EXHIBIT 10.61
POWER PURCHASE AGREEMENT
between
POTOMAC ELECTRIC POWER COMPANY and
PANDA-BRANDYWINE, L.P. dated
August 9, 1991
TABLE OF CONTENTS
ARTICLE I - Definitions 2
ARTICLE II - Term 11
2.1 Term 11
2.2 Extension of Term 11
ARTICLE III - Conditions to Purchase Obligations 12
3.1 Regulatory Approvals 12
3.2 Conditions Precedent 15
3.3 Timing for PEPCO's Response; Updates 19
ARTICLE IV - Financial Assurances 22
4.1 Development Security 22
4.2 Interconnection Security 24
4.3 Form of Development Security and
Interconnection Security 25
4.4 Extension to the Scheduled Commercial
Operation Date 26
4.5 Performance Security 27
4.6 Liquidated Damages 28
ARTICLE V - Sale and Purchase Obligations 29
5.1 Delivery of Electric Energy and
Capacity 29
5.2 Electric Characteristics 29
5.3 Interruption or Suspension of
Deliveries by PEPCO 29
5.4 Reduction 30
5.5 Maximum Emergency Generation Condition 30
ARTICLE VI - Compensation, Billing and Payment 31
6.1 Monthly Capacity Payment 31
6.2 Monthly Energy Payment 35
6.3 Loss of Qualifying Facility Status 54
6.4 Other Charges 55
6.5 Billing and Payment 55
6.6 Other Payments 56
ARTICLE VII - Pre-Operation Period 57
7.1 Facility Construction and Start-Up 57
7.2 Commencement Date 60
7.3 Actual Commercial Operation Date 60
ARTICLE VIII - Operation and Maintenance 62
8.1 Operation of Facility 62
8.2 Dependable Capacity; Testing of Capacity
Rating 62
8.3 Schedule and Dispatch of Generation 64
8.4 Annual Notice of Scheduled
Maintenance Outages 66
8.5 Routine Maintenance 66
8.6 Annual Maintenance and Inspection
Report 66
8.7 Maintenance Reserve 67
8.8 Special Operational Audits 69
8.9 Modification of Project and
Financing Documents 69
8.10 Operating Committee 70
ARTICLE IX - Interconnection 71
9.1 Interconnection and Transmission Facilities 71
9.2 Cost Estimate and Schedule for Design
Construction 71
9.3 Interconnection Costs 73
9.4 Protective Devices 73
9.5 Access to Facility and Site 74
9.6 Transmission Facilities 74
ARTICLE X - Metering 75
10.1 Metering Devices 75
10.2 Inspection of Metering Devices 75
10.3 Adjustments for Inaccurate Meters 76
ARTICLE XI - Representations, Warranties and
Additional Covenants of Seller and PEPCO's
Representations 77
11.1 Qualifying Facility 77
11.2 Fuel Supply and Transportation 77
11.3 Operating and Maintenance Standards 78
11.4 Effects on Voltage 78
11.5 Electrical Characteristics 78
11.6 Status and Authorization 78
11.7 Permits; Compliance with Laws 79
11.8 Certificates 80
11.9 Continuity of Existence 80
11.10 Books and Records; Information 80
11.11 PEPCO's Representations 80
ARTICLE XII - Taxes; Fines 81
12.1 Taxes 81
12.2 Fines 81
ARTICLE XIII - Insurance 82
13.1 Insurance Required 82
13.2 Substitute Coverages 84
13.3 Scope of Insurance 84
13.4 Evidence of Insurance 85
13.5 Application of Proceeds 85
13.6 Primary or Excess Insurance 85
ARTICLE XIV - Force Majeure 86
14.1 Effect of Force Majeure 86
14.2 Force Majeure Defined 86
14.3 Notification and Obligation to Remedy
the Cause of Force Majeure 86
14.4 Limitations on Force Majeure; Right
to Terminate 86
ARTICLE XV - Termination and Default 87
15.1 Event of Default 87
15.2 Remedies for Default 91
15.3 Termination Due to Market Forces 93
ARTICLE XVI - Indemnification and Liability 94
16.1 Indemnification 94
16.2 Consequential Damages 96
ARTICLE XVII - Dispute Resolution 96
17.1 Senior Officers 96
17.2 Maryland Commission 97
ARTICLE XVIII - Option to Purchase Facility; Rights
of First Refusal 97
18.1 Option to Purchase Transfer Interest 97
18.2 Right of First Refusal to Purchase
Transfer Interest 98
18.3 Right of First Refusal to Purchase
Interest in Seller 99
18.4 Seller's Right to Convey Transfer
Interest; Owner's Right to Convey
Seller Interest 100
18.5 Limitations on Option to Purchase and
Rights of First Refusal 101
18.6 PEPCO General Transfer Rights 101
ARTICLE XIX - Miscellaneous 103
19.1 Assignment 103
19.2 Notices 104
19.3 Choice of Law 104
19.4 Entire Agreement 104
19.5 Further Assurances 105
19.6 Waiver 105
19.7 Modification or Amendment 105
19.8 Severability 105
19.9 Counterparts 106
19.10 Confidential Information 106
19.11 Independent Contractors 106
19.12 Third Parties 107
19.13 Headings 107
19.14 Press Releases 107
19.15 Survival of Rights 107
19.16 Incorporated Provisions 107
19.17 Sections 108
ARTICLE XX - No Warranty of Facility by PEPCO 108
20.1 No Implied Warranty 108
APPENDICES
APPENDIX A - Description of Facility and Site
APPENDIX B - Sample Calculations
APPENDIX C - Guidelines and Performance Standards for
Parallel Operation of Customer Generation
Equipment on the PEPCO System
APPENDIX D - Testing Procedures for Determining Net
Capability
APPENDIX E - Metering Equipment
APPENDIX F - Interconnection and Communication Specification
APPENDIX G - Procedures for Determination of Fair Market
Value of Facility
APPENDIX H - Requirements With Respect to Fuel Supply
Arrangements
APPENDIX I - Generating Unit Event Reporting
APPENDIX J - Summary Specification for 230KV Overhead
Transmission Lines
APPENDIX K - Contributions to Maintenance Reserve Pursuant to
Subsection 8.7(b)(ii)
APPENDIX L - Capacity Rate
APPENDIX M - Natural Gas Reserve Commitment and Price
APPENDIX N - Equivalent Availability Factor ("EAF")
APPENDIX O - Equivalent Forced Outage Rate ("EFOR")
APPENDIX P - Valuation Procedures for PEPCO's
Buyout Rights under Subsection 18.6(b)(ii)
POWER PURCHASE AGREEMENT
This Agreement, dated as of August 9, 1991, by and
between Panda-Brandywine, L.P. ("Seller"), a Delaware Limited
Partnership, and Potomac Electric Power Company ("PEPCO"), a
District of Columbia and Virginia corporation, (referred to
hereinafter individually as "Party" and collectively as the
"Parties").
WITNESSETH:
WHEREAS, Seller proposes to design, construct,
operate and maintain an electric generating facility, with a
nominal rating of approximately 230,000 kilowatts to be
interconnected with PEPCO's electric transmission system, at
a site in Prince George's County, Maryland for the generation
and sale of electricity to PEPCO, such facility and site
being more specifically described in Appendix A hereto
(collectively, the "Facility");
WHEREAS, PEPCO desires to encourage and promote the
development of the lowest cost, reliable generation options,
including Qualifying Facilities, as part of its least cost
plans for meeting customer needs;
WHEREAS, Seller desires to sell to PEPCO, and PEPCO
desires to purchase from Seller, all the electricity
generated by the Facility for a period of twenty-five (25)
Years after the Actual Commercial Operation Date at the
rates and in accordance with the terms and conditions set
forth herein; and
WHEREAS, PEPCO's willingness to enter into this
Agreement and willingness to purchase electric power from the
Facility at the rates and in accordance with the terms and
conditions set forth herein in based upon the expectation
that the regulatory agencies with jurisdiction over PEPCO's
sales will determine that this Agreement is consistent with
PEPCO's least cost planning with respect to timing and costs.
NOW, THEREFORE, in consideration of these premises
and the mutual covenants set forth herein, the Parties hereby
agree that the following terms and conditions shall govern
Seller's sale and delivery of electricity from the Facility
to PEPCO and PEPCO's purchase and receipt of such electricity
from Seller:
ARTICLE I
DEFINITIONS
Unless otherwise defined herein or in any appendix
hereto, the following terms when used herein or in any
appendix hereto shall have the meanings set forth below. Such
meanings shall be applicable to both the singular and the
plural and to the masculine and the feminine forms of such
terms.
1.1 "Actual Commercial Operation Date" - The date
following the Day upon which Seller first successfully
completes the Net Capability test of the Facility pursuant to
Section 8.2 and has otherwise complied with all conditions
set forth in Section 7.3.
1.2 "Agreement" - This Power Purchase Agreement
including all appendices and amendments and supplements that
may be entered into by the Parties from time to time.
1.3 "Availability Market" or "AT" - The AT as
defined in Subsection 6.1(a).
1.4 "Available Capacity" - The Net Capability of
the Facility adjusted for ambient temperature as prescribed
in manufacturer's design specifications.
1.5 "Billing Period" - The approximately thirty
(30) Day period used for billing purposes pursuant to Article
VI hereof. This period will correspond as closely as
practicable to the Calendar Month.
1.6 "Business Day" - Monday through Friday
excluding holidays recognized by PEPCO. As of the date of
this Agreement, these holidays include New Year's Day, ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇'▇ Birthday, Inauguration Day, Washington's
Birthday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, Day after Thanksgiving, and Christmas Day.
Such holidays may be changed by PEPCO upon ten (10) Days'
written notice to Seller.
1.7 "Calendar Day" or "Day" - A Calendar Day shall
be the twenty-four (24) Hour period beginning and ending at
12:00 midnight Eastern Time.
1.8 "Calendar Month or "Month" - A Calendar Month
shall begin at 12:00 midnight on the last Day of the
preceding month and end at 12:00 midnight on the last Day of
the current month.
1.9 "Calendar Quarter" or "Quarter" - A Calendar
Quarter shall be a three (3) Month period beginning at 12:00
midnight on December 31, March 31, June 30, or September 30.
1.10 "Calendar Year" - A Calendar Year shall be
the twelve (12) Month period beginning at 12:00 midnight on
December 31 and ending at 12:00 midnight on the subsequent
December 31.
1.11 "CERCLA" - The Comprehensive Environmental
Response, Compensation and Liability Act of 1980, 42 U.S.C.
9601, et seq., as amended from time to time.
1.12 "Closing Date" - The date of the execution
and delivery of the Financing Documents for the construction
financing for the Facility, which in any event shall not be
earlier than the Scheduled Closing Date.
1.13 "Columbia Gas System" - The Columbia Gulf
Transmission Company and the Columbia Gas Transmission
Corporation, or any successors thereto.
1.14 "Columbia Gas Transmission Corporation" -
The Columbia Gas Transmission Corporation or any successor
thereto.
1.15 "Columbia Gulf Transmission Company" - The
Columbia Gulf Transmission Company or any successor thereto.
1.16 "Columbia LNG" - The Columbia LNG
Corporation or any successor thereto.
1.17 "Commencement Date" - The first date energy
is generated by the Facility and is metered by the PEPCOowned
metering equipment.
1.18 "Construction Start Date" - The date when
continuing work has started on the Facility with the pouring
of concrete foundations for the structures to be erected and
the equipment to be installed at the Site.
1.19 "Contract Year" - A Contract Year shall be
the twelve (12) Month period beginning on the first Day of
the first Month following the Actual Commercial Operation
Date (provided, however, that if the Actual Commercial
Operation Date occurs on the first Day of a Month, then the
first Contract Year shall begin on the Actual Commercial
Operation Date), and on each succeeding anniversary thereof,
and provided further that the last Contract Year shall end at
the end of the Term.
1.20 "Critical Path Method Schedule" or "CPM
Schedule" - The milestone schedule required pursuant to
Subsection 7.1(c).
1.21 "Dependable Capacity" - The capacity
expressed in kilowatts committed by Seller to PEPCO for the
Term and determined in accordance with Section 8.2.
1.22 "Development Security" - The security
provided by the Seller pursuant to Section 4.1.
1.23 "Dispatch Payment" - The payment for Net
Electrical Output from the Second and Fourth Dispatch
Segments in any given Billing Period calculated in accordance
with Subsection 6.2(b)(iii).
1.24 "Dispatchable Portion" - The portion of the
Facility's capacity and the Net Electrical Output associated
therewith under the sole direction and control of PEPCO's
dispatchers, which portion consists of all of the Dependable
Capacity in excess of the Limited Dispatch Portion and shall
equal one hundred and forty (140) MW at 92 degrees F. and fifty
percent (50%) relative humidity.
1.25 "District of Columbia Commission" - The
Public Service Commission of the District of Columbia or any
successor thereto.
1.26 "Effective Date" - The date set forth in the
first paragraph of this Agreement.
1.27 "Emergency Condition" - A condition or
situation which in PEPCO's sole judgment presents an imminent
physical threat of danger to life, health or property or
could cause a significant disruption on the PEPCO System and
could adversely affect PEPCO's ability to meet its
obligations to provide safe, adequate, and reliable electric
service to its customers including, but not limited to, other
utilities with which PEPCO is interconnected or the PJM Pool.
1.28 "Engineering Procurement & Construction
Contractor" or "EPC Contractor" - The firm or firms retained
by Seller for the purpose of engineering, procurement,
construction and testing of the Facility.
1.29 "Equivalent Availability Factor" or "EAF" -
The availability of the Facility to produce kilowatt-hours of
electrical energy during any period, to be determined as set
forth in Appendix N attached hereto.
1.30 "Equivalent Forced Outage Rate" or "EFOR" -
The equivalent forced outage rate of the Facility as
determined in accordance with Appendix O attached hereto.
1.31 "Extended Scheduled Commercial Operation
Date" - The date to which the Scheduled Commercial Operation
Date has been extended upon the Seller's compliance with the
requirements of Section 4.4.
1.32 "Event of Default" - Shall be defined as set
forth in Sections 15.1 and 18.3 and Appendix H attached
hereto.
1.33 "Facility" - Seller's generation facility
including the Site, auxiliary equipment and equipment located
on the Site as more specifically described in Appendix A, and
including Seller's equipment required by Appendices C, E and
F.
1.34 "Federal Power Act" - The Federal Power Act,
16 U.S.C. 791a et seq., as amended from time to time.
1.35 "FERC" - The Federal Energy Regulatory
Commission or any successor thereto.
1.36 "Financier Period" - Shall be defined as set
forth in Subsection 15.2(b)(i).
1.37 "Financing Documents" - The loan agreements
(including any subordinated debt), notes, bonds, indentures,
security agreements, and other documents relating to the
construction financing and/or the permanent financing for the
Facility, including any refinancing documents and any and all
amendments and supplements to the foregoing that may be
entered into from time to time.
1.38 "Financing Parties" - Any and all lenders
providing the construction financing and/or the permanent
financing for the Facility, pursuant to the Financing
Documents.
1.39 "First Dispatch Segment" - Shall be defined
as set forth in Subsection 6.2(b)(i).
1.40 "Force Majeure" - An event, condition or
circumstance as specified by Section 14.2.
1.41 "Fourth Dispatch Segment" - Shall be defined
as set forth in Subsection 6.2(b)(i).
1.42 "Fuel" - The primary fuel to be used by the
Facility will be natural gas. The Facility will use No. 2
fuel oil as an alternate fuel.
1.43 "Fuel Supply Contract(s)" - The contracts
entered into, or to be entered into, by Seller for the supply
of, and transportation of, Fuel for the Facility.
1.44 "Fuel Supply Plan" - Seller's plan for
providing Fuel for the Facility to ensure the operation of
the Facility in accordance with the terms and provisions of
this Agreement. The Fuel Supply Plan shall include, but not
be limited to, Seller's proposed Fuel supply and
transportation arrangements, and Seller's plans to facilitate
use of the most economic Fuel.
1.45 "GNP Deflator" - The implicit price deflator
associated with the Gross National Product ("GNP") as
normally published by the United States Department of
Commerce for each Quarter or, if the quarterly GNP deflator
is no longer published, such other substitute index that
measures quarterly or annual inflation in prices for goods
and services in the United States as the Parties shall
mutually agree upon.
1.46 "Hour" - A period of sixty (60) consecutive
minutes commencing at 12:00 midnight Eastern Time, or
commencing at the end of such consecutive sixty (60) minute
period or at the end of a subsequent consecutive sixty (60)
minute period.
1.47 "Independent Engineer" - The consulting
engineering firm or professional engineer retained by the
Seller or the Financing Parties and approved by PEPCO, which
approval shall not be unreasonably withheld.
1.48 "Interconnection Costs" - PEPCO's costs and
expenses associated with the construction and installation of
the Interconnection Facilities in accordance with the terms
and conditions set forth in Article IX, including but not
limited to any applicable allowance for funds used during
construction, any PEPCO income tax obligation
(including the tax on tax effect, if any), and the reasonable
costs incurred by PEPCO to remedy or mitigate any system
stability risks to the PEPCO System caused or contributed to
by the Facility.
1.49 "Interconnection Facilities" - All the
facilities (except for any Transmission Facilities)
determined to be necessary by PEPCO in accordance with
Prudent Utility Practices to enable PEPCO to receive Net
Electrical Output and Dependable Capacity from the Facility
and to maintain the stability of the PEPCO system, including
but not limited to, all metering devices, transformers and
associated equipment, communications equipment, relay and
switching equipment, circuit breakers and other protective
devices and safety equipment, and telecommunications
equipment, wherever located.
1.50 "Interconnection Plan" - The plan for the
construction and installation of the Interconnection
Facilities, including the estimates of the Interconnection
Costs, prepared by PEPCO in accordance with the terms and
conditions set forth in Article IX.
1.51 "Interconnection Point" - The physical point
at PEPCO's Burches Hill Substation where the Transmission
Facilities and the PEPCO System are connected, or such other
point as the Parties may agree.
1.52 "Interconnection Security" - The security
provided by Seller pursuant to Section 4.2.
1.53 "Limited Dispatch Portion" - The portion of
the Facility's capacity and the Net Electrical Output
associated therewith over which PEPCO has limited dispatch
control. The Limited Dispatch Portion shall consist of up to
approximately eighty-five percent (85%) of the maximum
capability of the Facility and the Net Electrical Output
associated therewith with one combustion turbine operating
and shall equal ninety (90) MW at 92 degrees F. and fifty percent
(50%) relative humidity.
1.54 "Maintenance Reserve" - The Maintenance
Reserve fund described in and maintained in accordance with
Section 8.7.
1.55 "Maryland Commission" - The Maryland Public
Service Commission or any successor thereto.
1.56 "Maximum Emergency Generation Condition" - A
period in which PEPCO has determined that it needs the
maximum attainable Net Electrical Output from the Facility as
a result of an emergency shortage of electric capacity or
energy as declared by the PEPCO dispatcher or for such other
periods as the Parties may mutually agree upon.
1.57 "MBtu" - One million (1,000,000) British
thermal units.
1.58 "Maximum Generation Emergency Condition" - A
light load period declared by the PEPCO dispatcher.
1.59 "Monthly Capacity Payment" - The payment
PEPCO will pay Seller each Billing Period for Dependable
Capacity calculated in accordance with Section 6.1.
1.60 "Monthly Energy Payment" - The payment PEPCO
will pay Seller each Billing Period for the Net Electrical
Output of the Facility calculated in accordance with Section
6.2. The Monthly Energy Payment shall consist of the sum of
the Dispatch Payment, Unit Commitment Payment, and Simple
Cycle Energy Payment.
1.61 "MW" - Megawatt.
1.62 "MWH" - Megawatt-hour.
1.63 "Net After-Tax Cash Flow" - The sum equal to
the net cash flow from the operation of the Facility (all
revenues net of all direct and indirect expenses, including
but not limited to operation and maintenance expenses
incurred in good faith and debt service and any debt reserve
funding requirements, and excluding as an expense,
depreciation, amortization or other non-cash expenditures)
available to Seller for distribution to its partners minus
the Seller's effective Federal and State income taxes as
determined in accordance with generally accepted accounting
principles consistently applied.
1.64 "Net Capability" - The capacity expressed in
kilowatts or megawatts from the Facility metered by the PEPCO-
owned metering equipment as established in accordance with
Appendix D.
1.65 "Net Electrical Output" - The electric
energy output of the Facility net of station use in kilowatt
hours metered by the PEPCO-owned metering equipment and
delivered at the Interconnection Point.
1.66 "Operating Committee" - The Committee
established in accordance with Section 8.10.
1.67 "PEPCO" - The Potomac Electric Power Company
or any successor thereto.
1.68 "PEPCO System" - The bulk power network
controlled or used by PEPCO for the purpose of generating,
transmitting, and distributing electricity to PEPCO's
customers.
1.69 "Performance Security" - The security
provided by Seller pursuant to Section 4.5.
1.70 "PJM Agreement" - The Pennsylvania-New
Jersey Maryland Interconnection Agreement, made among the
members of the PJM Pool, providing, inter alia, for
coordinated planning and operation of the members' systems in
order to enhance the efficiency, economy, and reliability of
electrical service in the Mid-Atlantic Region, as it may be
amended or superseded from time to time.
1.71 "PJM Pool" - The power pool comprised of
various electric utility systems in the Mid-Atlantic Region,
including PEPCO, serving customers in the States of Maryland,
New Jersey, and Delaware, the Commonwealths of Virginia and
Pennsylvania, and the District of Columbia, or any other
power pool in which PEPCO may be included hereafter.
1.72 "Prudent Utility Practices" - The practices
generally followed by the United States electric utility
industry with respect to the design, construction, operation,
and maintenance of electric generating, transmission, and
distribution facilities (including, but not limited to, the
engineering, operating, and safety practices generally
followed by the electric utility industry).
1.73 "PURPA" - The Public Utility Regulatory
Policies Act of 1978, Pub. L. No. 95-617, as amended from
time to time.
1.74 "Qualifying Facility" - A cogeneration
facility or a small power production facility which is a
qualifying facility within the meaning of the FERC
regulations implementing PURPA set forth in Part 292 of Title
18 of the Code of Federal Regulations, as in effect from time
to time.
1.75 "RCRA" - The Resource Conservation and
Recovery Act of 1976, 42 U.S.C. 6901, et seq., as amended
from time to time.
1.76 "Reduction" - The reduction or interruption
of Net Electrical Output by Seller at PEPCO's request
pursuant to Section 5.4.
1.77 "Scheduled Closing Date" - The date on which
Seller, by at least one hundred (100) Days' prior written
notice to PEPCO, projects that the Closing Date will occur.
1.78 "Scheduled Commencement Date" - The
scheduled commencement date specified by Seller pursuant to
Subsection 7.1(c)(viii) in the initial CPM Schedule, as such
date is confirmed pursuant to Subsection 9.2(a).
1.79 "Scheduled Commercial Operation Date" -
June 1, 1996.
1.80 "Scheduled Outage" - A planned interruption
of the Facility's generation that has been coordinated in
advance with PEPCO with a mutually agreed start date and
duration pursuant to Section 8.4 and that is required for
inspection, preventive maintenance, or corrective maintenance
of the Facility.
1.81 "Second Dispatch Segment" - Shall be defined
as set forth in Subsection 6.2(b)(i).
1.82 "Seller" - Panda-Brandywine, L.P., a
Delaware Limited Partnership.
1.83 "Simple Cycle Energy Payment" - The payment
for Net Electrical Output during periods when the Facility is
dispatched in simple cycle mode (i.e., when the steam turbine
is not available), calculated in accordance with Subsection
6.2(b)(iv)
1.84 "Site" - The parcel of land upon which the
Facility is to be constructed and located.
1.85 "Start-up Energy" - The electric energy
delivered at the Interconnection Point associated with the
start-up testing of the Facility prior to the Actual
Commercial Operation Date as metered by the PEPCO-owned
metering equipment.
1.86 "Steam Supply Contract" - The contract(s)
entered into by Seller and an industrial host for the sale
of thermal energy produced by the Facility.
1.87 "Summer Period" - The Months of June, July
and August.
1.88 "Term" - The period of this Agreement as
specified in Section 2.1 hereof, plus any extension thereof
in accordance with Section 2.2.
1.89 "Test Energy" - The electric energy
delivered at the Interconnection Point associated with the
testing of the Facility following the Actual Commercial
Operation Date as metered by the PEPCO-owned metering
equipment.
1.90 "Third Dispatch Segment" - Shall be defined
as set forth in Subsection 6.2(b)(i).
1.91 "Transco System" - The Transcontinental Gas
Pipe Line Corporation or any successor thereto.
1.92 "Transfer Interest" - All or any portion of
Seller's right, title or interest in the Facility and/or the
Site, which Seller proposes to sell, transfer, convey or
otherwise dispose of, whether upon Seller's own initiative,
or in response to a bona fide offer received by Seller from a
third party, or otherwise.
1.93 "Transmission Facilities" - The transmission
lines and associated equipment for connecting the Facility at
the line side of the Facility's line disconnect switch to the
line side of the line disconnect switch at PEPCO's Burches
Hill 230 kV Substation.
1.94 "Transmission Facilities Plan" - The plan
for construction of the Transmission Facilities to be
prepared by Seller and approved by PEPCO pursuant to Section
9.6.
1.95 "Transmission Facilities Site" - The
parcel(s) of land upon which the Transmission Facilities are
to be constructed and located.
1.96 "Unit Commitment Payment" - The payments
associated with commitment of the Facility's First Dispatch
Segment and Third Dispatch Segment calculated in accordance
with Subsection 6.2(b)(ii).
1.97 "Week" - A period of seven (7) consecutive
Days beginning at 12:00 midnight on Sunday and ending at
12:00 midnight on the following Sunday.
1.98 "Winter Period" - The Months of December,
January and February.
1.99 "Year" - A Year shall be the three hundred
and sixty-five (365) Day period beginning at 12:00 midnight
on the Day before the first Day of such period and ending at
12:00 midnight on the 365th Day of such period, provided that
a Year in which there is a February 29th shall consist of
three hundred and sixty-six (366) Days.
ARTICLE II
TERM
2.1 Term. This Agreement shall become effective
as of the Effective Date, and shall continue in effect for an
initial period ending on the date that is twenty-five (25)
Years from the Actual Commercial Operation Date, unless
otherwise extended or terminated in accordance with the
provisions set forth herein.
2.2 Extension of Term. If PEPCO requests an
extension of this Agreement prior to two (2) Years before the
end of the then current Term, Seller shall enter into good
faith negotiations with PEPCO to reach an extension agreement
on terms and conditions acceptable to each Party in its sole
discretion, and Seller shall not negotiate with any other
person for such purpose unless no such extension agreement
has been reached as of one (1) Year prior to the end of the
then current Term.
ARTICLE III
CONDITIONS TO PURCHASE OBLIGATIONS
3.1 Regulatory Approvals.
(a) PEPCO's obligation to purchase, accept and pay
for Dependable Capacity and Net Electrical Output pursuant to
Articles V and VI shall not commence until (i) PEPCO's
receipt of final, nonappealable orders from the Maryland
Commission and the District of Columbia Commission, each in
form and substance satisfactory to Seller and PEPCO, each in
its sole discretion, finding that the need for and the timing
of the Facility are consistent with PEPCO's least cost
planning, finding that the payments for energy and capacity
purchases from the Facility by PEPCO pursuant to the terms of
this Agreement are equal to or less than PEPCO's avoided
costs, and approving this Agreement, (ii) PEPCO's receipt of
all other governmental or regulatory approvals required by
PEPCO in connection with its execution and performance of
this Agreement in form and substance satisfactory to Seller
and PEPCO, each in its sole discretion, and (iii) Seller's
receipt of all other governmental or regulatory approvals
required by Seller in connection with its execution and
performance of this Agreement in form and substance
satisfactory to Seller and PEPCO (as determined by each Party
in accordance with the standards set forth in Subsection
3.1(b)). The Parties hereto agree to seek all such
regulatory approvals expeditiously and to use all reasonable
efforts to obtain approval of the Agreement from the Maryland
Commission and the District of Columbia Commission.
(b) For purposes of the governmental or regulatory
approvals to be received by Seller referred to in Subsection
3.1(a)(iii) (other than any approval for the Transmission
Facilities or any air permit for the Facility from the
Maryland Department of Environment's Air Management
Administration), any such approval shall be satisfactory to a
Party unless such Party reasonably determines that such
approval would materially impair the operation of the
Facility by Seller as a facility that is dispatchable by
PEPCO in accordance with the terms and provisions of this
Agreement or would otherwise materially impair PEPCO's rights
in accordance with the terms and provisions of this
Agreement. Any governmental or regulatory approval required
for the Transmission Facilities (including, but not limited
to, any certificate of public convenience and necessity for
the Transmission Facilities from the Maryland Commission)
shall be satisfactory to a Party if such approval is
satisfactory to such Party in its sole discretion. The air
permit for the Facility from the Maryland Department of
Environment's Air Management Administration shall be
satisfactory to a Party if such permit satisfies the standard
set forth in the first sentence of this Subsection 3.1(b)
and, additionally in the case of PEPCO, if such permit does
not materially impair any existing air permit for any
existing or planned facility issued to PEPCO prior to the
Effective Date.
(c) Upon receipt by PEPCO or Seller of any order
or approval described in Subsection 3.1(a) above, such Party
shall promptly transmit to the other Party a copy of such
order or approval. Within thirty (30) Days of the date of
such transmittal, each Party shall give notice to the other
Party whether it deems the terms and conditions of such order
or approval to be satisfactory in accordance with the
standards set forth for its review of such order or approval
in the relevant subpart of Subsection 3.1(a) and, if
applicable, Subsection 3.1(b). If a Party determines that
any such order or approval does not satisfy such standards,
such Party shall include with its notice a brief written
explanation of the basis for its determination, unless the
determination of whether such order or approval was
satisfactory was left to the sole discretion of the Party, in
which case no written explanation shall be required.
(d) If the orders identified in Subsection
3.1(a)(i) have not been received and accepted by the Parties
in accordance with Subsections 3.1(a)(i) and 3.1(c) by June
1, 1992, either Party shall have the right to terminate this
Agreement immediately without any further liability hereunder
by providing written notice of such termination to the other
Party within thirty (30) Days of June 1, 1992.
(e) (i) On or before April 1, 1992, PEPCO shall
provide to Seller for informational purposes a list of all
governmental or regulatory approvals to be obtained by PEPCO
in connection with PEPCO's execution and performance of this
Agreement that are within the scope of Subsection 3.1(a)(ii).
This list shall indicate the status of each such approval
(i.e., whether such approval has been received and accepted
by PEPCO pursuant to Subsections 3.1(a)(ii) and 3.1(c),
whether an application is pending for such approval, or the
approximate time when PEPCO contemplates applying for and
receiving such approval). PEPCO shall have the right to
revise the list of governmental or regulatory approvals
submitted to Seller under this Subsection 3.1(e) at any time
to include any additional governmental or regulatory
approvals required to be obtained by PEPCO in connection with
its execution and performance of this Agreement, provided
that the requirement to obtain any such additional approval
was imposed after the submittal of the list under this
Subsection 3.1(e).
(ii) When PEPCO receives any governmental
or regulatory approval specified in the list provided by
PEPCO to Seller pursuant to Subsection 3.1(e)(i), as such
list may be revised by PEPCO pursuant to such subsection,
PEPCO shall notify Seller whether it considers such approval
to be satisfactory in form and substance in its sole
discretion in accordance with the procedures set forth in
Subsection 3.1(c). If PEPCO notifies Seller that any such
approval that is in final and nonappealable form is not
satisfactory to PEPCO, PEPCO may terminate this Agreement
immediately by written notice to Seller given within ten (10)
Days after the date of the notice that such approval was not
satisfactory.
(iii) On or before thirty (30) Days prior
to the Scheduled Closing Date, PEPCO shall advise Seller of
the status of any remaining governmental or regulatory
approvals specified in the list provided by PEPCO to Seller
pursuant to Subsection 3.1(e)(i), as such list may be revised
by PEPCO pursuant to such subsection, for which PEPCO has not
provided Seller notice under Subsection 3.1(c). If PEPCO has
not obtained any such approval in form and substance
satisfactory to PEPCO in its sole discretion on or before the
Closing Date, then PEPCO, by written notice given to Seller
at any time prior to the Closing Date, may terminate this
Agreement.
(iv) If PEPCO terminates this Agreement
pursuant to this Subsection 3.1(e), neither Party shall have
any further liability to the other Party, except that PEPCO
shall return or release, as the case may be, the Development
Security, and the accumulated interest thereon, to Seller
within thirty (30) Days after the date of such termination.
(f) Both Parties agree that the rates pursuant to
which PEPCO shall purchase Net Electrical Output and
Dependable Capacity from Seller hereunder constitute formula
rates established pursuant to this Agreement which must be
filed with, and approved by, the Maryland Commission in
accordance with Subsection 3.1(a)(i) as a condition precedent
to the commencement of PEPCO's obligation to purchase, accept
and pay for Dependable Capacity and Net Electrical Output
from Seller at such rates. The Parties further agree that in
the event that the facility loses its status as a Qualifying
Facility, they hereby (i) waive the right to make any
unilateral filing with the FERC under Section 205 of the
Federal Power Act, (ii) waive the right to submit any
complaint under Section 206 of the Federal Power Act which
seeks to modify or change this Agreement without the prior
consent of the other Party, and (iii) intend that FERC's
power to impose changes to this Agreement under Section 206
of the Federal Power Act be limited to circumstances in which
FERC finds that this Agreement is contrary to the public
interest.
3.2 Conditions Precedent. PEPCO's obligation to
purchase, accept and pay for Dependable Capacity and Net
Electrical Output pursuant to Articles V and VI of this
Agreement shall not commence until Seller has provided the
following material and information to PEPCO (or, in the case
of the information to be provided under Subsection
3.2(h)(vi), to PEPCO's fuel consultant) within the times
specified herein (unless previously provided to PEPCO) and
PEPCO has approved such material and information in
accordance with Section 3.3 (except that PEPCO's obligation
to purchase Start-up Energy shall not be subject to the
provision of the material and information identified in
Subsections 3.2(p) or (q)):
(a) As soon as available, but no later than one
hundred and eighty (180) Days after the last to occur of
receipt of (i) approval of this Agreement, with the findings
specified in Subsection 3.1(a)(i), by the Maryland Commission
and (ii) approval of this Agreement, with the findings
specified in Subsection 3.1(a)(i), by the District
of Columbia Commission:
(i) a copy of Seller's water supply plan for
the Facility;
(ii) a copy of Seller's waste disposal plan
for the Facility;
(iii) a Phase 1 EPA environmental assessment
of the Site and the portion of the Transmission
Facilities Site that is not on property owned by PEPCO
as of the Effective Date (including, but not limited to,
identification of the presence of any polychlorinated
biphenyls, materials stored in underground storage
tanks, hazardous wastes within the meaning of RCRA and
hazardous substances within the meaning of CERCLA);
(iv) information and analyses reasonably
satisfactory to PEPCO demonstrating that the Site and
the Transmission Facilities Site and construction and
operation of the Facility and the Transmission
Facilities shall comply with all applicable
environmental requirements;
(v) a copy of the Fuel Supply Plan for the
Facility;
(vi) a report of the Independent Engineer to
the effect that the Facility can be constructed in
accordance with Prudent Utility Practices and the other
requirements of this Agreement; and
(vii) a report from an independent third party
knowledgeable in the operation and maintenance of a
generating facility such as the Facility and mutually
acceptable to the Parties that, given reasonable
assumptions as to costs and inflation, the projected
revenues under this Agreement throughout the Term will
be sufficient to cover the projected expenses to operate
and maintain the Facility in accordance with Prudent
Utility Practices throughout the Term.
(b) Within one hundred and twenty (120) Days after
the last to occur of receipt of (i) approval of this
Agreement, with the findings specified in Subsection
3.1(a)(i), by the Maryland Commission, and (ii) approval of
this Agreement, with the findings specified in Subsection
3.1(a)(i), by the District of Columbia Commission, the
initial CPM schedule as required pursuant to Subsection
7.1(c) of this Agreement.
(c) As soon as available, but no later than
September 1, 1992, a copy of Seller's application for an air
permit for the Facility from the Maryland Department of
Environment's Air Management Administration.
(d) As soon as available, but no later than
September 1, 1993, a copy of Seller's applications for a
water withdrawal permit for the Facility from the Maryland
Department of Environment and for either (i) a national
pollutant discharge elimination system permit for the
Facility from the Maryland Department of Environment or (ii)
a permit for the Facility in compliance with rules
promulgated pursuant to the pre-treatment effluent standards
of the Clean Water Act.
(e) The Development Security in the amounts and at
such times as required under Section 4.1.
(f) No later than ninety (90) Days prior to the
Scheduled Closing Date, a copy of the Seller's limited
partnership agreement.
(g) Beginning at least forty-five (45) Days prior
to the Scheduled Closing Date and continuing through the
Closing Date as required pursuant to Subsection 3.3(b) of
this Agreement, copies of the current drafts of those
Financing Documents which include provisions that may affect
PEPCO's rights under this Agreement, or for which the
Financing Parties will request PEPCO's consent.
(h) At least thirty (30) Days prior to the
Scheduled Closing Date:
(i) an air permit for the Facility from the
Maryland Department of Environment's Air Management
Administration;
(ii) a water withdrawal permit from the
Maryland Department of Environment and either (A) a
national pollutant discharge elimination system permit
for the Facility from the Maryland Department of
Environment, or (B) a permit for the Facility in
compliance with rules promulgated pursuant to the pre
treatment effluent standards of the Clean Water Act;
(iii) a final and nonappealable FERC order
certifying that the Facility is a Qualifying Facility
pursuant to the Optional Certification Procedure
established in Section 292.207(b) of Subpart A of the
FERC Regulations issued pursuant to Sections 201 and 210
of PURPA, as in effect from time to time;
(iv) (A) a special exception or other zoning
approval from Prince George's County, Maryland, if
necessary, for Seller to construct and operate the
Facility on the Site and (B) a special exception or
other zoning approval from Prince George's County,
Maryland, and/or a certificate of public convenience and
necessity from the Maryland Commission, if necessary,
for Seller to construct and operate the Transmission
Facilities prior to the transfer of the Transmission
Facilities to PEPCO pursuant to Subsection 7.3(a)(v) and
for PEPCO's initial operation of the Transmission
Facilities subsequent to such transfer;
(v) Seller's plan for obtaining all material
governmental and regulatory approvals required for
operation of the Facility in accordance with this
Agreement that Seller has not obtained, or does not
anticipate obtaining, prior to the Closing Date;
(vi) copies of all executed Fuel Supply
Contract(s) and other commitments then in existence to
implement the Fuel Supply Plan for the Facility, and all
information required to be provided under Appendix H,
shall be delivered to the fuel consultant selected by
PEPCO in accordance with the provisions of Subsection
3.3(e);
(vii) a report of the Independent Engineer,
to the effect that: (A) the Facility can be constructed
in accordance with Prudent Utility Practices and the
other engineering, construction and performance
requirements of this Agreement (updating and confirming
the report provided pursuant to Subsection 3.2(a)(vi)),
(B) it is technically feasible for the Actual Commercial
Operation Date to occur on or before the Scheduled
Commercial Operation Date, and (C) the Facility's useful
life is at least equal to the initial twenty-five (25)
Year Term;
(viii) a report from an independent third party
knowledgeable in the operation and maintenance of a
generating facility such as the Facility and mutually
acceptable to the Parties updating and confirming the
report provided pursuant to Subsection 3.2(a)(vii);
(ix) a copy of the Steam Supply Contract
(edited to delete specific dollar amounts to be paid to
Seller); and
(x) a copy of all easements or rights of way
necessary: (A) for Seller to construct and operate the
Facility for the Term of this Agreement plus fifteen
(15) Years, (B) for Seller to construct the Transmission
Facilities (including environmental indemnifications to
PEPCO from the parties providing each such easement or
right of way satisfactory to PEPCO in its sole
discretion), (C) for PEPCO to install, operate,
maintain, replace and/or remove the metering devices
specified in Appendix E on Seller's side of the
Interconnection Point for the Term of this Agreement
plus fifteen (15) Years and (D) for PEPCO to operate the
Transmission Facilities for the Term of this Agreement
plus fifteen (15) Years. (i) Within thirty (30) Days
after the Closing Date:
(i) a copy of a deed or lease entitling
Seller to the use of the Site for a period of at least
forty (40) Years from the Actual Commercial Operation
Date; and
(ii) conceptual engineering drawings and the
specifications pertaining to the electric generators and
step-up transformers of the Facility, including
demonstrations that (A) the requirements for reactive
supply facilities at the Facility will be met, and (B)
the Facility will meet the guidelines and performance
standards for parallel operation set forth in Appendix
C.
(j) At least two (2) Years prior to the Scheduled
Commencement Date specific information necessary for
preparation of the Interconnection Plan required to be
provided by Seller pursuant to Subsection 9.2(a)
(k) At least fifteen (15) Days prior to the
Construction Start Date, certificates of insurance coverage
or insurance policies for the construction period required
under Subsection 13.1(a).
(l) At least thirty (30) Days prior to the
commencement of construction of the Interconnection
Facilities as indicated in the Interconnection Plan, the
Interconnection Security pursuant to Section 4.2.
(m) As soon as available, but no later than one
hundred and twenty (120) Days prior to the Commencement Date,
a copy of the operation and maintenance agreement for the
Facility (edited to delete specific dollar amounts to be paid
to the operator) or, if Seller is to operate the Facility,
Seller's plans and procedures for such operation.
(n) At least fifteen (15) Days prior to the
Commencement Date, certificates of insurance coverage or
insurance policies for the operation period required under
Subsection 13.1(b).
(o) Prior to the Actual Commercial Operation Date,
a certificate from the Independent Engineer to the effect
that the Facility has been designed and constructed in
accordance with (i) Prudent Utility Practices, (ii) the terms
of this Agreement and (iii) the design information submitted
pursuant to Subsection 3.2(i)(ii).
(p) Prior to the Actual Commercial Operation Date,
a certificate from the Independent Engineer to the effect
that the acceptance testing by the EPC Contractor hen been
substantially completed for the Facility.
(q) Within ten (10) Days after the Commencement
Date, written confirmation that such date has occurred.
3.3 Timing for PEPCO's Response; Updates.
(a) Except as otherwise explicitly provided in
this Agreement, PEPCO shall, within thirty (30) Days (one
hundred and twenty (120) Days in the case of Subsection
3.2(j), sixty (60) Days in the case of Subsection 3.2(i)(ii)
and forty-five (45) Days in the case of Subsections 3.2(a)
(v) and 3.2(h)(vi)), of receipt of any material or
information required to be delivered by Seller pursuant to
Subsections 3.2(a) through (f), Subsections 3.2(h)(v) through
3.2(h)(x), or Subsections 3.2(i) through (q), respectively,
review and approve or disapprove (with written objections)
the material or information submitted. For purposes of such
review, PEPCO shall approve the material or information
submitted unless PEPCO reasonably determines that such
material or information would materially impair the operation
of the Facility by Seller as a facility that is dispatchable
by PEPCO in accordance with the terms and provisions of this
Agreement or would otherwise materially impair PEPCO's rights
in accordance with the terms and provisions of this
Agreement. Notwithstanding the foregoing, any environmental
indemnification to PEPCO from the parties providing each
easement or right of way for the Transmission Facilities (as
provided to PEPCO pursuant to Subsection 3.2(h)(x)(B)) must
be satisfactory to PEPCO in its sole discretion. The
regulatory approvals referred to in Subsections 3.2(h)(i)
through 3.2(h)(iv) shall be subject to review and approval by
the Parties in accordance with Subsections 3.1(b) and 3.1(c).
(b) During the period beginning forty-five (45)
Days prior to the Scheduled Closing Date and ending twenty
five (25) Days prior to the Scheduled Closing Date, Seller
shall provide to PEPCO in a timely manner current drafts
(including revised drafts) of all Financing Documents
referred to in Subsection 3.2(g) of this Agreement that are
in a form reasonably satisfactory to Seller. During the
period beginning twenty-five (25) Days prior to the Scheduled
Closing Date and continuing through the Closing Date, Seller
shall provide to PEPCO in a timely manner current drafts of
all Financing Documents referred to in Subsection 3.2(g) of
this Agreement, and all modifications to such drafts
(irrespective of whether such drafts and modified drafts are
in a form reasonably satisfactory to Seller). PEPCO shall
review drafts of Financing Documents submitted by Seller
pursuant to Subsection 3.2(g) and provide comments thereon to
Seller within a reasonable period of time, taking into
account the Scheduled Closing Date and the scope of the
material to be reviewed. PEPCO shall approve any Financing
Document unless PEPCO reasonably determines that such
Financing Document would materially impair PEPCO's rights in
accordance with the terms and provisions of this Agreement
(without regard to those terms and provisions of this
Agreement that subordinate PEPCO's rights to the rights of
the Financing Parties under Financing Documents reviewed and
approved by PEPCO), provided, however, that PEPCO shall not
be required to provide its final approval or disapproval of
any such Financing Document until the Closing Date.
Notwithstanding the foregoing: (i) PEPCO shall not be
required to provide its final approval or disapproval of any
Financing Document unless PEPCO has been provided at least
five (5) Business Days to review a final execution copy of
such Financing Document, and (ii) any Financing Document to
be executed by PEPCO (including, but not limited to, any
consent) shall be subject to approval by PEPCO in its sole
discretion.
(c) Seller shall, as soon as possible, provide
PEPCO with written notice of and, to the extent applicable,
copies of, any significant change made prior to the Actual
Commercial Operation Date in any material or information
previously submitted to PEPCO to fulfill any of the
requirements of Section 3.2, other than Subsection 3.2(g).
PEPCO shall use all reasonable efforts to review and approve
or disapprove such material or information pursuant to the
standard set forth in Subsection 3.3(a) as soon as possible
but in any case within thirty (30) Days after PEPCO's receipt
of such material or information (or such longer period of
time as is reasonably necessary taking into consideration the
nature and extent of the changes involved and Seller's timing
and need for PEPCO's review and approval). If Seller
materially changes or fails to implement any material or
information as previously provided to PEPCO pursuant to
Section 3.2 and approved by PEPCO, without receiving PEPCO's
written approval for such change or failure, PEPCO shall not
be bound by its prior review and approval of such material
and information, nor shall it have the obligation to commence
to purchase, accept and pay for the Dependable Capacity and
Net Electrical Output under this Agreement.
(d) During the period between the Closing Date and the
Actual Commercial Operation Date, (i) changes to any
Financing Documents that were submitted to PEPCO for review
and approval pursuant to Subsection 3.2(g) and Subsection
3.3(b), (ii) changes to any Financing Document that has been,
or is to be, executed by PEPCO, or (iii) any new or revised
provision added to a Financing Document or any new Financing
Document that affects PEPCO's rights under this Agreement or
for which the Financing Parties will request PEPCO's consent,
shall be subject to review and approval by PEPCO in
accordance with Subsection 8.9(b). If Seller has not
received PEPCO's prior written approval in accordance with
Subsection 8.9(b) for any such change or revision to any such
Financing Document or for any new such Financing Document,
PEPCO shall not be bound by its prior review and approval
pursuant to Subsection 3.3(b) of any such Financing Document,
nor shall it have the obligation to commence to purchase,
accept and pay for Dependable Capacity and Net Electrical
Output under this Agreement.
(e) PEPCO shall have the right to retain a consultant, which
is reasonably acceptable to Seller, to review the Fuel Supply
Plan, any Fuel Supply Contract(s), or any other contract or
arrangement to obtain Fuel for the Facility that is subject
to PEPCO's review and approval under Subsections 3.2(a)(v),
3.2(h)(vi), 3.3(a) and/or 3.3(c). Any such fuel consultant
shall execute a confidentiality agreement, in form and
substance reasonably satisfactory to Seller and PEPCO,
obligating the fuel consultant not to disclose any
confidential information obtained from Seller in connection
with the Fuel Supply Plan, any Fuel Supply Contract(s), or
any other contract or arrangement to obtain Fuel for the
Facility.
ARTICLE IV
FINANCIAL ASSURANCES
4.1 Development Security.
(a) At the times and in the amounts set forth
below, Seller shall provide to PEPCO a security deposit (the
"Development Security") in any form set forth in Section 4.3.
The Development Security shall be provided as follows:
(i) Within the later of one hundred and
twenty (120) Days after the Effective Date or sixty (60)
Days after receipt of the orders required under
Subsection 3.1(a)(i), one million one hundred fifty
thousand dollars ($1,150,000.00) (equal to the product
of five dollars ($5.00) per kilowatt multiplied by
230,000 kilowatts);
(ii) On or before December 1, 1993, and on or
before the first Day of every second Month thereafter through
June 1, 1995, an additional two hundred thirty thousand
dollars ($230,000.00) (equal to the product of one dollar
($1.00) per kilowatt multiplied by 230,000 kilowatts), so
that the total amount of Development Security provided by
Seller to PEPCO by June 1, 1995 shall equal three million
four hundred fifty thousand dollars ($3,450,000.00) (equal to
the product of fifteen dollars ($15) per kilowatt multiplied
by 230,000 kilowatts). The Development Security is to ensure
that the Actual Commercial Operation Date will occur by the
Scheduled Commercial Operation Date or the Extended Scheduled
Commercial Operation Date, if applicable. PEPCO will hold
cash provided as Development Security in an interest bearing
escrow account. Seller will be responsible for the payment
of any and all federal, state or local taxes imposed on any
such interest and any fees of the escrow agent. At Seller's
election (or at PEPCO's election if Seller fails to pay any
such taxes or escrow fees), any accumulated interest on the
Development Security remaining at the time payment of any
such taxes or escrow fees is due may be used to pay such
taxes or escrow fees, thereby reducing the amount of
accumulated interest that would be available for return or
release to Seller under various provisions of this Agreement.
(b) If the Actual Commercial Operation Date
does not occur by the Scheduled Commercial Operation Date, or
the Extended Scheduled Commercial Operation Date, if
applicable, for any reason other than PEPCO's default, PEPCO
shall have the right to terminate this Agreement immediately
by providing written notice of such termination to Seller.
In the event that PEPCO exercises any of its rights under
this Agreement to terminate this Agreement prior to the
Actual Commercial Operation Date, except for its right to
terminate under Subsection 3.1(e) or Section 15.3, PEPCO may
draw upon and retain the Development Security as liquidated
damages and any interest accumulated on such Development
Security shall be returned or released, as the case may be,
to Seller within thirty (30) Days after such termination. If
PEPCO terminates this Agreement pursuant to Subsection 3.1(e)
or Section 15.3 or if Seller terminates this Agreement
prior to the Scheduled Commercial Operation Date, or the
Extended Scheduled Commercial Operation Date, if applicable,
due to PEPCO's default, any remaining Development Security,
and the accumulated interest on the Development Security,
shall be returned or released, as the case may be, to the
Seller within thirty (30) Days after the date of such
termination, subject to the prior payment to PEPCO of all
amounts due to PEPCO under Section 4.4.
(c) Either Party may terminate this Agreement
immediately by written notice to the other Party given within
thirty (30) Days after September 1, 1993, if by September 1,
1993, Seller has not: (i) entered into a letter of intent
with Columbia Gas Transmission Corporation for firm
transportation of 23.7 million cubic feet of natural gas per
day from Broad Run, West Virginia to an interconnection with
the Columbia LNG pipeline at Loudoun, Virginia for the Term
of this Agreement, (ii) entered into a letter of intent with
Columbia LNG for transportation of a sufficient volume of
natural gas per day to fuel the four (4) dispatch segments of
the Facility (as specified in Subsection 6.2(b)(i)) from an
interconnection with the Columbia Gas Transmission
Corporation pipeline at Loudoun, Virginia to Waldorf,
Maryland for the Term of this Agreement or, in lieu thereof,
entered into a letter of intent with a third party whereby
such third party will include Seller's gas under its existing
or replacement transportation agreement with Columbia LNG, or
as part of such third party's letter of intent with Columbia
LNG, for transportation to Waldorf, Maryland, and (iii)
entered into a letter of intent with Conrail (Consolidated
Rail Corporation) for an easement for construction and
operation of Transmission Facilities for the Term of this
Agreement on that portion of Conrail's right-of-way located
in Prince George's County, Maryland that extends from the
Facility to that portion of the Transmission Facilities Site
that is owned by PEPCO as of the Effective Date. If either
Party terminates this Agreement pursuant to this Subsection
4.1(c), neither Party shall have any further liability to the
other Party, except that PEPCO may retain the Development
Security as liquidated damages for such termination, and the
accumulated interest on the Development Security shall be
returned or released, as the case may be, to Seller within
thirty (30) Days after the date of such termination.
(d) Either Party may terminate this Agreement
immediately by written notice to the other Party given within
thirty (30) Days after April 1, 1994, if by April 1, 1994,
Seller has not provided evidence reasonably satisfactory to
PEPCO demonstrating that sufficient natural gas reserves to
fuel the Limited Dispatch Portion are available for purchase
by Panda at prices that are economic in light of the
provisions of this Agreement. If either Party terminates
this Agreement pursuant to this Subsection 4.1(d), neither
Party shall have any further liability to the other Party,
except that PEPCO may retain the Development Security as
liquidated damages for such termination, and the accumulated
interest on the Development Security shall be returned or
released, as the case may be, to Seller within thirty (30)
Days after the date of such termination.
(e) Within thirty (30) Days after the Actual
Commercial Operation Date, PEPCO will return or release, as
the case may be, to Seller the remaining portion of the
Development Security against which PEPCO does not assert a
claim, with any accumulated interest thereon.
4.2 Interconnection Security.
(a) Thirty (30) Days prior to PEPCO's commencement
of the construction of the Interconnection Facilities, or the
procurement of the major equipment or components related
thereto, as specified in the schedule provided by PEPCO
pursuant to Subsection 9.2(b), Seller shall provide PEPCO
with a security deposit in an amount equal to the
Interconnection Costs estimated pursuant to Section 9.2 (the
"Interconnection Security") in any form set forth in Section
4.3. The Interconnection Security may be drawn upon and
retained by PEPCO for the payment of Interconnection Costs,
the payment of any cancellation charges, the payment of
removal costs, or other out-ofpocket expenses reasonably
incurred by PEPCO with respect to the study, planning,
engineering, procurement and construction of the
Interconnection Facilities if this Agreement is terminated
prior to the Scheduled Commercial Operation Date or the
Extended Scheduled Commercial Operation Date, if applicable.
Without limiting the foregoing, if this Agreement is
terminated by Seller due to PEPCO's default, PEPCO may draw
upon and retain the Interconnection Security for the payment
of (i) any Interconnection Costs incurred by PEPCO prior to
the date of such termination and (ii) any costs reasonably
incurred by PEPCO to remove or complete any Interconnection
Facilities, or to restore PEPCO's facilities to their
condition prior to the commencement of construction of the
Interconnection Facilities. Within ninety (90) Days after
the date that Seller terminates this Agreement due to PEPCO's
default, the remaining portion of the Interconnection
Security against which PEPCO does not assert a claim,
together with any accumulated interest thereon, shall be
returned or released, as the case may be, to Sellers.
(b) Within ten (10) Days after PEPCO's receipt of
any payment from Seller for Interconnection Costs pursuant to
Section 9.3, PEPCO shall return or release, as applicable, to
Seller an amount of the Interconnection Security equal to the
amount of such Interconnection Costs payment, provided,
however, that the Interconnection Security will in no event
be reduced below fifteen percent (15%) of the amount of the
Interconnection Security initially posted by Seller pursuant
to the first sentence of Subsection 4.2(a), which shall be
returned or released, as the case may be, to Seller in
accordance with Subsection 4.2(c).
(c) Within thirty (30) Days after the Actual
Commercial Operation Date, PEPCO will return or release, as
the case may be, to Seller the remaining portion of the
Interconnection Security against which PEPCO does not assert
a claim.
(d) PEPCO will hold cash provided as
Interconnection Security in an interest bearing escrow
account. Seller will be responsible for the payment of any
and all federal, state or local taxes imposed on any interest
accumulated on the Interconnection Security and any fees of
the escrow agent. At Seller's election (or at PEPCO's
election if Seller fails to pay any such taxes or escrow
fees), any accumulated interest on the Interconnection
Security remaining at the time payment of any such taxes or
escrow fees is due may be used to pay such taxes or escrow
fees, thereby reducing the amount of accumulated interest
that would be available for return or release to Seller under
various provisions of this Section 4.2.
4.3 Form of Development Security and
Interconnection Security. The Development Security and
Interconnection Security shall be cash or such other
equivalent assurance, satisfactory in form and substance to
PEPCO in its sole discretion, including without limitation
(a) an irrevocable direct pay letter of credit in PEPCO's
name issued by a financial institution acceptable to PEPCO in
its sole discretion; (b) an escrow account with an escrow
agent satisfactory to PEPCO in its sole discretion; (c) a
surety bond with a surety satisfactory to PEPCO in its sole
discretion; (d) a corporate guarantee from an entity of
demonstrable financial substance sufficient to back the
guarantee as determined by PEPCO in its sole discretion; or
(e) any combination of the foregoing. A letter of credit in
form and substance satisfactory to PEPCO in its sole
discretion issued by a financial institution with a Thomson
BankWatch rating of C or better and with assets of at least
twenty-five billion dollars ($25,000,000,000.00) shall be
deemed to satisfy the requirements of Subsection 4.3(a). A
surety bond in form and substance satisfactory to PEPCO in
its sole discretion issued by a surety with an A.M. Best's
rating of B or better and adjusted policyholders' surpluses
of at least five hundred million dollars ($500,000,000.00)
shall be deemed to satisfy the requirements of Subsection
4.3(c). A corporate guarantee in form and substance
satisfactory to PEPCO in its sole discretion issued by a
corporation with a Standard & Poor's credit rating of at
least A and assets of at least one billion dollars
($1,000,000,000.00) shall be deemed to satisfy the
requirements of Subsection 4.3(d). The Development Security
and Interconnection Security shall not be subject to any lien
or other claim by any person (including, but not limited to,
any Financing Parties) other than PEPCO. The Development
Security and Interconnection Security need not be in the same
form. The Development Security and the Interconnection
Security each may be provided in up to two (2) different
forms of security. Each security instrument specified above
shall reference this Agreement and Seller's obligations to
PEPCO hereunder and shall include a provision allowing PEPCO
to draw against such instrument or otherwise collect
therefrom for the amounts due PEPCO under this Agreement.
From time to time after the initial posting of the
Development Security and the Interconnection Security, Seller
shall, within thirty (30) Days of PEPCO's request therefor,
provide evidence (including, without limitation, legal
opinions) reasonably satisfactory to PEPCO of the continuing
existence of the Development Security and/or the
Interconnection Security.
4.4 Extension to the Scheduled Commercial
Operation Date.
(a) If the Actual Commercial Operation Date has
not occurred by June 1, 1996, Seller may by written notice to
PEPCO extend the Scheduled Commercial Operation Date by up to
twelve (12) Months. Such extension to the Scheduled
Commercial Operation Date will be operative only if:
(i) the Seller with the aforementioned notice pays to PEPCO a
non-refundable, one-time payment of one million one hundred
fifty thousand dollars ($1,150,000.00) (equal to the product
of five dollars ($5.00) per kilowatt multiplied by 230,000
kilowatts) and (ii) for each Month, or portion of a Month,
that the Scheduled Commercial Operation Date is extended
Seller pays to PEPCO a non-refundable payment of two hundred
thirty thousand dollars ($230,000.00) (equal to the product
of one dollar ($1.00) per kilowatt multiplied by 230,000
kilowatts) on or before the first Day of each such Month. In
no event shall the extension to the Scheduled Commercial
Operation Date exceed a twelve (12) Month period.
(b) Notwithstanding the foregoing, if Seller is
unable to achieve the Actual Commercial Operation Date by
June 1, 1996 due to an event or events of Force Majeure in
effect after the Closing Date, Seller may extend the
Scheduled Commercial Operation Date day-for-day for the
period that such Force Majeure remains in effect after the
Closing Date ("Force Majeure Delay Period") to a date no
later than June 1, 1997 by making a nonrefundable payment to
PEPCO as liquidated damages in the amount of one hundred
seventy-two thousand five hundred dollars ($172,500.00)
(equal to the product of seventy-five cents ($0.75) per
kilowatt multiplied by 230,000 kilowatts) per Month for each
Month of the extension requested for such Force Majeure Delay
Period on or before the first Day of each such Month. If, at
the end of any extension of the Scheduled Commercial
Operation Date implemented pursuant to this Subsection 4.4(b)
the Facility has not achieved the Actual Commercial Operation
Date, Seller may further extend the Scheduled Commercial
Operation Date (to a date no later than June 1, 1997)
pursuant to Subsection 4.4(a), in which case the initial
payment of one million one hundred fifty thousand dollars
($1,150,000.00) and the payment of two hundred thirty
thousand dollars ($230,000.00) due for the first Month under
Subsection 4.4(a) shall be paid on or before the first Day
following the end of the extension period implemented
pursuant to this Subsection 4.4(b).
4.5 Performance Security.
On or before the Actual Commercial Operation Date,
Seller shall provide and maintain throughout the Term
Performance Security by establishing an escrow account under
escrow arrangements satisfactory to PEPCO in its sole
discretion with a depository institution acceptable to PEPCO
in its sole discretion and deposit therein: (i) two million
dollars ($2,000,000.00) in cash, (ii) an irrevocable letter
of credit in form and substance satisfactory to PEPCO in its
sole discretion in the amount of two million dollars
($2,000,000.00) payable to the escrow agent issued by a
financial institution with a Thomson BankWatch rating of C or
better and assets of at least twenty-five billion dollars
($25,000,000,000.00), (iii) a surety bond in form and
substance satisfactory to PEPCO in its sole discretion in the
amount of two million dollars ($2,000,000.00) payable to the
escrow agent issued by a surety company with an A.M. Best's
rating of B or better and adjusted policyholders' surpluses
of at least five hundred million dollars ($500,000,000.00),
or (iv) any other form of financial guarantee upon which
PEPCO and Seller mutually agree. Seller will be responsible
for the payment of any and all federal, state or local taxes
imposed on any interest accumulated on the Performance
Security and for the payment of all of the escrow agent's
fees. PEPCO shall have the right to apply this Performance
Security to the payment of any monetary damages awarded to
PEPCO as a result of a termination of this Agreement at any
time after the Actual Commercial Operation Date to the extent
such damages are not the result of events covered by
liquidated damages pursuant to Section 4.2 in the event of
such termination. From time to time after the initial
posting of this security, Seller shall, within thirty (30)
Days of PEPCO's request therefor, provide evidence
(including, without limitation, legal opinions) reasonably
satisfactory to PEPCO of the continuing existence of such
security. Each security instrument specified above shall
reference this Agreement and Seller's obligations to PEPCO
hereunder and shall include a provision allowing PEPCO to
draw against such instrument or otherwise collect therefrom
for the amounts due PEPCO under this Agreement, including any
termination resulting from Seller's failure to secure and
maintain the security described hereunder. The Performance
Security shall not be subject to any lien or other claim by
any person (including, but not limited to, any Financing
Parties) other than PEPCO.
4.6 Liquidated Damages.
(a) The Parties agree that the sums to be paid to
PEPCO as specified in: (i) Sections 4.1 and 4.2, if the
Actual Commercial Operation Date does not occur by the
Scheduled Commercial Operation Date, or the Extended
Scheduled Commercial Operation Date, if applicable, or for
reimbursement of Interconnection Costs upon termination of
this Agreement (ii) Section 4.4, if Seller elects to extend
the Scheduled Commercial Operation Date pursuant to such
section, or (iii) Subsection 7.1(a), if the Construction
Start Date fails to occur by the date specified in such
subsection, constitute liquidated damages, and not a penalty,
for each such occurrence. The Parties acknowledge and agree
that it is difficult or impossible to determine with
precision the amount of damages that would or might be
incurred by PEPCO as a result of such occurrences and that
the liquidated damages specified in the foregoing Sections
and Subsection are fair and reasonable and represent a
reasonable estimate of fair compensation for the losses that
may reasonably be anticipated by PEPCO under such
circumstances. Such liquidated damages shall be the sole and
exclusive remedy of PEPCO for each and every circumstance for
which they are or may be payable.
(b) Seller hereby waives any defense as to the
validity of the payment of any liquidated damages stated in
this Agreement as they may appear on the grounds that such
liquidated damages are unfair, unreasonable, inadequate or
should be void as penalties.
ARTICLE V
SALE AND PURCHASE OBLIGATIONS
5.1 Delivery of Electric Energy and Capacity.
Subject to the satisfaction of the conditions set forth in
Article III and in accordance with the terms of this
Agreement (a) Seller shall sell and deliver to PEPCO and
PEPCO shall purchase and accept the Dependable Capacity and
the Net Electrical Output from the Facility for the Term at
the rates set forth in Article VI, (b) Seller shall sell and
deliver to PEPCO and PEPCO shall purchase and accept Startup
Energy generated by the Facility on a total of up to one
hundred and twenty (120) Days in the aggregate occurring
during the period between the Commencement Date and the
Actual Commercial Operation Date, provided, however, that
PEPCO shall continue to accept, but shall not be required to
pay for, Start-up Energy from the Facility after such
aggregate period of one hundred and twenty (120) Days, and
(c) Seller shall sell and deliver to PEPCO and PEPCO shall
purchase and accept from time to time Test Energy generated
by the Facility, provided, however, that in no event shall
PEPCO be obligated to purchase Test Energy from the Facility
for more than an aggregate total of twelve (12) equivalent
full load hours occurring over no more than a seven (7) Day
period associated with any single series of tests.
5.2 Electric Characteristics. Electricity
generated by Seller shall be delivered to PEPCO at the
Interconnection Point in the form of three-phase, sixty (60)
hertz, alternating current at a nominal voltage of two
hundred and thirty (230) KV, with reasonable variation of
frequency and voltage allowed consistent with Prudent Utility
Practices, and with voltage control as specified in Appendix
F. The Seller's power factor must meet the requirements of
Appendix C, Section V.C.
5.3 Interruption or Suspension of Deliveries by
PEPCO. PEPCO may interrupt or suspend deliveries of Net
Electrical Output and Dependable Capacity so long as the
circumstances set forth below continue, provided, however,
that such interruption or suspension shall not affect PEPCO's
obligation to make payment for Dependable Capacity in
accordance with Article VI, except as reflected in
determination of the EAF and EFOR:
(a) If the PEPCO dispatcher declares an Emergency
Condition or inspection of the interconnection reveals an
unsafe condition, PEPCO may interrupt the interconnection
between the PEPCO System and the Facility and/or require
Seller immediately to suspend or reduce deliveries to the
extent directed by PEPCO. Such interruption or suspension
may occur on an instantaneous basis; provided that PEPCO
shall give Seller advance notice of such occurrences to the
extent practical, and, if not practical, PEPCO shall give
Seller a written explanation of such occurrence as soon as
practicable, but in no event later than twenty (20) Days
after such occurrence.
(b) If in the reasonable opinion of PEPCO, consistent
with Prudent Utility Practices: (i) the Facility produces
energy or energy and capacity of a character or quality of
service which may adversely affect the safety, reliability or
security of PEPCO's equipment, facilities, personnel, or
system or the safety, reliability or security of those of any
other supplier of electricity to PEPCO or to PEPCO's
customers, or which does not meet PEPCO's obligation to the
PJM Pool in terms of safety, reliability or security, or (ii)
inspection of the interconnection and protective equipment
reveals a lack of maintenance, lack of records of maintenance
or noncompliance with the provisions of Appendix C, then
PEPCO shall notify Seller of this condition and reserves the
right to interrupt the interconnection. If Seller fails to
correct the condition within a reasonable time specified by
PEPCO, PEPCO may interrupt the connection between the PEPCO
System and the Facility until Seller demonstrates to the
reasonable satisfaction of PEPCO that Seller is operating in
accordance with the operating standards set forth in this
Agreement and such interruption shall be deemed to be an
Unplanned Outage - Immediate (Code U1) pursuant to Appendix I
attached hereto.
5.4 Reduction. In addition to the interruptions
and suspensions in Net Electrical Output from the Facility
pursuant to Section 5.3 and the rights of PEPCO to dispatch
the Facility, during Minimum Generation Emergency Conditions
Seller shall cease the delivery of Net Electrical Output to
the PEPCO System when requested to do so by PEPCO's
dispatcher ("Reduction"), for up to two hundred (200)
cumulative hours of operation of the Limited Dispatch Portion
in any Year.
5.5 Maximum Emergency Generation Condition.
Subject to Prudent Utility Practices, Seller agrees, to the
extent it can be accomplished without exceeding the
manufacturer's recommended operating limits, to use all
reasonable efforts to deliver the maximum attainable Net
Electrical Output from the Facility to PEPCO whenever the
PEPCO dispatcher notifies Seller that a Maximum Emergency
Generation Condition has been declared and requests that the
Facility be dispatched to its Available Capacity.
ARTICLE VI
COMPENSATION, BILLING AND PAYMENT
6.1 Monthly Capacity Payment.
(a) Except as otherwise expressly provided herein,
PEPCO shall pay a Monthly Capacity Payment to Seller for
Dependable Capacity available to PEPCO from the Facility
after the Actual Commercial Operation Date, but in no event
prior to June 1, 1996, commencing at the end of the first
Billing Period after the later of such dates and continuing
through the last Billing Period of the Term of this
Agreement. The Monthly Capacity Payment shall be calculated
in accordance with the following payment formula:
MCP = (DC) * (CR) * ( EAF/AT)
MCP = Monthly Capacity Payment in dollars.
DC = Dependable Capacity (net) in
kilowatts.
CR = Capacity Rate in Dollars/kilowatt/
Billing Period, as set forth in Appendix L
to this Agreement for each Month of each
Contract Year. On the Actual Commercial
Operation Date, the CR will be set at the
Capacity Rate amount listed in column 2 of
Appendix L for Contract Year one, as adjusted
based on the percentage change in the GNP
Deflator for the period between June 1, 1994
and June 1, 1996, and as further adjusted
pursuant to Subsection 6.1(c), if
applicable. This CR will remain in
effect through the first Contract Year.
The CR will be adjusted on the first Day
of each subsequent Contract Year
thereafter to the Capacity Rate amount
listed for that Contract Year in Appendix
L, as adjusted based on the same
percentage change in the GNP Deflator for
the period between June 1, 1994 and June
1, 1996, and as further adjusted pursuant
to Subsection 6.1(c), if applicable.
EAF = The Facility's Equivalent Availability Factor
for the previous twelve (12) Months expressed
as a percentage, provided that for purposes of
determining the MCP for each of the first
eleven (11) Months following the Actual
Commercial Operation Date, the EAF will
be deemed to be eighty-eight percent (88%)
during those Months prior to the Actual
Commercial Operation Date for which no actual
EAF exists.
AT = The Availability Target
set at eighty-eight percent (88%) if the
EAF is less than or equal to eighty-eight
percent (88%); set at ninety-two percent
(92%) if the EAF is greater than or equal
to ninety-two percent (92%); and set
equal to the EAF for values of the EAF
greater than eighty-eight percent (88%)
but less than ninety-two percent (92%).
(b) If the Actual Commercial Operation Date occurs
on a date other than the first Day of a Billing Period, or if
the Dependable Capacity shall be established or demonstrated
on a day other than the first Day of a Billing Period, or if
this Agreement terminates on a Day other than the last Day of
a Billing Period, then the Monthly Capacity Payment for such
Billing Period shall be equal to the sum of (i) the amount of
the Monthly Capacity Payment determined in accordance with
the formula set forth in Subsection
6.1 (a) using the Dependable Capacity up to such date
multiplied by a fraction, the numerator of which is the
number of Days in such Billing Period up to and including
such date and the denominator of which is the total number of
Days in the Billing Period, plus, (ii) the amount of the
Monthly Capacity Payment calculated in accordance with
Subsection 6.1(a) using the Dependable Capacity after such
date multiplied by a fraction, the numerator of which is the
number of Days remaining in such Billing Period after such
date and the denominator of which is the total number of Days
in such Billing Period. For purposes of this Subsection
6.1(b), the Dependable Capacity of the Facility shall be
deemed to be zero (0) for the period either prior to the
Actual Commercial Operation Date or following the termination
of this Agreement.
(c) (i) The Capacity Rate used to calculate the
Monthly Capacity Payment pursuant to Subsection 6.1(a) shall
be adjusted in the following manner to reflect the yield to
maturity on United States Treasury Securities with a maturity
of twelve (12) years ("12 year T-Bonds") in effect as of the
date that the interest rate for permanent financing for the
Facility is designated pursuant to an executed commitment for
such financing ("Commitment Date"). Seller shall use
reasonable efforts to ensure that the Commitment Date occurs
on a Day on which the yield to maturity on actively traded 12
year T-Bonds is as low as possible. If the yield to maturity
on actively traded 12 year T-Bonds as of the Commitment Date
is between eight percent (8%) and nine percent (9%), no
adjustment shall be made to the Capacity Rate as specified in
Subsection 6.1(a). If the yield to maturity on actively
traded 12 year T-Bonds as of the Commitment Date is greater
than nine percent (9%), then the Capacity Rates set forth in
Appendix L for each Contract Year shall be increased by an
amount equal to the product of the amount shown in column 3
of such appendix multiplied by the difference between such
yield and nine percent (9%). If the yield to maturity on
actively traded 12 year T-Bonds as of the Commitment Date is
less than eight percent (8%), then the Capacity Rates for
each Contract Year set forth in Appendix L shall be reduced
by an amount equal to the product of the amount shown in
column 3 of such appendix multiplied by the difference
between eight percent (8%) and such yield. Sample
calculations showing the adjustment under this Subsection
6.1(c)(i) are set forth in Appendix B.
(ii) If the yield to maturity on actively
traded 12-year T-Bonds as of the Commitment Date is greater
than nine percent (9%), then subsequent to the Actual
Commercial Operation Date Seller shall undertake to refinance
any or all of its debt instruments or debt securities or
enter into new or revised lease arrangements for the Facility
if so doing will result in a reduction in Seller's effective
interest rate (when the fees or other costs incurred by
Seller in connection with such refinancing or new or revised
lease arrangements are taken into account). Seller shall
continue to be obligated to undertake such refinancing or new
or revised lease arrangements until the Capacity Rates are
reduced to the Original Capacity Rates in accordance with the
first sentence of Subsection 6.l(c)(iii).
(iii) Upon the effective date of any
refinancing or new or revised lease arrangements for the
Facility entered into by Seller that results in a reduction
in Seller's effective interest rate, the Capacity Rates (as
adjusted in accordance with Subsection 6.1(c)(i) or previous
applications of this Subsection 6.1(c)(iii)) will be reduced
by an amount equal to the product of the amount shown in
column 3 of Appendix L, multiplied by the reduction in
Seller's effective interest rate, until the Capacity Rates
are reduced to the amounts set forth in column 2 of Appendix
L (as adjusted based on the percentage change in the GNP
Deflator for the period between June 1, 1994 and June 1, 1996
(the "Original Capacity Rates")), beginning with the Capacity
Rates in effect for the then current Contract Year. If,
pursuant to the immediately preceding sentence, the Capacity
Rates have been reduced to the Original Capacity Rates, then
Seller and PEPCO agree to negotiate additional reductions in
such Capacity Rates so that both Parties share equally in the
calculated savings from that portion of the reduction in
Seller's effective interest rate that was not applied in
making the reductions to the Capacity Rates in the
immediately preceding sentence. If Seller refinances any or
all of its debt instruments or debt securities or enters into
a new or revised lease arrangement for the Facility which
results in a lower effective interest rate for Seller at any
time when the Original Capacity Rates, or Capacity Rates
lower than the Original Capacity Rates, are in effect, then
Seller and PEPCO agree to renegotiate such Capacity Rates so
that both Parties share equally in the calculated savings.
(d) If the availability or the operation of the
Transmission Facilities is interrupted or otherwise impaired
after the Actual Commercial Operation Date due to: (i) a
defect, lien or other encumbrance on the title to the
Transmission Facilities or the Transmission Facilities Site,
(ii) the failure of an easement necessary for PEPCO to
operate the Transmission Facilities, (iii) the failure of
Seller to obtain any zoning approval or other governmental or
regulatory approval required for construction or operation of
the Transmission Facilities by Seller prior to the transfer
of the Transmission Facilities to PEPCO pursuant to
Subsection 7.3(a)(v) or for the initial operation of the
Transmission Facilities by PEPCO subsequent to such transfer,
(iv) environmental contamination of any portion of the
Transmission Facilities Site that is not on property that was
owned by PEPCO on the Effective Date (which in any of cases
(i), (ii), (iii) or (iv) existed or arose from circumstances
in existence prior to the transfer of Seller's rights in the
Transmission Facilities and the Transmission Facilities Site
to PEPCO pursuant to Subsection 7.3(a)(v)), or (v) any breach
of this Agreement by, or other fault of, Seller, its
directors, officers, employees, agents or affiliates, then
PEPCO shall be entitled to immediately suspend payment of the
Monthly Capacity Payment to the extent, and for the duration,
of such interruption or impairment.
(e) Notwithstanding any other provision of this
Section 6.1 or Section 1.65, if, in any Billing Period after
the Actual Commercial Operation Date (i) the availability or
the operation of the Transmission Facilities is impaired or
interrupted for any reason other than those specified in
Subsection 6.1(d), and (ii) the Facility is capable of
generating electric energy in accordance with the terms of
this Agreement but Seller is unable to deliver Net Electrical
Output to the Interconnection Point because of such
impairment or interruption of the Transmission Facilities,
then the Monthly Capacity Payment for such Billing Period
shall be calculated on the basis of the Dependable Capacity
and EAF in effect in the Billing Period immediately preceding
such impairment or interruption.
(f) Sample calculations demonstrating the
calculation of the Monthly Capacity Payment are set forth in
Appendix B.
6.2 Monthly Energy Payment.
(a) PEPCO shall pay Seller for Test Energy at the
rate provided by Subsection 6.2(b), provided, however,
that for purposes of the formula for determining the
Unit Commitment Payment pursuant to Subsection
6.2(b)(ii), startup costs for the Facility will not be
included (i.e., the variables X, Y and Z shall each be
equal to zero (0)). PEPCO shall pay Seller for Start-up
Energy at the rate determined in accordance with the
following formula:
SEP = NEO * 8.461 MBtu/MWH * IFR
Where:
SEP = Start-Up Energy Payment.
NEO = Net Electrical Output (MWH).
IFR = Interruptible Fuel Rate (dollars/MBtu)
determined as set forth in Subsection
6.2(b)(ii).
(b) (i) PEPCO shall make a Monthly Energy Payment
to the Seller for the Net Electrical Output after the Actual
Commercial Operation Date, for each Billing Period commencing
with the Billing Period in which such date occurs and
continuing through the last Billing Period of the Term of
this Agreement. When the Facility is dispatched in combined
cycle mode (i.e., when the steam turbine is available), the
Monthly Energy Payment shall consist of the sum of the Unit
Commitment Payment calculated as described in Subsection
6.2(b)(ii) and the Dispatch Payment calculated as described
in Subsection 6.2(b)(iii). The portion of the Monthly Energy
Payment for any period when the Facility is dispatched in
simple cycle mode (i.e., when the steam turbine is not
available), shall be calculated on the basis of the Simple
Cycle Energy Payment calculated as described in Subsection
6.2(b)(iv).
For purposes of calculating the Monthly Energy Payment,
the Net Electrical Output of the Facility will be assigned on
an hourly basis among the following four (4) dispatch
segments of the Facility's capacity beginning with the First
Dispatch Segment and moving sequentially through the
remaining dispatch segments:
Number of Cumulative
Cumbustion Turbines MW (at 59 degrees F
Operating with and 50%
Dispatch the Steam Turbine Relative
Segment Also Operating Description Humidity)
First 1 Up to minimum 0 to
99 MW
load
Second 1 From minimum 99 MW to
load to full 199 MW
load
Third 2 From full load 117 MW to
with one (1) 199 MW
combustion
turbine operating
to minimum load
with two (2)
cumbustion
turbines
operating
Fourth 2 From minimum 199 MW to
load to full load 237MW
with two (2)
combustion
turbines
operating.
(ii) PEPCO shall make a Unit Commitment Payment to the
Seller for costs associated with commitment of the First
Dispatch Segment and the Third Dispatch Segment in accordance
with the following formula:
UCP = {[SHA*(NLA+MMA)*MPF] * (FGRa+VOM)} +
{[SHB*(NLB+MMB)*MPF] * (IFR+VOM)} +
{[FS*X + HS*Y + CS1*Z + CS2*X] * (IFR)}
Where:
UCP = Unit Commitment Payment.
SHA = Service Hours:
Period of time in hours during the
Billing Period that the Facility was
synchronized with the PEPCO System
exclusive of service hours when the
Facility was operated in simple cycle
mode as described in Subsection
6.2(b)(iv).
SHB = Service Hours:
Period of time in hours during the
Billing Period that both combustion
turbines of the Facility were
synchronized with the PEPCO System
exclusive of service hours when the
Facility was operated in simple cycle
mode as described in Subsection
6.2(b)(iv).
NLA = No Load MBtu for
the First Dispatch Segment: 204.1 MBtu
per hour of operation.
NLB = No Load MBtu for the Third Dispatch
Segment: 205.1 MBtu per hour of operation.
MMA = Maintain Minimum
MBtu for the First Dispatch Segment:
633.6 MBtu per hour of operation.
MMB = Maintain Minimum
MBtu for the Third Dispatch Segment:
499.6 MBtu per hour of operation.
MPF = Monthly Performance Factor: Heat input
adjustment based on average historical
ambient conditions for each monthly
Billing Period. Monthly Performance
Factors are as follows:
Monthly Billing Period Performance Factor
January 1.08
February 1.06
March 1.04
April 1.01
May 0.98
June 0.96
July 0.96
August 0.96
September 0.97
October 1.00
November 1.03
December 1.06
FS = Partial Facility Start-Ups: Number of times
during the Billing Period that the Facility
was dispatched at a time when neither
combustion turbine was synchronized with the
PEPCO System.
HS = Hot Start-Ups: Number of times during the
Billing Period that one (1) of the Facility's
combustion turbines is dispatched and
synchronized with the PEPCO System after having
been disconnected from the PEPCO System for a
period of less than or equal to twelve
(12) Hours while the other combustion
turbine remained synchronized with the
PEPCO System.
CS1 = Cold Start-Ups - Level 1:
Number of times during the Billing Period
that one (1) of the Facility's combustion
turbines is dispatched and synchronized
with the PEPCO System after having been
disconnected from the PEPCO System for a
period of more than twelve (12) Hours
while the other combustion turbine
remained synchronized with the PEPCO
System.
CS2 = Cold Start-Ups - Level 2:
Number of times during the Billing Period
that the second of the Facility's two (2)
combustion turbines is dispatched and
synchronized with the PEPCO System and
the occurrence cannot be classified as a
Hot Start-Up (HS) or a Cold Start-Up -
Level 1.
X = four hundred and sixty-three (463) MBtu.
Y = one hundred and thirty-two (132) MBtu.
Z = three hundred and ninety-seven (397) MBtu.
FGRA = Firm Gas Rate to be applied for generation
of the First Dispatch Segment (Dollars/MBtu):
Calculated as described in Subsection
6.2(b)(v).
IFR = Interruptible Fuel Rate
(Dollars/MBtu):
The IFR will be equal to the
Interruptible Gas Rate as calculated in
Subsection 6.2(b)(vi) when the unit is
dispatched on natural gas. Otherwise,
the IFR will equal the Oil Rate as
calculated in Subsection 6.2(b)(vi).
VOM = Variable Operation and Maintenance Rate:
The VOM rate will be set initially at an
amount equal to thirty-six cents ($0.36)
per MBtu on June 1, 1994. On June 1 of each
Year thereafter, the VOM rate will be adjusted
based on the annual percentage change in
the GNP Deflator.
(iii) In addition to the Unit Commitment
Payment calculated in Subsection 6.2(b)(ii), PEPCO shall
make a Dispatch Payment for the Net Electrical Output in
any given Billing Period from the Second Dispatch
Segment and the Fourth Dispatch Segment. The Dispatch
Payment for such Net Electrical Output shall be
determined in accordance with the following formula:
N {[GEN(A)i * IHR(A)i * (FGRB+VOM)]+
DP = [GEN(B)i * IHR(B)i * (IFR +VOM)]}
i=1
Where:
DP = Dispatch Payment.
N = Hours in the Billing Period.
VOM = Variable Operation and Maintenance
Rate: Calculated as defined in Subsection
6.2(b)(ii).
GENi = Generation: The Net Electrical Output of
the Facility in MWH for each Hour of the
Billing Period when the Facility is operated
in combined cycle mode.
GEN(B)i = The portion of GENi attributable to the
Third Dispatch Segment and the Fourth
Dispatch Segment when the Facility is
operated in combined cycle mode.
= The greater of zero (0) or {GENi -
[the lesser of 117 or (117 * MCA)]}.
Where:
MCA = Monthly Capability adjustment:
Adjustment to the Facility's generating
capability based on average historical
ambient conditions for each monthly
Billing Period. The Monthly Capability
Adjustments are as follows:
Monthly Billing Capability
Period: Adjustment:
January 1.09
February 1.08
March 1.05
April 1.01
May 0.98
June 0.95
July O.94
August 0.95
September 0.96
October 1.00
November 1.03
December 1.07
GEN(A)i = The portion of GENi attributable to the
First Dispatch Segment and the Second
Dispatch Segment, not to exceed 117 MWH.
= GENi - GEN(B)i.
IHR(A)i = Incremental Heat Rate (MBtu/MWH) of the
Facility's Second Dispatch Segment
= The greater of zero (0) or
{[Ba* (GEN(A)i/MCA) +
CA*(GEN(A)i/MCA)2 - MMA]* MPF/GEN(A)i}.
Where:
MPF = Monthly Performance Factor:
Shall be defined as set forth in
Subsection 6.2(b)(ii).
BA = 4.193 MBtu/MWH
CA = O.02229 MBtu/MWH2
MMA = Maintain Minimum MBtu for the First
Dispatch Segment: Shall be defined as
set forth in Subsection 6.2(b)(ii).
IHR(B)i = Incremental Heat Rate (MBtu/MWH) of the Facility's
Fourth Dispatch Segment
= The greater of zero (O) or
{[Bb*(GEN(B)i/MCA) +
CB*(GEN(B)i/MCA)2 - MMB] *
MPF/GEN(B)i.
Where:
BB = 4.846 MBtu/MWH
CB = O.01520 MBtu/MWH2
MMB = Maintain Minimum MBtu for the Third
Dispatch Segment: Shall be defined as
set forth in Subsection 6.2(b)(ii).
FGRB = Firm Gas Rate to be applied for generation
of the Second Dispatch Segment (Dollars/MBtu):
Shall be calculated as described in
Subsection 6.2(b)(v).
IFR = Interruptible Fuel Rate (Dollars/MBtu):
Shall be calculated as described in Subsection
6.2(b)(ii).
(iv) Notwithstanding the other provisions of
this Subsection 6.2(b), if, when the Facility's steam turbine
is not available, Net Electric Output is available from either
one (1) or both of the combustion turbines of the Facility in
simple cycle mode, the Seller will make such Net Electrical
Output available to PEPCO when a Maximum Emergency Generation
Condition is in effect. If PEPCO elects to dispatch the Facility
at any such time (i.e. when the Facility's steam turbine
in not available) PEPCO shall be required to do so at the
Facility's maximum Net Electrical Output. PEPCO, however, shall
not be required to purchase or accept any Net Electrical
Output from the Facility at any time when the Facility's steam
turbine is not available. The Monthly Energy Payment for Net
Electrical Output purchased and accepted by PEPCO under this
Subsection 6.2(b)(iv) shall be determined in accordance with the
following formula:
SCEP - [(SCG * SCHR) + (SCS * 25 MBtu/Start-up)] * (IFR+VOM)
Where:
SCEP = Simple Cycle Energy Payment
SCG = Simple Cycle Generation (MWH): Net
Electrical Output when the steam turbine
is not available.
SCHR = Simple Cycle Heat Rate: 12.0 MBtu/MWH.
SCS = Simple Cycle Start-ups: The number of times
during the Billing Period a combustion turbine
was dispatched and synchronized with the PEPCO
System while in simple cycle mode.
IFR = Interruptible Fuel Rate (Dollars/MBtu): Shall be
calculated as defined in Subsection 6.2(b)(ii).
VOM = Variable Operation and Maintenance Rate: Shall be
calculated as defined in Subsection 6.2(b)(ii).
(v) The firm gas rates (FGRA and FGRB) will be the
weighted average of two (2) components. The first component will
represent natural gas supplied from gas reserves purchased by
Seller and will have a guaranteed price throughout the Term. The
second component will represent natural gas market purchases by
Seller and be tied to natural gas market prices. The percentages
of the Fuel to be made available from Seller's reserves for the
Term which are required to operate the Facility for the First
Dispatch Segment and the Second Dispatch Segment, are given in
Appendix M as %GRCA and %GRCB, respectively. The firm gas rate
to be applied for generation of the First Dispatch Segment (FGRa)
and for the generation of the Second Dispatch Segment (FGRb)
will be calculated in accordance with the following formulae:
FGRA = (FGRR * %GRCA/100%) + [FGMR * (1-%GRCA/100%)]
FGRB = (FGRR * %GRCB/100% ) + [FGMR * (1-%GRCB/100%)]
Where:
FGRa = Firm Gas Rate for First Dispatch Segment.
FGRB = Firm Gas Rate for Second Dispatch Segment.
FGRR = Firm Gas Reserve Rate.
FGMR = Firm Gas Market Rate.
%GRCA = Percent Gas Reserve Commitment to
fuel the First Dispatch Segment, as set
forth in column 2 of Appendix M for
each Contract Year.
%GRCB = Percent Gas Reserve Commitment to
fuel the Second Dispatch Segment, as
set forth in column 3 of Appendix M for
each Contract Year.
The unadjusted Firm Gas Reserve
Rate ("FGRR") for each Contract Year is
set forth in column 4 of Appendix M.
After the Actual Commercial Operation
Date, the FGRR for each Contract Year
will be adjusted by the percent change
in the Producer Price Index for Oil and
Gas Field Services (Industry Code 138)
published by the Bureau of Labor
Statistics, U.S. Department of Labor,
for the period between June 1, 1994 and
June 1, 1996. In the event that the
Producer Price Index for Oil and Gas
Field Services is no longer published
or otherwise available as of June 1,
1996, the Parties agree to negotiate in
good faith to replace such index with
an appropriate alternate source of
information. A sample calculation of
the FGRR is set forth in Appendix B.
The Firm Gas Market Rate (FGMR)
will be set initially on June 1, 1990
at an amount equal to the sum of
S2.27/MBtu plus the firm displacement
tariff rate, not to exceed $0.20/MBtu,
payable by, or on behalf of, Seller for
transportation on the Columbia LNG
pipeline from Loudoun, Virginia to
Waldorf, Maryland. Such rate will be
adjusted each Billing Period thereafter
in accordance with the following
formula:
FGMR = FGMRi * [(.77*CIf) + (.23*TIf)]
Where:
FGMR = Firm Gas Market Rate in effect for
the Billing Period (Dollars/MBtu).
FGMRi = Initial Firm Gas Market Rate.
CIf = Commodity Index for the FGMR:
Shall be calculated as described below.
TIf = Transportation Index for the FGMR:
Shall be calculated as described below.
The Commodity Index for the FGMR will
equal the sum of the most recent data
for each of the following four (4)
published spot gas prices available for
the Billing Period that the Commodity
Index for the FGMR is to be calculated,
divided by $6.46/MBtu (which is the sum
of the same spot gas prices as
published for June 1990).
1. Natural Gas Clearinghouse, "Survey of Domestic
Spot Market Prices for markets accessed by
Columbia Gulf Transmission Company on Onshore
Laterals, Louisiana;
2. Natural Gas Clearinghouse, "Survey of Domestic
Spot Market Prices" for markets accessed by
Tennessee Gas Pipeline Company, Vinton,
Louisiana;
3. Natural Gas Intelligence Gas Price Index,
"Spot Gas Price" delivered to pipelines thirty
(30) Day supply transactions for the
Appalachian Region - contract index price for
Columbia Gas Transmission Corporation; and
4. Natural Gas Week, "Spot Prices on Gas
Pipeline Systems" Columbia Gas Transmission
Corporation at Broad Run, W. VA.
In the event that any of the sources of information
referred to in the Commodity Index for the FGMR is no
longer published or otherwise available, the Parties
agree to negotiate in good faith to replace such source
of information with an appropriate alternate source.
The Transportation Index for the FGMR will be updated
for each Billing Period, beginning with the Billing
Period in which the Actual Commercial Operation Date
occurs, in accordance with the following formula:
(The CPI for the most recent Month
for which data have been published)
TIf = {[----------------------------------- - 1] / 2} + 1
129.9
Where: CPI = Consumer's Price Index
for all Urban Consumers, U.S. City
Average, or a suitable successor
index published monthly by the
Bureau of Labor Statistics, U.S.
Department of Labor.
129.9 = The value of the CPI
for June, 1990.
Sample calculations demonstrating the calculation of FGMR
and associated indices are set forth in Appendix B. Either
Party may, by written notice to the other Party given
during the period between one hundred and fifty (150) Days
and one hundred and twenty (120) Days prior to either the
tenth anniversary of the Actual Commercial Operation Date
or each subsequent third anniversary of the Actual
Commercial Operation Date thereafter ("Anniversary Date"),
request that the FGMR, and/or the Commodity Index and/or
Transportation Index for the FGMR, be reviewed and revised
in accordance with the standards set forth herein. If
either Party provides such notice within the specified time
period, the Operating Committee shall in good faith
undertake such review and revision of the FGMR, and/or the
Commodity Index and/or Transportation Index for the FGMR,
as applicable. The purpose of such review of the FGMR
shall be to determine the current market price of the
natural gas component and the transportation component of
the FGMR at the time of such review and to revise each such
component of the FGMR, as necessary, to reflect such then-
current market price. The purpose of such review of the
Commodity Index and/or Transportation Index for the FGMR,
shall be to determine the most accurate method of tracking
changes in the price of each of the components of the FGMR
at the time of such review and to revise the Commodity
Index and/or Transportation Index for the FGMR, as
necessary, for this purpose. If the Operating Committee
cannot agree on appropriate revisions to the FGMR, and/or
the Commodity Index and/or Transportation Index for the
FGMR, as applicable, within sixty (60) days prior to the
relevant Anniversary Date, the Parties shall use their best
efforts to resolve the matter in accordance with Subsection
17.1(b) and Section 17.2. Any revision of the FGMR, and/or
the Commodity Index and/or Transportation Index for the
FGMR, as applicable, determined in accordance with the
provisions of this Subsection 6.2(b)(v) or Article XVII
shall be effective on the relevant Anniversary Date,
subject to receipt of all regulatory authorizations
(including, but not limited to, approval of such revision
by the Maryland Commission and the District of Columbia
Commission) necessary to implement such revision, in a form
satisfactory to each of the Parties in accordance with the
standards set forth in Subsections 3.1(a) and 3.1(b). The
Parties agree to cooperate in obtaining all such necessary
regulatory authorizations. If a revised FGMR, and/or
Commodity Index and/or Transportation Index for the FGMR,
as applicable, has not been determined in accordance with
the foregoing procedures and so approved by regulatory
authorities prior to the relevant Anniversary Date, PEPCO
shall continue to make payments to Seller thereafter based
on an FGMR determined in accordance with the FGMR
provisions and Commodity Index and/or Transportation Index
for the FGMR, that were in effect on the Day prior to the
Anniversary Date, until a revised FGMR, and/or Commodity
Index and/or Transportation Index for the FGMR, as
applicable, is determined and so approved. Any revision to
the FGMR, and/or the Commodity Index and/or Transportation
Index for the FGMR, as applicable, determined and so
approved after the Anniversary Date shall be made effective
retroactively to the Anniversary Date, subject to the
receipt of all regulatory authorizations necessary for such
retroactive application in a form satisfactory to each of
the Parties in accordance with the standards set forth in
Subsections 3.1(a) and 3.1(b). Any credit or additional
payment resulting from any such retroactive adjustment of
the FGMR, and/or the Commodity Index and/or Transportation
Index for the FGMR, as applicable, shall be reflected in
the next Monthly Energy Payment due under this Agreement
(and subsequent Monthly Energy Payments, if necessary).
(vi) The third part of the Monthly Energy
Payment will reflect the cost of fuel associated with that
portion of the Net Electrical Output attributable to the
Third Dispatch Segment and the Fourth Dispatch Segment. An
Interruptible Gas Rate ("IGR") will be applied to the
portion of this generation that is fueled by natural gas
and/or by liquified natural gas ("LNG"), and an Oil Rate
("OR") will be applied to the portion of this generation
that is fueled by oil. The IGR will be set initially on
June 1, 1990 at an amount equal to the sum of $2.27/MBtu
plus the firm displacement tariff rate, not to exceed
$0.20/MBtu, payable by, or on behalf of, Seller for
transportation on the Columbia LNG pipeline to Waldorf,
Maryland. Such rate will be adjusted each Billing Period
thereafter in accordance with the following formula:
IGR = IGRi * [(%C*CIi) + (%T*TIi)]
Where: IGR = Interruptible Gas Rate in
effect for the Billing Period
(Dollars/MBtu).
IGRi = Initial Interruptible Gas Rate.
%C = 71 for the monthly Billing
Periods of March through November, and .84
for the monthly Billing Periods of
December through February.
CIi = Commodity Index for the IGR: Shall
be calculated as described below.
%T = 29 for the monthly Billing Periods
March through November, and .16 for the
monthly Billing Periods of December
through February.
TIi = Transportation Index for the IGR:
Shall be calculated as described below.
The Commodity Index for the IGR will equal the sum of
the most recent data for each of the following four (4)
published spot gas prices available for the Billing Period
that the Commodity Index for the IGR is to be calculated,
divided by $6.46/MBtu (which is the sum of the same spot
gas prices as published for June 1990).
1. Natural Gas Clearinghouse, "Survey of
Domestic Spot Market Prices" for markets accessed
by Columbia Gulf Transmission Company on Onshore
Laterals, Louisiana;
2. Natural Gas Clearinghouse, "Survey of
Domestic Spot Market Prices" for markets accessed
by Tennessee Gas Pipeline Company, Vinton,
Louisiana;
3. Natural Gas Intelligence Gas Price Index,
"Spot Gas Price" delivered to pipelines thirty
(30) Day supply transactions for the Appalachian
Region - contract index price for Columbia Gas
Transmission Corporation; and
4. Natural Gas Week, "Spot Prices on Gas
Pipeline Systems" Columbia Gas Transmission
Corporation at Broad Run, W. VA.
In the event that any of the sources of information
referred to in the Commodity Index for the IGR is no longer
published or otherwise available, the Parties agree to
negotiate in good faith to replace such source of
information with an appropriate alternate source.
The Transportation Index for the IGR will be updated
for each Billing Period, beginning with the Billing Period
in which the Commencement Date occurs, in accordance with
the following formula:
(The CPI for the most recent Month for
which data have been published)
TIi = {[------------------------- - 1] / 2} + 1
129.9
Where: CPI = Consumer's Price Index for
all Urban Consumers, U.S. City Average, or
a suitable successor index published
monthly by the Bureau of Labor Statistics,
U.S Department of Labor.
129.9 = The value of the CPI for June,
1990.
Sample calculations demonstrating the calculation of
IGR and associated indices are set forth in Appendix B.
Either Party may, by written notice to the other
Party given during the period between one hundred and fifty
(150) Days and one hundred and twenty (120) Days prior to
either the third anniversary of the Actual Commercial
Operation Date or each subsequent third anniversary of the
Actual Commercial Operation Date thereafter ("Anniversary
Date"), request that the IGR, and/or the Commodity Index
and/or the Transportation Index for the IGR, be reviewed
and revised in accordance with the standards set forth
herein. If either Party provides such notice within the
specified time period, the Operating Committee shall in
good faith undertake such review and revision of the IGR,
and/or the Commodity Index and/or Transportation Index for
the IGR, as applicable. The purpose of such review of the
IGR shall be to determine the current market price of
interruptible natural gas delivered to comparable users
located within the Washington, D.C. Metropolitan Area at
the time of such review and to revise each such component
of the IGR, as necessary, to reflect such then-current
market price. For the purposes of this Agreement, the
Washington, D.C. Metropolitan Area includes the District of
Columbia; ▇▇▇▇▇▇▇ County, ▇▇▇▇▇▇▇ County, ▇▇▇▇▇▇▇▇▇ County,
▇▇▇▇▇▇▇▇▇▇ County, Prince George's County and St. Mary's
County in the State of Maryland; and Arlington County,
Fairfax County, Fairfax City, Loudoun County, Prince
▇▇▇▇▇▇▇ County, ▇▇▇▇▇▇▇▇ County, Alexandria City, Falls
Church City, Manassas City and Manassas Park City in the
Commonwealth of Virginia. The purpose of such review of
the Commodity Index and/or Transportation Index for the
IGR, shall be to determine the most accurate method of
tracking changes in the market price of interruptible
natural gas delivered to comparable users located within
the Washington, D.C. Metropolitan Area at the time of such
review and to revise the Commodity Index and/or
Transportation Index for the IGR, as necessary for this
purpose. If the Operating Committee cannot agree on
appropriate revisions to the IGR, and/or the Commodity
Index and/or Transportation Index for the IGR, as
applicable, within sixty (60) days prior to the relevant
Anniversary Date, the Parties shall use their best efforts
to resolve the matter in accordance with Subsection 17.1(b)
and Section 17.2. Any revision of the IGR, and/or the
Commodity Index and/or Transportation Index for the IGR, as
applicable, determined in accordance with the provisions of
this Subsection 6.2(b)(vi) or Article XVII shall be
effective on the relevant Anniversary Date, subject to
receipt of all regulatory authorizations (including, but
not limited to, approval of such revision by the Maryland
Commission and the District of Columbia Commission)
necessary to implement such revision in a form satisfactory
to each of the Parties in accordance with the standards set
forth in Subsections 3.1(a) and 3.1(b). The Parties agree
to cooperate in obtaining all such necessary regulatory
authorizations. If a revized IGR has not been determined
in accordance with the foregoing procedures and so approved
by regulatory authorities prior to the relevant Anniversary
Date, PEPCO shall continue to make payments to Seller
thereafter based on an IGR determined in accordance with
the IGR provisions of this Agreement and the Commodity
Index and/or Transportation Index for the IGR, that were in
effect on the Day prior to the Anniversary Date, until a
revised IGR, and/or Commodity Index and/or Transportation
Index for the IGR, as applicable, is determined and so
approved. Any revision to the IGR, and/or the Commodity
Index and/or Transportation Index for the IGR, as
applicable, determined and so approved after the
Anniversary Date shall be made effective retroactively to
the Anniversary Date, subject to the receipt of all
regulatory authorizations necessary for such retroactive
application in a form satisfactory to each of the Parties
in accordance with the standards set forth in Subsections
3.1(a) and 3.1(b). Any credit or additional payment
resulting from any such retroactive adjustment of the IGR,
and/or the Commodity Index and/or Transportation Index for
the IGR, as applicable, shall be reflected in the next
Monthly Energy Payment due under this Agreement (and
subsequent Monthly Energy Payments, if necessary).
The OR will be set initially at $3.89/MBtu on June 1,
1990 and will be adjusted each Billing Period thereafter in
accordance with the following formula:
OR = 0Ri * OI
Where:
0R = 0il Rate in effect for the
Billing Period.
ORi = Initial Oil Rate: $3.89/MBtu.
OI = Oil Index: Shall be calculated
as described below.
The Oil Index for the Oil Rate will be based on prices
reported in ▇▇▇▇▇'▇ Oilgram Price Report in the U.S. Tank
Car/Truck Transport table for No. 2 fuel oil. The Index
will be the sum of the most recently reported average of
the low and high prices of No. 2 fuel oil delivered to
Baltimore, Norfolk and Philadelphia, determined as set
forth below, divided by 151.41 cents/gallon (which is the
sum of the average of the low and high prices for No. 2
fuel oil for the same locations as published in ▇▇▇▇▇'▇
Oilgram-Monthly Average Supplement for June 1990). In
calculating the numerator of the above Oil Index, the
average price for No. 2 fuel oil delivered to each location
will be determined by averaging the low and high prices for
each such location as published in ▇▇▇▇▇'▇ Oilgram for each
Wednesday in the Billing Period. In the event that any of
the sources of information referred to in the Oil Index is
no longer published or otherwise available, the Parties
agree to negotiate in good faith to replace such source of
information with an appropriate additional source. Sample
calculations demonstrating the calculation of the OR are
set forth in Appendix B.
Either Party may, by written notice to the other Party
given during the period between one hundred and fifty (150)
Days and one hundred and twenty (120) Days prior to either
the third anniversary of the Actual Commercial Operation
Date or each subsequent third anniversary of the Actual
Commercial Operation Date thereafter ("Anniversary Date"),
request that the OR and/or the Oil Index be reviewed and
revised in accordance with the standards set forth herein.
If either Party provides such notice within the specified
time period, the Operating Committee shall in good faith
undertake such review and revision of the OR and/or the Oil
Index, as applicable. The purpose of such review of the OR
shall be to determine the current market price of the fuel
oil component and the transportation component of the OR at
the time of such review and to revise each such component
of the OR, as necessary, to reflect such then-current
market price. The purpose of such review of the Oil Index
shall be to determine the most accurate method of tracking
changes in the price of each of the components of the OR
and to revise the Oil Index, as necessary, for such
purpose. If the Operating Committee cannot agree on
appropriate revisions to the OR and/or the Oil Index, as
applicable, within sixty (60) days prior to the relevant
Anniversary Date, the Parties shall use their best efforts
to resolve the matter in accordance with Subsection 17.1(b)
and Section 17.2. Any revision of the OR and/or the Oil
Index, as applicable, determined in accordance with the
provisions of this Subsection 6.2(b)(vi) or Article XVII
shall be effective on the relevant Anniversary Date, subject
to receipt of all regulatory authorizations (including, but
not limited to, approval of such revision by the Maryland
Commission and the District of Columbia Commission)
necessary to implement such revision in a form
satisfactory to each of the Parties in accordance with
the standards set forth in Subsections 3.1(a) and
3.1(b). The Parties agree to cooperate in obtaining
all such necessary regulatory authorizations. If a
revised OR and/or Oil Index, as applicable, has not
been determined in accordance with the foregoing
procedures and so approved by regulatory authorities
prior to the relevant Anniversary Date, PEPCO shall
continue to make payment to Seller thereafter based on
an OR determined in accordance with the OR provisions
of this Agreement and the Oil Index that were in
effect on the Day prior to the Anniversary Date, until
a revised OR and/or Oil Index, as applicable, is
determined and so approved. Any revision to the OR
and/or Oil Index, as applicable, determined and so
approved after the Anniversary Date shall be made
effective retroactively to the Anniversary Date,
subject to the receipt of all regulatory
authorizations necessary for such retroactive
application in a form satisfactory to each of the
Parties in accordance with the standards set forth in
Subsections 3.1(a) and 3.1(b). Any credit or
additional payment resulting from any such retroactive
adjustment of the OR and/or Oil Index shall be
reflected in the next Monthly Energy Payment due under
this Agreement (and subsequent Monthly Energy
Payments, if necessary).
6.3 (a) Loss of Qualifying Facility
Status. It is the intent and understanding of the Parties
that the Facility will be a Qualifying Facility throughout
the Term of this Agreement. If the Facility nevertheless
loses its status as a Qualifying Facility after the Actual
Commercial Operation Date, the Parties' rights and
obligations under this Agreement, including but not limited
to PEPCO's obligation to make payments in accordance with
this Agreement, shall continue, subject to the limitations
set forth in Subsection 6.3(b) and further subject to
receipt of all governmental and regulatory approvals
necessary for such continuation (whether the Facility is a
Qualifying Facility or attains another status) in form and
substance acceptable to each of the Parties pursuant to the
standard set forth in Subsection 6.3(c). PEPCO may
terminate this Agreement upon one hundred and eighty (180)
Days written notice given at any time subsequent to five
hundred and forty (540) Days following such loss of
Qualifying Facility status if all such necessary
governmental and regulatory approvals have not been
received in a form acceptable to each of the Parties as set
forth above. If at any time prior to the effective date of
such termination: (i) the Facility regains Qualifying
Facility status and receives all necessary governmental and
regulatory approvals therefor in form and substance
acceptable to each of the Parties, pursuant to the standard
set forth in Subsection 6.3(c), or (ii) the Facility does
not regain Qualifying Facility status, but Seller and PEPCO
receive all necessary governmental and regulatory approvals
in form and substance acceptable to each of the Parties
pursuant to the standard set forth in Subsection 6.3(c) for
the continued purchase and sale of capacity and energy from
the Facility in accordance with the provisions of this
Agreement, then the Parties' rights and obligations shall
continue in accordance with this Agreement.
(b) During any period when the Facility has
lost its status as a Qualifying Facility; (i) the
Dispatchable Portion shall be deemed to include the full
capacity and Net Electrical Output of the Facility and
there shall not be any Limited Dispatch Portion; (ii) the
four dispatch segments identified in Subsection 6.2(b)(i)
shall remain in effect without change; (iii) the rates
payable by PEPCO for the Net Electrical Output of each
dispatch segment shall remain in effect except that,
subject to conditions imposed by any governmental or
regulatory permit or approval relating to the Facility
reviewed and approved by PEPCO, Seller may use, and be
compensated for, No. 2 fuel oil as the Fuel for the
Facility on any Day when the Facility is dispatched by
PEPCO and Seller is not able, despite its best efforts, to
comply with the deadlines included in the thenprevailing
required procedures for monthly and daily nomination of gas
transportation service for the Columbia Gas Transmission
Corporation for scheduling transportation of gas to the
Facility on such Day. Such best efforts shall include, but
not be limited to, reasonable estimates of expected
Facility operation taking into account historical
experience, weather conditions, and nonbinding information
provided by the PEPCO dispatcher. The Operating Committee
shall modify the operating procedures as necessary to
reflect the elimination of a Limited Dispatch Portion.
(c) A Party shall accept any governmental
or regulatory approval referred to in Subsection 6.3(a)
unless such Party reasonably determines that such
governmental or regulatory approval would materially impair
the operation of the Facility by Seller as a facility that
is dispatchable by PEPCO in accordance with the terms and
provisions of this Agreement or would otherwise materially
impair PEPCO's rights in accordance with the terms and
provisions of this Agreement.
6.4 Other Charges. Seller shall pay PEPCO
itemized charges for metering and testing requested by
Seller in addition to the metering and testing required to
be performed by PEPCO under this Agreement.
6.5 Billing and Payment. (a) PEPCO shall
prepare and render to Seller (or to any person designated
in writing by Seller to PEPCO) within twenty-five (25) Days
after the end of each Billing Period: (i) a statement
detailing PEPCO's calculation of the Monthly Capacity
Payment and the Monthly Energy Payment due to Seller for
such Billing Period, less any undisputed amounts overdue to
PEPCO from Seller pursuant to this Agreement and less any
amounts owing to PEPCO under Sections 6.4 and 6.6, (ii)
payment to Seller in the amount indicated in such
statement, and (iii) calculations of the EAF and EFOR of
the Facility for the most recent time periods referred to
in Subsection 15.1(c) for which data are available.
(b) If any undisputed payment from either
Party is not paid when due, there shall be due and payable
to the other Party interest thereon from the date on which
such payment became overdue and calculated at the prime
interest rate(s) then in effect at Citibank of New York, or
its successor, plus two percent (2%), from the last Day of
the Billing Period(s) for which the overdue payment is
owed.
(c) If either Party disputes the accuracy
of a ▇▇▇▇, the Parties shall use their best efforts to
resolve the dispute in accordance with Section 17.1. Any
adjustments which the Parties may subsequently agree to
make with respect to any such billing dispute shall be made
by a credit or additional charge on the next ▇▇▇▇ rendered.
If the Parties are unable to resolve the dispute in this
manner, any amounts disputed on subsequent bills for the
same reason may thereafter be withheld pending final
resolution of the dispute in accordance with the procedures
described in Section 17.2, but the undisputed amount shall
be promptly paid.
(d) Upon resolution of a disputed amount,
the amount shall be due and payable to the appropriate
Party, with interest thereon from the date on which such
amount would otherwise have been overdue hereunder if no
dispute had arisen, calculated at the prime interest
rate(s) then in effect at Citibank of New York, or its
successor, plus two percent (2%). The existence of a
dispute as to any ▇▇▇▇ shall not relieve either Party of
compliance with any other provision of this Agreement.
6.6 Other Payments. Any amounts, other
than those specified in Sections 6.1 and 6.2, due either
Party under this Agreement shall be paid or objected to
within thirty (30) Days following receipt by either Party
of an itemized invoice from the other setting forth, in
reasonable detail, the basis for such payment. If any
undisputed payment shall not be paid when due, there shall
be due and payable to the other Party interest from the
date on which such payment became overdue and calculated at
the prime interest rate(s) then in effect at Citibank of
New York, or its successor, plus two percent (2%). PEPCO
shall have the option in any invoice it provides to Seller
pursuant to this Section to require payment from Seller or
to require Seller to treat the amount due as a credit
against any amounts PEPCO may then owe Seller under the
terms of this Agreement.
ARTICLE VII
PRE-OPERATION PERIOD
7.1 Facility Construction and Start-Up.
(a) The Construction Start Date shall not
be later than forty-eight (48) Months after the Effective
Date. Seller shall provide PEPCO with written confirmation
of the Construction Start Date within ten (10) Days after
the occurrence thereof. If the Construction Start Date
fails to occur by the time specified above, PEPCO may, at
its option, terminate this Agreement immediately by written
notice to Seller and PEPCO shall have the right to retain
the Development Security as liquidated damages, and any
remaining interest accumulated on the Development Security
shall be returned or released, as the case may be, to
Seller within thirty (30) Days after the date of such
termination.
(b) Commencing one (1) Month after the
Effective Date and continuing every Month thereafter until
the Actual Commercial Operation Date, Seller shall provide
a report to PEPCO outlining the progress on development of
the Facility.
(c) Seller shall provide PEPCO with a
Critical Path Method Schedule within one hundred and twenty
(120) Days after receipt of the orders required under
Subsection 3.1(a)(i). Thereafter, Seller shall update and
otherwise report progress on implementation of the Critical
Path Method Schedule in the monthly progress reports to be
provided by Seller pursuant to Subsection 7.1(b). The CPM
Schedule shall include, as a minimum, the following
milestones:
(i) Acquisition of the Site or a lease
thereof and required easements;
(ii) Acquisition of each major permit,
certificate, order, and other governmental or
regulatory authorization required prior to the
Construction Start Date and required for the operation
of the Facility during start-up and commercial operation;
(iii) Acquisition of project financing,
initial Fuel Supply Contract(s), and a Steam Supply Contract;
(iv) Issuance of notice to proceed to EPC
Contractors, and contractors or subcontractors for
major civil, mechanical, and electrical equipment
required by the project;
(v) Delivery of major equipment;
(vi) Major construction milestones (e.g.,
generator set in place);
(vii) Major equipment installed and tested;
and
(viii) The Scheduled Commencement Date. The
CPM Schedule shall also track, to the extent possible and
to the extent not specified above, all activities to be
performed by the project contractors, including but not
limited to PEPCO, the EPC Contractor, major equipment
vendors, construction contractors, and operation and
maintenance contractors, and will identify all major
deliverables through permitting, design, construction,
testing, start-up and parallel operation with the PEPCO
System. The Parties recognize that some of the foregoing
information will be revised after the CPM Schedule is first
submitted and that such information will be updated as
required. Interface points for PEPCO oversight
requirements will be delineated in the CPM Schedule. PEPCO
shall evaluate the reasonableness of the CPM Schedule and
monitor progress of the development of the Facility in
order to assess whether the Seller will meet the Actual
Commercial Operation Date as an aid to PEPCO's planning
process.
(d) After the Construction Start Date and
until the Actual Commercial Operation Date has occurred,
Seller shall provide PEPCO copies of the routine reports
provided to the Financing Parties, which explain
construction progress.
(e) PEPCO shall have the right to review
the design of the Facility and monitor the construction,
start- up, testing and operation of the Facility, including
physical inspections at the Site. Seller shall comply with
all reasonable requests of PEPCO for access to the Site for
such purposes. Seller shall cooperate with PEPCO to ensure
that the Facility's power generation equipment and
switchgear are designed and installed so that the Facility
can safely and successfully operate in parallel with the
PEPCO System.
7.2 Commencement Date.
(a) Seller shall provide PEPCO with at
least thirty (30) Days' prior notice of the proposed
Commencement Date. Such notice shall include Seller's
intended hourly delivery schedule of Start-up Energy.
(b) PEPCO and Seller shall agree on the
Commencement Date and PEPCO shall have the right to have
representatives present at the Site on the Commencement
Date; provided, however, that PEPCO reserves the right to
reasonably delay the Commencement Date until the
requirements of Subsection 7.1(i) have been satisfied or in
the event PEPCO is unable to complete the Interconnection
Facilities by such proposed Commencement Date due to Force
Majeure or a failure by Seller to provide information as
required by Subsection 9.2(a) or to carry out its
obligations under the Interconnection Plan provided
pursuant to Subsection 9.2(b) or to make payment of any
Interconnection Costs under this Agreement. In such event,
PEPCO shall give Seller written notice of the reason for
delaying the Commencement Date or the completion of the
Interconnection Facilities and the applicable Party shall
promptly proceed to rectify the identified problems.
(c) Written confirmation of the
Commencement Date shall be sent to PEPCO by Seller within
ten (10) Days after the occurrence thereof.
7.3 Actual Commercial Operation Date.
(a) The Actual Commercial Operation Date
shall be no sooner than the Scheduled Commercial Operation
Date, (or if the Scheduled Commercial Operation Date has
been extended as otherwise permitted under Section 4.4,
then the Actual Commercial Operation Date may occur during
the period between the Scheduled Commercial Operation Date
and the Extended Scheduled Commercial Operation Date) when
all of the following conditions have been satisfied:
(i) All of the conditions set forth in
Sections 3.1, 3.2 and 3.3 have been satisfied;
(ii) Seller has provided PEPCO with
evidence that it has obtained a commitment for the
permanent financing for the Facility;
(iii) Seller has provided PEPCO at least
thirty (30) Days' prior written notice of the proposed
Actual Commercial Operation Date;
(iv) Seller has established the Dependable
Capacity as set forth in Subsection 8.2(a); and
(v) Seller has transferred to PEPCO
ownership of the Transmission Facilities and Seller's
rights in the Transmission Facilities Site, free and
clear of any liens or other encumbrances of title,
unless otherwise agreed to by PEPCO. At the time of
such transfer, Seller shall provide PEPCO with a
warranty that the construction and operation of
electric transmission lines is a permitted use on all
portions of the Transmission Facilities Site and that
Seller has obtained all zoning approvals and other
governmental or regulatory approvals required for
construction and operation of the Transmission
Facilities by Seller prior to the transfer of the
Transmission Facilities to PEPCO pursuant to this
Subsection 7.3(a)(v) and for the initial operation of
the Transmission Facilities by PEPCO subsequent to
such transfer (including, but not limited to, any
certificate of public convenience and necessity for
the Transmission Facilities required from the Maryland
Commission). Prior to such transfer, Seller shall
provide PEPCO with such information as PEPCO may
reasonably request to evaluate the Transmission
Facilities, the Transmission Facilities Site and such
transfer. Such information shall include, but not be
limited to: (i) a Phase I EPA environmental
assessment of the Transmission Facilities Site
(including but not limited to, identification of the
presence of any polychlorinated biphenyls, materials
stored in underground storage tanks, hazardous wastes
within the meaning of RCRA and hazardous substances
within the meaning of CERCLA) current as of the date
of such transfer and in form and substance
satisfactory to PEPCO, (ii) any required easements or
rights of way necessary for construction and operation
of the Transmission Facilities (including
environmental indemnifications to PEPCO from the
parties providing each easement or right of way
satisfactory to PEPCO in its sole discretion), and
(iii) access to the Transmission Facilities Site for
the purpose of such inspections, testing, and sampling
as PEPCO may require. No transfer of the Transmission
Facilities or the Transmission Facilities Site to
PEPCO shall occur unless PEPCO has agreed in writing
to accept such transfer. Such agreement shall not be
unreasonably withheld.
ARTICLE VIII
OPERATIONS AND MAINTENANCE
8.1 Operation of Facility.
(a) Seller shall design, construct, operate
and maintain the Facility in accordance with Prudent
Utility Practices and otherwise in accordance with this
Agreement.
(b) Every operation of the intertie and/or
synchronizing circuit breaker shall occur under the
direction of the PEPCO dispatcher. The generation and
delivery of electricity shall be in accordance with
Appendix F.
(c) Seller shall operate the Facility in
parallel with the PEPCO System during the Term of this
Agreement, provided that, the Facility is designed,
constructed, maintained, and operated in accordance with
Prudent Utility Practices and the Guidelines and
Performance Standards for Parallel Operation contained in
Appendix C hereto, including but not limited to, such
practices, guidelines and standards relating to
synchronization, voltage control, and generation of
harmonic frequencies so that operation of the Facility will
not have an adverse impact on the voltage level or wave
form of the PEPCO System.
(d) Seller shall notify PEPCO in a timely
manner of any limitations, restrictions or outages of the
Net Electrical Output in accordance with Appendix I.
(e) Seller's selection of the operator for
the Facility and the terms and conditions of any operation
and maintenance agreement entered into by Seller with
respect to the Facility shall be subject to PEPCO's review
and approval; provided, however, that PEPCO may only
withhold its approval on the bases that the operator lacks
appropriate experience with the operation of facilities
similar to the Facility or that the operating agreement
would materially impair the operation of the Facility by
Seller as a facility that is dispatchable by PEPCO in
accordance with the terms and provisions of this Agreement
or would otherwise materially impair PEPCO's rights in
accordance with the terms and provisions of this Agreement.
8.2 Dependable Capacity; Testing of
Capacity Rating.
(a) Prior to or on the Actual Commercial
Operation Date, Seller shall establish a Dependable
Capacity of two hundred thirty thousand (230,000) kilowatts
for the Facility under summer ambient conditions (defined
as 92 degrees F. and fifty percent (50%) relative humidity) in
accordance with the test of "Net Capability" of Appendix D.
The Facility shall also be tested during each Summer Period
and each Winter Period occurring during the Term after the
Actual Commercial Operation Date in accordance with the
procedures set forth in Appendix D to demonstrate the Net
Capability of the Facility. The Parties agree that the
Dependable Capacity for the Facility under this Agreement
shall be established by testing the Net Capability of the
Facility as specified by Appendix D and shall be the lower
of (i) the Net Capability so tested and certified (stated
in kilowatts) and (ii) the Dependable Capacity specified in
the first sentence of this subsection.
(b) PEPCO shall have the right to require
the Seller to revalidate the Dependable Capacity of the
Facility if the Equivalent Availability Factor of the
Facility falls below eighty percent (80%) as calculated for
any twelve (12)-Month period which commences on or after a
one (l)-Year period following the Actual Commercial
Operation Date, or if the Equivalent Forced Outage Rate of
the Facility exceeds ten percent (10%) as calculated for
any twelve (12)-Month period which commences on or after a
one (l)-Year period following the Actual Commercial
Operation Date. Periods during which Seller has declared a
Force Majeure to exist or during which an Emergency
Condition exists shall be included in the calculation of
the EAF or the EFOR for purposes of this subsection.
(c) PEPCO may periodically need recognition
and credit for the generating capacity of the Facility from
the PJM Pool or such other power coordinating group to
which PEPCO belongs and has contractual responsibilities
for providing electrical capacity, or for regulatory or
other reporting purposes. If, in order to obtain such
recognition, PEPCO must verify the capacity rating of the
Facility under the PJM Pool's criteria, or PEPCO procedures
implementing such criteria, Seller shall, in addition to
the demonstrations of the Dependable Capacity of the
Facility during each Summer Period and Winter Period made
pursuant to Subsection 8.2(a), perform such actual tests of
the Facility's Net Capability as PEPCO may reasonably
request upon at least ten (10) Days' prior notice, with due
consideration to Seller's obligations under the Steam
Supply Contract.
(d) In the event that PEPCO is required to
derate the Net Capability of the Facility in accordance
with PJM Pool guidelines, then the Dependable Capacity of
the Facility shall automatically be reduced accordingly.
(e) If Seller is consistently unable during
the period from June through September in any Calendar Year
to provide the full Dependable Capacity when dispatched by
PEPCO, due to the unavailability of supplemental firing
equipment or other special equipment or methods used by
Seller in establishing the Dependable Capacity, then PEPCO
may require Seller to reestablish the Dependable Capacity,
in accordance with the test of Net Capability in Appendix
D, without such equipment or methods in operation.
8.3 Schedule and Dispatch of Generation.
(a) PEPCO shall dispatch the portion of the
Facility's Dependable Capacity designated as the Limited
Dispatch Portion for a total of one hundred and eight (108)
Hours between 8:00 a.m. Monday and 8:00 p.m. Friday for
each Week it is available. At all other times when the
Facility is required at less than the Facility's First
Dispatch Segment by PEPCO System dispatch, the Limited
Dispatch Portion may be cycled off by PEPCO's dispatchers.
Seller shall provide PEPCO with (i) an annual schedule of
the estimated generating capability and availability of the
Limited Dispatch Portion for each Calendar Year no later
than November 1st of the prior Calendar Year in accordance
with Section 8.4, (ii) a monthly schedule of the estimated
generating capability and availability of the Limited
Dispatch Portion no later than one (1) Week prior to the
end of the previous Month and (iii) a weekly schedule
(Monday through Sunday) of estimated generating capability
and availability of the Limited Dispatch Portion no later
than 4:00 p.m. on Thursday of the previous Week and shall
inform PEPCO promptly of any material changes in such
schedules. PEPCO may request Seller to modify the aforesaid
schedules as needed to meet the requirements of the PEPCO
System and shall take into consideration the obligations of
Seller under the Steam Supply Contract in requesting such
modification. Subject to Prudent Utility Practices, Seller
shall use its reasonable efforts to alter these schedules
to conform to modifications reasonably requested by PEPCO
throughout the Calendar Year. PEPCO shall furnish to
Seller PEPCO's estimated dispatch schedule for the Facility
and any changes thereto, at the times and in the manner
that PEPCO provides such estimated schedules for its own
generating facilities.
(b) For the portion of the Facility's
Dependable Capacity designated as the Dispatchable Portion,
PEPCO's dispatcher shall have the sole discretion to
schedule and control the generation of electricity.
PEPCO's dispatcher shall also have sole discretion to
control operation of the intertie circuit breaker. When
PEPCO elects to dispatch the Dispatchable Portion, subject
to Prudent Utility Practices and after the Limited Dispatch
Portion, if any, has been fully loaded, PEPCO shall do so
as agreed to by the Parties up to the Facility's Available
Capacity. PEPCO will not guarantee any hourly generation
level when scheduling the Dispatchable Portion. The
Facility dispatch shall be in accordance with a dispatch
plan as mutually agreed by the members of the Operating
Committee. The dispatch plan will be consistent with
Prudent Utility Practices.
(c) Seller shall purchase and install the
telecommunications equipment and channels for the Facility
listed in Appendix F attached hereto, subject to such
additions as PEPCO may determine to be appropriate prior to
the Actual Commercial Operation Date in accordance with
Prudent Utility Practices. At PEPCO's sole expense, from
time to time after the Actual Commercial Operation Date
Seller shall install additional equipment as may be
reasonably required by PEPCO consistent with Prudent
Utility Practices in order to allow PEPCO to maximize
economic and reliable dispatch of the Facility in
coordination with the PEPCO system.
(d) Seller shall coordinate with PEPCO to
ensure that any Start-up Energy or Test Energy generated by
the Facility that Seller proposes to deliver to PEPCO on
any Day is delivered at such time during such Day that is
most consistent with economic dispatch of the Facility.
(e) For purposes of determining payments to
be made pursuant to Section 6.2, the following will apply.
Natural gas or LNG will be used for the First Dispatch
Segment and the Second Dispatch Segment at all times,
except as allowed by Subsection 6.3(b). Natural gas or LNG
will be used for the Third Dispatch Segment and the Fourth
Dispatch Segment at all times when natural gas or LNG is
available. Natural gas will be considered to be available
if supply into either the Columbia Gas System or Transco
System is available and interruptible transportation on the
respective pipeline is available. Supply availability is
intended to mean supply from spot markets (excluding stored
natural gas) in the Gulf of Mexico, mid-continent and
Appalachian regions which are connected to the Columbia Gas
System or Transco System directly or via major interstate
pipeline systems with direct access to these supply
sources. Other sources of supply may be included in the
future by the Operating Committee.
(f) The Fuel Supply Plan is to set forth
Seller's plans to facilitate use of the most economic Fuel
in the Facility, among other matters. As of the Effective
Date, the most economic Fuel is natural gas. If, during
the Term, No. 2 fuel oil becomes a more economic Fuel than
natural gas on a long term basis, the Parties agree to
enter into good faith negotiations for the purpose of
agreeing to appropriate revisions to the Fuel Supply Plan
and to this Agreement in order to continue to facilitate
use of the most economic Fuel in the Facility.
8.4 Annual Notice of Scheduled Maintenance
Outages. Prior to November 1st of each Calendar Year,
Seller shall submit a proposed schedule of expected
maintenance outages for the twenty-four (24) Month period
beginning on January 1st of the following Calendar Year.
The schedule shall include estimated times of Facility
operation, amounts of electricity production, number of
anticipated and Scheduled Outages and reductions of output
and the reasons therefor, and the start dates and durations
of scheduled maintenance, including a specification of
maintenance requiring shutdown or reduction in output of
the Facility. PEPCO may request Seller to revise its
proposed schedule for the timing and duration of any
Scheduled Outages or reduction of output of the Facility,
taking into consideration Seller's obligations under the
Steam Supply Contract, to accommodate the requirements of
PEPCO. Subject to Prudent Utility Practices, Seller shall:
(a) use its best efforts not to schedule maintenance during
the periods from June through September and December
through February unless requested to do so by PEPCO, (b)
use its best efforts to restore the availability of the
Facility as soon as possible during unscheduled outages
that occur during the periods from June through September
and December through February and (c) use its reasonable
efforts to accommodate requests made by PEPCO with respect
to maintenance activities during other periods throughout
the Calendar Year. Seller may request that its proposed
maintenance schedule as previously provided to PEPCO
pursuant to this Section 8.4 be revised with respect to the
timing and duration of any Scheduled Outages or reduction
of output of the Facility. PEPCO shall endeavor in good
faith to accommodate any such revision requested by Seller
that is consistent with the requirements of the PEPCO
System and Prudent Utility Practices.
8.5 Routine Maintenance. In accordance
with the requirements of the PEPCO System and Prudent
Utility Practices, Seller agrees to coordinate routine
maintenance with PEPCO, including providing PEPCO with:
(a) at least seven (7) Days' notice prior to removing the
Facility from service for routine maintenance, which notice
shall include the scheduled start date and time and
duration of the proposed maintenance outage, or (b) the
number of Days that the maintenance can be deferred and the
duration of the proposed outage.
8.6 Annual Maintenance and Inspection
Report. Prior to February 1st of each Calendar Year, Seller
shall submit to PEPCO a summary of all maintenance and
inspection work performed in the prior Calendar Year, and
of all conditions experienced or observed during that
Calendar Year that may have a material adverse effect on,
or may materially impair the short or long-term operation
of, the Facility at the operational levels contemplated by
this Agreement. The summary shall also include Seller's
proposals for correcting or preventing recurrences of such
conditions and for performing such other maintenance and
inspection work as is required by Prudent Utility
Practices. PEPCO may provide comments concerning such
proposals, provided, however, that PEPCO's making or
failing to make comments with respect to operation or
maintenance of the Facility shall not be deemed to
constitute an endorsement of the operation and maintenance
thereof nor a warranty or other assurance by PEPCO of the
safety, durability or reliability of the Facility.
8.7 Maintenance Reserve.
(a) Seller agrees to establish and maintain
for the Term in accordance with Subsection 8.7(b), a
Maintenance Reserve (the "Maintenance Reserve") with a
financial institution with a Thomson BankWatch rating of C
or better and assets of at least twenty-five billion
dollars ($25,000,000,000.00), and under depository
arrangements satisfactory to PEPCO in its sole discretion,
to be used exclusively to pay for certain maintenance
expenses for the Facility, including any repairs, or
replacements that are necessary or appropriate to assure
that the Facility will continue to be operated and
maintained in accordance with Prudent Utility Practices and
the performance standards set forth in this Agreement. The
Maintenance Reserve shall not be subject to any lien or
other claim by any person (including, but not limited to,
any Financing Party) other than PEPCO. From time to time
after the initial posting of the Maintenance Reserve,
Seller shall, within thirty (30) Days of PEPCO's request
therefor, provide evidence (including, without limitation,
legal opinions) reasonably satisfactory to PEPCO of the
continuing existence of the Maintenance Reserve.
(b) (i) On or before the first anniversary
of the Actual Commercial Operation Date, Seller shall
deposit at least one million dollars ($1,000,000.00) in the
Maintenance Reserve. On or before the second anniversary
of the Actual Commercial Operation Date, Seller shall
deposit an additional one million dollars ($1,000,000.00)
in the Maintenance Reserve. On or before the third
anniversary of the Actual Commercial Operation Date, Seller
shall deposit an additional two million dollars
($2,000,000.00) in the Maintenance Reserve so that by such
third anniversary the aggregate amount of funds deposited
in the Maintenance Reserve pursuant to this Subsection
8.7(b)(i) shall be four million dollars ($4,000,000.00).
Thereafter, Seller shall maintain the portion of the
Maintenance Reserve funded pursuant to this Subsection
8.7(b)(i) at a funding level of four million dollars
($4,000,000.00). To the extent funds are withdrawn from
the Maintenance Reserve to pay for maintenance costs, the
Maintenance Reserve will be replenished out of the Seller's
Net After-Tax Cash Flow available during the next Month.
If Seller's Net After-Tax Cash Flow is insufficient to fund
the Maintenance Reserve at the required levels, any
shortfall shall be carried over and be due in the following
Month and subsequent Months until the required funding
level of the Maintenance Reserve has been reached. As an
alternative to depositing cash in the Maintenance Reserve,
Seller may fund the Maintenance Reserve with a letter of
credit, in the amounts and at the times specified in this
Subsection 8.7(b)(i) and otherwise in form and substance
satisfactory to PEPCO in its sole discretion, issued by a
financial institution with a Thomson BankWatch rating of C
or better and with assets of at least twentyfive billion
dollars ($25,000,000,000.00).
(ii) (A) In addition to the amounts
specified in Subsection 8.7(b)(i), Seller shall provide
additional funding for the Maintenance Reserve at quarterly
intervals, commencing with the Actual Commercial Operation
Date, in the amount of fifty-seven dollars ($57.00) for
each hour (or part thereof) of operation of the Facility's
combustion turbines during the prior Quarter. The hours of
operation for each of the Facility's combustion turbines
shall be added together to determine the total hours of
operation of the Facility's combustion turbines during said
prior Quarter. The quarterly contributions shall continue
thereafter as necessary to achieve and maintain a level of
funding for the Maintenance Reserve pursuant to this
Subsection 8.7(b)(ii)(A) equal to the amounts specified in
Appendix K attached hereto for the relevant time periods
identified in said Appendix. The portion of the
Maintenance Reserve funded pursuant to this Subsection
8.7(b)(ii)(A) may be used to perform manufacturer's
recommended maintenance in accordance with the schedule
shown generally on Appendix K attached to this Agreement.
(b) By written notice to PEPCO prior to the
Actual Commercial Operation Date, Seller may elect to
increase the total funding level of the Maintenance Reserve
provided pursuant to Subsection 8.7(b)(i) from four million
dollars ($4,000,000.00) to five million dollars
($5,000,000.00). If Seller so elects, the deposit that
Seller shall be required to make in the Maintenance Reserve
on or before the third anniversary of the Actual Commercial
Operation Date shall be increased by one million dollars
($1,000,000.00) over the amount specified in Subsection
8.7(b)(i) (i.e., so that the aggregate amount of funds
deposited in the Maintenance Reserve by such date shall be
five million dollars ($5,000,000.00)). Thereafter Seller
shall maintain the Maintenance Reserve at a funding level
of five million dollars ($5,000,000.00) in accordance with
the provisions of Subsection 8.7(b)(i). If Seller elects
pursuant to this Subsection 8.7(b)(ii)(B) to so increase
the funding level of the Maintenance Reserve, then Seller
shall not be required to provide the funding for the
Maintenance Reserve required under Subsection
8.7(b)(ii)(A).
(c) In the event the operating experience
indicates that the amount of funds retained in the
Maintenance Reserve should be increased or is greater than
necessary for the prudent long term operation of the
Facility in accordance with Prudent Utility Practices, the
Parties shall undertake good faith negotiations to modify
accordingly the funding requirements of Subsection 8.7(b).
8.8 Special Operational Audits. PEPCO
further reserves the right to have a special operations and
maintenance audit conducted at PEPCO's expense by an
independent third party qualified to conduct such audits:
(a) in the event that the Equivalent Availability Factor of
the Facility falls below eighty percent (80%), or the
Equivalent Forced Outage Rate of the Facility exceeds ten
percent (10%), in either case as calculated for any
consecutive twenty-four (24) Month period occurring after
the date that is one (1) Year after the Actual Commercial
Operation Date, or (b) if circumstances occur in which
PEPCO has the right to require Seller to reestablish the
Dependable Capacity pursuant to Subsection 8.2(e). If such
a special audit is conducted, Seller agrees to implement
the recommendations of such independent auditor, to the
extent such recommendations are consistent with Prudent
Utility Practices, in a timely and cost effective manner
(but in no event longer than one (1) Year after performance
of the audit, unless the Parties reasonably agree that an
additional period of time is necessary), or to otherwise
make necessary corrections in a manner reasonably
satisfactory to the Parties. Periods during which a Force
Majeure is in effect or when an Emergency Condition exists
shall be included in the calculation of EAF or EFOR for
purposes of this Section 8.8.
8.9 Modification of Project and Financing
Documents.
(a) Without the prior written consent of
PEPCO, Seller may not terminate or modify in a material
manner the Steam Supply Contract, or the Fuel Supply
Contract(s), or its operation and maintenance arrangements,
and may not enter into any new contract or arrangement with
respect to such matters, provided, that, PEPCO's consent
shall not be required for any additional Fuel Supply
Contract(s) for amounts of Fuel in excess of those required
to satisfy Seller's covenant under Section 11.2 of this
Agreement. PEPCO shall grant its consent for any such
proposed termination, modification or entry unless PEPCO
reasonably determines that such termination, modification
or entry would materially impair the operation of the
Facility by Seller as a facility that is dispatchable by
PEPCO in accordance with the terms and provisions of this
Agreement or would otherwise materially impair PEPCO's
rights in accordance with the terms and provisions of this
Agreement. Seller agrees to pay or reimburse PEPCO for all
reasonable costs and expenses reasonably incurred by PEPCO
in connection with any third party review in accordance
with Appendix H up to a maximum of $50,000.00 per review.
(b) Without the prior written approval of
PEPCO, Seller may not: (i) modify any of the Financing
Documents which include provisions that may affect PEPCO's
rights under this Agreement, or for which the Financing
Parties have requested PEPCO's consent, or which PEPCO has
executed or (ii) enter into any refinancing or additional
financing with respect to the Facility. PEPCO's review and
approval or disapproval of any such modification,
refinancing or additional financing shall be subject to the
same standards as set forth in Subsection 3.3(b) for
PEPCO's review and approval or disapproval of the Financing
Documents submitted by Seller pursuant to Subsections
3.2(g) and 3.3(b).
8.10 Operating Committee.
(a) Seller and PEPCO agree to establish an
Operating Committee consisting of one (1) representative
each of Seller and PEPCO. The Operating Committee shall
act only by unanimous agreement or consent. Seller and
PEPCO shall designate their respective representatives to
the Operating Committee, plus any alternate, by written
notice delivered in accordance with Section 19.2. Each
Party's representative on the Operating Committee is
authorized to act on behalf of such Party with respect to
any matter arising under this Agreement.
(b) The Operating Committee shall develop
and implement suitable operating, maintenance, outage and
capability reporting, accounting, and recordkeeping
policies and procedures to coordinate the operation of the
Facility with the operation of the PEPCO System and
facilitate the coordination and interaction between the
Parties with respect to their performance of the duties and
obligations imposed on the Parties hereunder. The
Operating Committee shall not, however, have any authority
to modify or otherwise alter the rights and obligations of
the Parties under this Agreement.
(c) Seller shall keep the Operating
Committee informed on a current basis of its own policies
and procedures for operation and maintenance of the
Facility and for otherwise implementing this Agreement and
shall discuss with the Operating Committee its suggestions
and proposals with respect to these matters.
ARTICLE IX
INTERCONNECTION
9.1 Interconnection and Transmission
Facilities. (a) All metering devices specified in Appendix
E and all Interconnection Facilities to be installed on
PEPCO's side of the Interconnection Point necessary to
enable PEPCO to receive power from the Facility at the
Interconnection Point, including, but not limited to, any
transformers, switches, relays, other protective devices,
communications equipment and safety equipment, and
transmission improvements necessary to accommodate the
interconnection of the Facility to the PEPCO System shall
be planned, designed, constructed, installed, operated and
maintained by PEPCO at the expense of Seller (except as
otherwise specified in Subsections 10.2(a) and 10.2(b) with
respect to responsibility for the expense of inspecting and
testing the metering devices). Such amounts shall be paid
by Seller to PEPCO pursuant to Section 6.6. All
Interconnection Facilities, other than the metering devices
specified in Appendix E, to be installed at the Site or on
property not owned by PEPCO shall be planned, designed,
constructed, installed, operated and maintained by, and at
the expense of, Seller in accordance with PEPCO's
requirements.
(b) All Transmission Facilities necessary
to transmit power from the line side of the Facility's line
disconnect switch to the line side of the line disconnect
switch at PEPCO's Burches Hill Substation shall be
designed, constructed and installed in accordance with
PEPCO's requirements by Seller and at Seller's expense
pursuant to Section 9.6. Subject to PEPCO's approval and
in accordance with Subsection 7.3(a)(v), prior to the
Actual Commercial Operation Date Seller shall transfer
ownership of the Transmission Facilities and its rights in
the Transmission Facilities Site to PEPCO at no cost to
PEPCO. PEPCO shall be responsible for all maintenance of
the Transmission Facilities after the date of such
transfer.
9.2 Cost Estimate and Schedule for Design
and Construction.
(a) Seller shall, no later than two (2)
Years prior to the Scheduled Commencement Date, provide
PEPCO with such information concerning the Facility as
PEPCO may reasonably require to prepare an Interconnection
Plan and a cost estimate and schedule for the
Interconnection Facilities to be installed by PEPCO. Such
information shall include, as a minimum (i) a functional
one-line diagram of the Facility showing at least the
generator(s), protective relay functions, step-up
transformers and circuit breakers proposed by Seller, (ii)
a Site plan showing Facility layout, property lines, access
road, and proposed boundaries allowed for the switchyard
and (iii) confirmation of the Scheduled Commencement Date.
(b) As soon as reasonably practicable, but
in any event no later than one hundred and twenty (120)
Days after receipt of the information provided by Seller
pursuant to Subsection 9.2(a), PEPCO shall provide Seller
with (i) an Interconnection Plan, (ii) an estimate of the
Interconnection Costs for PEPCO's design, procurement,
construction, and installation of the Interconnection
Facilities to be installed by PEPCO, including the metering
devices and metering systems required in connection with
the performance of this Agreement, which estimate shall
include, among other matters, any applicable overhead
costs, and (iii) a schedule for all work relating to the
Interconnection Facilities to be provided by PEPCO designed
to complete such work within a period mutually acceptable
to both Parties, but in any event prior to the Scheduled
Commencement Date; provided that: (iv) such plan,
estimate, or schedule shall be revised to the extent
necessary, consistent with Prudent Utility Practices, as
determined by PEPCO if Seller provides revised or
additional information which materially affects such plan,
estimate, or schedule, (v) engineering analysis confirms
the technical feasibility of the proposed interconnection
and (vi) such Interconnection Plan is completed at least
eighteen (18) Months prior to the Scheduled Commencement
Date.
(c) Seller agrees to grant, or cause to be
granted, to PEPCO all necessary rights of way and
easements, including adequate and continuing access rights
to, and on, the Site or other property of Seller, necessary
to install, operate, maintain, replace and/or remove any
Interconnection Facilities or Transmission Facilities.
Seller agrees that rights of way and easements shall
survive termination or expiration of this Agreement. Prior
to the construction, by PEPCO, of the Interconnection
Facilities, Seller agrees to execute such other grants,
deeds or documents as PEPCO may require to record such
rights of way and easements. PEPCO agrees to grant to
Seller on land which PEPCO owns or controls (by right of
way) all easements, permits or permission required by
Seller to construct and operate the Facility during the
Term of this Agreement and to construct and operate the
Transmission Facilities prior to the transfer of the
Transmission Facilities to PEPCO pursuant to Subsection
7.3(a)(v). Consideration for such grants, deeds or
documents shall be the execution of this Agreement and no
other consideration shall be required.
(d) PEPCO shall complete the construction
and installation of the Interconnection Facilities to be
installed by PEPCO in accordance with Prudent Utility
Practices and the schedule established pursuant to
Subsection 9.2(b)(iii), as such schedule may be modified as
provided above; provided, however, that PEPCO's obligation
to complete the construction and installation of such
Interconnection Facilities in accordance with such schedule
is expressly conditioned on Seller's submission of data in
support of the Interconnection Facilities in a timely
manner as required by this Agreement and in form and
substance meeting the requirements of PEPCO. PEPCO shall
provide Seller with notice of changes in such schedule in a
timely manner. Failure by PEPCO to complete the
Interconnection Facilities by the date specified pursuant
to Subsection 9.2(b)(iii) shall not be considered a breach
of this Agreement to the extent that such failure can
reasonably be attributed to any of the following:
(i) Events of Force Majeure;
(ii) The failure of Seller to comply with
Subsection 9.2(c); and
(iii) The failure of Seller to make any
monthly payment of Interconnection Costs to PEPCO
pursuant to Section 9.3.
9.3 Interconnection Costs. All Interconnection
Costs incurred by PEPCO in accordance with the estimates
provided pursuant to Section 9.2 shall be paid by Seller
in the following manner. Within twenty (20) Days after the
end of each Month commencing with the Month after PEPCO
provides Seller with the Interconnection Plan described
in Subsection 9.2(b) and continuing until Seller has paid
such Interconnection Costs to PEPCO in full, PEPCO shall
submit to Seller a detailed statement of the Interconnection
Costs actually incurred by PEPCO during the preceding Month
and copies of invoices from third parties relating thereto.
Within twenty (20) Days after receipt of such detailed
statement, Seller shall pay to PEPCO the Interconnection
Costs as specified in such statement.
9.4 Protective Devices. Final approval of
the design, construction, and installation of the
protective relays, step-up transformers, circuit breakers,
and other protective devices that Seller proposes to
install on the Facility side of the line disconnect switch
insofar as the requirements of PEPCO are concerned, is
reserved to PEPCO. Such approval shall not be unreasonably
delayed or withheld. PEPCO's approval shall not be required
hereunder for the generating equipment (however,
information with respect to the generating equipment for
the purpose of determining the adequacy of the other
equipment and devices described in the preceding sentence
shall be provided). PEPCO reserves the right to modify or
expand its requirements for protective devices for the
Interconnection Facilities in accordance with Prudent
Utility Practices. Except as otherwise provided in
Appendix C, each Party shall be responsible for installing
equipment necessary to protect its own facilities from
possible damage by reason of electrical disturbances or
faults caused by the operation, faulty operation, or
nonoperation of the other Party's facilities.
9.5 Access to Facility and Site. Seller
authorizes and empowers PEPCO and its authorized agents to
have reasonable access to the Facility and the Site, upon
reasonable prior notice (in light of the circumstances) and
subject to Seller's safety rules and regulations, in
connection with the design, construction, installation,
operation, and maintenance of any of the Interconnection
Facilities or Transmission Facilities and for the purpose
of reading and maintaining meters, examining, repairing, or
removing any of PEPCO's property, or other purposes related
to the operation and maintenance of such Interconnection
Facilities and Transmission Facilities. Such access shall
include access to the Seller's maintenance records upon
twenty-four (24) Hours notice by PEPCO.
9.6 Transmission Facilities. As soon as
reasonably practicable, but in any case no later than two
(2) Years prior to the Scheduled Commencement Date, Seller
shall provide PEPCO with the Transmission Facilities Plan,
which shall: (a) be consistent with Prudent Utility
Practices, Appendix J, and PEPCO's requirements, (b)
identify the Transmission Facilities to be constructed and
installed and (c) include a schedule for all work relating
to the Transmission Facilities to be provided by Seller
designed to complete such work within a period mutually
acceptable to both Parties, but in any event prior to the
Scheduled Commencement Date. The Transmission Facilities
Plan shall be subject to review and approval or disapproval
by PEPCO, which approval or disapproval shall be provided
within ninety (90) Days of PEPCO's receipt of the
Transmission Facilities Plan. Seller shall be responsible
for: (x) obtaining all governmental or regulatory
approvals required for construction and operation of the
Transmission Facilities by Seller prior to the transfer of
the Transmission Facilities to PEPCO pursuant to Subsection
7.3(a)(v) and for the initial operation of the Transmission
Facilities by PEPCO subsequent to such transfer (including,
but not limited to, any certificate of public convenience
and necessity for the Transmission Facilities required from
the Maryland Commission), (y) obtaining all easements and
rights of way required for construction and operation of
the Transmission Facilities located on land other than land
owned by PEPCO as of the Effective Date (including
appropriate environmental indemnifications to PEPCO from
the parties providing each easement or right of way
satisfactory to PEPCO in its sole discretion) and (z)
constructing the Transmission Facilities in accordance with
the Transmission Facilities Plan, as reviewed and approved
by PEPCO. Each governmental or regulatory approval to be
obtained by Seller in accordance with Subsection 9.6(x)
must be in form and substance satisfactory to PEPCO in its
sole discretion.
ARTICLE X
METERING
10.1 Metering Devices.
(a) The electricity delivered to PEPCO by
Seller pursuant to this Agreement shall be measured by
metering devices to be owned, installed, maintained, and
read by PEPCO in accordance with Prudent Utility Practices.
For billing and payment purposes, PEPCO will use data
collected at PEPCO's control center from signals
telecommunicated by the metering devices included in
Appendix E.
(b) The number, type and general location
of such metering devices shall be as set forth in the
Metering Plan contained in Appendix E. All PEPCO metering
devices shall be sealed and the seal shall be broken only
by PEPCO when such metering devices are to be inspected and
tested or adjusted in accordance with Sections 10.2 and
10.3.
(c) Upon request from Seller, PEPCO will,
consistent with Prudent Utility Practices, provide Seller
with reasonable access to pulse initiating contacts that
Seller may use.
10.2 Inspection of Metering Devices.
(a) PEPCO shall inspect and test all
metering devices at its own expense upon installation and
thereafter at least as frequently as required by American
National Standards Institute (ANSI) Standard C21.1. PEPCO
shall provide Seller with reasonable advance notice of, and
permit a representative of Seller to witness and verify,
such inspections and tests and any adjustments to be made
thereto in accordance with this Section 10.2 and Section
10.3.
(b) Upon request by Seller, PEPCO shall
perform additional inspections or tests of any PEPCO
metering device. Seller and PEPCO shall agree on a
mutually convenient time for such test and PEPCO shall
permit a qualified representative of Seller to inspect or
witness such testing of any metering device. The
reasonable and actual expense of any such requested
additional inspection or testing shall be borne by Seller
unless, upon such inspection or testing, a metering device
is found to register inaccurately by more than the
allowable limit for meter accuracy established by the
Maryland Commission for retail electric service (which
currently is plus/minus two percent (2%) of true registration), in
which event the expense of the requested additional
inspection or testing shall be borne by PEPCO.
(c) If a PEPCO metering device is found to
be defective or inaccurate it shall be adjusted, repaired,
replaced, and/or recalibrated by PEPCO. Subject to the
provisions of Appendix E, Seller may elect to install and
maintain at its own expense, as part of the Facility, back
up metering including separate current and potential
transformers in addition to those installed and maintained
by PEPCO. At all times, Seller agrees to keep all meter
locations associated with the Facility clean, clear and
accessible to PEPCO and its authorized agents upon
reasonable advance notice.
10.3 Adjustments for Inaccurate Meters. If
a PEPCO-owned metering device fails to register, or if the
measurement made by a metering device is found upon testing
to be inaccurate pursuant to the standard set by the
Maryland Commission for retail electric service (which
currently is plus/minus two percent (2%) of true registration) an
adjustment shall be made correcting all measurements by the
inaccurate or defective metering device for billing
purposes for both the amount of the inaccuracy and the
period of the inaccuracy, in the following manner:
(a) In the event that the Parties cannot
agree on the amount of the adjustment necessary to correct
the measurements made by any inaccurate or defective
metering device, the Parties shall use Seller's back-up
metering devices, if installed, to determine the amount of
such inaccuracy; provided, however, that in the event that
Seller's back-up metering devices also are found upon
testing to be inaccurate by more than the allowable limits
applicable to PEPCO's metering devices under this Section
10.3 and the Parties cannot agree on the amount of the
adjustment necessary to correct the measurements made by
such inaccurate or defective back-up metering devices, the
Parties shall estimate the amount of the necessary
adjustment on the basis of deliveries of Net Electrical
Output during periods of similar operating conditions
(e.g., based on the Facility's fuel use records) when the
PEPCO metering devices were registering accurately;
(b) In the event that the Parties cannot
agree on the actual period during which the inaccurate
measurements were made, the period during which the
measurements are to be adjusted shall be the shorter of (i)
one-half of the period from the last previous test of the
metering device, or (ii) the one hundred and eighty (180)
Days immediately preceding the test which found the
metering device to be defective or inaccurate; and
(c) To the extent that the adjustment
period covers a period of deliveries for which payment has
already been made by PEPCO, PEPCO shall use the corrected
measurements as determined in accordance with Subsections
10.3(a) or 10.3(b) to recompute the amount due for the
period of the inaccuracy and shall subtract the previous
payments by PEPCO for this period from such recomputed
amount. If the difference is a positive number, that
difference shall be paid by PEPCO to Seller; if the
difference is a negative number, that difference shall be
paid by Seller to PEPCO. Payment of such difference by the
owing Party shall be made within the thirty (30) Day time
period specified in Section 6.6.
ARTICLE XI
REPRESENTATIONS, WARRANTIES AND
ADDITIONAL COVENANTS OF SELLER
AND PEPCO'S REPRESENTATIONS
11.1 Qualifying Facility. Seller
represents and warrants that the Facility is a qualifying
cogeneration facility under 18 CFR 292.201-292.207.
11.2 Fuel Supply and Transportation.
(a) Seller covenants that at all times,
from the Actual Commercial Operation Date and continuing
throughout the Term of this Agreement, Seller will have a
reliable supply of Fuel of quality and in quantity
sufficient to meet the energy delivery requirements
hereunder of the Dispatchable Portion and Limited Dispatch
Portion of the Dependable Capacity, and reliable
transportation therefor. Without limiting the nature of
the foregoing in any manner, Seller specifically covenants
that throughout the Term of this Agreement: (i) Seller
will own sufficient reserves of natural gas to satisfy the
gas reserve commitment in Appendix M, (ii) Seller will
acquire sufficient additional supplies of natural gas and
oil from time to time to meet the remaining fuel
requirements of its Facility, (iii) Seller will contract
for sufficient firm pipeline transportation capacity to
transport sufficient volumes of natural gas to meet the
fuel requirements for the First Dispatch Segment and the
Second Dispatch Segment, and (iv) Seller will obtain
sufficient interruptible pipeline transportation capacity
to transport the remaining natural gas requirements of the
Facility.
(b) Seller covenants that at all times,
from the Actual Commercial Operation Date and continuing
throughout the Term of this Agreement, Seller reasonably
expects that, as determined over the Term of this
Agreement, Seller will be able to obtain Fuel on a basis
that will enable Seller to recover its variable operating
costs, including, but not limited to, those costs required
for Fuel and fuel transportation, from the Monthly Energy
Payment which Seller receives from PEPCO pursuant to
Section 6.2 of this Agreement.
11.3 Operating and Maintenance Standards.
Seller covenants that the Facility will be operated and
maintained in accordance with (a) operating and maintenance
standards recommended by the Facility's equipment
suppliers, (b) Prudent Utility Practices, including without
limitation, synchronizing, voltage and reactive power
control, (c) operating procedures developed pursuant to
Subsections 7.1(h) and 8.10(b), and (d) the requirements of
Appendix C.
11.4 Effects on Voltage. Seller covenants
that the Facility will be operated in such a manner so as
not to have an adverse effect on PEPCO's voltage level or
waveform.
11.5 Electrical Characteristics. Seller covenants
that the Facility will be operated with the electrical
characteristics specified in Section 5.2.
11.6 Status and Authorization. The Seller
represents and warrants:
(a) The Seller is a limited partnership
duly organized, validly existing and in good standing under
the laws of the State of Delaware and is qualified as a
foreign entity in good standing in the State of Maryland
and in each other jurisdiction where the failure so to
qualify would have a material adverse effect upon the
business or financial condition of the Seller or the
Facility; and the Seller has all requisite power and
authority to conduct its business, to own its properties,
and to execute, to deliver, and to perform its obligations
under this Agreement.
(b) The execution, delivery and performance
by the Seller of this Agreement have been duly authorized
by all necessary partnership action, and do not and will
not (i) require any consent or approval of the holders of
partnership interests in Seller, other than those which
have been obtained (evidence of which shall be, if it has
not theretofore been, delivered to PEPCO), or (ii) result
in a breach or constitute a default under the Seller's
certificate of limited partnership or partnership
agreement, any indenture, contract or agreement to which it
is a party or by which it or its properties may be bound,
or (iii) violate any law, rule, regulation, order, writ,
judgment, injunction, decree, determination, or award
presently in effect having applicability to the Seller.
(c) No authorization or approval by any
governmental or other official agency is necessary for the
due execution and delivery of this Agreement by Seller.
(d) This Agreement is a valid, legal and
binding obligation of the Seller, enforceable in accordance
with its terms.
(e) There is, as of the date of execution
of this Agreement, no pending or threatened action or
proceeding affecting the Seller before any court,
governmental agency or arbitrator that could reasonably be
expected to materially and adversely affect the financial
condition or operations of the Seller or the ability of the
Seller to perform its obligations hereunder, or which
purports to affect the legality, validity or enforceability
of this Agreement.
11.7 Permits; Compliance with Laws.
(a) Seller shall, at its expense, acquire,
and maintain in effect, from any and all federal, state and
local agencies, commissions and authorities with
jurisdiction over Seller, the Facility, and/or the
Transmission Facilities, all permits, licenses, approvals
and other governmental authorizations, and complete or have
completed all inspections and environmental impact studies,
in each case and to the degree necessary (i) for the
construction, operation and maintenance of the Facility,
for the construction and operation of the Transmission
Facilities by Seller prior to the transfer of the
Transmission Facilities to PEPCO pursuant to Subsection
7.3(a)(v), and for the initial operation of the
Transmission Facilities by PEPCO subsequent to such
transfer, (ii) for Seller to perform its obligations under
this Agreement, and (iii) to obtain and maintain
certification as a Qualifying Facility. Seller also shall,
at its expense, provide such support for PEPCO's
applications for approval of this Agreement by the District
of Columbia Commission and the Maryland Commission as may
be reasonably requested by PEPCO.
(b) Seller shall, at all times, conform to
all applicable laws, ordinances, rules and regulations
applicable to it, to the Facility and/or to the
Transmission Facilities.
11.8 Certificates. Seller agrees that,
upon request of PEPCO, it shall deliver or cause to be
delivered from time to time to PEPCO certifications of its
officers, accountants, engineers, or agents as to such
matters as PEPCO may reasonably request.
11.9 Continuity of Existence. Seller and
its general partner each agrees to preserve and keep in
force and effect its existence and all franchises, licenses
and permits necessary to the proper conduct of its
business, including without limitation the business of
constructing, owning and operating the Facility.
11.10 Books and Records; Information.
(a) Seller will keep proper books of record
and account in which full correct entries will be made of
all dealings or transactions of or in relation to its
business and affairs, in accordance with generally accepted
accounting principles consistently applied.
(b) Sixty (60) Days prior to the Scheduled
Commercial Operation Date, and within one hundred and
twenty (120) Days after the end of each Calendar Year
thereafter, Seller shall furnish to PEPCO copies of a
report from Seller's independent auditors stating that they
are not aware of any material modifications that should be
made in order for Seller's most recent annual audited
financial statements to be in conformance with generally
accepted accounting principles consistently applied. If
any report from Seller's auditors provided to PEPCO
includes any qualification, Seller shall provide PEPCO with
a copy of Seller's annual audited financial statements to
which such report refers.
11.11 PEPCO'S Representations. PEPCO
hereby represents that:
(a) this Agreement has been duly
authorized, executed and delivered by PEPCO, and is in full
force and effect on the date hereof; and
(b) this Agreement is a valid, legal and
binding obligation of PEPCO, enforceable in accordance with
its terms, except (i) as such enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium, or
other similar laws now or hereafter in effect relating to
creditors' rights generally, and (ii) to the extent that
the remedies of specific performance, injunctive relief and
other forms of equitable relief are subject to equitable
defenses, the discretion of the court before which any
proceeding therefor may be brought, and the principles of
equity in general.
ARTICLE XII
TAXES; FINES
12.1 Taxes.
(a) Except as specified in Subsection
15.2(b)(i) and as otherwise specified below, the payment of
any and all present or future federal, state, county, or
municipal taxes, or other lawful taxes imposed by any other
entity in connection with the design, construction,
operation or maintenance of the Facility or in connection
with the design and construction of the Transmission
Facilities shall be the sole and exclusive responsibility
and obligation of Seller.
(b) The Parties agree to oppose by all
reasonable lawful means any federal, state, county or
municipal tax that is sought to be imposed upon the
purchase or sale of the Dependable Capacity or Net
Electrical Output from the Facility, provided, however,
that any such tax which nevertheless is imposed upon Seller
(other than any taxes which Seller is required by law to
collect from PEPCO in connection with this Agreement) shall
be the sole and exclusive responsibility and obligation of
Seller and any such tax which nevertheless is imposed upon
PEPCO (other than any taxes which PEPCO is required by law
to collect from Seller in connection with this Agreement)
shall be the sole and exclusive responsibility and
obligation of PEPCO.
12.2 Fines.
(a) Any fines, penalties or other costs
incurred by Seller or its agents, employees or
subcontractors for noncompliance by Seller, its agents,
employees, or subcontractors with the requirements of any
laws, rules, regulations, licenses, permits, approvals or
other governmental requirements shall not be reimbursed by
PEPCO but shall be the sole responsibility of Seller.
(b) If such fines, penalties or other costs
are assessed against PEPCO by any government agency or
court due to noncompliance by Seller or its agents,
employees, or subcontractors with any laws, rules,
regulations, licenses, permits, approvals or other
governmental requirements or if the work of Seller or any
part thereof is delayed or stopped by order of any
government agency or court due to the noncompliance of
Seller or its agents, employees or subcontractors with any
such laws, rules, regulations, licenses, permits, approvals
or other governmental requirements, Seller shall indemnify
and hold harmless PEPCO against any and all losses,
liabilities, damages, and claims suffered or incurred
because of the failure of Seller, its agents, employees or
subcontractors to comply therewith. Seller shall also
reimburse PEPCO for any and all legal or other expenses
(including attorneys' fees) reasonably incurred by PEPCO in
connection with such losses, liabilities, damages or
claims.
(c) If such fines, penalties or other costs
are assessed against Seller by any government agency or
court due to noncompliance by PEPCO or its agents,
employees or subcontractors with any laws, rules,
regulations, licenses, permits, approvals or other
governmental requirements or if the work of PEPCO or any
part thereof is delayed or stopped by order of any
government agency or court due to the noncompliance of
PEPCO or its agents, employees or subcontractors with any
such laws, rules, regulations, licenses, permits, approvals
or other governmental requirements, PEPCO shall indemnify
and hold harmless Seller against any and all losses,
liabilities, damages, and claims suffered or incurred
because of the failure of PEPCO, its agents, employees or
subcontractors to comply therewith. PEPCO shall also
reimburse Seller for any and all legal or other expenses
(including attorneys' fees) reasonably incurred by Seller
in connection with such losses, liabilities, damages or
claims.
ARTICLE XIII
INSURANCE
13.1 Insurance Required
(a) Seller shall obtain, or cause to be
obtained by its EPC Contractor, prior to the commencement
of on-Site construction activities with respect to the
Facility (and prior to the commencement of construction
activities with respect to the Transmission Facilities),
and shall maintain in effect thereafter until the Actual
Commercial Operation Date the following insurance policies
and coverages with respect to the Facility, and with
respect to the Transmission Facilities prior to the
transfer of such Transmission Facilities to PEPCO pursuant
to Subsection 7.3(a)(v), in form and substance reasonably
satisfactory to PEPCO:
(i) "Comprehensive General Liability
Insurance," occurrence form, in the amount of at least
twenty million dollars ($20,000,000.00) annual
aggregate for all locations, including but not limited
to coverage for demolition of any building or
structure, collapse, blasting, excavation below
surface of the ground, operations, latent defects,
active malfunctions, broad form contractual liability
covering all liabilities assumed under the EPC
contract, property damage and personal injury;
(ii) "Workers' Compensation Insurance"
which complies with the law of the State of Maryland
and "Employers' Liability Insurance" with limits of at
least five hundred thousand dollars ($500,000.00);
(iii) "Comprehensive Automobile Insurance"
with bodily injury and property damage combined single
limit of at least one million dollars ($1,000,000.00)
per occurrence and in the aggregate. Such insurance
shall include owned, non-owned, hired and rented
vehicles;
(iv) "Completed Operations Insurance" for a
period of two (2) Years after the Actual Commercial
Operation Date;
(v) "Comprehensive Builders All Risk
Insurance" covering physical loss or damage including,
but not limited to, that caused by flood, earthquake,
windstorm, subsidence, comprehensive boiler and
machinery with testing exclusion deleted, vandalism,
malicious mischief, explosion, collapse and
underground hazards, erection, installation and
testing, while in transit, while in storage and until
completed and accepted in its entirety by Seller; and
(vi) Any other insurance required by
applicable law or which may otherwise be required by
the Financing Parties.
(b) Seller shall obtain from the Actual
Commercial Operation Date and shall maintain in effect
thereafter throughout the Term of this Agreement the
following insurance policies and coverages with respect to
the Facility, in form and substance reasonably satisfactory
to PEPCO:
(i) "Comprehensive or Commercial General
Liability Insurance" with bodily injury and property
damage combined single limits of at least one million
dollars ($1,000,000.00) per occurrence and two million
dollars ($2,000,000.00) in the aggregate, where
applicable, including but not limited to coverage for
"Completed Operations Liability", "Contractual
Liability" and "Broad Form Property Damage";
(ii) "Workers' Compensation Insurance"
which complies with the law of the State of Maryland
and "Employers' Liability Insurance" with limits of at
least five hundred thousand dollars ($500,000.00);
(iii) "Comprehensive Automobile Insurance"
with bodily and property damage combined single limit
of at least one million dollars ($1,000,000.00) per
occurrence and in the aggregate, covering owned, non
owned, hired and rented vehicles;
(iv) "All Risks Property Coverage
Insurance" and "Boiler and Machinery Insurance"
against damage to the Facility in amounts not less
than the construction cost of the Facility or its
replacement cost, whichever is greater, subject to
deductibles of no more than five hundred thousand
dollars ($500,000.00);
(v) "Excess Umbrella Liability Insurance"
with a limit of at least ten million dollars
($10,000,000.00) per occurrence and in the aggregate,
where applicable, in excess of the limits of insurance
provided in Subsections 13.1(b)(i) through
13.1(b)(iii) above; and
(vi) "Business Interruption Insurance" to
provide funds to cover all of Seller's costs to the
extent that such costs would not be eliminated or
reduced by the failure of the Facility to operate
(including but not limited to rent or mortgage
payments, interest and principal payments on loans or
bonds, salaries, and wages) for a period of at least
eighteen (18) Months after a deductible period not to
exceed two (2) Months. The nominal amount of coverage
required by Subsections 13.1(b)(iv) and 13.1(b)(vi)
shall be updated every five (5) years on the
anniversary of the Actual Commercial Operation Date as
agreed upon by the Parties in good faith negotiations
consistent with replacement cost values and gross
earning revenues.
13.2 Substitute Coverages. If the
designated coverages, or other relatively comparable
coverages, are unavailable on reasonable commercial terms,
Seller shall provide to PEPCO detailed information as to
the maximum amount of available coverage that it is able to
purchase on reasonable commercial terms; and shall be
required to obtain PEPCO's consent as to the adequacy of
said coverage under the circumstances prevailing at that
time, which consent PEPCO will not unreasonably withhold.
13.3 Scope of Insurance. Seller shall cause
the insurers providing the coverages described in Section
13.1 to amend or endorse each such "Comprehensive or
Commercial General Liability Insurance" and "Excess
Umbrella Liability Insurance" policy to (a) include PEPCO,
its directors, officers, and employees as additional
insureds, (b) provide that such insurance is primary with
respect to the interest of PEPCO, its directors, officers
and employees and that any other insurance maintained by
PEPCO, its officers, directors and employees is excess and
not contributory to the insurance provided under Section
13.1, (c) include a waiver of all rights of subrogation
against PEPCO, its directors, officers and employees, (d)
contain a severability of interest provision, (e) provide
that none of PEPCO, its directors, officers or employees
shall be liable for the payment of premiums under such
policy, (f) provide that complete copies of all inspection
or other reports required or performed for the insurer
shall be provided to PEPCO within thirty (30) Days of
delivery to Seller, and (g) provide for at least thirty
(30) Days' written notice to PEPCO prior to the
cancellation, termination, nonrenewal or material change of
such insurance.
13.4 Evidence of Insurance. Seller shall
cause such insurers or the agents thereof to provide PEPCO
with certificates of insurance evidencing the policies and
endorsements described in Sections 13.1 and 13.3 initially
at the times specified in Subsections 3.2(k) and 3.2(n) and
annually thereafter. Failure to provide such certificates
shall not relieve Seller of the insurance requirements
described herein, nor shall failure to obtain or maintain
such insurance relieve, or in any way reduce, any
obligation or liability imposed on Seller elsewhere in this
Agreement.
13.5 Application of Proceeds. For the Term
of this Agreement, and subject to the requirements of the
Financing Documents reviewed and approved by PEPCO pursuant
to Subsections 3.2(g), 3.3(b), 3.3(d) or 8.9(b) or the
exercise of any rights or remedies of the Financing Parties
under such Financing Documents, Seller shall either apply
the proceeds of any such insurance policies for damages to
the Facility, as well as the proceeds of any condemnation
awards or proceeds from any other recovery with respect to
the Facility, to the repair of the Facility, or, if the
Facility is not repaired, Seller shall use such proceeds to
pay PEPCO the liquidated damages, which are due to PEPCO,
pursuant to Article IV to the extent such damages are not
adequately provided by the Development Security or
Interconnection Security, unless Seller and PEPCO shall
otherwise agree.
13.6 Primary or Excess Insurance. Any
insurance required by this Article XIII may be satisfied by
any combination of primary or excess insurance at Seller's
option.
ARTICLE XIV
FORCE MAJEURE
14.1 Effect of Force Majeure. Subject to
the limitations set forth in this Agreement, in the event
that either Party is rendered unable by reason of an event
of Force Majeure in effect after the Closing Date, to
perform, wholly or in part, any obligation or commitment
set forth in this Agreement, then upon such Party's giving
notice and full particulars of such event as soon as
practicable after the occurrence thereof, the obligations
of such Party (except for the obligation to pay sums of
money owing hereunder for periods prior to the event of
Force Majeure) shall be suspended to the extent of such
Force Majeure condition, and such Party shall not be deemed
to be in breach of this Agreement, for the period of such
Force Majeure condition up to a maximum of: (a) three
hundred and sixty (360) Days, if such condition occurs
subsequent to the Closing Date but before the Actual
Commercial Operation Date, or (b) five hundred and forty
(540) Days, if such condition occurs subsequent to the
Actual Commercial Operation Date. Notwithstanding the
foregoing, Force Majeure shall not be applicable to any of
the occurrences specified in Article XV, except: (y) the
events of default covered by Subsection 15.1(b), or (z) to
the extent that Force Majeure is explicitly provided for in
Subsection 15.1(c).
14.2 Force Majeure Defined. For purposes of
this Agreement, Force Majeure shall mean an event,
condition, or circumstance beyond the reasonable control
and without the fault or negligence of the Party claiming
Force Majeure, which, despite all reasonable efforts of the
Party claiming Force Majeure to prevent it, causes a
material delay or disruption in the performance of any
obligation imposed hereunder. Force Majeure shall include,
without limitation, acts of God, natural disasters, fires,
earthquakes, lightning, floods, storms, civil disturbances,
riots, war, the action of a court or action or failure to
act on the part of any governmental body having or
asserting jurisdiction that is binding upon the Parties and
has been opposed by all reasonable lawful means, strikes,
lockouts or other labor disputes, or any other such causes
or events to the extent beyond the reasonable control, and
without the fault or negligence, of the Party relying
thereon as justification for not performing an obligation
or complying with any condition required of such Party
under this Agreement. Under no circumstances will lack of
finances be construed to constitute Force Majeure.
14.3 Notification and Obligation to Remedy
the Cause of Force Majeure. In the event of the occurrence
of a Force Majeure after the Closing Date, which prevents a
Party from performing its obligations hereunder, such Party
shall (i) immediately notify the other Party in writing of
such Force Majeure, (ii) not be entitled to suspend
performance of any greater scope or longer duration than is
required by the Force Majeure, (iii) use its best efforts
to mitigate the effect of such event of Force Majeure,
remedy its inability to perform and resume full performance
hereunder, (iv) keep such other Party apprised of such
efforts on a continual basis and (v) provide written notice
of the resumption of performance hereunder provided,
however, that the settlement of any strike, lockout or
labor dispute constituting a Force Majeure shall be within
the sole discretion of the Party to this Agreement involved
in such strike, lockout or labor dispute and the
requirement that a Party must use its best efforts to
remedy the cause of the Force Majeure and/or mitigate its
effects and resume full performance hereunder shall not
apply to strikes, lockouts, or labor disputes.
14.4 Limitations on Force Majeure; Right to Terminate.
(a) Notwithstanding any provision of this
Agreement, in no event will any condition of Force Majeure:
(i) extend the Actual Commercial Operation Date for the
Facility beyond June 1, 1997, or (ii) extend the dates for
posting Development Security, Interconnection Security, or
Performance Security beyond those set forth in Sections
4.1, 4.2 and 4.5, respectively.
(b) In no event will any condition of Force
Majeure extend this Agreement beyond the Term specified in
Article II. If any condition of Force Majeure excuses a
Party's performance for a time period greater than: (i)
three hundred and sixty (360) Days in the event a Force
Majeure occurring during the period between the Closing
Date and the Actual Commercial Operation Date, or (ii) five
hundred and forty (540) Days during the period after the
Actual Commercial Operation Date, the Party not excused by
such Force Majeure may terminate this Agreement immediately
by written notice to the other Party, without further
obligation, or extend such period at its sole discretion.
ARTICLE XV
TERMINATION AND DEFAULT
15.1 Event of Default. The occurrence of
any one of the following shall constitute an Event of
Default:
(a) Either Party fails to make timely
payment of any amounts due to the other Party under this
Agreement, which failure continues for a period of sixty
(60) Days after notice of such non-payment, provided,
however, that the failure to make such payment shall not be
an Event of Default during any period in which the payment
is being disputed in good faith pursuant to Section 6.5; or
(b) Either Party fails to comply with a
material provision of this Agreement, which failure
continues for a period of sixty (60) Days after notice of
such non-performance, unless such non-performance cannot
reasonably be cured within the sixty (60) Day notice period
and the defaulting Party is thereafter diligently pursuing
remedial efforts with regard to the failure, in which case
the defaulting Party will have an additional period of
sixty (60) Days or such other additional reasonable time
period as the Parties may mutually agree upon in light of
the circumstances to cure such default. Notwithstanding
the foregoing, the provisions of this Subsection l5.1(b)
shall not be applicable to: (i) Events of Default that are
subject to any other subsection of this Section 15.1, (ii)
any failure which automatically terminates or entitles
PEPCO to immediately terminate this Agreement pursuant to
any other provision of this Agreement, in which case such
failure shall, unless waived by PEPCO, constitute an
immediate Event of Default, or (iii) loss of Qualifying
Facility status by the Facility; or
(c) Any (i) reduction of the Equivalent
Availability Factor of the Facility to less than fifty
percent (50%), or (ii) increase in the Equivalent Forced
Outage Rate for the Facility to greater than twenty percent
(20%), as calculated in either such case for a period of
more than eighteen (18) consecutive Months, exclusive of:
(i) any periods (not to exceed eighteen (18) Months) in
which one or more Emergency Conditions is in effect; and
(ii) any periods (not to exceed eighteen (18) Months) in
which one or more events of Force Majeure is in effect.
PEPCO shall include with the monthly billing statement
provided to Seller pursuant to Subsection 6.5(a),
calculations of the Equivalent Availability Factor and
Equivalent Forced Outage Rate of the Facility for the most
recent time periods referred to in this Subsection l5.1(c)
for which data are available; or
(d) Seller sells any Dependable Capacity or
Net Electrical Output from the Facility to any party other
than PEPCO; or
(e) The Closing Date does not occur by
December 1, 1994; or
(f) By order of a court of competent
jurisdiction, a receiver or liquidator or trustee of either
Party or of a substantial part of the assets of either
Party shall be appointed, and such 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 a
substantial part of the assets of such Party shall have
been sequestered, and such decree shall not have been
dismissed, revoked, stayed, or discharged within sixty (60)
Days after the entry thereof, or if an order for relief
shall be entered by a court of competent jurisdiction
against a Party in an involuntary case pursuant to any of
the provisions of the Federal Bankruptcy Code (Title 11,
Bankruptcy, U.S. Code), 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, which order shall not have been dismissed within
sixty (60) Days after such entry, provided, however, that,
if the Actual Commercial Operation Date has occurred, the
failure to dismiss, revoke, stay or discharge any such
action within such sixty (60) Day period shall not be an
Event of Default for as long as: (i) Seller is pursuing a
motion for rehearing or reconsideration or an appeal of
such order or decree, and (ii) the Facility is continuing
to operate in a manner consistent with this Agreement; or
(g) Either Party shall file a voluntary
petition under bankruptcy 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 Code (Title 11, Bankruptcy, U.S. Code),
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
an assignment of a substantial part of its assets for the
benefit of its creditors, or if a Party shall become unable
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 a substantial part of its
assets; or
(h) The Site or the Facility is taken, in
whole or in part, by the exercise by a person or entity of
the right of eminent domain or its equivalent unless (i)
such person or entity agrees to be bound by this Agreement
and demonstrates to the reasonable satisfaction of PEPCO
that it is capable of fulfilling the requirements of this
Agreement or (ii) Seller demonstrates to the reasonable
satisfaction of PEPCO that Seller's rights to operate the
Facility and PEPCO's rights under this Agreement are not
materially impaired; or
(i) The Development Security, the
Interconnection Security, the Performance Security or the
Maintenance Reserve is not provided in accordance with this
Agreement; or
(j) The Development Security, the
Interconnection Security, the Performance Security, or the
Maintenance Reserve that has been provided in accordance
with this Agreement becomes materially and adversely
impaired through no fault or action or inaction of PEPCO,
which impairment continues for a period of sixty (60) Days
after PEPCO's notice to Seller of such impairment (such
impairment shall be deemed to include, but shall not be
limited to, instances when the financial institution or
other entity that has been used by Seller to provide a form
of security or reserve no longer satisfies the objective
criteria for such institutions or entities set forth in
this Agreement); or
(k) Any tampering by Seller, or its
employees, agents, contractors or subcontractors of any
tier with the Interconnection Facilities on PEPCO's side of
the Interconnection Point or the Transmission Facilities on
the line side of the Facility's line disconnect switch
without the prior written consent of PEPCO (except in
situations where such actions are taken to prevent
immediate injury, death, or property damage, and Seller
uses its best efforts to provide PEPCO with advance notice
of the need for such actions), which Seller does not stop
immediately after receiving notice of such tampering from
PEPCO; or
(l) The Fuel Supply Contract(s) shall cease
to be effective in substantially the form initially
furnished to PEPCO as the result of modification or
termination, or the Financing Documents or the Steam Supply
Contract in the forms initially provided to PEPCO shall be
amended or modified, or Seller shall have entered into a
replacement for any such contract or an additional such
contract, unless consent to the modification or termination
of any such Fuel Supply Contract, Financing Document or
Steam Supply Contract, or to any additional such contract,
has been obtained in accordance with the provisions of
Section 8.9 or is not required pursuant to such section; or
(m) Seller shall fail to use the
supplemental firing capability of the Facility or other
special equipment or methods used by Seller in establishing
the Dependable Capacity to generate Net Electrical Output
when the Facility is dispatched by PEPCO at levels up to
230 MW that require supplemental firing or such other
special equipment or methods, provided that there is no
physical equipment limitation preventing use of the
supplemental firing capability, or such other special
equipment or methods, of the Facility, which failure
continues for a period of thirty (30) Days after notice
from PEPCO for such failure.
15.2 Remedies for Default.
(a) If an Event of Default occurs, the non
breaching Party may, in addition to any rights described in
specific sections and subsections of this Agreement,
terminate this Agreement by giving notice of such default
and intention to terminate to the other Party, which
termination shall be effective no earlier than the 30th Day
following the date of said notice (except for terminations
pursuant to termination rights provided in Subsections
3.1(d), 3.1(e), 4.1(b), 4.1(c), 6.3(a), 7.1(a) or 14.4(b),
in which case such termination shall be effective
immediately upon such notice or as otherwise set forth in
each such Subsection), whereupon both Parties shall be
relieved of all obligations and liabilities under this
Agreement, except for payment of amounts due before the
effective date of termination or except as otherwise
explicitly provided in this Agreement. The period between
the giving of notice of intention to terminate and the
effective termination date shall not constitute an
additional cure period and the non-breaching Party's right
to terminate will not be affected by any actions of the
breaching Party during such period. If, pursuant to its
rights under this Agreement, PEPCO terminates this
Agreement prior to the Actual Commercial Operation Date,
the amounts specified in Sections 4.1 and 4.2 or Section
15.3, as the case may be, in event of such termination
shall be liquidated damages and shall be the sole and
exclusive remedy of either Party. Except as otherwise
provided in this Subsection 15.2(a), the nonbreaching Party
may exercise any rights or remedies it has at law or in
equity, including but not limited to bringing suit for
monetary damages (unless this Agreement provides for
liquidated damages for the harm caused by the default),
injunctive relief and specific performance.
(b) (i) In addition to all of PEPCO's
rights under this Section 15.2, but subject to the rights
of any Financing Party under Financing Documents reviewed
and approved by PEPCO pursuant to Subsections 3.2(g),
3.3(b), 3.3(d) or 8.9(b) so long as such Financing
Documents are in effect, in the case of an Event of Default
by Seller and if operation of the Facility is not assumed
by any Financing Party or assignee of the Financing Party
within one hundred and twenty (120) Days after such Event
of Default (the "Financier Period"), PEPCO shall have the
right, but under no circumstances the obligation, either:
(A) to purchase the Facility at fair market value as
determined in accordance with the valuation procedures
contained in Appendix G, or (B) to assume responsibility for
the operation and/or the construction of the Facility so as
to assure the uninterrupted availability of electric power,
in which case PEPCO shall also assume liability for the costs
associated with operating or constructing the Facility
(including, but not limited to, obligations to the
Financing Parties) after the date that PEPCO assumes
operating or construction responsibility. Seller shall
assure that the Financing Documents specifically
acknowledge this right of PEPCO. PEPCO's obligation to
make Monthly Capacity Payments and Monthly Energy Payments
to Seller pursuant to Sections 6.1 and 6.2 shall terminate
when PEPCO assumes responsibility for the construction
and/or operation of the Facility, if such obligations have
not previously terminated. Within ninety (90) Days after
the sooner to occur of the expiration of the Financier
Period or the date upon which the Financing Parties notify
PEPCO that they will not exercise this right, PEPCO shall
notify Seller whether PEPCO elects to purchase the Facility
or to assume responsibility for the construction and/or
operation of the Facility pursuant to this Subsection
15.2(b)(i). If PEPCO notifies Seller within such period
that PEPCO intends to exercise its right to purchase the
Facility or to assume responsibility for the construction
and/or operation of the Facility, Seller shall immediately
enter into good faith negotiations with PEPCO with the
objective of reaching a purchase agreement or a
construction and/or operating agreement, as the case may
be, on terms and conditions acceptable to each Party within
two hundred and seventy (270) Days after expiration of the
Financier Period, and Seller shall not negotiate with any
other person for such purposes during this period. It is
the intent of the Parties that the terms and conditions of
any such construction and/or operating agreement shall
include, as appropriate, provision for Seller to resume
operation of the Facility if Seller is able to demonstrate
to PEPCO's satisfaction that Seller is able to perform its
obligations under this Agreement and to operate the
Facility in accordance with this Agreement. During such
two hundred and seventy (270) Day period, Seller shall
provide PEPCO with the opportunity to inspect, examine, and
audit all records necessary to evaluate the operational
viability of the Facility and Seller's obligations. In the
event that PEPCO exercises its option to assume
responsibility for construction and/or operation of the
Facility pursuant to this Subsection 15.2(b)(i), the
Parties agree and acknowledge that PEPCO shall be liable
only for those obligations of Seller in connection with the
Facility arising after the date on which PEPCO assumes such
construction and/or operation responsibility. PEPCO in no
event shall be liable for any of Seller's obligations prior
to such date.
(ii) In no event shall PEPCO's election to
assume responsibility for constructing and/or operating the
Facility be deemed to be a transfer of title in the
Facility, or a transfer of Seller's obligations as owner
thereof arising from the period prior to PEPCO's assumption
of construction and/or operating responsibility for the
Facility.
(iii) During any period in which PEPCO
operates the Facility, PEPCO shall exercise its reasonable
efforts, consistent with Prudent Utility Practices, to
produce and deliver electrical energy, subject to the
Facility being operable at the time of PEPCO's takeover, or
later being made operable by repairs or otherwise.
15.3 Termination Due to Market Forces.
(a) In addition to the termination rights
which PEPCO has been granted in other provisions of this
Agreement, PEPCO may terminate its obligations under this
Agreement at any time prior to the Actual Commercial
Operation Date by giving notice to Seller if such
termination results from a material change or material
changes in circumstances (including, but not limited to, a
change in load growth, technology or legislation) which is
recognized in PEPCO's least cost planning process. Upon
receipt of notice from PEPCO pursuant to this Subsection
15.3(a), Seller will use its good faith efforts to stop
incurring further costs in connection with the development
of the Facility. Seller and PEPCO will negotiate in good
faith for a period of one hundred and eighty (180) Days
after the date of such notice in an effort to modify this
Agreement to make provision for the circumstances then
existing (including, but not limited to, PEPCO's then
effective avoided costs and the circumstances that led
PEPCO to give such notice). In considering any such
modifications, the Parties will make an effort to maintain
the relative balance of benefits and burdens reflected in
this Agreement. If the Parties are unable to reach
agreement on appropriate modifications to this Agreement
during the one hundred and eighty (180) Day negotiating
period, this Agreement shall terminate at the end of such
one hundred and eighty (180) Day period. If the Parties
are able to reach agreement on a modified Agreement, they
each shall expeditiously seek all necessary governmental
and regulatory approvals for such modified Agreement.
Approvals to be obtained by PEPCO, including but not
limited to approvals from the District of Columbia
Commission and the Maryland Commission, must be in a form
satisfactory to each Party in its sole discretion.
Approvals to be obtained by Seller must be in a form
satisfactory to each Party in accordance with the standards
set forth in Subsection 3.1(b). If all such approvals have
not been obtained in a form satisfactory to each of the
Parties in accordance with the standards referenced above
within two hundred and seventy (270) Days of the Parties'
agreement on a modified Agreement, this Agreement shall
terminate.
(b) If this Agreement is terminated pursuant
to Subsection l5.3(a), PEPCO shall pay to Seller, as
liquidated damages and as Seller's sole and exclusive
remedy for such termination: (i) an amount equal to the
reasonable incremental costs incurred by Seller up to and
including the effective date of such termination in
connection with the development of such Facility and (ii) a
fixed fee of (A) three million dollars ($3,000,000.00) if
PEPCO gives notice of termination pursuant to the first
sentence of Subsection 15.3(a) prior to December 1, 1994 or
(B) five million dollars ($5,000,000.00) if PEPCO gives
notice of termination pursuant to the first sentence of
Subsection 15.3(a) on or after December 1, 1994. Seller
shall be obligated to endeavor in good faith to mitigate
such costs through such actions as sale of work or assets
related to the Facility, prompt cancellation of commitments
with respect to the Facility, or sale of capacity and
energy from the Facility to another purchaser. If PEPCO so
elects in its notice of termination, PEPCO may assign its
rights and obligations under this Agreement to another
power purchaser subject to the prior consent of Seller and
the Financing Parties, which consent shall not be
unreasonably withheld. Within thirty (30) Days of
termination of this Agreement pursuant to Subsection
15.3(a), Seller shall provide PEPCO with a detailed listing
of the costs for which it is seeking reimbursement under
this provision. PEPCO shall have the right to audit and
verify such costs, at its own expense, and Seller shall
make its records, personnel and outside auditors available
to PEPCO to facilitate such audit. Both Parties agree that
such amount shall constitute fair and reasonable
compensation to Seller for the loss of the benefit of
Seller's bargain with respect to the Facility and waive any
argument or defense as to the validity of this payment
provision on the grounds that it is unfair, unreasonable,
inadequate or should be void as a penalty.
ARTICLE XVI
INDEMNIFICATION AND LIABILITY
16.1 Indemnification.
(a) Except as otherwise specifically
provided in this Agreement, or unless the damage or injury
arises out of, results from, or is caused by the breach of
this Agreement by a Party or by the negligence or
misconduct of a Party's own officers, directors, employees,
agents, contractors, or subcontractors, neither Party shall
be liable to the other for any claims, losses, costs,
expenses, or damages of any kind or character (including
loss of use of property), in connection with damages or
destruction of property or personal injury (including
death) arising out of the performance of this Agreement,
including, but not limited to, the design, construction,
maintenance, or operation of property, facilities, or
equipment owned or used by the other Party, or the use of,
misuse of, or contact with the electric energy delivered
hereunder.
(b) Each Party shall indemnify and hold the
other Party, and its officers, directors, affiliates,
agents, employees, contractors and subcontractors, harmless
from and against any and all claims, demands, actions,
losses, liabilities, expenses (including reasonable
attorneys' fees), suits and proceedings of any nature
whatsoever for personal injury, death, or property damage
to third parties, except workers compensation claims,
caused by any act or omission of the indemnifying Party's
own officers, directors, affiliates, agents, employees,
contractors or subcontractors that arise out of or are in
any manner connected with the performance of this
Agreement, except to the extent such injury or damage is
attributable to the negligence or willful misconduct of, or
breach of this Agreement by, the Party seeking
indemnification hereunder.
(c) Seller shall also defend, indemnify and
hold PEPCO, and its officers, directors, affiliates,
agents, employees, contractors and subcontractors, harmless
from and against any and all damages, claims, demands,
judgments, losses, costs and expenses (including, but not
limited to, reasonable attorneys' fees) under CERCLA, RCRA
or any other applicable federal, state, or local environmental
laws or regulations, or under federal or state common law,
arising out of any condition, whether known or unknown, of the
Site or the portion of the Transmission Facilities Site that
is not on property owned by PEPCO as of the Effective Date,
or arising out of Seller's ownership or operation of the
Facility or the Transmission Facilities, including without
limitation the discharge, dispersal, release, storage,
treatment, generation, disposal or escape of pollutants or
other toxic or hazardous substances from the Facility or
the Transmission Facilities, the contamination of the soil,
air, surface water or groundwater at or around the Site or
the Transmission Facilities Site, or any pollution
abatement, replacement, removal, or other decontamination
or monitoring obligations with respect thereto, except to
the extent such damages are attributable to the negligence
or willful misconduct of, or breach of this Agreement by,
PEPCO, its officers, directors, affiliates, agents,
employees, contractors or subcontractors. Seller further
agrees to reimburse any costs incurred by PEPCO in
enforcing this defense, indemnification, and hold harmless
agreement, including PEPCO's reasonable attorneys' fees.
(d) Seller shall also defend, indemnify and
hold PEPCO, and its officers, directors, affiliates,
agents, employees, contractors and subcontractors, harmless
from and against any and all damages, claims, demands,
judgments, losses and expenses (including, but not limited
to, reasonable attorneys' fees) that arise out of or are in
any way connected with use and operation of the
Transmission Facilities prior to the transfer of ownership
of the Transmission Facilities to PEPCO in accordance with
Subsection 7.3(a)(v) of this Agreement.
(e) In no case shall PEPCO be liable for
damage or destruction of property, facilities, or equipment
operated by Seller as the result of PEPCO's dispatch of the
Facility.
16.2 Consequential Damages. Except to the
extent that the liquidated damages specifically provided
for in this Agreement may be so considered or as otherwise
expressly provided in Subsection 4.2(a), neither Party
shall be liable to the other Party for any indirect,
incidental, consequential, punitive, or liquidated damages
as a result of the performance or non-performance of the
obligations imposed pursuant to this Agreement, including
failure to deliver or purchase Dependable Capacity and Net
Electrical Output hereunder, irrespective of the causes
thereof, including fault or negligence.
ARTICLE XVII
DISPUTE RESOLUTION
17.1 Senior Officers.
(a) The Operating Committee is authorized to
resolve any dispute arising under this Agreement in an
equitable manner and, unless otherwise expressly provided
herein, to exercise the authority of the Parties hereto to
make decisions by mutual agreement.
(b) If the Operating Committee is unable to
resolve a dispute under this Agreement, such dispute shall
be referred by the Operating Committee directly to a senior
officer designated by Seller and a senior officer
designated by PEPCO for resolution.
(c) The Parties hereto agree to attempt to
resolve all disputes arising hereunder promptly, equitably,
and in a good faith manner and further agree to provide
each other with reasonable access during normal business
hours to any and all non-privileged records, information,
and data pertaining to any such dispute.
17.2 Maryland Commission.
(a) In the event that the Parties are unable
to resolve any dispute arising under this Agreement in
accordance with the procedures set forth in Section 17.1,
the Parties shall submit such dispute to the Maryland
Commission for expedited resolution before pursuing any
other rights or remedies that may be available at law or in
equity, unless such dispute involves the existence of a
default hereunder, in which event the Party alleging the
default may immediately pursue such other rights or
remedies without first having to submit such matter to the
Maryland Commission.
(b) Any decision rendered by the Maryland
Commission with respect to any dispute of the Parties shall
be subject to appeal in the normal manner for appeals from
other decisions of the Maryland Commission.
(c) In the event that the Maryland
Commission formally declines to render a decision resolving
a dispute of the Parties, as evidenced by a formal Maryland
Commission determination to such effect, or the Maryland
Commission fails to render a decision on the dispute within
one hundred and eighty (180) Days, or one hundred and
twenty (120) Days in the case of a dispute solely involving
the amount of payment due hereunder, of the submission of
such dispute to the Maryland Commission by the Parties,
either Party may then remove the dispute from the Maryland
Commission (and both Parties hereby agree that in such an
event neither Party will assert or support any claim that
the Maryland Commission has the appropriate jurisdiction)
and pursue in any other forum having jurisdiction any other
rights or remedies that may be available at law or in
equity, including, but not limited to, compensation for
monetary damages (in the case of ▇▇▇▇▇ for which liquidated
damages are not available pursuant to this Agreement),
injunctive relief, and specific performance.
ARTICLE XVIII
OPTION TO PURCHASE FACILITY; RIGHTS OF FIRST REFUSAL
18.1 Option to Purchase Transfer Interest. If at
any time during the Term, Seller desires to sell, transfer,
convey or otherwise dispose of a Transfer Interest for
which Seller has not received a bona fide offer, Seller
shall so notify PEPCO and PEPCO shall have the right to
purchase such Transfer Interest in the Facility at the fair
market value of the Transfer Interest as determined by the
Parties in good faith negotiation. PEPCO shall notify
Seller within sixty (60) Days of PEPCO's receipt of such
notice whether PEPCO intends to exercise such purchase
right. If PEPCO notifies Seller that it does intend to
exercise such purchase right, Seller and PEPCO shall
negotiate in good faith to consummate such purchase and
Seller shall not negotiate with any other party regarding
the sale of the Transfer Interest until the earlier of:
(y) the date that Seller and PEPCO agree that their
negotiations are terminated or (z) one hundred and eighty
(180) Days after Seller's receipt of PEPCO's notice
declaring its intent to purchase the Transfer Interest.
Upon reasonable notice to Seller, PEPCO shall have the
right to investigate and inspect the Facility, the Site,
and all books and records pertaining to the Facility and
the Site during the period following PEPCO's notice to
Seller declaring its intent to purchase the Transfer
Interest until negotiations related thereto are terminated
pursuant to this Section 18.1. Except as otherwise provided
in Section 18.4, it is intended that no sale or transfer
will be made to PEPCO pursuant to this Section 18.1 if
Seller and PEPCO are unable through negotiations conducted
in good faith to reach agreement on the price and other
terms of such sale or transfer.
18.2 Right of First Refusal to Purchase Transfer
Interest. In the event that Seller receives a bona fide
offer from a third party to purchase a Transfer Interest
and Seller desires to sell to said third party pursuant to
the terms of such offer, Seller shall so notify PEPCO and
PEPCO shall have the right of first refusal to purchase the
Transfer Interest at a price equal to and on the same, or
substantially the same, terms as offered to the third
party; provided that, PEPCO shall reimburse Seller for any
negotiation expenses reasonably incurred by Seller in its
consideration of such third party's offer. Within sixty
(60) Days of PEPCO's receipt of Seller's notice, PEPCO
shall notify Seller whether PEPCO intends to exercise its
right of first refusal to purchase the Transfer Interest.
In the event that PEPCO so notifies Seller of its intent to
exercise its right of first refusal, Seller and PEPCO agree
to negotiate in good faith as expeditiously as possible to
consummate such purchase and Seller shall not negotiate
with such third party or any other party regarding the sale
of the Transfer Interest until the earlier of: (a) the
date that Seller and PEPCO agree that their negotiations
are terminated or (b) one hundred and twenty (120) Days
after Seller's receipt of PEPCO's notice of its intent to
exercise its right of first refusal. Upon reasonable
notice to Seller, PEPCO shall have the right to investigate
and inspect the Facility, the Site, and all books and
records pertaining to the Facility and the Site during the
period following PEPCO's written notice to Seller declaring
its intent to purchase the Transfer Interest until
negotiations related thereto are terminated pursuant to
thin Section 18.2.
18.3 Right of First Refusal to Purchase Interest
in Seller. If at any time during the Term, a transfer or
sale of any interest in Seller ("Seller Interest") is
planned or proposed, the Owner of such Seller Interest
("Owner") shall so notify PEPCO in writing and PEPCO shall
have the right to purchase such Seller Interest:
(a) (i) if the Owner has not received a bona
fide offer for such Seller Interest, at the fair
market value of the Seller Interest determined by
PEPCO and Owner in good faith negotiations and upon such other
terms and conditions determined by the Parties through
negotiation. Within sixty (60) Days of PEPCO's
receipt of any such notice from Owner, PEPCO shall
notify Owner in writing whether PEPCO intends to
exercise its right to purchase the Seller Interest.
In the event that PEPCO notifies Owner of its intent
to purchase the Seller Interest, the Owner and PEPCO
shall negotiate in good faith to consummate such
purchase, and the Owner shall not negotiate with any
other party regarding the sale of the Seller Interest
until the earlier of: (A) the date that PEPCO and
Owner agree that their negotiations are terminated or
(B) one hundred and eighty (180) Days after Owner's
receipt of PEPCO's notice of intent to purchase the
Seller Interest. Except as otherwise provided in
Section 18.4, it is intended that no sale or transfer
will be made to PEPCO pursuant to this Subsection
18.3(a)(i) if the Owner and PEPCO are unable through
negotiations conducted in good faith to reach
agreement on the price and other terms of such sale or
transfer.
(ii) Notwithstanding the foregoing, Seller
shall have been deemed to have fulfilled its
obligations under Subsection 18.3(a)(i) if Seller,
without having received a bona fide offer for a Seller
Interest: (A) provides PEPCO and other interested
persons simultaneously an offering memorandum in which
Seller offers to sell such Seller Interest and
solicits bids therefor and (B) provides PEPCO with a
right of first refusal to purchase such Seller
Interest in accordance with the provisions of
Subsection 18.3(b).
(b) if the Owner has received a bona fide offer
for such Seller Interest, at a price equal to and on
the same, or substantially the same terms as, such
bona fide offer; provided that PEPCO shall reimburse
Owner for any negotiation expenses reasonably incurred
by Owner in its consideration of such third party's
offer. Within sixty (60) Days after PEPCO's receipt of
written notice from Owner of such a bona fide offer
for a Seller Interest, PEPCO shall notify Owner in
writing whether PEPCO intends to exercise its right of
first refusal to purchase the Seller Interest. In the
event that PEPCO so notifies Owner of its intent to
exercise its right of first refusal, Owner and PEPCO
agree to negotiate in good faith an expeditiously as
possible to consummate such purchase and Owner shall
not negotiate with such third party or any other party
regarding the sale of the Seller Interest until the
earlier of: (i) the date that Owner and PEPCO agree
that their negotiations are terminated or (ii) one
hundred and twenty (120) Days after Owner's receipt of
PEPCO's notice of its intent to exercise its right of
first refusal.
Upon reasonable notice to Seller and Owner, PEPCO shall
have the right to investigate and inspect the Facility, the
Site, and all books and records pertaining to the Facility
and the Site during the period following PEPCO's written
notice to Owner declaring its intent to purchase the Seller
Interest until negotiations related thereto are terminated
pursuant to this Section 18.3. Prior to the execution of
this Agreement, PEPCO and the owners of all interests in
Seller shall enter into a separate agreement, in form and
substance satisfactory to PEPCO in its sole discretion,
confirming and implementing the rights granted to PEPCO in this Section
18.3 and Sections 18.4, 18.5 and 18.6. Any person or
entity that subsequently acquires an interest in Seller
shall, immediately upon such acquisition, enter into such
an agreement with PEPCO, and the failure to do so may be
treated by PEPCO as an immediate Event of Default under
Article XV of this Agreement.
18.4 Seller's Right to Convey Transfer
Interest; Owner's Right to Convey Seller Interest. In the
event that: (a) PEPCO elects by written notice to Seller or
Owner, as applicable, not to exercise PEPCO's option to
purchase under Section 18.1 or PEPCO's right of first
refusal under Section 18.2 or 18.3, (b) PEPCO fails to
provide to Seller or Owner, as applicable, written notice
of PEPCO's intention to exercise such option to purchase or
right of first refusal within the applicable time period
allotted for PEPCO's response under Section 18.1, 18.2, or
18.3, or (c) PEPCO and Seller or Owner, as applicable, have
agreed that their negotiations have terminated or the
negotiation period set forth in Section 18.1, 18.2, or 18.3
has expired, then for a period of one (1) Year after such
election, failure, agreement, or expiration, as the case
may be, Seller or Owner, as applicable, shall have the
right to transfer such Transfer Interest or Seller
Interest, as the case may be, to a third party provided
that: (y) the price is no lower than that, and the terms
are not materially more favorable to the transferee than
those, offered to PEPCO and (z) PEPCO has approved the
transferee as a party that is financially and technically
capable of operating the Facility and providing Dependable
Capacity and Net Electrical Output to PEPCO in accordance
with the terms of this Agreement. If Seller or Owner
proposes to transfer the Transfer Interest or Seller
Interest, as the case may be, to a third party at a price
that is lower than that, and/or on terms that are
materially more favorable to the transferee than those,
offered to PEPCO, then PEPCO shall be given a right of
first refusal to purchase such Transfer Interest (pursuant
to Section 18.2) or Seller Interest (pursuant to Subsection
18.3(b)), as the case may be, at the same price and on the
same, or substantially the same terms, as offered to the
third party.
18.5 Limitations on Option to Purchase and
Rights of First Refusal. PEPCO shall not have a right of
first refusal or option to purchase under Section 18.1,
18.2, or 18.3: (a) when such transfer is (i) a transfer of
a security interest in Seller or the Facility to a
Financing Party providing financing for the Facility in
accordance with the Financing Documents reviewed and
approved by PEPCO pursuant to Subsections 3.2(g), 3.3(b),
3.3(d) or 8.9(b), (ii) a transfer of a Transfer Interest or
a Seller Interest to such Financing Party(ies) upon
foreclosure on such Transfer Interest or Seller Interest
pursuant to the Financing Documents, under the
circumstances set forth in Subsection 18.6(b)(iii), or
(iii) a transfer of a Transfer Interest or a Seller
Interest acquired by such Financing Party(ies) as described
in Subsection 18.5(a)(ii), or the transfer of a Transfer
Interest or a Seller Interest to a third party under a
foreclosure sale, in either case under the circumstances
set forth in Subsection 18.6(b)(iii); or (b) in the case of
the right of first refusal granted pursuant to Section 18.2
or 18.3, with respect to a proposed transfer of less than
all interests in the Facility, the Site or Seller, if the
exercise of such right of first refusal would materially
jeopardize existing regulatory approvals.
18.6 PEPCO General Transfer Rights.
(a) Notwithstanding the foregoing sections
of this Article XVIII, Seller may not sell, convey,
transfer, or otherwise dispose of the Facility and/or the
Site or any material part thereof or any interest therein
to any other party without the prior written consent of
PEPCO, which such consent shall not be unreasonably
withheld. Under no circumstances may Seller or any owner of
an interest in Seller assign or transfer any interest in
Seller, which assignment or transfer would result in a
change in control of either Seller or the Facility, without
the prior written consent of PEPCO, which consent shall not
be unreasonably withheld. PEPCO shall not withhold its
consent for any assignment or transfer that would result in
a change in control of either Seller or the Facility unless
PEPCO reasonably determines that the parties that would
control Seller or the Facility after such assignment or
transfer are not financially and technically capable of
operating the Facility in accordance with the terms of thin
Agreement. For purposes of this Section 18.6: (i) any
transfer or assignment of any general partnership interest,
(ii) any transfer or assignment of any ten percent (10%) or
greater limited partnership interest or (iii) any transfer
of an interest that will result in the transferee holding
in the aggregate a ten percent (10%) or greater limited
partnership interest, shall constitute a change in control.
(b) (i) Prior to exercising any of their
rights to foreclose on the Facility and/or the Seller, the
Financing Parties shall notify PEPCO whether the capacity
and associated energy of the Facility will continue to be
sold to PEPCO in accordance with the terms and provisions
of this Agreement following such foreclosure. If the
Financing Parties notify PEPCO that the capacity and
associated energy of the Facility will continue to be sold
to PEPCO in accordance with the terms and provisions of
this Agreement, the Financing Parties may exercise their
rights to foreclose on the Facility and/or the Seller, or
may assign their rights in the Facility and/or the Seller
to a third party following foreclosure, or may proceed with
a foreclosure sale to a third party, subject to PEPCO's
prior consent. The Financing Parties, any third party to
which the Financing Parties may assign their rights in the
Facility and/or the Seller, and/or, as appropriate, any
third party that may purchase the Facility or the Seller at
foreclosure, shall agree in writing, in a form reasonably
satisfactory to PEPCO, to continue to sell the capacity and
associated energy of the Facility to PEPCO in accordance
with the terms and provisions of this Agreement.
(ii) If the Financing Parties notify
PEPCO pursuant to Subsection 18.6(b)(i) that the capacity
and associated energy of the Facility will not continue to
be sold to PEPCO following foreclosure on the Facility
and/or the Seller, then PEPCO shall have the right to
purchase the Facility at its fair market value as
determined by PEPCO and the Financing Parties in good faith
negotiations in accordance with the procedures set forth in
Appendix P attached to this Agreement. Within thirty (30)
Days after PEPCO's receipt of such notice from the
Financing Parties, PEPCO shall notify the Financing Parties
and the Seller whether PEPCO intends to pursue its right to
purchase the Facility. If PEPCO notifies the Financing
Parties and the Seller that PEPCO intends to pursue such
right, PEPCO shall have the right to purchase the Facility
in accordance with the provisions of Appendix P attached to
this Agreement within two hundred seventy (270) Days after
its notice to the Financing Parties and the Seller.
(iii) PEPCO shall not have a right of
first refusal or an option to purchase with respect to a
transfer of a Transfer Interest or a Seller Interest as set
forth in Subsections 18.5(a)(ii) and 18.5(a)(iii) if:
(A) the Financing Parties have notified PEPCO in accordance
with Subsection 18.6(b)(i) that the capacity and the
associated energy of the Facility will continue to be sold
to PEPCO in accordance with the terms and provisions of
this Agreement after foreclosure and such agreement with
PEPCO has been acknowledged in writing, in form reasonably
satisfactory to PEPCO, by the Financing Parties, any third
party to which the Financing Parties have assigned their
rights in the Facility and/or the Seller, and/or, as
appropriate, any third party that has purchased the
Facility and/or the Seller at foreclosure, or (B) PEPCO
notifies the Financing Parties and the Seller pursuant to
Subsection 18.6(b)(ii) that PEPCO does not intend to pursue
its right to purchase the Facility, or (iii) PEPCO, in
accordance with the procedures set forth in Appendix P
attached to this Agreement, elects not to purchase the
Facility.
(iv) The Financing Parties shall
explicitly acknowledge and agree in writing with PEPCO to
the provisions of this Subsection 18.6(b).
ARTICLE XIX
MISCELLANEOUS
19.1 Assignment. Neither this
Agreement, nor any of the rights or obligations hereunder,
may be assigned, transferred, or delegated by either Party
without the express prior written consent of the other
Party, which consent shall not be unreasonably withheld;
provided, however, that (i) such consent shall not be
required prior to an assignment to a wholly-owned
subsidiary of such Party and (ii) Seller may assign its
rights and/or obligations under this Agreement to the
Financing Parties as required for financing purposes,
subject to PEPCO's right to review and approve the
Financing Documents pursuant to Subsections 3.2(g), 3.3(b),
3.3(d) and 8.9(b) and provided, further, that, in each case
(x) any assignee shall expressly assume assignor's
obligations hereunder, including but not limited to in the
case of an assignment by Seller, making the
representations, warranties and additional covenants set
forth in Article XI hereof, (y) no such assignment shall
impair any security given by Seller hereunder and (z)
unless expressly agreed by the other Party, no assignment,
whether or not consented to, shall relieve the assignor of
its obligations hereunder in the event its assignee fails
to perform.
19.2 Notices. Except as otherwise
specified in this Agreement, any notice, demand for
information, or documents required or authorized by this
Agreement to be given to a Party shall be given in writing
and shall be either: (a) personally delivered, (b) mailed
by registered or certified mail (return receipt requested)
postage prepaid, (c) sent by overnight delivery service
(with a receipt for delivery), or (d) sent by telefacsimile
with a signed acknowledgment of receipt by return
facsimile, to such Party at the following address:
For Seller: For PEPCO:
President Manager, Supply Side Resources
Panda Energy Corporation PEPCO
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇ Telefacsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telefacsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Vice-President, Energy Policy and
Development
PEPCO
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Each Party's designation of such person and/or address may be
changed at any time by such Party upon written notice given
pursuant to the requirements of this section. A notice served by
mail shall be effective upon receipt.
19.3 CHOICE OF LAW. THIS AGREEMENT SHALL BE
INTERPRETED, CONSTRUED AND GOVERNED BY THE LAWS OF THE STATE OF
MARYLAND AND, TO THE EXTENT APPLICABLE, FEDERAL LAW, WITHOUT REGARD
TO ANY APPLICABLE CONFLICT OF LAWS PROVISIONS. THE PARTIES HEREBY
SUBMIT TO THE JURISDICTION OF COURTS LOCATED IN, AND VENUE IS
HEREBY STIPULATED TO BE IN, BALTIMORE, MARYLAND.
19.4 Entire Agreement. This Agreement, including the
appendices hereto, and the "Agreement With Respect to Transfers of
Interests in Panda-Brandywine, L.P." (entered into by PEPCO, Panda
Energy Corporation and Panda Brandywine Corporation and
acknowledged and agreed to by Seller) of even or approximately even
date herewith constitute the entire understanding between the
Parties and supersede any and all previous understandings between
the Parties with respect to the subject matter hereof. This
Agreement shall be binding upon and inure to the benefit of the
Parties, and their respective successors and assigns.
19.5 Further Assurances. If either Party
determines in its reasonable discretion that any further
instruments, assurances or other things are necessary or desirable
to carry out the terms of this Agreement, the other Party will
execute and deliver all such instruments and assurances and do all
things reasonably necessary or desirable to carry out the terms of
this Agreement; provided, however, that PEPCO's obligations under
this Section shall be subject to PEPCO's right to review and
approve Financing Documents under Subsections 3.2(g), 3.3(b),
3.3(d) and 8.9(b), and any Financing Documents required to be
executed by PEPCO shall be subject to approval by PEPCO in its sole
discretion.
19.6 Waiver. No waiver by either Party of the
performance of any obligation under this Agreement or with respect
to any default or any other matter arising in connection with this
Agreement shall be deemed a waiver with respect to any subsequent
performance, default or matter.
19.7 Modification or Amendment. No modification,
amendment or waiver of any provision of this Agreement shall be
valid unless it is in writing and signed by both Parties.
19.8 Severability. After the approvals required
under Subsection 3.1(a) have been obtained, if any term or
provision of this Agreement or the application thereof to any
person, entity or circumstance shall to any extent be declared
invalid or unenforceable by any competent agency or court, the
remainder of this Agreement, or the application of such term or
provision to persons, entities or circumstances other than those as
to which it is invalid or unenforceable, shall not be affected
thereby, and each other term and provision of this Agreement shall
be valid and enforceable to the fullest extent permitted by law.
In the event that any such term or provision of this Agreement or
the application thereof to any person, entity or circumstance shall
be so declared invalid or unenforceable, the Parties agree to
negotiate in good faith in an effort to reach agreement on
appropriate revisions to this Agreement to restore the relative
benefits and burdens of the Parties as originally incorporated in
this Agreement.
19.9 Counterparts. This Agreement may be executed in
several counterparts, and all such counterparts shall constitute
one agreement binding on both Parties hereto and shall have the
same force and effect as an original instrument, notwithstanding
that both Parties may not be signatories to the same original or
the same counterpart.
19.10 Confidential Information. The Parties agree that
this Agreement contains confidential commercial information and,
therefore, shall not be disclosed to any third party without the
consent of both Parties. Further, any information provided by a
Party to the other Party pursuant to this Agreement and labeled
"CONFIDENTIAL" shall be used by the receiving Party solely in
connection with the purposes of this Agreement and shall not be
disclosed by the receiving Party to any third party, except with
the providing Party's consent, and upon request of the providing
Party shall be returned thereto. Notwithstanding the above, the
Parties acknowledge and agree that this Agreement and any such
information may be disclosed to the Financing Parties, suppliers
and potential suppliers of Fuel and major equipment to the Facility
and other third parties as may be necessary for PEPCO and Seller to
perform their obligations under this Agreement (including, but not
limited to, consultants retained by PEPCO to review Seller's Fuel
Supply Plan, Fuel Supply Contract(s), or other contracts or
arrangements with respect to fuel for the Facility). To the extent
that such disclosures are necessary, the Parties also agree that
they shall endeavor in disclosing the Agreement and any such
information to seek to preserve the confidentiality of such
disclosures. This provision shall not prevent either Party from
providing this Agreement or any confidential information received
from the other Party to any court or governmental body as may be
required by such court or body, provided that, if feasible, the
disclosing Party shall have given prior notice to the other Party
of such required disclosure and, if so requested by such other
Party, shall have used all reasonable efforts to oppose the
requested disclosure, as appropriate under the circumstances, or to
otherwise make such disclosure pursuant to a protective order or
other similar arrangement for confidentiality. Without limiting
the scope of the foregoing, the Parties explicitly agree to use all
reasonable efforts to maintain the confidentiality of this
Agreement in any filings with, or submissions to, any governmental
or regulatory authorities.
19.11 Independent Contractors. The Parties are
independent contractors. Nothing contained herein shall be deemed
to create an association, joint venture, partnership, or
principal/agent relationship between the Parties hereto or impose
any partnership obligation or liability on either Party. Neither
Party shall have any right, power or authority to enter into any
agreement or commitment, act on behalf of, or otherwise bind the
other Party in any way.
19.12 Third Parties. This Agreement is intended solely
for the benefit of the Parties, and nothing in this Agreement shall
be construed to create any duty to, or standard of care with
reference to, or any liability to, any person not a Party to this
Agreement.
19.13 Headings. The headings contained in this
Agreement are solely for the convenience of the Parties and should
not be used or relied upon in any manner in the construction or
interpretation of this Agreement.
19.14 Press Releases. Prior to the Actual
Commercial Operation Date, neither Party shall issue any press
release referring to this Agreement without coordination with, and
the prior approval of the other Party.
19.15 Survival of Rights. Cancellation, expiration or
earlier termination of this Agreement shall not relieve the Parties
of obligations that by their nature should survive such
cancellation, expiration or termination, including, without
limitation, warranties, remedies, promises of indemnity and
confidentiality.
19.16 Incorporated Provisions. PEPCO has an Areawide
Contract with the General Services Administration (GS-00 P-90-BSD-
0027) (hereinafter referred to as the "Areawide Contract") which
requires PEPCO to comply with the following Federal Acquisition
Regulations ("FAR") clauses: (1) 52.222-26 Equal Opportunity (Apr.
1984), 48 C.F.R. 52.222-26 (1990); (2) 52.222-35 Affirmative Action
for Special Disabled and Vietnam Era Veterans (Apr. 1984), 48 C.F.R.
52.222-35 (1990); (3) 52.222-36 Affirmative Action for Handicapped
Workers (Apr. 1984), 48 C.F.R. 52.222-36 (1990); (4) 52.219-8
Utilization of Small Business Concerns and Small Disadvantaged
Business Concerns (Jun. 1985), 48 C.F.R. 52.219-8 (1989); and (5)
52.223-2 Clean Air and Water (Apr. 1984), 48 C.F.R. 52.223-2 (1990).
To the extent that these and any other government
contract clauses are required to be incorporated by reference and
made part of this Agreement pursuant to the terms of the clauses
themselves, the existence of the Areawide Contract or by operation
of law, such clauses are hereby so incorporated and made part of
the Agreement. Seller agrees to comply with the requirements of any
such government contract clause to the extent that the clause
applies to Seller and Seller is not otherwise exempt from these
requirements.
19.17 Sections. Unless otherwise specified, references
in this Agreement to numbered Sections and Subsections shall be to
Sections and Subsections of this Agreement.
ARTICLE XX
NO WARRANT OF FACILITY BY PEPCO
20.1 No Implied Warranty. Notwithstanding any other
provision of this Agreement, PEPCO's review and/or approval of any
material or information submitted to PEPCO under this Agreement
(including but not limited to any governmental or regulatory permit
or approval) and any review, inspection or monitoring of the
Facility or of the design and/or construction thereof by PEPCO and
PEPCO's participation in the Operating Committee shall not be
deemed to constitute either a waiver of any requirement of this
Agreement or an endorsement of the design of the Facility nor a
warranty or other assurance by PEPCO of the safety, durability or
reliability of the Facility.
IN WITNESS WHEREOF, the Parties have caused this
Agreement to be executed by their respective duly authorized
officers as of the date first above written.
POTOMAC ELECTRIC POWER COMPANY
Attest:
By: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Executive Vice President
PANDA-BRANDYWINE, L.P.
By It's General Partner,
Attest: Panda Brandywine Corporation
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman, Chief Executive Officer
The undersigned, Panda Brandywine Corporation, the general partner
in Panda-Brandywine, L.P., is executing this Power Purchase
Agreement for the limited purpose of acknowledging and agreeing to
comply with the provisions of Section 11.9 of this Agreement.
PANDA BRANDYWINE CORPORATION
Attest:
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman, Chief Executive Officer
APPENDIX G
PROCEDURES FOR DETERMINATION OF
FAIR MARKET VALUE OF
FACILITY
The then current net fair market value of the
Facility shall be determined in accordance with the following
procedures if upon the occurrence of an Event of Default by
Seller, PEPCO notifies Seller of its intent to purchase the
Facility pursuant to section 15.2(b) of the Agreement:
1. PEPCO shall, at PEPCO's expense, submit to the
Seller, within twenty (20) days of the receipt by the Seller of
PEPCO's notice of intent to purchase the Facility, an appraisal
of the then current net fair market value of the Facility
repared by a nationally recognized engineering or consulting
firm elected by PEPCO.
2. In the event that Seller disagrees with the
appraisal submitted by PEPCO, Seller shall promptly notify
PEPCO to that effect and, within twenty (20) days of submittal
of the appraisal by PEPCO, Seller shall obtain, at Seller's
expense, its own appraisal of the current net fair market value
of the acility prepared by a nationally recognized engineering
or consulting firm selected by Seller.
3. If the Parties or the two (2) appraisers cannot
reach a consensus on the current net fair market value of the
Facility within ten (10) Days of the submission of Seller's
appraisal to PEPCO, then the two (2) appraisers shall designate
a third similarly qualified appraiser within five (5) Days
after the end of such ten (10) Day period. PEPCO and Seller
shall share equally the expenses of the third appraiser. The
current net fair market value of the Facility shall be the
average of the values submitted by any two (2) of the three (3)
appraisers which are nearest to each other (or, if the two (2)
extreme values are equidistant from the middle value, the
middle value), which average (or middle value) shall be
presented to PEPCO and Seller. If an average (or middle value)
has not been determined within fifteen (15) Days of the
designation of the third appraiser, PEPCO and Seller may
mutually agree to terminate such appriasal process and to
initiate a new process to determine the current net fair market
value of the Facility (either pursuant to the procedures set
forth in this Appendix or otherwise), provided, however, that
PEPCO and Seller and/or the appraisers must reach agreement on
the purchase price within one hundred and twenty (120) Days
after Seller's receipt of PEPCO's notification of its intent to
pursue its right to purchase the Facility under Subsection
15.2(b)
4. Seller shall provide the appraisers with
reasonable access to the Facility (including the Site) and to
records anclicable to the Facility (including the Site) during
normal business hours in order to enable the appraisers to
conduct their appraisals. Seller shall provide PEPCO, its
officers, employees, agents, and consultants with reasonable
access to the Facility (including the Site) during normal
business hours to conduct such inspections (including but not
limited to soil sampling and other environmental audits and
inspections) and review of records as PEPCO may deem
appropriate in evaluating whether to acquire the Facility
(including the Site).
5. Following the establishment of the current net
fair market value of the Facility pursuant to the procedures
set forth in this Appendix G, PEPCO shall have up to ninety
(90) Days to provide Seller with irrevocable notice of whether
PEPCO will purchase the Facility at such net fair market value.
PEPCO's determination of whether to purchase the Facility shall
be in PEPCO's sole discretion.
6. In the event PEPCO elects to purchase the
Facility pursuant to Subsection 15.2(b) of the Agreement and
paragraph 5 above, Seller shall provide PEPCO good and
marketable title to the Facility free and clear of all liens,
conditions, easements, encumbrances or restrictions other than
those which existed at the time of the appraisal process and
which were not expressly excluded by the appraisers in
establishing the current net fair market value of the Facility,
as well as any other such encumbrance which PEPCO specifically
and expressly agrees to assume; provided, however, that as long
as the Financing documents remain in effect, Seller shall not
sell the Facility to PEPCO hereunder unless: (i) PEPCO agrees
to assume all of Seller's then-outstanding obligations under
the Financing Documents with respect to the Facility, (ii) if
PEPCO seeks to purchase and Seller agrees to sell the Facility
free and clear of the Financing Documents, the net proceeds
available to Seller must at a minimum be sufficient, and shall
be used, to satisfy in full all of its then outstanding
obligations under the Financing Documents (including without
limitation any prepayment fees) with respect to the Facility,
or (iii) the Financing Parties otherwise consent to the sale.
PEPCO's purchase of the Facility shall be consummated at a
settlement to be scheduled at a time and place mutually
agreeable to the Parties. Seller and PEPCO shall execute and
deliver at settlement all documents necessary to transfer,
assign and convey to PEPCO all of Seller's right, title and
interest in the Facility. PEPCO shall pay to Seller at
settlement the amount specified in paragraph 5 hereof in cash,
by certified check or by wire transfer of funds.
7. Capitalized terms used in this Appendix shall
have the meanings assigned to those terms in the Agreement,
unless otherwise defined herein. Notices and other materials to
be provided to the Parties hereunder shall be provided in
accordance with the requirements set out in Section 19.2 of the
Agreement.
APPENDIX K
CONTRIBUTIONS TO MAINTENANCE RESERVE
PURSUANT TO SUBSECTION 8.7(b)(ii)
Deposits Withdrawals
to from
Maintenance Maintenance
Hours Account Account Balance
8,000 $ 696,000 $ 475,000 $221,000
16,000 696,000 470,000 447,000
24,000 696,000 960,000 183,000
32,000 696,000 475,000 404,000
40,000 696,000 470,000 630,000
48,000 696,000 1,320,000 6,000
---------- ----------
$4,176,000 $4,170,000
========== ==========
(Schedule will repeat each 48,000 hours)
APPENDIX N
EQUIVALENT AVAILABILITY FACTOR ("EAF")
N
(PHm + SCAm - EUHm)
m=1
EAF = _______ _ _____ ___ _ _________ _______
N
PHm
m=1
Where:
m = Month
N = Number of Months in the calculation period
PH = Period Hours: Total hours in the month.
SCA = Simple Cycle Adjustment: The total
Net Electrical Output in simple cycle mode for
the Month as provided for in Subsection
6.2(b)(iv) of the Agreement divided by the
average Available Capacity for the Month(4).
EUH = Equivalent Unavailable Hours
= UOH + POH + MOH + EUDH + EPDH + EMDH
Where:
UOH = Unplanned Outage Hours: Sum of the
time, in hours, during which the Facility
experienced a full unplanned outage including
outage events with codes U1, U2, U3, and SF(1,2)
POH = Planned Outage Hours: Sum of the
time, in hours, during which the Facility
experienced a full planned outage or full
planned outage extensions including outage
events with codes PO and SE(1,2)
MOH = Maintenance Outage Hours: Sum of the
time, in hours, during which the Facility
experienced a full maintenance outage including
outage events with code MO(1,2)
EUDH = Equivalent Unplanned Deration Hours:
The sum of the products of the time (hours) and
size (MW-net) for each unplanned derating of
the Facility (deration events with codes D1,
D2, and D3) divided by the average Available
Capacity for the Month(1,3,4)
EPDH = Equivalent Planned Deration Hours:
The sum of the products of the time (hours) and
size (MW-net) for each planned derating of the
Facility or extension thereof deration events
with codes PD and DE) divided by the average
Available Capacity for the Month(1,3,4)
EMDH = Equivalent Maintenance Deration
Hours: The sum of the products of the time
(hours) and size (MW net) for each mintenance
aerating of the Facility or extension thereof
(deration events with codes D4 and DE) divided
by the average Available Capacity for the Month
(1,3,4)
Notes:
(1) Outage and aeration events and their associated
codes are defined in Appendix I in the Generating Unit
Event Reporting procedure.
(2) The Facility experiences a full outage event when it
cannot supply electrical energy in the combined-cycle
mode of operation.
(3) The Facility experiences a aeration event when its
ability to supply electrical output in the combined cycle
mode of operation is limited to below its Available
Capacity. The length of a aeration event excludes hours
coincident with full planned, unplanned, or maintenance
Outage Events.
(4) The average Available Capacity is defined as the
Available Capacity calculated for an ambient temperature
equal to the average of the weekday peak hour
temperatures for the Month, excluding those weekdays
which are holidays recognized by PEPCO (as identified
pursuant to Section 1.6 of the Agreement).
APPENDIX O
EQUIVALENT FORCED OUTAGE RATE ("EFOR")
N
(UOHm + EUDHm - SCAm)
m=1
EFOR = _______ __ ________________________ _________
N
(SHm + UOHm + EUDERSm)
m=1
Where:
m = Month
N = Number of Months in the calculation period
UOH = Unplanned Outage Hours: Sum of the time, in hours,
during which the Facility experienced a full
unplanned outage including outage events with
codes U1, U2, U3, and SF.(1,2)
EUDH = Equivalent Unplanned Deration Hours: The sum of
the products of the time (hours) and size (MW net)
for each unplanned derating of the Facility
(deration events with codes D1, D2 and D3) divided
by the average Available Capacity for the Month(1,3,4).
EUDHRS = Equivalent Unplanned Deration Hours During Reserve
Shutdown: The sum of the products of the length
(hours) and size (MW net) for each unplanned
derating of the Facility (Deration Events with
codes D1, D2, and D3) which occurred during reserve
shutdown divided by the average Available Capacity
for the Month(1,3,4,5).
SCA = Simple Cycle Adjustment: The total Net Electrical
Output of the Facility in simple cycle mode for the
Month as provided for in Subsection 6.2(b)(iv) of the
Agreement divided by the average Available Capacity for
the Month(4).
SH = Service Hours: Sum of the time, in hours, when the
Facility was electrically connected to the PEPCO
System.
Notes:
(1) Outage and aeration events and their associated
codes are defined in Appendix I in the Generating Unit
Event Reporting procedure.
(2) The Facility experiences a full outage event when
it cannot supply electrical energy in the combined-
cycle mode.
(3) The Facility experiences a deration event when its
ability to supply electrical output in the combined-
cycle mode of operation is limited to below its
Available Capacity. The length of a deration event
excludes hours coincident with full planned, unplanned,
or maintenance outage events.
(4) The average Available Capacity is defined as the
Available Capacity calculated for an ambient
temperature equal to the average of the weekday peak
hour temperatures for the Month, excluding those
weekdays which are holidays recognized by
PEPCO (as identified pursuant to Section 1.6 of
the Agreement).
(5) Hours when the Facility is available but not
dispatched. Reserve shutdown hours are equal to Period
Hours less Service Hours less all full planned,
unplanned, and maintenance outage hours.
APPENDIX P
VALUATION PROCEDURES FOR PEPCO'S
BUYOUT RIGHTS UNDER SUBSECTION 18.6(b)(ii)
The fair market value of the Facility shall be
determined in accordance with the following procedures
if PEPCO notifies the Financing Parties and the Seller
of its intent to pursue its right to purchase the
Facility pursuant to Subsection 18.6(b)(ii).
1. PEPCO and the Financing Parties shall negotiate for
a period of sixty (60) Days after receipt by the
Financing Parties of PEPCO's notification of PEPCO's
intent to pursue its right to purchase the Facility
pursuant to Subsection 18.6(b)(ii) in an effort to agree
upon the purchase price. If PEPCO and the Financing
Parties cannot agree upon the purchase price within such
sixty (60) Day period, then, within the next ten (10)
Days, PEPCO and the Financing Parties each shall, at its
own expense, select an appraiser from a nationally
recognized engineering or consulting firm.
2. If the two (2) appraisers cannot reach a consensus
on the fair market value of the Facility within ten (10)
Days of the submission of the matter to them by PEPCO
and the Financing Parties, then the two (2) appraisers
shall designate a third similarly qualified appraiser
within five (S) Days after the end of such ten (10) Day
period. PEPCO and the Financing Parties shall share
equally the expenses of the third appraiser. The fair
market value of the Facility shall then be the average
of the values submitted by any two (2) of the three (3)
appraisers which are nearest to each other (or, if the
two (2) extreme values are equidistant from the middle
value, the middle value), which average (or middle
value) shall be presented to PEPCO and the Financing
Parties hereto. If an average (or middle value) has not
been determined within fifteen (15) Days of the
designation of the third appraiser, PEPCO and the
Financing Parties may mutually agree to terminate such
appraisal process and to initiate a new process to
determine the fair market value of the Facility (either
pursuant to the procedures set forth in this Appendix or
otherwise), provided, however, that PEPCO and the
Financing Parties and/or the appraisers must reach
agreement on the purchase price within one hundred and
twenty (120) Days after the Financing Parties' and
Seller's receipt of PEPCO's notification of its intent
to pursue its right to purchase the Facility under
Subsection 18.6(b)(ii).
3. Notwithstanding any other considerations, a bona
fide offer received by the Financing Parties from a
third party not affiliated or otherwise related to, or
associated with, the Financing Parties, which offer is
acceptable to the Financing Parties in their sole
discretion, shall be presumptive evidence of fair market
value.
4. PEPCO and the Financing Parties shall use all
reasonable efforts to arrive at a mutually agreeable
determination of the fair market value of the Facility
as expeditiously as possible, and shall negotiate in
good faith to arrive at such determination. The
Financing Parties and the Seller shall provide the
appraisers with reasonable access to the Facility
(including the Site) and to records applicable to the
Facility (including the Site) during normal business
hours in order to enable the appraisers to conduct their
appraisals. The Financing Parties and the Seller shall
provide PEPCO, its officers, employees, agents, and
consultants with reasonable access to the Facility
"including the Site) during normal business hours to
conduct such inspection (including but not limited to
soil sampling and other environmental audits and
inspections) and reviews of records as PEPCO may deem
appropriate in evaluating whether to acquire the
Facility.
5. Following the establishment of the fair market
value of the Facility pursuant to the procedures set
forth in this Appendix P, PEPCO shall have up to thirty
(30) Days to provide the Financing Parties and the
Seller with irrevocable notice of whether PEPCO will
purchase the Facility at such fair market value. PEPCO's
determination of whether to purchase the Facility shall
be in PEPCO's sole discretion.
6. In the event PEPCO elects to purchase the Facility,
pursuant to Subsection 18.6(b)(ii) and paragraph 5
above, PEPCO shall purchase the Facility free and clear
of all liens, conditions, easements, encumbrances or
restrictions other than those which existed at the time
of the appraisal process or which PEPCO specifically
agrees to assume. The appraisers must take all such
liens, conditions, easements, encumbrances or
restrictions into account in establishing the fair
market value of the Facility. The Financing Parties in
the Financing Documents shall recognize PEPCO's rights
as set forth herein, and in Subsection 18.6(b)(ii).
PEPCO's purchase of the Facility shall be consummated at
a settlement to be scheduled within two hundred and
seventy (270) Days from the receipt by the Financing
Parties and the Seller of PEPCO's notice of its
intention to pursue its right to purchase the Facility
pursuant to Subsection 18.6(b)(ii), at a time and place
mutually agreeable to PEPCO and the Financing Parties.
The Financing Parties, the Seller and PEPCO shall
execute and deliver at settlement all documents
necessary to transfer, assign and convey to PEPCO all of
the right, title and interest in the Facility. PEPCO
shall pay to the Financing Parties (or to the Seller, if
so instructed by the Financing Parties) at settlement
the amount specified in paragraph 5 hereof in cash, by
certified check or by wire transfer of funds.
7. Capitalized terms used in this Appendix shall have
the meanings assigned to those terms in the Agreement,
unless otherwise defined herein. Notices and other
materials to be provided to PEPCO, the Financing Parties
and the Seller hereunder shall be provided in accordance
with the requirements set out in Section 19.2 of the
Agreement, at the following addresses:
PEPCO:
Manager, Supply Side Resources
PEPCO
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefacsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Vice-President, Energy Policy
and Development
PEPCO
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
SELLER
President
Panda Energy Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefacsimile: (▇▇▇) ▇▇▇-▇▇▇▇
FINANCING PARTIES: (To be
provided by Seller after the Closing Date)
8. The Seller shall cooperate with PEPCO and the
Financing Parties to implement the provisions of this
Appendix P and PEPCO's right to purchase the Facility in
accordance with Subsection 18.6(b)(ii). The Seller shall
be bound by any determination made by PEPCO and the
Financing Parties as to the fair market value of the
Facility or any other terms and conditions of the
transfer of the Facility to PEPCO.