Exhibit c-40
LEASE AGREEMENT
THIS AGREEMENT, entered into this 1st day
of October, 1984, between KANSAS GAS AND ELECTRIC
COMPANY, hereinafter referred to as KG&E or "Lessor",
and KANSAS CITY POWER AND LIGHT COMPANY, hereinafter
referred to as KCP&L or "Lessee",
W I T N E S S E T H:
WHEREAS, KG&E and KCP&L are co-owners of
the Wolf Creek Generating Station ("Wolf Creek") and
the La Cygne Generating Station ("La Cygne"); and
WHEREAS, KCP&L requires a transmission
path to deliver its share of power and energy generated
at Wolf Creek to its transmission system; and
WHEREAS, KG&E owns a 345 KV transmission
line approximately fifty-nine and 4/10 (59.4) miles in
length, extending from the bus in the LaCygne
switchyard to the bus in the Wolf Creek switchyard,
hereinafter referred to as the "Transmission Line";
NOW, THEREFORE, for and in consideration
of their mutual covenants and agreements hereinafter
set forth, Lessor hereby leases to Lessee the
Transmission Line on the following terms and
conditions:
1. KG&E leases the Transmission Line,
including all poles, wires, fixtures, and
appurtenances, and right-of-way easements upon which
such Transmission Line is constructed to KCP&L.
2. This lease shall commence when the
Wolf Creek turbine generator is first synchronized to
the 345 KV transmission system for the generation of
electric power and when such power is predominantly
resultant from the nuclear fission process in the Wolf
Creek reactor core and shall extend for five (5) years
thereafter, subject to any early termination,
extensions, or renewals as provided below.
3. Following the original five (5) year
term, this lease shall be automatically renewed for an
additional one (1) year term and for successive one (1)
year terms unless either party, at least two (2) years
prior to the expiration of the original term or, if
renewed, at least two (2) years prior to the expiration
of the renewal term, gives written notice to the other
party that the lease term will not be renewed.
4. In the event KCF&L shall secure an
alternate transmission path to Wolf Creek, KCP&L may
cancel this lease upon ninety (90) days written notice
to KG&E of its intention to do so.
5. Lessee shall pay to Lessor as rental
for the Transmission Line the following sums for each
month of each respective year of the original term:
For the first year, $189,857.50 per month
For the second year, $183,989.16 per month
For the third year, $174,367.50 per month
For the fourth year, $165,498.33 per month
For the fifth year, $157,376.66 per month
The first rental payment shall be due on the
commencement date of this lease as provided in
paragraph two (2) of this Lease
Agreement and each subsequent rental payment shall be
paid on the same date of each succeeding month. For
each renewal term, the rental payments shall be the
same as the rental payments due for each month of the
fifth year of the original term, subject to any
modifications under paragraph six (6).
6. After acceptance of the initial
filing of this Lease Agreement, Lessor shall have the
right to unilaterally make application to the Federal
Energy Regulatory Commission for a change in rates or
terms and conditions of this Lease Agreement under
Subsection 205 of the Federal Power Act and pursuant to
the Commission's Rules and Regulations promulgated
thereunder.
7. KCP&L represents that it has
inspected the Transmission Line and finds it suitable
for its intended purposes and accepts the line in its
present condition.
8. No modifications or alterations,
other than required maintenance, shall be made to the
Transmission Line without the approval of the parties
to this Lease Agreement. However, if KG&E desires to
underbuild or to add, at its costs, equipment or
facilities to the Transmission Line, KCP&L shall give
its approval, provided such alterations do not
unreasonably interfere with KCP&L's use of the
Transmission Line.
9. The Transmission Line will be
operated and maintained by KG&E personnel in accordance
with KG&E's practices.
10. In addition to the payment set forth
in ▇▇▇▇▇▇▇▇▇ ▇, ▇▇▇&▇ shall reimburse KG&E for all
direct and indirect operating expenses attributable to
the Transmission Line.
(a) Operating expenses shall include but
shall not be limited to:
1. All direct operation and maintenance
expenses as recorded in the transmission accounts 563
and 571, plus ten percent (10%).
2. Payroll taxes recorded in account
408 related to KG&E labor charged to the above
transmission accounts.
3. Pensions and Benefits - account 926
related to KG&E labor charged to the above transmission
accounts.
4. Property insurance applicable to the
Transmission Line - account 924.
5. Regulatory Commission expenses
applicable to this lease - account 928.
6. Property taxes applicable to the
Transmission Line- account 408.
7. An indirect overhead rate, the
numerator of which is KG&E Administrative and General
expenses in account 920, 921, 922, 925, 930.2, and 932,
and the denominator of which is utility expenses to
which such expenses apply, specifically excluding fuel,
purchased power and interchanged power costs,
applicable to transmission accounts 563 and 571.
(b) Such expenses shall be paid by KCP&L
within thirty (30) days after being billed for such
expenses by KG&E.
11. Annually KG&E shall provide KCP&L a
maintenance and operations budget with regard to the
Transmission Line.
12. With respect to the payments set
forth in ▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇&▇ shall provide KCP&L access
to all documents, books and records that KCP&L may
reasonably require to verify and audit such taxes and
expenses.
13. In the event the Transmission Line is
damaged by storm or other casualty Lessor shall repair
the same, such repairs to be accomplished with
reasonable diligence after notice of such damage, the
capital expense of such repair shall be borne by
Lessor. Such damage shall not be cause for terminating
this lease, but may result in review pursuant to
Paragraph 6 if KG&E's cost in the Transmission Line is
significantly increased.
14. Lessor shall not be liable for any
consequential damage as a result of the unavailability
of the Transmission Line for any reason other than its
willful misconduct or gross negligence. It is expressly
agreed that Lessor does not insure continuous
availability of the Transmission Line.
15. This lease shall not be assigned nor
shall the subject Transmission Line or any part thereof
be let or sublet by the Lessee.
16. Upon default of any obligation of
either party under this lease, the aggrieved party may
give the other party written notice that it demands
compliance with the lease and that such default or
breach be cured within thirty (30) days of the date of
the notice. If within the said time such default or
breach is not cured, the aggrieved party may terminate
this lease by giving sixty (60) days notice of such
termination.
17. At the end of the term of this lease
or any renewal thereof, or upon termination under any
of the other provisions of this lease, Lessee shall
quit and surrender the Transmission Line.
18. Any scheduled outages of the
Transmission Line for maintenance and/or construction
shall be coordinated between the dispatching personnel
of the parties.
19. The interconnection metering on the
Transmission Line is currently located at LaCygne.
During the term of the lease and any renewals thereof,
the interconnection metering shall be at Wolf Creek.
Any expenses associated with the establishment of
metering facilities at Wolf Creek shall be paid by
KCP&L. At the expiration of the term of the lease or
any renewal thereof, the interconnection metering shall
revert to LaCygne and KCP&L shall pay any costs
associated therewith.
20. In the event either party hereto
should be delayed in or prevented from performing or
carrying out any of the agreements, covenants, and
obligations made by and imposed upon said parties by
this agreement, by reason of or through strike,
stoppage in labor, failure of contractors or suppliers
of materials, riot, fire, storm, flood, earthquake,
ice, invasion, civil war, commotion, insurrection,
military or usurped power, order of any court granted
in any bona fide adverse legal proceedings or action,
order of any civil or military authority, either de
facto or de jure, explosion, act of God or the public
enemies, or any cause reasonably beyond its control and
not attributable to its neglect, such delay or
prevention shall not constitute a breach of this
agreement, and both parties shall be relieved of
performance under this agreement and shall not be
liable to the other party for or on account of any
loss, damage, injury, or expense resulting from or
arising out of such delay or prevention; provided,
however, that the party suffering such delay or
prevention shall use due and practical diligence to
remove the cause or causes thereof; and provided,
further, that neither party shall be required by the
foregoing provisions to settle a strike except when,
according to its own best judgment, such a settlement
seems advisable.
21. Each party will defend, indemnify and
save harmless the other party against liability, loss,
costs and expenses resulting from injury to or death of
its own employees, occurring while such employees are
engaged in the line of their duties, whether or not
such employees be harmed on the property of, or on or
adjacent to the facilities of the other party.
22. All rights and remedies under this
lease shall be cumulative and none shall exclude any
other rights and remedies allowed by law to either
party.
23. Any waiver at any time by either
party of its right with respect to a default under this
agreement, or with respect to any other matter arising
in connection with this agreement, shall not be deemed
a waiver with respect to any subsequent default or
matter. Any delay short of the statutory period of
limitation in asserting or enforcing any right shall
not be deemed a waiver of such right.
24. Any notices which Lessor or Lessee
shall be required or may desire to give to the other
shall be made in writing and sent by United States
mail, postage prepaid, addressed to Lessor at its
offices in Wichita, Kansas, and to Lessee at its
offices in Kansas City, Missouri.
25. The terms and provisions herein
contained constitute the entire agreement between the
parties and supercede all previous communications,
representations or agreements, either verbal or written
between the parties hereto with respect to the subject
matter hereof.
26. Both parties acknowledge and agree
that each of the provisions set forth above are
essential elements of the consideration given for this
agreement and, therefore, in the event that any
regulatory body having jurisdiction or any court of
competent jurisdiction should not approve any provision
of this agreement, on its initial filing, then either
party shall be entitled to withdraw or cancel this
agreement provided that both parties reserve the right
at all times to judicial review in the courts of any
action, order or approval or disapproval by such
regulatory body in such manner as may be permitted by
applicable law.
27. This Lease Agreement shall be null
and void if the Nuclear Regulatory Commission requires
an additional 345 KV line to Wolf Creek as a condition
of the grant of an operating license for Wolf Creek.
28. Lessor shall have the primary
responsibility, at KCP&L's costs, to secure all
regulatory approvals as may be required, except for any
certification of convenience and necessity which KCP&L
must obtain, which regulatory approval shall be the
primary responsibility of KCP&L. The parties shall
cooperate fully in securing such approvals.
IN WITNESS WHEREOF, we have hereunto set
our hands the day and year first above written.
KANSAS GAS AND ELECTRIC COMPANY
By /s/▇▇▇▇ ▇. ▇▇▇▇▇
Title Group Vice President-Technical
Services
ATTEST: "LESSOR"
/s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Secretary
KANSAS CITY POWER & LIGHT COMPANY
By /s/▇. ▇▇▇▇▇▇▇▇▇
Executive Vice President
ATTEST:
"LESSEE"
/s/▇▇▇▇▇▇ Sell ▇▇▇▇
Secretary
Approved:
/s/▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Counsel
April 9, 1991
▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇
Group Vice President
Kansas Gas and Electric Company
▇▇▇ ▇. ▇▇▇▇▇
▇. ▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Dear ▇▇. ▇▇▇▇▇:
As we have discussed in our recent phone
conversation, KCPL is willing, in response to your
recent proposals, to agree to the following terms to
resolve the remaining issues regarding extension by
Kansas Gas and Electric Company ("KGE") and Kansas City
Power & Light Company ("KCPL") of the October 1, 1984
Lease Agreement ("Lease") of the Wolf Creek/LaCygne
transmission line. We will agree to the following:
1. Both parties will treat the notice
of intent not to renew the Lease upon the expiration of
its five-year term in 1990, sent by KCPL on July 8,
1988, and the notice sent by KGE on May 2, 1990,
setting a termination date of the Lease on August 2,
1990, as void, ab initio.
2. The parties agree, all other
notices, attempted notices and regulatory filings to
date notwithstanding, that the Lease is in full force
and effect pursuant to its own terms of automatic
renewal for successive one-year terms unless either
party, at least two years prior to the expiration of
the original term or, if renewed, at least two years
prior to the expiration of the renewal term, gives
written notice to the other party that the Lease term
will not be renewed.
3. The parties agree that throughout
the operating life of the Wolf Creek Generating Station
neither party will give such a notice that the Lease
will be canceled or otherwise not renewed, except for
material breach by the other party or, for KCPL, except
in the additional circumstance identified in the fifth
paragraph of this letter agreement contained below.
4. The parties agree that while the
Lease is in effect, KGE will be entitled to no other
compensation for delivery to KCPL of KCPL's Wolf Creek
entitlements. The parties further agree that during
that same period KGE will not exercise its right
contained in Paragraph 6 of the Lease to unilaterally
make application to the Federal Energy Regulatory
Commission for a change in the rental payment specified
in Paragraph 5 of the Lease, unless that change in
rental payment is based on KGE's actual costs in the
Wolf Creek/LaCygne transmission line, including any
costs incurred by KGE in the circumstances identified
in Paragraph 13 of the Lease.
5. The parties agree that in the event
KGE does exercise its right for a change in the rental
payment under the terms of the preceding paragraph of
this letter agreement, KCPL will be entitled, if it
chooses, to exercise its right contained in Paragraph 4
of the Lease to cancel the Lease upon ninety (90) days
written notice if it is able to secure an alternative
transmission path to Wolf Creek, which could include
construction of its own transmission line. KCPL agrees
that in consideration of the extension of the Lease
pursuant to the terms hereunder it will not exercise
its right in that regard, except in the circumstance
described in this paragraph, throughout the operating
life of the Wolf Creek Generating Station.
6. The parties agree that the Lease and
this letter agreement will be binding upon their
respective successors and assigns. KGE represents that
KGE has the authority under its existing merger
agreement with the Kansas Power and Light Company
("KPL") to so bind KPL upon its merger with KGE (and
the corporation which will emerge from that proposed
merger), or if it does not have such authority, that
the concurrence of KPL in the terms of the Lease, and
this letter agreement, will be obtained in writing
within 5 days of the execution of the letter agreement
by the parties.
7. KCPL agrees that upon the execution
of this letter agreement (including any written
concurrence by KPL required pursuant to the preceding
paragraph), and upon the filing of this letter
agreement by KGE for the necessary approvals from the
regulatory agency having jurisdiction (which
application would include KCPL's certificate of
concurrence), KCPL will promptly withdraw its
intervention in FERC Docket No. EC91-2-000 and will no
longer participate in addressing any issue regarding
the transmission services to be provided by KGE and/or
KPL upon the consummation of their proposed merger
which may arise in KCC Docket No. 174,155-U or in MPSC
Docket No. EM-91-213. By remaining as intervenor in
KCC Docket No. 174,155-U and in MPSC Docket No. EM-91-
213 it is not KCPL's desire or intent to oppose KGE and
KPL's merger application, but to protect its interests
on any (non-transmission) issue affecting it as a
utility which would be interconnected with the merged
company which may arise during the hearings in those
proceedings.
8. This letter agreement will be
effective and binding between KCPL and KGE even in the
circumstance that the proposed merger between KGE and
KPL is not consummated for whatever reason. If you
concur that the foregoing represents our agreement as
to the continued effectiveness of the Lease, please
sign where indicated below and return a signed copy to
me.
Very truly yours,
/s/▇. ▇. ▇▇▇▇▇
JME:cb
The above and foregoing letter
agreement approved by
Kansas Gas and Electric Company
this 9th day of April, 1991.
By /s/▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇
Group Vice President