AMENDATORY AGREEMENT NO. 2
TO
AGREEMENT FOR THE SALE AND PURCHASE OF NONFIRM ENERGY
BETWEEN
CHUGACH ELECTRIC ASSOCIATION INC.
AND
GOLDEN VALLEY ELECTRIC ASSOCIATION, INC.
Dated February 8. 1999
WHEREAS, Chugach Electric Association, Inc. ("Chugach") and Golden
Valley Electric Association, Inc. ("GVEA") entered into an Agreement for the
Sale and Purchase of Nonfirm Energy dated May 18, 1989 ("Agreement"); and
WHEREAS, Chugach and GVEA amended such Agreement by letter agreement
dated January 18, 1996 (Tier II Agreement), and the Agreement and Tier II
Agreement together constitute the current amended agreement ("Amended
Agreement"); and
WHEREAS, Chugach and GVEA now wish to revise the various terms of the
Amended Agreement;
NOW, THEREFORE, in consideration of the mutual agreements contained
herein, the Parties agree as follows:
1. Section 5(b) is amended to read as follows:
(b) GVEA's Requirements for Nonfirm Energy. GVEA's
requirements for Nonfirm Energy in any hour shall be the difference,
expressed in kilowatt-hours (kWh), between (1) GVEA's overall system
load (including sales of electric power at wholesale) and (2) the
energy generated and delivered to GVEA from GVEA's Power Resources or
purchased by GVEA on the Economy Energy Spot Market, in accordance with
the final proviso of Section 5(c) For purposes of this Agreement, GVEA
shall not Schedule electric energy from its Power Resources in any hour
except to the extent that Nonfirm Energy is not available to GVEA under
this Agreement, or GVEA reasonably and in good faith determines that
(1) the operation of a specific GVEA generating resource is necessary
or prudent to provide system reserves, system stability, or other
system reliability or security needs, or because transmission capacity
for Nonfirm Energy is unavailable or limited; (2) the cost of Nonfirm
Energy hereunder exceeds GVEA's cost of energy from GVEA's Power
Resources; or (3) such energy is provided by a Qualifying Facility or
from another resource from which GVEA is obligated by contract to
accept delivery of such energy.
2. Section 5(c) is amended to read as follows:
(c) Limitations On Other Purchases. In consideration of
Chugach's agreement to sell Nonfirm Energy to GVEA on the basis of
GVEA's requirements for Nonfirm Energy, rather than on the basis of
specified maximum and/or minimum purchase amounts, and in furtherance
of GVEA's intention that Chugach and Marathon rely on this Agreement in
entering into the Marathon Contract, GVEA agrees that (1) GVEA will not
enter into any new Firm Power purchase agreement that would reduce
GVEA's purchases of Nonfirm Energy under this Agreement in the period
prior to December 31, 1995, unless GVEA is required by law or by order
of a regulatory agency to do so; (2) GVEA will not at any time purchase
or otherwise obtain nonfirm or economy or other similar energy from
other suppliers (except QFs), regardless of the price(s) at which such
energy may be available to GVEA from such suppliers, if the effect of
GVEA doing so would be to reduce GVEA's purchases of Nonfirm Energy
under this Agreement; provided, that in addition to purchasing energy
from QFs, GVEA shall be entitled to purchase particular increments of
nonfirm, economy, or other similar energy from suppliers other than QFs
if and to the extent that Chugach is unable to make Nonfirm Energy
available to meet such increments of GVEA's requirements for Nonfirm
Energy; and provided further, that whenever GVEA is entitled under
Exhibit B (attached hereto and incorporated by reference herein) to
purchase energy from another supplier in circumstances requiring such
supplier to start up one or more generating units for GVEA, GVEA shall
also be entitled to commit to such supplier that GVEA will purchase
such energy produced by such units for some reasonable continuous
period, not to exceed seventy-two (72) hours; and provided further,
GVEA shall be entitled to purchase. up to one-third (1/3rd) of the
first 450,000,000 kilowatt-hours and twenty percent (20%) of amounts
over 450,000,000 kWh of its annual requirement for nonfirm energy as
Spot Market Economy Energy.
3. Section 5 is amended to add new subsections (d), (e) and (f) as follows:
(d) To the extent GVEA's purchases of nonfirm energy from
Chugach in any calendar year are less than two-third (2/3rds) of GVEA's
annual purchase of nonfirm energy from all sources, GVEA's purchase
obligation in the succeeding year shall be increased by such amount;
provided however, that GVEA shall operate in good faith under this
Agreement to take in each year those amounts of nonfirm energy which it
is capable, with a reasonable amount of care and planning, of taking
from Chugach in fulfillment of GVEA's obligations under this Agreement.
(e) From the energy that GVEA would otherwise have been
entitled to purchase in the Economy Energy Spot Market, GVEA will
instead purchase from Chugach on a one-time basis during the first
twelve (12) months of this Settlement Agreement, under a mutually
acceptable schedule, and in addition to any other purchases that GVEA
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is obligated or entitled to make from Chugach under the Nonfirm Energy
Agreement, a quantity of energy equal to 9,236,000 kilowatt-hours. This
represents energy that GVEA did not purchase from Chugach under the
Nonfirm Energy Agreement in September and October of 1997 because GVEA
instead took delivery of power from ML&P.
(f) For purposes of this Agreement, any and all electric power
that GVEA obtains from generators owned by others shall be considered
"nonfirm or economy or similar energy" and not "Firm Power" unless the
following conditions, as well as the definition of "Firm Power," have
been met:
(1) The power will be generated by the capacity
of a machine or portion of the capacity of a
machine that is dedicated to the sale to
GVEA and is in excess of any requirement of
the owner for generation or reserves;
(2) For "Firm Power" to be produced using ML&P's
generators, Chugach shall be provided either
(A) a ruling from the Internal Revenue
Service that the proposed contract is
consistent with provisions of the Internal
Revenue Code applicable to ML&P's generation
and any tax-exempt financing thereof,
together with a copy of ML&P's request for
that ruling, or (B) an opinion by ML&P's
bond counsel that such contract is
consistent with such provisions, including a
reasonable explanation of the basis for that
opinion; and
(3) GVEA shall have requested competitive
proposals for the desired Firm Power and
shall have selected the lowest cost
responsive proposal.
4. Section 7(a) is amended to read as follows:
(a) In General. Except as provided in the Tier II Agreement,
rates for the sale and purchase of Nonfirm Energy and any Spot Market
Economy Energy sold by Chugach shall be established in accordance with
this Section 7 and with the provisions of Exhibits B, C, and E attached
hereto and incorporated by reference herein; provided that for hours
GVEA requests proposals for Spot Market Economy Energy and suppliers
other than Chugach offer sales of incremental generation from otherwise
operating generation facilities in quantities sufficient to meet GVEA's
request, Chugach may elect to offer Spot Market Economy Energy at such
price as Chugach determines.
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For purposes of determining the application of Tier I and Tier
II pricing under the Tier II Agreement, sales by Chugach for "FMUS
loads" shall be deemed to be any GVEA purchases of Spot Market Economy
Energy from Chugach. In addition, pursuant to the Tier II Agreement,
all GVEA purchases of nonfirm energy other than from Chugach's spinning
reserves shall continue to be Tier II purchases, as set forth in the
Tier II Agreement.
5. Section 7(b) is amended to read as follows:
(b) Nonfirm Energy Rate. Except as provided in Section 7(a),
the rate per kWh for all Nonfirm Energy or Spot
Market Economy Energy sold by Chugach in any given day.
6. Section 10 is amended to add new subsections (c) and (d) as follows:
(c) GVEA and Chugach dispatchers will coordinate with any
other entities desiring to make sales in the Economy Energy Spot Market
to maximize availability of Spot Market Economy Energy and Nonfirm
Energy to GVEA.
(d) Subject to GVEA's purchase obligations under this
Agreement and to Section 10(c) above, GVEA shall decide the final
Schedule for purchases from Chugach and the Economy Energy Spot Market.
7. Section 30 is amended to add the following definitions:
(i)(2) Economy Energy Spot Market. The market of nonfirrn
energy suppliers for sales to GVEA other than GVEA's required
purchases from Chugach under this Agreement. The Economy
Energy Spot Market shall be a competitive market open to
participation by any and all qualified sellers on a fair and
non-discriminatory basis. Such sellers shall include, but not
necessarily be limited to, Chugach, ML&P, and such other
electric utilities, independent power producers, power
marketers, and other entities as may be willing and able to
sell electric power to GVEA in accordance with applicable law
and Commission regulations.
(w)(2) Spot Market Economy Energy. Energy purchased by GVEA in
the Economy Energy Spot Market.
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CHUGACH ELECTRIC ASSOCIATION, INC.
Dated: February 8, 1999 By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, General Manager
GOLDEN VALLEY ELECTRIC ASSOCIATION, INC.
Dated: February 8, 1999 By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President & CEO
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