Exhibit 10.5
INTERCONNECTION AND OPERATING
AGREEMENT
THIS AGREEMENT is made this 18th day of May, 1998, by and between LSP
Energy Limited Partnership, a limited partnership organized and existing under
the laws of the State of Delaware, sometimes hereinafter referred to as
"Customer", and Energy Mississippi, Inc., a corporation organized and existing
under the laws of the State of Mississippi, sometimes hereinafter referred to as
"Company".
WITNESSETH:
WHEREAS, Customer intends to construct, own and operate a facility for the
generation and sale of electric energy, which facility is located in Batesville,
Mississippi (the "Facility"); and
WHEREAS, the Facility is expected to sell electrical energy and capacity
to one or more power purchasers for resale and to have a generating capacity of
up to 800 MWs in the summer period and up to 900 MWs in the winter period; and
WHEREAS, the Facility is located near the transmission facilities of
Company; and
WHEREAS, Customer has requested and Company has agreed to enter into an
interconnection agreement with Customer in order for Customer to be able to
transmit energy from the Facility across Company's transmission system; and
NOW THEREFORE, in consideration of and subject to the mutual covenants
contained herein, it is agreed:
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ARTICLE I - DEFINITIONS
Whenever used in this Agreement, Appendices and attachments hereto, the
following terms shall have the following meanings:
Company Interconnection Facilities - Those certain Interconnection
Facilities presently in place, presently proposed to be installed or required to
be installed in the future, which facilities are required to interconnect the
Customer Interconnection Facilities to Company's system at Company's Batesville
Substation and were installed or will be installed and will be owned, operated
and maintained by Company, but at Customer's expense pursuant to this Agreement,
and which facilities are more fully described in Appendix A of this Agreement.
Customer Interconnection Facilities - All Interconnection Facilities to be
installed, owned, operated and maintained by Customer on Customer's side of the
Point of Interconnection which facilities are more fully described in Appendix A
of this Agreement.
Customer Interconnection Specifications - shall have the meaning set forth
in Section 3.2.b. of this Agreement.
Good Utility Practice - shall mean any of the practices, methods and acts
engaged in or approved by a significant proportion of the electric utility
industry during the relevant time period, or any of the practices, methods and
acts which, in the exercise of reasonable judgment in light of the facts known
at the time the decision was made, could have been expected to accomplish the
desired result at the lowest reasonable cost consistent with reliability, safety
and expedition. Good Utility Practice is not intended to be limited to the
optimum practice, method or act to the exclusion of all others, but rather to be
a spectrum of acceptable practices, methods or acts.
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Interconnection Facilities - All Customer Interconnection Facilities,
Company Interconnection Facilities and System Upgrades presently in place or
presently proposed to be installed or required to be installed in the future
pursuant to this Agreement in order to interconnect and deliver energy from the
Facility to Company's system including, but not limited to, any such connection,
transmission, distribution, engineering, administrative, transformation,
switching, metering, communications and safety equipment and any additions
and/or reinforcements to Company's system that the Company, in the exercise of
its reasonable judgment, deems necessary.
Operation Date - The day commencing at 00:01 hours, following the day
during which Interconnection Facilities and equipment of Customer
Interconnection Facilities have been completed to Company's and Customer's
mutual satisfaction pursuant to the requirements of this Agreement and energized
in parallel operation of Company's and Customer's systems as confirmed in
writing.
Point of Interconnection - The point, shown in Appendix A, where the
facilities of Customer interconnect with the facilities of Company as the same
may be modified consistent with Section 3.2.f.
System Protection Facilities - The equipment required to protect (1)
Company's system and its customers from faults occurring at Customer
Interconnection Facilities or the Facility, and (2) Customer Interconnection
Facilities or the Facility from faults occurring on Company's system or on the
system of others to which Company's system is directly or indirectly connected.
System Upgrades - Any Interconnection Facilities comprising an upgrade or
improvement to Company's existing transmission system as specified in Appendix
B.
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Transferrable Interconnection Facilities - Those certain Customer
Interconnection Facilities that may be transferred from Customer to the Company
or to a third party pursuant to Section 3.2.f., as more particularly described
in Appendix C and any rights of way or easements to be assigned to Company in
connection with such transfer pursuant to Section 3.2.f.
ARTICLE II - TERM OF AGREEMENT
2.1 This Agreement shall be binding upon execution, shall remain in effect
for a term of thirty-five (35) year(s) from the Operation Date, and shall renew
thereafter for succeeding five (5) year terms; provided, that during or with
respect to any renewal term either Company or Customer may terminate this
Agreement by giving at least three (3) years written notice to the other
conditioned upon such termination being consistent with applicable law and
regulation.
ARTICLE III - CONSTRUCTION
3.1. Land Rights. Customer agrees to furnish at no cost to Company all
necessary rights of way upon, over, under, and across lands owned or controlled
by Customer and/or its affiliated interests for the construction and operation
of Company Interconnection Facilities under this Agreement and shall, at all
reasonable times, give the Company, or its agents, free access to such
facilities. Customer grants to Company at all reasonable times the right of free
ingress and egress to Customer's premises to the extent necessary for the
purpose of installing, testing, reading, inspecting, repairing, operating,
altering or removing any of the Company Interconnection Facilities located on
Customer's premises or for such other purposes as necessary to enable Company to
receive electric energy or suspend the receipt thereof pursuant to the terms of
this Agreement, or
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determine Customer's compliance with this Agreement. If any part of the Company
Interconnection Facilities, System Upgrades or Transferable Interconnection
Facilities are to be installed on property owned by other than Company or
Customer, Customer shall procure from the owners thereof all necessary permanent
property rights, rights of way and easements for the construction, operation,
maintenance and replacement of Company facilities upon such property in a form
reasonably satisfactory to Company. In the event Customer is unable to secure
such rights by condemnation or otherwise, Company shall use due diligence to
secure such rights and Customer shall reimburse Company for all reasonable costs
incurred by Company in securing such rights. In connection with Company's
exercise of rights under this Section 3.1, while on Customer's premises,
Company's personnel and agents shall comply with all applicable safety rules or
regulations of Customer that are communicated by Customer to Company. Company is
currently expected to install all System Upgrades on existing Company property,
rights of way or easements. If any part of the System Upgrades are to be
installed on property owned by other than Company, Company shall notify Customer
of such additional property requirements. as soon as practicable.
3.2. Facility and Equipment Design and Construction.
a. Customer shall be obligated to design, construct, install, own,
operate and maintain Customer Interconnection Facilities. Customer
Interconnection Facilities shall meet all requirements of applicable safety
and/or engineering codes, and further, shall meet all requirements of any duly
constituted regulatory authority having jurisdiction, as specified by Company
pursuant to this Section 3.2. The Facility shall meet all
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requirements of applicable law including any safety or other codes required by
any duly constituted regulatory authority having jurisdiction.
b. As soon as possible but no later than sixty (60) days after
execution of this Agreement, Company shall provide Customer with all design
specifications or other requirements for the Customer Interconnection Facilities
required to satisfy Company's requirements for operational control, reliability
or safety of the Interconnection Facilities pursuant to the standards specified
in this Agreement (the "Customer Interconnection Specifications"). Customer
shall provide Company with any proposed revisions to such Customer
Interconnection Specifications within thirty (30) days after receipt of such
specifications from Company. Company shall either accept or reject, in whole or
in part, Customer's proposed revisions within thirty (30) days after receipt.
Company shall provide Customer a written explanation of the basis for any
rejection. Customer shall submit the actual specifications for all Customer
Interconnection Facilities, including any System Protection Facilities, to
Company for review prior to connecting said Customer Interconnection Facilities
and equipment to Company's system in order to insure that connection to
Customer's Facility is consistent with the Customer Interconnection
Specifications. Within thirty (30) days after receipt of such specifications,
Company shall confirm in writing the acceptability thereof or provide Customer
with a written notice of any failure of such specifications to satisfy the
Customer Interconnection Specifications, setting forth in reasonable detail an
explanation of the failure and such revisions as believed necessary to remedy
the failure. Customer shall revise the Customer Interconnection Facilities as
necessary to overcome the failure and resubmit such specifications for the
Company's review and approval pursuant to this Section 3.2.b. Company's review
of the
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specifications for Customer Interconnection Facilities shall be solely for the
purpose of confirming their conformance with the Customer Interconnection
Facilities and shall not be construed either as confirming or as endorsing the
design, or as any warranty as to fitness, safety, durability or reliability of
Customer Interconnection Facilities or any portion thereof. Company shall not,
by reasons of such review or failure to review, be responsible for strength,
details of design, adequacy or capacity of Customer Interconnection Facilities
or equipment, nor shall Company's acceptance be deemed to be an endorsement of
any Facility or equipment.
c. Each Party agrees to make changes to the Interconnection
Facilities on its respective side of the Point of Interconnection as may be
reasonably required to cause such facilities to meet the standards of this
Agreement in response to changing requirements of Company's system. It is agreed
that such necessary changes will be made by each Party to its facilities on its
respective side of the Point of Interconnection, at its own expense, unless such
facilities are determined to be Company Interconnection Facilities, in which
case such facilities will be installed, owned and maintained by Company, but at
Customer's expense. Company agrees to give Customer advance written notice of
the time such changes are to be completed, and a reasonable opportunity for
Customer to accomplish these changes. Contemporaneous with such notice, Company
shall supply complete engineering information and specifications to Customer for
use in determining what changes will be necessary on Customer's side of the
Point of Interconnection.
d. Company shall design, license, install, operate, maintain and own
the Company Interconnection Facilities and the System Upgrades. Company shall
provide
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Customer with a detailed description and its preliminary estimate of the
itemized expected budget for the design and construction of the Company
Interconnection Facilities and the System Upgrades pursuant to the standards set
forth in this Agreement no later than fifteen (15) days after execution of this
Agreement. Company shall provide Customer with its best estimate of any
revisions to such description and budget and the schedule for the design and
construction of the Company Interconnection Facilities and System Upgrades
within sixty (60) days after execution of this Agreement. Company understands
that time is of the essence to Customer in the construction of such facilities.
Company shall timely advise Customer of any opportunities to reduce the
scheduled time for such construction by the payment of additional costs or
otherwise. Company shall promptly provide Customer with any material revisions
in such description, budget or schedule, but in any event, no less than sixty
(60) days prior to initiating any work covered by such revision. Customer shall
within sixty (60) days after receipt provide Company with any comments or
proposed revisions to such description, or budget, or schedule estimate. Company
shall use reasonable efforts to address or accommodate the comments received
from Customer pursuant to this Section 3.2.d.; provided that Company shall
reserve the final judgment with respect to any such matters. Company shall not
commence detailed design or construction of any Company Interconnection
Facilities or System Upgrades prior to receiving written authorization to
proceed from Customer. Subject to Company's right to suspend its performance
pursuant to Section 5.2, Company shall use due diligence to complete or cause to
complete and place in service any Company Interconnection Facilities or System
Upgrades on or before sixteen (16) months from the date of receipt of the
authorization to proceed from Customer; or such earlier or later date as set
forth in
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Company's schedule provided under this Section. Company shall be reimbursed by
Customer for all reasonable costs incurred by Company in performing its work
under this Section 3.2.d. If Customer reasonably determines that Company is
failing to use due diligence to complete the Company Interconnection Facilities
or System Upgrades pursuant to the detailed design and schedule provided under
this Section, Customer may provide Company with written notice of its
determination setting forth in reasonable detail the actions necessary to cure
the failure. If, within thirty (30) days after such notice, Company fails to
provide Customer with reasonably satisfactory evidence that it has cured such
failure, Customer may, upon thirty (30) days notice to Company, without
prejudice to any other remedies it may have, cause the remaining work to be
completed in accordance with the design specifications and standards for such
work prepared by Company pursuant to this Agreement by an independent contractor
selected from a list provided by Company. Company shall cooperate reasonably
with Customer to facilitate the transfer of responsibility for work subject to
Customer's exercise of such right, provided that Company shall to oversee and
supervise all such remaining work.
e. The Company shall cause the construction of the Company
Interconnection Facilities and System Upgrades consistent with the procedures,
practices and standards routinely employed by the Company with respect to its
construction of its own comparable facilities in accordance with Good Utility
Practice, including without limitation, any applicable bidding or other cost
control procedures. At Customer's request, Company shall provide Customer with a
cost accounting setting forth in reasonable detail the expenditures for all
necessary facilities and materials comprising the Company Interconnection
Facilities and System Upgrades.
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f. Customer shall have the option, exercisable upon thirty (30) days
written notice to Company to transfer ownership of the Transferrable
Interconnection Facilities to Company or to any affiliated or unaffiliated
thirty party.
A transfer of the Transferrable Interconnection Facilities to Company
shall be made pursuant to a ▇▇▇▇ of sale or such other documentation
("Facilities Documents") as required by law and reasonably acceptable to the
Company to effect a transfer of title of the Transferrable Interconnection
Facilities to Company with all legal warranties. Customer's transfer shall
include an assignment of any rights of way or easements ("Easement Documents")
necessary for Company to own, operate and maintain the Transferrable
Interconnection Facilities in a form reasonably acceptable to the Company.
Facilities Documents and Easement Documents are referred to collectively as
"Transfer Documents". Such transfer and assignment of the Transferrable
Interconnection Facilities shall be for no additional consideration by either
Party to the other. Prior to effecting the transfer of the Transferrable
Interconnection Facilities, Customer shall demonstrate to Company's reasonable
satisfaction that any required maintenance of the Transferrable Interconnection
Facilities has been performed consistent with the standards of this Agreement.
Such transfer and assignment to Company shall be effective upon the execution
and delivery of the Transfer Documents by Customer. Any costs incurred by
Company to effectuate such transfer and assignment shall be reimbursed by
Customer pursuant to Article V.
Upon transfer of the Transferrable Interconnection Facilities to Company,
Company shall operate and maintain such facilities and easements at the
Customer's expense for the term of the Agreement or as long as Transferrable
Interconnection Facilities are used
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by Customer for transmission of electricity, whichever occurs last.
Reimbursement for such reasonable operation and maintenance expenses to Company
and other related expenses such as taxes and administrative expenses shall be
made pursuant to Article V. Such transfer and assignment shall be subject to any
regulatory approval which may be required by law or rule or regulation
promulgated by a governmental authority with jurisdiction over such a
transaction.
Company shall use due diligence and cooperate in good faith to cause such
transfer and assignment to be effective as soon as possible after Customer's
notice under this Section 3.2.f. Upon the effective date of such transfer and
assignment to Company, the Transferrable Interconnection Facilities shall become
Company Interconnection Facilities as of such date for all purposes of this
Agreement. The transfer of the Transferrable Interconnection Facilities to a
third party shall not require the consent of Company provided that Customer
shall remain liable for all obligations under this Agreement with respect to
such transferred facilities and provided further that the Company, the third
party, and Customer have executed in a manner reasonably acceptable to Company,
all agreements and modifications to existing agreements that Company, in its
reasonable judgment, deems necessary to effectuate such transfer and continued
interconnection.
g. Customer (or Customer's power purchaser(s)) will be responsible
for arranging transmission service necessary for deliveries from the Facility
across Company's system. To the extent appropriate, network, firm
point-to-point, non-firm point-to-point, or comparable service shall be
purchased at the rates established pursuant to the Company's then current tariff
to the extent energy produced by the Facility is transmitted
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over Company's transmission system. Company shall offset such charges by a
credit up to the cost of the System Upgrades paid for by Customer for purposes
of Customer's or Customer's power purchasers, use of network, firm point-to-
point, non-firm point-to-point, or comparable transmission service under
Company's tariff. To the extent any energy produced by the Facility is
transmitted over Company's transmission system pursuant to a network, firm
point-to-point, non-firm point-to-point, or comparable transmission service
agreement, Company shall credit against Customer's (or Customer's purchasers')
use an amount equal to the equivalent point-to-point transmission service rate
for such service until such time as the cost of the System Upgrades has been
fully offset, after which time such offset or credit shall no longer apply. Any
such credit shall be separately identified by Company and applied monthly
pursuant to the terms of the applicable transmission service agreement.
h. At Customer's request, Company shall use due diligence and shall
cooperate in good faith to (i) determine what, if any, modifications to the
Interconnection Facilities are either required or allowable to accommodate a
change in Customer's requirements related to interconnection with Company's
transmission system, and (ii) implement such modifications at Customer's expense
pursuant to the other provisions of this Agreement.
3.3. Metering. Customer shall provide, install, own and maintain metering
equipment at the locations shown in Appendix A, or such other accessible,
protected and satisfactory site selected by mutual agreement of the Parties,
necessary to meet its obligations in this Agreement. Company shall provide,
install, own and maintain metering equipment at the location shown in Appendix
A, or such other accessible, protected and
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satisfactory site selected by mutual agreement of the Parties, necessary to meet
its obligations under this Agreement. All reasonable and documented costs
required for the administration of Company's metering shall be born by Customer.
All reasonable and documented costs required for either the initial installation
of Company's metering, or any changes to metering requested by Customer shall be
borne by Customer. Customer and Company shall share with each other the
necessary output information from their respective meters consistent with the
terms of this Agreement.
ARTICLE IV - OPERATION
4.1. Interconnection. Upon completion, testing and acceptance of the
Interconnection Facilities pursuant to Section 3.2 of this Agreement and subject
to the other terms and conditions of this Article IV, Company shall operate and
maintain the Company Interconnection Facilities and System Upgrades as necessary
to accept electrical energy from the Facility at the Point of Interconnection.
As a condition to energizing the Interconnection Facilities, Customer shall
provide Company with evidence reasonably satisfactory to Company that Customer
has closed on the construction financing required to complete the Facility and
that the agreements providing for the disbursement of such financing are still
in full force and effect. In the event that the System Upgrades are not
completed by the date upon which Customer wishes to synchronize the Facility
with Company's system, Customer shall nonetheless be allowed to synchronize the
Facility and delivery energy to Company's system but only to the extent
Company's system can accept such energy.
4.2. Reliability. The Company and Customer agree that the implementation
of this Agreement shall comply with the then existing (or amended) manuals,
standards, and
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guidelines of the North American Electric Reliability Council ("NERC") and the
Southeastern Electric Reliability Council ("SERC"), or any successor agency
assuming or charged with similar responsibilities related to the operation and
reliability of the North American electric interconnected transmission grid. To
the extent that this Agreement does not specifically address or provide the
mechanisms necessary to comply with such NERC or SERC manuals, standards, or
guidelines, the Company and Customer hereby agree that both parties shall
provide to the other Party all such information as may reasonably be required to
comply with such manuals, standards, or guidelines and shall operate, or cause
to be operated, their respective facilities in accordance with such manuals,
standards, or guidelines.
4.3. Reactive Power. In association with power generated by Customer for
transmission by Company, Customer shall operate the Facility so as to meet the
voltage schedules designated by Company's operations personnel, which shall be
within the normal operating range of the Facility, which schedules shall be
consistent with the voltage schedules provided to Customer by the Tennessee
Valley Authority ("TVA"). To the extent energy produced by the Facility is
transmitted across Company's transmission system, consistent with Company's
currently effective transmission tariff, an appropriate adjustment to the charge
for reactive supply and voltage control in the transmission service agreement
will be made to reflect the contribution to reactive supply and voltage support
made by the Facility.
4.4. Protection and System Quality. It shall be Customer's obligation, at
its expense, to install or have installed and keep operative System Protection
Facilities, including such protective and regulating devices as are identified
by order, rule or
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regulation of any duly constituted regulatory authority having jurisdiction, or
as are otherwise necessary to protect personnel and equipment and to minimize
deleterious effects to Company's electric service operation, all in accordance
with the standards of this Agreement and as specified pursuant to Section 3.2.
Any such protective or regulating devices that may be required for Company's
Interconnection Facilities or System Upgrades shall be installed by Company at
Customer's expense pursuant to this Agreement.
a. Requirements for Protection. Customer shall provide relays,
circuit breakers, and all other devices necessary to promptly remove any fault
contribution of Customer's generating equipment to any short circuit occurring
on Company's system not otherwise isolated by Company equipment. Such protective
equipment shall include, without limitation, a disconnecting device or switch
with load interrupting capability to be located between Facility and the
Company's system at the point specified in Appendix A hereto or such other
accessible, protected, and satisfactory site selected upon mutual agreement of
the Parties. Customer shall be responsible for protection of Customer
Interconnection Facilities and the Facility from such conditions as negative
sequence currents, over- or under-frequency, sudden load rejection, over- or
under-voltage, and generator loss-of-field. Customer shall be solely responsible
for provisions to disconnect its generation when a disturbance on the Company's
system results in Customer's generation becoming isolated from Company's
generation.
b. System Quality. Customer's Facility and Customer Interconnection
Facilities shall meet the specifications for voltage excursions and voltage
operating range,
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voltage flicker and sinusoidal voltage or current waves as specified by
appropriate industry guidelines consistent with Good Utility Practice and the
standards of this Agreement.
c. Inspection. Company shall have the right, but shall have no
obligation or responsibility to: i) observe Customer's tests and/or inspection
of any of Customer Interconnection Facilities including any System Protection
Facilities maintained by Customer; ii) review the settings of Customer's System
Protection Facilities; and iii) review Customer's maintenance records relative
to Customer Interconnection Facilities including any System Protection
Facilities. The foregoing rights may be exercised by Company from time to time
as deemed necessary by the Company upon reasonable notice to Customer. However,
the exercise or non-exercise by Company of any of the foregoing rights of
observation, review or inspection shall be construed neither as an endorsement
or confirmation of any aspect, feature, element, or condition of Customer
Interconnection Facilities or the operation thereof, nor as a warranty as to
fitness, safety, desirability, or reliability of same.
4.5 Meters. Each Party shall, at Customer's expense, inspect and test its
respective meters upon their installation and at least once every two years
thereafter. If requested to do so by a Party, the other Party shall inspect or
test its meters more frequently than every two years, at the expense of the
requesting Party. Each Party shall give reasonable notice of the time when any
inspection or test shall take place, and the other Party may have
representatives present at the test or inspection. If a meter is found to be
inaccurate or defective, it shall be adjusted, repaired or replaced at
Customer's expense, in order to provide accurate metering. If a meter fails to
register, or if the measurement made by a meter during a test is found not to be
within the accuracy
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standards established in the most recent revision of Standard C 12.1 of the
American National Standard Institute, Incorporated, an adjustment shall be made
correcting all measurements made by the inaccurate meter for:
a. the actual period during which inaccurate measurements were
made, if the period can be determined, or if not,
b. the period immediately preceding the test of the meter equal
to one-half the time from the date of the last previous test
of the meter; provided, that the period covered by the
correction shall not exceed six months.
If hourly and/or daily energy readings are available and if such data are
requested by Company, Customer shall report same to Company's representatives as
designated by Company, by telephone, on a schedule to be agreed upon.
At Customer's expense, and in accordance with Section 4.6.b. and the other
standards and requirements of this Agreement, Customer's output information
shall be telemetered to the location specified by Company.
4.6. Control Area. Customer reserves the right to designate from time to
time, but no more frequently than once each year, all, part or none of its
Facility to be located in Company's control area. In the event that all or a
portion of the Facility is located in Company's control area and energy from
such portion of the Facility is scheduled and delivered to or across TVA's
system, no transmission service charge other than any applicable ancillary
services shall be assessed by Company related to such energy provided that the
Facility is directly connected to TVA's system and that no such charge is
imputed to Company or its customers under its current transmission tariff.
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4.7 Communications. To the extent communications with Company are required
they shall be conducted in accordance with this Section 4.7.
a. At Customer's expense, Customer shall maintain operating
communications with Company's system dispatcher or representative as designated
by Company in accordance with the standards of this Agreement. Any required
maintenance of the communications equipment shall be performed at Customer's
expense, but may be performed by Customer, the Company, or a subcontractor to
Customer approved by Company. The operating communications shall include, but
not be limited to, system paralleling or separation, scheduled and unscheduled
shutdowns, equipment clearances, next day forecasted hourly generation levels
and hourly and daily load data.
b. A Remote Terminal Unit ("RTU") or other communication method
acceptable to both parties shall be installed by Customer to gather accumulated
and instantaneous data from Customer's meters to be telemetered to the location
designated by Company. The communication protocol for this link will be
specified by Company. Instantaneous analog watt and var flow information must be
telemetered directly to such location. RTU equipment shall also be installed or
modified by Company at Customer's expense to gather accumulated and
instantaneous data from Company's meters.
4.8. Disconnection. Company shall have the right to disconnect, without
notice, the Customer Interconnection Facilities if, in the Company's reasonable
opinion, a hazardous condition exists and immediate disconnection is necessary
to protect persons, Company facilities, or other customer facilities from damage
caused by Customer Interconnection Facilities and/or the Facility, or the lack
of proper or properly operating System Protection Facilities. For purposes of
this Section 4.8, Customer System
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Protection Facilities may be deemed by Company to be not properly operating if
Company's review under Section 4.4.c. discloses irregular or insufficient
maintenance on such devices contrary to Good Utility Practice or that
maintenance records do not exist or are otherwise insufficient to demonstrate
that adequate maintenance has been and is being performed in accordance with the
standards under this Agreement. Company shall give Customer such notice as
reasonably practicable prior to such disconnection. Company shall (i) use
reasonable care and cooperate reasonably with Customer to avoid and minimize
interruptions in the acceptance of capacity and energy from the Facility
pursuant to this Section 4.8, (ii) keep Customer fully informed as to the
anticipated duration of each interruption, and (iii) restore connection and
resume acceptance of capacity and energy from Customer as soon as practicable to
the extent the condition resulting in the interruption has abated sufficiently
to permit such resumption. Any interruption or disconnection of Customer shall
be done in accordance with Good Utility Practice and be limited to the extent
necessary to effectively relieve the condition necessitating such interruption
or disconnection. Such interruption or disconnection shall not be inconsistent
with open access transmission policies of the Federal Energy Regulatory
Commission ("FERC").
4.9. Continuity of Service. Company shall have the right, exercisable in
accordance with this Section 4.9, to curtail deliveries of energy from Customer
or disconnect Customer Interconnection Facilities : a) for failure by Customer
to company with the provisions of this Agreement, provided that, Company shall
not curtail or disconnect Customer as a result of such material noncompliance
without provided the
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Customer written notice and at least thirty (30) days to cure such
noncomplicance; or b) to the extent required to:
(i) overcome system reliability problems caused by an emergency;
(ii) permit installation, repairs, maintenance, construction or
inspection of any part of Company's equipment or Company's
transmission system;
(iii) facilitate restoration of line or equipment outages; or
(iv) overcome system reliability problems caused by an outage of
Company's equipment or generation facilities; or
(v) for any reason otherwise permitted by applicable rules or
regulations promulgated by a regulatory authority having
jurisdiction over such matters.
Except in case of emergency, in order not to interfere unreasonably with
the other Party's operations, the curtailing or disconnecting Party shall give
the other Party reasonable prior notice of any curtailment or disconnection, the
reason for its occurrence and its probable duration. Company shall (i) use
reasonable care to avoid and minimize curtailments or disconnections in the
acceptance of capacity and energy, (ii) use reasonable care to coordinate any
curtailments or disconnections with scheduled outages or maintenance of the
Facility, (iii) keep Customer fully informed as to the anticipated duration of
each curtailment or disconnection, and (iv) resume acceptance of deliveries of
capacity and energy from Customer as soon as practicable once the condition
resulting in the interruption has abated sufficiently to permit such resumption.
Any curtailment or disconnection of Customer shall be done in accordance with
Good Utility Practice and be
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limited to the extent necessary to effectively relieve the condition
necessitating such curtailment or disconnection. Such curtailment or
disconnection shall not be inconsistent with FERC's open access transmission
policies.
4.10 Energy Imbalance. Company reserves the right to file rate schedules
with the FERC concerning any services the Company deems necessary for reliable
and orderly bulk power supply system management, including but not limited to,
any standby or related services that may arise from a failure of Customer to
meet its schedule of deliveries across facilities covered by this Agreement.
ARTICLE V. BILLING AND ADJUSTMENTS
5.1 Notwithstanding any other provision of this Agreement, Customer shall
be responsible for and shall reimburse Company for all actual costs incurred by
Company consistent with Sections 3.2.e. and 3.2.f. with respect to the design,
construction, and installation of the Company Interconnection Facilities, System
Upgrades, and all related equipment. Any estimates of costs provided under the
terms of this Agreement shall be for purposes of forecasting expected costs and
shall not be binding on Company.
5.2 Company shall ▇▇▇▇ Customer monthly in arrears for the costs to be
reimbursed Company under this Agreement. Customer shall pay all amounts due
within twenty (20) days after receipt of Company's statement. Company shall
provide reasonable documentation supporting Company's statement. In the event
Customer fails to make said monthly payments, Company shall have the right to
suspend its performance of work or other obligations under this Agreement until
such time as any overdue amounts have been paid in full.
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5.3 All Costs and expenses to be reimbursed by Customer under this
Agreement shall be reasonably incurred and properly documented by Company and
consistent with the standards of this Agreement.
5.4 In the event adjustments to billing statements are required as a
result of measurements made by inaccurate meters, the Parties shall use the
corrected measurements described in Section 4.5 to compute the amounts due from
or to Company for the energy delivered under this Agreement during the period of
inaccuracy. If the total amount, as computed, due from a Party for the period of
inaccuracy varies from the total amount due as previously computed, and the
payment of the previously computed amount has been made, the difference in the
amounts shall be paid to the Party entitled to it within thirty (30) days after
the paying Party is notified of the recomputation.
ARTICLE VI. FORCE MAJEURE
6.1. The term "Force Majeure" as used herein shall mean any act of God,
labor disturbance, act of the public enemy, war, insurrection, riot, fire, storm
or flood, explosion, breakage or accident to machinery or equipment, any order,
regulation or restriction imposed by governmental military or lawfully
established civilian authorities, or any other cause beyond a Party's reasonable
control. The Party unable to carry out an obligation, imposed on it by this
Agreement, due to "Force Majeure", shall notify the other Party in writing or by
telephone within a reasonable time after the occurrence of the cause relied on.
6.2. Company shall not be responsible for any non-performance under the
Agreement to the extent due to "Force Majeure" whether occurring on Company's
electric system or any connecting electric system to the extent affecting
Company's operations.
22
Company shall be excused from whatever performance is affected only to the
extent a "Force Majeure" situation exists and prevents such performance and
Company attempts in good faith and reasonable diligence to alleviate such
situation.
6.3. If Customer, because of "Force Majeure", is rendered wholly or
partially unable to perform an obligation imposed on it by this Agreement,
except for the obligation to make payments of money, Customer shall be excused
from whatever performance is affected, but only to the extent a "Force Majeure"
situation exists and prevents such performance and Customer attempts in good
faith and reasonable diligence to alleviate such situation.
ARTICLE VII. INDEMNITY
7.1 Customer agrees to fully indemnify and hold Company, its shareholder,
directors, officers, agents, representatives, employees, servants, its
affiliated and associated companies, their respective shareholders and/or its
assigns, harmless from and against any and all claims, demands, liability,
losses, damage, costs or expenses (including attorneys' fees and other costs of
defense), of any nature or kind whatsoever, including, but not limited to,
claims, demands and/or liability for personal injury to (including death of) any
person whomever (including payments and awards made to Customer's employees or
others under any workers' compensation law or under any plan for employees'
disability and death benefits) and for damage to any property whatsoever
(including Customer Interconnection Facilities, the Facility and Company's
system which includes Company Interconnection Facilities) arising out of or
otherwise resulting from the use, ownership, maintenance, or operation of the
Facility or Customer Interconnection Facilities, regardless of whether such
claims, demands or liability are alleged to have been
23
caused by negligence or to have arisen out of Company's status as the owner or
operator of facilities involved; provided, however, that the provisions of this
Section 7.1 shall not apply if any such personal injury or property damage is
held to have been caused by the sole negligence or the sole willful misconduct
of Company, its agents or employees.
7.2 Neither Party shall be liable in contract, in tort (including
negligence), or otherwise to the other Party, its agents, representatives, its
affiliated and associated companies, and/or its assigns, for any incidental or
consequential loss or damage whatsoever, including, but not limited to, loss of
profits or revenue on work not performed, for loss of use of or
under-utilization of the other Party's facilities or loss of use of revenues or
loss of anticipated profits, resulting from either Party's performance or
non-performance of an obligation imposed on it by this Agreement.
7.3 Each Party acknowledges and agrees that in no event shall any partner,
shareholder, owner, officer, director, employee, or affiliate of either Party be
personally liable to the other Party for any payments, obligations, or
performance due under this Agreement, or any breach or failure of performance of
either Party and the sole recourse for payment or performance of the obligations
hereunder shall be against the Customer or Company and each of their respective
assets and not against any other Person, except for such liability as expressly
assumed by an assignee pursuant to an assignment of this Agreement in accordance
with the terms hereof.
ARTICLE VIII. MISCELLANEOUS
8.1. Waiver. Any waiver at any time by either Party of its rights with
respect to a default under this Agreement, or with respect to any other matters
arising in connection
24
with this Agreement, shall not be deemed a waiver with respect to any subsequent
default of other matter.
8.2. Assignment. Neither Party shall voluntarily assign this Agreement, or
any part thereof, without the written consent of the other Party, which consent
shall not be unreasonably withheld, except in connection with the sale or merger
of a substantial portion of its properties including Interconnection Facilities
which it owns, and in the case of Customer, to its lenders in connection with a
financing of the Facility or as permitted with respect to a transfer of
Transferrable Interconnection Facilities pursuant to Section 3.2.f.,and any such
assignment or delegation made without such written consent shall be null and
void. Upon request by Customer, Company shall execute and deliver such consent
to assignment and opinion of counsel as may be reasonably necessary to effect an
assignment to Customer's lenders and reasonably requested by such lenders in
connection with a financing of the Facility.
8.3. Governing Law. The validity, interpretation and performance of this
Agreement and each of its provisions shall be governed by the applicable laws of
the State of Mississippi without regard to the Conflicts of Law provisions.
8.4. Headings Not to Affect Meaning. The descriptive headings o the
various Sections and Articles of this Interconnection Agreement have been
inserted for convenience of reference only and shall in no way modify or
restrict any of the terms and provisions hereof.
8.5. Amendments. This Interconnection Agreement may be amended by and only
by a written instrument duly executed by each of the parties hereto.
25
8.6. Standards. Company and Customer shall discharge any and all rights
and obligations under this Interconnection Agreement in a prudent manner and in
accordance with Good Utility Practice. Any exercise by Company of any right of
approval, inspection or review under this Agreement shall not be unreasonably
withheld or delayed.
8.7. Governmental Jurisdiction and Authorization.
a. This Agreement shall become effective when executed by both
parties and shall be subject to the acceptance for filing or approval, of the
FERC. The Company shall use due diligence to file this Agreement with the FERC
and obtain its acceptance for filing or approval. In the event the FERC requires
changes in this Agreement as a condition to its acceptance or, if applicable,
approval of this Agreement, the parties shall negotiate in good faith for a
period of no less than thirty (30) days to effect any required amendments. If,
at the end of such period, the parties have not reached agreement on such
amendment and either party would be materially adversely affected by the
required change, the adversely affected party may terminate this Agreement,
effective upon fifteen (15) days notice to the other party. Company shall also
use due diligence to seek and obtain any other governmental approval required by
it to construct, own, operate and maintain the Company Interconnection
Facilities and the System Upgrades.
b. This Agreement is subject to present and future valid laws and
valid orders, rules and regulations of duly constituted regulatory authorities
having jurisdiction. Each Party expressly reserves, however, the right to appeal
and otherwise contest any change ordered by a governmental agency or court
having jurisdiction in the rights, terms and conditions specified in this
Agreement.
26
c. Nothing contained herein shall be construed as affecting in any
way the right of the Company or Customer to unilaterally make application to the
FERC for a change in rates, terms or conditions of service under Section 205 or
206 of the Federal Power Act and pursuant to the FERC's Rules and Regulations
promulgated thereunder.
d. Notwithstanding the above provisions of this Section 8.7, Company
and Customer agree that neither Party shall unilaterally petition or otherwise
request the FERC or any successor thereto for any change in any rate, term or
condition set forth in Sections 2.1, 3.2.a., 3.2.b., 3.2.d., 3.2.e., 3.2.f. and
4.1 of this Agreement pursuant to Section 205 or Section 206 of the Federal
Power Act or otherwise and each Party hereby expressly waives its right to make
or request such change to the full extent permitted by law.
8.8. Notices. Any notice, demand or request required or permitted to be
given by either Party to the other and any Instrument required or permitted to
be tendered or delivered by either Party to the other may be so given, tendered
or delivered, as the case may be, by depositing the same in any United States
Post Office with postage prepaid, for transmission by certified or registered
mail, addressed to the Party, or personally delivered to the Party, at the
address set out below:
To Company: Energy Services, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Interconnection Arrangements Administrator
To Customer: LSP Energy Limited Partnership
c/o LS Power, LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Batesville Project Manager
27
ARTICLE IX - INSURANCE
9.1 Without limiting any obligations or liabilities under this Agreement,
Customer shall, at its own expense, provide and maintain or cause to be provided
and maintained, in effect beginning upon the date of Customer's authorization to
proceed to Company pursuant to Section 3.2.d. for the life of this Agreement,
minimum insurance coverage (in any combination of primary and excess/umbrella
and subject to commercially reasonable deductibles) as follows:
A. Workers' Compensation Insurance in accordance with all applicable
State, Federal, and Maritime laws, including Employer's Liability Insurance in
the minimum amount of $2,000,000. Policy shall be endorsed to include a Waiver
of Subrogation in favor of Company and its affiliated and associated companies.
To the extent Customer has employees, this coverage shall be maintained.
B. Comprehensive General Liability Insurance, including contractual
liability coverage for liabilities assumed under this Agreement,
products/completed operations coverage, broad form property liability coverage,
and personal injury coverage, with combined single limit of not less than
$10,000,000 each occurrence. Customer shall furnish to Company an Additional
Insured Endorsement with respect to such insurance in substantially the form
shown in Appendix D.
C. All risk property damage coverage on the Facility and Customer
Interconnection Facilities, including coverage for electrical injury under an
electrical apparatus assumption clause and Boiler and Machinery Insurance upon
commercial operation of the Facility, which shall include mechanical breakdown,
including, but not limited to, any pressure vessels, air tanks, boilers,
machinery, turbine generators,
28
transformers, pressure piping, and heating and air conditioning equipment.
Customer shall furnish to Company an Additional Insured Endorsement with respect
to such insurance in substantially the form shown in Appendix D.
9.2 The Insurance to be provided hereunder shall be written by one or more
nationally reputable insurance companies authorized to do business in
Mississippi, rated B+ VII by AM Best or Lloyds Companies reasonably acceptable
to Company. All of Customer's policies of insurance shall provide Company with
thirty (30) days prior written notice of cancellation (except that notice for
cancellation for nonpayment of premiums shall be ten (10) days), expiration or
material adverse modification. Prior to the date the Facility is first operated
in parallel with Company's electric system and annually thereafter during the
term of this Agreement, Customer shall furnish a Certificate of Insurance to
Company evidencing the coverages required under this Article IV.
ARTICLE X - GENERAL PROVISIONS
10.1 Company shall not be liable for any costs or damages due to the
inability of Customer or its designated representatives to obtain any licenses
or permits required by any authority having jurisdiction over such matters.
10.2 This Agreement, including all Appendices hereto, constitutes the
entire agreement between the Parties hereto with reference to the subject matter
hereof and no change or modification as to any of the provisions hereof shall be
binding on either Party unless reduced to writing and approved by the authorized
officer or agent of the Customer and the President or a Vice President of the
Company. The terms and conditions of this Agreement any every Appendix referred
to herein shall be amended, as agreed to by the Parties, to comply with changes
or alterations made necessary by a valid applicable order
29
of any governmental regulatory authority, or any court, having jurisdiction
hereof. This Agreement includes the following appendices which are attached and
incorporated herein:
Appendix A - Company and Customer Interconnection Facilities
Appendix B - System Upgrades
Appendix C - Transferrable Interconnection Facilities
Appendix D - Additional Insured Endorsement
30
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
duly executed by their duly authorized officers on the day and year first above
written.
WITNESSES:
LSP ENERGY LIMITED PARTNERSHIP
BY: LSP Energy, Inc.,
Its: General Partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------- --------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Assistant Vice President
-------------------------------- ----------------------------
ENTERGY MISSISSIPPI, INC.
By:
-------------------------------- --------------------------------
Title: VP Transmission
-------------------------------- ------------------------------
31
APPENDIX A
COMPANY AND CUSTOMER INTERCONNECTION FACILITIES
1. Company Interconnection Facilities. The Company Interconnection Facilities
shall be all the necessary equipment needed to interconnect the Company's
system with the Customer's Interconnection Facilities as shown on the
attached drawing. These facilities may include a breaker, switches, bus
work, conductor, poles, foundations, System Protection Facilities,
metering equipment, communication equipment and other facilities as may
be identified in accordance with this Agreement.
2. Point of Interconnection. The Point of Interconnection shall be where the
230kV conductors of the Company Interconnection Facilities interconnect
with the conductors of the Customer Interconnection Facilities at the
fence of the Company's 230kV Batesville Substation.
3. Customer Interconnection Facilities. The Customer Interconnection
Facilities shall include but not be limited to the following:
The necessary transformers, circuit breakers, bus work, relay and
protection equipment, switch gear, transmission line and supporting
structures, metering and communications equipment. The conceptual layout,
location, configuration and extent of Customer Interconnection
Facilities is shown on the attached drawing.
▇▇
▇▇▇▇▇▇▇▇ ▇
SYSTEM UPGRADES
TUNICA TO TUNICA DIST. 115kV--.61 MILE 4/0 COPPER
Upgrade conductor to 1272 and upgrade risers, two switches, and operating bus
at Tunica Dist. 115kV Substation
TUNICA DIST. TO BANKS 115kV Line--14.89 MILES, 4/0 COPPER
Upgrade conductor to 1272 and upgrade risers in Banks Switching Station
BANKS TO WALLS 115kV Line--9.7 Miles 4/9 COPPER AND 1/2 MILE OF 336
Upgrade conductor to 1272 and upgrade risers, two switches, operating bus,
and two line bay busses at Walls Substation
WALLS-DESOTO 115kV LINE--3.9 MILES OF 4/0 COPPER, .48 MILES OF 336
Upgrade conductor to 1272--Partial upgrade and partial dynamic line rating
SARDIS SUBSTATION--115kV
Replace two switches
SENATOBIA 115kV SUBSTATION
Upgrade two risers, two switches, two line bay busses and operating bus
DYNAMIC LINE RATING EQUIPMENT ON:
-- Senatobia to Coldwater
-- Como to ▇▇▇▇▇▇▇▇
-- ▇▇▇▇▇▇▇▇ to Tunica
The projects listed above are preliminary in nature and will be designed and
specified more fully in accordance with Section 3.2.d.
33
APPENDIX C
TRANSFERRABLE INTERCONNECTION FACILITIES
Transferrable Interconnection Facilities. Transferable Interconnection
Facilities shall consist of those facilities which customer shall designate
as such. The conceptual layout, location, configuration and extent of the
Transferable Interconnection Facilities is shown on the attached drawing.
34
APPENDIX D
ADDITIONAL INSURED ENDORSEMENT
Customer shall furnish to Company an Additional Insured Endorsement with
respect to such insurance in substantially the following form:
"In consideration of the premium charged, Entergy _______________,
Inc. and its affiliated and associated companies are named as
additional insureds with respect to liabilities arising out of
Customer's use and ownership of Customer's Facilities and
Interconnection Facilities."
"The inclusion of more than one insured under this policy shall not
operate to impair the rights of one insured against another insured
and the coverages afforded by this policy will apply as though
separate policies had been issued to each insured. The inclusion of
more than one insured will not, however, operate to increase the
limits of the carrier's liability. Entergy ____________, Inc. will
not, by reason of its inclusion under this policy, incur liability
to the insurance carrier for payment of premium for this policy."
35
[ENTERGY LETTERHEAD]
August 18, 1998
LSP Energy Limited Partnership
c/o LS Power, LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
LETTER OF AMENDMENT
Ladies and Gentlemen:
In accordance with the terms set forth below, Entergy Mississippi, Inc. (the
Company) agrees to modify the Interconnection and Operating Agreement dated
May 18, 1998 (the Agreement) between the Company and LSP Energy Limited
Partnership (LSP) with the following amendments:
1. Section 3.2(g) of the Agreement shall be amended to read as follows:
g. Customer (or Customer's power purchaser(s)) will be
responsible for arranging transmission service necessary for
deliveries from the Facility across Company's system. Network, firm
point-to-point, non-firm point-to-point, or comparable service shall
be purchased by Customer (or Customer's power purchaser(s)) at the
rates established pursuant to the Company's then current tariff to
the extent energy produced by the Facility is transmitted over
Company's transmission system, and Company shall credit Customer for
such use in an amount equal to the equivalent point-to-point
transmission service rate for such service until such time as the
cost of the System Upgrades previously paid by Customer has been fully
offset, after which time such offset or credit shall no longer apply.
Any such credit shall be separately identified by Company and applied
monthly against charges due Entergy under Customer's applicable
transmission service agreement, or paid directly to Customer in the
event that no charges are due Entergy from Customer for such month
under such transmission service agreement.
2. Section 8.2 of the Agreement shall be amended by addition, after the
last sentence of such Section, the following:
In addition, Entergy shall be entitled to assign the Agreement to any
wholly owned direct or indirect subsidiary of Entergy Corporation
which succeeds to Entergy's ownership or control of the Entergy
transmission system.
Upon receipt of LSP's executed acceptance of this Letter of Amendment, as
provided below, the Company shall promptly make such filings with the Federal
Energy Regulatory Commission as necessary to cause this Letter of Amendment
to become effective. Upon acceptance for filing by the Federal Energy
Regulatory Commission, the Letter of Amendment will become part of the
Agreement.
Please indicate your agreement to the above terms by signing both copies of
this Letter of Amendment and return one copy to us.
Sincerely,
/s/ ▇▇▇▇ ▇. Zehanek
---------------------
▇▇▇▇ ▇. Zehanek
Vice President
Transmission Business
Agreed and Accepted:
LSP Energy Limited Partnership
LSP Energy, Inc. its general partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------
Title: Assistant Vice President
--------------------------
Date: 8/18/98
--------------------------
