Electric Clearinghouse, Inc.
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Phone ▇▇▇.▇▇▇.▇▇▇▇
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DYNEGY
May 27, 1999
VIA FACSIMILE AND FEDERAL EXPRESS
Cap Rock Electric Cooperative
▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Mr. ▇▇▇▇ ▇▇▇▇▇▇
CONFIRMATION LETTER
Ladies and Gentlemen:
Electric Clearinghouse, Inc. ("ECI") is pleased to enter into this agreement
reached effective as of the date last set forth below with Cap Rock Electric
Cooperative, for its ▇▇▇▇-▇▇▇▇▇▇ Division and the City of Farmersville
Municipal Electric Utility ("CAPROCK") regarding the purchase/sale of Power
under the terms and conditions as follows. This confirmation letter is
delivered in connection with, and is subject to the execution and thereafter
to the terms and conditions of that certain Power Purchase and Sale Agreement
to be executed prior to or concurrently with this Confirmation Letter (the
"Master Agreement"). Any terms that are capitalized but not defined herein
shall have the same meaning(s) as ascribed to such term(s) as set forth in
the Master Agreement. Any conflict between the terms of this Confirmation
Letter and the Master Agreement shall be resolved in favor of the
construction contained in this Confirmation Letter. This Confirmation Letter
and the Master Agreement are sometimes hereinafter referred to as the
"Agreement".
SELLER: Electric Clearinghouse. Inc,
BUYER: Cap Rock Electric Cooperative, for its ▇▇▇▇-▇▇▇▇▇▇ Division
and the City of Farmersville Municipal Electric Utility
TERM AND
RENEWAL OPTION: June 1, 1999 through May 31, 2001 (the "Initial Term"). At
any time prior to August 1, 2000 (the "Exercise Date"), ECI
may make an election to extend the Initial Term of this
Agreement for an additional one-year period commencing June
1, 2001 and continuing through May 31, 2002.
Mr. ▇▇▇▇ ▇▇▇▇▇▇
Cap Rock Electric Cooperative,
▇▇▇▇-▇▇▇▇▇▇ Division
May 27, 1999 Page 2
Notice of ECI's election to extend the Initial Term by one
year as described above must be delivered in writing to
CAPROCK no later than the Exercise Date. If ECI elects not
to extend the Initial Term of this Agreement as provided in
this Section which may be evidenced by ECI's failure to
deliver any notice by the Exercise Date, then neither ECI
nor CAPROCK shall have any rights or obligations under this
Agreement following the expiration of the Initial Term. The
Initial Term together with the one-year extension described
in this Section is sometimes referred to in this Agreement
as the "Term". Each period under this Agreement from June 1
through May 31 of the next following year is referred to in
this Agreement as a "Contract Year".
THE TRACKING
ACCOUNT: For each Summer Month Period (defined below), CAPROCK shall
establish a tracking account (the "Tracking Account").
"Summer Month Period" means each period of June, July,
August, and September during the Initial Term. During each
Summer Month Period, the Tracking Account shall track
CAPROCK's total cost of Replacement Energy (the "Replacement
Energy Cost") accrued during the Summer Month Period, which
cost shall equal the positive difference, if any, between
(a) CAPROCK's actual cost of Replacement Energy procured
from sources other than ECI and adjusted for any differences
in transmission costs, and (b) the applicable price for the
same quantity of energy determined below pursuant to the
Section entitled "Energy Strike Prices" if such energy had
not been provided as Replacement Energy but rather as energy
under this Agreement. If during the Summer Month Period, the
Replacement Energy Cost exceeds $250,000, then subject to
ECI's right to reduce the Replacement Energy Cost as
described below, CAPROCK shall have the right to terminate
this Agreement upon five Business Days' notice to ECI with
such termination to then become effective on the next
following December 31 of the calendar year during which
CAPROCK elects to make such termination. Upon receipt of a
notice of termination as described in the preceding
sentence, ECI may elect to pay to CAPROCK an amount that
would have the effect of reducing the Replacement Energy
Cost in the Tracking Account to $0.00. ECI shall make such
election within five Business Days following ECI's receipt
of a termination notice from CAPROCK. If ECI elects to
reduce the Replacement Energy Cost in the Tracking Account,
the Tracking Account shall be re-set to $0.00 to reflect
such payment by ECI but may thereafter continue to accrue
Replacement Energy Cost, if any, until the end of the Summer
Month Period. On the beginning of each Summer Month Period,
it shall be presumed that the Replacement Energy Cost in the
Tracking Account is zero dollars without
Mr. ▇▇▇▇ ▇▇▇▇▇▇
Cap Rock Electric Cooperative,
▇▇▇▇-▇▇▇▇▇▇ Division
May 27, 1999 Page 3
regard to whether any Replacement Energy Cost has previously
accrued. Following a termination as described in this
Section, from the date of such termination through the
remainder of the calendar year (the "Post Termination
Period") CAPROCK shall have the right, but not the
obligation to make a one-time election to source energy that
would otherwise have been provided under this Agreement from
any third party provider; however, even if CAPROCK makes
the election to source energy from third parties other than
ECI during the Post Termination Period, CAPROCK shall
continue to pay to ECI the applicable payments relative to
Reservation Charges that would otherwise have been paid
during the Post Termination Period. CAPROCK shall notify ECI
of its election to source energy from a third party provider
at the same time and pursuant to the same notice in which
CAPROCK notifies ECI of its election to terminate. After
such election, CAPROCK may not thereafter elect to return to
a circumstance in which ECI is obligated to supply energy
under this Agreement for the Post Termination Period or
otherwise. Notwithstanding anything contained in this
Agreement to the contrary, if CAPROCK makes the election
to terminate the Agreement as provided in this Section or
if the Agreement is terminated early for any reason
provided in this Agreement, then all accrued but unpaid
obligations of CAPROCK relative to payment for Ancillary
Services or Excess Energy as provided elsewhere in this
Agreement (the "AS Obligations") or pursuant to any
agreement regarding Ancillary Services, shall survive
the early termination of this Agreement. Similarly,
CAPROCK shall remain liable to ECI for any AS Obligations
following the expiration of the Term. A termination under
this Section shall not constitute an Event of Default and
thus shall not give rise to any of the remedies set forth
in Section 6.3 of the Master Agreement.
TYPE, COMMITTED
AND PLANNED
RESOURCES: Capacity and Energy (i.e. Power under the Master Agreement)
will be made available at a level of firmness that can be
used for ERCOT Planned Transmission Reservation. Capacity
will be made available to CAPROCK up to, but not in excess
of, the Transmission Contract Quantity. ECI will also make
available energy up to the Energy Contract Quantity for the
purpose of providing CAPROCK with capacity and energy
service for its native load customers in its ▇▇▇▇-▇▇▇▇▇▇
Division and the native load of the City of Farmersville
Municipal Electric Utility. In addition, subject to, and in
accordance with, the provisions contained in the section
entitled "Ancillary Services" below, following execution of
this Agreement, ECI and CAPROCK shall use reasonable efforts
to arrange for the provision of
Mr. ▇▇▇▇ ▇▇▇▇▇▇
Cap Rock Electric Cooperative,
▇▇▇▇-▇▇▇▇▇▇ Division
May 27, 1999 Page 4
Ancillary Services to accompany the supply of capacity and
energy. While CAPROCK and ECI intend that the Power
supplied under this Agreement will be furnished to CAPROCK
to meet a portion of CAPROCK's load, the obligation of ECI
to supply Power for a portion of CAPROCK's load
nevertheless extends only up to the Energy Contract
Quantity. Indeed, ECI and CAPROCK acknowledge that
there may be periods during the Term in which CAPROCK's
energy demand exceeds the quantity of energy that may be
dispatched from the Energy Contract Quantity; however, in
such circumstances, ECI shall use reasonable efforts to
procure any energy necessary to satisfy CAPROCK's energy
demand in excess of the energy available from the Energy
Contract Quantity (the "Excess Energy"), either from
Ancillary Services or from sources independent from this
Agreement. As such, in circumstances where ECI determines on
a day-ahead basis that CAPROCK's peak demand for an upcoming
day will exceed the Energy Contract Quantity, i.e., that
Excess Energy may be required to serve CAPROCK's energy
demand, ECI shall use reasonable efforts to identify
resources (other than Ancillary Services) from which the
Excess Energy may be supplied. ECI will also use reasonable
efforts to deliver or cause the delivery of, the Excess
Energy to the applicable Delivery Point using planned or
unplanned transmission service, if either level of service
is available, procured by CAPROCK or ECI on behalf of
CAPROCK. CAPROCK acknowledges that the foregoing
undertakings of ECI relative to the procurement of Excess
Energy are an accommodation to CAPROCK only, and as such, if
ECI is unable to cause the delivery of the Excess Energy,
for whatever reason, ECI shall have no liability for such
failure. If Excess Energy from sources identified by ECI is
undelivered for any reason, the parties intend that the
Excess Energy will otherwise be supplied pursuant to the
arrangements for Ancillary Services set forth below and
likewise paid for by CAPROCK.
During the Initial Term, all energy supplied under this
Agreement up to the Energy Contract Quantity, will be
designated (or treated) as ERCOT Type "D" Energy although
ECI may schedule energy to CAPROCK under any ERCOT
designation other than Type "D" provided that without regard
to the type of, or ERCOT classification for the energy
scheduled, as between ECI and CAPROCK the delivery
obligations of ECI will be consistent with those attendant
to deliveries of ERCOT Type "D" energy only. Therefore, when
the Planned Resource is unavailable: (a) for any of the
reasons set forth in the Master Agreement under Section
10.1; (b) as a result of a failure or threat of failure of
any generating equipment comprising the Planned Resource,
whether caused by any of the reasons enumerated in Section
10.1 of the Master Agreement or otherwise; or (c)
Mr. ▇▇▇▇ ▇▇▇▇▇▇
Cap Rock Electric Cooperative,
▇▇▇▇-▇▇▇▇▇▇ Division
May 27, 1999 Page 5
the failure or threat of failure of transmission facilities
or curtailment of transmission whether caused by any of the
reasons enumerated in Section 10.1 of the Master Agreement
or otherwise, including, but not limited to CAPROCK's
failure to obtain annual planned transmission service for
the Energy Contract Quantity from the ERCOT Independent
System Operator, ECI shall be relieved from any obligation
to deliver capacity and energy as provided in this
Agreement, and CAPROCK shall have sole financial
responsibility for any replacement energy procured during
such periods ("Replacement Energy"), and/or for "Emergency
Energy" as described below. ECI shall use reasonable efforts
to deliver or cause the delivery of Replacement Energy to
the applicable Delivery Point utilizing sources of energy
identified by ECI and existing planned transmission
arrangements, or at ECI's election and if available,
unplanned transmission services. ECI will also attempt to
identify the most competitive sources for such Replacement
Energy in terms of price and level of firmness comparable to
energy delivered from the Transmission Contract Quantity.
CAPROCK however, acknowledges that the foregoing obligations
of ECI relative to obtaining Replacement Energy are an
accommodation to CAPROCK only, and as such, if ECI is unable
to cause the delivery of any Replacement Energy, for
whatever reason, ECI shall have no liability to CAPROCK for
such failure. If Replacement Energy from sources identified
by ECI is undelivered for any reason, the parties intend
that the Replacement Energy will otherwise be supplied
pursuant to the arrangements for Ancillary Services set
forth below.
During the Initial Term, ECI may also source energy to
CAPROCK from the Committed Resource provided that the energy
from the Committed Resource can be transmitted under
CAPROCK's annual planned transmission service. All
deliveries of energy from the Committed Resource shall also
be delivered as ERCOT Type "D" Energy; provided. however
that in circumstances in which the Committed Resource is
unavailable for energy dispatch (each, a "CR Outage Period")
due to: (a) any of the reasons set forth in the Master
Agreement under Section 10.1; (b) as a result of a failure
or threat of failure of any generating equipment comprising
the Committed Resource, whether caused by any of the reasons
enumerated in Section 10.1 of the Master Agreement or
otherwise; or (c) the failure or threat of failure of
transmission facilities or curtailment of transmission
whether caused by any of the reasons enumerated in Section
10.1 of the Master Agreement or otherwise and without regard
to whether energy from the Committed Resource can be
transmitted under CAPROCK's annual planned transmission
service, the Energy Strike Price shall be adjusted in
accordance with the following protocol. When the
Mr. ▇▇▇▇ ▇▇▇▇▇▇
Cap Rock Electric Cooperative,
▇▇▇▇-▇▇▇▇▇▇ Division
May 27, 1999 Page 6
Committed Resource is unavailable for dispatch during the
CR Outage Period, ECI shall provide energy to CAPROCK from
the Planned Resource subject to and in accordance with the
terms and conditions for energy deliveries set forth
elsewhere in this Agreement. However, for energy delivered
from the Planned Resource during a CR Outage Period (the
"CR Energy"), the Energy Strike Price shall be the actual
per megawatt hour energy price paid by ECI (the "CR Outage
Price") to obtain replacement quantities of energy
necessary, in ECI's judgment, to supply other third party
obligations of ECI that would have otherwise been served but
for the unavailability of the Committed Resource for the CR
Outage Period. The CR Outage Price shall apply to all CR
Energy. Once a CR Outage Period has concluded, the Energy
Strike Price shall return to the pricing mechanisms for
energy set forth below. Amounts paid for CR Energy by
CAP ROCK shall be considered Replacement Energy and shall be
included in the Tracking Account but only for amounts
attributable to CR Energy delivered to CAPROCK during a
Summer Month Period. The CR Outage Price shall apply to all
CR Energy and the foregoing mechanism for accrual of CR
Energy and payment of the CR Outage Price shall apply even
if ECI was sourcing energy to CAPROCK from the Planned
Resource at the time that the CR Outage Period occurred and
even though ECI may have intended to serve CAPROCK with
energy from the Planned Resource during the period
encompassed by the CR Outage Period.
Until a different generating source is identified by ECI as
a Planned Resource, which ECI shall have the right to
identify, from time to time in accordance with the Rules
(defined below), the "Planned Resource" as such term is
defined by Substantive Rules of the Texas Public Utility
Commission (the "Rules"), shall be the electric generating
facility located in Channelview, Texas owned by Cogen
Lyondell, Inc. (the "CLI Facility"). The "Committed
Resource" shall be any, generating resource identified by
ECI as a resource from which ECI may supply a portion of the
Power under this Agreement during each calendar year of the
Term, which for 1999 shall be the AES Deepwater Facility
(the "AES Facility") located in Pasadena, Texas. ECI shall
determine the Committed Resource and the Planned Resource
for each subsequent year of the remainder of the Term if
different from the CLI Facility and the AES Facility. ECI
owns or controls (or in subsequent Contract Years, will own
or control) capacity and energy attributable to the Planned
Resource and the Committed Resource in amounts sufficient to
make the Transmission Contract Quantity and the Energy
Contract Quantity available to CAPROCK. While the CLI
Facility is the Planned Resource for purposes of
Mr. ▇▇▇▇ ▇▇▇▇▇▇
Cap Rock Electric Cooperative,
▇▇▇▇-▇▇▇▇▇▇ Division
May 27, 1999 Page 7
establishing and reserving planned transmission under the
Rules for 1999, and with the understanding that in
subsequent years of the Term another facility may be
identified as the Planned Resource by ECI, CAPROCK
acknowledges that ECI may actually source capacity and
energy to be delivered to CAPROCK from any available sources
in ERCOT, including, but not limited to, the Committed
Resource. While ECI may source capacity and energy from any
ERCOT resource, CAPROCK shall not be responsible for any T
Costs (defined below), in excess of those that would have
been payable by CAPROCK for energy deliveries from the
Planned Resource.
In accordance with Section 3.1 of the Master Agreement,
CAPROCK shall be responsible for all transmission losses and
loss charges relating to the delivery of energy from and
after the Delivery Point, including, but not limited to,
"Planned Losses" as such term is construed under the Rules
and any other applicable laws or regulations. CAPROCK shall
also be responsible for and shall pay all costs, fees,
charges or liabilities of whatever nature imposed by the
ERCOT Independent System Operator, any applicable
transmission utility, or any third party with jurisdiction
over such matters (collectively the "T Costs"), incurred in
connection with the Transmission Contract Quantity to
CAPROCK's load but only up to the amount of the T Costs that
are, or would be payable based on energy deliveries from the
Planned Resource. In addition, to the extent that the
applicable laws, rules, regulations, methodologies,
practices or protocols are changed during the Term, and as a
result there is a corresponding increase in T Costs for
deliveries from the Planned Resource, CAPROCK shall bear all
risk, cost and liability associated with such change whether
such increase occurs during the Contract Year that such T
Costs are incurred or whether they are imposed
retroactively. The liabilities for T Costs contained in this
Section are in addition to any liabilities associated with
Ancillary Services or transmission costs attributable to
Excess Energy or Replacement Energy for which CAPROCK bears
sole liability and responsibility.
During the third Contract Year, (assuming that ECI exercises
the election to extend the Initial Term as provided above)
all energy supplied under this Agreement up to the Energy
Contract Quantity, whether supplied from the Planned
Resource or from a Committed Resource, will be designated
(or considered) as ERCOT Type "B" Energy although ECI may
schedule energy to CAPROCK under any ERCOT designation other
than Type "B" provided that without regard to the type of,
or ERCOT classification for the energy scheduled, as between
ECI and CAPROCK, the delivery
Mr. ▇▇▇▇ ▇▇▇▇▇▇
Cap Rock Electric Cooperative,
▇▇▇▇-▇▇▇▇▇▇ Division
May 27, 1999 Page 8
obligations of ECI will be consistent with those attendant
to deliveries of ERCOT Type "B" energy only. The obligations
of ECI for deliveries of energy during the third Contract
Year shall be subject to the excuses from performance set
forth in the Master Agreement and for the failure or threat
of failure of transmission or the curtailment of
transmission.
CONTRACT QUANTITY: The Transmission Contract Quantity shall be equal to the
following amounts: For all months of 1999, the Transmission
Contract Quantity shall equal 25 MW. For all months of 2000,
the Transmission Contract Quantity shall equal the amount of
reserved transmission capacity actually approved by the
ERCOT Independent System Operator pursuant to the request
for Planned Transmission Reservation from the Planned
Resource entered by ECI on behalf of CAPROCK prior to
October 1, 1999 (or pursuant to any other mechanism or
methodology then in effect) and which is specific to this
Agreement and for CAPROCK's energy load. For all months of
2001 (including those subsequent to May 2001 if ECI elects
to extend the Initial Term), the Transmission Contract
Quantity shall equal the amount of reserved transmission
capacity actually approved by the ERCOT Independent System
Operator pursuant to the request for Planned Transmission
Reservation from the Planned Resource entered by ECI on
behalf of CAPROCK prior to October 1, 2000 (or pursuant to
any other mechanism or methodology then in effect) and which
is specific to this Agreement and for CAPROCK's energy load.
For all months of 2002, assuming an extension of the Initial
Term, the Transmission Contract Quantity shall equal the
amount of reserved transmission capacity actually approved
by the ERCOT Independent System Operator pursuant to the
request for Planned Transmission Reservation from the
Planned Resource entered by ECI on behalf of CAPROCK prior
to October 1, 2001 (or pursuant to any other mechanism or
methodology then in effect) and which is specific to this
Agreement and for CAPROCK's energy load.
In addition to the Transmission Contract Quantity, during
each month of the Term, there shall exist an "energy
contract quantity" expressed in MW (the "Energy Contract
Quantity") which, for each Contract Year shall be as set
forth in the following table:
--------------------------------------------------------------------------------------
Contract Year Time Period Energy
Contract
Quantity
--------------------------------------------------------------------------------------
1 June 1, 1999 through May 31, 2000 20 MW
--------------------------------------------------------------------------------------
Mr. ▇▇▇▇ ▇▇▇▇▇▇
Cap Rock Electric Cooperative,
▇▇▇▇-▇▇▇▇▇▇ Division
May 27, 1999 Page 9
--------------------------------------------------------------------------------------
2 June 1, 2000 through May 31, 2001 20 MW
--------------------------------------------------------------------------------------
3 June 1, 2001 through May 31, 2002 22 MW
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The Energy Contract Quantity amounts for periods after May
31, 2001 are predicated on the assumption that ECI elects to
extend the Agreement in accordance with the provisions set
forth above in the Section entitled "Term". Nothing in this
Section shall be construed to require ECI to extend the
Initial Term or to otherwise modify the rights of ECI to
elect such an extension.
DELIVERY POINT: During the Initial Term, energy delivered under this
Agreement shall be delivered to either the Planned Resource
Delivery Point or the Committed Resource Delivery Point. ECI
shall make such election for each day of the Initial Term
prior to the scheduling deadline established by the ERCOT
Independent System Operator. The "Planned Resource Delivery
Point" and the "Committed Resource Delivery Point" shall be
each facility's respective point of interconnection to the
transmission grid of the transmission utility in whose
service territory the respective facility is located. During
the final Contract Year, the delivery point shall be the
point on the transmission system of Garland Power & Light
commonly known as the "▇▇▇▇▇▇▇▇ Substation".
TRANSMITTING
UTILITY: Any transmission owning utility in ERCOT.
RESERVATION
CHARGES:
PLANNING CAPACITY CHARGE: $1.50 per KW/MO.
FIRM CAPACITY CHARGE:
Contract Years 1 and 2 $4.40 PER KW/MO.
Contract Year 3 $4.50 PER KW/MO.
For each month throughout the Term, CAPROCK shall pay ECI a
monthly capacity payment equal to (A) the result obtained by
multiplying the Planning Capacity Charge times the
Transmission Contract Quantity (expressed in kilowatts),
plus (B) the result obtained by multiplying the Firm
Capacity Charge times the Energy Contract Quantity
(expressed in kilowatts).
ENERGY STRIKE
PRICES: FOR ENERGY DELIVERED DURING DAYTIME HOURS (DEFINED BELOW),
EXCLUDING ANY EXCESS ENERGY OR REPLACEMENT ENERGY, THE
ENERGY
Mr. ▇▇▇▇ ▇▇▇▇▇▇
Cap Rock Electric Cooperative,
▇▇▇▇-▇▇▇▇▇▇ Division
May 27, 1999 Page 10
STRIKE PRICE (THE "DAYTIME ENERGY PRICE") SHALL BE EQUAL
TO THE MONTHLY HOUSTON SHIP CHANNEL GAS (HSC) PRICE
TIMES 10,500 MMBTU/KWH + $1.20 VARIABLE O&M PER MWH. FOR
ENERGY DELIVERED DURING NIGHTTIME HOURS (DEFINED BELOW),
EXCLUDING ANY EXCESS ENERGY OR REPLACEMENT ENERGY, THE
ENERGY STRIKE PRICE (THE "NIGHTTIME ENERGY PRICE") SHALL BE
EQUAL TO $15.00 PER MWH. DAYTIME HOURS AND NIGHTTIME HOURS
SHALL HAVE THE DEFINITIONS APPLICABLE TO SUCH TERMS AS
CONTAINED IN HOUSTON LIGHTING & POWER COMPANY'S FIRM ENERGY
PRICING TARIFF AS SUCH TARIFF IS IN EXISTENCE ON THE DATE OF
THIS CONFIRMATION, A COPY OF WHICH HAS BEEN PROVIDED BY ECI
TO CAPROCK. MONTHLY HOUSTON SHIP CHANNEL GAS PRICE MEANS THE
PRICE OF NATURAL GAS EXPRESSED IN $/MMBTU ACCORDING TO THE
INSIDE FERC INDEX PRICE UNDER THE HEADING DELIVERED SPOT-GAS
PRICE, HOUSTON SHIP CHANNEL/BEAUMONT, TEXAS (LARGE PACKAGES
ONLY) AS REPORTED IN THE PUBLICATION "INSIDE FERC'S GAS
MARKET REPORT" FOR THE FIRST DAY OF THE APPLICABLE MONTH IN
WHICH DELIVERIES OF ENERGY ARE MADE TO CAPROCK; PROVIDED
THAT IF THE FOREGOING INDEX IS NO LONGER PUBLISHED, A
MUTUALLY ACCEPTABLE, COMPARABLE INDEX SHALL BE USED.
During each month of the Term, CAPROCK shall pay to ECI for
all energy dispatched during Daytime Hours of that month but
excluding any Excess Energy or Replacement Energy, an amount
equal to the result obtained by multiplying the total
quantity of MWh delivered to CAPROCK during Daytime Hours,
excluding Excess Energy and Replacement Energy, times the
Daytime Energy Price. During each month of the Term, CAPROCK
shall pay to ECI for all energy dispatched during Nighttime
Hours of that month but excluding any Excess Energy and
Replacement Energy, an amount equal to the result obtained
by multiplying the total quantity of MWh delivered to
CAPROCK during Nighttime Hours, excluding Excess Energy and
Replacement Energy, times the Nighttime Energy Price.
For any Excess Energy or Replacement Energy procured by ECI,
and in accordance with the understandings regarding the
procurement of Excess Energy and/or Replacement Energy by
ECI as set forth above, ECI shall use reasonable efforts to
obtain the most competitively priced available Excess Energy
or Replacement Energy. Nevertheless, in circumstances where
ECI has delivered Excess Energy or Replacement Energy, ECI
shall not guarantee any particular price for such Excess
Energy or Replacement Energy; or indeed, whether the price
for such Excess Energy or
Mr. ▇▇▇▇ ▇▇▇▇▇▇
Cap Rock Electric Cooperative,
▇▇▇▇-▇▇▇▇▇▇ Division
May 27, 1999 Page 11
Replacement Energy is ultimately determined to be the most
competitive price. For any Excess Energy or Replacement
Energy procured by ECI, CAPROCK shall reimburse ECI on a
dollar for dollar basis for all charges, costs, fees,
liabilities (including, but not limited to transmission or
Ancillary Services costs) incurred by ECI in connection
with ECI's procurement of the Excess Energy or
Replacement Energy.
ANCILLARY SERVICES: In order to provide CAPROCK with the service described above
during the Initial Term (and any extension as provided
above), the Parties recognize that they will have to reach
an agreement relative to the implementation of Ancillary
Services (as such term is defined by the Substantive Rules
of the Texas Public Utility Commission, the ERCOT ISO and/or
the ERCOT Operating Guides) to accompany the deliveries of
energy to CAPROCK. As such, the effectiveness of this
Agreement is expressly conditioned upon the Parties
obtaining and reaching a mutually acceptable arrangement(s)
relative to such Ancillary Services prior to the
commencement of the Initial Term and such arrangement(s) (or
alternative comparable, satisfactory arrangements) being
available throughout the Term. ECI shall use reasonable
efforts to obtain the required Ancillary Services on behalf
of CAPROCK prior to the commencement of the Initial Term, or
if interim arrangements have been agreed to by the Parties,
ECI shall use reasonable efforts to accommodate any
arrangements obtained by CAPROCK for the interim period. ECI
shall also use reasonable efforts to assist CAPROCK in
putting more permanent arrangements in place following the
commencement of the Initial Term. CAPROCK acknowledges that
ECI cannot guarantee that Ancillary Services will be
available for the transactions contemplated in this
Agreement, or the price at which such Ancillary Services may
be available.
Whether an agreement for Ancillary Services is entered into
by ECI on behalf of CAPROCK or by CAPROCK on its own behalf,
CAPROCK shall bear all costs associated with the procurement
of such Ancillary Services, including, but not limited to,
any fees or charges that may be necessary to transfer the
CAPROCK load signal to any applicable control area. CAPROCK
shall also bear all costs associated with the various energy
products comprising Ancillary Services, if and when such
Ancillary Services are supplied by an ancillary services
provider.
ENERGY SCHEDULE: For each month of the Initial Term during which ECI is
supplying the service described in this Agreement to
CAPROCK, CAPROCK shall provide ECI not later than five
Business Days prior to the beginning of the
Mr. ▇▇▇▇ ▇▇▇▇▇▇
Cap Rock Electric Cooperative,
▇▇▇▇-▇▇▇▇▇▇ Division
May 27, 1999 Page 12
month, an hourly forecast of the energy demand expected to
be required by CAPROCK under this Agreement. Prior to
commencement of the Initial Term, CAPROCK and ECI agree to
cooperate to develop a methodology by which the forecasts
contemplated by this section may be accomplished. Any such
methodology shall account for variations in temperature and
The corresponding impact on CAPROCK's energy demand. ECI
shall enter hourly schedules of energy based on forecasts
provided by CAPROCK for each hour during which energy is to
be provided under this Agreement. ECI shall use reasonable
efforts to accommodate the requirements of any Ancillary
Services agreement between CAPROCK and any Ancillary
Services provider when entering or implementing schedules.
MISCELLANEOUS: The capacity and energy delivered under this Agreement are
intended for CAPROCK's use only for purposes of supplying
its native customer load in its ▇▇▇▇-▇▇▇▇▇▇ Division and the
native load of the City of Farmersville Municipal Electric
Utility. As a result CAPROCK shall not be permitted to
resell any of the capacity or energy delivered under this
Agreement to any third party wholesale purchaser other than
the City of Farmersville Municipal Electric Utility. The
word "Seller's" in the first line of Section 6.6 of the
Master Agreement is hereby deleted and replaced with the
words "a Parties'". Section 6.3(a) of the Master Agreement
is deleted in its entirety and replaced with the following:
"To terminate this Agreement and pursue the Non-Defaulting
Party's direct damages against the Defaulting Party;
and/or". Section 6.4 of the Master Agreement shall not apply
in the context of an Event of Default for purposes of
calculating damages.
This Agreement is executed to be effective as of the 27TH day of May 1999.
Electric Clearinghouse, Inc. Cap Rock Electric Cooperative,
▇▇▇▇-▇▇▇▇▇▇ Division
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------- ----------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: Executive Vice President Title: VP/CFO
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Date: June 4, 1999 Date: May 27, 1999
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