ELECTRIC POWER SUPPLY AGREEMENT Between FirstEnergy Solutions Corp., Seller And Pennsylvania Power Company, Buyer
FirstEnergy
Solutions Corp. EXHIBIT
10.10
FERC
Electric
Tariff, Original Volume No.1
Service
Agreement
No.5
Between
FirstEnergy Solutions Corp., Seller
And
Pennsylvania Power Company, Buyer
This
Electric Power Supply Agreement (“Agreement”)
dated October 31,
2005, is made by and between FirstEnergy Solutions Corp., (“SOLUTIONS” or
“Seller”), and Pennsylvania Power Company (“Penn Power” or “Buyer”). SOLUTIONS
and Penn Power may be identified collectively as “Parties” or individually as a
“Party.” This Agreement is entered into in connection with Pennsylvania electric
restructuring legislation and is designed to provide Penn Power’s Power Supply
Requirements:
WHEREAS,
Seller has
purchased: all of the electric output of nuclear generating units of its
affiliate, FirstEnergy Nuclear Generation Corp. (including the electric output
of nuclear generating units owned by others that is purchased by FirstEnergy
Nuclear Generation Corp.); all of the electric output of fossil and pumped
storage generating facilities owned or operated by its subsidiary, FirstEnergy
Generation Corp.; and power from unaffiliated companies (collectively referred
to as “Generating Resources”); and
WHEREAS,
Seller is engaged
inter
alia,
in the business
of generating, purchasing, and selling electric power at wholesale and retail;
and
WHEREAS,
Buyer is
responsible for obtaining and delivering sufficient Capacity, Energy, and
related services necessary to meet its Provider of Last Resort obligations
under
Pennsylvania law, as well as other power supply obligations incurred by law,
contract or tariff;
WHEREAS,
Buyer desires to
obtain from Seller sufficient Power to satisfy its Power Supply Requirements
to
Pennsylvania customers under the rates, terms and conditions set forth herein;
It
is agreed as follows:
| I. |
TERM
|
The
sale and
purchase of electric power pursuant to this Agreement shall begin on January
1,
2006, or such later effective date authorized by the Federal Energy Regulatory
Commission, and shall remain in effect through December 31, 2006.
Issued
By: ▇▇▇▇▇▇▇
▇.
▇▇▇▇▇, Senior Vice President Effective
Date: January 1, 2006
Issue
Date: October
31,
2005
| II. |
SALE
AND PURCHASE OF CAPACITY AND ENERGY
|
| A. |
Seller
shall
make available to Buyer, Capacity and Energy sufficient to satisfy
Buyer’s
Power Supply Requirements. Seller shall make such firm Capacity
and Energy
available at the Delivery Points. Capacity and Energy supplied
shall be
sixty-hertz, three phase alternating current. The Power Supply
Requirements will be provided in accordance with Good Utility
Practice,
and where applicable, the provisions of the OATT of the Transmission
Provider or any superseding tariff. The Capacity and Energy provided
by
Seller will comply with all requirements for Network Resources
under the
Transmission Provider OATT and Buyer’s Network Transmission Agreements
with Transmission Provider.
|
| B. |
Buyer
will
purchase its full Power Supply Requirements from Seller during
the term of
this Agreement. Buyer will receive and pay for its Power Supply
Requirements in accordance with Section IV of this Agreement. Buyer
will
be responsible for obtaining all Network Transmission Service,
Ancillary
Services, congestion charges, marginal transmission losses, and
such other
services and administrative charges as are required and imposed
by the
Transmission Provider OATT on the Buyer as a Load Serving Entity
for the
delivery of Capacity and Energy at and from the Delivery Points
under this
Agreement.
|
| C. |
Seller
may
purchase power from third parties in the Spot Market as necessary
to
satisfy its obligations under this Agreement.
|
| D. |
If
Seller’s
credit is adversely impacted during the term of this Agreement,
Buyer
agrees to allow Seller to acquire purchased power as agent for
the Buyer
where reasonably necessary to minimize supply costs under this
Agreement.
Buyer will pay all of the costs associated with acquiring this
Power, but
Seller will not charge Buyer any broker fee for performing this
service.
|
| III. |
SCHEDULING
AND
SYSTEM PLANNING
|
| A. |
On
or before
November 1, 2005, Buyer will inform Seller of its initial annual
Capacity
and Energy forecast for calendar year 2006. Such initial annual
forecast
shall include Buyer’s Power Supply Requirements for the year, by month.
Based on Buyer’s initial annual forecast, as well as other information
that may be communicated between Buyer and Seller as necessary
and
appropriate for system planning, Seller shall procure the necessary
Generation Resources and develop forecasts of Buyer’s Power Supply
Requirements on a weekly, daily and hourly basis, and shall periodically
update such forecasts to reflect current
circumstances.
|
| B. |
Buyer
shall
update its initial annual forecast of Capacity and Energy for any
change
or expected change in its Power Supply Requirements that would
materially
affect the forecast provided to Solutions. Buyer shall provide
the updated
forecast to Solutions for any full month(s) remaining in the calendar
year
within thirty days of becoming aware of the change or expected
change in
its Power Supply Requirements.
|
Effective
Date: January 1, 2006
2
| C. |
Buyer
is
responsible for scheduling delivery of its Power Supply Requirements
with
Transmission Provider in accordance with the OATT. Buyer will
simultaneously furnish its schedule to Seller and Transmission
Provider.
Seller will supply Capacity and Energy to Buyer in accordance with
the
schedule provided to Transmission Provider. Buyer and Seller acknowledge
that Buyer’s Power Supply Requirements may vary from the schedule provided
to Transmission Provider. Buyer agrees that it is responsible for
payment
of any Transmission Provider charges incurred when actual Power
Supply
Requirements differ from the schedule provided. Seller shall be
responsible for payment of any Transmission Provider charges incurred
by
its failure to deliver the scheduled amount of Capacity and Energy.
|
| D. |
Load
Management. To minimize supply risk to the Seller hereunder, Buyer
agrees
to enforce its applicable Retail Tariffs, Special Contracts, and
federal
tariffs and contracts, including, but not limited to, those tariffs
or
contracts that provide for curtailment or interruption of electric
service, real time pricing, or other load management devices. At
Buyer’s
request Seller will provide estimates of the Spot Market price
of Energy
in sufficient detail for Buyer to implement and administer its
tariffs and
contracts with retail customers. Any such data furnished to Buyer
shall be
treated as Confidential
Information.
|
|
E.
|
Seller
agrees
to operate its Generating Resources in accordance with Good Utility
Practice, including, but not limited to the efficient and economic
dispatch of the Generating Resources. Seller will self-schedule
sufficient
Generating Resources to supply Buyer’s Power Supply Requirements in
accordance with the Buyer’s delivery schedule and Transmission Provider
OATT.
|
|
F.
|
Buyer
and
Seller agree to cooperate in providing any information required
by the
Transmission Provider, NERC, regional reliability council, Electric
Reliability Organization, Regional Entity or Government Authority
related
to service provided under this Agreement.
|
| IV. |
PRICE
|
Seller
shall
charge, and Buyer shall pay the following charges for Buyer’s Power Supply
Requirements. The method for calculating this amount is set forth in Exhibit
B.
Effective
Date: January 1, 2006
3
| A. |
Capacity
and Energy Charges
|
Buyer
shall pay
Seller an amount up to, but not exceeding, the amount of money that Buyer
bills
its retail customers who elect to receive generation service from Buyer as
generation service charges, including the retail charge for losses billed
to
Buyer’s retail customers, under the Buyer’s Retail Tariffs and Special Contracts
as approved by the Pennsylvania Public Utility Commission. This amount will
be
reduced for any gross receipts taxes contained in the generation service
portion
of Buyer’s Retail Tariffs and Special Contracts. As soon as practicable after
the end of the month, Buyer shall provide Seller load data, metered sales,
and
rates used for billing in sufficient detail for Seller to determine after
the
fact, the revenues due Seller for Buyer’s Power Supply Requirements and
delivered to the applicable retail customer classes during a billing period.
Buyer and Seller will abide by all applicable Code of Conduct provisions
in
exchanging this data, and such data will be considered Confidential Information
under Section VII.C of this Agreement.
| B. |
Power
Supply for Buyer’s Existing Wholesale Contracts
|
During
the term of
this Agreement, Seller will supply sufficient Capacity and Energy to fulfill
Power supply obligations under Buyer’s wholesale contracts in effect on January
1, 2006. Buyer is responsible for scheduling and delivery of Power under
such
wholesale contracts, as well as payment of any charges imposed by the
Transmission Provider for delivery of Power under the wholesale contracts.
Buyer
will pay Seller the amount billed by Buyer under its wholesale contracts
for
Power supply, including, but not limited to, charges for demand Capacity,
Energy, or reserves. As soon as practicable after the end of the month, Buyer
shall provide Seller load data, metered sales, and rates used for billing
wholesale customers in sufficient detail for Seller to determine after the
fact,
the revenues due Seller for Buyer’s existing wholesale contracts.
| C. |
Billing
and Payment
|
Unless
otherwise
specifically agreed upon by the Parties, the calendar month shall be the
standard period for all ▇▇▇▇▇▇▇▇ and payments under this Agreement. As soon
as
practicable after the end of each month, the Seller will render an invoice
to
Buyer for the amounts due for Power Supply Requirements for the preceding
month.
Payment shall be due and payable within ten days of receipt of the invoice
or,
if such day is not a Business Day, then on the next Business Day. Buyer will
make payments by electronic funds transfer or by other mutually agreeable
method(s) to the account designated by Seller. Any amounts not paid by the
due
date will be deemed delinquent and will accrue interest at the Interest Rate
until the date of payment in full.
Effective
Date: January 1, 2006
4
| D. |
Records
|
Each
Party shall
keep complete and accurate records of its operations under this Agreement
and
shall maintain such data as may be necessary to determine the reasonableness
and
accuracy of all relevant data, estimates, payments, or invoices submitted
by or
to it hereunder. All records regarding this Agreement shall be maintained
for a
period of three years from the date of the invoice or payment, or such longer
period as may be required by law.
| E. |
Audit
and
Adjustment Rights
|
Buyer
shall have
the right, at its own expense and during normal business hours, to audit
the
accounts and records of Seller that reasonably relate to the provision of
service under this Agreement. If the audit reveals an inaccuracy in an invoice,
the necessary adjustment in such invoice and the payments therefor will be
promptly made. No adjustment will be made for any invoice or payment made
more
than one year from rendition thereof. This provision shall survive the
termination of this Agreement for a period of one year from the date of
termination for the purpose of such invoice and payment objections. To the
extent that audited information includes Confidential Information, the Buyer
shall keep all such information confidential under Section VII.C.
| F. |
Section
205 Rights
|
The
rates for
service specified herein shall remain in effect for the Term of this Agreement,
and shall not be subject to change through application to the FERC pursuant
to
the provisions of Section 205 of the Federal Power Act absent the written
agreement of all Parties hereto.
| V. |
METERING
|
Generation
metering
shall be installed, operated and maintained in accordance with the applicable
interconnection agreements between the generator, Transmission Owner and
the
Transmission Provider. Metering between balancing areas shall be handled
in
accordance with the practices established b y the Transmission Provider.
Retail
metering shall be provided in accordance with applicable state law. Nothing
in
this Agreement requires Seller or Buyer to install new metering
facilities.
| VI. |
NOTICES
|
All
notices,
requests, statements or payments shall be made as specified below. Notices
required to be in writing shall be delivered by letter, facsimile or other
documentary form. Notice by facsimile or hand delivery shall be deemed to
have
been received by the close of the Business Day on which it was transmitted
or
hand delivered (unless transmitted or hand delivered after close in which
case
it shall be deemed received at the close of the next Business day). Notice
by
overnight mail or courier shall be deemed to have been received two Business
Days after it was sent. A Party may change its addresses by providing notice
of
same in accordance herewith.
Effective
Date: January 1, 2006
5
NOTICES
& CORRESPONDENCE:
|
To
Seller:
|
FirstEnergy
Solutions Corp.
|
To
Buyer:
|
FirstEnergy
Service Company
|
|
|
Director,
FES
Back Office
|
Vice
President
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▇▇
▇▇▇▇▇ ▇▇▇▇
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▇▇▇▇▇,
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▇▇▇▇▇
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▇▇▇▇▇,
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▇▇▇▇▇
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INVOICES
& PAYMENTS:
|
To
Seller:
|
FirstEnergy
Solutions Corp.
|
To
Buyer:
|
FirstEnergy
Service Company
|
|
|
Director,
FES
Back Office
|
Vice
President
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SCHEDULING:
|
To
Seller:
|
FirstEnergy
Solutions Corp.
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To
Buyer:
|
FirstEnergy
Service Company
|
|
|
Director,
FES
Back Office
|
Vice
President
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| VII. |
MISCELLANEOUS
|
A. Performance
Excused
If
either Party is rendered unable by an event of Force Majeure to carry out,
in
whole or part, its obligations hereunder, then, during the pendency of such
Force Majeure, but for no longer period, the Party affected by the event
shall
be relieved of its obligations insofar as they are affected by Force Majeure.
The Party affected by an event of Force Majeure shall provide the other Party
with written notice setting forth the full details thereof as soon as
practicable after the occurrence of such event and shall take all reasonable
measures to mitigate or minimize the effects of such event of Force Majeure.
Nothing in this Section requires Seller to deliver, or Buyer to receive,
Power
at Delivery Points other than those Delivery Points designated under this
Agreement, or relieves Buyer of its obligation to make payment under Section
IV
of this Agreement.
Effective
Date: January 1, 2006
6
Force
Majeure shall
be defined as any cause beyond the reasonable control of, and not the result
of
negligence or the lack of diligence of, the Party claiming Force Majeure
or its
contractors or suppliers. It includes, without limitation, earthquake, storm,
lightning, flood, backwater caused by flood, fire, explosion, act of the
public
enemy, epidemic, accident, failure of facilities, equipment or fuel supply,
acts
of God, war, riot, civil disturbances, strike, labor disturbances, labor
or
material shortage, national emergency, restraint by court order or other
public
authority or governmental agency, interruption of synchronous operation,
or
other similar or dissimilar causes beyond the control of the Party affected,
which causes such Party could not have avoided by exercising good electric
operating practice. Nothing contained herein shall be construed to require
a
Party to settle any strike, lockout, work stoppage, or other industrial
disturbance or dispute in which it maybe involved or to take an appeal from
any
judicial, regulatory or administrative action.
B. Transfer
of
Title and Indemnification
Title
and risk of
loss related to the Power Supply Requirements shall transfer to the Buyer
at the
Delivery Points. Seller warrants that it will deliver the Power Supply
Requirements to Buyer free and clear of all liens, security interests, claims
and encumbrances or any interest therein or thereto by any person arising
prior
to the Delivery Points. Each Party shall indemnify, defend and hold harmless
the
other Party from and against any claims arising from or out of any event,
circumstance, act or incident first occurring or existing during the period
when
control and title to the Power Supply Requirements is vested in the other
Party.
C. Confidentiality
Neither
Party shall
disclose to third parties Confidential Information obtained from the other
Party
pursuant to this Agreement except in order to comply with the requirements
of
FERC, NERC, Electric Reliability Organization, applicable regional reliability
council, Regional Entity, Regional Transmission Organization, or Government
Authority. Each Party shall use reasonable efforts to prevent or limit the
disclosure required to be provided to third parties.
D. Further
Assurances
Subject
to the
terms and conditions of this Agreement, each of the Parties hereto will use
reasonable efforts to take, or cause to be taken, all action, and to do,
or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and effectuate the transactions contemplated
hereby.
E. Defined
Terms
Terms
not
specifically defined in this Agreement shall have the meaning given in the
applicable Transmission Provider OATT.
Effective
Date: January 1, 2006
7
F. Assignment
Unless
mutually
agreed to by the Parties, no assignment, pledge, or transfer of this Agreement
shall be made by any Party without the prior written consent of the other
Party,
which shall not be unreasonably withheld, provided, however, that no prior
written consent shall be required for (i) the assignment, pledge or other
transfer to another company or Affiliate in the same holding company system
as
the assignor, pledgor or transferor, or (ii) the transfer, incident to a
merger
or consolidation with, or transfer of all (or substantially all) of the assets
of the transferor, to another person or business entity; provided, however,
that
such assignee, pledgee, transferee or acquirer of such assets or the person
with
which it merges or into which it consolidates assumes in writing all of the
obligations of such Party hereunder and provided, further, that either Party
may, without the consent of the other Party (and without relieving itself
from
liability hereunder), transfer, sell, pledge, encumber or assign such Party’s
rights to the accounts, revenues or proceeds hereof in connection with any
financing or other financial arrangements.
G. Governing
Law
The
interpretation
and performance of this Agreement shall be according to and controlled by
the
laws of the Commonwealth of Pennsylvania regardless of the laws that might
otherwise govern under applicable principles of conflicts of laws.
H. Counterparts
This
Agreement may
be executed in two or more counterparts and each such counterpart shall
constitute one and the same instrument.
I. Waiver
No
waiver by a Party of any default by the other Party shall be construed as
a
waiver of any other default. Any waiver shall be effective only for the
particular event for which it is issued and shall not be deemed a waiver
with
respect to any subsequent performance, default or matter.
J. No
Third Party
Beneficiaries
This
Agreement
shall not impart any rights enforceable by any third party other than a
permitted successor or assignee bound to this Agreement.
K. Severability
Any
provision
declared or rendered unlawful by any applicable court of law or regulatory
agency or deemed unlawful because of a statutory change will not otherwise
affect the remaining lawful obligations that arise under this
Agreement.
Effective
Date: January 1, 2006
8
L. Construction
The
term
“including” when used in this Agreement shall be by way of example only and
shall not be considered in any way to be a limitation. The headings used
herein
are for convenience and reference purposes only.
IN
WITNESS
WHEREOF,
the Parties have
caused their duly authorized representatives to execute this Electric Power
Supply Agreement on their behalf as of October 31, 2005.
|
FirstEnergy
Solutions Corp.
|
Pennsylvania
Power Company
|
|||||||
|
By
______________________________
|
By:
_______________________________________
|
|||||||
|
Senior
Vice
President,
FirstEnergy
Solutions Corp.
|
Vice
President, FirstEnergy Service
Company
|
|||||||
Effective
Date: January 1, 2006
9
Exhibit
A
DEFINITIONS
In
addition to
terms defined elsewhere in this Agreement, the terms listed below are defined
as
follows:
Affiliate
means, with
respect to any person, any other person (other than an individual) that,
directly or indirectly, through one or more intermediaries, controls, or
is
controlled by, or is under common control with, such person. For purposes
of the
foregoing definition, control means the direct or indirect ownership of more
than fifty percent (50%) of the outstanding capital stock or other equity
interests having ordinary voting power or ability to direct the affairs of
the
affiliate.
Ancillary
Services
means all services
as defined in the Transmission Provider OATT that Buyer must obtain to deliver
Capacity and Energy under this Agreement.
Buyer’s
Network Transmission Agreements
means the service
agreements for Network Integration Transmission Service and the Network
Operating Agreement among the Transmission Provider and The Cleveland Electric
Illuminating Company, Ohio Edison Company, Pennsylvania Power, and The Toledo
Edison Company.
Buyer’s
Retail Tariffs
mean all retail
tariffs of Pennsylvania Power Company as approved by the Pennsylvania Public
Utility Commission.
Buyer’s
Power Supply Requirements means
Capacity and
Energy, necessary to meet its Provider of Last Resort obligations under
Pennsylvania law, as well as other power supply obligations incurred by law,
contract or tariff. Buyer’s Power Supply Requirements do not include deviations
in the amount of energy scheduled and consumed under this Agreement, including,
but not limited to, energy imbalance, transmission losses, and congestion
as
defined in the Transmission Provider OATT.
Business
Day
means any day on
which Federal Reserve member banks in New York City are open for
business.
Capacity
means the resource
that produces electric Energy, measured in megawatts.
Code
of
Conduct
means statutes,
rules, regulations, or orders issued by a Government Authority that prohibit,
restrict, or condition the exchange of information between the regulated
and
competitive business operations of Affiliates.
Confidential
Information
means any
confidential, proprietary, trade secret, critical energy infrastructure
information, customer account information, or commercially sensitive information
relating to the present or planned business of a Party that is supplied under
this Agreement, and is identified as confidential by the entity supplying
the
information.
Delivery
Point
means, where
Capacity and Energy are supplied from generating facilities owned or controlled
by the Seller within the FirstEnergy Balancing Area, the point of
interconnection between the generating facility and the transmission facilities
of Transmission Owner. Delivery Point means, where Capacity and Energy are
supplied from generating facilities outside of the FirstEnergy Balancing
Area,
the interface between the transmission facilities of the adjacent balancing
area
and the transmission facilities of Transmission Owner.
Effective
Date: January 1, 2006
10
Electric
Reliability Organization
has the meaning
given in Section 215(a)(2) of the Federal Power Act.
Energy
means electric
energy delivered under this Agreement at three-phase, 60-hertz alternating
current measured in megawatt hours.
FERC
means The Federal
Energy Regulatory Commission or its regulatory successor.
FirstEnergy
Balancing Area
means the
collection of generation, transmission, and loads within the metered boundaries
of the FirstEnergy system where FirstEnergy maintains load resource balance.
Force
Majeure
has the meaning
given in Section VII.C.
Good
Utility Practice
means any of the
practices, methods and acts engaged in or approved by a significant portion
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 a reasonable cost consistent
with
good business practices, reliability, safety, and expedition. Good Utility
Practice includes compliance with the standards adopted by NERC, its applicable
regional councils, an Electric Reliability Organization or Regional Entity
as
approved by the FERC. 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
acceptable practices, methods or acts, generally accepted in the region and
consistently adhered to by utilities in the region.
Government
Authority
means any federal,
state, local, municipal or other governmental entity, authority or agency,
department, board, court tribunal, regulatory commission, or other body,
whether
legislative, judicial or executive, together or individually, exercising
or
entitled to exercise any administrative, executive, judicial, legislative,
policy, regulatory or taxing authority or power over Buyer or
Seller.
Interest
Rate
means the lesser
of Prime Rate plus two percent and the maximum lawful rate permitted by
applicable law.
NERC
means The North
American Electric Reliability Council or any superceding organization with
responsibility for establishing reliability standards for the interstate
grid.
Power
means Capacity
and/or Energy.
Effective
Date: January 1, 2006
11
Prime
Rate
means for any
date, the per annum rate of interest announced from time to time by Citibank,
N.A., as its prime rate for commercial loans, effective for such date as
established from time to time by such bank.
Regional
Entity
has the meaning
given in Section 215(a)(7) of the Federal Power Act.
Regional
Transmission Organization
has the meaning
given in Section 3(27) of the Federal Power Act.
Special
Contracts
mean contracts
between the Buyer and retail customers for the sales of Power and other related
services at prices that differ from the Buyer’s Retail Tariffs.
Spot
Market
means the Day
Ahead or Real Time Energy Markets administered by the Regional Transmission
Organization or any other over-the-counter Energy market in which the
transaction date of the Energy purchase is within thirty calendar days of
the
last day of the delivery period specified for the purchase.
Transmission
Owner
means the entity
that owns facilities used for the transmission of Power from the Seller’s
Generating Facilities.
Transmission
Provider
means the Midwest
Independent Transmission System Operator, Inc. or other utility, including
Regional Transmission Organizations, transmitting Power on behalf of Buyer
to or
from the Delivery Point(s) under this Agreement.
Transmission
Provider OATT
means the Open
Access Transmission Tariff, Open Access Transmission and Energy Markets Tariff,
or any other tariff of general applicability on file at the FERC under which
the
Transmission Provider offers transmission service.
Effective
Date: January 1, 2006
12
Exhibit
B
Total
▇▇▇▇
Calculation
Total
▇▇▇▇ will not
exceed ∑ [g + L + WCR]
where:
|
g
|
=
|
the
generation charge, expressed in total dollars, billed to Buyer’s retail
customers which elect to receive generation service from Buyer,
less any
gross receipts taxes contained in the generation
charge.
|
|
L
|
=
|
the
retail
charge for losses billed to Buyer’s retail customers which elect to
receive generation service from
Buyer
|
|
WCR=
|
Wholesale
Contract Revenues for Power supply
obligations.
|
Effective
Date: January 1, 2006
13