EXHIBIT 10b
EXHIBIT F-2
NON COLSTRIP UNIT NUMBER 3
WHOLESALE TRANSITION SERVICE AGREEMENT
This Wholesale Transition Service Agreement (this "Agreement") is entered
into effective as of the _____ day of __________________, 199__ (the
"Effective Date"), by and between ____________________________, a
_____________ corporation ("Seller" or "__________"), and THE MONTANA POWER
COMPANY, a Montana corporation ("Buyer" or "MPC"). Seller and Buyer are also
referred to herein individually as a "Party" and collectively as the
"Parties."
RECITALS
1. Under the Asset Purchase Agreement, defined below, MPC has sold
its generating facilities and/or power purchase/exchange agreements and
related assets to __________.
2. MPC must still provide power to its wholesale and retail customers
who have not yet chosen an alternative power supplier or who have not yet been
given the opportunity to choose an alternative power supplier.
3. Since MPC will not own any generating facility and/or power
purchase/exchange contracts to serve these customers, MPC must contract with
__________ to serve, in part, MPC's remaining wholesale and retail customer
loads.
4. MPC and __________ enter into this Agreement to allow MPC to
purchase and __________ to sell defined quantities of power from the
generating facilities and/or power purchase/exchange contracts.
5. Since MPC must rely on the Seller to serve a portion of the
remaining wholesale and retail customer load, MPC and __________ intend that
__________'s delivery obligation is absolute and will not be excused for any
reason.
In consideration of the Parties' mutual promises, they agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions. As used in this Agreement, the following terms
shall have the respective meanings set forth below. Certain other capitalized
terms used herein are either (i) defined where they appear in this Agreement,
or (ii) defined in the Asset Purchase Agreement.
(a) "Affiliate" means any person that directly or indirectly
Controls, is Controlled by, or is under common Control with the person in
question.
(b) "Asset Purchase Agreement" means that certain Asset
Purchase Agreement entered into between Buyer and Seller dated as of
___________, 199__, and pursuant to which Seller shall purchase and Buyer
shall sell the MPC generation facility and/or power purchase/exchange
agreements.
(c) "Claims" means all claims or actions, threatened or filed
and whether groundless, false or fraudulent, that directly or indirectly
relate to the subject matter of an indemnity, and the resulting losses,
damages, judgments, penalties, expenses, reasonable attorneys' fees and court
costs, whether incurred by settlement or otherwise, and whether such claims or
actions are threatened or filed prior to or after the termination of this
Agreement.
(d) "Contract Quantity" means the amount of energy to be
purchased and sold hereunder, as set forth in Article 3.
(e) "Contract Term" means the term of this Agreement as set
forth in Section 2.1.
(f) "Control" means the possession, directly or indirectly,
through one or more intermediaries, of the following: (i) in the case of a
corporation, 50% or more of the outstanding voting securities thereof; (ii) in
the case of a limited liability company, partnership, limited partnership or
venture, the right to 50% or more of the distributions therefrom (including,
without limitation, liquidating distributions); (iii) in the case of a trust
or estate, 50% or more of the beneficial interest therein; (iv) in the case of
any other entity, 50% or more of the economic or beneficial interest therein;
or (v) in the case of any entity, the power or authority, through the
ownership of voting securities, by contract or otherwise, to direct the
management, activities or policies of the entity.
(g) "Delivery Point" means (i) the point of interconnection of
the Unit to the Buyer's electrical system as defined in the Generation
Interconnection Agreement, or (ii) any point of interconnection with the
Buyer's transmission system at which capacity and/or energy may be available
for purchase pursuant to the Buyer's open access transmission tariff, unless
the Seller acquires the Buyer's Colstrip 1, 2 and 3 Transmission Assets as
provided in section 1.10(f) of the Asset Purchase Agreement. If the Seller
acquires the Buyers' Colstrip 1, 2 and 3 Transmission Assets as provided in
section 1.10(f) of the Asset Purchase Agreement, "Delivery Point", with
respect to Colstrip Units 1&2, means (i) the points of interconnection between
the Colstrip 1, 2 and 3 Transmission Assets and the Buyer's transmission
system at Colstrip and/or Broadview and/or ▇▇▇▇▇▇▇▇, or (ii) any point of
interconnection with the Buyer's transmission system at which capacity and/or
energy may be available for purchase pursuant to the Buyer's open access
transmission tariff.
(h) "Delivery Term" means the term for the purchase and sale of
energy hereunder, as set forth in Section 2.2.
(i) "Energy Charge" means the price to be paid by Buyer to
Seller each month during the Delivery Term for each kWh of the Contract
Quantity of energy delivered, as set forth on Exhibit A hereto.
(j) "FERC" means the Federal Energy Regulatory Commission, or
any successor thereto.
(k) "firm" means that the only excuse for the failure by Seller
(l) "Force Majeure" means an event not anticipated as of the
Effective Date, which is not within the reasonable control of the Party (or in
the case of third party obligations or facilities, the third party) claiming
suspension (the "Claiming Party"), and which by the exercise of due diligence
the Claiming Party, or third party, is unable to overcome or for which the
Claiming Party is unable to obtain or cause to be obtained a commercially
reasonable substitute. Events of Force Majeure may include, but are not
restricted to: acts of God; fire; explosion; civil disturbance; labor dispute;
labor or material shortage; sabotage; action or restraint by court order or
public or governmental authority (so long as the Claiming Party has not
applied for or assisted in the application for, and has opposed where and to
the extent reasonable, such action or restraint); provided, that none of (a)
the loss of Buyer's markets nor Buyer's inability economically to use or
resell energy purchased hereunder, (b) Seller's decision not to operate the
Unit or any Unit thereof, (c) normal operational outages at the Unit which are
not the result of an emergency or similar situation, (d) unless otherwise
constituting an event of Force Majeure as defined above, any other outages at
the Unit whether resulting from an emergency or not, (e) Seller's failure to
reserve sufficient firm transmission to deliver the Contract Quantity at the
Delivery Point, (f) Seller's ability to sell energy to a market at a more
advantageous price, and (g) Buyer's failure to reserve sufficient firm
transmission to deliver the Contract Quantity from the Delivery Point, shall
constitute an event of Force Majeure. Unless otherwise constituting an event
of Force Majeure as defined above, interruption by a Transmission Provider
shall not be deemed to be Force Majeure unless (i) the Party contracting with
such Transmission Provider shall have made arrangements with such Transmission
Provider for the firm point-to-point transmission services, network
integration transmission service, and/or similar firm transmission service, as
defined under the Transmission Provider's tariff or other applicable tariff,
of the energy to be delivered or received hereunder and (ii) such
interruptions is due to an interruption or curtailment in accordance with the
Transmission Provider's tariff or other applicable tariff.
(m) "GAAP" means generally accepted accounting principles
consistently applied for the period(s) in question.
(n) "Good Utility Practice" means any practices, methods or 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 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 and giving due regard for the requirements
of governmental agencies having jurisdiction. 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 electric utility industry.
(o) "Interest Rate" means, for any date, two percent (2%) over
the per annum rate of interest equal to the prime lending rate as may from
time to time be published in the Wall Street Journal under "Money Rates";
provided, the Interest Rate shall never exceed the maximum lawful rate
permitted by applicable law.
(p) "kW" means one kilowatt.
(q) "kWh" means one kilowatt hour.
(r) "Material Adverse Change" means, in the case of (i) Buyer,
has long-term, secured, senior debt that is rated below "BBB-" by S&P and
below "Baa3" by ▇▇▇▇▇'▇, or (ii) Seller, has long-term, secured, senior debt
that is rated below "BBB-" by S&P and below "Baa3" by ▇▇▇▇▇'▇. For the
purposes of this definition, "S&P" means the Standard & Poor's Rating Group (a
division of ▇▇▇▇▇▇-▇▇▇▇, Inc.) or its successor, and "▇▇▇▇▇'▇" means ▇▇▇▇▇'▇
Investors Services, Inc. or its successor.
(s) "month" means a calendar month.
(t) "MPC" means The Montana Power Company, a Montana
corporation.
(u) "MPT" means Mountain prevailing time, that is, prevailing
Standard Time or Daylight Savings Time in the Mountain Time Zone.
(v) "MPSC" means the Montana Public Service Commission, or any
successor agency thereto.
(w) "mW" means one megawatt.
(x) "mWh" means megawatt hour.
(y) "PROPORTIONAL ALLOCATION FACTOR" means the percentage to
multiply the Remaining Customer Load by to obtain the Seller's non-binding
load estimate.
(z) "REMAINING CUSTOMER LOAD" means the Seller's load obligation
to the Buyer. The Remaining Customer Load is a portion of the Buyer's load
obligation ("Residual Load") for customers who have not chosen, or been given
an opportunity to choose, a power supplier other than the Montana Power
Company MPSC regulated Communication and Energy Services Division power
supply. Exhibit D provides an initial estimate of the non-binding Remaining
Customer Load which the Seller can determine a non-binding estimate of their
load obligation by multiplying the Remaining Customer Load by the appropriate
Proportional Allocation Factor. Exhibit D shows the calculations used to
compute the Remaining Customer Load as the Buyer's Residual Load less
deliveries from Colstrip 3 and other possible purchases (purchases from the
Bonneville Power Administration and/or Qualifying Facilities).
(aa) "Schedule" or "Scheduling" means the acts of Seller, Buyer
and/or their designated representatives, including, without limitation, each
Party's Transmission Providers, if applicable, of notifying, requesting and
confirming to each other the quantity of energy to be delivered hourly on any
given day or days during the Delivery Term at a specified Delivery Point.
(bb) "Transmission Providers" means the entity or entities
transmitting energy on behalf of Seller or Buyer to or from the Delivery
Point.
(cc) "Unit" means either (or in the plural, all) The Montana
Power Company's generating unit or units and/or power purchase/exchange
contracts that the Buyer sold and the Seller purchased pursuant to the Asset
Purchase Agreement.
(dd) "Work Day" means a work day observed by both Parties
beginning at 8:00 a.m. and closing at 5:00 p.m. local time for each Party's
principal place of business.
ARTICLE 2
TERM AND TERMINATION
2.1 Contract Term. Subject to the provisions of Section 16.6
regarding winding-up arrangements, the Contract Term shall begin on the day
immediately succeeding the Closing Date, as defined in the Asset Purchase
Agreement, and shall continue until the end of the Delivery Term.
2.2 Delivery Term. The purchase and sale of energy shall commence at
00:00:01 MPT on the day immediately succeeding the Closing Date and shall end
when the Buyer's Remaining Customer Load is zero or no later than 23:59:59
MPT June 30, 2002. No interruption in purchases or sales shall operate to
extend the Delivery Term.
2.3 Termination. Neither Party shall have the right to terminate this
Agreement except as provided in Article 9.
ARTICLE 3
QUANTITY
3.1 Contract Quantity/Seller's Obligations. Seller shall sell and
deliver, or cause to be delivered, and Buyer shall purchase and receive, or
cause to be received, an amount of firm energy measured in mWh per hour equal
to the Seller's proportional allocation of Buyers actual Remaining Customer
Load. An initial non-binding estimate of the Seller's share of the Buyer's
Remaining Load Obligation can be computed by multiplying the initial estimate
of the Remaining Customer Load shown in Exhibit D by the appropriate
Proportional Allocation Factor in Exhibit C. The Proportional Allocation
Factor defined in Exhibit C assumes the same Closing Date, which will be
defined, for all assets and power purchase agreements. The Proportional
Allocation Factor may change if the generation asset and contract sale results
in multiple Closing Dates, or a different mix of resources available to serve
the Remaining Customer Load. Seller's obligation to deliver, or cause to be
delivered, the Contract Quantity shall be absolute, regardless of whether the
Unit is operated or operable. Seller shall not be required to provide the
Contract Quantity from the Unit, and shall be entitled to provide the Contract
Quantity from any source.
3.2 Deliveries. All deliveries and receipts of energy under this
Agreement shall be made at the Delivery Point as nominated by Seller.
3.3 Reserves. Seller shall be solely responsible for all reserve
requirements associated with its delivery obligation under this Agreement,
including spinning and supplemental reserves, as determined in accordance with
Western Systems Coordinating Council and Northwest Power Pool minimum
operating reliability criteria. The Seller shall ensure sufficient reserves
through sharing or other arrangements to maintain deliveries to Buyer at all
times.
ARTICLE 4
ENERGY CHARGE
4.1 Energy Charge. Buyer shall pay to Seller each month during the
Delivery Term an Energy Charge equal to the product of (i) the price set forth
on Exhibit A attached hereto (the Energy Charge reflected in ▇▇▇▇▇/kWh) times
(ii) the amount of energy in kWh actually delivered in accordance with this
Agreement by Seller. The Energy Charge shall be payable in arrears pursuant
to Article 10.
4.2 Failure to Deliver. Unless excused by Buyer's failure to perform
or Force Majeure, if Seller fails to deliver all or part of the required or
otherwise Scheduled Contract Quantity of energy at the Delivery Point, Seller
shall pay Buyer, on the date payment would otherwise be due to Seller, an
amount for each kWh of such deficiency equal to the positive difference, if
any, obtained by subtracting the Energy Charge for the deficient Contract
Quantity from the Replacement Price, plus twenty percent (20%) of the
resulting amount. "Replacement Price" means the price at which Buyer, acting
in a commercially reasonable manner, purchases substitute energy not delivered
by Seller (plus additional transmission charges, if any, incurred by Buyer to
the Delivery Point) or, absent a purchase, the market price for such quantity
of energy at such Delivery Point as determined by Buyer in a commercially
reasonable manner; provided, however, in no event shall the Replacement Price
include any penalties, ratcheted demand or similar charges.
4.3 Failure to Receive. Unless excused by Seller's failure to perform
or Force Majeure, if Buyer fails to receive all or part of the required or
otherwise Scheduled Contract Quantity of energy at the Delivery Point, Buyer
shall pay Seller, on the date payment would otherwise be due to Seller, an
amount for each kWh of such deficiency equal to the positive difference, if
any, obtained by subtracting the Replacement Price for the deficient Contract
Quantity from the Energy Charge, plus twenty percent (20%) of the resulting
amount. "Replacement Price" means the price at which Seller, acting in a
commercially reasonable manner, sells the deficiency energy not received by
Buyer (plus additional transmission charges, if any, incurred by Seller to the
Delivery Point) or, absent a purchase, the market price for such quantity of
energy at such Delivery Point as determined by Seller in a commercially
reasonable manner; provided, however, in no event shall the Replacement Price
include any penalties, ratcheted demand or similar charges.
4.4 Acknowledgment of the Parties. The Parties stipulate that the
payment obligations set forth in this Article 4 are reasonable in light of
the anticipated harm and the difficulty of estimation or calculation of
actual damages and waive the right to contest such payments as an
unreasonable penalty. If either Party fails to pay amounts in accordance
with this Article 4 when due, the other Party shall have the right to: (a)
suspend performance until such amounts plus interest at the Interest Rate
have been paid, and/or (b) exercise any remedy available at law or in equity
to enforce payment of such amount plus interest at the Interest Rate. With
respect to the amount of such damages only, the remedy set forth in this
Article 4 shall be the sole and exclusive remedy of the Parties for the
failure of Seller to sell and deliver, and Buyer to purchase and receive, the
Contract Quantity and all other damages and remedies are hereby waived.
Disagreements with respect to the calculation of damages pursuant to this
Article 4 shall be submitted to arbitration in accordance with the
arbitration procedures set forth in Section16.9.
4.5 Fixed Rates. The rates for service specified in this Agreement
shall remain in effect for this Agreement and shall be determined in
accordance with this Agreement for the Delivery Term, and shall not be subject
to change for his Agreement through application to FERC pursuant to the
provisions of Section 205 of the Federal Power Act absent the Agreement in
writing of both of the Parties.
ARTICLE 5
OPERATIONS, TRANSMISSION AND SCHEDULING
5.1 Operating Procedures. Seller and Buyer shall mutually develop
written operating procedures prior to the beginning of the Delivery Term.
Topics covered by such operating procedures shall include, but not be limited
to, methods of day-to-day communications, scheduling, accounting, and key
personnel lists for Seller and Buyer. Where applicable, the operating
procedures shall comply with the terms and conditions of the Buyer's open
access transmission tariff. Seller shall provide and deliver the energy and
perform its other obligations hereunder, at all times consistent with Good
Utility Practice
5.2 Transmission. Seller shall arrange and be responsible for
transmission service to the Delivery Point and shall Schedule or arrange for
Scheduling services with its Transmission Providers to deliver the energy to
the Delivery Point. Buyer shall arrange and be responsible for transmission
service at and from the Delivery Point and shall Schedule or arrange for
Scheduling services with its Transmission Providers to receive the energy at
the Delivery Point. Each Party shall designate authorized representatives to
effect the Scheduling of the Contract Quantity.
5.3 Long-term Notification. The Seller will be provided non-binding
estimates of the Buyer's Remaining Customer Load obligation in the following
manner: Upon completion of the sale, Seller will be notified of Buyer's non-
binding Remaining Customer Load monthly capacity and energy obligation through
the Contract Term if different than Exhibit D. These will be the Buyer's best
estimates and will not be guaranteed schedules. By the fifteenth of each
month during the Contract Term, the Buyer will notify the Seller of the non-
binding monthly energy and peak estimates for the Remaining Customer Load
provided the non-binding Remaining Customer Load estimate have changed from
previously provided estimates. The Seller will be responsible to serve its
proportional allocation of the Buyer's actual Remaining Customer Load as
defined in Section 3.1 and will be notified of this obligation pursuant to
Section 5.4.
5.4 Short-term Notification. Each day the Seller will be provided a
preschedule for the next day's hourly loads; on weekends and holidays,
however, the preschedule will be provided to the Seller consistent with
regional scheduling practices. The hourly prescheduled amounts will be the
firm schedule if no changes are necessary. If MPC deems necessary a change to
the preschedule in order to balance Seller's resources to the Remaining
Customer Load, then the preschedule will be provided to the Seller consistent
with regional scheduling practices. If the schedule, as provided and modified
through time by MPC, is different from the actual load requirements; MPC will
be responsible for the forecast error, including acquiring the power necessary
to meet the difference and any associated cost of the power acquired to meet
the difference. The Seller is obligated to meet the schedule provided by the
Buyer as described in Section 5.1.
5.5 Other Notifications. All transactions hereunder shall not be
reported to any party in determining any indexed price for electricity
including, but not limited to any Dow ▇▇▇▇▇ Mid-Columbia Electricity Index.
ARTICLE 6
DELIVERY POINT; OBLIGATIONS OF THE PARTIES; TITLE
6.1 Delivery Point. Seller shall sell and deliver, or cause to be
delivered, and Buyer shall purchase and receive, or cause to be received, the
Contract Quantity at the Delivery Point.
6.2 Obligations of the Parties. Up to the Delivery Point, Seller
shall be responsible for any costs or charges imposed on or associated with
the delivery of the Contract Quantity, including, but not limited to, control
area services, inadvertent energy flows, transmission losses and loss charges
relating to the transmission of the Contract Quantity. At and from the
Delivery Point, Buyer shall be responsible for any costs or charges imposed on
or associated with the Contract Quantity, including, but not limited to,
control area services (except as provided in Section 3.3), inadvertent energy
flows, transmission losses and loss charges relating to the transmission of
the Contract Quantity.
6.3 Title; Risk of Loss; and Indemnity. As between the Parties,
Seller shall be deemed to be in exclusive control (and responsible for any
damages or injury caused thereby) of the energy prior to the Delivery Point
and Buyer shall be deemed to be in exclusive control (and responsible for any
damages or injury caused thereby) of the energy at and from the Delivery
Point. Seller warrants that it will deliver to Buyer the Contract Quantity,
free and clear of all liens, Claims and encumbrances arising prior to the
Delivery Point. Title to and risk of loss related to the Contract Quantity
shall transfer from Seller to Buyer at the Delivery Point. Seller and Buyer
shall each indemnify, defend and hold harmless the other Party from any Claims
arising from any act or incident occurring when title to the energy is vested
in the indemnifying Party.
In furtherance of the foregoing, each Party represents to the other
that it has read and understood the Agreement Limiting Liability Among Western
Interconnected Systems ("Western Systems Agreement"). If either Party is not
a party to the Western Systems Agreement or terminates its participation in
the Western Systems Agreement, then, notwithstanding, the provisions of the
Western Systems Agreement shall apply in full force and effect as between the
Parties to the extent that such provisions apply to the transactions
contemplated by this Agreement. For purposes of this paragraph, the Western
Systems Agreement is incorporated herein by the reference.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES
7.1 Representations and Warranties. As a material inducement to
entering into this Agreement, each Party, with respect to itself, hereby
represents and warrants to the other Party as of the Effective Date as
follows:
(a) it is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its formation and is qualified to conduct its
business in those jurisdictions necessary to perform this Agreement;
(b) except for the regulatory approvals as provided in Section 9.4
hereof, it has all regulatory authorizations necessary for it to legally
perform its obligations under this Agreement;
(c) the execution, delivery and performance of this Agreement are
within its statutory and corporate powers, have been authorized by all
necessary action and do not violate any of the terms or conditions in its
governing documents or any contract to which it is a party or any law, rule,
regulation, order, writ, judgment, decree or other legal or regulatory
determination applicable to it;
(d) this Agreement constitutes a legal, valid and binding obligation
of such Party enforceable against it in accordance with its terms, subject to
bankruptcy, insolvency, reorganization and other laws affecting creditor's
rights generally, and with regard to equitable remedies, to the discretion of
the court before which proceedings to obtain same may be pending;
(e) there are no bankruptcy, insolvency, reorganization, receivership
or other arrangement proceedings pending or being contemplated by it, or to
its knowledge threatened against it; and
(f) there are no suits, proceedings, judgments, rulings or orders by
or before any court or any governmental authority that materially adversely
affect its ability to perform this Agreement.
7.2 Additional Representation and Warranty. Buyer hereby further
represents and warrants to Seller that Buyer, under this Agreement, is a
wholesale purchaser and is purchasing the energy hereunder for resale.
7.3 No Other Representations and Warranties. Each Party acknowledges
that it has entered into this Agreement based solely upon the express
representations and warranties set forth in this Agreement.
ARTICLE 8
ADDITIONAL COVENANTS
8.1 Remaking of Representations and Warranties. Each Party covenants
that it will cause its respective representations and warranties in Sections
7.1 and 7.2 to remain true and correct throughout the Contract Term.
8.2 Financial Information.
If requested by Buyer, Seller shall cause to be delivered as soon
as available and (i) within one hundred twenty (120) days following the end of
each fiscal year, a copy of the annual report of ____________ containing
audited consolidated financial statements for such fiscal year certified by
independent certified public accountants and (ii) within sixty (60) days after
the end of each of its first three fiscal quarters of each fiscal year, a copy
of the quarterly report of ___________ containing unaudited consolidated
financial statements for such fiscal quarter.
If requested by Seller, Buyer shall cause to be delivered as soon
as available and (i) within one hundred twenty (120) days following the end of
each fiscal year, a copy of the annual report of Buyer containing audited
consolidated financial statements for such fiscal year certified by
independent certified public accountants and (ii) within sixty (60) days after
the end of each of its first three fiscal quarters of each fiscal year, a copy
of the quarterly report of Buyer containing unaudited consolidated financial
statements for such fiscal quarter.
In all cases the statements required under this Section 8.2 shall
be for the most recent accounting period and prepared in accordance with GAAP;
provided that, should any such statements not be timely due to a delay in
preparation or certification, such delay shall not be considered a default so
long as such Party diligently pursues the preparation, certification and
delivery of the statements.
ARTICLE 9
EVENTS OF DEFAULT, REMEDIES AND REGULATORY APPROVALS
9.1 Events of Default. An "Event of Default" means, with respect to a
Party alleged to have taken or been affected by any of the actions set forth
below in this Section 9.1 (the "Defaulting Party"):
(a) the failure by the Defaulting Party to make, when due, any
payment required under this Agreement if such failure is not remedied within
five (5) Work Days after written notice of such failure is given to the
Defaulting Party by the other Party ("Non-Defaulting Party"), provided that
the payment is not the subject of a good faith dispute as described in the
billing and payment provisions under Article 10; or
(b) any representation or warranty made by the Defaulting Party
in this Agreement shall prove to have been false or misleading in any material
respect when made or ceases to remain true during the Contract Term; or
(c) the failure by the Defaulting Party to perform any covenant
set forth in this Agreement (other than the events that are otherwise
specifically covered in this Section 9.1 as a separate Event of Default or
Seller's obligation to sell and deliver, and Buyer's obligation to purchase
and receive, for which a separate remedy is provided in Article 4), and such
failure is not cured within five (5) Work Days after written notice thereof to
the Defaulting Party; or
(d) the Defaulting Party shall make an assignment (other than
any assignment permitted pursuant to Article 11) or any general arrangement
for the benefit of creditors;
(e) the Defaulting Party shall file a petition or otherwise
commence, authorize or acquiesce in the commencement of a proceeding or cause
of action under any bankruptcy or similar law for the protection of creditors,
or have such petition filed against it and such petition is not withdrawn or
dismissed within thirty (30) days after such filing;
(f) the Defaulting Party shall otherwise become bankrupt or
insolvent (however evidenced); or
(g) the Defaulting Party shall be unable to pay its debts as
they fall due;
(h) the guarantor of the Defaulting Party fails to perform any
covenant set forth in the guaranty agreement it delivered in respect of this
Agreement (if any), any representation or warranty made by such guarantor in
the guaranty agreement shall prove to have been false or misleading in any
material respect when made or when deemed to be repeated or such guarantor
shall take or suffer any actions set forth in Section 9.1(d) as applied to it;
or
(i) guarantor of the Defaulting Party shall repudiate, purport
to revoke or fail to perform any of such guarantor's obligations under such
guarantor's guaranty hereunder, or guarantor shall cease to exist; or
(j) if at any time, in the case of: (i) Buyer, Buyer shall have
defaulted on its indebtedness to third parties resulting in obligations
(whether individually or in the aggregate) of Buyer in excess of Twenty Five
Million U.S. Dollars ($25,000,000), becoming, or becoming capable of being
declared, accelerated; or (ii) Seller, Seller shall have defaulted on its
indebtedness to third parties resulting in obligations of Seller in excess of
Twenty Five Million U.S. Dollars ($25,000,000), becoming, or becoming capable
of being declared, accelerated; or
9.2 Remedies Upon an Event of Default.
(a) If an Event of Default occurs with respect to a Defaulting
Party at any time during the Contract Term, the Non-Defaulting Party may, for
so long as the Event of Default is continuing (i) establish a date (which date
shall be between five (5) and ten (10) Work Days after the Non-Defaulting
Party delivers notice) ("Early Termination Date") on which this Agreement
shall terminate if the Event of Default has not been cured and (ii) withhold
any payments due in respect of this Agreement; provided, however, upon the
occurrence of any Event of Default listed in Section 9.1(d) as it may apply to
any Party, this Agreement shall automatically terminate, without notice, and
without any other action by either Party as if an Early Termination Date had
been declared immediately prior to such event. If an Early Termination Date
has been designated, the Non-Defaulting Party shall in good faith calculate
its Gains or Losses and Costs (as hereafter defined) resulting from the
termination of this Agreement. The Gains, Losses and Costs shall be
determined by comparing the value of the remaining Contract Term and Contract
Quantity under this Agreement had it not been terminated to the equivalent
quantities and relevant market prices for the remaining term either quoted by
a bona fide third-party offer or which are reasonably expected to be available
in the market under a replacement contract for this Agreement. To ascertain
the market prices of a replacement contract, the Non-Defaulting Party may
consider, among other valuations, any or all of the settlement prices of NYMEX
electricity futures contracts, quotations from leading dealers in energy swap
contracts and other bona fide third party offers, all adjusted for the length
of the remaining term and differences in transmission. It is expressly agreed
that a Party shall not be required to enter into a replacement transaction in
order to determine the Termination Payment (as hereafter defined). The Non-
Defaulting Party shall aggregate such Gains, Losses and Costs with respect to
this Agreement into a single net amount ("Termination Payment") and notify the
Defaulting Party. If the Non-Defaulting Party's aggregate Losses and Costs
exceed its aggregate Gains, the Defaulting Party shall, within five (5) Work
Days of receipt of such notice, pay the net amount to the Non-Defaulting
Party, which amount shall bear interest at the Interest Rate from the Early
Termination Date until paid. If the Non-Defaulting Party's aggregate Gains
exceed its aggregate Losses and Costs, if any, resulting from the termination
of this Agreement, the amount of the Termination Payment shall be zero. If
the Defaulting Party disagrees with the calculation of the Termination
Payment, the issue shall be submitted to binding arbitration in accordance
with the arbitration procedures set forth in Section 16.9 and the resulting
Termination Payment shall be due and payable within ten (10) Work Days after
the award.
(b) For purposes of this Agreement:
"Costs" mean(s), with respect to a Party, brokerage fees,
commissions and other similar transaction costs and expenses, including,
without limitation, verifiable breakage costs, reasonably incurred by such
Party either in terminating any arrangement pursuant to which it has hedged
its obligations or entering into new arrangements which replace this Agreement
and attorneys' fees, if any, incurred in connection with enforcing its rights
under this Agreement.
"Gains" mean(s), with respect to a Party, an amount equal to the
present value of the economic benefit (exclusive of Costs), if any, to such
Party resulting from the termination of its obligations with respect to this
Agreement determined in a commercially reasonable manner.
"Losses" mean(s), with respect to a Party, an amount equal to the
present value of the economic loss (exclusive of Costs), if any, to such Party
resulting from the termination of its obligations with respect to this
Agreement determined in a commercially reasonable manner.
In no event, however, shall a Party's Gains, Losses or Costs
include any penalties, ratcheted demand or similar charges. At the time for
payment of any amount due under this Section 9.2, each Party shall pay to the
other Party all additional amounts payable by it pursuant to this Agreement,
but all such amounts shall be netted and aggregated with any Termination
Payment payable hereunder.
9.3 Other Events. Except with respect to the initial regulatory
approvals provided for in Section 9.4, in the event that either Party is
regulated by a federal, state or local regulatory body, and such body shall
subsequently disallow all or any portion of any costs incurred or yet to be
incurred by such Party under any provision of this Agreement, such action
shall not operate to excuse such Party from performance of any obligation nor
shall such action give rise to any right of such Party to any retroactive
adjustment of the Energy Charge. Despite the foregoing, if a Party's
activities hereunder become subject to regulation of any kind whatsoever under
any law (other than with respect to Transition Costs) to a greater or
different extent than that existing on the Effective Date and such regulation
either (a) renders all of this Agreement illegal or unenforceable or (b)
materially adversely affects the business of a Party, with respect to its
financial position or otherwise, then in the case of (a) above, either Party,
and in the case of (b) above, only the Party affected (for purposes of this
Section 9.3, the "Defaulting Party"), shall at such time have the right to
declare an Early Termination Date in accordance with the provisions hereof;
provided that notwithstanding the rights of the Parties to declare an Early
Termination Date as above stated, the Defaulting Party shall be liable for
payment of the Termination Payment calculated by the Non-Defaulting Party as
provided in Section 9.2.
9.4 Regulatory Approvals. The Seller shall file this Agreement with
FERC. The obligations of the Parties under this Agreement are subject to and
contingent upon receipt and approval by each Party (in each Party's sole
discretion) of an order of FERC accepting this Agreement for filing or
otherwise permitting this Agreement to be or become effective, including,
without limitation, rates to be charged hereunder. If the FERC or any
reviewing court or other governmental agency, including, without limitation,
the Montana Public Service Commission, imposes any condition, limitation or
qualification upon this Agreement or upon the performance by either of the
Parties of its performance hereunder which, individually or in the aggregate,
precludes either or both of the Parties from performing, in whole or in part,
this Agreement, or materially adversely affects the benefits of this Agreement
to either Party, then the precluded or affected Party may terminate this
Agreement by giving, within not less than thirty (30) days of the entry of any
such order or decree, written notice thereof to the other Party, effective as
of the date of entry of the applicable order or decree imposing such
condition, limitation or qualification. In no event shall the terminating
Party incur any liability (whether for lost revenues or lost profits or
otherwise) as a result of such termination.
ARTICLE 10
BILLING AND PAYMENT
10.1 Billing and Payment. Seller shall render to Buyer (by regular
mail, facsimile or other acceptable means pursuant to Article14) for each
calendar month during the Delivery Term a statement setting forth the total
Energy Charges for the month and any other charges due Seller, including,
without limitation, any payment due pursuant to Article 4 during the preceding
month. Billing and payment will be based on the Energy Charge and on
Scheduled hourly quantities. Payment by Buyer shall be due on or before
thirty (30) days after receipt of Seller's statement, to the payment address
provided in Exhibit B hereto. Overdue payments shall accrue interest at the
Interest Rate from, and including, the due date to, but excluding, the date of
payment. If Buyer, in good faith, disputes a statement, Buyer shall provide a
written explanation specifying in detail the basis for the dispute and pay the
portion of such statement conceded to be correct no later than the due date.
If any amount disputed by Buyer is determined to be due to Seller, it shall be
paid within ten (10) days of such determination, along with interest accrued
at the Interest Rate from the original due date until the date paid.
10.2 Setoff. If Buyer and Seller are each required to pay to the other
an amount in the same month under this Agreement, then such amounts with
respect to each Party may be aggregated and the Parties may discharge their
obligations to pay through netting, in which case the Party, if any, owing the
greater aggregate amount may pay to the other Party the difference between the
amounts owed. Each Party reserves to itself all rights, setoffs,
counterclaims and other remedies and defenses consistent with Article 12 (to
the extent not expressly herein waived or denied) which such Party has or may
be entitled to arising from or out of this Agreement. The obligations to make
payment under this Agreement between the Parties may be setoff against each
other.
10.3 Audit. Each Party (and its representatives) has the right, at its
sole expense and during normal working hours, to examine the records of the
other Party to the extent reasonably necessary to verify the accuracy of any
statement, charge or computation made pursuant to this Agreement. If
requested, a Party shall provide to the other Party statements evidencing the
quantities of energy delivered at the Delivery Point. If any such examination
reveals any inaccuracy in any statement, the necessary adjustments in such
statement and the payments thereof will be promptly made and shall bear
interest calculated at the Interest Rate from the date the overpayment or
underpayment was made until paid; provided, however, that no adjustment for
any statement or payment will be made unless objection to the accuracy thereof
was made prior to the lapse of one (1) year from the rendition thereof; and
provided further that this Section 10.3 will survive any termination of this
Agreement for a period of one (1) year from the date of such termination for
the purpose of such statement and payment objections.
ARTICLE 11
ASSIGNMENT; BINDING EFFECT
11.1 Assignment. Neither Party shall assign this Agreement or any of
its rights or obligations hereunder without the prior written consent of the
other Party, which consent shall not be unreasonably withheld or delayed.
Despite the foregoing, either Party may, without the need for consent from the
other Party (and without relieving itself from liability hereunder), (a)
transfer, sell, pledge, encumber or assign this Agreement or the accounts,
revenues or proceeds hereof in connection with any financing or other
financial arrangements; (b) transfer or assign this Agreement to an Affiliate
of such Party; or (c) transfer or assign this Agreement to any person or
entity succeeding to all or substantially all of the assets of such Party;
provided, however, that in the case of (b) and (c) any such assignee shall
agree in writing to be bound by the terms and conditions hereof. Assignments
or transfers not in compliance with this section shall be void.
11.2 Binding Effect. This Agreement shall inure to the benefit of and
be binding upon the Parties and their respective successors and permitted
assigns. No assignment or transfer permitted hereunder shall relieve Seller
or Buyer of any of their respective obligations under this Agreement.
ARTICLE 12
FORCE MAJEURE AND LIMITATION OF LIABILITY
12.1 Force Majeure. If either Party is rendered unable by Force
Majeure to carry out, in whole or part, its obligations under this Agreement
and such Party gives notice and full details of the event to the other Party
as soon as practicable after the occurrence of the event, then during the
pendency of such Force Majeure but for no longer period, the obligations of
the Party affected by the event (other than the obligation to make payments
then due or becoming due with respect to performance prior to the event) shall
be excused to the extent provided for herein. The Party affected by the Force
Majeure shall remedy the Force Majeure with all reasonable dispatch.
12.2 Limitation of Remedies, Liability and Damages. THE PARTIES
CONFIRM THAT THE EXPRESS REMEDIES AND MEASURES OF DAMAGES PROVIDED IN THIS
AGREEMENT SATISFY THE ESSENTIAL PURPOSES HEREOF. FOR BREACH OF ANY PROVISION
FOR WHICH AN EXPRESS REMEDY OR MEASURE OF DAMAGES IS HEREIN PROVIDED, SUCH
EXPRESS REMEDY OR MEASURE OF DAMAGES SHALL BE THE SOLE AND EXCLUSIVE REMEDY,
THE OBLIGOR'S LIABILITY SHALL BE LIMITED AS SET FORTH IN SUCH PROVISION AND
ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN EQUITY ARE WAIVED. IF NO REMEDY OR
MEASURE OF DAMAGES IS EXPRESSLY HEREIN PROVIDED, THE OBLIGOR'S LIABILITY SHALL
BE LIMITED TO DIRECT ACTUAL DAMAGES ONLY, SUCH DIRECT ACTUAL DAMAGES SHALL BE
THE SOLE AND EXCLUSIVE REMEDY AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN
EQUITY ARE WAIVED. UNLESS EXPRESSLY PROVIDED IN THIS AGREEMENT, NEITHER PARTY
SHALL BE LIABLE FOR CONSEQUENTIAL, INCIDENTAL, SPECIAL, PUNITIVE, EXEMPLARY OR
INDIRECT DAMAGES, LOST PROFITS OR OTHER BUSINESS INTERRUPTION DAMAGES, BY
STATUTE, IN TORT OR CONTRACT, UNDER ANY INDEMNITY PROVISION OR OTHERWISE. IT
IS THE INTENT OF THE PARTIES THAT THE LIMITATIONS HEREIN IMPOSED ON REMEDIES
AND THE MEASURE OF DAMAGES BE WITHOUT REGARD TO THE CAUSE OR CAUSES RELATED
THERETO, INCLUDING, WITHOUT LIMITATION, THE NEGLIGENCE OF ANY PARTY, WHETHER
SUCH NEGLIGENCE BE SOLE, JOINT OR CONCURRENT, OR ACTIVE OR PASSIVE. TO THE
EXTENT ANY DAMAGES REQUIRED TO BE PAID HEREUNDER ARE LIQUIDATED, THE PARTIES
ACKNOWLEDGE THAT THE DAMAGES ARE DIFFICULT OR IMPOSSIBLE TO DETERMINE,
OTHERWISE OBTAINING AN ADEQUATE REMEDY IS INCONVENIENT AND THE LIQUIDATED
DAMAGES CONSTITUTE A REASONABLE APPROXIMATION OF THE HARM OR LOSS.
12.3 Duty to Mitigate. Each Party agrees that it has a duty to
mitigate damages and covenants that it will use commercially reasonable
efforts to minimize any damages it may incur as a result of the other Party's
performance or non-performance of this Agreement.
12.4 Disclaimer of Warranties. EXCEPT AS EXPRESSLY SET FORTH HEREIN,
SELLER EXPRESSLY NEGATES ANY OTHER REPRESENTATION OR WARRANTY, WRITTEN OR
ORAL, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY REPRESENTATION OR
WARRANTY WITH RESPECT TO CONFORMITY TO MODELS OR SAMPLES, MERCHANTABILITY, OR
FITNESS FOR ANY PARTICULAR PURPOSE.
ARTICLE 13
TAXES; TRANSITION COSTS
13.1 Applicable Taxes. Seller shall be responsible for all existing
and any new sale, use, excise, ad valorem, and any other similar taxes,
imposed or levied by any federal, state or local governmental agency on the
energy generated, sold and delivered hereunder up to the delivery of such
energy to the Delivery Point. Buyer shall be responsible for all existing and
any new sale, use, excise, ad valorem, and any other similar taxes, imposed or
levied by any federal, state or local governmental agency on the energy sold
and delivered hereunder from and after the delivery of such energy to the
Delivery Point. Each Party shall indemnify, release, defend and hold harmless
the other Party from and against any and all liability for taxes imposed or
assessed by any taxing authority with respect to the energy sold, delivered
and received hereunder that are the responsibility of such Party pursuant to
this Section 13.1.
ARTICLE 14
NOTICES
14.1 Notices. All notices, requests, statements or payments shall be
made as specified in Exhibit B hereto. 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 Work 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 Work Day). Notice by overnight mail or
courier shall be deemed to have been received two (2) Work Days after it is
sent. A Party may change its address by providing notice of same in
accordance herewith.
ARTICLE 15
SECURITY
15.1 Security. So long as a Party does not suffer a Material Adverse
Change, it is not obligated to furnish the other Party a guaranty of its
performance hereunder. If, however, a Party suffers a Material Adverse Change
and is unable to remedy such condition within thirty (30) days after the onset
of the condition, then, in addition to any other remedies it may have, the
other Party may require the Party suffering Material Adverse Change to provide
additional credit support, such as a letter of credit, corporate guarantee or
such other collateral mutually agreeable to both Parties.
ARTICLE 16
MISCELLANEOUS
16.1 Entirety. This Agreement and the Exhibits hereto constitute the
entire agreement between the Parties. There are no prior or contemporaneous
agreements or representations affecting the same subject matter other than
those herein expressed. Except for any matters which, in accordance with the
express provisions of this Agreement, may be resolved by verbal agreement
between the Parties, no amendment, modification or change herein shall be
enforceable unless reduced to writing and executed by both Parties.
16.2 Governing Law. THIS AGREEMENT AND THE RIGHTS AND DUTIES OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED, ENFORCED AND PERFORMED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF MONTANA, WITHOUT GIVING EFFECT TO
PRINCIPLES OF CONFLICTS OF LAWS, EXCEPT TO THE EXTENT SUCH LAWS MAY BE
PREEMPTED BY THE LAWS OF THE UNITED STATES OF AMERICA.
16.3 Non-Waiver. No waiver by any Party hereto of any one or more
defaults by the other Party in the performance of any of the provisions of
this Agreement shall be construed as a waiver of any other default or defaults
whether of a like kind or different nature.
16.4 Severability. Except as otherwise stated herein, any provision or
article declared or rendered unlawful by a court of law or regulatory agency
with jurisdiction over the Parties, or deemed unlawful because of a statutory
change, will not otherwise affect the lawful obligations that arise under this
Agreement.
16.5 Headings; Exhibits. The headings used for the sections and
articles herein are for convenience and reference purposes only and shall in
no way affect the meaning or interpretation of the provisions of this
Agreement. Any and all Exhibits referred to in this Agreement are, by such
reference, incorporated herein and made a part hereof for all purposes.
16.6 Winding Up Arrangements. All indemnity and audit rights shall
survive the termination of this Agreement. All obligations provided in this
Agreement shall remain in effect following the expiration or termination of
this Agreement to the extent necessary to give full force and effect to the
rights and obligations undertaken by the Parties herein.
16.7 No Third Party Beneficiaries. Nothing in this Agreement shall
provide any benefit to any third party or entitle any third party to any
claim, cause of action, remedy or right of any kind, it being the intent of
the Parties that this Agreement shall not be construed as a third party
beneficiary contract.
16.8 Counterparts. This Agreement may be executed in several
counterparts, each of which is an original and all of which constitute one and
the same instrument.
16.9 Arbitration. ANY DISPUTE OR NEED OF INTERPRETATION ARISING OUT OF
THIS AGREEMENT PERTAINING TO THE CALCULATION OF A TERMINATION PAYMENT OR A
PAYMENT REQUIRED PURSUANT TO ARTICLE 4 SHALL BE SUBMITTED TO BINDING
ARBITRATION BY ONE ARBITRATOR WHO HAS NOT PREVIOUSLY BEEN EMPLOYED BY EITHER
PARTY, AND DOES NOT HAVE A DIRECT OR INDIRECT INTEREST IN EITHER PARTY OR THE
SUBJECT MATTER OF THE ARBITRATION. SUCH ARBITRATOR SHALL EITHER BE AS
MUTUALLY AGREED BY THE PARTIES WITHIN THIRTY (30) DAYS AFTER WRITTEN NOTICE
FROM EITHER PARTY REQUESTING ARBITRATION, OR FAILING AGREEMENT, SHALL BE
SELECTED UNDER THE EXPEDITED RULES OF THE AMERICAN ARBITRATION ASSOCIATION
(THE "AAA"). SUCH ARBITRATION SHALL BE HELD IN ALTERNATING LOCATIONS OF THE
HOME OFFICES OF SELLER AND BUYER, COMMENCING WITH BUYER'S OFFICE. THE RULES
OF THE AAA SHALL APPLY TO THE EXTENT NOT INCONSISTENT WITH THE RULES HEREIN
SPECIFIED. EITHER PARTY MAY INITIATE ARBITRATION BY WRITTEN NOTICE TO THE
OTHER PARTY AND THE ARBITRATION SHALL BE CONDUCTED ACCORDING TO THE FOLLOWING:
(a) NOT LATER THAN SEVEN (7) DAYS PRIOR TO THE HEARING DATE SET BY THE
ARBITRATOR EACH PARTY SHALL SUBMIT A BRIEF WITH A SINGLE PROPOSAL FOR
SETTLEMENT, (b) THE HEARING SHALL BE CONDUCTED ON A CONFIDENTIAL BASIS WITHOUT
CONTINUANCE OR ADJOURNMENT, (c) THE ARBITRATOR SHALL BE LIMITED TO SELECTING
ONLY ONE OF THE TWO PROPOSALS SUBMITTED BY THE PARTIES, (d) EACH PARTY SHALL
DIVIDE EQUALLY THE COST OF THE ARBITRATOR AND THE HEARING AND EACH PARTY SHALL
BE RESPONSIBLE FOR ITS OWN EXPENSES AND THOSE OF ITS COUNSEL AND
REPRESENTATIVES AND (e) EVIDENCE CONCERNING THE FINANCIAL POSITION OR
ORGANIZATIONAL MAKE-UP OF THE PARTIES, ANY OFFER MADE OR THE DETAILS OF ANY
NEGOTIATION PRIOR TO ARBITRATION AND THE COST TO THE PARTIES OF THEIR
REPRESENTATIVES AND COUNSEL SHALL NOT BE PERMISSIBLE. WITH RESPECT TO ALL
OTHER DISPUTES, THE PARTIES SHALL BE ENTITLED TO AVAIL THEMSELVES OF ALL
REMEDIES AVAILABLE AT LAW OR IN EQUITY.
16.10 Acknowledgment of Arbitration. EACH PARTY UNDERSTANDS THAT THIS
AGREEMENT CONTAINS AN AGREEMENT TO ARBITRATE WITH RESPECT TO ANY DISPUTE OR
NEED OF INTERPRETATION PERTAINING TO THE CALCULATION OF A TERMINATION PAYMENT
OR A PAYMENT REQUIRED PURSUANT TO ARTICLE 4 OF THIS AGREEMENT. AFTER SIGNING
THIS AGREEMENT, EACH PARTY UNDERSTANDS THAT IT WILL NOT BE ABLE TO BRING A
LAWSUIT CONCERNING ANY DISPUTE THAT MAY ARISE WHICH IS COVERED BY THE
ARBITRATION PROVISION. INSTEAD, EACH PARTY AGREES TO SUBMIT ANY SUCH DISPUTE
TO AN IMPARTIAL ARBITRATOR.
IN WITNESS WHEREOF, the Parties, by their respective duly authorized
representatives, have executed this Agreement effective as of the Effective
Date. This Agreement shall not become effective as to either Party unless and
until executed by both Parties.
By:
Name:
Title:
The Montana Power Company
By:
Name:
Title:
EXHIBIT A
to the
Wholesale Transition Service Agreement
ENERGY CHARGE
Seller will be paid a weighted monthly on-peak and off-peak Dow ▇▇▇▇▇
Mid Columbia index (as defined below, the "Index") price (computed as
described below) as long as the cumulative weighted average Index price does
not exceed 22.25 ▇▇▇▇▇ per kWh. The cumulative weighted average Index price
will become a rolling twelve (12) month weighted average Index price starting
in the thirteenth (13th) month after the first month of the Delivery Term. If
the weighted monthly Index price is less than 20.00 ▇▇▇▇▇ per kWh, then the
weighted monthly Index price will be set at 20.00 ▇▇▇▇▇ per kWh. If the
cumulative weighted average Index price or the twelve (12) month weighted
average Index price exceeds 22.25 ▇▇▇▇▇ per kWh, then the monthly Index price
will be set at an amount that makes the cumulative weighted average Index
price or the twelve (12) month weighted average Index price index equal to
22.25 ▇▇▇▇▇ per kWh. The weighted monthly Index price index will be computed
as the Index price weighted by the amount of energy actually delivered for
each month by Seller. See the examples included in this Exhibit for an
illustration of the weighted monthly Index price calculation (EXAMPLE 1 -
CALCULATION OF MONTHLY WEIGHTED INDEX PRICE) and an illustration of the how
the price paid will be computed using the cumulative weighted average Index
price and the twelve month rolling average Index price (EXAMPLE 2 - PRICE PAID
COMPUTATION).
For purposes of this Agreement, "Index" means the prices in the Dow
▇▇▇▇▇ Mid-Columbia Electricity Firm Index reported by Dow ▇▇▇▇▇ to Dow ▇▇▇▇▇
Telerate subscribers for on-peak hours and off-peak hours for each day of the
relevant billing month. If a price for any on-peak hour is not reported in
the Index, then the price for such unreported on-peak hour period shall be
determined by calculating the average of the Index prices last reported for
the on-peak hours period immediately preceding and immediately succeeding such
unreported on-peak hour period. If a price for any off-peak hour period is
not reported in the Index, then the price of such unreported off-peak hour
period shall be determined by calculating the average of the Index prices last
reported for the off-peak hours immediately preceding and immediately
succeeding such unreported off-peak hour period. "On-peak hours" are the
hours between 6:00 a.m. and 10:00 p.m. Pacific prevailing time, Monday through
Saturday, exclusive of holidays recognized by the North American Electric
Reliability Council or its successor. Off-peak hours are hours that are not
on-peak hours provided however, the total amount of energy actually sold by
Seller and purchased by Buyer hereunder shall not be included in the
calculation of the on-peak and off-peak Dow ▇▇▇▇▇ Mid-Columbia Index reported
by Dow ▇▇▇▇▇.
EXHIBIT A
Example 1
EXAMPLE 1 - CALCULATION OF MONTHLY WEIGHTED INDEX PRICE
Monthly
$ per mWh Weighted
Dow ▇▇▇▇▇ Mid-C Price times Average
Month Day Period $ per mWh Hours mWh Delivered mWh Delivered Price
January 1 Firm on-peak 21.6 16 3,200 $69,120
1 Firm off-peak 20.0 8 1,600 $32,000
January 2 Firm on-peak 23.5 16 3,168 $74,448
2 Firm off-peak 19.0 8 1,640 $31,160
. . . . . . .
. . . . . . .
. . . . . . .
January 31 Firm on-peak 18.6 16 3,168 $58,925
31 Firm off-peak 18.0 8 1,640 $29,520
January Total 148,800 $3,124,800 21.0
EXHIBIT A
Example 2
Example 2 - Of Price Paid Computation
Assuming a January 1, 1999 Closing
Example
Index Price Sum of
See Note Sum of Months Index Index Last 11 months
$/MWh gWh gWh in Sums Price*gWh Price*gWh Payments (K$)
January 1999 21.0 148.65 149 1 3,122 3,122 0
February 1999 26.0 134.27 283 2 3,491 6,613 3,122
March 1999 15.0 148.65 432 3 2,230 8,842 6,295
April 1999 20.0 143.86 575 4 2,877 11,719 9,268
May 1999 26.0 74.33 650 5 1,932 13,652 12,145
June 1999 27.0 71.93 722 6 1,942 15,594 14,078
July 1999 21.0 148.65 870 7 3,122 18,716 16,020
August 1999 26.0 148.65 1,019 8 3,865 22,581 19,141
September 1999 22.0 143.86 1,163 9 3,165 25,745 22,672
October 1999 21.0 148.65 1,311 10 3,122 28,867 25,837
November 1999 22.0 143.86 1,455 11 3,165 32,032 28,959
December 1999 25.0 148.65 1,604 12 3,716 35,748 32,124
January 2000 27.0 148.65 1,604 12 4,014 36,640 32,567
February 2000 21.0 134.27 1,604 12 2,820 35,969 32,516
March 2000 26.0 148.65 1,604 12 3,865 37,604 32,362
Note
The Index Price will be developed using the methodology shown in EXAMPLE - CALCULATION OF MONTHLY
WEIGHTED AVERAGE PRICE. The values shown do not represent actual prices.
EXHIBIT A (continued)
Example 2
Example 2 - Of Price Paid Computation
Assuming a January 1, 1999 Closing
Annual Sum of Max. Price paid Sum of Annual
Price Cap Payments (K$) Price Paid compared to Payments Payments weighted
$/MWh Price Cap*gWh $/mWh Index Price? (K$) (K$) $/mWh
January 1999 22.25 3,307 21.00 equal to 3,122 3,122 21.00
February 1999 22.25 6,295 23.63 less than 3,173 6,295 22.25
March 1999 22.25 9,602 20.00 greater than 2,973 9,268 21.48
April 1999 22.25 12,803 20.00 equal to 2,877 12,145 21.11
May 1999 22.25 14,457 26.00 equal to 1,932 14,078 21.67
June 1999 22.25 16,057 27.00 equal to 1,942 16,020 22.20
July 1999 22.25 19,365 21.00 equal to 3,122 19,141 21.99
August 1999 22.25 22,672 23.75 less than 3,531 22,672 22.25
September 1999 22.25 25,873 22.00 equal to 3,165 25,837 22.22
October 1999 22.25 29,181 21.00 equal to 3,122 28,959 22.08
November 1999 22.25 32,381 22.00 equal to 3,165 32,124 22.07
December 1999 22.25 35,689 23.98 less than 3,565 35,689 22.25
January 2000 22.25 35,689 21.00 less than 3,122 35,689 22.25
February 2000 22.25 35,689 21.00 equal to 2,820 35,335 22.03
March 2000 22.25 35,689 22.38 less than 3,327 35,689 22.25
Note
The Index Price will be developed using the methodology shown in EXAMPLE - CALCULATION OF MONTHLY
WEIGHTED AVERAGE PRICE. The values shown do not represent actual prices.
EXHIBIT B
to the
Wholesale Transition Service Agreement
NOTICES
NOTICES AND PAYMENT
Buyer:
NOTICES & CORRESPONDENCE:
The Montana Power Company
▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn.: General Counsel
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
PAYMENTS:
__________________________
for The Montana Power Company
ABA Routing # ▇▇▇▇▇▇▇▇▇
Account # 156210000816
[or address if wire not required
INVOICES:
The Montana Power Company
▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn.: Resource Acquisition Director
SELLER:
NOTICES, CORRESPONDENCE, & INVOICES: PAYMENTS:
Attn:
Facsimile No.: (____)
EXHIBIT C
to the
Wholesale Transition Service Agreement
PROPORTIONAL ALLOCATION FACTOR
Allocation Factor (%)
Colstrip Units 1 and 2 31.16
Colstrip ▇▇▇▇ ▇ Fixed Delivery Requirement
Colstrip Unit 4 0.00
▇▇▇▇▇▇▇ 15.05
Hydro + Basin + Exchanges 44.41
▇▇▇▇
▇▇▇▇▇▇▇▇ Falls
Milltown
Mystic
Hebgen
Madison
▇▇▇▇▇▇
▇▇▇▇▇▇
Black Eagle
Rainbow
Cochrane
▇▇▇▇
▇▇▇▇▇▇
Basin
BPA Exchange
Idaho Exchange
QF Resources 9.38
BGI
▇▇▇▇▇▇▇▇▇▇
Montana One
Small QF (12)
Total 100.00
The allocation factors may change if the Generating Asset sale results in
multiple Closing Dates or in a different mix of resources available to serve
the remaining customer load.
EXHIBIT D
to the
Wholesale Transition Service Agreement
NON-BINDING ESTIMATE OF REMAINING CUSTOMER LOAD
Page 1 of 2
Energy Load (gWh) Peak Load (Mw) Load Factor
Remaining Remaining Remaining
Residual CS3 & Other Customer Residual CS3 & Other Customer Customer
Load Deliveries Load Load Deliveries Load Load
1998 Aug 667 0 667 1175 0 1175
Sep 608 0 608 1000 0 1000
Oct 556 0 556 987 0 987
Nov 620 0 620 1169 0 1169
Dec 651 0 651 1162 0 1162
Annual 3102 0 3102 1175 0 1175 72%
1999 Jan 623 149 475 1167 200 967
Feb 543 134 408 1148 200 948
Mar 501 149 353 851 200 651
Apr 419 144 275 774 200 574
May 434 74 360 703 100 603
Jun 433 72 361 791 100 691
Jul 419 149 270 775 200 575
Aug 406 149 257 753 200 553
Sep 361 144 217 614 200 414
Oct 372 149 223 690 200 490
Nov 425 144 281 851 200 651
Dec 456 149 307 854 200 654
Annual 5391 1604 3787 1167 200 967
45%
2000 Jan 426 149 277 849 200 649
Feb 368 134 234 842 200 642
Mar 381 149 233 662 200 462
Apr 311 144 167 574 200 374
May 320 74 246 502 100 402
Jun 320 72 248 569 100 469
Jul 292 149 143 542 200 342
Aug 279 149 130 522 200 322
Sep 248 144 104 415 200 215
Oct 254 149 106 472 200 272
Nov 293 144 149 593 200 393
Dec 312 149 164 592 200 392
Annual 3805 1604 2201 849 200 649 39%
EXHIBIT D
to the
Wholesale Transition Service Agreement
NON-BINDING ESTIMATE OF REMAINING CUSTOMER LOAD
Page 2 of 2
Energy Load (gWh) Peak Load (mW) Load Factor
Remaining Remaining Remaining
Residual CS3 & Other Customer Residual CS3 & Other Customer Customer
Load Deliveries Load Load Deliveries Load Load
2001 Jan 326 0 326 659 0 659
Feb 278 0 278 645 0 645
Mar 291 0 291 500 0 500
Apr 238 0 238 430 0 430
May 245 0 245 379 0 379
Jun 245 0 245 436 0 436
Jul 268 0 268 497 0 497
Aug 256 0 256 478 0 478
Sep 228 0 228 379 0 379
Oct 233 0 233 433 0 433
Nov 269 0 269 546 0 546
Dec 287 0 287 545 0 545
Annual 3164 0 3164 659 0 659 55%
2002 Jan 298 0 298 605 0 605
Feb 254 0 254 593 0 593
Mar 266 0 266 458 0 458
Apr 216 0 216 391 0 391
May 216 0 216 328 0 328
Jun 204 0 204 362 0 362
Jul 0 0 0 0 0 0
Annual 1454 0 1454 605 0 60 55%
Note: This example assumes that Colstrip 3 deliveries begin in January 1999 and follow
monthly amounts as shown. This Colstrip 3 beginning date and/or monthly amounts may
vary.
MPC NON COLSTRIP 3 26