Exhibit 10.17.2
FIRST AMENDMENT TO AGREEMENT
FOR PURCHASE AND SALE OF ELECTRIC POWER
This FIRST AMENDMENT, dated as of June 11, 1991 ("Amendment") to the
Agreement of Purchase and Sale of Electric Power, dated October 28, 1986,
("Agreement") between O'BRIEN ENERGY SYSTEMS, INC. ("Seller") and JERSEY
CENTRAL POWER & LIGHT COMPANY ("JCP&L").
WHEREAS, the Agreement provides for the purchase by JCP&L of the
capacity and energy from a project being developed by SELLER at the DuPont
(▇▇▇▇▇▇) New Jersey plant site; and
WHEREAS, the Agreement was assigned to O'Brien (▇▇▇▇▇▇) Cogeneration,
In by SELLER on December 1, 1988 which assignment was consented to by JCP&L
on December 1, 1988; and
WHEREAS, the Parties now desire to ratify and amend the Agreement in
certain respects and make certain modifications thereto;
NOW THEREFORE, in consideration of the mutual covenants contained
herein, the Parties hereby agree as follows:
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1. Definition of "Company Availability Factor": A new Article 3.7.5
is added to read as follows: "Company Availability Factor" means the
weighted average of the Equivalent Availability of all the Company's non-
nuclear electric generating facilities.
2. Definition of "Contract Capacity": The definition of "Contract
Capacity" in Article 3.8 of the Agreement is amended to read as follows:
"When Operating Status Option I is selected, "Contract Capacity" means the
maximum summer peak season (92 F ambient air temperature or 78 F incoming
condensing water temperature) producing capability of the Generating
Facility, as specified in Paragraph 5A of Preface A to this Agreement, that
Seller shall demonstrate according to PJM guidelines in MWH/Hr. When
Operating Status Option II is selected, "Contract Capacity" means the
maximum summer peak season (92 F ambient air temperature or 78 F incoming
condensing water temperature) producing capability of the Generating
Facility consisting of three components: the "Base Contract Capacity"
which shall equal 92 megawatts; the "Supplemental Schedule A Capacity"
which shall represent capacity in excess of the Base Contract Capacity as
determined by the Seller in accordance with Article 6.18, and the
"Supplemental Schedule B Capacity" which shall represent capacity in excess
of the sum of the Base Contract Capacity and Supplemental Schedule A
Capacity.
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Supplemental Schedule B Capacity will be established by the Seller on a
daily basis.
3. Definition of "Date of Initial Commercial Operation": The
definition of "Date of Initial Commercial Operation" in Article 3.9 is
hereby amended to read as follows: "Date of Initial Commercial Operation"
means the date specified by the Seller and agreed to by JCP&L after the
Seller has completed start-up and testing including the acceptance test of
the Generating Facility by the engineering/construction firm, which date
shall not precede the Initial Delivery Date. The Seller shall notify JCP&L
of the proposed Date of Initial Commercial Operation upon not less than 30
days prior written notice. JCP&L's approval of such date shall not
unreasonably be withheld.
4. Definition of "Dispatchable Capacity": A new Article 3.9.5 is
added to read as follows: "Dispatchable Capacity" means the total hourly
output of the Supplemental Schedule A Capacity and Supplemental Schedule B
Capacity.
5. Definition of "Equivalent Availability" and "Facility
Availability Factor": New Articles 3.10.1 and 3.10.2 are added to read as
follows: "Equivalent Availability" means the percentage of hours that a
generating unit is available to operate taking into account any partial
outage time as determined in accordance with
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the methodology set forth in Appendix III. "Facility Availability Factor"
means the Equivalent Availability of the Facility.
6. Definition of "Forced Outage": A new Article 3.10.5 is added to
read as follows: "Forced Outage" means the unscheduled removal of the
Generating Facility or a portion thereof from service or the inability of
the Generating Facility to operate in accordance with the capacity-
temperature tables included as Appendix II.
7. Definition of "GPU System": A new Article 3.11.5 is added to
read as follows: "GPU System" means the integrated electric generating
system of General Public Utilities Corporation, a Pennsylvania corporation,
which is the parent of JCP&L.
8. "Maintenance Outage": A new Article 3.17.5 is added to read as
follows: "Maintenance Outage" means the scheduled removal of the
Generating Facility from service in order to perform necessary repairs on
specific components of the Generating Facility where removal of the
Generating Facility can be postponed to the weekend past the immediately
succeeding weekend. A Maintenance Outage must be scheduled with PJM
through JCP&L and be accepted by JCP&L and PJM.
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9. Definition of "Maximum Hourly Production". The definition of
"Maximum Hourly Production" in Article 3.19 is hereby amended to read as
follows: When Operating Status Option I is selected, "Maximum Hourly
Production" shall equal 92 megawatt hours per hour. When Operating Status
Option II is selected. "Maximum Hourly Production" shall equal a base
component of 92 megawatt hours per hour and a dispatchable component [in
megawatt hours per hour] consisting of the total of Supplemental Schedule A
Capacity and Supplemental; Schedule B Capacity. Maximum Hourly Production
shall not exceed, in any event, 140 MWH per hour.
10. Definition of "Net Electric Energy". The definition of "Net
Electric Energy" in Article 3.20 is hereby amended to read as follows:
"Net Electric Energy" or "Electricity" means the gross amount of
electricity in kilowatt hours (kWh) generated by Seller's Generating
Facility less kWh consumed by the Host and Seller's Generating Facility and
less transformation and transmission losses, if any, to the point of
Interconnection.
11. Definitions for "On-Peak Hours" and "Off-Peak Hours":
(a) A new Article 3.20.5 is added to read as follows: "Off-Peak
Hours" means all hours other than On-Peak Hours.
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(b) A new Article 3.21.5 is added to read as follows: "On-Peak
Hours" means all hours from 8 a.m. to 8 p.m., prevailing time, Monday
through Friday, 52 weeks per year other than New Years Day, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, and Christmas.
12. Definition of "On-Peak Period". The definition of "On-Peak
Period" in Article 3.22 is hereby amended to read as follows: "On-Peak
Period" means all hours from 8 a.m. to 8 p.m., prevailing time, Monday
through Friday, during the months of December through February and June
through September, other than New Years Day, Independence Day, Labor Day
and Christmas.
13. Definition of "PJM" or "PJM System". A new Article 3.26.3 is
added to read as follows:
"PJM" or "PJM System" means the Pennsylvania/New Jersey/Maryland
Interconnected Power Pool cooperatively operated under the Pennsylvania/New
Jersey/Maryland Interconnection Agreement dated as of September 26, 1956 as
amended or supplemented from time to time.
14. Definition of "Planned Outage" and Amendments to Articles 3.32
and 3.36. A New Article 3.26.5 is added to read as follows:
"Planned Outage" means the scheduled removal of the Generating
Facility from service for inspection or repair. A
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Planned Outage must be scheduled by the Seller 2 months in advance and be
approved by JCP&L and PJM.
Articles 3.22 and 3.36 are deleted in their entirety.
15. Definition of "Scheduled Dispatch Period", "Shut Down Period" and
"Start-Up Period". New Articles 3.31.5, 3.32.5, and 3.35.5 are hereby
added to read as follows:
"Scheduled Dispatch Period" means the time duration of a request for
delivery of output in excess of the Base Contract Capacity (92 MW)
beginning and ending at the time specified by JCP&L. Such periods are
exclusive of Start-Up and Shut-Down Periods and shall require thirty
minutes notice in advance of commencement of a Start-Up Period.
"Shut-Down Period" means the period, as determined by test, necessary
to return the Generating Facility to Base Contract Capacity in accordance
with good engineering practice and manufacturer's recommendations
immediately following a Scheduled Dispatch Period.
"Start-Up Period" means the period, as determined by test, necessary
to ramp up the dispatchable portion of the Generating Facility and reach
steady state operation in a
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manner consistent with good engineering practice and manufacturer's
recommendations immediately preceding a Scheduled Dispatch Period.
16. Amendment to Article 4.1. Article 4.1(B) is hereby amended to
read as follows: Notwithstanding the preceding paragraph and subject to
the "force majeure" provisions stated in Article 12 hereof, JCP&L may
terminate this Agreement by providing Seller 45 days written notice if the
Date of Initial Commercial Operation has not occurred prior to February 28,
1992."
17. Amendment to Article 5.3 (Interconnection Facility and Protective
Apparatus Design and Construction): The following language is added to
Article 5.3 following the second full sentence thereof: "Seller shall also
reimburse JCP&L for all reasonable costs associated with the routine
maintenance of interconnection equipment on JCP&L's side of the Point of
Interconnection. Upon thirty days notice by Seller, prior to the planned
Date of Initial Commercial Operation and on each subsequent anniversary of
such Date of Initial Commercial Operation, JCP&L shall provide an estimate
(for planning purposes only) and a description of the work to be performed
in the succeeding year to conduct routine maintenance of interconnection
equipment on JCP&L's side of the Point of Interconnection."
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18. Amendment to Article 5.6 (Interconnection Facility and Protective
Apparatus Design and Construction): Article 5.6 is hereby added and reads
as follows:
"5.6: Seller shall indemnify, hold harmless and agrees to defend
JCP&L from and against any and all liability, loss, cost and expense,
associated with any and all Federal, State and/or local income tax
liability, arising out of or connected with the transfer from the Seller to
JCP&L of the Seller's Interconnection Facilities, Protective Apparatus,
Special Facilities and/or any and all associated and/or related structures,
equipment, facilities and devices in performance of, pursuant to and/or in
connection with this Agreement. JCP&L and Seller intend that such transfer
shall be a Qualifying Facility transfer pursuant to IRS Advance Notice 88-
129. Accordingly, Seller shall obtain, at its own expense, the report of
an independent engineer regarding electricity sales by JCP&L to the Seller
as provided by that Advance Notice."
19. Amendment to Article 6.1. The last sentence of Article 6.1 is
hereby deleted.
20. Amendment to Article 6.2 (Conditions Requiring
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Curtailment or Interruption of Deliveries of Electricity). The last three
lines of Article 6.2(a) are hereby amended to read as follows: ". . . .
provided further that any such PJM requirement to reduce or interrupt such
purchases does not exceed 600 hours in any calendar year, with the further
provision that no more than 400 of the 600 hours shall occur during On-Peak
Periods."
21. Amendment to Article 6.4 (Maintenance Outages). Article 6.4 is
hereby amended to read as follows: "Seller shall furnish JCP&L with an
annual forecast not later than December 15 of each year setting forth the
expected dates and anticipated duration of each Planned Outage for the
succeeding 36 months. Seller shall update, on a monthly basis, the outage
request schedule by the 15th day of each month. Such updates shall be
transmitted to JCP&L by telephone and promptly confirmed in writing. JCP&L
shall forward its response to an outage request not later than 10 days
following JCP&L's receipt of such outage request. Seller shall notify
JCP&L's dispatcher approximately 15 minutes prior to the approved outage
period of its intent to remove the Generating Facility from service.
Seller shall also notify JCP&L concerning the cause and duration of any
Forced Outage."
22. Amendments to Article 6.5 and 6.6.
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(a) Article 6.5 is deleted in its entirety.
(b) Article 6.6 is hereby amended to read as follows: "Seller
shall not schedule or conduct Planned Outages during On-Peak Periods."
23. Amendments to Article 6.7. Article 6.7 is hereby amended to read
as follows:
(a) "Seller shall keep and maintain accurate and complete
records for the Generating Facility containing such information regarding
operation and maintenance of the Generating Facility and all associated
equipment as is appropriate and consistent with industry practice and as
may be necessary for JCP&L to comply with its applicable requirements.
JCP&L will advise the Seller of such requirements as in effect from time to
time. Seller shall make such records available to JCP&L for inspection and
copying from time to time as JCP&L may reasonably request."
(b) "Seller shall maintain and classify outage statistics for
the Generating Facility in accordance with the GPU System outage
classification procedures as the same may be in effect from time to time.
Seller shall supply such statistics to
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JCP&L upon request. In addition, Seller shall maintain or cause to be
maintained such other records relating to the Generating Facility as may be
reasonably required by the GPU System of cogeneration projects, and, upon
written notice from JCP&L, will maintain or cause to be maintained such
other records as the BPU, Federal Energy Regulatory Commission (FERC) or
other regulatory body having jurisdiction, may from time to time require."
24. Amendment to Article 6.9. Article 6.9 is hereby amended to read
as follows: "Seller shall furnish to JCP&L on each January 1 following the
Date of Initial Commercial Operation satisfactory evidence that during the
previous calendar year, Seller has performed or caused to be performed all
manufacturer-recommended maintenance and testing of the Generating Facility
and the Protective Apparatus and interconnection equipment, including
circuit breakers, relays and auxiliary equipment. Seller shall provide
JCP&L with at least 30 days prior written notice of its intent to test such
equipment and JCP&L personnel or their representatives may, if JCP&L
desires, observe such testing."
25. Amendment to Article 6.12 (Contract Capacity and Reduction of
Capacity Component of Price). Article 6.12 is hereby amended to read as
follows:
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(a) "When Operating Status Option I is selected, Seller shall,
at JCP&L's request, demonstrates the ability of the Generating Facility to
provide JCP&L Contract Capacity within 30 days after the Date of Initial
Commercial Operation. Thereafter, twice annually Seller shall, once during
On-Peak Period summer months and once during On-Peak Period summer months
and once during On-Peak Period winter months demonstrate the ability of the
Generating Facility to provide Contract capacity for such period of time as
is required by PJM from time to time for all PJM suppliers. Seller's
demonstration of Contract Capacity shall be at Seller's expense and
conducted at a time and pursuant to procedures as may be required by
applicable GPU System rules, regulations and guidelines. If Seller fails
to demonstrate the ability of the Generating Facility to provide at least
90% of the Base Contract Capacity, the Capacity Component of the price to
be paid for Electricity pursuant to Article 9.1(b)(v) thereof shall be
reduced to the following amount until Seller is able to demonstrate the
ability to provide at least 90% of the Base Contract Capacity.
Demonstrated Capacity X 5.97 cents/kWh
Contract Capacity
If Seller does not demonstrate the ability of the Generating Facility
to provide at least 90% of the Base
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Contract Capacity during the applicable On-Peak Period, then a retroactive
reduction of the Capacity Component of the price to be paid for Electricity
pursuant to Article 9.1(b)(v) based upon the above formula will be applied
to the entire applicable On-Peak Period.
However, should Seller's failure to demonstrate the ability of the
Generating Facility to provide Contract Capacity be caused by a "force
majeure" event as defined in Article 12 hereof, the provisions of this
Article 6.12 shall not apply until the "force majeure" has ceased to exist.
Should Seller fail to demonstrate the ability of the Generating
Facility to provide at least 90% of Contract Capacity for any reason other
than "force majeure", Seller shall have the right to schedule subsequent
demonstrations at Seller's expense as soon as possible during The
Adjustment Period at a time mutually agreed upon by the Parties, but not
later than 1 months following the last such demonstration. The Capacity
Component of the price to be paid for Electricity pursuant to Article
9.1(b)(v) shall be immediately readjusted to its original formulation (i.e.
5.97 cents/kWh) following the expiration of The Adjustment Period provided
Seller has successfully demonstrated the ability of the Generating
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Facility to provide at least 90% of Contract Capacity during The Adjustment
Period.
(b) When Operating Status Option II is selected, Seller shall
demonstrate the ability of the Generating Facility to provide JCP&L Base
Contract Capacity within 30 days after the Date of Initial Commercial
Operation. Thereafter, twice annually at JCP&L's request, Seller shall,
once during On-Peak Period summer months and once during On-Peak Period
winter months demonstrate the ability of the Generating Facility to provide
Base Contract Capacity for such period of time as is required by PJM from
time to time for all PJM suppliers. Seller's demonstration of Base
Contract Capacity shall be at Seller's expense and conducted at a time and
pursuant to procedures as may be required by applicable GPU System rules,
regulations and guidelines. JCP&L and Seller agree to use their reasonable
best efforts to cause the capacity demonstration to be scheduled as early
as practicable in each peak period. If Seller fails to demonstrate the
ability of the Generating Facility to provide at least 90% of the Base
Contract Capacity, the Capacity Component of the price to be paid for
Electricity pursuant to Article 9.1(b)(v) thereof shall be reduced to the
following amount until Seller is able to demonstrate the ability to provide
at least 90% of the Base
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Contract Capacity:
Demonstrated Capacity x 5.97 cents/kWh
Base Contract Capacity
If Seller does not demonstrate the ability of the Generating Facility
to provide at least 90% of the Base Contract Capacity during the applicable
On-Peak Period, then a retroactive reduction of the Capacity Component of
the price to be paid for Electricity pursuant to Article 9.1(b)(v) based
upon the above formula will be applied to the entire applicable On-peak
Period.
However, should Seller's failure to demonstrate the ability of the
Generating Facility to provide Contract Capacity be caused by a "force
majeure" event as defined in Article 12 hereof, the provision, of this
Article 6.12 for Base Contract Capacity shall not apply until the "force
majeure" has ceased to exist.
As part of the foregoing capacity test, Seller shall demonstrate the
ability of the Generating Facility to provide JCP&L the Supplemental
Schedule A Capacity. This test shall be conducted pursuant to procedures
as may be required by applicable GPU System rules, regulations and
guidelines. If Seller fails to demonstrate the ability of the Generating
Facility to provide 100% of the sum
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of the Base Contract Capacity and the Supplemental Schedule A Capacity, the
Capacity Component of the price set out in Appendix I hereto for the
Supplemental Schedule A Capacity shall be reduced by an amount calculated
using the following formula until Seller is able to demonstrate the ability
of the Generating Facility to provide 100% of the sum of Supplemental
Schedule A Capacity plus the Base Contract Capacity. (Supplemental
Schedule A Capacity will be based on the capacity which can be demonstrated
according to GPU System rules above 92 MWH/Hr.)
The lesser of:
1.5 x (1- Demonstrated Supplemental Schedule A Capacity) x Applicable
Supplemental
Supplemental Schedule A Capacity Schedule A Capacity
payment
pursuant to Appendix I.
or
100% x Applicable Supplemental
Supplemental Schedule A
Capacity payment pursuant
to Appendix I.
If Seller does not demonstrate the ability of the Generating Facility to
provide at least 100% of the Supplemental Schedule A
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Capacity during the applicable On-Peak Period, then a retroactive reduction
to the Supplemental Schedule A Capacity Component of the price to be paid
for Electricity pursuant to Appendix I based upon the above formula will be
applied to the entire applicable On-Peak Period. If at any time during
each consecutive three (3) year period commencing with the latter of the
Date of Initial Commercial Operation or the Effective Date of this First
Amendment (hereafter referred to as a "Supplemental Schedule A Nomination
Period") Seller fails to demonstrate the ability of the Facility to provide
at least 1/3 of the Supplemental Schedule A capacity during any scheduled
peak period capacity demonstration, and such failure results in a 100%
reduction of Supplemental Schedule A capacity payments for the applicable
on-peak period, then Seller shall pay to JCP&L a penalty equal to 1.25% of
the full Supplemental Schedule A capacity payments to be made to Seller
over the entire Supplemental Schedule A Nomination Period, which penalty
Seller shall pay to JCP&L in six (6) equal monthly payments commencing in
the month following the month such failure occurs.
Should Seller's failure to demonstrate 100% of Supplemental Schedule A
Capacity be for any reason other than "force majeure", Seller shall have
the right to schedule subsequent demonstrations at Seller's expense as soon
as possible at a time mutually agreed upon by JCP&L and Seller, following a
failed demonstration of
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Supplemental Schedule A Capacity.
However, should Seller's failure to demonstrate the ability to provide
Supplemental Schedule A Capacity be caused by JCP&L's inability to accept
delivery of such capacity, the provision of this Section shall not apply.
Demonstrated Capacity will be based on the earliest demonstration
thereafter which JCP&L can accept.
Should Seller's failure to demonstrate the ability to provide
Supplemental Schedule A Capacity be caused by a "force majeure" event, as
defined in Article 12 hereof, there will be no penalty incurred for such
documented "force majeure" period and no Schedule A Capacity payment will
be made during such period.
Seller shall demonstrate 100% of the applicable Supplemental Schedule
B Capacity when requested by JCP&L during scheduled Dispatch Periods. If
the Seller fails to demonstrate 100% of the Supplemental Schedule B
Capacity, the Supplemental Schedule B Capacity payment set out in Appendix
I hereto shall be reduced by an amount calculated using the following
formula until Seller is able to successfully demonstrate such capacity, or
the next succeeding Scheduled Dispatch Period, whichever occurs first. In
the absence of a Supplemental Schedule B Dispatch Period, Supplemental
Schedule B Capacity Payments will be based upon the
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last demonstrated Supplemental Schedule B Capacity until the next Dispatch
Period. Seller may also demonstrate the ability of the Generating Facility
to produce Supplemental Schedule B Capacity by self test in the absence of
a Dispatch Period. Such self test will be for a one hour period. The
payment for the energy delivered to JCP&L during this self test will be the
applicable On-Peak or off-Peak PJM billing rate to GPU minus ten (10%)
percent.
1.5 x (1- Demonstrated Supplemental Schedule B Capacity) x Applicable
Supplemental
Supplemental Schedule A Capacity Schedule B Capacity
payment
pursuant to Appendix I.
For purposes of this test, demonstrated Supplemental Schedule B
Capacity shall be the average output delivered during the Scheduled
Dispatch Period and shall not include sales to the Generating Facility's
steam host, Base Contract Capacity at 100% output and Supplemental Schedule
A Capacity at 100% output.
26. Amendment to Article 6.13 (Electric Sales and Reduction of Energy
Component of Price): Article 6.13 is hereby amended to read as follows:
When Operating Status I is selected:
"(a) Seller shall sell Electricity to JCP&L continuously
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throughout the term of this Agreement and any extensions or renewals hereof
at an annual level which is equal to or greater than 90% of the Theoretical
Output using the Contract Capacity. For the purposes of this Agreement,
the Theoretical Output which could be sold in any calendar year using the
Contract Capacity shall be determined by the following formula:
A = 92,000 x (8760-B-C) where,
A = Theoretical Output expressed in kilowatt hours;
B = Non-generating hours as required by JCP&L due to curtailment or
interruption caused by JCP&L and for which the Seller is not at fault, or a
:force majeure";
C = Planned Outage Hours for a major facility overhaul as furnished to
JCP&L pursuant to Article 6.4.
Annual or yearly periods for determining sales of Electricity to JCP&L
shall be based on a calendar year.
Failure to maintain Electricity sales equal to or greater than 90% of the
Theoretical Output for any calendar year, which shall be the twelve
calendar months beginning on January 1 of each year, shall result in a
reduction in the energy component
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of the price pursuant to Article 9.1(b) to be paid for Electricity in the
following year.
(b) To determine whether there is to be an energy component price
reduction in any year, beginning with January 1 of the second calendar year
of Commercial Operation, the actual annual amount of Electricity sold by
Seller to JCP&L in the most recent year, less sales of Electricity during
the same period in excess of Maximum Hourly Production, the resulting
difference being referred to hereafter as the "Annual Electricity Sold"
shall be compared to the Theoretical Output. If the Annual Electricity
Sold to JCP&L in the most recent year is less than 90% of the Theoretical
Output, then the energy component of the price (Article 9.1(b)) to be paid
for Electricity in the following year shall be calculated in accordance
with the following formula:
E = (Y/A) x P where
E = Energy Component of Price
Y = Annual Electricity Sold, expressed in kilowatt hours
A = Theoretical Output expressed in kilowatt hours
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P = Fixed plus Variable Energy Component Price as specified in Article
9.1(b) and applicable to the contract year.
(c) In all cases, pricing will be determined and effective in
accordance with this Article 6.13 for each 3 month adjustment of the energy
component of the price set forth in Article 9.1(b) beginning with January 1
of the year the reduction will take effect and remain in effect until the
following January 1. When the Seller has in the most recently completed
calendar year achieved in Annual Electricity Sold result of at least 90% of
the Theoretical Output, the Fixed plus Variable Energy Component of the
price in the following year will be returned to 100% of that specified in
Article 9.1[b].
(d) If JCP&L determined there should be an energy component price
reduction, it shall submit a statement to Seller within 30 days after the
end of a calendar year, which shall contain the calculation as performed
pursuant to Article 6.13(b) (referred to hereafter as the "Pricing
Statement"). Seller shall promptly (but in any event, within fifteen (15)
days following receipt) advise JCP&L of any objections to the Pricing
Statement. All such objections shall be settled by the
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Parties as expeditiously as possible.
(e) If JCP&L does not receive written notice from Seller concerning
Seller's objection to a Pricing Statement within fifteen (15) days from the
date of its receipt by Seller, said Pricing Statement shall be binding,
absent manifest error, upon Seller and upon JCP&L.
When Operating Status Option II is selected:
(a) Seller shall provide Base Contract Capacity and dispatchable
energy to JCP&L at a level which results in a Facility Available Factor
based on Base Contract Capacity and Supplemental Schedule A Capacity for
each calendar year (a "Performance Year") at least equal to the Company
Availability Factor for the immediately preceding calendar year.
(b) Subject to paragraphs (h) and (I) below, if for any Performance
Year the Facility Availability Factor is less than the Company Availability
Factor for the immediately preceding calendar year, the Seller shall be
assessed a performance penalty for such Performance Year, equal to the
weighted average of the PJM capacity deficiency payment rate for that year
multiplied by the difference between the Company
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Availability Factor and the Facility Availability Factor multiplied by the
sum of the Base Contract and the Supplemental Schedule A Capacity.
(c) For purposes of calculating the Facility Availability Factor, the
Facility will not be penalized during the relevant Performance Year due to
a "force majeure" event or negligent actions or inactions by JCP&L which
prevent JCP&L from accepting deliveries from the Facility.
(d) Notwithstanding anything contained in this Article VI or this
Agreement to the contrary, Seller shall not be liable for and no
performance penalty payment shall be payable if the Facility Availability
Factor for a Performance Year is at least 85%.
(e) JCP&L shall submit to Seller a performance penalty payment
statement setting forth the amount of any performance penalty payment to be
made by the Seller to JCP&L pursuant to this Article VI within 90 days
after the close of each Performance year.
(f) If JCP&L does not receive written notice from Seller of any
objection to the performance penalty payment statement
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within 15 days from the date of receipt thereof, said performance penalty
payment statement shall be deemed conclusive and binding on the parties
absent manifest error.
(g) Seller shall make any performance penalty payment due to JCP&L in
6 equal monthly payments by applying said monthly payments against amounts
due from the Company for output delivered during the first six months
following the receipt by Seller of the performance penalty payment
statement. If Seller does not deliver sufficient electric energy to JCP&L
in any month to allow the full set-off of the monthly payment as provided
herein, Seller shall pay to JCP&L no later than 10 days following the date
of Seller's receipt of JCP&L's invoice therefor any amount which cannot be
set-off. Any and all amounts due and owing to JCP&L under this Article VI
shall be immediately due and payable by Seller in the event of a
termination of the Agreement.
27. Amendment to Article 6.14 (Electricity in Excess of Maximum
Hourly Production): Article 6.14 is hereby amended to read as follows:
"Subject to the provisions of Article 6.2 hereof, when Operating Status
Option I is selected, JCP&L shall accept additional megawatt hours per hour
of Electricity in excess of the Contract Capacity of 92 megawatt hours per
hour, pursuant to the
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pricing formula in Article 9.1 adjusted as follows:
Electricity -% in excess Price as a Percentage
of 92 MW per hour of Article 9.1[b] Price
up to 1 90%
1 to 2 80%
2 to 3 70%
3 to 4 60%
above 4 50%
28. Amendment to Articles 6.15 and 6.16: Articles 6.15 and 6.16 are
deleted in their entirety.
29. Amendment to Article 6.18 (Operating Options): Articles 6.18 is
hereby amended to read as follows: "Seller must, 6 months prior to every
third year anniversary of the Date of Initial Commercial Operation, elect
to operate its Generating Facility in parallel with JCP&L's electric system
for the next 3 years pursuant to one of the following options.
(a) Operating Status Option I: Seller shall sell to JCP&L the
Base Contract Capacity of 92 MWH/Hr. and associated energy. Seller may
sell any output in excess of the Base Contract Capacity at the rates set
forth in Article 6.14.
(b) Operating Status Option II: Seller shall sell to JCP&L Base
Contract Capacity of 92 MWH/Hr. and associated energy and offer annually
for the following three years
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Supplemental Schedule A Capacity and on a daily basis. Supplemental
Schedule B Capacity. The Seller shall also make any energy above the Base
Contract Capacity fully dispatchable by JCP&L.
(c) The Seller must specify, in writing, the Operating Status Option
it will initially follow at least 4 months prior to the Date of Initial
Commercial Operation, and must specify the amount of Supplemental Schedule
A Capacity, if any, which Seller has selected for the initial Supplemental
Schedule A Nomination Period no later than the Date Initial Commercial
Operation. Thereafter, at least 6 months prior to every third-year
anniversary of the Date of Initial Commercial Operation, Seller must notify
JCP&L in writing concerning the Operating Status Option and the amount of
Supplemental Schedule A Capacity, if any, which Seller has selected for the
succeeding Supplemental Schedule A Nomination Period.
30. Amendment to Article 7.0 (Delivery and Metering): The following
sentence shall be added to the end of Article 7.0: "Seller shall reimburse
JCP&L for the reasonable costs of all meters and equipment used for the
measurement of Electricity, and shall also reimburse JCP&L for costs
involved with the inspection and periodic testing of such meters."
28
31. Amendment to Article 7.2: Article 7.2 is hereby amended to read
as follows: "For purposes of monitoring the generator operation, JCP&L
shall have the right to require, at Seller's expense, the installation of
generation telemetering and control of selected breakers and switching
equipment. Seller will also be responsible for the operating and
maintenance costs associated with the metering and telemetering equipment."
32. Amendments to Articles 8.1, 8.2., 8.3., 8.4(c), 8.5 and 8.6:
(a) Article 8.1 is hereby amended to read as follows: "Seller agrees
to deliver and JCP&L agrees to purchase Net Electric Energy and Contract
Capacity generated by the Generating Facility pursuant to the terms and
conditions of this Agreement. Not later than August 30 of each year,
Seller will provide a schedule of expected monthly generated for the next 3
years. Seller will provide each week by Thursday at 9:30 a.m. or by
Wednesday at 9:30 a.m. if Thursday at 9:30 a.m. or by Wednesday at 9:30
a.m. if Thursday or Friday is a scheduled holiday for JCP&L,. a schedule of
expected hourly output for the coming week. The schedule for each day will
be confirmed on the preceding workday. Seller will promptly inform JCP&L
of any occurrences which will cause a change to
29
the expected hourly output schedule".
(b) Article 8.2 and 8.3 are hereby deleted in their entirety.
(c) Article 8.4(c) is hereby amended to read as follows: "Conditions
on the PJM System are such that generators of all PJM member utility are
required to reduce generation to minimum levels during periods of low load
in accordance with Section 9.00 of the Alert and Emergency Procedures
contained in the PJM Interconnection Operating Instruction OI-B.11 and
pursuant thereto JCP&L has received a request from the PJM interconnection
dispatcher to reduce or interrupt purchases from generation external to
PJM, provided that any such PJM requirement to reduce or interrupt such
purchases shall not exceed 600 hours in any calendar year, and provided
further that no more than 400 of the 600 hours shall be during On-Peak
Periods."
(d) Article 8.5 is hereby added and reads as follows:
8.5 (a) When Operating Status Option II is selected, JCP&L shall have
full dispatching control of the output generated by the Generating Facility
above the Base Contract Capacity subject to paragraphs (b) through (d)
below.
30
(b) The Seller will supply to JCP&L by the tenth calendar day of each
month a cents/kWh energy price for the succeeding month, not to exceed 2
times the Base Contract Capacity Energy Component Price, for output above
the Base Contract Capacity level and also an estimate of the daily
dispatchable capacity (Supplemental Schedule A and Supplemental Schedule B
Capacity) available. JCP&L shall use reasonable efforts to provide Seller
with a monthly operating forecast for the succeeding month by the 20th day
of each month. The monthly operating forecast will contain the hours JCP&L
expects to require dispatch of the Generating Facility and the level of
output at which it expects the Generating Facility to operate for each day
during the next month. Such operating forecast is intended solely for use
by Seller in planning fuel purchases and shall not create an obligation on
JCP&L to dispatch the Generating Facility.
(c) JCP&L will supply a more detailed monthly operating plan on or
about the 30th day of each month. Thereafter, JCP&L will provide a weekly
operating plan to Seller by 3:00 p.m. Friday of each week for
implementation the following Monday. The weekly operating plan as amended
shall be used by Seller to plan maintenance and work schedules. Seller
will provide
31
each day by 9:30 a.m. the level of dispatch capacity (both Supplemental
Schedule A and Supplemental Schedule B Capacity) available for the next
day. Unless otherwise agreed, Seller will be prepared to commence a
dispatchable level operation within thirty (30) minutes of receiving a
Scheduled Dispatch Period request from JCP&L. Shut-Down Periods will
commence immediately upon notification by JCP&L.
(d) The normal dispatchable level of output is expected to be the sum
of the Supplemental Schedule A and Supplemental Schedule B Capacity.
(e) Article 8.6 is hereby added and reads as follows:
"8.6 In recognition of the understanding of the parties hereto that
any payments made pursuant to this Agreement are intended by the parties to
be treated as received in the year in which such payments are due, Seller
acknowledges that the parties intend that JCP&L shall have a deductible
expense, and the Seller shall have taxable income or expense, as the case
may be, with respect to any payments made to the Seller under this
Agreement. Seller shall not take a contrary or inconsistent position with
respect to the foregoing on
32
any federal, state or local tax return, before any taxing authority or in
any related tax proceeding."
33. Amendments to Article 9 (Price): Article 9 is hereby amended to
read as follows:
9.1 (a) The price for all energy 1) delivered prior to the Date
of Initial Commercial Operation and 2) delivered in excess of 92 MWH/Hr.
during Start-Up and Shut-Down Periods when Operating Status Option II has
been selected, thereafter, will be the applicable On or Off-Peak PJM
billing rate to GPU minus ten (10) percent.
(b) The price for Contract Capacity, if Operating Status Option
I is selected, or Base Contract Capacity, if Operating Status Option II is
selected, delivered to JCP&L shall consist of an energy component and a
capacity component.
The energy component shall be as follows:
(i) a fixed energy component equal to 1.362 cents per kWh shall be
paid for the first twelve years of the term hereof following the Date of
Initial Commercial Operation; plus
(ii) a Variable energy component equal to 2.347 cents per
33
kWh which represents 85% of the 1988 hourly average PJM billing rate to GPU
plus 10%.
The energy component of the price for Contract Capacity shall be varied
according to the time of delivery as follows:
(iii) during On-Peak Hours, the sum of the Fixed and Variable
energy component of price shall be multiplied by 127%.
(iv) during Off-Peaks Hours, the sum of the Fixed and Variable energy
component of price shall be multiplied by 85%.
The Fixed energy component of price shall not be paid during years thirteen
through twenty from the Date of Initial Commercial Operation.
The capacity component for Contract Capacity shall be as follows:
(v) 1.21 cents per kWh averaged over all hours. The capacity
component will, however, be paid only for kWh delivered during the On-Peak
Period at the rate of 5.97 cents per kWh.
(vi) There will be no capacity component payment during
34
the Off-Peak Period.
Amendment to Article 9.2 (Index): Article 9.1 is hereby amended to
read as follows: "With respect to the Contract Capacity or Base Contract
Capacity delivered to JCP&L, depending upon the Operating Status Option
which is in effect, the variable portion of the energy component of price
will be adjusted every three months during the term hereof commencing on
January 1, 1990 by a percentage equal to the lower of the percentage change
in the gas or oil average price for the four quarters ending with the
quarter prior to the quarter immediately preceding the current quarter
compared to the value for the calendar year 1988 as published for JCP&L
plants in the DOE/EIA Publication "Cost and Quality of Fuels for Electric
Plants".
Example: (Not based on actual index results)
1988 Variable Price = 2.347
Oil Cost Gas Cost
Calendar Year 1988 = 2.0 Calendar Year 1988 = 2.1
Four Quarters ending 9/1989 = 2.4 Four Quarters ending 9/1989 = 2.3
Percentage Change 20% 10%
The index change which would be used in this example for the January 1,
1990 adjustment is .10 corresponding to the lower percentage change of the
two indices.
The variable energy component of the price for the succeeding three
35
months will be equal to the 1988 variable energy component of the price
(2.347 cents/kwh) multiplied by the sum of one plus the lower percentage
change of the indices.
Variable energy component for succeeding three months =
2.347 * [1 + .1] = 2.582
A new Article 9.3 is added to read as follows:
9.3 If Operating Status Option I is selected, any energy delivered in
excess of the Base Contract Capacity will be purchased at the rates set
forth in Article 6.14. If Operating Status Option II is selected, a
payment for Supplemental Schedule A Capacity and Supplemental Schedule B
Capacity will be made in accordance with Appendix I. The price for
dispatchable energy will be the price supplied by Seller in Article 8.5(b).
No payment will be made for energy in excess of 92 Mwh/hr during Non
Scheduled Dispatch Periods.
34. Amendment Article 10.3. A New Article 10.3 is hereby added and
reads as follows:
10.3 Commencing with the month in which the Date of Initial
Commercial Operation occurs, Seller shall pay to the Company a monthly
administration fee in the amount of $1,440. Such fee shall be offset
against JCP&L's payment to Seller pursuant to
36
Section 10.1. This fee is be adjusted annually based upon the change in
Gross National Product Deflator Index.
35. Amendment to Article 10.4: A new Article 10.4 is hereby added
and reads as follows:
10.4 The Company shall have the right to set off at any time
against any and all amounts which may be due and owing from the Company to
the Seller under this Agreement the full cost of any and all materials,
equipment, services and supplies for which payment is past due.
36. Amendment to Article 12 (Force Majeure): Article 12 is hereby
amended to read as follows:
12.1 (a) The term "force majeure" as used herein means
unforeseeable causes beyond the reasonable control of and without the fault
or negligence of the party claiming "force majeure", including but not
limited to acts of God, strike, flood, earthquake, storm, fire, lightening,
epidemic, war, riot, civil disturbance, sabotage, change in law or
applicable regulation subsequent to the date hereof and action or inaction
by any federal, state or local legislative, executive, administrative or
judicial agency or body which, in any of the foregoing cases, by exercise
of due foresight such party could
37
not reasonably have been expected to avoid, and which, by the exercise of
due diligence, it is unable to overcome.
(b) Anything to the contrary contained in Section 12.1(a) or
otherwise in this Agreement notwithstanding, except as may expressly be
provided in Section 12.1(a), the term "force majeure" shall not include any
of the following:
(i) Any reduction, curtailment or interruption of
generation or operation of the Generating Facility, whether in whole or in
part, or the ability of JCP&L to accept or transmit electricity generated
by the Generating Facility which reduction, curtailment or interruption is
caused by or arises from the action or inaction of any third party,
including without limitation, any vendor or supplier to the Generating
Facility or JCP&L of materials, equipment, supplies or services, unless,
and then only to the extent that, any such action or inaction would itself
be excused hereunder as a "force majeure";
(ii) Any outage, whether or not due to the fault or
negligence of JC&L or the Seller, of the Generating Facility or JCP&L's
system attributable to a defect or
38
inadequacy in the manufacture, design or installation of the Generating
Facility or JCP&L's facilities of equipment or to a breakdown of their
mechanical or electrical equipment that prevents, curtails, interruption or
reduces the ability of the Generating Facility to generate electricity or
the ability of JCP&L to period its obligations hereunder; or
(iii) Changes in market conditions that affect to cost
or availability of the Generating Facility's prime or alternate fuel supply
or demand for the Seller products or affect JCP&L's fuel supplies or
alternate supplies of electric energy or customer demand therefor.
12.2 Except for the obligations of either party to make required
payments under this Agreement, the parties shall excuse from performing
their respective obligations under Agreement and shall not be liable in
damages or otherwise and to the extent that they are unable to so perform
or prevented from performing by a "force majeure", provided:
(a) the non-performing party, as promptly as practical
after the occurrence of the "force majeure", but in no later than 14 days
thereafter, gives the other party was notice describing the particulars of
the occurrence;
39
(b) the suspension of performance is of no greater scope
and of no longer duration than is reasonably required by the "force
majeure";
(c) the non-performing party uses its best efforts to
remedy its inability to perform; and
(d) as soon as the non-performing party is able to resume
performance of its obligations excused as a result of the occurrence, its
shall give prompt written notification thereof to the other party.
12.3 Neither party shall be required to settle any strike, walkout,
lockout or other labor dispute on terms which, in the sole judgment of the
party involved in the dispute, are contrary to its interest, it being
understood and agreed that the settlement of strikes, walkouts, lockouts or
other labor disputes shall be entirely within the discretion of the party
having such dispute.
12.4 (a) Either party may terminate this Agreement upon 10 days
written notice if, following the Date of Initial Commercial Operation (1)
the generating Facility is either
40
destroyed or substantially damaged and the Seller advises JCP&L that it
does not intend promptly to reconstruct or repair the Generating Facility,
or (2) an event of "force majeure" hereunder prevents either party from
substantial performance of its respective obligations hereunder for a
period of 24 consecutive months; provided, however, that this Agreement may
not be so terminated if the party prevented from performing due to such
"force majeure" event (i) is to the reasonable satisfaction of the other
party, unable despite use of its best efforts, to overcome the effects of
such "force majeure" during such 24 months and (ii) demonstrates to the
reasonable satisfaction of the other party that the effects of such "force
majeure" can nevertheless be overcome and that it is diligently applying
its best efforts to do so. The party prevented from performing shall at
its expense provide the other party not later than 60 days following a
request therefor with an opinion of an independent engineering firm,
reasonably acceptable to such other party, supporting the matters set forth
in (ii) above. Failure to provide such an opinion shall be adequate ground
for termination of this Agreement.
(b) Upon termination of this Agreement as provided in
subparagraph (a) above, the parties shall have no further liability or
obligation to each other except for (i) any
41
obligation arising prior to the date of such termination; and (ii) payment
in full by the Seller of any performance penalty payments which may be owed
to the Company pursuant to Article VI hereof.
37. Amendment to Article 13 (Insurance Liability and
Indemnification): Article 13.1 is hereby amended to read as follows:
(a) Seller agrees to keep, or cause its contractors to keep, the
Generating Facility continuously insured with reputable insurance companies
against loss or damage in the amounts and for the risks that property of
similar character is usually so insured by entities owning and operating
like properties.
(b) Seller shall maintain, or cause its contractors to maintain,
in effect insurance coverage for the Generating Facility with initial
minimum limits as follows:
Insurance Limits
1. a. Worker's Compensation Insurance As required by statute
b. Employer's Liability Insurance $1,000,000
2. Comprehensive General Liability (Public Liability) Insurance
Including:
a. Bodily Injury $1,000,000 per occurrence
42
and and
Property Damage $1,000,000 per occurrence
or
b. Bodily Injury and $1,000,000
Property Damage combined single occurrence
c. Personal Injury $1,000,000 per occurrence
3. Automobile Liability Insurance (owned, hired & non-owned):
a. Bodily Injury $1,000,000 per Accident
b. Property Damage $1,000,000 per Accident
(c) At the ▇▇▇▇ ▇▇▇▇▇▇ accepts the Generating Facility from its
turnkey contractor, Seller shall also procure or cause to be procured and
maintain in effect business interruption insurance (or in lieu thereof, an
operating and maintenance agreement for the Generating Facility with a
reputable equipment manufacturer containing availability guarantees for the
Generating Facility which agreement shall be satisfactory to JCP&L).
(d) JCP&L may, upon 90 days prior written notice, require Seller
and Seller shall, from time to time, increase the foregoing initial limits
to amounts which shall be reasonable, based upon (a) commercial
availability of such increased limits on commercially reasonable terms, and
(b) the location, size and type of the Generating Facility, to meet changed
43
circumstances and then current industry practice.
(e) Seller's liability insurance (other than its worker's
compensation insurance) shall include provisions or endorsements (a) naming
JCP&L as an additional insured, (b) stating that such insurance is primary
insurance with respect to the interest of JCP&L and that any insurance
maintained by JCP&L is excess and not contributory insurance with the
insurance required hereunder, and (c) providing that such policies shall
not be canceled or their limits of liability reduced except upon 30 days
prior written notice to JCP&L.
(f) A copy of each such insurance policy, certified as a true
copy by an authorized representative of the issuing insurance company or in
lieu thereof, a certificate in form satisfactory to JCP&L certifying that
such insurance is in effect, shall be furnished to the JCP&L not less than
30 days prior to the commencement of construction of the Interconnection
Facilities and 15 days prior to the expiration date of each such policy.
38. Effectiveness; Further Agreements: This First Amendment,
together with the Agreement, constitutes the complete agreement between the
Parties, and may only be further modified by written
44
agreement signed by both parties. It is expressly understood by the
Parties that this First Amendment shall only become effective upon its
approval by the New Jersey Board of Public Utilities ("BPU"). The Parties
agree to submit the amendment to the BPU for approval promptly, and to take
all reasonable steps to secure its prompt approval by the BPU. In the
event that the BPU refuses to approve this First Amendment, or requests
modifications thereto, the Parties agree to negotiate in good faith
appropriate revisions hereto. If after such good faith efforts, the
Parties cannot agree on a revised First Amendment, the Parties shall retain
all legal rights, and this First Amendment shall not serve to waive any
rights which either Party may have at law or in equity.
39. Counterparts. This First Amendment may be signed in two or more
counterparts, all which taken together shall constitute one and the same
agreement.
45
IN WITNESS WHEREOF the undersigned have duly executed this First
Amendment as of the date first above written.
JERSEY CENTRAL POWER & O'BRIEN (▇▇▇▇▇▇)
LIGHT COMPANY COGENERATION, INC.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Date: 6/11/91 Date: 3/19/91
46
Appendix I
Capacity Schedules
Schedule "A" Schedule "B"
Year S/MW-Month S/MW-Day
1991 5534 92.15
1992 8492 96.36
1993 8132 101.36
1994 7733 107.51
1995 7356 113.95
1996 7000 120.46
1997 6661 128.06
1998 6322 135.72
1999 5987 143.87
2000 5652 152.07
2001 5312 161.63
2002 4978 165.73
2003 4643 154.59
2004 4303 142.88
2005 3968 132.10
2006 3659 121.81
2007 3405 113.32
2008 3180 105.57
2009 2955 98.40
2010 2730 90.90
2011 2438 81.14
Appendix II
Gas Turbine Capacity vs. Temperature Table
Temperature Capacity Factor
90 1.0
80 1.04
70 1.09
60 1.13
50 1.18
40 1.22
30 1.26
Appendix II
Capacity vs. Temperature Table
To be provided by
O'Brien (▇▇▇▇▇▇)
Cogeneration, Inc.
Appendix III
EQUIVALENT AVAILABILITY FACTOR
The equation used to calculate Equivalent Availability Factor is:
EAF (%) = AH - (EFPOH - EMPOH - EPPOH) X 100%
PH
WHERE:
EAF = Equivalent Availability Factor
AH = Available Hours which are the time a unit is capable of producing
energy, regardless of its capacity level.
PH = Period Hours which are the total calendar time for the period (year).
EFPOH
EMPOH
EPPOH = Equivalent Forced, Maintenance, and Planned Partial Outage Hours.
These are the number of hours a unit was involved in a less than 100
percent outage expressed as equivalent hours of full outage at the unit''
net summer installed capacity. Equivalent hours are calculated using the
following formula.
E = (D1 x T1)
-------------
C
WHERE:
E = Equivalent Outage Hours
D1 = Capacity duration for outage I, MW.
T1 = Time accumulated during outage I, hrs.
C = Base Contract Capacity and Supplemental Schedule A Capacity.
Appendix IV
Capacity Payment Methodology
Capacity Test - Base and Supplemental Schedule A Capacity
1. Test results will be based on the delivery to JC through the billing
meter.
Test may be scheduled any time except during minimum load problems on JC
or PJM system.
2. During the first season, payment will be based on the initial
demonstration of Contract Capacity until the final test has been
completed.
3. During subsequent seasons, payments will be based on the previous
season's test results until the new test is completed.
Capacity Test - Schedule B Capacity
1. Capacity shall be the average output delivered during the scheduled
dispatch period. Because of metering limitations, this will be limited
to whole clock hours.
2. When the facility is not dispatched, payment will be made for
nominated capacity.
3. If nominated capacity exceeds that demonstrated during the last
scheduled dispatch period, supplier must demonstrate this capacity for
one clock hour. The energy above 92 MW will be priced at the
applicable PJM billing rate minus 10%.
Capacity Payments - Base
Payment are made for on peak, on season energy up to 92 Mwh/hr
Rate is $0.0597/kWh adjusted for penalty, if any.
Final rate will be applied to the entire peak period.
Any overpayment will be adjusted in the last month of the peak period.
Capacity Payments - Schedule A
The monthly values in Appendix I will be multiplied by 12/7 and paid
only in peak months.
IV-1
The rate will be adjusted by the penalty, if any.
Any overpayment will be adjusted in the last month of the peak period.
Capacity Payment - Schedule B
The daily capacity rate will be adjusted for the penalty, if any.
The penalty, if any, will be calculated using only full dispatch
hours.
The nominated capacity will be limited to that demonstrated during the
most recent dispatch period unless the supplier demonstrates the higher
value for one clock hour at his expense.
IV-2
Example 1a
Assumptions
Base Capacity = 92
"A" Capacity = 20
1-91 Verification Test = 112 @ 92 F
8-91 Verification Test = 106 @ 92 F
There will be no penalty on base capacity since it was demonstrated. All
on peak kWh delivered in June, July, August and September will be paid for
at 5.97 cents/kWh.
"A" capacity payments will be made in full during June, July and August
since "A" capacity was demonstrated in January. Penalty will be calculated
and applied in September ▇▇▇▇.
The applied rate = $5,534/MW-mo. X 12/7 = $9,487/MW-mo.
June 20 MW x $9,487/MW-mo. = $189,740
July 20 MW x $9,487/MW-mo. = $189,740
August 20 MW x $9,487/MW-mo. = $189,740
Capacity Price Reduction Factor (CPRF) = 1.5 (1-(14/20)) = 45%
Final capacity rate = $9,487 (1-.45) = $5,218/MW-mo.
Summer Period Payment = 20 MW x 4 months x $5,218/MW-mo = $417,440
June-August Payment = $189,740 x 3 = $569,220
September Payment = - $151,780
This amount will be deducted from the September base capacity payment.
IV-3
Example 1b
Assumptions
Base capacity = ▇▇
"▇" ▇▇▇▇▇▇▇▇ = 20
8-91 Verification Test = 106 @ ▇▇ ▇
▇-▇▇ ▇▇▇▇ = 45%
2-92 Verification Test = 98 @ 92 F
1991 initial capacity rate = 5,534 x 12/7 x .55 = $5,218/MW-mo
1992 initial capacity rate = 8,492 x 12/7 x .55 = $8,007/MW-mo
December = 20 MW x $5,218/MW/mo. = $104,360
January = 20 MW x $8,007/MW/mo. = $160,140
December Actual = 20 MW ($0/MW-mo) = $
Jan-Feb Actual = 20 MW ($0/MW-mo) x 2 mo. = $
December reversal $104,360
January reversal $160,140
Net adjustment to February base capacity $264,500
Since the demonstrated availability of 30% (=6/20) falls below the (1/3)
availability threshold specified in Section 25(b) of the First Amendment,
an amount equal to 1.25% of the Full Supplemental A Capacity payment for
the entire Nomination Period is assessed as follows:
0.125 x [20 MW x $5534 x 12 mo. + 20 MW x $8492 x 12 mo. + 20 MW x 8132 x
12 mo.] = $66,474.
Six (6) equal monthly payments of $11,079 would be paid by Seller starting
in February.
IV-4
Example 1c
Assumptions
Base capacity = ▇▇
"▇" ▇▇▇▇▇▇▇▇ = 20
2-92 Verification Test = 98 @ 92 F
2-92 CPRF = 105%, capped at 100%
7-92 Verification Test = 112
Initial capacity rate = $8,492 x 12/7 x (1-1) = $0/MW-mo
June = 20 MW ($0/MW-mo) = $0
7-92 CPRF = 1.5 (1-20/20) = 0
Final capacity rate = $8,492 x 12/7 = $14,558/MW-mo
June, July Actual = 20 MW x $14,558/MW-mo x 2 mo =$582,320
Reversal of June Payment $ 0
July Payment $582,320
August Payment = 20 x $14,558 = $291,160
September Payment = 20 x $14,558 = $291,160
IV-5
Example 2
Assumptions
Base capacity = 92
"A" capacity = 20
Year = 1991
Determination of "B" capacity delivery
Average delivery to JC 117
Base capacity -▇▇
"▇" ▇▇▇▇▇▇▇▇ -▇▇
"▇" capacity delivery 5
Day Mon Tues Wed Thu Fri Sat
"B" Capacity
Nominated 5 5 4* 5*** 5 5
"B" Capacity
Dispatched 0 5 0 0 0 0
"B" Capacity
Delivered 0 4 5** 0 0 0
CPRF 0 0.3 0 0 0 0
Schedule B Rate 92.15 92.15 92.15 92.15 92.15 92.15
Actual Rate 92.15 64.51 92.15 92.15 92.15 92.15
Actual Payment 460.75 322.55 368.60 460.75 460.75 460.75
* Nomination limited to amount previously demonstrated
Actual capacity delivered and associated penalties, if any, will
be based on the billing meter. Allowable capacity nominated
will, by necessity, be based on values telemetered to JCP&L.
Nominated capacity will not be retroactively adjusted when the
billing meter is read.
** Seller demonstrated 5 MW at his expense.
*** Seller may now nominate 5MW until it is dispatched and not made.
IV-6
Appendix V
Energy Payment Methodology
Parsing of hourly energy values:
If the dispatch request is not for full hours, partial dispatch hours
will be considered full dispatch hours.
If the dispatch request is for full hours, the hour before dispatch
and the hour after dispatch will be considered ramp hours.
If the dispatch period starts on a partial hour, subtract the contract
ramp time from the start time. If still in the same hour, no ramp time
will be billed. If part of ramp time is in previous hour, entire previous
hour will be considered ramp hour.
Assumptions for example:
Base capacity - 92 mw
"A" capacity - 110 mw
"B" capacity - 118 mw
Ramp up time - 20 min
Ramp down time - 10 min
Peak season weekday
Base energy cost - Fixed 1.362 cent/KWH
Variable 2.775 cent/KWH
Total 4.137 cent/KWH
On Peak = 5.254 cent/KWH
Off Peak = 3.516 cent/KWH
Dispatch energy cost 4.5 cent/KWH
PJM billing rate - On Peak 3.5 cent/KWH x .9 = 3.15 cent/KWH
Off Peak 2.5 cent/KWH x .9 = 2.25 cent/KWH
"B" capacity dispatched from 1030 to 1400
Notes: The example does not show the effect of regulation.
The example is for a day. The PJM billing rates are for the month.
V-1
MWH RECEIVED
HOUR TOT BASE OFPK BASE ONPK DISP PJMOFPK PJMONPK FREE
1 90 90
2 91 91
3 89 89
4 91 91
5 88 88
6 70 70
7 94 92 2
8 92 92
9 91 91
10 90 90
11 108 92 16
12 118 92 26
13 117 92 25
14 116 92 24
15 95 92 3
16 91 91
17 90 90
18 89 89
19 88 88
20 89 89
21 90 90
22 90 90
23 91 91
24 89 89
Total 2247 1063 1088 91 0 3 2
V-2
INVOICE
Energy Type Output Rate ▇▇▇▇ $
Base OFPK 1,063,000 3.516 37,375.08
Base ONPK 1,088,000 5,254 57,163.52
Disp 91,000 4.500 4,095.00
PJM OFPK 0 2.250 0
PJM ONPK 3,000 3.150 94.50
FREE 2,000 0.000 0
Total 2,247,000 98,728.10
V-3