WHOLESALE POWER SUPPLY AND SERVICES CONTRACT
BETWEEN TEXAS NEW MEXICO POWER COMPANY
AND
CAP ROCK ELECTRIC COOPERATIVE, INC.
This WHOLESALE POWER SUPPLY AND SERVICES CONTRACT ("Contract") is
entered into as of April 16, 1997, by and between TEXAS NEW MEXICO POWER
COMPANY, a Texas corporation ("TNP"), and CAP ROCK ELECTRIC COOPERATIVE, INC.,
a Texas corporation ("Cap Rock"). (TNP and Cap Rock each being referred to
herein as a "Party" or jointly as the "Parties").
RECITALS:
WHEREAS, Cap Rock operates an electric cooperative for the purpose
of providing electric power to its customers ("Customers"); and
WHEREAS, Cap Rock desires to reduce its total costs for electric
power by entering into new electric power supply arrangements; and
WHEREAS, TNP is engaged in the business of managing and marketing
electric power and utilizing its management skills and techniques to reduce
electric power costs for its customers;
NOW THEREFORE, in consideration of the recitals and the
covenants and agreements hereinafter set forth and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the Parties hereto agree as follows:
1. DEFINITIONS
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1.1 "ANCILLARY SERVICES" are defined in the ERCOT Operating
Guide as the same may be amended from time to time.
1.2 "CAP ROCK DEMAND" means the requirements for electric power
imposed on Cap Rock's System by Cap Rock's customers in Cap Rock's
▇▇▇▇-▇▇▇▇▇▇ Division measured in KW as an average over 30 minute intervals.
1.3 "CAP ROCK ENERGY" has the meaning in Section 3.2.
1.4 "CONTRACT INTEREST RATE" means the lesser of: (a) the then
effective prime rate for large U.S. Money Center Commercial Banks, published
under "Money Rates" by the Wall Street Journal plus two percent or (b) the
maximum applicable non-usurious rate in the State of Texas.
1.5 "CUSTOMERS" has the meaning in the Recitals.
1.6 "TNP" has the meaning in the introductory paragraph.
1.7 "ENERGY PAYMENT" has the meaning in section 3.2.
1.8 "ERCOT" means the Electric Reliability Council of Texas.
1.9 "Energy Price" has the meaning in Section 3.3.
1.10 "FIRM" means not subject to interruption in the absence of
Force Majeure.
1.11 "FORCE MAJEURE" has the meaning in Section 10.1
1.12 "GOVERNMENTAL REGULATIONS" means any law. statute.
ordinance, or regulation, or any change to any existing law, statute,
ordinance or regulation, which is promulgated, enacted or imposed by any
local, state or federal government, agency or authority including, without
limitation, any environmental law, statute, ordinance or regulation but
excluding any Taxes.
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1.13 "KV" means kilovolt or one thousand volts.
1.14 "KW" means kilowatt or one thousand ▇▇▇▇▇.
1.15 "MWH" means megawatt hour or one megawatt or energy for one
hour.
1.16 "POINT OF DELIVERY" has the meaning in Section 2.3.
1.17 "PRUDENT ELECTRIC INDUSTRY PRACTICES" means any of the
reasonably prudent practices, methods, and acts engaged in or approved by a
significant portion of the wholesale electric power industry during the
relevant time period, or any of the practices methods and acts which, in the
exercise of reasonable judgment in light of the facts known at the time the
decision was made, could have been expected to accomplish the desired result
at a reasonable cost consistent with good business practices, reliability,
safety, and expedition.
1.18 "REGULATORY COSTS" means any assessments, charges, fees or
costs incurred by a Party or for which a Party is liable as a result of
Governmental Regulations and which directly affect the cost of electric power
delivered to Cap Rock under this Contract, whether from ownership,
generation, transmission or the purchase, sale or delivery of electric power
or fuel, excluding taxes. "Regulatory Costs" excludes the costs which a Party
incurs in the conduct of its business in general, whether or not this
Contract exists. 1.19 "▇▇▇▇▇▇▇▇ Substation" means the ▇▇▇▇▇▇▇▇ electric
substation located in ▇▇▇▇ County, Texas at the interconnection of the Cap
Rock System and the Texas Municipal Power System transmission system.
1.20 "SYSTEM" means Cap Rock's ▇▇▇▇-▇▇▇▇▇▇ electric transmission
and distribution system.
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1.21 "TAXES" shall include, without limitation, any and all
federal, state or local taxes imposed on or measured by sales, use, gross
receipts, consumption or other similar taxes or franchise fees, but shall not
include any taxes imposed on net income or net worth for the privilege of
doing business or exercising a franchise.
1.22 "TERM" has the meaning in Section 2.5.
2. TERMS AND CONDITIONS
2.1 POWER SUPPLY. During the Term and subject to the
limitations set forth in this Contract: (i) TNP shall cause sufficient
capacity to be made available, and sufficient power and energy be delivered,
to Cap Rock at the Point of Delivery on a Firm basis to satisfy Cap Rock's
Demand, (ii) TNP shall have the sole right and obligation to satisfy all of
Cap Rock's Demand at the Point of Delivery (so long as TNP has satisfied its
contractual requirements to Cap Rock), and (iii) Cap Rock shall accept and
pay TNP for all energy which is delivered to Cap Rock by TNP at the Point of
Delivery, to satisfy Cap Rock's Demand. Cap Rock and its Customers shall use
the energy made available by TNP under this Agreement to meet Cap Rock's
Demand and not for resale to persons or entities other than Cap Rock or its
customers.
2.2 RELIABILITY CRITERIA. TNP shall supply electric power to Cap
Rock in accordance with ERCOT reliability criteria. TNP shall comply with all
ERCOT Operating Guides applicable to generation, scheduling, delivery, metering
and telemetering of demand and energy as the same are in effect from time to
time.
2.3 POINT OF DELIVERY. The Point of Delivery for capacity made
available and energy delivered under this Contract shall be delivered to the
high side of the transformer at the ▇▇▇▇▇▇▇▇ Substation located in ▇▇▇▇
County, Texas.
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2.4 METERING. The meter shall be placed on the low side of the
transformer at the ▇▇▇▇▇▇▇▇ Substation. A meter that compensates for
transformer losses will be used.
2.5 TERM. The term of this Contract ("Term") shall commence at
12:01 A.M. on June 1, 1997 and shall expire at 11:59 P.M. on May 31, 1999,
unless extended by mutual agreement or as otherwise terminated pursuant to
this Agreement.
2.6 LOAD CONTROL AREA REQUIREMENTS. The Parties agree to
incorporate the load of the ▇▇▇▇-▇▇▇▇▇▇ division of Cap Rock into the TNP
load control area for the Term of this Contract. All capital costs and
expenses associated with required RTUs will be the responsibility of Cap
Rock. All telephone line charges for telemetry between the RTU(s) and TNP's
load control area will be shared 50%-50% by the Parties.
2.7 EMERGENCY TIES. The Parties recognize that Cap Rock
currently has a normally open emergency interconnection point with TMPA near
the City of Farmersville and is contemplating another with the City of
Greenville. It is Cap Rock's intent to use these and any future
interconnection points solely to accommodate mutual backup energy
arrangements with other utilities in the event of system emergencies. Cap
Rock agrees to coordinate with and inform TNP system operators of any intent
to utilize such interconnection point(s) to receive or-deliver energy.
3. COMPENSATION, PRICING AND CHARGES
3.1 COMPONENTS. TNP's compensation for the power supply and
other services it provides to Cap Rock under this Contract shall be the total
of the following components:
1. Energy - the result of (a) The Energy Price (Section
3.3) times (b) the Energy Amount (Section 3.2)
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2. Substation Lease Payment - if any (Section 3.4): and
3. Planned Transmission Service Charges (Section 3.5).
4. 50% of telephone line charges for telemetry between
the RTUs and TNP's control center.
3.2 ENERGY AMOUNT. For each month, the Energy Amount shall be
the metered KWH.
3.3 ENERGY PRICE. The Energy Price per KWH for the energy
delivered to the Cap Rock system is dependent upon the monthly load factor.
The load factor shall be determined by dividing the metered KWH for the month
by the product of the metered KW and the number of hours in the monTh. The
prices shall be according to the following:
MONTHLY LOAD FACTOR PRICE PER KWH
--------------------------------------------------------------
LESS THAN 40% 2.833(CENT)
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40% TO 45% 2.756(CENT)
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45% TO 50% 2.695(CENT)
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50% TO 55% 2.645(CENT)
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55% TO 60% 2.603(CENT)
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MORE THAN 603% 2.567(CENT)
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3.4 SUBSTATION LEASE PAYMENT. For each month of the Term, Cap
Rock shall pay TNP an amount equal to lease payments payable by TNP under a
potential substation lease assignment (Section 15,7)
3.5 PLANNED TRANSMISSION SERVICE CHARGES. Planned transmission
service charges pursuant to Public Utility Commission of Texas Rules and
ERCOT procedures
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will be paid by TNP and reimbursed by Cap Rock. The amount paid by TNP for
such services to accommodate firm energy deliveries to serve the Cap Rock
Demand will be included on the monthly ▇▇▇▇ to Cap Rock as a separate item.
4. OBLIGATIONS FOR INTERCONNECTION
If during the Term of this contract TNP demonstrates to Cap Rock
that the capability of the Point of Delivery or any other point of
interconnection with other utility systems should be upgraded because the
safety, reliability, or the security of the Cap Rock System requires
reinforcement or enlargement of the Point of Delivery, and both Parties agree
such upgrades are necessary, Cap Rock shall pay the amounts required to
upgrade such interconnection facilities, as and when such amounts are
incurred. Otherwise TNP shall be released from its obligations under this
Contract to the extent such obligations are adversely affected by the failure
to upgrade such interconnection facilities.
5. ACKNOWLEDGMENTS
Each Party acknowledges and agrees that:
(a) the material economic terms of this Contract have been
individually tailored and negotiated by it:
(b) the other Party is acting solely in the capacity of an
arm's length contractual counterpart with respect to this Contract;
(c) the other Party is not acting as a financial advisor (or in
any similar capacity) with respect to this Contract; and
(d) it is entering into this Contract in reliance upon its own
judgment and upon such tax, accounting, regulatory and financial advice given
by its representatives as
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it has deemed necessary and not upon any view expressed by the other Party or
its representatives and with full understanding of all of the material risks
and it is capable of assuming those risks.
6. REGULATORY APPROVALS
The Parties agree to cooperate in obtaining all regulatory approvals
necessary to perform its Contract. Each Party shall pay its own costs for any
approvals it is required to obtain. Except as otherwise provided in this
Contract, TNP shall prepare and submit any filings that may be required to
permit full performance of this Contract at TNP cost.
7. TERMINATION OF CONTRACT
7.1 The following shall be grounds for termination of this
Contract:
(a) Either Party may terminate this Contract if the other Party
fails to make payment of any amounts due under any provision of this
Contract, which failure continues for a period of five (5) days after receipt
of written notice of such nonpayment.
(b) either Party may terminate this Contract if the other Party
fails to comply with any other material provision of this Contract, which
failure continues for a period of thirty (30) days after written notice of
such noncompliance. unless, in the case of a failure which cannot be cured
within thirty (30) days, the noncomplying Party has commenced to cure such
non-compliance within the thirty (30) day notice period, is thereafter
diligently pursuing such efforts, and the noncompliance is cured within sixty
(60) days following the date that written notice of noncompliance is given.
If during the cure periods under this Section 7.1(b) the noncomplying Party
is, in good faith, attempting to cure its noncompliance then the other Party
shall, to the extent its cooperation is required, co-operate with the
noncomplying Party so long as that
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cooperation does not require the other Party to waive any of its rights under
this Contract make any economic concessions to the noncomplying Party.
(c) Either Party may terminate this Contract if the other Party
(i) makes an assignment or any general arrangement for the benefit of
creditors; (ii) files a petition or otherwise commences, authorizes or
acquiesces in the commencement of a proceeding or cause under any bankruptcy
or similar law for the protection of creditors, or has such petition filed
against it; (iii) otherwise becomes bankrupt or insolvent (however
evidenced); or (iv) is unable to pay its debts as they fall due.
(d) Either Party may terminate this Contract if the other Party
or its activities become subject to regulation under state or federal law to
a greater or different extent than that existing on the date of this Contract
and such greater or different regulation renders this Contract illegal,
unenforceable, or materially changes the economic benefits to the Parties.
8. REMEDIES
8.1 A Party which may and desires to terminate this Contract
pursuant to Section 7.1 or Section 10.2 shall give written notice of its
intention to terminate and the reasons therefor to the other Party, which
termination shall be effective no earlier than the thirtieth (30th) day
following the receipt of said notice from Cap Rock to TNP or no earlier than
the sixtieth (60th) day following receipt of said notice from TNP to Cap
Rock, whereupon the terminating Party shall be excused and relieved of all
obligations and liabilities under this Contract, except those liabilities
incurred before the effective date of termination or as a result of the
termination.
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8.2 Each Party shall use every reasonable effort to mitigate
any damages resulting from a breach and/or termination of this Contract.
8.3 If this Contract is terminated by either Party, each Party
shall cooperate in providing the information, documents, software and other
resources necessary to facilitate the transition of services that terminate
causes.
8.4 In the event that TNP does not meet the Reliability
Criteria (Section 2.2) for reasons other than a Force Majeure event and Cap
Rock must acquire power and energy from another source to meet the needs of
its System, then TNP shall reimburse Cap Rock to the extent that Cap Rock's
cost of replacement energy will be equal to the applicable Energy Price set
out in Section 3.3
9. LIMITATION OF LIABILITY
In no event shall either Party be liable to the other for, and each
of the Parties waive s the right to seek punitive or consequential damages,
whether arising in contract, tort, by operation of law or otherwise. Nothing
in this Contract shall be construed to create any duty to, standard of care
with respect to, or any liability to any person not a party to this Contract
10. FORCE MAJEURE
10.1 FORCE MAJEURE. Neither Party shall be responsible or liable
for or deemed in breach of this Contract because of any delay or failure in
the performance of its obligations under this contract (other than the
obligation to pay money) due solely to circumstances beyond the reasonable
control of the Party experiencing such delay or failure, including, but not
limited to, acts of God; unusually severe weather conditions; war, riots,
requirements, actions or failures to act on the part of governmental
authorities
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preventing performance; accident; fire; damage to or breakdown of necessary
facilities (including, without limitation, the inability to obtain necessary
parts and equipment); or transportation or transmission delays, curtailments
or accidents (such causes hereinafter called "Force Majeure"); provided that:
(a) the nonperforming Party gives the other Party reasonably prompt written
notice describing the particulars of the occurrence; (b) the suspension of
performance is of no greater scope and of no longer duration than is required
by the Force Majeure; (c) the nonperforming Party uses its best efforts to
remedy its inability to perform; (d) when the nonperforming Party is able to
resume performance of its obligations under this contract, that Party shall
give the other party written notice to that effect; and (e) the Force Majeure
was not caused by or connected with any negligent or intentional acts,
errors, or omissions of the nonperforming Party, or the nonperforming party's
failure to comply with any law, rule, regulation, order or ordinance, or any
breach or default of this Contract by the nonperforming Party.
10.2 TERMINATION DUE TO FORCE MAJEURE. Except as otherwise
provided, in no event will any condition of Force Majeure extend the Term of
this Contract. If any condition of Force Majeure delays a Party's performance
for a time period greater than ninety (90) days, the Party not delayed by
such Force Majeure may terminate this Contract, without further obligation;
provided that the Party not delayed may at its sole discretion extend such
period if the Party delayed by such Force Majeure is exercising due diligence
in its efforts to cure the condition of Force Majeure.
10.3 REMOVAL OF FORCE MAJEURE. The affected Party shall use all
reasonable efforts to remedy any inability to perform due to Force Majeure.
If within a reasonable time after the occurrence of a Force Majeure the
affected that Party has failed to take such
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action as that Party could lawfully and reasonably initiate to remove or
relieve either the Force Majeure occurrence or its direct or indirect
effects, the other Party may, in its sole discretion and after written notice
to the affected Party, but at the affected Party's expense, initiate such
reasonable measures as will be designed to remove or relieve such Force
Majeure occurrence or its direct or indirect effects and thereafter require
the affected Party to resume full or partial performance. The affected party
shall reimburse the other Party promptly for the expenses incurred by such
other Party in taking the aforementioned measures.
11. BILLING AND RECORDS
11.1 BILLING AND PAYMENTS. For each month of the Term of this
Contract, TNP shall prepare and deliver to Cap Rock as soon as possible
following the end of that month an invoice, setting forth the total charges
due from Cap Rock for that month. Cap Rock shall pay to TNP the undisputed
charges set forth in TNP invoice not later than the due date which shall be
the fifteenth (15th) day from the date of receipt of TNP invoice sent by the
earliest mode of transmittal. TNP invoice may be faxed or electronically
transmitted to Cap Rock in which case a hard copy will be sent by overnight
mail delivery. Cap Rock's payment may be made by check or by electronic wire
transfer of same day available funds to TNP account at:
Texas-New Mexico Power Company
NationsBank of Texas, Dallas
Dallas, Texas
ABA Routing No. 11000012
Account No. 5050268201
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11.2 LATE PAYMENTS PENALTY. All undisputed amounts invoiced
pursuant to this Section 11 which are not paid by Cap Rock on or before the
due date shall be payable with interest accrued daily from such due date to
the date of payment at an annual rate equal to the Contract Interest Rate
plus 2%, but in no event greater than the maximum rate permitted by law.
Interest shall be calculated from the due date of the invoice to the date of
payment.
11.3 RECORDS. Cap Rock and TNP each shall keep properly stored
and maintained and shall make available for the inspection, examination and
audit of the other Party, its authorized employees, agents, or
representatives and auditors at all reasonable times, such records as
required by this Contract and all data, documents, and other materials
relating to or substantiating any charges to be paid by or to Cap Rock, for
the minimum period required by the State of Texas for records retention.
11.4 DISPUTES ON INVOICES. If there is a dispute between TNP and
Cap Rock concerning the amount of any TNP invoice, Cap Rock shall pay the
undisputed portion of the amount stated as due under that invoice. TNP and
Cap Rock shall attempt to promptly and amicably resolve the dispute. Upon
resolution of the dispute the disputed amount shall be paid or refunded. as
the case may be, to the prevailing Party, together with accrued interest at
the Contract Interest Rate from the due date or the date the disputed amount
was paid by the prevailing Party, as the case may be, to the date of payment
or refund, as the case may be.
12. ARBITRATION
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Any controversy or claim arising out of or relating to this Contract
or the breach thereof which cannot be resolved amicably shall be settled by
arbitration. This agreement to arbitrate shall be specifically enforceable
under the prevailing arbitration law. The award of the arbitrators shall be
final, and a judgment may be entered upon it by any court having
jurisdiction. The arbitration shall be conducted in accordance with the
Commercial Arbitration Rules of the American Arbitration Association then
prevailing, and shall be conducted in Dallas, Texas unless the Parties agree
otherwise.
13. ASSIGNMENT
13.1 Neither Party shall (by operation of law or otherwise)
assign its rights or delegate its performance under this Contract without the
prior written consent of the other, which consent shall not be unreasonably
withheld, and any attempted assignment or delegation without such consent
shall be void. Subject to the preceding sentence, this Contract and all of
its covenants, terms and provisions shall be binding upon and inure to the
benefit of and be enforceable by the Parties and their respective successors
and assigns.
13.2 Notwithstanding Section 14.1, (a) TNP may assign its rights
and delegate its performance under this Contract to an affiliate so long as
such affiliate has the legal ability. the financial capability and the
technical experience necessary- to perform the obligations of TNP under this
Contract and (b) Cap Rock may assign its rights and delegate its performance
under this Contract together but not separately to a wholly-owned subsidiary
of Cap Rock provided that Cap Rock provides a guaranty to TNP of the
subsidiary's obligations on terms and in a form reasonably acceptable to TNP.
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14. NOTICES Unless otherwise provided in this Contract, any notice,
consent or other communication required to be made under this Contract
shall be in writing, shall include an effective date, and shall be
mailed first class, U. S. Mail, postage prepaid, or delivered to the
address or sent to the fax number, set forth below:
Texas-New Mexico Power Company
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: Manager, Power Resources
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
15. MISCELLANEOUS
15.1 EFFECT OF CONTRACT. This Contract shall not constitute the
dedication of either Party's system or resources or any portion thereof to
the other Party or to the public. Nothing in this Contract shall create any
duty to, any standard of care with reference to, or any liability to any
person not a Party to it. Except with respect to the obligations specifically
set forth in this Contract, nothing contained in this Contact shall be
construed to form a partnership, joint venture, fiduciary, or any other legal
relationship between the parties other than the relationship of independent
contracting parties.
15.2 GOVERNING LAW. This Contract is entered into and
performable in ▇▇▇▇ County, Texas and shall be governed by and construed in
accordance with the laws of the State of Texas applicable to contracts made
and to be performed in the State of Texas excluding conflicts of laws
principles.
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15.3 AMENDMENT AND WAIVER. This Contract may not be amended,
modified, superseded, or canceled, nor may any of the terms hereof be waived,
except by a written instrument executed by both Parties or, in the case of a
waiver, by the Party waiving compliance. Any failure of either Party to
enforce any of the provisions of this Contract or to require compliance with
any of its provisions at any time during the pendency of this Contract shall
in no way affect the validity of this Contract, or any part hereof, and shall
not be deemed to be a waiver of the right of either Party thereafter to
enforce any and each such provision.
15.4 SEVERABILITY. The invalidity of one or more of the
provisions or Sections contained in this Contract shall not affect the
validity of the remaining portion of this Contract so long as the material
purposes of this Contract can be determined and effectuated. In the event
that any portion or all of this Contract is held to be invalid or
unenforceable, the Parties agree to negotiate in good faith to reach an
equitable agreement on such portion that is void or enforceable which shall
effect the intent of the Parties as set forth in this Contract. If after
sixty (60) days negotiations are unsuccessful, either Party may request
arbitration as allowed under Sections 12 of this Contract.
15.5 ENTIRE CONTRACT. This Contract constitutes the entire
understanding of the Parties with respect to the subject matter hereof. and
supersedes all prior agreements and commitments with respect thereto. There
are no oral understandings. terms, or conditions and neither Party has relied
upon any representation, express or implied, not contained in this Contract.
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15.6 CAPTIONS. All indexes, titles, subject headings, section
titles, and similar items are provided for the purposes of reference and
convenience and are not intended to be inclusive, definitive, or to affect
the meaning of the contents or scope of this Contract.
15.7 SUBSTATION LEASE ASSIGNMENT. In the event that Cap Rock
enters into a lease financing arrangement for the ▇▇▇▇▇▇▇▇ Substation, TNP
will accept the assignment under a separate Lease Assignment Agreement. Under
that agreement, TNP would pass through to Cap Rock the monthly debt service
payments and any other payments or charges that are due under the lease.
15.8 COOPERATION OF THE PARTIES. The Parties agree to each
utilize reasonable diligence and work in good faith to effect the
transactions contemplated in this contract by June 1, 1997. Such efforts
include but are not limited to:
- Cooperating with appropriate ERCOT entities in making any
required changes to the placed resources depicted in the
current ERCOT placing cases to accommodate the transactions
contemplated by this contract.
- Setting up the necessary telemetry- and metering equipment and
communications to incorporate the ▇▇▇▇- ▇▇▇▇▇▇ load into TNP's
load control area.
IN WITNESS WHERE OF, the Parties hereto have caused this Contract to
be signed by their respective duly authorized representatives as of the date
first written above.
CAP ROCK ELECTRIC COOPERATIVE, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: Vice President/Chief
Financial Officer
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TEXAS NEW-MEXICO POWER COMPANY
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇
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TITLE: Assistant Vice President
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