Exhibit 10.9
INTERCONNECTION AGREEMENT
BY AND BETWEEN
THE CONNECTICUT LIGHT AND POWER COMPANY
AND
NORTHEAST GENERATION COMPANY
JULY 2, 1999
TABLE OF CONTENTS
PAGE
INTERCONNECTION AND OPERATION AGREEMENT..........................................................5
1. DEFINITIONS...................................................................................6
2. TERM OF AGREEMENT............................................................................12
2.1 TERM AND TERMINATION OF AGREEMENT.......................................................12
3. CONTINUING OBLIGATIONS AND RESPONSIBILITIES..................................................12
3.1 INTERCONNECTION SERVICE..................................................................12
3.2 ACCESS, EASEMENTS, CONVEYANCES, LICENSES, AND RESTRICTIONS...............................13
3.3 FACILITY AND EQUIPMENT MAINTENANCE.......................................................14
3.4 EQUIPMENT TESTING........................................................................14
3.5 NEW CONSTRUCTION OR MODIFICATIONS........................................................15
3.6 INSPECTIONS..............................................................................15
3.7 TELECOMMUNICATIONS STRUCTURAL FACILITIES.................................................16
3.8 INFORMATION REPORTING OBLIGATIONS........................................................16
3.8.1 In order to maintain Interconnection Service.........................................17
3.8.2 Buyer shall supply accurate..........................................................17
3.8.3 Buyer shall gather information.......................................................17
3.8.4 Seller shall provide information.....................................................17
3.9 LOCAL SERVICES...........................................................................17
3.9.1 In addition to the Interconnnection Service..........................................17
3.9.2 TEMPORARY SUSPENSION OF SECTION 3.10 AND 3.11 SERVICES...............................18
3.10 SELLER PROVIDED LOCAL SERVICES..........................................................18
3.10.1 DELIVERY SERVICE....................................................................18
3.10.2 BUILDING SERVICES...................................................................18
3.10.3 METERING..............................................................................19
3.10.4 LINE OPERATION INFORMATION..........................................................20
3.10.5 REMOTE TERMINAL UNITS...............................................................20
3.10.6 RELAYING SYSTEMS....................................................................20
3.11 BUYER PROVIDED LOCAL SERVICES...........................................................20
3.11.1 SELLER'S FACILITY SUPPORT...........................................................20
3.11.2 BUILDING SERVICES...................................................................20
3.12 COMMUNICATIONS SERVICES.................................................................20
3.12.1 GENERAL.............................................................................21
3.12.2 RADIO LICENSES......................................................................21
3.12.3 UPGRADES............................................................................21
3.12.4 MAINTENANCE.........................................................................21
3.13 SPARE PARTS.............................................................................21
3.14 EMERGENCY PROCEDURE.....................................................................21
3.15 INTERCONNECTION SERVICE INTERRUPTIONS...................................................22
3.16 NON-DISPATCHABILITY NOTIFICATION........................................................23
3.17 SCHEDULED MAINTENANCE NOTIFICATION AND COORDINATION.....................................23
3.17.1 TRANSMISSION SYSTEM MAINTENANCE.....................................................23
3.17.2 LOCAL ROUTINE INSPECTIONS AND MAINTENANCE...........................................23
3.18 SAFETY..................................................................................23
3.18.1 GENERAL............................................................................23
3.18.2 SWITCHING, TAGGING AND GROUNDING...................................................24
3.18.3 TRAINING............................................................................24
3.19 ENVIRONMENTAL COMPLIANCE AND PROCEDURES.................................................24
3.20 NEPOOL/ISO..............................................................................25
4. OPERATIONS...................................................................................25
4.1 GENERAL..................................................................................25
4.2 BUYER'S OPERATING OBLIGATIONS............................................................26
4.2.1 GENERAL..............................................................................26
4.2.2 VOLTAGE OR REACTIVE CONTROL REQUIREMENTS.............................................26
4.3 SELLER'S OPERATING OBLIGATIONS...........................................................27
4.4 AUDITING OF ACCOUNTS AND RECORDS.........................................................27
5. COST RESPONSIBILITIES AND BILLING PROCEDURES.................................................28
5.1 BUYER'S INTERCONNECTION COST RESPONSIBILITIES............................................28
5.1.1 INTERCONNECTION FACILITIES CHARGE....................................................28
5.1.2 PAYMENT ON REMOVAL FROM SERVICE......................................................28
5.1.3 LEASED TELEPHONE LINES...............................................................29
5.2 DELIVERY OF AC SERVICE POWER.............................................................29
5.3 COST RESPONSIBILITIES FOR LOCAL SERVICES.................................................29
5.4 BILLING PROCEDURES.......................................................................29
5.5 BILLING DISPUTES, INTEREST ON UNPAID BALANCE.............................................30
5.6 DEFAULT..................................................................................30
6. DOCUMENTATION................................................................................30
6.1 OBLIGATION TO PROVIDE DOCUMENTATION......................................................30
6.2 DRAWINGS.................................................................................30
7. CONFIDENTIALITY..............................................................................32
7.1 CONFIDENTIALITY OF SELLER................................................................32
7.2 CONFIDENTIALITY OF BUYER.................................................................32
7.3 CONFIDENTIALITY OF AUDITS................................................................33
7.4 REMEDIES.................................................................................33
8. DAMAGE TO CONTROL CABLES FROM SUBSTATIONS TO POWER PLANTS....................................33
9. PERSONAL INJURY AND PROPERTY DAMAGE..........................................................33
10. INDEMNIFICATION.............................................................................34
10.1 GENERAL.................................................................................34
10.2 INDEMNIFICATION PROCEDURES..............................................................34
11. INSURANCE...................................................................................35
12. FORCE MAJEURE...............................................................................36
13. DEFAULT AND DISPUTE RESOLUTION..............................................................36
13.1 EVENTS OF DEFAULT.......................................................................36
13.2 REMEDIES FOR DEFAULT....................................................................37
13.3 ARBITRABLE CLAIMS.......................................................................38
13.4 ARBITRATION PROCESS.....................................................................39
13.5 REMEDIES................................................................................40
13.6 CONFIDENTIALITY.........................................................................40
13.7 FERC JURISDICTION OVER CERTAIN DISPUTES.................................................40
13.8 PRELIMINARY INJUNCTIVE RELIEF...........................................................41
14. ASSIGNMENT/CHANGE IN CORPORATE IDENTITY.....................................................41
14.1 ASSIGNMENT..............................................................................41
14.2 ASSUMPTION..............................................................................41
15. CONTRACTORS AND SUBCONTRACTORS..............................................................42
15.1.........................................................................................42
15.2.........................................................................................42
16. LABOR RELATIONS.............................................................................42
17. INDEPENDENT CONTRACTOR STATUS...............................................................42
18. LIMITATION OF LIABILITY.....................................................................42
19. NOTICES.....................................................................................43
20. SURVIVAL....................................................................................44
21. HEADINGS....................................................................................44
22. WAIVER......................................................................................44
23. COUNTERPARTS................................................................................45
24. GOVERNING LAW...............................................................................45
25. EQUAL EMPLOYMENT OPPORTUNITY................................................................45
26. SEVERABILITY................................................................................45
27. AMENDMENTS..................................................................................46
28. ENTIRE AGREEMENT............................................................................46
Schedule A. Interconnection Facilities and Associated Equipment Description
Schedule B. Revenue Meters
Schedule C. STN Agreement
Schedule D. Switching, Tagging and Grounding Rules
Schedule E. CONVEX Operating Instructions
Schedule F. CONVEX Operating Instruction--System Restoration
Schedule G. Northeast Utilities System Companies Open Access Transmission
Service Tariff No. 9
Schedule H. Interconnection Facilities Charges
Schedule I. Insurance Requirements
Schedule J. Seller's Rate 30
[Schedules will be provided to the Securities and Exchange Commission by
Northeast Generation Company upon request.]
INTERCONNECTION AGREEMENT
This
Interconnection Agreement (the "Agreement"), dated July 2, 1999 by
and between The
Connecticut Light and Power Company ("Seller"), a
Connecticut
corporation with a principal place of business located at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ and
Northeast Generation Company, a
Connecticut corporation
("Buyer"). The Seller and the Buyer are each referred to herein as a "Party" or,
collectively, the "Parties."
WITNESSETH:
WHEREAS, Seller and Buyer have entered into a Purchase and Sale
Agreement dated July 2, 1999 (the "Purchase and Sale Agreement") for the sale of
certain of Seller's generating assets; and
WHEREAS, Seller and/or its Affiliates intend to continue to operate
their transmission and distribution businesses from their present locations; and
WHEREAS, in the Purchase and Sale Agreement, Seller agreed to transfer
to Buyer certain designated real and personal properties, contracts, rights and
licenses pertaining to Seller's generating assets and to retain certain
designated real and personal properties, contracts, rights and licenses related
to Seller's transmission and distribution operations; and
WHEREAS, the Parties have agreed to enter into the Asset Demarcation
Agreement evidencing their agreement as to the demarcation between certain of
such transferred and retained assets that will not be situated wholly on real
property owned or to be owned by the respective owners of such assets after the
Closing under the Purchase and Sale Agreement ("Asset Demarcation Agreement");
and
WHEREAS, Buyer needs Interconnection Service from Seller for the assets
it is acquiring; and
WHEREAS, Seller and its Affiliates need access to parts of the assets
being acquired by the Buyer and the Buyer needs access to the assets that are
being acquired that are located on the property of the Seller; and
WHEREAS, the Parties agreed in the Purchase and Sale Agreement to
execute this mutually acceptable
Interconnection Agreement in order to provide
for the Seller's interconnection service to the Buyer and to define the
continuing responsibilities and obligations of each Party with respect to the
use of the other Party's property, assets and facilities.
NOW THEREFORE, in order to carry out the transactions contemplated by
the Purchase and Sale Agreement, the Asset Demarcation Agreement, and this
Agreement, and in
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consideration of the premises and mutual promises herein made, the Seller and
the Buyer agree as follows:
1. DEFINITIONS
Whenever used in this Agreement as capitalized terms, the following
terms shall have the meanings specified in this section. Capitalized terms used
but not otherwise specifically defined herein shall have the meaning ascribed to
them in the Purchase and Sale Agreement.
"Access Rights" shall mean all Easements, the Reserved Easements, the
Granted Easements, all licenses granted pursuant to Section 3.2.1 and all other
easements granted by one Party to the other.
"Acquired Assets" has the meaning set forth in Section 2.1 of the
Purchase and Sale Agreement.
"AC Service Power" means the AC service power purchased by the Buyer
from its suppliers for purposes of backing-up station service loads on a
generation site.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act (17 C.F.R. 240-12b-2).
"Closing" means the closing of the transactions contemplated by the
Purchase and Sale Agreement.
"Closing Date" means the date and time at which the Closing actually
occurs.
"CONVEX" means the
Connecticut Valley Electric Exchange or any
successor organization which operates as a satellite to or the ISO.
"Distribution System" means those electric energy delivery facilities
not classified as Transmission System by Seller that are owned, controlled or
operated by Seller or its Affiliates and that provide delivery service to or
from the Transmission System.
"Environment" means soil, land surface or subsurface strata, real
property, surface waters, groundwater, wetlands, sediments, drinking water
supply, ambient air (including indoor air) and any other environmental medium or
natural resource.
"Environmental Claim" means a claim by any Person based upon a breach
of Environmental Law or an Environmental Liability alleging loss of life, injury
to persons, property or business, damage to natural resources or trespass to
property.
"Environmental Laws" means all applicable Laws and any binding
administrative or judicial interpretations thereof relating to: (a) the
regulation, protection and use of the
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Environment; (b) the conservation, management, development, control and/or
use of land (including zoning laws and ordinances), natural resources and
wildlife; (c) the management, manufacture, possession, presence, use,
generation, transportation, treatment, storage, disposal, release, threatened
release, abatement, removal, remediation, or handling of, or exposure to, any
Hazardous Substances; or (d) noise; and includes, without limitation, the
following federal statues (and their implementing regulations): the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended; the Solid Waste Disposal Act, as amended, 42 U.S.C. Section 6901
et seq.; the Federal Water Pollution Control Act of 1972, as amended, 33
U.S.C. Section 1251 et seq.; the Toxic Substances Control Act of 1976, as
amended, 15 U.S.C. Section 2601 et. seq.; the Clean Air Act of 1966, as
amended, 42 U.S.C. Section 7401 et. seq.; the Federal Insecticide, Fungicide,
and Rodenticide Act, as amended, 7 U.S.C.ss.136 et. seq.; the Coastal Zone
Management Act of 1972, as amended, 16 U.S.C. Section 1451 et seq.; the Oil
Pollution Act of 1990 as amended, 33 U.S.C. Section 2701 et seq.; the Rivers
and Harbors Act of 1899, as amended, 33 U.S.C. Section 401 et seq.; the
Hazardous Materials Transportation Act, as amended, 49 U.S.C. Section 1801 et
seq.; the Endangered Species Act of 1973, as amended, 16 U.S.C. Section 1531
et seq.; and the Safe Drinking Water Act of 1974, as amended, 42 U.S.C.
Section 300(f) et seq.; and all analogous or comparable state statutes and
regulations, including, without limitation, the
Connecticut Transfer Act, as
amended, CGS Section 22a-134 et seq.; the
Connecticut Remediation Standard
Regulations, RCSA Section 22a-133k-1 et seq.; and the Massachusetts Oil and
Hazardous Release Prevention and Response Act, as amended, M.G.L. c. 21E.
"Environmental Liabilities" means any Liability under or related to
Environmental Laws arising as a result of or in connection with (i) any
violation or alleged violation of Environmental Law; (ii) any Environmental
Claims caused (or allegedly caused) by the presence or Release of Hazardous
Substances; (iii) the investigation and/or Remediation of Hazardous Substances;
(iv) compliance with Environmental Laws; (v) any Environmental Claim arising
from or relating to the off-site disposal, treatment, storage, transportation,
discharge, Release or recycling, or the arrangement for such activities, of
Hazardous Substances; and (vi) the investigation and/or remediation of Hazardous
Substances that are generated, disposed, treated, stored, transported,
discharged, Released, recycled, or the arrangement of such activities at any
Offsite Disposal Facility.
"FERC" means the Federal Energy Regulatory Commission, or any successor
thereto.
"Fossil Stations" means that portion of the Acquired Assets (subject to
the Easements and the Excluded Assets, as defined in the Purchase and Sale
Agreement) consisting of the Seller's
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Montville, Middletown, Devon, and Norwalk Harbor Facilities.
"Good Utility Practice" means any of the practices, methods and acts
engaged in or approved by a significant portion of the electric utility industry
during the relevant time period which, in the exercise of reasonable judgment in
light of the facts known at the time the decision was made, could have been
expected to accomplish the desired result at a reasonable cost consistent with
good business practices, reliability, safety, and expedition. Good Utility
Practice is not intended to be limited to the optimum practice, method, or act
to the exclusion of all others, but rather to be acceptable practices, methods,
or acts generally accepted in the region.
"Hazardous Substance" means (a) any petrochemical or petroleum
products, oil, waste oil, asbestos in any form that is or could become friable,
urea formaldehyde foam insulations, lead- based paint and polychlorinated
biphenyls; (b) any products, mixtures, compounds, materials or wastes, air
emissions, toxic substances, wastewater discharges and any chemical, material or
substance that may give rise to liability pursuant to, or is listed or regulated
under, or the human exposure to which or the Release of which is controlled or
limited by applicable Environmental Laws; and (c) any materials or substances
defined in Environmental Laws as "hazardous", "toxic", "pollutant", or
"contaminant", or words of similar meaning or regulatory effect.
"Hydroelectric Stations" means that portion of the Acquired Assets
(subject to the Easements and the Excluded Assets, as defined in the Purchase
and Sale Agreement) consisting of the [list hydro stations] hydroelectric
generating stations and associated dams and reservoirs.
"Indemnifying Party" has the meaning set forth in Section 10.1.
"Interconnection Facilities" means facilities or portions of facilities
located between each Interconnection Point and the PTF that are identified as
Interconnection Facilities and Associated Equipment in Schedule A hereto, as
amended from time to time.
"Interconnection Facilities Charge" has the meaning set forth in
Schedule 5.1.1.
"Interconnection Point" means the point for each Acquired Asset at
which the electric energy generated by such Acquired Asset enters the Seller's
Transmission System or Distribution System. The Interconnection Points are as
specified in Schedule A to this Agreement.
"Interconnection Service" means all of the services necessary for the
purpose of interconnecting the Buyer's Acquired Assets with the Transmission
System or the Distribution System and delivering the output of the Acquired
Assets over the Interconnection Facilities to the PTF.
"ISO" means ISO New England Inc., the independent system operator for
the New
8
England control area, or its successor.
"Joint Tag List" means the personnel approved by Buyer and Seller who
meet the requirements to switch, tag, and ground electrical equipment set forth
in CONVEX Operating Instruction No. 6401, Protective Switching and Tagging
Procedures, effective September 1, 1992.
"Leased Equipment" means hardware or software leased by Seller from
various third-party suppliers which is not directly transferable or assignable
to Buyer.
"Local Services" has the meaning set forth in Section 3.9.1.
"Maintain" means construct, reconstruct, install, inspect, repair,
replace, operate, patrol, maintain, use, modernize, expand, upgrade, or other
similar activities.
"NEPOOL" means the New England Power Pool, established by the NEPOOL
Agreement, or its successor.
"NEPOOL Agreement" means the New England Power Pool Agreement dated as
of September 1971, as amended by the Restated NEPOOL Agreement filed with FERC
on July 22, 1998 as finally approved by FERC and, as further amended from time
to time.
"NEPOOL Tariff" means the Restated NEPOOL Open Access Transmission
Tariff as filed with FERC on July 22, 1998 and as it may be amended from time to
time.
"NERC" means the North American Electric Reliability Council, or any
successor thereto.
"NPCC" means Northeast Power Coordinating Council, or any successor
thereto.
"OASIS" means Open Access Same Time Information System.
"Pool Transmission Facilities" or "PTF" means the transmission
facilities of Seller and other transmission owners in New England, as defined by
the NEPOOL Agreement.
"Primary System" means bulk power equipment such as transformers,
circuit breakers, rigid or strain bus, conductors, cables and other equipment
operating at 2,400 volts or above.
"Qualified Personnel" has the meaning set forth in 29 C.F.R. Section
1910.269(x). "Rate 30" means the rate charged by Seller attached hereto as
Schedule J, or its successor rate.
"Release" means any actual, threatened or alleged spilling, leaking,
pumping, pouring, emitting, dispersing, emptying, discharging, injecting,
escaping, leaching, dumping, or disposing of any Hazardous Substance into the
Environment that may cause an Environmental Liability (including the disposal or
abandonment of barrels, containers, tanks or other receptacles containing or
previously containing any Hazardous Substance).
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"Remediation" means any or all of the following activities to the
extent required to address the presence or Release of Hazardous Substances:
(a) monitoring, investigation, assessment, treatment, cleanup containment,
removal, mitigation, response or restoration work as well as obtaining any
permits, consents, approvals or authorizations of any Governmental Authority
necessary to conduct any such activity; (b) preparing and implementing any
plans or studies for any such activity; (c) obtaining a written notice from a
Governmental Authority with competent jurisdiction under Environmental Laws
or a written opinion of a (i) Licensed Environmental Professional (as defined
in C.G.S. Section 22a - 133v) or (ii) a Licensed Site Professional as defined
in M.G.L. c21A Section 19 et seq.), as contemplated by the relevant
Environmental Laws and in lieu of a written notice from a Governmental
Authority, that no material additional work is required; and (d) any other
activities reasonably determined by a party to be necessary or appropriate or
required under Environmental Laws.
"Revenue Meters" means all kWh, kVAh, and kVARh meters, pulse isolation
relays, pulse conversion relays, associated totalizing and Remote Access Pulse
Recorder (RAPR) equipment required to measure the transfer of energy between the
Parties.
"Right of Way Access" means use of existing gates, roadways, paths or
other means of access to gain entry to the Transmission System and Distribution
System rights of way from the Buyer's property or facilities.
"Routine Inspection and Maintenance" means any inspection,
measurements, meter readings and/or maintenance work deemed necessary by either
Party in the exercise of Good Utility Practice on either Party's property or
facilities to ensure reliable substation, Transmission System and Distribution
System operations and Transmission System and Distribution System integrity.
"SCADA Equipment" means Supervisory Control and Data Acquisition
equipment.
"Secondary Systems" means control or power circuits that operate below
600 volts, AC or DC, including but not limited to any hardware, control or
protective devices, cables, conductor, electric raceways, secondary equipment
panels, transducers, batteries, chargers, and voltage and current transformers
whose signals or energy may be used by Buyer, Seller, or their respective
Affiliates.
"Structural Facilities" has the meaning set forth in Section 3.7.
"Switching, Tagging, and Grounding Rules" has the meaning set forth in
CONVEX Operating Instruction #6401, Protective Switching and Tagging Procedures,
effective September 1, 1992, or relevant successor provisions as in effect from
time to time. A copy of the existing
10
Switching, Tagging and Grounding Rules is attached hereto as Schedule D and
incorporated by reference as if fully set forth herein.
"T&D Assets" means the Seller's transmission, distribution,
communication, substation and other assets which are not Acquired Assets and
which are not necessary to the operation of the Acquired Assets and/or which are
necessary to the operation of the Transmission System or the Distribution
System.
"Transmission System" means the PTF and non-PTF facilities owned,
controlled or operated by Seller or its Affiliate for purposes of providing
point-to-point transmission service, network integration transmission service,
and Interconnection Service, including services under the NEPOOL Open Access
Tariff.
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2. TERM OF AGREEMENT
2.1 TERM AND TERMINATION OF AGREEMENT. The obligations of the
Parties under this Agreement shall commence on the Closing Date and shall remain
in effect until such time as both Parties mutually agree to terminate them;
provided, however, that this Agreement shall terminate (x) with respect to any
Acquired Asset , or unit thereof, upon the date such Acquired Asset is
decommissioned, or (y) in accordance with Section 13. If (i) a change in law or
other circumstance substantially affects Seller's provision of Interconnection
Service, or (ii) FERC requires a modification to this Agreement that is
unacceptable to either Party, the Parties will negotiate in good faith to amend
this Agreement in a manner acceptable to FERC.
3. CONTINUING OBLIGATIONS AND RESPONSIBILITIES
3.1 INTERCONNECTION SERVICE. The Seller agrees to provide
Interconnection Service to the Acquired Assets in accordance with the operating
procedures and practices set forth in Schedules E and F hereto and Good Utility
Practice. Each of the Acquired Assets for which Buyer is requesting
Interconnection Service shall require the associated Interconnection Facilities
described in Schedule A. Seller shall connect the Acquired Assets to the
Transmission System or the Distribution System at the respective Interconnection
Points specified in Schedule A. Seller agrees to permit Buyer to interconnect
the Acquired Assets for so long as Buyer continues to operate the Acquired
Assets in accordance with Good Utility Practice. Interconnection Service shall
enable Buyer to receive generating station service from Buyer's supplier at the
respective Interconnection Points if Buyer does not supply its own generating
station service to the Acquired Assets in a manner that does not use the
Transmission System or Distribution System. Buyer or its supplier shall be
responsible for making arrangements under the applicable tariffs for
transmission and ancillary services associated with the receipt of generating
station service using the Transmission System or Distribution System or the PTF.
Seller shall operate and maintain the Interconnection Facilities in
accordance with Good Utility Practice. In the event Seller reasonably determines
that Buyer's existing generation interconnection or any modification to such
existing generation interconnection requires an addition to or modification of
the Interconnection Facilities, Seller shall notify Buyer of the necessity of
the addition or modification and the resulting change in the effective
Interconnection Facilities Charge. If Buyer agrees on the need for the addition
or modification or a dispute is resolved in accordance with Section 13 in favor
of the need therefor, Seller shall file the necessary amendments to this
Agreement with FERC, and upon FERC acceptance for filing of
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such amendment, Seller shall install the modification or addition and Buyer
shall pay the costs thereof in accordance with Section 5. Seller shall have no
responsibility for any diminution in the quality of Interconnection Service
directly attributable to the absence of such addition or modification.
Significant changes in the Acquired Assets or their capacity will require Buyer
to follow NEPOOL Section 18.4 procedures where applicable.
3.2 ACCESS, EASEMENTS, CONVEYANCES, LICENSES, AND RESTRICTIONS.
3.2.1 ACCESS. (a) The Parties agree to grant to each other
access, including Right of Way Access, to such of their respective facilities,
properties, equipment and records as may be necessary to enable each Party to
Maintain its respective facilities, properties, equipment and records in a
manner consistent with Good Utility Practice. Such access shall be provided in a
manner that does not unreasonably interfere with the ongoing business
operations, rights and obligations of the other Party.
(b) Buyer hereby grants to Seller and its Affiliates a
license to gain access to all of their substation equipment, Transmission System
or Distribution System, Secondary Systems and telecommunications systems and
facilities that are located on Buyer's property.
(c) Seller hereby grants to Buyer a license for Buyer's
Qualified Personnel to gain access to all of the Acquired Assets located on
Seller's property at Cos Cob, Branford, Torrington Terminal, Franklin Drive,
Montague, Tunnel and Northfield Mountain Station.
(d) The Access Rights are intended to be permanent and
shall not be revoked, nor shall either Party take any action that would impede,
restrict, diminish, or terminate the rights of access or use granted by such
Access Rights. Notwithstanding the foregoing, (i) should either Party or its
successor decide to permanently abandon the use of any Access Right or portion
thereof, such Party shall give the other Party written notice of its
abandonment, shall remove its properties from the area to be abandoned, perform
any remediation required by applicable Environmental Laws, and shall cause a
release of such Access Rights or any portion thereof to be recorded in the
appropriate Registry of Deeds; and (ii) the Parties may mutually agree to
relocate or expand any or all of the Access Rights locations within a Fossil or
Hydroelectric Station, provided, however, that the Party requesting the
relocation or expansion shall pay all reasonable costs and expenses associated
therewith, and the Parties shall execute or obtain, in a form reasonably
satisfactory to both Parties, all instruments necessary to establish the new
easement location. Both Parties agree to use their best efforts to establish a
mutually agreeable location if so requested.
(e) Buyer shall grant Seller and Seller shall grant Buyer
such additional
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conveyances, easements, or licenses as are reasonably necessary for ownership,
possession, maintenance, operation, or repair of the respective Party's
equipment and facilities as long as such conveyances, easements or licenses do
not have a material adverse impact upon the other Party's operations and are
consistent with the purpose of this Agreement and the Purchase and Sale
Agreement.
3.2.2 Each Party shall provide the other Party keys, access
codes, or other means of access necessary to enter each other's facilities or
properties. Access shall be granted only to Qualified Personnel. If personnel
who are not Qualified Personnel require access, Qualified Personnel shall escort
them while on site.
3.2.3 Neither Party shall make changes to the site
topography or accesses, including but not limited to grading or drainage, that
could reasonably be expected to materially adversely affect the other Party's
facilities or common use drainage or pollution control systems, without the
prior written consent of the other Party, such consent not to be unreasonably
withheld.
3.2.4 Each Party shall have the right to use and maintain
its control cables in existing underground duct banks located on the property of
the other Party, including duct banks between Seller's substation and the first
point of termination in a Fossil Station or Hydroelectric Station.
3.3 FACILITY AND EQUIPMENT MAINTENANCE.
Each Party shall Maintain its equipment and facilities and
perform its maintenance obligations that could reasonably be expected to affect
the operations of the other Party pursuant to Good Utility Practice. Buyer shall
be responsible for maintenance of all common use roadways and plant accesses in
or about the Fossil Stations and the Hydroelectric Stations. Unless otherwise
specified herein, or unless the Parties mutually agree to a different
arrangement, neither Party shall be responsible for the maintenance of the other
Party's equipment or Secondary Systems, regardless of their location.
3.4 EQUIPMENT TESTING
Each Party may request, pursuant to Good Utility Practice,
that the other Party test, calibrate, verify or validate its telemetering, data
acquisition, protective relay, control equipment or systems or other equipment
or software pursuant to Good Utility Practice (which currently requires such
action on an annual basis) or for the purpose of troubleshooting problems on
interconnected facilities, consistent with the other Party's obligation to
Maintain its equipment and facilities. Each Party shall be responsible for all
costs to test, calibrate, verify or validate its
14
equipment or software at intervals required by NEPOOL, NERC or NPCC. The
requesting Party shall be responsible for all costs of the other Party
associated with more frequent requests. Each Party shall supply the Party
requesting the test, at no cost to such Party, with copies of the resulting
inspection reports, installation and maintenance documents, test and calibration
records, verifications and validations of the telemetering, data acquisition,
protective relay, or other equipment or software connected to the Transmission
System or Distribution System.
3.5 NEW CONSTRUCTION OR MODIFICATIONS.
Seller may construct or modify its Transmission System and
Distribution System, including associated telecommunication facilities, pursuant
to Good Utility Practice, and Buyer may construct or modify its Acquired Assets
pursuant to Good Utility Practice. Notwithstanding the foregoing, no
modifications to or new construction of facilities or access thereto, including
but not limited to rights of way, fences or gates shall be made by either Party
which might reasonably be expected to adversely affect the other Party with
respect to its rights, obligations and responsibilities under this Agreement,
without prior written notification and without providing the other Party with
sufficient information regarding the work prior to commencement to enable such
Party to evaluate the effect of the proposed work on its operations.
If a proposed modification would reasonably be expected to affect the
Transmission System or Distribution System, both Parties agree to comply with
Good Utility Practice in a manner that complies with NEPOOL CRS 43, the NPCC's
"Basic Criteria for Design and Operation of Interconnected Power Systems," or
any successor criteria and all applicable operating rules, regulations
procedures and interconnection standards of the Seller as each may be
modified from time to time. For all construction work, major modifications, or
circuit changes involving new or existing facilities, equipment, systems or
circuits that could reasonably be expected to affect the operation of either
Party, the Party desiring to perform such work shall provide the other Party
with drawings, plans, specifications, and other necessary documentation for
review at least sixty days prior to the beginning of construction; provided that
if either Party contemplates a modification that would require the other Party
to make associated changes at its facilities, that Party shall promptly provide
written notice thereof to the other Party and shall keep the other Party fully
informed as its plans develop. The Parties shall cooperate in good faith to
coordinate the start of construction required by each Party in connection with
such proposed modification. If Seller constructs new or upgraded transmission or
distribution facilities at the request of Buyer, Buyer shall pay the costs
thereof in accordance with Section 5.
3.6 INSPECTIONS.
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Each Party shall have the right to inspect or observe, at its
own expense, the maintenance activities, equipment tests, installation,
construction, or other modifications to the other Party's Acquired Assets or T&D
Assets and associated telecommunication facilities, as the case may be, which
might reasonably be expected to adversely affect the observing Party's
operations or liability. The Party desiring to inspect or observe shall notify
the other Party in accordance with the notification procedures set forth herein.
If the Party inspecting the equipment, systems, or facilities observes any
deficiencies or defects that might reasonably be expected to adversely affect
the operations or liability of the observing Party, that Party shall notify the
Party owning the equipment or systems, and the owning Party shall make any
corrections necessitated by Good Utility Practice.
3.7 COMMON STRUCTURAL FACILITIES.
The Asset Demarcation Agreement delineates certain facilities
that will be part of the Acquired Assets or the T&D Assets, which are supported
on or within structures or buildings belonging to the other Party (the
"Structural Facilities"). Each Party shall maintain the Structural Facilities
that it owns in accordance with Good Utility Practice. The Parties shall conduct
an initial inspection of all such Structural Facilities prior to Closing. Seller
shall then make any corrections necessitated by Good Utility Practice. In the
case of Structural Facilities owned by Buyer upon which Seller has installed
Transmission System or Distribution System or
telecommunications equipment, Seller shall have the right to inspect such
Structural Facilities annually pursuant to Section 3.6 and provide Buyer with a
report documenting any deficiencies. Buyer shall then make any corrections
necessitated by Good Utility Practice. In the case of Structural Facilities
owned by Seller upon which Buyer has installed Acquired Assets, Buyer shall have
the right to inspect such Structural Facilities annually pursuant to Section 3.6
and provide Seller with a report documenting any deficiencies. Seller shall then
make any corrections necessitated by Good Utility Practice.
3.8 INFORMATION REPORTING OBLIGATIONS.
Notwithstanding anything to the contrary in this Agreement,
any obligation set forth in this Agreement of Buyer to provide information,
reports, or data to Seller shall be subject to the following limitations: (a)
such information, reports, or data shall be subject to the provisions of Section
7 concerning confidentiality; (b) Buyer shall be required to provide such
information, reports or data only to the extent Seller reasonably requires such
information to operate, maintain, or plan its Transmission System or the
Distribution System pursuant to Good Utility Practice; (c) Seller shall request
information, reports, and data from Buyer on a non-
16
discriminatory basis with respect to generators interconnected to the
Transmission System or Distribution System, as necessary, in Seller's judgment,
for the purposes set forth in clause (d), below; (d) Seller shall use any
information provided by Buyer pursuant to this Agreement only for the purposes
of operating, maintaining and planning the Transmission System or the
Distribution System pursuant to Good Utility Practice; and (e) if and to the
extent that any of the functions for which Seller requires certain information,
reports, or data is no longer performed by Seller, which function has been
adequately assumed by the ISO, Buyer's provision of such information, reports,
or data to the ISO shall satisfy its corresponding obligation under this
Agreement.
3.8.1 In order to maintain Interconnection Service, Buyer
shall promptly provide Seller with all information which could reasonably be
expected to affect the Transmission System and which is reasonably requested by
NERC, NPCC, NEPOOL, CONVEX, the ISO, or Seller's dispatching functions. Buyer
shall also provide to Seller or to the ISO at Seller's or the ISO's request all
information regarding its generating facilities needed by the ISO to model and
study transmission system responses to system contingencies and disturbances.
3.8.2 Buyer shall supply accurate, complete, and reliable
information in response to data requests necessary for operations, maintenance,
regulatory requirements and analysis of the Transmission System or the
Distribution System. Such information may include metered values for MW, MVAR,
voltage, current, frequency, breaker status indication, or any other information
reasonably required by Seller for reliable operation of the Transmission System
or of the Distribution System pursuant to Good Utility Practice.
3.8.3 Buyer shall gather information pertaining to
generation, transmission and distribution operating parameters for transmittal
to Seller using existing remote access systems.
3.8.4 Seller shall provide information to Buyer
concerning the status and/or condition of the Transmission System and parts
thereof in accordance with the requirements of FERC Orders 888 and 889 and
any successors thereto, including in particular any requirements pertaining
to the provision of information affecting the availability of transmission
services over an OASIS maintained by Seller or the ISO on Seller's behalf.
3.9 LOCAL SERVICES.
3.9.1 In addition to the Interconnection Service, the
Parties agree that, due to the integration of certain control schemes, revenue
metering applications, and communication networks, it is desirable to provide
each other with the services set forth in Sections 3.10 and 3.11 ("Local
Services") at no cost. The Parties shall use their best efforts to ensure that
such
17
Local Services are available at all times in the manner specified herein.
Notwithstanding the foregoing, either Party, upon notice to the other, may
change the Local Services it provides, provided that there is no cost to the
receiving Party and the quality, reliability and integrity of the replacement
Local Services are equivalent to the then existing services. If service could be
interrupted as a result of the change, the Party proposing to make the change
shall give ten working days prior written notice of the change to the other
Party. Neither Party shall terminate its Local Services without the other
Party's written consent or without at least twelve months' prior written
notification; provided, however, if either Party no longer needs or desires a
particular Local Service, such Party shall notify the other Party and the Party
providing the Local Service shall terminate such service as soon thereafter as
practicable.
3.9.2 TEMPORARY SUSPENSION OF SECTION 3.10 AND 3.11
SERVICES. The Party providing the Local Services set forth in Sections 3.10 and
3.11 below shall notify and obtain approval from the other Party of any
scheduled temporary suspension of Local Services at least five working days in
advance of such suspension. Such notification shall include an estimated time
duration for a return to normal conditions. In the event of any unplanned or
forced suspension of the Local Services set forth in Sections 3.10 and 3.11
below, the Party providing the Local Service shall immediately notify the other
Party first orally and then in writing. The notifying Party shall use all
reasonable efforts to minimize the duration of such suspension. The Parties
agree to use all reasonable efforts to complete any repairs, modifications or
corrections that are necessary to restore suspended Local Services pursuant to
Section 3.10 and 3.11 below to the other Party as soon as reasonably
practicable. The Party temporarily suspending the Local Services shall reimburse
the other Party for the reasonable costs incurred by the other Party in
obtaining equivalent Local Services.
3.10 SELLER PROVIDED LOCAL SERVICES
3.10.1 DELIVERY SERVICE. At Seller's expense, Seller shall
maintain the facilities necessary for it to deliver to Buyer the AC Service
Power in the quantities, at the levels, and in the substation locations where
such power is provided over facilities included in the T&D Assets immediately
prior to Closing. At no cost to Buyer, Seller shall allow Buyer's relays and
controls that are currently dependent upon Seller's batteries for DC service
power to continue to take such DC service power from Seller's facilities (or
shall otherwise provide such service) in the quantities, at the levels and in
the locations where such power is provided from the Seller's facilities
immediately prior to the Closing.
3.10.2 BUILDING SERVICES. At Seller's expense, Seller shall
provide Buyer with
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heating, ventilation, air conditioning, lighting, and other building services at
the levels in existence for winter and summer conditions immediately prior to
Closing, for Buyer's storage spaces, offices and relay or control equipment
within Seller's T&D Assets. If Buyer desires a higher level of service, Buyer
and Seller shall mutually agree upon the upgrade and price for such upgrade and
Buyer shall pay Seller for the upgrade.
3.10.3 METERING. Buyer shall acquire and own all revenue
metering equipment and Seller shall own all metering equipment for AC Service
Power if used solely for that purpose. Seller shall maintain, control and repair
all revenue meters and station service meters, conduct meter accuracy and
tolerance tests, and prepare all calibration reports required for equipment that
measures energy transfers between Buyer and Seller. Such reports shall be in
accordance with NEPOOL CRS-13, as amended from time to time, and any applicable
requirements of state public utilities commissions. The Parties agree that if
the meter equipment and the Interconnection Point are not at the same location
electrically, the meter shall be compensated to record delivery of electricity
in a manner that accounts for energy losses occurring between the meter and the
Interconnection Point, both when the generating unit is delivering energy to
Seller and when Seller is delivering AC Service Power to the Buyer.
If at any time any metering equipment owned by the Buyer is
found to be inaccurate by a margin of error greater than that allowed under the
applicable NEPOOL Criteria, Rules and Standards and such equipment cannot be
repaired, Seller shall cause such metering equipment to be replaced at Buyer's
expense. Meter readings for the period of inaccuracy shall be corrected so far
as corrections can be reasonably ascertained. Each Party shall comply with any
reasonable request of the other concerning the sealing of meters, the presence
of a representative of the other Party when the seals are broken and the tests
are made, and other matters affecting the accuracy of the measurement of
electricity delivered to or from each Acquired Asset. If either Party believes
that there has been a meter failure or stoppage, it shall immediately notify the
other. Revenue Meter locations at the Effective Date are set forth on Schedule B
hereto.
In order for Seller to meet its reporting obligations to the
ISO, Buyer shall provide Seller daily telephone access to hourly interval data
recording meters enabling Seller to derive (1) net generation at the
Interconnection Point and (2) generating station service loads when a plant is
not generating. The data recording meters may be either net generation meters or
a combination of gross generation and generation station service load meters. In
the event of telephone communication failure, Buyer shall report the hourly
interval net generation data
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values to Seller by facsimile by 8:00 a.m. on the day following the day of
generation. In the event of meter failure, Buyer shall provide Seller informed
and intelligent estimates of the hourly net generation data by 8:00 a.m. on the
day following the day of generation.
3.10.4 LINE OPERATION INFORMATION. Both Parties shall
require remote access to available site specific line operation information at
Seller's facilities. Seller shall make such information available to Buyer over
OASIS in accordance with FERC Order 889 and any successor orders thereto.
3.10.5 REMOTE TERMINAL UNITS. Seller may continue to own and
operate remote terminal units (RTU's) that are associated with CONVEX control at
each of Buyer's Fossil Stations and Hydroelectric Stations where such RTUs are
located immediately prior to the Closing.
3.10.6 RELAYING SYSTEMS. Seller shall own, maintain and test
all protective relaying equipment that protects its T&D Assets. Where protective
relaying equipment protects property of both Parties, the ownership of such
equipment shall be as set forth in the Asset Demarcation Agreement.
3.11 BUYER PROVIDED LOCAL SERVICES.
3.11.1 SELLER'S FACILITY SUPPORT. At no cost to Seller,
Buyer shall allow Seller's facilities that are currently dependent upon the
Acquired Assets for station service support to continue to take AC and DC
station service power from the Acquired Assets (or shall otherwise provide for
such service) in the quantities, at the levels and in the locations where such
power is provided from the Acquired Assets immediately prior to the Closing. Any
upgrade in the level of support hereafter requested by Seller shall be mutually
agreed upon by the Parties.
3.11.2 BUILDING SERVICES. At no cost to Seller, Buyer shall
own, repair, maintain and provide Seller with heating, ventilation, air
conditioning, lighting, and other building services at the levels in existence
for winter and summer conditions, immediately prior to Closing, for areas within
Buyer's Acquired Assets used by the Seller for relay, control and communications
equipment and cables, offices, control rooms, or other related transmission
functions. Seller shall have the right to expand its equipment and facilities
within the control room space existing at the Closing Date which it will share
with Buyer with the written consent of Buyer, which consent shall not be
unreasonably withheld. If Seller desires a higher level of service, Seller and
Buyer shall mutually agree upon the upgrade and Seller shall pay for such
upgrade
3.12 COMMUNICATIONS SERVICES.
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3.12.1 GENERAL. Buyer shall acquire and maintain appropriate
channels of communication as required by the ISO and CONVEX. Buyer may at its
option use Seller's communication equipment for necessary microwave services, on
the condition that Buyer will become a participant in the Shared
Telecommunications Network (STN) and will abide by the terms and conditions of
the STN Agreement dated June 1, 1990, a copy of which is attached hereto as
Schedule D and incorporated by reference as if fully set forth herein.
3.12.2 RADIO LICENSES. Existing radio licenses shall be
retained by Seller or its Affiliates. Buyer shall establish its own separate
frequencies.
3.12.3 UPGRADES. Seller shall, after providing notice to
Buyer in accordance with this Agreement, at its own expense, have the right to
modify, add or upgrade communication equipment including but not limited to
antennas, waveguides and cables on Buyer's Acquired Assets as required for
Transmission System or Distribution System operations, provided that such
upgrades have no adverse impact upon Buyer's operation of its Acquired Assets,
shall not require Buyer to incur any costs, unless reimbursed by Seller for such
costs, shall not result in any liability for the Buyer, and are installed,
operated and maintained by the Seller in accordance with applicable laws,
regulations, rules and permits.
3.12.4 MAINTENANCE. Seller shall be responsible for
maintaining equipment and cables necessary to connect its communication
equipment to other equipment in the Buyer's facility to which communication
services are provided or to access an outside facility or telecommunication
service provider for communication purposes.
3.13 SPARE PARTS.
Where practicable and available, each Party shall provide the
other Party with spare parts in the event of emergencies or equipment failures.
The Parties shall mutually agree upon payment for or replacement of such spare
parts. If Buyer desires Seller to maintain spare parts that are not in Seller's
possession, and if Seller has the physical space to do so, Seller shall maintain
such parts, at Buyer's expense.
3.14 EMERGENCY PROCEDURE
Seller shall provide Buyer's designee under Section 19 with
prompt oral notification of Transmission System or Distribution System
emergencies which may reasonably be expected to affect Buyer's immediate
operation of the Fossil Stations or Hydroelectric Stations, and Buyer shall
provide Seller's designee under Section 19 with prompt oral notification of
generation equipment emergencies which may reasonably be expected to affect
Seller's or its Affiliates' operations. Such oral notification shall be followed
within 24 hours by written
21
notification. The written notification shall describe the extent of damage or
deficiency, anticipated length of outage and the corrective action.
If, in the good faith judgment of either Party, an emergency
endangers or could endanger life or property, the Party recognizing the problem
shall take such action as may be reasonable and necessary to prevent, avoid, or
mitigate injury, danger, or loss in accordance with CONVEX Operating
Instructions, No. 6401, Section 1.D.
Seller may, consistent with Good Utility Practice, request
that the ISO take whatever actions or inactions it deems necessary during
emergency operating conditions to: (i) preserve public safety; (ii) preserve the
integrity of the Transmission System, (iii) limit or prevent damage, or (iv)
expedite restoration of service.
3.15 INTERCONNECTION SERVICE INTERRUPTIONS.
If the ISO, CONVEX, or, with respect to portions of the
Transmission System or the Distribution System subject to Seller's dispatch,
Seller, reasonably determines that the Buyer's operation of its Acquired Assets
is inconsistent with Good Utility Practice and will have an adverse impact on
the quality of service or interfere with Seller's safe and reliable operation of
the Transmission System or the Distribution System, Seller may discontinue
Interconnection Service until the condition has been corrected. Unless the ISO,
CONVEX, or Seller determines that an emergency exists or the risk of an
emergency is imminent, Seller shall give Buyer reasonable notice of its
intention to discontinue Interconnection Service and, where practicable, allow
suitable time for Buyer to remove the interfering condition. Seller's judgment
with regard to the interruption of service under this paragraph shall be made
pursuant to Good Utility Practice. In the case of such interruption, Seller
shall immediately confer with Buyer regarding the conditions causing such
interruption and its recommendation concerning timely correction thereof. In the
event Interconnection Service is interrupted under this section due to Buyer's
failure to operate and maintain the Acquired Assets pursuant to Good Utility
Practice, Buyer shall compensate Seller for all costs reasonably incurred by
Seller directly attributable to the interruption and restoration of
Interconnection Service; provided, however that such costs shall not include the
costs of replacement energy or capacity. Seller shall restore the
Interconnection Service as it was before the interruption once the interfering
condition ceases to exist.
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3.16 NON-DISPATCHABILITY NOTIFICATION.
If any Fossil Station or Hydroelectric Station is not
dispatchable by NEPOOL or the ISO, Buyer shall notify Seller, to the extent
feasible, at least 48 hours in advance of its intent to take the unit
temporarily off-line, and it shall provide Seller with a schedule of when
generation operations will be resumed. In the event of a forced outage, Buyer
shall notify Seller of its generating unit's temporary interruption of
generation as soon as practicable; and it shall provide Seller, as soon as
practicable, with a schedule of when generation will be resumed.
3.17 SCHEDULED MAINTENANCE NOTIFICATION AND COORDINATION
3.17.1 TRANSMISSION SYSTEM MAINTENANCE. Seller shall consult
with Buyer regarding timing of scheduled maintenance of the Transmission System
which might reasonably be expected to affect the Fossil Stations or
Hydroelectric Stations. Seller shall, to the extent practicable, schedule any
testing, shutdown, or withdrawal of such facilities to coincide with Buyer's
scheduled outages. To facilitate such consultation and to the extent the
information is not available from the ISO in a timely manner, in June of each
year, or on another date mutually acceptable to the Parties, Buyer shall furnish
Seller with non-binding preliminary generator maintenance schedules covering the
upcoming two years. Buyer shall furnish Seller with non-binding updates to such
schedules to reflect significant changes.
In the event Seller is unable to schedule the outage of its
Transmission System to coincide with Buyer's schedule, Seller shall use all
reasonable efforts to notify Buyer, in advance, of the reasons for the outage,
the time scheduled for it to take place, and its expected duration. Seller shall
use due diligence to restore such facilities to operation as quickly as
possible.
3.17.2 LOCAL ROUTINE INSPECTIONS AND MAINTENANCE. If any
Fossil Station or Hydroelectric Station is not routinely staffed, Seller shall
provide advance notice to Buyer's designee provided in Section 19 by telephone
before Seller's personnel enter such Fossil Station or Hydroelectric Station for
Routine Inspection and Maintenance and all other non-disruptive work that does
not require equipment outages. Buyer shall provide advance notice by telephone
to Seller's dispatch personnel (or equivalent) before Buyer's personnel enter
Seller's T&D Assets for routine measurements, inspections, and meter reads. For
work that will require equipment outages or that is reasonably expected to
affect the security of the other Party's operations, the Party desiring to
perform the Routine Inspection and Maintenance shall provide the other Party
with at least 48 hours prior written notification in accordance with Section 19.
3.18 SAFETY.
3.18.1 GENERAL. Subject to the provisions of Section 10,
each Party shall be solely
23
responsible for and shall assume all liability for the safety and supervision of
its own employees, agents, representatives, and subcontractors. All work
performed by either Party that could reasonably be expected to affect the
operations of the other Party shall be performed in accordance with all
applicable laws, rules, and regulations pertaining to the safety of persons or
property, including, without limitation, compliance with the safety regulations
and standards adopted under the Occupational Safety and Health Act of 1970
(OSHA) as amended from time to time, the National Electrical Safety Code (NESC)
as amended from time to time and Good Utility Practice.
3.18.2 SWITCHING, TAGGING AND GROUNDING. Each Party shall
comply with Seller's Switching, Tagging and Grounding Rules, as in existence on
the Closing Date and as it may be modified from time to time at all utility
Primary System and Secondary System Interconnection Points or demarcation
points. A copy of the existing Switching, Tagging and Grounding Rules is
attached hereto as Schedule D and incorporated by reference as if fully set
forth herein. Seller will notify Buyer of any changes in its Switching, Tagging
and Grounding Rules.
3.18.3 TRAINING. Each Party, in accordance with Schedule D,
shall be responsible for training, testing, and certifying operators for
inclusion on a Joint Tag List. Every six months, each Party shall provide the
other Party with an updated list of employees qualified for inclusion on the
Joint Tag List. Buyer shall Maintain and be responsible for all switching,
tagging and grounding on Buyer's side of the Interconnection Point and Seller
shall Maintain and be responsible for all switching, tagging and grounding at
the Interconnection Point and on Seller's side thereof.
3.19 ENVIRONMENTAL COMPLIANCE AND PROCEDURES.
During the term of this Agreement, each Party shall notify the
other Party first orally and then in writing of any releases of Hazardous
Substances, asbestos or lead abatement, or requirements for or commencement of
Remediation activities within 24 hours of discovery or initiation or sooner when
necessary to permit the other Party to comply with applicable laws or
regulations. Except as required by law or any federal or state agency, neither
Party shall knowingly take any action referred to in the next preceding sentence
which might reasonably be expected to have an adverse effect upon the operations
of the Acquired Assets or T&D Assets, as the case may be, of the other Party
hereunder without prior written notification and agreement between the Parties.
Neither Party shall require the other to modify any physical structures,
including containment systems, unless required by law. The Parties agree to
coordinate with each other concerning any site regulatory required plans. Each
Party shall promptly remove any
24
oil or jet fuel remaining from any tank whose use is discontinued, except that
Seller shall have no obligation to remove oil from transformers that are
temporarily removed from service. Buyer shall operate, maintain and inspect the
cathodic protection systems installed to protect underground tanks from
corrosion and shall permit Seller to review records pertaining to those systems.
Each Party shall comply in all respects with all Environmental Laws and obtain
and maintain all Permits required under all applicable Environmental Laws with
respect to the properties that it owns. To the extent necessary, the Parties
shall cooperate in all compliance and filings under Environmental Laws.
Each Party shall indemnify, hold harmless and defend the other Party,
its parent and Affiliates and their respective officers, directors, trustees,
employees, contractors, subcontractors and agents, from and against any claims
or liability for damage to property, injury to or death of any person or any
other liability, including all expenses and reasonable attorney's fees incurred
by such Indemnified Party, to the extent caused by any act or omission of the
Indemnifying Party, its parent and Affiliates and their respective officers,
directors, trustees, employees, contractors, subcontractors or agents that
violates the Indemnifying Party's undertakings under this Section 3.19. The
indemnification procedures set forth in Section 10.2 shall also be applicable to
this Section 3.19.
3.20 NEPOOL/ISO
From and after the Closing Date, the Buyer agrees to maintain
membership in good standing in NEPOOL and to submit to the governance of the ISO
as established by the NEPOOL Agreement. From and after the Closing Date, if the
Buyer decides to effect a permanent or long-term shut-down or substantial
reduction in existing generation capacity of the Norwalk Harbor or Cos Cob
facilities, the Buyer shall give twenty-four months prior written notice of such
decision to the Seller, to the
Connecticut Department of Public Utility Control,
and to the ISO. The Buyer shall fully comply with all rules and regulations of
the ISO related to shutdown of generating facilities. Other than as set forth in
this Section 3.20 or as may be required to preserve system reliability or to
comply with the requirements of the ISO or NEPOOL, the Seller shall not
interfere with Buyer's efforts to expand or modify generation capacity at any of
the Sites.
4. OPERATIONS.
4.1 GENERAL. The Parties agree to operate all equipment that could
reasonably be expected to have an impact on the operations of the other Party or
an Affiliate of Seller in
25
accordance with all applicable federal, state, and local laws, governmental
agency rules, regulations, and codes, and Good Utility Practice. Notwithstanding
anything to the contrary in this Agreement, any obligation of Buyer to carry out
or comply with requests, orders, or directives of Seller shall be subject to the
following limitations: (a) Seller shall issue such requests, orders or
directives to Buyer pursuant to Good Utility Practice and applicable tariffs;
(b) Seller shall issue requests, orders, or directives to Buyer on a
non-discriminatory basis, with respect to generators interconnected to the
Transmission System or the Distribution System, as necessary, in Seller's
judgment, exercised reasonably and in good faith based on information available
to Seller at the time, (i) to operate the Transmission System and the
Distribution System safely, reliably, and effectively, or (ii) to conduct
necessary inspection, testing, repair, maintenance, modification, or replacement
of Transmission System or Distribution System facilities. To the extent Seller
ceases to perform any function authorized by this Agreement to issue requests,
orders, or directives to Buyer, which function has been adequately assumed by
the ISO, Buyer's compliance with the requests, orders, and directives of the ISO
shall satisfy its corresponding obligation under this Agreement.
4.2 BUYER'S OPERATING OBLIGATIONS.
4.2.1 GENERAL. Buyer shall operate the Fossil Stations and
the Hydroelectric Stations that are connected to the Distribution System in
accordance with the CONVEX Operating Instructions for each such station as
revised from time to time. Copies of the effective CONVEX Operating Instructions
for each such station are attached hereto as Exhibit E. Buyer shall carry out
all switching orders from Seller's dispatch personnel, the ISO, or CONVEX issued
pursuant to the CONVEX Operating Instructions in a reasonably timely manner.
Buyer shall keep Seller advised of its generating unit's capabilities of
participation in system restoration and if it has black start capability. The
electrical supply to the Point of Interconnection shall be in the form of three
phase 60 Hertz alternating current. Buyer's equipment shall conform to industry
standards for harmonic distortion and voltage fluctuation.
4.2.2 VOLTAGE OR REACTIVE CONTROL REQUIREMENTS. Unless
otherwise agreed by the Parties, Buyer shall operate its existing interconnected
Acquired Assets with automatic voltage regulators. The voltage regulators will
continuously control voltage at each of the Interconnection Points consistent
with the range of voltage set forth in Schedule E as it may be amended by
Seller, the ISO or CONVEX from time to time; provided, however, that Buyer's
conforming to such range of voltage does not cause any Fossil Station or
Hydroelectric Station to operate outside its generating capacity or to violate
any electrical constraints. Unless otherwise
26
required by CONVEX or the ISO the voltage regulator shall be in automatic mode
and continuously regulating the voltage schedules. Buyer acknowledges that the
ISO or CONVEX may direct Buyer to deactivate the automatic voltage regulator and
to supply reactive power pursuant to a schedule provided by the ISO or CONVEX.
If Buyer fails to operate a generating facility included in the Acquired Assets
in accordance with Schedule E, and to the extent the generating facility is
operating, Seller will provide written notice to Buyer to remedy that situation.
If Buyer does not commence appropriate action within seven days of receiving
such notice, Seller may then take necessary action, at Buyer's expense, to
remedy Buyer's default, including the installation of capacitor banks or other
reactive compensation equipment necessary to ensure the proper voltage or
reactive supply at the generating facility. Buyer shall notify CONVEX or the
ISO, to the extent required by CONVEX or the ISO, (i) if a generating unit
reaches a VAR limit; (ii) if there is any deviation from the assigned voltage
schedule; (iii) if the voltage regulator is placed in manual mode; or (iv) if
any voltage regulator is removed from or restored to service. In addition to
voltage regulation, Buyer shall adhere, to the extent possible within its
generating capacity, to CONVEX or the ISO's service restoration plan and black
start criteria, as amended from time to time. A copy of the plan in existence
immediately prior to Closing is attached hereto as Schedule F and is
incorporated by reference as if fully set forth herein. Buyer acknowledges that
CONVEX and the ISO may have the right to require reduced or increased generation
from the Acquired Assets in accordance with the NEPOOL Tariff and applicable
rules of NEPOOL and the ISO.
4.3 SELLER'S OPERATING OBLIGATIONS. All operations, including
start-up, shutdown and determination of hourly generation, will be coordinated
by the ISO, or, if the ISO is not doing so, by Seller's designated agent. Seller
reserves the right, in accordance with Good Utility Practice, to reasonably
specify generator controls that affect the Transmission System or the
Distribution System, such as excitation, droop and automatic generation control
settings, as modified from time to time. Buyer agrees to comply with such
reasonable specifications at Buyer's expense to the extent consistent with Good
Utility Practices and the requirements of the ISO and NPCC.
4.4 AUDITING OF ACCOUNTS AND RECORDS. Within two years following
each calendar year, Buyer and Seller shall have the right to audit each other's
accounts and records pertaining to the transactions under this Agreement in that
calendar year. Such audits shall take place at the offices where such accounts
and records are maintained during normal business hours. Appropriate notice
under Section 19 shall be given prior to any audit. The Party being audited will
be entitled to review the audit report and any supporting materials. Any audit
hereunder
27
shall be subject to Section 7, and, to the extent that audited information
includes confidential information, the auditing Party shall designate an
independent auditor to perform such audit.
5. COST RESPONSIBILITIES AND BILLING PROCEDURES.
5.1 BUYER'S INTERCONNECTION COST RESPONSIBILITIES.
5.1.1 INTERCONNECTION FACILITIES CHARGE. Buyer shall pay
all costs related to Buyer's use of the Interconnection Facilities through the
assessment of Interconnection Facilities Charges. The Interconnection Facilities
Charge applicable to Seller's Non-PTF Transmission Facilities shall be assessed
in accordance with the Northeast Utilities System Companies Open Access
Transmission Service Tariff No. 9, attached hereto as Schedule G, as it may be
revised from time to time. The Interconnection Facilities Charge applicable to
Seller's Distribution System Facilities shall be based on the Seller's estimated
cost of providing service based on the Seller's estimated cost of providing
service based on the classification of the Seller's Distribution System
Facilities used to provide Interconnection Service to the Hydroelectric Station
receiving such service.
The Interconnection Facilities Charges for Distribution System
Facilities from the Closing Date through December 31, 2003 shall be deemed to be
included in the Purchase Price paid by the Buyer to the Seller set forth in the
Purchase and Sale Agreement dated July 2, 1999. After December 31, 2003, Buyer
shall pay Distribution System Interconnection Facilities Charges as approved by
the regulatory authority having jurisdiction over such charges.
For informational purposes, Seller has calculated the current
Distribution Facilities Interconnection Charge at $28/kWyr, based on data
contained in Seller's most recent FERC Form 1. Such charge will be filed with
FERC in the joint application of the Buyer and the Seller for approval of this
Agreement under Section 205 of the Federal Power Act and is subject to such FERC
approval. The Buyer will retain all rights to participate in future FERC
proceedings and to protest any rate filing as applicable after 2003.
The Interconnection Facilities Charge applicable to each of the Fossil
Stations and Hydroelectric Stations shall be as specified in Schedule H, a copy
of which is attached hereto and incorporated by reference as if fully set forth
herein.
5.1.2 PAYMENT ON REMOVAL FROM SERVICE. If Buyer permanently
removes from service a Fossil Station or a Hydroelectric Station for which it
pays Seller an Interconnection Facilities Charge, Buyer may, at its option,
terminate its obligation to pay the Interconnection Facilities Charge by paying
Seller a lump sum payment based on the cost of the Interconnection
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Facility as shown on Seller's books of account, reduced by an allocated portion
of accumulated depreciation. Upon reasonable request by Buyer, Seller shall
furnish Buyer with an estimate of the amount of the lump sum payment that would
be due upon the retirement or mothballing of any such Fossil Station or
Hydroelectric Station, including a description of the methodology employed to
calculate such amount.
5.1.3 LEASED TELEPHONE LINES. Buyer and Seller shall share
equally the cost of telephone lines used by both Parties to transmit the status
of generation and transmission operations to CONVEX. Buyer and Seller shall
share the costs of telephone lines used by both Parties for other purposes in a
manner proportionate to their use of such lines.
5.2 DELIVERY OF AC SERVICE POWER. In the event that Buyer obtains
AC Service Power for the Acquired Assets, Seller shall deliver such AC Service
Power to the Acquired Assets at Seller's Rate 30, attached hereto as Schedule J,
for demand for AC Service Power up to the maximum demand covered by such rate,
or at the appropriate rate applicable to Buyer's actual demand for AC Service
Power, plus any applicable NEPOOL charges.
5.3 COST RESPONSIBILITIES FOR LOCAL SERVICES
Each Party shall bear its cost for Local Services provided to
the other Party as provided in Sections 3.10 and 3.11. For Local Services that
require reimbursement but for which price or rate schedules are not included in
this Agreement, the Parties shall agree upon the price or rate to be paid before
performing or providing such Local Services. Work performed by Seller on Buyer's
Acquired Assets shall be paid for by Buyer at applicable rates unless performed
for Seller's purpose or a joint purpose, in which case each Party shall pay its
ratable share of the cost.
5.4 BILLING PROCEDURES. Within a reasonable time after the first
day of each month, each Party shall prepare an invoice for those reimbursable
services rendered to the other Party under this Agreement during the preceding
month. Each invoice shall state the month in which the services were rendered,
shall be itemized to reflect the nature of the services rendered, and shall
fully describe the services rendered. Each invoice shall be paid within thirty
days of receipt. All payments shall be made in immediately available funds
payable to the other Party, or by wire transfer to a bank named by such Party.
When payments are made by mail, invoices shall be deemed paid on the
date payment is received. Payment of an invoice shall not relieve the paying
Party from any responsibilities or obligations it has under this Agreement; nor
shall it constitute a waiver of any claims arising hereunder.
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5.5 BILLING DISPUTES, INTEREST ON UNPAID BALANCE. In the event
of a billing dispute between Seller and Buyer, Seller and Buyer will continue
to provide services as long as the other Party (i) continues to make all
payments not in dispute, and (ii) pays into an escrow account the amount of
the invoice in dispute, pending resolution of such dispute. If Buyer fails to
meet these two requirements for continuation of Interconnection Service, then
Seller may provide notice to Buyer of its intention to suspend service in
sixty (60) days, in accordance with then applicable FERC policy. Interest on
any unpaid amounts (including amounts placed in escrow) shall be calculated
in accordance with the methodology specified for interest on refunds in FERC
regulations at 18 C.F.R. Section 35.19a(a)(2)(iii). Interest on delinquent
amounts shall be calculated from the due date for payment set forth in
Section 5.3 to the date of payment.
5.6 DEFAULT. In the event either Party fails to make payment of
the costs identified in this Section 5.0 to the other Party on or before the due
date as described above (except for amounts in dispute under Section 5.4), an
event of default by such Party under Section 13.1 shall be deemed to exist.
6. DOCUMENTATION.
6.1 OBLIGATION TO PROVIDE DOCUMENTATION. Whenever a Party makes a
modification to its Acquired Assets or T&D Assets, as the case may be, that
could reasonably be expected to affect the other Party's operations hereunder,
the Party making the change shall provide notice to the other party and
appropriate documentation for such changes, in the form of written test records,
operation and maintenance procedures, drawings, materials lists, or
descriptions. Before making any modification to equipment or portions of the
facilities that are identified in the Asset Demarcation Agreement, the Party
desiring to make the change shall submit the proposed change to the other Party
for review. The Party initiating the change shall allow the other Party 30 days
to review the proposed change. Upon completion of any modifications to equipment
or facilities that are identified in the Asset Demarcation Agreement, the Party
initiating the modifications shall issue "as built" drawings to the other Party.
The "as built" drawings shall be issued within 90 days of completion, unless
otherwise agreed by the Parties. Each Party shall be responsible for its own
equipment, inspections, maintenance, construction, and modifications, and the
other Party's review of or comments on any document provided by the initiating
Party shall not relieve the initiating Party of its responsibility for the
correctness and adequacy of the work to be performed.
6.2 DRAWINGS. Before the Closing Date Seller shall identify,
number, and provide
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Buyer with a duplicate set of the most current drawings, labeled as "Common"
that represent equipment or facilities that are identified in the Asset
Demarcation Agreement. Such drawings shall consist, at a minimum, of one or more
of the following:
System One-Lines Single page format drawings used for
dispatch and operation purposes.
One-Line Drawings Prints used in conceptual design which
provide detail on Interconnection
Facilities and Interconnection Points.
Meter and Relay Drawings Prints which provide a higher level of
detail than one-line drawings and
identify on a single line basis current
and voltage transformer locations,
protection relay types, and meter and
control connections.
Current and Voltage Drawings Prints which provide the highest level of
detail for the facilities in a three line
format with specific current and voltage
transformer connections, relay and meter
terminations.
Control Drawings Prints which provide information on
apparatus controls, switch developments,
etc.
Secondary Wiring Drawings Prints which describe the physical panel
layout, relay, terminal block and device
locations, wiring and other construction
details.
Other Physical Drawings Prints which include information on
foundations, equipment layouts,
grounding, panel construction, etc.
Each Party shall be responsible for updating and correcting
its own drawings and shall provide copies of all updated and corrected drawings
to the other Party as soon as practicable thereafter. Except as otherwise stated
on any document or drawing, Seller makes no representations as to the accuracy,
detail, or completeness of the documents or drawings provided to Buyer at or
before the Closing; and Buyer hereby releases Seller from any liability arising
as a result of Buyer's use of such documentation or drawings. Seller shall
provide Buyer with technical maintenance or operations documentation, if
available, for protection, communications
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and Primary electrical equipment.
7. CONFIDENTIALITY.
7.1 CONFIDENTIALITY OF SELLER. Seller shall hold in confidence,
unless compelled to disclose by judicial or administrative process or other
provisions of law, all documents and information furnished to it by Buyer in
connection with this Agreement. All such information shall be deemed
confidential except to the extent that such information or documents are (i)
generally available to the public other than as a result of a disclosure by
Seller, (ii) made available to Seller on a non-confidential basis prior to
disclosure to Seller by Buyer, or (iii) made available to Seller on a
non-confidential basis from a source other than Buyer, provided that such source
is not known, and by reasonable effort could not be known, by Seller to be bound
by a confidentiality agreement with Buyer or otherwise prohibited from
transmitting the information to Seller by a contractual, legal or fiduciary
obligation. Seller shall not release or disclose such confidential information
to any other person, except to its employees on a need-to-know basis in
connection with this Agreement. Each such employee shall first be advised of the
confidentiality provisions of this Section 7.1 and shall agree in writing to
comply with such provisions. In no event shall such information be disclosed in
violation of the requirements of FERC Order 889 or any other applicable
standards of conduct and any successor(s) thereto. Seller shall promptly notify
Buyer if it receives notice or otherwise concludes that the production of any
information subject to this Section 7.1 is being sought under any provision of
law. Seller may use information subject to this Section 7.1 in any arbitration
proceeding under Section 13, subject to a confidentiality agreement with the
arbitrator and other participants.
7.2 CONFIDENTIALITY OF BUYER. Buyer shall hold in confidence,
unless compelled to disclose by judicial or administrative process or other
provisions of law, all documents and information furnished to it by Seller in
connection with this Agreement. All such information shall be deemed
confidential except to the extent that such information or documents are (i)
generally available to the public other than as a result of a disclosure by
Buyer, (ii) made available to Buyer on a non-confidential basis prior to
disclosure to Buyer by Seller, or (iii) made available to Buyer on a
non-confidential basis from a source other than Seller, provided that such
source is not known, and by reasonable effort could not be known, by Buyer to be
bound by a confidentiality agreement with Seller or otherwise prohibited from
transmitting the information to Buyer by a contractual, legal or fiduciary
obligation, Buyer shall not release or disclose such confidential information to
any other person, except its employees on a need-to-know basis in
32
connection with this Agreement. Each such employee shall first be advised of the
confidentiality provisions of this Section 7.2 and shall agree in writing to
comply with such provisions. Buyer shall promptly notify Seller if it receives
notice or otherwise concludes that the production of any information subject to
this Section 7.1 is being sought under any provision of law. Buyer may use
information subject to this Section 7.1 in any arbitration proceeding under
Section 13, subject to a confidentiality agreement with the arbitrator and other
participants.
7.3 CONFIDENTIALITY OF AUDITS. An independent auditor performing
any audit shall enter into a confidentiality agreement with the Party being
audited. Information disclosed to the auditor subject to the confidentiality
agreement shall be treated as confidential except to the extent that its
disclosure is otherwise permitted under this Agreement. Except as provided
herein, neither Party shall disclose audit information to any third party
without the other Party's prior written consent. Audit information in the hands
of the Party not being audited shall be subject to all provisions of Section 7.1
or 7.2, as applicable.
7.4 REMEDIES. The Parties agree that monetary damages would be
inadequate to compensate either Party for the other Party's breach of its
obligations under Section 7.1 or 7.2. Each Party accordingly agrees, subject to
Section 18, that a Party shall be entitled to equitable relief, by way of
injunction or otherwise, if the other Party breaches or threatens to breach its
obligations under Section 7.1 or 7.2.
8. DAMAGE TO CONTROL CABLES FROM SUBSTATIONS TO POWER PLANTS
Costs for physical damage to or destruction of control cables
owned by Seller or its Affiliate from substations to the first point of
termination in a Fossil Station or Hydroelectric Station shall be shared equally
by Buyer and Seller for repair and/or replacement costs up to $25,000 per
incident. Costs in excess of $25,000 per incident shall be borne by the Party
causing the damage or destruction. If neither Party is at fault or if both
Parties are partially at fault for damage or destruction that costs more than
$25,000 per incident to repair or replace, the costs shall be shared by both
Parties on a pro rata basis based upon their use of such cables. The obligations
under this section shall not be limited in any way by any limitation on either
Party's insurance.
9. PERSONAL INJURY AND PROPERTY DAMAGE.
As between the Parties, each Party shall be liable for any
physical damage to or destruction of equipment, facilities or property owned
solely by it or its Affiliates, and for any
33
claims for personal injury or death asserted against it or its Affiliates
arising out of equipment, facilities or property owned by it or its Affiliates,
regardless of whether the other Party or its Affiliates is responsible in whole
or in part for the event which caused the injury, except to the extent caused by
the other Party's or its Affiliates' negligence or willful or wanton acts or
omissions. The obligations under this section shall not be limited in any way by
any limitation on either Party's insurance.
10. INDEMNIFICATION.
10.1 GENERAL. To the extent of the responsibility and liability
assumed in Sections 8, 9 and 15 of this Agreement, each Party (the "Indemnifying
Party") shall indemnify, hold harmless and defend the other Party, its parent
and Affiliates and their respective officers, directors, trustees, employees,
contractors, subcontractors and agents, from and against any claims or liability
for damage to property, injury to or death of any person or any other liability,
including all expenses, and reasonable attorneys' fees incurred by such
indemnified Party, to the extent caused by the negligence or willful or wanton
acts or omissions of the Indemnifying Party, its parent and Affiliates and their
respective officers, directors, trustees, employees, contractors,
subcontractors, or agents, arising out of or connected with the operation of the
Indemnifying Party's or its Affiliates' facilities, equipment or properties,
Acquired Assets or T&D Assets, as the case may be, or the Structural Facilities,
or arising out of or connected with the Indemnifying Party's performance or
breach under this Agreement; provided, however the Indemnifying Party shall not
have any liability for damages or losses arising out of negligence or willful
misconduct by the other Party, its parent and Affiliates and their respective
officers, directors, trustees, employees, contractors, subcontractors or agents.
10.2 INDEMNIFICATION PROCEDURES. If either Party intends to seek
indemnification under this Section 10 from the other Party with respect to any
claim or action, the Party seeking indemnification shall give the other Party
notice of such claim within fifteen days of the commencement of, or actual
knowledge of, such claim or action. Such notice shall describe the claim in
reasonable detail, and shall indicate the amount (estimated if necessary) of the
claim that has been or may be sustained by such Party. To the extent that the
other Party is actually and materially prejudiced as a result of failure to
provide such notice, such notice will be a condition precedent to any liability
of the other Party under the indemnification provisions of this Agreement.
Neither Party may settle or compromise any claim without the prior consent of
the other Party; provided, however, such consent shall not be unreasonably
withheld. The
34
indemnification obligations of each Party shall continue in full force and
effect regardless of whether this Agreement has expired or been terminated or
canceled and shall not be limited in any way by any limitation on insurance, on
the amount or types of damages, or by any compensation or benefits payable by
the Parties under Worker's Compensation Acts, disability benefit acts or other
employee acts.
11. INSURANCE.
The Parties agree to maintain, at their own cost and expense, fire,
liability, worker's compensation, and other forms of insurance relating to their
property and facilities in the manner, and amounts set forth in Schedule I
attached hereto and incorporated by reference as if fully set forth herein.
Schedule I may be amended from time to time by agreement of the Parties. The
Parties agree to furnish each other with certificates of insurance evidencing
the insurance coverage set forth in Schedule I, and to notify and provide copies
to the other of any policies maintained hereunder written on a "claims made"
basis. The Parties shall be required to maintain tail coverage for five years on
all policies written on a "claims made" basis. Every contract of insurance
providing the coverages required in Schedule I shall contain the following or
equivalent clause: "No reduction, cancellation or expiration of the policy shall
be effective until ninety (90) days from the date written notice thereof is
actually received by the insured." Upon receipt of any notice of reduction,
cancellation or expiration, each Party shall immediately notify the other Party
in accordance with Section 19. Each Party and its Affiliates shall be named as
additional insureds on the general liability insurance policies set forth in
Schedule I as regards liability under this Agreement; and each Party shall waive
its rights of recovery against the other for any loss covered by such policy.
Each Party shall have the right to inspect the original policies of insurance
applicable to this Agreement at the other Party's place of business during
regular business hours. Each Party shall have the right to self-insure all, or a
portion, of the required insurances indicated in this Schedule I, to the same
amount or extent that it does so in its other insurance programs.
Failure of either Party to comply with the foregoing insurance
requirements, or the complete or partial failure of an insurance carrier to
fully protect and indemnify the other Party or its affiliates or the inadequacy
of the insurance, shall not in any way lessen or affect the obligations or
liabilities of each Party to the other. The Parties on behalf of themselves,
their parents, and Affiliates, each waive any right of subrogation under their
respective insurance policies for any liability each has agreed to assume under
this Agreement. Evidence of this
35
requirement shall be noted on all certificates of insurance.
12. FORCE MAJEURE.
Notwithstanding anything in this Agreement to the contrary, Buyer and
Seller shall not be liable in damages or otherwise or responsible to the other
for failure to carry out any of its obligations under this Agreement if and only
to the extent that it is unable to so perform or is prevented from performing by
an event of force majeure. The term "force majeure," as used herein, means those
causes beyond the reasonable control of the Party affected, which by the
exercise of reasonable diligence that Party is unable to prevent, avoid,
mitigate, or overcome, including the following: any act of God, labor
disturbance, act of the public enemy, war, insurrection, riot, fire, storm or
flood, explosion, breakage or accident to machinery or equipment, order,
regulation or restriction imposed by governmental, military or lawfully
established civilian authorities, or any other cause of a similar nature beyond
a Party's reasonable control.
If a Party shall rely on the occurrence of an event or condition
described above, as a basis for being excused from performance of its
obligations under this Agreement, then the Party relying on the event or
condition shall: (i) provide prompt written notice of such force majeure event
to the other Party giving an estimation of its expected duration and the
probable impact on the performance of its obligations hereunder; (ii) exercise
all reasonable efforts to continue to perform its obligations under this
Agreement, (iii) expeditiously take action to correct or cure the event or
condition excusing performance; provided that settlement of strikes or other
labor disputes will be completely within the sole discretion of the Party
affected by such strike or labor dispute; (iv) exercise all reasonable efforts
to mitigate or limit damages to the other Party; and (v) provide prompt notice
to the other Party of the cessation of the event or condition giving rise to its
excuse from performance. All performance obligations hereunder shall be extended
by a period equal to the term of the resultant delay.
13. DEFAULT AND DISPUTE RESOLUTION.
13.1 EVENTS OF DEFAULT. Any of the following shall constitute an
event of default under this Agreement:
(a) The failure to pay any amount when due (including as
set forth in Section 5.5);
(b) A breach of any material term or condition of this
Agreement. Failure by a
36
Party to provide any schedule, report or notice hereunder may constitute a
material breach if such failure is not cured within thirty (30) days after
notice to the defaulting Party.
(c) Either Party shall commence any voluntary case under
federal bankruptcy laws or other proceeding under any similar law of any
jurisdiction for the relief of debtors or shall petition or apply for the
appointment of a trustee or other custodian, liquidator, or receiver for such
Party or for any substantial part of the Acquired Assets or T&D Assets, as the
case may be;
(d) A decree or order for relief shall be entered in
respect of either Party in an involuntary case under federal bankruptcy laws or
in any other proceeding under any similar law of any jurisdiction for the relief
of debtors or a decree or order shall be entered appointing a trustee or other
custodian, liquidator, or receiver for either Party or for any substantial part
of the Acquired Assets or T&D Assets, as the case may be;
(e) Either Party shall cease its operations without
having an assignee, successor, or transferee in place; or
(f) Either Party shall terminate its existence as a
corporate entity by acquisition or sale, or if all or substantially all of such
Party's assets are transferred to another person or business entity, without
complying with Section 14.
13.2 REMEDIES FOR DEFAULT.
(a) Upon the occurrence of an event of default, the party
not in default may give written notice of default to the defaulting Party. Such
notice shall set forth in reasonable detail the nature of the default and, where
known and applicable, the steps necessary to cure such default. Except with
respect to an Interconnection Facilities Charge default (as described under
Section 5.6) and a Buyer default (as described under Section 4.2.2), the
defaulting Party shall have thirty (30) days following receipt of such notice
either to (i) cure such default, or (ii) commence in good faith all such steps
as are reasonable and appropriate to cure such default in the event such default
cannot, in the reasonable judgment of such non-defaulting Party, be cured within
such thirty (30) day period. With respect to a default under Section 5.6, the
defaulting Party shall have twenty (20) days to cure such default, and with
respect to a Buyer default under Section 4.2.2, Buyer shall have seven (7) days
to cure such default.
(b) If the defaulting Party fails to cure such default or
take such steps as provided under subparagraph (a) above, the following remedies
may be exercised; (i) the non-defaulting Party may terminate this Agreement,
(with respect to any Buyer's default, Seller may initiate a
37
proceeding with FERC to terminate service, but shall not terminate service until
FERC authorizes any such request), (ii) with respect to a default by Buyer under
Section 13.1(c) , (d) or (e), Seller shall be entitled to operate and/or
purchase from Buyer such DC power systems, components of protection and metering
circuits, SCADA Equipment, Secondary Systems and related components,
communication equipment and building facilities, software, documentation, and
structural components associated with the foregoing, as are necessary for Seller
or its Affiliates to operate and/or maintain its transmission and distribution
business; provided, however, that if Seller elects to exercise such rights (A)
Seller shall at all times operate such equipment in accordance with Good Utility
Practice and applicable agreements to which the Buyer is a party and (B) Seller
shall return operational control of Buyer's equipment to Buyer if the event
permitting Seller to exercise such control has ceased, or if Buyer has cured its
default, within thirty (30) days after Seller's exercise of its rights
hereunder; and (iii) with respect to a default by Buyer under Section 13.1(f) or
Section 4.2.2, Seller shall be entitled to exercise its rights set forth under
Section 4.2.2, but only to the extent necessary for Seller to maintain the
voltage supply to its Transmission System and Distribution System as such supply
was maintained prior to Buyer's default.
(c) Notwithstanding the foregoing, upon the occurrence of
any event of default, the non-defaulting Party shall have the right (i) to
commence an action to enjoin the defaulting Party from continuing with the
defaulting action or to require the specific performance of the defaulting
Party' defaulted obligations hereunder, and (ii) to exercise any other rights
and remedies as it may have hereunder or at equity or law.
13.3 ARBITRABLE CLAIMS. Any disagreement between the Parties as to
their rights and obligations under this Agreement shall first be addressed by
the Parties. In the event that representatives of Buyer and Seller are unable in
good faith to satisfactorily resolve their disagreement within 30 days, they
shall refer the matter to their respective senior management. If after using
their best efforts to resolve the dispute, senior management cannot resolve the
dispute in 30 days, independent arbitration proceedings shall be used to resolve
the dispute as set forth below Notwithstanding the foregoing, physical accidents
or events giving rise to negligence or intentional tort claims for the recovery
of property damages and/or damages for personal injury shall not be considered
"Arbitrable Claims." However, disputes regarding the interpretation or scope of
any indemnification clause in this Agreement shall be subject to arbitration,
even if the dispute relates to whether one Party must indemnify the other for
property damages and/or
38
damages for personal injury, the recovery of which was or will be determined in
a court of law.
13.4 ARBITRATION PROCESS. Any arbitration initiated under this
Agreement shall be conducted before a single neutral arbitrator appointed by the
Parties. To the extent that the subject matter of the arbitration involves FERC
jurisdictional issues, the arbitrator shall be selected and the arbitration
shall be conducted pursuant to Section 605 of the FERC Rules of Practice and
Procedure, 18 C.F.R. Section 386.605, as amended. For purposes of this Agreement
an arbitrator shall be considered "neutral" only if the arbitrator has not
previously served as an arbitrator for a dispute involving the Parties and is
not a present or former lawyer, employee or consultant of a Party or any of its
Affiliates. Notwithstanding the foregoing, if the Parties fail to agree upon a
single, neutral arbitrator within sixty (60) days of the referral of the dispute
to arbitration, each Party shall choose one arbitrator who shall sit on a
three-member arbitration panel. The two arbitrators so chosen shall within
twenty (20) days select a third arbitrator to chair the arbitration panel. In
either case, the arbitrators shall meet the definition of a "neutral" in Section
604 (c) of the FERC Rules of Practice and Procedure, 18 C.F.R. Section
385.604(c) and in this Section 13.4 of this Agreement and shall be knowledgeable
in electric utility matters, including electric transmission and bulk power
issues, and shall not have any current or past substantial business or financial
relationships with any party to the arbitration.
Except as provided in Section 13.7, the arbitrator(s) shall provide
each of the Parties an opportunity to be heard and, except as otherwise provided
herein, the arbitrator(s) shall conduct the arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association. Any
arbitration hereunder shall be conducted in Hartford,
Connecticut unless
otherwise agreed by both Parties. Unless otherwise agreed, the arbitrator(s)
shall render a decision within ninety (90) days of appointment and shall notify
the Parties in writing of such decision and the reasons therefor. The
arbitrator(s) shall be authorized only to interpret and apply the provisions of
this Agreement or any related agreements entered into under this Agreement and
shall have no power to modify or change them in any manner. The decision of the
arbitrator(s) shall be final and binding upon the Parties, and judgment on the
award may be entered in any court having jurisdiction. The decision of the
arbitrator(s) may be appealed solely on the grounds that the conduct of the
arbitrator(s), or the decision itself, violated the standards set forth in the
Federal Arbitration Act and/or the Alternative Dispute Resolution Act of 1990,
as amended. Each Party shall be responsible for its own costs incurred during
the arbitration process
39
and for the following costs, as applicable: (i) the cost of the arbitrator
chosen by the Party to sit on the three-member panel and one half of the cost of
the third arbitrator chosen; or (ii) one half the cost of the single arbitrator
jointly chosen by the Parties.
13.5 REMEDIES. Any award of damages by the arbitration panel
shall be determined, limited and controlled by Section 18. The arbitration
panel shall not award punitive damages or multiple damages or any other
damages not measured by the prevailing Party's actual damages. The arbitrator
panel may, in its discretion, award pre-award and post-award interest on any
damages award; provided, however, that the rate of pre-award or post-award
interest shall not exceed a rate equal to the rate provided for postjudgment
interest by 28 U.S.C. Section 1961 as published from time to time by the
Administrative Office of the United States Courts based on the equivalent
coupon issue yield for auctions of 52-week Treasury bills.
13.6 CONFIDENTIALITY. The existence, contents, or results of any
arbitration hereunder may not be disclosed without the prior written consent of
both Parties; provided, however, either Party may make such disclosures as may
be necessary to fulfill regulatory or other legal obligations to any
governmental authority having jurisdiction, and may inform their lenders,
Affiliates, auditors, and insurers, as necessary, under pledge of
confidentiality, and may consult with experts as required in connection with the
arbitration under pledge of confidentiality. If any Party seeks preliminary
injunctive relief from any court to preserve the status quo or to avoid
irreparable harm pending mediation or arbitration, the Parties agree to use best
efforts to keep the court proceedings confidential, to the maximum extent
permitted by law.
13.7 FERC JURISDICTION OVER CERTAIN DISPUTES. Nothing in this
Agreement shall preclude any Party from filing a petition or complaint with FERC
with respect to any arbitrable claim over which FERC has jurisdiction. In such
case, the other Party may request FERC to reject or to waive jurisdiction. If
FERC rejects or waives jurisdiction with respect to all or a portion of the
claim, the portion of the claim not so accepted by FERC shall be resolved
through arbitration, as provided in this Agreement. To the extent that FERC
asserts or accepts jurisdiction over the claim, the decision, findings of fact,
or order of FERC shall be final and binding, subject to judicial review under
the Federal Power Act, and any arbitration proceedings that may have commenced
prior to the assertion or acceptance of jurisdiction by FERC shall be stayed,
pending the outcome of the FERC proceedings. An arbitration panel shall have no
authority to modify, and shall be conclusively bound by, any decision, finding
of fact, or order of FERC. However, to the extent that a decision, finding of
fact, or order of FERC does not provide a final or complete remedy to the Party
seeking relief, such Party may proceed to arbitration to
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secure such remedy, subject to the FERC decision, finding, or order.
13.8 PRELIMINARY INJUNCTIVE RELIEF. Nothing in this Section 13
regarding arbitration shall preclude, or be construed to preclude, the resort by
either Party to a court of competent jurisdiction solely for the purposes of
securing a temporary or preliminary injunction to preserve the status quo or
avoid irreparable harm pending arbitration.
14. ASSIGNMENT/CHANGE IN CORPORATE IDENTITY
14.1 ASSIGNMENT. This Agreement shall be binding upon and inure to
the benefit of the Parties hereto and their respective successors and permitted
assigns, but neither this Agreement nor any of the rights, interests, or
obligations hereunder shall be assigned by either Party (other than by operation
of law), except by Seller to an Affiliate of the Seller that owns the T&D Assets
used in the Transmission System and Distribution System or by Buyer to an
Affiliate of the Buyer that owns the Acquired Assets, without the prior written
consent of the other Party, such consent not to be unreasonably withheld. Any
assignment of this Agreement in violation of the foregoing shall be void at the
option of the non-assigning Party. Notwithstanding the foregoing, Buyer or its
permitted assignee may assign, transfer, pledge or otherwise dispose of its
rights and interests hereunder to a trustee or lending institution(s) for the
purposes of financing or refinancing the Acquired Assets, including upon or
pursuant to the exercise of remedies under such financing or refinancing, or by
way of assignments, transfers, conveyances or dispositions in lieu thereof;
provided, however, that no such assignment or disposition shall relieve or in
any way discharge Buyer or such assignee from the performance of its duties and
obligations under this Agreement. Seller agrees to execute and deliver such
documents as may be reasonably necessary to accomplish any such assignment,
transfer, conveyance, pledge or disposition of rights hereunder for purposes of
the financing or refinancing of the Acquired Assets, so long as Seller's rights
under this Agreement are not thereby altered, amended, diminished or otherwise
impaired.
14.2 ASSUMPTION. Except as set forth in Section 14.1 above, no
assignment or transfer of rights or obligations under this Agreement by either
the Buyer or the Seller shall relieve such Party from full liability and
financial responsibility for the performance thereof after any such transfer or
assignment unless and until the transferee or assignee shall agree in writing to
assume the obligations and duties of the assigning or transferring Party under
this Agreement and the other Party has consented in writing to such assumption,
such consent not to be unreasonably withheld.
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15. CONTRACTORS AND SUBCONTRACTORS.
15.1 Nothing in this Agreement shall prevent either Party from
utilizing the services of such contractors or subcontractors as it deems
appropriate; provided, however, that all such contractors or subcontractors
shall comply with the terms and conditions of this Agreement. The creation of
any contract or subcontract relationship shall not relieve the Party retaining
the contractor or subcontractor of any of its obligations under this Agreement.
Any obligation imposed by this Agreement upon the Parties, where applicable,
shall be equally binding upon and shall be construed as having application to
any contractor or subcontractor. No contractor or subcontractor is intended to
be deemed a third party beneficiary of this Agreement.
15.2 To the fullest extent permitted by law, each Party shall
require its contractors or subcontractors to indemnify and hold harmless and
defend the other Party, its parent and Affiliates and their officers, directors,
trustees, employees, agents, and assigns from and against any and all claims
and/or liability for damage to property, injury to or death of any person,
including such Party's employees and its Affiliates' employees, or any other
liability incurred by such Party or its parent or Affiliates including all
expenses and reasonable attorneys fees, to the extent caused by any act or
omission, negligent or otherwise, by said contractor or subcontractor and/or its
officers, directors, trustees, employees, agents, and assigns arising out of or
connected with the operation of either Party's or its Affiliates' facilities,
equipment, and property described in this Agreement, regardless of whether
caused in part by a Party indemnified hereunder. The obligations under this
section shall not be limited in any way by any limitation on any contractor's or
subcontractor's insurance.
16. LABOR RELATIONS.
Each Party agrees to immediately notify the other Party, orally and
then in writing, of any labor dispute or anticipated labor dispute or job action
which may reasonably be expected to affect the operations of the other Party.
17. INDEPENDENT CONTRACTOR STATUS.
Nothing in this Agreement shall be construed as creating any
relationship between Seller and Buyer other than that of independent
contractors.
18. LIMITATION OF LIABILITY
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Except for the indemnification obligations under Section 3.19 and
Section10 hereof, to the fullest extent permitted by law and notwithstanding any
other provision of this Agreement, neither Seller nor Buyer, nor their
respective officers, directors, trustees, agents, employees, parent or
Affiliates, successors or assigns, or their respective officers, directors,
trustees, agents or employees, successors or assigns, shall be liable to the
other Party or its parent, subsidiaries, Affiliates, officers, directors,
agents, employees, successors or assigns, for claims, suits, actions or causes
of action for incidental, punitive, special, indirect, multiple or consequential
damages (including attorneys' fees or litigation costs) connected with or
resulting from performance or non-performance of this Agreement, or any actions
undertaken in connection with or related to this Agreement, including without
limitation any such damages which are based upon causes of action for breach of
contract, tort (including negligence and misrepresentation), breach of warranty,
strict liability, statute, operation of law, or any other theory of recovery.
The provisions of this Section 18 shall apply regardless of fault and shall
survive termination, cancellation, suspension, completion or expiration of this
Agreement. The remedies set forth in this Agreement are the exclusive remedies
for the liabilities of each Party arising out of or in connection with this
Agreement.
19. NOTICES.
At or prior to the Closing Date, each Party shall indicate to the other
Party, by notice, the appropriate person during each eight-hour work shift to
contact in the event of an emergency, a scheduled or forced interruption or
reduction in services, or Routine Inspections and Maintenance as provided in
Section 3.17.2. The notice last received by a Party shall be effective until
modified in writing by the other Party. Unless otherwise specified in this
Agreement, all notices, requests, claims, demands and other communications
hereunder shall be in writing and shall be given (and will be deemed to have
been duly given if so given) by hand delivery, cable, telecopy (confirmed in
writing) or telex, or by mail (registered or certified, postage prepaid) to the
respective Parties as follows:
IF TO THE SELLER:
The
Connecticut Light and Power Company
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Vice President - Administration
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COPY TO:
Vice President, Secretary and General Counsel
Northeast Utilities
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
IF TO THE BUYER:
Northeast Generation Company
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Vice President and Treasurer
COPY TO:
Select Energy, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Vice President - Power Supply Marketing
or such other address as is furnished in writing by such Party; and any such
notice or communication shall be deemed to have been given as of the date so
mailed.
20. SURVIVAL.
The liabilities and obligations assumed in Section 3.19, 8, 9, 10 and
15 of this Agreement with respect to events which occur during the term of this
Agreement shall survive the termination of this Agreement.
21. HEADINGS.
The descriptive headings of the sections of this Agreement are inserted
for convenience only and do not affect the meaning or interpretation of this
Agreement.
22. WAIVER.
Except as otherwise provided in this Agreement, any failure of any
Party to comply with any obligation, covenant, agreement, or condition herein
may be waived by the Party entitled to
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the benefits hereof only by a written instrument signed by the Party granting
such waiver, but such waiver or failure to insist upon strict compliance with
such obligation, covenant, agreement, or condition shall not operate as a waiver
of, or estoppel with respect to, any subsequent or other failure.
23. COUNTERPARTS.
This Agreement may be executed in two or more counterparts, all of
which will be considered one and the same Agreement and each of which will be
deemed an original.
24. GOVERNING LAW.
This Agreement and all rights, obligations, and performances of the
Parties hereunder are subject to all applicable federal and state laws and to
all duly promulgated orders and other duly authorized action of governmental
authority having jurisdiction. This Agreement will be governed by and construed
in accordance with the laws of the State of Connecticut when not in conflict
with or pre-empted by federal law, without giving effect to the conflict of law
principles thereof. Except for those matters covered in this Agreement and
jurisdictional to FERC or which must first go to arbitration pursuant to Section
13 herein, any action arising out of or concerning this Agreement must be
brought in the courts of the State of Connecticut. Both Parties hereby consent
to the jurisdiction of the State of Connecticut for the purpose of hearing and
determining any action not pre-empted by federal law; and to the jurisdiction of
FERC for those matters governed by FERC rules and regulations or by the Federal
Power Act.
25. EQUAL EMPLOYMENT OPPORTUNITY.
The Parties agree to comply with all applicable federal, state, and
other applicable anti-discrimination laws, the standards and regulations issued
thereunder, and the amendments thereto.
26. SEVERABILITY.
In the event that any of the provisions of this Agreement are held to
be unenforceable or invalid by any court of competent jurisdiction, the Parties
shall, to the extent possible, negotiate an equitable adjustment to the
provisions of this Agreement, with a view toward effecting the purpose of this
Agreement, and the validity and enforceability of the remaining provisions
hereof shall not be affected thereby.
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27. AMENDMENTS.
Seller may unilaterally make application to FERC under Section 205 of
the Federal Power Act and pursuant to the FERC rules and regulations promulgated
thereunder for a change in any rates, terms and conditions, charges,
classification of service, rule or regulation for any services Seller provides
under this Agreement over which FERC has jurisdiction. Buyer may exercise its
rights under Section 206 of the Federal Power Act and pursuant to FERC rules and
regulations promulgated thereunder with respect to any rate, term, condition,
charge, classification of service, rule or regulation for any services provided
under this Agreement over which FERC has jurisdiction. Except as provided in the
foregoing, this Agreement may be amended, modified, or supplemented only by
written agreement signed by both Seller and Buyer.
28. ENTIRE AGREEMENT.
This Agreement, together with the Purchase and Sale Agreement and the
Related Agreements as defined therein, and the Asset Demarcation Agreement and
the Schedules attached thereto, constitutes the entire understanding between the
Parties, and supersedes any and all previous understandings, oral or written,
which pertain to the subject matter contained herein or therein. If there is any
conflict in such documents, the Purchase and Sale Agreement shall have
precedence over the others.
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IN WITNESS WHEREOF, Seller and Buyer have caused this Agreement to be
signed by their respective duly authorized officers as of the date first above
written.
Northeast Generation Company The Connecticut Light and Power Company
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
----------------------- -------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President Title: Vice President -
and Treasurer, NGC Generation Divestiture
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