STATE OF INDIANA

INDIANA UTILITY REGULATORY COMMISSION

IN THE MATTER OF THE COMPLAINT OF ) UNITED STATES STEEL CORPORATION) AGAINST NORTHERN INDIANA PUBLIC ) SERVICE COMPANY FOR MISAPPLICATION ) CAUSE NO. 43674 OF TARIFF FOR PURCHASES FROM) COGENERATION FACILITIES, VIOLATION OF ) FILED RATE DOCTRINE AND REFUSAL TO ) APPROVED: AP ADHERE TO COMMISSION-APPROVED) R 0 7 TARIFF. RESPONDENT: NORTHERN INDIANA ) PUBLIC SERVICE COMPANY )

BY THE COMMISSION: David E. Ziegner, Commissioner Angela Rapp Weber, Administrative Law Judge

On April 23, 2009, the United States Steel Corporation, ("U.S. Steel") filed a Complaint with the Indiana Utility Regulatory Commission ("Commission") seeking to resolve issues arising from contract negotiations with Northern Indiana Public Service Company ("NIPSCO"). The Complaint relates to a qualified cogeneration facility located at U.S. Steel's Midwest Plant in Porter County, Indiana (the "Midwest QF"). According to the Complaint, prior to April 12, 2009, NIPSCO purchased from U.S. Steel the excess power generated by the Midwest QF and provided back-up and maintenance service to U.S. Steel pursuant to the terms of a special contract previously approved by this Commission.

When the special contract was scheduled to expire, U.S. Steel sought to sell the excess energy to NIPSCO and receive back-up and maintenance service pursuant to NIPSCO's Rate Schedule for Purchases from Cogeneration and Small Power Production Facilities ("Cogeneration Tariff'). The parties attempted to negotiate a contract in accordance with the Cogeneration Tariff but were unable to agree on the terms and conditions. U.S. Steel then sought Commission relief in this proceeding. NIPSCO filed an Answer to the Complaint on May 13, 2009, and U.S. Steel then filed a Response to NIPSCO's request for affirmative relief on May 26, 2009. The Commission held a duly noticed Prehearing Conference in this Cause on May 28, 2009 and issued a Prehearing Conference Order on June 10, 2009, which established an agreed-to procedural schedule in this matter.

On September 2, 2009, U.S. Steel filed its case-in-chief consisting of the prefiled direct testimony ofMr. Ralph R. Riberich, Mr. Jesse L. Cox, and Mr. James R. Dauphinais, together with accompanying exhibits. NIPSCO filed its case-in-chief on October 21,2009, which consisted ofthe prefiled testimony of Ms. Victoria Vrab and Mr. Timothy R. Caister, together with supporting exhibits. U.S. Steel filed on November 12, 2009 its rebuttal testimony consisting of the testimony of Mr. Ralph R. Riberich, Mr. Jesse L. Cox, Mr. James R. Dauphinais, and Mr. Dean Hall, together with supporting exhibits and workpapers. U. S. Steel also submitted the Affidavit of Kay M. Squires, together with a book chapter.

This Cause was set for a public Evidentiary Hearing on December 7, 2009. However, the parties reached a settlement on December 4, 2009 and notified the Commission shortly thereafter. At the scheduled Hearing, the parties confirmed that they had reached a settlement and requested that the Commission establish a procedural schedule for the submission of evidence in support of the Settlement Agreement. The Commission therefore ordered that prefiled testimony in support of the Settlement Agreement be submitted on December 18, 2009 and set the matter for an Evidentiary Hearing on January 7, 2010.

On December 18, 2009, U.S. Steel submitted the prefiled testimony of Mr. Riberich together with the Settlement Agreement and Cogeneration Agreement executed by the parties and a copy of the FERC certification filing for the Midwest QF. NIPSCO submitted the prefiled testimony ofMr. Caister together with a copy of NIPSCO's Cogeneration Tariff, a chart illustrating the difference between the price the parties agreed upon for the purchase of excess power and the avoided cost rate stated in NIPSCO's Cogeneration Tariff, and a copy of NIPSCO's standard form cogeneration agreement approved by this Commission in 1987. On January 6, 2010, NIPSCO submitted a response to an inquiry made by the Presiding Officers in a Docket Entry dated January 5, 2010. The Docket Entry and response addressed the manner in which the cost of energy received from U.S. Steel subsequent to April 13, 2009 would be reflected in NIPSCO's F AC proceedings.

The Office of Utility Consumer Counselor ("OUCC") did not file testimony or exhibits during the contested phase of the proceeding or in connection with the Settlement Agreement.

An Evidentiary Hearing was held on January 7, 2010 at 1:30 p.m. in Room 224 of the National City Center, 101 West Washington Street, Indianapolis, Indiana. U.S. Steel and NIPSCO presented evidence in support of the Settlement Agreement. The OUCC was also present. No member of the general public appeared or sought to testify at the Evidentiary Hearings in this Cause.

Based on the applicable law and evidence presented herein, the Commission now finds as follows:

1. Notice and Jurisdiction. Due, legal, and timely notice of the public hearings in this Cause was given and published by the Commission as required by law. U.S. Steel owns and operates steel production facilities at multiple locations in northern Indiana and is one of largest electric consumers within NIPSCO's service territory. U.S. Steel's Midwest Plant in Porter County, Indiana contains the Midwest QF, which simultaneously generates electricity and useful thermal energy, both of which are consumed by, and utilized in production at, the Midwest Plant. Excess energy produced by the Midwest QF is sold to no entity other than NIPSCO. NIPSCO is a public utility established pursuant to the laws of the State of Indiana, which provides electric service to customers in northern Indiana. Pursuant to Ind. Code §§ 8-1-2-34.5, 58, 69, 115; Ind. Code § 8-1-2.4-4; and 170 lAC 4-4.1-12, the Commission has jurisdiction over the parties and the subject matter of this proceeding.

2. The Terms of the Settlement Agreement. The parties request that the Commission enter findings expressly determining that U.S. Steel is a qualified facility or otherwise eligible to receive service under NIPSCO's Cogeneration Tariff, including Appendices A and B; that the rate for energy purchases agreed upon by the parties is just and reasonable; that the contract's effective date of April l3, 2009, by which NIPSCO will pay for energy delivered since the prior contract

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expired, is just and reasonable; and that all other terms set forth in the Cogeneration Agreement are just and reasonable.

The Settlement Agreement incorporates by reference the Cogeneration Agreement executed by the parties. The Cogeneration Agreement sets the rate for purchase of the excess energy at a price per kWh based on the Real-Time Company Load Zone Locational Marginal Price ("LMP") minus the product of 6% times the absolute value of that same LMP. The LMP is the Locational Marginal Price determined by the Midwest Independent System Operator ("Midwest ISO"), which includes a Marginal Congestion Component, a Marginal Loss Component, and a Marginal Energy Component, as determined by the Midwest ISO. The Cogeneration Agreement further provides that if the LMP is negative, U,S. Steel will pay NIPSCO to accept the excess energy flowing into NIPSCO's grid.

The Cogeneration Agreement provides a mechanism for U.S. Steel to pay for potential non­compliance fines or penalties imposed by the North American Electric Reliability Corporation ("NERC"), Reliability First Corporation, and the Midwest ISO. Such payment is contingent on NIPSCO providing U.S. Steel with notice of any assessment of such a fine or penalty. The payment is also contingent upon notice given to U.S. Steel of any petition filed with the Commission seeking recovery of such fines or penalties and on a Commission determination regarding the appropriate allocation of such fines and penalties.

The term of the contract is to run from April 13, 2009 through an initial term ending on April 12, 2011. It may be continued from month to month thereafter, unless canceled on at least sixty days written notice prior to the end of the initial term, or at the end of the monthly period first occurring after written notice is given. The Cogeneration Agreement further provides that if the Cogeneration Tariff is modified by this Commission during the first twelve months, the Cogeneration Agreement is to remain in effect under the new rate schedule or rider.

Under the Cogeneration Agreement, NIPSCO will provide back-up and maintenance power to U.S. Steel and will bill for such services in accordance with the terms of the Temporary Power provision of NIPS CO's Rate 832. Such service will be provided by NIPSCO unless it would have a materially adverse operational or economic impact on NIPSCO. If NIPSCO does not provide Temporary Power due to economic impact, U.S. Steel has the option of purchasing energy through the Midwest ISO market at an energy charge equal to the greater of Day-Ahead LMP or Real-Time LMP.

The parties also agreed in the Cogeneration Agreement that U.S. Steel would provide a yearly schedule of anticipated maintenance at the Midwest QF. NIPSCO has an opportunity to propose changes to the maintenance schedule provided by U.S. Steel and has agreed to keep the schedule confidential.

3. Testimony in Support ofthe Settlement Agreement. Both U.S. Steel and NIPSCO submitted prefiled testimony in support of the Settlement Agreement on December 18, 2009.

a. U.S. Steel's Settlement Testimony. U.S. Steel filed the testimony of Ralph R. Riberich. Mr. Riberich testified as to the general factual background that gave rise to the Complaint, described the characteristics and operation of the Midwest QF, and explained why, from

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u.s. Steel's perspective, the terms ofthe Settlement and Cogeneration Agreements are a reasonable compromise between the parties. Mr. Riberich explained that when the existing contract between u.S. Steel and NIPS CO ended on April 12, 2009, the parties were in the process of negotiating a contract pursuant to the Cogeneration Tariff. The parties reached an impasse, however, over certain points, which included the price for excess power, the pass-through of non-compliance charges from the Midwest ISO and NERC, the transfer of environmental attributes, and the price and terms of back-up and maintenance power. Mr. Riberich also testified that during the course of the negotiations, NIPSCO raised questions regarding the ownership of the Midwest QF and its status as a qualifying facility ("QF").

Mr. Riberich testified that the Cogeneration Agreement fairly addresses the points of dispute between the parties. He explained that during negotiations, both parties generally agreed that the proposed rates for energy purchases by NIPSCO should be at LMP minus some percentage to account for any costs NIPSCO might incur in taking the power. Mr. Riberich testified that the parties accepted LMP as an objective market price. He stated that the final rate arrived at, LMP minus 6%, represented a "reasonable assessment of an objective market price less costs incurred by NIPSCO that would not be incurred ifit did not take the power." (Ex. RRR-S at 4).

Mr. Riberich also testified that the parties' resolution of the dispute over the provision of back-up and maintenance power represented a framework that reasonably addressed the parties' positions. Mr. Riberich explained that U.S. Steel initially objected to NIPSCO's proposal to provide back-up and maintenance power through Rate 832 because of a lack of reliability and because if Temporary Power under Rate 832 was not provided by NIPSCO, U.S. Steel's demand level could be adversely reset for a full year. Mr. Riberich explained that under the terms of the Cogeneration Agreement, NIPSCO will provide back-up and maintenance power through Rate 832's Temporary Power provision, and U.S. Steel will have the option to purchase power through the Midwest ISO market under certain conditions. This approach would preserve the service framework proposed by NIPSCO but provide U.S. Steel with a reliable mechanism to secure needed power without resetting its demand level.

With respect to the effective date of the Cogeneration Agreement by which NIPSCO will pay for energy delivered since April 13, 2009, Mr. Riberich testified that he believed this to be a reasonable term. According to Mr. Riberich, since April 12, 2009, U.S. Steel has provided NIPSCO with electrical energy produced by the Midwest QF for which it has not received compensation. Mr. Riberich stated that U.S. Steel sought service under the Cogeneration Tariff prior to the expiration of the special contract and commenced negotiations under the Cogeneration Tariff before the April 12, 2009 expiration date. Mr. Riberich added that even the prefiled testimony of both parties anticipated that NIPSCO would pay for the power delivered to the NIPSCO system at the rate ultimately set by the Commission's Final Order in this Cause. He therefore testified that payments for energy delivered since April 13, 2009 are appropriate and reasonable.

Mr. Riberich provided further testimony regarding the ownership and operation of the Midwest QF. Mr. Riberich explained that the facility is located within the boundaries of U.S. Steel's Midwest Plant on land owned by U.S. Steel but leased to Portside Energy, LLC ("Portside"), the owner of the facility. Mr. Riberich testified that in 2006 Portside self-certified with FERC as a qualifying cogeneration facility and provided a copy of that document as Exhibit RRR-S2. That self-certification document describes the physical plant and outputs of the Midwest QF and establishes the operating efficiency of the facility.

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Mr. Riberich explained that u.s. Steel acquired the Midwest Plant in 2003 and has since utilized the Midwest QF pursuant to several agreements with Portside. Under those agreements, U.S. Steel employees handle daily operations and routine maintenance at the Midwest QF. U.S. Steel is also responsible for the acquisition and delivery of the natural gas, which fuels the facility, and has full ownership over the gas and the Midwest QF's outputs. Mr. Riberich also testified that U.S. Steel has dispatch rights over the Midwest QF's outputs and fully directs the utilization of it to meet U.S. Steel's production needs.

Mr. Riberich testified that U.S. Steel makes use of the Midwest QF's electrical and thermal outputs in its steel making operations. He described the Midwest QF as being fully integrated into U.S. Steel's production facilities at the Midwest Plant. As explained by Mr. Riberich, all of the steel manufactured at the Midwest Plant is produced utilizing the energy supplied by the Midwest QF.

Mr. Riberich stated that in his view the Settlement Agreement and Cogeneration Agreement are reasonable and in the public interest. He stated that the Agreements resolve a dispute between NIPSCO and one of its largest customers on mutually acceptable terms. Mr. Riberich also testified that by resolving the parties' dispute over the status of Midwest QF as a QF, the agreements properly address the question regarding the Midwest QF's status.

b. NIPSCO's Settlement Testimony. NIPSCO offered the testimony of Timothy R. Caister in support of the Settlement Agreement. Mr. Caister testified that from NIPSCO's perspective, the Settlement Agreement and Cogeneration Agreement resolve four central issues: (1) the identification of the Midwest QF as a QF under Indiana law and, therefore, its ability to receive service under the NIPSCO Cogeneration Tariff; (2) the purchase rate for excess power; (3) the effective date of the Cogeneration Agreement; and (4) the reasonableness of the contract provisions for excess power.

Mr. Caister testified that a finding from the Commission that U.S. Steel is a QF would provide clarity to the current dispute. He stated that such a Commission determination will resolve issues concerning the appropriate application of NIPSCO's Cogeneration Tariff and the Midwest QF's eligibility under it. Mr. Caister testified that, in NIPSCO's opinion, the testimony provided by Mr. Riberich presents an adequate record upon which the Commission could make such a determination.

Mr. Caister next testified in support of the negotiated rate for purchased power. Mr. Caister stated that, pursuant to Commission regulations and NIPSCO's Cogeneration Tariff, the parties are permitted to agree upon a rate for the purchase of excess power that is different from that stated in NIPSCO's Cogeneration Tariff. Mr. Caister confirmed that the parties mutually agreed to a per kWh purchase rate based on LMP minus 6% times the absolute value of that LMP.

Mr. Caister provided Exhibit TRC-2, which is a chart that compares the avoided cost rate contained in NIPSCO's Cogeneration Tariff with the purchase rate negotiated by the parties. Mr. Caister explained that since April 12, 2009, the purchase rate of LMP minus 6% is significantly cheaper than the avoided cost rate. Mr. Caister testified that the negotiated rate is reasonable because the rate paid for the energy will never exceed the price for power available from the Real­Time market. Mr. Caister further testified that he believed the 6% discount is a reasonable figure

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given the relatively small magnitude of dollars at stake and the opportunity to resolve a dispute with a large customer.

Mr. Caister further testified that setting the effective date of the Cogeneration Agreement at April 13, 2009 will have the effect of compensating U.S. Steel for power delivered to NIPSCO since the expiration of the special contract. Mr. Caister stated that this is consistent with the relief requested by u.s. Steel and noted that NIPS CO did not specifically dispute that payment should be made to U.S. Steel for energy delivered between the end of the special contract and resolution of this proceeding. In addition, Mr. Caister testified that it was reasonable to apply the purchase rate from April 13,2009 forward because that would be the date upon which U.S. Steel was eligible for service under NIPSCO's Cogeneration Tariff, provided the Commission makes the findings as requested in the Settlement Agreement.

Mr. Caister identified four specific contract provisions that resolved disputes between the parties. These included the provision of back-up and maintenance power, the coordination of maintenance outages, the disposition of environmental attributes, and pass-through to US. Steel of fines or penalties assessed by Reliability Agencies. With respect to the provision of back-up and maintenance service, Mr. Caister testified that the parties agreed NIPSCO would provide US. Steel with Temporary Power under Rate 832. Under Rate 832, NIPSCO has discretion whether to provide Temporary Power. Mr. Caister noted that it is generally economically advantageous for NIPSCO to do so and that NIPSCO has historically approved properly submitted requests for such power. In addition, U.S. Steel would be able to buy-through energy at LMP rates if NIPSCO refused a request for Temporary Power due to the economic impact. According to Mr. Caister, this would help to protect NIPSCO's FAC customers from the impact of high LMPs if US. Steel needs power at a time when prices are high and NIPSCO is able to import the power.

With regard to the coordination of maintenance outages, Mr. Caister testified that the parties reached an agreeable protocol. US. Steel recognized NIPSCO's need to take into account planned outages, but objected to allowing NIPSCO to have approval over U.S. Steel's planned outages. Mr. Caister testified that he believes the past cooperative practices between the parties will continue.

Mr. Caister next testified that the parties were willing to forego addressing the transfer of "environmental attributes" sought by NIPSCO during negotiations. He explained that at this time, there are no such attributes, nor any assigned value. Mr. Caister testified that in NIPSCO's opinion, in the interests of settlement, the matter can wait for further resolution until the market for such attributes develops and their effect on the purchase rate of energy becomes clearer.

Mr. Caister also discussed U.S. Steel's payment of any fines and penalties assessed by Reliability Agencies. He stated that the parties agreed to use language from a Rate 832 contract previously executed by the parties earlier this year. Mr. Caister listed three conditions upon which US. Steel's obligation to indemnify NIPSCO is qualified.

Finally, Mr. Caister noted that the Cogeneration Agreement executed between the parties differs from NIPSCO's standard contract filed with the Commission in 1987. Mr. Caister stated, however, that pursuant to Commission regulations, NIPSCO and a QF may agree to rates for purchases and sales transactions that differ from those in the standard contract, provided such contracts are filed with the Commission. Mr. Caister also noted that the parties have sought Commission approval of the Cogeneration Agreement as a condition of the Settlement Agreement.

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4. Commission Discussion and Findings. It is undisputed that the public policy of the State of Indiana strongly favors the settlement of controversies. See Georgos v. Jackson, 790 N.E.2d 448, 453 (Ind. 2003). As this Commission has previously noted, the policy extends to public utility proceedings. See Petition of PSI Energy, Inc., Cause No. 42718 (IURC May 24, 2006). Settlements presented to the Commission are not ordinary contracts between private parties, but rather lose their "status as a strictly private contract and take on a public interest gloss." United States Gypsum, Inc. v. Indiana Gas Co., 735 N.E.2d 790, 803 (Ind. 2000) (quoting Citizens Action Coalition v. PSI Energy, 664 N.E.2d 401, 406 (Ind. Ct. App. 1996)). The Commission "may not accept a settlement merely because the private parties are satisfied; rather [the Commission] must consider whether the public interest will be served by accepting the settlement." Citizens Action Coalition, 644 N.E.2d at 406.

Furthermore, any Commission decision, ruling, or Order-including the approval of a settlement-must be supported by specific findings of fact and sufficient evidence. United States Gypsum, 735 N.E.2d at 795 (citing Citizens Action Coalition v. Public Service Co., 582 N.E.2d 330, 331 (Ind. 1991)). The Commission's own procedural rules require that settlements be supported by probative evidence. 170 lAC 1-1.1-17(d). Therefore, before the Commission can approve the Settlement Agreement, we must determine whether the evidence in this Cause sufficiently supports the conclusions that the Settlement Agreement is reasonable, just, and consistent with the purpose of Indiana Code § 8-1-2 and that such agreement serves the public interest.

In this proceeding, the parties have requested that the Commission enter certain findings, as well as approve the Settlement Agreement and Cogeneration Agreement. We address these requests in turn.

a. Eligibility of U.S. Steel as a OF. The Settlement Agreement is conditioned on a Commission finding that U.S. Steel is a QFor a finding that confirms U.S. Steel's eligibility for service under NIPSCO's Cogeneration Tariff. However, the parties stipulated and agreed in the Settlement Agreement that "located within the Midwest Plant is a cogeneration facility owned by [Portside] ... that has been self-certified by Portside under federal law as a [QF]." The record shows that the generating facility at the Midwest Plant, the Midwest QF, was duly certified as a QF under federal law through a self-certification filing by Ports ide in 2006. The Commission also notes that the parties did not dispute the Midwest QF's status as a QF. Therefore, the Commission turns its attention to U.S. Steel's eligibility for service under NIPSCO's Cogeneration Tariff. Based on the facts presented, the Commission finds that U.S. Steel is eligible for such service with respect to the Midwest QF.

Portside's ownership and U.S. Steel's operation of the Midwest QF does not alter the Commission's determination that it is eligible for service under NIPSCO's Cogeneration Tariff. The question of whether separate ownership of the QF and the industrial operation with which it is associated affects the obligation of the public utility to provide such service has been addressed under federal law. In Puerto Rico Electric Power Authority v. FERC, 848 F.2d 243 (D.C. Cir. 1988), the Court upheld a FERC decision finding that, in a case involving such separate ownership, both the producing and consuming elements together render the QF eligible for the service contemplated under federal law. In that case, one company constructed and operated a facility that

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produced electricity and other energy used in another, unaffiliated pharmaceutical manufacturing plant. FERC found that the industrial operation was a consuming component of a unified qualifying cogeneration project, and the Court of Appeals affirmed that conclusion. Id. at 246.

In that case, the Court noted that it is the consuming element of the operation that requires the back-up and maintenance service which regulated electric utilities are required by law to provide because that is the load normally served by the cogeneration facility. Id. at 247-48. The Court further noted that Congress was aware that the producing and consuming facilities may be separately owned, in particular to support third-party financing. Id. at 248. On that basis, the Court endorsed FERC's conclusion: "Given the 'close nexus,' it was altogether reasonable for the Commission to view the QF concept as encompassing both the producing and consuming components of such a project. It properly credited substance over form; to have done otherwise could have doomed numerous projects for no reason related to any statutory goal." Id. See also Gulf States Utilities Co. v. FERC, 922 F.2d 873 (D.C. Cir.), cert. denied, 502 US. 819 (1991) (affirming FERC determination that a generating facility owned by a joint venture shown to be part of an integrated industrial operation is a QF).

Here, the record is clear that the QF at the Midwest Plant is an integrated component of U.S. Steel's steelmaking operations at that location. It is located on-site and on land owned by U.S. Steel and leased to Portside. U.S. Steel supplies and owns the natural gas used as fuel to produce the three outputs of the QF--electricity, steam, and hot water-all of which are owned and under the control of U.S. Steel. US. Steel determines the utilization of the Midwest QF, controls the delivery of fuel, and maintains all dispatch rights with respect to the electricity and other outputs. The operation of the Midwest QF is coordinated with the production needs of U.S. Steel, and its use is predominantly to support the US. Steel industrial operations at the Midwest Plant. In all respects, the cogeneration unit is integrated into the U.S. Steel industrial operation, and thus, by the reasoning explained in Puerto Rico Electric Power Authority and Gulf States Utilities, U.S. Steel is appropriately entitled to the electric utility service associated with Midwest QF status as contemplated by federal law.

In addition, the certification filing for the QF establishes that it qualifies as a topping-cycle cogeneration facility meeting the operating and efficiency standards under federal law, and therefore is the type of facility encouraged as a matter of policy under Indiana as well as federal law. Ind. Code § 8-1-2.4-1; 16 U.S.c. § 824a-3. Consistent with that policy, Indiana law and federal law require regulated electric utilities to purchase electricity generated by such QFs where, as here, the output of the QF at times exceeds the needs of the host industrial operation. Further, Indiana law and federal law require such utilities to provide back-up and maintenance power at just and reasonable rates to support the customer's operation during unscheduled or scheduled QF outages. Ind. Code § 8-1-2.4-4; 16 U.S.C. § 824a-3. Also, 170 lAC 4-4.1-5 provides that an electric utility is obligated to purchase energy from a QF and sell back-up and maintenance power to a QF.

Consistent with the policy encouraging the development and utilization of QFs; the provisions ofInd. Code § 8-1-2.4-1, 16 U.S.C. § 824a-3, and 170 lAC 4-4.1-5; and the reasoning in Puerto Rico Electric Power Authority, the Commission concludes that with respect to the Midwest QF, US. Steel is eligible to sell excess electricity to NIPSCO and to receive back-up and maintenance service from NIPSCO in accordance with the Cogeneration Tariff.

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b. Whether the negotiated purchase rate is just and reasonable. The parties also requested pursuant to the Settlement Agreement that the Commission find the rate for energy purchases set forth in the Cogeneration Agreement to be just and reasonable. The parties agreed upon a rate per kWh to be paid by NIPSCO to U.S. Steel and based on the hourly Real-Time Company Load Zone LMP, as defined by Midwest ISO, minus the product of 6% times the absolute value of that same LMP. Pursuant to 170 lAC 4-4.1-3, utilities and qualifying facilities may "mutually agree to rates for purchase ... which may differ from conditions which are specified" in 170 lAC 4-4.1 et seq. provided that such rates are filed with the Commission. In addition, 170 lAC 4-4.1-8(a)-(b) establishes the rates that an electric utility must pay for electricity generated by a QF. However, 170 lAC 4-4.1-8(d) permits a utility and a QF to negotiate a rate that is different from that detailed by 170 lAC 4-4.1-8(a)-(b). Thus, NIPSCO and U.S. Steel were not precluded from negotiating a different price.

Here, it is clear from the testimony of Mr. Riberich that the parties settled on a base price of LMP as an objective measure of a market rate. The deduction of 6% from LMP reflects an appropriate adjustment to account for the costs incurred by NIPSCO in taking the energy. Mr. Caister testified that this rate compares favorably with the purchase rate set forth in NIPSCO's Cogeneration Tariff and, over the course of this dispute, has been effectively cheaper for NIPSCO than the standard purchase rate. In addition, Mr. Caister testified that this rate is reasonable because the price paid "will never exceed the price at which power is available from the Real-Time market." (Respondent's Ex. 1 at 6).

Under the terms of the Cogeneration Agreement, NIPSCO is, and will be, paying below market prices for energy taken from the Midwest QF. Moreover, the parties have agreed that if the LMP is negative, U.S. Steel will be required to pay for the excess energy flowing from the Midwest QF onto NIPSCO's grid. (Ex. RRR-Sl, Cogeneration Agreement at 2). These terms provide NIPSCO with energy at a market price adjusted downward to account for NIPSCO's resulting costs, hence protecting NIPSCO's other customers from absorbing any above-market purchases or any incremental costs associated with accepting the energy from U.S. Steel.

Accordingly, the Commission finds that the negotiated rate is just, reasonable, and in the public interest.

c. The reasonableness of the effective date. The parties asked that the Commission find the April 13, 2009 effective date of the Cogeneration Agreement to be just and reasonable.

Prior to April 12, 2009, NIPS CO purchased excess energy from U.S. Steel pursuant to a special contract. After NIPSCO gave notice of its intent to terminate that contract, the parties promptly commenced the negotiation of a new contract under the Cogeneration Tariff, but were unsuccessful in agreeing to terms. These attempts to execute a new contract continued through the litigation and ultimately resulted in the execution of the Settlement and Cogeneration Agreements. According to Mr. Riberich, throughout that time, NIPSCO has been receiving energy from U.S. Steel without providing compensation to U.S. Steel for that energy.

NIPSCO's witness Mr. Caister acknowledged that NIPSCO did not specifically object to U.S. Steel's request that any Final Order of the Commission require NIPSCO to compensate or otherwise make appropriate billing adjustments for U.S. Steel for the energy received by NIPSCO

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beginning April 13, 2009. Mr. Caister added that it is reasonable to apply the purchase rate from April 13, 2009 forward. Mr. Riberich testified that both sides anticipated that NIPSCO would compensate U.S. Steel for energy delivered after the expiration of the special contract on April 12, 2009 at the rate established in the Final Order.

As concluded above, with respect to the Midwest QF, U.S. Steel is eligible for service under NIPSCO's Cogeneration Tariff. As NIPSCO acknowledged, that conclusion of eligibility is applicable as well to the status as of April 13, 2009. It is therefore just and reasonable to set the effective date of the Cogeneration Agreement at April 13, 2009. It is also just and reasonable for NIPSCO to provide U.S. Steel with appropriate compensation in a manner consistent with the "Payment Conditions" set forth in the Cogeneration Agreement for all energy delivered by U.S. Steel from that date to the date of this Order.

d. The reasonableness of the other terms. U.S. Steel and NIPSCO have also requested pursuant to the Settlement Agreement that the Commission enter a finding that all of the terms and conditions of the Cogeneration Agreement are just and reasonable. In addition to the purchase rate, the parties have identified several negotiated terms on which they were ultimately able to reach agreement.

During the contract negotiations, U.S. Steel objected to NIPSCO's proposal to provide back­up and maintenance power through the Temporary Power provisions of Rate 832 because it did not provide adequate reliability and because it could have the effect of resetting U.S. Steel's demand ratchet. Under the terms of the Cogeneration Agreement, U.S. Steel will receive back-up and maintenance service pursuant to the Temporary Power provision of Rate 832. However, U.S. Steel also will be allowed to buy-through the Midwest ISO market if NIPSCO does not provide temporary power due to economic impact.

Both parties described this framework as a reasonable compromise. U.S. Steel indicated that the buy-through option will make the availability of energy more reliable and allow it to avoid resetting its demand level. In addition, Mr. Caister testified that NIPSCO has historically approved requests for Temporary Power because it is economically advantageous for it to do so. Further, Mr. Caister testified that the buy-through provision will help to protect NIPSCO's FAC customers from the impact of high LMPs if U.S. Steel needs power at a time of unusually high prices. The Commission concludes that this provision is just and reasonable.

The parties also reached agreement with respect to the coordination of planned maintenance outages at the Midwest QF. Initially, NIPSCO proposed that it have approval authority over planned outages. But, under the Cogeneration Agreement, U.S. Steel will inform NIPSCO of planned outages and NIPSCO may propose or recommend changes in that schedule. U.S. Steel recognized that NIPS CO has a legitimate interest in coordinating planned outages of the Midwest QF and expressed a willingness to cooperate with NIPSCO on this subject. NIPSCO believes the past cooperation between the parties will continue. The Commission finds the provision relating to coordination of planned outages to be just and reasonable.

The Cogeneration Agreement provides a mechanism for NIPSCO to pass through to U.S. Steel any fines or penalties assessed by a Reliability Agency determined to have been caused by non-compliance associated with the Midwest QF. The parties indicated that the agreed provision is identical to language previously filed with the Commission in a Rate 832 Contract executed

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between these two parties. 1 The clause provides u.s. Steel with notice and an opportunity to participate in any proceeding in which NIPSCO seeks recovery of fines or penalties, and further provides for Commission oversight of any such recovery. The Commission concludes this provision is just and reasonable.

NIPSCO initially proposed a transfer of environmental attributes associated with the Midwest QF but agreed not to include that provision in the final contract. As Mr. Caister pointed out, there are no such environmental attributes associated with the Midwest QF at this time, and there is no present value for them. Mr. Caister added that this issue can be addressed when the market for such attributes develops and their effect on the purchase rate of energy becomes clearer. Therefore, the Commission finds the absence of a provision transferring environmental attributes to be just and reasonable under the circumstances.

e. Approval of the Agreements. The parties presented substantial evidence in this instance that the Cogeneration Agreement, as negotiated by the parties, resolves the disputes that led to this proceeding in a way that addresses and protects the interests of the parties and NIPSCO's other customers. The Commission therefore finds that the terms and conditions of the Cogeneration Agreement are fair, just and reasonable, and in the public interest.

The Commission concludes that the Settlement Agreement is fair, just, reasonable, and in the public interest. The parties have not only settled the pending dispute, but provided the groundwork to avoid future disputes.

The parties agreed that the Settlement Agreement should not be used as precedent in any other proceeding or for any other purpose, except to the extent necessary to implement or enforce its terms. With regard to future citation of the Settlement Agreement, however, the Commission finds that our approval herein should be construed in a manner consistent with our finding in Richmond Power & Light, Cause No. 40434, (lURC March 19, 1997).

IT IS THEREFORE ORDERED BY THE INDIANA UTILITY REGULATORY COMMISSION THAT:

1. U.S. Steel is eligible to receive servIce at its Midwest Plant under NIPSCO's Cogeneration Tariff as a QF.

2. The purchase rate and other terms and conditions set forth in the Cogeneration Agreement are hereby approved without change or modification, and shall be implemented by the parties.

3. The Settlement Agreement is hereby approved without change or condition, and shall be implemented by the parties.

1 In Cause No. 43675, NIPSCO and U.S. Steel entered into a new Rate 832 contract and submitted that contract for the Commission's review. The parties filed with the Commission a Joint Motion to Dismiss, and after review ofthe contract, the Commission granted it in its Order dated August 26, 2009.

11

4. NIPSCO shall provide compensation to U.S. Steel for all energy delivered since April 13, 2009 until the date of this Order at the purchase rate set forth in the Cogeneration Agreement.

5. This order shall be effective on and after the date of its issuance.

ATTERHOLT, MAYS AND ZIEGNER CONCUR; HARDY AND LANDIS ABSENT:

APPROVED: APR 0 7

I hereby certify that the above is a true and correct copy of the Order as approved.

~8~ Brenda A. Howe, Secretary to the Commission

12

IN THE.. INDIANA UTILITY REGULATORY COMMISSION

I .

) IN THE MATTER OF THE COMPLAlNTOF . ) UNITED STATES STEEL CORPORATION )

. AGAINST NORTHERN INDIANA PUBLIC .) SERVICE COMPANY FOR MISAPPLICATION ) OFTARJFF FOR PURCHASES FROM ) . COGENERATION FAC~IT1ES, VIOLATION . )' CAUSE NO. 43674 OF FILED RATE DOCTRINE AND REFUSAL TO ) ADHERE TO COMMISSION-APPROVED TARIFF )

) )

RESPONDENT: NORTHERN INDIANA . ) PUBLIC SERVICE COMPANY·' )

~--~--------~--------~--------~)

SETTLEMENT AGREEMENT

Urrlted States Steel Corporation (''D. S. SteeI").and Northern Indiana Public Service . ': .' .... . . -

Company (''NIPSCO''), being duly advi~e~herebystipUlate andagree thatihe terms and . . . . - . .' .

conditions ofthis Settlement Agreement, as set forth below, subject to incorporation in aJinaI .

o~aerofthe Indiana Utility Regulatory Ccimmission ("Comnrission")in this Cause without .'

. modification Dr further condition unacceptable 10 any party, npresent a just, reaso~able and

comp1ete resolution to the issues in this Cause.

WHEREAS, U S. Steel owns and operates a steel production fucilltylocatedat"Portage,

Indiana (the ''Midwest Plant"); .

WHEREAS, the Midwest Plant is located in the service territory of NIPS CO, which . .

supplies electric service to U. S. Steelat that location; .

WHEREAS, located within the Midwest Plantis a cogeneration facility owned by· .

Portside Energy; LLC ("'Portside") that produ~es electricity, steam and hot water for use in the

l

I .j.

! "

1 j

!

1

-mdustrial operations of the Midwest Plant and thathas been self-certified by Portside under

federal· law as a qualifying facility (the "QF");

WHEREAS, in connection withtheexplration ofa Commission-approved contract

between U S. Steel and NIPSCO relating to the. Midwest plant onApriI12, 2009, D. S. Steel

timely requested service pursuant to the provisions ofNIPSCO~s Rate Schedule for Purchases

from Cogeneration and .Small Power .Production Facilities, including back-lIp andm~tenance

service pursuant to Appendices A and B of that rate schedule;

WHEREAS, U. S. Steel and NIPSCOatiempted to negotiate amutualiy ~cceptable .. cOntract prior to the Apri,112, 2009 expiration date, but were Unable at that time to reach

.agreement; ..

WHER.EAS, u. S. Stee1commenced thisCauseNb. 43674 on April 23,2009, naming .~ '. .. . .... .,.,'. .

NIPSCO as Respondent and seeking Commission reliefin accordance with Ind .. Code §8-1-2.4-4.

and 170 Ind. Admin.Code§4-4.1-12; ..

WHEREAS, U. S. Steel and NIPSCO have continued to negotiate and have reached .. . . .

agreement on th~ terms and provisions of a mutually. acceptable. Coge~eration Agreement and

this Settlement Agreement; . .' . , . . . :. .

NOW; THEREFORE, for.material and sufficient consideration, in accordance with the . .

. ' '.' ...., ." . - .' ! ... "... ..

agreement of the parties and in resolution of the issues presented ill thls· Cause, U~ S. Steel and . . .

NIPSCO hereby enter into and agree on the foliowing terms .and provisions, pursuant to whicb ..

all controversy and disputes in·this Ca"-use shall be settled'and resolved.

1. U. S., Steel and NlPSCO sh311 enter into a Cogeneration Agreement as attached

hereto as Exhibit A, and incorporated by reference. U. S·. Steel·and NIPSCO· hereby stipulate .

that the attached Cogeneration Agreement is in a form mutually acceptable to both parties, is a

2

f.

i i

I I ~ 1

result of good faith negotiations between the parties fol1owmg full consideration of aU relevant.

infOImationand upon due consultation with their respective representatives and counsel, and

contains tenus and provisions that in all respects they support as just and reasonable. , .

2.' U. S. Steel aridNIPSCO shalljointlysuoinitthis Settlement Agreement andtbe

attached Cogeneration Agreement for'Commission review and approval, and sball jointly request

., that the Co~ssi6n approve the Settlement Agreeme~tand the Cogeneration Agreetn.ent fu . . .' .. '.

their entirety, without change or condition unacceptabIetoanyparty. U. S. Steel andNIPSCO

. shall coopei~te with each other in submitting to the Commissi~naTIevidence and submissions in '

,support of the:Settlement Agreement and ~ogenerati~n Agreeme~tasmaybe necessary and .

appropriate tofacilitat~ and secure such c6TInnissionapproyal. '

3 .. ," In connection with:\:heappmval ;ofthe'.8ettlement Agreement and Cogeneratiori

Agreement,u. ·S. Steel and NIPSCO shall jointly.request that the .Cmnniission enter findings in ,

its final order expressly detern:iiningthat: .

(1)

.' . . . . . . .

U. S. Steel is it qualifying facility oris otherwise eligt'bleto ~eceive service under' , NIPSCO's Rat~ Scheaule for Purchases from Cogeneratiml and Small Power " Production Facilities, including Appendices.A and B; .

. . ". '. . '. . .. _" -. ,'" . . . "

, the rate for ~nergy purchases set forfum the Cogeneration Agieement,as negotiated between the parties, is just ,and reasonable;'.

(3) .' the April' 13, 2009 effectiv~ date of the Cogeneration Agreement, pursuant to , whi~h NIPSCO wi11l'ay U. S. Steel at theagfeedrate for eleCtricity tb8.t bas been . provided toNIPSCO subsequentto the.expiration of the prior contract, is just and .. reasonable; and .

. (4) . all other termS and conditions set forth in the Cogeneration Agreement, as negotiated between the parties, are .inallrespects just and reasonable.

The parties: agree that this Settlement Agr~ement is conditioned on the entry by the Commission

of a final order that includes all of those express findings, and that in the event such findings ~re

3

'. . I •

not made by the Commission, this Settlement Agreement and the Cogeneration Agreement shall , '

be null and void and withdrawn and shall not be binding on either .:party iIi any respect

4. " U. S. Steel and NIPSCObereby stipulateand agreethat a final order~ytb.e

Conimission approVing this Settlement Agreeme~t and the attached CQgenenltion Agreement in

their entirety, without change or condition unacceptable to anyparty, will fully and completely . '. .

Tes~lveall issues that have been raised and that could, have been raised in this , Cause:. In the

event such an ord~ i~ entered py the Commission, U. S. steel and: NIPS CO agree not t6 s~ek '

rehearing or judi'~ial review, 'and will actively iupp;rt this Settlement Agreementmany

reheaTIng orjudiCialreviewsought by any other entity.

5. , " 'In the event the Commission does not' appro:re the SettlementA~eeme~t Md the'

Cogeneration 'Agreementm thriir entirety, without :change or condlti~:ti unacceptable to any' party, '

, then this Settlement Agreement Md theCogeneratio~ Agreement shall benull and void and

withdrawn and shall;notbe,biridingon eitherparty in anyresPect In the event of such an oider, . - .' ," . . . . . . '.

,u. s. Steel and NIPSCO agreethatth~proceedings inthls Cause should resume and continue to

,,' "a: GOIDnnssiondetermination on the merits, with both.partiesthen ful1y~apable ofpresenfulg ~d' ' supportingtheirp~~itions on fuelssues without prejudicearismg from thetender~d Settlement "

. ", '."" ".":

Agreement and the p;oceedings associated with its consideration by- the Commission. In sUch

event, the pames agree that the Settlement Agreement and the Cogeneration Agreement shall not

. be admitted into evidence 'and shall not be utilized hy, either party as support for orin opposition

to my position or issue~irlsed in this or any subsequent Cause.

6. Nothing in this Settlement Agreement or the attached Cogeneration ~greement

shall constitute in any respect an admission as to any issue in this or any other proceeding. By

entering into this Settl~ent Agreement and Cogeneration Agreement, neither U. S. Steel nor

4

1

NIPSCO shall be foreclosed from asserting any contention or takmg any positio.n -m _any other

proceeding, except that neither party shall in any way challenge the validity and bindmgeffect of

this Settlement Agreement, the Cogeneration Agreement or any fu.1alorder of the Commission " . .

approving the Settlement Agreernentand Cogeneration Agreement:in fuemanner and on the

terms sought by theparties. - -

7. This Agreement shall be binding on and inure to thebene:fit~f the successorn and

assigns of the parties:

AGREED and ACCEPTEDffus& -day of December, 2009. . ...... .

..", '. .',' - ",. .

-UNITED STATES STEEL CORPORA1ION . < NORTHEru{rNDIANAPUBLk~ . ' .. , ....

. '. .

BY.,/t;;JI~ . Title:·.-· ·Guy H. Ausmus

svp. Customer Engagement -NorfhemlndionaEnergy

5

. ·SERVICECOMP ANY

" "

.. By: .~. ~. lVI_All-• I

Title:ili"~"id ~r;heryr~~ COytl:r,)~"'(,fes -- - .

" .' .

COGENERATION AGREElVIENT . .

Tills Agreement., .entered into this 13th day of April, 2009 between tJNITED. STATES 'STEEL

CORPORATION,.a Delaware corporation, for cogeneration at its Midwest Plant (hereinafter called

"Customer"), and NORTHERN TI'IDIANA PUBLIC SERVICE COlYlP .f\1'\¥, an Indiana corporation,

hereinafter called the "Company," WITNESSETH:

STATUS OF QUALIf'Yll\TG"FACJLITY

The Customer owns the electric power generated by the Portside Energy :LLC Facility

cogane;'ationand! or small power production facility located :intema 1 to the . Customer' s electric system

at 6300 U. S. Hjghway Route 12 in Portage, lniliana (the "Qualifying F ac!lity"), :which qual ifi es

. \ . under the Order of the Pubic SerVice Conmrission of Indiana in Cause No. 37494. The QuaIify:ing

Facility consists of the following generation facilities: 44,000 kW Combustion Turbine & 19,000 kVi

SreamTOjJping Turbine. The Customer wishes to sell and the Company wishes to purchase electric

p0werproduced by the Qualifying Facility.

in order for the energy supplied by Customer to be considered Qualif<;ing Electricity, Customer ,

:nust satisfy the following standru::ds ("Qualifying Standards';): (1) The en~gy must be 3-phase, 60

Bertz, alternating current ata voltage of approximately 138,000 volts; arid (2) ~ustomermusi.co:tnply

·\'1·ith theCompanys Power Quality Specifications that are contained in the Company's Electric Standard

ER J 6-600-B, revised 04/01/05, or updates to .standards as applicable.' A copy of the Co!?pany's

cu.rrent standard is attached to tllls Agreement.

AM'OL'NT OF SALE AND PURCHASE

'The Customer agrees to sell and deliver and the Company agrees to purc1ll;se and accept deEvery

of the energy or energy and capacity as milicated below:

J l I

The rate per kWb to be paid to the' Customer oy the Company will be based on the hourly' . .

Real-Time Company Load Zone LMP, as defined by the Midwest ISO (":MISO"), minus the product

of 6% times the abscilutevalue of that same LMP. LMP shall mean the Locaticinal Marginal Pricing

determined by MIS 0 fOT a specified time and 10catlOJI,which shall include a Marginal Congestion.

Component, a Marginal Loss Component and a Marginal Energy Component, ~s determined by

MISO. It is understood by both parties that the Real-Time Company Load Zone LMP can be a

positive or negative value for any given hour.

Any and all obligations by the Company to purchase power from the Customer are expressly

conditioned on the Customer first obtaining allnecessary.·Federal Encig~<Ro;gu1attlJ1r:Com.mjssion '.

approvals, which Company is unaware' of an)'.at this time; pertai:n.ing·to-.snch:sahl;'I;.&;Cul>tomer~s:. .

excess power. Customer-understands when fueLI\1P :is'negative;·the Custemerwilym;payi...'1gi~e··

. Company to accept excess energy that will be flowing into the Company's gric1.from·the Customer.

Compariy shall make.no capacity payments for the capacity supplied by Customerrs QF.

ADDITIONAL CHARGES

Customer acknowledges that Company's provision of electrical service is subject to· rules and

regulations of North Americean Electric. Reliability Corporation; Reliability First Corporation and

Midwest ISO or any Sllccessors in illterest thereto, (each a "Reliability Agency"). The Parties

understand that the Reliability Agencies may a:llocate or assess fines·orpenalties for noncompliance

with their rules and regulations. Customer shall use its best efforts to min:imize any such fin~ and

penaitiesassociated "with Customer's operations, and Company shall. use its best efforts to apprise

Customer of any compliance problem of which Company becomes aware so as to allow Customer the

. opportunity to mitigate such compliance problem. Customer agrees to indemnify and reimbUrse

Company upon demand for any and all fines or penalties :incurred and paid by Company which are

assessed by any Reliability Agency to the e;\.1ent resulting from Customer's operations if each of the

following conditions have been met:

2

a. Company provides notice to Customerpromptly·after Company receives notice bfthe .

asseSsment of such fine or penalty by the Reliability Agency and Compan,y's dete:rrnillation that such

fine orpenaityresulted in whole or in part from Customer's operations;

b. Company provides notice to Customer of any petition it files with the Commission

seeking recovery of such fines or penalties and Customer is afforded the opportunitY to participate;

and

. c. The ~ommission determines that such fines or penalties.are appropriately assigned

or allocated io Customer.

.. . .. .~.-

Wheeling is available forthe Qualifying Facility in accord with the pr.ovi.sioTIS.of170 lAp.

4-4.1':'6 ..

CONTRACT TERM .

The Customer shall begill to snpply electric service :hereunder on or about Apri113, 2009. and'

this contract shall then continue in effe~t for an initial term ending, April 12, 2011, and from month to

month there~er unless cancel~ed by either party giving to the other not less than sixty (60) days'

prior written notice of the termination thereOf at the expiration ·ofthe initial term or, at the end of the

monthly period first occurring after the giving of such notice. Thereafter, ~he term of this Agreement

shall contfuue until termina!ed. Either party may terminate this Agreement, at any time, by giving the

other party at least sixty (60) days prior written notice. If the Rate Schedule upon which this

Agreement is based is modified as a result of a Commission order dUril1g the initial twelve (12) month

term of this Agreement, this Agreement will continue in effect under a new successor Rate Schedule , ,

or Rider.

3

P Al'MEl\1'J' CONDITlONS .

. Company will read the Company Meter, as near as practical, to the end of the last day of eacl1

calendar month. For purposes of this Agreement, Third Party shall mean .American lron Oxide

Company located on thepreniises at 6300 US Highway 12 inlJortage, IN .. The Company will

provide these readings and the Third-Party reaaillf,TS, LMP hourly prices, and other necessary billing ," .' . .

infonnati on to Customer within five (5) business days of the meter reading. Within five (5) business

days after Customer receives the readings from Company,Customer will deliver to Company a bill

for the Qualifying Electricity delivered during the penod covered byihe meter reading .. The bill will

be calculated in the manner set forth in this Agreement. Company_will pay to Customer the amount

of all properly calculated bills submitted by Customer within fifteen (15) business days after

Company.receives the bill from Customer. For' all Q~alifying Electricity that Customer deUvers to

Company, Company will pay Customer an amount based on the number bfkWh of Qualifying

Electricity thathas been metered. If the metered amountofpower flowing from the Company to the

Customer is greater than.or equal to"the Third Party usage for a given hour then the Customer.shall

bill the COlIlpany for the amount of power flowing from the Customer·to .the Company for that given

hour. If the metered amount of power flmving from the Company ~o the Customer is less than the

Third Party usage for a given hour then ·the Customer shall bill the Company for the amoUnt of power .

flowing from .the Customer to the Company plus the absolute ;.wue of the difference betWeen the

amount of-power flowing from the Company to the Customer ano the Third PartY usage for that given

hour. -

FORECAST

Customer shall furnish via electronic communications equipment by 8 :OOa.m. Centr~l Standard

Time (C.S.T.) on Friday of each week, a forecast for each of the three eight-h01:ir~periods (each such

period a "Tum") of the day of Customer's eA."]Jected load on Company's system. and internal

generating levels, if any, for every Tum in the succeeding week, Sunday through Saturday. In

4

addition, the Customer shali furnish vla electronic coimnumcation'equipment by 8:DOa.m. Centnil -'

Standai-d Time (C,S,T.) 011 Monday through Friday of each week, a TUID. by Tum forecast of

Customer's expected.1oad on Company's system and internal generating levels, if any" for every Tum

in the succeeding day, \\;ith Friday's forecast to include Saturday, Sunday and Monday. Lastly, the

Customer will malce best efforts to notify the Company of its revised load fdrecast odnternal

generating levels for any Tum in the current day in which the 10ad or internal generating levels are

f~recasted to differ fiye (5) megawatts or greater from the electronically submitted forecasts.

i\PPLICABILITY OFRA TE SCHEDULE

. This contract is in accordance v,iiththepresent currem schedule of rates on file with" and

. approved by,thel'ublic Service Commission oflndiana; whlchrates aIe subject to change as

provided by law. The tenns, provisions and conditions of the rate· schedule applicable 10 the electric

service supplied hereunder aremade.a part· of this contract, and shall be bin.di:n,g upon the palues

hereto. The Company's rate scheduleforpurchases fi·om .cogeneration and smaIl power production . . . .

facilities applicab1eatthe date of this· contract to the electric service supplieXJ hereunder is, by

reference thereto, hereby made a part hereof, and the Customer acknowledges receipt· of a copy of the

same.

BACK-UP _AND MAThiTENANCE POWER.

Customer has requested, and Company shall supply, Back-Up Power and Maintenance Pow!;:r at

the .rates indicated in Appendix A and Appendix B to Company's Rate Schedule for Purchases from

Cogeneration and SmaIl Power Production Facilities. Customer has not elected the alternative pricing.

option available in those two Appendices, and therefore the Back-Up Power and Maintenance Power

will be billed in accordance with the Temporary Power provisions tinder Rate 832. I:n:the event !l

condltion arises during a period when Temporary Power under Rate 832 has been requested by the

Customer and such condition would, in the reasonable ju~omenf of the Company cause the continued

5

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delivery of power "to have a materially adverse operational or economk impact on the. Comp'any, the .

Company has the right to notify the Customer to reduce its take of suclieilerg)' up to such amount and

. forup to such portion of such period as is causillgthe impact on the Company. The Customer-is

obligated to comply_ The Company agrees to provide Customer with such advancel10tice of .

curtailment as is reasonable under the circumstances. If the reason for curtailing Temporaty-Poweris

based on the econ~m:ic impact on the Company, the Company shall provide Customer the opportunity

to continue receiving energy, if.available from the Midwest ISO market, if Customer agrees to

compensate the Company for allldiowatthours used above the Rate 832 contract demand at an

energy c11arge equal to the greater of (1) Day-:Ab.eadLMP, or (2) Real-TUne LMP. If the Rate

Schedule upon-i.vhlch:this Agreement is based is superseded as ~ result of a Commission order, then . . . . .' . - . . . . . . . .

the charges forBack-UpPower and Maintenance Power shall be based upon a comparable successor . .

. appendix, or if there is no such comparable successor appendix, th~ the charges sllaB be based lipon

tbe-provisions of the Company's successor. sales rat~ schedule under which the Customer will be

receiving service. .

With rega.rd to Company's provision of Back-Up Yower, the folioVliing shall apply: . . .

In order for the capaCity used during an outage to qualify for billing underBack~Up . . .

"Power, the Customer isrequiied to TePort all ~utages to tbeCompany dispatcherwit:hin ten

(10) minutes after the beginmllg of any outage, stating the time the outage began, the

anticipated duration ofthe outage and that the Customer wishes the delivery of Back-up

Power capacity and energy. Customer also mustrepOlttothe Company clispatcberthe time

of the restart of the unit within ten (10) minutes after the unit has been restarted and

synchronized with the system and is carrying its norrnalload .. Failure to ~ake such

notifications will result in the capacity and energy used during theperiodbeingbilled under

the provisions of the Company rate schedule upon which the Customer has existing service.

Wtthregard toCompany's provision of Maintenance Power, the following shall apply:

6.

A. In order for the capacity used during an outage to. qualify for billing under

Maintenance Power, the Customer is required to report all outages to the Company

dispatcher within ten (10) mlnutes after the beginning of any outage stating the time the

outage began and verifyil1gihe capacityusecl during the outage period De classified as

Maintenance Power. Customer must· also report to the Co.mpany dispatcher the time of the

restart of the unit within ten (10) minutes after: the unit has been restarted arid synchronized . , '. .. . .

with the system and is carrying its norrnalload. Failure to make such notifi..cations wlll result . '. . '.

in the capacity and energy used during the period being billed under ilie:provisiolls of the

Company Tate schell~le upon whlchtheCustOmer has existing service.'

B. 1n the eve.nt conditions arise during a period when Backup or Mainterulnce Power bas .' . ,. . , . -. .' . . .'

.' '.

'. been requeSt~ by the Customer:' and is being.supJilied by the Company, and such co.nditions

would,inthe solejudgIDent of the Company, causefue coniinueddellveryof power to have . '.' '.' .,'. '.. .

an:adverseoperational or economic impact on. the CompanY, the Company hastherigbt to . ". .. .' ." . '. '. .

'notifythe Customer to reduce its ·take of such energy to any amount Bpecifiedand fo.ranY

. portion of such period. T4e Cu~tomer is obligated to comp~ywithin thirty."(30)m:ii:lUtes of

notification.

C; The Customer shall:

i. Provide the Company, in vnitIDg,priortoOctoberl of·~ach calendar year, a

schedule of the estimated maintenance reqUirements of the Customers generating

facilities for the following calendar year, 'including tirrie, duration and m8.0onitude of any

scheduled outages or reduction in capacity. Schedulea maintenance outages shall be

limited to the foIio~i.'1g time frames: February 16 .through May 31 and October 1 through

December 15 of any year.

n. Coordinate seheduled generation facility outages with the Company by

confirrning before 10;00 A.M. of the day preceding any scheduled outage, the duration

and magnitude of said scheduled outage. Inthe event the dlrration changes, notification

7

. .

must be received by the Company before·l0:00 AJvl. bfthedaytb;be extendedC1J'

reduced by the Customer.

iii. Promptly forward to the Company any changes to the yearly generation and

malntenance schedUles.

iv. Provide veriiication of outages from time to time as may be required by the

Company;

D, The Company shall:

. i. Propose or recommend changes tofue Customer's proposed maintenance schedule· .

within forty-live (4S)days of receipt of the proposed maintenance schedule

iL Keep any Customer schedule confidential. - .' '. .' .

INTERCONNECTiON TERMS AND CONDITIONS . .' .

'The Customer shall reimburse theCo~pany for all interconnection costs the Company has ..•

reasonably incurred for which the Comj:mnyhas not already been reinibursed; and the Compan)1 viill . . ~ . "'. . I .

connect its .power supply lines to the terminals of a service entrance connection. which shall be

provided by the ~stomer andlocated.on anoutside:wallofthe.Customei,sbuilcling or.at a point

satisfactory to the Company. The Customer shall install, operate, and maintaID in .good order such.

relays, locks ~d seals, breakers; a~tomatic sYl1chroniz~rs, and other control and pr~tectiveapp~atns' . ....,

as shall be designated by the Company fcir safe, efficient and reliable operation ll1 parallel to the

Company's system. The Customer shall bear full responsibility for the installation and safe operation , . . . . .

of this equipment: Breakers capable of isolating the Qualifying Facility from the Company shall at all

times be immediately accessible to the Company. The Company may isolate any Qualifying Facility .

at its own discretion if the CompClny believes continued parallel operation .... vith the Qualifying

Facility creates or contributes to a system emergency.

All wiring and other electric equipment installed by the Customer shall be maintained by the

Customer at all times in conformity witb the requrrements of the National Board of Fire Hnderwriters

8

'"

. .

and Gther'authorities havingjurisrnction;and an inspector from the Company shall be permitted iO

inspect Customel~S ·wiring and apparatus and the C~mpaIlY may traUsmit its reco~endations in

connection with any such inspection to the Customer, but nothiJ?g 11erein contained shall mean, or be

,consn:ued to mean, that the Compan~ shall be reguired to inspect or examine, or it) anyway be .

responsible for the condition ofthe conduits, pipes, wires or appliances on the Customer's premises.

If Company determines that Customer is failingto meet the Qmilifying St8D.dards,or tlllt Customer

has failed to 'complywith Rul; 51 ortheJnterconnection Agreement, or that Customer is creating o~ . . .

contributingto an enlergeney for Company's system, then Company may, without notice, discoIinect the

Customer's facilities from Company's system. IT C01l!Pi'lllY disco1lllects O.istomer' [dacilltiesfrom

Company's system, then Company ",ill provide ~stomer'withan explanation :for the disconnection. 1£

.', Custo~er' c~ demonstrate to 'COmpany that:the basls fOiComparris discoimectionhasbe~n remedied,

then Company will recol;IDect Customer' s faciliti~ to. Company' s ~ystem

. . .

. ·METERING TERMS AND CONDITIONS . ". .

Subject to the provisions of the rate schedule applicable at the time of the.servlce: electric service

to be used under L"he tenus of this contract shall be measured, as to ma:~urn demand, energy and· . . /

power factors by meters to be .:inSta:Ued by the Company on or near the premises of the Customer. The . . . . .

Customer hereby agrees to p~ovide suitable electric ~oDllections for such meterS and suitable housing

for the same, and upon fue reg±stration of thes~meters: all bills other th8D..bilIs fo~ the Illinimum .

payments shall be calculated.

The Company shall at all times have the right to inspect and test meters and if fotind defective to

repair, orrep1ace them at its option. Such meters shall be tested periodically in accordance with the

Rules and Standards of Service prescribed by the Public Service Commission ofIndiana. At the·

Customer's request, the Coi:npany shall inspect and tes~ such meters once each·ye?rly period.

9

.oa.

TneCompanyshalI repair and re-test orreplace a defectivem~r within ~lreaSODab]e time.

During the time there is no 'in~tej· in service, it-shall be assumed that the power de1ivered is !he sa:r.rie

as the delivery of power ofthe Cust~mer during similar periods of the Customer's operations.

In case of impaired or defecthie serVice, the Cust0me~· shill immediatel)'give notice to the

Company,by telephone, con:finn:ing such notice in'vi'Titing on same day Dotice is given.

INDEMNIFICATION' '. . ... -... . .... '.

Except to the extent the provisions of'·~A..dditional Chaiges" section oftbis,Agreement on pages

2-3 'of tbisAgreement are l:!pplicable,the Coropanyandthe Customer shall indemnify and hold the

other party harmless from and against all claims, liability, damages and exPenses:; including attorneys' . . '. . '.' . .

. . . ... .

. fees, baSed'o:r;' anylnju!ytQ anypersori, inciudinglossofiife, or damagctb any property, lD.cluding ,

loss of use thereof, arising out of, resulting from or connected wIth, onh~t may he ,alleg~d to have

arisen ~ut of, resulted from or connected with, an act otomission by such other-p~, its employees, .' . . . . .

:agents,representatives, succt:!Ssors or assigns in the construction, ownersbip, operation or

maintenance of such party's facilities used.ill connectionwifu this Agreement: Upon the written

requ~t of the party seeking indemruncation und~rtbisprcivision, the other party shall defend any suit '

'asserting a c1aim. cover~d by this provision. If apa:rt}' is required to brfug action ioemorce its

, in~emni:fication rights under tbis-provisiCin, either asa separateacti6n or in·connection with mother

action; and sai<i indemnification rights were u.pheld, the party.from whom the ind~mnification was . . '. '. . . .

sought shall reimburse the party seeking indemnification for all expenses, including attorneys' fees, '

incurred in connection with such action " ,

FORCE MATEURE

Neither the Company nor the Customer shalJ be liable to -the other for damages caused by the

intenuption, suspension, r~duction or curtailment of the delivery of electric energy hereunder due to,

occasioned by or in consequence of, any of the fonowing cal,lses or contingencies, via: acts of God,

. . .

strikes, lockouts, oT'ofheriildustrlal disturbances; acts of public enelllies; orders orper.mits or the

absence of the necessary Qrders or..permits ofan)'kIDdwPich have been properly applied for fromthe . .

government of the United States, the State of Indiana, any political SUbdivision or municipal

subdivision or any oftheir departments, agenCies of offiCials, or any civil or milita!), ~utb,ority;

unavailability of a fuel onesource used in connection with the generation of electricity; extraordinar}, .

delay in transportation; nnioreseensoilconditions;· equipment, material, supplies, labor or machinery

shortages; epidemics; landslip,es; lightning; earthquakes; fires; humcanes; tomadoes; storms; floods;

washouts;ckought;· arrest; war; civil disturbances;·explosiol1s; breakage or accident tomachiner:i,

transmission .tines, pipes orcanals;.partial or entire failure of-utilitles; b-reacuof.CDuITactby any . . .

suppiier, . contractor, subcontractors; laborer or materialman; sabotage; injunctionbiight;' fanrlne;' .

blockage, or quarantine. The partysufferln.i an o~urrenceofForce ·Majeure shall; .as :soon as is .

. reasonablypossibl~ after sucnoceurrenc~~ i;ve the other partywrltten 'notice describing the ' .

. partirnlars of the occurren~e ~dshall USe its best efforts to remedy its' inability to perlorm,. provided,

however, that the settlel1len.t of.any:strike, walkout,J6ckOut or other:Jabor dispute shall be entire1};

within the discretion of the party involved in.such labor dispute.

REGULATORY AUTHORITJES

ThePa.rtles hereto recogniZe. that this Agreemerit is subje'ct to the jurisdiction of the

Commission, and is also subj eet to sucb lawful' action asaily regulatory ;mthority having jurisdiction

shall take hereafter witb respect thereto. The perfonnance of any obligation of.e~therPartY hereto

sball be subject to the receipt:froin time to time as required of such authorizations, approvals or

actions of regulatory authorities having jUrisdiction as shall be required by law.

F AJLURES TO PERFORM

If ei,ther party believes that the other party has breached a material provision of this Agreement,

the non-breaching partj! may terminate this Agreement. The Don-breaching party must give the

11

breachlng 'party notice of the breach and this Agreement "till terminate thir!:y (3D) daysaftet the . .

breaching party receives. such notice if the breach has noi beEm cured by that date .

. .IJ\TfERRUPTION OR CURTiillJvIENT OF PURCHASE

The Company reserves the right to interrupt purchase at ffiJy-time when necessary to make

emergency repairs. For the purpose of miling other than emergency repairs, the Company reserves

. the right to disconnect the Customers electric system for four (4) consecutive hours on any Sunday, ~ . . . " ...... .

or such 6therday or days as may be agreed to by the Customer and the Company, provided forty- . '.' , . .

eight (48) hours'notification previoU:S to the hour of cuf-offis given-the Ctist6rrit):r::ofsuch intention.

All terms andstip~afions.iMdeor agreedto~' t1ieparties'inrelaticmto sajd.electi.icsenn.ceare .

compietely expressedand.mel'gecl nl'tbiscontract, :andno previo\:lS or contemporal1eo~ promises,

. represE:ntations or agreei:nentsm:ade b~.~ the Company's officers or agehts,shall be bindiu:: on the . . .

CompallY and no previous promises, representations .oragreements made by·th~ CustolIler's officers

. or agents, shiillbebiitd±Dgon the Customer, unless her$' contaim:d. The tenrisofthis contract'

. cannot be added to, Varied or waived, either verbally ori~ writing, by anyagent~ solicitor, or other

.. person connected with the C~mpany, or connecte~ withthi Customer, excepting executive officers of

the Company and officers of the Customer ..

. . From aild after the date when electric service is cOIDIDenced under this cop.tract, this co~tract shall

supersede and terminate any and .all existing agreements between the parties hereto under the terms of .' . :' .' .' .

which the Customer furnishes and the Company receives elf~ctricservic;e .at the preIcis~s covered by

this Agreement.' .

\ This Agreement shall be binding upon and inure to the benefit of the parties hereto and their

respective successors or assigns.

This Agreement shall not be binding upon the Company until approved by the president or a vice-

president of the Company 'and attested by the .secretary or an assistant secretary.'

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NOTICES'

Unless otherwise expressly specified in this Agreement, any notice given pursuant to this Contract

shaIlbe.in writing and addressed as fo110'1'5:

If to Customer:

Ifto Company:

Manager-Energy & Consnmables United States Steel Corporation Manager-Regional Procurement, Purchasing & Energy 600 Grant Street -Room 2028 Pittsburgh, ~A ] 5219

, NorthemlndilUlll P1IDlicService COlIlpa:ny;, Executive Direct(jT, ;M:ajor Accounts, , .. 801 E. 86tb Avenue', ' ' M,errillville, lndiana 46410

• The above titles rin4'addresses may' change at any~me by written notice,to'the-'other :Party: ,',

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IN W1TNESS y"\.'!-IEREOF. the parties heretohave'causecl this instrument to'be du]yexecuted in .

. . duplicate the day and 'year fust above written.

UNlTEDSTATESSTEELCORPORATION

,"~.~ I'fl(lg (Sjgnature) . T.

Ro~) GUM';' cleO (Printed Name)

MCtY'-o,r=cA ;. E v-ucry 9"3.:\ (oVl·suiMc..bie s-. . " (Title)

? ".. .... (SlgnaUlT!~) " _

. . .. .. Guy -H. Ausmus .. . ~~~~=:m •.. ".-~----- . -----.. -.. --.. -~~-

- . {Tit' 1 • .­. \.L li.~:;J

14

Cause No. 43674 Exhibit RRR-S2

Victoria,

Ralph Riberich/ Headquar ters/USS

04/1312009 08:43 AM

Tovavrab@nisource.com

ccnrrpasky@NiSource.com, rdcerminaro@uss.com, wrjessen@NiSource.com,DerekJ Rykaczewski/HeadquarterslUSS@USS

SubjectFw: Cogeneration Agreement

Attached are th~ files you requested regarding the POt'~ide Facility QF status.

(See attachedfile: Portside _Energy _ForTn_556.pdj)(See attached file: Portside_Energy_FERC_Lttr.pdf) .

Ralph R. Rioerich, Jr., P .E. Team Leader. Energy Procurement ··Suite 2028 United States Steel Corporation 600 Grant Street Pittsburgh, PA IS219-~800 . (412) 433-5861 - Phone (412) 433-2449 - Fax ---- Forwarded by Ralph Riberich/HeadquarterslUSS on 04/131200908:36 AM--

Victoria,

Ralph Riberich/ Headquar ters/USS

04/13/2009 07:59AM

Tovavrab@nisource.com

ccmrpasky@NiSource.com, rdcemrlnaro@uss.com, wrjessen@NiSource.com

SubjectRe: Cogeneration Agreementt:;1

Attached is page 3 of our contract with Portside Energy Corporation. The last sentence in section 3.2. I gives USS the right to dispatch the generator. I removed some pricing information on this page as it was confidential in nature and doesn't pertain to NJPSCO's question.

(See attached file: USS Dispatch rights.pdf)

Also, I am working this morning to obtain the QF Certification for the Portside·Faci,lity.

Ralph R. Riberich, Jr., P.R Team Leader· Energy Procurement. Suite 2028 United States Steel Corporation 600 Grant Street Pittsburgh, PA 15219-2800

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Miuch 16, 2006

Via USPS Return ReceIpt Requested

Office of the Secretary Federal' Energy Regulatory Commission 888 First Street. N.E. WaShington, D.C. 20426

Re:. Portside Energy LLC Cogeneration Facility Docket No,; QF 06- ____ _

Dear Sir or Madam:

2000 York Road Suite 1~9 Oakbrook, IL 60523 Phone (630) 371-0505 . Fax(630)371~73 www.prtmaryenergy.com

Attached please find a Notice of Self-Certification of Qualifying Facility Status for a cogener~tion facility on behalf of Portside Energy LLC. Copies of the Notice have been selVed concurrently upon the Indiana Utility Regulatory Cqmmission, Northern Indiana Public SelVlce Company and on NiSource Inc.

Kindly acknowledge receipt of this filing by time-stamping a copy for our files.

Enclosures

Respectfully submitted,

cJ4.R~ Cr gE. ~~~- --r

ssa iate General Counsel

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UNITED STATES OF AMERICA . FEDERAL ENERGY REGULATORY COMMISSION

PORTSIDE ENERGY LLC

. COGENERATION FACUlTY QUALIFYING STATUS

) ) DOCKET NO. QF06-_ ) ) )

NOTICE OF SELF-CERTIFICATION OF QU~IFY1NG FACILITY STATUS FOR A

COGENERATIO:N FACILITY

Pursuant to 18 CFR § 292.207 (a) of the regulations of the Federal Energy Regulatory Commission ("FERC" or "Commission"), Portside Energy LLC, by its counsel, ("Applicant") hereby provides notice of . self-certification of qualifying status as a cogeneration facility ("Facility") located in Portage, Indiana.

FORM 556

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PART A GENERAL INFORMATION

la. Full name of applicant/purpose for filing:

Name: Portside Energy LLC

Purpose for Filing: Notice of Self-Certification of Qualifying Facility (QF) status

lb. Full address of applicant:

Portside Energy LLC 6290 US Highway 12 PO Box 206' Portage, Indiana 46368

le. Indicate the owner(s)/operator(s) of the facility:

See Ownership Chart, attached hereto as Attachment 1.

The Facility is owned by P9rtside Energy LLC. an Indiana limited liability company.

Portside Energy .LLC is 100% owned by Primary Energy Operations LLC~ a Delaware limited liability company.

Primary Energy Operations LLC is 100% owned by Primary Energy Recycling Holdings LLC, a Delaware limited liability company.

Primary Energy Recycling Holdings is 83.2% owned by Primary Energy. Recycling Corporation, a British Columbia corporation, and 16.8% by Primary Energy Holdlngs LLC, a Delaware limited liability company. .

Primary Energy HoldIDgs LLC is 100% owned by Primary Energy Ventures LLC, a Delaware limited liability company.

Primary Energy Ventures LLC is owned 83.183% by ASP PP LLC, a Delaware limited liability company, 1.817% by Private Power Management LLC, a Delaware limited liability company, a:od 15% by Incentive Pool LLC, a Delaware limited liability company.

Neither Primary Energy Operations LLC, Primary Energy Holdings LLC, nor Primary Energy Ventures LLC (i) is directly or indirectly engaged in the generation or sale of electric energy in the United States other than from QF's, (ll) owns or operates .

any electric generation facilities in the United States other than QF's, or (iii) has any affiliate that owns or operates any electric l;ltility assets in the United States other than QF's.

Portside Energy LLC operates the Facility.

Ill. Signature of authorized individual evid~cing accuracy and authenticity of information provided by Applicant.

~ ~-&~~ I" ~= ... ~g. Benn Date

Craig Bennett is Portside Energy LLC's Associate General Counsel and Assistant Secretary and is an authorized individual evidencing the accuracy and authenticity of the infurmation provided by Applicant

2. Person to whom communications regarding the filed information may be addressed.:

Craig E. Bennett Associate General Counsel PrimaI)' Energy Ventures LLC 2000 Yolk Road- Suite 129 Oak Brook, IL 60523 630-413-5420 cbennett@primazyenergy.com

3a. Location offacility to be certified:

State: Indiana County: Porter City or town: Portage Street address: 6290 US Highway 12 - PO Box. 206 Zip: 46368

3b. Electric utilities that are contemplated to transact with the F~cility;

The Facility is interconnected to the internal grid of the steam host anci the local utility. The local utility is Northern Indiana Public Service Company (NlPSCO), a subsidiary ofNiSource. All power generated by the Facility is typicaily consumed by the host If delivered power ex.ceeds internal plant demand, the host sells the power to NiSource via a purchase power agreement The Facility receives supplemental­maintenance and backup power from NJ.8ource.

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4a. Describe the principal components of the Facility;

DESCRIPTION QUANTITY CAPACITY

Gas Turbine Generator 1 44.37MW

steam. Turbine Generator 1 19.25MW

Once~through Steam Generator 1 145,000 Iblhr, HP steam

30tOOO lblhr, LP steam

Amciliary Boilers 2 175,00'lblhr

Soft Water Heat Exchangers 2 2,000 gpm.

13.8-138 kV Step-up Transformer 1 45160175 MY A

13.8-4.16 kV Aux. Transfonner 2 .S,OOOkVA

13.8-048 kV Aux. Transformers 2 2,OOOkVA

Main Transmission Line 1,400 ft 138kV

The Facili~ is a.combined...cycle cogeneration plant consisting of one GE 6B gas turbine, a once-through steam generator (OTSG), one GE extraction steam. turbine generator and two auxiliary boilers. Exhaust gas from the gas turbine flows through the once-through steam generator (OTSG) which produces high pressure and low pressure superheated steam.. Low pressure steam. feeds the dearator preheating feedwater to the OTSG or boiler .. The exhaust gas flows from the OTSG out a stack mounted on top of . the OSTG. All of the high pressure steam normally flows to the steam turbine generator which has three extraction pressures: The steam host does not return condensate to the Facility.

A single 13.8 to 138 kV transfonner steps up the voltage of the electricity from the gas turbine generator and the steam. turbine generator. TIlls transfonner is connected to the host's 138 kV distribution system. Auxiliary power is supplied from two sources: from the 13.8 kV power inside the Facility and from the host:s 13.8 kV system.

4b. Indicate the maximum gross and maximum net eledric power produ.ction capacity of the facility at the point(s) of delivery and show tne derivation.

The gross power production capacity in full extraction mode is 63.62 MW.

The parasitic load is 1.5 MW.

The net electric power productio.n capacity in full extraction mode is 62.12 MW .

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4c. Indicate the actual or expected installation and operation dates of the facility, or the actual or expected date of completion of the reported modification to the facility

The Facility began co:tnmercial operation in September 1997.

4d Describe the primary energy input (e.g., hydro, coal, oil, natural gas, soiar, geothermal, wind, waste, bjomass, or other).·

The primary energy input is natural gas.

S. Provide the aV'el'age annual hourly energy input of fossil fuel:

460.73 MMBtuJhr (LHV) - includes fossil fuel (na.tui-al gas) energy inputs to the combustion turbine and auxiliary boilers. This is 100% of the fuel input.

6. Particular characteristics of the facility which bear ou its QF.' status. .

None

PARTB DESCRIPTION OF THE SMALL POWER PRODUCTION FACILITY

Not Applicable

PARTe DESCRIPTION OF THE COGENERATION FAcaITY

9. Describe the cogeneration system, and state whether the facility is a topping-cycle or bottoming-cycle cogeneration facility.

. . The Facility is a topping-cycle combined-cycle cogeneration plant consisting of one GE 6B gas turbine, a once-through steam generator (OTSG), one GE extraction steam turbine generator and two auxiliary boilers. Electricity is produced by the GE 6B gas turbine and the GE extraction steam turbine. Exhaust gas from the gas turbine flows through the on:ce-through steam generator (orsG) which produces hig1i pressure superheated steam for steam turbine and process steam users. The exhaust gases then pass through economizers which produce low pressure steam used for heating process water for the mill and for preheating boiler feed water in the dearators.

All of the high pressure steam normal.ly flows to the steam turbine generator which has three extraction pressures. The -steam host does not return condensate to the Facility. The host has dispatch authority of the gas turbine. When the gas turbine is not running. the auxiliary boilers provide all high pressure steam to the steam turbines.

10. To demonstrate the sequeutiality ofthe cogeneration process provide a mass and beat balance (cycle) diagram depicting average annual hourly operating conditions. -

a. Two masslheat balance cycle diagrams are provided in Attachment 3: one depicts conditions during operation of the gas turbine; the other depicts conditions during operation of only the auxiliary boilers and the stearn. turbine.

The nUmbers presented below in (b), (c), (d) and (g) represent average annual operating conditions and are a weighted average of the conditions presented in the attached masslheat balance diagrams. All numbers use the lower h~ting value (LHV):

b. Fuel Input: Combustion Turbine Fuel

264.3 MMBtuIbr LHV 2005

c. Supplemental Fuel Input: Boiler Fuel

1512 MMBtuIbr LHV 2005 Total Fuel

415.5 MMBtuIhr Gross 2005

d. Average net electric output Combustion Turbine

22.5 MW 2005 net Steam Turbine

8.1 MW 2005 net' e. Average net mechanical output

Not Applicable

f. All numbers above are based on 8,760 operating hours during calendar year 2005. The combustion gas turbine operated 6,862.3 hours/yr. Annual average operating conditions during this period are presented in Attachment 2. The steam

- turbine operated &,707.5 hours, of which, 1,845.2 hours it was driven by the auxiliary boilers only. .

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g. Worl:dIlg flow conditions at input and output of prime movers and each thermal application:

Prime Mover~ Steam Turbine Flow rates Obs/.br): 184,800 Ibslbr Enthalpy (Btu/lb): 1403.5 Btullb

Steam Export to Host: Flow rates (lbs/hr): 116,000 Ibs/hr Enthalpy (BtuIlb): 1264.7 Btullb

Hot Water host Flow rates (gpm): 1263 gpm Flow rates Obs.!hr.): 628.974 Ibsfhr Enthalpy (Btu/lb.): 128 Btu/lb

No thermal energy retum from the Host

11. Operating and efficiency values for the Facility:

Pt= 227.2 Pe = 104.4 Pm=NA Pi= 264.3 Ps= '1512

MMBtuIhr MMBtuIhr MMBtuIhr MMBtulhr MMBtuIbr

Average annual hourly useful thennal energy output Average annual hourly useful electric energy output Average annual hourly mechanical output Average annual hourly energy input (natural gas) Average annual hourly energy input for supplemental firing (natural gas)

Operating Standard = 5% or more

Operating Value = Pt I (pt + Pe + Pm) = 68.5%

Efficiency Standard = 42.5% or more when operating value is equal to or greater than 5%

Efficiency Value (topping cycle) = (pe+ Pm + 0.5 Pt) I (Pi + Ps)

Efficiency Value = 52.5%

The Facility satisfies applicable QF operating and efficiency standards.

FOR TOPPING CYCLE COGEN FACILITIES

U. Identify the thermal host whi.;h will pllI:chase the useful thermal energy output from the facility. Indicate whether the entity uses such output for the purpose of space and water heating, space cooling, and/or process use.

The steam host is US Steel Midwest Division. The host uses the thennal energy from the cogeneration unit for its process and space heating.

13. Description of thermal ootput uses: In Connection with the requirement that the thermal energy output be useful:

All of the high pressure steam nonnally flows to the steam turbine generator which has three extraction pressures. An average of 116,000 Ibslhr of intermediate pressure steam. is delivered to the host for the processing of hot rolled coilS and space heat. The Facility does not track space heat and process steam uses at the host. The host does not return condensate to the Facility.

The Facility supplies 1,263 gpm of water (62S,9741bs/br) of softened hot water to the host at 160"F for washing of the product. The Facility's water treatment capacity replaces the softened water sent to the host and. also supplies makeup water for the steam.

sent to the host. Lake water is sent through the power plant once-through cooling system to provide 1,500 to 1 ,SOO gpm of filtered water. l

1 Portside Energy LLC is an "existing" cogeneration facility that has not previously been certified with . FERC as a qualifying facility. The Facility is now self certifying as a qualifying facility in order to meet

the new mandatory certification requirement in section 292.203(b)(2) within the 6O-day 'Nindow provided in the new rule. ReVised Regulations Governing SmaU Power Production and Cogeneration. FaciliUe~, Order No. 671. 114 PERC 1{61.102 at P82 (2006). 71 Fed. Reg, 7852, 1861 (Feb. 15,2006), clarified, 114 PERC Cj{ 61,128 (2006). To the extent that FERC may consider Portside Energy LLC to be a "new" cogeneration facility. a view with which Portside Energy LLC disagrees, we offer the following showing that (i) the thennal energy output of the cogeneration facility is.used in a productive and beneficial manner and (li) the electrical and thermal output of the cogeneration facility is used fundamentally for industrial purposes and is not intended fundamentally for sale to an electric utility. consistent with section 292.205(d).

The Facility exports steam to the host for common industrial processes. Intennediate pressure steam is taken from an'extraction port on the turbine and delivered to the host's main steam header. This header feeds several steam users in the steel finishing process, including hot rolled coil cooling and line baths. These thermal hosts existed prior to the commissioning of the Facility. Hot water use for washing the steel . products is a neW process, but it dramatically improves product quality. The Facility supplanted a large boiler house at the host, equipped with three inefficient natural gas boilers. Well above 50% of the aggregate output of the Facility, on an annual basis, is used for industrial purposes, Including steeling rolling equipment, pumps, fans, and otber motor applications.

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FORBOTTONITNGCYCLECOGENFAC~nnES

14. Provide a description of the commercial or md~ial process or other thermal application to which the energy input to the system is first applled and from which the reject heat is then used for electric power production.

Not Applicable

The above infonnation and following Appendix demonstrate that Portside Energy LLC satisfies the qualifying cogeneration facility criteria set forth in the Commission'S PURPA Rules at 18 CFRPart 292. Accordingly, Portside EnergyLLC respectfully submits this notice of self certification as a qualifying cogeneration facility.

Very truly,

Jg' 4.~~ . . E. en tt, ,

As clate eneral Counsel Primary Energy Ventures LLC ,

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CERTIFICATE OF SERVICE

I hereby certify that I have this day caused the foregoing document to be served

on the following entities, in accordance with 18 C.F.R. § 292.207(a)(1)(ii): .

Mr. Joseph Southerland Chief Operating Officer Indiana Utility Regulatory Commission 302 W. Washington St- Ste E-306 Indianapolisr IN 46204

Mark Maassel President Northern Indiana Public Service Company 801 East 86th AveJlue Merrillville, IN 46410

Mr. Peter Fazio, Jr. Executive VP and General Counsel NiSource, Inc. 801 East 86th Avenue Merrillville, IN 46410

Dated at Oak Brook, IL this 15th day of March, 2006. .

-~'-I-~~~~r--=:-. (--ll4Ir:..c:.::~ (jG:;r ~Benn~

Asso' e General Counsel Primary Energy Ventures LLC 2000 Y OTk Road - Suite 129 Oak Brook, Illinois 60523 Tel: (630) 413·5420 Fax: (630) 371-0673 cbenn.ett@primaryenergy.com

----~,~.--~------------~---------- ~~--------~~~~,~.".~

./

Attachment 2 - Process Flow Diagram

NatumlGas

HPSteam

------.--".""~-"""'''-.-., .-

-From Com:l.Pumps

TaPAs

#! Aux. Barler

NatumtGss

#2 kjx. Boller

FromtP Steam

'--------1~ t -. --_Uir rl -HotSofteaedWatertoM1U

-- I ~ - I· .. Retl:lmn>Demln

St~mtQ·M(U

~ To O'TSG lion.

CondetlSilte-1'1JJ'IWl' {5TotaQ

560gpm 1'OO,0009ai., I Demlo. Water

Demln.· Tmlns Stomge t2Tanks)

From Heat El<cJ1.

Soft Water HeatEXt:h. {2Total},

lQ50gpm Softened

Water'F~"s (4' Total)

100.0.00931 Softened

Water Storage

'--__ ... __ "Jl) Dmln.

Storage

s.w.Pumps (ZTotal)

I... EXlttlog Plant System

__ ._1 --"---------.--~-.. - .. ---------------------

----_ .... _._ ..

Attachment 3 - MasslHeat Balance Cycle Diagrams

Nat Gas Inl~p!!!UI~e=-=o=Jl====t1 LHV 415.1 MMEH1lIhr HHV 450.3 MMBluIhr

Steam In!ectic 0.0 klbslhr

LIN HHV

Figure 2: Heat Balance Diagram with Operating Gas Turbine

Aw<Blr1 (175kpph)

,'~ I AuxBlr2 (175kpph)

Para.ItIoLoad 1.5MW

MW

Hot I. .".1 Water ~klblhr

OATMk~~~ ________ ~

PI

.1263 gpm

/

us Steel Midwest

Plant

CERTIFICATE OF SERVICE

The undersigned hereby certifies that a true and correct copy of the foregoing document

has been served, by electronic transmission, hard copies available upon request, this 18th day of

December, 2009, upon the following:

Gregory S. Colton NiSource Corporate Services 801 East 86th Avenue Merrillville, IN 46410 gscolton@nisource.com

Robert Endris Office of Utility Consumer Counselor National City Center 101 West Washington Street, 1500 South Indianapolis, Indiana 46204 rendris@oucc.in.gov

LEWIS & KAPPES One American Square, Suite 2500 Indianapolis, Indiana 46282

. Telephone: (317) 639-1210 Fax: (317) 639-4882 TRichardson@Lewis-Kappes.com

/s/ Todd A. Richardson Todd A. Richardson

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