appendix a power purchase agreements (ppas) ne power

8/13/2019 Appendix a Power Purchase Agreements (PPAs) Ne Power

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Power Purchase Agreements

Toll ing Agreement

Disco Colesonco Holdco

Power Purchase Agreement

Disco Nuclearco

Vesting Agreement

Genco Disco Holdco

October 1, 2004


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EXECUTION COPY

NEW BRUNSWICK POWER DISTRIBUTION

AND CUSTOMER SERVICE CORPORATION

and

NEW BRUNSWICK POWER COLESON COVE CORPORATION

and

NEW BRUNSWICK POWER HOLDING CORPORATION

TOLLING AGREEMENT

COLESON COVE GENERATING STATION

October 1, 2004


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TABLE OF CONTENTS

-i-

ARTICLE 1

INTERPRETATION......................................................................................................... 4

1.1 Definitions ................................................................................................................ 4

1.2 Headings and Table of Contents............................................................................. 22

1.3 Gender, Number and Grammatical Changes .......................................................... 22

1.4 Business Days ......................................................................................................... 22

1.5 Currency.................................................................................................................. 22

1.6 Calculation of Interest............................................................................................. 23

1.7 Statutes.................................................................................................................... 23

1.8 Invalidity of Provisions........................................................................................... 23

1.9 Entire Agreement.................................................................................................... 23

1.10 Waiver..................................................................................................................... 24

1.11 Amendment............................................................................................................. 24

1.12 Governing Law ....................................................................................................... 25

1.13 Technical Terms ..................................................................................................... 25

1.14 Schedules ................................................................................................................ 25

ARTICLE 2

TOLLING AND CAPACITY ........................................................................................ 26

2.1 Tolling, Capacity and Fuel...................................................................................... 26

2.2 Sellers Failure to Deliver Net Energy ................................................................... 29

2.3 Title and Risk relating to Net Energy and Fuel ...................................................... 31

2.4 Transmission and Related Costs ............................................................................. 322.5 Capacity Payments.................................................................................................. 33

2.6 Availability after the In-Service Date..................................................................... 33

2.7 Adjustments for Environmental Costs.................................................................... 35

2.8 Emission Credits and Other Environmental Attributes .......................................... 42

2.9 Heat Rate................................................................................................................. 42

2.10 Taxes....................................................................................................................... 44

2.11 Metering.................................................................................................................. 45

2.12 Start-Ups ................................................................................................................. 45

2.13 New Fuel................................................................................................................. 452.14 Gypsum and Ash..................................................................................................... 46

2.15 Notice of Shutdown ................................................................................................ 46

ARTICLE 3

OUTAGES ....................................................................................................................... 47

3.1 Planned Outage Schedule ....................................................................................... 47


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3.2 Changes to Planned Outage Schedule .................................................................... 47

3.3 Forced Outages ....................................................................................................... 49

3.4 Maintenance Outages.............................................................................................. 49

3.5 Cost of Changes ...................................................................................................... 50

3.6 Scheduling .............................................................................................................. 50

ARTICLE 4

ANCILLARY SERVICES.............................................................................................. 52

4.1 Self Supply by Buyer.............................................................................................. 52

4.2 Payment for Ancillary Services .............................................................................. 52

ARTICLE 5

COVENANTS.................................................................................................................. 54

5.1 Operation, Repair and Maintenance ....................................................................... 54

5.2 Refurbishment Obligations..................................................................................... 555.3 Information ............................................................................................................. 55

5.4 Inspection................................................................................................................ 56

5.5 Insurance................................................................................................................. 56

5.6 Damage, Destruction and Repair ............................................................................ 57

5.7 Derations................................................................................................................. 58

5.8 Unit Generator Load and Common Service Load .................................................. 58

5.9 Regulatory Compliance .......................................................................................... 58

5.10 Notification of Actions ........................................................................................... 59

ARTICLE 6

BILLING, PAYMENT, AUDIT AND CREDIT........................................................... 60

6.1 Billing and Other Statements.................................................................................. 60

6.2 Payments and Interest ............................................................................................. 62

6.3 Adjustments ............................................................................................................ 62

6.4 Disputed Bills ......................................................................................................... 62

6.5 Audit ....................................................................................................................... 63

6.6 Credit and Collateral Requirements........................................................................ 65

ARTICLE 7

REPRESENTATIONS AND WARRANTIES ............................................................. 67

7.1 Representations and Warranties of the Seller ......................................................... 67

7.2 Representations and Warranties of the Buyer......................................................... 68


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ARTICLE 8

TERM, DEFAULT AND TERMINATION.................................................................. 70

8.1 Term........................................................................................................................ 70

8.2 Events of Default by Buyer .................................................................................... 70

8.3 Termination by Seller ............................................................................................. 72

8.4 Events of Default by Seller..................................................................................... 73

8.5 Termination by the Buyer ....................................................................................... 75

8.6 NB Power Holdco Remedy..................................................................................... 76

8.7 Termination and Survival ....................................................................................... 76

ARTICLE 9

LIABILITY AND INDEMNIFICATION..................................................................... 78

9.1 Limitation of Liability ............................................................................................ 78

9.2 Liquidated Damages ............................................................................................... 78

9.3 Indemnification by Seller........................................................................................ 799.4 Indemnification by the Buyer ................................................................................. 80

9.5 Sole Remedies and Injunctive Relief...................................................................... 81

9.6 Defence of Claims .................................................................................................. 81

ARTICLE 10

CONTRACT OPERATION AND ADMINISTRATION............................................ 86

10.1 Operating Committee.............................................................................................. 86

10.2 Record Retention .................................................................................................... 86

10.3 Notices .................................................................................................................... 87

ARTICLE 11

FORCE MAJEURE ........................................................................................................ 90

11.1 Effect of Invoking Force Majeure and Notice ........................................................ 90

11.2 Definition of Force Majeure ................................................................................... 91

11.3 Prolonged Force Majeure........................................................................................ 92

11.4 Extension ................................................................................................................ 93

11.5 No Capacity Payment ............................................................................................. 93

11.6 NB Power Holdco Limitation................................................................................. 93

ARTICLE 12

MISCELLANEOUS PROVISIONS.............................................................................. 94

12.1 Informal Dispute Resolution Procedures................................................................ 94

12.2 Arbitration Procedures............................................................................................ 94

12.3 Legal Relationship .................................................................................................. 95

12.4 Assignment ............................................................................................................. 95


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12.5 Set-off ..................................................................................................................... 98

12.6 Further Assurances ............................................................................................... 100

12.7 Confidentiality ...................................................................................................... 100

12.8 Agency .................................................................................................................. 102

12.9 Time of the Essence.............................................................................................. 103

12.10 Counterparts.......................................................................................................... 103

SCHEDULES

Schedule 1.1.16 Capacity PaymentSchedule 1.1.25 Contracted Energy PriceSchedule 1.1.28 CPI AdjustmentSchedule 1.1.55 Fuel SpecificationsSchedule 1.1.64 Heat Rate Test

Schedule 1.1.107 Refurbishment DescriptionSchedule 2.1.4 Scheduling ProceduresSchedule 2.5 Adjustments to Capacity PaymentSchedule 2.9.4 Heat Rate Adjustment and Start-Up FeesSchedule 5.1 Coleson Cove Operating CharacteristicsSchedule 12.2 Arbitration Procedures


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TOLLING AGREEMENT

THIS TOLLING AGREEMENT is made effective this 1st day of October,

2004,

B E T W E E N:

NEW BRUNSWICK POWER DISTRIBUTION AND CUSTOMER

SERVICE CORPORATION, a duly incorporated company under and by

virtue of the laws of the Province of New Brunswick, with head office

therein at the City of Fredricton, in the County of York

(the Buyer)

and

NEW BRUNSWICK POWER COLESON COVE CORPORATION,

a duly incorporated company under and by virtue of the laws of the

Province of New Brunswick, with head office therein at the City of

Fredricton, in the County of York

(the Seller)

and

NEW BRUNSWICK POWER HOLDING CORPORATION, a duly

incorporated company under and by virtue of the laws of the Province of

New Brunswick, with head office therein at the City of Fredricton, in the

County of York

(NB Power Holdco)


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RECITALS:

A. The Buyer and the Seller are the successors to the distribution business and the electricitygeneration business located at Coleson Cove, respectively, of New Brunswick Power

Corporation.

B. New Brunswick Power Corporation was restructured as a result of the proclamation ofthe Electricity Act on the date hereof and its assets and liabilities were transferred, in

part, to five corporations, two of which are the Buyer and the Seller.

C. The Seller has agreed to (i) sell to the Buyer tolling capacity and related services fromColeson Cove to convert fuel to Electricity, and (ii) sell services to, and act as the agent

of, NB Power Holdco in certain circumstances. The Buyer and/or NB Power Holdco willcause all necessary fuel to be provided to the Seller as required for the generation of

Electricity from Coleson Cove.

D. The Seller is refurbishing Coleson Cove and the Buyer, NB Power Holdco and the Sellerhave prepared this Agreement in contemplation that the Refurbishment will be

completed.

E. In addition to the transactions contemplated by this Agreement, the Buyer provides theSeller with Electricity at several delivery points at voltages of 25 kV or lower. The

provision of this Electricity by the Buyer to the Seller does not form part of this

Agreement.

F. The Seller may assign, transfer, pledge or otherwise dispose of all or part of its rights andinterests under this Agreement pursuant to section 12.4.1.2 upon a Transfer of all or part

of the Facilities to which the Province has consented, and upon the assignee, transferee,

pledgee or other acquiror assuming the Sellers liabilities and obligations hereunder, theSeller shall be freed and relieved from such liabilities and obligations pursuant to

section 12.4.3.


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NOW THEREFORE in consideration of the mutual covenants set forth herein

and other good and valuable consideration (the receipt and sufficiency of which are hereby

acknowledged) the parties agree as follows:


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ARTICLE 1

INTERPRETATION

1.1 DefinitionsIn this Agreement and the recitals to this Agreement:

1.1.1 Affiliate means, with respect to any Person, any other Person that, directly orindirectly, through one or more intermediaries, Controls or is Controlled by such Person,

or is under the common Control of a third Person.

1.1.2 Agreement means this tolling agreement and all Schedules attached to thistolling agreement, in each case as they may be amended, restated or replaced from time to

time, and unless otherwise indicated, references to Articles, recitals, sections and

Schedules are references to articles, recitals, sections and schedules in this tolling

agreement.

1.1.3 Ancillary Services means services and products necessary to maintain thereliability of the SO-Controlled Grid, including frequency control, voltage control, reactive

power and operating reserve.

1.1.4 Applicable Law means, collectively, all applicable laws, statutes, ordinances,decrees, rules, regulations, by-laws, legally enforceable policies, codes and guidelines, the

Market Rules, judicial, arbitral, administrative, ministerial, departmental and regulatory

judgments, orders, decisions, directives, rulings and awards, and conditions of any grant of

approval, permission, certification, consent, registration, authority or licence by any court,

statutory body, self-regulatory authority, stock exchange or other Governmental Authority.

1.1.5 Availability means, for any period of time and expressed as a percentage:1.1.5.1 the amount of Net Energy declared available by the Seller to the Buyerduring that period of time in accordance with section 2.1.4 and the Scheduling

Procedures; divided by


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1.1.5.2 the aggregate of the Contracted Capacities for each hour during thatperiod of time;

provided that:

1.1.5.3 a Unit Generator on (i) a Planned Outage during March, April, May,September, October or November which was Scheduled in compliance with the

terms of this Agreement, (ii) a Planned Outage in any other month which was

Scheduled in compliance with the terms of this Agreement, provided that, for the

purposes of this section 1.1.5.3, the Buyer has provided its consent to such

Planned Outage, which consent shall be in the Buyers sole discretion, or (iii) a

Maintenance Outage consented to by the Buyer in accordance with the terms of

this Agreement, which consent shall be in the Buyers sole discretion (but not, for

greater certainty, a Forced Outage), shall be considered to have available for each

hour of such Planned Outage or Maintenance Outage, Net Energy equal to the

amount of the Unit Generators DNC, notwithstanding the Sellers declaration to

the Buyer pursuant to section 2.1.4 and theSchedulingProcedures in respect of

the Unit Generators actual availability; and

1.1.5.4 a Unit Generator that has been subject to a Deration during that periodof time shall be considered to have available for each hour that the Deration

occurs during such period of time Net Energy equal to the sum of (i) subject to

section 1.1.5.3, Net Energy declared available by the Seller to the Buyer during

each such hour in accordance with section 2.1.4 and the SchedulingProcedures,

and (ii) the decrease in that Unit Generators availability as a result of the

Deration.

For greater certainty, whether or not a Unit Generator is actually dispatched by the SO

shall not affect Availability.

1.1.6 Availability Statement means for any Billing Month or other period of time astatement of the Availability for that Billing Month or that period of time in a form which

is acceptable to the Buyer, acting reasonably.


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1.1.18 Change of Control means the occurrence of any change in the Control orEffective Control of a Person. For greater certainty, a change in either the equity

ownership or the voting control of a Person which results in a decrease in the beneficial

ownership of or control over the equity value or voting rights or interests, respectively, of

that Person from more than 50% to 50% or less of the outstanding equity value or voting

rights or interests, respectively, shall be considered a Change of Control for the purposes

of this Agreement.

1.1.19 Coleson Cove means the Coleson Cove generating station located inSaint John, New Brunswick.

1.1.20 Collection Period means the period in days commencing on the first day of aBilling Month and ending on the date that is 30 days after the Payment Date for that

Billing Month.

1.1.21 Commercially Reasonable Efforts means efforts which are designed to enablea party, directly or indirectly, to satisfy or perform its obligations under this Agreement or

to otherwise assist in the consummation of the transactions contemplated by this

Agreement and which do not require the performing party to expend any funds or assume

liabilities other than expenditures or liabilities which are reasonable in nature and amount

in the context of such obligations or transactions or, where applicable, usual commercial

practice.

1.1.22 Common Service Load means the total amount of Electricity measured inMWh consumed by the Facilities which is not Unit Generator Load, as measured at the

applicable Metering Installation(s).

1.1.23 Confidential Information has the meaning attributed to that term insection 12.7.

1.1.24 Contracted Capacity means 100% of the aggregate DNCs of the UnitGenerators, provided that and notwithstanding the foregoing, (i) prior to the In-Service

Date, the aggregate Contracted Capacities of the Unit Generators for the purposes of this

Agreement shall not exceed 998 MW and if 100% of the aggregate DNCs of the Unit


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Generators exceeds 998 MW, the Contracted Capacity for the purposes of this Agreement

shall be deemed to equal 998 MW, and (ii) on and after the In-Service Date, the aggregate

Contracted Capacities of the Unit Generators shall not exceed 978 MW and if 100% of the

aggregate DNCs of the Unit Generators exceeds 978 MW, the Contracted Capacity for the

purposes of this Agreement shall be deemed to equal 978 MW.

1.1.25 Contracted Energy Price has the meaning attributed to that term inSchedule 1.1.25.

1.1.26 Control means:1.1.26.1 when applied to the relationship between a Person and a corporation,the beneficial ownership by such Person at the relevant time of shares of thecorporation: (i) carrying more than 50% of the voting rights ordinarily

exercisable at meetings of shareholders of the corporation, and (ii) representing

more than 50% of the equity value of the corporation;

1.1.26.2 when applied to the relationship between a Person and a partnership orjoint venture, (i) the beneficial ownership by such Person at the relevant time of:

(a) more than 50% of the voting interests of the partnership or joint venture, and

(b) partnership or joint venture interests representing more than 50% of the equity

value of the partnership or joint venture, and (ii) it can reasonably be expected

that the Person directs the affairs of the partnership or joint venture;

1.1.26.3 when applied to the relationship between a Person and a limitedpartnership, the beneficial ownership by such Person at the relevant time of:

(i) shares of the general partner or general partners of the limited partnership

carrying more than 50% of the voting rights ordinarily exercisable at meetings of

shareholders of such general partner or general partners such that it can

reasonably be expected that the Person directs the affairs of the limited

partnership, and (ii) partnership interests representing more than 50% of the

equity value of the limited partnership; or


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1.1.26.4 when applied to the relationship between a Person and another Personthat is not a corporation, partnership, joint venture or limited partnership, (i) the

beneficial ownership by such Person at the relevant time of more than 50% of any

equity, participating and any other ownership interests of that other Person, and

(ii) it can reasonably be expected that the Person directs the affairs of that other

Person; and

the term Controlled by has a corresponding meaning; provided that a Person (the

first-mentioned Person) who Controls a corporation, partnership, limited partnership,

joint venture or other Person (the second-mentioned Person) shall be deemed to

Control a corporation, partnership, limited partnership, joint venture or other Person which

is Controlled by the second-mentioned Person and so on.

1.1.27 CPI (New Brunswick) means the Consumer Price Index for New Brunswick,All items (Not Seasonally Adjusted), 1992 = 100, or any index published in substitution

therefor if the Consumer Price Index for New Brunswick, All items (Not Seasonally

Adjusted), 1992 = 100, is no longer published, or any other replacement index designated

by the Buyer and acceptable to the Seller, acting reasonably, published by Statistics

Canada (or any successor thereof or any other Governmental Authority) from time to time.

1.1.28 CPI Adjustment has the meaning attributed to that term in Schedule 1.1.28.1.1.29 Deration means any normal operating condition, not caused by the Sellersnegligence or practices, methods or activities not in accordance with Good Utility

Practices, that has the effect of decreasing a Unit Generators availability, provided that:

1.1.29.1 the normal operating condition must be capable of being remedied orrepaired by a Maintenance Outage or a Planned Outage which would have a

duration of no more than 72 hours;

1.1.29.2 the decrease in a Unit Generators availability as a result of one or moreDerations occurring at the same time shall in no circumstances exceed 50 MW

and if such decrease in availability exceeds 50 MW, such decrease in availability

shall be deemed to equal 50 MW for purposes of this Agreement; and


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1.1.29.3 the normal operating condition is remedied or repaired within120 hours of its commencement and if it is not so remedied or repaired, the

Deration shall be deemed for purposes of this Agreement to have terminated at

the end of such 120th

hour.

1.1.30 Direct Claim has the meaning attributed to that term in section 9.6.8.1.1.31 Dispatched Differential has the meaning attributed to that term insection 2.1.11.

1.1.32 Disputes has the meaning attributed to that term in section 12.1.1.1.33 Disputes Committee has the meaning attributed to that term in section 12.1.1.1.34 DNC means, in respect of a Unit Generator, that Unit Generators demonstratednet maximum capability to deliver Net Energy to the Point of Delivery, as declared from

time to time by the Seller and acceptable to the Buyer, acting reasonably, provided that if

the SO determines, establishes or audits the demonstrated net maximum capability of a

Unit Generator, that Unit Generators DNC for the purposes of this Agreement shall

equal such demonstrated net maximum capability determined, established or audited by the

SO from time to time. For greater certainty, a Unit Generators DNC shall be calculated

net of that Unit Generators Unit Generator Load and net of that Unit Generators pro rata

share of the Common Service Load.

1.1.35 Effective Control means control in fact by one Person, together with itsAffiliates and those with whom it is acting in concert, exercising effective control over

another Person or over the decision-making of that other Person, either directly or

indirectly, whether through the holding of shares of a corporation or through the holding of

a significant portion of any class of shares of a corporation or through the holding of unitsin a partnership or limited partnership or through the holding of outstanding debt of a

corporation, partnership or limited partnership or of any shareholder or member of a

corporation, partnership or limited partnership or by any other means; any Person which

holds voting or equity securities (as defined in the Securities Act(Ontario)) representing, in


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the aggregate, 50% or more of the outstanding securities of any class of the Person shall be

deemed for the purposes of this Agreement to have Effective Control of that Person.

1.1.36 Electric Finance Corporation means New Brunswick Electric FinanceCorporation, a corporation incorporated under the laws of New Brunswick, and includes

any successor to New Brunswick Electric Finance Corporation resulting from any

amalgamation, merger, arrangement or other reorganization of or including New

Brunswick Electric Finance Corporation or any continuance under the laws of another

jurisdiction.

1.1.37 Electricity means electrical capacity and/or energy measured in MW or MWh,as applicable.

1.1.38 Electricity Act means theElectricity Act (New Brunswick).1.1.39 Emission Allowances means any allowances issued, allocated or granted underApplicable Law authorizing the emission into the Environment of specified substances in

specified levels or quantities, including the emission of particulates, nitrogen oxide,

sulphur dioxide and carbon dioxide.

1.1.40 Emission Credits means any credits issued, allocated or granted underApplicable Law which are associated with an amount of emissions into the Environment

which have been avoided or reduced.

1.1.41 Environment means the air, water (including surface water and undergroundwater) and land.

1.1.42 Environmental Costs has the meaning attributed to that term in section 2.7.1.2.1.1.43 Environmental Law means all Canadian federal, provincial and municipallaws, statutes, ordinances, decrees, regulations, by-laws, decisions and rules, and any

legally enforceable orders, codes, policies and guidelines of any Canadian Governmental

Authority (whether federal, provincial, municipal or local), and any permits, certificates,

approvals, consents, authorizations, registrations or licences issued by any Canadian

Governmental Authority (whether federal, provincial, municipal or local), and any


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requirements or obligations arising under Canadian common law, relating specifically to

the Environment, the Release and/or threatened Release of Hazardous Substances into the

Environment, and/or the manufacture, processing, distribution, use, treatment, storage,

transport, disposal and/or handling of Hazardous Substances, including the Canadian

Environmental Assessment Act (Canada), the Canadian Environmental Protection Act,

1999 (Canada), the Fisheries Act (Canada), the Pest Control Products Act (Canada), the

Transportation of Dangerous Goods Act, 1992 (Canada), the Clean Air Act (New

Brunswick), the Clean Environment Act (New Brunswick), the Clean Water Act (New

Brunswick), and the Transportation of Dangerous Goods Act (New Brunswick), and the

respective regulations thereunder and any municipal noise or sewer use by-law.

1.1.44 Estimated Collection Value means an estimated amount payable for aCollection Period by the Buyer to the Seller equal to (i) the product of the estimated

aggregate Net Energy that is expected to be Scheduled with the SO to be delivered by the

Seller to the Buyer at the Point of Delivery during the Collection Period and the Contracted

Energy Price applicable during the Collection Period, plus (ii) any estimated Capacity

Payment applicable for the Collection Period as estimated to be decreased pursuant to

section 2.6, if at all. The Estimated Collection Value shall be determined by the Seller,

acting reasonably, by reference to the Scheduling instructions and its expected Availability

for the Collection Period.

1.1.45 Event of Default means a Buyer Event of Default or a Seller Event of Default.1.1.46 Excluded Month has the meaning attributed to that term in section 3.2.1.5.1.1.47 Facilities means the plant, facilities, buildings, equipment, supplies andimprovements owned or leased by the Seller and located at, on, in, upon, over, across,

under or within Coleson Cove.

1.1.48 Final Heat Rate Test has the meaning attributed to that term in section 2.9.1 or2.9.2, as applicable.

1.1.49 Final Hourly Balanced Schedule has the meaning attributed to that term in theMarket Rules.


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1.1.50 Firm Estimate has the meaning attributed to that term in section 2.7.4.1.1.51 Fiscal Year means the 12-month period from April 1 in one year to March 31in the next year, inclusive.

1.1.52 Force Majeure has the meaning attributed to that term in section 11.2.1.1.53 Forced Outage means an unplanned Unit Generator outage, including anunplanned Unit Generator outage that is a result of:

1.1.53.1 automatic action of equipment without any action of the operator;1.1.53.2 action of the operator where such operator reasonably believes thatsuch action is necessary to avoid: (i) compromising the health or safety of any

Person, (ii) compromising the integrity of the Environment, (iii) damage to

material plant or facilities, or (iv) breaching the provisions of Applicable Law;

1.1.53.3 action of the operator where such operator reasonably believes thatsuch action is necessary to avoid an automatic disconnection of a Unit Generator

that would have occurred shortly after the intentional disconnection of a Unit

Generator by the operator; or

1.1.53.4 Force Majeure.1.1.54 Fuel Delivery Point means the point where the pipeline that delivers fuel to theSeller crosses into Coleson Cove.

1.1.55 Fuel Specifications means the required specifications for fuel provided orcaused to be provided by the Buyer, its agents (including NB Power Genco) or NB Power

Holdco to the Seller in connection with this Agreement, as set out in Schedule 1.1.55.

1.1.56 Generation Interconnection Agreement means the generation interconnectionagreement between the Seller and New Brunswick Power Transmission Corporation, as

amended, restated or replaced from time to time.


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1.1.57 Good Utility Practices means, as applicable to the party obliged to use GoodUtility Practices hereunder, any of the practices, methods and activities adopted by a

significant portion of the North American electric utility industry as good practices

applicable to facilities of similar design, size and capacity to Coleson Cove or any of the

practices, methods or activities which, in the exercise of skill, diligence, prudence,

foresight and reasonable judgment by a prudent operator in light of the facts known at the

time the decision was made, could have been expected to accomplish the desired result at a

reasonable cost consistent with good business practices, reliability, safety, expedition and

Applicable Law. Good Utility Practices are not intended to be limited to the optimal

practices, methods or acts to the exclusion of all others, but rather to be practices, methods

or acts generally accepted in the North American electric utility industry.

1.1.58 Governmental Authority means any federal, provincial, municipal or localgovernment, parliament or legislature, or any regulatory authority, agency, tribunal,

commission, board or department of any such government, parliament or legislature, or

any court or other law, regulation or rule-making entity, or any arbitrator, each having or

reasonably purporting to have jurisdiction in the relevant circumstances, including, for

greater certainty, the SO, or any Person acting or reasonably purporting to act under the

authority of any such Governmental Authority.

1.1.59 GST means all tax payable under Part IX of theExcise Tax Act(Canada).1.1.60 Guarantee means a guarantee in a form satisfactory to the Seller, actingreasonably, as provided by a Guarantor pursuant to section 6.6.1.1 or replaced pursuant to

section 6.6.4.

1.1.61 Guarantor has the meaning attributed to that term in section 6.6.1.1 andincludes a Guarantors permitted assignee pursuant to section 6.6.4.

1.1.62 Hazardous Substances means:1.1.62.1 any chemicals, materials or substances defined as or included in thedefinition of hazardous substances, hazardous wastes, hazardous materials,

hazardous constituents, restricted hazardous materials, extremely hazardous


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substances, toxic substances, deleterious substances, contaminants,

pollutants, toxic pollutants or words of similar meaning and regulatory effect

under any applicable Environmental Law, including any petrochemical or

petroleum products, oil or coal ash, radioactive materials, radon gas, friable

asbestos, urea formaldehyde foam insulation and polychlorinated biphenyls

waste; and

1.1.62.2 any other material or substance, exposure to which is prohibited,limited or regulated by any applicable Environmental Law.

1.1.63 Heat Rate Adjustment has the meaning attributed to that term inSchedule 2.9.4.

1.1.64 Heat Rate Test means a test of a Unit Generators heat rate as described inSchedule 1.1.64.

1.1.65 HST means all tax payable under the Harmonized Sales Tax Act (NewBrunswick) and under Part IX of theExcise Tax Act(Canada).

1.1.66 including, included and include means including, included or include,each without limitation.

1.1.67 Indemnifiable Loss has the meaning attributed to that term in section 9.3.1.1.1.68 Indemnifying Party means a Person required to provide indemnification underthis Agreement.

1.1.69 Indemnitee means a Seller Indemnitee or a Buyer Indemnitee, as the case maybe.

1.1.70 In-Service Date means the first day in the first calendar month following thecompletion of the Refurbishment, which completion shall be evidenced by an appropriate

declaration of in-service in respect of the Facilities being delivered by the Seller to the

Buyer.


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1.1.71 Insolvency Legislation means the Bankruptcy and Insolvency Act (Canada),theCompanies Creditors Arrangement Act(Canada), the Winding Up and Restructuring

Act(Canada) and any other similar legislation, statutes, regulations and rules.

1.1.72 Interest Rate means, for any day, the annual rate of interest equal to the ratewhich the Bank of Montreal establishes at its principal office in Fredericton, New

Brunswick as the reference rate of interest to determine interest rates it will charge on such

day for commercial loans in Canadian dollars made to its customers in Canada and which

it refers to as its prime rate of interest, plus 1%.

1.1.73 Knowledge of any Person means the actual knowledge of the corporate officersof that Person charged with responsibility for the particular function.

1.1.74 kV means kilovolt.1.1.75 Letter of Credit means one or more irrevocable, standby letters of credit issuedby a Canadian commercial bank or foreign bank with a Canadian branch having an S&P

debt rating in respect of its most senior unsecured debt of at least A or another debt rating

at least equivalent to the foregoing S&P rating in respect of its most senior unsecured debt,

and in a form acceptable to the Seller, acting reasonably.

1.1.76 Maintenance Outage means an unplanned Unit Generator outage which isrequired as a result of equipment failure, an order from a Governmental Authority, or any

other event or condition which, without a Unit Generator outage, would reduce safety or

materially reduce unit reliability, and the operator has some discretion to schedule the

outage (as opposed to a Forced Outage where the operator has no such discretion).

1.1.77 Market Rules means the rules made under section 58 of the Electricity Act.1.1.78 Market Participant has the meaning attributed to that term in the MarketRules.

1.1.79 Metering Installation means any apparatus used to measure electricalquantities.


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1.1.80 Minimum Credit Rating has the meaning attributed to that term insection 6.6.3.

1.1.81 MMBTU means one million BTUs.1.1.82 Monthly Capital Payment has the meaning attributed to that term inSchedule 1.1.16.

1.1.83 MW means megawatt.1.1.84 MWh means megawatt hour.1.1.85 NB Power Genco means New Brunswick Power Generation Corporation, acorporation incorporated under the laws of New Brunswick, and includes any successor to

New Brunswick Power Generation Corporation resulting from any amalgamation, merger,

arrangement or other reorganization of or including New Brunswick Power Generation

Corporation or any continuance under the laws of another jurisdiction.

1.1.86 NB Power Holdco means New Brunswick Power Holding Corporation, acorporation continued under the laws of New Brunswick, and includes any successor to

New Brunswick Power Holding Corporation resulting from any amalgamation, merger,

arrangement or other reorganization of or including New Brunswick Power Holding


1.1.87 Net Energy means the aggregate of Net Generation per Unit for all of the UnitGenerators less the Common Service Load, provided that if Net Energy is a negative

amount, Net Energy shall be deemed to be zero.

1.1.88 Net Generation per Unit means in respect of a Unit Generator, the totalamount of Electricity measured in MWh delivered at the Point of Delivery for that Unit

Generator less the Unit Generator Load applicable to that Unit Generator measured in

MWh. For greater certainty, Net Generation per Unit can be a negative amount for the

purposes of this Agreement.


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generation of Net Energy which are owned or leased by the Seller or which the Seller is

permitted to use.

1.1.97 Outage means a Forced Outage, a Maintenance Outage or a Planned Outage.1.1.98 Payee has the meaning attributed to that term in section 6.1.3.1.1.99 Payment Date has the meaning attributed to that term in section 6.2.1.1.100 Payor, except in section 2.10 where such term is separately defined, has themeaning attributed to that term in section 6.1.3.

1.1.101 PDVSA means the Petroleos de Venezuela, S.A.1.1.102 Person means any individual, partnership, limited partnership, joint venture,syndicate, sole proprietorship, company or corporation with or without share capital,

unincorporated association, trust, trustee, executor, administrator or other legal personal

representative, Governmental Authority or entity however designated or constituted.

1.1.103 Planned Outage means any Unit Generator outage other than a MaintenanceOutage or a Forced Outage. For greater certainty, a Planned Outage may arise because

work is being conducted on the Facilities which requires a Unit Generator outage, eventhough work is not being performed on that Unit Generator.

1.1.104 Planned Outage Schedule has the meaning attributed to that term insection 3.1.

1.1.105 Point of Delivery means, in respect of a Unit Generator, the high voltageterminals of the step-up transformer for that Unit Generator.

1.1.106 Province means Her Majesty the Queen in right of the Province of NewBrunswick.

1.1.107 Refurbishment means the refurbishment of the Facilities as described inSchedule 1.1.107.


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1.1.108 Release means any spilling, leaking, pumping, pouring, emitting, venting,emptying, discharging, injecting, escaping, leaching, dumping or disposing of Hazardous

Substances into the Environment.

1.1.109 S&P has the meaning attributed to that term in section 6.6.3.1.1.110 Schedule, Scheduled and Scheduling means all acts necessary pursuant toand in accordance with the SchedulingProcedures and the Market Rules for the Buyer (and

its agents) and the Seller, or either one of them, to schedule, dispatch and deliver, or to

cause to be scheduled, dispatched and delivered, Electricity to the Point of Delivery,

including, if applicable, (i) the submission or re-submission of all dispatch data or bilateral

contract data to, and (ii) the receipt of dispatch communications or instructions from, the

SO.

1.1.111 Scheduling Procedures means the procedures for Scheduling set out inSchedule 2.1.4 as those procedures may be amended, supplemented, or replaced from time

to time by the Operating Committee and any such amended, supplemented or replaced

Scheduling Procedures shall be deemed to be the Scheduling Procedures referred to in this

Agreement.

1.1.112 Seller means New Brunswick Power Coleson Cove Corporation, a corporationincorporated under the laws of New Brunswick, and includes any successor to New

Brunswick Power Coleson Cove Corporation resulting from any amalgamation, merger,

arrangement or other reorganization of or including New Brunswick Power Coleson Cove


1.1.113 Seller Event of Default has the meaning attributed to that term in section 8.4.

1.1.114

Seller Indemnitee has the meaning attributed to that term in section 9.4.1.

1.1.115 Shutdown means, in respect of a Unit Generator, when that Unit Generator hasbeen shutdown and has stopped generating Electricity on a permanent basis.

1.1.116 SO means the New Brunswick System Operator established under section 40 ofthe Electricity Act, and includes any successor thereto.


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1.1.117 SO-Controlled Grid means the transmission systems with respect to which,pursuant to Applicable Law, the SO has authority to direct operations.

1.1.118 Start-Up means the bringing of a Unit Generator from a desynchronized tosynchronized condition in accordance with the Scheduling Procedures or dispatch

instructions from the SO. For greater certainty, a Start-Up shall not include any

unsuccessful attempt to bring a Unit Generator from a desynchronized to a synchronized

condition.

1.1.119 Start-Up Fee has the meaning attributed to that term in Schedule 2.9.4.1.1.120 Start-Up Fuel means the aggregate MMBTU (high heating value) of the fuelused by a Unit Generator for a Start-Up as set out in Schedule 5.1.

1.1.121 Target Heat Rate Curve means, for a Unit Generator, the heat rate curve(expressed in MMBTU per MWh) for that Unit Generator as determined by the Final Heat

Rate Test for that Unit Generator.

1.1.122 Taxes means all sales taxes, including HST, GST, use taxes, ad valoremtaxes,value added taxes, excise taxes, and any similar taxes, whether enacted before or after the

date of this Agreement, but excluding taxes based on excess profits, profits, net income,

income, taxable income or net worth, capital taxes, and any similar taxes and any payments

in lieu of any such taxes.

1.1.123 Term has the meaning attributed to that term in section 8.1.1.1.124 Termination Date has the meaning attributed to that term in section 8.1.1.1.125 Testing Period has the meaning attributed to that term in section 2.9.1.1.1.126 Third Party Claim has the meaning attributed to that term in section 9.6.1.1.1.127 Transfer means a sale, assignment, lease, sublease, mortgage, encumbrance,disposition, licence, tolling, or any other transaction whereby ownership of, or the right to

control, use, occupy or operate all or part of the Facilities and/or the Other Facilities has


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been transferred to, or conferred on, any Person. Transferred has a corresponding

meaning.

1.1.128 Transmission and Related Costs means all costs applicable to, or incurred bya party in relation to, the transmission of Electricity, including, if applicable, Ancillary

Services costs, transmission charges and transmission losses.

1.1.129 Unit Generator Load means, in respect of a Unit Generator, the total amountof Electricity consumed by that Unit Generator as measured at the Point of Delivery for

that Unit Generator.

1.1.130 Unit Generators means the three electrical generating units located at ColesonCove designated as Unit Generator 1 to Unit Generator 3, inclusive, and UnitGenerator means any one of them.

1.2 Headings and Table of ContentsThe inclusion of headings and a table of contents in this Agreement is for

convenience of reference only and shall not affect the construction or interpretation of this

Agreement.

1.3 Gender, Number and Grammatical ChangesIn this Agreement, unless the context otherwise requires, words importing the

singular include the plural and vice versa and words importing gender include all genders.

Where a word or phrase is defined, its other grammatical forms have a corresponding meaning.

1.4 Business DaysIf any payment is required to be made pursuant to this Agreement on a day which

is not a Business Day, then such payment shall be made on the next Business Day.

1.5 CurrencyExcept where otherwise expressly provided, all amounts in this Agreement are

stated and shall be paid in Canadian currency.


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1.6 Calculation of InterestAny interest to be calculated pursuant to this Agreement shall be calculated based

on the amount upon which interest is payable multiplied by the product of the specified rate of

interest and the total number of days lapsed for which interest is payable divided by 365 (366 in

a leap year). For any period of time, the first day of such period shall be included and the last

day of such period shall be excluded.

1.7 StatutesAny reference in this Agreement to a statute or to a regulation or rule promulgated

under a statute or to any provision of a statute, regulation or rule shall be a reference to the

statute, regulation, rule or provision, as amended, re-enacted or replaced from time to time.

1.8 Invalidity of ProvisionsEach of the provisions contained in this Agreement is distinct and severable and a

declaration of invalidity or unenforceability of any such provision or part thereof by a court of

competent jurisdiction or an arbitrator shall not affect the validity or enforceability of any other

provision of this Agreement. To the extent permitted by Applicable Law, the parties waive any

provision of Applicable Law which renders any provision of this Agreement invalid or

unenforceable in any respect. The parties shall engage in good faith negotiations to replace any

provision which is declared invalid or unenforceable with a valid and enforceable provision, the

legal and economic effect of which comes as close as possible to that of the invalid or

unenforceable provision which it replaces.

1.9 Entire AgreementThis Agreement constitutes the entire agreement between the parties pertaining to

the subject matter of this Agreement. There are no warranties, conditions, or representations

(including any that may be implied by statute) and there are no agreements in connection with

such subject matter except as specifically set forth or referred to in this Agreement. No reliance

is placed on any warranty, representation, opinion, advice or assertion of fact made either prior

to, contemporaneous with, or after entering into this Agreement, or any amendment or

supplement thereto, by a party to this Agreement or its partners, shareholders, directors, officers,

employees or agents, to the other parties to this Agreement or their partners, shareholders,


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directors, officers, employees or agents, except to the extent that the same has been reduced to

writing and included as a term of this Agreement, and no party to this Agreement has been

induced to enter into this Agreement or any amendment or supplement by reason of any such

warranty, representation, opinion, advice or assertion of fact. Accordingly, there shall be no

liability, either in tort or in contract, assessed in relation to any such warranty, representation,

opinion, advice or assertion of fact, except to the extent contemplated above.

1.10 WaiverNo waiver of any provision of this Agreement shall constitute a waiver of any

other provision nor shall any waiver of any provision of this Agreement constitute a continuing

waiver or operate as a waiver of, or estoppel with respect to, any subsequent failure to comply,

unless otherwise expressly provided.

1.11 AmendmentExcept as expressly provided in this Agreement, no amendment of this Agreement

shall be binding unless executed in writing by each of the parties. Notwithstanding the foregoing

and sections 12.1 and 12.2, for so long as the Buyer, NB Power Holdco and the Seller remain

directly or indirectly wholly-owned by the Province and/or any wholly-owned Affiliates of the

Province, any party may submit in writing any concerns or issues relating to the terms of this

Agreement to the board of directors of the Electric Finance Corporation (the Board) for its

consideration, provided that such party provides a copy of any such submission to the other

parties at the same time it is provided to the Board. Provided that the other parties are permitted

to deliver a reply submission to the Board and that all parties are given a reasonable opportunity

in the circumstances to provide the Board with additional written or oral submissions with

respect to the concerns or issues raised, the parties acknowledge and agree that the Board may, in

its sole discretion, amend the terms of this Agreement to protect the financial integrity of the

parties, to prevent undue hardship for consumers, or to facilitate a third party investment in or

Transfer of the Facilities and/or the Other Facilities. If the Board amends the terms of this

Agreement, each party shall promptly do, take, execute or deliver or cause to be done, taken,

executed or delivered all such further acts, steps, deeds, agreements, written amendments,

assurances and things as may be reasonably required for the purpose of giving effect to the


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amended terms directed by the Board and shall take all such steps as may be reasonably within

its power to implement to their full extent the terms of any amendment made by the Board.

1.12 Governing LawThis Agreement and any Disputes shall be governed by and construed in

accordance with the laws of the Province of New Brunswick and the laws of Canada applicable

therein.

1.13 Technical TermsWords or abbreviations that have well known technical or trade meanings are

used in this Agreement in accordance with their recognized meanings.

1.14 SchedulesThe following are the Schedules attached to this Agreement:

Schedule 1.1.16 Capacity PaymentSchedule 1.1.25 Contracted Energy PriceSchedule 1.1.28 CPI AdjustmentSchedule 1.1.55 Fuel SpecificationsSchedule 1.1.64 Heat Rate TestSchedule 1.1.107 Refurbishment Description

Schedule 2.1.4 Scheduling ProceduresSchedule 2.5 Adjustments to Capacity PaymentSchedule 2.9.4 Heat Rate Adjustment and Start-Up FeesSchedule 5.1 Coleson Cove Operating CharacteristicsSchedule 12.2 Arbitration Procedures


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ARTICLE 2

TOLLING AND CAPACITY

2.1 Tolling, Capacity and Fuel2.1.1 The Seller shall make the Contracted Capacity and related services to convert fuelinto Electricity exclusively available to the Buyer, unless the Seller is instructed to do

otherwise by the SO.

2.1.2 Subject to section 2.1.3, the Buyer shall (i) at the cost of the Buyer, provide, orcause to be provided, all fuel required by the Seller (as the Buyer is notified of such by the

Seller from time to time) to comply with its obligations under this Agreement, including

necessary fuel inventory and fuel required for the Unit Generator Load and Common

Service Load, but not limestone or light fuel oil required for Start-Ups, and (ii) ensure that

all such fuel meets or exceeds the Fuel Specifications. Notwithstanding the foregoing, if

any such fuel is not in compliance with the Fuel Specifications, including any fuel

provided to the Seller pursuant to section 2.1.3, the Seller shall accept and use such fuel

unless to do so would be a breach of its obligations under section 5.1. The Buyer shall

(i) notify the Seller on or prior to provision of any fuel, if the Buyer is aware that such fuel

is not in compliance with the Fuel Specifications, and (ii) compensate the Seller for its

reasonable incremental out-of-pocket costs and expenses arising from using fuel provided

or caused to be provided by the Buyer or its agents, or, in the case of ORIMULSION, by

NB Power Holdco, that does not comply with the Fuel Specifications. Such reasonable

incremental out-of-pocket expenses shall be agreed to by the Operating Committee or,

failing such agreement, shall be determined in accordance with section 12.2, without first

having to comply with section 12.1.

2.1.3 NB Power Holdcos predecessor entered into the ORIMULSION Fuel SupplyAgreement for the provision by Bitumenes Orinoco, SA of ORIMULSION for use at

Coleson Cove. Notwithstanding section 2.1.2, NB Power Holdco may, at its option and at

its own cost, provide, or cause to be provided, ORIMULSION

to the Seller and to the

extent it does so, the Buyer is relieved of its obligations pursuant to section 2.1.2 to supply

fuel to the Seller and ensure that such fuel meets the Fuel Specifications, but not of its

obligations pursuant to section 2.1.2 to compensate the Seller for fuel, including


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ORIMULSION, that is not in compliance with the Fuel Specifications, or to notify the

Seller, if it is aware, that fuel, including ORIMULSION, does not comply with the Fuel

Specifications. NB Power Holdco shall ensure that all such ORIMULSION meets or

exceeds the Fuel Specifications and shall notify the Seller on or prior to delivery if NB

Power Holdco is aware that any such ORIMULSIONis not in compliance with the Fuel

Specifications. The Seller shall act and agrees to act as NB Power Holdcos agent when

storing, handling and using ORIMULSIONat Coleson Cove and agrees to comply with

all of the provisions of the ORIMULSION

Fuel Supply Agreement relating thereto,

provided that NB Power Holdco shall provide the Seller with the information necessary to

permit such compliance.

2.1.4 The Seller shall declare to the Buyer, in good faith, its maximum bona fideavailability from the Unit Generators and shall promptly declare, in good faith and from

time to time, any change to its maximum bona fide availability from the Unit Generators.

The Buyer and the Seller shall Schedule Net Energy in accordance with, and perform their

respective obligations set forth in, theSchedulingProcedures.

2.1.5 In accordance with the Scheduling Procedures, each hour the Seller shallgenerate, sell and deliver to the Buyer Net Energy Scheduled with the SO to be sold and

delivered by the Seller to the Buyer during that hour.

2.1.6 The Seller agrees to act in accordance with any reasonable instructions providedby the Buyer or its agents in connection with the Sellers use, storage or handling of fuel

provided to the Seller pursuant to section 2.1.2 and to immediately notify the Buyer and its

agents of any spill or pollution incident involving such fuel.

2.1.7 The Seller agrees to act in accordance with any and all instructions provided byNB Power Holdco or its agents in connection with the Sellers use, storage or handling of

ORIMULSION provided to the Seller by NB Power Holdco or its agents and to

immediately notify NB Power Holdco and its agents of any spill or pollution incident

involving such ORIMULSION.


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2.1.8 NB Power Holdco or its agents shall give the Seller reasonable notice prior toproviding, or causing to be provided, ORIMULSION to the Seller pursuant to

section 2.1.3.

2.1.9 The Seller acknowledges that the Buyer or its agents, or NB Power Holdco in thecase of ORIMULSION

, are providing, or causing to be provided, fuel to the Seller

pursuant to section 2.1.2 or 2.1.3, as the case may be, in order for the Seller to provide the

Buyer and its agents and NB Power Holdco with the services contemplated in this

Agreement.

2.1.10 The Buyer shall pay the Seller monthly for Net Energy Scheduled with the SO tobe purchased and received by the Buyer in each hour of each calendar month an amount

equal to the product of (i) such Scheduled Net Energy and (ii) the applicable Contracted

Energy Price.

2.1.11 Notwithstanding any other provision of this Agreement, any reference in thisAgreement to an amount of Net Energy Scheduled by the Buyer with the SO to be sold and

delivered by the Seller to the Buyer for each hour shall mean that amount of Net Energy

Scheduled with the SO in the last balanced hourly schedule submitted by the Buyer or its

agent to the SO, being the Final Hourly Balanced Schedule, in respect of that hour and not,

for greater certainty, the amount of Net Energy ultimately dispatched by the SO, to the

extent the amounts are different. For greater certainty, the Buyer shall pay the Seller for

each MWh included in the Final Hourly Balanced Schedule submitted by the Buyer or its

agent for each hour regardless of the amount of Net Energy ultimately dispatched by the

SO; and the Buyer shall purchase and receive Net Energy in any hour up to the amount of

Net Energy included in such Final Hourly Balanced Schedule for that hour. For greater

certainty, but subject to section 4.2.2, any payment to or from the SO required under the

Market Rules as a result of the amount of Net Energy included in the Final Hourly

Balanced Schedule for any hour being different from the amount of Net Energy ultimately

dispatched by the SO for that hour (such difference being the Dispatched Differential

for that hour) shall be settled directly between the SO and the Market Participant for the

Unit Generators and the Facilities and to the extent such settlement is not so made, the


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Buyer shall be responsible for such settlement with the SO. Notwithstanding such

settlement with the SO, but subject to section 4.2.2:

2.1.11.1 in the event that the Dispatched Differential for an hour arises as aresult of the amount of Net Energy Scheduled in the Final Hourly Balanced

Schedule for that hour being greater than the amount dispatched by the SO for

that hour, the Seller shall pay the Buyer an amount equal to the Contracted

Energy Price multiplied by the Dispatched Differential for that hour; and

2.1.11.2 in the event that the Dispatched Differential for an hour arises as aresult of the amount of Net Energy Scheduled in the Final Hourly Balanced

Schedule for that hour being less than the amount dispatched by the SO for that

hour, the Buyer shall pay the Seller an amount equal to the Contracted Energy

Price multiplied by the Dispatched Differential for that hour.

2.1.12 The Seller agrees to irrevocably appoint the Buyer, or an agent of the Buyer asmay be designated by the Buyer from time to time upon notification to the Seller, as the

Market Participant for the Unit Generators and the Facilities and agrees to do, take,

execute, or deliver, or cause to be done, taken, executed or delivered all such acts, steps,

deeds or documents necessary to effect such appointment with the SO in accordance with

the Market Rules. The Seller acknowledges that such appointment is coupled with an

interest in such appointment by both the Buyer and any agent designated by the Buyer

pursuant to this section 2.1.12. The Seller also agrees to, if requested by the Buyer, enter

into a power of attorney with any such agent reflecting the irrevocable appointment of such

agent as the Sellers Market Participant for the Unit Generators and the Facilities.

2.2 Sellers Failure to Deliver Net EnergyUnless excused or relieved from performance hereunder by Force Majeure or

unless Outages or other operating conditions have prevented the Seller from declaring to the

Buyer in good faith the maximum bona fide availability from the Unit Generators, if, as a direct

or indirect result or consequence of the Seller failing to comply with its obligations under this

Agreement, the Seller fails to declare to the Buyer in good faith the maximum bona fide

availability from the Unit Generators, the following provisions shall apply:


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2.2.1 For each MWh of such Net Energy not so declared available by the Seller, theSeller shallpay the Buyer as liquidated damages, and not as a penalty, amounts equal to

the positive difference, if any, between:

2.2.1.1 the price the Buyer pays to purchase replacement Electricity for suchMWh, plus the aggregate direct, out-of-pocket costs and expenses, including

Transmission and Related Costs (calculated as a per MWh amount) reasonably

incurred by the Buyer in effecting the purchase of the replacement MWh; and

2.2.1.2 the Contracted Energy Price which the Buyer would have paid theSeller for such MWh, plus the aggregate direct, out-of-pocket costs and expenses,

including Transmission and Related Costs (calculated as a per MWh amount) that

the Buyer would have reasonably incurred had the Buyer purchased such MWh

from the Seller hereunder;

provided, however, that:

2.2.1.3 the Buyer shall have taken Commercially Reasonable Efforts tomitigate its damages.

2.2.2 Provided that replacement Electricity is available to be purchased by the Buyerand without in any way limiting section 2.6, the right to receive liquidated damages under

section 2.2.1 shall be the Buyers sole and exclusive remedy for any and each failure of the

Seller to declare in good faith the maximum bona fide availability from the Unit

Generators as a direct or indirect result or consequence of the Seller failing to comply with

its obligations under this Agreement and all other damages and remedies are hereby

waived by the Buyer. For greater certainty and notwithstanding section 8.5, it shall not be

considered a Seller Event of Default, nor shall the Buyer have the termination rights or

other remedies contained in section 8.5 or elsewhere in this Agreement, in circumstances

where (i) the Seller has failed to declare in good faith the maximum bona fide availability

from the Unit Generators as a direct or indirect result or consequence of the Seller failing

to comply with its obligations under this Agreement, (ii) replacement Electricity was

available and purchased by the Buyer, and (iii) the Seller paid the Buyer liquidated

damages under section 2.2.1 in respect thereof in accordance with this section 2.2. If


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replacement Electricity is not available to be purchased by the Buyer, the Buyer shall be

entitled to specific performance and any other appropriate equitable or other remedy

pursuant to section 9.5.2 or otherwise.

2.3 Title and Risk relating to Net Energy and Fuel2.3.1 Each hour, property and title in and risk relating to Net Energy up to the amountScheduled with the SO to be delivered and sold by the Seller to the Buyer during that hour,

shall pass from the Seller to the Buyer at the Point of Delivery. The Seller warrants that

any such Net Energy so Scheduled with the SO will be free and clear of all liens, security

interests, claims and encumbrances of any kind by any Person arising prior to the Point of

Delivery.

2.3.2 Subject to section 2.3.3, risk relating to all fuel provided, or caused to beprovided, to the Seller by the Buyer or its agents will pass to the Seller at the Fuel Delivery

Point. For greater certainty, title to all fuel delivered, or caused to be delivered, to the

Seller by the Buyer shall remain with the Buyer or its agents, depending on who provided

the fuel, and the Buyer may, in its sole discretion and at its own cost, cause the Seller to

return such fuel to the Buyer or its agents, depending on who provided the fuel, prior to it

being used in accordance with this Agreement, including as contemplated by sections 8.3.3

and 8.5.1.1. In that situation, risk relating to such fuel will pass back to the Buyer or its

agents, depending on who provided the fuel, at the Fuel Delivery Point.

2.3.3 Notwithstanding any other provision of this Agreement, title to and risk of loss ofany ORIMULSION provided, or caused to be provided, to the Seller by NB Power

Holdco shall in no event pass to the Seller and shall at all times remain with NB Power

Holdco, and any such ORIMULSIONshall at all times remain under the sole control of

NB Power Holdco with respect to its storage, handling and use, it being acknowledged by

the parties that the Seller is solely acting as the agent of NB Power Holdco in respect of the

storage, handling and use of such ORIMULSION, and, as such, is at all times subject to

the direction and control of NB Power Holdco in respect thereof, in order to enable NB

Power Holdco to satisfy and discharge, in all respects, its obligations under the

ORIMULSION

Fuel Supply Agreement. NB Power Holdco may, in its sole discretion

and at its own cost, cause the Seller to return such ORIMULSIONto NB Power Holdco


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prior to it being used in accordance with this Agreement, including as contemplated by

section 8.6.

2.3.4 The Buyer or NB Power Holdco, as the case may be, shall be responsible for allcosts relating to the transport, storage, maintenance and delivery of fuel to the Fuel

Delivery Point. The Seller shall be responsible for all costs relating to the transport,

storage, maintenance and delivery of fuel from and after the Fuel Delivery Point. The

Buyer shall be responsible for ensuring that the parties have sufficient access to and use of

the pipeline that delivers fuel to the Seller and if, for any reason, the parties cease to have

access to such pipeline, or such pipeline otherwise becomes unavailable, the Buyer shall be

responsible for providing another means of delivering fuel to the Seller and in that case the

parties shall, if necessary, and acting reasonably, determine a new Fuel Delivery Point for

the purposes of this Agreement.

2.3.5 The Buyer represents and warrants that it, or its agents, depending on whoprovided the fuel, has title to all fuel provided or caused to be provided by it or its agents

to the Seller hereunder free and clear of all liens, security interests, claims and

encumbrances of any kind by any Person.

2.3.6 NB Power Holdco represents and warrants that it has title to all ORIMULSIONprovided or caused to be provided by it to the Seller hereunder free and clear of all liens,

security interests, claims and encumbrances of any kind by any person.

2.4 Transmission and Related CostsSave and except for charges payable by the Seller under the Generation

Interconnection Agreement for equipment and facilities after the Point of Delivery, the Buyer

shall be responsible for and pay or cause to be paid all Transmission and Related Costs payable

after the Point of Delivery in respect of Net Energy delivered and sold by the Seller to the Buyerhereunder during each hour up to the amount Scheduled by the Buyer with the SO to be

delivered and sold by the Seller to the Buyer during that hour. The Seller shall be responsible for

and pay or cause to be paid all Transmission and Related Costs payable (i) prior to the Point of

Delivery in respect of Net Energy delivered and sold to the Buyer at the Point of Delivery, or

(ii) in respect of Unit Generator Load and Common Service Load. The Seller shall have no


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responsibility for obtaining or arranging any transmission rights necessary or required to permit

Net Energy delivered and sold by the Seller to the Buyer hereunder to be transmitted from the

Point of Delivery.

2.5 Capacity PaymentsBeginning on the In-Service Date and subject to section 2.6, the Buyer shall pay

the Seller the Capacity Payment in arrears for each remaining calendar month until the

Termination Date or such earlier date on which this Agreement may be terminated. For greater

certainty, prior to the In-Service Date, the Buyer shall have no obligation to pay the Seller any

Capacity Payment. The Capacity Payment for the last calendar month prior to the Termination

Date or such earlier date on which this Agreement may be terminated shall be decreased by a

factor equal to the quotient obtained by dividing the number of days in that calendar month afterthat date by the total number of days in that calendar month. If New Fuel Capital Costs are

incurred or expended by the Seller in order to permit the Seller to accept and use

ORIMULSIONto generate Electricity from the Unit Generators, the Monthly Capital Payment

shall be adjusted as necessary pursuant to Schedule 2.5 to reflect such New Fuel Capital Costs.

2.6 Availability after the In-Service Date2.6.1 Subject to sections 2.6.2 and 2.6.5 and beginning on the In-Service Date, if duringany of December, January or February of any Fiscal Year the Availability of the Unit

Generators is less than 95% for any such calendar month, the Capacity Payment for that

calendar month shall be decreased by the percentage equal to (i) 95%, less (ii) the

Availability for that calendar month.

2.6.2 Notwithstanding sections 2.6.1 and 2.6.5, but subject to section 2.6.6:2.6.2.1 if the Availability of the Unit Generators for any period of threesuccessive calendar months of December, January and February in a Fiscal Year

equals or is greater than 95%, there shall be no decrease to the Capacity Payments

for those calendar months and any decrease to the Capacity Payment for any of

those calendar months which was previously effected pursuant to sections 2.6.1

and/or 2.6.5 shall be repaid by the Buyer to the Seller, together with interest

thereon at the Interest Rate from and including the date the Capacity Payment was


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made with the decrease to the date the amount of the decrease is paid by the

Buyer to the Seller; and

2.6.2.2 if the Availability of the Unit Generators for any period of threesuccessive calendar months of December, January and February in a Fiscal Year

is less than 95%, the Capacity Payments for those calendar months shall be

recalculated for such three month period and decreased by the percentage equal to

(i) 95%, less (ii) the Availability for such three month period; and any resulting

overpayment or underpayment when such recalculated Capacity Payments are

compared to the Capacity Payments calculated pursuant to sections 2.6.1 and/or

2.6.5 shall be refunded or paid by the Seller or the Buyer, as the case may be, to

the other, together with interest thereon at the Interest Rate from and including the

date of the overpayment or underpayment to the date of the refund or the payment

thereof, as the case may be.

2.6.3 Subject to sections 2.6.4 and 2.6.5 and beginning on the In-Service Date, if duringany of June, July or August of any Fiscal Year the Availability of the Unit Generators is

less than 85% for any such calendar month, the Capacity Payment for that calendar month

shall be decreased by the percentage equal to (i) 85%, less (ii) the Availability for that

calendar month.

2.6.4 Notwithstanding sections 2.6.3 and 2.6.5, but subject to section 2.6.6:2.6.4.1 if the Availability of the Unit Generators for any period of threesuccessive calendar months of June, July and August in a Fiscal Year equals or is

greater than 85%, there shall be no decrease to the Capacity Payments for those

calendar months and any decrease to the Capacity Payment for any of those

calendar months which was previously effected pursuant to sections 2.6.3 and/or

2.6.5 shall be repaid by the Buyer to the Seller, together with interest thereon at

the Interest Rate from and including the date the Capacity Payment was made

with the decrease to the date the amount of the decrease is paid by the Buyer to

the Seller; and


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2.6.4.2 if the Availability of the Unit Generators for any period of threesuccessive calendar months of June, July and August in a Fiscal Year is less than

85%, the Capacity Payments for those calendar months shall be recalculated for

such three month period and decreased by the percentage equal to (i) 85%, less

(ii) the Availability for such three month period; and any resulting overpayment

or underpayment when such recalculated Capacity Payments are compared to the

Capacity Payments calculated pursuant to sections 2.6.3 and/or 2.6.5 shall be

refunded or paid by the Seller or the Buyer, as the case may be, to the other,

together with interest thereon at the Interest Rate from and including the date of

the overpayment or underpayment to the date of the refund or the payment

thereof, as the case may be.

2.6.5 Notwithstanding sections 2.6.1 and 2.6.3, but subject to sections 2.6.2, 2.6.4 and2.6.6, if for any calendar month the Availability of the Unit Generators is less than 50%,

the Capacity Payment for that calendar month shall be zero.

2.6.6 For the purposes of calculations pursuant to sections 2.6.2 and 2.6.4, if for anycalendar month, the Availability of the Unit Generators is less than 50%, the Availability

of the Unit Generators for that calendar month shall be deemed to be zero.

2.7 Adjustments for Environmental Costs2.7.1 The Seller shall promptly notify the Buyer, in writing, if it becomes aware of oneor more of the following which would prevent the Seller from (i) being able to deliver the

Net Energy Scheduled by the Buyer with the SO to be delivered by the Seller to the Buyer

at the Point of Delivery, and/or (ii) meeting the Availability requirements so that the

Capacity Payment is not decreased pursuant to section 2.6:

2.7.1.1 a change or proposed change in Environmental Law which appliesgenerally to electricity generators in New Brunswick, or in Canada if the change

is imposed at the federal level, and not specifically to the Seller, and which

results, or would result if the proposed change was enacted, in the Emission

Allowances and/or Emission Credits the Seller has in respect of the Facilities

being insufficient to permit (i) the generation and delivery of such Net Energy to


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the Point of Delivery, and/or (ii) the Seller to meet such Availability

requirements; and/or

2.7.1.2 a change or proposed change in Environmental Law which appliesgenerally to electricity generators in New Brunswick, or in Canada if the change

is imposed at the federal level, and not specifically to the Seller, and which

results, or would result if the proposed change was enacted, in the Seller being

required to make additional capital expenditures and/or to incur additional

operations and maintenance costs (collectively, Environmental Costs)in order

to be able to (i) generate and deliver such Net Energy to the Point of Delivery

and/or (ii) meet such Availability requirements.

Together with such notice, the Seller shall also indicate to the Buyer:

2.7.1.3 each of the possible methods for addressing the change or proposedchange in Environmental Law; and

2.7.1.4 the Sellers best estimate of (i) the amount it will cost to acquireadditional Emission Allowances and/or Emission Credits which will be sufficient

to allow the Seller to generate and deliver such Net Energy to the Point of

Delivery and/or to meet such Availability requirements, and/or (ii) the amount of

such Environmental Costs, setting out separately such Environmental Costs which

are capital costs in nature and those which are operations and maintenance costs

in nature, each in respect of the least cost method for addressing the change or

proposed change in Environmental Law.

2.7.2 Upon receipt of a notice pursuant to section 2.7.1 of a change in EnvironmentalLaw (but not, for greater certainty, notice of a proposed change in Environmental Law),

the Buyer shall, in its sole discretion and within a reasonable amount of time in the

circumstances and upon written notice to the Seller, determine whether the Buyer will

reimburse the Seller for (i) the cost of acquiring additional Emission Allowances and/or

Emission Credits which will be sufficient to allow the Seller to generate and deliver such

Net Energy to the Point of Delivery and/or to meet such Availability requirements, if

applicable, and/or (ii) making or incurring such Environmental Costs. In this regard, the


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Seller shall assist the Buyer in making such determination, including by providing the

Buyer and its agents, representatives and advisors, with all information, data, books and

records, and access to the Facilities and the Other Facilities and all directors, officers,

employees, agents, representatives and advisors of the Seller, that the Buyer may request.

Further, the Seller shall, upon the request of the Buyer, use reasonable efforts to challenge

or dispute the necessity of the change or proposed change in Environmental Law and/or the

requirement to procure such additional Emission Allowances and/or Emission Credits or to

make or incur such Environmental Costs. The Buyer shall be responsible for and/or shall

reimburse the Seller for all reasonable costs incurred by the Seller in carrying out any such

challenge or dispute requested by the Buyer.

2.7.3 If the Buyer does not agree that the Seller has selected the least cost method foraddressing the change in Environmental Law or that the Sellers best estimate of the cost

of acquiring such additional Emission Allowances and/or Emission Credits and/or the

amount of such Environmental Costs is reasonable and appropriate in the circumstances,

the Buyer and the Seller shall discuss and negotiate in good faith the method to be used

and such costs in order that agreement between the Buyer and the Seller can be reached as

to the method to be used and a reasonable and appropriate estimate of the costs thereof. If

the Buyer and the Seller cannot agree on a reasonable and appropriate estimate of such

costs, the estimate shall be determined in accordance with the provisions of section 12.1

and, if required, section 12.2. The least cost method for addressing the change in

Environmental Law shall be used unless the Buyer agrees otherwise.

2.7.4 Once the method for addressing the change in Environmental Law and theestimate of the cost of acquiring such additional Emission Allowances and/or Emission

Credits and/or such Environmental Costs has either been agreed between the Buyer and the

Seller or determined in accordance with the provisions of section 12.1 and, if required,

section 12.2 (such estimate to be referred to as the Firm Estimate), the Buyer shall

determine, at its sole option and in its sole discretion and upon notice to the Seller, whether

it shall reimburse the Seller for the cost of acquiring such additional Emission Al

appendix a power purchase agreements (ppas) ne power

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