c ecoelectrica, l.p. and · 2018-07-06 · c c power purchase and operating agreement between both...
TRANSCRIPT
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ECOELECTRICA, L.P.
AND
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c TABLE OF CONTENTS
ARTICLE 1 - DEFINITIONS 3
57
31
32
44
49
54
75
606063
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 73
-...JC'~,~n FUEL SUPPLY 77
ILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 84
INTERCONNECTIO
- TERMINATION 95
- INI)EMNIFICATION.................................. 89i.i l
- FORCE MAJEURE 91
- PREPA's OPTION TO PURCHASE THE SELLER'S COMPLEX . .. 86
ARTICLE 7 - DISPATCHING .
ARTICLE 6 - REPRESENTATIONS, WARRANTIE~-.nJJ
ARTICLE 5 - TERM .
ARTICLE 3
ARTICLE 4
ARTICLE 9
ARTICLE 10
ARTICLE 8
ARTICLE 1111. 1(a)11.1(b)11.1(c)
ARTICLE 12 -
ARTICLE 2 - SALE AND PURCHASE OF ENERGY AND DEPEND EC" CAPACITY .
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C ARTICLE 19 - BREACH OF AGREEMENT, DELAYS AND SECURITY 98
ARTICLE 20 - TAXES AND ENVIRONMENTAL COSTS 107
ARTICLE 21 - INSURANCE 112
122
124124128129132136139140142146147150152153
FINANCING ADWSTMENT .PONENTS .
Vl'.l~lV .
ARTICLE 23
ARTICLE 25
ARTICLE 24
APPENDICES .
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A -B -
(f C -C D -
E -
~F -G -H -I -J -K -L -M -
C ARTICLE 22 - ASSIGNMENT .. .
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cPOWER PURCHASE AND OPERATING AGREEMENT
BETWEEN
Both
L.P., a limited
office at Plaza Scotiabank,
. ,and authorized to do business in
ECOELECTRICA, L.P.
AND
PUERTO RICO ELECTRIC POWER AUTHO
public corporation and governmental instrumentality of
Rico, authorized to enter into this Agreement by virtue of Act
,"V~c~,,", 19 1, as amended (22 L.P.R.A. § 196(f), with offices at 1110 Ponce de
PREPA are herein individually referred to as a "Party" and collectively referred to as
THIS AGREEMENT (the "Agreement"), entered I'U1'tn~l(n
March, 1995 (the "Effective Date"), by and b
partnership organized under the laws of Ber
273 Ponce de Leon Avenue, Suite 902,
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RECITALS
the
ales and purchases of dependable
these premises and of the mutual covenants and
A, intending to be legally bound, hereby agree to
WHEREAS, Seller will construct, own, operate and maintain an approximately 461
megawatt cogeneration facility capable of operating on natural gas, vaporized LPG and fuel oil
in the vicinity of Peiiuelas, Puerto Rico, such facility in all future correspondence to
as the Peiiuelas Cogeneration Facility; and
WHEREAS, PREPA is an electric utility engaged in
distribution and sale of electric power within the Commonwe
WHEREAS, Seller will sell exclusively to
dependable capacity and electric energy produced b
Regulatory Policies Act of 1978, as amende
WHEREAS, the Parties hereto
agreements set forth
capacity and energy in accordanc wi
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ARTICLE 1 - DEFINmONS
Whenever the following terms appear in this Agreement, whether in the singular or in the
plural, present or past tense, they shall have the meaning stated below:
h of this document.
gins on the Commercial Operation Date
thereof, and each one (1) year period thereafter
tch Level" - For any Billing Period, 1.5 multiplied by the
mum Dispatch Level" - For any Billing Period, the product, expressed
centage between twenty percent (20%) and forty percent (40%) selected by
"Agreed Operating Procedures" -
1.5
1.4
1.3 "Additional Development Security"-, --=
1.1 "Acceptable Bank" - A bank or trust company authorized to engage in e
1.6
1.2 "Actual Permanent Financing Amount" -
to gIve such notice in a timely manner, thirty percent (30%), multiplied by (ii) the sum of
e 1\vailable Capacity for all hours in the period.
whose long-term debt is rated "AA" or higher by Standard & Poo s
higher by Moody's Investor Services, Inc. or the equivalent bX
commencing on each
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1.9 "Alternate Period" - Prior to the availability of LNG to the Facility, the limited
period, if any, which is subject to the alternate pricing and dispatch provisions under Sections
1l.l(a)(2) and 11.1(b)(I), beginning on the later of (a) the Commercial Operation Date and (b)
the date Seller notifies PREPA with thirty Days of advance notice, in writing, that the Alternate
the
ate, then there shall not be
discussed above shall be a part of
Seller or any of Seller's general partners.
eration Control" or "AGC" -Provides supplementary control that
ower output level of the Facility, It maintains system frequency as
e desired value, minimizing the accumulation of system time errOL It also
acility as close as possible to its economic loading as calculated by the Economic
AGC includes Load Frequency Control, Economic Dispatch, spinning reserve
1.11
o putation, and production cost monitor, Appendix A specifies the Design Limits applicable
1.10
which Seller notifies PREPA with thirty Days of advance notice, i
Period will begin, and ending on the last day of the Billing Period ending the ear r 0 (i) 39
agree in writing on the amount for "AP" and "AP "'n
Months after the "Construction Permit Obtained" Milestone Date and (ii)
Period will end; where Seller cannot claim Force Majeure due
"APDF" in Section 11.1(b)(l) prior to the In'
postpone the ending of this period, Notwithstanding t
an Alternate Period under this Agreeme
!'¥-the Base Period,
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. ity is Dispatched, used to
effect on fuel consumption of the
orce Majeure claimed by Seller. In the event clause (b)
e Net Derating shall equal zero.
- Number 2 fuel oil, vaporized LPG or LNG that has not been
PREPA as Fuel, or any other type of fuel or fuel arrangements as mutually
hour, the average amount, expressed in kilowatts
1.14
to the Facility for the purpose of AGC. Such limits shall include maximum ramping rates and
allowable step changes.
1.13 "Available Capacity"- For any hour, the net capacity made available at the
Interconnection Point for dispatch from the Facility to PREPA for that hour, expressed in
kilowatts.
Date, the weighted average (weighted by kWh
Correction Factors for each hour during the e io
calculate the Energy Payment. Its purp e' t
"Base Period" - The period beginning with the Commercial Operation Date and
n ing with the last Billing Period of the Term, but excluding the Alternate Period, if any. The
Base Period is subject to the pricing and dispatch provision under Sections 11.1(a)(3) and
service and regardless of the capacity level that can be provid .
1.15 "Average Correction Factor" - For any p.
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11.1 (b)(2), irrespective of the type of fuel used by Seller and whether or not a LNG Terminal has
been constructed.
1.19 "Billing Period" - As set forth in Section 10.4.
1.20 "Business Day" - Monday through Friday excluding holidays recognized by
onth shall begin at 12:00 midnight
midnight on the last Day of the current
may be used interchangeably and shall have the
Quarter" - A Calendar Quarter shall be a three (3) Month
. ht on December 31, March 31, June 30, or September 30. The
d Quarter shall be used interchangeably and shall have the same
"Calendar Year" or "Year" - A Calendar Year shall be the twelve (12) Month
eginning 12:00 midnight on December 31 and ending at 12:00 midnight on the
1.23 "Calendar Day" or "Day" - A Calendar Da
1.21 "BTU Tracking Account" - As set forth in Section 7 .
1.22 "BTU Tracking Account Balance" - As set fort 1
1.25
u sequent December 31. The terms Calendar Year and Year may be used interchangeably and
1.24
ten (10) Days of any changes to the holidays recognized by PREPA as set
PREPA, which are set forth on Appendix B hereto; PREPA will notify Seller in w . in within
interchangeably and shall have the same defi
and ending at 12:00 midnight Atlantic time.
on the last Day of the preceding
same definition.
shall have the same definition.
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e of all regions in the United
e o. 6) of the Handy-Whitman Index
e' (lex value will be interpolated from such
or decrease in such index value occurred evenly
"Construction Cost Index" - T1.32
mutual agreement of the Parties.
ermit" - The construction permit issued to Seller by the Permit and
CbtITn1~4!1tio of Puerto Rico, or any successor thereto, that allows Seller to begin
e Facility and Seller Interconnection Facilities.
1.27 "Capacity Payment" or "CP"- As set forth in Section 11.1(b).
1.28 "Capacity Purchase Price"- As set forth in Section 11.1 (b).
1.29 "Cash" - Cash or short term securities with a maturity of 90 days or less.
1.30 "Commencement of Construction"- The action taken by Seller or one or more
contractors or subcontractors retained by Seller, initiating construction of Selle
bond requirements set out in Section 21.7.
1.31 "Commercial Operation Date" - The first
Dependable Capacity of the Facility has been set i
throughout the index
ICO, the United States District Court for the District of Puerto Rico, the United States
~'-""'UA.lrt of Appeals for the First Circuit and the United States Supreme Court.
~#~.
States of the "Total Steam Production PI t"
-7- M3rch 10. 1995
1.35 "Current Assets" - Cash held in an operating and maintenance reserve account,
1.36 "Current Liabilities" - Accounts payable, collections
I ,r 'n-"i"It the Interconnection Point.
sive of Outage Hours, when the
ependable Capacity, including hours
ment"· Prior to the Commercial Operation Date, an
e Seller to permanently cease the development of the Seller's
"Derated Hours" • That
1.39
1.40
1.38
" ev lopment Security"- As set forth in Section 19.4.
"Dispatch lt- The ability of PREPA's dispatching centers to schedule and control,
tly or indirectly, manually or automatically, the generation of the Facility in order to increase
r ecrease the electricity delivered to the PREPA system in accordance with Prudent Utility
Practices and subject to the Agreed Operating Procedures and the Facility's Design Limits.
Article 12 herein and made available from th
cash and marketable securities (both not restricted for use and available for current operations),
inventories, receivables collectible within one year, accounts receivable, notes receivable, prepaid
expenses, and consumables and spare parts expected to be used in the Seller's Complex within
one year and that are not required to be depreciated according to GAAP.
services, accrued expenses and other liabilities (excluding
coming due within one (1) year.
1.37 "Dependable Capacity" - The net electric ge
electric generating capacity less station use) expre...v_-.....,
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1.43 "Dispatchable Mode" - A period during which the Facility will be on PREPA's
AGC system with the turbine-generator governors in the frequency bias mode and voltage
regulators in service, or off AGC and block-loaded at PREPA's request, with the speed governors
and voltage regulators in service.
orth in the Seller's Complex after deducting its liabilities
h per kilowatt hour rate that PREPA will
c poration or other investors as common stock, preferred stock or equivalents,
ted partnership interests, Subordinated Debt, or other qualifying contributions.
"Equivalent Availability Factor" or "EAF" - For any period of time, the Period
~~~C ital" - The amount invested in the Seller's Complex by Seller's direct
1.46 "Emergency" - A condition or situation which i t
1.44 "Economic Dispatch" - The distribution of total PREPA energy n
1.47
1.48
1.49
1.50
1.51
likely to result in imminent significant disruption of servi
or is imminently likely to endanger life or proper .
_ .....~JL'4'UrS less the Outage Hours less the Equivalent Derated Hours, divided by the Period Hours less
( -9- March 10, 1995
the Equivalent Force Majeure Hours, expressed as a percentage pursuant to the following
formula:
EAF (%) = PH-OH-EDH x 100PH-EFMH
Hour, plus (b) all Outage Hours
e EAF to the nearest one-tenth (1/10)
. ed by dividing, for each Derated Hour during such period, the Average
r any period of time, the sum, expressed in hours,
en Fa ce Majeure Hours" - For any period of time, the sum of (a) the
Equivalent Availability Factor
Outage Hours
Period Hours
Equivalent Force Majeure Hours
Equivalent Derated Hours
. g such Derated Hour attributable to a Force Majeure claimed by the Seller
ttr'butable to a Force Majeure claimed by the Seller,
Where:
EAF =
PH =
OH =
EDH =
EFMH=
J-fi/---
be rounded to the nearest one-tenth (1/10) fa
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1.56 "Equivalent Fuel Price"- A fuel price in $!MMBTU equal to 133.33 kWhIMMBTU
times the Energy Purchase Price.
1.57 "Estimated Dependable Capacity" - The Dependable Capacity for the Facility that
Seller commits to PREPA as designated under the provisions of Section 12.1 herein.
c sisting of two combustion turbine
urbine unit of approximately 160 MW,
ers on Seller's side of the Interconnection Point.
Regulatory Commission, or any successor thereto.
, - The first date on which documents that provide binding
I Year"· The Calendar Year, unless otherwise agreed by the Parties.
"Fuel" • Natural gas or vaporized LPG delivered under one or more contracts with
"Force Majeure" • As set forth in Article 17 hereof.
n.rUise-.u..I C struction become available to Seller.
or e construction of Seller's Complex have been executed and funds
1. 59 "Excess LNG" . The amount of LNG in Seller's in n
1.58 "Estimated Spinning Reserve Capacity" - The Spinning Reserve Capa 'ty
1.60
1.61
1.62
rm greater than six (6) months or any other type of fuel or fuel arrangements as mutually
Facility that Seller commits to PREPA as designated under the provisions 0
amount of LNG reasonably required to operate the Facility
(assuming the Facility operates solely on LNG) for the
provide to other persons or entities.
scheduled arrival of a LNG cargo ship, and (ii) theAn~l1lt<X
agreed by the Parties.
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under Section 19.5(b)
t Obtained" Milestone Date).
e Capacity set in accordance with
immediately preceding the Commercial
Date" - The first date upon which electrical energy is
delivered to PREPA at the Interconnection Point.
'"~_"'nl Yeo "- As set forth in Section 11.1(b)(4).
Facilities" - Seller Interconnection Facilities and PREPA
1.72
1.73
"Interconnection Point" - The physical point(s) where the output of the Facility is
e vered to PREPA's system. This point will be located as set forth on Appendix E hereto.
months (if any) for which PREPA has drawn on the",•.,,-....
after prior Milestone Dates (other than the "L
1.66 "Fuel Cost Correction Curve" or "FCCC" - As set forth in Appendix D.
1.67 "Fuel Cost Correction Factor" or "FCCF" - For each hour, the factor used in the
determination of the Average Correction Factor, based on the average for the hour of the Percent
of Dependable Capacity rounded to the nearest percentage point and determined in accordance
with Appendix D.
1.68 "Fuel Milestones"- As set forth in Section 13.1.
1.69 "GAAP"- Generally Accepted Accounting Principl ,
Financial Accounting Standards Board or its predecessors or
1.70 "Grace Months"- A number of months e
(
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1.77 "Interest" - The compensation for the accrual of monetary obligations under this
Agreement computed monthly and prorated daily from the time each such obligation is past due
based on an annual interest rate equal to the lesser of (i) the Prime Commercial Lending Rate as
set by Citibank N.A., New York, New York or any other bank as mutually agreed by the Parties
Ull-''''''Uy associated with obtaining
eller's affiliate's personnel directly
and conditions for the purchase by Seller of LNG in
when taken together with the design and usable storage capacity
. 1 "LNG Letter of Intent"- A document or documents stating the intent of the parties
1.80
1.79 "LNG"-
1\n\~;:"'r1""inal to enable Seller to have or have access to a reliable supply of LNG,
1.78 "Licensing Costs" - The direct costs incur
egotiate to enter into an agreement or agreements for the purchase by Seller of LNG in
or any other equivalent rate as mutually agreed by the Parties and (ii) the rna 'm
of interest on the Project Debt.
charged by agencies which issue Permits, oth
the Seller's Complex including, without limitation, .."..............:.::-J ~~n,rN'.
allocated to obtaining Permits.
Permits, and the normal salary and overh ad
(
quantity and quality' sufficient, when taken together with the design and usable storage capacity
( -13- March 10. 1995
of Seller's LNG Terminal, to enable Seller to have or have access to a reliable supply of LNG,
consistent with industry standards, sufficient to at least meet the Minimum Dispatch Level for
a term of at least fifteen (15) years during the Base Period.
1.82 "LNG Purchase Agreement"- A binding agreement or agreements containing all the
a term of at
deliveries under the LNG
dock, storage and vaporization
ciliary equipment utilized in Seller's Complex to
01" - The control function within the AGC system for the
tp t of the Facility, in response to changes in system frequency and
scheduled frequency within predetermined limits.
st Emergency Fuel Rate" - A special rate, reflecting only Seller's direct and
be charged by Seller to PREPA for natural gas to be used at PREPA's generating
1.84
s unng a PREPA Fuel Emergency.
with industry standards, sufficient to at least meet the Minimu
material commercial terms and conditions for the purchase by Seller of LNG in
least fifteen (15) years during the Base Period; together
satisfactory to PREPA, which transportation plan m
~ demonstrating that tr.nsportation of LNG
/t'/--- Purchase Agreement commence.
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1.86 "Lowest Emergency Terminal Rate" - A special rate, reflecting only Seller's direct
and indirect cost, to be charged by Seller to PREPA for receiving, unloading, storing and
vaporizing LNG for PREPA at the LNG Terminal during a PREPA Fuel Emergency.
1.87 "LPG" - Liquid propane or liquefied petroleum gas.
1.88 "Maximum Interest Rate" - As set forth in Section 11.1(b)7.
in the period of the
s set forth in Section 11.1 (b)(7).
The Net Electrical Output will be delivered
e monthly capacity payment described in Section
Debt Service" - As set forth in Section 11.1(b)(7).
y Payment" - The monthly energy payment described in Section
o hly Expected Total Debt Service" - As set forth in Section 11.1(b)7.
"Net Electrical Output" -The net electrical energy output (expressed in kWh) from
1.90 "Minimum Dispatch Level" - For any perinA'.."yt
1.89
1.92
1.91 "MMBTU" - Million Brit'
1.93
1.94
Available Capacity.
Available Capacity.
equal to fifty-four percent (54%)
11.1 (b).
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1.98 "Non-Scheduled Outage" - A planned interruption of all or a portion of the
electrical output of the Facility that has been coordinated with PREPA and is required for any
purpose including inspection, preventive maintenance, or corrective maintenance and which has
not been included in the Scheduled Outage Program.
providing service at any capacity
if'tlooM.a/hours attributable to a Force
Ie Capacity" - As set forth in Appendix D.
Abandonment" - Following the Commercial Operation Date, either:
o sIt - All hours in the relevant period.
action taken by Seller, its successors, or assignees, as applicable, to
ut down the operations of the Facility, or (b) the Available Hours equalling zero
1.99 "Off-Peak Period" - The time from 10:00 p.m. to 8:00 a.m. daily f
1.102
1.100 "On-Peak Period" - The time from 8:00 a.m. t
1.101 "Operation Security" - As set for
1.103
1.104
1.105
for any period of twenty-four (24) consecutive Months whether or not a Force Majeure event
a been claimed by Seiler.
through Friday and all hours from 10:00 p.m. of each Friday throug
immediately succeeding Monday.
through Friday.
Majeure claimed by Seller, that the Faci ty
level.
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1.108 "Permanent Closing" - Shall be deemed to have occurred when the Available
Hours equal zero (0) for any period of twelve (12) consecutive Months, excluding periods of
outages due to Force Majeure.
1.109 "Permanent Financing Adjustment" - As set forth in Section 11.1 (b)(7).
the Seller's Complex.
Initial Synchronization Date
- All equipment and facilities located on
oint constructed and installed for the purpose of intercon-
ission Jines and associated equipment, relay and switching equipment,
s and safety equipment, as set out in Appendix E.
"PREPA Selected kWhs"or "PSK" - As set forth in Section 11.1(a)(3)C.
"PREPA's Operating Period" - As set forth in Section 19.9(a).
-.ULI''''UA's electric transmission system, including but not limited to, all
n r situation where PREPA has inadequate
1.110 "Permanent Financing Interest" - As set forth in Section 11.1 (b)(
1.118 "Principal" - As set forth in Section 11.1 (b)(7)(A).
1.111
1.112
waivers issued by federal, Commonwealth and local agenci ,
required for the development, construction, operati
1.113 "Pre-Operation Period" - The p
regulatory bodies with jurisdiction over Seller and the S
and ending on the Commercial Operatio D
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1.119 "Project Debt" - The outstanding balance, as amortized according to the
amortization schedules established at the Financial Closing Date or refunding date, respectively,
of the Total Initial Debt or the corresponding initial permanent financing of the Total Initial Debt,
including related Project Lenders fees and expenses. For the purpose of determining the Project
rical engineering and operations to operate a facility
r tices, methods, standards and acts which,
.g t of the facts known at the time a decision was
e or similar circumstances, including equipment for the
'bution and delivery of electricity, lawfully and with efficiency and
any other applicable federal, state or local code,
"PR-CPI" - As set forth in Section l1.1(a)(1).
"Prudent Utility Practices" - Those practices, methods, standards and acts which,
'lIT1l'tNUlat ar in accordance with the National Electrical Safety Code, the National
1.121
1.120 "Project Lenders" - Any party providing c
1.122
e exercise of reasonable judgment in light of the facts known at the time a decision was
made, would have been generally followed by the electric generation industry in the United States
Complex including the LNG Terminal shall not exceed one tho
Debt, the Total Initial Debt for the Seller's Complex excluding the LNG Termin
the Seller's Complex or any portion thereof (excludi
($1050/kW) times the Initial Dependable Capacity.
trustee or other person representing or actin
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and Puerto Rico, as changed from time to time, which generally include, but are not limited to,
engineering and operating considerations.
be "new capacity" pursuant
r uired for the Facility to change its per
another output level, determined in accordance
for the Facility are set forth on Appendix A.
ce the preliminary Ramp Rates set forth on Appendix A
e remainder of the Term, will be derived within sixty (60) Days
eller's selection of gas turbine and steam turbine equipment for the
e r's completion of the detailed design of the Facility.
1.128
eir successors, or, if either such Rating Agency is no longer in business or no longer
g the obligations in question, another internationally recognized rating agency selected by
the Seller with the written consent of PREPA.
1.125 "PURPA" - The Public Utility Regulatory Policies Act of 1978 and the regulations
promulgated thereunder in effect as of the date this Agreement is executed or as they are
amended in the future from time to time.
Seller's general partners, or another qualified and experienced oper
1.127 "Qualifying Facility" - A cogeneration facility or s
which is a Qualifying Facility under Subpart B of Subch"..v·~'Ii:
Code of Federal Regulations, promulgated by the F'r--~
date hereof or as amended from time to time
with Appendix A.
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.ng its obligations under this
"Scheduled Outage Program" - As set forth in Se 10
"Seller" - As set forth in the first paragraph f is A
uipment and facilities, located on Seller's
a d installed for the purpose of interconnecting the
system, including but not limited to, all metering
ociated equipment, relay and switching equipment, and
equipment, as set forth in Appendix E.
The electric generating capacity of the Facility
tts maintained by Seller in addition to the Dependable Capacity, made
t e Interconnection Point for immediate dispatch (as described in Appendix M) by
1.134
1.135
1.137
1.130 "Replacement Energy Cost"- As set forth in Section 13.7(b).
1.131 "RTU" - As set forth in Section 7.1.
1.132 "RevIsed Energy Purchased Prices"- As set forth in Section 13.7(a).
1.133 "Scheduled Outage" - A planned interruption of the Facility's generation that has
been coordinated in advance with PREPA with mutually agreed start and duration
Article 8.
1.136 "Seller's Complex" - The premises, facil' .
Facility, the Seller Interconnection Facilities, the L
or the purpose of spinning reserve, as determined in accordance with Article 12, which
.--.__..../TVunt of capacity is expected to be up to ten percent (10%) of the Dependable Capacity.
ancillary equipment owned by Sell,::r for th
~-Agreement.
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1.139 "Spot Fuel Price" - With respect to any Backup Fuel, the fuel price in dollars per
MMBTU ($/MMBTU) higher heating value, for such Backup Fuel available for use at the Seller's
Complex, reflecting Seller's cost of such Backup Fuel delivered into Seller's storage tanks; and
with respect to Excess LNG, the Fuel price in dollars per MMBTU higher heating value for such
Maximum Dispatch Level; and, with respect to the pricing provisio
the term SFP is used, the lowest of the Spot Fuel Prices for Bac p
as available for generation of electricity under Section 7.7
Spot Fuel Price is used first to the extent of such av .
y the Equity Capital requirement
st in excess of the applicable Treasury
oints, or if greater, the Maximum Interest Rate.
period, multiplied by the sum of the Available Capacity
e original principal amount of each of the debts (excluding Subordinated Debt) incurred up
to that time for the development, acquisition and construction of the Seller's Complex, excluding
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Liabilities.
the LNG Terminal until such terminal is in commercial operation, prior to any amortization or
repayment of each of such debt components.
1.146 "Treasury Bond Rate" - The per annum yield on the 30-year Treasury constant
maturities as set forth in Federal Reserve Statistical Release H.15 (519) published by the Board
of Governors of the Federal Reserve System.
1.147
1.148 "Working Capital" - The amount by which Curr t
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ARTICLE 2 - SALE AND PURCHASE OF ENERGY AND DEPENDABLE CAPACITY
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2.1 Seller agrees to sell and PREPA agrees to accept delivery of and purchase Net
Electrical Output of the Facility as of and following the Initial Synchronization Date, subject to
PREPA's
from Seller is
er owns Seller's Complex and has
re property on which Seller's Complex is
independent consultant selected by both· Parties,
nterconnection Facilities, if operated and maintained in
rical Practices, Prudent Utility Practices and/or other appropriate
expected to have a useful life at least equal to the Term of the
that the Facility and Interconnection Facilities have been designed and
(c) Evidence that the Facility will be a Qualifying Facility pursuant to 18 CFR
(b)
2.3 Without limiting any other obligations
in compliance with the terms of the Agreement.
e ion 292.207, provided prior to the Commercial Operation Date.
the terms and conditions of this Agreement.
following the Commercial Operation Date of the Facility, subject to
this Agreement.
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located.
the right to use, for the Term of t
obligation to purchase Net Electrical Output
C~ conditioned upon Seller's submittal to PREP
~
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(d) Originals of certificates of insurance policies for insurance coverage required
c by Article 21.
(e) Copies of all material Permits needed to construct and operate the Facility and
Seller Interconnection Facilities.
2.4 Without limiting any other obligations of Seller in this Agreeme
completing or having completed any environmental impact stu .es
the design, construction, operation and maintenance of th
prevent Seller from operating the Facility and/or (b
Net Electrical Output to PREPA in accordan
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ARTICLE 3 - NOTICES
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3.1 All notices and other communications hereunder shall be in writing, other than
dispatch orders which may be oral and immediately confirmed by telecopy, and shall be deemed
KES Pefiuelas, Inc.
Suite 800
If to Seller to:
800 Sansome Street
With a copy to each of:
Attention: General Counsel
San Francisco, California 94111
telecopy, addressed as follows:
duly given upon receipt after being delivered by hand or sent by registered or ce
return receipt requested, postage
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Enron Development Corp.
333 Clay Street, Suite 1700
Houston, TX 77002
Attention: General Counsel
If to PREPA:
Puerto Rico Electric Power Authority
1110 Ponce de Leon A
- ogenerators Administration
(if by mail)
.P.O. Box 364267
San Juan, Puerto Rico 00936
Attention: Executive Director
opy to: General Superintendent - Cogenerators Administration
3.2 Either Party hereto may change, by notice as above provided, the persons and/or
addresses to which all such notices are to be sent.
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ARTICLE 4 - PRE-OPERATION PERIOD
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4.1 Seller shall submit to PREPA the following: (i) Seller's licensing and milestone
construction schedules prior to the Effective Date; (ii) the conceptual engineering design of the
onth until the Commercial
design submitted under (ii) above, in a
vcrlaIl.:g~/£o Seller's licensing and milestone
Ie design and construction standards and schedules in (i)
have a material adverse effect on Seller's ability to comply with
cuments previously submitted to PREPA resulting therefrom, and, in
el ction of the independent engineer and its determination, which shall be based on standards
within thirty (30) Days following its receipt by Sel
within thirty (30) Days following its completion; and
Seller's Complex, including the relay protection scheme, within thirty (30) Days
performance data required to perform the interconnecti
form satisfactory to PREPA by the fifth (5th)
Operation Date and notify PREPA of a
the Seller's Complex.
fi I y resolved by an independent engineer jointly selected and paid for by the Parties. Both the
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applicable to facilities similar to Seller's Complex, shall take into account the construction
-27- March 10. 1995
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schedule. During the resolution of these issues Seller shall, to the extent commercially
c reasonable, continue to work in a manner not to affect the overall schedule of the project. Seller
shall cooperate in such physical inspections of the Seller's Complex as may be required by
PREPA during and after completion of construction, provided that PREPA shall use its best
schedule for the Facility not
sed Initial Synchronization Date.
vide PREPA with relay settings for review and inspection by
undred fifty (150) Days prior to the Proposed Initial Synchronization
ot found to be acceptable to PREPA, Seller agrees to comply with any
ajor equipment list for review prior to the Financial Closing Date. All information must be
y PREPA to provide acceptable relay settings prior to Initial Synchronization
reliability of the Seller's Complex.
efforts to ensure that such inspections do not interfere with the normal course of con
4.2 Seller shall notify PREPA in writing of t
of the Seller's Complex, pursuant to this Agreement, regardless of ti
construed as endorsing the design
later than one hundred eighty (180) Da
"Proposed Initial Synchronization Date") and
period.
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csubmitted in a manner acceptable to PREPA, particularly the turbine generator data, which shall
c -28- March 10, 1995
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be used for PREPA's inspections and transient stability analysis. PREPA agrees to give any
c comments or suggested changes which it is entitled to give to Seller pursuant to this Section 4.3
within sixty (60) Days after Seller submits any required documents or other information to
PREPA.
. ed to, method of day-to-day
1\'s dispatching centers, clearances
a il Ie capacity and energy reports, Facility
of the AGe, Dispatch practices and Emergency
es may only be modified with the written consent
ys prior to the Proposed Initial Synchronization Date. PREPA may
re re and submit to Seller a written voltage schedule for the Facility
s m and shall not require the Facility to operate beyond its Design Limits.
4.4 Seller and PREPA shall mutually develop detailed written operating pro du
ge schedule upon thirty (30) Days prior written notice and in accordance with
shall be the procedures as to how to integrate the F ..
agreement based on the design of the Facility, the design of the' t
electric system and PREPA's standard operating procedu
system. Topics covered shall include, but n
Proposed Initial Synchronization Date. The Agreed Operating Pr ce
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of the Parties.
and switching practices, outage sc d
cc}communications, key personnel lists for
~ ..
-29- March 10, 1995
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4.6 PREPA reserves the right to delay the actual Initial Synchronization Date for each
unit of the Facility due to problems with such unit which could adversely affect the operations
of PREPA's electrical system. In such event, PREPA shall promptly give Seller notice of such
problems and Seller shall promptly remedy any problems with facilities or equipment which
Seller installed or maintains.
twenty (120) Days after the Commercial Operation Date and withi 0
Days after any material modification of the Facility.
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-30- March 10, 1995
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ARTICLE 5 - TERM
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The term of this Agreement shall begin with the Effective Date and shall continue for a
period of twenty-two (22) years from the later to occur of (i) thirty-nine (39) Months following
the Effective Date, and (ii) the Commercial Operation Date (the "Term"), unlec
terminated, or cancelled in accordance with the terms hereof. If the Term
J "Term" shall thereafter be deemed to mean the original Term so e en d.
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ARTICLE 6 - REPRESENTATIONS, WARRANTIES AND COVENANTS
6.1 Seller represents and warrants that as of the Financial Closing Date it shall have
contractual commitments for or access to a reliable supply of Fuel of quality an in quantity
.s obligation. Seller shall have fuel
Ie Capacity and shall have access to short
ll\IJ~ of not less than fifteen (15) Days of
al fuel supplies for the uninterrupted operation of
Days at one hundred percent (100%) of Dependable
ts and warrants that the Seller's Complex shall be operated and
d Operator in accordance with (a) the Agreed Operating Procedures, (b)
Practices and (c) Prudent Utility Practices, including without limitation,
Seller covenants and warrants that the Facility shall be operated at the voltage
vels determined pursuant to Section 4.5 and that the Design Limits shall have a MVA capability
based on a 0.85 power factor. Seller warrants that it will correct any Facility design or
Capacity.
reliable supply of Fuel for a period equal to at least t
or to the end of the Term if less. From time to . e,
supplies on or adjacent to the site of the
shall provide PREPA evidence of its co
supply of Fuel, Seller shall have new or extended contract
sufficient to meet the Minimum Dispatch Level delivery requirements under this Ag ec
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c -32- March 10, 1995
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construction defect that causes the Facility to have a material adverse effect on PREPA's voltage
c level or voltage waveform.
6.4 Seller shall, at all times, comply with all applicable laws, ordinances, rules and
regulations applicable to it and the use, occupancy and operation of Seller's Complex, unless the
be diligently
ents, suppliers, employees or
oyees, suppliers, or subcontractors
elated to these (including without limitation all reasonable
s of the Effective Date, the Seller is a limited partnership duly organized,
g and in good standing under the laws of Bermuda, and is registered to do business
ommonwealth of Puerto Rico and its general partners are KES Bermuda, Inc., the
mate parent of which is KENETECH Corporation and Buenergia B.V., the ultimate parent of
6.5 Seller shall have the sole responsib' .
noncompliance therewith would not have a material adverse effect on the operation
contesting such payments in good faith.
notices and shall pay all charges and fees in connection therew' ,
contesting any such law, ordinance, rule or regulation in good faith.
subcontractors for noncompliance by S Ie, it a
other penalties incurred by or imposed upo t
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-33- March 10. 1995
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which is Enron Corp. Seller has all requisite power and authority to conduct its business, to own
c its properties, and to execute, to deliver, and to perform its obligations under this Agreement.
(b) The execution, delivery and performance by Seller of this Agreement have
organic documents or other
party or by which it or its property
ment is a legal, valid and binding obligation of Seller, enforceable
Except as previously disclosed In writing, there is no pending action or
which Seller is a party before any court, governmental agency or arbitrator that
reasonably be expected to affect materially and adversely the financial condition or
o rations of Seller or the ability of Seller to perform its obligations under, or which purports
been duly authorized by all necessary partnership action, and do not and will not (i) require any
documents, any indenture, contract or agreement to which i IS
consent or approval of Seller's partners, other than that which has been obtained, a
Effective Date, (ii) violate any provision of Seller's partnership
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may be bound.
(c)
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properties may be bound, or any law, ordinance, r
C ~ injunction, decree, determination or award presen
,--J constitute a default under Seller's partnersh'~-
material indentures, contracts or agreem ts O'/VVIV\,:;n
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cto affect the legality, validity or enforceability of, this Agreement as in effect on the date hereof.
-34- March 10, 1995
(f) Seller shall have irrevocably committed as of the Financial Closing Date, and
c shall have contributed as of the Commercial Operation Date, the Equity Capital required by the
Project Lenders, but in no event less than ten percent (10%) of the Seller's Complex cost, of
which not more than fifty percent (50%) of the Equity Capital shall be in the form of
s been made
ars ($8 million) by the end of
III ion) by the end of the second
~ Ii ) by the end of the third Agreement Year
oIlowing amounts of Working Capital will be in
k I ated in the U. S. if required by the Project Lenders:
any amount properly invoiced to PREPA by Seller under
when due, by the end of the first Agreement Year; five million
y amount properly invoiced to PREPA by Seller under this Agreement
ue, by the end of the second Agreement Year; and eight million dollars ($8
(h) Seller shall provide, on the Financial Closing Date, as credit support for the
ny amount properly invoiced to PREPA by Seller under this Agreement and not
en due, by the end of the third Agreement Year and thereafter.
(g)
establishing the commitment of Equity Capital, to confirm tha
Cash deposited in a I
Agreement Year, and twenty mill' n
the first Agreement Year, twelve mil on
($4 million) on the Commercial Operation D
to its satisfaction.
subordinated debt, provided that such subordinated debt may be converted into anc
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cPermanent Financing, the letter of credit (where the issuer has recourse only to the Facility assets)
c -35- March 10. 1995
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from an Acceptable Bank that results in the most overall cost-effective non-recourse financing
c for the Seller's Complex, provided that if the most overall cost-effective non-recourse financing
for the Seller's Complex is available without obtaining such credit support, Seller shall secure
such financing without obtaining a letter of credit.
its counsel to issue and deliver an opinion in a form reasonably acceptabl
"",-ooUfl ontroller of Seller or any of
such information delivered to PREPA IS confidential
an independent firm of certified public accountants of
t for such semiannual period just ended;f semiannual period;
ows 0 s ch semiannual period;e 'n to holders' Equity as of the end of such semiannual
, Seller agrees that each Fiscal Year following the Commercial Operation Date
Seller agrees that, within forty-five (45) Days
Seller agrees that at no cost to PREPA, Seller shall on the Effecti
6.8
6.7
(a)(b)(c)(d)
(e)
u table experience and acceptable to PREPA. Such audit shall commence on or before thirty
30) Days after the end of the Fiscal Year and shall be completed within ninety (90) Days after
the Commercial Operation Date commencing with the s
GAAP and signed by the President, Vice P
Operation Date it will cause to be delivered to B
the representations in Section 6.6(a)-(d).
Seller's general partners setting forth t
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its commencement date. On or before the last Day of the first Month following the completion
c of such audit, reports of such audits shall be delivered to PREPA. Such audit reports shall set
forth, in respect to the preceding Fiscal Year, the same matters as are herein above required for
the semiannual reports.
a financial
ce and effect during the Term its
ration with or into another entity, subject
e such a general partner, will not permit any entity
w 11 not permit any entity that is a general partner
f the Effective Date to become such a general partner and
its affairs, or otherwise dispose of all or substantially all of its
PREPA agrees that all information (whether financial, technical, or otherwise)
Nn'e-Q[l',or a roval of PREPA, which approval shall not be unreasonably withheld
rom Seller, including without limitation information obtained pursuant to Section 6.8,
Seller further agrees that it will cause to be delivered to PREPA an annual
r rom PREPA's inspections of Seller's Complex or from any third parties pursuant to Section
maintenance evaluations or reports to be provided by Seller t
partnership existence (including v'
6.9, which is not otherwise generally available to the public shall be kept confidential and usedc
6.10 Seller agrees to preserve ""nn"",,,~
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security interest in or lien on the Seller's Complex, inclu
r!P-. the request of such third parties or performed hy jIm.....calg
C #- party.
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C -37- March 10. 1995
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solely by PREPA in connection with the performance of its obligations under this Agreement.
c Disclosure of such information may be made only within PREPA's organization to key personnel,
and to third parties serving as PREPA's legal, financial or technical advisors, whose duties justify
their need to review and know such material. PREPA shall require each person (and personnel
of the
is not successful
at a technology improvement (that
rporation of replacement items having
Seller pursuant to Article 11 during the
Seller shall submit to PREPA a technical report
result in annual savings (net of the cost of such improve-
mg such improvement, a cost estimate and the expected benefits of the incorporation of
technology improvement into the Seller's Complex. If the Parties cannot agree on the costs
and/or the benefits of the incorporation of such technology improvement, the determination of
'ng twelve (12) Billing Periods, Seller shall provide written notification of
the remaining life of this Agreement) to the Seller in excess of five
the extent PREPA is required to disclose such information by any court, 0
best efforts to seek a confidentiality agreement that assur s
thereof) to agree for the benefit of Seller to maintain the confidentiality of such info
the Facility) relating t
or to the extent necessary to secure governmental approval or autho . a:'on,
6.12
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information consistent with the terms of this Section 6.1 .
~ in obtaining a confidentiality agreement, PREPA autl~C ~. through court action the appropriate protecti
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such costs and/or benefits shall be determined by an independent engineer selected by the Parties.
c Seller further agrees that if Seller decides to incorporate such technology improvement into the
Seller's Complex, PREPA shall have the option, exercisable within thirty (30) Days of such
notice, to share equally (by adjustment of the Monthly Capacity Payment or the Monthly Energy
of the Trust
t Bank and Trust, Company,
~I~fnents, including any amendments,
of PREPA, enforceable against PREPA according to its
withheld, before establishing the Financial Closing Date if, and only if, the
ermit has been issued but is not yet final and nonappealable.
At all times, as available, Seller agrees to provide at no cost to PREPA copies of
~I:;n.li~agr s that it will be required to obtain the consent of PREPA, which will
6.13 PREPA hereby agrees that, throughout the Term, all p
final site related reports and applications, including without limitation, technical,
remaining Term.
under this Agreement shall be treated as current expenses as
Payment) with Seller in the costs and benefits of such technology
terms.
as successor trustee, and any successor nd
(National Association) as successor trustee, the Tr~~
Indenture dated January 1, 1947 as amended between P
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c -39- March 10, 1995
_._--r---'
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environmental, geological, seismological, licensing and permitting data in Seller's possession,
c excluding any proprietary design information relating to the Seller's Complex.
6.17 Seller shall cause its contract with its contractor of the Seller's Complex to include
6.18 Seller warrants that it will include in its contract for t
. tely upon resolution of the dispute
in its contract for the construction of the Seller's
nstruction contractor will guaranty that the Seller's
ner that will allow the Seller's Complex to be operated in
ler agrees to use its best reasonable efforts, when soliciting and obtaining
an thirty percent (30%) of the total personnel hours expended in Seller's performance of
Operation Date and not less than fifty percent (50%) expended in Seller's performance of the
ica: e terms and conditions under this Agreement and will meet all
e ement of the suspension of construction.
a provision that recognizes PREPA's first right, but not the obligation, to assume all rights and
Complex a dispute resolution provision providing that in the v
obligations of Seller under such contract in the event Seller and the Project Lenders
Seller's Complex.
'"'"'--_ ...." construction services in Puerto Rico pursuant to this Agreement prior to the Commercial
suspends construction on account of a dispute with Se
contract, the construction contractor and Seller sh«IT""~
J,f} (60) Days of the commencement of the
~. contractor and Seller agrees to resume
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services pursuant to this Agreement following Commercial Operation Date shall be performed
c by individuals who are bona fide residents of Puerto Rico as defined in subsection 6.20(c).
(b) Seller agrees to use its best reasonable efforts, when soliciting and selecting
Section 6.20 of this Agreement, an individual shall be considered
ration; in the case of a partnership
al m t hold at least fifty-one percent (51 %) of
siness concern); and (ii) whose management and
commencing work on the Seller's Complex. To the extent that despite
~;;;;;-,.r,.",.,1+ of uerto Rico if said individual has been a resident of Puerto Rico
e r's be r asonable efforts Seller has failed to achieve the goals set forth in Sections 6.20(a)
.20 ), Seller may for purposes of calculating satisfaction of said goals include the services
achieve a goal that not less than thirty percent (30%) of such construction servi
subcontractors and vendors to perform services for the Seller's Complex in Puerto Rico, to
are owned and controlled by one or more individuals who are 0
as defined in subsection 6.20(c). For purposes of the p
the beneficial interests in t,.~.IJ"'''l
of mdividuals who at some time prior to commencing work on Seller's Complex, but not
~ means a business (i) which is at least fifty-one p
~ individuals (e.g., in the case of a corporate
least fifty-one percent (51%) of all voti
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necessarily including the period of time immediately prior to commencing work on Seller's
c -41- March 10, 1995
._-----------.......,..-,-----------------------}
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Complex, were residents of Puerto Rico for at least five (5) consecutive years and who relocated
to Puerto Rico in order to perform work on Seller's Complex. Seller shall, in good faith, be
entitled to rely on the representation of each individual applicant and of each subcontractor or
vendor as to whether such individual, subcontractor or vendor meets the criteria set forth herein.
Seller shall require equivalent undertakings from its subcontractors.
~1, as amended, PREPA is a
conduct its business, to own its
the laws of the Commonwealth of
erform its obligations under this Agreement.
legal, valid and binding obligation of PREPA,
as previously disclosed in writing, there is no pending or, to its best
tion or proceeding against PREPA before any court, governmental
that could reasonably be expected to affect materially and adversely the
(b)
(a)
ition or operations of PREPA or the ability of PREPA to perform its obligations
6.21 PREPA warrants:
er, or which purports to affect the legality, validity or enforceability of, this Agreement (as
(d)
which would be in violation of the United States Constitution, fede I
affiliated companies are or may be bound under federa
public corporation duly organized and
Rico or of any affirmative action program or equal opportuni
1 effect on the date hereof).
Puerto Rico and has all
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6.22 PREPA agrees that at no cost to Seller, PREPA shall at the time of execution of
this Agreement cause its general counsel to issue an opinion to Seller affirming the
representations in Section 6.21.
6.23 Seller shall not be relieved of its obligations under this Agreement as a result of
subcontracting any of its obligations to a third party.
c -43- March 10, 1995
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ARTICLE 7 - DISPATCHING
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7.1 Subject to Section 7.4 and the other terms of this Agreement, PREPA, at its sole
discretion, shall have the right to Dispatch the Facility within its Design Limits. PREPA's
vide Seller with an estimated daily schedule of operations for the
In addition, by Friday of each week PREPA shall provide Seller with
nit ("RTU") the actual
and subject to the Agreed
,..v, ...... ueller shall not be deemed in
~a~led by PREPA. In addition, Seller
ill be operated in the Dispatchable Mode. On the 15th Day of each
dent Utility Practices and may be substantially different than the schedule provided in
de ermined by the requirements for operation in accordance with Economic Dispatch and
dispatcher a status report every eight (8) hours of the Seller's Compl
Seller's Complex restrictions, and the hourly integrated net ge ra'on
Facility load limit adjustment. During the P -
The Seller shall make available through the Facil' I rem te
shall notify the dispatcher immediately if there is any per'
breach of this Agreement if it is not av la e
an stimat dourly schedule of operations for the following five weeks. The actual schedule will
accordance with this section. PREPA will immediately provide notice to Seller at any time thatc
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c -44- March 10, 1995
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the total level that it intends to Dispatch the Facility during a Month changes by five percent
c (5%) or more from the total level of the estimated schedules of operations previously provided
to Seller, or the Dispatch level for the Month will be greater than the Maximum Dispatch Level
or Alternate Maximum Dispatch Level, as applicable.
The notices herein
from one hundred percent (100%)
e able Capacity, subject to the Ramp Rates
vent that the Facility is operating with one of the
ctices and so as to comply with the Facility's Permits. The
Spinning Reserve Capacity, provided that PREPA's use of
. ec .on Factor will vary from unity (1.00) based on the Facility's
PREPA will use all reasonable efforts to provide Seller with six (6) h
The Facility can be dispat e
ro~......L:>Cf'ribe in the definition of Fuel Cost Correction Factor.
7.3
7.4
nmg Reserve Capacity shall be limited to one (1) hour durations for a maximum of one
u dred (100) times per Year and no more frequently than one hour during any three (3) hour
Year. PREPA agrees to reimburse Seller, on a monthly basi m
mentioned must be given orally and confir
0..~j (c) and Appendix G, for all incremental costs incurred b
\j to shut down and restart any unit of the Facility, as"".---=-
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period. The applicable Ramp Rate in such event will be as determined in accordance with
-45- March 10, 1995
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Appendix M for the Spinning Reserve Capacity Test. If at the time of such a Spinning Reserve
c Capacity operation, the Facility is dispatched at less than the Dependable Capacity, for purposes
of complying with the required Ramp Rate, such Ramp Rate will apply to the five (5) seconds
following the start of the underfrequency disturbance which caused the Spinning Reserve
operating at such a level and
A shall pay Seller the applicable
s of time. PREPA agrees to Dispatch the Facility during
PA's normal system operating practices.
st sixty (60) Days prior to the commencement of the Base Period and at least
s prior to the beginning of each Calendar Year thereafter during the Term, Seller
reater than fifty-four percent (54%) and equal to or less than seventy-six percent (76%), used
I provide to PREPA a written statement setting forth the percentage, which shall be equal to
7.5
im based on the lower Energy Purchase Price and in accordance with
Capacity operation.
a level in excess of its Dependable Capacity (while maintaining t
7.6
PREPA chooses to Dispatch the Facili
Spinning Reserve Capacity described in Section 7.4) during the 01
"Peaking Rate"), expressed in cents per kilowatt hour t
Energy Purchase Pric
excess capacity available to PREPA, based on thp/'lo<U:!<n~>
available.> If Seller notifies PREPA that the
in determining the Target Dispatch Level for the Facility for such Calendar Year. By Friday of
c -46- March 10. 1995
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each week thereafter during the Term, Seller shall provide PREPA with a report regarding fuel
availability, setting forth (i) the amount of Seller's existing Fuel (separately identifying Excess
LNG) and Backup Fuel inventories in excess of amounts required to meet the Maximum Dispatch
~u'u"ut above the
TU, nor a negative value
cause the BTU Tracking Account
described above, then unless the Parties
MMBTU will be permanently disregarded in
I Price and permanently disregarded in the calculating the
The BTU Tracking Account Balance shall be increased or
re is a positive balance in the BTU Tracking Account, PREPA shall have
uce such positive balance by requiring Seller to make available for PREPA's use
7.8
. s other power generating facilities an amount of natural gas up to such positive balance.
Account") to record the amount of Fuel utilized to produc
Level and obligations to others, (ii) the projected delivery dates and amounts for Fuel and Backup
Fuel for the next six weeks, and (iii) the Spot Fuel Prices for Backup Fuel and
___......... I<I... pA may not require the transfer of natural gas for use in other power generating facilities
Maximum Dispatch Level or below the Minimum Dis
~. positive or negative balance. The BTU Tracking ¥-~:mt.~)~
¢ Balance") may never have a positive value
of less than 400,000 MMBTU. If any . c
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during any hour at a rate of greater than 3,400 MMBTU per hour, or to the extent such transfer
c -47- March 10. 1995
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would reduce Fuel inventories below the level reasonably necessary to achieve the Maximum
Dispatch Level prior to the scheduled arrival of the next cargo of LNG.
c -48- March 10, 1995
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ARTICLE 8 - CONTROL AND OPERAnON OF THE FACILITY
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8.1 Seller shall, at least thirty (30) Days prior to the Commercial Operation Date,
submit a written scheduled outage program (the "Scheduled Outage Program") for the remaining
e Scheduled
acility below its Dependable
A shall have the right, upon six (6)
ring which Seller shall not schedule a
set for the time period that PREPA has
date reasonably acceptable to PREPA for the Scheduled
notify Seller in writing whether the requested Scheduled Outage periods are
If PREPA cannot accept any of the requested Scheduled Outage periods in the
e hall be requested and scheduled by the Parties in accordance with
.n sixty (60) Days of the receipt of the proposed Scheduled Outage Program,
eduled Outage Program, PREPA shall advise Seller of the time period closest to the requested
after September 1, for the following Year, setting forth the Scheduled
portion of the first Year of the Facility's operations and, if the Commercial Operatio
desired Scheduled Outage Program for the next Year.
Facility. Thereafter, Seller shall submit to PREPA, in writing, by S'l"I-"''"'iU
Outages during periods approved by PREPA, and such atngiMV
~ held. Seller shall not schedule Scheduled Outagesjl1'tH:J..Q.g
#--. 30th of any Year that would decrease the c a
Capacity without the prior written cons t OJ.'t,flU-Jyn.
(
period when the outage can be scheduled.
c -49- March 10, 1995
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Seller shall use all reasonable efforts to comply with the Scheduled Outage Program.
In the event the Seller has reason to believe that the duration of the Scheduled Outage will
exceed the planned duration of the Scheduled Outage, the Seller shall notify PREPA, as soon
as possible, of the cause or causes for such delay and of the additional time required to end the
coordinating operations of the Seller's Complex with PREPA's system.
n-Scheduled
effect on the operation
o perform and complete Non-
ent Utility Practices.
monitoring the Seller's Complex and for
lex with PREPA's system. Seller shall provide
(120) Days prior to the Commercial Operation Date
nnel changes occur), with a list and qualifications of the
e responsible for supervising the operation and maintenance of the
8.5 If an Emergency is declared by PREPA, PREPA's dispatching centers will notify
ler's personnel and, if requested by PREPA, Seller's personnel shall place the Net Electrical
r that listed supervisory personnel will be on duty at all times, twenty-four (24)
Output within the exclusive control of PREPA's dispatching centers for the duration of such
8.3 Seller shall use reasonable efforts to notify PREP
8.4 Seller shall employ
Outages to occur during times when the Facility is
coordinating operations 0
Scheduled Outage. In such event, Seller will use all reasonable efforts to return t
Scheduled Outages or at such other times as willptWJ..lll!!
of PREPA's electric system. Seller shall u
Scheduled Outages with PREPA. Seller shall use reasonable
operation in the shortest possible time.
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Emergency. Without limiting the generality of the foregoing, PREPA's dispatching centers may
require Seller's personnel to delay synchronization or raise or lower production of energy
generated by the Faciiity to maintain safe and reliable load levels and voltages on PREPA's
transmission and/or distribution system; provided, however, any changes in the level of Net
k-start capabilities and
auled Outage, and such Scheduled
r coincident with an Emergency, Seller
begun, to expedite the completion thereof.
Two voice grade telecommunication circuits for the dual portedRTD. One to Monacillos transmission center ("Te") and the otherto Ponce Te.
(2)
For the purpose oftelemetering, data acquisition, and automatic generationcontrol by PREPA:
(1) One dual ported RTU for data acquisition and generation controlcompatible with PREPA's energy management system.
o . e at its expense the following communication facilities linking the
8.6 Seller shall cooperate with PREPA in establishing
8.7 If Seller has a Scheduled 0
without limitation, recovery from a local or widespread electri I
minimum load-carrying ability.
Prudent Utility Practices and within the Facility's Design Limits.
Electrical Output required by PREPA hereunder shall be implemented in a manner co sis
order to effect load curtailment; and other plans which~.,u:?-- information and data available to PREPA concern,i ~ .... ~""'"'
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(3) One voice grade telecommunication circuit for the Facility for thebackup telemetry to Monacillos Te.
(4) Pro rata cost of installation by PREPA of all equipment needed forthis purpose outside of the Facility and attributable to the Facility,as set forth in the interconnection study performed by PREPApursuant to Section 9.3.
8. shall be subject to the approval of
e maintained for a minimum of five (5) years after the
r the Parties; provided, however, that neither Party shall dispose of
data and for any additional length of time required by regulatory
A voice telephone extension for the purpose of accessing P Ametering equipment and for communicating with P A's dlcenters.
Ring down telephone line to Monacicoordinations.
Telecommunications radio c.,. .........=system.
(30) Days prior notice to the other Party. If notice is given to the notifying
records that are specifically designated by the other Party even after five (5)
(b)
(c) Telephone line and equipment to transmitpurposes of confirming the coordinations.
(e)
(d)
such thirty (30) Day period, the notifying Party shall promptly deliver such records
d data to the Party wishing to retain such records.
creation of s
8.9 Each Party shall
Items provided by Seller in accordance w'
PREPA, which approval shall not be me
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(b) Seller shall maintain an accurate and up-to-date operating log at the Facility
with records of: (i) real and reactive power production for each hour; (ii) changes in operating
time during
tests and inspections of
s electrical system. PREPA
e r's Complex during operation and
written notice to the other Party and during regular business hours 0
8.10 At PREPA's request, Seller shall pr .
data of the other Party relating to the proper administration
status and Scheduled Outages; (iii) any unusual conditions found during inspections; (iv) the
capacity available for Dispatch for each hour as determined consistent with Prudent Utility
Practices and subject to verification by PREPA.
the period the records are required to be maintained.
the electric and protection equipment which/nrl<>l\.,
testing.
shall have the right to visit and visual
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ARTICLE 9 - INTERCONNECTION
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9.1 Seller shall at its own cost and in accordance with Appendix E, (i) design, obtain
the land rights necessary, acquire all materials and equipment necessary, construct and install the
Seller
Seller, PREPA
acilities shall be part of the
rmits and Regulations Administra-
o aining, with Seller's assistance on design
ested by PREPA, all Permits required for the
rmits within forty-five (45) Days following the date Seller
it. If PREPA fails to obtain such Permits within the time period
tence and such failure causes a delay in Seller achieving any such
estone Date or in obtaining non-recourse Project Debt, Seller shall be given
ension of such Milestone Date and subsequent Milestone Dates for each day of
o ained by PREPA hereunder will cause a delay in achieving a Milestone or obtaining non-
construct, install and transfer to PREPA the PREPA Interconnection Fa llitie , .
contemporaneous with performing such acts with respect to the Se Co ~"'"' ...,.__•
project design to be submitted by Seller
Seller Interconnection Facilities, and (ii) design, acquire all materials and equipme
own and be responsible for the safe and adequate operatio
Interconnection Facilities, other than metering equipme
~ shall own and be responsible for the safe and adequy-_~~Interconnection Facilities. The der,ign of the
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recourse Project Debt, it may request that Seller be permitted to obtain the Permits and PREPA
-54- March 10, 1995
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shall not unreasonably withhold or delay its consent and shall cooperate with Seller in obtaining
c such Permits.
9.2 Seller shall provide to PREPA the preliminary and final equipment data required
in Appendix E by the dates specified therein.
have the right to review, comment on, and approve, which approval shall not be
Seller
nsistent with Prudent Utility
ecf n agram and approved specifications
rights necessary for the Seller Interconnection
easonable time, Seller shall so notify PREPA, and
ch land that Seller requests PREPA to obtain, necessary for Seller
and shall in exchange for appropriate consideration provide to Seller
,,~r"'''J/Ier, sh , within a reasonable time, obtain and maintain title to all
se the land to enable Seller to construct, install, operate and maintain the
PREPA shall, at its own cost, perform an interconnection study an
nection Facilities for the Term.
Seller shall notify PREPA and provide the following information which PREPA
9.3
9.4
by of Section 9.2. The interconnection study shall, at a minimum, (
capabilities of the major interconnection equipment r
dispatching centers that will coordinate the operati
Facilities and PREPA Interconnection Facili . s
contained in Appendix E and the It
Interconnection Facilities and PREPA Interconnection F " les,
Facilities at a fair m
~~. Practices considering the functional one-l e i e 0
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unreasonably withheld: (i) a detailed design and list of the equipment required for the Seller
-55- March 10, 1995
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Interconnection Facilities and PREPA Interconnection Facilities; and (ii) the estimated time
required to construct and/or install the PREPA Interconnection Facilities.
9.6 PREPA reserves the right to modify or expand, its requirements for protective
devices in the Seller Interconnection Facilities in conformance with Prudent Electrical Practices.
c 9.7 Each Party shall notify the other in advance of any changes to its sy
-56- March 10. 1995
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ARTICLE 10 - METERING
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10.1 PREPA shall own and maintain all meters and metering devices (including RTUs)
two (2) weeks prior written
e that there has been a meter failure or
e a e esentative present during the meter
ller, at Seller's cost, PREPA will test and calibrate the
meters, in accordance with the provisions for meter testing as
ational Standard Code for Electricity Metering (ANSI) Standard C
te Electricity Meters, and the Handbook for Electrical Metering, Edison
10.2 All meters and metering equipment including
test IS performed. When, as a result of such a test, a meter is found to be inaccurate by no
used to measure the delivery and receipt of Net Electrical Output and Dependable Capacity, for
payment purposes. Seller shall install meters and metering devices for backup purp
the Net Electrical Output and Dependable Capacity del'
Interconnection Point and sealed, and the seals bro~l'-Q;IlJv
..................... '"UJle than two percent (2%), no adjustment will be made in the amount paid to Seller for Net
10.3
are to be inspected, tested or adjusted.
~ notice thereof and Seller shall have the
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Electrical Output and Dependable Capacity delivered to PREPA. If the meter is found to be
-57- March 10, 1995
inaccurate by more than two percent (2%), PREPA will use the backup meters to calculate the
c correct amount delivered to PREPA for the actual period during which inaccurate measurements
were made or, if the actual period cannot be determined to the mutual satisfaction of the Parties,
for a period equal to the time elapsed since the most recent test, but in no case for a period in
e subtracted from the amount
.s Agreement. The difference shall
t is made, and other matters affecting the accuracy of the
ppage it shall immediately notify the other Party.
g each one (1) year period, following the Initial Synchronization Date,
ead the meters twelve (12) times to determine the amount of Net Electrical Output
to PREPA between any such two (2) consecutive meter readings (the "Billing Period").
Billing Period shall not exceed thirty-three (33) Days nor be less than twenty-eight (28)
elivered from the Facility. If either Party believes that there has
excess of six (6) Months. If the backup meters are not available, or if the testing 0 th
cannot be determined to the mutual satisfaction of the P
the actual period during which inaccurate measurements w e
the time elapsed since the most recent test, but .
Months. The previom~ payments by PREPA
of payments that are calculated to have ee
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Days. The meters will be read on the dates indicated on the meter reading program prepared by
-58- . March 10, 1995
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PREPA and submitted to the Seller on or before January 1st of each Calendar Year. PREPA
shall notify Seller in advance of any change on the meter reading program. The Seller may be
present, at its option, during all meter readings. PREPA shall provide the Seller with a written
statement containing the results of such meter readings within ten (10) Days following the
reading.
-59- March 10, 1995
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ARTICLE 11 - COMPENSATION, PAYMENT AND BILLINGS
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11.1 PREPA shall pay Seller for the Net Electrical Output and Dependable Capacity
ring the Pre-Operation
n, the numerator of which shall be PR-CPI (as published
immediately preceding the date of such calculation and the
twelve (12) Months ending on December 31, 1994.
denominator of which shall be the PR-CPI corresponding to the
and Human Resources, or any successor thereto) corresponding to
the twelve (12) Months ending on December 31 of the Year
Net Electrical Output for such Billing Period.
Pre-Operation Period.
PEAC x NEO
by the Puerto Rico Bureau of Labor Statistics, Department of Labor
11.1(a)(1)
EP ($) =
PEAC ($/kWh) .~~
NED (kWh) =
delivered and billed to PREPA every Billing Period. Such payment will be equal to an Energy
Payment plus a Capacity Payment plus a Start-up Payment, as set forth below.
(the "Energy Payment" or "EP") for the Net Electrical Output of
Electrical Output delivered prior to the Commercial Operation
Section 10.1 and calculated as set forth below.
Period, the Energy Payment shall be:
Where:
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11.1 (a)(2) Alternate Period.
c A. For each Billing Period during the Alternate Period, the Energy Payment
shall be:
EP ($) = AP x APPI x 0.0075 x ACF x NED
Value to be
nchronization Date. If the Parties
by such a date, there shall not be an
mimum Dispatch Level, the Energy Payment shall be
the Alternate Minimum Dispatch Level
($ - AP x APPI x 0.0075 x (AMDL - NED)
B.
C. If in any Billing Period during the Alternate Period the Net Electrical
AP ($/MMBTU) = Alternate Price. Value to be agreed b t
APPI =
NED (kWh) = Net Electrical Output for i)U""~
ACF=
Where:
not be an Alternate Period.
Synchronization Date. If the Parties are not able to agree in
Output is
____.J"J'Ull.Uut is greater than the Alternate Maximum Dispatch Level, then PREPA shall direct Seller
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to procure Backup Fuel and the Energy Payment shall be calculated assuming the Spot Fuel Price
c for such Backup Fuel as follows:
EP ($) = BEP + EEP
Where:
SFP ($/MMBTU) = Spot Fuel Price
EEP ($) = Excess Energy Payment
Alternate
accordance with Appendix K.
be adjusted on the first day of each Calendar Year to apply to the
next twelve (12) Billing Periods subsequent to such adjustment in
The Energy Purchase Price , which is equal to $0.01957 x EPI.
The Energy Price Index, which is defined in Appendix K and shall
AP x APPI x 0.0075 x ACF x AXDL
SFP x 0.0075 x ACF x (NEO-AXDL)
Average Correction Factor for such Bill'
BEP ($) =
EEP ($) =
ACF =
A.
BEP ($) =
AXDL (kWh) =
1l.1(a)(3)
Where:
Where:
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od, the Net Electrical Output
ay elect to deduct any or all of the
Minimum Dispatch
MFC (kWh) = Monthly Fuel Credit (relating to the utilization of a positive
balance in the BTU Tracking Account) and is calculated in
accordance with Appendix H.
B. Ifin any Billing Period during the Base Period, including any period during
which PREPA is unable to receive energy due to a Force Majeure event claimed by
Net Electrical Output is less than the Minimum Dispatch Level, the Ener
Billing Period shall be increased by an amount calculated as folio
Increase in EP ($) = EPP x (MDL - NEO)
Where:
the extent permitted t
MDL (kWh) =-
Where:
EPP x ACF x (XDL - MFC + PSK)
SFP x 0.0075 x ACF x (NEO-XDL-PSK)
Maximum Dispatch Level
.1 (b) Capacity Payment. Prior to Commercial Operation Date, the Capacity Payment
""'--_""'••..,.1 be equal to zero (0). For each Billing Period after the Commercial Operation Date, PREPA
shall pay to Seller a payment (the "Capacity Payment" or "CP") for the Dependable Capacity of
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c -63- March 10, 1995
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the Facility made available at the Interconnection Point on a dollars per kW basis at a monthly
c rate calculated as follows:
CP ($) = (CPP x DC) + SRCP
Where:
d, the Capacity Purchase Price shall be equal to:
as defined in Section 11.1 (b)(5).
Capacity Purchase Price, as calculated in Sectio
or 11.1 (b)(2) as applicable
Dependable Capacity
SRC x SRPP x EAAF x.,__ "",-_
3.00 x DCEF
. ning Reserve Capacity operations required by PREPA's
If none is required SRPF equals one.
during the last twelve Billing Periods ending with the one being
The Equivalent Availability
Section 11.1(b)(4).
(13.2299 x DCEF+ 5.0434 x FCEF + PFA) x FMAF x EAAF x APDF)
Iternate Period Ca aci Purchase Price. For each Billing Period during the
CPP ($lkW-month) =
DC (kW) =
SRCP ($/month) =
EAAF =
SRPP ($lkW-month) =
DCEF =
SRC (kW) =
SRPF =
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Where:
c -64- March 10, 1995
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used. Value to be agreed by the
.2299 x DCEF + 5.0434 x FCEF + PFA) x FMAF x EAAF
n' ation Date. If the Parties are not able to
a date, there shall not be an Alternate Period.
11.1(b)(5).
The Fixed Cost Escalation Factor, determ' e
11.1(b)(6).
The Permanent Financing Adjust
11.1 (b)(7).
Force Majeure Adjustment Factor as described in Section 11.1(b)(3).
11.1(b)(4).
Equivalent Availability Adjustment Factor as described in Section
~~~~~~=n~~=""'-"""""= For each Billing Period during the Base
FCEF =
APDF =
PFA =
FMAF = The Force Majeure Adjustment Factor, determined according to Section
C 11.1(b)(3).
EAAF = The Equivalent Availability Adjustment Factor, determined according to
Section 11.1(b)(4).
C DCEF = The Demand Charge Escalation Factor, determined accordin
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c -65- March 10, 1995
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Beginning with the twenty-first (21st) Agreement Year and for the remainder of the Term,
c a further adjustment shall be made to the Capacity Purchase Price by multiplying it by 0.965.
11.1(b)(3) Force Majeure Adiustment Factor. For each Billing Period, the Force
Majeure Adjustment Factor shall be determined as follows, taking into account outages or
equation would result in the
FMH for that Billing Period shall
in the calculation of the Billing Period
e multiplied by 1.005 and carried over into the
re than 1930 EFMH. If the application of the foregoing
an 1930 EFMH to be carried over, such carried over EFMH shall
BPH - EFMHBPH
Equivalent Force Majeure Hours
Hours in the Billing Period
Equivalent Availability Adjustment Factor. For each Billing Period the
FMAF =
EFMH=
BPH=
Provided, that if in any Billing Perio a
Iv.J~uld th excess above 1930 shall be added back to the EFMH in the foregoing
'lling Period, even if that results in the FMAF < 0.67.
for the period comprising the last twelve Billing Periods ending with the one being billed
iva ent Availability Adjustment Factor shall be calculated as set forth below based on the
deratings due to Force Majeure events claimed by Seller in which Seller is unable
or part of the electricity:
Where:
FMAF < 0.67, for the purposes of calcui tin t
be capped at 33% of BPH. Any
next Billing Period,
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("Twelve Month EAF").
-66- March 10, 1995
illing Period. So long as the EAF
ua.r-........::;ar"), EAF will be deemed to
ed 100%. Examples of the EAAF calculation are included
he one-time option, exercisable by written notice given to PREPA
ement Year, to increase the committed EAF by up to four percent (4%) (the
Increase") from the beginning of the second Agreement Year to the end of the
such notice is given to PREPA, each of the percentages set forth in the table above in
Notwithstanding the foregoing, for each of the first four
h the Range and EAAF columns, except for the 0% in the last line of the EAAF column, shall
Range EAAF
EAF> 92% 100%
92% > EAF > 88% 100% -( (92%-EAF) x 1.25)
88% > EAF > 85% 95% -( (88%-EAF) x 1.5)
(I 85% > EAF > 70% 90.5% - ( (85%-EAF) x 2)
70% > EAF > 60% 60.5% - ( (70%-EAF) x 3)
60% > EAF 0%
Commercial Operation Date (the "Initial Period"), the E
Period of the Initial
for such Billing Period only. For purpose of calc
(I~. Periods following the Commercial Operatio
~~be two percent (2%) greater than the act
a:!
G
(Ji
be increased by the EAF Percent Increase.
-67- March 10. 1995
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ll.l(b)(5) Demand Charge Escalation Factor. The Demand Charge Escalation Factor
for 1994 is equal to one (1) and shall be recalculated each January 1 starting January 1, 1995 to
January 1, 1998 as equal to the fraction, the numerator of which shall be the Construction Cost
Index in effect on July 1 of the Year immediately preceding the date of such calculation and the
harge Escalation Factor
ry 1 starting January 1, 1995 as equal to
R-CPI (as published by the Puerto Rico Bureau
. ed Cost Escalation Factor for 1994
and Human Resources, or any successor thereto)
ths ending on June 30 of the Year immediately preceding
d the denominator of which shall be the PR-CPI corresponding to
Permanent Financing Adjustment.
The Capacity Purchase Price for each Agreement Year set forth above shall
11.1(b)(6)
event that the Monthly Deemed Total Debt Service for the permanent financing of the Project
su ~ect to a Permanent Financing Adjustment each Month in the manner set forth below in
denominator of which shall be the Construction Cost Index in effect on July 1, 19
of Labor Statistics,
percent (2%) per Year, that is, multiplying the prev.,...·."....-...
Demand Charge Escalation Factor shall be further ad_or'.._~_
by 1.02.
or any successor index. Starting with January 1, 1999 and(I
Debt is higher or lower than the Monthly Expected Total Debt Service solely due to changes in
-68- March 10, 1995
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(1) the Permanent Financing Interest Rates for each tranche of the permanent financing of the
Project Debt; (2) fees related to the permanent financing of the Project Debt; (3) the principal
payment schedule for each tranche of the permanent financing of the Project Debt; or (4) the
relative proportion each tranche of debt bears to the total of the permanent financing of the
Project Debt. The Permanent Financing Adjustment shall be established for the er
by PREPA and with the rollover of any Section 936 funds
permanent financing of the Project Debt at the Financial
the Initial Dependable Capacity shall not be dete
accordance with Article 12 of this Agreeme .
calculated in accordance with the follo ng or
Where:
ervice = Monthly Actual Total Debt Service x $1050/kWActual Permanent Financing Amount ($/kW)
= Total Initial Debt($1050/kW x Initial Dependable Capacity)
Actual Permanent Financing Amount = Total Initial DebtInitial Dependable Capacity
-69- March 10, 1995
CI
CT
Permanent Financing Interest - means, commencmg with the Month following theCommercial Operation Date, the total interest expense related to the debt servicefor the permanent financing of the Project Debt to be incurred over the pertinentAgreement Year, divided by twelve (12).
Principal - means, commencing with the Month following the Commercial OperationDate, the principal repayment for the permanent financing of the Project Debt and feesrelated to the permanent financing of the Project Debt such as payme lating tointerest rate swaps or other hedging agreements, attorneys' fees, under ite ' fees,accountants' fees, letters of credit fees and other fees that are to b . curre ve epertinent Agreement Year, divided by twelve (12).
Monthly Expected Total Debt Service for a term of 240 Months.
Permanent Financing Interest Rate - means the acharged (including any underwriting fees and exexpenses) for all tranches of debt for the perman tdetermined in accordance with the followi mu
Where:
XI = tranche 1 debt
For each tranche of permanent financing of the Project Debt, the average life is calculated
10 accordance with the ft'llowing formula:
-70- March 10. 1995
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Sum of the Principal Repayments in each year x Year in which repayment is madeSum of the repayments
Examples of this adjustment are set forth in Appendix J.
(B) The selection of the underwriters for the construction financing of the
financing of the Project Debt shall be made by PREP
similar term and amortization schedule. The total costs and expenses of such
nancing of the Project Debt would produce a net present value
The selection of the lead underwriter for
with respect to that tranche, PREPA may request Seller to refinance that
(C)
including but not limited to issuance costs and expenses, underwriting fees and
n t e event PREPA reasonably determines that refinancing by Seller of any
discount rate equal to the interest rate of such tranche) savings of more than
issuing permanent debt. If the Seller intends to issue permanent debt as part
Seller's Complex shall be made by the Seller in Seller's sole discretion if there is n 1 ention of
financing, the conditions for the issuance of permanent debt shall apply.
Notwithstanding the foregoin permanent debt is the sole responsibility of
Issuance expenses, prepayment charges, fees and expenses related to the debt being refinanced,
the Seller and PREPAi' does not guarantee the market availability of the
underwriters submitted by Seller, of which at least thre
J-- have offices in Puerto Rico. Seller commits to u
~. financing cost for the permanent financing
agree on the debt structure, issuance ate, ule, interest rates and issuance cost.
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and refinancing, shall be included in determining the total amount of the tranche of debt being
refinanced, The Capacity Purchase Price shall be adjusted on a prospective basis in accordance
with paragraph (A) above by the annual savings (specified in dollars per kW-Month) in
permanent financing costs produced by such refinancing,
ear the time of the Financial
ds and for a comparable financing
, within sixty (60) Days of such notice, of an amount equal
Seller agrees to notify PREPA of the anticipated Permane
r's Complex, (ii) Interest thereon from the date on which such costs were
(E)
iii) twenty percent (20%) of the Licensing Costs for the Seller's Complex incurred
,,,,"~.~v,~or f s, if any, owed by Seller to suppliers or contractors under agreements
accrued by or on behalf of Seller after the Effective Date, including
er, unless Seller, within fifteen (15) Days of receipt of such written notice, notifies PREPA
writing that Seller agrees to bear the costs in excess of the Maximum Interest Rate. In such
underwriting fees and expenses and credit enhanc
the Permanent Financing Interest Rate exceeds (ii) the all' ,
Seller's satisfaction, by means of an opinion of an independent 'n
have obtained for its own account in the m
([
event, the Permanent Financing Interest Rate Adjustment shall be determined as if the Permanent
-72- March 10, 1995
(I
Financing Interest Rate equals the Maximum Interest Rate. For the purposes of this paragraph
(E), the phrase "similar facility" shall mean a facility similar in type, construction and location
as the Seller's Complex. If PREPA exercises its right to terminate, and upon payment to Seller
as stated above, PREPA shall have the right to acquire from Seller, its parent company, affiliates,
f each Billing Period,
A, and for the Start-up Payment
I"...,,~v.lectrical Output delivered to
ay after the Billing Period. Notwithstanding the payment
Section, any amounts owed to PREPA by Seller relating to the
not paid when due to PREPA may, at PREPA's discretion, be offset
due to Seller from PREPA under this Agreement. Payment to PREPA shall
Ire transfer to an account with a bank to be specified by PREPA in writing at least
) Days prior to the Initial Synchronization Date or with such other banks as may
ounts or reimbursements due to Seller
11.1(c) Strot-up Payment. For each Billing Period, P
eafter be specified by PREPA in writing. Payment to Seller shall be made by wire transfer
successors, assignees or any other party which may have any interest, right or title t th
Complex every and all interests, rights, and titles existing, or which may
Complex in relation to its present and/or future ownership and oper I
11.2 On or before the fifteenth (15th) D
(the "Start-up Payment") equal to the amount calculated'
to an account with a bank to be specified by Seller in writing at least thirty (30) Days prior to
PREPA, for the Dependable Capacity
r-.. Seller shall provide PREPA with a written'
(T
(1)1
(I
-73- March 10, 1995
i_"I~-"_
(I
(I
the Initial Synchronization Date or with such other banks or institutions as may thereafter be
specified by Seller in writing. Either Party may, by written notice to the other, change the
address to which such payments are to be sent.
11.3 If a discrepancy exists between the amount of Net Electric Output determined by
PREPA and the amount set forth in Seller's invoice to PREPA, or PREPA in good
any other amount in such invoice, PREPA shall pay the amount it determin
based on its meter reading or otherwise, until the dispute is resol
Agreement.
o -74- March 10, 1995
ARTICLE 12 - TESTING AND CAPACITY RATINGS
12.1 Seller declares that the Estimated Dependable Capacity for the Facility is 461 MW
and the Estimated Spinning Reserve Capacity is 20 MW.
and any disputes with
the Parties as provided in
Spinning Reserve Capacity based
est a: 'tional tests described herein if Seller is not satisfied with
et the Dependable Capacity or the Spinning Reserve Capacity.
sts can be made only after five (5) days have expired since the
ost recent test. Upon completion of such additional test(s), if any, Seller
ependable Capacity and the Spinning Reserve Capacity based on the results
In such testing. The Dependable Capacity shall be set within plus or minu~ ten percent
12.2 The Dependable Capacity and Spinning Reserve Capacity for the Fac
12.4
rotl 10%) of the Estimated Dependable Capacity, as specified in Section 12.1, and the Spinning
Reserve Capacity shall be set within 0 to 10% of the Estimated Dependable Capacity.
ready for the testing and the date and time when the Seller s
Appendix M, Seller shall set the Depend Ie
respect to such testing have been resolved
12.3 If the testing is completed in accordr-_.__,,-,
to Appendix M and PREPA shall have the right to mon'
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This new
en set originally under such
~vv~u the final written approval of the
may
n accordance with this paragraph.
ting of the Dependable Capacity and the Spinning Reserve
ller shall notify PREPA in writing of the Dependable Capacity and
and consequently the Commercial Operation Date.
12.6
12.5 Upon completion of the first Agreement Year, or, if later, 39 Months after the
"Construction Permit Obtained" Milestone Date, the Dependable Capacity and the Spinning
Reserve Capacity may be reset by testing as described in this Article 12. At least fourteen (14)
Days prior to the later of these two dates, Seller shall notify PREPA of its intention to reset the
Dependable Capacity and the Spinning Reserve Capacity, and the date and tim
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Capacity the payments for Dependable Capacity and Spinning Rese e
C' j).. be made based on this new Dependable capacity. and Spinn' g
V' Dependable Capacity shall be within plus or minus te,n/l'O~Pr
~. Capacity, as set pursuant to Section 12.3 or 12.4, atl(:HJ:te
Reserve Capacity must be within the limit
Sections. In addition, at PREPA's writ n
Parties, either the Dependable
-76- March 10, 1995
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ARTICLE 13 - LONG-TERM FUEL SUPPLY
13.1 Fuel Milestones. Seller agrees that, in addition to the Development Security Seller
is required under Section 19.4 to provide to PREPA, Seller shall provide additional Development
Milestones") set out below relating to Seller's long-term fuel supply arrange
$1,000,000, or$750,000 if Fuel Milestone
(1) is achieved
$1,500,000, or$1,250,000 if Fuel Milestone
(1) is achieved, or$1,000,000 if Fuel Milestone
(2) is achieved
In addition, Fuel Milestone (3) above is included in the table of
dl' al Development Security shall no longer be required and shall be
FuEL MILESTONE
Section 19.5(a). Seller shall not be entitled to any corresponding reductions in the
~",, ,"A w en the Fuel Milestone to which they relate is achieved, or a later Fuel
If LNG Letter of Intent is not executeddays after Effective Date.
If LNG Heads of Agreement is nwithin 6 months following Ef£ tiv
(2)
(3)
(1)
r q ired Development Security as a result of the foregoing Fuel Milestones being accomplished
by the dates shown:
Security (the "Additional Development Security") as follows if the fuel milestone (t
__...ead of schedule. Notwithstanding anything to the contrary stated herein, if Seller fails to meet
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the "LNG Purchase Agreement Obtained" Milestone Date set forth in Section 19.5(a) but is able
to subsequently achieve such Milestone prior to the Construction Permit Obtained Milestone
Date, PREPA shall refund to Seller one hundred percent (100%) of any amount paid to PREPA
for the failure to meet the "LNG Purchase Agreement Obtained" Milestone Date.
inimum Dispatch Level in
gas pipeline, part of it on land or rights-of-way
to PREPA's South Coast generating station ("South
a use all reasonable efforts, at its sole cost
Seller's LNG Terminal achieves commercial operation.
supply gas to South Coast in the event of an LNG oversupply.
A at South Coast in the event of a PREPA Fuel Emergency and to help
_,-"'~~'" A's request, to supply gas not otherwise needed by Seller to operate
a Dispatch shortfall. In either case, the price will not exceed the lesser of (i)
s all-in cost of purchasing Number 6 fuel oil for South Coast Steam Plant at the time of
13.4
13.2 Energy Price Indexes. In order to reduce PREPA's dependency
fluctuations of oil, Seller agrees that, unless PREPA expressly agrees other
Index must not contain any component not set out in Appendix K
Article 7, in accordance with the provisi s
Facility in a manner which exceeds, by up t
'-'~U.~ sale, and (ii) the Equivalent Fuel Price; provided that such purchase does not violate the
must be weighted within the ranges set out on such Appendix
~. 13.3 Dispatch Flexibility. SeIler agrees that its
~ to provide PREPA the flexibility to exceed, and ¥""~.L'
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n -78- March )o. )995
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contracts then in effect, the infrastructure and combustion systems to utilize such natural gas are
in place and operational; and subject to Economic Dispatch. The procedures for the transfer of
gas to PREPA shall be developed as part of the Agreed Operating Procedures.
13.5 Supply of Gas During PREPA Fuel Emergency. If, during a PREPA Fuel
Emergency, Seller has LNG in its Fuel inventory in excess of supplies reasonably fo se
at the Lowest Emergency Fuel Rate then in effect. In the event
Emergency, Seller's Complex has LNG storage capacity reasonably
foreseeable to be needed to comply with its then existiI}g".prJ!
ships carrying cargoes of LNG arranged by PREPA
facilities at the Lowest Emergency Terminal
13.6 LPG Operations. During t mmercial Operation Date but prior
During such
d monthly Energy Payments shall be as described
Seller has agreed to the fuel storage requirements in Section
the event of any Fuel supply interruption, it will nevertheless remain
obligations hereunder to supply electric energy, by using alternate LNG
G or other natural gas liquids or Backup Fuels. The Energy Payments that apply
event, which allow PREPA to require Seller to continue to provide Dependable Capacity
n Net Electrical Output, are set forth below.
-79- March 10. 1995
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(a) In the event of an interruption of Fuel that causes the non-availability of
Fuel to the Facility, Seller shall use all reasonable efforts with the diligence required to remedy
such interruption. It is the intention of the Parties to cooperate and mutually endeavor, to the
extent commercially reasonable and in accordance with Prudent Utility Practices, to minimize any
10:00 a.m.
. .e prIce or prIces
for each hour of the
f such Backup Fuel delivered to
s mgs of fixed and variable costs (and any
nergy Payment relating to such Day in lieu of the price
1.1 (disregarding the last sentence of paragraph (a) above) and provide the calculations
n results to Seller. If under such simulation the Facility would not have been Dispatched, then
therwise) which result from the non-availability
---....:::_.,,-PA and Seller shall jointly cooperate and participate in determining the
maintain the Facility's Available Capacity and avoid declarin
adverse effects and costs for the Parties from a Fuel interruption or the resulting fuel
interruption.
on the Day prior to any Day affected by such interruptioO"CWv
1\~ at which Net Electrical Output could be generate\1 .. following Day as a result of such Fuel inteeru
~ Revised Energy Purchase Prices shall
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the Replacement Energy Cost for such following Day shall be zero. If under such simulation the
(I -80- March 10, 1995
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Facility would have been Dispatched during the following Day, then PREPA shall simulate its
Economic Dispatch for such following day using the Revised Energy Purchase Prices described
above and compare it to the simulation using the EPP described in Section 11.1 (disregarding the
last sentence of paragraph (a) above) with all other assumptions and variables the same in each
ratio of (i) all Seller's
axes and other operating expenses
operation of the Seller's Complex to (ii)
e ct the Replacement Energy Cost for all days in the
e to Seller from PREPA, unless Seller demonstrates to
deduction would cause the Debt Service Coverage Ratio to fall
ebt Service Coverage Ratio that would have resulted in the absence
"Alternative Debt Coverage Ratio"), whichever is lower, in which case
nly deduct a portion (or none) of the Replacement Energy Cost to permit the
(c)
tenance of the Debt Service Coverage Ratio at a minimum of 1.30 or the Alternative Debt
o erage Ratio, whichever is lower. The Replacement Energy Cost not deducted for such Billing
(other than debt service) incurred'
case and provide the calculations and results to Seller.
debt service on the Project
such following Day resulting from the simulation using the Revis
exceeds the simulated system cost to PREPA for such
revenues generated by the Seller's Compl
simulation using the EPP described in Section 11.1 (disr
c~ <a) above).
~
Period shall be recorded in an unfunded tracking account and shall accrue Interest. If at any time
-81- March 10, 1995
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during the first twenty (20) Agreement Years the Seller's current payment obligation would
enable the Seller to maintain a Debt Service Coverage Ratio in excess of 1.30, Seller shall
reimburse PREPA for amounts contained in the tracking account sufficient to reduce the Debt
Service Coverage Ratio to 1.30, and the tracking account balance shall be reduced by such
ccount balance equals
of the twenty-second (22nd)
e Term for up to such additional
rein, and there is a balance in the tracking account, such
A according to Section 18.3. Notwithstanding, during the Term
ore any termination of this Agreement takes place, Seller shall have
(3) Notwithstanding the foregoing, if Seller claims an amount under
all or any portion of the balance of the tracking account at any time or from
(2)
e tion 13.7(c)(I) above that causes the tracking account balance to exceed twice the amount of
reimbursed amounts.
amount retained under Section 20.1 (d), up to fifty percent (50% of
twentieth (20th) Agreement Year, Seller agrees that PREPA may reta" ,1
Agreement Year, PREPA shall have th op'
amount. This monthly retention shall be eliminat
Billing Period thereafter, which shall reduce the tracki
zero; provided that if any amount has not b
Year and thereafter s
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the Operation Security required under Section 19.6(a), PREPA shall have the option to purchase
the Seller's Complex pursuant to Section 15.2 (a).
(4) For all purposes of managing the Replacement Energy Cost tracking
account established under this Article 13 and the Taxes and Environmental Costs tracking account
established under Article 20, the Replacement Energy Cost tracking account balanc , ifo
() ~. Replacement Energy Cost will be subject to the end of Fiscal
, " 6.8 hereof, and properly adjusted if applicable.
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ARTICLE 14 LIABILIlY
cnn~~s suffered by the other as a
gligent performance, omission or
greement, as stated under Article 1060
Section 14.3 below.
-"J'''' y- their respective directors, officers, shareholders, partners,
r entatives nor any of their respective heirs, successors and assigns
"""n'Oo~e lia Ie to the other Party or its officers, directors, agents, employees or
aims for incidental, consequential or indirect damages to persons or property,
n ther ar' i g in tort, contract or otherwise, connected with or resulting from performance or
rmance under this Agreement, including without limitation, claims made by either Party's
u omers or suppliers, or claims made by third parties, or claims made by either Party for lost
profits (except payments specifically provided for in Article 11). Further provided that Seller's
14.3
14.2 Each Party shall be liable for
necessary consequence of the Seller or _.... '"
14.1 Each Party shall be responsible for the energy and facilities, including
Seller Interconnection Facilities and PREPA Interconnection Facilities, located on its respective
side of the Interconnection Point. The energy made available by the Seller to PRE
PREPA's generation, transmission, and distribution system, inc d'
Facilities and PREPA Interconnection Facilities, resulti
misuse or presence of said energy once it passes t
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liability and PREPA's sole remedy for any damage resulting (i) from the failure to deliver the
electrical energy resulting from the low availability of the Facility and its failure to achieve the
committed Twelve Month EAF of 92% are those adjustments to the Capacity Purchase Price set
forth in Sections 11.1 (b)(1) and 11.1 (b)(2), and (ii) from the delay of Seller in achieving the
Milestones by the corresponding Milestone Dates set forth in Section 19.5 are thos se orth i
the Agreement is terminated pursuant to Article 18.
14.4 Nothing in this Article 14 shall relieve
payments that become or have become due pursu.,.... --....-
o -85- March 10, 1995
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ARTICLE 15 - PREPA's OPTION TO PURCHASE THE SELLER'S COMPLEX
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15.1 If a Permanent Abandonment under Section 1.107(b) occurs, PREPA shall have
the first option to purchase the Seller's Complex at a price agreed upon by the Parties, which
(20) Year
Ii) the appraised value of the
e lower than the Project Debt.
ce n r Section 20.1 exceeds twice the amount
value of any capital improvements (other than capital
he option to purchase the Seller's Complex at the
m the date of such improvements and (ii) the appraised value of the
'" ...."-L.~~ under Sections 6.12 and 19.9(b» depreciated on a twenty (20)
t in no event shall such purchase price be lower than the Project Debt plus
15.2
Days notice of its intent to purchase the Seller's Complex pursuant to the terms of this
'nitial q ity Capital (which Equity Capital will be reduced to zero (0) on a straight-line basis
shall be no less than the Project Debt but not greater than the appraised value 0 th
Section. Further provided that, if Seller reimburses PREPA within such sixty (60) Day period
Q r a eriod of forty-five (45) Years); provided, however, that PREPA shall give Seller sixty
Seller's Complex, but in no event shall
the lower of (i) the original cost of the Seller's Complex as
iri straight-line basis together with the value of any
\~ improvements paid by PREPA under Sections 6.1
Year straight-line basis from the date of suc
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in an amount sufficient to reduce the tracking account balance below twice the amount accrued
(J on Operation Security, PREPA's option shall lapse. In the event PREPA purchases the Seller's
Complex pursuant to this Section 15.2(a), PREPA shall assume all contractual obligations of
Seller relating to the Seller's Complex.
to become
and also shall assume
to purchase the Seller's Complex
vVJlnp.ex; provided, however, that
Nt:llVluat if, within such sixty (60) Day period,
the Term, Seller shall have the right to make such pricing
nergy Purchase Price such that said independent
op 'on under this Section 15.2 (b) shall lapse.
to the Seller of its intent to purchase the Seller's Complex, to establish the
artie shall have a period, which will not exceed six (6) Months after
In determining the appraised value of the Seller's Complex the Parties shall
o ider the price which would be obtained for the Seller's Complex in its then-current condition,
(b) If, after the twelfth (12th) anniversary of the Commercial Op
continued dispatch of the Facility is no longer economic an
determination of acceptability to be made in a non-arbitrary m
taking into account its profitability, and assuming a sale of the Seller's Complex in an arms-
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~~. economic for the remainder of the Term, PREPA shallv:. Complex at a price equal to the Project Debt plus t
O· t/~ all contractual obligations of Seller relating e
n -87- March 10, 1995
_._-,-.~-~'-
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length transaction between a willing seller and a willing buyer with an assumed closing date of
one hundred twenty (120) Days after the date of determination of the appraised value.
15.5 After the six (6) Month period pursuant to .section 15.3, if the Parties have not
agreed on the appraised value of the Seller's Complex, the case will be submitted to a voluntary
closing in immediately available funds, shall transfer the Seller's Complex
other than those in favor of the Project
The purchase price determined e un15.6
purpose of determining the appraised value of the Seller's Co pi
eminent domain process in a Court of Competent Jurisdiction. In this event, the Partl
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Complex consider the factors set forth in Section
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ARTICLE 16 INDEMNIFICATION
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16.1 Each Party shall indemnify and hold harmless the other Party and each of its
affiliates and each of their respective directors, officers, shareholders, partners, employees, agents
In
failure to
nt r c . es notice of any claim or cause of
In emnification and hold harmless from the
st give prompt written notice to the other Party
indemnification and hold harmless under the terms
ave control of the defense of any such claim or cause of
vented by any legal conflict of interest) including the selection of
addition to the counsel so selected, the Party being indemnified and
e entitled to be represented by counsel of his or its own choosing but, in
cost and expense of said additional counsel shall be borne by the indemnitee.
As of the Effective Date and for the Term, Seller shall indemnify and hold
16.2
less PREPA for any and all judgments and expenses (including reasonable costs and
and representatives and each of their respective heirs, successors and assigns from
contract, tort or otherwise to third parties for or on account of' j
action for which such Party elects
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death of persons or for damage to or destruction of prope
() out of or iu connection with such indemnifying .vttNolt._;)cv.¢ perform under this Agreement.
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attorneys' fees) required to be incurred hy PREPA as a result of claims of any nature whatsoever
(I -89- March 10. 1995
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incurred, PREPA may offset the amount of such expenses agains a
PREPA under this Agreement.
resulting from any environmental harm due to the actions of the Seller or Seller's agents or
employees in the design, planning, construction or operation of the Facility or arising as a result
of the presence at the Facility of pollutants, hazardous substances, materials or wastes in excess
of amounts and concentrations permitted by applicable federal or Commonwealth laws, rules or
regulations then in effect. In the event Seller fails to reimburse PREPA for such exp
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ARTICLE 17 FORCE MAJEURE
re met, Force Majeure events
, strikes, acts of public enemy, war,
s, ar quakes, storms, floods, civil disturbances,
to acts or failure to act of any governmental
17.2 Provided that the provisions 0
n Date failure of any subcontractor or supplier to perform
ould constitute a Force Majeure hereunder. The Force Majeure
n 17.2 shall not be construed as excluding any other event as long as
provisions under Section 17.1.
Except as otherwise provided in Section 17.4 hereunder or in Article 11, if either
IS rendered wholly or partly unable to perform its obligations under this Agreement because
orce Majeure, that Party shall be excused from whatever performance is affected by the Force
Majeure to the extent so affected, provided that: (i) the non-performing Party, within ten (10)
17.1 For purposes of this Agreement, Force Majeure means any cause beyond the
reasonable control of and not the result of the fault or negligence of the Party claiming the Force
Majeure. A Force Majeure shall excuse the performance of the Party claiming a Fo
event if such event causes the non-performance or inability to perform.
to whether a Force Majeure has caused a non-performance or inabili
Party claiming the Force Majeure. Except as provided in Se 0
be excused from performing hereunder and shall not b
extent the non-performance or inability to perforrrv~lIlp.
include, but are not limited to, the folIo
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Days after the occurrence of the Force Majeure, gives the other Party written notice describing
o the particulars of the occurrence and its estimated duration; (ii) the suspension of performance
be of no greater scope and of no longer duration than is required by the Force Majeure consistent
Majeure be excused as a result of the Force Majeure; and (iv) the non-performing
by the Parties are unable to agree upon the appointment of the third arbitrator
.~Ill~jl'I, in the sole
from the obligation to
s the other Party's claim of Force
r . ration in accordance with the following
expertise with respect to the claimed Force Majeure to serve as
f the Parties cannot agree on an arbitrator within ten (10) Days, each
hen appoint one person to serve as an arbitrator and the two thus appointed
all matters by majority vote; provided, however, if the two arbitrators appointed
as chairman of the panel of arbitrators; and such three arbitrators shall determine
shall select a third arbitrator with such special knowledge and expertise to serve
(1)
17.5
requirements:
17.4 Neither Party shall be excused by re,r-__ ---..:::-
make any payments, when due, to the other
Maj eure, such dispute shall be res ve b
require the settlement of any strike, walkout or other labor di u
with Prudent Utility Practices; (iii) no obligations of either Party which arose prior to the Force
judgment of the Party involved in the dispute, are contr
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with the prevailing rules of the American Arbitration Association for commercial
arbitration.
(3) The arbitrators shall have the right only to interpret and apply the terms and
conditions of this Agreement and to order any remedy allowed by this Agreement,
all be conclusive and binding
(50%) of the cost of arbitrator or
the arbitration, the Party claiming Force Majeure shall use
ligation shall not require the settlement of any strike, walkout or other labor
are contrary to its best interest.
dispute on terms which, in the sole judgment of the Party involved in the dispute,
ici r lew, except on the grounds of fraud
rt , consistent with Prudent Utility Practices, to remedy its inability to
or bias.
Any actual determination rna
but may not change any term or condition of this Agreement, deprive
signed by them within five (5) DaxD""'N":'_~--,__~
fact, conclusions of law and order, and s,.,..""....
The arbitrators shall give a written decision to
'RE!l'te~._aj)t<I resume in full its performance under this Agreement, provided that
(7)
(6)
(5)
(4)
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ARTICLE 18 - TERMINAnON
18.1 Termination of this Agreement shall occur only upon: (i) expiration of the Term
of this Agreement shall not discharge either Party hereto from any
exercised by
(7)(E); or (vii) any reason as
D tiveness of this Agreement is dependent
plex to be constructed in accordance with this
the other Party under this Agreement by reasons of any transaction, loss,
os , dam e, expense or liability which shall occur or arise (or the circumstances, events, or
ty (90) Days after the Effective Date, either Party may
of this Agreement as provided in Article 5; or (ii) mutual written consent of the Parties; or (iii)
the Development Abandonment, Permanent Abandonment or Permanent Closing 0
either Party, subject to the provisions of Article 19 hereof; or (v) del
Commercial Operation Date by sixty-three (63) Months after
due to a Force Majeure event, in such case the termi
PREPA, or exercised by either Party if the delaU /1"l'"'-L'<>11
Majeure; or (vi) termination by PREPA purs
specified in this Article 18.
. 0 which shall occur or arise) prior to termination. It is the intent of the Parties hereby that
""'"---_......<1111" such obligation owed (whether the same shall be known or unknown at termination or
whether the circumstances, events or basis of the same shall be known or unknown at termina-c'
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-95- March 10. 1995
tion) shall survive termination. Any indebtedness by either Party to the other shall be considered
o payable within ninety (90) Days of the termination of this Agreement. This Section 18.3,
together with Section 6.11, Article 16, Sections 24.4 and 24.7 shall survive termination of this
Agreement.
of the Permits and has
Effective Date, whether or not a
provided in Section 18.3 hereof with respect to prior
At any time, within thirty 30 Months of the Effective Date,18.4 (a)
other Party, except as provided in Section 18.3 hereof with respect to prior obligations it
ence required in pursuing its application for approval of the Permits.
that Seller can only exercise this right if it has used all reasonable
without liability to the other Party, except as provided in Secti
(\' ) At any time, after thirty 30 Months of the Effective Date whether or not
a~je re event has been claimed, if Seller has not obtained a Permit necessary for the
.on of Seller's Complex, either Party may terminate the Agreement without liability to
construction of Seller's Complex is finally denied, either Party m
thirty (30) Months of
efforts with the diligence required in pursuing its a
~ exhausted all reasonable appeals to reverse s'"
a./-. (b)
obligations it owes, provided that Seller can only exerci
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owes, provided that Seller can only exercise this right if it has used all reasonable efforts with
c the diligence required in pursuing its application for approval of the Permits.
(d) If the Agreement is terminated according to the provisions of this Section
18.4, Seller shall not be deemed to be in breach of this Agreement for such termination if Seller
(e) If the Agreement is terminated according to t
by Seller to PREPA or claimed by PREPA but pe_,__-"-.oL..
Additional Development Security, after retaining from s .
18.4, PREPA agrees to return to Seller any amounts remainin
approval of the Permits.
has used all reasonable efforts with the diligence required in pursuing its applic .on
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ARTICLE 19 - BREACH OF AGREEMENT, DELAYS AND SECURITY
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19.1 A breach of this Agreement shall be deemed to exist upon the occurrence of any
one of the following: (i) a Permanently Failed Milestone, as described in Section 19.5(c), (ii)
non-breaching Party shall provide the other Party with written notice
e prOViSions
ction 19.1 (i) above, PREPA shall
edies which may exist under this Agreement or
ther Party fails to respond in writing to the Notice of Breach, the non-breaching
REPA believes the Seller has breached this Agreement pursuant to
elie s he other Party has breached this Agreement pursuant to
1 .5 below as an exclusive remedy. This
r ch") thereof. If within fifteen (15) Days of the receipt of such Notice of
r Party disputes in writing that a breach by it has occurred, the Parties may attempt to resolve
the failure by either Party to perform in any material respect its obligations under thi,...,",,,,,,,,,,
the matter by any form of dispute resolution mutually acceptable. If the matter is not resolved
19.2 If Seller breaches this Agr
percent (70%) for any period of twenty-four (24) consecutive
of Section 19.3, or (iv) Development Abandonment, Perm
to a Permanent Abandonment under Section 1.107
#-.. prior notice thereof to PREPA) or Permanen
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-98- March 10, 1995
within sixty (60) Days of receipt of the Notice of Breach, either by admission that a specific
breach has occurred or by any other agreed solution, the Party serving the Notice of Breach may
pursue its remedies under this Agreement and/or under the law. In case the other Party admits
e breach or such cause within
edies under this Agreement and/or
Aggregate Development Security Amount
$20.00 per kW of Estimated Dependable Capacity
$15.00 per kW of Estimated Dependable Capacity
$10.00 per kW of Estimated Dependable Capacity
$5.00 per kW of Estimated Dependable Capacity
curity acceptable to PREPA)("Development Security"):
12 Months
resolution contemplated above determines that a breach has occurr ,t
,whic such issuing bank and letter(s) of credit shall be subject to
cause of such breach if the breach is one which by its nature c n
under the law.
in writing, or the resolution contemplated above determines that a breach (other th
that if the breach or such cause cannot be cured within
breach) has occurred, the breaching Party shall have a minimum of thirty (30) Da
the exercise of due diligence. If the breachi
Party shall be given an additional reasonable perio 0
such time period, the non-breaching Par m
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The Development Security required herein shall be maintained up to the Commercial Operation
Date. At such time Seller shall provide the Operation Security required under Section 19.6 and
the Development Security shall be returned to Seller.
19.5 (a) Seller agrees that the specific events set forth in the left hand column below (the
and subsequent Milestone Dates shall be extended on a day-fa -d
Milestone
LNG Purchase Agreement ObtainedConstruction Permit ObtainedCommencement of ConstructionCommercial Operation Date
Months, PREPA may, on the
pensation to PREPA for the detrimental impact caused
Milestone Date on PREPA's generation planning. Notwithstanding
ted herein, if Seller fails to meet the "Construction Permit Obtained"
e "Commencement of Construction" Milestone Date and then Seller is able
ommercial Operation Date within twenty-four (24) months after the "Construction
y, amount drawn by PREPA for failure to meet such two previous Milestone Dates:
-100- March 10, 1995
( .
(
Number of Days the Commercial OperationDate occurs after twenty-one (21) monthsfollowing the "Construction Permit Obtained"Milestone Date
Refund Percentage
80%60%40%20%O~
efault in the Milestone Date refers
of PREPA's termination right under
shall be entitled to request a number of
Months) to achieve such Commercial Operation
ollars ($2.00) per kilowatt of Estimated Dependable Capacity per
If any Milestone is achieved by Seller less than ten (10) months plus the
.:s 0 Days
.:s 30 Days and> 0 Days
.:s 60 Days and > 30 Days
.:s 90 Days and > 60 Days> 90 Days
onth requested by the Seller, as compensation for such delay in achieving the
the time of such request for extension: (i) shall demon-
(c) If after ten (10) months plus the Grace Months followi
ra e Months after the default on the applicable Milestone Date, Seller shall no longer be
applicable Milestone has not been achieved by Seller, such
such Milestone Date, except the LNG Purchase Agreement
as specified in Section 18.1(iv), without Seller
to the Commercial Operation Date, befo
Notwithstanding the previous sentence, in
shall be considered a Permanently Failed Milestone an
~ ._emed to be in breach for that particular Milestone Date, and PREPA shall no longer be entitled
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-101- March 10, 1995
to further draw by reason of that particular breach on the Development Security provided by
Seller under Section 19.4.
(e) PREPA's drawing on the letter or letters of credit (or other security
acceptable to PREPA) due to the delay by Seller in obtaining the Milestone Dates shall be
. g bank and letter(s) of credit
uaranty provided by KENETECH
Seller's partners, acceptable to PREPA
increasing thereafter at a compound annual
throughout the remainder of the Term, provided that if
ear prior to the tenth Agreement Year or a Twelve Month EAF of seventy
or more for every Billing Period during the last twenty-four (24) consecutive
eriods ending with the anniversary date of the tenth Agreement Year, no further
'lfI1~l.St tw 've (12) consecutive Billing Periods ending with the anniversary date
nth EAF of ninety-two percent (92%) or more for every Billing
s lation shall apply. For each subsequent Agreement Year, such escalation shall resume for
19.6 (a) Commencing with the Commercial Op
considered liquidated damages as to such delay, but shall not limit any other reco ry REP
as a result of a Permanently Failed Milestone.
delay in the event that PREPA terminates this Agreement in accor
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~ provide to PREPA, at Seller's sole expense, an unc
C\J: of credit issued by a local bank or any other
V- shall be subject to PREPA's approval, 0
an additional Year' at any time that Seller fails to achieve a Twelve Month EAF of seventy
-102- March 10. 1995
percent (70%) or more for every Billing Period during the previous twenty-four (24) consecutive
c Billing Periods. Provided that on January 1, 2000 and on every January 1 thereafter, Seller shall
increase the Operation Security by two dollars ($2.00) per kilowatt of Dependable Capacity if
a Court of Competent Jurisdiction
determines that the Operation Security
"611:n:~1~-.i4·her obtains the agreement of
such agreement or judgment, PREPA may draw
escrow account in a bank reasonably acceptable to Seller
draw from the escrow account and retain amounts equal to the
if any, determined to be due to PREPA and PREPA shall deliver to Seller
aining in the escrow account, if any. Drawing under the Operation Security shall
e exclusive remedy available to PREPA.
19.7 Any amount drawn by PREPA from the Development Security according to Section
t of damages is determined. Following such agreement or
(b) PREPA may draw from the Operation Secu .
19.5(b) above, shall be replenished by Seller within thirty (30) Days and, if drawn from the
a reliable supply of LNG to the Facility, consistent with industry standards, in
quality sufficient, when taken together with the design and usable storage capaci
upon such commencement, all such increase of the Operation Securi
breach of this Agreement under Section 19.1 (ii),~.--.,.
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above to offset any damages PREPA may be entitled
applicable period set forth in Section 19.3, pr
specifying the level of damages.
Seller to the level of damages or obtai
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-103- March 10. 1995
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Operation Security according to 19.6(b) above after the Commercial Operation Date, shall be
c replenished in the form of cash escrow, an unconditional and irrevocable direct pay letter(s) of
credit issued by a local bank or any other bank, which cash escrow, issuing bank and letter(s) of
credit shall be subject to PREPA's approval, or a parent company guaranty acceptable to PREPA
above after
. g in accordance with GAAP
o replenish the Operation Security.
a be ntitled to terminate and have returned to it the Operation Security
Should a Permanent Abandonment of the Seller's Complex occur under Section
~~'·+'·on 1 .6(a) above upon termination of the Agreement and after payment of
without PREPA being notified sixty (60) Months prior to such occurrence or if there
PREPA shall be entitled to invoke its remedies under this Agreement and/or under the law,
n owed to PREPA and resolution of any pending issues relating thereto..
(or other security acceptable to PREPA) by Seller from and to the extent of the net a:
period.
accounting firm, until full replenishment is
the Commercial Operation Date is not replenished wit .
PREPA, Seller shall provide PREPA with a mont':r.'-J~=
Subordinated Debt. If any Operation Security drawn accord' g
that the net after-tax cash flow from the
Security. The net after-tax cash flow shall not be reduced by
___ ~v&& ...&l be a Permanent Closing, the Seller shall be in default under Article 19.1 (iv). In such case,
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provided that PREPA shall also have the right, and the Seller shall permit PREPA, to operate the
Seller's Complex for a period of sixty (60) Months from the occurrence of such Permanent
Abandonment decreased by the actual number of Months between the date of notice to PREPA
of such Permanent Abandonment and the date operation of the Seller's Complex by Seller
actually ceases, or for a period of sixty (60) Months from occurrence of a Perman
that period ("PREPA's Operating Period"), including the correspon '
provided, that PREPA shall have and retain an option to pur a
time after the occurrence of a Permanent Abandonment o~~l'm
Section 15.1 hereof.
f the Seller's Complex and/or
mplex during PREPA's Operating
rticle 15.1 hereof. In the event PREPA does not exercise
e Seller's Complex is sold to a third party, PREPA shall receive
ale reimbursement for its payments to reduce the debt and for capital
pursuant to this paragraph~ provided that PREPA's right to receive such
shall be subordinate to the rights of the Project Lenders to receive repayment out
19.10 Upon any termination of this Agreement prior to the end of the Term described
in Article 5 hereof which is attributable to Seller's breach of the Agreement or Development
c -105- March 10, 1995
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Abandonment, Permanent Abandonment or Permanent Closing of the Seller's Complex or upon
termination under Section 18.2 or 18.4 hereof, Seller agrees to provide at no cost to PREPA
copies of all site related data, including without limitation, technical, environmental, geological,
seismological, licensing and permitting data in Seller's possession, excluding any' proprietary
design information relating to the Seller's Complex.
-106- March 10, 1995
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ARTICLE 20 TAXES AND ENVIRONMENTAL COSTS
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20.1 For purposes of this Agreement, "Taxes" shall mean any and all taxes, fees or
other charges of any nature, excluding income taxes and repatriation (tollgate) taxes, that are
"After Tax Debt
from laws, rules,
he Effective Date. "Post-Effective
r's operating expenses (other than debt service) and minus
repatriation (tollgate) taxes paid by Seller, incurred in connection
eller's Complex to (ii) debt service on the Project Debt. "Debt Level"
Equity Capital as required in Section 6.6(f). "Minimum Debt Service Coverage
mean a debt service coverage ratio used in the implementation of the Tracking
o .ent obtained by dividing Total Initial Debt by the sum of Total Initial Debt
rules, regulations or orders enacted, app ve
all fixed and variable costs incurred by Seller resulting from t e i
imposed or assessed on or as a result of the ownership or operations of the Seller's
implementing tax laws, rules, regulations or orders. "Environment
as a result of the ownership or operations of the Seller's
federal, Commonwealth or municipal governmental bodies or
bodies or agencies. "Post-Effective Date T
orders relating to the environment issued by federllv-,~m
"","--_~r'ULount created as per this Article 20 and calculated as follows:
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-107- March 10, 1995
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Debt Level (DL)
DL~ 0.850.85> DL> 0.80DL:s 0.80
Minimum Debt ServiceCoverage Ratio
1.31.3 + 2x(O.85 - DL)1.4
wHO h either (i) would also apply
the Facility and the LNG Terminal
its system or (ii) are Taxes applicable
ould cause the After Tax Debt Service Coverage Ratio
th " during the first twenty (20) Agreement Years the
ave resulted in the absence of such Changes ("Alternative Ratio"),
Debt Service Coverage Ratio or below the After Tax Debt Service
PA shall pay the necessary amount of such Changes to permit the
(b)
(a) Seller shall be responsible for all income taxes, repatriation (
f tHe After Tax Debt Service Coverage Ratio at a minimum equal to the Minimum
rv' e Coverage Ratio or the Alternative Ratio, whichever is lower. Such Changes
a ble by PREPA according to the foregoing shall be paid to Seller in equal monthly
to fall below
would have been owned and operated b . P
to fuel used by Seller to prov' e
in the payments of Taxes by Seller that are the result of the enactment of
Taxes and for all changes in Seller's Environmental Costs that ar
Taxes and Environmental Costs. Provided that, PREPA shall reimburse S
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Post-Effective Date Environmental Costs, all applicable to el
\\ operation of Seller's Complex for the purpose of the sa
~V,i. Output or Dependable Capacity (collectively calleC
a~to PREPA if a generation facility and LN e in
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installments due on the same dates and on the same terms as payments made under Section 11.2
c hereof.
(c) All such Changes paid by PREPA according to the preceding Section
20.1 (b), shall be recorded in an unfunded tracking account and shall accrue Interest. If at any
account at the end of the
........ ' .....AT1 ay retain up to fifty percent (50%)
r, PREPA shall have the option to extend the Term for up
cessary to repay such balance by applying such monthly retention
un, such amount shall be paid to PREPA according to Section 18.3. Notwithstanding,
th Agreement is so extended, the Capacity Payment for the twenty-third
u ng the Term of this Agreement and before any termination of this Agreement takes place,
(d) If there remams
twentieth (20th) Agreement Year, Seller
by such reimbursed amounts.
time during the first twenty (20) Agreement Years the Seller's current payment oblig .on f suc
contained in the tracking account sufficient to reduce the Afte
to the Minimum Debt Service Coverage Ratio, and the tr
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-109- March 10. 1995
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Seller shall have the option to prepay all or any portion of the balance of the tracking account
at any time or from time to time.
(e) Notwithstanding the foregoing, if Seller claims an amount under Section
20.1 (b) above that causes the tracking account balance to exceed twice the amount of the
federal income taxes in the
be inequitable as compared to the
e 0 negotiate in good faith the revision of
d discharge all lawful taxes, assessments and
d upon it or in respect of all or any part of its property or
yable in accordance with usual and customary business terms, and
vided, however, that Seller shall not be required to pay any such tax,
arge, levy, account payable or claim if (a) the validity, applicability or amount
",,'V&~labor r materials which, if unpaid, might become a lien or charge upon any
20.2
forfeiture or sale of any property of Seller or any material interference with the use thereof
Operation Security required under Section 19.6(a), PREPA shall have the option to
calculation of the After Tax Debt Servic
Seller's Complex pursuant to Section 15.2 (a).
c\\_~, of Fiscal Year audit, as provided in Section 6.8 hereof,
\J - the event that U.S. federal income taxes become an .
~ to the reasonable satisfaction of PREPA that
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(t) The Seller agrees that any financial impact at
C Date Tax or Post-Effective Date Environmental Cost paid by
-110- March 10, 1995
I
--r--,---------------------------------------------)
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by Seller and (b) Seller shall set aside on its books reserves deemed by it to be adequate with
respect thereto.
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ARTICLE 21 - INSURANCE
ability Insurance with bodily injury
$1,000,000 per occurrence. Such
rovisions in Article 16, broad form property damage
osion and collapse hazard coverage, products/completed
e applicable, watercraft protection and indemnity liability which may
(d) Excess Umbrella Liability Insurance with a single limit of at least $9,000,000
per occurrence in excess of the limits of insurance provided in subparagraphs (a), (b) and (c) above.
and property
insurance shall include,
$1,000,000; and
(b)
Commonwealth of Puerto
21.1 Except for the insurance described in Section 21.1 (e), Seller shall obtain or cause
its agent or its affiliate to obtain on or before the later of (i) the Financial Closing Date, and (ii)
the commencement of construction of the Seller's Complex, and shall maintain
Best rated insurance company or any other insurance providers reas a
such as Lloyds of London:
(a) Workmen's Compensation Insuranc
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(e) All risk physical damage insurance, including comprehensive boiler and
c machinery coverages, to cover all real and personal property of Seller (including earthquake and
hurricanes occurrence) to one hundred percent (100%) of replacement cost to the extent available
ve may be satisfied by Seller
uying a separate Excess Umbrella
u erlying coverage. The structure of the
mount of insurance meets PREPA's requirements
in Section 21.1 (b) above and any required Umbrella or
on the first "claims-made" policy shall be maintained on all
" currence" form policies if available on commercially reasonable
Builder's "All Risk" insurance on a "re(f)
.4 Seller shall cause its insurers to amend its Comprehensive or Commercial General
has "claims-made" form coverage, Seller shall notify PREPA and the
ility and, if applicable, Excess Umbrella Liability policies with the following endorsement
21.3
coverage is Seller's option, s
set forth in Section 2
purchasing primary coverage in the amo ts
Liability policy together with 10\ r . it
21.2 The amounts of insurance requir
by the Seller and subject to reasonable deductible
total cost of the Facility to the extent available on comm.e~fl{l
deductible which shall be the responsibility of the Seller. This policy of insur
on commercially reasonable terms as determined by the Seller and subject to a reasonable
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items (a) through (e) with respect to the Seller's Complex; and to amend Seller's Worker's
c Compensation and Automobile Liability policies with endorsement item (e):
(a) PREPA, its board of directors, its directors, officers and employees are
eing made by reason of (i)
.. :
mployees of one insured hereunder
b ,or (ii) damage to property belonging to
or may be made in the same manner as if separate
ed hereunder, except with respect to the limits of insurance
hereby waives all rights of subrogation against PREPA, its officers,
e case of non-payment of premiums) prior written notice to PREPA. All other terms and
conditions of the policy remain unchanged.
-renewed, or materially changed by the insurer without giving thirty (30) Days (ten (10) Days
interest of PREPA, its directors, officers, and employees, and 0
this Agreement; and
additional insureds under this policy to the extent of Seller's indemnity obligations elsewhere in
such insured against
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personal and/or bodily injuries suffered
is excess and not contributory with this insurance; and
~" (c) The following cross liability CI9U"~~C ~- language is made a part of the policy.
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21.5 Regarding breach of insurance warranties by Seller, all insurance policies under
c Sections 21.1 (b), (c) and (d) shall be endorsed, to the extent available on commercially reasonable
terms, as follows or with substantially similar language agreeable to the Parties: "The breach of
olicies will be provided
s) with respect to the Seller's
ance does not relieve Seller of the
obligations and liabilities under other
million dollars ($150,000,000), that will provide for the payment of
d suppliers and will guaranty the satisfactory completion of the project, on
anner that will allow Seller to comply with its obligations established under this
Under such bond(s) PREPA will be named as a dual obligee. Upon abandonment
eller's Complex by Seller and the Project Lenders, PREPA will have the first right but not
21.6 Seller shall cause its insurers or agents to provide P
under this policy." If Seller does not obtain the aforementioned endorsement, then e
any of the warranties or conditions in this policy by Seller shall not prejudice PREPA's right
. s contractor(s) for the construction of the Seller's Complex
er rmance bond(s), or similar guaranty acceptable to PREPA, of not
Days prior to Commencement of Construction, with the origi
Article 13 shall in no '"
Complex. Failure of PREPA to obtain
insurance requirements set forth
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~ evidencing the policies and endorsements listed above
.~ Section 2U(e), in which case certificates of insur'S}m~~l(]lX1C a/--- within thirty (30) Days following the effecti
the obligation to assume all rights and obligations of Seller under the construction contract,
c -115- March 10, 1995
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provided that if PREPA exercises said option, then PREPA shall execute any documentation
reasonably requested by the construction contractor evidencing PREPA's assumption of such
rights and obligations of Seller under the construction contract.
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ARTICLE 22 - ASSIGNMENT
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22.1 This Agreement shall not be assigned or transferred by either Party without the
prior written consent of the other Party, which consent shall not be unreasonably withheld. Any
greement, and further
terms and conditions of this
execute the appropriate consenting
this Agreement to the Project Lender(s): (a) the Project
sume or cause a nominee to assume all of the rights and obligations
r this Agreement on the same terms and during the same periods available to
e ers, in connection with any assignment
is greement and (b) the Project Lender(s) will have the right to cure defaults
t upon the occurrence of a default under the Project Lender(s)
22.3
22.2 Notwithstanding the above, the Seller may assign it n ts
provided that any such assignment is made e
Agreement between the Seller and PREP .
of its responsibility to carry out its duties and 07
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as collateral security, in order to obtain financing, provi
attempt to assign this Agreement without the prior written consent of the corresp
shall be void.
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-117- March 10, 1995
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ARTICLE 23 - QUALIFYING FACILITY STATUS
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23.1 The Seller hereby agrees that the Facility will achieve status as a Qualifying Facility
and/or are propitious to electric
the rights, duties, and obligations of the Parties under this
utilities, provided,
23.2 In the event the Facility loses its status as a Qual"
remain in full force and effect and the Seller
all other provisions of PURPA and the e
Notwithstanding the above, should the Seller be UnljlUl~~
on or before the Financial Closing Date with a sworn statement duly notarized by a
the Seller shall vigorously pursue and use reasonable eft!
pursuant to PURPA on or before the Commercial Operation Date. Seller shall provide PREPA
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ARTICLE 24 MISCELLANEOUS PROVISIONS
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t of the Parties hereto. Nothing in
reement shall not be interpreted or construed to create an association, joint
tnership between the Parties or to impose any partnership obligation or liability
a to any share or part of this Agreement or to any benefit
would be in violation of any law, rule, regulation, order, or policy
24.1 This Agreement, including the appendices thereto, can be amended only by
agreement between the Parties in writing.
24.2 The failure of either Party to insist in anyone or more
such right or any other right hereunder, which shall remain i
24.3 The headings contained in this Agreement
not constitute a part of the Agreement between the
in any manner in the construction of this Ag e
24.4 This Agreement is intended 01
"'"""-- ...,r ement or undertaking for, or act on behalf of, or to act as or be an agent or representative
of, or to otherwise bind, the other Party.c
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24.7 Cancellation, expiration or earlier termination of this Agreement shall not relieve
c the Parties of obligations incurred prior to, or as a result of, such cancellation, expiration or
earlier termination of this Agreement, which by their nature should survive such events, including
sources Department of Puerto
o cover applicable unemployment,
foregoing conditions are an essential
lcient cause to cancel this Agreement. If this cancellation
obligated to reimburse to PREPA all the payments received under
It
All subcontractors employed by the Seller shall also comply with the
ed certifications. The Seller shall be responsible for requiring such certification
(c)
(b) The Seller certifies and warraJ~:--UlLa
24.8 PREPA agrees to provide electric service to Seller as requested by
24.10 Each Party to this Agreement warrants that, except to the extent that a particular
24.9 (a) The Seller hereby certifies and warrants that at t
a subcontractors and notifying PREPA of such compliance.
provision of this Agreement expressly creates a different standard, it will be reasonable with
Rico required by the Puerto Rico Emplo
without limitation warranties, remedies, promises of indemnity and confidentiality.
to the Commonwealth of Puerto Rico.
its income tax return for the last five (5) Years, if required,
0J.?~'payments and does not owe any monies to the a r
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-120- March 10, 1995
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respect to the timing and substance of any exercise of its respective rights, obligations, duties and
c discretions in implementmg this Agreement, including, without limitation, the making of and
satisfying of requests, the issuance and withholding of consents and findings of acceptability or
satisfaction, the incurrence of costs that are the responsibility of the other Party, and the provision
24.11 This Agreement shall inure to the benefit of and be bindin
t either Party may have with
as the final expression of their
and exclusive statement of the terms of their
rein with respect to the Seller's Complex. Except for the
Seller to PREPA under Section 4.1(i) and the information to be
ns of every kind pertaining to the sale of Net Electrical Output and
pacity hereunder to PREPA by Seller are hereby superseded.
If any provision hereof shall be held invalid, illegal or unenforceable by any Court
ompetent Jurisdiction, such holding shall not invalidate or render unenforceable any other
......~rl1lo.·~"'''+··ons .6(e) and 6.21(c), all prior written or oral understandings, offers or
of notice to the other Party (and the Project Lenders if applicable).
PREPA and their respective successors and assigns.
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breach waived and shall not limit or otherwi
respect to any other or future breach.
24.13
r'- ~~/ 24.12 Either Party may waive breach by the other Pa
cJ on behalf of either Party of any breach of this Agreeme,nY'c'R061
a/- Party unless the waiver is in writing.
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provision hereof.
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ARTICLE 25 - CHOICE OF LAW AND VENUE
25.1 This Agreement shall be governed by, construed and enforced in accordance with
the laws of the Commonwealth of Puerto Rico and, to the extent applicable, the laws of the
United States of America.
25.2 Unless otherwise specified in this Agreement, the venue for
shall be in a Court of Competent Jurisdiction.
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c IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
as of the date first above written.
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ATTEST:
By: _..::::::..~.-c....__=--__--\-__Title: Managing Director
Enron Development Co
ATTEST:
-123-
ECOELECTRICA, L.P.
March 10, 1995
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APPENDICES
APPENDIX A - DESIGN LIMITS
cI. Objective
III.
C~' A.B.
/ ..,-/ C.d/'/--'D.
E.F.
C G.
Immary Normal Start and Loadingf ac .ty arts: Hot Start, Warm Start and Cold Start.
fi ed in Appendix G. Each of these charts indicatesn tion .of time and provides the Preliminary Ramp
w er minute ("MW/min"). Revised Ramp Rates wille . ements of Section 1.128.
Ramp Rates
Generator Step-Up Transformers ("GSU") Impedance(OGSU Connection and Winding:Generator Reactances (X"d) (%):Generator Short Circuit Ratio:Generator Kilowatt Rating (kW):Generator Kilovar Rating (kVAr):Excitation System:
Design Limits
This Appendix includes threeCharacteristics for each of the t eeHot Start, Warm Start and Col St tarethe Facility's Percent of te L dRates for the Facility i 1
be provided in acco a e
This Appendix specifies the Design Limits applicable to the Facility for the purpose ofAutomatic Generation Control inc,luding Ramp Rates.
The following are preliminary Design Limits for each Unit of the Fare identical to those identified as Approved Criteria in Appendix
II.
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-124- March 10, 1995
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f)
60
()i)f)t"'ji)
20 30 40
Time from Initiation (Minutes)
Preliminary Normal Start and Loading CharacteristicsHot Start «1 Hour After Shutdown)
10
()i)
O ' I I Y I I , I I (#I < < I I I1 Y > >
o
100 -- ......- £ q.' .i 7 7 I 7< 51
80
"'C~0
..J"'C 60Q)......~
0:::\f-0
......c 40~~
Q)a.
20
n
i~
I
!)
150
nnnn
IRamp Rate=2 MW/min I •
60 90
Time from Initiation (Minutes)
i)
30
Preliminary Normal Start and Loading CharacteristicsWarm Start (1 - 12 Hours After Shutdown)
~ IRamp Rate=21.5 MW/fnin
nn
o I I: I I I I , I I I I II I <I" I I ,r r 7 7
o
100 ~ I (I AI \ 7 Y 7 <: :::::>.
80
20
'+-o
"'Ccoo
....J"'C 602co0::
......c~ 40'-Q)a.
(\
i~
I
I
I1j
250
~CiD1:-)
IRamp Rate=5.5 MW/min I ~
(J
100 150
Time from Initiation (Minutes)50
Preliminary Normal Start and Loading CharacteristicsCold Start (>12 Hours After Shutdown)
( ).J
... I Ramp Rate=21.5 MW/min
Io I I I ) ! !
O ~.I~---LI-----J-..L--L.---.l-.l--.-L--L I! I I I I I J J I I I I) IIr 7' 7/) IJ I I
r/
20
80
\f-o
100 ~ ~ I I •I J I 7<: I i
"'CctSo
...J"'C 60a>....ctS0::
....c~ 40L-
a>a.
()
;~
I
I
APPENDIX B - HOLIDAYS
The following holidays are recognized by PREPA. All holidays which fall on a Sundayare observed the following day, Monday:
CELEBRAnON
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January 1
January 6
2nd Monday in January
3rd Monday in January
3rd Monday in February
March 22
Friday of Holy Week
3rd Monday in April
Last Monday in May
July 4
3rd Monday in July
4th Monday in July
July 25
New Year's Day
Three Kings Day
E.M. de Hostos
Martin Luther King
George Washington
Good Friday
Labor Day
Columbus Day
Veterans Day
Thanksgiving Day
Christmas Day
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APPENDIX C - EAAF CALCULATION EXAMPLES
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-129- March 10, 1995
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() () ,r 0 C) ,~ ('; (\') ,;
Appendix C- Equivalent Availability Factor Examples
Example 1 r ( ,J \~First Agreement Year
um.AH Derated Capac. Derated I IAccum. EDH I IAccum. PH I I Monthly Capacityont Reduction (MW) Hours EDH 12 month PH 12 month EAF Pavrnent
Jul
I0.0 85.0 85.0 744.0 744.0 88.58% 98.22%
Aug 20.0 0.0 85.0 744.0 1488.0 97.31% 100.00%Sept. 10.0 14.3 99.3 720.0 2208.0 96.63% 100.00%
Oct. 40.0 70.0 288 .0 4.3 103.6 744.0 2952.0 94.05% 100.00%Nov. 0.0 70.0 3602. 0.0 103.6 720.0 3672.0 100.00% 100.00%Dec. 0.0 70.0 4346.0 0.0 103.6 744.0 4416.0 100.00% 100.00%Jan. 0.0 70.0 5090.0 200.0 303.6 744.0 5160.0 73.12% 70.74%Feb. 0.0 70.0 5762.0 210.0 513.6 672.0 5832.0 68.75% 62.00%Mar. 500.0 570.0 6006.0 0.0 513.6 744.0 6576.0 32.80% 0.00%Apr. 0.0 570.0 6726.0 0.0 513.6 720.0 7296.0 100.00% 100.00%May 35.0 605.0 7435.0 513.6 744.0 8040.0 95.30% 100.00%Jun. I 0.0 605.0 8155.0 :' 13.6 720.0 8760.0 100.00% 100.00%
lEAF First Agreement Year = 87.23% I
AlI - Available HoursOH - Outage HoursEDH - Equivalent Derated HoursPH - Period HoursEAF - Equivalent Availability Factor
JulAug.SepOct
70.050.00.050.0
675.0705.0695.0705.0
8085.08055.08065.08055.0
100.0230.5
0.00.0
50.0450.0
0.00.0
10.8225.00.00.0
89.14%63.04%84.64%84.58%
96.42%39.61%89.79%89.66%
IEAF First Agreement Year = 91.04% I
AH - Available HoursOH - Outage HoursEDH - Equivalent Derated HoursPH - Period HoursEAF - Equivalent Availability Factor
JulAug.ScpOct
70.050.00.050.0
635.0665.0655.0705.0
8125.08095.08105.08055.0
100.0230.5
0.00.0
50.0450.0
0.00.0
10.8225.00.00.0
89.14%63.04%87.93%87.36%
96.42%39.61%94.89%94.03%
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APPENDIX D - FUEL COST CORRECTION CURVE
1. Objective
This Appendix sets forth the procedure to develop several Fuel Cost Correction Curves
Section 1.67.
a percent, the numerator of
ur i, is defined as that quantity the
such hour i ("HRt) at SCO j and the
t 100 percent of Dependable Capacity ("Baseload
SCO,PDC,=--xl00%
DC
HR,FCCF, Base/oad Heat Rate
A. The derived thermal performance data will reasonably reflect actual operation for
each operating configuration.
The abscissa of the FCCC is the Percent of Dep
configuration including combined-cycle operation with two (2) combustion t rbines,
Dependable Capacity ("DC").
(collectively "FCCCs" or individually "FCCC"). A FCCC will be developed for
ordinate of the FCCC is the Fuel Cost Correction Facto II
The PDC j for each hour i, is defined as that qu
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B. Characteristics will be represented in the form of an equation or equations which
CIbest fit the operating data. The FCCC equation(s) will be either second or third order polynomial
equation(s) derived to describe the FCCF as a function ofPDC. A piecewise curve fit is allowed.
Preliminary FCCCs are derived from engineering design data.
ler's selection of gas turbine
letion of the detailed design of the
e the revised preliminary Fuel Cost Correction Curve,
configuration of the Facility in accordance with the
will be conducted for various capacity outputs over the operating range of the
In order to represent steady state conditions the minimum run at each point, following
....~ .... ,.,........ be"used throughout the remainder of the Term of the Agreement
A. Preliminary FCCCs
III. Procedure
B.
are performed at various capacity outputs over the operating range
Cost Correction Curve, which will replace the prelimin
performance data. A preliminary FCCC is attached to this A
on Appendix D, will be derived within sixty (60)
and steam turbine equipment for the Facili
Facility.
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unit stabilization, will be one (1) hour. During this period, all plant systems consistent with
normal operations will be functioning and there shall be no process steam extraction.
1. The Dependable Capacity and Baseload Heat Rate will be derived during
performance testing.
the
The
usmg two (2) combustion turbines the
(D), the Facility's Heat Rate (HR) is 9,060 Btu/kWh. At this
For each operating configuration, one test will be
/kWh -:- 7,500 Btu/kWh), based on the preliminary FCCF curve.
2.
Assume
Example:
Dependable C
ility s DC is 50.0 percent (230,500 kW -:- 461,000 kW) and the FCCF50,o% is
3. For each test, the PDC j will be the
this period divided by the net
change in FCCF at 0.05 or less.
maximum interval of 10 percent of Dependable Capacity or such lesser inte
The resulting heat rate (HR j) correspondin be the gross fuel consumption over
Minimum Dispatch Level. Additional tests will be conducted at various c
Interconnection Point divided by the time increment e re
one-hundredth (1/1 00) of an hour, with the resulti
'-
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n-;')C)()
EcoElectrica. L.P
,')~O
( )
(IFUE ~rvel
.... I ,
~~:--//7//(/A-- ~v
f~VA- I"---- v~M V/p-I-'-
~ ;jv/,/\\-l-I-
l- V
~<~) )/I- <l- I"->-I- '-~<t'0I--l-I-
>-<",~"~/: /l-
I-I-
>-~V/L//(l-
I- ....... ~l-
I-
~ C//V0AI->-
r...........>-I-- ~ (/ //~>-
~I--I-
'-
~ /~;;;)- <- ----'-
- ~r-~VI /)Spinning Reserve
- I-'-
= ~;::VHili 11°11 I1II IIII IIII IIII IIII I11I IIII I 1/ I1II I1II IIII
.... ....
}
f)
0.9540
1.60
1.55
1.50
LL 1.45()()
1.40u.........'-
~ 1.35<Uu..c: 1.300
t51.25~
'-0() 1.20....UJ0() 1.15Q)::Ju.. 1.10
1.05
1.00
Percent of Dependable Capacity
APPENDIX E - INTERCONNECTION
Seller shall provide the following information to PREPA within ninety (90) Daysfollowing the Effective Date. Data submitted in a preliminary or estimated form shall beupdatedwithin thirty (30) Days after final equipment arrangements and specifications are established.
1. Electrical one-line diagram of the Facility.
10% - 14%
b if the actual data provided by Seller
0.5 - 0.75
150,000 - 190,000
150,000 - 220,000
176,500 - 223,500
18kV(Wye) - 230 kVDelta
14.5% - 16.5%
Explanation of proposed equipment protection and control scheme (functionally on the one-line diagram).
Preliminary equipment layout and arrangementup transformers (GSU).
2.
3. Site plan showing plant layout, propertyboundaries.
4.
5. Reactive Power Capacity curve of gener
7.
8.
9.
10.
b. Steam Turbine Generator 176,500 - 258,800Kilovar rating,
13. Explanation of the excitation Brushresssystem,'
r<--
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Cf1 6. Station auxiliary load.
Items 7 through 12 below shall be d~_ falls within the approved specifications.
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14. Additional data necessary for initial transient stability study. At a minimum:
QF status obtainedEngineering 30% completeOne-line diagram approvedFinancial Closing DateMajor licenses/permitsMajor material procureStart constructionEngineering 70% cUtility technical su I
Operating pro esStart test -upStart ga tUF ine #1Start s bl #2R ea t
I s
Inertia Constant, H of turbo generator shaft.Stator resistance of generator (R).Direct axis and quadrature axis open circuit transient time constants.Generator saturation curves.IEEE Mechanical System Model covering speed governing and turbinetime constants and gains.
Project schedule (I-J or bar chart format) including butmilestones:
Seller's requirements for power supplied by PREPA during constructior 15.Cup.
16.
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APPENDIX F - INTENTIONALLY OMITTED
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APPENDIX G - START-UP REIMBURSEMENT
PREPA shall reimburse Seller for costs incurred by Seller in restarting any Unit of theFacility that was shut down due to PREPA's request. Reimbursement shall be made during eachMonth in accordance with the following formula:
(NCS x $CS) + (NWS x $WS) + (NHS x $HS) + Applicable Demand Charge
where the following terms have the following meanings:
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"ApplicableDemand Charge"
"$CS"
"Cold Start"
"Demand Charge"
"Hot Start"
"$HS"
The difference between the actual Deby PREPA and the Demand Chademand established by Seller in eBilling Period in restarting a nitboth units at the request of
rt of a it, which amount shallnm~~lU 1, 1995 and on the first day~l'rif~ltthljl: Term by multiplying such
Escalation Factor, determined
s been shutdown for more than twelve
f a Unit that has been shutdown for less than one hour.
$2,000, being the cost per Hot Start of a Unit, which amount shalle adjusted annually beginning January 1, 1995 and on the first day
of each subsequent Year during the Term by multiplying suchamount times the Fixed Cost Escalation Factor, determinedaccording to Section 11.1(b)(6).
the number of Cold Starts of Units during such Month that are thefirst occurring restarts after a shut down requested by PREPA.
the number of Hot Starts of Units during such Month that are thefirst occurring restarts after a shutdown requested by PREPA
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"NWS"
"Unit"
"$WS"
"Warm Start"
the number of Warm Starts of Units during such Month that are thefirst occurring restarts after a shutdown requested by PREPA
one of the two gas turbines that are part of the Facility.
$5,000, being the cost per Warm Start of a Unit, which amountshall be adjusted annually beginning January 1, 1995 and on thefirst day of each subsequent Year during the Term by multiplyingsuch amount times the Fixed Cost Escalation Facto eterminedaccording to Section 11.1(b)(6).
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APPENDIX H • BTU TRACKING ACCOUNT ADWSTMENTS
1.0 Changes to the Initial Btu Tracking Account Balance (BTABo) shall be made at
the end of each Billing Period as follows:
1.1 If in any Billing Period the beginning Btu Tracking Account Balance is greater
as follows:
ce to Section 11.1 (a)(3)C.
cking Account Balance is greater than zero, then
- TDL - PSK) X 7500 X ACF
Decrease the beginning Btu Trac
If Interim Btu Tracking Account Balance is less than or equal to
e Ending Btu Tracking Account Balance
(i)
(iv) Calculate the Monthly Fuel Credit (MFC) in kwh's as follows:
(a) The Net Electrical Output (NED) is greater than the
BTAB j = BTABo - (PSK X 7500 X ACF
ACF = Average Correcti
than or equal to zero and if:
where:
(TDL), then:
decrease Interim Btu
where:
If the Ending Btu Tracking Account Balance is greater than zero then:
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MFC (kwh's) = (BTABo - BTABE)/(7500 X ACF)
Otherwise:
MFC (kwh's) = BTABo /(7500 X ACF)
(b) The Net Electrical Output is less than the Target Dispatch Level and equal
to or greater than the Minimum Dispatch Level, then:
Btu Tracking Account Balance as follows:
FC (kwh's) = 0
e Net Electrical Output is less than or equal to the Maximum Dispatch
(ii) MFC (kwh's) = 0
(i) BTABE= BTABo
(i)
The Net Electrical Output (NEO) is less th,nvll'<1 .....
(i) BTABE = BTABo
(ii) MFC (kwh's) = 0
an or equal to the Target Dispatch Level, then:
(c)
BTABE = BTABo + (MDL - NEO
(ii)
1.2
(MDL), then:
if:
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(c) The Net Electrical Output is less than the Target Dispatch Level and equal
to or greater than Minimum Dispatch Level, then:
0) Increase the Btu Tracking Account Balance as follows but not
greater than zero:
I enm Btu Tracking Account Balance is greater than or equal
onthly Fuel Credit and Ending BTABE as follows:
(ii) MFC (kwh's) = 0
(ii)
(i) Increase the Btu Tracking Accou
BTABE = BTABo + «TDL - NEO) X 7500 X ACF)
(d) The Net Electrical Output is less than the Min'
BTAB 1 = BTABo + «MDL - NEO) X 7S
Set the Initial Btu Tracking Account Balance (BTABo) for the next Billing Period
Ending Btu Tracking Account Balance (BTABE) for the current Billing Period,
calculate the Monthly Fuel Credit and incr as
follows, but not greater than zero:
to zero, then
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-144- March 10, 1995
Net Electrical Output (NEO)
Maximum Dispatch Level (XDL)
Target Dispatch Level (TDL)
Minimum Dispatch Level (MOL)
Availability
Capacity Factor
Average Correction Factor (ACF)
,240 239,646,240 239,646,240 239,646,240 239,646,240 239,646,240 239,646,240 239,646,240
'--_\..._- 195,500,880 195,500,880 195,500,880 195,500,880 195,500,880 195,500,880 195,500,880
70,274,960 170,274,960 170,274,960 170,274,960 170,274,960 170,274,960 170,274,960
5,~,OOO 298,728,000 315,324,000 165,960,000 165,960,000 248,940,000 165,960,000 199,152,000
,-,(~ () (~ ",I )
J
Maximum Percentage
\C~76.0%
Target Percentage 62.0%
Minimum Percentage 54.0%
Expected Availability 92.0%
Maximum Positive Balance 800,000
Maximum Negative Balance (400,000)
May-98 Jun-98 Jul-98 Aug-98 Sep-98 Oct-98 Nov-98 Dec-98
BP5 BP6 BP7 BP8 BP9 BP10 BP 11 BP12
95.0% 95.0% 95.0% 95.0% 95.0% 95.0% 95.0% 95.0%
80.0% 90.0% 95.0% 50.0% 50.0% 75.0% 50.0% 60.0%
1 1 1 1 1 1 1 1
/')/!
232,078,464 239,646,240 239,646,
189,327,168 195,500,880 195,500,
164,897,856 170,274,960 170,274,960
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Dependable Capacit
Energy Purchase Pri,
Spot Fuel Cost (SIMM
Delivery Volume (MMBtu'~Storage Capacity (MMBtu's)
Period Hours
Beginning BTAB (MMBtu) 0 240,974 522,276 (195,760) (400,000) (178,443) 0 (69,703) 0
Ending BTAB (MMBtu) 240,974 522,276 800,000 (400,000) (178,443) 0 (69,703) 0 0
Monthly Fuel Credit (MFC) 0 0 0 3,651,120 4,314,960 4,314,960 0 4,314,960 0
PREPA Selected kWh's (PSK) 0 0 0 0 0 0 9,293,760 0 0
Monthly Energy Payment (Sect. 11 3,227,051 3,332,281 3,332,281 3,825,952 3,247,837 4,871,756 3,247,837 3,897,405
Nominal Energy Payment (NEO) 2,598,270 2,598,270 2,598,270 3,897,405 3,247,837 4,871,756 3,247,837 3,897,405
12130194 10:29 AM TRACKACT.WK4
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APPENDIX I - SCHEDULED OUTAGE PROGRAM
Scheduled Outages shall not exceed the amounts set forth below.
Annual Maintenance
Major Overhaul Year (Every 4-6 years)
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240 Hours
432 Hours
240 Hours
1008 Hours
Per turbine, one turbine shutdown at a time.
Complete shutdown
(no electric output)
c -146- March 10, 1995
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APPENDIX J .. EXAMPLES OF PERMANENT FINANCING ADJUSTMENT
Example 1 Project Debt term of 18 years, 18th year Adjustment
Adjustment = DTDS ETDS
$7.83/kWm
$7.83/kWm
ETDS
$1050/kW$1050/kW
$1050/kW$1050/kW
$1050/kW$1050/kW
$7.83/kWm
ETDS
ATDS x $1050/kWAPFA
$45.688 MM x461 MW x 12 Months
$8.26/kWm x 1
Pro' ect Debt term of 18
DTDS
ATDS x $1050/kW ETDSAPFA
$40.606 MM x461MW x 12 Months
=
=
=
Pro ct Debt term of 23 years, 20th year Adjustment
= + $0.43/kWm
=
= ATDS x
=
=
=
Example 2
Adjustment
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$7.83/kWm
ETDS
ETDS
$7.83/kWm
$O/kWm
x $1050/kW$1050/kW
ETDS
ATDS x $1050/kWAPFA
$O/kWm
Lt61MW x 12 Months
$O/kWm x 1
.. $OMM
=
=
=
=
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= $7.34/kWm x 1 $7.83/kWm
= - $0.49/kWm
CExample 4 Project Debt term of 23 years. 21st year Adjustment
Adjustment = DTDS ETDS
= ATDS x $1050/kW ETDSC APFA
= $40.606 MM x $1050/kW461MW x 12 Months $1050/kW
= $7.34/kWm x 1C
fJ-+ $7.34/kWm
Example 5 Pro' ect Debt term of 20Adjustment
C ~ Adjustment = DTDS
= ATDS x
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GLOSSARY
Monthly Deemed Total Debt ServiceMonthly Expected Total Debt ServiceMonthly Actual Total Debt ServiceActual Permanent Financing AmountKilowattMillionMegawattKilowatt - Month
DTDS =ETDS =ATDS =APFA =kW =
MM =MW =kWm =
Note: The ATDS will be calculated as of the Commercial Operatiovalues are merely estimates that are intended to illustrateto the ATDS when it is actually determined.
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APPENDIX K - ENERGY PRICE INDEX COMPONENTS
c1. ENERGY PRICE INDEX
s er Price Index For All Families and Revised Wage~rfniHies in rto Rico, as published by the Puerto Rico Bureau of Labor
epartment of Labor and Human Resources.
EPI = (ri fro x
r = PR-CPI
ri =
ro = PR-CPI base value
g =
gi =
go =
Index" = the average of the thirty-six (36) values representing"'t11'~LeW rk Mercantile Exchange ("NYMEX") closing prices on the last three
trading Days of the NYMEX natural gas futures contracts for each of thet el (12) Months of the prior Year or, if such values are not available, aneqUIvalent measure agreed by the Parties which averages U.S. monthly spot gasprices traded on a national objectively verifiable market, or such other index asthe Parties may agree.
The Energy Price Index "EPI" will be used to adjust the Energy Purchase Price. The baseEnergy Purchase Price as of January 1, 1994 is $0.01957/kWh. The base Energy Purchase Pricewill be adjusted on the first day of each Year during the Term by the Energy Pri dex. TheEnergy Price Index equals the sum of (i) the change in the Puerto Rico Consumer ri IndeFor All Families (the "PR-CPI") from the base value on January 1, 1994, mu . lied by 0° d(ii) the change in U.S. Spot Gas Index from the base value reported for the e~a mu . Iiby 50%. The values reported for the PR-CPI and U.S. Spot Gas Index for th a 'mm 'a elyprior to the date of adjustment shall be used to adjust the EPI. Exp s d ma e a 'ca (withterms defined in the text and table below):
Where:
and:
and:
and:
o ithstanding the above, Seller shall use commercially reasonable efforts to provide other__'~udices acceptable to both Parties in place of the base indices described in clauses (i) and (ii)
above. An EPI containing solely indices provided by Seller that fall within the percentage limits
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c -150- March 10, 1995
_._--,--._--------
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specified in the table, will be deemed to be acceptable to both Parties. Expressed mathematically(with terms and values defined in the table and its footnotes):
c EPI = (ri Ira x R) + (Sj Iso X S) + (ei leo x E) + (gj Igo x G)+ (Pi Ipo x P) + (Ii /1
0x L) + (fOoI994) x F) + (c j Icox C)
Where: R + S + E + G + P + L + F + C = 100%
INDEX WEIGHTTOTAL "EPI"
S
R ~
f 35% if 1.025 < f~
< 50% if 1.02 < f <1.025F < 75% if 1.01 < f <1.02F ~ 100% if 1.00 < f < 1.01
C ~ 100%
g
e
TERMS 1
s
r
P
a specific year in the future. The subscript "0" indicates the base value of the. 1994) is an exponent indicating the power to which the factor "f' will be
combined total Index Weight of the two indices, No.2 Fuel Oil and No.6 Fuel Oil, used in anycombination cannot exceed 25%, that is P + L ~ 25%. The combination of either or both of these indicestogether with a U.S. Spot Gas index cannot exceed 40%, that is, P + L + G ,5, 40%.
total Index Weight of the two indices, PR-CPI and US-CPI, used in any combination cannotex ed 5 at is R + S ~ 35%. The combination of either or both of these indices together with aFixe in ex between 2.5% and 3.5% per year cannot exceed 35%, that is, R + S +F ,5, 35%, when 2.5%<F,5,3.5O!J .
Coal
(1)
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CINDEX
PR-CPI2
C US-CPI2
Florida Electricity
U.S. Spot Gas3
No. 2 Fuel Oie
No. 6 Fuel Oil3
Fixed (up to 3.5% peryear, that is 1.035)2
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APPENDIX L - INTENTIONALLY OMITTED
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APPENDIX M - CAPACITY TEST PROCEDURES
underfrequencywill be input to
ObjectiveThe purpose of the test is to set the Dependable Capacity and Spinning Reserve Capacity
of the Facility.Test Duration
On the day of testing, the Dependable Capacity test period shall be eight (8) hours andshall be between 10:00 a.m. and 12:00 p.m. In addition, a one (1) hour test of the SpinningReserve Capacity shall be completed during the Dependable Capacity Test.
Test ConditionsThe Facility shall be in its normal base-loaded operation mode with he vo e re
and governor in service, but not on Automatic Generation Control. The proc s~ 10 s allapproximate normal operating conditions for the Facility. All aJ co ~~~s all beoperated within their design pressures, temperatures, and flow r e ec s safety andenvironmental equipment shall be in service.
The Spinning Reserve Capacity Test shall be perfordisturbance in the PREPA system. A frequency drop sithe speed relays of the governor control of the Facilione-half (1 1/2) seconds. The response required ifiring temperature of the ,~ombustion turbines frReserve Capacity set by Seller pursuant to tl Ieavailable within five (5.0) seconds of the s rt f tsustained for one (1) hour.Test Verification
During the capacity tests, Itical s re, e eratures, and flow rates along with theelectrical loads shall be record ~astou ly copies of the records provided to PREPA.Witnessing
PREPA may provi 0 -SI w· e e at its discretion.Declaration of De en I a . d S mnin Reserve Ca aci
Upon compl 1 of i tests, Operator shall declare the Dependable Capacityand Spinning Re v p Ity 0 e Facility provided that the Dependable Capacity andSpinning Res e a set by such declaration shall be based upon actual operation of theFacility during t ts described in this Appendix. The Dependable Capacity declaredby Oper or at Ie equal to or less than the average output results of the DependableCapacity st. tor s all notify PREPA of the Dependable Capacity and Spinning ReserveC Cl ance with Article 3.
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