EXHIBIT 10.52-01 FIRST AMENDED AND RESTATED INTERCONNECTION AGREEMENT

EXHIBIT 10.52-01

 

FIRST AMENDED AND RESTATED INTERCONNECTION AGREEMENT

 

DATED OCTOBER 9, 2003

 

BETWEEN

 

EL PASO ELECTRIC COMPANY

 

AND

 

PUBLIC SERVICE COMPANY OF NEW MEXICO

 

FIRST REVISED SERVICE AGREEMENT NO. 47

 

SUPERSEDING ORIGINAL SERVICE AGREEMENT NO. 47

 

UNDER EL PASO ELECTRIC COMPANY

 

FERC ELECTRIC TARIFF ORIGINAL VOLUME NO. 1

 

EFFECTIVE DATE: OCTOBER              , 2003

Table of Contents

 

 

 

 

 

 

 

FIRST AMENDED AND RESTATED INTERCONNECTION AGREEMENT

 

This First Amended and Restated Interconnection Agreement (as defined below, “Agreement”) is made and entered into as of this 9 ^th day of OCTOBER, 2003, by and between El Paso Electric Company (“EPE”), a corporation organized under the laws of the State of Texas, and Public Service Company of New Mexico (“Generator”), a corporation organized under the laws of the State of New Mexico.

 

W I T N E S S E T H

 

WHEREAS, EPE is engaged in the transmission and distribution of electric energy in the States of New Mexico and Texas;

 

WHEREAS, EPE owns and operates the new Afton Switching Station near Afton, New Mexico and 345 kV transmission lines from the existing EPE Transmission System to Afton Switching Station;

 

WHEREAS, EPE and Generator have entered into an Interconnection Agreement on May 23, 2002 (“Interconnection Agreement”);

 

WHEREAS, Generator has constructed, owns and operates an electric generating facility (as defined below, “Facility”) located near Afton, New Mexico;

 

WHEREAS, in accordance with the Interconnection Agreement, Generator has constructed the new Afton Switching Station and 345 kV transmission lines from Afton Switching Station to EPE’s existing transmission system;

 

WHEREAS, in accordance with the Interconnection Agreement, Generator has interconnected the Facility with the EPE Transmission System at the Afton Switching Station;

 

WHEREAS, this Agreement does not provide for transmission, distribution or ancillary services and separate arrangements are required for such services; and

 

WHEREAS, EPE and Generator desire to amend and restate the Interconnection Agreement by allocating the costs of interconnection facilities in accordance with FERC policy as set forth herein.

 

NOW, THEREFORE, in consideration of the premises and mutual covenants set forth herein, the Parties agree as follows:

 

Article I

DEFINITIONS

 

For purposes of this Agreement, the following terms shall have the following meanings.

 

1.1

“Abnormal Condition” means any condition at the Facility, on the Interconnected Facilities, on the EPE Transmission System, or on the transmission system of other utilities which is outside normal operating parameters such that facilities are operating outside their normal ratings or reasonable operating limits have been exceeded and would result in an Emergency if these conditions continue. Any condition or situation that results from lack of sufficient planned generating capacity to meet load requirements or that results solely from economic conditions shall not, standing alone, constitute an Abnormal Condition.

 

1.2

“Affiliate” means, with respect to any Person, any other Person (other than an individual) that, directly or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control with, such Person. For this purpose, “control” means the direct or indirect ownership of fifty percent (50%) or more of the outstanding capital stock or other equity interests having ordinary voting power.

 

1.3	“Afton Switching Station” means the 345 kV substation constructed by Generator, and owned and operated by EPE near Afton, New Mexico as depicted in Appendices B and E.

 

1.4	“Agents” means the officers, directors, shareholders, employees or agents acting on behalf of a Party or group of Parties.

 

1.5	“Agreement” means this First Amended and Restated Interconnection Agreement between EPE and Generator, including attachments, exhibits, and appendices.

 

1.6

“Applicable Laws and Regulations” means all applicable federal, state and local laws, codes, ordinances, rules and regulations, and all duly promulgated orders and other duly authorized actions, as amended from time to time, and whether now existing or hereafter enacted, promulgated, entered or otherwise arising, of any Governmental Authority having jurisdiction over the Parties and/or their respective facilities.

 

1.7	“Bankruptcy Laws” shall have the meaning set forth in Article 22.2(c).

 

1.8	“Breaching Party” shall have the meaning set forth in Article 22.2.

 

1.9

“Business Day” means any day on which the Federal Reserve member banks are open for business. A Business Day shall commence at 8:00 a.m. and close at 5:00 p.m., local time, at the location of the relevant Party’s principal place of business, or at such other location as the context may require. The relevant Party, in each instance unless otherwise specified, shall be the Party to which the notice, payment, or delivery is being sent and by which the notice, payment, or delivery is being received.

 

1.10	“Commercial Operation Date” means the first day on which the Facility generates electric energy, other than test energy, for sale.

 

1.11

“Commercially Reasonable Efforts” means efforts by a Party to perform the particular obligation under this Agreement using skills, time and funds which are customary and reasonable in transactions of the kind and nature contemplated by this Agreement in order for such Party to satisfy such obligation under this Agreement.

 

1.12

“Confidential Information” means any confidential, proprietary, or trade secret information associated with a plan, specification, pattern, procedure, design, device, list, concept, policy, or compilation relating to the present or planned business of a Party (including all information relating to a Party’s technology, research and development, business affairs and pricing), which is designated as “Confidential” by the Party supplying the information, whether conveyed orally, in writing, electronically, through inspection, or otherwise prior to or after the Effective Date. Any Confidential Information designated as such by a Party that is conveyed in writing or electronically must clearly be designated or marked as confidential on the face of the document or electronic transmission. To the extent that the Confidential Information is designated as such by a Party orally or through inspection, the Party providing such information must inform the Party receiving such information that it is Confidential Information.

 

1.13	“Custodian” shall have the meaning set forth in Article 22.2(c).

 

1.14	“Due Diligence” means the exercise of good faith efforts to perform a required act on a timely basis and in accordance with Good Utility Practice using the necessary technical resources and personnel.

 

1.15	“Effective Date” means the date set forth in Article 2.1 of this Agreement.

 

1.16

“Emergency” means (a) a condition or situation which, in the judgment of the Operating Agent, requires immediate manual or automatic action to prevent (i) endangerment of life or property, or (ii) loss of firm load, equipment damage, or tripping of system elements that could adversely affect the reliability of the EPE Transmission System or the electrical transmission systems of others to which the EPE Transmission System is directly or indirectly connected, and which requires that the output of the Facility be adjusted to help avoid or mitigate such condition or situation, and (b) a condition or situation which Generator deems imminently likely to (i) endanger life or property, or (ii) adversely affect or impair the reliability of the Facility. The conditions or situations described in Articles 1.16(a)(ii) and 1.16(b)(ii) include equipment damage, danger of instability, voltage collapse or uncontrollable cascading outages. Any condition or situation that results from lack of sufficient planned generating capacity to meet load requirements or that results solely from economic conditions shall not, standing alone, constitute an Emergency.

 

1.17

“Environmental Laws” means federal, state, and local laws, regulations, rules, ordinances, codes, decrees, judgments, directives, or judicial or administrative orders (and any amendments thereto) relating to pollution or protection of the environment, archaeological or natural resources, or human health and safety, including laws relating to exposures, Releases or threatened Releases of Hazardous Substances (including Releases or threatened Releases to ambient air, surface water, groundwater, land, surface and subsurface strata) or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, Release, transport, or handling of Hazardous Substances.

 

1.18	“EPE” shall have the meaning set forth in the first paragraph of this Agreement.

 

1.19	“EPE Control Area” means the power system where EPE is responsible for matching generation within the control area and net transactions with other control areas with the prevailing real-time

 

electrical load in the control area, for maintaining within limits generally accepted as Good Utility Practice scheduled interchange with neighboring control areas, and for maintaining frequency within reasonable limits in accordance with Good Utility Practice.

 

1.20

“EPE Interconnection Facilities” means all equipment and other facilities, including Protective Equipment and Metering Equipment owned, operated and maintained by EPE from the Generator’s side of air switch 32485 to the Interconnection Point. The EPE Interconnection Facilities are listed in Appendix B.

 

1.21

“EPE OATT” means EPE’s Open Access Transmission Tariff filed with FERC in accordance with FERC’s Order No. 888, and any successor transmission service tariff thereto, including any such successor tariff of a Regional Transmission Organization to which EPE transfers operating authority over the EPE Transmission System.

 

1.22

“EPE’s Palo Verde Facilities” means three 500 kv lines and related facilities, that extend 165 miles in total from the Palo Verde Nuclear Generating Station near Phoenix, Arizona, with two of the lines extending to the Westwing substation and one extending to the Kyrene substation, all facilities entirely in Arizona.

 

1.23	“EPE Transmission System” means all of the facilities owned by EPE, including the Interconnection System Upgrades that are made available for the purpose of providing transmission service under the EPE OATT.

 

1.24

“Facility” means Generator’s electric generating facility with an output of 142 MW (Summer) and 149 MW (Winter) located near Afton, New Mexico, together with the other property, facilities, and equipment owned and/or operated by Generator up to and including the output terminals of the generator as indicated in Appendix A.

 

1.25	“Federal Power Act” means the Federal Power Act, 16 U.S.C. § 791a et seq., as amended from time to time.

 

1.26	“FERC” means the Federal Energy Regulatory Commission, or any successor federal agency.

 

1.27	“General Orders” means the set of standard operating procedures, as modified from time to time, by which the Operating Agent operates the EPE Transmission System and which are applicable to generating facilities connected to that transmission system, including, at the Effective Date, the Facility.

 

1.28	“Generator” shall have the meaning set forth in the first paragraph of this Agreement.

 

1.29

“Generator’s Interconnection Facilities” means all equipment and other facilities, including certain Protective Equipment, owned, operated and maintained by Generator, from the generator output terminals up to the Generator’s side of air switch 32485 as indicated in Appendices B (Attachment 1) and E, including any modifications, additions, or upgrades made to such facilities, which, in conjunction with the EPE Interconnection Facilities, are necessary to connect the Facility to the EPE Transmission System at the Afton Switching Station.

 

1.30

“Good Utility Practice” means any of the practices, methods, and acts required, approved, or engaged in by the WSCC, NERC, RTO (if applicable) or a significant portion of the electric utility industry during the relevant time period, or any of the practices, methods, and acts which, in the exercise of reasonable judgment in light of the facts known at the time the decision was made, could have been expected to accomplish the desired result at a reasonable cost consistent with good business practices, reliability, safety, and expedition. Good Utility Practice is not intended to be limited to the optimum practice, method, or act; rather, it is intended to be a spectrum of practices, methods, and acts generally accepted by the electric utility industry in the WSCC region. Good Utility Practice shall include compliance with Applicable Laws and Regulations.

 

1.31

“Governmental Authority” means any entity with proper jurisdiction or authority over the Parties and/or their respective facilities, including (i) a federal, tribal, state, local or municipal governmental body; (ii) a governmental, regulatory or administrative agency, commission, body or other authority exercising or entitled to exercise administrative, executive, judicial, legislative, policy, regulatory or taxing authority or power; and (iii) a court or governmental tribunal.

 

1.32	“Governor Droop” means the governor response characteristic (speed versus output characteristic) defining the decrease in frequency needed to cause generator output to go from no load to full load.

 

1.33

“Hazardous Substances” means (a) any petrochemical or petroleum products, oil, coal ash, radioactive materials, radon gas, asbestos in any form that is or could be friable, urea formaldehyde foam insulation and transformers or other equipment that contains dielectric fluid that may contain polychlorinated biphenyls; (b) any chemicals, materials, or substances defined as or included in the definition of “hazardous substances,” “hazardous wastes,” “hazardous materials,” “hazardous constituents,” “restricted hazardous materials,” “extremely hazardous substances,” “toxic substances,” “contaminants,” “pollutants,” “toxic pollutants,” or words of similar meaning and regulatory effect under any applicable Environmental Law; or (c) any other chemical, material, or substance, exposure to which is prohibited, limited, or regulated by any applicable Environmental Law.

 

1.34	“Interconnected Facilities” means the EPE Interconnection Facilities and the Generator’s Interconnection Facilities.

 

1.35	“Interconnection Point” means the point where the EPE Interconnection Facilities attach to the bus bar within the Afton Switching Station as delineated in Appendices B and E.

 

1.36	“Interconnection Service” means the service provided by EPE to interconnect the Facility, via Generator’s Interconnection Facilities, with the EPE Transmission System.

 

1.37

“Interconnection Studies” means the studies performed by or on behalf of EPE pursuant to an interconnection request by Generator which have determined the design, specifications and cost estimate for the Interconnected Facilities and the Interconnection System Upgrades required to accommodate the interconnection of the Facility.

 

1.38

“Interconnection System Upgrades” means the additions, modifications, and upgrades to the EPE Transmission System, including Protective Equipment and Metering Equipment, required beyond the Interconnection Point to accommodate the interconnection of the Facility to the EPE Transmission System through the EPE Interconnection Facilities as identified in Appendix B, including any modifications, additions, or upgrades made to such facilities.

 

1.39

“Interest Rate” means the prime interest rate for currency as published from time to time under “Money Rates” by The Wall Street Journal, or its successor (or, if no longer so published, any substitute mutually agreeable to the Parties), as of the payment due date and/or default date, plus two (2) percent; provided, however, that in no event shall the Interest Rate exceed the maximum interest rate permitted by Applicable Laws and Regulations.

 

1.40	“Metering Equipment” means all metering equipment to be installed at the Facility and at or near the Interconnection Point and Afton Switching Station. Metering Equipment is identified in Appendices A, B, and D.

 

1.41	“NERC” means the North American Electric Reliability Council, or any successor organization.

 

1.42	“Non-Breaching Party” shall have the meaning set forth in Article 22.2(g).

 

1.43	“Operating Agent” shall mean the entity that operates the EPE Transmission System. On the Effective Date of this Agreement, EPE is the Operating Agent for the EPE Transmission System.

 

1.44	“Operating Committee” shall have the meaning set forth in Article 4.1.

 

1.45

“Operation Date” means the day upon which the Interconnected Facilities, Interconnection System Upgrades and Facility have been completed to EPE’s and Generator’s mutual satisfaction and energized in parallel operation as confirmed in a written notice provided by EPE to Generator, which occurred January 1, 2003.

 

1.46	“Participant” has the meaning as stated in Article 9.3.

 

1.47	“Parties” means EPE (including in its capacity as Operating Agent) and Generator or the successor or permitted assignee of the rights and obligations of any of the foregoing under this Agreement.

 

1.48	“Party” means one of the Parties.

 

1.49	“Person” means an individual, partnership, corporation (including a business trust), limited liability company, joint stock company, trust, unincorporated association, joint venture or other entity or a government or any political subdivision or agency thereof.

 

1.50	“Power System Stabilizer (PSS)” means a control system applied at a generator that monitors variables such as current, voltage and shaft speed and sends the appropriate control signals to the voltage regulator to damp system oscillations.

 

1.51

“Protective Equipment” means such protective relay systems, locks and seals, breakers, automatic synchronizers, associated communication equipment and other control schemes and protective apparatus as is reasonably necessary under Good Utility Practice and standards of EPE for the operation of the Facility in parallel with the EPE Transmission System and to permit the facilities of EPE and the Facility to operate reliably and safely.

 

1.52

“Regional Transmission Organization” or “RTO” means an entity approved by FERC to assume responsibility for providing electric transmission services and certain operational functions in a specific region in accordance with FERC Order No. 2000 or any other Applicable Laws and Regulations (including, but not limited to, other FERC orders).

 

1.53	“Release” means any release, spill, leak, discharge, disposal, pumping, pouring, emission, emptying, injection, leaching, dumping, escape into or through the environment of any Hazardous Substance.

 

1.54	“Reliability Management System” or “RMS” means the contractual reliability management program implemented through the WSCC Reliability Criteria Agreement, Article IX of this Agreement, and any similar contractual arrangement(s).

 

1.55	“Security Coordinator” means the entity authorized by the WSCC to have the final authority to direct electric system operations to prevent or remedy problems or disturbances that have regional impacts.

 

1.56	“SOCC” means System Operations Control Center.

 

1.57

“Termination Costs” means the costs incurred by or on behalf of EPE upon termination of this Agreement in accordance with Article XXIII in taking one or more of the following actions: (a) returning or canceling pending orders made by EPE for equipment or facilities required for the interconnection contemplated by this Agreement; (b) removing any portion of the EPE Interconnection Facilities or Interconnection System Upgrades; and (c) performing such work as may be necessary to ensure the safety of persons and property and to preserve the integrity of the EPE Transmission System.

 

1.58	“Transmission Service Agreement” means any transmission service agreements between Generator and EPE, excluding any agreement for transmission service that is provided over EPE’s Palo Verde Facilities.

 

1.59	“WSCC” means the Western Systems Coordinating Council, or any successor organization.

 

1.60	“WSCC Agreement” means the Western Systems Coordinating Council Agreement dated March 20, 1967.

 

1.61	“WSCC Reliability Criteria Agreement” means the Western Systems Coordinating Council Reliability Criteria Agreement dated June 18, 1999, among the WSCC and certain members of WSCC.

 

Article II

 

TERM

 

2.1

Effectiveness of this Agreement. Article 2.2 and the fourth sentence of this Article 2.1 of this Agreement shall become effective upon execution by the Parties. The remaining provisions of this Agreement shall become effective on the effective date specified by FERC in accepting this Agreement (“Effective Date”) under Section 205 of the Federal Power Act. This Agreement shall supercede the Interconnection Agreement upon the Effective Date. Notwithstanding the foregoing and with respect to this Agreement, no Party shall take any action which is inconsistent with the terms of this Agreement and Applicable Laws and Regulations during the period between execution of this Agreement and acceptance by FERC or earlier termination of this Agreement.

 

2.2	FERC Filing.

 

2.2.1 Within a reasonable time after execution of this Agreement by the Parties, EPE shall file this Agreement with FERC as an amended “Rate Schedule” within the meaning of Part 35 of FERC’s regulations and with any other Governmental Authority to the extent required by Applicable Laws and Regulations. Each of the Parties shall support this Agreement in its current form at FERC when filed. Generator shall reasonably cooperate with EPE with respect to obtaining FERC approval of such FERC filing and provide any information, including testimony, reasonably required by EPE to comply with the applicable FERC filing requirements.

 

2.2.2 Promptly upon execution by the Parties of any amendment to this Agreement, EPE shall, if necessary, file such amendment with FERC and with any other Governmental Authority, to the extent required by Applicable Laws and Regulations. Each of the Parties shall support any such amendment at FERC when filed. Generator shall reasonably cooperate with EPE with respect to obtaining FERC approval of such FERC filing and provide any information, including testimony, reasonably required by EPE to comply with the applicable FERC filing requirements.

 

2.2.3 If FERC requires conditions to or modifications of any of the terms, conditions or provisions agreed to herein or in an amendment hereto and: (i) neither Party notifies the other Party in writing within fourteen (14) calendar days following receipt of FERC’s order that the notifying Party takes exception to FERC’s order, the FERC-ordered modifications and/or conditions shall become part of this Agreement as an amendment or appendix; or (ii) the Party taking exception to FERC’s conditions or modifications gives fourteen (14) calendar days notice (following receipt of FERC’s order) to the other Party of such exception, then the Parties shall promptly negotiate an amendment to this Agreement acceptable to FERC and providing similar benefit, rights, or effect to the Parties. Any such amendment shall be effective when accepted for filing by FERC. For purposes of this Article 2.2.3, each Party reserves and may exercise all of its rights under Applicable Laws and Regulations.

 

2.3	Term. This Agreement shall continue in full force and effect until a mutually agreed termination date; provided, however, that such termination date shall be no later than the date on which the Facility permanently ceases commercial operation; and provided further that this

 

Agreement may be terminated earlier (a) upon a Party’s default in accordance with the provisions of Article 23.2 or (b) by the mutual agreement of the Parties or as explicitly provided elsewhere in this Agreement. Unless no longer required by FERC, any termination of this Agreement permitted hereunder shall not take effect until the filing at FERC of a notice of termination of this Agreement which notice is accepted for filing by FERC.

 

2.4

Material Adverse Change. In the event of a change in law or regulation after the Effective Date that has a material adverse effect, or may reasonably be expected to have a material adverse effect, on a Party’s ability to perform under this Agreement, the Parties shall negotiate in good faith any amendment or amendments to this Agreement necessary to adapt the terms of this Agreement to such change in law or regulation. If the Parties are unable to reach agreement on any such amendments within sixty (60) days of the commencement of their negotiations, each Party reserves and may exercise all its rights under Applicable Laws and Regulations.

 

2.5

Survival. The applicable provisions of this Agreement shall continue in effect after cancellation, expiration, or termination of this Agreement to provide for final billings, billing adjustments, and the determination and enforcement of liability and indemnification obligations arising from acts or events that occurred while this Agreement was in effect. In addition, upon termination of this Agreement subject to the terms of Article 23, Generator shall be responsible for any Termination Costs incurred by or on behalf of EPE.

 

Article III

CONTINUING OBLIGATIONS AND RESPONSIBILITIES

 

3.1

Interconnection Service Provided. EPE shall provide Generator with Interconnection Service for the Facility, as such service is defined in Article 1.36 and described in this Article III. EPE shall not provide Interconnection Service under this Agreement for any other generating units, wherever located. Any other generating units shall be covered by a separate interconnection agreement or an amendment of this Agreement as provided for in Article 3.2.3.

 

3.2	Scope of Interconnection Service.

 

3.2.1 Interconnection Service shall consist of the services necessary to allow the physical interconnection of the Facility pursuant to the terms of this Agreement. Interconnection Service does not mean and shall not include transmission service, ancillary services, losses, or any other service available under the EPE OATT. Specifically, Interconnection Service shall not include the purchase or sale of energy or ancillary services to or from the Facility beyond the Interconnection Point, or the delivery of energy or ancillary services from the Facility beyond the Interconnection Point, which services shall be provided separately under the EPE OATT or by others under separate agreements, as applicable.

 

3.2.2 Generator shall be responsible for (a) making arrangements under the EPE OATT for transmission and ancillary services on the EPE Transmission System, and under other applicable tariffs for such services on other transmission system(s), associated with the injection or delivery of the capacity and/or energy produced by the Facility beyond the Interconnection Point, which services shall not be provided under the terms of this Agreement, (b) obtaining capacity and/or energy to satisfy its Facility service or other requirements, and (c) making

 

arrangements under applicable tariffs for transmission services, losses, and ancillary services associated with the use of the EPE Transmission System for the injection or delivery of capacity and/or energy to other generating facilities owned by Generator for the purpose of supplying facility service or for any other use. EPE makes no representations to Generator regarding the availability of transmission service on the EPE Transmission System, and Generator agrees that the availability of such transmission service may not be inferred or implied from this Agreement. Generator must request such transmission service in accordance with the EPE OATT.

 

3.2.3 In the event of an increase in the output of the Facility or other material change or modification to the configuration and/or operation of the Facility, the Parties shall negotiate appropriate revisions to this Agreement, including, as necessary, the performance by EPE of studies to determine the effects of such increase or change, and changes to the specifications or requirements set forth in the Appendices to this Agreement, as necessary to permit EPE to provide Interconnection Service to the Facility under this Agreement in a safe, secure and reliable manner.

 

3.3	Services Outside Scope of Agreement.

 

3.3.1 This Agreement provides only for interconnection of the Facility with the EPE Transmission System at the Afton Switching Station. Nothing in this Agreement shall be read as a request by Generator, or a commitment by EPE, to install any facilities other than those necessary to interconnect the Facility with the EPE Transmission System at the Afton Switching Station.

 

3.3.2 This Agreement does not obligate any Party to purchase, sell, transmit or otherwise provide any rights other than Interconnection Service. This Agreement does not obligate any Party to provide, or entitle any Party to receive, any transmission or other service not expressly provided for herein. This Agreement does not provide a right to inject or transmit energy which right shall be realized through the necessary arrangements for transmission rights and service, including mitigation related to transmission service, if any. Each Party is responsible for making any arrangements necessary for it to receive any transmission or other service not expressly provided for herein that it may desire from the other Party or any other Person. Notwithstanding any other provision of this Agreement, nothing herein shall be construed as a relinquishment or foreclosure of any rights to transmission credits to which Generator may be entitled, now or in the future, as a result of, or otherwise, associated with, the transmission capacity, if any, created by the Interconnection System Upgrades, if any.

 

3.3.3 This Agreement does not provide for the injection, sale or purchase of power or energy from or to the Facility. Upon Generator’s request, construction, back-up, start-up, auxiliary, station, and maintenance power required for the Facility at the Facility site shall be provided under a separate agreement or any applicable tariff.

 

3.4

No Guarantees; Release. EPE (which, for the purposes of this Article 3.4, shall be deemed to include the Operating Agent) does not warrant against the occurrence of, and Generator releases EPE from any and all claims or damages associated with: (a) damage to Generator’s Interconnection Facilities or the Facility resulting from electrical transients, or (b) any

 

interruption in the availability of the EPE Interconnection Facilities, or any Interconnection System Upgrades, except, in the case of subpart (a) or (b), to the extent determined to be attributable to the negligence of, willful misconduct of, or default under Article XXII by EPE. Generator does not warrant against the occurrence of, and EPE releases Generator from any and all claims or damages associated with: (y) damage to the EPE Interconnection Facilities, any Interconnection System Upgrades, or the EPE Transmission System resulting from electrical transients, or (z) any interruption in the availability of Generator’s Facility, except, in the case of subpart (y) or (z), to the extent determined to be attributable to Generator’s negligence, willful misconduct or default under Article XXII.

 

3.5 Reporting Requirements. Each Party shall notify the other Party promptly when it becomes aware of its inability to comply with the terms and conditions of this Agreement, and provide a sufficient explanation of its inability to comply, including the date, duration, and reasons for its inability to comply, and corrective actions taken; provided that such notification shall not release such Party from its obligation to comply with this Agreement, except as provided under Article XIX.

 

3.6 Third Party Activity. During the term of this Agreement, other Persons may develop, construct or acquire, and operate generating facilities in EPE’s service territory, and reservations of transmission service by such Persons under the EPE OATT may adversely affect the availability of transmission service for the Facility’s electric output. EPE has no obligation to disclose to Generator any information regarding such third party activity, except as may be required under the EPE OATT or under this Agreement subject to the provisions of Article 3.7. To the extent that such third party activity has, or EPE reasonably expects the third party activity to have, a material adverse impact on the operation of the Facility or the Interconnected Facilities, EPE shall, subject to Article 3.7, disclose to Generator such material information as is necessary for Generator to understand the nature and extent of such adverse impact and the viable remedies.

 

3.7 Compliance with EPE OATT and FERC Orders No. 888 and No. 889. Nothing in this Agreement shall be deemed or construed to obligate EPE to provide or make available to Generator any information in violation of the EPE OATT, FERC Orders No. 888 and No. 889 or any other Applicable Laws and Regulations.

 

Article IV

OPERATING COMMITTEE

 

4.1 Operating Committee. Within fifteen (15) days after the Effective Date, each Party shall designate a primary and alternate representative to serve on an operating committee (“Operating Committee”), which shall meet periodically to ensure effective cooperation in system planning, to deal promptly with the various operating and technical issues that may arise during the term of this Agreement, and to attempt to resolve any disputes that may arise under this Agreement, as more specifically described in Article 4.2. Each primary and alternate representative shall be authorized, on behalf of the designating Party, to act with respect to all matters delegated to the Operating Committee. Each Party shall promptly notify the other Party of the designation of its primary and alternate representatives and of any subsequent changes in such designations in accordance with Article 30.9.

 

4.2

Responsibilities of the Operating Committee. The Operating Committee shall have the following responsibilities and functions, each of which shall be performed consistent with the terms and conditions of this Agreement and Good Utility Practice: (a) to establish general policies to be followed in the coordination of the operation and maintenance of the Interconnected Facilities; (b) to establish procedures and standard practices, consistent with the terms and conditions of this Agreement, for guidance for each Party’s system controllers and other operating personnel regarding the interconnected operations of the Afton Switching Station and the Interconnected Facilities; (c) to establish detailed procedures to govern in the event of an Emergency; (d) to establish detailed procedures and standard practices for metering, communications, and control facilities; (e) to establish the plan for disconnection of the Facility at the termination of this Agreement; (f) to establish other procedures and standard practices as may be needed from time to time and to engage in other activities consistent with the terms and conditions of this Agreement, provided that the Operating Committee shall not have the authority to modify or amend any term or condition of this Agreement; and (g) to attempt to resolve any disputes that may arise under this Agreement in accordance with Article 29.1.

 

4.3

Effectiveness of Operating Committee Determinations. All determinations made by the Operating Committee, including the establishment of any procedure or standard practice, within the scope of the Operating Committee’s responsibilities set forth in Article 4.2, shall be effective when signed by one designated representative of each Party and, if necessary, accepted for filing or approved by FERC.

 

Article V

FACILITY INTERCONNECTION

 

5.1

Establishment of Interconnection. The Facility constructed by Generator shall be interconnected to the EPE Transmission System at the Afton Switching Station, such interconnection being further described in Appendices A, B, and E. Appendix E may be revised by mutual written agreement of the Parties. Pursuant to this Agreement, the Parties shall, during the term of this Agreement, continue in service the existing transmission lines and essential terminal equipment, to the extent required to establish and maintain a reliable interconnection.

 

5.2

Necessary Easements, Permits, Licenses, Etc. Subject to Articles 5.6.1 and 5.6.2, each Party shall diligently pursue all rights, easements, permits, licenses, certificates and properties necessary to construct, own and maintain its portion of the Interconnected Facilities and the Interconnection System Upgrades. If a Party cannot reasonably acquire all the rights, easements, permits, licenses, certificates and properties necessary to construct, own and maintain its portion of the Interconnected Facilities and/or Interconnection System Upgrades, the Party shall promptly provide written notice to the other Party indicating its inability. After such notice, Generator shall have thirty (30) days to authorize EPE to initiate and diligently pursue the following at Generator’s expense: (a) condemnation proceedings, (b) alternate routes, designs, methods or procedures necessary for the construction, ownership, or maintenance of the Interconnected Facilities and/or Interconnection System Upgrades, or (c) any other appropriate action mutually agreed upon by the Parties. Each Party shall also pursue with Due Diligence and maintain all necessary governmental approvals, permits, licenses and inspections necessary for its performance of this Agreement. Generator shall also assign to

 

EPE, that portion of Generator’s rights under the Bureau of Land Management (“BLM”) Right of Way NMNM102630 (“BLM 102630 R-O-W”) for the land underlying the Interconnection System Upgrades and the portion of the EPE Interconnection Facilities delineated as TRACT 3 on Appendix F. Contemporaneous with the partial assignment of the BLM 102630 R-O-W, the grants of access pursuant to Articles 5.6.1 and 5.6.2 shall become effective. All expenses associated with such transfer shall be at Generator’s cost and shall be a part of the cost of Interconnection System Upgrades and delineated in Appendix B.

 

5.3	Design and Construction of Generator’s Interconnection Facilities.

 

5.3.1 Unless the Parties agree otherwise in writing, Generator shall, at its own expense, design, procure, construct, install, operate, maintain and repair/replace Generator’s Interconnection Facilities.

 

5.3.2 Protective Equipment to be installed by Generator is set forth in Appendix A. This Protective Equipment shall be subject to review and approval by EPE, which approval shall not be unreasonably withheld or denied. EPE’s review and/or approval shall not be deemed an endorsement of any equipment nor as any warranty as to the fitness, safety, durability or reliability of any equipment.

 

5.3.3 Generator shall design, procure, construct and install Generator’s Interconnection Facilities in accordance with applicable Interconnection Studies and Good Utility Practice.

 

5.3.4 At Generator’s expense, Generator’s Interconnection Facilities shall be constructed by Generator or, at Generator’s option, a third party contractor to be selected by Generator. Notwithstanding the foregoing, Generator understands and agrees that EPE shall be responsible for closing the connection of the EPE Interconnection Facilities and Generator’s Interconnection Facilities.

 

5.3.5 Generator shall, at its own expense, operate, maintain and repair/replace Generator’s Interconnection Facilities in accordance with Articles VIII and XIII.

 

5.4	Design and Construction of EPE Interconnection Facilities and Interconnection System Upgrades, and Transmission Credits.

 

5.4.1 At Generator’s expense, Generator shall design, procure equipment for and construct the EPE Interconnection Facilities and the Interconnection System Upgrades required to connect the Facility to the existing EPE Transmission System.

 

5.4.2 At Generator’s expense, EPE will review and approve all design, procurement of equipment and construction of the EPE Interconnection Facilities and Interconnection System Upgrades. EPE’s approval shall not be unreasonably withheld or denied. EPE’s review and/or approval shall not be deemed an endorsement of any design, facility or equipment nor as any warranty as to the fitness, safety, durability or reliability of any design, facility or equipment.

 

5.4.3 At Generator’s expense, EPE shall own, operate, maintain, and repair/replace the EPE Interconnection Facilities.

 

5.4.4 EPE shall own the Interconnection System Upgrades, including Afton Switching Station. After the Operation Date, EPE shall, at its own expense, operate, maintain and repair/replace Interconnection System Upgrades in accordance with Good Utility Practice.

 

5.4.5 The cost to design, engineer, procure equipment, and construct the EPE Interconnection Facilities and the Interconnection System Upgrades is set forth in Appendix B, subject to audit by EPE pursuant to Article 7.1.3 below.

 

5.4.6 The schedule for Generator and EPE to perform the design, procurement of equipment, construction and testing is set forth in Appendix C .

 

5.4.7 The design, procurement, construction and installation of the EPE Interconnection Facilities and the Interconnection System Upgrades shall be in accordance with applicable Interconnection Studies and Good Utility Practice. The EPE Interconnection Facilities and Interconnection System Upgrades must be sufficient, as designed and built, to deliver the full Facility output as defined in Article 1.24 to the Interconnection Point and to enable the Facility to receive capacity necessary to satisfy its operational requirements (not to exceed 10 MW of capacity).

 

5.4.8 As of the Effective Date, the Parties agree that the Interconnection System Upgrades and the EPE Interconnection Facilities have been installed. The costs of the Interconnection System Upgrades and the EPE Interconnection Facilities, subject to audit by EPE pursuant to Article 7.1.3 below, are delineated in Exhibit B.

 

5.4.9 Notwithstanding any other provision of this Agreement, Generator shall not be responsible for any costs or expenses associated with the design, procurement, construction, installation, testing, operation, maintenance, repair/replacement, or any modifications or upgrades to the EPE Transmission System that are undertaken in order to prevent, mitigate, or otherwise remedy conditions that existed prior to the establishment of the interconnection of the Facility with the EPE Transmission System at the Afton Switching Station, and that were required or should have been required in order to prevent, mitigate, or remedy such conditions regardless of, or that otherwise are unrelated to, such interconnection. To the extent that Generator has made payment to EPE for any such costs and expenses, EPE shall refund to Generator such sums, with interest at the Interest Rate calculated from the date Generator made such payment(s) to the date Generator receives the refund, within thirty (30) days of any determination as to the appropriate allocation of the costs for such modifications or upgrades.

 

5.4.10 Subject to the provisions of this section, EPE shall credit Generator against charges for transmission service under any Transmission Service Agreement in an amount equal to the cost paid by Generator, including tax gross-up payments made by Generator to EPE in accordance with Article 7.5, for the Interconnection System Upgrades, plus interest calculated at the FERC approved interest rate from the date Generator incurred costs associated with the construction, engineering and installation of the Interconnection System Upgrades (“Transmission Service Credits”); provided, however, that such credits shall not apply to service under any Transmission Service Agreement under which transmission service credits or payments are due for transmission service upgrades until the cost of such upgrades has been fully amortized through payments by the Generator. If the amount of any remaining unapplied Transmission

 

Service Credits (including those held by Generator’s assignee) that exist five (5) years from the Effective Date is equal to or less than three (3) million dollars, EPE shall refund such remaining unapplied Transmission Service Credits to Generator within thirty (30) days after reaching such five (5) year period, and no further Transmission Service Credits will be due to Generator or any other Person. If the amount of any remaining unapplied Transmission Service Credits (including those held by Generator’s assignee) that exists five (5) years after the Effective Date is greater than three (3) million dollars, EPE shall continue to credit Generator against charges for transmission service under any Transmission Service Agreement until the date the remaining balance of such unapplied Transmission Service Credits is equal to three (3) million dollars. Within thirty (30) days of such date, EPE shall refund three (3) million dollars to Generator (not to exceed the remaining balance of the unapplied Transmission Service Credits), and no further Transmission Service Credits shall be due to Generator or any other Person. Generator may assign any portion of the Transmission Service Credits to any Person that purchases the Facility or that purchases power from the Facility. In the event of such assignment, EPE will credit the assignee against charges for transmission services provided to the assignee with respect to power purchased from the Facility, subject to the limitations set forth above. Such assigned Transmission Service Credits shall reduce the amount of Transmission Service Credits available to the Generator on a dollar for dollar basis. Without limiting the foregoing, Generator will receive Transmission Service Credits against the charges for transmission service that EPE has invoiced Generator for service with respect to the Facility under the existing Transmission Service Agreement (filed with the FERC on October 29, 2002 in FERC Docket No. ER03-93-000) from the date such transmission service commenced thereunder until the Effective Date; provided that within thirty (30) days after the Effective Date, the Parties shall reconcile the amount of Transmission Service Credits to be applied against the charges for transmission service with respect to the Facility during such period.

 

5.5

Subcontractors. Nothing in this Agreement shall prevent any Party from using the services of subcontractors as it deems appropriate; provided, however, each Party shall require such subcontractors to comply with the relevant terms and conditions of this Agreement. The creation of any subcontractor relationship shall not relieve the retaining Party of any of its obligations under this Agreement.

 

5.6	Rights of Access.

 

5.6.1 Prior to the assignment of a portion of the BLM 102630 R-O-W, by Generator to EPE in accordance with Article 5.2, Generator shall provide EPE access to the Interconnection System Upgrades and the portion of the EPE Interconnection Facilities located within the Facility property boundary to enable EPE to perform required operation and maintenance activities of these facilities in accordance with Good Utility Practice. Contemporaneous with the assignment of a portion of the BLM 102630 R-O-W, Generator grants EPE at no cost to EPE and the Operating Agent, as applicable, access, easements, or licenses upon, over, under, and across TRACTS 1 and 2 as delineated on Appendix F that are necessary for EPE and the Operating Agent, as applicable, and their Agents and subcontractors to design, procure, construct, install, test, operate, maintain and repair/replace the EPE Interconnection Facilities and the Interconnection System Upgrades in accordance with the terms of this Agreement. With respect to TRACT 2 both before and after the assignment of a portion of BLM 102630 R-O-W, EPE or Operating Agent shall exercise such access rights without notification of or supervision by

 

Generator. With respect to TRACT 3 before the assignment of a portion of BLM 102630 R-O-W, EPE shall exercise such access rights without notification of or supervision by Generator, except for the area inside the Afton Switching Station, which area will be subject to the notification requirements in the Afton Generating Plant Operating Procedures. With respect to TRACT 1 both before and after the assignment of a portion of the BLM 102630 R-O-W EPE or Operating Agent shall exercise such access rights only with supervision by Generator. EPE or Operating Agent shall provide Generator reasonable notice under the circumstances of any request for such supervised access, and Generator and EPE shall mutually agree upon a date and time of such supervised access and such agreement shall not be unreasonably withheld or delayed. In addition to the aforementioned requirement, in exercising such supervised access rights, EPE and the Operating Agent, as applicable, shall (a) not unreasonably disrupt or interfere with normal operations of Generator’s business, (b) act in a manner consistent with Good Utility Practice, and (c) adhere to the safety rules and procedures established by Generator. Generator shall execute such documents as EPE and the Operating Agent, as applicable, may reasonably require to enable EPE or the Operating Agent, as applicable, to establish record evidence of such access rights. Such access rights shall remain in effect for so long as this Agreement is in effect.

 

5.6.2 Contemporaneous with the assignment of a portion of the BLM 102630 R-O-W by Generator to EPE in accordance with Article 5.2, EPE grants, at no cost to Generator, all access, easements or licenses upon, over, under and across TRACT 3 as delineated on Appendix F that are necessary for Generator and its Agents and subcontractors to design, procure, construct, install, test, operate, maintain and repair/replace Generator’s Interconnection Facilities, EPE Interconnection Facilities, and Facility, as applicable, in accordance with the terms of this Agreement. Such access rights for Generator’s facilities located inside the Afton Switching Station shall be exercised by Generator only with supervision by EPE or the Operating Agent, as applicable. Generator shall provide EPE or the Operating Agent, as applicable, reasonable notice under the circumstances of any request for such supervised access to the Afton Switching Station, and EPE or Operating Agent, as applicable, and Generator shall mutually agree upon the date and time of such supervised access, such agreement not to be unreasonably withheld or delayed. In addition to the aforementioned requirement, in exercising such access rights, Generator shall (a) not unreasonably disrupt or interfere with normal operations of EPE or the Operating Agent, (b) act in a manner consistent with Good Utility Practice, and (c) adhere to the safety rules and procedures established by the Operating Agent and EPE. EPE or the Operating Agent, as applicable, shall execute such documents as Generator may reasonably require to enable it to establish record evidence of such access rights. Such access rights shall remain in effect for so long as this Agreement is in effect.

 

5.6.3 Any Party or its subcontractors performing construction, or other work, on the property of the other Party shall be responsible for proper housekeeping during the period the work is being performed and proper clean-up of the property in a timely fashion after the work is completed.

 

5.7	Course and Completion of Construction.

 

5.7.1 Generator shall promptly notify EPE in writing when the construction of Generator’s Interconnection Facilities and the EPE Interconnection Facilities is complete. Likewise, each

 

Party shall promptly notify the other Party in writing when the construction of the Interconnection System Upgrades is complete.

 

5.7.2 Generator shall keep the Generator’s Interconnection Facilities, the EPE Interconnection Facilities, Interconnection System Upgrades, and any real or personal property of EPE related to this interconnection project free and clear of all Generator, contractor, subcontractor, supplier or materialmen’s liens, claims and encumbrances arising out of the construction of the Generator’s Interconnection Facilities, the EPE Interconnection Facilities and Interconnection System Upgrades. Generator shall provide to EPE lien waivers from Generator and all such contractors, subcontractors, suppliers or materialmen before or upon completion of the Generator’s Interconnection Facilities, the EPE Interconnection Facilities and Interconnection System Upgrades. In the event that any such lien arising out of the construction of the Generator’s Interconnection Facilities, the EPE Interconnection Facilities and Interconnection System Upgrades shall nevertheless be filed or asserted against the real or personal property of EPE, Generator agrees to take all steps necessary and proper for the release and discharge of such liens in the manner allowed under New Mexico law. Generator shall indemnify and hold EPE harmless against any and all loss, claims, or suits (including costs and attorneys’ fees), for any lien claims asserted or filed by any party on or against EPE’s real or personal property relating to the construction of Generator’s Interconnection Facilities, the EPE Interconnection Facilities and the Interconnection System Upgrades.

 

5.8	Timely Completion.

 

5.8.1 Generator shall use Commercially Reasonable Efforts to design, procure, construct, install, and test Generator’s Interconnection Facilities and EPE Interconnection Facilities in accordance with the schedule set forth in Appendix C, which schedule may be revised from time to time by mutual agreement of the Parties.

 

5.8.2 Each Party shall use Commercially Reasonable Efforts to design, procure, construct, install, and test the Interconnection System Upgrades, in accordance with the schedule set forth in Appendix C, which schedule may be revised from time to time by mutual agreement of the Parties. EPE shall, at Generator’s request and expense, take all appropriate actions to accelerate its work under this Agreement in order to meet the schedule set forth in Appendix C, provided that Generator authorizes such actions and the costs associated therewith in advance and pays such costs in accordance with the payment schedule mutually agreed upon by the Parties.

 

5.8.3 If any of the Interconnection System Upgrades is not reasonably expected to be completed prior to the Commercial Operation Date of the Facility, Generator may, at its option, have operating studies performed at its expense to determine the maximum allowable output of the Facility, based upon the portion of the Interconnection System Upgrades that is expected to be completed prior to such Commercial Operation Date and, subject to EPE’s standards and Good Utility Practice, Generator will be permitted to operate the Facility, provided such limited operation of the Facility does not adversely affect the safety and reliability of the EPE Transmission System.

 

5.9	Environmental Compliance and Procedures. The Parties shall comply with (a) all applicable Environmental Laws in meeting all their obligations under this Agreement; and (b) all local

 

notification and response procedures required for all applicable environmental and safety matters which affect the ability of the Parties to meet their respective obligations under this Agreement.

 

5.10

Generator Modeling Data. Generator shall provide the Operating Agent and EPE with such final modeling data of the Facility and Interconnected Facilities that reflect final Facility unit data and settings of the generation protection and control equipment as is reasonably requested by the Operating Agent and EPE and is necessary for reliable operation of the EPE Transmission System, including (a) the turbine speed/load controls including the governor; and (b) the excitation system including the automatic voltage regulator, power system stabilizer, over-excitation controls and limits, and other controls and limits. Such modeling data is to be provided in the format of the computer programs utilized by the Operating Agent and EPE. On the Operation Date, such programs are: Powerflow-General Electric PSLF; Transient Stability-General Electric PSLF; Short Circuit-Aspen One Liner.

 

5.11

Equipment Requirements. All equipment shall be of utility grade that meets or exceeds the quality of the equipment as required by EPE. The trip energy source for the interconnection breaker shall be of a stored energy type (i.e., battery) that will be available under circumstances when the alternating current source is unavailable. Generator shall ensure that Generator’s Interconnection Facilities comply with all applicable requirements of the National Electrical Safety Code, as amended from time to time, and/or any Applicable Laws and Regulations.

 

5.12

Required Diagrams. Generator shall maintain the following equipment at locations approved by the Operating Agent, which approval shall not be unreasonably withheld or denied: (a) a permanent and weatherproof one-line electrical diagram of the Facility located at the Facility site; and (b) a permanent and weatherproof map of the Facility showing the location of all major equipment. EPE shall maintain, at locations approved by Generator, which approval shall not be unreasonably withheld or denied, a permanent and weatherproof one-line diagram of the EPE Interconnection Facilities.

 

5.13

Required Personnel Information. No later than fifteen (15) Business Days after the Effective Date, Generator shall provide the Operating Agent the names and current telephone numbers of at least two (2) persons who are authorized to provide access to the Facility and who have authority to make decisions regarding the Facility, Generator’s Interconnection Facilities, and Generator’s operations. Generator shall keep the names and telephone listings current at all times during the term of this Agreement.

 

5.14	Use of Afton Switching Station by Third Parties.

 

5.14.1 If required by Applicable Laws and Regulations, or if EPE in its sole discretion allows one or more third parties to use Afton Switching Station, or any part thereof, and such use decreases the capacity of Afton Switching Station available to the Facility, or otherwise causes any detriment to the Facility or to Generator, or benefits any party (including EPE) other than Generator, then Generator and such third party (parties) shall negotiate in good faith to determine the appropriate compensation due to Generator as a result of such third party use and to determine the appropriate allocation of the annual carrying charges. EPE shall include a provision comparable to this Article 5.14.1 in its agreements with third party users providing for

 

such third party users to participate in such negotiations. In any case, the Generator shall only be entitled to receive a reduction in charges under this Agreement equal to the amount of charges allocated to the third party user(s) (with a corresponding reduction in credits against the cost of transmission service in accordance with Article 5.4.10). If the issue of such compensation or allocation cannot be resolved through such negotiations, it shall be submitted to the FERC for resolution.

 

5.14.2 If one or more third parties are to use Afton Switching Station in accordance with this Article 5.14 and the Operating Agent determines that, as a result, Good Utility Practice requires that modifications be made to the Interconnected Facilities, the Operating Agent must comply with notification and scheduling provisions of Article 5.15. In no event shall Generator be responsible for the costs of any such modifications.

 

5.14.3 If it is determined by the FERC or any Governmental Authority that any costs associated with the design, engineering, construction, procurement, or installation of any of the EPE Interconnection Facilities or Interconnection System Upgrades paid for by Generator pursuant to this Agreement are not Generator’s responsibility, EPE shall refund to Generator, no later than sixty (60) days after the determination by FERC or any Governmental Authority, that portion of the costs paid by Generator that are included in the transmission revenue requirement or were paid by Generator and that have not been reflected in credits, if any, against the cost of transmission service from the Facility, with interest at the Interest Rate.

 

5.15	Interconnected Facilities and Facility Additions, Modifications or Replacements.

 

5.15.1 EPE Interconnection Facilities and EPE Transmission System.

 

(a)

Any additions to, modifications to, or replacements of the EPE Interconnection Facilities must be constructed and operated in accordance with Good Utility Practice. If such additions, modifications, or replacements made after the Operation Date will likely cause a material adverse effect on Generator’s operation of the Facility, the Operating Agent will, except in cases of Emergency, provide a minimum of thirty (30) days’ advance written notice to Generator prior to undertaking such additions, modifications, or replacements. In the written notice, the Operating Agent must advise Generator when such additions, modifications or replacements are expected to be made; the time period expected to be required to complete such additions, modifications or replacements; and whether, if known, such additions, modifications or replacements are expected to interrupt or curtail the flow of electricity from the Facility. The Parties shall mutually agree in advance upon a schedule for such additions, modifications or replacements, such agreement not to be unreasonably withheld or delayed.

 

(b)

Unless required by Applicable Laws and Regulations, Generator shall not be responsible for the costs of any additions, modifications, or replacements made to the EPE Transmission System by EPE, in its sole

 

discretion, after the Operation Date in order to facilitate (a) the interconnection of a third party or (b) the provision of transmission service to or for a third party. Generator shall, however, be responsible for all costs of any additions, modifications, or replacements made to the EPE Transmission System as a result of any additions, modifications, or replacements made by Generator to the Facility.

 

(c)

If any additions, modifications, or replacements to the EPE Interconnection Facilities (other than those caused by additions, modifications, or replacements made by the Generator to the Facility) cause a material adverse effect on the Generator’s Interconnection Facilities or the interconnection of the Facility (via Generator’s Interconnection Facilities) to the EPE Transmission System at the Afton Switching Station, EPE shall be responsible, at its sole cost and expense, for all actions necessary to mitigate such effect on the interconnection (“Mitigation Actions”) and, if necessary, to promptly and expeditiously re-establish the connection of the Facility (via Generator’s Interconnection Facilities) with the EPE Transmission System at the Afton Switching Station, in accordance with Good Utility Practice and/or secure such services as are necessary to deliver the capacity and energy to the Interconnection Point in accordance with Good Utility Practice (“Reconnection Activities”); provided, however, that, if EPE is required by Applicable Laws and Regulations or the RTO (if applicable) to undertake such additions, modifications, or replacements, EPE shall not be required to undertake any Mitigation Action or Reconnection Activity.

 

5.15.2 Generator’s Interconnection Facilities and Facility. Except for changes deemed by the Operating Agent to be necessary to ensure the protection and safety of a Party’s personnel and the safety and reliability of a Party’s property, Generator shall not be required to make any modifications to the Facility or Generator’s Interconnection Facilities unless such change is consistent with Good Utility Practice and required (i) as a result of a change in the Facility or (ii) as a result of a change on the EPE Transmission System which is required by Good Utility Practice. Generator shall not be responsible for the cost of any such modifications and the cost of operating and maintaining such modifications unless required by Applicable Laws and Regulations or such modifications are required as a result of a change in the Facility made by Generator.

 

Article VI

ACCEPTANCE AND PERFORMANCE TESTING

AND COMPLIANCE MONITORING

 

6.1	Responsibility for Testing.

 

6.1.1 Prior to the Operation Date, Generator shall perform all testing of the Facility and Generator’s Interconnection Facilities required by the RTO (if applicable), NERC and WSCC. EPE or the Operating Agent, as applicable, may require Generator to perform additional testing

 

whenever EPE or the Operating Agent reasonably determines that such additional testing is required for reliability reasons. All testing shall be successfully completed before the Operation Date. Testing subsequent to the Operation Date shall be performed in compliance with the frequency requirements of NERC, WSCC, and the RTO (if applicable) and any other reliability requirements of any other organization/entity with responsibility for electricity and whose requirements Generator is obligated to follow. All such tests shall be performed to the specifications of NERC, WSCC, the RTO (if applicable), or any other specifications required by new or other reliability organizations with responsibility for electricity and whose requirements Generator is obligated to follow. Generator shall inform EPE or the Operating Agent, as applicable, in advance (whenever possible, a minimum of five (5) Business Days) when such tests are scheduled to occur, and EPE shall have the right to have representatives observe and monitor such tests. The cost of all such testing shall be borne by Generator.

 

6.1.2 Prior to the Operation Date, EPE or the Operating Agent, as applicable, shall perform all testing of the EPE Interconnection Facilities and the Interconnection System Upgrades required by NERC, WSCC and the RTO (if applicable). All testing shall be successfully completed before the Operation Date. After the Operation Date, the Operating Agent and EPE shall test their facilities at their own expense (or, in the case of the Operating Agent, the EPE Interconnection Facilities at the expense of EPE) in accordance with Good Utility Practice. Generator shall have the right, upon five (5) Business Days’ advance written notice to the Operating Agent or EPE to require additional testing of such entity’s facilities, at Generator’s expense, if Generator reasonably believes that such entity’s facilities are causing a material adverse effect on the operation of the Facility or Generator’s Interconnection Facilities, or as may be otherwise prudent in accordance with Good Utility Practice, and shall have the right to be present during such tests.

 

6.2

Responsibility for Modifications Following Testing. Based upon the pre-operational testing, Generator is responsible for making any modifications necessary to ensure the safe and reliable operation of Generator’s Interconnection Facilities and the EPE Interconnection Facilities in accordance with Good Utility Practice; EPE is responsible for making any modifications necessary to ensure the safe and reliable operation of the Interconnection System Upgrades in accordance with Good Utility Practice. The costs of all such modifications are to be borne by Generator, except to the extent the modifications are required as a result of the sole negligence or willful misconduct of EPE, or any Agent of EPE.

 

6.3

Documentation of Results to EPE or the Operating Agent. Generator shall provide EPE or the Operating Agent, as applicable, with necessary documentation of all test results for all tests performed pursuant to Article 6.1.1. The documentation shall be, at a minimum, that required to conform with any RTO, NERC or WSCC requirements.

 

6.4	Facility Certification. Generator shall comply with any facility certification requirements of NERC, WSCC, and the RTO (if applicable).

 

6.5	Transmission Service During Testing. Generator has sole responsibility to make necessary arrangements under the EPE OATT to procure any transmission service over the EPE Transmission System that may be required to accommodate the testing procedures of the Facility.

 

6.6

EPE Inspection Rights. EPE (which, for the purposes of this Article 6.6, shall be deemed to include the Operating Agent) shall have the right, but shall have no obligation or responsibility, to: (a) observe Generator’s tests and/or inspection of any of Generator’s Protective Equipment; (b) review the settings of Generator’s Protective Equipment; and (c) review Generator’s maintenance records relative to the Generator’s Protective Equipment. EPE may exercise the foregoing rights from time to time as it deems necessary upon five (5) Business Days’ written notice to Generator. However, the exercise or non-exercise by EPE of any of the foregoing rights of observation, review or inspection shall be construed neither as an endorsement or confirmation of any aspect, feature, element, or condition of the Facility or Generator’s Protective Equipment or the operation thereof, nor as a warranty as to the fitness, safety, durability, or reliability of same.

 

6.7

Generator Inspection Rights. Generator, upon five (5) Business Days’ advance written notice to the Operating Agent has the right, but not the obligation, to inspect or observe the operation and maintenance activities, equipment tests, installation, construction, or other modifications to the EPE Interconnection Facilities which could cause a material adverse effect on Generator’s operations. However, the exercise or non-exercise by Generator of any of the foregoing rights of observation, review or inspection shall be construed neither as an endorsement or confirmation of any aspect, feature, element, or condition of the EPE Interconnection Facilities or the operation thereof, nor as a warranty as to the fitness, safety, durability, or reliability of same.

 

6.8

EPE’s Reviews, Inspections, and Approvals. EPE’s or Operating Agent’s review, inspection, and approval, related to the Generator’s Interconnection Facilities and EPE’s Interconnection Facilities required under this Agreement shall not be unreasonably withheld or delayed, and will be limited to the purpose of ensuring the safety, reliability, protection and control of the EPE Transmission System.

 

Article VII

INTERCONNECTION FACILITY COSTS AND BILLING

 

7.1	Interconnection Construction Completion and Cost.

 

7.1.1 Notification of Delay. If any event occurs that will materially affect the time for completion of the Interconnection System Upgrades, or the ability to complete them, the Party responsible for the construction of the affected portion of the Interconnection System Upgrades shall, within five (5) Business Days of its knowledge of any such event, notify the other Party . In such circumstances, the responsible Party shall, within ten (10) Business Days of notifying the other Party of such an event and corresponding delay, convene a technical meeting with the other Party to evaluate the alternatives available to the other Party. The responsible Party also shall make available to the other Party all studies and work papers related to the event and corresponding delay, including all information that is in the responsible Party’s possession that is reasonably needed by the other Party to evaluate alternatives.

 

7.1.2 Cost Estimate. Pursuant to Article 5.4.5 and delineated in Exhibit B and subject to audit by EPE pursuant to Article 7.1.3 below, the Parties have established the cost to design,

 

engineer, procure equipment, and construct the Interconnection System Upgrades and the EPE Interconnection Facilities.

 

7.1.3 Audit of Cost. Each Party shall have the right to receive such cost information as is reasonably necessary to verify the cost of the Interconnection System Upgrades and the EPE Interconnection Facilities constructed by the other Party and that such cost was incurred in accordance with Good Utility Practice. EPE shall have the right to receive such cost information as is reasonably necessary to verify the cost of Generator’s activities associated with the Interconnection System Upgrades and the EPE Interconnection Facilities and that such costs were incurred in accordance with Good Utility Practice. Each Party shall have the right to audit (a) the othe