AMENDED AND RESTATED POWER PURCHASE AGREEMENT

EXHIBIT 10.20

 

AMENDED AND RESTATED POWER PURCHASE AGREEMENT

 

THIS AMENDED AND RESTATED POWER PURCHASE AGREEMENT (the “ Agreement ” ) is entered into as of August 19, 2004 (the “ Agreement Date ”), by and between Commonwealth Electric Company, a Massachusetts corporation ( “ CECO ” ) and Northeast Energy Associates Limited Partnership, a Massachusetts limited partnership ( “ NEA ” ). CECO and NEA are individually referred to herein as a “ Party ” and are collectively referred to herein as the “ Parties ” .

 

WHEREAS, NEA owns a nominal 300 MW natural gas-fired electricity and steam generating plant located in Bellingham, Massachusetts (the “ Facility ” );

 

WHEREAS, CECO and NEA are parties to a certain Power Purchase Agreement dated November 26, 1986, as amended to date (the “ Existing CECO 1 PPA ” ), pursuant to which CECO purchases from NEA a portion of the Facility’s capacity and associated energy;

 

WHEREAS, CECO and NEA desire to amend and restate the Existing CECO 1 PPA as provided form herein; and

 

WHEREAS, such amendment and restatement of the Existing CECO 1 PPA is consistent with CECO’s invitation, dated October 17, 2003, to submit proposals regarding the transfer of entitlements to certain power purchase agreements and NEA’s response, dated December 3, 2003, related to the restructuring of four (4) power purchase agreements (including the Existing CECO 1 PPA) existing between NEA and each of CECO and Boston Edison Company (“BECO”) (the four (4) existing agreements, the “ Existing Agreements ” , are set forth at Exhibit A).

 

NOW, THEREFORE, in consideration of the premises and of the mutual agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

 

1. DEFINITIONS

 

In addition to terms defined in the recitals hereto, the following terms shall have the meanings set forth below.

 

“ Affiliate ” shall mean, with respect to any Person, any other Person that directly or indirectly through one or more intermediaries’ controls, is controlled by, or is under common control with, such first Person. As used in this definition, “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

 

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

 

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

“ Approved Capacity Buyer ” shall mean any of the Persons set forth on Schedule 4.1(c) hereto.

 

“ Business Day ” shall mean any day that is not a Saturday, Sunday, or NERC Holiday.

 

“ Capacity ” shall mean “Unforced Capacity” as presently defined in the NEPOOL Manual for Definitions and Abbreviations (and, throughout the Term, any successor product thereto).

 

“ Capacity Payment ” with respect to any given time period, shall mean the product of (a) the Capacity Price and (b) Capacity Requirement, for such period.

 

“ Capacity Price ” with respect to any month, shall mean (a) the Negotiated Capacity Price or (b) in the event that the Parties fail to agree upon a Negotiated Capacity Price on or before the Contract UCAP Transfer Deadline, the price for UCAP for such month established pursuant to the next UCAP Monthly Supply Auction; provided, however, if no price for UCAP is established in the next UCAP Monthly Supply Auction, the price to be used is that established pursuant to the last UCAP Monthly Supply Auction in which UCAP was transacted.

 

“ Capacity Receipt Shortfall ” shall have the meaning set forth in Section 3.8(c) hereof.

 

“ Capacity Replacement Damages ” shall have the meaning ascribed thereto in Section 3.8(b) herein.

 

“ Capacity Replacement Price ” with respect to any portion of the Capacity Requirement that NEA fails to deliver to CECO hereunder, shall mean (a) the price at which CECO, acting in a commercially reasonable manner, purchases Capacity in lieu of such portion of the Capacity Requirement, plus transaction and other administrative costs reasonably incurred by CECO in purchasing such Capacity, or (b) to the extent CECO has not purchased Capacity in lieu of such portion of the Capacity Requirement, the market price for such portion of the Capacity Requirement determined in a commercially reasonable manner.

 

“ Capacity Requirement ” shall mean for the applicable month, for so long as NEA is the owner of the Facility during the Term hereof, the lesser of (a) 20 MW or (b) 10% of the Capacity recognized by the ISO as attributable to the Facility. Upon the sale, assignment or transfer by NEA of its interest in the Facility during the Term hereof, Capacity Requirement shall be fixed at the Capacity Requirement in effect on the date immediately prior to such sale, assignment or transfer.

 

“ Capacity Resale Damages ” shall have the meaning ascribed thereto in Section 3.8(c) herein.

 

“ Capacity Resale Price ” with respect to any portion of the Capacity Requirement that CECO fails to accept delivery from NEA hereunder, shall mean (a) the price at which NEA, acting in a commercially reasonable manner, re-sells Capacity in lieu of such portion of the Capacity Requirement, less transaction and other administrative costs reasonably incurred by NEA in selling such Capacity or (b) to the extent NEA has not sold Capacity in lieu of such portion of the Capacity Requirement, the market price for such portion of the Capacity Requirement determined in a commercially reasonable manner.

 

“ Capacity Supply Shortfall ” shall have the meaning set forth in Section 3.8(b) hereof.

 

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“ CECO Reorganization Event ” shall mean (a) any consolidation, merger or other form of combination of CECO with any other Person, (b) the acquisition of a majority of the outstanding shares of CECO by any Person or (c) the sale, conveyance, lease, transfer or other disposition, in one transaction or a series of related transactions, including without limitation the transfer or “spin-off” of shares of a subsidiary (collectively, a “Transfer”), affecting all or substantially all of the assets of CECO existing on the Agreement Date or hereafter acquired. For purposes of this definition, the transfer, sale or other disposition of all or substantially all of the transmission and/or distribution assets of CECO, will, in either case, constitute a “CECO Reorganization Event.”

 

“ CECO Termination Payment ” shall mean, with respect to this Agreement and NEA, an amount payable by CECO to NEA equal to the sum of the Losses (net of Gains) and Costs, expressed in U.S. Dollars, which NEA incurs as a result of the termination of this Agreement pursuant to Section 8.2 (a)(i) hereof.

 

“ Change in Law or Market Structure ” shall mean any of the following events that has a material adverse economic effect on one or both of the Parties: (a) the adoption, promulgation, modification, repeal or reinterpretation by any Governmental Entity of any Law which (or the effects of which) amends or conflicts with the Laws established or in effect as of the Agreement Date, (b) the adoption, promulgation, modification, repeal or reinterpretation by ISO of the ISO Policies which (or the effect of which) amends or conflicts with the ISO Policies established or in effect as of the Agreement Date or (c) the adoption or promulgation of a market structure that differs from the market structure reflected in the ISO Policies established or in effect as of the Agreement Date. For avoidance of doubt, a Change in Law or Market Structure shall include any event described in clauses (a), (b) or (c) above that results in CECO not being able to sell the Contract Energy purchased hereunder at a price greater than or equal to the Energy Payment prices (excluding the Support Payment) paid to NEA hereunder.

 

“ Claiming Party ” shall have the meaning set forth in Section 9.2(b) hereof.

 

“ Contract Energy ” shall have the meaning set forth in Section 3.1 hereof.

 

“ Contract UCAP Transfer Deadline ” with respect to any month, shall mean 5 PM Eastern Prevailing Time on the Business Day preceding the day by which final bids into the NEPOOL ISO Supply Auction must be submitted to be considered timely under the NEPOOL Practices and Market Rules and Procedures governing suppliers” participation in the UCAP Monthly Supply Auction.

 

“ Costs ” shall mean brokerage fees, commissions and other similar third party transaction costs and expenses reasonably incurred in terminating this Agreement; and all reasonable attorneys’ fees and expenses incurred in connection with the termination of this Agreement.

 

“ Cover Damages ” shall have the meaning set forth in Section 3.6 hereof.

 

“ Credit Support ” shall have the meaning set forth in Section 8.2(a)(i)(B) hereof.

 

“ Day-Ahead Energy Market” or “DAM ” shall have the meaning as set forth in the NEPOOL Manual for Definitions and Abbreviations.

 

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“ Delivery Point ” shall mean the Facility Bus; provided, however, that (a) if a LMP is not established for a node at the Facility Bus, or during periods of Force Majeure, NEA may deliver Contract Energy to an alternate node within the ISO control area that has a published LMP price and (b) NEA may deliver to any other delivery point mutually agreed to by the Parties.

 

“ Delivery Shortfall ” shall have the meaning set forth in Section 3.6 hereof.

 

“ DTE ” shall mean the Massachusetts Department of Telecommunications and Energy or its successor state regulatory agency.

 

“ Eastern Prevailing Time ” shall mean either Eastern Standard Time or Eastern Daylight Savings Time, as in effect from time to time.

 

“ Effective Date ” shall have the meaning set forth in Section 2.1 hereof.

 

“ Energy Payment ” shall have the meaning set forth in Section 4.1 (a)(i) hereof.

 

“ Event of Default ” shall have the meaning set forth in Section 8.1 hereof.

 

“ Existing Agreements ” shall have the meaning set forth in the Recitals.

 

“ Execution Agreement ” shall mean the Execution Agreement by and among NEA, BECO and CECO dated as of August 19, 2004.

 

“ Existing CECO 1 PPA ” shall have the meaning set forth in the Recitals.

 

“ Facility ” shall have the meaning set forth in the Recitals.

 

“ Facility Bus ” shall mean the point of interconnection between the Facility and the NEPOOL transmission system, which as of the Agreement Date is the UN.Bellinghm 13.2 NEA bus.

 

“ FERC ” shall mean the United States Federal Energy Regulatory Commission, and shall include its successors.

 

“ Force Majeure ” shall have the meaning set forth in Section 9.1(a) hereof.

 

“ Gains ” shall mean an amount equal to the present value, at an eight point one percent (8.1%) discount rate, of the economic benefit, if any (exclusive of Costs) resulting from the termination of this Agreement, determined in a commercially reasonable manner.

 

“ Governmental Entity ” shall mean any federal, state or local governmental agency, authority, department, instrumentality or regulatory body, and any court or tribunal, with jurisdiction over NEA, CECO or the Facility.

 

“ IBT Containers ” shall have the meaning as set forth in Section 3.3(a) hereof.

 

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“ Indemnified Party ” shall have the meaning set forth in Section 12.1 hereof.

 

“ Indemnifying Party ” shall have the meaning set forth in Section 12.1 hereof.

 

“ Internal Bilateral Transaction ” shall have the meaning as set forth in the NEPOOL Manual for Definitions and Abbreviations.

 

“ ISO” or ISO-NE ” shall mean the ISO New England, Inc., the independent system operator established in accordance with the NEPOOL Agreement, or its successor.

 

“ ISO Policies ” shall mean the Market Rules and Procedures, NEPOOL Agreement, NEPOOL Manual for Definitions and Abbreviations and NEPOOL Practices.

 

“ ISO Settlement Market System ” shall have the meaning as set forth in the NEPOOL Manual for Definitions and Abbreviations.

 

“ ISO UCAP Transfer Deadline ” with respect to any month, shall mean the latest date upon which Capacity for that month may be transferred under an Internal Bilateral Transaction in accordance with ISO rules.

 

“ Late Payment Rate ” shall have the meaning set forth in Section 4.3 hereof.

 

“ Law ” shall mean all federal, state and local statutes, regulations, rules, orders, executive orders, decrees, policies, judicial decisions and notifications.

 

“ Lead Participant ” shall have the meaning as set forth in the NEPOOL Manual for Definitions and Abbreviations.

 

“ LMP ” shall mean, for any ISO nodal point for any hour on any day, the “Day Ahead LMP” or “Real Time LMP” ($/MWh) at such ISO nodal point calculated in accordance with Section 2 of Market Rule 1, as reported on the ISO website at www.iso-ne.com on the “Data & Reports” page, “Hourly Markets Data” subpage and “Selectable Hourly LMP Data” category, for such nodal point on such date and time. If such price should ever cease to be published, then the LMP shall be a regularly published comparable substitute price, as agreed to by the Parties in writing.

 

“ Losses ” shall mean, with respect to any Party, an amount equal to the present value, at an eight point one percent (8.1%) discount rate, of the economic loss to it, if any (exclusive of Costs), resulting from termination of this Agreement, determined in a commercially reasonable manner.

 

“ Market Rules and Procedures ” shall mean the Market Rules, Manuals and Procedures adopted by the ISO and/or members of NEPOOL, as may be amended from time to time, and as administered by the ISO to govern the operation of the NEPOOL markets, and any applicable successor rules, manuals and procedures.

 

“ Moody’s ” shall mean Moody’s Investors Service, Inc., and any successor thereto.

 

“ MW ” shall mean a megawatt.

 

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“ MWh ” shall mean a megawatt-hour (one MWh shall equal 1,000 kWh).

 

“ NEA Termination Payment ” shall mean, with respect to this Agreement and CECO, an amount payable by NEA to CECO equal to the Losses (net of Gains) and Costs, expressed in U.S. Dollars, which CECO incurs as a result of the termination of this Agreement pursuant to Section 8.2 (a)(ii) hereof.

 

“ Negotiated Capacity Price ” shall mean the price for Capacity as agreed to by the Parties pursuant to Section 4.1(b) herein.

 

“ NEPOOL ” shall mean the New England Power Pool, or its successor.

 

“ NEPOOL Agreement ” shall mean that certain Restated New England Power Pool Agreement, as restated by an amendment dated as of December 1, 1996, as amended and restated from time to time, and any applicable successor agreement.

 

“ NEPOOL ISO Supply Auction ” shall mean the auction currently defined as the “Supply Auction” in the Market Rules and Procedures, or any successor to such auction.

 

“ NEPOOL Manual for Definitions and Abbreviations ” shall mean that certain Manual for Definitions and Abbreviations prepared by ISO-NE, as may be amended from time to time, and any applicable successor manual.

 

“ NEPOOL Practices ” shall mean the NEPOOL practices and procedures for delivery and transmission of electricity and capacity and capacity testing in effect from time to time and shall include, without limitation, applicable requirements of the NEPOOL Agreement, and any applicable successor practices and procedures.

 

“ NERC Holiday ” shall mean New Year’s Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day, and any other day declared a holiday by NERC.

 

“ Ownership Share ” shall have the meaning as set forth in the NEPOOL Manual for Definitions and Abbreviations.

 

“ Party ” and “ Parties ” shall have the meaning set forth in the first paragraph of this Agreement.

 

“ Performance Assurance ” shall mean collateral in the form of either cash, letter(s) of credit, or other security acceptable to the requesting Party.

 

“ Person ” shall mean an individual, partnership, corporation, limited liability company, limited liability partnership, limited partnership, association, trust, unincorporated organization, or a government authority or agency or political subdivision thereof.

 

“ PURPA ” shall mean the Public Utility Regulatory Policies Act of 1978, as amended.

 

“ QF ” shall have the meaning set forth in Section 6.3(a)(i) hereof.

 

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“ Quote Period ” shall have the meaning set forth in Section 4.1(b) herein.

 

“ Real-Time Energy Market” or “RTM ” shall have the meaning as set forth in the NEPOOL Manual for Definitions and Abbreviations.

 

“ Rejected Power ” shall have the meaning set forth in Section 3.7 hereof.

 

“ Replacement Power ” shall mean electricity purchased by CECO and delivered to the Delivery Point as replacement for any Delivery Shortfall. Replacement Power shall not include Contract Energy delivered to CECO on behalf of NEA pursuant to Section 3.1 hereof.

 

“ Replacement Price ” shall mean the lesser of (a) the price at which CECO, acting in a commercially reasonable manner, purchases Replacement Power, plus (i) transaction and other administrative costs reasonably incurred by CECO in purchasing such Replacement Power and (ii) additional transmission charges, if any, reasonably incurred by CECO to transmit Replacement Power to the Delivery Point, or (b) the locational marginal pricing at the Delivery Point for such Replacement Power; provided, however, that in no event shall the Replacement Price include any penalties; ratcheted demand or similar charges, nor shall CECO be required to utilize or change its utilization of its owned or controlled assets or market positions to minimize NEA’s liability.

 

“ Resale Damages ” shall have the meaning set forth in Section 3.7 hereof.

 

“ Resale Price ” shall mean the higher of (a) the price at which NEA, acting in a commercially reasonable manner, sells or is paid for Rejected Power, plus transaction and other administrative costs reasonably incurred by NEA in re-selling such Rejected Power; or (b) the LMP at the Delivery Point for such Rejected Power; provided, however, that in no event shall such price include any penalties, ratcheted demand or similar charges, and further provided that in no event shall NEA be required to utilize or change its utilization of the Facility or its other assets or market positions in order to minimize CECO’s liability for Rejected Power.

 

“ Schedule or Scheduling ” shall mean the actions of NEA or CECO and/or their designated representatives, including each Party’s Transmission Providers, if applicable, of notifying, requesting and confirming to each other the quantity of Contract Energy to be delivered on any given day or days (or in any given hour or hours) during the Term at the Delivery Point.

 

“ S&P ” shall mean Standard & Poor’s Ratings Group, a division of McGraw Hill, Inc., and any successor thereto.

 

“ Support Payment ” shall have the meaning set forth in Section 4.1(a)(i) hereof.

 

“ Term ” shall have the meaning set forth in Section 2.2 hereof.

 

“ Third-Party Quote ” with respect to any Capacity Requirement, shall mean a firm offer by an Approved Capacity Buyer to purchase Capacity from CECO in a volume and for a time period equal to such Capacity Requirement.

 

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“ Transmission Provider ” shall mean (a) ISO, its respective successor or Affiliates; (b) NEPOOL; (c) CECO; or (d) such other third parties from whom transmission services are necessary for NEA to fulfill its performance obligations to CECO hereunder.

 

“ UCAP ” shall have the meaning as set forth in the NEPOOL Manual for Definitions and Abbreviations.

 

“ UCAP Monthly Supply Auction ” shall mean the auction currently defined as the “UCAP Monthly Auction” in the NEPOOL Manual for Definitions and Abbreviations, or any successor to such auction that establishes a price for UCAP or its successor product.

 

2. EFFECTIVE DATE; CONDITIONS; TERM

 

2.1 Effective Date . The “ Effective Date ” of this Agreement shall be the Closing Date as established under the Execution Agreement.

 

2.2 Term .

 

(a) The “Term” of this Agreement shall mean the period from and including 11:59 p.m. (Eastern Prevailing Time) on the Effective Date through and including 11:59 p.m. (Eastern Prevailing Time) on September 15, 2016, unless this Agreement is sooner terminated in accordance with the provisions hereof.

 

(b) At the expiration of the Term, the Parties shall no longer be bound by the terms and provisions hereof (including, without limitation, any payment obligation hereunder), except (i) to the extent necessary to provide invoices and make payments or refunds with respect to Contract Energy or Capacity delivered prior to such expiration or termination, (ii) to the extent necessary to enforce the rights and the obligations of the Parties arising under this Agreement before such expiration or termination and (iii) the obligations of the Parties hereunder with respect to confidentiality and indemnification shall survive the expiration or termination of this Agreement and shall continue for a period of two (2) calendar years following such expiration or termination.

 

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3. DELIVERY OF CONTRACT ENERGY AND CAPACITY

 

3.1 Obligation to Sell and Purchase Contract Energy . During each hour of the Term, NEA shall sell and deliver at the Delivery Point, and CECO shall purchase and receive at the Delivery Point, electricity in the amounts set forth in Section 3.3 and otherwise in accordance with the terms and conditions of this Agreement ( “Contract Energy” ). NEA shall be permitted to satisfy its obligation to deliver Contract Energy from any source of supply available to NEA. Contract Energy delivered to CECO by NEA or on behalf of NEA by NEA’s suppliers, designees or any other Person engaged by NEA to deliver Contract Energy shall be deemed delivered by NEA hereunder and NEA shall be solely responsible for any costs payable to its suppliers for such delivery. The aforementioned obligations for NEA to sell and deliver the Energy and for CECO to purchase and receive the Energy shall be firm and subject to adjustment only to reflect performance interruptions excused by this Agreement.

 

3.2 Characteristics . Contract Energy delivered by NEA to CECO at the Delivery Point shall be in the form of three (3)-phase, sixty (60) hertz, alternating current and otherwise in the form required by Market Rules and Procedures.

 

3.3 Scheduling .

 

(a) NEA shall Schedule deliveries of Contract Energy delivered hereunder with ISO in equal hourly quantities in accordance with all NEPOOL Practices and Market Rules and Procedures applicable thereto as set forth in Schedule 3.3. Furthermore, Contract Energy will be sold and delivered for purchase by CECO in the form of Internal Bilateral Transactions ( “IBTs” ) and NEA will use commercially reasonable efforts to transfer Contract Energy in the DAM; provided, however, that if such transfer cannot be made in the DAM, the Contract Energy shall be transferred in the RTM. All Contract Energy will be delivered to a specific node and not a zone. NEA will submit IBT Containers, as defined below, and notify CECO that the IBT Containers have been submitted into the ISO Settlement Market System. Subject to the satisfaction of NEA’s obligations in this Section 3.3, CECO will confirm the IBT Container in the ISO Settlement Market System. For purposes of this Agreement, “IBT Container” shall mean the form of electronic contract submittal, as implemented in the ISO Settlement Market System effective March 1, 2003 as amended from time to time, that requires CECO to confirm the general parameters of the IBT. IBTs shall be submitted and confirmed for the longest term permitted by the ISO. NEA shall be responsible for any inaccuracies in any schedules and shall correct such schedules upon notification by CECO; provided, however, CECO shall cooperate with NEA in connection with any such Scheduling and bidding and in complying with all NEPOOL Practices and shall promptly provide information reasonably requested by NEA for the purpose of assisting NEA with its Scheduling obligations hereunder. Notwithstanding the agreement to Schedule all Contract Energy in the DAM, the Energy Payment made by CECO to NEA shall be as calculated pursuant to Section 4.1(a) hereof.

 

(b) The Parties agree to use commercially reasonable efforts to comply with all applicable ISO Policies in connection with the Scheduling and delivery of Contract Energy hereunder. For administrative convenience, the Parties agree that all Contract Energy deliveries and receipts made pursuant to this Agreement and any other power purchase agreement between the Parties may be provided for in a single Schedule. Penalties or similar charges assessed by a Transmission Provider and caused by a Party’s noncompliance with the Scheduling obligations set forth in this Section 3.3 shall be the responsibility of the Party whose action or inaction caused the penalty.

 

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3.4 Lead Participant; Ownership Share . NEA, or any entity so identified by NEA, shall be the Lead Participant of the Facility and CECO shall use commercially reasonable efforts to transfer such designation to NEA or the entity so identified by NEA. CECO shall use commercially reasonable efforts to transfer to NEA, or any entity so identified by NEA, the Ownership Share now held by CECO relating to the Facility.

 

3.5 Sales for Resale . All Contract Energy delivered by NEA to CECO hereunder shall be sales for resale, with CECO reselling such Contract Energy. CECO shall provide NEA with any certificates reasonably requested by NEA to evidence that the deliveries of Contract Energy hereunder are sales for resale. Nothing in this Agreement shall be construed to prohibit or restrict such resale by CECO.

 

3.6 Failure of NEA to Deliver Scheduled Contract Energy; Cover Damages .

 

Subject to Section 8.1(g) hereof, in the event NEA fails to deliver Contract Energy it is obligated to deliver hereunder and such failure is not excused under the terms of this Agreement (such undelivered Contract Energy to be referred to herein as the “Delivery Shortfall” ), then NEA shall pay CECO, on the date payment would otherwise be due in respect of the month in which the failure occurred, an amount for such Delivery Shortfall equal to the Cover Damages. “Cover Damages” means an amount equal to (i) the amount, if any, by which (A) the Replacement Price ($/MWh) multiplied by the quantity (in MWh) of the Delivery Shortfall, exceeds (B) the Energy Payment that would have been paid pursuant to Section 4.1 hereof had the Delivery Shortfall been delivered, plus (ii) any applicable penalties assessed by NEPOOL, ISO-NE or any other party against CECO as a direct result of NEA’s failure to deliver such Contract Energy; provided, however, CECO shall use commercially reasonable efforts to purchase replacement power or otherwise mitigate such damages, penalties and related costs and charges wherever possible pursuant to applicable NEPOOL, ISO-NE or any other party’s tariffs and operating procedures then in effect. Except as otherwise provided in Section 8.1(g) and 8.2 hereof, the damages provided in this Section 3.6 shall be the sole and exclusive remedy of CECO for any failure of NEA to deliver Contract Energy that it is obligated to deliver hereunder. The invoice for the amount payable pursuant to this Section 3.6 shall include a written statement explaining in reasonable detail the calculation of such amount.

 

3.7 Failure by CECO to Accept Delivery of Contract Energy; Resale Damages . If CECO fails to accept all or part of the Contract Energy it is obligated to accept hereunder and such failure to accept is not excused under the terms of this Agreement (such Contract Energy is referred to herein as “Rejected Power” ), then CECO shall pay NEA, on the date payment would otherwise be due in respect of the month in which the failure occurred, an amount for such Rejected Power equal to the Resale Damages. “Resale Damages” means an amount equal to (a) the amount, if any, by which (i) the Energy Payment that would have been paid pursuant to Section 4.1(a) hereof for such Rejected Power, had it been accepted, exceeds (ii) the Resale Price ($/MWh) multiplied by the quantity (in MWh) of Rejected Power resold by NEA, plus (b) any applicable penalties assessed by NEPOOL, ISO-NE or any other party against NEA as a direct result of CECO’s failure to accept such Contract Energy; provided, however, NEA shall use commercially reasonable efforts to sell such Rejected Power or otherwise mitigate such damages, penalties and related costs and charges wherever possible pursuant to applicable NEPOOL, ISO-NE or any other party’s tariffs and operating procedures then in effect. Except as otherwise provided in Section 8.1(h) and 8.2 hereof, the damages provided in this Section 3.7 shall be the sole and exclusive remedy of NEA for any failure of CECO to accept delivery of Contract Energy that it is obligated to accept hereunder. The invoice for the amount payable pursuant to this Section 3.7 shall include a written statement explaining in reasonable detail the calculation of such amount.

 

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3.8 Obligation to Sell and Purchase Capacity Requirements .

 

(a) During the Term, NEA shall sell to CECO and CECO shall purchase from NEA the Capacity Requirement. In the event there is no longer a market for Capacity in New England, NEA shall not be obligated to sell and CECO shall not be obligated to purchase the Capacity Requirement.

 

(i) For so long as NEA is the owner of the Facility, NEA shall be permitted to satisfy its obligation to deliver the Capacity Requirement only from the Facility. In the event that NEA sells, assigns or transfers its interests in the Facility, NEA shall be permitted to satisfy its obligation to deliver the Capacity Requirement from any source of supply available to NEA. Nothing in this Agreement shall be construed to restrict or bar NEA from any sale, assignment or transfer of its interests in the Facility.

 

(ii) The Parties acknowledge that as of the Agreement Date, the Market Rules and Procedures do not impose any locational requirement with respect to Capacity. In the event that, at any time during the Term, the Market Rules and Procedures do impose a zonal, nodal or other geographic locational requirement, the Capacity Requirement will be fulfilled for the zone, node or other geographic area in which the Facility is located.

 

(b) If NEA fails to provide CECO with all or part of the Capacity Requirement it is required to provide pursuant to Section 3.8 (a) hereof (a “Capacity Supply Shortfall” ) and such failure is not excused under the terms of this Agreement, then the Capacity Replacement Damages associated with such Capacity Supply Shortfall shall be deducted from amounts payable by CECO hereunder for the next succeeding month or paid by NEA to CECO, at CECO’s election. “Capacity Replacement Damages,” with respect to any portion of the Capacity Requirement that NEA fails to deliver to CECO hereunder, means an amount equal to: (i) the amount, if any, by which the Capacity Replacement Price exceeds the Capacity Price, multiplied by the Capacity Supply Shortfall, plus (ii) any penalties assessed by NEPOOL, ISO-NE or any other party against CECO as a direct result of NEA’s failure to deliver the Capacity Requirement in accordance with Section 3.8 (a) hereof. Subject to Section 8.1(g) hereof, the damages provided in this Section 3.8(b) shall be the sole and exclusive remedy of CECO for any failure of NEA to deliver the Capacity Requirement hereunder. With respect to any calendar month during the Term, NEA will be deemed to have failed to deliver the Capacity Requirement for such calendar month if it has not scheduled a bilateral transfer of the Capacity Requirement (or otherwise effected delivery in accordance with applicable Market Rules and Procedures as in effect at any time during the Term) on or before the Contract UCAP Transfer Deadline.

 

(c) If CECO fails to accept delivery of all or part of the Capacity Requirement it is required to purchase pursuant to Section 3.8 (a) hereof (a “Capacity Receipt Shortfall” ), and such failure is not excused under the terms of this Agreement, then the Capacity Resale Damages associated with such Capacity Receipt Shortfall shall be payable by CECO on the date payment would otherwise be due in respect of the month in which the failure occurred. “Capacity Resale Damages,” with respect to any portion of the Capacity Requirement that CECO fails to accept delivery of from NEA hereunder, means an amount equal to: (i) the amount, if any, by which the Capacity Price exceeds the Capacity Resale Price, multiplied by the Capacity Receipt Shortfall, plus (ii) any penalties assessed by NEPOOL, ISO-NE or any other party against NEA as a direct result of CECO’s failure to accept delivery of the Capacity Requirement

 

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in accordance with Section 3.8(a) hereof. Subject to Section 8.1(h) hereof, the damages provided in this Section 3.8(c) shall be the sole and exclusive remedy of NEA for any failure of CECO to accept delivery of the Capacity Requirement hereunder and there shall be no adjustment of the Energy Payment or Support Payment as a result of CECO’s failure to accept delivery of such Capacity Requirement. With respect to any calendar month during the Term, CECO will be deemed to have failed to accept delivery of the Capacity Requirement for such calendar month if it has not confirmed a schedule (or an equivalent commitment instrument) entered by NEA for bilateral transfer of the Capacity Requirement (or otherwise effected acceptance of delivery in accordance with applicable Market Rules and Procedures as in effect at any time during the Term) on or before the Contract UCAP Transfer Deadline.

 

3.9 Delivery Point .

 

(a) All Contract Energy shall be delivered hereunder by NEA to CECO at the Delivery Point.

 

(b) Except as provided for in Section 3.3(b) herein, NEA shall be responsible for all transmission and distribution charges, including applicable ancillary service charges, line losses, congestion charges and other NEPOOL or applicable system costs or charges associated with transmission incurred, in each case, in connection with the delivery of Contract Energy to the Delivery Point.

 

(c) Except as provided for in Section 3.3(b) herein, CECO shall be responsible for all transmission charges, ancillary services charges, line losses, congestion charges and other NEPOOL or applicable system costs or charges associated with transmission, incurred, in each case, in connection with the transmission of Contract Energy delivered under this Agreement from and after the Delivery Point.

 

4. PAYMENTS FOR CONTRACT ENERGY AND CAPACITY REQUIREMENTS

 

4.1 Payment for Contract Energy and Capacity Requirements .

 

(a) All Contract Energy delivered to CECO under this Agreement shall be purchased by CECO for an amount calculated pursuant to this Section 4.1(a).

 

(i) Beginning on the Effective Date and continuing for the Term, CECO shall pay NEA a monthly energy payment (the “Energy Payment” ) equal to the sum of: (A) the product of (I) the Contract Energy (in MWhs) delivered to CECO hereunder during each hour during such month that cleared in the DAM and (II) the hourly DAM LMP Price for such hour at the Delivery Point for MWhs that cleared in the DAM for such month, plus (B) the product of (I) the Contract Energy (in MWhs) delivered to CECO hereunder during each hour during such month that cleared in the RTM and (II) the hourly RTM LMP Price for such hour at the Delivery Point for MWhs that cleared in the RTM for such month, plus (C) a support payment (the “Support Payment” ) equal to the product of (I) the lesser of: the total Contract Energy (in MWhs) delivered to CECO hereunder during such month or the MWh quantity for the applicable month, as set forth in Schedule 4.1(a), and (II) the $/MWh price (the “Monthly Support Payment Price” ) for the applicable month, as set forth in Schedule 4.1(a). Notwithstanding anything in this Agreement to the contrary, no exercise by NEA of its right under Section 8.2 to reduce Contract Energy delivered to CECO as a result of CECO’s failure to timely pay for such Contract Energy shall have the effect of reducing the Support Payment as calculated pursuant to this Section.

 

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(ii) CECO’s sole payment obligation, including without limitation any Support Payment obligation, with respect to Contract Energy is limited to the payment of the Energy Payment for Contract Energy delivered in accordance with the terms of this Agreement by or on behalf of NEA to the Delivery Point.

 

(b) All Capacity delivered to CECO under this Agreement shall be purchased by CECO at the Capacity Price. CECO’s sole payment obligation with respect to Capacity is limited to the payment of the Capacity Payment for the Capacity Requirement actually provided to CECO in accordance with the terms of this Agreement by or on behalf of NEA. The Parties will negotiate in good faith and in a commercially reasonable manner towards agreement upon a negotiated price for Capacity (the “Negotiated Capacity Price” ) for each month of the Term in accordance with the terms and provisions of this Section 4.1(b). At any time during the Term, NEA may request CECO to provide it with an indicative quote for the Capacity Requirement for one month or any period of months (the “Quote Period” ) as set forth in such request. Within six (6) Business Days after CECO’s receipt of such request, CECO will provide NEA with an indicative quote for a purchase price of such Capacity Requirement for the Quote Period which CECO in its commercially reasonable judgment believes reflects the fair market value for such Capacity Requirement. Within one Business Day after its receipt of such indicative quote, NEA will inform CECO as to whether NEA accepts or rejects the indicative quote.

 

(i) In the event that NEA accepts the indicative quote, the pricing reflected in such indicative quote will be established as the Negotiated Capacity Price for such Capacity Requirement unless CECO notifies NEA, within one Business Day after NEA’s acceptance, that CECO retracts the indicative quote. CECO may retract the indicative quote only in the event that CECO, in its commercially reasonab