POWER PURCHASE AGREEMENTPower Purchase Agreement |
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Gulf Power Company has requested confidential treatment for certain portions of this document pursuant to an application for confidential treatment sent to the Securities and Exchange Commission. Gulf Power Company has omitted portions from this filing and filed them separately with the Securities and Exchange Commission. Such omissions are designated as “[**]”.
POWER PURCHASE AGREEMENT
DATED March 16, 2009
SHELL ENERGY NORTH AMERICA (US), L.P.
AND
GULF POWER COMPANY
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EXHIBITS
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POWER PURCHASE AGREEMENT
This Power Purchase Agreement (this “ Agreement ”) dated March 16, 2009 (the “ Effective Date ”) is entered into between Shell Energy North America (US), L.P., a Delaware limited partnership (“ Shell ”), and Gulf Power Company, a Florida corporation (“ Gulf Power ”).
BACKGROUND STATEMENT
Under the Tenaska ECA (as defined in Section 1.1), Owner owns and operates the Plant (as defined in Section 1.1) and Shell has the exclusive right to the Plant’s generating capacity to convert Fuel (as defined in Section 1.1) to Energy (as defined in Section 1.1) and to receive all Energy capable of being generated by the Plant. Under this Agreement, Gulf Power will pay Shell a fee to reserve all of the generating capacity of the Plant and to have the exclusive right to the Plant’s generating capacity to convert Fuel to Energy and to receive all Energy capable of being generated by the Plant. When Gulf Power desires to convert Fuel to Energy and to receive Energy from Shell, Gulf Power will notify Shell of the timing and amounts of Energy to be generated by the Plant and will cause Fuel to be delivered to the Plant for conversion into Energy and Shell will cause Owner to perform the necessary Energy conversion services. This Agreement sets forth the terms under which Gulf Power will deliver Fuel to Shell and receive Energy generated by the Plant and the payments to be made by Gulf Power as compensation for reserving the Plant’s generating capacity and for the Energy conversion services to be performed as provided herein.
ARTICLE 1 DEFINED TERMS; INTERPRETATION
1.1 Defined Terms . Unless otherwise required by the context in which a defined term appears, each of the following capitalized terms shall, for all purposes of this Agreement, have the respective meaning set forth below. “ Adjusted Fired Hour Payments ” means for a Combustion Turbine for any Contract Year, the amounts, if any, payable by Gulf Power to Shell according to Sections 8.5(d), 8.5(e) and 8.5(f).
“ Affiliate ” means, when used with reference to a specified Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with the specified Person. For purposes of the foregoing, “control”, “controlled by” and “under common control with” with respect to any Person means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such
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Person, whether through the ownership of voting securities or partnership interests, by contract or otherwise.
“ AGC ” means operation of equipment at the Plant necessary to enable a transmission control area operator to adjust the Plant’s output automatically from a control area’s system control center.
“ Agreement ” has the meaning set forth in the introductory paragraph of this Agreement and includes this Agreement and all exhibits referenced in and attached to this Agreement, as the same may be amended from time to time.
“ Alternate Delivery ” means delivery of Energy from an Alternate Resource to an Alternate Delivery Point.
“ Alternate Delivery Point ” means any point on the Transmission System (including interfaces between the Transmission System and other transmission systems) at which Gulf Power is (i) capable of receiving Energy in the quantity to be delivered at such point pursuant to Part III of the Southern OATT as a network resource, and (ii) able to transmit such Energy to its loads without being required to either materially change the output of generating resources available to Gulf Power or materially change the schedule of its preexisting power purchases or sales (other than purchases or sales pursuant to this Agreement) where such schedule change would result in material economic harm to Gulf Power.
“ Alternate Resource ” means a generating resource (other than the Plant) for which Shell has an unencumbered first call right, which is connected to the Transmission System, either directly or through other transmission systems, and which in Gulf Power’s sole judgment is reasonably reliable to meet Gulf Power’s schedule.
“ Ancillary Services ” means services ancillary to the operation of a generating facility that can be provided in addition to the sale of Energy or capacity, including voltage/VAR support.
“ Applicable Laws ” means all laws, ordinances, rules, regulations, orders, interpretations, Permits, judgments, decrees, injunctions, writs and orders of any Governmental Authority or arbitrator that are applicable to either or both of the Parties, the Plant or the terms of this Agreement.
“ Arbitration Body ” means JAMS/Endispute or, if it no longer exists or no longer handles commercial arbitration matters, the Center for Public Resources or, if it no longer exists or no longer handles commercial arbitration matters, the American Arbitration Association, or such other arbitration body as the Parties may agree.
“ Availability Bonus Payments ” means the amounts, if any, that Gulf Power is required to pay to Shell according to Section 8.6.
“ Availability Payments ” means Peak Availability Payments and Off Peak Availability Payments.
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“ Availability Tolerance ” means, with respect to an hour, the greater of (a) [**] MWhs or (b) [**]% of Base Requested Energy for such hour.
“ Barrel ” means 42 gallons.
“ Base Delivered Energy ” means for any hour the least of (a) Delivered Energy for such hour, (b) Requested Energy for such hour, and (c) the Contract Capacity in effect during such hour multiplied by one hour.
“ Base Fired Hour Rate ” means, for any Month, $[**]/Factored Fired Hour multiplied by the Escalation Factor applicable to such Month.
“ Base Requested Energy ” means for any hour the lesser of (a) Requested Energy for such hour and (b) the product of (i) the Contract Capacity in effect during such hour minus the sum of (A) the amount of Contract Capacity, if any, for which Shell has elected to make a Cover Payment according to Section 5.7 in respect of such hour, (B) the amount of Contract Capacity, if any, associated with Energy withheld according to Section 5.9 during such hour, and (C) for each Combustion Turbine with respect to which Gulf Power has not requested Power Augmentation in accordance with Section 1 of Exhibit 5.2, the Power Augmentation Capacity of such Combustion Turbine, multiplied by (ii) one hour.
“ Bonus Availability Factor ” means the Bonus Availability Factor calculated according to Section 1 of Exhibit 8.6.
“ Bonus Availability Target ” means [**]% for each Contract Year.
“ Bonus Hour ” means, (i) with respect to the First Contract Year, each of the Peak Hours on each of the 30 Days during the 12-Month period inclusive of both the Pre-Term Period and the First Contract Year for which the average Spark Spread for all Peak Hours of such Day is the highest; and (ii) after the First Contract Year, each of the Peak Hours on each of the 30 Days of such Contract Year for which the average Spark Spread for all Peak Hours of such Day is the highest.
“ Btu ” means British thermal unit defined as the amount of heat required to raise the temperature of one avoirdupois pound of pure water from fifty-eight and one-half degrees Fahrenheit (58.5°F) to fifty-nine and one-half degrees Fahrenheit (59.5°F) at a constant pressure of fourteen and sixty-five hundredths pounds per square inch absolute (14.65 psia).
“ Business Day ” means any Day other than a Saturday, a Sunday or a Day on which commercial banks in New York, New York are authorized or required to close.
“ Capacity Payments ” means the payments Gulf Power is required to make to Shell according to Section 4.1.
“ Capacity Reservation Rate ” means for each Month during the Operating Term, the amount expressed in $ per Month per MW of Contract Capacity set forth in Exhibit 4.1.
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“ Central Prevailing Time ” means Central Daylight Savings Time when such time is applicable in Houston, Texas, and otherwise means Central Standard Time.
“ Change of Law ” has the meaning set forth in Section 21.1.
“ Claims ” means all claims and actions, whether arising prior to or after the Termination Date, that directly or indirectly relate to the indemnities in this Agreement, and the resulting losses, damages, expenses, attorneys’ fees, experts’ fees and court costs, whether incurred through settlement or otherwise.
“ Cold Steam Turbine Start ” means a Steam Turbine Start that occurs more than forty-eight (48) hours since the previous Shutdown.
“ Combustion Turbine ” means each of the combustion turbines included in the definition of “Generating Unit.”
“ Communications and Telemetry Equipment ” means the equipment, communication channels and related items at the Plant that are necessary to transmit information to Gulf Power’s receiving equipment to enable Gulf Power to monitor the Plant’s operating characteristics on a continuous basis, which consists of all inputs/outputs to/from the Plant’s distributed control system with reasonably acceptable scan rates.
“ Confidential ” means with respect to a Party’s obligations regarding Confidential Information both during the term of this Agreement and for a period of five years following the Termination Date:
(a) to keep in safe custody all Confidential Information and not to disclose to any third party any Confidential Information except with the prior written consent of the Party entitled to protection against unauthorized disclosure of Confidential Information; and
(b) to limit access to Confidential Information to the Party’s officers, directors, employees (and the officers, directors and employees of any other Person that manages the Party) and representatives (including attorneys, accountants and full-time individual consultants) who reasonably require the information in connection with this Agreement, to inform each officer, director, employee and representative of the foregoing restrictions on disclosure of such Confidential Information and to ensure compliance with such restrictions.
“ Confidential Information ” has the meaning set forth in Section 15.1.
“ Contract Capacity ” means the capacity of the Plant (expressed in MW) to produce Energy as determined according to Section 4.3, and shall include the Power Augmentation Capacity of each Combustion Turbine.
“ Contract Year ” means the period of time beginning on the first day of the Operating Term
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and ending on the last day of May, each one-year period thereafter during the Operating Term, and the period beginning on the day after the last such one-year period during the Operating Term and ending on the last day of the Operating Term.
“ Costs ” has the meaning set forth in Section 11.3.
“ Cover Determination ” has the meaning set forth in Section 5.7(a).
“ Cover Event ” has the meaning set forth in Section 5.7(a).
“ Cover Order ” has the meaning set forth in Section 5.7(a).
“ Cover Payment ” has the meaning set forth in Section 5.7(g).
“ Covered Amount ” has the meaning set forth in Section 5.7(a).
“ Creditworthy ” means a Person has an investment grade rating such that its senior unsecured debt (or issuer rating if such Person has no senior unsecured debt rating) is rated at least BBB by Standard & Poor’s Rating Group and at least Baa2 by Moody’s Investor Services, Inc. and at least BBB by Fitch Ratings where such Person has a senior unsecured debt rating (or issuer rating if such Person has no senior unsecured debt rating) from each of such foregoing rating agencies (the “ Rating Agencies ”), or from an entity succeeding to the functions and business of such rating agencies. While a Person is not required to have a senior unsecured debt rating (or issuer rating if such Person has no senior unsecured debt rating) from each of the foregoing rating agencies, a Person shall no longer be “Creditworthy” if such Person ceases to have a senior unsecured debt rating (or issuer rating if such Person has no senior unsecured debt rating) from at least one of Standard & Poor’s Rating Group, Moody’s Investor Services, Inc. or Fitch Ratings, or from an entity succeeding to the functions and business of such rating agencies.
“ CT Start Rate ” means for any Month $[**]/Gulf Power Factored CT Start multiplied by the Escalation Factor applicable to such Month.
“ CT Start Reduction ” means, for the Contract Year1, (a) [**] for any Contract Year in which there are more than [**] but less than [**] Gulf Power Factored CT Starts, (b) [**]for any Contract Year in which there are more than [**] but less than [**] Gulf Power Factored CT Starts, (c) [**] for any Contract Year in which there are more than [**] but less than [**] Gulf Power Factored CT Starts, (d) [**] for any Contract Year in which there are more than [**] but less than [**] Gulf Power Factored CT Starts, and (e) [**] for any Contract Year in which there are more than [**] but less than [**] Gulf Power Factored CT Starts, it being understood that the CT Start Reduction shall be zero for any Contract Year in which there are less than [**] Gulf Power Factored CT Starts; provided, however, that the First Contract Year shall include any Pre-Term Activities.
_________________________ 1 For purposes of this definition, the First Contract Year shall be deemed to include the Pre-Term Period and the Pre-Term Activities.
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“ Cumulative Provisional Peak Availability Amount ” has the meaning set forth in Section 8.7(b).
“ Cumulative Provisional Off Peak Availability Amount ” has the meaning set forth in Section 8.8(b).
“ Daily Fuel Oil Price ” means a per gallon price for Fuel Oil equal to the [**] or such supply point mutually agreeable to the Parties, plus a commercially reasonable cost-based Fuel Oil transportation and supplier margin adder to be calculated by Gulf Power plus any applicable Taxes and surcharges. The Operating Committee shall establish the procedures and methodology that Gulf Power shall use for determining the Fuel Oil transportation and supplier margin adder.
“ Daily Gas Index Price ” means for any Gas Day an amount (expressed in $/MMBtu) determined as follows:
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