POWER PURCHASE AGREEMENT

Exhibit 10.53

 

POWER PURCHASE AGREEMENT

 

Dated as of November 17, 2004

 

Between

 

Dynegy Power Marketing, Inc.

as Seller

 

And

 

Constellation Energy Commodities Group, Inc.

as Purchaser

TABLE OF CONTENTS

 

 

i

 

ii

 

Appendix A

Appendix B

Appendix C

Appendix D

Appendix E

Appendix F

Appendix G

Appendix H

Appendix I

Appendix J

Appendix K

 

 

iii

POWER PURCHASE AGREEMENT

 

This POWER PURCHASE AGREEMENT (this “ Agreement ”), dated as of November 17, 2004, is entered into between Dynegy Power Marketing, Inc., a Texas corporation (“ Seller ”), and Constellation Energy Commodities Group, Inc. a Delaware corporation (“ Purchaser ”) (each, a “ Party ” and collectively, the “ Parties ”).

 

RECITALS

 

A. Seller has rights to electrical capacity and energy from the Facility, located in Kendall County, Illinois, pursuant to a “Power Purchase Agreement” between it and LSP-Kendall Energy, LLC (“ Kendall ”) entered into on February 25, 1999 (“ Kendall PPA ”).

 

B. Seller wishes to deliver and sell to Purchaser, and Purchaser wishes to purchase and take from Seller, electrical capacity and energy from the Facility on the terms and conditions of this Agreement.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth in this Agreement, and for other good and valuable consideration, the receipt and adequacy of which is acknowledged, the Parties hereby agree as follows:

 

AGREEMENT

 

ARTICLE I

 

DEFINITIONS; INTERPRETATION

 

Section 1.1 Defined Terms . Unless otherwise defined herein or in any exhibit, schedule or appendix hereto, the following terms, when used herein or in any exhibit, schedule or appendix hereto shall have the meanings set forth below.

 

“ Actual Contract Capacity ” means, as to a Dedicated Unit, the sum of the Standard Capacity and the Supplemental Capacity of such Dedicated Unit as each is adjusted in accordance with the Ambient Condition Adjustment Formulas to prevailing ambient conditions.

 

“ Additional Enforcement Action ” has the meaning assigned to such term in Section 14.7

 

“ Additional Scheduled Maintenance Outage ” shall have the meaning assigned to such term in Section 5.2(c).

 

“ 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.

 

“ Agreement ” means this Power Purchase Agreement and the Appendices hereto, which are hereby incorporated herein by reference.

 

“ Ambient Condition Adjustment Formulas ” means formulas, as adjusted from time to time pursuant to Appendix A, provided by the Facility construction contractor or the applicable equipment manufacturer to customers other than Kendall for similar equipment used to calculate the expected capacity of a Dedicated Unit under varying prevailing ambient conditions, which formulas shall not be unreasonably inconsistent with the formulas used for such purpose for comparable equipment pursuant to Prudent Industry Practice.

 

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“ Appendix ” means an appendix attached to this Agreement.

 

“ Assignment and Assumption Agreement ” shall have the meaning assigned to such term in Section 2.1.

 

“ Available Contract Capacity ” means, as to a Dedicated Unit, the actual quantity of Net Electrical Output that such Dedicated Unit is capable of generating at any given time if such Dedicated Unit was Dispatched in accordance with the Design Limits.

 

“ Availability Adjustment Factor ” or “AAF” means, as to a Dedicated Unit, the actual availability adjustment factor calculated for each Billing Period in accordance with the following formula:

 

(i)	If the Adjusted Availability is greater than 0.975, then

 

AAF = 1.00 + ((Adjusted Availability – 0.975) * 0.5); otherwise

 

(ii)	If the Adjusted Availability is greater than or equal to 0.95, then AAF = 1.00 ; otherwise,

 

(iii)

If the Adjusted Availability is greater than or equal to 0.80 then,

 

AAF = 1.00 – (0.95 - Adjusted Availability); otherwise,

 

(iv)

 

AAF = 1.00 – ((0.95 – 0.80) + ( 0.80 – Adjusted Availability) * 2))

 

where:

 

Adjusted Availability = (AH – EFOH)/AH ; and,

 

AH (Adjusted Hours) = Total Hours in the Year, less the sum of Seller’s Force Majeure Event hours and Scheduled Maintenance Outage hours.

 

EFOH = the sum of the Equivalent Forced Outage Hours of the preceding twelve-Month period. For the purpose of calculating EFOH, the Equivalent Forced Outage Hours for November 2003 through November 2004 shall have the values determined pursuant to the Kendall PPA.

 

“ Billing Period ” means each Month used for billing purposes pursuant to Section XIII.

 

“ BTU ” means British Thermal Units.

 

“ Break Up Fee ” has the meaning assigned to such term in Section 18.3.

 

“ Business Day ” means any Day except Saturday, Sunday or a weekday that is observed as a legal holiday in the state of Illinois.

 

“ Capacity Factor ” means, as to a Dedicated Unit over a specified period of time, the ratio expressed as a percentage, of (a) the total Net Electrical Output of such Dedicated Unit requested or projected to be requested for Dispatch pursuant to this Agreement divided by (b) the maximum Net Electrical Output of such Dedicated Unit that Purchaser is entitled or projected to be entitled to request pursuant to this Agreement.

 

“ Central Prevailing Time ” means Central Daylight Saving Time when such time is applicable and otherwise means Central Standard Time.

 

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“ Change-in-Law ” means, after the Effective Date, the adoption, imposition, promulgation or modification by a Government Agency of any Law or Governmental Approval, or the issuance of an order, judgment, award or decree of a Government Agency having the effect of the foregoing.

 

“ Change-in-Law Taxes ” means any Taxes of the United States or the state of Illinois arising from a Change-in-Law and imposed on or measured by the volume or amount of consumption of fuel, the production of energy or the provision of electric generation capacity, or gross revenue, gross receipts or comparable measure thereof, and whether characterized as an ad valorem, sales, gross receipts, BTU, energy production or other similar Tax. A Change-in-Law Tax must result in either a net increase or a net decrease in the affected Tax due by the appropriate Party and shall not include changes in Federal or state Tax Laws that have the effect of substituting a new Tax for an existing Tax (e.g., eliminate property taxes in favor of tax on energy). Change-in-Law Taxes shall not include any Taxes imposed by a local or municipal political subdivision of the state of Illinois or any Taxes upon or measured by the income or net income of either Party.

 

“ Claims ” means any claims, judgments, losses, liabilities, costs, expenses (including reasonable attorneys’ fees) and damages of any nature whatsoever (except workers’ compensation claims) in relation to personal injury, death or property damage incurred or made by third parties.

 

“ Collateral Amount ” means, for any period during the Term, the corresponding amount set forth on Appendix J, plus (ii) Seven Million, Five Hundred Thousand Dollars ($7,500,000).

 

“ Commercially Reasonable ” or “ Commercially Reasonable Efforts ” means, with respect to any purchase or sale or other action required to be made, attempted or taken by a Party under this Agreement, such efforts as a reasonably prudent business would undertake for the protection of its own interest under the conditions affecting such purchase or sale or other action, including without limitation, the amount of notice of the need to take such action, the duration and type of the purchase or sale or other action, the competitive environment in which such purchase or sale or other action occurs, and other material considerations. To the extent that in the context used, the phrase relates to Seller using Commercially Reasonable Efforts to cause Kendall to take (or refrain from taking) an action (or words of similar effect) (i) Seller shall be deemed to have used Commercially Reasonable Efforts if it diligently exercises its rights as purchaser under the Kendall PPA in a manner consistent with the other provisions of this definition, to cause Kendall to take (or refrain for taking) such action and (ii) for the purpose of determining whether the efforts taken by Seller are those a reasonably prudent business would undertake for the protection of its own interest, Seller’s own interest shall be determined as if Seller was the only beneficiary of the rights and obligations under the Kendall PPA and had not provided the benefit of such rights and obligations to Purchaser pursuant to this Agreement .

 

“ Common Facilities ” means the equipment of the Facility (other than the Units) necessary for the generation and transmission of Net Electrical Output from the Dedicated Units including, but not limited to, any such necessary control room, machine shops, warehouse, parking, domestic water supply and waste disposal, switch yards, electrical bus bars, Interconnection Facilities, and Fuel Interconnection Facilities.

 

“ Commonwealth Edison ” means Commonwealth Edison Company, an Illinois Corporation, or its successors or assigns related to the Electrical Interconnection Agreement.

 

“ Contest ” means, with respect to any Person, a contest of (a) any Governmental Approval, acts or omissions by Governmental Agencies or any related matters or (b) the amount or validity of any claim pursued by such Person in good faith and by appropriate legal, administrative or other proceedings diligently conducted so long as: (i) appropriate notations are included in the Parties’ financial statements regarding possible liabilities in accordance with GAAP, (ii) the contesting Party could not reasonably be expected to be prevented from performing its material obligations under this Agreement pending the outcome of such contest and (iii) during the period of such contest the enforcement of any material claim against the contesting Party is effectively stayed or reasonably protected by adequate financial reserves.

 

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“ Contract Capacity ” means, as to any Dedicated Unit, the sum of the Contract Standard Capacity and the Contract Supplemental Capacity for such Dedicated Unit.

 

“ Contract Standard Capacity ” means, for each Dedicated Unit, the generating capacity of such Dedicated Unit without duct firing or steam injection at Reference Ambient Conditions, as such capacity is determined in accordance with Appendix A.

 

“ Contract Standard Capacity Test ” has the meaning assigned to such term in Appendix A.

 

“ Contract Supplemental Capacity ” means, for each Dedicated Unit, the generating capacity of such Dedicated Unit in excess of the Contract Standard Capacity achieved with duct firing and steam injection at Reference Ambient Conditions, as such capacity is determined in accordance with Appendix A.

 

“ Contract Supplemental Capacity Test ” has the meaning assigned to such term in Appendix A.

 

“ Control Center ” means the generation control center of Commonwealth Edison or the Independent System Operator designated pursuant to Section 7.4(a) as the primary control center for the Dispatch of the Dedicated Units.

 

“ Costs ” means, with respect to Purchaser, brokerage fees, commissions and other similar third party transaction costs and expenses reasonably incurred by Purchaser in terminating any arrangement pursuant to which it has hedged its obligations; and all reasonable attorneys’ fees and expenses incurred by Purchaser in connection with the termination of the Agreement pursuant to Section 18.3.

 

“ Credit Rating ” means, with respect to any entity, the rating then assigned to such entity’s unsecured, senior long-term debt obligations (not supported by third party credit enhancements) or if such entity does not have a rating for its senior unsecured long-term debt, then the rating then assigned to such entity as an “issuer rating” by S&P or Moody’s.

 

“ Day ” or “ Calendar Day ” means the 24-hour period beginning and ending at 12:00 midnight (Central Prevailing Time). The terms Day and Calendar Day may be used interchangeably and shall have the same meaning.

 

“ Dedicated Units ” means the two Units of the Facility, designated as “Unit 1” and “Unit 2”, the Actual Contract Capacity of each of which is dedicated to Purchaser pursuant to this Agreement.

 

“ Default Rate ” has the meaning assigned to such term in Section 13.5.

 

“ Delivered Cost of Fuel ” means (a) all costs incurred by Purchaser to cause gas to be delivered to the Fuel Metering Points when gas has been scheduled for delivery to the Fuel Metering Points, or (b) if no gas has been scheduled for delivery to the Fuel Metering Points, the Gas Index.

 

“ Delivery Excuse ” has the meaning assigned to such term in Section 17.4(a).

 

“ Delivery Date ” shall have the meaning set forth in Section 14.8.

 

“ Delivery Start Date ” has the meaning assigned to such term in Section 3.1.

 

“ Design Limits ” means the parameters set forth on Appendix C.

 

“ Diagnostic Period ” has the meaning assigned to such term in Section 6.3(a).

 

“ Dispatch ” has the meaning assigned to such term in Section 6.2(e).

 

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“ Dollars ” or “ $ ” means the lawful currency of the United States of America.

 

“ Early Termination Date ” has the meaning assigned to such term in Section 18.3.

 

“ Effective Date ” means November 17, 2004.

 

“ Electrical Interconnection Agreement ” means the interconnection agreement between LSP-Kendall Energy, LLC and Commonwealth Edison dated as of July 26, 1999, as may be amended from time to time, providing for the construction and operation of the Interconnection Facilities between the Dedicated Units and Electrical Transmission System.

 

“ Electrical Transmission System ” means the transmission system of Commonwealth Edison (or any successor thereto) or other entity, to be used by Purchaser for the purpose of transmitting electricity generated by the Dedicated Units from the Interconnection Point.

 

“ Electricity Metering Points ” has the meaning assigned to such term in Section 9.1(a).

 

“ Emergency Condition ” means a condition or situation that presents an imminent physical threat of danger to life, health or property, or could reasonably be expected to cause a significant disruption on the Electrical Transmission System.

 

“ Enforcement Action ” has the meaning assigned to such term in Section 14.7.

 

“ Energy Payment ” means, for each Billing Period, the payment to be made by Purchaser to Seller, in accordance with Section 10.3.

 

“ Equivalent Forced Outage Hours ” means, for each Dedicated Unit for any Month, the Forced Outage Hours of such Dedicated Unit for such Month multiplied by the Weighing Factors applicable to such Month and On-Peak or Off-Peak hour, as the case may be.

 

“ Extended Outage Period ” has the meaning assigned to such term in Section 6.3(a).

 

“ Facility ” means the natural-gas fueled electrical generation plant consisting of four combustion turbines and four steam turbines and having a total output of approximately 1,100 MW, located on the Facility Site, together with the Common Facilities, including any additions or replacements thereof, to be constructed, supplied and delivered at the Facility Site.

 

“ Facility Site ” means the approximately 158-acre parcel of land upon which the Facility is located, in Kendall County, Illinois.

 

“ FERC ” means the Federal Energy Regulatory Commission, or any successor thereto.

 

“ Financing Parties ” means institutions (including any trustee or agent on behalf of such institutions) providing financing or refinancing to Kendall for the acquisition, construction, ownership, operation, maintenance or leasing of the Dedicated Units and the Common Facilities.

 

“ Force Majeure Event ” means, with respect to a Dedicated Unit, an event, condition or circumstance described in Section 17.1.

 

“ Force Majeure Fixed Payment ” shall have the meaning set forth in Section 17.3(b).

 

“ Forced Outage ” means, for any Dedicated Unit, and after the Delivery Start Date, a reduction of, cessation in the delivery of, or inability to deliver, the Actual Contract Capacity of such Dedicated Unit that is not the result of (a) a Scheduled Maintenance Outage, (b) a Force Majeure Event, or (c) a Delivery Excuse; provided

 

5

that, for the purposes of this Agreement, a period of reduction of, cessation in the delivery of, or inability to deliver, Actual Contract Capacity of such Dedicated Unit shall not be deemed to be a Forced Outage if and to the extent either Party provides Replacement Power during such period in accordance with Section 6.3.

 

“ Forced Outage Hour ” means any hour, or portion thereof, in which a Forced Outage occurs or is continuing. If the Available Contract Capacity of a Dedicated Unit is greater than zero but less than the amount of the Actual Contract Capacity of such Dedicated Unit, then such partial Forced Outage Hour shall be determined by the ratio for such hour of the Available Contract Capacity of such Dedicated Unit to the Actual Contract Capacity of such Dedicated Unit.

 

“ Fuel ” means natural gas, which is the fuel used by the Facility.

 

“ Fuel Interconnection Facilities ” means Fuel supply lines, taps and headers that provide Fuel supply to the Facility from the Transporting Pipelines beginning at the Fuel Metering Points and ending at the boundary of the Facility Site (expressly excluding any facilities or equipment upstream of the Fuel Metering Points).

 

“ Fuel Metering Points ” means the location of meters at or near the interconnection of the Facility to the Transporting Pipelines.

 

“ GAAP ” means generally accepted accounting principles as in effect from time to time in the United States.

 

“ Gas Index ” means that “Midpoint” index price published in Gas Daily in the table titled “Daily Price Survey” under the heading “Citygates – Chicago city-gates”. Should the index specified herein be discontinued or no longer reflect the market price of gas delivered to the Facility, an index specified by the appropriate entity as the replacement index, if any, plus an appropriate basis differential representing the cost to deliver gas to the Facility, shall be used. If no replacement index is specified, a new index which most accurately reflects changes for the applicable cost component shall be substituted by mutual agreement of the Parties. If the basis of the calculation of the index specified herein is substantially modified, the index as modified may continue to be used or another index may be substituted by mutual agreement of the Parties. A minor change in weighting, and minor changes in benchmarks shall not be construed as substantial modification to the index and the affected values shall be re-established in accordance with the instructions issued by the appropriate index entity.

 

“ GDP-IPD Index ” means the ratio of the Gross Domestic Product - Implicit Price Deflator published in the National Income and Product Account by the U. S. Department of Commerce on the date of determination relative to such Gross Domestic Product – Implicit Price Deflator value on January 1, 1999.

 

“ Gains ” means, with respect to Purchaser, an amount equal to the present value of the economic benefit to it, if any (exclusive of Costs), resulting from the termination of the Agreement pursuant to Section 18.3, determined in a commercially reasonable manner.

 

“ Government Agency ” means any federal, state, local, territorial or municipal government and any department, commission, board, bureau, agency, instrumentality, judicial or administrative body thereof having competent jurisdiction over the subject or Party at issue.

 

“ Governmental Approval ” means any authorization, consent, approval, license, ruling, permit, exemption, variance, order, judgment, decree, guidances, policies, declarations of or regulation by any Government Agency relating to the acquisition, development, ownership, occupation, construction, start-up, testing, operation or maintenance of the Dedicated Units and Common Facilities or to the execution, delivery or performance of this Agreement.

 

“ Guaranteed Heat Rate Payment ” means, for each Billing Period, the payment to be made in accordance with Section 10.4.

 

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“ Incremental Replacement Power Cost ” or “ IRPC ” has the meaning assigned to such term in Appendix E.

 

“ Independent System Operator ” or “ ISO ” means an independent entity formed under jurisdiction of the FERC (or any other federal or state agency exercising valid regulatory authority with respect to the formation and operation of ISOs), that is responsible for the safe and reliable operation of the Electrical Transmission System and administration of transmission service, within its defined boundaries.

 

“ Interconnection Facilities ” means the interconnection facilities that connect the Dedicated Units with the Electrical Transmission System, as more fully described in the Electrical Interconnection Agreement.

 

“ Interconnection Point ” means the physical points at which the Dedicated Units are connected with the Electrical Transmission System, as more fully described in the Electrical Interconnection Agreements, or such other point as the Parties may agree.

 

“ Kendall ” means LSP-Kendall Energy, LLC.

 

“ Kendall PPA ” means the “Power Purchase Agreement” between Seller and LSP-Kendall Energy, LLC (“Kendall”) entered into on February 25, 1999, as set forth in Appendix K.

 

“ KW ” means kilowatt.

 

“ KWh ” means kilowatt-hour.

 

“ Law ” means any statute, law, rule or regulation imposed by a Government Agency, whether in effect now or at any time in the future or any judicial or administrative interpretation having the force of the foregoing.

 

“ Letter(s) of Credit ” means one or more irrevocable, standby letters of credit issued by a U.S. commercial bank or a foreign bank with a U.S. branch with such bank having a Credit Rating of at least A- from S&P or A3 from Moody’s, substantially in the form attached hereto as Appendix I. Costs of a Letter of Credit shall be borne by Purchaser.

 

“ Losses ” means, with respect to Purchaser, an amount equal to the present value of the economic loss to it, if any (exclusive of Costs), resulting from termination of the Agreement pursuant to Section 18.3, determined in a commercially reasonable manner.

 

“ Lump Sum Payment ” has the meaning assigned to such term in Section 10.8.

 

“ Maximum Guaranteed Heat Rate ” has the meaning assigned to such term in Appendix F.

 

“ Maximum Heat Rate Tracking Account ” has the meaning assigned to such term in Section 12.1.

 

“ Minimum Guaranteed Heat Rate ” has the meaning assigned to such term in Appendix F.

 

“ Minimum Heat Rate Tracking Account ” has the meaning assigned to such term in Section 12.1.

 

“ Minimum Load ” means, with respect to a Dedicated Unit, 70% of the Standard Capacity of such Dedicated Unit.

 

“ MMBTU ” means million BTU.

 

“ Month ” means a calendar month.

 

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“ Moody’s ” means Moody’s Investor Services, Inc. or its successor.

 

“ MW ” means megawatt.

 

“ MWh ” means megawatt-hour.

 

“ NERC “ means the North American Electric Reliability Council.

 

“ Net Electrical Output ” means, for any Dedicated Unit for any period, the net electric energy output (as measured in MWhs at the Electricity Metering Point) of such Dedicated Unit during such period.

 

“ Non-Conforming Fuel ” means Fuel that does not meet the specifications for Fuel as set forth in the performance warrantee from the equipment manufacturers (the specifications for which as of the Effective Date are set forth on Appendix A-1), including Fuel delivered to the Fuel Metering Points at a pressure less than the lesser of the manufacturers’ specified minimum requirements of the Facility and 500 PSIA.

 

“ Non-Conforming Power ” has the meaning assigned to such term in Section 4.3.

 

“ Off-Peak ” means all hours of a NERC-observed holiday, Saturday and Sunday, and for each other Day, the hours of such Day that are not defined as On-Peak.

 

“ On-Peak ” means for each Day not a NERC-observed holiday or a Saturday or a Sunday, the period of time beginning at the top of the hour ending at 0700 Central Prevailing Time and continuing through the end of the hour ending at 2200 Central Prevailing Time.

 

“ Peak Season ” means the period of April 15 ^th through October 15 ^th .

 

“ Performance Assurance ” means collateral in the form of cash, Letter(s) of Credit, or other security acceptable to Seller.

 

“ Person ” means any individual, corporation, partnership, joint venture, trust, unincorporated organization or Government Agency.

 

“ PJM ” means the PJM Interconnection, LLC or any successor thereto.

 

“ PSIA ” means pounds per square inch absolute.

 

“ Purchaser ” means Constellation Energy Commodities Group, Inc.

 

“ Purchaser’s Guarantor ” means Constellation Energy Group, Inc.

 

“ Prudent Industry Practices ” means any of the practices, methods, standards and acts (including, but not limited to, the practices, methods and acts engaged in or approved by a significant portion of the electric power generation industry in the United States) that, at a particular time, in the exercise of reasonable judgment in light of the facts known or that should reasonably have been known at the time a decision was made, could have been expected to accomplish the desired result consistent with good business practices, reliability, economy, safety and expedition, and which practices, methods, standards and acts generally conform to operation and maintenance standards recommended by the Facility’s equipment suppliers and manufacturers, the Design Limits and applicable Governmental Approvals and Law.

 

“ Reactive Power Amount ” has the meaning assigned to such term in Section 10.7.

 

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“ Reactive Power Deficiency ” has the meaning assigned to such term in Section 10.7.

 

“ Reactive Power Payments ” has the meaning assigned to such term in Section 10.7.

 

“ Reference Ambient Conditions ” means 78 ^W F and 57% relative humidity at absolute pressure of 14.425 PSIA.

 

“ Replacement Capacity ” means electric generation capacity provided to Purchaser to replace the Standard Capacity or Supplemental Capacity, as applicable, from sources other than the Dedicated Units in accordance with the requirements of Appendix E.

 

“ Replacement Energy ” means electric energy provided to Purchaser to replace the energy to be provided from Standard Capacity or Supplemental Capacity, as applicable, from sources other than the Dedicated Units in accordance with the requirements of Appendix E.

 

“ Replacement Power ” means either or both of Replacement Capacity and Replacement Energy.

 

“ Replacement Power Arrangements ” means any arrangement made with any interconnecting utilities and/or any other Person for the supply, transmission and delivery of Replacement Power in accordance with the requirements of Appendix E.

 

“ Replacement Power Delivery Point ” means either the Interconnection Point or one or more points for the receipt of Replacement Power designated by Purchaser in writing and accepted by Seller in accordance with Appendix E.

 

“ Reservation Payment ” means, for each Billing Period, the payment to be made by Purchaser to Seller for the Contract Capacity of a Dedicated Unit or for Replacement Capacity during such Billing Period, in accordance with Section 10.1.

 

“ Restricted Months ” means June, July, August, and September.

 

“ Resulting Non Payment ” has the meaning assigned to such term in Section 18.2.

 

“ Scheduled Maintenance Outage ” means, as to a Dedicated Unit, a time period during which such Dedicated Unit is shut down or the output is reduced due to the maintenance of such Dedicated Unit or the Common Facilities in accordance with Section 5.2.

 

“ S&P ” means the Standard & Poor’s Rating Group (a division of McGraw-Hill, Inc.) or its successor.

 

“ Seller ” means Dynegy Power Marketing, Inc.

 

“ Settlement Amount ” means the Losses or Gains, and Costs, expressed in U.S. Dollars, which the Purchaser incurs as a result of the liquidation of the Agreement pursuant to Section 18.4.

 

“ Standard Capacity ” means, for each Dedicated Unit, the Contract Standard Capacity adjusted to actual ambient conditions in accordance with the Ambient Condition Adjustment Formulas.

 

“ Start-Up ” means, with respect to a Dedicated Unit, the ignition of such Dedicated Unit pursuant to Purchaser’s Dispatch order and the operation of such Dedicated Unit up to the Minimum Load; provided that for purposes of this Agreement, there shall be deemed to be only one Start-Up per Dispatch order, unless delivery of energy is delayed, terminated or reduced by Purchaser, a Dispatch order, a Force Majeure Event or a Delivery Excuse.

 

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“ Supplemental Capacity ” means, for each Dedicated Unit, the Contract Supplemental Capacity adjusted to actual ambient conditions in accordance with the Ambient Condition Adjustment Formulas.

 

“ Supplemental Guaranteed Heat Rate ” has the meaning set forth in Appendix F.

 

“ Taxes ” means, with respect to any Person, all taxes, withholdings, assessments, imposts, duties, governmental fees, governmental charges or levies imposed directly or indirectly by any Government Agency on such Person or its income, profits or property as measured by the volume or amount of consumption of fuel, the production of energy or the provision of electric generation capacity, or gross revenue, gross receipts or comparable measure thereof, and whether characterized as an ad valorem, sales, gross receipts, BTU, carbon, energy production or other similar taxes.

 

“ Term ” shall have the meaning assigned to such term in Section 2.1.

 

“ Termination Payment ” has the meaning assigned to such term in Section 18.4.

 

“ Test Energy ” has the meaning assigned to such term in Section 11.2.

 

“ Tracking Account ” has the meaning assigned to such term in Section 12.1.

 

“ Transporting Pipeline ” shall mean each of ANR Pipeline Company and Natural Gas Pipeline Company of America.

 

“ Unit ” means any of the up to four natural gas-fueled combined cycle electric generating units of the Facility.

 

“ Unit Meters - Fuel ” has the meaning assigned to such term in Appendix B.

 

“ Weighing Factor ” means, for any Month, the weighing factor set forth opposite such Month and in the On-Peak and Off-Peak hours in the table below:

 

 

      On-Peak / Off-Peak

      On-Peak Hours – 1.25

      Off-Peak Hours – 0.79

 

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Section 1.2 Interpretation . Unless the context otherwise requires:

 

(a) Words singular and plural in number shall be deemed to include the other and pronouns having masculine or feminine gender shall be deemed to include the other.

 

(b) Subject to Section 1.2(g), any reference in this Agreement to any Person includes its successors and assigns and, in the case of any Government Agency, any Person succeeding to its functions and capacities.

 

(c) Any reference in this Agreement to any Section or Appendix means and refers to the Section contained in, or Appendix attached to, this Agreement.

 

(d) Other grammatical forms of defined words or phrases have corresponding meanings.

 

(e) A reference to writing includes typewriting, printing, lithography, photography and any other mode of representing or reproducing words, figures or symbols in a lasting and visible form.

 

(f) A reference to a specific time for the performance of an obligation is a reference to that time in the place where that obligation is to be performed.

 

(g) A reference to a Party to this Agreement includes that Party’s successors and permitted assigns.

 

(h) A reference to a document or agreement, including this Agreement, includes a reference to that document or agreement as novated, amended, supplemented or restated from time to time.

 

(i) If any payment, act, matter or thing hereunder would occur on a Day that is not a Business Day or a Day in which banks are closed in New York, NY, then such payment, act, matter or thing shall, unless otherwise expressly provided for herein, shall occur on the next successive Business Day.

 

(j) Unless otherwise expressly provided herein any consent, acceptance, satisfaction, cooperation or approval required of a Party under this Agreement shall not be unreasonably withheld or delayed.

 

Section 1.3 Technical Meanings . Words not otherwise defined herein that have well-known and generally accepted technical or trade meanings are used herein in accordance with such recognized meanings.

 

ARTICLE II

 

TERM

 

Section 2.1 Term . This Agreement shall become effective as of the Effective Date and shall continue in effect from and including the Delivery Start Date (as defined below) through and including the earlier of: (i) the date on which the conditions precedent are satisfied in Section 1 of that certain Assignment and Assumption Agreement, dated as of the date hereof, by and between Seller and Purchaser (the “ Assignment and Assumption Agreement ”), or (ii) November 30, 2008 (the “ Term ”).

 

ARTICLE III

 

COMMENCEMENT OF OPERATION AND MILESTONES; ALTERNATE SITE

 

Section 3.1 Delivery Start Date .

 

(a) The Delivery Start Date shall be December 1, 2004.

 

(b) Except as otherwise provided in Section 10.7 and 11.2, Purchaser shall have the sole right to sell capacity and energy from the Dedicated Units during the Term of this Agreement.

 

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Section 3.2 Consequences of Delays .

 

(a) This section has been intentionally deleted.

 

(b) This section has been intentionally deleted.

 

(c) This section has been intentionally deleted.

 

(d) This section has been intentionally deleted.

 

Section 3.3 Completion Security; Additional Consequences of Delay .

 

(a) This section has been intentionally deleted.

 

(b) This section has been intentionally deleted.

 

(c) This section has been intentionally deleted.

 

(d) This section has been intentionally deleted.

 

(e) This section has been intentionally deleted.

 

(f) This section has been intentionally deleted.

 

(g) This section has been intentionally deleted.

 

Section 3.4 Alternate Site . This section has been intentionally deleted.

 

ARTICLE IV

 

SALE AND PURCHASE OBLIGATIONS

 

Section 4.1 Sale and Purchase of Energy .

 

(a) Subject to the other terms and conditions of this Agreement, the Dedicated Units shall be committed to the performance of Seller’s obligation to Purchaser hereunder.

 

(b) Subject to the terms and conditions of this Agreement, Seller shall sell and deliver, and Purchaser shall purchase and accept, (i) on and after the Delivery Start Date and for the Term of this Agreement, the Net Electrical Output of each Dedicated Unit as Dispatched in accordance with this Agreement and (ii) on or after the Delivery Start Date, Replacement Energy provided by Seller.

 

Section 4.2 Sale and Purchase of Capacity . Subject to the terms and conditions of this Agreement, Seller shall sell and make available, and Purchaser shall purchase and accept, on the Delivery Start Date and for the Term of this Agreement, the Actual Contract Capacity or Replacement Capacity provided in accordance with Appendix E.

 

Section 4.3 Measurement and Quality of Electricity .

 

(a) All Net Electrical Output shall be measured at the Electricity Metering Point and Seller shall use Commercially Reasonable Efforts in accordance with its rights as purchaser under the Kendall PPA to meet the specifications of the Electrical Interconnection Agreement.

 

(b) In the event that electricity delivered by Seller hereunder fails to conform to the specifications set forth in the Electrical Interconnection Agreement (“ Non-Conforming Power ”), and upon notice of such non-conformance by the Control Center or Purchaser, Seller shall immediately exercise Commercially Reasonable Efforts to cause Kendall to correct such non-conformity and shall provide to Purchaser an estimate of the duration and extent of such failure to conform. As between the Parties, Seller shall use Commercially Reasonable Efforts in accordance with its rights as purchaser under the Kendall PPA to cause Kendall to pay any costs incurred under the Electrical Interconnection Agreement as a result of Seller delivering Non-Conforming Power.

 

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ARTICLE V

 

OPERATION OF THE DEDICATED UNITS AND THE COMMON FACILITIES

 

Section 5.1 Operation and Maintenance of the Dedicated Units and the Common Facilities .

 

(a) Seller shall use Commercially Reasonable Efforts in accordance with its rights as purchaser under the Kendall PPA to cause Kendall to operate and maintain the Dedicated Units and Common Facilities in accordance with Prudent Industry Practices and otherwise in accordance with this Agreement.

 

(b) Seller shall use Commercially Reasonable Efforts in accordance with its rights as purchaser under the Kendall PPA to cause Kendall to employ and maintain at the Facility during every hour of every Day during the Term, appropriately qualified (determined in Seller’s reasonable opinion) personnel for the purposes of operating and maintaining the Dedicated Units and coordinating operations with the Control Center.

 

Section 5.2 Scheduled Maintenance .

 

(a) At least 55 Days prior to March 28 ^th of each year for Unit 1 and April 5 ^th of each year for Unit 2, Purchaser shall provide to Seller a non-binding proposed schedule of Capacity Factor and Start-Ups for such Dedicated Unit for each of the following twelve Months. In connection with its rights as purchaser under the Kendall PPA, Seller shall promptly submit such schedule to Kendall in accordance with the Kendall PPA, and promptly after receipt from Kendall shall promptly provide Purchaser with Kendall’s proposed schedule for Scheduled Maintenance Outages for the period provided in accordance with the Kendall PPA. Within eight (8) Days after Seller has provided to Purchaser the proposed schedule for Scheduled Maintenance Outages, Purchaser may request Seller to request that Kendall re-schedule any such Scheduled Maintenance Outage and Seller shall exercise Commercially Reasonable Efforts in accordance with its rights as purchaser under the Kendall PPA to effectuate such change in schedule consistent with Prudent Industry Practices and the then current equipment manufacturers’ recommendations. Seller shall not consent to any proposal by Kendall to schedule Scheduled Maintenance Outages during the Restricted Months without Purchaser’s consent, which may be withheld in Purchaser’s sole discretion. Any Scheduled Maintenance Outages scheduled for Months during the Peak Season Months that are not Restricted Months shall be subject to rescheduling by Purchaser pursuant to this Section 5.2(a). Within eight (8) Days after Seller has provided to Purchaser the proposed schedule for Scheduled Maintenance Outages, Purchaser may request changes to such Scheduled Maintenance Outages scheduled during the Peak Season Months that are not Restricted Months. If, pursuant to Prudent Industry Practices and then current equipment manufacturers’ recommendations, such requested changes would result in additional costs to Seller, Seller shall notify Purchaser of such additional costs. Upon receipt of such notification from Seller, if Purchaser wishes for Seller to proceed with such changed schedule, Purchaser shall so notify Seller and shall reimburse Seller for such reasonable additional costs as were described in Seller’s notice to Purchaser; otherwise Seller shall proceed in accordance with the schedule set forth in Seller’s notice hereunder. Seller shall use Commercially Reasonable Efforts in accordance with its rights as purchaser under the Kendall PPA to cause Kendall to minimize any costs reimbursable by Purchaser under this Section 5.2(a).

 

(b) The years in which a combustor inspection, a hot gas inspection or a major inspection shall occur with respect to a Dedicated Unit shall be determined in accordance with the equipment manufacturers’ then current recommendations; provided that for purposes of this Section 5.2(b), the manufacturers’ recommendations shall be determined in accordance with the formulae provided by the relevant equipment manufacturers and shall be consistent with the formulae provided by such equipment manufacturers to customers other than Kendall for similar equipment, which formulae may be revised from time to time by such manufacturers. Days of Scheduled Maintenance Outages shall be, as to a Dedicated Unit, as follows, subject to revisions in manufacturers’ recommendations: (i) in years in which a combustor inspection is to occur, 15 Days; (ii) in years in which a hot gas inspection is to occur, 24 Days; and (iii) in years in which a major inspection is to occur, 30 Days. In scheduling the Days of Scheduled Maintenance Outage in accordance with Section 5.2(a), Seller may divide the permitted number of Days into two or more periods. Seller shall use Commercially Reasonable Efforts in accordance with its rights as purchaser under the Kendall PPA to cause Kendall to complete any Schedule

 

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Maintenance Outage in less than the time periods scheduled and place the affected Dedicated Unit back into full operation as soon as possible. The Scheduled Maintenance Outage periods shall apply to each Dedicated Unit. Days of Scheduled Maintenance Outage shall be prorated based on the ratio of the Available Contract Capacity for a Dedicated Unit to the Actual Contract Capacity of such Dedicated Unit during the Scheduled Maintenance Outage in the case of a partial Scheduled Maintenance Outage.

 

(c) In addition to the Scheduled Maintenance Outages provided for in Section 5.2(b), Purchaser acknowledges that Kendall shall also be entitled to perform up to 120 hours per year of additional Scheduled Maintenance Outage with written notice. Provided that Seller receives notice from Kendall, Seller shall provide notice thereof to Purchaser not later than 9:30 a.m. Central Prevailing Time on the Day prior to the Day on which the additional Scheduled Maintenance Outage commences of each such additional Scheduled Maintenance Outage period (an “ Additional Scheduled Maintenance Outage ”). Seller shall not consent to a proposal by Kendall to schedule Additional Scheduled Maintenance Outages during the Restricted Months without Purchaser’s consent, which may be withheld in Purchaser’s sole discretion. Seller shall use Commercially Reasonable Efforts in accordance with its rights as purchaser under the Kendall PPA to cause Kendall to minimize the period of any Additional Scheduled Maintenance Outage. Purchaser acknowledges that Kendall may take up to twenty (20) hours of the Additional Scheduled Maintenance Outage during On-Peak hours as necessary to avoid a significant risk to the safety or reliability of the Dedicated Units and the Common Facilities. Within five (5) hours after receipt of Seller’s notice, Purchaser may request a change to any Additional Scheduled Maintenance Outage, as scheduled by Kendall during On-Peak hours, which affects the reliability (and not the safety) of the Dedicated Units. Upon receipt of such request Seller, in connection with its rights as purchaser under the Kendall PPA, shall promptly notify Purchaser of the expected risks to reliability resulting from such requested change and any additional costs which may be incurred to minimize such risks. Within one (1) hour after receipt of such notification from Seller, if Purchaser wishes for Seller to proceed with such changed schedule, Purchaser shall so notify Seller and shall hold Seller harmless from such expected risks and reimburse Seller for such additional costs as were described in Seller’s notice to Purchaser and all other costs incurred in good faith as a result of such change in schedule. If Purchaser does not notify Seller of its decision prior to the deadlines as specified in this Section 5.2 (c), then Seller shall use Commercially Reasonable Efforts in connection with its rights as purchaser under the Kendall PPA to cause Kendall to proceed in accordance with the schedule set forth in Kendall’s notice hereunder. Seller shall use Commercially Reasonable Efforts in connection with its rights as purchaser under the Kendall PPA to minimize any costs reimbursable by Purchaser under this Section 5.2(c).

 

Section 5.3 Access and Information .

 

(a) In connection with its rights as purchaser under the Kendall PPA and upon receipt of such information from Kendall, Seller shall provide to Purchaser the following information with respect to the Dedicated Units and the Common Facilities:

 

(i) This section has been intentionally deleted;

 

(ii) The manufacturers’ guidelines and recommendations for maintenance of the Facility equipment;

 

(iii) A report summarizing the results of maintenance performed during each Scheduled Maintenance Outage and any Forced Outage, and upon request of Purchaser any of the technical data obtained in connection with such maintenance;

 

(iv) Equipment order confirmations and installation scheduling information in respect to significant capital items; and

 

(v) Any information similar to the information provided pursuant to Section 5.3(a), (ii), and (iii) that is received by Seller pursuant to Section 5.3(a)(v) of the Kendall PPA.

 

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(b) Upon reasonable prior notice (in light of the circumstances) and subject to the safety rules and regulations pertaining to the Facility, pursuant to its rights under the Kendall PPA, Seller shall request that Kendall provide to Seller and Purchaser, as well as Purchaser’s authorized agents, employees and inspectors, with reasonable access to the Facility Site, the Dedicated Units and the Common Facilities: (i) for the purpose of reading or testing metering equipment in accordance with Article IX, and (ii) as necessary to witness tests of Contract Capacity in accordance with Article XI.

 

Section 5.4 Permits; Compliance with Laws .

 

a) In accordance with its rights as purchaser under the Kendall PPA, subject to the right of Contest of Kendall, Seller shall, at its expense, exercise Commercially Reasonable Efforts to cause Kendall to acquire and maintain in effect, from any and all Governmental Agencies with jurisdiction over Kendall and/or the Facility, all Governmental Approvals, in each case necessary for the operation and maintenance of the Facility in accordance with this Agreement and to permit each Dedicated Unit to operate on natural gas at its Contract Capacity for all hours of the year less hours allowed for Scheduled Maintenance Outages pursuant to Section 5.2. Seller shall also acquire and maintain in effect, from any and all Governmental Agencies with jurisdiction over Seller, all Governmental Approvals necessary for Seller to perform its obligations under this Agreement.

 

(b) In accordance with its rights under the Kendall PPA, subject to the right of Contest of Kendall, Seller shall, at all times, comply, or as applicable use Commercially Reasonable Efforts to cause Kendall to comply, with all Laws and Governmental Approvals applicable to it and/or to the Facility, including (i) all environmental laws in effect, and (ii) all such Laws relating to fuel supply, or otherwise concerning any type of facility used for the generation of electric power.

 

(c) Subject to the right of Contest of Kendall, Purchaser shall, at all times, comply with all Laws necessary for Purchaser to perform its obligations under this Agreement.

 

Section 5.5 Operating Procedures . Purchaser and Seller shall develop operating procedures which shall establish the protocol under which the Parties shall perform their respective responsibilities under this Agreement and shall include, but shall not necessarily be limited to, method of Day-to-Day communications, key personnel lists for Seller and Purchaser, Forced Outage and Scheduled Maintenance Outage reporting, daily capacity level and energy reports, coordinating Fuel arrangements and the operating procedures for Fuel supply, the resolution of disputes and the allocation of Fuel delivered to the Facility.

 

Section 5.6 Relationship to Other Purchasers . This section has been intentionally deleted.

 

ARTICLE VI

 

SCHEDULING, DISPATCH AND DELIVERY

 

Section 6.1 Dispatch . Dispatch shall be consistent with the Design Limits, Prudent Industry Practices and equipment manufacturers’ then current guidelines and recommendations generally applicable to such equipment. Each Dedicated Unit shall be fully Dispatchable by and capable of automatic generation control. In accordance with Seller’s rights as purchaser under the Kendall PPA, Seller shall use Commercially Reasonable Efforts to cause Kendall to allow Purchaser to install any necessary telecommunication facilities and controls in accordance with Prudent Industry Practices, equipment manufacturers’ then current guidelines and recommendations, and Control Center requirements, at Purchaser’s expense, to allow the Control Center to operate each Dedicated Unit on automatic generation control. Purchaser, or the Control Center on behalf of Purchaser, shall have the sole discretion to Dispatch the Net Electrical Output from each Dedicated Unit up to the Actual Contract Capacity of such Dedicated Unit; provided that Dispatch shall be consistent with the Design Limits, Prudent Industry Practices and equipment manufacturers’ then current guidelines and recommendations generally applicable to such equipment.

 

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Section 6.2 Scheduling for Delivery .

 

(a) As of the Delivery Start Date, Purchaser (or the Control Center on behalf of Purchaser) may Dispatch each Dedicated Unit in accordance with Design Limits, Prudent Industry Practices and the then current equipment manufacturers’ recommendations up to its Actual Contract Capacity in accordance with this Section 6.2 by providing dispatch instructions to Seller. During the Term, Seller shall maintain a 24-hour dispatch operation to implement such instructions and, provided that Seller receives dispatch instructions from Purchaser in accordance with this Section 6.2(a) by the time required by Section 6.2(d) and provided that Seller has not been prevented from performing by Force Majeure, Seller shall provide such instruction to Kendall in sufficient time for Kendall to operate each Dedicated Unit in accordance with such instructions. Subject to the provisions of Section 19.3 (a) and (d), Seller agrees to indemnify and hold harmless Purchaser from and against any loss, damage, cost or expense in connection with Seller’s failure to comply with the preceding sentence. Seller hereby authorizes Purchaser to perform all bidding activities with PJM associated with the Dedicated Units during the Term and shall cooperate with Purchaser in implementing applicable PJM rules, procedures and business practices to enable Purchaser to perform such bidding activities.

 

(b) Prior to the first Day of each Month in the Term, Purchaser shall provide to Seller good faith projections of the amounts of energy to be scheduled by Purchaser from each Dedicated Unit for each hour of such Month.

 

(c) Promptly after Seller is informed by Kendall pursuant to the terms of the Kendall PPA, Seller shall inform Purchaser on a daily basis of the estimated generation capability of each Dedicated Unit and any expected limitations, restrictions, deratings or outages affecting such Dedicated Unit for the next Day and shall update Seller’s notice to the extent that it receives notice from Kendall of any material changes in this information.

 

(d) Purchaser shall inform Seller before 11:00 a.m. (Central Prevailing Time) on the prior Business Day of the estimated Dispatch schedule for each Dedicated Unit for each hour of the next succeeding Day or Days until the next Business Day. After entering a Dispatch schedule for a Day, Purchaser shall have the right to change the scheduled quantity of energy any number of times subject to Seller’s ability in connection with its rights as purchaser under the Kendall PPA to cause Kendall to implement such changes given then-prevailing operational constraints based on manufacturers’ recommendations, Prudent Industry Practices and Design Limits.

 

(e) Consistent with Design Limits, Prudent Industry Practices and manufacturers’ guidelines and recommendations generally applicable to similar equipment of a Dedicated Unit, in connection with its rights as purchaser under the Kendall PPA Seller shall use Commercially Reasonable Efforts in connection with its rights as purchaser under the Kendall PPA to cause Kendall to comply with dispatch instructions provided by Purchaser or the Control Center on behalf of Purchaser to Seller (“ Dispatch ”) for each Dedicated Unit. Seller shall have no liability to Purchaser for the implementation of reliability dispatch instructions for the Dedicated Units provided by the Control Center.

 

(f) In the event of an Emergency Condition and Seller is not immediately accessible, Purchaser shall be permitted to provide dispatch instructions directly to Kendall and provide Seller with notice of such dispatch instructions as soon as practicable thereafter.

 

Section 6.3 Forced Outages .

 

(a) Upon notification from Kendall pursuant to Section 6.3(a) of the Kendall PPA, Seller shall, or in the case an emergency condition with respect to Seller’s generation portfolio has occurred and is continuing, Seller shall use Commercially Reasonable Efforts to, immediately notify Purchaser that a Dedicated Unit is unable to deliver all or part of the Actual Contract Capacity pursuant to the Dispatch schedule provided by Purchaser. Each such period shall be divided into two distinct, contiguous periods: (i) the period beginning at the time of the occurrence of the outage until 12:00 midnight (Central Prevailing Time) of the second following Day (the “ Diagnostic Period ”) and (ii) the period from the end of the Diagnostic Period until resumption of the delivery of the Actual Contract Capacity pursuant to the Dispatch schedule provided by Purchaser (the “ Extended Outage Period ”).

 

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(b) As soon as practicable, after notification from Kendall pursuant to Section 6.3(b) of the Kendall PPA notify Purchaser of:

 

(i) the cause (or if not known, Kendall’s best estimate) of the Forced Outage;

 

(ii) the proposed corrective action;

 

(iii) Kendall’s best estimate of the expected duration of the Diagnostic Period and Extended Outage Period; and

 

(iv) Seller’s election regarding Replacement Power in any Extended Outage Period (which shall be consistent with Kendall’s election under the Kendall PPA) may be either (1) that Purchaser shall provide Replacement Power and Seller shall compensate Purchaser for Incremental Replacement Power Costs in accordance with Appendix E, or (2) that Seller shall not be responsible for Replacement Power during the Extended Outage with such hours included as Forced Outage Hours in any Availability Adjustment Factor calculations; and unless the Parties otherwise agree, Seller’s election during the Extended Outage Period shall remain in effect for the duration of the Extended Outage Period.

 

(c) Purchaser shall not be required to provide Replacement Power during the Diagnostic Period with such hours included as Forced Outage Hours in any Availability Adjustment Factor calculations.

 

(d) Seller’s estimate of the duration of the outage shall be based on the best information obtained by Seller and after Seller is informed by Kendall pursuant to the terms of the Kendall PPA, Seller shall promptly notify Purchaser of any expected changes in such period. During any Extended Outage Period in which Seller is supplying Replacement Power, Purchaser shall continue to schedule energy as described in Article VI.

 

(e) Upon notice from Seller to Purchaser of the ability to resume delivery of the Actual Contract Capacity, and expiration of any Replacement Power Arrangements in effect, any Diagnostic Period or Extended Outage Period then in effect shall end and Dispatch shall continue as described in Article VI. If the Facility is able to resume delivery of the Actual Contract Capacity prior to the expiration of any Replacement Power Arrangements where Purchaser is procuring Replacement Power, Seller may elect one of the following courses of action: (i) Seller shall resume delivery of the Actual Contract Capacity and Purchaser shall liquidate such Replacement Power Arrangements, in which case, any gain or loss realized by Purchaser upon liquidation of such Replacement Power Arrangements shall be for the Seller’s account, or (ii) Seller shall resume delivery of the Actual Contract Capacity upon expiration of the Replacement Power Arrangements. For the purpose of this Section 6.3(e), the duration of Purchaser’s Replacement Power Arrangements shall not be deemed to extend beyond the longest estimate of such Forced Outage period provided by Seller under Section 6.3(b)(iii) and 6.3(d).

 

(f) Seller shall use Commercially Reasonable Efforts in accordance with its rights as purchaser under the Kendall PPA to cause Kendall to use Commercially Reasonable Efforts consistent with Prudent Industry Practices to avoid Forced Outages and to minimize the duration of any Forced Outages.

 

(g) Notwithstanding the forgoing provisions of this Section 6.3 and for the purpose of determining a Forced Outage under this Agreement, in the event that the price at which Purchaser, through the use of Commercially Reasonable Efforts and with due regard for the quantity, period of replacement and amount of notice, could have purchased applicable Replacement Power from third parties for an hour or hours during a Forced Outage is below Purchaser’s marginal cost to procure such power from Seller had the outage not occurred, Seller shall be deemed to have provided Replacement Power for the duration of such hour or hours for the purposes of determining the occurrence of a Forced Outage.

 

Section 6.4 Electronic Communications .

 

(a) Seller shall use Commercially Reasonable Efforts in accordance with its rights as purchaser under the Kendall PPA to cause Kendall to allow Purchaser, at Purchaser’s expense, to install telemetering

 

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equipment and facilities capable of transmitting the following information with respect to each Dedicated Unit to Purchaser and to the Control Center:

 

(i) This section has been intentionally deleted

 

(ii) This section has been intentionally deleted

 

(iii) This section has been intentionally deleted

 

(iv) This section has been intentionally deleted

 

(v) Instantaneous net output;

 

(vi) Operational status (on/off);

 

(vii) Fuel delivery.

 

(b) This section has been intentionally deleted.

 

(c) Seller shall use Commercially Reasonable Efforts in accordance with its rights as purchaser under the Kendall PPA to cause Kendall to install a facsimile machine in the Facility’s control room.

 

ARTICLE VII

 

ELECTRICAL INTERCONNECTION & OTHER SERVICES

 

Section 7.1 Interconnection Facilities . Seller shall use Commercially Reasonable Efforts in accordance with its rights as purchaser under the Kendall PPA to cause Kendall to operate and maintain all Interconnection Facilities located on the Facility Site up to, but not including, the Interconnection Point. Purchaser shall be solely responsible for securing any transmission rights required to cause the acceptance of and delivery from the Interconnection Point of the Net Electrical Output, and the effectiveness of this Agreement shall not be contingent upon Purchaser’s securing transmission service with Commonwealth Edison or any other transmitting utility or upon the availability of transmission capacity at specific delivery or receipt points selected by Purchaser downstream of the Interconnection Point.

 

Section 7.2 Interconnection Point . Seller shall use Commercially Reasonable Efforts in accordance with its rights as purchaser under the Kendall PPA to cause Kendall to deliver Net Electrical Output Dispatched hereunder by Purchaser to the Interconnection Point. Seller shall use Commercially Reasonable Efforts in accordance with its rights as purchaser under the Kendall PPA to cause Kendall to deliver all Replacement Energy to the Replacement Power Delivery Points. Seller shall have the responsibility, at its expense (as between the Parties), to cause the Net Electrical Output to be delivered from the Electricity Metering Point to the Interconnection Point.

 

Section 7.3 Risk of Loss .

 

(a) As between the Parties, Seller shall be deemed to have the responsibility for risk of loss of the Net Electrical Output prior to the Interconnection Point or the Replacement Power Delivery Point (as applicable) and Purchaser shall be deemed to have the responsibility of risk of loss and be in exclusive control (and responsible for any property damages or injuries to persons caused thereby) of the Net Electric Output at and from the Interconnection Point or the Replacement Power Delivery Point (as applicable). Seller shall use Commercially Reasonable Efforts in accordance with its rights as purchaser under the Kendall PPA to cause Kendall to be responsible for any property damages or injuries to persons relating to the Net Electric Output prior to the Interconnection Point or the Replacement Power Delivery Point (as applicable). Without limiting the foregoing,

 

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Seller shall not be deemed responsible for or deemed to have failed to deliver any Net Electrical Output which the Electrical Transmission System fails to accept or deliver except to the extent caused by Kendall’s breach of the Electrical Interconnection Agreement or by Seller’s failure to comply with any of the covenants set forth in Section 7.1 pertaining to the Interconnection Facilities.

 

(b) Purchaser shall also be exclusively responsible, and if necessary, shall reimburse Seller for any energy imbalance (or comparable) charges or penalties arising out of any excess or deficient delivery of Net Electric Output, whether assessed under the Electrical Interconnection Agreement or otherwise, except to the extent caused by Seller’s failure to comply with its Dispatch obligations under this Agreement, Kendall’s failure to comply with its Dispatch obligations under the Kendall PPA, Prudent Industry Practice, breach of Seller’s obligations under this Agreement, breach of Kendall’s obligations under the Kendall PPA or the Electrical Interconnection Agreement, or a Force Majeure Event claimed by Seller or Kendall. Without limitation, the creation of an excess or deficient delivery of Net Electric Output shall not, by itself, be considered a breach of this Agreement or the Electrical Interconnection Agreement. The Parties shall cooperate to minimize and mitigate any such imbalance charges or penalties.

 

Section 7.4 Additional Agreements .

 

(a) Purchaser and Seller may agree to redesignate the Control Center with all costs associated with such redesignation paid for by Purchaser. If the Parties are forced by a third party with legal or regulatory authority over the Parties or Kendall to redesignate the Control Center, all costs associated with such redesignation shall be shared equally by Seller and Purchaser.

 

(b) Purchaser shall be responsible for obtaining and paying for the provision of transmission services and control area services required by the FERC, the Electrical Transmission System operator, the ISO or any other transmission utility with respect to the delivery and transmission of electric energy past the Interconnection Points. Purchaser may obtain such services pursuant to tariffs filed with the FERC by the relevant Person or by separately contracting with such Person. Seller shall reasonably cooperate with Purchaser and provide information as reasonably requested by Purchaser in connection with the negotiation and performance of each agreement for the provision of transmission services and control area services.

 

(c) This section has been intentionally deleted.

 

ARTICLE VIII

 

FUEL ARRANGEMENTS

 

Section 8.1 Lateral Pipeline .

 

(a) Seller shall use Commercially Reasonable Efforts in accordance with its rights as purchaser under the Kendall PPA to request Kendall, at no cost to Purchaser, to (i) obtain all Governmental Approvals for the ownership, operation and maintenance of the Fuel Interconnection Facilities; and (ii) operate and maintain, the Fuel Interconnection Facilities in accordance with applicable Law, Government Approvals and prudent operating practices generally applied to similar facilities, in each case, subject to the right of Contest.

 

(b) Seller shall use Commercially Reasonable Efforts in accordance with its rights as purchaser under the Kendall PPA to cause Kendall to reserve transportation rights (either through ownership or through contract with a third party owner) on the Fuel Interconnection Facilities sufficient for the delivery of Fuel to operate Each Dedicated Unit at its hourly maximum output level in accordance with this Agreement and applicable Governmental Approvals, with no Person having a right to transport fuel on the Fuel Interconnection Facilities superior to Kendall except as may be required by applicable Law or Government Approvals.

 

(c) This section has been intentionally deleted.

 

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Section 8.2 Fuel for Commissioning and Testing Prior to the Commercial Operation Date . This section has been intentionally deleted.

 

Section 8.3 Fuel for Operations; Delivery and Acceptance .

 

(a) With respect to agreements for the supply of Fuel with Transporting Pipelines, Purchaser shall exercise Commercially Reasonable Efforts to negotiate such agreements to contain the following provisions: (i) require the quality of gas supplied or transported to conform to the gas quality specification applicable in the performance warranty obtained from the manufacturer of the gas turbines included in each Dedicated Unit (the specification for which as of the Effective Date