<PAGE>
EXHIBIT 10.53
Consumers Energy Company
Original Sheet No. 1
Rate Schedule No. 116
EXECUTION COPY
Amendment and Restatement of the April 1, 2001
PURCHASE AND SALE AGREEMENT
FOR ANCILLARY SERVICES
Between
Consumers Energy Company
And
Michigan Electric Transmission Company
Issued by: William E. Garrity
Effective on: May 1, 2002
Vice President, Fuels and
Power Transactions
Issued on: [INSERT DATE]
<PAGE>
Consumers Energy Company
Original Sheet No. 2
Rate Schedule No. 116
EXECUTION COPY
Amendment and Restatement of the April 1, 2001
Purchase and Sale Agreement
For Ancillary Services
Table of Contents
<TABLE>
<S>
<C>
ARTICLE 1 -
Definitions....................................................
5
1.1 Ancillary
Services...............................................
5
1.2
Commission.......................................................
5
1.3 Consumers'
Resources............................................. 5
1.4
ECAR.............................................................
5
1.5 Firm
Service.....................................................
5
1.6 Good Utility
Practice............................................ 5
1.7
NERC.............................................................
5
1.8 Point of
Receipt.................................................
6
1.9 Reserved
Capacity................................................
6
1.10
Resources........................................................
6
1.11
System
Operator..................................................
6
1.12
Tariff...........................................................
6
1.13
Third
Party......................................................
6
1.14
Transmission
Service Area........................................ 6
1.15
Transaction......................................................
6
ARTICLE 2 - Effective
Date................................................. 6
ARTICLE 3 - Capacity, Energy and Reactive Power Sale By
Consumers
to Michigan
Transco.....................................................
7
3.1 Consumers'
Responsibilities...................................... 7
3.2 Michigan Transco's
Responsibilities.............................. 7
3.3 Ancillary
Services...............................................
8
3.4 Changes in
Responsibilities...................................... 9
ARTICLE 4 - Service
Conditions.............................................
10
4.1 Maintenance and
Operation........................................ 10
4.2 Service Interruptions
to Maintain Reliability.................... 10
ARTICLE 5 -
Compensation...................................................
10
5.1 Payments to
Consumers............................................ 10
5.2 Payments to Michigan
Transco..................................... 11
5.3 Applicable Tariff
Rates.......................................... 12
ARTICLE 6 - Forecasted Requirement for Generation
Services................. 12
ARTICLE 7 - Priority and Nature of
Service................................. 13
7.1 Nature of
Service................................................
13
7.2 Use of
Power.....................................................
13
ARTICLE 8 - Conditions
Precedent........................................... 13
ARTICLE 9 - Operating
Committee............................................ 13
9.1 Creation of the
Operating Committee.............................. 13
9.2
Duties...........................................................
13
9.3 Committee
Expenses...............................................
14
ARTICLE 10 - Exchange of
Information....................................... 14
10.1
Data to be
Furnished............................................. 14
10.2
Records and
Accounts............................................. 14
</TABLE>
Issued by: William E. Garrity
Effective on: May 1, 2002
Vice President, Fuels and
Power Transactions
Issued on: [INSERT DATE]
<PAGE>
Consumers Energy Company
Original Sheet No. 3
Rate Schedule No. 116
EXECUTION COPY
<TABLE>
<S>
<C>
ARTICLE 11 -
Settlements...................................................
14
11.1
Accounting
Period................................................ 14
11.2
Invoicing........................................................
14
11.3
Payments.........................................................
14
11.4
Interest
Charges.................................................
15
11.5
Disputed
Invoices................................................
15
ARTICLE 12 -
Indemnity.....................................................
15
ARTICLE 13 - Regulatory
Authority.......................................... 15
ARTICLE 14 -
Term..........................................................
16
14.1
Initial
Term.....................................................
16
14.2
Termination......................................................
16
ARTICLE 15 - Breach and
Default............................................ 16
15.1
General..........................................................
16
15.2
Events of
Breach.................................................
16
15.3
Cure and
Default.................................................
17
15.4
Right to Compel
Performance...................................... 17
ARTICLE 16 - Successors and
Assigns........................................ 17
ARTICLE 17 - Dispute Resolution
Procedures................................. 18
ARTICLE 18 - Force
Majeure.................................................
18
ARTICLE 19 -
General.......................................................
19
19.1
Authority........................................................
19
19.2
Waivers..........................................................
19
19.3
Governing
Law....................................................
19
19.4
Headings.........................................................
19
19.5
Notices..........................................................
19
19.6
Entirety.........................................................
20
19.7
Severability.....................................................
20
</TABLE>
APPENDIX A -
Forecast Procedures
APPENDIX B -
Ancillary Services Rates
Issued by: William E. Garrity
Effective on: May 1, 2002
Vice President, Fuels and
Power Transactions
Issued on: [INSERT DATE]
<PAGE>
Consumers Energy Company
Original Sheet No. 4
Rate Schedule No. 116
EXECUTION COPY
Amendment and Restatement of the April 1, 2001
PURCHASE AND SALE AGREEMENT
FOR ANCILLARY SERVICES
This
Amendment and Restatement of the April 1, 2001 Purchase and
Sale
Agreement for Ancillary Services (herein referred to as
"Agreement") is made and
entered into as of April 29, 2002, by and between Consumers Energy
Company, a
Michigan corporation with offices at 212 West Michigan Avenue,
Jackson, Michigan
(herein referred to as "Consumers") and Michigan Electric
Transmission Company,
a Michigan corporation with offices at 540 Avis Drive, Suite H, Ann
Arbor,
Michigan (herein referred to as "Michigan Transco"). The purpose of
this
Agreement is to establish the terms and conditions under which
Michigan Transco
may obtain Ancillary Services from Consumers. Consumers and
Michigan Transco are
sometimes individually referred to herein as "Party" and
collectively as
"Parties". This Agreement amends, restates and replaces the April
1, 2001
Purchase and Sale Agreement For Ancillary Services between the
Parties,
effective on the date indicated above.
WITNESSETH:
WHEREAS, Consumers is in the business of generating electric
capacity and
energy and selling electric capacity and energy and reactive power
to wholesale
and retail customers; and
WHEREAS, Michigan Transco is in the business of providing
transmission
services under its Open Access Transmission Tariff on file with the
Commission
and is obligated to provide or offer certain Ancillary Services
within its
Transmission Service Area; and
WHEREAS, the Parties
have entered into an Operating Agreement, dated as of
April 1, 2001, as amended and restated, (herein referred to as the
"Operating
Agreement") that defines the operating responsibilities of Michigan
Transco over
its transmission system and the obligations, rights and
responsibilities of
Consumers to provide electric capacity and energy as Ancillary
Services and to
operate its Generation Resources in a manner that will not unduly
interfere with
the provision of transmission services by Michigan Transco; and
WHEREAS, the Parties have entered into a Network Operating
Agreement, dated
as of April 1, 2001, as amended and restated, that governs
Transmission
Provider's provision of Network Integration Transmission Service to
Consumers as
a Network Customer under the Tariff, and
WHEREAS, the Parties have entered into a Generator
Interconnection
Agreement, dated as of April 1, 2001, as amended and restated, that
describes
the general facilities and associated appurtenances that
electrically connect
the Generation Resources to the transmission system, establishes
the ownership
interests of the Parties in such facilities and establishes the
respective
obligations and rights of the Parties with respect to the operating
and
maintenance of such facilities; and
WHEREAS, during the term of this Agreement, Michigan Transco
desires to
purchase and Consumers desires to sell capacity and energy and
Reactive Power to
at
Issued by: William E. Garrity
Effective on: May 1, 2002
Vice President, Fuels and
Power Transactions
Issued on: [INSERT DATE]
<PAGE>
Consumers Energy Company
Original Sheet No. 5
Rate Schedule No. 116
EXECUTION COPY
least partially meet the Tariff obligations of Michigan Transco for
provision of
Ancillary Services; and
WHEREAS, under the Transmission Service Agreement between the
Parties,
Consumers has elected to self-supply the optional Ancillary
Services under the
Tariff to its native load customers.
NOW
THERFORE, in consideration of the covenants and mutual
agreements
contained herein, Consumers and Michigan Transco agree as
follows:
ARTICLE 1
Definitions
1.1 Ancillary Services
Services identified by the Commission, as set forth in Section 3.3
below,
which Michigan Transco must include in its Tariff.
1.2 Commission
The
Federal Energy Regulatory Commission, or any successor
regulatory
agency of the federal government of the United States of
America.
1.3 Consumers' Resources
Capacity and associated energy supplied from generation facilities
owned
and/or operated by Consumers or from purchased power.
1.4 ECAR
The
East Central Area Reliability council, its successors and
assigns.
1.5 Firm Service
Service that is interrupted only to maintain the reliability of
the
generation and transmission systems.
1.6 Good Utility Practice
Any
of the practices, methods and acts engaged in or approved by a
significant portion of the electric utility industry with respect
to similar
facilities during the relevant time period which, in each case, in
the exercise
of reasonable judgement in light of the facts known or that should
have been
known at the time the decision was made, could have been expected
to accomplish
the desired result at a reasonable cost consistent with good
business practices,
reliability, safety, law, regulation, environmental protection and
expedition.
Good Utility Practice is not intended to be limited to the optimal
practices,
methods or acts to the exclusion of all others, but rather to
delineate the
acceptable practices, methods or acts generally accepted in such
industry.
1.7 NERC
The
North American Electric Reliability Council, its successors and
assigns.
Issued by: William E. Garrity
Effective on: May 1, 2002
Vice President, Fuels and
Power Transactions
Issued on: [INSERT DATE]
<PAGE>
Consumers Energy Company
Original Sheet No. 6
Rate Schedule No. 116
EXECUTION COPY
1.8 Point of Receipt
The
point at which capacity and energy is provided by Consumers to
Michigan
Transco.
1.9 Reserved Capacity
The
maximum amount of capacity and energy that Consumers provides
to
Michigan Transco during any specified period as Ancillary Services
under Part II
of the Tariff. Reserved Capacity shall be expressed in terms to
whole megawatts
on a sixty (60) minute interval (commencing on the clock hour)
basis.
1.10 Resources
Consumers' Generation committed or procured by Consumers to provide
service
under this Agreement.
1.11 System Operator
A
generic term used to describe the individuals responsible for
the
integrity or the operational control of Michigan Transco's
transmission system,
and any successor thereto.
1.12 Tariff
Either (a) the Open Access Transmission Tariff (OATT) of Michigan
Transco
filed with the Commission on November 13, 2000, or (b) the Joint
Open Access
Transmission Tariff (JOATT) filed by Michigan Transco and ITC with
the
Commission on February 22, 2001 as they may subsequently be
modified or
supplemented and accepted for filing by the Commission, or any
superseding
tariff.
1.13 Third Party
Parties other than Consumers or Michigan Transco.
1.14 Transmission Service Area
The
geographic region in which Michigan Transco operates
transmission
facilities and provides transmission service as of the effective
date of this
Agreement.
1.15 Transaction
A
particular purchase by Michigan Transco or sale by Consumers of
capacity
and/or energy and/or reactive power to be performed under this
Agreement, as
evidenced by the agreement of the Parties.
ARTICLE 2
Effective Date
This
Agreement shall become effective on May 1, 2002, or the date
the
Michigan Transco begins operation under its filed Tariff, whichever
date occurs
later, or such other date as is required by regulatory authority
having
jurisdiction over this Agreement.
Issued by: William E. Garrity
Effective on: May 1, 2002
Vice President, Fuels and
Power Transactions
Issued on: [INSERT DATE]
<PAGE>
Consumers Energy Company
Original Sheet No. 7
Rate Schedule No. 116
EXECUTION COPY
ARTICLE 3
Capacity, Energy and Reactive Power Sale
By Consumers to Michigan Transco
3.1 Consumers' Responsibilities
(a)
During the term of
this Agreement, Consumers shall provide capacity,
energy and reactive power needed by Michigan Transco for
Ancillary
Services in amounts set forth in this Article 3. Capacity, energy
and
reactive power shall be supplied from one or more Resources as
Firm
Service. The quantities to be supplied shall be as specified in
the
pertinent forecasts or actual use for each type of service, as
outlined
in Article 6 and Appendix A hereof. Notwithstanding Ancillary
Service obligations that Michigan Transco may enter into
associated
with Transmission Service Agreements that have a term that is
longer
than the term of this Agreement, Consumers shall not be obligated
to
provide Michigan Transco with Ancillary Services after this
Agreement
is terminated.
(b)
Michigan Transco and
Consumers agree that dispatch and scheduling
decisions with respect to Consumers' Resources shall be as set
forth
in Section 4.6 of the Operating Agreement between the Parties.
(c)
Subject to Consumers'
obligation to supply capacity, energy and
reactive power under this Agreement, Consumers may, under an
applicable tariff, sell capacity and/or energy and reactive power
to
any other entity that is eligible to make purchases under such
tariffs. Consumers is not obligated to curtail any previously
committed sales from Consumers' Generation to provide service
hereunder beyond the obligations set forth in Section 3.3.
(d)
The energy delivered
hereunder shall be of the character commonly
known as three-phase, 60 Hertz (60 Hz) energy at a voltage, or
voltages, mutually agreed upon by the Parties.
(e)
Consumers shall
continue the present practice of providing overlap
regulation services for Michigan Transco's Transmission Service
Area.
(f)
Consumers shall
cooperate with Michigan Transco in establishing
billing practices and information transfer protocols to process
and
bill transactions under this Agreement.
3.2 Michigan Transco's Responsibilities
(a)
Michigan Transco shall
purchase from Consumers capacity, energy and
reactive power in order to provide pertinent Ancillary Services
in
addition to transmission services pursuant to its Tariff. Nothing
in
this Agreement shall be construed to preclude Michigan Transco
from
procuring capacity, energy and/or reactive power from Third
Party
suppliers when available.
Issued by: William E. Garrity
Effective on: May 1, 2002
Vice President, Fuels and
Power Transactions
Issued on: [INSERT DATE]
<PAGE>
Consumers Energy Company
Original Sheet No. 8
Rate Schedule No. 116
EXECUTION COPY
(b)
Michigan Transco will
use services provided hereunder solely in order
to meet its obligations under its Tariff, local, regional and
national
reliability requirements and its operating practice
requirements.
(c)
Michigan Transco shall
provide Consumers with timely notification of
forecasted
requirements for Ancillary Services pursuant to Article 6
hereof so that Consumers can plan its supply of such services.
(d)
Michigan Transco will
provide Consumers with necessary real-time and
historic information for Consumers to forecast and identify its
obligations under this Agreement.
(e)
At Consumers' request,
Michigan Transco will provide to Consumers the
information Consumers may need to reassess the rates stated in
Article
5 hereof.
3.3 Ancillary Services
The
following Ancillary Services may be purchased by Michigan Transco
at
quantities specified in the forecasts for same as outlined in
Article 6 and
Appendix A hereof.
(a)
Reactive Supply and
Voltage Control from Generation Sources Service
Michigan Transco will control transmission voltages on the
Michigan
Transco transmission facilities. Michigan Transco shall
establish
voltage schedules or reactive power schedules for each
Resource,
within its established capabilities, to maintain voltage levels in
the
Michigan Transco Transmission Service Area within stability
limits
that are generally accepted in the region and consistently adhered
to
by Michigan Transco. Michigan Transco shall provide to Consumers
a
daily forecast of reactive power requirements, and updates as
needed
the day ahead and throughout the day being forecasted, as an
operational guide as outlined in Article 6 and Appendix A
hereof.
Within the limitations specified below, Consumers shall provide
reactive power daily from operating Resources in a manner that
will
produce or absorb reactive power in amounts and over periods of
time
as needed by Michigan Transco. Under Michigan Transco's
direction,
Consumers may (i) vary the reactive power from its generating units
in
operation at the time or (ii) remove units from operation or
place
units in operation at its earliest convenience in a manner
consistent
with Good Utility Practice to allow for the delivery, absorption
or
redistribution among local units of reactive power; however,
the
removal of units from operation or the placing of units in
operation
shall be classified as a request for redispatch pursuant to Section
2
of the Network Operating Agreement between the Parties and
compensated
pursuant to said Network Operating Agreement. Consumers will not
be
obligated to provide reactive power when, in its sole judgement, to
do
so would damage or otherwise adversely affect the reliability of
its
Generation Resources.
Issued by: William E. Garrity
Effective on: May 1, 2002
Vice President, Fuels and
Power Transactions
Issued on: [INSERT DATE]
<PAGE>
Consumers Energy Company
Original Sheet No. 9
Rate Schedule No. 116
EXECUTION COPY
(b)
Regulation and
Frequency Response Service
Michigan Transco shall provide to Consumers, on a daily basis,
a
forecast (updated throughout the day, as necessary) of Regulation
and
Frequency Response Service which it is purchasing from Consumers,
as
outlined in Article 6 and Appendix A hereof.
(c)
Energy Imbalance
Service, Delivery Scheduling and Balancing Service
and Generator Supply Imbalance Service
Because Consumers will provide overlap regulation services to
the
Michigan Transco area, Michigan Transco will automatically be
supplied
with energy needed to maintain the balance between (i)
real-time
generation made available to Michigan Transco and (ii) the actual
load
in the Michigan Transco Transmission Service Area. In addition,
Consumers will provide energy up to the daily operating reserve
capacity defined in Sections 3.3(b), 3.3(d) and 3.3(e) to
support
Michigan
Transco's obligations, including but not limited to
contributions to frequency control and area control error.
Michigan
Transco shall provide to Consumers, on a daily basis, a
forecast
(updated throughout the day, as necessary) of energy Michigan
Transco
will purchase to maintain these obligations, as outlined in Article
6
and Appendix A hereof. Consumers shall attempt at all times to
provide
this service from Consumers' Resources in a manner consistent
with
Good Utility Practice.
(d)
Operating Reserve -
Spinning Reserve Service
Michigan Transco shall provide to Consumers, on a daily basis,
a
forecast (updated throughout the day, as necessary) of Spinning
Reserve Service capacity which it is purchasing from Consumers,
as
outlined in Article 6 and Appendix A hereof.
(e)
Operating Reserve -
Supplemental Reserve Service
Michigan Transco shall provide to Consumers, on a daily basis,
a
forecast (updated throughout the day, as necessary), of
Supplemental
Reserve Service capacity which it is purchasing from Consumers,
as
outlined in Article 6 and Appendix A hereof.
3.4 Changes in Responsibilities
(a)
Mandated Changes
In the event that a regulatory body having jurisdiction over
the
operations of Michigan Transco, or legislative action, either
federal
or state, or a regional or national reliability organization,
alters,
revises or otherwise restructures the electric utility industry
such
that Michigan Transco is no longer required to provide
transmission
and/or Ancillary Services, in whole or in part, then in such
event,
either
Party may call for amendment to or termination of this
Agreement as of the effective date of the relevant regulatory
decision.
(b)
Notice of Changes
Michigan Transco agrees to provide Consumers reasonable notice of
all
forecasts and forecast revisions outlined in Article 6 and Appendix
A
hereof.
Issued by: Wi
