FirstEnergy Operating
Companies
EXHIBIT
10.6
FERC Electric Tariff, Second
Revised Volume No. 2
Service Agreement No.
[Execution Copy]
NUCLEAR
SALE/LEASEBACK
POWER SUPPLY
AGREEMENT
Between
Ohio Edison Company and The Toledo Edison Company,
Sellers
and
FirstEnergy
Nuclear Generation Corp., Buyer
This Nuclear Sale/Leaseback
Power Supply Agreement ("Agreement") dated October 14, 2005 is made
by and between Ohio Edison Company and The Toledo Edison Company
("Sellers") and FirstEnergy Nuclear Generation Corp., ("FENGenco"
or "Buyer"). The Sellers and FENGenco may be identified
collectively as "Parties" or individually as a "Party." This
Agreement is entered into in connection with the transfer of the
ownership interest of The Cleveland Electric Illuminating Company,
Ohio Edison Company, Pennsylvania Power Company, and The Toledo
Edison Company in the Beaver Valley Power Station, Davis-Besse
Nuclear Power Station, and Perry Nuclear Power Plant
(“Nuclear Generating Plants”) to FENGenco.
WHEREAS, Buyer is a newly
formed, nuclear generation only company that intends to acquire the
Nuclear Generating Plants owned by The Cleveland Electric
Illuminating Company, Ohio Edison Company, Pennsylvania Power
Company, and The Toledo Edison Company (collectively "the
FirstEnergy Operating Companies"); and
WHEREAS, Buyer will be a wholly
owned subsidiary of FirstEnergy Corp; and
WHEREAS, Sellers lease portions
of Beaver Valley Power Station Unit 2 and Perry Nuclear Power Plant
(hereinafter “Leased Nuclear Generation Facilities”)
from owner trustees under the Sale/Leaseback Arrangements;
and
WHEREAS, FirstEnergy Nuclear
Operating Company, an Affiliate of the Parties, operates the Leased
Nuclear Generation Facilities; and
WHEREAS, Sellers wish to sell
to Buyer the electrical output of the Leased Nuclear Generation
Facilities; and
WHEREAS, Buyer is engaged
exclusively in the business of owning and purchasing generation and
selling Power at wholesale; and
WHEREAS, Buyer desires to
obtain the entire electric output of the Leased Nuclear Generation
Facilities pursuant to the rates, terms and conditions set forth
herein.
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Issued by: David M. Blank,
Vice President
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Effective
Date:
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Issued on: October 14,
2005
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December 1,
2005
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It is agreed as
follows:
I.
TERM
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A.
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The sale and purchase of Power
pursuant to this Agreement shall begin on December
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1,2005, or such later effective
date authorized by the FERC, for an initial term ending December
31, 2010. This Agreement shall remain in effect from year to year
thereafter unless terminated by either Party upon at least sixty
days written notice prior to the end of the calendar
year.
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B.
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Notwithstanding I.A, this
Agreement will terminate if all of the Sale/Leaseback Arrangements
for the Leased Nuclear Generation Facilities are terminated or
assigned to FENGenco. Termination of the Agreement under this
Section will be effective no sooner than the effective date of the
termination or assignment of the Sale/Leaseback Arrangements. Buyer
will give Sellers no less than sixty days written notice of the
termination of this Agreement under this Section I.B. In the event
of a partial termination or assignment of the Sale/Leaseback
Arrangements, the Parties will amend this Agreement to reflect the
revised rates, terms, and conditions for the sale of Power from the
remaining Leased Nuclear Generation Facilities.
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II.
SALE AND PURCHASE OF CAPACITY AND ENERGY
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A.
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Sellers shall provide to Buyer
all of the Capacity, Energy, and Ancillary Services available from
the Leased Nuclear Generation Facilities identified in Exhibit C to
this Agreement, and Buyer shall purchase and pay for such Capacity,
Energy, and Ancillary Services in accordance with the terms of this
Agreement. Sellers shall make Capacity, Energy, and Ancillary
Services available at the Delivery Points. Buyer shall arrange and
will be responsible for all transmission, congestion costs, losses,
and related services at and from the Delivery Points. The Capacity,
Energy, and Ancillary Services supplied by Seller are collectively
referred to as Buyer's "Power Supply Requirements". Capacity and
Energy supplied shall be sixty-hertz, three phase alternating
current. The Power Supply Requirements will be provided in
accordance with Good Utility Practice, and where applicable, the
provisions of the applicable Transmission Provider OATT, and the
requirements of the NRC.
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B.
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Sellers shall cause the Leased
Nuclear Generation Facilities to be operated and maintained in
accordance with Good Utility Practice, the applicable requirements
of the FERC, NRC and NERC, or successor Electric Reliability
Organization, as well as the requirements of the regional
reliability councils or Regional Entity, and Regional Transmission
Organizations where the Leased Nuclear Generation Facilities are
located. Sellers will enter into agreements with FirstEnergy
Nuclear Operating Company, other FirstEnergy Affiliates,
Transmission Provider, or Government Authority to ensure compliance
with this Section II.B.
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III.
SCHEDULING AND SYSTEM PLANNING
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A.
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Sellers shall notify Buyer on
or before November 1 of each year during the term of this Agreement
of the amount of Capacity, Energy, and Ancillary Services it
expects to have available from the Leased Nuclear Generation
Facilities for each day in each month of the next calendar year.
The information provided in this notification shall include, but
not be limited to, the time and expected duration of any planned
outage of the Leased Nuclear Generation Facilities.
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B.
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Sellers shall update their
annual forecast of available Capacity, Energy, and Ancillary
Services for any change or expected change in the operation of the
Leased Nuclear Generation Facilities that would materially affect
the annual forecast provided to FENGenco. FENGenco shall provide
the updated forecast for any full month(s) remaining in the
calendar year within thirty days of becoming aware of the change or
expected change in the operation of the Leased Nuclear Generation
Facilities.
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C.
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Sellers will supply FENGenco,
upon request, any such information as is necessary to meet the
requirements of the applicable Transmission Provider OATT, FERC,
NERC, NRC, Electric Reliability Organization, regional reliability
council, Regional Entity, or Government Authority.
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IV.
PRICE
Sellers shall charge, and Buyer
shall pay, for Buyer's Power Supply Requirements, as follows on a
monthly basis.
A.
Charges
Buyer will pay Sellers the
Monthly Charge under the formula set forth in Exhibit A for the
Power Supply Requirements available from the Leased Nuclear
Generation Facilities identified in Exhibit C .
B.
Billing and Payment
Unless otherwise specifically
agreed upon by the Parties, the calendar month shall be the
standard period for all billings and payments under this Agreement.
As soon as practicable after the end of each month, the Sellers
will render an invoice to Buyer for the amounts due for Power
Supply Requirements for the preceding month. Payment shall be due
and payable within ten days of receipt of the invoice or, if such
day is not a Business Day, then on the next Business Day. Buyer
will make payments by electronic funds transfer or by other
mutually agreeable method(s) to the account designated by Sellers.
Any amounts not paid by the due date will be deemed delinquent and
will accrue interest at the Interest Rate until the date of payment
in full.
C.
Records
Each Party shall keep complete
and accurate records of its operations under this Agreement and
shall maintain such data as may be necessary to determine the
reasonableness and accuracy of all relevant data, estimates,
payments or invoices submitted by or to it hereunder. All records
regarding this Agreement shall be maintained for a period of three
years from the date of the invoice or payment, or for such longer
period as may be required by law.
D.
Audit and Adjustment Rights
Buyer shall have the right, at
its own expense and during normal business hours, to audit the
accounts and records of Sellers that reasonably relate to the
provision of service under this Agreement. If the audit reveals an
inaccuracy in an invoice, the necessary adjustment in such invoice
and the payments therefore will be promptly made. No adjustment
will be made for any invoice or payment made more than one year
from rendition thereof. This provision shall survive the
termination of this Agreement for a period of one year from the
date of termination for the purpose of such invoice and payment
objections. To the extent that audited information includes
Confidential Information, the Buyer shall keep all such information
confidential under Section VII.C.
E.
Section 205 Rights
Nothing contained herein shall
be construed as affecting in any way the right of the Party
furnishing service under this Agreement to unilaterally make
application to the FERC for a change in rates under Section 205 of
the Federal Power Act and pursuant to the FERC's Rules and
Regulations thereunder. Provided, however, that nonrate terms and
conditions may be amended only by a written agreement signed by the
Parties.
V.
METERING
Generation metering shall be
installed, operated and maintained in accordance with the
applicable generator interconnection agreements between the
FENGenco, Transmission Provider, and Transmission Owner. Metering
between control areas shall be handled in accordance with the
applicable Transmission Provider OATT. Retail metering shall be
provided in accordance with applicable state law. Nothing in this
Agreement requires Sellers or Buyer to install new metering
facilities.
VI.
NOTICES
All notices, requests,
statements or payments shall be made as specified below. Notices
required to be in writing shall be delivered by letter, facsimile
or other documentary form. Notice by facsimile or hand delivery
shall be deemed to have been received by the close of the Business
Day on which it was transmitted or hand delivered (unless
transmitted or hand delivered after close in which case it shall be
deemed to have been received at the close of the next Business
Day). Notice by overnight mail or courier shall be deemed to have
been received two Business Days after it was sent. A Party may
change its addresses by giving notice as provided above.
