FirstEnergy Solutions
Corp.
EXHIBIT
10.9
FERC Electric Tariff, First
Revised Volume No.1
Service Agreement
No.4
POWER SUPPLY
AGREEMENT
Between FirstEnergy
Solutions Corp., Seller
And the FirstEnergy
Operating Companies, Buyer
This Electric Power Supply
Agreement (“Agreement”) dated October 31, 2005, is
made by and between FirstEnergy Solutions Corp.
(“SOLUTIONS” or “Seller”), and the
following FirstEnergy Operating Companies: The Cleveland Electric
Illuminating Company, Ohio Edison Company, and The Toledo Edison
Company (collectively referred to as “FEOCs” or
“Buyer”). SOLUTIONS and FEOCs may be identified
collectively as “Parties” or individually as a
“Party.” This Agreement is entered into in connection
with the Ohio electric restructuring legislation and the Ohio rate
stabilization plan approved by the Public Utilities Commission of
Ohio (“PUCO”) in Case No. 03-2144-EL-ATA, et al.,
(hereinafter, “Ohio Rate Stabilization
Plan”).
WHEREAS
, Seller has
purchased: all of the electric output of nuclear generating units
of its affiliate, FirstEnergy Nuclear Generation Corp. (including
the electric output of nuclear generating units owned by others
that is purchased by FirstEnergy Nuclear Generation Corp.); all of
the electric output of fossil and pumped storage generating
facilities owned or operated by its subsidiary, FirstEnergy
Generation Corp.; and power from unaffiliated companies
(collectively referred to as “Generating Resources”);
and
WHEREAS
, Seller is
engaged inter alia
, in the business of generating, purchasing, and selling Power at
wholesale and retail; and
WHEREAS
, Buyer is
responsible for obtaining and delivering sufficient Capacity and
Energy, and related services necessary to meet its Provider of Last
Resort obligations under Ohio law, as well as other power supply
obligations incurred by law, contract or tariff;
WHEREAS
, Buyer desires to
obtain from Seller sufficient Power to satisfy its Power Supply
Requirements to Ohio customers under the rates, terms and
conditions set forth herein;
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Issued By:
Richard H.
Marsh, Senior Vice President
Issue Date:
October
31, 2005
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Effective Date: January 1,
2006
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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 January 1, 2006, or such
later effective date authorized by the Federal Energy Regulatory
Commission, and unless terminated by mutual agreement of the
Parties shall remain in effect through December 31,
2008.
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B.
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This Agreement may be
terminated at the sole option of Seller with sixty days notice to
become effective upon the implementation of a winning bid for
Provider of Last Resort service resulting from the auction process
established pursuant to the Ohio Rate Stabilization Plan approved
in PUCO Case No. 03-2144-EL-ATA, et al, and any subsequent
modifications or proceedings related thereto (“Ohio
Auction”). In the event Buyer obtains Capacity and Energy for
Provider of Last Resort service from an unaffiliated supplier
through the Ohio Auction, Buyer is not obligated to obtain and pay
for that portion of its Power Supply Requirements from
Seller.
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II.
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SALE AND PURCHASE OF CAPACITY
AND ENERGY
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A.
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Seller shall make available to
Buyer Capacity and Energy sufficient to satisfy Buyer’s Power
Supply Requirements. Seller shall make such firm Capacity and
Energy available at the Delivery Points. 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 OATT
of the Transmission Provider or any superseding tariff. The
Capacity and Energy provided by Seller will comply with all
requirements for Network Resources under the Transmission
Provider’s OATT and Buyer’s Network Transmission
Agreements with Transmission Provider.
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B.
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Except as provided in Section
I.B., Buyer will purchase its full Power Supply Requirements from
Seller during the term of this Agreement. Buyer will pay for the
Power Supply Requirements in accordance with Section IV of this
Agreement. Buyer is responsible for obtaining all Network
Transmission Service, Ancillary Services, congestion charges,
marginal transmission losses, and such other services and
administrative charges as are required and imposed by the
Transmission Provider OATT on the Buyer as a Load Serving Entity
for the delivery of Capacity and Energy at and from the Delivery
Points under this Agreement.
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C.
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Seller may purchase Power from
third parties in the Spot Market as necessary to satisfy its
obligations under this Agreement. Buyer will pay for this Power at
the price specified in Section IV.B of this Agreement.
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Effective
Date: January 1, 2006
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D.
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If Seller’s credit is
adversely impacted during the term of this Agreement, Buyer agrees
to allow Seller to acquire purchased Power as agent for the Buyer
as reasonably necessary to minimize supply costs under this
Agreement. Buyer will pay all of the costs associated with
acquiring this Power, but Seller will not charge Buyer any broker
fee for performing this service.
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II.
SCHEDULING AND SYSTEM PLANNING
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A.
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On or before November 1, 2005
and on November 1 of each subsequent year during the term of this
Agreement, Buyer will inform Seller of its initial annual Capacity
and Energy forecast for the next calendar year. Such initial annual
forecast shall include Buyer’s Power Supply Requirements for
the year, by month. Based on Buyer’s initial annual forecast,
as well as other information that may be communicated between Buyer
and Seller as necessary and appropriate for system planning, Seller
shall procure the necessary Generation Resources and develop
forecasts of Buyer’s Power Supply Requirements on a weekly,
daily and hourly basis, and shall periodically update such
forecasts to reflect current circumstances.
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B.
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Buyer shall update its annual
forecast of Capacity and Energy for any change or expected change
in its Power Supply Requirements that would materially affect the
annual forecast provided to Solutions. Buyer shall provide the
updated forecast to Solutions for any full month(s) remaining in
the calendar year within thirty days of becoming aware of the
change or expected change in its Power Supply
Requirements.
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C.
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Buyer is responsible for
scheduling delivery of its Power Supply Requirements with
Transmission Provider in accordance with the OATT. Buyer will
simultaneously furnish its schedule to Seller and Transmission
Provider. Seller will supply Capacity and Energy to Buyer in
accordance with the schedule provided to Transmission Provider.
Buyer and Seller acknowledge that Buyer’s Power Supply
Requirements may vary from the schedule provided to Transmission
Provider. Buyer agrees that it is responsible for payment of any
Transmission Provider charges incurred when actual Power Supply
Requirements differ from the schedule provided. Seller shall be
responsible for payment of any Transmission Provider charges
incurred by its failure to deliver the scheduled amount of Capacity
and Energy.
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D.
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Seller agrees to operate its
Generating Resources in accordance with Good Utility Practice,
including, but not limited to the efficient and economic dispatch
of the Generating Resources. Seller will self-schedule sufficient
Generating Resources to supply Buyer’s Power Supply
Requirements in accordance with Buyer’s delivery schedule and
the Transmission Provider OATT.
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Effective
Date: January 1, 2006
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E.
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Load Management. To minimize
supply risk to the Seller hereunder, Buyer agrees to enforce its
applicable Retail Tariffs, Special Contracts, and federal tariffs
and contracts, including, but not limited to, those tariffs or
contracts that provide for curtailment or interruption of electric
service, real time pricing, or other load management devices. At
Buyer’s request, Seller will provide estimates of the Spot
Market price of Energy in sufficient detail for Buyer to implement
and administer its tariffs and contracts with retail customers. Any
such data furnished to Buyer shall be treated as Confidential
Information.
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F.
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Buyer and Seller agree to
cooperate in fulfilling their respective obligations to the
Transmission Provider, NERC, regional reliability council, Electric
Reliability Organization, Regional Entity or Government Authority
related to service provided under this Agreement.
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IV. PRICE
Seller shall charge, and Buyer
shall pay, for Buyer’s Power Supply Requirements the sum of
the following charges. The method for calculating this amount is
set forth in Exhibit B.
A. Capacity and
Energy Charges
Buyer shall pay Seller an
amount up to, but not exceeding, the amount of money that Buyer
bills its retail customers taking Capacity and Energy from Buyer as
the generation charge, fuel cost adder and Rate Stabilization
Charge under the Buyer’s Retail Tariffs and Special Contracts
as approved by the Public Utilities Commission of Ohio. As soon as
practicable after the end of the month, Buyer shall provide Seller
load data, metered sales, and rates used for billing retail
customers in sufficient detail for Seller to determine after the
fact, the revenues due Seller for Buyer’s Power Supply
Requirements and delivered to the applicable retail customer
classes during a billing period. Buyer and Seller will abide by all
applicable Code of Conduct provisions in exchanging this data, and
such data will be considered Confidential Information under Section
VII.C of this Agreement.
B. Adjustments to
Capacity and Energy Charges
In addition to the charges
specified above, Buyer will pay a monthly charge equal to its pro
rata share of the total cost of Energy purchased by Seller in the
Spot Market for delivery to the FirstEnergy Balancing Area in the
previous calendar month. The pro rata share of total cost of Energy
payable by Buyer shall be determined in accordance with Exhibit
B.
Effective
Date: January 1, 2006
C. Power Supply
for Buyer’s Existing Wholesale Contracts
During the term of this
Agreement, Seller will supply sufficient Capacity and Energy to
fulfill Power supply obligations under Buyer’s wholesale
contracts in effect on January 1, 2006. Buyer is responsible for
scheduling and delivery of Power under such wholesale contracts, as
well as payment of any charges imposed by the Transmission Provider
for delivery of Power under the wholesale contracts. Buyer will pay
Seller the amount billed by Buyer under its wholesale contracts for
Power supply, including, but not limited to, charges for demand
Capacity, Energy, or reserves. As soon as practicable after the end
of the month, Buyer shall provide Seller load data, metered sales,
and rates used for billing wholesale customers in sufficient detail
for Seller to determine after the fact, the revenues due Seller for
Buyer’s existing wholesale contracts.
Unless otherwise specifically
agreed upon by the Parties, the calendar month shall be the
standard period for all invoices and payments under this Agreement.
As soon as practicable after the end of each month, the Seller will
render an invoice to Buyer for the amounts due for Power Supply
Requirements for the preceding month. The invoice will be provided
in such detail as agreed by the Parties. 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 Seller. 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.
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
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