FILE NO. 70-8037
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 5
(POST-EFFECTIVE) TO
FORM U-1
APPLICATION
UNDER THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
CENTRAL AND SOUTH WEST CORPORATION
1616 Woodall Rodgers Freeway
Dallas, Texas 75202
CENTRAL POWER AND LIGHT COMPANY
P.O. Box 2121
Corpus Christi, Texas 78403
(Names of companies filing this statement and
addresses of principal executive offices)
CENTRAL AND SOUTH WEST CORPORATION
(Name of top registered holding company parent)
Wendy G. Hargus , Treasurer
Central and South West Corporation
1616 Woodall Rodgers Freeway
Dallas, Texas 75202
Wendy G. Hargus, Treasurer
Central Power and Light Company
P.O. Box 2121
Corpus Christi, Texas 78403
Ronald T. Astin, Esq.
Vinson & Elkins L.L.P.
2300 First City Tower
1001 Fannin Street
Houston, Texas 77002-6760
(Name and addresses of agents for service)
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Item 6. Exhibits and Financial Statements.
Item 6 is amended as follows:
Confidential
Exhibit 12 - Form of Amended and Restated Participation Agreement
(filed hereto).
Confidential
Exhibit 13 - Form of South Texas Project Operating Agreement (filed
hereto).
Confidential
Exhibit 14 - Form of Articles of Incorporation of OPCO (filed hereto).
Confidential
Exhibit 15 - Form of Bylaws of OPCO (filed hereto).
Exhibit 16 - Preliminary Opinion of Vinson & Elkins LLP, Counsel to CSW
and CPL (filed hereto).
Exhibit 18 - Financial Data Schedule (per books and pro forma) (filed
hereto).
Exhibit 19 - Financial Statements (per books and pro forma) of CSW and
CPL and consolidated subsidiaries as of December 31, 1996 (filed
hereto)
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S I G N A T U R E
Pursuant to the requirements of the Public Utility Holding
company Act of 1935, as amended, the undersigned company has duly caused this
document to be signed on its behalf by the undersigned thereunto duly
authorized.
Dated: June 19, 1997
CENTRAL AND SOUTH WEST CORPORATION
By:/s/ WENDY G. HARGUS
Wendy G. Hargus
Treasurer
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S I G N A T U R E
Pursuant to the requirements of the Public Utility Holding
company Act of 1935, as amended, the undersigned company has duly caused this
document to be signed on its behalf by the undersigned thereunto duly
authorized.
Dated: June 19, 1997
CENTRAL POWER AND LIGHT COMPANY
By:/s/ WENDY G. HARGUS
Wendy G. Hargus
Treasurer
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INDEX OF EXHIBITS
EXHIBIT TRANSMISSION
NUMBER EXHIBITS METHOD
12 Form of Amended and Restated Participation EDGAR
Agreement
13 Form of South Texas Project Operating EDGAR
Agreement
14 Form of Articles of Incorporation of OPCO EDGAR
15 Form of Bylaws of OPCO EDGAR
16 Preliminary Opinion of Vinson & Elkins LLP, EDGAR
Counsel to CSW and CPL
17 Final or "past tense" opinion of Vinson & Elkins
LLP, Counsel to CSW and CPL (to be filed with
Certificate of Notification)
18 Financial Data Schedule (per books and pro EDGAR
forma) of CSW and CPL and consolidated
subsidiaries as of December 31, 1996 (to be
filed by amendment)
20 Proposed Form of Notice EDGAR
Exhibit 12
AMENDED AND RESTATED
SOUTH TEXAS PROJECT
PARTICIPATION AGREEMENT
BETWEEN
CITY OF SAN ANTONIO
CENTRAL POWER AND LIGHT COMPANY
HOUSTON LIGHTING & POWER COMPANY
CITY OF AUSTIN
EFFECTIVE AS OF _______________
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TABLE OF CONTENTS
Page
1. PARTIES......................................................... 1
2. RECITALS........................................................ 1
3. AGREEMENT....................................................... 2
4. DEFINITIONS..................................................... 2
5. OWNERSHIP OF SOUTH TEXAS PROJECT................................ 10
6. ADDITION OF GENERATING UNITS.................................... 11
7. GENERATING CAPACITY AND ENERGY ENTITLEMENT...................... 15
8. DELIVERY AND TRANSMISSION....................................... 16
9. ADMINISTRATION.................................................. 18
10. OPERATION AND DECOMMISSIONING................................... 21
11. REPLACEMENT OF OPCO............................................. 22
12. PROJECT COSTS....................................................... 22
13. ADVANCEMENT OF FUNDS............................................ 23
14. TAXES........................................................... 23
15. WAIVER OF RIGHT TO PARTITION.................................... 24
16. MORTGAGE AND TRANSFER OF INTEREST............................... 25
17. RIGHT OF FIRST REFUSAL.......................................... 28
18. DESTRUCTION OR ABANDONMENT...................................... 33
19. PROJECT INSURANCE............................................... 36
20. LIABILITY OF PARTICIPANTS TO EACH OTHER......................... 37
21. PAYMENT DEFAULT................................................. 41
22. SOURCE OF PAYMENTS BY SAN ANTONIO............................... 43
23. SOURCE OF PAYMENTS BY AUSTIN.................................... 44
24. CONTINUING RESPONSIBILITY OF OPCO............................... 46
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25. RELATIONSHIP OF PARTICIPANTS................................... 46
26. FORCE MAJEURE.................................................. 48
27. GOVERNING LAW.................................................. 49
28. BINDING OBLIGATIONS............................................ 49
29. AMENDMENT OF THIS RESTATED AGREEMENT........................... 51
30. TERM........................................................... 51
31. INTERESTS ACQUIRED IN THE NAME OF AN INDIVIDUAL
PARTICIPANT.................................................... 51
32. NOTICES........................................................ 51
33. MISCELLANEOUS PROVISIONS....................................... 52
Exhibit A: Common Station Facilities........................... 55
Exhibit B: South Texas Plant Site.............................. 56
Exhibit B-1: Railroad Strip.................................... 57
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AMENDED AND RESTATED SOUTH TEXAS PROJECT PARTICIPATION AGREEMENT
1. PARTIES: The parties to this amended and restated agreement (this " Restated
Agreement") are: CITY OF SAN ANTONIO, acting through the City Public Service
Board of San Antonio, hereinafter referred to as "San Antonio"; CENTRAL POWER
AND LIGHT COMPANY, a Texas corporation, hereinafter referred to as "Central";
HOUSTON LIGHTING & POWER COMPANY, a Texas corporation, hereinafter referred to
as "Houston"; and the CITY OF AUSTIN, hereinafter referred to as "Austin". 2.
RECITALS: The parties have heretofore jointly licensed and constructed two
nuclear-fueled electric generation facilities known as the South Texas Project
which are currently operated for the production of electric power and energy
taken by each Participant in proportion to its ownership interest in such
facilities. Such jointly owned facilities were licensed and constructed and
currently are operated under the terms of the Participation Agreement, dated as
of July 1, 1973, as amended by three amendments thereto (which Participation
Agreement, as so amended, is hereinafter referred to as the "Prior Agreement").
The parties now desire to amend and restate the Prior Agreement in order (i) to
provide for the continued operation and maintenance of the said generating
facilities by STP Nuclear Operating Company ("OPCO") acting pursuant to the
South Texas Project Operating Agreement, dated effective as of the Effective
Date, (the "Operating Agreement") (ii) to relieve Houston and Central of their
respective
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rights and obligations as Project Managers under provisions of the
Prior Agreement, (iii) to amend and restate the terms of the Prior
Agreement in other respects and (iv) to terminate the Prior
Agreement as of the Effective Date.
3. AGREEMENT: In consideration of the mutual covenants herein,
the parties agree as follows:
4. DEFINITIONS: The following terms, when used herein, shall
have the meanings specified:
4.1 ADDITIONAL GENERATING UNIT: The third or any
subsequent nuclear electric generating unit to be located on the
South Texas Plant Site.
4.2 CAPACITY: Electrical rating expressed in megawatts
(mw) or megavolt-amperes (mva) and based on manufacturer's
nameplate electrical ratings where available.
4.3 CAPITAL ADDITIONS: Any Units of Property, land or interests in
land which are added to the South Texas Project and which are not in
substitution for any existing Units of Property, land or interests in land
constituting a part of the South Texas Project, and which in accordance with
accounting practice should be capitalized.
4.4 CAPITAL BETTERMENTS: Any improvements to the South
Texas Project, including any enlargement or improvement of any
Units of Property constituting a part of the South Texas Project or
the substitution therefor, where such substitution constitutes an
enlargement or improvement as compared with that for which it is
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substituted, and which in accordance with accounting practice
should be capitalized.
4.5 CAPITAL IMPROVEMENTS: All of any Capital Additions,
Capital Betterments, or Capital Replacements.
4.6 CAPITAL REPLACEMENTS: The substitution of any Units of Property
for other Units of Property constituting a part of the South Texas Project,
where such substitution does not constitute an enlargement or improvement of
that for which it is substituted, and which in accordance with accounting
practice should be capitalized.
4.7 COMMON STATION FACILITIES: Those components of the
South Texas Project identified in Exhibit A as being for the common
use of all units now or hereafter comprising the South Texas
Project.
4.8 CONSTRUCTION POWER LINE: A 138 KV line located within
the Transmission Corridor.
4.9 CONSTRUCTION WORK: Design, construction, repair, replacement and
reconstruction of Capital Improvements to the South Texas Project, and the
decommissioning, dismantling, removal and final disposition of all components of
the South Texas Project, including, but not by way of limitation, all related
engineering, design, contract preparation, purchasing, supervision, expediting,
inspection, accounting, testing, management and protection.
4.10 CONSTRUCTION WORK LIABILITY: Liability of OPCO or one
or more Participants for damage suffered by anyone other than a
Participant which arises out of Construction Work and is not
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discharged by Project Insurance, and is not the result of Willful
Action.
4.11 COSTS OF OPERATION: Includes all Costs of Operation as
defined in the Operating Agreement.
4.12 EFFECTIVE DATE: [DATE] .
4.13 ENERGY: Kilowatt-hours (kwh).
4.14 GENERATION ENTITLEMENT SHARE: The percentage
entitlement of each Participant in a particular Generating Unit of the South
Texas Project. Each Participant's percentage entitlement shall be equal to such
Participant's percentage ownership in the particular Unit at the applicable time
as contemplated by this Restated Agreement.
4.15 GENERATING UNIT or UNIT: An electric generating unit, including
the components thereof (nuclear steam supply system, turbine and generator
including step-up transformers and other associated equipment), located on the
South Texas Plant Site. A Generating Unit does not include Common Station
Facilities but does include that portion of the South Texas Plant Site allocated
thereto in Exhibit B hereto, and in the case of an Additional Generating Unit,
that portion selected by the Participant proposing the Additional Generating
Unit and approved by the Owners Committee.
4.16 NET EFFECTIVE GENERATING CAPABILITY: The maximum
continuous ability of each Generating Unit to produce power
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measured at the high voltage terminals of the generator step-up
transformers.
4.17 NRC OR NUCLEAR REGULATORY COMMISSION: The United States Nuclear
Regulatory Commission or its predecessor, the Atomic Energy Commission, or any
successor having responsibility for the administration of the licensing and
regulation of the operation of nuclear utilization facilities under the Atomic
Energy Act of 1954 and any amendments thereto.
4.18 NUCLEAR FUEL: Any source, special nuclear or by- product material
as defined in the Atomic Energy Act of 1954 and any amendments thereto,
including any ores, mined or unmined, uranium concentrates, natural or enriched
uranium hexafluoride, or any other material in process containing uranium, and
any fuel assemblies or parts thereof, which are required for the generation of
electricity at South Texas Project.
4.19 OPCO: STP Nuclear Operating Company, a Texas non-profit
corporation formed by the Participants for the purposes described in Section
10.1 of this Restated Agreement.
4.20 OPERATING AGREEMENT: The Operating Agreement dated
effective as of the Effective Date, by and among the Participants
and OPCO, as the same may be amended from time to time.
4.21 OWNERS COMMITTEE: The committee established pursuant
to Section 9.1 hereof composed of representatives of each
Participant.
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4.22 PARTICIPANT: A party hereto or other entity acquiring an interest
in the South Texas Project in accordance with this Restated Agreement.
4.23 PLANT OWNERSHIP INTEREST: The percentage interest of the
Participants in the South Texas Project. Each Participant's percentage interest
shall be equal to such Participant's ownership in the Common Station Facilities
at the applicable time as contemplated by this Restated Agreement.
4.24 POWER: Kilowatts (kw) or megawatts (mw).
4.25 PRECONSTRUCTION WORK: Environmental impact studies,
safety analyses, site evaluation, licensing of the South Texas Project and
acquisition of the South Texas Plant Site, but excluding all Construction Work
and all Station Work.
4.26 PRECONSTRUCTION WORK LIABILITY: Liability of OPCO or
one or more Participants for damage suffered by anyone other than
a Participant which arises out of Preconstruction Work, and is not
discharged by Project Insurance, and is not the result of Willful
Action.
4.27 PROJECT COSTS: The costs of possessing, using, maintaining,
repairing, improving, operating, decontaminating and decommissioning the South
Texas Project which include (a) all Costs of Operation as defined in the
Operating Agreement; (b) all payments made to and expenses incurred by a
Participant pursuant to an agreement executed by each of the Participants which
designates such payments and expenses as Project Costs; and (c) costs of
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jointly acquiring and disposing of Nuclear Fuel whether by OPCO or as otherwise
directed by the Owners Committee but excluding the Spent Fuel Disposal Fee.
4.28 PROJECT INSURANCE: Policies of insurance to be
procured and maintained in accordance with Section 19 of this
Restated Agreement.
4.29 RAILROAD STRIP: A strip of land approximately 80 feet
wide, extending northerly from the South Texas Plant Site and being
generally depicted in Exhibit B-1 hereto.
4.30 SOUTH TEXAS PLANT SITE: A parcel of land in Matagorda
County, Texas, consisting of approximately 11,000 acres and being
generally depicted on Exhibit B hereto.
4.31 SOUTH TEXAS PROJECT: The South Texas Plant Site and the two
existing nuclear steam electric generating units situated thereon, each having a
Capacity of approximately 1250 mw and all interests in property, facilities and
structures used therewith or related thereto on or adjacent to the South Texas
Plant Site. The South Texas Project is generally described in Exhibit A hereto.
Said definition shall also include any Additional Generating Unit located on the
South Texas Plant Site pursuant to this Restated Agreement and all interests in
property, facilities and structures used therewith or related thereto on or
adjacent to the South Texas Plant Site.
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4.32 SPENT FUEL DISPOSAL FEE: The fee imposed by the Department of
Energy on nuclear reactor owner licensees in connection with the disposition of
spent fuel. The fee is assessed on the basis of Energy produced by a nuclear
reactor in accordance with rules established by the Department of Energy or its
successor. The term "Spent Fuel Disposal Fee" shall also be deemed to include
any other fee levied now or hereafter by any governmental entity for any purpose
related to the South Texas Project against nuclear reactor owner licensees
unless such fee is assessed on a basis that, when compared to the aggregate fee
for all Participants, equates to each Participant's Generation Entitlement
Share, if any, in the applicable nuclear reactor.
4.33 STATION WORK: Operation, maintenance, use or repair of the South
Texas Project including, though not by limitation, all related engineering,
contract preparation, purchasing, supervision, expediting, inspection,
accounting, testing, management and protection.
4.34 STATION WORK LIABILITY: Liability of OPCO or one or
more Participants for damage suffered by anyone other than a
Participant which arises out of Station Work and is not discharged
by Project Insurance, and is not the result of Willful Action.
4.35 TRANSMISSION CORRIDOR: A strip of land 400 feet wide
and approximately 6 miles long, plus a continuing strip of land 340
feet wide and approximately 13 miles long, extending northwesterly
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from the South Texas Plant Site and being generally depicted in Exhibit B-1
hereto.
4.36 UNITS OF PROPERTY: Units of property as described in the Federal
Energy Regulatory Commission's list of "Units of Property for Use in Accounting
for Additions and Retirements of Electric Plant", 18 CFR Part 116 as in effect
from time to time.
4.37 WILLFUL ACTION:
4.37.1 Action taken or not taken by a Participant at the
direction of its governing body or board (that is, its managing Board
or governing body in the case of San Antonio and Austin, or its Board
of Directors in the case of Central or Houston), which action is
knowingly or intentionally taken or not taken with intent to cause
injury or damage to another.
4.37.2 Action taken or not taken by an employee of a
Participant, which action is intentionally taken or not taken with
intent to cause injury or damage to another and which action or
non-action is subsequently ratified by the Participant employing such
employee at the direction of its said governing body or board.
4.37.3 Willful Action does not include intentional acts or
omissions of a Participant for which a Participant is legally
responsible solely because of the master-servant relationship between
such Participant and its employees.
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5. OWNERSHIP OF SOUTH TEXAS PROJECT:
5.1 The Participants have acquired and, subject to adjustments as
provided herein, own the South Texas Plant Site, Railroad Strip and Common
Station Facilities as tenants in common, as follows:
San Antonio owns an undivided 28.0 percent interest therein;
Central owns an undivided 25.2 percent interest therein;
Houston owns an undivided 30.8 percent interest therein; and
Austin owns an undivided 16.0 percent interest therein.
5.2 The Participants have acquired and own the first two Generating
Units located on the South Texas Plant Site as tenants in common, as follows:
San Antonio owns an undivided 28.0 percent interest therein;
Central owns an undivided 25.2 percent interest therein;
Houston owns an undivided 30.8 percent interest therein; and
Austin owns an undivided 16.0 percent interest therein.
5.3 The Participants have acquired and own:
5.3.1 The 400 foot wide section of the Transmission Corridor as
tenants in common, as follows:
San Antonio owns an undivided 36.5 percent interest therein;
Central owns an undivided 21.5 percent interest therein;
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Houston owns an undivided 23.2 percent interest therein; and,
Austin owns an undivided 18.8 percent interest therein.
5.3.2 The 340 foot wide section of the Transmission Corridor as
tenants in common, as follows:
San Antonio owns an undivided 38.0 percent interest therein;
Central owns an undivided 20.9 percent interest therein;
Houston owns an undivided 21.8 percent interest therein;
Austin owns an undivided 19.3 percent interest therein.
6. ADDITION OF GENERATING UNITS:
6.1 Any Participant may propose the construction of an
Additional Generating Unit by written notice to all other
Participants setting forth:
6.1.1 A general description of the proposed Additional
Generating Unit and of proposed Capital Additions and Capital
Betterments to the existing Common Station Facilities, all in the same
form and detail as South Texas Generating Station Units Nos. 1 and 2
are shown in Exhibit A to this Restated Agreement, identifying all
Common Station Facilities proposed for use in connection with the
proposed Additional Generating Unit or with respect to which Capital
Additions or Capital Betterments are proposed.
6.1.2 A plat of the South Texas Plant site depicting the
location of the proposed Additional Generating Unit.
6.1.3 An estimate of the respective costs (all prospective
Preconstruction Work and all Construction Work required) of the
proposed Additional Generating Unit, Capital Additions and Capital
Betterments, all in reasonable detail.
6.1.4 A description of the entities which would plan,
design, license, construct and operate the proposed
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Additional Generating Unit and the arrangements pursuant to
which this work would be performed.
6.2 Within forty-five (45) days after service of the
written notice given pursuant to Section 6.1 hereof, the proposing Participant
shall furnish to each other Participant a statement, in reasonable detail, of
all actual costs (without depreciation) of the South Texas Plant Site, the
Railroad Strip, and all Preconstruction Work and Construction Work attributable
to the Common Station Facilities.
6.3 Each Participant may elect to participate in the proposed
Additional Generating Unit, Capital Additions and Capital Betterments to the
extent of its Plant Ownership Interest by written election served upon each of
the other Participants within three (3) months after service of the written
notice given pursuant to Section 6.1 hereof. Failure of a Participant to
exercise said election as provided in this Section 6.3 within the time period
specified shall be conclusively deemed to be an election not to participate.
6.4 Subject to any limitations or conditions imposed by any court or
other governmental authority having jurisdiction over the licensing of the South
Texas Project or the proposed Additional Generating Unit, should all of the
Participants served with a written notice as provided in Section 6.1 hereof
elect to participate in the proposed Additional Generating Unit, the proposed
Additional Generating Unit, Capital Additions and Capital
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Betterments shall be planned, licensed, constructed, operated and maintained in
accordance with the provisions of this Restated Agreement, shall be owned
(subject to adjustments as provided herein) by the Participants in proportion to
their Plant Ownership Interests, and shall become a part of the South Texas
Project.
6.5 Subject to any limitations or conditions imposed by any court or
other governmental authority having jurisdiction over the licensing of the South
Texas Project or the proposed Additional Generating Unit, should any one or
more, but less than all, of the Participants served with a written notice as
provided in Section 6.1 hereof elect to participate in the proposed Additional
Generating Unit and should the Participants desiring to participate in the
Additional Generating Unit own in excess of fifty (50) percent of the total
Plant Ownership Interest in the South Texas Project, the Participants desiring
to participate in the proposed Additional Generating Unit, Capital Additions and
Capital Betterments shall have the right to own and shall endeavor to obtain the
necessary permits and licenses and shall construct, operate and maintain the
Additional Generating Unit, Capital Additions and Capital Betterments proposed
pursuant to Section 6.1 hereof on the following basis:
6.5.1 The Additional Generating Unit shall be acquired,
constructed and owned by and at the sole cost, risk and expense of the
Participants proposing the Additional Generating Unit or electing to
participate therein in the proportion that the Plant Ownership Interest
of each of said Participants bears to the Plant Ownership Interest of
all of said Participants or as otherwise agreed between said
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Participants and shall be operated, maintained and decommissioned by
OPCO pursuant to this Restated Agreement and the Operating Agreement.
6.5.2 Within two (2) months after the proposing
Participant has determined the actual costs of the Capital Additions
and Capital Betterments to the previously existing Common Station
Facilities undertaken in conjunction with the Additional Generating
Unit, the proposing Participant shall furnish to each other Participant
a statement, supplemental to the statement furnished pursuant to
Section 6.2 hereof, setting forth the costs shown in the statement
furnished pursuant to Section 6.2 hereof and the actual costs of said
Capital Additions and Capital Betterments. Within one (1) month after
receiving the statement called for in this Section 6.5.2, the
Participants participating in the Additional Generating Unit shall make
a cash payment to all Participants equal to the amount, if any, by
which: (i) the product of the total costs shown in the statement called
for in this Section 6.5.2 times a fraction, the numerator of which is
the nameplate rating of the Additional Generating Unit and the
denominator of which is the sum of the nameplate ratings of all
completed Generating Units in the South Texas Project plus the
Additional Generating Unit; exceeds (ii) the actual costs of said
Capital Additions and Capital Betterments. Thereafter the South Texas
Plant Site (exclusive of the portions thereof allocated to all
Generating Units theretofore agreed upon or permitted under this
Restated Agreement or allocated to the Additional Generating Unit), the
Railroad Strip and the Common Station Facilities shall be owned by the
Participants, as tenants in common, in the proportion that the sum of
the interests of each Participant in all Generating Units (including
the Additional Generating Unit) bears to the sum of the interests of
all Participants in all Generating Units (including the Additional
Generating Unit) and appropriate transfers of interests shall be made.
Said payment shall be borne by each Participant participating in the
Additional Generating Unit in the proportion that the interest of each
Participant so participating bears to the interest of all Participants
so participating and shall be paid to each Participant in the
proportion of its Plant Ownership Interest immediately prior to such
payment.
6.5.3 The Participants proposing the Additional Generating
Unit and the Capital Additions and Capital Betterments to existing
Common Station Facilities and electing to participate therein shall
bear the costs of Preconstruction Work and Construction Work of the
Additional Generating Unit and of said Capital Additions and Capital
Betterments and
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Project Costs of the Additional Generating Unit in proportion to their
Generation Entitlement Share in the Additional Generating Unit. The
Project Costs of the Common Station Facilities to which said Capital
Additions and Capital Betterments relate shall be borne as provided in
Section 12.1 hereof.
6.6 Not withstanding any other provision of this Section 6, any
Participant who proposes construction of an Additional Generating Unit must,
prior to the commencement of construction, (i) provide San Antonio and Austin
with a ruling from the Internal Revenue Service to the effect that construction
and operation of said Unit pursuant to this Restated Agreement and the Operating
Agreement will not jeopardize the tax exempt status of any Debt Obligations as
that term is defined in Sections 22 and 23 hereof and (ii) provide each other
Participant with a ruling from the Internal Revenue Service to the effect that
the construction and operation of said Unit pursuant to this Restated Agreement
and the Operating Agreement will not create an association among the
Participants which will be taxable as a corporation.
6.7 The arrangements for securing Nuclear Fuel for
Additional Generating Units and the arrangements for the disposal
of spent Nuclear Fuel materials from such Additional Generating
Units shall be determined by the owners of such Additional Unit or
Units.
7. GENERATING CAPACITY AND ENERGY ENTITLEMENT:
7.1 The Capacity entitlement of each Participant in each
Generating Unit of the South Texas Project shall be the product of
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its Generation Entitlement Share in that Unit and the Net Effective
Generating Capability of such Unit.
7.2 Each Participant shall take for its account a percentage share of
the total Energy available at the high voltage terminal of the generator step-up
terminals from each Generating Unit from time to time, corresponding to such
Participant's Generation Entitlement Share in such Generating Unit.
7.3 Operation of any Generating Unit shall be subject to scheduled
outages or curtailments, operating emergencies and unscheduled outages or
curtailments of such Generating Unit.
8. DELIVERY AND TRANSMISSION:
8.1 Power and Energy shall be metered and delivered to the
transmission system as shown in Exhibit B to this Restated Agreement at the
South Texas Project switchyard generally described in Exhibit A to this Restated
Agreement, and shall be accounted for in accordance with Section 7.2.
8.2 Each Participant shall design, construct, own, operate and
maintain the transmission facilities necessary to connect its system to the
South Texas Project switchyard, with the objective of permitting each
Participant to transmit under normal operating conditions its Generation
Entitlement Share from units of the South Texas Project to its system in a
manner which will not unreasonably affect the operation of the electric systems
of the other Participants or the interconnected systems of others.
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8.3 Each Participant shall be entitled to the exclusive use of so much
of the South Texas Plant Site as may be necessary to construct and connect its
transmission facilities to the South Texas Project switchyard as generally shown
in Exhibit B hereto, provided the actual location and construction schedule of
any additional transmission facilities shall be subject to approval of the
Owners Committee and the requirements of the Operating Agreement.
8.4 Each Participant agrees to provide for the South Texas Project
off-site power to satisfy Nuclear Regulatory Commission requirements, such power
to be supplied through the Construction Power Line, through the Participant's
respective transmission lines connecting into the South Texas Project switchyard
and through the Participant's interconnections with other systems through the
Electric Reliability Council of Texas, Inc., or its successors. The Participants
agree not to modify their respective facilities, procedures and practices in a
manner that may result in failure to comply with Nuclear Regulatory Commission
regulations or commitments or the terms of the Operating Licenses, and each
Participant agrees to inform OPCO promptly of proposed changes that reasonably
would be expected to adversely affect such compliance. Appropriate adjustments
shall be made in the allocation of Energy available to the respective
Participants through the interconnected power grid of the Electric Reliability
Council of Texas, Inc. (or any successor power grid through which the generating
facilities of
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the Participants are interconnected) or through the South Texas
Project switchyard, so as to cause each Participant to bear and
provide a net percentage share of off-site power corresponding to
its Plant Ownership Interest.
9. ADMINISTRATION:
9.1 As a means of implementing this Restated Agreement and the
Operating Agreement and fostering the interchange of information, the
Participants hereby establish the Owners Committee.
9.2 The Owners Committee shall be composed of one primary
representative of each Participant, who shall be an officer or general manager
of the Participant, and an alternate, both of whom shall be designated by the
Participant represented by written notice to all other Participants.
9.3 The Owners Committee shall:
9.3.1 Provide liaison among the Participants and
with OPCO at the management level;
9.3.2 Perform such other functions and duties as may
be assigned to it in this Restated Agreement;
9.3.3 Determine the Net Effective Generating
Capability of each Unit;
9.3.4 Review and act upon OPCO's recommendations
concerning or initiate, adopt, modify or take action with respect to:
9.3.4.1 Annual budget for Costs of Operation;
9.3.4.2 Annual revisions to the South Texas Project Five
Year Business Plan;
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9.3.4.3 Annual revisions to the South Texas Project Five
Year Operating/Outage and Fuel Procurement Plans;
9.3.4.4 Process and procedure for the sale, encumbrance
or other disposition of equipment or personal property comprising the
South Texas Project;
9.3.4.5 Process and procedure for OPCO contracting on
behalf of the Participants for the purchase, lease or other acquisition
of materials, inventories, supplies, spare parts, equipment, Nuclear
Fuel, and other goods and services;
9.3.4.6 Process and procedure for OPCO handling the
defense, prosecution and/or settlement of disputes with third parties
relating in any way to the South Texas Project;
9.3.4.7 The Project Insurance to be procured and
maintained pursuant to Section 19 of this Restated Agreement, including
the process and procedure for OPCO obtaining and complying with
insurance coverages in effect and obtaining payment of claims;
9.3.4.8 Costs of Operation materially different from or
in excess of annual budget or Five Year Plans, and any sale,
encumbrance or other disposition of property other than in accordance
with approved processes and procedures;
9.3.4.9 Any other matter requiring Participants'
Direction or Participants' Approval pursuant to the Operating
Agreement;
9.3.4.10 The annual independent audit of the books and
records of OPCO and any interim or special audits directed by the
Owners Committee;
9.3.5 Decide upon the abandonment of each Unit of the
South Texas Project and provide written direction to OPCO of any
decision by the Participants to operate at reduced capacity and/or
place a Unit in safe shutdown condition and/or retire and decommission
a Unit;
9.3.6 Approve and join, where necessary, any application
or amended application to the Nuclear Regulatory Commission or other
regulatory authority as appropriate to provide for the reliable, safe
and efficient operation of the
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South Texas Project by OPCO pursuant to the Operating
Agreement;
9.3.7 Make arrangements for securing Nuclear Fuel for
Units 1 and 2 and arrangements for disposal of spent Nuclear Fuel
materials and approve practices and procedures for accounting for
Nuclear Fuel;
9.3.8 Arrange for such additional support, services and
assistance as may be required by OPCO in carrying out its
responsibilities under the Operating Agreement; and
9.3.9 Plan for and approve payment of Project Costs to
the extent not provided for in the annual budget for Costs of
Operation.
9.4 All matters coming under the authority of the Owners Committee
shall be decided by agreement of the representatives of two or more Participants
having in excess of sixty percent (60%) interest in the Generating Unit or Units
affected by the decision, except as otherwise specifically provided in this
Restated Agreement. If, for any reason, the Owners Committee does not agree on
an annual budget for Costs of Operation, OPCO shall continue to operate under
the provisions of the most recently approved Five Year Business Plan and Five
Year Operating/Outage and Fuel Procurement Plan until such time as at least two
or more Participants having in excess of sixty percent (60%) interest in the
Generating Unit or Units affected by the decision otherwise agree. For the
purposes of this Section 9.4 decisions affecting the Common Station Facilities
shall be deemed to affect all Generating Units then served by the Common Station
Facilities or portion thereof affected by the decision. All decisions reached by
the Owners Committee on matters concerning the South Texas Project
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and properly before the Owners Committee for decision pursuant to the terms of
this Restated Agreement shall be binding upon all Participants.
9.5 The Owners Committee shall designate one of its members as Chairman
and another as Vice Chairman, and shall appoint a Secretary and an Assistant
Secretary, neither of whom need be a member of the Owners Committee, and the
Committee shall keep such minutes of its meetings as the Committee shall
determine, provided a written record shall be made by the Committee of all of
its actions and decisions.
9.6 The Owners Committee shall have no authority to modify any of the
terms, covenants or conditions of this Restated Agreement or of the Operating
Agreement.
9.7 Each Participant shall give prompt written notice to the other
Participants of any change in the designation of its primary and alternate
representatives on the Owners Committee. Any primary representative, or any
alternate in the absence of the primary representative, appearing at a committee
meeting shall be deemed to have authority to act on behalf of the Participant
represented unless the Participant represented has designated another primary
representative or alternate representative as the case may be, as provided in
Section 9.2 hereof. 10. OPERATION AND DECOMMISSIONING:
10.1 The Participants shall cause the South Texas Project to
be operated in a safe and efficient manner in order to provide to
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each Participant its proportionate share of Power and Energy produced from the
South Texas Project. The Participants further shall cause the decontamination
and decommissioning of the Generating Units and other facilities at the South
Texas Project upon final termination and abandonment of each Generating Unit. To
that end, the Participants have contemporaneously herewith engaged OPCO to do
all things necessary or desirable under the terms of the Operating Agreement for
the operation, maintenance, repair, replacement, reconstruction, decontamination
and decommissioning of the South Texas Project. 11. REPLACEMENT OF OPCO:
11.1 In the event OPCO's right to serve as operator on behalf of the
Participants is terminated prior to final decommissioning of the Generating
Units, the Participants shall by unanimous agreement select a successor to OPCO
for the operation, maintenance, repair, replacement, reconstruction,
construction, decontamination and decommissioning of the South Texas Project.
Such successor may be a third party, one or more of the Participants or an
affiliate thereof. 12. PROJECT COSTS:
12.1 The Project Costs of each Generating Unit shall be
shared and paid for by the Participants in proportion to their
Generation Entitlement Shares for the applicable Generating Unit.
The Project Costs of the Common Station Facilities shall be shared
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and paid for by the Participants in proportion to their Plant
Ownership Interest.
13. ADVANCEMENT OF FUNDS:
13.1 Each Participant shall pay its share of Costs of Operation under
the Operating Agreement at the times established under and in accordance with
the procedures specified in the Operating Agreement. Each Participant shall pay
its share of Project Costs arising under any agreement other than the Operating
Agreement at the times established under and in accordance with the procedures
specified in said agreement. 14. TAXES:
14.1 Each Participant shall render for ad valorem taxation, if
applicable, its undivided interest in the jointly owned property comprising the
South Texas Project and shall otherwise use its best efforts to have any taxing
authority imposing any taxes or assessments on the South Texas Project, or any
interest or rights therein, assess and levy such taxes or assessments directly
against the ownership or beneficial interest of each Participant.
14.2 All taxes or assessments including but not limited to the Spent
Fuel Disposal Fee levied against or with respect to each Participant's interest
in, or pro rata share of, the purchase, use, ownership or beneficial interest in
the South Texas Project and Energy generated therefrom, shall be the sole
responsibility of, and, if applicable, shall be paid by, the Participant upon
whose
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purchase, use, ownership or beneficial interest said taxes or
assessments are levied.
14.3 If any property taxes or other taxes or assessments are legally
and properly levied or assessed other than against each Participant as
contemplated in Sections 14.1 and 14.2 hereof (that is, are levied or assessed
in such a way as to be disproportionately collected from one or more
Participants), such taxes or assessments shall be apportioned between the
Participants in accordance with their respective ownership interest or Power or
Energy entitlement or take, whichever is appropriate to the incidence of the
tax.
14.4 Each of the Participants claiming exemption from any taxes or
assessments shall be responsible for and shall pay all expenses in connection
with the sustaining or determination of such claims and each of the other
Participants, the Owners Committee and OPCO (as directed by the Owners
Committee) shall lend all reasonable cooperation in connection with the filing
of tax renditions and reports and in connection with the making of protest and
payment under protest as may be requested by each Participant claiming an
exemption. 15. WAIVER OF RIGHT TO PARTITION:
15.1 Each Participant hereto agrees to waive any rights which it may
have to partition any component of the South Texas Project, whether by partition
in kind or by sale and division of the proceeds, and further agrees that it will
not resort to any
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action in law or in equity to partition such component, and it waives the
benefits of all laws that may now or hereafter authorize such partition for the
maximum term permitted under applicable law.
16. MORTGAGE AND TRANSFER OF INTEREST:
16.1 Each Participant shall have the right at any time and from time to
time to mortgage, pledge, create or provide for a security interest in or convey
in trust all or a part of that Participant's share in the South Texas Project,
together with an equal interest in this Restated Agreement and the Operating
Agreement, to a trustee or trustees under deeds of trust, mortgages or
indentures, or to secured parties under a security agreement, as security for
its present or future bonds or other obligations or securities, and to any
successors or assigns thereof, without need for the prior written consent of any
other Participant, and without such mortgagee, trustee or secured party assuming
or becoming in any respect obligated to perform any of the obligations of the
Participant arising prior to such time as such mortgagee, trustee, or secured
party obtains possession of or assumes the right to exercise such Participant's
rights in respect of such ownership share, or after such possession or
assumption ceases.
16.2 Any mortgagee, trustee or secured party under present or future
deeds of trust, mortgages, indentures or security agreements of any of the
Participants and any successor or assign thereof, and any receiver, referee or
trustee in bankruptcy or reorganization of any of the Participants, and any
successor by
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action of law or otherwise, and any purchaser, transferee or assignee of any
thereof may, without need for the prior written consent of the other
Participants, succeed to and acquire all of the rights, titles and interests of
such Participant in the South Texas Project and in this Restated Agreement, the
Operating Agreement and its rights as an owner of the South Texas Project under
any other agreement to which all the Participants are parties, and may take over
possession of or foreclose upon said property, rights, titles and interests of
such Participant.
16.3 Each Participant shall have the right to transfer or assign its
ownership share in the South Texas Project, together with its rights under this
Restated Agreement, the Operating Agreement and its rights as an owner of the
South Texas Project under any other agreement to which all the Participants are
parties, to any of the following without the need for prior written consent of
any other Participant:
16.3.1 To any entity acquiring all or substantially all of
the electric utility properties and business, or of the electric
generating facilities, of such Participant; or
16.3.2 To any entity merged or consolidated with such
Participant; or
16.3.3 To any entity which is wholly-owned by such
Participant.
16.4 Except as otherwise provided in Sections 16.1 and 16.2
hereof, any successor to the rights, titles and interests of a Participant in
the South Texas Project shall assume and agree in writing to fully perform and
discharge all of the obligations
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hereunder of such Participant, and such successor shall notify each of the other
Participants in writing of such transfer, assignment or merger, and shall
furnish to each Participant evidence of such transfer, assignment or merger.
16.5 Unless and until the Participants unanimously agree otherwise, all
Nuclear Fuel purchased for use in or removed from any Generating Unit or
recovered after reprocessing for reuse in any Generating Unit or for sale to
others shall be jointly owned by the Participants in accordance with their
respective Generation Entitlement Shares in the Generating Unit for which the
Nuclear Fuel was purchased, provided that any Participant may at any time sell
and assign all or any part of its interest in such Nuclear Fuel to any person or
entity ("Fuel Lessor") for leaseback to such Participant subject to the
conditions that: (i) the Fuel Lessor shall waive all right to partition of such
Nuclear Fuel prior to completion of the reprocessing thereof; (ii) the Fuel
Lessor shall not obtain any rights not possessed by such Participant with
respect to the operation or scheduling of any Generating Unit or the removal of
Nuclear Fuel therefrom; (iii) the Fuel Lessor shall not become a Participant in
the Project unless or until it succeeds to all of such Participant's right,
title and interest in the South Texas Project in accordance with the terms and
provisions hereof; and (iv) such Participant shall indemnify all other
Participants against any costs or expenses incurred by them because of such
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Participant's sale and leaseback of its interest in the Nuclear Fuel.
16.6 No Participant assigning or transferring an interest under this
Section 16 or Section 17 shall be relieved of any of its obligations under this
Restated Agreement or the Operating Agreement but shall remain liable and
obligated for the performance of all of the terms and conditions of this
Restated Agreement and the Operating Agreement, unless otherwise agreed by all
of the remaining Participants. 17. RIGHT OF FIRST REFUSAL:
17.1 Except as provided in Section 16 hereof, should any Participant,
prior to the expiration of the period described in Section 17.12 hereof, desire
to transfer its ownership, or any part thereof, in the South Texas Project to
any person, entity or another Participant, ready, able and willing to acquire
same, the Participant desiring to make such transfer shall obtain a written
offer from the prospective transferee, setting forth the consideration and other
terms of the offer, and each of the other Participants shall have the right of
first refusal to acquire such interest on the basis of the following
consideration:
17.1.1 If the offer is in cash, whether payable in one
payment or in installments, the amount of the bona fide written offer
from the prospective transferee, payable as specified in the offer; or
17.1.2 If the offer is not in cash but is in securities
having a readily ascertainable market value, the fair market value of
the securities offered by the prospective transferee; or
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17.1.3 If the offer is neither in cash nor in securities having a
readily ascertainable market value, the fair market value of the consideration
to be received for the ownership interest to be transferred. 17.2 At least seven
(7) months prior to the date on which the intended transfer is to be
consummated, the Participant desiring to transfer shall serve written notice of
its intention to do so upon all of the Participants. Such notice shall contain
the proposed date of transfer and the terms and conditions of the transfer.
17.3 Each Participant shall have the option to acquire all or any part
of the interest to be transferred and shall exercise said option by serving
written notice of its intention upon the Participant desiring to transfer and on
the remaining Participants within three (3) months after service of the written
notice of intention to transfer given pursuant to Section 17.2 hereof. Failure
of a Participant to exercise said option as provided herein within the time
period specified shall be conclusively deemed to be an election not to exercise
said option.
17.4 If two or more of the Participants desire to acquire all, or parts
aggregating more than all, of such interest, unless otherwise agreed, such
interest shall be transferred in the ratio that the Plant Ownership Interest of
each Participant desiring to acquire bears to the total Plant Ownership
Interests of all Participants desiring to acquire.
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17.5 If one or more of the Participants exercise their options to
acquire a part of the interest to be transferred but fail to exercise their
options so as to acquire in the aggregate the entire ownership interest to be
transferred, then the Participant desiring to transfer shall serve written
notice of this fact upon the Participants exercising their options within
fourteen (14) days after its receipt of all of the written notices permitted by
Section 17.3 hereof, or after the expiration of the three (3) month period
referred to in Section 17.3 hereof, whichever is earlier.
17.6 The Participants who exercise their option to acquire less than
the entire ownership interest to be transferred shall have the option to
acquire, for the consideration provided in Section 17.1 hereof, the remaining
ownership interest to be transferred, which such option shall be exercised by
serving written notice of such election upon the Participant desiring to
transfer within three (3) months after the receipt of the notice given pursuant
to Section 17.5 hereof.
17.7 When the options to acquire all or any part of said ownership
interest have been exercised, the Participants shall thereby incur the following
obligations:
17.7.1 The Participant desiring to transfer the ownership
interest and the Participant or Participants having exercised the
option to acquire all or any portion of such ownership interest shall
be obligated to proceed in good faith and with due diligence to obtain
all required authorizations and approvals of such acquisition.
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17.7.2 The Participant desiring to transfer such ownership
interest shall be obligated to obtain the release of any lien
encumbering the ownership interest which is the subject of the transfer
at the earliest practicable date.
17.7.3 The Participant or Participants having
exercised the option to acquire such ownership interest shall
be obligated to perform all of the terms and conditions
required of them to complete the acquisition of said ownership
interest.
17.8 The acquisition of the ownership interest by the
Participant or Participants having elected to acquire the same shall be fully
consummated within seven (7) months following the date upon which all notices
required to be given under this Section 17 have been duly served, unless said
Participant or Participants are then diligently pursuing applications for
required authorizations or approvals to effect such transfer or are then
diligently pursuing or defending appeals from orders entered or authorizations
issued in connection with such applications, in which event the transfer shall
be consummated within three (3) months following the date upon which the final
order is entered or authorizations issued in connection with such applications.
17.9 If the Participants receiving notice of the proposed transfer
fail to exercise their options to acquire all or some part of the ownership
interest to be transferred, the Participant desiring to transfer such interest
shall be free to transfer such interest, if any, as may be left after the
exercise of such options to the party that made the offer referred to in Section
17.1 hereof upon the terms and conditions set forth in said bona fide written
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offer. If such transfer is not consummated by the proposed date of transfer
referred to in Section 17.2 hereof, the Participant desiring to transfer said
ownership interest must give another complete new right of first refusal to the
remaining Participants pursuant to the provisions of this Section 17 before such
Participant shall be free to transfer said ownership interest to another party.
17.10 The Participant or Participants who acquire an ownership interest
pursuant to this Section 17 shall receive title to and shall own the interest as
tenants in common, subject to the same rights, duties and obligations as are
applied by this Restated Agreement to the interest being transferred in the
hands of the transferring Participant.
17.11 Any party who may succeed to an ownership interest pursuant to
this Section 17 shall specifically agree in writing with the remaining
Participants at the time of such transfer that it will not transfer or assign
all or any portion of such ownership interest without complying with the terms
and conditions of this Section 17.
17.12 It is intended that the provisions of this Section 17 shall, to
the full extent permitted by law, continue in effect and be enforceable by the
Participants, their successors and assigns, so long as two or more of them
continue to own an interest in the South Texas Project and/or in the South Texas
Plant Site, under this Restated Agreement. However, should it be finally
determined
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by a court of competent jurisdiction that Article I, Section 26 of the
Constitution of the State of Texas or any other constitutional provision,
statute or rule of common law of like import, is applicable to the rights
created by this Section 17, then the agreements contained in this Section 17
shall terminate and be of no further force and effect whenever 21 years less one
day shall have elapsed after the death of the last surviving descendant (living
at the date of the earliest execution of this Restated Agreement on behalf of
any of the Participants) of any person signing this Restated Agreement in behalf
of a Participant in any capacity.
17.13 It is required that any transfer of a part of an interest
pursuant to this Section 17 be a transfer of the same percentage share of the
selling Participant's interest in each of the Generating Units and the Common
Station Facilities.
18. DESTRUCTION OR ABANDONMENT:
18.1 If a Generating Unit should be damaged or destroyed to the extent
that the estimated cost of repairs, replacement or reconstruction of the
physical damage to the affected Unit is not more than one hundred percent (100%)
of the aggregate amount of the proceeds from Project Insurance carried and
covering the cost of the repairs, replacement or reconstruction of such
Generating Unit, the Participants, unless otherwise unanimously agreed, shall
repair, replace or reconstruct such Generating Unit to substantially the same
general character or use as the original.
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The Participants shall share the costs of such repairs, replacement or
reconstruction in proportion to their Generation Entitlement Shares in the
Generating Unit so destroyed.
18.2 If a Generating Unit should be damaged or destroyed to the extent
that the estimated cost of repairs, replacement or reconstruction of the
physical damage to the affected Unit is more than one hundred percent (100%) of
the aggregate amount of the proceeds from Project Insurance carried and covering
the cost of the repairs, replacement or reconstruction of such Generating Unit,
the Participants shall, upon agreement, repair, replace or reconstruct such
Generating Unit to substantially the same general character or use as the
original; provided, however, that should all of the Participants not agree to
repair, replace or reconstruct such Generating Unit, but one or more of the
Participants nevertheless desire so to do, then any Participant who does not
agree to repair, replace or reconstruct shall sell its interest in such
Generating Unit together with the corresponding interest in the Common Station
Facilities to the Participants desiring to repair, replace or reconstruct such
Generating Unit for a price equal to the selling Participant's proportionate
interest in the salvage value of such Generating Unit plus such Participant's
proportionate cost, less depreciation at the maximum straight line rates then
applicable to like properties under the Federal income tax law, in the interest
in the Common Station Facilities so sold. The Participants, if more than one,
desiring to repair, replace or
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reconstruct such Generating Unit, unless otherwise agreed between them shall
share the payments to, and the interest acquired from, any Participant not
desiring to repair, replace or reconstruct such Generating Unit and the costs of
repair, replacement or reconstruction of such Generating Unit in the proportion
that the Generation Entitlement Share in such Unit bears to the total Generation
Entitlement Shares in such Unit of all Participants agreeing to repair, replace
or reconstruct such Generating Unit, and appropriate transfers of interests will
be made.
18.3 If any of the Common Station Facilities should be destroyed, the
Participants shall, unless otherwise agreed, repair or reconstruct same to
substantially the same character or use as the original. The Participants shall
share the costs of such repair or reconstruction in proportion to their Plant
Ownership Interests.
18.4 Should the Nuclear Regulatory Commission by final order not
subject to judicial or administrative appeal require, or should Participants
having in excess of a sixty percent (60%) Generation Entitlement Share in the
affected Generating Unit agree upon, the abandonment of any or all of the
Generating Units or of the South Texas Project, the Owners Committee shall
direct OPCO to seek authorization of the Nuclear Regulatory Commission to
surrender the operating licenses for the affected Generating Unit or Generating
Units or of the South Texas Project, as the case may be, and upon obtaining same
shall dismantle and sell or make such other final
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disposition as may be required by law of the affected properties.
18.5 Costs of abandonment of the Common Station Facilities
shall be shared and paid for by the Participants in proportion to
their Plant Ownership Interests while the costs of abandonment of
a Generating Unit shall be shared and paid for by the Participants
in proportion to their respective Generation Entitlement Shares in
said Generating Unit.
19. PROJECT INSURANCE:
19.1 The Owners Committee shall direct OPCO to recommend, and the
Owners Committee shall determine, the insurance coverages, including the
insurable values, limits, deductibles, retentions and other special terms, to be
obtained during the periods covered by and with respect to Preconstruction Work,
Construction Work and Station Work or any phases thereof.
19.2 All policies of Project Insurance shall:
19.2.1 Provide insurable values, limits, deductibles,
retentions and other special terms as determined by the Owners
Committee;
19.2.2 List as loss payees or additional insureds (as
their interests may appear) such mortgagees, trustees or secured
parties as a Participant, by written notice to OPCO, may designate;
19.2.3 Contain endorsements providing for positive notice
of cancellation to all parties listed as named or additional insureds;
19.2.4 Contain endorsements providing that the
insurance is primary insurance for all purposes; and
19.2.5 Contain cross-liability endorsements for
comprehensive bodily injury liability and property damage liability
coverages.
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19.3 The Owners Committee shall direct OPCO to observe the following
procedures in connection with the procurement of Project Insurance and changes
in Project Insurance:
19.3.1 OPCO shall give prompt written notice to the
Owners Committee of the procurement of all insurance binders.
19.3.2 OPCO shall furnish each Participant with either a
certified copy of each of the policies of the insurance procured or a
certified copy of each of the policy forms therefor, together with a
line sheet therefor (and any subsequent amendments) naming the
insurers and underwriters and the extent of their participation.
19.3.3 No policy of Project Insurance obtained pursuant
to decision of the Owners Committee shall be materially changed
without the prior written consent of the Owners Committee.
19.3.4 Any changes in policies of Project Insurance shall
be promptly reported to the Owners Committee by OPCO. 19.4 Each
Participant, at its expense, shall have the right to secure such
additional or different insurance coverage as may be required under
any mortgage or contract provision, and, to the extent practicable,
such additional or different insurance coverage may be effected
through endorsements on policies of Project Insurance. Costs incurred
by Participants pursuant to this Section 19.4 are not Project Costs.
20. LIABILITY OF PARTICIPANTS TO EACH OTHER:
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20.1 No Participant shall have any Liability to any other Participant
for any action taken or omitted to be taken by such Participant which arises out
of or relates to the ownership of the South Texas Project or any portion
thereof, any Preconstruction Work, Construction Work or Station Work or any
actions taken or omitted to be taken by such Participant in connection with this
Restated Agreement or the Operating Agreement, except for any Liability of such
Participant resulting from (i) its Willful Action, or (ii) a payment "default"
under Section 21 hereof. Each Participant agrees that it shall not make, or
permit to be made on its behalf, any Claim against any other Participant in
respect of any breach or wrongful conduct of such Participant (whether based on
any federal, state or local law or regulation, securities or commercial law or
regulation or under common law or in equity or on contract, tort, strict
liability or otherwise) arising out of or relating to the ownership of the South
Texas Project or any portion thereof or any Preconstruction Work, Construction
Work or Station Work, or any actions taken or omitted to be taken by such
Participant in connection with this Restated Agreement or the Operating
Agreement other than a Claim (an "Excepted Claim") arising from (i) Willful
Action of such other Participant or (ii) a payment "default" under Section 21
hereof, and hereby waives and releases and agrees not to sue upon any such Claim
(other than any Excepted Claim).
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20.2 Each Participant shall indemnify each other Participant against,
and hold them harmless from and in respect of all Claims in favor of the
indemnifying Participant's electric customers (or any Person claiming through
the indemnifying Participant's electric customers) on account of bodily
injuries, death, damage to property or economic loss occurring, incident to or
arising out of or in connection with the furnishing of, or failure to furnish,
electric service to such customers by such indemnifying Participant, it being
the intention of this Section 20.2 to impose on each Participant the sole
responsibility for the defense and discharge of all such Claims; provided that
nothing in Section 20.2 shall impair any Excepted Claim of any Participant.
20.3 EACH PARTICIPANT SEVERALLY ACKNOWLEDGES TO EACH OTHER PARTICIPANT
THAT THE PROVISIONS OF SECTIONS 20.1 AND 20.2 HEREOF WHICH RELEASE THE OTHER
PARTICIPANTS FROM LIABILITY OR PROVIDE FOR THE INDEMNIFICATION BY THE
INDEMNIFYING PARTICIPANT OF THE OTHER PARTICIPANTS ARE INTENDED BY THE
INDEMNIFYING PARTICIPANT, TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW FROM
TIME TO TIME, TO RELEASE AND SAVE AND HOLD THE INDEMNIFIED PARTICIPANTS HARMLESS
FROM THE CONSEQUENCES OF THE INDEMNIFIED PARTICIPANT'S OWN NEGLIGENCE (WHETHER
ORDINARY OR GROSS, SOLE, JOINT OR CONCURRENT OR ACTIVE OR PASSIVE) AND STRICT
LIABILITY AND (EXCEPT AS PROVIDED IN SECTION 20.1 WITH RESPECT TO EXCEPTED
CLAIMS) RECKLESS OR WILLFUL MISCONDUCT WHICH ARISES OUT OF OR RELATED TO THE
OWNERSHIP OF THE SOUTH TEXAS PROJECT OR ANY PORTION THEREOF OR ANY
PRECONSTRUCTION
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WORK, CONSTRUCTION WORK OR STATION WORK OR ANY ACTIONS TAKEN OR OMITTED TO BE
TAKEN BY THE INDEMNIFIED PARTICIPANT IN CONNECTION WITH THIS RESTATED AGREEMENT
OR THE OPERATING AGREEMENT. EACH PARTICIPANT ALSO SEVERALLY ACKNOWLEDGES TO EACH
OTHER PARTICIPANT THAT IT IS THE INTENTION OF THE INDEMNIFYING PARTICIPANT IN
SECTION 20.2 TO BE SOLELY RESPONSIBLE FOR THE DEFENSE AND DISCHARGE OF ALL
CLAIMS OF ANY KIND OR NATURE REFERRED TO IN SECTION 20.2 EVEN WHEN CAUSED BY THE
SOLE FAULT OF ANOTHER PARTICIPANT.
20.4 As used in this Section 20, the following terms shall have the
meanings hereinafter specified, to wit:
20.4.1 Claim--shall mean any demand, claim, loss, cost
(including, without limitation, fees and disbursements of accountants,
attorneys, consultants and experts, whether or not any action, suit or
other proceeding is brought), damage (including, without limitation,
consequential, exemplary or punitive or treble damage), expense,
action, suit, fine, penalty, proceeding, judgment or liability of any
kind or nature whatsoever.
20.4.2 Liability--shall mean, as to any Person, the
liability of such Person for payment, property or services, whether or
not the right is reduced to judgment, liquidated, unliquidated, fixed
contingent, matured, unmatured, disputed, undisputed, legal, equitable,
secured or unsecured.
20.4.3 Person--shall mean any individual, corporation,
limited liability company, partnership, joint venture, association,
joint stock company, trust, unincorporated organization, government (or
any agency or subdivision thereof, including, without limitation,
cities and towns of every class and the agencies and instrumentalities
thereof), electric cooperative corporation, joint powers agency,
municipal power agency or other entity. Each Participant is a Person.
20.5 The parties agree that the provisions of this Section
20 shall apply solely to Liability based on acts or omissions
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occurring on or after the Effective Date. Liability, if any, based
on acts or omissions occurring before the Effective Date shall be
governed by the provisions of the Prior Agreement.
20.6 Each of the Participants acknowledges, agrees to and accepts the
provisions of the Articles of Incorporation of OPCO in the form on file with the
Secretary of State of Texas including, without limitation, the provisions of
Articles IV and X thereof.
21. PAYMENT DEFAULT
21.1 For the purpose of this Section 21, the word "default" shall mean
the failure of any Participant to make any payment at the time and in the manner
required by this Restated Agreement or the Operating Agreement.
21.2 Because of the immediate and irreparable damage that could be
caused to the South Texas Project, the other Participants and OPCO as a result
of a default hereunder by any Participant, each Participant agrees that, should
such Participant be in default hereunder, each other Participant, singly or in
any combination of such other Participants, may enforce the payment provisions
hereof against the Participant in default hereunder by mandatory injunction.
This remedy is not exclusive of any other right, remedy or recourse that the
Participants not in default hereunder may have in equity, at law, by virtue of
statute or otherwise.
21.3 Without limiting Section 21.2, in the event a
Participant is in default:
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21.3.1 The non-defaulting Participants, if any, agreeing
to make payments and take actions necessary to cover the default (the
"covering Participants") shall make such payments and take such
actions, with the cost thereof allocated among and paid by each of the
covering Participants having cost responsibility for the component of
the South Texas Project to which the default relates in such ratio as
they may then agree. The non-defaulting Participants are not obligated
to make payments under this Subsection 21.3.1.
21.3.2 An election by the non-defaulting Participants not
to cover the default shall not operate as a waiver of any damages
incurred by the non-defaulting Participants from the resulting
shut-down status of the South Texas Project. If none of the
non-defaulting Participants elect to cover the default, OPCO shall, as
provided in the Operating Agreement, take whatever action and make
whatever expenditures, whether budgeted or not, which it determines to
be reasonably necessary to protect public health and safety as required
by the Operating Licenses and applicable laws and regulations and to
comply with applicable licenses or permits and to place and maintain
the South Texas Project in a safe shut-down condition. All Participants
remain obligated to pay for these expenditures in proportion to their
Generation Entitlement Shares for each affected Generating Unit. If one
or more Participants default on this safe shut-down obligation, the
other Participants are obligated to increase their contributions to
OPCO to cover the safe shut-down obligation in the proportion that
their respective Generation Entitlement Shares in the affected Unit
bear to the aggregate Generation Entitlement Shares in such Unit of all
non-defaulting Participants.
21.3.3 The defaulting Participant shall remedy defaults
including a default under Section 21.3.2 as soon as possible and shall
pay upon demand to each covering Participant any amount paid by such
covering Participant for the account of the defaulting Participant plus
interest on such amounts calculated at the rate applicable to judgments
rendered in the State of Texas. If the defaulting Participant shall
fail to make such payment upon demand therefor by a covering
Participant, then such covering Participant may, with or without the
other covering Participants, exercise any or all remedies afforded by
law, including without limitation, the institution of an action at law
or in equity to collect such amounts or to obtain such other legal or
equitable relief as may be available, or both.
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22. SOURCE OF PAYMENTS BY SAN ANTONIO
22.1 It is expressly stipulated and agreed that none of the other
Owners nor any of their successors or assigns shall ever have the right to
demand or require payment of any amount becoming due from San Antonio under or
in connection with or pursuant to any term or provision of this Restated
Agreement out of any funds raised or to be raised by taxation, or from any
source whatsoever other than the sources specified in Section 22.2 below, and no
such amount shall ever constitute a claim, debt, liability or general obligation
of the City of San Antonio required to be paid from any other revenues or assets
thereof.
22.2 San Antonio covenants and agrees that any and all amounts becoming
due from San Antonio under or in connection with or pursuant to any term or
provision of this Restated Agreement shall be payable from the Revenue of the
San Antonio Electric and Gas Systems and from the proceeds of the sale of Debt
Obligations issued for that purpose.
22.3 As used in this Section 22, the following terms shall have the
meanings hereinafter specified:
22.3.1 Debt Obligations shall mean all bonds, notes and
other evidence of indebtedness for borrowed money which (i) have been
or are issued, incurred or assumed by the City of San Antonio pursuant
to express charter or statutory authority heretofore or hereafter
adopted or enacted and (ii) are payable from or secured by a lien or
pledge on net Revenues of the San Antonio Electric and Gas Systems.
22.3.2 Revenue shall mean all income and revenues from the
operation of the San Antonio Electric and Gas Systems.
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22.3.3 San Antonio Electric and Gas Systems shall mean the
entire electric light and power plants and systems and gas distribution
system and all property of every kind appurtenant to and used or
acquired in connection with said electric light and power plant and
systems and gas distribution system owned by the power plant and
systems and gas distribution system owned by the City of San Antonio,
together with all property of every kind now or hereafter owned or
acquired by the City of San Antonio as a part of or for use in the
operation of the City's electric light and power plants and systems and
gas distribution system.
23. SOURCE OF PAYMENTS BY AUSTIN
23.1 It is expressly stipulated and agreed that none of the other
Owners nor any of their successors or assigns shall ever have the right to
demand or require payment of any amount becoming due from Austin under or in
connection with or pursuant to any term or provision of this Restated Agreement
out of any funds raised or to be raised by taxation, or from any source
whatsoever other than the sources specified in Section 23.2 below, and no such
amount shall ever constitute a claim, debt, liability or general obligation of
Austin required to be paid from any other revenues or assets of Austin.
23.2 Austin covenants and agrees that any and all amounts becoming due
from Austin under or in connection with or pursuant to any term or provision of
this Restated Agreement shall be payable from the Revenues of the Austin
Utilities Systems (as defined in Section 23.3 below) and from the proceeds of
the sale of Debt Obligations issued by Austin for that purpose.
23.3 As used in this Section 23, the following terms shall have the
meanings hereinafter specified:
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23.3.1 Austin Utilities Systems shall mean collectively
the Electric Light and Power System and the Waterworks and Sewer
System.
23.3.2 Debt Obligations shall mean all bonds, notes and
other evidence of indebtedness for borrowed money which (i) have been
or are issued, incurred or assumed by the City of Austin pursuant to
express charter or statutory authority heretofore or hereafter adopted
or enacted and (ii) are payable from or secured by a lien or pledge on
net Revenues of the Austin Utilities Systems or of the Electric Light
and Power System or the Waterworks and Sewer System.
23.3.3 Electric Light and Power System shall mean the
entire electric light and power plants and systems and all property of
every kind appurtenant to and used or acquired in connection with said
electric light and power plants and systems owned by Austin, together
with all property of every kind now or hereafter owned or acquired by
Austin as a part of or for use in the operation of Austin's electric
light and power plants and systems; provided that, notwithstanding the
foregoing, and to the extent now or hereafter authorized or permitted
by law, the term "Electric Light and Power System" shall not include
facilities of any kind (including any electric power generating and
transmission facilities) which are declared not to be a part of the
Electric Light and Power System, are not a then existing material and
functioning part of the Electric Light and Power System at the time of
such declaration and which are acquired or constructed by Austin, alone
or in participation with others, with the proceeds from the issuance of
"Special Facilities Bonds," which are hereby defined as being special
revenue obligations of Austin which are not entitled to be paid from or
secured by any liens on or pledges of any Revenues of the Austin
Utilities Systems.
23.3.4 Revenues shall mean, with respect to the Electric
Light and Power System or the Waterworks and Sewer System, all income
and revenues from the operation of the respective system, excluding
refundable meter deposits, restricted gifts and grants, and income,
receipts, revenues, proceeds or payments from facilities acquired or
constructed with "Special Facilities Bonds."
23.3.5 Waterworks and Sewer System shall mean the entire
waterworks and sewer system operated and maintained by Austin for the
supply, treatment and transmission of treated potable water and the
collection, treatment and disposal of water-carried wastes and all
property of every kind appurtenant to and used or acquired in
connection with said
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waterworks and sewer system owned by Austin, together with all property
of every kind now or hereafter owned or acquired by Austin as a part of
or for use in the operation of Austin's waterworks and sewer system;
provided, however, that notwithstanding the foregoing, and to the
extent now or hereafter authorized or permitted by law, the term
"Waterworks and Sewer System" shall not include facilities of any kind
which are declared not to be a part of the Waterworks and Sewer System,
are not a then existing material and functioning part of the Waterworks
and Sewer System at the time of such declaration and which are acquired
or constructed by or on behalf of Austin with the proceeds from the
issuance of "Special Facilities Bonds," which are hereby defined as
being special revenue obligations of Austin which are not entitled to
be paid from or secured by any liens on or pledges of any Revenues of
the Austin Utilities Systems.
24. CONTINUING RESPONSIBILITY OF OPCO:
24.1 If the Participants replace OPCO pursuant to Section
11, OPCO shall be required to continue to perform its duties under
the Operating Agreement as provided therein until its replacement
has been licensed to act as operator of the South Texas Project by
the Nuclear Regulatory Commission.
25. RELATIONSHIP OF PARTICIPANTS:
25.1 The covenants, obligations and liabilities of the Participants
shall be several and not joint or collective. Each Participant shall be
individually responsible for its own covenants, obligations and liabilities as
herein provided.
25.2 It is not the intention of the Participants to create, nor shall
this Restated Agreement be construed as creating, a partnership, association,
joint venture or trust, as imposing a trust or partnership covenant, obligation
or liability on or with regard to any one or more of the Participants or as
rendering the
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Participants liable as partners or trustees. No Participant or group of
Participants shall be under the control of or shall be deemed to control any
other Participant or the Participants as a group. No Participant as such shall
be the agent of or have a right or power to bind any other Participant. If, for
federal income tax purposes, this Restated Agreement and the operations
hereunder are regarded as a partnership, each of the Participants hereto elects
to be excluded from the application of all of the provisions of Subchapter "K,"
Chapter 1, Subtitle "A," of the Internal Revenue Code of 1986, as amended
("Code"), as permitted and authorized by Section 761 of the Code and the
regulations promulgated thereunder. OPCO is authorized and directed to execute
on behalf of each Participant such evidence of this election as may be required
by the Secretary of the Treasury of the United States or the Federal Internal
Revenue Service, including specifically, but not by way of limitation, all of
the returns, statements, and the data required by Treasury Regulations ss.
1.761. Should there be any requirement that each Participant give further
evidence of this election, each Participant shall execute such documents and
furnish such other evidence as may be required by the Federal Internal Revenue
Service or as may be necessary to evidence this election. No such Participant
shall give any notices or take any other action inconsistent with the election
made hereby. If any present or future income tax laws of the State of Texas or
any future income tax laws of the United States contain provisions similar to
those
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in Subchapter "K," Chapter 1, Subtitle "A," of the Code, under which an election
similar to that provided by Section 761 of the Code is permitted, each
Participant shall make such election as may be permitted or required by such
laws. In making the foregoing election, each Participant states that the income
derived by such Participant from operations hereunder can be adequately
determined without the computation of partnership taxable income.
26. FORCE MAJEURE:
26.1 In the event of any Participant being rendered unable, wholly or
in part, by force majeure to perform any of its obligations under this Restated
Agreement (other than obligations to pay money), upon such Participant giving
notice and full particulars of such force majeure in writing or by telephone to
the other Participants as soon as reasonably possible after the occurrence of
the cause relied upon, the obligations of the Participant giving such notice, so
far as they are affected by such force majeure, shall be suspended during the
continuance of any inability of performance so caused, but for no longer period.
Telephone notices given under the provisions of this Section 26.1 shall be
confirmed in writing as soon as reasonably possible and shall specifically state
full particulars of the force majeure, the time and date when the force majeure
occurred and when the force majeure ceased. This Restated Agreement shall not be
terminated by reason of any such cause but shall remain in full force and
effect. The term "force majeure" shall mean any cause beyond the control of
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the Participant affected which by the exercise of due diligence such Participant
could not reasonably have been expected to avoid and which by exercise of due
diligence it shall be unable to overcome. Nothing contained herein shall be
construed so as to require a Participant to settle any strike, lockout, work
stoppage or other industrial disturbance or dispute in which it may be involved.
Any Participant rendered unable to fulfill any of its obligations under this
Restated Agreement by reason of force majeure shall exercise due diligence to
remove such inability with all reasonable dispatch.
27. GOVERNING LAW:
27.1 This agreement shall be governed by the laws of the State of
Texas, except as to matters exclusively controlled by the Constitution and
statutes of the United States of America.
28. BINDING OBLIGATIONS:
28.1 All of the respective covenants, undertakings and obligations of
each of the Participants set forth in this Restated Agreement shall bind and
shall be and become the respective covenants and obligations of that Participant
and, to the extent permitted by law and the existing contracts of the applicable
Participant, shall apply to and bind:
All mortgagees, trustees and secured parties under all
present and future mortgages, indentures and deeds of trust, security
agreements and other financing arrangements which are or may become a
lien upon any of the properties of such Participant;
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All receivers, assignees for the benefit of creditors,
bankruptcy trustees and referees of, or having control or jurisdiction
over, such Participant;
All other persons, firms, partnerships, corporations or
entities claiming by, through or under any of the foregoing;
and
Any successors or assigns of any of those mentioned
above in this Section 28.1;
and shall be covenants and obligations running with each Participant's
respective rights, titles and interests in the South Texas Project and with all
of the rights and interests of each Participant under this Restated Agreement,
and shall be for the benefit of the respective rights, titles and interests of
the Participants and their respective successors and assigns, in and to the
South Texas Project. It is the specific intention of this provision that all
such covenants and obligations shall be binding upon any party which acquires
any of the rights, titles and interests of any Participant in the South Texas
Project or in, to and under this Restated Agreement and that all of the
above-described persons and groups shall be obligated to use such Participant's
rights, titles and interests in the South Texas Project and/or in, to or under
this Restated Agreement for the purpose of discharging the covenants and
obligations under this Restated Agreement; except that in the case of a partial
assignment the assignee shall only be required to share in the cost of
fulfilling said covenants and obligations of the assigning Participant to an
extent proportionate to the interest so assigned.
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29. AMENDMENT OF THIS RESTATED AGREEMENT:
29.1 The Participants agree that this Restated Agreement cannot be
amended except by an instrument in writing signed by the duly authorized
representative of each Participant.
30. TERM:
30.1 This Restated Agreement shall be and become effective as of the
Effective Date and shall remain in force and effect, subject to prior
termination by unanimous agreement by all Participants, until the abandonment
of, authorization by the Nuclear Regulatory Commission of the surrender of all
operating licenses for, and final disposition of all components of, the South
Texas Project.
31. INTERESTS ACQUIRED IN THE NAME OF AN INDIVIDUAL PARTICIPANT:
31.1 Any Participant which acquires in its name an interest in any real
or personal property or a contractual right which is part of the South Texas
Project shall acquire and hold same subject to this Restated Agreement, and
shall transfer and assign an undivided interest therein to the other
Participants so that the ownership and rights of the Participants in such
property or contract shall be as provided in this Restated Agreement.
32. NOTICES:
32.1 Any notice, demand or request provided for in this Restated
Agreement shall be deemed properly served, given or made if delivered in person
or sent by registered or certified-mail,
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postage prepaid, to the Participants at the addresses specified
below:
City of Austin
P. O. Box 1088
Austin, Texas 78767
Attention: Director, Electric Utility Department
City of San Antonio-City Public Service Board
P. O. Box 1771
San Antonio, Texas 78296-1771
Attention: Office of the General Manager,
City Public Service Board
Central Power and Light Company
P. O. Box 2121
Corpus Christi, Texas 78403
Attention: Office of the President
Houston Lighting & Power Company
P. O. Box 1700
Houston, Texas 77001
Attention: Office of the President.
32.2 Any Participant may, at any time, by written notice to all other
Participants, designate different or additional persons or different addresses
for the giving of notices hereunder.
32.3 Each Participant shall provide to each other Participant a copy of
any notice, demand or request given or received by it in connection with this
Restated Agreement.
33. MISCELLANEOUS PROVISIONS:
33.1 Each Participant agrees, upon request by the other
Participants, to make, execute and deliver any and all documents
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and writings of every kind reasonably requested or required to implement this
Restated Agreement.
33.2 The captions and headings appearing in this Restated Agreement are
inserted merely to facilitate reference and shall have no bearing upon the
interpretation thereof.
33.3 Each term, covenant and condition of this Restated Agreement is
deemed to be an independent term, covenant and condition, and the obligation of
any Participant to perform all of the terms, covenants and conditions to be kept
and performed by it is not dependent on the performance by the other
Participants of any or all of the terms, covenants and conditions to be kept and
performed by them.
33.4 In the event that any of the terms, covenants or conditions of
this Restated Agreement, or the application of any such term, covenant or
condition, shall be held invalid as to any person or circumstance by any court
having jurisdiction in the premises, the remainder of such agreement, and the
application of its terms, covenants or conditions to such persons or
circumstances shall not be affected thereby.
33.5 If any provision of this Restated Agreement is found to be in
conflict with any provision of the Operating Agreement, the Participants agree
that as between and among the Participants the terms of this Restated Agreement
are controlling.
33.6 The Participants do not intend to create rights in or
to grant remedies to any third party as a beneficiary of this
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Restated Agreement or of any duty, covenant, obligation or undertaking
established therein.
33.7 Any waiver at any time by any Participant of its rights with
respect to a default or any other matter arising in connection with this
Restated Agreement or the Operating Agreement shall not be deemed a waiver with
respect to any subsequent default or matter.
33.8 As of the Effective Date, the Prior Agreement is
terminated and shall be of no further force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Restated
Agreement to be executed effective as the Effective Date.
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EXHIBIT A
Common Station Facilities
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EXHIBIT B
South Texas Plant Site
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EXHIBIT B-1
Railroad Strip
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Exhibit 13
South Texas Project
Operating Agreement
The parties to this Operating Agreement are the owners of the South
Texas Project: CITY OF SAN ANTONIO, Texas, acting through the City Public
Service Board of San Antonio, hereinafter referred to as "San Antonio;" CENTRAL
POWER AND LIGHT COMPANY, a Texas corporation, hereinafter referred to as
"Central;" HOUSTON LIGHTING & POWER COMPANY, a Texas corporation, hereinafter
referred to as "Houston;" CITY OF AUSTIN, hereinafter referred to as "Austin"
(collectively, the "Participants"); and the operator of the South Texas Project,
STP NUCLEAR OPERATING COMPANY, a Texas non-profit corporation (hereinafter
referred to as "Opco").
The parties desire to enter into this Operating Agreement to
set forth the rights and obligations between Participants, on the one hand, and
Opco, on the other, for the licensing, operation, maintenance, modification,
decontamination and decommissioning of the South Texas Project.
RECITALS
A. San Antonio, Central, Houston and Austin have heretofore jointly
licensed and constructed two nuclear-fueled electric generation facilities known
as the South Texas Project and currently operate said facilities for the
production of electric power and energy which is taken by each Participant in
proportion to its ownership interest in such facilities.
B. Such jointly owned facilities were licensed, constructed and
operated under the terms of the Participation Agreement, dated as of July 1,
1973, as amended by three amendments thereto (which Participation Agreement, as
so amended, is hereinafter referred to as the "Prior
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Agreement"). Houston served as Project Manager for all aspects of the South
Texas Project under the terms of said Prior Agreement.
C. Contemporaneously herewith, the Participants are amending and
restating the Prior Agreement (which Prior Agreement, as so amended and
restated, is hereinafter referred to as the "Restated Agreement") in order: (i)
to relieve Houston of its rights and obligations as Project Manager under the
Prior Agreement; (ii) to transfer to Opco responsibilities for the licensing,
operation and maintenance of the South Texas Project, including responsibilities
for repair, modification, decontamination, decommissioning, and the construction
of any additional Generating Unit(s) and support facilities that may from time
to time be constructed at the South Texas Plant Site; and (iii) to amend and
restate certain other terms previously contained in the Prior Agreement.
D. Pursuant to this Operating Agreement, Opco is authorized to act on
behalf of San Antonio, Central, Houston and Austin to maintain and operate the
South Texas Project. Participants agree and Opco acknowledges and agrees that
Participants are severally and not jointly liable for payments that are
chargeable to the South Texas Project hereunder in proportion to each of
Participants' respective undivided ownership interests in the Common Station
Facilities and the respective Generating Units included or to be included in the
South Texas Project, as applicable, as provided in the Restated Agreement,
except as to payments which are required to be allocated to and paid by one or
more Participants other than in proportion to the ownership interests of such
Participant or Participants pursuant to the provisions of Section 9.3 of this
Operating Agreement.
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ARTICLE I
DEFINITIONS
In addition to the previously defined terms, the following terms when
used herein, shall have the meanings specified. Terms defined in the Restated
Agreement, unless otherwise defined herein, shall have the meanings indicated in
that agreement.
1.1 "Costs of Operation" means all costs of Operation and all costs of
Capital Improvements and any related taxes that are incurred by Opco under or
pursuant to or with respect to this Operating Agreement and attributable to the
South Texas Project, including, without limitation, all overhead costs and costs
of maintaining the corporate existence of Opco, all costs of all officers and
employees of Opco (including, without limitation, all pension, medical, welfare
and other employee benefits, compensation and welfare costs) and all obligations
incurred by Opco under and pursuant to employment agreements and indemnity
agreements (including, without limitation, undertakings to indemnify officers
and directors pursuant to the Articles of Incorporation and Bylaws of Opco) in
connection with the directors, officers, employees, agents and contractors of
Opco, all costs of contracts for goods (including, without limitation, Nuclear
Fuel acquired by Opco for the Participants pursuant to this Operating Agreement)
or services entered into by Opco with third parties or individual Participants,
all costs of claims for personal injury or death or damage to or loss or
destruction of property asserted against Opco by any person or party, and all
other costs of operation of Opco of whatsoever nature.
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1.2 "Force Majeure" means any cause which by the exercise of due
diligence such party could not reasonably have been expected to avoid and which
by exercise of due diligence it shall be unable to overcome.
1.3 "Operate" and its derivatives means to possess, use, maintain,
repair, improve, operate, decontaminate and decommission the South Texas
Project.
1.4 "Operating Licenses" means the Facility Operating Licenses No.
NPF-76 for Unit 1 of the South Texas Project and No. NPF-80 for Unit 2 of the
South Texas Project and amendments thereto as issued from time to time by the
NRC.
1.5 "Participants' Approval" or "Participants' Direction" and
derivatives thereof means the written approval or direction of the Owners'
Committee constituting the binding action of all Participants with respect to
such approval or direction under the provisions of the Restated Agreement.
1.6 "Participant's Share" means, with respect to each item of Costs of
Operation and with respect to each Participant, the share of such item of Costs
of Operation which such Participant is required to bear and pay pursuant to the
provisions of the Restated Agreement and this Operating Agreement.
1.7 "South Texas Project" as used in this Operating Agreement shall
have the meaning set forth in the Restated Agreement, except and excluding the
Transmission Corridor, the Construction Power Line and other transmission lines
owned by the respective Participants extending from the switchyard and switching
facilities at the South Texas Project.
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ARTICLE II
OPCO'S AUTHORITY AND RESPONSIBILITY
WITH RESPECT TO OPERATION OF SOUTH TEXAS PROJECT
2.1 Authority for Operation. Opco shall Operate the South Texas Project
and shall have full control over all Operations of and making of Capital
Improvements to the South Texas Project as permitted and required by, and
subject to the provisions and limitations set forth in, this Operating
Agreement. Without limiting the generality of the foregoing, Opco shall provide,
or shall provide for, all labor, supervision, supplies, equipment and services
for the operation, maintenance, repair, replacement, reconstruction,
decontamination and decommissioning of all aspects of the South Texas Project in
order to deliver to the Participants their respective Generation Entitlement
Shares, all in accordance with the Restated Agreement (including Participants'
Direction pursuant to the terms and provisions thereof), this Operating
Agreement, and the terms and conditions of all applicable licenses and permits,
laws and regulations, including the Operating Licenses. In carrying out its
responsibilities, Opco shall have authority, subject to Participants' Direction
from time to time, to take any and all action, in the Participants' names and on
the Participants' behalf, necessary or desirable to obtain and maintain in
effect all licenses and permits issued by the NRC or other regulatory bodies
relating to the South Texas Project and to enter into agreements and make other
commitments on behalf of the Participants necessary or desirable to carry out
its responsibility to provide for Operation. Opco shall act on behalf of
Participants in all matters related to NRC licensing of the South Texas Project
and, on behalf of the Participants, shall Operate, and make Capital Improvements
at, the South Texas Project in accordance with the Operating Licenses and
applicable laws and regulatory
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requirements and Participants' Direction from time to time; provided that Opco
shall have sole authority, as the Operator of the South Texas Project pursuant
to the Operating Licenses, to make all decisions to protect public health and
safety as required by the Operating Licenses and applicable laws and regulations
and as are necessary to comply with applicable laws and regulations. Subject to
the provisions of Sections 2.2 and 2.3 herein, in order to enable Opco fully and
effectively to perform its duties hereunder, Opco shall have, and the
Participants do hereby grant to Opco, subject to the terms and conditions set
forth herein, the power and authority to exercise in accordance with applicable
laws and Participants' Direction from time to time, the rights of the
Participants under, and to execute, modify, amend, enforce or terminate, any
contracts, agreements, purchase orders, licenses, permits and privileges
relating to the Operation of, and making of Capital Improvements to, the South
Texas Project, on behalf of the Participants.
2.2 Limitations: Notwithstanding Section 2.1 above:
A. Opco shall, except in the case of emergency or unexpected
contingencies as provided in Section 5.2 or with the Participant's Approval,
endeavor to avoid incurring Costs of Operation that are either materially
different from or in excess of the budgeted or business plan expenditures
provided for or contemplated in annual Budgets or Five Year Plans adopted and
approved by Participants' Approval.
B. In conducting Operations or making Capital Improvements,
Opco shall conform to annual Budgets and Five Year Plans adopted and approved by
Participants' Approval, except in the case of emergency or unexpected
contingencies as provided in Section 5.2 or unless otherwise authorized by
Participants' Approval.
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C. Opco shall not sell, encumber or otherwise dispose of any
real property or any equipment or personal property comprising the South Texas
Project or acquired by Opco on behalf of Participants pursuant to this Operating
Agreement for use in connection with Operation of or making Capital Improvements
to the South Texas Project, except for sales, encumbrances or dispositions made
in accordance with processes and procedures for which Participants' Approval has
been obtained.
D. Participants, by exercise of Participants' Direction, shall
have exclusive authority to and may direct Opco at any time to retire and
decommission the South Texas Project or any Generating Unit or to operate the
South Texas Project or any Generating Unit at reduced capacity, or to place the
South Texas Project or any Generating Unit in a safe shutdown condition. Opco
shall follow any such Participants' Direction; provided that Opco shall take any
such action in a manner which it determines, in the exercise of the authority
vested in Opco as the Operator under the Operating Licenses and applicable laws
and regulations, is consistent with public safety and health, the Operating
Licenses, and applicable laws and regulations. Further, in the exercise of the
authority vested in Opco as the Operator under the Operating Licenses and
applicable laws and regulations, Opco shall be authorized to Operate the South
Texas Project or any Generating Unit at a reduced capacity or otherwise to place
the South Texas Project or any Generating Unit in a safe shutdown condition at
any time Opco determines such action is necessary to comply with the Operating
Licenses and applicable laws and regulations. All costs incurred by Opco in
taking any such action relating to decommissioning or shutdown of the South
Texas Project or any Generating Unit shall be considered Costs of Operation.
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E. Opco shall conduct no business or activity other than to
carry out its rights and responsibilities under and pursuant to this Operating
Agreement, nor shall Opco engage in any activity seeking profit for itself. Opco
shall never realize or derive a profit from the Operation of or making of
Capital Improvements to the South Texas Project or otherwise under or in
connection with this Operating Agreement. Opco shall not own any interest in the
South Texas Project or be entitled to any electric power therefrom. Any
property, of whatsoever kind or nature, which is acquired by Opco, whether for
Operation, Capital Improvements or otherwise, shall be acquired for the account
and benefit of the Participants and shall be owned by the Participants as
tenants in common under the Restated Agreement, each Participant owning such
right and interest in and bearing such share of the costs associated with such
property as is provided for property of such character in the Restated
Agreement.
2.3 Third-Party Contracts. All contracts entered into by Opco pursuant
to this Operating Agreement with third parties (excluding contracts with
officers, employees and agents of Opco and workers' compensation insurance
policies and other contracts relating to the internal affairs of Opco) in
connection with the Operation of or making of Capital Improvements to the South
Texas Project, including, without limitation, contracts with individual
Participants, contracts for the sale, lease or acquisition of materials,
inventories, supplies, spare parts, equipment, machinery, fuel, Nuclear Fuel
(unless otherwise directed by Participants' Direction), or services, shall be
executed by Opco as agent for and acting on behalf of the Participants and as
the person designated to act for San Antonio and Austin pursuant to the
cooperative purchasing program provided for in Section 2.7 hereof. Each such
contract shall (a) expressly provide that the rights and interests of the
Participants in and to and under such contract and in and to all
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goods and services to be provided to or acquired by Participants under or
pursuant to such contracts are and shall be owned and held by Participants in
undivided interests, in proportion to the respective Participant's Shares of the
obligations and undertakings of the Participants pursuant to such contract, and
(b) expressly provide that the obligations and undertakings of the Participants
under and in connection with such contract are several and not joint and that
each Participant is and shall be liable and responsible only for its
Participant's Share of such obligations and undertakings. The Participants agree
to be severally bound (with each Participant being liable only for its
Participant's Share of the obligations and undertakings of the Participants) by
the terms of all contracts executed by Opco as authorized in this Operating
Agreement (including, without limitation, any provisions that limit or protect
against a third party's liability, provisions granting indemnity to third
parties, and limitations or exclusions of warranties) to the same extent as if
the Participants were original several signatories to such contract. In
addition, if the Participants' signatures are deemed by Opco to be necessary to
induce a third party to enter into such a contract, Participants agree not to
unreasonably refuse to execute such contract.
2.4 Sales and Use Taxes. Opco recognizes that some Participants may
have exemptions from sales or use taxes imposed by the State of Texas or other
governmental entity or authority which are not available to other Participants,
and Opco agrees to take all actions necessary to assist a Participant in
claiming and sustaining such exemptions. When Opco enters into a contract on
behalf of Participants (or Participants execute a contract at Opco's request),
Opco will make such representations and provide such certificates as are
required to preserve any exemption from sales and use taxes a Participant may
claim and to insure that the assessment and
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payment of any sales and use taxes due from a Participant are assessed and paid
only by that Participant. Participants agree to provide Opco with sufficient
exemptions or other certificates required to claim any exemptions and to provide
for separate payment of sales and use taxes owed by a Participant, and
Participants agree that each will be severally responsible for any expenses in
connection with sustaining an exemption claimed by that Participant and the
payment of any sales and use taxes attributable to the purchase of that
Participant's undivided interest in any goods or services. These expenses or
taxes paid by a Participant shall be disregarded in determining the relative
Participant's Shares of the costs of purchasing or acquiring such goods or
services under the provisions of this Operating Agreement.
2.5 Enforcement of Rights.
A. Subject to the provisions of Section 2.2, and except as
otherwise directed by Participants' Direction from time to time, Participants
delegate to Opco the power, authority and obligation to manage on behalf of the
Participants the defense, prosecution and/or settlement of disputes with third
parties relating in any way to the South Texas Project; provided, however, that
if any Participant is named as a party to any such dispute, it shall have the
right, at its own cost, to defend any claims against it in such dispute.
B. Subject to Article VI, to the extent Opco incurs any
liability to a third party in performing its duties under this Operating
Agreement, amounts paid by Opco because of such liability and Opco's expenses in
defending claims by third parties or prosecuting claims against third parties
shall be considered Costs of Operation.
2.6 Cooperative Purchasing Program. Pursuant to and as authorized
by Sections 271.101 and 271.102 (Subchapter F of Chapter 271 of Title 8) of the
Local Government Code of
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the State of Texas, as such Sections may be amended, revised or supplemented
from time to time, San Antonio and Austin have agreed to and shall participate
in a cooperative purchasing program to purchase and acquire for San Antonio and
Austin, respectively, interests corresponding to their respective Participant's
Shares of and in and to all supplies, fuel, Nuclear Fuel, equipment, machinery
and other goods of any nature whatsoever purchased or acquired by Opco and all
services of third parties (or of other individual Participants) engaged or
acquired by Opco for or in connection with the Operation of and making of
Capital Improvements to the South Texas Project pursuant to and as authorized
and provided for in this Operating Agreement. Pursuant to Subsection
271.102(b)(1) of said Local Government Code, each of San Antonio and Austin
designates Opco as the person to act under the direction of, and on behalf of
San Antonio and Austin, respectively, in all matters relating to such
cooperative purchasing program, subject to the right of San Antonio and Austin
to change such designation if deemed appropriate.
ARTICLE III
PARTICIPANTS' RESPONSIBILITY AND OBLIGATIONS
3.1 Payment. Each Participant hereby severally agrees to pay Opco
for its Participant's Share of Costs of Operation.
3.2 Site Access and Control. In order for Opco to Operate South Texas
Project in accordance with the Operating Licenses and other applicable
regulatory requirements, the Participants, as their interests may appear, grant
Opco possession and use of the property constituting South Texas Project and
agree to provide Opco, its agents, employees and contractors unrestricted access
to the property constituting South Texas Project and, without limitation, the
other real property and the switchyard, facilities, equipment and personal
property
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located on the South Texas Plant Site. As and to the extent required by either
of the Operating Licenses or applicable statutes and regulations, the
Participants further agree that Opco shall have authority to exercise complete
control over the Exclusion Areas as defined in the Updated Final Safety Analysis
Report for each Generating Unit and to determine all activities within such
Exclusion Areas. The respective commitments and responsibilities of the
Participants and Opco regarding the South Texas Project switchyard, substation
and transmission facilities, including the Construction Power Line, are set
forth in Exhibit A hereto (as same may be modified from time to time consistent
with Opco's and the Participants' regulatory obligations).
3.3 Support Services from Participants.
(a) Subject to paragraph 3.3(b), each Participant agrees that
it will provide assistance and cooperation with Opco in Opco's
discharge of its responsibilities under this Operating Agreement.
Specifically, subject to paragraph 3.3(b), each Participant agrees to
provide support to the South Texas Project Emergency Plan and emergency
training and drills and to other activities undertaken by Opco as may
be necessary from time to time to allow Opco to conduct safe, economic,
and efficient operations at the South Texas Project and to otherwise
carry out its responsibilities under this Operating Agreement, the
Operating Licenses, and applicable laws and regulations. Such support
services shall be provided in accordance with the principles described
in Exhibit B hereto (as same may be modified from time to time
consistent with Opco's and the Participants' regulatory obligations).
The Participants agree to provide, subject to reasonable capability and
availability, additional services or assistance required by Opco and
hereafter agreed to by the applicable Participant in writing in
connection with the
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Operation of South Texas Project, including, without limitation, the
following: (1) communications access and support, (2) transportation
support, and (3) other services as may be required in order to allow
Opco to conduct safe, economic and efficient operations at South Texas
Project.
(b) If any services are to be rendered by a Participant to
Opco pursuant to paragraph 3.3(a) in order to assist Opco in the
discharge of its responsibilities under this Operating Agreement, such
services and the amounts to be charged therefor must be described in a
separate written contract hereafter agreed upon and executed by Opco
and such Participant, and all costs of Opco thereunder shall be
considered Costs of Operation.
3.4 No Changes to Facilities, Procedures or Practices. So that Opco
will be capable of Operating South Texas Project in accordance with the
Operating Licenses and applicable regulatory requirements, the Participants
agree that they will not make any changes to facilities, procedures or practices
that may result in failure to comply with NRC regulations or commitments or the
terms of the Operating Licenses, including, but not limited to, physical changes
to the electrical transmission or distribution facilities that directly provide
an off-site power supply to South Texas Project, without prior consultation with
and written consent from Opco, which consent Opco shall not unreasonably
withhold.
3.5 Off-Site Power Supply. In order for Opco to operate the South Texas
Project in accordance with the Operating Licenses and applicable regulatory
requirements, each Participant agrees to provide off-site power to the South
Texas Project through the Participant's transmission lines connecting into the
South Texas Project and the Participant's interconnections with other systems
through the interconnected power grid of the Electric Reliability Council of
Texas, Inc.
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("ERCOT"), or its successors. Appropriate adjustments shall be made in the
allocation of electric energy available to the respective Participants through
the interconnected power grid of ERCOT (or any successor power grid through
which the generating facilities of the Participants are interconnected) or
through the South Texas Project switchyard, so as to cause each Participant to
bear and provide a net percentage share of off-site power for the South Texas
Project corresponding to its Plant Ownership Interest.
ARTICLE IV
OWNERSHIP
4.1 Ownership of Capacity and Energy. In accordance with the provisions
of the Restated Agreement, the Participants shall be and remain the owners of,
and shall be entitled to all of, the Capacity and Energy from South Texas
Project, with each Participant to take and receive that Participant's entire
Generation Entitlement Share of all electric Power and Energy generated from the
respective Generating Units.
4.2 Plant Property. Opco shall have no ownership interest in the South
Texas Project or any supplies, equipment or other property acquired in
connection therewith. All such property shall be owned by the Participants as
tenants-in-common in accordance with the terms of the Restated Agreement. As
between Opco and the Participants, all risks associated with ownership or loss
of such property and all benefits inuring from ownership shall be vested with
the Participants.
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ARTICLE V
PAYMENT; AUDIT AND INSPECTION RIGHTS
5.1 Opco Submittals and Participant Approvals. On or before November 1
(or such other date at Participants' Direction) of each year during the term of
this Operating Agreement, Opco will submit the following for Participants'
Approval: (1) annual revisions to the South Texas Project Five Year
Operating/Outage and Fuel Procurement Plans; (2) annual revisions to the South
Texas Project Five Year Business Plan; (3) the annual budget for Costs of
Operation; and (4) the annual budget for costs of Nuclear Fuel. Opco will keep
Participants timely informed and obtain Participants' Approval in advance for
projects which are reasonably anticipated to cause a material change to the then
current Five Year Plans or annual Budgets as previously approved by
Participants' Approval. Notwithstanding the foregoing, during an emergency or
other unexpected contingency, Opco is authorized to make such expenditures and
take such other action, whether budgeted or not, as Opco shall determine to be
reasonably necessary in order to comply with applicable laws and regulations,
the Operating Licenses and any other applicable licenses or permits or otherwise
to maintain the South Texas Project in a safe condition. If any such unbudgeted
costs and expenditures are incurred, Opco shall promptly notify the Participants
of such action, specifying the full particulars of the events giving rise to
such costs and expenditures, and shall promptly submit revised annual Budgets to
encompass such costs and expenditures incurred, as well as those expected to be
incurred, as a result of such emergency or other unexpected event, and such
costs and expenditures shall be Costs of Operation.
5.2 Payment Obligations. If as a result of accounting or billing
errors or otherwise any Participant shall at any time pay more than its
Participant's Share of any Costs of Operation,
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thus resulting in allocation to and payment by one or more other Participants of
less than its or their Participant's Share of such Costs of Operation, each
Participant which has paid less than its Participant's Share of such Costs of
Operation will, promptly upon demand, remit such deficiency to Opco, and, upon
receipt thereof, Opco shall promptly transmit and refund same to the Participant
who has thus paid more than its Participant's Share of such Costs of Operation.
It is expressly stipulated and agreed, however, that no Participant shall have
the right to require that Opco refund to such Participant, or that any other
Participant pay to Opco or to such first-mentioned Participant, any overpayment
of Costs of Operation made by such first-mentioned Participant unless such
first-mentioned Participant shall have given written notice and demand for
refund of such overpayment to Opco prior to the expiration of two years after
the end of the year during which such overpayment was made.
5.3 Payment Default. Consistent with Section 21 of the Restated
Agreement and without prejudice to the rights of the non-defaulting Participants
against the defaulting Participant under the Restated Agreement on account of
such default, in the event any Participant fails to make any payment at the time
and in the manner required by this Operating Agreement, and if none of the
non-defaulting Participants elect to cover the default, Opco shall take whatever
action and make whatever expenditures, whether budgeted or not, that it
determines to be reasonably necessary to protect public health and safety as
required by the Operating Licenses and applicable laws and regulations and to
comply with applicable licenses or permits and to place and maintain the South
Texas Project in a safe, shut-down condition. All Participants remain obligated
to pay for these expenditures in proportion to their Generation Entitlement
Shares for each affected Generating Unit. If one or more Participants default on
this safe, shutdown obligation, the other Participants are obligated to increase
their contributions to Opco to cover the safe, shut-down obligation default (in
the proportion that their respective Generation Entitlement Shares in the
affected Generating Unit bear to the aggregate Generation Entitlement Shares of
all non-defaulting Participants in such Unit) without prejudice to the rights of
the non-defaulting Participants against the defaulting Participant under the
Restated Agreement on account of such default.
5.4 Payment and Billing. Subject to Sections 5.1 and 5.2 above and in
accordance with procedures as may be agreed upon in writing by the parties, Opco
hereby agrees to furnish Participants with requests for funds to pay Costs of
Operation. Each Participant shall pay its share of Costs of Operation in
accordance with requests for funds submitted by Opco. Payments for the Costs of
Operation in accordance with Opco's requests for funds shall be made
notwithstanding the availability or lack of availability of the South Texas
Project to produce Energy.
5.5 Audit and Adjustment. Opco shall maintain books and records to
support the Costs of Operation, which books and records shall be maintained by
Opco for such periods of time as Participants shall direct by Participants'
Direction. As soon as practical, but no later than ninety (90) days after the
end of each calendar year, Opco shall prepare and deliver to each Participant a
report prepared by an independent public accounting firm selected by
Participants by Participants' Direction reflecting the results of an audit of
the books and records of Opco. The cost of preparing such audit reports shall be
Costs of Operation. Further, from time to time, any of the Participants may, at
the applicable Participant's cost and expense, conduct or cause to be conducted
by others, including regulatory authorities having jurisdiction, audits of the
books and
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records of Opco. Such audits shall be conducted at reasonable mutually agreed
upon times, with agreement not being unreasonably withheld. Opco shall credit
each Participant with its Participant's Share of recoveries, whenever received,
from third parties and shall charge each Participant with its appropriate share
of any underpayments of Costs of Operation and promptly transmit and refund
amounts received in payment of such underpayments to the Participant or
Participants who have made overpayments with respect to such Costs of Operation
as provided for in Section 5.2 hereof.
ARTICLE VI
LIABILITY
6.1 Release of Opco. In no event shall Opco be liable to any
Participant for any direct, indirect, incidental or consequential damages,
including, without limitation, damages for loss of profits or loss of use or
cost of replacement power, and each Participant hereby releases Opco for any
damages arising out of Opco's performance or failure to perform this Operating
Agreement. The parties recognize that Opco is a nonprofit corporation formed,
controlled and financed by the Participants solely for the purpose of acting on
behalf of Participants in carrying out the responsibilities which are described
herein. Opco does not assume liability or responsibility to the Participants for
loss, cost or expense that may be suffered by any Participant as a result of any
action or inaction of Opco; provided, however, that nothing herein shall relieve
any person or party other than Opco from any responsibility to Opco or to the
Participants, whether assumed by contract or by operation of law.
6.2 Indemnity. The Participants shall severally, each to the extent
only of its Participant's Share, protect, indemnify and hold Opco free and
harmless from and against any and
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all damages, liabilities, claims, demands, causes of action, suits or other
proceedings (including all costs in connection therewith and in connection with
the defense thereof, including attorneys' fees) of every kind and character,
directly or indirectly connected with Opco's Operation of the South Texas
Project or making of Capital Improvements to the South Texas Project or for any
damage thereto, whether arising in or based upon tort, fraud, contract, strict
liability, negligence, breach of fiduciary duty or any other theory of legal
liability or as a result of fines or other penalties imposed by the NRC or other
governmental authority.
6.3 Allocations of Liability Among Participants. All losses, damages,
expenses, penalties, liabilities and claims (including those in respect of
property damages, personal injury, and fines or penalties imposed upon Opco by
the NRC or other governmental authority) asserted by third parties against Opco
in connection with, or arising out of, the Operation of or making of Capital
Improvements to the South Texas Project or any portion thereof, including,
without limitation, the expenses of defending against or disposing of such
claims and liabilities and the costs and expenses covered by the indemnity under
Section 6.2, attributable to any property, policy, system, design or process in
existence at or prior to the time that responsibility for the Operation of the
South Texas Project is transferred to Opco or developed after such transfer, or
which is attributable to any former employee of any Participant who is employed
by Opco upon or incident to such transfer, or to any employee hired by Opco
after such transfer, and which are not covered in full by insurance procured in
accordance with Article VII (or any successor insurance arrangement), shall be
treated as Costs of Operation.
6.4 Scope of Indemnity and Release. EACH PARTICIPANT SEVERALLY
ACKNOWLEDGES TO OPCO THAT THE PROVISIONS OF SECTIONS 6.1, 6.2 AND 6.3
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HEREOF WHICH RELEASE OPCO OR PROVIDE FOR THE INDEMNIFICATION BY THE PARTICIPANTS
(SEVERALLY) OF OPCO ARE INTENDED BY THE PARTICIPANTS, TO THE MAXIMUM EXTENT
PERMITTED BY APPLICABLE LAW FROM TIME TO TIME, TO RELEASE AND SAVE AND HOLD
HARMLESS AND INDEMNIFY OPCO FROM THE CONSEQUENCES OF OPCO'S OWN NEGLIGENCE
(WHETHER ORDINARY OR GROSS, SOLE, JOINT OR CONCURRENT, OR ACTIVE OR PASSIVE) AND
RECKLESS OR INTENTIONAL CONDUCT OR STRICT LIABILITY OF OPCO, ANY OF WHICH ARISES
OUT OF OR RELATES TO THE OPERATION OF OR MAKING OF CAPITAL IMPROVEMENTS TO THE
SOUTH TEXAS PROJECT OR ANY PORTION THEREOF.
ARTICLE VII
INSURANCE
With respect to the South Texas Project, Opco shall recommend and,
subject to the Participants' Direction, shall procure and maintain or cause to
be procured and maintained, in the name of and on behalf of the Participants,
Opco, and the Participants' respective mortgagees, if required, as their
respective interests may appear, protection through insurance or otherwise
covering the Participants' and Opco's obligations to pay damages because of
personal injury, death or property damage, including, without limitation,
obligations under applicable workers' compensation laws, and protection through
insurance or otherwise covering nuclear property and nuclear liability and other
insurance and financial protection in accordance with customary industry
practice and as necessary to comply with all applicable laws and regulations and
the provisions of the Restated Agreement and applicable mortgages and credit
arrangements of any of the Participants. All insurance policies obtained
pursuant to this Operating Agreement shall
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be issued, subject to Participants' Direction, with the Participants, Opco, and
the Participants' respective mortgagees, if required, as named or additional
insureds or loss payees, as their interests may appear, as appropriate to the
particular coverage and as directed by Participants' Direction. Opco, subject to
prior Participants' Approval, shall determine the coverage limits and
deductibles for any insurance policies obtained pursuant to this Operating
Agreement.
Subject to the Participants' Direction, Opco will establish necessary
procedures, cooperate with the insurers and otherwise comply with requirements
of the insurers to maintain coverages in effect and to obtain payment of claims
recoverable under such insurance applicable to the South Texas Project.
ARTICLE VIII
TERM AND TERMINATION
8.1 Term. This Operating Agreement shall become effective concurrent
with the Restated Agreement, and unless sooner terminated as provided
hereinafter, it shall remain in effect, subject to Section 8.2 below, until all
Generating Units shall have been retired and decommissioned in accordance with
all applicable regulatory and governmental requirements and the parties hereto
agree in writing, with agreement not to be unreasonably withheld, that all
responsibilities hereunder have been fulfilled.
8.2 Termination. This Operating Agreement may be terminated prior to
the expiration of the term set forth in Section 8.1 above, subject to receipt of
any and all necessary regulatory approvals, by Participants' Direction; provided
that this Operating Agreement may not be terminated prior to the expiration of
the term set forth in Section 8.1 unless and until a successor Operator of all
Generating Units in the South Texas Project shall have been designated
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and selected by unanimous agreement of the Participants and shall have qualified
and been designated as operator of the Generating Units pursuant to Operating
Licenses issued by the NRC. Opco, as contemplated by Section 11.1 of the
Restated Agreement, agrees that any and all licenses, permits, books, records,
privileges or rights acquired by Opco relating to the South Texas Project shall
be assigned or otherwise transferred to the Participants or as directed by
Participants' Direction upon any termination of this Operating Agreement.
8.3 Survival. The indemnification, release, and limitation of liability
provisions contained in Article VI shall survive termination to the extent they
pertain to events giving rise to such indemnification, release and liability
that occurred during the term of this Operating Agreement. Further, it is agreed
that in no event shall this Operating Agreement terminate unless all payments
required to have been made by the Participants to Opco shall have been made and
all necessary regulatory approval for decommissioning or transfer of
responsibility for the South Texas Project shall have been obtained.
ARTICLE IX
INFORMATION PROVIDED TO PARTICIPANTS
9.1 Reports to Participants. Opco shall provide data and/or reports to
the Participants to support Costs of Operation. Such data and reports shall be
in such form, content and detail as the Participants may from time to time
direct by Participants' Direction. Such data and reports shall include reports
relating to all receipts and disbursements of Opco.
9.2 Site Access. The Participants or their designees shall have access
to the South Texas Project, subject to Opco's obligation to limit such access
pursuant to the Operating Licenses or the applicable rules and regulations of
the NRC or other regulatory authorities.
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9.3 Assistance to Individual Participants. At the request of any
Participant from time to time, Opco shall provide such Participant with data and
assistance as may be requested by such Participant to enable such Participant to
satisfactorily discharge, as a co-owner of the South Texas Project, such
Participant's responsibilities with regard to the South Texas Project, including
such Participant's responsibilities to its security holders, to regulatory
authorities and others. Opco shall maintain records of all direct costs and
expenses incurred by Opco in providing data and assistance to a Participant
pursuant to this Section 9.3. Those costs and expenses shall be included in
Costs of Operation but shall be directly assigned and charged to and borne and
paid solely by the particular Participant for whom such data and assistance was
provided.
ARTICLE X
OPCO PERSONNEL
It is contemplated that Opco will make offers of employment to
substantially all the employees of Houston (who may be selected by Opco in its
sole discretion) stationed at the South Texas Project who have been engaged in
the operation and management of the South Texas Project as employees of Houston
in its capacity as Project Manager, to become effective upon the transfer of
responsibility for the Operation of the South Texas Project from Houston to
Opco. All such employees of Houston who accept such offers of employment by Opco
shall be discharged by Houston and shall become employees of Opco effective as
of such transfer of responsibility and shall thereafter be the employees of Opco
until such employment is terminated for any reason and shall not be employees,
representatives or agents of any Participant, or be considered for any purpose
to be acting as employees of Opco at the request of Houston or any
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other Participant, and shall perform services designated by Opco in accordance
with Opco's rules, regulations, and safety or health procedures. Costs of any
and all compensation and benefits provided by Opco to any employees of Opco
(whether formerly employed by Houston or otherwise) are Costs of Operation. This
Operating Agreement is not, however, intended to, nor shall it, confer any right
or benefit upon any Houston employee or any other person to receive an offer of
employment by or to be employed by Opco in any capacity or for any amount or
nature of compensation or benefits or for any particular term.
ARTICLE XI
SOURCE OF PAYMENTS BY AUSTIN
11.1 It is expressly stipulated and agreed that neither Opco nor any of
the other Participants nor any of their successors or assigns shall ever have
the right to demand or require payment of any amount becoming due from Austin
under or in connection with or pursuant to any term or provision of this
Operating Agreement out of any funds raised or to be raised by taxation, or from
any source whatsoever other than the sources specified in Section 11.2 below,
and no such amount shall ever constitute a claim, debt, liability or general
obligation of Austin required to be paid from any other revenues or assets of
Austin.
11.2 Austin covenants and agrees that any and all amounts becoming due
from Austin under or in connection with or pursuant to any term or provision of
this Operating Agreement shall be payable from the Revenues of the Austin
Utilities Systems (as defined in Section 11.3 below) and from the proceeds of
the sale of Debt Obligations hereafter issued by Austin for such purpose.
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11.3 As used in this Article XI, the following terms shall have the
meanings hereinafter specified, to wit:
(a) Austin Utilities Systems shall mean collectively the
Electric Light and Power System and the Waterworks and Sewer System.
(b) Debt Obligations shall mean all bonds, notes and other
evidences of indebtedness for borrowed money which (i) have been or are
issued, incurred or assumed by Austin pursuant to express charter or
statutory authority heretofore or hereafter adopted or enacted and (ii)
are payable from or secured by a lien or pledge on Revenues of the
Austin Utilities Systems or of the Electric Light and Power System or
the Waterworks and Sewer System.
(c) Electric Light and Power System shall mean the entire
electric light and power plants and systems and all property of every
kind appurtenant to and used or acquired in connection with said
electric light and power plants and systems owned by Austin, together
with all property of every kind now or hereafter owned or acquired by
Austin as a part of or for use in the operation of Austin's electric
light and power plants and systems; provided that, notwithstanding the
foregoing, and to the extent now or hereafter authorized or permitted
by law, the term "Electric Light and Power System" shall not include
facilities of any kind (including any electric power generating and
transmission facilities) which are declared not to be a part of the
Electric Light and Power System, are not a then existing material and
functioning part of the Electric Light and Power System at the time of
such declaration and which are acquired or constructed by Austin, alone
or in participation with others, with the proceeds from the issuance of
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"Special Facilities Bonds," which are hereby defined as being special
revenue obligations of Austin which are not entitled to be paid from or
secured by any liens on or pledges of any Revenues of the Austin
Utilities Systems.
(d) Revenues shall mean, with respect to the Electric Light
and Power System or the Waterworks and Sewer System, all income and
revenues from the operation of the respective system, excluding
refundable meter deposits, restricted gifts and grants, and income,
receipts, revenues, proceeds or payments from facilities acquired or
constructed with "Special Facilities Bonds."
(e) Waterworks and Sewer System shall mean the entire
waterworks and sewer system operated and maintained by Austin for the
supply, treatment and transmission of treated potable water and the
collection, treatment and disposal of water- carried wastes and all
property of every kind appurtenant to and used or acquired in
connection with said waterworks and sewer system owned by Austin,
together with all property of every kind now or hereafter owned or
acquired by Austin as a part of or for use in the operation of Austin's
waterworks and sewer system; provided, however, that notwithstanding
the foregoing, and to the extent now or hereafter authorized or
permitted by law, the term "Waterworks and Sewer System" shall not
include facilities of any kind which are declared not to be a part of
the Waterworks and Sewer System, are not a then existing material and
functioning part of the Waterworks and Sewer System at the time of such
declaration and which are acquired or constructed by or on behalf of
Austin with the proceeds from the issuance of "Special Facilities
Bonds," which are hereby defined as
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being special revenue obligations of Austin which are not entitled to
be paid from or secured by any liens on or pledges of any Revenues of
the Austin Utilities Systems.
ARTICLE XII
SOURCE OF PAYMENTS BY SAN ANTONIO
12.1 It is expressly stipulated and agreed that neither Opco nor any of
the other Participants nor any of their successors or assigns shall ever have
the right to demand or require payment of any amount becoming due from San
Antonio under or in connection with or pursuant to any term or provision of this
Operating Agreement out of any funds raised or to be raised by taxation, or from
any source whatsoever other than the sources specified in Section 12.2 below,
and no such amount shall ever constitute a claim, debt, liability or general
obligation of San Antonio required to be paid from any other revenues or assets
thereof.
12.2 San Antonio covenants and agrees that any and all amounts becoming
due from San Antonio under or in connection with or pursuant to any term or
provision of this Operating Agreement shall be payable from the Revenue of the
San Antonio Electric and Gas Systems and from the proceeds of the sale of Debt
Obligations issued for that purpose.
12.3 As used in this Article XII, the following terms shall have the
meanings hereinafter specified, to wit:
(a) Debt Obligations shall mean all bonds, notes and other
evidence of indebtedness for borrowed money which (i) have been or are
issued, incurred or assumed by San Antonio pursuant to express charter
or statutory authority heretofore or hereafter adopted or enacted and
(ii) are payable from or secured by a lien or pledge on net Revenues of
the San Antonio Electric and Gas Systems.
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(b) Revenue shall mean all income and revenues from the
operation of the San Antonio Electric and Gas Systems.
(c) San Antonio Electric and Gas Systems shall mean the entire
electric light and power plants and systems and gas distribution system
and all property of every kind appurtenant to and used or acquired in
connection with said electric light and power plants and systems and
gas distribution system owned by San Antonio, together with all
property of every kind now or hereafter owned or acquired by San
Antonio as a part of or for use in the operation of San Antonio's
electric light and power plants and systems and gas distribution
system.
ARTICLE XIII
MISCELLANEOUS
13.1 Confidentiality. Any party may, from time to time, come into
possession of information of another party that is confidential or proprietary
(including, without limitation, Safeguards Information as defined in 10 C.F.R.
Part 73). Any party having any such information which another party has advised
it is confidential or proprietary will not reproduce, copy, or disclose (except
upon prompt and prior notification to the other party of the event precipitating
such disclosure and notice to the affected parties that such disclosure is
required by law) any such information in whole or in part for any purpose
without the prior written consent of the other party. Safeguards Information
relative to the South Texas Project shall be controlled and protected in
accordance with 10 C.F.R. 73.21.
13.2 Restricted Data. The parties agree that, unless otherwise
required by law, they will not permit any person to have access to Restricted
Data, as defined in 42 U.S.C. ss. 2014.y,
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<PAGE>
until the Federal Office of Personnel Management shall have made an
investigation and report to the NRC on the character, associations and loyalty
of such person and the NRC shall have determined that permitting such person to
have access to Restricted Data will not endanger the common defense and
security.
13.3 Assignment and Successors. This Operating Agreement shall not be
assignable by Opco without the prior written unanimous consent of the
Participants and without first obtaining all necessary regulatory approval, and
any attempted assignment without such consent and approval shall be void. Any
Participant that assigns or transfers its rights or interest in the South Texas
Project in accordance with the terms of the Restated Agreement shall also assign
a proportionate interest in this Operating Agreement and shall cause the
assignee thereof to execute an agreement to be bound by the terms of this
Operating Agreement as a condition to the effectiveness thereof. Subject to the
preceding provisions of this Section, this Operating Agreement shall be binding
upon and shall inure to the benefit of the parties and their respective
successors and assigns.
13.4 Governing Law. This Operating Agreement shall be governed by
the laws of the State of Texas, except as to matters exclusively controlled by
the Constitution and statutes of the United States of America.
13.5 No Delay in Payments. No disagreement or dispute of any kind
between or among the parties concerning any matter, including, without
limitation, the amount (if any) of any payment due from any Participant to Opco
or from Opco to any Participant, as the case may be, or the correctness of any
charge made or statement submitted by Opco to a Participant, or any reason,
excuse or circumstance, including Force Majeure, shall permit or authorize any
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<PAGE>
Participant to delay or withhold payment of any statement or charge submitted or
made by Opco to such Participant pursuant to this Operating Agreement; provided
that a Participant shall not waive any rights, including its rights to conduct
audits in accordance with Section 5.6 and to receive refunds of overpayments
pursuant to Section 5.2, by making payments to Opco.
13.6 Notification. Any notice, demand or request provided for or given
in connection with this Operating Agreement shall be in writing and shall be
delivered in person or sent by registered or certified mail, postage prepaid and
return receipt requested, or transmitted in written form by electronic means to
the respective parties at their applicable address specified below, and shall be
deemed given when received by such addressee at its address as follows:
City of Austin
P. O. Box 1088
Austin, Texas 78767
Attention: Director, Electric Utility Department
Telecopy:
City of San Antonio-City Public Service Board
P. O. Box 1771
San Antonio, Texas 78296-1771
Attention: Office of the General Manager,
City Public Service Board
Telecopy: 210-978-3058
Central Power and Light Company
P. O. Box 2121
Corpus Christi, Texas 78403
Attention: Office of the President
Telecopy:
Houston Lighting & Power Company
P. O. Box 1700
Houston, Texas 77251
Attention: Office of the President
Telecopy:
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<PAGE>
STP Nuclear Operating Company
South Texas Project Electric Generating Station
P. O. Box 289
Wadsworth, Texas 77483
Telecopy:
Any party may, at any time, by written notice to all other parties, designate
different or additional persons or different addresses for the giving of notices
hereunder.
13.7 Amendments. This Operating Agreement may be amended only by a
written instrument duly executed by and delivered to all of the parties hereto
and with any and all necessary regulatory approvals previously obtained.
13.8 Relationship of Parties. The covenants, obligations and
liabilities of the Participants to each other and to Opco under this Operating
Agreement shall be several and not joint or collective. Each Participant shall
be individually responsible for its own covenants, obligations and liabilities
as herein provided. It is not the intention of the parties to create, nor shall
this Operating Agreement be construed as creating, a partnership, association,
joint venture or trust, as imposing a trust or partnership covenant, obligation
or liability on or with regard to any one or more of the parties or as rendering
the parties liable as partners or trustees. Neither Opco nor any Participant or
group of Participants shall be under the control of or shall be deemed to
control any other Participant or Opco, or Opco and the Participants as a group.
No Participant shall be the agent of or have a right or power to bind any other
Participant, and Opco shall have only such powers to act on behalf of the
Participants as are expressly set forth in this Operating Agreement. If, for
federal income tax purposes, this Operating Agreement and the operations
hereunder are regarded as a partnership, each of the parties hereto elects to be
excluded from the application of all of the provisions of Subchapter "K,"
Chapter 1, Subtitle "A," of the Internal
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<PAGE>
Revenue Code of 1986, as amended ("Code"), as permitted and authorized by
Section 761 of the Code and the regulations promulgated thereunder. Opco is
authorized and directed to execute on behalf of each party hereto such evidence
of this election as may be required by the Secretary of the Treasury of the
United States or the Federal Internal Revenue Service, including specifically,
but not by way of limitation, all of the returns, statements, and the data
required by Treasury Regulations ss. 1.761. Should there be any requirement that
each party hereto give further evidence of this election, each such party shall
execute such documents and furnish such other evidence as may be required by the
Federal Internal Revenue Service or as may be necessary to evidence this
election. No such party shall give any notices or take any other action
inconsistent with the election made hereby. If any present or future income tax
laws of the State of Texas or any future income tax laws of the United States
contain provisions similar to those in Subchapter "K," Chapter 1, Subtitle "A,"
of the Code, under which an election similar to that provided by Section 761 of
the Code is permitted, each party hereto shall make such election as may be
permitted or required by such laws. In making the foregoing election, each party
hereto states that the income derived by such party from operations hereunder
can be adequately determined without the computation of partnership taxable
income.
13.9 Counterparts. This Operating Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
13.10 Force Majeure. In the event of any party being rendered unable,
wholly or in part, by Force Majeure to perform any of its obligations under this
Operating Agreement (other than obligations to pay amounts due and owing), upon
such party giving notice and full particulars of
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such Force Majeure in writing or by telephone to the other parties as soon as
reasonably possible after the occurrence of the cause relied upon, the
obligations of the party giving such notice, so far as they are affected by such
Force Majeure, shall be suspended during the continuance of any inability of
performance so caused, but for no longer period. Telephone notices given under
the provisions of this Section 13.10 shall be confirmed in writing as soon as
reasonably possible and shall specifically state full particulars of the Force
Majeure, the time and date when the Force Majeure occurred, and when the Force
Majeure ceased. This Operating Agreement shall not be terminated by reason of
any such cause but shall remain in full force and effect. Nothing contained
herein shall be construed so as to require a party to settle any strike,
lockout, work stoppage or other industrial disturbance or dispute in which it
may be involved. Any Participant rendered unable to fulfill any of its
obligations under this Operating Agreement by reason of Force Majeure shall
exercise due diligence to remove such inability with all reasonable dispatch.
13.11 Captions. The captions and headings appearing in this Operating
Agreement are inserted merely to facilitate reference and shall have no bearing
upon the interpretation thereof.
13.12 Severability. Each term, covenant and condition of this Operating
Agreement is deemed to be an independent term, covenant and condition, and the
obligation of any party to perform all of the terms, covenants and conditions to
be kept and performed by it is not dependent on the performance by the other
parties of any or all of the terms, covenants and conditions to be kept and
performed by them. In the event that any of the terms, covenants or conditions
of this Operating Agreement, or the application of any such term, covenant or
condition shall be held invalid as to any person or circumstance by any court
having jurisdiction
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<PAGE>
in the premises, the remainder of this Operating Agreement, and the application
of its terms, covenants or conditions to such persons or circumstances shall not
be affected thereby.
13.13 No Third-Party Beneficiaries. The parties hereto do not intend to
create rights in or to grant remedies to any third party as a beneficiary of
this Operating Agreement or of any duty, covenant, obligation or undertaking
established therein.
13.14 Nonwaiver. Any waiver at any time by any party of its rights with
respect to a default or any other matter arising in connection with this
Operating Agreement shall not be deemed a waiver with respect to any subsequent
or other default or matter.
13.15 Entire Agreement. This Operating Agreement, including Exhibits A
and B, shall constitute the entire agreement between Opco and the Participants
with respect to the subject matter hereof as of the date hereof, but it shall
not supersede or control the separate Restated Agreement as between or among the
Participants or modify the rights of the Participants thereunder as between or
among the Participants. In the event of any conflict between any term or
provision of this Operating Agreement and any term or provision of the Restated
Agreement, then solely as between and among the Participants the terms and
provisions of the Restated Agreement shall govern and control. In the event of
any conflict between any term or provision of this Operating Agreement and any
term or provision of Exhibit A or Exhibit B hereto, the terms and provisions of
this Operating Agreement shall govern and control.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Operating
Agreement to be executed to be effective as of the Effective Date.
STP NUCLEAR OPERATING COMPANY
By:
ATTEST:
CITY OF AUSTIN, TEXAS
By:
ATTEST:
CITY OF SAN ANTONIO,
acting through the City Public
Service Board of San Antonio
By:
ATTEST:
CENTRAL POWER AND LIGHT COMPANY
By:
ATTEST:
HOUSTON LIGHTING & POWER COMPANY
By:
ATTEST:
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Exhibit 14
ARTICLES OF INCORPORATION OF STP NUCLEAR OPERATING COMPANY
<PAGE>
ARTICLES OF INCORPORATION
OF
STP NUCLEAR OPERATING COMPANY
(A Non-Profit Corporation)
ARTICLE I
The name of the Corporation is STP Nuclear Operating Company.
ARTICLE II
The Corporation is a non-profit corporation.
ARTICLE III
The period of duration of the Corporation is perpetual.
ARTICLE IV
The four owners of the South Texas Project, viz. the City of San
Antonio, Texas, acting through the City Public Service Board of San Antonio
("San Antonio"); Central Power and Light Company, a Texas corporation
("Central"); Houston Lighting & Power Company, a Texas corporation ("HL&P"); and
the City of Austin, Texas ("Austin"), and the successors or assigns of any such
entities (San Antonio, Central, HL&P and Austin and their respective successors
and assigns being sometimes referred to herein individually as a "Participant"
and collectively as the "Participants"), have formed the Corporation to perform
or cause to be performed on behalf of the Participants the operation,
maintenance, repair, replacement reconstruction, decontamination and
decommissioning of, and nuclear
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fuel procurement and the disposition of spent nuclear fuel for, the South Texas
Project, a nuclear-fueled electric generating station located in Matagorda
County, Texas (the "South Texas Project"). The Corporation shall conduct no
other business or activity other than the foregoing, nor shall the Corporation
ever engage in any activity seeking profit or pecuniary gain. The relationship
among the Participants with respect to the South Texas Project is one of
co-tenancy and the Participants do not intend, by formation of the Corporation,
to alter the co-ownership nature of their relationship. Under the provisions of
these Articles of Incorporation and the Bylaws of the Corporation, each
Participant will appoint one director to the Board of Directors of the
Corporation. Each "Participant Director" is expected to advocate and further the
interests of the respective appointing Participant. No Participant Director is
expected to advocate or further the interests of the other Participants. If the
best interests of the various Participants conflict, each Participant Director
is expected to act or not act in whatever manner is consistent with the best
interests of his appointing Participant. The provisions of this Article are
specifically adopted as a "Standard of STP Nuclear Operating Company".
ARTICLE V
The Corporation is to have no members, and its affairs shall be managed
by a Board of Directors.
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ARTICLE VI
The street address of its initial registered office is
____________________, Texas ______, and the name of its initial registered agent
at such address is _______________________.
ARTICLE VII
The number of directors of the Corporation shall be five, and the
directors shall be divided into two classes. Each of the four Participants shall
be entitled to designate one director, and the four directors so designated (the
"Participant Directors") shall constitute a class. The Participant Directors
shall, by the affirmative vote of three of the Participant Directors, be
entitled to elect the fifth director, who shall also constitute a class and who
shall be the chief executive officer of the Corporation (the "CEO/Director").
The names and addresses of the members of the initial Board of Directors and, in
the case of the Participant Directors, the Participant who has designated each
such director, are as follows:
PARTICIPANT
DESIGNATING
NAME ADDRESS DIRECTOR
[To Come]
Unless removed in accordance with these articles, each director shall hold
office in perpetuity and until his successor shall have been duly elected or
designated and qualified. A Participant
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Director may be removed from office, with or without cause, only by the
Participant who designated such director. The CEO/Director may be removed from
office, with or without cause, by the affirmative vote of three of the
Participant Directors. Any vacancy occurring in the Board of Directors shall be
filled by the Participant who designated the person whose absence has created
the vacancy. If the person whose absence has created the vacancy was the
CEO/Director, such vacancy shall be filled by the affirmative vote of three of
the Participant Directors.
ARTICLE VIII
The Corporation shall dissolve upon the adoption of a resolution to
dissolve by all of the members of the entire Board of Directors. Upon
dissolution, any assets of the Corporation shall be applied and distributed in
accordance with Article 6.02 of the Texas Non-Profit Corporation Act. None of
the assets of the Corporation shall at any time inure to the benefit of any
person other than a governmental entity or charity.
ARTICLE IX
None of the following shall be authorized or effected unless the same
shall have been authorized by a resolution of the Board of Directors approved by
the affirmative vote of all of the members of the entire Board of Directors:
(1) Any amendment of these Articles of Incorporation or of
the Bylaws;
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(2) Any merger or consolidation of the Corporation with any
other corporation; or
(3) Any sale, lease, exchange or other disposition of all or
any substantial portion of the property and assets of the
Corporation.
ARTICLE X
A director of the Corporation shall not be liable to the Corporation
for monetary damages for an act or omission in the director's capacity as a
director, except that this Article X does not authorize the elimination or
limitation of the liability of a director to the extent the director is found
liable for:
(1) a breach of the director's duty of loyalty to the
Corporation;
(2) an act or omission not in good faith that constitutes a breach
of duty of the director to the Corporation or an act or
omission that involves intentional misconduct or a knowing
violation of the law;
(3) a transaction from which the director received an improper
benefit, whether or not the benefit resulted from an action
taken within the scope of the director's office; or
(4) an act or omission for which the liability of a director
is expressly provided by an applicable statute.
The exceptions set forth in clauses 1-4 above are not intended to create or
imply the existence of any duty to the Corporation
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inconsistent with the provisions of Article IV hereof and are not intended to
create liability or result in denial of indemnification in instances in which a
Participant Director is acting in a manner that the Director reasonably believes
to be in the best interests of the Participant who appointed the Director,
irrespective of the effect of any such action on the Corporation or the
interests of the other Participants.
Any repeal or modification of this Article X shall not adversely affect
any right or protection of a director of the Corporation existing at the time of
such repeal or modification.
ARTICLE XI
The name and address of the incorporator is ______________,
- -----------------------------------.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this ____
day of_______ 199__.
--------------------------------
Incorporator
6
BYLAWS OF STP NUCLEAR OPERATING COMPANY
<PAGE>
EXHIBIT 15
BYLAWS
OF
STP NUCLEAR OPERATING COMPANY
(A Texas Non-Profit Corporation)
ARTICLE 1
PURPOSE
The four owners of the South Texas Project, viz. the City of San
Antonio, Texas, acting through the City Public Service Board of San Antonio
("San Antonio"); Central Power and Light Company, a Texas corporation
("Central"); Houston Lighting & Power Company, a Texas corporation ("HL&P"); and
the City of Austin, Texas ("Austin"), and the successors or assigns of any such
entities (San Antonio, Central, HL&P and Austin and their respective successors
and assigns being sometimes referred to herein individually as a "Participant"
and collectively as the "Participants"), have formed the Corporation to perform
or cause to be performed on behalf of the Participants the operation,
maintenance, repair, replacement reconstruction, decontamination and
decommissioning of, and nuclear fuel procurement and the disposition of spent
nuclear fuel for, the South Texas Project, a nuclear-fueled electric generating
station located in Matagorda County, Texas (the "South Texas Project").
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The Corporation shall conduct no other business or activity other than the
foregoing, nor shall the Corporation ever engage in any activity seeking profit
or pecuniary gain.
ARTICLE 2
BOARD OF DIRECTORS
Section 2.1. Duties and Powers. The affairs of the Corporation shall be
managed by the Board of Directors, which may exercise all such powers of the
Corporation and do all such lawful acts and things as are not prohibited by
statute, by the Articles of Incorporation of the Corporation (the "Articles of
Incorporation") or by these Bylaws. Included among the powers of the Board of
Directors is the power to make the rules for the government of its own business
and of the business of the Corporation and to do all such actions and to do all
such things as, in the sole judgment and discretion of such Board of Directors,
shall be necessary or desirable in furtherance of the interests of the
Corporation.
Section 2.2. Number and Appointment. The Board of Directors
shall consist of five members, who shall be selected in the manner
set forth in the Articles of Incorporation.
Section 2.3. Vacancies. Vacancies shall be filled in the
manner set forth in the Articles of Incorporation.
Section 2.4. Meetings. Meetings of the Board of Directors,
regular or special, may be held either within or without the State
of Texas. Regular meetings of the Board of Directors may be held
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with or without notice at such time and at such place as may from time to time
be determined by the Board of Directors. Special meetings of the Board of
Directors may be called by the President or a majority of the directors. Notice
thereof stating the place, date and hour of the meeting shall be given to each
director either by mail not less than 48 hours before the date of the meeting,
by telephone, telegram or telecopy on 24 hours' notice or on such shorter notice
as the person or persons calling such meeting may deem necessary or appropriate
in the circumstances. A waiver of notice in writing signed by the person or
persons entitled to such notice, whether before or after the time stated
therein, shall be equivalent to the giving of such notice. Attendance of a
director at a meeting shall constitute a waiver of notice of such meeting,
except where a director attends a meeting for the express purpose of objecting
to the transaction of any business on the ground that the meeting is not
lawfully called or convened. Neither the business to be transacted at, nor the
purpose of, any regular or special meeting need be specified in the notice or
waiver of notice of such meeting.
Section 2.5. Quorum: Action by Directors. Except as may be
otherwise specifically provided by law, the Articles of
Incorporation or these Bylaws, at all meetings of the Board of
Directors, a majority of the entire Board of Directors shall
constitute a quorum for the transaction of business. Directors
present by proxy may not be counted toward a quorum. The act of a
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majority of the directors, voting in person or by proxy at a meeting at which a
quorum is present, shall be the act of the Board of Directors, unless the act of
a greater number is otherwise required by law, the Articles of Incorporation or
these Bylaws. If a quorum shall not be present at any meeting of the Board of
Directors, the directors present thereat may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present.
A director may vote in person or by proxy executed in writing by the
director. No proxy shall be valid after three months from the date of its
execution. Each proxy shall be revocable unless expressly provided therein to be
irrevocable and unless otherwise made irrevocable by law.
Section 2.6. Actions Without a Meeting and Meetings by Telephone.
Unless otherwise provided by law, the Articles of Incorporation or these Bylaws,
any action required or permitted to be taken at any meeting of the Board of
Directors may be taken without a meeting, if a consent in writing, setting forth
the action to be taken, shall be signed by all the directors. Members of the
Board of Directors may participate in and hold a meeting of such board by means
of a conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other, and participation
in a meeting pursuant to this Section shall constitute presence in person at
such meeting, except where a person participates in the
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<PAGE>
meeting for the express purpose of objecting to the transaction of any business
on the ground that the meeting is not lawfully called or convened.
ARTICLE 3
OFFICERS
Section 3.1. General. The officers of the Corporation shall consist of
a President, one or more Vice Presidents, a Secretary, a Treasurer, and such
other officers and assistant officers as may be deemed necessary. Any two or
more offices may be held by the same person, except the offices of President and
Secretary.
Section 3.2. Appointment. The officers of the Corporation shall be
elected or appointed by the Board of Directors at such time and at such manner
and for such terms as shall be determined from time to time by the Board of
Directors. The Board of Directors may delegate to any other officer of the
Corporation the power to appoint other officers or assistant officers at such
time, in such manner and for such terms. All officers of the Corporation shall
hold office for their stated terms and until their successors are chosen and
qualified, subject to their earlier resignation or removal. Any officer elected
or appointed may be removed, with or without cause, by the persons authorized to
elect or appoint such officer whenever in their judgment the best interests of
the Corporation be served thereby.
Section 3.3. Powers and Duties. Each of the officers of the
Corporation shall have such powers and duties as generally pertain
5
<PAGE>
to their respective offices, except as modified from time to time by the Board
of Directors, and may also exercise such other and additional powers and duties
as may from time to time be conferred upon them by the Board of Directors.
ARTICLE 4
INDEMNIFICATION OF OFFICERS
Section 4.1 Mandatory Indemnification for Officers. The
Corporation shall indemnify any officer of the Corporation who was
or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason
of the fact that the indemnitee is or was an officer of the
Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against
expenses (including court costs and attorneys' fees), judgments,
fines (including fines imposed by the Nuclear Regulatory
Commission), and amounts paid in settlement actually and reasonably
incurred by the indemnitee in connection with such action, suit or
proceeding if the indemnitee acted in good faith and in a manner
the indemnitee reasonably believed to be in or not opposed to the
best interests of the Corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful; provided that no indemnitee shall be
entitled to indemnification for amounts paid in settlement of any
6
<PAGE>
claim, action, suit or proceeding unless such settlement is approved by the
Board of Directors of the Corporation. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
the indemnitee did not act in good faith and in a manner which the indemnitee
reasonably believed to be in or not opposed to the best interest of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe that the indemnitee's conduct was lawful. The right
to indemnification under this Section 4.1 shall be a contract right that may be
enforced in any lawful manner by an officer of the Corporation.
Section 4.2 Indemnification for Employees and Agents. The Board of
Directors may grant to an employee or agent of the Corporation who is not an
officer of the Corporation rights to indemnification upon such terms and
conditions as the Board of Directors deems appropriate.
Section 4.3 Miscellaneous. The rights of indemnification as provided by
this Article shall not be deemed exclusive of any other rights to which the
indemnitee may at any time be entitled under applicable law, the Articles of
Incorporation, these Bylaws, agreement, insurance, arrangement or a resolution
of directors, or otherwise. No amendment, alteration or repeal of this Article
or any provision thereof shall be effective as to any indemnitee for acts,
events and circumstances that occurred, in whole or in part,
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<PAGE>
before such amendment, alteration or repeal. The provisions of this Article
shall continue as to an indemnitee after his employment with the Corporation has
ceased and shall inure to the benefit of his heirs, executors and
administrators.
If any provision or provisions of this Article shall be held to be
invalid, illegal or unenforceable for any reason whatsoever, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby; and, to the fullest extent possible, the
provisions of this Article shall be construed so as to give the effect to the
intent manifested by the provision held invalid, illegal or unenforceable.
ARTICLE 5
INDEMNIFICATION OF DIRECTORS
The Corporation shall indemnify, and advance Expenses (as this and all
other capitalized words are defined in this Article or in Article 2.22A of the
Texas Non-Profit Corporation Act) to, members of its Board of Directors to the
fullest extent permitted by applicable law in effect on the date these Bylaws
were adopted, and to such greater extent as applicable law may thereafter
permit. The rights of a director provided under the preceding sentence shall
include, but not be limited to, the right to be indemnified and to have Expenses
advanced in all Proceedings to the fullest extent permitted by Article 2.22A of
the Texas Non-Profit Corporation Act or any successor statutory provision, as
from time to time amended.
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The rights of indemnification and to receive advancement of Expenses as
provided by this Article shall not be deemed exclusive of any other rights to
which a director may at any time be entitled under applicable law, the Articles
of Incorporation, these Bylaws, agreement, insurance, arrangement or a
resolution of directors, or otherwise. No amendment, alteration or repeal of
this Article or any provision thereof shall be effective as to any director for
acts, events and circumstances that occurred, in whole or in part, before such
amendment, alteration or repeal. The provisions of this Article shall continue
as to a director whose status as a director has ceased and shall inure to the
benefit of his heirs, executors and administrators.
If any provision or provisions of this Article shall be held to be
invalid, illegal or unenforceable for any reason whatsoever, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby; and, to the fullest extent possible, the
provisions of this Article shall be construed so as to give the effect to the
intent manifested by the provision held invalid, illegal or unenforceable.
For purposes of this Article:
"Expenses" shall include all reasonable attorneys' fees, retainers,
court costs, transcript costs, fees of experts, witness fees, travel expenses,
duplicating costs, printing and binding costs, telephone charges, postage,
delivery service fees, and all other disbursements or expenses of the types
customarily incurred
9
<PAGE>
in connection with prosecuting, defending, preparing to prosecute or defend,
investigating, or being or preparing to be a witness in a Proceeding.
ARTICLE 6
MISCELLANEOUS
Section 6.1. Amendments. These Bylaws may be altered,
amended or repealed or new bylaws adopted, only by the affirmative
vote of all of the members of the entire Board of Directors.
Section 6.2. Fiscal Year. The fiscal year of the Corporation
shall be fixed by resolution of the Board of Directors.
10
EXHIBIT 16
VINSON & ELKINS L.L.P.
1001 Fannin Street, Suite 2300
Houston, Texas 77002-6760
Telephone: (713) 758-2222
Fax: (713) 758-2346
June 18, 1997
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Central and South West Corporation and Central Power and Light Company
Form U-1 Application -- File No. 70-8037
Dear Sirs:
We refer to the Form U-1 Application, as amended (the "Application"),
under the Public Utility Holding Company Act of 1935, as amended, (the "1935
Act") filed by Central and South West Corporation ("CSW"), a Delaware
corporation and a registered public utility holding company and Central Power
and Light Company ("CPL"), a Texas corporation and a wholly owned subsidiary of
CSW. This opinion relates to (i) the completion of the record with respect to
the settlement of the litigation between CSW and CPL and Houston Industries
Incorporated and its subsidiary, Houston Lighting & Power Company and (ii) the
request of authority from the Securities and Exchange Commission to enter into
the final form of documents to create a new Texas non-profit corporation to act
as the operating company for the South Texas Project Electrical Generating
Station ("STP") pending completion of the record (collectively, the
"Transactions"), all as more fully set forth in the Application. We have acted
as special counsel for CSW and CPL in connection with the Application and, as
such counsel, we are familiar with the corporate proceedings taken by CSW and
CPL in connection with the Transactions as described in the Application.
We have examined originals, or copies certified to our satisfaction, of
such corporate records of CSW and CPL, certificates of public officials,
certificates of officers and representatives of CSW and CPL and other documents
as we have deemed it necessary to require as a basis for the opinions
hereinafter expressed. In such examination we have assumed the genuineness of
all signatures and the authenticity of all documents submitted to as originals
and the conformity with the originals of all documents submitted to us as
copies. As to various questions of fact material to such opinions we have, when
relevant facts were not independently established, relied upon certificates of
officers of CSW and CPL and other appropriate persons and statements contained
in the Application.
Based upon the foregoing, and having regard to legal considerations
which we deem relevant, we are of the opinion that, in the event the proposed
Transactions are consummated in accordance with the Application, as it may be
amended, and subject to the assumptions and conditions set forth below:
CSW is validly organized and duly existing under the laws of
the State of Delaware.
CPL is validly organized and duly existing under the laws of
the State of Texas.
All state laws applicable to the Transactions as described in
the Application will have been complied with.
The consummation of the Transactions as described in the
Application will not violate the legal rights of the holders of any securities
issued by CSW or any associate company of CSW.
The opinions expressed above in respect of the Transactions
and described in the Application are subject to the following assumptions or
conditions:
The Transactions shall have been duly authorized and approved to the
extent required by state law by the Boards of Directors of CSW and CPL.
The Transactions shall have been accomplished in accordance with
required approvals, authorizations, consents, certificates and orders of any
state commission or regulatory authority with respect to the consummation of the
Transactions, and all of such required approvals, authorizations, consents,
certificates and orders shall have been obtained and remain in effect at the
time of the closing thereof.
The Securities and Exchange Commission shall have duly entered an
appropriate order or orders granting and permitting the Application to become
effective with respect to the Transactions.
We do not purport to express any opinions as to any laws other than
the General Corporation Law of the State of Delaware, the laws of the State of
Texas and the federal laws of the United States of America.
We hereby consent to the use of this opinion as an exhibit to the
Application.
Very truly yours,
INDEX EXHIBIT 18
TO
FINANCIAL STATEMENTS Page
Number
CENTRAL AND SOUTH WEST CORPORATION AND SUBSIDIARY COMPANIES
Consolidated Balance Sheets - Per Books and Pro Forma
as of March 31, 1997 2 - 3
Consolidated Statement of Income for the Twelve Months Ended
March 31, 1997 4
Consolidated Statement of Retained Earnings for the Twelve Months
Ended March 31, 1997 5
Statements of Long-Term Debt Outstanding as of March 31, 1997 6 - 9
Statements of Preferred Stock Outstanding as of March 31, 1997 10
CENTRAL AND SOUTH WEST CORPORATION (CORPORATE)
Balance Sheets - Per Books and Pro Forma as of March 31, 1997 11
Statement of Income for the Twelve Months Ended March 31, 1997 12
CENTRAL POWER AND LIGHT COMPANY
Balance Sheets - Per Books and Pro Forma as of March 31, 1997 13 - 14
Statement of Income for the Twelve Months Ended March 31, 1997 15
Statement of Retained Earnings for the Twelve Months Ended
March 31, 1997 16
PRO FORMA ADJUSTMENTS TO BALANCE SHEETS 17
STATEMENT OF CHANGES 18
CAPITALIZATION RATIOS - Per books and Pro forma 19
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 20
<PAGE>
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
PER BOOKS AND PRO FORMA
AS OF MARCH 31, 1997
UNAUDITED
(Millions)
Per Pro Forma Pro
Books Adjustments Forma
--------------------------------
ASSETS
NONE
FIXED ASSETS
Electric utility plant
Production $5,793 $5,793
Transmission 1,544 1,544
Distribution 4,242 4,242
General 1,323 1,323
Construction work in progress 213 213
Nuclear fuel 185 185
Other Diversified 125 125
--------------------------------
13,425 13,425
Less - Accumulated depreciation 4,971 4,971
--------------------------------
8,454 8,454
--------------------------------
CURRENT ASSETS
Cash and temporary cash investments 120 120
Special deposits 78 78
Accounts receivable 794 794
Materials and supplies, at average cost 183 183
Electric fuel inventory 87 87
Under-recovered fuel costs 52 52
Prepayments and other 72 72
--------------------------------
1,386 1,386
--------------------------------
DEFERRED CHARGES AND OTHER ASSETS
Deferred plant costs 508 508
Mirror CWIP asset - net 296 296
Other non-utility investments 293 293
Income tax related regulatory assets, net 236 236
Goodwill 1,449 1,449
Other 347 347
--------------------------------
3,129 3,129
--------------------------------
$12,969 $0 $12,969
================================
<PAGE>
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
PER BOOKS AND PRO FORMA
AS OF MARCH 31, 1997
UNAUDITED
(Millions)
Per Pro Forma Pro
Books Adjustments Forma
--------------------------------
CAPITALIZATION AND LIABILITIES NONE
CAPITALIZATION
Common Stock Equity -
Common stock, $3.50 par value,
authorized 350,000,000 shares;
issued and outstanding 212,200,000 shares $743 $743
Paid-in capital 1,038 1,038
Retained earnings 1,896 1,896
Foreign currency translation and other 27 27
--------------------------------
Total Common Stock Equity 3,704 3,704
--------------------------------
Preferred stock
Not subject to mandatory redemption 292 292
Subject to mandatory redemption 33 33
Long-term debt 3,986 3,986
--------------------------------
Total Capitalization 8,015 8,015
--------------------------------
CURRENT LIABILITIES
Long-term debt/preferred stock
due within twelve months 203 203
Short-term debt 619 619
Short-term debt - CSW Credit 493 493
Loan Notes 66 66
Accounts payable 438 438
Accrued taxes 85 85
Accrued interest 111 111
Other 231 231
--------------------------------
2,246 2,246
--------------------------------
DEFERRED CREDITS
Accumulated deferred income taxes 2,253 2,253
Investment tax credits 288 288
Other 167 167
--------------------------------
2,708 2,708
--------------------------------
$12,969 $0 $12,969
================================
<PAGE>
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF INCOME
FOR THE TWELVE MONTHS MARCH 31, 1997
UNAUDITED
(Millions)
OPERATING REVENUES $5,217
-----------
OPERATING EXPENSES AND TAXES
U.S. Electric fuel and purchased power 1,251
United Kingdom Cost of Sales 1,300
Operating and maintenance 1,031
Depreciation and amortization 467
Taxes, other than income 183
Income taxes 208
-----------
4,440
-----------
OPERATING INCOME 777
-----------
OTHER INCOME AND DEDUCTIONS (65)
-----------
INCOME BEFORE INTEREST CHARGES 712
-----------
INTEREST CHARGES
Interest on long-term debt 331
Interest on short-term debt and other 85
-----------
416
-----------
INCOME FROM CONTINUING OPERATIONS 296
-----------
DISCONTINUED OPERATIONS
Income from discontinued operations,
net of tax 4
Gain on the sale of discontinued
operations, net of tax 120
-----------
124
-----------
NET INCOME 420
Preferred stock dividends 18
-----------
NET INCOME FOR COMMON STOCK $402
===========
<PAGE>
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF RETAINED EARNINGS
FOR THE TWELVE MONTHS MARCH 31, 1997
UNAUDITED
(Millions)
RETAINED EARNINGS AT MARCH 31, 1996 $1,860
Add: Net income for common stock 402
-----------
2,262
-----------
Deduct: Common stock dividends 366
Retained earnings adjustment 0
-----------
RETAINED EARNINGS AT MARCH 31, 1997 $1,896
===========
<PAGE>
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
STATEMENT OF LONG-TERM DEBT OUTSTANDING
AS OF MARCH 31, 1997
UNAUDITED
(Millions)
CENTRAL POWER AND LIGHT COMPANY
First mortgage bonds -
Series J, 6-5/8%, due January 1, 1998 $28
Series L, 7%, due February 1, 2001 36
Series T, 7-1/2%, due December 15, 2014 112
Series AA, 7-1/2%, due March 1, 2020 50
Series BB, 6%, due October 1, 1997 200
Series CC, 7-1/4%, due October 1, 2004 100
Series DD, 7-1/8%, due December 1, 1999 25
Series EE, 7-1/2%, due December 1, 2002 115
Series FF, 6-7/8%, due February 1, 2003 50
Series GG, 7-1/8%, due February 1, 2008 75
Series HH, 6%, due April 1, 2000 100
Series II, 7-1/2%, due April 1, 2023 100
Series JJ, 7-1/2%, due May 1, 1999 100
Series KK, 6-5/8%, due July 1, 2005 200
Installment sales agreements -
Pollution control bonds
Series 1993, 6%, due July 1, 2028 120
Series 1995, 6-1/10%, due July 1, 2028 101
Series 1995, variable, due November 1, 2015 41
Series 1996, 6 1/8%, due June 1, 2020 6
Series 1996, 6 1/2%, due May 1, 2030 60
Unamortized discount (5)
Unamortized costs of reacquired debt (89)
Amount to be redeemed within one year (200)
----------
$1,325
----------
<PAGE>
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
STATEMENT OF LONG-TERM DEBT OUTSTANDING (Continued)
AS OF MARCH 31, 1997
UNAUDITED
(Millions)
PUBLIC SERVICE COMPANY OF OKLAHOMA
First mortgage bonds -
Series K, 7-1/4%, due January 1, 1999 $25
Series L, 7-3/8%, due March 1, 2002 30
Series S, 7-1/4%, due July 1, 2003 65
Series T, 7-3/8%, due December 1, 2004 50
Series U, 6-1/4%, due April 1, 2003 35
Series V, 7-3/8%, due April 1, 2023 100
Series W, 6-1/2%, due June 1, 2005 50
Long-term note
Series A-1, 5.89%, due December 15, 2000 10
Series A-2, 5.91%, due March 1, 2001 6
Series A-3, 6.02%, due March 1, 2001 5
Series A-4, 6.02%, due March 1, 2001 9
Series A-5, 6.43%, due March 30, 2000 10
Installment sales agreements -
Pollution control bonds
Series A, 5.9%, due December 1, 2007 35
Series 1996 6.0%, due June 1, 2020 12 *
Unamortized discount (4)
Unamortized costs of reacquired debt (18)
----------
* Rounded down from 12,660,000 $420
----------
<PAGE>
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
STATEMENT OF LONG-TERM DEBT OUTSTANDING (Continued)
AS OF MARCH 31, 1997
UNAUDITED
(Millions)
SOUTHWESTERN ELECTRIC POWER COMPANY
First mortgage bonds -
Series V, 7-3/4%, due June 1, 2004 $40
Series W, 6-1/8%, due September 1, 1999 40
Series X, 7%, due September 1, 2007 90
Series Y, 6-5/8%, due February 1, 2003 55
Series Z, 7-1/4%, due July 1, 2023 45
Series AA, 5-1/4%, due April 1, 2000 45
Series BB, 6-7/8%, due October 1, 2025 80
1976 Series A, 6.2%, due November 1, 2006 7
1976 Series B, 6.2%, due November 1, 2006 1
Installment sales agreements -
Pollution control bonds
1978 Series A, 6%, due January 1, 2008 14
1991 Series A, 8.2%, due August 1, 2011 17
1991 Series B, 6.9%, due November 1, 2004 12
Series 1992, 7.6%, due January 1, 2019 54
Series 1996, 6.1%, due April 1, 2018 82
Bank loan, variable rate, due June 15, 2000 50
Railcar lease obligations 10
Unamortized premium 1
Unamortized costs of reacquired debt (42)
Amount to be redeemed within one year (3)
----------
$598
----------
WEST TEXAS UTILITIES COMPANY
First mortgage bonds -
Series P, 7-3/4%, due July 1, 2007 25
Series Q, 6-7/8%, due October 1, 2002 35
Series R, 7%, due October 1, 2004 40
Series S, 6-1/8%, due February 1, 2004 40
Series T, 7-1/2%, due April 1, 2000 40
Series U, 6-3/8%, due October 1, 2005 80
Installment sales agreement -
Pollution control bonds
Series 1996, 6%, due June 1, 2020 44
Unamortized discount and premium (1)
Unamortized costs of reacquired debt (27)
----------
$276
----------
<PAGE>
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
STATEMENT OF LONG-TERM DEBT OUTSTANDING (Continued)
AS OF MARCH 31, 1997
UNAUDITED
(millions)
CSW U.K. GROUP
Long-term fixed rate loan, 8.25%, due December 23, 2003 $276
Long-term revolving credit facility, 6.35%, due December 12, 2001 82
Eurobond, 8-1/2%, due October 3, 2005 164
Eurobond, 8-7/8%, due September 27, 2006 164
Notes, 7.98%, due August 1, 2001 211
Notes, 8.75%, due August 1, 2006 211
Unamortized discount and premium (1)
----------
$1,107
----------
CENTRAL AND SOUTH WEST SERVICES, INC.
Term loan facility, Variable rate, due
December 1, 2001 $60
----------
$60
----------
CSW ENERGY, INC.
Senior Notes, 6.875%, due 2001 $200
----------
$200
----------
TOTAL CONSOLIDATED $3,986
==========
<PAGE>
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
STATEMENT OF PREFERRED STOCK OUTSTANDING
AS OF MARCH 31, 1997
UNAUDITED
(Millions)
NOT SUBJECT TO MANDATORY REDEMPTION
CENTRAL POWER AND LIGHT COMPANY
4.00% Series, 100,000 shares $10
4.20% Series, 75,000 shares 8
7.12% Series, 260,000 shares 26
8.72% Series, 500,000 shares 50
Auction Money Market, 750,000 shares 75
Auction Series A, 425,000 shares 42
Auction Series B, 425,000 shares 42
Issuance expense (3)
----------
$250
----------
PUBLIC SERVICE COMPANY OF OKLAHOMA
4.00% Series, 97,900 shares $10
4.24% Series, 100,000 shares 10
----------
$20
----------
SOUTHWESTERN ELECTRIC POWER COMPANY
5.00% Series, 75,000 shares $8
4.65% Series, 25,000 shares 2
4.28% Series, 60,000 shares 6
----------
$16
----------
WEST TEXAS UTILITIES COMPANY
4.40% Series, 60,000 shares 6
----------
Total Consolidated $292
==========
SUBJECT TO MANDATORY REDEMPTION
SOUTHWESTERN ELECTRIC POWER COMPANY
6.95% Series, 340,000 shares $34
Amount to be redeemed within one year (1)
----------
Total Consolidated $33
==========
<PAGE>
CENTRAL AND SOUTH WEST CORPORATION
BALANCE SHEETS
PER BOOKS AND PRO FORMA
AS OF MARCH 31, 1997
UNAUDITED
(Millions)
Per Pro Forma Pro
Books Adjustments Forma
--------------------------------
ASSETS NONE
FIXED ASSETS
Electric utility plant
General $1 $1
Less - Accumulated depreciation (1) (1)
--------------------------------
NET PLANT 0 0
INVESTMENTS IN COMMON STOCK
OF SUBSIDIARY COMPANIES (at equity) 3,982 3,982
--------------------------------
CURRENT ASSETS
Cash and temporary cash investments 33 33
Advances to affiliates 354 354
Accounts and interest receivable - Affiliated 60 60
Accounts receivable - Non-affiliated 1 1
Prepayments and other 2 2
--------------------------------
450 450
--------------------------------
DEFERRED CHARGES AND OTHER ASSETS 13 13
--------------------------------
$4,445 $0 $4,445
================================
CAPITALIZATION NONE
Common Stock Equity -
Common stock, $3.50 par value;
authorized 350,000,000 shares;
issued and outstanding 212,200,000 shares $743 $743
Paid-in capital 1,038 1,038
Retained earnings 1,896 1,896
Foreign currency translation and other 1 1
--------------------------------
Total Common Stock Equity 3,678 3,678
--------------------------------
Long-term debt 0 0
--------------------------------
Total Capitalization 3,678 3,678
--------------------------------
CURRENT LIABILITIES
Short-term debt 619 619
Accounts payable and other 153 153
--------------------------------
772 772
--------------------------------
DEFERRED CREDITS (5) (5)
--------------------------------
$4,445 $0 $4,445
================================
<PAGE>
CENTRAL AND SOUTH WEST CORPORATION
STATEMENT OF INCOME
FOR THE TWELVE MONTHS MARCH 31, 1997
UNAUDITED
(Millions)
INCOME
Equity in earnings of subsidiaries
Central Power and Light Company $114
Public Service Company of Oklahoma 33
Southwestern Electric Power Company 62
West Texas Utilities Company 16
SEEBOARD Investment 115
Transok, Inc. 4
CSW Credit, Inc. 8
CSW Energy, Inc. (9)
CSW Leasing, Inc. 0
CSW International, Inc. (1)
CSW Communications, Inc. (5)
Enershop Inc. (2)
Central and South West Services, Inc. 0
Other Income 29
----------
$364
----------
EXPENSES AND TAXES
General and administrative expenses 63
Depreciation and amortization expense 1
Interest expense 35
Taxes, other than income 1
Federal income taxes (18)
----------
82
----------
DISCONTINUED OPERATIONS
Gain on sale of discontinued operations, net of tax 120
----------
NET INCOME $402
==========
<PAGE>
CENTRAL POWER AND LIGHT COMPANY
BALANCE SHEETS
PER BOOKS AND PRO FORMA
AS OF MARCH 31, 1997
UNAUDITED
(Millions)
Per Pro Forma Pro
Books Adjustments Forma
--------------------------------
ASSETS NONE
FIXED ASSETS
Electric utility plant
Production $3,101 $3,101
Transmission 507 507
Distribution 969 969
General 273 273
Construction work in progress 106 106
Nuclear fuel 184 184
--------------------------------
5,140 5,140
Less - Accumulated depreciation
and amortization 1,736 1,736
--------------------------------
3,404 3,404
--------------------------------
CURRENT ASSETS
Cash and temporary cash investments 3 3
Accounts receivable 52 52
Under-recovered fuel costs 31 31
Materials and supplies, at average cost 77 77
Fuel inventory 12 12
Prepayments and other 80 80
--------------------------------
255 255
--------------------------------
DEFERRED CHARGES AND OTHER ASSETS
Deferred STP costs 487 487
Mirror CWIP asset 296 296
Income tax related regulatory assets, net 333 333
Other 96 96
--------------------------------
1,212 1,212
--------------------------------
$4,871 $0 $4,871
================================
<PAGE>
CENTRAL POWER AND LIGHT COMPANY
BALANCE SHEETS
PER BOOKS AND PRO FORMA
AS OF MARCH 31, 1997
UNAUDITED
(Millions)
Per Pro Forma Pro
Books Adjustment Forma
--------------------------------
CAPITALIZATION AND LIABILITIES NONE
CAPITALIZATION
Common stock, $25 par value;
authorized 12,000,000 shares;
issued and outstanding 6,755,535 shares $169 $169
Paid-in capital 405 405
Retained earnings 839 839
--------------------------------
Total common stock equity 1,413 1,413
Preferred stock
Not subject to mandatory redemption 250 250
Long-term debt 1,325 1,325
--------------------------------
Total capitalization 2,988 2,988
--------------------------------
CURRENT LIABILITIES
Long-term debt due within twelve months 200 200
Advances from affiliates 144 144
Accounts payable 45 45
Accrued taxes 23 23
Accumulated deferred income taxes 9 9
Accrued interest 36 36
Refund due customers 47 47
Other 59 59
--------------------------------
563 563
--------------------------------
DEFERRED CREDITS
Accumulated deferred income taxes 1,159 1,159
Investment tax credits 146 146
Other 15 15
--------------------------------
1,320 1,320
--------------------------------
$4,871 $0 $4,871
================================
<PAGE>
CENTRAL POWER AND LIGHT COMPANY
STATEMENT OF INCOME
FOR THE TWELVE MONTHS MARCH 31, 1997
UNAUDITED
(Millions)
ELECTRIC OPERATING REVENUE $1,362
-----------
OPERATING EXPENSES AND TAXES
Fuel 355
Purchased power 65
Other operating 302
Maintenance 58
Depreciation and amortization 152
Taxes, other than income 77
Income taxes 85
-----------
1,094
-----------
OPERATING INCOME 268
-----------
OTHER INCOME AND DEDUCTIONS
Other (12)
-----------
(12)
-----------
INCOME BEFORE INTEREST CHARGES 256
-----------
INTEREST CHARGES
Interest on long-term debt 110
Interest on short-term debt and other 18
-----------
128
-----------
NET INCOME 128
PREFERRED STOCK DIVIDENDS 14
-----------
NET INCOME FOR COMMON STOCK $114
===========
<PAGE>
CENTRAL POWER AND LIGHT COMPANY
STATEMENT OF RETAINED EARNINGS
FOR THE TWELVE MONTHS MARCH 31, 1997
UNAUDITED
(Millions)
RETAINED EARNINGS AT MARCH 31, 1996 $851
Add: Net income (loss) for common stock 114
-----------
965
Deduct: Common stock dividends 126
-----------
RETAINED EARNINGS AT MARCH 31, 1997 $839
===========
<PAGE>
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
PRO FORMA ADJUSTMENTS TO BALANCE SHEETS
MARCH 31, 1997
UNAUDITED
(Millions)
DR CR
---------------------
CENTRAL AND SOUTH WEST CORPORATION AND SUBSIDIARY COMPANIES
None
CENTRAL AND SOUTH WEST CORPORATION (CORPORATE)
None
CENTRAL POWER AND LIGHT COMPANY
None
<PAGE>
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
STATEMENT OF CHANGES
On April 24, 1997, PSO's business trust, PSO Capital I, sold to underwriters in
a negotiated offering $75 million, 8.00% Series A, Trust Originated Preferred
Securities due April 2037. The proceeds from the sale of these securities were
used by PSO to repay short-term debt, to reimburse PSO's treasury for the cost
of reacquiring approximately $14.5 million of 4.00% Series and 4.24% Series
preferred stock, to provide working capital and for other general corporate
purposes. Settlement of the transaction occurred on May 2, 1997. PSO Capital I
will be treated as a subsidiary of PSO whose only assets are the approximately
$73.3 million principal subordinated debentures issued by PSO. In addition to
PSO's obligation under the subordinated debentures, PSO has also agreed to a
security obligation which represents a full and unconditional guarantee of PSO
Capital I's trust obligations.
On April 30, 1997, SWEPCO's business trust, SWEPCO Capital I, sold to
underwriters in a negotiated offering $110 million, 7.875% Series A, Trust
Preferred Securities due April 2037. The proceeds from the sale of these
securities were used by SWEPCO to repay short-term debt, to reimburse SWEPCO's
treasury for the cost of reacquiring approximately $15.5 million of 4.28%
Series, 4.65% Series, 5.00% Series and 6.95% Series preferred stock, to provide
working capital and for other general corporate purposes . Settlement of the
transaction occurred on May 8, 1997. SWEPCO Capital I will be treated as a
subsidiary of SWEPCO whose only assets are the approximately $113.4 million
principal subordinated debentures issued by SWEPCO. In addition to SWEPCO's
oblig obligation under the subordinated debentures, SWEPCO has also agreed to a
security obligation which represents a full and unconditional guarantee of
SWEPCO Capital I's trust obligations.
On May 8, 1997, CPL's business trust, CPL Capital I, sold to underwriters in a
negotiated offering $150 million, 8.00% Series A, Quarterly Income Preferred
Securities due April 2037. The proceeds from the sale of these securities were
used by CPL to repay short-term debt, to reimburse CPL's treasury for the cost
of reacquiring approximately $87.5 million of 4.00% Series, 4.20% Series, 7.12%
Series and 8.72% Series preferred stock, to provide working capital and for
other general corporate purposes. Settlement of the transaction occurred on May
14, 1997. CPL Capital I will be treated as a subsidiary of CPL whose only assets
are the approximately $154.6 million principal subordinated debentures issued by
CPL. In addition to CPL's obligation under the subordinated debentures, CPL has
also agreed to a security obligation which represents a full and unconditional
guarantee of CPL Capital I's trust obligations.
Other than the financing activites described above, there have been no
significant changes in the financial statements of Central and South West
Corporation and subsidiary companies subsequent to March 31, 1996, other than
in the ordinary course of business.
<PAGE>
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
CAPITALIZATION RATIOS
PER BOOKS AND PRO FORMA
AS OF MARCH 31, 1997
Common
Stock Preferred Long-term
Equity Stock Debt
--------------------------------
Central and South West Corporation
and Subsidiary Companies
(Consolidated) Per books 46.2% 4.1% 49.7%
Central and South West Corporation
and Subsidiary Companies
(Consolidated) Pro forma 46.2% 4.1% 49.7%
Central and South West Corporation (Corporate)
Per books 100.0% 0.0% 0.0%
Central and South West Corporation (Corporate)
Pro forma 100.0% 0.0% 0.0%
Central Power and Light Company
Per books 47.3% 8.4% 44.3%
Central Power and Light Company
Pro forma 47.3% 8.4% 44.3%
<PAGE>
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The notes to consolidated financial statements included in Central and
South West Corporation's 1996 Combined Annual Report on Form 10-K are hereby
incorporated by reference and made a part of this report.
Page
Reference
1996 Combined Annual Report on Form 10-K pages 2-39 through 2-71
<TABLE> <S> <C>
<ARTICLE> OPUR1
<CIK> 0000018540
<NAME> CENTRAL AND SOUTH WEST CORPORATION & SUBS
<MULTIPLIER> 1,000,000
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1997
<PERIOD-END> Mar-31-1997 Mar-31-1997
<BOOK-VALUE> PER-BOOK PRO-FORMA
<TOTAL-NET-UTILITY-PLANT> 8,330 8,330
<OTHER-PROPERTY-AND-INVEST> 124 124
<TOTAL-CURRENT-ASSETS> 1,386 1,386
<TOTAL-DEFERRED-CHARGES> 508 508
<OTHER-ASSETS> 2,621 2,621
<TOTAL-ASSETS> 12,969 12,969
<COMMON> 743 743
<CAPITAL-SURPLUS-PAID-IN> 1,038 1,038
<RETAINED-EARNINGS> 1,923 1,923
<TOTAL-COMMON-STOCKHOLDERS-EQ> 3,704 3,704
33 33
292 292
<LONG-TERM-DEBT-NET> 3,888 3,888
<SHORT-TERM-NOTES> 0 0
<LONG-TERM-NOTES-PAYABLE> 90 90
<COMMERCIAL-PAPER-OBLIGATIONS> 1,112 1,112
<LONG-TERM-DEBT-CURRENT-PORT> 200 200
1 1
<CAPITAL-LEASE-OBLIGATIONS> 8 8
<LEASES-CURRENT> 2 2
<OTHER-ITEMS-CAPITAL-AND-LIAB> 3,639 3,639
<TOT-CAPITALIZATION-AND-LIAB> 12,969 12,969
<GROSS-OPERATING-REVENUE> 5,217 5,217
<INCOME-TAX-EXPENSE> 208 208
<OTHER-OPERATING-EXPENSES> 4,232 4,232
<TOTAL-OPERATING-EXPENSES> 4,440 4,440
<OPERATING-INCOME-LOSS> 777 777
<OTHER-INCOME-NET> (65) (65)
<INCOME-BEFORE-INTEREST-EXPEN> 712 712
<TOTAL-INTEREST-EXPENSE> 416 416
<NET-INCOME> 420 420
18 18
<EARNINGS-AVAILABLE-FOR-COMM> 402 402
<COMMON-STOCK-DIVIDENDS> 366 366
<TOTAL-INTEREST-ON-BONDS> 205 205
<CASH-FLOW-OPERATIONS> 843 843
<EPS-PRIMARY> 1.91 1.91
<EPS-DILUTED> 1.91 1.91
</TABLE>
<TABLE> <S> <C>
<ARTICLE> OPUR1
<SUBSIDIARY>
<NUMBER> 002
<NAME> CENTRAL AND SOUTH WEST CORP.
<MULTIPLIER> 1,000,000
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1997
<PERIOD-END> Mar-31-1997 Mar-31-1997
<BOOK-VALUE> PER-BOOK PRO-FORMA
<TOTAL-NET-UTILITY-PLANT> 0 0
<OTHER-PROPERTY-AND-INVEST> 3,982 3,982
<TOTAL-CURRENT-ASSETS> 450 450
<TOTAL-DEFERRED-CHARGES> 0 0
<OTHER-ASSETS> 13 13
<TOTAL-ASSETS> 4,445 4,445
<COMMON> 743 743
<CAPITAL-SURPLUS-PAID-IN> 1,038 1,038
<RETAINED-EARNINGS> 1,897 1,897
<TOTAL-COMMON-STOCKHOLDERS-EQ> 3,678 3,678
0 0
0 0
<LONG-TERM-DEBT-NET> 0 0
<SHORT-TERM-NOTES> 0 0
<LONG-TERM-NOTES-PAYABLE> 0 0
<COMMERCIAL-PAPER-OBLIGATIONS> 619 619
<LONG-TERM-DEBT-CURRENT-PORT> 0 0
0 0
<CAPITAL-LEASE-OBLIGATIONS> 0 0
<LEASES-CURRENT> 0 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 148 148
<TOT-CAPITALIZATION-AND-LIAB> 4,445 4,445
<GROSS-OPERATING-REVENUE> 0 0
<INCOME-TAX-EXPENSE> (18) (18)
<OTHER-OPERATING-EXPENSES> 65 65
<TOTAL-OPERATING-EXPENSES> 47 47
<OPERATING-INCOME-LOSS> (47) (47)
<OTHER-INCOME-NET> 364 364
<INCOME-BEFORE-INTEREST-EXPEN> 317 317
<TOTAL-INTEREST-EXPENSE> 35 35
<NET-INCOME> 402 402
0 0
<EARNINGS-AVAILABLE-FOR-COMM> 402 402
<COMMON-STOCK-DIVIDENDS> 366 366
<TOTAL-INTEREST-ON-BONDS> 0 0
<CASH-FLOW-OPERATIONS> 665 665
<EPS-PRIMARY> 1.91 1.91
<EPS-DILUTED> 1.91 1.91
</TABLE>
<TABLE> <S> <C>
<ARTICLE> OPUR1
<SUBSIDIARY>
<NUMBER> 003
<NAME> CENTRAL POWER AND LIGHT COMPANY
<MULTIPLIER> 1,000,000
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1997
<PERIOD-END> Mar-31-1997 Mar-31-1997
<BOOK-VALUE> PER-BOOK PRO-FORMA
<TOTAL-NET-UTILITY-PLANT> 3,404 3,404
<OTHER-PROPERTY-AND-INVEST> 2 2
<TOTAL-CURRENT-ASSETS> 255 255
<TOTAL-DEFERRED-CHARGES> 6 6
<OTHER-ASSETS> 1,204 1,204
<TOTAL-ASSETS> 4,871 4,871
<COMMON> 169 169
<CAPITAL-SURPLUS-PAID-IN> 405 405
<RETAINED-EARNINGS> 839 839
<TOTAL-COMMON-STOCKHOLDERS-EQ> 1,413 1,413
0 0
250 250
<LONG-TERM-DEBT-NET> 1,325 1,325
<SHORT-TERM-NOTES> 114 114
<LONG-TERM-NOTES-PAYABLE> 0 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0 0
<LONG-TERM-DEBT-CURRENT-PORT> 200 200
0 0
<CAPITAL-LEASE-OBLIGATIONS> 0 0
<LEASES-CURRENT> 0 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 1,569 1,569
<TOT-CAPITALIZATION-AND-LIAB> 4,871 4,871
<GROSS-OPERATING-REVENUE> 1,362 1,362
<INCOME-TAX-EXPENSE> 85 85
<OTHER-OPERATING-EXPENSES> 1,009 1,009
<TOTAL-OPERATING-EXPENSES> 1,094 1,094
<OPERATING-INCOME-LOSS> 268 268
<OTHER-INCOME-NET> (12) (12)
<INCOME-BEFORE-INTEREST-EXPEN> 256 256
<TOTAL-INTEREST-EXPENSE> 128 128
<NET-INCOME> 128 128
14 14
<EARNINGS-AVAILABLE-FOR-COMM> 114 114
<COMMON-STOCK-DIVIDENDS> 126 126
<TOTAL-INTEREST-ON-BONDS> 110 110
<CASH-FLOW-OPERATIONS> 441 441
<EPS-PRIMARY> 0.00 0.00
<EPS-DILUTED> 0.00 0.00
</TABLE>
