EXHIBIT 10.27.7
Execution Copy
1996 AMENDATORY AGREEMENT
This Agreement, dated as of the 4th day of December, 1996, is
entered into by and between Connecticut Yankee Atomic Power Company
("Connecticut Yankee" or "Seller") and The Connecticut Light and Power
Company ("Purchaser").
For good and valuable consideration, the receipt of which is hereby
acknowledged, it is agreed as follows:
1. BASIC UNDERSTANDINGS
Connecticut Yankee was organized in 1962 to provide for the supply
of power to its sponsoring utility companies, including the Purchaser
(collectively the "Purchasers"). It constructed a nuclear electric
generating unit, having a net capability of approximately 582 megawatts
electric (the "Unit") at a site in Haddam Neck, Connecticut.
Connecticut Yankee was issued a full-term, Facility Operating License
for the Unit by the Nuclear Regulatory Commission (which, together with
any successor agencies, is hereafter called the "NRC"), which license is
now dated to expire on June 29, 2007. The Unit has been in commercial
operation since January 1, 1968.
The Unit was conceived to supply economic power on a cost of
service formula basis to the Purchasers. Connecticut Yankee and the
Purchaser are parties to a Power Contract dated as of July 1, 1964
("Initial Power Contract"). Pursuant to the Initial Power Contract and
other similar contracts (collectively, the "Initial Power Contracts")
between Connecticut Yankee and the other Purchasers, Connecticut Yankee
contracted to supply to the Purchasers all of the capacity and electric
energy available from the Unit for a term of thirty (30) years following
January 1, 1968.
Connecticut Yankee and the Purchaser are also parties to an
Additional Power contract, dated as of April 30, 1984 ("Additional Power
Contract"). The Additional Power Contract and other similar contracts
(collectively, the "Additional Power Contracts") between Connecticut
Yankee and the other Purchasers provide for an operative term stated to
commence on January 1, 1998 (when the Initial Power Contracts terminate)
and extending until a date (the "End of Term Date") which is 30 days
after the later of the date on which the last of the financial
obligations of Connecticut Yankee has been extinguished or the date on
which Connecticut Yankee is finally relieved of any obligations under
the last of the licenses (operating or possessory) which it holds, or
hereafter receives, from the NRC wit+ respect to the Unit. The
Additional Power Contracts also provide, in the event of their earlier
cancellation, for the survival of the decommissioning cost obligation
and for the applicable provisions thereof to remain in effect to permit
final billings of costs incurred prior to such cancellation.
Pursuant to the Power Contract and the Additional Power Contract,
the Purchaser is entitled and obligated to take its entitlement
percentage of the capacity and net electrical output of the Unit during
the service life of the Unit and is obligated to pay therefor monthly
its entitlement percentage of Connecticut Yankee's cost of service,
including decommissioning costs, whether or not the Unit is operated.
Connecticut Yankee and the Purchaser are also parties to a 1987
Supplementary Power Contract, dated as of April 1, 1987 ("1987
Supplementary Power Contract"). The 1987 Supplementary Power Contract
and other similar contracts (collectively, the "1987 Supplementary Power
Contracts) between Connecticut Yankee and the other Purchasers restate
and supersede earlier Supplementary Power Contracts and Agreements
Amending Supplementary Power Contracts between Connecticut Yankee and
the Purchasers. Pursuant to the 1987 Supplementary Power Contracts, the
Purchasers make monthly certain supplementary payments to Connecticut
Yankee during the term of the Initial Power Contracts and Additional
Power Contracts.
On December 4, 1996, the board of directors of Connecticut Yankee,
after conducting a thorough review of the economics of continued
operation of the Unit for the remainder of the term of the Facility
Operating License for the Unit in light of other alternatives available
to Connecticut Yankee and the Purchasers, determined that the Unit
should be permanently shut down effective December 4, 1996. The
Purchaser concurs in that decision.
As a consequence of the shutdown decision, Connecticut Yankee and
the Purchaser propose at this time to amend the 1987 Supplementary Power
Contract and the Additional Power Contract in various respects in order
to clarify and confirm provisions for the recovery under said contracts
of the full costs previously incurred by Connecticut Yankee in providing
power from the Unit during its useful life and of all costs of
decommissioning the Unit, including the costs of maintaining the Unit in
a safe condition following the shutdown and prior to its decontamination
and dismantlement.
Connecticut Yankee and each of the other Purchasers are entering
into agreements which are identical to this Agreement except for
necessary changes in the names of the parties.
2. PARTIES' CONTRACTUAL COMMITMENTS
Connecticut Yankee reconfirms its existing contractual obligations
to protect the Unit, to maintain in effect certain insurance and to
prepare for and implement the decommissioning of the Unit in accordance
with applicable laws and regulations. Consistent with public safety,
Connecticut Yankee shall use its best efforts to accomplish the shutdown
of the Unit, the protection and any necessary maintenance of the Unit
after shutdown and the decommissioning of the Unit in a cost-effective
manner and shall use its best efforts to ensure that any required
storage and disposal of the nuclear fuel remaining in the reactor at
shutdown and all spent nuclear fuel or other radioactive materials
resulting from operating of the Unit are accomplished consistent with
public health and safety considerations and at the lowest practicable
cost. The Purchaser reconfirms its obligations under its Initial Power
Contract, Additional Power Contract and 1987 Supplementary Power
Contract to pay its entitlement percentage of Connecticut Yankee's costs
as deferred payment in connection with the capacity and net electrical
output of the Unit previously delivered by Connecticut Yankee and agrees
that the decision to shut down the Unit described in Section 1 hereof
does not give rise to any cancellation right under Section 9 of the
Initial Power Contract or Section 10 of the Additional Power Contract.
Except as expressly modified by this Agreement, the provisions of
the Additional Power Contract and the 1987 Supplementary Power Contract
remain in full force and effect, recognizing that the mutually accepted
decision to shut down the Unit renders moot those provisions which by
their terms relate solely to continuing operation of the Unit.
3. AMENDMENT OF PAYMENT PROVISIONS OF ADDITIONAL POWER CONTRACT AND
1987 SUPPLEMENTARY POWER CONTRACT
A. Section 2 of the Additional Power Contract is hereby amended
by deleting the first two paragraphs thereof and by inserting in lieu
thereof the following:
This contract shall become effective upon receipt by the Purchaser
of notice that Connecticut Yankee has entered into Additional Power
Contracts, as contemplated by Section 1 above, with each of the
other Purchasers. The operative term of this contract shall
commence on such date as may be authorized by the FERC and shall
terminate on the date (the "End of Term Date") which is the later
to occur of (i) 30 days after the date on which the last of the
financial obligations of Connecticut Yankee which constitute
elements of the payment calculated pursuant to Section 7 of this
contract has been extinguished by Connecticut Yankee, or (ii) 30
days after the date on which Connecticut Yankee is finally relieved
of all obligations under the last of any licenses (operating and/or
possessory) which it now holds from, or which may hereafter be
issued to it by, the NRC with respect ro the Unit under applicable
provisions of the Atomic Energy Act of 1954, as amended from time
to time (the "Act").
B. The second paragraph of Section 4 of the Additional Power
Contract is amended by deleting the phrase "Second Supplementary Power
Contracts" wherever it appears and inserting in lieu thereof the phrase
"1987 Supplementary Power Contract".
C. The first paragraph of Section 1 of the Additional Power
Contract is amended to read as follows:
With respect to each month commencing on or after the commencement
of the operative term of this contract, whether or not this
contract continues fully or partially in effect, the Purchaser will
pay Connecticut Yankee as deferred payment for the capacity and
output of the Unit provided to the Purchaser by Connecticut Yankee
prior to the permanent shutdown of the Unit on December 4, 1996, to
the extent not otherwise paid in accordance with the Power
Contract, but without duplication:
D. The eighth paragraph of Section 7 of the Additional Power
Contract is amended by changing the period at the end to a comma and
inserting:
, but including for purposes of this contract:
(i) with respect to each month until the commencement of
decommissioning of the Unit, the Purchaser's entitlement
percentage of all expenses related to the storage or disposal
of nuclear fuel or other radioactive materials, and all
expenses related to protection and maintenance of the Unit
during such period, including to the extent applicable all of
the various sorts of expenses included in the definition of
"Decommissioning Expenses", to the extent incurred during the
period prior to the commencement of decommissioning;
(ii) with respect to each month until expenses associated with
disposal of pre-April 7, 1983 spent nuclear fuel have been
fully covered by amounts which have been collected from
Purchasers and paid to a segregated fund as contemplated by
Section 8 of the 1987 Supplementary Power Contract, dated as
of April l, 1987, between Connecticut Yankee and the
Purchaser, as amended (the "1987 Contract"), the Purchaser's
entitlement percentage of previously uncollected expenses
associated with disposal of such prior spent nuclear fuel, as
determined in accordance with Section 10 of the 1987
Contract; and
(iii) with respect to each month until End of License Term, the
Purchaser's entitlement percentage of monthly amortization of
(a) the amount of any unamortized deferred expenses, as
permitted from time to time by the Federal Energy Regulatory
Commission or its successor agency, plus (b) the remaining
unamortized amount of Connecticut Yankee's investment in
plant, nuclear fuel and materials and supplies and other
assets. Such amortization shall be accrued at a rate
sufficient to amortize fully such unamortized deferred
expenses and Connecticut Yankee's investments in plant,
nuclear fuel and materials and supplies or other assets over
a period extending to June 29, 2007, PROVIDED, that if during
any calendar month ending on or before December 31, 2000
either of the following events shall occur: (a) Connecticut
Yankee shall become insolvent or (b) Connecticut Yankee shall
be unable, from available cash or other sources, to meet when
due during such month its obligations to pay principal,
interest, premium (if any) or other fees with respect to any
of its indebtedness of money borrowed, then Connecticut
Yankee may adjust upward the accrual for amortization of the
unrecovered investment for such month to an amount not
exceeding the applicable maximum level specified in Appendix
A hereto, provided that concurrently therewith the net Unit
investment shall be reduced by an amount equal to the amount
of such adjustment.
As used herein, "End of License Term" means June 29, 2007 or such
later date as may be fixed, by amendment to the NRC Facility
Operating License for the Unit, as the end of the term of the
Facility Operating License.
E. The definitions in Section 7 of the Additional Power Contract
and in Section 3 of the 1987 Supplementary Power Contract of "Total
Decommissioning Costs" and "Decommissioning Expenses" are hereby amended
to read as follows:
"Total Decommissioning Costs" for any month shall mean the sum of
(x) an amount equal to all accruals in such month to any reserve,
as from time to time established by Connecticut Yankee and approved
by its board of directors, to provide for the ultimate payment of
the Decommissioning Expenses of the Unit, plus (y), during the
Decommissioning Period, the Decommissioning Expenses for the month,
To the extent such Decommissioning Expenses are not paid with funds
from such reserve, plus (z) Decommissioning Tax Liability for the
month. It is understood (i) that funds received pursuant to clause
(x) may be held by Connecticut Yankee or by an independent trust or
other separate fund, as determined by said board of directors, (ii)
that, upon compliance with applicable regulatory requirements, the
amount, custody and/or timing of such accruals may from time to
time during the term hereof be modified by said board of directors
in its discretion or to comply with applicable statutory or
regulatory requirements or to reflect changes in the amount,
custody or timing of anticipated Decommissioning Expenses, and
(iii) that the use of the term "to decommission" herein encompasses
compliance with all requirements of the NRC for permanent cessation
of operation of a nuclear facility and any other activities
reasonably related thereto, including provision for the interim
storage of spent nuclear fuel.
"Decommissioning Expenses" shall include all expenses of
decommissioning the Unit, and all expenses relating to ownership
and protection of the Unit during the Decommissioning Period, and
Shall also include the following:
(1) All costs and expenses of any NRC-approved method of removing
the Unit from service, including without limitation:
dismantling, mothballing and entombment of the Unit; removing
nuclear fuel and other radioactive material to temporary
and/or permanent storage sites; construction, operation,
maintenance and dismantling of a spent fuel storage facility;
decontaminating, restoring and supervising the site; and any
costs and expenses incurred in connection with proceedings
before governmental authorities relating to any authorization
to decommission the Unit or remove the Unit from service;
(2) All costs of labor and services, whether directly or
indirectly incurred, including without limitation, services of
foremen, inspectors, supervisors, surveyors, engineers,
security personnel, counsel and accountants, performed or
rendered in connection with the decommissioning of the Unit
and the removal of the Unit from service, and all costs of
materials, supplies, machinery, construction equipment and
apparatus acquired or used (including rental charges for
machinery, equipment or apparatus hired) for or in connection
with the decommissioning of the Unit and the removal of the
Unit from service, and all administrative costs, including
services of counsel and financial advisers of any applicable
independent trust or other separate fund; it being understood
that any amount, exclusive of proceeds of insurance, realized
by Connecticut Yankee as salvage on any machinery,
construction equipment and apparatus, the cost of which was
charged to Decommissioning Expense, shall be treated as a
reduction of the amounts otherwise chargeable on account of
the costs of decommissioning of the Unit; and
(3) All overhead costs applicable to the Unit during the
Decommissioning Period, or accrued during such period,
including without limiting the generality of the foregoing,
taxes (other than taxes on or in respect of income), charges,
license fees, excises and assessments, casualties, health care
costs, pension benefits and other employee benefits, surety
bond premiums and insurance premiums.
F. Section 7 of the Additional Power Contract and Section 3 of
the 1987 Supplementary Power Contract are each hereby amended by adding
the following new paragraph after the definition of "Decommissioning Tax
Liability":
Decommissioning Period" shall mean the period commencing with the
notification by Connecticut Yankee to the NRC of a decision of the
board of directors of Connecticut Yankee to cease permanently
the operation of the Unit for the purpose of producing electric
energy and ending with the date when Connecticut Yankee has
completed the decommissioning of the Unit and the restoration of
the site and has been relieved of all its obligations under the
last of any licenses issued to it by the NRC.
G. The first sentence of Section 8 of the Additional Power
Contract is hereby amended to read as follows:
Connecticut Yankee will bill the Purchaser, no later than ten (10)
days after the end of any month, for all amounts payable by the
Purchaser with respect to such particular month pursuant to Section
7 hereof.
H. Section 8 of the Additional Power Contract and Section 4 of
the 1987 Supplementary Power Contract are each amended to delete the
name "The Connecticut Bank and Trust Company, National Association" and
substitute "Fleet National Bank".
I. Section 5 of the 1987 Supplementary Power Contract is
amended to read as follows:
5. DECOMMISSIONING FUND
Connecticut Yankee agrees to pay to, or cause to be paid to,
the Connecticut Yankee Trust or any successor trust approved by
the board of directors of Connecticut Yankee all funds
collected pursuant to Section 3 under clause (x) of the
definition of "Total Decommissioning Costs".
J. Section 10 of the Additional Power Contract is amended
to read as follows:
10. CANCELLATION OF CONTRACT
If either
(i) the Unit is damaged to the extent of being completely or
substantially completely destroyed, or
(ii) the Unit is taken by exercise of the right of eminent
domain or a similar right or power,
then and in any such case, the Purchaser may cancel the provisions
of this contract, except that in all cases other than those
described in clause (ii) above, the Purchaser shall be obligated to
continue to make the payments of Total Decommissioning Costs and
the other payments required by Section 7 and the provisions of that
Section and the related provisions of this contract shall remain in
full force and effect until the End of Term Date, it being
recognized that the costs which Purchaser is required to pay
pursuant to Section 7 represent deferred payments in connection
with power heretofore delivered by Connecticut Yankee hereunder.
Such cancellation shall be effected by written notice given by the
Purchaser to Connecticut Yankee. In the event of such
cancellation, all continuing obligations of the parties hereunder
as to subsequently incurred costs of Connecticut Yankee other than
the obligations of the Purchaser to continue to make the payments
required by Section 7 shall cease forthwith. Notwithstanding the
foregoing, the applicable provisions of this contract shall
continue in effect after the cancellation hereof to the extent
necessary to permit final billings and adjustments hereunder with
respect to obligations incurred through the date of cancellation
and the collection thereof. Any dispute as to the Purchaser's
right to cancel this contract pursuant to the foregoing provisions
shall be referred to arbitration in accordance with the provisions
of Section 13.
Notwithstanding anything in this contract elsewhere contained, the
Purchaser may cancel this contract or be relieved of its
obligations to make payments hereunder only as provided in the next
preceding paragraph of this Section 10. Further, if for reasons
beyond Connecticut Yankee's reasonable control, deliveries are not
made as contemplated by this contract, Connecticut Yankee shall
have no liability to the Purchaser on account of such non-delivery.
K. Section 2 of the 1987 Supplementary Power Agreement is amended
to change the date in the definitions of "operating expenses" and "M"
from "May 26, 2004" to "June 29, 2007".
5. EFFECTIVE DATE
This Agreement shall become effective upon receipt by the Purchaser
of notice that Connecticut Yankee has entered into 1996 Amendatory
Agreements, as contemplated by Section 1 hereof, with each of the other
Purchasers.
6. INTERPRETATION
The interpretation and performance of this Agreement shall be in
accordance with and controlled by the laws of the State of Connecticut.
7. ADDRESSES
Except as the parties may otherwise agree, any notice, request,
bill or other communication from one party to the other relating to this
Agreement, or the rights, obligations or performance of the parties
hereunder, shall be in writing and shall be effective upon delivery to
the other party. Any such communication shall be considered as duly
delivered when mailed to the respective post office address of the other
party shown following the signatures of such other party hereto, or such
other post office address as may be designated by written notice given
in the manner as provided in this Section.
8. CORPORATE OBLIGATIONS
This Agreement is the corporate act and obligation of the parties
hereto.
9. COUNTERPARTS
This Agreement may be executed in any number of counterparts and
each executed counterpart shall have the same force and effect as an
original instrument and as if all the parties to all of the counterparts
had signed the same instrument. Any signature page of this Agreement
may be detached from any counterpart without impairing the legal effect
of any signatures thereon, and may be attached to another counterpart of
this Agreement identical in form hereto but having attached to it one or
more signature pages.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amendatory
Agreement by their respective duly authorized officers as of the day and
year first named above.
CONNECTICUT YANKEE ATOMIC POWER COMPANY
By /s/ John B. Keane
JOHN B. KEANE
Vice President and Treasurer
Address: 107 Selden Street
Berlin, CT 06037
THE CONNECTICUT LIGHT AND POWER COMPANY
By /s/ John B. Keane
J0HN B. KEANE
Vice President and Treasurer
Address: 107 Selden Street
Berlin, CT 06037
<PAGE>
Appendix A to
1996 Amendatory Agreement
MAXIMUM AMORTIZATION SCHEDULE
If the event occurs during the twelve
months ending: Maximum Amortization Accrual
December 31, 1997 $100,000,000.00
December 31, 1998 $ 80,000,000.00
December 31, 1999 $ 40,000,000.00
December 31, 2000 $ 20,000,000.00
