SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form U-1
APPLICATION OR DECLARATION
under
The Public Utility Holding Company Act of 1935
GEORGIA POWER COMPANY
333 Piedmont Avenue, N.E.
Atlanta, Georgia 30308
(Name of company or companies filing this statement
and addresses of principal executive offices)
THE SOUTHERN COMPANY
(Name of top registered holding company parent
of each applicant or declarant)
Judy M. Anderson, Vice President and Corporate Secretary
Georgia Power Company
333 Piedmont Avenue, N.E.
Atlanta, Georgia 30308
(Names and addresses of agents for service)
The Commission is requested to mail signed copies of all
orders, notices and communications to:
W. L. Westbrook, Financial Vice President
The Southern Company
64 Perimeter Center East
Atlanta, Georgia 30346
John D. McLanahan, Esq.
Troutman Sanders
Suite 5200
NationsBank Plaza
600 Peachtree Street
Atlanta, Georgia 30308-2216
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INFORMATION REQUIRED
Item 1. Description of Proposed Transaction.
Georgia Power Company ("GPC") is a wholly-owned subsidiary
of The Southern Company, a registered holding company under the
Public Utility Holding Company Act of 1935. Florida Power
Corporation ("FPC") is a corporation organized and existing under
the laws of the State of Florida.
1.1 GPC proposes to purchase from FPC a percentage
undivided ownership interest in the Intercession City Facility
Combustion Turbine (the "Facility") pursuant to the Intercession
City Siemens Unit Purchase and Ownership Participation Agreement
dated as of June 8, 1994 between GPC and FPC (the "Ownership
Agreement") and the Intercession City Siemens Unit Step-Up
Transformer Purchase Agreement dated as of June 8, 1994 between
GPC and FPC (the "Step-Up Transformer Agreement"). The Facility
includes one complete Siemens V84.3 combustion turbine-generating
unit and a step-up transformer. At the closing, which is
currently scheduled to occur in January 1996, FPC will sell and
transfer to GPC and GPC will purchase from FPC a one-third
undivided ownership interest in the Facility, and FPC will
furnish to GPC a release from any and all mortgages, deeds to
secure debt or other security interests with respect to GPC's
undivided ownership interest in the Facility.
1.2 The purchase price for the assets to be acquired by GPC
at the closing will be one-third of the costs of construction
incurred with respect to the Facility which are currently
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estimated to be $13,137,680 (the "Purchase Price"). To such
amount shall be added an amount to compensate FPC for federal and
state income taxes payable due to differences in book and tax
basis of the equity component of the allowance for funds used
during construction with respect to the sale by FPC of such
undivided ownership interest in the Facility (which is
approximately $40,000). At the closing, GPC also shall pay FPC
the use of common facilities during the construction and testing
period (which is stipulated to be $87,500) and carrying charges
with respect to the fuel inventory maintained during the testing
period (which is approximately $9,491). FPC will adjust the
Purchase Price within one hundred eighty (180) days after the
closing to account for any necessary true-ups and inform GPC of
any amounts to be reimbursed to GPC or any amounts owed by GPC
with respect to the Purchase Price.
1.3 Pursuant to the Long Term Lease Agreement dated as of
June 8, 1994, between GPC and FPC, FPC shall lease to GPC an
undivided one-third interest in the real property on which the
Facility will be developed. The annual rent for the leasehold
interests conveyed to GPC shall be $300.00 per year plus all
Florida sales taxes applicable thereto.
1.4 The Facility will be managed, controlled, operated and
maintained by FPC on its own behalf and as agent for GPC in
accordance with the terms and conditions set forth in the
Ownership Agreement and the Intercession City Siemens Unit
Operating Agreement dated as of June 8, 1994 between GPC and FPC
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(the "Operating Agreement"). FPC and GPC shall pay all future
costs of construction on a pro rata basis based on their
percentage undivided ownership interests in the Facility at the
time such costs are incurred. FPC and GPC will share operating
costs and fuel costs as follows: fixed operation and maintenance
costs and fixed fuel costs shall be allocated between FPC and GPC
in proportion to their respective percentage undivided ownership
interests in the Facility; variable operation and maintenance
costs and variable fuel costs incurred by FPC during the months
of June, July, August and September (the "Summer Period") shall
be allocated solely to GPC; and variable operation and
maintenance costs and variable fuel costs incurred by FPC during
the months of October, November, December, January, February,
March, April and May (the "Winter Period") shall be allocated
solely to FPC. In addition, GPC will pay a share of the monthly
administrative and general costs of operating the Facility
pursuant to the terms of the Operating Agreement.
1.5 GPC will be entitled to the net capacity and the net
energy output of the Facility at all times during the Summer
Period. FPC will be entitled to the net capacity and the net
energy output of the Facility at all times during the Winter
Period.
1.6 The Facility is currently scheduled to go into
commercial operation in January 1996.
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Item 2. Fees, Commission and Expenses.
The fees and expenses to be paid or incurred, directly or
indirectly, in connection with the proposed transactions will be
filed by amendment.
Item 3. Applicable Statutory Provisions.
The proposed purchase by GPC from FPC is subject to Sections
9(a)(1) and 10 of the Act and Rule 44 thereunder. The proposed
transaction will be carried out in accordance with the procedures
specified in Rule 23, pursuant to an order of the Commission with
respect thereto.
Item 4. Regulatory Approval.
The Georgia Public Service Commission has issued a
certificate of public convenience and necessity for the Facility.
FPC's sale of the step-up transformer pursuant to the Step-Up
Transformer Agreement is subject to the jurisdiction of the
Federal Energy Regulatory Commission ("FERC"). Such approval was
received by Order dated November 8, 1994. Approval of the FERC
is also required for certain transmission agreements related to
this transaction which was received by letter dated October 5,
1994. The proposed transaction is not subject to the
jurisdiction of any federal commission other than the FERC as
aforesaid and the Securities and Exchange Commission.
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Item 5. Procedure.
GPC requests that the Commission's order be issued as soon
as the rules will allow, and that there be no thirty-day waiting
period between the issuance of the Commission's order and the
date on which it is to become effective. GPC hereby waives a
recommended decision by a hearing officer or other responsible
officer of the Commission and hereby consents that the Division
of Investment Management may assist in the preparation of the
Commission's decision and/or Order herein, unless such division
opposes the matters covered hereby.
Item 6. Exhibits and Financial Statements.
(a) Exhibits
A None
B-1 Intercession City Siemens Unit Purchase and
Ownership Participation Agreement dated as of
June 8, 1994, between FPC and GPC.
B-2 Intercession City Siemens Unit Operating
Agreement dated as of June 8, 1994, between
FPC and GPC.
B-3 Intercession City Siemens Unit Step-Up
Transformer Purchase Agreement dated as of
June 8, 1994, between GPC and FPC.
B-4 Long Term Lease Agreement dated as of June 8,
1994, between GPC and FPC.
C None
D-1 Relevant Excerpts from the Georgia Power
Company Application for Certification of the
Intercession City Combustion Turbine Project.
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D-2 Certificate of Public Convenience and
Necessity: Intercession City CT Project, No.
GPC-3-SS.
E Map showing the interconnection relationship
of the properties of FPC with properties of
GPC. (To be filed by amendment.)
F Opinion of Troutman Sanders LLP. (To be filed
by amendment.)
(b) Financial Statements
No financial statements are filed herewith since the
financial condition of GPC is not material to the proposed
transaction.
Item 7. Information as to Environmental Effects.
(a) In view of the nature of the proposed transactions
described in Item 1 hereof, the Commission's action in these
matters will not constitute any major federal action
significantly affecting the quality of the human environment.
(b) No other federal agency has prepared or is preparing an
environmental impact statement with regard to the proposed
transactions.
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SIGNATURE
Pursuant to the requirements of the Public Utility Holding
Company Act of 1935, the undersigned company has duly caused this
statement to be signed on its behalf by the undersigned thereunto
duly authorized.
Date: July 28, 1995
GEORGIA POWER COMPANY
By: /s/Wayne Boston
Wayne Boston
Assistant Secretary
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EXHIBIT B-1
INTERCESSION CITY SIEMENS UNIT
PURCHASE AND OWNERSHIP
PARTICIPATION AGREEMENT
between
GEORGIA POWER COMPANY
and
FLORIDA POWER CORPORATION
Dated as of June 8, 1994
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INTERCESSION CITY SIEMENS UNIT
PURCHASE AND OWNERSHIP PARTICIPATION AGREEMENT
TABLE OF CONTENTS
PAGE
R E C I T A L S: . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
OPERATIVE TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . 2
(a) GPC Representations and Warranties . . . . . . . . . . . . . 2
(i) Organization and Existence . . . . . . . . . . . . . . 2
(ii) Due Authorization . . . . . . . . . . . . . . . . . . . 2
(iii) Litigation . . . . . . . . . . . . . . . . . . . . . . 2
(iv) No Material Violation; No Material Impairment . . . . . 3
(v) Approvals . . . . . . . . . . . . . . . . . . . . . . . 3
(b) FPC Representations and Warranties . . . . . . . . . . . . . 4
(i) Organization and Existence . . . . . . . . . . . . . . 4
(ii) Due Authorization . . . . . . . . . . . . . . . . . . . 4
(iii) Litigation . . . . . . . . . . . . . . . . . . . . . . 4
(iv) No Material Violation; No Material Impairment . . . . . 5
(v) Approvals . . . . . . . . . . . . . . . . . . . . . . . 5
3. PURCHASE BY GPC OF AN UNDIVIDED OWNERSHIP INTEREST IN THE
FACILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(a) Sale Of Assets . . . . . . . . . . . . . . . . . . . . . . . 5
(b) Purchase Price and Payment . . . . . . . . . . . . . . . . . 6
(c) Closing . . . . . . . . . . . . . . . . . . . . . . . . 8
(d) Option To Purchase Additional Intercession City Facility
Generating Unit . . . . . . . . . . . . . . . . . . . . . . . 9
4. AGENCY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(a) Appointment . . . . . . . . . . . . . . . . . . . . . . . . . 10
(b) Authority and Responsibility . . . . . . . . . . . . . . . . 11
(c) Environmental Costs . . . . . . . . . . . . . . . . . . . . . 12
(d) Management and Construction Audits . . . . . . . . . . . . . 14
(e) Right To Copies . . . . . . . . . . . . . . . . . . . . . . . 14
(f) Confidentiality of Information . . . . . . . . . . . . . . . 15
(g) Right of Inspection . . . . . . . . . . . . . . . . . . . . . 16
(h) Record Keeping . . . . . . . . . . . . . . . . . . . . . . . 16
(i) Non-Discrimination . . . . . . . . . . . . . . . . . . . . . 17
5. OWNERSHIP, RIGHTS AND OBLIGATIONS . . . . . . . . . . . . . . . . . 17
(a) Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(b) Alienation and Assignment . . . . . . . . . . . . . . . . . . 18
(c) Successor Agent . . . . . . . . . . . . . . . . . . . . . . . 21
(d) Damage or Destruction . . . . . . . . . . . . . . . . . . . . 22
(e) Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(f) Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(g) Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 24
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(h) Payments Made During Construction . . . . . . . . . . . . . . 25
(i) Sharing of Costs - General . . . . . . . . . . . . . . . . . 25
6. CERTAIN ADDITIONAL AGREEMENTS AMONG THE PARTICIPANTS . . . . . . . 25
(a) Collateral Documents . . . . . . . . . . . . . . . . . . . . 25
(b) Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . 25
(c) Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(d) Compliance With Laws and Environmental Matters . . . . . . . 26
(e) Safety . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(f) Equal Employment Opportunity and Civil Rights . . . . . . . . 28
7. CONDITIONS PRECEDENT TO THE CLOSING . . . . . . . . . . . . . . . . 29
(a) FPC's Conditions . . . . . . . . . . . . . . . . . . . . . . 29
(i) Representations and Warranties Correct; Performance by
GPC . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(ii) Litigation Certificate . . . . . . . . . . . . . . . . 29
(iii) Collateral Documents . . . . . . . . . . . . . . . . . 30
(iv) Opinion of GPC's Counsel . . . . . . . . . . . . . . . 30
(b) GPC's Conditions . . . . . . . . . . . . . . . . . . . . . . 31
(i) Representations and Warranties Correct; Performance by
FPC . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(ii) Litigation Certificate . . . . . . . . . . . . . . . . 31
(iii) Collateral Documents . . . . . . . . . . . . . . . . . 32
(iv) Opinion of FPC's Counsel . . . . . . . . . . . . . . . 32
(v) Due Diligence Satisfactory . . . . . . . . . . . . . . 33
(c) Mutual Conditions . . . . . . . . . . . . . . . . . . . . . . 33
8. FORCE MAJEURE . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9. DISPUTE RESOLUTION PROCEDURES . . . . . . . . . . . . . . . . . . . 35
(a) Mandatory Procedures . . . . . . . . . . . . . . . . . . . . 35
(b) Failure to Resolve Dispute . . . . . . . . . . . . . . . . . 36
10. THIRD PARTY CLAIMS . . . . . . . . . . . . . . . . . . . . . . . . 37
11. LIMITATION OF LIABILITY . . . . . . . . . . . . . . . . . . . . . . 37
12. BREACH OF AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . 37
(a) By GPC . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(b) By FPC . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
13. REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
(a) Remedies of FPC . . . . . . . . . . . . . . . . . . . . . . . 39
(b) Remedies of GPC . . . . . . . . . . . . . . . . . . . . . . . 39
(i) FPC's Willful or Intentional Misconduct . . . . . 39
(ii) Failure to Operate in Accordance with Prudent
Utility Practice. . . . . . . . . . . . . . . . . . . 40
(iii) Any Other Breach. . . . . . . . . . . . . . . . . 40
(c) Determination of Fair Market Value . . . . . . . . . . . . . 40
(d) Determination of Net Book Value . . . . . . . . . . . . . . . 41
(e) Closing of the Purchase . . . . . . . . . . . . . . . . . . . 42
(f) Termination of the Collateral Documents . . . . . . . . . . . 42
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14. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
(a) Survival . . . . . . . . . . . . . . . . . . . . . . . . . . 42
(b) Further Assurances . . . . . . . . . . . . . . . . . . . . . 42
(c) Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 43
(d) Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
(e) Headings Not To Affect Meaning . . . . . . . . . . . . . . . 44
(f) No Partnership . . . . . . . . . . . . . . . . . . . . . . . 44
(g) Amendments . . . . . . . . . . . . . . . . . . . . . . . . . 44
(h) Successors and Assigns; No Third Party Beneficiaries . . . . 44
(i) Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 44
(j) Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . . 45
(k) Continuing Due Diligence . . . . . . . . . . . . . . . . . . 45
(l) Several Agreements; Entire Agreements . . . . . . . . . . . . 45
(m) Construction of "Including" . . . . . . . . . . . . . . . . . 46
(n) No Delay . . . . . . . . . . . . . . . . . . . . . . . . . . 46
iii
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ATTACHMENTS
A DEFINITIONS
B APPROVALS, PERMITS AND LICENSES TO BE OBTAINED BY GPC OR BY FPC AS
AGENT FOR GPC
C APPROVALS, PERMITS AND LICENSES TO BE OBTAINED BY FPC
D FORM OF BILL OF SALE
E DETERMINATION OF WORKING CAPITAL DEPOSIT AND CARRYING CHARGES WITH
RESPECT TO FUEL INVENTORY FOR TESTING
F DIAGRAM OF THE FACILITY
G DIAGRAM OF THE FACILITY SITE (TO BE REPLACED BY LEGAL DESCRIPTION)
H LEGAL DESCRIPTION OF INTERCESSION CITY SITE
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INTERCESSION CITY SIEMENS UNIT
PURCHASE AND OWNERSHIP PARTICIPATION AGREEMENT
THIS INTERCESSION CITY SIEMENS UNIT PURCHASE AND OWNERSHIP PARTICIPATION
AGREEMENT (this "Agreement"), dated as of the 8th day of June, 1994, is
entered into by and between GEORGIA POWER COMPANY, a corporation organized and
existing under the laws of the State of Georgia ("GPC"), and FLORIDA POWER
CORPORATION, a corporation organized and existing under the laws of the State
of Florida ("FPC").
R E C I T A L S:
GPC and FPC desire and intend, by entering into this Agreement and the
Collateral Documents, as defined in Attachment A, to establish their
respective co-ownership rights in a Siemens combustion turbine generating unit
and related facilities to be located at the Intercession City Site, as defined
in Attachment A, to provide for the planning, licensing, design, procurement,
construction, acquisition, completion, testing, startup, management, control,
operation, maintenance, addition, replacement, modification, retirement, and
disposal of such generating unit and related facilities, and to provide for
the entitlement to and use of capacity and energy therefrom and the sharing of
the costs related thereto.
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OPERATIVE TERMS
In consideration of the promises and the mutual agreements set forth in
this Agreement, GPC and FPC hereby agree as follows:
1. DEFINITIONS. In addition to the terms defined elsewhere in this
Agreement, the terms in Attachment A to this Agreement have the meanings set
forth in Attachment A, which meanings shall be equally applicable to both
singular and plural forms of such terms except as otherwise expressly
provided.
2. REPRESENTATIONS AND WARRANTIES.
(a) GPC Representations and Warranties. GPC hereby represents and
warrants to FPC as follows:
(i) Organization and Existence. GPC is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Georgia and has sufficient corporate power and authority to
execute and deliver this Agreement and the Collateral Documents and to
perform its obligations hereunder and thereunder. GPC has full
corporate power and authority to carry on its business as it is now
being conducted and as it is contemplated hereunder and under the
Collateral Documents to be conducted in the future.
(ii) Due Authorization. The execution, delivery and performance
of this Agreement and the Collateral Documents by GPC have been duly and
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effectively authorized by all requisite corporate action on the part of
GPC. This Agreement and the Collateral Documents constitute the legal,
valid and binding obligations of GPC enforceable against GPC in
accordance with their terms, except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting the
rights of creditors generally or by general principles of equity.
(iii) Litigation. There is no action, suit, claim, proceeding or
investigation pending or, to GPC's knowledge, threatened against GPC by
or before any Governmental Authority having jurisdiction over GPC which,
if adversely determined, would have a material and adverse effect upon
GPC's ability to enter into and perform its obligations and consummate
the transactions contemplated by this Agreement and the Collateral
Documents or the material rights of FPC under this Agreement and the
Collateral Documents. GPC is not subject to any material outstanding
judgment, order, writ, injunction or decree of any Governmental
Authority having jurisdiction over GPC which would materially and
adversely affect its ability to enter into and perform its obligations
under this Agreement and the Collateral Documents or the material rights
of FPC under this Agreement and the Collateral Documents.
(iv) No Material Violation; No Material Impairment. There is no
provision of the charter or bylaws of GPC, nor any existing statute,
law, regulation, material note, bond, resolution, indenture, agreement
or instrument to which GPC is a party and which is enforceable against
it which would be materially violated by or which would materially
3
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impair GPC's entry into this Agreement or the Collateral Documents, the
performance by GPC of its material obligations hereunder and thereunder
in accordance with the terms hereof and thereof or the consummation of
the material transactions contemplated hereby or thereby in accordance
with the terms hereof and thereof; provided, however, no representation
or warranty is given with respect to the provisions of GPC's first
mortgage bond indenture in the event of a default by GPC under such
indenture.
(v) Approvals. Other than the approvals by the Governmental
Authorities described in Attachment B hereto, there are no approvals or
consents, other than those referenced in Section 7, CONDITIONS PRECEDENT
TO THE CLOSING, the absence of which would materially impair the ability
of GPC to consummate the transactions described in, or to perform its
obligations under, this Agreement and the Collateral Documents.
(b) FPC Representations and Warranties. FPC hereby represents and
warrants to GPC as follows:
(i) Organization and Existence. FPC is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Florida and has sufficient corporate power and authority to
execute and deliver this Agreement and the Collateral Documents and to
perform its obligations hereunder and thereunder. FPC has full
corporate power and authority to carry on its business as it is now
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being conducted and as it is contemplated hereunder and under the
Collateral Documents to be conducted in the future.
(ii) Due Authorization. The execution, delivery and performance
of this Agreement and the Collateral Documents by FPC have been duly and
effectively authorized by all requisite corporate action on the part of
FPC. This Agreement and the Collateral Documents constitute the legal,
valid and binding obligations of FPC, enforceable against FPC in
accordance with their terms, except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting the
rights of creditors generally or by general principles of equity.
(iii) Litigation. There is no action, suit, claim, proceeding or
investigation pending or, to FPC's knowledge, threatened against FPC by
or before any Governmental Authority having jurisdiction over FPC which,
if adversely determined, would have a material and adverse effect upon
FPC's ability to enter into and perform its obligations and consummate
the transactions contemplated by this Agreement and the Collateral
Documents or the material rights of GPC under this Agreement and the
Collateral Documents. FPC is not subject to any material outstanding
judgment, order, writ, injunction or decree of any Governmental
Authority having jurisdiction over FPC which would materially and
adversely affect its ability to enter into and perform its obligations
under this Agreement and the Collateral Documents or the material rights
of GPC under this Agreement and the Collateral Documents.
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(iv) No Material Violation; No Material Impairment. There is no
provision of the charter or bylaws of FPC, nor any existing statute,
law, regulation, material note, bond, resolution, indenture, agreement
or instrument to which FPC is a party and which is enforceable against
it which would be materially violated by or which would materially
impair FPC's entry into this Agreement or the Collateral Documents, the
performance by FPC of its material obligations hereunder and thereunder
in accordance with the terms hereof and thereof or the consummation of
the material transactions contemplated hereby or thereby in accordance
with the terms hereof and thereof; provided, however, no representation
or warranty is given with respect to the provisions of the Indenture in
the event of a default by FPC under the Indenture.
(v) Approvals. Other than the approvals of the Governmental
Authorities and the permits and licenses described in Attachment C,
there are no approvals or consents, other than those referenced in
Section 7, CONDITIONS PRECEDENT TO THE CLOSING, the absence of which
would materially impair FPC's ability to consummate the transactions
described in, or to perform its obligations under, this Agreement and
the Collateral Documents.
3. PURCHASE BY GPC OF AN UNDIVIDED OWNERSHIP INTEREST IN THE FACILITY.
(a) Sale Of Assets. Subject to the terms and conditions of this
Agreement:
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(i) At the Closing, FPC will sell and transfer to GPC and GPC
will purchase from FPC a one-third undivided ownership interest, as a
tenant in common with FPC, in the Facility, less and except the
undivided ownership interest in the Step-Up Transformer transferred to
GPC pursuant to the Step-Up Transformer Agreement. The sale and
transfer hereunder will be by Bill of Sale substantially in the form of
Attachment D hereto and made a part hereof.
(ii) At the Closing, FPC will furnish to GPC a Release from any
and all mortgages, deeds to secure debt or other security interests with
respect to GPC's undivided ownership interest in the Facility being
sold to GPC at the Closing.
(b) Purchase Price and Payment.
(i) The purchase price for the undivided co-ownership interest
in the Facility, less and except the undivided one-third ownership
interest in the Step-Up Transformer, to be acquired by GPC at the
Closing pursuant to Section 3(a), SALE OF ASSETS, hereof (the "Purchase
Price") will be one-third of the Costs of Construction incurred with
respect to the Facility, less and except the Step-Up Transformer, up to
and including the date of the Closing. To such amount shall be added an
amount to compensate FPC for federal and state income taxes payable due
to differences in book and tax basis of the equity component of the
allowance for funds used during construction with respect to the sale by
FPC of such undivided co-ownership interest in the Facility.
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(ii) At the Closing, GPC shall pay to FPC, in immediately
available United States funds, (A) the Purchase Price, (B) the
additional amount described in paragraph (i) above, (C) the sum of
Eighty-Seven Thousand Five Hundred Dollars ($87,500.00) for GPC's use of
the Common Facilities during the Construction Period and the Testing
Period, and (D) the Carrying Charges, as calculated in Attachment E
hereto, with respect to the Fuel Inventory maintained during the Testing
Period. In addition, GPC shall deposit the Working Capital Deposit with
FPC on the date of Closing.
(iii) Not less than:
(A) thirty (30) days prior to the Closing, FPC shall
provide GPC with an estimated closing statement; and
(B) ten (10) days prior to the Closing, FPC shall provide
GPC with an actual closing statement;
setting forth the Purchase Price and the other amounts to be paid to or
deposited with FPC at the Closing as described in paragraph (ii) above.
(iv) From time to time after the Closing, FPC and GPC shall
execute and deliver such other instruments of conveyance and transfer as
may be necessary or appropriate or as either of them may reasonably
request to vest in FPC and GPC their respective undivided co-ownership
interests in and to the Facility.
(v) FPC shall adjust the Purchase Price within one hundred
eighty (180) days after the Closing to account for any necessary true-
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ups and inform GPC of any amounts to be reimbursed to GPC or any amounts
owed by GPC with respect to the Purchase Price or other amounts
described in paragraph (ii) above (other than Subparagraph (C) thereof).
GPC shall have the right to question or contest the correctness of the
Purchase Price and such other amounts within ninety (90) days after
receiving notice of the adjusted Purchase Price. In the event that
during such ninety (90) days, GPC questions or contests the correctness
of the Purchase Price or such other amounts, FPC shall promptly review
the questioned amounts and shall notify GPC of the amount of any error
and the amount of reimbursement, if any, that GPC is entitled to receive
in respect of such error. In the event that either Party hereto is owed
an amount under this paragraph (v), the other Party shall forward such
amount to the Party to which it is owed in immediately available United
States funds. FPC will provide GPC with such information as is
reasonably required by GPC in order for GPC to review the Purchase Price
and the other amounts described in paragraph (ii) above (other than
subparagraph (C) thereof).
(c) Closing.
(i) Subject to the provisions of Section 7, CONDITIONS PRECEDENT
TO THE CLOSING, hereof, the closing of the sale and transfer
contemplated in Section 3(a), hereof (the "Closing") will take place at
10:00 a.m., Eastern Time, on a Business Day to be selected by FPC in the
month of December 1995, unless the Closing is extended to a later date
pursuant to paragraph (iii) of this Section 3(c). FPC shall provide GPC
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with written notice of the scheduled date of the Closing at least ten
(10) Business Days prior thereto. The Closing shall take place at the
offices of Carlton, Fields, Ward, Emmanuel, Smith & Cutler, P.A., One
Harbour Place, 777 South Harbour Island Drive, Tampa, Florida 33602.
(ii) If FPC and GPC agree in writing in their sole discretion
that it is mutually beneficial for the Closing to take place prior to
December 1, 1995, then the Closing shall take place on the date set
forth in such agreement.
(iii) If, on the date set forth for the Closing, GPC is unable to
consummate the Closing hereunder because of the failure of GPC to
receive the approval of the Georgia Public Service Commission of GPC's
Application for Certification of the Intercession City Combustion
Turbine Project, but such approval has been applied for and has been
diligently pursued, and such approval remains pending and not refused or
rejected by the Georgia Public Service Commission on such date, then GPC
shall be entitled to a reasonable extension of the Closing in order to
permit GPC to obtain such pending approval; provided, however, that the
date of the Closing shall not be delayed beyond June l, 1996.
(iv) In the event that the Closing does not occur on or before
June 1, 1996, because of GPC's inability or refusal to close for any
reason other than GPC's failure to obtain the approval of the SEC, as
described in Attachment B hereto, or FPC's breach of this Agreement,
then GPC shall pay to FPC, on or before June 5, 1996, the sum of Two
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Hundred Fifty Thousand Dollars ($250,000.00), in immediately available
United States funds, to compensate FPC for its expenses in negotiating
and entering into this Agreement and the Collateral Documents and, upon
such payment, this Agreement and the Collateral Documents shall
thereupon be terminated and the Parties shall have no further
obligations or liability to each other under this Agreement or the
Collateral Documents.
(d) Option To Purchase Additional Intercession City Facility
Generating Unit. FPC shall offer GPC an option to purchase a co-ownership
interest in the next combustion turbine generating unit, if any, that FPC
decides to construct at the Intercession City Site and with respect to which
FPC decides to offer a co-ownership interest and an arrangement for seasonal
sharing of electric output; provided, however, that it shall be a condition
precedent to such option or the exercise thereof by GPC that FPC determines,
in its sole discretion, that it is economically desirable to FPC and
consistent with its system requirements to construct the next combustion
turbine generating unit for co-ownership and seasonal sharing with another
electric utility; and provided further, however, that any such co-ownership
shall be subject to FPC and GPC being able to agree in writing as to the terms
of a co-ownership of, and the operations with respect to, such combustion
turbine generating unit. In the event that FPC makes the determination
described in the preceding sentence of this Section 3(d), FPC shall promptly
give notice of such determination to GPC. GPC shall then have sixty (60) days
after the date of such notice within which to give notice to FPC of its desire
to enter into such a co-ownership and seasonal sharing arrangement with FPC.
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If GPC gives FPC such notice, the Parties shall negotiate in good faith to
attempt to enter into contracts with respect to such co-ownership and seasonal
sharing arrangement within sixty-five (65) days after the date of such notice.
If GPC and FPC have not, during such sixty-five (65) day period, entered into
all necessary contracts with respect to such co-ownership and seasonal sharing
arrangement, then FPC shall be free to offer a co-ownership of, and seasonal
sharing arrangement with respect to, such unit to any other person or entity.
Prior to the expiration of the sixty (60) day period described in this
Subsection above, and, in the event that GPC gives FPC notice (within such
sixty (60) day period) exercising its option to purchase a co-ownership
interest in the additional combustion turbine generating unit, then, during
the sixty-five (65) day period described above, FPC shall not offer a co-
ownership and seasonal sharing arrangement in such additional generating unit
to any other party.
4. AGENCY.
(a) Appointment. Subject to the terms of this Agreement and the
Operating Agreement, the Participants hereby irrevocably appoint FPC as their
Agent to act on behalf of the Participants in performing the Agency Functions
with respect to the Facility. FPC hereby accepts such appointment and agrees
that it shall discharge its responsibilities as Agent in accordance with the
terms of this Agreement and the Operating Agreement and in accordance with
Prudent Utility Practice.
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(b) Authority and Responsibility. Subject to the provisions of this
Agreement and the Operating Agreement, FPC, as Agent, shall have sole
authority and responsibility with respect to the Agency Functions, and in
respect thereof, FPC as Agent is authorized to take and shall take, in the
name and on behalf of the Participants, all reasonable actions which, in the
discretion and judgment of FPC, are deemed necessary or advisable to effect
the Agency Functions, including, without limitation, the following:
(i) the making of such agreements and modifications of existing
agreements, other than this Agreement and the Collateral Documents, and
the taking of such other action as FPC, as Agent, deems necessary or
appropriate, in its sole discretion, or as may be required under the
regulations or directives of any Governmental Authority having
jurisdiction, with respect to the Agency Functions, which such
agreements and modifications shall, together with all such existing
agreements, be held by FPC, as Agent; provided, however, without GPC's
prior written consent, which shall not be unreasonably withheld or
delayed, FPC shall not enter into any amendments to, or modifications
of, or waive any rights under, the Siemens Agreement which would
materially and adversely affect GPC's co-ownership of, or right to
output from, the Facility;
(ii) the execution and filing, with any Governmental Authority
having jurisdiction (except the Georgia Public Service Commission), of
applications, amendments, reports and other documents and filings in or
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in connection with the licensing and other regulatory matters with
respect to the Facility or any portion thereof;
(iii) the receipt of any notice or other communication from any
Governmental Authority having jurisdiction (except the Georgia Public
Service Commission), as to any licensing or other similar matter
concerning the Facility; and
(iv) the provision of, or contracting with any third party to
purchase or provide, any equipment, facilities or services in connection
with the Facility, in accordance with the provisions of this Agreement
or any of the Collateral Documents.
GPC and FPC agree that all such agreements which relate to the Facility
described in this Section 4(b) which are entered into after the date hereof
shall, by their terms, be made assignable by FPC as Agent to any successor
Agent for the Agency Functions, pursuant to this Agreement and the Operating
Agreement.
(c) Environmental Costs. From and after the date of this Agreement:
(i) FPC shall be solely responsible for all Environmental Costs
which arise as a result of the ownership and operation, prior to the date of
this Agreement, of the Intercession City Site and all activities conducted on
the Intercession City Site prior to the date of this Agreement.
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(ii) GPC and FPC shall be responsible, in proportion to their
respective Ownership Interests, with respect to Environmental
Costs that arise as a result of the construction, installation or
operation of the Facility.
(iii) FPC shall be solely responsible for Environmental Costs that
arise as a result of the construction, installation or operation
of any electric generating unit on the Intercession City Site
other than the Facility or the Common Facilities.
(iv) GPC and FPC shall be responsible, in proportion to their
respective Ownership Interests, with respect to Environmental
Costs that arise as a result of the construction, installation or
operation of Common Facilities that are dedicated solely to the
Facility.
(v) GPC and FPC shall be responsible, in proportion to their
respective Weighted Average Common Facilities Allocation Factors,
with respect to Environmental Costs that arise as a result of the
construction, installation or operation of Common Facilities other
than those described in paragraph (iv) above.
(vi) GPC and FPC shall be responsible, in proportion to their
respective Weighted Average Common Facilities Allocation Factors,
with respect to Environmental Costs pertaining to the Facility or
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the Facility Site that are not described in paragraphs (i), (ii),
(iii), (iv) or (v) above.
Notwithstanding any of the foregoing, GPC shall not be responsible for
any Environmental Costs to the extent that such Environmental Costs are
directly attributable to a spill or release of any Environmental Material
prior to the date hereof or a failure by FPC to comply with Prudent Utility
Practice, to a material breach by FPC of Section 6(d), COMPLIANCE WITH LAWS
AND ENVIRONMENTAL MATTERS, hereof, or to the willful or intentional misconduct
of FPC.
Each Party shall indemnify, defend and hold harmless the other Party
from any investigation, enforcement action, consent agreement, administrative
order, removal or remedial action, cleanup obligation, or other governmental
or private third-party claim for damages, contribution, cost recovery, loss or
injury at any time threatened, instituted or completed in any way arising out
of, relating to, or in connection with any Environmental Material to the
extent that the indemnifying party is responsible for Environmental Costs
under the terms of this Section 4(c).
(d) Management and Construction Audits. GPC shall have the right from
time to time to conduct management and construction audits, at its own cost,
of FPC's performance as Agent hereunder, either by its own officers and
employees or through its duly authorized agents or representatives. FPC shall
cooperate with GPC, to a reasonable extent, in conducting any such audit and,
subject to the applicable regulations of any Governmental Authority having
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jurisdiction and to the provisions of Section 4(f), CONFIDENTIALITY OF
INFORMATION, hereof give GPC reasonable access, after reasonable notice, to
all contracts, records, and other documents relating to the Facility or any
portion thereof.
(e) Right To Copies. Subject to the provisions of Section 4(f),
CONFIDENTIALITY OF INFORMATION, hereof, GPC shall be entitled, after
reasonable notice to FPC and, for a reasonable charge to be paid by GPC, to
obtain copies of (i) any and all contracts, books, records, reports and other
documents and papers to which GPC is permitted access, or which FPC has agreed
shall be available for audit under the terms of this Agreement or the
Operating Agreement, and (ii) any and all planning, licensing, construction,
testing, architectural, engineering and design drawings and specifications
that have been or shall hereafter be prepared in connection with the Facility
or any portion thereof. GPC shall use any such copy, the information
contained therein, or both, only in the exercise of its rights and obligations
hereunder or under the Operating Agreement; and GPC shall not sell or
otherwise transfer any such copy or the information contained therein to any
person or entity except that, subject to the provisions of Section 4(f),
CONFIDENTIALITY OF INFORMATION, GPC may provide such copies or disclose their
contents to its mortgagees, security deed holders and its agents and
authorized representatives; and neither GPC nor its respective officers,
employees, agents, representatives, consultants, mortgagees nor security deed
holders may use any such copy or the information contained therein in
connection with any other generating plant or for the benefit of any other
person or entity.
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(f) Confidentiality of Information. Notwithstanding any other
provision of this Agreement or any of the Collateral Documents, GPC recognizes
that there are, or may be in the future, certain contracts, records, drawings,
data or other documents or information relating to FPC or the Agency Functions
which FPC or the party or parties supplying any such material to FPC have
designated as proprietary, confidential or privileged, or as to which FPC is
obligated not to disclose the same to any other person or entity without the
express approval of such person or entity ("Proprietary Information"). GPC
agrees that FPC shall have no obligation under this Agreement or the Operating
Agreement to disclose, provide access to or permit copying of any such
Proprietary Information (it being understood that FPC shall cooperate to a
reasonable extent in obtaining consent or approval from third parties as to
any such disclosure) and that any such disclosure to GPC shall be in
accordance with all of the terms of any such approval.
GPC agrees to take all reasonable steps to protect the Proprietary
Information furnished to it, including, without limitation, limiting access to
and disclosure of such Proprietary Information and ensuring that those
receiving any such Proprietary Information understand the proprietary,
confidential or privileged nature of such Proprietary Information.
Notwithstanding the foregoing, GPC may, with FPC's prior written consent,
disclose Proprietary Information to other parties, including, without
limitation, any Governmental Authority having jurisdiction, as necessary to
obtain approval of the purchases contemplated herein or to otherwise
effectuate the purposes of this Agreement. GPC agrees to promptly notify FPC
of any other legal or administrative proceedings, in which it is participating
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or of which it is aware, in which an issue to be determined includes the
potential disclosure of any or all of the contents of any Proprietary
Information.
Furthermore, GPC shall be permitted to produce and disclose Proprietary
Information if required by subpoena or other binding process of an
administrative agency or other Government Authority but shall cooperate with
the supplier of such Proprietary Information in seeking a protective order
with respect to such production or disclosure.
(g) Right of Inspection. Upon reasonable prior notice to FPC from
time to time, representatives of GPC shall be entitled to inspect the
Facility, the Facility Site and the Common Facilities, review operating and
maintenance practices with respect thereto and discuss the operations and
maintenance thereof with the plant manager of the Facility, provided that such
inspections and discussions shall not materially interfere with the operations
of the Facility or the Common Facilities and provided that GPC complies with
the rules and regulations of Governmental Authorities having jurisdiction with
respect to the Facility, the Facility Site and the Common Facilities, and
FPC's policies and procedures applicable to operations at the Facility Site
including, without limitation, those with respect to safety.
(h) Record Keeping. In furtherance of its duties as Agent, FPC shall
also keep and maintain appropriate plant records with respect to the Facility
in accordance with applicable Legal Requirements and FPC's record retention
policies; and upon reasonable notice from time to time by GPC, FPC will inform
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GPC of the location of such records and, subject to Section 4(f) above,
CONFIDENTIALITY OF INFORMATION, provide GPC with reasonable access thereto.
To the extent that GPC would like to retain those records for longer periods
of time than FPC would retain such records, then, upon written request from
GPC, and subject to Section 4(f) above, CONFIDENTIALITY OF INFORMATION, FPC
shall provide GPC, at GPC's sole expense, with originals or copies as
appropriate of such records on or prior to the date that FPC would dispose of
such records.
(i) Non-Discrimination. In no event will FPC, in its performance of
the Agency Functions, materially discriminate against the Facility (in a
manner that is adverse to a Participant's undivided ownership interest in the
Facility or right to output from the Facility) in comparison with other
comparable electric peak-load generating units owned or operated by FPC;
provided, however, that the foregoing non-discrimination provision shall not
apply with respect to the construction, operation or use of any facilities for
natural gas for any other electric generating units at the Intercession City
Site or elsewhere in FPC's electric system.
5. OWNERSHIP, RIGHTS AND OBLIGATIONS.
(a) Ownership.
(i) The Participants shall have title to the Facility as co-
owners with undivided ownership interests therein, subject to the terms
of this Agreement and the Operating Agreement, and shall own the
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Facility and possess rights and obligations related thereto, including,
without limitation, payment therefor, as specified in Sections 3(a) and
(b), SALE OF ASSETS, and PURCHASE PRICE AND PAYMENT, hereof. The
Participants shall be entitled to the capacity and the associated energy
of the Facility in accordance with Section 3(a), AVAILABILITY OF OUTPUT,
of the Operating Agreement.
(ii) FPC shall have sole title to the Common Facilities.
(iii) The real property interests in the Facility Site shall be
as follows: (A) FPC shall own fee simple title to the Facility Site
subject to the leasehold interest granted by FPC to GPC pursuant to the
Long Term Lease; and (B) GPC shall have (1) an undivided one-third
interest in a leasehold estate as a tenant in common with FPC in the
Facility Site, and (2) the Access Easement (as defined in the Long Term
Lease).
(b) Alienation and Assignment.
(i) So long as FPC and GPC are Participants under the terms of
this Agreement, neither of them shall sell, lease, convey, transfer,
assign, encumber or alienate in any manner whatsoever, except as
otherwise provided herein, its ownership interest, or any portion or
portions thereof, in the Facility or any rights under this Agreement
without first giving to the other Party the offer described in Section
5(b)(ii) hereof; provided, however, that upon notice to the other Party
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hereto but without its consent, FPC may assign its entire co-ownership
interest, or any portion thereof, to any Affiliate of FPC, and GPC may
assign its entire co-ownership interest, or any portion thereof, to any
other Operating Subsidiary.
(ii) In the event that a Participant wishes to sell, transfer or
otherwise assign its ownership interest in the Facility, or any portion
thereof, other than as permitted in Section 5(b)(i) above, it shall
first offer, subject to all requisite regulatory approvals, including,
without limitation, the approval of the SEC, if required, pursuant to
the Public Utility Holding Company Act of 1935, such sale, transfer or
assignment to the other Party, upon the same terms and conditions as the
proposed sale, transfer or assignment to the third party (unless,
pursuant to the terms of the Public Utility Holding Company Act of 1935
and any amendments or successor legislation thereto, the terms and
conditions of such sale, transfer or assignment are regulated, in which
case the terms and conditions of such sale, transfer or assignment shall
not be inconsistent with such Act), which offer shall be made in the
form of a proposed contract and shall be open for acceptance by the
other Party to this Agreement for a period of sixty (60) days after the
date of the offer for the interest being offered, and in the event such
offer is accepted by the other Party, the Parties shall proceed to a
closing of the transaction with respect to such interest, pursuant to
the terms of the aforesaid contract and in an expeditious manner.
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(iii) In no event shall the offering Participant sell, transfer
or assign such interest, pursuant to Section 5(b)(ii) above, to any
person or entity (including, without limitation, GPC or FPC) which is
not financially responsible or do so on any terms materially different
from those set forth in the aforesaid offer.
(iv) Each Participant shall notify the other Participant in
writing as soon as possible after it learns that any lien or security
interest in respect of an obligation or liability in excess of $100,000
has been or will be imposed upon its ownership interest in the Facility
or any portion or portions thereof or has reason to believe that such a
lien or security interest will be imposed (other than a lien or security
interest created by such Participant as security for bonds or other
obligations issued or to be issued by it).
(v) In the event of any sale, transfer or assignment (other than
solely as security for an indebtedness) by one of the Participants of
its ownership interest in the Facility or any portion or portions
thereof, such Participant shall also assign its interest in the Long
Term Lease to the transferee (in the case of a transfer by GPC) or, in
the case of a transfer by FPC, grant a lease to the transferee with
respect to the Facility Site on terms that correspond to the Long Term
Lease. As a condition precedent to the consummation of the foregoing
transactions, the transferring Participant shall cause the transferee of
such interest to become a Party to this Agreement and the Collateral
Documents (except the Long-Term Lease in the case where FPC is the
23
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transferor), and assume the obligations of the transferor hereunder and
thereunder in proportion to the interest so sold, transferred or
assigned, or alienated, whereupon such transferee shall become a
Participant hereunder.
(vi) Each Participant hereby expressly waives and renounces, for
the duration of its co-ownership of the Facility, for itself, its
successors, transferees and assigns, all rights to a partition of the
Facility and its respective interest in the Facility Site and to an
accounting associated therewith.
(vii) Notwithstanding paragraphs (i) through (iv) of this
Section 5(b), each Participant shall have the right to mortgage or to
convey a security interest in its ownership in the Facility, or any
portion or portions thereof, as security for bonds or other obligations
issued or to be issued by such Participant.
(viii) In the event either Participant sells, transfers or
assigns to any transferee (including, without limitation, GPC or FPC)
any ownership interest in the Facility in accordance with the provisions
of this Section 5(b), or pursuant to any other provisions of this
Agreement authorizing such sale, transfer or assignment, such
Participant's rights and obligations hereunder and under the Operating
Agreement as a Participant and co-owner of the Facility, including,
without limitation, the obligation to make payments of future Additional
Costs of Construction, Operating Costs, Fuel Costs, and Major Outage
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Costs, shall be reduced to the extent of the interests so sold,
transferred or assigned and the other Participant shall look solely to
such transferee for performance of the corresponding future obligations
relating to the interest sold.
(ix) If, pursuant to this Section 5(b), either Participant makes a
sale, transfer or assignment of all or any portion of its co-ownership
interest in the Facility, such Participant shall also assign to the
transferee its interest in the Collateral Documents (except the Long
Term Lease in the case where FPC is the transferor), pro tanto, and
shall cause the transferee to assume to the same extent the rights and
obligations of such Participant thereunder; provided, however, that FPC
shall not assign its responsibilities as Agent hereunder without the
prior written approval of GPC, which shall not be unreasonably withheld
or delayed.
(x) Any attempted or purported assignment of this Agreement or
any of the Collateral Documents not in compliance with this Section 5(b)
shall be null and void and of no force or effect whatsoever.
(c) Successor Agent. In the event that FPC assigns its entire
Ownership Interest in the Facility under the terms of this Agreement, its
assignee or successor shall be a successor Agent, subject to the prior written
approval of GPC, which shall not be unreasonably withheld or delayed. Any
successor Agent as contemplated hereby shall exercise all of the rights and
powers and shall be subject to all of the duties and obligations of FPC as
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Agent hereunder and under the Operating Agreement, and FPC shall take all
action and execute (and file where appropriate) all documents and instruments
which shall be requested by the successor Agent to effect the transfer to such
successor Agent of such rights, powers, duties and obligations, including, but
not limited to, taking such actions and executing such documents and
instruments necessary to enable the successor Agent to operate and maintain
the Common Facilities.
(d) Damage or Destruction. Subject to the receipt of all requisite
approvals of any Governmental Authority having jurisdiction:
(i) In the event the Facility or any portion thereof is damaged
or destroyed during the first thirty (30) years of the term of this
Agreement, and the estimated cost of repairs or reconstruction:
(A) exceeds by more than Three Million Dollars ($3,000,000.00) in
1994 Dollars the aggregate amount of insurance coverage procured
and maintained by FPC, as Agent, on behalf of the Participants
(less applicable deductibles) covering such repairs or
reconstruction, then, unless the Participants mutually agree to
repair or reconstruct the Facility, the Facility shall not be
repaired or reconstructed, and FPC, as Agent, shall use reasonable
efforts to salvage the Facility, or remaining portion thereof, and
divide the proceeds thereof, net of de-commissioning, dismantling
and salvaging costs, between the Participants in accordance with
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their Ownership Interests, whereupon this Agreement and the
Collateral Documents shall be deemed terminated; or
(B) does not exceed by more than Three Million Dollars
($3,000,000.00) in 1994 Dollars the aggregate amount of insurance
coverage procured and maintained by FPC, as Agent, on behalf of
the Participants (less applicable deductibles) covering such
repairs or reconstruction, then, the Facility shall be repaired or
reconstructed as the case may be.
(ii) In the event the Facility or any portion thereof is damaged
or destroyed after the first thirty (30) years of the term of this
Agreement, and the estimated cost of repairs or reconstruction:
(A) exceeds Three Million Dollars ($3,000,000.00) in 1994
Dollars, then, unless the Participants mutually agree to repair or
reconstruct the Facility, the Facility shall not be repaired or
reconstructed, and FPC, as Agent, shall use reasonable efforts to
salvage the Facility, or remaining portion thereof, and divide the
proceeds thereof, net of de-commissioning, dismantling and
salvaging costs, between the Participants in accordance with their
Ownership Interests, whereupon this Agreement and the Collateral
Documents shall be deemed terminated; or
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(B) does not exceed Three Million Dollars ($3,000,000.00) in 1994
Dollars, then, the Facility shall be repaired or reconstructed as
the case may be.
(e) Term. Unless earlier terminated under the terms of this
Agreement, this Agreement shall be effective upon its execution and delivery
and shall remain in effect for forty (40) years after the date of Commercial
Operation and such additional time as is reasonably necessary for the de-
commissioning, dismantling and salvaging of the Facility at the end of such
forty (40) years, but in no event shall such additional time exceed two (2)
years.
(f) Taxes. To the extent possible, each Participant shall separately
report, file returns with respect to, be responsible for and pay all property,
business, and other taxes or fees (except payroll taxes for FPC employees)
arising out of its ownership interest in the Facility; provided, however, that
to the extent that such taxes or fees may be levied on or assessed against the
Facility, its operation, or the Participants in such a manner so as to make
impossible or impractical the carrying out of the foregoing provisions of this
Section 5(f), such taxes or fees shall be considered as Costs of Construction,
or Operating Costs, as appropriate, but in no event shall any taxes or fees as
to the payment of which any Participant is exempt by law be considered as part
of the Costs of Construction or Operating Costs. All prorations of taxes
shall be based on estimated taxes (if estimates are available or, otherwise,
the prior year's tax bill) and shall be adjusted between the Participants upon
receipt of the actual tax bills. All sales and transfer taxes, recording and
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filing fees, if any, incurred in connection with the (i) sale to GPC of an
undivided co-ownership interest in the Facility pursuant to Section 3,
PURCHASE BY GPC OF AN UNDIVIDED OWNERSHIP INTEREST IN THE FACILITY, hereof, or
(ii) the leasehold interest in the Facility Site, pursuant to the Long Term
Lease, shall be paid by GPC.
(g) Insurance. FPC and GPC acknowledge that Siemens is required,
under the Siemens Agreement, to carry adequate insurance coverage and to bear
all risk of loss in connection with the Facility up to and including the date
of Official Acceptance (as such term is defined in the Siemens Agreement) by
FPC of the Facility; provided however, that each Participant that will have
any employees, agents or representatives present on the Facility Site during
construction or installation of the Facility shall carry such worker's
compensation insurance as it deems appropriate with respect to its operations
on the Facility Site, but not less than such insurance as is required by law.
The insurance provided by Siemens under the Siemens Agreement shall be primary
to any insurance held or maintained by either of the Participants. From and
after the date of Official Acceptance by FPC of the Facility, insurance shall
be maintained by FPC in accordance with the Operating Agreement.
(h) Payments Made During Construction. FPC, as Agent, shall be
responsible for making, and shall make, payment to third parties of all Costs
of Construction.
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(i) Sharing of Costs - General. The Participants shall share all
items of cost, obligation and liability incurred in connection with the
Facility (other than the financing of each Participant's respective ownership
interests in the Facility), which are not otherwise expressly provided for in
this Agreement or in the Collateral Documents, in proportion to their
respective Ownership Interests; provided, however, that any such cost,
obligation or liability incurred at the request of and for the sole benefit of
a particular Participant shall be the sole responsibility of such Participant
and such Participant hereby agrees to indemnify and hold harmless the other
Participant against any claims, costs, damages, expenses, losses or any other
liability of any kind arising from such costs, obligations or liability.
6. CERTAIN ADDITIONAL AGREEMENTS AMONG THE PARTICIPANTS. FPC and GPC
hereby mutually covenant and agree as follows:
(a) Collateral Documents. Contemporaneously with the execution and
delivery of this Agreement, FPC and GPC agree to execute and deliver to each
other the Collateral Documents.
(b) Cooperation. FPC and GPC will cooperate with each other in all
activities relating to the Facility, including, without limitation, the execu-
tion and filing of applications for authorizations, permits and licenses with
Governmental Authorities having jurisdiction, fuel procurement and the
execution of such other documents as may be reasonably necessary to carry out
the provisions of this Agreement. Without FPC's written consent, GPC shall
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not incur any obligation in connection with the Facility which would or could
obligate FPC to any third party.
(c) Approvals. Following the execution and delivery of this
Agreement, GPC and FPC shall use reasonable efforts to obtain as quickly as
possible all requisite and contemplated judicial, governmental, regulatory and
vendor (with regard to assignment of contractual rights and obligations, if
any) approvals for the consummation of the transactions contemplated hereby.
(d) Compliance With Laws and Environmental Matters.
(i) FPC and GPC acknowledge and agree that FPC, as Agent, shall
plan, design, license, permit, procure, construct, acquire, complete,
test, startup, manage, control, operate, maintain, add to, renew,
modify, replace and dispose of the Facility in compliance with all
local, state and federal laws, codes, regulations, ordinances or orders
now or hereinafter in effect; provided, however, that any failure to
comply with such local, state or federal laws, regulations, ordinances
or orders shall not be deemed a breach of this Agreement if, and so long
as, such failure is in accordance with a court order or decree, or a
formal agreement with the regulatory agency having jurisdiction over the
subject matter of noncompliance or having authority to issue the
required approval.
(ii) Prior to December 31 of each calendar year during which the
Facility is operated during the Summer Period, GPC shall transfer to FPC
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all Allowances, as defined below, required as a result of the operation
of the Facility during the Summer Period under Title IV of the Clean Air
Act, as amended from time to time, and any regulations and requirements
arising thereunder, at the operating level utilized by GPC. "Allowance"
shall have the meaning set forth in Section 402(3) of the Clean Air Act,
as amended from time to time. FPC, as Agent, in consultation with GPC,
shall develop reasonable procedures for determining the amount of the
emissions attributable to each Participant for the purpose of
determining the number of Allowances required of each Participant. Each
Participant shall provide reasonable assurance to FPC, as Agent, that
such Allowances are or will be available in order to operate the
Facility at the actual and anticipated levels of operation.
(iii) The Parties acknowledge that so-called "soft" continuous
environmental monitoring devices will be installed in or in connection
with the Facility, under the terms of 40 C.F.R. sections 75.11, 75.12 and
75.13, including 40 C.F.R. Part 75, Appendices D, E and G, respectively,
with respect to the monitoring of SO2, NOx, and CO2, respectively. The
Parties also acknowledge that if the Facility exceeds a 20% capacity
factor in any one year (1752 equivalent full load run hours) or an
average of a 10% capacity factor over any three year period (an average
of 876 equivalent full load run hours), the Facility will be required to
install so-called "hard" continuous environmental monitoring devices
("Hard CEMs"). In an effort to legally avoid the requirement of having
Hard CEMs installed and operational in the Facility, the Parties agree
to reasonably cooperate with each other in their operation of the
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Facility; provided, however, that (A) neither Party shall be limited in
its hours of operation of the Facility to avoid the requirement of Hard
CEMs, and (B) in the event that Hard CEMs are legally required to be
installed in the Facility, then such Hard CEMs shall be installed as a
part of the Facility and the costs thereof (including, without
limitation, all installation costs) shall be considered Additional Costs
of Construction.
(iv) Each Participant shall be a permittee for any air quality
permit(s) issued for the Facility by a Governmental Authority having
jurisdiction, only if such Governmental Authority determines that the
air quality permits cannot be issued under applicable law unless each
Participant is a joint permittee.
(v) FPC, as Agent, shall not use, treat, store, dispose, or
recycle at the Facility any Environmental Material in amounts or under
circumstances requiring notification of, or a permit, license, or
approval from, any Governmental Authority of competent jurisdiction,
unless such Environmental Material was generated at the Facility or is
required to be used, treated, stored, disposed of or recycled incident
to the construction or operation of Facility.
(e) Safety. FPC and GPC acknowledge and agree that in the
acquisition, construction and completion of the Facility, FPC shall at all
times take all reasonable precautions for the safety of its employees on the
work site and of the public, and shall comply with all applicable provisions
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of federal, state, and municipal safety laws and building and construction
codes, including, without limitation, all regulations of the Occupational
Safety and Health Administration. The requirements of this Subsection shall
be for the sole benefit of the Participants only, and shall not create or
impose any standard of care or duty to any third party or to any employee or
contractor's or subcontractor's employee or to the public, beyond the duty
incumbent upon FPC which would exist under applicable law without reference to
any term or provision of this Agreement.
(f) Equal Employment Opportunity and Civil Rights. FPC, as Agent,
shall conform to the requirements of the Equal Employment Opportunity clause
in Section 202, Paragraphs 1 through 7 of Executive Order 11246, as amended,
and applicable portions of Executive Orders 11701 and 11758, relative to Equal
Employment Opportunity and the Implementing Rules and Regulations of the
Office of Federal Contract Compliance Programs.
7. CONDITIONS PRECEDENT TO THE CLOSING.
(a) FPC's Conditions. The obligations of FPC to close the
transactions under this Agreement and the Collateral Documents are subject to
the fulfillment, prior to or at the Closing, of each of the following
conditions (or the waiver in writing of such conditions by FPC):
(i) Representations and Warranties Correct; Performance by GPC.
GPC's representations and warranties contained in this Agreement shall
have been materially true and correct at the date hereof, and shall be
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<PAGE>
deemed to have been made again at and as of the time of the Closing and
shall then be true and correct in all material respects; GPC shall have
performed and complied with all agreements, covenants and conditions
required by this Agreement to be performed or complied with by it prior
to or at the Closing; and FPC shall have been furnished with a
certificate of the President or a Vice President of GPC, dated the date
of the Closing, certifying in such detail as FPC may request to the
fulfillment of the foregoing conditions.
(ii) Litigation Certificate. GPC shall have delivered to FPC a
certificate executed by the President or a Vice President of GPC that,
as of the time of the Closing, such officer of GPC has no personal
knowledge of actual or threatened litigation against GPC which might
materially adversely affect the rights of FPC as a holder of an
undivided co-ownership interest in the Facility, other than such pending
or threatened litigation described or referred to in such certificate,
and the contents of such certificate shall be reasonably satisfactory to
FPC.
(iii) Collateral Documents. At the Closing, the Collateral
Documents shall be in full force and effect and GPC shall not be in
material breach under this Agreement or any of the Collateral Documents.
(iv) Opinion of GPC's Counsel. FPC shall have been furnished
with an opinion of Troutman Sanders, counsel for GPC, dated the date of
the Closing, to the effect that:
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(A) GPC is a corporation duly organized, validly existing
and in good standing under the laws of the State of Georgia and
has the requisite power and authority to own those portions of the
Facility as GPC is required to own following the Closing, to
execute and deliver this Agreement and the Collateral Documents
and to perform its obligations hereunder and thereunder, and to
conduct its business as it is then being conducted;
(B) the execution, delivery and performance of this
Agreement and the Collateral Documents by GPC have been duly and
effectively authorized by all requisite corporate action; and
(C) GPC had full power and authority to execute this
Agreement and the Collateral Documents, and this Agreement and the
Collateral Documents have been fully executed and delivered by GPC
and are the legal, valid and binding obligations of GPC
enforceable against it in accordance with their terms (except as
the provisions hereof or thereof may be limited by bankruptcy,
insolvency, reorganization or other laws relating to or affecting
the enforcement of creditors' rights and by other laws of general
application affecting the rights and remedies of creditors, and
that the availability of the remedy of specific enforcement or of
injunctive relief is subject to the discretion of the court before
which any proceeding therefor may be brought, and except that no
opinion shall be expressed as to the validity and enforceability
36
<PAGE>
of the restrictions on alienation set forth in Section 5(b),
ALIENATION AND ASSIGNMENT, hereof).
Such opinion shall cover such other matters as FPC may reasonably
request and shall be reasonably satisfactory to FPC's counsel.
(b) GPC's Conditions. The obligations of GPC to close the
transactions under this Agreement and the Collateral Documents are subject to
the fulfillment, prior to or at the Closing, of each of the following
conditions (or the waiver in writing of such conditions by GPC):
(i) Representations and Warranties Correct; Performance by FPC.
FPC's representations and warranties contained in this Agreement shall
have been materially true and correct at the date hereof, and shall be
deemed to have been made again at and as of the time of the Closing and
shall then be true and correct in all material respects; FPC shall have
performed and complied with all agreements, covenants and conditions
required by this Agreement to be performed or complied with by it prior
to or at the Closing; and GPC shall have been furnished with a
certificate of the President or a Vice President of FPC, dated the date
of the Closing, certifying in such detail as GPC may request to the
fulfillment of the foregoing conditions.
(ii) Litigation Certificate. FPC shall have delivered to GPC a
certificate executed by the President or a Vice President of FPC that,
as of the time of the Closing, such officer of FPC has no personal
37
<PAGE>
knowledge of actual or threatened litigation against FPC which might
materially adversely affect the rights of GPC as a holder of an
undivided co-ownership interest in the Facility, other than such pending
or threatened litigation described or referred to in such certificate,
and the contents of such certificate shall be reasonably satisfactory to
GPC.
(iii) Collateral Documents. At the Closing, the Collateral
Documents shall be in full force and effect and FPC shall not be in
material breach under this Agreement or any of the Collateral Documents.
(iv) Opinion of FPC's Counsel. GPC shall have been furnished
with an opinion of Carlton, Fields, Ward, Emmanuel, Smith & Cutler,
P.A., counsel to FPC, dated the date of the Closing, to the effect that:
(A) FPC is a corporation duly organized, validly existing
and in good standing under the laws of the State of Florida and
has the requisite power and authority to execute and deliver this
Agreement and the Collateral Documents and to perform its
obligations hereunder and thereunder, and to conduct its business
as it is then being conducted;
(B) the execution, delivery and performance of this
Agreement and the Collateral Documents by FPC have been duly and
effectively authorized by all requisite corporate action; and
38
<PAGE>
(C) FPC had full power and authority to execute this
Agreement and the Collateral Documents, and this Agreement and the
Collateral Documents have been fully executed and delivered by FPC
and are the legal, valid and binding obligations of FPC
enforceable against it in accordance with their terms (except as
the provisions hereof or thereof may be limited by bankruptcy,
insolvency, reorganization or other laws relating to or affecting
the enforcement of creditors' rights and by other laws of general
application affecting the rights and remedies of creditors, and
that the availability of the remedy of specific enforcement or of
injunctive relief is subject to the discretion of the court before
which any proceeding therefor may be brought, and except that no
opinion shall be expressed as to the validity and enforceability
of the restrictions on alienation set forth in Section 5(b),
ALIENATION AND ASSIGNMENT, hereof).
Such opinion shall cover other matters as GPC may reasonably request and
shall be reasonably satisfactory to GPC's counsel.
(v) Due Diligence Satisfactory. GPC shall have had adequate
opportunity to conduct Due Diligence, as described in Section 14(k) of
this Agreement, and, in the course thereof, shall not have discovered
any information, state of facts, condition or event which, in the
exercise of reasonable judgment, causes GPC to determine that it would
be materially deprived of the value of the bargain intended to be
obtained thereby on the date hereof.
39
<PAGE>
(c) Mutual Conditions. The respective obligations of GPC and FPC
under this Agreement and the Collateral Documents are subject to the
fulfillment, prior to or at the Closing (unless waived in writing by GPC and
FPC prior to or at the Closing), of the further conditions that the following
shall have been achieved:
(i) the receipt of all requisite or contemplated governmental,
regulatory, judicial or other authorizations, consents, orders, permits,
licenses, certifications, filings, waivers or approvals with respect to
the Closing (including, without limitation, those listed on Attachments
B and C hereto); provided, however, that GPC, or the Operating
Subsidiary to which GPC may assign this Agreement, shall have the right
to waive, on behalf of itself and FPC, as a condition to the Closing,
the approval by the Georgia Public Service Commission described in item
1 of Attachment B;
(ii) the Official Acceptance (as such term is defined in the
Siemens Agreement) by FPC of the Facility; and
(iii) the receipt by GPC from the trustee under the Indenture of
a Release of the undivided ownership interest in that portion of the
Facility to be sold to GPC at the Closing.
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<PAGE>
8. FORCE MAJEURE. Notwithstanding any other provision of this Agreement,
no delay in or failure of performance by either party to this Agreement shall
constitute a breach under this Agreement, and neither party shall be liable
for any loss or damage suffered by the other Party as a result thereof, when
and to the extent such delay in or failure of performance is caused by a Force
Majeure Event; provided that:
(a) the non-performing Party gives the other Party prompt notice
describing the particulars of the Force Majeure Event, including, without
limitation, the nature of the occurrence and its expected duration;
(b) the suspension of performance is of no greater scope and of no
longer duration than is required by the Force Majeure Event; and
(c) the non-performing Party uses reasonable efforts to remedy its
inability to perform; provided, however, that neither Party shall be required
to settle any strike or labor trouble or to settle any lawsuit or other legal
proceeding brought against it.
9. DISPUTE RESOLUTION PROCEDURES.
(a) Mandatory Procedures. In the event of any dispute between the
Parties hereto with respect to any matter in connection with this Agreement,
compliance with the procedures set forth in this Section shall be a condition
precedent to the filing of any lawsuit, other than for injunctive relief, with
respect to such dispute; provided, however, that a Party shall not be required
41
<PAGE>
to comply with the alternative dispute resolution procedures of this Section
upon the breach of this Agreement because of the other Party's willful or
intentional misconduct.
(i) The Parties agree that representatives designated by the
Parties shall meet at mutually agreeable times and engage in good faith
negotiations at a mutually convenient location to resolve such dispute.
(ii) If either Party subsequently determines that negotiations
between the representatives of the Parties are at an impasse, the Party
declaring that the negotiations are at an impasse shall give notice to
the other Party stating with particularity the issues that remain in
dispute.
(iii) Not more than fifteen (15) days after the giving of such
notice, each Party shall deliver to the other Party a list of the names
and addresses of at least five individuals, any one of whom would be
acceptable as a neutral advisor in the dispute (the "Neutral Advisor")
to the Party delivering the list. Any individual proposed as a Neutral
Advisor shall have experience in determining, mediating, evaluating, or
trying commercial litigation and shall not be affiliated with the Party
that is proposing such individual. Within 10 days after delivery of
such lists, the Parties shall agree on a Neutral Advisor. If they are
unable to so agree within that time, they shall each, within 10 days
thereafter, select one individual from the lists. The individuals so
42
<PAGE>
selected shall meet promptly and appoint a third individual from the
lists to serve as the Neutral Advisor.
(iv) Within thirty (30) days after the selection of a Neutral
Advisor:
(A) each Party shall meet separately with the Neutral
Advisor on a schedule established by the Neutral Advisor;
(B) following the meeting described in Section 9(a)(iv)(A),
each Party shall make a presentation with respect to its position
concerning the dispute at a joint meeting of the Parties and the
Neutral Advisor; and
(C) following such joint meeting, each Party shall meet
separately with the Neutral Advisor, who will advise such Party of
his or her opinion of the position of each Party in the dispute.
(v) The expenses of the Neutral Advisor shall be shared by the
Parties equally. All other out-of-pocket costs and expenses for the
alternative dispute resolution procedure required under this Section
shall be paid by the party incurring the same.
(vi) Positions taken and statements made during this alternative
dispute resolution procedure shall be deemed settlement negotiations and
shall not be admissible for any purpose in any subsequent proceeding.
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(b) Failure to Resolve Dispute. If any dispute has not been resolved
within thirty (30) days following the joint meeting described in Section
9(a)(iv)(B) above, either Party may file appropriate administrative or
judicial proceedings with respect to the dispute.
10. THIRD PARTY CLAIMS. FPC agrees to indemnify, hold harmless and defend
GPC against any loss, cost, damages or expense (including attorneys' fees)
arising out of any claim for personal injury, death, property damage or other
loss asserted against GPC by a third party to the extent caused by FPC's gross
negligence as Agent or willful or intentional misconduct as Agent.
11. LIMITATION OF LIABILITY. Notwithstanding any other provisions of this
Agreement or any of the Collateral Documents, in no event shall FPC or GPC
have any liability to the other under this Agreement or any of the Collateral
Documents for (A) any special, incidental, indirect or consequential damages;
(B) damages with respect to costs of capital, costs of replacement power, loss
of profits or revenues, loss of use of plant or equipment, or claims of
customers of FPC or GPC, as the case may be, irrespective of whether such
damages may be categorized as direct, special, consequential, incidental,
indirect or otherwise; or (C) costs, losses, damages, expenses, fines or
penalties to the extent that either Participant is entitled to receive
insurance proceeds pursuant to an insurance policy or policies covering such
costs, losses, damages, expenses, fines or penalties.
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<PAGE>
12. BREACH OF AGREEMENT.
(a) By GPC. GPC shall be in breach of this Agreement in the event
that:
(i) it fails to pay any monetary obligation owing by it under
this Agreement or any of the Collateral Documents within thirty (30)
days after notice thereof by FPC;
(ii) it fails to observe or perform any of its other obligations
under this Agreement or any of the Collateral Documents, and such
failure is not cured within thirty (30) days after notice thereof by
FPC; or
(iii) it becomes insolvent, or files a petition in bankruptcy, or
there is filed against it a petition in bankruptcy which is not
dismissed within one hundred twenty (120) days after the filing thereof.
(b) By FPC. FPC shall be in breach of this Agreement if:
(i) it fails to observe or perform any of its obligations under
this Agreement or any of the Collateral Documents and such failure
continues for thirty (30) days after notice thereof by GPC; provided,
however, that if such failure is not reasonably capable of being cured
by FPC within such thirty (30) day period, FPC shall not be deemed to be
in breach of this Agreement or any of the Collateral Documents, as a
45
<PAGE>
result of such failure, if FPC commences the cure of such failure within
a reasonable time after receipt of notice of such failure from GPC and
FPC proceeds with diligence to cure such failure; provided further
however, that any such cure period shall not exceed six (6) months;
(ii) it fails to perform the Agency Functions in accordance with
Prudent Utility Practice and such failure continues for thirty (30) days
after notice thereof by GPC; provided, however, that if such failure is
not reasonably capable of being cured by FPC within such thirty (30) day
period, FPC shall not be deemed to be in breach of this Agreement, as a
result of such failure, if FPC (A) commences the cure of such failure
within a reasonable time after receipt of notice of such failure from
GPC; (B) cures such failure within six (6) months after such notice from
GPC; and (c) pays for all costs, expenses, penalties and fees associated
with the cure of the failure; or
(iii) it becomes insolvent, or files a petition in bankruptcy, or
there is filed against it a petition in bankruptcy which is not
dismissed within one hundred twenty (120) days after the filing thereof.
13. REMEDIES.
(a) Remedies of FPC. Upon the breach of this Agreement by GPC, FPC,
in addition to its right to recover damages from GPC with respect to such
breach, or any equitable remedies to which it may be entitled, shall have the
right, at FPC's option, by notice to GPC, to purchase GPC's entire co-
46
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ownership interest in the Facility at a purchase price equal to the lower of
(A) the Fair Market Value, as determined under Subsection (c) below, or (B)
Net Book Value, as determined under Subsection (d) below, of GPC's co-
ownership interest in the Facility. In the event FPC exercises its option to
purchase GPC's entire co-ownership interest in the Facility in accordance with
this Section 13(a), FPC shall have the absolute right to withhold from GPC the
capacity and energy to which GPC would have been entitled in the absence of
such breach and FPC shall be entitled to utilize or sell, solely for FPC's
benefit and without any obligations to account to GPC, all or any portion of
such capacity and energy until such time as GPC transfers its undivided co-
ownership interest in the Facility to FPC pursuant to Section 13(e) of this
Agreement.
(b) Remedies of GPC.
(i) FPC's Willful or Intentional Misconduct. Upon a breach of
this Agreement because of FPC's willful or intentional misconduct, GPC,
in addition to its right to recover damages from FPC with respect to
such breach, or any equitable remedies to which it may be entitled,
shall have the right, at GPC's option, by notice to FPC, to require FPC
to purchase GPC's entire co-ownership interest in the Facility at a
purchase price equal to the greater of (A) 125% of Fair Market Value, as
determined under Subsection (c) below, or (B) 125% of the Net Book
Value, as determined under Subsection (d) below, of GPC's co-ownership
interest in the Facility.
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<PAGE>
(ii) Failure to Operate in Accordance with Prudent Utility
Practice. Upon a breach of this Agreement because of FPC's failure to
perform the Agency Functions in accordance with Prudent Utility
Practice, where such failure does not constitute willful or intentional
misconduct, GPC, in addition to its right to recover damages from FPC
with respect to such breach, or any equitable remedies to which it may
be entitled, shall have the right, at GPC's option, by notice to FPC, to
require FPC to purchase GPC's entire co-ownership interest in the
Facility at a purchase price equal to the greater of (A) the Fair Market
Value, as determined under Subsection (c) below, or (B) the Net Book
Value, as determined under Subsection (d) below, of GPC's co-ownership
interest in the Facility.
(iii) Any Other Breach. Upon any breach of this Agreement by FPC
other than a breach described in paragraphs (i) or (ii) above, GPC may
elect as its exclusive remedy with respect to such breach, other than
any equitable remedies to which it may be entitled, to either (A)
recover damages from FPC with respect to such breach; or (B) require
that FPC purchase GPC's entire co-ownership interest in the Facility at
the same purchase price as determined under paragraph (ii) above.
(c) Determination of Fair Market Value. Within thirty (30) days after
the date of the notice by GPC or FPC, exercising its option under Subsection
(a) or (b), as the case may be, GPC and FPC shall attempt to agree as to the
fair market value of GPC's co-ownership interest in the Facility, taking into
account, (i) in the case of a purchase under Subsection (a) above, GPC's
48
<PAGE>
accrued share and projected future share of decommissioning, dismantling and
salvage costs of the Facility, as if GPC were going to continue to co-own its
entire interest in the Facility until such de-commissioning, dismantling and
salvage, or (ii) in the case of a purchase under subsection (b) above, GPC's
accrued share of de-commissioning, dismantling and salvage costs of the
Facility to the date of such determination of fair market value (the "Fair
Market Value"). If they are unable to agree on such Fair Market Value during
such thirty (30) day period, then, within ten (10) days thereafter, each of
the Participants shall select an appraiser and give notice to the other
Participant of its selection. The two appraisers shall promptly select a
third appraiser, who shall determine the Fair Market Value, and whose
determination of Fair Market Value shall be binding on both Participants.
(d) Determination of Net Book Value. The net book value of GPC's
interest in the Facility (the "Net Book Value") shall be determined as
follows:
(i) For purposes of Subsection (a) above, the net book value of
GPC's interest in the Facility shall be determined in the same manner as FPC
has determined the net book value of its co-ownership interest in the
Facility, adjusted appropriately to take into account GPC's accrued share and
projected future share of de-commissioning, dismantling and salvage costs of
the Facility, as if GPC were going to continue to co-own its entire interest
in the Facility until such de-commissioning, dismantling and salvage.
49
<PAGE>
(ii) For purposes of Subsection (b), the net book value of GPC's
interest in the Facility shall be as reflected in GPC's books and records,
adjusted appropriately to take into account, if not already taken into account
in the determination of net book value in GPC's books and records, GPC's
accrued share of de-commissioning, dismantling and salvage costs of the
Facility to the date of such determination of net book value.
(e) Closing of the Purchase. Within twenty (20) days after (i) the
determination of the purchase price under Subsection (a) or (b) above, or (ii)
the receipt of all governmental approvals necessary for such transfer and
assignment, whichever is later, GPC shall transfer and assign to FPC, by bill
of sale and other appropriate assignment documents, GPC's entire co-ownership
interest in the Facility, free and clear of all liens, claims and
encumbrances, and FPC shall pay to GPC the purchase price for such co-
ownership interest in immediately available United States funds. GPC shall
use its reasonable efforts to obtain any and all governmental approvals
necessary for such transfer and assignment.
(f) Termination of the Collateral Documents. Upon the purchase by FPC
of GPC's co-ownership interest pursuant to this Section 13, this Agreement and
the Collateral Documents shall automatically terminate.
14. MISCELLANEOUS.
(a) Survival. The agreements, covenants, representations and
warranties contained in this Agreement shall survive the Closing.
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(b) Further Assurances. From time to time after the date hereof, each
Party will execute and deliver such instruments of conveyance and other docu-
ments, upon the request of the other Party, as may be necessary or appropriate
to carry out the intent of this Agreement.
(c) Governing Law. The validity, interpretation, and performance of
this Agreement and each of its provisions shall be governed by the laws of the
State of Florida.
(d) Notice. Any notice to be given or that may be given under this
Agreement shall be in writing and shall be (i) delivered by hand; (ii)
delivered through the United States Mail, postage prepaid, certified, return
receipt requested; or (iii) delivered through or by Federal Express, Express
Mail, or other expedited mail or package service, if a receipt evidencing
delivery has been retained; and addressed to the Parties as follows:
If to GPC: Georgia Power Company
333 Piedmont Avenue, N.E.
Atlanta, Georgia 30308
Attention: F.D. Williams, Senior
Vice President, Bulk Power Markets
With copy to: Southern Company Services, Inc.
800 Shades Creek Parkway
Birmingham, Alabama 35209
Attention: W. K. Newman, Vice President,
Operating and Planning Services
If to FPC: Florida Power Corporation
3201 Thirty-Fourth Street South
St. Petersburg, Florida 33711
Attention: Director,
Combustion Turbine Operations
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- and to -
Florida Power Corporation
P. O. Box 368
Intercession City, Florida 33848
Attention: Intercession City
Plant Manager
With copy to: General Counsel
Florida Power Corporation
3201 Thirty-Fourth Street South
St. Petersburg, Florida 33711
Any notice that may be given under this Agreement shall be deemed given
(i) five days after such notice has been deposited in the United States Mail,
certified, return receipt requested, with proper postage affixed thereto, (ii)
one Business Day after such notice has been deposited with Federal Express,
Express Mail or other expedited mail or package delivery service guaranteeing
delivery not later than the next Business Day, or (iii) upon hand delivery to
the appropriate address and person as herein provided if a receipt evidencing
delivery has been retained. Either Party hereto may change the address
provided hereinabove or the person to whose attention notices are to be given,
by notice to the other party in the manner hereinabove provided.
(e) Headings Not To Affect Meaning. The descriptive headings of the
various provisions of this Agreement have been inserted for convenience of
reference only and shall in no way modify or restrict any of the terms and
provisions hereof.
(f) No Partnership. Notwithstanding any provision of this Agreement,
neither of the Parties intends to create hereby any joint venture,
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partnership, association taxable as a corporation, or other entity for the
conduct of any business for profit between themselves.
(g) Amendments. This Agreement may be amended by and only by a
written instrument duly executed by each of the Parties.
(h) Successors and Assigns; No Third Party Beneficiaries. This
Agreement shall inure to the benefit of and be binding upon each of the
Parties and their respective successors and upon their permitted assigns
pursuant to the provisions of Section 5(b), ALIENATION AND ASSIGNMENT, hereof.
Nothing in this Agreement, express or implied, is intended to confer upon any
other person any rights or remedies hereunder.
(i) Counterparts. This 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.
(j) Disclaimer. FPC MAKES NO REPRESENTATION OR WARRANTY WHATSOEVER IN
THIS AGREEMENT OR THE COLLATERAL DOCUMENTS, EXPRESS, IMPLIED OR STATUTORY,
INCLUDING, WITHOUT LIMITATION, ANY REPRESENTATION OR WARRANTY AS TO THE VALUE,
QUANTITY, CONDITION, SALABILITY, OBSOLESCENCE, MERCHANTABILITY, FITNESS OR
SUITABILITY FOR USE OR WORKING ORDER OF THE FACILITY OR ANY PORTION THEREOF OR
CAPACITY OF THE FACILITY; AND FPC DOES NOT REPRESENT OR WARRANT THAT THE USE
OR OPERATION OF ANY PORTION OF THE FACILITY WILL NOT VIOLATE PATENT, TRADEMARK
OR SERVICE MARK RIGHTS OF ANY THIRD PARTIES. GPC IS WILLING TO PURCHASE ITS
INTEREST IN THE FACILITY "AS IS" AND "WHERE IS" SUBJECT TO AND IN ACCORDANCE
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WITH THE TERMS AND CONDITIONS OF THIS AGREEMENT. Notwithstanding the
foregoing, GPC shall have the benefit, consistent with its co-ownership
interest in the Facility, of all manufacturers' and vendors' warranties and
all patent, trademark and service mark rights running to GPC in connection
with the Facility.
(k) Continuing Due Diligence. From the date hereof and until the
consummation of the Closing, GPC shall, in addition to any other rights
conferred otherwise hereunder or under the Operating Agreement, be entitled,
upon reasonable prior notice to FPC, and without disruption to the operations
of the Facility or on the Facility Site, to conduct such reasonable review of
the Facility and the Facility Site as it may reasonably deem appropriate.
This review shall be referred to herein as "Due Diligence."
(l) Several Agreements; Entire Agreements. The agreements and
obligations of the Parties set forth in this Agreement and the Collateral
Documents shall be the several, and not joint, agreements and obligations of
the Parties. This Agreement and the Collateral Documents supersede all prior
agreements between the Parties with respect to their subject matter,
including, without limitation, the letter of intent between FPC and Southern
Company Services, Inc., as agent for the operating subsidiaries of The
Southern Company, dated August 12, 1993, as amended, and are intended (with
the documents referred to herein and in the Collateral Documents) as a
complete and exclusive statement of the terms of the agreements between the
parties with respect thereto.
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(m) Construction of "Including". Wherever the term "including" is
used in this Agreement, such term shall not be construed as limiting the
generality of any statement, clause, phrase or term and shall not be deemed to
exclude any person or thing otherwise within the meaning of the statement,
clause, phrase or term which it modifies.
(n) No Delay. No disagreement or dispute of any kind between the
Participants concerning any matter, including, without limitation, the amount
of any payment due from GPC, or the correctness of any charge made to GPC,
shall permit GPC to delay or withhold any payment pursuant to this Agreement.
The undersigned parties hereto have duly executed this Agreement as of
the date first above written.
WITNESSES: GEORGIA POWER COMPANY, as a
Participant
By:
H. Allen Franklin, as
President
and Chief Executive Officer
FLORIDA POWER CORPORATION, as Agent
and as a Participant
By:
A.J. Keesler, Jr., as
President
and Chief Executive Officer
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ATTACHMENT A
DEFINITIONS
1. ADDITIONAL COSTS OF CONSTRUCTION. The "Additional Costs of
Construction" shall refer to all costs incurred by FPC, as Agent for the
Participants, after the Closing, in connection with the planning, design,
licensing, procurement, acquisition, construction, completion, testing,
startup, renewal, addition, modification, retirement, replacement or disposal
of the Facility, or any portion thereof, including, without limitation, that
portion of administrative and general expenses incurred by FPC, as Agent,
which is properly and reasonably allocable to the Facility and for which FPC
has not been otherwise reimbursed by GPC, which costs are properly recordable
in accordance with the Electric Plant Instructions and in appropriate accounts
as set forth in the Uniform System of Accounts, and shall also include all
costs incurred by FPC, as Agent, in connection with (i) the purchase and
acquisition of Spare Parts, and any replacements for such Spare Parts, that
are to be utilized for the Facility, including, without limitation, that
portion of administrative and general expenses incurred by FPC, as Agent,
which is properly and reasonably allocable to such acquisition of Spare Parts
and for which FPC has not been otherwise reimbursed by GPC, (ii) the
acquisition of all necessary governmental permits, materials and supplies,
engineering drawings and records, and operation and maintenance procedure
manuals, (iii) any taxes, including, without limitation, sales, use or excise
taxes incurred in connection with the acquisition or construction of the
Facility, and (iv) any and all costs to dismantle, remove, salvage or de-
commission all or any portion of the Facility; provided, however, that
Additional Costs of Construction shall not include any costs and expenses
incurred by FPC for the sole benefit of FPC.
<PAGE>
2. AFFILIATE. An "Affiliate" of a Participant shall mean any
corporation, partnership (limited or general), limited liability company or
other person or entity controlling, under common control with, or controlled
by, such Participant. The term "control" (including the terms "controlling,"
"controlled by" and "under common control with") means the possession, direct
or indirect, of the power to direct or cause the direction of the management
and policies of a person, whether through the ownership of voting shares, by
contract, or otherwise.
3. AGENCY FUNCTIONS. The "Agency Functions" shall mean those
activities which the Agent shall undertake on behalf of the Participants which
relate to the planning, design, licensing, procurement, acquisition (other
than acquisition by GPC of a leasehold interest in the Facility Site and an
undivided co-ownership interest in the Facility pursuant to this Agreement),
construction, completion, testing, startup, administration of the Siemens
Agreement (including, without limitation, negotiation of amendments to the
Siemens Agreement determined by FPC, as Agent, to be necessary with respect to
the Facility and any litigation or other dispute resolution in connection with
the Siemens Agreement), management, control, operation, de-commissioning,
dismantling, salvage, maintenance, renewal, addition, replacement,
modification, retirement and disposal of the Facility, and to arrange for and
acquire all fuel and fuel transportation for the Facility under this Agreement
and the Operating Agreement.
4. AGENT. "Agent" shall mean FPC or its successors with respect to
its or their rights and obligations in the performance of the Agency
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Functions. The term "Agent" shall also mean and refer to FPC (or any of its
successors as Agent) acting on its own behalf with respect to the Facility and
the Common Facilities for so long as FPC (or its successor, as Agent) owns an
undivided ownership interest in the Facility.
5. BUSINESS DAY. A "Business Day" shall be any Monday, Tuesday,
Wednesday, Thursday or Friday other than a day which has been established by
law or required by executive order as a holiday for any commercial banking
institution in the State of Florida or the State of Georgia.
6. CARRYING CHARGES. "Carrying Charges" shall mean carrying charges
for which GPC is responsible, under the Ownership Agreement or the Operating
Agreement, with respect to (a) Fuel Inventory, as calculated pursuant to
Attachment E to the Ownership Agreement and Attachment B to the Operating
Agreement, and (b) Common Facilities, as calculated pursuant to Attachment F
to the Operating Agreement.
7. CLOSING. The "Closing" has the meaning set forth in Section 3(c)
of the Ownership Agreement.
8. COLLATERAL DOCUMENTS. The term "Collateral Documents":
(a) as used in the Ownership Agreement, shall refer to the
Operating Agreement, the Transmission Service Agreement, the Long Term Lease
Agreement and the Step-Up Transformer Agreement, collectively; or
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(b) as used in the Operating Agreement, shall refer to the
Ownership Agreement, the Transmission Service Agreement, the Long Term Lease
Agreement and the Step-Up Transformer Agreement, collectively.
9. COMMERCIAL OPERATION. "Commercial Operation" shall refer to the
date on which the Facility is completed and declared fully operable by FPC.
10. COMMON FACILITIES. The "Common Facilities" shall be the items
described in Attachment E to the Operating Agreement that will serve (a) the
Facility, or (b) the Facility and other facilities located on the Intercession
City Site, and any and all modifications to, replacements of or additions to
such items.
11. COMMON FACILITIES CARRYING CHARGES. "Common Facilities Carrying
Charges" shall mean the annual charges, as calculated in the manner set forth
in Attachment F to the Operating Agreement for the use of the Common
Facilities by the Facility, based upon FPC's investment in the Common
Facilities, as adjusted from time to time, FPC's cost of capital, depreciation
and property taxes with respect to the Common Facilities.
12. CONSTRUCTION PERIOD. "Construction Period" shall refer to the
period of time from and including the effective date of the "Notice of
Commencement of Construction" that FPC files with the County of jurisdiction
for the Facility until and including the day before the Facility is fired for
the first time.
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13. COSTS OF CONSTRUCTION. The "Costs of Construction" shall refer to
all costs incurred by FPC, as Agent for the Participants, in connection with
the planning, design, licensing, procurement, acquisition, construction,
completion, testing, startup, renewal, addition, modification, retirement,
replacement or disposal of the Facility, or any portion thereof, including,
without limitation, that portion of administrative and general expenses
incurred by FPC, as Agent, which is properly and reasonably allocable to the
Facility and for which FPC has not been otherwise reimbursed by GPC, which
costs are properly recordable in accordance with the Electric Plant
Instructions and in appropriate accounts as set forth in the Uniform System of
Accounts, and shall also include all costs incurred by FPC, as Agent, in
connection with (i) the cost of fuel consumed by the Facility on and prior to
the date of Commercial Operation with respect to the testing of the Facility
(less all applicable credits provided for in FPSC Staff Accounting Bulletin
No. 2 and FERC Electric Plant Instruction No. 3 (18a)), including, without
limitation, that portion of administrative and general expenses incurred by
FPC, as Agent, which is properly and reasonably allocable to the acquisition
of such fuel and for which FPC has not been otherwise reimbursed by GPC, (ii)
the purchase and acquisition of the initial supply of Spare Parts, and any
replacements for such Spare Parts, that are utilized, during pre-Commercial
Operation construction activities, for the Facility, including, without
limitation, that portion of administrative and general expenses incurred by
FPC, as Agent, which is properly and reasonably allocable to such acquisition
of Spare Parts and for which FPC has not been otherwise reimbursed by GPC,
(iii) the acquisition of all necessary governmental permits, materials and
supplies, engineering drawings and records, and operation and maintenance
5
<PAGE>
procedure manuals, (iv) any bonus earned by Siemens under the Siemens
Agreement, (v) any taxes, including, without limitation, sales, use or excise
taxes incurred in connection with the acquisition or construction of the
Facility, (vi) the expenditure or advancement of funds during construction
with respect to Facility (including, without limitation, an Allowance for
Funds Used During Construction for the period on or before the date of
Commercial Operation), and (vii) if the date of the Closing is delayed, under
the terms of Section 3(c)(iii) of the Ownership Agreement, because of GPC's
failure to obtain or receive the approval by the Georgia Public Service
Commission of GPC's Application for Certification of the Intercession City
Combustion Turbine Project, FPC's cost of capital, determined by reference to
the sum of FPC's Pre-Tax Weighted Cost Rates as shown in Attachment E to the
Ownership Agreement (for example, 13.35% as of the date of this Agreement) for
the period from and after the date scheduled by FPC for the Closing, pursuant
to Section 3(c)(i), CLOSING, of the Ownership Agreement, and extending to and
including the actual date of the Closing); provided, however, that Costs of
Construction shall not include any costs and expenses (A) incurred by FPC for
the sole benefit of FPC, or (B) incurred by any Participant in connection with
the development of this Agreement or the Collateral Documents.
14. DEDICATED COMMON FACILITIES. "Dedicated Common Facilities" shall
mean those items that are not part of the Facility but which, in the
reasonable determination of FPC, as Agent, support solely the Facility and are
included in item 45 of Attachment E to the Operating Agreement, as revised
from time to time.
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15. ENVIRONMENTAL COSTS. "Environmental Costs" shall mean all costs,
losses, damages, expenses, fines or penalties, exclusive of insurance
proceeds, which arise from the possession, ownership or use by FPC, GPC, or
third parties of Environmental Material; provided, however, that modifications
to the Facility that are required in order to comply with environmental laws
or regulations shall not be considered Environmental Costs.
16. ENVIRONMENTAL MATERIAL. "Environmental Material" shall mean and
include asbestos, radioactive material, petroleum, petroleum products,
petroleum fractions, petroleum distillates, and any substance, material or
waste designated as hazardous under the Comprehensive Environmental Response,
Compensation, and Liability Act and amendments thereto, or designated as toxic
or hazardous or otherwise regulated under the Toxic Substances Control Act and
amendments thereto, the Resource Conservation and Recovery Act and amendments
thereto, the Clean Water Act and amendments thereto, the Clean Air Act and
amendments thereto, the Florida Air Quality Act and amendments thereto, the
Florida Hazardous Waste Management Act and amendments thereto, or the Florida
Water Quality Control Act and amendments thereto.
17. EQUIVALENT OPERATING HOURS. The term "Equivalent Operating Hours"
shall (a) mean the sum of (1) the actual operating hours that the Facility is
on-line during any designated period of time, and (2) the product determined
by multiplying (A) the number of starts with respect to the Facility during
the same designated period of time, by (B) ten (10); or (b) have such other
meaning, as reasonably determined by FPC, and which is consistently used by
FPC in connection with its maintenance plans for the Facility.
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18. FACILITY. The term "Facility" shall refer to:
(i) All property comprising the combustion turbine-generating
unit to be known as the Intercession City Facility CT, including,
without limitation, one complete Siemens V84.3 combustion turbine-
generating unit (comprised of a gas turbine block, two combustion
chambers, a generator exciter block, a stack, a fin fan cooler, an
auxiliary skid, a water injection block, a cooling water block, a power
and control module, a battery module, a generator breaker module, a
generator bus duct, unit auxiliary transformer secondary switchgear, a
fuel oil pump block, an air intake filter, a unit auxiliary transformer
and a transfer switch module), the enclosures housing the same, and the
Step-Up Transformer, which are to be used solely in connection with such
Siemens unit, all as the foregoing list of property may be modified or
supplemented at or prior to the Closing;
(ii) Such modifications to the Facility or such additional
facilities and other tangible property as may be acquired, constructed,
installed or replaced solely in connection with the Facility; provided
that (A) the cost of such modifications or additional facilities or
other tangible property shall be properly recordable in accordance with
the Uniform System of Accounts, and (B) such modifications or additional
facilities or other tangible property shall have been acquired,
constructed, installed or replaced for the joint use of the Participants
under and subject to the provisions of the Ownership Agreement or the
Operating Agreement;
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(iii) The Spare Parts; and
(iv) Existing intangible property rights, and such additional
intangible property rights as may be hereafter acquired, associated with
the planning, licensing, design, construction, acquisition, completion,
testing, startup, management, control, operation, maintenance, renewal,
addition, replacement, modification and disposal of any of the items
comprising the Facility.
Notwithstanding any of the foregoing, the Facility shall not include the
Facility Site or the Common Facilities.
A diagram of the Facility, as contemplated by FPC as of the date of the
Ownership Agreement, is as shown in Attachment F to the Ownership Agreement.
19. FACILITY SITE. The "Facility Site" shall refer to that certain
parcel of land located within the Intercession City Site upon which the
Facility shall be constructed and located. The exact legal description of the
Facility Site shall be determined upon completion of the construction of the
Facility, and shall consist of a parcel of land approximately 105 feet by 435
feet, which shall be approximately as shown within the crosshatched area
labeled as the "demised premises" on Attachment G to the Ownership Agreement,
together with such additional land, appurtenant easements or other rights
therein as may hereafter be acquired solely and exclusively for the purposes
of the Facility. GPC and FPC agree that the exact legal description of the
parcel of land described above shall be attached as Attachment G to the
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Ownership Agreement upon completion of the survey of such parcel of land and
the approval of such survey by FPC, and such legal description shall become a
part of the Ownership Agreement and supersede the existing Attachment G.
20. FDEP. The "FDEP" shall refer to the Department of Environmental
Protection, of the State of Florida, or any entity succeeding to the powers
and functions thereof.
21. FERC. The "FERC" shall mean the Federal Energy Regulatory
Commission or any entity succeeding to the powers and functions thereof.
22. FIXED FUEL COSTS. The "Fixed Fuel Costs" shall mean all Fuel
Costs other than the Variable Fuel Costs.
23. FIXED O&M COSTS. The "Fixed O&M Costs" shall mean all Operating
Costs other than the Variable O&M Costs.
24. FORCE MAJEURE EVENT. A "Force Majeure Event" shall refer to any
occurrence reasonably beyond the control and not attributable to the neglect
of a Party, including, without limitation, any one or more of the following:
failure, interruption, or curtailment of transportation or supply of fuels;
inability to obtain materials or equipment; failure or breakdown of materials
or equipment; breakdown of or damage to the Facility or the Common Facilities;
absence as of any particular time of precise engineering and scientific
knowledge generally available to fashion a method for compliance with Legal
Requirements or absence as of any particular time of appropriate technology
10
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generally available which may be required for compliance with Legal
Requirements; confiscation of facilities by Governmental Authorities;
restraint by court order or order of public authority; challenge by third
party or governmental agency with respect to the construction, ownership, or
operation of the Facility or the Common Facilities; act or failure to act of
any Governmental Authority; act of war; act of a public enemy; explosion;
rebellion, terrorism, or sabotage, or damage resulting therefrom; fire,
hurricane, tornado, lightning, flood, earthquake or other casualty or act of
God; explosion or other physical disaster; act or omission of any third party;
discovery of hazardous or toxic wastes on or under the property leased to GPC
under the Long Term Lease; riot, rebellion, strike, or other concerted act of
workmen; protests or pranks; embargo, blockade, quarantine, restriction,
epidemic; or any other cause, direct or indirect, which is reasonably beyond
the control and not attributable to the neglect of the Party, whether similar
or dissimilar to those enumerated above.
25. FPSC. The "FPSC" shall mean the Florida Public Service Commission
or any governmental agency succeeding to the powers and functions thereof.
26. FUEL CARRYING CHARGES. "Fuel Carrying Charges" shall mean those
Carrying Charges with respect to Fuel Inventory, as determined in Attachment E
to the Ownership Agreement and Attachment B to the Operating Agreement.
27. FUEL COSTS. The "Fuel Costs" shall mean all costs incurred by the
Agent for the Participants that are allocable to the acquisition, processing,
transportation, delivering, handling, storage, treatment, analysis,
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measurement and disposal of fuel consumed by the Facility after the date of
Commercial Operation, including, without limitation, any advance payments in
connection therewith, less credits related to such costs applied as
appropriate, and including, without limitation, that portion of administrative
and general expenses which is properly and reasonably allocable to acquisition
and management of fuel and for which the Agent has not been otherwise
reimbursed by GPC. Fuel Costs shall consist of Fixed Fuel Costs and Variable
Fuel Costs.
28. FUEL INVENTORY. The "Fuel Inventory" shall mean the initial and
on-going supply of fuel for the Facility.
29. GOVERNMENTAL AUTHORITY. A "Governmental Authority" shall mean any
local, state, regional or federal administrative, legal, judicial, or
executive agency, court, commission, department or other entity, but excluding
any agency, commission, department or other such entity acting in its capacity
as lender, guarantor or mortgagee.
30. INDENTURE. The "Indenture" shall refer to that certain Indenture
of Mortgage and Deed of Trust, dated as of January 1, 1944, and Supplemental
Indentures thereto, from FPC to Morgan Guaranty Trust Company of New York, as
Trustee, and First Union National Bank of Florida, as Co-Trustee.
31. INTERCESSION CITY SITE. The "Intercession City Site" shall refer
to the land located in Osceola County, Florida described in Attachment H to
the Ownership Agreement.
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32. LEGAL REQUIREMENTS. "Legal Requirements" shall mean all laws,
codes, ordinances, orders, judgments, decrees, injunctions, licenses, rules,
permits, approvals, regulations and requirements of every Governmental
Authority having jurisdiction over the matter in question, whether federal,
state or local, which may be applicable to FPC, as Agent, or either
Participant, as required by the context in which used, or to the Facility, or
to the use, manner of use, occupancy, possession, planning, licensing, design,
procurement, construction, acquisition, testing, startup, operation,
maintenance, management, control, addition, renewal, modification, replacement
or disposal of the Facility or any portion or portions thereof.
33. LONG TERM LEASE. The "Long Term Lease" shall refer to that
certain Long Term Lease Agreement, dated as of June 8, 1994, between FPC and
GPC, as such Agreement may be amended from time to time.
34. MAJOR OUTAGE. A "Major Outage" shall refer to any blade
recoating, blade replacement, combustion tile replacement and/or generator
rewinding (individually, a "Procedure") with respect to the Facility that is
performed (a) during any Scheduled Maintenance Outage to meet the preventive
maintenance schedule or standards of the manufacturer of the Facility, as the
same may be amended from time to time, or (b) after not less than ten thousand
(10,000) Equivalent Operating Hours since (i) the last such Procedure was
performed, or (ii) the date of Commercial Operation, in the case of the first
such Procedure.
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35. MAJOR OUTAGE COSTS. "Major Outage Costs" shall mean all costs
incurred by FPC with respect to a Major Outage.
36. METERED WATER COST. "Metered Water Cost" shall mean the sum of
(a) the monthly metered volume of demineralized water multiplied by the
contractual cost (incurred by FPC to the operator of the water systems at the
Facility Site) per unit of volume for demineralized water, and (b) 1.5
multiplied by the same metered volume of demineralized water, and multiplied
by the contractual costs (incurred by FPC to the supplier of raw water) per
unit of volume for raw water.
37. 1994 DOLLARS "1994 Dollars" shall mean the dollar amount, at the
applicable time, discounted to December 1994 based on the Consumer Price Index
For All Urban Consumers (CPI-U) [1982-84=100], All Cities, as published by the
United States Department of Labor, Bureau of Labor Statistics or comparable
successor index.
38. OPERATING AGREEMENT. "Operating Agreement" shall refer to that
certain Intercession City Siemens Unit Operating Agreement, dated as of June
8, 1994, between GPC and FPC, as such Agreement may be amended from time to
time.
39. OPERATING COSTS. "Operating Costs" shall mean all of the costs to
operate the Facility (including, without limitation, administrative and
general costs). Operating Costs shall consist of Fixed O&M Costs and Variable
O&M Costs.
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40. OPERATING SUBSIDIARY. "Operating Subsidiary" shall mean Georgia
Power Company, Savannah Electric and Power Company, Gulf Power Company,
Alabama Power Company, or Mississippi Power Company or any successor
corporation that is a regulated public utility and subsidiary of The Southern
Company.
41. OWNERSHIP AGREEMENT. The "Ownership Agreement" shall refer to the
Intercession City Siemens Unit Purchase and Ownership Participation Agreement,
dated as of June 8, 1994, between FPC and GPC, as such Agreement may be
amended from time to time.
42. OWNERSHIP INTEREST. An "Ownership Interest" shall mean for each
Participant the percentage undivided co-ownership interest in the Facility
which such Participant actually owns at any relevant time following the
Closing.
43. PARTICIPANTS. "Participant" and "Participants" shall refer
individually or collectively, as the case may be, to GPC and FPC (in their
capacities as co-owners of the Facility) and to any permitted transferee or
assignee of either of them of an ownership interest in the Facility pursuant
to the Ownership Agreement; provided, however, such references shall only
refer to an entity for so long as said entity has an ownership interest in the
Facility.
44. PARTY. A "Party" shall refer to any entity, which is now or
hereafter a party to this Agreement and the Collateral Documents.
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45. PRIME RATE. The "Prime Rate" shall mean the prime rate of
interest as published from time to time in the Wall Street Journal or
comparable successor publication. The Prime Rate shall be calculated on the
basis of a 365-day year for the actual number of days that a payment,
reimbursement or adjustment, as the case may be, has not been made.
46. PRUDENT UTILITY PRACTICE. "Prudent Utility Practice" at a
particular time shall mean any of the practices, methods and acts engaged in
or approved by a significant portion of the electric utility industry prior to
such time, or any of the practices, methods and acts, which in the exercise of
reasonable judgment by FPC in light of the facts known to it at the time the
decision was made, could have been expected to accomplish the desired result
at a reasonably low cost consistent with good business practices, reliability,
safety and expedition. "Prudent Utility Practice" is not intended to be
limited to the optimum practice, method or act to the exclusion of all others,
but rather to be a spectrum of possible practices, methods or acts having due
regard for, among other things, manufacturers' warranties and the requirements
of Governmental Authorities having competent jurisdiction and the requirements
of this Agreement.
47. PURCHASE PRICE. The "Purchase Price" shall have the meaning set
forth in Paragraph (i) of Section 3(b), PURCHASE PRICE AND PAYMENTS, of the
Ownership Agreement.
48. RELEASE. "Release" shall mean a release executed and delivered by
the holder of a mortgage, deed to secure debt or other security interest
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(including, without limitation, a release from the Indenture trustee)
sufficient to release GPC's co-ownership interest in the Facility from the
lien, security title and effect of such mortgage, deed to secure debt or other
security interest.
49. SCHEDULED MAINTENANCE OUTAGE. A "Scheduled Maintenance Outage"
shall mean a maintenance outage with respect to the Facility which is planned
for the purpose of preventive maintenance and scheduled a reasonable time
prior to the commencement of such outage.
50. SEC. The "SEC" shall refer to the U.S. Securities and Exchange
Commission or any governmental agency succeeding to the powers and functions
thereof.
51. SIEMENS AGREEMENT. The "Siemens Agreement" shall refer to that
certain Contract dated September 28, 1993, between Siemens Power Corporation
and FPC with respect to the Facility as such Agreement may be amended from
time to time.
52. SPARE PARTS. "Spare Parts" shall mean the spare parts purchased
or acquired by FPC, as Agent, from time to time, for use in the Facility.
53. STEP-UP TRANSFORMER. The "Step-Up Transformer" shall mean the
step-up transformer described in the Step-Up Transformer Agreement.
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54. STEP-UP TRANSFORMER AGREEMENT. The "Step-Up Transformer
Agreement" shall refer to that certain Intercession City Siemens Unit Step-Up
Transformer Purchase Agreement, dated as of June 8, 1994, between FPC and GPC,
as such Agreement may be amended from time to time.
55. SUMMER PERIOD. The "Summer Period" shall refer to all of the
calendar months of June, July, August and September during the term of the
Ownership Agreement that include or follow the date of the Closing.
56. TESTING PERIOD. The "Testing Period" shall refer to the period of
time from and including the date on which the Facility is fired for the first
time until and including the day before the date of Commercial Operation.
57. TRANSMISSION SERVICE AGREEMENT. The "Transmission Service
Agreement" shall refer to that certain Intercession City Siemens Unit
Transmission Service Agreement, dated as of June 8, 1994, between GPC and FPC,
as such Agreement may be amended from time to time.
58. UNIFORM SYSTEM OF ACCOUNTS. The "Uniform System of Accounts"
shall mean the FERC Uniform System of Accounts prescribed for Public Utilities
and Licensees (subject to the provisions of the Federal Power Act) as the same
now exists or may be hereafter amended by the FERC.
59. VARIABLE FUEL COSTS. The "Variable Fuel Costs" shall mean all
Fuel Costs as recorded in FPC account 547.10 or equivalent successor account.
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60. VARIABLE O&M COSTS. The "Variable O&M Costs" shall consist of the
Metered Water Costs, and any environmental permit charges, fees and costs
imposed by federal, state or local law with respect to emissions which are
produced by the Facility during a Participant's respective period of
operation.
61. WATER COSTS. The "Water Costs" shall mean the total costs
(including, without limitation, taxes and fees) of (a) all water consumed in
the operation of the Facility, (b) all wastewater discharged in connection
with the operation of the Facility, and (c) all water treatment costs. All
Water Costs other than Metered Water Costs shall be deemed Fixed O&M Costs.
62. WEIGHTED AVERAGE COMMON FACILITIES ALLOCATION FACTORS. The
"Weighted Average Common Facilities Allocation Factors" for GPC and FPC shall
be as determined in Attachment E to the Operating Agreement.
63. WINTER PERIOD. The "Winter Period" shall refer to all of the
calendar months (other than the calendar months included in the Summer Period)
during the term of the Ownership Agreement that include or follow the date of
the Closing.
64. WORKING CAPITAL DEPOSIT. The "Working Capital Deposit" shall be
as defined in Attachment E to the Ownership Agreement and Attachment H to the
Operating Agreement.
19
<PAGE>
ATTACHMENT B
APPROVALS, PERMITS AND LICENSES
TO BE OBTAINED BY GPC OR BY FPC AS AGENT FOR GPC
1. Approval by the Georgia Public Service Commission of Georgia Power
Company's 1993 Application for Certification of the Intercession City
Combustion Turbine Project.
2. Approval by the Securities and Exchange Commission pursuant to the
Public Utilities Holding Company Act of 1935, as amended, of Georgia
Power Company's acquisition of an ownership interest in the Facility.
3. Surface Water Management Permit from the South Florida Water Management
District.
4. Permit to Construct an Industrial Wastewater Treatment and Disposal
System from the Florida Department of Environmental Protection.
5. Authorization by the Department of the Army Corps of Engineers to fill
wetlands pursuant to Nationwide Permit No. 91 NW-41755.
6. General Water Use Permit from the South Florida Water Management
District.
7. Consent by Florida Department of Environmental Protection to use of
state-owned submerged lands.
8. Permits to construct and operate the Facility from Florida Department of
Environmental Protection, Division of Air Resources Management and
Bureau of Air Regulation, pursuant to Chapter 403, Florida Statutes.
9. Building Permit for construction of the Facility from Osceola County,
Florida.
<PAGE>
ATTACHMENT C
APPROVALS, PERMITS AND LICENSES TO BE OBTAINED BY FPC
1. Surface Water Management Permit from the South Florida Water Management
District.
2. Permit to Construct an Industrial Wastewater Treatment and Disposal
System from the Florida Department of Environmental Protection.
3. Authorization by the Department of the Army Corps of Engineers to fill
wetlands pursuant to Nationwide Permit No. 91 NW-41755.
4. General Water Use Permit from the South Florida Water Management
District.
5. Consent by Florida Department of Environmental Protection to use of
state-owned submerged lands.
6. Permits to construct and operate the facility from Florida Department of
Environmental Protection, Division of Air Resources Management and
Bureau of Air Regulation, pursuant to Chapter 403, Florida Statutes.
7. Building Permit for construction of the Facility from Osceola County,
Florida.
8. FERC acceptance for filing of the Transmission Service Agreement.
9. FERC approval of the sale of the Step-Up Transformer.
<PAGE>
ATTACHMENT D
FORM OF BILL OF SALE
FLORIDA POWER CORPORATION, a Florida corporation ("Seller"), for and in
consideration of Ten Dollars ($10.00), and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
has granted, bargained, sold, transferred, set over and delivered, and by
these presents does grant, bargain, sell, transfer, set over and deliver to
GEORGIA POWER COMPANY, a Georgia corporation ("Purchaser"), a one-third
undivided interest to be held as co-owner with Seller in and to the Facility
as such term is defined in that certain Intercession City Siemens Unit
Purchase and Ownership Participation Agreement (the "Agreement") between
Seller and Purchaser dated as of the 8th day of June, 1994, which definition
is incorporated herein as if set out in its entirety.
TO HAVE AND TO HOLD such one-third undivided interest in the Facility
unto Purchaser, its permitted successors and assigns under the Agreement,
forever.
Seller covenants that it is the sole owner of the Facility and that the
one-third undivided interest in the Facility being granted, bargained, sold,
transferred, set over and delivered to Purchaser is free and clear of any and
all liens and encumbrances, except for real and tangible personal property
taxes for [insert calendar year of the Closing] and subsequent years. Seller
shall forever warrant and defend title to the one-third interest in the
Facility against the claims of all persons claiming by, through or under
Seller.
This instrument shall be binding upon Seller, its successors and
assigns, and shall inure to the benefit of Purchaser, and its permitted
successors and assigns under the Agreement.
IN WITNESS WHEREOF, Seller has caused this instrument to be duly
executed as of the ______ day of ___________________, 199___.
WITNESSES: FLORIDA POWER CORPORATION
By:
Name:
Title:
<PAGE>
ATTACHMENT E
DETERMINATION OF WORKING CAPITAL DEPOSIT AND
CARRYING CHARGES WITH RESPECT TO FUEL INVENTORY FOR TESTING
WORKING CAPITAL DEPOSIT
The Working Capital Deposit due on the date of the Closing shall be based on
FPC's budgeted forecast of the average of two months of total billings to GPC
under the Operating Agreement. The Working Capital Deposit will be adjusted
effective as of each January 1 (commencing with the first January 1 after not
less than two monthly bills have been sent to GPC under the Operating
Agreement), to equal the average of two months of total billings to GPC under
the Operating Agreement during the immediately preceding calendar year. For
purposes of this Attachment E, "total billings to GPC under the Operating
Agreement" shall mean all amounts billed to GPC under the Operating Agreement
of whatever nature, including, without limitation, Additional Costs of
Construction, Common Facilities Carrying Charges, Fuel Carrying Charges, Fuel
Costs and Major Outage Costs.
SAMPLE CALCULATION
ORIGINAL DEPOSIT
Billing budget for the calendar year with respect to GPC $1,200,000
Average monthly budgeted total billings to GPC under
Operating Agreement $100,000
Two months average of budgeted total billings to GPC
under Operating Agreement $200,000
ADJUSTMENT PROCEDURE
Working Capital Deposit on hand with FPC $200,000
Average of two months of total billings to GPC
under Operating Agreement based $210,000
on prior calendar year's total billings
Increase in deposit
$10,000
-or-
Working Capital Deposit on hand with FPC $200,000
Average of two months of total billings to GPC
under Operating Agreement based
on prior calendar year's total billings $190,000
Decrease in deposit $10,000
<PAGE>
ATTACHMENT E - Continued
CARRYING CHARGES WITH RESPECT TO
FUEL INVENTORY FOR TESTING
GPC's Fuel Carrying Charges with respect to the Testing Period shall be
calculated as follows:
1. Determine the sum of FPC's Pre-Tax Weighted Cost Rates (the "Total
Pre-Tax Weighted Cost Rate"), based on the methodology set forth
in the chart on page 3 of this Attachment (for example, 13.35%,
as of the date of this Agreement).
2. Multiply the Total Pre-Tax Weighted Cost Rate by a fraction, the
numerator of which is the number of days in the Testing Period,
and the denominator of which is 365 (the "Daily Weighted Cost
Rate").
3. Determine FPC's average cost of the daily average volume of fuel
inventory for all electric generating units on the Intercession
City Site during the Testing Period (the "Daily Average Site Fuel
Cost"), and multiply the Daily Average Site Fuel Cost by one-third
(the "Daily Adjusted Average Site Fuel Cost").
4. Multiply the Daily Adjusted Average Site Fuel Cost by a fraction,
the numerator of which is the name plate rating of the Facility
and the denominator of which is the sum of the name plate ratings
of all electric generating units on the Intercession City Site
(the "Daily Average Facility Fuel Cost").
5. Multiply the Daily Average Facility Fuel Cost by .93 (the "Daily
Adjusted Average Facility Fuel Cost").
6. The Fuel Carrying Charges for the Testing Period shall be the
product determined by multiplying the Daily Adjusted Average
Facility Fuel Cost by the Daily Weighted Cost Rate (the product
determined under item 5 x the product determined under item 2).
S A M P L E C A L C U L A T I O N
Total Pre-Tax Weighted Cost Rate = 13.35%
Number of Days in the Testing Period = 100
Daily Weighted Cost Rate (100/365 x 13.35% = 3.6575% (.036575)
Daily Average Site Fuel Cost = $5,000,000
Daily Adjusted Average Site Fuel Cost = ($5,000,000 x 1/3 = $1,666,665)
Daily Average Facility Fuel Cost ($1,666,665 x 165/965 = $284,974)
Daily Adjusted Average Facility Fuel Cost ($284,974 x 0.93 = $265,026)
Fuel Carrying Charges for the Testing Period ($265,026 x .036575 = $9,693)
2
<PAGE>
ATTACHMENT E - Continued
FPC'S PRE-TAX WEIGHTED COST RATES
FPC Pre-Tax
Capital Weighted
Structure Cost Weighted Income Tax Cost
Components Amount Ratio Rate Cost Multiplier Rates
Rate
Common
Equity $1,195,942 45.84% 12.00% 5.50% 1.628134 8.95%
Preferred
Stock 179,643 6.89% 7.18% 0.50% 1.628134 0.81%
Long Term
Debt:
Fixed Rate 998,561 38.28% 8.26% 3.16% 3.16%
Variable 89,247 3.42% 6.11% 0.21% 0.21%
Rate
Short Term
Debt 145,421 5.57% 4.00% 0.22% 0.22%
Total $2,608,814 100.00% 9.59% 13.35%
NOTE: The items in the above chart, other than Income Tax Multiplier, will be
updated effective as of January 1 of each calendar year based on FPC's
capital structure components and cost rates as of December 31 of the
immediately preceding calendar year. [For example, the Common Equity Cost
Rate shown in the above chart represents FPC's authorized return on equity
as of the date of this Agreement. This item will be updated effective as
of January 1 of each succeeding calendar year to reflect FPC's authorized
return on equity as of December 31 of the immediately preceding calendar
year.]
The Income Tax Multiplier in the above chart sets forth FPC's federal
corporate income tax rate and Florida corporate income tax rate
(which are 35% and 5.5%, respectively, as of the date of this
Agreement). This column will be updated from time to time to reflect
changes in FPC's federal or Florida corporate income taxes. Any such
update will be effective as of the effective date of the applicable
change in corporate income tax rate.
3
<PAGE>
ATTACHMENT F
DIAGRAM OF FACILITY - TO BE INSERTED
<PAGE>
ATTACHMENT G
DIAGRAM OF THE FACILITY SITE
<PAGE>
ATTACHMENT H
LEGAL DESCRIPTION OF INTERCESSION CITY SITE
A TRACT OR PARCEL OF LAND LYING IN SECTION 31, TOWNSHIP 25 SOUTH,
RANGE 28 EAST, OSCEOLA COUNTY, FLORIDA AND BEING MORE PARTICULARLY
DESCRIBED AS FOLLOWS;
COMMENCE AT THE SOUTHEAST CORNER FOR SECTION 31 AND RUN N00 degrees
35'58"E ALONG THE EAST LINE THEREOF A DISTANCE OF 961.13 FEET TO A
POINT ON THE NORTHERLY RIGHT-OF-WAY LINE FOR C.S.X. RAILROAD (100
FOOT RIGHT-OF-WAY), SAID POINT BEING THE POINT OF BEGINNING; THENCE
RUN S63 degrees 29'13"W ALONG SAID NORTHERLY RIGHT-OF-WAY LINE A
DISTANCE OF 1441.59 FEET TO THE POINT OF CURVE (P.C.) CONCAVE
SOUTHEASTERLY, SAID RIGHT-OF-WAY CURVE BEING 50.00 FEET FROM AND
PARALLEL WITH A CENTERLINE LINE CURVE HAVING A RADIUS OF 11459.16
FEET AND A 150 FOOT SPIRAL; THENCE CONTINUE ALONG THE ARC OF SAID
RIGHT-OF-WAY A CHORD BEARING OF S63 degrees 20'58"W A CHORD DISTANCE
OF 349.76 FEET TO THE INTERSECTION OF THE NORTH RIGHT-OF-WAY LINE FOR
STATE ROAD NUMBER 532 (200 FOOT RIGHT-OF-WAY); THENCE N89 degrees
15'56"W ALONG SAID NORTH RIGHT-OF-WAY LINE A DISTANCE OF 1307.75 FEET
TO A POINT ON THE EAST RIGHT-OF-WAY LINE FOR WESTMONT BOULEVARD
(60.00 FOOT RIGHT-OF-WAY) AS RECORDED IN PLAT BOOK 2, PAGE 82 AND 83
OF THE PUBLIC RECORDS FOR OSCEOLA COUNTY, FLORIDA, SAID POINT BEING
THE POINT OF CURVE (P.C.) FOR A CURVE HAVING THE FOLLOWING ELEMENTS:
A RADIUS OF 25.00 FEET, A CENTRAL ANGLE OF 90 degrees 00'00, A CHORD
OF 35.35 FEET AND A CHORD BEARING OF N44 degrees 15'56"W; THENCE
CONTINUE ALONG SAID RIGHT-OF-WAY LINE AND CURVE TO THE RIGHT AN ARC
DISTANCE OF 39.27 FEET TO THE POINT OF TANGENCY (P.T.) FOR SAID
CURVE; THENCE CONTINUE ALONG SAID RIGHT-OF-WAY LINE N00 degrees
44'04"E A DISTANCE OF 48.77 FEET TO THE POINT OF CURVE (P.C.) FOR A
CURVE HAVING THE FOLLOWING ELEMENTS: A RADIUS OF 229.99 FEET, A
CENTRAL ANGLE OF 14 degrees 58'35", A CHORD OF 59.95 FEET AND A CHORD
BEARING OF N06 degrees 45'14"W; THENCE CONTINUE ALONG SAID RIGHT-OF-
WAY LINE AND CURVE TO THE LEFT AND ARC DISTANCE 60.12 FEET TO THE
POINT OF TANGENCY (P.T.) FOR SAID CURVE; THENCE CONTINUE ALONG SAID
RIGHT-OF-WAY LINE N14 degrees 14'32"W A DISTANCE OF 1536.82 FEET TO
THE POINT OF CURVE (P.C.) FOR A CURVE HAVING THE FOLLOWING ELEMENTS:
A RADIUS OF 170.00 FEET, A CENTRAL ANGLE OF 15 degrees 21'23", A
CHORD OF 45.43 FEET AND A CHORD BEARING OF N06 degrees 33'50"W;
THENCE CONTINUE ALONG SAID RIGHT-OF-WAY LINE AND CURVE TO THE RIGHT
AN ARC DISTANCE OF 45.56 FEET TO THE POINT OF TANGENCY (P.T.) FOR
SAID CURVE; THENCE CONTINUE ALONG SAID RIGHT-OF-WAY LINE N01 degrees
06'52" E A DISTANCE OF 1224.15 FEET; THENCE S89 degrees 54'12"E A
DISTANCE OF 3.54 FEET; THENCE N00 degrees 24'52"E A DISTANCE OF
910.53 FEET THENCE N89 degrees 44'57"E A DISTANCE OF 664.59 FEET;
THENCE N89 degrees 44'59"E A DISTANCE OF 664.47 FEET; THENCE S00
degrees 29'20"W A DISTANCE OF 1319.32 FEET; THENCE N89 degrees
38'03"E A DISTANCE OF 663.63 FEET; THENCE S00 degrees 31'33"W A
DISTANCE OF 1336.73 FEET ;THENCE N89 degrees 45'54"E A DISTANCE OF
1325.50 FEET TO A POINT ON THE EAST LINE FOR SAID SECTION 31; THENCE
S00 degrees 35'58"W ALONG SAID EAST LINE A DISTANCE OF 378.66 FEET TO
THE POINT OF BEGINNING, CONTAINING 167.192 ACRES MORE OR LESS.
BEARING STRUCTURE AND DISTANCES BASED ON STATE PLANE COORDINATE, GRID
VALUES.
<PAGE>
EXHIBIT B-2
INTERCESSION CITY SIEMENS UNIT
OPERATING AGREEMENT
between
GEORGIA POWER COMPANY
and
FLORIDA POWER CORPORATION
Dated as of June 8, 1994
<PAGE>
INTERCESSION CITY SIEMENS UNIT
OPERATING AGREEMENT
TABLE OF CONTENTS
R E C I T A L S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
OPERATIVE TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2. APPOINTMENT AND AUTHORITY OF AGENT . . . . . . . . . . . . . . . . 2
(a) Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(b) Record Keeping . . . . . . . . . . . . . . . . . . . . . . . 2
(c) Authority and Responsibility For Operation . . . . . . . . . 3
(d) FPC'S Right To Provide Equipment, Facilities or Services;
Contracts With Affiliates . . . . . . . . . . . . . . . . . . 4
3. OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(a) Availability of Output . . . . . . . . . . . . . . . . . . . 5
(b) Scheduling and Dispatching . . . . . . . . . . . . . . . . . 5
(c) Fuel Supply . . . . . . . . . . . . . . . . . . . . . . . . . 7
(d) Maintenance . . . . . . . . . . . . . . . . . . . . . . . . . 8
(e) Metering . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(f) Non-Discrimination . . . . . . . . . . . . . . . . . . . . . 10
(g) Reports, Budgets and Forecasts To Be Provided To The
Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
i
<PAGE>
(h) GPC Approval Of Certain Capital Expenditures and Disposal Of
Property. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(i) Common Facilities. . . . . . . . . . . . . . . . . . . . . . 15
(i) Ownership and Possession of Common Facilities . . . . . 15
(ii) Common Facilities Carrying Charges; Adjustments
Thereto . . . . . . . . . . . . . . . . . . . . . . . . 15
(iii) Common Facilities For Sole Benefit Of a Party . . . . . 17
4. ADDITIONAL COSTS OF CONSTRUCTION . . . . . . . . . . . . . . . . . 17
5. OPERATING COSTS, FUEL COSTS AND MAJOR OUTAGE COSTS . . . . . . . . 17
(a) In General . . . . . . . . . . . . . . . . . . . . . . . . . 17
(b) Billing and Payment Of Additional Costs Of Construction,
Operating Costs, Fuel Costs, and Major Outage Costs;
Adjustment Of Working Capital Deposit . . . . . . . . . . . . 18
6. NONPAYMENT AND SETTLEMENT OF COSTS . . . . . . . . . . . . . . . . 19
7. INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8. THIRD PARTY CLAIMS . . . . . . . . . . . . . . . . . . . . . . . . 23
9. LIMITATION OF LIABILITY . . . . . . . . . . . . . . . . . . . . . . 23
10. BREACH OF AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . 24
ii
<PAGE>
(a) By GPC . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(b) By FPC. . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
11. REMEDIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
12. CERTAIN ADDITIONAL AGREEMENTS AMONG THE PARTICIPANTS . . . . . . . 25
(a) Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . 25
(b) Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(c) Right Of Inspection . . . . . . . . . . . . . . . . . . . . . 26
(d) Compliance With Law and Environmental Matters . . . . . . . . 26
(e) Environmental Costs . . . . . . . . . . . . . . . . . . . . . 28
(f) Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . 30
(g) Safety . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(h) Equal Employment Opportunity. . . . . . . . . . . . . . . . . 31
(i) Term. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(j) Limitation On Assignability . . . . . . . . . . . . . . . . . 31
13. DISPUTE RESOLUTION PROCEDURE . . . . . . . . . . . . . . . . . . . 32
14. GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(a) Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 32
(b) No Delay . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(c) Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(d) Headings Not To Affect Meaning . . . . . . . . . . . . . . . 34
(e) No Partnership . . . . . . . . . . . . . . . . . . . . . . . 34
(f) Amendments . . . . . . . . . . . . . . . . . . . . . . . . . 34
iii
<PAGE>
(g) Successors and Assigns . . . . . . . . . . . . . . . . . . . 34
(h) Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 34
(i) Further Assurances . . . . . . . . . . . . . . . . . . . . . 34
(j) Successor Agent . . . . . . . . . . . . . . . . . . . . . . . 35
(k) Several Agreements; Entire Agreements . . . . . . . . . . . . 35
(l) Construction Of "Including" . . . . . . . . . . . . . . . . . 35
iv
<PAGE>
ATTACHMENTS
A DEFINITIONS
B FORMULA TO CALCULATE GPC'S CARRYING CHARGES APPLICABLE TO THE FUEL
INVENTORY
C FIXED DAILY CHARGES TO BE PAID BY GPC
D FIXED DAILY CHARGES TO BE PAID BY FPC
E DESCRIPTION OF COMMON FACILITIES
F METHOD OF CALCULATING COMMON FACILITIES CARRYING CHARGES
G ALLOCATION OF ADMINISTRATIVE AND GENERAL COSTS AND OTHER COSTS
H RECALCULATION OF WORKING CAPITAL DEPOSIT
I ALLOCATION OF INSURANCE COSTS
v
<PAGE>
INTERCESSION CITY SIEMENS UNIT
OPERATING AGREEMENT
THIS INTERCESSION CITY FACILITY SIEMENS UNIT OPERATING AGREEMENT (this
"Agreement"), dated as of the 8th day of June, 1994, is entered into by and
between GEORGIA POWER COMPANY, a corporation organized and existing under the
laws of the State of Georgia ("GPC"), and FLORIDA POWER CORPORATION, a
corporation organized and existing under the laws of the State of Florida
("FPC").
R E C I T A L S:
A. GPC and FPC have heretofore entered into that certain Intercession
City Siemens Unit Purchase and Ownership Participation Agreement dated as of
the date hereof (the "Ownership Agreement") with respect to a Siemens
combustion turbine generating unit and related facilities.
B. Under this Agreement, the Participants intend to provide for the
management, control, operation, maintenance, renewal, addition, replacement,
modification, retirement and disposal of the Facility, in all respects not
covered by the Ownership Agreement and for the entitlement and use of capacity
and energy from the Facility and the sharing of the costs with respect to the
Facility.
<PAGE>
OPERATIVE TERMS
In consideration of the premises and the mutual agreements herein set
forth, GPC and FPC hereby agree as follows:
1. DEFINITIONS. In addition to the terms defined elsewhere in this
Agreement, the terms in Attachment A to this Agreement have the meanings
indicated in Attachment A, which meanings shall be equally applicable to both
singular and plural forms of such terms except as otherwise expressly
provided.
2. APPOINTMENT AND AUTHORITY OF AGENT.
(a) Agent. Subject to the terms of this Agreement and of the
Ownership Agreement, the Participants hereby irrevocably appoint FPC as their
Agent to act on behalf of the Participants in performing the Agency Functions.
FPC hereby accepts such appointment and agrees that it shall discharge its
responsibilities as Agent in accordance with this Agreement and the Ownership
Agreement and in accordance with Prudent Utility Practice.
(b) Record Keeping. In furtherance of its duties as Agent, FPC shall
also keep and maintain appropriate plant records with respect to the Facility
in accordance with applicable Legal Requirements and FPC's record retention
policies; and upon reasonable notice from time to time by GPC, FPC will inform
GPC of the location of such records and, subject to Section 4(f)
CONFIDENTIALITY OF INFORMATION, of the Ownership Agreement, provide GPC
reasonable access thereto. To the extent that GPC would like to retain such
2
<PAGE>
records for longer periods of time than FPC would retain such records, then,
upon written request from GPC, and subject to Section 4(f) CONFIDENTIALITY OF
INFORMATION, of the Ownership Agreement, FPC shall provide GPC, at GPC's sole
expense, with originals or copies as appropriate of such records on or prior
to the date that FPC would dispose of such records.
(c) Authority and Responsibility For Operation. Subject to the
provisions of this Agreement and the Ownership Agreement, FPC, as Agent for
the Participants, shall have sole authority and responsibility with respect to
the Agency Functions, and in respect thereof, FPC, as Agent, is authorized to
take and shall take, in the name and on behalf of the Participants, all
reasonable actions which, in the discretion and judgment of FPC, are deemed
necessary or advisable to effect the Agency Functions, including, without
limitation, the following:
(i) the making of such agreements and modifications of existing
agreements, other than this Agreement and the Collateral Documents, and
the taking of such other action as FPC, as Agent, deems necessary or
appropriate, in its sole discretion, or as may be required under the
regulations or directives of any Governmental Authority having
jurisdiction, with respect to the Agency Functions, which such
agreements and modifications shall, together with all such existing
agreements, be held by FPC as Agent; provided, however, without GPC's
prior written consent, which shall not be unreasonably withheld or
delayed, FPC shall not enter into any amendments to, or modifications
of, or waive any rights under, the Siemens Agreement which would
3
<PAGE>
materially and adversely affect GPC's co-ownership of, or right to
output from, the Facility;
(ii) the execution and filing, with any Governmental Authority
having jurisdiction (except the Georgia Public Service Commission), of
applications, amendments, reports and other documents and filings in or
in connection with the licensing and other regulatory matters with
respect to the Facility or any portion thereof;
(iii) the receipt of any notice or other communication from any
Governmental Authority having jurisdiction (except the Georgia Public
Service Commission), as to any licensing or other similar matter
concerning the Facility; and
(iv) the provision of, or the contracting with any third party to
purchase or provide, any equipment, facilities or services in connection
with the Facility, in accordance with this Agreement or any of the
Collateral Documents.
GPC and FPC agree that all such agreements which relate to the Facility
described in this Section 2(c) which are entered into after the date of this
Agreement shall, by their terms, be made assignable by FPC, as Agent, to any
successor Agent for the Agency Functions, pursuant to this Agreement and the
Ownership Agreement.
4
<PAGE>
Subject to the terms of this Agreement and the Ownership Agreement, FPC,
as Agent, shall also, at all times, be responsible for ensuring the continued
availability of any equipment and services necessary to support the operation
and maintenance of the Facility and the Common Facilities as contemplated in
this Agreement and the Ownership Agreement.
(d) FPC'S Right To Provide Equipment, Facilities or Services;
Contracts With Affiliates. In discharging its obligations as Agent hereunder,
FPC shall have the right, on behalf of the Participants, to provide, or
contract with any of its Affiliates, on terms that are within Prudent Utility
Practice, to purchase or provide any equipment or facilities or to perform
services in connection with the Facility, the Common Facilities, or any
portion thereof. FPC shall give GPC reasonable notice of any contract with
its Affiliates described in the preceding sentence.
5
<PAGE>
3. OPERATIONS.
(a) Availability of Output.
(i) Subject to the further provisions of this Agreement and the
Ownership Agreement, GPC shall be entitled to the net capacity and the
net energy output of the Facility (measured at the high side of the
Step-Up Transformer) at all times during the Summer Period, and FPC
shall be entitled to the net capacity and the net energy output of the
Facility (measured at the high side of the Step-Up Transformer) at all
times during the Winter Period. The net energy output of the Facility
shall be dispatched in accordance with the provisions of Section 3(b),
SCHEDULING AND DISPATCHING, hereof.
(ii) GPC and FPC agree that the Facility shall be limited to a
maximum number of 3390 hours of operation each calendar year based on
environmental permit limitations. The 3390 hours shall be allocated
one-third to the Summer Period and two-thirds to the Winter Period.
Neither GPC nor FPC shall exceed its allocated share of hours of
operation, as determined herein, without the prior written consent of
the other Party.
(iii) In the event of any change to the environmental permit
limitations, the maximum hours of operation of the Facility shall be re-
allocated in the manner set forth in paragraph (ii) above.
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(b) Scheduling and Dispatching.
(i) The Facility shall be dispatched through FPC's Energy
Control Center (the "ECC") and will be available for operation twenty-
four (24) hours per day unless the Facility is out of service due to a
scheduled maintenance or forced outage. Under normal operating
conditions during the Summer Period, GPC shall use its reasonable best
efforts to give the ECC at least thirty (30) minutes' advance notice of
its intended need for output of the Facility. Under emergency
conditions, FPC shall use reasonable efforts to make the Facility
available to commence operations for the benefit of GPC upon ten (10)
minutes' advance notice to the ECC.
(ii) The Parties will develop procedures and designate operating
representatives, as appropriate, for the coordination of scheduling of
the operation of the Facility, notification of changes in the status of
the Facility, coordination of short-term maintenance scheduling, and
such other hourly and daily coordination as necessary for the operation
of the Facility.
(iii) FPC will reasonably cooperate with GPC to implement real
time load following of the Facility. Such real time load following
shall be coordinated through the ECC, shall be consistent with FPC's
safety requirements and general operating parameters, and shall not
impose a material operating burden on FPC. Any additional costs
associated with procuring, installing, operating and maintaining the
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equipment necessary for real time load following shall be borne solely
by GPC.
(iv) The initial capacity of the Facility shall be determined
during the acceptance testing period and according to the methodology
set forth in the Siemens Agreement, and such determination shall be
binding on the Parties unless and until superseded under the terms of
paragraph (v) below.
(v) No more often than once each year, each Party shall have the
right to request a capacity test to demonstrate the maximum capability
of the Facility. Each such test shall have a minimum run time of one
hour at the normal full load capability of the Facility. Incremental
costs associated with any capacity test, including, without limitation,
any set-up and monitoring costs not consistent with normal operations,
shall be considered Fixed O&M Costs. The Siemens charts of performance
correction factors for the Facility in relation to ambient operating
conditions shall be used, together with the data obtained from the
capacity tests, to reestablish the capacity of the Facility, at the
ninety degree (90) Fahrenheit point, for the purpose of calculating
charges under Section 7.1 of the Transmission Service Agreement.
(c) Fuel Supply.
(i) Except as provided in paragraph (ii) below, FPC, as Agent,
shall have sole authority to and shall arrange for and acquire all fuel
8
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and fuel transportation for the Facility and shall make payment to third
parties of all Fuel Costs.
(ii) In the event natural gas and transportation for natural gas
are available to the Facility on an economic basis during the Summer
Period, over and above the needs of all of the other generating units in
FPC's electric system, FPC will use reasonable efforts to make natural
gas available to the Facility. If all necessary facilities to provide
transportation of natural gas to the Facility have been constructed and
transportation services for such gas are available to the Facility on an
economic basis during the Summer Period, but FPC's natural gas supply is
not sufficient to serve the needs of all of FPC's other generating units
in FPC's electric system and the Facility, GPC shall be permitted to
arrange for natural gas to be supplied to the Facility and FPC will use
reasonable efforts to make that supply available to the Facility during
the Summer Period.
(iii) For each month during the Summer Period, FPC shall be
entitled to receive from GPC Carrying Charges applicable to the value of
the Fuel Inventory maintained during such months as calculated under
Attachment B hereto.
(d) Maintenance.
(i) FPC shall perform maintenance on the Facility in accordance
with guidelines published by the manufacturer of the combustion turbine
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unit included in the Facility and in accordance with Prudent Utility
Practice. FPC shall perform all maintenance in a manner that restores
the Facility to service as soon as practicable consistent with Prudent
Utility Practice. In addition, except as otherwise provided in
paragraph (iii) below, all Scheduled Maintenance Outages shall be set
forth in the maintenance plan to be provided for GPC's review and
comment pursuant to Section 3(g), REPORTS, BUDGETS AND FORECASTS TO BE
PROVIDED TO THE PARTIES, hereof.
(ii) Except as otherwise provided in paragraph (iii) below,
Scheduled Maintenance Outages shall be performed by FPC during the
Winter Period. GPC shall pay to FPC a fixed daily charge, calculated in
accordance with the formula set forth in Attachment C hereto, for each
day the Facility is out of service due to a Scheduled Maintenance Outage
during the Winter Period; provided, however, that if any such Scheduled
Maintenance Outage is extended beyond the period scheduled by FPC, and
such extension is for FPC's convenience, GPC shall not be required to
pay such fixed daily charge with respect to the duration of such
extension.
(iii) Scheduled Maintenance Outages may not occur during the
Summer Period without GPC's prior written consent. FPC shall pay to GPC
a fixed daily charge, calculated in accordance with the formula set
forth in Attachment D hereto, for each day the Facility is out of
service due to a Scheduled Maintenance Outage during the Summer Period.
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<PAGE>
(iv) FPC shall use the same degree of care in the operation and
maintenance of the Facility during the Summer Period as it does in its
operation and maintenance of the Facility during the Winter Period.
(e) Metering.
(i) FPC, as Agent, shall install and maintain the necessary
metering equipment so as to determine (A) the gross output, auxiliary
requirements, net output and reactive power of the Facility each hour to
the FPC transmission system, and (B) the monthly power, fuel and water
consumption of the Facility. All metering equipment shall be consistent
with Prudent Utility Practice.
(ii) Each electric meter used pursuant to this Section 3(e) shall
be tested and calibrated by FPC at regular intervals determined by FPC
in accordance with FPC's standard practices; provided, however, that the
accuracy standards utilized by FPC shall not exceed the ranges set forth
in this paragraph (ii). Any electric meter tested and found to be
within plus or minus 0.5% accuracy shall be considered to be accurate. If, as a
result of any test, any electric meter is found to register not within
plus or minus 0.5% accuracy, FPC shall repair or replace the meter to bring the
accuracy within the required plus or minus 0.5% accuracy as soon as practicable,
and shall calculate a correction. The correction shall be calculated from
the commencement date of any known or agreed period of inaccuracy, and,
in the absence of such a known or agreed period, a correction shall be
calculated based upon one-half the time since the last test of the meter
11
<PAGE>
involved. The correction shall be calculated in whole megawatt-hours
and shall be set forth on the next bill by FPC as a charge or credit to
GPC after repair or replacement of the meter. The dollar value per
megawatt-hour of any correction with respect to any calendar month shall
be determined by dividing the sum of all Variable O&M Costs and Variable
Fuel Costs for such month by the net output of the Facility during such
calendar month. The dollar value per megawatt-hour so determined will
then be multiplied by the megawatt-hour correction for the calendar
month.
(iii) All metering records and tests shall be available, upon
reasonable notice, to authorized representatives of GPC. All costs
incurred in connection with such metering equipment and compliance with
the provisions of this Section 3(e) shall be considered Additional Costs
of Construction or Operating Costs, as appropriate, and as such shall be
paid by the Participants in accordance with the provisions of Section 5,
OPERATING COSTS, FUEL COSTS AND MAJOR OUTAGE COSTS, hereof, or of the
Ownership Agreement.
(f) Non-Discrimination. In no event will FPC, in its performance of
the Agency functions, materially discriminate against the Facility (in a
manner that is adverse to a Participant's undivided ownership interest in the
Facility or right to output from the Facility) in comparison with other
comparable electric peak-load generating units owned or operated by FPC;
provided, however, that the foregoing non-discrimination provision shall not
apply with respect to the construction, operation or use of any facilities for
12
<PAGE>
natural gas for any other electric generating units at the Intercession City
Site or elsewhere in FPC's electric system.
(g) Reports, Budgets and Forecasts To Be Provided To The Parties.
Subject to the provisions of this Section 3(g) below:
(i) On or before June 1 of each calendar year during the term of
this Agreement, commencing June 1, 1995, GPC shall provide FPC with (A)
a forecast, with respect to each of the next five calendar years, of
GPC's projected megawatt hours of run time and total hours of run time
(including, without limitation, third party sales) of the Facility, the
number of starts and the manner in which electrical energy from the
Facility will be dispatched, and (B) such other information reasonably
required to be used by FPC in the development of capital budgets,
operating and maintenance budgets, maintenance plans and billing
budgets.
(ii) Taking into account the information provided by GPC, on or
before September 1 of each calendar year during the term of this
Agreement, commencing September 1, 1995, FPC shall provide GPC with (A)
a proposed capital budget, (B) a proposed operating and maintenance
budget, and (C) a proposed maintenance plan. The capital budget and
operating and maintenance budget shall set forth budgeted capital
expenditures and operating and maintenance expenses (other than with
respect to fuel) for the Facility during the next calendar year. In
addition, the capital budget shall provide a forecast of capital
13
<PAGE>
expenditures for the next five years. The maintenance plan shall be for
the next calendar year and shall include a forecast of maintenance for
the next five years. The maintenance plan shall describe in reasonable
detail the contemplated time and duration of each outage, the
maintenance work to be done and the estimated cost thereof.
(iii) On or before October 1 of each calendar year during the term
of this Agreement, commencing October 1, 1995, GPC shall provide FPC
with comments, if any, to the proposed capital budget, operating and
maintenance budget and maintenance plan.
(iv) Taking into consideration the comments of GPC, if any, on or
before December 1 of each calendar year during the term of this
Agreement, commencing December 1, 1995, FPC shall provide GPC with a
final capital budget, operating and maintenance budget, maintenance plan
and billing budget.
(v) On or before March 1 of each calendar year during the term
of this Agreement, commencing March 1, 1996, GPC shall provide FPC with
a preliminary forecast of GPC's fuel requirements for the Facility
during the Summer Period of that calendar year.
(vi) At least thirty (30) days prior to the beginning of each
calendar month during each Summer Period, GPC shall provide FPC with a
report as to GPC's fuel requirements for the Facility for such calendar
month.
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<PAGE>
(vii) Notwithstanding GPC's right to make comments and ask
questions of FPC with respect to budgets and plans, as provided in this
Subsection above, FPC shall have ultimate authority with respect to
final budgets and plans for the Facility.
(viii) FPC and GPC make no representation, warranty or
promise of any kind as to the accuracy of any estimate or other
information contained in any report, plan or forecast given to the
other, and in no event shall FPC or GPC have any liability to the other
in these regards.
(ix) In the event that either Party changes its budgeting or
forecasting cycle, and such change makes it burdensome on such party to
provide any forecast, proposed budget or plan, comments, or a final
budget or plan on or before any date specified in paragraphs (i) through
(iv) above, such Party shall give notice thereof to the other Party, and
the Parties shall cooperate reasonably with each other to make the
necessary amendments to paragraphs (i) through (iv) so that the dates
therein will not be burdensome to the party which is to provide such
item or items.
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<PAGE>
(h) GPC Approval Of Certain Capital Expenditures and Disposal Of
Property.
(i) Notwithstanding any other provisions of this Agreement or
the Ownership Agreement, if FPC proposes to make any discretionary
modification, replacement or addition with respect to:
(A) the Facility, the total costs of which (net of any insurance
proceeds or recoveries under warranty claims applicable
thereto) that are allocable to GPC based on its one-third
ownership interest in the Facility exceed Seven Hundred
Fifty Thousand Dollars ($750,000) in 1994 Dollars; or
(B) the Common Facilities, the total costs of which (net of
insurance proceeds or recoveries under warranty claims
applicable thereto) that are allocable to GPC pursuant to
Attachment E to this Agreement exceed Five Hundred Thousand
Dollars ($500,000) or more in 1994 Dollars;
FPC shall give notice to GPC of the proposed modification, replacement
or addition and seek GPC's consent thereto. If GPC withholds its
consent to such modification, replacement or addition, FPC shall
nevertheless have the right, in its sole discretion, to make such
modification, replacement or addition and, in such event, GPC shall
reimburse FPC for that proportion of the Additional Costs of
Construction with respect to such modification, replacement or addition
16
<PAGE>
as the benefit to be received by GPC as a result of such modification,
replacement or addition bears to the benefit to be received by GPC and
FPC as a result of such modification, replacement or addition. A
benefit to be received as a result of a discretionary modification,
replacement or addition shall include, without limitation, increased
unit capacity, increased unit availability, reductions in operations and
maintenance costs or reductions in heat rate, or a modification,
replacement or addition that will reduce, eliminate or avoid degradation
with respect to unit capacity, unit availability, or avoid increases in
operations and maintenance costs or increases in heat rate.
For purposes of this paragraph (i), a discretionary modification,
replacement or addition shall be one that is not required in order to
comply with Legal Requirements or FPC's safety requirements or safety
concerns and is not to be made to repair damage to or destruction of the
Facility or the Common Facilities.
(ii) Notwithstanding any other provision of this Agreement or the
Ownership Agreement, except in connection with FPC's duties or rights
under the Ownership Agreement or this Agreement to retire or salvage the
Facility, FPC, as Agent, shall not, without the prior written consent of
GPC, dispose of, retire or salvage any machinery, apparatus, supplies or
equipment or any other portion of the Facility which has a depreciated
value, as determined by FPC, in excess of One Million Dollars
($1,000,000.00), in 1994 Dollars, net of the value, as determined by
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<PAGE>
FPC, of any portion of the Facility that replaces such disposed of,
retired or salvaged portion of the Facility.
(i) Common Facilities.
(i) Ownership and Possession of Common Facilities. During the
term of this Agreement, FPC shall have sole ownership and possession of,
and the exclusive right to operate, the Common Facilities, as described
in Attachment E to this Agreement, as the same maybe updated from time
to time under the terms of Section 3(i)(ii). The Common Facilities
shall be operated and maintained by FPC, during the term of this
Agreement, for the benefit of the Facility and FPC's other electric
power generating facilities at the Intercession City Site, in accordance
with Prudent Utility Practice, without priority to or material adverse
discrimination against the Facility in comparison with FPC's other
electric generating units at the Intercession City Site.
(ii) Common Facilities Carrying Charges; Adjustments Thereto.
(A) On a monthly basis following the Closing, GPC shall pay for
its share of the Common Facilities Carrying Charges, under
the methodology of Attachment F hereto and in accordance
with this Section 3(i)(ii). Attachment E shall be updated,
as of December 31, 1995 to reflect the net book value to FPC
of the Dedicated Common Facilities as of the last day of the
calendar month immediately preceding the date of the Closing
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<PAGE>
and the revised Weighted Average Common Facilities
Allocation Factor as a result of such update. Until
adjusted under subparagraph (B) or (C) below, the initial
monthly Common Facilities Carrying Charges shall be: (1)
Nine Thousand One Hundred Sixty Five Dollars ($9,165.00)
with respect to the first forty-four (44) items listed in
Attachment E; and (2) as determined under Attachment F, with
respect to item 45 listed in Attachment E.
(B) Upon the written request of either Party after December 31,
2000, (1) Attachment E shall be updated to reflect the net
book value to FPC of the Common Facilities as of the
immediately preceding December 31, and (2) the Common
Facilities Carrying Charges shall thereupon be recalculated
in accordance with the methodology set forth in Attachment F
for purposes of this subparagraph (B). Such Common
Facilities Carrying Charges, as so recalculated, shall be
effective for purposes of this Agreement commencing as of
the calendar month immediately following the date of the
request and, except as otherwise provided in subparagraph
(C) below, for a minimum period of five years thereafter.
(C) Notwithstanding subparagraph (B) above, if at any time, FPC
adds Common Facilities (referred to in Attachment F as
"additional Common Facilities"), in a cumulative total
amount equal to or exceeding $250,000 in net book value, FPC
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<PAGE>
may elect to recalculate, under the methodology set forth in
Attachment F for purposes of this subparagraph (C), the
Common Facilities Carrying Charges to reflect such change in
net book value. Such Common Facilities Carrying Charges, as
so recalculated, shall be effective for purposes of this
Agreement commencing as of the calendar month immediately
succeeding the date on which notice is given by FPC to GPC
exercising its election under this subparagraph (C).
(iii) Common Facilities For Sole Benefit Of a Party.
Notwithstanding the provisions of paragraph (ii) above, each Party
hereto shall pay all of the costs of acquisition, installation,
operation and maintenance of any portion of the Common Facilities, or
any modifications, replacements or additions thereto, that benefit
solely such Party.
4. ADDITIONAL COSTS OF CONSTRUCTION.
(a) FPC, as Agent, shall be responsible for making, and shall make,
payment to third parties of all Additional Costs of Construction.
(b) FPC shall give GPC as much notice as is reasonably practicable of
any major anticipated Additional Costs of Construction.
(c) Each Participant's respective share of Additional Costs of
Construction (other than with respect to Major Outages) shall be in proportion
20
<PAGE>
to such Participant's Ownership Interest. Each Participant's respective share
of costs with respect to Major Outages shall be as set forth in Section 5,
OPERATING COSTS, FUEL COSTS AND MAJOR OUTAGE COSTS, hereof.
5. OPERATING COSTS, FUEL COSTS AND MAJOR OUTAGE COSTS.
(a) In General.
(i) FPC, as Agent, shall be responsible for making, and shall
make, payment to third parties of all Operating Costs, Fuel Costs and
Major Outage Costs.
(ii) The Participants shall share Operating Costs and Fuel Costs
as follows: Fixed O&M Costs and Fixed Fuel Costs shall be allocated
between the Participants in proportion to their respective Ownership
Interests; Variable O&M Costs and Variable Fuel Costs incurred by FPC
during the Summer Period shall be allocated solely to GPC; and Variable
O&M Costs and Variable Fuel Costs incurred by FPC during the Winter
Period shall be allocated solely to FPC. The allocations of
administrative and general costs and other costs shall be as set forth
in Attachment G hereto.
(iii) Major Outage Costs shall be allocated between GPC and FPC
based on their respective proportions of the Equivalent Operating Hours,
from and after the date of Commercial Operation, taking into account the
most recently available monthly data with respect to Equivalent
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Operating Hours at the time the work order with respect to such Major
Outage is submitted.
(b) Billing and Payment Of Additional Costs Of Construction, Operating
Costs, Fuel Costs, and Major Outage Costs; Adjustment Of Working
Capital Deposit.
(i) FPC will, on or before the 20th day of each calendar month
after the Closing, furnish GPC with a statement of GPC's share of (A)
Additional Costs of Construction, Operating Costs, Fuel Costs and Major
Outage Costs with respect to the immediately preceding calendar month,
plus or minus any adjustments to Additional Costs of Construction,
Operating Costs, Fuel Costs and Major Outage Costs incurred in prior
months but not previously charged or credited to GPC under the
provisions of this Section 5(b) or other provisions of this Agreement,
and (B) Fuel Carrying Charges and Common Facilities Carrying Charges.
GPC shall make payment to FPC of the amounts set forth in such bill in
immediately available United States funds on or before the 15th day of
the calendar month immediately following the date of the bill.
(ii) FPC shall recalculate the Working Capital Deposit no more
frequently than at one year intervals after the date of the Closing,
under the terms of Attachment H hereto, and FPC shall furnish GPC with
notice of the results of such recalculation. Within thirty days after
any such notice:
22
<PAGE>
(A) GPC shall pay to FPC the amount by which the Working Capital
Deposit, as recalculated, exceeds the Working Capital
Deposit then held by FPC, and FPC shall add such excess to,
and such excess shall become part of, the Working Capital
Deposit; or
(B) FPC shall pay to GPC the amount by which the Working Capital
Deposit then held by FPC exceeds the Working Capital
Deposit, as recalculated.
6. NONPAYMENT AND SETTLEMENT OF COSTS.
(a) Payments due from GPC under this Agreement not made when due shall
bear interest, compounded monthly until paid, at a rate per annum equal to the
lesser of (1) the highest interest rate allowed under Florida law, or (2) 105%
of the Prime Rate.
(b) GPC shall have until September 15 of each calendar year to
question or contest, by notice to FPC, the correctness of any charge or credit
billed or applied by FPC under this Agreement during the immediately preceding
calendar year. After September 15 of each calendar year, the correctness of
any such charge or credit billed or applied by FPC under this Agreement during
the immediately preceding calendar year, that has not been timely questioned
or contested by GPC, shall be conclusively presumed. In the event that GPC
timely questions or contests the correctness of any such charge or credit, FPC
shall promptly review the questioned charge or credit and shall, within 45
23
<PAGE>
days following notice from GPC questioning or contesting such charge or
credit, notify GPC of the amount of any error, and the payment that GPC is
required to make or the amount of reimbursement that GPC is entitled to
receive in respect of such error. Not later than the fifth Business Day after
receipt of such notice from FPC, GPC shall pay to FPC any amount due by it, as
specified in such notice, in immediately available United States funds. Any
such reimbursement required to be made by FPC, shall be paid by FPC not later
than the fifth Business Day after FPC notifies GPC of the amount of such
reimbursement.
(c) FPC, as Agent, will provide GPC with such information as is
reasonably required by GPC in order for GPC to account for payments made
pursuant to this Agreement on GPC's books. During the period of March 15
through September 15 of each calendar year, both dates included, GPC shall
have the right, upon reasonable prior notice to FPC, and without disruption to
FPC's operations, to review, on a one-time basis, FPC's relevant records with
respect to charges or credits billed or applied by FPC under this Agreement
during the immediately preceding calendar year.
(d) In the event GPC fails to pay any amount owed by GPC under this
Agreement within thirty (30) days after notice thereof by FPC, GPC shall have
no right to any output of capacity or net energy of the Facility or to
exercise any other right of a Participant until all amounts overdue from GPC
have been paid, together with interest at the rate provided in Section 6(a)
above.
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(e) Notwithstanding the foregoing provisions of this Section 6, if GPC
disagrees with or disputes the amount of any payment claimed by FPC to be due
pursuant to this Agreement, GPC shall nevertheless make such payment under
protest; provided, however, GPC shall be reimbursed, together with all accrued
interest at the lesser of (A) the highest interest rate allowed under Florida
law, or (B) the Prime Rate, from the date of payment to the date of
reimbursement, for any amount paid in error by GPC under this Subsection.
(f) To the extent that GPC has not paid, on a timely basis, any sums
due under this Agreement or any of the Collateral Documents, then, in addition
to any of FPC's other rights under this Agreement, any of the Collateral
Documents, or at law, FPC shall be entitled to retain amounts otherwise due to
GPC under this Agreement or any of the Collateral Documents (together with any
applicable interest thereon) and to apply such amounts to the reduction of
such overdue sums and interest thereon.
(g) No remedy referred to in this Section 6 is intended to be
exclusive of any other remedy set forth in this Section 6, but every such
remedy herein provided shall be cumulative and may be exercised from time to
time and as often as may be deemed expedient except where the exercise of any
one of such remedies precludes its further exercise or the exercise of any
other remedy. No delay or failure to exercise any remedy herein provided
shall impair the right to exercise any such remedy or be construed to be a
waiver of such right.
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7. INSURANCE.
(a) Except as may otherwise be agreed to by the Participants, on and
after the date of Official Acceptance (as such term is defined in the Siemens
Agreement) of the Facility by FPC, FPC, as Agent, shall carry in the name of
the Participants, as insureds, insurance covering (i) workers' compensation,
which shall include employers' liability, (ii) commercial general liability,
which shall include broad form property damage (including, without limitation,
explosion, collapse, and underground), broad form contractual and
products/completed operations liability, and shall contain a severability of
interests clause, and (iii) "all risk" property, which shall include coverage
for boiler and machinery, in such amounts and with such deductible or self-
insurance features as are consistent with industry practice for utilities of
similar size and exposure.
Such insurance shall have the following minimum limits of
liability: (w) workers' compensation -- statutory limits; (x) employers'
liability -- $1,000,000 per accident, and $1,000,000 disease aggregate; (y)
commercial general liability, which shall include broad form contractual,
broad form property damage, and products/completed operations liability, and
protection against hazards of explosion, collapse and underground --
$50,000,000 combined single limit per occurrence; and (z) "all risk" property
insurance in an amount equal to the replacement cost of the Facility, as
reasonably determined by FPC, or such greater or lesser limits as may be
mutually determined by the Parties. All deductibles shall be paid by the
Participants in proportion to their respective Ownership Interests.
26
<PAGE>
(b) The aggregate cost of all such insurance shall be considered as
Operating Costs, and shall be allocated in accordance with Attachment I
hereto, and shall be paid in accordance with the provisions of Section 5(b),
BILLING AND PAYMENT OF ADDITIONAL COSTS OF CONSTRUCTION, OPERATING COSTS, FUEL
COSTS, AND MAJOR OUTAGE COSTS; ADJUSTMENT OF WORKING CAPITAL DEPOSIT, hereof.
(c) Each policy with respect to property and general liability shall
be endorsed to be primary to any insurance which may be maintained by GPC.
FPC's worker's compensation coverage shall contain a waiver of subrogation
with respect to GPC.
(d) On or before the date of Closing and within thirty (30) days after
the renewal of any of the insurance policies described in Section 7(a), FPC
shall provide GPC with certificates of insurance with respect to such
policies. FPC shall provide GPC with copies of the insurance policies
described in Section 7(a) upon request and shall furnish GPC with reasonable
notice of the cancellation or material modification of any of such policies.
(e) Each Participant may also maintain additional or other insurance,
at its own cost and expense, which it deems necessary or advisable to protect
its respective interest in any portion of the Facility, provided that such
additional insurance does not reduce or diminish in any way the coverage of
the insurance procured and maintained by FPC pursuant to this Section 7.
(f) Notwithstanding the foregoing, GPC shall separately procure and
maintain in force, at its own expense, workers' compensation and employer's
27
<PAGE>
liability insurance or self insurance for its directors, officers, employees,
agents or representatives visiting the Facility with the minimum limits of
liability set forth above. GPC's worker's compensation coverage shall include
a waiver of subrogation with respect to FPC.
8. THIRD PARTY CLAIMS. FPC agrees to indemnify, hold harmless and defend
GPC against any loss, cost, damages or expense (including attorneys' fees)
arising out of any claim for personal injury, death, property damage or other
loss asserted against GPC by a third party to the extent caused by FPC's gross
negligence as Agent or willful or intentional misconduct as Agent.
9. LIMITATION OF LIABILITY. Notwithstanding any other provisions of this
Agreement or any of the Collateral Documents, in no event shall FPC or GPC
have any liability to the other under this Agreement or any of the Collateral
Documents for (A) any special, incidental, indirect or consequential damages;
(B) damages with respect to costs of capital, costs of replacement power, loss
of profits or revenues, loss of use of plant or equipment, or claims of
customers of FPC or GPC, as the case may be, irrespective of whether such
damages may be categorized as direct, special, incidental, indirect,
consequential, or otherwise; or (C) costs, losses, damages, expenses, fines or
penalties to the extent that either Participant is entitled to receive
insurance proceeds pursuant to an insurance policy or policies covering such
costs, losses, damages, expenses, fines or penalties.
10. BREACH OF AGREEMENT.
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(a) By GPC. GPC shall be in breach of this Agreement in the event
that:
(i) it fails to pay any monetary obligation owing by it under
this Agreement or any of the Collateral Documents within thirty (30)
days after notice thereof by FPC;
(ii) it fails to observe or perform any of its other obligations
under this Agreement or any of the Collateral Documents, and such
failure is not cured within thirty (30) days after notice thereof by
FPC; or
(iii) it becomes insolvent, or files a petition in bankruptcy, or
there is filed against it a petition in bankruptcy which is not
dismissed within one hundred twenty (120) days after the filing thereof.
(b) By FPC. FPC shall be in breach of this Agreement if:
(i) it fails to observe or perform any of its obligations under
this Agreement or any of the Collateral Documents and such failure
continues for thirty (30) days after notice thereof by GPC; provided,
however, that if such failure is not reasonably capable of being cured
by FPC within such thirty (30) day period, FPC shall not be deemed to be
in breach of this Agreement or any of the Collateral Documents, as a
result of such failure, if FPC commences the cure of such failure within
a reasonable time after receipt of notice of such failure from GPC and
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FPC proceeds with diligence to cure such failure; provided further
however, that any such cure period shall not exceed six (6) months;
(ii) it fails to perform the Agency Functions in accordance with
Prudent Utility Practice and such failure continues for thirty (30) days
after notice thereof by GPC; provided, however, that if such failure is
not reasonably capable of being cured by FPC within such thirty (30) day
period, FPC shall not be deemed to be in breach of this Agreement, as a
result of such failure, if FPC (A) commences the cure of such failure
within a reasonable time after receipt of notice of such failure from
GPC; (B) cures such failure within six (6) months after such notice from
GPC; and (C) pays for all costs, expenses, penalties and fees associated
with the cure of the failure; or
(iii) it becomes insolvent, or files a petition in bankruptcy, or
there is filed against it a petition in bankruptcy which is not
dismissed within one hundred twenty (120) days after the filing thereof.
11. REMEDIES. The remedies of a Party in the event of a breach of this
Agreement by the other Party shall be as set forth in Section 13 of the
Ownership Agreement, which shall be deemed incorporated herein verbatim.
12. CERTAIN ADDITIONAL AGREEMENTS AMONG THE PARTICIPANTS.
(a) Cooperation. FPC and GPC will cooperate with each other in all
activities relating to the Facility, including, without limitation, the execu-
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tion and filing of applications for authorizations, permits and licenses with
Governmental Authorities having jurisdiction, fuel procurement and the
execution of such other documents as may be reasonably necessary to carry out
the provisions of this Agreement. Without FPC's written consent, GPC shall
not incur any obligation in connection with the Facility which would or could
obligate FPC to any third party.
(b) Approvals. Following the execution and delivery of this
Agreement, GPC and FPC shall use reasonable efforts to obtain as quickly as
possible all requisite and contemplated judicial, governmental, regulatory and
vendor (with regard to assignment of contractual rights and obligations, if
any) approvals for the consummation of the transactions contemplated hereby.
(c) Right Of Inspection. Upon reasonable prior notice to FPC from
time to time, representatives of GPC shall be entitled to inspect the
Facility, the Facility Site and the Common Facilities, review operating and
maintenance practices with respect thereto and discuss the operations and
maintenance thereof with the plant manager of the Facility, provided that such
inspections and discussions shall not materially interfere with the operations
of the Facility or the Common Facilities and provided that GPC complies with
the rules and regulations of Governmental Authorities having jurisdiction with
respect to the Facility, the Facility Site and the Common Facilities, and
FPC's policies and procedures applicable to operations at the Facility Site
including, without limitation, those with respect to safety.
(d) Compliance With Law and Environmental Matters.
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(i) FPC and GPC acknowledge and agree that FPC, as Agent, shall
plan, design, license, permit, procure, construct, acquire, complete,
test, startup, manage, control, operate, maintain, add to, renew,
modify, replace and dispose of the Facility in compliance with all
local, state and federal laws, codes, regulations, ordinances or orders
now or hereinafter in effect; provided, however, that any failure to
comply with such local, state or federal laws, regulations, ordinances
or orders shall not be deemed a breach of this Agreement if, and so long
as, such failure is in accordance with a court order or decree, or a
formal agreement with the regulatory agency having jurisdiction over the
subject matter of noncompliance or having authority to issue the
required approval.
(ii) Prior to December 31 of each calendar year during which the
Facility is operated during the Summer Period, GPC shall transfer to FPC
all Allowances, as defined below, required as a result of the operation
of the Facility during the Summer Period under Title IV of the Clean Air
Act, as amended from time to time, and any regulations and requirements
arising thereunder, at the operating level utilized by such Participant.
"Allowance" shall have the meaning set forth in Section 402(3) of the
Clean Air Act, as amended from time to time. FPC, as Agent, in
consultation with GPC, shall develop reasonable procedures for
determining the amount of the emissions attributable to each Participant
for the purpose of determining the number of Allowances required of each
Participant. Each Participant shall provide reasonable assurance to
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FPC, as Agent, that such Allowances are or will be available in order to
operate the Facility at the actual and anticipated levels of operation.
(iii) The Parties acknowledge that so-called "soft" continuous
environmental monitoring devices will be installed in or in connection
with the Facility, under the terms of 40 C.F.R. sections 75.11, 75.12 and
75.13, including 40 C.F.R. Part 75, Appendices D, E and G, respectively,
with respect to the monitoring of SO2, NOx, and CO2, respectively. The
Parties also acknowledge that if the Facility exceeds a 20% capacity
factor in any one year (1752 equivalent full load run hours) or an
average of a 10% capacity factor over any three year period (an average
of 876 equivalent full load run hours), the Facility will be required to
install so-called "hard" continuous environmental monitoring devices
("Hard CEMs"). In an effort to legally avoid the requirement of having
Hard CEMs installed and operational in the Facility, the parties agree
to reasonably cooperate with each other in their operation of the
Facility; provided, however, that (A) neither party shall be limited in
its hours of operation of the Facility to avoid the requirement of Hard
CEMs, and (B) in the event that Hard CEMs are legally required to be
installed in the Facility, then such Hard CEMs shall be installed as a
part of the Facility and the costs thereof (including, without
limitation, all installation costs) shall be considered Additional Costs
of Construction.
(iv) Each Participant shall be a permittee for any air quality
permit(s) issued for the Facility by a Governmental Authority having
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jurisdiction, only if such Governmental Authority determines that the
air quality permits cannot be issued under applicable law unless each
Participant is a joint permittee.
(v) FPC, as Agent, shall not use, treat, store, dispose, or
recycle at the Facility any Environmental Material in amounts or under
circumstances requiring notification of, or a permit, license, or
approval from, any Governmental Authority of competent jurisdiction,
unless such Environmental Material was generated at the Facility or is
required to be used, treated, stored, disposed of or recycled incident
to the construction or operation of Facility.
(e) Environmental Costs. From and after the date of this Agreement:
(i) FPC shall be solely responsible for all Environmental Costs
which arise as a result of the ownership and operation of the
Intercession City Site, prior to the date of this Agreement, and all
activities conducted on the Intercession City Site prior to the date of
this Agreement.
(ii) GPC and FPC shall be responsible, in proportion to their
respective Ownership Interests, with respect to Environmental Costs that
arise as a result of the construction, installation or operation of the
Facility.
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(iii) FPC shall be solely responsible for Environmental Costs that
arise as a result of the construction, installation or operation of any
electric generating unit on the Intercession City Site other than the
Facility or the Common Facilities.
(iv) GPC and FPC shall be responsible, in proportion to their
respective Ownership Interests, with respect to Environmental Costs that
arise as a result of the construction, installation or operation of
Common Facilities that are dedicated solely to the Facility.
(v) GPC and FPC shall be responsible, in proportion to their
respective Weighted Average Common Facilities Allocation Factors, with
respect to Environmental Costs that arise as a result of the
construction, installation or operation of Common Facilities other than
those described in paragraph (iv) above.
(vi) GPC and FPC shall be responsible, in proportion to their
respective Weighted Average Common Facilities Allocation Factors, with
respect to Environmental Costs pertaining to the Facility or the
Facility Site that are not described in paragraphs (i), (ii), (iii),
(iv) or (v) above.
Notwithstanding any of the foregoing, GPC shall not be responsible for
any Environmental Costs to the extent that such Environmental Costs are
directly attributable to a spill or release of any Environmental Material
prior to the date hereof or a failure by FPC to comply with Prudent Utility
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Practice, to a material breach by FPC of Section 12(d), COMPLIANCE WITH LAWS
AND ENVIRONMENTAL MATTERS, hereof, or to the willful or intentional misconduct
of FPC.
Each party shall indemnify, defend and hold harmless the other party
from any investigation, enforcement action, consent agreement, administrative
order, removal or remedial action, cleanup obligation, or other governmental
or private third-party claim for damages, contribution, cost recovery, loss or
injury at any time threatened, instituted or completed in any way arising out
of, relating to, or in connection with any Environmental Material to the
extent that the indemnifying party is responsible for Environmental Costs
under the terms of this Section.
(f) Force Majeure. Notwithstanding any other provision of this
Agreement, no delay in or failure of performance by either party to this
Agreement shall constitute a breach under this Agreement, and neither party
shall be liable for any loss or damage suffered by the other party as a result
thereof, when and to the extent such delay in or failure of performance is
caused by a Force Majeure Event; provided that:
(i) the non-performing party gives the other party prompt notice
describing the particulars of the Force Majeure Event, including,
without limitation, the nature of the occurrence and its expected
duration;
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<PAGE>
(ii) suspension of performance is of no greater scope and of no
longer duration than is required by the Force Majeure Event; and
(iii) the non-performing party uses reasonable efforts to remedy
its inability to perform; provided, however, that neither party shall be
required to settle any strike or labor trouble or to settle any lawsuit
or other legal proceeding brought against it.
(g) Safety. FPC and GPC acknowledge and agree that in the
acquisition, construction and completion of the Facility, FPC shall at all
times take all reasonable precautions for the safety of its employees on the
work site and of the public, and shall comply with all applicable provisions
of federal, state, and municipal safety laws and building and construction
codes, including, without limitation, all regulations of the Occupational
Safety and Health Administration. The requirements of this Subsection shall
be for the sole benefit of the Participants only, and shall not create or
impose any standard of care or duty to any third party or to any employee or
contractor's or subcontractor's employee or to the public, beyond the duty
incumbent upon FPC which would exist under applicable law without reference to
any term or provision of this Agreement.
(h) Equal Employment Opportunity. FPC, as Agent, shall conform to the
requirements of the Equal Employment Opportunity clause in Section 202,
Paragraphs 1 through 7 of Executive Order 11246, as amended, and applicable
portions of Executive Orders 11701 and 11758, relative to Equal Employment
37
<PAGE>
Opportunity and the Implementing Rules and Regulations of the Office of
Federal Contract Compliance Programs.
(i) Term. Unless earlier terminated under the terms of this
Agreement, this Agreement shall become effective upon its execution and
delivery and shall remain in effect for the term set forth in Section 5(e),
TERM, of the Ownership Agreement.
(j) Limitation On Assignability. If, pursuant to the Ownership
Agreement, a Participant makes a sale, transfer or assignment of all or any
portion of its co-ownership interest in the Facility, such Participant shall
also assign to the transferee its entire interest in the Collateral Documents,
and shall cause the transferee to assume to the same extent the rights and
obligations of such Participant hereunder; provided, however, that FPC shall
not assign its responsibilities as Agent hereunder without the prior written
approval of GPC, which shall not be unreasonably withheld or delayed. No
other assignment of this Agreement shall be made except in connection with a
sale, transfer or assignment of the assignor's interest in the Facility
pursuant to the Ownership Agreement. Any attempted or purported assignment of
this Agreement not in compliance with this Section 12(j) shall be null and
void and of no force or effect whatsoever.
13. DISPUTE RESOLUTION PROCEDURE. In the event of any dispute between the
Parties hereto with respect to any matter in connection with this Agreement,
compliance with the procedures set forth in Section 9 of the Ownership
Agreement, which are deemed incorporated herein verbatim, shall be a condition
38
<PAGE>
precedent to the filing of any lawsuit, other than for injunctive relief, with
respect to such dispute; provided, however, that a Party shall not be required
to comply with the alternative dispute resolution procedures of this Section
upon the breach of this Agreement because of the other Party's willful or
intentional misconduct.
14. GENERAL.
(a) Governing Law. The validity, interpretation and performance of
this Agreement and each of its provisions shall be governed by the laws of the
State of Florida.
(b) No Delay. No disagreement or dispute of any kind between the
Participants concerning any matter, including, without limitation, the amount
of any payment due from GPC, or the correctness of any charge made to GPC,
shall permit GPC to delay or withhold any payment pursuant to this Agreement.
(c) Notices. Any notice to be given or that may be given under this
Agreement shall be in writing and shall be (i) delivered by hand; (ii)
delivered through the United States Mail, postage prepaid, certified, return
receipt requested; or (iii) delivered through or by Federal Express, Express
Mail, or other expedited mail or package service, if a receipt evidencing
delivery has been retained; and addressed to the Parties as follows:
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<PAGE>
If to GPC: Georgia Power Company
333 Piedmont Avenue, N.E.
Atlanta, Georgia 30308
Attention: F.D. Williams, Senior
Vice President, Bulk Power Markets
With copy to: Southern Company Services, Inc.
800 Shades Creek Parkway
Birmingham, Alabama 35209
Attention: W. K. Newman, Vice President,
Operating and Planning Services
If to FPC: Florida Power Corporation
3201 Thirty-Fourth Street South
St. Petersburg, Florida 33711
Attention: Director,
Combustion Turbine Operations
- and to -
Florida Power Corporation
P. O. Box 368
Intercession City, Florida 33848
Attention: Intercession City
Plant Manager
With copy to: General Counsel
Florida Power Corporation
3201 Thirty-Fourth Street South
St. Petersburg, Florida 33711
Any notice that may be given under this Agreement shall be deemed given
(i) five days after such notice has been deposited in the United States Mail,
certified, return receipt requested, with proper postage affixed thereto, (ii)
one Business Day after such notice has been deposited with Federal Express,
Express Mail or other expedited mail or package delivery service guaranteeing
delivery not later than the next Business Day, or (iii) upon hand delivery to
the appropriate address and person as herein provided if a receipt evidencing
delivery has been retained. Either Party hereto may change the address
40
<PAGE>
provided hereinabove or the person to whose attention notices are to be given,
by notice to the other party in the manner hereinabove provided.
(d) Headings Not To Affect Meaning. The descriptive headings of the
various provisions of this Agreement have been inserted for convenience of
reference only and shall in no way modify or restrict any of the terms or
provisions hereof.
(e) No Partnership. Notwithstanding any provision of this Agreement,
neither of the Parties intends to create hereby any joint venture,
partnership, association taxable as a corporation, or other entity for the
conduct of any business for profit between themselves.
(f) Amendments. This Agreement may be amended by and only by a
written instrument duly executed by each of the Parties.
(g) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon each of the Parties and their respective successors and
upon their permitted assigns pursuant to the provisions of Section 5(b),
ALIENATION AND ASSIGNMENT, of the Ownership Agreement. Nothing in this
Agreement, express or implied, is intended to confer upon any other person any
rights or remedies hereunder.
(h) Counterparts. This 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.
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(i) Further Assurances. From time to time after the date hereof, each
Party will execute and deliver such instruments and documents, upon the
request of the other Party, as may be necessary or appropriate to carry out
the intent of this Agreement.
(j) Successor Agent. In the event that FPC assigns its entire
Ownership Interest in the Facility (under the terms of the Ownership
Agreement), its assignee or successor shall be a successor Agent, subject to
the prior written approval of GPC, which shall not be unreasonably withheld or
delayed. Any successor Agent as contemplated hereby shall exercise all of the
rights and powers and shall be subject to all of the duties and obligations of
FPC as Agent hereunder and under the Ownership Agreement, and FPC shall take
all action and execute (and file where appropriate) all documents and
instruments which shall be requested by the successor Agent to effect the
transfer to such successor Agent of such rights, powers, duties and
obligations, including, but not limited to, taking such actions and executing
such documents and instruments necessary to enable the successor Agent to
operate and maintain the Common Facilities.
(k) Several Agreements; Entire Agreements. The agreements and
obligations of the Parties set forth in this Agreement and the Collateral
Documents shall be the several, and not joint, agreements and obligations of
the Parties. This Agreement and the Collateral Documents supersede all prior
agreements between the Parties with respect to their subject matter,
including, without limitation, the letter of intent between FPC and Southern
Company Services, Inc., as agent for the operating subsidiaries of The
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Southern Company, dated August 12, 1993, as amended, and are intended (with
the documents referred to herein and in the Collateral Documents) as a
complete and exclusive statement of the terms of the agreements between the
parties with respect thereto.
(l) Construction Of "Including". Wherever the term "including" is
used in this Agreement, such term shall not be construed as limiting the
generality of any statement, clause, phrase or term and shall not be deemed to
exclude any person or thing otherwise within the meaning of the statement,
clause, phrase or term which it modifies.
The undersigned parties hereto have duly executed this Agreement as of
the date first above written.
WITNESSES: GEORGIA POWER COMPANY, as a
Participant
By:
H. Allen Franklin, as President
and Chief Executive Officer
FLORIDA POWER CORPORATION, as Agent
and as a Participant
By:
A.J. Keesler, Jr., as
President
and Chief Executive Officer
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ATTACHMENT A
DEFINITIONS
1. ADDITIONAL COSTS OF CONSTRUCTION. The "Additional
Costs of Construction" shall refer to all costs incurred by FPC, as Agent for
the Participants, after the Closing, in connection with the planning, design,
licensing, procurement, acquisition, construction, completion, testing,
startup, renewal, addition, modification, retirement, replacement or disposal
of the Facility, or any portion thereof, including, without limitation, that
portion of administrative and general expenses incurred by FPC, as Agent,
which is properly and reasonably allocable to the Facility and for which FPC
has not been otherwise reimbursed by GPC, which costs are properly recordable
in accordance with the Electric Plant Instructions and in appropriate accounts
as set forth in the Uniform System of Accounts, and shall also include all
costs incurred by FPC, as Agent, in connection with (i) the purchase and
acquisition of Spare Parts, and any replacements for such Spare Parts, that
are to be utilized for the Facility, including, without limitation, that
portion of administrative and general expenses incurred by FPC, as Agent,
which is properly and reasonably allocable to such acquisition of Spare Parts
and for which FPC has not been otherwise reimbursed by GPC, (ii) the
acquisition of all necessary governmental permits, materials and supplies,
engineering drawings and records, and operation and maintenance procedure
manuals, (iii) any taxes, including, without limitation, sales, use or excise
taxes incurred in connection with the acquisition or construction of the
Facility, and (iv) any and all costs to dismantle, remove, salvage or de-
commission all or any portion of the Facility; provided, however, that
Additional Costs of Construction shall not include any costs and expenses
incurred by FPC for the sole benefit of FPC.
<PAGE>
2. AFFILIATE. An "Affiliate" of a Participant shall mean
any corporation, partnership (limited or general), limited liability company
or other person or entity controlling, under common control with, or
controlled by, such Participant. The term "control" (including the terms
"controlling," "controlled by" and "under common control with") means the
possession, direct or indirect, of the power to direct or cause the direction
of the management and policies of a person, whether through the ownership of
voting shares, by contract, or otherwise.
3. AGENCY FUNCTIONS. The "Agency Functions" shall mean
those activities which the Agent shall undertake on behalf of the Participants
which relate to the planning, design, licensing, procurement, acquisition
(other than acquisition by GPC of a leasehold interest in the Facility Site
and an undivided co-ownership interest in the Facility pursuant to this
Agreement), construction, completion, testing, startup, administration of the
Siemens Agreement (including, without limitation, negotiation of amendments to
the Siemens Agreement determined by FPC, as Agent, to be necessary with
respect to the Facility and any litigation or other dispute resolution in
connection with the Siemens Agreement), management, control, operation, de-
commissioning, dismantling, salvage, maintenance, renewal, addition,
replacement, modification, retirement and disposal of the Facility, and to
arrange for and acquire all fuel and fuel transportation for the Facility
under this Agreement and the Operating Agreement.
4. AGENT. "Agent" shall mean FPC or its successors with
respect to its or their rights and obligations in the performance of the
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Agency Functions. The term "Agent" shall also mean and refer to FPC (or any
of its successors as Agent) acting on its own behalf with respect to the
Facility and the Common Facilities for so long as FPC (or its successor, as
Agent) owns an undivided ownership interest in the Facility.
5. BUSINESS DAY. A "Business Day" shall be any Monday,
Tuesday, Wednesday, Thursday or Friday other than a day which has been
established by law or required by executive order as a holiday for any
commercial banking institution in the State of Florida or the State of
Georgia.
6. CARRYING CHARGES. "Carrying Charges" shall mean
carrying charges for which GPC is responsible, under the Ownership Agreement
or the Operating Agreement, with respect to (a) Fuel Inventory, as calculated
pursuant to Attachment E to the Ownership Agreement and Attachment B to the
Operating Agreement, and (b) Common Facilities, as calculated pursuant to
Attachment F to the Operating Agreement.
7. CLOSING. The "Closing" has the meaning set forth in
Section 3(c) of the Ownership Agreement.
8. COLLATERAL DOCUMENTS. The term "Collateral
Documents":
(a) as used in the Ownership Agreement, shall refer to
the Operating Agreement, the Transmission Service Agreement, the Long Term
Lease Agreement and the Step-Up Transformer Agreement, collectively; or
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(b) as used in the Operating Agreement, shall refer to
the Ownership Agreement, the Transmission Service Agreement, the Long Term
Lease Agreement and the Step-Up Transformer Agreement, collectively.
9. COMMERCIAL OPERATION. "Commercial Operation" shall
refer to the date on which the Facility is completed and declared fully
operable by FPC.
10. COMMON FACILITIES. The "Common Facilities" shall be
the items described in Attachment E to the Operating Agreement that will serve
(a) the Facility, or (b) the Facility and other facilities located on the
Intercession City Site, and any and all modifications to, replacements of or
additions to such items.
11. COMMON FACILITIES CARRYING CHARGES. "Common
Facilities Carrying Charges" shall mean the annual charges, as calculated in
the manner set forth in Attachment F to the Operating Agreement for the use of
the Common Facilities by the Facility, based upon FPC's investment in the
Common Facilities, as adjusted from time to time, FPC's cost of capital,
depreciation and property taxes with respect to the Common Facilities.
12. CONSTRUCTION PERIOD. "Construction Period" shall
refer to the period of time from and including the effective date of the
"Notice of Commencement of Construction" that FPC files with the County of
jurisdiction for the Facility until and including the day before the Facility
is fired for the first time.
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13. COSTS OF CONSTRUCTION. The "Costs of Construction"
shall refer to all costs incurred by FPC, as Agent for the Participants, in
connection with the planning, design, licensing, procurement, acquisition,
construction, completion, testing, startup, renewal, addition, modification,
retirement, replacement or disposal of the Facility, or any portion thereof,
including, without limitation, that portion of administrative and general
expenses incurred by FPC, as Agent, which is properly and reasonably allocable
to the Facility and for which FPC has not been otherwise reimbursed by GPC,
which costs are properly recordable in accordance with the Electric Plant
Instructions and in appropriate accounts as set forth in the Uniform System of
Accounts, and shall also include all costs incurred by FPC, as Agent, in
connection with (i) the cost of fuel consumed by the Facility on and prior to
the date of Commercial Operation with respect to the testing of the Facility
(less all applicable credits provided for in FPSC Staff Accounting Bulletin
No. 2 and FERC Electric Plant Instruction No. 3 (18a)), including, without
limitation, that portion of administrative and general expenses incurred by
FPC, as Agent, which is properly and reasonably allocable to the acquisition
of such fuel and for which FPC has not been otherwise reimbursed by GPC, (ii)
the purchase and acquisition of the initial supply of Spare Parts, and any
replacements for such Spare Parts, that are utilized, during pre-Commercial
Operation construction activities, for the Facility, including, without
limitation, that portion of administrative and general expenses incurred by
FPC, as Agent, which is properly and reasonably allocable to such acquisition
of Spare Parts and for which FPC has not been otherwise reimbursed by GPC,
(iii) the acquisition of all necessary governmental permits, materials and
supplies, engineering drawings and records, and operation and maintenance
5
<PAGE>
procedure manuals, (iv) any bonus earned by Siemens under the Siemens
Agreement, (v) any taxes, including, without limitation, sales, use or excise
taxes incurred in connection with the acquisition or construction of the
Facility, (vi) the expenditure or advancement of funds during construction
with respect to Facility (including, without limitation, an Allowance for
Funds Used During Construction for the period on or before the date of
Commercial Operation), and (vii) if the date of the Closing is delayed, under
the terms of Section 3(c)(iii) of the Ownership Agreement, because of GPC's
failure to obtain or receive the approval by the Georgia Public Service
Commission of GPC's Application for Certification of the Intercession City
Combustion Turbine Project, FPC's cost of capital, determined by reference to
the sum of FPC's Pre-Tax Weighted Cost Rates as shown in Attachment E to the
Ownership Agreement (for example, 13.35% as of the date of this Agreement) for
the period from and after the date scheduled by FPC for the Closing, pursuant
to Section 3(c)(i), CLOSING, of the Ownership Agreement, and extending to and
including the actual date of the Closing); provided, however, that Costs of
Construction shall not include any costs and expenses (A) incurred by FPC for
the sole benefit of FPC, or (B) incurred by any Participant in connection with
the development of this Agreement or the Collateral Documents.
14. DEDICATED COMMON FACILITIES. "Dedicated Common
Facilities" shall mean those items that are not part of the Facility but
which, in the reasonable determination of FPC, as Agent, support solely the
Facility and are included in item 45 of Attachment E to the Operating
Agreement, as revised from time to time.
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15. ENVIRONMENTAL COSTS. "Environmental Costs" shall mean
all costs, losses, damages, expenses, fines or penalties, exclusive of
insurance proceeds, which arise from the possession, ownership or use by FPC,
GPC, or third parties of Environmental Material; provided, however, that
modifications to the Facility that are required in order to comply with
environmental laws or regulations shall not be considered Environmental Costs.
16. ENVIRONMENTAL MATERIAL. "Environmental Material"
shall mean and include asbestos, radioactive material, petroleum, petroleum
products, petroleum fractions, petroleum distillates, and any substance,
material or waste designated as hazardous under the Comprehensive
Environmental Response, Compensation, and Liability Act and amendments
thereto, or designated as toxic or hazardous or otherwise regulated under the
Toxic Substances Control Act and amendments thereto, the Resource Conservation
and Recovery Act and amendments thereto, the Clean Water Act and amendments
thereto, the Clean Air Act and amendments thereto, the Florida Air Quality Act
and amendments thereto, the Florida Hazardous Waste Management Act and
amendments thereto, or the Florida Water Quality Control Act and amendments
thereto.
17. EQUIVALENT OPERATING HOURS. The term "Equivalent
Operating Hours" shall (a) mean the sum of (1) the actual operating hours that
the Facility is on-line during any designated period of time, and (2) the
product determined by multiplying (A) the number of starts with respect to the
Facility during the same designated period of time, by (B) ten (10); or (b)
have such other meaning, as reasonably determined by FPC, and which is
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consistently used by FPC in connection with its maintenance plans for the
Facility.
18. FACILITY. The term "Facility" shall refer to:
(i) All property comprising the combustion turbine-
generating unit to be known as the Intercession City
Facility CT, including, without limitation, one complete
Siemens V84.3 combustion turbine-generating unit (comprised
of a gas turbine block, two combustion chambers, a generator
exciter block, a stack, a fin fan cooler, an auxiliary skid,
a water injection block, a cooling water block, a power and
control module, a battery module, a generator breaker
module, a generator bus duct, unit auxiliary transformer
secondary switchgear, a fuel oil pump block, an air intake
filter, a unit auxiliary transformer and a transfer switch
module), the enclosures housing the same, and the Step-Up
Transformer, which are to be used solely in connection with
such Siemens unit, all as the foregoing list of property may
be modified or supplemented at or prior to the Closing;
(ii) Such modifications to the Facility or such
additional facilities and other tangible property as may be
acquired, constructed, installed or replaced solely in
connection with the Facility; provided that (A) the cost of
such modifications or additional facilities or other
8
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tangible property shall be properly recordable in accordance
with the Uniform System of Accounts, and (B) such
modifications or additional facilities or other tangible
property shall have been acquired, constructed, installed or
replaced for the joint use of the Participants under and
subject to the provisions of the Ownership Agreement or the
Operating Agreement;
(iii) The Spare Parts; and
(iv) Existing intangible property rights, and such
additional intangible property rights as may be hereafter
acquired, associated with the planning, licensing, design,
construction, acquisition, completion, testing, startup,
management, control, operation, maintenance, renewal,
addition, replacement, modification and disposal of any of
the items comprising the Facility.
Notwithstanding any of the foregoing, the Facility shall not include the
Facility Site or the Common Facilities.
A diagram of the Facility, as contemplated by FPC as of the
date of the Ownership Agreement, is as shown in Attachment F to the Ownership
Agreement.
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19. FACILITY SITE. The "Facility Site" shall refer to
that certain parcel of land located within the Intercession City Site upon
which the Facility shall be constructed and located. The exact legal
description of the Facility Site shall be determined upon completion of the
construction of the Facility, and shall consist of a parcel of land
approximately 105 feet by 435 feet, which shall be approximately as shown
within the crosshatched area labeled as the "demised premises" on Attachment G
to the Ownership Agreement, together with such additional land, appurtenant
easements or other rights therein as may hereafter be acquired solely and
exclusively for the purposes of the Facility. GPC and FPC agree that the
exact legal description of the parcel of land described above shall be
attached as Attachment G to the Ownership Agreement upon completion of the
survey of such parcel of land and the approval of such survey by FPC, and such
legal description shall become a part of the Ownership Agreement and supersede
the existing Attachment G.
20. FDEP. The "FDEP" shall refer to the Department of
Environmental Protection, of the State of Florida, or any entity succeeding to
the powers and functions thereof.
21. FERC. The "FERC" shall mean the Federal Energy
Regulatory Commission or any entity succeeding to the powers and functions
thereof.
22. FIXED FUEL COSTS. The "Fixed Fuel Costs" shall mean
all Fuel Costs other than the Variable Fuel Costs.
10
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23. FIXED O&M COSTS. The "Fixed O&M Costs" shall mean all
Operating Costs other than the Variable O&M Costs.
24. FORCE MAJEURE EVENT. A "Force Majeure Event" shall
refer to any occurrence reasonably beyond the control and not attributable to
the neglect of a Party, including, without limitation, any one or more of the
following: failure, interruption, or curtailment of transportation or supply
of fuels; inability to obtain materials or equipment; failure or breakdown of
materials or equipment; breakdown of or damage to the Facility or the Common
Facilities; absence as of any particular time of precise engineering and
scientific knowledge generally available to fashion a method for compliance
with Legal Requirements or absence as of any particular time of appropriate
technology generally available which may be required for compliance with Legal
Requirements; confiscation of facilities by Governmental Authorities;
restraint by court order or order of public authority; challenge by third
party or governmental agency with respect to the construction, ownership, or
operation of the Facility or the Common Facilities; act or failure to act of
any Governmental Authority; act of war; act of a public enemy; explosion;
rebellion, terrorism, or sabotage, or damage resulting therefrom; fire,
hurricane, tornado, lightning, flood, earthquake or other casualty or act of
God; explosion or other physical disaster; act or omission of any third party;
discovery of hazardous or toxic wastes on or under the property leased to GPC
under the Long Term Lease; riot, rebellion, strike, or other concerted act of
workmen; protests or pranks; embargo, blockade, quarantine, restriction,
epidemic; or any other cause, direct or indirect, which is reasonably beyond
11
<PAGE>
the control and not attributable to the neglect of the Party, whether similar
or dissimilar to those enumerated above.
25. FPSC. The "FPSC" shall mean the Florida Public
Service Commission or any governmental agency succeeding to the powers and
functions thereof.
26. FUEL CARRYING CHARGES. "Fuel Carrying Charges" shall
mean those Carrying Charges with respect to Fuel Inventory, as determined in
Attachment E to the Ownership Agreement and Attachment B to the Operating
Agreement.
27. FUEL COSTS. The "Fuel Costs" shall mean all costs
incurred by the Agent for the Participants that are allocable to the
acquisition, processing, transportation, delivering, handling, storage,
treatment, analysis, measurement and disposal of fuel consumed by the Facility
after the date of Commercial Operation, including, without limitation, any
advance payments in connection therewith, less credits related to such costs
applied as appropriate, and including, without limitation, that portion of
administrative and general expenses which is properly and reasonably allocable
to acquisition and management of fuel and for which the Agent has not been
otherwise reimbursed by GPC. Fuel Costs shall consist of Fixed Fuel Costs and
Variable Fuel Costs.
28. FUEL INVENTORY. The "Fuel Inventory" shall mean the
initial and on-going supply of fuel for the Facility.
12
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29. GOVERNMENTAL AUTHORITY. A "Governmental Authority"
shall mean any local, state, regional or federal administrative, legal,
judicial, or executive agency, court, commission, department or other entity,
but excluding any agency, commission, department or other such entity acting
in its capacity as lender, guarantor or mortgagee.
30. INDENTURE. The "Indenture" shall refer to that
certain Indenture of Mortgage and Deed of Trust, dated as of January 1, 1944,
and Supplemental Indentures thereto, from FPC to Morgan Guaranty Trust Company
of New York, as Trustee, and First Union National Bank of Florida, as Co-
Trustee.
31. INTERCESSION CITY SITE. The "Intercession City Site"
shall refer to the land located in Osceola County, Florida described in
Attachment H to the Ownership Agreement.
32. LEGAL REQUIREMENTS. "Legal Requirements" shall mean
all laws, codes, ordinances, orders, judgments, decrees, injunctions,
licenses, rules, permits, approvals, regulations and requirements of every
Governmental Authority having jurisdiction over the matter in question,
whether federal, state or local, which may be applicable to FPC, as Agent, or
either Participant, as required by the context in which used, or to the
Facility, or to the use, manner of use, occupancy, possession, planning,
licensing, design, procurement, construction, acquisition, testing, startup,
operation, maintenance, management, control, addition, renewal, modification,
replacement or disposal of the Facility or any portion or portions thereof.
13
<PAGE>
33. LONG TERM LEASE. The "Long Term Lease" shall refer to
that certain Long Term Lease Agreement, dated as of June 8, 1994, between FPC
and GPC, as such Agreement may be amended from time to time.
34. MAJOR OUTAGE. A "Major Outage" shall refer to any
blade recoating, blade replacement, combustion tile replacement and/or
generator rewinding (individually, a "Procedure") with respect to the Facility
that is performed (a) during any Scheduled Maintenance Outage to meet the
preventive maintenance schedule or standards of the manufacturer of the
Facility, as the same may be amended from time to time, or (b) after not less
than ten thousand (10,000) Equivalent Operating Hours since (i) the last such
Procedure was performed, or (ii) the date of Commercial Operation, in the case
of the first such Procedure.
35. MAJOR OUTAGE COSTS. "Major Outage Costs" shall mean
all costs incurred by FPC with respect to a Major Outage.
36. METERED WATER COST. "Metered Water Cost" shall mean
the sum of (a) the monthly metered volume of demineralized water multiplied by
the contractual cost (incurred by FPC to the operator of the water systems at
the Facility Site) per unit of volume for demineralized water, and (b) 1.5
multiplied by the same metered volume of demineralized water, and multiplied
by the contractual costs (incurred by FPC to the supplier of raw water) per
unit of volume for raw water.
14
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37. 1994 DOLLARS "1994 Dollars" shall mean the dollar
amount, at the applicable time, discounted to December 1994 based on the
Consumer Price Index For All Urban Consumers (CPI-U) [1982-84=100], All
Cities, as published by the United States Department of Labor, Bureau of Labor
Statistics or comparable successor index.
38. OPERATING AGREEMENT. "Operating Agreement" shall
refer to that certain Intercession City Siemens Unit Operating Agreement,
dated as of June 8, 1994, between GPC and FPC, as such Agreement may be
amended from time to time.
39. OPERATING COSTS. "Operating Costs" shall mean all of
the costs to operate the Facility (including, without limitation,
administrative and general costs). Operating Costs shall consist of Fixed O&M
Costs and Variable O&M Costs.
40. OPERATING SUBSIDIARY. "Operating Subsidiary" shall
mean Georgia Power Company, Savannah Electric and Power Company, Gulf Power
Company, Alabama Power Company, or Mississippi Power Company or any successor
corporation that is a regulated public utility and subsidiary of The Southern
Company.
41. OWNERSHIP AGREEMENT. The "Ownership Agreement" shall
refer to the Intercession City Siemens Unit Purchase and Ownership
Participation Agreement, dated as of June 8, 1994, between FPC and GPC, as
such Agreement may be amended from time to time.
15
<PAGE>
42. OWNERSHIP INTEREST. An "Ownership Interest" shall
mean for each Participant the percentage undivided co-ownership interest in
the Facility which such Participant actually owns at any relevant time
following the Closing.
43. PARTICIPANTS. "Participant" and "Participants" shall
refer individually or collectively, as the case may be, to GPC and FPC (in
their capacities as co-owners of the Facility) and to any permitted transferee
or assignee of either of them of an ownership interest in the Facility
pursuant to the Ownership Agreement; provided, however, such references shall
only refer to an entity for so long as said entity has an ownership interest
in the Facility.
44. PARTY. A "Party" shall refer to any entity, which is
now or hereafter a party to this Agreement and the Collateral Documents.
45. PRIME RATE. The "Prime Rate" shall mean the prime
rate of interest as published from time to time in the Wall Street Journal or
comparable successor publication. The Prime Rate shall be calculated on the
basis of a 365-day year for the actual number of days that a payment,
reimbursement or adjustment, as the case may be, has not been made.
46. PRUDENT UTILITY PRACTICE. "Prudent Utility Practice"
at a particular time shall mean any of the practices, methods and acts engaged
in or approved by a significant portion of the electric utility industry prior
to such time, or any of the practices, methods and acts, which in the exercise
16
<PAGE>
of reasonable judgment by FPC in light of the facts known to it at the time
the decision was made, could have been expected to accomplish the desired
result at a reasonably low cost consistent with good business practices,
reliability, safety and expedition. "Prudent Utility Practice" is not
intended to be limited to the optimum practice, method or act to the exclusion
of all others, but rather to be a spectrum of possible practices, methods or
acts having due regard for, among other things, manufacturers' warranties and
the requirements of Governmental Authorities having competent jurisdiction and
the requirements of this Agreement.
47. PURCHASE PRICE. The "Purchase Price" shall have the
meaning set forth in Paragraph (i) of Section 3(b), PURCHASE PRICE AND
PAYMENTS, of the Ownership Agreement.
48. RELEASE. "Release" shall mean a release executed and
delivered by the holder of a mortgage, deed to secure debt or other security
interest (including, without limitation, a release from the Indenture trustee)
sufficient to release GPC's co-ownership interest in the Facility from the
lien, security title and effect of such mortgage, deed to secure debt or other
security interest.
49. SCHEDULED MAINTENANCE OUTAGE. A "Scheduled
Maintenance Outage" shall mean a maintenance outage with respect to the
Facility which is planned for the purpose of preventive maintenance and
scheduled a reasonable time prior to the commencement of such outage.
17
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50. SEC. The "SEC" shall refer to the U.S. Securities and
Exchange Commission or any governmental agency succeeding to the powers and
functions thereof.
51. SIEMENS AGREEMENT. The "Siemens Agreement" shall
refer to that certain Contract dated September 28, 1993, between Siemens Power
Corporation and FPC with respect to the Facility as such Agreement may be
amended from time to time.
52. SPARE PARTS. "Spare Parts" shall mean the spare parts
purchased or acquired by FPC, as Agent, from time to time, for use in the
Facility.
53. STEP-UP TRANSFORMER. The "Step-Up Transformer" shall
mean the step-up transformer described in the Step-Up Transformer Agreement.
54. STEP-UP TRANSFORMER AGREEMENT. The "Step-Up
Transformer Agreement" shall refer to that certain Intercession City Siemens
Unit Step-Up Transformer Purchase Agreement, dated as of June 8, 1994, between
FPC and GPC, as such Agreement may be amended from time to time.
55. SUMMER PERIOD. The "Summer Period" shall refer to all
of the calendar months of June, July, August and September during the term of
the Ownership Agreement that include or follow the date of the Closing.
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<PAGE>
56. TESTING PERIOD. The "Testing Period" shall refer to
the period of time from and including the date on which the Facility is fired
for the first time until and including the day before the date of Commercial
Operation.
57. TRANSMISSION SERVICE AGREEMENT. The "Transmission
Service Agreement" shall refer to that certain Intercession City Siemens Unit
Transmission Service Agreement, dated as of June 8, 1994, between GPC and FPC,
as such Agreement may be amended from time to time.
58. UNIFORM SYSTEM OF ACCOUNTS. The "Uniform System of
Accounts" shall mean the FERC Uniform System of Accounts prescribed for Public
Utilities and Licensees (subject to the provisions of the Federal Power Act)
as the same now exists or may be hereafter amended by the FERC.
59. VARIABLE FUEL COSTS. The "Variable Fuel Costs" shall
mean all Fuel Costs as recorded in FPC account 547.10 or equivalent successor
account.
60. VARIABLE O&M COSTS. The "Variable O&M Costs" shall
consist of the Metered Water Costs, and any environmental permit charges, fees
and costs imposed by federal, state or local law with respect to emissions
which are produced by the Facility during a Participant's respective period of
operation.
19
<PAGE>
61. WATER COSTS. The "Water Costs" shall mean the total
costs (including, without limitation, taxes and fees) of (a) all water
consumed in the operation of the Facility, (b) all wastewater discharged in
connection with the operation of the Facility, and (c) all water treatment
costs. All Water Costs other than Metered Water Costs shall be deemed Fixed
O&M Costs.
62. WEIGHTED AVERAGE COMMON FACILITIES ALLOCATION FACTORS.
The "Weighted Average Common Facilities Allocation Factors" for GPC and FPC
shall be as determined in Attachment E to the Operating Agreement.
63. WINTER PERIOD. The "Winter Period" shall refer to all
of the calendar months (other than the calendar months included in the Summer
Period) during the term of the Ownership Agreement that include or follow the
date of the Closing.
64. WORKING CAPITAL DEPOSIT. The "Working Capital
Deposit" shall be as defined in Attachment E to the Ownership Agreement and
Attachment H to the Operating Agreement.
20
<PAGE>
ATTACHMENT B
FORMULA TO CALCULATE GPC'S
FUEL CARRYING CHARGES
After the date of Commercial Operation, GPC's Fuel Carrying Charges for
any calendar month or, if applicable, partial calendar month shall be
calculated as follows:
1. Determine the sum of FPC's Pre-Tax Weighted Cost Rates (the "Total
Pre-Tax Weighted Cost Rate"), based on the methodology set forth
in the chart on the page 2 of this Attachment (for example,
13.35%, as of the date of this Agreement).
2. Multiply the Total Pre-Tax Weighted Cost Rate by a fraction, the
numerator of which is the number of days in the calendar month or,
if applicable, the partial calendar month, and the denominator of
which is the number of days in the calendar year in which such
calendar month or partial calendar month occurs (the "Daily
Weighted Cost Rate").
3. Determine FPC's average cost of the daily average volume of fuel
inventory for all electric generating units on the Intercession
City Site for the calendar month or, if applicable, partial
calendar month, at issue (the "Daily Average Site Fuel Cost").
4. Multiply the Daily Average Site Fuel Cost by a fraction, the
numerator of which is the name plate rating of the Facility and
the denominator of which is the sum of the name plate ratings of
all electric generating units on the Intercession City Site (the
"Daily Average Facility Fuel Cost").
5. Multiply the Daily Average Facility Fuel Cost by .93 (the "Daily
Adjusted Average Facility Fuel Cost").
6. The Fuel Carrying Charges for the calendar month, or, if
applicable, partial calendar month, shall be the product
determined by multiplying the Daily Adjusted Average Facility Fuel
Cost by the Daily Weighted Cost Rate (the product determined under
item 5 x the product determined under item 2).
S A M P L E C A L C U L A T I O N
Total Pre-Tax Weighted Cost Rate = 13.35%
Number of Days in the Calendar Month = 30
Daily Weighted Cost Rate (30/365 X 13.35% = 1.10% (.0110))
Daily Average Site Fuel Cost = $5,000,000
Daily Average Facility Fuel Cost ($5,000,000 x 165/965 = 854,922)
Daily Adjusted Average Facility Fuel Cost ($854,922 X 0.93 = $795,150)
Fuel Carrying Charges for Calendar Month ($795,150 x .0110 = $8,747)
<PAGE>
ATTACHMENT B - continued
FPC'S PRE-TAX WEIGHTED COST RATES
FPC Pre-Tax
Capital Weighted
Structure Cost Weighted Income Tax Cost
Components Amount Ratio Rate Cost Multiplier Rates
Rate
Common
Equity $1,195,942 45.84% 12.00% 5.50% 1.628134 8.95%
Preferred
Stock 179,643 6.89% 7.18% 0.50% 1.628134 0.81%
Long Term
Debt:
Fixed Rate 998,561 38.28% 8.26% 3.16% 3.16%
Variable 89,247 3.42% 6.11% 0.21% 0.21%
Rate
Short Term
Debt 145,421 5.57% 4.00% 0.22% 0.22%
Total $2,608,814 100.00% 9.59% 13.35%
NOTE: The items in the above chart, other than Income Tax Multiplier, will
be updated effective as of January 1 of each calendar year based on
FPC's capital structure components and cost rates as of December 31
of the immediately preceding calendar year. [For example, the Common
Equity Cost Rate shown in the above chart represents FPC's authorized
return on equity as of the date of this Agreement. This item will be
updated effective as of January 1 of each succeeding calendar year to
reflect FPC's authorized return on equity as of December 31 of the
immediately preceding calendar year.]
The Income Tax Multiplier in the above chart sets forth FPC's federal
corporate income tax rate and Florida corporate income tax rate (which are
35% and 5.5%, respectively, as of the date of this Agreement). This item
will be updated from time to time to reflect changes in FPC's federal or
Florida corporate income taxes. Any such update will be effective as of
the effective date of the applicable change in corporate income tax rate.
2
<PAGE>
ATTACHMENT C
FIXED DAILY CHARGES TO BE PAID BY GPC
The fixed daily charges to be paid by GPC for each Scheduled Maintenance
Outage occurring during the Winter Period shall be the sum of the Net Book
Value Component, the Carrying Charge Component and the Fixed O & M Component,
as set forth below.
1. Net Book Value Component. The Net Book Value Component shall be
determined as follows:
The Facility Net Book Value, as defined below, shall be:
a. multiplied by the sum of FPC's Pre-Tax Weighted Cost Rates
calculated in accordance with Attachment B to this
Agreement (for example, 13.35%, as of the date of this
Agreement); and the product thereof shall be:
b. divided by 365; and the quotient thereof shall be:
c. multiplied by one-third; and the product thereof shall be:
d. multiplied by the number of days (rounded to the nearest
whole day) of the Scheduled Maintenance Outage.
For purposes of this item 1, the "Facility Net Book Value" shall mean the net
book value of FPC's co-ownership interest in the Facility, as of the December
31 immediately preceding the commencement of the Scheduled Maintenance Outage,
as reflected in FPC's books and records, multiplied by 1.5.
2. Carrying Charge Component. The Carrying Charge Component shall be
determined as follows:
a. The monthly Fuel Carrying Charges, calculated in accordance
with Attachment B to this Agreement, shall be added to the
product of three times the monthly Common Facilities
Carrying Charges, calculated in accordance with Attachment
F to this Agreement; and the sum thereof shall be:
b. divided by the number of days in the calendar month in
which the Scheduled Maintenance Outage begins; and the
quotient thereof shall be:
c. multiplied by one-third; and the product thereof shall be:
d. multiplied by the number of days (rounded to the nearest
whole day) of the Scheduled Maintenance Outage.
ATTACHMENT C, continued
3. Fixed 0 & M Component. The Fixed O & M Component shall be determined as
follows:
<PAGE>
a. The annual sum of all Fixed 0 & M Costs during each
calendar year in which any days of the Scheduled
Maintenance Outage occur shall be:
b. divided by 365; and the quotient thereof shall be:
c. multiplied by one-third; and the product thereof shall be:
d. multiplied by the number of days during such calendar year
(rounded to the nearest whole day) of the Scheduled
Maintenance Outage.
The Net Book Value Component and the Carrying Charge Component shall be billed
during the calendar month immediately following the calendar month in which
the Scheduled Maintenance Outage ends. The Fixed O & M Component shall be
billed during each January immediately following each calendar year in which
any days of the Scheduled Maintenance Outage have occurred.
3
<PAGE>
ATTACHMENT D
FIXED DAILY CHARGES TO BE PAID BY FPC
The fixed daily charges to be paid by FPC for each Scheduled Maintenance
Outage occurring during the Summer Period shall consist of the sum of the Net
Book Value Component, the Carrying Charge Component and the Fixed O & M
Component, as calculated under Attachment C, except that for purposes of
making such calculations under this Attachment D:
a. the term "Summer Period" shall be substituted for the term "Winter
Period" where it appears in Attachment C; and
b. "two-thirds" shall be substituted for "one-third" in each place
that it appears in Attachment C.
<PAGE>
ATTACHMENT E
DESCRIPTION OF COMMON FACILITIES
This Attachment describes the Common Facilities that are projected, as
of the date of this Agreement, to support the Facility. For purposes of this
Attachment, the column entitled "Existing" contains the net book value, as
reflected on FPC's books and records, of those items installed before January
1, 1993, and the column entitled "New" contains the net book value, as
reflected on FPC's books and records, of those items installed on or after
January 1, 1993.
This Attachment E shall be updated from time to time in accordance with
Section 3(i)(ii) of the Operating Agreement.
<PAGE>
ATTACHMENT F
METHOD OF CALCULATING INITIAL
COMMON FACILITIES CARRYING CHARGES WITH
RESPECT TO ITEMS 1-44 ON ATTACHMENT E
The initial Common Facilities Carrying Charges with respect to items 1-
44 on Attachment E shall be calculated as follows:
The Total of the "Item Net Book Values" of items 1-44 on
Attachment E shall be multiplied by .94, and the product thereof
shall be:
A. multiplied by the sum of FPC's Pre-Tax Weighted Cost Rates,
as determined in accordance with Attachment B (for example,
13.35%, as of the date of this Agreement); and the product
thereof shall be:
B. added to the estimated non-operating and maintenance
expenses of depreciation and property taxes with respect to
such Common Facilities for the entire calendar year 1995;
and the sum thereof shall be:
C. multiplied by an allocation factor of 6.86%; and the
product thereof shall be:
D. divided by 12 to arrive at the initial Common Facilities
Carrying Charges with respect to items 1-44. The initial
Common Facilities Carrying Charges for any partial calendar
month with respect to such items shall be a pro rata
portion of the initial monthly Common Facilities Carrying
Charges with respect to such items.
<PAGE>
ATTACHMENT F - continued
METHOD OF CALCULATING INITIAL
COMMON FACILITIES CARRYING CHARGES WITH
RESPECT TO ITEM 45 ON ATTACHMENT E
The initial Common Facilities Carrying Charges with respect to item 45
on Attachment E shall be calculated as follows:
The net book value to FPC of the Dedicated Common Facilities (item
45 on Attachment E) as of the last day of the calendar month
immediately preceding the date of the Closing shall be multiplied
by .94, and the product thereof shall be:
A. multiplied by the sum of FPC's Pre-Tax Weighted Cost Rates,
as determined in accordance with Attachment B (for example,
13.35%, as of the date of this Agreement); and the product
thereof shall be:
B. added to the estimated non-operating and maintenance
expenses of depreciation and property taxes with respect to
such Common Facilities for the entire calendar year 1995;
and the sum thereof shall be:
C. multiplied by an allocation factor of 33%; and the product
thereof shall be:
D. divided by 12 to arrive at the initial Common Facilities
Carrying Charges with respect to the Dedicated Common
Facilities. The initial Common Facilities Carrying Charges
for any partial calendar month with respect to the
Dedicated Common Facilities shall be a pro rata portion of
the initial monthly Common Facilities Carrying Charges with
respect to the Dedicated Common Facilities.
2
<PAGE>
ATTACHMENT F - continued
METHOD OF RECALCULATING
COMMON FACILITIES CARRYING CHARGES
FOR PURPOSES OF SECTION 3(i)(ii)(B)
The following procedure shall apply upon a request by either party,
under the terms of Section 3(i)(ii)(B) of the Operating Agreement, for a
recalculation of Common Facilities Carrying Charges:
1. Attachment E of the Operating Agreement shall be updated to
establish FPC's net book value of each item of the Common
Facilities as of the immediately preceding December 31, to
reflect any changes in the number and/or capacity of
electric generating units on the Intercession City Site and
to incorporate other changes, if any, that may be mutually
agreed upon by the Parties.
2. The net book values of the Common Facilities, as listed in
updated Attachment E, shall be multiplied by .94; and the
product thereof shall be:
A. added to the net book values, as reflected in FPC's books
and records, of any additional Common Facilities which have
been added since such December 31 and which have an
aggregate net book value to FPC equal to or exceeding
$250,000.00; and the sum thereof shall be:
B. multiplied by the sum of FPC's Weighted Pre-Tax Cost Rates,
as determined in accordance with Attachment B (for
example, 13.35% as of the date of this Agreement); and the
product thereof shall be:
C. added to the non-operating and maintenance expenses of
depreciation and property taxes with respect to such Common
Facilities for the entire calendar year immediately
preceding the calendar year in which such recalculation is
made; and the sum thereof shall be:
D. multiplied by the Weighted Average Common Facilities
Allocation Factor, as set forth in updated Attachment E;
and the product thereof shall be:
E. divided by 12 to arrive at the recalculated monthly Common
Facilities Carrying Charges payable by GPC. The
recalculated Common Facilities Carrying Charges for any
partial calendar month shall be a pro rata portion of the
recalculated monthly Common Facilities Carrying Charges.
3
<PAGE>
ATTACHMENT F - continued
METHOD OF RECALCULATING
COMMON FACILITIES CARRYING CHARGES
FOR PURPOSES OF SECTION 3(i)(ii)(C)
The following procedure shall apply upon an election by FPC, under the
terms of Section 3(i)(ii)(C) of the Operating Agreement, to recalculate the
Common Facilities Carrying Charges:
The net book values of the Common Facilities, as listed in Attachment
E, as in effect immediately prior to the recalculation, shall be
multiplied by .94; and the product thereof shall be:
A. added to the net book values, as reflected in FPC's books
and records, of any additional Common Facilities which have
been added since the last date on which Attachment E was
updated under Section 3(i)(ii)(A) or (B), and which have an
aggregate net book value to FPC equal to or exceeding
$250,000.00; and the sum thereof shall be:
B. multiplied by the sum of FPC's Weighted Pre-Tax Cost Rates,
as determined in accordance with Attachment B, as in
effect immediately prior to the recalculation (for example,
13.35% as of the date of this Agreement); and the product
thereof shall be:
C. added to (i) the non-operating and maintenance expenses of
depreciation and property taxes, as in effect immediately
prior to the recalculation, with respect to the Common
Facilities, and (ii) the non-operating and maintenance
expenses of depreciation and property taxes with respect to
the additional Common Facilities for the entire calendar
year immediately preceding the calendar year in which such
recalculation is made; and the sum thereof shall be:
D. multiplied by the Weighted Average Common Facilities
Allocation Factor, as set forth in Attachment E, as in
effect immediately prior to the recalculation; and the
product thereof shall be:
E. divided by 12 to arrive at the recalculated monthly Common
Facilities Carrying Charges payable by GPC. The
recalculated Common Facilities Carrying Charges for any
partial calendar month shall be a pro rata portion of the
recalculated monthly Common Facilities Carrying Charges.
4
<PAGE>
ATTACHMENT F - continued
CALCULATION OF INITIAL COMMON FACILITIES CARRYING CHARGES
WITH RESPECT TO ITEMS 1 THROUGH 44 ON ATTACHMENT E
TOTAL NET BOOK VALUE OF ITEMS 1-44 OF THE COMMON $9,083,512.00
FACILITIES (PER CHART IN ATTACHMENT E)
94% OF TOTAL NET BOOK VALUE OF SUCH COMMON $8,538,501.00
FACILITIES
SUM OF THE PRE-TAX WEIGHTED COST RATES (PER 13.35%
ATTACHMENT B)
EQUIVALENT PRE TAX RETURN ON INVESTMENT $1,139,890.00
ADD: ESTIMATED NON O&M OPERATING EXPENSES
FOR 1995 -
DEPRECIATION EXPENSE $299,756.00
PROPERTY TAXES $163,503.00
TOTAL CARRYING COST OF SUCH COMMON FACILITIES $1,603,149.00
ALLOCATION FACTOR 6.86%
INITIAL ANNUAL COMMON FACILITIES CARRYING $109,976.00
CHARGES WITH RESPECT TO ITEMS 1-44
INITIAL MONTHLY COMMON FACILITIES CARRYING $9,165.00
CHARGES WITH RESPECT TO ITEMS 1-44
5
<PAGE>
ATTACHMENT F - continued
CALCULATION OF INITIAL COMMON FACILITIES CARRYING CHARGES WITH
RESPECT TO ITEM 45 ON ATTACHMENT E
(USING HYPOTHETICAL NUMBERS)
TOTAL NET BOOK VALUE TO FPC OF DEDICATED COMMON $1,000,000.00
FACILITIES AS OF THE END OF THE CALENDAR MONTH
IMMEDIATELY PRECEDING THE DATE OF THE CLOSING
(LINE 45 OF CHART IN UPDATED ATTACHMENT E)
94% OF TOTAL NET BOOK VALUE OF DEDICATED COMMON $940,000.00
FACILITIES
SUM OF PRE-TAX WEIGHTED COST RATES (PER 13.35%
ATTACHMENT B)
EQUIVALENT PRE TAX RETURN ON INVESTMENT $125,490.00
ADD: ESTIMATED NON O&M OPERATING EXPENSES
FOR 1995 -
DEPRECIATION EXPENSE $33,000.00
PROPERTY TAXES $18,000.00
TOTAL CARRYING COST OF DEDICATED COMMON $176,490.00
FACILITIES
ALLOCATION FACTOR (PER LINE 45 OF CHART IN 33.33%
ATTACHMENT E)
INITIAL ANNUAL COMMON FACILITIES CARRYING $58,824.00
CHARGES WITH RESPECT TO DEDICATED COMMON
FACILITIES
INITIAL MONTHLY COMMON FACILITIES CARRYING $4,902.00
CHARGES WITH RESPECT TO DEDICATED COMMON
FACILITIES
6
<PAGE>
ATTACHMENT F - continued
SAMPLE CALCULATION FOR RECALCULATING
COMMON FACILITIES CARRYING CHARGES FOR PURPOSES
OF SECTION 3(i)(ii)(B)
(USING HYPOTHETICAL NUMBERS)
TOTAL NET BOOK VALUE OF ALL COMMON FACILITIES $10,083,512.00
(PER CHART IN ATTACHMENT E AS OF IMMEDIATELY
PRECEDING DECEMBER 31)
94% OF TOTAL NET BOOK VALUE OF COMMON FACILITIES $9,478,501.00
NET BOOK VALUE OF SUBSEQUENTLY ADDED COMMON $0
FACILITIES
ADJUSTED TOTAL NET BOOK VALUE OF ALL COMMON $9,478,501.00
FACILITIES
SUM OF THE PRE-TAX WEIGHTED COST RATES (PER 13.35%
ATTACHMENT B)
EQUIVALENT PRE TAX RETURN ON INVESTMENT $1,265,380.00
ADD: NON O&M OPERATING EXPENSES FOR ENTIRE
PRECEDING CALENDAR YEAR -
DEPRECIATION EXPENSE $332,756.00
PROPERTY TAXES $181,503.00
TOTAL CARRYING COST OF COMMON FACILITIES $1,779,639.00
WEIGHTED AVERAGE COMMON FACILITIES ALLOCATION 9.48%
FACTOR (PER CHART IN ATTACHMENT E)
COMMON FACILITIES CARRYING CHARGES FOR ONE YEAR $168,710.00
PERIOD
MONTHLY COMMON FACILITIES CARRYING CHARGES $14,059.00
PAYABLE BY GPC
7
<PAGE>
ATTACHMENT F - continued
SAMPLE CALCULATION FOR RECALCULATING
COMMON FACILITIES CARRYING CHARGES FOR PURPOSES
OF SECTION 3(i)(ii)(C)
(USING HYPOTHETICAL NUMBERS)
TOTAL NET BOOK VALUE OF ALL COMMON FACILITIES $10,083,512.00
(PER CHART IN ATTACHMENT E)
94% OF TOTAL NET BOOK VALUE OF COMMON FACILITIES $9,478,501.00
NET BOOK VALUE OF ADDITIONAL COMMON FACILITIES $1,000,000.00
ADJUSTED TOTAL NET BOOK VALUE OF ALL COMMON $10,478,501.00
FACILITIES
SUM OF THE PRE-TAX WEIGHTED COST RATES (PER 13.35%
ATTACHMENT B)
EQUIVALENT PRE TAX RETURN ON INVESTMENT $1,398,880.00
ADD: NON O&M OPERATING EXPENSES, AS IN EFFECT
IMMEDIATELY PRIOR TO THE RECALCULATION,
WITH RESPECT TO COMMON FACILITIES -
DEPRECIATION EXPENSE $332,756.00
PROPERTY TAXES 181,503.00
-AND-
NON O&M OPERATING EXPENSES OF ADDITIONAL
COMMON FACILITIES FOR ENTIRE PRECEDING
CALENDAR YEAR-
DEPRECIATION EXPENSE $33,000.00
PROPERTY TAXES $18,000.00
TOTAL CARRYING COST OF COMMON FACILITIES $1,964,139.00
WEIGHTED AVERAGE COMMON FACILITIES ALLOCATION 9.48%
FACTOR (PER CHART IN ATTACHMENT E)
COMMON FACILITIES CARRYING CHARGES FOR ONE YEAR $186,200.00
PERIOD
MONTHLY COMMON FACILITIES CARRYING CHARGES $15,517.00
PAYABLE BY GPC
8
<PAGE>
ATTACHMENT G
ALLOCATION OF ADMINISTRATIVE AND GENERAL COSTS
AND OTHER COSTS
GPC's share of monthly administrative and general costs and
certain other costs shall be determined as follows:
1. Administrative and General Costs (Excluding Insurance,
Certain Claims and Employee Benefits). GPC's share of
administrative and general costs shall be 13% of GPC's share
of Operating Costs (excluding administrative and general
expenses; fuel costs; insurance costs and claims, which are
to be allocated under item 2 below; and pension and employee
benefit costs, which are to be allocated under item 3
below).
2. Insurance Costs and Certain Losses. GPC's share of
insurance costs and claims described in Attachment I to the
Operating Agreement shall be as determined in Attachment I.
3. Employee Benefits. GPC's share of all pension and employee
benefits costs incurred by FPC, excluding claims described
in item 2.A of Attachment I and payroll department costs,
shall be equal to the sum of: (a) FPC's then-current payroll
loading percentage of such costs, multiplied by FPC's
payroll charged to the Intercession City Site, and
multiplied by 1/3 of the Allocation Factor, as defined
below; and (b) one-third of the payroll applicable to FPC's
Load Control and Dispatching multiplied by a fraction, the
numerator of which is one and the denominator of which is
the total number of generating units in FPC's electric
system.
The "Allocation Factor" shall be a fraction:
(a) the numerator of which is the sum of:
(i) the quotient determined by dividing (A) one, by
(B) the number of electric generating units on
the Intercession City Site; and
(ii) the quotient determined by dividing (A) the
nameplate rating of the Facility, by (B) the sum
of the nameplate ratings of all of the electric
generating units on the Intercession City Site;
and
(b) the denominator of which is two.
4. Payroll Taxes. GPC's share of payroll taxes, which shall
include F.I.C.A. (Social Security and Medicare), Federal
Unemployment, State Unemployment, and other taxes that are
directly related to payroll, shall be equal to FPC's
<PAGE>
established payroll loading percentage of the applicable
payroll.
5. Load Control and Dispatching. GPC's share of Load Control
and Dispatching costs shall be equal to one-third of the
amount of such costs, multiplied by a fraction the numerator
of which is one and the denominator of which is the total
number of electric generating units in FPC's entire electric
system.
6. General-to-Plant-Expenses. Except as otherwise provided
herein, expenses general to all electric generating units on
the Intercession City Site will be allocated to GPC based on
1/3 of the Allocation Factor, as defined above.
7. Off-Site O&M Expenses. O&M expenses incurred for the
benefit of all electric generating units in FPC's entire
electric system will be allocated to the Intercession City
Site based on FPC's Activity Management System or similar
successor process; provided, however, GPC retains the right
to review the reasonableness of allocations included in such
process.
2
<PAGE>
ATTACHMENT H
RECALCULATION OF WORKING CAPITAL DEPOSIT
The Working Capital Deposit due on the date of the Closing shall
be based on FPC's budgeted forecast of the average of two months
of total billings to GPC under the Operating Agreement. The
Working Capital Deposit will be adjusted effective as of each
January 1 (commencing with the first January 1 after not less
than two monthly bills have been sent to GPC under the Operating
Agreement) to equal the average of two months of total billings
to GPC under the Operating Agreement during the immediately
preceding calendar year. For purposes of this Attachment H,
"total billings to GPC under the Operating Agreement" shall mean
all amounts billed to GPC under the Operating Agreement of
whatever nature, including, without limitation, Additional Costs
of Construction, Common Facilities Carrying Charges, Fuel
Carrying Charges, Fuel Costs and Major Outage Costs.
SAMPLE CALCULATION
ORIGINAL DEPOSIT
Billing budget for the calendar year with respect to GPC$1,200,000
Average monthly budgeted total billings to GPC under
Operating Agreement $100,000
Two months average of budgeted total billings to GPC
under Operating Agreement $200,000
ADJUSTMENT PROCEDURE
Working Capital Deposit on hand with FPC $200,000
Average of two months of total billings to GPC
under Operating Agreement based $210,000
on prior calendar year's total billings
Increase in deposit
$10,000
-or-
Working Capital Deposit on hand with FPC $200,000
Average of two months of total billings to GPC
under Operating Agreement based
on prior calendar year's total billings $190,000
Decrease in deposit $10,000
<PAGE>
ATTACHMENT I
ALLOCATION OF INSURANCE COSTS AND CERTAIN LOSSES
1. Allocation of Insurance Premiums
A. Worker's Compensation (including Employer's
Liability) - The cost of Worker's Compensation
insurance purchased in excess of FPC's self-insurance
retention (which is $1M, as of the date of this
Agreement), will be included in FPC's established
payroll loading and allocated to GPC in the same manner
as pension and employee benefit costs under item 3 of
Attachment G to the Operating Agreement.
B. General Liability - The cost of insurance purchased in
excess of FPC's self insurance retention (which is $2M,
as of the date of this Agreement), will be included in
FPC's established payroll loading and allocated to GPC
in the same manner as pension and employee benefit
costs under item 3 of Attachment G to the Operating
Agreement.
C. Property Insurance - The cost of property insurance
covering the Facility that is allocated to GPC shall be
equal to 1/3 of the replacement value of the Facility
(as determined by FPC, from time to time, in connection
with its annual insurance value updates) multiplied by
FPC's property rate then in effect. The cost of
property insurance for the Common Facilities that is to
be allocated to GPC shall be equal to the product of
the replacement value of the Common Facilities,
multiplied by the Weighted Average Common Facilities
Allocation Factor, as determined under Attachment E of
the Operating Agreement, and multiplied by FPC's
property rate then in effect.
2. Allocation of Claims within Deductibles and Self-Insurance
Retentions
A. Workers' Compensation (including Employer's
Liability) - The portion of all payments made with
respect to worker's compensation claims by employees
working at the Intercession City Site that fall within
FPC's self-insurance retention (which is $1M, as of the
date of this Agreement) and that is to be allocated to
GPC shall be equal to the amount of such payments
multiplied by 1/3 of the Allocation Factor, as defined
in Attachment G of the Operating Agreement.
B. General Liability - The portion of all payments made
with respect to liability claims by third parties which
fall within the self-insurance retention of FPC (which
<PAGE>
is $2M, as of the date of this Agreement) that arise
from activities conducted on the Intercession City Site
and that is to be allocated to GPC shall be equal to
the amount of such payments multiplied by 1/3 of the
Allocation Factor, as defined in Attachment G of the
Operating Agreement. To the extent practical, related
costs and expenses covered under the excess general
liability policies will be identified and allocated to
GPC on the same basis as the claims. In such case, all
such costs and expenses incurred by FPC will be
excluded from costs allocable under item 3 of
Attachment G. To the extent the foregoing is not
practical, such costs and expenses may be included in
the costs allocable under item 3 of Attachment G in
lieu of billing to GPC on the same basis as the claims.
C. Property Insurance - GPC shall be allocated one-third
of any property insurance loss with respect to the
Facility falling within the deductible portion of such
policy. In the event of a property insurance loss with
respect to the Common Facilities which is properly
chargeable to operating expense, GPC shall be allocated
that portion of the loss falling within the deductible
portion of such policy multiplied by the Weighted
Average Common Facilities Allocation Factor, as
determined under Attachment E of the Operating
Agreement.
T#234493.14 2
<PAGE>
EXHIBIT B-3
INTERCESSION CITY SIEMENS UNIT
STEP-UP TRANSFORMER
PURCHASE AGREEMENT
between
GEORGIA POWER COMPANY
and
FLORIDA POWER CORPORATION
Dated as of June 8, 1994
<PAGE>
INTERCESSION CITY SIEMENS UNIT
STEP-UP TRANSFORMER PURCHASE AGREEMENT
TABLE OF CONTENTS
R E C I T A L . . . . . . . . . . . . . . . . . . . . . . . . 1
OPERATIVE TERMS . . . . . . . . . . . . . . . . . . . . . . . 1
1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . 1
2. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . 2
(a) FPC Representations and Warranties . . . . . . . . 2
(b) GPC Representations and Warranties . . . . . . . . 2
3. SALE TO GPC . . . . . . . . . . . . . . . . . . . . . . 3
4. CONDITIONS PRECEDENT TO CLOSING . . . . . . . . . . . . 3
5. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . 4
(a) Survival . . . . . . . . . . . . . . . . . . . . . 4
(b) Further Assurances . . . . . . . . . . . . . . . . 4
(c) Governing Law . . . . . . . . . . . . . . . . . . . 4
(d) Notice . . . . . . . . . . . . . . . . . . . . . . 4
(e) Headings Not to Affect Meaning . . . . . . . . . . 6
(f) No Partnership . . . . . . . . . . . . . . . . . . 6
(g) Amendments . . . . . . . . . . . . . . . . . . . . 6
(h) Successors and Assigns; No Third Party
Beneficiaries . . . . . . . . . . . . . . . . . . . 6
(i) Counterparts . . . . . . . . . . . . . . . . . . . 7
(j) Disclaimer . . . . . . . . . . . . . . . . . . . . 7
(k) Several Agreements; Entire Agreements . . . . . . . 7
(l) Construction of "Including" . . . . . . . . . . . . 8
i
<PAGE>
ATTACHMENTS
A DEFINITIONS
B FORM OF BILL OF SALE
C NON-EXHAUSTIVE LIST OF EQUIPMENT COMPRISING
STEP-UP TRANSFORMER
ii
<PAGE>
INTERCESSION CITY SIEMENS UNIT
STEP-UP TRANSFORMER PURCHASE AGREEMENT
THIS INTERCESSION CITY SIEMENS UNIT STEP-UP TRANSFORMER
PURCHASE AGREEMENT (this "Agreement"), dated as of the 8th day of
June, 1994, is entered into by and between GEORGIA POWER COMPANY,
a corporation organized and existing under the laws of the State
of Georgia ("GPC"), and FLORIDA POWER CORPORATION, a corporation
organized and existing under the laws of the State of Florida
("FPC").
R E C I T A L
GPC and FPC have entered into an Intercession City Siemens
Unit Purchase and Ownership Participation Agreement (the
"Ownership Agreement"), and related agreements, dated as of the
date hereof. In connection with the Ownership Agreement, FPC
desires to sell and transfer to GPC and GPC desires to purchase
from FPC an undivided one-third ownership interest in the Step-Up
Transformer, as defined below.
OPERATIVE TERMS
In consideration of the promises and the mutual agreements
set forth in this Agreement, GPC and FPC hereby agree as follows:
1. DEFINITIONS.
<PAGE>
In addition to the terms defined elsewhere in this
Agreement, the terms in Attachment A to this Agreement have the
meanings set forth in Attachment A, which meanings shall be
equally applicable to both singular and plural forms of such
terms except when otherwise expressly provided. Capitalized
words and phrases which are not defined in this Agreement shall
have the meanings assigned in the Ownership Agreement.
2. REPRESENTATIONS AND WARRANTIES.
(a) FPC Representations and Warranties. FPC hereby
represents and warrants to GPC that FPC is a corporation duly
organized, validly existing and in good standing under the laws
of the State of Florida and has sufficient corporate power and
authority to own its two-thirds undivided interest in the Step-Up
Transformer, to execute and deliver this Agreement and to perform
its obligations hereunder and to carry on its business as it is
now being conducted and as it is contemplated hereunder to be
conducted in the future.
(b) GPC Representations and Warranties. GPC hereby
represents and warrants to FPC that GPC is a corporation duly
organized, validly existing and in good standing under the laws
of the State of Georgia and has sufficient corporate power and
authority to own its one-third undivided interest in the Step-Up
Transformer, to execute and deliver this Agreement and to perform
2
<PAGE>
its obligations hereunder and to carry on its business as it is
now being conducted and as it is contemplated hereunder to be
conducted in the future.
3. SALE TO GPC. Subject to the terms and conditions of this
Agreement:
(a) In General. Upon the Closing under the Ownership
Agreement, FPC will sell and transfer to GPC and GPC will
purchase from FPC a one-third undivided co-ownership
interest in the Step-Up Transformer. The purchase price for
such one-third undivided interest shall be one-third of the
Costs of Construction incurred with respect to the Step-Up
Transformer up to and including the date of the Closing. To
such amount shall be added an amount to compensate FPC for
federal and state income taxes payable due to differences in
book and tax basis of the equity component of the allowance
for funds used during construction with respect to the sale
by FPC of such undivided co-ownership interest in the Step-
Up Transformer. At the Closing, GPC shall pay to FPC, in
immediately available United States funds, the entire
purchase price thereof and such additional amount.
(b) Bill of Sale and Release. The sale provided for
in Subsection (a) of this Section 3 will be by Bill of Sale
substantially in the form of Attachment B to this Agreement.
3
<PAGE>
At the Closing, FPC will furnish to GPC a Release from any
and all mortgages, deeds to secure debt or other security
interests with respect to such undivided one-third
co-ownership interest in the Step-Up Transformer.
4. CONDITIONS PRECEDENT TO CLOSING. The respective obligations
of GPC and FPC to consummate the purchase and sale contemplated
in Section 3, SALE TO GPC, hereof are subject to the fulfillment
of the condition that at the closing hereof the Closing under the
Ownership Agreement is also consummated.
5. MISCELLANEOUS.
(a) Survival. The agreements, covenants, representations
and warranties contained in this Agreement shall survive the
Closing.
(b) Further Assurances. From time to time after the date
hereof, each Party will execute and deliver such instruments of
assignment and transfer and other documents, upon the request of
the other Party, as may be necessary or appropriate to carry out
the intent of this Agreement.
(c) Governing Law. The validity, interpretation, and
performance of this Agreement and each of its provisions shall be
governed by the laws of the State of Florida.
4
<PAGE>
(d) Notice. Any notice to be given or that may be given
under this Agreement shall be in writing and shall be (i)
delivered by hand; (ii) delivered through the United States Mail,
postage prepaid, certified, return receipt requested; or (iii)
delivered through or by Federal Express, Express Mail, or other
expedited mail or package service, if a receipt evidencing
delivery has been retained, and addressed to the Parties as
follows:
If to GPC: Georgia Power Company
333 Piedmont Avenue, N.E.
Atlanta, Georgia 30308
Attention: F.D. Williams, Senior
Vice President, Bulk Power Markets
With copy to: Southern Company Services, Inc.
800 Shades Creek Parkway
Birmingham, Alabama 35209
Attention: W. K. Newman, Vice
President,
Operating and Planning Services
If to FPC: Florida Power Corporation
3201 Thirty-Fourth Street South
St. Petersburg, Florida 33711
Attention: Director,
Combustion Turbine Operations
- and to -
Florida Power Corporation
P. O. Box 368
Intercession City, Florida 33848
Attention: Intercession City
Plant Manager
5
<PAGE>
With copy to: General Counsel
Florida Power Corporation
3201 Thirty-Fourth Street South
St. Petersburg, Florida 33711
Any notice that may be given under this Agreement shall be
deemed given (i) five days after such notice has been deposited
in the United States Mail, certified, return receipt requested,
with proper postage affixed thereto, (ii) one Business Day after
such notice has been deposited with Federal Express, Express Mail
or other expedited mail or package delivery service guaranteeing
delivery not later than the next Business Day, or (iii) upon hand
delivery to the appropriate address and person as herein provided
if a receipt evidencing delivery has been retained. Either Party
hereto may change the address provided hereinabove or the person
to whose attention notices are to be given, by notice to the
other Party in the manner hereinabove provided.
(e) Headings Not to Affect Meaning. The descriptive
headings of the various provisions of this Agreement have been
inserted for convenience of reference only and shall in no way
modify or restrict any of the terms and provisions hereof.
(f) No Partnership. Notwithstanding any provision of this
Agreement, neither of the Parties intends to create hereby any
joint venture, partnership, association taxable as a corporation,
or other entity for the conduct of any business for profit
between themselves.
6
<PAGE>
(g) Amendments. This Agreement may be amended by and only
by a written instrument duly executed by each of the Parties.
(h) Successors and Assigns; No Third Party Beneficiaries.
This Agreement shall inure to the benefit of and be binding upon
each of the Parties and their respective successors and upon
their permitted assigns pursuant to the provisions of Section
5(b), ALIENATION AND ASSIGNMENT, of the Ownership Agreement.
Nothing in this Agreement, express or implied, is intended to
confer upon any other person any rights or remedies hereunder.
(i) Counterparts. This 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.
(j) Disclaimer. FPC MAKES NO REPRESENTATION OR WARRANTY
WHATSOEVER IN THIS AGREEMENT, EXPRESS, IMPLIED OR STATUTORY,
INCLUDING, WITHOUT LIMITATION, ANY REPRESENTATION OR WARRANTY AS
TO THE VALUE, QUANTITY, CONDITION, SALABILITY, OBSOLESCENCE,
MERCHANTABILITY, FITNESS OR SUITABILITY FOR USE OR WORKING ORDER
OF THE STEP-UP TRANSFORMER OR ANY PORTION THEREOF; AND FPC DOES
NOT REPRESENT OR WARRANT THAT THE USE OR OPERATION OF ANY PORTION
OF THE STEP-UP TRANSFORMER WILL NOT VIOLATE PATENT, TRADEMARK OR
SERVICE MARK RIGHTS OF ANY THIRD PARTIES. GPC IS WILLING TO
PURCHASE ITS INTEREST IN THE STEP-UP TRANSFORMER "AS IS" AND
7
<PAGE>
"WHERE IS" SUBJECT TO AND IN ACCORDANCE WITH THE TERMS AND
CONDITIONS OF THIS AGREEMENT. Notwithstanding the foregoing, GPC
shall have the benefit, consistent with its co-ownership interest
in the Step-Up Transformer, of all manufacturers' and vendors'
warranties and all patent, trademark and service mark rights
running to GPC in connection with the Step-Up Transformer.
(k) Several Agreements; Entire Agreements. The agreements
and obligations of the Participants set forth in this Agreement,
the Ownership Agreement and the Collateral Documents, as defined
in and with respect to the Ownership Agreement, shall be the
several, and not joint, agreements and obligations of the
Participants. The Ownership Agreement and the Collateral
Documents, as defined for purposes of the Ownership Agreement,
including, without limitation, this Agreement, supersede all
prior agreements between the Parties with respect to their
subject matter, including, without limitation, the letter of
intent between FPC and Southern Company Services, Inc., as agent
for the operating subsidiaries of The Southern Company, dated
August 12, 1993, as amended, and are intended (with the documents
referred to in the Ownership Agreement and in such Collateral
Documents) as a complete and exclusive statement of the terms of
the agreements between the parties with respect thereto.
(l) Construction of "Including". Wherever the term
"including" is used in this Agreement, such term shall not be
8
<PAGE>
construed as limiting the generality of any statement, clause,
phrase or term and shall not be deemed to exclude any person or
thing otherwise within the meaning of the statement, clause,
phrase or term which it modifies.
The undersigned parties hereto have duly executed this
Agreement as of the date first above written.
WITNESSES: GEORGIA POWER COMPANY
By:
H. Allen Franklin, as
President
and Chief Executive Officer
FLORIDA POWER CORPORATION
By:
A.J. Keesler, Jr., as
President
and Chief Executive Officer
9
<PAGE>
ATTACHMENT A
DEFINITIONS
1. AGENT. "Agent" shall mean FPC or its successors with
respect to its rights and obligations in the performance of the
Agency Functions under the Ownership Agreement.
2. BUSINESS DAY. A "Business Day" shall be any Monday,
Tuesday, Wednesday, Thursday or Friday other than a day which has
been established by law or required by executive order as a
holiday for any commercial banking institution in the State of
Florida or Georgia.
3. COSTS OF CONSTRUCTION. The "Costs of Construction"
shall refer to all costs incurred by FPC, as Agent for the
Participants, in connection with the planning, design, licensing,
procurement, acquisition, construction, completion, testing,
startup, addition or modification of the Step-Up Transformer, or
any portion thereof, including, without limitation, that portion
of administrative and general expenses incurred by FPC, as Agent,
which is properly and reasonably allocable to the Step-Up
Transformer and for which FPC has not been otherwise reimbursed
by GPC, which costs are properly recordable in accordance with
the Electric Plant Instructions and in appropriate accounts as
set forth in the Uniform System of Accounts, and shall also
include all costs incurred by FPC, as Agent, in connection with
(1) the purchase and acquisition of the initial supply of Spare
Parts, and any replacements for such Spare Parts, that are
utilized, during pre-Commercial Operation construction
<PAGE>
activities, for the Step-Up Transformer, including, without
limitation, that portion of administrative and general expenses
incurred by FPC, as Agent, which is properly and reasonably
allocable to such acquisition of Spare Parts and for which FPC
has not been otherwise reimbursed by GPC, (2) the acquisition of
all necessary governmental permits, materials and supplies,
engineering drawings and records, and operation and maintenance
procedure manuals, (3) any sales, use or excise taxes incurred in
connection with the acquisition or construction of the Step-Up
Transformer, and (4) the expenditure or advancement of funds
during construction with respect to Step-Up Transformer
(including, without limitation, an Allowance for Funds Used
During Construction for the period on or before the date of
Commercial Operation and FPC's incremental cost of capital for
the period after the date of Commercial Operation, to and
including the date of the Closing, taking into account debt and
equity components); provided, however, that Costs of Construction
shall not include any costs and expenses (i) incurred by FPC for
the sole benefit of FPC, or (ii) incurred by either Participant
in connection with the development of this Agreement.
4. FACILITY. The term "Facility" shall refer to all
property comprising the combustion turbine-generator unit to be
known as the Intercession City Facility CT, including, without
limitation, one complete Siemens V84.3 combustion turbine-
2
<PAGE>
generator unit, and as the Facility is further defined in the
Ownership Agreement.
5. OWNERSHIP AGREEMENT. The "Ownership Agreement" shall
refer to the Intercession City Siemens Unit Purchase and
Ownership Participation Agreement, dated as of June 8, 1994,
between FPC and GPC, as such Agreement may be amended from time
to time.
6. PARTICIPANTS. "Participant" and "Participants" shall
refer individually or collectively, as the case may be, to GPC
and FPC (in their capacities as co-owners of the Step-Up
Transformer) and to any permitted transferee or assignee of
either of them of a co-ownership interest in the Step-Up
Transformer pursuant to the Ownership Agreement.
7. PARTY. A "Party" shall refer to any entity, which is
now or hereafter a party to this Agreement and the Collateral
Documents; provided, however, such reference shall only refer to
an entity for so long as such entity is a party to this Agreement
and the Collateral Documents.
8. RELEASE. "Release" shall mean a release executed and
delivered by the holder of a mortgage, deed to secure debt or
other security interest (including, without limitation, a release
from FPC's indenture trustee) sufficient to release GPC's co-
3
<PAGE>
ownership interest in the Step-Up Transformer from the lien,
security title and effect of such mortgage, deed to secure debt
or other security interest.
9. STEP-UP TRANSFORMER. "Step-Up Transformer" shall mean
the step-up transformer described in the Siemens Agreement. The
Step-Up Transformer shall be located on the Facility Site and
shall be connected between and including the low-side bushings
and the high-side bushings. The Step-up Transformer shall
include, without limitation, the items listed in Attachment C
hereto.
4
<PAGE>
ATTACHMENT B
FORM OF BILL OF SALE
FLORIDA POWER CORPORATION, a Florida corporation ("Seller"),
for and in consideration of Ten Dollars ($10.00), and other good
and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, has granted, bargained, sold,
transferred, set over and delivered, and by these presents does
grant, bargain, sell, transfer, set over and deliver to GEORGIA
POWER COMPANY, a Georgia corporation ("Purchaser"), a one-third
undivided ownership interest to be held as co-owner with Seller
in and to the Step-Up Transformer as described in that certain
Intercession City Siemens Unit Step-Up Transformer Purchase
Agreement (the "Agreement") between Seller and Purchaser dated as
of the 8th day of June, 1994, which definition is incorporated
herein as if set out in its entirety.
TO HAVE AND TO HOLD such one-third undivided interest in the
Step-Up Transformer unto Purchaser, and its permitted successors
and assigns under the Ownership Agreement, as defined in the
Agreement, forever.
Seller covenants that it is the sole owner of the Step-Up
Transformer and that the one-third undivided interest in the
Step-Up Transformer being granted, bargained, sold, transferred,
set over, and delivered to Purchaser as co-owner is free and
clear of any and all liens and encumbrances, except for real and
tangible personal property taxes for [insert the year of the
Closing] and subsequent years. Seller shall forever warrant and
defend that title to the one-third interest in the Step-Up
Transformer against the claims of all persons claiming by,
through or under Seller.
This instrument shall be binding upon Seller, its successors
and assigns, and shall inure to the benefit of Purchaser, and its
permitted successors and assigns under the Ownership Agreement.
Seller has caused this instrument to be duly executed in its
name on the ______ day of ___________________, 199___.
WITNESSES: FLORIDA POWER CORPORATION
By:
Name:
Title:
<PAGE>
ATTACHMENT C
NON-EXHAUSTIVE LIST OF EQUIPMENT COMPRISING
STEP-UP TRANSFORMER
Transformer
Low-side Bushings
High-side Bushings
Surge Arresters
Tap Changer
Current Transformers
Mounting Pad
T#236696.7
<PAGE>
EXHIBIT B-4
LONG TERM LEASE AGREEMENT
between
FLORIDA POWER CORPORATION
and
GEORGIA POWER COMPANY
Dated as of June 8, 1994
<PAGE>
LONG TERM LEASE AGREEMENT
TABLE OF CONTENTS
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . 1
OPERATIVE TERMS . . . . . . . . . . . . . . . . . . . . . . . 2
1. DEMISED PREMISES . . . . . . . . . . . . . . . . . . . . 2
2. USE OF THE FACILITY SITE . . . . . . . . . . . . . . . . 4
3. TERM OF LEASE . . . . . . . . . . . . . . . . . . . . . 5
4. RENTAL . . . . . . . . . . . . . . . . . . . . . . . . . 6
5. TAXES . . . . . . . . . . . . . . . . . . . . . . . . . 6
6. UTILITIES AND SERVICES/MAINTENANCE AND REPAIR . . . . . 6
7. INSURANCE . . . . . . . . . . . . . . . . . . . . . . . 6
8. TITLE TO FACILITY; LANDLORD'S TITLE . . . . . . . . . . 7
9. CONDEMNATION . . . . . . . . . . . . . . . . . . . . . . 7
10. LIABILITY/DEFAULT . . . . . . . . . . . . . . . . . . . 8
11. COVENANT OF QUIET ENJOYMENT . . . . . . . . . . . . . . 8
12. ASSIGNMENT; PARTITION . . . . . . . . . . . . . . . . . 8
13. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . 9
14. AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . 10
15. COUNTERPARTS; EFFECTIVENESS . . . . . . . . . . . . . . 10
16. HEADINGS. . . . . . . . . . . . . . . . . . . . . . . . 11
17. BINDING EFFECT . . . . . . . . . . . . . . . . . . . . . 11
18. INVALIDITY OF PARTICULAR PROVISION . . . . . . . . . . . 11
19. CONSTRUCTION . . . . . . . . . . . . . . . . . . . . . . 11
20. RADON GAS DISCLOSURE . . . . . . . . . . . . . . . . . . 12
21. INCORPORATION . . . . . . . . . . . . . . . . . . . . . 12
22. ENVIRONMENTAL CONDITION . . . . . . . . . . . . . . . . 12
i
<PAGE>
ATTACHMENTS
A DRAWING DEPICTING APPROXIMATE LOCATION OF THE FACILITY
SITE (LEGAL DESCRIPTION OF LAND CONSTITUTING THE FACILITY
SITE WILL SUPERSEDE THE DRAWING)
B LEGAL DESCRIPTION OF INTERCESSION CITY SITE
ii
<PAGE>
LONG TERM LEASE AGREEMENT
THIS LONG TERM LEASE AGREEMENT (this "Lease") is made as of
the 8th day of June, 1994, between FLORIDA POWER CORPORATION, a
Florida corporation ("Landlord"), and GEORGIA POWER COMPANY, a
Georgia corporation (the "Tenant").
RECITALS
A. Either prior to or contemporaneously with the execution of
this Lease, Landlord and Tenant have entered into the following
agreements with respect to the purchase, installation, and
operation of a Siemens Power Corporation V84.3 combustion turbine
generation unit, and related facilities (being referred to herein
as the "Facility," and being more particularly described and
defined in the "Ownership Agreement") at Landlord's electric
power plant site at Intercession City, Florida:
1. Intercession City Siemens Unit Purchase and Ownership
Participation Agreement between Tenant and Landlord (the
"Ownership Agreement");
2. Intercession City Siemens Unit Operating Agreement
between Tenant and Landlord (the "Operating Agreement");
3. Step-Up Transformer Purchase Agreement between Tenant
and Landlord (the "Step-Up Transformer Agreement"); and
<PAGE>
4. Long Term Transmission Service Agreement between
Landlord and Tenant ("Transmission Service Agreement").
B. Under the Ownership Agreement, Landlord and Tenant will be
co-owners of the Facility and Landlord will operate and manage
the Facility in accordance with the terms of the Operating
Agreement.
C. Landlord is entering into this Lease to grant to Tenant an
undivided one-third leasehold interest in the Facility Site (as
defined below) together with the Access Easement (as defined
below) for the purposes set forth below, and Tenant is willing to
accept such a grant under the terms of this Lease.
OPERATIVE TERMS
In consideration of the mutual covenants between Landlord
and Tenant in this Lease and the Agreements described in Recital
A above, Landlord and Tenant hereby agree as follows:
1. DEMISED PREMISES. In consideration of the rent to be
paid by Tenant to Landlord, and in consideration of the covenants
of the respective parties to be performed under this Lease,
Landlord leases and lets unto Tenant, and Tenant leases from
Landlord:
2
<PAGE>
(a) An undivided one-third interest in and to that
certain real property lying and being in Osceola
County, Florida, being more particularly shown in
the cross-hatched area in the diagram attached
hereto as Attachment A and made a part hereof by
reference (the "Facility Site"); together with
(b) A non-exclusive easement (the "Access Easement"),
for the term of this Lease, upon, over and across
the Intercession City Site (as such term is more
particularly described and defined in the
Ownership Agreement), the legal description of
such Intercession City Site being attached hereto
as Attachment B and made a part hereof by
reference. The Access Easement shall be
appurtenant to the interest held by Tenant in the
Facility Site and shall be for the benefit of
Tenant, and its permitted successors and assigns
under the Ownership Agreement. The Access
Easement shall be for the purposes of pedestrian
and vehicular ingress and egress from the public
right-of-ways adjacent to the Intercession City
Site to the Facility Site and the additional areas
within the Intercession City Site upon which
Tenant is permitted to conduct inspections
pursuant to Section 4(g), RIGHT OF INSPECTION, of
3
<PAGE>
the Ownership Agreement, and such rights with
respect to the Access Easement shall be exercised
by Tenant only in accordance with the provisions
of Section 2, below.
(c) The undivided one-third interest of Tenant in and
to the Facility Site shall be held by Tenant as a
tenant in common with Landlord during the term of
this Lease, it being the intent of this Lease to
create in Tenant an estate in the Facility Site
for the term of this Lease and not a mere
usufruct, easement or license.
The legal description of the Facility Site shall be
determined by a survey to be obtained by Landlord and reasonably
approved by Tenant, the legal description shown on the survey
shall be substituted as Attachment A for the diagram presently
attached as Attachment A, and such legal description shall become
a part of this Lease automatically upon such substitution. The
purpose of the survey shall be to establish the legal description
of the Facility Site and not to re-calculate its area.
2. USE OF THE FACILITY SITE. The Facility shall be
constructed and installed on the Facility Site in accordance with
the Ownership Agreement and shall be operated thereon in
accordance with the Operating Agreement. Tenant's use or
4
<PAGE>
occupancy of the Facility Site and the Access Easement shall be
limited to (i) the construction, maintenance and operation of
Tenant's undivided one-third interest in the Facility, on the
Facility Site, such construction, maintenance, and operation to
be effected by Landlord, as Agent, in accordance with the terms
of the Ownership Agreement, Step-Up Transformer Agreement and
Operating Agreement, and (ii) Tenant's entry onto the Facility
Site and the Intercession City Site to inspect the Facility
pursuant to the terms of the Ownership Agreement and the
Operating Agreement.
Prior to any proposed entry onto the Intercession City Site
and Facility Site, and inspection of the Facility, Tenant shall
provide Landlord with reasonable prior notice of the date and
time of Tenant's proposed entry and inspection.
At all times during the term of this Lease, Tenant, at
Landlord's option, shall be accompanied by a representative of
Landlord when entering the Intercession City Site and the
Facility Site for the purposes of inspecting the Facility.
Landlord may deny Tenant access to areas Landlord reasonably
designates as a "dangerous area" for purposes of protecting
persons and property.
Tenant acknowledges that Landlord's right to construct,
maintain and operate the Facility on behalf of the Participants
5
<PAGE>
(as such term is defined in the Ownership Agreement) throughout
the term of this Lease is governed by the terms of the Ownership
Agreement, Step-Up Transformer Agreement and Operating Agreement.
3. TERM OF LEASE. The term of this Lease shall commence
on the date of the Ownership Agreement and shall end on the
termination of the Ownership Agreement. A breach by Tenant of
any of the Agreements described in Recital A above shall
constitute a breach by Tenant of this Lease.
4. RENTAL. Tenant covenants and agrees it will pay to
Landlord rental in the amount of Three Hundred Dollars ($300.00)
per year plus all Florida sales taxes applicable thereto. The
first rental payment shall be due upon the commencement date of
this Lease and all subsequent rental payments shall be due on the
anniversary date of the commencement date of this Lease.
5. TAXES. The payment of all taxes of any kind or nature
assessed upon the Facility Site and the Intercession City Site
shall be governed by the terms of the Ownership Agreement and the
Operating Agreement.
6. UTILITIES AND SERVICES/MAINTENANCE AND REPAIR. The
provision of all utilities services, water treatment services,
transmission services and other services which are necessary for
6
<PAGE>
the use and operation of the Facility on the Facility Site and
for effecting the purposes contemplated in this Lease and the
obligations with respect to the maintenance and repair of the
Facility and the Facility Site shall be governed by the terms of
the Ownership Agreement, the Operating Agreement, the Step-Up
Transformer Agreement and the Transmission Service Agreement.
7. INSURANCE. Insurance with respect to the Facility Site
shall be as set forth in the Ownership Agreement and Operating
Agreement.
8. TITLE TO FACILITY; LANDLORD'S TITLE. Notwithstanding
the affixation of the Facility to the Facility Site, the Facility
shall constitute personal property and title to the Facility
shall remain in the Participants (as such term is defined in the
Ownership Agreement) in accordance with their respective
undivided co-ownership interests as provided in the Ownership
Agreement. Landlord represents to Tenant that Landlord owns fee
simple title to the Facility Site and the Intercession City Site,
and has full right, title and authority to enter into this Lease
and to grant to Tenant the leasehold estate in the Facility Site
and the Access Easement as described in this Lease. Landlord
further represents to Tenant that there are no easements, liens,
encumbrances or other rights (other than the lien of Landlord's
trust indenture, which Tenant acknowledges is superior to this
Lease, but which permits Landlord to execute and deliver this
7
<PAGE>
Lease and perform the covenants and obligations of Landlord
hereunder), affecting the Facility Site which would prevent
Tenant's use and enjoyment of the Facility Site and the Access
Easement and the benefits to be derived therefrom as contemplated
herein.
9. CONDEMNATION. If, by exercise of the right of eminent
domain or by conveyance made in response to the threat of the
exercise of such right, all or any portion of the Facility Site
or the Intercession City Site is taken, Landlord and Tenant shall
each be entitled to pursue its separate award as their respective
interests exist in the Facility Site and the Intercession City
Site. If, by exercise of the right of eminent domain or by a
conveyance made in response to the threat of the exercise of such
right, all or substantially all of the Facility Site is taken,
Landlord shall use its reasonable efforts to substitute other
premises within the Intercession City Site which are
substantially equivalent to the Facility Site for the purposes of
this Lease.
10. LIABILITY/DEFAULT. The respective rights, obligations,
remedies and limitations of liability of Landlord and Tenant
under this Lease in the event of a breach by either Landlord or
Tenant under this Lease or in the event of any loss, cost, damage
or expense incurred by either Landlord or Tenant arising out of
or relating to any act or omission occurring on the Facility Site
8
<PAGE>
or the Intercession City Site, including, without limitation, any
loss, cost, damage or expense relating to the presence of,
discharge of or seepage of any hazardous materials, are as set
forth in the Ownership Agreement and the Operating Agreement.
11. COVENANT OF QUIET ENJOYMENT. So long as the Ownership
Agreement is in effect, Tenant's possession of the Facility Site
and the Access Easement granted hereby will not be disturbed by
Landlord or anyone claiming by, through or under Landlord;
provided, however, that Tenant acknowledges that the leasehold
interest and Access Easement granted hereby are subordinate to
the lien of Landlord's bond indenture.
12. ASSIGNMENT; PARTITION. Tenant's rights to assign this
Lease or any interest in this Lease are governed by the terms of
the Ownership Agreement. Tenant waives any and all rights to
partition its interest hereby granted in the Facility Site or the
Access Easement.
13. NOTICES. Any notice to be given or that may be given
under this Lease shall be in writing and shall be (i) delivered
by hand; or (ii) delivered through the United States Mail,
postage prepaid, certified, return receipt requested; or (iii)
delivered through or by Federal Express, Express Mail, or other
expedited mail or package service, if a receipt evidencing
9
<PAGE>
delivery has been retained; and addressed to the parties as
follows:
If to Landlord: Florida Power Corporation
3201 Thirty-Fourth Street South
St. Petersburg, Florida 33711
Attention: Director,
Combustion Turbine Operations
- and to -
Florida Power Corporation
P. O. Box 368
Intercession City, Florida 33848
Attention: Intercession City
Plant Manager
With copy to: General Counsel
Florida Power Corporation
3201 Thirty-Fourth Street South
St. Petersburg, Florida 33711
If to Tenant: Georgia Power Company
333 Piedmont Avenue, N.E.
Atlanta, Georgia 30308
Attention: F.D. Williams, Senior
Vice President, Bulk Power Markets
10
<PAGE>
With copy to: Southern Company Services, Inc.
800 Shades Creek Parkway
Birmingham, Alabama 35209
Attention: W. K. Newman,
Vice President, Operating and
Planning Services
Any notice that may be given under this Lease shall be
deemed given (i) five days after such notice has been deposited
in the United States Mail, certified, return receipt requested,
with proper postage affixed thereto, (ii) one Business Day, as
defined in the Ownership Agreement, after such notice has been
deposited with Federal Express, Express Mail or other expedited
mail or package delivery service guaranteeing delivery not later
than the next Business Day, or (iii) upon hand delivery to the
appropriate address and person as herein provided if a receipt
evidencing delivery has been retained. Either party hereto may
change the address provided hereinabove or the person to whose
attention notices are to be given, by notice to the other party
in the manner hereinabove provided.
14. AMENDMENTS. No amendment or waiver of any provision of
this Lease shall in any event be effective unless such amendment
is in writing and signed by both Landlord and Tenant.
15. COUNTERPARTS; EFFECTIVENESS. This Lease may be
executed in any number of counterparts, each of which when so
executed shall be deemed to be an original and all of which taken
together shall constitute one and the same document.
11
<PAGE>
16. HEADINGS. The headings of the provisions throughout
this Lease are for convenience and reference only and the words
contained in the headings shall in no way be held to explain,
modify, amplify or aid in the interpretation, construction or
meaning of the provisions of this Lease.
17. BINDING EFFECT. Except as otherwise expressly provided
in this Lease, the terms and provisions of this Lease shall be
binding upon and shall inure to the benefit of the successors and
assigns of Landlord and the permitted successors and assigns of
Tenant. The reference contained to successors and assigns of
Tenant is not intended to constitute a consent to assignment by
Tenant, but as reference only to those instances in which
Landlord may have given consent to a particular assignment or
such assignment as otherwise expressly permitted hereunder.
18. INVALIDITY OF PARTICULAR PROVISION. If any term or
provision of this Lease shall to any extent be invalid or
unenforceable, the remainder of this Lease shall not be affected
thereby, and each term and provision of this Lease shall be valid
and enforced to the fullest extent permitted by law.
19. CONSTRUCTION. This Lease shall be deemed to be a
contract made under the laws of the State of Florida, and for all
purposes shall be governed by, and construed in all respects
(including matters of construction, validity and performance) in
12
<PAGE>
accordance with, the internal laws of the State of Florida,
without regard to its choice of law rules.
20. RADON GAS DISCLOSURE. The following disclosures is
made by Landlord to Tenant as required by law:
Radon is a naturally occurring radioactive gas
that, when it has accumulated in a building in
sufficient quantities, may present health risks to
persons who are exposed to it over time. Levels
of radon that exceed federal and state guidelines
have been found in buildings in Florida.
Additional information regarding radon and radon
testing may be obtained from your county public
health unit.
21. INCORPORATION. It is the intent of Landlord and Tenant
that the terms and provisions of the Ownership Agreement, the
Operating Agreement, the Step-Up Transformer Agreement and the
Transmission Service Agreement be incorporated into this Lease by
reference as if set out in full herein. In the event of any
conflict or inconsistency between the terms and provisions of
this Lease and those of the Ownership Agreement, the Operating
Agreement, the Step-Up Transformer Agreement and the Transmission
Service Agreement, the terms of such other agreements shall
control over the conflicting or inconsistent terms and provisions
of this Lease.
22. ENVIRONMENTAL CONDITION. Landlord represents to Tenant
that throughout the duration of its ownership or operation of the
Facility Site, and, to the best of Landlord's knowledge, but
without any investigation by Landlord, prior thereto, the uses of
13
<PAGE>
the Facility Site have not involved the generation, use, storage,
treatment or disposal of Environmental Material (as such term is
defined in the Ownership Agreement), excepting quantities of
those materials or substances necessary for normal housekeeping,
operation and maintenance services and that no Environmental
Materials, excepting quantities of those materials or substances
necessary for normal housekeeping, operation and maintenance
services, have been or are currently generated, used, stored,
treated or disposed on or at the Facility Site.
Landlord represents to Tenant that throughout the duration
of its ownership or operations of the Facility Site and, to the
best of Landlord's knowledge, but without any investigation by
Landlord, prior thereto, there has been no contamination, spill
or unpermitted discharge, release or emission of or by any
Environmental Material, pollutant or contaminant at the Facility
Site.
Landlord further represents to Tenant that it has not
knowingly spilled, generated, discharged, emitted or released
from the Facility Site any Environmental Material in any manner
that may form the basis for any present or future claim, demand,
or action seeking cleanup of any site, location, or body of
water, surface or subsurface.
14
<PAGE>
The undersigned parties hereto have duly executed this Lease
as of the date first above written.
WITNESSES: FLORIDA POWER CORPORATION
By:
A.J. Keesler, Jr., as
President and Chief
Executive Officer
"Landlord"
GEORGIA POWER COMPANY
By:
H. Allen Franklin, as
President and Chief
Executive Officer
"Tenant"
15
<PAGE>
ATTACHMENT B
LEGAL DESCRIPTION OF INTERCESSION CITY SITE
A TRACT OR PARCEL OF LAND LYING IN SECTION 31, TOWNSHIP 25
SOUTH, RANGE 28 EAST, OSCEOLA COUNTY, FLORIDA AND BEING MORE
PARTICULARLY DESCRIBED AS FOLLOWS;
COMMENCE AT THE SOUTHEAST CORNER FOR SECTION 31 AND RUN
N00 degrees 35'58"E ALONG THE EAST LINE THEREOF A
DISTANCE OF 961.13 FEET TO A POINT ON THE NORTHERLY
RIGHT-OF-WAY LINE FOR C.S.X. RAILROAD (100 FOOT RIGHT-
OF-WAY), SAID POINT BEING THE POINT OF BEGINNING;
THENCE RUN S63 degrees 29'13"W ALONG SAID NORTHERLY
RIGHT-OF-WAY LINE A DISTANCE OF 1441.59 FEET TO THE
POINT OF CURVE (P.C.) CONCAVE SOUTHEASTERLY, SAID
RIGHT-OF-WAY CURVE BEING 50.00 FEET FROM AND PARALLEL
WITH A CENTERLINE LINE CURVE HAVING A RADIUS OF
11459.16 FEET AND A 150 FOOT SPIRAL; THENCE CONTINUE
ALONG THE ARC OF SAID RIGHT-OF-WAY A CHORD BEARING OF
S63 degrees 20'58"W A CHORD DISTANCE OF 349.76 FEET TO
THE INTERSECTION OF THE NORTH RIGHT-OF-WAY LINE FOR
STATE ROAD NUMBER 532 (200 FOOT RIGHT-OF-WAY); THENCE
N89 degrees 15'56"W ALONG SAID NORTH RIGHT-OF-WAY LINE
A DISTANCE OF 1307.75 FEET TO A POINT ON THE EAST
RIGHT-OF-WAY LINE FOR WESTMONT BOULEVARD (60.00 FOOT
RIGHT-OF-WAY) AS RECORDED IN PLAT BOOK 2, PAGE 82 AND
83 OF THE PUBLIC RECORDS FOR OSCEOLA COUNTY, FLORIDA,
SAID POINT BEING THE POINT OF CURVE (P.C.) FOR A CURVE
HAVING THE FOLLOWING ELEMENTS: A RADIUS OF 25.00 FEET,
A CENTRAL ANGLE OF 90 degrees 00'00, A CHORD OF 35.35
FEET AND A CHORD BEARING OF N44 degrees 15'56"W; THENCE
CONTINUE ALONG SAID RIGHT-OF-WAY LINE AND CURVE TO THE
RIGHT AN ARC DISTANCE OF 39.27 FEET TO THE POINT OF
TANGENCY (P.T.) FOR SAID CURVE; THENCE CONTINUE ALONG
SAID RIGHT-OF-WAY LINE N00 degrees 44'04"E A DISTANCE
OF 48.77 FEET TO THE POINT OF CURVE (P.C.) FOR A CURVE
HAVING THE FOLLOWING ELEMENTS: A RADIUS OF 229.99
FEET, A CENTRAL ANGLE OF 14 degrees 58'35", A CHORD OF
59.95 FEET AND A CHORD BEARING OF N06 degrees 45'14"W;
THENCE CONTINUE ALONG SAID RIGHT-OF-WAY LINE AND CURVE
TO THE LEFT AND ARC DISTANCE 60.12 FEET TO THE POINT OF
TANGENCY (P.T.) FOR SAID CURVE; THENCE CONTINUE ALONG
SAID RIGHT-OF-WAY LINE N14 degrees 14'32"W A DISTANCE
OF 1536.82 FEET TO THE POINT OF CURVE (P.C.) FOR A
CURVE HAVING THE FOLLOWING ELEMENTS: A RADIUS OF
170.00 FEET, A CENTRAL ANGLE OF 15 degrees 21'23", A
CHORD OF 45.43 FEET AND A CHORD BEARING OF N06 degrees
33'50"W; THENCE CONTINUE ALONG SAID RIGHT-OF-WAY LINE
AND CURVE TO THE RIGHT AN ARC DISTANCE OF 45.56 FEET TO
THE POINT OF TANGENCY (P.T.) FOR SAID CURVE; THENCE
CONTINUE ALONG SAID RIGHT-OF-WAY LINE N01 degrees
06'52" E A DISTANCE OF 1224.15 FEET; THENCE S89 degrees
<PAGE>
54'12"E A DISTANCE OF 3.54 FEET; THENCE N00 degrees
24'52"E A DISTANCE OF 910.53 FEET THENCE N89 degrees
44'57"E A DISTANCE OF 664.59 FEET; THENCE N89 degrees
44'59"E A DISTANCE OF 664.47 FEET; THENCE S00 degrees
29'20"W A DISTANCE OF 1319.32 FEET; THENCE N89 degrees
38'03"E A DISTANCE OF 663.63 FEET; THENCE S00 degrees
31'33"W A DISTANCE OF 1336.73 FEET ;THENCE N89 degrees
45'54"E A DISTANCE OF 1325.50 FEET TO A POINT ON THE
EAST LINE FOR SAID SECTION 31; THENCE S00 degrees
35'58"W ALONG SAID EAST LINE A DISTANCE OF 378.66 FEET
TO THE POINT OF BEGINNING, CONTAINING 167.192 ACRES
MORE OR LESS. BEARING STRUCTURE AND DISTANCES BASED ON
STATE PLANE COORDINATE, GRID VALUES.
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Exhibit D-1
(Relevant excerpts from the Georgia Power Company
Application for Intercession City Combustion Turbine
Project.)
III. PROPOSED INTERCESSION CITY CT PROJECT
The proposed Intercession City Combustion Turbine Project
consists of a single 147- megawatt oil-fired simple-cycle
combustion turbine jointly owned by Georgia Power and
Florida Power Corporation (FPC). The unit will be installed
at FPC's existing Intercession City generating plant --
located near Kissimmee, Florida -- and is expected to begin
commercial operation on or before January 1, 1996.
Georgia Power will have a one-third ownership interest in
the unit and will be entitled to the entire capability of
the unit during June through September of each year. FPC, a
winter peaking utility, will have the remaining two-thirds
ownership interest in the unit and will have exclusive
rights to the unit's output during the other eight months of
the year when they have a need for new capacity. FPC will
operate and maintain the unit on behalf of FPC and Georgia
Power, with the costs being shared by the two owners.
Georgia Power estimates the unit will have a service life of
approximately 40 years.
The project will be built around a Siemens Power Corporation
Model V84.3 advanced combustion turbine unit. Although no
other V84.3 units are commercial at this time, two other
units will have begun commercial operation in two other
locations by the time the Intercession City unit begins
operation. Furthermore, the V84.3 prototype has undergone
extensive testing in Germany and the Intercession unit's
performance will be backed by extensive guarantees and
warranties provided by Siemens. The model utilizes mature
and proven basic design features from its predecessor model
which was introduced in 1987. It also utilizes advanced
design features from earlier Siemens models which are
similar but on smaller megawatt scales to the V84.3
model. These advanced design features allow the unit to have
high output, high fuel efficiency, and low emissions. Water
injection will be utilized to control NOX emissions.
Siemens will perform much of the actual construction of the
project under the terms of a contract already entered into
between FPC and Siemens. To supplement the Siemens
construction work, FPC will make modifications to certain
existing facilities at the site and add new facilities as
necessary to accommodate the new unit.
<PAGE>
Upon commercial operation of the unit, Georgia Power will
purchase from FPC a one-third undivided ownership interest
in the unit and the facilities added specifically to
accommodate the unit. The total in-service cost for Georgia
Power's ownership in the project is estimated at $13,926,394
-- or approximately $95 per kilowatt based on the unit's
147-megawatt maximum output rating during the Company's
summer entitlement periods. This in-service cost estimate
includes the purchase price and Georgia Power's project
development costs.
Several agreements are currently being negotiated between
Georgia Power and FPC related to this project. Broadly
speaking, these agreements will cover the purchase and
ownership of the unit, the operation and maintenance of the
facility, and the transmission of the power from the
facility to the Georgia Integrated Transmission System
(ITS). These agreements are expected to be completed during
the first quarter of 1994. Certain portions of these
agreements will require Federal Energy Regulatory Commission
(FERC) or Securities Exchange Commission (SEC) approvals.
Appendix 2 contains a copy of the letter of intent dated
August 12, 1993, and an extension thereto dated October 29,
1993 entered into by Florida Power Corporation and Southern
Company Services, serving as agent on behalf of Georgia
Power and the other Southern Company operating companies.
A. PROJECT DESCRIPTION
The primary systems of the Intercession City CT Project are
the:
- combustion turbine and auxiliary equipment;
- fuel oil forwarding systems;
- water treatment, storage and forwarding systems;
and
- other balance of plant equipment and facilities.
A.1. INTERCESSION CITY FACILITY
The Intercession City facility currently has six Turbo Power
and Marine combustion turbines operating since 1974, plus
four General Electric 7EA combustion turbines which began
commercial operation earlier this year.
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The Intercession City site is located in Osceola County,
Florida, at the intersection of State Route 532 and US17/92,
approximately 7 miles west of the city of Kissimmee,
Florida, near Orlando. The 167.5 acre site is situated in a
rural region consisting of a combination of uplands,
wetlands and hardwood forests. In addition to road access,
the site is adjacent to a treated waste water pipeline, an
oil pipeline, a rail line, and FPC's 230/69 kV transmission
system.
A.2. COMBUSTION TURBINES AND AUXILIARY EQUIPMENT
The generation and auxiliary equipment for the project will
be built by Siemens Power Corporation under the terms of the
contract between FPC and Siemens. The turbine-generator unit
consists of the following equipment:
- Siemens V84.3 turbine
- two combustion chambers, each with 6 burners and 2
flame monitors
- natural gas and No. 2 oil fuel injection
equipment, although the unit is
expected to burn oil only at the present time
- NOX emission reduction system for fuel oil
operation
- lubrication/control oil system
- control system
- turbine blades cooling air system
- intermediate shaft
- generator
Associated mechanical equipment provided by Siemens include
inlet air filtration and silencer, exhaust system, and a C02
fire protection system. Siemens also will provide certain
electrical and instrument/control equipment including
various transformers, circuit breakers, switchgear, and a
power control center.
Siemens Model V84.3 Description
The Siemens Model V84.3 represents a new generation of high
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efficiency advanced combustion turbines. This model was
developed from the V84.2 model which was introduced in 1987.
The common design features include the following:
- 17 compressor stages
- 4 turbine stages
- Compressor blade carriers
- Disk-type rotor
- Two outboard bearings
- Axial exhaust
Furthermore, the V84.2 machine was based on the 50 Hz model
V94.2 introduced in 1970. The following design features have
characterized all Siemens models since 1970:
- Two off-board multi-burner combustion chambers
- Generator at compressor end
- Light weight shaft stacked disc-type rotor
requiring only two bearings
- No shaft-driven ancillary equipment, instead only
separate motor-driven auxiliaries are utilized
More output and higher efficiency (36. 1 %) are achieved on
the advanced models like the V84.3 by a mass flow increase,
a higher pressure ratio, an elevated turbine inlet
temperature as well as improved compressor and turbine
efficiencies. The increase of flow and pressure ratio
required increasing the compressor intake dimensions by
about
10 percent. Supersonic blade profiles were adopted for the
first two compressor stages to improve their performance.
Other improvements include: externally cooled turbine blade
cooling air system, horizontal combustion chamber design,
four stages of adjustable inlet guide vanes, and improved
metallurgy and blade coating technology. These advanced
features were previously introduced on a geometrically
similar 60- megawatt model V64.3.
Although none of the units are commercial at this time, the
model V84.3 utilizes mature and proven basic design features
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from its predecessor the V84.2 and advanced design features
from the geometrically similar V64.3 model. Both V84.2 and
V64.3 have been operating commercially. Furthermore, the
V84.3 prototype has undergone exhaustive testing in Germany
to verify static and dynamic stresses, blade metal
temperature distribution, vibration levels and emissions at
various load levels. Based on these tests: higher machine
output and lower emissions are possible, and (2) certain
blade cooling deficiencies have been overcome. As a result
of this comprehensive testing program, it is expected that
the model V84.3 would have minimal field problems. It should
be noted that the machine to be installed at the
Intercession City facility will be the third V84.3 and the
first unit with a significant United States manufactured
content.
Siemens is providing more than the normal level of
warranties for the Intercession City unit. Siemens has
extended the warranty on the unit to five years which is
well beyond the current manufacturers' standard of one year.
Furthermore, Siemens will replenish the initial spare parts
supply as required during the five year warranty period.
Maintainability of the model V84.3 can be considered better
than that of its predecessors because of the following
features:
- easy access allows complete visual inspection of
the hot gas path from the burners to the first
stage blades
- large access opening permits minor repair work
inside the silo combustors without dismantling the
flame tubes
- several openings facilitate visual inspection of
compressor and turbine flow sections
- all moving blades can be exchanged without taking
the rotor out of its bearings
- all lower stationary blade carriers can be removed
from underneath the rotor
- compressor blade carriers can be aligned from the
outside
- exhaust bearing without horizontal joint permits
axial assembly
This improved maintainability can potentially reduce
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<PAGE>
lifetime operation and maintenance costs.
A.3. FUEL SYSTEMS
All of the Intercession City units are planned to bum No. 2
fuel oil only, as the facility is not supplied with natural
gas. The Siemens V84.3 combustion turbine unit will require
204 gallons of No. 2 fuel oil per minute. The combined fuel
consumption rate for the entire Intercession City facility,
including the Siemens unit and the ten existing units, will
be 1,072 gallons per minute (gpm).
In general, fuel will be transported to the plant by Central
Florida Pipeline from Tampa. Fuel oil can be delivered to
the site at an average rate of 2000 barrels per hour or 1400
gpm. Alternatively, fuel oil can be received from local
distribution companies by truck. The unloading capacity for
trucked oil is approximately 1250 gpm including connect and
disconnect time. The fuel oil supply is expected to be
contracted on an annual basis.
Fuel oil for the entire Intercession City facility will be
stored in three existing, interconnected, atmospheric
pressure storage tanks. The combined capacity of these tanks
is 15.1 million gallons.
A.4. WATER SYSTEMS
Water injection will be utilized to control the NOX
emissions of the new Siemens V84.3 combustion turbine unit
to a guaranteed level of 42 ppmdv for No. 2 fuel oil
operation. The new unit will require 280 gallons of
demineralized water per minute of full load operation. The
combined water consumption rate for the entire Intercession
City facility, including the Siemens unit and the ten
existing units, will be 666 gallons per minute.
The existing water treatment system will provide
demineralized injection water and combustion turbine wash
water for the entire facility at a rate of 370,000 gallons
per day. The maximum production capability of the system is
330 gallons per minute. The water treatment system consists
of a combination of permanent and temporary (mobile)
equipment. The permanent equipment includes one reverse
osmosis (RO) product water tank, interconnecting piping,
valves, and instrumentation. The interfacing mobile
equipment consists of pretreatment equipment, RO equipment,
and ion exchange equipment. Treated wastewater received from
the City of Kissimmee wastewater pipeline is routed to the
mobile pretreatment equipment and then to the mobile RO
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<PAGE>
equipment for further treatment. The RO product water is
routed to the permanent RO product water tank for
intermediate storage and then to the mobile ion exchange
equipment for final treatment and storage.
The treated water will be stored in two existing,
atmospheric pressure storage tanks. The combined capacity of
these tanks is 2.2 million gallons.
A.5. OTHER BALANCE OF PLANT SYSTEM
Other existing facilities which will support the new Siemens
combustion turbine, as well as the ten existing units, include:
- additional water systems, which will provide water
for various washdown, fire protection, and
plumbing purposes
- a common services building, which will house the
control room, offices, maintenance and machine
shop, parts storage area, and offices
- remote control and remote dispatching systems
- site fire protection systems, which will
supplement the C02 system provided
by Siemens for the new combustion turbine unit
- wastewater collection, treatment, and disposal
systems.
- remote warehouse (located 30 miles away in
Enterprise, Florida), which is the primary storage
warehouse for unit spare parts covering the
combustion turbines for the Intercession City
facility as well as for FPC's Turner and DeBary
facilities.
B. PERFORMANCE CHARACTERISTICS
Georgia Power will have a one-third ownership interest in
the unit and will be entitled to the entire capability of
the unit during June through September of each year. Florida
Power, a winter peaking utility, will have the remaining
two-thirds ownership interest in the unit and will have
exclusive rights to the unit's output during the other eight
months of the year.
Based on production cost modeling results, Georgia Power
expects to operate the unit in a peaking mode during its
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<PAGE>
summer entitlement periods. On average, the Company
anticipates operating approximately 50 hours per year (which
equates to 0.6% capacity factor on an annual basis) with
around 15 unit starts.
The following output, heat rate, and availability ratings
relate to Georgia Power's entitlement during the summer
periods.
B. 1. OUTPUT AND HEAT RATE
The following summer performance ratings have been
calculated based on correction factors obtained from
performance curves contained in the Siemens Proposal.
Appropriate correction factors were used to adjust for the
site elevation and 95OF summer ambient temperature.
Output and Heat Rate Based on Guarantees in the Siemens
Proposal Forms
Net Output @ 95 F . . . . . . . . . . . . . 136,750 kW
Net Heat Rate (HHV) @ 95 F and 100% Output 11,517 Btu/kWh
Net Heat Rate (HHV) @ 95 F and 75 % Output 11,974 Btu/kWh
Net Heat Rate (HHV) @ 95 F and 50% Output 12,999 Btu/kWh
Expected Output and Heat Rate per the Siemens Computer
Analysis
Net Output @ 95 F . . . . . . . . . . . . 147,281 kW
Net Heat Rate (HHV) @ 95 F and 100% Output 11,453 Btu/kWh
B.2. AVAILABILITY
Planned maintenance for the new unit is expected to occur
only during the eight-month FPC entitlement periods.
Therefore the effective planned maintenance outage rate
during Georgia Power's entitlement period is zero. The
expected demand equivalent forced outage rate for the unit
is 4 percent, resulting in an expected demand availability
factor of 96 percent. The demand availability factor is
defined as the percent of demanded generation that is
actually delivered.
C. ENVIROMENTAL IMPACTS
The Florida Department of Environmental Protection (FDEP),
formerly the Department of Natural Resources and the
Department of Environmental Regulation, has already granted
its approval for the installation of new combustion turbines
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at the Intercession City site. While the permits were issued
for the installation of two General Electric 7F units
instead of a Siemens V84.3 unit, the emission and discharge
parameters of the Siemens unit are expected to meet the
permit conditions already established and approved by the
FDEP, thus allowing an uncomplicated reissuance of the
permits. The following sections discuss the environmental
impacts of the facility and the findings of the FDEP.
C.1. ENVIRONMENTAL COMPLIANCE
The Intercession City project has been issued construction
permits for the four General Electric model 7EA CTs which
began commercial operation earlier this year, plus two
additional General Electric model 7F CTs. The decision to
select the Siemens V84.3 bine in place of one of the General
Electric 7F CTs (the second 7F has been postponed) does not
significantly change the emissions or the environmental
impacts because the Siemens CT is approximately the same
size as the 7F and has similar emission characteristics. The
amounts and qualities of water, fuel, wastewater, exhaust
gas, surface runoff, wetlands impacts, etc. are not changed
appreciably by the substitution. Therefore, the construction
of this unit will require only administrative changes to the
construction permits and compliance with environmental
regulations will be ensured through compliance with existing
permit conditions.
Operating compliance will be demonstrated through reference
method tests, regular monitoring, and reporting of
environmental parameters. Periodic reports are specified in
the special conditions of the air and water permits.
C.2. ENVIRONMENTAL ASSESSMENT
This project is not a major action by a federal agency so a
National Environmental Policy Act environmental impact study
is not required.
C.3. AIR EMISSIONS
The proposed Siemens combustion turbine is expected to
exhibit the following approximate exhaust gas parameters at
guaranteed conditions:
Flow........................ 3,569,040 lb/hr
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Temperature................. 989 F
Nitrogen 42 ppmdv
Oxides...............
Carbon 5 ppmdv
Monoxide...............
Carbon 5 % Volume
Dioxide................
Volatile Organic 3 ppmwv
Compounds....
Methane 2 ppmwv
(estimated)...........
Particulate Matter (PM- <10 lb/hr
10)....
Sulfur 226.1 lb/hr
Dioxide................
Opacity..................... <10 %
The permit conditions require an initial test for beryllium,
arsenic, and mercury emissions for informational purposes but
no limits are specified. Chlorofluorocarbons, halogens and other
ozone depleting substances are negligible products of combustion
from CTs. Hydrogen sulfides and ammonia are currently not
pollutants of concern for the Environmental Protection Agency
(EPA) in the operation of CTs. Air quality modeling was
performed by Florida Power Corporation and by the U.S. Fish and
Wildlife Service. These were reviewed by the FDER and both
demonstrated acceptable impacts on ambient air quality.
Sulfur dioxide emissions will be in compliance with Title IV
of the Clean Air Act Amendments (CAAA) of 1990, as Georgia
Power's current overall compliance strategy will provide a
sufficient number of allowances to meet the resulting needs.
Title III of the CAAA of 1990 lists 189 air toxic compounds
or groups of compounds. It is recognized from previous
studies of health risks from power plant emissions that
utility sources pose very little air toxic risk. Therefore,
instead of drafting utility regulations, the EPA was
directed to undertake a risk assessment study of utility
emissions to determine whether any additional emission
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<PAGE>
controls are warranted. The study is now underway and the
EPA is currently compiling emission information. The utility
industry will be regulated for air toxics only if the
results of the EPA study indicate such a need.
An appropriate continuous emissions monitoring system will
be provided and is included in the project construction
scope and cost estimate.
C.4. WATER ISSUES
The project has been approved by the South Florida Water
Management District and the FDER for water withdrawal,
process discharges, construction discharges, stormwater
discharges, and wetlands impacts - including preservation
and reconstruction. The Corps of Engineers has also
approved, under Nationwide Permits, wetland drainage and
filling activities on site.
C.5. OTHER ISSUES
The project is not a generator of solid or hazardous waste
and thus will not require a hazardous waste generator ID
number. Any solid or hazardous wastes generated during
construction will be properly disposed off-site at an
approved facility.
Noise parameters are well within the limits normally applied
to industrial areas in Florida municipalities.
Threatened and Endangered Species have been identified in
the vicinity of the project but no critical habitat has or
will be disturbed. Moreover, the U.S. Fish and Wildlife
Service has reviewed the project and found the impacts
acceptable.
D. SCHEDULES
A major milestone schedule for the project is presented
below. In summary, the combustion turbine/generator is being
furnished by Siemens to FPC on a "turn-key" basis. The unit
will be started in Spring 1995 and tested by Siemens for
approximately three months prior to initial synchronization
to the transmission grid around July 1, 1995. The months
prior to commercial operation on or before January 1, 1996,
will be spent operating and testing the unit and training
FPC personnel. Given that the unit will actually begin
operating in Spring 1995, there will be an approximate 14
month period of check-out and operation prior to GPC's first
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use of the facility in June 1996, providing ample
opportunity to assure reliable service.
Event Start Date End
Date
Engineering and Procurement 09/93 06/95
Environmental Permitting 11/93 06/94
Site Construction 09/94 06/95
Equipment Delivery 01/95 03/95
Siemens Testing and Start-up 03/95 06/95
Initial Synchronization 07/01/95
Additional Testing and FPC
Training 07/95 12/95
Commercial Operation Date
(on or before) 01/01/96
Start of Georgia Power's
First Entitlement Period 06/01/96
E. PERMITS
The permits required by the project include construction-
related permits, such as the building permit, and
operations-related permits, such as the air permit. The
following table provides a listing of the required permits
and their current status.
Permit Issuing Agency Status
Air Permit Fla Dept of Envir Prot Already apprvd for 4-GE7EAs
& 2-7Fs; need amendment for
V84.3 in lieu of 7F
NPDES Fla Dept of Envir Prot Not required (no discharges)
Building Permit Osceola County, Fla Future submittal
Construction Storm Water S Fla Water Mgt Dist Future submittal
(if required)
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Construction Burning Fla Dept of Envir Prot Not required (use landfill)
Stack Fed Aviation Admin Future submittal
Septic Tank Osceola County, Fla Not required (use existing)
Wetlands Fla Dept of Envir Prot No new wetlands involved
General Water Use S Fla Water Mgt Dist Not required
Constr of Industrial Fla Dept of Envir Prot Renew to include new unit
Wastewater System
Surface Water Mgt S Fla Water Mgt Dist Future submittal
(if required)
Drinking Water S Fla Water Mgt Dist Existing permit is adequate
F. IN-SERVICE COST
The total in-service cost which Georgia Power requests be
certified is $13,926,394, which is approximately $95 per kilowatt
based on an expected output of 147 megawatts during the Company's
summer entitlement periods. The in-service cost estimate consists
of the following components:
Combustion Turbine-Generator & Auxiliary Equipment
(provided under contract between Siemens and FPC)$11,926,196
Installation of New Facilities and Modifications to
Existing Facilities (performed by FPC) $ 1,065,348
Capitalized Test Energy Costs $ 479,469
Total Purchase Price (paid to FPC at C.O.D.)$13,471,013
GPC Project Development Costs $ 455,381
Total In-Service Costs $13,926,394
As described previously, Siemens Power Corporation will
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<PAGE>
perform much of the actual construction of the project for FPC on
a tum-key basis under the terms of a contract already entered into
between FPC and Siemens. The costs of the turbine-generator and
auxiliary equipment provided under this contract is $35,778,587.
Georgia Power's one-third share of this cost is $11,926,196.
The payment of the full price by FPC to Siemens will be
contingent upon the unit demonstrating at the "expected" output
levels rather than at the lower "guaranteed" levels presented
earlier. Should the unit meet the guaranteed performance levels but
fail to meet the higher expected output levels during the
first year of operation, then the payment to Siemens will be
reduced by as much as $1,500,000 and Georgia Power's
cost will be reduced by as much as $500,000.
To supplement the Siemens construction work, FPC will make
modifications to certain existing facilities at the site and
add new facilities as necessary to accommodate the new unit.
In addition, FPC will incur costs for activities such as
engineering and project management, licensing and
permitting, establishing initial fuel inventory, and
financing the progress payments made to Siemens prior to the
commercial operation date. The estimated combined cost to
FPC for all of these activities is $3,196,045. Georgia
Power's one-third share of these costs is $1,065,348.
An additional cost which will be incurred by FPC prior to
commercial operation is the fuel costs associated with the
testing of the unit. The net cost to FPC is the difference
between the price of the energy produced by the Intercession
unit and FPC's marginal cost for the displaced energy. FPC's
net test energy cost is estimated at $1,438,406. Georgia
Power's one-third share of these costs is $479,469.
Upon commercial operation of the unit on or around January
1, 1996, Georgia Power will purchase from FPC a one-third
undivided ownership interest in the unit and the facilities
added specifically to accommodate the unit. The estimated
purchase price is $13,471,013 -- the sum of the $11,926,196,
$1,065,348, and $479,469 costs described above.
The total in-service cost associated with this project --
$13,926,394 -- includes this purchase price plus $455,381 in
project development costs. The development costs include the
costs Georgia Power expects to incur to support the
development of this project. The project development costs
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<PAGE>
include an estimated $51,381 for AFUDC associated with
those costs.
This cost does not yet include the cost which Georgia Power
will be charged by the Commission associated with the
Commission's review of this application.
G. LIFE-CYCLE COSTS
Georgia Power's ownership interest in the Intercession City
CT Project will result in costs in addition to those related to the
initial in-service cost. These costs can be grouped into the
following seven categories:
- Investment Costs
- Common Facilities and Land Charges
- Transmission Charges
- Fixed Operating and Maintenance Costs
- Variable Operating and Maintenance Costs
- Fuel Bum Costs
- S02 Allowance Costs
Exhibit III. 1 provides a summary of the costs associated
with these major components.
Exhibit III.2 provides additional detail.
The life cycle costs presented here were developed assuming
50 hours of operation during Georgia Power's summer
operation periods. Based on information provided by FPC, the
analysis used an assumed 280 hours of operation during FPC's
eight-month operation periods.
Also, Georgia Power and FPC are currently negotiating
agreements which govem the assignment of costs associated
with the new combustion turbine. The life cycle cost
analysis presented here should be regarded as the Company's
current best estimate of the costs which will be incurred
over the useful life of the facility.
G.1. INVESTMENT COSTS
As discussed previously, the projected in-service cost of
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Georgia Power's ownership in the Intercession City Project
is $13,926,394. The revenue requirement stream
associated with this investment will consist of a return of
investment, a return on the undepreciated balance, and
income taxes.
Additionally, a major inspection and refurbishment will take
place in the future which will result in capital
expenditures for the replacement of certain equipment such
as exhaust stack and control systems. For the purposes of
this analysis, it was assumed that these costs would be
incurred around the 22nd year of operation.
Pages 1 and 2 of Exhibit III.2 provide the specific costs
and associated revenue requirements for these costs.
An additional cost which might be incurred is the cost of
decommissioning the unit at the end of its life. No
estimate has been made, however Georgia Power expects that
the cost would be very small relative to the overall cost of
the project.
G.2. COMMON FACILITIES AND LAND CHARGES
Georgia Power will purchase a one-third undivided ownership
interest in the new combustion turbine unit and the
additional facilities installed at the Intercession City
site by FPC specifically to accommodate the unit. There are
additional facilities, however, that will provide support
for the new combustion turbine (as well as other existing
units at the site) that Georgia Power will not purchase.
Georgia Power will be charged for the use of these common
facilities on an ongoing basis, based on the
depreciated book value of those facilities.
It was assumed for the life cycle analysis that common
facilities costs will be allocated to the new unit based on
ratios of the new unit's use of the components of the common
facilities. Some items may be common to the entire site,
whereas others may only be common to portions of the site.
Once the basis for allocating the existing common facilities
to the new unit has been made, an annual service charge will
be calculated based on the depreciated value of these
assets. While subject to negotiation, the current estimate
of these charges is $135,000 in 1996, based on information
provided by FPC, and declining thereafter.
In addition to common facilities, Georgia Power will be
charged an ongoing fee for leasing the land on which the CT
and associated new support facilities will be constructed.
As with the common facilities charge, Georgia Power's charge
for the land lease will be based on one-third of the value
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of the land assigned to the new unit. For the purpose of
this analysis, it was assumed that this charge would be $300
per year based on information provided by FPC.
Pages 3 and 4 of Exhibit III.2 provide the specific costs
and associated revenue requirements for these charges.
G.3. TRANSMISSION CHARGES
FPC, which is interconnected to the Georgia ITS, will
provide transmission services to deliver energy from the new
unit to the Georgia system. During the first ten years of
operation, FPC will charge Georgia Power according to a
specific formulary rate based on the embedded costs of FPC's
transmission system.
After the first ten years, FPC will have the right to seek
FERC approval of changes in the transmission service rates
to be paid by Georgia Power. However, Georgia Power would
have the right to challenge FPC's request, and would also
have certain options should the unit become uneconomic
because of the cost or reliability of the transmission
service provided by FPC. If that situation occurs, then the
Company will have the unilateral right to (1) sell its
ownership in the unit to FPC at its then depreciated book
value or (2) obtain any transmission service FPC has
available and sell the Company's entitlement to another
party also interconnected to FPC. Georgia Power's current
estimate of the cost of transmission service is $1.18 per
kilowatt-month (or $4.72 per Idlowatt-year) in 1993 dollars,
escalating annually at inflation.
Page 5 of Exhibit III.2 presents the revenue requirement
cost associated with the transmission service charges.
In addition to the FPC transmission service charges, two
additional transmission-related impacts were explicitly
considered in evaluating the Intercession City project --
transmission system improvements costs and transmission
system losses. In the same manner in which the purchased
power bids were evaluated, an analysis was performed to
determine the impacts of this project on the Georgia ITS.
This analysis concluded, as described in Exhibit II.2, that
there would be no incremental system improvements needed as
a result of this project. Further, the analysis indicated
that the delivery of power from the new unit from Florida
into the Georgia system would actually result in an
approximate 10 megawatt reduction in losses on the Georgia
system. This reduction in losses on the Georgia system is
expected to be partially offset by the contractual losses on
the FPC system, which will be defined in the transmission
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service agreement. For this analysis, a 3 percent (4
megawatt) FPC system loss was assumed.
G.4. FIXED OPERATION AND MAINTENANCE COSTS
Georgia Power will reimburse FPC for the Company's share of
the fixed operating and maintenance costs of the new unit.
The costs assumed for this category are:
- Annual Operation - Manpower requirements including
direct operational staff, allocated management,
allocated clerical support, and allocated general
office support staff
- Annual Routine Maintenance - the cost associated
with replacing the materials and parts used during
routine maintenance of the unit
- Scheduled Outages - Pre-scheduled outages for the
purpose of performing inspections, conducting
major maintenance activities, and/or maidng
capital additions; includes compensation to FPC
for scheduling maintenance during non-summer
periods only
- Fuel Inventory Carrying Cost - costs associated
with maintaining a certain level of oil inventory
over an extended period of time
- Emissions Testing - periodic testing of unit
emissions as required by law
- Insurance - payments to FPC for insuring the unit
- Ad Valorem Taxes - Property taxes for the CT site
and its improvements
- Stand-By Station Service - payments to FPC for
providing the minimal station service necessary
during hours the unit is not operating, in order
for the unit to remain in a state of "readiness"
The estimated levelized real cost for these fixed costs in
aggregate will be $2.31 per kilowatt-year, in 1/l/93
dollars, assuming an annual inflation rate of 3.37%. Pages 6
and 7 of Exhibit III.2 provide the specific costs assumed
for the life-cycle analysis.
G.5. VARIABLE OPERATION AND MAINTENANCE COSTS
18
<PAGE>
For the purpose of estimating the life cycle costs
associated with the unit, the following items were assumed
to be included in the variable cost category.
- Demineralized Water - the cost of purifying and/or
delivering purified water for use by the CT
- Cash Worldng Capital Carrying Costs - the cost
associated with the lag between FPC's outlay of
money for variable expenses and collection of
revenues from Georgia Power.
The estimated levelized real cost for these variable costs
in aggregate will be $1.57 per megawatt-hour, in 1/l/93
dollars, assuming an annual inflation rate of 3.37%. Pages 8
and 9 of Exhibit III.2 provide the specific costs assumed
for the life-cycle analysis.
G.6. FUEL BURN COSTS
Georgia Power will reimburse FPC for fuel which is used by
the unit during the Company's summer entitlement periods.
As discussed earlier, Georgia Power expects to operate the
unit only around 50 hours per summer period. The costs
associated with this bum are estimated by adding the
projected costs for Gulf Coast-derived fuel oil from the
June 1992 (Budget 1993) Southern Electric System fuel
forecast to the projected costs of delivering the fuel to
the Intercession City facility.
Page 10 of Exhibit III.2 provides the specific annual fuel
bum cost estimates.
G.7. S02 ALLOWANCE COSTS
Siemens advises that the new unit will emit no more than 226
lbs (. 1 1 tons) Of S02 per hour of operation at guaranteed
ISO ratings. Because the unit will be classified as a Phase
II unit under the Clean Air Act Amendments of 1990, emission
allowances will not be required prior to the year 2000. For
the purposes of assigning a cost to these emissions, Georgia
Power's estimated market value of allowances was used. At
$330 per ton in year 2000, the cost associated with 50 hours
of operation is less than $3,000.
Page I 1 of Exhibit III. 2 provides the specific expected
annual allowance cost estimates.
19
<PAGE>
EXHIBIT D-2
GEORGIA PUBLIC SERVICE COMMISSION
Docket No. 4895-U
CERTIFICATES OF PUBLIC CONVENIENCE AND NECESSITY:
FPC POWER PURCHASE, NO. GPC-1-PP
INTERCESSION CITY CT PROJECT, NO. GPC-3-SS
IN RE: Application of Georgia Power Company for Certification
of the Florida Power Corporation Purchase and
Intercession City Combustion Turbine Project
Record Submitted: June 22, 1994 Decided: July 19, 1994
APPEARANCES:
On behalf of the Adversary Staff of Georgia Public Service
Commission:
TIANE L. SOMMER, Special Assistant Attorney General
On behalf of the Consumers' Utility Counsel:
NANCY G. GIBSON, Attorney
DANIEL WALSH, Attorney
On behalf of the Georgia Power Company:
KEVIN C. GREENE, Attorney
SUSAN W. DRECHSEL, Attorney
On behalf of the Georgia Textile Manufacturers Association,
Inc.:
PEYTON S. HAWES, JR., Attorney
On behalf of the Georgia Industrial Group:
C. CHRISTOPHER HAGY, Attorney
RANDALL D. QUINTRELL, Attorney
On behalf of the Campaign for a Prosperous Georgia:
DEBORAH SHEPPARD, Executive Director
JULIE SIMON, Energy Policy Analyst
On behalf of the Southern Environmental Law Center:
JEFFREY M. GLEASON, Staff Attorney
On behalf of the Independent Power Producers Group:
WILLIAM W. MAYCOCK, Attorney
<PAGE>
FINDINGS OF FACT AND CONCLUSIONS OF LAW
A. Summary
Georgia Power Company ("Georgia Power," the "Company," or
"GPC") requests that the Georgia Public Service Commission grant
it certificates of public convenience and necessity for: (1) a
contract to purchase approximately 400 megawatts (MW) of peaking
capacity and energy from Florida Power Corporation ("FPC"); and
(2) the purchase of a one-third ownership interest in a 147-MW
combustion turbine (CT) at FPC's Intercession City site in
Florida at a certified capital cost of $13,926,394, or roughly
$95 per kilowatt of peaking capacity.
The Intercession City CT's final negotiated contract costs
vary slightly from the estimated costs used in GPC's
certification application. The total in-service cost changed
from $13,926,394 to $13,804,589 a reduction of $121,805. As
part of the negotiations, various other costs, such as the
components of the O&M costs, increased or decreased. The end
result was that the total project cost on a $/Kw basis changed
from $307.66 to $308.90 an increase of $1.24 (Staff Ex. 11)
The FPC Power Purchase is a four-year contract allowing Georgia
Power to obtain 400 megawatts of peaking capacity and associated
energy from FPC during the period from June through September
("summer months") of 1996 and 1997, and to obtain 200 megawatts
during the summer months of 1998 and 1999. The contract has a
certain amount of flexibility to change the amounts taken in each
year, and to add some capacity during 1995.
The Commission in this Order grants with modifications the
certificates requested by Georgia power to pursue the FPC Power
Purchase and the Intercession City CT Project. The modifications
that this Commission adopts revising the certificate requested by
Georgia Power shall be conditions of the certificate issued.
B. Jurisdiction, Issues and Proceedings
Georgia Power Company is a public electric utility serving
retail customers within the State of Georgia. This Commission
has jurisdiction pursuant to O.C.G.A. section 46-2-1 et seq. and
the Georgia IRP statute, O.C.G.A. section 46-3A-1 et seq. This
section of the Order identifies the general issues that must be
decided when determining whether to grant, modify or deny an
application for certification of resources under the Georgia IRP
statute.
The Commission must adopt a forecast of future Georgia
retail electricity requirements of the utility. O.C.G.A.
section 46-3A-5(b). Georgia Power's load forecast is discussed
as a specific issue later in this Order. For purposes of
approving the certificates, however, the Commission uses the load
forecast previously approved as part of the Integrated Resource
Plan (IRP) adopted in Docket No. 4311-U.
<PAGE>
The Commission shall issue a certificate upon finding: (1)
that there is or will be a need for the capacity resource at the
time it is proposed to be utilized to assure an economical and
reliable supply of electric power and energy for the utility's
Georgia retail customers; (2) that the certificate is required by
the public convenience and necessity; and (3) that the
certificate complies with the provisions of the Georgia IRP Act
and the rules of the Commission. O.C.G.A. section 46-3A-4(a).
These findings are supported by the evidence in this record,
including Georgia Power's certificate application filing
exhibits, the Staff Team's certificate analysis testimony and
exhibits, and the evidence presented at the hearings. Therefore,
the Commission finds and concludes that there is sufficient
evidence to meet these statutory requirements and to support the
decision herein set forth.
The Commission received into evidence the Company's
application; the direct testimony with exhibits of the Company,
of the Staff Team's witnesses, and of intervenor witnesses; the
rebuttal testimony with exhibits of the Company; and cross-
examination with exhibits of all parties, at public hearings
which were held on March 24 and 25, May 19, and June 22, 1994.
All parties were also given the opportunity to file briefs and
reply briefs on June 30 and July 12, 1994.
C. The Proposed Supply-Side Resources
The FPC Power Purchase is a four-year contract allowing
Georgia Power to obtain 400 megawatts of peaking capacity and
associated energy from FPC during the period from June through
September ("summer months") of 1996 and 1997, and to obtain 200
megawatts during the summer months of 1998 and 1999. The Company
also retains options to increase or decrease the capacity
purchased during these years, and even to add up to 300 MW of
purchased capacity in 1995. GPC can increase the capacity level
during 1996 by an additional 100 MW. Subject to certain
termination provisions, Georgia Power's minimum commitment is to
buy 400 MW for 1996, 300 MW for 1997, and 150 MW for 1998 and for
1999. The capacity cost is approximately $15 per Kw-yr, as
described more fully in the contract. FPC will provide
guaranteed system peaking capacity during the four summer months
of each year. This refers to the system capacity of 1900 MW of
FPC peaking units guaranteed to be available at a demand
availability rate of 98%. This purchase is a product of Georgia
Power's formal Request for Proposals to Supply Capacity and
Energy ("RFP") released in February, 1993. That RFP produced 40
offers from 15 bidders, and after extensive evaluation, Georgia
Power selected the FPC contract (GPC's Application for
Certification at I-6 & Appendix 1).
The Intercession City CT Project consists of a single 147-MW
oil-fired combustion turbine to be built at FPC's existing
Intercession City facility near Kissimmee, Florida. When the
unit becomes commercially operational by January 1, 1996, Georgia
<PAGE>
Power will buy a one-third ownership interest in the unit.
Georgia Power will have complete rights to the output of the unit
during the summer months, while FPC, the holder of the remaining
two-thirds ownership of the unit, will have full rights to the
unit's output the remaining eight months of the year. This
arrangement benefits both parties, since Georgia Power is
projected to need an additional 560 MW of summer peaking capacity
in 1996 (amply met by these resources, totaling 574 MW), while
FPC is a winter-peaking utility that needs additional capacity in
October through May. The certified capital cost of Georgia
Power's one-third ownership interest in the CT project was
estimated in Georgia Power's application to be $13,926.394,
although Georgia Power's estimate of the capital cost is now
$13,804,589 (Staff Exhibit 11).
Compared to the other purchased power and self-build options
open to Georgia Power, the FPC Power Purchase and the
Intercession City CT Project seem to be the two best options
currently available to fulfill the Company's 1996 capacity
requirements. The Company projected that these two options will
save Georgia ratepayers approximately $21 million over the next
40 years, relative to Georgia Power's self-build option. (GPC
Application at II-6.) The amount of actual savings depends not
only on assumptions about plant operations, but also on the
Company's self-build option being the avoided unit.
The Commission adopts the recommendations of the Staff Team
and other intervenors to certify the proposed FPC Power Purchase
and Intercession City Project. This and other Staff Team
recommendations were submitted in testimony by the consultants of
GDS Associates. The Commission agrees that the two options
selected by Georgia Power appears to be the best available to
Georgia ratepayers. Since the Company has produced ample
evidence assuring the reliability of a summer-only facility, this
Commission's concern is that Georgia Power provide, as soon as
possible, an updated load forecast accounting for the 1996 Summer
Olympics in Atlanta, as well as the most recent estimate of
energy efficiency impacts due to the Energy Policy Act of 1992.
The Commission notes that the flexibility written into the
FPC Purchase Agreement has value, especially given Georgia
Power's load forecast situation. Atlanta's hosting of the
Olympics during the summer of 1996 is likely to have significant
impact on Georgia Power's loads (Tr. 804-805). Therefore, this
certification expressly allows Georgia Power the latitude to use
the contract's flexibility to adjust the needs if cost-effective,
including (but not necessarily limited to) use of the additional
100 MW during the summer of 1996.
D. Georgia Power's 1996 RFP Selection Process
Georgia Power issued its RFP on February 15, 1993, to meet
projected capacity needs of 600 MW by early 1996 and an
additional 600 MW by early 1997. On September 30, 1993, Georgia
<PAGE>
Power selected the FPC Power Purchase and the Intercession City
Project to meet the 1996 capacity need.
There was some criticism by parties in this Docket of
certain aspects of the Company's 1996 RFP process. The first
concerned the bid fees established by Georgia Power. The base
fee was $10,000, with $2,000 for each additional bid on the same
site but having a different number of combustion turbines. There
were fears that these fees might deter potential bidders and
lessen the quality of bidder competition, therefore the parties
recommended reductions from $5,000 and to $1,000, respectively.
A second criticism concerned the non-price factors. Georgia
Power asked bidders to provide non-price information, but did not
explain how it would be used in the bid evaluation. The Staff
Team recommends that the Company provide in the RFP a detailed
description of how it will weigh non-price factors, and then
follow these guidelines accordingly during the evaluation process
(Tr. 481, 483; GDS Direct at 10, 12). Georgia Power apparently
agrees to this recommendation (Tr. 759; GPC Rebuttal at 7).
Another criticism was aimed at the requirement that
generating facilities dedicate their capacity exclusively to
Georgia Power. The Consumers' Utility Counsel ("CUC"), and the
Staff Team noted that while utilities like FPC have a capacity
obligation to their own ratepayers and thus do not need to sell
their capacity elsewhere during the winter months, independent
power producers would be at a competitive disadvantage under the
Company's scenario because they would be denied an alternative
market for their capacity (Tr. 678; CUC Direct at 23).
The Staff Team's witnesses presented several other concerns
and recommendations. The Company withheld key transmission
information, and denied the requests of some bidders for more
detailed transmission information that would have enabled them to
improve the cost-effectiveness of their project bids, to the
ultimate benefit of ratepayers. Instead, GPC provided only
generalized information about the integrated transmission system
("ITS"). The Staff recommends that the Company be required to
respond to requests for such information, and if any unusual cost
is incurred the requestor should be billed (Tr. 487; GDS Direct
at 16). Georgia Power has no objection to this recommendation
(Tr. 760; GPC Rebuttal at 8). The Staff Team notes that the
billed costs should only be those reasonably and necessarily
incurred and that the requestor should be notified before
billing.
The Commission believes that there is validity to these
concerns and that the Company should attempt to alleviate such
concerns in future RFPs. This Commission also concludes that it
is not necessary at this time to require GPC to re-open its 1997
Bid Process as was initially recommended in this Docket. The
Staff ultimately removed this recommendation from consideration.
<PAGE>
Finally, the Independent Power producers' Group ("IPP
Group") proposed six changes to promote competition in Georgia.
Five were consistent with the Staff Team recommendations
discussed here and in other sections of this order. The sixth
was that an independent evaluator be established to evaluate all
bids, including the utility's self-build proposals (IPP Group
Brief at 6-9). The Commission finds that this issue should be
deferred to allow time for the new rule amendments to achieve its
intended fair and impartial results.
E. The Intercession City Combustion Turbine Project
The Intercession City Combustion Turbine Project involves
one 147-MW oil-fired, simple-cycle CT to be built near Kissimmee,
Florida, at FPC's Intercession City generating plant site. This
site already supports 10 operational CTs, all oil-fired with an
existing oil pipeline providing the necessary fuel. Addition of
the new CT would not negatively affect the currently operational
units and should incur comparatively little cost, since the
requisite oil pipeline, oil storage tanks, water treatment plant,
service building, and waste systems are functional and already
installed.
FPC chose the Siemens Power Corporation Model V84.3 as the
combustion turbine for the project. Although it is a recent
model not currently operational in any commercial facility,
Georgia Power points to the extensive testing and guarantees
provided by Siemens as evidence of the V84.3 unit's reliability.
Furthermore, by the time that the Intercession City combustion
turbine is built, two other V84.3 models will be in commercial
operation.
The joint ownership of the CT will allow Georgia Power one-
third ownership, but provides for the complete power output for
the months of June through September each year. The initial
estimate of GPC's portion of the in-service cost of the unit was
$13,926.394, roughly $95 per Kw; the Company's share now falls at
approximately $13,804,589, or about $94 per Kw (Staff Exhibit
11). Siemens Power Corporation will perform most of the
construction of the project, including the V84.3 unit, inlet air
and exhaust systems, fire protection system, generator,
transformers, switchgear, and control systems, beginning in
September, 1994.
Not until January, 1996, after a test period, will Georgia
Power actually close on its one-third share; the Company can, in
fact, delay closing until June 1, 1996. As a protection to the
Company, "If the level of reliability of transmission services or
the cost of transmission services make continued ownership in the
unit uneconomic, the Company may require FPC to purchase its
ownership interest in the unit for its depreciated book value or
obtain from FPC any available transmission services to allow the
Company to sell its interest in the unit to third parties" (Tr.
499; GDS Direct at 28).
<PAGE>
The Staff Team consultants determined $13,926,394 (Georgia
power's initial price for the project) to be a reasonable cost,
although somewhat above one-third of the estimated expense of the
Company's McIntosh self-build option (Tr. 500; GDS Direct at 29).
GDS is concerned, however, with the reliability of the Siemens
V84.3, as no other of this model is currently operational to
prove its ability to meet expectations. GDS fears lower
reliability and a higher Equivalent Forced Outage Rate could
result in higher expenses if the Intercession City project fails
to deliver the peaking capacity required. This Commission
concludes that a review of operational problems found during
startup and initial operation of the Intercession City project is
appropriate.
The Staff Team consultants also advise that the signed
Operating Agreement be reviewed, and that any concerns raised
over the operating costs or cost allocation be settled in the
Company's next rate case (Tr. 509; GDS Direct at 38). Georgia
Power agrees to this recommendation by GDS, but advises the
Commission that the O&M costs of this project, while perhaps
high, were the lowest of any of the options available to the
Company, providing ratepayers $21 million in savings relative to
the other projects proposed (Tr. 764; GPC Rebuttal at 12). The
Commission finds that any such concerns can be addressed in the
cost recovery proceedings to be conducted in the future.
The Staff Team consultants further recommend that extra
power be sold through the Florida energy broker system, possibly
with FPC as an intermediary and/or through standard economy
energy transactions, both of which would reap revenues for the
Company's stockholders and ratepayers (Tr. 511; GDS Direct at
40). Georgia Power maintains its policy has always been to
"engage in economy energy and other transactions which benefit
our customers" (Tr.765; GPC Rebuttal at 13), thus apparently
agreeing in principle to the recommendation.
The Commission finds that the Staff Team's recommendations
regarding the Intercession City CT project are reasonable and
should be adopted, with the proviso that the review of any cost
issues resulting from the final Operating Agreement should occur
during proceedings that the Commission intends to conduct to
decide regulatory treatment issues, as discussed next in this
Order.
F. Regulatory Treatment
The regulatory treatment issues pertain only to the FPC
Power Purchase. Georgia Power proposed to recover capacity and
energy costs associated with the FPC Power Purchase through the
Fuel Cost Recovery (FCR) mechanism. Moreover, under the
Company's proposal an "additional sum" of $2.3 million would also
be collected through the FCR mechanism. These proposals are
largely opposed by the Staff Team and most intervenors.
<PAGE>
Georgia Power asks for FCR recovery of FPC purchase capacity
and energy costs that will be incurred beginning in 1996.
Essentially Georgia Power relies on its interpretation of the
"Fuel Cost Recovery" statute, to support its claim for use of the
FCR. See O.C.G.A. sections 46-2-26(b) and 46-2-26(j).
The Staff Team did not endorse the use of the FCR mechanism
to allow Georgia Power to recover the FPC Power Purchase
expenses, but believes that O.C.G.A. section 46-2-26(j) could be
interpreted to require the Commission to accept purchase power
cost recovery via some adjustment mechanism.
Neither the Staff Team, the CUC, the Campaign for a
Prosperous Georgia ("GPG"), the GIG, the Georgia Textile
Manufacturers Association ("GTMA"), nor the Southern
Environmental Law Center ("SELC") believe FCR recovery to be
appropriate. CUC witness Talbot explains, "a fuel adjustment
clause's scope should be narrow; it should not be a catch-all for
a wide range of adjustments" (Tr. 662; CUC Direct at 7). This
Commission has also expressed this as its policy in Georgia
Power's most recent FCR case, Docket No. 4798-U.
The use of an adjustment mechanism, or rider, also poses an
allocation problem. Representing industrial consumers with high
energy load factors, both the GTMA (Tr. 648; GTMA Direct at 5)
and the GIG ( Tr. 721; GIG Direct at 11) objected to the use of
the FCR (a price per Kw-hr scheme) to recover purchased power
capacity costs, because a disproportionate amount of the costs
would be borne by customers with high load factors. This is
especially onerous to them since the costs will be for peaking
capacity.
The Staff Team also points out that there is no need to rush
to a decision on revenue recovery, not only because of the great
risk of double recovery, but because Georgia power will not even
begin to incur the purchase power costs until 1996. Therefore,
the Commission concludes that the decision on the method of
recovery should be deferred until 1996, unless otherwise ordered
by the Commission.
Additionally, Georgia Power proposes an "additional sum" of
50% of the savings from the FPC Power Purchase, both energy and
capacity. The Staff Team was opposed to this proposal, taking
the position that it takes money from ratepayers and gives it to
the Company, not in order to reimburse any costs, but merely to
compensate the Company for complying with the requirements of the
IRP Act.
The IRP Act at section 46-3A-8 does provide for the utility
to recover purchased power costs," along with an additional sum
as determined by the commission to encourage such purchases. The
commission shall consider lost revenues, if any, changed risk,
and an equitable sharing of benefits between the utility and its
retail customers."
<PAGE>
The CUC, CPG, GIG, GTMA, and SELC join with the Staff Team
in recommending denial of an "additional sum." The Company
believes it would be unjust for the Commission to take away the
hope of an "additional sum" so late in the certification process
and urges the Commission not to heed recommendations to do so
(Tr. 768; TGPC Rebuttal at 16).
The Staff Team consultants further recommend that the issue
of an "additional sum" be deferred and addressed in a Georgia
Power rate case, as a more appropriate forum for such a
determination (Tr. 515, GDS Direct at 44). They believe it would
not be suitable to decide this one issue out of the context of
all aspects of the Company's operations; that would be
"piecemeal" or "single-issue ratemaking."
As is the case with the method of purchased power recovery,
this Commission concludes that the issue of the "additional sum"
would best be postponed for further review. It will be included
in the consideration given to other regulatory treatment issues
in the proceeding referred to above, unless otherwise ordered by
the Commission.
G. Load Forecast
Georgia Power relied on the 1992 load forecast that was
approved as part of the Commission's Order in Docket No. 4311-U
(the Robins CT certification) to justify its proposed supply-side
resource additions in this case. Georgia power claims that it
chose not to develop another load forecast before August 1994, so
the 1992 load forecast (which it calls the "Budget-93" Load
Forecast) was the most recent one available.
The Staff Team consultants objected to Georgia Power's
reliance on the 1992 load forecast, maintaining that developments
since 1992 outdate its use. These developments include a greater
than foreseen response to Georgia Power's residential DSM
programs, newly instituted real-time pricing and time-of-use
tariffs, more accurate information on the predicted effects of
the recent National Energy Policy Act efficiency standards, more
thorough data estimating the impact of interruptible rates and
the stand-by generation program, and, finally, economic
influences including the 1996 Summer Olympics to take place in
Atlanta. (Tr. 512-513; GDS Direct at 41-42). In rebuttal
testimony, Georgia Power agrees to submit an updated load
forecast to the Commission, but maintains that the 1992 load
forecast is not so outdated as GDS implies (Tr. 756; GPC Rebuttal
at 4).
The CUC agrees that the 1992 load forecast used is not
outdated enough to deny Georgia Power certification of the
proposed projects, but recommends "that no further projects be
approved by the Commission without a review of the Company's new
load forecast, ... an updated DSM plan, and a schedule of supply-
side resources" (Tr. 676; CUC Direct at 21).
<PAGE>
The Commission finds the proposed resources should be
approved on the basis of the previously approved forecast from
Docket No. 4311-U; and further, that Georgia Power should be
directed to submit an updated load forecast reflecting, inter
alia, the 1996 Olympics and the impacts of the Energy Policy Act
of 1992, no later than August 31, 1994.
WHEREFORE, IT IS
ORDERED, that the Commission grants with modifications the
certificates requested by Georgia Power Company for 1996 supply-
side peaking resources. Certificate No. GPC-1-PP shall be to
purchase peaking capacity from Florida Power Corporation
according to the Purchase Agreement contract. Certificate No.
GPC-3-SS shall be to purchase a one-third ownership interest in
the 147-megawatt combustion turbine at the FPC Intercession City
site in Florida at the revised capital cost of $13,804,589, or
roughly $94 per kilowatt of peaking capacity (Staff Exhibit 11).
The modifications adopted herein shall be conditions of the
certificate issued.
ORDERED FURTHER, that Georgia power shall develop and file
with this Commission no later than August 31, 1994 its updated
load forecast. This forecast is to account, among other things,
for both the 1996 Summer Olympics in Atlanta and an accurate
assessment of energy efficiency impacts resulting from the Energy
Policy Act of 1992. The Commission will consider it pursuant to
O.C.G.A. section 46-3A-6.
ORDERED FURTHER, that the Commission adopts the following as
guiding principles for the Company's future RFP processes and
purchase power acquisitions:
(i) The base bid fee for bids should be set to a maximum
level of $5,000 with an additional $1,000/bid for same-
site bids, unless GPC can demonstrate that a more
costly evaluation process is required. A fee too
costly can discourage potential reliable bidders and
thereby hamper competition and, ultimately, savings for
the ratepayer.
(ii) GPC should provide in the RFP a full explanation of the
precise weighing and criteria for all non-price factors,
so that prospective bidders can
determine the corresponding
effects. This process should be
closely monitored by the Commission
Staff by reviewing GPC's draft RFP,
to be submitted 60 days in advance
of the RFP's formal issuance (as
required by the Commission's IRP
rules regarding RFP processes).
(iii) Purchased power producers who obtain a contractual
<PAGE>
agreement with the Company should be permitted to
sell at wholesale to third parties when the
capacity is not needed by the Company to serve
territorial load requirements.
(iv) Future RFPs should be structured such that GPC responds
to requests made for transmission and other similar
information in the course of bid preparations. If
responding to such requests imposes additional costs on
GPC not otherwise recovered through the bid fee, the
Company should bill the requestor for the appropriate
prudent expenses incurred.
(v) Georgia Power should pursue economic opportunities to
benefit the Company and ratepayers, by selling the
unit's power to the extent unused by GPC during the
summer months when it owns all of the unit's output.
Such opportunities can occur through the Florida energy
broker system or through standard economy energy
transactions, and should benefit both the Company and
its ratepayers.
ORDERED FURTHER, that with regard to the Intercession City
Project, Georgia Power is directed to develop and file with the
Commission reports on any and all operational problems
encountered during startup and initial operation of the Siemens
Model V84.3 units at the Intercession City project for the
Commission's review. The final Operating Agreement is to be
reviewed by the Staff regarding the reasonableness of the O&M
costs.
ORDERED FURTHER, that Georgia Power shall be allowed to
recover its certified costs associated with the FPC Power
Purchase. However, the method of recovery will not be decided
until 1996, unless otherwise ordered by the Commission. Any
decision regarding an "additional sum " to be recovered by
Georgia Power under O.C.G.A. section 46-3A-8 shall also be
deferred until such time.
ORDERED FURTHER, that all findings of fact and conclusions
of law made in the previous sections or any other motion shall
not stay the effective date of this Order, unless otherwise
ordered by the Commission.
ORDERED FURTHER, that a motion for reconsideration,
rehearing or oral argument or any other motion shall not stay the
effective date of this Order, unless otherwise ordered by the
Commission.
ORDERED FURTHER, that jurisdiction over this matter is
expressly retained for the purpose of entering such further Order
or orders as to this Commission may seem meet and proper.
<PAGE>
The above by action of the Commission in Administration
Session on the 19th day of July, 1994.
_______________________________ ___________________________
Terri M. Lyndall Robert B. Baker, Jr.
Executive Secretary Chairman
_________________________________ ____________________________
Date Date
<PAGE>
EXHIBIT G
Form of Notice
Georgia Power Company ("GPC") is a wholly-owned subsidiary
of The Southern Company, a registered holding company under the
Public Utility Holding Company Act of 1935. Florida Power
Corporation ("FPC") is a corporation organized and existing under
the laws of the State of Florida.
GPC proposes to purchase from FPC a percentage undivided
ownership interest in the Intercession City Facility Combustion
Turbine (the "Facility"), pursuant to the Intercession City
Siemens Unit Purchase and Ownership Participation Agreement dated
as of June 8, 1994 between GPC and FPC (the "Ownership
Agreement") and the Intercession City Siemens Unit Step-Up
Transformer Purchase Agreement dated as of June 8, 1994 between
GPC and FPC (the "Step-Up Transformer Agreement"). The Facility
includes one complete Siemens V84.3 combustion turbine-generating
unit and a step-up transformer. At the closing, which is
currently scheduled to occur in January 1996, FPC will sell and
transfer to GPC and GPC will purchase from FPC a one-third
undivided ownership interest in the Facility, and FPC will
furnish to GPC a release from any and all mortgages, deeds to
secure debt or other security interests with respect to GPC's
undivided ownership interest in the Facility.
The purchase price for the assets to be acquired by GPC at
the closing will be one-third of the costs of construction
incurred with respect to the Facility which are currently
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estimated to be $13,137,680.
Pursuant to a Long Term Lease Agreement dated as of June 8,
1994 between GPC and FPC, FPC shall lease to GPC an undivided
one-third interest in the real property on which the Facility
will be developed. The annual rent for the leasehold interests
conveyed to GPC shall be $300.00 per year plus all Florida sales
taxes applicable thereto.
The Facility will be managed, controlled, operated and
maintained by FPC on its own behalf and as agent for GPC in
accordance with the terms and conditions set forth in the
Ownership Agreement and the Intercession City Siemens Unit
Operating Agreement dated as of June 8, 1994 between GPC and FPC
(the "Operating Agreement"). FPC and GPC shall pay all future
costs of construction on a pro rata basis based on their
percentage undivided ownership interests in the Facility at the
time such costs are incurred. FPC and GPC will share operating
costs and fuel costs as follows: fixed operation and maintenance
costs and fixed fuel costs shall be allocated between the FPC and
GPC in proportion to their respective percentage undivided
ownership interests in the Facility; variable operation and
maintenance costs and variable fuel costs and variable fuel costs
incurred by FPC during the months of June, July, August and
September (the "Summer Period") shall be allocated solely to GPC;
and variable operation and maintenance costs and variable fuel
costs incurred by FPC during the months of October, November,
December, January, February, March, April and May (the "Winter
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Period") shall be allocated solely to FPC. In addition, GPC will
pay a share of the monthly administrative and general costs of
operating the Facility pursuant to the terms of the Operating
Agreement.
GPC will be entitled to the net capacity and the net energy
output of the Facility at all times during the Summer Period.
FPC will be entitled to the net capacity and the net energy
output of the Facility at all times during the Winter Period.
The Facility is scheduled to go into commercial operation in
January 1996.
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