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78064.7
PART II, ITEM 6(A), EXHIBIT 10-B-88
ENERGY EAST POWER PURCHASE OPTION AGREEMENT
GREEN MOUNTAIN POWER CORPORATION
163 Acorn Lane
Colchester, Vermont 05446
September 11, 2000
Energy East Corporation
P.O. Box 12904
Albany, New York 12212-2904
Attention: Mr. Robert D. Kump
Vice President & Treasurer
OPTION AGREEMENT
Dear Bob:
This Option Agreement sets forth the terms and conditions relating to the
power supply agreement (the "Agreement") between Green Mountain Power
Corporation ("GMP") and Energy East Corporation and/or its affiliates ("EE")
which may be commenced pursuant to this Option Agreement.
1. On the date of execution and delivery of a $15 million revolving credit
agreement (the "RCA") by GMP and KeyBank National Association ("KeyBank"), EE
shall wire transfer the option payment of $15 million (the "OP") to GMP or its
designee in accordance with wire transfer instructions provided to EE by GMP at
least two days prior to the date of execution and delivery of the RCA.
2. GMP's or its designee's receipt of the OP will give EE an option to
commence the Agreement ten business days following the scheduled expiration date
of the RCA (the "Commencement Date"), subject to Paragraph 6 hereof.
3. GMP shall deposit the OP in a one year certificate of deposit (the "CD")
at KeyBank.
4. The OP shall serve as security for repayment of GMP indebtedness to
KeyBank pursuant to the RCA.
5. EE shall give GMP not less than 60 days notice (the "Commencement
Notice") of its intention to (i) commence the Agreement on the Commencement Date
or (ii) cancel EE's option and require GMP to return the OP plus the interest
scheduled to be earned on the CD, irrespective of the amount of time the OP
actually remains in the CD (the "Supplemental Amount") (the OP and the
Supplemental Amount are collectively referred to as the "Termination Amount") to
EE on the Commencement Date.
6. If EE's Commencement Notice states that EE intends to commence the
Agreement on the Commencement Date, GMP shall have the right to pay the
Termination Amount to EE in order to terminate EE's right to commence the
Agreement on the Commencement Date. If GMP fails to pay the Termination Amount
to EE by the Commencement Date, the Agreement shall commence on the Commencement
Date.
7. The Agreement will require GMP to deliver energy to EE in accordance with
Appendix A hereto.
8. If the Agreement is commenced on the Commencement Date, GMP shall be
entitled to retain the Termination Amount and EE shall not be required to pay
for the energy delivered by GMP to EE because on the Commencement Date the
Termination Amount shall constitute a prepayment of all amounts which EE is
required to pay for the energy GMP is required to deliver to EE pursuant to the
Agreement.
9. Subject to the second paragraph of Appendix A, the Agreement shall
terminate upon the earlier of (i) 15 years following the Commencement Date or
(ii) such date that the energy and/or cash (which election shall be made by GMP
on an annual basis) delivered to EE by GMP shall have a value equal to the
Termination Amount. For purposes of calculating the Termination Amount
following the Commencement Date, it shall be understood that (i) interest shall
accrue on any outstanding balance of the OP each year at 10% and (ii) the OP
shall be reduced each year by the value of the energy delivered, and/or the
amount of cash paid, by GMP to EE each year.
10. Not less than 90 days prior to the termination of the Option Agreement,
GMP and EE shall determine whether to extend the Option Agreement for an
additional year. If GMP and EE determine to extend the Option Agreement for an
additional year, GMP shall pay the Supplemental Amount to EE within three
business days of the commencement of such additional year. If GMP fails to pay
the Supplemental Amount to EE, the Agreement shall commence on the tenth
business day of the commencement of such additional year. If EE and GMP agree
to extend the Option Agreement for an additional year, EE shall not have the
right to give the Commencement Notice pursuant to Paragraph 5 until after the
commencement of such additional year.
11. GMP agrees that if GMP terminates the RCA prior to the expiration of its
one year term, GMP shall return the OP, plus interest earned thereon calculated
at the CD rate, through the date of termination (collectively, the "Repayment
Amount"), to EE within three business days of such termination. If GMP fails to
pay the Repayment Amount to EE, the Agreement shall commence on the tenth
business day following such termination.
12. The commencement of the Option Agreement and the Agreement shall be
subject to EE's and GMP's receipt of all requisite regulatory and third party
approvals.
13. This Option Agreement and the Agreement will be governed in all
respects, including validity, interpretation, and effect, by the laws of Vermont
(without giving effect to its choice of law principles).
14. All notices and other communications under the Option Agreement and the
Agreement will be in writing and may be given by personal delivery, reputable
express courier, registered or certified mail (return receipt requested), or
facsimile (receipt confirmed). Such notice will be deemed effective when
received if it is given by personal delivery, reputable express courier, or
facsimile, and will be effective three (3) days after mailing by registered or
certified mail, so long as it is actually received within five (5) days (and, if
not so received within five (5) days, is effective when actually received) by
the parties at the following addresses (or at such other address for a party as
will be specified by like notice):
(a) if to EE, to:
Energy East Corporation
P.O. Box 12904
Albany, New York 12212-2904
Attn.: Mr. Robert D. Kump
Vice President & Treasurer
Telephone No.: 607-347-2498
Fax No.: 607-347-2606
with a copy to:
Huber Lawrence & Abell
605 Third Avenue, 27th Floor
New York, NY 10158
Attn.: Frank Lee, Esq.
Telephone No.: 212-455-5515
Fax No.: 212-661-5759
(b) if to GMP, to:
Green Mountain Power Corporation
163 Acorn Lane
Colchester, VT 05446
Attn.: Nancy Rowden Brock
Vice President, Chief Financial Officer & Treasurer
Telephone No.: 802-655-8401
Fax No.: 802-655-8406
with a copy to:
Hunton & Williams
200 Park Avenue
New York, NY 10166
Attn.: Edmond P. Murphy, Esq.
Telephone No.: 212-309-1205
Fax No.: 212-309-1100
15. No provision of this Option Agreement or the Agreement shall be amended,
waived or modified except by an instrument in writing signed by the parties
hereto. Failure to insist upon strict compliance with any of the terms,
covenants or conditions of this Option Agreement or the Agreement shall not be
deemed a waiver of such term, covenant or condition, nor shall any waiver or
relinquishment of any right or power hereunder or thereunder at any time or
times be deemed a waiver or relinquishment of such right or power at any other
time or times.
16. This Option Agreement and the Agreement may be executed in one or more
counterparts, all of which will be considered one and the same agreement and
will become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties. One or more counterparts of
this Option Agreement and the Agreement may be executed and delivered via
telecopier, with the intention that any such counterpart have the effect of an
original counterpart hereof and thereof.
17. If any provision of this Option Agreement or the Agreement, or the
application hereof or thereof, will for any reason and to any extent be invalid
or unenforceable, the remainder of this Option Agreement and the Agreement and
application of such provision to other persons or circumstances will be
interpreted so as reasonably to effect the intent of the parties hereto and
thereto. The parties further agree to replace such invalid or unenforceable
provision of this Option Agreement or the Agreement with a valid and enforceable
provision that will achieve, to the extent possible, the economic, business, and
other purposes of the invalid or unenforceable provision.
GREEN MOUNTAIN POWER CORPORATION
BY:_/s/Nancy Rowden Brock
------------------------
Nancy Rowden Brock
Accepted and Agreed this
11th day of September 2000
ENERGY EAST CORPORATION
BY:__/s/Robert D. Kump
---------------------
Robert D. Kump
<PAGE>
APPENDIX A
TERMS AND CONDITIONS OF AGREEMENT
AVAILABILITY
GENERATING UNIT MW CAPACITY MWH/YEAR DELIVERY POINT
Berlin GT 46.5 20,550 Berlin/VELCO Sub#5
Vergennes Diesel 2.0 900 Lines 4465/3322
Gorge GT 17.0 7,650 Lines 3321/3308
Essex Diesel 2.0 900 Lines 3302/3307
------------- --- --- ----------------
Total 67.5 30,000
The aggregate value of energy delivered in any calendar year shall not
exceed $2.1 million based on NEPOOL energy clearing prices.
If NEPOOL goes to locational based marginal pricing or a zonal price (the "New
NEPOOL Pricing Rules"), GMP shall have the right to terminate the Agreement by
paying the Termination Amount (reduced by the value of energy delivered by GMP
to EE from the Commencement Date through the NEPOOL Pricing Buy-Out Date, as
hereinafter defined) to EE by no later than the business day immediately prior
to the commencement of the New NEPOOL Pricing Rules (the "NEPOOL Pricing Buy-Out
Date"). If GMP does not pay the Termination Amount (reduced by the value of
energy delivered by GMP to EE from the Commencement Date through the NEPOOL
Pricing Buy-Out Date) to EE by the NEPOOL Pricing Buy-Out Date, the energy
clearing price will be based on the relevant zone in which the energy is
delivered.
Notwithstanding any provision of the Option Agreement or the Agreement, GMP
shall have the right to deliver energy from sources other than the above-listed
generating units if it so desires; provided, however, if the New NEPOOL Pricing
Rules become effective and GMP has not paid the Termination Amount (reduced by
the value of energy delivered by GMP to EE from the Commencement Date through
the NEPOOL Pricing Buy-Out Date) to EE by the NEPOOL Pricing Buy-Out Date, GMP
shall have the right to deliver energy from sources other than the above-listed
generating units only with the prior written approval of EE.
GMP shall make available 30,000 MWH/year as scheduled in the immediately
following paragraph.
EE shall be required to schedule 25 MW or 50 MW for 16 consecutive hours per day
by 12:00 noon on the previous weekday, excluding NERC holidays. EE shall have
discretion as to when it shall schedule the energy to be delivered by GMP to EE.
GMP and EE agree that the energy to be delivered by GMP to EE pursuant to the
Agreement shall be delivered on a firm basis.
The energy produced by any of the generating units listed above shall be
delivered by GMP to EE at the applicable delivery point listed above. If GMP
delivers energy from sources other than the above-listed generating units, the
delivery point shall be at NEPOOL PTF.
GMP and EE agree that there are no brokers involved in the delivery of energy by
GMP to EE pursuant to the Agreement.
