SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C 20549
FORM 10-K/A
For the fiscal year ended December 31, 1996 Commission file number 1-3632
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the fiscal year ended December 31, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to
INTERSTATE POWER COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 42-0329500
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1000 Main St., P.O. Box 769, Dubuque, IA 52004-0769
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code 319-582-5421
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
Common Stock Par Value $3.50 Per Share ) New York Stock Exchange
) Chicago Stock Exchange
) Pacific Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: N O N E
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X . No .
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. [ X ]
As of March 1, 1997 the aggregate market value of the voting stock held
by non-affiliates of the registrant was $281,817,111.
Indicate the number of shares outstanding of each of the issuer's
classes of common stock.
Shares Outstanding
March 1, 1997
Common Stock Par Value $3.50 Per Share 9,676,124
Documents incorporated by reference - portions of the Annual Report to
Stockholders for 1996 (Exhibit EX-13) are incorporated by reference in Parts
I, II and IV.
INTERSTATE POWER COMPANY
1996 Form 10-K Annual Report
Table of Contents
Page
Part I
Item 1. Business 1
General 1
Construction Program 1
Electric Operations 1
Sources and Availability of Raw Materials 2
Duration and Effect of Electric Patents and Franchises 3
Electric Seasonal Business 3
Working Capital Items 3
Electric Governmental Regulations 3
Electric Competitive Conditions 4
Other Sources of Power 6
Other Electric Operations 7
Gas Operations 7
Gas Sources and Availability of Raw Materials 8
Duration and Effect of Gas Patents and Franchises 9
Gas Seasonal Business 9
Gas Governmental Regulations 9
Gas Competitive Conditions 10
Dependence of Segment Upon a Single Customer 10
Research and Development 10
Electric and Magnetic Fields 10
Environmental Regulations 11
Employees 13
Accounting Matters 13
Item 2. Properties 13
Electric Properties 13
Generating Stations 14
Gas Properties 15
General Properties 15
Titles 15
Item 3. Legal Proceedings 15
Item 4. Submission of Matters to a Vote of Security Holders 16
Part II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters 16
Item 6. Selected Financial Data 18
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 18
Item 8. Financial Statements and Supplementary Data 18
Item 9. Disagreements on Accounting and Financial Disclosure 18
Part III
Item 10. Executive Officers of the Registrant 19
Item 11. Executive Compensation 19
Item 12. Security Ownership of Certain Beneficial Owners and
Management 19
Item 13. Certain Relationships and Related Transactions 20
Part IV
Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K 20
PART I
ITEM 1. BUSINESS
(General)
Interstate Power Company (the company), is a public utility
incorporated in 1925 under the laws of the State of Delaware. The
company is engaged in the generation, purchase, transmission,
distribution and sale of electricity. It owns property in portions
of twenty-five counties in the northern and northeastern parts of
Iowa, in portions of twenty-two counties in the southern part of
Minnesota, and in portions of four counties in northwestern Illinois.
The company also engages in the distribution and sale of natural gas
in Albert Lea, Minnesota; Clinton, Mason City and Clear Lake, Iowa;
Fulton and Savanna, Illinois and in a number of smaller Minnesota,
Iowa and Illinois communities, and in the transportation of natural
gas within Iowa, Illinois and Minnesota, and in interstate commerce.
For information pertaining to industry segments and lines of business
please refer to pages 27 and 28 of Exhibit EX-13 (the Annual Report
to Stockholders).
(Construction Program)
The table below shows actual construction expenditures for 1996 and
estimated expenditures for the period 1997 through 2001:
(Thousands of Dollars)
1996 Actual $31,000
1997 Est. $36,300
1998 Est. $45,000
1999 Est. $35,500
2000 Est. $38,400
2001 Est. $62,600
Current projections of construction expenditures for the 1997 and
1998 periods do not indicate any need for permanent financing.
Refer to (Environmental Regulations) on page 11 for additional
information on construction expenditures related to compliance with
the regulations of the Clean Air Act of 1990.
(Electric Operations)
Of the 234 communities served with electricity, Dubuque, Iowa, is the
largest with a population of approximately 58,000. Other major
cities served are Albert Lea, Minnesota and Clinton and Mason City,
Iowa. The remainder of the communities served are under 15,000
population, of which 193 are less than 1,000 population. As of
December 31, 1996, the company sells electricity at wholesale to 13
small communities which have municipal distribution systems, 8 of
which are total requirements customers, and 5 of which are partial
requirements customers. During 1996, 6 firm municipal electric
wholesale customers elected to purchase their requirements from other
utilities. In addition, two firm municipal customers have given the
company notice that they intend to purchase their requirements from
other utilities when their contracts expire later in 1997.
The estimated population of the company's service area is 340,000.
Six large industrial customers account for 31% of electric MWH sales.
A diverse mixture of residential, agricultural, and industrial
customers constitute the remainder of the company's 164,900 electric
customers.
There have been no significant changes since the beginning of the
fiscal year in the kind of products produced, services rendered,
markets or method of distribution.
The facilities owned or operated by the company include facilities
for the transmission of electric energy in interstate commerce or the
sale of electric energy at wholesale in interstate commerce.
(Sources and Availability of Raw Materials)
Electricity generated by the company in 1996 was 93.8% from coal as a
fuel, 0.2% from oil and 6.0% from natural gas. In 1997, the sources
of such generation are estimated to be: 96.6% from coal, 0.4% from
middle distillate oils, and 3.0% from natural gas. In 1996, 78.1% of
the company's coal requirements came from long-term contracts. In
1997, the company anticipates that 79.0% of its coal requirements
will be from long-term contracts. These contracts have expiration
dates ranging through August 31, 1999.
The company has a contract for 450,000 tons per year of 0.5% sulfur
Colorado coal for its Kapp #2, a 217 MW unit at Clinton, Iowa. The
contract continues through August 1999, and will allow the company to
comply with sulfur dioxide restrictions mandated by the Clean Air Act
Amendments of 1990.
The company has a contract for 500,000 tons per year for its 260 MW
Lansing #4 unit. Lansing Unit #4 requires low sulfur coal, which is
being purchased in the Powder River Basin of Wyoming. The coal is
shipped by rail and then transloaded to barge at facilities near
Keokuk, Iowa. A contract with Orba-Johnson Transshipment Company,
Inc., covers rail to barge coal transloading. Coal required for
generation at the Neal #4 unit, located near Sioux City, Iowa, and
the Louisa #1 unit, located near Muscatine, Iowa, is contracted for
by the operator, MidAmerican Energy Company, under terms of the Unit
Participation Agreements.
The company will purchase coal on an annual basis for the Dubuque
Power Plant and for Lansing Units #1, #2 and #3.
The company owns 120 coal cars and has an undivided ownership
(21.528%) in 372 coal cars in connection with Neal #4. The company
has an undivided ownership (4%) in 136 cars in connection with Louisa
#1. Coal requirements in 1997 will require using leased cars for the
Louisa #1 coal supply.
The company relies on spot purchases of oil. The company burned
795,043 gallons of No. 2 and No. 6 oil in 1996 and has 6,477,000
gallons of oil storage capacity in which to store adequate reserves
during periods of high demand on refineries.
The company presently has interruptible natural gas available for its
electric generation station at Clinton, Iowa through Natural Gas
Pipeline Company of America. At the Fox Lake and Dubuque plants,
interruptible gas is available through Peoples Natural Gas Company.
There is no assurance that interruptible gas will continue to be
available as fuel for electric generating plants.
(Duration and Effect of Electric Patents and Franchises)
The company owns no patents.
The company has, in the opinion of its legal counsel, all necessary
franchises or other rights from the incorporated communities and
other governmental subdivisions now served, required for the
operation of its properties. With 195 electric franchises in effect
in cities and villages, and with the majority of such franchises
being for a term of 25 years, the renewal of such franchises is a
continuing process. Twenty-three percent (45) of the franchises have
been secured since January 1, 1987.
(Electric Seasonal Business)
The effects of air conditioning in summer and heating in winter have
a seasonal impact. The air conditioning sales in the summer months
are primarily related to the residential and commercial customer
classes, however, the company does not meter air conditioning sales
separately. During the past five years, the highest and lowest
average residential consumption in the peak summer month has been 960
Kwh (August 1995) and 571 Kwh (June 1993), respectively, compared to
806 Kwh (January 1994) and 651 Kwh (February 1992) during the peak
winter month. Refer to the (Electric Governmental Regulations)
section for a discussion of Iowa and Minnesota seasonal rates.
(Working Capital Items)
Three of the company's generating stations are located on the
Mississippi River at Clinton, Dubuque and Lansing, Iowa. The coal
supply for the three plants is delivered by barge during the shipping
season (approximately April 1st to December 1st). Refinements to the
company's fuel delivery process have decreased the amount of
inventory required to carry the company over the winter. Coal
shipments to the company's Neal #4 and Louisa #1 generating stations
are able to continue through the winter as river transportation is
not involved.
(Electric Governmental Regulations)
In August 1993, the company implemented a revised electric tariff
structure. The new tariffs give greater weight to the demand
component of electric usage, and include a provision for a higher
rate during the summer cooling season (June-September), but did not
change the company's overall annual electric revenue.
The company filed an Iowa electric rate increase application in March
1995. The application requested an annual increase of $13.1 million.
Interim rates in an annual amount of $7.1 million were placed in
effect on June 29, 1995. A December 1995 Iowa Utilities Board (IUB)
order allowed an annual increase of $6.6 million.
The company filed a Minnesota electric rate increase application in
June 1995. The application requested an annual increase of $4.6
million (later adjusted by the company to $3.3 million). Interim
rates were not requested. On April 10, 1996, the Commission issued
an order allowing an increase in electric rates of $2.3 million.
Rates reflecting the increase were implemented in August 1996. A
Commission order issued December 16, 1996, allowed the company to
recover approximately an additional $830,000 in 1997 applicable to
the time period from the original order to the date when new rates
were implemented.
Minnesota and Iowa regulations require that utilities conduct energy
efficiency and demand side management programs. Demand side
management expenditures applicable to the Minnesota jurisdiction in
an annual amount of approximately $1.0 million are currently being
recovered through rates. Iowa jurisdiction tariffs which provide for
the recovery of demand side management costs incurred through
December 31, 1992, were placed in effect in October 1994. The Iowa
tariffs provide for the recovery of $6.7 million of costs over a four
year period. The company filed in 1996 for recovery of $18.5 million
of costs incurred from 1993 through 1995. A decision by the IUB is
pending. As of December 31, 1996 and 1995, the amounts deferred were
$29.9 and $23.1 million, respectively.
The company's electric rate tariffs provide for recovery of the cost
of fuel through energy adjustment clauses. These clauses are subject
to revision from time to time by the regulatory authority having
jurisdiction, and are designed to pass on to the consumer the
increases or decreases in the cost of fuel without formal rate
proceedings. Purchased capacity costs are not recovered from
customers through energy adjustment clauses, but rather must be
addressed in base rates in a formal rate proceeding. In the
company's Iowa electric jurisdiction, the company is required to
return to customers any jurisdictional revenue from capacity sales to
other utilities.
(Electric Competitive Conditions)
The Illinois Commerce Commission entered an order in 1993 determining
that the company, and not Jo-Carroll Electric Cooperative, had the
right to provide electric service to a freezer service plant near
East Dubuque, IL. Upon judicial review sought by Jo-Carroll, the
Illinois 15th Judicial Circuit Court in 1994 remanded the proceeding
to the Commission for further hearings. The Commission entered an
order on remand in 1996 further determining that the company, and not
Jo-Carroll, had the right to provide such service. Proceedings
brought by Jo-Carroll for judicial review of the Commission order on
remand are now pending before that court. The company continues to
serve the freezer service plant pursuant to Commission order.
The National Energy Policy Act of 1992 (Act) addresses several
matters designed to promote competition in the electric wholesale
power generation market, including mandated open access to the
electric transmission system. Current initiatives at the federal
level propose to allow customers to purchase energy from alternative
power suppliers and then pay the local utility a fee for delivery of
the energy. As legislation, regulations, and economic changes occur,
electric utilities will be faced with increasing pressure to become
more competitive. The company cannot predict the long-term
consequences of these competitive issues on its results of operation
or financial condition. The company has experienced difficulty in
retaining electric wholesale customers which take service under one
year contracts. To date, 6 of the company's 18 firm municipal
electric wholesale customers have elected to purchase their
requirements from other utilities. The net impact on the company's
financial condition is not expected to be significant as these
municipal customers are required to pay the company a wheeling fee
for use of the company's transmission system to transport power from
other utilities.
The company's industrial rates generally compare favorably with those
of neighboring utilities. For the company's six largest industrial
customers, the aggregate 1996 rate was approximately 3.4 cents per
KWH. This rate also compares favorably with that of potential
independent power producers and electric wholesale generators. The
company's favorable rates mitigate the incentive that these customers
might otherwise have to relocate, self-generate or purchase
electricity from other suppliers. The company anticipates that its
generating cost will decline slightly over the next several years as
long-term coal purchase and transloading contracts expire and are
renegotiated.
The company currently has no competition from the same type of public
utility service in the sale of electricity in any of the incorporated
communities it serves. In the States of Iowa, Illinois and
Minnesota, territorial laws govern the question of possible service
to customers in unincorporated areas, and such laws regulate
competition in such areas.
Laws and statutory regulations in the different states in which
service is rendered provide, under varying terms and conditions, for
municipal ownership of electric generating plants and distribution
systems. Certain franchises under which utility service is rendered
give the municipality the right to purchase the system of the company
within said municipality upon certain terms and conditions. However,
no such purchase option and no right of condemnation of the company's
properties has been exercised and no municipal generating plant or
municipal distribution system has been established in the territory
now served by the company during the past twenty-five years.
The Iowa Utilities Board, the Illinois Commerce Commission and the
Minnesota Public Utilities Commission have each approved tariffs that
allow the company to offer interruptible electric service for
qualifying customers. The availability of this service provides
price incentives to those customers having the ability to interrupt
their connected load. The primary objective of the incentives is to
reduce the system peak. The incentives also serve to retain existing
customers and attract new customers.
(Other Sources of Power)
The company has been a participant in the Mid-Continent Area Power
Pool (MAPP) since March 31, 1972. Membership in the Pool permits
sharing of reserve capacities of the members which affects reductions
in plant facilities investment for MAPP members. The minimum reserve
margin for participants in MAPP has been established at 15%.
A new Restated Agreement was approved by the MAPP membership and
after FERC review became effective November 1, 1996. MAPP is now
comprised of a Regional Transmission Committee (RTC), a Regional
Reliability Committee (RRC), and a Power and Energy Market (PEM).
With open membership MAPP has gained several new members and includes
investor- owned utilities, the United States (Western Area Power
Administration), a Canadian system, public power districts, rural
electric generating and transmission cooperative associations,
municipal electric supply agencies, municipal utilities, and power
marketers operating in Canada and the North Central region of the
United States. The Pool coordinates planning and reliability in
Minnesota, Wisconsin, Montana, Iowa, Nebraska, North Dakota, and
South Dakota. The Pool also provides a marketplace for economic
power supply in these States with an expanding influence in the
surrounding States through new utility and marketer membership. The
MAPP Agreement was filed with the FERC and accepted as an initial
rate filing effective December 1, 1972 and has been in operation
since that time. In 1995, MAPP implemented an intra-pool
transmission service fee. With an effective date of November 1, 1996
the Restated Agreement, in addition to opening membership,
implemented a revised rate schedule for transmission service for
transactions with terms of up to two years. The company has little
historical data to use as a basis for quantifying the potential
maximum intra-pool transmission service fees that are now required
under the Restated MAPP Agreement. Current projections of maximum
charges would be up to three times the level incurred prior to
approval of the Restated Agreement. MAPP is presently working to
develop a region-wide tariff for transactions longer than two years.
The company cannot project the effective date nor the level of
charges of that long term tariff.
In addition to the MAPP membership, the company has interchange
agreements with certain Missouri and Illinois utilities through 345
kV transmission systems. Future interconnections are planned to meet
transmission requirements for the next ten years.
In 1992, the company entered into three long-term power purchase
contracts with other utilities. The contracts provide for the
purchase of 255 MW of capacity through April 2001. Energy is
available at the company's option at approximately 100% to 110% of
the monthly production costs for the designated units. The three
power purchase contracts required capacity payments of $24.6 million
in each year 1994 - 1996. Over the remaining life of the contracts,
total capacity payments will be approximately $111 million. The
purchase power contract payments are not for debt service
requirements of the selling utility, nor do they transfer risk or
rewards of ownership.
In Iowa the IUB has concluded that the capacity purchases were
prudent and allowed recovery of costs in rates. The rate structure
approved by the MPUC does not provide for full recovery of purchased
power applicable to the Minnesota jurisdiction. The 1996 rate order
by the MPUC held that the company had 100 MW of excess capacity and
disallowed recovery of approximately $800,000 annually.
The company has not filed for rate recovery of approximately $2.5
million of the purchased power payments in the Illinois and FERC
jurisdictions. The company believes that increased margins from
sales growth in Illinois have largely offset the revenue deficiency.
The company has contracts with several governmental power agencies
whereby the company provides transmission service to their
customer/members. During 1996, the company received $1,419,838 for
transmission service to customers of the Western Area Power
Administration (WAPA), and $1,392,455 from Cooperative Power
Association (CPA) for wheeling power to nine of its member
distribution cooperatives.
The company's contract with CPA also provides for payment by the
company for mutually utilized facilities constructed and owned by
CPA. During 1996, these payments amounted to $321,066.
The company and Southern Minnesota Municipal Power Agency (SMMPA)
have agreed by contract to compensate each other if
over/underinvestment in the shared transmission system occurs.
During 1996, SMMPA made payments to the company in the amount of
$365,886.
The company's contract with Central Iowa Power Cooperative (CIPCO)
provides for compensation to each other if over/underinvestment in
the shared transmission system occurs. During 1996, the company paid
CIPCO $139,302 for underinvestment in the Liberty Substation
property.
(Other Electric Operations)
The 1996 peak of 996,378 KW occurred on August 6, 1996 between 2:00
and 3:00 in the afternoon. At the time of its 1996 peak the company
had a net effective electric capability of 1,310,600 KW. Of this net
effective capability, 903,300 KW was in steam generation, 113,500 KW
was in combustion turbine and the balance was in internal combustion
units and purchases. The previous historical system net peak load
for a sixty-minute period, of 1,010,821 KW, was reached on July 14,
1995.
(Gas Operations)
The company supplies retail gas service in 39 communities and serves
approximately 49,200 gas customers.
There have been no significant changes since the beginning of the
fiscal year in the kind of products produced, markets or methods of
distribution.
(Gas Sources and Availability of Raw Materials)
The company purchases pipeline transportation capacity from Northern
Natural Gas Company (NNG), Natural Gas Pipeline Company of America
(NGPL) and Northern Border Pipeline Company (NBPL). During 1996 the
company purchased gas from six non-traditional suppliers, i.e.
producers, brokers and marketers, at market responsive rates. FERC
Order 636 became effective in 1993. Order 636 unbundled pipeline
supply from its capacity. Subsequent to Order 636, FERC continues to
approve the tariffs of NNG and NGPL, but only with regard to capacity
and storage rates, subject to change as rate cases are filed.
Gas for the company's Mason City, Albert Lea and Savanna service
areas is transported by NNG under capacity contracts for 36,338 Mcf
daily, and for an additional 15,657 Mcf in the November to March time
frame. The majority, 26,999 Mcf, of the above capacities is from the
producing areas of Oklahoma and Texas, etc. These contracts expire
in October, 1999. Gas is supplied by producers, marketers and
brokers, as well as from storage services, to meet the peak heating
season requirements. The company had 15,170 Mcf/d of storage, with
the necessary pipeline capacity, available for the 1995-1996 heating
season.
Gas for its Clinton service area is transported by NGPL under
capacity contracts for 17,750 Mcf annually, with expiration dates of
November 30, 1998, February 28, 1999, and two as of November 30,
2001. This gas is supplied by producers, marketers and brokers. The
company supplements this capacity with storage gas, which has the
pipeline capacity embedded in its FERC approved rate. The company
had 10,000 Mcf/d of storage available for the 1995-1996 heating
season.
During 1996, the company utilized approximately 34.9% of its
annualized daily contract gas available from its firm suppliers. The
company's 1996 total throughput level of 35,706,261 Mcf represents a
1.1% increase over 1995. The total throughput was composed of sales
gas (26.3%) and customer transportation gas (73.7%).
During 1996, twenty-four of Interstate's customers transported a
total of 26,305,197 Mcf of their own gas over the company's pipeline
and distribution systems. This reflects an increase over 1994 and
1995 in the number of customers exercising the transportation option.
In 1994, eighteen of Interstate's customers transported a total of
24,498,793 Mcf, and in 1995, twenty-one customers transported a total
of 26,400,766 Mcf. The customer owned gas was delivered by
interstate pipeline companies for those customers' accounts to
Interstate's town border stations. The company subsequently
delivered the gas to customers under tariffs approved by respective
state commissions.
The company owns propane-air gas plants in Albert Lea, Minnesota and
Clinton and Mason City, Iowa. The daily output capacities are:
5,000 Mcf, 4,000 Mcf and 9,600 Mcf of propane-air mix gas
respectively.
The requirement for gas on the peak winter day of the 1995-1996
season was 126,312 Mcf, including both firm and interruptible
customers. This peak consisted of 40.5% jurisdictional sales gas,
2.4% spot gas, 39.0% customer purchased gas, 15.4% storage gas and
2.7% propane-air from the company's peak-shaving plant. The maximum
daily firm gas sales during the 1995-1996 season were as follows:
Albert Lea 15,770 Mcf; Savanna 3,268 Mcf; Clinton 26,265 Mcf; Mason
City 31,470 Mcf, or 60.8% of the peak winter day throughput.
(Duration and Effect of Gas Patents and Franchises)
The company owns no patents.
The company has, in the opinion of its legal counsel, all necessary
franchises or other rights from the incorporated communities and
other governmental subdivisions now served, required for the
operation of its properties. With 34 gas franchises in effect in
cities and villages, and with the larger majority of such franchises
being for a term of 25 years, the renewal of such franchises is a
continuing process. Thirty-eight percent (13) of the franchises have
been secured since January 1, 1987.
(Gas Seasonal Business)
The effects of heating sales to the residential and commercial
classes of customers have a significant seasonal impact on the
company's business. The heating sales in the winter months account
for 98% of the total annual sales to these classes of customers. The
average consumption for a residential customer during the peak winter
months is 18.8 Mcf compared to the average of 2.5 Mcf during the
summer. The average consumption for a commercial customer during the
peak winter months is 90.5 Mcf compared to the average of 12.9 Mcf
during the summer.
(Gas Governmental Regulations)
The company filed an Iowa gas rate increase application in August
1995. The application requested an annual increase of $2.2 million.
Interim rates in an annual amount of $1.3 million were placed in
effect on October 20, 1995. An IUB order granting an increase of
$1.1 million was received in August 1996.
The company filed a Minnesota gas rate increase application in May
1995. The application requested an annual increase of $2.4 million,
including a return on common equity of 11.75%. Interim rates in an
annual amount of $1.5 million were placed in effect in June 1995. On
February 29, 1996, the Minnesota Public Utilities Commission (MPUC)
issued an order allowing an increase in gas rates of $2.1 million.
Rates reflecting the increase were implemented in September 1996.
The Minnesota Department of Public Service (DPS) and the Office of
Attorney General (OAG) appealed the Commission's decision. The
appeal was denied by the Minnesota Court of Appeals on February 18,
1997. On March 21, 1997, the DPS and OAG appealed the decision of
the Court of Appeals (and the MPUC) to the Minnesota Supreme Court.
FERC order 636 provides a mechanism under which gas pipelines can
recover transition costs from local distribution companies. The
company estimates its remaining share of transition costs will
aggregate approximately $2.2 million payable in declining annual
installments from 1997 to 2006. The company is recovering transition
costs from customers.
(Gas Competitive Conditions)
The company has no competition from the same type of public utility
service in the sale of gas in any of the incorporated communities
serviced by it. Certain major industrial customers of the company
purchase their own gas supply from others and have that gas
transported by the company as described in the "Gas Sources and
Availability of Raw Materials" section.
One customer recently constructed independent distribution facilities
to bypass the company's system. The company is evaluating its
response to the bypass issue and developing policies to deal with
future competitive conditions which could result from potential
system bypass. The customers most likely to bypass the company's
distribution facilities are transportation customers. During 1996,
four of the 24 gas transportation customers chose to return as
jurisdictional sales customers. At the present time the company has
20 gas transportation customers with total revenues of $2.7 million
(6% of gas revenues and 0.8% of total company revenues). Over 60% of
the $2.7 million of revenues occurs in an area where the potential
for bypass is considered to be minimal. The loss of any one customer
would not have a material adverse impact on the company's financial
condition.
(Dependence of Segment Upon a Single Customer)
In 1996, 1995 and 1994, the company had no single customer or
industry for which electric and/or gas sales accounted for 10% or
more of the company's consolidated revenues. In 1996, the company's
three largest industrial customers accounted for 1,353,162,917 Kwh of
electric sales ($45,844,492) and 23,676,656 Mcf of gas sales and
transportation ($1,991,412). The company's largest gas customer,
which represents 32% of the company's total gas throughput, is
committed by contract for the next five years.
(Research and Development)
The company has no full-time professional employees engaged in
research activities and had no company-sponsored research programs
during 1996, 1995 and 1994. In the public utility industry, research
is commonly and traditionally done by manufacturers of equipment,
trade organizations to which the company belongs, and university
research programs. In 1996 approximately $782,299 was paid for
research activities compared with $1,054,925 in 1995 and $1,072,871
in 1994.
(Electric and Magnetic Fields)
Electric and magnetic fields, a topic that has been an issue for a
number of years, was clarified by a study of the National Research
Council. The committee spent two years analyzing about 500 studies
conducted since 1979, and concluded in its report issued in 1996 that
there was no evidence to clearly prove electric and magnetic fields
are harmful to health. The company expects there will be continuing
national debate as to whether or not electromagnetic fields are
harmful to health.
(Environmental Regulations)
The company is subject to various federal and state government
environmental regulations. The company meets or exceeds the existing
federal and state environmental regulations. The Federal Clean Air
Act Amendments of 1990 requires reductions in sulfur dioxide and
nitrogen oxide emissions from power plants. The most restrictive
provisions relate to sulfur dioxide emissions. Phase 1 of the Clean
Air Act became effective January 1, 1995, while Phase 2 is effective
January 1, 2000. To comply with Phase 1, the company switched to low
sulfur coal and installed low nitrogen oxide burners. Phase 2
regulations will affect approximately 87% of the company's current
generating capacity and will require capital, operating and
maintenance costs beyond those required for Phase 1.
The United States EPA and the states have promulgated discharge
limits necessary to meet water quality standards. A National
Pollutant Discharge Elimination System (NPDES) permit is required for
all discharges. The company has current NPDES permits for all
discharges and meets or is within the range of required discharge
limits.
Early this century, various utilities including the company operated
plants which manufactured gas for cooking and lighting. The
company's facilities ceased operations over 40 years ago when natural
gas pipelines were extended into the upper Midwest. Some of the
former gasification sites contain coal tar waste products which may
present an environmental hazard.
In 1957, the company purchased facilities in Mason City, Iowa, from
Kansas City Power & Light Company (KCPL) which included land
previously used for a coal gasification plant. Coal tar waste was
discovered on the property in 1984. In 1995, a settlement was
reached with KCPL for sharing of costs to remediate the site. As of
year end 1996, remediation of the site is almost complete. The
company's total share of cost from 1984 to 1996 at this site was $3.7
million.
The company formerly operated a manufactured gas plant in Rochester,
Minnesota. Soil remediation was completed in 1995 and post-
remediation groundwater monitoring is underway. From 1991 through
1996, the company incurred costs aggregating $6.8 million applicable
to the Rochester site.
The company has identified an additional seven sites, as described
below, which may contain hazardous waste from former coal
gasification plants and has recorded an estimated liability
applicable to the investigation of those sites. The company is
unable to determine, at this time, the extent, if any, of remediation
necessary at these seven sites.
In Minnesota, the company owned or operated four manufactured gas
plant sites: Albert Lea, Austin, New Ulm and Owatonna. Potentially
hazardous wastes associated with former coal gasification operations
have been identified at each site. The company incurred $0.2 million
in investigation costs for these sites in 1996, and $1.2 million
since the investigation process began.
In 1995 and 1996, the company received accounting orders from the
MPUC which allow the deferral of investigation and remediation costs
applicable to the Minnesota sites and further allows the company to
seek recovery in a rate case.
In addition, the company has identified three other sites: Galena and
Savanna, Illinois, and Clinton, Iowa. Potentially hazardous wastes
associated with former coal gasification operations have been
identified at these sites. Little or no activity is expected at the
Illinois sites in 1997. In 1996, $0.4 million was expensed for
investigation work expected at the Clinton site in 1997.
Previous actions by Iowa and Illinois regulators have permitted
utilities to recover prudently incurred unreimbursed investigation
and remediation costs.
In 1994, the company filed a lawsuit against certain of its insurers
to recover the costs of investigating and remediating the former coal
gasification plants. Seven insurers paid the company a total of $8.6
million in 1995 and 1996 in order to be discharged from the lawsuit.
As of December 31, 1996, $5.8 million is recorded as a deferred
credit pending regulatory disposition. The trial against the
remaining insurers is expected to begin in Iowa in 1997. Neither the
company nor its legal counsel is able to predict the amount of any
additional insurance recovery, and no potential recovery has been
recorded.
Under the Federal Comprehensive Environmental Response, Compensation
and Liability Act (CERCLA), a past waste generator can be designated
by the United States Environmental Protection Agency (U.S. EPA) as a
Potentially Responsible Party (PRP). Certain types of used
transformer oil (primarily those containing polychlorinated
biphenyls, or "PCBs") have been designated as hazardous substances by
the U.S. EPA.
In 1988, the U.S. EPA designated the company a PRP for the clean-up
of former salvage facilities operated by the Missouri Electric Works,
Inc. (MEW) in Cape Girardeau, Missouri. A portion of the
PCB-contaminated equipment found at the site was formerly owned by
the company. The company has notified the U.S. EPA that it disclaims
responsibility for the site, as the equipment was in proper operating
condition when sold by the company to a third party, which
subsequently made arrangements to transport this equipment to MEW.
The U.S. EPA has not responded to the company's disclaimer. The
company has not recorded any liability for the MEW site, and
management believes that it will be able to successfully defend
itself against any claims applicable to the site.
(Employees)
The company has 914 regular employees consisting of 882 full-time and
32 part-time employees.
(Accounting Matters)
Statements of Position (SOP) 96-1 on environmental liabilities was
issued by the American Institute of Certified Public Accountants in
1996. The company has reviewed the requirements of the SOP and is in
compliance with its provisions.
ITEM 2. PROPERTIES
The principal power plants and other materially important physical
properties of the company are maintained in accordance with sound
operating practices. Their general character and location are
described below:
(Electric Properties)
The company has been a participant in the Mid-Continent Area Power
Pool (MAPP) Agreement since March 31, 1972. As a part of this power
network the company is the owner of a 55.0 mile section of the 345 KV
transmission line extending from St. Louis, Missouri to Minneapolis,
Minnesota; a 15.5 mile section of the 345 KV transmission line
between Minneapolis, Minnesota and Kansas City, Missouri; a 5.0 mile
345 KV transmission line from near Clinton, Iowa to near Cordova,
Illinois; a 49.8 mile 345 KV transmission line from near Clinton,
Iowa to a substation south of Dubuque, Iowa; and three associated
345/161 KV substations.
The company's electric generating stations at year-end consist of six
steam plants, three combustion turbine stations, and five internal
combustion facilities. Pertinent information regarding each electric
generating station is shown on the following page:
INTERSTATE POWER COMPANY GENERATING STATIONS
Net
Generating Units December 31, 1996 Output
Nameplate Capability in KWH
Unit Capacity Year KW KW (000's)
Location Number KW Installed (Gross) (Net) 1996
STEAM:
Dubuque, IA 2 15,000 1929 82,500 78,000 179,734
3 25,000 1952
4 33,000 1959
Clinton, IA 1 15,000 1947 254,900 235,000 934,033
(M.L.Kapp Plt.) 2 212,284 1967
Lansing, IA 1 15,000 1948 337,800 320,000 914,062
2 11,500 1949
3 33,000 1957
4 252,649 1977
Sherburn, MN 1 11,500 1950 113,500 108,000 241,396
(Fox Lake Plt.) 2 11,500 1951
3 75,000 1962
Sioux City, IA 4* 125,924 1979 142,000 134,300 938,881
(Neal Unit #4)
Louisa County, IA 1** 27,400 1983 29,400 28,000 183,306
(Louisa Unit #1)
TOTAL STEAM 960,100 903,300 3,391,412
GAS TURBINE:
Montgomery, MN 1 26,535 1974 22,200 22,200 231
Sherburn, MN 4 26,535 1974 21,300 21,300 255
(Fox Lake Plt.)
Mason City, IA 1 37,520 1991 70,400 70,000 1,314
(Lime Creek Plt.) 2 37,520 1991
TOTAL GAS TURBINE 113,900 113,500 1,800
INTERNAL COMBUSTION:
Dubuque, IA 1 2,000 1966 4,600 4,600 (93)
2 2,000 1966
Hills, MN 1 2,000 1996 4,000 4,000 (140)
2 2,000 1960
Lansing, IA 1 1,000 1970 2,000 2,000 4
2 1,000 1971
New Albin, IA 1 685 1970 700 700 (51)
TOTAL INTERNAL COMBUSTION 11,300 11,300 (280)
TOTAL COMPANY 1,085,300 1,028,100 3,392,932
* Interstate owns 21.528% of a 584,931 KW unit operated by MidAmerican
Energy Company.
** Interstate owns 4.0% of a 685,000 KW unit operated by MidAmerican
Energy Company.
(Gas Properties)
The company owns and operates natural gas distributing systems in
Albert Lea, Minnesota; Savanna, Illinois; Clinton, Mason City and
Clear Lake, Iowa and in a number of smaller Minnesota, Illinois and
Iowa communities. At Albert Lea, the company owns 14 tanks with a
liquid propane storage capacity of 357,000 gallons; at Clinton, there
are 12 tanks with 306,000 gallons capacity and at Mason City, 22
tanks with 561,000 gallons capacity.
During 1996, in response to a request from the company's largest gas
customer to increase their firm contract from 35,000 MMBtu/d to
50,000 MMBtu/d, the company began construction of approximately 13.5
miles of 10" steel pipeline. The project was completed and placed
into service on November 25, 1996.
The company owns 47 gas regulating stations and approximately 992
miles of gas distribution mains.
(General Properties)
The company owns numerous properties in various parts of its
territory which are used for office, service and other purposes. The
most important of these are three General Office buildings in Dubuque
and the district office buildings at Clinton, Decorah, Dubuque, Mason
City and Oelwein, Iowa and Albert Lea, and Winnebago, Minnesota and
the distribution service buildings in each of those locations. The
company, as lessee, leases office space at various locations. The
company also leases a few small parcels of land for storage of poles
and miscellaneous temporary uses.
(Titles)
In the opinion of legal counsel for the company, the company has
satisfactory title to its properties for use in its utility
businesses subject only to permitted liens as defined in the Bond
Indenture and to minor defects and encumbrances customarily found in
cases of like size and character and which do not materially
interfere with the use of such properties.
Properties such as electric transmission and electric and gas
distribution lines are constructed principally on rights-of-way which
are maintained under franchise or held by easement only.
All properties of the company, other than "excepted property" as
defined in the Bond Indenture, are subject to the lien of the
company's Bond Indenture dated as of January 1, 1948, as
supplemented, securing the company's outstanding First Mortgage
Bonds.
ITEM 3. LEGAL PROCEEDINGS
Reference is made to "Electric Governmental Regulations", "Electric
Competitive Conditions" and "Environmental Regulations" under "Item
1. Business" for certain pending legal proceedings and proceedings
known to be contemplated by governmental authorities. Other than
these items, there are no material pending legal proceedings, or
proceedings known to be contemplated by governmental authorities,
other than ordinary routine litigation incidental to the business, to
which the company is a party or of which any of the company's
property is the subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There was no submission of matters to a vote of security holders
during the fourth quarter of the 1996 year.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
(Proposed Merger)
WPL Holdings, Inc. (WPLH), IES Industries, Inc. (IES) and Interstate
Power Company (IPC) have entered into an Agreement and Plan of Merger
dated November 10, 1995, as amended May 22, 1996 and August 16, 1996,
(Merger Agreement), which provides for the combination of all three
companies. The new company will be named Interstate Energy
Corporation (IEC). See Note 15 of "Notes to Consolidated Financial
Statements" for additional information. Detailed pro forma financial
statements for IEC are included at EX-99.1.
IES is a holding company headquartered in Cedar Rapids, Iowa, and is
the parent company of IES Utilities Inc. (IES Utilities) and IES
Diversified Inc. (IES Diversified). IES Utilities supplies electric
and gas service to approximately 336,000 and 176,000 customers,
respectively, in Iowa. IES Diversified and its principal
subsidiaries are primarily engaged in the energy-related,
transportation and real estate development businesses. WPLH is a
holding company headquartered in Madison, Wisconsin, and is the
parent company of Wisconsin Power and Light Company (WP&L) and
Heartland Development Corporation (HDC). WP&L supplies electric and
gas service to approximately 385,000 and 150,000 customers,
respectively, in south and central Wisconsin. HDC and its principal
subsidiaries are engaged in business in three major areas:
environmental, energy and affordable housing services.
The proposed merger, which will be accounted for as a pooling of
interests, was approved by the respective Boards of Directors and
shareholders on September 5, 1996. The merger is conditioned on the
receipt of approvals of several federal and state regulatory
agencies. The status of these approvals is as follows:
On January 15, 1997, the Federal Energy Regulatory Commission (FERC)
issued an order in which it accepted several provisions of the IEC
merger application without the need for public hearings.
Specifically, the FERC found that the IEC merger does not pose any
major concerns with respect to market concentration and that the
legal structure proposed by the company does not impair FERC's
ability to regulate. The FERC has set limited issues for hearing,
including generation market power in the transmission-constrained
Wisconsin Upper Michigan System (WUMS) subregion. The FERC has also
ordered the merger partners to negotiate a ratepayer protection
mechanism with those intervenors who are not satisfied with the four
year rate freeze proposed in the application. If an agreement
between the merger partners and the intervenors is not reached, the
FERC will decide the issue. A final decision on the merger is
expected to be issued by the FERC by the end of 1997.
IES and IPC announced in 1996 their intentions to hold retail
electric prices to their current levels until at least January 1,
2000. The companies made the proposal as part of their testimony in
the IEC merger application filed with the Iowa Utilities Board (IUB).
The proposal excludes price changes due to government-mandated
programs, such an energy efficiency cost recovery, or unforeseen
dramatic changes in operations. The IUB approval is expected by the
end of 1997.
In March of 1996, an application requesting approval of the merger
was filed with the Public Service Commission of Wisconsin (PSCW). On
February 13, 1997, the PSCW voted to delay hearings on the proposed
merger. The hearings have been rescheduled for June of 1997 with a
decision anticipated by the end of the third quarter of 1997.
Legislation was introduced in the Wisconsin State Senate in February
1997 which could delay the PSCW approval of the merger. IPC cannot
predict the outcome of such legislation.
In March of 1996, an application requesting approval of the merger
was also submitted to the Illinois Commerce Commission (ICC). The
ICC conducted hearings on November 12, 1996, and final briefs were
filed on December 23, 1996. A decision is pending.
On January 15, 1997, the Minnesota Public Utilities Commission (MPUC)
announced that it had approved the IEC merger without hearings,
subject to a number of technical conditions, which are not opposed by
the merger partners. Included in these conditions is a four year
rate freeze for IEC's electric and gas customers in the state of
Minnesota.
An application to establish IEC as a registered holding company under
the Public Utility Holding Company Act of 1935 (1935 Act) was
submitted to the Securities and Exchange Commission (SEC). The
period for comments by interested parties was closed on November 5,
1996. A decision on the application is pending. The SEC
historically has interpreted the 1935 Act to preclude registered
holding companies, with limited exceptions, from owning both electric
and gas utility systems. Although the SEC has recently recommended
that registered holding companies be allowed to hold both gas and
electric utility operations if the affected states agree, it remains
possible that the SEC may require as a condition to its approval of
the proposed merger that IPC, WPLH and IES divest their gas utility
properties, and possibly certain non-utility ventures of IES and
WPLH, within a reasonable time after the effective date of the
proposed merger.
An impact review of the merger on market power, which is required by
the Hart-Scott-Rodino Antitrust Improvements Act, was completed by
the U.S. Department of Justice (DOJ). All requirements of this
review have been satisfied. If the merger is not consummated before
July 7, 1997, the merger partners will be required to submit new
information to the DOJ. The merger partners do not currently believe
that a new submission to the DOJ will result in a delay in the
consummation of the transaction.
An application was filed with the Nuclear Regulatory Commission (NRC)
to approve the transfer of the licenses of IES's Duane Arnold Energy
Center (DAEC) nuclear facility and WP&L's co-owned Kewaunee Nuclear
Power Plant to IEC. The application, which was filed on October 1,
1996, is pending.
For information pertaining to common stock market data required by
Item 201 of Regulation S-K please refer to page 32 of Exhibit EX-13
(the Annual Report to Stockholders).
ITEM 6. SELECTED FINANCIAL DATA
For information pertaining to selected financial data required by
Item 301 of Regulation S-K please refer to page 31 of Exhibit EX-13
(the Annual Report to Stockholders).
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
For information pertaining to management's discussion and analysis
required by Item 303 of Regulation S-K please refer to pages 1
through 8 of Exhibit EX-13 (the Annual Report to Stockholders).
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Financial statements and supplementary data incorporated by reference
to Exhibit EX-13 (the Annual Report to Stockholders for 1996):
Statements of Income Page 9
Balance Sheets Pages 10 & 11
Statements of Cash Flows Page 12
Statements of Capitalization Page 13
Statements of Retained Earnings Page 14
Notes to Financial Statements Pages 15 - 28
Independent Auditors' Report Page 29
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Name Age Offices Held Past 5 Years
M. R. Chase 58 5-7-91 - Vice President-Power Production
7-1-95 - Executive Vice President
10-1-96 - President & Chief Operating
Officer
1-1-97 - President & Chief Executive
Officer
R. R. Ewers 52 5-1-90 - Vice President-Administrative
Services
7-1-95 - Vice President-Administration
D. E. Hamill 60 9-1-80 - Vice President-Budgets &
Regulatory Affairs
J. C. McGowan 59 2-1-89 - Secretary & Treasurer
R. P. Richards 60 1-1-91 - Vice President-Gas Operations
D. R. Sharp 56 7-1-95 - Vice President-Power Production
1-1-96 - Vice President-Engineering
W. C. Troy 58 5-1-86 - Controller
All officers are elected and serve as such until the next annual
meeting of directors. There are no arrangements or understandings
with respect to election of any person as an officer.
For information pertaining to directors, and other data required by
Items 401 and 405 of Regulation S-K, refer to pages 2 through 5 of
the company's Official Proxy Statement to be filed with the
Securities and Exchange Commission on March 27, 1997.
ITEM 11. EXECUTIVE COMPENSATION
Refer to information on pages 7 through 11 of the company's Official
Proxy Statement filed with the Securities and Exchange Commission to
be filed with the Securities and Exchange Commission on March 27,
1997.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Refer to information on page 6 of the company's Official Proxy
Statement filed with the Securities and Exchange Commission to be
filed with the Securities and Exchange Commission on March 27, 1997.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions with Management and Others:
In 1996 there were no transactions and there are presently proposed
no transactions with management, to which the company or its
subsidiary was or is to be a party, of the character as to which
answer is called for in response to Item 404(a) of Regulation S-K.
Indebtedness of Management:
No director or officer, or nominee for election as a director, or any
associate of any thereof, was indebted to the company or its
subsidiary during 1996, as to which answer is called for in response
to Item 404(b) of Regulation S-K.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) List of documents filed as part of this report:
1. The financial statements, including supporting schedules,
are listed in the Index to Financial Statements, Schedules
and Exhibits filed as part of this Annual Report.
2. Exhibits which are filed herewith, including those incor-
porated by reference are listed in the Index to Financial
Statements, Schedules and Exhibits filed as part of this
Annual Report.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed with the Securities and
Exchange Commission during the last quarter of 1996.
(c) Refer to Index to Exhibits commencing on page 22.
(d) The Unaudited Pro Forma Combined Financial Information of
Interstate Energy Corporation is filed herewith as EX-99.1.
INDEX TO FINANCIAL STATEMENTS, SCHEDULES AND EXHIBITS
The 1996, 1995 and 1994 financial statements, together with the
Independent Auditors' Report thereon of Deloitte & Touche LLP, dated
January 30, 1997, appearing on pages 9 through 29 of Exhibit EX-13
(the 1996 Annual Report to Stockholders), are incorporated in this
Form 10-K Annual Report. The following additional data, as attached
on EX-23 and S-1 should be read in conjunction with the financial
statements in such Exhibit EX-13.
Schedules and other historical financial information not included with
this additional financial data have been omitted because they are not
applicable or the required information is shown in the financial
statements or notes thereto.
Page or Exhibit Reference
Exhibit EX-13
Form (Annual Report to
10-K Stockholders)
Consent of Independent Auditors EX-23
Financial Statements:
Statements of Income for the years ended
December 31, 1996, 1995 and 1994 9
Balance Sheets as of December 31, 1996 and 1995 10 & 11
Statements of Cash Flows for the years ended
December 31, 1996, 1995 and 1994 12
Statements of Capitalization as of December 31,
1996 and 1995 13
Statements of Retained Earnings for the years
ended December 31, 1996, 1995 and 1994 14
Notes to Financial Statements 15 - 28
Selected Financial Data 31
Common Stock Market Data 32
Management's Discussion and Analysis 1 - 8
Schedule II: Valuation and Qualifying Accounts
and Provisions S-1
Report of Independent Auditors 28
INDEX TO FINANCIAL STATEMENTS, SCHEDULES AND EXHIBITS (CONT'D.)
Exhibit
Number Description of Exhibit
2.1 Agreement and Plan of Merger, dated as of November 10, 1995, by
and among WPL Holdings, Inc., IES Industries Inc., Interstate
Power Company and AMW Acquisition, Inc. (incorporated by
reference to Exhibit 2.1 to the Form 8-K of Interstate Power
Company, a Delaware corporation, dated November 10, 1995). **
2.2 Amendment No. 1 to the Agreement and Plan of Merger and Stock
Option Agreements, dated May 22, 1996, by and among WPL
Holdings, Inc., IES Industries Inc., Interstate Power Company,
AMW Acquisition, Inc., WPLH Acquisition Co. and Interstate Power
Company (incorporated by reference to Exhibit 2.1 to the Form 8-
K of Interstate Power Company, a Delaware corporation, dated May
22, 1996). **
2.3 Amendment No. 2 to the Agreement and Plan of Merger, as amended,
dated August 16, 1996, by and among WPL Holdings, Inc., IES
Industries, Inc., Interstate Power Company, WPLH Acquisition Co.
and Interstate Power Company (incorporated by reference to
Exhibit 2.1 to the Form 8-K of Interstate Power Company, a
Delaware corporation, dated August 23, 1996). **
3.(i).1 Restated Certificate of Incorporation of Interstate Power
Company as originally filed April 18, 1925 and as amended
effective through October 21, 1993. *
3.(i).2 Certificate of Amendment to the Restated Certificate of
Incorporation of Interstate Power Company, effective March 4,
1997. *
3.(i).3 IPC Development Co. Articles of Incorporation, State of Iowa
dated May 24, 1978 (physically filed in Form 10-K for the Year
Ended December 31, 1978 as EXHIBIT G). **
3.(ii).1 By-Laws of Interstate Power Company as adopted April 20, 1925
and as amended October 1, 1996 (filed in Form 10-Q for the
Quarter Ended September 30, 1996 as EX-3.(ii)). **
3.(ii).2 IPC Development Co. By-Laws adopted May 10, 1978 (physically
filed in Form 10-K for the Year Ended December 31, 1978 as
EXHIBIT H). **
4.1 The Original through the Nineteenth Supplemental Indentures of
Interstate Power Company to The Chase Manhattan Bank and Carl E.
Buckley and C. J. Heinzelmann, as Trustees, dated January 1,
1948 securing First Mortgage Bonds (physically filed in
Registration Statement No. 33-59352 dated March 11, 1993 under
the Securities Act of 1933 as Exhibits (4)(b) through (4)(t)).
**
* Filed Herewith
** Previously Filed
Exhibit
Number Description of Exhibit
4.2 Twentieth Supplemental Indenture of Interstate Power Company to
The Chase Manhattan Bank and C. J. Heinzelmann, as Trustees,
dated May 15, 1993 (physically filed in Registration Statement
No. 33-59352 dated March 11, 1993 under the Securities Act of
1933 as Exhibit (4)(u)). **
4.3 Dividend Reinvestment and Stock Purchase Plan filed on
Form S-3 covering the registration of 500,000 shares of Common
Stock, dated May 11, 1993 (physically filed in Registration
Statement No. 33-62644 under the Securities Act of 1933). **
4.4 Post-Effective Amendment No. 1 to Registration Statement No. 33-
62644, Dividend Reinvestment and Stock Purchase Plan, providing
for expansion of the safekeeping option in the Plan, dated
December 19, 1996 and effective December 31, 1996 (filed in Form
S-3 on December 19, 1996). **
4.5 Guaranty Agreement between Interstate Power Company and Commerce
Union Bank as Trustee dated as of December 1, 1973 (City of
Dubuque, Iowa $4,400,000 Pollution Control Revenue Bonds)
(physically filed in Registration Statement No. 2-50685 as
EXHIBIT 5-GG.1a). **
4.6 Security Agreement dated as of December 1, 1973 between
Interstate Power Company (Guarantor) and Commerce Union Bank
(Trustee) (City of Dubuque, Iowa $4,400,000 Pollution Control
Revenue Bonds) (physically filed in Registration Statement No.
2-50685 as EXHIBIT 5-GG.1b). **
4.7 Guaranty Agreement between Interstate Power Company and Commerce
Union Bank as Trustee dated as of December 1, 1973 (Town of
Lansing, Iowa $3,700,000 Pollution Control Revenue Bonds)
(physically filed in Registration Statement No. 2-50685 as
EXHIBIT 5-GG.2a). **
4.8 Security Agreement dated as of December 1, 1973 between
Interstate Power Company (Guarantor) and Commerce Union Bank
(Trustee) (Town of Lansing, Iowa $3,700,000 Pollution Control
Revenue Bonds) (physically filed in Registration Statement No.
2-50685 as EXHIBIT 5-GG.2b). **
4.9 Guaranty Agreement between Interstate Power Company and Commerce
Union Bank as Trustee dated as of December 1, 1973 (City of
Clinton, Iowa $900,000 Pollution Control Revenue Bonds)
(physically filed in Registration Statement No. 2-50685 as
EXHIBIT 5-GG.3a). **
4.10 Security Agreement dated as of December 1, 1973 between
Interstate Power Company (Guarantor) and Commerce Union Bank
(Trustee) (City of Clinton, Iowa $900,000 Pollution Control
Revenue Bonds) (physically filed in Registration Statement No.
2-50685 as EXHIBIT 5-GG.3b). **
* Filed Herewith
** Previously Filed
Exhibit
Number Description of Exhibit
4.11 Registration Statement No. 33-32529 on Form S-8 covering the
registration of $10,000,000 of participation interests,
including the registration of up to 402,010 shares of Common
Stock, par value $3.50 per share, of Interstate Power Company
pursuant to its 401(k) Plan (filed with the Commission on
December 12, 1989). **
4.12 Statement regarding availability upon request of Loan Agreement
and Pollution Control Indenture (filed in Form 10-K for the Year
Ended December 31, 1994 as EX-4). **
10.1 P Gas Portfolio Management and Sales Contract between Interstate
Power Company and MidCon Gas Services Corp. filed under Form SE
as confidential and non-public. *
10.2 Mid-Continent Area Power Pool (MAPP) Restated Agreement dated
January 12, 1996. *
10.3 Mid-Continent Area Power Pool (MAPP) Center Agreement dated
December 2, 1996. *
10.4 Participation Power and Block Energy Agreement between United
Power Association and Interstate Power Company, dated August 7,
1991 (physically filed in Form 10-K for the Year Ended December
31, 1991 as EXHIBIT F). **
10.5 Unit Participation Power Agreement between Iowa Public Service
Company and Interstate Power Company, dated August 12, 1991
(physically filed in Form 10-K for the Year Ended December 31,
1991 as EXHIBIT G). **
10.6 Unit Participation Power Agreement between Minnesota Power and
Interstate Power Company, dated August 14, 1991 (physically
filed in Form 10-K for the Year Ended December 31, 1991 as
EXHIBIT H). **
10.7 Mid-Continent Area Power Pool Agreement Amendment dated January
1, 1991 (physically filed in Form 10-K for the Year Ended
December 31, 1991 as EXHIBIT I). **
10.8 Mid-Continent Area Power Pool Coordination Center Agreement
dated September 18, 1990 (physically filed in Form 10-K for the
Year Ended December 31, 1991 as EXHIBIT J). **
10.9 Coal Transportation Agreement ICC-BN-C-2536 between Interstate
Power Company and Burlington Northern Railroad Company dated
February 21, 1990 (physically filed in Form 10-K for the Year
Ended December 31, 1990 as EXHIBIT D). **
* Filed Herewith
** Previously Filed
Exhibit
Number Description of Exhibit
10.10 Third Amended and Restated Coal Supply Agreement between
Interstate Power Company and AMAX Coal Company and a fully
executed Release and Discharge Agreement for the previous
Agreement and Amendments. Both dated April 9, 1990 (physically
filed in Form 10-K for the Year Ended December 31, 1990 as
EXHIBIT E). **
10.11 Coal Transshipment Agreement by and between Interstate Power
Company and Orba-Johnson Transshipment Company dated December
20, 1979 (physically filed in Form 10-K for the Year Ended
December 31, 1979 as EXHIBIT F, and filed in Form 10-K/A for the
Year Ended December 31, 1995 as EX-10.b). **
10.12 Coal Transloading Agreement between Interstate Power Company and
Orba-Johnson Transshipment Company dated December 20, 1995
(filed in Form 10-K/A for the Year Ended December 31, 1995 as
EX-10.a). **
10.13 Barge Transportation Agreement dated March 1, 1990 between
Orgulf Transport Company and Interstate Power Company for the
shipment of coal from the Orba-Johnson Transshipment Terminal
near Keokuk, Iowa to the Unit 4 power-generating facility at
Lansing, Iowa (physically filed in Form 10-K for the Year Ended
December 31, 1990 as EXHIBIT J). **
10.14 Coal Supply Agreement between Interstate Power Company and
Powderhorn Coal Company filed under Form SE as confidential and
non-public (filed in Form 10-K for the Year Ended December 31,
1994 as EX-10.a). **
12 Statement re Computation of Ratios. *
13 The Company's 1996 Annual Report to Stockholders. *
23 Consent of Independent Auditors. *
27 Financial Data Schedule (required for electronic filing only in
accordance with Item 601 (c) (1) of Regulation S-K). *
99.1 Unaudited Pro Forma Combined Financial Information of
Interstate Energy Corporation. *
99.2 Summary Plan Description for the Interstate Power Company 401(k)
Plan dated November 30, 1993 (filed in Form 10-K for the Year
Ended December 31, 1993 as EX-99.c). **
99.3 Interstate Power Company Irrevocable Trust Agreement dated April
30, 1990 (filed in Form 10-K for the Year Ended December 31,
1993 as EX-99.f). **
* Filed Herewith
** Previously Filed
Exhibit
Number Description of Exhibit
99.4 Interstate Power Company Amended Deferred Compensation Plan as
amended through January 30, 1990 (filed in Form 10-K for the
Year Ended December 31, 1993 as EX-99.e). **
99.5 Interstate Power Company Supplemental Retirement Plan as amended
and restated November 10, 1995 (filed in Form 10-K/A for the
Year Ended December 31, 1995 as EX-99.b). **
* Filed Herewith
** Previously Filed
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
INTERSTATE POWER COMPANY
Date March 20, 1997 By /s/ M. R. CHASE
(M. R. Chase,
President and Chief
Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.
Signature Title
/s/ M. R. CHASE President and Chief Executive
(M. R. Chase) Officer (Principal Executive
Officer and Principal
Financial Officer)
/s/ W. C. TROY Controller (Principal
(W. C. Troy) Accounting Officer)
/s/ W. H. STOPPELMOOR Chairman of the Board
(W. H. Stoppelmoor
/s/ A. B. ARENDS Director
(A. B. Arends)
/s/ J. E. BYRNS Director
(J. E. Byrns)
/s/ A. D. CORDES Director
(A. D. Cordes)
/s/ J. L. HANES Director
(J. L. Hanes)
/s/ G. L. KOPISCHKE Director
(G. L. Kopischke)
Date March 20, 1997
SCHEDULE II
INTERSTATE POWER COMPANY
VALUATION AND QUALIFYING ACCOUNTS AND PROVISIONS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(Thousands of Dollars)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
ADDITIONS
BALANCE AT CHARGED CHARGED DEDUCTION BALANCE
BEGINNING TO TO OTHER FROM AT END
DESCRIPTION OF YEAR INCOME ACCOUNTS RESERVES OF YEAR
YEAR ENDED DEC. 31, 1996
Valuation account
deducted from caption
of which it applies -
accumulated provision
for doubtful accounts $200 $277 $143 (a) $420 (b) $200
Provision for medical
benefits, injuries
and damages $4,682 $6,469 $1,215 $9,341 (c) $3,025
YEAR ENDED DEC. 31, 1995
Valuation account
deducted from caption
of which it applies -
accumulated provision
for doubtful accounts $200 $169 $144 (a) $313 (b) $200
Provision for medical
benefits, injuries
and damages $4,671 $5,729 $1,081 $6,799 (c) $4,682
YEAR ENDED DEC. 31, 1994
Valuation account
deducted from caption
of which it applies -
accumulated provision
for doubtful accounts $203 $243 $148 (a) $394 (b) $200
Provision for medical
benefits, injuries
and damages $4,105 $7,240 $2,757 $9,431 (c) $4,671
(a) Recoveries on accounts previously written off.
(b) Accounts written off.
(c) Claims and damages paid and expenses in connection therewith.
S-1 (28)
DELOITTE & TOUCHE LLP
INDEPENDENT AUDITORS' REPORT
Interstate Power Company:
We have audited the financial statements of Interstate Power Company as of
December 31, 1996 and 1995, and for each of the three years in the period
ended December 31, 1996, and have issued our report thereon dated January
30, 1997; such financial statements and report are included in your 1996
Annual Report to Stockholders and are incorporated herein by reference.
Our audits also included the financial statement schedule of Interstate
Power Company, listed in Item 14. This financial statement schedule is
the responsibility of the Company's management. Our responsibility is to
express an opinion based on our audits. In our opinion, such financial
statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly, in all material respects,
the information set forth therein.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Davenport, Iowa
January 30, 1997
INDEX OF EXHIBITS FILED HEREWITH:
EX-3.(i).1 Restated Certificate of Incorporation of Interstate Power
Company as originally filed April 18, 1925 and as amended
effective through October 21, 1993.
EX-3.(i).2 Certificate of Amendment to the Restated Certificate of
Incorporation of Interstate Power Company, effective
March 4, 1997.
EX-10.1 P Gas Portfolio Management and Sales Contract between
Interstate Power Company and MidCon Gas Services Corp.
filed under Form SE as confidential and non-public
EX-10.2 Mid-Continent Area Power Pool (MAPP) Restated Agreement
dated January 12, 1996
EX-10.3 Mid-Continent Area Power Pool (MAPP) Center Agreement
dated December 2, 1996
EX-12 Statement re Computation of Ratios
EX-13 The Company's 1996 Annual Report to Stockholders
EX-23 Consent of Independent Auditors
EX-27 Financial Data Schedule (required for electronic filing
only in accordance with Item 601 (c) (1) of Regulation
S-K)
EX-99.1 Unaudited Pro Forma Combined Financial Information of
Interstate Energy Corporation
EX-3.(i).1
RESTATED CERTIFICATE OF INCORPORATION
OF INTERSTATE POWER COMPANY
Interstate Power Company, a corporation organized and existing
under the laws of the State of Delaware (the "Corporation") does hereby
certify as follows:
The original Certificate of Incorporation was filed with the
Secretary of State of Delaware on April 18, 1925. The first Restated
Certificate of Incorporation was duly adopted by the Board of Directors
of Interstate Power Company on December 8, 1988, in accordance with
Section 245 of the General Corporation Law of the State of Delaware and
was filed on March 16, 1989. The first Restated Certificate of
Incorporation restated, integrated and further amended the Certificate
of Incorporation of this Corporation by deleting Article SIXTH of the
Certificate of Incorporation, deleting the second paragraph of Article
SIXTEENTH of the Certificate of Incorporation, renumbering all Articles
following Article FIFTH, so Article SEVENTH became Article SIXTH, etc.,
through Article SEVENTEENTH, which became SIXTEENTH, and changed the
reference in what was Article SEVENTEENTH to read "Article SIXTEENTH",
in lieu of "Article SEVENTEENTH", deleted the signature lines of
original subscribers, and original attestation and original acknowledg-
ment and substituted then current signature references and acknowledge-
ment, and attestation, and eliminated and integrated all Certificates
described in Section 104 of the Delaware Corporation Law, which amended
the Certificate of Incorporation through July 5, 1988.
Pursuant to the provisions of Sections 242 and 245 of Title 8 of
the Delaware Code Annotated, the stockholders of the Corporation duly
adopted the second Restated Certificate of Incorporation. The second
Restated Certificate of Incorporation, adopted May 7, 1991, (i) under
Article FOURTH, increased the number of authorized shares of Common
Stock to 30,000,000, par value $3.50, from 15,000,000; (ii) under
Article FOURTH, increased the total shares of all classes from
19,000,000 to 34,000,000; (iii) made inapplicable cumulative voting
provisions in paragraph D of Article FOURTH; (iv) deleted from Article
FIFTH a minimum number of shares requirement; added a "fair price"
provision to insure fairness to all stockholders in the event of
unsolicited takeover actions, including provision for an 80% shareholder
vote for approval of a Business Combination; (v) amended Article EIGHTH
to allow removal of directors by stockholders (and not by directors) and
only for cause; to add provisions for filling of vacancies and newly
created directorships, and to adopt a staggered board of directors,
divided into three classes and serving three year terms with only one
class of directors to be elected at each annual meeting of stockholders
(subject to a possible shortening of the elected term upon attainment of
retirement age or relocation from the Company's service area).
Pursuant to the provisions of Section 245 of Title 8 of the
Delaware Code Annotated, the Board of Directors of the Corporation have
duly adopted the following third Restated Certificate of Incorporation.
The third Restated Certificate of Incorporation restates and integrates
the provisions of the second Restated Certificate of Incorporation of
May 7, 1991 as heretofore amended or supplemented and effects the
following further amendments thereto:
The provisions of Article FOURTH have been amended to add the
designation of 6.40% Preferred Stock, $50 par value, created May 18,
1993, and to delete therefrom the designations of the 8%, 9% and 9%
Series A Preferred Stocks, and the designation of the $2.28 Preference
Stock, since the remaining shares of the entire 140,000 shares of 8%
Preferred Stock, of the entire 137,228 shares of 9% Preferred Stock, of
the entire 200,000 shares of 9% Series A Preferred Stock, all $50 par
value, and all of the 400,000 shares of the $2.28 Preference Stock, $1
par value, were redeemed effective June 30, 1993. In addition, the
references to Paragraphs VIII and X in designations of the 4.36%, 4.68%,
and 7.76% Preferred Stock have been changed to read Paragraphs XX and
XXIII, respectively, and appropriate references to Restated Certificate
of Incorporation, in lieu of Certificate of Incorporation, have been
made, where applicable.
The text of the Restated Certificate of Incorporation as amended or
supplemented heretofore is hereby restated without further amendments or
changes, except as noted in this Restated Certificate of Incorporation
above, to read as follows:
FIRST: The name of this Corporation is
INTERSTATE POWER COMPANY
SECOND: Its registered office in the State of Delaware is located
at Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle. The name of the registered agent at
such address is The Corporation Trust Company.
THIRD: The nature of the business or objects or purposes proposed
to be transacted, promoted or carried on by this Corporation are as
follows:--
(a) To purchase or otherwise acquire, own, operate and dispose
of all or any part of the business and properties of Interstate
Power Company, a Wisconsin corporation; to make payment therefor by
the issuance of preferred and common stock of this Corporation or
in any other manner permitted by law, and in connection therewith
to assume any or all the bonds, mortgages, franchises, leases,
contracts, indebtedness, liabilities and obligations of said
corporation.
(b) To generate, produce, buy, or in any manner acquire, and
to sell, dispose of and distribute electricity for light, heat,
power and other purposes and to carry on the business of
furnishing, supplying and vending light, heat, power and water and
any and all businesses incident thereto, and to build, construct,
develop, improve, acquire, hold, own, lease, maintain and operate
plants, facilities and works for the manufacture, generation,
production, accumulation, transmission and distribution of electric
energy, gas and steam, for light, heat, power and other purposes,
and to acquire, construct, maintain and operate systems of water
works for the supply of water.
(c) To build, construct, develop, improve, acquire, hold, own,
lease, maintain and operate, by electricity, or other power, street
railways and interurban railways for the transportation of
passengers, mail, express, merchandise or other freight in any part
of the world, except that this Corporation shall not have power to
construct, maintain or operate railroads or railways within the
State of Delaware.
(d) To produce, mine, buy, sell, store, market, deal in and
prospect for coal and minerals of all kinds and the products and
by-products thereof.
(e) To organize, incorporate, reorganize, finance and to aid
and assist financially or otherwise, companies, corporations, joint
stock companies, syndicates, partnerships and associations of all
kinds, particularly those engaged in operating public utilities,
and to underwrite, subscribe for and endorse the bonds, stocks,
securities, debentures, notes or undertakings of any such company,
corporation, joint stock company, syndicate, partnership or
association, and to make any guaranty in connection therewith or
otherwise for the payment of money or for the performance of any
obligation or undertaking, and to do any and all things necessary
or convenient to carry any of such purposes into effect.
(f) To carry on the business of engineering and contracting in
all of its branches; to appraise, value, design, build, construct,
enlarge, develop, improve, extend and repair light, heat, power,
transmission and hydraulic plants, electrical works, machinery and
appliances, telegraph and telephone lines, dams, reservoirs,
canals, bridges, piers, docks, mines, shafts, tunnels, wells, water
works, street railways, interurban railways, railways and
buildings.
(g) To purchase and acquire securities, assets and property of
every kind and description at judicial, judiciary, trustee's,
pledgee's, mortgagee's, or liquidating or public or private sales,
and to carry on a general salvage, liquidation and realization
business; and also to do a general commission and brokerage busi-
ness.
(h) To hold in trust, issue on commission, make advances upon
or sell, lease, license, transfer, organize, reorganize, incor-
porate or dispose of any of the undertakings or resulting
investments aforesaid, or the stock or securities thereof; to act
as agent, or depositary for any of the above or like purposes, or
any purpose herein mentioned, and to act as fiscal agent of any
other person, firm or corporation.
(i) To obtain the grant of, purchase, lease, or otherwise
acquire any concessions, rights, options, patents, privileges,
lands, rights of way, sites, properties, undertakings or busi-
nesses, or any right, option or contract in relation thereto, and
to perform, carry out and fulfill the terms and conditions thereof,
and to carry the same into effect, and to develop, maintain, lease,
sell, transfer, dispose of and otherwise deal with the same.
(j) From time to time to apply for, purchase or acquire by
assignment, transfer or otherwise, and to exercise, carry out and
enjoy any license, power, authority, franchise, ordinance, order,
right or privilege, which any government or authority, supreme,
municipal or local, or any corporation or other public body shall
enact, make or grant.
(k) To issue shares of the capital stock (of any class),
bonds, debentures, debenture stock, notes and other obligations of
this Corporation for cash, for labor done, for property, real or
personal, or leases thereof, or for any combination of any of the
foregoing, or in exchange for the stock, debentures, debenture
stock, bonds, securities or obligations of any person, firm,
association, corporation or other organization.
(l) To purchase, acquire and lease, and to sell, lease and
dispose of water, water rights, water records, power privileges and
appropriations for power, light, heat, mining, milling, irrigation,
agricultural, domestic or any other use or purpose.
(m) To acquire by purchase, lease, own, hold, sell, mortgage
and encumber both improved and unimproved real estate wherever
situated; to survey, subdivide, plat, colonize and improve the same
for purposes of sale or otherwise; and to construct and erect
thereon factories, works, plants, stores, mills, hotels, houses and
buildings.
(n) To subscribe for, or cause to be subscribed for, buy, own,
hold, purchase, receive, or acquire, and to sell, negotiate,
guarantee, assign, deal in, exchange, transfer, mortgage, pledge or
otherwise dispose of, shares of the capital stock, scrip, bonds,
coupons, mortgages, debentures, debenture stock, securities, notes,
acceptances, drafts and evidences of indebtedness issued or created
by other corporations, joint stock companies or associations,
whether public, private or municipal, or any corporate body, and
while the owner thereof, to possess and to exercise in respect
thereof all the rights, powers and privileges of ownership, includ-
ing the right to vote thereon; to guarantee the payment of
dividends on any shares of the capital stock of any of the corpora-
tions, joint stock companies or associations in which this Corpora-
tion has or may at any time have an interest, and to become surety
in respect of, endorse or otherwise guarantee the payment of the
principal of or interest on any scrip, bonds, coupons, mortgages,
debentures, debenture stock, securities, notes, drafts, bills of
exchange or evidences of indebtedness, issued or created by any
such corporations, joint stock companies or associations; to become
surety for or guarantee the carrying out and performance of any and
all contracts, leases and obligations of every kind of any corpora-
tions, joint stock companies or associations, and in particular of
any corporation, joint stock company or association any of whose
shares, scrip, bonds, coupons, mortgages, debentures, debenture
stock, securities, notes, drafts, bills of exchange or evidences of
indebtedness, are at any time held by or for this Corporation, and
to do any acts or things designed to protect, preserve, improve, or
enhance the value of any such shares, scrip, bonds, coupons,
mortgages, debentures, debenture stock, securities, notes, drafts,
bills of exchange or evidences of indebtedness.
(o) To manufacture, buy, sell and generally deal in goods,
wares, merchandise, property and commodities of any and every class
and description, and all articles used or useful in connection
therewith, insofar as may be permitted by the laws of the State of
Delaware; to engage in any business, whether manufacturing or
otherwise which this Corporation may deem advantageous or useful in
connection with any or all of the foregoing, and to purchase,
acquire, manufacture, market or prepare for market, sell and
otherwise dispose of any article, commodity or thing which this
Corporation may use in connection with its business.
(p) To secure, purchase, acquire, apply for, register, own,
hold, sell or dispose of any and all copyrights, trademarks and
other trade rights.
(q) To organize, or cause to be organized, under the laws of
the State of Delaware, or of any other state, territory or country,
or the District of Columbia, a corporation or corporations, for the
purpose of accomplishing any or all of the objects for which this
Corporation is organized, and to dissolve, wind up, liquidate,
merge or consolidate any such corporation or corporations, or to
cause the same to be dissolved, wound up, liquidated, merged or
consolidated.
(r) To purchase, apply for, obtain or otherwise acquire any
and all letters patent, licenses, patent rights, patented processes
and similar rights granted by the United States or any other
government or country, or any interest therein, or any inventions
which may seem capable of being used for or in connection with any
of the objects or purposes of this Corporation, and to use, exer-
cise, develop, sell, dispose of, lease, grant licenses in respect
to, or other interests in the same, and otherwise turn the same to
account, and to carry on any business, manufacturing or otherwise,
which may be deemed to directly or indirectly aid, effectuate or
develop the objects or any of them of this Corporation.
(s) To borrow money for any of the purposes of this Corpora-
tion, and to issue bonds, debentures, debenture stock, notes and
other obligations therefor, and to secure the same by pledge or
mortgage of the whole or any part of the property of this Corpora-
tion, either real or personal, or to issue bonds, debentures,
debenture stock, notes or other obligations without any such
security.
(t) To enter into, make, perform and carry out contracts of
every kind for any lawful purpose, without limit as to amount, with
any person, firm, association or corporation.
(u) To draw, make, accept, endorse, discount, guarantee,
execute and issue promissory notes, bills of exchange, drafts,
warrants, and all kinds of obligations and certificates and negoti-
able or transferable instruments.
(v) To purchase, hold, sell and transfer shares of its own
capital stock (of any class), bonds and other obligations of this
Corporation from time to time to such extent and in such manner and
upon such terms as its Board of Directors shall determine; provided
that this Corporation shall not use any of its funds or property
for the purchase of its own shares of capital stock when such use
would cause any impairment of the capital of this Corporation; and
provided further that shares of its own capital stock belonging to
this Corporation shall not be voted upon directly or indirectly.
(w) To have one or more offices, to carry on any or all of its
operations and business, and, without restriction or limit as to
amount, to purchase, lease, or otherwise acquire, hold and own, and
to mortgage, sell, convey, lease or otherwise dispose of, real and
personal property of every class and description, in any of the
states or territories of the United States and in the District of
Columbia, and in any and all foreign countries, subject to the laws
of such state, district, territory or country.
(x) To do any and all things herein set forth, and in addition
such other acts and things as are necessary or convenient to the
attainment of the purposes of this Corporation, or any of them, to
the same extent as natural persons lawfully might or could do in
any part of the world, insofar as such acts are permitted to be
done by a corporation organized under the General Corporation Laws
of the State of Delaware.
The forgoing clauses shall be construed, both as objects and
powers, and it is hereby expressly provided that the foregoing enumer-
ation of specific powers shall not be held to limit or restrict in any
manner the powers of this Corporation, and are in furtherance of, and in
addition to, and not in limitation of the general powers conferred by
the laws of the State of Delaware.
It is the intention that the purposes, objects and powers specified
in this Article THIRD and all subdivisions thereof shall, except as
otherwise expressly provided, in nowise be limited or restricted by
reference to or inference from the terms of any other clause or
paragraph of this Article, and that each of the purposes, objects and
powers specified in this Article THIRD shall be regarded as independent
purposes, objects and powers.
FOURTH: The total number of shares of all classes of stock which
the Corporation shall have authority to issue is thirty-four million
(34,000,000), of which two million (2,000,000) shares of the par value
of Fifty Dollars ($50) each are to be of a class designated Preferred
Stock, two million (2,000,000) shares of the par value of One Dollar
($1) each are to be of a class designated Preference Stock, and thirty
million (30,000,000) shares of the par value of Three Dollars and Fifty
Cents ($3.50) each are to be of a class designated Common Stock.
The designations and the voting powers, preferences and relative,
participating, optional or other special rights, and qualifications,
limitations or restrictions thereof, of the classes of stock of the
Corporation which are fixed by the Certificate of Incorporation, and the
express grant of authority to the Board of Directors of the Corporation
(hereinafter referred to as the Board of Directors) to fix by resolution
or resolutions the designations and the voting powers, preferences and
relative, participating, optional or other special rights, and
qualifications, limitations or restrictions thereof, of the Preferred
Stock and of the Preference Stock, respectively, which are not fixed by
the Certificate of Incorporation, are as follows:
A. Preferred Stock
I. The Preferred Stock may be issued at any time or from time to
time in any amount, not exceeding in the aggregate (including all shares
of any and all series thereof theretofore issued) the total number of
shares of Preferred Stock hereinabove authorized, as Preferred Stock of
one or more series, as hereinafter provided. All Shares of any one
series of Preferred Stock shall be alike in every particular, each
series thereof shall be distinctly designated by letter or descriptive
words, and all series of Preferred Stock shall rank equally and be
identical in all respects except as permitted by the provisions of
Paragraph II of this Article FOURTH.
II. Authority is hereby expressly granted to and vested in the
Board of Directors at any time or from time to time to issue the
Preferred Stock as Preferred Stock of any series, and in connection with
the creation of each such series to fix by the resolution or resolutions
providing for the issue of shares thereof, the designations and the
preferences and relative, participating, optional or other special
rights, and qualifications, limitations or restrictions thereof, of such
series, to the full extent now or hereafter permitted by the laws of the
State of Delaware, in respect to the matters set forth in the following
subparagraphs (a) to (g), inclusive:
(a) The distinctive designation of such series and the number
of shares which shall constitute such series, which number may be
increased or decreased (but not below the number of shares thereof
then outstanding) from time to time by resolution of the Board of
Directors;
(b) The dividend rate per annum of such series, the quarterly
payment dates for dividends on shares of such series, and the date
from which dividends on shares of such series shall be cumulative
(hereinafter called the "date of cumulation"), which date of
cumulation shall be identical for all shares of such series;
(c) The price or prices at which, and the terms and conditions
on which, the shares of such series may be redeemed at the option
of the Corporation (hereinafter called the "optional redemption
price");
(d) The amount or amounts payable upon the shares of such
series in the event of voluntary liquidation, dissolution or
winding up of the Corporation;
(e) Whether or not the shares of such series shall be entitled
to the benefit of a sinking fund or a purchase fund to be applied
to the purchase or redemption of shares of such series, and if so
entitled, the amount of such fund and the manner of its applica-
tion, including the price or prices at which the shares of such
series may be redeemed or purchased through the application of such
fund;
(f) Whether or not the shares of such series shall be made
convertible into, or exchangeable for, shares of any other class or
classes or of any other series of the same or any class or classes
of stock of the Corporation and, if made so convertible or exchan-
geable, the conversion price or prices, or the rates of exchange,
and the adjustments thereof, if any, at which such conversion or
exchange may be made, and any other terms and conditions of such
conversion or exchange; and
(g) Whether or not the issue of any additional shares of such
series, or any future series in addition to such series, or of any
shares of any other class of stock (except junior stock, as herein-
after in this Article FOURTH defined) of the Corporation shall be
subject to restrictions and, if so, the nature thereof.
The designations and separate terms of the four separate series of
the Preferred Stock authorized as of the date of this Restated
Certificate of Incorporation are as follows:
(i) 4.36% Preferred Stock
Created December 9, 1954
The Company has established a "4.36% Preferred Stock", consisting
initially of 200,000 authorized shares of the par value of $50 per
share.
The terms of the "4.36% Preferred Stock", in the respects in which
the shares of such series may vary from shares of other series of the
Preferred Stock (in addition to the voting powers, designations,
preferences and relative, participating, optional or other special
rights, and qualifications, limitations or restrictions thereof, set
forth elsewhere in the Restated Certificate of Incorporation, which are
applicable to the Preferred Stock of the par value of $50 per share of
all series) shall be as follows:
(a) The dividend rate of the 4.36% Preferred Stock shall be
4.36% per share per annum upon the par value thereof payable
quarterly on the first days of January, April, July and October in
each year (the quarterly periods ending on the first days of such
months, respectively, to be designated as dividend periods) and the
date from which dividends on shares of the 4.36% Preferred Stock
shall be cumulative shall be December 1, 1954.
(b) The prices at which the 4.36% Preferred Stock may be
redeemed at the option of the Corporation, on the terms and condi-
tions specified in Paragraph XXIII of Article FOURTH of the
Restated Certificate of Incorporation shall be $53.30 per share, if
redeemed on or before December 1, 1959, $52.80 per share if
redeemed thereafter and on or before December 1, 1964, and $52.30
per share if redeemed after December 1, 1964, plus, as provided in
said Paragraph XXIII, an amount equal to full cumulative dividends
thereon to the redemption date.
(c) The amounts payable upon the shares of 4.36% Preferred
Stock in the event of any voluntary liquidation or dissolution or
winding up of the Corporation shall be an amount equal to the
redemption price (exclusive of dividends) specified in paragraph
(b) hereof above, then in effect, plus, as provided in Paragraph XX
of Article FOURTH of the Restated Certificate of Incorporation, an
amount equal to full cumulative dividends thereon to the date of
final distribution to the holders of the Preferred Stock.
(ii) 4.68% Preferred Stock
Created May 20, 1965
The Company has established a "4.68% Preferred Stock" consisting
initially of 166,000 authorized shares of the par value of $50 per
share.
The terms of the "4.68% Preferred Stock", in the respects in which
the shares of such series may vary from shares of other series of the
Preferred Stock (in addition to the voting powers, designations,
preferences and relative, participating, optional or other special
rights, and qualifications, limitations or restrictions thereof, set
forth elsewhere in the Restated Certificate of Incorporation, which are
applicable to the Preferred Stock of the par value of $50 per share of
all series) shall be as follows:
(a) The dividend rate of the 4.68% Preferred Stock shall be
4.68% per share per annum upon the par value thereof payable
quarterly on the first days of January, April, July and October in
each year (the quarterly periods ending on the first days of such
months respectively, to be designated as dividend periods) and the
date from which dividends on shares of the 4.68% Preferred Stock
shall be cumulative shall be May 26, 1965.
(b) The prices at which the 4.68% Preferred Stock may be
redeemed at the option of the Corporation, on the terms and condi-
tions specified in Paragraph XXIII of Article FOURTH of the
Restated Certificate of Incorporation shall be $53.22 per share, if
redeemed on or before May 1, 1970, $52.37 per share if redeemed
thereafter and on or before May 1, 1975, and $51.62 per share if
redeemed after May 1, 1975, plus, as provided in said Paragraph
XXIII, an amount equal to full cumulative dividends thereon to the
redemption date.
(c) The amounts payable upon the shares of 4.68% Preferred
Stock in the event of any voluntary liquidation or dissolution or
winding up of the Corporation shall be an amount equal to the
redemption price (exclusive of dividends) specified in paragraph
(b) hereof above, then in effect, plus, as provided in Paragraph XX
of Article FOURTH of the Restated Certificate of Incorporation, an
amount equal to full cumulative dividends thereon to the date of
final distribution to the holders of the Preferred Stock.
(iii) 7.76% Preferred Stock
Created May 21, 1969
The Company has established a "7.76% Preferred Stock", consisting
initially of 100,000 authorized shares of the par value of $50 per
share.
The terms of the "7.76% Preferred Stock", in the respects in which
the shares of such series may vary from shares of other series of the
Preferred Stock (in addition to the voting powers, designations,
preferences and relative, participating, optional or other special
rights, and qualifications, limitations or restrictions thereof, set
forth elsewhere in the Restated Certificate of Incorporation, which are
applicable to the Preferred Stock of the par value of $50 per share of
all series) shall be as follows:
(a) The dividend rate of the 7.76% Preferred Stock shall be
7.76% per share per annum upon the par value thereof payable
quarterly on the first days of January, April, July and October in
each year (the quarterly periods ending on the first days of such
months, respectively, to be designated as dividend periods) and the
date from which dividends on shares of the 7.76% Preferred Stock
shall be cumulative shall be May 28, 1969.
(b) The prices at which the 7.76% Preferred Stock may be
redeemed at the option of the Corporation, on the terms and condi-
tions specified in Paragraph XXIII of Article FOURTH of the
Restated Certificate of Incorporation shall be $58.82 per share, if
redeemed on or before May 1, 1974, $53.97 per share if redeemed
thereafter and on or before May 1, 1979, $53.00 per share, if
redeemed thereafter and on or before May 1, 1984, and $52.03 per
share if redeemed after May 1, 1984, plus, as provided in said
Paragraph XXIII, an amount equal to full cumulative dividends
thereon to the redemption date.
(c) The amounts payable upon the shares of 7.76% Preferred
Stock in the event of any voluntary liquidation or dissolution or
winding up of the Corporation shall be an amount equal to the
redemption price (exclusive of dividends) specified in paragraph
(b) hereof above, then in effect, plus, as provided in Paragraph XX
of Article FOURTH of the Restated Certificate of Incorporation, an
amount equal to full cumulative dividends thereon to the date of
final distribution to the holders of the Preferred Stock.
(iv) 6.40% Preferred Stock
Created May 18, 1993
The Company has established a "6.40% Preferred Stock", consisting
initially of 545,000 authorized shares of the par value of $50 per
share.
The terms of the "6.40% Preferred Stock", in the respects in which
the shares of such series may vary from shares of other series of the
Preferred Stock (in addition to the voting powers, designations,
preferences and relative, participating, optional or other special
rights, and qualifications, limitations or restrictions thereof, set
forth elsewhere in the Restated Certificate of Incorporation, which are
applicable to the Preferred Stock of the par value of $50 per share of
all series) shall be as follows:
(a) The dividend rate of the 6.40% Preferred Stock shall be
6.40% per share per annum upon the par value thereof payable
quarterly on the first days of January, April, July and October in
each year (the quarterly periods ending on the first days of such
months, respectively, to be designated as dividend periods) and the
date from which dividends on shares of the 6.40% Preferred Stock
shall be cumulative shall be May 26, 1993.
(b) The prices at which the 6.40% Preferred Stock may be
redeemed at the option of the Corporation, otherwise than for
sinking fund purposes, on the terms and conditions specified in
Paragraph XXIII of Article FOURTH of the Restated Certificate of
Incorporation shall be $53.20 per share, if redeemed on or before
May 1, 2003, $51.60 per share if redeemed thereafter and on or
before May 1, 2009, $50.80 per share, if redeemed thereafter and on
or before May 1, 2014, and $50 per share, if redeemed after May 1,
2014, plus, as provided in said Paragraph XXIII, an amount equal to
full cumulative dividends thereon to the redemption date; except
$50 per share if redeemed at any time for the sinking fund, plus,
in each case, accrued dividends to the date of redemption; provide-
d, however, that prior to May 1, 2003, none of the shares may be
redeemed pursuant to this paragraph (b) if such redemption is for
the purpose or in anticipation of refunding any such shares through
the use, directly or indirectly, of funds borrowed by the Company,
or through the use, directly or indirectly, of funds derived
through the issuance by the Company of stock ranking prior to or on
a parity with the 6.40% Preferred Stock, as to dividends or assets,
if such borrowed funds have an interest rate or an effective
interest cost to the Company (computed in accordance with generally
accepted financial practice) or such stock has a dividend rate or
cost (so computed) of less than 6.40% per annum.
(c) The amounts payable upon the shares of 6.40% Preferred
Stock, in the event of any voluntary liquidation or dissolution or
winding up of the Corporation shall be an amount equal to the
redemption price (exclusive of dividends) specified in paragraph
(b) hereof above, then in effect, plus, as provided in Paragraph XX
of Article FOURTH of the Restated Certificate of Incorporation, an
amount equal to full cumulative dividends thereon to the date of
final distribution to the holders of the Preferred Stock.
(d) The holders of shares of 6.40% Preferred Stock shall be
entitled to the benefit of a sinking fund as follows: on May 1,
2003, and on each May 1 (except that the final redemption shall be
on May 1, 2022) thereafter the Corporation shall redeem out of
funds legally available therefor 27,250 shares of this series (or
the number of shares then outstanding if less than 27,250) at a
sinking fund redemption price equal to $50.00 per share plus
accrued and unpaid dividends to the redemption date; on May 1,
2008, and on each May 1 thereafter the Corporation shall have the
non-cumulative option to redeem up to an additional 27,250 shares
of this series at a sinking fund redemption price equal to $50.00
per share plus accrued and unpaid dividends to the redemption date;
all shares redeemed by the Corporation pursuant to the foregoing
provisions shall be cancelled; in the event that the Corporation
shall at any time be in default in the performance of its
obligations under the foregoing provisions of this paragraph (d),
no dividends (other than dividends payable in Common Stock) shall
be paid or any other distribution of assets made, by purchase of
shares or otherwise, on Common Stock or any other stock of the
Company over which the Preferred Stock has preference as to the
payment of dividends or as to assets.
III. Out of the net profits or net assets of the Corporation legally
available for dividends the holders of Preferred Stock of each series
shall be entitled to receive, when and as declared by the Board of
Directors, dividends at the per annum rate for such series fixed by the
Board of Directors pursuant to the foregoing Paragraph II, and no more,
payable quarterly on the dates fixed by the Board of Directors pursuant
to said Paragraph II for such series, in each case from the date of
cumulation of such series; and such dividends shall be cumulative
(whether or not in any dividend period or periods there shall be net
profits or net assets of the Corporation legally available for the
payment of such dividends), so that, if at any time full cumulative
dividends, as hereinafter in this Article FOURTH defined, to the end of
the then current dividend period upon the outstanding Preferred Stock of
all series shall not have been paid or declared and set apart for
payment, the amount of the deficiency shall be fully paid, but without
interest, or dividends in such amount declared on each such series and
set apart for payment, before any sum or sums shall be set aside for or
applied to the purchase or redemption of Preferred Stock of any series
and before any dividend shall be declared or paid upon or set apart for,
or any other distribution shall be ordered or made in respect of, any
junior stock and before any shares of junior stock shall be purchased,
redeemed or otherwise acquired for value (except in exchange for or with
the proceeds of the issue of other junior stock) by the Corporation.
All dividends declared on the Preferred Stock shall be declared pro
rata so that the amounts of dividends per share declared on the
Preferred Stock of different series shall in all cases bear to each
other the same proportions that the respective dividend rates of such
respective series bear to each other.
IV. After full cumulative dividends to the end of the then current
dividend period upon the outstanding Preferred Stock of all series shall
have been paid or declared and set apart for payment, the Corporation
shall set aside as a sinking fund or purchase fund, when and as
required, out of any funds legally available for that purpose, in
respect of each series of Preferred Stock any shares of which shall at
the time be outstanding and in respect of which a sinking fund or
purchase fund for the purchase or redemption thereof has been provided
for in the resolution or resolutions referred to in the foregoing
Paragraph II, the sum or sums required by the terms of such resolution
or resolutions as a sinking fund or purchase fund to be applied in the
manner specified therein.
V. Out of any net profits or net assets of the Corporation legally
available for dividends remaining after full cumulative dividends to the
end of the then current dividend period upon the outstanding Preferred
Stock of all series shall have been paid or declared and set apart for
payment and after the Corporation shall have complied or made provision
for compliance with the provisions of the foregoing Paragraph IV in
respect of any and all amounts then or theretofore required to be set
aside or applied in respect of any sinking fund or purchase fund
mentioned in said Paragraph IV, then and not otherwise, the holders of
any junior stock shall, subject to the provisions hereof and of any
resolution or resolutions of the Board of Directors with respect to any
series of Preferred Stock adopted pursuant to the foregoing Paragraph
II, be entitled to receive such dividends as may from time to time be
declared by the Board of Directors.
In the event of the issue of additional Preferred Stock of any then
existing series all dividends paid on Preferred Stock of such series
prior to the issue of such additional Preferred Stock and all dividends
declared and payable to holders of record of Preferred Stock of such
series on any date prior to such additional issue shall be deemed to
have been paid on the additional Preferred Stock so issued.
VI. So long as any shares of the Preferred Stock of any series
shall be outstanding, the right of the Corporation to make any dis-
tribution on junior stock, as hereinafter in this Article FOURTH
defined, shall be subject to the following limitations:
(a) If and so long as the junior stock equity ratio, as
hereinafter in this Article FOURTH defined, is 20% or more but less
than 25%, the Corporation shall not make, during the twelve months'
period ending with and including the date of any proposed distribu-
tion on junior stock, distributions on junior stock (including the
proposed distribution on junior stock) exceeding in aggregate
amount 75% of the consolidated net income of the Corporation and
its subsidiaries, as hereinafter in this Article FOURTH defined,
for the twelve months' period ending with and including the second
calendar month preceding the date on which the Board of Directors
shall authorize such proposed distribution on junior stock; and
(b) If and so long as the junior stock equity ratio is less
than 20%, the Corporation shall not make, during the twelve months'
period ending with and including the date of any proposed distribu-
tion on junior stock, distributions on junior stock (including the
proposed distribution on junior stock) exceeding in aggregate
amount 50% of the consolidated net income of the Corporation and
its subsidiaries for the twelve months' period ending with and
including the second calendar month preceding the date on which the
Board of Directors shall authorize such proposed distribution on
junior stock.
B. Preference Stock
VII. The Preference Stock shall be stock subordinate to the
Preferred Stock both as to dividends and upon any liquidation, dis-
solution or winding up of the Corporation and shall be subject to the
prior rights and preferences of the Preferred Stock as defined in this
Article FOURTH.
The Preference Stock may be issued at any time or from time to time
in any amount, not exceeding in the aggregate (including all shares of
any and all series thereof theretofore issued) the total number of
shares of Preference Stock hereinabove authorized, as Preference Stock
of one or more series, as hereinafter provided. All consideration
received by the Corporation from the issuance and sale of shares of any
series of Preference Stock in excess of its par value shall be entered
on its books as premium for such stock. All Shares of any one series of
Preference Stock shall be alike in every particular, each series thereof
shall be distinctly designated by letter or descriptive words, and all
series of Preference Stock shall rank equally and be identical in all
respects except as permitted by the provisions of Paragraph VIII of this
Article FOURTH.
VIII. Authority is hereby expressly granted to and vested in the
Board of Directors at any time or from time to time to issue the
Preference Stock as Preference Stock of any series, and in connection
with the creation of each such series to fix by the resolution or
resolutions providing for the issue of shares thereof, the designations
and the preferences and relative, participating, optional or other
special rights, and qualifications, limitations or restrictions thereof
to the full extent now or hereafter permitted by the laws of the State
of Delaware, in respect of the matters set forth in the following
subparagraphs (a) to (g), inclusive:
(a) The distinctive designation of such series and the number
of shares which shall constitute such series, which number may be
increased or decreased (but not below the number of shares thereof
then outstanding) from time to time by resolution of the Board of
Directors;
(b) The dividend rate per annum of such series, the quarterly
payment dates for dividends on shares of such series, and the date
from which dividends on shares of such series shall be cumulative
(hereinafter called the "date of cumulation"), which date of
cumulation shall be identical for all shares of such series;
(c) The price or prices at which, and the terms and conditions
on which, the shares of such series may be redeemed at the option
of the Corporation (hereinafter called the "optional redemption
price");
(d) The amount or amounts payable upon the shares of such
series in the event of voluntary liquidation, dissolution or
winding up of the Corporation;
(e) Whether or not the shares of such series shall be entitled
to the benefit of a sinking fund or a purchase fund to be applied
to the purchase or redemption of shares of such series, and if so
entitled, the amount of such fund and the manner of its applica-
tion, including the price or prices at which the shares of such
series may be redeemed or purchased through the application of such
fund;
(f) Whether or not the shares of such series shall be made
convertible into, or exchangeable for, shares of any other class or
classes or of any other series of the same or any other class or
classes of stock of the Corporation and, if made so convertible or
exchangeable, the conversion price or prices, or the rates of ex-
change, and the adjustments thereof, if any, at which such
conversion or exchange may be made, and any other terms and condi-
tions of such conversion or exchange; and
(g) Whether or not the issue of any additional shares of such
series, or any future series in addition to such series, of the
Corporation shall be subject to restrictions and, if so, the nature
thereof.
Any shares of Preference Stock redeemed or purchased pursuant to
any redemption or sinking fund provision, or converted pursuant to a
convertible provision, established by the Board of Directors shall be
cancelled and shall not thereafter be issued as shares of the same
series of Preference Stock but shall revert to the status of authorized
but unissued shares of Preference Stock undesignated as to series, or
any rights or preferences thereof, and may thereafter be issued by
appropriate action of the Board of Directors just as if such stock had
never been issued, redeemed or purchased and cancelled.
IX. Subject to the prior rights and preferences of the Preferred
Stock, out of the net profits or net assets of the Corporation legally
available for dividends the holders of Preference Stock of each series
shall be entitled to receive, when and as declared by the Board of
Directors, dividends at the per annum rate for such series fixed by the
Board of Directors pursuant to the foregoing Paragraph VIII and no more,
payable quarterly on the dates fixed by the Board of Directors pursuant
to said Paragraph VIII for such series, in each case from the date of
cumulation of such series; and such dividends shall be cumulative
(whether or not in any dividend period or periods there shall be net
profits or net assets of the Corporation legally available for the
payment of such dividends), so that, if at any time full cumulative
dividends, as hereinafter in this Article FOURTH defined, to the end of
the then current dividend period upon the outstanding Preference Stock
of all series shall not have been paid or declared and set apart for
payment, the amount of the deficiency shall be fully paid, but without
interest, or dividends in such amount declared on each such series and
set apart for payment, before any sum or sums shall be set aside for or
applied to the purchase or redemption of Preference Stock of any series
and before any dividend shall be declared or paid upon or set apart for,
or any other distribution shall be ordered or made in respect of, any
stock junior to the Preference Stock either as to dividends, or upon
liquidation, dissolution or winding up and before any shares of such
stock junior to the Preference Stock shall be purchased, redeemed or
otherwise acquired for value (except in exchange for or with the
proceeds of the issue of other such stock junior to the Preference
Stock) by the Corporation.
All dividends declared on the Preference Stock shall be declared
pro rata so that the amounts of dividends per share declared on the
Preference Stock of different series shall in all cases bear to each
other the same proportions that the respective dividend rates of such
respective series bear to each other.
X. Subject to the prior rights and preferences of the Preferred
Stock, after full cumulative dividends to the end of the then current
dividend period upon the outstanding Preference Stock of all series
shall have been paid or declared and set apart for payment, the
Corporation shall set aside as a sinking fund or purchase fund, when and
as required, out of any funds legally available for that purpose, in
respect of each series of Preference Stock any shares of which shall at
the time be outstanding and in respect of which a sinking fund or
purchase fund for the purchase or redemption thereof has been provided
for in the resolution or resolutions referred to in the foregoing
Paragraph VIII, the sum or sums required by the terms of such resolution
or resolutions as a sinking fund or purchase fund to be applied in the
manner specified therein.
XI. Subject to the prior rights and preferences of the Preferred
Stock, out of any net profits or net assets of the Corporation legally
available for dividends remaining after full cumulative dividends to the
end of the then current dividend period upon the outstanding Preference
Stock of all series shall have been paid or declared and set apart for
payment and after the Corporation shall have complied or made provision
for compliance with the provisions of the foregoing Paragraph X in
respect of any and all amounts then or theretofore required to be set
aside or applied in respect of any sinking fund or purchase fund
mentioned in said Paragraph X, then and not otherwise, the holders of
the Common Stock shall, subject to the provisions hereof and of any
resolution or resolutions of the Board of Directors with respect to any
series of Preference Stock adopted pursuant to the foregoing Paragraph
VIII, be entitled to receive such dividends as may from time to time be
declared by the Board of Directors.
C. Exclusive Voting Rights of
Common Stock--Certain Voting Rights of
Preferred Stock and Preference Stock as to Directors
XII. Except as otherwise required by the statutes of the State of
Delaware and as otherwise provided in this Article FOURTH, and subject
to the provisions of the By-Laws of the Corporation, as from time to
time amended, with respect to the closing of the transfer books and the
fixing of a record date for the determination of stockholders entitled
to vote, the holders of the Common Stock shall exclusively possess all
voting power for the election of directors and for all other purposes,
and the holders of the Preferred Stock and of the Preference Stock shall
have no voting power and shall not be entitled to any notice of or to
attend any meeting of stockholders; provided, however, that (a) if and
whenever full cumulative dividends for four (4) quarterly dividend
periods upon any series of Preferred Stock shall be unpaid, the holders
of the Preferred Stock as a class, subject to any rights of the holders
of the Preference Stock, if any, and without regard to series shall
thereafter at all elections of directors have the exclusive right to
elect the smallest number of directors of the Corporation that shall
constitute a majority of the Board of Directors as then constituted, and
the holders of the Common Stock of the Corporation as a class shall have
the exclusive right to elect the remaining number of directors of the
Corporation, which right of the holders of the Preferred Stock, shall
however, cease when full cumulative dividends upon the Preferred Stock
of all series then outstanding shall have been paid or declared and set
apart for payment (and such full cumulative dividends shall be declared
and paid out of any funds legally available therefor as soon as
reasonably practicable), and/or (b) if and whenever full cumulative
dividends for six (6) quarterly dividend periods (whether or not
consecutive) upon any series of Preference Stock shall be unpaid, in
whole or in part, the number of directors then constituting the full
Board of Directors shall be increased by two (said two being referred to
as the "additional two directors") and the holders of the Preference
Stock as a class and without regard to series shall thereafter at all
elections of directors have the exclusive right to elect said
"additional two directors"' and the holders of the Common Stock of the
Corporation as a class, subject to any rights of the holders of the
Preferred Stock, if any, shall have the exclusive right to elect the
remaining number of directors of the Corporation, which right of the
holders of the Preference Stock shall, however, cease when full
cumulative dividends upon the Preference Stock of all series then
outstanding shall have been paid or declared and set apart for payment
(and such full cumulative dividends shall be declared and paid out of
any funds legally available therefor as soon as reasonably practicable).
The terms of office of all persons who may be directors of the
Corporation at the time when such right to elect a majority of the
directors shall accrue to holders of Preferred Stock and/or right to
elect such additional two directors shall accrue to holders of Prefer-
ence Stock shall terminate upon the election of the successors of such
majority directors and/or such additional two directors at the next
annual meeting of the stockholders or (unless under the provisions of
the By-Laws of the Corporation, as then in effect, an annual meeting of
the stockholders is to be held within ninety (90) days after such right
to elect a majority of directors and/or such additional two directors
shall have so accrued) at an earlier special meeting of the stockholders
held as hereinafter in this Paragraph XII provided. A special meeting of
the stockholders shall be held at any time after such right to elect a
majority of the directors shall accrue to holders of Preferred Stock
and/or such right to elect such two additional directors shall accrue to
holders of Preference Stock upon notice similar to that provided in the
By-Laws for an annual meeting, which notice shall be given not more than
fifteen (15) days after the accrual of such rights by the President, a
Vice-President, or the Secretary, of the Corporation, such meeting to be
held not less than sixty (60) nor more than ninety (90) days after the
accrual of such rights.
At the first meeting of stockholders held for the purpose of
electing directors during such time as the holders of the Preferred
Stock and/or Preference Stock shall have the special rights voting as
separate classes to elect directors, the presence in person or by proxy
of the holders of a majority of the outstanding Common Stock shall be
required to constitute a quorum of such class for the election of
directors, and the presence in person or by proxy of the holders of a
majority of the outstanding Preferred Stock and/or Preference Stock
shall be required to constitute a quorum of each such class for the
election of directors; provided, however, that in the absence of a
quorum of the holders of the Preferred Stock and/or Preference Stock, no
election of directors shall be held, but a majority of the holders of
the Preferred Stock and/or Preference Stock who are present in person or
by proxy shall have power to adjourn the election of the directors to a
date not less than fifteen nor more than fifty days from the giving of
the notice of such adjourned meeting hereinafter provided for; and
provided, further, that at such adjourned meeting, the presence in
person or by proxy of the holders of 35% of the outstanding Preferred
Stock and/or Preference Stock shall be required to constitute a quorum
of each such class for the election of directors. In the event such
first meeting of stockholders shall be so adjourned, it shall be the
duty of the President, a Vice-President or the Secretary of the
Corporation, within ten days from the date on which such first meeting
shall have been adjourned, to cause notice of such adjourned meeting to
be given to the stockholders entitled to vote thereat, such adjourned
meeting to be held not less than fifteen days nor more than fifty days
from the giving of such second notice. Such second notice shall be given
in the form and manner hereinabove provided for with respect to the
notice required to be given of such first meeting of stockholders, and
shall further set forth that a quorum was not present at such first
meeting and that the holders of 35% of the outstanding Preferred Stock
and/or Preference Stock shall be required to constitute a quorum of each
such class for the election of directors at such adjourned meeting. If
the requisite quorum of holders of the Preferred Stock and/or Preference
Stock shall not be present at said adjourned meeting, then the directors
of the Corporation then in office shall remain in office until the next
annual meeting of the Corporation, or special meeting in lieu thereof
and until their successors shall have been elected and qualify. Neither
such first meeting nor such adjourned meeting need be held on a date
within sixty days of the next annual meeting of the Corporation or
special meeting in lieu thereof. At each annual meeting of the
Corporation, or special meeting in lieu thereof, held during such time
as the holders of the Preferred Stock and/or Preference Stock, voting as
separate classes shall have the right to elect Directors, the foregoing
provisions of this paragraph shall govern each annual meeting, or
special meeting in lieu thereof, as if said annual meeting or special
meeting were the first meeting of stockholders held for the purpose of
electing directors after the right of the holders of the Preferred Stock
and/or Preference Stock, voting as separate classes, to elect Directors,
should have accrued with the exception, that if, at any adjourned annual
meeting, or special meeting in lieu thereof, the holders of 35% of the
outstanding Preferred Stock and/or Preference Stock are not present in
person or by proxy, all the directors shall be elected by a vote of the
holders of a majority of the Common Stock of the Corporation present or
represented at the meeting; provided, however, that notwithstanding the
provisions of this paragraph so long as any shares of the Preferred
Stock and/or Preference Stock of the Corporation shall be outstanding,
the holders of a majority of the Preferred Stock and/or Preference Stock
shall be sufficient to constitute a quorum of the outstanding Preferred
Stock and/or Preference Stock for the election of directors.
No delay or failure by the holders of the Preferred Stock and/or
Preference Stock to elect the members of the Board of Directors which
such holders are entitled to elect shall invalidate the election of the
members of the Board of Directors elected by the holders of the Common
Stock. Upon the termination of such right of the holders of the
Preferred Stock to elect a majority of directors, the terms of office of
all the directors of the Corporation shall terminate upon the election
of the successors of such directors at the next annual meeting of the
stockholders or at an earlier special meeting of the stockholders called
in like manner and subject to similar conditions as hereinbefore in this
Paragraph XII provided with respect to the call of a special meeting of
stockholders for the election of directors by the holders of the
Preferred Stock.
If and when all dividends then in default on the Preference Stock
of each series then outstanding shall have been paid, the Preference
Stock shall be divested of such voting powers and the terms of office of
the additional two directors (whether elected by vote of the holders of
Preference Stock or to fill a vacancy) shall forthwith terminate and the
number of directors constituting the full Board of Directors shall be
reduced accordingly.
Whenever the Preferred Stock and/or Preference Stock shall be
entitled to elect Directors, any holder of such stock shall have the
right, during regular business hours, in person or by a duly authorized
representative, to examine and to make transcripts of the stock records
of the Corporation for the Preferred Stock and/or Preference Stock for
the purpose of communicating with other holders of such stock with
respect to the exercise of such right of election.
D. No Cumulative Voting
XIII. At all elections of directors by stockholders of the
Corporation, each holder of Common Stock, and each holder of Preferred
Stock and/or Preference Stock, if entitled to vote at such election,
shall be entitled to one vote for each share. The principle of
cumulative voting shall not apply.
E. Certain Voting Rights of Preferred Stock
XIV. So long as any shares of the Preferred Stock of any series
shall be outstanding, the Corporation shall not, without the consent by
vote or in writing of the holders of a majority of the shares of the
Preferred Stock of all series at the time outstanding, considered as a
class without regard to series,
(a) Sell all or substantially all its assets or consolidate or
merge with or into any other corporation or corporations, except
that no such consent or vote shall be required if such sale,
consolidation or merger or the issuance or assumption of all
securities to be issued or assumed in connection with such sale,
consolidation or merger shall have been approved, permitted or
ordered by the Securities and Exchange Commission or by any succes-
sor commission or by any regulatory authority of the United States
of America having jurisdiction over such sale, consolidation or
merger or the issuance or assumption of securities in connection
therewith; provided, however, that the provisions of this sub-
paragraph (a) shall not apply to (i) a consolidation of the Cor-
poration with, or a merger into the Corporation of, any subsidiary
of the Corporation, or (ii) the purchase or other acquisition by
the Corporation of the franchises or assets of another corporation
in any manner which does not involve a consolidation or merger
under the laws of the State of Delaware; the term "subsidiary" as
used in this subparagraph (a) shall mean any corporation all of the
outstanding shares of stock of which (except directors' qualifying
shares) at the time shall be owned directly or indirectly by the
Corporation or by a wholly-owned subsidiary of the Corporation; or
(b) Increase the total authorized amount of Preferred Stock,
or authorized any other preferred stock on a parity therewith with
respect to the payment of dividends or the distribution of assets
upon the dissolution, liquidation or winding up of the Corporation,
whether voluntary or involuntary; or
(c) Issue any additional shares of Preferred Stock (including
the reissuance of reacquired Preferred Stock) ranking on a parity
with the outstanding shares of Preferred Stock either as to the
payment of dividends or as to the distribution of assets unless (i)
the consolidated gross income of the Corporation and its subsidiar-
ies (after all taxes including taxes based on income) for 12
consecutive calendar months within a period of 15 calendar months
immediately preceding the date of such issuance is equal to at
least one and one-half times the aggregate of all interest charges
on indebtedness of the Corporation and its subsidiaries on a
consolidated basis (excluding interest charges on indebtedness to
be retired by the application of the proceeds from the issuance of
such Preferred Stock) and the annual dividend requirements on all
Preferred Stock of the Corporation and its subsidiaries on a
consolidated basis (including dividend requirements on all
Preferred Stock ranking as to dividends or assets prior to or on a
parity with the Preferred Stock to be issued) which will be
outstanding immediately after the issuance of such Preferred Stock;
and unless (ii) the aggregate par value, or stated capital represe-
nted by the outstanding shares of the junior stock of the Corpora-
tion, including premiums thereon plus any surplus of the Corpora-
tion is equal to at least the aggregate amount payable in connec-
tion with an involuntary liquidation of the Corporation with
respect to all shares of the Preferred Stock and all shares of
stock, if any, ranking prior thereto or on a parity therewith as to
dividends or assets, which will be outstanding immediately after
the issuance of such Preferred Stock. If for the purpose of meeting
the requirements of clause (c)(ii) immediately preceding it shall
have been necessary to take into consideration any earned surplus
of the Corporation, the Corporation shall not thereafter pay any
dividends on, or make any distributions in respect of, or purchase
or otherwise acquire, junior stock which would result in reducing
the junior stock equity to an amount less than the amount payable
on involuntary liquidation of the Corporation with respect to all
shares of the Preferred Stock and all shares ranking prior to or on
a parity with the Preferred Stock as to dividends and assets at the
time outstanding. If, during the period for which gross income is
to be determined for the purpose set forth in clause (c)(i) above,
the amount required to be expended by the Corporation pursuant to
a maintenance fund or similar fund established under its mortgage
indenture shall exceed the amount deducted in the determination of
gross income on account of depreciation and maintenance, such
excess shall also be deducted in determining gross income; or
(d) Issue or assume any unsecured notes, debentures or other
securities representing unsecured indebtedness for any purpose
other than
(i) the refunding of unsecured indebtedness theretofore
created or assumed by the Corporation and then outstanding;
(ii) the reacquisition, redemption or other retirement of
any indebtedness, whether secured or unsecured, which reac-
quisition, redemption or other retirement has been authorized
by any state or federal regulatory authority; or
(iii) the reacquisition, redemption or other retirement
of outstanding shares of one or more series of the Preferred
Stock;
if immediately after such issue or assumption the total principal
amount of all unsecured notes, debentures or other securities
representing unsecured indebtedness issued or assumed by the Cor-
poration (including unsecured indebtedness then to be issued or
assumed) would exceed twenty per centum (20%) of the aggregate of
(1) the total principal amount of all bonds or other securities
representing secured indebtedness issued or assumed by the
Corporation and then to be outstanding and (2) the par value of, or
stated capital represented by, the shares of all classes of stock
of the Corporation then to be outstanding in the hands of the
public, plus premium on such stock, plus capital surplus, earned
surplus and any other surplus of the Corporation as then to be
stated on the books of account of the Corporation.
XV. So long as any shares of the Preferred Stock of any series
shall be outstanding, the Corporation shall not, without the consent by
vote or in writing of the holders of two-thirds of the number of shares
of the Preferred Stock of all series at the time outstanding considered
as a class without regard to series, authorize any class of stock
ranking prior to the Preferred Stock with respect to the payment of
dividends or the distribution of assets upon the dissolution,
liquidation or winding up of the Corporation, whether voluntary or
involuntary.
XVI. So long as any shares of the Preferred Stock of any series
shall be outstanding, the Corporation shall not change the express terms
and provisions of the Preferred Stock as such series so as to affect
such series adversely, without the consent by vote or in writing of the
holders of two-thirds of the number of shares of Preferred Stock of all
series so affected, considered as a class without regard to series.
F. Certain Voting Rights of Preference Stock
XVII. So long as any shares of the Preference Stock of any series
shall be outstanding, the Corporation shall not, without the consent by
vote or in writing of the holders of two-thirds of the number of shares
of Preference Stock of all series at the time outstanding considered as
a class without regard to series, authorize or increase the authorized
amount of any class of stock, other than shares of the Preferred Stock
(whether now or hereafter authorized or increased) ranking prior to the
Preference Stock with respect to the payment of dividends or the
distribution of assets upon the dissolution, liquidation or winding up
of the Corporation, whether voluntary or involuntary.
XVIII. So long as any shares of the Preference Stock of any series
shall be outstanding, the Corporation shall not change the express terms
and provisions of the Preference Stock of such series so as to affect
such series adversely, without the consent by vote or in writing of the
holders of two-thirds of the number of shares of Preference Stock of all
series so affected, considered as a class without regard to series.
XIX. So long as shares of the Preference Stock of any series shall
be outstanding, the Corporation shall not, without the consent by vote
or in writing of the holders of a majority of the shares of Preference
Stock of all series at the time outstanding considered as a class
without regard to series, either (a) increase the authorized amount of
Preference Stock, or (b) authorize or create, or increase the authorized
amount of, any class of stock, which is entitled to dividends or assets
on a parity with the Preference Stock, (c) sell all or substantially all
its assets or consolidate or merge with or into any other corporation or
corporations, except that no such consent or vote shall be required if
such sale, consolidation or merger or the issuance or assumption of all
securities to be issued or assumed in connection with such sale,
consolidation or merger shall have been approved, permitted or ordered
by the Securities and Exchange Commission or by any successor commission
or by any regulatory authority of the United States of America having
jurisdiction over such sale, consolidation or merger or the issuance or
assumption of securities in connection therewith; provided, however,
that the provisions of this subparagraph (c) shall not apply to (i) a
consolidation of the Corporation with, or a merger into the Corporation
of, any subsidiary of the Corporation, or (ii) the purchase or other
acquisition by the Corporation of the franchises or assets of another
corporation in any manner which does not involve a consolidation or
merger under the laws of the State of Delaware; the term "subsidiary" as
used in this subparagraph (c) shall mean any corporation all of the
outstanding shares of stock of which (except directors' qualifying
shares) at the time shall be owned directly or indirectly by the
Corporation or by a wholly-owned subsidiary of the Corporation, or (d)
purchase, otherwise than upon tenders, or redeem less than all of the
outstanding Preference Stock, unless all past and current dividends on
the Preference Stock shall have been paid or provided for.
G. Rights of Preferred Stock on
Liquidation, Dissolution or Winding Up
XX. In the event of any liquidation or dissolution or winding up of
the Corporation the holders of the Preferred Stock of each series shall
be entitled to receive, out of the assets of the Corporation available
for distribution to its stockholders, before any distribution of assets
shall be made to the holders of any class of junior stock, (i) if such
liquidation, dissolution or winding up shall be involuntary, the sum of
fifty dollars ($50) per share plus full cumulative dividends thereon to
the date of final distribution to the holders of the Preferred Stock and
(ii) if such liquidation, dissolution or winding up shall be voluntary,
the amount per share fixed by the Board of Directors pursuant to the
foregoing Paragraph II plus full cumulative dividends thereon to the
date of final distribution to the holders of the Preferred Stock; and
the holders of the junior stock shall be entitled, to the exclusion of
the holders of the Preferred Stock of any and all series, to share
ratably in all the assets of the Corporation then remaining according to
the number of shares of the junior stock held by them respectively. If
upon any liquidation or dissolution or winding up of the Corporation the
net assets of the Corporation shall be insufficient to pay the holders
of all outstanding shares of Preferred Stock the full amounts to which
they respectively shall be entitled, the holders of shares of Preferred
Stock of all series shall share ratably in any distribution of assets
according to the respective amounts payable in respect of the shares
held by them upon such distribution if all amounts payable on or with
respect to the Preferred Stock of all series were paid in full. Neither
the merger nor consolidation of the Corporation into or with other
corporation, nor the merger or consolidation of any other corporation
into or with the Corporation, nor a sale, transfer or lease of all or
any part of the assets of the Corporation, shall be deemed to be a
liquidation, dissolution or winding up of the Corporation.
H. Rights of Preference Stock on
Liquidation, Dissolution or Winding Up
XXI. The shares of Preference Stock shall be subordinate to the
Preferred Stock but in preference to the Common Stock upon any dis-
solution, liquidation or winding up of the Corporation, whether
voluntary or involuntary. Upon any such dissolution, liquidation or
winding up of the Corporation, whether voluntary or involuntary, the
holders of Preference Stock of each series, without any preference of
the shares of any series of Preference Stock over the shares of any
other series of Preference Stock, shall be entitled to receive out of
the assets of the Corporation, whether capital, surplus or other, before
any distribution of the assets to be distributed shall be made to the
holders of Common Stock or of any other stock not having preference as
to assets over the Preference Stock, the amount determined to be payable
on the shares of such series in the event of voluntary liquidation, or
the amount of consideration originally received by the Corporation for
the shares of such series in the event of involuntary liquidation, as
the case may be. In the case the assets shall not be sufficient to pay
in full the amounts determined to be payable on all the shares of
Preference Stock in the event of voluntary or involuntary liquidation,
as the case may be, then the assets available for such payment shall be
distributed ratably among the holders of the Preference Stock of all
series in accordance with the amounts determined to be payable on the
shares of each series, in the event of voluntary or involuntary
liquidation, as the case may be, in proportion to the full preferential
amounts to which they are respectively entitled. After payment to the
holders of the Preference Stock of the full preferential amounts
hereinbefore provided for, the holders of the Preference Stock as such
shall have no right or claim to any of the remaining assets of the
Corporation, either upon any distribution of such assets or upon
dissolution, liquidation or winding up, and the remaining assets to be
distributed, if any, upon a distribution of such assets or upon
dissolution, liquidation or winding up, may be distributed among the
holders of the Common Stock or of any other stock over which the
Preference Stock has preference as to assets. Without limiting the right
of the Corporation to distribute its assets or to dissolve, liquidate or
wind up in connection with any sale, merger, or consolidation, neither
the merger nor consolidation of the Corporation into or with any other
corporation, nor the merger or consolidation of any other corporation
into or with the Corporation, nor a sale, transfer or lease of all or
any part of the assets of the Corporation, shall be deemed to be a
liquidation, dissolution or winding up of the Corporation.
I. Certain Definitions
XXII. The term "consolidated net income of the Corporation and its
subsidiaries" shall mean the consolidated gross earnings of the
Corporation and its subsidiaries from all sources less all proper
deductions for operating expenses, taxes (including income, excess
profits and other taxes based on or measured by income or undistributed
earnings or income), interest charges and other appropriate items,
including provision for maintenance and depreciation, and less all
dividends paid or accrued on the Preferred Stock of the Corporation
which are applicable to the periods in question, and otherwise deter-
mined in accordance with sound accounting practice in use at the time,
or, at the option of the Corporation, in use at the date of this
Certificate Amendment, but determined without deducting any losses,
expenses or provisions charged directly to surplus in accordance with
the Uniform Systems of Accounts prescribed by regulatory commissions
having jurisdiction over the Corporation and its subsidiaries. The
amount deducted for maintenance and depreciation of property of the
Corporation and its subsidiaries shall be at least equal to the
aggregate amount spent for maintenance and provided for depreciation by
the Corporation and its subsidiaries.
The term "consolidated surplus of the Corporation and its sub-
sidiaries" shall include capital surplus, earned surplus and any other
surplus of the Corporation and its subsidiaries, consolidated in
accordance with sound accounting practice.
The term "distribution on junior stock" shall mean a dividend
(other than a dividend payable in junior stock) or other distribution on
junior stock, a purchase or redemption of junior stock and any other
acquisition for value of junior stock (except in exchange for or with
the proceeds of the issue of other junior stock).
The term "full cumulative dividends" whenever used in this Article
FOURTH with reference to any share of any series of the Preferred Stock
or Preference Stock shall be deemed to mean (whether or not in any
dividend period or any part thereof in respect of which such term is
used there shall have been net profits or net assets of the Corporation
legally available for the payment of such dividends) that amount which
shall be equal to dividends at the rate per share fixed for such series
by the Board of Directors pursuant to Paragraphs II or VIII of this
Article FOURTH, for the period of time elapsed from the date of
cumulation of such series to the date as of which full cumulative
dividends are to be computed (including an amount equal to a dividend at
such rate for the elapsed portion of the current dividend period) less,
in each case, the amount of all dividends paid, or deemed paid, upon
such stock.
The term "junior stock", whenever used in this Article FOURTH,
shall mean the Common Stock, Preference Stock and any other class or
classes of stock of the Corporation over which the Preferred Stock has
preference or priority with respect to the payment of dividends and the
distribution of assets upon the dissolution, liquidation or winding up
of the Corporation, whether voluntary or involuntary.
The term "junior stock equity", whenever used in this Article
FOURTH, shall mean the aggregate par value of, or stated capital
represented by, the outstanding shares of the junior stock of the
Corporation including premiums thereon plus any surplus of the Cor-
poration.
The term "junior stock equity ratio" shall mean the ratio, computed
as of the end of the second calendar month preceding the date of the
authorization by the Board of Directors of the proposed distribution on
junior stock and adjusted to reflect the proposed distribution on junior
stock, of
(i) the aggregate par value of, or stated capital represented
by, the outstanding shares of the junior stock, including premiums
on junior stock, plus the consolidated surplus of the Corporation
and its subsidiaries, as hereinafter in this Article FOURTH defin-
ed,
to
(ii) the total capitalization of the Corporation and its
subsidiaries, as hereinafter in this Article FOURTH defined, plus
the consolidated surplus of the Corporation and its subsidiaries.
The term "total Capitalization of the Corporation and its sub-
sidiaries" shall mean the aggregate of the principal amount of all
indebtedness of the Corporation and its subsidiaries outstanding in the
hands of the public maturing more than twelve (12) months from the date
of determination of total capitalization of the Corporation and its
subsidiaries, plus the par value of, or stated capital represented by,
the shares of all classes of stock of the Corporation and its
subsidiaries outstanding in the hands of the public, plus premium on
such stock plus, in the case of such stock of subsidiaries, any surplus
applicable thereto.
J. Redemption of Preferred
Stock and/or Preference Stock
XXIII. The Preferred Stock and/or Preference Stock of all series,
or of any series thereof, or any part of any series thereof, at any time
outstanding, may be redeemed by the Corporation, at its election
expressed by resolution of the Board of Directors, at any time or from
time to time (which time, when fixed in each case, is herein after
called the "redemption date"), upon not less than thirty (30) days'
previous notice to the holders of record of the Preferred Stock and/or
Preference Stock to be redeemed, given by mail and by publication in a
newspaper of general circulation in the Borough of Manhattan, City and
State of New York, in such manner as may be prescribed by resolution or
resolutions of the Board of Directors, at the optional redemption price
or prices fixed by the Board of Directors pursuant to the foregoing
Paragraph II and/or Paragraph VIII, as the case may be, then applicable
to the Preferred Stock and/or Preference Stock to be redeemed, plus an
amount equal to full cumulative dividends thereon to the redemption date
(the aggregate of which amounts is hereinafter in this Paragraph XXIII
called the "redemption price"). If less than all the outstanding shares
of the Preferred Stock and/or Preference Stock of any series are to be
redeemed, the redemption may be made either by lot or pro rata in such
manner as may be prescribed by resolution of the Board of Directors. The
Corporation may, if it so elects, provide moneys for the payment of the
redemption price by depositing the amount thereof for the account of the
holders of Preferred Stock and/or Preference Stock entitled thereto,
with a bank or trust company doing business in the Borough of Manhattan,
in the City of New York, and having capital and surplus of at least Five
Million Dollars ($5,000,000), at any time prior to the redemption date
(the date of any such deposit being hereinafter called the "date of
deposit"). In such event, the notice of redemption shall include a
statement of the intention of the Corporation to deposit such amount
prior to the redemption date and the name and address of the bank or
trust company with which the deposit will be made. On and after the
redemption date (unless default shall be made by the Corporation in
providing moneys for the payment of the redemption price), or, if the
Corporation shall make such deposit on or before the date specified
therefor in the notice, then on and after the date of deposit, all
dividends on the Preferred Stock and/or Preference Stock thereby called
for redemption shall cease to accrue and, notwithstanding that any
certificate for shares of Preferred Stock and/or Preference Stock so
called for redemption shall not have been surrendered for cancellation;
the shares represented thereby shall no longer be deemed to be
outstanding and all rights of the holders thereof as stockholders of the
Corporation shall cease and terminate, except the right to receive the
redemption price as hereinafter provided and except any conversion or
exchange rights not theretofore expired. Such conversion or exchange
rights, however, in any event shall cease and terminate upon the
redemption date or upon any earlier date fixed by the Board of Directors
pursuant to the foregoing Paragraph II and/or Paragraph VIII for the
termination of such rights. The Corporation may pay in regular course
any dividends reflected in the redemption price either to the holders of
record on the record date fixed for determination of stockholders
entitled to receive such dividends (in which event, anything herein to
the contrary notwithstanding, the amount so deposited need not include
any dividends so paid or to be paid) or as a part of the redemption
price upon surrender of the certificates for the shares redeemed. On and
after the redemption date or, if the Corporation shall elect to deposit
the moneys for such redemption as herein provided, then on and after the
date of deposit, the holders of record of the Preferred Stock and/or
Preference Stock to be redeemed shall be entitled to receive the
redemption price upon actual delivery to the Corporation or, in the
event of such a deposit, to the bank or trust company with which such
deposit is made, of certificates for the shares to be redeemed (such
certificates, if required, to be properly stamped for transfer and duly
endorsed in blank or accompanied by proper instruments of assignment and
transfer thereof duly endorsed in blank). Any moneys so deposited which
shall remain unclaimed by the holders of such Preferred Stock and/or
Preference Stock at the end of six (6) years after the redemption date
shall be paid by such bank or trust company to the Corporation;
provided, however, that all moneys so deposited, which shall not be
required for such redemption because of the exercise of any right of
conversion or exchange, shall be returned to the Corporation forthwith.
Any interest accrued on moneys so deposited shall be paid to the
Corporation from time to time.
K. Purchase of Preferred and/or Preference Stock
XXIV. The Corporation may, from time to time, subject to the
provisions of Paragraph III and/or Paragraph IX, as the case may be, of
this Article FOURTH, purchase the whole of the Preferred Stock and/or
Preference Stock or any series thereof, or any part of any series
thereof, upon the best terms reasonably obtainable, but in no event at
a price greater than the then current redemption of the shares so
purchased.
L. Preemptive Rights
XXV. No holder of stock of the Corporation shall be entitled as
such as a matter of right to subscribe for or purchase any part of any
new or additional issue of stock of the Corporation of any class or of
securities convertible into stock of any class, whether now or hereafter
authorized or whether issued for money, for consideration other than
money or by way of dividend; provided, however, that if the Board of
Directors shall determine to offer any new or additional shares of
Common Stock, or any security convertible into Common Stock, for money,
other than: (a) by a public offering or an offering of such shares of
Common Stock or such security to or through underwriters or investment
bankers who shall have agreed to make a public offering thereof; (b)
pursuant to a plan offered to any one or more classes of security
holders of the Corporation or of any subsidiary of the Corporation under
which such holders can invest dividends paid on stock of the Corporation
or of any such subsidiary and/or amounts of cash in any of such shares
or securities; or (c) pursuant to a thrift, savings, employee stock
ownership, pension or other employee benefit plan under which an
employee of the Corporation or of any subsidiary of the Corporation or
a trust for the benefit of any such employee can purchase or acquire any
of such shares or securities; the same shall first be offered pro rata
to the holders of the then outstanding shares of Common Stock of the
Corporation upon terms not less favorable to the purchaser (without
deduction of such reasonable compensation, allowance or discount for the
sale, underwriting or purchase as may be fixed by the Board of
Directors) than those on which the Board of Directors issues and
disposes of stock or securities to others than such holders of Common
Stock; and provided further that the time within which such preemptive
rights shall be exercised may be limited by the Board of Directors to
such time as said Board may deem proper, not less, however, than ten
(10) days after the mailing of notice that such preemptive rights are
available and may be exercised. For the purposes of this Paragraph XXV,
the term "subsidiary" shall mean any corporation at least a majority of
whose outstanding voting stock shall at the time be owned by the
Corporation or by one or more subsidiaries or by the Corporation and one
or more subsidiaries, and the term "voting stock" shall mean stock of
any class or classes, however designated, having ordinary voting power
for the election of a majority of the directors of such corporation,
other than stock having such power only by reason of the happening of a
contingency.
M. Scrip
XXVI. The Board of Directors may from time to time by resolution or
resolutions provide for the issue of scrip in lieu of fractional shares
of Common Stock, disregarding balances of less the l/100 of a share.
Such scrip shall not confer upon the holder any right to dividends or
any voting or other rights of a stockholder of the Corporation, but the
Corporation shall from time to time, within such period as may be
limited by resolution or resolutions of the Board of Directors, issue
one or more whole shares of Common Stock upon the surrender of scrip for
fractional shares aggregating the number of whole shares issuable in
respect of the scrip so surrendered, provided that the scrip so
surrendered shall be properly endorsed for transfer if in registered
form. All scrip certificates not so exchanged within such period as may
be limited by resolution or resolutions of the Board of Directors shall
be and become null and void and of no further force and effect.
FIFTH:A. Higher Vote for Certain Business Transactions. In
addition to any affirmative vote required by law or this Restated
Certificate of Incorporation or the By-Laws of the Corporation, and
except as otherwise expressly provided in Section C of this Article
FIFTH:
(1) any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with (a) any Interested
Stockholder (as hereinafter defined) or (b) any other company
(whether or not itself an Interested Stockholder) which is or after
such merger or consolidation would be an Affiliate (as hereinafter
defined) or Associate (as hereinafter defined) of an Interested
Stockholder; or
(2) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of transactions)
to or with any Interested Stockholder or any Affiliate or Associate
of any Interested Stockholder, involving any assets or securities
of the Corporation, any Subsidiary or any Interested Stockholder or
any Affiliate or Associate of any Interested Stockholder, having an
aggregate Fair Market Value (as hereinafter defined) in excess of
$25,000,000; or
(3) the adoption of any plan or proposal for the termination,
liquidation or dissolution of the Corporation proposed by or on
behalf of an Interested Stockholder or any Affiliate or Associate
of any Interested Stockholder; or
(4) any reclassification of securities (including any reverse
stock split) or recapitalization of the Corporation or any merger
or consolidation of the Corporation with any Subsidiary of the
Corporation or any other transaction (whether or not with or
otherwise involving an Interested Stockholder) that has the effect,
directly or indirectly, of increasing the proportionate share of
any class or series of Common Stock (as hereinafter defined), or
any securities convertible into Common Stock or into equity
securities of the Corporation or any Subsidiary, that is
beneficially owned by an Interested Stockholder or any Affiliate or
Associate of any Interested Stockholder; or
(5) any tender offer or exchange offer made by the Corporation
for shares of Common Stock which may have the effect of increasing
an Interested Stockholder's percentage beneficial ownership (as
hereinafter defined) so that following the completion of the tender
offer or exchange offer the Interested Stockholder's percentage
beneficial ownership of the outstanding Common Stock may exceed
100% of the Interested Stockholder's percentage beneficial
ownership immediately prior to the commencement of such tender
offer or exchange offer; or
(6) the issuance or transfer by the Corporation or any
Subsidiary (in one transaction or a series of transactions) of any
securities of the Corporation or any Subsidiary to any Interested
Stockholder or any Affiliate of any Interested Stockholder having
an aggregate Fair Market Value in excess of $25,000,000; or
(7) any agreement, contract or other arrangement providing for
any one or more of the actions specified in the foregoing clauses
(1) to (6) shall require: (1) the affirmative vote of the holders
of Voting Stock (as hereinafter defined) representing shares equal
to at least eighty percent (80%) of the then issued and outstanding
Voting Stock of the Corporation authorized to be issued from time
to time under Article FOURTH of this Restated Certificate of
Incorporation; and (2) the affirmative vote of a majority of the
then issued and outstanding Voting Stock of the Corporation,
excluding any shares of Voting Stock beneficially owned by such
Interested Stockholder. Such affirmative vote shall be required
notwithstanding the fact that no vote may be required, or that a
lesser percentage may be specified, by law or any agreement with
any national securities exchange or otherwise.
B. Definition of "Business Combination". For the purposes of this
Article FIFTH the term "Business Combination" shall mean any transaction
that is referred to in any one or more of clauses (1) through (6) of
Section A of this Article FIFTH.
C. When Higher Vote is Not Required. The provisions of the
preceding Paragraph A shall not be applicable to any particular Business
Combination, and such Business Combination shall require only such
affirmative vote, if any, as is required by law or by any other
provision of this Restated Certificate of Incorporation or the By-Laws
of the Corporation or any agreement with any national securities
exchange, if all of the conditions specified in either of the following
Paragraphs (1) or (2) are met or, in the case of a Business Combination
not involving the payment of consideration to the holders of the
Corporation's outstanding Common Stock, if the condition specified in
the following Paragraph (1) is met:
(1) The Business Combination shall have been approved by a
majority (whether such approval is made prior to or subsequent to
the acquisition of beneficial ownership of the Voting Stock that
caused the Interested Stockholder to become an Interested
Stockholder) of the Continuing Directors (as hereinafter defined).
(2) All of the following conditions shall have been met with
respect to the outstanding Common Stock, whether or not the
Interested Stockholder has previously acquired beneficial ownership
of any shares of the Common Stock:
(a) The aggregate amount of cash and the Fair Market Value, as
of the date of the consummation of the Business Combination, of
consideration other than cash to be received per share by holders
of the Common Stock in such Business Combination shall be at least
equal to the highest amount determined under clauses (i), (ii),
(iii), and (iv) below:
(i) (if applicable) the highest per share price (including
any brokerage commissions, transfer taxes and soliciting
dealers' fees) paid by or on behalf of the Interested
Stockholder for any share of the Common Stock in connection
with the acquisition by the Interested Stockholder of
beneficial ownership of shares of the Common Stock (x) within
the two-year period immediately prior to the first public
announcement of the proposed Business Combination (the
"Announcement Date") or (y) in the transaction in which it
became an Interested Stockholder, whichever is higher, in
either case as adjusted for any subsequent stock split, stock
dividend, subdivision or reclassification with respect to the
Common Stock;
(ii) the Fair Market Value per share of the Common Stock on
the Announcement Date or on the date on which the Interested
Stockholder became an Interested Stockholder (the
"Determination Date"), whichever is higher, as adjusted for
any subsequent stock split, stock dividend, subdivision or
reclassification with respect to the Common Stock;
(iii) (if applicable) the price per share equal to the Fair
Market Value per share of the Common Stock determined pursuant
to the immediately preceding clause (ii), multiplied by the
ratio of (x) the highest price per share (including any
brokerage commissions, transfer taxes and soliciting dealers'
fees) paid by or on behalf of the Interested Stockholder for
any share of the Common Stock in connection with the
acquisition by the Interested Stockholder of beneficial
ownership of shares of the Common Stock within the two-year
period immediately prior to the Announcement Date, as adjusted
for any subsequent stock split, stock dividend, subdivision or
reclassification with respect to the Common Stock to (y) the
Fair Market Value per share of the Common Stock on the first
day in such two-year period on which the Interested
Stockholder acquired beneficial ownership of any shares of the
Common Stock, as adjusted for any subsequent stock split,
stock dividend, subdivision or reclassification with respect
to Common Stock; and
(iv) the Corporation's net income per share of the Common
Stock for the four full consecutive fiscal quarters
immediately preceding the Announcement Date, multiplied by the
higher of the then price/earnings multiple (if any) of such
Interested Stockholder or the highest price/earnings multiple
of the Corporation within the two-year period immediately
preceding the Announcement Date (such price/earnings multiples
being determined by dividing (x) an amount equal to the
highest price per share during a day as reported in The Wall
Street Journal from the Composite Tape for the New York Stock
Exchange by (y) the immediately preceding publicly reported
twelve-months earnings per share).
(b) The consideration to be received by holders of the Common
Stock shall be in cash or in the same form as previously has been
paid by or on behalf of the Interested Stockholder in connection
with its direct or indirect acquisition of beneficial ownership of
shares of such Common Stock. If the consideration previously paid
by the Interested Stockholder to acquire Common Stock varied among
the recipients thereof as to form, the form of consideration to be
paid for such Common Stock in connection with the Business
Combination shall be either cash or the form used to acquire
beneficial ownership of the largest number of shares of such Common
Stock previously acquired by the Interested Stockholder.
(c) After the Determination Date and prior to the consummation
of such Business Combination: (i) there shall have been no
reduction in the annual rate of dividends paid on the Common Stock
(except as necessary to reflect any stock split, stock dividend or
subdivision of the Common Stock), except as approved by a majority
of the Continuing Directors; (ii) there shall have been an increase
in the annual rate of dividends paid on the Common Stock as
necessary to reflect any reclassification (including any reverse
stock split), recapitalization, reorganization or any similar
transaction that has the effect of reducing the number of
outstanding shares of Common Stock, unless the failure so to
increase such annual rate is approved by a majority of Continuing
Directors; and (iii) such Interested Stockholder shall not have
become the beneficial owner of any additional shares of Common
Stock except as part of the transaction that results in such
Interested Stockholder becoming an Interested Stockholder and
except in a transaction that, after giving effect thereto, would
not result in any increase in the Interested Stockholder's
percentage of beneficial ownership of Common Stock.
(d) After the Determination Date, such Interested Stockholder
shall not have received the benefit, directly or indirectly (except
proportionately as a stockholder of the Corporation), of any loans,
advances, guarantees, pledges or other financial assistance or any
tax credits or other tax advantages provided by the Corporation,
whether in anticipation of or in connection with such Business
Combination or otherwise.
(e) A proxy or information statement describing the proposed
Business Combination and complying with the requirements of the
Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder (the "Act") (or any subsequent provisions
amending or replacing such Act, rules or regulations) shall be
mailed to all stockholders of the Corporation at least 30 days
prior to the consummation of such Business Combination (whether or
not such proxy or information statement is required to be mailed
pursuant to such Act or subsequent provisions). The proxy or
information statement shall contain on the first page thereof, in
a prominent place, any statement as to the advisability of the
Business Combination that the Continuing Directors, or any of them,
may choose to make and, if deemed advisable by a majority of the
Continuing Directors, the opinion of an investment banking firm
selected by a majority of the Continuing Directors as to the
fairness (or not) of the terms of the Business Combination from a
financial point of view to the holders of the outstanding shares of
the Common Stock other than the Interested Stockholder and its
Affiliates or Associates (as hereinafter defined), such investment
banking firm to be paid a reasonable fee for its services by the
Corporation.
(f) Such Interested Stockholder shall not have made any major
change in the Corporation's business or equity capital structure
without the approval of a majority of the Continuing Directors.
D. Certain Definitions. The following definitions shall apply with
respect to this Article FIFTH.
(1) The term "Common Stock" or "Voting Stock" shall mean all
common stock of the Corporation authorized to be issued from time
to time under Article FOURTH of the Restated Certificate of
Incorporation that by its terms may be voted on all matters
submitted to stockholders of the Corporation generally.
(2) The term "person" shall mean any individual, firm, company
or other entity and shall include any group comprised of any person
and any other person with whom such person or any Affiliate or
Associate of such person has any agreement, arrangement or
understanding, directly or indirectly, for the purpose of
acquiring, holding, voting or disposing of the Common Stock.
(3) The term "Interested Stockholder" shall mean any person
(other than the corporation or any Subsidiary and other than any
profit-sharing, employee stock ownership or other employee benefit
or dividend reinvestment plan of the Corporation or any Subsidiary
or any trustee of or fiduciary with respect to any such plan when
acting in such capacity) who (a) is the beneficial owner of Voting
Stock representing five percent (5%) or more of the votes entitled
to be cast by the holders of all then outstanding shares of Voting
Stock; or (b) is an Affiliate or Associate of the Corporation and
at any time within the two-year period immediately prior to the
Announcement Date was the beneficial owner of Voting Stock
representing five percent (5%) or more of the votes entitled to be
cast by the holders of all then outstanding shares of Voting Stock.
(4) A person shall be a "beneficial owner" of any Common Stock
(a) which such person or any of its Affiliates or Associates
beneficially owns, directly or indirectly, (b) which such person or
any of its Affiliates or Associates has, directly or indirectly,
(i) the right to acquire (whether such right is exercisable
immediately or subject only to the passage of time), pursuant to
any agreement, arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrants or options, or
otherwise, or (ii) the right to vote pursuant to any agreement,
arrangement or understanding; or (c) which is beneficially owned,
directly or indirectly, by any other person with which such person
or any of its Affiliates or Associates has any agreement,
arrangement or understanding for the purpose of acquiring, holding,
voting or disposing of any shares of Common Stock. For purposes of
determining whether a person is an Interested Stockholder pursuant
to Paragraph 4 of this Section D, the number of shares of Common
Stock deemed to be outstanding shall include shares deemed
beneficially owned by such person through application of Paragraph
5 of this Section D, but shall not include any other shares of
Common Stock that may be issuable pursuant to any agreement,
arrangement or understanding, or upon exercise of conversion
rights, warrants, or options, or otherwise.
(5) An "Affiliate" of a specified person is a person that
directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, the
person specified. The term "Associate", used to indicate a
relationship with any person, means (a) any company (other than the
Corporation or any Subsidiary) of which such person is an officer
or partner or is, directly or indirectly, the beneficial owner of
ten percent (10%) or more of any class of equity securities, (b)
any trust or other estate in which such person has a substantial
beneficial interest or as to which such person serves as trustee or
in a similar fiduciary capacity, and (c) any relative or spouse of
such person, or any relative of such spouse, who has the same house
as such person or who is a director or officer of the Corporation
or of any parent or Subsidiary of the Corporation.
(6) The term "Subsidiary" means any company of which a
majority of any class of equity security is beneficially owned by
the Corporation; provided, however, that for the purposes of the
definition of Interested Stockholder set forth in Paragraph (3) of
this Section D, the term "Subsidiary" shall mean only a company of
which a majority of each class of equity security is beneficially
owned by the Corporation.
(7) The term "Continuing Director" means any member of the
Board of Directors of the Corporation (the "Board of Directors"),
who, while such person is a member of the Board of Directors, is
not an Affiliate or Associate or representative of any Interested
Stockholder and who was a member of the Board of Directors prior to
the time than any Interested Stockholder became an Interested
Stockholder, and any successor of a Continuing Director, who, while
such successor is a member of the Board of Directors, is not an
Affiliate or Associate or representative of any Interested
Stockholder and who is recommended or elected to succeed the
Continuing Director by a majority of Continuing Directors.
(8) The term "Fair Market Value" means (a) in the case of
cash, the amount of such cash; (b) in the case of stock, the
highest closing sale price during the 30-day period immediately
preceding the date in question of a share of such stock on the
Composite Tape for New York Stock Exchange-Listed Stocks, or if
such stock is not quoted on the Composite Tape, on the New York
Stock Exchange, or, if such stock is not listed on such Exchange,
on the principal United States securities exchange registered under
the Act on which such stock is listed, or, if such stock is not
listed on any such exchange, the highest closing bid quotation with
respect to a share of such stock during the 30-day period preceding
the date in question on the National Association of Securities
Dealers, Inc. Automated Quotations System or any similar system
then in use, or if no such quotations are available, the fair
market value on the date in question of a share of such stock as
determined by a majority of the Continuing Directors in good faith;
and (c) in the case of property other than cash or stock, the fair
market value of such property on the date in question as determined
in good faith by a majority of the Continuing Directors.
(9) In the event of any Business Combination in which the
Corporation survives, the phrase "consideration other than cash to
be received" as used in Paragraphs 2(a) and 2(b) of Section C of
this Article FIFTH shall include the shares of Common Stock and/or
the shares of any other class of Voting Stock retained by the
holders of such shares.
E. Powers of the Continuing Directors. A majority of the
Continuing Directors shall have the power and duty to determine for
purposes of this Article FIFTH, on the basis of information known to
them after reasonable inquiry, (1) whether a person is an Interested
Stockholder, (2) the number of shares of Common Stock or other
securities beneficially owned by any person, (3) whether a person is an
Affiliate or Associate of another, and (4) whether the assets that are
the subject of any Business Combination have, or the consideration to be
received for the issuance or transfer of securities by the Corporation
or any Subsidiary in any Business Combination has, an aggregate Fair
Market Value in excess of the amounts set forth in clauses (2) and (6)
of Section A of this Article FIFTH.
Any such determination made in good faith by a majority of the
Continuing Directors shall be binding and conclusive for all the
purposes of this Article FIFTH.
F. No Effect of Fiduciary Obligations of Interested Stockholders.
Nothing contained in this Article FIFTH shall be construed to relieve
any Interested Stockholder from any fiduciary obligation imposed by law.
G. No Effect on Fiduciary Obligations of Directors. The fact that
any Business Combination complies with the provisions of Section C,
Paragraph 2 of this Article FIFTH shall not be construed to impose any
fiduciary duty, obligation or responsibility on the Board of Directors,
or any member thereof, to approve such Business Combination or recommend
its adoption or approval to the stockholders of the Corporation, nor
shall such compliance limit, prohibit or otherwise restrict in any
manner the Board of Directors, or any member thereof, with respect to
evaluations of or actions and responses taken with respect to such
Business Combination.
SIXTH: The existence of this Corporation is to be perpetual.
SEVENTH: The private property of the stockholders of this
Corporation shall not be subject to the payment of corporate debts to
any extent whatever.
EIGHTH: (1) The number of directors of this Corporation shall be
fixed and may be altered from time to time as may be provided in the By-
Laws. Vacancies on the Board of Directors and newly created
directorships resulting from any increase in the authorized number of
directors may be filled by a majority vote of the directors then in
office, though less than a quorum or by a sole remaining director at any
meeting of the Board of Directors and the directors so chosen shall hold
office until the next election of the Class for which such directors
shall have been chosen and until their successors shall have been duly
elected and qualified, unless sooner displaced. If there are no
directors in office, then an election of directors may be held in the
manner provided by statute. If, at the time of filling any vacancy or
any newly created directorship, the directors then in office shall
constitute less than a majority of the whole board (as constituted
immediately prior to any such increase), the Court of Chancery may, upon
application of any stockholder or stockholders holding at least ten
percent of the total number of the shares at the time outstanding having
the right to vote for such directors, summarily order an election to be
held to fill any such vacancies or newly created directorships, or to
replace the directors chosen by the directors then in office. Subject to
the provisions of Paragraph XII of Article FOURTH hereof, any director
may be removed by the stockholders at any annual or special meeting
thereof only for cause. Directors of this Corporation need not be
stockholders therein.
(2) At each annual meeting of stockholders, directors of the
Corporation shall be elected to hold office until the expiration of the
term for which they are elected, and until their successors have been
duly elected and qualified; except that if any such election shall not
be so held, such election shall take place at a stockholders' meeting
called and held in accordance with the Delaware General Corporation Law.
The directors of the Corporation shall be divided into three classes as
nearly equal in size as is practicable, hereby designated Class I, Class
II and Class III. The term of office of the initial Class I directors
shall expire at the next succeeding annual meeting of stockholders, the
term of office of the initial Class II directors shall expire at the
second succeeding annual meeting of stockholders and the term of office
of the initial Class III directors shall expire at the third succeeding
annual meeting of the stockholders. For the purposes hereof, the initial
Class I, Class II and Class III directors shall be those directors
elected at the May 7, 1991 annual meeting and designated as members of
such Class. At each annual meeting after the May 7, 1991 annual meeting,
directors to replace those of a Class whose terms expire at such annual
meeting shall be elected to hold office until the third succeeding
annual meeting and until their respective successors shall have been
duly elected and shall qualify. If the number of directors is hereafter
changed, any newly created directorships or decrease in directorships
shall be so apportioned among the classes as to make all classes as
nearly equal in number as is practicable.
Anything to the contrary notwithstanding, after May 7, 1991, any
director's term shall be subject to being mandatorily shortened to a
period of less than the term for which he or she was elected, depending
upon the attainment of a particular age of the director or upon
relocation of the director from the Company's service area, subject to
short-term extensions for a period no longer than the term for which he
or she was elected, based on the judgment of the directors as to what is
in the best interests of the Company, as may be provided by By-Laws
implementing these provisions.
The foregoing provisions relating to the classification of the
Board are subject to the provisions of Paragraph XII of Article FOURTH
hereof.
NINTH: In furtherance and not in limitation of the powers conferred
by statute the Board of Directors is expressly authorized:
(a) To fix, determine and vary from time to time the amount to
be maintained as surplus and the amount or amounts to be set apart
as working capital.
(b) To make, amend, alter, change, add to or repeal By-Laws
for this Corporation, without any action on the part of the stock-
holders. The By-Laws made by the directors may be amended, altered,
changed, added to or repealed by the stockholders.
(c) By resolution passed by a majority of the whole Board, to
designate three or more directors to constitute an Executive
Committee which committee shall have and exercise (except when the
Board of Directors shall be in session) such powers and rights of
the Board of Directors in the management of the business and
affairs of this Corporation as may be provided in the By-Laws or in
said resolution, and shall have power to authorize the seal of this
Corporation to be affixed to all papers which may require it.
(d) To authorize and cause to be executed mortgages and liens,
without limit as to amount, upon the real and personal property of
this Corporation.
(e) From time to time to determine whether and to what extent,
at what time and place, and under what conditions and regulations
the accounts and books of this Corporation or any of them, shall be
open to the inspection of any stockholder; and no stockholder shall
have any right to inspect any account or book or document of this
Corporation except as conferred by statute or the By-Laws or as
authorized by a resolution of the stockholders or Board of
Directors.
(f) To sell, assign, convey and otherwise dispose of a part of
the property, assets and effects of this Corporation less than the
whole or less than substantially the whole thereof, on such terms
and conditions as they shall deem advisable, without the assent of
the stockholders in writing or otherwise; and also to sell, assign,
transfer, convey and otherwise dispose of the whole or
substantially the whole of the property, assets, effects,
franchises and good-will of this Corporation on such terms and
conditions as they shall deem advisable, but only with the assent
in writing or pursuant to the affirmative vote of the holders of
not less than a majority in interest of the Common Stock then out-
standing, but in any event not less than the amount required by
law.
(g) All of the powers of this Corporation, in so far as the
same lawfully may be vested by this certificate in the Board of
Directors, are hereby conferred upon the Board of Directors of this
Corporation.
TENTH: In the absence of fraud, no contract or transaction between
this Corporation and any other association or corporation shall be
affected by the fact that any of the directors or officers of this
Corporation are interested in or are directors or officers of such other
association or corporation, and any director or officer of this
Corporation individually may be a party to, or may be interested in any
such contract or transaction of this Corporation; and no such contract
or transaction of this Corporation with any person or persons, firm,
association or corporation, shall be affected by the fact that any
director or officer of this Corporation is a party to, or interested in
such contract or transaction, or in any way connected with such person
or persons, firm, association or corporation; and each and every person
who may become a director or officer of this Corporation is hereby
relieved from any liability that might otherwise exist from thus
contracting with this Corporation for the benefit of himself or any
person, firm, association or corporation in which he may be in any way
interested.
ELEVENTH: This Corporation may in its By-Laws fix the number (not
less than the number required by law or in this certificate) of shares,
the holders of which must consent to, or which must be voted in favor
of, any specific act or acts by this Corporation, or its Board of
Directors or Executive Committee, and during the period for which such
number remains so fixed, such specified act or acts shall not and may
not be performed or carried out by this Corporation, or its Board of
Directors or Executive Committee without the consent or affirmative vote
of the holders of at least the number of shares so fixed.
TWELFTH: Except where other notice is specifically required by
statute written notice only of any stockholders' meeting given as
provided in the By-Laws shall be sufficient without publication or other
form of notice.
THIRTEENTH: Any officer or agent elected or appointed by the Board
of Directors, or by the Executive Committee, or by the stockholders, or
any member of the Executive Committee, or of any other committee, may be
removed at any time, with or without cause, in such manner as shall be
provided in the By-Laws of this Corporation.
FOURTEENTH: This Corporation may in its By-Laws make any other
provisions or requirements for the management or conduct of the business
of this Corporation, provided the same be not inconsistent with the
provisions of this certificate, or contrary to the laws of the State of
Delaware or of the United States.
FIFTEENTH: This Corporation reserves the right to amend, alter,
change, add to or repeal any provision contained in this Certificate of
Incorporation in the manner now or hereafter prescribed by statute, and
all rights conferred on officers, directors and stockholders herein are
granted subject to this reservation.
SIXTEENTH: To the full extent permitted by the General Corporation
Law of the State of Delaware or any other applicable laws as presently
or hereafter in effect, no director of the Corporation shall be
personally liable to the Corporation or its stockholders for or with
respect to any acts or omissions in the performance of his or her duties
as a director of the Corporation. No amendment to or repeal of this
Article SIXTEENTH shall apply to or have any effect on the liability or
alleged liability of any director of the Corporation for or with respect
to any acts or omissions of such director occurring prior to such
amendment.
IN WITNESS WHEREOF, said INTERSTATE POWER COMPANY has caused this
certificate to be signed by W. H. STOPPELMOOR, its President and
attested by J. C. McGowan, its Secretary, this 21st day of October,
1993.
INTERSTATE POWER COMPANY
Attest: By /s/ W. H. Stoppelmoor
J.C. McGowan, W. H. STOPPELMOOR
Secretary President
________________________
INTERSTATE POWER COMPANY
1925
CORPORATE SEAL
DELAWARE
/s/ J. C. McGowan
STATE OF IOWA }ss.:
COUNTY OF DUBUQUE }
BE IT REMEMBERED that on October 21, 1993, personally came before
me DONNA KLEIN, a Notary Public in and for the County and State
aforesaid, W. H. STOPPELMOOR, President of INTERSTATE POWER COMPANY, a
Delaware corporation, the corporation described in and which executed,
and on behalf of which was made, the foregoing Certificate, known to me
to be such President, and said W. H. STOPPELMOOR as such President duly
signed said Certificate before me and acknowledged said Certificate to
be his act and deed and the act and deed of said Corporation, and he
further acknowledged to me that the signatures affixed to said
Certificate are in the handwriting of, and are the genuine signatures of
W. H. STOPPELMOOR, as President, and J. C. McGowan, as Secretary, of
said Corporation, respectively; that the seal affixed to said
Certificate is the corporate seal of said Corporation; that said
Certificate was sealed, executed, acknowledged and delivered pursuant
to due authority from the Board of Directors of said Corporation.
Given under my hand and seal the day and year first in this
Certificate written.
DONNA KLEIN,
Notary Public
/s/ Donna Klein
DONNA KLEIN
(NOTARIAL SEAL) Notary Public, Dubuque County, Iowa
My Commission Expires January 30, 1994
STATE OF DELAWARE
OFFICE OF SECRETARY OF STATE
I, William T. Quillen, Secretary of State of the State of Delaware
do hereby certify the attached is a true and correct copy of the
Certificate of the Restated Certificate of Incorporation of Interstate
Power Company, filed in this Office on the Twenty-seventh day of
October, A.D., 199389 at 10:00 o'clock A.M.
/s/ William T. Quillen
William T. Quillen
Secretary of State
STATE OF DELAWARE
NEW CASTLE COUNTY ss:
I, Paulette Sullivan-Moore, Recorder of Deeds for New Castle
County, Delaware, do hereby certify that Certified Copy of Restated
Certificate of Incorporation of INTERSTATE POWER COMPANY, was received
for record in this office on November 5, 1993 and the same appears of
record in the Recorder's Office for said County in Record-Volume 1526
Page 647 Ec.
Witness my hand and Official Seal this Twenty-Fourth day of
November, A.D. 1993.
/s/ P. S. Moore
(OFFICIAL SEAL) Recorder
EX-3.(i).2
CERTIFICATE OF AMENDMENT
TO
THE RESTATED CERTIFICATE OF INCORPORATION
OF
INTERSTATE POWER COMPANY
__________________________________________________
Under Section 242 of the General Corporation Law
__________________________________________________
Pursuant to the provisions of Section 242 of the General
Corporation Law of the State of Delaware, the undersigned
corporation (the "Corporation") does hereby certify:
FIRST: That the Board of Directors of the Corporation, at
a meeting duly held, unanimously adopted a resolution proposing and
declaring advisable the following amendment to the Restated
Certificate of Incorporation of the Corporation and directing that
such amendment be submitted to the stockholders of the Corporation
for their approval:
RESOLVED, that the Restated Certificate of Incorporation
of Interstate Power Company be amended by deleting Heading C and
Paragraph XII of Article FOURTH in their entirety and inserting in
lieu thereof Heading C and Paragraph XII as follows:
"C. Voting Rights of Common
Stock and Preferred Stock--Certain Voting
Rights of Preferred Stock and
Preference Stock as to Directors
XII. Except as otherwise required by the statutes of the State
of Delaware and as otherwise provided in this Article FOURTH, and
subject to the provisions of the By-Laws of the Corporation, as
from time to time amended, with respect to the closing of the
transfer books and the fixing of a record date for the
determination of stockholders entitled to vote, the holders of the
Common Stock and the Preferred Stock shall exclusively possess all
voting power for the election of directors and for all other
purposes, and the holders of the Preference Stock shall have no
voting power and shall not be entitled to any notice of or to
attend any meeting of stockholders. Except as otherwise required
by the statutes of the State of Delaware and as otherwise provided
in this Article FOURTH, the holders of the Preferred Stock and the
holders of the Common Stock shall vote together as one class on all
matters submitted to a vote of stockholders of the Corporation,
with each share of Preferred Stock and each share of Common Stock
being entitled to one vote. Notwithstanding the foregoing, (a) if
and whenever full cumulative dividends for four (4) quarterly
dividend periods upon any series of Preferred Stock shall be
unpaid, the holders of the Preferred Stock as a class, subject to
any rights of the holders of the Preference Stock, if any, and
without regard to series shall thereafter at all elections of
directors have the exclusive right to elect the smallest number of
directors of the Corporation that shall constitute a majority of
the Board of Directors as then constituted, and the holders of the
Common Stock of the Corporation as a class shall have the exclusive
right to elect the remaining number of directors of the
Corporation, which right of the holders of the Preferred Stock,
shall however, cease when full cumulative dividends upon the
Preferred Stock of all series then outstanding shall have been paid
or declared and set apart for payment (and such full cumulative
dividends shall be declared and paid out of any funds legally
available therefor as soon as reasonably practicable), and/or (b)
if and whenever full cumulative dividends for six (6) quarterly
dividend periods (whether or not consecutive) upon any series of
Preference Stock shall be unpaid, in whole or in part, the number
of directors then constituting the full Board of Directors shall be
increased by two (said two being referred to as the "additional two
directors") and the holders of the Preference Stock as a class and
without regard to series shall thereafter at all elections of
directors have the exclusive right to elect said additional two
directors and the holders of the Common Stock and the Preferred
Stock of the Corporation voting as one class, subject to any
additional rights of the holders of the Preferred Stock, if any,
shall have the exclusive right to elect the remaining number of
directors of the Corporation, which right of the holders of the
Preference Stock shall, however, cease when full cumulative
dividends upon the Preference Stock of all series then outstanding
shall have been paid or declared and set apart for payment (and
such full cumulative dividends shall be declared and paid out of
any funds legally available therefor as soon as reasonably
practicable).
The terms of office of all persons who may be directors of the
Corporation at the time when such right to elect a majority of the
directors shall accrue to holders of Preferred Stock and/or right
to elect such additional two directors shall accrue to holders of
Preference Stock shall terminate upon the election of the
successors of such majority directors and/or such additional two
directors at the next annual meeting of the stockholders or (unless
under the provisions of the By-Laws of the Corporation, as then in
effect, an annual meeting of the stockholders is to be held within
ninety (90) days after such right to elect a majority of directors
and/or such additional two directors shall have so accrued) at an
earlier special meeting of the stockholders held as hereinafter in
this Paragraph XII provided. A special meeting of the stockholders
shall be held at any time after such right to elect a majority of
the directors shall accrue to holders of Preferred Stock and/or
such right to elect such two additional directors shall accrue to
holders of Preference Stock upon notice similar to that provided in
the By-Laws for an annual meeting, which notice shall be given not
more than fifteen (15) days after the accrual of such rights by the
President, a Vice-President, or the Secretary, of the Corporation,
such meeting to be held not less than sixty (60) nor more than
ninety (90) days after the accrual of such rights.
At the first meeting of stockholders held for the purpose of
electing directors during such time as the holders of the Preferred
Stock and/or Preference Stock shall have the special rights voting
as separate classes to elect directors, the presence in person or
by proxy of the holders of a majority of the outstanding Common
Stock, together with the Preferred Stock, shall be required to
constitute a quorum of such class for the election of directors,
and the presence in person or by proxy of the holders of a majority
of the outstanding Preferred Stock and/or Preference Stock shall be
required to constitute a quorum of each such class for the election
of directors; provided, however, that in the absence of a quorum of
the holders of the Preferred Stock and/or Preference Stock, no
election of directors shall be held, but a majority of the holders
of the Preferred Stock and/or Preference Stock who are present in
person or by proxy shall have power to adjourn the election of the
directors to a date not less than fifteen nor more than fifty days
from the giving of the notice of such adjourned meeting hereinafter
provided for; and provided, further, that at such adjourned
meeting, the presence in person or by proxy of the holders of 35%
of the outstanding Preferred Stock and/or Preference Stock shall be
required to constitute a quorum of each such class for the election
of directors. In the event such first meeting of stockholders shall
be so adjourned, it shall be the duty of the President, a
Vice-President or the Secretary of the Corporation, within ten days
from the date on which such first meeting shall have been
adjourned, to cause notice of such adjourned meeting to be given to
the stockholders entitled to vote thereat, such adjourned meeting
to be held not less than fifteen days nor more than fifty days from
the giving of such second notice. Such second notice shall be given
in the form and manner hereinabove provided for with respect to the
notice required to be given of such first meeting of stockholders,
and shall further set forth that a quorum was not present at such
first meeting and that the holders of 35% of the outstanding
Preferred Stock and/or Preference Stock shall be required to
constitute a quorum of each such class for the election of
directors at such adjourned meeting. If the requisite quorum of
holders of the Preferred Stock and/or Preference Stock shall not be
present at said adjourned meeting, then the directors of the
Corporation then in office shall remain in office until the next
annual meeting of the Corporation, or special meeting in lieu
thereof and until their successors shall have been elected and
qualify. Neither such first meeting nor such adjourned meeting need
be held on a date within sixty days of the next annual meeting of
the Corporation or special meeting in lieu thereof. At each annual
meeting of the Corporation, or special meeting in lieu thereof,
held during such time as the holders of the Preferred Stock and/or
Preference Stock, voting as separate classes shall have the right
to elect Directors, the foregoing provisions of this paragraph
shall govern each annual meeting, or special meeting in lieu
thereof, as if said annual meeting or special meeting were the
first meeting of stockholders held for the purpose of electing
directors after the right of the holders of the Preferred Stock
and/or Preference Stock, voting as separate classes, to elect
Directors, should have accrued with the exception that if, at any
adjourned annual meeting, or special meeting in lieu thereof, the
holders of 35% of the outstanding Preferred Stock and/or Preference
Stock are not present in person or by proxy, all the directors
shall be elected by a vote of the holders of a majority of the
Common Stock and the Preferred Stock of the Corporation present or
represented at the meeting voting as one class; provided, however,
that notwithstanding the provisions of this paragraph so long as
any shares of the Preferred Stock and/or Preference Stock of the
Corporation shall be outstanding, the holders of a majority of the
Preferred Stock and/or Preference Stock shall be sufficient to
constitute a quorum of the outstanding Preferred Stock and/or
Preference Stock for the election of directors.
No delay or failure by the holders of the Preferred Stock
and/or Preference Stock to elect the members of the Board of
Directors which such holders are entitled to elect shall invalidate
the election of the members of the Board of Directors elected by
the holders of the Common Stock and the Preferred Stock voting as
one class. Upon the termination of such right of the holders of the
Preferred Stock to elect a majority of directors, the terms of
office of all the directors of the Corporation shall terminate upon
the election of the successors of such directors at the next annual
meeting of the stockholders or at an earlier special meeting of the
stockholders called in like manner and subject to similar
conditions as hereinbefore in this Paragraph XII provided with
respect to the call of a special meeting of stockholders for the
election of directors by the holders of the Preferred Stock.
If and when all dividends then in default on the Preference
Stock of each series then outstanding shall have been paid, the
Preference Stock shall be divested of such voting powers and the
terms of office of the additional two directors (whether elected by
vote of the holders of Preference Stock or to fill a vacancy) shall
forthwith terminate and the number of directors constituting the
full Board of Directors shall be reduced accordingly.
Whenever the Preferred Stock and/or Preference Stock shall be
entitled to elect Directors, any holder of such stock shall have
the right, during regular business hours, in person or by a duly
authorized representative, to examine and to make transcripts of
the stock records of the Corporation for the Preferred Stock and/or
Preference Stock for the purpose of communicating with other
holders of such stock with respect to the exercise of such right of
election."
SECOND: That the amendment to the Restated Certificate of
Incorporation of the Corporation effected by this Certificate was
duly authorized by the stockholders of the Corporation, after first
having been declared advisable by the Board of Directors of the
Corporation, all in accordance with the provisions of Section 242
of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this
certificate to be signed by Michael R. Chase, its President and
Chief Executive Officer, who hereby acknowledges under penalties of
perjury that the facts herein stated are true and that this
Certificate is the Corporation's act and deed, this 3rd day of
March, 1997.
INTERSTATE POWER COMPANY
By: /s/ Michael R. Chase
Name: Michael R. Chase
Title: President
and Chief Executive Officer
EX-10.1
GAS PORTFOLIO MANAGEMENT AND SALES CONTRACT
BETWEEN
INTERSTATE POWER COMPANY
AND
MIDCON GAS SERVICES CORP.
(A Confidential Agreement)
FORM SE
FILED ON MARCH 18, 1997
EX-10.2
MAPP
MID-CONTINENT AREA POWER POOL
Restated Agreement
January 12, 1996
Table of Contents
ARTICLE 1
PREAMBLE . . . . . . . . . . . . . . . 1
1.1 Regional Reliability and Power Pool . . . . . . . . . . . . . 1
1.2 Regional Transmission and Power and Energy Market . . . . . . 1
ARTICLE 2
PURPOSE . . . . . . . . . . . . . . . 2
2.1 Purpose of the Restated Agreement . . . . . . . . . . . . . . 2
ARTICLE 3
DEFINITIONS . . . . . . . . . . . . . . 2
3.1 Accredited Capability . . . . . . . . . . . . . . . . . . . . 2
3.2 Accredited Capacity . . . . . . . . . . . . . . . . . . . . . 3
3.3 Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.4 Affiliated Members. . . . . . . . . . . . . . . . . . . . . . 3
3.5 All-Requirements Service. . . . . . . . . . . . . . . . . . . 3
3.6 Annual System Demand. . . . . . . . . . . . . . . . . . . . . 4
3.7 Applicant . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.8 Associate Member. . . . . . . . . . . . . . . . . . . . . . . 4
3.9 Associate Participant . . . . . . . . . . . . . . . . . . . . 4
3.10 Available Accredited Capacity . . . . . . . . . . . . . . . . 4
3.11 Canadian Laws . . . . . . . . . . . . . . . . . . . . . . . . 4
3.12 Canadian Regulatory Authority . . . . . . . . . . . . . . . . 4
3.13 Canadian Transmission Requester . . . . . . . . . . . . . . . 5
3.14 Canadian Transmission Supplier. . . . . . . . . . . . . . . . 5
3.15 Contractor. . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.16 Control Area Operator . . . . . . . . . . . . . . . . . . . . 5
3.17 Designating Entity. . . . . . . . . . . . . . . . . . . . . . 5
3.18 Effective Date. . . . . . . . . . . . . . . . . . . . . . . . 5
3.19 Electric Revenues . . . . . . . . . . . . . . . . . . . . . . 5
3.20 Electric Utility. . . . . . . . . . . . . . . . . . . . . . . 6
3.21 End-Use Load. . . . . . . . . . . . . . . . . . . . . . . . . 6
3.22 End-Use Load Member . . . . . . . . . . . . . . . . . . . . . 6
3.23 End-Use Load Obligation . . . . . . . . . . . . . . . . . . . 6
3.24 Federal Power Marketing Agency. . . . . . . . . . . . . . . . 6
3.25 FERC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.26 Firm Power. . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.27 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.28 FPA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.29 Good Utility Practice . . . . . . . . . . . . . . . . . . . . 7
3.30 Interruptible Load. . . . . . . . . . . . . . . . . . . . . . 7
3.31 Joint Member. . . . . . . . . . . . . . . . . . . . . . . . . 7
3.32 MAPP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.33 MAPP Agreement. . . . . . . . . . . . . . . . . . . . . . . . 8
3.34 MAPP Region . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.35 Market. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.36 Market Participant. . . . . . . . . . . . . . . . . . . . . . 8
3.37 Member. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.38 NERC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.39 Net Generating Capability . . . . . . . . . . . . . . . . . . 9
3.40 Non-Spinning Reserve. . . . . . . . . . . . . . . . . . . . . 9
3.41 Operating Reserve . . . . . . . . . . . . . . . . . . . . . . 9
3.42 Operating Reserve Obligation. . . . . . . . . . . . . . . . . 9
3.43 Partial Requirements Service. . . . . . . . . . . . . . . . . 9
3.44 Participant . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.45 Pool Participant. . . . . . . . . . . . . . . . . . . . . . . 10
3.46 Power and Energy Market Member. . . . . . . . . . . . . . . . 10
3.47 Regulatory Agency . . . . . . . . . . . . . . . . . . . . . . 10
3.48 Regulatory Participant. . . . . . . . . . . . . . . . . . . . 10
3.49 Reliability Dues. . . . . . . . . . . . . . . . . . . . . . . 10
3.50 Reliability Megawatts . . . . . . . . . . . . . . . . . . . . 10
3.51 Reliability Member. . . . . . . . . . . . . . . . . . . . . . 11
3.52 Representative. . . . . . . . . . . . . . . . . . . . . . . . 12
3.53 Reserve Capacity Obligation . . . . . . . . . . . . . . . . . 12
3.54 Restated Agreement. . . . . . . . . . . . . . . . . . . . . . 12
3.55 Rights Equivalent to Ownership. . . . . . . . . . . . . . . . 12
3.56 Service Schedules . . . . . . . . . . . . . . . . . . . . . . 13
3.57 Spinning Reserve. . . . . . . . . . . . . . . . . . . . . . . 13
3.58 System Demand . . . . . . . . . . . . . . . . . . . . . . . . 13
3.59 Total Operating Reserve Obligation. . . . . . . . . . . . . . 14
3.60 Transmission Owning Member. . . . . . . . . . . . . . . . . . 14
3.61 Transmission Provider . . . . . . . . . . . . . . . . . . . . 14
3.62 Transmission Requester. . . . . . . . . . . . . . . . . . . . 14
3.63 Transmission Using Member . . . . . . . . . . . . . . . . . . 14
3.64 Transmitting Utility. . . . . . . . . . . . . . . . . . . . . 14
3.65 Uncontrollable Forces . . . . . . . . . . . . . . . . . . . . 15
ARTICLE 4
MEMBERSHIP. . . . . . . . . . . . . . . 15
4.1 Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.2 Membership Process. . . . . . . . . . . . . . . . . . . . . . 16
4.2.1 Participants and Associate Participants. . . . . . . . 16
4.2.2 New Members. . . . . . . . . . . . . . . . . . . . . . 17
4.2.3 Joint Members. . . . . . . . . . . . . . . . . . . . . 17
4.2.4 Review of Applications . . . . . . . . . . . . . . . . 18
4.2.5 Change in Membership Categories. . . . . . . . . . . . 19
4.3 State and Provincial Agencies . . . . . . . . . . . . . . . . 19
4.4 Associate Members . . . . . . . . . . . . . . . . . . . . . . 20
4.5 Joint Members . . . . . . . . . . . . . . . . . . . . . . . . 20
4.6 Withdrawal, Suspension or Termination . . . . . . . . . . . . 21
4.6.1 Withdrawal . . . . . . . . . . . . . . . . . . . . . . 21
4.6.2 Suspension or Termination. . . . . . . . . . . . . . . 21
4.6.3 Joint Members. . . . . . . . . . . . . . . . . . . . . 22
4.6.4 Members in Good Standing . . . . . . . . . . . . . . . 23
4.7 Obligations on Suspension, Withdrawal or Termination. . . . . 23
4.7.1 Stability and Reliability. . . . . . . . . . . . . . . 23
4.7.2 Transactions . . . . . . . . . . . . . . . . . . . . . 24
4.7.3 Financial Obligations. . . . . . . . . . . . . . . . . 24
4.7.4 Regulatory Obligations . . . . . . . . . . . . . . . . 24
ARTICLE 5
GOVERNANCE AND MANAGEMENT. . . . . . . . . . . 25
5.1 Management Committee. . . . . . . . . . . . . . . . . . . . . 25
5.1.1 Membership . . . . . . . . . . . . . . . . . . . . . . 25
5.1.2 Number of Votes. . . . . . . . . . . . . . . . . . . . 25
5.1.3 Voting Requirements. . . . . . . . . . . . . . . . . . 26
5.1.4 Officers . . . . . . . . . . . . . . . . . . . . . . . 26
5.1.5 Meetings . . . . . . . . . . . . . . . . . . . . . . . 27
5.1.6 Nominating Committee . . . . . . . . . . . . . . . . . 27
5.1.7 Dispute Resolution . . . . . . . . . . . . . . . . . . 28
5.1.8 Review of Executive Committee. . . . . . . . . . . . . 29
5.1.9 Responsibilities . . . . . . . . . . . . . . . . . . . 29
5.2 Executive Committee . . . . . . . . . . . . . . . . . . . . . 30
5.2.1 Membership . . . . . . . . . . . . . . . . . . . . . . 30
5.2.2 Voting Requirements. . . . . . . . . . . . . . . . . . 33
5.2.3 Officers . . . . . . . . . . . . . . . . . . . . . . . 33
5.2.4 Meetings . . . . . . . . . . . . . . . . . . . . . . . 34
5.2.5 Reconsideration and Appeal of Decisions. . . . . . . . 34
5.2.6 Dispute Resolution . . . . . . . . . . . . . . . . . . 36
5.2.7 Responsibilities . . . . . . . . . . . . . . . . . . . 36
5.3 MAPP Center . . . . . . . . . . . . . . . . . . . . . . . . . 39
5.3.1 Establishment of MAPP Center . . . . . . . . . . . . . 39
5.3.2 Agreement with the Contractor. . . . . . . . . . . . . 39
5.4 Fees and Dues . . . . . . . . . . . . . . . . . . . . . . . . 40
5.4.1 Fee upon Joining . . . . . . . . . . . . . . . . . . . 40
5.4.2 Dues . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE 6
REGIONAL RELIABILITY . . . . . . . . . . . . 41
6.1 Objective . . . . . . . . . . . . . . . . . . . . . . . . . . 41
6.2 Standards . . . . . . . . . . . . . . . . . . . . . . . . . . 41
6.3 Adoption of Existing Reliability Requirements . . . . . . . . 42
6.4 Obligations of Members. . . . . . . . . . . . . . . . . . . . 42
6.4.1 Reliability. . . . . . . . . . . . . . . . . . . . . . 42
6.4.2 End-Use Load . . . . . . . . . . . . . . . . . . . . . 42
6.4.3 Assignment of End-Use Load Obligation. . . . . . . . . 43
6.4.4 Operating Reserves . . . . . . . . . . . . . . . . . . 44
6.4.5 Interconnected Operations. . . . . . . . . . . . . . . 45
6.4.6 Accreditation of Generation. . . . . . . . . . . . . . 45
6.4.7 System Disturbances. . . . . . . . . . . . . . . . . . 45
6.4.8 Interconnection. . . . . . . . . . . . . . . . . . . . 46
6.4.9 Information. . . . . . . . . . . . . . . . . . . . . . 46
6.5 MAPP Reliability Council. . . . . . . . . . . . . . . . . . . 46
6.5.1 Membership . . . . . . . . . . . . . . . . . . . . . . 46
6.5.2 Reliability Dues . . . . . . . . . . . . . . . . . . . 47
6.5.3 Number of Votes. . . . . . . . . . . . . . . . . . . . 48
6.5.4 Voting Requirements. . . . . . . . . . . . . . . . . . 48
6.5.5 Officers . . . . . . . . . . . . . . . . . . . . . . . 49
6.5.6 Meetings . . . . . . . . . . . . . . . . . . . . . . . 49
6.5.7 Nominating Committee . . . . . . . . . . . . . . . . . 50
6.5.8 Dispute Resolution . . . . . . . . . . . . . . . . . . 51
6.6 Regional Reliability Committee. . . . . . . . . . . . . . . . 52
6.6.1 Membership . . . . . . . . . . . . . . . . . . . . . . 52
6.6.2 Voting Requirements. . . . . . . . . . . . . . . . . . 56
6.6.3 Officers . . . . . . . . . . . . . . . . . . . . . . . 56
6.6.4 Meetings . . . . . . . . . . . . . . . . . . . . . . . 57
6.6.5 Subcommittees. . . . . . . . . . . . . . . . . . . . . 57
6.6.6 Reconsideration and Appeal of Decisions. . . . . . . . 59
6.6.7 Dispute Resolution . . . . . . . . . . . . . . . . . . 60
6.6.8 Responsibilities . . . . . . . . . . . . . . . . . . . 61
6.7 Participation in North-American Electric Reliability Council. 65
ARTICLE 7
GENERATION RESERVE-SHARING POOL . . . . . . . . . 66
7.1 Objective . . . . . . . . . . . . . . . . . . . . . . . . . . 66
7.2 Membership . . . . . . . . . . . . . . . . . . . . . . . . . 66
7.3 Obligations of Members of the Pool. . . . . . . . . . . . . . 66
7.3.1 Emergency Energy . . . . . . . . . . . . . . . . . . . 66
7.3.2 Scheduled Outage Energy. . . . . . . . . . . . . . . . 67
7.3.3 Operating Reserves . . . . . . . . . . . . . . . . . . 67
7.3.4 Reserve Capacity Deficiency . . . . . . . . . . . . . 67
7.3.5 Service Schedules. . . . . . . . . . . . . . . . . . . 67
ARTICLE 8
REGIONAL TRANSMISSION. . . . . . . . . . . . 68
8.1 Objectives. . . . . . . . . . . . . . . . . . . . . . . . . . 68
8.2 Standards . . . . . . . . . . . . . . . . . . . . . . . . . . 68
8.3 Obligation to Provide Transmission Service. . . . . . . . . . 69
8.3.1 Members Generally. . . . . . . . . . . . . . . . . . . 69
8.3.2 Filing of Tariffs. . . . . . . . . . . . . . . . . . . 70
8.3.3 Review of Tariffs. . . . . . . . . . . . . . . . . . . 71
8.3.4 Canadian Transmission Suppliers. . . . . . . . . . . . 72
8.4 Requests for Transmission Service . . . . . . . . . . . . . . 73
8.5 Response to a Request for Service . . . . . . . . . . . . . . 73
8.6 Transmission Planning . . . . . . . . . . . . . . . . . . . . 74
8.6.1 Member Plans . . . . . . . . . . . . . . . . . . . . . 74
8.6.2 Availability of Plans and Information. . . . . . . . . 75
8.6.3 Planning Standards . . . . . . . . . . . . . . . . . . 76
8.6.4 The Regional Plan. . . . . . . . . . . . . . . . . . . 76
8.6.5 Reliability Catalogue. . . . . . . . . . . . . . . . . 77
8.6.6 Support of the Plan. . . . . . . . . . . . . . . . . . 78
8.7 Construction and Ownership of Transmission Facilities . . . . 78
8.7.1 Obligation to Build. . . . . . . . . . . . . . . . . . 78
8.7.2 U.S. and Canadian Members. . . . . . . . . . . . . . . 80
8.8 Regional Transmission Committee . . . . . . . . . . . . . . . 80
8.8.1 Membership . . . . . . . . . . . . . . . . . . . . . . 80
8.8.2 Dues . . . . . . . . . . . . . . . . . . . . . . . . . 80
8.8.3 Voting Requirements. . . . . . . . . . . . . . . . . . 81
8.8.4 Officers . . . . . . . . . . . . . . . . . . . . . . . 81
8.8.5 Meetings . . . . . . . . . . . . . . . . . . . . . . . 82
8.8.6 Subcommittees. . . . . . . . . . . . . . . . . . . . . 83
8.8.7 Dispute Resolution . . . . . . . . . . . . . . . . . . 85
8.8.8 Responsibilities . . . . . . . . . . . . . . . . . . . 86
ARTICLE 9
POWER AND ENERGY MARKET . . . . . . . . . . . 90
9.1 Establishment of Market . . . . . . . . . . . . . . . . . . . 90
9.2 Participation . . . . . . . . . . . . . . . . . . . . . . . . 90
9.2.1 Non-Members. . . . . . . . . . . . . . . . . . . . . . 90
9.2.2 Suspension or Termination. . . . . . . . . . . . . . . 91
9.3 Transaction Fees and Service Schedules. . . . . . . . . . . . 91
9.4 Market Committee. . . . . . . . . . . . . . . . . . . . . . . 92
9.4.1 Membership . . . . . . . . . . . . . . . . . . . . . . 92
9.4.2 Voting Requirements. . . . . . . . . . . . . . . . . . 93
9.4.3 Officers . . . . . . . . . . . . . . . . . . . . . . . 93
9.4.4 Meetings . . . . . . . . . . . . . . . . . . . . . . . 93
9.4.5 Subcommittees. . . . . . . . . . . . . . . . . . . . . 94
9.4.6 Dispute Resolution . . . . . . . . . . . . . . . . . . 94
9.4.7 Responsibilities . . . . . . . . . . . . . . . . . . . 95
ARTICLE 10
METERING AND RECORDS . . . . . . . . . . . . 96
10.1 Metering. . . . . . . . . . . . . . . . . . . . . . . . . . . 96
10.2 Records . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
10.2.1 Power and Energy Movements . . . . . . . . . . . . . . 96
10.2.2 Meter Registrations. . . . . . . . . . . . . . . . . . 97
ARTICLE 11
DISPUTE RESOLUTION. . . . . . . . . . . . . 97
11.1 Mediation . . . . . . . . . . . . . . . . . . . . . . . . . . 97
11.1.1 When Required. . . . . . . . . . . . . . . . . . . . . 97
11.1.2 Procedures . . . . . . . . . . . . . . . . . . . . . . 98
11.2 Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . 100
11.2.1 When Required. . . . . . . . . . . . . . . . . . . . . 100
11.2.2 Initiation . . . . . . . . . . . . . . . . . . . . . . 101
11.2.3 Selection of Arbitrator(s) . . . . . . . . . . . . . . 102
11.2.4 Procedures . . . . . . . . . . . . . . . . . . . . . . 102
11.2.5 Summary Disposition and Interim Measures . . . . . . . 102
11.2.6 Discovery of Facts . . . . . . . . . . . . . . . . . . 103
11.2.7 Evidentiary Hearing. . . . . . . . . . . . . . . . . . 104
11.2.8 Confidentiality. . . . . . . . . . . . . . . . . . . . 105
11.2.9 Timetable. . . . . . . . . . . . . . . . . . . . . . . 106
11.2.10 Advisory Interpretations. . . . . . . . . . . . . . 106
11.2.11 Decisions . . . . . . . . . . . . . . . . . . . . . 107
11.2.12 Costs . . . . . . . . . . . . . . . . . . . . . . . 107
11.2.13 Enforcement . . . . . . . . . . . . . . . . . . . . 108
11.3 Alternate Dispute Resolution Committee. . . . . . . . . . . . 108
11.3.1 Membership . . . . . . . . . . . . . . . . . . . . . . 108
11.3.2 Voting Requirements. . . . . . . . . . . . . . . . . . 109
11.3.3 Officers . . . . . . . . . . . . . . . . . . . . . . . 109
11.3.4 Meetings . . . . . . . . . . . . . . . . . . . . . . . 109
11.3.5 Responsibilities . . . . . . . . . . . . . . . . . . . 110
ARTICLE 12
PARTICIPATION BY THE WESTERN AREA POWER ADMINISTRATION. . . . 111
12.1 Participation by the United States. . . . . . . . . . . . . . 111
12.3 Officials Not To Benefit. . . . . . . . . . . . . . . . . . . 112
12.4 Covenant Against Contingent Fees. . . . . . . . . . . . . . . 112
12.5 Contractor Agreement. . . . . . . . . . . . . . . . . . . . . 112
12.5.1 Equal Opportunity Employment Practices . . . . . . . . 113
12.5.2 Contract Work Hours and Safety Standards . . . . . . . 113
12.5.3 Use of Convict Labor . . . . . . . . . . . . . . . . . 113
ARTICLE 13
GENERAL PROVISIONS. . . . . . . . . . . . . 114
13.1 Effect of Prior Obligations . . . . . . . . . . . . . . . . . 114
13.2 Pending FERC Proceedings. . . . . . . . . . . . . . . . . . . 114
13.3 Notice and Conduct of Meetings. . . . . . . . . . . . . . . . 114
13.3.1 Notice . . . . . . . . . . . . . . . . . . . . . . . . 114
13.3.2 Alternative Means of Meeting . . . . . . . . . . . . . 115
13.3.3 Participation in Meetings. . . . . . . . . . . . . . . 116
13.3.4 Minutes. . . . . . . . . . . . . . . . . . . . . . . . 116
13.3.5 Written Votes. . . . . . . . . . . . . . . . . . . . . 116
13.3.6 Reimbursement of Expenses. . . . . . . . . . . . . . . 117
13.4 Delivery of Notices and Minutes . . . . . . . . . . . . . . . 117
13.5 Terms of Office . . . . . . . . . . . . . . . . . . . . . . . 118
13.6 Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . 118
13.7 Successors and Assigns. . . . . . . . . . . . . . . . . . . . 118
13.7.1 Successors . . . . . . . . . . . . . . . . . . . . . . 118
13.7.2 Assignments. . . . . . . . . . . . . . . . . . . . . . 119
13.7.3 Rights and Obligations . . . . . . . . . . . . . . . . 119
13.8 Choice of Law . . . . . . . . . . . . . . . . . . . . . . . . 119
13.9 Regulation. . . . . . . . . . . . . . . . . . . . . . . . . . 119
13.10 Amendment and Termination. . . . . . . . . . . . . . . 119
13.11 Tax Exempt Financing . . . . . . . . . . . . . . . . . 120
13.11.1 No Impairment . . . . . . . . . . . . . . . . . . . 120
13.11.2 Counsel Opinion or IRS Ruling . . . . . . . . . . . 121
13.11.3 Elimination of Impairment . . . . . . . . . . . . . 121
13.11.4 New Tax-exempt Debt . . . . . . . . . . . . . . . . 123
13.11.5 Applicability to Obligation to Build. . . . . . . . 124
13.11.6 Participation in the Generation Reserve-Sharing Pool124
13.11.7 IRS Rule or Regulation. . . . . . . . . . . . . . . 124
13.12 Uncontrollable Forces. . . . . . . . . . . . . . . . . 124
13.13 Political Activities . . . . . . . . . . . . . . . . . 125
13.14 Laws of the United States. . . . . . . . . . . . . . . 125
13.15 Compliance with Applicable Laws. . . . . . . . . . . . 125
13.16 Effect of Canadian Laws. . . . . . . . . . . . . . . . 126
13.17 Independent Contractors. . . . . . . . . . . . . . . . 126
13.18 Currency . . . . . . . . . . . . . . . . . . . . . . . 127
13.19 Weighted Voting for Transmission Owning Members. . . . 127
13.20 Weighted Voting for Transmission Using Members . . . . 128
13.22 Affiliate Relationships. . . . . . . . . . . . . . . . 128
ARTICLE 14
TERM . . . . . . . . . . . . . . . . 128
14.1 Effective Date. . . . . . . . . . . . . . . . . . . . . . . . 128
14.2 Termination of MAPP Agreement . . . . . . . . . . . . . . . . 129
EXHIBIT A
INITIAL REGIONAL RELIABILITY COMMITTEE SUBCOMMITTEES . . . . A-1
EXHIBIT B
INITIAL GENERATION RESERVE-SHARING POOL SCHEDULES. . . . . B-1
EXHIBIT C
SCHEDULE F: TRANSMISSION SERVICE FOR
COORDINATION TRANSACTIONS. . . . . . . . . . . C-1
EXHIBIT D
INITIAL REGIONAL TRANSMISSION COMMITTEE SUBCOMMITTEES. . . . D-1
EXHIBIT E
INITIAL POWER AND ENERGY MARKET SCHEDULES. . . . . . . E-1
EXHIBIT F
MAP OF THE MAPP REGION. . . . . . . . . . . . G-1
RESTATED MID-CONTINENT AREA POWER POOL AGREEMENT
THIS RESTATED MID-CONTINENT AREA POWER POOL AGREEMENT (RESTATED
AGREEMENT) is made and entered into to amend and restate the MAPP
Agreement.
ARTICLE 1
PREAMBLE
1.1 Regional Reliability and Power Pool - MAPP was established and
continues to operate as a regional reliability council and power pool to
realize and further the reliability and other benefits of interconnected
operations among a large number of entities engaged in the electric utility
business in the MAPP Region. MAPP also provides coordination of the
installation and operation of generation and transmission facilities
located within the MAPP Region and for the sharing of reserves.
1.2 Regional Transmission and Power and Energy Market - In addition
to the functions enumerated in Section 1.1, the Members desire (1) to
establish a regional transmission group to provide for the comparable and
efficient provision of transmission service within and contiguous to the
MAPP Region on a consistent basis, to realize and further the benefits of
coordinated regional transmission planning, and to resolve disputes over
the provision of transmission services, and (2) to establish a Power and
Energy Market to obtain the benefits of the efficient purchase and sale of
electric capacity and energy at competitive rates, including the
development of recommended standard terms and conditions for market-based
capacity and energy transactions.
ARTICLE 2
PURPOSE
2.1 Purpose of the Restated Agreement - MAPP's primary purposes have
been and are to ensure that the interconnected electric systems in the MAPP
Region are operated reliably and efficiently, consistent with reasonable
utilization of natural resources and effects on the environment, and to
achieve the economic benefits of power pooling through coordinated planning
and operations, the sharing of reserves, and economic sales and purchases.
The establishment of a regional transmission group and a Power and Energy
Market will further advance the public interest by coordinating
transmission planning in the region, by facilitating the provision of
transmission service within the region on a comparable basis, and
facilitating exchanges of wholesale capacity and energy at competitive
rates among a wide variety of entities, thereby promoting efficiency in the
generation and sale of bulk power, while preserving the reliability of the
interconnected electric system in the MAPP Region.
ARTICLE 3
DEFINITIONS
3.1 Accredited Capability of an End-Use Load Member for any month
shall mean (a) the Net Generating Capability of an End-Use Load Member at
the time of the Member's maximum System Demand, plus (b) the value in
kilowatts assigned to such Member's purchase of Accredited Capacity, and
minus (c) the value in kilowatts assigned to any commitment of such Member
to sell Accredited Capacity. Accredited Capability will be determined and
assigned under procedures established by the Regional Reliability
Committee.
3.2 Accredited Capacity shall mean: (i) capacity from a specific
generating unit accredited annually under Section 6.4.6 in accordance with
MAPP procedures; (ii) capacity purchased under a Service Schedule that the
Regional Reliability Committee has designated as a Service Schedule under
which purchases will qualify as Accredited Capacity; or (iii) capacity that
the Regional Reliability Committee has determined is equivalent in firmness
and reliability to a purchase under a Service Schedule designated as
specified in (ii) above.
3.3 Affiliate shall mean: (i) any two or more entities one of which
controls the other or that are under common control; (ii) any generation
and transmission cooperative and one of its cooperative members; or (iii)
any joint municipal agency and one of its members. Control means the
possession, directly or indirectly, of the power to direct the management
or policies of an entity. A rebuttable presumption that control exists
arises from the ownership of or the power to vote, directly or indirectly,
ten percent (10%) or more of the voting securities of such entity.
3.4 Affiliated Members shall mean: (i) any two Members if one
controls the other; (ii) any two or more Members that are directly or
indirectly under common control; (iii) any generation and transmission
cooperative and one of its cooperative members, both of which are Members;
or (iv) any joint municipal agency and one of its members, both of which
are Members. Control means the possession, directly or indirectly, of the
power to direct the management or policies of an entity. A rebuttable
presumption that control exists arises from the ownership of or the power
to vote, directly or indirectly, ten percent (10%) or more of the voting
securities of such entity.
3.5 All-Requirements Service shall mean wholesale service that
includes reserves for all of the requirements of specified End-Use Load in
the MAPP Region.
3.6 Annual System Demand shall mean the highest System Demand of an
End-Use Load Member occurring during the 12-month period ending with the
current month.
3.7 Applicant shall mean an entity which has completed an application
for membership pursuant to Section 4.2.2 or Section 4.2.3.
3.8 Associate Member shall mean an association or other group the
members or participants in which are entities that are eligible to become
Members, or an entity that is eligible to become a Member, and that has
been accepted as an Associate Member in accordance with the provisions of
Section 4.4 of this Restated Agreement.
3.9 Associate Participant shall mean an entity that was an Associate
Participant of MAPP as defined in the MAPP Agreement, in good standing
immediately prior to the date on which this Restated Agreement is submitted
to a vote of the Participants under the MAPP Agreement for adoption as an
amendment and restatement of the MAPP Agreement.
3.10 Available Accredited Capacity shall mean the Accredited
Capability of a Member adjusted for generating capacity out of service for
maintenance or repair.
3.11 Canadian Laws shall mean the laws of Canada or any Province of
Canada, any regulations made thereunder and any orders, policies, rules or
procedures of any governments thereof or of agencies established thereby,
including Canadian Regulatory Authorities, relating to facilities or
interconnections located in Canada or the sale, purchase or transmission of
electric energy in Canada or the rates, charges, terms and conditions of
service therefor.
3.12 Canadian Regulatory Authority shall mean the agency or agencies
established under the laws of Canada or any Province of Canada having
jurisdiction over facilities or interconnections located in Canada or the
sale, purchase or transmission of electric energy in Canada or the rates,
charges, terms and conditions of service therefor.
3.13 Canadian Transmission Requester shall mean any Member, wherever
located, that requests interconnection or transmission service from a
Canadian Transmission Supplier.
3.14 Canadian Transmission Supplier shall mean any Member owning or
controlling access to or the use of transmission facilities in Canada.
3.15 Contractor shall mean MAPPCOR, a Minnesota nonprofit corporation,
or such other entity or entities as may be selected by the Management
Committee to provide the services, as well as all associated facilities,
equipment and personnel, described in Section 5.3.1 of this Restated
Agreement.
3.16 Control Area Operator shall mean an entity operating a control
area recognized by NERC.
3.17 Designating Entity shall mean an entity that is eligible for
membership in accordance with the requirements of Article 4, that has
Electric Revenues of less than $15,000,000, or such other amount as may be
established from time to time by the Executive Committee, and that elects
to participate in MAPP through a Joint Member.
3.18 Effective Date shall mean the date specified in Section 14.1 of
this Restated Agreement.
3.19 Electric Revenues shall mean the average of the annual total
revenues of each Member over its most recent three fiscal years, as
determined from the audited financial records of each Member, from: (a)
sales to customers located in the MAPP Region of electric capacity or
energy or both; (b) sales to customers located outside the MAPP Region of
electric capacity or energy or both from generation facilities located in
the MAPP Region; and (c) sales of transmission service, including related
ancillary services, on transmission facilities located in the MAPP Region;
provided, however, that to the extent a Member's annual total revenues are
derived from sales of electric capacity or energy or both to an Affiliate
which is not a Member, such annual total revenues shall be increased, under
standards and procedures established by the Executive Committee, by the
difference between the revenues of each such Affiliate derived from the
resale of such electric capacity and energy, and the cost of such electric
capacity and energy to the Affiliate.
3.20 Electric Utility shall mean any entity, person, Federal agency
(including any Federal Power Marketing Agency and the Tennessee Valley
Authority) or State agency (including any municipality) which sells
electric energy.
3.21 End-Use Load shall mean the load of persons or other entities
that purchase or produce electric energy for their own consumption and not
for resale.
3.22 End-Use Load Member shall mean an individual Member that has an
End-Use Load Obligation, or a Designating Entity that has an End-Use Load
Obligation.
3.23 End-Use Load Obligation shall mean an obligation imposed by law,
regulation or contract to serve End-Use Load within the MAPP Region,
including any obligation imposed by an assignment of End-Use Load
Obligation under Section 6.4.3 of this Restated Agreement.
3.24 Federal Power Marketing Agency shall mean any agency or
instrumentality of the United States (other than the Tennessee Valley
Authority) which sells electric energy.
3.25 FERC shall mean the Federal Energy Regulatory Commission or a
successor agency.
3.26 Firm Power shall mean Accredited Capacity and associated energy
intended to be available at all times for which the seller maintains
reserves, under standards and requirements established by the Regional
Reliability Committee.
3.27 Fiscal Year shall mean the MAPP fiscal year as established by the
Management Committee.
3.28 FPA shall mean the Federal Power Act, 16 U.S.C. Section 791a et
seq., and all amendments thereto.
3.29 Good Utility Practice shall mean, at any particular time, any of
the practices, methods and acts engaged in or approved by a significant
portion of the electric utility industry in the MAPP Region during the
relevant time period, or any of the practices, methods and acts which, in
the exercise of reasonable judgment in light of the facts known at the time
a decision is made, could be expected to produce the desired result at the
lowest reasonable cost consistent with reliability, safety and expedition.
Good 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
range of acceptable practices, methods or acts.
3.30 Interruptible Load shall mean End-Use Load certified to be
interruptible under standards and requirements established from time to
time by the Regional Reliability Committee.
3.31 Joint Member shall mean an entity designated by any two or more
Designating Entities to participate in the activities of MAPP on their
behalf.
3.32 MAPP shall mean the Mid-Continent Area Power Pool, the
organization created by and existing pursuant to the MAPP Agreement and
this Restated Agreement.
3.33 MAPP Agreement shall mean the Mid-Continent Area Power Pool
Agreement dated as of the 31st day of March, 1972, and as amended through
the Effective Date.
3.34 MAPP Region shall mean the geographic area the boundaries of
which are as shown on the map attached hereto as Exhibit F, which map and
boundaries may be modified from time to time as appropriate by the
Executive Committee, and shall also include all additional End-Use Load
outside of that area which is operated electronically as part of the
control area of a Control Area Operator that is a Member. Such geographic
area shall be expanded to include the control area of an adjacent Control
Area Operator that becomes a Member and reports to NERC the transfer of its
control area to the MAPP Region, or shall be reduced if a Control Area
Operator withdraws from this Restated Agreement.
3.35 Market shall mean the Power and Energy Market established
pursuant to Article 9 hereof.
3.36 Market Participant shall mean the Power and Energy Market Members
and those entities that have qualified to participate in the Power and
Energy Market in accordance with the provisions of Section 9.2.1.
3.37 Member shall mean any entity that (a) meets the eligibility
requirements of Section 4.1, has been accepted for membership in accordance
with the procedures set forth in Section 4.2, and has executed an agreement
with the Contractor pursuant to Section 5.3.2, or (b) is a Joint Member
that has been accepted for membership in accordance with the provisions of
Section 4.2.3., or (c) is a Designating Entity for such Joint Member. As
used herein, the term "Member" shall not mean an Associate Member or a
Regulatory Participant.
3.38 NERC shall mean the North American Electric Reliability Council.
3.39 Net Generating Capability shall mean that amount of kilowatts,
less station use, that all the accredited generating facilities of a Member
could normally supply simultaneously to its system or the interconnected
systems of the Members under standards and requirements established from
time to time by the Regional Reliability Committee. The capability of
accredited generating units out of service for maintenance or repair shall
be included in the Net Generating Capability of a Member under standards
and requirements established by the Regional Reliability Committee.
3.40 Non-Spinning Reserve shall mean all unloaded generating
capability not qualifying as Spinning Reserve, or other resources that can
be made available in ten minutes or less, under standards and requirements
established from time to time by the Regional Reliability Committee that
meet or exceed the applicable criteria, standards and guides established by
NERC.
3.41 Operating Reserve shall mean that Available Accredited Capacity
above System Demand required to provide Spinning Reserve and Non-Spinning
Reserve sufficient to return the Area Control Error (ACE) of a MAPP control
area which has lost a generating resource to zero under standards and
requirements established by the Regional Reliability Committee that meet or
exceed the criteria, standards and guides established by NERC.
3.42 Operating Reserve Obligation shall mean that amount of Spinning
Reserve and Non-Spinning Reserve which a Member is obligated under the
terms of this Restated Agreement to provide for the purpose of maintaining
continuity of service.
3.43 Partial Requirements Service shall mean wholesale service that
(a) has an initial term of not less than five years, (b) includes reserves,
and (c) supplies a specified portion but not all of the requirements of
specified End-Use Load in the MAPP Region.
3.44 Participant shall mean (i) an entity that was a "Participant" of
MAPP as defined in the MAPP Agreement, in good standing immediately prior
to the date on which this Restated Agreement is submitted to a vote of the
Participants under the MAPP Agreement for adoption as an amendment and
restatement of the MAPP Agreement, and (ii) Manitoba Hydro.
3.45 Pool Participant shall mean a Member participating in the
Generation Reserve-Sharing Pool as specified in Section 7.2.
3.46 Power and Energy Market Member shall mean any Member that (i)
intends to conduct transactions through the Power and Energy Market, (ii)
is willing to share in the costs of establishing and operating the Power
and Energy Market, and (iii) has so signified in writing to the Secretary
of the Management Committee.
3.47 Regulatory Agency shall mean a state or provincial agency in the
United States or Canada exercising regulatory authority over the rates,
terms or conditions of electric service of an entity other than itself
within the MAPP Region or the planning, siting, construction or operation
of electric facilities of an entity other than itself within the MAPP
Region.
3.48 Regulatory Participant shall mean a Regulatory Agency which
elects to participate in the activities of MAPP.
3.49 Reliability Dues shall mean the contribution toward the costs
allocated or assigned to the MAPP Reliability Council that are to be paid
by each Reliability Member in accordance with the provisions of Section
6.5.2.
3.50 Reliability Megawatts shall mean: (a) for a Reliability Member
that is an End-Use Load Member (1) the total megawatts of peak firm demand
attributable to that Member's End-Use Load Obligation during the calendar
year prior to the annual meeting of the Members, plus (2) the sum of the
daily maximum capacity in megawatts of (i) wholesale Firm Power sold during
such prior calendar year to customers in the MAPP Region other than to meet
the Reliability Member's End-Use Load Obligation and (ii) wholesale Firm
Power sold to customers outside the MAPP Region from generation facilities
located in the MAPP Region, this sum being divided by the total number of
days in such prior calendar year; (b) for a Reliability Member that has
sold Firm Power during the calendar year prior to the annual meeting of
Members but is not an End-Use Load Member, the sum of the daily maximum
capacity in megawatts of (i) wholesale Firm Power sold during such prior
calendar year to customers in the MAPP Region and (ii) wholesale Firm Power
sold to customers outside the MAPP Region from generation facilities
located in the MAPP Region, this sum being divided by the total number of
days in such prior calendar year; and (c) for a Reliability Member that
owns, or has Rights Equivalent to Ownership in, transmission facilities in
the MAPP Region and does not have Reliability Megawatts under either (a) or
(b) hereof, the sum of the daily maximum capacity in megawatts of firm
transmission service on facilities in the MAPP Region sold during the
twelve month period ending with the calendar year prior to the annual
meeting of Members, divided by the total number of days in such period.
3.51 Reliability Member shall mean any Member which is (a) an End-Use
Load Member, or (b) a Transmission Owning Member that is not an End-Use
Load Member and that owns or has Rights Equivalent to Ownership in
transmission facilities in the MAPP Region, or (c) a Joint Member one or
more of the Designating Entities of which are End-Use Load Members, or (d)
a Member desiring to participate in the activities of the MAPP Reliability
Council and willing to assume its share of the costs of MAPP reliability
functions.
3.52 Representative shall mean an employee or other agent of a Member,
a Joint Member, an Associate Member or a Regulatory Participant who has
been designated by the Member, the Joint Member, the Associate Member or
the Regulatory Participant to serve on or attend meetings of a council,
committee, subcommittee or other body created by or pursuant to this
Restated Agreement, including any such a person elected or appointed as
specified in this Restated Agreement to serve on a committee, subcommittee
or other body.
3.53 Reserve Capacity Obligation of a Member, for any month, shall
mean the Accredited Capability a Member is obligated to reserve and use for
the purpose of maintaining continuity of service, as established from time
to time by the Regional Reliability Committee.
3.54 Restated Agreement shall mean this Restated Mid-Continent Area
Power Pool Agreement.
3.55 Rights Equivalent to Ownership shall mean the rights, benefits,
and obligations associated with the ownership of a pro rata share of
transmission capacity without ownership of the associated transmission
facilities, including but not limited to, the right to use, control access
to, assign, sell or otherwise dispose of such transmission capacity, and
the financial obligation to pay for the associated share of all costs,
including but not limited to operation, maintenance or replacement costs
and taxes allocated to such facilities, but excluding legal title and the
responsibility for siting and constructing, maintaining, replacing, and
physically operating such facilities. Taking service under a long-term
firm, flexible point-to-point, or network tariff or schedule does not
create or confer Rights Equivalent to Ownership.
3.56 Service Schedules shall be those schedules designated in Sections
7.3, 8.3, and 9.3, and such additional schedules as may be established from
time to time, including any amendments or modifications to such schedules
as may be implemented in accordance with the provisions of this Restated
Agreement.
3.57 Spinning Reserve shall mean the amount of capacity of the
unloaded accredited generating units connected to and synchronized with the
interconnected system in the MAPP Region that is responsive to frequency
deviation, that will respond immediately to the loss of MAPP generation,
and that is sufficient to provide normal regulating margin, subject to such
standards and requirements as may be established from time to time by the
Regional Reliability Committee that meet or exceed the criteria, standards
and guides established by NERC.
3.58 System Demand shall mean that number of kilowatts which is equal
to the kilowatt-hours in any clock hour attributable to energy required by
an End-Use Load Member during such hour to fulfill its End-Use Load
Obligation within the MAPP Region, including system losses, and also
including any associated losses occurring on other systems supplied by such
Member, but excluding (i) generating station uses, (ii) transmission losses
supplied by another system, and (iii) energy purchased for Interruptible
Load, under such standards and requirements as may be established from time
to time by the Regional Reliability Committee.
3.59 Total Operating Reserve Obligation shall be that amount of
Spinning Reserve and Non-Spinning Reserve of the Members collectively
required to maintain continuity of service to all End-Use Load in the MAPP
Region.
3.60 Transmission Owning Member shall mean a Member owning, or having
by contract Rights Equivalent to Ownership in, facilities for the
transmission of electric power at 115 kV or greater and extending for 500
miles or more that (i) are connected with and capable of operating as part
of the interconnected grid of such facilities within the MAPP Region, or
(ii) are outside the MAPP Region but are operated synchronously with and
are directly interconnected with facilities within the MAPP Region, or
(iii) are interconnected and operated synchronously with facilities within
the MAPP Region through the facilities of another Member or Members.
Partial ownership or entitlement in a mile of line shall be represented as
a percentage of the whole mile based on the current rating of the line as
reported to MAPP.
3.61 Transmission Provider shall mean any Member that supplies
interconnection or transmission service to another Member.
3.62 Transmission Requester shall mean any Member that requests
interconnection or transmission service from any other Member or Members.
3.63 Transmission Using Member shall mean a Member that is an actual
or potential user of transmission service within the MAPP Region and that
is not a Transmission Owning Member.
3.64 Transmitting Utility shall mean any Electric Utility, qualifying
cogeneration facility as defined in the FPA, qualifying small power
production facility as defined in the FPA, or other entity which owns,
operates, or has Rights Equivalent to Ownership in electric power
transmission facilities used for the transmission of electric energy for
sale at wholesale.
3.65 Uncontrollable Forces shall mean without limitation, the
following: acts of God; strikes, lockouts or other industrial
disturbances; acts of public enemies; orders, or absence of necessary
orders and permits of any kind which have been properly applied for, from
the government of the United States, Canada or from any State, Territory or
Province, or any of their departments agencies or officials, or from any
civil or military authority; extraordinary delay in transportation;
inability to transport, store or reprocess spent nuclear fuel; unforeseen
soil conditions; equipment, material, supplies, labor or machinery
shortages; epidemics; landslides; lightning; ice; earthquakes; fire;
hurricanes; tornadoes; storms; floods; washouts; drought; war; sabotage;
national emergency; civil disturbances; explosions; breakage or accident to
machinery generation, transmission and/or distribution facilities, pipes or
canals not due to lack of proper care or maintenance; partial or entire
failure of utilities; breach of contract by any supplier, contractor,
subcontractor, laborer or materialman; injunction; blight; famine;
blockade; quarantine; or any other similar cause or event not reasonably
within the control of the Member.
ARTICLE 4
MEMBERSHIP
4.1 Eligibility - Membership in MAPP shall be open to any Electric
Utility, any Transmitting Utility, and to any other entity generating
electric energy for sale for resale, or to a Joint Member the Designating
Entities of which meet the foregoing requirements.
4.2 Membership Process
4.2.1 Participants and Associate Participants - All
Participants shall automatically become Members and be deemed signatories
to this Restated Agreement upon the Effective Date; provided, however, that
a Participant that votes against adoption or readoption of the Restated
Agreement pursuant to Section 14.1 may decline such automatic membership
and shall not be a Member by providing to the Secretary of the Executive
Committee written notice of its intent to decline membership not later than
the thirtieth day following the Effective Date; and provided, further, that
an Associate Participant under the MAPP Agreement or Manitoba Hydro may
decline such automatic membership and shall not be a Member by providing to
the Secretary of the Executive Committee written notice of its intent to
decline membership not later than the thirtieth day following the Effective
Date. A Participant declining such automatic membership shall continue to
be liable for any obligations incurred prior to giving notice of such
decision. The Secretary of the Executive Committee shall provide immediate
notice to all Participants of the commencement of any thirty day period
specified in Section 14.1. Notice of intent to decline membership pursuant
to the provisions of this paragraph shall become effective immediately and
may be given without regard to the termination provisions contained in
Paragraph 2.03 of the MAPP Agreement, but any Participant providing such
notice shall be subject to any obligations it would have had as a
terminated or a terminating Participant under the MAPP Agreement,
including, without limitation, the obligations of Paragraph 2.07 of the
MAPP Agreement. Upon written request, the Secretary of the Executive
Committee shall provide a statement quantifying those obligations. Any
Participant or Associate Participant electing to decline membership under
the provisions of this Section shall not be eligible to have a
Representative on any council, committee or subcommittee. Within thirty
days after the Effective Date, each Participant or Associate Participant
intending to become a Member (i) shall provide written notification to the
Secretary of the Executive Committee of its identification as a
Transmission Owning Member or a Transmission Using Member and as an End-Use
Load Member as may be appropriate, (ii) shall provide to the Executive
Committee the information necessary for the Executive Committee to
determine its number of votes on the Management Committee and the MAPP
Reliability Council, and (iii) shall execute an agreement with the
Contractor pursuant to 5.3.2. The Secretary of the Executive Committee
shall designate the appropriate classifications for any Member that does
not provide the foregoing notification.
4.2.2 New Members - An entity other than a Participant or
Associate Participant meeting the definition of a Member and desiring to
become a Member shall submit to the Secretary of the Executive Committee an
application for membership in such form, and providing such information, as
specified by the Executive Committee. Such application for membership
shall include: (i) a brief description of the Applicant; (ii) an
indication of whether the Applicant is a Transmission Owning Member or
Transmission Using Member and whether it is an End-Use Load Member, (iii)
information necessary to determine the Applicant's number of votes, and
(iv) such additional information as may be required by the Executive
Committee to incorporate the Applicant into all aspects of MAPP, including,
without limitation, any models, line loading relief procedures, loss
repayment and transmission service charges. The application shall obligate
the Applicant to be bound by the provisions of this Restated Agreement if
the Applicant becomes a Member.
4.2.3 Joint Members - Any entity desiring to become a Joint
Member shall submit a written application to the Secretary of the Executive
Committee demonstrating (a) its eligibility for such status, (b) that each
of its Designating Entities is eligible to be a Designating Entity and has
designated it as a Joint Member on its behalf, and (c) the willingness of
the Joint Member and each of its Designating Entities to be bound by all
applicable provisions of this Restated Agreement. A Joint Member shall
promptly notify the Executive Committee in writing of any changes in its
Designating Entities, such notification to demonstrate that any added
Designating Entity is eligible to be a Designating Entity and has
designated the Joint Member to serve as the Joint Member on its behalf.
4.2.4 Review of Applications - Within thirty days of the
receipt by the Secretary of the Executive Committee of (i) an application
for membership, or (ii) an initial specification by a Participant or
Associate Participant as to whether it is an End-Use Load Member and a
Transmission Owning Member or a Transmission Using Member, or (iii) a
Members proposed change in membership category pursuant to Section 4.2.5,
or (iv) a notification of a change in the Designating Entities for a Joint
Member pursuant to Section 4.2.3, the Secretary of the Executive Committee
shall notify all Members of the receipt of such application or of such
initial identification or proposed change in category (any of the foregoing
being referred to for purposes of this Section as an "Application"). The
Secretary of the Executive Committee may, and upon the request of any
Member made within thirty days of the foregoing notification shall, require
a Member or Applicant to demonstrate that it meets the criteria for
membership or for the claimed membership category or categories. Not later
than thirty days after completion of the foregoing process, the Secretary
of the Executive Committee shall approve any Application which the
Secretary determines complies with the requirements of this Restated
Agreement, or shall refer the Application to the Executive Committee. At
its next meeting occurring at least thirty days after receiving a referral
of an Application from its Secretary, the Executive Committee shall
determine whether the Applicant is eligible for membership and shall
designate, on the basis of the best information available to it, the
membership category or categories in which the Member is to participate, or
shall reject the Application if the Applicant does not meet the
requirements for membership or for a change in membership category or
classification. An Applicant shall become a Member, or a Member's new
membership category or classification shall become effective, upon approval
of the Application therefor by the Secretary of the Executive Committee or
by the Executive Committee, but shall only be eligible to participate in or
obtain the benefits of any activities or functions carried out pursuant to
this Restated Agreement by complying with the standards and requirements
applicable thereto. The action of the Secretary of the Executive Committee
on an Application shall be considered the action of the Executive
Committee.
4.2.5 Change in Membership Categories - No more frequently than
once each Fiscal Year a Member may propose a change in its designated
identification as an End-Use Load Member or as a Transmission Owning Member
or Transmission Using Member by submitting a written request to the
Secretary of the Executive Committee demonstrating its eligibility for, and
stating its willingness to abide by all obligations pertaining to, such new
designation. The request for a new designation shall be reviewed as
specified in Section 4.2.4.
4.3 State and Provincial Agencies - Any Regulatory Agency may become
a Regulatory Participant by providing written notice to the Secretary of
the Executive Committee of its intent to participate. Each Regulatory
Participant shall receive notice of the meetings of all MAPP committees and
councils and may participate in such meetings through a Representative as
permitted by this Restated Agreement, but shall have no vote in any
council, committee, subcommittee or other entity created by or pursuant to
this Restated Agreement, and shall have no vote on any proposal to amend or
terminate this Restated Agreement. Any Regulatory Participant may
terminate its participation effective upon its written notice to the
Secretary of the Executive Committee of its desire to terminate such
participation.
4.4 Associate Members - Any entity desiring to become an Associate
Member shall submit a written request to the Secretary of the Executive
Committee demonstrating its eligibility for such status and obligating
itself to be bound by all applicable provisions of this Restated Agreement
if it becomes an Associate Member. Each Associate Member shall receive
notice of the meetings of all MAPP committees and councils and may
participate in such meetings through a Representative as permitted by this
Restated Agreement, but shall have no vote. Any Associate Member may
terminate its membership by providing written notice to the Secretary of
the Executive Committee of its intent to terminate membership.
4.5 Joint Members - Each Joint Member may participate in meetings of
all MAPP councils, committees and subcommittees, and shall do so in place
and on behalf of its Designating Entities, through a Representative as
permitted by this Restated Agreement. With respect to provisions of this
Restated Agreement specifying that a Member or Representative shall have
one vote, each Joint Member shall have one vote. With respect to
provisions of this Restated Agreement specifying weighted voting, a Joint
Member shall have the number of votes equal to the aggregate votes which
the Designating Entities for that Joint Member would have if the
Designating Entities were voting individually as Members. The Designating
Entities for a Joint Member shall have no voting rights except through
their Joint Member as specified herein. Each Joint Member shall be
obligated to pay such fees and dues, or other charges or assessments, as
would be applicable in the aggregate to the Designating Entities for that
Joint Member if such Designating Entities were participating individually
as Members in the activities of MAPP participated in by the Joint Member,
except that the fee upon joining and the annual fixed dues of a Joint
Member shall be that of a single Member.
4.6 Withdrawal, Suspension or Termination
4.6.1 Withdrawal - Any Member other than a Joint Member may
withdraw from participation in this Restated Agreement by written notice to
the Secretary of the Executive Committee. Such notice shall specify a
date, not earlier than three years from the date of the notice, on which
the withdrawal shall become effective. A Member withdrawing from
membership may not reapply for membership for one year after its withdrawal
has become effective.
4.6.2 Suspension or Termination - If the Executive Committee
determines that a Member has failed to comply with any of the provisions of
this Restated Agreement or any obligations assumed thereunder, the
Executive Committee shall give written notice to such Member specifying
such failure to perform or lack of compliance, and affording the Member a
reasonable period to perform or come into compliance. In accordance with
such notice, the Executive Committee shall review the conduct of such
Member and if its failure to perform or comply continues beyond the period
specified above, the Executive Committee may thereupon suspend in whole or
in part the rights of such Member to participate in or benefit from MAPP
activities, including suspension of the Member's right to vote and, if
appropriate in light of the conduct of the Member, utilization of the
Service Schedules. Suspended Members shall continue to be liable for all
applicable dues, fees, assessments, or other charges. The Executive
Committee shall cause notice of the suspension of a Member to be delivered
to all Members. The suspension of a Member shall be effective on the date
specified by the Executive Committee in such notice. The period of such
suspension shall continue until either (i) the Executive Committee
determines that the suspended Member has come into compliance or is
prepared to comply with its reliability obligations and the other
provisions of this Restated Agreement, including all applicable Service
Schedules, or (ii) the Management Committee determines that the Member's
continued failure to perform or comply warrants termination of its
membership. A terminated Member shall not be eligible to re-apply for
membership until one year from the date of its termination, and shall be
readmitted to membership only upon demonstration that it has cured the
deficiencies that led to its termination, and is ready, willing and able to
abide by all applicable reliability obligations and any other applicable
provisions of this Restated Agreement, including all Service Schedules.
The provisions of this Section 4.6.2 shall not limit the right of any other
Member to enforce the rights and obligations established pursuant to this
Restated Agreement.
4.6.3 Joint Members - Any Joint Member may withdraw from
membership by providing written notice to the Secretary of the Executive
Committee of its intent to terminate membership, and may be terminated or
suspended as a Member in accordance with the provisions of this Restated
Agreement. Designating Entities shall be subject to the withdrawal,
suspension and termination provisions applicable to Members. Unless a
Designating Entity for a withdrawing or terminated Joint Member designates
another entity as its Joint Member, such Designating Entity shall become an
individual Member.
4.6.4 Members in Good Standing - To the extent determined by
the Executive Committee pursuant to the provisions of Section 4.6.2,
Members in good standing shall have no obligation under this Restated
Agreement to provide to or receive from any suspended or terminated Member
any services under any of the Service Schedules.
4.7 Obligations on Suspension, Withdrawal or Termination
4.7.1 Stability and Reliability - If upon suspension,
withdrawal or termination of a Member, or an election by a Participant to
decline membership pursuant to Section 4.2.1, the Regional Reliability
Committee determines that any of the transmission or generation facilities
of such Member or Participant are required for the continuing stability and
reliability of the interconnected systems of the remaining Members, such
suspended, withdrawing or terminated Member, or Participant declining
membership, shall continue to be subject to all MAPP reliability
requirements otherwise applicable to such facilities for as long as (i)
such Member or Participant continues to be directly interconnected with the
system of any Member, and (ii) the facilities of the suspended, withdrawing
or terminated Member, or Participant declining membership, remain in the
MAPP Region, unless such suspended, withdrawing or terminated Member, or
Participant declining membership, has become subject to the requirements of
another regional reliability council recognized by NERC. Each Member
specifically acknowledges its continuing obligation to comply with the
foregoing reliability obligations and that such obligations shall continue
notwithstanding that the Member's rights under this Restated Agreement have
been suspended or terminated or that the Member has withdrawn from this
Restated Agreement.
4.7.2 Transactions - Any obligation incurred prior to a
Member's suspension, withdrawal or termination, or incurred by a
Participant electing to decline membership pursuant to Section 4.2.1,
arising from any transaction under the Service Schedules, or pursuant to
any of the service schedules included in the MAPP Agreement, or pursuant to
an agreement to provide transmission service, shall continue,
notwithstanding such suspension, withdrawal, termination or election, until
completion of any such obligation.
4.7.3 Financial Obligations - Any withdrawing or terminated
Member shall continue to fulfill any previously incurred financial
obligations under this Restated Agreement, including but not limited to any
obligations pursuant to any agreement entered into in accordance with the
provisions of Section 5.3.2. Any suspended Member shall continue to be
obligated to pay any dues, fees, or other charges assessed to it prior to
or during its period of suspension pursuant to the terms of this Restated
Agreement.
4.7.4 Regulatory Obligations - Nothing herein shall relieve any
suspended, withdrawing, or terminated Member, or Participant or Associate
Participant electing to decline membership pursuant to Section 4.2.1, from
any obligation it may have under Section 205 of the FPA to obtain
authorization from FERC to change or terminate its transmission tariff or
tariffs.
ARTICLE 5
GOVERNANCE AND MANAGEMENT
5.1 Management Committee
5.1.1 Membership - The Management Committee shall be composed
of one Representative of each Member. Each Member shall designate a
Representative and an alternate Representative for the Management Committee
by written notice to the Secretary of the Management Committee. Members
shall appoint as their Representatives on the Management Committee persons
with significant management or regulatory responsibility within the Member
and with significant experience in formulating or assisting in formulating
policy-level decisions for the Member.
5.1.2 Number of Votes
(a) For purposes of votes taken by the Management Committee,
and except as modified by the cap specified below, each Member shall have
one vote, plus the additional votes determined as follows:
i. One vote for each $7,500,000 or fraction thereof of its
Electric Revenues up to $90,000,000;
ii. One vote for each $15,000,000 of its Electric Revenues
over $90,000,000 and up to $180,000,000; and
iii. One vote for each $30,000,000 of its Electric Revenues
over $180,000,000.
(b) The votes of any Member in excess of twenty percent of
the total number of votes determined as specified in Section 5.1.2(a) shall
not be counted in any vote or quorum determination.
(c) The number of votes specified above shall be determined
for each Member as of the commencement of each Annual Meeting of the
Management Committee.
5.1.3 Voting Requirements - Except as specified in the last
sentence of Section 13.3.1, approval or adoption of any measure by the
Management Committee shall require two-thirds of the total number of votes
cast, determined as specified in Section 5.1.2; provided, however, that
approval or adoption of any measure materially affecting access to or use
of transmission facilities in the MAPP Region shall instead require
two-thirds of the votes of the Representatives of the Transmission Owning
Members voting and two-thirds of the votes of the Representatives of the
Transmission Using Members voting, each Representative of a Transmission
Owning or Transmission Using Member having one vote or such votes as
determined pursuant to Sections 13.19 and 13.20. The presence in person or
by proxy of Representatives or alternate Representatives able to vote 50%
or more of the total number of Management Committee votes, or alternatively
in cases requiring their consideration, 50% of each of the Representatives
of the Transmission Owning Members and the Transmission Using Members,
shall constitute a quorum for the conduct of business by the Management
Committee. Any Member whose Representative is unable to attend a meeting
of the Management Committee may designate and send its alternate
Representative to participate and vote in the place of the Representative,
or may give its written proxy to another Representative.
5.1.4 Officers - The Chair and Vice Chair of the Executive
Committee shall serve as Chair and Vice Chair of the Management Committee.
The incumbent Chairman and Vice Chairman of the Management Committee under
the MAPP Agreement shall serve as Chair and Vice Chair of the Management
Committee created by this Restated Agreement from the Effective Date until
the first Chair and Vice Chair of the Executive Committee are elected.
The Chair shall preside at meetings of the Management Committee, and shall
have the power to call meetings of the Management Committee and to exercise
such other powers as are specified in this Restated Agreement. The Vice
Chair shall preside at meetings of the Management Committee in the absence
of the Chair. A designee of the Contractor shall serve as the Secretary of
the Management Committee.
5.1.5 Meetings - The Management Committee shall hold an Annual
Meeting each Fiscal Year, at such time and place as the Chair shall
designate. The Chair shall call a meeting of the Management Committee
within a reasonable time after the Effective Date for the purpose of
selecting the initial Representatives for the Executive Committee. The
Management Committee shall meet at other times at the call of the Chair.
The Chair shall call a meeting of the Management Committee upon the request
of five or more members of the Management Committee. Alternate
Representatives may participate in any meeting of the Management Committee,
but may vote only if the Representative of the Member is not present.
5.1.6 Nominating Committee - The Chair of the Management
Committee shall appoint a Nominating Committee composed of: (a) one
Representative or alternate Representative of a Member that is in the
uppermost one-fifth of the End-Use Load Members when ranked by Electric
Revenues; (b) one Representative or alternate Representative of a Member
that is in the lowermost one-fifth of the End-Use Load Members when ranked
by Electric Revenues; (c) one Representative or alternate Representative of
a Member which is not an End-Use Load Member; (d) and three additional
Representatives or alternate Representatives selected in a best effort to
have the Nominating Committee reflect the diversity of the Members in terms
of size, type of entity, and geographic location; provided, however, that
at least two persons on the Nominating Committee shall also be
Representatives of Transmission Owning Members, and at least two shall also
be Representatives of Transmission Using Members. The members of the
Nominating Committee may not be members of the Executive Committee. The
Nominating Committee shall present to the Management Committee at its
Annual Meeting a slate of nominees for election to the At-Large Seats on
the Executive Committee as specified in Section 5.2.1, and shall coordinate
the selection of Representatives to fill the other seats on the Executive
Committee. The Nominating Committee shall also propose nominees for
vacancies on the At-Large Seats on the Executive Committee as may be
necessary. Nominations from the floor of the Management Committee in
addition to those presented by the Nominating Committee shall be permitted.
5.1.7 Dispute Resolution - Actions or decisions by the
Management Committee as to all matters over which it has responsibility
under this Restated Agreement shall be subject to review, modification or
other action only by the Management Committee; provided, however, that
assertions by a terminated Member that it was improperly or wrongfully
terminated under the provisions of this Restated Agreement, or assertions
by any Member or Regulatory Participant that an action or decision, or
failure to act or decide, of the Management Committee (i) is based on an
error of fact, (ii) is inconsistent with any term, standard, purpose or
objective of this Restated Agreement or (iii) is inconsistent with
applicable regulatory requirements or other applicable legal standards,
shall be resolved in accordance with the dispute resolution provisions of
Article 11.
5.1.8 Review of Executive Committee - Upon a request pursuant
to Section 5.2.5(c) from any three or more Members or from any Regulatory
Participant, the Management Committee shall review, and may modify,
rescind, or affirm, or take such other action as it shall deem appropriate
with respect to, any action or decision of the Executive Committee;
provided, however, that the action or decision of the Executive Committee
shall go into effect as adopted by the Executive Committee unless modified
or rescinded by the Management Committee.
5.1.9 Responsibilities - The Management Committee shall have
the following duties:
(a) Elect the Representatives to the Executive Committee as
specified herein;
(b) Provide such policy or other guidance as it may deem
appropriate to the Executive Committee;
(c) Terminate the membership of any suspended Member for
continued failure to comply with the terms of this
Restated Agreement or any standard, requirement, or other
obligation adopted pursuant to or incorporated by this
Restated Agreement, including but not limited to all
applicable reliability obligations;
(d) At each Annual Meeting review, revise if and to the
extent it deems appropriate, and approve, the annual
budget for MAPP, the allocation of costs consistent with
Section 5.4.2, the annual dues assessed each Member and
Associate Member, and the initial fee upon joining MAPP;
and
(e) Pursuant to Section 5.1.8, review, affirm, modify or
rescind, as it shall deem appropriate, any action or
decision of the Executive Committee.
5.2 Executive Committee
5.2.1 Membership
(a) Representatives to the Executive Committee shall be
elected by the Management Committee at its Annual Meeting from among the
Representatives and alternate Representatives on the Management Committee.
The Executive Committee shall have 12 Representatives, elected as follows:
i. Unless such seats are filled as specified in subsection
5.2.1(a)ii below, two Representatives shall be
Representatives or alternate Representatives of End-Use
Load Members that are in the uppermost one-fifth of the
End-Use Load Members when ranked by Electric Revenues,
and shall be elected by such Members on the basis of one
vote per Member, such seats on the Executive Committee
being designated the "Large-Member Seats";
ii. Each of the two largest End-Use Load Members subject to
the voting cap specified in Section 5.1.2(b), if any,
shall be entitled to designate its Representative or
alternate Representative to the Management Committee to
fill one of the Large-Member Seats;
iii. Two Representatives shall be Representatives or alternate
Representatives of Members that are in the lowermost
one-fifth of the End-Use Load Members when ranked by
Electric Revenues, and shall be elected by such Members
on the basis of one vote per Member, such seats on the
Executive Committee being designated the "Small-Member
Seats";
iv. Two Representatives shall be Representatives or alternate
Representatives of Members that are not End-Use Load
Members and shall be elected by the Members that are not
End-Use Load Members on the basis of one vote per Member,
such seats on the Executive Committee being designated
the "Non-End-Use Load Member Seats"; provided, however,
that if there are one or more but less than six Members
that are not End-Use Load Members, there shall be only
one Non-End-Use Load Member Seat, and if there are no
Members that are not End-Use Load Members there shall be
no Non-End-Use Load Member Seat;
v. Six Representatives, or seven if there is only one
Non-End-Use Load Member Seat, or eight if there are no
Non-End-Use Load Member Seats, shall be Representatives
or alternate Representatives of any Member, and shall be
elected by all the Members on the basis of the number of
votes specified in Section 5.1.2, such seats on the
Executive Committee being designated as the "At-Large
Seats";
vi. If there are more than two End-Use Load Members subject
to the voting cap specified in Section 5.1.2(b), each
such Member other than the largest two such Members shall
be entitled to designate its Representative or alternate
Representative to the Management Committee to fill an
At-Large Seat on the Executive Committee;
vii. The Management Committee shall use its best efforts to
elect Representatives to the At-Large Seats such that the
Executive Committee as a whole will reflect the diversity
among the Members in terms of size, type of entity, and
geographic location; and
viii. At least four of the Executive Committee Representatives
shall be Representatives or alternate Representatives of
Transmission Owning Members, and at least four of the
Executive Committee Representatives shall be
Representatives or alternate Representatives of
Transmission Using Members.
(b) No two or more persons serving on the Executive Committee
may be employees or agents of the same Member, or of Affiliated Members.
(c) The Representatives on the Management Committee
responsible for electing Representatives to the Large-Member Seats, the
Small-Member Seats, and the Non-End-Use Load Member Seats on the Executive
Committee, and any Members entitled to seats on the Executive Committee by
virtue of the voting cap specified in Section 5.1.2, shall appoint nominees
to fill those seats sufficiently in advance of the Annual Meeting of the
Management Committee to enable the Nominating Committee of the Management
Committee to prepare a slate of nominees for the At-Large Seats on the
Executive Committee.
(d) Representatives elected to the Executive Committee shall
serve for terms of three years; provided, however, that of the
Representatives first elected to the Executive Committee, one each from the
Large-Member, Small-Member, and Non-End-Use Load Member Seats shall serve
for terms of two years, two from the At-Large Seats shall serve for terms
of one year, and two from the At-Large Seats shall serve for terms of two
years. The Representatives to serve these shortened terms shall be
selected by the Representatives electing them. With the exception of
Members subject to the voting cap specified in Section 5.1.2, no Member may
have a Representative on the Executive Committee for more than two
consecutive terms.
(e) Any vacancies on the Executive Committee may be filled by
the Executive Committee on an interim basis until the next meeting of the
Management Committee.
5.2.2 Voting Requirements - Each Representative elected to the
Executive Committee shall have one vote. Except as specified in the last
sentence of Section 13.3.1, any action, determination or recommendation by
the Executive Committee shall require two-thirds of the votes of the
Representatives present and voting; provided, however, any action,
determination or recommendation materially affecting access to or use of
transmission facilities in the MAPP Region shall instead require two-thirds
of the votes of the Representatives of each of the Transmission Owning
Members and the Transmission Using Members present and voting. A quorum of
three-fourths of the Representatives on the Executive Committee, or
alternatively in cases requiring their consideration three-fourths of each
of the Representatives of the Transmission Owning Members and the
Transmission Using Members, shall be necessary for the Executive Committee
to conduct business.
5.2.3 Officers - The Executive Committee shall elect a Chair
and a Vice Chair from among its members at its Annual Meeting, the officers
so elected to serve until the next Annual Meeting. A designee of the
Contractor shall serve as the Secretary of the Executive Committee. The
Chair of the Executive Committee shall preside at meetings of the Executive
Committee, and shall have the power to call meetings of the Executive
Committee and to exercise such other powers as are specified in this
Restated Agreement or are authorized by the Executive Committee. The Vice
Chair shall preside at meetings of the Executive Committee in the absence
of the Chair, and shall exercise such other powers as are delegated by the
Chair. The incumbent Vice Chair may be elected to the position of Chair,
but no person shall serve more than two consecutive terms as Chair or more
than two consecutive terms as Vice Chair.
5.2.4 Meetings - The Executive Committee shall hold Annual and
Mid-Year meetings, with the Annual Meeting coinciding with the Annual
meeting of the Management Committee. The Executive Committee shall meet at
other times at the call of the Chair. The Chair shall call a meeting of
the Executive Committee upon the request of three or more members of the
Executive Committee, and shall call a meeting at least thirty days but not
more than 90 days after receiving a referral of a membership application
from its Secretary if a meeting of the Executive Committee would not
otherwise occur in this period.
5.2.5 Reconsideration and Appeal of Decisions
(a) The Secretary of the Management Committee shall be
immediately notified of any action or decision by the Executive Committee,
including action upon a request for reconsideration, and including any
action of the Secretary of the Executive Committee deemed to be an action
of the Executive Committee, and shall mail or distribute electronically
written notice thereof to each Representative to the Management Committee
and to each Regulatory Participant prior to the end of the seventh day
following the meeting of the Executive Committee at which such action was
taken or decision was made.
(b) Any Member or Regulatory Participant may request the
Executive Committee to reconsider any action or decision; provided,
however, that any request for reconsideration must be delivered to the
Secretary of the Executive Committee not more than fifteen days after
mailing or distribution of the notice specified above. A request for
reconsideration shall stay implementation of the action or decision at
issue unless the Executive Committee determines that immediate
implementation of the action or decision is in the best interests of the
Members; provided, however, that a request for reconsideration shall not
affect the obligation of the Management Committee to review the annual
budget for MAPP, the allocation of costs consistent with Section 5.4.2, the
annual dues assessed each Member and Associate Member, and the initial fee
upon joining MAPP, as specified in Section 5.1.9(d). A request for
reconsideration shall not be a prerequisite to appealing an action or
decision of the Executive Committee to the Management Committee.
(c) Actions or decisions of the Executive Committee, other
than actions or decisions with respect to the annual budget for MAPP, the
allocation of costs pursuant to Section 5.4.2, the annual dues assessed
each Member and each Associate Member, and any adjustment in the initial
fee upon joining MAPP, which matters shall be subject to review as
specified in Section 5.1.9(d), may be appealed by any three or more Members
or any Regulatory Participant to the Management Committee. Any such
Members or Regulatory Participant wishing to appeal any such action or
decision of the Executive Committee must deliver a written statement of the
Members' or the Regulatory Participant's intent to seek review by the
Management Committee, along with a summary of the reasons for review, to
the Secretary of the Management Committee not later than twenty-five days
after mailing or distribution of the notice of the action or decision upon
reconsideration specified above.
5.2.6 Dispute Resolution - Actions or decisions by the
Executive Committee as to all matters over which it has responsibility
under this Restated Agreement shall be subject to review, modification or
other action only by the Management Committee; provided, however, that the
following matters shall be resolved in accordance with the dispute
resolution provisions of Article 11:
(a) assertions by a Suspended Member that it was improperly
or wrongfully suspended under the provisions of this
Restated Agreement;
(b) disputes as to the proper categorization of a Member as
an End-Use Load Member, a Transmission Owning Member or a
Transmission Using Member;
(c) disputes as to whether an entity qualifies for
membership; and
(d) disputes as to whether a Member's Electric Revenues,
Reliability Megawatts, End-Use Load Obligation, votes, or
dues have been correctly determined under the applicable
methodologies established by the Executive Committee.
5.2.7 Responsibilities - The Executive Committee shall have the
following duties:
(a) Oversee the activities of the MAPP Center, and administer
relations with the Contractor;
(b) Maintain a list of End-Use Load Members, and determine
the End-Use Load Obligation of each;
(c) Maintain a list of Joint Members, and determine the
Designating Entities properly represented by such Joint
Member;
(d) Establish each Member's number of votes;
(e) Establish standards and procedures for determining
Electric Revenues;
(f) Revise as may be appropriate the size threshold
applicable to Section 3.17 for participation as a
Designating Entity;
(g) No later than thirty days prior to the Annual Meeting of
the Management Committee, adopt (i) an annual budget for
MAPP, including the costs of the Contractor, and any
other general and administrative costs, (ii) an
allocation of such costs consistent with Section 5.4.2,
(iii) the annual dues assessed each Member and each
Associate Member, and (iv) an adjustment, if appropriate,
in the initial fee upon joining MAPP, which budget,
allocations, fees, and adjustments shall go into effect
as of the Annual Meeting of the Management Committee as
adopted by the Executive Committee unless revised by the
Management Committee;
(h) Establish a budget, an allocation of costs, and the dues
to be assessed each Member and Associate Member, for the
Fiscal Year or part thereof first following the Effective
Date.
(i) Resolve disputes among the Regional Transmission
Committee, the Power and Energy Market Committee, and the
MAPP Reliability Council with respect to the scope of
their authority and responsibilities as specified in this
Restated Agreement or by the Management Committee;
(j) Establish or abolish, and set the duties and
responsibilities of, such committees or councils, other
than the committees and councils specified herein, as may
be appropriate to achieve the purposes of this Restated
Agreement;
(k) Establish an area relations advisory group;
(l) Make such other necessary administrative arrangements
pertinent to this Restated Agreement not specifically
covered herein, including the establishment of a Fiscal
Year;
(m) Exercise responsibility for representation of MAPP's
interests in regulatory and other legal proceedings;
(n) Suspend the membership of any Member that fails to
perform its reliability obligations, or otherwise fails
to comply with obligations arising under or imposed
pursuant to the terms of this Restated Agreement;
(o) Appoint the representatives of MAPP to the NERC Board of
Trustees;
(p) Exercise responsibility for such other matters as are
assigned to it by this Restated Agreement or by the
Management Committee; and
(q) Submit a report of its activities to the Management
Committee at the Annual Meeting of the Management
Committee.
5.3 MAPP Center
5.3.1 Establishment of MAPP Center - The Executive Committee
shall cause the Contractor to maintain and operate the MAPP Center, which
shall furnish the facilities, equipment, personnel and services appropriate
to carrying out this Restated Agreement, including assisting the MAPP
committees, councils, task forces, subcommittees, working groups, and other
persons or entities to satisfy the obligations and responsibilities of the
Members under this Restated Agreement, and providing educational programs,
material and information to the public, Members, government regulatory
bodies, NERC and others.
5.3.2 Agreement with the Contractor - Each Member shall enter
into an agreement with the Contractor for services as described in Section
5.3.1 under the terms and conditions, and requiring such payments, as may
be established from time to time between the Executive Committee and the
Contractor. Such agreement shall impose on any suspended, withdrawing or
terminated Member, or the successor to any Member that ceases to be a
Member as a result of a merger or consolidation, a continuing obligation to
pay its share of the costs of facilities, equipment or other assets
acquired by the Contractor with the approval of the Executive Committee, to
the extent such acquisition was approved and the level of each Member's
obligation was established by the Executive Committee prior to the period
of suspension, the notice of withdrawal given pursuant to Section 4.5, the
effective date of termination pursuant to Section 4.6.1, or the effective
date of such merger or consolidation, as applicable.
5.4 Fees and Dues
5.4.1 Fee upon Joining - Except as provided herein, each new
Member shall be assessed an initial fee of $10,000 upon joining MAPP. The
amount of the foregoing fee may be adjusted by the Executive Committee to
reflect changes in costs and inflation, and shall not be paid by any Member
that was a Participant or Associate Participant or that was qualified to be
a Participant or Associate Participant and had a completed application to
become a Participant or Associate Participant pending on or prior to the
date on which this Restated Agreement was submitted to a vote of the
Participants for adoption as an amendment and restatement of the MAPP
Agreement.
5.4.2 Dues
(a) The Executive Committee shall establish fixed annual dues
payable each year by each Member, which dues shall initially be set at
$2,500, and annual dues payable each year by each Associate Member, which
dues shall initially be set at $1,000. The Executive Committee shall
assign costs directly attributable to a Member or Associate Member to that
Member or Associate Member, and shall allocate the costs of the Contractor
and any other general and administrative costs of MAPP to the functions
within the respective purviews of the Regional Transmission Committee, the
Power and Energy Market Committee, and the MAPP Reliability Council to
reflect fairly the costs incurred as a result of each function. In making
such allocations, the Executive Committee shall allocate a reasonable
portion of transmission-related reliability costs to the Regional
Transmission Committee and to the Power and Energy Market Committee, in
recognition of the benefits from the MAPP reliability function received by
users of transmission facilities and participants in the Power and Energy
Market. The Regional Transmission Committee shall recover the costs
allocated to it in accordance with the provisions of Section 8.8.2. The
Power and Energy Market Committee shall recover the costs allocated to it
from the dues, fees and charges associated with the Power and Energy Market
in accordance with the provisions of Section 9.3. The Regional Reliability
Committee shall recover the costs allocated to it from the Reliability
Members in accordance with the provisions of Section 6.5.2.
(b) In the event of a merger or other corporate
reorganization, the surviving entity shall be obligated to pay, for any
Fiscal Year in which such merger or other reorganization occurs, any fees,
dues or other obligations imposed on an annual basis on the predecessor
entity or entities, including any such fees established pursuant to this
Section, Section 6.5.2, Section 8.8.2 or Section 9.3, prior to the merger
or other reorganization.
ARTICLE 6
REGIONAL RELIABILITY
6.1 Objective - The Members desire to realize, safeguard, maintain
and further the reliability of interconnected operations among a large
number of entities engaged in the electric business in the MAPP Region, in
order to ensure the provision within the MAPP Region of highly reliable,
safe electric service at a reasonable cost.
6.2 Standards - The Members hereby agree to adopt, enforce and comply
with requirements and standards that will safeguard regional reliability.
Such reliability requirements and standards shall be: (1) adopted and
enforced for the purpose of providing reliable service at a reasonable cost
within the MAPP Region; (2) not unduly discriminatory in substance or
application; (3) applied consistently to all Members; (4) consistent with
Good Utility Practice; and (5) not less stringent than NERC standards or
guidelines. A requirement or standard may not impose unreasonable or
unduly discriminatory costs or burdens on a Member or class of Members.
6.3 Adoption of Existing Reliability Requirements - All reliability
requirements and standards in effect under the MAPP Agreement on the
Effective Date shall remain in full force and effect, unless and until such
reliability requirements and standards are revised in accordance with the
terms of the Restated Agreement. The reliability requirements and
standards that shall remain in full force and effect shall be applied in a
manner consistent with the terms of this Restated Agreement and shall
include, without limitation, those in: the MAPP Engineering Handbook; the
MAPP Operating Handbook; the MAPP Design Review Committee Manual; the MAPP
System Analysis Standards and Study Guide; the MAPP Operating Requirements;
and the NERC Operating Manual. The Regional Reliability Committee shall be
responsible for administering the foregoing reliability standards and
requirements in accordance with the terms of this Restated Agreement.
6.4 Obligations of Members
6.4.1 Reliability - Members shall comply with all applicable
MAPP reliability standards and requirements, as well as all applicable NERC
reliability standards and guidelines to the extent not incorporated in or
superseded by a MAPP reliability standard or requirement.
6.4.2 End-Use Load - Each End-Use Load Member shall maintain
during each month Accredited Capability in an amount equal to or greater
than its maximum System Demand for such month plus its Reserve Capacity
Obligation, and shall maintain transmission capability adequate for
delivery of the Accredited Capability to its End Use Load in accordance
with standards and requirements established by the Regional Reliability
Committee.
6.4.3 Assignment of End-Use Load Obligation
(a) The supplier of All-Requirements Service shall have the
End-Use Load Obligation for the End-Use Load supplied by such service. If
All-Requirements Service is purchased from another Member and resold by the
purchaser for resale, the Member first supplying such All-Requirements
Service shall have the End-Use Load Obligation with respect to such
service.
(b) The supplier of Partial Requirements Service shall have
the End-Use Load Obligation for the End-Use Load supplied by such service.
If Partial Requirements Service is purchased from another Member and resold
by the purchaser for resale, the Member first supplying such Partial
Requirements Service shall have the End-Use Load Obligation with respect to
such service.
(c) In order for wholesale service provided under contracts
entered into after the Effective Date to be deemed All-Requirements Service
or Partial Requirements Service for purposes of this Restated Agreement,
the service must meet the applicable definition for such service specified
in Section 3.5 or Section 3.43 of this Restated Agreement, and the contract
must specify that the service is All-Requirements Service or Partial
Requirements Services for MAPP purposes, as applicable. If a contract for
wholesale service entered into after the Effective Date does not meet the
foregoing requirements, the service provided thereunder shall not be deemed
All-Requirements or Partial Requirements Service for purposes of this
Restated Agreement.
(d) Unless the parties to a contract for wholesale service in
effect on the Effective Date are Participants, such contracts that provide
service meeting the definition of All-Requirements Service specified in
Section 3.5 shall be deemed to provide All-Requirements Service for
purposes of this Restated Agreement, and such contracts that provide
service meeting the definition of Partial Requirements Service specified in
Section 3.43 shall be deemed to provide Partial Requirements Service for
purposes of this Restated Agreement. If the parties to a contract for
wholesale service in effect on the Effective Date are Participants, the
parties shall file a joint specification of the nature of such service with
the Executive Committee not later than the 60th day after the Effective
Date. If the parties are unable to agree on a joint specification, the
purchaser shall have any End-Use Load Obligation associated with such
contract.
(e) In addition to any other End-Use Load Obligation it may
have, the purchaser shall have the End-Use Load Obligation with respect to
End-Use Load supplied under any wholesale contract not providing either
All-Requirements Service or Partial Requirements Service.
(f) Notwithstanding any of the foregoing provisions of this
Section 6.4.3, a Member may by written agreement assign any or all of its
End-Use Load Obligation to another Member. Any such assignment shall not
be effective until the agreement making such assignment shall have been
filed with the Secretary of the Executive Committee.
6.4.4 Operating Reserves - Each Member shall maintain Operating
Reserves in accordance with standards and requirements established by the
Regional Reliability Committee.
6.4.5 Interconnected Operations - Members which own or control
generation facilities in, or transmission facilities in or contiguous to,
the MAPP Region shall operate such facilities on an interconnected basis
under normal system conditions. If interconnection of the systems of the
Members becomes interrupted, the Members shall cooperate to remove the
cause of such interruption and shall restore the interconnection to normal
operation as soon as practicable. The Members shall cooperate in keeping
the frequency of the interconnected systems of the Members at 60 Hz, in
keeping the interchange of power and energy between the systems of the
Members as close as is practicable to the scheduled amounts, and in
maintaining mutually satisfactory voltage levels. Each Member owning or
controlling generation or transmission facilities shall be responsible for
the reactive volt-ampere requirements of its system. Reactive volt-amperes
may be interchanged between systems from time to time, subject to agreement
between the Members involved, if a benefit to one system may be gained
thereby without causing undue hardship to another system.
6.4.6 Accreditation of Generation - Each Member seeking to have
a generating unit accredited shall have such unit tested and accredited in
accordance with standards and requirements established by the Regional
Reliability Committee.
6.4.7 System Disturbances - The systems of the Members shall
normally be maintained and operated to minimize, in accordance with Good
Utility Practice, the likelihood of a disturbance originating in the system
of one Member causing impairment to the service of the system of any other
Member or of any other system with which the systems of the Members are
interconnected.
6.4.8 Interconnection - No Member shall permit a non-Member
with End-Use Load in the MAPP Region, or a non-Member that owns or controls
generation or transmission facilities in the MAPP Region, to operate its
facilities on an interconnected basis with the facilities in the MAPP
Region of a Member unless such non-Member has agreed in writing with a
Member to abide by all MAPP reliability requirements that would be
applicable to such non-Member if it were a Member. The interconnected
Member or Members shall be responsible for ensuring that the non-Member
abides by such requirements, and shall assume the MAPP reliability
requirements associated with the non-Member's End-Use Load or facilities if
the non-Member does not comply.
6.4.9 Information - Members shall comply with all reasonable
requests of the MAPP Reliability Council or the Regional Reliability
Committee or its subcommittees for information relating to the
establishment or modification of, or compliance with, MAPP reliability
standards and requirements.
6.5 MAPP Reliability Council
6.5.1 Membership - The MAPP Reliability Council shall be
composed of one Representative of each Reliability Member. Each
Reliability Member shall be assessed and pay a share of the costs allocated
or assigned to the MAPP Reliability Council, unless another Reliability
Member agrees to pay such costs. Representatives and alternate
Representatives for the MAPP Reliability Council shall be designated by
written notice to the Secretary of the MAPP Reliability Council. Any
Reliability Member other than an End-Use Load Member or a Transmission
Owning Member that is not an End-Use Load Member may terminate its
participation in the MAPP Reliability Council effective upon written notice
to the Secretary of the Executive Committee, but such termination shall not
reduce such Reliability Member's Reliability Dues for the Fiscal Year in
which such termination occurs. For purposes of voting on the MAPP
Reliability Council or service on Committees of the MAPP Reliability
Council, a Joint Member of which one or more Designating Entities is an
End-Use Load Member shall be considered a Reliability Member that is an
End-Use Load Member.
6.5.2 Reliability Dues - Each Reliability Member shall pay
fixed annual Reliability Dues in equal amounts such that the total of such
amounts equals 10% of the annual total costs allocated or assigned to the
MAPP Reliability Council. Reliability Members shall pay additional
Reliability Dues in amounts determined by the following formula:
RM Dues = (RM's Reliability Megawatts/Reliability Megawatts of all
RMs) * NET MRC Costs
Where:
RM = Reliability Member
Net MRC Costs = Total costs allocated or assigned to the MAPP
Reliability Council (or, for the first year
following the Effective Date, the budgeted costs
allocated or assigned to the MAPP Reliability
Council) net of the fixed annual Reliability Dues
collected on an equal basis from all Reliability
Members.
6.5.3 Number of Votes
(a) For purposes of votes taken by the MAPP Reliability
Council, and except as modified by the cap specified below, each
Reliability Member shall have the number of votes determined as follows:
i. One vote for each 25 Reliability Megawatts, or fraction
thereof, up to 300 Reliability Megawatts;
ii. One vote for each 50 Reliability Megawatts, or fraction
thereof, from 301 to 600 Reliability Megawatts; and
iii. One vote for each 100 Reliability Megawatts, or
fraction thereof, over 600 Reliability Megawatts.
(b) The votes of any Reliability Member in excess of twenty
percent of the total number of votes determined as specified in Section
6.5.3(a) shall not be counted in any vote or quorum determination.
6.5.4 Voting Requirements - Except as specified in this Section
6.5.4 and in the last sentence of Section 13.3.1, approval or adoption of
any measure by the MAPP Reliability Council shall require two-thirds of the
total number of votes cast, such votes to be determined as specified in
Section 6.5.3. Approval or adoption of any measure that will determine the
Reserve Capacity Obligation of End-Use Load Members, or the rules for the
determination of Accredited Capability for End-Use Load Members, shall
instead require two-thirds of the total number of votes cast by the
Reliability Members that are End-Use Load Members, such votes to be
determined as specified in Section 6.5.3. Approval or adoption of any
measure that will materially affect access to or use of transmission
facilities in the MAPP Region shall instead require two-thirds of the votes
of the Reliability Members that are Transmission Owning Members voting and
two-thirds of the votes of the Reliability Members that are Transmission
Using Members voting, each Representative of a Transmission Owning or
Transmission Using Member having one vote or such votes as determined
pursuant to Sections 13.19 and 13.20. The presence in person or by proxy
of Representatives able to vote 50% or more of the total number of MAPP
Reliability Council votes, or alternatively in cases requiring their
consideration 50% of the votes of the Representatives of the Reliability
Members that are Transmission Owning Members and of those that are
Transmission Using Members, shall constitute a quorum for the conduct of
business by the MAPP Reliability Council. Any Reliability Member the
Representative of which is unable to attend a meeting of the MAPP
Reliability Council may send its alternate Representative to participate
and vote in the place of the Representative, or may give its written proxy
to another Representative.
6.5.5 Officers - The Chair and Vice Chair of the Regional
Reliability Committee shall serve as Chair and Vice Chair of the MAPP
Reliability Council. The Chair shall preside at meetings of the MAPP
Reliability Council, and shall have the power to call meetings of the MAPP
Reliability Council and to exercise such other powers as are specified in
this Restated Agreement. The Vice Chair shall preside at meetings of the
MAPP Reliability Council in the absence of the Chair. A designee of the
Contractor shall serve as the Secretary of the MAPP Reliability Council.
6.5.6 Meetings - The MAPP Reliability Council shall hold an
Annual Meeting each Fiscal Year, at such time and place as the Chair shall
designate. The Chair shall call a meeting of the MAPP Reliability Council
within a reasonable time after the Effective Date for the purpose of
selecting the initial Representatives for the Regional Reliability
Committee. The MAPP Reliability Council shall meet at other times at the
call of the Chair. The Chair shall call a meeting of the MAPP Reliability
Council upon the request of five or more Reliability Members.
6.5.7 Nominating Committee - Prior to each Annual Meeting of
the MAPP Reliability Council, the Chair of the MAPP Reliability Council
shall appoint a Nominating Committee composed of: (a) one Representative
or alternate Representative of a Member that is in the uppermost one-fifth
of the End-Use Load Members when ranked by Reliability Megawatts; (b) one
Representative or alternate Representative of a Member that is in the
lowermost one-fifth of the End-Use Load Members when ranked by Reliability
Megawatts; (c) one Representative or alternate Representative of
Reliability Members which are not End-Use Load Members if there are any
such Reliability Members; and (d) three additional Representatives or
alternate Representatives selected in a best effort to have the Nominating
Committee reflect the diversity of the Reliability Members in terms of
size, type of entity, and geographic location; provided, however, that at
least two persons on the Nominating Committee shall also be Representatives
of Reliability Members which are Transmission Owning Members, and at least
two shall also be Representatives of Reliability Members which are
Transmission Using Members. The members of the Nominating Committee may
not be members of the Regional Reliability Committee. The Nominating
Committee shall present to the MAPP Reliability Council at its Annual
Meeting a slate of nominees for election to the At-Large Seats on the
Regional Reliability Committee as specified in Section 6.6.1, and shall
coordinate the selection of Representatives to fill the other seats on the
Regional Reliability Committee. The Nominating Committee shall also
propose nominees for vacancies on the At-Large Seats on the Regional
Reliability Committee as may be necessary. Nominations from the floor of
the MAPP Reliability Council in addition to those presented by the
Nominating Committee shall be permitted.
6.5.8 Dispute Resolution - Actions or decisions by the MAPP
Reliability Council as to all matters over which it has responsibility
under this Restated Agreement shall be subject to review, modification or
other action only by the MAPP Reliability Council; provided, however, that
assertions by any Member or Regulatory Participant that an action or
decision, or failure to act or decide, of the MAPP Reliability Council (i)
is based on an error of fact, (ii) is inconsistent with any term, standard,
purpose or objective of this Restated Agreement or (iii) is inconsistent
with applicable regulatory requirements or other applicable legal
standards, shall be resolved in accordance with the dispute resolution
provisions of Article 11.
6.5.9 Responsibilities - The MAPP Reliability Council shall
have the following duties:
(a) Carry out the functions and responsibilities of MAPP as
the recognized NERC reliability council for the MAPP
Region;
(b) Elect the Representatives to the Regional Reliability
Committee as specified herein;
(c) Provide such policy or other guidance as it may deem
appropriate to the Regional Reliability Committee;
(d) Hear and resolve appeals from decisions of the Regional
Reliability Committee; and
(e) Carry out, or delegate to the Regional Reliability
Committee, such tasks as may be appropriately assigned to
the MAPP Reliability Council by the Management or
Executive Committees.
6.6 Regional Reliability Committee - The Regional Reliability
Committee shall be responsible, under the supervision and direction of the
MAPP Reliability Council, for carrying out the regional reliability
functions of MAPP, as set forth in this Article 6. The Regional
Reliability Committee may request the Contractor to provide the assistance
of the MAPP Center in carrying out these responsibilities.
6.6.1 Membership
(a) Representatives to the Regional Reliability Committee
shall be elected by the MAPP Reliability Council at its Annual Meeting from
among the Representatives and alternate Representatives on the MAPP
Reliability Council. The Regional Reliability Committee shall have 12
Representatives, elected as follows:
i. Unless such seats are filled as specified in subsection
6.6.1(a)ii below, two Representatives shall be
Representatives or alternate Representatives of
Reliability Members that are End-Use Load Members and
that are in the uppermost one-fifth of such Reliability
Members when ranked by Reliability Megawatts, and shall
be elected by those Reliability Members on the basis of
one vote per Reliability Member, such seats on the
Regional Reliability Committee being designated the
"Large-Member Reliability Seats";
ii. Each of the two Reliability Members that are the End-Use
Load Members with the largest number of votes and that
are subject to the voting cap specified in Section
6.5.3(b), if any, shall be entitled to designate its
Representative or alternate Representative to the MAPP
Reliability Council to fill one of the Large-Member
Reliability Seats;
iii. Two Representatives shall be Representatives or alternate
Representatives of Reliability Members that are End-Use
Load Members and that are in the lowermost one-fifth of
such Reliability Members when ranked by Reliability
Megawatts, and shall be elected by those Reliability
Members on the basis of one vote per Reliability Member,
such seats on the Regional Reliability Committee being
designated the "Small-Member Reliability Seats";
iv. Two Representatives shall be Representatives or alternate
Representatives of Reliability Members that are not
End-Use Load Members and shall be elected by such
Reliability Members on the basis of one vote per
Reliability Member, such seats on the Regional
Reliability Committee being designated the "Non-End-Use
Load Member Reliability Seats"; provided, however, that
if there are one or more but less than six Reliability
Members that are not End-Use Load Members, there shall be
only one Non-End-Use Load Member Reliability Seat, and if
there are no Reliability Members that are not End-Use
Load Members there shall be no Non-End-Use Load Member
Reliability Seat;
v Six Representatives, or seven if there is only one
Non-End-Use Load Member Reliability Seat, or eight if
there are no Non-End-Use Load Member Reliability Seats,
shall be Representatives or alternate Representatives of
any Reliability Member, and shall be elected by all the
Reliability Members on the basis of the number of votes
specified in Section 6.5.3, such seats on the Regional
Reliability Committee being designated as the "At-Large
Reliability Seats";
vi. If there are more than two Reliability Members subject to
the voting cap specified in Section 6.5.3(b), each such
Reliability Member other than the largest two such
Reliability Members shall be entitled to designate its
Representative or alternate Representative to the MAPP
Reliability Council to fill one of the At-Large
Reliability Seats on the Regional Reliability Committee;
vii. The MAPP Reliability Council shall use its best efforts
to elect Representatives to the At-Large Reliability
Seats such that the Regional Reliability Committee as a
whole will reflect the diversity among the Reliability
Members in terms of size, type of entity, and geographic
location; and
viii. At least four of the Regional Reliability Committee
Representatives shall be Representatives or alternate
Representatives of Reliability Members which are
Transmission Owning Members, and at least four of the
Regional Reliability Committee Representatives shall be
Representatives or alternate Representatives of
Reliability Members which are Transmission Using Members.
(b) No two or more persons serving on the Regional
Reliability Committee may be employees or agents of the same Member, or of
Affiliated Members.
(c) The Representatives on the MAPP Reliability Council
responsible for electing Representatives to the Large-Member Reliability
Seats, the Small-Member Reliability Seats, and the Non-End-Use Load Member
Reliability Seats on the Regional Reliability Committee, and any
Reliability Members entitled to seats on the Regional Reliability Committee
by virtue of the voting cap specified in Section 6.b.3(b), shall appoint
nominees to fill those seats sufficiently in advance of the Annual Meeting
of the MAPP Reliability Council to enable the Nominating Committee of the
MAPP Reliability Council to prepare a slate of nominees for the At-Large
Seats on the Regional Reliability Committee.
(d) Representatives elected to the Regional Reliability
Committee shall serve for terms of three years; provided, however, that of
the Representatives first elected to the Regional Reliability Committee,
one each from the Large Reliability Member, Small Reliability Member, and
Non-End-Use Load Member Reliability Seats shall serve for terms of two
years, two from the At-Large Reliability Seats shall serve for terms of one
year, and two from the At-Large Reliability Seats shall serve for terms of
two years. The Representatives to serve these shortened terms shall be
selected by the Representatives electing them. With the exception of
Reliability Members subject to the voting cap specified in Section
6.5.3(b), no Reliability Member may have a Representative on the Regional
Reliability Committee for more than two consecutive terms.
(e) Persons elected as Representatives to the Regional
Reliability Committee shall have technical expertise and significant
experience relating to electric industry reliability matters.
6.6.2 Voting Requirements - Each Representative on the Regional
Reliability Committee shall have one vote. Except as specified in this
Section 6.6.2 and in the last sentence of Section 13.3.1, any action,
determination or recommendation by the Regional Reliability Committee shall
require two-thirds of the votes of the Representatives present and voting.
Any action, determination or recommendation which will determine the
Reserve Capacity Obligation of End-Use Load Members, or the rules for the
determination of Accredited Capability for End-Use Load Members, shall
instead require two-thirds of the votes of the Representatives of
Reliability Members that are End-Use Load Members present and voting. Any
action, determination or recommendation materially affecting access to or
use of transmission facilities in the MAPP Region shall instead require
two-thirds of the votes of the Representatives of each of the Transmission
Owning Members and the Transmission Using Members present and voting. A
quorum of three-fourths of the Representatives on the Regional Reliability
Committee, or alternatively in cases requiring their consideration
three-fourth of each of the Representatives of the Transmission Owning
Members and the Transmission Using Members, shall be necessary for the
Regional Reliability Committee to conduct business.
6.6.3 Officers - At the first meeting of the Regional
Reliability Committee following the Annual Meeting of the MAPP Reliability
Council, the Representatives to the Regional Reliability Committee shall
choose a Chair and Vice Chair from among the Representatives on the
Committee. A designee of the Contractor shall serve as the Secretary of
the Regional Reliability Committee. The Chair of the Regional Reliability
Committee shall preside at meetings of the Committee, and shall have the
power to call meetings of the Committee and to exercise such other powers
as are specified in this Restated Agreement or are authorized by the
Regional Reliability Committee. The Vice Chair shall preside at meetings
of the Regional Reliability Committee in the absence of the Chair, and
shall exercise such other powers as are delegated by the Chair.
6.6.4 Meetings - The Regional Reliability Committee shall meet
at such times and places as determined by the Committee, or at the call of
the Chair. The Chair shall call a meeting of the Regional Reliability
Committee upon the request of three or more members of the Regional
Reliability Committee.
6.6.5 Subcommittees
(a) The Regional Reliability Committee shall have such
subcommittees and ad hoc task forces as from time to time it shall deem
appropriate. Each subcommittee shall be composed of eight voting
Representatives, including at least one Representative of a Reliability
Member which is not an End-Use Load Member, if such there be and such
Representative is willing to serve on the Subcommittee. Subcommittee
voting Representatives shall be elected by the Regional Reliability
Committee, using its best efforts to provide representation on the
subcommittee of the subregions within MAPP and the range of interests
likely to be affected by the actions of the subcommittee. Subcommittee
Representatives shall serve for terms of three years, and may be
re-elected. Any person designated by a Reliability Member to serve on a
subcommittee and who has technical expertise and significant experience
relating to electric industry reliability matters pertinent to the
responsibilities of the subcommittee shall be eligible to serve on the
subcommittee; provided, however, that a subcommittee of the Regional
Reliability Committee may not have two or more Representatives of the same
Member, or of Affiliated Members. Each subcommittee shall also have as a
non-voting Representative an employee designated by the Contractor.
(b) The Regional Reliability Committee shall establish or
modify the duties and responsibilities of the subcommittees of the Regional
Reliability Committee. Each Representative on a subcommittee shall have
one vote. Except as specified in the last sentence of Section 13.3.1,
decisions and other actions of each subcommittee shall be determined by
two-thirds vote of the subcommittee Representatives present and voting,
with the presence of six voting Representatives being necessary to
establish a quorum; provided, however, that any decision, determination, or
other action of any subcommittee shall at the request of any Member or
Regulatory Participant be subject to review and modification by the
Regional Reliability Committee. Any request for such review or
modification must be delivered to the Secretary of the Regional Reliability
Committee not later than the fourteenth day after the delivery of the
minutes of the subcommittee meeting at which the decision, determination or
other action was taken.
(c) Without limiting the authority of the Regional
Reliability Committee as set forth in subparagraphs (a) and (b) of this
Section, the initial subcommittees to be established by the Regional
Reliability Committee, and the initial responsibilities of those
subcommittees, shall be as described in Exhibit A of this Restated
Agreement. The Regional Reliability Committee shall update and revise
Exhibit A as appropriate. The members immediately prior to the Effective
Date of the committee established under the MAPP Agreement with
responsibilities most similar to that of each subcommittee specified in
Exhibit A shall constitute the corresponding subcommittee until the initial
Representatives on the subcommittee are elected as specified in this
Restated Agreement, all such elections to take place not later than the end
of the sixth month following the Effective Date.
(d) To enable the subcommittees of the Regional Reliability
Committee to carry out their tasks, Members shall furnish such studies and
data as a subcommittee shall reasonably request, including but not limited
to technical studies of system performance, data on current and projected
loads, system equipment capabilities, capability margins, spinning
reserves, relay settings controlling major facilities, communication
facilities, recording facilities and operating procedures.
6.6.6 Reconsideration and Appeal of Decisions
(a) The Secretary of the MAPP Reliability Council shall be
immediately notified of any action or decision taken by the Regional
Reliability Committee, and shall mail or distribute electronically written
notice thereof to each Representative to the MAPP Reliability Council and
to each Regulatory Participant prior to the end of the seventh day
following the meeting of the Regional Reliability Committee at which such
action or decision was taken.
(b) Any Member or Regulatory Participant may request the
Regional Reliability Committee to reconsider any action or decision;
provided, however, that any request for reconsideration must be delivered
to the Secretary of the Regional Reliability Committee not more than
fifteen days after mailing or distribution of the notice specified above.
A request for reconsideration shall stay implementation of the action or
decision at issue unless the Regional Reliability Committee determines that
immediate implementation of the action or decision is necessary to
safeguard reliability in the MAPP Region.
(c) Actions or decisions of the Regional Reliability
Committee may be appealed to the MAPP Reliability Council by any Member or
Regulatory Participant. Any such Members or Regulatory Participant wishing
to appeal an action or decision of the Regional Reliability Committee must
deliver a written statement of an intent to seek review by the MAPP
Reliability Council, along with a summary of the basis for review, to the
Secretary of the MAPP Reliability Council not later than twenty-five days
after mailing or distribution of the notice specified above; provided,
however, that the foregoing period shall be stayed by a request to the
Regional Reliability Committee for reconsideration, and shall run anew from
the date of the Regional Reliability Committee's action on such
reconsideration. A request for reconsideration shall not be a prerequisite
to appealing an action or decision of the Regional Reliability Committee to
the MAPP Reliability Council.
6.6.7 Dispute Resolution
(a) Decisions or other actions of the Regional Reliability
Committee shall be subject to review, modification, or other action only by
the MAPP Reliability Council, in accordance with the appeal procedures set
forth in Section 6.6.6; provided, however, that actions or decisions, or
failures to act or decide, of the MAPP Reliability Council shall be subject
to the dispute resolution provisions of Article 11 as provided herein; and
provided, further, that assertions as to any final decision or other action
of the Regional Reliability Committee on the following matters shall be
resolved in accordance with the dispute resolution provisions of Article 11
if the Member or Regulatory Participant making such an assertion does not
elect to take an appeal to the MAPP Reliability Council:
i. Assertions that a reliability requirement, rule,
guideline, procedure or other standard is unduly
discriminatory, imposes undue or unreasonable costs or
other burdens on the Member, or is otherwise contrary to
the terms of this Restated Agreement;
ii. Assertions as to compliance or lack of compliance by the
Member or another Member with a reliability requirement,
rule, guideline, procedure or other standard; and
(1) Assertions that an approval or accreditation sought by
the Member was unreasonably or improperly denied or
withheld.
6.6.8 Responsibilities - The duties of the Regional Reliability
Committee include the following and such additional duties as may be
assigned to it by the MAPP Reliability Council, all such duties to be
carried out in conformity with NERC reliability criteria, standards and
guides, and all applicable laws and regulations:
(a) Establish and revise system design standards for the MAPP
Region, and coordinate such standards with other NERC
regional reliability councils, to effect optimum
reliability and economy of service;
(b) Establish and revise system operating standards,
including but not limited to, criteria and rules relating
to protective equipment, switching, voltage control,
system control performance, load shedding, emergency and
restoration procedures and the operation and maintenance
of generation and transmission facilities of the Members
necessary to assure the reliable operation of the MAPP
Region;
(c) Establish and revise the Reserve Capacity Obligation of
each End-Use Load Member;
(d) Establish and revise the Total Operating Reserve
Obligation, the procedures to be followed by Members in
restoring the Total Operating Reserve Obligation in the
event of a large generator failure or other comparable
contingency, a formula to establish the Operating Reserve
Obligation of each Member, and procedures for determining
the Operating Reserve that is available on the systems of
the Members at all times;
(e) Approve planned generation and transmission additions and
retirements based on conformance with reliability and
design standards and requirements;
(f) Establish procedures for prompt review and approval by
the Contractor, if consistent with applicable reliability
criteria, of capacity transactions below specified
megawatt and duration thresholds established by the
Regional Reliability Committee, such procedures to
provide that any such approval by the Contractor shall be
promptly communicated to the Members;
(g) Establish procedures for review and approval of, and
review and approve, if consistent with applicable
reliability criteria, capacity transactions that exceed
the megawatt or duration thresholds established under
subsection 6.6.8(f);
(h) Establish and revise rules for the determination of
Accredited Capability of the End-Use Load Members;
(i) Establish and revise standards for testing the capability
of all generation within the MAPP Region owned or
controlled by Members;
(j) Conduct periodic overall system reliability studies as
required;
(k) Establish and revise rules, procedures and guidelines
governing the operation of control areas in the MAPP
Region, and the scheduling of transactions, as may be
necessary or appropriate to safeguard reliability;
(l) Perform annually, for the ensuing ten years or other
planning period specified by NERC, an assessment of the
adequacy and reliability of facilities to serve the
End-Use Load in the MAPP Region and other projected
requirements, based on a continuing review of the
Members' load and capability forecasts and other relevant
information;
(m) Provide reports to the MAPP Reliability Council assessing
the impact of significant disturbances of reliability, or
other significant events, within the MAPP Region or any
of its subregions, and providing recommendations for
appropriate action, if any, in light of such disturbances
or events;
(n) Establish and revise procedures and practices to
coordinate the operation of the bulk power production
system in the MAPP Region and its development and
operation with adjoining systems, pools and regional
reliability councils;
(o) Establish and revise rules relating to the effect of
abnormal conditions on System Demand and Reserve Capacity
Obligation;
(p) Select representatives to the NERC Engineering and
Operating Committees, and participate in NERC functions
as appropriate;
(q) Recommend to the Executive Committee planning and
operating functions which should be assigned to the
Contractor to improve reliability and economy and to
facilitate preparation of budget recommendations;
(r) Review and coordinate planned generation and transmission
maintenance, to assure at all times satisfying the Total
Operating Reserve Obligation;
(s) Coordinate the periods and methods of reporting scheduled
and actual power and energy flows;
(t) Establish and revise procedures and practices sufficient
to ensure that the reliability standards, practices and
procedures adopted by the Regional Reliability Committee
are implemented in a manner consistent with all laws and
regulations for the protection of the environment
applicable to any affected Member;
(u) Cause studies to be made as necessary for administration
of the aforesaid duties;
(v) Coordinate with the Regional Transmission Committee on
all matters relating to transmission reliability;
(w) Establish and revise the Generation Reserve-Sharing Pool
Schedules, including methods, standards and procedures
for the determination of costs associated with
transactions thereunder, and methods and procedures for
accounting and billing thereunder;
(x) Keep abreast of current environmental laws, regulations,
and natural resource issues that may impact reliability
in the MAPP Region;
(y) Provide information to decision-making agencies
concerning the actual or potential impact on regional
reliability of proposed laws and regulations;
(z) Foster information exchange between Members on
environmental factors, compliance issues, and resource
programs that may impact reliability within the MAPP
Region;
(aa) With the assistance of the Contractor, develop a budget
for submission to the Executive Committee;
(ab) Establish the reliability objectives and results to be
accomplished by the MAPP procedures for transmission line
loading relief, consistent with other applicable
procedures for maintaining system reliability; and
(ac) Undertake such other tasks or activities as may be
necessary or appropriate to maintain the reliability of
the integrated facilities of the Members in the MAPP
Region.
6.7 Participation in North-American Electric Reliability Council -
MAPP shall continue to participate as one of the member regional councils
of NERC. MAPP shall reimburse the reasonable out-of-pocket expenses
incurred in connection with representing MAPP at NERC functions of persons
appointed by MAPP to the NERC Board of Trustees, and of other MAPP
Representatives appointed to the NERC committees and working groups.
ARTICLE 7
GENERATION RESERVE-SHARING POOL
7.1 Objective - A Generation Reserve-Sharing Pool shall be
established for Members obligated to maintain generation reserves pursuant
to the Reserve Capacity Obligation established under this Restated
Agreement, in order to share and thereby reduce the cost of maintaining
such reserves, with the goal of serving End-Use Load in the MAPP Region at
the lowest reasonable cost.
7.2 Membership - Each Member with a Reserve Capacity Obligation shall
be a member of the Generation Reserve-Sharing Pool (such pool being
referred to in this Article 7 as the "Pool") and shall satisfy the
obligations imposed on Pool Participants by this Restated Agreement.
7.3 Obligations of Members of the Pool
7.3.1 Emergency Energy - A Pool Participant, upon request by
other Pool Participants, shall supply emergency energy up to the full
amount of its Available Accredited Capacity available to supply emergency
service under standards and requirements established by the Regional
Reliability Committee, provided that the request for emergency service
conforms with the provisions of Service Schedule C.
7.3.2 Scheduled Outage Energy - A Pool Participant, upon
request by other Pool Participants, shall supply scheduled outage energy up
to the full amount of its Available Accredited Capacity not required to
maintain its Operating Reserve Obligation and otherwise available to supply
scheduled outage energy under standards and requirements established by the
Regional Reliability Committee. Scheduled outage energy service shall
conform with the provisions of Service Schedule C1.
7.3.3 Operating Reserves - A Pool Participant, upon request by
other Pool Participants, shall supply Operating Reserves up to the full
amount of its Available Accredited Capacity not required to maintain its
Operating Reserve Obligation and otherwise available to supply Operating
Reserves under standards and requirements established by the Regional
Reliability Committee. Operating reserves service shall conform with the
provisions of Service Schedule D.
7.3.4 Reserve Capacity Deficiency - A Pool Participant shall be
deemed to have requested capacity to meet a planning reserve capacity
deficiency from all other Pool Participants for any MAPP season in which
such Pool Participant is found to be deficient in meeting the Reserve
Capacity Obligation portion of its Accredited Capability obligation under
Section 6.4.2. A Pool Participant, upon request by other Pool
Participants, shall supply generating capacity from Accredited Capability
to the extent such capacity is available to supply the Pool Participant's
planning reserve deficiency, under standards and requirements established
by the Regional Reliability Committee. The provision of planning reserve
capacity shall conform with the provisions of Service Schedule B.
7.3.5 Service Schedules - The initial Generation
Reserve-Sharing Pool Schedules for Reserve Capacity Deficiency Service,
Emergency Energy Interchange Service, Scheduled Outage Energy Interchange
Service and Operating Reserve Service, which Service Schedules are
available for use for purchases for resale and not for consumption by the
purchaser, are set forth in Exhibit B. Transmission service for use of
such Service Schedules shall be arranged pursuant to the provisions of
Service Schedule F - Transmission Service for Coordination Transactions,
attached hereto as Exhibit C, if applicable, or in accordance with and
subject to any tariff or tariffs for the MAPP Region or any subregion
thereof adopted by the Regional Transmission Committee under Section
8.8.8(g), or otherwise in accordance with the provisions of a transmission
provider's applicable tariff or tariffs.
ARTICLE 8
REGIONAL TRANSMISSION
8.1 Objectives - The Members desire to provide for the comparable and
efficient provision of transmission service within and contiguous to the
MAPP Region on a consistent basis, to realize and further the benefits of
coordinated regional transmission planning, and to resolve disputes over
the provision of transmission services. To achieve these objectives in
conformance with FERC policies in connection with such groups, this Article
8 establishes a regional transmission group as part of MAPP to obtain the
deference afforded to such groups by FERC. The Regional Transmission
Committee shall administer and implement this Article 8 to achieve a
vigorously competitive wholesale market for power and energy within the
MAPP Region.
8.2 Standards - All Members shall be entitled to receive comparable,
not unduly discriminatory transmission service over the transmission
facilities of Members. Owners of transmission facilities, whether or not
identified as Transmission Owning Members, shall be entitled to recover all
of their prudently incurred costs of providing transmission service. A
Member's rates and terms and conditions for transmission service over its
transmission facilities shall be just and reasonable, and not unduly
discriminatory or preferential.
8.3 Obligation to Provide Transmission Service
8.3.1 Members Generally
(a) Each Member owning transmission facilities, or
controlling access to or the use of transmission facilities by third
parties, shall upon request provide transmission service comparable to its
own use of such facilities to a Member. Transmission service shall be
provided in accordance with and subject to the provisions of Service
Schedule F - Transmission Service for Coordination Transactions, attached
hereto as Exhibit C, if applicable, and otherwise in accordance with and
subject to the Transmission Provider's own tariff or tariffs for
transmission service or its agreements providing such service, or in
accordance with and subject to the terms of another Member's or group of
Members' tariff or tariffs applicable to such facilities. Transmission
service shall instead be provided to Members in accordance with and subject
to any applicable tariff or tariffs for transmission service for the MAPP
Region or any subregion thereof at such time as such tariff or tariffs are
established or approved by the Regional Transmission Committee.
(b) Transmission service shall include all forms of
interconnection, transmission, and ancillary service available under
Sections 210, 211 and 212 of the FPA as in effect on the Effective Date,
and shall be provided over existing facilities, modifications to existing
facilities, interconnections, and enlargements of transmission capacity
where necessary to provide such service; provided, however, that
notwithstanding any other provision of this Restated Agreement, a Member
shall have no obligation under this Restated Agreement to provide any form
of transmission service or interconnection of a type not available pursuant
to an order requiring such service under Sections 210, 211 or 212 of the
FPA as in effect on the Effective Date, or to any entity not eligible to
obtain an order requiring such service under Sections 210, 211 or 212 of
the FPA as in effect on the Effective Date; and provided, further, that
Members shall have no obligation to build or modify transmission facilities
in order to provide service under Service Schedule F - Transmission Service
for Coordination Transactions. Nothing in this Restated Agreement shall be
construed as prohibiting any Member from providing voluntarily or pursuant
to a state statute or lawful decision of a regulatory agency or court any
other type of transmission service to any entity.
(c) Each Member's tariffs for transmission service shall
provide flexible point-to-point service and network service and shall
conform to the minimum standards for transmission service established by
FERC; provided, however, that in order to establish terms, conditions and
rates for transmission service throughout the MAPP Region, the Regional
Transmission Committee may establish and modify from time to time, subject
to applicable regulatory standards or approvals, the requirements for
flexible point-to-point service and network service provided by Members.
8.3.2 Filing of Tariffs - Each Member owning transmission
facilities, or controlling access to or the use of transmission facilities
by third parties, shall file a tariff or tariffs, or a joint tariff or
tariffs with another Member, with MAPP that comply with the requirements of
this Restated Agreement. The filing shall be made within the later of (i)
90 days of the Effective Date, or (ii) 60 days of first owning transmission
facilities, or of first obtaining control over access to or the use of
transmission facilities by third parties, and shall set forth the specific
rates, terms and conditions of service in conformity with Section 8.3.1
applicable to such facilities. A Member with a right to resell
transmission service purchased under another Member's tariff need not file
its own tariff with MAPP for such purpose, but shall be bound by the
provisions of the other Member's tariff concerning resale of transmission
service and in all events, the rate charged for such resold service shall
be capped at the originally selling Member's maximum price for the
transmission service. Any Transmission Using Member owning transmission
facilities, or controlling access to or the use of transmission facilities
by third parties, and that is not a "public utility" as defined in Section
201(e) of the FPA, and that determines that it is unlikely to receive a
transmission request, shall advise the Regional Transmission Committee in
writing that it does not intend to submit a tariff. Notice of such advice
shall be given to the Members. Upon the request of any Member, the
Regional Transmission Committee shall determine whether a tariff shall be
filed. If a Member does not file a tariff at that time, it shall file a
tariff not later than the 60th day from the date the Member first receives
a request for transmission service from another Member.
8.3.3 Review of Tariffs - The Regional Transmission Committee
shall review the tariffs filed with it pursuant to the provisions of
Section 8.3.2 for compliance with the requirements of Section 8.3.1, and
shall require any Member whose tariff does not comply with such provisions
to revise the tariff accordingly. The Regional Transmission Committee may
delegate all or part of such review to the Contractor as the Committee
shall deem appropriate. Upon completion of review of a tariff by the
Regional Transmission Committee and the filing with it of any revisions
required by it, if the Member filing such tariff is a "public utility"
within the meaning of Section 201(e) of the FPA the Regional Transmission
Committee shall issue a letter to the Member confirming that the tariff has
been filed with and approved by the Regional Transmission Committee. In
connection with any review of such tariff by FERC, the Member shall submit
to FERC the foregoing letter, shall request FERC to defer to the
determination of MAPP that the tariff is acceptable, and shall request FERC
to accept the tariff for filing without hearing or modification. Unless
FERC subsequently denies, suspends or modifies the tariff, the tariff as
approved by the Regional Transmission Committee shall remain in effect
until superseded or modified by a later tariff filed in accordance with the
provisions of this Restated Agreement.
8.3.4 Canadian Transmission Suppliers - Each Canadian
Transmission Supplier agrees to provide interconnection, transmission or
ancillary service under this Restated Agreement on a basis comparable to a
Member subject to Sections 210, 211 or 212 of the FPA as in effect on the
Effective Date to the maximum extent permitted by Canadian Laws. For
purposes of this Restated Agreement, any Member formed under the laws of
Canada or any province thereof shall be considered an entity eligible to
obtain an order requiring interconnection, transmission or ancillary
service under Sections 210, 211 or 212 of the FPA as in effect on the
Effective Date to the same extent as if it were an entity formed under the
laws of the United States or any state thereof. If and as necessary, each
Canadian Transmission Supplier will apply to the appropriate Canadian
Regulatory Authority for any approvals required to provide the
interconnection, transmission or ancillary service specified herein, and
will diligently prosecute such application. To the extent that Canadian
Laws do not allow, or the appropriate Canadian Regulatory Authority does
not permit, a Canadian Transmission Supplier to provide interconnection,
transmission or ancillary service on a basis comparable to a Member subject
to Sections 210, 211 or 212 of the FPA, then a Transmission Supplier shall
only be required, in responding to a request from such Canadian
Transmission Supplier for interconnection, transmission, or ancillary
service, to provide service to the Canadian Transmission Supplier on a
basis comparable to the service which the Canadian Transmission Supplier is
then allowed or authorized to provide to any Member requesting service.
8.4 Requests for Transmission Service - Each Transmission Requester
desiring transmission service from a Transmission Provider shall comply
with the provisions of Service Schedule F - Transmission Service for
Coordination Transactions, attached hereto as Exhibit C, or of the
Transmission Provider's tariff or tariffs filed pursuant to Section 8.3.2,
or of any applicable regional or subregional tariff or tariffs as may be
established or approved by the Regional Transmission Committee. A request
for transmission service of a type not provided by Service Schedule F -
Transmission Service for Coordination Transactions, or by a Transmission
Provider's tariff, or by any applicable regional or subregional tariff or
tariffs as may be established or approved by the Regional Transmission
Committee, shall be made in writing in accordance with requirements
established by the Regional Transmission Committee or, where such
requirements have not been established, in accordance with FERC's
then-applicable policies regarding such requests. A request for
transmission service made in accordance with this Section shall be deemed
to be a "good faith request" for service within the meaning of Section 213
of the FPA.
8.5 Response to a Request for Service - The Transmission Provider
shall respond to a request for transmission service from a Transmission
Requester in accordance with, as applicable, the provisions of Service
Schedule F, the Transmission Provider's tariffs filed pursuant to Section
8.3.2, any regional or subregional tariff established or approved by the
Regional Transmission Committee, or by an agreement to provide the
requested transmission service. A response to a request for transmission
service of a type not provided for by Service Schedule F, the Transmission
Provider's tariffs, or any applicable regional or subregional tariff
established or approved by the Regional Transmission Committee, shall be
made in accordance with requirements established by the Regional
Transmission Committee or, where such requirements have not been
established, in accordance with FERC's then-applicable policies regarding
such responses.
8.6 Transmission Planning
8.6.1 Member Plans - Each Member which is a Transmitting
Utility shall prepare and maintain a plan for its transmission facilities.
Such plans shall conform to applicable reliability standards and
requirements established by the Regional Reliability Committee, and to
applicable methods and assessment practices and other transmission planning
standards and requirements established by the Regional Transmission
Committee. Such plans shall take into account:
(a) The Member's current and anticipated requirements for
transmission to provide All-Requirements and Partial
Requirements Service and service to its End-Use Loads;
(b) The current and anticipated requirements for transmission
to provide network transmission service to those entities
for which the Member provides such service;
(c) The Member's other contractual and tariff obligations to
provide firm transmission service;
(d) Any other contractual obligations of the Member affecting
the use of its transmission facilities;
(e) Any requirements for future transmission service of a
Member or non-Member communicated to the Member under
procedures, standards and requirements established by the
Regional Transmission Committee;
(f) Facilities for which a commitment has been made as of the
Effective Date;
(g) The coordination of the Member's transmission plan with
the transmission plans of neighboring systems, and in
particular any coordination parameters or requirements
identified by the relevant subregional working groups
used by the Regional Transmission Committee; and
(h) The obligation of the Member under FERC requirements,
this Restated Agreement, and applicable standards and
requirements established by the Regional Transmission
Committee to provide transmission service to other
entities on a basis comparable to its own use of its
transmission facilities.
8.6.2 Availability of Plans and Information - The Members'
transmission plans, along with the information on which the plans are
based, shall be made available to the Regional Transmission Committee on a
regular basis as established by the Regional Transmission Committee. Each
Member shall make available to any other Member upon request its
transmission plan, together with sufficient information to enable the
requesting Member to perform planning analyses on the same basis as the
Member providing the information.
8.6.3 Planning Standards - The Regional Transmission Committee
shall establish procedures, standards and requirements for:
(a) The communication to a Member by Members and non-Members
of their bona fide requirements for transmission service;
(b) The utilization of subregional working groups for the
coordination of Members transmission plans and the
resolution of subregional transmission planning issues on
an informal, collaborative basis, which working groups
shall be open to any interested Member and any actual or
potential user of the relevant transmission facilities,
and shall maintain such records as shall be required by
the Regional Transmission Committee;
(c) The incorporation of asserted bona fide requirements for
transmission service into Member, subregional, and
regional transmission plans; and
(d) The development of integrated transmission plans by the
subregional working groups, and the integration of the
subregional plans into a transmission plan for the MAPP
Region.
8.6.4 The Regional Plan - Not less often than biennially the
Regional Transmission Committee shall develop and approve a coordinated
transmission plan, including alternatives, for the ensuing 10 years, or
other planning period specified by NERC, for all transmission facilities in
the MAPP Region at a capacity of 115 kV or greater (the "Plan"). The Plan
shall integrate the transmission plans developed by individual Members and
by subregional working groups, for the purpose of enabling the transmission
needs in the MAPP Region of Member and non-Members to be met on a
consistent, reliable, environmentally acceptable and economic basis. The
Plan shall avoid unnecessary duplication of facilities or the imposition of
unreasonable costs on any Member, shall take into account the legal and
contractual rights and obligations of all Members, may provide alternative
means for meeting transmission needs in the MAPP Region, and shall
differentiate proposed transmission projects from projects for which a
definite commitment of resources has been made. The Plan shall be
consistent with applicable standards and requirements established by the
Regional Reliability Committee. The Regional Transmission Committee shall
develop policies and procedures for updating or modifying the Plan between
biennial planning cycles as may be appropriate. Any Member, Regulatory
Participant, or interested non-Member may attend any meeting of the
Regional Transmission Committee or any of its subcommittees dealing with
the Plan. At the request of any Member or Regulatory Participant any
non-Member may participate in, but not vote at, any such meeting.
8.6.5 Reliability Catalogue - Prior to the development of the
first Plan each Member may file with the Regional Transmission Committee a
catalogue describing its reliability and operating standards and
requirements in effect on the Effective Date for its facilities for the
transmission of electric power at 115 kV or greater. A Member may require
that any facilities proposed to be added to its system comply with such
standards and requirements and that such standards and requirements be
adhered to in connection with the use of such facilities, provided that
such standards and requirements are not in conflict with MAPP reliability
standards and requirements or standards and requirements established by the
Regional Transmission Committee, and are not unduly discriminatory.
8.6.6 Support of the Plan - Subject to the right of Members to
invoke the appeal or dispute resolution procedures specified in this
Restated Agreement, and subject to the compensation requirements and
obligations of Section 8.7 of this Restated Agreement, each Member shall
support the Plan before any regulatory or other governmental agency or
authority having jurisdiction over matters affecting the implementation of
the Plan, and shall use its best efforts to implement the Plan.
Notwithstanding the foregoing obligation of each Member to support the Plan
and to use its best efforts to implement the Plan, any Member that is
required by the Plan to construct or upgrade facilities and that opposed
the inclusion of such facilities in the Plan shall have the right to
present, at any time, its position regarding the construction or upgrading
of such facilities to any regulatory or other governmental agency having
jurisdiction over matters pertaining to the Member's compliance with the
Plan.
8.7 Construction and Ownership of Transmission Facilities
8.7.1 Obligation to Build - Subject to the provisions of this
Restated Agreement, to the requirements of applicable law, government
regulations or approvals, to the availability of required financing, and to
the right to recover, pursuant to appropriate financial and credit
arrangements and tariffs or contracts, all reasonably incurred costs plus a
reasonable return on investment, Members designated as the appropriate
entities to construct and own transmission facilities specified in the Plan
shall construct and own such facilities or enter into appropriate contracts
to fulfill such obligations. A Member shall not be designated as the
appropriate Member, or one of the appropriate Members, to construct and own
transmission facilities unless the facilities are contiguous with or an
upgrade of the Member's existing transmission facilities, or the Member has
agreed to such designation. A Member or Members designated as the
appropriate Member or Members to construct and own or upgrade transmission
facilities shall be entitled to recover all reasonably incurred costs plus
a reasonable return on investment in connection with construction,
ownership, or upgrading of such facilities, under requirements established
by the Regional Transmission Committee and consistent with FERC standards
or Canadian Law as applicable. In the absence of agreement among the
affected parties, and with due regard for applicable comparability
requirements, the Regional Transmission Committee may require the
Transmission Requester, the constructing and owning or upgrading Member or
Members, and any Member owning or having the right to control the use of
transmission facilities contiguous to the facilities being constructed or
upgraded, to pay, either directly or through an appropriate transmission
rate, an appropriate share of the costs of such facilities. Subject to
applicable comparability requirements, the Regional Transmission Committee
shall apportion such costs primarily to those entities for whose needs the
facilities are being constructed or upgraded, but shall also recognize the
incidental benefits other entities will receive from the new facilities,
taking into account whether such other entities would expend funds to
achieve such incidental benefits. Any Member that is required to pay all
or substantially all of the costs of constructing a new transmission
facility shall have the right to own or receive Rights Equivalent to
Ownership in the facility. Any Member contributing directly to the
incremental cost of upgrading existing facilities shall have the
proportionate right to receive Rights Equivalent to Ownership in the
incremental upgrade. Ownership or Rights Equivalent to Ownership of a
transmission facility shall be subject to such reasonable requirements as
to the design, operation, control or maintenance of the facility as may be
imposed by a Member owning connected facilities or operating the control
area in which the new facility is located.
8.7.2 U.S. and Canadian Members - No Member that is an entity
existing under the laws of the United States or any state thereof shall be
designated as the appropriate Member to construct transmission facilities
located in Canada, and no Member that is an entity existing under the laws
of Canada or any Province thereof shall be designated as the appropriate
Member to construct transmission facilities located in the United States.
8.8 Regional Transmission Committee - The Regional Transmission
Committee shall be responsible for the regional transmission functions of
MAPP.
8.8.1 Membership - The Regional Transmission Committee shall be
composed of one Representative of each Member. Each Member shall designate
a Representative and an alternate Representative for the Regional
Transmission Committee by written notice to the Secretary of the Executive
Committee. Members shall appoint as their Representatives on the Regional
Transmission Committee persons with technical expertise and significant
experience relating to electric transmission matters.
8.8.2 Dues - Each Member shall pay fixed annual dues for the
Regional Transmission Committee in an amount established by the Executive
Committee, which amount shall be $2,500 for the first fiscal year of MAPP
following the Effective Date. The Regional Transmission Committee shall
determine a reasonable and appropriate method for recovering the costs
allocated or assigned to it, net of the foregoing fixed annual dues, from
charges for transmission service provided under Service Schedule F -
Transmission Service for Coordination Transactions, or by such other means
as may be necessary or appropriate.
8.8.3 Voting Requirements - Except as specified in the last
sentence of Section 13.3.1, and subject to the provisions of Sections 13.19
and 13.20, the action of two-thirds of the Representatives of the
Transmission Owning Members present and voting and of two-thirds of the
Representatives of the Transmission Using Members present and voting shall
be the action of the Regional Transmission Committee. A quorum of
two-thirds of the Representatives to the Regional Transmission Committee
present in person or by proxy shall be necessary for the Regional
Transmission Committee to conduct business. Upon the written demand of any
Member, the Regional Transmission Committee shall vote on any matter ready
for decision at its next meeting, provided that the Chair of the Committee
received such demand thirty or more days prior to such meeting. A failure
to act by reason of the voting or quorum requirements specified herein
shall constitute an action or decision of the Regional Transmission
Committee for purposes of the applicable dispute resolution procedures
specified herein.
8.8.4 Officers - The members of the Regional Transmission
Committee shall choose a Chair and Vice Chair from among the
Representatives of the Transmission Owning Members and the Transmission
Using Members by a majority of the votes of the Representatives of both
groups present and voting, each Representative having one vote, subject to
the following requirements. The initial Chair shall be a Representative of
a Transmission Owning Member, and the initial Vice Chair shall be a
Representative of a Transmission Using Member, and each shall serve for a
term of two years. Upon the expiration of the term of office of the Chair,
the Vice Chair shall become the Chair for a term of two years, and the
Regional Transmission Committee shall choose a new Vice Chair, who shall be
a Representative of a Transmission Owning Member if the new Chair is a
Representative of a Transmission Using Member, and vice versa. If during
the term of office of the Chair or the Vice Chair the status of the Member
of which either is a Representative changes from Transmission Using Member
to Transmission Owning Member or vice versa, the office held by the
Representative whose Member changed status shall become vacant, and a new
election held to fill the unexpired term of that office in accordance with
the diversity requirements specified in this Section 8.8.4. The Chair of
the Regional Transmission Committee shall preside at meetings of the
Committee, and shall have the power to call meetings of the Committee and
to exercise such other powers as are specified in this Restated Agreement
or are authorized by the Regional Transmission Committee. The Vice Chair
of the Regional Transmission Committee shall preside at meetings of the
Regional Transmission Committee in the absence of the Chair of the
Committee, and shall exercise such other powers as are delegated by the
Chair. A designee of the Contractor shall serve as the Secretary of the
Regional Transmission Committee.
8.8.5 Meetings - The Regional Transmission Committee shall meet
not less often than once each calendar year, and shall meet at such other
times and places as determined by the Committee, or at the call of the
Chair. The Chair shall call a meeting of the Regional Transmission
Committee upon the request of five or more members of the Committee. Any
Member whose Representative is unable to attend a meeting of the Regional
Transmission Committee may designate an alternate Representative to
participate and vote in the place of the Representative, or may give its
written proxy to another Member.
8.8.6 Subcommittees
(a) The Regional Transmission Committee shall have such
subcommittees and ad hoc task forces as from time to time it shall deem
appropriate. Each subcommittee shall have an equal number of
Representatives of Transmission Owning Members and Transmission Using
Members, who shall be elected by the Transmission Owning and Transmission
Using Member Representatives on the Regional Transmission Committee
respectively, each using its best efforts to select subcommittee members
that are representative of the range of interests likely to be affected by
the subcommittee. Any person designated by a Transmission Owning or a
Transmission Using Member who has technical expertise and significant
experience relating to electric transmission matters shall be eligible to
serve on any subcommittee of the Regional Transmission Committee; provided,
however, that a subcommittee of the Regional Transmission Committee may not
have two or more Representatives designated by the same Member or by
Affiliated Members.
(b) The Regional Transmission Committee shall establish the
size, duties and responsibilities of its subcommittees, consistent with the
requirements set forth herein. Except as specified in the last sentence of
Section 13.3.1, actions or decisions by a subcommittee of the Regional
Transmission Committee shall require the affirmative votes of two-thirds of
the Representatives of the Transmission Owning Members present and voting
and two-thirds of the Representatives of the Transmission Using Members
present and voting, each Representative having one vote. A quorum of
two-thirds of the Representatives to the subcommittee shall be necessary
for the subcommittee to conduct business. Upon the written demand of any
Member, a subcommittee shall vote on any matter ready for decision at its
next meeting, provided that the Chair of the subcommittee received such
demand thirty or more days prior to such meeting. A failure to act by
reason of the voting or quorum requirements specified herein shall
constitute an action or decision of the subcommittee for purposes of review
by the Regional Transmission Committee or the dispute resolution procedures
specified herein.
(c) Any action or decision of any subcommittee of the
Regional Transmission Committee shall at the request of any Member or
Regulatory Participant be subject to review and modification by the
Regional Transmission Committee. Any request for such review or
modification must be delivered to the Secretary of the Regional
Transmission Committee not later than the fourteenth day after the delivery
of the minutes of the subcommittee meeting at which the decision,
determination or other action was taken. The Regional Transmission
Committee shall act on any request to review or modify any action or
decision of any of its subcommittees at its next meeting if such request
was received by the Secretary of the Committee thirty or more days prior to
such meeting; provided, however, that the Regional Transmission Committee
may establish a subcommittee for the purpose of making recommendations to
the Regional Transmission Committee on requests for review or modification
of subcommittee actions or decisions, and may establish such procedures
relating to such subcommittee as it shall deem appropriate. A failure to
act on a request for review or modification by reason of the voting or
quorum requirements set forth in Section 8.8.3 shall be deemed interim
approval of the decision, determination or action of the subcommittee for
purposes of implementation of the decision and the applicable dispute
resolution procedures specified herein.
(d) Without limiting the authority of the Regional
Transmission Committee as set forth in subparagraphs (a) and (b) of this
Section, the initial subcommittees to be established by the Regional
Transmission Committee, and the initial responsibilities of those
subcommittees, shall be as described in Exhibit D of this Restated
Agreement. The Regional Transmission Committee shall update and revise
Exhibit D as appropriate.
8.8.7 Dispute Resolution
(a) A decision or other action, or failure to decide or act,
of a subcommittee of the Regional Transmission Committee shall be subject
to review, modification, or other action only by the Regional Transmission
Committee, in accordance with the appeal procedures set forth in Section
8.8.6; provided, however, that assertions as to any final decision or other
action, or failure to act or decide, of a subcommittee of the Regional
Transmission Committee on the following matters shall be resolved in
accordance with the dispute resolution provisions of Article 11 if the
Member or Regulatory Participant making such an assertion does not elect to
take an appeal to the Regional Transmission Committee:
i. Assertions that a transmission tariff, schedule, or plan
or any portion of the foregoing is unduly discriminatory
as applied to the Member, or imposes undue or
unreasonable costs or other burdens on the Member, or is
otherwise contrary to the terms of this Restated
Agreement or applicable requirements of state or federal
law; or
ii. Assertions as to compliance or lack of compliance by the
Member or another Member with a transmission tariff,
schedule or plan.
(b) Actions or decisions by the Regional Transmission
Committee as to all matters over which it has responsibility under this
Restated Agreement shall be subject to review, modification or other action
only by the Regional Transmission Committee; provided, however, that
assertions by any Member or Regulatory Participant that any final action or
decision, or failure to act or decide, of the Regional Transmission
Committee (i) is based on an error of fact, (ii) is inconsistent with any
term, standard, purpose or objective of this Restated Agreement, or (iii)
is inconsistent with applicable regulatory requirements or other applicable
legal standards, shall be resolved in accordance with the dispute
resolution provisions of Article 11.
(c) Assertions that any Member has not provided transmission
service in accordance with the provisions of this Restated Agreement,
including any rate, tariff, minimum requirement for transmission service,
or obligation to construct transmission facilities established hereunder,
shall be decided in the first instance by the Regional Transmission
Committee subcommittee assigned responsibility for resolving such
assertions, and shall thereafter be resolved in accordance with the dispute
resolution provisions of Article 11.
(d) Disputes as to the billing and collection of payments for
transmission service shall be resolved in accordance with the dispute
resolution provisions of Article 11.
8.8.8 Responsibilities - The duties of the Regional
Transmission Committee include but are not limited to the following:
(a) Consistent with the provisions of this Restated
Agreement, establish the rates, terms and conditions for
transmission service for coordination transactions under
Service Schedule F - Transmission Service for
Coordination Transactions;
(b) Consistent with minimum standards for transmission
tariffs established by FERC and applicable regulatory
approvals, establish and from time to time modify as
appropriate consistent terms, conditions and rate
methodologies for the provision of flexible
point-to-point and network service throughout the MAPP
Region, and review and approve or establish such other
rates, terms and conditions for transmission service as
are consistent with this Restated Agreement and necessary
or appropriate to ensure that transmission service is
available to all Members on a comparable basis in the
MAPP Region;
(c) Establish standards, policies, procedures and
requirements as appropriate to implement this Article 8;
(d) Assure conformity of the standards, policies, procedures
and requirements implementing this Article 8 with
applicable standards and requirements established by the
MAPP Reliability Council and the Regional Reliability
Committee;
(e) Implement and modify as appropriate MAPP procedures for
transmission line loading relief, including generation
redispatch, and other appropriate procedures for
curtailments of transmission service ("MAPP Line Loading
Relief Procedures"), and establish and implement
provisions for compensation for transmission losses, as
may be appropriate to ensure the safe, reliable, and not
unduly discriminatory operation of transmission
facilities in the MAPP Region;
(f) Establish standards, policies, procedures and
requirements as appropriate to deal equitably with
uncompensated adverse effects on any Member resulting
from unscheduled power flows, loop flows, or other
consequences of any long-term use of transmission
facilities within the MAPP Region;
(g) In addition to the tariff specified in Service Schedule F
- Transmission Service for Coordination Transactions,
endeavor to establish, and if possible establish, tariffs
for the MAPP Region or subregions thereof for
transmission service, such tariffs to be utilized as
applicable by the Members in place of the transmission
tariffs of individual Members implemented pursuant to
Section 8.3 of this Restated Agreement;
(h) In cases of disagreement among the affected Members,
determine whether two or more Members should provide
transmission services pursuant to a joint tariff, instead
of individual tariffs implemented pursuant to Section
8.3.1 of this Restated Agreement, such determination to
be based on applicable comparability and other standards
for transmission service and the integrated nature of
such Members' transmission facilities; provided, however,
that engaging in coordinated transmission planning shall
not of itself require the provision of transmission
service pursuant to a joint tariff;
(i) Develop and implement an appropriate electronic
information network for the posting of such information
relating to the availability and provision of
transmission service within the MAPP Region as may be
appropriate;
(j) Resolve disputes as to compliance with the requirements
of this Article 8 or the application or interpretation of
standards, policies, procedures and requirements
implemented by the Regional Transmission Committee;
(k) Establish and revise procedures and practices to
coordinate the operation of the MAPP transmission system
and its development and operation with adjoining systems,
pools and regional transmission groups;
(l) Develop the biennial Plan required by Section 8.6.4;
(m) Collect and analyze operating data pertinent to the
interconnected operation of the systems of the Members
and arrange for conducting such transmission network
studies as may be necessary in the performance of its
duties hereunder;
(n) Develop procedures to compensate Members for reactive
power and voltage control services which support
coordination transactions;
(o) With the assistance of the Contractor, develop a budget
for submission to the Executive Committee; and
(p) Carry out such tasks as may be appropriately assigned to
the Regional Transmission Committee by the Management or
Executive Committees.
ARTICLE 9
POWER AND ENERGY MARKET
9.1 Establishment of Market - The Contractor shall establish and
operate a wholesale market for the voluntary purchase and sale of
electricity at market-based rates (hereafter the "Power and Energy
Market"). A facility which is a qualifying small power production facility
or a qualifying cogeneration facility, as those terms are defined in FPA
Sections 3(17)(A), 3(17)(C), 3(18)(A) and 3(18)(B), and which meets the
requirements set forth in 18 C.F.R. Sections 292.203-292.209, whether or
not a Member, shall be allowed to participate in the Power and Energy
Market only upon waiving its rights under the Public Utility Regulatory
Policies Act of 1978 to require purchases at avoided cost for purposes of
transactions in the Power and Energy Market.
9.2 Participation
9.2.1 Non-Members - An entity which is not a Member may
participate in the Power and Energy Market and become a Market Participant
provided that it:
(a) Agrees to be bound by the terms of any Power and Energy
Market Service Schedules applicable to transactions it
conducts through the Power and Energy Market;
(b) Agrees to be bound by all the dispute resolution
provisions of Section 9.4.6 below;
(c) Agrees to conduct and conducts operations relating to the
Power and Energy market in accordance with applicable
reliability standards established by the Regional
Reliability Committee; and
(d) Agrees to pay and pays to the Contractor all applicable
dues and fixed and transaction fees, including its
portion of MAPP Center costs and any other administrative
and general costs of MAPP which are applicable to the
Power and Energy Market.
9.2.2 Suspension or Termination - The Power and Energy Market
Committee ("Market Committee") may suspend or terminate the participation
in the Power and Energy Market of any Market Participant that does not
comply with relevant provisions of this Restated Agreement or the standards
and requirements for the Power and Energy Market established by the Power
and Energy Market Committee.
9.3 Transaction Fees and Service Schedules - The creation, operation
and maintenance of the Power and Energy Market shall be funded from dues
and fees for participating in or effecting transactions through the Power
and Energy Market. All monies lent or advanced to establish the Power and
Energy Market shall be repaid through such dues and fees. Each Market
Participant shall pay fixed annual dues in an amount established by the
Executive Committee, which amount shall be $1,000 for the first fiscal year
of MAPP. The Market Committee shall determine a reasonable and appropriate
method for recovering the costs allocated or assigned to it net of the
fixed annual dues from the other fees and charges associated with the Power
and Energy Market. All fees and Service Schedules applicable to
transactions on the Power and Energy Market shall be non-discriminatory and
shall not unduly favor, or exclude, tend to exclude, or otherwise disfavor,
any actual or potential participant in the Power and Energy Market. The
initial Service Schedules to be made available for the completion of
transactions on the Power and Energy Market, which Service Schedules are
available for the purchase and sale of power and energy for resale and not
for consumption, are set forth in Exhibit E. Such initial Service
Schedules shall become effective on the first May 1 or the first November 1
first following the Effective Date. Market Participants shall make
appropriate arrangements for the provision of any transmission service
necessary for Power and Energy Market transactions with the entities
providing such service, along with appropriate arrangements for
compensation of losses.
9.4 Market Committee
9.4.1 Membership
(a) The Market Committee shall be composed of 12
Representatives elected by the Power and Energy Market Members. No two or
more Representatives on the Market Committee may be employees of the same
Power and Energy Market Member or of Affiliated Members. Each Power and
Energy Market Member shall be entitled to vote for a number of Market
Committee nominees equal to the number of vacant seats on the Market
Committee.
(b) Representatives to the Market Committee shall be elected
at the Management Committee Annual Meeting by the Representatives to the
Management Committee of those Members which are Power and Energy Market
Members, using their best efforts to select a Market Committee that
reflects the diversity within the Power and Energy Market Members. To be
elected, a candidate for a seat on the Market Committee must receive
two-thirds of the total votes available to be cast for that seat by the
Power and Energy Market Members voting, each Power and Energy Market Member
having one vote for each vacant seat.
(c) Representatives to the Market Committee shall serve for
terms of three years, beginning on the first day of the month following the
Management Committee Annual Meeting, except that of the Representatives
first elected to the Market Committee, four Representatives shall serve
terms of one year, and four shall serve terms of two years, the
Representatives to serve these terms to be designated by the Power and
Energy Market Member Representatives to the Management Committee.
Vacancies on the Market Committee occurring during the term of a regularly
elected Representative and more than one month prior to a MAPP Annual
Meeting shall be filled by the Market Committee.
9.4.2 Voting Requirements - Except as specified in the last
sentence of Section 13.3.1, approval or adoption of measures by the Market
Committee shall require two-thirds of the votes of the Representatives
present and voting. A quorum of Representatives of two-thirds of the
entities represented on the Market Committee shall be necessary for the
Market Committee to conduct business.
9.4.3 Officers - At the first meeting of the Market Committee
following the Management Committee Annual Meeting, the members of the
Market Committee shall choose a Chair and Vice Chair from among the elected
Representatives to the Committee by the votes of two-thirds of the
Committee Representatives present and voting. The Chair of the Market
Committee shall preside at meetings of the Committee, and shall have the
power to call meetings of the Committee and to exercise such other powers
as are specified in this Restated Agreement or are authorized by the Market
Committee. The Vice Chair shall preside at meetings of the Market
Committee in the absence of the Chair, and shall exercise such other powers
as are delegated by the Chair.
9.4.4 Meetings - The Market Committee shall meet at such times
and places as determined by the Committee, or at the call of the Chair.
The Chair shall call a meeting of the Market Committee upon the request of
three or more members of the Committee. Any Member whose Representative is
unable to attend a meeting of the Market Committee may designate an
alternate Representative to participate and vote in the place of the
Representative.
9.4.5 Subcommittees - The Market Committee shall have such
subcommittees as it shall deem appropriate. Any person designated by a
Power and Energy Market Member shall be eligible to serve on any
subcommittee of the Market Committee; provided, however, that a
subcommittee of the Market Committee may not have two or more
Representatives of the same Member or of Affiliated Members. The Market
Committee shall establish the duties and responsibilities of the
subcommittees of the Market Committee. Decisions and other actions of each
subcommittee shall be governed by majority vote of the subcommittee
members; provided, however, that any decision, determination, or other
action of any subcommittee shall at the request of any Power and Energy
Member be subject to review and modification by the Market Committee
pursuant to the voting requirements specified in Section 9.4.2.
9.4.6 Dispute Resolution - Matters within the responsibility of
the Market Committee as set forth in Section 9.4.7 below shall be
determined in the first instance by the Market Committee. Assertions by
any Market Participant that any final action or decision, or failure to act
or decide, of the Market Committee (i) is based on an error of fact, (ii)
is inconsistent with any term, standard, purpose or objective of this
Restated Agreement or (iii) is inconsistent with applicable regulatory
requirements or other applicable legal standards, shall be resolved in
accordance with the dispute resolution provisions of Article 11. Any
dispute arising from the operation of the Power and Energy Market, the
application of any Service Schedule established pursuant to Section 9.3, or
other matters relating to particular transactions conducted or sought to be
conducted through the Power and Energy Market, and not calling into
question an action or decision of the Market Committee, shall be resolved
pursuant to the Dispute Resolution procedures established in Article 11 of
this Restated Agreement.
9.4.7 Responsibilities - The duties of the Market Committee
shall include the following and such additional duties as may be assigned
to it by the Management or Executive Committees, all such duties to be
carried out in conformity with MAPP reliability requirements and standards,
and all applicable laws and regulations:
(a) Administer the Power and Energy Market, including
determining the initial and continuing eligibility of
entities to participate in the Power and Energy Market;
(b) Establish and revise wholesale Service Schedules,
including the Service Schedules specified in Section 9.3,
for the use of entities effecting transactions through
the Power and Energy Market, and make any necessary
filings of such tariffs with relevant regulatory
agencies;
(c) Establish and revise methods, standards and procedures
for implementation of the foregoing Service Schedules,
including methods and procedures for accounting and
billing thereunder;
(d) Monitor activities pursuant to the foregoing Service
Schedules to determine if they are encouraging the
voluntary interchange of power and energy at market-based
rates and to propose modifications where needed;
(e) Establish procedures and requirements for the reporting
of Power and Energy Market transactions to the MAPP
Center;
(f) Develop additional Service Schedules as appropriate to
encourage the voluntary interchange of capacity and
energy at market-based rates;
(g) Institute and administer an appropriate electronic
bulletin board; and
(h) Review and recommend to the Executive Committee budgets
and fee schedules proposed by the Contractor for the
operation of the Power and Energy Market.
ARTICLE 10
METERING AND RECORDS
10.1 Metering - All metering equipment required for recording the
deliveries of power and energy between the systems of each Member and the
systems of the other Members with which it is interconnected shall be
maintained by the Members owning such metering equipment in accordance with
Good Utility Practice and accepted industry standards. Should any such
metering equipment at any time fail to register or should the registration
thereof be so erratic as to be meaningless, the power and energy delivered
shall be determined from the best information available.
10.2 Records
10.2.1 Power and Energy Movements - In addition to meter
records, the Members shall keep such log sheets and other records
(determined by the Regional Reliability Committee, the Regional
Transmission Committee or the Market Committee) as may be needed to afford
a clear history of the various movements of power and energy between the
systems of the Members involved both in transactions hereunder and in
transactions between Members hereto under other agreements between such
Members and to effect such differentiation as may be needed in connection
with settlements in respect to such transactions. The originals of all
such meter records and other records shall be open to inspection by
representatives of the Members concerned and by any council or committee
needing such information to carry out its functions under this Restated
Agreement.
10.2.2 Meter Registrations - To the extent necessary and
appropriate for settlements, special tests, operating records or other
purposes consistent with the responsibilities of a council or committee,
each Member shall furnish to any such council or committee requesting such
information all appropriate data from meter registrations and other sources
for such time periods as requested by the council or committee. As
promptly as practicable after the end of each month, each Member shall
render to the other Members concerned statements setting forth appropriate
data from meter registrations and other sources in such detail and with
such segregation as may be needed for operating records and for settlements
hereunder.
ARTICLE 11
DISPUTE RESOLUTION
11.1 Mediation
11.1.1 When Required - Any dispute as to a matter governed by
this Restated Agreement shall be subject to non-binding mediation prior to
the initiation of arbitral, regulatory, judicial, or other dispute
resolution proceedings, unless the Alternate Dispute Resolution Committee
or its designee shall determine from the nature of the dispute, the
positions of the parties, and other relevant facts and circumstances that
mediation would be highly unlikely to lead to resolution of the dispute.
11.1.2 Procedures
(a) The parties to a dispute arising from or relating to this
Restated Agreement shall notify the Alternate Dispute Resolution Committee
in writing of the existence and nature of the dispute prior to commencing
any other form of proceeding for resolution of the dispute. The Alternate
Dispute Resolution Committee shall have ten days in which to determine
whether mediation would be highly unlikely to lead to resolution of the
dispute. At the earlier of (i) the expiration of such period, (ii) a
determination by the Alternate Dispute Resolution Committee that mediation
is appropriate, or (iii) agreement of the parties, the parties shall
proceed to mediation.
(b) A mediator shall be selected by the Chair of the
Alternate Dispute Resolution Committee after consultation with the
disputing parties. The Chair of the Alternate Dispute Resolution Committee
may also consult with the other Representatives on the Alternate Dispute
Resolution Committee on the selection of a mediator for a dispute. The
mediator shall (i) be knowledgeable in the subject matter of the dispute,
and (ii) have no official, financial, or personal conflict of interest with
respect to the issues in controversy, unless the interest is fully
disclosed in writing to all participants and all participants waive in
writing any objection to the interest.
(c) The disputing parties shall attempt in good faith to
resolve their dispute in accordance with the procedures and timetable
established by the mediator. In furtherance of the mediation efforts, the
mediator may:
i. Require the parties to meet for face-to-face discussions,
with or without the mediator;
ii. Act as an intermediary between the disputing parties;
iii. Require the disputing parties to submit written
statements of issues and positions; and
iv. If requested by the disputing parties at any time in the
mediation process, provide a written recommendation on
resolution of the dispute including, if requested, the
mediator's assessment of the merits of the principal
positions being advanced by each of the disputing
parties.
(d) If a resolution of the dispute is not reached by the
thirtieth day after the appointment of the mediator or such later date as
may be agreed to by the parties, if not previously requested to do so the
mediator shall promptly provide the disputing parties with a written,
confidential, non-binding recommendation on resolution of the dispute,
including the mediator's assessment of the merits of the principal
positions being advanced by each of the disputing parties, or if such a
request has been made shall provide any additional recommendations or
assessments the mediator shall deem appropriate. At a time and place
specified by the mediator after delivery of the foregoing recommendation,
the disputing parties shall meet in a good faith attempt to resolve the
dispute in light of the mediator's recommendation. Each disputing party
shall be represented at the meeting by a person with authority to settle
the dispute, along with such other persons as each disputing party shall
deem appropriate. If the disputing parties are unable to resolve the
dispute at or in connection with this meeting, then: (i) any disputing
party may commence such arbitral, judicial, regulatory or other proceedings
as may be appropriate as provided in this Restated Agreement; and (ii) the
recommendation of the mediator shall have no further force or effect, and
shall not be admissible for any purpose, in any subsequent arbitral,
administrative, judicial, or other proceeding.
11.1.3 Costs - The costs of the time, expenses, and other
charges of the mediator and of the mediation process shall be borne by the
parties to the dispute, with each side in a mediated matter bearing
one-half of such costs. Each party shall bear its own costs and attorney's
fees incurred in connection with any mediation under this Restated
Agreement.
11.2 Arbitration
11.2.1 When Required - Any dispute as to a matter governed by
this Restated Agreement that has not been resolved through the procedures
specified herein, including but not limited to any dispute arising under
any tariff, Service Schedule, principle, standard, requirement, procedure,
plan, or other right or protection established by or pursuant to this
Restated Agreement (any such dispute being hereafter referred to as a
"Dispute"), shall be resolved by arbitration in accordance with the
procedures specified herein; provided, however, that any Dispute involving
the provision or denial of transmission service or the use of or obligation
to build or enlarge transmission facilities, or a rate, term or condition
for transmission service, shall be subject to resolution by FERC if (i)
FERC has jurisdiction over the subject matter of the Dispute, jurisdiction
to grant the relief sought by one or more disputing parties and has
jurisdiction over the party from which such relief is sought, and (ii) at
least one of the disputing parties seeking such relief or from which such
relief is sought demands that the matter be submitted to FERC; and
provided, further, that any assertion that any provision of this Restated
Agreement, including any tariff, Service Schedule, principle, standard,
requirement, plan, or procedure, or that any act or failure to act of any
Member, Market Participant, or other person or entity, is contrary to any
United States federal or state law or regulation, or any Canadian federal
or provincial law or regulation, shall be heard by any court or agency
having jurisdiction thereof and over the parties, unless all parties
consent to arbitration of such assertion. A party seeking to invoke FERC
jurisdiction of a Dispute shall so notify the other parties to a Dispute
within fourteen days of receiving a demand for arbitration, and shall
thereafter have a further 60 days in which to make the necessary filing to
commence proceedings at FERC. If the filing necessary to commence FERC
proceedings is not made within the foregoing period, the Dispute shall
revert to arbitration.
11.2.2 Initiation - Subject to the appeal and reconsideration
provisions of this Restated Agreement and to the provisions of Section
11.1, a party to a Dispute wishing to commence arbitration shall send a
written demand for arbitration via first class registered mail, return
receipt requested, to the Management Committee Representative of each other
party to the Dispute that is a Member, or to an officer or managing or
general agent (or other agent authorized by appointment or law to receive
service of process) of each party to the Dispute not a Member, and to the
Secretary of the Alternate Dispute Resolution Committee. The demand for
arbitration shall state each claim for which arbitration is being demanded,
the relief being sought, a brief summary of the grounds for such relief and
the basis for the claim, and shall identify all other parties to the
Dispute. The Secretary of the Alternate Dispute Resolution Committee shall
cause a copy of the demand for arbitration to be distributed promptly to
all Members.
11.2.3 Selection of Arbitrator(s) - The parties to a Dispute
for which arbitration has been demanded may agree on any person to serve as
a single arbitrator, or shall endeavor in good faith to agree on a single
arbitrator from a list of arbitrators prepared for the Dispute by the
Alternate Dispute Resolution Committee and delivered to the parties by
facsimile or other electronic means promptly after receipt by the Alternate
Dispute Resolution Committee of a demand for arbitration. If the parties
are unable to agree on a single arbitrator by the fourteenth day following
delivery of the foregoing list of arbitrators or such other date as agreed
to by the parties, then not later than the end of the seventh business day
thereafter the party or parties demanding arbitration on the one hand, and
the party or parties responding to the demand for arbitration on the other,
shall each designate an arbitrator from a list for the Dispute prepared by
the Alternate Dispute Resolution Committee, pursuant to procedures for such
designation established by the Alternate Dispute Resolution Committee. The
arbitrators so chosen shall then choose a third arbitrator.
11.2.4 Procedures - The Alternate Dispute Resolution Committee
shall compile and make available to the arbitrator(s) and the parties
standard procedures for the arbitration of Disputes, which procedures (a)
shall include provision, upon good cause shown, for intervention or other
participation in the proceeding by any Member whose interests may be
affected by its outcome, and (b) may be modified or adopted for use in a
particular proceeding as the arbitrator(s) deem appropriate. Upon
selection of the arbitrator(s), arbitration shall go forward in accordance
with applicable procedures.
11.2.5 Summary Disposition and Interim Measures
(a) The procedures for arbitration of a Dispute shall provide
a means for summary disposition of a demand for arbitration or response to
a demand for arbitration that in the reasoned opinion of the arbitrator(s)
does not have a good faith basis in either law or fact. If the
arbitrator(s) determine that a demand for arbitration or response to a
demand for arbitration does not have a good faith basis in either law or
fact, the arbitrator(s) shall have discretion to award the costs of the
time, expenses, and other charges of the arbitrator(s) to the prevailing
party.
(b) The procedures for the arbitration of a Dispute shall
provide a means for summary disposition without discovery if there is no
dispute as to any material fact, or with such limited discovery as the
arbitrator(s) shall determine is reasonably likely to lead to the prompt
resolution of any disputed issue of material fact.
(c) The procedures for arbitration of a Dispute shall permit
any party to a Dispute to request the arbitrator(s) to render a written
interim decision requiring that any action or decision that is the subject
of a Dispute not be put into effect, or imposing such other interim
measures as the arbitrator(s) deem necessary or appropriate, to preserve
the rights and obligations secured by this Restated Agreement during the
pendency of the arbitration proceeding. The Members shall be bound by such
written decision pending the outcome of the arbitration proceeding.
11.2.6 Discovery of Facts
(a) The arbitration procedures for the resolution of a
Dispute shall include adequate provision for the discovery of relevant
facts, including the taking of testimony under oath, production of
documents and things, and inspection of land and tangible items. The
nature and extent of such discovery shall be determined as provided herein
and shall take into account (i) the complexity of the Dispute, (ii) the
extent to which facts are disputed, and (iii) the amount in controversy.
The forms and methods for taking such discovery shall be as described in
the Federal Rules of Civil Procedure, except as modified by the
arbitrator(s) or agreement of the parties.
(b) The sole arbitrator, or the arbitrator selected by the
arbitrators chosen by the parties, as the case may be (such arbitrator
being hereafter referred to as the "Procedures Arbitrator"), shall be
responsible for establishing the timing, amount, and means of discovery,
and for resolving discovery and other pre-hearing disputes. If a Dispute
involves contested issues of fact, promptly after the selection of the
arbitrator(s) the Procedures Arbitrator shall convene a meeting of the
parties for the purpose of establishing a schedule and plan of discovery
and other pre-hearing actions.
11.2.7 Evidentiary Hearing - The procedures established by the
arbitrator(s) shall provide for an evidentiary hearing, with provision for
the cross-examination of witnesses, unless all parties consent to the
resolution of the matter on the basis of a written record. The forms and
methods for taking evidence shall be as described in the Federal Rules of
Evidence, except as modified by the arbitrator(s) or agreement of the
parties. The arbitrator(s) may require such written or other submissions
from the parties as shall be deemed appropriate, including submission of
the direct testimony of witnesses in written form. The arbitrator(s) may
exclude any evidence that is irrelevant, immaterial, unduly repetitious, or
privileged. Any party or parties may arrange for the preparation of a
record of the hearing, and shall pay the costs thereof. Such party or
parties shall have no obligation to provide or agree to the provision of a
copy of the record of the hearing to any party that does not pay a
proportionate share of the cost of the record. At the request of any
party, the arbitrator(s) shall determine a fair and equitable allocation of
the costs of the preparation of a record between or among the parties to
the proceeding willing to share such costs.
11.2.8 Confidentiality
(a) Any document or other information obtained from another
party in the course of an arbitral proceeding and not otherwise available
to the receiving party, including any such information contained in
documents or other means of recording information created during the course
of the proceeding, may be designated "Confidential" by the producing party.
The party producing documents or other information marked "Confidential"
shall have twenty days from the production of such material to submit a
request to the Procedures Arbitrator to establish such requirements for the
protection of such documents or other information designated as
"Confidential" as may be reasonable and necessary to protect the
confidentiality and commercial value of such information and the rights of
the parties. Prior to the decision of the Procedures Arbitrator on a
request for confidential treatment, documents or other information
designated as "Confidential" shall not be used by the receiving party or
parties, or the arbitrator(s), or anyone working for or on behalf of any of
the foregoing, for any purpose other than the arbitration proceeding, and
shall not be disclosed in any form to any person not involved in the
arbitration proceeding without the prior written consent of the party
producing the information or as permitted by the Procedures Arbitrator.
(b) Any person or entity receiving a request or demand for
disclosure, whether by compulsory process, discovery request, or otherwise,
of documents or information obtained in the course of an arbitration
proceeding that have been designated "Confidential" and that are subject to
a non-disclosure requirement under this Restated Agreement or a decision of
the Procedures Arbitrator, shall immediately inform the person or entity
from which the information was obtained, and shall take all reasonable
steps to afford the person or entity from which the information was
obtained an opportunity to protect the information from disclosure. Any
person disclosing information in violation of this Restated Agreement or
requirements established by the Procedures Arbitrator shall thereby waive
any right to introduce or otherwise use such information in any judicial,
regulatory, or other legal or dispute resolution proceeding, including the
proceeding in which the information was obtained.
(c) Nothing in this Restated Agreement shall preclude any
person or entity from using documents or information properly obtained
outside of an arbitral proceeding, or otherwise public, for any legitimate
purpose, notwithstanding that the information was also obtained in the
course of the arbitral proceeding.
11.2.9 Timetable - Promptly after the selection of the
arbitrator(s), the arbitrator(s) shall set a date for the issuance of the
arbitral decision, which shall be not later than eight months (or such
earlier date as may be agreed to by the parties) from the date of the
selection of the arbitrator(s), with other dates, including the dates for
an evidentiary hearing or other final submissions of evidence, set in light
of this date. The date for the evidentiary hearing or other final
submission of evidence shall not be changed absent extraordinary
circumstances. The arbitrator(s) shall have the power to impose sanctions
for dilatory tactics or undue delay in completing the arbitral proceedings.
11.2.10 Advisory Interpretations - Except as to matters subject
to decision in the arbitration proceeding, the arbitrator(s) may request
from the Executive Committee, or any other MAPP council, committee or
subcommittee as may be appropriate, an interpretation of this Restated
Agreement, or of any standard, requirement, procedure, tariff, Service
Schedule, principle, plan or other criterion or policy established by any
MAPP council, committee or subcommittee; provided, however, that such
interpretation shall not relieve the arbitrator(s) of responsibility for
resolving the Dispute or deciding the arbitration proceeding in accordance
with the standards specified herein.
11.2.11 Decisions - The arbitrator(s) shall issue a written
decision, including findings of fact and the legal basis for the decision.
The arbitral decision shall be based on (i) the evidence in the record,
(ii) the terms of this Restated Agreement, including any applicable tariff,
Service Schedule, principle, standard, requirement, procedure, plan, or
other right or obligation established by or pursuant to this Restated
Agreement, (iii) applicable United States federal and state, and Canadian
federal and provincial, legal standards, including the FPA and any
applicable FERC regulations and decisions, and international treaties or
agreements as applicable, and (iv) relevant decisions in previous
arbitration proceedings under this Restated Agreement. The arbitrator(s)
shall have no authority to revise or alter any provision of this Restated
Agreement. Any arbitral decision issued pursuant to the Restated Agreement
that affects matters subject to the jurisdiction of FERC under Section 205
of the FPA shall be filed with FERC.
11.2.12 Costs - Unless the arbitrator(s) shall decide
otherwise, the costs of the time, expenses, and other charges of the
arbitrator(s) shall be borne by the parties to the dispute, with each side
on an arbitrated issue bearing one-half of such costs, and each party to an
arbitral proceeding shall bear its own costs and fees. The arbitrator(s)
may award all or a portion of the costs of the time, expenses, and other
charges of the arbitrator(s), the costs of arbitration, attorney's fees,
and the costs of mediation, if any, to any party that substantially
prevails on an issue determined by the arbitrator(s) to have been raised
without a substantial basis.
11.2.13 Enforcement - The decision of the arbitrator(s) shall
be binding, and judgment may be entered on an arbitral award by any court
having jurisdiction thereof; provided, however, that within one year of the
issuance of the arbitral decision any Member or Regulatory Participant
affected thereby may request FERC or any other federal, state, or Canadian
provincial regulatory or judicial authority having jurisdiction to vacate,
modify, or take such other action as may be appropriate with respect to any
arbitral decision that is based upon an error of law, or is contrary to the
statutes, rules, or regulations administered or applied by such authority.
Any party making or responding to, or intervening in proceedings resulting
from, any such request, shall request the authority to adopt the
resolution, if not clearly erroneous, of any issue of fact expressly or
necessarily decided in the arbitral proceeding, whether or not the party
participated in the arbitral proceeding.
11.3 Alternate Dispute Resolution Committee
11.3.1 Membership
(a) The Alternate Dispute Resolution Committee shall be
composed of six Representatives selected by the Executive Committee, which
shall use its best efforts to select an Alternate Dispute Resolution
Committee that reflects the diversity among the Members in terms of size,
type of entity, geographic location, and their status as Transmission
Owning Members or Transmission Using Members. No two or more
Representatives on the Alternate Dispute Resolution Committee may be
Representatives of the same Member or of Affiliated Members.
(b) Representatives on the Alternate Dispute Resolution
Committee shall serve for terms of three years, beginning on the first day
of the month following the Executive Committee Annual Meeting, and may
serve additional terms, except that of the Representatives first elected to
the Alternate Dispute Resolution Committee, two Representatives designated
by the Executive Committee shall serve terms of one year, and two
Representatives designated by the Executive Committee shall serve terms of
two years.
11.3.2 Voting Requirements - Except as specified in the last
sentence of Section 13.3.1, approval or adoption of measures by the
Alternate Dispute Resolution Committee shall require two-thirds of the
votes of the Representatives present and voting. Two-thirds of the
Representatives on the Alternate Dispute Resolution Committee shall
constitute a quorum for the conduct business.
11.3.3 Officers - At the first meeting of the Alternate
Dispute Resolution Committee following the Annual Meeting of the Executive
Committee, the Representatives to the Alternate Dispute Resolution
Committee shall choose a Chair and Vice Chair from among the
Representatives on the Committee. A designee of the Contractor shall serve
as the Secretary of the Alternate Dispute Resolution Committee. The Chair
of the Alternate Dispute Resolution Committee shall preside at meetings of
the Committee, and shall have the power to call meetings of the Committee
and to exercise such other powers as are specified in this Restated
Agreement or are authorized by the Alternate Dispute Resolution Committee.
The Vice Chair shall preside at meetings of the Alternate Dispute
Resolution Committee in the absence of the Chair, and shall exercise such
other powers as are delegated by the Chair.
11.3.4 Meetings - The Alternate Dispute Resolution Committee
shall meet at such times and places as determined by the Committee, or at
the call of the Chair. The Chair shall call a meeting of the Alternate
Dispute Resolution Committee upon the request of two or more members of the
Alternate Dispute Resolution Committee.
11.3.55 Responsibilities - The duties of the Alternate Dispute
Resolution Committee include but are not limited to the following:
(a) Maintain a pool of persons qualified by temperament and
experience, and with technical or legal expertise in
matters likely to be the subject of Disputes, to serve as
mediators and arbitrators under this Restated Agreement;
(b) Determine the rates and other costs and charges that
shall be paid to mediators and arbitrators for or in
connection with their services;
(c) Select mediators for disputes;
(d) Determine whether mediation is not warranted in a
particular dispute;
(e) Provide to disputing parties lists of arbitrators
qualified by temperament and experience, and with
appropriate technical or legal expertise, to resolve
particular Disputes, such lists to include only neutral
persons who have no official, financial, or personal
conflict of interest with respect to the issues in
controversy;
(f) Compile and make available to Members, arbitrators, and
other interested parties suggested procedures for the
arbitration of Disputes in accordance with Section
11.2.4;
(g) Maintain and make available to Members, mediators,
arbitrators, and other interested parties the written
decisions required by Section 11.2.11;
(h) Establish such procedures and schedules, in addition to
those specified herein, as it shall deem appropriate to
further the prompt, efficient, fair and equitable
resolution of disputes; and
(i) Provide such oversight and supervision of the dispute
resolution processes and procedures instituted pursuant
to this Restated Agreement as may be appropriate to
facilitate the prompt, efficient, fair and equitable
resolution of disputes.
ARTICLE 12
PARTICIPATION BY THE WESTERN AREA POWER ADMINISTRATION
12.1 Participation by the United States - The participation by the
United States through the Western Area Power Administration in this
Restated Agreement is subject in all respects to acts of Congress and to
regulations of the Secretary of Energy established thereunder, and to rate
schedules promulgated by the Secretary of Energy or delegatee. This
reservation includes, but is not limited to, the statutory limitations upon
the authority of the Secretary of Energy to submit disputes arising under
this Restated Agreement to arbitration. In the event of a conflict between
this Article 12 and any other Article of this Restated Agreement, this
Article 12 shall have precedence with respect to the application of this
Restated Agreement to the United States.
12.2 Contingent Upon Appropriations - Where activities provided for
in this Restated Agreement extend beyond the current fiscal year, continued
expenditures by the United States are contingent upon Congress making the
necessary appropriations required for the continued performance of the
obligations of the United States under this Restated Agreement. In case
such appropriation is not made, the Members hereby release the United
States from its contractual obligations under this Restated Agreement and
from all liability due to the failure of Congress to make such
appropriation.
12.3 Officials Not To Benefit - No member of or delegate to Congress
or Resident Commissioner shall be admitted to any share or part of this
Restated Agreement or to any benefit that may have arisen from this
Restated Agreement, but this restriction shall not be construed to extend
to this Restated Agreement if made with a corporation or company for its
general benefit.
12.4 Covenant Against Contingent Fees - The Members warrant that no
person or selling agency has been employed or retained to solicit or secure
participation by the Western Area Power Administration in this Restated
Agreement upon an agreement or understanding for a commission, percentage,
brokerage or contingent fee, excepting bona fide employees or bona fide
established commercial or selling agencies maintained by the Members for
the purpose of securing business. For breach or violation of this
warranty, the Western Area Power Administration shall have the right to
annul its participation in this Restated Agreement without liability or, in
its discretion, to deduct from the contract price or consideration the full
amount of such commission, percentage, brokerage, or contingent fee.
12.5 Contractor Agreement - For the purpose of this Section 12.5 the
term "Contract" shall mean this Restated Agreement and the term
"Contractor" shall mean a Member having transactions with the Western Area
Power Administration. During the performance of this Contract, the
Contractor agrees to the following provisions. In addition, the Contractor
will include the following provisions in every subcontract or purchase
order involving the Western Area Power Administration unless exempted by
rules, regulations or order of the Secretary of Labor.
12.5.1 Equal Opportunity Employment Practices - Section 202 of
Executive Order No. 11246, 43 Fed. Reg. 46501 (1978), which provides, among
other things, that the Contractor will not discriminate against any
employee or applicant for employment because of race, color, religion, sex,
or national origin, is incorporated by reference in the Contract.
12.5.2 Contract Work Hours and Safety Standards - The
Contract, to the extent that it is of a character specified in Section 103
of the Contract Work Hours and Safety Standards Act, 40 U.S.C. Section 329
(1986) (the "Act"), is subject to the provisions of the Act, 40 U.S.C.
Sections 327-333 (1986), and to regulations promulgated by the Secretary of
Labor pursuant to the Act.
12.5.3 Use of Convict Labor - The Contractor agrees not to
employ any person undergoing sentence of imprisonment in performing the
Contract except as provided by 18 U.S.C. Section 4082(c)i(2) and Executive
Order 11755 of December 29, 1973.
ARTICLE 13
GENERAL PROVISIONS
13.1 Effect of Prior Obligations - Each Member agrees not to enter
into an agreement which will preclude performance hereunder. Nothing
herein shall relieve any Member of any obligation to purchase or supply
electric capacity or energy, or to provide transmission service, under any
agreement entered into prior to the Effective Date, or affect the
obligations of or enforceability of existing financing or other agreements.
13.2 Pending FERC Proceedings - Any proceedings pending at FERC on
the Effective Date shall remain at FERC and shall not be subject to action
or decision by any body, or through any procedures, established by or
pursuant to this Restated Agreement.
13.3 Notice and Conduct of Meetings -
13.3.1 Notice - Written notice of each meeting of the
Management Committee, the Executive Committee, the MAPP Reliability
Council, the Regional Transmission Committee, and such other councils or
committees as are established herein or may be established from time to
time by the Management Committee, shall be delivered to each Representative
and alternate Representative on the Management Committee and on the council
or committee concerned, and to each Regulatory Participant, at least ten
days prior to the meeting; provided, however, that the Chair of the
relevant council or committee may determine that a shorter notice period,
but in no event less than 24 hours, is warranted in view of the
circumstances giving rise to the call for the meeting; and provided,
further, that at least five days prior notice shall be required for all
meetings of the Management Committee, the Regional Transmission Committee,
and the MAPP Reliability Council. Written or other notice of meetings of
subcommittees shall be delivered to the Representatives on the subcommittee
and to such other persons as a Member may designate in a written request to
the Contractor, and to each Regulatory Participant. Written notice of a
meeting of any Committee shall be deemed to have been delivered if mailed
or sent by facsimile transmission on or before the date specified for
delivery by this Restated Agreement; provided, however, that notice shall
be delivered by facsimile transmission or other electronic means in any
instance in which the normal ten day notice period has been shortened as
specified herein. Other notices may be sent by mail as specified herein,
by facsimile, or by other electronic means, including posting on a suitable
electronic bulletin board, on or before the date specified for delivery by
this Restated Agreement. The notice of a meeting shall state the time and
place of the meeting and shall include an agenda sufficient to notify
Members of the substance of matters to be considered at the meeting.
Action may be taken on a matter not described in the agenda for a meeting
if 90% or more of the votes the Representatives or Alternative
Representatives present and voting, including such votes in the Management
Committee as specified in Section 5.1.2 and in the MAPP Reliability Council
as specified in Section 6.5.3, are cast in favor of taking up the matter.
13.3.2 Alternative Means of Meeting - Subject to a preference
for meetings in person where practical, meetings of any committee, council
or subcommittee may at the discretion of its Chair be held: (i) by any
electronic or other means of communication through which all
Representatives can simultaneously perceive the oral or other communication
of any Representative; or (ii) pursuant to a writing signed by the number
of Representatives on the council, committee or subcommittee required for
the council, committee or subcommittee to take action as specified in this
Restated Agreement. In addition, the Chair of any council, committee or
subcommittee may permit one or more Representatives to participate in a
meeting via any electronic or other means of communication through which
all Representatives, including those present in person, can simultaneously
perceive the oral or other communication of any Representative. Any person
participating in a meeting as specified in this subsection shall be deemed
to be present at the meeting.
13.3.3 Participation in Meetings - Any person duly authorized
by a Member may participate in any meeting of any council, committee or
subcommittee as a non-voting observer. Alternate Representatives may
participate in any meeting of any council, committee or subcommittee but
may vote only if the Representative of the Member is not present.
13.3.4 Minutes - The chair of each council, committee and
subcommittee shall cause accurate and timely minutes of each meeting to be
prepared and submitted to the Secretary of the Executive Committee. In
addition to the Representatives on the council, committee or subcommittee,
copies of the minutes of council and committee meetings shall be
distributed to the Management Committee Representative of each Member and
to each Regulatory Participant, and copies of the minutes of subcommittees
shall be distributed to the Representatives on the council or committee of
which it is a subordinate body, and upon request to any other person
designated by a Member, and to each Regulatory Participant.
13.3.5 Written Votes - Signed written votes on a proposal to
amend or terminate this Restated Agreement may be submitted by facsimile
transmission or other electronic means of delivery to the Secretary of the
Management Committee, and the signed written votes of the Representatives
or alternate Representatives participating in person or electronically in
any meeting of any council, committee or subcommittee may at the discretion
of its Chair be submitted by facsimile transmission or other electronic
means of delivery to the Chair. The signature of a Representative or
alternate Representative on a written vote printed by a receiving facsimile
machine or similar electronic means shall be deemed an original of the
Representative's signature.
13.3.6 Reimbursement of Expenses - MAPP shall reimburse the
reasonable out-of-pocket expenses incurred in connection with attendance at
meetings of committees, subcommittees and task forces, of a Representative
or alternate Representative, but not both, serving on such committee,
subcommittee or task force; provided, however, that no reimbursement shall
be provided for expenses incurred in connection with attendance at meetings
of (i) councils or committees comprised of Representatives of all the
Members, and (ii) the Power and Energy Market Committee or any of its
subcommittees; and provided, further, that the reimbursement provided to a
Member in any one fiscal year shall not exceed its total dues and fees
(other than user fees) for that year. The Executive Committee shall set a
per diem or other limit on the expenses to be reimbursed.
13.4 Delivery of Notices and Minutes - Subject to the provisions of
Section 13.3.1, any formal notice, demand or request required or authorized
by this Restated Agreement shall be deemed properly given if (i) mailed,
postage prepaid, to the Management Committee Representative of the Member
concerned, at the address of such Representative specified by the Member to
the Secretary of the Management Committee, or to such other designated
person or other address as shall have been provided in writing to the
Secretary of the Management Committee by a Member, or (ii) if transmitted
by facsimile or other electronic means to the foregoing at such number or
address as shall have been provided in writing to the Secretary of the
Management Committee; provided, however, that notice of any meeting of any
council, committee or subcommittee shall also be given by one of the
foregoing means to the Representatives serving on such council, committee
or subcommittee. The minutes of the meetings of councils, committees or
subcommittees shall be delivered by any of the foregoing means to the
Representatives specified in this Restated Agreement.
13.5 Terms of Office - The term of office of any Representative or
alternate Representative, or of any officer of any council, committee or
subcommittee, shall continue until his or her successor has been elected or
appointed; provided, however, that any Representative or alternate
Representative who ceases to be an employee or agent of the Contractor or
of the Member, Joint Member or Associate Member of which he or she was an
employee or agent at the time of election or appointment to a council,
committee or subcommittee shall immediately cease to be a member of such
council, committee or subcommittee and his or her seat shall immediately
become vacant.
13.6 Waivers - Any waiver at any time by any Member of its rights
with respect to a default under this Restated Agreement, or with respect to
any other matter arising in connection with this Restated Agreement, shall
not be deemed a waiver with respect to any subsequent default or other
matter arising in connection herewith. Any delay short of the statutory
period of limitation in asserting or enforcing any right shall not be
deemed a waiver of such right, except as may be provided in the payment
provisions of the Service Schedules.
13.7 Successors and Assigns
13.7.1 Successors - This Restated Agreement shall be binding
upon the successors of any Member, and upon the surviving entity in any
merger, consolidation, or acquisition involving a Member in which the
Member is not a surviving entity.
13.7.2 Assignments - Except for the assignment or pledge of an
interest in this Restated Agreement to the United States acting through the
Rural Utilities Service, no Member shall assign this Restated Agreement
without the consent, in writing, of the Executive Committee, which consent
shall only be withheld if the assignee is not a Member, or upon a
determination that there is a substantial likelihood that the assignee will
not fulfill the obligations under this Restated Agreement of the assigning
Member.
13.7.3 Rights and Obligations - The several provisions of this
Restated Agreement are not intended to and shall not create rights of any
character whatsoever in favor of any person, corporation, or association
other than the Members. The obligations herein assumed are solely for the
use and benefit of the Members.
13.8 Choice of Law - Subject to the provisions of Section 13.15 and
to the extent permitted by law, to promote uniformity of interpretation of
this Restated Agreement the laws of the State of Minnesota, with the
exception of its laws governing choice of law, or United States federal law
or Canadian Laws as applicable, shall control the obligations and
procedures established by this Restated Agreement and the performance and
enforcement thereof.
13.9 Regulation - This Restated Agreement is subject to the
regulation of any regulatory body or governmental agency having
jurisdiction thereof.
13.10 Amendment and Termination - Any Member may sponsor a
proposal to amend or terminate this Restated Agreement by filing a written
proposal with the Secretary of the Management Committee. The Secretary of
the Management Committee shall immediately forward copies of the proposal
to all Members, Joint Members, and Regulatory Participants. The forwarding
of the proposal to the Members shall constitute submission of the proposal
for a vote of the Members. Votes on a proposal to amend or terminate this
Restated Agreement must be in writing, signed by a Representative or
alternate Representative to the Management Committee, and received by the
Secretary of the Management Committee not later than the 60th day from the
date the proposal is submitted for a vote as specified herein. A proposal
to amend or terminate this Restated Agreement shall be adopted if it is
approved by (i) at least two-thirds of the votes cast, such votes
determined as specified in Section 5.1.2, and (ii) at least two-thirds of
the Members voting. A proposal to amend or terminate that has been adopted
shall be filed with FERC and shall become effective on the later of (i) 120
days after the Secretary of the Management Committee distributes
electronically or by mail written notice of adoption of the proposed
amendment or termination to each Representative on the Management
Committee, or (ii) its acceptance for filing by FERC. If FERC, by final
order, materially modifies the terms of an amendment, such amendment shall
be deemed withdrawn and of no further force or effect unless, in accordance
with the procedures and voting requirements specified herein, the modified
amendment is submitted to the Members for a vote and is adopted.
13.11 Tax Exempt Financing
13.11.1 No Impairment - Notwithstanding any other provision of
this Restated Agreement, except as provided in Section 13.11 no
Transmission Provider which has utilized tax-exempt financing shall be
required to provide interconnection or transmission service to a
Transmission Requester hereunder unless, in the unqualified written opinion
of nationally-recognized bond counsel selected by the Transmission
Provider, or pursuant to a ruling of the Internal Revenue Service (the
"IRS") issued for the benefit of such Transmission Provider, the requested
service would not: (i) impair the exclusion from gross income for Federal
income tax purposes of interest paid or to be paid on any debt issued or to
be issued by or for the benefit of the Transmission Provider, or (ii)
impair the deductibility of interest expense associated with interest paid
or to be paid on any such tax-exempt debt (either hereafter referred to as
an "Impairment").
13.11.2 Counsel Opinion or IRS Ruling - The Transmission
Requester may direct the Transmission Provider to seek an unqualified
opinion of bond counsel or to request a clarifying IRS ruling described in
Section 13.11.1. In seeking any such bond counsel opinion or preparing any
such IRS ruling request, the Transmission Provider shall consult with the
Transmission Requester, and the Transmission Provider shall attempt in good
faith to obtain the requested bond counsel opinion and/or IRS ruling. All
costs related to obtaining such bond counsel opinion or IRS ruling shall be
paid by the Transmission Requester.
13.11.3 Elimination of Impairment
(a) If the Transmission Provider determines that an
Impairment exists but (i) the Impairment can be eliminated if steps are
taken in connection with tax-exempt debt issued or to be issued by or for
the benefit of the Transmission Provider, (ii) the manner of eliminating
the Impairment does not require the Transmission Provider to violate
provisions of this Restated Agreement or any covenant of any existing debt
instrument of the Transmission Provider, (iii) the Transmission Provider
determines that the costs of eliminating the Impairment can be determined
with reasonable accuracy, and (iv) the Transmission Requester agrees to pay
all costs related to elimination of such Impairment, then the Transmission
Provider shall take all reasonable steps to eliminate the Impairment. If
the Impairment can be eliminated, the Transmission Provider shall endeavor
to determine with reasonable accuracy the lowest reasonable cost method of
eliminating the Impairment. Among other things, such costs shall include
(i) the Transmission Provider's increased financing costs associated with
the inclusion in gross income for Federal income tax purposes of interest
on any debt to be issued by or for the benefit of the Transmission
Provider, and (ii) any increased income tax liability of the Transmission
Provider resulting from the loss of deductibility of interest expense
associated with interest on any tax-exempt debt issued or to be issued by
or for the benefit of the Transmission Provider. If the Transmission
Provider has been unable to obtain an approving opinion or IRS ruling, or
if the Transmission Provider is unable to determine the costs of
eliminating the Impairment with reasonable accuracy, or if any of the other
requirements of the first sentence of this Section 13.11.3 are not met,
then the Transmission Provider's obligation to provide the requested
service pursuant to this Restated Agreement shall be discharged. The
Transmission Requester may, however, request FERC to order the requested
interconnection service under Section 210 of the FPA, or the requested
transmission service under Sections 211 or 213 of the FPA. In the case of
a Transmission Provider on behalf of which tax-exempt debt has been issued,
absent an unqualified bond counsel opinion or IRS ruling pursuant to
Section 13.11.1 of this Restated Agreement concluding that no Impairment
would occur, the Transmission Requester shall not request FERC to issue an
order under Section 210 of the FPA that would require the Transmission
Provider to finance or own any additional facilities; provided, however, a
Transmission Requester shall not be precluded from requesting an order
under Section 210 of the FPA that does not require such Transmission
Provider to finance or own such additional facilities.
(b) A Transmission Requester may request FERC to order
interconnection service under Section 210 of the FPA, or transmission
service under Sections 211 and 213 of the FPA, if (i) the Transmission
Requester disagrees that an Impairment exists, (ii) the Transmission
Requester has reasonable grounds to believe that the Transmission Provider
is not taking all reasonable steps to eliminate the Impairment, and the
Transmission Provider has not within 60 days of the request for
transmission service determined (1) that service can be provided without
causing an Impairment, or (2) that the Impairment can be eliminated, or (3)
the cost of eliminating the Impairment, or (iii) the Transmission Provider
concludes that it cannot remove the Impairment.
(c) Any dispute between the Transmission Provider and the
Transmission Requester as to the existence of an Impairment shall not be
subject to the dispute resolution provisions of Article 11 of this Restated
Agreement.
13.11.4 New Tax-exempt Debt - At the timely request of any
actual or potential Transmission Requester, any actual or potential
Transmission Provider who plans to finance new electric transmission or
interconnection facilities with proceeds of tax-exempt debt shall undertake
all reasonable specific actions requested by an actual or potential
Transmission Requester to minimize: (i) any restrictions on the
Transmission Requester's access to such facilities caused by the tax-exempt
debt, and (ii) any increase in the price of interconnection or transmission
service resulting from the refinancing, reconfiguring, or other
restructuring of such tax-exempt debt in order to provide service to the
Transmission Requester. Actual or potential Transmission Providers shall
not be obligated to incur any cost in undertaking such actions unless all
associated costs are paid by actual or potential Transmission Requesters.
13.11.5 Applicability to Obligation to Build - The provisions
of Sections 13.11.1 through 13.11.4 shall apply to any obligations imposed
by the Regional Transmission Committee pursuant to Section 8.7, except that
any Member may seek a FERC order under the circumstances described in
Sections 13.11.3 or 13.11.3(b).
13.11.6 Participation in the Generation Reserve-Sharing Pool -
Any Member which has used tax-exempt financing and which concludes that its
participation in the Generation Reserve-Sharing Pool would cause an
Impairment, shall not be obligated to participate in the Generation
Reserve-Sharing Pool, in which event none of the other Members shall have
any obligation under Section 7.3 to such Member. Such conclusion shall be
communicated in writing to the Secretary of the Executive Committee.
13.11.7 IRS Rule or Regulation - MAPP shall endeavor to
persuade the IRS or the United States Treasury Department to promulgate a
rule or regulation clarifying the ability of Members to provide
interconnection, pooling or transmission services consistent with this
Restated Agreement without giving rise to an Impairment and clarifying
circumstances under which any Impairments can be eliminated.
13.12 Uncontrollable Forces - A Member shall not be considered
to be in default in respect of any obligation hereunder if prevented from
fulfilling such obligation by reason of Uncontrollable Forces, except that
the obligation to pay money in a timely manner is absolute and shall not be
subject to this Section. Any Member unable to fulfill any obligation by
reason of Uncontrollable Forces will exercise due diligence to remove such
disability with reasonable dispatch, but such obligation shall not require
the settlement of a labor dispute except in the sole discretion of the
Member experiencing such labor dispute.
13.13 Political Activities - No Member shall be required to
participate in any political activities or to participate in or contribute
to any activity which is intended to influence legislation, nor shall any
portion of its dues be utilized for such purposes.
13.14 Laws of the United States - This Restated Agreement shall
not make any laws or regulations governing employment or production of
goods and services enacted by the Congress of the United States or by any
other legislative or governmental body in the United States or any state
thereof applicable to any power or other service provided or used in
Canada. This Restated Agreement shall not confer or extend the authority
or jurisdiction of FERC or any Regulatory Agency over matters pertaining to
the generation, sale, purchase or transmission of electric energy in Canada
or by Members in the United States not otherwise subject to the
jurisdiction of FERC or any such Regulatory Agency, or over the rates,
charges, terms and conditions of service therefor, or over the facilities
for providing such service. Nothing in this Restated Agreement waives any
objection to, or otherwise constitutes a consent to, any assertion of such
jurisdiction, including any assertion of jurisdiction over any entity based
on its membership in MAPP.
13.15 Compliance with Applicable Laws - This Restated Agreement
shall be binding on all Members to the maximum extent permitted by United
States federal and state law or regulation, and Canadian federal and
provincial law or regulation, but notwithstanding any other provision of
this Restated Agreement, no Member shall be required to take any action or
do any other thing with respect to rates, charges, terms or conditions of
service, the resolution of disputes under this Restated Agreement, or any
other matter, that (a) it is not permitted by law to undertake or that is
prohibited in whole or in part by any law or regulation applicable to such
Member, or (b) would require such Member to violate a provision of such law
or regulation in order to comply with this Restated Agreement. Each Member
shall seek such approvals, grant such waivers, and take such other actions
as may be necessary to comply with this Restated Agreement, to the maximum
extent permitted by United States federal or state law or regulation, or
Canadian federal or provincial law or regulation. If as a result of any
such law or regulation a Member does not provide services or other benefits
in accordance with any provision of this Restated Agreement to any other
Member or Members, each such other Member or Members (i) shall only be
obligated to provide services or other benefits to the legally restricted
Member on a basis comparable to the services and other benefits the
restricted Member is permitted or enabled to provide to the other Members,
(ii) may exercise any rights it may otherwise have to request FERC to issue
an order under the FPA requiring the restricted Member to provide
interconnection or transmission service, or (iii) may contest any such law
or regulation in any court or Regulatory Agency having jurisdiction
thereof.
13.16 Effect of Canadian Laws - The sale, purchase and
transmission of electricity in Canada and the rates, charges, terms and
conditions of service therefor are subject in all respects to Canadian
Laws. This includes but is not limited to:
i. The final authority of the Government of Canada in all
matters relating to the export of electric power; and
ii. The final authority of the government of a Canadian
province in all matters relating to the installation or
construction of facilities.
13.17 Independent Contractors - The Members are independent
contractors, and this Restated Agreement creates no partnership, joint
venture or other joint legal entity in connection with which any Member
shall be jointly or severally liable for the acts of any other Member.
13.18 Currency - All rates stated in the Service Schedules, and all
monetary transactions, revenues, dues, accounting and cost calculations
among the Parties shall be determined and stated in lawful money of the
United States. Unless otherwise approved by the Executive Committee, if
required for any such monetary transaction, revenue, dues, accounting or
cost calculations, the rate to be used to convert from the currency of
Canada to that of the United States or to convert from the currency of the
United States to that of Canada, for each day shall be the Bank of Canada
noon spot exchange rate for such day as published by the Royal Bank of
Canada, Winnipeg, Manitoba, Canada, or the last published rate if not
published for such day. If any such monetary transaction, accounting or
cost calculation is for a period of time of more than one day, the average
of such noon spot exchange rates for each day in such period of time shall
be used.
13.19 Weighted Voting for Transmission Owning Members - For purposes
of voting on the Management Committee, the MAPP Reliability Council, and
the Regional Transmission Committee that is required to be done separately
by the Transmission Owning Members and the Transmission Using Members, the
Transmission Owning Members may agree by resolution to conduct such voting
within the Transmission Owning Members on a weighted voting basis.
Adoption of such a resolution to use weighted voting shall require the
affirmative votes of two-thirds or more of the Transmission Owing Members.
If such a resolution is adopted, the majority requirements applicable to
Transmission Owning Members herein shall be understood to apply to the
weighted votes of the Transmission Owning Members.
13.20 Weighted Voting for Transmission Using Members - For purposes
of voting on the Management Committee, the MAPP Reliability Council, and
the Regional Transmission Committee that is required to be done separately
by the Transmission Owning Members and the Transmission Using Members, the
Transmission Using Members may agree by resolution to conduct such voting
within the Transmission Using Members on a weighted voting basis. Adoption
of such a resolution to use weighted voting shall require the affirmative
votes of two-thirds or more of the Transmission Using Members. If such a
resolution is adopted, the majority requirements applicable to Transmission
Using Members herein shall be understood to apply to the weighted votes of
the Transmission Using Members.
13.21 Time References - All references to time, unless otherwise
stated, shall be to Central Standard Time or Central Daylight Time as
observed by the Contractor.
13.22 Affiliate Relationships - If a Member and one or more of its
Affiliates operate as an integrated electric system, all interchanges of
power and energy between such Member or any such Affiliate and another
Member shall be considered transactions between such other Member and the
Member having such Affiliates.
ARTICLE 14
TERM
14.1 Effective Date - This Restated Agreement shall become effective
upon the first May 1 or the first November 1 first following the later of
(a) its adoption as an amendment to and restatement of the MAPP Agreement
pursuant to Sections 33.01 and 33.02 thereof and the expiration of the time
period specified therein, and (b) the earlier of (i) the expiration of
thirty days following the date on which a final order by FERC approving
this Restated Agreement in its entirety without condition or modification
is no longer subject to judicial review, or (ii) in the event such FERC
final order is subject to judicial review, such date as may be established
by an affirmative vote of 75% or more of the total authorized votes of the
Management Committee as specified in Section 33.03 of the MAPP Agreement.
If FERC issues a final order approving this Restated Agreement with any
condition or modification, this Restated Agreement shall only become
effective upon the later of (a) the confirmation and approval of such
condition or modification in accordance with the provisions of Section
33.03 of the MAPP Agreement, and (b) the earlier of (i) expiration of
thirty days following the date on which a final order by FERC approving the
readopted Restated Agreement in its entirety without condition or
modification is no longer subject to judicial review, or (ii) in the event
such FERC final order is subject to judicial review, such date as may be
established by an affirmative vote of 75% or more of the total authorized
votes of the Management Committee as specified in Section 33.03 of the MAPP
Agreement.
14.2 Termination of MAPP Agreement - Upon the Effective Date this
Restated Agreement shall supersede in its entirety the MAPP Agreement as
amended. With the exception of the continuing obligations identified in
Sections 4.2.1 and 4.7.1, the MAPP Agreement shall terminate upon the
Effective Date. Nothing herein shall affect the continuity of service
provided pursuant to obligations entered into prior to the termination of
the MAPP Agreement.
MAPP
MID-CONTINENT AREA POWER POOL
Restated Agreement:
Exhibits
Table of Contents - Exhibits
EXHIBIT A
INITIAL REGIONAL RELIABILITY COMMITTEE SUBCOMMITTEES . . . . A-1
Design Review Subcommittee . . . . . . . . . . . . . . . . . . . . A-1
Operating Review Subcommittee. . . . . . . . . . . . . . . . . . . A-2
Accreditation Subcommittee . . . . . . . . . . . . . . . . . . . . A-3
Operating Procedures Subcommittee. . . . . . . . . . . . . . . . . A-6
Pool Performance Subcommittee. . . . . . . . . . . . . . . . . . . A-9
Reliability Studies Subcommittee . . . . . . . . . . . . . . . . .A-10
Environmental Subcommittee . . . . . . . . . . . . . . . . . . . .A-13
EXHIBIT B
INITIAL GENERATION RESERVE-SHARING POOL SCHEDULES. . . . . B-1
General Terms and Conditions . . . . . . . . . . . . . . . . . . . B-1
Section 1. General Description. . . . . . . . . . . . . . B-1
Section 2. Accreditation. . . . . . . . . . . . . . . . . B-1
Section 3. Scheduling . . . . . . . . . . . . . . . . . . B-1
Section 4. Line Loading Relief. . . . . . . . . . . . . . B-2
Section 5. Transmission Service and Loss Repayment. . . . B-2
Section 6. Billing and Payment. . . . . . . . . . . . . . B-3
Section 7. Definitions. . . . . . . . . . . . . . . . . . B-5
Schedule B: Reserve Capacity Deficiency Service . . . . . . . . . B-6
Section 1. Service to be Provided . . . . . . . . . . . . B-6
Section 2. Conditions of Service. . . . . . . . . . . . . B-6
Section 3. Schedule of Rates. . . . . . . . . . . . . . . B-7
Schedule C: Emergency Energy Interchange Service. . . . . . . . . B-9
Section 1. Service to be Provided . . . . . . . . . . . . B-9
Section 2. Scheduling of Deliveries . . . . . . . . . . . B-9
Section 3. Schedule of Rates. . . . . . . . . . . . . . . B-9
Schedule C1: Scheduled Outage Energy Interchange Service. . . . .B-10
Section 1. Service to be Provided . . . . . . . . . . . .B-10
Section 2. Scheduling of Deliveries . . . . . . . . . . .B-10
Section 3. Schedule of Rates. . . . . . . . . . . . . . .B-10
Schedule D: Operating Reserve Service . . . . . . . . . . . . . .B-13
Section 1. Service to be Provided . . . . . . . . . . . .B-13
Section 2. Schedule of Rates. . . . . . . . . . . . . . .B-13
EXHIBIT C
SCHEDULE F: TRANSMISSION SERVICE FOR
COORDINATION TRANSACTIONS. . . . . . . . . . . C-1
Preamble . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-1
1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . C-1
1.1 Application. . . . . . . . . . . . . . . . . . . . . . C-1
1.2 Buyer. . . . . . . . . . . . . . . . . . . . . . . . . C-1
1.3 Completed Application. . . . . . . . . . . . . . . . . C-1
1.4 Contractor . . . . . . . . . . . . . . . . . . . . . . C-1
1.5 Coordination Transaction . . . . . . . . . . . . . . . C-1
1.6 Delivering Member. . . . . . . . . . . . . . . . . . . C-2
1.7 Firm Transmission Service. . . . . . . . . . . . . . . C-2
1.8 Line Loading Relief Procedure. . . . . . . . . . . . . C-2
1.9 Loss Repayment Procedure . . . . . . . . . . . . . . . C-2
1.10 Native Load Customers. . . . . . . . . . . . . . . . . C-2
1.11 Network Customers. . . . . . . . . . . . . . . . . . . C-2
1.12 Non-firm Transmission Service. . . . . . . . . . . . . C-3
1.13 Parties. . . . . . . . . . . . . . . . . . . . . . . . C-3
1.14 Receiving Member . . . . . . . . . . . . . . . . . . . C-3
1.15 Regional Transmission Committee. . . . . . . . . . . . C-3
1.16 Seller . . . . . . . . . . . . . . . . . . . . . . . . C-3
1.17 System Impact Study. . . . . . . . . . . . . . . . . . C-3
1.18 Transmission Customer. . . . . . . . . . . . . . . . . C-3
1.19 Transmission Provider. . . . . . . . . . . . . . . . . C-4
1.20 Transmission System. . . . . . . . . . . . . . . . . . C-4
2. Scope . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-4
3. Nature of Firm Transmission Service . . . . . . . . . . . . . C-6
3.1 Term . . . . . . . . . . . . . . . . . . . . . . . . . C-6
3.2 Service Priority . . . . . . . . . . . . . . . . . . . C-6
3.3 Curtailment of Service . . . . . . . . . . . . . . . . C-7
3.4 Classification of Firm Transmission Services . . . . . C-8
4. Nature of Non-firm Transmission Service . . . . . . . . . . . C-9
4.1 Term . . . . . . . . . . . . . . . . . . . . . . . . . C-9
4.2 Service Priority . . . . . . . . . . . . . . . . . . .C-10
4.3 Classifications of Non-firm Transmission Service . . .C-10
4.4 Scheduling of Non-firm Transmission. . . . . . . . . .C-11
4.5 Curtailment of Service . . . . . . . . . . . . . . . .C-12
5. Service Availability. . . . . . . . . . . . . . . . . . . . .C-12
5.1 General Conditions . . . . . . . . . . . . . . . . . .C-12
5.2 Determination of Capacity Availability . . . . . . . .C-13
5.3 Policy on Facility Additions or Redispatch of
Generation . . . . . . . . . . . . . . . . . . . . . .C-13
6. Electronic Information Network. . . . . . . . . . . . . . . .C-13
7. Standards of Nondiscrimination. . . . . . . . . . . . . . . .C-14
8. Conditions Required of Transmission Customers . . . . . . . .C-14
9. Procedures for Arranging Firm Service . . . . . . . . . . . .C-14
9.1 Application. . . . . . . . . . . . . . . . . . . . . .C-14
9.2 Completed Application. . . . . . . . . . . . . . . . .C-15
9.3 Reservation of Firm Transmission Services. . . . . . .C-15
9.4 Notice of Deficient Application. . . . . . . . . . . .C-16
9.5 Response to Completed Applications . . . . . . . . . .C-17
9.6 Completed Application Approvals. . . . . . . . . . . .C-17
10. Procedures for Arranging Non-firm Transmission Service. . . .C-18
10.1 Application. . . . . . . . . . . . . . . . . . . . . .C-18
10.2 Completed Application. . . . . . . . . . . . . . . . .C-18
10.3 Reservation of Non-firm Transmission Service . . . . .C-19
10.4 Determination of Capacity Availability . . . . . . . .C-19
10.5 Transmission Customer Responsibility for Third-Party
Arrangements . . . . . . . . . . . . . . . . . . . . .C-20
11. Determination of Capacity Availability and Responsibility
for Costs Incurred in Providing System Impact Studies . . . .C-20
11.1 Notice of Need for System Impact Study . . . . . . . .C-20
11.2 Study Agreement and Cost Reimbursement . . . . . . . .C-21
11.3 Performance of System Impact Study . . . . . . . . . .C-22
11.4 Partial Interim Service. . . . . . . . . . . . . . . .C-22
12. Sale or Assignment of Transmission Service. . . . . . . . . .C-23
12.1 Procedures for Assignment or Transfer of Service . . .C-23
12.2 Information on Assignment or Transfer of Service . . .C-23
13. Compensation for Transmission Service . . . . . . . . . . . .C-23
13.1 Compensation for Use of Transmission Facilities. . . .C-23
13.2 Capacity and Energy Losses . . . . . . . . . . . . . .C-24
13.3 Other Charges. . . . . . . . . . . . . . . . . . . . .C-24
13.4 Waivers or Exclusions of Payments. . . . . . . . . . .C-24
14. Billing and Payment . . . . . . . . . . . . . . . . . . . . .C-26
14.1 Billing Procedure. . . . . . . . . . . . . . . . . . .C-26
14.2 Interest on Unpaid Balances. . . . . . . . . . . . . .C-27
14.3 Customer Default . . . . . . . . . . . . . . . . . . .C-27
15. Regulatory Filings. . . . . . . . . . . . . . . . . . . . . .C-28
16. Liability and Indemnification . . . . . . . . . . . . . . . .C-28
16.1 Liability. . . . . . . . . . . . . . . . . . . . . . .C-28
16.2 Release. . . . . . . . . . . . . . . . . . . . . . . .C-28
16.3 Damages. . . . . . . . . . . . . . . . . . . . . . . .C-29
17. Creditworthiness. . . . . . . . . . . . . . . . . . . . . . .C-30
18. Dispute Resolution Procedures . . . . . . . . . . . . . . . .C-30
19. Appointment of Representative . . . . . . . . . . . . . . . .C-30
20. Effectiveness . . . . . . . . . . . . . . . . . . . . . . . .C-31
Appendix A . . . . . . . . . . . . . . . . . . . . . . . . . . .C(A)-1
RATE SCHEDULE FCTS . . . . . . . . . . . . . . . . . . . . . . .C(A)-1
Firm Capacity Transmission Service. . . . . . . . . . . . .C(A)-1
RATE SCHEDULE FETS . . . . . . . . . . . . . . . . . . . . . . .C(A)-3
Firm Energy Transmission Services . . . . . . . . . . . . .C(A)-3
RATE SCHEDULE RNF. . . . . . . . . . . . . . . . . . . . . . . .C(A)-5
Reserved Non-firm Transmission Service. . . . . . . . . . .C(A)-5
RATE SCHEDULE HNF. . . . . . . . . . . . . . . . . . . . . . . .C(A)-7
Hourly Non-firm Transmission Service. . . . . . . . . . . .C(A)-7
Appendix B . . . . . . . . . . . . . . . . . . . . . . . . . . .C(B)-1
APPLICATION FOR TRANSMISSION SERVICE . . . . . . . . . . . . . .C(B)-1
Appendix C . . . . . . . . . . . . . . . . . . . . . . . . . . .C(C)-1
PROCEDURE FOR CALCULATION AND ADMINISTRATION OF THE TRANSMISSION
SERVICE CHARGE. . . . . . . . . . . . . . . . . . . . . . .C(C)-1
1. Introduction. . . . . . . . . . . . . . . . . . . . . . . .C(C)-1
2. Definitions, Models and Parameters Used . . . . . . . . . .C(C)-1
2.1 Composition of the Network Model . . . . . . . . . .C(C)-1
2.2 Calculating the Cost Parameters. . . . . . . . . . .C(C)-4
2.3 Transmission Facility Ownership Representation . . .C(C)-6
3. Calculating the Rate for Transmission Service . . . . . . .C(C)-7
3.1 History of the Technique and Computer Programs . . .C(C)-7
3.2 Detailed Explanation of the Rate Calculation . . . .C(C)-8
3.3 The "Megawatt-Mile" Method . . . . . . . . . . . . .C(C)-8
3.4 Application to Service Charge Rates. . . . . . . . C(C)-10
3.5 Generator and Load Dispatch. . . . . . . . . . . . C(C)-10
EXHIBIT D
INITIAL REGIONAL TRANSMISSION COMMITTEE SUBCOMMITTEES. . . . D-1
Transmission Planning Subcommittee . . . . . . . . . . . . . . . . D-1
Transmission Schedules and Compensation Subcommittee . . . . . . . D-3
Operations and Compliance Subcommittee . . . . . . . . . . . . . . D-4
EXHIBIT E
INITIAL POWER AND ENERGY MARKET SCHEDULES. . . . . . . E-1
General Terms and Conditions . . . . . . . . . . . . . . . . . . . E-1
Section 1. General Description. . . . . . . . . . . . . . E-1
Section 2. Accreditation. . . . . . . . . . . . . . . . . E-1
Section 3. Scheduling . . . . . . . . . . . . . . . . . . E-1
Section 4. Line Loading Relief. . . . . . . . . . . . . . E-2
Section 5. Transmission Service and Loss Repayment. . . . E-2
Section 6. Billing and Payment. . . . . . . . . . . . . . E-2
Schedule A: Participation Power Interchange Service . . . . . . . E-5
Section 1. Service to be Provided . . . . . . . . . . . . E-5
Section 2. Conditions of Service. . . . . . . . . . . . . E-5
Section 3. Schedule of Rates. . . . . . . . . . . . . . . E-5
Schedule J: Firm Power Interchange Service. . . . . . . . . . . . E-7
Section 1. Service to be Provided . . . . . . . . . . . . E-7
Section 2. Conditions of Service. . . . . . . . . . . . . E-7
Section 3. Schedule of Rates. . . . . . . . . . . . . . . E-8
Schedule K: System Participation Power Interchange Service. . . . E-9
Section 1. Service to be Provided . . . . . . . . . . . . E-9
Section 2. Conditions of Service. . . . . . . . . . . . . E-9
Section 3. Schedule of Rates. . . . . . . . . . . . . . .E-10
Schedule L: Interruptible Load Replacement Energy Service . . . .E-11
Section 1. Services to be Provided. . . . . . . . . . . .E-11
Section 2. Conditions of Service. . . . . . . . . . . . .E-11
Section 3. Schedule of Rates. . . . . . . . . . . . . . .E-12
Schedule M: General Purpose Energy Service. . . . . . . . . . . .E-13
Section 1. Service to be Provided . . . . . . . . . . . .E-13
Section 2. Conditions of Service. . . . . . . . . . . . .E-13
Section 3. Schedule of Rates. . . . . . . . . . . . . . .E-13
EXHIBIT F
MAP OF THE MAPP REGION. . . . . . . . . . . . G-1
EXHIBIT A
INITIAL REGIONAL RELIABILITY COMMITTEE SUBCOMMITTEES
The initial subcommittees of the Regional Reliability Committee, and
the responsibilities of those subcommittees, shall be as set forth below.
The subcommittees shall have such additional responsibilities as may be
assigned by the Regional Reliability Committee. Each subcommittee shall
initially utilize the applicable procedures of the existing MAPP handbooks
and manuals, but may adopt such further or different procedures as it may
deem appropriate, subject to the requirements of the Restated Agreement and
any procedures for the governance of any of its subcommittees as may be
adopted by the Regional Reliability Committee.
Design Review Subcommittee
The members of the Design Review Committee under the MAPP Agreement
immediately prior to the Effective Date shall serve as the Design Review
Subcommittee until Representatives for the Design Review Subcommittee are
selected in accordance with the terms of the Restated Agreement.
Design Review Subcommittee Responsibilities:
1. Review each Applicant's generation and transmission facilities in
the MAPP Region for conformance with the standards specified in the MAPP
Engineering Handbook as in effect on the Effective Date and as such
standards may thereafter be revised by the MAPP Reliability Council or the
Regional Reliability Committee ("MAPP System Design Standards"), approve
facilities that conform with such standards, and report its findings to the
Regional Reliability Committee.
2. Review each Member's proposed additions to or retirements of
generation or transmission facilities in the MAPP Region for conformance
with MAPP System Design Standards, approve facility additions or
retirements that conform with such standards, and report its findings to
the Regional Reliability Committee.
3. Review planned capacity transactions by any Member that exceed
the megawatt and duration thresholds established by the Regional
Reliability Committee pursuant to Section 6.6.8(f) and 6.6.8(g) for
conformance with applicable reliability criteria, approve capacity
transactions that conform with such standards, and report its findings to
the Regional Reliability Committee.
4. Determine any operating restrictions necessary to make a Member's
planned facilities operate within MAPP System Design Standards, and forward
a description of any such restrictions to the Operating Review Subcommittee
for action.
5. Approve temporary generating unit accreditation or authorized
accreditation.
Operating Review Subcommittee
The members of the Operating Review Committee under the MAPP Agreement
immediately prior to the Effective Date shall serve as the Operating Review
Subcommittee until Representatives for the Operating Review Subcommittee
can be selected in accordance with the terms of the Restated Agreement.
Operating Review Subcommittee Responsibilities:
1. Review each Member's generation and transmission facilities and
its operating studies, guides and practices for conformance to the
standards specified in the MAPP Operating Handbook as in effect on the
Effective Date and as such standards may thereafter be revised by the MAPP
Reliability Council or the Regional Reliability Committee ("MAPP System
Operating Standards"), approve such of the foregoing as conform with such
standards, and report its findings to the Regional Reliability Committee.
2. Impose and revise as necessary any operating restrictions
forwarded by the Design Review Subcommittee necessary to make a Member's
planned facility operate within MAPP System Design Standards.
3. Impose operating restrictions on any Member necessary to make
facilities within the MAPP Region operate in accordance with MAPP System
Operating Standards.
4. Review any capacity or energy transaction, and impose any
restrictions necessary to ensure that Members operate in accordance with
MAPP System Operating Standards.
Accreditation Subcommittee
The members of the Accreditation Subcommittee under the MAPP Agreement
immediately prior to the Effective Date shall serve as the Accreditation
Subcommittee until Representatives for the Accreditation Subcommittee can
be selected in accordance with the terms of the Restated Agreement.
Accreditation Subcommittee Responsibilities:
1. Review each Member's seasonal load and capability forecasts for
the next ten years (or such period as the Regional Reliability Committee
may designate), and the Member's monthly load and capability forecasts for
the first two years of this period, and prepare appropriate reports for the
Regional Reliability Committee.
2. Establish detailed criteria for the accreditation of capacity
transactions (1), including a requirement to obtain approval from the
Design Review Subcommittee for transactions of greater than the megawatt or
duration thresholds established by the Regional Reliability Committee.
3. Conduct a semiannual review of after-the-fact load and capability
data from each Member, and from such data determine the amount and
allocation of any required Reserve Capacity Deficiency Service purchases
and sales in accordance with criteria established by the Regional
Reliability Committee.
4. Compile, reproduce and supply load and capability data in any
format needed by any council, committee or subcommittee of MAPP, or for
submission to reliability or government agencies.
5. Approve any interruptible load appropriate for adjustment in the
MAPP Load and Capability Report.
6. Assume responsibility for the following Sections of the MAPP
Engineering Committee Handbook:
(1) A capacity transaction for the month of October that otherwise meets
the criteria of the Regional Reliability Committee may be included in
the Accredited Capability of a Member only to the extent that the
Member's October system demand is forecast to exceed its maximum
system demand of the previous five months.
a. Section 2 Power Transactions (Procedures for approval of
capacity transactions)
b. Section 5 Generation and Interconnection Evaluation
(Procedures for approval of generation
accreditation and outside pool transactions)
c. Exhibit G Allocation Procedures for Participant Deficiencies
(Procedure to allocate surplus capacity at Service
Schedule B rates to deficit utilities)
d. Exhibit H Procedures for Systematic Recordings of Committed
Power Transactions (Procedures to record approved
capacity transactions for MAPP Members)
e. Exhibit J MAPP Procedures for the Uniform Rating of
Generating Equipment (Rules used in determining
the capacity of all types of generation including
coal, nuclear, hydro, gas, oil, wind and solar)
f. Exhibits K, L, L-2 Forms for Temporary Accreditation Request,
Extended Accreditation Request, and return
from Extended Accreditation
g. Exhibit N MAPP Procedure for Certification of Interruptible
Demand for Purchase of Service Schedule L.
Note:
Under the Restated Agreement, the Contractor will determine whether
capacity transactions below megawatt and duration thresholds set by
the Regional Reliability Committee meet applicable reliability
criteria. If the Contractor determines that a proposed capacity
purchase or sale will violate MAPP System Design Standards or MAPP
System Operating Standards, it will notify the Members participating
in any such transaction in writing, which may be done by electronic
mail.
Operating Procedures Subcommittee
The members of the Operating Practices Subcommittee under the MAPP
Agreement immediately prior to the Effective Date shall serve as the
Operating Procedures Subcommittee until Representatives for the Operating
Procedures Subcommittee can be selected in accordance with the terms of the
Restated Agreement.
Operating Procedures Subcommittee Responsibilities:
1. Adopt procedures for re-establishing reserves following a
resource loss.
2. Adopt criteria for load shedding.
3. Adopt procedures and practices for coordinating interregional
reliability, including coordinating MAPP reliability activities with
adjoining systems, pools, and other regional power coordination agencies.
4. Adopt methods, standards and procedures for pool voltage and VAR
control.
5. Coordinate Members' transmission and generation maintenance
schedules in order to maintain regional reliability.
6. In cooperation with other concerned councils, committees and
subcommittees, coordinate the activities of the MAPP communications
network.
7. In coordination with the Reliability Studies Subcommittee,
develop MAPP computer models for seasonal power flow, stability and short
circuit studies for use by Members and the MAPP Center.
8. Establish and modify line-loading relief standards, requirements
and procedures necessary to preserve regional reliability.
9. Review, and modify as necessary to preserve regional reliability,
the Total Operating Reserve Obligation and the formula for establishing the
Operating Reserve Obligation of the End-Use Load Members.
10. Review and approve methods and procedures, including
determination of costs, accounting and billing, for the use of the
Generation Reserve-Sharing Pool Schedules, including the Service Schedules
for Emergency Energy Interchange Service, Scheduled Outage Energy
Interchange Service, Operating Reserve Service, and Reserve Capacity
Deficiency Service.
11. Develop continuing education programs for Members' System
Operators.
12. Assume responsibility for the following portions of the MAPP
Operating Handbook:
Section III Generating Capability Availability
Interconnection Capacity
Operating Reserve
Maintenance Scheduling
Incremental Cost Determination Guide
Section IV Emergency Procedures Overview
Transmission Loading Relief Procedure
Tight Capacity Procedure
Emergency Energy Replacement Procedure
Scheduled Outage Energy Locating Procedure
Reduced Oil and Gas Consumption Procedure
Section VII Uniform Rating of Generating Equipment (URGE) Procedure
13. Assume responsibility for the following portions of the NERC
Operating Guides:
Guide II - System Security
A. MW Generation Reserve
C. Transmission Operation
E. Monitoring Interconnection Parameters
F. Information Exchange
G. Maintenance Coordination
Guide III - Emergency Operations
A. Insufficient Generation Capacity
B. Transmission Overload and Voltage Control
C. Load Shedding
D. System Restoration
E. Emergency Information Exchange
F. Special System or Control Area Action
G. Control Center Backup
Guide IV - Operating Personnel
A. Responsibility and Authority
B. Selection
C. Training
D. Responsibility to Other Groups
Guide V - Operations Planning
A. Normal Operations
B. Planning for Emergency Conditions
C. Long Term Deficiencies
D. Load Shedding
E. System Restoration
Guide VI - Telecommunications
A. Facilities
B. System Operator Communications Procedures
C. Loss of Communications
Pool Performance Subcommittee
The members of the Pool Performance Subcommittee under the MAPP
Agreement immediately prior to the Effective Date shall serve as the Pool
Performance Subcommittee until Representatives for the Pool Performance
Subcommittee can be selected in accordance with the terms of the Restated
Agreement.
Pool Performance Subcommittee Responsibilities:
1. Review and adopt Operating Principles and Guides establishing
commonly accepted standards for control area operation.
2. Review and adopt methods, standards, and procedures for
monitoring and improving control performance in the MAPP Region.
3. Coordinate the activities of MAPP control areas with the NERC
Performance Subcommittee through the MAPP Survey Coordinator, who shall be
the MAPP representative to the NERC Performance Subcommittee. The MAPP
Survey Coordinator shall be nominated by the Pool Performance Subcommittee
and elected by the Regional Reliability Committee, shall serve for a term
of two years with eligibility for re-election, and shall:
a. Represent MAPP on the NERC Operating Committee Performance
Subcommittee, and attend all meetings of the subcommittee.
b. Be responsible for performance surveys and other surveys as
requested by the NERC Operating Committee Performance Subcommittee.
c Serve as a non-voting member of the MAPP Pool Performance
Subcommittee.
4. Assume responsibility for the following portions of the MAPP
Operating Handbook:
Section III Control Area Operation
Section VII Average Production Cost, Other Than Fuel
Additional Payment for Scheduled Outage Energy
5. Assume responsibility for the MAPP Operating Requirements
Document.
6. Assume responsibility for the following portions of the NERC
Operating Guides:
Guide I - Systems Control
A. Generation Control
B. Voltage Control
C. Time and Frequency Control
D. Interchange Scheduling
E. Control Performance Criteria
F. Inadvertent Interchange Management
G. Control Surveys
Guide II - System Security
B. Reactive Power Supply
E. Monitoring Interconnection Parameters
Reliability Studies Subcommittee
The members of the Technical Operations Subcommittee and the
Reliability Subcommittee under the MAPP Agreement immediately prior to the
Effective Date shall serve as the Reliability Studies Subcommittee until
Representatives for the Reliability Studies Subcommittee can be selected in
accordance with the terms of the Restated Agreement.
Reliability Studies Subcommittee Responsibilities:
1. Collect and analyze operating data pertinent to the
interconnected operation of MAPP.
2. Conduct appropriate transmission network studies.
3. Review the Reserve Capacity Obligation, and recommend such
modifications as it may deem appropriate to the Regional Reliability
Committee.
4. Review and approve operating reliability standards, criteria, and
rules relating to protective equipment and communications or digital
control systems.
5. Identify the planning functions that should be conducted by the
Contractor in order to improve reliability.
6. Review the reliability characteristics of the MAPP system and
perform associated reliability studies as appropriate.
7. Coordinate the development and updating by the Members and MAPP
of appropriate models for power flow, stability, short-circuit, and
reliability studies of the MAPP Region.
8. Accumulate and maintain data files as necessary to determine
existing system reliability and to propose recommendations on system
reliability to the Regional Reliability Committee.
9. Conduct static transmission adequacy assessments as appropriate,
including assessments of the intra- and inter-regional transfer capability
of the MAPP system.
10. Evaluate new methodologies, with a goal of performing combined
generation and transmission reliability analysis.
11. Review and evaluate recommended plans and procedures developed by
the Regional Transmission Committee for technical coordination of the MAPP
Plan with adjoining systems, pools, and other regional coordinating
agencies.
12. In cooperation with other concerned committees and subcommittees,
coordinate the activities of the MAPP communications network.
13. Assume responsibility for reliability criteria and modelling
necessary for submission of FERC Form 715 information for MAPP.
14. Assume responsibility for the following portions of the MAPP
Engineering Handbook:
Section 1 Load and Capability (Requirement to submit Load and
Generating Capability for OE-411 reporting)
Exhibit F Load and Capability Reporting (Instruction forms for
projected seasonal and monthly load and capability
reporting)
14. Assume responsibility for the following portions of the MAPP
Operating Handbook:
Section II Major Disturbance Analysis Procedure
Section III Interconnection Capacity
Regional Communications
Protective Relaying Guide
Section VII Special Stability Systems and Procedures
Transmission Line Capacity Data
16. Assume responsibility for the following portions of the NERC
Operating Guides:
Guide I - Systems Control
H. Control Equipment Requirements
Guide II - System Security
D. Relay Coordination
F. Information Exchange
Environmental Subcommittee
The members of the Environmental Committee under the MAPP Agreement
immediately prior to the Effective Date shall serve as the Environmental
Subcommittee until Representatives for the Environmental Subcommittee are
selected in accordance with the terms of the Restated Agreement.
Environmental Subcommittee Responsibilities:
1. Keep abreast of current environmental laws, regulations, and
natural resource issues which may impact regional system operating
reliability.
2. Provide input and recommendations to decision-making agencies
concerning the actual or potential impact on regional reliability of
proposed environmental laws and regulations, and emerging natural resource
issues.
3. Foster information exchange among Members on environmental
factors, compliance issues, and resource programs that may impact
reliability within the MAPP Region.
4. Foster greater understanding of MAPP by providing information to
the public on the interrelationship of environmental factors, regional
reliability, system planning and operations.
EXHIBIT B
INITIAL GENERATION RESERVE-SHARING POOL SCHEDULES
General Terms and Conditions
Section 1. General Description
1.1 The initial Service Schedules set forth herein are intended to
facilitate the exchange of capacity and energy in the MAPP Generation
Reserve Sharing Pool. The Service Schedules are established to enable the
Pool Participants to help maintain the reliability of the interconnected
system through sharing of capacity reserves and operating reserves. These
Service Schedules may be revised and new Service Schedules established as
needs arise, in accordance with the Restated Agreement.
Section 2. Accreditation
2.1 Accreditation of capacity transactions shall be determined and
assigned under procedures established by the Regional Reliability
Committee. Initially, the same procedures shall be used as in effect
immediately prior to the Effective Date.
Section 3. Scheduling
3.1 Interchange of capacity and energy between the Pool
Participants shall be in accordance with the reliability standards and
procedures established by the Regional Reliability Committee. These
standards and procedures shall meet or exceed NERC criteria. Exchange of
energy between Pool Participants shall conform to the MAPP Operating
Requirements in order to satisfy the obligations of those Pool Participants
which operate Control Areas.
Section 4. Line Loading Relief
4.1 Delivery of energy between Pool Participants under the
Scheduled Outage Energy Interchange Service Schedule shall be subject to
the MAPP Line Loading Relief Procedures when such procedures are necessary
to alleviate overloads or potential overloads of transmission facilities.
Reserve Capacity Deficiency Service, Emergency Energy Interchange Service,
and Operating Reserve Service are not subject to the MAPP Line Loading
Relief Procedures.
Section 5. Transmission Service and Loss Repayment
5.1 Pool Participants that schedule capacity and energy under the
Service Schedules for Reserve Capacity Deficiency Service, Emergency Energy
Interchange Service, or Scheduled Outage Energy Interchange Service are
obligated to compensate other Pool Participants for use of their
transmission facilities in accordance with Schedule F - Transmission
Service for Coordination Transactions. Such compensation may include a
transmission service charge for any of these Service Schedules, plus a
charge for net incremental losses incurred by such other Pool Participants
for energy delivered under the Scheduled Outage Energy Interchange Service
Schedule or the Emergency Energy Interchange Service Schedule. Procedures
for determining transmission service and loss repayment charges and for
administering the payment process shall be established by the Regional
Transmission Committee.
Section 6. Billing and Payment
6.1 For billing purposes, the amount of energy delivered by a
supplying Pool Participant to a purchasing Pool Participant, or delivered
to the purchasing Pool Participant through any intervening transmission
service providers during any period, shall be the amount scheduled for
delivery at a point or points where the system of the supplying Pool
Participant connects with the system of the purchasing Pool Participant or
with the Transmission System (as defined in Schedule F - Transmission
Service for Coordination Transactions).
6.2 Billing for any transaction involving generation or
transmission capacity, including any transmission charges pertaining to a
transaction, shall be based upon the amount of such capacity committed in
advance for delivery at a point or points where the system of the supplying
Pool Participant connects with either the system of the purchasing Pool
Participant or with the Transmission System (as defined in Schedule F -
Transmission Service for Coordination Transactions).
6.3 All bills for services supplied in connection with the
Generation Reserve-Sharing Pool shall be rendered monthly by the supplying
Pool Participant to the purchasing Pool Participant after the end of the
period to which such bills are applicable. Unless otherwise specified by
the appropriate council or committee, such period shall be from 12:01 a.m.
of the first day of the month to 12:01 a.m. of the first day of the
succeeding month. Bills shall be due and payable within fifteen days from
the date such bills are rendered. Payment shall be made when due and
without deduction, and may be effected by electronic funds transfer. Bills
shall be deemed rendered on the postmark date if deposited in first class
mail with postage prepaid and shall be deemed rendered upon receipt if
another means of delivery is used. If the due date of any bill falls on
Saturday, Sunday or holiday observed by either Pool Participant, the bill
shall be due and payable on the next following working day of both Pool
Participants. Interest shall accrue and be compounded daily on any unpaid
amount, from the date due until the date upon which payment is made, using
the lowest daily prime rates published in the money rates section of the
Wall Street Journal for the applicable time period. Such daily interest
shall be computed on the basis of actual days and a 365 day calendar year.
6.4 In the event a Pool Participant desires to dispute all or any
part of the charges submitted by some other Pool Participant, it shall
nevertheless pay the full amount of the charges when due and give
notification in writing within sixty (60) days from the date of the
statement stating the grounds on which the charges are disputed and the
amount in dispute. The complaining Pool Participant shall not be entitled
to any adjustment on account of any disputed charges that are not brought
to the attention of the Pool Participant rendering such charges within the
time and in the manner herein specified. If settlement of the dispute
results in a refund to the payer, interest shall accrue and be compounded
daily on the amount to be refunded from the date of payment until the date
upon which refund is made, using the lowest daily prime rates published in
the money rates section of the Wall Street Journal for the applicable time
period. Such daily interest shall be computed on the basis of a 365 day
year. If the Pool Participants are unable to reach a mutually satisfactory
agreement, the dispute resolution procedures of Article 11 of the Restated
Agreement shall apply.
Section 7. Definitions
7.1 For purposes of Service Schedules C and C1 only, Incremental
Cost shall mean:
a. The cost of fuel, operating labor, and maintenance required to
generate the energy necessary to supply (i) the scheduled
delivery to the purchasing Pool Participant's system, plus (ii)
the incremental losses incurred on the supplying Pool
Participant's system, plus (3) the energy supplied to any
intervening system or systems as compensation for losses;
b. The cost of starting and operating any generating units which
must be started as a result of supplying such energy; and
c. The supplying Pool Participant's cost of purchased energy if
the purchase is made as a result of supplying such energy.
d. The Incremental Cost per kilowatt-hour for any particular
transaction shall be the total of such costs divided by the
kilowatt-hours scheduled for delivery to the purchasing Pool
Participant either directly by the supplying Pool Participant
or through an intervening system or systems.
Schedule B: Reserve Capacity Deficiency Service
Section 1. Service to be Provided
1.1 Reserve Capacity Deficiency is the value in kilowatts by which
a Pool Participant's System Demand plus its Reserve Capacity Obligation in
any hour of either the Summer Season (May 1 - Oct 31) or the Winter Season
(Nov 1 - April 30) exceeds its Accredited Capability for such hour. This
Service Schedule provides for the sale of Reserve Capacity by any Pool
Participant to any other Pool Participant that has experienced a Reserve
Capacity Deficiency, to enable the purchasing Pool Participant to satisfy
its Reserve Capacity Obligation.
1.2 Allocation of sales from other Pool Participants' seasonal
surpluses to supply the deficiency shall be determined after the fact in
accordance with procedures established by the Regional Reliability
Subcommittee.
Section 2. Conditions of Service
2.1 This Service Schedule shall be available for the sale of
Reserve Capacity Deficiency Service for six consecutive months beginning on
May 1 or November 1 unless another duration and other dates are agreed to
by the Regional Reliability Committee.
2.2 Reserve Capacity Deficiency Service shall be supplied through
transmission facilities which have adequate capacity for transmitting such
power, in accordance with reliability standards and procedures established
by the Regional Reliability Committee.
2.3 Firm Capacity Transmission Service under Service Schedule F -
Transmission Service for Coordination Transactions shall be obtained for
delivery of Reserve Capacity Deficiency Service.
Section 3. Schedule of Rates
3.1 The purchasing Pool Participant shall pay to the supplying Pool
Participant for Reserve Capacity Deficiency Service furnished during any
month a demand charge determined as follows:
For each megawatt or fraction thereof committed by the
supplier, a charge per month not more than P, where
P = A/12
where A = the value for the applicable year based on ten (10)
years of data representing the composite levelized annual fixed
charges per megawatt for the units of the Pool Participants
which supplied, or are most likely to supply, capacity and
energy under this Service Schedule.
3.2 For each FERC regulated Pool Participant, the levelized annual
fixed carrying charge is the sum of the return requirement, depreciation,
income tax, property tax, insurance and administrative and general costs.
The return requirement shall be calculated in accordance with standard FERC
methods using debt costs, preferred stock cost and a percentage rate of
return on equity, weighted in accordance with the Pool Participant's
capital ratios at the end of the preceding calendar year. The percentage
rate of return on equity shall not be higher than the most recent rate of
return on equity percentage approved by the Pool Participant's state
regulatory commission. The income tax requirement which shall include
deferred taxes, shall be calculated in accordance with standard FERC
methods using federal and state tax rates in effect for the current year.
The administrative and general costs in column b on line 167 of page 323 of
the FERC Form 1 shall be appropriately allocated to the electric production
plant and converted to a percentage of the electric production plant
investment.
Schedule C: Emergency Energy Interchange Service
Section 1. Service to be Provided
1.1 This Service Schedule provides for the supply of Emergency
Energy by any Pool Participant to any other Pool Participant during
emergency outages of generating or transmission facilities or both.
Section 2. Scheduling of Deliveries
2.1 Deliveries of Emergency Energy shall be scheduled as soon as
possible after the occurrence of an Emergency Outage, through transmission
facilities which have adequate capacity for transmitting such energy, in
accordance with reliability standards and procedures established by the
Regional Reliability Committee.
2.2 Firm Energy Transmission Service under Service Schedule F -
Transmission Service for Coordination Transactions shall be obtained for
delivery of Emergency Energy Interchange Service.
Section 3. Schedule of Rates
3.1 The receiving Pool Participant shall pay to the supplying Pool
Participant for Emergency Energy furnished during any month under this
Service Schedule the greater of 3.0 cents per kilowatt-hour or 110 percent
of the supplying Pool Participant's Incremental Cost of supplying such
energy.
Schedule C1: Scheduled Outage Energy Interchange Service
Section 1. Service to be Provided
1.1 This Service Schedule provides for the supply of energy by any
Pool Participant to any other Pool Participant during Scheduled Outages of
generation or transmission facilities or both.
Section 2. Scheduling of Deliveries
2.1 Scheduled Outage Energy shall be supplied through transmission
facilities which have adequate capacity for transmitting such power and
energy, in accordance with reliability standards and procedures established
by the Regional Reliability Committee.
2.2 Scheduled Outage Energy may be scheduled from a Pool
Participant not directly interconnected with the purchasing Pool
Participant if such energy is available at a lower delivered cost than from
a directly interconnected Pool Participant.
2.3 Firm Energy Transmission Service under Service Schedule F -
Transmission Service for Coordination Transactions shall be obtained for
Scheduled Outage Energy Interchange Service.
Section 3. Schedule of Rates
3.1 The purchasing Pool Participant shall compensate the supplying
Pool Participant for Scheduled Outage Energy furnished during any month
under this Service Schedule in accordance with one of the following
subparagraphs:
a. The purchasing Pool Participant shall pay to the
supplying Pool Participant for such Scheduled Outage Energy the greater of:
i. 110 percent of the Incremental Cost of producing such
energy, or
ii. 110 percent of the Average Production Cost (as specified
in Section 3.28 of the MAPP Agreement as in effect on the
Effective Date and as may thereafter be revised by the
MAPP Reliability Council or the Regional Reliability
Committee) of the purchasing Pool Participant had it
produced such energy with the generating unit which is
out of service; provided that, if the purchasing Pool
Participant is not using its Total Available Accredited
Capacity, the supplying Pool Participant may require the
purchasing Pool Participant to make an additional payment
for any financial loss that accrues to the supplying Pool
Participant attributable to foregoing a sale to another
party. For uniformity of application, such additional
payment shall be calculated assuming that the decremental
cost of the foregone sale would have been an amount equal
to the cost of energy from oil-fired generation
determined in accordance with principles and practices
established by the Regional Reliability Committee as
follows: The cost of oil-fired generation will be
calculated using the least-squares method based on a
maximum of seven years' data. For FERC regulated Pool
Participants, the data used will be the sum of fuel,
operation and maintenance costs divided by net KWH line
35 on page 402 and columns e, h, i and o on pages 410 and
411 of the FERC Form 1. Pool Participants not regulated
by the FERC will provide comparable data when cost data
is requested for filing with the Contractor.
b. The Pool Participant supplying Scheduled Outage Energy
may, at its option, require the purchasing Pool Participant to return such
energy at such times and under such conditions that the supplying Pool
Participant will not experience a loss due to the transaction, or under
conditions mutually agreeable to both Pool Participants.
Schedule D: Operating Reserve Service
Section 1. Service to be Provided
1.1 A Pool Participant may arrange for another Pool Participant to
supply part or all of its Operating Reserve requirement. Such other Pool
Participant is not obligated to supply Operating Reserve Service if the
requesting Pool Participant is not using all of its Available Accredited
Capacity.
Section 2. Schedule of Rates (See Note No. 1)
2.1 Except as otherwise agreed to by the Pool Participants
concerned, a Pool Participant supplying a portion or all of another Pool
Participant's Operating Reserve during any month shall be paid by the
purchasing Pool Participant the greater of:
a. 110 percent of the Incremental Cost of supplying such service;
or
b. The Incremental Cost of supplying such service plus one-half of
the overall savings of such transaction, where overall savings
shall be equal to the difference between the Incremental Cost
of the selling Pool Participant and the Decremental Cost of the
purchasing Pool Participant.
2.2 In the event there are repetitive transactions between certain
Pool Participants involving similar Incremental and Decremental Costs, flat
rates or exchange arrangements may be established for such transactions by
the Pool Participants concerned.
2.3 Transmission service need not be arranged for Operating Reserve
Service; provided, however, that any energy subsequently taken from
Operating Reserves shall be taken under the applicable energy Service
Schedule, and appropriate transmission service shall be arranged therefor.
Note No. 1:
For the purpose of this Service Schedule only, Incremental and Decremental
Cost shall be determined as follows:
Incremental Cost of the supplying Pool Participant shall be based on
the costs incurred in starting and operating any generating unit or
units which must be started as a result of supplying such service.
Decremental Cost of the purchasing Pool Participant shall be based on
the cost avoided by not starting and operating any generating unit or
units as a result of receiving such service.
EXHIBIT C
SCHEDULE F: TRANSMISSION SERVICE FOR
COORDINATION TRANSACTIONS
Preamble
This Service Schedule provides transmission service for Coordination
Transactions pursuant to the MAPP Restated Agreement.
1. Definitions
Definitions provided in the Restated Agreement shall apply to this
Service Schedule unless otherwise provided in this Service Schedule.
1.1 Application: A request by a Member for transmission service
pursuant to the provisions of this Service Schedule.
1.2 Buyer: The Member that is the purchaser pursuant to a
Coordination Transaction.
1.3 Completed Application: An Application that satisfies all of
the information and other requirements of this Service Schedule.
1.4 Contractor: An impartial entity that performs actions or
functions under this Service Schedule on behalf of all of the Transmission
Providers. The initial Contractor shall be the Contractor under the
Restated Agreement.
1.5 Coordination Transaction: Any sale for resale of power and/or
energy between Members, for a period not to exceed two years, using
existing generation and transmission facilities. Any transaction where the
Seller is obligated to sell, or has an option to sell, power and/or energy,
or the Buyer is obligated to take or pay, or has the option to take or pay,
for power and/or energy, for more than two years shall not qualify for
service under this Service Schedule for any portion of the duration of the
transaction.
1.6 Delivering Member: The Member on whose system the capacity
and/or energy provided under a Coordination Transaction will be delivered
to the Buyer. The Delivering Member may be the Buyer. The Delivering
Member shall be specified in the Completed Application.
1.7 Firm Transmission Service: Transmission service under this
Service Schedule that is reserved or scheduled for a term not to exceed two
years, and that is of the firmness and priority as set forth in this
Service Schedule. Firm Transmission Service is available as Firm Capacity
Transmission Service or Firm Energy Transmission Service.
1.8 Line Loading Relief Procedures: Those procedures established
by the Regional Transmission Committee involving curtailment of
transactions for the purpose of relieving transmission system overloads or
maintaining necessary voltage criteria.
1.9 Loss Repayment Procedure: Those procedures established by the
Regional Transmission Committee involving repayment of transmission system
losses due to Coordination Transactions.
1.10 Native Load Customers: The wholesale and retail customers on
whose behalf the Transmission Provider, by statute, franchise, regulatory
requirements, or contract, has undertaken an obligation to construct and
operate the Transmission Provider's system to provide reliable transmission
service on a firm basis.
1.11 Network Customers: Entities receiving transmission service
pursuant to the terms of the Transmission Provider's network service tariff
or other contracts for similar service.
1.12 Non-firm Transmission Service: Transmission service under this
Service Schedule that is reserved and/or scheduled on an as available basis
and is subject to interruption pursuant to MAPP Line Loading Relief
Procedures. Non-firm Transmission Service is available as either Hourly
Non-firm Transmission Service or Reserved Non-firm Transmission Service.
1.13 Parties: The Transmission Providers and the Transmission
Customer receiving service under this Service Schedule.
1.14 Receiving Member: The Member on whose system capacity and/or
energy from a Coordination Transaction will be made available to the
Transmission Providers by the Seller. The Receiving Member may be the
Seller. The Receiving Member shall be specified in the Completed
Application.
1.15 Regional Transmission Committee: A standing committee under
the MAPP Restated Agreement.
1.16 Seller: The Member that is the seller pursuant to a
Coordination Transaction.
1.17 System Impact Study: An assessment by the Contractor or the
Regional Transmission Committee of the adequacy of the Transmission System
to accommodate a request for Firm Transmission Service.
1.18 Transmission Customer: Any Member whose Completed Application
for Transmission Service is approved by the Contractor and who receives
transmission service under this Service Schedule. The Transmission Customer
shall be the Buyer.
1.19 Transmission Provider: A Member owning or controlling
transmission used to provide service under this Service Schedule. The
Contractor shall not be considered to be a Transmission Provider.
1.20 Transmission System: The composite of all contiguous
networked, synchronously operated 115 kV and above (or 69 kV as specified
in Appendix C) transmission facilities owned or controlled by MAPP Members.
Such contiguous facilities shall include (i) networked facilities in the
MAPP Region, (ii) facilities that are directly interconnected with those
within the MAPP Region, and (iii) facilities that are interconnected with
those within the MAPP Region through the facilities of another Member or
Members.
2. Scope
1.2 This Service Schedule provides for transmission service
pursuant to the Restated Agreement in connection with Coordination
Transactions. A Member located outside of the MAPP Region agrees to
provide service to the other Members under the terms and conditions of this
Service Schedule over transmission facilities owned or controlled by it or
its Affiliates, that are a part of the Transmission System. Service under
this Service Schedule is not available to an entity not eligible for an
order requiring transmission service under Sections 210, 211 or 212 of the
FPA as in effect on the Effective Date or of a type not available pursuant
to an order requiring such service under Sections 210, 211 or 212 of the
FPA as in effect on the Effective Date.
2.2 This Service Schedule shall be used for Coordination
Transactions between Members instead of the individual tariffs of the
Members. Service is available for Coordination Transactions arranged under
the MAPP Power and Energy Market, the Generation Reserve-Sharing Pool or
otherwise. Any entity eligible to obtain a Section 211 order under the
Federal Power Act is eligible to become a MAPP Member and obtain service
under this Service Schedule. Service under this Service Schedule is
available to all Members on an equivalent basis pursuant to the terms of
this Service Schedule. To receive such service, an entity must be willing
to take on the responsibilities and obligations of membership.
2.3 Subject to the waiver provisions of Section 13.4 hereof,
charges are imposed for service under this Service Schedule.
2.4 This Service Schedule cannot be used to deliver power or energy
directly to a non-member. This Service Schedule also is not intended to be
used, and shall not be used, by a generator located on a Receiving Member's
system in place of a long term transmission arrangement that compensates
the Receiving Member for the load imposed on the Receiving Member's system
by the generator. Nor is this Service Schedule intended to be used for
load located on a Delivering Member's system and routinely imposed on that
system in lieu of a long term transmission arrangement for the needs of
that load. Furthermore, this Service Schedule is intended to apply only to
transactions of two years or less. This Service Schedule shall be
interpreted and applied to prevent its use for any transactions that are in
any way more than a two years in duration.
2.5 If any Member believes that the intended scope of this Service
Schedule expressed above is being violated in connection with any
transaction, it may file a written complaint specifying its concern with
the Regional Transmission Committee, or the appropriate subcommittee of the
Regional Transmission Committee. During the pendency of any such
complaints, the charges sought to be imposed by the Transmission Providers
under this Service Schedule and/or under their individual tariffs or other
agreements shall be paid by the Transmission Customer and held in escrow by
the Contractor and shall be paid, with any interest earned thereon, to the
appropriate parties upon final resolution of the dispute. The Regional
Transmission Committee shall deal with all such disputes on an expedited
basis.
2.6 In addition to the primary purpose of this Service Schedule set
forth above, the Members hereby agree that the rate schedules appended
hereto also shall be used to compensate Members for third party use of
their systems in connection with sales or purchases by Members to or from
non-members that otherwise meet the requirements of a Coordination
Transaction. Such transactions must be scheduled and arranged by the
transacting parties under the individual tariffs of the Members.
Nature of Firm Transmission Service
3.1 Term
(a) The minimum term of Firm Capacity Transmission Service
reservations shall be seven consecutive days, which hereafter may be
referred to as "weekly". The maximum term for Firm Capacity Transmission
Service reservations shall be two years.
(b) The minimum term for Firm Energy Transmission Service
shall be one hour and the maximum term shall be 120 days, or as otherwise
required for extended maintenance or extended accreditation authorized by
the Regional Reliability Committee.
3.2 Service Priority - An Application for Firm Transmission Service
will have priority over Non-firm Transmission Service under this Service
Schedule. Firm Transmission Service will always have priority over Non-
firm Transmission Service under this Service Schedule, including previously
scheduled Non-firm Transmission Service. Firm Capacity Transmission
Service shall have priority over Firm Energy Transmission Service,
including previously scheduled Firm Energy Transmission Service. Firm
Transmission Service under this Service Schedule shall be available on a
first-come, first-served basis (i.e., in the chronological sequence in
which each Transmission Customer has requested service) from capacity in
excess of that needed for reliable service to Native Load Customers,
Network Customers and other transmission customers taking firm transmission
service for longer than two years and previously scheduled Firm Capacity
Transmission Service under this Service Schedule or tariffs and contracts
of the Transmission Providers.
3.3 Curtailment of Service - The Transmission Providers shall
provide Firm Transmission Service with the curtailment priority set forth
in the MAPP Line Loading Relief Procedures as they may be amended from time
to time by the Regional Transmission Committee. To the extent practical
under the circumstances, Firm Energy Transmission Service shall be
curtailed before Firm Capacity Transmission Service and Firm Transmission
Service shall be curtailed prior to firm transmission service provided by
the Transmission Provider for a term in excess of two years. When the
Contractor or the Transmission Provider determines that an electrical
emergency exists and implements emergency procedures to curtail Firm
Transmission Service, the Transmission Customer shall make the required
reductions upon request of the Contractor. The Contractor has the right to
direct the interruption of service whenever an emergency exists or MAPP
Line Loading Relief Procedures are required.
3.4 Classification of Firm Transmission Services -
(a) Firm Transmission Service under this Service Schedule
shall be Member system to Member system transmission service. Firm
Transmission Service shall include: (i) Firm Capacity Transmission Service
on a weekly, monthly, seasonal or one-year basis under Rate Schedule FCTS;
and (ii) Firm Energy Transmission Service on an hourly basis up to 120 days
under Rate Schedule FETS. Firm Energy Transmission Service is available
only for Emergency Energy Interchange Service and Scheduled Outage Energy
Interchange Service under the Generation Reserve-Sharing Pool in the
Restated Agreement and the comparable needs of Members that are not
participants in the Pool.
(b) A Transmission Customer may purchase transmission service
to make purchases of power from multiple generating units that are on the
Receiving Member's Transmission System. The Transmission Customer will be
required to provide to the Contractor the information identified in Section
9.2 of this Service Schedule.
(c) The Transmission Providers shall provide firm deliveries
of power from a point or points at which power and/or energy for a
Coordination Transaction is made available by the Seller to the Receiving
Member to a point or points at which power and/or energy for a Coordination
Transaction are made available to the Buyer by the Delivering Member. Each
Receiving Member at which firm transmission capacity is reserved by the
Transmission Customer shall be set forth in the Completed Application along
with a corresponding capacity reservation. The reservation and schedules
shall be in whole megawatts measured on a sixty minute, clock hour
interval. Each Delivering Member at which firm transmission capacity is
reserved by the Transmission Customer shall be set forth in the Completed
Application along with a corresponding capacity reservation. The
Transmission Customer will be billed for its transmission service as set
forth in Appendix A. The Transmission Customer may not exceed its firm
capacity reservation.
(d) Schedules for the Transmission Customer's Firm
Transmission Service must be submitted to the Contractor in accordance with
procedures established by the Regional Transmission Committee. Initially,
those procedures shall be: Schedules for the Transmission Customer's Firm
Capacity Transmission Service must be submitted to the Contractor no later
than 3:00 p.m. of the day prior to the day service is to commence.
Hour-to-schedules of any power and energy that is to be delivered must be
stated in increments of whole megawatts per hour. Scheduling changes will
be permitted up to 20 minutes before the start of the next clock hour or
such other time as established by the Regional Transmission Committee. The
Transmission Customer will furnish to schedulers at the Contractor and on
the system of the Delivering Member hour-to-hour schedules equal to those
furnished by the Receiving Member and shall deliver power and energy to the
Delivering Member in an amount provided by such schedules. Should the
Transmission Customer, Delivering Member or Receiving Member revise or
terminate any schedule pursuant to its contract authority to do so, such
party shall immediately notify the Contractor, and the Transmission
Providers shall have the right to adjust accordingly the schedule for
capacity and energy to be received and to be delivered.
4. Nature of Non-firm Transmission Service
4.1 Term - Non-firm Transmission Service will be available for
periods ranging from hourly to six consecutive months.
4.2 Service Priority - Non-firm Transmission Service shall be
available on a first-come, first-served basis (i.e., in the chronological
sequence in which each Transmission Customer has reserved service) from
capacity in excess of that needed for reliable service to Native Load
Customers, Network Customers and other transmission customers taking Firm
service for more than two years and previously reserved or scheduled Firm
and Non-firm Transmission Service under this Service Schedule or tariffs
and contracts of the Transmission Providers.
4.3 Classifications of Non-firm Transmission Service
(a) Non-firm transmission service shall be Member system to
Member system transmission service. Parties requesting non-firm service
for the transmission of firm power do so at their own risk with the full
realization that such service is subject to interruption under the terms of
this Service Schedule. Non-firm Transmission Service shall include:
(i) Hourly Non-firm Transmission Service - Transmission of
energy on an hourly basis under Rate Schedule HNF; and
(ii) Reserved Non-firm Transmission Service - Transmission of
reserved non-firm capacity and energy on a seasonal,
monthly, weekly or daily basis subject to Section 9.3 and
not to exceed six consecutive months in duration for any
one Application for non-firm service under Rate Schedule
RNF.
(b) The Transmission Providers shall provide non-firm
deliveries of energy from the Receiving Member to the Delivering Member.
Each Receiving Member at which non-firm transmission capacity is reserved
by the Transmission Customer shall be set forth in the Completed
Application along with a corresponding capacity reservation. The
reservation shall be in whole megawatts measured on a sixty minute, clock
hour interval. Each Delivering Member at which non-firm transmission
capacity is reserved by the Transmission Customer shall be set forth in the
Completed Application along with a corresponding capacity reservation. The
Transmission Customer will be billed for its transmission service as set
forth in Appendix A. The Transmission Customer may not exceed its non-firm
capacity reservation.
4.4 Scheduling of Non-firm Transmission - Schedules for the
Transmission Customer's Hourly Non-firm Transmission Service and Reserved
Non-firm Transmission Service must be submitted to the Contractor in
accordance with procedures established by the Regional Transmission
Committee. Initially, those procedures shall be: Schedules for the
Transmission Customer's Reserved Non-firm Transmission Service must be
submitted to the Contractor no later than 3:00 p.m. of the day prior to the
day service is to commence. New schedules and schedule changes submitted
after 3:00 p.m. will be accommodated, if practicable, in light of all other
schedules in place. Schedules for Hourly Non-firm Transmission Service
shall be submitted no earlier than 3:00 p.m. of the day prior to the
commencement of service. New Hourly Non-firm Transmission Service and
scheduling changes shall be submitted prior to the commencement of such
service. Schedules submitted for service to commence during the current
clock hour or for any application requiring a portion of a clock hour will
have transmission service charges applied for the full associated clock
hour. The Transmission Customer will furnish to schedulers at the
Contractor and on the system of the Delivering Member hour-to-hour
schedules equal to those furnished by the Receiving Member and shall
deliver power and energy to the Delivering Member in an amount provided by
such schedules. Hour-to-hour schedules of energy that is to be delivered
must be stated in increments of whole megawatts per hour. Should the
Transmission Customer, Delivering Member or Receiving Member revise or
terminate any schedule, such party shall immediately notify the Contractor.
4.5 Curtailment of Service - The Contractor has the right to direct
interruption, in whole or in part, of Transmission Service provided under
this Service Schedule when, in the Contractor's sole discretion, an
emergency or other unforeseen condition impairs or degrades the reliability
of the Transmission System. In such situations, all Non-firm Transmission
Service contributing to the situation requiring relief will be curtailed
before Firm Transmission Service is curtailed. Firm Energy Transmission
Service will be curtailed before Firm Capacity Transmission Service where
practicable and Hourly Non-firm Transmission Service will be curtailed
before Reserved Non-firm Transmission Service where practicable.
Curtailments will be made in accordance with the MAPP Line Loading Relief
Procedures. The Contractor, by posting on its electronic information
network, will provide advance notice of curtailments where such notice can
be provided consistent with Good Utility Practice.
5. Service Availability
5.1 General Conditions - Subject to the terms and conditions of
this Service Schedule, Transmission Providers will provide Firm and Non-
firm Transmission Service over the Transmission System for any Member that
has met the requirements of Section 8.0 of this Service Schedule. Nothing
in this Service Schedule relieves or otherwise modifies the obligation of a
Transmission Customer or the Transmission Provider to perform its
obligations under previously negotiated contractual commitments and
agreements. In addition, the Transmission Providers undertake no
obligation to plan the Transmission System to have sufficient capacity for
Firm and Non-firm Transmission Service under this Service Schedule.
5.2 Determination of Capacity Availability - The Contractor will
respond to a Firm Transmission Service Request on behalf of the
Transmission Providers in accordance with procedures of Section 9.0 of this
Service Schedule.
5.3 Policy on Facility Additions or Redispatch of Generation -
Nothing contained in this Service Schedule or in the procedures established
by the Regional Transmission Committee shall be interpreted to require a
Member to install or upgrade transmission facilities in order to enable
transmission service under this Service Schedule. Redispatch of generation
may be offered in association with the provisions of MAPP's Line Loading
Relief Procedures. Available transmission capacity for transmission
service under this Service Schedule shall be determined on an integrated
system basis considering the combined capability of the Transmission
System.
6. Electronic Information Network
An electronic information network ("EIN") will provide 24-hour access
to data as directed by the Regional Transmission Committee and will
initially provide the Member to Member availability of capacity over the
Transmission System, rates to be charged for service, and all currently
approved Completed Applications. Members may submit their Application for
Transmission Service over the EIN. The information that the Contractor and
the Members post on the EIN will be available in accordance with FERC
policy.
7. Standards of Nondiscrimination
In performing its obligations under this Service Schedule, the
Contractor shall apply this Service Schedule's provisions in a
nondiscriminatory manner to all Members.
8. Conditions Required of Transmission Customers
Transmission Service shall be provided by the Transmission Providers
under this Service Schedule only if the following conditions are satisfied:
(a) The Transmission Service is consistent with the Completed
Application submitted by a Member;
(b) The Transmission Customer meets the creditworthiness
criteria set forth in Section 17 of this Service Schedule;
(c) The Transmission Customer will have final arrangements in
place for any other transmission service necessary to effect the delivery
from the generating source to the ultimate load prior to the time service
under this Service Schedule commences; and
(d) The Contractor has approved the service requested under a
Completed Application.
9. Procedures for Arranging Firm Service
9.1 Application - Members seeking Firm Transmission Services under
this Service Schedule must submit a Completed Application to the Contractor
by (i) entering the information listed below directly on the Contractor's
EIN, (ii) transmitting the required information to the Contractor by
telefax, or (iii) providing the information by telephone over the
Contractor's time recorded telephone line. Each of these methods will
provide a time-stamped record for establishing the priority of the
Application.
9.2 Completed Application - A Completed Application shall provide
all of the following information and such additional information as may be
required by the Regional Transmission Committee:
(a) The identity of the Member requesting service;
(b) The identities of the Receiving Member and the Delivering
Member;
(c) The electrical location of the generating facility(ies)
supplying the capacity and energy and the location of the
load ultimately served by the capacity and energy
transmitted, or to the extent known, the generation
displaced by the transaction;
(d) A description of the supply characteristics of the
capacity and energy to be delivered;
(e) An estimate of the capacity and energy expected to be
delivered to the Receiving Member;
(f) The service commencement date and hour and the service
termination date and hour of the requested Transmission
Service; and
(g) The transmission capacity requirement (1,000 kilowatt
minimum) stated in increments of whole megawatts per
hour.
9.3 Reservation of Firm Transmission Services
(a) Requests to reserve Firm Capacity Transmission Service
shall be submitted in accordance with the following schedule, or such other
times established by the Regional Transmission Committee. Requests to
reserve service for any term of six consecutive months up to two years
shall be submitted no later than 30 days and no earlier than one year
before service is to commence; requests to reserve service for more than
one month and up to six consecutive months shall be submitted no later than
14 days and no earlier than 120 days before service is to commence;
requests to reserve service for one week and up to one month shall be
submitted no later than 7 days and no earlier than 60 days before service
is to commence.
(b) The 30 day minimum for reservation of service for a
period of six months to two years shall not apply when a Member must
purchase firm transmission service for Reserve Capacity Deficiency Service.
(c) Firm Energy Transmission Service may be taken and
scheduled for a term of one hour up to 120 days, or as otherwise required
for extended maintenance or extended accreditation authorized by the
Regional Reliability Committee. Requests for Firm Energy Transmission
Service for emergencies shall be submitted as soon as possible under the
circumstances. Requests for Firm Energy Transmission Service for scheduled
outages shall be submitted in accordance with the requirements for Reserved
Non-firm Transmission Service in Section 10.3.
9.4 Notice of Deficient Application - If an Application fails to
meet the requirements of this Service Schedule, the Contractor shall notify
the Member requesting service of the reasons for such failure within
twenty-four hours of receipt of the Application. The Contractor will
attempt to remedy minor deficiencies in the Application through informal
communications with the Transmission Customer. If such efforts are
unsuccessful, the Contractor shall return the Application. Upon receipt of
a new or revised Application that fully complies with the requirements of
this Service Schedule, the Transmission Customer shall be assigned a new
priority consistent with the date of the new or revised Application.
9.5 Response to Completed Applications
(a) Following receipt of a Completed Application for Firm
Capacity Transmission Service, the Contractor shall make a determination of
capacity availability as required in Section 11 of this Service Schedule.
The Contractor should consult with the Transmission Provider(s) likely to
be impacted as necessary, but shall make an independent determination of
capacity availability. The Contractor shall notify the Transmission
Customer as soon as practicable after the date of receipt of a Completed
Application, but not later than one business day for a weekly reservation
request, not later than two business days for a monthly reservation
request, and not later than one week for a reservation request of greater
than a month, either (i) if service can be provided under this Service
Schedule without performing a System Impact Study or (ii) if such a study
is needed to evaluate the impact of the Application.
(b) The Contractor shall respond to requests for Firm Energy
Transmission Service for emergencies within the same timeframe as it
responds to requests for Hourly Non-Firm Transmission Service and to
requests for Firm Energy Transmission Service for scheduled outages within
the same timeframe in which the Contractor responds to requests for
Reserved Non-Firm Transmission Service.
9.6 Completed Application Approvals - Whenever the Contractor
determines that a System Impact Study is not required and that the service
can be provided, it shall approve the Completed Application within the time
frames specified in Section 9.5 above. Where a System Impact Study is
required, the provisions of Section 11 of this Service Schedule will govern
the tendering and execution of a Study Agreement between the Contractor and
a Transmission Customer.
10. Procedures for Arranging Non-firm Transmission Service
10.1a. Application - Members seeking non-firm service under this
Service Schedule must submit a Completed Application to the Contractor.
Applications may be submitted by (i) entering the information listed below
directly on the Contractor's EIN, (ii) transmitting the required
information to the Contractor by telefax, or (iii) providing the
information by telephone over the Contractor's time recorded telephone
line. Each of these methods will provide a time-stamped record for
establishing the service priority of the Application.
10.2 Completed Application - A Completed Application shall provide
all of the following information and such additional information as may be
required by the Regional Transmission Committee or the Contractor:
(a) The identity, address and telephone number of the Member
requesting service;
(b) The identities of the Receiving Member and Delivering
Member;
(c) The maximum amount of capacity requested; and
(d) The proposed dates and hours for initiating and
terminating transmission service hereunder.
In addition to the information specified above, when required to properly
evaluate system conditions, the Contractor has the right to require the
Transmission Customer to provide the following:
(e) The electrical location of the initial source of the
power to be transmitted pursuant to the Transmission
Customer's request for service and to the extent known,
the generation displaced by the transaction; and
(f) The electrical location of the ultimate load.
10.3 Reservation of Non-firm Transmission Service
(a) Requests for Reserved Non-firm Transmission Service shall
be submitted to the Contractor no later than 3:00 p.m. of the day prior to
the day service is to commence, and no earlier than the times specified
below, or such other deadlines as are established by the Regional
Transmission Committee. Requests to reserve service for more than one
month and up to six consecutive months shall be submitted no earlier than
120 days before service is to commence; requests to reserve service for
more than one week and up to one month shall be submitted no earlier than
60 days before service is to commence; requests to reserve service for more
than one day and up to one week shall be submitted no earlier than 30 days
before service is to commence; and requests to reserve daily service shall
be submitted no earlier than 3 days before service is to commence.
(b) Hourly Non-firm Service may not be reserved in advance
except by scheduling a transaction no earlier than 3:00 p.m. of the day
prior to the day service is to commence. Requests for Hourly Non-firm
Service over transmission facilities that are not constrained shall be
deemed approved unless the Contractor notifies the Transmission Requester
within 30 minutes that the transaction is denied. Requests for Hourly
Non-firm Service over transmission facilities that the Contractor has
identified on the MAPP electronic information network as constrained
facilities shall require approval from the Contractor before scheduling
commences.
10.4 Determination of Capacity Availability - Following receipt of a
Completed Application the Contractor will make a determination on a
nondiscriminatory basis of capacity availability. The Contractor should
consult with the Transmission Provider(s) likely to be impacted as
necessary, but shall make an independent determination of capacity
availability. Such determination shall be made as soon as reasonably
practicable after receipt, but not later than the following time periods
for the following terms of service, or such other deadlines as are
established by the Regional Transmission Committee: (i) thirty minutes for
Hourly Non-firm Transmission Service; (ii) one hour for daily Reserved
Non-firm Transmission Service; (iii) four hours for weekly Reserved
Non-firm Transmission Service; (iv) two business days for monthly Reserved
Non-firm Transmission Service; and (v) one week for Reserved Non-firm
Transmission Service for more than one month.
10.5 Transmission Customer Responsibility for Third-Party
Arrangements - Any arrangements that may be required with electric systems
not subject to this Service Schedule shall be the responsibility of the
Transmission Customer.
11. Determination of Capacity Availability and Responsibility for Costs
Incurred in Providing System Impact Studies
11.1 Notice of Need for System Impact Study - After receiving a
request for service, the Contractor shall determine on a nondiscriminatory
basis whether a System Impact Study is needed. If the Contractor
determines that the Transmission System may be inadequate to accommodate a
request for service, it shall so inform the Applicant, within the time
periods specified in Section 8.5 following receipt of a Completed
Application. In such cases, the Contractor shall tender an agreement (the
"Study Agreement") pursuant to which the Transmission Customer shall agree
to reimburse the Contractor for performing the required System Impact
Study.
11.2 Study Agreement and Cost Reimbursement
(a) The Study Agreement will clearly specify an estimated
charge, based on the Contractor's estimate of the actual cost, and time for
completion of the System Impact Study. The charge shall be based on the
actual cost of the study. The study shall identify any system constraints.
A description of the methodology that will be used by the Contractor in
assessing capacity available to provide service is contained in the FERC
Form 715 filing for MAPP, Annual Transmission Planning and Evaluation
Report. The criteria specified in Form 715 are provided to apprise the
Transmission Customer of the criteria the Contractor intends to apply, but
shall not be deemed to bind the Regional Transmission Committee in
reviewing any dispute over the availability of capacity to provide Firm
Transmission Services.
(b) In performing the System Impact Study, the Contractor
shall rely, to the extent reasonably practicable, on existing transmission
planning studies. The Transmission Customer will not be assessed a charge
for such existing studies. The Transmission Customer will, however, be
responsible for charges associated with any modifications to existing
planning studies that are reasonably necessary in evaluating the impact of
the Transmission Customer's request for service on the Transmission System.
(c) In cases where a single System Impact Study is sufficient
for the Contractor to assess capacity availability, in response to multiple
Members requesting service in relation to the same competitive
solicitation, the costs of that study shall be prorated among the
requesting Members.
(d) For a service request to remain valid, the Transmission
Customer shall execute the Study Agreement and return it to the Contractor
within thirty (30) days. If the Transmission Customer elects not to
execute the Study Agreement, its Application shall be deemed withdrawn.
11.3 Performance of System Impact Study - Upon receipt of an
executed Study Agreement, the Contractor will use due diligence to complete
the required System Impact Study within a sixty (60) day period. The
Contractor should consult with the Transmission Provider(s) likely to be
impacted as necessary, but shall make an independent determination of
capacity availability. In the event that the Contractor is unable to
complete the required studies within such time period, it shall so notify
the Transmission Customer and provide an estimated completion date along
with an explanation of the reasons why additional time is required to
complete the required studies. A copy of the completed study and related
work papers shall be made available to the Transmission Customer. The
Contractor will use the same due diligence in completing the studies for a
Transmission Customer as it uses when completing studies for Transmission
Providers.
11.4 Partial Interim Service - If the Contractor determines that
adequate transmission capacity does not exist to satisfy the full amount of
a Completed Application for Firm Transmission Service, the Transmission
Providers nonetheless shall be obligated to offer and provide the portion
of the requested Firm Transmission Services that can be accommodated
utilizing the existing system. However, the Transmission Providers shall
not be obligated to provide the incremental amount of requested Firm
Transmission Services that requires the addition of facilities or upgrades
to the Transmission System.
12. Sale or Assignment of Transmission Service
12.1 Procedures for Assignment or Transfer of Service - A
Transmission Customer may sell, assign, or transfer all or a portion of its
rights under this Service Schedule for Firm Capacity Transmission Service
whose duration is six months or longer under this Service Schedule, but
only to another Member (the "Assignee"), provided that there is no change
in the Receiving Member or the Delivering Member and no increase in the
amount of service reserved as Reserved Non-firm Transmission Service or
Firm Service. Any sale, assignment or transfer shall not result in the
Transmission Customer receiving compensation that exceeds its cost under
this Service Schedule.
12.2 Information on Assignment or Transfer of Service - In
accordance with Section 5.0, Transmission Customers or Assignees must use
the Contractor's EIN to post capacity availability.
13. Compensation for Transmission Service
13.1 Compensation for Use of Transmission Facilities
(a) Transmission Providers shall be compensated for use of
their respective portion of the Transmission System for Coordination
Transactions in accordance with the rate schedules appended to this Service
Schedule and subject to Section 13.4 below: Firm Energy Transmission
Service (Rate Schedule FETS), Firm Capacity Transmission Service (Rate
Schedule FCTS), Reserved Non-Firm Service (Rate Schedule RNF), and Hourly
Non-Firm Service (Rate Schedule HNF). Transmission Customers shall pay for
Transmission Services obtained under this Service Schedule pursuant to
these rate schedules.
(b) In addition, a Member that sells or purchases power and
energy to or from a non-Member in a transaction that would otherwise
qualify as a Coordination Transaction shall compensate the Transmission
Providers who are not providing service under their transmission tariffs
for the transaction, using the rate schedules appended hereto. Such
transactions must be arranged under Member tariffs with third party impact
compensation under this Service Schedule.
(c) The Contractor will itemize the Member's payment
obligations and credits.
13.2 Capacity and Energy Losses - The Transmission Customer shall be
responsible to compensate other Members for capacity and energy losses in
accordance with the MAPP Loss Repayment Procedure.
13.3 Other Charges - Costs incurred by the Contractor for
administering Transmission Service under this Service Schedule shall be
compensated by the Scheduling Charges and Administrative Charges included
in the rate schedules appended to this Service Schedule.
13.4 Waivers or Exclusions of Payments
(a) Receiving Members' Systems - No charge shall be imposed
under the rate schedules appended hereto for the use of the Receiving
Member's transmission system by any Transmission Customer, including the
Receiving Member, where (i) the Seller has a transmission arrangement with
the Receiving Member, such as a generator outlet arrangement or long term
flexible point-to-point transmission service agreement, that allows use of
the Receiving Member's system for the Coordination Transaction or (ii) the
source of the power and energy for the Coordination Transaction, if other
than the Seller, has such a transmission arrangement with the Receiving
Member; provided however, that where any such transmission arrangement
covers only a portion of the Receiving Member's transmission system, the
waiver of charges shall apply only to such portion. Where the criteria in
(i) or (ii) are not met and the service is within the scope of this Service
Schedule, this Service Schedule shall impose a charge for use of the
Receiving Member's system, including use by the Receiving Member of its own
system for Coordination Transactions. Where this Service Schedule is
applicable, the Receiving Member shall charge itself hereunder rather than
under its individual tariff.
(b) Delivering Members' Systems - No charge shall be imposed
hereunder for use of the Delivering Member's system by any Transmission
Customer, including the Delivering Member, where (i) the Delivering Member
is the Buyer and the power and energy is delivered to the Delivering
Members' load on its system, (ii) the Buyer is a Network Customer of the
Delivering Member and the power and energy is delivered to the Buyer's load
covered by such service, (iii) the Buyer otherwise has a transmission
arrangement with the Delivering Member that covers the delivery of the
power and energy associated with the Coordination Transaction or (iv) the
entity to which the Buyer is making delivery at the Delivery Points has
such a transmission arrangement with the Delivering Member; provided
however, where any such transmission arrangement covers only a portion of
the Delivering Member's system, the waiver of charges shall apply only to
such portion. Where none of the criteria in (i), (ii), (iii) or (iv)
applies and the service is within the scope of this Service Schedule, this
Service Schedule shall impose a charge for use of the Delivering Member's
system for delivery of the Coordination Transaction.
(c) Intervening Members' Systems - A Member shall waive
payment of charges to it hereunder by the Buyer on a nondiscriminatory
basis where the Member is not the Delivering or Receiving Member and the
Buyer or Seller has a transmission arrangement with the Member, such as a
shared system, joint use agreement or other transmission agreement, under
which the Buyer or Seller has the right to use the Member's system for the
Coordination Transaction. Such a waiver may apply to all or only a portion
of the Member's system and, where appropriate, such waivers may be
reciprocal.
(d) Disclosure - All waivers of charges under (a), (b) and
(c) above must be on file with the Regional Transmission Committee and
disclosed to all Members. All disputes concerning waivers, including but
not limited to, disputes over whether a waiver is or is not required, or is
or is not nondiscriminatory, and the scope of any waiver, shall be
reported, in writing, to the Regional Transmission Committee, or the
appropriate subcommittee of the Regional Transmission Committee, for
review, and shall be subject to dispute resolution under Article 11 of the
Restated Agreement. During the pendency of any such dispute, all disputed
charges claimed to be due under this Service Schedule or a Transmission
Provider's tariff shall be paid to the Contractor and held in escrow
pending resolution of the dispute. Upon final resolution of the dispute,
the funds in escrow, together with any interest earned thereon, shall be
paid to the parties to which they are due.
14. Billing and Payment
14.1 Billing Procedure - Within a reasonable time after the first
day of each month, the Contractor shall submit an invoice to the
Transmission Customer for the charges for all transmission services
furnished under this Service Schedule during the preceding month. Charges
for the month will be netted against revenue for each Member for all
transactions which occurred. Payments shall be made in accordance to
procedures approved from time to time by the Regional Transmission
Committee and pursuant to the Restated Agreement.
14.2 Interest on Unpaid Balances - Interest on any unpaid amount
shall be calculated in accordance with the methodology specified for
interest on refunds in FERC's regulations at 18 CFR Section
35.19a(a)(2)(iii). Interest on delinquent amounts shall be calculated from
the due date of the bill to the date of payment. When payments are made by
mail, bills shall be considered as having been paid on the date of receipt
by the Contractor.
14.3 Customer Default - In the event the Transmission Customer
fails, for any reason other than a billing dispute as described below, to
make payment to the Contractor on or before the due date as described
above, and such failure of payment is not corrected within thirty (30)
calendar days after the Contractor notifies the Transmission Customer to
cure such failure, a default by the Transmission Customer shall be deemed
to exist. Upon the occurrence of a default, (i) the Regional Transmission
Committee or its designee may initiate a proceeding to terminate service
and (ii) a late payment charge in the amount of 2% per month of the
defaulted payment shall be required. In the event of a billing dispute
between the Transmission Providers and the Transmission Customer, the
Transmission Providers will continue to provide service under the Service
Agreement as long as the Transmission Customer (i) continues to make all
payments not in dispute, and (ii) pays into an independent escrow account
the portion of the invoice in dispute, pending resolution of such dispute.
If the Transmission Customer fails to meet these two requirements for
continuation of service, the Regional Transmission Committee will provide
notice to the Transmission Customer of its intention to suspend service, in
accordance with Regional Transmission Committee policy.
15. Regulatory Filings
Nothing contained in this Service Schedule or any Service Agreement
shall be construed as affecting in any way the right of MAPP to change any
of the rates, rate methodologies, charges, classification or term or
conditions of service, or any rule, regulation or Service Agreement related
to service hereunder, and to file any such change, under Section 205 of the
FPA and pursuant to FERC's rules and regulations promulgated thereunder on
behalf of the Transmission Providers.
16. Liability and Indemnification
16.1 Liability - Neither the Transmission Customer nor the
Transmission Provider shall be liable to the other for damages for any act,
omission, or circumstance occasioned by or in consequence of any act of
God, labor disturbance, act of the public enemy, war, insurrection, riot,
fire, storm or flood, explosion, breakage or accident to machinery or
equipment, or by any other cause or causes beyond such Party's control,
including any curtailment, order, regulation or restriction imposed by
governmental, military or lawfully established civilian authorities, or by
the making of necessary repairs upon the property or equipment of either
Party hereto.
16.2 Release - For and in consideration of the provision by the
Contractor of the services specified herein, each Transmission Provider and
each Transmission Customer (hereinafter referred to as a "Releasing
Entity"), to the maximum extent permitted by law, releases and discharges,
and shall indemnify and hold harmless, the Contractor from any and all
liability for any and all damage or other claim each Releasing Entity may
have, or that may be asserted on behalf or in the name of the Releasing
Entity, to the extent any such claim arises out of or relates to the
administration of this Service Schedule, or otherwise relates to
transmission service provided or sought under such Service Schedule,
including but not limited to (i) unintentional, consequential, direct,
compensatory, punitive, special, indirect, or incidental damages, (ii)
damages arising from loss of or damage to property and loss of life or
personal injury, or (iii) any claims arising from any loss of interchange
or coordination sales or revenues, loss of profits, costs or substitute
power or transmission service, costs or additional operating expenses, or
suits by third parties; provided, however, that the Contractor shall not be
released, discharged, indemnified or held harmless with respect to any
liability for damages or other claims arising from any action by the
Contractor that is unlawful, undertaken in bad faith, grossly negligent or
the product of wilful misconduct. If MAPPCOR is replaced as Contractor,
the agreement between MAPP and the new Contractor shall deal with any
limitations on the Contractor's liability.
16.3 Damages - Except in the event of bad faith or intentional
breach of its obligations hereunder, a Transmission Provider shall not be
liable to a Transmission Customer, and a Transmission Customer shall not be
liable to a Transmission Provider, for any claim for any consequential,
incidental or indirect damages arising out of service provided under this
Service Schedule.
17. Creditworthiness
For the purpose of determining the ability of the Transmission
Customer to meet its obligations related to service hereunder, the
Contractor may require reasonable credit review procedures. This review
shall be made in accordance with standard commercial practices. Where the
Contractor determines a basis exists to question a Member's
creditworthiness consistent with good commercial practice, the Contractor
may require the Transmission Customer to provide and maintain in effect an
unconditional and irrevocable letter of credit or a deposit as security to
meet its responsibilities and obligations under this Service Schedule, or
an alternative form of security proposed by the Transmission Customer and
acceptable to the Contractor and consistent with commercial practices
established by the Uniform Commercial Code that protects the Contractor and
the Transmission Providers against the risk of non-payment.
18. Dispute Resolution Procedures
Any dispute between a Transmission Customer and the Transmission
Provider involving Transmission Service under this Service Schedule shall
be resolved pursuant to the dispute resolution procedures set forth in
Article 11 of the Restated Agreement.
19. Appointment of Representative
Each Member hereby appoints the Contractor as its representative for
purposes of administering this Service Schedule on an impartial,
nondiscriminatory basis.
20. Effectiveness
This Service Schedule shall apply to all Coordination Transactions
entered into on or after the Effective Date.
Coordination Transmission Service Schedule
Appendix A
RATE SCHEDULE FCTS
Firm Capacity Transmission Service - The Transmission Customer shall
compensate the Transmission Providers each month for Reserved Capacity at
the sum of the applicable charges set forth below:
1. Transmission Service Charge:
The maximum amount of capacity (MW) reserved for Firm Capacity
Transmission Services shall be charged as follows:
Monthly Firm Demand Charge = Rate * EOC * 0.6
Weekly Firm Demand Charge = 12/52 * Rate * EOC * 0.6
where the Rate and EOC are determined by the MW-Mile methodology set forth
in Appendix C. The Firm Demand Charge is to be posted on the MAPP
electronic information network in advance of each season. Such posting
shall provide the Firm Demand Charge from each Member's transmission system
to each of the other Members' transmission systems.
2. Administrative Charge:
Up to $0.10 per MWh for energy scheduled shall be charged to cover
MAPP Center expenses related to Coordination Transmission. MAPP
Center shall record expenses at the close of each calendar month and
shall charge for transmission service on the basis of expenses
incurred during the month that service was rendered. Reconciliations
of either credits or debits shall be applied to the month that service
was provided.
3. Loss Compensation:
Third party Member's energy losses shall be paid in accordance with
the MAPP Loss Repayment Procedure. Responsibility for the associated
generation capacity required to supply energy losses shall be in
accordance with the MAPP Loss Repayment Procedure.
4. Scheduling Services:
For each Firm Capacity Transmission Service Transaction, the
Transmission Customer shall pay the Contractor a charge for Scheduling
Services as follows:
Weekly Firm: $100 per approved Completed Application
Monthly, seasonal or longer Firm: $200 per approved Completed
Application
Schedule changes: $25 per schedule change for schedules submitted
after 3:00 p.m. of the day prior to the day the change is to be
effective.
RATE SCHEDULE FETS
Firm Energy Transmission Services - The Transmission Customer shall
compensate the Transmission Providers each month for transmission service
at the sum of the applicable charges set forth below:
1. Transmission Service Charge:
Each megawatthour (MWh) of energy scheduled and taken under FETS shall
be charged as follows:
Firm Energy = Monthly Firm Demand Charge/730 hours per month
where the Monthly Firm Demand Charge is taken from Rate Schedule FCTS.
In the event the amount of Firm Energy Transmission Service is reduced
by the Contractor, the transmission service charge shall be zero for
each megawatt so reduced. The Firm Energy Charge shall be posted on
the MAPP EIN in advance of each season. Such posting shall provide
the Firm Energy Charge from each Member's transmission system to each
of the other Members' transmission systems.
2. Administrative Charge:
Up to $0.10 per MWh for energy scheduled shall be charged to cover
MAPP Center expenses related to Coordination Transmission. MAPP
Center shall record expenses at the close of each calendar month and
shall charge for transmission service on the basis of expenses
incurred during the month that service was rendered. Reconciliations
of either credits or debits shall be applied to the month that service
was provided.
3. Loss Compensation:
Third party Member's energy losses shall be paid in accordance with
the MAPP Loss Repayment Procedure. Responsibility for the associated
generation capacity required to supply energy losses shall be in
accordance with the MAPP Loss Repayment Procedure.
4. Scheduling Services:
For each Firm Energy Transmission Service transaction, the
Transmission Customer shall pay the Contractor a charge for Scheduling
Services as follows:
New Schedules: $50 per approved Completed Application
Schedule Changes: $25 per schedule change for schedules submitted
after 3:00 p.m. of the day prior to the day the change is to be
effective.
RATE SCHEDULE RNF
Reserved Non-firm Transmission Service - The Transmission Customer shall
compensate the Transmission Providers for reserved non-firm service at the
sum of the applicable charges set forth below:
1. Reservation Charge:
The MW of capacity reserved for the reservation period shall be the MW
of capacity reserved during the hour of maximum demand over the reservation
period. The following charge shall apply to the reserved capacity:
Monthly Reservation Charge = 0.35 * FIRM charge
= 0.35 * Rate * EOC * 0.6
Weekly Reservation Charge = Monthly Reservation Charge *
12 Months/52 Weeks
= Monthly Reservation Charge * 0.231
Daily Reservation Charge = Weekly Reservation Charge/6 Days
= Weekly Reservation Charge * 0.167
where the Rate and EOC are derived by the MW Mile methodology set forth in
Appendix C to Schedule F - Transmission Service for Coordination
Transactions.
2. Energy Charge:
For each MWh of energy scheduled the HNF energy charge rate shall
apply.
3. Administrative Charge:
Up to $0.10 per MWh for energy scheduled shall be charged to cover
MAPP Center expenses related to Coordination Transactions. MAPP Center
shall record expenses at the close of each calendar month and shall charge
for transmission service on the basis of expenses incurred during the month
that service was rendered. Reconciliations of either credits or debits
shall be applied to the month that service was provided.
4. Loss Compensation:
Energy losses shall be paid back in accordance with the MAPP Loss
Repayment Procedure. Responsibility for the associated generation capacity
required to supply energy losses shall be in accordance with the MAPP Loss
Repayment Procedure.
5. Scheduling Services:
For each Reserved Non-firm Transmission Service transaction, the
Transmission Customer shall pay the Contractor a charge for Scheduling
Services as follows:
New schedules: $100 per approved Completed Application
Schedule changes: $25 per schedule change for schedules submitted
after 3:00 p.m. of the day prior to the day the change is to be
effective.
RATE SCHEDULE HNF
Hourly Non-firm Transmission Service - The Transmission Customer shall
compensate the Transmission Providers for Hourly Non-firm Transmission
Service at the sum of the applicable charges set forth below:
1. Transmission Service Charge:
For each MWh of energy scheduled the following charge shall apply:
Hourly On-Peak Non-Firm Energy Charge =
(0.5 * Rate)/730 hours per month
Hourly Off-Peak Non-Firm Energy Charge =
(0.25 * Rate)/730 hours per month
where the Rate is determined by the MW-Mile methodology set forth in
Appendix C. In the event the amount of Hourly Non-firm Transmission
Service is reduced by the Contractor, the transmission service charge shall
be zero for each megawatt reduced. Specific Non-firm Energy Charges shall
be posted on the MAPP EIN in advance of each season. Such posting shall
provide the Non-firm Energy Charge from each Member's transmission system
to each of the other Members' transmission systems.
2. Administrative Charge:
Up to $0.10 per MWh for energy scheduled shall be charged to cover
MAPP Center expenses related to Coordination Transmission. MAPP Center
shall record expenses at the close of each calendar month and shall charge
for transmission service on the basis of expenses incurred during the month
that service was rendered. Reconciliations of either credits or debits
shall be applied to the month that service was provided.
3. Losses:
Losses shall be repaid through the MAPP Loss Repayment Procedure.
Coordination Transmission Service Schedule
Appendix B
APPLICATION FOR TRANSMISSION SERVICE
1.0 This Application, dated as of
, is a request for Transmission Service under the
provisions of Schedule F - Transmission Service for Coordination
Transactions.
2.0 The Transmission Customer agrees to take and pay
for Firm Transmission Services in accordance with
the provisions of the Service Schedule and this
Application.
3.0 The specifications for Firm Transmission Services
as requested by the Transmission Customer and
accepted by the MAPP Center are as follows:
i. Transmission Customer:
___________________________________
Term of Transaction:
___________________________________
Start Hour and Date:
___________________________________
Termination Hour and Date:
___________________________________
ii. Nature of Transmission Service requested:
FCTS . FETS . HNF .
HNF .
SEASONAL __ MONTHLY __ WEEKLY __ DAILY __ HOURLY __
iii. Delivering Member:
________________________________________
iv. Receiving Member:
__________________________________________
v. Maximum amount of capacity and/or energy to be
transmitted (Reserved Capacity): __________
___________________________________________
vi. Designation of party subject to reciprocal
service obligation:
____________________________________________
4.0 Any notice or request made to or by either
Party regarding this Service Application shall be made to
the representative of the other Party as indicated below.
MAPP Center:
Transaction Coordinator
Mid-Continent Area Power Pool
430 Century Plaza
1111 Third Avenue South
Minneapolis, MN 55404
Transmission Customer:
__________________________________________________
__________________________________________________
__________________________________________________
__________________________________________________
5.0 This Application for Transmission Service is
submitted by:
NAME: __________________________________________
TITLE: __________________________________________
MEMBER: __________________________________________
DATE: __________________________________________
6.0 This Application for Transmission Service is:
Authorized by:____________________ Denied: ____________
NAME: _______________________________________________
TITLE: _______________________________________________
DATE: ______________________ TIME: _______________
Coordination Transmission Service Schedule
Appendix C
PROCEDURE FOR CALCULATION AND ADMINISTRATION OF THE TRANSMISSION
SERVICE CHARGE
1.1. Introduction
1.1 The purpose of this Appendix C is to provide written
documentation of the transmission service charge process as
implemented by the Mid-Continent Area Power Pool. Definitions of
the models and parameters used in the calculations are presented,
as well as a description of the calculations performed by the
"Megawatt-Mile Software". Details of the rate calculations,
adjustments to this rate, and its application to MAPP
transactions are discussed. Procedures for administering the
program by the Contractor are included.
1.2 The megawatt-mile technique, adopted by MAPP, is a
distance based method of calculating payment for transmission use
considering that power will, to some extent, flow over all
available paths from the generating source to the load. The flow
over each and every facility due to a transaction is calculated.
This flow is then multiplied by the monthly MAPP Transmission
System average cost per megawatt-mile (or average cost per MVA
for transformers), by voltage class, of owning such a facility.
The sum of all the individual use charges is the total
transmission service charge for the transaction.
2. Definitions, Models and Parameters Used
2.1 Composition of the Network Model - The network
models used in the transmission service charge calculations are
derived from loadflow models of the MAPP system assembled
annually by MAPP. Prior to May 1 each year, data are submitted,
models assembled, modifications required for using the models in
the transmission service charge calculations are made, and the
rate tables for the upcoming Summer and Winter seasons are
computed.
2.2.2 Seasonal Models - The seasonal models used in the
calculations are the Summer Peak Load Operating model and the
Winter Peak Load Operating model, as modified for use in the
transmission service charge computations. Modifications to the
models include some AREA renumbering and required changes to
phase shifter and DC line representation as outlined in sections
2.1.5 and 2.1.6, respectively. Estimated rates for future Summer
and Winter seasons may be calculated using the appropriate
planning model from the annual series of MAPP models.
2.1.2 Transmission Elements Included in the Transmission
Service Charge Calculations - All transmission lines and terminal
equipment of 115 kV and higher voltage modeled by a Member may be
included in the transmission service charge calculations. All
transformers modeled by a Member with a secondary voltage of 115
kV or higher may be included. All other transmission elements
are excluded, except as provided in section 2.1.4. Network
branches below the 115 kV level that are present in the loadflow
model participate in the determination of power flow on the
network, but are excluded from participation in determination of
the transmission service charge rates since there are no rents
paid for the use of these branches, except as provided in section
2.1.4.
2.1.3 Transmission Facility Rating Assumptions - The
transmission service charge calculations are based on the normal
continuous MVA ratings of transmission facilities for the
applicable season. The ratings used are the most limiting rating
reported in the then-current MAPP operating model. For
transmission lines, these are normally the lesser of the
conductor thermal rating and the rating of equipment such as
switches, wavetraps, etc. For transformers, these are normally
the continuous rating of the transformers. The corresponding
ratings from the applicable MAPP planning model are used in
estimating transmission service charges for future years.
Members may determine the transmission facility ratings described
herein based on their individual system design standards.
2.1.4 Criteria For Inclusion of 69 kV Facilities - A
Member may elect to include investments in and flows through 69
kV facilities for the purpose of determining MAPP transmission
service charges, subject to the following criteria:
(a) Only networked facilities may be included (i.e.,
include only those facilities that are normally
operated in a manner subjecting them to changes in
flows due to transactions by other Members).
(b) Transformers between the 69 kV system and the higher
voltage transmission system may be included.
Substations associated with step-down to voltages
below 69 kV are to be excluded.
(c) The Member must demonstrate that adding the 69 kV
facilities identified per items (a) and (b) above
will change at least one entry of the megawatt-mile
rate matrix by at least 5%.
(d) The Member must supply modeling information for its
69 kV system to the appropriate MAPP committee(s)
for inclusion in MAPP powerflow models. The 69 kV
system model should be simplified as much as
possible to minimize the number of buses and
branches added. For example, radial lines and two-
branch buses (except for those associated with
transformers between the 69 kV and higher voltage
systems) should be eliminated.
Members electing to include 69 kV facilities must submit
requests with supporting information to the Regional Transmission
Committee for review.
2.1.5 Modeling Phase Shifters - Phase shifting
transformers within MAPP are represented as an open circuit.
Power flow on the phase shifting transformer prior to opening the
circuit is represented by appropriate placement of equivalent
loads and/or generation on buses at both ends of the open
circuit, in order not to change the operating point of the
remaining network. Where owners of such facilities indicate the
need to schedule transactions across the phase shifter,
appropriate modeling is provided (i.e., dummy loads or
generation) to accommodate such transactions.
2.1.6 Modeling DC Lines - Appropriate modeling of DC lines
shall be provided by the owners of such facilities. DC lines are
typically represented as an open circuit, with generation on the
rectifier end reduced an amount equivalent to the power flow on
the DC line or offset by a load equivalent to the flow into the
DC line. A dummy generator is placed at the inverter end,
operating at a level equivalent to the flow on the line. The
rating of the dummy generator should be equivalent to the rating
of the DC line or the rating of the generator at the rectifier
end reduced for DC line losses. This inverter end dummy
generator is used in the allocation process instead of the
rectifier end generation. A similar dummy rectifier end load and
generator arrangement can be used to represent transmission
service through a DC system.
2.2 Calculating the Cost Parameters - Annual
Transmission System average costs are developed for each voltage
class of transmission lines and transformers of 115 kV and
higher. Transmission lines and transformers of 69 kV may be
included subject to the provisions of section 2.1.4.
2.2.1 Transmission Lines and Terminals - The electric
plant in service (investment) per megawatt-mile for each voltage
class of transmission lines, including terminals, is calculated
by summing the individual monthly costs of all Members owning
such facilities. This sum for each voltage class is then
divided by the total megawatt-miles of transmission at that
voltage class in the Transmission System. The annual
Transmission System electric plant in service per megawatt-mile
is developed using actual data for the prior year for all Members
owning transmission lines.
2.2.2 Transformers - The electric plant in service
(investment) per MVA for each voltage class of transformers is
calculated by summing the individual monthly costs of all Members
owning transformers. This sum for each voltage class is then
divided by the total MVA of transformers at that voltage class in
the Transmission System. The electric plant in service per MVA is
developed using actual data for the prior year for all Members
owning transmission transformers.
2.2.3 Fixed Charge Rate - The annual cost of each Member
is the product of that Member's fixed charge rate and the related
electric plant in service. The rate used for fixed charges
includes the following components:
(a) Operation and maintenance expenses;
(b) Depreciation expenses;
(c) Return and composite income taxes (or interest and
margins);
(d) Administrative and general expenses (includes
property insurance);
(e) General plant;
(f) Cash working capital;
(g) An adjustment to the fixed charge rate to reflect
the utilities accumulated provision for deferred
income taxes;
(h) Income taxes; and
(i) Taxes other than income taxes (i.e., Minnesota
property taxes, Wisconsin taxes on gross receipts).
Such annual cost will be converted to monthly amounts when
determining the monthly rates. Procedures for calculation and
collection of data associated with the fixed charge rates are
determined by the Regional Transmission Committee.
2.3 Transmission Facility Ownership Representation -
Members are required to update their transmission facility
ownership representation annually in conjunction with the MAPP
Model data submittal.
2.3.1 Transmission Lines and Terminals - Each transmission
line which is to participate in the calculation of the
transmission service charge has a record in a branch ownership
file. This file is required by the Megawatt-Mile Software in
order to calculate and allocate payments for use of every branch.
The ownership file contains two types of records for every
transmission line: one record contains the total line mileage;
the other reflects the percent of each Member's "ownership"
(i.e., for collecting rents) of the line. If ownership
percentages for a given branch are not provided, the ownership
will be divided equally to the AREA (Members are represented by
AREAs in the model) numbers in which the buses on either end of
the branch reside in the loadflow model. If a transmission line
does not have a mileage entry in the ownership file, it will not
participate in the rate calculation since the line mileage is not
known.
2.3.2 Transformers - The transformer ownership file is
similar to the branch ownership file, except that there is no
mileage record associated with the transformer. The records for
transformers serve the same function as for transmission lines.
If ownership percentages for a given branch are not provided, the
ownership will be divided equally to the AREA numbers in which
the buses on either end of the branch reside in the loadflow
model.
2.3.3 Generation and Load - The ownership representation
for generation and load is maintained in generation and load
ownership files. These files are required by the Megawatt-Mile
Software in order to model transactions. For each bus that has
either generation or load, a record in the ownership file
allocates to the AREAs their percent ownership. If no record is
entered for a load bus or generator bus, the ownership is
allocated to the AREA in which the bus resides in the loadflow
model.
2.3.4 Representation of Utilities Outside of MAPP -
Utilities outside of MAPP are to be represented in the model as
needed to result in accurate transmission service charge and loss
repayment calculations. Minimum representation for a non-Member
involved in a sale to a Member is ownership of a generator bus in
the non-Member's system or a generator bus judged to be
electrically close to the non-Member's system. Similarly,
minimum representation for a non-Member involved in a purchase
from a Member is ownership of a load bus in the non-Member's
system or a load bus judged to be electrically close to the non-
Member's system.
3. Calculating the Rate for Transmission Service
3.1 History of the Technique and Computer Programs - The
megawatt-mile method of calculating transmission service charge
utilizes two computer programs known as the Megawatt-Mile
Software to accomplish the necessary computations. A
commercially available power systems analysis package, PTI's
PSS/E, performs the necessary network flow calculations through
activity MWMI, which was written specifically for this
application. MWMI also keeps track of cost information and
branch, load, and generation ownership. The second program is a
stand alone program called MWMIRPT which reads the output of MWMI
and provides the distribution of payments for transmission
service, given a set of power transactions.
3.2 Detailed Explanation of the Rate Calculation - The
megawatt-mile approach is a distance based method of calculating
payment for transmission service considering that power will, to
some extent, flow over all available paths from the generating
source to the load. The distribution of flows over each and
every facility due to transactions between each combination of
potential parties is calculated. This flow on applicable
facilities, as defined in section 2.1.2, is then multiplied by
the monthly MAPP Transmission System average cost per
megawatt-mile (or average cost per MVA for transformers) of
owning the facility. The sum of all the individual charges is
the total transmission service charge for the transaction.
3.3 The "Megawatt-Mile" Method
(a) The megawatt-mile technique starts from a
solved loadflow model of the system. Transactions are modeled
between utilities by changing generation on the sending, or
selling end, and changing the load on the receiving, or buyer
end. The amount by which the generation and load are changed is
small. A linear analysis technique is then used to determine the
distribution of flows on each branch in the network. This value
is used in subsequent calculations.
(b) Individual branch charges are calculated
given the flow on the branch due to the transaction, the line
mileage (for transmission lines), and the facility costs as
described in section 2.2. The individual branch charges for
transmission lines are determined as follows:
Transmission Line Charges = P * L * C [$/MW-month
where
P = calculated flow due to the transaction
L = line length in miles
C = cost per megawatt-mile per month
(c) Similarly, the individual branch charges for
transformers are determined as follows:
Transformer Charge = P * C [$/MW-month]
where
P = calculated flow due to the transaction
C = cost per MVA per month
(d) The sum of all the individual branch charges
for each utility is calculated in units $/MW-month. These
charges can be summarized, by utility, for all combinations of
buyers and sellers.
(e) The Rate, before adjustments or discounts,
represents Transmission System average embedded costs. The
transmission service Rate paid for actual transactions is the
total transmission service charge per MW per month for a given
transaction. The Rate, in $/MW-month, is defined as the sum of
the branch charges:
Rate = Sum Branch Charges [$/MW-month]
3.3.1 Adjustments and Discount Factors Applied to the
Rate - Adjustments and discount factors are applied to this basic
rate. The adjustment for effective operating capacity will
increase or decrease the rate as reserve transmission capacity is
either used up or expanded. The "Effective Operating Capacity
Ratio" (EOC), is the adjustment which recognizes total pool
transmission capacity beyond that required to serve load, and
available to accommodate transactions. The megawatt-miles
required to serve the total load of all the Members from all the
on-line generation of the Members is calculated, as well as the
Members' total megawatt-miles of transmission capacity. The
transmission reserve is defined as the difference between the
Members' total megawatt-miles of transmission capacity and the
megawatt-miles required to serve load. The EOC can then be
defined as the total megawatt-miles of transmission capacity
divided by the total megawatt-miles of transmission reserve:
The EOC is calculated for each Season.
EOC = Total megawatt-miles transmission capacity/Total
megawatt-miles transmission reserve
The EOC is calculated for each Season.
3.4 Application to Service Charge Rates - Transmission
service charge rates using this MW-Mile methodology shall be set
forth in the rate schedules established for each respective type
of service and shall be incorporated in the MAPP Regional
Transmission Service Schedule.
3.5 Generator and Load Dispatch - Capacity transactions under
Service Schedules A and B are simulated as coming from the
seller's generator(s) as designated in the contract provided to
the Regional Reliability Committee. Capacity transactions under
Service Schedules J and K are simulated as coming from all of a
seller's on-line generation in proportion to unit MVA base
(nameplate rating). In both cases the transaction is simulated
as delivered to all of the buyer's load.
Energy transactions are simulated as coming from all of the
seller's on-line generation in proportion to the unit MVA base
(nameplate rating) and delivered to all of the buyer's load.
In all cases the capability to model transactions as sold from
a particular generator bus or set of generator buses is
available.
Each load on a bus at which the buyer represents load
ownership picks up a proportionate amount of the transaction.
The portion of the transaction picked up at any given bus is the
amount of load owned by the buyer on that bus divided by the
total load owned by the buyer.
Alternative modeling of generator and load dispatch and phase
shifter representation may be utilized if a Member can
demonstrate that the alternative modeling more accurately
reflects the actual performance of the transmission system.
Requests to utilize alternative modeling are reviewed by the
Regional Transmission Committee.
EXHIBIT D
INITIAL REGIONAL TRANSMISSION COMMITTEE SUBCOMMITTEES
The initial subcommittees of the Regional Transmission
Committee, and the responsibilities and procedures of those
subcommittees, shall be as set forth below. The subcommittees
shall have such additional responsibilities as may be assigned by
the Regional Transmission Committee. Subject to the requirements
of the Restated Agreement and any procedures for the governance
of any of its subcommittees as may adopted by the Regional
Transmission Committee, each subcommittee may adopt such further
procedures governing its operations as it may deem appropriate.
Transmission Planning Subcommittee
Transmission Planning Subcommittee Responsibilities:
1. Develop and recommend for approval by the Regional
Transmission Committee the biennial Plan required by Section
8.6.4 of the Restated Agreement.
2. Develop procedures and policies for updating and
modifying the Plan between biennial planning cycles, and approve
modifications to the Plan.
3. Develop and approve procedures, standards and
requirements for the communication of the future transmission
requirements of Members and non-Members to the appropriate
Transmission Owning Members, and for the inclusion of bona fide
requirements in the transmission plans of the Transmission Owning
Members, and in the Plan.
4 Establish procedures, standards and requirements for the
coordination of the transmission plans of Transmission Owning
Members with the transmission plans of neighboring transmission
systems, including establishing subregional working groups for
resolution of subregional transmission planning issues on a
cooperative basis.
5. Establish procedures, standards and requirements for
making available Members' transmission plans and the information
on which the plans are based, as required by Section 8.6.2 of the
Restated Agreement.
6. Establish procedures, standards and requirements for
public input, including input from Regulatory Participants, in
the development of the Plan.
7. In the absence of agreement among the affected parties,
in accordance with the requirements of Section 8.7 of the
Restated Agreement determine the appropriate Member or Members to
construct and own, or to receive Rights Equivalent to Ownership
in, transmission facilities.
8. Coordinate with the subcommittees of the Regional
Reliability Committee on reliability issues, standards,
requirements, procedures, models and studies, and conduct or
request a subcommittee of the Regional Reliability Committee to
conduct such studies as are appropriate to carry out the
responsibilities of the Transmission Planning Subcommittee.
9. Assume responsibility for submission of FERC Form 715
information for MAPP.
Transmission Schedules and Compensation Subcommittee
Transmission Schedules and Compensation Subcommittee
Responsibilities:
1. Review and recommend to the Regional Transmission
Committee changes in the compensation, terms and conditions,
waiver, and other provisions of Service Schedule F - Transmission
Service for Coordination Transactions.
2. Establish, and modify from time to time, consistent
requirements for flexible point-to-point service and network
service provided by Members in the MAPP Region.
3. Establish procedures, standards and requirements to
resolve equitably third-party impact and loop flow issues
associated with long-term uses of transmission facilities in the
MAPP Region.
4. Endeavor to establish, and if possible establish, tariffs
for the MAPP Region or its subregions for long-term transmission
service.
5. Establish procedures, standards and requirements for cost
allocation and compensation in connection with the construction
of transmission facilities as required by Section 8.7 of the
Restated Agreement.
6. Develop and recommend to the Regional Transmission
Committee compensation formulas and methodologies.
7. Establish procedures, standards and requirements for
compensation of transmission losses.
8. Pursuant to line-loading relief standards and
requirements established by the Regional Reliability Committee or
its subcommittees, and subject to review, approval and
modification by the Regional Reliability Committee or its
subcommittees as necessary to maintain reliability, establish
procedures, standards and requirements for implementing
line-loading relief, including appropriate compensation measures.
9. Establish procedures, standards and requirements for
requests for transmission service by Members, and for responses
to such requests, to the extent such procedures, standards and
requirements are not set forth in Service Schedule F -
Transmission Service for Coordination Transactions, each Members'
transmission tariffs, or applicable MAPP tariffs for long-term
transmission service.
10. Upon the request of a Member, determine whether two or
more Members should provide long-term transmission service
pursuant to a joint tariff, such determination to be based on
applicable comparability and other standards for transmission
service and the integrated nature of such Members' transmission
facilities.
Operations and Compliance Subcommittee
Operations and Compliance Subcommittee Responsibilities:
1. Establish procedures, standards and requirements for
coordinating the operation and development of transmission
facilities in the MAPP Region with the operation and development
of transmission facilities in or subject to adjoining systems,
pools, regional transmission groups, or Reliability Councils.
2. Monitor and enforce compliance with transmission service,
use, and compensation requirements established in or pursuant to
the Restated Agreement, including compliance with all
transmission tariffs, Service Schedules, principles and
agreements relating to transmission service within the MAPP
Region.
3. Monitor and enforce compliance with the transmission
planning obligations established in Section 8.6.1. of the
Restated Agreement.
4. Conduct the review of transmission tariffs required by
Section 8.3.3 of the Restated Agreement, including review and
approval or modification of proposed rates, other compensation,
or terms and conditions for transmission service under tariffs on
file with MAPP.
5. Hear and decide, or refer to dispute resolution, disputes
between Members as to the availability or comparability of
transmission service or the use of transmission facilities, or
the rates, other compensation, or terms and conditions, for
transmission service or the use of transmission facilities.
6. Hear and decide, or refer to dispute resolution, disputes
between Members as to the applicability of waivers of charges and
the non-discriminatory application of such waivers pursuant to
Service Schedule F - Transmission Service for Coordination
Transactions.
EXHIBIT E
INITIAL POWER AND ENERGY MARKET SCHEDULES
General Terms and Conditions
Section 1. General Description
1.1 The initial Service Schedules described herein are
intended to facilitate the exchange of capacity and energy in the
MAPP Power and Energy Market. The Service Schedules employ
market-based rates for interchange of capacity and energy and are
available to all Market Participants. These Service Schedules
may be revised and new Service Schedules established as needs
arise, in accordance with the Restated Agreement.
Section 2. Accreditation
2.1 Accreditation of capacity transactions shall be
determined and assigned under procedures established by the
Regional Reliability Committee. Initially, the same procedures
shall be used as in effect immediately prior to the Effective
Date.
Section 3. Scheduling
3.1 Interchange of capacity and energy between the Market
Participants shall be in accordance with any applicable
reliability standards and procedures established by the Regional
Reliability Committee. These standards and procedures shall meet
or exceed NERC criteria. Exchange of energy between Market
Participants shall conform to the MAPP Operating Requirements in
order to satisfy the obligations of those participants which
operate Control Areas.
Section 4. Line Loading Relief
4.1 Delivery of energy between Market Participants shall be
subject to the MAPP Line Loading Relief Procedures when such
procedures are necessary to alleviate overloads or potential
overloads of transmission facilities.
Section 5. Transmission Service and Loss Repayment
5.1 Market Participants that schedule capacity or energy
under any of the Service Schedules in this Exhibit E shall make
appropriate arrangements for the provision of any necessary
transmission service with the entities providing such service,
along with appropriate arrangements for compensation of losses.
Section 6. Billing and Payment
6.1 For billing purposes, the amount of energy delivered
under these Service Schedules by a supplying Market Participant
to a purchasing Market Participant, or delivered to the
purchasing Market Participant through an intervening Transmission
Provider during any period, shall be the amount scheduled for
delivery at a point or points where the system of the supplying
Market Participant connects with the system of the purchasing
Market Participant or with the Transmission System (as defined in
Schedule F - Transmission Service for Coordination Transactions).
6.2 Billing for any transaction involving generation or
transmission capacity under the Service Schedules, including any
transmission charges pertaining to a transaction, shall be based
upon the amount of such capacity committed in advance for
delivery at a point or points where the system of the supplying
Market Participant connects with either the system of the
purchasing Market Participant or with the Transmission System (as
defined in Schedule F - Transmission Service for Coordination
Transactions).
6.3 All bills for services supplied in connection with the
Power and Energy Market shall be rendered monthly by the
supplying Market Participant or the Contractor to the purchasing
Market Participant after the end of the period to which such
bills are applicable. Unless otherwise agreed upon by the
appropriate Committee, such period shall be from 12:01 a.m. of
the first day of the month to 12:01 a.m. of the first day of the
succeeding month. Bills shall be due and payable within fifteen
days from the date such bills are rendered. Payment shall be
made when due and without deduction, and may be effected by
electronic funds transfer. Bills shall be deemed rendered on the
postmark date if deposited in first class mail with postage
prepaid and shall be deemed rendered upon receipt if another
means of delivery is used. If the due date of any bill falls on
a Saturday, Sunday or holiday observed by either Market
Participant, the bill shall be due and payable on the next
following working day of both Market Participants. Interest
shall accrue and be compounded daily on any unpaid amount, from
the date due until the date upon which payment is made, using the
lowest daily prime rates published in the money rates section of
the Wall Street Journal for the applicable time period. Such
daily interest shall be computed on the basis of actual days and
a 365 day calendar year.
6.4 In the event a Market Participant desires to dispute
all or any part of the charges submitted by another Market
Participant, it shall nevertheless pay the full amount of the
charges when due and give notification in writing within sixty
(60) days from the date of the statement stating the grounds on
which the charges are disputed and the amount in dispute. The
complaining Market Participant shall not be entitled to any
adjustment on account of any disputed charges that are not
brought to the attention of the Market Participant rendering such
charges within the time and in the manner herein specified. If
settlement of the dispute results in a refund to the payer,
interest shall accrue and be compounded daily on the amount to be
refunded from the date of payment until the date upon which
refund is made, using the lowest daily prime rates published in
the money rates section of the Wall Street Journal for the
applicable time period. Such daily interest shall be computed on
the basis of a 365 day year. If the Market Participants are
unable to reach a mutually satisfactory agreement, the dispute
resolution procedures of Article 11 of the Restated Agreement
shall apply.
Schedule A: Participation Power Interchange Service
Section 1. Service to be Provided
1.1 This Service Schedule provides for the sale of
Participation Power by a Market Participant to any other Market
Participant from a specific generating unit or units.
Participation Power shall mean power and energy sold from a
specific generating unit or units on a continuously available
basis except when such unit or units are temporarily out of
service for maintenance, during which time the delivery of energy
from other sources shall be at the seller's option.
Section 2 Conditions of Service
2.1 This Service Schedule shall be available for the sale
of Participation Power for a period of six months or more.
2.3 Participation Power shall be supplied through
transmission facilities that have adequate capacity for
transmitting such power and energy, in accordance with any
applicable reliability standards and procedures established by
the Regional Reliability Committee.
Section 3. Schedule of Rates
3.1 The rates and term for Participation Power shall be
negotiated by the Market participants arranging the transaction
and confirmed in writing by them. The rate shall be
market-based.
3.2 In the event that service cannot be supplied on the
effective date of an agreement to sell Participation Power
because of a delayed in-service date of the associated generating
facility or facilities, the demand charge to be paid by the
purchasing Market participant shall not be effective until the
date such facility or facilities are placed in commercial
operation.
Schedule J: Firm Power Interchange Service
Section 1. Service to be Provided
1.1 This Service Schedule provides for the sale of Firm
Power by any Market Participant to any other Market Participant.
Section 2. Conditions of Service
2.1 Firm Power shall be supplied through transmission
facilities which have adequate capacity for transmitting such
power and energy, in accordance with any applicable reliability
standards and procedures established by the Regional Reliability
Committee.
2.2 This Service Schedule shall be available for the sale
of Firm Power for a period of seven days or longer.
2.3 Energy available under this Service Schedule may be
supplied in one of the following forms:
a. Energy is available at all times during the period
covered by the commitment; or
b. If energy is being supplied as peaking energy, or for
other purposes which anticipate a capacity-factor
limitation, the supplying Market Participant and the
purchasing Market Participant may mutually agree on
minimum or maximum limits on the energy to be delivered
during the period covered by the commitment.
Section 3. Schedule of Rates
3.1 The rates and term for Firm Power shall be negotiated
by the Market Participants arranging the transaction and
confirmed in writing by them. The rates shall be market-based.
Schedule K: System Participation Power Interchange Service
Section 1. Service to be Provided
1.1 This Service Schedule provides for the sale of System
Participation Power by any Market Participant to any other Market
Participant for a specified period for the purpose of obtaining a
supply of power that can be depended upon with the same degree of
assurance as that expected from the Market Participant's own
generating capacity, but which does not include reserve capacity.
Section 2. Conditions of Service
2.1 This Service Schedule shall be available for the sale
of System Participation Power for periods of seven or more
consecutive days.
2.2 System Participation Power is intended to be available
at all times during the period covered by the commitment;
provided, however, that if conditions arise during the period
covered by the commitment that in the sole judgment of the
supplying Market Participant would otherwise require curtailment
of firm power sales or service to its own customers, the
supplying Market Participant has the right to notify and require
the receiving Market Participant to reduce its take of such
energy to any amount specified and for any portion of the term of
the commitment. The receiving Market Participant shall promptly
comply with such requirements of the supplying Market
Participant.
2.3 System Participation Power shall be supplied through
transmission facilities that have adequate capacity for
transmitting such power and energy, in accordance with any
applicable reliability standards and procedures established by
the Regional Reliability Committee.
Section 3. Schedule of Rates
3.1 The rates and terms for System Participation Power
shall be negotiated by the Market Participants arranging the
transaction and confirmed in writing by them. The rate shall be
market-based.
Schedule L: Interruptible Load Replacement Energy Service
Section 1. Services to be Provided
1.1 This Service Schedule provides for the supply of
Interruptible Load Replacement Energy by any Market Participant
to any other Market Participant when it is economical and
practical to do so under the conditions set forth hereinafter.
Section 2. Conditions of Service
2.1 Interruptible Load Replacement Energy may be used by
Market Participants to serve interruptible load when that load
would otherwise be interrupted.
a. In order to be eligible for Interruptible Load
Replacement Energy Service, the purchasing Market
Participant must report in advance monthly quantities
of Certified Interruptible Demand, as specified in the
MAPP Engineering Handbook as in effect on the Effective
Date and as the specification therefor may thereafter
be revised by the MAPP Reliability Council or the
Regional Reliability Committee.
b. The rate of delivery of energy supplied under this
Service Schedule in any hour shall not exceed the
purchasing Market Participant's Certified Interruptible
Demand.
c. Deliveries of energy may be received under this
Service Schedule only when a Market Participant's
maximum System Demand would otherwise be greater than
the Market Participant's forecast System Demand for the
current season, and shall not exceed that required to
reduce the System Demand to the forecast System Demand.
d. Interruptible Load Replacement Energy Service
shall be supplied through transmission facilities which
have adequate capacity for transmitting such power and
energy, in accordance with any applicable reliability
standards and procedures established by the Regional
Reliability Committee.
Section 3. Schedule of Rates
3.1 The rates and term for Interruptible Load Replacement
Energy Service shall be negotiated by the Market Participants
arranging the transaction and confirmed in writing by them. The
rate shall be market-based.
Schedule M: General Purpose Energy Service
Section 1. Service to be Provided
1.1 This Service Schedule provides for the supply of
General Purpose Energy by any Market Participant to any other
Market Participant to enhance economic system operation.
Section 2. Conditions of Service
2.1 To the extent practicable, General Purpose Energy shall
be used to improve the overall economy of the systems involved in
the transactions.
2.2 General Purpose Energy shall be supplied through
transmission facilities which have adequate capacity for
transmitting such energy, in accordance with any applicable
reliability standards and procedures established by the Regional
Reliability Committee.
Section 3. Schedule of Rates
3.1 The rate and term for General Purpose Energy shall be
negotiated by the Market Participants arranging the transaction
and confirmed in writing by them. The rate shall be
market-based.
3.2 Transactions under this Service Schedule may include
the purchase or sale of energy for use for operational control,
in order to improve electric system control and reliability.
Rates for such energy may be (a) on the basis of the incremental
cost of the supplying Market Participant, or the decremental
costs of the purchasing Market Participant, as agreed to by the
parties to the transaction, or (b) such other basis as agreed to
by the parties to the transaction.
3.3 Transactions under this Service Schedule may include
the purchase or sale of energy for the purpose of lowering the
cost of energy of the supplying Market Participant or the
purchasing Market Participant. Rates for such energy may be on
the basis of a split of the difference between the incremental
cost of the supplying Market Participant and the decremental cost
of the purchasing Market Participant as agreed upon by the
parties to the transaction, or such other basis as may be agreed
upon by such parties.
EXHIBIT F
MAP OF THE MAPP REGION
EX-10.3
MAPP CENTER AGREEMENT
THIS AGREEMENT ("Agreement") is dated and executed on December 2,
1996, (the "Effective Date") between MAPPCOR, a Minnesota nonprofit
corporation, and Interstate Power Company ("Member"), a Delaware
Corporation, under the laws of the State of Minnesota.
W I T N E S S E T H:
WHEREAS, Member is a party to the Restated Agreement and is a
member of MAPP;
WHEREAS, MAPPCOR will provide services to Member as described in
this Agreement; and
WHEREAS, the Restated Agreement requires each member of MAPP to
enter into an agreement with MAPPCOR for the services to be provided by
MAPPCOR under the Restated Agreement; and
WHEREAS, Member desires to receive the services to be provided by
MAPPCOR;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE ONE
DEFINITIONS
Section 1.01. Definitions. Capitalized terms used in this
Agreement, but not defined herein, shall have the meaning assigned to
such terms in the Restated Agreement.
ARTICLE TWO
MAPP CENTER
Section 2.01. MAPP Center. MAPPCOR shall maintain and operate
the MAPP Center, which shall furnish the facilities, equipment,
personnel and services appropriate to carrying out the Restated
Agreement, including assisting the MAPP committees, councils, task
forces, subcommittees, working groups, and other persons or entities to
satisfy the obligations and responsibilities of the Members of MAPP
under the Restated Agreement, and providing educational programs,
material and information to the public, MAPP Members, government
regulatory bodies, NERC and others.
ARTICLE THREE
LIMITATION OF LIABILITY; RELEASE
Section 3.01. Limitation of Liability. Member shall retain sole
responsibility for the operation of its system and the utilization of
information provided by MAPPCOR. MAPPCOR makes no warranties, express
or implied, or representations as to the accuracy of the information
supplied by it, MAPPCOR shall not be liable to Member whether in
contract, tort, warranty, or otherwise, for any claims by Member that
result in any manner whatsoever from the operation of the MAPP Center,
or the information provided, or the services rendered hereunder, except
claims resulting from willful acts or omissions of MAPPCOR.
Section 3.02. Schedule F, Release. In consideration of the
provision by MAPPCOR of the services specified in Schedule F of the
Restated Agreement, Member as a Transmission Provider or a Transmission
Customer, as the case may be, to the maximum extent permitted by law,
releases and discharges, and shall indemnify and hold harmless, MAPPCOR
from any and all liability for any and all damage or other claim Member
may have, or that may be asserted on behalf or in the name of Member,
to the extent any such claim arises out of or relates to the
administration of this Schedule F, or otherwise relates to transmission
service provided or sought under such Schedule, including but not
limited to (i) unintentional, consequential, direct, compensatory,
punitive, special, indirect, or incidental damages, (ii) damages
arising from loss of or damage to property and loss of life or personal
injury, or (iii) any claims arising from any loss of interchange or
coordination sales or revenues, loss of profits, costs or substitute
power or transmission service, costs or additional operating expenses,
or suits by third parties; provided, however, that MAPPCOR shall not be
released, discharged, indemnified or held harmless with respect to any
liability for damages or other claims arising from any action by
MAPPCOR that is unlawful, undertaken in bad faith, grossly negligent or
the product of willful misconduct.
ARTICLE FOUR
FINANCIAL
Section 4.01. Billing for Costs. MAPPCOR shall bill Member for
dues, and costs as allocated and assigned by the Executive committee of
MAPP in accordance with and at the times provided in the Restated
Agreement.
Section 4.02. Payment. Member shall pay each bill submitted by
MAPPCOR within the time provided in the Restated Agreement; or, if no
time is so provided, within 30 days of the date of the bill.
Section 4.03. Accounting. MAPPCOR will maintain its books and
records in accordance with generally accepted accounting practices and
procedures. Member, at its sole expense, may audit the books and
records of MAPPCOR relevant to the transactions contemplated by this
Agreement, during normal business hours of MAPPCOR.
Section 4.04. Credit. For the purpose of determining the ability
of Member to meet its obligations under this Agreement, MAPPCOR may
from time to time require reasonable credit review procedures in
accordance with standard commercial practices, including, without
limitation, audited or unaudited financial statements. Member
authorizes MAPPCOR to conduct such credit investigation of Member as
MAPPCOR, in its sole discretion, deems necessary and appropriate.
ARTICLE FIVE
SUCCESSORS; ASSIGNS
Section 5.01. Successors. This Agreement shall be binding upon
the successors of Member, and upon the surviving entity in any merger,
consolidation, or acquisition involving Member in which Member is not
a surviving entity.
Section 5.02. Assignment. Except for the assignment or pledge of
an interest in this Agreement to the United States acting through the
Rural Utilities Service, Member shall not assign this Agreement without
the consent, in writing, of the board of directors of MAPPCOR, which
consent shall only be withheld if the assignee is not a member of MAPP,
or upon a determination that there is a substantial likelihood that the
assignee will not fulfill the obligations of Member under this
Agreement, or that the Executive Committee of MAPP has not consented to
the assignment of Member's interest in the Restated Agreement.
ARTICLE SIX
TERM
Section 6.01. Term. The term of this Agreement shall commence on
the Effective Date and shall continue until the termination of Member's
membership in MAPP, subject, however, to Member continuing financial
obligations upon suspension, withdrawal or termination, or the
successor to Member that ceases to be a Member of MAPP as a result of
a merger or consolidation pursuant to Section 5.3.2 of the Restated
Agreement.
ARTICLE SEVEN
MEMBER'S REPRESENTATIONS
Section 7.01. Representations. Member represents and warrants
that the following are true in all respects:
(a) Member is an entity described in the preamble of this
Agreement, duly organized, validly existing, and in good
standing under the laws specified in the preamble.
(b) The execution, delivery and performance of this Agreement by
Member has been duly authorized by all necessary governance
action and is enforceable in accordance with its terms.
(c) Such execution, delivery and performance does not, and the
transactions contemplated will not (i) result in a material
breach or constitute a material default under any agreement
or instrument to which Member is a party or by which it is
bound, or (ii) require the consent or approval of any other
person or governmental agency or authority.
ARTICLE EIGHT
NEGOTIATION; ARBITRATION
Section 8.01. Negotiation. The parties shall attempt in good
faith to resolve any controversy or claim arising out of or relating to
this Agreement promptly by negotiation between representatives
appointed by the parties who have authority to settle the controversy.
The disputing party shall give the other party written notice of the
dispute. Within 20 days after receipt of said notice, the receiving
party shall submit to the other a written response. The notice and
response shall include (a) a statement of each party's position and a
summary of the evidence and arguments supporting its position, and (b)
the name and title of the person who will represent that party.
The representatives shall meet at a mutually acceptable time and
place within 30 days of the date of the disputing party's notice and
thereafter as often as they reasonably deem necessary to exchange
relevant information and to attempt to resolve the dispute.
Section 8.02. Arbitration. If the dispute has not been resolved
within 60 days of the disputing party's notice, or if the party
receiving the notice will not meet within 30 days, any remaining
unresolved controversy or claim arising out of or relating to this
Agreement shall be settled by arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association by
three arbitrators, and judgment upon the award rendered by the
arbitrators may be entered in any court having jurisdiction. The place
of arbitration shall be Hennepin County, Minnesota. The arbitrators
are not empowered to award damages in excess of actual damages,
including punitive damages, nor are the arbitrators empowered to modify
or alter any express condition or provision of this Agreement or to
render an award that by its terms has the effect of altering or
modifying any express condition or provision of this Agreement. The
provisions of this Section 8.02 are not applicable to a party that does
not have legal authority to engage in binding arbitration.
ARTICLE NINE
GENERAL PROVISIONS
Section 9.01. Choice of Law. Subject to the provisions of
Sections 13.15 (compliance with Applicable Laws) and 13.16 (Effect of
Canadian Laws) and to the extent permitted by law, the laws of the
State of Minnesota, with the exception of its laws governing choice of
law, or United States federal law or Canadian Laws as applicable, shall
control the obligations established by this Agreement and the
performance and enforcement thereof.
Section 9.02. Incorporation by Reference. The provisions of
Sections 13.15 (Compliance with Applicable Laws) and 13.16 (Effect of
Canadian Laws) are incorporated herein by reference and made a part
hereof.
Section 9.03. Waiver. The waiver of any of the rights or
remedies arising pursuant to this Agreement on any one occasion by any
party shall not constitute a waiver of any rights or remedies in
respect to any subsequent breach or default of the terms of this
Agreement.
Section 9.04. Entire Agreement. This Agreement supersedes any
prior agreements and contains the entire agreement of the parties and
all representations with respect to the subject matter hereof. Any
prior correspondence, memoranda or agreements are replaced in total by
this Agreement, including any agreement entitled "Coordination Center
Agreement".
Section 9.05. Amendments. Any amendments to this Agreement shall
be in writing and signed by all parties hereto.
Section 9.06. Counterparts. This Agreement may be executed in
counterparts, any one of which shall be deemed to be an original, but
such counterparts when taken together shall constitute but one
agreement.
Section 9.07. Captions. Captions are for convenience only and
shall not be deemed part of the contents of this Agreement.
Section 9.08. Parties in Interest. This Agreement shall be
binding upon and enure solely to the benefit of the parties hereto and
their permitted assigns, and nothing in this Agreement, expressed or
implied, is intended to confer upon any other person any rights or
remedies of any nature under or by reason of this Agreement.
Section 9.09. Currency. All payment to be made pursuant to this
Agreement shall be in lawful money of the United States.
Section 9.10. Uncontrollable Forces. A party shall not be
considered to be in default in respect of any obligation hereunder if
prevented from fulfilling such obligation by reason of Uncontrollable
Forces, except that the obligation to pay money in a timely manner is
absolute and shall not be subject to this section. A party unable to
fulfill any obligation by reason of Uncontrollable Forces will exercise
due diligence to remove such debility with reasonable dispatch, but
such obligation shall not require the settlement of a labor dispute
except in the sole discretion of the party experiencing such labor
dispute.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their authorized representatives.
MAPPCOR
By: /s/ James Van Epps
Name: James Van Epps
Title: General Manager
INTERSTATE POWER COMPANY
By: /s/ Dale R. Sharp
Name: Dale R. Sharp
Title: Vice President-Engineering
EX-12
Computation of Ratio of Earnings to Fixed Charges
Twelve Months Ended
Dec.31 Dec.31 Dec.31 Dec.31 Dec.31
1992 1993 1994 1995 1996
(Thousands of Dollars)
Fixed Charges, as defined:
Interest on long-term debt $16,292 16,166 15,405 14,811 14,587
Other interest 586 596 1,771 2,325 1,885
Interest component of rents
charged to operating expenses 214 183 177 227 231
Total Fixed Charges $17,092 16,945 17,353 17,363 16,703
Earnings, as defined:
Net income $19,217 18,987 20,667 27,656 28,323
Income taxes 9,698 9,464 9,188 19,453 18,133
Fixed charges 17,092 16,945 17,353 17,363 16,703
Total Earnings $46,007 45,396 47,208 64,472 63,159
Ratio-Earnings to Fixed Charges 2.69x 2.68x 2.72x 3.71x 3.78x
Computation of Ratio of Earnings to Fixed Charges
and Preferred & Preference Dividends
Twelve Months Ended
Dec.31 Dec.31 Dec.31 Dec.31 Dec.31
1992 1993 1994 1995 1996
(Thousands of Dollars)
Fixed Charges, as defined:
Interest on long-term debt $16,292 16,166 15,405 14,811 14,587
Other interest 586 596 1,771 2,325 1,885
Interest component of rents
charged to operating expenses 214 183 177 227 231
Total Fixed Charges $17,092 16,945 17,353 17,363 16,703
Preferred & Preference
Dividends, as defined (a) 4,476 4,287 3,545 4,187 4,040
Fixed Charges and Preferred &
Preference Dividends $21,568 21,232 20,898 21,550 20,743
Earnings, as defined:
Net income $19,217 18,987 20,667 27,656 28,323
Income taxes 9,698 9,464 9,188 19,453 18,133
Fixed charges 17,092 16,945 17,353 17,363 16,703
Total Earnings $46,007 45,396 47,208 64,472 63,159
Ratio-Earnings to Fixed
Charges and Preferred &
Preference Dividends 2.13x 2.14x 2.26x 2.99x 3.04x
(a) Preferred and preference dividends have been adjusted by multiplying
the requirement by the ratio that income before income taxes bears to
net income. Such ratios were as follows: 151% in 1992, 150% in 1993,
145% in 1994, 170% in 1995 and 164% in 1996.
EX-13
INTERSTATE POWER COMPANY
Annual Report to Stockholders
1996
MANAGEMENT'S DISCUSSION AND ANALYSIS
MERGER
The Company, WPL Holdings, Inc. (WPLH) and IES Industries Inc. (IES) have
entered into an Agreement and Plan of Merger (merger agreement), dated
November 10, 1995, as amended on May 22, 1996, and August 16, 1996,
providing for: a) Interstate Power Company (IPC) becoming a wholly-owned
subsidiary of WPLH and b) the merger of IES with and into WPLH, which
merger will result in the combination of IES and WPLH as a single holding
company. The new holding company will be named Interstate Energy
Corporation (Interstate Energy). The proposed merger, which will be
accounted for as a pooling of interests and is intended to be tax-free for
federal income tax purposes, was approved by the shareholders of each
company on September 5, 1996. It is still subject to approval by several
federal and state regulatory agencies. The companies expect to receive
regulatory approvals by the end of the third quarter of 1997.
The business of Interstate Energy will consist of utility operations and
various non-utility enterprises, and it is expected that its utility
subsidiaries will serve more than 886,000 electric customers and 375,000
natural gas customers in Iowa, Illinois, Minnesota and Wisconsin.
Under the terms of the merger agreement, the outstanding shares of WPLH's
common stock will remain unchanged and outstanding as shares of Interstate
Energy. Each outstanding share of IES common stock will be converted to
1.14 shares of Interstate Energy's common stock. Each share of IPC's
common stock will be converted to 1.11 shares of Interstate Energy's
common stock. It is anticipated that Interstate Energy will retain WPLH's
common share dividend payment level as of the effective time of the
merger. On January 22, 1997, the Board of Directors of WPLH declared a
quarterly dividend of 50 cents per share. This represents an equivalent
annual rate of $2.00 per share.
WPLH is a holding company headquartered in Madison, Wisconsin, and is the
parent company of Wisconsin Power and Light Company (WP&L) and Heartland
Development Corporation (HDC). WP&L supplies electric and gas service to
approximately 385,000 and 150,000 customers, respectively, in south and
central Wisconsin. HDC and its principal subsidiaries are engaged in
business in three major areas: environmental, energy and affordable
housing services.
IES is a holding company headquartered in Cedar Rapids, Iowa, and is the
parent company of IES Utilities Inc. (Utilities) and IES Diversified Inc.
(Diversified). Utilities supplies electric and gas service to
approximately 336,000 and 176,000 customers, respectively, in Iowa.
Diversified and its principal subsidiaries are primarily engaged in the
energy-related, transportation and real estate development businesses.
Interstate Energy will be the parent company of Utilities, WP&L and IPC
and will be registered under the Public Utility Holding Company Act of
1935 (1935 Act), as amended. The merger agreement provides that these
operating utility companies will continue to operate as separate entities
for a minimum of three years beyond the effective date of the merger. In
addition, the non-utility operations of IES and WPLH will be combined
shortly after the effective date of the merger under one entity to manage
the diversified operations of Interstate Energy. The corporate
headquarters of Interstate Energy will be in Madison, Wisconsin.
The Securities & Exchange Commission (SEC) historically has interpreted
the 1935 Act to preclude registered holding companies, with limited
exceptions, from owning both electric and gas utility systems. Although
the SEC has recently recommended that registered holding companies be
allowed to hold both gas and electric utility operations if the affected
states agree, it remains possible that the SEC may require as a condition
to its approval of the proposed merger that IPC, WPLH and IES divest their
gas utility properties, and possibly certain non-utility ventures of IES
and WPLH, within a reasonable time after the effective date of the
proposed merger.
LIQUIDITY AND CAPITAL RESOURCES
Cash flow from operating activities was $63 million in 1996, versus $61
million in 1995. The funds were primarily used to pay the company's
construction program and to pay common and preferred dividends. It is
management's opinion that the company has adequate access to capital
markets and will be able to satisfy anticipated capital requirements.
Construction expenditures were $31, $29 and $41 million in 1996, 1995 and
1994, respectively. For the five year period from 1997 through 2001,
construction expenditures are estimated to be $218 million. The company
anticipates that approximately 75% of the construction funds for years
1997 and 1998 will be generated internally. The 1997 and 1998 construction
programs are estimated to be $36 and $45 million, respectively. Budgeted
construction expenditures for 1997 and 1998 include approximately $10
million for a baghouse / precipitator at the Lansing unit #4 plant to
comply with the Clean Air Act.
The company has authorization from the Federal Energy Regulatory
Commission (FERC) to issue up to $75 million in short-term debt. At year
end 1996, a $42.5 million line of credit was available. Lines of credit
are generally used in support of commercial paper, which is the primary
source of short-term financing. At year end 1996, the company had $28.7
million of commercial paper payable. The company anticipates that short-
term debt will increase to $52 million at year end 1997 due to
construction outlays and the retirement of $17 million of 6 1/8% First
Mortgage Bonds which mature on May 1, 1997.
At December 31, 1996, based upon the most restrictive earnings test
contained in the company's Indenture pursuant to which first mortgage
bonds are issued, the company could issue in excess of $200 million of
additional first mortgage bonds. The company's fixed charge coverage ratio
was 3.8 times for 1996, 3.7 times for 1995 and 2.7 times for 1994.
The company's stock price decreased from $33.125 at year end 1995 to $29
at year end 1996. Effective June 1996, the company elected to issue new
shares of common stock for the Dividend Reinvestment and Stock Purchase
Plan rather than purchasing shares on the open market. The company
anticipates that it will resume open market purchases to satisfy the
Dividend Reinvestment and Stock Purchase Plan requirements in mid 1997.
Electric and gas rates include an energy adjustment clause and a purchased
gas adjustment clause whereby increases or decreases in fuel and purchased
gas costs are included in current revenue without having changes in base
rates approved in formal hearings. Electric capacity costs are not
recovered from customers through energy adjustment clauses, but rather
must be addressed in base rates in a formal rate proceeding. However, any
Iowa jurisdictional revenue from electric capacity sales to other
utilities is returned to customers through the energy adjustment clause.
The company is subject to regulation which recognizes only original cost
rate base. This may result in economic losses when the effects of
inflation are not recovered from customers on a timely basis.
NEW ACCOUNTING GUIDANCE
Statements of Position (SOP) 96-1 on environmental liabilities was issued
by the American Institute of Certified Public Accountants in 1996. The
company has reviewed the requirements of the SOP and is in compliance with
its provisions.
PURCHASED POWER CONTRACTS
In 1992, the company entered into three long-term purchased power
contracts with other utilities. The contracts provide for the purchase of
255 MW of capacity through April 2001. Energy is available at the
company's option at approximately 100% to 110% of monthly production costs
for the designated units. The three purchased power contracts required
annual capacity payments of $24.6 million in 1996, 1995 and 1994. Over the
remaining life of the contracts, total capacity payments will be
approximately $111 million. The purchased power contract payments are not
for debt service requirements of the selling utility, nor do they transfer
risk or rewards of ownership.
The rate structure approved by the Minnesota Public Utilities Commission
(MPUC) does not provide for full recovery of purchased power costs
applicable to the Minnesota jurisdiction. The 1996 rate order by the MPUC
held that the company had 100 MW of excess capacity and disallowed
recovery of approximately $800,000 annually.
The company has not filed for rate recovery of approximately $2.5 million
of the purchased power payments in the Illinois and FERC jurisdictions.
Increased margins from sales growth in Illinois have largely offset the
revenue deficiency.
CLEAN AIR ACT
The company meets the existing federal and state environmental
regulations. The Federal Clean Air Act Amendments of 1990 requires
reductions in sulfur dioxide and nitrogen oxide emissions from power
plants. The most restrictive provisions relate to sulfur dioxide
emissions. Phase 1 of the Clean Air Act became effective January 1, 1995,
while Phase 2 is effective January 1, 2000. To comply with Phase 1, the
company switched to low sulfur coal and installed low nitrogen oxide
burners. Phase 2 regulations will affect approximately 87% of the
company's current generating capacity and will require capital, operating
and maintenance costs beyond those required for Phase 1.
COAL TAR DEPOSITS
Early this century, various utilities including the company operated
plants which manufactured gas for cooking and lighting. The company's
facilities ceased operations over 40 years ago when natural gas pipelines
were extended into the upper Midwest. Some of the former gasification
sites contain coal tar waste products which may present an environmental
hazard.
In 1957, the company purchased facilities in Mason City, Iowa, from Kansas
City Power & Light Company (KCPL) which included land previously used for
a coal gasification plant. Coal tar waste was discovered on the property
in 1984. In 1995, a settlement was reached with KCPL for sharing of costs
to remediate the site. As of year end 1996, remediation of the site is
almost complete. The company's total share of cost from 1984 to 1996 at
this site was $3.7 million.
The company formerly operated a manufactured gas plant in Rochester,
Minnesota. Soil remediation was completed in 1995 and post-remediation
groundwater monitoring is underway. From 1991 through 1996, the company
incurred costs aggregating $6.8 million applicable to the Rochester site.
The company has identified an additional seven sites, as described below,
which may contain hazardous waste from former coal gasification plants and
has recorded an estimated liability applicable to the investigation of
those sites. The company is unable to determine, at this time, the extent,
if any, of remediation necessary at these seven sites.
In Minnesota, the company owned or operated four manufactured gas plant
sites: Albert Lea, Austin, New Ulm and Owatonna. Potentially hazardous
wastes associated with former coal gasification operations have been
identified at each site. The company incurred $0.2 million in
investigation costs for these sites in 1996, and $1.2 million since the
investigation process began.
In 1995 and 1996, the company received accounting orders from the MPUC
which allow the deferral of investigation and remediation costs applicable
to the Minnesota sites and further allows the company to seek recovery in
a rate case.
In addition, the company has identified three other sites: Galena and
Savanna, Illinois, and Clinton, Iowa. Potentially hazardous wastes
associated with former coal gasification operations have been identified
at these sites. Little or no activity is expected at the Illinois sites in
1997. In 1996, $0.4 million was expensed for investigation work expected
at the Clinton site in 1997.
Previous actions by Iowa and Illinois regulators have permitted utilities
to recover prudently incurred unreimbursed investigation and remediation
costs.
In 1994, the company filed a lawsuit against certain of its insurers to
recover the costs of investigating and remediating the former coal
gasification plants. Seven insurers paid the company a total of $8.6
million in 1995 and 1996 in order to be discharged from the lawsuit. As of
December 31, 1996, $5.8 million is recorded as a deferred credit pending
regulatory disposition. The trial against the remaining insurers is
expected to begin in Iowa in 1997. Neither the company nor its legal
counsel is able to predict the amount of any additional insurance
recovery, and no potential recovery has been recorded.
LARGE ELECTRIC CUSTOMERS
The company's six largest electric customers consumed a total of 1,744,557
MWH of electricity in 1996, which accounts for over 31 percent of total
MWH sales. These customers are involved in the production of agricultural,
chemical and cement products and their usage is generally not affected by
weather variations. Electric consumption by these customers decreased 0.4
percent from 1995, while 1995 consumption was 4.9 percent over 1994. The
aggregate 1996 rate for these customers was approximately 3.4 cents per
KWH.
DEMAND SIDE MANAGEMENT COSTS
Regulations in Iowa and Minnesota require that utilities conduct demand
side management or energy efficiency programs. The company's long-term
forecast projects that these programs may offset the need for
approximately 150 MW of generating capacity by the year 2001. Program
costs and related carrying costs are deferred pending regulatory reviews.
The company's Minnesota rates recover jurisdictional demand side
management expenditures and lost revenues. Other operating expenses for
1996, 1995 and 1994 include $1.0, $0.6 and $0.5 million, respectively, for
the amortization of Minnesota costs. A 1994 Iowa Utilities Board (IUB)
order allows recovery over a four year period of $6.7 million of deferred
Iowa costs incurred through 1992; such recovery began October 1994. Other
operating expenses for 1996 and 1995 include $1.2 million for the
amortization of Iowa costs. As of December 31, 1996 and 1995, the total
demand side management costs deferred were $29.9 and $23.1 million,
respectively. Of the $29.9 million deferred, approximately $7.9 million
relates to costs incurred in 1996. The company filed in Iowa in 1996 for
recovery of $18.5 million of costs incurred from 1993 through 1995.
Management believes that the amounts deferred meet the criteria
established for recovery.
ORDER 636
FERC order 636, effective in late 1993, shifted primary responsibility for
gas supply acquisition from pipelines to local distribution companies such
as the company.
Order 636 provides a mechanism under which pipelines can recover prudent
transition costs associated with the restructuring process. The company
paid $1.1 million of transition costs in 1996 and is currently recovering
these costs from customers through the purchased gas adjustment clause.
The company anticipates that under customary ratemaking practices, future
transition costs will be recovered from customers, and has recorded on its
balance sheet a liability and a corresponding regulatory asset in the
amount of $2.2 million.
INDUSTRIAL AND COMMERCIAL GAS CUSTOMERS
Current regulatory rules allow industrial and commercial customers to
purchase their gas supply directly from producers and use the company's
facilities to transport the gas. Transportation customers pay the company
a fee equivalent to the margin on a retail sale. Acting as a gas
transporter, rather than as a merchant, reduces the risk to the company
applicable to taking ownership of the gas. Twenty-four large customers
currently purchase a majority of their gas requirements from producers or
gas marketers. Consumption for the three largest gas customers was up 0.6%
over 1995 and currently accounts for approximately 66% of system
throughput. The company's largest gas customer, which represents 32% of
the company's total gas throughput, is committed by contract for the next
five years.
RATE MATTERS
The company filed for rate increases in 1995 in the Iowa electric, Iowa
gas, Minnesota electric, and Minnesota gas jurisdictions. Revenues from
those jurisdictions comprise over 87% of total revenues. Such applications
sought to recover the costs associated with the purchased power contracts,
the environmental clean-up of former manufactured gas plant sites, and
attrition due to inflation.
The company filed an Iowa electric rate increase application in March
1995. The application requested an annual increase of $13.1 million.
Interim rates in an annual amount of $7.1 million were placed in effect on
June 29, 1995. A December 1995 IUB order allowed an annual increase of
$6.6 million, including a return on common equity of 11.35%. In 1996, the
company refunded to customers approximately $250,000 collected in 1995 in
excess of the final order.
The company filed an Iowa gas rate increase application in August 1995.
The application requested an annual increase of $2.2 million. Interim
rates in an annual amount of $1.3 million were placed in effect on October
20, 1995. An IUB order granting an increase of $1.1 million was received
in August 1996.
The company filed a Minnesota electric rate increase application in June
1995. The application requested an annual increase of $4.6 million (later
adjusted by the company to $3.3 million). Interim rates were not
requested. On April 10, 1996, the Commission issued an order allowing an
increase in electric rates of $2.3 million. The company and the Department
of Public Service filed for reconsideration by the Commission. A
Commission order issued June 26, 1996, denied reconsideration. Rates
reflecting the increase were implemented in August 1996. A Commission
order issued December 16, 1996, allowed the company to recover
approximately an additional $830,000 in 1997 applicable to the time period
from the original order to the date when new rates were implemented.
The company filed a Minnesota gas rate increase application in May 1995.
The application requested an annual increase of $2.4 million, including a
return on common equity of 11.75%. Interim rates in an annual amount of
$1.5 million were placed in effect in June 1995. On February 29, 1996, the
Commission issued an order allowing an increase in gas rates of $2.1
million. The company, the Department of Public Service and the Office of
Attorney General filed for reconsideration by the Commission. A Commission
order after reconsideration issued July 2, 1996, affirmed the level of
increased rates at approximately $2.1 million. Rates reflecting the
increase were implemented in September 1996. The Department of Public
Service and the Office of Attorney General appealed the Commission's
decision. The appeal was denied by the Minnesota Court of Appeals on
February 18, 1997.
As discussed under Demand Side Management Costs, the company filed in 1996
for recovery of Iowa costs incurred in 1995, 1994 and 1993.
CHANGING STRUCTURE OF THE ELECTRIC INDUSTRY
The National Energy Policy Act of 1992 addresses several matters designed
to promote competition in the electric wholesale power generation market,
including mandated open access to the electric transmission system.
Current initiatives at the federal level propose to allow customers to
purchase energy from alternative power suppliers and then pay the local
utility a fee for delivery of the energy.
As legislation, regulations, and economic changes occur, electric
utilities will be faced with increased competitive pressure. The company
currently faces competition from other suppliers of electrical energy to
wholesale customers and from alternative energy sources and self-
generation for other customer groups, primarily industrial customers.
As a result of cost-based regulation, the company follows the accounting
practices set forth in Statement of Financial Accounting Standard (SFAS)
No. 71, "Accounting for the Effects of Certain Types of Regulation." Under
SFAS 71 regulators can create assets and impose liabilities that would not
be recorded by non-regulated entities. Regulatory assets and liabilities
represent probable future revenues that will be recovered from or refunded
to customers through the ratemaking process. Recoverability of regulatory
assets is assessed at each reporting period. Should the basis of
regulation for some or all of the company's business change from cost-
based regulation, existing regulatory assets and liabilities would have to
be written off unless regulators specify an alternative means of recovery.
RESULTS OF OPERATIONS
The company's results of operations and financial condition are affected
by numerous factors, including weather, general economic conditions and
rate changes.
Earnings per share of common stock were $2.69 for 1996, compared with
$2.63 for 1995 and $1.92 for 1994. Increased sales, electric and gas rate
increases and continuing efforts to control costs contributed to the
increased earnings. The 1996 return on common equity was 12.9%, compared
with 13.0% for 1995 and 9.5% in 1994.
Electric residential sales for 1995 were unusually high primarily because
of warm and humid weather during the air conditioning season. The 1996
summer returned to a more normal weather pattern. KWH use per residential
customer was 7,972 for 1996, 8,280 for 1995, and 7,799 for 1994.
Electric "margin" represents electric revenue less certain other costs
(primarily fuel and purchased power). Electric margins for years 1996,
1995 and 1994 were $153.5, $151.8 and $138.9 million, respectively. The
Iowa electric rate increase implemented in June 1995 and the Minnesota
electric rate increase in August 1996 were the primary reasons for the
increased electric margin. Gas "margin" represents gas revenue less
certain other costs (primarily purchased gas). The gas margins for 1996,
1995 and 1994 were $17.2, $17.3 and $14.5 million, respectively. An
increase in residential and commercial gas sales of 7.3% and 10.8%,
respectively, contributed to a higher gas margin, as did rate increases in
the states of Minnesota and Iowa. The gas margin for 1996 was depressed
due to a sharp increase in gas costs in December. Under existing purchased
gas adjustment clauses, there is a delay of at least a month in collecting
(or refunding) any variations in gas costs.
Other operating expenses were $53.1, $51.1 and $51.9 million for 1996,
1995 and 1994, respectively (excluding deferral of environmental costs as
ordered by the MPUC). Other operating expenses include $2.7 million for
1996 and $1.3 million for 1995 of merger related expenses. Other operating
expenses for the years 1996, 1995 and 1994, include $0.4, $1.0 and $1.7
million, respectively, for environmental investigation, remediation and
litigation costs.
Maintenance expense for 1996 was $16.2 million, compared to $14.9 million
in 1995 and $17.2 million in 1994. Several maintenance projects postponed
in 1995 were completed in 1996.
Depreciation expense was $30.6, $29.3 and $27.8 million, for 1996, 1995
and 1994, respectively. The increase is primarily due to additional
investment and the implementation of higher depreciation rates approved by
the MPUC.
The company and the Internal Revenue Service reached a settlement of
income tax audits in 1996, for tax years through 1994. To reflect the
settlement, the company recorded additional interest expense of $0.1
million.
Interest on long-term debt was $14.6, $14.8 and $15.4 million for 1996,
1995 and 1994, respectively. On May 1, 1997, $17 million of 6 1/8% First
Mortgage Bonds will be retired, and as of December 31, 1996, have been
classified as a current liability. As a result, the percentage of total
capitalization attributable to long-term debt has declined from 44.8% at
year end 1995 to 41.6% at year end 1996.
Other interest charges for 1996 were $1.9 million, compared with $2.3
million for 1995 and $1.8 million for 1994. Interest on commercial paper
payable was $1.6, $2.1 and $0.7 million for 1996, 1995 and 1994,
respectively. The decreased commercial paper interest expense is primarily
attributable to a lower average balance outstanding. At year end 1996, the
company had $28.7 million of short-term commercial paper payable, compared
with $39.3 million at year end 1995.
The company's investment in coal stockpiles was $13.3 million at December
31, 1996 and $15.8 million at December 31, 1995. Refinements to the
company's fuel delivery process have decreased the amount of inventory
required to carry the company over the winter. The company's investment in
gas stored underground was $2.3, $2.4 and $3.7 million at December 31,
1996, 1995 and 1994, respectively.
Statements of Income
For the years ended December 31 1996 1995 1994
(Thousands of Dollars)
OPERATING REVENUES:
Electric $276,620 $274,873 $261,730
Gas 49,464 43,669 45,920
Total operating revenues 326,084 318,542 307,650
OPERATING EXPENSES:
Operation:
Fuel for electric generation 57,560 62,164 61,384
Power purchased 61,556 57,566 58,339
Cost of gas sold 31,617 25,888 30,905
Other operating expenses 53,134 45,717 51,917
Maintenance 16,164 14,881 17,160
Depreciation and amortization 31,087 29,560 28,212
Income taxes:
Federal current 11,389 11,608 1,395
State current 3,434 3,549 454
Deferred taxes - net 2,787 6,506 7,092
Investment tax credit amortization (1,028) (1,028) (1,028)
Property and other taxes 16,064 15,990 16,298
Total operating expenses 283,764 272,401 272,128
OPERATING INCOME 42,320 46,141 35,522
OTHER INCOME AND DEDUCTIONS 2,225 (1,690) 1,990
INCOME BEFORE INTEREST CHARGES 44,545 44,451 37,512
INTEREST CHARGES:
Long-term debt 14,587 14,811 15,405
Other interest charges 1,885 2,325 1,772
Borrowed funds used during construction (250) (341) (332)
Total interest charges 16,222 16,795 16,845
NET INCOME 28,323 27,656 20,667
PREFERRED STOCK DIVIDENDS (2,463) (2,458) (2,454)
INCOME AVAILABLE FOR COMMON STOCK $ 25,860 $ 25,198 $ 18,213
EARNINGS PER AVERAGE COMMON SHARE
OUTSTANDING based on 9,593,664;
9,564,287 and 9,478,741 shares,
respectively $ 2.69 $ 2.63 $ 1.92
DIVIDENDS PAID PER COMMON SHARE $ 2.08 $ 2.08 $ 2.08
The accompanying notes are an integral part of these financial statements.
Balance Sheets
ASSETS
As of December 31
1996 1995
(Thousands of Dollars)
UTILITY PLANT:
In Service:
Electric:
Production $376,338 $374,489
Transmission 187,911 183,858
Distribution 234,320 221,645
General 53,847 54,232
Total Electric 852,416 834,224
Gas 68,047 63,303
920,463 897,527
Less - accumulated depreciation 426,471 402,685
493,992 494,842
Held for future use 591 590
Construction work in progress 3,129 3,095
Net utility plant 497,712 498,527
OTHER PROPERTY AND INVESTMENTS 453 555
CURRENT ASSETS:
Cash and cash equivalents 3,072 1,537
Accounts receivable, less reserves of $200 28,227 27,797
Inventories - at average cost:
Fuel 16,623 19,332
Materials and supplies 6,214 5,509
Prepaid pension cost 3,331 3,870
Prepaid income tax 9,483 6,690
Other prepayments and current assets 683 614
Total current assets 67,633 65,349
DEFERRED DEBITS:
Regulatory assets 66,786 62,841
Unamortized debt expense 5,710 5,915
Other 906 1,129
Total deferred debits 73,402 69,885
TOTAL $639,200 $634,316
The accompanying notes are an integral part of these financial statements.
Balance Sheets
CAPITALIZATION AND LIABILITIES
As of December 31
1996 1995
(Thousands of Dollars)
CAPITALIZATION, per accompanying statements:
Common stock, par value $3.50 per share;
authorized - 30,000,000 shares; issued and
outstanding - 9,670,866 in 1996 and
9,564,287 in 1995 $ 33,848 $ 33,475
Additional paid-in capital 105,959 103,145
Retained earnings 66,251 61,150
Total common equity 206,058 197,770
Preferred stock (optional sinking fund) 10,819 10,819
Preferred stock (mandatory sinking fund) 24,147 24,036
Long-term debt 171,731 188,880
Total capitalization 412,755 421,505
CURRENT LIABILITIES:
Commercial paper 28,700 39,300
Long-term debt maturing within one year 17,000 -
Accounts payable 14,013 11,868
Dividends payable - preferred stock 599 599
Payrolls accrued 3,291 2,846
Taxes accrued 16,953 16,758
Interest accrued 2,817 2,819
FERC Order 636 transition costs 2,200 3,200
Other 2,878 4,756
Total current liabilities 88,451 82,146
DEFERRED CREDITS AND OTHER NON-CURRENT
LIABILITIES:
Accumulated deferred income taxes 99,303 95,518
Accumulated deferred investment tax credits 17,013 18,041
Deferred pension cost 4,999 4,900
Accrued postretirement benefit cost 1,311 2,792
Environmental clean-up costs 7,234 6,860
Other 8,134 2,554
Total deferred credits and other non-current
liabilities 137,994 130,665
COMMITMENTS AND CONTINGENCIES (Notes 2, 8, 10,
11, 12 and 14)
TOTAL $639,200 $634,316
Statements of Cash Flows
For the years ended December 31
1996 1995 1994
(Thousands of Dollars)
RECONCILIATION OF NET INCOME TO CASH FLOWS
FROM OPERATING ACTIVITIES:
Net Income $28,323 $27,656 $20,667
Adjustment for non-cash items:
Depreciation and amortization 31,087 29,560 28,212
Deferred income taxes 4,916 6,912 5,488
Investment tax credit amortization (1,028) (1,028) (1,028)
Equity funds used during construction (AFUDC) (13) - (166)
Prepaid pension cost 99 74 9
Changes in assets and liabilities:
Accounts receivable - net (430) (5,447) 3,710
Inventories 2,016 4,599 (1,536)
Accounts payable and other current liabilities 73 (2,946) 4,324
Accrued and prepaid taxes (2,500) 2,379 (1,011)
Interest accrued (2) (111) (160)
Other prepayments and current assets 470 1,469 (656)
Rate refund payable (256) 256 -
Regulatory assets - deferred demand side
management costs (6,718) (6,177) (7,295)
Regulatory assets - other 2,648 794 (8,267)
Other operating activities 4,018 3,275 721
Cash flows from operating activities 62,703 61,265 43,012
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to utility plant (30,734) (28,238) (40,600)
Borrowed funds used during construction (AFUDC) (250) (341) (332)
Other (243) 127 (670)
Cash flows from investing activities (31,227) (28,452) (41,602)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock 3,228 - 4,237
Issuance of long-term debt - - 13,250
Retirement of long-term debt (225) (14,225) (13,475)
Debt and stock discount and financing expenses - - (357)
Dividends on common and preferred stock (22,344) (22,288) (22,111)
Commercial paper - net (10,600) 3,700 15,500
Cash flows from financing activities (29,941) (32,813) (2,956)
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS $ 1,535 $ - $(1,546)
CASH AND CASH EQUIVALENTS:
Beginning of year $ 1,537 $ 1,537 $ 3,083
End of year $ 3,072 $ 1,537 $ 1,537
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest (net of interest capitalized) $15,678 $16,655 $16,773
Income taxes $16,330 $11,134 $ 8,066
The accompanying notes are an integral part of these financial statements.
Statements of Capitalization
As of December 31 1996 1995
(Thousands of Dollars)
COMMON EQUITY $206,058 49.9% $197,770 46.9%
CUMULATIVE PREFERRED STOCKS:
Authorized:
Preferred - 2,000,000 shares at $50.00 par value
Preference - 2,000,000 shares at $1.00 par value (A)
Issued and outstanding (B):
Redemption
Series Shares Price
Preferred with optional sinking fund provisions:
4.36% 60,455 $52.30 3,023 3,023
4.68% 55,926 $51.62 2,796 2,796
7.76% 100,000 $52.03 5,000 5,000
10,819 2.6% 10,819 2.6%
Preferred with mandatory sinking fund provisions:
6.40% 545,000 $53.20 27,250 27,250
Unamortized Discount on 6.40% Preferred Stock (1,921) (1,990)
Unamortized Issuance Expense on 6.40%
Preferred Stock (101) (104)
Unamortized Call Premiums on Preferred Stock (1,081) (1,120)
24,147 5.9% 24,036 5.7%
LONG-TERM DEBT:
First Mortgage Bonds:
6 1/8% Series due 1997 - 17,000
8 % Series due 2007 25,000 25,000
8 5/8% Series due 2021 25,000 25,000
7 5/8% Series due 2023 94,000 94,000
144,000 161,000
Pollution Control Revenue Bonds:
5.95% due 1996 to 1998 6,075 6,300
6 3/8% due 1998 to 2007 11,400 11,400
5.75% due 2003 1,000 1,000
6.25% due 2009 1,000 1,000
6.30% due 2010 5,600 5,600
6.35% due 2012 5,650 5,650
30,725 30,950
Other Long-Term Debt 95 104
Unamortized Discount on Long-Term Debt (3,089) (3,174)
Total Long-Term Debt - net 171,731 41.6% 188,880 44.8%
TOTAL CAPITALIZATION $412,755 100.0% $421,505 100.0%
(A) None outstanding.
(B) Redeemable at the option of the company upon 30 days notice at the
current prices shown.
The accompanying notes are an integral part of these financial statements.
Statements of Retained Earnings
For the years ended December 31 1996 1995 1994
(Thousands of Dollars)
Retained Earnings, Beginning of Year $61,150 $55,893 $57,397
Net Income 28,323 27,656 20,667
Dividends on Common Stock (19,950) (19,941) (19,717)
Dividends on Preferred Stock (2,463) (2,458) (2,454)
Additional Minimum Liability for
Non-Qualified Pension Plan at
December 31 - net of taxes (809) - -
Retained Earnings, End of Year $66,251 $61,150 $55,893
NOTES TO FINANCIAL STATEMENTS
1. Summary of Accounting Policies
GENERAL
Interstate Power Company (company) is a public utility engaged primarily
in the generation, transmission, distribution and sale of electricity. The
company also distributes and sells natural gas. The company is subject to
weather variations common to the utility industry.
The financial statements are based on generally accepted accounting
principles, which give recognition to the ratemaking and accounting
practices of the Federal Energy Regulatory Commission (FERC) and state
commissions having regulatory jurisdiction over the company.
RECLASSIFICATIONS
Certain reclassifications have been made to the prior years financial
statements to conform with the presentation for 1996. Such
reclassifications had no impact on net income or stockholders' equity.
SIGNIFICANT ESTIMATES
Significant estimates used in the preparation of the accompanying
financial statements include environmental remediation costs, depreciation
and projection of future employee pension and medical benefits. Such
estimates are based on informed judgement with appropriate consideration
to materiality. Actual results could differ from those estimates.
UTILITY PLANT
Utility plant is recorded at original cost. The cost of additions to
utility plant and replacement of units of property includes contracted
labor, company labor, materials, allowance for funds used during
construction and overheads. Repairs of property and replacement of items
less than units of property are charged to maintenance expense. The
original cost of units retired, plus removal costs, less salvage is
charged to accumulated depreciation. Substantially all property is subject
to the lien of the First Mortgage Bond Indenture.
DEPRECIATION
Depreciation is computed on the straight-line method based on net salvage
values and the estimated remaining service lives of depreciable property.
The provision for book depreciation as a percentage of the average balance
of depreciable property in service was 3.6% in 1996 and 3.5% in 1995 and
1994.
STATEMENTS OF CASH FLOWS
For purposes of the statements of cash flows, the company considers all
liquid investments with a maturity of three months or less to be cash
equivalents.
ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION (AFUDC)
AFUDC includes the net cost of borrowed funds and a reasonable rate on
equity funds used for construction. It was capitalized at gross rates of
5.8% for 1996, 6.0% for 1995 and 6.3% for 1994. Gross AFUDC rates are
computed in accordance with the FERC regulations, including approval to
incorporate demand side management costs in the formula. AFUDC does not
contribute to the current cash flow of the company. Under normal
regulatory practices, the company anticipates earning a fair rate of
return on such capitalized costs and recovery of those costs in customer
rates after completion of the related construction.
REVENUES AND FUEL COSTS
Annual revenues do not include unbilled revenues for service rendered from
the date of the last meter reading to year end. The company's electric and
gas tariffs contain an energy adjustment clause and a purchased gas
adjustment clause whereby increases or decreases in fuel costs are
included in current revenue without having changes in base rates approved
in formal hearings. Purchased capacity costs are not recovered from
electric customers through energy adjustment clauses, but rather must be
addressed in base rates in a formal rate proceeding.
DEBT REACQUISITION PREMIUM
In accordance with normal regulatory practices, the company defers debt
redemption premiums and amortizes such costs over the life of the
replacement bonds.
REGULATORY ASSETS
Regulatory assets represent probable future revenue associated with
certain incurred costs. The company is subject to the provisions of SFAS
No. 71 "Accounting for the Effects of Certain Types of Regulation". In the
event that the Company's operations are no longer subject to the
provisions of SFAS 71, as a result of market-based pricing due to
regulatory or other charges, existing regulatory assets and liabilities
would have to be written off unless provisions are made to ensure their
recovery or refund.
Regulatory assets of $66.8 million are classified as deferred debits on
the balance sheet. Deferred income taxes, environmental clean-up costs and
FERC order 636 transition costs have corresponding deferred credits.
Demand side management costs (DSM) do not have corresponding liabilities.
Regulators allow the company to earn a return on DSM costs, but not on the
other regulatory assets.
At December 31, 1996 and 1995, regulatory assets were as follows:
1996 1995
(Millions of Dollars)
Deferred income taxes (Note 9) $26.6 $27.8
Deferred demand side management (Note 12) 29.9 23.1
Environmental clean-up (Note 2) 6.4 6.2
FERC order No. 636 transition costs (Note 8) 2.2 3.2
Employee/retiree benefits (Note 7) 1.7 2.5
Total $66.8 $62.8
CONCENTRATION OF SALES
The company provides service to six large electric customers which account
for over 31% of total electric MWH sales. The company provides
transportation service to three large gas customers, which account for 66%
of system throughput. The company does not take title to the gas consumed
by these transportation customers.
In addition, the company provides electric service to 165,000 electric
customers in 234 communities and 49,000 gas customers in 39 communities.
Credit risk for these customers is spread over a diversified base of
residential, commercial and small industrial customers.
2. Environmental Regulations
The company is subject to various federal and state government
environmental regulations. The company meets existing air and water
regulations. The Federal Clean Air Act requires reductions in certain
emissions from power plants. The company switched to a low sulfur coal and
installed low nitrogen oxide burners at the 217 MW plant affected by Phase
1, which became effective January 1, 1995. Additional costs will be
incurred to comply with Phase 2 environmental standards, which take effect
January 1, 2000.
In 1957, the company purchased facilities in Mason City, Iowa, from Kansas
City Power & Light Company (KCPL) which included land previously used for
a coal gasification plant. Coal tar waste was discovered on the property
in 1984. In 1995, a settlement was reached with KCPL for sharing of costs
to remediate the site. As of year end 1996, remediation of the site is
almost complete. The company's total share of cost from 1984 to 1996 at
this site is $3.7 million.
The company formerly operated a manufactured gas plant in Rochester,
Minnesota. Soil remediation was completed in 1995 and post-remediation
groundwater monitoring is underway. From 1991 through 1996, the company
incurred costs aggregating $6.8 million applicable to the Rochester site.
The company has identified an additional seven sites, as described below,
which may contain hazardous waste from former coal gasification plants and
has recorded an estimated liability applicable to the investigation of
these sites. The company is unable to determine, at this time, the extent
of remediation necessary at these seven sites.
In Minnesota, the company owned or operated four manufactured gas plant
sites: Albert Lea, Austin, New Ulm and Owatonna. Potentially hazardous
wastes associated with former coal gasification operations have been
identified at each site. The company incurred $0.2 million in
investigation cost for these sites in 1996 and $1.2 million since the
investigation process began.
In 1995 and 1996, the company received accounting orders from the
Minnesota Public Utilities Commission (MPUC) which allows the deferral of
investigation and remediation costs applicable to the Minnesota sites and
further allows the company to seek recovery in a rate case.
In addition, the company has identified three other sites: Galena and
Savanna, Illinois, and Clinton, Iowa. Potentially hazardous wastes
associated with former coal gasification operations have been identified
at these sites. Little or no activity is expected at the Illinois sites in
1997. In 1996, $0.4 million was expensed for investigation work expected
at the Clinton site in 1997.
Previous actions by Iowa and Illinois regulators have permitted utilities
to recover prudently incurred unreimbursed investigation and remediation
costs.
In 1994, the company filed a lawsuit against certain of its insurers to
recover the costs of investigating and remediating the former coal
gasification plants. Seven insurers paid the company a total of $8.6
million in 1995 and 1996 in order to be discharged from the lawsuit. As of
December 31, 1996, $5.8 million is recorded as a deferred credit pending
regulatory disposition. The trial against the remaining insurers is
expected to begin in Iowa in 1997. Neither the company nor its legal
counsel is able to predict the amount of any additional insurance
recovery, and no potential recovery has been recorded.
3. Fair Value of Financial Instruments
The estimated fair values of the company's financial instruments at year
end 1996 and 1995 did not vary significantly from their carrying values.
The estimated fair values were based on quoted market prices for the same
or similar issues or on the current rates for debt of the same remaining
maturities.
4. Preferred and Common Stock
In 1993, the company issued 545,000 shares of 6.40% $50 par value
preferred stock with a final redemption date of May 1, 2022. Under the
provisions of the mandatory sinking fund, beginning in 2003 the company is
required to redeem annually $1.4 million of 6.40% preferred stock (27,250
shares). The discount and other issuance expenses in an aggregate amount
of $2.0 million as of year end 1996 are reflected as an offset to
preferred stock and are being amortized to common equity.
Call premiums related to the 1993 retirement of the preferred and
preference stock in the amount of $1.1 million as of year end 1996 are
reflected as an offset to preferred stock and are being amortized to
common equity. The amortization transfers the amount of the call premiums
from preferred to common equity over the life of the refunding 6.40%
issue, but has no effect on net income.
The company's Common Stock Dividend Reinvestment and Stock Purchase Plan
gives the company the option of issuing new stock or purchasing shares on
the open market. The Dividend Reinvestment Plan acquired 39,326; 176,971
and 44,868 shares of common stock on the open market during 1996, 1995 and
1994, respectively. The company received $3.2 million for 106,579 shares
of new common stock issued in 1996 and $4.2 million for 174,446 shares of
new common stock issued in 1994. None of the authorized shares of
preferred, preference or common stock are reserved for officers and
employees, or for options, warrants, conversions and other rights.
5. Long-Term Debt
On May 1, 1997, $17 million of 6 1/8% First Mortgage Bonds will mature and
are classified as a current liability on the December 31, 1996, balance
sheet. Total debt maturities for the years 1997 through 2001 are $17.2,
$6.3, $0.4, $0.4 and $0.4 million, respectively.
Annual sinking fund requirements are $1.8 million for the years 1997
through 2001. Such sinking fund requirements for first mortgage bonds may
be satisfied with property additions at the rate of 167% of such
requirements. Sinking fund requirements for 1996 were met by property
additions.
6. Short-Term Borrowings
The company had bank lines of credit aggregating $42.5 million at December
31, 1996. There are no compensating balances required, but some of the
banks require commitment fees; such fees were not significant. The maximum
amount of short-term borrowing at any month end in 1996, 1995 and 1994 was
$32.8, $46.8 and $35.6 million, respectively, all in commercial paper,
with the average outstanding borrowing during the year of $27.0, $36.2 and
$15.6 million, respectively. The average interest rate on borrowings was
5.48%, 5.96% and 4.73% for the years 1996, 1995 and 1994, respectively. At
December 31, 1996, the interest rate was 5.48%.
7. Employee/Retiree Benefits
The company has a non-contributory defined benefit pension plan for all
full-time employees. Plan benefits are based primarily on years of service
and employee compensation. The company uses the "projected unit credit"
actuarial method in computing pension costs for accounting purposes. Plan
assets consist of high-grade bonds, commercial mortgages and other fixed
income investments. Company policy is to fund the plan under the
"aggregate" actuarial cost method to the extent deductible under tax
regulations. Contributions to the plan for the years ended December 31,
1996, 1995 and 1994 were $3.7, $3.4 and $3.4 million, respectively. In
addition to the pension plan, the company has an unfunded non-qualified
supplemental retirement plan (SRP) which, as amended in 1995, provides a
retirement benefit for officers of the company. Although the SRP has no
assets, the company purchases corporate owned life insurance to provide
funding for future cash requirements. The cash value of such insurance was
$0.9 million, $0.6 million and $0.4 million as of December 31, 1996, 1995
and 1994 respectively. The total accumulated benefit obligation for the
SRP at December 31, 1996, was $2.9 million.
The company is collecting an annual funding amount in customer rates and
anticipates that it will continue to do so. The cumulative difference
between the higher funded amount and the accounting pension cost amount is
a deferred credit on the balance sheet. The company recognized an
additional minimum liability on the balance sheet in 1996 for the plan in
which the accumulated benefit obligation exceeded the fair value of plan
assets.
Qualified Pension Plan
Cost Components 1996 1995 1994
(Thousands of Dollars)
Service cost $ 2,312 $ 2,302 $ 2,599
Return on plan assets (3,631) (3,513) (1,646)
Interest cost on projected benefit
obligation 3,680 3,629 3,569
Net amortization and deferral 126 146 (1,259)
Net pension cost $ 2,487 $ 2,564 $ 3,263
The assumptions used for measurement purposes are as follows:
Discount rate for obligation 7.5% 7.5% 7.5%
Discount rate for expense 7.5% 7.5% 7.0%
Assumed rate of compensation increase 5.0% 5.0% 5.0%
Expected long-term rate of return 8.0% 8.0% 7.0%
Reconciliation of Funded Status of Qualified Pension Plan as of
November 1:
Plan assets at fair value $51,343 $48,698 $48,685
Vested benefit obligation $34,670 $33,058 $35,057
Nonvested benefit obligation 1,296 1,825 2,365
Accumulated benefit obligation 35,966 34,883 37,422
Additional benefits based on
estimated future salary levels 15,662 16,624 13,130
Projected benefit obligation $51,628 $51,507 $50,552
Plan assets greater or (less) than
the projected benefit obligation $ (285) $(2,809) $(1,867)
Unrecognized net obligation at
October 31, 1986, being amortized
over 16.1 years 2,071 2,412 2,753
Unrecognized prior service cost 2,125 904 3,316
Unrecognized net (gain)loss 1,812 4,604 473
Net prepaid pension cost $ 5,723 $ 5,111 $ 4,675
In addition to providing pension benefits, the company provides life
insurance for retired employees and health care benefits for 921 retirees
and spouses. Substantially all of the company's 882 full-time employees
and spouses become eligible for benefits if they reach retirement age
while working for the company. The estimated future cost of providing
these postretirement benefits is accrued during the employees' service
periods, and was $4.3, $4.1 and $4.9 million for 1996, 1995 and 1994,
respectively. Funding of the benefit obligation is concurrent with
recovery in customer rates. Plan assets consist of high-grade debt
securities. Assuming a one percent increase in the medical cost trend
rate, the company's 1996 cost of postretirement benefits would increase by
$0.6 million and the accumulated benefit obligation would increase by $5.0
million.
The table below sets forth the postretirement health care plan's
accumulated benefit obligation (in thousands):
1996 December 31, 1996 January 1, 1996
Retirees $25,954 $21,168
Active plan participants 14,014 13,141
Total accumulated benefit obligation 39,968 34,309
Less fair value of plan assets 11,066 6,640
Accumulated postretirement benefit
obligation in excess of plan assets 28,902 27,669
Unrecognized net gain or (loss) (3,412) 812
Unrecognized transition obligation (22,728) (23,991)
Accrued postretirement benefit cost $ 2,762 $ 4,490
The components of the estimated cost of postretirement benefits other than
pensions for the twelve months ended December 31, 1996 and 1995, are as
follows (in thousands):
1996 1995
Service cost $1,198 $1,097
Return on plan assets (507) (440)
Interest cost on accrued postretirement
benefit obligation 2,486 2,291
Amortization of transition obligation 1,543 1,543
Net amortization and deferral (388) (377)
Net cost $4,332 $4,114
The assumptions used for measurement purposes are as follows:
1997 1996
Discount rate for obligations 7.5% 7.5%
Discount rate for expense 7.5% 7.5%
Initial medical cost trend rate 8.0% 8.0%
Ultimate medical cost trend rate 6.0% 6.0%
Year that the medical cost trend rate
is assumed to decrease to the ultimate rate 1998 1997
8. Rate Matters
IOWA
The company filed an Iowa electric rate increase application in March
1995. The application requested an annual increase of $13.1 million.
Interim rates in an annual amount of $7.1 million were placed in effect on
June 29, 1995. A December 1995 Iowa Utilities Board (IUB) order allowed an
annual increase of $6.6 million.
The company filed an Iowa gas rate increase application in August 1995.
The application requested an annual increase of $2.2 million. Interim
rates in an annual amount of $1.3 million were placed in effect on October
20, 1995. An IUB order granting an increase of $1.1 million was received
in August 1996.
MINNESOTA
The company filed a Minnesota electric rate increase application in June
1995. The application requested an annual increase of $4.6 million (later
adjusted by the company to $3.3 million). Interim rates were not
requested. On April 10, 1996, the Commission issued an order allowing an
increase in electric rates of $2.3 million. Rates reflecting the increase
were implemented in August 1996. A Commission order issued December 16,
1996, allowed the company to recover approximately an additional $830,000
in 1997 applicable to the time period from the original order to the date
when new rates were implemented.
The company filed a Minnesota gas rate increase application in May 1995.
The application requested an annual increase of $2.4 million, including a
return on common equity of 11.75%. Interim rates in an annual amount of
$1.5 million were placed in effect in June 1995. On February 29, 1996, the
Commission issued an order allowing an increase in gas rates of $2.1
million. Rates reflecting the increase were implemented in September 1996.
The Department of Public Service and the Office of Attorney General
appealed the Commission's decision. The appeal was denied by the Minnesota
Court of Appeals on February 18, 1997.
FEDERAL ENERGY REGULATORY COMMISSION (FERC)
FERC order 636 provides a mechanism under which gas pipelines can recover
transition costs from local distribution companies. The company estimates
its remaining share of transition costs will aggregate approximately $2.2
million payable in declining annual installments from 1997 to 2006. The
company is recovering transition costs from customers.
9. Income Taxes
A deferred tax asset or liability is recognized for each temporary
book/tax difference. Corresponding regulatory assets or liabilities,
reflecting the anticipated future rate treatment, have also been
recognized. The balance sheet as of December 31, 1996, includes regulatory
assets and deferred tax liabilities in an equal amount of $26.6 million.
Investment tax credits have been deferred and are credited to operating
income over the lives of the property which gave rise to the credits.
The principal components of the company's deferred tax (assets)
liabilities recognized in the December 31, 1996 and 1995, balance sheet
are shown below:
Item: Thousands of Dollars
1996 1995
Property $86,737 $84,865
Energy Conservation Costs 10,262 7,589
Call Premiums on Reacquired Bonds 1,889 1,948
Environmental Costs - Net (2,626) (188)
Unbilled Revenue (3,474) (3,348)
Other (2,968) (2,038)
Total $89,820 $88,828
Gross deferred assets $(9,483) $(6,690)
Gross deferred liabilities 99,303 95,518
Total $89,820 $88,828
The total income tax expense produces the overall effective income tax
rate shown in the table. The percentages are computed by dividing total
income tax expense by the sum of such tax expense and net income.
1996 1995 1994
Federal statutory tax rate 35.0% 35.0% 35.0%
Increases (reductions) in taxes resulting from:
State income taxes net of federal income tax
benefit 5.2% 5.7% 4.0%
Investment tax credit amortization (2.2%) (2.2%) (3.4%)
Excess book over tax depreciation 1.3% 1.5% 2.0%
Other (0.3%) 1.3% (6.8%)
Overall effective income tax rate 39.0% 41.3% 30.8%
The current and deferred tax expense is comprised of (in thousands):
1996 1995 1994
Federal and state currently payable $14,823 $15,157 $ 1,849
Deferred income tax - federal and state:
Additional tax depreciation - net 3,004 3,673 3,270
Energy efficiency costs 2,674 2,394 2,413
Environmental costs - net (2,437) 166 2,010
Other (455) 273 (601)
Investment tax credit amortization (1,028) (1,028) (1,028)
Federal and state currently payable -
other income and deductions 1,551 (1,182) 1,276
Total $18,132 $19,453 $ 9,189
10. Jointly-Owned Utility Plant
The company has a 21.528% (134,300 KW) interest in a 624,000 KW coal-fired
unit (Neal #4), completed in 1979. Amounts at December 31, 1996 and 1995,
included in utility plant were $82.4 and $82.0 million, respectively, and
the accumulated provision for depreciation was $43.3 and $40.8 million,
respectively. In addition, the company has a long-term participation power
purchase for 25,000 KW of Neal #4 generating capacity which expires in
2003. Minimum future capacity payments under the participation purchased
power agreement are approximately $13.7 million. The 21.528% ownership
share and the long-term participation purchase provide the company with an
aggregate of 159,300 KW of Neal #4 generating capacity.
The company also has a 4% (28,000 KW) interest in a 675,000 KW coal-fired
unit (Louisa #1), completed in 1983. Utility plant at December 31, 1996
and 1995, was $24.7 and $24.8 million, respectively, and the accumulated
provision for depreciation was $10.2 and $9.6 million, respectively.
The company's share of direct expenses of Neal #4 and Louisa #1 is
included in the appropriate operating expenses in the statements of
income.
11. Purchased Power Contracts
The company has three long-term purchased power contracts with other
electric utilities. The contracts provide for the purchase of 255
megawatts of capacity through April 2001. The company is obligated to pay
the capacity charges regardless of the actual electric demand by the
company's customers. Energy is available at the company's option at
approximately 100% to 110% of monthly production costs for the designated
units.
The three purchased power contracts required annual capacity payments of
$24.6 million in 1996, 1995 and 1994. Over the remaining period of the
contracts, total capacity payments will be approximately $111 million. In
Iowa, the IUB has concluded that the capacity purchases were prudent and
allowed recovery of costs in rates.
The rate structure approved by the MPUC does not provide for full recovery
of purchased power applicable to the Minnesota jurisdiction. The 1996 rate
order by the MPUC held that the company had 100 MW of excess capacity and
disallowed recovery of approximately $800,000 annually.
The company has not filed for rate recovery of the allocable portions of
the purchased power payments in the Illinois and FERC jurisdictions.
Increased margins from sales growth in Illinois have largely offset the
revenue deficiency.
The purchased power contract payments are not for debt service
requirements of the selling utility, nor do they transfer risk or rewards
of ownership.
12. Demand Side Management Costs
Minnesota and Iowa regulations require that utilities conduct energy
efficiency and demand side management programs. Demand side management
expenditures applicable to the Minnesota jurisdiction in an annual amount
of approximately $1.0 million are currently being recovered through rates.
Iowa jurisdiction tariffs which provide for the recovery of demand side
management costs incurred through December 31, 1992, were placed in effect
in October 1994. The Iowa tariffs provide for the recovery of $6.7 million
of costs over a four year period. The company filed in 1996 for recovery
of $18.5 million of costs incurred from 1993 through 1995. As of December
31, 1996 and 1995, the amounts deferred were $29.9 and $23.1 million,
respectively.
13. Quarterly Information (Unaudited)
The quarterly information has not been audited but, in the opinion of the
company, reflects all adjustments necessary for the fair statement of the
results of operations for each period. The quarterly data shown below
reflect seasonal and timing variations which are common in the utility
industry.
(Thousands of Dollars)
(Except Earnings Per Share)
1996 March 31 June 30 Sept. 30 Dec. 31
Operating revenues $87,049 $76,298 $83,482 $79,255
Operating income 13,140 7,649 12,762 8,769
Net income 9,541 3,927 9,821 5,034
Earnings per share of common stock .93 .34 .95 .45
1995 March 31 June 30 Sept. 30 Dec. 31
Operating revenues $82,765 $72,054 $86,340 $77,383
Operating income 11,815 10,880 15,283 8,163
Net income 7,757 3,865 11,731 4,303
Earnings per share of common stock .74 .34 1.16 .38
Net income for the fourth quarter of 1996 was $5.0 million, compared with
$4.3 million in 1995. Factors contributing to the higher net income
included increased electric and gas sales, decreased maintenance expense,
and the recognition of insurance proceeds to offset previously incurred
legal expenses.
Total electric sales for the fourth quarter of 1996 increased 3.9% over
the same period in 1995. Residential electric sales increased 1.2%, while
commercial and farm sales increased 7.1% primarily due to increased crop
drying. Large power and light sales increased 2.7%.
Total gas volumes increased 6.0%, due primarily to a 7.2% increase in
transportation gas volumes. Gas revenues were $14.9 million for the fourth
quarter of 1996, compared to $13.6 million for the fourth quarter of 1995.
The increased revenues reflect increased residential and commercial sales
due to colder temperatures.
Maintenance expense for the fourth quarter of 1996 was $3.8 million
compared to $4.1 million for the fourth quarter of 1995. The variation for
the fourth quarter is primarily due to differences in the timing of
maintenance projects. For the calendar year, maintenance expense for 1996
was $16.2 million, compared to $14.9 million for 1995.
Other operating expense for the fourth quarter of 1996 reflects the
recognition of approximately $2.5 million received from insurance
companies in partial settlement of environmental litigation proceedings.
The proceeds offset environmental litigation expenses incurred by the
company in 1996. Other operating expense for the fourth quarter of 1996
also reflects a provision of $0.4 million related to anticipated future
environmental investigation expense.
Other operating expense for the proposed merger of Interstate Power
Company, IES Industries and WPL Holdings were $1.2 million in the fourth
quarter of 1996, compared to $1.3 million for the fourth quarter of 1995.
Depreciation expense was $7.9 million for the fourth quarter of 1996,
compared to $7.5 million for the corresponding period of 1995. The
increase is attributable to increased investment in plant and the
implementation of higher depreciation rates.
14. Commitments and Contingencies
The company has a barge transportation contract, coal supply contracts, a
rail transportation contract and a coal transloading agreement applicable
to its power plants. Such contracts, the last of which expires in 1999,
require estimated minimum future payments of $78.8 million.
The company has three natural gas supply contracts, three natural gas
transportation contracts, and three natural gas storage contracts, which
collectively obligate the company for a minimum annual commitment of
approximately $11.1 million. Such agreements individually expire from 1998
through 2002.
15. Merger
The Company, WPL Holdings, Inc. (WPLH) and IES Industries Inc. (IES) have
entered into an Agreement and Plan of Merger (merger agreement), dated
November 10, 1995, as amended on May 22, 1996, and August 16, 1996,
providing for: a) Interstate Power Company (IPC) becoming a wholly-owned
subsidiary of WPLH and b) the merger of IES with and into WPLH, which
merger will result in the combination of IES and WPLH as a single holding
company. The new holding company will be named Interstate Energy
Corporation (Interstate Energy). The proposed merger, which will be
accounted for as a pooling of interests and is intended to be tax-free for
federal income tax purposes, was approved by the shareholders of each
company on September 5, 1996. It is still subject to approval by several
federal and state regulatory agencies. The companies expect to receive
regulatory approvals by the end of the third quarter of 1997.
The summary below contains selected unaudited pro forma financial data for
the year ended December 31, 1996. The financial data should be read in
conjunction with the historical consolidated financial statements and
related notes of the Company, WPLH and IES and in conjunction with the
unaudited pro forma combined financial statements and related notes of
Interstate Energy included in the Form 10-K Annual Report of Interstate
Power Company.
PRO FORMA
COMBINED
IES WPLH IPC (Unaudited)
(in thousands)
Operating Revenues $ 973,912 $ 932,844 $326,084 $2,232,840
Income from Continuing
Operations $ 60,907 $ 73,205 $ 25,860 $ 159,972
Earnings per share from
Continuing Operations $ 2.04 $ 2.38 $ 2.69 $ 2.12
Assets at December 31,
1996 $2,125,562 $1,900,531 $639,200 $4,665,293
Long-term debt, net at
December 31, 1996 $ 744,298 $ 430,190 $188,731 $1,363,219
Under the terms of the merger agreement, the outstanding shares of WPLH's
common stock will remain unchanged and outstanding as shares of Interstate
Energy. Each outstanding share of IES common stock will be converted to
1.14 shares of Interstate Energy's common stock. Each share of IPC's
common stock will be converted to 1.11 shares of Interstate Energy's
common stock. It is anticipated that Interstate Energy will retain WPLH's
common share dividend payment level as of the effective time of the
merger. On January 22, 1997, the Board of Directors of WPLH declared a
quarterly dividend of 50 cents per share. This represents an equivalent
annual rate of $2.00 per share.
WPLH is a holding company headquartered in Madison, Wisconsin, and is the
parent company of Wisconsin Power and Light Company (WP&L) and Heartland
Development Corporation (HDC). WP&L supplies electric and gas service to
approximately 385,000 and 150,000 customers, respectively, in south and
central Wisconsin. HDC and its principal subsidiaries are engaged in
business in three major areas: environmental, energy and affordable
housing services.
IES is a holding company headquartered in Cedar Rapids, Iowa, and is the
parent company of IES Utilities Inc. (Utilities) and IES Diversified Inc.
(Diversified). Utilities supplies electric and gas service to
approximately 336,000 and 176,000 customers, respectively, in Iowa.
Diversified and its principal subsidiaries are primarily engaged in the
energy-related, transportation and real estate development businesses.
Interstate Energy will be the parent company of Utilities, WP&L and IPC
and will be registered under the Public Utility Holding Company Act of
1935 (1935 Act), as amended. The merger agreement provides that these
operating utility companies will continue to operate as separate entities
for a minimum of three years beyond the effective date of the merger. In
addition, the non-utility operations of IES and WPLH will be combined
shortly after the effective date of the merger under one entity to manage
the diversified operations of Interstate Energy. The corporate
headquarters of Interstate Energy will be in Madison, Wisconsin.
The Securities & Exchange Commission (SEC) historically has interpreted
the 1935 Act to preclude registered holding companies, with limited
exceptions, from owning both electric and gas utility systems. Although
the SEC has recently recommended that registered holding companies be
allowed to hold both gas and electric utility operations if the affected
states agree, it remains possible that the SEC may require as a condition
to its approval of the proposed merger that IPC, WPLH and IES divest their
gas utility properties, and possibly certain non-utility ventures of IES
and WPLH, within a reasonable time after the effective date of the
proposed merger.
16. Segments of Business
Information about the company's operations in different segments of
business for 1996, 1995 and 1994 are shown in the table below.
Electric Gas Total
(Thousands of Dollars)
1996
Revenue $276,620 $49,464 $326,084
Operating income (Before income taxes) $ 54,835 $ 4,066 $ 58,901
Depreciation and amortization expense $ 28,919 $ 2,168 $ 31,087
Capital expenditures $ 25,738 $ 5,259 $ 30,997
Utility plant - net $455,368 $42,344 $497,712
1995
Revenue $274,873 $43,669 $318,542
Operating income (Before income taxes) $ 57,255 $ 9,521 $ 66,776
Depreciation and amortization expense $ 27,442 $ 2,118 $ 29,560
Capital expenditures $ 26,583 $ 1,996 $ 28,579
Utility plant - net $459,250 $39,277 $498,527
1994
Revenue $261,730 $45,920 $307,650
Operating income (Before income taxes) $ 42,881 $ 554 $ 43,435
Depreciation and amortization expense $ 26,156 $ 2,056 $ 28,212
Capital expenditures $ 38,129 $ 2,969 $ 41,098
Utility plant - net $461,245 $39,436 $500,681
Independent Auditors' Report
DELOITTE & TOUCHE LLP
To the Stockholders and Board of Directors of Interstate Power Company:
We have audited the accompanying balance sheets and statements of
capitalization of Interstate Power Company as of December 31, 1996 and
1995 and the related statements of income, retained earnings and of cash
flows for each of the three years in the period ended December 31, 1996.
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Company at December 31, 1996 and
1995 and the results of its operations and its cash flows for each of the
three years in the period ended December 31, 1996 in conformity with
generally accepted accounting principles.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Davenport, Iowa
January 30, 1997
REPORT OF MANAGEMENT ON FINANCIAL STATEMENT RESPONSIBILITY
Company management has prepared and is responsible for the integrity and
objectivity of the financial statements and related financial information
included in this Annual Report to Stockholders. These statements have been
prepared in conformity with generally accepted accounting principles and
necessarily include amounts based on informed judgements and estimates
with appropriate consideration to materiality of events pending at year
end.
In meeting its responsibility, management has implemented an internal
accounting system designed to safeguard the assets of the company and
assure that transactions are executed in accordance with its directives.
An organizational structure has been developed that provides for
appropriate functional responsibilities. A qualified internal audit staff
is responsible for monitoring the system of policies, procedures and
methods of operation. The company believes its system of internal controls
appropriately balances the cost/benefit relationship, and that errors or
irregularities will be detected and corrected on a timely basis.
The Audit Committee of the Board of Directors, comprised of three
directors who are not employees, periodically meets with management and
with the independent certified public accountants to discuss and evaluate
auditing, internal control and financial reporting matters.
Management believes that these policies and procedures provide reasonable
assurance that the operations of the company are in accordance with the
standards and responsibilities entrusted to management.
/s/ Michael R. Chase
Michael R. Chase
President and Chief
Executive Officer
Selected Financial Data
1996 1995 1994 1993 1992
(Thousands of Dollars)
Operating revenues $326,084 $318,542 $307,650 $309,468 $285,298
Operation 203,867 191,335 202,545 204,871 181,391
Maintenance 16,164 14,881 17,160 16,771 16,966
Depreciation and
amortization 31,087 29,560 28,212 26,955 25,887
Income taxes 16,582 20,635 7,913 8,967 9,337
Property and other taxes 16,064 15,990 16,298 17,080 16,533
283,764 272,401 272,128 274,644 250,114
Operating income 42,320 46,141 35,522 34,824 35,184
Other income (deductions)
- net 2,225 (1,690) 1,990 780 724
Income before interest
charges 44,545 44,451 37,512 35,604 35,908
Interest charges 16,222 16,795 16,845 16,617 16,691
Net income 28,323 27,656 20,667 18,987 19,217
Preferred dividends 2,463 2,458 2,454 2,861 2,975
Earnings available for
common stock $ 25,860 $ 25,198 $ 18,213 $ 16,126 $ 16,242
Average number of common
shares outstanding 9,593,664 9,564,287 9,478,741 9,316,387 9,297,748
Earnings per common
share $ 2.69 $ 2.63 $ 1.92 $ 1.73 $ 1.74
Common dividends
declared per share $ 2.08 $ 2.08 $ 2.08 $ 2.08 $ 2.08
Total assets $639,200 $634,316 $628,845 $604,361 $558,100
Long-term debt and
mandatory sinking fund
preferred stock $195,878 $212,916 $212,965 $227,007 $207,958
Common Stock Market Data
The company's common stock (IPW) is listed on the New York, Midwest and
Pacific Stock Exchanges. The company's preferred stock and first mortgage
bonds are traded in the over-the-counter market. The company was
reorganized as of March 31, 1948, and dividends on common stock have been
paid each quarter since September 20, 1948, with the annual payments
rising from $0.60 per share to $2.08 per share. As of December 31, 1996,
there were 13,904 holders of common stock and 152 holders of preferred
stock. Historical quarterly data for the company's common stock is shown
below:
Avg. Shares
Dividends Price Range Outstanding
Quarter Ended Paid High Low 12 Months Ended
March 31, 1994 $0.52/Share 30 1/4 - 26 3/8 9,341,751
June 30, 1994 $0.52/Share 29 - 22 1/4 9,379,249
Sept. 30, 1994 $0.52/Share 24 3/4 - 21 9,428,183
Dec. 31, 1994 $0.52/Share 23 3/4 - 20 7/8 9,478,741
March 31, 1995 $0.52/Share 25 1/4 - 23 9,519,098
June 30, 1995 $0.52/Share 25 - 23 1/2 9,548,054
Sept. 30, 1995 $0.52/Share 27 1/4 - 23 1/4 9,563,020
Dec. 31, 1995 $0.52/Share 33 1/4 - 27 1/8 9,564,287
March 31, 1996 $0.52/Share 33 1/2 - 30 9,564,287
June 30, 1996 $0.52/Share 32 1/2 - 29 7/8 9,565,211
Sept. 30, 1996 $0.52/Share 32 1/2 - 28 7/8 9,574,607
Dec. 31, 1996 $0.52/Share 31 1/4 - 28 3/4 9,593,664
EX-23
DELOITTE & TOUCHE LLP
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in Registration
Statement No. 33-62644 on Form S-3 and Registration Statement No.
33-32529 on Form S-8 of Interstate Power Company of our reports
dated January 30, 1997, appearing in and incorporated by reference
in the Annual Report on Form 10-K of Interstate Power Company for
the year ended December 31, 1996.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Davenport, Iowa
March 10, 1997
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EX-99.1
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
WPL Holdings, Inc. (WPLH), IES Industries Inc. (IES), Interstate Power
Company (IPC), and certain related parties have entered into an Agreement
and Plan of Merger, dated as of November 10, 1995, as amended (the Merger
Agreement), providing for (a) the merger of IES with and into WPLH and (b)
the merger of IPC with a subsidiary of WPLH pursuant to which IPC will
become a subsidiary of WPLH (the above referenced mergers are collectively
referred herein to as the Mergers). In connection with the consummation
of the Mergers, WPLH will change its name to Interstate Energy
Corporation. Detailed information with respect to the Merger Agreement
and the proposed Mergers is contained in the Joint Proxy
Statement/Prospectus, dated July 11, 1996, as supplemented by the
Supplement to Joint Proxy Statement/Prospectus, dated August 21, 1996,
contained in IPC's Registration Statements on Form S-4, Registration Nos.
333-07931 and 333-10401 relating to the meetings of shareowners of WPLH,
IES and IPC to vote on the Merger Agreement and related matters.
The following unaudited pro forma financial information combines the
historical consolidated balance sheets and statements of income of WPLH,
IES and IPC, including their respective subsidiaries, after giving effect
to the Mergers. The historical data for WPLH have been adjusted to
reflect the restatement of such data to account for certain discontinued
operations discussed in the notes hereto. The unaudited pro forma
combined balance sheet at December 31, 1996, gives effect to the Mergers
as if they had occurred at December 31, 1996. The unaudited pro forma
combined statements of income for each of the three years in the period
ended December 31, 1996, give effect to the Mergers as if they had
occurred at January 1, 1994. These statements are prepared on the basis
of accounting for the Mergers as a pooling of interests and are based on
the assumptions set forth in the notes thereto. In addition, the pro
forma financial information does not give effect to the expected synergies
or the cost to be incurred to achieve such synergies. The pro forma
financial information, however, does reflect the transaction costs to
effect the Mergers.
The following pro forma financial information has been prepared from, and
should be read in conjunction with, the historical consolidated financial
statements and related notes thereto of WPLH, IES and IPC. The following
information is not necessarily indicative of the financial position or
operating results that would have occurred had the Mergers been
consummated on the date, or at the beginning of the periods, for which the
Mergers are being given effect nor is it necessarily indicative of future
operating results or financial position.
INTERSTATE ENERGY CORPORATION
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
December 31, 1996
(In thousands)
ASSETS WPLH IES IPC Pro Pro
(As (As (As Forma Forma
Reported) Reported) Reported) Adj. Combined
UTILITY PLANT
Electric $1,729,311 $2,007,839 $853,007 $--- $4,590,157
Gas 227,809 175,472 68,047 --- 471,328
Other 175,998 126,850 --- --- 302,848
Total 2,133,118 2,310,161 921,054 --- 5,364,333
Accumulated provision
for depreciation 967,436 1,030,390 426,471 --- 2,424,297
Construction work
in progress 55,519 43,719 3,129 --- 102,367
Nuclear fuel--net 19,368 34,725 --- --- 54,093
Net utility plant 1,240,569 1,358,215 497,712 --- 3,096,496
OTHER PROPERTY, PLANT
AND EQUIPMENT--NET AND
INVESTMENTS (NOTE 8) 144,671 314,071 453 --- 459,195
CURRENT ASSETS
Cash and cash
equivalents 11,070 8,675 3,072 --- 22,817
Accounts receivable--
net 88,798 62,861 28,227 --- 179,886
Fossil fuel inventories,
at average cost 15,841 13,323 16,623 --- 45,787
Materials and supplies,
at average cost 29,907 22,842 6,214 --- 58,963
Prepayments and other 26,786 70,350 13,497 --- 110,633
Total current assets 172,402 178,051 67,633 --- 418,086
EXTERNAL DECOMMISSIONING
FUND 90,671 59,325 --- --- 149,996
DEFERRED CHARGES AND
OTHER 252,218 215,900 73,402 --- 541,520
TOTAL ASSETS $1,900,531 $2,125,562 $639,200 $--- $4,665,293
See accompanying Notes to Unaudited Pro Forma Combined Financial
Statements.
INTERSTATE ENERGY CORPORATION
UNAUDITED PRO FORMA COMBINED BALANCE SHEET (Continued)
December 31, 1996
(In thousands)
WPLH IES IPC Pro Pro
(As (As (As Forma Forma
Reported) Reported) Reported) Adj. Combined
LIABILITIES AND EQUITY
CAPITALIZATION
Common Stock Equity:
Common Stock
(Note 1) $308 $407,635 $33,848 ($441,033) $758
Other stockholders'
equity (Note 1) 607,047 219,246 172,210 430,033 1,428,536
Total common stock
equity 607,355 626,881 206,058 (11,000) 1,429,294
Preferred stock not
mandatorily redeemable 59,963 18,320 10,819 --- 89,102
Preferred stock
mandatory sinking fund --- --- 24,147 --- 24,147
Long-term debt--net 362,564 701,100 171,731 --- 1,235,395
Total
capitalization 1,029,882 1,346,301 412,755 (11,000) 2,777,938
CURRENT LIABILITIES
Current maturities,
sinking funds, and
capital lease
obligations 67,626 23,598 17,000 --- 108,224
Commercial paper, notes
payable and other 102,779 135,000 28,700 --- 266,479
Variable rate demand
bonds 56,975 --- --- --- 56,975
Accounts payable and
accruals 120,986 99,861 14,013 --- 234,860
Taxes accrued 4,669 43,926 16,953 --- 65,548
Other accrued
liabilities 54,303 54,498 11,785 11,000 131,586
Total current
liabilities 407,338 356,883 88,451 11,000 863,672
OTHER LIABILITIES
Deferred income taxes 245,686 262,675 99,303 --- 607,664
Deferred investment
tax credits 36,931 34,470 17,013 --- 88,414
Accrued environmental
remediation costs 74,075 47,502 7,234 --- 128,811
Capital lease
obligations --- 19,600 --- --- 19,600
Other liabilities and
deferred credits 106,619 58,131 14,444 --- 179,194
Total other
liabilities 463,311 422,378 137,994 --- 1,023,683
TOTAL CAPITALIZATION
AND LIABILITIES $1,900,531 $2,125,562 $639,200 $ --- $4,665,293
See accompanying Notes to Unaudited Pro Forma Combined Financial
Statements
INTERSTATE ENERGY CORPORATION
UNAUDITED PRO FORMA COMBINED STATEMENTS OF INCOME
YEAR ENDED DECEMBER 31, 1996
(In thousands, except per share amounts)
WPLH IES IPC Pro Pro
(As (As (As Forma Forma
Reported) Reported) Reported) Adj. Combined
Operating Revenues
Electric $589,482 $574,273 $276,620 $--- $1,440,375
Gas 165,627 273,979 49,464 --- 489,070
Other 177,735 125,660 --- --- 303,395
Total operating revenues 932,844 973,912 326,084 --- 2,232,840
Operating Expenses
Electric production fuels 114,470 84,579 57,560 --- 256,609
Purchased power 81,108 88,350 61,556 --- 231,014
Cost of gas sold 104,830 217,351 31,617 --- 353,798
Other operation 319,154 214,759 53,134 --- 587,047
Maintenance 46,492 49,001 16,164 --- 111,657
Depreciation and amortization 90,683 107,393 31,087 --- 229,163
Taxes other than income taxes 34,603 48,171 16,064 --- 98,838
Total operating expenses 791,340 809,604 267,182 --- 1,868,126
Operating Income 141,504 164,308 58,902 --- 364,714
Other Income (Expense)
Allowance for equity funds
used during construction 2,270 (100) 13 --- 2,183
Other income and
deductions---net 15,644 (2,333) 3,763 --- 17,074
Total other income (expense) 17,914 (2,433) 3,776 --- 19,257
Interest Charges 41,089 52,619 16,222 --- 109,930
Income from continuing
operations before income taxes
and preferred dividends 118,329 109,256 46,456 --- 274,041
Income Taxes 41,814 47,435 18,133 --- 107,382
Preferred dividends of
subsidiaries (Note 2) 3,310 914 2,463 --- 6,687
Income from continuing
Operations (Notes 3 and 6) $73,205 $60,907 $25,860 $--- $159,972
Average Common Shares
Outstanding (Note 1) 30,790 29,861 9,594 5,236 75,481
Earnings per share of Common
Stock from continuing
operations 2.38 2.04 2.69 $--- 2.12
See accompanying Notes to Unaudited Pro Forma Combined Financial
Statements
INTERSTATE ENERGY CORPORATION
UNAUDITED PRO FORMA COMBINED STATEMENTS OF INCOME
YEAR ENDED DECEMBER 31, 1995
(In thousands, except per share amounts)
WPLH IES IPC Pro Pro
(As (As (As Forma Forma
Reported) Reported) Reported) Adj. Combined
Operating Revenues
Electric $546,324 $560,471 $274,873 $--- $1,381,668
Gas 139,165 190,339 43,669 --- 373,173
Other 121,766 100,200 --- --- 221,966
Total operating revenues 807,255 851,010 318,542 --- 1,976,807
Operating Expenses
Electric production fuels 116,488 96,256 62,164 --- 274,908
Purchased power 44,940 66,874 57,566 --- 169,380
Cost of gas sold 84,002 141,716 25,888 --- 251,606
Other operation 253,277 201,390 45,717 --- 500,384
Maintenance 42,043 46,093 14,881 --- 103,017
Depreciation and amortization 86,319 97,958 29,560 --- 213,837
Taxes other than income taxes 34,188 49,011 15,990 --- 99,189
Total operating expenses 661,257 699,298 251,766 --- 1,612,321
Operating Income 145,998 151,712 66,776 --- 364,486
Other Income (Expense)
Allowance for equity funds
used during construction 1,425 386 --- --- 1,811
Other income and
deductions---net 6,509 3,170 (2,872) --- 6,807
Total other income (expense) 7,934 3,556 (2,872) --- 8,618
Interest Charges 42,896 47,689 16,795 --- 107,380
Income from continuing
operations before income taxes
and preferred dividends 111,036 107,579 47,109 --- 265,724
Income Taxes 36,108 42,489 19,453 --- 98,050
Preferred dividends of
subsidiaries (Note 2) 3,310 914 2,458 --- 6,682
Income from continuing
Operations (Notes 3 and 6) $71,618 $64,176 $25,198 $--- $160,992
Average Common Shares
Outstanding (Note 1) 30,774 29,202 9,564 5,140 74,680
Earnings per share of Common
Stock from continuing
operations $2.33 $2.20 $2.63 $--- $2.16
See accompanying Notes to Unaudited Pro Forma Combined Financial
Statements
INTERSTATE ENERGY CORPORATION
UNAUDITED PRO FORMA COMBINED STATEMENTS OF INCOME
YEAR ENDED DECEMBER 31, 1994
(In thousands, except per share amounts)
WPLH IES IPC Pro Pro
(As (As (As Forma Forma
Reported) Reported) Reported) Adj. Combined
Operating Revenues
Electric $531,747 $537,327 $261,730 $--- $1,330,804
Gas 151,931 165,569 45,920 --- 363,420
Other 112,039 82,968 --- --- 195,007
Total operating revenues 795,717 785,864 307,650 --- 1,889,231
Operating Expenses
Electric production fuels 123,469 85,952 61,384 --- 270,805
Purchased power 37,913 68,794 58,339 --- 165,046
Cost of gas sold 100,942 120,795 30,905 --- 252,642
Other operation 248,847 176,863 51,917 --- 477,627
Maintenance 41,227 52,841 17,160 --- 111,228
Depreciation and amortization 80,351 86,378 28,212 --- 194,941
Taxes other than income taxes 33,788 46,308 16,298 --- 96,394
Total operating expenses 666,537 637,931 264,215 --- 1,568,683
Operating Income 129,180 147,933 43,435 --- 320,548
Other Income (Expense)
Allowance for equity funds
used during construction 3,009 2,299 166 --- 5,474
Other income and
deductions---net 10,245 3,472 3,100 --- 16,817
Total other income (expense) 13,254 5,771 3,266 --- 22,291
Interest Charges 36,657 44,399 16,845 --- 97,901
Income from continuing
operations before income taxes
and preferred dividends 105,777 109,305 29,856 --- 244,938
Income Taxes 36,043 41,573 9,189 --- 86,805
Preferred dividends of
subsidiaries (Note 2) 3,310 914 2,454 --- 6,678
Income from continuing
Operations (Notes 3 and 6) $66,424 $66,818 $ 18,213 $--- $ 151,455
Average Common Shares
Outstanding (Note 1) 30,671 28,560 9,479 5,041 73,751
Earnings per share of Common
Stock from continuing
operations $2.17 $2.34 $1.92 $--- $2.05
See accompanying Notes to Unaudited Pro Forma Combined Financial
Statements
INTERSTATE ENERGY CORPORATION
NOTES TO UNAUDITED PRO FORMA
COMBINED FINANCIAL STATEMENTS
1. The pro forma combined financial statements reflect the conversion of
each share of IES Common Stock (no par value) outstanding into 1.14
shares of WPLH Common Stock ($.01 par value) and the conversion of
each share of IPC Common Stock ($3.50 par value) into 1.11 shares of
WPLH Common Stock ($.01 par value), and the continuation of each
share of WPLH Common Stock ($.01 par value) outstanding as one share
of Interstate Energy Common Stock, as provided in the Merger
Agreement. The pro forma adjustment to common stock equity restates
the common stock account to equal par value for all shares to be
issued ($.01 par value per share of Interstate Energy Common Stock)
and reclassifies the excess to other stockholders' equity. The pro
forma combined statements of income are presented as if the companies
were combined on January 1, 1994. The pro forma combined balance
sheet gives effect to the Mergers as if they occurred at December 31,
1996.
The number of shares of common stock used for calculating per share
amounts is based on the exchange ratio shown below.
As Pro As Pro As Pro
Exchange reported forma reported forma reported forma
Ratio 12/31/96 12/31/96 12/31/95 12/31/95 12/31/94 12/31/94
IES 1.14 29,861 34,042 29,202 33,290 28,560 32,558
IPC 1.11 9,594 10,649 9,564 10,616 9,479 10,522
WPLH N/A 30,790 30,790 30,774 30,774 30,671 30,671
2. The Preferred Stock of IPC has been reclassified in the pro forma
statements as preferred stock of subsidiary companies and deducted in
the determination of income from continuing operations which reflects
the holding company structure of the entity formed through the
Mergers.
3. IES's income from continuing operations for the year ended December
31, 1996, included costs incurred relating to its successful defense
of a hostile takeover attempt mounted by MidAmerican Energy Company.
The after-tax impact on income from continuing operations was a
decrease of $4.6 million.
Nonrecurring items affecting WPLH's performance for the year ended
December 31, 1996, included the impact of the sale of a combustion
turbine and the sale of WPLH's assisted-living real estate
investments. The after-tax impact of these items on continuing
operations was an increase of $5.9 million. Nonrecurring items
affecting WPLH's 1994 performance included the impact of early
retirement and severance programs and the reversal of a coal contract
penalty assessed by the Wisconsin Public Service Commission which was
charged to income in 1989. The net after-tax impact of these items
on income from continuing operations for the year ended December 31,
1994, was a decrease of $8.3 million related to the early retirement
and severance programs offset by an increase of $4.9 million related
to the coal contract penalty reversal.
4. The allocation between WPLH, IES and IPC and their customers of the
estimated cost savings of approximately $749 million over ten years
resulting from the Mergers, net of the costs incurred to achieve such
savings, will be subject to regulatory review and approval. Costs
arising from the proposed Mergers are currently estimated to be
approximately $78 million (including transaction costs of $11 million
related to fees for financial advisors, attorneys, accountants and
consultants). The estimate of potential cost savings constitutes a
forward-looking statement and actual results may differ materially
from this estimate. The estimate is necessarily based upon various
assumptions that involve judgments with respect to, among other
things, future national and regional economic and competitive
conditions, technological developments, inflation rates, regulatory
treatments, weather conditions, financial market conditions, future
business decisions and other uncertainties. No assurance can be
given that the estimated cost savings will actually be realized.
In addition to the $11 million remaining transaction costs, since the
announcement of the Merger Agreement on November 11, 1995, IES, IPC
and WPLH have collectively incurred $6 million of merger-related
transaction costs through December 31, 1996, which have been expensed
and are reflected in the combined income statements as presented.
The remaining merger-related $11 million of transaction costs have
been reflected in the pro forma balance sheet at December 31, 1996,
such that shareowners' equity has been reduced by $11 million and
accrued liabilities have been increased by $11 million. None of the
estimated cost savings, or costs to achieve such savings, have been
reflected in the pro forma combined financial statements.
5. Intercompany transactions (including purchased and exchange power
transactions) between WPLH, IES and IPC during the periods presented
were included in the determination of regulated rates and were not
material. Accordingly, no pro forma adjustments were made to
eliminate such transactions.
6. The financial statements of WPLH reflect the discontinuance of
operations of its utility energy and marketing consulting business in
1995. The discontinuance of this business resulted in a pre-tax loss
in the fourth quarter of 1995 of $7.7 million. The after-tax loss on
disposition was $11.0 million reflecting the associated tax expense
on disposition due to the non-deductibility of the carrying value of
goodwill at sale. During 1996, WPLH recognized an additional loss of
$1.3 million, net of applicable income tax benefit, associated with
the final disposition of the business. Operating revenues, operating
expenses, other income and expense and income taxes for the
discontinued operations for the time periods presented have been
excluded from income from continuing operations. Interest expense
has been adjusted for the amounts associated with direct obligations
of the discontinued operations.
Operating revenues, related losses, and income tax benefits
associated with the discontinued operations for the years ending
December 31 were are follows:
1995 1994
Operating revenues $24,979 $34,798
Loss from discontinued operations before
income tax $ 3,663 $ 1,806
Income tax benefit 1,451 632
Loss from discontinued operations $ 2,212 $ 1,174
7. Accounting principles have been consistently applied in the financial
statement presentations for WPLH, IES and IPC with one exception.
IPC does not include unbilled electric and gas revenues in its
calculation of total revenues. The utility subsidiaries of WPLH and
IES accrue unbilled revenues. The impact of this difference in
accounting principles among the companies does not have a material
impact on the unaudited pro forma combined financial statements as
presented and, accordingly, no adjustments have been made to conform
to accounting principles.
8. At December 31, 1996, IES had a $20.0 million investment in Class A
common stock of McLeod, Inc. (McLeod), a $9.2 million investment in
Class B common stock and vested options that, if exercised, would
represent an additional investment of approximately $2.3 million.
McLeod provides local, long-distance and other telecommunications
services.
McLeod completed an Initial Public Offering (IPO) of its Class A
common stock in June 1996 and a secondary offering in November 1996.
As of December 31, 1996, IES is the beneficial owner of approximately
10.6 million total shares on a fully diluted basis. Class B shares
are convertible at the option of IES into Class A shares at any time
on a one-for-one basis. The rights of McLeod Class A common stock
and Class B common stock are substantially identical except that
Class A common stock has 1 vote per share and Class B common stock
has 0.40 vote per share. IES currently accounts for this investment
under the cost method.
IES has entered into an agreement with McLeod which provides that for
two years commencing on June 10, 1996, IES cannot sell or otherwise
dispose of any of its securities of McLeod without the consent of the
McLeod Board of Directors. This contractual sale restriction results
in restricted stock under the provisions of Statement of Financial
Accounting Standards No. 115 (SFAS No. 115), Accounting for Certain
Investments in Debt and Equity Securities, until such time as the
restrictions lapse and such shares become qualified for sale within a
one year period. As a result, IES currently carries this investment
at cost.
The closing price of the McLeod Class A common stock on December 31,
1996, on the Nasdaq National Market was $25.50 per share. The
current market value of the shares IES beneficially owns
(approximately 10.6 million shares) is currently impacted by, among
other things, the fact that the shares cannot be sold for a period of
time and it is not possible to estimate what the market value of the
shares will be at the point in time such sale restrictions are
lifted. In addition, any gain upon an eventual sale of this
investment would likely be subject to a tax.
Under the provisions of SFAS No. 115, the carrying value of the
McLeod investment will be adjusted to estimated fair value at the
time such shares become qualified for sale within a one year period;
this will occur on June 10, 1997, which is one year before the
contractual restrictions on sale are lifted. At that time, the
adjustment to reflect the estimated fair value of this investment
will be reflected as an increase in the investment carrying value
with the unrealized gain reported as a net of tax amount in other
common shareholders' equity until realized (i.e. until the shares are
sold by IES).
