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EXHIBIT 10(a)
WHOLESALE POWER COORDINATION
AND DISPATCH OPERATING AGREEMENT
Between
MINNESOTA POWER, INC.
and
SPLIT ROCK ENERGY LLC
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This WHOLESALE POWER COORDINATION AND DISPATCH OPERATING AGREEMENT
("AGREEMENT") is dated as of this 14th day of April, 2000, between Minnesota
Power, Inc, a Minnesota corporation ("MP"), and SPLIT ROCK ENERGY LLC, a
Minnesota limited liability company ("Split Rock"). For purposes of this
AGREEMENT, MP or Split Rock shall be referred to individually as a "Party" and
collectively as the "Parties."
RECITALS
WHEREAS, MP is an investor-owned electric utility that owns electric
generation, transmission and distribution facilities and is engaged in the
generation, transmission and sale of electric power and energy to retail
customers in the state of Minnesota and to wholesale customers in Minnesota and
throughout the Midwest; and
WHEREAS, Great River Energy ("GRE") is an electric cooperative company
that owns electric generation and transmission facilities and is engaged in the
generation, transmission, and sale of electric power and energy at wholesale in
the state of Minnesota; and
WHEREAS, MP and GRE, operate their respective electric systems within
the interconnected electrical transmission network in accordance with the
requirements and guidelines set forth by the Mid-Continent Area Power Pool
("MAPP"); and
WHEREAS, MP and GRE, have agreed to enter into a business alliance
intended to mutually benefit them in such areas as risk management, economic
commitment and dispatch of generating and purchased power resources, load and
capability responsibilities under MAPP, and wholesale power marketing and
brokering; and
WHEREAS, Split Rock was formed by MP and GRE as a limited liability
company, with MP and GRE as its original members, and MP and GRE have executed
and entered into a Member Control Agreement to set out the terms and conditions
of the business alliance; and
WHEREAS, MP desires to enter into a power coordination agreement with
Split Rock setting out the terms and conditions under which MP will, among other
things, make its generating and purchased power resources available to Split
Rock for commitment and dispatch, and Split Rock will, among other things,
commit and dispatch those resources on an economic basis to meet MP's native
load needs and obligations under power sales contracts with third parties, be
responsible for meeting MP's load and capability responsibilities under MAPP,
and facilitate joint resource planning.
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NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt, adequacy and sufficiency of which are
hereby acknowledged, and intending to be legally bound, MP and Split Rock hereto
agree as follows:
SECTION 1.
TERM OF AGREEMENT AND DEFINITIONS
Section 1.01 Term of Agreement.
This AGREEMENT shall become effective on the latest of: (1) the date
this AGREEMENT is approved by the Administrator of the RUS or accepted for
filing by any other regulatory agencies as required by law; or (2) the date
hereof. After such effective date, unless earlier terminated in accordance with
its provisions, this AGREEMENT shall remain in effect as long as MP is a member
of Split Rock and a party to the Member Control Agreement.
Section 1.02 Purpose of Agreement.
The purpose of this AGREEMENT, among other things, is to establish the
terms and conditions under which Split Rock shall: (i) become responsible for
integrating the commitment and dispatch of MP's Generation Resources, and the
procurement of capacity and energy, with the Generation Resources of other
Members to serve safely and reliably, and at the lowest reasonable costs, the
full requirements of MP's End-Use Loads and the End-Use Loads of other Members;
(ii) become a member of MAPP and undertake those MAPP obligations and
responsibilities necessary for Split Rock to assume the MAPP End-Use Load
Obligation for the Members' combined electric loads and to represent the
Members' interests in MAPP and its subcommittees for that purpose; (iii)
cooperate with the Members to establish an equitable sharing of the costs and
benefits of Split Rock membership; (iv) facilitate joint resource planning
between and among the Members; and (v) market excess Generation Resources on a
coordinated basis to maximize the value of the Members' Generating Resources.
Section 1.03 Definitions.
The following terms, when used herein, shall have the meanings
specified below
a. "Due Diligence" means the exercise of good faith efforts to
perform a required or requested act on a timely basis and in accordance with
Good Utility Practice, using the technical and human resources reasonably
available.
b. "End-Use Load" means the load of persons or other entities that
purchase or produce electric energy for their own consumption and not for
resale, as defined in the MAPP Restated Agreement or by any similar successor
organization.
c. "End-Use Load Obligation" means an obligation imposed by law,
regulation or contract to serve End-Use Load within the MAPP Region including
any obligation imposed by an assignment
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of End-Use Load Obligation, as defined in the MAPP Restated Agreement, or by any
similar successor organization.
d. "FERC" means the Federal Energy Regulatory Commission (or its
successor).
e. "Force Majeure" means any cause beyond the control of the Party
affected, including, without limitation, the following: acts of God, fire,
flood, landslide, lightning, earthquake, tornado, storm, freeze, drought,
blight, famine, epidemic or quarantine; strike, lockout, or other labor
difficulty; act or failure to act on the part of any Party that impedes or
prevents the others Party's performance; theft, casualty, accident, equipment
breakdown, failure or shortage of, or inability to obtain from usual sources
goods, labor, equipment, information or drawings, machinery, supplies, energy,
fuel, or materials; embargo; injunction; litigation or arbitration with
suppliers or manufacturers; civil unrest, war, civil disorder or disturbance,
explosion, or breach of contract by any supplier, contractor, subcontractor,
laborer or materialman, including, but not limited to, failure of facilities,
flood, earthquake, storm, fire, lightning, epidemic, war, riot, civil
disturbance, labor disturbance, sabotage, and restraint by court or public
authority.
f. "Generation Resources" means a Member's electric generation resources,
whether owned or under contract.
g. "Good Utility Practice" means any of the practices, methods, and acts
engaged in or approved by a significant portion of the electric utility industry
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 the decision was made, could have been expected to accomplish the desired
result at the lowest possible cost consistent with good business practices,
reliability, and safety. Good Utility Practice is not intended to be limited to
the optimum practice, method, or act to the exclusion of all others, but rather
as a spectrum of possible practices, methods, or acts which could have been
expected to accomplish the desired result at the lowest possible cost consistent
with good business practices, reliability, and safety. Good Utility Practice
includes due regard for manufacturers' warranties and the requirements of
regulatory authorities.
h. "Hedges" means (a) futures or forward transactions, (b) transactions
for the purchase or sale of Power, (c) the purchase or sale of put or call
options, (d) transactions for the purchase or sale of fuel, (e) similar
transactions; in each case the purpose of which is to offset the price risk of
transactions envisioned under this AGREEMENT. Hedges may be entered into by
Split Rock with the Parties or third parties. "Hedge", used as a verb, means the
act of entering into Hedges.
i. "MAPP" means the Mid-Continent Area Power Pool or its successor
organization.
j. "MAPP Agreement" means the Mid-Continent Area Power Pool Restated
Agreement dated January 12, 1996, as amended, and as may be further amended from
time to time.
k. "Member" means a utility that has executed the Member Control Agreement
and has become a participant in Split Rock.
l. "NERC" means the North American Electric Reliability Council or its
successor reliability entity.
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m. "Off-System Transaction" means a wholesale purchase or sale of
capacity or energy by Split Rock or MP from or to an entity that is not a Member
of Split Rock.
n. "Power" means either electric capacity or energy or both.
o. "RUS" means the U.S.D.A. Rural Utilities Service or its successor.
p. "Scheduling Center" means a center responsible for one or more of the
following functions, consistent with FERC standards of conduct requirements:
marketing, 24-hour transaction (buying and selling) scheduling, and Generation
Resource commitment and dispatch decisions.
SECTION 2.
MEMBERSHIP IN SPLIT ROCK
Throughout the term of this AGREEMENT, MP shall maintain its membership
in Split Rock as provided for under the Member Control Agreement, and shall be
subject fully to the terms and conditions of that Agreement, as it may be
amended from time to time.
SECTION 3.
PARTIES' RESPONSIBILITIES
Section 3.01 MP Authorized Split Rock Representative.
MP shall designate in writing an Authorized Representative, which
person shall have full authority to, among other things, coordinate MP's actions
under this AGREEMENT, to provide support to Split Rock for the services to be
provided hereunder, and to review and recommend revisions of the cost-sharing
and transfer price principles agreed to by the Members. MP may, at any time,
designate a new Authorized Representative by providing written notice to Split
Rock and the other Members. In addition, MP's Authorized Representative may, by
providing written notice to Split Rock and the other Members, designate
Alternate Authorized Representatives who, unless explicitly provided otherwise,
shall, for the duration of their designation, have the full authority and
responsibility to act on behalf of MP as if they were MP's Authorized
Representative.
Section 3.02 Split Rock Responsibilities.
The responsibilities of Split Rock shall include but are not
necessarily limited to the following:
a. Establish procedures and operating protocols consistent with the
provisions hereof governing the coordination of MP's Generation Resources and
other Members' Generation Resources to serve End-Use Load pursuant to this
AGREEMENT.
b. Review MP's estimates of future loads and projected fuel and
resource requirements and recommend resource plans to meet Split Rock's
obligations to the Members; provided, however, that nothing herein shall
obligate MP to acquire any additional generation resources for itself and for
any Member as a result of Split Rock's recommendations.
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c. Perform the dispatch, scheduling, commodity trading, and marketing
functions in this AGREEMENT.
d. Represent MP's End-Use Load interests in NERC and MAPP and
other organizations or reliability councils in regions in which Split Rock may
transact, and perform, on behalf of MP, those responsibilities and undertake
those obligations that are consistent with and required by such organizations
and/or councils.
e. Prepare and distribute for MP's and the other Members' review and
approval annual operational budgets.
f. Take such other actions and perform such other duties as may be
required in connection with the terms of this AGREEMENT and approved by the
Members.
Section 3.02.1 Arrangements with Affiliates. MP recognizes that Split
Rock may fulfill some or all of its obligations under this AGREEMENT
through contracts and arrangements with other parties, and that such
parties may be affiliated with a Member. To the extent Split Rock
contracts with a Member or a Member's affiliate for the performance of
one or more of Split Rock's obligations hereunder, the other Members
must consent to any such arrangement.
Section 3.02.2 Limitation on Split Rock Responsibilities. Nothing in
this AGREEMENT or otherwise shall be interpreted as requiring that
Split Rock assume any responsibility, and Split Rock shall not have any
responsibility, for the physical operation and/or maintenance of any of
MP's Generation Resources or facilities, employees, fuel arrangements
or obligations, or for any MP debt or other obligations related to
ownership or operation and maintenance of those resources or
facilities.
Section 3.03 MP Responsibilities.
The responsibilities of MP under this AGREEMENT shall include but are
not necessarily limited to the following:
a. MP shall pay fifty percent (50%) of the costs and charges for the
Scheduling Center, and related facilities, staff, and other operating expenses
incurred by Split Rock in performing the functions hereunder.
b. MP shall make available to Split Rock under an applicable
Administrative Services Agreement those of MP's staff and resources as are
reasonably necessary and available to support Split Rock's functions and
responsibilities hereunder, consistent with applicable regulatory principles and
standards of conduct.
c. MP shall be responsible for the costs of owning and operating its
control center and providing or obtaining from third parties all necessary
control area functions and services. MP shall provide to Split Rock control
center information and coordinate control area functions and services with Split
Rock and/or any of the Members as reasonably necessary for Split Rock to fulfill
its obligations hereunder.
d. MP shall coordinate with Split Rock, and designate Split Rock as its
agent where necessary, to obtain from third parties the transmission service
necessary to implement this AGREEMENT.
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SECTION 4.
INTEGRATED DISPATCH OF MEMBERS' GENERATION RESOURCES
Section 4.01 Integrated Dispatch and Scheduling.
a. Split Rock shall provide services that are necessary and appropriate
to economically commit and dispatch the Members' Generation Resources on an
integrated basis to serve the Members' combined End-Use Load and any Off-System
Transactions arranged by Split Rock on behalf of itself and/or the Member(s). In
order to effectuate a least-cost, economic dispatch, MP shall operate its
Generation Resources consistent with Split Rock's instructions; provided,
however, as to such MP Generation Resources, MP operators may take any and all
actions that they reasonably believe, based on the circumstances and information
available to them at the time, are necessary and appropriate to avoid or
alleviate emergency conditions or to protect the safety of persons or property.
b. MP shall provide and maintain, at its own expense, in accordance
with specifications and procedures satisfactory to meet its obligations
hereunder, such telecommunications and other facilities at its premises as are
necessary to transfer data relating to its Generation Resources, and other
necessary operating data, to and from the Split Rock Scheduling Center.
c. Split Rock shall operate and maintain a Scheduling Center as necessary
to commit and dispatch the Members' Generating Resources to serve their combined
End-Use Loads on an economic basis and to consolidate Split Rock's and/or the
Members' wholesale trading, marketing and scheduling activities.
d. Should MP or any other Member provide notice of its intent to retire,
dispose of, or let lapse any of its Generation Resources, Split Rock shall
recommend to the Members alternative generation resources to replace such
retired, disposed, or lapsed Generation Resources.
Section 4.02 Ownership and Maintenance of Generation Resources.
a. MP shall have the responsibility, at its cost, to operate and maintain
its Generation Resources, including maintaining any necessary accreditation,
consistent with Good Utility Practice and any operating practices or protocols
implemented by Split Rock pursuant to this AGREEMENT.
b. MP may retire or dispose of any of its existing Generation Resources,
or choose not to renew or extend the contractual arrangements for Generation
Resources under contract, upon reasonable notice to Split Rock and the other
Members, and MP shall have no obligation to Split Rock or the Members to replace
any retired, disposed or lapsed Generation Resource.
c. Should an event of Force Majeure or other event of partial or complete
outage of MP's Generation Resources occur, MP shall immediately notify Split
Rock and the other Members of such event, its expected duration, and MP's
intentions to address such event. During such Force Majeure events, MP shall
take all reasonable actions, in coordination with Split Rock, to restore the
operation and rating of any Generation Resource adversely affected by such Force
Majeure events.
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d. Should MP experience an outage of any of its Generation Resources that
may affect the ability of Split Rock to fulfill its responsibilities under this
AGREEMENT or any applicable prevailing regional reliability requirements, Split
Rock will take any actions that it reasonably believes are necessary and
appropriate to obtain replacement capacity or energy from other resources.
Unless other arrangements have been made and agreed to by the other Members, the
cost of such replacement capacity and energy shall be borne by MP.
e. MP shall be responsible for procuring any fuel or other resources
needed for the operation of its Generation Resources and for maintaining and
administering any contacts for the purchase and delivery of such fuel or
resources; provided, however, that consistent with any confidentiality
obligations or restrictions, MP shall coordinate with Split Rock and provide
such information as may be reasonably necessary for Split Rock to maximize the
Members' efficient use and procurement of fuel and other resources.
SECTION 5.
END-USE LOAD SERVICE
Section 5.01 Split Rock Obligations.
As provided for in Section 6.4.3(f) of the MAPP Restated Agreement, MP
hereby assigns to Split Rock, and Split Rock hereby accepts such assignment from
MP, all of MP's End-Use Load Obligation. Notwithstanding Split Rock's
obligations hereunder, MP at all times retains all of the rights and obligations
it may have under its own contracts to provide electric service to MP's End-Use
Loads, including contracts with municipal electric utility customers.
Section 5.02. Dispatch to Serve Other Members.
In the event that Split Rock's dispatch directions result in MP's
Generation Resources being used to serve end-use Loads other than MP's End-Use
Load or other Members' Off-System Transactions, MP shall sell to Split Rock that
capacity or energy transferred to serve such other Members' requirements, under
MP's market-based rate tariff. In the event that Split Rock's dispatch
directions result in MP's End-Use Load or Off-System Transactions being served
from the capacity and energy of other Members' Generation Resources, MP shall
purchase from Split Rock that capacity and energy transferred to serve MP's
requirements. To the extent that Split Rock's dispatch directions result in the
need to serve all or a portion of MP's End-Use Load or Off-System Transactions
other than from MP's Generation Resources, MP shall purchase that capacity or
energy to serve those requirements at the price, terms, and conditions for such
transactions determined in accordance with transfer pricing principles
established by Split Rock and approved by the Members. Such transactions shall
be identified by Split Rock, and shall be accounted for and settled between the
Members on a monthly basis.
Section 5.03 Generation Resource Obligations.
MP shall designate a level of Generation Resources, and be required to
operate and maintain such Generation Resources consistent with Good Utility
Practices, sufficient to meet
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MP's contribution to Split Rock's End-Use Load Obligation. Unless otherwise
agreed to by the Members, MP shall be solely responsible for any costs incurred
by Split Rock as a result of MP's failure to meet its obligations herein.
SECTION 6.
MARKETING AND SALE OF EXCESS CAPACITY AND ENERGY
Section 6.01 Existing MP Off-System Transactions.
MP shall retain its rights and obligations under the existing MP
Off-System Transactions described in Appendix A. Split Rock will provide
scheduling and dispatch services for MP in connection with these Off-System
Transactions.
Section 6.02 Marketing of MP's Power Resources.
Split Rock shall market the excess Power available from MP's Generation
Resources, including the purchase and resale of Power from non-Members, with the
goal to maximize the economic value of MP's Generation Resources and reduce the
cost to MP of serving MP's End-Use Loads. Split Rock may fulfill its obligations
hereunder by contracting with MPEX under the Wholesale Marketing and Operating
Services Agreement Between MPEX and Split Rock Energy LLC.
Section 6.03. Purchase and Resale of Members' Excess Power.
MP hereby grants to Split Rock the exclusive option to purchase for
resale to non-Member customers any excess Power available from MP's Generation
Resources, after deduction for the Power dispatched from those Generation
Resources to serve MP's End-Use Loads, any existing MP Off-System Transactions,
and any released energy available as a result of arrangements with MP's retail
customers. The Power for any such sales to non-Members shall be dispatched as
part of Split Rock's dispatch services under this AGREEMENT, and shall be sold
by MP to Split Rock under MP's market-based rate tariff at the transfer price
and under the terms and conditions agreed to by the Members. If Split Rock does
not exercise its option hereunder to purchase excess Power from MP, MP shall
have the right, consistent with its other obligations under this AGREEMENT, to
separately enter into transactions with third parties for the sale of such
excess Power.
Section 6.04 Duration of Split Rock's Contracts to Supply Power to
Non-Members.
No transaction for the purchase or sale of Power between Split Rock and
non-Members shall have a duration longer than the notice period for terminating
this AGREEMENT unless one or more of the Members agrees in writing to assume the
obligation to provide service and assume any and all liabilities under such
transactions after the dissolution of Split Rock and the termination of this
AGREEMENT.
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SECTION 7.
MEMBERSHIP IN MAPP
Section 7.01 End-Use Load and Reliability Membership.
In recognition of the End-Use Load Obligation assumed by Split Rock
under this AGREEMENT, Split Rock shall apply for and become an End-Use Load and
Reliability Member of MAPP, taking responsibility for the End-Use Loads and the
Generation Resources of MP and satisfying MP's related obligations under the
MAPP Agreement.
Section 7.02 MAPP Application.
MP and Split Rock, in conjunction with the other Members, shall
mutually cooperate in preparation of Split Rock's MAPP membership application,
and MP shall support the application through the MAPP approval process. As part
of that process, MP shall prepare and submit to MAPP an application for a change
in its MAPP membership status consistent with Split Rock's assumption of End-Use
Load Obligation and Reliability Membership for MP's End-Use Loads and Generation
Resources. Notwithstanding the foregoing, MP intends to participate in MAPP as a
Transmission Owning Member.
Section 7.02.1 Change in MAPP Membership Status.
If, during the term of this AGREEMENT, (a) MP ceases to be a MAPP
Member, (b) the MAPP Agreement is terminated or materially modified,
(c) some or all of MAPP's functions and responsibilities are assumed
under a successor or different organization or entity, all terms and
conditions with respect to MAPP shall remain in force until new terms
and conditions are mutually agreed upon by the Members.
Section 7.03 Costs of MAPP Membership.
The costs of Split Rock's application to and participation in MAPP
shall be considered a Split Rock cost and shall be charged to MP and the other
Members pursuant to this AGREEMENT.
SECTION 8.
STANDARDS FOR SYSTEM OPERATIONS
Section 8.01 Operating Standards.
To the extent applicable, MP shall operate its electrical systems and
Split Rock shall carry out its responsibilities under this AGREEMENT consistent
with Good Utility Practice and in compliance with NERC and MAPP requirements.
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Section 8.02 Scheduling, Metering, and Systems Coordination
Split Rock shall adopt principles and procedures to address the
scheduling of MP's Generation Resources, metering, record-keeping, and electric
systems coordination.
Section 8.03 Information Requirements.
The Parties shall maintain records reflecting hourly schedules of power
and energy generated and actual deliveries of power and energy from MP
Generation Resources, and shall make such records available to each other and to
the other Members upon request. Nothing in this AGREEMENT shall obligate either
Party to retain records longer than the period prescribed by FERC, RUS, MAPP, or
other applicable regulatory body, reliability council or operational standard.
SECTION 9.
TERMINATION
Section 9.01 Notice of Termination.
This AGREEMENT may be terminated by MP upon one year's notice of
termination, provided, however, that such termination shall not take effect
between May 1 and September 30 of any year. Termination will be effective on the
first day of the month, and written notice of termination must be given at least
one year prior to the first day of the month that MP intends for its notice to
become effective and for the AGREEMENT to terminate. Upon termination in
accordance with this Section 9.01, MP shall be excused and relieved of all
obligations and liabilities under this AGREEMENT, except those liabilities
incurred before the effective date of termination or as a result of the
termination. Each Party shall use every reasonable effort to mitigate any
damages resulting from a breach and/or termination of this AGREEMENT.
Section 9.02 Effect of Termination.
If, upon termination of this AGREEMENT, the Parties are unable to
mutually agree as to the effects of termination, any dispute over the effects of
termination shall be resolved through arbitration under Section 11 of this
AGREEMENT. The Parties shall allocate the responsibility for purchase and sales
obligations under Split Rock contracts outstanding as of termination in
accordance with principles to be adopted and implemented by the Members. The
termination of this AGREEMENT shall not discharge either Party from any
obligation it owes to the other or to any other Member by reason of any
transaction, cost, damage, expense, investment, or liability which shall occur
or arise prior to such termination. The Parties intend that any such obligation
owed (whether the same shall be known or unknown at the termination of this
AGREEMENT) shall survive the termination of this AGREEMENT.
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SECTION 10.
GENERAL
Section 10.01 Continuity of Operation.
a. Unless otherwise directed by Split Rock as part of its integrated
dispatch, the operating performance of MP's electrical system under this
AGREEMENT shall be continuous, except for the following:
(1) Interruptions or reductions due to Force Majeure, which, by exercise of
due diligence and foresight, could not reasonably have been avoided.
(2) Interruptions or reductions due to operation of devices installed for
power system protection.
(3) Temporary interruptions or reductions which are necessary or desirable
for the purposes of maintenance, repairs, replacements, installation of
equipment or investigation and inspection. MP will give Split Rock and other
Members reasonable advance notice of such interruptions or reductions, except in
cases of emergency make such advance notice impracticable as reasonably
determined by MP, and MP will use best reasonable efforts to remove the cause
thereof as quickly as practicable under the circumstances.
b. The Party prevented from performing its obligations for any of the
reasons set forth in Section 10.01(a), above, shall exercise Due Diligence in
attempting to remove the cause of its failure to perform, and nothing herein
shall be construed as permitting that Party to continue to fail to perform after
said cause has been removed; however, the Party shall not be obligated to agree
to any settlement of a strike or labor dispute which, in that Party's sole
discretion, may be inadvisable or detrimental to its interests.
Section 10.02. Character of Power and Energy.
All deliveries of electric power and energy hereunder shall be of the
character commonly known as three-phase, sixty-Hertz power and energy, unless
explicitly stated otherwise.
Section 10.03 Successors and Assigns.
This AGREEMENT shall be binding upon the respective Parties, their
successors and assigns, on and after the effective date hereof. None of the
provisions of this AGREEMENT, whether in whole or in part, shall be assigned nor
their performance delegated by any Party to any third party without the written
consent of the other, which shall not be unreasonably withheld, unless such
assignment is to an affiliate or successor that assumes all of the rights and
obligations hereunder so long as such assignment would not adversely affect any
of the federal, state or reliability council approvals or findings required or
in place for Split Rock's operations under this AGREEMENT.
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Section 10.04 No Third Party Beneficiary.
No provision of this AGREEMENT shall in any way inure to the benefit of
any customer, or any other third party, so as to constitute any such person as a
third party beneficiary under this AGREEMENT, or of any one or more of the terms
hereof, or otherwise give rise to any cause of action in any person not a Party
hereto.
Section 10.05 Notices.
Any notice, demand, request, or communication required or authorized by
this AGREEMENT shall be either hand-delivered or mailed by certified mail,
return-receipt requested, with postage prepaid, to:
Minnesota Power, Inc.
30 West Superior Street
Duluth, Minnesota 55802
Attn: Donald J. Shippar
Chief Operating Officer - Minnesota Power Electric
with copies to:
Steven W. Tyacke
Assistant General Counsel
Minnesota Power, Inc.
30 West Superior Street
Duluth, Minnesota 55802
On behalf of Split Rock to:
Split Rock Energy LLC
17845 East Highway 10
P.O. Box 800
Elk River, MN 55330-0800
Attn: David Saggau
The designation and titles of the persons to be notified or the address
of such person may be changed at any time by written notice.
Section 10.06 Billing and Payment Procedure.
Unless governed by separate written agreement, the Parties shall bill
and make payments in accordance with the following procedures:
a. The Party (selling Party) providing any billable services to the other
Party (buying Party) shall issue an invoice by the fifteenth of each month for
services provided during the previous month.
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b. The buying Party's payments to the selling Party shall be due if by
mail at the selling Party's general office, or if by wire transfer to a bank and
account named by the selling Party, no later than fifteen days following the
date of the invoice, but such payment shall not be due before the 20th day of
the month. The buying Party shall have the right to dispute the amount of any
such invoice by protest on or before the payment date, but such dispute shall
not relieve the buying Party of the obligation to pay the entire amount,
including the disputed portion, by the payment date. If such due date falls on a
Saturday, Sunday, or holiday, such due date shall be the next working day.
Payments received after the due date shall be considered late and shall bear
interest on the payment due at a rate equal to the rate set out in Section
35.19a(a) of FERC's Regulations, as such section may be amended from time to
time, for the number of days elapsed from and including the day after the due
date, to and including the payment date.
c. Upon the failure of the buying Party to pay all amounts due within
thirty days of the due date, the buying Party shall be in default.
Section 10.07 Right of Access; Right to Audit.
a. Each Party, after receiving reasonable notice from another Party, will
give authorized agents and employees of the other the right to enter its
premises at all reasonable times for the purpose of reviewing hourly metering
and scheduling records, for reading or checking meters, or for constructing,
testing, repairing, renewing, exchanging, or removing any or all of its
equipment which may be located on the property of the other, or for any work
incident to performing system operations under this AGREEMENT or rendering
service contracted for.
b. Each Party shall have the right from time to time, upon written request
and at its own expense, to audit the other Party's books and records to verify
the information provided by that Party as required under this AGREEMENT.
Section 10.08 Drafting Responsibility.
No Member shall be deemed solely responsible for drafting all or any
portion of this AGREEMENT and, in the event of a dispute, responsibility for any
ambiguities arising from any provision of this AGREEMENT shall be equally shared
by the Members.
Section 10.09 Captions.
All titles, subject headings, section titles, and similar items are
provided for the purpose of reference and convenience and are not intended to be
inclusive, definitive, or to affect the meaning of the contents or scope of this
AGREEMENT.
Section 10.10 Governing Law.
This AGREEMENT shall be interpreted and governed by the laws of the
state of Minnesota, or the laws of the United States, as applicable.
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Section 10.11 Regulation.
This AGREEMENT, and all rights and obligations of MP hereunder is
subject to all applicable state and federal laws and regulations. The Parties
agree to defend this AGREEMENT before any regulatory body, and to cooperate to
seek to obtain any necessary regulatory approvals. Fees or costs associated with
obtaining approvals shall be the responsibility of MP.
Section 10.12 No Joint Venture or Partnership.
No provision of this AGREEMENT shall be interpreted to mean or imply
that the Members have established or intend to establish a joint venture or a
partnership.
Section 10.13 Amendment.
Any amendment, alteration, variation, modification, or waiver of the
provisions of this AGREEMENT shall be valid only after it has been signed by the
Parties and, if required, approved or accepted by any regulatory body with
jurisdiction over MP or this AGREEMENT.
Section 10.14 Severability.
If any governmental agency or court of competent jurisdiction holds
that any provision of this AGREEMENT is invalid, or if, as a result of a change
in any federal or state law or constitutional provision, or any rule or
regulation promulgated pursuant thereto, any provision of this AGREEMENT is
rendered invalid or results in the impossibility of performance thereof, the
remainder of this AGREEMENT shall not be affected thereby and shall continue in
full force and effect. In such an event, the Parties shall promptly renegotiate
in good faith new provisions to restore this AGREEMENT as nearly as possible to
its original intent and effect.
Section 10.15 Superseding Effect.
This AGREEMENT supersedes and has merged into it all prior oral and
written agreements on the same subjects by or among the Parties, with the effect
that this AGREEMENT shall control.
SECTION 11.
ARBITRATION
Section 11.01 Arbitration.
Any controversy or claim arising out of or relating to this AGREEMENT
or the breach hereof which cannot be resolved amicably shall be settled by
arbitration. A Party desiring to invoke this arbitration provision shall serve
written notice upon the other of its intention to do so. The arbitration shall
be conducted in accordance with the Commercial Arbitration Rules of the American
Arbitration then prevailing. The American Arbitration Association shall
administer the arbitration and act as appointing authority of the arbitrator.
Each Party shall bear its own costs and
-15-
<PAGE>
expenses of the arbitration, including attorneys and expert witness fees, and
shall equally share the expense of the arbitrator and the administrative
expenses of the arbitration. The arbitration shall be governed by the United
States Arbitration Act, 9 U.S.C. Sections 1-16. The award of the arbitrator
shall be final, and judgment on the award rendered by the arbitrator may be
entered by any court having jurisdiction. The arbitration shall be conducted in
Minneapolis, Minnesota unless the Parties agree otherwise.
Section 11.02 Effect of Termination on Arbitration.
This Section 11 shall survive the termination of this AGREEMENT as
necessary to resolve any outstanding disputes that arose prior to the time that
termination of this AGREEMENT became effective as well as any disputes involving
termination, as provided for in Section 9.02 herein
[The next page is the signature page]
.-16-
<PAGE>
IN WITNESS WHEREOF, the Parties have caused this AGREEMENT to be
executed by their duly authorized representatives as of the day and year first
above written.
MINNESOTA POWER, INC.
By: /s/ R. D. Edwards
--------------------------------
Robert D. Edwards
Title: Executive Vice President and
-----------------------------
President - MP Electric
SPLIT ROCK ENERGY LLC
By: /s/ Ade Mussell
-------------------------------
Ade Mussell
Title: President
-----------------------------
<PAGE>
APPENDIX A
MP Existing Off-System Transactions
-----------------------------------
-18-
<PAGE>
<TABLE>
MPE Existing
Transactions
(May 1, 2000)
<CAPTION>
CAPACITY
PURCHASES &
SALES
----------------------------------------------------------------------------------------------------------------------
Company Contract MP Purchase/Sale MW End of Term
------- -------- ---------------- -- -----------
<S> <C> <C> <C> <C>
OH OM-L98-01 Purchase 150 MW 10/31/01
Alliant (IPW) ALT-1 Sale Summers-55 MW 4/30/01
Alliant (WPL) WPL-1 Sale 75 MW 12/31/07
MPC M-2 Sale 10 MW 10/31/00
NSP NSP-1 Sale 150 MW 10/31/00
OTP OTP-4 Sale 50 MW 5/1/01-10/31/01
5/1/02-10/31/02
OTP OTP-5/NSP-8 Sale 50 MW 10/31/00
<CAPTION>
ENERGY SALES
& PURCHASES
----------------------------------------------------------------------------------------------------------------------
Company Contract MP Purchase/Sale MW End of Term
------- -------- ---------------- -- -----------
<S> <C> <C> <C> <C>
GRE GRE-6 Sale 50 MW 10/31/00
WEP WEP Purchase 50 MW 6/1/00-8/31/00
<CAPTION>
SERVICES
----------------------------------------------------------------------------------------------------------------------
Company Contract MP Purchase/Sale MP Service Provided End of Term
------- -------- ---------------- ------------------- -----------
<S> <C> <C> <C> <C>
MRES MR-2 Sale Operating Reserves 60 day notice
NWPS NWPS-1 Sale Operating Reserves 30 day notice
<CAPTION>
BROKERING
----------------------------------------------------------------------------------------------------------------------
Company Contract MP Purchase/Sale MP Service Provided End of Term
------- -------- ---------------- ------------------- -----------
<S> <C> <C> <C> <C>
MHEB Real Time Services 1/1/01
Enbridge Marketing Services
Rainy River Marketing Services
</TABLE>
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