EX-10.5 6 ex_10-5.htm EXHIBIT 10-5 GENCO POWER SUPPLY AGREEMENT DATED AS OF OCTOBER 14, 2005 Unassociated Document
FirstEnergy Generation Corp.                                                      EXHIBIT 10.5
FERC Electric Tariff, Original Volume No. 1
Service Agreement No. 2
 
[Execution Copy]

GENCO POWER SUPPLY AGREEMENT

Between FirstEnergy Generation Corp., Seller
and
FirstEnergy Solutions Corp., Buyer

This GENCO Power Supply Agreement ("Agreement") dated October 14, 2005 is made by and between FirstEnergy Generation Corp., ("Genco" or "Seller"), and FirstEnergy Solutions Corp. ("Solutions" or "Buyer"). Genco and Solutions may be identified collectively as "Parties" or individually as a "Party." This Agreement is entered into in connection with the transfer of ownership of The Cleveland Electric Illuminating Company, Ohio Edison Company, Pennsylvania Power Company, and The Toledo Edison Company’s fossil and pumped storage generation assets to Genco.

WHEREAS, Seller is a generation only company that owns, operates and leases fossil and pumped storage generation assets; and

WHEREAS, Seller is engaged exclusively in the business of owning and operating this generation and selling Power at wholesale, and

WHEREAS, Seller is a wholly owned subsidiary of Solutions; and

WHEREAS, Buyer desires to obtain the entire electric output of the generating plants owned by Genco as described in Exhibit C (collectively, the “Genco Facilities”), pursuant to the rates, terms and conditions set forth herein.

It is agreed as follows:

I.  TERM
 
The sale and purchase of Power pursuant to this Agreement shall begin on December 1, 2005, or such later effective date authorized by the FERC, for an initial term ending December 31, 2010. This Agreement shall remain in effect from year to year thereafter unless terminated by either Party upon at least sixty days written notice prior to the end of the calendar year.



Issued by: Donald R. Schneider, President                                                  Effective Date:
Issued on: October 14, 2005                                                           December 1, 2005
 
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II. SALE AND PURCHASE OF CAPACITY AND ENERGY

A.
Seller shall make available to Buyer all of the Capacity, Energy, Ancillary Services, Emission Allowances, and Renewable Energy Attributes, if any, which are available from the Genco Facilities and Buyer shall purchase and pay for such Capacity, Energy, Ancillary Services, Emission Allowances and Renewable Energy Attributes in accordance with the terms of this Agreement. Seller shall make firm Capacity, Energy, and Ancillary Services available at the Delivery Points. Buyer shall arrange and will be responsible for all transmission, congestion costs, losses, and related services at and from the Delivery Points. The Capacity, Energy, Ancillary Services, Emission Allowances and Renewable Energy Attributes supplied by Seller are collectively referred to as Buyer's "Power Supply Requirements." Electric Capacity and Energy supplied shall be sixty-hertz, three phase alternating current. The Power Supply Requirements will be provided in accordance with Good Utility Practice, and where applicable, the provisions of the applicable Transmission Provider OATT, and the requirements of the FERC.

B.
Genco will operate and maintain the Genco Facilities in accordance with Good Utility Practice, the applicable requirements of the FERC, NERC, Electric Reliability Organization, as well as the requirements of the regional reliability councils or Regional Entity and Regional Transmission Organizations where the Genco Facilities are located.

III. SCHEDULING AND SYSTEM PLANNING
 
A.  
In order for Solutions to be able to plan adequately to market and sell all of the Capacity, Energy, Ancillary Services, Emission Allowances and Renewable Energy Attributes available from the Genco Facilities, Genco shall notify Solutions on or before November 1 of each year during the term of this Agreement of the amount of Capacity, Energy, Ancillary Services, Emission Allowances and Renewable Energy Attributes it expects to have available for each day in each month of the next calendar year. The information provided in this notification shall include, but not be limited to, the time and expected duration of any planned outage of the Genco Facilities.

B.
Genco shall update its annual forecast of available Capacity, Energy, Ancillary Services, Emission Allowances, and Renewable Energy Attributes for any change or expected changed in the operation of Genco Facilities that would materially affect the annual forecast provided to Solutions. Genco shall provide the updated forecast to Solutions for any full month(s) remaining in the calendar year within thirty days of becoming aware of the change or expected change in the operation of the Genco Facilities.
 
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C.  
Genco will supply Solutions, upon request, any such information as is necessary to meet the requirements of the applicable Transmission Provider OATT, the FERC, NERC, Electric Reliability Organization, regional reliability council, Regional Entity or Government Authority.
 
IV. PRICE

Seller shall charge, and Buyer shall pay, for Buyer's Power Supply Requirements, as follows on a monthly basis.

A. Charges

Buyer will pay Seller the Monthly Charge under the formula set forth in Exhibit A for the Power Supply Requirements available from the Genco Facilities identified in Exhibit C.

B. Billing and Payment

Unless otherwise specifically agreed upon by the Parties, the calendar month shall be the standard period for all billings and payments under this Agreement. As soon as practicable after the end of each month, the Seller will render an invoice to Buyer for the amounts due for Power Supply Requirements for the preceding month. Payment shall be due and payable within ten days of receipt of the invoice or, if such day is not a Business Day, then on the next Business Day. Buyer will make payments by electronic funds transfer or by other mutually agreeable method(s) to the account designated by Seller. Any amounts not paid by the due date will be deemed delinquent and will accrue interest at the Interest Rate until the date of payment in full.
 
C. Records

Each Party shall keep complete and accurate records of its operations under this Agreement and shall maintain such data as may be necessary to determine the reasonableness and accuracy of all relevant data, estimates, payments or invoices submitted by or to it hereunder. All records regarding this Agreement shall be maintained for a period of three years from the date of the invoice or payment, or for such longer period as may be required by law.

D. Audit and Adjustment Rights

Buyer shall have the right, at its own expense and during normal business hours, to audit the accounts and records of Seller that reasonably relate to the provision of service under this Agreement. If the audit reveals an inaccuracy in an invoice, the necessary adjustment in such invoice and the payments therefor will be promptly made. No adjustment will be made for any invoice or payment made more than one year from rendition thereof. This provision shall survive the termination of this Agreement for a period of one year from the date of termination for the purpose of such invoice and payment objections. To the extent that audited information includes Confidential Information, the Buyer shall keep all such information confidential under Section VII.C.
 
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E. Section 205 Rights

Nothing contained herein shall be construed as affecting in any way the right of the Party furnishing service under this Agreement to unilaterally make application to the FERC for a change in rates under Section 205 of the Federal Power Act and pursuant to the FERC's Rules and Regulations thereunder. Provided, however, that nonrate terms and conditions may be amended only by a written agreement signed by the Parties.

V. METERING

Generation metering shall be installed, operated and maintained in accordance with the applicable generator interconnection agreements between the Genco, Transmission Provider, and Transmission Owner. Metering between control areas shall be handled in accordance with the applicable Transmission Provider OATT. Retail metering shall be provided in accordance with applicable state law. Nothing in this Agreement requires Seller or Buyer to install new metering facilities.

VI. NOTICES

All notices, requests, statements or payments shall be made as specified below. Notices required to be in writing shall be delivered by letter, facsimile or other documentary form. Notice by facsimile or hand delivery shall be deemed to have been received by the close of the Business Day on which it was transmitted or hand delivered (unless transmitted or hand delivered after close in which case it shall be deemed to have been received at the close of the next Business Day). Notice by overnight mail or courier shall be deemed to have been received two Business Days after it was sent. A Party may change its addresses by giving notice as provided above.

NOTICES & CORRESPONDENCE: 
 
 To Seller: FirstEnergy Generation Corp., President
  76 South Main St.
  Akron, Ohio 44308
 
 
 To Buyer: FirstEnergy Solutions Corp., Director, Wholesale Energy Transactions
  395 Ghent Road
  Akron, Ohio 44333
 
 
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INVOICES & PAYMENTS: 
 
 To Seller:  FirstEnergy Generation Corp., President
  76 South Main St.
  Akron, Ohio 44308
 
 
 To Buyer:  FirstEnergy Solutions Corp., Director, Wholesale Energy Transactions
  395 Ghent Road
  Akron, Ohio 44333
 
SCHEDULING:
 
 
 To Seller: FirstEnergy Generation Corp., President
  76 South Main St.
  Akron, Ohio 44308
 
 
 To Buyer:  FirstEnergy Solutions Corp., Director, Wholesale Energy Transactions  
  395 Ghent Road
  Akron, Ohio 44333
 
VII. MISCELLANEOUS

A. Performance Excused
 
If either Party is rendered unable by an event of Force Majeure to carry out, in whole or part, its obligations hereunder, then, during the pendency of such Force Majeure but for no longer period, the Party affected by the event shall be relieved of its obligations insofar as they are affected by Force Majeure. The Party affected by an event of Force Majeure shall provide the other Party with written notice setting forth the full details thereof as soon as practicable after the occurrence of such event and shall take all reasonable measures to mitigate or minimize the effects of such event of Force Majeure. Nothing in this Section requires Seller to deliver, or Buyer to receive, Power at Delivery Points other than those Delivery Points designated under this Agreement, or relieves Buyer of its obligation to make payment under Section IV of this Agreement.
 

Force Majeure shall be defined as any cause beyond the reasonable control of, and not the result of negligence or the lack of diligence of, the Party claiming Force Majeure or its contractors or suppliers. It includes, without limitation, earthquake, storm, lightning, flood, backwater caused by flood, fire, explosion, act of the public enemy, epidemic, accident, failure of facilities, equipment or fuel supply, acts of God, war, riot, civil disturbances, strike, labor disturbances, labor or material shortage, national emergency, restraint by court order or other Government Authority, interruption of synchronous operation, or other similar or dissimilar causes beyond the control of the Party affected, which causes such Party could not have avoided by exercising Good Utility Practice. Nothing contained herein shall be construed to require a Party to settle any strike, lockout, work stoppage, or other industrial disturbance or dispute in which it may be involved or to take an appeal from any judicial, regulatory or administrative action.

 
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B. Transfer of Title and Indemnification

Title and risk of loss related to the Power Supply Requirements shall transfer to the Buyer at the Delivery Points. Seller warrants that it will deliver the Power Supply Requirements to Buyer free and clear of all liens, security interests, claims and encumbrances or any interest therein or thereto by any person arising prior to the Delivery Points. Each Party shall indemnify, defend and hold harmless the other Party from and against any claims arising from or out of any event, circumstance, act or incident first occurring or existing during the period when control and title to the Power Supply Requirements is vested in the other Party.
 
C. Confidentiality

Neither Party shall disclose to third parties Confidential Information obtained from the other Party pursuant to this Agreement except in order to comply with the requirements of FERC, NERC, Electric Reliability Organization, applicable regional reliability councils or Regional Entity, Regional Transmission Organization, or Government Authority. Each Party shall use reasonable efforts to prevent or limit the disclosure required to third parties under this section.

D. Further Assurances

Subject to the terms and conditions of this Agreement, each of the Parties will use reasonable efforts to take, or cause to be taken, all action, and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate and effectuate the transactions contemplated hereby.

E. Assignment

No assignment, pledge, or transfer of this Agreement shall be made by any Party without the prior written consent of the other Party, which consent shall not be unreasonably withheld. No prior written consent shall be required for (i) the assignment, pledge or other transfer to another company or affiliate in the same holding company system as the assignor, pledgor or transferor, or (ii) the transfer incident to a merger or consolidation with, or transfer of all (or substantially all) of the assets of the transferor, to another person or business entity; provided, however, that such assignee, pledgee, transferee or acquirer of such assets or the person with which it merges or into which it consolidates assumes in writing all of the obligations of such Party hereunder and provided, further, that either Party may, without the consent of the other Party (and without relieving itself from liability hereunder), transfer, sell, pledge, encumber or assign such Party's rights to the accounts, revenues or proceeds hereof in connection with any financing or other financial arrangements.
 

 

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F. Governing Law

The interpretation and performance of this Agreement shall be according to and controlled by the laws of the State of Ohio regardless of the laws that might otherwise govern under applicable principles of conflicts of laws.
 
G. Counterparts

This Agreement may be executed in two or more counterparts and each such counterpart shall constitute one and the same instrument.

H. Waiver

No waiver by a Party of any default by the other Party shall be construed as a waiver of any other default. Any waiver shall be effective only for the particular event for which it is issued and shall not be deemed a waiver with respect to any subsequent performance, default or matter.

I. No Third Party Beneficiaries

This Agreement shall not impart any rights enforceable by any third party other than a permitted successor or assignee bound to this Agreement.

J. Severability

Any provision of this Agreement declared or rendered unlawful by any applicable court of law or regulatory agency or deemed unlawful because of a statutory change will not otherwise affect the remaining lawful obligations that arise under this Agreement.

K. Construction

The term "including" when used in this Agreement shall be by way of example only and shall not be considered in any way to be a limitation. The headings used herein are for convenience and reference purposes only.
 
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IN WITNESS WHEREOF, the Parties have caused their duly authorized representatives to execute this Agreement on their behalf as of October 14, 2005.
 
     FirstEnergy Solutions Corp.
 
 
 		  
 		  
 
 
 
President, FirstEnergy Solutions Corp.
 

     FirstEnergy Generation Corp.
   
 
 		  
 		  
 
 
 
 President, FirstEnergy Generation Corp.
 

 

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EXHIBIT A

FirstEnergy Generation Corp.
Monthly Charge Formula
 
 
 
 
 
 

 
EXHIBIT B

DEFINITIONS

In addition to terms defined elsewhere in this Agreement, the terms listed below are defined as follows:

Affiliate means, with respect to any person, any other person (other than an individual) that, directly or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control with, such person. For purposes of the foregoing definition, control means the direct or indirect ownership of more than fifty percent (50%) of the outstanding capital stock or other equity interests having ordinary voting power or ability to direct the affairs of the affiliate.

Ancillary Services means Reactive Supply and Voltage Control from Generation Resources, Regulation and Frequency Response Service, Operating Reserve - Spinning Reserve Service, and Operating Reserve - Supplemental Service and such additional Ancillary Services as defined in the Open Access Transmission Tariff of the Transmission Provider and to the extent available from the Genco Facilities.

Business Day means any day on which Federal Reserve member banks in New York City are open for business.

Capacity means the resource that produces electric Energy, measured in megawatts.

Confidential Information means any confidential, proprietary, trade secret, critical energy infrastructure information, or commercially sensitive information relating to the present or planned business of a Party that is supplied under this Agreement, and is identified as confidential by the Party supplying the information.

Delivery Point means where Capacity, Energy, and Ancillary Services are supplied by the Seller at the point of interconnection between the Genco Facilities and the transmission facilities of Transmission Owner.

Electric Reliability Organization has the meaning given in Section 215(a)(2) of the Federal Power Act.

Emission Allowances means all present and future authorizations to emit specified units of pollutants or hazardous substances, which units are established by the Government Authority with jurisdiction over the Genco Facilities under (i) an air pollution and emissions reduction program designed to mitigate global warming, interstate or intra-state transport of air pollutants; (ii) a program designed to mitigate impairment of surface waters, watersheds, or groundwater; or (iii) any pollution reduction program with a similar purpose. Emission Allowances include allowances, as described above, regardless as to whether the Governmental Authority establishing such Emission Allowances designates such allowances by a name other than “allowances.”

 
 
Energy means electric energy delivered under this Agreement at three-phase, 60-hertz alternating current measured in megawatt hours.

FERC means The Federal Energy Regulatory Commission or its regulatory successor.

Force Majeure has the meaning given in Section VII.A.

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 a reasonable cost consistent with good business practices, reliability, safety, and expedition. Good Utility Practice includes compliance with the standards adopted by NERC, its applicable regional councils, an Electric Reliability Organization or Regional Entity as approved by the FERC. 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 acceptable practices, methods or acts, generally accepted in the region and consistently adhered to by utilities in the region.

Government Authority means any federal, state, local, municipal or other governmental entity, authority or agency, department, board, court, tribunal, regulatory commission, or other body, whether legislative, judicial or executive, together or individually, exercising or entitled to exercise any administrative, executive, judicial, policy, regulatory or taxing authority or power over Buyer or Seller.

Interest Rate means the lesser of Prime Rate plus two percent and the maximum rate permitted by applicable law.

NERC means The North American Electric Reliability Council or any superseding organization with responsibility for establishing reliability standards for the interstate grid.

Power means Capacity and/or Energy.

Prime Rate means for any date, the per annum rate of interest announced from time to time by Citibank, NA as its prime rate for commercial loans, effective for such date as established from time to time by such bank.

Regional Entity has the meaning given in Section 215(a)(7) of the Federal Power Act.

Regional Transmission Organization has the meaning given in Section 3(27) of the Federal Power Act.

Renewable Energy Attributes means any credits, offsets, benefits, or tradable instrument created by law and related to generation of Power from the Genco Facilities.

Taxes means all ad valorem, property, occupation, utility, gross receipts, sales, use, excise and other taxes, governmental charges, licenses, permits and assessments, other than taxes based on net income or net worth.
 
 
Transmission Owner means the entity that owns facilities used for the transmission of Power from the Genco Facilities.

Transmission Provider means the utility or utilities, including Regional Transmission Organizations, transmitting Power on behalf of Buyer from the Delivery Point(s) under this Agreement.

Transmission Provider OATT means the Open Access Transmission Tariff, Open Access Transmission and Energy Markets Tariff, or any other tariff of general applicability on file at the FERC under which the Transmission Provider offers transmission service.




EXHIBIT C
NDC in kW
Genco Facilities
 

FirstEnergy
GENERATION CAPABILITIES
 
PLANT NAME
UNIT #
YEAR IN-
SERVICE
NAMEPLATE
RATINGS (KW)
NET DEMONSTRATED
CAPABILITY (KW)
         
 
ASHTABULA
5
1958
256,000
244,000
ASHTABULA
Total
    
 
256,000
 
244,000
         
BAY SHORE
1
1955
140,625
136,000
BAY SHORE
2
1959
140,625
138,000
BAY SHORE
3
1963
140,625
142,000
BAY SHORE
4
1968
217,600
215,000
BAY SHORE
CT
1967
16,000
  17,000
BAY SHORE
Total
    
 
655,475
 
648,000
         
R.E. BURGER
3
1950
103,500
  94,000
R.E. BURGER
4
1955
156,250
156,000
R.E. BURGER
5
1955
156,250
156,000
R.E. BURGER
EMD (3)
1972
7,500
7,000
R.E. BURGER
Total
    
 
423,500
 
413,000
         
EASTLAKE
1
1953
123,000
132,000
EASTLAKE
2
1953
123,000
132,000
EASTLAKE
3
1954
123,000
132,000
EASTLAKE
4
1956
208,000
240,000
EASTLAKE
5
1972
680,000
597,000
EASTLAKE
CT
1973
32,000
  29,000
EASTLAKE
Total
    
 
1,289,000
 
1,262,000
         
EDGEWATER
CT (2)
1973
57,600
48,000
EDGEWATER Total
    
57,600
48,000
         
LAKESHORE
18
1962
256,000
245,000
LAKESHORE
EMD (2)
1966
4,000
4,000
LAKESHORE
Total
    
 
260,000
 
249,000
         
         
 
 
 

MAD RIVER
CT(2)
1972
54,000
60,000
MAD RIVER
Total
    
54,000
60,000
       
 
MANSFIELD
1
1976
913,750
780,000
MANSFIELD
2
1977
913,750
780,000
MANSFIELD
3
1980
913,750
800,000
MANSFIELD Total
2,741,250
2,360,000
         
RICHLAND
CT1-3 
1967 
45,000
42,000
RICHLAND 
 CT 4-6
2001 
390,000 
390,000 
RICHLAND
Total
 
435,000
432,000
         
SAMMIS
1
1959
190,400
180,000
SAMMIS
2
1960
190,400
180,000
SAMMIS
3 
1961 
190,400
180,000
SAMMIS 
4 
1962 
190,400 
180,000 
SAMMIS
5
1967
334,050
300,000
SAMMIS
6
1969
680,000
600,000
SAMMIS
7
1971
680,000
600,000
SAMMIS
EMD (5)
1972
12,500
13,000
SAMMIS
Total
2,468,150
2,233,000
         
SENECA
1
1970
220,000
210,000
SENECA
2 
1970 
220,000
195,000
 SENECA
3 
1970 
29,000 
30,000
SENECA Total
469,000
435,000
   
STRYKER 
CT 
 1968
19,000 
18,000 
STRYKER
Total
19,000
18,000
 
 
 
 
 
SUMPTER
CT 1-4 
2002 
340,000
340,000
SUMPTER
Total 
  
 
 340,000
340,000 
     
 
  
WEST LORAIN 
CT 1A
& 1B 
1973 
130,600 
120,000 
WEST LORAIN 
 CT 2-6
2001 
425,000 
425,000 
WEST LORAIN
Total 
    
555,600 
545,000 
     
 
  
Total 
    
10,023,575 
9,287,000