2008 Amendment to 1990 Hydropower Contract
Rochester Gas & Electric Corporation (the “Company”) and the New York Power Authority (the “Authority”) are parties to an agreement dated February 22, 1989 under which the Authority sells certain quantities of hydroelectric power and energy from the Authority’s Niagara and St. Lawrence Projects to the Company for resale to its rural and residential consumers (the “1990 Hydropower Contract”). The Company and the Authority have previously extended the 1990 Hydropower Contract to June 30, 2008 by letter agreement dated August 29, 2007 (the “2007 Amendment”).
The Company and the Authority agree to terminate the 2007 Amendment effective July 1, 2008, and further extend and modify certain terms of the 1990 Hydropower Contract as follows:
1) The amount of Firm Hydroelectric Power and Energy allocated to the Company under Service Tariff No. 41 will be reduced from 120 MW to 99 MW. The Firm Peaking Power allocation of 35 MW under Service Tariff No. 42 will remain unchanged.
2) Article E – Rates. The current text is deleted in its entirety and is replaced with the following text.
“The rates charged by the Authority under this Agreement shall be established in accordance with this Article.
The Authority shall charge and the Company shall pay the preference power rates adopted by the Authority on April 24, 2007, as such rates may be revised from time to time. The Company waives any and all objections, suits, appeals or other challenges to the preference power rates adopted by the Authority on April 24, 2007, except as otherwise provided for below.
The Company waives any challenges to any of the following methodologies and principles used by the Authority to set future preference power rates, numbers (ii) through (vii) as set forth in the “January 2003 Report on Hydroelectric Production Rates” as modified by the April 2003 “Staff Analysis of Public Comments and Recommendations”:
(i) The principles set forth in the March 5, 1986 Settlement Agreement settling Auer v. Dyson, No. 81-124 (Sup. Ct. Oswego Co.), Auer v. Power Authority, Index No. 11999-84 (Sup. Ct. N.Y. Co.) and Delaware County Electric Cooperative, Inc. v. Power Authority, 82 Civ. 7256 (S.D.N.Y.) (the “Auer Settlement”).
(ii) Recovery of capital costs using Trended Original Cost and Original Cost methodologies.
(iii) Treatment of sales to third parties, including the New York Independent System Operator.
(iv) Allocation of Indirect Overheads.
(v) Melding of costs of the Niagara Power Project and the St. Lawrence-FDR Power Project for ratemaking.
(vi) Post-employment benefits other than pensions (i.e., retiree health benefits).
(vii) Rate Stabilization Reserve (“RSR”) methodology.
In the event the Authority ceases to employ any of the methodologies and principles enumerated above, the Company shall have the right to take any position whatsoever with respect to such methodology or principle, but shall not have the right to challenge any of the remaining methodologies and principles that continue to be employed by the Authority.”
3) Article F – Transmission. The current text is deleted in its entirety and is replaced with the following text.
“In accordance with the terms of the existing transmission service agreement, which by its terms will expire on August 31, 2007, the Company will cease taking transmission service from the Authority and will instead take transmission service under the New York Independent System Operator's ("NYISO") Open Access Transmission Tariff. The Company agrees to settle any outstanding transmission charges that may apply prior to September 1, 2007, including any subsequent NYISO true up settlements.”
4) Article G – Notification. In the contact address for the Authority, replace “10 Columbus Circle, New York, NY 10019” with “123 Main Street, White Plains, NY 10601.” For the Company, delete the current reference in its entirety and replace with the following: “Dave Kimiecik, Vice President, Energy Supply, New York State Electric & Gas Corporation, 18 Link Drive, P.O. Box 5224, Binghamton, NY 13902-5224.” [IS THIS THE CORRECT CONTACT ADDRESS FOR RG&E?]
5) Article K – Restoration of Withdrawn Power and/or Energy is deleted in its entirety.
6) Article L – Term of Service is revised to read as follows:
”Service under this contract shall commence at 12:01 A.M. on January 1, 1990 and shall continue unless cancelled as provided for in the “Withdrawals of Power and/or Energy” or the “Cancellation or Reduction” provisions until December 31, 2009, subject to earlier termination by the Authority with respect to any or all of the quantities of power and energy provided hereunder on at least thirty (30) days’ prior written notice to the Company.”
7) Article M – Availability of Energy – Firm and Firm Peaking Hydroelectric Power Service. In the third paragraph, line 1, starting with the words ”In the event that . . .”through “. . . minimize the impact of such reductions” on line 10, replace with the following:
“The Authority will have the right to reduce on a pro rata basis the amount of energy provided to the Company under Service Tariff Nos. 41 and 42 if such reductions are necessary due to low-flow (i.e., hydrologic) conditions at the Authority’s Niagara and St. Lawrence-FDR hydroelectric generating stations. In the event that hydrologic conditions require the Authority to reduce the amount of energy provided to the Company, reductions as a percentage of the otherwise required energy deliveries will be the same for all firm Niagara and St. Lawrence-FDR Project customers. The Authority shall be under no obligation to deliver and will not deliver any such curtailed energy to the Company in later billing periods. The offer of Energy for delivery shall fulfill the Authority’s obligations for purposes of this Provision whether or not the Energy is taken by the Company. The Authority shall provide reasonable notice to the Company of any condition or activities that could result, or have resulted, in low-flow conditions consistent with the notice provided to other similarly affected customers.”
8) This amendment shall be referred to as the “2008 Amendment to the 1990 Hydropower Contract.”
9) Continuation of service under this 2008 Amendment to the 1990 Hydropower Contract shall be subject to ultimate approval by the Governor of the State of New York pursuant to Section 1009 of the Power Authority Act. If the Governor does not approve this amendment, service will cease on the last day of the month following said disapproval.
Except as expressly provided in this 2008 Amendment to the 1990 Hydropower Contract, the 1990 Hydropower Contract shall remain unchanged and in full force and effect.
This 2008 Amendment to the 1990 Hydropower Contract shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts o be performed in such state, without regard to conflict-of-laws principles.
This 2008 Amendment to the 1990 Hydropower Contract may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signature thereto and hereto were upon the same instrument.
Upon approval of the Governor of the State of New York pursuant to Section 1009 of the Public Authorities Law, and upon execution by the Chairman of the Authority, this 2008 Amendment shall come into full force and effect, provided however that pending such gubernatorial approval and execution this 2008 Amendment shall take effect upon the expiration of the 2007 Amendment and continue on a month-to-month basis.
If the foregoing changes are acceptable to your organization, please so indicate by executing both copies of this amendment and returning one copy to us.
AGREED:
Power Authority of the State of New York
By: _________________________
Roger B. Kelley
President and Chief Executive Officer
Date: _________________________
By: _________________________
Frank S. McCullough, Jr.
Chairman
Date: __________________________
Rochester Gas & Electric Corporation
By: _________________________
Title: _________________________
Date: _________________________