Exhibit 10.1


 


RESTATED AND AMENDED COAL SUPPLY AGREEMENT FOR


NEIL SIMPSON UNIT #2


 


 


between


 


 


WYODAK RESOURCES DEVELOPMENT CORP.


 


and


 


BLACK HILLS CORPORATION


 


 


Date:  February 12, 1993


 

















 


TABLE OF CONTENTS


 


	
  1.

  	
  DEFINITIONS
  AND RECITALS

  	
  1

  
	
   

  	
   

  	
   

  
	
   

  	
  1.1

  	
  Definitions

  	
  1

  
	
   

  	
  1.2

  	
  Recitals

  	
  3

  
	
   

  	
  1.3

  	
  Term
  of Agreement

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  SOURCE
  OF COAL

  	
  4

  
	
   

  	
   

  	
   

  
	
  3.

  	
  QUANTITES
  OF COAL TO BE SOLD AND PURCHASED

  	
  4

  
	
   

  	
   

  	
   

  
	
  4.

  	
  PLACE
  OF DELIVERY AND SALE

  	
  5

  
	
   

  	
   

  	
   

  
	
  5.

  	
  QUALITY
  OF COAL

  	
  5

  
	
   

  	
   

  	
   

  
	
  6.

  	
  WEIGHING

  	
  5

  
	
   

  	
   

  	
   

  
	
  7.

  	
  SAMPLING
  AND ANALYSIS

  	
  6

  
	
   

  	
   

  	
   

  
	
  8.

  	
  PURCHASE
  PRICE PAYMENT AND ADJUSTMENTS TO COAL SOLD FOR EXISTING PLANTS

  	
  6

  
	
   

  	
   

  	
   

  
	
   

  	
  8.1

  	
  Purchase
  Price

  	
  6

  
	
   

  	
  8.2

  	
  Negative
  Amount Adjustments for Coal Sold to Existing Plants

  	
  7

  
	
   

  	
  8.3

  	
  Invoice
  and Payments

  	
  7

  
	
   

  	
  8.4

  	
  Retroactive
  Adjustments

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  INSPECTION

  	
  8

  
	
   

  	
   

  	
   

  
	
  10.

  	
  UNCONTROLLABLE FORCES

  	
  9

  
	
   

  	
   

  	
   

  
	
  11.

  	
  APPLICABLE LAW

  	
  10

  
	
   

  	
   

  	
   

  
	
  12.

  	
  AMENDMENT

  	
  10

  
	
   

  	
   

  	
   

  
	
  13.

  	
  SUCCESSORS AND ASSIGNS

  	
  10

  
	
   

  	
   

  	
   

  
	
  14.

  	
  CONDITION PRECEDENT

  	
  10

  
	
   

  	
   

  	
   

  
	
  15.

  	
  COMPLETE AGREEMENT

  	
  11

  



 

















 


RESTATED AND AMENDED COAL SUPPLY AGREEMENT FOR


NEIL SIMPSON UNIT #2


 


This
Restated and Amended Coal Supply Agreement for Neil Simpson Unit #2, dated as
of February 12, 1993, is entered into by and between WYODAK RESOURCES
DEVELOPMENT CORP. and BLACK HILLS CORPORATION.


 


1.             DEFINITIONS AND RECITALS.


 


1.1           Definitions.  The following capitalized term and phrases
when used in this Agreement shall have the respective meanings as follows:


 


“1977
Coal Agreement” refers to the following contracts:


 


Coal
Supply Agreement, dated September 1, 1977 between Wyodak Resources and
Black Hills;


 


First
Amendment to Coal Supply Agreement between Wyodak Resources Development Corp.
and Black Hills Power and Light Company, dated May 1, 1980; and


 


Second
Amendment to Coal Supply Agreement for Black Hills Power and Light Company,
dated November 2, 1987.


 


The
1977 Coal Agreement obligates Wyodak Resources to furnish all of the coal
requirements to fuel Black Hills’ Exiting Plants during their remaining used
and useful life.


 


“Affiliate
Price Limitation” is an amount Black Hills would pay Wyodak Resources during a
calendar year for which the calculation is being determined for all coal sold
for consumption at the Existing Plants, Black Hills’ 20 percent interest in the
Wyodak Plant and for Unit #2, which would allow Wyodak Resources to earn on
those sales an after-tax rate of return to be applied to the Investment Base of
4 percent above the average rate of long-term A-rated utility bonds issued
during the calendar year for which the calculation is being made as recorded in
Moody’s Bond Survey.  The Affiliate Price
Limitation shall be determined as of each April 1 for the 


 


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previous
calendar year.  Except where otherwise
specifically provided by this Agreement, generally accepted accounting
principles shall be applied in determining the Affiliate Price Limitation.


 


“Agreement”
is this Restated and Amended Coal Supply Agreement for Neil Simpson Unit #2.


 


“Black
Hills” is Black Hills Corporation, a South Dakota corporation which operates
its electric utility business under the assumed name of Black Hills Power and
Light Company.


 


“Coal
Handling Facilities” are those facilities from time to time that are
constructed and used to process and deliver coal at the Mine to the Existing
Plants, the Wyodak Plant, Unit #2 and to fulfill any further sales of coal form
the Mine.


 


“Colstrip
Agreement” is the Power Sales Agreement between PacifiCorp and Black Hills
dated as of December 31, 1983.


 


“Dispatch
Discount” is an amount that Wyodak Resources will reduce the coal prince for
coal delivered to any of the Existing Plants if necessary to make the Existing
Plant Economically Dispatchable over the Estimated Variable Costs of the
Colstrip Agreement; provided, Wyodak Resources is not required to grant a
Dispatch Discount if such discount will not result in a net reduction of the
total of the cost of Black Hills’ fuel and purchased power.


 


“Economically
Dispatchable” means for these purposes that under Prudent Utility Practice,
Black Hills would not have generated power from one or more of the Existing
Plants unless the coal price to be paid under the 1977 Coal Agreement was
reduced.


 


“Estimated
Variable Costs” are those variable costs as estimated and first billed by
PacifiCorp for an applicable period under the Colstrip Agreement.


 


“Existing
Plants” are Black Hills’ wholly owned plants consisting of Neil Simpson Unit
#1, located at the Mine; Osage Units #1, #2 and #3, located at Osage, Wyoming;
Kirk Unit #4, located at Kirk, near Lead, South Dakota; and Ben French Plant,
located at Rapid City, South Dakota.


 


“Investment
Base” is the investment base of Wyodak Resources and shall include all of its
actual investment from time to time in the Mine, including coal reserves, coal
leases, land 


 


2

















 


and
mining and processing equipment at original cost depreciated.  Generally accepted accounting principles
shall be applied in determining the Investment Base, except at otherwise
provided by this Agreement.


 


“Mine”
is the surface coal mine owned and operated by Wyodak Resources in Campbell
County, Wyoming, approximately six miles east of Gillette, Wyoming.  Coal reserves now owned or leased by Wyodak
Resources or acquired in the future and located in Campbell County, Wyoming are
included as a part of the Mine.


 


“PacifiCorp”
is an Oregon corporation that is the successor to Pacific Power &
Light Company, a party to the PacifiCorp Coal Agreement.


 


“PacifiCorp
Coal Agreement” is the Further Restated and Amended Coal Supply Agreement,
dated as of May 5, 1987, entered into among Wyodak Resources, PacifiCorp
and Black Hills.


 


“Prudent
Utility Practice” is the same as that definition at Section 1.9 of the
Colstrip Agreement.


 


“Term”
is that period of time described as Section 1.


 


“Unit
#2” is Neil Simpson Unit #2, an 80 MW coal-fired electric generating plant
which Black Hills plans to construct at the site of the Mine and bring into
commercial operation by January 1, 1996.


 


“Wyodak
Plant” is the 330 MW coal-fired electric generating plant in operation at the Mine
and owned 80 percent by PacifiCorp and 20 percent by Black Hills.


 


“Wyodak
Resource” is Wyodak Resources Development Corp., a Delaware corporation, and is
a wholly-owned subsidiary of Black Hills.


 


1.2           Recitals.  Black Hills is planning to construct Unit #2
at the site of the Mine.  Wyodak
Resources has sufficient uncommitted coal reserves to commit sufficient coal
for the used and useful life of Unit #2. 
Black Hills desires to purchase and Wyodak Resources desires to reserve
sufficient coal reserves and sell all


 


3

















 


of
the coal requirements to fuel Unit #2 for its used and useful life, estimated
to be 50 years.  The purpose of this
Agreement is to set forth the terms and provisions of such sale and purchase.


 


1.3           Term of Agreement.  The Term of this Agreement shall commence at
such a time Unit #2 requires coal and shall terminate at such time Unit #2 is
no longer used and useful for electric utility purposes.


 


2.             SOURCE OF COAL.


 


The
source of the coal to be sold and purchased shall come from Wyodak Resources’
coal reserves presently held by Wyodak Resources at the Mine together with any
subsequent coal reserves which Wyodak Resources may acquire hereafter in
Campbell County, Wyoming.  Wyodak
Resources represents that the coal reserves contain sufficient coal for the
fulfillment of this Agreement.  It is
understood that Wyodak Resources reserves the right to mine and sell coal from
the Mine for other purposes, provided that Wyodak Resources retains sufficient
coal reserves to fulfill this Agreement and providing further that sales to
others do not in any way prevent Wyodak Resources from carrying out the terms
of this Agreement.


 


3.             QUANTITIES OF COAL TO BE
SOLD AND PURCHASED.


 


Wyodak
Resources agrees to sell and Black Hills agrees to buy all of the coal which is
required to fuel Unit #2 during the Term. 
It is specifically understood and agreed that Black Hills does not
promise Wyodak Resources any minimum amount of coal to be purchased.


 


4














 


Without
limiting the obligations herein, it is estimated that the maximum yearly coal
consumption of Unit #2 is 490,000 tons.


 


4.             PLACE OF DELIVERY AND SALE.


 


Coal
for Unit #2 shall be delivered to Black Hills at the point where the Coal
Handling Facilities will interconnect to the coal delivery system of Unit
#2.  By mutual agreement the parties may
change this delivery point from time to time.


 


5.             QUALITY OF COAL.


 


The
coal to be furnished hereunder shall be raw, run-of-mine coal, crushed to a
size of 0” to no more than 5 percent exceeding 1.5”, produced without selective
mining, with a base analysis of approximately 8000 Btu per pound.  Wyodak Resources warrants that the quality of
coal as delivered shall be within the ranges. 
The quality of the coal delivered shall be determined from the coal
samples taken by Wyodak Resources and pursuant to Section 7.


 


6.             WEIGHING.


 


The
weights of the coal delivered to Black Hills shall be determined from weights
taken from Wyodak Resources’ scales at the Mine.  The aggregate weights of such delivered coal
shall be accepted as the quantity of coal delivered for which invoices are to
be rendered and payments to be made.  The
scales should be tested from time to time to determine their accuracy and
adjusted accordingly.


 


5

















 


7.             SAMPLING AND ANALYSIS.


 


Sampling
and analysis shall be made by Wyodak Resources and shall be taken by sampling
equipment provided by Wyodak Resources. 
Sampling and analysis shall be performed in accordance with the latest
methods approved by the American Society for Testing and Materials or such
alternates as the parties may agree upon.


 


8.             PURCHASE PRICE PAYMENT AND
ADJUSTMENTS TO COAL SOLD FOR EXISTING PLANTS.


 


8.1           Purchase Price.  For all coal sold by Wyodak Resources to
Black Hills under this Agreement during any calendar year of the Term, Black
Hills shall pay Wyodak Resources a total purchase price determined under the
following formula:


 


P
= A – T – DD


 


where


 


“P”
is the total purchase price to be paid Black Hills to Wyodak Resources for all
coal sold during the calendar year for consumption at Unit #2 and for which the
calculation is being made;


 


“A”
is the amount of the Affiliate Price Limitation determined for the calendar
year for which the purchase price is being determined;


 


“T”
is the total amount paid by Black Hills to Wyodak Resources for coal for
consumption at the Existing Plants Resources for coal for consumption at the
Existing Plants under the 1977 Coal Agreement and for Black Hills’ 20 percent
interest in the Wyodak Plant under the PacifiCorp Coal Agreement for the
calendar year for which the purchase price is being determined; and


 


6

















 


“DD”
is the total amount of the actual Dispatch Discount Wyodak Resources is
obligated to discount coal sold for consumption at the Existing Plants during
the calendar year for which the calculation of the purchase price is being
made.


 


If
for any calendar year “P” is a negative number, Black Hills shall not pay
Wyodak Resources any purchase price for coal sold for consumption at Unit #2
during that calendar year.


 


8.2           Negative Amount Adjustments
for Coal Sold to Existing Plants.  For any calendar year the calculation made
under the formula at Section 8.1 of this Agreement
determines a negative amount,  Wyodak
Resources shall reduce the adjusted based mine price under the 1977 Coal
Agreement by reducing that price in the amount of the negative amount so
calculated.  The credit shall be applied
over a 12-month period in equal installments commencing as of the April 1
when the negative amount was determined.


 


8.3           Invoice and Payments.  Wyodak Resources shall invoice Black Hills by
the 5th working day of each month for coal ordered to
be delivered for that calendar month and an adjustment for actual coal sold the
previous calendar month at a purchase price to be estimated based on the
formula at Section 8.1. 
Black Hills shall pay each invoice to Wyodak Resources by the 15th day of the month the invoice is rendered.  On each April 1, Wyodak Resources shall
calculate the purchase price for coal sold to Black Hills under this Agreement
for the preceding calendar year. 
Appropriate charges and credits shall thereupon be applied for coal sold
during the previous


 


7

















 


calendar
year in order that the actual purchase price paid for coal during that calendar
year is consistent with the formula at Section 8.1.


 


8.4           Retroactive Adjustments.  Adjustments to cost items affecting “A” or “T”
under the formula at Section 8.1 and discovered after the April 1
calculation of the purchase price for any calendar year shall be applied to an
adjustment in the purchase price for that calendar year at such time the actual
costs are discovered, and appropriate credits and charges shall be made.  If Wyodak Resources fails to make an
adjustment in billings within two years form the date information is reasonably
available to Wyodak Resources to fully determine the actual amount of the
adjustment, Wyodak Resources shall be barred from making that adjustment.  If Black Hills fails to protest to Wyodak
Resources in writing within two years of a date when information is reasonably
available to Black Hills to determine that an adjustment included in a billing
received prior to that date is incorrect, Black Hills shall be barred form
contesting that adjustment even if the adjustment was incorrect.


 


9.             INSPECTION.


 


Each
party shall, at all reasonable times, have the right to enter upon the premises
of the other to inspect coal receiving equipment and the weighing, measuring
and testing facilities.  Black Hills
shall at all reasonable times have the right to inspect the Mine, maps and
operating records of Wyodak Resources relating to the


 


8

















 


operation
of the Mine.  Black Hills shall further
have the right to inspect the books and accounts of Wyodak Resources to the
degree that such inspection is necessary in order to determine cost data
affecting the purchase price being paid under this Agreement; provided, during
any time that Wyodak Resources may not be affiliated with Black Hills, such
inspection of books and accounts shall be conducted by Black Hills’ outside
auditing firm who at the time of the inspection has been appointed to do the
independent auditing of Black Hills’ books of account.


 


10.           UNCONTROLLABLE FORCES.


 


If,
because of uncontrollable forces, either party hereto is unable to carry out
any part or all of its obligations under this Agreement, and if such party
promptly gives to the other party hereof notice of such uncontrollable forces,
then the obligations of the party giving such notice shall be suspended to the
extent made necessary by such uncontrollable forces and during its continuance,
provided the effect of such uncontrollable forces is eliminated insofar as
possible with all reasonable dispatch. 
The term “uncontrollable forces” as used herein shall mean any causes
beyond the control of the party in which, by the exercise of reasonable diligence,
the party is unable to overcome include but not be limited to acts of God, acts
of the public enemy, insurrections, riots, strikes, labor disputes, labor and
material shortages, fires, explosions, floods, breakdowns of or damage to
plants, equipment or 


 


9

















 


facilities,
interruptions to transportation, embargoes, orders or injunctions of federal,
state or local governmental bodies and jurisdictions, or acts of civil or
military authority, failure of equipment, or inability to obtain materials,
supplies, or equipment from others because of similar causes.  It shall be considered an uncontrollable
force and shall relieve Wyodak Resources from performing its obligation under
this Agreement if valid state or federal legislation is enacted which prohibits
the strip mining of the federal coal which has been leased by Wyodak Resources.


 


11.           APPLICABLE LAW.


 


This
Agreement shall be considered to have been entered into and shall be
interpreted under the laws of the State of Wyoming.


 


12.           AMENDMENT.


 


No
provision of this Agreement may be amended, modified, supplemented or waived
except by an instrument in writing signed by both parties.


 


13.           SUCCESSORS AND ASSIGNS.


 


This
Agreement and all the terms and provisions hereof shall be binding upon and
inure to the benefit of the respective successors and assigns of the parties
hereto.


 


14.           CONDITION PRECEDENT.


 


If
for any reason, including a decision made in the absolute discretion of Black
Hills, Black Hills does not give notices to proceed to vendors and contractors
to commence the construction of


 


10

















 


Unit
#2 on or before July 1, 1993, this Agreement shall become null and void.


 


15.           COMPLETE AGREEMENT.


 


This
Agreement constitutes the complete and full agreement between the parties
relating to the matters set forth herein and supersedes any oral conversations
or writings prior thereto.  This
Agreement supersedes and replaces the Coal Supply Agreement for Neil Simpson
Unit #2 dated January 15, 1993.


 


IN
WITNESS WHEREOF, the parties hereunder have executed this Agreement as of the
date set forth in the first paragraph hereof.


 


	
   

  	
  WYODAK
  RESOURCES DEVELOPMENT

  
	
   

  	
  CORP.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By
  

  	
  /s/
  Dale E. Clement

  
	
   

  	
   

  	
  Its
  Senior Vice President – Finance

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BLACK
  HILLS CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
  By
  

  	
  /s/
  Daniel P. Landguth

  
	
   

  	
   

  	
  Its
  Chairman, President and

  
	
   

  	
   

  	
  Chief
  Executive Officer

  



 


11