ex10-50




EXHIBIT 10.50



	 	 	 	 	 
	 		 	
Department of Energy

        Oak Ridge Operations Office

        P.O. Box 2001

        Oak Ridge, Tennessee 37831-	 










		
	 	                  
        March 20, 2001




Mr. E. Linn Draper, Jr.

President

Ohio Valley Electric Corporation

P.O. Box 16631

Columbus, Ohio 43216



Dear Mr. Draper:


LETTER SUPPLEMENT RELATING TO CANCELLATION BY THE UNITED
STATES DEPARTMENT OF ENERGY OF CONTRACT N0. DE-AC05-760801530


This letter supplement (Supplement) will confirm a number of understandings
between Ohio Valley Electric Corporation (OVEC) and the United States of
America with respect to Power Agreement No. DE-AC05-760801530 (Agreement).
The Supplement is intended to reduce the DOE Contract Demand (as that term is
defined in the Agreement) and to resolve certain issues which have arisen as
a result of DOE’s September 29, 2000 Notice of Cancellation of the Agreement.


We understand from our discussions with representatives of OVEC that the OVEC
Sponsoring Companies would be able to utilize additional capacity and the
energy related thereto, which DOE offers to make available during the period
March 29 through August 31, 2001 as set forth in Exhibit A hereto.
Accordingly, we understand that OVEC is willing to agree pursuant to Paragraph
1 of Section 2.05 and Section 7.11 of the Agreement to waive for such periods
any requirement that the DOE Contract Demand during such period be higher than
the DOE Contract Demand After Reduction for each referenced period.


Furthermore, we understand that OVEC is willing pursuant to Section 7.11 to
waive partially (i) the requirements under Sections 3.06 and 3.07 of the
Agreement that DOE pay 100 percent of the costs of Additional Facilities and
Replacements (AFR) and (ii) where applicable, the requirements under Sections
3.04.4 and 3.04.5 of the Agreement that the adjustments of demand charges
shall be made on the basis that the average DOE capacity ratio in effect
equaled unity as to amounts, if any, specified in Section 3.04.3 with respect
to the costs of AFR.


In consideration for the reduction in DOE’s power requirements, we
understand that OVEC is willing, pursuant to Section 7.11, to waive DOE’s
share of Section 3.03 (energy) and Section 3.04 (demand) charges relating
to power which DOE makes available pursuant to this Supplement, as well as
certain charges under Sections 3.06 (additional facilities) and 3.07
(replacements).











	 	 	 
	Mr. E. Linn Draper, Jr.	-2-	
March 20, 2001



      Accordingly, DOE and OVEC hereby agree as follows:



	 	 	 	 	 	 	 	 
		(a)		
DOE affirms its obligation to pay monthly amounts due to a
trustee for purchasers of OVEC secured notes pursuant to
assignments, consents to assignment and notices of assignment dated
on or about June 9,1993 related to the financing of the Clifty
Creek Coal Switch Project; provided, however, that OVEC will give
DOE a billing credit for, or if DOE does not owe amounts at least
equal to such monthly payments, will pre-fund, such payments to the
extent that they exceed DOE’s pro-rata share of such amounts based
on power available to DOE during the remainder of the term of the
Agreement. (OVEC is required to pay off the balance due on such
notes on or before the first day of the month during which the
Agreement terminates.) DOE also affirms its obligation to pay a
pro-rata share of principal and interest on costs financed pursuant
to DOE’s requests dated July 30, 1999 and April 25, 2000, based on
power available to DOE.
	 
		(b)		
The parties affirm that they will hereafter conclude one or
more letter supplements or other appropriate agreements pursuant to
which:				
	 
				(1)		DOE will:
	 
						(A)		
Pay its share of the post-retirement
and post-employment benefits obligations in accordance
with Section 6.04 of the Agreement no later than April
30. 2003 (DOE will remain liable for the gross-up for
estimated taxes on its share, but OVEC and DOE “i11
attempt to avoid or minimize the gross-up by using a
grantor trust or other acceptable means): and
	 
						(B)		
Pay its share of decommissioning costs based on an
estimate by an
agreed upon independent engineer in accordance with
Section 6.09
of the Agreement. (OVEC and DOE will attempt to avoid
or
minimize any gross-up for estimated taxes by using a
grantor trust
or other acceptable means).
	 
				(2)		
OVEC will give DOE appropriate credit for the
antitrust and investment tax credit refunds due DOE
(amounting to approximately $9.5 million).
	
	
	
	
	
	

	
	
	
	
	
	

		(c)		
The DOE Contract Demand under the Agreement for the
purposes of Clause (A) of Paragraph 1 of Section 2.05 thereunder
shall be deemed to equal the Contract Demand After Reduction set
forth in Exhibit A for the period from March 29 through August 31,
2001.










	 	 	 
	Mr. E. Linn Draper, Jr.	-3-	
March 20, 2001




	 	 	 	 	 	 	 	 
	 
		(d)		
Except as specified in paragraph (a) above, DOE shall be
relieved of all AFR costs and of the gross-up to cover estimated
income taxes, if any, associated with those costs, provided that DOE
shall pay OVEC two million dollars ($2,000,000) for certain AFR
costs incurred during prior periods.
	 

		(e)		
Except as set forth herein, DOE shall not be responsible for
any energy, demand or AFR charges related to power released by DOE
pursuant to the Supplement.
	 

		(f)		
OVEC shall issue revised bills to DOE for the period from
October 1. 2000 through not later than March 31, 2001, and give DOE
appropriate credits for any prior overpayments.
	 
		(g)		
If a regulatory or other governmental authority requires more
power to be supplied to DOE or the Portsmouth gaseous diffusion
plant than is required under the terms of this Supplement, DOE
agrees to purchase such power from parties other than OVEC or to
request OVEC to use its best efforts to obtain arranged power to
cover the requirements of DOE or the Portsmouth Gaseous Diffusion
Plant in excess of those indicated in Exhibit A.
	 
		(h)		
The parties will discuss whether the Agreement can be
appropriately terminated prior to April 30, 2003.
	 
		(i)		
DOE shall cooperate with OVEC (including taking any
reasonable action) in making any filings with, or obtaining any
required authorizations from, any regulatory or other governmental
authority to terminate the Agreement in accordance with its terms
and the terms of this Supplement, including, without limitation,
pre-granted authorization to terminate.
	 
		(j)		
Neither DOE nor OVEC shall assert that a failure by any other
party to enforce rights it may have under the Agreement
constitutes, nor shall such failure to enforce such rights
constitute, a waiver or relinquishment, explicit or implicit, of
any provision of either agreement, except as set forth herein.










	 	 	 
	Mr. E. Linn Draper, Jr.	-4-	
March 20, 2001



If OVEC agrees to the matters described above, please execute a copy of this
Supplement at the place designated for your signature.




	 	Sincerely,





	 	





	 	








OVEC hereby agrees to the provisions herein described.

OHIO VALLEY ELECTRIC CORPORATION