Exhibit 10.28


 


Service
Level Agreement

Construction and Maintenance/Engineering/System Operations


 


This Service Level Agreement (the “Agreement”) is made
and entered into this 28th day of February, 2003, by and between The
Detroit Edison Company, a Michigan corporation (“Detroit Edison”) and
International Transmission Company, LLC, a Michigan limited liability company (“ITC”).
Detroit Edison and ITC are each referred to herein as a “Party” and
collectively as, the “Parties.”


 


RECITALS


 


WHEREAS, ITC
owns certain assets and properties located within the service territory of
Detroit Edison in southeastern Michigan (the “Transmission Assets”) and
performs certain functions constituting or used primarily in the provision of
non-discriminatory, open-access electric transmission service (the “Transmission
Business”); and


 


WHEREAS, ITC
desires to purchase and Detroit Edison is willing to furnish certain
construction and maintenance, engineering and planning and system operations
services upon the terms and conditions hereinafter set forth; and


 


NOW, THEREFORE,
in consideration of the mutual promises contained herein, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, Detroit Edison and ITC
agree as follows:


 


1.             Services.


 


(a)           ITC
hereby engages Detroit Edison, and Detroit Edison hereby accepts such
engagement, to provide certain construction and maintenance services (the “C&M
Services”), engineering services (the “Engineering Services”) and system
operations services (the “SO Services,” and collectively with the C&M
Services, and the Engineering Services, the “Services”) for ITC with respect to
the Transmission Assets and the Transmission Business, in accordance with the
terms and conditions set forth in this Agreement.  In addition, as and when requested by ITC,
ITC hereby engages Detroit Edison, and Detroit Edison hereby accepts such
engagement and agrees to use commercially reasonable efforts (provided that
such efforts shall not require any material system modification), to the extent
permitted by applicable law or regulation and consistent with Detroit Edison’s
existing resources, to provide any transition design, planning and
implementation services relating to the Services provided hereunder reasonably
requested by ITC to ITC in accordance with the terms and conditions and for the
consideration set forth in this Agreement.


 


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(b)           A
description of the C&M Services to be provided is set forth on Schedule A
attached hereto, a description of the Engineering Services to be provided is
set forth on Schedule B attached hereto, and a description of the
SO Services to be provided is set forth on Schedule C attached
hereto.  Schedule A, Schedule B
and Schedule C may be amended from time to time by mutual agreement
of the Parties, and/or additional schedules which document the specific C&M
Services, Engineering Services or SO Services which Detroit Edison will provide
for ITC may be added to this Agreement from time to time by mutual agreement of
the Parties.  Schedule A, Schedule B
and Schedule C, and such additional schedules, if any, are
collectively referred to herein as the “Schedules.”  Upon the amendment and/or addition of any such
Schedules, the term “C&M Services,” “Engineering Services” or “SO Services,”
as applicable, and the term “Services” shall be amended and modified to reflect
such amendment and/or addition.  The
Schedules are hereby incorporated by reference into this Agreement, provided
however, that in the event of a conflict between any Schedule and the
terms of this Agreement, this Agreement shall govern.  Detroit Edison (i) shall, except as
otherwise provided in this Agreement (including the Schedules hereto), perform
all Services with respect to any Transmission Assets or any portion of the ITC
transmission system located within the geographical boundaries of the ITC
transmission system existing as of the date of this Agreement, as indicated by
a map of such territory provided to ITC prior to the date of this Agreement and
appended hereto in Attachment No. 1(b) (the “Territory”), and (ii) unless
otherwise mutually agreed in writing, shall not be obligated to perform any
Services with respect to any Transmission Assets or any portion of the ITC
transmission system located outside of such Territory.


 


(c)           Except
as otherwise provided in this Agreement (including the Schedules hereto), ITC
shall obtain its requirements for the Services within the Territory from
Detroit Edison, and shall not obtain such Services within the Territory from
any person or entity other than Detroit Edison, during the term of this
Agreement.


 


(d)           Each
of the Parties and their affiliates, employees and Subcontractors providing
Services pursuant to this Agreement, shall comply with the requirements of the
Open-Access Same-Time Information System (“OASIS”) standard of conduct
procedures developed by ITC and Detroit Edison, and accepted by FERC pursuant
to 18 C.F.R. Part 37.4 (2000).


 


2.               Manner and Time of Performance of Services.


 


(a)           Detroit
Edison shall perform, or cause to be performed, the Services in accordance with
the terms of this Agreement.


 


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(b)           Detroit
Edison may subcontract some or all of the Services to any subcontractor set
forth on Exhibit 1 attached hereto and incorporated herein by
reference or to any other subcontractor approved in writing by ITC (any such
subcontractor being referred to herein as a “Subcontractor”), or, to the extent
required by any law, regulation or licensing requirement, cause some or all of
the Services to be provided through an affiliate of Detroit Edison duly
licensed to perform such Services.  For purposes of this Agreement, no
contractual relationship will exist between ITC and any such Subcontractor or
any affiliate of Detroit Edison.  In all
cases under this subsection (b), Detroit Edison will remain responsible
for the performance of its obligations hereunder.


 


(c)           Detroit
Edison will require all persons performing the Services to comply with all
generally applicable policies, procedures and directives of Detroit Edison,
including security, environmental protection, employee health and safety,
sexual harassment, access, use of alcohol and controlled substances, and
similar activities.


 


3.             ITC Responsibilities.


 


(a)           ITC
agrees to cooperate with, and to assist and support, Detroit Edison in
connection with the performance of the Services.


 


(b)           To
the extent that access to the Transmission Assets or other property or
facilities of ITC, or to the personnel of ITC, is at any time reasonably
necessary or appropriate in connection with the performance of the Services,
ITC agrees to grant such access to Detroit Edison and its Subcontractors and
representatives.  Detroit Edison shall
not be responsible for any loss, damage, fine, penalty, cost, expense, delay,
interruption, breach, non-performance or other failure of any of the Services
to the extent resulting from or arising out of or in connection with any
failure by ITC to provide access to its property, facilities or personnel in
connection with the performance of the Services.


 


4.               Compensation.


 


(a)           As
consideration for the Services, ITC shall pay to Detroit Edison the following
amounts:


 


(i)            for
all Services performed by personnel of Detroit Edison and its affiliates, all
verifiable direct and indirect costs (including but not limited to all such
costs of labor, benefits, materials, storage and transportation) allocated in
accordance with the same methodology employed historically by Detroit Edison in
connection with the


 


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provision of services to
affiliated entities and business units, prior to the allocation of
overhead costs in the manner described in subsection (iii) below,
incurred in performing the Services, subject to subsection (v), below;


 


(ii)           for
all Services performed by Subcontractors not affiliated with Detroit Edison, an
amount equal to all costs invoiced to and paid by Detroit Edison arising under
such subcontracts, subject to subsection (v), below;


 


(iii)          an
additional overhead cost fee equal to 25% of the amount determined pursuant to
subsections (i) and (ii) above, subject to subsection (v),
below; and


 


(iv)          an
additional fee equal to 9.5% of the amounts determined pursuant to subsections
(i), (ii) and (iii) above (the “Fee”), subject to subsection (v),
below.


 


(b)           On
a monthly basis, Detroit Edison shall submit to ITC a detailed, itemized
invoice (an “Invoice”) setting forth the Services provided to ITC during the
previous month and any outstanding reimbursable expenses or charges incurred by
Detroit Edison hereunder and the amount payable by ITC for such Services and
expenses or charges pursuant to this Agreement.


 


(c)           Subject
to subsections (e) and (f) below, ITC shall pay any amount payable to
Detroit Edison hereunder in full within thirty (30) days of receipt of the
applicable Invoice.


 


(d)           Any
applicable federal, state and local sales, excise, ad valorem, use or similar
taxes, if any, imposed in connection with the Services, except for federal,
state and local income taxes payable by Detroit Edison based on net income,
will be reimbursed by ITC.


 


(e)           To
the extent that amounts charged by Detroit Edison, in the aggregate, for all
Services other than capital projects and Services incidental thereto (such
Services being referred to herein as “O&M Services”) performed during any
calendar year during the term of this Agreement, at a volume and frequency up
to the “Baseline Service Level” (as defined below), exceed $15.9 million in
2003 or $16.3 million in 2004 (the “Baseline Charges”) (the amount by which
actual charges for O&M Services performed up to the Baseline Service Level
during an applicable calendar year exceed the Baseline Charges for such
calendar year being referred to herein as “Excess Annual Charges”), then, at
ITC’s option, payment of any such Excess Annual Charges shall be deferred until
June 1, 2006, without interest or return thereupon.  One-fifth of the total Excess Annual Charges


 


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so deferred shall be paid on June 1 of each of
2006, 2007, 2008, 2009 and 2010.  Amounts
due with respect to such deferred Excess Annual Charges after June 1, 2006
shall bear simple interest from June 2, 2006 to, but not including, the
date of payment at the LIBOR rate for one-year deposits quoted on the date of
payment through customary sources identified by ITC.  Notwithstanding the foregoing, ITC shall not
be entitled to defer payment of any charges arising from the performance by
Detroit Edison of O&M Services requested by ITC at a volume or frequency in
excess of the Baseline Service Level, whether or not reflected in the
applicable budgets for all Services to be performed during such calendar year
established by the Parties in accordance with the Schedules (collectively, the “Budgets”),
including, without limitation, any charges arising from the performance by
Detroit Edison of O&M Services necessitated by catastrophic storms or other
catastrophic events.  The applicable
Baseline Service Level and corresponding amount of Baseline Charges shall be
prorated, as appropriate, to reflect any partial calendar year occurring during
the term of this Agreement.  The term “Baseline
Service Level,” as used herein, shall refer to a volume and frequency of
O&M Services comparable or equivalent in the aggregate to the volume and
frequency of all such O&M Services provided by Detroit Edison to ITC in the
Budgets for the 2002 calendar year.


 


(f)            To
the extent that ITC requests that Detroit Edison perform O&M Services
during any calendar year during the term of this Agreement, at a volume or
frequency in excess of the Baseline Service Level, and the amount charged by
Detroit Edison, in the aggregate, for all O&M Services performed during
such calendar year above the Baseline Service Level and up to the “Budgeted
Service Level” (as defined below), exceeds the total amount of charges
forecasted in the Budgets to be charged for all O&M Services to be
performed during such calendar year above the Baseline Service Level and up to
the Budgeted Service Level (the “Budgeted Charges”) (the amount by which actual
charges for O&M Services performed above the Baseline Service Level and up
to the Budgeted Service Level during an applicable calendar year exceed the
Budgeted Charges for such calendar year being referred to herein as “Budget
Excess Charges”), then, at ITC’s option, payment of all such Budget Excess
Charges shall be deferred until June 1, 2006, without interest or return
thereupon.  One-fifth of the total Budget
Excess Charges so deferred shall be paid on June 1 of each of 2006, 2007,
2008, 2009 and 2010.  Amounts due with
respect to such deferred Budget Excess Charges after June 1, 2006 shall
bear simple interest from June 2, 2006 to, but not including, the date of
payment at the LIBOR rate for one-year deposits quoted on the date of payment
through customary sources identified by ITC. 
Notwithstanding the foregoing, ITC shall not be entitled to defer
payment of any charges arising from the performance by Detroit Edison of
O&M Services requested by ITC at a


 


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volume or frequency in excess of the Budgeted Service
Level or any O&M Services not set forth in the applicable Budget, including
without limitation, any charges arising from the performance by Detroit Edison
of O&M Services necessitated by catastrophic storms or other catastrophic
events.  The term “Budgeted Service
Level,” as used herein, shall refer to a volume and frequency of O&M
Services comparable or equivalent in the aggregate to the volume and frequency
of all such O&M Services forecasted in the applicable Budgets.


 


(g)           Any
amount not paid by ITC when due hereunder shall bear interest at a rate equal
to the prime rate, as reported in the Wall Street Journal on the last business
day of the month in which the applicable Invoice was received, plus two (2) percent
per annum (or, if lower, the highest rate permitted by applicable law) accrued
from the due date of such payment until such payment is actually received by
Detroit Edison.  Such interest charges
shall not be applied to any amounts deferred by ITC pursuant to subsections 4(e) and
4(f) above until after June 1, 2006.


 


5.             Books and Records.  Detroit Edison shall keep records and books
of account showing all charges, disbursements or expenses made or incurred by
it in performing the Services and shall preserve such records and books of
account for a period of three (3) years following incurrence of such
expenses, or longer if required by applicable law.


 


6.             Access to Records. ITC, directly or
through authorized representatives, shall at all times during reasonable
business hours have access to and the right to audit, inspect and make copies
of any and all books, records and accounts, invoices, contracts, canceled
checks, payrolls and other documents and papers of every kind held by Detroit
Edison pertaining to the performance of the Services and all charges,
disbursements and expenses made or incurred by Detroit Edison in performing the
Services and all information related to the calculation of overhead costs by
Detroit Edison.


 


7.             Term.


 


(a)           The
term of this Agreement shall commence as of March 1, 2003 and shall
continue for a period of twelve (12) months thereafter, unless earlier
terminated pursuant to the terms of this Agreement.


 


(b)           This
Agreement, or the provision of any portion of the Services by Detroit Edison
hereunder, may be terminated at any time upon the mutual written consent of
Detroit Edison and ITC.


 


(c)           Notwithstanding
anything else set forth herein, ITC may, at any time, for any reason or no
reason, terminate the provision by Detroit Edison of any


 


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portion of the
Engineering Services that ITC elects to perform through its own employees upon
not less than thirty (30) days’ prior written notice to Detroit Edison;
provided that the Parties shall cooperate in good faith (i) if applicable,
to implement a mutually agreeable plan for the transition to ITC of such
services, and (ii) to amend the Schedules as necessary or appropriate to
reflect the termination of the provision by Detroit Edison of such Services.


 


(d)           Upon
expiration or termination of this Agreement (or any applicable portion thereof)
for any reason, ITC shall promptly pay to Detroit Edison all amounts owing to
Detroit Edison for Services performed or reimbursable expenses incurred as
provided herein prior to such expiration or termination.


 


(e)           Sections
4, 7(d), 8, 9, 10, and 12 shall survive any expiration or termination of this
Agreement with respect to the provision of any of the Services.


 


8.             Confidentiality.


 


(a)           In
recognition of the other Party’s need to protect its legitimate business
interests, each Party hereby covenants and agrees that it shall regard and
treat each item of information or data constituting “Confidential Information”
(as defined below) of the other Party as strictly confidential and wholly owned
by such other Party and that it will not (i) distribute, disclose,
reproduce or otherwise communicate any such item of information or data to any
person or entity or (ii) use any such item of information or data for any
purpose other than in accordance with the terms of this Agreement or other
agreements between the Parties and in connection with its performance
thereof.  For purposes of this Agreement,
“Confidential Information” shall mean the proprietary and confidential data or
information of a Party which is of tangible or intangible value to such Party
and is not generally known by or available to the competitors of such
Party.  Notwithstanding the foregoing,
Confidential Information shall not include information which:  (i) at the time of disclosure to the
receiving Party is in the public domain or thereafter enters the public domain
through no wrongful act or omission of the receiving Party; (ii) is
already known by the receiving Party at the time of disclosure by the
disclosing Party and such information is not otherwise subject to
confidentiality obligations of the receiving Party; (iii) is available to
the receiving Party at the time of disclosure by the disclosing Party from a
third party who, to the receiving Party’s knowledge, may disclose such
information without violation of any confidentiality obligation or (iv) is
required to be made public by “posting” or other procedure by law or
regulation.


 


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(b)           Notwithstanding
the foregoing, each Party may disclose Confidential Information of the other
Party to those of its officers, directors, employees, agents, independent
contractors and advisors who need to know such Confidential Information in
order to carry out the purposes and intent of this Agreement; provided,
however, that any such disclosure shall be consistent and compliant with all rules,
requirements and procedures of the FERC and any other applicable regulatory
authority, including without limitation the OASIS standard of conduct
procedures developed by ITC and accepted by FERC pursuant to 18 C.F.R. Part 37.4
(2000), as amended from time to time. 
Each Party shall be responsible for ensuring the continued
confidentiality of all Confidential Information of the other Party known by,
disclosed or made available to such of its officers, directors, employees,
agents, independent contractors and advisors in connection with this Agreement,
including, without limitation, instructing its officers, employees, independent
contractors, agents and advisors to maintain the confidentiality of such
Confidential Information.


 


(c)           If
a Party becomes legally compelled to disclose any Confidential Information of
the other Party (whether by judicial or administrative order, applicable law, rule or
regulation, or otherwise), or to the extent disclosure of Confidential
Information directly related to the rates, terms or conditions of the
performance of the Services is required in the context of any regulatory
proceeding, including without limitation any rate case before the Federal
Energy Regulatory Commission under Sections 205 or 206 of the Federal Power Act,
such Party will use all reasonable efforts to provide the other Party with
prior notice thereof so that the other Party may seek a protective order or
other appropriate remedy to prevent such disclosure.  If such protective order or other remedy is
not obtained prior to the time such disclosure is required, such Party will
only disclose that portion of such Confidential Information which it is legally
required to disclose.


 


(d)           Upon
termination or expiration of this Agreement, or promptly upon receipt of
written notice from the other Party, each Party shall return to the other Party
all copies, versions or abstracts of written or descriptive materials of any
kind that contain or discuss any Confidential Information of such other Party,
and the confidentiality obligations of this Agreement shall continue in full
force and effect for a period of three years.


 


(e)           Each
Party expressly understands and agrees that the covenants and agreements set
forth in this Section 8 are special, unique, and of an extraordinary
character, and in the event of any default, breach or threatened breach hereof
by such Party, the other Party shall be entitled, if it so elects, to institute
and prosecute proceedings in any court of


 


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competent jurisdiction,
either at law or in equity, and shall be entitled to such relief as may be
available to it pursuant hereto, at law or in equity.  All such rights and remedies shall be
cumulative, and none of them shall limit any other rights or remedies of either
Party.


 


9.             Limitation of Liability.


 


(a)           NEITHER ITC NOR DETROIT EDISON SHALL BE LIABLE HEREUNDER FOR ANY
SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, INCLUDING LOSS OF BUSINESS OR
PROFITS, WHETHER BASED UPON BREACH OF WARRANTY, BREACH OF CONTRACT, NEGLIGENCE,
STRICT LIABILITY, TORT OR ANY OTHER LEGAL THEORY, AND WHETHER OR NOT DETROIT
EDISON OR ITC HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.


 


(b)           IN NO EVENT (OTHER THAN ONE INVOLVING DETROIT EDISON’S GROSS NEGLIGENCE
OR WILLFUL MISCONDUCT) WILL DETROIT EDISON’S LIABILITY TO ITC FOR ANY AND ALL
CLAIMS RELATED TO OR ARISING OUT OF THIS AGREEMENT OR THE PERFORMANCE OF THE
SERVICES EXCEED THE FEE (AS DEFINED IN SECTION 4(a)(iii)) ASSOCIATED WITH
THE PORTION OF THE SERVICES OUT OF WHICH THE CLAIM AROSE.


 


10.           Limited Warranty, Exclusions of Warranties and
Limited Remedy.


 


(a)           Detroit
Edison will perform the Services (i) in accordance with all performance
standards set forth in the Schedules, and (ii) with at least the same
degree of care, skill and diligence with which it currently performs or has in
the past performed similar services for or with respect to the Transmission
Assets.


 


(b)           If
any of the Services fails to comply with the warranty set forth in Section 
10(a), ITC shall give notice of such failure to Detroit Edison not later that
one year after such Services were performed. 
Detroit Edison shall have the right, within thirty (30) days after
receipt of any such notice, to dispute any assertion by ITC that Detroit Edison’s
performance of the Services fails to comply with such warranty, and such
dispute shall be submitted to the dispute resolution procedures set forth in Section 12.  In the event that it is ultimately determined
(by mutual agreement, arbitration, or a final, non-appealable judgment of a
court of competent jurisdiction) that any of the Services fail to comply with
the warranty set forth in Section 10(a), then at ITC’s sole option,
Detroit Edison will re-perform such Services at no additional cost to ITC or
will fully compensate ITC for all reasonable


 


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and verifiable costs of
remedial work performed by third party contractors necessary to correct such
failure.  All liabilities and obligations
of Detroit Edison arising out of or related to any of the Services shall cease
one year after which such Services were performed; provided, however, that in
the event any claim on the part of ITC for a breach of the warranty set forth
in Section 10(a) is time barred as a result of this sentence, Detroit
Edison shall, if permissible, assign to ITC its rights, and if such assignment
is impermissible, shall itself pursue any warranty claims against any
applicable Subcontractor(s) to the extent, and only to the extent, that such
rights arise solely out of such Subcontractors’ performance of the applicable
Services giving rise to ITC’s claim.


 


(c)           THE ONLY WARRANTY CONCERNING THE SERVICES IS SET FORTH IN SECTION 10(a).  ALL OTHER WARRANTIES WITH RESPECT TO THE
SERVICES OR ANY LABOR, PARTS OR MATERIALS PROVIDED IN CONNECTION THEREWITH,
EXPRESS OR IMPLIED, ARE EXCLUDED, INCLUDING THE IMPLIED WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND ANY WARRANTY ARISING FROM
COURSE OF DEALING, USAGE OF TRADE, DESCRIPTION OR SAMPLE.


 


11.           Default.  Notwithstanding anything to the
contrary set forth in this Agreement, (i) either Party may, by written
notice to the other, terminate this Agreement or suspend its further
performance without terminating this Agreement if the other Party materially
breaches any of its material obligations under this Agreement and fails to cure
such breach within thirty (30) days following a final and binding
determination, by mutual agreement, arbitration or final, non-appealable
judgment of a court of competent jurisdiction, that such breach has occurred
(or, if the breach is such that its cure is possible but will take longer than
thirty (30) days, fails to commence to cure such breach within such thirty (30)
day period and proceed diligently therewith until cured), and (ii) Detroit
Edison may terminate this Agreement or suspend its further performance without
terminating this Agreement if ITC fails to pay any amount owing to Detroit
Edison hereunder within thirty (30) days following receipt of written notice of
non-payment from Detroit Edison.


 


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12.           Dispute Resolution.


 


(a)           Each
Party shall, from time to time, designate a senior officer (a “Dispute
Representative”) who shall have the authority to represent such Party and
resolve and settle any dispute arising under or in connection with this
Agreement or the Services performed hereunder. 
The Parties hereto agree to attempt to resolve all such disputes
equitably and in a good faith manner (unless, in the reasonable judgment of the
affected Party, the immediate pursuit of judicial equitable relief is necessary
to prevent or mitigate a risk of irreparable harm or damage).


 


(b)           If
any dispute arising under or in connection with this Agreement or the Services
performed hereunder is not resolved pursuant to Section 12(a) within
thirty (30) days from the date on which such dispute is submitted to the
Dispute Representatives, such dispute shall, if the Parties so agree, be
submitted to and resolved by binding arbitration, or in the absence of such
agreement either Party may pursue any and all remedies in respect of such
dispute available to such Party at law or in equity.  Any arbitration proceeding arising under or
in connection with this Agreement or the Services performed hereunder shall be
conducted pursuant to the terms of the Federal Arbitration Act and (except as
otherwise specified herein) the Commercial Arbitration Rules of the
American Arbitration Association in effect at the time the arbitration is
commenced.  The venue for the arbitration
shall be Detroit, Michigan.  The
arbitration shall be conducted before a panel of three (3) arbitrators,
selected as follows:  (i) each Party
shall specify one arbitrator within ten (10) days of the end of the thirty
(30) day period for dispute resolution under Section 12(a), and (ii) a
neutral person shall be selected through the American Arbitration Association’s
arbitrator selection procedures to serve as the third arbitrator.  The arbitrator designated by any Party need
not be neutral.  In the event that any
person fails or refuses timely to name his arbitrator within the time specified
herein, the American Arbitration Association shall (immediately upon notice
from the other Party) appoint an arbitrator for the person or entity that has
failed to appoint its arbitrator.  To the
extent practical, the arbitrators shall schedule the hearing to commence
within sixty (60) days after the arbitrators have been impaneled.  A majority of the panel shall render an award
or other decision within ten (10) days of the completion of the hearing,
which award or decision shall be final, binding and conclusive upon the Parties
hereto.  Each Party shall have the right
to have an award or decision of such panel enforced by any court of competent
jurisdiction.


 


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13.           Notices.  All notices and other communications
hereunder shall be in writing and shall be deemed given and received the
earlier of (i) when actually received, (ii) when delivered personally,
(iii) one (1) business day after being delivered by facsimile
transmission, (iv) one (1) business day after being deposited with a
recognized overnight courier service, or (v) four (4) days after
being deposited in the United States mail, First Class with postage
prepaid, to the recipient Party at its address (or at such other address or
facsimile number for a Party as shall be specified by like notice; provided,
however, that notices of a change of address shall be effective only
upon receipt thereof):


 


	
  If to Detroit Edison:

  	
   

  	
  The Detroit Edison Company

  2000 2nd Avenue

  Detroit, Michigan 48226-1279

  Attn: Kenneth D. Cash

  
	
   

  	
   

  	
   

  
	
  with a copy to:

  	
   

  	
  The Detroit Edison Company

  2000 2nd Avenue

  Detroit, Michigan 48226-1279

  Attn: Patrick B. Carey

  Telecopy: (313) 235-8500

  
	
   

  	
   

  	
   

  
	
  If to ITC:

  	
   

  	
  International Transmission Company

  1901 South Wagner

  Ann Arbor, MI 48103-9715

  Attn: Joseph Welch

           John H.
  Flynn, Esq.

  Telecopy: (734) 665-3040

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Milbank, Tweed, Hadley & McCloy LLP

  1 Chase Manhattan Plaza

  New York, New York 10005

  Attn: M. Douglas Dunn

  Telecopy: (212) 530-5219

  

  and

  

  Simpson Thacher & Bartlett

  425 Lexington Avenue

  New York, New York 10017

  Attn: David J. Sorkin

           Brian M. Stadler

  Telecopy: (212) 455-2502

  



 


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14.           Assignment.  Neither Detroit Edison nor ITC may assign
this Agreement without the prior written consent of the other Party, which
consent shall not be unreasonably withheld, except that (i) Detroit Edison
may, without consent, cause certain of the Services to be performed by one or
more of its affiliates or Subcontractors, consistent with the terms of this
Agreement, (ii) either Party may assign its rights and obligations under
this Agreement without consent to any successor entity pursuant to a merger,
consolidation, sale of assets or other transaction as a result of which
substantially all of the assets of such Party are acquired by such successor
entity, and (iii) either Party may assign its rights under this Agreement
for purposes of collateral security to lenders or financing parties without
consent.


 


15.           Governing Law.  This Agreement shall be governed by and
construed in accordance with the laws of the State of Michigan (without giving
effect to conflicts of law principles) as to all matters, including but not
limited to matters of validity, construction, effect, performance and remedies.


 


16.           Interpretation.


 


(a)           The
article, section and schedule headings contained in this Agreement
are for reference purposes only and are not part of this Agreement and shall
not, in any way, affect the meaning or interpretation of this Agreement.


 


(b)           This
Agreement shall not be construed more strongly against either Party hereto
regardless of which Party is responsible for its preparation, it being agreed
that this Agreement was fully negotiated by both Parties.  Notwithstanding anything else herein to the
contrary, this Agreement shall be construed consistent with all rules,
requirements and procedures of the FERC and any other applicable regulatory
authority, including without limitation the OASIS standard of conduct
procedures developed by ITC and accepted by FERC pursuant to 18 C.F.R. Part 37.4
(2000), as amended from time to time.


 


17.           Excusable Delays.  In no event shall Detroit Edison be deemed to
be in default of any provision of this Agreement or liable for delays or
interruptions in the performance of Services to the extent resulting from or
arising out of or in connection with acts or events beyond the reasonable
control of Detroit Edison; provided, however, that Detroit Edison shall
exercise commercially reasonable efforts to minimize the extent of any delays
or interruptions in performance, and provided further that the excused
delay or interruption shall last only as long as the acts or events beyond the
control of Detroit Edison require.  Such
acts or events include without limitation acts of God, civil or military
authority, civil disturbance, war, strikes, fires, storms, other catastrophes,
computer system failures, acts of third parties, and other events of similar or
dissimilar nature 


 


13





















 


beyond Detroit Edison’s reasonable control.


 


18.           Entire Agreement.  This Agreement, including all exhibits hereto
(all of which are incorporated herein by this reference), contains the entire
agreement and understanding, and supersedes all prior agreements and
understandings, concerning the subject matter hereof between the Parties
hereto.


 


19.           Independent Contractors.  The Parties hereto acknowledge and agree that
in the performance of their respective duties and obligations hereunder they
are acting as independent contractors of each other, and neither Party shall
represent that an employer/employee, partnership, joint venture, or agency relationship
exists between them, nor shall either Party have the power nor will either
Party represent that it has the power to bind the other Party hereto to any
contract or agreement.


 


20.           Waiver. 
No waiver, amendment, termination or discharge of this Agreement or
any of the terms or provisions hereof, shall be binding upon either Party
unless confirmed in writing.  No waiver
by either Party of any term or provision of this Agreement or of any default
hereunder shall affect such Party’s right thereafter to enforce such term or
provision or to exercise any right or remedy in the event of any other default,
whether or not similar.


 


21.           Severability.  If any provision of this Agreement shall be
held void, voidable, invalid or inoperative, no other provision of this
Agreement shall be affected as a result thereof, and accordingly, the remaining
provisions of this Agreement shall remain in full force and effect as though
such void, voidable or inoperative provision had not been contained herein.


 


22.           Binding Effect.  This Agreement shall be binding upon and
shall inure to the benefit of the Parties hereto and their respective
successors and permitted assigns.


 


23.           Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute the same Agreement. 
Any signature page of any such counterpart, or any electronic
facsimile thereof, may be attached or appended to any other counterpart to
complete a fully executed counterpart of this Agreement, and any telecopy or
other facsimile transmission of any signature shall be deemed an original and
shall bind such Party.


 


24.           Further Assurances.  Upon the reasonable request of the other
Party, each Party hereto agrees to take any and all actions necessary or
appropriate to give effect to the terms set forth in this Agreement.


 


[Signatures on next page]


 


14





















 


IN WITNESS
WHEREOF, Detroit Edison and ITC have caused this Agreement to be signed by
their respective duly authorized officers as of the date first above written.


 


 


 


	
   

  	
  THE DETROIT EDISON COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  INTERNATIONAL TRANSMISSION COMPANY, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
				



 


 


 


 


 





















 


Service Level Agreement

Schedule A – Construction and Maintenance Services


 


Part I
– General Scope of Services


 


1.             For
all ITC transmission line and station/switchyard budget items approved as
provided herein, Detroit Edison will act as general contractor for ITC, to perform
maintenance and complete construction, in either case as required by ITC.


 


2.             ITC
and Detroit Edison shall cooperate in good faith to jointly develop and
implement a non-binding, good faith schedule and budget for all
construction projects anticipated to be required by ITC for the following year,
or for such portion thereof as this Agreement will remain in effect (the
“Construction Budget”).


 


3.             ITC
and Detroit Edison shall cooperate in good faith to jointly develop and
implement a non-binding, good faith schedule and budget for all
maintenance services anticipated to be required by ITC for the following year,
or for such portion thereof as this Agreement will remain in effect (the
“Maintenance Budget”).


 


4.             Detroit
Edison may, by delivery of written notice to ITC at any time prior to
completion of the Construction Budget, decline to perform any portion of the
services requested by ITC to be included in the Construction Budget for the
following year if, in the reasonable judgment of Detroit Edison, Detroit
Edison, exercising commercially reasonable efforts, would lack the resources to
perform such services or meet the proposed schedule therefor, in which
case Detroit Edison shall not be obligated to perform such services hereunder.  Any such services which Detroit Edison
declines to perform will not be included in the Construction Budget and may be
self-provided by ITC or obtained from qualified third parties.


 


5.             Detroit
Edison may, by delivery of written notice to ITC at any time prior to
completion of the Maintenance Budget, decline to any portion of the services
requested by ITC to be included in the Maintenance Budget to the extent that
the volume and frequency of such maintenance services is in excess of the level
of such maintenance services provided by Detroit Edison to ITC during the 2002
calendar year.  Any such services which
Detroit Edison declines to perform will not be included in the Maintenance
Budget and may be self-provided by ITC or obtained from qualified third
parties.


 


6.             Detroit
Edison shall perform all C&M Services, to the extent required by ITC, that
are set forth in the Construction Budget and Maintenance Budget, up to the
levels specified therein.  Actual amounts
charged by Detroit Edison and


 


A - 1





















 


payable by ITC for the
performance of such C&M Services shall be governed by and determined in
accordance with Section 4 of the Agreement, regardless of whether or not
such amounts exceed those reflected or forecast in the Construction Budget or
Maintenance Budget.


 


7.             ITC
shall request that Detroit Edison perform, and Detroit Edison shall use
commercially reasonable efforts to perform, any C&M Services required by
ITC which are not set forth or exceed the levels specified in the Construction
Budget or Maintenance Budget, as applicable. 
No later than 30 days after receipt of any request by ITC for such
additional C&M Services, Detroit Edison shall either agree to perform such
services or notify ITC that, consistent with the preceding sentence, Detroit
Edison is unable to perform such services, in which case Detroit Edison shall
not be obligated to perform such additional services hereunder.  Any such services which Detroit Edison
declines to perform may be self-provided by ITC or obtained from qualified
third parties.


 


8.             For
all C&M Services, ITC and Detroit Edison will cooperate in good faith to
establish a construction or maintenance schedule that will meet ITC’s
needs. If established and agreed upon schedules cannot be met, the applicable
Detroit Edison project manager will cooperate with ITC to obtain remedial
action (e.g., appointing contract labor, overtime, or schedule slippage).


 


9.             ITC
will oversee and provide direction to Detroit Edison for maintenance and
construction of the ITC facilities. 
Detroit Edison will construct and maintain the ITC facilities in
accordance with Good Utility Practice and established Detroit Edison
engineering and construction standards, except as modified and approved by
mutual agreement of the parties.  Detroit
Edison shall comply with all applicable engineering and building codes and
guidelines, and shall, upon request of ITC, provide evidence of such
compliance.  As used herein, “Good
Utility Practice” means any of the practices, methods and acts engaged in or
approved by a significant proportion 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 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 applicable region.


 


10.           Detroit Edison will supply all equipment and materials required to
perform the C&M Services.


 


11.           ITC and Detroit Edison recognize that the performance of the C&M
Services and the implementation of the Construction Budget and Maintenance
Budget and any related performance schedules may be subject to the oversight
and


 


A - 2





















 


direction
of and modification by the Midwest Independent Transmission System Operator, Inc.
(the “Midwest ISO”) or any other regional transmission organization in which
ITC subsequently participates.


 


A - 3





















 


Schedule A
– Services to Be Provided


 


Part II
– Service Description and Performance Measures


 


	
  Service Name

  	
   

  	
  Service Description

  	
   

  	
  Performance Measure

  
	
  1. Construction and Maintenance Services to
  construct and maintain the transmission system

  	
   

  	
   

  	
   

  	
  Provide as required by ITC in accordance with the
  Construction Budget and Maintenance Budget.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.1. Provide necessary labor, materials, and
  equipment to perform construction and maintenance activities on the
  transmission system.

  	
   

  	
  1.1.1. Provide (SPE) project
  tracking and project management services for capital construction and
  maintenance of transmission system assets.

  	
   

  	
  Provide
  as required by ITC in accordance with the Construction Budget and Maintenance
  Budget.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.1.2. Provide (SPE) line
  clearance and maintenance services for capital construction projects and for
  transmission system easements and rights of way.

  	
   

  	
  Provide
  as required by ITC in accordance with the Construction Budget and Maintenance
  Budget.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.1.3. Provide (CS)
  Construction Support labor, materials & equipment for the capital
  construction and maintenance of the non-electrical portions of the
  transmission stations.

  	
   

  	
  Provide
  as required by ITC in accordance with the Construction Budget and Maintenance
  Budget.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.1.4. Provide (SCO) electrical
  labor, materials, miscellaneous materials, and equipment for the capital
  construction and maintenance of the electrical portions of the transmission
  stations.

  	
   

  	
  Provide
  as required by ITC in accordance with the Construction Budget and Maintenance
  Budget.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.1.5. Provide (SCO)
  Underground labor, materials and equipment for the capital construction and
  maintenance of the

  	
   

  	
  Provide
  as required by ITC in accordance with the Construction Budget and Maintenance
  Budget.

  



 


A - 4





















 


	
   

  	
   

  	
  underground conduit and cable
  transmission system.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.1.6. Provide (SCO) overhead
  line crew labor, materials and equipment for the capital construction and
  maintenance of the 120 kV transmission wood pole lines system.

  	
   

  	
  Provide
  as required by ITC in accordance with the Construction Budget and Maintenance
  l Budget.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.1.7. Provide (SCO) overhead
  transmission labor, miscellaneous material, and equipment for the capital
  construction and maintenance of the 120, 230, & 345 kV transmission
  line system.

  	
   

  	
  Provide
  as required by ITC in accordance with the Construction Budget and Maintenance
  Budget.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.1.8. Provide (CS)
  construction inspection and quality assurance services for site prep, and
  below ground grade construction of new installations and modifications to
  transmission stations.

  	
   

  	
  Provide
  as required by ITC in accordance with the Construction Budget.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.1.9. Provide (SPE) labor,
  materials and equipment for the installation and maintenance of the transmission
  cathodic protection systems.

  	
   

  	
  Provide
  as required by ITC in accordance with the Maintenance Budget.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.1.10. (CFS) Provide labor,
  materials and equipment for installation, calibrating, testing, inspection,
  and maintenance of interconnection billing meters at transmission system
  interconnections.

  	
   

  	
  Provide
  as required by ITC in accordance with the Maintenance Budget.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.1.11. Provide Power Equipment & Relay
  Test labor, materials and equipment for installation, testing and periodic

  	
   

  	
  Provide
  as required by ITC in accordance with the Maintenance Budget.

  



 


A - 5





















 


	
   

  	
   

  	
  maintenance of major equipment, relay systems,
  SCADA/RTU systems and fault recorder systems on the transmission system.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.1.12. Provide Cable Test Lab services to perform
  dissolved gas analysis testing of transformer oil.

  	
   

  	
  Provide
  as required by ITC in accordance with the Maintenance Budget.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.1.13 Provide (SCO) operating labor, materials and
  equipment for the switching, tagging and monitoring of the transmission
  system.

  	
   

  	
  Provide as required by ITC in accordance with the
  Maintenance Budget.

  



 


A - 6





















 


Service Level Agreement


 


Schedule B
–Engineering Services


 


Part I
– General Scope of Services


 


1.              For
all ITC transmission line and station/switchyard budget items approved as
provided herein, Detroit Edison will act as general contractor for ITC, to
complete engineering.


 


2.              ITC
and Detroit Edison shall cooperate in good faith to jointly develop and
implement a non-binding, good faith schedule and budget for all
engineering services anticipated to be required by ITC for the following year,
or for such portion thereof as this Agreement will remain in effect (the “Engineering
Budget”).


 


3.              Detroit
Edison may, by delivery of written notice to ITC at any time prior to
completion of the Engineering Budget, decline to perform any portion of the
Engineering Services requested by ITC to be included in the Engineering Budget
for the following year if, in the reasonable judgment of Detroit Edison,
Detroit Edison, exercising commercially reasonable efforts, would lack the
resources to perform such services or meet the proposed schedule therefor,
in which case Detroit Edison shall not be obligated to perform such services
hereunder.  Any such Engineering Services
which Detroit Edison declines to perform will not be included in the
Engineering Budget and may be self-provided by ITC or obtained from qualified
third parties.


 


4.              Detroit
Edison shall perform all Engineering Services, to the extent required by ITC,
that are set forth in the Engineering Budget, up to the levels specified
therein.  Actual amounts charged by
Detroit Edison and payable by ITC for the performance of such Engineering
Services shall be governed by and determined in accordance with Section 4
of the Agreement, regardless of whether or not such amounts exceed those
reflected or forecast in the Engineering Budget.


 


5.              ITC
shall request that Detroit Edison perform, and Detroit Edison shall use
commercially reasonable efforts to perform, any engineering services required
by ITC which are not set forth or exceed the levels specified in the
Engineering Budget.  No later than 30
days after receipt of any request by ITC for such additional Engineering
Services, Detroit Edison shall either agree to perform such services or notify
ITC that, consistent with the preceding sentence, Detroit Edison is unable to
perform such services, in which case Detroit Edison shall not be obligated to
perform such additional services hereunder. 
Any such services which Detroit Edison declines to perform may be
self-provided by ITC or obtained from qualified third parties.


 


6.              For
all Engineering Services, ITC and Detroit Edison will cooperate in good faith


 


B - 1





















 


to establish an
engineering schedule that will meet ITC’s needs. If established and agreed
upon schedules cannot be met, the applicable project manager will cooperate
with ITC to obtain remedial action (e.g., appointing contract labor, overtime,
or schedule slippage).


 


7.              All
designs, engineering drawings, equipment specifications, records and other
documentation developed, created or acquired by Detroit Edison in the course of
performing the Engineering Services shall become the property of, and be wholly
owned by, ITC.  Detroit Edison will
promptly deliver to ITC, and if requested by ITC, will maintain and store all
designs, engineering drawings, and records, both paper and electronic, of the
transmission system on behalf of ITC.


 


8.              Detroit
Edison will obtain ITC’s prior approval (not to be unreasonably withheld) of
changes to any engineering practices and policies applied to ITC facilities,
including substantive modifications to Detroit Edison’s standards.


 


9.              Detroit
Edison will obtain ITC’s prior approval (not to be unreasonably withheld) of
changes to any standard materials applied to ITC facilities, including
substantive modifications to Detroit Edison’s standards.


 


10.            Subject
to the oversight and direction of ITC, Detroit Edison will design all ITC
facilities in accordance with Good Utility Practice and established Detroit
Edison engineering and construction standards, except as modified and approved
by mutual agreement of the parties. 
Detroit Edison shall comply with all applicable engineering and building
codes and guidelines, and shall, upon request, provide evidence of such
compliance.


 


13.            ITC
and Detroit Edison recognize that the performance of the Engineering Services
and the implementation of the Engineering Budget and any related performance
schedules may be subject to the oversight and direction of and modification by
the Midwest ISO or any other regional transmission organization in which ITC
subsequently participates.


 


B - 2





















 


Schedule B –
Services to Be Provided


 


Part II
– Service Description and Performance Measures


 


	
  Service Name

  	
   

  	
  Service Description

  	
   

  	
  Performance Measures

  
	
  1.  Planning
  Support Services

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.1.   Engineering Support Services for Planning

  	
   

  	
  1.1.1.   Provide Power Delivery Planning Services,
  provide input to studies, review Engineering Information sketches; and
  provide scope review.

  	
   

  	
  Respond
  to planning requests by the mutually agreed upon date.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.   Engineering Support Services

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.1.   Provide technical support services. 

  	
   

  	
  2.1.1.   Provide Towers engineering services to
  provide scope review and estimates, review Engineering Information sketches,
  provide input to studies, and other related services. 

  	
   

  	
  Respond to planning requests by the mutually agreed
  upon date. 

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.1.2.   Provide
  Substation Design engineering services to provide scope review and estimates,
  review Engineering Information sketches, provide input to studies, and other
  related services.

  	
   

  	
  Respond to planning requests by the mutually agreed
  upon date.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.1.3.   Provide
  Relay engineering services to provide scope review and estimates, provide
  input to studies, review Engineering Information sketches. Specify capital
  upgrades and improvements to transmission relay, SCADA, alarm systems.

  	
   

  	
  Respond to planning requests by the mutually agreed
  upon date.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.1.4.   Provide
  Equipment Performance and Predictive Maintenance engineering

  	
   

  	
  Respond to planning requests by the mutually agreed
  upon date.

  



 


B - 3





















 


	
   

  	
   

  	
  services to specify capital upgrades and
  improvements for control batteries and battery charger systems.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.1.5.   Provide Underground Design services to
  provide scope review, estimates; provide input to studies; review EI
  sketches.

  	
   

  	
  Respond to planning requests by the mutually agreed
  upon date.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.1.6.   Provide Field Support services to prepare
  input for transformer and equipment upgrades and replacements.

  	
   

  	
  Respond to planning requests by the mutually agreed
  upon date.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.1.7.   Provide
  Lines Engineering services to projects dealing with 120 kV wood pole.

  	
   

  	
  Respond to planning requests by the mutually agreed
  upon date.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.1.8.   Provide Operational Risk Assessment
  engineering services, provide input to studies, review Engineering
  Information sketches; provide scope review and provide day-to-day technical
  support.

  	
   

  	
  Respond to planning requests by the mutually agreed
  upon date.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.1.9.   Provide Project Management Organization
  scheduling services.

  	
   

  	
  Respond to planning requests by the mutually agreed
  upon date.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.1.10   Provide
  Architectural/ Civil/Structural engineering services to provide review and
  estimates, review Engineering Information sketches, assist in property
  purchases, and other related services; specify non-electrical capital
  improvements and upgrades to the transmission system.

  	
   

  	
  Respond to planning requests by the mutually agreed
  upon date.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.   Engineering
  and Design Services for Construction Projects

  	
   

  	
   

  	
   

  	
   

  



 


B - 4





















 


	
  3.1.   Provide
  engineering and design services necessary to prepare construction documents
  for new installations and capital modifications to the transmission system.
  Includes specifying and ordering long lead-time materials, engineering
  products and major equipment.

  	
   

  	
  3.1.1.   Provide Architectural, Civil, and Structural
  engineering and design services for the transmission stations.

  	
   

  	
  Provide as
  required by ITC in accordance with the Engineering Budget.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.1.2.   Provide
  Towers engineering and design services for transmission tower or pole lines.

  	
   

  	
  Provide
  as required by ITC in accordance with the Engineering Budget.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.1.3.   Provide Relay engineering services for new
  or existing relay protection and control schemes, SCADA systems, RTU’s, and
  Disturbance Monitoring Systems at transmission stations.

  	
   

  	
  Provide
  as required by ITC in accordance with the Engineering Budget.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.1.4.   Provide
  Substation Design electrical engineering and design services for the
  transmission stations.

  	
   

  	
  Provide
  as required by ITC in accordance with the Engineering Budget.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.1.5.   Provide Underground Design services for the
  transmission underground cable and conduit systems.

  	
   

  	
  Provide
  as required by ITC in accordance with the Engineering Budget.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.1.6.   Provide Service Planning line design
  services for the transmission system 120 kV wood pole overhead lines system.

  	
   

  	
  Provide
  as required by ITC in accordance with the Engineering Budget.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.1.7.   Provide
  Lines engineering services for the transmission system 120 kV wood pole
  overhead lines system.

  	
   

  	
  Provide
  as required by ITC in accordance with the Engineering Budget.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.1.8.   Provide
  Equipment 

  	
   

  	
  Provide
  as required by ITC 

  



 


B - 5





















 


	
   

  	
   

  	
  Performance and Predictive Maintenance equipment
  engineering services for all major transmission system equipment. Includes
  Insulation Coordination and Thermal Loading services.

  	
   

  	
  in
  accordance with the Engineering Budget.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.1.9.   Provide
  Meter engineering services for interconnection metering on the transmission
  system

  	
   

  	
  Provide
  as required by ITC in accordance with the Engineering Budget.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.1.10.   Provide
  Cathodic Protection engineering services for cathodic protection systems on
  the transmission system.

  	
   

  	
  Provide
  as required by ITC in accordance with the Engineering Budget.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.1.11.   Provide technical support services for the
  acquisition of rights of way and easements for the transmission line system
  projects.

  	
   

  	
  Provide
  as required by ITC in accordance with the Engineering Budget.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.1.12.   Provide
  engineering assistance and consulting as requested by ITC in connection with
  the community approval process including community approval meetings, zoning
  board of appeals meetings, community informational meetings, and other
  related activities.

  	
   

  	
  Provide
  as required by ITC in accordance with the Engineering Budget.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.1.13.   Provide assistance and consulting as
  requested by ITC in connection with its acquisition and maintenance of
  various permits required to implement projects, including building, soil
  erosion control, wetlands, road ROW and, state permits, and other related
  activities.

  	
   

  	
  Provide
  as required by ITC in accordance with the Engineering Budget.

  



 


B - 6





















 


	
  4.   Provide engineering and project management
  services necessary to support the transmission maintenance projects and
  programs. Includes specifying and ordering long lead-time materials for
  maintenance projects.

  	
   

  	
  4.1.   Provide Architectural/ Civil/Structural
  engineering services to support the maintenance activities of the
  non-electrical aspects of the transmission system.

  	
   

  	
  Respond to technical requests from ITC on an as
  requested basis.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.2.   Provide
  Towers engineering and design services to support maintenance activities of
  the transmission towers system.

  	
   

  	
  Respond to technical requests from ITC on an as
  requested basis.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.3.   Provide
  Relay and EPPM services to support the maintenance activities of the
  protective relay and control systems, the SCADA/RTU systems, interconnection
  and telemetering systems and the Fault Recorder systems of the transmission
  system.

  	
   

  	
  Respond to technical requests from ITC on an as
  requested basis.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.4. Provide Equipment Performance and Predictive
  Maintenance engineering services to support the maintenance activities on the
  major equipment of the transmission system, including infrared inspection
  services.

  	
   

  	
  Respond to technical requests from ITC on an as
  requested basis.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.5.   Provide
  Meter engineering services to support the maintenance activities associated
  with the interconnection metering equipment on the transmission system.

  	
   

  	
  Respond to technical requests from ITC on an as
  requested basis.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.6.   Provide
  Cathodic Protection engineering services to support maintenance activities on
  the cathodic protection 

  	
   

  	
  Respond to technical requests from ITC on an as
  requested basis.

  



 


B - 7





















 


	
   

  	
   

  	
  system.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.7.   Provide
  Cable Test Lab technical services to support maintenance activities on the
  high voltage cable system.

  	
   

  	
  Respond to technical requests from ITC on an as
  requested basis.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.8.   Provide
  Lines engineering services to support the maintenance activities of the
  underground conduit and cable systems on the transmission system.

  	
   

  	
  Respond to technical requests from ITC on an as
  requested basis.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.9.   Provide Engineering and Project Management
  services to plan and manage the Preventative Maintenance Program and the
  Reliability Maintenance line clearance program for the transmission system

  	
   

  	
  Respond to technical requests from ITC on an as
  requested basis.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.   Provide
  engineering services necessary to support the operation of the transmission
  system.

  	
   

  	
  5.1.   Provide
  Equipment Performance and Predictive Maintenance services to investigate and
  troubleshoot problems with major equipment and relay systems, SCADA, RTU
  systems and disturbance monitoring systems.

  	
   

  	
  Respond to requests from ITC on an as requested
  basis.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  5.2.   Provide
  Relay engineering services to investigate and troubleshoot relay system
  disturbances and anomalies.

  	
   

  	
  Respond to requests from ITC on an as requested
  basis.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  5.3.   Provide
  Meter engineering services to investigate and troubleshoot interconnection
  metering equipment failures and malfunctions.

  	
   

  	
  Respond to requests from ITC on an as requested
  basis.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  5.4.   Provide
  Cable Test Lab services to investigate and troubleshoot high voltage cable
  failures.

  	
   

  	
  Respond to requests from ITC on an as requested
  basis.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  5.5.   Provide
  Cathodic 

  	
   

  	
  Respond to requests from 

  



 


B - 8





















 


	
   

  	
   

  	
  Protection Services to investigate and troubleshoot
  failures and malfunctions of the cathodic protection system.

  	
   

  	
  ITC on an as requested basis.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  5.6.   Provide Lines Engineering Radio
  Interference/Television Interference services to regional facilitators for
  investigating complaints and troubleshoot RI/TVI on the transmission system.

  	
   

  	
  Respond to requests from ITC on an as requested
  basis.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  5.7.   Provide
  EMF services to deal with concerns and questions on Electro-Magnetic fields,
  Inductive Coordination, Radio Noise, and Real Estate Issues.

  	
   

  	
  Respond to requests from ITC on an as requested
  basis.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.   Real Estate Services

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.1.   Provide assistance and consulting as
  requested by ITC.

  	
   

  	
  6.1.1.   Provide Architectural engineering services
  as requested by ITC to assist ITC in responding to external property
  inquiries.

  	
   

  	
  Respond to each individual request from ITC by the
  date included on the request letter. Typically 10 to 15 working days
  depending on scope of inquiry.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6.1.2.   Provide
  Tower engineering services as requested by ITC to assist ITC in responding to
  external property inquiries.

  	
   

  	
  Respond to each individual request from ITC by the
  date included on the request letter. Typically 10 to 15 working days
  depending on scope of inquiry.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6.1.3.   Provide
  Substation Design engineering services as requested by ITC to assist ITC in
  responding to external property inquiries.

  	
   

  	
  Respond to each individual request from ITC by the
  date included on the request letter. Typically 10 to 15 working days
  depending on scope of inquiry.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6.1.4.   Provide
  Underground Design Engineering services as requested by ITC to assist ITC in
  responding to external property inquiries.

  	
   

  	
  Respond to each individual request from ITC by the
  date included on the request letter. Typically 10 to 15 working days
  depending on scope of inquiry.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6.1.5.   Provide
  EMF engineering services as 

  	
   

  	
  Respond to each individual request from ITC by the

  



 


B - 9





















 


	
   

  	
   

  	
  Requested by ITC to assist ITC in responding to
  external property inquiries.

  	
   

  	
  date included on the request letter. Typically 10 to
  15 working days depending on scope of inquiry.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6.1.6.   Provide
  Central Contracting Support as requested by ITC to assist ITC in responding
  to external property inquiries.

  	
   

  	
  Respond to each individual request from ITC by the
  date included on the request letter. Typically 10 to 15 working days
  depending on scope of inquiry.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6.1.7.   Provide
  Environmental Protection support services as requested by ITC to assist ITC
  in responding to external property inquiries.

  	
   

  	
  Respond to each individual request from ITC by the
  date included on the request letter. Typically 10 to 15 working days
  depending on scope of inquiry.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6.1.8.   Provide
  Transmission Planning and Regional Planning Support services as requested by
  ITC to assist ITC in responding to external property inquiries.

  	
   

  	
  Respond to each individual request from ITC by the
  date included on the request letter. Typically 10 to 15 working days
  depending on scope of inquiry.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6.1.9.   Provide
  Service Center support services as requested by ITC to assist ITC in
  responding to external property inquiries.

  	
   

  	
  Respond to each individual request from ITC by the
  date included on the request letter. Typically 10 to 15 working days
  depending on scope of inquiry.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6.1.10.   Provide
  Project Management services as requested by ITC to assist ITC in coordinating
  the inquiry response process.

  	
   

  	
  Respond to each individual request from ITC by the
  date included on the request letter. Typically 10 to 15 working days
  depending on scope of inquiry.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.2.   Provide
  services required as requested by ITC to assist ITC in coordinating
  relocation requests.

  	
   

  	
  6.2.1.   Provide
  Project Management services as requested by ITC to assist ITC in coordinating
  requested relocation of transmission assets.

  	
   

  	
  Respond to each individual request from ITC by the
  date included on the request letter. Typically 10 to 15 working days
  depending on scope of inquiry.

  



 


B - 10





















 


Service Level Agreement


 


Schedule C –
System Operations Services


 


Part I
- General Scope of Services


 


1.             Detroit
Edison will provide SO Services as directed by ITC.  All ITC related system one line drawings,
operating maps, records and other documentation developed, created or acquired
by Detroit Edison in the course of performing the SO Services shall become the
property of, and be wholly owned by, ITC. 
Detroit Edison shall promptly deliver to ITC all such system one line
drawings, operating maps, records and other documentation developed, created or
acquired by Detroit Edison.  If requested
by ITC, Detroit Edison shall store and archive such system one line drawings,
operating maps, records and other documentation.


 


2.             ITC
and Detroit Edison shall cooperate in good faith to jointly develop and
implement a non-binding, good faith schedule and budget for all system
operations services anticipated to be required by ITC for the following year
(the “Operations Budget”).


 


3.             Detroit
Edison may, by delivery of written notice to ITC not later than 30 days after
the receipt of the Operations Budget, decline to perform any portion of the services
requested by ITC to be included in the Operations Budget for the following year
if, in the reasonable judgment of Detroit Edison, Detroit Edison, exercising
commercially reasonable efforts, would lack the resources to perform such
services or meet the proposed schedule therefor, in which case Detroit Edison
shall not be obligated to perform such services hereunder.  Any such services which Detroit Edison
declines to perform may be self-provided by ITC or obtained from qualified
third parties


 


4.             Detroit
Edison shall perform all Services, to the extent required by ITC, that are set
forth in the Operations Budget, up to the levels specified therein.  Actual amounts charged by Detroit Edison and
payable by ITC for the performance of such Services shall be governed by and
determined in accordance with Section 4 of the Agreement, regardless of whether
or not such amounts exceed those reflected or forecast in the Operations
Budget.


 


5.             ITC
shall request that Detroit Edison perform, and Detroit Edison shall use
commercially reasonable efforts to perform, any SO Services required by ITC
which are not set forth or exceed the levels specified in the Operations
Budget.  No later than 30 days after
receipt of any request by ITC for such additional Services, Detroit Edison
shall either agree to perform such services or notify ITC that, consistent with
the preceding sentence, Detroit Edison is unable to


 


C - 1





















 


perform such services, in
which case Detroit Edison shall not be obligated to perform such services
hereunder.  Any such services which
Detroit Edison declines to perform may be self-provided by ITC or obtained from
qualified third parties.


 


6.             The
System Operating Practices listed in Exhibit 4 of the Coordination and
Interconnection Agreement between Detroit Edison and ITC are incorporated
herein by reference and shall govern the performance of the SO Services by
Detroit Edison.


 


7.             The
Parties recognize and hereby acknowledge that all of the SO Services provided
for herein may be subject to the oversight and direction of the Midwest ISO, or
any other regional transmission organization in which ITC subsequently
participates.


 


8.             For
so long as Detroit Edison is performing any SO Services, ITC shall afford Detroit
Edison reasonable notice of proposed interconnections to the ITC transmission
system, consistent with applicable laws and regulations, including without
limitation the OASIS Standards of Conduct. 
ITC shall coordinate the process for implementing such interconnections
with Detroit Edison to the maximum extent possible, consistent with and subject
to the applicable guidelines and requirements of the Midwest ISO (or any other
regional transmission organization in which ITC subsequently participates) and the
Federal Energy Regulatory Commission.


 


C - 2





















 


Schedule C –
Services to Be Provided


 


Part II – Service Description and Performance Measures


 


	
  Service Name

  	
   

  	
  Service Description

  	
   

  	
  Performance Measure

  
	
  1.     Transmission System Service Restoration

  	
   

  	
  1.1.   Pursuant to guidelines established by ITC,
  for restoration of service requiring action on the ITC system, analyze
  trouble, as required by ITC, determine action plan, direct and approve
  switching and tagging to isolate trouble, direct restoration of interrupted
  load and direct repair of the problem by ITC. Under such emergency
  conditions, coordinate action with generators, distribution company and
  interconnection operators.

  	
   

  	
  Transmission facilities
  returned to service in a timely manner

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.     Operations and Risk Assessment

  	
   

  	
  2.1.   Under ITC direction, prepare contingency
  plans and recommend planned outage schedules.

  	
   

  	
  Complete subject plans before
  distribution and posting by ITC of maintenance schedules

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.     Coordinated Planned outages

  	
   

  	
  3.1.   Pursuant to guidelines established by ITC,
  coordinate necessary switching and tagging to isolate trouble with ITC
  equipment or lines, so repairs can be completed in a safe manner.

  	
   

  	
  Equipment restored in a timely
  manner

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.     Power Quality

  	
   

  	
  4.1.   Maintain transmission system bus voltages
  within limits specified by ITC. Respond to isolated problems of TV, radio
  interference, etc in a timely manner by receiving and forwarding complaints
  for corrective action.

  	
   

  	
  Voltage levels maintained
  within the guidelines specified by ITC

  



 


C - 3





















 


	
  5.     Reporting

  	
   

  	
  5.1.   Provide data and consulting as requested by
  ITC in connection with the preparation of necessary reports and notifications
  to management and Federal, State, and Municipal authorities.

  	
   

  	
  Assistance provided to enable
  ITC to complete and file reports in a timely manner in accordance with
  criteria specified by the requiring agency.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.     Real-time Transmission System Monitoring

  	
   

  	
  6.1.   Provide data and consulting as requested by
  ITC in monitoring the ITC Transmission System for unplanned activity,
  abnormalities, overloads and other out of the ordinary events, analyzing
  system security and preparing corrective action plans. Take remedial action
  as requested by ITC.

  	
   

  	
  All abnormalities addressed in
  a timely manner.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.     Alarm Monitoring and Response

  	
   

  	
  7.1.   Monitor all computer systems and stations
  which monitor the ITC Transmission System for alarms and take prompt action
  to correct causes of alarms.

  	
   

  	
  All alarms serviced within 2
  hours by field personnel under normal conditions (non-storm conditions).

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.     Maintain System Voltage

  	
   

  	
  8.1.   Maintain proper system voltage within limits
  specified by ITC.

  	
   

  	
  System Voltages maintained
  within limits specified by ITC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.     Energy Management System

  	
   

  	
  9.1.   Update, and maintain data supplied by ITC
  for the EMS system.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.   Energy Scheduling processing

  	
   

  	
  10.1.   Evaluate, approve and process energy
  requests (including MRD and LEER). Maintain and verify for accuracy all
  transaction records and metering data for settlements billing. Review and
  correct transactions based on settlements log. Investigate and reconcile
  energy record discrepancies. 

  	
   

  	
   

  



 


C - 4





















 


	
   

  	
   

  	
  Report settlement data to MECS
  participants.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.   Load Forecasting / Reconciliation

  	
   

  	
  11.1.   Under the direction of ITC, perform load
  forecasts based on existing historical load and weather data.

  	
   

  	
  Prepare Forecast Performance —
  Energy Imbalance

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.   Update Operating Documents to reflect ITC System Changes

  	
   

  	
  13.1.   As
  requested by ITC, prepare and update System One Line Drawings and Operating
  Maps of the ITC system.

  	
   

  	
  System One Line Drawings and
  Operating Maps updated in an accurate and timely manner

  



 


C - 5





















 


Exhibit 1


 


Subcontractors


 


	
  Potential
  ITC Work Contractors

  	
   

  
	
   

  
	
  Overhead
  Line Construction Contractors

  
	
  Asplundh Tree
  Expert Co

  
	
  Harlan Electric

  
	
  Henkels &
  McCoy

  
	
  Hydaker-Wheatlake

  
	
  MJ Electric

  
	
  NG Gilbert

  
	
  SPE Construction

  
	
  The Energy Group

  
	
   

  
	
  Line
  Clearance

  
	
  Asplundh Tree
  Expert Co.

  
	
  Nelson Tree
  Service

  
	
  The Energy Group

  
	
   

  
	
  Transmission
  Clearing

  
	
  Asplundh Brush
  Control

  
	
  Kappen Tree
  Service

  
	
  Mid State Tree
  Service

  
	
  Woodland Brush
  Specialties

  
	
   

  
	
  Mowing &
  Landscaping

  
	
  Eagle
  Landscaping

  
	
  DRM
  Maintenance & Management Co.

  
	
  Michael LaFave
  Construction

  
	
   

  
	
  Substation &
  Electrical Work

  
	
  Chezcore

  
	
  Doublejack
  Electric

  
	
  Dumas

  
	
  Ferndale
  Electric

  
	
  JM Olson Corp

  
	
  MIG

  
	
  Motor City Electric

  
	
  Spaulding
  Electric

  
	
  Trianlge
  Electric

  
	
   

  
	
  Underground/System
  Conduit

  
	
  Corby Energy

  
	
  Kaltz Excavating

  
	
  Versatile Power

  



 





















 


	
  Engineering/Construction
  Management

  
	
  Black &
  Veatch

  
	
  Commonwealth
  Associates

  
	
   

  
	
  Tower
  Painting

  
	
  Seaway Painting

  



 





















 


Attachment No. 1(b)



Map of Territory