Document:

EXHIBIT 10.70

 

	
  Ohio Valley
  Electric Corporation

  	
   

  	
  Original Sheet No. 197

  
	
  Indiana-Kentucky
  Electric Corporation

  	
   

  	
   

  
	
  151
  Revised Rate Schedule FERC No. 4

  	
   

  	
   

  

 

MODIFICATION NO. 13

TO

 

INTER-COMPANY POWER AGREEMENT

 

DATED JULY 10, 1953

 

AMONG

 

OHIO VALLEY ELECTRIC CORPORATION, 

ALLEGHENY ENERGY SUPPLY COMPANY, L.L.C.

(successor to West Penn Power Company)

APPALCAHIAN POWER COMPANY (formerly

APPALACHIAN ELECTRIC POWER COMPANY),

THE CINCINNATI GAS & ELECTRIC COMPANY,

COLUMBUS SOUTHERN POWER COMPANY (formerly

COLUMBUS AND SOUTHERN OHIO ELECTRIC

COMPANY),

THE DAYTON POWER AND LIGHT COMPANY,

INDIANA MICHIGAN POWER COMPANY (formerly

INDIANA & MICHIGAN ELECTRIC COMPANY),

KENTUCKY UTILITIES COMPANY, LOUISVILLE GAS

AND ELECTRIC COMPANY MONONGAHELA POWER

COMPANY, OHIO EDISON COMPANY,

OHIO POWER COMPANY (formerly THE OHIO

POWER COMPANY),

PENNSYLVANIA POWER COMPANY,

THE POTOMAC EDISON COMPANY,

SOUTHERN INDIANA GAS AND ELECTRIC COMPANY, and

THE TOLEDO EDISON COMPANY.

 

Dated as of May 24, 2000

 

	
  Issued
  by: Dave Hart

  	
   

  	
  Effective: June 1, 2001 

  
	
   

  	
  Vice
  President and Assistant to the President

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Issued
  on: June 15, 2001

  	
   

  	
   

  

 

 

	
  Original Sheet No. 198

  

 

MODIFICATION NO. 13

 

TO

 

INTER-COMPANY POWER AGREEMENT

 

THIS AGREEMENT dated as of the 24th day of May, 2000, by and
among OHIO VALLEY ELECTRIC CORPORATION (herein called “OVEC” or “Corporation”),
ALLEGHENY ENERGY SUPPLY COMPANY, L.L.C. (successor to WEST PENN POWER COMPANY),
APPALACHIAN POWER COMPANY, THE CINCINNATI GAS & ELECTRIC COMPANY, COLUMBUS
SOUTHERN POWER COMPANY (formerly COLUMBUS AND SOUTHERN OHIO ELECTRIC COMPANY),
THE DAYTON POWER AND LIGHT COMPANY, INDIANA MICHIGAN POWER COMPANY (formerly
INDIANA & MICHIGAN ELECTRIC COMPANY), KENTUCKY UTILITIES COMPANY,
LOUISVILLE GAS AND ELECTRIC COMPANY, MONONGAHELA POWER COMPANY, OHIO EDISON
COMPANY, OHIO POWER COMPANY, PENNSYLVANIA POWER COMPANY, THE POTOMAC EDISON
COMPANY, SOUTHERN INDIANA GAS AND ELECTRIC COMPANY and THE TOLEDO EDISON
COMPANY, all of the foregoing, other than OVEC, being herein sometimes
collectively referred to as the Sponsoring Companies and individually as

 

a
Sponsoring Company.

 

 

	
  Original Sheet No. 199

  

 

WITNESSETH THAT

 

WHEREAS, Corporation and the United States of America have heretofore
entered into Contract No. AT-(40-1)-1530 (redesignated Contract No. E-(40-1)-1530
later redesignated Contract No. EY-76-C-05-1530 and later redesignated Contract
No. DE-AC05-76OR01530), dated October 15, 1952, providing for the supply by
Corporation of electric utility services to the United States Atomic Energy
Commission (hereinafter called “AEC”) at AEC’s project near Portsmouth, Ohio
(hereinafter called the “Project”), which Contract has heretofore been modified
by Modification No. 1, dated July 23, 1953, Modification No. 2, dated as of
March 15, 1964, Modification No. 3, dated as of May 12, 1966, Modification No.
4, dated as of January 7, 1967, Modification No. 5, dated as of August 15,
1967, Modification No. 6, dated as of November 15, 1967, Modification No. 7,
dated as of November 5, 1975, Modification No. 8, dated as of June 23, 1977,
Modification No. 9, dated as of July 1, 1978, Modification No. 10, dated as of
August 1, 1979, Modification No. 11, dated as of September 1, 1979,
Modification No. 12, dated as of August 1, 1981, Modification No. 13, dated as
of September 1, 1989, Modification No. 14, dated as of January 15, 1992,
Modification No. 15, dated as of February 1, 1993, and Modification No. 16,
dated as of January 1, 1998 (said Contract, as so modified, is hereinafter
called the “DOE Power Agreement”); and

 

WHEREAS, pursuant to the Energy Reorganization Act of 1974, the AEC was
abolished on January 19, 1975 and certain of its functions, including the
procurement of electric utility services for the Project, were transferred to
and vested in the Administrator of Energy Research and Development; and

 

2

 

	
  Original Sheet No. 200

  

 

WHEREAS, pursuant to the Department of Energy Organization Act, on
October 1, 1977, all of the functions vested by law in the Administrator of
Energy Research and Development or the Energy Research and Development
Administration were transferred to, and vested in, the Secretary of Energy, the
statutory head of the Department of Energy (hereinafter called “DOE”); and

 

WHEREAS, the parties hereto have entered into a contract, herein called
the “InterCompany Power Agreement,” dated July 10, 1953, governing, among other
things, (a) the supply by the Sponsoring Companies of Supplemental Power in
order to enable Corporation to fulfill its obligations under the DOE Power
Agreement, and (b) the rights of the Sponsoring Companies to receive Surplus
Power (as defined in the Agreement identified in the next clause in this
preamble) as may be available at the Project Generating Stations and the
obligations of the Sponsoring Companies to pay therefor; and

 

WHEREAS, the Inter-Company Power Agreement has heretofore been amended
by Modification No. 1, dated as of June 3, 1966, Modification No. 2 dated as of
January 7, 1967, Modification No. 3, dated as of November 15, 1967,
Modification No. 4, dated as of November 5, 1975, Modification No. 5, dated as
of September 1, 1979, Modification No. 6, dated as of August 1, 1981,
Modification No. 7, dated as of January 15, 1992, Modification No. 8, dated as
of January 19, 1994, Modification No. 9, dated as of August 17, 1995,
Modification No. 10, dated as of January 1, 1998, Modification No. 11, dated as
of April 1, 1999, and Modification No. 12, dated as of November 1, 1999 (said
contract so amended and as

 

3

 

	
  Original Sheet No. 201

  

 

modified and amended by this Modification No. 13 being herein and
therein sometimes called the “Agreement”); and

 

WHEREAS, it is the goal of OVEC to assist its Sponsoring Companies
during the summer of 2000 by making available to them additional power and
energy; and

 

WHEREAS, additional power would be made available as a result of
reductions by DOE of its contractual entitlement to power from OVEC; and

 

WHEREAS, it is desired that DOE release a portion of its contractual
entitlement to OVEC power and energy in exchange for payments based on the
value of such power and energy; and

 

WHEREAS, OVEC and the Sponsoring Companies desire to enter into this
Modification No. 13 as more particularly hereinafter provided;

 

NOW, THEREFORE, the parties hereto agree with each other as follows:

 

1.                                       Delete subsections 1.0124, 1.0125 and
1.0126 of the Inter-Company Power Agreement and substitute therefore the
following:

 

1.0124 “DOE Additional Power Release Period” means
the calendar months from June 1 through September 30, 2000.

 

1.0125 “DOE Additional Power Release” means a
reduction of the otherwise applicable DOE contract demand pursuant to this
Section 1.0125, for any calendar month during a DOE additional Power Release
Period.

 

1.0126 “Effective Date” means the date on which
Corporation notifies DOE and the Sponsoring Companies that all conditions to
effectiveness, including all required waiting periods and all required
regulatory acceptances or approvals, of the arrangements for a DOE Additional
Power Release and

 

4

 

	
  Original Sheet No. 202

  

 

reimbursement of Corporation for costs associated with such release,
have been satisfied.

 

2.                                     Delete subsection 5.05 of the
Inter-Company Power Agreement and

 

substitute therefore the following:

 

5.05 Surplus
Energy. Corporation shall make available to each Sponsoring Company
Surplus Energy in proportion to said Sponsoring Company’s Surplus Power
Reservation, provided that when (a) the DOE’s contractual entitlement to power
from OVEC has been reduced and (b) one or more of the Sponsoring Companies have
agreed to assume responsibility for the charges associated with such reduction
in exchange for the right to receive Surplus Power made available thereby, the
Sponsoring Companies which have assumed responsibility for the charges
associated with such reduction shall have first priority to Surplus Energy up
to the amounts of their respective entitlements to Surplus Power made available
by their assumptions of responsibility for such charges. Any remaining Surplus
Energy shall be made available (through successive allotments if necessary) to
all Sponsoring Companies in proportion to their respective Power Participation
Ratios. No Sponsoring Company, however, shall be obligated to avail itself of
any Surplus Energy. Each Sponsoring Company availing itself of Surplus Energy
shall be entitled to an amount of energy (herein called billing kilowatt-hours
of Surplus Energy) equal to its portion, determined as provided above, of the
total Surplus Energy after deducting therefrom such Sponsoring Company’s
proportionate share, as defined below in this Section 5.05, of all losses which
would be incurred in transmitting the total of such Surplus Energy from the
345-kv busses of the Project Generating Stations to the systems of all
Sponsoring Companies availing themselves of Surplus Energy. The proportionate
share of all such losses that shall be so deducted from such Sponsoring
Company’s portion of Surplus Energy shall be equal to all such losses
multiplied by the ratio of such portion of Surplus Energy to the total of such
Surplus Energy. Each Sponsoring Company shall have the right, pursuant to this
Section 5.05, to avail itself of Surplus Energy for the purpose of meeting the
loads of its own system and/or of supplying energy to other systems in
accordance with agreements, other than this Agreement, to which such Sponsoring
Company is a party.

 

5

 

	
  Original Sheet No. 203

  

 

3.                                  Delete subsection 6.01 and substitute
therefor the following:

 

CHARGES FOR SURPLUS POWER, ECAR EMERGENCY ENERGY AND
DOE ADDITIONAL POWER RELEASES

 

6.01 Total
Monthly Charge. The amount to be paid Corporation each month by the
Sponsoring Companies for Surplus Power and Surplus Energy supplied under this
Agreement shall  consist
of the sum of an energy charge, a demand charge and, if applicable, an
emergency power surplus and/or a DOE Additional Power Release Surcharge, all
determined as set forth in this Article 6. The amount to be paid to Corporation
for ECAR Emergency Energy supply under this Agreement shall be 98.74 mills per
kilowatt hour (plus transmission charges calculated in accordance with
applicable law).

 

4.                                     Delete subsection 6.024 and substitute
therefor the following:

 

6.024 Determine for such month the difference
between the total cost of fuel as described in subsection 6.021 above and the
sum of (a) the total energy charge to be billed DOE as described in subsection
6.022 above, (b) the energy charge to be billed as DOE Emergency Energy as
described in subsection 6.023 above and (c) the total cost of fuel used to
generate ECAR Emergency Energy. For the purposes hereof the difference so
determined shall be the fuel cost allocable for such month to the total
kilowatt-hours of energy generated at the Project Generating Stations for the
supply of Surplus Energy. For Surplus Energy made available to the Sponsoring
Companies by the reduction in DOE Contract Demand from 1899 MW to 1299 MW
during June through September 2000 (the “Released Demand”) and by DOE
Additional Power Releases, each Sponsoring Company shall pay Corporation for
each such month an amount obtained by multiplying the ratio of the billing
kilowatt-hours of Surplus Energy availed of by such Sponsoring Company during
such month to the aggregate of the billing kilowatt-hours of all Surplus Energy
availed of by all Sponsoring Companies during such month times the difference
determined hereinabove. For all other Surplus Energy, each Sponsoring Company
shall pay Corporation an amount equal to (i) an amount obtained by multiplying
the billing kilowatt-hours of Surplus Energy (other than Surplus Energy
associated with the Released Demand or with a DOE Additional Power Release)
availed of by such Sponsoring Company during

 

6

 

	
  Original Sheet No. 204

  

 

such month by the average station heat rate of the
Project Generating Stations times the average cost per Btu (determined in a
uniform manner for all Sponsoring Companies in conformity with any applicable
requirements of Account 703 (Fuel) by said Uniform System of Accounts) of all
fuel consumed by said Sponsoring Company in its own generating stations, both
averages to be computed in respect of the month next preceding that for which
payment is being made, plus (ii) its Power Participation Ratio of the excess,
if any, for such month of the fuel costs of the Corporation allocable to the
total kilowatt-hours of energy generated at the Project Generating Stations for
the supply of Surplus Energy (other than Surplus Energy associated with the
Released Demand or with a DOE Additional Power Release) over the aggregate of
the amounts computed with respect to all Sponsoring Companies under (i) above,
minus (iii) its Power Participation Ratio of the excess, if any, for such month
of the aggregate of the amounts computed with respect to all Sponsoring
Companies under (i) above over the fuel costs of the Corporation allocable to
the total kilowatt-hours of energy generated at the Project Generating Stations
for the supply of Surplus Energy (other than Surplus Energy associated with the
Released Demand or with a DOE Additional Power Release).

 

5.                                       Delete subsection 6.038 and substitute
therefor the following:

 

6.038 DOE will be responsible for capacity costs
related to the Released Demand when and to the extent that energy associated
with the Released Demand is not received by the Sponsoring Companies because of
a curtailment or outage of Corporation’s generating plants or transmission
facilities (an OVEC Outage). Any transmission loading relief (TLR) which is not
caused by an OVEC Outage will not be considered an OVEC Outage.

 

6.                                       Insert after subsection 6.038, a new
subsection 6.039 as follows:

 

6.039 When, pursuant to the May 24, 2000 letter
supplement (“Supplement”) to the DOE Power Agreement, DOE and Corporation agree
to a DOE Additional Power Release and thereby to make additional Surplus Power
and Surplus Energy available to the sponsoring Companies, the aggregate demand
charge otherwise payable by each Sponsoring Company for Surplus Power shall be
adjusted to reflect its agreed share of a

 

7

 

	
  Original Sheet No. 205

  

 

DOE Additional Power Release Surcharge, such DOE Additional Power
Release Surcharges to be equal to amounts per megawatt hour set forth below for
the Insured Sponsoring Companies, as defined herein, and for the other
Sponsoring Companies:

 

(a) For Insured Sponsoring Companies, the DOE
Additional Power Release Surcharge shall be their agreed share of the amount of
the DOE Additional Power Release under the Supplement times $50.76 per megawatt
hour during the calendar month of June 2000, $118.60 per megawatt hour during
the calendar months of July and August 2000 and $25.76 per megawatt hour during
the calendar month of September 2000 times the number of onpeak hours (5 x 16)
during each such month notwithstanding the fact that transmission loading
relief or outages or curtailments of Corporation’s generation or transmission
facilities may reduce deliveries of Surplus Energy which might otherwise be
made available to the Sponsoring Companies by the DOE Additional Power Release,
minus (a) the demand charges which DOE avoids by reason of the monthly
reduction in DOE contract demand required for the DOE Additional Power Release
to make additional Surplus Power available to the Insured Sponsoring Companies
and (b) charges for energy in amounts equal to such reductions in demand times
the number of on-peak hours during such month times Corporation’s energy rate
per MWH.

 

(b) For Sponsoring Companies other than the Insured
Sponsoring Companies, the DOE Additional Power Release Surcharge shall be their
agreed share of the DOE Additional Power Release under the Supplement times
$38.58 per magawatt hour during the calendar month of June 2000, $118.60 per
megawatt hour during the calendar months of July and August 2000 and $25.76 per
megawatt hour during the calendar month of September 2000 times the number of
on-peak hours (5 x 16) during each such month notwithstanding the fact that
transmission loading relief or outages or

 

8

 

	
  Original Sheet No. 206

  

 

curtailments of corporation’s generation or transmission facilities may
reduce deliveries of Surplus Energy which might otherwise be made available to
the sponsoring Companies by the DOE Additional Power Release, minus (a) the
demand charges which DOE avoids by reason of the monthly reduction in DOE contract
demand required for the DOE Additional Power Release to make additional Surplus
Power available to Sponsoring Companies other than the Insured Sponsoring
Companies and (b) charges for energy in amounts equal to such reductions in
demand times the number of on-peak hours during such month times Corporation’s
energy rate per MWH.

 

The Sponsoring Companies listed below (“Insured
Sponsoring Companies”) will be the loss payees of a $18,800,000 insurance
policy in form and substance satisfactory to the Insured Sponsoring Companies
covering their obligations to Corporation for its payments to DOE for DOE
Additional Power Releases, when Surplus Energy associated with such releases is
not received by the Insured Sponsoring Companies because of curtailments or outages
of Corporation’s generation or transmission facilities other than curtailments
resulting from transmission loading relief (TLR). TLR caused by curtailments or
outages of Corporation’s generation or transmission facilities shall not
constitute TLR for purposes of the preceding sentence.

 

9

 

	
  Original Sheet No. 207

  

 

Insured Sponsoring Companies

 

Kentucky Utilities Company Louisville

Gas and Electric Company Ohio Edison

Company Pennsylvania Power

Company The Toledo Edison Company

 

7.                                  Insert after subsection 10.07 new subsection
10.08 as follows:

 

10.08 DOE Additional Power Release
Surcharge.

Corporation shall render to each Sponsoring Company a statement
indicating the DOE Additional Power Release Surcharge due Corporation from such
Sponsoring Company pursuant to Article 6 above.
The total of such charges to the Sponsoring Companies shall in the aggregate
equal Corporation’s payment obligation to DOE for a DOE Additional Power
Release. Such Sponsoring Company shall make payment therefore by the date set
forth in such statement. In case the computation of the amount due cannot be
determined at the time, it shall be estimated subject to adjustment when the
actual determination can be made, and all payments shall be subject to
subsequent adjustment.

 

8.                                       This Modification No. 13 shall become
effective at 12:00 o’clock Midnight on the Effective Date.

 

9. The Inter-Company Power Agreement, as modified by Modification Nos. 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11 and
12 and as hereinbefore provided, is hereby in all respects confirmed.

 

10. This Modification No. 13 may be executed in any number of copies
and by the different parties hereto on separate counterparts, each of which
shall be deemed an original but all of which together shall constitute a single
agreement.

 

10

 

	
  Original Sheet No. 208

  

 

IN WITNESS WHEREOF, the parties hereto have executed this Modification
No. 13 as of the day and year first written above.

 

	
   

  	
  OHIO
  VALLEY ELECTRIC CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/
  David L. Hart

  	
   

  
	
   

  	
   

  
	
   

  	
  ALLEGHENY
  ENERGY SUPPLY COMPANY, L.L.C.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
   

  	
  /s/
  Peter J. Skrgic

  	
   

  
	
   

  	
   

  
	
   

  	
  APPALACHIAN
  POWER COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
   

  	
  /s/
  Henry Fayne

  	
   

  
	
   

  	
   

  
	
   

  	
  THE
  CINCINNATI GAS & ELECTRIC COMPANY

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
   

  	
  /s/
  John C. Procario

  	
   

  
	
   

  	
   

  
	
   

  	
  COLUMBUS
  SOUTHERN POWER COMPANY

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
   

  	
  /s/
  Henry Fayne

  	
   

  
	
   

  	
   

  
	
   

  	
  THE
  DAYTON POWER AND LIGHT COMPANY

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
   

  	
  /s/
  H. Ted Santo

  	
   

  
	
   

  	
   

  
	
   

  	
  INDIANA
  MICHIGAN POWER COMPANY

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
   

  	
  /s/
  Henry Fayne

  	
   

  
									

 

11

 

	
  Original Sheet No. 209

  

 

	
   

  	
  KENTUCKY
  UTILITIES COMPANY

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
   

  	
  /s/
  Wayne T. Lucas

  	
   

  
	
   

  	
   

  
	
   

  	
  LOUISVILLE
  GAS AND ELECTRIC COMPANY

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
   

  	
  /s/
  Chris Hermann

  	
   

  
	
   

  	
   

  
	
   

  	
  MONONGAHELA
  POWER COMPANY

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
   

  	
  /s/
  Peter J. Skrgic

  	
   

  
	
   

  	
   

  
	
   

  	
  OHIO
  EDISON COMPANY

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
   

  	
  /s/
  H. Peter Burg

  	
   

  
	
   

  	
   

  
	
   

  	
  OHIO
  POWER COMPANY

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
   

  	
  /s/ Henry Fayne

  	
   

  
	
   

  	
   

  
	
   

  	
  PENNSYLVANIA
  POWER COMPANY

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
   

  	
  /s/
  Arthur R. Garfield

  	
   

  
	
   

  	
   

  
	
   

  	
  THE
  POTOMAC EDISON COMPANY

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
   

  	
  /s/
  Peter J. Skrgic

  	
   

  
							

 

12

 

	
  Original Sheet No. 210

  

 

	
   

  	
  SOUTHERN
  INDIANA GAS AND ELECTRIC COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/
  J. G. Hurst

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  THE
  TOLEDO EDISON COMPANY

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/
  Guy L. Pipitone

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
						

 

13EXHIBIT
10.71

 

	
  Ohio Valley Electric Corporation

  	
   

  	
  Original Sheet No. 211

  
	
  Indiana-Kentucky Electric Corporation

  	
   

  	
   

  
	
  1” Revised Rate Schedule FERC No. 4

  	
   

  	
   

  

 

MODIFICATION NO. 14

 

TO

 

INTER-COMPANY POWER AGREEMENT

 

DATED JULY 10, 1953

 

AMONG

 

OHIO VALLEY ELECTRIC CORPORATION,

ALLEGHENY ENERGY SUPPLY COMPANY, L.L.C.

(successor to West Penn Power Company

and The Potomac Edison Company)

APPALACHIAN POWER COMPANY (formerly

APPALACHIAN ELECTRIC POWER COMPANY), THE

CINCINNATI GAS & ELECTRIC COMPANY, COLUMBUS

SOUTHERN POWER COMPANY (formerly

COLUMBUS AND SOUTHERN OHIO ELECTRIC COMPANY),

THE DAYTON POWER AND LIGHT COMPANY, INDIANA

MICHIGAN POWER COMPANY (formerly

INDIANA & MICHIGAN ELECTRIC COMPANY),

KENTUCKY UTILITIES COMPANY, LOUISVILLE

GAS AND ELECTRIC COMPANY MONONGAHELA

POWER COMPANY, OHIO EDISON COMPANY, OHIO

POWER COMPANY (formerly THE OHIO

POWER COMPANY),

PENNSYLVANIA POWER COMPANY,

SOUTHERN INDIANA GAS AND ELECTRIC COMPANY, and

THE TOLEDO EDISON COMPANY.

 

Dated as of April 1, 2001

 

	
  Issued by: Dave Hart

  	
  Effective: June 1, 2001

  
	
   

  	
  Vice President and
  Assistant to the President

  	
   

  
	
   

  	
   

  
	
  Issued on: June 15, 2001

  	
   

  
			

 

 

	
   

  	
   

  	
  Original Sheet No. 212

  

 

MODIFICATION NO. 14

TO

INTER-COMPANY POWER
AGREEMENT

 

THIS AGREEMENT dated as of the 1st day of
April, 2001, by and among OHIO VALLEY ELECTRIC CORPORATION (herein called
“OVEC” or “Corporation”), ALLEGHENY ENERGY SUPPLY COMPANY, L.L.C. (successor to
WEST PENN POWER COMPANY and THE POTOMAC EDISON COMPANY), APPALACHIAN POWER
COMPANY, THE CINCINNATI GAS & ELECTRIC COMPANY, COLUMBUS SOUTHERN POWER
COMPANY (formerly COLUMBUS AND SOUTHERN OHIO ELECTRIC COMPANY), THE DAYTON
POWER AND LIGHT COMPANY, INDIANA MICHIGAN POWER COMPANY (formerly INDIANA &
MICHIGAN ELECTRIC COMPANY), KENTUCKY UTILITIES COMPANY, LOUISVILLE GAS AND
ELECTRIC COMPANY, MONONGAHELA POWER COMPANY, OHIO EDISON COMPANY, OHIO POWER
COMPANY, PENNSYLVANIA POWER COMPANY, SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
and THE TOLEDO EDISON COMPANY, all of the foregoing, other than OVEC, being
herein sometimes collectively referred to as the Sponsoring Companies and
individually as a Sponsoring Company.

 

 

	
   

  	
   

  	
  Original Sheet No. 213

  

 

WITNESSETH  THAT

 

WHEREAS, Corporation and the United States of America
have heretofore entered into Contract No. AT-(40-1)-1530 (redesignated Contract
No. E-(40-1)-1530, later redesignated Contract No. EY-76-C-05-1530 and later
redesignated Contract No. DE-AC05-76OR01530), dated October 15, 1952, providing
for the supply by Corporation of electric utility services to the United States
Atomic Energy Commission (hereinafter called “AEC”) at AEC’s project near
Portsmouth, Ohio (hereinafter called the “Project”), which Contract has
heretofore been modified by Modification No. 1, dated July 23, 1953,
Modification No. 2, dated as of March 15, 1964, Modification No. 3, dated as of
May 12, 1966, Modification No. 4, dated as of January 7, 1967, Modification No.
5, dated as of August 15, 1967, Modification No. 6, dated as of November 15,
1967, Modification No. 7, dated as of November 5, 1975, Modification No. 8, dated
as of June 23, 1977, Modification No. 9, dated as of July 1, 1978, Modification
No. 10, dated as of August 1, 1979, Modification No. 11, dated as of September
1, 1979, Modification No. 12, dated as of August 1, 1981, Modification No. 13,
dated as of September 1, 1989, Modification No. 14, dated as of January 15,
1992, Modification No. 15, dated as of February 1, 1993, and Modification No.
16, dated as of January 1, 1998 (said Contract, as so modified, is hereinafter
called the “DOE Power Agreement”); and

 

WHEREAS, pursuant to the Energy Reorganization Act of
1974, the AEC was abolished on January 19, 1975 and certain of its functions,
including the procurement of electric utility services for the Project, were
transferred to and vested in the Administrator of Energy Research and
Development; and

 

2

 

	
   

  	
   

  	
  Original Sheet No. 214

  

 

WHEREAS, pursuant to the Department of Energy
Organization Act, on October 1, 1977, all of the functions vested by law in the
Administrator of Energy Research and Development or the Energy Research and
Development Administration were transferred to, and vested in, the Secretary of
Energy, the statutory head of the Department of Energy (hereinafter called
“DOE”); and

 

WHEREAS, the parties hereto have entered into a
contract, herein called the “Inter-Company Power Agreement,” dated July 10,
1953, governing, among other things, (a) the supply by the Sponsoring Companies
of Supplemental Power in order to enable Corporation to fulfill its obligations
under the DOE Power Agreement, and (b) the rights of the Sponsoring Companies
to receive Surplus Power as may be available at the Project Generating Stations
and the obligations of the Sponsoring Companies to pay therefor; and

 

WHEREAS, the Inter-Company Power Agreement has
heretofore been amended by Modification No. 1, dated as of June 3, 1966,
Modification No. 2 dated as of January 7, 1967, Modification No. 3, dated as of
November 15, 1967, Modification No. 4, dated as of November 5, 1975, Modification
No. 5, dated as of September 1, 1979, Modification No. 6, dated as of August 1,
1981, Modification No. 7, dated as of January 15, 1992, Modification No. 8,
dated as of January 19, 1994, Modification No. 9, dated as of August 17, 1995,
Modification No. 10, dated as of January 1, 1998, Modification No. 11, dated as
of April 1, 1999, Modification No. 12, dated as of November 1, 1999, and
Modification No. 13, dated as of May 24, 2000 (said contract so amended and as
modified and amended by this Modification No. 14 being herein and therein
sometimes called the “Agreement”); and

 

3

 

	
   

  	
   

  	
  Original Sheet No. 215

  

 

WHEREAS, it is the goal
of OVEC to assist its Sponsoring Companies by making available to them additional
power and energy; and

 

WHEREAS, additional power would be made available as a
result of reductions by DOE of its contractual entitlement to power from OVEC;
and

 

WHEREAS, it was agreed between DOE and Corporation
that DOE would reduce its contractual entitlement to OVEC power and energy in
exchange for Corporation’s agreement to relieve DOE of certain costs associated
with additional facilities and replacements (“AFR”); and

 

WHEREAS, it was necessary to allocate to the
Sponsoring Companies shares of the AFR costs which, as a result of
Corporation’s agreement with DOE, will no longer be payable by DOE; and

 

WHEREAS, the Sponsoring Companies also wish to amend
this Agreement to equalize the costs of surplus energy associated with the
additional power being made available by DOE; and

 

WHEREAS, OVEC and the Sponsoring Companies desire to
enter into this Modification No. 14 as more particularly hereinafter provided;

 

NOW, THEREFORE, the parties hereto agree with each
other as follows: 1.            Delete subsection
1.0124 and substitute therefor the following:

 

1.0124 “DOE Settlement
Capacity Surcharge Period” means the calendar months from June 1, 2001 through
April 30, 2003.

 

2.              Delete
subsection 1.0125 and substitute therefor the following:

 

1.0125 “DOE Settlement Energy
Surcharge Period” means the calendar months from September 1, 2001 through
April 30, 2003.

 

4

 

	
   

  	
   

  	
  Original Sheet No. 216 5

  

 

3.            Delete subsection  1.0126 and substitute therefor the
following:

 

1.0126 “Effective Date” means the date on which
Corporation notifies the Sponsoring Companies that all conditions to
effectiveness, including all required waiting periods and all required
regulatory acceptances or approvals, of this Modification No. 14 have been satisfied.

 

4.            Delete
subsection  6.01 and
substitute therefor the following:

 

CHARGES FOR SURPLUS POWER AND ECAR EMERGENCY ENERGY,
AND DOE SETTLEMENT SURCHARGES

 

6.01
Total Monthly Charge. The amount to be paid Corporation each month by the Sponsoring Companies
for Surplus Power and Surplus Energy supplied under this Agreement shall
consist of the sum of an energy charge, a demand charge and, if applicable, an
emergency power surcharge, a DOE Settlement Capacity Surcharge and a DOE
Settlement Energy Surcharge, all determined as set forth in this Article 6. The amount to be paid to Corporation
for ECAR Emergency Energy supply under this Agreement shall be 98.74 mills per
kilowatt hour (plus transmission charges calculated in accordance with
applicable law).

 

5.             Delete
subsection  6.024 and
substitute therefor the following:

 

6.024 Determine for such month the difference
between the total cost of fuel as described in subsection 6.021 above and the sum of (a) the total
energy charge to be billed DOE as described in subsection 6.022 above, (b) the energy charge to be
billed as DOE Emergency Energy as described in subsection 6.023 above and (c) the total cost of fuel
used to generate ECAR Emergency Energy. For the purposes hereof the difference
so determined shall be the fuel cost allocable for such month to the total
kilowatt-hours of energy generated at the Project Generating Stations for the
supply of Surplus Energy. For Surplus Energy made available to the Sponsoring
Companies by the Letter Supplement between DOE and Corporation dated March 20,
2001 (the “Released Demand”), each Sponsoring Company shall pay Corporation for
each such month an amount obtained by multiplying the ratio of the billing
kilowatt-hours of such Surplus Energy availed of by such Sponsoring Company
during such month to the aggregate of the billing kilowatt-hours of all Surplus
Energy availed of by all Sponsoring Companies during such month times the
difference determined hereinabove. For all other Surplus Energy, each
Sponsoring Company shall pay Corporation an amount equal to (i) an amount
obtained by multiplying the billing

 

5

 

	
   

  	
   

  	
  Original Sheet No. 217

  

 

kilowatt-hours of Surplus
Energy (other than Surplus Energy associated with the Released Demand) availed
of by such Sponsoring Company during such month by the average station heat
rate of the Project Generating Stations times the average cost per Btu
(determined in a uniform manner for all Sponsoring Companies in conformity with
any applicable requirements of Account 703 (Fuel) of the Uniform System of
Accounts) of all fuel consumed by said Sponsoring Company in its own generating
stations, both averages to be computed in respect of the month next preceding
that for which payment is being made, plus (ii) its Power Participation Ratio
of the excess, if any, for such month of the fuel costs of the Corporation
allocable to the total kilowatt-hours of energy generated at the Project
Generating Stations for the supply of Surplus Energy (other than Surplus Energy
associated with the Released Demand) over the aggregate of the amounts computed
with respect to all Sponsoring Companies under (i) above, minus (iii) its Power
Participation Ratio of the excess, if any, for such month of the aggregate of
the amounts computed with respect to all Sponsoring Companies under (i) above
over the fuel costs of the Corporation allocable to the total kilowatt-hours of
energy generated at the Project Generating Stations for the supply of Surplus
Energy (other than Surplus Energy associated with the Released Demand).

 

6.            Add
a new subsection 6.025 after subsection 6.024 as follows:

 

6.025 During the DOE Settlement Energy
Surcharge Period, Kentucky Utilities Company and Louisville Gas and Electric
Company shall, in addition to all other charges payable to Corporation under
this Agreement, pay to Corporation for all on-peak hours a DOE Settlement
Energy Surcharge in the amount of 1.37 mills per kilowatt hour. For purposes of
this subsection, “on-peak hour” means any hour from the hour ending 0800
Eastern Prevailing Time through the hour ending 2300 Eastern Prevailing Time on
any Monday, Tuesday, Wednesday, Thursday or Friday, excluding any holidays
specified by the North American Electric Reliability Council or its successors.

 

7.             Delete
subsection 6.03 and substitute therefor the following:

 

6.03 Demand Charge from June 1, 2001 through April 30,
2003. The demand charge to be paid each month from June 1, 2001
through April 30, 2003 by the Sponsoring Companies shall, subject to the
provisions of Sections 6.08 and 6.12 below, be determined by Corporation as
follows:

 

6

 

	
   

  	
   

  	
  Original Sheet No. 218

  

 

8.           Delete
subsection 6.033 and substitute therefor the following:

 

6.033 Determine the demand
charge to be charged to DOE for such month, such demand charge to be an amount
equal to the product of the aggregate of the costs determined in accordance
with subsection 6.031 above and
the average DOE capacity ratio in effect for such month, weighted with respect
to the periods of time during which DOE capacity ratios were in effect;
provided, however, that the demand charge to be charged to DOE for such month
shall be reduced by amounts, if any, specified in paragraph 3 of Section 3.04
of the DOE Power Agreement with respect to fines and penalties, which amounts
DOE shall not be obligated to pay to Corporation as a result of the second
proviso contained in Section 7.05 of the DOE Power Agreement and other amounts,
if any, specified in paragraph 3 of Section 3.04 of the DOE Power Agreement
which DOE shall not be obligated to pay to Corporation as a result of
adjustments mutually agreed upon by Corporation and DOE pursuant to said second
proviso which reads as follows:

 

“provided, further, that DOE shall be relieved of its
obligation to pay to Corporation amounts specified in paragraph 3 of Section
3.04 with respect to fines and penalties with respect to occasions where it is
asserted that Corporation failed to comply with a law or regulation relating to
the emission of pollutants or the discharge of wastes, if, and only if, prior
to any such particular occasion, (i) DOE has requested Corporation to limit the
generation at either or both Project Generating Stations so as not to exceed a
stated number of megawatts for a stated period to comply with applicable laws
or regulations relating to the emission of pollutants or the discharge of
wastes, (ii) DOE has advised Corporation that it will, and does, during such
period, limit its demand at the Project so that the number of megawatts to be
supplied by Corporation at the point of delivery as permanent and supplemental
power shall not exceed the amount determined by multiplying the DOE capacity
ratio by the number of megawatts of permanent and supplemental power to which
DOE would be entitled after giving effect to the limitation provided in clause
(i) above, and (iii) Corporation shall willfully fail so to limit generation at
either or both of the Project Generating Stations so as not to exceed the
number of megawatts stated in such request (however, should Corporation
willfully operate either or both of the Project Generating Stations so that the
number of megawatts generated shall exceed (x) the number of megawatts which
could have been generated had DOE not requested Corporation to limit its
generation as provided in clause (i) above, minus (y) the number of megawatts
which could have been generated had DOE not requested Corporation to limit its
generation as provided in clause (i) above multiplied by the DOE capacity
ratio, plus (z) the number of megawatts

 

7

 

	
   

  	
   

  	
  Original Sheet No. 219

  

 

determined as provided in
clause (ii) above plus transmission losses thereon, then the amount to be paid
by DOE to Corporation on account of the costs specified in paragraph 3 of
Section 3.04 other than (a) any interest, principal, and/or amortization
component of any purchase price, amortization, rental, or other payment under
an installment sale, loan, lease or similar agreement relating to the purchase,
lease, or acquisition by Corporation of additional facilities under Section
3.06 and replacements under Section 3.07, (b) the cost of any insurance carried
solely for the benefit of DOE at its request pursuant to paragraph 3(b) of
Section 3.04 and (c) any taxes allocated directly to DOE pursuant to paragraph
3(c) of Section 3.04, shall be adjusted to the extent mutually agreed
upon);...”

 

9.            Delete
subsections 6.038 and 6.039 in their entirety.

 

10.          Delete
the last paragraph of subsection 6.08 and substitute therefor the following:

 

In the event DOE delivers
such further notice to Corporation as provided in said paragraph (b) of Section
6.02 of the DOE Power Agreement and payment of a modified demand charge by DOE
to Corporation as provided in said paragraph (d) of Section 6.02 of the DOE
Power Agreement becomes effective during any portion of the notice period as
defined in said Section 6.02 of the DOE Power Agreement, during such portion of
the notice period determination of the demand charges to be paid by the
Sponsoring Companies to Corporation each month shall continue to be in accord
with the provisions of Section 6.03 of
this Agreement, modified only as such provisions may be affected by said
paragraphs (b) and (d) and consistent with the principle that the aggregate of
(i) the demand charges payable by DOE adjusted pursuant to paragraph 4 of
Section 3.04 of the DOE Power Agreement and (ii) the demand charges payable by
the Sponsoring Companies, each month to Corporation shall be equal to the total
costs incurred for such month by Corporation resulting from its ownership,
operation, and maintenance of the Project Generating Stations and Project
Transmission Facilities determined in accordance with paragraph 3 of Section
3.04 of the DOE Power Agreement and quoted in subsection
6.031 above.

 

11.           After
subsection 6.08, add a new subsection 6.081 as follows:

 

6.081 DOE Settlement Capacity Surcharge. During
the DOE Settlement Capacity Surcharge Period, the following Sponsoring Companies
shall, in addition to all other charges payable to Corporation under this
Agreement, by the Sponsoring Companies, pay monthly to Corporation, DOE
Settlement Capacity Surcharges in the amounts set forth below:

 

8

 

	
   

  	
   

  	
  Original Sheet No. 220

  

 

	
  Allegheny Energy Supply Company, L.L.C.

  	
   

  	
  $

  	
  314,093.66

  	
   

  
	
  Appalachian Power Company

  	
   

  	
  532,786.51

  	
   

  
	
  The Cincinnati Gas & Electric Company

  	
   

  	
  314,093.65

  	
   

  
	
  Columbus Southern Power Company

  	
   

  	
  151,500.27

  	
   

  
	
  The Dayton Power and Light Company

  	
   

  	
  174,003.45

  	
   

  
	
  Indiana Michigan Power Company

  	
   

  	
  263,699.21

  	
   

  
	
  Monongahela Power Company

  	
   

  	
  123,292.06

  	
   

  
	
  Ohio Edison Company

  	
   

  	
  510,600.28

  	
   

  
	
  Ohio Power Company

  	
   

  	
  527,398.42

  	
   

  
	
  Pennsylvania Power Company

  	
   

  	
  67,192.59

  	
   

  
	
  Southern Indiana Gas and Electric Company

  	
   

  	
  50,394.44

  	
   

  
	
  The Toledo Edison Company

  	
   

  	
  140,407.15

  	
   

  

 

12.          Delete
the first paragraph of subsection 6.12 and substitute therefor the
following:

 

6.12 Demand Charge Beginning May 1, 2003. During
the period commencing with May 1, 2003 and for the remainder of the term of
this Agreement, subject to the provisions of Article 11 below, demand charges
payable by the Sponsoring Companies to Corporation shall be determined as
provided below in this Section 6.12.

 

13.                               Delete subsection 10.08 in its
entirety.

 

14.           This
Modification No. 14 shall become effective at 12:00 o’clock Midnight on the
Effective Date.

 

15. The Inter-Company Power Agreement, as modified by
Modifications Nos. 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12 and 13 and as
hereinbefore provided, is hereby in all respects confirmed.

 

16. This Modification No. 14 may be executed in any
number of copies and by the different parties hereto on separate counterparts,
each of which shall be deemed an originai but all of which together shall
constitute a single agreement.

 

9

 

	
   

  	
   

  	
  Original Sheet No. 221

  

 

IN WITNESS WHEREOF, the parties hereto have executed
this Modification No. 14 as of the day and year first written above.

 

	
   

  	
  OHIO VALLEY ELECTRIC CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  s/ E. L. Draper, Jr.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ALLEGHENY ENERGY SUPPLY COMPANY, L.L.C.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  s / D. C. Benson

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  APPALACHIAN POWER COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  s/ E. L. Draper, Jr.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THE CINCINNATI GAS & ELECTRIC COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  s/ J. C. Procario

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  COLUMBUS SOUTHERN POWER COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  s/ E. L. Draper, Jr.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THE DAYTON POWER AND LIGHT COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  s/ H. T. Santo

  	
   

  

 

10

 

	
   

  	
   

  	
  Original Sheet No. 222

  

 

	
   

  	
  INDIANA MICHIGAN POWER COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  s/ E. L. Draper, Jr.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  KENTUCKY UTILITIES COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  s/ P. W. Thompson

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LOUISVILLE GAS AND ELECTRIC COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  s/ P. W. Thompson

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MONONGAHELA POWER COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  s/ D. C. Benson

  	
   

  
	
   

  	
   

  
	
   

  	
  OHIO EDISON COMPANY

  
	
   

  	
   

  
	
   

  	
  OHIO POWER COMPANY By: 

  	
  s/ E. L. 

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Draper, Jr.

  	
   

  
	
   

  	
   

  
	
   

  	
  PENNSYLVANIA

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  s/ A. R. Garfield

  	
   

  
							

 

11

 

	
   

  	
   

  	
  Original Sheet No. 223

  

 

	
   

  	
  SOUTHERN INDIANA GAS AND ELECTRIC

  COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  s/ R. G. Jochum

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THE TOLEDO EDISON COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  s/ G. L. Pipitone

  	
   

  

 

12

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