Document:

ex10_3.htm

EXHIBIT 10.3

 

March 2, 2006                                                                                                           TV-05356W, Supp. No. 2

Mr. Robert Van Namen

Marketing and Operations VP

United States Enrichment Corporation

Two Democracy Center, Tenth Floor

6903 Rockledge Drive

Bethesda, MD  20817-1818

Dear Mr. Van Namen:

In accordance with the provisions of Power Contract TV-05356W, as amended (Power Contract), TVA has determined that United States Enrichment Corporation (Company) presently has a CRR equal to a Below Investment Grade Rating.  Accordingly, this letter is to confirm the arrangements agreed upon between representatives of TVA and Company, regarding Company’s Performance Assurance to be provided and maintained by Company:

It is understood and agreed that until such time, if any, that Company’s CRR and corresponding Collateral Threshold is such that no Performance Assurance is due from Company under the Power Contract, and in accordance with Article IV of the Power Contract, the parties have agreed that the provisions below shall be applicable to provide for the Performance Assurance to be provided and maintained by Company.

	
  

	
1.

	
Letter of Credit.  Company shall provide TVA an Irrevocable Letter of Credit, in a form acceptable to TVA, in the amount of $11,000,000.00 not later than March 15, 2006.  Company shall at all times keep such Letter of Credit in full force and effect.  The Letter of Credit may be utilized by TVA to cover any obligations arising after June 1, 2006, for which the Power Contract provides and for which payments are not made by Company, including, but not limited to, minimum bill obligations.  Notwithstanding hereunder, Company will remain obligated to make all payments as they become due under the Power Contract.

	
  

	
2.

	
Weekly Prepayments.  Notwithstanding the provision of section 2.6 of the Power Contract, Company shall pay TVA a designated sum of money per week in advance for power and energy used under the Power Contract (Weekly Prepayment).  On or before May 26, 2006, Company shall pay TVA the amount of $4,000,000.00.  Beginning on June 2, 2006, and each Friday thereafter, Company shall pay TVA a Weekly Prepayment in the amount of $11,000,000.00 per week.  Such Weekly Prepayments shall be made no later than 3 p.m. CST or CDT, whichever is currently effective, on each Friday and shall be made electronically through Automated Clearing House to TVA’s account.  TVA’s monthly bill for
power and energy shall reflect the cumulative Weekly Prepayments for that month as a credit to be applied against that monthly bill.  Company shall have seven (7) days from the date of the monthly bill, or until the next Weekly Prepayment (whichever comes later) to pay any amount that is not covered by the cumulative Weekly Prepayments for that month.  In the event that the cumulative Weekly Prepayments for any month exceed the amount of that monthly bill, TVA shall notify Company of the overpayment and credit such amount to Company’s next Weekly Prepayment.

	
  

	
3.

	
Adjustments to Performance Assurance.  The Performance Assurance provided for in this letter agreement is based on the price and usage of power and energy taken by Company and may be adjusted by TVA as provided in the Power Contract.  If TVA determines that any adjustment is necessary, TVA will provide Company with written notice of any increased or decreased amount of Performance Assurance required under the Power Contract.  Within ten (10) days after such notice is given, Company shall provide TVA with the amount of the adjusted Performance Assurance required.

	
  

	
4.

	
Early Payment Credits.  Notwithstanding Section 2 of the Terms and Conditions set forth in Attachment 4 of the Power Contract, for any Billing Month, in which Company fails to make a Weekly Prepayment on or before a Weekly Prepayment Due Date falling within that Billing Month, Company shall not be entitled to any early payment credit that would otherwise apply with respect to early payments for usage in that Billing Month.

	
  

	
5.

	
Default.  Failure to comply with any of the above provisions shall constitute an immediate default under this contract.  Upon such default, TVA shall have the right to immediately discontinue the supply of power, upon 5 days’ written notice, to Company.

Discontinuance of supply under this letter agreement shall not relieve Company of its liability for minimum monthly charges or payment of past due amounts.  TVA’s election of any remedies under this letter agreement shall be without waiver of any other rights, including, without limitation, the right to damages for such default.

The Power Contract, as supplemented and amended by this letter agreement, is hereby ratified and confirmed as the continuing obligation of the parties.

If this letter satisfactorily sets forth the understandings between us, please have a duly authorized representative execute two copies on behalf of Company and return them to TVA.  Upon completion by TVA, one fully executed copy will be returned to you.

Sincerely,

/s/ Bruce S. Schofield

Bruce S. Schofield for

Kenneth R. Breeden

Executive Vice President

Customer Service and Marketing

Accepted and agreed to as of the

date first above written:

UNITED STATES ENRICHMENT CORPORATION

/s/ Robert Van Namen

By:           Robert Van Namen

Marketing and Operations VPex10_4.htm

EXHIBIT 10.4

AMENDATORY AGREEMENT

Between

TENESSEE VALLEY AUTHORITY

And

UNITED STATES ENRICHMENT CORPORATION

 

Date: April 3, 2006                                                                                     TV-05356W, Supp. No. 3

THIS AGREEMENT, made and entered into by and between TENNESSEE VALLEY AUTHORITY (TVA), a corporation created and existing under and by virtue of the Tennessee Valley Authority Act of 1933, as amended (TVA Act), and UNITED STATES ENRICHMENT CORPORATION (Company), a corporation created and existing under the laws of the State of Delaware;

W I T N E S S E T H:

WHEREAS, Company has been purchasing power from TVA under Power Contract TV-05356W, dated July 11, 2000, as amended (2000 Contract), for the operation of Company’s uranium enrichment facilities near Paducah, Kentucky; and

WHEREAS, the parties wish to amend the 2000 Contract to provide for the pricing and quantity of power and energy for the time period commencing on June 1, 2006, and ending on May 31, 2007;

NOW, THEREFORE, for and in consideration of the premises and of the mutual agreements hereinafter set forth, and subject to the provisions of the TVA Act, the parties mutually agree as follows:

SECTION 1 – DEFINITIONS

1.1           Defined Terms.  Initial capped terms used in this agreement which are defined in Article I of the 2000 Contract shall have the meaning there defined.

1.2           References to the 2000 Contract.  References to “this contract” in any section of or attachment to this agreement shall be deemed to refer to the 2000 Contract as amended by TV-05356W, Supp. No 1, dated March 2, 2006, TV-05356W, Supp. No 2, dated March 2, 2006, and this agreement.

SECTION 2 – QUANTITY OF ENERGY

Subject to the terms and conditions of this contract, Baseline Energy, in the monthly MW amounts set forth in Exhibit A, shall be made available to USEC for the first year of Period Two (June 1, 2006, through May 31, 2007).  Of each monthly amount, 300 MW would continue to be Firm Baseline Energy and any remaining amount would be Interruptible Baseline Energy, as provided in the 2000 Contract.

SECTION 3 – BASE CHARGES

Pursuant to section 2.3(b) and in accordance with section 2.4 of the 2000 Contract, the Baseline Energy Price during the first year of Period Two shall be as follows:

(i)           $68.67 per MWh from June 1, 2006, through August 31, 2006, and

(ii)           $35.57 per MWh from September 1, 2006, through May 31, 2007.

SECTION 4 – FUEL COST ADJUSTMENT

The Baseline Energy Prices as set forth in section 3 above of this agreement are subject to the TVA Fuel Cost Adjustment (FCA) as calculated under Exhibit B, attached hereto and hereby incorporated herein.  The FCA shall mean the per-MWh amount by which the Baseline Energy Prices under section 3 above of this agreement are increased or decreased from time to time in accordance with the formula designed to reflect changes in TVA’s fuel costs, purchased power costs, and related costs as shown in Exhibit B.  It is recognized that TUm (as defined in Exhibit B) has a lag integrated into the formula and that unless otherwise agreed between the parties, any such amount shall remain an obligation
even though the payment of the bill for power taken during May of 2007 has been made.

SECTION 5 – RATIFICATION OF THE 2000 CONTRACT

This contract is ratified and confirmed as the continuing obligation of the parties.

IN WITNESS WHEREOF, the parties to this agreement have caused it to be executed by their duly authorized representatives, as of the day and year first above written.

UNITED STATES ENRICHMENT CORPORATION

By           /s/ Robert Van Namen                                                      

Title:       Senior Vice President

Uranium Enrichment

TENESSEE VALLEY AUTHORITY

By           /s/ Kenneth R. Breeden                                           

Executive Vice President

Customer Service and Marketing

  

  

  

EXHIBIT A

BASELINE ENERGY

JUNE 1, 2006, THROUGH MAY 31, 2007

(TOTAL OF FIRM AND INTERRUPTIBLE BASELINE ENERGY IN MW)*

	  	
2006

	
2007

	
January

	  	
1,550

	
February

	  	
1,525

	
March

	  	
1,540

	
April

	  	
1,540

	
May

	  	
1,400

	
June

	
300

	  
	
July

	
300

	  
	
August

	
300

	  
	
September

	
1,450

	  
	
October

	
1,560

	  
	
November

	
1,600

	  
	
December

	
1,590

	  

* The monthly MW amounts shall be multiplied by the number of hours in that month to determine the required quantities of Baseline Energy.  The actual hourly MW amounts shall be essentially constant except during ramp up/ramp down periods and will be scheduled in accordance with operating procedures jointly developed under section 2.2(f) of the 2000 Contract.

  

  

  

EXHIBIT B

FUEL COST ADJUSTMENT

In accordance with the formula below, the Fuel Cost Adjustment amount (FCA) shall be determined for each month by applying data from TVA’s forecasts of TVA’s actual operations, as well as actual data when it becomes available.  The FCA consists of two parts.  The first part is the monthly adjustment (Am) (as defined below), which is an adder to be applied to each Megawatthour (MWh).  TVA will publish the amount of Am no later than 15 days in advance of the month of application, and the formula will be applied as part of the monthly USEC bill.  In addition to the Am, there is a monthly true-up to bring TVA’s forecasts to actual amounts (TUm) (as defined below)
that will add or credit a lump sum amount on the monthly bill once actual data is collected.

[Missing Graphic Reference]

	
m =

	
a particular month.

	
Am =

	
The FCA adjustment to be applied to the MWh sales during the current billing period and computed to the nearest cent per MWh.

	
CF =

	
The core FCA adjustment amount.  CF = FFm/SFm - Bm

	
  

	
FF =

	
TVA’s estimate of FA (as described below) for month m, based on the latest TVA Financial Forecast.

	
  

	
SF =

	
TVA’s estimate of SA (as described below) for month m, based on the latest TVA Financial Forecast.

	
  

	
B =

	
The monthly per MWh Base Fuel Rates (as shown in the table below).

	
June

	
$16.07

	
July

	
$20.40

	
August

	
$17.21

	
September

	
$15.96

	
October

	
$14.36

	
November

	
$14.57

	
December

	
$13.28

	
January

	
$14.02

	
February

	
$13.62

	
March

	
$13.59

	
April

	
$14.17

	
May

	
$14.30

	
TUm =

	
The true-up adjustment amount necessary to reconcile prior estimates to actual data, which shall be computed with the formula below.  The true-up will be a dollar payment or credit on the bill two months after a forecast FCA month.

(FAm-2/SAm-2-FFm-2/SFm-2)*USECSm-2/.95

	
FA =

	
Actual total fuel and purchased power expenses (in dollars) under the framework and accounts provided below (or such similar or successor accounts as may be proscribed by FERC in the future).

	
  

	
(1)

	
Fossil Fuel Expense – Account 501 – Direct cost of fuel burned in TVA coal plants, including transportation and fuel treatments.  Costs to be excluded are lease payments for rail cars, maintenance on rail cars, sampling and fuel analysis, and fuel handling expenses in unloading fuel from shipping media and the handling of fuel up to the point where fuel enters the bunker or other boiler-house structure.

	
  

	
(2)

	
Reagents Expense – Account 501.L – Cost of emission reagents such as limestone and ammonia that are directly related to the level of generation output.

	
  

	
(3)

	
Emission Allowance Expense – Account 509 – Cost of emission allowance expense such as SO2 and NOx that are directly related to the level of generation output.

	
  

	
(4)

	
Nuclear Fuel Expense – Account 518 – Cost of nuclear fuel amortization expense dependent upon burn, including DOE spent fuel disposal charges.

	
  

	
(5)

	
Gas Turbine Fuel Expense – Account 547 – Direct cost of gas and oil delivered to TVA plants, including transportation.  Costs to be excluded are costs of gas storage facilities and sampling and fuel analysis that do not vary with changes in generation volume.

	
  

	
(6) Purchased Power Expense – Account 555 – Energy cost of purchased power to serve native load demand or to displace higher cost generation.  Costs to be excluded are fixed demand or capacity payments in tolling agreements and purchased power agreements that do not vary with volume and costs of purchased power linked to off-system sales transactions.

	
SA =

	
Actual total TVA energy sales (in MWh) for month m, as determined from TVA’s General Ledger with specific accounts 442, 445, 447, 447.1, and 448 (or such similar or successor accounts as may be proscribed by FERC in the future), excluding  any displacement sales reflected in account 447.1.

	
USECSm =

	
USEC actual sales in a particular month, excluding Additional Energy sales (as defined in Power Contract number TV-05356W between USEC and TVA dated July 4, 2000) unless otherwise agreed between the parties.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00206-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00206-of-00352.parquet"}]]