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Enron Mail |
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---------------------- Forwarded by Kay Mann/Corp/Enron on 06/13/2000 04:57 PM --------------------------- Linda J Simmons@ECT 06/13/2000 08:45 AM To: Kay Mann/Corp/Enron@Enron, Heather Kroll/HOU/ECT@ECT, Ozzie Pagan/HOU/ECT@ECT, Jeffrey M Keenan/HOU/ECT@ECT, Tom Chapman/HOU/ECT@ECT cc: Subject: VEPCO PPA ----- Forwarded by Linda J Simmons/HOU/ECT on 06/13/2000 08:44 AM ----- "Nancy Wodka" <nwodka@bracepatt.com< 06/12/2000 04:20 PM To: <linda.j.simmons@enron.com<, <lisa.mellencamp@enron.com< cc: "William Frederking" <wfrederking@bracepatt.com< Subject: VEPCO PPA Lisa: Attached is a draft of the Power Purchase Agreement with VEPCO, based on the current version of the term sheet. In preparing the draft, we did encounter several additional questions for Enron's consideration. These are noted with brackets and, in some cases, italicized notes, in the draft and are also highlighted below. You may want to address these issues before this goes to VEPCO. Cover and first page-- Should the party to the agreement (for the moment) be ENA or a special purpose company? Definitions-- We included a defined term "Emergency Start-Up" (a start up or increase in energy scheduled during a day) and a place in Exhibit A to include a price for this, although this was not covered in the term sheet. Section 2.2-- We included a provision for VEPCO to take test energy (energy charge only; no demand charge)--do you want this? Section 2.3-- This was taken from the term sheet, but is it correct that COD will be July 1 (since the demand charge is supposed to start June 1?) Also, it would be best to define "commencement of construction" to avoid controversy down the road. We could either do this now or put in a placeholder that indicates it needs to be defined or be silent, whichever is your preference. Also, bear in mind that we have not included a specific remedy (e.g., liquidated damages) if the Seller does not achieve that milestone on time. Under the default provision (Section 8.1©), there would be a 30 day period to cure before Buyer could terminate (extendible to 90 days if a longer period of time is needed and Seller diligently pursues the cure). Would you prefer the right to pay ld's and extend the time period? Section 3.1(b)-- Should the 1400 hour limitation apply to all sales under this PPA or only sales from the Facility? I.e., would you use this Agreement to sell to VEPCO power in addition to what would be available from the Facility? Also, is this a calendar year limitation--i.e., could they take 1400 hours in the period June-Dec. 2001 or does the 1400 hours need to be pro-rated for the first year? Section 3.4-- Since this is not a base load plant, the normal definition of Availability as the number of hours in a year of operations compared to the total hours in the year would not seem to be applicable. Instead, we stated that the Facility would be capable of being available 92% of the year (other than due to Force Majeure and 336 hours (2 weeks) of scheduled maintenance)--i.e., that if they tried to schedule it, it is expected to be available. Is that what Enron intended? Additionally, the term sheet stated that a remedy for failure to meet Availability would need to be agreed--why wouldn't cost of cover damages be appropriate? Also, please note that we included language stating that Seller will not perform maintenance during peak periods. Section 3.5(b)-- Please note the bracketed language re taking Blocks of Energy. We have 50 MW minimum blocks but the capacity is 223--should we allow the last Block to be 23 if they've scheduled all the rest? Section 3.5©-- Please see the bracketed language at the end of this Section. Section 4.7-- Should there a required minimum take of Energy? Article 6-- The Genco/Santee Cooper form of PPA we used as a model did not have any provisions on metering. (See placeholder note in Article 6.) Do you want to add such a provision, ignore it or just include a placeholder for now? Section 9.1-- Is 30 days from invoice correct for the payment due date or would you prefer a shorter period? Article 15-- The Genco/Santee Cooper form had mediation as a required step prior to arbitration. Should we keep that? Also, the form of arbitration is "baseball" arbitration--i.e., the arbitrators have to chose one party's position or the other's. Is that what you want? Section 16.2-- We used New York for governing law, on the premise that it will be difficult to get VEPCO to agree to Texas law and we would not recommend Virginia law for this contract. Exhibit A-- There are a number of questions on the pricing exhibit--please see the bracketed notes therein. Please call and let us know how you would like to proceed on this draft. - VEPPPA.DOC
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