Enron Mail

From:john.rigby@enron.com
To:bob.carter@enron.com, dean.russell@enron.com, john.rigby@enron.com,kay.mann@enron.com, kent.shoemaker@ae.ge.com, michael.barnas@ps.ge.com, pthompson@akllp.com, roseann.engeldorf@enron.com, sheila.tweed@enron.com, stephen.swift@ps.ge.com, scott.dieba
Subject:World Hunger- Performance LD Refund Reduction language.
Cc:
Bcc:
Date:Wed, 28 Mar 2001 03:51:00 -0800 (PST)

During one of the World Hunger calls a couple weeks ago I noted that the
later half of Performance Liquidated Damage refund provision in Section
10.9.8 was slighty broken. I volunteered to find what I thought it should
look like. In reviewing the Arcos contract I found the corresponding
provision that seems to capture what I was concerned about. I have included
the ARCOS provision below for everyone's review. Some of the defined terms
do not match, but.....


14.18.2.2 If the corrections to reduce a Shortfall are completed before the
Power Island achieves Acceptance and:
(i) such corrections are made and are complete prior to commercial operation
of the Station, and
(ii) such corrections cause a reduction in the performance Shortfall
then Purchaser shall:
(a) refund to Seller an amount equal to the Performance Liquidated Damages
associated with such reduction in the Shortfall, and/or
(b) reduce the offset associated with such reduced Shortfall; however, such
reduction in offset or amount of refund shall not exceed the amount actually
offset (payment withheld) in accordance with Clause 30.8 or paid in
accordance with Clause 14.15 for such Shortfall.
14.18.2.3 If the corrections to reduce a Shortfall are completed after the
Power Island achieves Acceptance, and such corrections are completed within
one hundred eighty (180) days after the Power Island achieved Acceptance, and
such corrections cause a reduction in the performance Shortfall, then
Purchaser shall:
(a) refund to Seller an amount equal to the Performance Liquidated Damages
associated with such reduction in the Shortfall, and/or
(b) reduce the offset associated with such reduced Shortfall;
however, such refund of Performance Liquidated Damages or reduction of offset
will not exceed the amount actually offset in accordance with Clause 30.8 or
paid in accordance with Clause 14.15 for such Shortfall and the amount of
such refund or reduction of offset shall itself be reduced by the following
amounts for each day that passes from date of the Performance Test on which
the Performance Liquidated Damages were originally based upon until the date
that Seller demonstrated the improved performance:
© At a rate of $0.23/day for each kW that the Net Electrical Output
Shortfall of the Power Island is reduced (the "Output Liquidated Damages
Refund Reduction").
(d) At a rate of $45.00/day for each kj/kWh that the Net Heat Rate Shortfall
of the Power Island is reduced (the "Heat Rate Liquidated Damages Refund
Reduction").
14.18.2.4 No refund of Performance Liquidated Damages shall be made if the
corrections are made after one hundred eighty (180) days after Acceptance of
the Power Island, unless Purchaser elects to do so as a result of the
corrective action plan presented by Seller prior to the expiry of such one
hundred eighty (180) day period. In the event Seller determines the cause of
a portion or all of the Shortfall prior to the expiry of the one hundred
eighty (180) day period following Acceptance, but in spite of its reasonable
efforts is not able to effect the necessary corrections to the Plant, Seller
may present a correction plan that extends beyond such one hundred and eighty
(180) day period. Purchaser, at its sole discretion, may elect to permit
Seller the opportunity to make such corrections.