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Comments of Cap Rock Electric Cooperative,Inc Re Significant Changes in Activity of Licensee Texas Utilities Electric Co That Warrant Antritrust Review Before Issuance of Ol
	ML20141M103
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Site:	Comanche Peak
Issue date:	03/25/1992
From:	Adragna J, Bilsky E; MILLER, BALIS & O'NEIL
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ORIGINAL UNITED STATES OF AMERICA I

BEFORE THE NUCLEAR REGULATORY COMMISSION Texas Utilities Electric Company

)

Comanche Peak Steam Electric

)

Docket No. 50-446A Station, Unit 2

)

t COMMENTS OF 5

CAP ROCK ELECTRIC COOPERATIVE, INC.

CCNCERNING SIGNIFICANT CHANGES IN THE ACTIVITY OF LICENSEE TEXAS UTILITIES ELECTRIC COMPANY I

THAT WARRANT AN ANTITRUST REVIEW BEFORE THE ISBUANCE OF AN OPERATING LICENSE t

i COUNSEL FOR CAP ROCK ELECTRIC COOPERATIVE, INC.

John Michael Adragna I

Eric A. Dilsky Miller, Balis E O'Neil, P.C.

1101 Fourteunth Street, N.W.

I Buite 1400 Washington, D.C.

20005 4

(202) 789-1450 I

i March 25, 1992 t

I 4

grouu888;he n

I h

UNITED STATES OF AMERICA BEFORE THE NUCLEAR REGULATORY COMMISSION Texas Utilities Electric Company

)

Comanche Peak Stea.t Electric

)

Docket No. 50-446A 8

Station, Unit 2

)

COMMENTS OP CAP ROCK ELECTRIC COOPERATIVB, INC.

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CONCERNING SIGNIFICANT CHANGES IN THE ACTIVITY 4

OF LICEN.3EE TEXAS UTILITIES ELECTRIC COMPANY THAT WARRANT AN ANTITRUST REVIEW EIFORE.THE ISSUANCE OF AN OPERTdI}{G LICf1SE

)

Pursuant to this Commission's notice, published on February 24, 1992,1/ Cap Rock Electric Cooperative. Inc.

(" Cap Rock"),

hereby comments on ignificant changes in the activities of licensee Texas Utilities Electric Company ("TUEC") since the antitrust operating license review associated with Comanche Peak Unit No.

1, which was completed in August, 1989.

TUEC is overtly exercising its monopoly power, in violation of its existing antitrust license conditions and applicable antitrust laws, anticompetitively to injure Cap Rock and other TUEC customers and I

competitors.

Cap Rock submits that TUEC's ongoing activities create and maintain a situation inconsistent with the antitrust i

laws and warrant the institution by this Commission of an antitrust review and hearing at which the extent of TUEC's anticompetitive conduct can be established and the appropriate I

i remedies fixed.

l1 1/

57 fed. Eqq. 6340 (February 24, 1992).

I

t 2

I.

I ffRihRX TUEC's February 5, 1992, response to Regulatory Guide 9.3 2/ misrepresents and, through material omissions, is apparently intended intentionally to mislead this commission concerning TUEC's anticompetitive conduct toward its wholesale customers.

As the Commission is conducting this antitrust review, TUEC is actively using its monopoly power over transmission and other essential servicea to prevent Cap Rock and other TUEC wholesala customers from purchasing bulk power from

-bulk power suppliers other than TUEC, thus forcing them to purchase higher cost TUEC power.

i TUEC has refused to wheel wholesale bulk power from West Texas Utilities Company ("WTU") to Cap Rock.

TUEC's refusal to wheel has been communicated orally to representatives of Cap Rock on several occasions, and in a letter dated January 30, 1997 2/

TUEC's refusal to wheel violates Paragraph 3.D. (2) (i) of the Comanche Peak license conditions, which require TUEC, inter alia, to wheel on behalf of Entities 3/ like Cap Rock.

SS_q Section IV, infra.

TUEC's putative justification for its refusal to 2/

TU Electric Response to Regulatory Guide 9.3, dated February 5, 1992 ("TUEC Antitrust Response").

2/

Attachment A at 3-4.

TUFC has confirmed its refusal to wheel on page 23 of its Antitrust Response.

3/

The term " Entity" is defined in Paragraphs 3.D. (1) (c) and (d) of the license conditions.

n

E I

wheel is its contention that Cap Rock, which has legally terminated its 1963 full requirements contract with TUEC, nevertheless remains obligated to purchase its full recruirements from TUEC.

Under TUEC's apparent reasoning, its mer~ utterance of this contention to Cap Rock somehow entitles TUEC to violate its license conditions and the antitrust laws, to irreparably harm Cap Rock competitively, and to damage Cap Rock by more than

$ 3,000,000 per year.

Neither the license conditions nor the a

i antitrust laws permit the monopolist to engage in "self help."

To the contrary, the license conditions and antitrust laws are intended to prevent precisely this kind of "self help" (i.es illegal use of monopoly power to foreclose competition).

TUEC has decided that TUEC may refuse to wheel (h, W

violate the antitrust laws) because TUEC interprets its 1990 settlement with Car Rock'1/ as preventing Cap Rock from i

purchasing power frot TUEC competitors.

This self-serving

" interpretation" is entirely baseless (Sg_q Section IV.D).

TUEC's putative interpretation is the immediate concern of, and is m

currently the subject of litigation before, the District Court of I

I

.5/

Power Supply Agreement Between Texas Utilities Electric

[

Company and Cap Rock Electric Cooperative, Inc., dated 4

3 June 8, 1990 ("1990 Settlement").

TUEC and Cap Rock entered

/

into the 1990 Settlement in settlement of, j nter aliq, the enforcement action-instituted by the filing of the Request I

of Cap Rock Electric Cooperative, Inc. For An Order Enforcing And Modifying Antitrust License Conditions, dated May 12, 1989

(" Cap Rock Request for Enforcement").

I

L 4

a Midland County, Texas.h/

Section 105(c) of the Atomic En?rgy Act, 42 U.S.C.

5 2135(c), mandates that this Commission investigate and remedy TUEC's open and admitted exercise of monopoly power and violation of its license conditions before the Commission may grant TUEC an operating license for Comanche Peak Unit No.

2.

It must be emphasized what TUEC has nol done.

TUEC has not sought legal or equitable remedies to redress what it contends would be an illegal breach of contract by Cap Rock.

For example, TUEC has not sought to test the merits of its " interpretation" in court by seeking a declaratory order confirming that interpretation.

Instead, TUEC has done it the old fashlot.ed way:

it has refused to wheel and physically prevented Cap Rock from buying from TUEC's competitor.

If TUEC did not have monopoly power over the sole transmission facilities which interconnect Cap Rcck and WTU, Cap Rock would be purchasing power from WTU.

TUEC's recourse in such a case, if it truly believed Cap Rock to be in breach of some agreement, would be to present its claim for breach of contract and damages in a court of competent jurisdiction.

TUEC instead has chosen a course of action that f/

Can Rock Electric Cooperative. Inc. v. Texas Utilit; igg Electric, District Court of Midland County, 238th Judicial District, No. B38,879.

Persistence by TUEC in baseless legal claims, however, may itself be evidence or anticompetitive conduct that this Commission would be obligated to consider. See Section IV.C.3, infra.

t I

s has been recognized to violate section 2 of the Sherman Act, 15 m

U.S.C.

52, since 1973 2/

TUEC is also misleading the Commission as to the status of its relationships with two other wholesale customers, Tex-La Electric Cooperative, Inc.

(" Tex-La") and Rayburn Country Electric Cooperative, Inc. ("Rayburn Country").

On February S, 1992, TUEC represented to this Commission that it was currently providing transmission and related scheduling services for Tex-La's and Rayburn Country's purchases of low cost hydroelectric power from the Denison Dam.jf Those representations were true for less than two days.

On February 7, 1992, TUEC informed Tex-La and Rayburn Country that it was terminating its Scheduling Agreements with them because TUEC asserted that each may have breached those agreements; TUEC stated that it would only consider the Scheduling Agreements effective through March 1, 1992 2/

This notice was given without prior notice of the purported breaches and without affording Tex-La and Rayburn Country opportunities to cure the purported breaches.1D/

TUEC's notice was given with full recognition of the ramifications of such an action for Tex-La and Rayburn Country.

))

Otter Tail Power v. United States 410 U.S.

366 (1973),

c 3/

TUEC Antitrust Response, at 27-28 and 30.

The Denison Dam

+I is a federal hydroelectric project, the electrical output of which is marketed by the Southwestern Power Administration of the Department of Energy.

2/

Attachment B.

19/

Attachment C, at 1.

E

I R

e I

As alleged by Tex-La, termination of its Scheduling Agreement with TUEC will result in Tex-La and Rayburn Country having no way to make use of the output of the Denison Dam and loss to them of the entire economic value of the recource.M/

Notwithstanding the gravity of such actions to Tex-La and Raybu'rn Country, TUEC chose to conceal its actions from this Commission and to seek to have this Comnission believe that it cont'nued to transmit and to schedule Denison Dam power for Tex-La and Rayburn Country.

Cap Rock understands that after Tex-La filed suit in state court, TUEC may have agreed not to terminate scheduling soivices for an additional period time.

Cap Rock further understands that, although Rayburn Country may spbmit comments to this I

Commission on this matter, Tex-La is precluded by its earlier settlement agreement with TUEC from filing comments before the Commission.

The complaint and other public documents filed by Tex-La in the District Court, however, make it clear that TUEC's

~

representations to this commission as to its scheduling arrangements for Tex-La und Rayburn Country are plainly incorrect.

As in the case of Cap Rock, TUEC has chosen to use a unilaterally asserted claim of contract right to mask a naked exercise of monopoly power.U/

U/

Attachment D at 12.

Uf As set forth in Attachment D, Tex-La maintains that TUEC's termination is ineffective because no breach of which Tex-La is aware occurred and, if a breach did occur, TUEC did not give Tex La the 90 day iotice and opportunity to cure that is required by the Scheduling Agreement.

I I

R l

V The antitrust license conditions are intended to prevent

?

TUEC from foreclosing competition through the exercise of its f

monopoly power to harm its competitors, like Cap Rock.

TUEC is activolf flouting the license conditions.

If TUEC is able, based upon its unilateral assertion of a contract right, to refuse to wheel for Cap Rock, it can, with impunity, refuse to wheel for any Entity with which it currently has a contract.

Cap Rock s'2bmits that TUEC's actions are in clear siolation of the I

antitrust license conditions.

Cap Rock does not ask the Commission to adjudicate the l

merits of TUEC's claims under the 1990 Settlement; that question is currently being addressed in the action brought by Cap Rock in state court in Texas.

Cap Rock seeks two things from this Commission.

First, Cap Rock requests that the Commission institute a full and complete investigation into the ongoing anticompetitive conduct of TUEC.

Cap ~ Rock does not purport to know the circumstances of all entities which may be forced to do business with TUEC.

Only an antitrust hearing, open to the public, can present this Commission with a complete picture of the ongoing anticompetitiva conduct of TUEC.

Secondly, Cap Rock seeks an unequivocal determination by the Commission that TUEC is obligated by its antitrust license conditions to wheel for Cap Rock and other similarly situated entities.

Only such a clear pronouncement by the Conmission can hope to avoid future anticompetitive actions by TUEC.

It is time that TUEC is brought I

I 8

to realize that its license conditions impose real and binding obligations on it.

In its August 9, 1988, comments concerning TUEC's application for an operating license for Comanche Peak Unit No.

1, Cap Rock asked the Commission to enforce the existing antitrust license conditions to, inter alia, require TUEC to wheel and to provide other services essential to permit Cap Rock to do business with bulk power suppliers other than TUEC.

Cap Rock also asked the Commission to institute an antitrust hearing and to modify the license conditions as necessary to prevent TUEC

[

from maintaining a situation inconsistent with the antitrust laws.

Cap Rock repeated these requests in its 1989 request for an order enforcing and modifying the license conditions.

Only after this Commission indicated its willingness to act on Cap Rock's request for enforcement did TUEC first begin to take seriously ite obligations under the license conditions.

Cap Rock ultimately accepted a settlement with TUEC that offered the prospect of an orderly transition off the TUEC system and which permitted TUEC to avoid final action on Cap Rock's request for enforcement by this Commission.

Cap Rock did not squander the opportunities presented by the 1990 Settlement.

Cap Rock proceeded vigorously and expeditiously to search out and to obtain new sources of bulk power that would permit Cap Rock to become independent of TUEC.

Cap Rock promised to engage in an orderly and systematic transition off the TUEC system.

Cap Rock not only has kept that promise, it has bettered

_____._________.________m_

l that promise.

Cap Rock is not only able to begin the transition off the TUEC system, but far sooner than anyone could have predicted, Cap Rock is in a position to complete that departure.

=

In so doing, Cap Rock will require minimal coordination and cooperation from TUEC.

The burden on TUEC will be virtually

=

nonexistent.

TUEC professed its villingness to assist Cap Rock in becoming an independent electric utility once Cap Rock terminated its full requirements contract with TUEC.

Cap Rock has done that; TUEC cannot now legitimately complain that it did not really believe that Cap Rock could do it.

Barely two years after the 1990 settlement, Cap Rock is again being subjected to TUEC's anticompetitive refusals to wheel and efforts to prevent Cap Rock from obtaining alternative I

sources of bulk power.

TUEC's monopoly power, und its apparent willingness to exercise it to the anticompetitive disadvantage of its competitors, have not chanaod in two years.

TUEC's anticompetitive conduct toward Cap Rock (and otherc) is clear and intentional.

Cap Rock urges the Commission to act definitively to preclude further abuses of monopoly power by TUEC; Section 105(c) of the Atomic Energy Act requires no less.

l 10 l

II.

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FAMhk BA9EQBQM l

A.

CAP ROCK ELECTRIC COOPERATIVL INQ_m.

Cap Rock Electric Cooperative, Inc. is a distribution cooperative incorporated under the laws of the state of Texas, with its headquartors in Stanton, Texas.

Cap Rock was organized in 1939 to eerve in the counties of Howard, Martin, Midland, and Glasscock, and now provides service in those countios and eight additional counties in Nortnern Texas.13/

Cap Pock currently

);

serves a peak load of approximately 100 MW vith more than 20,000 customers in the service area of over 10,000 square miles located I

in 17 counties in Texas.

Located in or nnGr Cap Rock's service territory are two cities of appro::imately 90,000 to 120,00 population, one town of approximately 35,000 population, and two towns of 2,000 to 3,000 population.

Cap Rock does not serve any of these municipalities, but has existing facilities around and 4

near their corporate limits and has experienced considerable residential growth arcand municipalities such as the City of Midland, Texas.Ja/

In 1990, Cap Rock merged with the Lone Wolf Electric Power Cooperative, Inc., formerly a wholesale customer of TUEC.

On D/

Cap Rock also provides service in Borden, Dawson, Ector, I

Upton, Reagan, Irion, Tom Green, and Sterling counties.

All but Irion County are included as part of the " North Texas Area" as defined in Paragraph 3.D. (1) (b) of the antitrust license conditions.

.1A/

Cap Rock's large industrial load consist almost entirely of oil field pumps and cotton gins.

1

I 11 November 5, 1991, Cap Rock filed an application with the Public Utility Commission of Texas ("PUCT") to merge with Hunt-Collin Electric Cooperative, Inc.

(" Hunt-Collin"), formerly a distribution cooperative member of Rayburn Country.Uf Since Hunt-Collin left Rayburn Country, TUEC has sold Hunt-Collin its full power requirements, even though Hunt-Collin has no service agreement with TUEC.

TUEC has intervened in PUCT Docket No.

10726 and is opposing Cap Rock's proposed merger with Hunt-Collin.

By letter dated December 19, 1991, Cap Rock notified TUEC that, pursuant to the te u of the 1972 amendment to its 1963 service contract with TUEC, Cap Rock was terminating the service contract effective February 1, 1992.

By that letter, Cap Rock provided the identical notice of termination for the service contract of Cap Rock's Lone Wolf Division (formerly Lone wolf Electric Cooperative, Inc., a full requirements customer of TUEC with a service contract identical in all relevant respects to the 1963 Cap Rock /TUEC service contract).

Cap Rock also confirmed 1

its previour informal communications with TUEC that, as of February 1, 1992, the wholesale electric power needs of Cap Rock (and its Lone Wolf Division) would be served by WTU.lbf TUEC now concedes that the 1963 contract has been validly terminatec, but contends that Cap Rock remains obligated to buy its full M/

Appiication for Sale, Transfer, or Merger of Cap Rock Electric Cooperative, Inc. and Hunt-Collin Electric g

Cooperative, Inc., PUCT Docket No. 10726.

15/

Attachment E.

I 11 November 5, 1991, Cap Rock filed an application with the Public Utility Commission of Texas ("PUCT") to merge with Hunt-Collin g

Llectric Cooperative, Inc.

(" Hunt-Collin"), formerly a distribution cooperative member of Rayburn Country.15/

Since Hunt-Collin lett Rayburn Country, TUEC has sold Hunt-Collin its f t; 1.

wower requirements, even though Hunt-Collin has no service agreement with TUEC.

TUEC has intervened in PUCT Docket No.

10726 and is opposing Cap Rock's proposed merger with Hunt-Collin.

By letter dated December 19, 1991, Cap Rock notified TUEC that, pursuant to the terms of the 1972 amendment to its 1963 serv 3ce contract with TUEC, Cap Rock was terminating the service contract effective February 1, 1992.

By that letter, Cap Rock provided the idantical notice of termination for the service contract of Cap Rock's Lone Wolf Division (formerly Lone wolf

,I Electric Cooperdtive, Inc., a full requirements customer of TUEC with a service contract identical in all relevant respects to the 1963 Cap Rock /TUEC service contract).

Cap Rock also confirmed its previous informal communications with TUEC that, as of February 1, 1992, the wholesale electric power needs of Cap Rock (and its Lone Wolf Division) would be served by WTU.lff TUEC now concedes that the 1963 contract has been validly terminated,

i 15/

Application for Sale, Transfer, or Merger of Cap Rock Electric Cooperative, Inc. and Hunt-Collin Electric Cooperative, Inc., PUCT Docket No. 10726.

16/

su..achment E.

5

l 2

J

-but contends that Cap Rock remains obligated to buy its full requirements from TUEC under the Settlement.

B.

CAP _ ROCK IS IN DIRECT COMPETITION WIT 11_TH&

Cap Rock competes with TUEC at retail and in the bulk power markets.

Cap Rock's service territory is surrounded by the TUEC service territory.

The PUCT permits dual and ;ometimes triple certification of service torritories.

In other words, two or more electric utilities may be authorized to competc to serve the electrical needs of customers within a single service territory.

Approximately, 30-35 percent of the service territories in the state are dually or triply certified.

Between 50 and 60 percent of Cap R7ck's service territory is at least dually-certified with TUEC.12/

In other words, Cap Rock in in direct retail competition with TUEC in more than half of the territory in which Cap Rock is authorized to serve.

The foregoing facts concerning Cap Rock's retail competition with TUEC are essentially the same as in 1988, when Cap Rock filed comments concerning the need for an antitrust review of TUEC's activities before issuance of an operating license stage i

E for Comanche Peak Unit No. 1,1B/ and in 1989, when Cap Rock's filed its Request for Enforcement of the Comancho Peak antitrust 12/

Some of Cap Rock's service territory is triply certified.

1Df Comments of Cap Rock Electric Cooperative, Inc. Concerning Significant Changes In Licensee's Activity That Warrant An Antitrust Review At The Operating License Stage, dated August 9, 1988.

_a 13 license conditions.

Cap Rock competition with TUEC for new J

retail load, however, has become even more direct and inmediate.

As previounly noted, Cap Rock has merged with a former full requirementa customer of TUEC, Lone Wolf, and Cap Rock has an application pending before the PUCT to merge with another full requirements customer of TUEC, Hunt-Collin.

Cap Rock also continues actively to seek the lowest cost sources of bulk power.

Cap Rock has executed an agreement with Southwestern Public

)

Service Company ("SPS") under which Cap Rock will switch its entire load from the WTU system to the SPS system beginning in i.

1993.

Under the SPS agreement, SPS will construct the necessary transmission directly to interconnect the SPS and Cap Rock systems, thus obviating the need for any transmicsion or other services from TUEC.

The SPS agreement also affords Cap Rock the flexibility to purchase bulk power resources from suppliers other than SPS.

As a valuable bridge to the SPS arrangements, Cap Rock negotiated a contract with WTU pursuant to which WTU agreed to take over control area responsibility for Cap Rock and to sell Cap Rock its full bulk power requirements, beginning 12.01 AM, February 1, 1992, the effective date of the termination of Cap Rock's full requirements contract with TUEC.

It is estimated that this arrangement with WTU will save Cap Rock approximately

$250,000 per month.

All that is required from TUEC to permit Cap Rock's contract with WTU to go forward is for TUEC: (1) to coordinate with WTU so that, when WTU " ramps up" (i.et, k

14 increases) its generation to serve Cap Rock's load, TUEC back down its generation, and (2) to provide the necessary transmission service.

TUEC has refused to cooperate.

Instead, TUEC has informed Cap Rock that TUEC believes Cap Rock must continue to buy all of its bulk power needs from TUEC SY.RD after February 1, 1992, when cap Rock's full requirements contract with TUEC is lawfully terminated.12/

I III.

LEGAL STAHQARDR A.

STANDARDS APPLICABLE TO A "BIGNIFICANT CHANGES" DXTERHJyATION.

An antitrust review at the operating license stage is warranted if:

the Commission determines such a review is E

advisable on the ground that significant E

changes in the licensees' activities or proposed activitiee have occurred subsequent to the previous review by the Attorney General and the Commission under this subsection in connection with the construction permit for the facility.

42 U.S.C. 52135(c)(2).

"significant changes" within the meaning of this provision have been defined by the Commission to mean:

1.

Changes that have occurred since the previous antitrust review of the licensee; 2.

Changes that are reasonably attributable to the licensee in the sense that the licensee has sufficient causal relationship to the change that it would not be unfair to permit it to trigger a second antitrust review; and 19/

Attachment A at 1-2.

I l

is 15 3.

Changes that are "significant" in the sense 5

that the charge has antitrust implications that would likely warrant Commission remedy.

Eouth Carolina Electric & Gas D Epany. et al. (Virgil C. Summer Nuclear Station., Unit No. 1), 13 NRC 862, 871-72 (1981).29/

The Commission has stated that the third criterion requires assessment of whether the changes would likely warrant Commin,sion a

remedy and the type of remedy.21/

TUEC's conduct is inconsistent with the antitrust principles applied by this Commission and is in direct violation of TUEC's obligation under the antitrust license conditions.22/

The TUEC anticompetitive conduct here discussed has occurred since

.Novemb6r, 1991, principally within the past several months, well after the Commission completed the 1989 antitrust review associated with the grant of an operating license for Comanche Peak Unit No.

1.

Moreover, TUEC's anticompetitive conduct continues unabated.

Indeed, evidence of TUEC's anticompetitive conduct may be found in the misleading information which it filed with this Commission on February 5, 1992.

TUEC's ability to prevent Cap Rock from purchasing power from WTU is solely attributable to TUEC's monopoly power over transmission.

The remedy for TUEC's conduct is well within the I

2_Q/

Egg jlLlgg, South Carolina Electric & Gas Company (Virgil C.

I Summer Nuclear Station, Unit No. 1), 11 NRC 817 (1980);

Central ElectrLc Power Coonerative. Inc. (Virgil C.

Summer Nuclear Station, Unit No. 1), 14 NRC 787 (1981).

2.1/

SCE&G, 13 NRC at 872.

22/

See Section IV.B, infra.

I

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16 Commission's authority.

The Commission should enforce the existing license conditions and impose such additional licence condition as may be necessary to compel TUEC to honor its obligations to wheel and to make available under reasonable terms and conditions the services which it ic required to make available by the licenre conditions.

B.

APJ11Q] MILE _ ANTITRUST PRINSIPLES.

The antitrust principles to which TUEC's conduct must conform are well established.

This Commission's application of those principles to licensees before it is unchanged since the Commission's previous reviews of TUEC's anticompetitive activities between 1988 and 1990.

The decisions of the Atomic i

Safety and Licensing Appeal Boa'd in the Midland,U/ Davis-ARSE 2,2A/ and Farlev 25f cases remain the definitive articulations by the Commission of the application of the antitrust laws to licensees under the Atomic Energy Act.

E I

Uf

,Qppsumers Power Company (Midland Plant, Units 1 and 2), 6 NRC 892 (1977).

'23/

The Toledo Edison Company and the Cleveland Electric

. I Illuminatina ComDany (Davis-Besse Nuclear Power Station Units 1, 2& 3), 10 NRC 265 (1979).

t 25/

Alabama Power Company (Joseph M.

Farley Nucle u Plant, Units 1 and 2), 13 NRC 1027 (1981), aff'd Alabama Power Company v.

Nuclear Becrulatory Commission, 692 F.2d 1362 (11th Cir.

2982), cert denied 464 U.S. 816 (1983).

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The antitrust laws embody fundamental national economio po: icy.25/

At their most basic level, the antitrust laws seek to j

prevent the unreasonable use of market power to gain additional market power;22/ they seek to dissipate the distortion that monopoly power can work on an otherwise competitive market.

In its simplest terms, monopoly power is the power to control prices or to exclude competitors.H/

Violation of the antitrust j

l laws, however, does not require the actual exclusion of competitors from a market.

Rather, the antitrust laws proscribe the exercise of monopoly power to disadvantage competitors. H/

This Commission's authority is not limited to redressing actual violations of the antitrust laws or their underlying policies, but rather extends to remedying acts which constitute a reasonable probability of violation of those laws, or the policies underlying those laws.lQ/

The Coinmission is empowered to reach and to redress incipient anticompetitive conduct, and to halt anticompetitive conduct well before it violates the antitrust laws.

liidl and, 6 NRC at 912.

2k/

Midland, 6 NRC at 896; Gulf States Utilities Company v. FPC, I

411 U.S.

747, 759 (1973); Otter Tail Power Comntnv v. United States, 410 U.S.

366, 372-75 (1973).

22/

Farley, 13 NRC at 1105.

23/

Farley, 13 NRC at 1073; United States v.

Grinnell Corp., 384

)E U.S.

563, 571 (1966); United States v.

E.I.

du Pont de 3

Hemourg and Co.,

'51 U.S.

377, 391 (1956).

23/

Se e, hgt, United States v. Griffith, 334 U.S.

100, 107-08 I

(1948).

1Q/

Midland, 6 NRC at 909; 926-27; Farley, 13 NRC at 1103.

t 18 TUEC is subject directly to the antitrust laws.11/ Those laws, and the policies underlying them, likewise apply to TUEC through the exercise by this Commission of its obligations pursuant to Section 105c of the Atomic Energy Act of 1954, 42 U.S.C. 5213S(c).

The analytical questions posed by the structure and characteristics of the electric utility industry are now well settled.

An analysis of competition in the electric utility industry generally entails inquiry into three discrete produtt markets:

the bulk power, coordination services and retail markets.12/

The relevant geographic market for the coordination and bulk power markets is limited to those areas in which the utility's smaller competitors practically can turn for alternative suppliers.12/

The geographical limits of the retail market are defined by the utility's service territory.14/

Cap Rock's ability to compete with TUEC in the bulk power, coordination and retail markets is dominated by one basic fact:

TUEC's dominance and control of essential transmission and coordination services.

The Commission has recognized that the 1

ability to compete effectively in these markets is dependent substantially, if not entirely, upon access to necessary 11/

Otter Tail Power Company '.. United States, suora; Cantor v.

Detroit Edison Company, 428 U.S.

579, 596 n.35 (1976).

12/

Hidland, 6 NRC at p. 945-990; f_arley, 13 NRC 1046-1068.

W Farlqy, 13 NRC at 1058.

13/

liidland, 6 NRC at 978-79; Farley, 13 NRC at 1066-67.

I l

1

I 19 transmission services.

In Parley, the Board found that Alabama Power Company owned and controlled the lion's share of generating capacity in its service territory and owned all transmission lines in the market above 115 KV and all transmission facilities that provided access to utilities outside the market area.25/

The Board concluded that this dominance, particularly the dominance over transmission facilities, " places the applicant in a unique position to control access to the market for coordination service."

In liillhDsi, the Board found that, in order to engage in bulk power and coordination transactions, small utilities within the Consumers Power Company service territory had to obtain transmission wheeling services from Consumers.25/

Cap Rock efforts to obtain bulk power from sources other than TUEC are most directly intended to enable Cap Rock to compete more effectively with TUEC in the retail market.

Such retail competition is entitled to full protection under the antitrust laws and by this Commission.17/

In both Midland and Farlp_y., the Board rejected arguments that, because there was little likelihood of head-to-head competition at retail, competition in the retail market was somehow entitled to less protection.

In this case, head-to-head competition is not only likely, but guaranteed by the dual certification scheme employed 15/

13 NRC at 1070.

2f/

6 NRC at 998.

22/

1:idland, 6 NRC at 988; Farley, 13 NRC 1064-1066.

I i

o

I 20 in the state of Texas.

Cap Rock's merger With Lone Wolf and pending application to morge with Hunt-Collin are evidence of the 1

viability and significance of that rota11 competition.

j Every action taken by TUEC that discdvantages Cap Rock in the bulk power or coordinat3on servicos market has an inovitable and adverso impact on Cap Rock's ability to competo with TUEC in the retail market.

The Board acknowledgod this fact ir. Dirigy, 1

l More importantly, applicant's dominanca of transmission and generation facilities l

ft!rther bolsters the finding of monopoly power (in the retail market).

As the Board 4

below noted, this dominame enables applicant to influence its present and potential competitors' accesc to the S sic inputs necessary for the productiari and sales of i

rollable and econonical firm bulk power.

The dominance of what in ossence conLtitutes i

certain factors of production in tho Inductry, viewed in conjunction with i-applicant's high market sharen and the high j

oconomic barriors facing now competitors, would ordinarily compel a finding of monopoly i

power in the rotail market.

1 I

13 NRC at 1072-73 (footnote omitted).

L TUEC's nurront actions violate those principios.

TUEC avoidad the application of these prir.cipios to its conduct in 1990 by o.itoring into a settlement with Cap Rock, a settlement a

which it now socks use as a means to excuse its illegal refusal to wheel.

This comminsjon's coligations under Section 105(c),

I-and the concomitant obligaticns of NRC 1.lconsoon, are foreign to TUEC.

TUEC pays attention to its licenso conditions only whsm forced to by thic Commission.

Cap Rock submits that only by a full application of the forgoing principles in a full evidentiary hearing that will produce thc appropriate remedy will TUEC bo I

N I

21 I

made to recognize the significanco of its obligationn under the antitrust laws and the Atomic Snorgy Act as a licencoa.

l l

IV.

TUBC'N REFUDAL TO WHEEL FOR CAP ROCK VIOLATED TUEC'O CURRENT LIC2NDE CONDITIONS AND THE

=

A1T11EAISLAtiTITlWAT._LhHD.,

The intent of '.dEC's cerrant actions, although with cortain il now twists, remains what it was in 1988, 1989 and 1990s to dony Cap Rock access to sourcos of power tie. aro lower cost than TUEC full requirements service.

In liis11And 23/, DaYin-Danan 22/

and EAlitY iQ/, the applicants sought to disable smaller utilitios in and around their servico territorios by denying them access to the benefits at th relatively low cost power to be generated by nucicar projects licensed by this Commission.

TUEC's goal in to accomplish the opposito, to disadvantago Cap Rock competitively by blocking Cap Rock's efforts to purchase lower cost supplies of bulk power, thereby forcing it to buy TUEC's much higher priced energy and capacity, which includes the costs of Comanche Peak Unit Nos. 1 and 2.

TUEC is exorcising its monopoly power over trhnsmission by an admitted refusal to wheel, 33/

Consumers PowqE_qQEnany (Midland Plant, Unita 1 and 2), 6 NRC 892 (1977).

22/

Tha T21&s12.ld11Lon Coitpany_ansL1hn_. Clay.cleillac.tric lllitaillAling CQEDanY. (Davis-Bosso Nucioar Power Station Unita 1, 2 & 3), 10 NRC 265 (1979).

iq/

Alabama PQyer Comnany (Joseph M. Farley Nuclear Plant, Units 1 and 2), 13 NRC 1027 (1981), uff'd AlnkgAq Poh;gr company vt 1[QGlear Rectu]ALQIy_Rommissign, 692 F.2d 1362 (lith Cir.

1982), Egr.t_110 Died 4 64 U. S. 816 (1983).

I l

22 in violation of the antitrust laws and the existing antitrust license conditions.

I A.

TUEC HAE_REFERED TO WiiXEL FOR CAf_lqQL There is no factual dispute over whether TUEC has refused to wheel power for cap Rock from WTU.

TUEC informed Cap Rock in writing of itu refusal to whoo111/ and has confirced its rei'usal to whool to this Commission in the February 5, 1992 TUEC Antatrust Rouponno.12/

The following is a brief summary or

'C the events which produced TUEC's refusal to whool.

O After oxocution of the 1990 Settlement, Cap Rock began i

intensivo efforts to obtain competitively priced sources of bulk

{

power that were loss costly than TUEC full requirements servico.

Cap Rock roached an understanding with WTU, and negotiated an agreement with WTU, pursuant to which WTU would supply cap Rock's i

full powor requirements for the period between the tcrmination of

I AJ/

Attachment A at 3-4.

q A2/

At page 23 of the TUEC Antitrust Responso, TUEC stcted (emphasis supplied):

~

TU Electr$c advised Cap Rock, [ sic] that (after February 1, 1992] it would.

supply all of Cap Rock's power and energy requirements, in accordance with the provisions of the 1990 Power Supply Agreement, at Cap Rock's points of delivery I

served by TU Electric.

IU Electric also denied Cao Rock's roauest for TU Electric to wheel power from W1U to Cap Rock, beginning February 1, 1992, until the 1990 Power Supply

,I Agreement has been terminnted in accordance with its terms or a wheeling request is mado pursuant to the terms thereof.

I

I 23 Cap Rock's 1963 rgrooment with TUEC and the physical transfer of Cap Rock's load from the TUEC to the SPS transmission system in l

1993 12/

Cap Rock and krU agreed that service would begin on February 1, 1992.

On October 23, 1991, Cap Rock informed TUEU of its agreement with WTU and of its intention to terminate the 1963 agreement.AA/

TUEC's reply provided the first indication of TUEC's determination to prevent the Cap Rock /WTU purchase from being consummated.

Despite the plain meaning of the 1990 Settlement, TUEC maintained that, even if the 1963 agreement were terLinated, Cap Rock could not purchase power from sources other than TUEC without giving throo years notico.15/ TUEC refused to permit Cap Rock to receive power from WTU, thereby leaving Cap Roc)' With no way to receive that power.

Accordingly, on December 18, 1991, Cap Rock filed suit againe TUEC in state court in Texas to enforce its right to purchase power from WTU.

On December 19, 1991, Cap Rock gave TUEC vritten notice that it was terminating the 1963 agreement as of February 1, 1992.

Af/

On January 13, 1992, TUEC filed an answer and counterclaim to Cap Rock's stato court complaint.

In its counterciaim, TUEC assertod, inLqr alin, that: (1) cap Rock had failed to give proper notico of termination of the 1963 agreement Alf Attachmentu F and G.

14/

Attachment H.

Ali/

Attachment I.

Ab/

Attachment E.

a,

24 and, (2) tne 1990 Settlement requires cap Rock to give three years notice before it may purchase power from any sources of bulk power other than TUEC (except with respect to cortain Points of Delivery where two years notice was purportedly sufficient).

on January 30, 1992, TUEC admitted that Cap Rock's notice of termination under the 1963 agreement was proper and that it would ig

g terminate on February 1, 1992. 12/

TUEC made it clear, however, that it intended, through the exercise of its monopoly I

power over transmission, to force Cap Rock to continue to purchase from TUEC.

TUEC stated:

Your requast for TV Electric to wheel power l

from West Texas Utilities Company to Cap Rock, beginning February 1, 1992, is denied until the 1990 Pcwor Supply Agreement has been terminated in accordance with its terms or a wheeling request is mado pursuant to tho provisions thereof.

The_1990 Power Supply Agreement does not obligate TU Electric to l

wheel power or energy from West Texas

]

Utilities, as requested, for Cap Rock without at least three years' (24 months to cortain

]

points of delivery) prior written notice.

Attachment A at 3-4.

Hence, TUEC has denied cap Rock the ability to whool power, and cut Cap Rock off from all alternativo sources of power supply.

TUEC efforts to prevent Cap Rock from purchasing power from WTU have not been limited to cap Rock.

As mentioned above, Cap Rock had negotiated an agreement with WTU for the purchase by Cap Rock of its full electric power requirements from WTU.

On December 10, 1991, WTU mailed to Cap Rock three originals of the I

12/

Attachment A at 1.

4 I

g a

final contract for cap Rock's execution.

Upon return of the contracts, WTU was to execute then and return "[ojne completely executed set" to Cap Rock. 10/

Although Cap Rock rr.turnerf its copics on January 2, 1992, AS/ the contract was never executnd by WTU.

TUEC's threats and deliberate efforto to mislead WTU undeniably caused WTU to forego executing the contract which it had negotiated with Cap Rock.

On December 19, 1991, TUEC claimed in a letter to WTU that Cap Rock was " obligated to acquire aill of its power and energy from TU Electric.

"rd t N

'wt, TUEC clearly implied that it would sue WTU i f W. 'l d ;d 33 ' d g contract with Cap Rock.

Noting that the " knowledge" o,

Chp Rock's purported duties to TUEC put "an extra burden of responsibility" on WTU, TUEC threatened to " aggressively defend" itself "against any damages or losses" caused by purported

" interference" with its contract with Cap Rock. Elf As mentioned above, on January 2, 1992, Cap Rock returned its executed copies of the new contract to WTU.

On February 18, 1992, WTU responded.

Noting that it stood " ready, willing, and able to begin selling electric energy to Cap Rock," WTU nonetheless declined to finalize any agreement until " Cap Rock's relationship with TU Electric han onded."

Clearly responding to

.43/

Attachment F.

A9/

Attachment G.

10/

Attachment J.

SJ/

Attachment J.

I

.I

,I 2e I

TUEC's threat, WTU disavowed any intention to "interfore with the relationship borwoon cap Rock and TU Electric." 12/

t The solo barrior to Cap hock's purchase froin WTU is TUEC.

WTU stands " ready, willing, and ablo" to supply power to cap Rock, just as soon as the instant dispute is resolved.

TUEC's ro usal to whool and throats to WTU ovidence a pattern of anticompetitivo conduct intonied to provent cap Rock from purchasing bulk power from any supplier other than TUEC.

As demonstrated below, the licenso conditions and the antitrust laws do not permit a licensee before this Commission to engage in such illegal conduct.

D.

TUEC IS OBLIGATED BY ITS LICENDE CONDITIONS TO WHEEL FOR CAP BOCK.

TUEC's obligations under the licenso conditions are to

" Entities," as defined in Paragraphs 3.D. (1) (c) and (d).

Paragraph 3.D. (1) (c) defines an Entity as:

an electric utility... owning. operatina or I

contractually contro111na, or orocosino in g ud faith to own, onorate or contractually sntrol, faciM. ties for._gqueration of.

cicatric_ sover..nnGLSDercty, providod, however, I

that as used in [cortain epocified paragraphs, including Paragraph 3.D. (2) (i) ),

" Entity" means an electric utility which is a person, a private or public corporation, a govtsrnmental agency or authority, a municipality, a cooperativo, or an I

association owning or operating, or proposing in good faith to own or operato, facilities for generation, transmission and/or I

12/

Attachment K.

e I

27 distribution of electric power and energy.

(emphasis suppliod)

Cap Rock is a cooperative and currently owns and operates facilities for the transmission and distribution of electric power and energy.

Cap Rock is an Entity under TUEC's licenso conditions.

Paragraph 3.D. (2) (1) of the Comancb 1 peak license conditions obligates TUEC tot participate in and facilitate the exchange of bulk power-by transmission over the Applicants' transmission facilitics between or among two or more Entities in the North I

Texas Area with which the opplicants are connected, and between any such Entity (les) and any Entity (ies) outside the North Texas

_I Area between whose facilities the Applicants' transmir,sion line and other transmission lines.

form a continuous electrical path cap Rock is an " Entity" as defined in Paragraph 3.D(1) (c).

Cap Rock is located and does business in the " North Texas Area" as definud in Paragraph 3.D. (1) (b), and is directly interconnected TUEC.

WTU is directly interconnected with TUEC.

TUEC is expressly obligated to provido the transmission services necessary to facilitate the exchange of bulk power betwoon WTU and Cap Rock.M/

TUEC's refusal to wheel is unequivocal and in clear violation of TUEC's obligations under Paragraph 3.D. (2) (1).

As I

Uf

" Bulk Power" is defined as " electric power and/or electric energy supplied or made available at transmission or I

subtransmission voltages."

Paragraph 3.D. (1) (e).

This definition clearly encompanses the purchase by Cap Rock of wholesale bulk power from WTU.

I I

I 28 demonstrated in the following section, that refusal to wheel is 1

also in clear violation of the antitrust laws.

C.

TUEC'S REFUSAL TO WHEEL POWER FOR CAP ROCK IS INCONSISTENT KITH =TRFL.ARTITAUST LAWD-The Commission's authority and obligations under Section 105 are not limited to redressing actual violations of the antitrust laws or their underlying policies.

The commission's authority and obligations extend to remedying acts which constitute a reasonable probability of violation of those laws, or the policies underlying those laws.M/

As demonstrated above, TUEC's refusal to wheel for cap Rock constitutes a clear violatien of the TUEC's license conditions.

It is equally clear that TUEC's conduct is inconsistent with the applicable antitrust laws.

E 1.

TUEC Has Denied Cap Rock Access To An Essential N

Eap_ility.

TUEC electrically surrounds Cap Rock (i.e., Cap Rock is 2

electrically interconnected solely with TUEC).

Cap Rock cannot receive power unless it in transmitted over TUEC's lines.

Cap Rock is, therefore, entirely dependent upon the transmission i

facilities of TUEC, its principal competitor at retail, for the transmission service necessary to allow Cap Rock to purchase the I

power Cap Rock needs to compete with TUEC at retail.

The only transmission facilities between Cap Rock and WTU are TUEC transmission facilities.

It is simply not feasible for Cap Rock I

sf Midland, 6 NRC at 909; 926-27; Farley, 13 NRC at 1103.

I

-__.- =.-.

I 29 to duplicate the integrated TUEC transmission grid betwoon cap Rock and WTU.

TUEC's transmission system, therefore, is an

" essential facility."

The assential ft.cility or "bottlenock I

monopoly" doctrino of antitrust law imposco upon a monopolist who controls an essential facility tno obligation to make that facility availablo to competitors on non-discriminatory terms.

This doctrino onour that "a monopolist may not retaliato against a customar who is also a competitor by denying him access to a facility casential to his operations, absent legitimato business justifications."

hug.q_ Technical __ Services, 903 P. 2d 612, 620 (9th Cir. 1990).

A monopolist which denies a competitor access to an essential facility is liable under Section 2 of the Sherman Act for monopolizing or attempting to monopollzo trado or commerce.

A party socking to invoko the oncential facilities doctrino must show:

I (V;

control of the essential facility by a monopolist; I

(2) a competitor's inability practically or reasonably to dup 1'.cate the essential facility; (3) the denial of the use of the facility to a competitor; and I

(4) the feasibility of providing ascose to the facility, ligl_,S.gmmunications v.,American Tel. & Tel. Co._, 70b F.2d 1081 (7th Cir. 1983) (citations omitted).

TUEC's refusal to wheel for Cap Rock is a classic examplo of an abuse of monopoly power over essential facilities.

TUEC has I

I 30 unquestioned monopoly power over all transmission to Cap Rock.

Cap Rock cannot feasibly duplicate the integrated TUEC transmission system that connects cap Rock to WTU and the rest of the Economic Rollability Council of Texas ("ERCOTH); such an undortaking is boyond the economic means of Cap Rock (and virtually overy other electric utility in Texas), inherently wastoful and inefficient and environnentally unsound.

TUEC's transmission system is unique and, from Cap Rock's porspective, ossential.

TUEC has denied Cap Rock the use of its transmission facilities.

At no point h>as TUEC contended that it is not feasible for it to provido such transmission servico.h5/

The obligations cf a monopolist controlling an essential facility to prcvide non-discriminatory access can be traced back to U.S.

v. Terminal Railmd.,.luigtQh, 224 U.S. 303 (1912).

In that case, a consortium of railroads had gained control of every rail route feeding into St. 1,ouis across the Mississippi River.

The consortium had the power to exclude any competing railroad or to force that railroad to capitulate to any terms the consortium demanded.

It was economically and geographically infoasible for l

a competitor to build another bridge.

Thorofore, the Supreme Court ruled that the consortium must allow competing railroads to

!I lI 53/

Lets we loue sight of the obvious, it bears remembering that I

not only is it perfectly feasible for TUEC to provide l

transmission for Cap Rock, but TUEC is unequivocally obligated by its license conditions to provide such i

transmissiore.

lI l

l l

..,c

I I

31 use its facilition on a non-discriminatory basis Id. at 411 10/

The seminal essential facilities doctrine ca se involves a refusal to wheel.

In !1aitad_J1Atc_ v. Otter Tall Ppwor CA F.Supp. 54

, 331 (D.Minn. 1971), qLL'd 410 U. S. 366 (1973), Otter Tail Power Co.,

an investor owned public utility, refused to soll wholesale or wheel electric power to coveral municipaliti at I

were attempting to not up municipal power systems t es which Otter Tail in the retail sale of power o compete with The court held that under the bottleneck monopoly theory Otter Tail had violated section 2 of the Sherman Act, 1

and enjoined Ottor Tail from continuing its anti-competitivo practicos Otter Tail'at The court found that of its service area gives it substantialcontrol over trans effective control over potential ccmpetition from municipal ownership.

sell or wheel power By its refusal to competition from sur, facing. defendant prevents that lb at 61.

As the Supreme Court subsequently conclud d record made " abundantly clear that Otter Tail used it e

the power in the cities in its service area to forecl s monopoly ose competition or to destroy a competitor, all in violation of th laws."

e antitrust Q1tsr Tail h er Co. v.,_Ljix, 410 U.S. 366, 377 (1973).

Like Otter Tail, TUEC has completo control over transmission to 16/

TUEC is already obligated to provide nondis access by its licenso conditions.

criminctory TUEC to obe conditions.y, or to be compelled to obey,It remains, however, for those license

_-~

I 32 its retail competitor and, like Otter Tail, TUEC is using that monopoly control to foreclose competition.

In a case which bears many similarition to a refusal to whool electricity, AT&T was hold to have violated the shorman Act f

by refusing to interconnect MCI's long distanco service with AT&T's local distribution facilities.

The court found that AT&T had complete control over the local distribution facilition required by MCI and that MCI could not practicably duplicato the local facilities.

Relying on Qtier Tail, the court hold that AT&T's local facilities were a natural nonopoly and that AT&T was denying an essential facility to MCI.

11QI, 708 F.2d at 1132-33.

In Moen Hichlands Skiina Coro.,v.

Apoon Skiino Co., 730 F.2d 1509 (10th Cir. 1984), aff'd 472 U.S.

585 (1985), the defendant, Aspen Ski.ing Co., operated throo of the four skiing facilities in Aspen, while plaintiff, Aspen Highlands operated the other. In the past, Aspen Skiing and Aspen Highlands, had jointly issued a multi-day ski lift ticket good at all four mountains.

Then Aspen Skiing refused to issue the four-area ticket and began to issue a three-area ticket, good only at Aspen Skiing mountains.

Following ligl, the court applied the four prong test.

The court hold that the four-area multi-day ticket was an essential facility controlled by the defendant.

Aspen Highlands could not issue a ticket good at the other thren Aspen areas, and week long vacationers with a choice between a multi-day three-area ticket and a one-area ticket would choose the I

three-area.

The Supreme Court concurred that in this case "the I

I

33 monopolist made a deliberato offort to discoutago its customers from doing business with its smallor rival."

Ar, pen Skiina Co.

v._

Mpril_111ghlando_ Skiino Cup 2, 472 U.S.

S85, 610 (1985).

TUEC's refusal to whool is an extremo example of the kind of anticompetitivo conduct proscribed by the ossential facilities doctrino.

TUEC's actions also run afoul of otner fundamental principles which underlie Section 2 of the Sherman Act, 15 U.S.C.

5 2.

2.

TUEC Is Illegally Leveraging Its Monopoly Power over Essential Transmission To Stifle Competition In The Bulk PowoJ_ Bale And Rotail Markets.

In jicrkov Phnto. Inc. v. Eastman Kodak Co., 603 F.2d 263 (2d Cir. 1979), the Second Circuit hold that "the uno of monopoly power attained in one market to gain a competitivo advantage in another is a violation of 52 (of the Sherman Act), even if there has not been an attempt to monopolize the second market."

This articulation of a Section 2 violation, often referred to as

" monopoly loveraging," precisely describes TUEC's conduct towards Cap Rock.

TUEC is exercising its monopoly power over transmission tot (1) preclude competition by Cap Rock for alternative sources of bulk power in the bulk power market, thereby forcing Cap Rock to buy TUEC's higher priced power, and thus (2) gaining an advantage over Cap Rock in the retail market.

By denying Cap Rock access to more economical bulk power from utilities such as WTU, TUEC koops Cap Rock's retail pricos high, I

I l

1

]

34 allowing TUEC to more offectively compoto at retail.12/

Moreover, TUEC gains an advantage in the market for wholesale power.

By proventing WTU or other alternati'to power sources from supplying Cap Rock, TUEC levarages its control of transmission into completo domination of bulk power salon to Cap Rock.

D.oriny,_Ehats has its antecodonts in UniteLEtaten_L.

Gr1111th, 3 3 4 U. S. 100 (1948).

In that caso, the Supreme Court found a Section 2 violation when a group of motion picturo exhibitors with competitors in some localition refused to exhibit movies in localition in which they had monop31y power unless the d3stributor granted them exclusivo showing rights in the contested markets. Ish at 108.

In Keranotes Migli. Theaters t. National AmquementS, 854 P.

2d 135 (6th Cir. 1988), National Amusements alleged that Korasotos had used its monopoly and market power in other citios to coorce distributors into providing first-run films in the Flint, Michigan area, where Korasotos competed with National.

The court hold this conduct violated Section 2 of the Sherman Act.

Ish at 136-37.

TUEC has monopoly power over transmission and is using this power to loverage a superior position for itself in the ' market for bulk power by denying bulk power sollers access to Captivo I

bulk power purchases such as cap Rock.

TUEC is also exploiting 4

17f This incluctable of fect of the preclusion of competition in the bulk power market on the ability to compete at retail was expressly recognized by the Board in farley, 13 NRC 1072-73.

I 35 its monopoly over transmission to gain an edge in the retail market by denying its competitors, such as Cap Rock, access to economical electricity.

TUEC's conduct is inherently anticompetitivo and impermissible for a licensoo of this Commission.5ff 3.

MEC's Assertion of Its Interpretation Of The 1990

Novanter 4,

199i Mr. Steven E.

Collior Director of pover Supply and Regulatory Af teirs Cap Re % Electrle Cucperative, Inc.

B140 Burnet Road Auntin, Toxas 70766-106)

Dear Stevat This is in response to your letter of October 23, 1991, in which you indicated that Cap Rock anti.:ipates cancelling its current contract with TU Electric, dated July 2, 1963, as n.anded, "without having to serve any wholcoale lead toccorarily under the new power supply agroanent."

k we attenpted to reach you by phone on Friday and sgain this F

torning.
Af ter moeting with you on october 22 and af ter reviewing your October 23 letter, va reviewed our power supply agroonontc I
with Cap Rock in dotail.
As you are svare, the 1963 agroeecnt calls for cap Rock to purchase its full pouer and anorgy requiror. ento from TU Electric.
The new cap Rock 2cver Supply Agreenent executed on June 8,
1900, itself a full-rcquircrents I
contract initially, automatically bacones effoetivo for s tern of 10 years, upon cancellation of the 1963 ful2-roquiremonta contract.
Under the 1990 agreement, Cap Rock may supply a part of its power and energy requirerents from other sourceo or usy purchase all of I
its requirocents elsewhere by complete tornination of that agreement -- in either case, upon threc years' notice during yearn one through five and upon five years' notice thereafter.
Upon 2t.
nenths' notica during years one through five of the 1990 agreGment, Il Cap Rock r,ay purchaso up to 30 MW of power and energy frem other ocurcas at nine specif td points of delivery. All purchasos by Cap Rock of power and enecy from sources other than 'IU Electric are subject to other provisione of the 1990 Power Supply Arpleoment and the negotiation of satisfactory wheeling agreements.
Wo wish to advios you that TU Electric expects cap Rcck to I
fully comply with the 1963 and 1990 pcVer supply agroo:tenta.
To comply wich thoso agreer.cnts, it will not be possir,le for you to purchase power cloewhere, including Cap Rock's propcsed purchase from West Texas Utilities Company "ao eady as January, 1992,"
8
~2-until the cancellation of the 1963 agroenont and ;nly then open expiration of the foregoing notices provided for in the 1393 agroenent and the cenpliance with all other tens of that contract.
Please lot ua know the cal. cella tion date of Cap Pcek's 1963 power supply a gr o or.e nt,
cheuld yea have any Ta u s t i c ns, please cal 1.
'!e ry t r u l y 7 ar c,
,h]+'kl(H Henry A.
83Jnting HAD/mkm Carrell Bevolhycer cc:
3 David Fruitt
g Mark Sullivan j
Cary Gibnon - SPSCO Oon 'inlch 2
'#rU 1
lE l
!I iE lI 1
!B l
_ _ = _ _.
ve{ ao SifVEN E COL (IER w No. 1 51P 41 t619 h@
JM.17..9.2..F,RI 14 : 5 u N 'rs too vru tize, orc, gootioot es g.. O /
i 6
WELECTRIC December 19 19.'
t4ms seweir w pu.a.- q e.n tm aa.m Kr. Davic.oetor West Texas Utilities p.
O.
Dox 641 1,b ile ne, TX 79604 Coar David:
I have recently received a copy of an inquiry rogaroinq I
wheeling servicos Cap Rock seeka from other F.RCDT control area utilition for power supplied to Cap Rock by Vr0 beginning January 1992.
I feel that it is important to clearly cor.muninate to you and your managenent that Cap Rock is obligated to acquiro all of 5
its power and energy from TU Electric under ono of two existing contracts which I have enclosed for your review.
l I must apologize that with knowledge of the existence of thoco agreer.ents, this obviously puts an extra burden of responsibility on you and your company to avoid any interference with this contracitual relationship.
As I'm sure you vould do in a similar I
situation, we vill aggressively defend TU Electrie again.it nny damages or losses incurred from any type of interference.
please font froa to give no a call at any time on t.his issue.
Yours very truly,-
c
$td W'
NW I
c:
Terry Dennic I
I
?8
-esme ew ese e
e+ w
a su re
.h.
4.va a va w e. w.t. ww w. L.s 6 no av.
6 s e a.
%a w4sJ
r. v4 I
l WEST TEXAS UTILITIES COVJ%NY CEN(RAL Ofitet PO 60x en / *Bu (NI,13x 4 19f04 i mH 674 7613 I
February 18,1992 Dori Wekh vice PreodeN Mr. Steven E. Collier, P.E, l
Director of Power Supply fEB 201992 and Regulatory Affairs Cup Rock Electric Cooperative, Inc.
l 8140 Durnet Road Austin, Texas 78766 Re: Cap Rock's Proposed Purchase of Electric Energy from WTU
Dear Steven:
8 in response to your letters of January 2, 6, and 10,1992, please be assured that WTU stands ready, willing, and able to begin selling nloctric onorgy to l
Cap Rock. As you know, however, unless and until Cap Rock has validly terminated its relationship with TU Eloetric and has fulalled all of its l
contractual obilgacions to TU Electric and TU Electric has agrood to the necessary v hooling and scheduling agreements, on terms acceptable to WTU, WTU cannot finalize any agreement to soll electricity to Cap Rock.
'l WTU's negotiations with Cap Rock, which have not resulted in a centract between WTU and Cap Rock, have proceeded based upon the promiso that Cap Rock had the intention and the legal right to terminato its relationship with il TU Electric while obtaining TU Electric's cooperation in the wheeling and transmission of electric energy. Whilo WTU has expressed its willingness to sell electricity to Cap Rock once Cap Pock's relationship with TU Electric has I
ended, WTU has avoided and must continuo to avoid any activities that would Interfore with the relationship between Cap Rock and TU Electric. WTU is interested in establishing a relationship with Cap Rock, but WTU has not and
'I cannot provide any assistance or support to Cap Rock in connection with Cap Rock's termination ofits relationahlp with TU Electile.
h We hope that Cap Rock will be able to proceed with the establishment of a relationship between WTU and Cap Rock. Please let us know when Cap Rock has obtained TU Electric's ec.peration in this proposed venture.
Yours very truly i
e DW/plw B
A MEMBER OF THE CENTRAL AND SOUTH wf 5T SYSTfM
$$a$n cNsYro'.$
.$, o b$
?.Ne, N$ n'!
$$netoN,
~
X ",
I
/
NO. b l
9$$cm CAP ROCK ELECITUC I
IN TIIE DISUUCr COUIh /2P l
COOPERATIVE, INC.,
i Plaintiff, 6
I 5
l vs.
I OF SilDLAND, COUNTY I
I I
I l
TEXAS UTILnTES ELECDUC 6
l CO3fPANY l
Defendant.
I//
JUDICIAL DISTRICT PLAINTIFPS ORIGINAL PINITION TO THE HONORABLE JUDGE OF THIS COURT:
Cep Rock Electric Cooperative, Inc., (Cap Rock) complains of Texas Utilities Electric Company (TUEC) as follows:
l L Pnrties and Venue Cap Rock is an electric cooperative corporation, incorporated under the Texas Electrie Cooperative Corporation Act, Tex, Rev. Civ. Stat. Ann, art. 1528b.
Its headquarters is in Stanton, Martin County, Texas.
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.I TUEC is a Texas Corporation. It has a divisior ' ofUce in 511dland. Texu, located in hildland County.
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, TUEC's registered agent for service is $1r. Peter B. Tinkham, at 2001 Bryan I
1 Tower, Suite 1900, Dallas, Texas,75201.
I Venue is proper in hiidland County under Texas Chril Practice & Remedies Code
I Sec.15.036.
I H. Factual Backamund I
Cap Rock is an electne distribution cooperative. Cap Rock currently owns no electric generating facilities. It buys electncity at wholesale and resells the electricity to itt end use, member customers. Cap Rock serves over 20,710 meters. Its service area covers 10,000 square miles in all or parts of Andrews, Borden, Dawson, Ector, Fisher, Glasscock, Howard, Irion, Startin, Slidland, hiltchell, Nolan, Reagan, Scurry, Upton, Sterling and Tom Green counties. As a cooperative corporation, Cap Rock is owned by its consumer members. Any profit made oy the cooperative ultimately is either invested in the cooperative or returned as cash or lower rates to its consumer members. Cap Rock's annual electric revenues are about $35 millivn. Over 70 per cent of these revenues goe. to pay its wholesale power supplier. Cap Rock's net plant investment is about $75 million.
I TUEC is the fifth largest electrie utility company in the United States, it is a wholly owned subsidiary of Texas Utilities. TUEC, by any means of measurement, is by far and away the largest electric utility in Texas. TUEC serves a vast portion of Texas. Its service area covers 87 counties ranging from Tyler on the east, to Vah llorn on the west, Oklahoma on the north and Austin on the south. TUEC serves over 5.2 million custerners, Cao Rock Electre Cooperatrve. Inc. vs. Texas utsttes Electre Comoany. inc.
Pisumere ortgM Pettuan Pago 2
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I' another utility builds transmission lines into Cap Rock's service area, any new power supplier for Cap Rock initially must wheel over TUEC's system.
, TUEC's costs of constructing and operating Comanche Peak have increased TUEC's costs, including rates TUEC charges Cap Rock. Any future increase in TUEC's rates hkewise will increase the cost of power for Cap Rock and its retail customers. To keep its rates low and to remain competitive,in the late 1980s Cap Rock began to seek other sources of wholesale electricity. Cap Rock found short term sources of power other than TUEC at a cost lower than TUEC's rates. One such source was a ecgeneration pro,iect. Cap Rock was unable to complete the arrangement with the cogenerator due to TUEC's unwillingness to oiTer stand by power and scheduling services. Another source was the purchase of " economy energy
from Houston Lighting & Power Co. Cap Rock requested I
that TUEC wheel this economy energy under similar terms and conditions that TUEC was wheeling economy energy for other TUEC customers. TUEC refused to wheel. thereby denying Cap Rock's customers lower cost electricity.
I Because of TUEC's failure to wheel and because of TUEC's,6crimination, Cap I
Rock started two separate actions at the NRC. The Grst was in 1988. Cap Rock Gled comments with the NRC concerning whether there had been signincant changes in TUEC's activities that would warrant a new antitrust review. The NRC declined to and a change in conditions under Cap Rock's 1988 Oling Cap Rock appealed this decision to the U.S. Court of Appeata in Washington, D.C. Second, in 1989, Cap Rock requested an order from the NRC enforcing and modifying TUEC's nuclear license antitrust conditions.
While these uctions were pending, Cap Rock and TUEC negotiated a resolution of the disputes in 1190. The settlement allows Cap Rock to get a new power supplier. Italso allows Cap Rock to determine, what, if any, services Cap Rock would purchase from TUEC.
Cap Rock Electre Cooperstrve, Inc. vs. Tenas UtMties Electre Comoany inc.
Pian,ters oryne Pesm Pop 4 I
e L
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Cap Rock and TUEC signed a document entitled " Power Supply Agreement Between Texas 1ltilities Electne Company and Cap Rock Electne Cooperative, Inc., dated as of kne 3,1990* tthe 1990 Document). A copy is attached to this Petition av Ethibit "A" I
and incorporated hereir.. The 1990 Document purports to govern the relationship between Cap Rock and TUEC while Cap Rock gained access to other power suppliers. In fact, the 1990 Document is a menu of semees that TUEC is to offer Cap Rock. The terms and conditions for the menu remain open. For example:
I 1.
The 1990 Document allows Cap Rock to buy eleetneity at certain " Points of Delivery
with TUEC " existing on the effective date hereof, each of which, oints of Delivery shall be specified on Exhibit A hereto..." Exhibit "A" also required the listing of the amount of
Contract Demand"; that is, the amount of power and energy to be bought.
Exhibit "A" of the 1990 Document states: *!nformatiou to be Speci6ed on the Effective date of this Arreement." Exhihit 'A' remains blank and to be negotiated. Without further negotistion and agreement, there is no way of knowing what, if any, are the Points of Deliven nor what is the " Contract Demand,"
2. The 1990 Document allows for Cap Rock to have other
Power Supply Resources" for electricity. These resources "shall be identified on Exhibit 'B of the 1990 Document.
Section 2.03.
Exhibit "B" of the si;;ned 1990 Document states:"To be speci6ed pursuant to Section 2.03 of this Agreement." Exhibit "B" is blank and remains to be negotiated.
Without further negotiation and agreement, there is no way of knowing which third party power sources are covered by the 1990 Documert.
3. Cap Rock is to develop "a mutually acceptable curtailment plan" at least ux months prior to Cap Rock taking power froin a firm power resource via TUEC's scheduling Cao Rock Electre Cooperatrve, Inc. vs Tuas Ut* ties E!ectre Comoany. Inc.
Pw.rt : Ogrud Penen Page i
as provided in the 1990 Document. Section 4.03. This curtailment plan will then become Exhibit "D" ta the 1990 Document. Exhibit "D" is blank.
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, 4. TUEC is to provide to Cap Rock regulation power and energy " pursuant to a mutually acceptaole regulation serv ces agreement.' Section 6.01 (a).
This agreement remains to be negotiated.
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5. TUEC is to provide on a transaction specine basis wheeling services to Cap Rock
pursuant to a mutually acceptable wheeling apeement(s)." Section 7.0L Cap Rock has requested a draft agreement and TUEC be refused to provide one. This agreement remains to be negotiated.
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6. When Cap Rock becomes a " control aren", TUEC is to provide Orm wheeling services "for a term and in accordance with mutually acceptable interconnection and transmission wheeling agreement (s)." Section 7.02(a).
This agreement remains to be negotiated.
I After signing the 1990 Document and consistent with Cap Rock's understanding of the document, Cap Rock sc.ght alternate power suppliers. As a result ofits search, Cap Rock entered into a contract with West Texas Utilities (WTU). Under the WTU contract, Cap Rock will buy its full requirements for electricity for its entire system from WTU.
Cap Rock will save about 20 per cent by buying the electricity from WTU. The savings averages about $2bO,000 per month. Cap Rock's end use erstomers will receive these savings immediately after Cap Rock begins buying WTU electncity. The WTU purchase will begin on 12:01 a.m. February 1,1992.
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Cap Rock Electre Cooperstrve, Inc. vs. Tomas LMrties Electre comoany. Inc.
Phraff 3 (MgrW Pettuun Pagt i I
l Cap Rock has timely told TUEC that Cap Rock will and the 19o3 Contract as of 12.01 a.m., February 1.1992.
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, TUEC electrically surrounds Cap Rock. At present, any electncity from a utihty other than TUEC must Oow on TUEC's transminion lines connected to Cap Rock's substations.
Electncity must be used at the instant it is generated. It can not be stored. TUEC's cooperation is essential for the WTU purchase since TUEC can physically prevens WTU's electneity from reaching Cap Rock. TUEC must reduce its generation to the same degree and at the same instant that WTU increases its generation to meet Cap Rock's requirements. Otherwise, WTU cannot cause electricity to be delivered to Cap Rock and that incremental electricity will be disbursed throughout the other electric systems in Texas.
I TUEC has informed Cap Rock that TUEC expects to continue as Cap Rock's full requirernents supplier aRer the termination date of the 1963 Contract. TUEC has refused to negotiate as to the content of Exhibits "A" and "B" as well as the other agreements contemplated in the 1990 Document. TUEC has refused to cooperate in providing metenng and telemetry for third party suppliers, and other normal control area procedures to allow the tranuetion to occur. TUEC also has stated it will not back down its generation to allow WTU to Atrnish electricity to Cap Rock.
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Cap Rock Electre Cooperatra inc. vs. Texas Utat>*s Electre Comoany. inc.
Pwmars OW Pomm Page 7 I
i IIL Request fur Declaratory Judstnent Fhwt enuw of Actinn Under the Uniform Declaratory Judgments Au (Declaratory Judgments Act;.
Chapter 37 of the Texas Civil Practice and Remedies Code, Cap Rock requests that the eeurt Gnd the 1990 dticument is not enforceable not binding since essential condition precedents required to make the document complete have not been negotiated and executed The execution of Exhibits "A" and *B* are essenual to the formation of a complete and binding agreement between Cap Rock and TUEC. The 1990 Document is incomplete we.hout these exhibits. There is no way to determine the Points of Deaivery and the Contract Demand within the four corners of the document without completed Exhibits *A" and 'B.*
Since the exhibits remain to be negotiated and executed, there is no binding or enforceable contract.
I Therefore, Cap Rock requests an order from this court Onding the 1990 Document is neither binding nor enforceable.
I Semnd Caume of Action in the alternative, without waiving the above, but.nsisting on the same, Cap Rock requests under the Declaratory Judgments Act that the 1990 Document is not a valid or binding contract. On its face, the 1990 Document is illusory. It lacks the necessary and essential terms and conditions required for its enforcement.
I The facts stated above show, at best, the 1990 Document is an " agreement to agree" in the future on a serits of material issues. Such agreements are neither binding nor enforceable in Texas. Therefore, Cap Rock requests an order from this court finding the I
can _ _ _.t~.. m e.. -. a, = g,
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1990 Document is neither a binding contract nor does it have any force and etTect between l
Cap Rock and TUEC.
Thini Cniiw of Actinn i
in the alternative, without waiving the above, but insisting on the same, Cap Rock requests under the Declarstory Judgments Act that the court find the 1990 Document n not enforceable since it vtolates the Statute of Frauds.
I rotuh Cnitw of Action I
In the alternative, without waiving the above, but insisting on the same, Cap Rock requests under the Declaratory Judgments Act that the court find the 1990 Document not to be a binding contract. There was no meeting of the minds of the parties to the essential terms of the document.
I As explained above, the 1990 Document Exhibits "A" and "B" are to be specified on the effective date, Cap Rock informed TUEC that for Exhibit "A," Cap Rock will spec >if no Points of Delivery and will only require wheeling services from TUEC. The purchase Contract Demand will be zero. TUEC's interpretation is that all of the Points of Delivery under the 1963 Contract shall be incorporated onto Exhibit "A" an of the effective date. This is contrary to the 1990 Document itself which in Section 10.02 that states the 1963 Contract will
" continue until terminated in accordance with their respective terms, at which time said agreen ents shall have no force or effect whatsoever." TUEC's interpretation would make the contract a full requirements contract. The ability of Cap Rock to specify the Points of l
Delivery, if any, on Exhibit "A" is a material term and condition of the 1990 Document.
Without this option, Cap Rock would not have signed the 1990 Document.
I Cao Rock Electre Cooperatrve, Inc. vs. Texas utmos Electre comoany. Inc.
PWraffs 0,1 gem PetMen Page 9 I
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I There is no meeting of the minds on this and other material and essential matters f the 1990 Document, it cannot be a binding contract. Cap Rock requests the Court to enter an order Onding the 1990 Documerit not to be a contract because of the failure to reach agreement on materlak matters.
I Fifth Cayr of Acdnn In the alternative, without waiving the above, but insisting on the snme. Cap Rock requests under the Declaratory Judgments Act, that if the court Ands the 1990 Document to be a binding contract, that the court declare it not to be a full requirements contract.
I As explained above, TUEC has taken the position that the 1990 Document is a full reqmrements contract. Cap Rock believes the 1990 Document allows Cap Rock to specify the number,if any, of the Points of Delivery and the amount,if any, of Contract Demand.
I Cap Rock requests the Court to enter an order Onding that if the 1996 Document is a l
binding contract, that Cap Rock can enter any, or none, of its Delivery Points on Exhibit "A" and can enter another resource to meet all of Cap Rock's needs on Exhibit "B."
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s IV. Raquest forTemporary Restmining Onler Tempomry and Permanent injunction Cap Rock has timely notified TUEC of Cap Rock's intent to terminate the 1963 Contract. Cap Rock informed TUEC of Cap Rock's intent to take all of its electric I
reqturements from WTU at the end of the 1963 Contract. TUEC told Cap Rock that TUEC will not provide metenng and telemetry points, will not provide normal control area services, will not reduce its generation to allow WTU to increase to serve Cap Rock and will not allow WTU to wheel its eleetncity over TUEC's transmission lines.
TUEC's refusal to back down its generation and to prohibit wheeling violates the last peaceable status quo..the termination of the 1963 Contract. TUEC's action will cause irreparable harm to Cap Rock and its end use customvis. Cap Rock, and, in turn, its member customers, will pay more for electricity than what it would pay if WTU provides the electiicity. Cap Rock also faces the possibility that the Public Utility Commission of Texas will disallow the pass through to Cap Rock's customers of TUEC's excessive cost of power. This excessive TUEC power cost places.'ap Rock at a disadvantage to compete for customers in the dually certified areas. It also places Cap Rock at a disadvantage to attract new customers to its service area. Cap Rock has no adequate remedy at law. The damages are continuing and incalculable.
I Cap Ruk requests the court to gratit Cap Rock a temporary rotraining order without notice to TUEC. The crder (i) would restrain TUEC, its agents, servants and g
l u
employees, from directly or indirectly interfering with the contract between WTU and Cap Rock,(ii) would require TUEC to reduce its generation to allow WTU to provide electricity to Cap Rock and (iii) would require TUEC to wheel WTU's electricity to Cap Rock. - Cap l
Rock shall,in turn, pay TUEC a proper wheeling fee.
\\i Cap Rock EIectre Cooperatwo, he. vs. Tenas Utilities Electre Company. (*:.
PWnef t Orrgrad Petun Pope ti LI c
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e Upon hearing, Cap Rock requests the court to enter an order making the temporary restraining order and injunction permanent.
V.1%yer for Relief Cap Rock requests that TUEC be cited to appear and answer and aner final heanng the court enter s.n order:
1. Finding that essential conditions precedent to the 1990 Document havr at been met and that there in no binding contract.
2. In the alternative, finding that the 1990 Document is illusory and not a binding I
rentract and is of no force and effect on either Cap Rock or TUEC.
3. In the alternative, finding that the 1990 Document is not enforceable since it violates the Statute of Frauds.
4. In the alternative, Onding that the 1990 Document fails to set forth sufficient matenal and essential tenns and conditions and that the 1990 Document is not a binding contract and is of no force and effect on eith.or Cap Rock or TUEC.
5. In the alternative, nnding that if the 1990 Document is a binding contract, that Cap Rock can enter any number, including none, as the Delivery Points on Exhibit "A' and can enter WTU as another resource to meet all of Cap Rock's electric requirements on Exhibit "B".
I Cap Rock further tcquests this court to anter an order granting Cap Rock's request for temporsry restraining order, temporary injunction and permanent injunction to prevent TUEC from taking any actica to interfere or prevent Cap Rock from receiving electricity from WTU, Cap Rock further requests this court grant such other and further relief to which Cap Rock shows itself entitled to receive either at law or in equity.
I Cap Rocx Electre Cooperatrve, Inc. vs. Texas Utdmes Electre Company. Inc.
Ptsersef's orieust Pettum Page 12 I
g-pedully submitted, I
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' vfA6K+_t'J__8J.4cc.' \\ ;
Richard C. Balough
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163 West Sixth Street j
A'ustin, Texas 78703 I
(512)477 7896
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Fax:($12) 477 8657 V
Ststa Bar No. 0165S500 I
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__,.____x___
f Morgan, Ward, Leeton & Martin I
Suite 700,306 Wo.t Wall P. O. Box 1271 Midland Texas 79702 (915)683 0803 I
Fax:(512) 682 0502 State Bar No. 13064500 Tom W. Oregg, Jr.
P. O. Drawer 1032 I
San Angelo, Texas 76902 (915) 655 9188 Fax:(915)655 9180 State Bar No. 0&t30000 Of Counsel:
I Mark J. Yudof 6302 Shadow Mountain Drive Austin, Texas 78731 I
(512)345 2669 State Bar No. 22232500 I
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can e m e. _ c - - a.... e.1..a. -. a g g e e,
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I VFRIFICATION I
STATE OF TEXAS l
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COUNTY OF TRAVIS i
BEFORE SIE, the undersigned Notary Public, on this day personally appeared Steven E. Collier, who, being by me duly sworn on oath deoosed and said that he is the director of power supply and regulatorv afTalrs for Cap Rock Electrie Cooperative and that he has been duly authonted by Cap Rock Electric Cooperative, Inc., to be its agent in the above styled and numbered cause; that he has read the above and foregoing PlaintitTs Original Petition; and that every statement contained therein is with.n his personal knowledge and is true and correct.
l l/t-4 i
r STEVEN E. COLLIER SUBSCRIBED AND SWORN TO BEFORE StE, on the day of December.
I 1991, to certify which witness my and and otTicial seal.
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6.w, N= so. e i.
THERESA ANN ALBA
-Notary Public in and for the Sta,te, of Texas
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Sly commission expires: 9.
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l Cap Rock Electre Cooperatrve, Inc. vs. Texas utdities Electre Comaany lac.
mecott e Ongr.W Penen Page 14 i
CXHIBIT "A#
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5 s
POWER SUPPLY AGREEMENT DE7 FEEN g
Tens cTzI.zTzEs EI.Ec Rze coxeun 9
AND CAP ROCK ELECTRIC COOPERATIVE,. INC.
I o m o A e,,m.,
1,,,
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1 POWER CUPPLY AGREEMENT g
BETWEEN 5-TEXA5 UTIL2 TIES ELECTRIC COMPAN'.t CAP ROCK ELECTRIC COOPERATIVE, INC.
TABLE OF CONTENTS ARTICLE I.
DEFINITIONS 1.01
" Contract Danand" 2
1.02
" Control Area" 2
i 1.03
" Cost of Service Study" 2
l 1.04
" Default" 4
1.05 "ERCOT" 3
1.06 "ERCOT Operating Guidhs".
3 1.07
" Firm capability" 3
1.08
" Firm Power Resource" 3
1.09
" Metered Demand" 3
1.10
" Metered Energy".
3 5
1.11
" Points of Delivery".
4 1.12
" Points of Interconnection" 4
'.13
" Power Supply Resources" 4
g
' g 1.14
" Schedule Period" 4
1.15 "TU Electric Capacity" 4
4 1.16 "TU Electric Energy".
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4 1.17
" Working Day" 4
ARTICLE II.
EFFECTIVE DATE, l.
TERM AND NOTICES 2.01 Effective Date.
5 2.02 Tarn 5
2.03 Power Supply Resources 6
I, _
2.04 Ncticas - for Changes in Purchases of Fuer and Energy.
7 g'
2.05 Removal of Specified Points of Delivery 8
ARTICLE III.
SAL 3 0F POWER AND ENERGY SY TU ELECTRIC AND PURCHASE BY CAP ROCK 3.01 Full Requirements Power and Energy.
9 3.02 Partial Requirements Power and Energy 10 3.03 Load Growth
'4 3.04 Unintentional Energy.
14 3.05 Rate Schedulu 15 3.06 Charactoristics of Power and Energy 15 3.07 Points of Dalivery.
15 3.08 Contract Demand 17 i
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l 3.09,
Idicd Focilitics.
3 3.10, Change of Voltage
9 3.11 Facilities at Points of Delivery.
o 3.12 Interconnection or Parallel Operations with l
Other Suppliers
o
[
3.13 Forecasts y
3.14 Right of Access
}
3.15 Changes in the P ro'.'is i o n of Power and Energy.
2 ARTICLE IV.
BACKUP, STANDBY, EMERGENCY AND SCHEDULED KAINTENANCE POWER 4.01 Loss of Firm Power Resource
4 4.02 Emergency Power
5 l
4.03 Curtailment Plan.
26 7
4.04 SchNduled Maintenance Power 27 4.05 Limitations on Emergency and Scheduled
(
Maintenance Power
7 W
4.06 Ner and Energy.
27 49fCLE V.
SCHEDULING 5.01 a
. of Power Supply Resources
S 5.02 Notice of Schedulec to TU 23 a
5.03 in Delivery Rate.
9 5.04 Baunup Resources.
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9 5.05 TU Electric Execution of Schedules 29 5.06 Scheduling and System Modification Charges 30 5.07 Term of Scheduling.
22 1,
5.08 Full Requirements Points of Delivery af ter Scheduling.
23 ARTICLE VI.
REGULATI N SERVICES, AVAILABILITY OF EMERGENCY AND SCHEr.ULED MAINTENANCE BULK PO1rER AND DELIVERY OF POWER AND ENERGY 6.01 Regulation Services 33 6.02 Availability of Emergency and Scheduled Maintenance Bulk Power.
34 ARTICLE VII.
TRANSMIS8ICN WHEELING AND DISTRIBUTION SERVICES
[
7.01 Wheeling in Connection with Scheduling 25 7.02 Wheeling Af tur Can Rock Becomes a Control Area.
25 7.03 Transmission Arrangements with Third Parties 37 ARTICLE VIII.
BILLING 8 AND DEFAULT ii l
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8.01,
billings and Paymonto 37 8.02 Billings and Payments Subject to Correction.
I 37 8.03 Notice of Default 23 8.04 Failure to Cure Def ault 8
8.05 Specific Pertermance and Injunctive Relief 35 8.06 No Waiver 39 8.07 Indemnification 39
. 8.08 Bankruptcy.
I 42 8.09 Non-Exclusive Remedy.
43 ARTICLE II.
INTRASTATE OPERATIONS
. g 8
9.01 Interstate Commercs 43 9.02 Failure to Comply 44 8
9.03 Specific Performance 45 9.04 Bona Fide Emergencies 45 I}
ARTICLE Z.
MISCELLANZOUS PROVISIONS 10.01 Amendment 45 10.02 Entirety of Agreement and Prior Agreements Superseded.
45 10.03 Successors and AsAigns 46 10.04 Taxes 47 10.05 Agreement to Control 48 10.06 Servica Regulations 48 10.07 Governing Law and Venue 48 h
10.08 Notices 49 10.09 Interruption of Service 50 10.10 No Third-Party Beneficiaries.
50 l
10.11 Multiple Counterparts 5C W
10.12 Headings.
51 10.13 Severability.
51 h
10.14 Agreements to be Negotiated in Good y
Faith 51 10.16 Mutual Release.
52 g
10.17 Withdrawal of Participation and Dismissal of g~
Litigation.
52 10.18 Conditions Precedent 53 I
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LIST OF EIHIBITS
(
Exhibit A Points of Delivery Exhibit B Power supply Resources xhibit C E
' css Facters Exhibit D Cap Rock Curtail.ent P'.an Exhibit E Mutual Release Exhibit F Notice of h'ithdrawal I
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POWER J.RFPLY AGREEMENT BETWZRE TEXA8 UTILITIES ELECTRIC CO)iEMD(
W CAP ROCK ELECTRIC COOPERATIVE, !NC4 This Power Supply Agreement
(" Agreement")
. s made and l
entered into as of the 8th day of June, 1990, by and between Texas Utilities Electric Company ("TU Electric"), a Texas corpcrati:n, and cap Rock Electric Cooperative, Inc.
(" Cap Rock"),
a Texas coeperative corporation, (each hereinafter so=etimes referred Oc individually as " Party" or both referred to collectively as the
" Parties").
WITNESSETH:
hHEREAS, Cap Rock is a full requirerents wholesale cust:mer of TU Ilectric; and
WHEREAS, Cap Rock desires to develop alternative power suppiy arrangements, including the purchase of power from suppliers other than TU Electric, as well as construction of Cap Reck's own I
genere. tion and transmission, and obtaining the necessary regulatory approvals in connection therewith; and tTHIREAS, Cap Rock intends to pursue development of control area arrangements; and
WHEREAS, Cap Rock expects to make such power supply arrangements f or Lone Wolf Elr.ctric Cooperative, Inc.
(" Lone Wolf")
dalivery points in the avant that cap Rock and Lone Wolf =erge or otherwise consolidate; g
NOW, THEREFORE, in reccgnition of tho f orogoing, the Parties hereby agree as follows:
ARTICLE I.
DEFINITIONS The following terms, when used herein and in the Exhibits attached hereto, shall have the neaning specified below, except as may :thervise be expressly set f:rth :.n this Agreement:
1.01
" Contract Demand" shall mean the maximum amount of power and I
energy expressed in kilowatts (0:ntract Kw) that Oap Rock projects
TU Ilectric will be required to provide at cach Point of Delivery.
Contract Demand will be specified on Exhibit A,
which may be changed from time to time as provided in Section 3.08 hereof.
1.02
" Control Area" shall mean an area within ERCOT which has contractually ar6d electrically prescribed boundaries at transmission voltages whose nominal operating voltage is at leas:
60,000 volts when n.easured phase-to-phase, is capable of instantaneously matching generation and load within such area and is established and operated in accordance with prudent electric
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utility practices, including all provisions of the ERCOT Operating Guides.
1.o3
" cont of servico study" shall mean that study undertaken by TU Electric to allocate its system cost to its rate classes as mest recently approved by the Public Utility Commission of Texas
( "PUCT") in a general rate case.
1.04 "Def ault" shall mean the f ailure of Cap Rock or TU Electric to make any payment or perform any obligation in the time and I
2 1
mannor providCd in this Agrocm:nt.
"YRCOT" shall mean the Electric Reliability Council of Texas 1.03 l
cr its successor (s).
"ERCOT operating Guides" shall :sean these operating guides 1.06 prepared and adopted by the operating Subcommi: tee of ERCOT and approved by tha Technical Advisory C:=mittee of ERCOT, the purpose of wn ch is to outline the mutually agreed upon practices to ':e followed in operation of the interconnected systems of the re=cer utilities of ERCOT.
" Firm capability" shall mean the maxi =um capacity expressed 1.07 in negawatts (exclusive of installed and spinning reserves) for sach Firm Power Resource specified on Exhibit B.
1.os "Fira Power Resource" shall mean a Power Supply Resource fully backed up by an electric utility member of ERCOT, other than Tc Electric which (1) is available at all times, even under adverse conditions, (ii) includes both installed and spinning reserves, and (iii) is of a level of firmnesa not less than the ERCOT utility's firm native load customers.
1.09
" Metered Demand" shall mean the total metered demand at a
Point of Delivery (adjusted for
losses, if any, bet. ween One metering point and the Point of Delivery), excluding demand at subtract mater pointa. if any, serving TU Electric customers.
1.10
" Metered Energy" unall mean the total metered energy at a
Point of Delivery (adjusted for
losses, if
any, between the metering point and the Point of Delivery), excluding enorgy at subtract matar points, if any, serving TU Electric custo=ers.
3 l
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1.11 "Pointo of Dolivory" shall scan all points within TU f
Electric's Control Area at which TU Electric maintains an electrical connection with Cap Rock existing on the effective date hereof, each of which Points of Delivery shall be specified On Exhibit A hereto, which shall be amended fr:m time to ti:e in acecrdance with Section 3.07'b) hereof.
1.12
" Points of Interconnection" shall mean each P0 int at vnich 4
TU Electric maintains an electrical connection with Cap Rock 's 0:ntrol Area, at a nominal voltage level of at least 60,000 volts when measured phase-to phase (except at such points and *:r such I
periods as provided in Section 7.02 hereof).
1.13
" Power supply Resources" shall mean Cap Rock's Firm Power Resources and/or economy energy resources specified frog. ti=e to time on Exhibit B hereto pursuant to the provisions of this Agreement.
1.14
" Schedule Period" shall mean a period of one (1) calundar day unless such day is not a working Day, in which evera the Schedule Period shr,ll be all :ensecutive days which are not Working Days plus the first following Working Day.
1.15 "TU Electric Capacity" shall mean that amount of capac:.ty which TU Electric will provide to cap Rock as defined in Section 3.02(a) hereto pursuant to the provisions of this Agreement.
1.16 "TU Electric Energy" shall mean that amount of energy which TU Electric will provide to Cap Rock as defined in Section 3.02 (b) hereto pursuant'to the provisions of this Agreement.
1.17
" Working Day" shall mean any day from Monday through Friday 4
\\
l
thich is not a holiday rccognized by TU Eloctric which holidays shall be specified by TU Electric within 30 days after the execution of this Agreement, such holidays to be subject to en3nge by TU Electric upon reasonable advance written notica.
ARTICLE II.
EFFECTI7E DATE, t
TERM AND NOTICES 2.01 Effective Date This Agreement shall become affactive, with respect to tap
Rock, frcm and after Cap Rock's termination of its full require =ents Agreement for Purchase of Power, dated June 2,
1963, y
as amended, in accordance with its terms.
8 This Agreement shall become effective, with respect to Lone
Wolf, from and after the termination of Lone Wolf's full requirements Agreement for Purchase of Power dated July 2,
1963, as amended, in accordance with its terms; provided, however, that in the event Cap Rock and Lone Wolf do not consolidate within the time specified in Section 3.07(b)(iv) hereof, all Cap Rock's rignts and TU Electric's obligations with respect to Lone Wolf provided for herein shall terminate and be of no further force or effect.
2.02 Tara l
The torn of this Agreement will be 10 years.
Cap Rock will have the right to terminate this Agreement on three years' written notice in years one through five and on five years' written notice thereafter.
TJ Electric will have the right to terminate this Agreement s
I
ott notico aquel to tho balanco of tho ton-yoor term in years eno through five, and on five years' notice thereafter, Af ter the expiration of the fif th full year, this Agree =ent will be automatically extended fr== year to year unless terminated as provided above.
2.03-Power Supply Resources l-l All Power Supply Resources shall be identified on Exhibit B,
which shall
include, in addition to the other infcrmation specified therein, the Fi= Capability of each Firm Power Resource.
None of the characteristi:s of the Power Supply Resources may be changed, nor shall any Pcwer Supply Resource be added or deleted from Exhibit B, except as specifically authorized by this Section 2.03, or Sections 2.04, 3.15 ( a) ( i) or 5.01(b) heroof.
l Cap Rock may, notwithstanding the notice requirements of Section 2.04, replace a Fir: Power Resource with another Firm Pcwer i
Resource so long as the replacement has a term no longer than the remaining term of the replaced Tim Power Resource, has the same Firm capability as the Firm Po'ver Resource so
replaced, is substantially identical with respect to, among other things, the direction and pattern of flow of the power and energy, loadings on TU Electric's transmission facilities, and i= pacts en its generation dispatch, and such replacement is otherwise satisf actory to TU Electric.
The Firm Pcwer Resource so replaced shall be deleted from Exhibit B.
Cap Rock may not, without the notices required by Section 2.04 hereof, substitute Firm Power Resources or increase the Firm capability to be taken under each such Firm 6
l l
i powcr Recourco.
The nu::tber of Power Supply Resources shall never excaad six at any one time and shall not be scheduled or delivered vinhout ene giving of the notices provided for in Section 2.04.
, cap Rock shall provide a copy of all Firs Power Resource agreenent(s) or generation ownership / entitlement agreement (s) to i
TU Electric no less than 60 days prior to the date it wishes to begin receiving power from such Firm Power Resource.
Oap R:ok =ay redact such portions of the foregoing agreements as is necessary to avoid the disclosure of confidential infor=ation, if any;
provided, however, that such redaction shall not prevent TU Electric from having access to such information as it may reasonably require to insure that the power being purchased and/or generation ownership /entitleeent agreement (s) meat the require =ents of this Agreement; provided further that if such inf:rmati:;n includes confidential infor=& tion, TU Electric will agret not to use f.he same for any other purpose and not to disclose such confidentinl information to any other person without Cap Rock's
consent, unless required to do so by a court or regulatory I
authority of competent jurisdiction.
2.04 Notices for changes in Purchasec of Power and Energy Cap Rock will have the right to reduce load supplied by TU Electric under this Agreement on three years' advance written notice in years one through five, inclusive, and on five years' advance written notice thereaf ter.
Af ter year five, Cap Rock =ay, upcn the giving of three years' advance written notice, reduce or i
,g l
increase, by not more than plus or =inus lot, the Firm Capability h
supplied by a Firm Power Resource (and thereby increase or reduce respectively its lead supplied by TU Electric), under a previously given notice.
All de=and determinat:cns under TU Electric's Rate WP Whelesale Power, or its successor, associated with and resulting from usage prior to the date upon which such reduction is ef f ective will be waived for each load reduction at each such Point of celivery associated with and following the expiration of the foregoing cap Rock notice (s);
otherwise such billing derand determinations shall apply.
TU Electric will have the right to reduce load to be l
~
supplied under this Agreement upon advance written notice equal to the balance of the ten-year term in years one through five, inclusive, of this Agreement and upcn five years' advance written notice thereafter.
All notice (s) not associated with the addition of a Fir =
Power Resource given by either Party to the other pursuant to this section shall specify the Point (s) of Delivery at which such reduction is to occur and, for each such Point (s) of Delivery, the I
amount of such reduction.
--g 2.05 Reisoval of Specified Points of Delivery Subject to the limitations described below, all (but not part) of the power and energy requirements of Cap Rock's customers at nine Points of Delivery (Pembrook, St. Lawrence, stiles, Knott, Ackerly, Vealmore, Coahoma, La Mesa and Schwartz) may, during years one through five of this Agreement, be served by another electric 8
1 utility, provided cap Rock has first given TU Electric twenty-four nonths' advance written notice of such service to one or core of the Points of Delivery identified above by such other electric utility and such service at any such Point (s) of Delivery has com=enced prior to June 1 in the year of such notice, in which j
event the demand determinations from TU Electric's Rate WP Wholesale Power, or its successor, shall not be i= posed from and af ter the commencement of such 9ervice at the Point (s) of Delivery for which Cap Rock has given the required notice.
The Contr.ct Demand (s) at the Point (s) of Delivery for which notice is given pursuant to this Section 2.05 may not, in the aggregate, exceed 30 MW of Contract Demand (as specifiad on Exhibit A on the effective date of this Agreement).
If required by the provisions of Section 3.12 or Article IX hereof, Cap Rock will disconnect each such Point
-of Delivery from TU Electric.
ARTIOLE III.
SALE OP POWER AND ENERGY BY TU ELECTRIC AND PURCHABE BY CAP ROCK
. 3.ol Full Requirements Power and Energy Except as otherwise permitted by this Agreement, Cap Rock shall purchase frea TU Electric and TU Electric will sell to Cap Rock all of Cap Rock's power and energy requirements, including normal load growth, at each of the Points of Delivery for resale to Cap Rock's customers.
Cap Rock may, upon reasonable advance written notice, elect to retain one or more of its Points of Delivery (having voltage levels of less than 60,000 volts) which 9
l l
axist on tho offcctivo dato of this AgroomOnt as full requirenents points of Delivery pursuant to this Section 3.01 (notwithstanding the purchase of partial requirements power pursuant to Sect:.on 3.02 bel:w at Cap Rock's remaining Points of Delivery), in which event, upon the giving of the n0tices required by Secti:n 2. 04 hereof, Cap Rock may, from time to time, convert :pe or more of such Points of Delivery to partial requirements Points of Delivery
u. der the provisions of Section 3.02 hereof.
3.02 Partial Requirements Power and Energy
!n the event and to the extent Cap Rock gives tM requisite notice pursuant ;o Section 2.04 hereof and during the peri:d(s) that TU Electric may be required to schedule under Article v hereof, Cap Rock shall purchase from TU Electric and TU Ele :rie will sell to Cap Rock, at each of the Points of Delivery (except Points of Delivery which are retained as full requirements Points of Delivery pursuant to Section 3.01 above (the "Rotained Tull Requirements Points of Delivery"), unless and until such Points of Delivery become partial requirements Points of Delivery as permitted therein),
partial requirements power and energy for resale to Cap Rock's customers.
Paruial requirements power and energy shall be determined as fellows:
(a)
"TU Electric Capacity" shall mean capacity equal to the difference between the Metered Demand during the billing interval on each of the metering points at each I
Point of Delivery (except the Retained Full Require =ents Points of Delivery) delivering power and energy to Cap Rock g
10
B for rocolo cnd a portion (CP,) of ;ho Firm Capability of Cap Rock's Firm Power Resources, if any.
The quantity CP, shall have the following definition:
AF, x FPSR. x [ (1/TL,) g ( 1 / D L,) J '
CP,
=
.Where, AF, The Metered Energy for each Point of
=
Delivery (except the Retained Tull I
Requirements Points of Delivery) during l
each hour of the current billing conth divided by the sum of the Metered Energy for all cap Rock's Points of D61ivery l
(except the Ratained Full Require = ants Points of Delivery) during said hour.
r The capacity (MW) of Cap Rock's Firm FPSR.
=
Power Resources actually scheduled and I
delivered to TU Electric's transmission system during a given clock hour on l
behalf of Cap Rock, in accordance with I
.he terms of this Agreement, coincident with the Metered Demand at the Point of j
Delivery during the same hour of the billing month.
l TL, The TU Electric transmission system
=
demand loss factor as contained in TU Electric's Cost of Service Study =ost
(
recently approved by the PUCT.
At the time of execution of this Agreement, this I
factor is 1.03063139 as shown in Exhibit C attached hereto and made a part hereof.
l The TU Electric primary system demand DL,
=
loss f actor as contained in TU Electric's l
Cost of Service Study most recently
,I approved by the PUCT.
At the time of execution of this Agreement, this factor l
is 1.05802362 as shown in Exhibit C
attached hereto and made a part hereof.
l (b)
"TU Electric Energy" shall mean energy, at each I
'The f actor "(1/TL,)" shall be used for Points of Delivery at nominal voltages greater than or equal to 60 Kv.
The factor
" ( 1/ DL,) " shall be used for Points of Delivery at voltages less
[
than 60 Kv.
I l
Point of Dolivory (excopt tho Full Rcquiremonts Points of Delivery), equal to hourly Metered Energy less the sum of:
1 (i) a portion (IPH -- )
f the energy scheduled and delivered ta g
pursuant to any economy energy scheduling agent agreenents entered into between the Parties and (ii) a porti:n (Ipg,)
of the energy fr:= cap Reck's Firm Power oscurces, if any, c
The quantities EPH., and EPH, shall have the f ell wing g
definitions:
EPHta AT, x ECONHt
=
X 5 (1/Il ) E (1/Ul ) 3 e
e
EPH, AF, x FPSRH X [ (1/IL ) C (1/ DL,) ) *
=
1 1
e
where, 8
AF, shall have the same meaning as such factor in the preceding sub-section 3.02 (a).
The average transmission energy less I
TL,
=
f actor as used in the determination by the PUCT of TU Electric's fuel factors 3
then currently in ef fect f or transsission 5
voltava lina lo8585-At the ti== of the execution of this Agreement, this factor is equal to 1.024789 as shown in Exhibit I
C attached hereto and made a part hereof.
The average distribution energy l'os s DL,
=
! actor used in the determination by the PUCT of TU Electric's fuel f acters then currently in effect for primary voltage line losses.
At the time of the execution of this Agreement, this factor is equal to 1.051741 as shown in Exhibit C attached hereto and made a part hereof.
The scheduled generation (MWH) actually ECONH
=
g scheduled and delivered on behalf of Cap I
Rock, as providad in any economy energy
For Points of Delivery at nominal voltages equal to or greater than 60 Kv, the f actor "(1/TL,)" shall be used.
For Points of Delivery at nominal voltages less than 60 Kv, the factor
"(1/DL,)" shall be used.
12 I
l 5
scheduling agent agreements entered into between the Parties, during said hour.
FPSRH The energy (MWH) asscciated with Cap
=
t Rock's Firm Pcwer Resources actually scheduled and delivered on behal* of Cap Rock in accordance with the terms of this Agreecent during said hour.
When Cap Rock becomes a control Area pursuant to Section 6.01 l
hereof, the partial requirements power and energy to be purchased by cap Rock and sold by TU Electric shall be all of Cap Rock's power and energy requirements as provided in this Agreement, less the a=ounts being supplied from a source other than TU Electric f or which notice has been given pursuant to Section 2.04 hereof, the accounting for which shall be determined pursuant to a mutually satisfactory procedure.
Such power and energy shall be delivered by TU Electric to Points of Interconnection under a mutually acceptabla schedule, at such times and at such capacity factors, ramp rates, and other factors as are mutually agrecable and consistant with good utility practices within ERCOT. The foregoing shall not apply to regulation power and energy provided by TU Electric pursuant to the provisions of Section 6.01 hereof or to the full quirements power and energy delivered to Cap Rock Points of Delivary, if any, remaining in TU Electric's Control Area.
In the event Cap Rock movas one or more of its Points of Delivery (other than a former Point of Delivery served by another electric utility pursuant to Section 2.05 hereof) from the control x
Area of TU Electric to the control Area of another electric utility, TU Electric will (if there is no load reduction as a consequence thereof), upon reasonable advance notice, continue to 13 1
t sell such wholesale power and energy to Cap Rock for such Point (s) l of Delivery in accordance with the provisions of a mutually acceptable power supply agreement at Rate WP Wholesale Power, I
or its successor, notwithstanding the provisions of special Condition
!!o.
1, or its equivalent, of TU Electric's preposed Rate WP Wholesale Power pending bef oro the PUCT in Docket tio. 9300 on the I
date hereof.
3.03 Load Growth
'"U Electric Capacity and TU Electric Energy supplied hereunder shall include normal load growth
!or each Point of Delivery specified in Exhibit A hereto.
3.04 UnintentioneA Energy In the event that, in any hour, the total energy scheduled and delivered to TU Electric f r== cap Rock's Power Supply Resources is in excens of the Metered Energy at any Point of Delivery in that hour, TU Electric shall c =pensate Cap Rock f or said excess, up to but not = ore than three percent (31) of the Metered Energy in that hour, by way of credit, in TU Electric's sola discretion:
(a) as a direct replacement of TU Electric Energy I
purchased by cap Rock under Rate WP Wholesale Power during the monthly billing period in which said hour occurs, or (b) in an amount equal to ninety-five percent (95%) cf TU Electric's actual avoided enerQy cost in that hour, iI against Cap Rock's bill for TU Electric Energy purchased by Cap Rock under Rate WP Wholesale Power during the conthly period in which isaid hour occurs, g
u I
E otherv100 TU Electric shall have no rooponoibility or obligation to pay or otherwise compensate Cap Rock, directly or indirectly, for any energy scheduled to any Point of Delivery during any hour
)
which is in excess of the Metered Energy c such Point of Delivery l
during such hour.
3.05 Rate schedule l
It is distinctly understood and agreed that the conthly rate of charge (including any charges for power and energy in excess of l
Contract Demand and any demand determinations aff acting billing demand) for all power and energy whien Cap Rock shall purchase from TU Electric and TU Electric is required to sell to Cap Rock under this Agreement; shall be pursuant to TU Electric's Rate WP Wholesale Power, or its successor, as the same may from time to time be fixed and approved by the PUCr.
3.06 Characteristics of Power and Energy The power and enargy TU Electric is required to deliver to Cap Rock under this Agreement will be of the character connonly described as three-phase, 60 herc, at a voltage for each Point of Delivery as specified on Exhibit A, and with reasonable variation in voltage and frequency to be allowed.
3.07 Points of Delivery (a)
Power and energy will be sold by TU Electric and purchased by Cap Rock under this Agreement at the Points of Delivery identified on Exhibit A hereto in the amounts specified in Sections 3.01, 3.02 and 3.03 hereof.
(b)
Subject to the provisions of Section 3.11 hereof, 15
~~
t Exhibit A shall ba emonded from timo to timo (upon tho oxocution of the supplemental agreement provided for in Section 3.08) to :
(i) add new points of delivery required by reason of normal load gr:vth in the certificated service areas of Cap Rock (and Lcne Wolf,_if Cap Rock and Lone Wolf are consolidated within the ti.y spr,cified in Section 3. 07 (b) (iv) below), as established by the PUC-as of June B,
1990; (ii) add and/cr delete Points of Delivery resulting from the consolidation of existing Cap Rock Points of I
Delivery and/or those new points of delivery, if any, added to Exhibit A pursuant to (i) above; (iii) delete Points of Delivery moved to the Control Area of Cap Rock or another electric utility; (iv) add points of delivery served by Lone Wolf on the date hereof provided that all corporate action necessary to apprsva such consolidation has been taken by Lone Wolf and cap Rock within 90 l
days after May 15, 1990, applications are filed for approval by One FUCT and the Rural Electrification Administration ("REA") within 120 days after May 15,
1990, and the transaction is finally consummated and approved by all regalatory agencias having jurisdiction thereover within one year from the date of filing of the af:rementioned applications (unless extended by mutual agreement of the Parties); provided, however, that if approved by the PUCT and otherwise consummated within 12 months f allowing such h
filing date, failure of the REA to approve the consolidation, if otherwise consurs.atect, shall not constitute a breach of the I
foregoing provision; e.d (v) add Points of Delivery permitted by Section 3.15 (a) (ii).
Any load reductions or increases resulting I
l I
I fro 3 tiho forO90ing shall bo cubjoct to tho applicablo notico provisions'o'f this Agreement.
3.os contract Demand 4
contract Demand shall be specified for each Point of I
celivery identified on Exhibit A.
centract Demand at any Point of l
Delivery may be changed from time to time on Exhibit A, upon 12 I
months' prior written notice to TU Electric (but no more frequently than once every 12 months), as the result of nor=al lead growth or normal lead reductions (which, in either case, does not include
]
load transferred to or from anothar source, including Cap Rock) at each such Point of Delivery.
Contract Demand at any Point of Delivery may be decreased on Exhibit A by Cap Rock contemporaneously with the expiration of the notice period provided for in Section 2.04.
Contract Demand at any Point of Delivery may be increased
!I on Exhibit A as a result of purchases of power and energy pursuant i
4 g
to the provisions of Section 3.15 (a) (1) or (iii)
hereof, conte =poraneously with the expiration of the notice periods provided for therein.
Contract Decand may be established on Exhibit A for a Point of Delivery which has been added pursuant to Section 3.07 (b) (v) hereof at the expiration of the notice period provided for in Section 3.15 (a) (ii) hereof and for Points of Delivery added pursuant to Section 3.07 (b) (iv) hereof.
Contract Demand at any Point of Delivery may, if there is no load reduction, be enanged simultaneously with the addition or 17
, I I
dolction of a Point of Delivery as pe_ itted by Section 3,07(b) (ii) hereof.
f Each change in Contract Demand on Exhibit A as provided above shall be subject to the execution of a supplecent to this Agreement containing mutually satisfactory provisions, including l
any necessary changes in facilities at each Point of relivery resulting tnerefrom as required by Section 3.M hereof.
6 3.09 Idled Facilities j
Cap Rock will pay TU Electric for each transmission and i
distribution-related f acility(ies) which is rendered idle by reason of the reduction in any load covered by this Agreement.
A facility (ies) is rendered idle if such facility (ies)
(i) is no l
longer being used for the delivery of powar and energy on behalf of Cap Rock and is not, or no longer has any reasonable pr:spect of, being used on behalf of any other TU Electric customer for the l
delivary of power and energy; er (ii) is so underutili:ed by an l
existing TU Electric customer (s)
(including Cap Rock) as to require, using prudent utility practices, its re= oval for use elsewhere on the TU Electric system.
Cap Rock agrees to psy TU l
Electric for each idled facility (ies) the replace =ent c:st new (RCN) less an allowance for age and condition, plus removal ecsts, less salvage value; provided, however, f or a f acility(ies) removed for use elsewhere on the TU Electric system pursuant to (ii) above, l
Cap Rock agrees, to pay only the costs of removal and the costs of l
insta.llation of any facility (ies) replacing said removed facility (ies).
Such charges shall be reduced by the amounts, if l
)
g any, previously paid by Cap Rock (pursucnt to thG provisionc of Section 3.ll' hereof and the provisions of any wheeling agreecent(s) executed by the Parties as provided in Section 7.01 hereof) for such idled facilities.
In lieu of paying TU Electric f or the idled A
facilities as required above, Cap Rock =ay, at the sole option of TU El'ectric, purchase the idled facilities or pay TU Ilectric jg annually the reasonable carrying cost of the idled f acilities; Cap
5 Rock shall not be required to purchase or lease the idled facility (les).
3.10 change of voltage TU Electri: vill provide power and energy to Cap Rcck at each Point of Delivery at the delivery voltage specified in Exhibit A as long as such delivery voltage is available.
If TU Electric converts its facilities providing power and energy at any Point of Delivery to a different operating voltage, Cap Rock agrees to take power and energy at the changed voltage then available or bear all costs to transform the voltage from the changed voltage to that which Cap Rock stiy require.
TU Electric will give Cap Rock written notice at least two years in advance of such voltage change.
TU Electric will support Cap Rock in obtaining any Certificate of Convenience and Necessity ("CCN") necessary for Cap Rock to effect such conversion, and will not terminate service at the existing voltage to Cap Rock at the Point of Delivery until the CCN is granted and Cap Rock's conversion can be completed.
Cap Rock may, at its option, upgrade its facilities at any Point of Delivery to a higher delivery voltage than available from 19 I
.,,r
TU Electric at cuch Point of Dolivory; providcd, hovcVer, that: (i) g Cap Rock pays f or all =edifications to TU Electric's facilities that are necessary to provide power and energy to Cap Rock at such higher delivery voltage, (ii) Cap Rock gives TU Electric reasonable written notice of its desire to take delivery at such higher voltage, and (iii) TU Electric vill not be required to provide delivery at such higher voltage until all required modificatiens to TU Electric's facilities can be co=pleted.
I 3.11 Facilities at Points of Dslivery Any new or upgraded transmission and distribution-related f acilities reasonably rsquired by TU Electric in connection with servica to Cap Rock shall be at Cap Rock's sole cost and expense.
3.12 Interconnection er Parallel Operations with Other Suppliers cap Rock agrees that no portion of its transmission and l
distribution system interconnected with TU Electric vill be electrically interconnected or operated in parallel with any part or parts of a system being supplied through connection with any other supplier of electric energy, nor shall any Points of Delivery
~
be interconnected by such transmission and distribution system; provided, however, that, subject to the execution of a sutually acceptable interconnection agreement, the foregoing limitation shall not apply to any Point of Delivery which is moved to Cap Rock's Control Area or the Control Area of another electric utility.
3.13 Forecasts on January 15 of each year during the time this Agreement I
l 8
rcmcino in offcct, Ccp Rock vill provido TU Eloctric by point og Delivery and otherwish with such forecast (s) (in such foro as TU l
Electric may reasonably require) of (i) total power and energy requirements, (ii)
I-power and energy required from TU Ilectrie, (iii) changes in Power Supply Resources, (iv) changes in transmission and distribution facilities, (v) changes in transmission service arrangements and (vi) such other information as may be reasonably required by TU Electric.
Upon the furnishing of any such inf ormation, Cap Rock will appropriately designate those portions thereof which it considers to be confidential TU Ilectric will use reasonable diligence to maintain in confidence all such designated information which has not otberwise becoce publicly available.
TU Electric may furnish the foregoing g
information to the PUCT or to any other person if ordered to do so by any court or regulatory agency having jurisdiction and, to the extent required, to ERCOT for planning purposes only.
Information supplied to TU Electric pursuant to this Section 3.13 shall be for planning purposes only and shall not constitute a notice of h
reduction or load increase by Cap Rock under any provision of this load Agreement.
3.14 Right of Access g
Each Party shall give all necessary per:sission to the other to enable the agents of the other Party to carry out this Agreement and shall give the other the right by its fully authorized agents and employees to enter the premises of the other at all reasonable times for the purposes of reading or checking
meters, for 21 I
t
incpacting, tocting, ropciring, roncwing or exchanging any or all of its equipment which may be located on the propierty of the other, I
and for performing any ot."er work incident to rendering the services provided for in this Agreement; provided, hcwever, that neither Party hereto shall have any duty to inspect the equipcent, I
lines and facilities of the other.
3.15 Changes in the Provision of Power and Energy (a)
If, during the tern hereof, Cap Rock wishes to: (i) purchase power and energy from 37 Electric previously supplied from a Firm Power Resource; (ii) add a Point of Delivery previously i
=oved from the TU Electric Control Area to the Control Area of l
another electric utility cther than Cap Rock; or (iii) otherwise increase the amount of power and energy to be supplied by TU Electric at any Point of Delivery specified on Exhibit A hereto (other than normal load growth at such Points of Delivery or increases occasioned by the consolidation of two or = ore existing and/or new Points of Delivery), 31 Electric will, on three years' advance written notice, subject to the limitations of Sections 5.07 I
and 5.08 hereof, sell to cap Rock full and partial require =ents l
power in accordance with Rate WP Wholesale Power, or its successor, pursuant to the provisions of this Agreement.
(b)
If Cap Rock or TU Electric cancels this Agreement pursuant to Section 2.02 hereof, or if Cap Rock causes one or = ore of its Points of Delivery (other than a former Point of Delivery I
served by another electric utility pursuant to Section 2.05 hereof) to become a part of another Control Area (other than Cap Rock's 1
I
I control Arca) and, if thoro 10 o lead reduction in connection j _
therewith, gives the notice required by section 2.04 hereof, TU Electric will: (i) on three years' (or five years' in the case of those Points of Delivery becoming full requirements points of delivery in accordance with Sections 5.08 and
7. 02 (b) hereof) advance vritten
notice, sell to Cap Rock full and partial requirements wholesale power in accordance with the provisions of
' I Rate WP ' Wholesale Power, or its successor, pursuant to a =utually 1
acceptable agreement f or electric service (which shall not include l
the sale of scheduling or regulation services), provided that TU Electric has suf*icient bulk power available and provided the sale would not impair its ability to render adequate and reliable service to its customers er its ability to discharge prior cor.mit=ents ; and (ii) provide firm transmission wheeling, on a transaction specific basis, in accorduce with mutually acceptable interconnection and transmission wheeling agreement (s) on ter=s that fully compensate TU Electric for its costs p'"5 a reasonable return on investment, together with all costs fo;
.y additions or modifications necessary to accommodate each whee..ng transaction, provided TU Electric has adequate transmission and distribution 4
g capacity available (if distribution wheeling services are then being offered) and the transaction would not unreasonably i= pair 1
TU Electric's systaa reliability or emergency transmission capacity.
I
-Im m.
oc
,.mm, ---
AND SCREDULED MAINTENANCR POWER 23 I
4.01 Loss of Pirm Power Resource
.I TU Electric vill not provide any backup or standby service, l
includ!.nq installed or spinning reserves, nor will it plan for or shall it be obligated to serve any of Cap Rock's requirements not I
expressly specified or provided for in this Agreement, including j
the sale of power previously supplied from a Fin Power Resour:n.
In the event a Fi n Power Resource being scheduled as prov:,ded in Arti:le V hereof is not delivered for any reason, Cap Rock shall, subject to the sale of emergancy power provided in i,ection 4.01 hereof, immediately curtail load (in accordance with a curtailcent l
plan reasonably acceptable to TU Electric), in amounts equal to such undelivered Firm Power Resource unless cap Rock
=akes arrangements (satisfactory to TU Electric) to replace such undeliverad Firm Power Resource with another Firm Power Resource (which shall be deemed to be a sourca or resource for the purposes of sections A.08, 5. 'P., 5.04 and 5.06 hereof); provided, however, that in instances where the Firs Power Resourca is not delivered due solely to an emergency ceased by the failure of TU Electric's transmis#cn faullities or an eoergency caused by the fallure of transmission facilitias of another member system of ERCOT (other than the supplier of the undelivered Firm Power Resource), Cap Rock l
may (if satisfactory to TU Electric) use a source to replace suen undelivered Firn Sover Rescurce other than that provided for in section 5.01,(a) at a level of firmness other than that required by Section 5.01(b), provided Cap Rock agrees in advance to execura a I
I
j r.cnodulutg agent agroccant on tho torms provided for in section 5.06 and a mutually datisfactory short-term wheeling agreement.
Anything in this Agreement to the contrary netvithstanding, TU l
Electric shall not be required to deliver any power replacing such undelivered Firm Power Resource for a period of = ore than f ur consecutive days or the length of the emergency, whichever is less, g
and in any evegt for more than three such emergencies during any 12-month period, except in cases where the emergency is due solely to an eoergency caused by the f ailure of TU Electric's transmission se facilities, in which event the period of such delivery shall
'g continue for the entire length of the emergency and the nurler of
)l such smergencies for which such delivery shall be made will not be limited.
>I 4.02 Emergency Powe" fg Before Cap Rock becomes a Control Area and during the I
period (s) in which TU Electric may be required tc schedule Firs Power Resources pursuant to Article V hereof, and in the event a Firm Power Resource being scheduled as provided under Article V hereof is not delivered due to no fault of Cap Rock, and TV
-l Electric has power and energy available therefor, TU Electric will sell emergency power to Cap Rock in an amount equal to such I
undelivnrad Fira Power Resource for a period not to exceed tan hours at the rate specified in Rate WP Wholesale Power, or its successor, including the demand determinations under Rate VP Wholesale Power specified therein; provided, however, if the Tirn
.I Power Resource is not delivered due solely to an emergency caused 25
by tho failuro of TU Electric's transmission f acilitico or the f ailure of f acilities at Texas Utilities System operating Centar
("TUSoca), TU Electric vill sell or continue to sell such emergency l
power to Cap Rock for an additicnal f our-day peried at the sace rate as aforesaid, including the demand determinations.
I 4.03 Cu.rtailment Plan l
No later than six c:nths prior to the date cap ttock first begins taking power frem a Tirm Power Resource in accordance with the provisions of this Agreement, Cap Rock shall develop and deliver to TU Electric a mutually etcaptable curtail =ent plan, and TU Electric agrees to coeperate with Cap Rock in the development of said curtailment pian, :,dentifying lead equal to tne capacity of such Firm Power Resource to be curtailed and the =eans by which l I said curtailment plan is to be i=plemented in accordance with the 5
ar=vi *="- =' " =**=" '
2 " r
'"- =""" * " "" v2 = =" t thereupon be added as an amanciment to this Agreement and set f orth in Exhibit D hereto.
The curtailment plan may be amended from time to time by mutual agreement of the Parties, provided that, upon the addition of, ol' any increase or reduction in Firs capability of, any Firm Power Resource pursuant to Section 2.04 hereof and by no 1.1ter than ten (10) Working Days prior to the date upon which Cap Rock desires l
to begin taking power from such Firm Power Resouren, Cap Rock shall
develop, in cooperation with TU
Electric, and deliver to TU Einctriic a mutually acceptable revised curtailrant plan, to be added to this Agreement as an a:nendment to Exhibit o herato, 26 4
identifying,lood equoi to tho ecpacity of such Pirm Power Resource g
and the means by which the amended curtailment plan is to be imple=ented.
4.04 scheduled Maintenance Power
.Before cap Rock becosts a control Area ind du:*ina the peried t s) in which TU Electric nay to required to schedule Firm l
Power Resources pursuant to Article V hereof, and if Cap Rock owns or controls its own generation (located within TU Electric's interconnected system),
TU Electric shall sell scheduled maintenance power to Cap
Rock, if available, on
=utually satisf actory terms and conditions, at P. ate WP Wholesale Power or its successor, including the demand deturminations specific 1 therein.
4.05 Limitations on Envrgency and scheduled Maintenance Pavar l
TU Electric shall not be required to sell amargency or scheduled maintenance power if to do so would result in the I
curtail =ent of its native load customers, the inability to l
discharge prior commit =ents or otherwise impair its ability to rreder adequate and reliable electric service.
4.06 other Power and Energy Any power and energy taken by Cap Rock from TU Electric as a result of Cap Rock's presence in the TU Electric Control Area, not permitted by this Agreement and not resulting frem TU Electric's interruption of firm transmission service, will, among
-all other consequences provided for herein, including the Default l
provisions hereof, be paid for by cap Rock at TU Electric's Rate g
n I
a WP Wholconlo
Powcr, or ito succossor, pluo the demand determinations specified therein.
I ARTICLE V.
SCHEDULING 5.01 Scheduling of Power Supply Resources (a)
TU Electric vill schedule power from up to six Power Supply Resources (determined by source and not control area i.e.,
an electric utility generating plant, an electric utility ee:.pany (other than TU Electric) or a qualifying f acility) specified en Exhibit B horeto so long as not more than three of which resources (at least one of which shall be a Firn Power Resource) are scheduled during any 24-hour period.
(b)
TU Electric's obligation to schedule will be limited to Firs Power Resources (except when it has elected to schedule I
econcmy energy and a
mutually satisfactory scheduling agent I
agreement has been executed).
In the event TU Electric agrees to schedule economy energy, any such scheduling agent agreement (s) shall be subject to cancellation by either Party on 30 days' written notica and shall provide for charges in the same menner as set forth in Section 5.05 hereof.
h 5.02 Cap Rock Hotice of Schedules to TU Flectric Cap Rock shall notify W Electric in yriting by f acsimile communication to TUSOC, at the number set forth in Section 10.07 l
hereof, no later than 12:00 noon on the Working Day prior to the Schedule Period during which Cap Rock desires to receive power and 28
\\
I
onergy frca.cny tira Power Roccurco, which writton notico snall sper:ify the amount of energy (MWH) that Cap Rock desires TU i
Electric to schedule on its behalf during each hour of the schedule l
Period from each Firm Power Resource.
5.03 changes in Delivery Rate I
Unless TU Electric agreed otherwise, no notice given by Osp l
Rock pursuant to Section 5.02 hereof shall con *:ain more than tour changen in the delivery rate (two up and two down) in any twenty-f eur hour period for each Tirm Power Resource being scheduled pursuant to the provisions of this article, it being understood and agreed by the Parties that such changes will be acce=plished at a ramp rate of not less than two megawatts / minute nor more than ten magavatts/ minute.
I 5.04 Backup Resources Any backup resource scheduled through the Control Area (excluding the TU Electric Control Area) in which the original Firm Power Resource is located and in lieu of the original Firs Power 3
Resource, toyether with such original Tir:s Power Resource, shall be considered a single resource.
In all-other cases, a backup resource shall be considered a separate resource.
5.05 TU Electric Execution of schedules I
subject to the provisions of this Agreement and the l
execution of mutually acceptable wheeling agreement (s) as provided in Section 7.01 hureof, TU Electric will execute the schedules in accordance with the notices received by TU Electric pursuant to Section 5.02 hereof.
The scheduling of power replaced by Cap Rock 29 I
l
pursucnt to tho provisiens of section 4.01 shall, to the extent practicable, be scheduled withcut such notice period.
n additi:n to any other remedies provided for in this Agreement, ?U Elaetr:c l
shall not be obligated to execute such schedules in the events
{a)
Orp Rock does not give TU Electric advance notice of its schedule in accordance with Secti:n 5.02 hereof; (b)
Cap Rock's Firs Power Resource supplier fails, far ary reason, to deliver during all or any pertion of any schedule period the amount of power and energy f or Cap Rock's account that TU Electric attempts to l
schedule on behalf of Cap Rock; (c) service cannot be functionally or technically accommodated; (d)
TU Electric is prevented from providing such service by any cause beyond its reasonable centrol, including, but not limited to,
storm, fleed, lightning, earthquaxe, fire, explosion # failure or threat cf f ailure of f acilities, civil disturbance, l
strike or other labor disturbance, sabotage, var, or restraint by court er public authority; or I
(e)
Cap Rock is in Default of any material obligation under this Agreement.
5.06 scheduling and Systna Modification Charges Cap Rock Will pay TU Electric for scheduling services for each Firm Power Resource a scheduling charge of $1.00/Hvh, but in 30 I
l l
I
~
i 1
no ovont loss then $10,000 nor more than $20,000 per month per rir:
Power Resource; provided, howaver, that such charges shall not te applicable to a Firm Power Resource not schaduled during any calendar month. The aforesaid sums shall be increased beginning i
January.1, 1991, in accordance with the following:
r (a) the percentage inflation which cecurred during the calendar year preceding Jenuary 1 of each year that thin Agreement is in effect shall be determined from the Bureau I
of Leor Statistics the UnAted States Depart =ent of or Transportation and Public Utilities Electric Services average hourly
earnings, said average hourly earnings numbers to be taken from SIC Code 491 (or if said SIC Code 491 is discontinued, from such other statistics of the 4
Bureau of Labor Statistics of the United Staten Department e.
of Labor that are most nearly comparable to SIC Oade 491 and as agreed by TU Electric and Cap Rock);
(b)
The sum of the integer 1
plus the percentage inflation expressed as a decimal determined in accordance with (a) abovs shall be multiplied by each of the aforesaid sums (i.e., $1.00/Mwh, $10,000 anJ $20,000) and the product of that multiplication shall be the sums applicable during the calendar year 1991, except that the period to be used for calculation of the percentage of inflation for 1990 shall be from July 1, 1990, through December 31, 1990.
I 31 1
__ _ _ _. ~
(c) for years sucacquant to colondar yoor 1991, the percentage inflation expressed as a decimal determined in accordance with (a) above for the preceding calendar year
)
shall be summed with the integer 1, and that num multiplied by the sums applicable during the preceding year to derive I
l i
the sums applicable for the following year, and so en i.
during the ters of this Agreement.
In addition, so long as any Firs Power Resource is being scheduled by TU Electric pursuant to this Agreement, Cap Rock will pay to TU Elcetric the cost of additional or replacement ::: puter hardware and software :henges or the additien of personnel and ether costs incident to the implementation and administration of schedules and the continuation of scheduling services under this
I Agreement, not to exceed $150,000 during any 36-month period.
g Charges imposed upon cap Rock pursuant to the foregoing sentence 1
shall be made with reasonable written notice specifying the reasons therefor.
5.07 Term of scheduling Scheduling will be limited to two years from the date TU Electric is first required to ecm=ence the scheduling of a Firm Power Resource.
In the event Cap Rock, due to no f ault of its cwn, fails to become a Control Area within said two-year period, TU Electric will, subject to the provisions of Section 6.01 hereof, schedule power and energy f or a maxi =um of five years from the date it is first required to commence the scheduling of a Firs Power Resoutce as aforesaid.
32 I
5.08 Full.Requirem nts Points of Dolivory ofter Sch0duling After the expiration of the period (s) provided in Section 5.07 hereof, all points of Delivery remaining in TU Electric's
ntrol Area vill ce full requirements Points of Delivery pursuant to section 3.01 hereof, and TU Electric will.;t be required to achedule power and anergy to any such Points of Delivery in the future.
Cap Rock may terminate full requirements service at any such Point of Delivery upon the same five-year notice as provided in Sections 2.02 and/or 2.04 hereof, in which event TU Electric shall
not, subject to the provisions of Section 3.15 ( b)
hereof, be obligated to provide any servics to Cap Rock at any such Points of Delivery.
l ARTICLE VI.
REGULATION SERVICE 8, AVAILABILITY OF EXERGENCY AND SCKEDULED MAINTENANCE BULE POWER mfd DELIVIRY OF POWER mfd ENERGY 6.01 Regulation Services (a)
TU Electric will provide cap Rock not = ore than 15 MW of regulation power and energy, plus associated
services, pursuant to a mutually acceptable regulation sc; vices agreement (which shall contain mutually acceptable terms and conditions consistent with good utility practices within ERCOT) for the purpose of f acilitating the creation of a cap Rock Control Area; i
previded, however, that should Cap Rock elect to purchase regulation services and baconna a control Area, all scheduling 33
arrang stnto, if any, in a f f of.: at that timo shall thereupon terminate and provided, further, that TU Electric shall not be required to furnish regulation services f or a total of core than five years less such nur.ber of years TU Electric has scheduled Fir =
Power Resources pur.suant to Article V hereof.
Charges (plus the initial :cplementation fee) for the sale of regulation services,
gether with the power and energy included therewith, snall be mutually satisfactory.
Cap Reck shall be solely responsible for securing Control Area status f ran the = ember utilities of ERCOT (which shall include all costs associated with bact=ing a Control Area), failing in which TU Electric shall not be re.sponsible f or the sale of any regulation services to Cap Rock.
Within the context of this Agreement, TU Electric will support Cap Rock's discussions with the ER00T se=ber utilities.
(b)
If, due to no fault of Cnp Rock, unanticipated delays in the construction or certification of generation facilities dalay Cap Rock in its efforts to centinue its Taalification as a Control Area af ter the ti=a within which TU Electric is required to provide regulation services under the x
provisions of this
section, TU Electric will provide such regulation aarvices for the period of such unanticipatad delay, but in no event for more than le =enths.
6.02 Availability of Emergency and scheduled Maintenance aulk Power TU Electric will, when Cap Rock becomes a Control Area, cooperate, in its capacity as a = ember of
ERCOT, in making available to Cap Rock emergency and scheduled maintenance bulk 34
(
l l
powcr in accordanco with tho previolone of the ERCOT Cperating Guides.
l ARTICLE VII.
TRANSHISSION WHEELING AND CISTRIBUTION SERVICE 8 7.01
~ Wheeling in Connection with scheduling TU Electric will, on a transacticn specific basis, provide wheeling services to both transmission and distribution Points of Calivery in connection with the scheduling of a Firm Power Rescur:e pursuant to mutually acceptable wheeling agreement (s).
Such wheeling service will be provided at fully allocated embedded ecsts plus a reasenkble return on investment; together with the payment of all costs for any additions or modifications necessary to accommodate each wheeling transaction which can be f orecested by TU Electric at the '%e such wheeling agreement (s) are executed.
Upon the payment of the forogoing costs, Cap Rock shal?. be entitled to firm transuission service for the entire term of such wheeling agreecent(s).
A Firu Power Resource which has replaced a Tirm Power Resource pursuant to Section 2.03 hereof may be wheeled pursuant to the wheeling agreement covering the Firs Power Nscurce so replaced.
7.02 neelfug After Cap Rock Becomes a Control Area (a)
At such time as Cap Rock becomes a Control Area pursuant to the provisions of Section 6.01 hereof or otherwise, TU Electric will, during the term of this Agreements (i) provide firs transmission wheeling (for firm power and energy purchased oy Cap Rock from other sources) to Points of Interconnection, on a 35 l
transaction specific basis, for o term and in accordanco with mutually acceptable inter ennection and transmission wheeling agree =ent(s); and (ii) for a period of two years af ter Cap Roex beco=es a Control Area pursuant to the provisions of Section 6.01 hereof or otherwise, TU Electric will provide distribution whealing servi:e pursuant to a mutually acceptable distribution service agree:ent only to those Points of Interconnection (notwithstanding that the voltage at such Points of Interconnection is less than 60,000 volts) for which Cap Rock has demonstrable plans to supply 4;g at trans=ission voltages within said two-year period, the identity E
and plano for which shall be furnished to TU Electric within a reasonable period of ti=o prior to the date Cap Rock becomes a control Area.
.ig
W (b)
All Points of Interconnection receiving such distribution services will be supplied by cap Rock at transmiscion voltages on or before the expiration of said two-year peri:d, f ailing in which said Points of Interconnection shall revert to TU Eiactric full requirements Points of Delivery pursuant to Section 3,01 hereof.
(c)
Whooling services vill be provided at fully allocated ambedded cost, plus a reasonable return an invast=ent; together with all costs for any additions or
=edifications reasonably necessary to accommodate each wheeling transaction Iwhich can be forecasted by TU Electric at the time such whosling 5 I-agreement (s) aru made) over the term of any such agreement.
Subject to the execution of such interconnection and transmission 36 I
_.,.m a
.m
.-~a am.
.s
--.a 3_A
.-A
-+-.a--
,l.
J.
L
.;_AJ2_
m. -,
_._m.. _. _.
__4_34,%.m
_a______,&.__Ao whooling agrooment(o)
Cap Rock shall bo entitled to firm trancnd upon smission service term of the wheeling agreement (s).
for tho 7.02 Transmission Arrangements with Third Partie l
s TU Electric's obligations to schedule or wheel pcVer and energrr shall be subject to Cap Rock's making and 1
maintaining arrangements, including third party transmission arra ngements, for the delivery of all resources; with respect t o Firm Powe: Resources such transmission arrangements vill be for ! irs
service, transmisston i
AR".'ICLE VIII.
BILLINos AND DEFAULT i
j s.01 Billings and Payments i
Bills for sums due hereunder shall be rendered on approximate 30 day intervals, monthly or upon occurre d
nce, as may be convenient for TU Electric.
All bills rendered shall be due and 4
payable within sixteen (16) days after the invoice date.The i
f allure of Cap Rock to pay the total amount of any bill within such 16-day perior! shall constitute a Default hereunder If not paid within thirty (30) days after the invoice date, interest shall accrue on the amount due from the due date until paid at th of nine and one-half e rate percent (9-1/2%)
per annum, compounded g
monthly, but not to exceed the maximum rate which may lawf l charged.
u y be s.02 Billings and Payasnts Subject to Correction 1
37 I
E
Billingo and payuanto will be subject to correction, for a period not to exceed three years from the date thereof, as cay be l
appr:priate as a result of reviews or audits made for the purpose of verification or othervise.
l s.03
.Not.!,ce of Default
[
A Party shall give written notice of a Def ault to the Part'/
in Default.
The Party in Def ault shall have thirty (30) days from the date of receipt of such notice in which to cure such Default.
If the Default is cured within the applicable pericd, the Def ault specified in such notice shall cease to exist.
8.04 Failure to cure Default A Def ault which is not cured as provided in Section 8.03 1
above shall entitle the Party not in Def ault to im=ediately cancel th2s Agreement and be relieved of any further obligation hereunder and to recover from the Party in Def ault twice all amounts due hereunder, including all other damages to which it is entitled at law or in aquity.
8.05 specific Performance and Injunctive Relief TU Electric and cap Rock agree that it may be i=possible to measure in terms of money the damages which may or will accrue by reason of a Def ault under this Agreement and f or that reason, a=eng others, Ttt Electric and cap Rock agree that, in case of any such L
Default, the non-dsfaulting Party will be irreparably damaged if this Agreement is not specifically enforceable and further r.o adequate remedy at law will ewist.
Accordingly, TU Electric and cap Rock agree that the non~ defaulting Party shall be entitled to 38 l
l
specific performance and/or injunctive relief, in addition to any other remedies which may exist at law or in equity.
If the 5
non-defaulting Party institutes any proceedings in accordance with this section, the defaulting Party hereby vaivas any claim or dnf ense-that an adequate remedy at law exists.
l 3.06 No Waiver The failure of a Party to this Agrescent to insist, on any occasion, upon strict performance of any provision of this Agree-ment, including, without limitation, the provisions of this article l
pertaining to Default, shall not be considered to valve the obligations, rights and/or duties imposed upon the Partian hereto.
8.07 Indemnification It is understood that cap Rock assu=es full responsibility for electric energy furnished or delivered to cap Rock at and p,ast the Points of Delivery or Points of Interconnection (as the case may be) and vili indemnify and hold TU Electric, its affiliates, and its or their directors,
officers, e=p.oyees, agents and independent contractors harmless from and against all claims for damages including but not limited to injuries to any persons, including death resulting therefrom, and damages to property occurring upon the precises of Cap Rock arising from electric power and energy delivered by TU Electric whether or not caused by the negligence of TU Electric except when the negligence of TU Electric or its agent or agents was the sole proxi= ate cause of such injuries, death of persons or damages to property.
Without limiting the foregoing, TU Electric is not and shkil 39
^
~ ~ ~ ~ - - - - - --~_____________ _________
not to licblo to Cop Rock for daoogos occasioned by:
(A) trregularities or interruptions (of any duration), or failure to ec=mence electric or other service, caused in whole or in part oy (1) govern = ental or municipal action or authority, litigati:n, public enemies, strikes, acts of God (including weather.=nd resuit:.ngconsequences),
its
( :, an crder of any Court or Judge granted in any bona fide adverse legal proceeding or action or any Ord er of any commission or tribunal having jurisdiction in the pre =ises
[
(3) interruptions in electric or other service to cap Rock when in TU Electric's sole judgment, such interruption:
(a) vill prevent or alleviate an emergency thr,aatening to disrupt the Operation of TU Electric's syste=, or (b) will lesson or remove possible danger to life or pceperty, or (c) will aid in the l
restoration of electric service, or (d) is required to make necessary repairs to, tests of, or changes in TV Electrir's f acilician, or (e) whun such interruption is authori:ed elsewhere in TU Electric's Tariff for Electric service; (4) the absence, inadequacy er failure of protective devices which are the responsibility of Cap Rock, (3) inadequacy or f ailure of ganaratien or transmission facilities, or (6) any other act or thing reasonably beyond the control of
U Electric or as
=ay be authorized elsewhere in TU Electric's Tariff for Electric Service; i
or (B) any interruption of electric or other service not occasiened by situations or conditions described in (A) above that has not l
existed continuously for beyond a reasonable period of ti=a after notice to TU Electric, which reasonable period shall under no l
I e
I
circumstances be less than twenty-four (24) hours or any
]
interruption of service of greater than a reasonable duration if l
TU Electric has used reasonable diligence in attempts to restore c
d electric or other service af ter TU E16ctric is notified of suen L
interruption.
TU Electric may perf or= voluntary or emergency acts ::
electric facilities which are the responsibility of cap Rock Out shall have no liability for damages or injurien resulting from said acts except to the extent that said damages or injuries are prox 1=ately caused by acts or omissions of TU Electric vnich are found to be vnnten or villful with the intant to cause injury.
r Cap Rock may perform voluntary cr emergency acts to electric facilities which are the responsibility of TU Electrie but shall have no liability for dumages or injuries resulting from said acts except to the extent that said damages or injuries are proximately caused by acts or omissions of Cap Rock which are !=und to me l
vanton er willful vitit the intent to cause injury.
In any claim or cause of action relating to the provis;:n of electric or other service assarted by cap Rock or any other person against TU Electric, TU Electric sht.11 not be liable f or any consequential, special, or non-direct damages, including but not limited to loss of use of equipment, extra expensa due to the use of temporary or replacement equipment, loss of electronic data or program, loss of business revenue, costs of capital, or any cost not part of necessary repair to or reasonabla replacement of electric equipment whether the claim or cause of action is based 41
7 f
p upon contract, tort, negligence, preducts liability, or any other theory of recovery.
TU flectric makes no warranties whatsoever with regard to d
the provision of electric or 9ther service and disclaims any and all warranties, express or implied, including but not limited to warranties of merchantability or fitness f or a particular purpose.
8.08 Bankruptcy
'l Either Party shall have the right to cancel a.id terminate this Agreateent, upon written notice to the other-Party, if the other Party shall (a) apply for or consent to the appointment of a
B
receiver, trustee, or liquidator of all or
{
substantially all of its assets, or (b) be adjudicated bankrupt or insolvent or file a voluntary petitlen in bankruptcy or admit in writing its inability to psy its debts as they become due, or (c) make a for=al assignment for the benefit of its creditors, or (d) file a petition or answer seeking reorgani:ation or 1
arrangement with creditors or taking advantage of any insolvency law, or (e) file an answer admitting the material allegations of or consenting to, or default in answering, a petition filed against it in any bankruptcy, reorganization, or insolvency proceeding, or 42
'f) if, in any legal action instituted in a court of competent jurisdiction by so=eena other than the
[
other Party, an order, judgment, or decree shall te entered approving a petition seeking reorganization of such Party or appointine a receiver, trustee, or liquidator of such Party or of all or substantially all of such Party's assets and such
order, judgment, or decree shall continue unstayed for a i
period of one hundred twenty (120) days.
8.09 Non-Exclusive Remedy The remedies set forth in this article are in addition to any other right or retady provided in this Agreement or now or hereafter existing at law or in equity or by statute and the exercise of said remedies shall not be deemed a
valver, or g
relinquishment by said nondefaulting Party of its right to recover any damages resulting from the other Party's breach.
1 ARTICLE II.
INTRA 8TATh OPERATIONN 9.01 Interstate Conunerce Except in compliance with the orders of the Federal Energy Regulatory Commission (the "TERC") in TERC Dockets Nos. EL-79-8 and E-9558 issued on October 28, 1981, November 5, 1981, and January 29, 1982, and the Order issued in FERC Docket No. EL-79-8-002 en July 23, 1987, TU Electric and Cap Rock represent and warrant to each other that they do not, eithnr directly or through connections y
a L
t
+
vith othor er.titico (who are either directly or indirectly L
interconnected with facilities owned or operated by TU tiectric) p transmit electric energy in interstate c =erce or sell electr::
energy in interstate ce=erce or own or operate any facilities theref or and TU Ilectric and Osp Rock each agrees tnat it vill not except :n ec=pliance with such orders, hereafter engage, directly or thrcugh other entities, in any such interstate activities or
operate, establish,
=aintain,
modify, or utilize, directly r
through cther entities, any connection or f aci'.ity used or to be used for the sale or transmission of electric energy in interstate ce=erce uithcut one year's prier written notice to the other Party; provided further, that such Party desiring to ec=ence interstate operation agrees to file an application with, and use its best efforts to obtain an order
rem, the FGC, applicable to the other Party (unless such other Party agrees in writing that such application nee.d not be filed), under Sections 210, :11 and 212 of the Federal Power
Act, requiring the establishment, maintenance, modification, or utilization of any such connecti:n which may be involved; provided, however, that compliance with such orders shall not require further notice to the Parties or application to the FGC pursuant to this article.
9.02 Failure to Comply It is understood and agreed that the f ailure of the Party electing to commence interstate operations to comply with any provision of this article or said orders chan entitle the other Party to disconnect its facilities.
44
_ - - - - - ~ ~
9,03 8700ifio P0rfC: man 30 TU Electric and cap Rock agree that it will be i=pegsidia to measure in terms of money the damages which may or willaccrue ey reason of any breach of the representation and warranty above set forth, or any failure in the performance of any Of the obligati:ns contained in this article and, for that reason, among others, TU Electric and Cap Rock agree that, in case of any such breach or failure, the non-breaching Party will be irreparably da= aged if this Agreement is not specifically enforceable, and acc rdingly, TU Electric and cap Rock agree that the non-breaching Party is entitled to specific performance of the previsions of thi s article, in addition to any other remedies which may exist.
9.04 Bona Fide Emergencies Nothing contained in this article shall preclude One utili:ation of connections for the transmission of electric energy in interstate commerce under bona fide emergancies pursuar t to the provisions of Section 202(d) of the Federal Power Act.
ARTICLE I.
MIDCELLANEOUS PROVISIONS 10.01 Amendment This Agreement may be amended only upon mutual agree =ent of the Parties hereto, which amendment shall not ba effective until reduced to writing and executed by the Parties.
10.02 Entirety of Agreement and Prior Agreements Superseded This Actreament, including all Exhibits attached hereto which 45
__ __ _ __ - - - - - ----- ~
~
3.
l are hereby expressly made a
part hereof for all
purposes, constitutes the entire agreement and understanding between ne l
Parties with regard to the subject matter hereof.
The Parties shall not be bound by or liable f or any statement, representation, promise, inducement, understanding or undertaking of any kind or nature (whether written or oral) with regard to the sut]ect matter hereof not set forth or provided for herein.
l This Agreement replaces all prior agreements and undertakings, oral or written, between the Parties with regard to
a subject matter hereof, including without limitation the Principles of Agreement, dated May 15, 1990, between the Parties and all such agreements and undertakings are agreed by the Parties l
to no longer be of any force or effect; provided, however, that this Agreement shall not replace, superande or otherwise af f act tap Rock's Agreement for Purchase of Power dated June 2,
1963, as a= ended, or the Agreement for Purchase of Power between Lone Wolf and TU Electric, dated July 2, 1963, as amended, such agreements to continue until terminated in artcordance with their respective terms, at which tima said agreements shall have no f orce or af f act whatsoever.
10.03 kuccessors and Ansigns This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and assigns, each of whom shall agree to be bound by all ter=n and conditions of this Agreement and the Mutual Release executed contemporaneously herewith, provided that this Agreement may be assigned by either 46
Party only upon the written consent of the other and provided further that any such assignment shall not relieve either Party of their respective obligations nor shall TU Electric's obligations be enlarged, in whole or in part, by reason thereof.
Such consent I
will not be unreasonably withheld, provided that either Party will not be required to consent to any assign =ent which
'uld in its sole judgment, among other reasons, subject it to addit:,onal f ederal or state regulation, subject it to the plenary jurisdiction of the Federal Energy Regulatory Commission, result in the imposition of additional costs of administration which Cap Rocs does not agree to reimburse, or in any way diminish the reliabilny of its system, enlarge its obligations or otherwise create or l
maintain an unacceptable condition.
The respective obligations of TU Electric and cap Rock under this Agreement may not bb enanged, modified, amended or enlarged, in whole or in part, by reason of g
the sale, merger or other business combination of either Party with any other person or entity (other than Lone Wolf), nor say. !"
Electric be required to sell power and energy by reason thereof ether than that specifically provided f or in Sections 3.01 and 3.02
,I hereof.
10.04 Taxes All present or future federal, state, municipal or other lawful taxes (other than f ederal income taxes) applicable by reason g
of the sale of power and energy, the services performed by TU Electric, or the compensation paid to TU Electric hereunder shall be paid by cap Rock.
's c
8
10.05 Agreement to Control It is distinctly understood and agreed that the full and partial requirements power and energy sold to Cap Rock pursuant to this Agreement vill be at Rate WP Wholesale Power as approved by the PL'CT.
It is expressly underste d and agreed that all other ter=s and conditions of sale and the terms, conditions and charges for all other services (including but not limited to regulation power and energy and associated services) provided by TU nectri:
to cap Rock hereunder shall be governed by this Agree =ent, notwithstanding the provisions of said Rate WP Wholesale Power or g
any other tariff of TU Electric which may hereafter be fixed and approved by the PUCT.
TU Electric and Cap Rock agree that neither of them shall petition uny regulatory cuthority to review the ter=s of this Agreement or to change the charges established from time to ti=a pursuant to this Agreement or the accounting set forth herein.
10.06 service Regulations Except as otherwise specifically provided in this Agree =ent, the sale of power and energy by TU Electric to Cap Rock under this Agreement shall be subject to the service regulations of TU Electric's Tariff for E.lectric Service as same may f rom ti=e to time be fixed and approved by the PUCT.
10.07 Governing Law and venus This Agreement was executed in the state of Texas and shall in all respects be governed by, interpreted, construed and enf orced in accordance with the laws thereof.
Tha venue of any legal 48
j proceeding relative to this Agreement shall be in Dallas County, Texas.
10.os Notices i
Notices of an administrative nature, including but not limited to notice of termination, limitation on access or request for a=end=ent shall be given as provided herein to the designates listed below and shall be deemed to have been duly delivered hand delivered or cent by United States certified mail, return receipt requested, postage prepaid, tot (a)
If to TJ Electrict Texas Utilities Electric company l
Attnt Pitt Pittman, Vice President Skyway Tower 400 North Olive Street, L.B.
81 Dallas, Texas 75201 (b)
If to Cap Rock Cap Rock Electric Cooperative, Inc.
Attnt Steve Collier, Director of Power Supply P.
O.
Box 9589 Austin, Texas 78765-9589 All other notices required to be given by Cap Rock to TU Electric under this Agreement shall be in writing and telecopied to:
Texas Utilities System operating Center at 214/330-4598, and sent by United States mail, postage prepaid, to:
Texas Utilities Electric Company Attnt Manager, Inter-Utility Services 31st Floor, Skyway Tovar 400 North Olive Street, L.B.
81 Dallas, Texas 75201 49
i All othi,r notices required to be given by TU Electric to cap neeg i
under this Agreement shall be in vriting and telecopied to:
Cap Rock Electric Cooperative, Inc.
at (512) 454-4221, Attnt Steve Collier, and sent by United States mail, postage prepaid, to:
Cap Rock Electric Cooperative, Inc.
Attn Steve Collier, Director of Power Supply P. C. Box 9589 Austin, Texas 78765-9589 The abra-listed names, titles, addresses, and telephone nusters of either Party may be changed by written notification to tha I
ether.
10.09 Interruption of service The Parties agree that TU Electric may interrupt any service it is required to provide under this Agreement to make repairs, tc change equipment or to install new equipment, but only for suen periods as =ay be reasonably unavoidable.
TU Electric a-rees to provide reasonable advance notice of such interruptions to cap Rock if, in TU Electric's sole discretion, the nature of the situati:n I
permits.
~
10.10 No Third-Party Beneficiaries This Agreement is not. intended to and shall not create rights, remedies or benefits of any character whatsoever in favor of any persons, corporations, associations or entities other than the Parties hereto, and the obligations herein assumed are solely for the use and benefit of the Parties hereto, their successors in interest and, where permitted as provided herein, their assigns.
10.11 Multiple counterparts 50
l' This Agreement m&y be executed in two or = ore counterparts, each of which shall be desced an original but all shall constitute one and the same instrument.
10.12 Headings I
The descriptive headings of the varicun articles and l
sections of this Agreement have been inserted for convenience of reference only and shall be afforded no significance in the intaiTretation or construction of this Agreement.
10.13 Dev?-ability In.ao event any of the terms, covenants, or conditions of this Agreement, or any application therno!, is finally determined to be invalid, illegal or unenforceable by any court or regulatory I
authority having jurisdiction.
all other terms, covenants, and conditions of this Agreement shall not be af f ected thereby and g
shall remain in full force and effect; provided, however, that if either Party determines, in its sole discretion, that there is a material change in this Agreement by reason of any provision or application being finally determined to be invalid, illegal or unenforceable that Party may terminat2 this Agreement on three (3) days' prior written notice to the other Pt.rty.
10.14 Agreements to be Negotiated in Good faith l
All mutually acceptable agreements and procedure required or permitted by this Agreement shall be negotiated by the Parties in good faith.
The inability to reach a mutually acceptable agreement or procedure shall not itself constitute any evidence g
that either Party failed to negotiate in good faith.
I 51
K. M a
therein.
(b)
Subject to the provisions of Section 10.18 hereof,
_3 Cap Rock will, on the basis of the settlement ptovided for herein move for dismissal of its appeal in can Reck Electric Coegative,
Inc, v.- United States Muclear Fefru'agorv Co nission, and t!yt tfnited States of M erica No. 89-1735, pending in the United Stat.es Court I
]
of Appeals for the District of Columbia Circuit, and ove to trithdraw its "Requent for an order Enforcing and Modifying Antitrust License Conditions,"
filed May 12,
1989, in Texas Utilities Electric CcecAng (Comtnehe Paak Staam Electric Station)
Cap Rock and TU Electric agree that any order of dismissal say refer to the Agreement and this Mutual Release providad that in no event will TO Electric be required to admit or indica.te, nor shall Cap Rock assert, g
that TU Electric has at any ti=e or in any =anner been in violation of the License Conditions for Comanche Peak Steam s
a Electric Station Units 1 and 2 i
~
(" License conditions") or any other 1aw or regulaticn promulgated by any government a.gency or entity, er taken any action inconsistent the swith.
Nor shall the Agreement constitute any amendment of, addition to n
interpretation of the License conditions and Cap Rock and TU Electric agran that the Nuclear Regulatury Cc==ission shall have no jurisdiction to enforce, directly or indirectly, any provision of the Agreement, its enf atcament jurisdiction being limited to the License Conditions.
10.18 Conditions Precedent This Agreement is subject to approval by the respective a
53 am"
"-" " ^
d Boards of Directors of Cap Rock, TU Electric and Lone Wolf on or
~
cefore
Thursday, June 21r
1990, pursuant to resolutions f.
satisfacCCOY M f or::t and substance to the Parties hereto, ft.iling in which the same shall, in all things, terminate and be of no force oi effact.
g EXECUTED on the date and year first above written, 45 i
TEXAS UTILITIES ELECTRIC COMPANY I
ig LY h
=_
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j W Pitt Pittman TITLE: Vit.'
Midenw ATTEST:
S
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E Secretary CAP ROCK ELECTRIC COOPERATIVE, IN'C.
ATTEST:
BY:
M David Prus.tt g,
'SAcretary '
V TITLE:
President and Chief I
/
Executive Officer BYI n
Jx Russell Jones T1rLE: President of the Board BY:
/
Steven E. Collier TITLE:
Director of Power Supply ii I
e4
.I
LONE k'OM' ELECTRIC COOPERATIVE, INC.
s BY:
w r
m ~e./,
TITLE:
President of the Board
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AtrEST:
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EXHIDIT A Cap Rock Electric Cooperative, Inc.
Points of Delivery I
Q t rset Demand t v.W )
'.'eitsee (v.m h
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(Information to be specified on the Effectiva 9 ate of this Agreement) i I
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I B
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I E;GIBIT Cao Rock Power,.,sunelv Resour es I
Name and Location Firs Ters (Years) of Control Capability Beginning Ending Lower suco1v Resource Area DDi).
Date One 1,.
(To be specified pursuant to Section 2.03 of this Agreement]
I 2.
[To be specified pursuant to section 2.03 of this Agreement]
8 3.
[To be specified pursuant to Section 2.03 of this Agreement)
I 4.
[To be specified pursuant to section 2.03 of this Agreement]
E 5.
[To be specified pursuant to Section 2.03 of this Agreement) 6.
I
[O be specified pursuant to section 2.03 of this Agreement) i I
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EXHIBIT C (Page 2 ot 2) l
(
TU Electric Fuel Ccst Factor Fill 1D9 l
PUCT Docket No. 72C9 TU ELECTRIC 1'IS CALCULATIOWS Bb3 OR l
ESTI3tRTED kWh SALBf AfD SITER INFUT BY TULTASE LETRL l
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RMLNEtt IIffER_INE 19fEERfit IREft* LIB l
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misser it/3ss,3n,9ee tr,ase,ssT.ses 1.estMt e.sensa tene merstes e,3se,3es, set 9 set.142,v M
s. spree e.,snes l
l l
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Cao Rock Curtail:nent Plan lII (This Exhibit to be developed as provided in Section 4.03)
I
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5
Ie EXHIBIT E Mutual Release For and in consideration of the premises and mutual agreements forth herein and the agreements, undertakings, premises, and set covenants set I
forth in the power Supply Agree =ent, of even date
herewith, (hereinaf ter referred to as the " Agraement")
by and between CJ.P ROCK ELECTRIC COOPCRATIVE, INC.,
(" Cap Rock") and TEXA5 UTILITIES ELECTR2C CCMPANY ("TU Electric"), Cap Rock, Lone Wolf Electric Cooperative, Inc.
(" Lone Wolf") and TU Electric do hereby covenant and agres as follows:
Cap Rock, Lone Wolf and TU Electric, each on behalf of itself and on behalf of any person or entity, private or governmentul, claiming by, through or under it, including without limitation, to I
the extent it has the standing and right under law to do so,,its present and past customers, predecessorn, parents, shareholders,
officers, directors, agents
servants, employees,
insurers, subsidiaries, affiliates, divis'ons, consultants, attorneys, i
su:cessors, assigns and legal representatives (which, together with Cap Rock, Lone Wolf and TU Electric are referred to herain collectively as
" Releasing Parties"),
hereby absolutely, unconditionally and completely releases and discharges forever and for all purpoems and in all respects, the other and' the other's prasent and past customers, predecessors, parents, shareholders,
officers, directors,
agents, servants, employees,
insurers, I
subsidiaries, affiliates, divisions, consultants, attorneys, successors, assigns and legal representatives (which, together with Cap Rock, Lone Wolf and TU Electric are referred to herein I
I
E' o
collectively,as " Released Parties"), or any of them, jointly and severally, from any and all claims, demands, actions, causes of action, suits, and damages, including attorneys' feen and related disbursements, of any kind or nature whatsoever, direct or consequ'enti al, fixed or contingent, and the consequences thereof, existing at, or at any ti=a prior to and including, the date hereof, arising out of or in any way incident to any allegation
=ade, or which could have been
made, in any
judicial, administrative (except Federal Energy Regulatory Commission Occket I
Nos. EL79-8, ER82-545-000, at al. and EL79-B-002) or legislative procaeding (federal, state, municipal or otherwise) in which Cap Rock is, was or could have been a party, an intervenor or a
witness, or has, had or could have had any other
interest, including, but not limited to, PUCT Docket Nos. 9300 and 5540, l
Nuclear Regulatory Commission Dot:ket Nos. 50-445A and 50-446A, and Cause No. 89-1735 pending in the United States Court of Appeals f or the District of Columbia Circuit, except, however, any claims, lI liabilities or obligations arising after the date hereof out of or in any way relating to the Agreement or any agreement or instru=ent executed and delivered pursuant thereto; that certain Agreement f or Purchase of Power between Cap Rock and TU Electric, dated June 2, 1963, as amended; that certain Agreement for' Purchase of Power between Lone Wolf and TU Electric, dated July 2, 1963, as amended; or this Mutual Release (hereinaf ter collt:tively ref erred to as the
" Released Claim 3");
provided, however, that nothing herein is intended to be, or shall constitute, a release, waiver or discharge I
2 l
of cny claim, dcfcnco or counterclaim assertad, or which eculd 'ca assertad, by any of the respective Releasing Partise againstany person, firm, corporation or other entity other than any of the respective Released Parties.
Cap Rock, Lone Wolf and TU I
Electric each hereby agrees to indemnity, datand and hold harmless the other and its present and past customers, predacassers,
parents, shareholders,
officers, directors,
agents, servants, employaas,
insurers, subsidiaries, affiliates, divisions, consultants, attorneys, successors, assigns and legal representatives, or any of them, jointly and severally, from and against and with respect to any and all past, present and future obligations, liabilities, claims, losses, demands
actions, causes of
action, suits,
damages, interest, penalties, deficiencies, judgments (and costs and expenses in connection therewith, including, without limitation, attorneys' fees and ralated disbursements) in any way arising out of or othe.m/ise relating to any of the Released Claims.
Cap Rock, Lone Wolf and TU Electric aach hereby covenants and agrees that it will forsvar refrain frem instituting, maintaining, pres.acuting or continuing to prosecuta or maintain any suit, action I
v. proceeding of any kind, or collecting from or proceeding against the othat or the ether's present and past customers, predecessors
parents, shareholders,
officars, directors,
agents, servants, employees,
insurers, subsidiaries, affiliates, divisions, consultants, attorneys, successors, assigns and legal representatives, or any of them, jointly or severally, or any other I
3
_ _ - - _ - - - ~ - - - - - -
-~~ -
Person, firm or corporation, based upon any of the Released Claims.
EXECUTID in multiple counterparts on this, the date of 1990.
~
TEXAS UTILITIES ELECTRIC COMPANY I
BY:
Pitt Pit *aan
-I TITLE: Vice President ATTEST:
Secretary CAP ROCK ELECTRIC COOPERATIVE, INC.
ATTEST:
BY:
David PYuitt
.I Sacrata.7 TITLE:
President and Chief Executive Officer BY:
Russell Jones TITLE: President of the Board I
BY:
Steven E. Collier I
TITLE:
Director of Power Sucply I
I I
4 1
I
P LONE WOLF ELECTRIC COOPERATIVE, INC.
g j
BY:
.I TITLE:
l-ATTEST:-
lI Secretary
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I EXHIBIT F DOCKET No. 9300 I
APPLICATION OF TEXA3 UTILITIES 5
BEFORE THE ELECTRIC COMPANY FOR AUTHORITY S
PUBLIC UTILITY COMMISSIcN TO CHANGE RATES S
OF TEXAS NOTICE CAP ROCK ELECTRIC COOPERATIVE, INC.
(" Cap Rock") and LONE WOLF ELECTRIC COOPERATIVE, INC.
(" Lone Wolf"), by and through their attorney of record, hereby give notice that they (i) have reached a settlement of their disputes with TEXAS UTILITIES ELECTRIC COMPANY ("TU Electric") in this proceeding; (ii) hereby cease all participation, directly or indirectly, in this proceeding; (iii) no longer
desire, directly or indirectly, to prosecute their
}
intervention or take any position adverse to the position of TU l
Electric in this proceeding; (iv) hereby withdraw all testimony, motions, objections and other pleadings haretofore filed in this proceeding on behalf of Cap Rock cnd Lone Wolf; and (v) hereby support TU Electric's proposed cost allocation and rate design in this proceeding.
Respectfally submitted, E
EARNEST CASSTEVENS
5 901 hopac South 400 Barton Oaks Plaza Two 13 Austin, Texas 78746 l3 (512) 318-361.
!I i
By:
EARNEST CASSTEVENS State Bar No. 03980400
!l
CERTIFICATE OF SERYTCE l
I hereby certify that a true and correct copy of the above and foregoing has been served upon all parties of record to this l
proceeding by ma!.1 or hand delivey on this the day of June, 1990.
I EARNEST CASSTEVENS I
I I
I I
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I I
I I
I I
I I I
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ML20141M103: Difference between revisions

Latest revision as of 14:17, 11 December 2024

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Dear Steven:

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