Default Sales Agreement between Allegheny Energy Supply Company, LLC and The Potomac Edison Company dba Allegheny Power (May 22, 2000)

Summary

Allegheny Energy Supply Company, LLC (AE Supply) and The Potomac Edison Company, doing business as Allegheny Power, entered into this agreement for the supply of firm electric power to meet Allegheny Power’s retail requirements in Maryland from July 1, 2000, to December 31, 2008. AE Supply will deliver power as scheduled, and Allegheny Power will pay based on a set rate or AE Supply’s costs, whichever is higher. The agreement includes provisions for scheduling, billing, assignment, cancellation with notice, and special terms for interruptible loads. Either party has specific obligations to ensure reliable service and payment.

EX-10.2 13 c21539_ex10-2.txt DEFAULT SALES AGREEMENT Exhibit 10.2 ------------ -------------------------------------------------------------------------------- May 22, 2000 -------------------------------------------------------------------------------- CONTACT: The Potomac Edison Company dba Allegheny Power Energy Procurement Division Attention: Mark A. Mader 800 Cabin Hill Drive Greensburg, PA 15601 Phone: 724 ###-###-#### FAX: 724 ###-###-#### BILLING ADDRESS: 800 Cabin Hill Drive Greensburg, PA 15601 AE MARKETER: Allegheny Energy Supply Company, LLC ("AE Supply") Attention: Jan M. Hanks Phone: 724 ###-###-#### FAX: 724 ###-###-#### TRANSACTION: E00-0001-R1 GENERAL: This is a "services provision" product that is designed and priced to provide the flexibility necessary to serve a variable retail load. The inherent flexibility of this product is not intended to permit arbitrage in the wholesale markets. At its sole discretion, AE Supply may source the generation components of this product, in whole or in part, at any time, from any number of suppliers in the wholesale generation market, provided applicable ECAR rules are observed. Other non-rate terms and conditions may be negotiated between the parties from time to time. Allegheny Power agrees to exercise best efforts to minimize the risk to AE Supply, hereunder, which includes but is not limited to the following: enforce its tariff provisions, enforce retail contract provisions, enforce PURPA contract provisions, implement a generation buy-back program, support favorable regulatory initiatives, and actively manage default service. TERM OF SERVICE: July 1, 2000 through December 31, 2008 DELIVERY POINT(S): Into Allegheny Power Control Area, Seller's Choice AE Supply will deliver firm power to Allegheny Power into the Allegheny Power electrical control area at any Allegheny Power transmission interconnection(s) and/or generator step-up transformer(s) within Allegheny Power. AE Supply, at its sole discretion, may schedule the delivery of firm power to Allegheny Power in any combination of MW amounts and at any combination of delivery points, such that the total power supply requirements under this agreement are met. SCHEDULING: Hours ending 01:00 through 24:00 EPT (24 hours) Daily retail schedules will be submitted by Allegheny Power to AE Supply by 11:30 EPT, one (1) business day prior to delivery. A business day is any Monday through Friday excluding NERC holidays. AE Supply 24-Hour Trading Desk: 724 ###-###-#### FAX: 724 ###-###-#### AE Supply will act as agent for Allegheny Power with respect to scheduling with the Allegheny Power Control Area or its successor, including any adjustments thereto, deemed necessary by the Control Area or AE Supply. TYPE OF SERVICES: AE Supply will provide firm power, through any means available, including purchases in amounts equal to Allegheny Power's full Standard Offer Service retail requirements for the Potomac Edison franchise within the state of Maryland, including all losses and energy imbalance charges, whether those charges are for Supply or Consumption imbalance within Allegheny Power. PRICE: The price for all MWh delivered and services provided hereunder shall be the greater of the actual average annualized unbundled generation rate, as established by the Maryland Public Service Commission, or 102% of the incremental delivered cost that AE Supply incurs in providing services during a calendar year. For purposes of intra-year administration of this agreement, the estimated average annualized unbundled generation rate for Standard Offer Service customers during each calendar year is as follows: 2000 $30.66/MWh 2001 $31.52/MWh 2002 $31.52/MWh 2003 $31.52/MWh 2004 $31.52/MWh 2005 $31.52/MWh 2006 $31.52/MWh 2007 $31.52/MWh 2008 $31.52/MWh Allegheny Power will pay the applicable estimated average annualized unbundled generation rate each month for services rendered and will true-up the payments to the actual average price, including reconciliation imbalances, (or the multiple of incremental delivered cost, if applicable) subsequent to year-end and when pertinent data are available. Intra-year adjustments to the estimated booked-price, from time to time, may also be performed at Allegheny Power's discretion. RESERVATION: Allegheny Power will provide a rolling 24 month forecast of its anticipated retail load. Allegheny Power does not guarantee maximum or minimum load. Reservations will be made on a monthly basis based on the most recent retail forecast. 2 ASSIGNMENT: In AE Supply's sole discretion, this agreement may be assigned to any organizational successor of AE Supply. Prior to assignment, AE Supply will notify Allegheny Power of its intentions. CANCELLATION: AE Supply may cancel this Agreement at any time with twelve (12) months written notification. Upon receipt of written notification, purchases hereunder will be reduced to the levels indicated by the following schedule: 270 days prior to cancellation: 75% of the monthly reservation 180 days prior to cancellation: 50% of the monthly reservation 90 days prior to cancellation: 25% of the monthly reservation Date of cancellation: 0% of the monthly reservation BILLING AND PAYMENT: Each Monday or next subsequent business day if Monday is a Banking or Company holiday, for the preceding seven-day period Sunday through Saturday, as deemed necessary by AE Supply, AE Supply shall notify Allegheny Power via email of the amount to be prepaid based on the transactions scheduled or a reasonable estimate for the pertinent period. Allegheny Power shall pay the requested prepaid amount within 24 hours of notification. On or before the eighth working day of each calendar month, AE Supply shall calculate the amount due for the actual deliveries to Allegheny Power for the previous calendar month. That amount shall then be reconciled with the total prepaid amounts received from Allegheny Power during the previous calendar month. Any payment or credit due as the result of such reconciliation shall be made by the end of the twentieth (20th) calendar day of the month. SPECIAL TERMS AND CONDITIONS: AE Supply will be responsible to meet all retail schedules provided by Allegheny Power that meet the notification guidelines of the Allegheny Power electric distribution company and AE Supply. Interruptible Loads: Allegheny Power may have special arrangements with certain retail customers that permit curtailment for economic reasons. AE Supply will notify Allegheny Power by 9:00 am, one business day prior to delivery of its desire to interrupt load, including the quantity of load requested and the period of the interruption. Allegheny Power will reply to AE Supply no later than 10:30 am of the quantity of load available for interruption. AE Supply and Allegheny Power will share, at a ratio of 50/50, the net benefits of the hourly price avoided or received for each MWh of load interrupted. Allegheny Power will provide sufficient documentation to verify the load interrupted. ALLEGHENY ENERGY SUPPLY COMPANY, LLC THE POTOMAC EDISON COMPANY DBA ALLEGHENY POWER By: /s/ David C. Benson By: /s/ Ronald A. Magnuson ------------------------- ------------------------- David C. Benson Ronald A. Magnuson Title: Vice President Title: Vice President ---------------------- -----------------------