Bayonne Capacity Supply Agreement between Cogen Technologies NJ Venture and El Paso Merchant Energy, L.P. dated October 1, 2001

Summary

This agreement is between Cogen Technologies NJ Venture (Bayonne) and El Paso Merchant Energy, L.P. (EPME). Bayonne agrees to supply EPME with at least 40 MW of capacity credits per day, enabling EPME to meet its obligations under a related power purchase agreement. If Bayonne fails to provide the required capacity, it must reimburse EPME for replacement costs. The agreement runs until October 31, 2008, or until the related agreement ends. Both parties outline their responsibilities, payment terms, and remedies for non-performance.

EX-10.FF 12 h94727ex10-ff.txt BAYONNE CAPACITY SUPPLY AGREEMENT EXHIBIT 10.FF ================================================================================ BAYONNE CAPACITY SUPPLY AGREEMENT BETWEEN COGEN TECHNOLOGIES NJ VENTURE AND EL PASO MERCHANT ENERGY, L.P. DATED AS OF OCTOBER 1, 2001 ================================================================================ BAYONNE CAPACITY SUPPLY AGREEMENT This Bayonne Capacity Supply Agreement (this "Agreement") is made and entered into as of this 1st day of October, 2001, between Cogen Technologies NJ Venture ("Bayonne") and El Paso Merchant Energy, L.P. ("EPME") (each individually referred to as a "Party" and collectively as the "Parties"). RECITALS WHEREAS, Public Service Electric and Gas Company ("PSE&G") and Bayonne are parties to a Power Purchase and Operations Coordination Agreement, dated as of June 5, 1989 (the "Bayonne PPA"), providing for the interconnection of the Bayonne Facility with PSE&G and the sale by Bayonne and the purchase by PSE&G of the output of the cogeneration facility located in Bayonne, New Jersey; WHEREAS, Bayonne and Cedar Brakes II, L.L.C. (formerly known as Cedar Brakes IV, L.L.C.) ("Cedar Brakes") intend for Cedar Brakes to obtain Bayonne's interests in the Bayonne PPA; WHEREAS, Cedar Brakes and PSE&G are parties to an Amended and Restated Power Purchase Agreement, dated as of May 23, 2001 (the "Amended and Restated PPA"), providing for the sale by Cedar Brakes and the purchase by PSE&G of capacity and energy; WHEREAS, EPME and Cedar Brakes intend to enter into a Power Purchase Agreement (the "Mirror PPA"), providing for the sale by EPME and the purchase by Cedar Brakes of capacity and energy sufficient for Cedar Brakes to meet its obligations under the Amended and Restated PPA; WHEREAS, EPME and Bayonne are parties to a Power Purchase/Sale Transaction Confirmation, dated as of the date hereof (the "Bayonne Transaction Confirmation"), providing for the sale by Bayonne and the purchase by EPME of energy sufficient for EPME to meet its obligations under the Mirror PPA; WHEREAS, EPME is entering into this agreement in order to be able to assure itself of a supply of capacity sufficient to meet its obligations under the Mirror PPA; and WHEREAS, as a condition to EPME's obligations under the Bayonne Transaction Confirmation, Bayonne is required to execute and deliver this Agreement. -1- NOW, THEREFORE, in consideration of the mutual promises set forth herein, and other good and valuable consideration, the receipt of which is hereby acknowledged, the Parties hereto agree as follows: SECTION 1. DEFINITIONS Unless otherwise specified, capitalized terms used herein but not defined herein have the respective meanings assigned to such terms in the Mirror PPA. SECTION 2. CAPACITY SUPPLY (a) Bayonne shall arrange for Capacity to be made available to EPME, which may include, at Bayonne's option, Capacity provided by the Bayonne Facility or from other sources of such Capacity, such that EPME shall be credited by PJM with at least forty (40) MW per day of such Capacity credits through and including October 31, 2008 or the earlier termination of the Mirror PPA. Bayonne shall take all necessary steps utilizing PJM's "eCapacity" mechanism, or as otherwise may be required by PJM, such that EPME's account with PJM shall reflect such Capacity credits as of the Effective Date of the Mirror PPA and at all times throughout the term thereof. EPME agrees to cooperate with Bayonne in making any submittals required by PJM. (b) The amount of Capacity credits to be provided to EPME above is based on the methodology currently specified in the RAA. If such methodology is no longer used by PJM, the minimum quantity of Capacity credits Bayonne is required to provide hereunder (restated in terms of the new unit of measurement) shall be calculated based upon the new measurement methodology as specified in Article II(c) of the Mirror PPA. If the Mirror PPA no longer requires EPME to obtain such Capacity credits, Bayonne shall provide Capacity to EPME in an amount equal to the amount specified in the measurement methodology in effect immediately prior to the cancellation of such requirement. (c) If Bayonne fails for reasons other than a Force Majeure or in the event of an occurrence described in Article II(D) of the Mirror PPA, during any Month to provide all or a part of the Capacity to EPME pursuant to this Agreement, EPME shall use reasonable commercial efforts to purchase replacement Capacity in the amount of such shortfall, and Bayonne will be obligated to reimburse EPME for all such replacement costs. In the event that EPME, in spite of using reasonable commercial efforts, is unable to purchase such Capacity shortfall, Bayonne shall pay to EPME an amount equal to the deficiency charge, if any, or other charges, as applicable, payable by EPME under Article V(E) of the Mirror PPA. -2- (d) The foregoing liquidated damages shall be the sole damages to which EPME shall be entitled as the result of any failure by Bayonne to provide Capacity under this Agreement. Under no circumstances shall Bayonne be liable for special, consequential, exemplary, tort or other damages or costs. SECTION 3. MISCELLANEOUS (a) Limitation on Remedy. Notwithstanding anything herein to the contrary, in the event of a default by Bayonne in the performance of its obligations hereunder, EPME agrees that in no event shall it seek or be entitled to any amendment, modification set-off or other relief under or with respect to its rights and obligations under the Mirror PPA. (b) Representation and Warranty. Bayonne represents and warrants to EPME that Bayonne has all requisite power and authority to execute, deliver and perform its obligations under this Agreement. (c) Notices. Any notice, request, demand, or statement which any Party may desire to give to the other Party shall be in writing and except as otherwise provided for in this Agreement shall be considered as duly delivered when mailed by certified mail or delivered against receipt by messenger or overnight courier addressed to said Party as follows: (i) If to EPME: El Paso Merchant Energy, L.P. 1001 Louisiana Street Houston, Texas 77002 ATTENTION: General Counsel (ii) If to Bayonne: Cogen Technologies NJ Venture 10 Hook Road Bayonne, NJ 07002 ATTENTION: General Manager (d) Payment. Bayonne shall pay EPME for Capacity replacement costs, deficiency charges, or other costs that EPME incurs under Section 2(c) hereof, within thirty (30) days of receipt of a written notice from EPME stating the amount of such charges or costs. If payment is not made by the due date specified herein, Bayonne shall pay to EPME an interest charge on unpaid amounts which shall accrue daily from the due date until the date upon which payment is made at the Late Payment Rate. -3- (e) Entire Agreement. This Agreement constitutes the entire Agreement of the Parties with respect to the matters contained herein and may not be modified except by a written instrument duly executed by each of the Parties. (f) Term. The term of this Agreement shall run from the Effective Date of the Mirror PPA until and including October 31, 2008 or the earlier termination of the Mirror PPA. (g) Governing Law. This Agreement shall be interpreted, governed and construed under the laws of the State of New Jersey, exclusive of its conflict of laws provisions. (h) Counterparts. This Agreement may be executed in counterparts. Each counterpart shall be deemed an original but together shall constitute one and the same instrument. -4- IN WITNESS WHEREOF, this Agreement has been executed and delivered as of the date and year first above written. COGEN TECHNOLOGIES NJ VENTURE By: /s/ CLARK C. SMITH ------------------------------- Name: Clark C. Smith Title: President EL PASO MERCHANT ENERGY, L.P. By: /s/ TIMOTHY D. BOURN ------------------------------- Name: Timothy D. Bourn Title: Senior Vice-President -5-