AMENDMENT TO EPC AGREEMENT (W. H. Sammis Plant AQC Systems)

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(W. H. Sammis Plant AQC Systems)

 

THIS AMENDMENT (“Amendment”) is entered into as of September __, 2007, by and between FirstEnergy Generation Corp. (“FirstEnergy”), and Bechtel Power Corporation (“Contractor”).  FirstEnergy and Contractor are sometimes referred to herein individually as a “Party” or collectively as the “Parties.”

 

R E C I T A L S:

 

A.       FirstEnergy and Contractor entered into General Terms and Conditions for Engineering, Procurement, and Construction of Air Quality Control (AQC) Systems, dated August 26, 2005 (the “EPC Agreement”), by which FirstEnergy has retained Contractor to engineer, procure, and construct air quality control systems for the reduction of sulfur dioxide emissions at FirstEnergy’s W. H. Sammis Plant.

 

B.      During the Development Phase of each Subproject, the Parties have mutually determined the Target Construction Cost, Work Scope, Guaranteed Final Completion Date, Project Schedule, and certain other issues with respect to such Subproject.  FirstEnergy has issued to Contractor a Notice to Proceed with full construction of the Subprojects, effective on the same date as this Amendment.

 

C.      In connection with the determinations made during the Development Phase and issuance of the Notice to Proceed, the Parties desire to amend the terms of the EPC Agreement as described below.  The EPC Agreement, as amended hereby, is referred to herein as the “Agreement.”

 

FOR GOOD AND VALUABLE CONSIDERATION, and intending to be legally bound, the Parties agree to amend the EPC Agreement as follows:

 

1.      Priority of Interpretation.  Section 1.3 of the EPC Agreement shall be deleted in its entirety, and the following inserted in its place:

 

 1.3           Priority.  The documents making up this Agreement are intended to be complementary and mutually explanatory of one another.  For the purposes of interpretation, the priority of the documents shall be in accordance with the following sequence:

 

  (A)           Purchase Order #45161617;

 

  (B)           these General Terms and Conditions;

 

  (C)           the Scope Book

 

  (D)           FirstEnergy’s Requirements;

 

  (E)           the Drawings and Specifications;

 

  (F)           any other documents forming a part of this Agreement.

 

As to any FirstEnergy’s Requirements issued after the date of this Amendment, the Parties acknowledge and agree (i) any such items shall only be issued by the individuals identified in the Parties’ Notice of Direction on Designated Representatives and Official Communications (TCM-GAM-00240, or any future amendment thereof) and further (ii) such items may qualify as an Owner-directed Change, to be evaluated for a Change Order in accordance with Section 8.1.

 

The latest dated amendment or Change Order shall take precedence over that part of the foregoing documents that it supersedes.  Either Party, upon becoming aware of any such conflict or variance, shall promptly notify the other Party in writing.

 

2.  Subsurface Conditions.  The following shall be added as a new Section 8.2(A)(7) of the EPC Agreement:

 

  (7)           discovery at the Site of unknown: (A) subsurface natural conditions of an unusual nature, differing materially from those ordinarily encountered or generally recognized as inherent in work similar to the Project and from those subsurface natural conditions established by First Energy Reliable Information or the geotechnical survey reports included or referenced in the Scope Book; or (B) subsurface man-made conditions differing from those man-made conditions established by First Energy Information or the subsurface man-made conditions reports included or referenced in the Scope Book, provided Contractor has used Good Practices in investigating the Site; which materially affects Contractor’s direct cost to perform the Work under this Agreement or delays the time of performance of such Work.

 

3.  Force Majeure.  The following shall be added as a new Section 9.1(C) of the EPC Agreement:

 

  9.1(C)     Force Majeure Granted under NSR Consent Decree for Labor Unavailability.  Notwithstanding the foregoing, if FirstEnergy is granted, by stipulation of the parties to the NSR Consent Decree or by final unappealable judgment of a court pursuant to the dispute resolution procedures of the NSR Consent Decree, an extension of deadlines for performance of FirstEnergy’s compliance requirements under the NSR Consent Decree, as a result of a force majeure event arising out of unavailability of labor, then Contractor shall be entitled to seek a similar extension of the Project Schedule (including the Guaranteed Final Completion Date) as a result of such labor unavailability circumstances as a Force Majeure Event under this Agreement.

 

                  If FirstEnergy elects to seek a claim for force majeure relief under the NSR Consent Decree, then Contractor agrees to provide reasonable assistance in presenting such claim.  FirstEnergy retains sole discretion over whether and how to seek force majeure relief under the NSR Consent Decree.

 

4.  FE Vendors/Subcontractors.  The supply contracts described on Appendix A hereto  (entitled “FE Vendors”) will be contracted directly by FirstEnergy as FE Vendors.    If additional required supply scope is identified after the date hereof, FirstEnergy and Contractor will determine whether such suppliers will be FE Vendors or Subcontractors on a case-by-case basis in a manner consistent with the EPC Agreement and shall update Appendix A.

 

5.  Automatic Assignment of Certain Subcontracts; Chimney Subcontract Default.

 

                          (A)           In addition to FirstEnergy’s right to request assignment of any Subcontract under Section 2.3(C) of the EPC Agreement, FirstEnergy hereby grants to Contractor the right to request assignment to FirstEnergy or its designee of the Subcontracts listed below (including all payment obligations) in the event of any termination or cancellation of the EPC Agreement.  FirstEnergy hereby prospectively accepts, and shall cause its designee(s) to accept, all such assignments.

 

25186-000-HC1-CP00-00001   (Piling)

 

25186-000-HC1-DB51-00001  (Chimney)

 

25186-000-POA-SS01-00001   (Structural Steel)

 

25186-000-POA-MD00-00001 (Duct - Dynasteel)

 

25186-000-POB-MD00-00001 (Duct - PSP)

                       

                         (B)          To the extent that the Subcontractor defaults under Subcontract 25186-000-HC1-DB51-00001 (Chimney) (the “Chimney Subcontract”), FirstEnergy agrees that all amounts expended or incurred by Contractor (including any un-recovered backcharges or other un-recovered costs) in excess of the amount allocated to the Chimney Subcontract in the TCC , to address such Subcontractor default that would have been recoverable by Contractor under or pursuant to a payment and performance bond had such a bond been secured for the Chimney Subcontract, shall be the subject of a Change Order between the Parties that will increase the Target Construction Cost by the amounts so expended; provided Contractor shall pursue recovery of such amounts as may be recoverable from the associated Subcontractor; and further provided, the Change Order described above shall be only in the amount that is not recoverable from the Subcontractor or amounts recovered by First Energy that are not applied to reduce the Final Construction Cost.  FirstEnergy shall be subrogated to the rights of Contractor under the Chimney Subcontract to recover from the Subcontractor the amount of such excess cost.

 

6.  Delineation of Subprojects.  The Project will be made up of three Subprojects:

 

                          (A)           Subproject #1 is comprised of Scrubber C (which serves the gas flow from Generating Units 1-4), including the ID booster fans serving Scrubber C.

 

                         (B)           Subproject #2 is comprised of either Scrubber A or Scrubber B, whichever is the first to achieve Final Completion (which serves an amount of gas flow equivalent to ½ of the gas flow from Generating Units 5, 6, and 7), excluding the ID booster fans serving Scrubber A and Scrubber B (provided however, notwithstanding the foregoing definition, sufficient ID fan capacity must be available to support Performance Testing of Subproject #2).

 

                         (C)          Subproject #3 is comprised of either Scrubber A or Scrubber B, whichever is the last to achieve Final Completion (which serves an amount of gas flow equivalent to ½ of the gas flow from Generating Units 5, 6, and 7), including the ID booster fans serving Scrubbers A and B, and all common facilities and equipment not included within Scrubbers A, B, and C.

 

For purposes of this Section, a “Scrubber” shall include the WFGD absorber tower, ID booster fans (except as noted above in the case of Subproject #2), ductwork, and other equipment and systems dedicated to that absorber tower.  A schematic of each Subproject is attached hereto as Appendix B.

 

7.  Guaranteed Final Completion Date.  The Guaranteed Final Completion Date for Subproject #1 shall be September 1, 2010.  The Guaranteed Final Completion Date for Subproject #2 shall be October 31, 2010.  The Guaranteed Final Completion Date for Subproject #3 shall be November 15, 2010.

 

8.  Target Construction Cost; Final Construction Cost; Fee.

 

                           (A)         The sixth paragraph of Exhibit 5.1 of the EPC Agreement shall be deleted in its entirety, and the following inserted in its place:

 

The "Target Construction Cost" of the Subprojects will include the Professional Construction Labor (and associated G&A and Engineering Technology Charge), Purchased Equipment and Materials, Fabricated Items, Freight, Craft Labor, Consumables, Major Equipment & Tool Rental, Temporary Facilities, Subcontractors, premiums for bonds and insurances as provided in the EPC Agreement, and taxes on Contractor’s construction equipment and Consumables.  The “Target Construction Cost” excludes Professional Engineering and Graphics labor and Other Professional labor (with the associated Engineering Technology Charge and G&A), travel and living expenses, Engineering Subcontracts, additional insurances or bonds other than those provided in the EPC Agreement, all FE Vendor costs (other than B&W costs) and all other taxes.  The Target Construction Cost shall be exclusive of any Fee.  The “Final Construction Cost” of the Subprojects shall be the aggregate amount of costs associated with the Target Construction Cost that, with respect to each Subproject, is actually incurred prior to Final Completion of that Subproject.

 

 

 

 

                          (B)          The aggregate Target Construction Cost for Subprojects #1, #2, and #3 is provided in Appendix C-1.

 

                          (C)          The Target Construction Cost, the Final Construction Cost and the ultimate value of the earned Target Construction Cost Fee shall be administered and determined on an aggregate basis among all three Subprojects.  Therefore, any adjustments of the Target Construction Cost Fee as described in Exhibits 5.1 through 5.1-3 to the EPC Agreement shall be determined and made on an aggregate basis for Subprojects #1, #2, and #3, by comparing the aggregate Final Construction Cost for all three Subprojects to the aggregate Target Construction Cost for all three Subprojects.  All other Fees (the Engineering/Graphics & Other Professional & Specialists Labor Cost Fee and the Professional Construction (Field Non Manual Labor Fee)) shall also be administered and determined on an aggregate basis among all three Subprojects as described above.

 

                          (D)        For purposes of the liability cap described in Section 18.4 of the EPC Agreement, (i) the earned Fee associated with Subproject #1 shall be equal to [******%] of the  actual final value of the total earned Fees on the Project;  (ii) the earned Fee associated Subproject #2 shall be equal to [******%] of the actual final value of the total earned Fees on the Project; and (iii) the earned Fee associated with Subproject #3 shall be equal to [******%] of the actual final value of the total earned Fees on the Project.  The parties acknowledge and agree that the actual final value of the earned Fees associated with  the Project will be determined through a jointly conducted reconciliation of all applicable adjustments to the aggregate Fees that will be completed as promptly as practicable, and in no case later than ninety (90) Days, after all Subprojects have achieved Final Completion.  Upon completion of the foregoing reconciliation, the actual final value of the total earned Fees shall be allocated among Subprojects #1, #2, and #3 in accordance with the percentages provided in the first sentence hereof.  To the extent that the foregoing reconciliation results in any amount previously paid by Contractor on any Subproject being an overpayment in light of the value of the total earned Fee applicable to such Subproject, FirstEnergy shall reimburse to Contractor any such overpaid amounts as part of the next billing cycle.  Similarly, to the extent that the foregoing reconciliation results in any amount previously paid by Contractor on any Subproject being an underpayment in light of the value of the total earned Fee applicable to such Subproject, Contractor shall pay to FirstEnergy any such underpaid amounts as part of the next billing cycle.  A work sheet attached hereto as Appendix C-2 provides illustrative examples of how the earned Fee will be determined and apportioned in accordance with the process described above.

 

  9.  Performance Tests.  Testing for Performance Guarantees shall be performed independently for Subprojects #1, #2, and #3.  Testing for the Reliability Standard shall be performed independently for Subprojects #1 and #3 and there shall be no Reliability Standard required to be tested or demonstrated with respect to Subproject #2.  The common systems will be tested in conjunction with the Reliability Test performed on Subproject #3, and must not cause the output of any Sammis Generating Unit to be restricted during the duration of the test.

 

               10.  Schedule Liquidated Damages;  Final Document Delivery.  Exhibit 6.5 of the EPC Agreement shall be deleted in its entirety and replaced with the new form of Exhibit 6.5 attached hereto as Appendix D.

 

11.  TCC Deadband.  Exhibit 5.1-3 of the EPC Agreement shall be deleted in its entirety and replaced with the new form of Exhibit 5.1-3 attached hereto as Appendix E.  The [******%] deadband below the Target Construction Cost shall be eliminated.

 

12.  Additional Incentive.  FirstEnergy will pay to Contractor an “Additional Incentive Fee” in the amount of [$******] for each [$******] by which the final Overall Project Cost is below a fixed target amount of [$******] (the “Additional Incentive Target”).  The Additional Incentive Target is not subject to adjustment up or down for any reason whatsoever.  The “Overall Project Cost” is intended to be the total of all costs actually incurred by FirstEnergy in connection with the Project, and shall be equal to the total aggregate amount of the Final Construction Cost, plus the amount payable to Contractor for Engineering & Graphics Labor, Other Professional Labor, the Engineering Technology Charge associated with Engineering & Graphics Labor and Other Professional Labor, Engineering Subcontracts, Travel & Living Expenses, and G&A (each of the foregoing as described in Exhibit 5.1 of the EPC Agreement), plus all amounts payable to FE Vendors identified in Appendix A.

 

In addition, if Contractor loses its entitlement to earn any portion of the Target Construction Cost Fee due to an overrun of the Target Construction Cost, then the amount of the Additional Deadband Adjustment will be subtracted from the Final Construction Cost for purposes of determining adjustment of the Target Construction Cost Fee, as described in Exhibit 5.1-3.  The “Additional Deadband Adjustment” shall be the amount equal to the difference of: (a) [$******] minus (b) the Overall Project Cost less the Final Construction Cost.

 

 

 

The actual final total value of the Overall Project Cost, the Additional Incentive Fee, and the Additional Deadband Adjustment shall be calculated as part of the reconciliation provided in Section 8(D) of this Amendment.  The Additional Incentive Fee shall be payable with the immediately following billing cycle.

 

13.          Schedules.  The Project Schedule and Critical Path Schedule referenced in Section 6.4 of the EPC Agreement, as recognized by the Parties as of the date of this Amendment,  is attached hereto as Appendix F.

 

14.          Additional Contract Clarifications.  For the avoidance of doubt, the Parties acknowledge that:

 

(A)  Contractor is not liable for Performance Liquidated Damages or Schedule Liquidated Damages attributable to performance deficiencies or delays to the extent caused by a Subcontractor   (but is liable for Liquidated Damages to the extent such are assessable due to any Professional Services, and construction labor services provided as part of the Work except where such is provided by a Subcontractor supplying Materials or equipment).

 

(B)  The cost of products and services supplied by Subcontractors are included in the Target Construction Cost, and the [******]% Target Construction Cost Fee applies to these items.  The cost of products and services supplied by Babcock & Wilcox as OEM under the Agreement for Flue Gas Desulfurization Systems dated August 25, 2006 (the “FGD Agreement”), are included in the Target Construction Cost (provided, if any change orders  to the FGD Agreement adjust the costs thereunder, such price adjustments shall be made (up or down) to the Target Construction Cost and the Parties shall memorialize a revision to the Target Construction Cost and the related [******%] Target Construction Cost Fee, which applies to this item).  The cost of products and services supplied by FE Vendors (other than costs paid to Babcock & Wilcox under the FGD Agreement) are not included in the Target Construction Cost, and the [******%] Target Construction Cost Fee does not apply to these items.  Notwithstanding the foregoing, costs paid to Babcock & Wilcox for the SO₃ control system are not included in the Target Construction Cost, and the [******%] Target Construction Cost Fee does not apply to this item.

 

(C)      FirstEnergy, Contractor, the FE Vendors, and the Subcontractors shall each have separate and independent obligations to achieve the key milestones assigned to any such Persons in accordance with the schedule and by the dates provided in the Project Schedule and the Critical Path Schedule for achievement thereof.  In addition, the Parties acknowledge and agree that the failure of B&W to achieve the milestones assigned to B&W described in Appendix G by the date set forth therein shall be considered a delay within the meaning of Section 9.2 of the EPC Agreement.

 

(D)  For purposes of clarity, the Parties confirm that, as provided in Exhibit 5.1-3 and notwithstanding the description of the Professional Cost Fee on page 7 of Exhibit 5.1 of the EPC Agreement, Contractor’s [******%] Target Construction Cost Fee shall be the sole component of Contractor’s Fee that will be adjusted for variance from the Target Construction Cost.

 

(E)  In allocating float as described in Section 6.4(A)(3) of the EPC Agreement, in the event that float associated with an activity is used and such usage delays the critical path of the Critical Path Schedule and materially affects Contractor’s ability to meet the Critical Path Schedule, the Parties will review in good faith the impacts resulting from such usage of float to ensure that each Party is treated fairly in consideration of the issue(s) that caused float to be used and in consideration of any efforts taken to mitigate the impacts.

 

15.         Work Scope; Scope Book.  Attachment A of the EPC Agreement shall be deleted in its entirety and replaced with the new form of Attachment A attached hereto as Appendix H.  The Scope Book referenced in Section 1 hereof is Document Number 25186-000-G80-GGG-00001-002, which document shall be updated as provided in Appendix I hereto.

 

16.         Design Coal.  Exhibit 7.2-1 of the EPC Agreement shall be deleted in its entirety; and the Parties agree that the Design Fuel range for purposes of the Performance Guarantees shall be as provided in the Design Fuel Specifications set forth in the Scope Book.

 

17.           Miscellaneous.

 

(A)  Definitions;  Agreement in Full Force and Effect.  Capitalized terms used but not otherwise defined in this Amendment shall have the meanings given to such terms in the EPC Agreement.  Except as otherwise expressly modified hereby, the EPC Agreement remains in full force and effect, and the Parties hereby restate each and every term, condition, and agreement of the Parties as contained in the EPC Agreement as if fully written out herein.  The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of any party under the EPC Agreement, except as specifically set forth herein.

 

(B)  Governing Law.  This Amendment shall be governed by and construed in accordance with the laws of the State of Ohio.

 

(C)  Interpretation. The section and other headings in this Amendment are inserted solely as a matter of convenience and for reference, and shall be given no effect in the construction or interpretation of this Amendment.  Upon the effectiveness of this Amendment, each reference in the Agreement to “this Agreement,” “hereunder,” “hereof,” “herein,” “hereby” or words of like import shall mean and be a reference to the Agreement as amended hereby, and each reference to the Agreement in any other document, instrument or agreement executed and/or delivered in connection with the Agreement shall mean and be a reference to the Agreement as amended hereby.  When used herein, the words “include” and “including” shall be construed as “include, without limitation” and “including, without limitation.”  This Amendment has been freely negotiated by all Parties and in the event there is any controversy, dispute, or claim involving the meaning, interpretation, validity, or enforceability of this Amendment or any of its terms or conditions, there shall be no inference, presumption, or conclusion drawn against a Party by virtue of such Party having drafted this Amendment or any portion hereof.

 

(D)  Execution and Counterparts.  This Amendment may be executed in multiple counterparts, which taken together shall constitute an original without the necessity of all parties signing the same page or the same documents, and may be executed by signatures to electronically or telephonically transmitted counterparts in lieu of original printed or photocopied documents.  Signatures transmitted by facsimile shall be considered original signatures.

 

IN WITNESS WHEREOF, the undersigned have caused this Amendment to be duly executed as of the date first written above.

 

FirstEnergy Generation Corp.
By:
	Richard R. Grigg, Executive Vice
	President and Chief Operating Officer
Bechtel Power Corporation
By:
	Robert L. Kasper, Jr.
	Principal Vice President

 

 

 

 

Description

CIVIL / STRUCTURAL / ARCHITECTURAL

CIVIL / STRUCTURAL

Inspection of Deck over Route 7

MACHINERY

ROTATING EQUIPMENT

Booster Fans / ID Fans

ID Fan Centrifugal - Mods to Existing Fans (Rotor Replacement)

General Purpose Pumps (Water)

Fire Pumps / Jockey Pumps/ Water Pumps

Sump Pumps

WATER TREATMENT/PACKAGED SYSTEMS

Raw/Service Water Filtration System

Wastewater Treatment

MATERIAL HANDLING

Limestone and Gypsum Handling System

POWER GENERATION

SO3 Control System

Wet Scrubber FGD System

 

ELECTRICAL

ELECTRICAL EQUIPMENT

Motor Control Centers < 1 kV  ANSI  and AC Distribution Panel

Elect  Equip  Module / Powerhouse - Building Only

Unit Substation < 1 kV - ANSI / Loadcenter 480 kV (Incl Trans.)

13.8 kV Switchgear - ANSI (Includes MCCs> 1 kV)

4160 V Switchgear - ANSI (Includes MCCs> 1 kV)

Cranking Transformer

Transformers, Power (Oil Filled, MV/MV)

Dry Type Transformer for double ended MCCs (DEMCCs)

Inverter, UPS Panel & Regulating Transformer, Batteries & Battery Chargers

and DC Switchboard

ELECTRICAL SWITCHYARD

High Voltage  Breakers  (Swyd - AIS)

HV Swyd Disconnect Switches (AIS)

HV Surge Arrestors

CONTROL SYSTEMS

CEMS

DCS

SPECIALTY CONTRACTS

Scaffold, Furnish & Install / Furnish Only

 

 

 

 

 

[See Attached Appendix B]