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HomeMy WebLinkAbout5.407 Original Contract 6. -<t{)~1 POWER SALES AGREEMENT THIS AGREEMENT is entered into effective the 1 st day of July, 1996, by and between the City of Port Angeles, a municipal corporation of the State of Washington (hereinafter referred to as "City"), and Rayonier Inc., a North Carolina corporation (hereinafter referred to as "Rayonier"). WITNESSETH: WHEREAS, the Bonneville Power Administration (hereinafter referred to as "Bonneville") has agreed to make available to the City surplus firm energy at a fixed rate for a limited period of time for use at Rayonier's pulp mill located in the City of Port Angeles, pursuant to a Surplus Firm Energy Sale Agreement, contract No. 96MS-95279, effective July 1, 1996, (hereinafter referred to as the "Bonneville Agreement") in order to facilitate the unique needs and foster a longer term relationship with Rayonier; and WHEREAS, the City Council has approved an amendment to the City's electric rate ordinance to provide for passing through the above referenced rate; and WHEREAS, it is in the best interests of the citizens of Port Angeles to enter into a contractual arrangement with Rayonier in order to pass through this special rate in the limited circumstances authorized by Bonneville; NOW, THEREFORE, the parties hereto mutually agree as follows: 1. Effective Date of Agreement. This Agreement shall be effective on the hour ending (HE) 0100 hours on July 1, 1996 (hereinafter referred to as the "Effective Date"). 2. Term of Agreement. This Agreement shall be in effect for an "Initial Term" and a "Secondary Term", and shall terminate at the end of the Secondary Term. a) The Initial Term shall commence on the Effective Date and shall end on the earlier of the following: i) HE 2400 hours on December 31, 1997; ii) HE 2400 hours on the last day of the calendar month in which Rayonier gives notice of termination of the Initial Term. Rayonier may give notice of termination of the Initial Term to the City and to Bonneville, in writing, not later than the 20th day of any calendar month, effective as of the last day of that month; or ill) HE 2400 hours on the last day of the calendar quarter in which Rayonier's fiscal quarters accounting records show a mill margin, less depreciation and electric power costs, for the Rayonier Port Angeles pulp mill of more than $200/ton of pulp produced during that quarter. The City shall have the right to have a mutually agreeable CPA firm review the accounting books and records ofRayonier's Port Angeles pulp mill, at reasonable times and upon reasonable notice, for the purpose of verifying the mill's pre-tax income numbers. The CPA firm shall review such books and records under a confidentiality agreement and will not disclose the actual books and records to any party, including the City and Bonneville, in order to avoid the mill's books and records becoming subject to release pursuant to any public records disclosure requirements. The CPA firm will make a report to the City verifying or not verifying the mill's pre-tax numbers. If the CPA firm cannot verify the mill's pre-tax numbers, the mill will provide additional documentation or revise the calculations in a form that can be verified by the CPA firm. Rayonier shall pay for the CPA's review. b) The Secondary Term shall commence on the HE 0100 hours on the first day following the end of the Initial Term and shall continue for a period equal to the number of calendar months of the Initial Term, plus and additional number of calendar months, if any, calculated pursuant to section 6, and shall end on the HE 2400 hours of the last day of the last calendar month of such period. 3. Early Termination. Rayonier shall have the right to terminate this Agreement prior to the end of its term, upon sixty (60) days written notice to the City and to Bonneville, in the event of a permanent closure ofRayonier's Port Angeles mill. Rayonier may give notice of permanent closure if it projects that a closure will last more than nine (9) months; provided that if the mill re-opens in less than nine (9) months, the notice shall be deemed effective to terminate only the Initial Term and this Agreement shall be reinstated for the balance of its term. 4. Sale of Power and Price. The City agrees to provide power to Rayonier and Rayonier agrees to purchase power from the City in the amounts and at the prices set forth below. a) During the Initial Term, the City shall provide to Rayonier's Port Angeles mill the firm blocks of power (100% load factor) set forth in Exhibit "A", which is attached hereto and by this reference made a part hereof Rayonier shall have the right to modify the blocks of power set forth in Exhibit "A" as provided in section 5. The price for such firm blocks of power shall be $17.00 per megawatt hour. The City shall also provide power to meet the needs ofRayonier's Port Angeles Mill which are in excess of such blocks of power at the rates set forth in the City's then current IT rate schedule. b) During the Secondary Term, the City shall provide all of the electric power needs ofRayonier's Port Angeles mill at the rates set forth in the City's then current IT rate schedule. 2 5. Modification of Firm Blocks of Power. Rayonier shall have the right to reduce the amount of power it will purchase under the firm blocks of power set forth in Exhibit" A" for any calendar month by providing notice to the City and Bonneville of the reduced amount not later than the 20th day of the month preceding the month for which the reduction will take effect. 6. Failure to Use Scheduled Firm Blocks of Power. In the event Rayonier fails to use the full amount of the scheduled firm block of power set forth in Exhibit "P;', as modified pursuant to section 5, above, the amount of power not taken shall be added to the "Power Account". At the end of the Initial Term, the total amount of power in the Power Account shall be divided by 5,000 MWh, and the resulting quotient, rounded to the nearest whole number, shall be the number of months added on to the Secondary Term. 7. Point of Delivery. The point of delivery for power provided under this Agreement shall be the same as the point of delivery under the Bonneville Agreement. 8. Ancillary Services. The City shall provide load shaping, load regulation, reactive power and other customary services ancillary to the delivery of power. The charge for such services is included in the prices set forth above. 9. Force Majeure. Neither party hereto shall be liable for any delay or default in providing or taking power hereunder due to any cause beyond its control which prevents the operation of its facilities, including but not limited to acts of God or the public enemy, acts of the federal or state government, floods, volcanic eruptions; wars, fires, storms, labor disputes, weather conditions, interruptions of transportation, freight embargoes, or delays in delivery of material, equipment or service. If either party is unable to perform due to a force majeure event, such party shall use due diligence to remove such inability. 10. Assignment. Neither party hereto may assign its rights hereunder without the prior written consent of the other party, except that Rayonier may assign its rights hereunder to a party which acquires substantially all of the assets ofRayonier's Port Angeles mill without the consent of the City. 11. Notice. Any notice given hereunder shall be in writing and shall be deemed to have been duly given when deposited into the United States mail postage prepaid as registered or certified mail, return receipt requested, addressed as follows, or sent by facsimile transmission to the fax numbers shown below with confirmation of receipt. To Rayonier: Jim Nelson Materials Group Leader Rayonier Inc. 700 North Ennis St. Port Angeles, WA 98362 Fax: (360) 457-2439 3 Copy to: Donald L. Schwendiman Regional Counsel Northwest Rayonier Inc. P.O. Box 34162 Seattle, W A 98124 Fax: (206) 248-4117 To City: Scott McLain Power Resources Manager City of Port Angeles P. O. Box 1150 Port Angeles, W A 98362 Fax: (360) 417-4709 To Bonneville: Chuck Forman Customer Account Executive Bonneville Power Administration 1835 Black Lake Blvd. S.W. Olympia, WA 98512-5623 Fax: (360) 753-9028 or such other person, address or fax number as either party may designate by written notice from time to time. 12. Applicable Law. The law of the State of Washington shall govern this Agreement. 13. Captions. Captions or section headings contained in this Agreement are inserted only as a matter of convenience and in no way define, limit, or extend the scope or intent of this Agreement or any provision hereof 14. Complete Agreement. This Agreement constitutes the entire agreement between Rayonier and the City with respect to the transaction contemplated herein and there are no other agreements written or oral. Any changes in the terms and conditions of this Agreement must be made in writing, identified as a part of this Agreement and signed by both parties. 15. Dispute Resolution. ( a) If there is a dispute between the parties regarding any matter arising out of or in connection with this Agreement, and either party gives notice to the other party of such dispute, then the representatives of each party with authority to resolve such dispute will meet within fifteen (15) days of the date the notice is received to discuss and attempt to resolve the dispute. If the dispute is resolved, the parties will confirm the resolution of the dispute in writing within five (5) days thereafter. 4 (b) In the event a dispute is not resolved within the time provided in subparagraph 15(a), the parties shall endeavor to settle the dispute by mediation under the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes. The parties will attempt to agree on a neutral third party for the mediation. If the parties cannot agree on a neutral third party, the neutral third party will be selected from the CPR Panels of Neutrals. If the parties encounter difficulty agreeing on a neutral, they will seek the assistance of CPR in the selection process. ( c) In the event a dispute is not resolved by negotiation or mediation as provided in subparagraphs 15(a) or (b), such dispute shall, upon written demand of either party, be submitted for resolution by an Arbitrator mutually agreed to by the parties, or, if they are unable to agree upon the Arbitrator within ten (10) days of such written demand for arbitration, the Judicial Arbitration & Mediation Service shall provide a list of 3 available arbitrators from which each party may strike one. The remaining jurist will serve as the arbitrator. The arbitration shall be conducted pursuant to the laws of Washington and the Commercial Arbitration Rules of the American Arbitration Association, shall proceed with due dispatch to resolution and award, and the award shall be evidence by a writing capable of being filed and enforced and judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof The arbitration shall be conducted at Port Angeles, Washington unless otherwise agreed by the parties. Nothing shall give the Arbitrators the power or authority to alter, amend, change, modify, add to or subtract from any of the written terms of this Contract. Each party shall be responsible for the cost of its own attorney's, consultants or other experts in any arbitration and the parties shall equally share the cost of the arbitrator. IN WITNESS WHEREOF, the parties have executed this Agreement, the date and year first above written. CITY OF PORT ANGELES RA YONIER INC. BY:~~ Robert . Titus Ci Li t Director Date:. 30 96 By:!I!d/fJ!~ pera .ons Manager Dat: .30 9Cf6:::? 5 EXHIBIT A Monthly Blocks of Surplus Firm Energy MonthlY ear Monthly amount of energy (Mwh) July 1996 August 1996 September 1996 October 1996 November 1996 December 1996 January 1997 February 1997 March 1997 April 1997 May 1997 June 1997 July 1997 August 1997 September 1997 October 1997 November 1997 December 1997 10,000 15,624 15,120 15,645 15,120 15,624 15,624 14,112 15,624 15,099 15,624 15,120 15,624 15,624 15,120 15,645 15,120 15,624 e~w c~ lty lllitl 6