ML20055J322

Decommissioning Funding Assurance Rept & Certification

ML20055J322
Person / Time
Site:	Yankee Rowe
Issue date:	07/25/1990
From:	Tracy H YANKEE ATOMIC ELECTRIC CO.
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ML20055H671	List: ML20055H670 ML20055J322
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NUDOCS 9008020095
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i DECOMMISSIONING FUNDING ASSURANCE REPORT AND CERTIFICATION j

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Submitted pursuant to 10 CFR $50.33 (k) (2) and 550.75 YANKEE NUCLEAR POWER STATION ROWE, MASSACHUSETTS YANKEE ATOMIC ELECTRIC COMPANY i

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July 25, 1990 i

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JAIDEDIN.YA 9008020095 900725 PDR ADOCK 05000029 I

PDR I

INTRODUCTION This report is being submitted by Yankee Atomic Electric Company (" Yankee"), which owns and operates Yankee Nuclear Power Station ("YNPS") under License No. DPR-3 (the " License"),

pursuant to 10 CPR 550.33(k)(2), for the ytrpose of " indicating how reasonable assurance vill be provided that funds will be available to decommissior the (YNPS) facility".

The information contained in this report a1 dresses Yankee's compliance with 10 CFR 550.75.

BACKGROUND Yankee is a public utility corporation, organized under the laws of Massachusetts in 1954 for the purpose of constructing YNPS, a PWR producing 600 MWt and one of the earliest commercial generating reactors.

Yankee is owned bi in established electric utility companies serving customers in various parts of New England.

During the construction of YNPS and since its commercial operation began, these utilities provided' financial support for Yankee through Power Contracts and Research Contracts, each with initial terms of twenty years.. The former continue to provide an assured market for.100% of YNPS' capacity and output at a price equal to Yankee's total cost-of service, including a return on equity; the lattgr provided a source of revenue primarlly while plant construction was underway.

Together these contracts supported construction financing by L

third parties.

In subsequent years, the Power Contracts have

been extended to coincide with the term of the License, have been amended to specifically include the cost of decommissioning, whenever incurred, and have supported Yankee's outside financings from time to time.

YNPS began commercial operation in 1961 under the Operating License, whose term initially expired November 4, 1997.

In 1988 the License term was extended to July 9, 2000 to recapture the construction period.

COMPLIAMCE WITE 10 CFR E50.75 The Trust 1.

On April 16, 1981, Yankee entered into an Indenture of ~~

Trust with State Street Bank and Trust Company, as trustee, which created the Yankee Atomic Decommissioning Trust (the " Trust") for the purpose of holding funds collected for the eventual

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decommissioning of YNPS.

After enactment of the Tax Reform Act of 1984, in particular the new Sections 172(k) and 468A, the 4

Trust was modified to reflect the new tax provisions by an instrument entitled " Amended and Restated Indenture of Trusta, dated as of November 29, 1985, between Yankee and the Trustee.

That instrument was amended by a First Supplemental Indenture, dated as of July 1, 1987, to provide for multiple fund managers and a Second Supplemental Indenture, dated as of September 12, i

1988, to modify the investment guidelines. A copy of the trust instrument is submitted herewith in compliance with the requirements of 10 CFR 550.75(b).

(Enclosure No. 1).

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2.

The Trust is an independent, irrevocable trust whose assets are held and administered by the Trustee for the sole F

purpose of paying the decommissioning costs of YNPS.

As such, the Trust is completely segregated from Yankee's assets and outside its administrative control.

The Trust constitutes an external sinking fund within the meaning of 10 CPR 550.75(e)(li).

l 3.

The Trust instrument has been duly executed by officers of the parties thereto, thereunto duly authorized.

4.

Currently, the Trustee is a Massachusetts banking corporation whose trust operations are regulated and examined by the Commonwealth of Massachusetts.

As of August 1, 1990, the Trust will be amended to name as trustee Mellon Bank, N.A.,

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national banking association whose trust operations are regulated and examined by the Commonwealth of Pennsylvania.

5.

The Trust instrument establishes three separate trust i

funds: a " Qualified Trust Fund" which consists of all contributions and earnings thereon which qualify for deduction under Section 468A of the Internal Revenue Code; a "Non-Qualified Trust-A Fund" which consists of amounts contributed by the utilities prior to July 18, 1984 and income earned thereon't and i These contributions were contributed directly to the Trust in accordance with Yankee's directions to the utilities under the Power Contracts.

While Yankee initially included these amounts in its tax return, it immediately filed for a refund on the theory that it had no claim on these funds until they were expended by the Trust to meet Yankee's decommissioning expenses.

IRS denied the clain; however, the U. S. Court of Appeals for the i

Federal Circuit ultimately upheld Yankee's position and the l

refund was paid.

Yankee Atomic Electric Comoany vs.

U.S.,

782 F.2d 1013 (Fed. Cir., 1986). I

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a "Non-Qualified Trust-B Fund" which consists of any amounts contributed after July 18, 1984 and income thereon which are not eligible for treatment under Section 468A.

Collections 6.

Yankee's Power Contracts with each of the utilities constitute wholesale power contracts which are subject to the jurisdiction of the Federal Energy Regulatory Commission l

("FERC").

The original contracts were filed with FERC and accepted as cost of service tariffs in 1959, before YNPS commenced operation.

As such, they are binding obligations of the wholesale seller, Yankee, and the wholesale buyers, the utilities.

The Power Contracts are take-or-pay obligations which require that the utilities pay Yankee's cost of service, whether r

l or not YNPS is operating.

The cost of service payable under the Power Contracts includes a return on Yankee's equity, thus i

1 assuring that Yankee earns net income each year for the benefit l

of its stockholders.

The payments from the utilities are a cost of power which they pass on to their consumers.

A composite conformed copy of the Power Contracts is submitted herewith.

(Enclosure No. 2).

7.

In 1981, with the approval of the FERC, Yankee commenced collecting from the utilities, pursuant to their Power Contracts, a reserve for decommissioning, which amounts were paid directly into the Trust.

In that proceeding, FERC required the collections to be made over the then remaining term of the Power 4

2 FERC Docket No. ER80-569 - ER80-570.,

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Contracts (i.e., June 30, 1991), and expressly provided for the collection of additional dollars to pay the income taxes due with respect to such collections, the effect of which was to almost double the collections to compensate for the taxes paid by Yankee.3 In 1985, after Sections 468A and 172(k) of the Internal Revenue Code had become effective, Yankee initiated another rate proceeding at FERC', among other things, for the purpose of updating the decommissioning costs and collections and reflecting the impact of the Tax Reform Act of 1984.

In order to mitigate the costs to ultimate consumers the FERC order in that proceeding, obligated Yankee to take maximum advantage of the Section 468A provisions.

Also, in order to more equitably allocate the impact on generations of ratepayers, it required that the schedule of collections coincide with the term of the License (i.e., at that time, 1997), notwithstanding the shorter Power contract term, and fully reflect the impact of the projected net operating loss carryback resulting from Section 172(k).

3 8.

In 1989, Yankee initiated another rate proceeding to review the decommissioning issue.

This proceeding amended the Power Contracts to extend their term to coincide with the latest expiration date of any license issued by the NRC with respect to 3 See description of tax litigation in note 1 supra.

When the tax refund was received, it was repaid to the utilities which had contributed toward the original tax payment.

' FERC Docket No. ER84-654-001 5 FERC Docket No. ER90-47-000.

l YNPS and updated the schedule of decommi:Sioning collections based upon the extended term of the License (i.e., at that time, July 9, '2000), and the updated cost of decommissioning.

Decommissioning Costs 9.

Based upon the formula minimum requirements of 10 CFR

$50.75(c) and the adjustment factors specified therein, the applicable formula amount for decommissioning YNPS would be l

$100.9 million in 1990 dollars.

This calculated minimum fund 1

amount, escalated to the end of Yankee's licensed operations (July 9, 2000), becomes $170.8 million.

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un m;r u 10.

In connection with its.1989 FERC rate proceeding,

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Yankee prepared a decommissioning study for YNPS (the " Study").

Based upon that Study and other evidence, FERC approved a funding.

schedule to meet the ultimate cost of decommissioning YNPS in 2000 of $178.3 million.

The funding schedule, including collections, projected earnings on deposits and associated tax credits, approved by'FERC as an appropriate cost collectible under the Power Contracts, demonstrates that the Trust will have-r an aggregate of $178.3 million available at the end of YNPS' licensed operation in July, 2000 (see Enclosure'No. 3).

Since the FERC approved funding schedule provides for accumulation of-more than the formula minimum, the Study is not being submitted herewith, although it is available if the Staff requests, certification 11.

Based upon the foregoing, Yankee hereby certifies that financial assurance for the decommissioning of YNPS will be

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provided in an aggregate amount not less than the inflation adjusted minimum amount required by 10 CFR 550.75(c).

i Further assuramoes 12.

Yankee commits to monitor the status of the I

decommissioning fund and the applicable NRC requirements, including the annual adjustment of the minimum decommissioning requirement, and to seek rate relief as appropriate.

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13.

The Power Contracts with the utilities assure the l

existence of financial resources sufficient to cover the annual decommissioning reserve collections and the actual l

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decommissioning costs whenever incurred, regardless of whether YhPS operates in the meantime.

The Power Contracts expressly provide that each utility's obligation with respect to decommissioning costs continues in effect until the full cost of decommissioning has been paid.

14.

In accordance with 10 CFR 550.75(f), Yankee will submit, at or about five years prior to the projected and of ope / cation, a decommissioning plan containing an updated cost estimate and assessment of the major technical factors that could affect planning for decommissioning.

DISCUSSION i

As indicated by the above recitals and Enclosures No. 3 and 4,

the funds available for decommissioning YNPS in July 2000 are projected to include $90.490 million in the Non-Qualified Trust Account, $50.175 million in the Qualified Account-and $37.667 receivable from the Internal Revenue Service in respect of NOL t i

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carryback.

Yankee submits that all these funds should be considered available in an external sinking fund in accordance with 10 CFR 550.75(e) (ii) for the following reasons.

In drafting the Tax Reform Act of 1984, Congress for the first time faced the special circumstances presented by the utility industry's need to prepare for the ultimate decommissioning of its nuclear plants.'

Congress recognized that this obligation involved the accumulation over time of large sums of money in a manner which would both assure their availability when needed and minimize the cost burden on present consumers.

Because of the varying ages of the nuclear plants and the differing character of the numerous utility organizations which i

owned them, it was not a problem for which a simple answer could be fashioned.

Instead, Congress enacted a two-pronged response which provided tax sheltering for future contributions and tax relief for any unsheltered obligations:

Section 468A fostered the prudent segregation of new collections, while Section 172(k) held out assurance of future tax relief for the unsheltered obligations; the measure of the distinction being determined by the portion of the useful life of each plant which had been

' The than pending Yankee tax litigation with respect to its external fund (see note 1 supra) served as a catalyst for legislative reform of the Tax code with respect to nuclear plant decommissioning.

That case demonstrated the economic impact which the differing views of the IRS and nuclear facility owners relative to the application of existing tax principles had on the industry as a whole.

The existence of that case underscored the i

morass of litigation which would ensue if Congress failed to clarify the tax consequences of decommissioning reserves.

That clarification was subsequently provided by Congress with the passage of the ?.984 Tax Reform Act. 1

4 utilized when the Reform Act was enacted.

"The Congress believed that the establishment of segregated reserve funds for paying future nuclear decommissioning costs was of sufficient national importance that a tax deduction, subject to limitations, should be provided for amounts contributed to qualified funds."7 At the same time, Congress enacted the special loss carryback provisions relating to decommissioning expenses.

In present value terms, Congress intended that a company's taxes be equal whether it used Section 468A, the special carryback provisions, or some combination of the two.

Thus, while Congress recognized the importance of external trusts in providing decommiscioning funds, Congress limited the availability of a deduction based on the portion of a plant's life occurring after 1983.

For the portion of a plant's life attributable to years before 1984, owners must use the special

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l carryback provisions.

However, either alternative (Section 468A j

or Section 172(k)) results in the same amount of federal income e

taxes paid by the owner in present value terms.

The enactment of Sections 468A and 172(k) raflects a Congressional intent that decommissioning funAs be accumulated on an after-tax basis coupled with a future tax refund (Section 172(k)), or on a pre -

tax basis to the extent Section 468A is available and that either 7 Staff of the Joint nommittee on Taxation, General Explanation of the Revenue Provisions of the Deficit Reduction Act of 1984, p. 270 (1984); S. Rep. No. 69, 98th Cong., 2d Sess.

277 (1984). ;

l approach is a reasonable means of assuring the availability of monies for decommissioning.

As evidenced by the three FERC proceedings identified above, I

that Agency has adopted the philosophy inherent in Congress' action by requiring Yankee to maximize its utilization of the benefits of Section 468A and, at the same time, requiring that

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current collections factor in the ultimate benefits of Section 172(k) so that the burden of decommissioning is not disproportionately allocated among ratepayers.

Yankee is an unique example of the application ~of-this a== m bifurcated approach: YNPS is _the oldest plant sti[5~ operating ~ ~

l having operated almost two-thirds of its present licensa term before 1984, and Yankee itself, being essentially a single asset _

.._ T company with an assured cost of service wholesale contract for its capacity and output, is assured of annual not earnings regardless of whether YNPS operates.

The age of YNPS means that only 37.84% of the reserve needed for decommissioning qualifies for the Section 468A deduction.

The balance (62.16%) is currently taxable but, pursuant to Section 172(k) as adopted by Congress in 1984, will generate a net operating loss carryback I

when expended after July 2000.

_ _b The cumulative tax carryback as of Dececher 31, 1989 (shown on Enclosure 3) represents actual collections for decommissioning paid by the utilities (and earnings thereon).

Rather than putting the full amount of the collections into the trust (as Yankee was entitled to do pre-1984), Congress required Yankee !

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i after 1983 to pay over a portion of the funds to the federal J

government.

At the same time, however, Congress committed the government to return those amounts to Yankee at the time of decommissioning by application of the not operating loss l

carryback.

These funds are, in effect, held by the federal

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government.

Each year's increase in the amount of the tax carryback also l

t reflects amounts actually collected and paid over to the federal l

government.

As can be seen on Enclosure No. 4, Yankee has paid in the past, and expects to pay in the future, federal income l

taxes well in excess of the taxes attributable to decommissioning collections and earnings.

Thus, there is no question upon f

decommissioning that Yankee will have paid adequate taxes such I

that it will receive the full amount of the carryback shown on t

Enclosure No.

3.

In Yankee's case this future :arryback is not problematical.

Because Yankee's Power Contracts are cost of service tariffs, l

assuring coverage of all operating costs, including j

decommissioning, plus a return on equity, Yankee will not be l

t subject to intervening operating losses which.could otherwise j

reduce the projected carryback at end of life and will not become j

l a candidate for bankruptcy proceedings.

Because the Power Contracts limit Yankee's operating income to a fixed return on equity in excess of its total operating costs, including taxes, i

the potential of future tax rate increases is of minimal impact.

I Finally, given the fact that the vast majority of nuclear plant i

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owners qualify for the future benefits under Saction 172(k) and the fact that Section 172(k) was enacted as part of a coherent tax plan to deal with decommissioning, a potential repeal of Section 172(k) is highly improbable.

Yankee submits that the foregoing Unique characteristics fully justify approval of the Trust and the FERC approved collection schedule as a valid external sinking fund complying with 10 CFR 50.75(e) (li).

In further support of its position that it has fully complied with 10 CFR 550.75, Yankee submits that its Power contracts, as approved and enforceable by FERC, place it in a stronger position than most licensees.

These contracts are in effect a type of surety for the payment by Yankee of its decommissioning obligation.

The Power Contracts expressly obligate each utility to pay its share of decommissioning costs

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whenever incurred by Yankee.

Therefore, if Yankee in 2000 or beyond discovers that the funds accumulated in the Trust or anticipated as tax refunds are for any reason insufficient to cover its expenditures for decommissioning, it can collect the necessary amount from the utilities.

Each utility is a well-established business.

Each utility is capable of meeting its obligations to Yankee.

Furthermore, FERC has approved the l

extension of the term of the Power Contracts until the expiration date of the last NRC license with respect to YNPS and the

. provisions of the Power Contract preclude any early termination of the obligation for decommissioning.

Thus, the utilities' I

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commitment under the Power Contracts is an open-ended, enforceable and non-cancellable obligation to pay any decommissioning costs whenever incurred by Yankee.

As such, they constitute a surety arrangement which protects not only against the unlikely failure of the not operating loss carryback to materialize in 2000 but also against an unforeseeable decline in the value of the Trust assets or an unanticipated increase in the l

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actual cost of decommissioning YNPS.

l Respectfully submitted, i

YANKEE ATOMIC ELECTRIC COMPANY f?[

By W

. T. Tracy, Jr.

l Vice President, Treasurer and Chief Financial Officer

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i ENCIOSURES 1.

Copy of Trust, certified by Yankee officer.

2.

Composite conformed Power Contract, certified by Yankee officer.

3.

Funding Schedule.

4.

Comparison of Tax carryback with Taxes Actually Paid.

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I, H. T. Tracy, Jr., Vice President of Yankee Atomic Electric Company (the " Company"), hereby certify that the attached documents are a trus' copy of

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the Amended and Restated Indenture of Trust, dated as of November 29, 1985, the First Supplemental Indenture, dated as of July 1, 1987, and the Second Supplemental Indenture, dated as of September 12, 1988, all between the Company and State Street Bank and Trust Company, as trustee, as in effect on the date hereof.

WITNESS my hand and the seal of the Company this 25th day of July 1990.

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/~-~~r H. T. Tracy, Jr.

Vice president h

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INDENTURE OF TRUST BETWEEN YANKEE ATOMIC ELECTRIC COMPANY AND STATE STREET BANK & TRUST COMPANY TAB #

DESCRIPTION

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AMENDED AND RESTATED INDENTURE (Dated November 29, 1985) 2.

FIRST SUPPLEMENTAL INDENTURE (Dated July 1, 1987) 3.

SECOND SUPPLEMENTAL INDENTURE (Dated September 12, 1988) i 5

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1 AMENDED AND RESTATED INDENTURE OF TRUST,= dated as of November 29,1985,. between YANKEE ATOMIC-ELECTRIC COMPANY, a Massachusetts corporation having its principal office in Framingham, Massachusetts-(" Yankee"), and STATE STREET BANK AND~ TRUST COMPANY, a' banking corporation '.aving its principal office in Boston, Massachusetts-(the " Trustee").

WHEREAS, Yankee owns and operates a nuclear reactor as i

i the en.rgy source in an electric generating plant located in Rowe, Massachusetts, which activity is performed pursuant to an Operating License, No. DPR-3, dated June 23, 1961, as amended, issued by the United States Atomic Energy Commission (now the Nuclear ~ Regulatory Commission (the "NRC")), which by its terms expires on November 4, 1997; and' WHEREAS, Yankee-has heretofore established a trust pursuant to an Indenture of Trust,' dated as of April-16, j

1981 (the " Original Indenture"), between Yankee and State i

Street Bank and Trust Company, as Trustee,~to make provision 1

for financing the decommission'ing of Yankee's nuclear reactor in accordance with the Rules and Regulations of the

.o NRC and to assure Yankee's financial ability to meet the obligations to the NRC, other applicable regulatory bodies, the general public-and Yankee's ultimate customers in connection.with said decommissioning; and WHEREAS, the Tax Reform Act of 1984 added or amended several sections of the Internal Revenue Code of 1954, as i

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amended (the " Code"), relating to the costs incurred for the decommissioning of a nuclear reactor, including a new Section 46BA (as such may from time to time be amended, "Section 468A") which, among other things, permits the owner of a nuclear reactor to elect the application of 3

f Section 468A and thereby be allowed as a deduction, subject l

to certain limitations and qualifications, the amount of i

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payments made to a Nuclear Decommissioning Reserve Fund; and WHEREAS, Yankee intends to make such an electica pursuant to said Section 468A and to create three ::parate trust funds in order, among other reasons, to comply with the requirements of said Section 468A;_ and WHEREAS, Yankee has determined that, in order to provide for thu efficient 'dministration of the three trust funds l

and to obtain the maximum benefits of.Section 468A, it is-i desirable to amend and restate in its entirety the Original Indenture as expressly permitted by Section 8~.01 thereof (the Original Indenture as amended and restated hereby being sometimes referred to herein as the " Restated Indenture");

and WHEREAS, all conditions and requirements necessary to make this Restated Indenture a valid and legal instrument, L

in'accordance with its terms and the terms of the Original Indenture and for the purposes herein expressed, have been performed and fulfilled and the execution and delivery hereof have been duly authorized.

b; NOW, THEREFORE,.in consideration-of the premises _and'of I

.the sum of One Dollar duly paid by Yankee to the Trustee, L

-and of other good.and valuable consideration,.the receipt whereof is hereby. acknowledged, and for:the purposes of I

d amending and restating the original-Indenture and creating the three separate trust' funds herein provided for and 4

securing the' faithful' performance:and observance of the covenants and conditione hereinafter set forth,. Yankee has executed'and delivered this-Restated Indenture to.the' Trustee, and to its successor or successors in trust and~

said Trustee does by these presents agree, on behalf of' itselfanditssuccessororsuccessorsintrustftoholdall-

' property and rights conveyed to.it or them pursuant hereto-ur pursuant to the-Original Indenture upon the trusts and s

subject to the conditions herein set forth, l

And it is hereby covenanted, declared and agreed, upon the trusts and for the purposes aforesaid, as set-forth in 4

the following covenants, agreements, conditions and provisionc, viz.:

e PART ONE. -AMENDMENT AND RESTATEMENT.

The-. Original 4

Indenture is hereby. amended and restated by' deleting bhe I

same in its-entirety and substituting in lieu thereof the following Articles:

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s ARTICLE I Nature and Duration'of-the Trust Section 1.01.

Name.

This trust instrument _and all the trusts hereunder shall be named the " Yankee Atomic Decommissioning Trust" (hereinafter referred to collectively as the "YD Trust").

Section 1.02.

Creation =of Three Separate Trust Funds.

The property held in trust hereunder shall'be divided into.three separate trusts as follows:

1 (1)

The " Qualified Trust Fund" chall consist of any amounts contributed under this Restated Indenture (and all income thereon whenever earned)-

plus amounts previously contributed under the Original Indenture (and all income thereon whenever earned) which in accordance with instructions from Yankee pursuant-to Section 2.08 hereof are directed to be allocated to the Qualified Trust. Fund by the Trustee, in each case to the extent such amounts qualify for deduction under Section 468A;;

(2)

The "Nonqualified Trust-A Fund" shall consist-of.the amounts / contributed prior to July 18, 1984-to the YD Trust under the. original J

Indenture (and all income thereon whenever earned);

and (3)

The "Nonqualified_ Trust-B Fund" shall.

consist of any.-amounts contributed on or after_ July 18, 1984 (and all income thereon whenever1 earned)'

under-the Original Indenture or this' Restated Indenture which have'not been designated as being made under said Section "? 8A.

The Nonqualified Trust-A Fund and the Nonqualified Trust-B Fund are sometimes hereinafter-together referred to l'

as the "Nonqualified Trust Funds"..The Qualified Trust. Fund L.

and the Nonqualified Trust Funds are sometimes hereinafter

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together referred to as the " Trust Fund". l f

's Except as otherwise specifically provided, all of the Qualified Trust Fund, the Nonqualified. Trust-A Fund and the Nonqualified Trust-B Fund shall be administered and disposed of_ identically as provided below in this YD Trust.

Section 1.03.

Nature.

The within YD Trust is-l irrevocable by Yankee and is established only to make assured provision for all, or as great a portion as possible, of the expenses associated with the decommissioning of the Unit following the cessation of commercial operation thereof.

Said YD Trust will constitute a vehicle independent of Yankee and its stockholders which'will hold and dispense, in accordance with the provisions hereof, the monays collected from the customers of Yankee's stockholders for the purpose of defraying such decommissioning expenses.

Such an independent. vehicle assures the availability, when needed, i

of such moneys by removing them from Yankee's control and-may reduce-the effective cost of decommissioning charged to such customers when combined with an election pursuant to Section 468A.

If, after completion-of the decommissioning-process for the Unit, it is determined that excess moneys may have been collected or accumulated, said YD Trust shall distribute any such excess pursuant to Article VI hereof.

Section 1.04.

Duration.

The term of the within YD 3

Trust and all the trusts hereunder shall extend until the earliest of:

(1) the exhaustion of all moneys in the YD

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Trust at a time when Yankee is under no further obligation to make deposits-under Section 3.01 hereof,. (2) the substantial completion of_the decommissioning-process for the Unit.as evidenced,by an appropriate order, license expiration or other~act of the NRC, or (3) an election by Yankee to have this YD-Trust merged into a trust created in j

i accordance with legislative-action by the' federal government j

or inr The Commonwealth of Massachusetts and to effect the transfer of all the moneys in the YD Trust to such successor q

trust, all in accordance with Section 6'.01: hereof.

Upon termination of the YD. Trust, any then remaining trust property shall be distributed as provided in-Article VI below.

ARTICLE II i

I Particular Covenants of Yankee i

j Yankee hereby covenants.as follows:

Section 2.01.

Title to Unit.

At the time of the i

i execution and delivery-of this instrument, Yankee'is well seized and possessed of the real property in Rowe, Massachusetts, on which the Unit is. located, the Unit itself 1'

and all personal property appurtenant thereto.

Section 2.02.

Corporate Existence.

Except,as otherwise

.specifically permitted tur this-Indenture, Yankee will do or cause to be done, so long as the Unit is in-commercial operation, all things necessary to preserve, extend and keep l i

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s in full force and effect its existence, rights and franchises.

Section 2.03.

Peyment of Taxes.

Yankee will promptly pay and discharge or cause.to be paid and discharged all taxes, assessments und governmental charges or levies imposed upon it or apon its income or profits or upon any of its property, real, yersonal or mixed,- or upon any part i

thereof, as well as all claims for labor, materials and l

supplies which, if unpaid, might by law'become a lien upon.

1 its property; provided, however, that Yankee shall not be l

required.to pay any such tax, assessment, charge, levy or claim if the validity thereof is contested currently in good i

faith by appropriate proceedings.

Section 2.04.

Maintenance of the Unit.

So long as the Unit remains in commercial operation, Yankee will maintain i

and keep the Unit as it shall from time to time exist in i

such good repair, working order and condition and'make or cause to be made all such needful and proper-repairs, renewals and replacements thereto, as in the judgment of Yankee may be necessary or appropriate'to comportLwith industry practice or applicable regulations.

Section 2.05.

NRC Licenses.

At the time of the execution ar.

delivery of this instrument, Yankee, as licensee under the Operating License, is subject to the authority of the NRC.

Yankee will obtain and thereafter maintain, to-the extent within its capacity, in full force 1'

and effect, all. licenses and other public authorizations, necessary or required for the operation of the Unit to the extent Yankee continues such operation, for the decommissioning of the Unit, and for subsequent possession and surveillance of the site.

Section 2.06.

Instruments _of Further Assurance.

Yankee j

will execute and deliver such further instruments and do such further acts as it considers necessary or proper.to j

carry out more effectually the purposes of this Restated i

Indenture or to transfer to any.new' Trustee or Trustees the-estate, powers,-instruments and funds held in trust hereunder, Section 2.07.

Appointment of Successor Trustee.

Whenever necessary.to avoid or fill a-vacancy in the office of Trustee, Yankee will, in the manner provided in Section 5.04, appoint a Trustee so that there shall at all times be a Trustee hereunder which is eligible and qualified i-in accordance with the provisions of Section 5.02.

Section 2.08 Notice of Ruling Amounts.- Yankee Will seek.to obtain a schedule of ruling amounts with respect-to its contributions to the Qualified Trust.as provided for in Section 468A and will.promptly provide the Trustee with a copy of such schedule (and any revisions thereof).: No.later than the date of receipt of each schedule-of ruling amounts, i

Yankee will also promptly provide the Trustee with written e

instructions directing the Trustee as to the proper

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allocation of the amounts previously contributed on-or after July 18, 1984 under the original Indenture or this Restated Indenture (and any income thereon whenever earned) which are then held in the Nonqualified Trust-B. Fund and: which1may properly be transferred to the Qualified-Trust Fund pursuant a

to-Section 468A.. Upon receipt of;the foregoing instructions, the Trustee will transfer funds as so directed

-to the Qualified Trust Fund.

Section 2.09-Notice of Cessation of Commercial operation.

Yankee will promptly provide the Trustee with written' notice of the scheduled date for cessation of commercial operation of the Unit-and any changes in'such schedule in order that the Trustee may satisfy its obligations under Section 3.02 hereof.

1 ARTICLE III Decommissioning-Fund Section 3.01.

Creation of Decommissioning Fund.

Yankee shall make deposits into.any one or more of the Qualified Trust Fund or the Nonqualified Trust Funds from time to time in accordance-with the order of FERC as may then be in effect with respect to the estimated costs of decommissioning the Unit.

In no event, however, shall~the t

amounts paid into the Qualified Trust Fund exceed the amounts with respect to which'a deduction is allowable under Section 468A.

1 '

+

Moneys held in the Trust Fund shall constitute part of the-trust estate and shall'be applied'or' paid by the Trustee l

only in accordance with the provisions of this Article III.

l Section 3.02.

Investment of Moneys in Trust Fund.

Any.

moneys held as part of the Qualified Trust Fund shall be invested by the Trustee, as the Trustee-may: from time to j

i time determine, only in investments' permitted by Section 468A.

The Trustee shall-review at least annually the specific investment guidelines permitted by such section,-

1 including those-set forth in Section sol (c)(21)(B)(ii) of-the Code, if applicable.

Any moneys held as part of'the Nonqualified Trust Funds shall-be invested by.-the Trustee, as the-Trustee may from time to time determine,'only in Permitted Investments as set forth in Exhibit-A attached

-[

hereto.

In no event shall investments be made by-the Trustee which carry a remaining _ life to maturity 11n excess of five-years or the then announced date.for cessation-offcommercial operation of the Unit, whichever-is earlier.

It is recognized that as the announced date for cessation of s

comme'rcial operation of the Unit approaches and the decommissioning expenditure schedule is known, the above maturity guidelines will have to b'e adapted to' meet that expenditure schedule.

Any interest earned on invested funds shall be added to the principal of the Trust' Fund and reinvested by the Trustee. 1 l

u

The Trustee shall not commingle moneys in the-Qualified

~

Trust Fund with those in either Nonqualified Trust Fund.

For purposes of this Section 3.02, the. Trustee may,Lbut is

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not required to, commingle' moneys 'in the Nonqualified Trust i'

-Funds, provided-that the Trustee shall maintain separate trust accounts for each.Nonqualified. Trust' Fund and shall i

allocate principal and interest earned in che Nonqualified q

Trust Funds _to said separate accounts in accordance with h

generally accepted trust. accounting principles.

Section 3.03.

Withdrawal ~of Trust Fund Moneys.

I (a)

Upon compliance with the requirements _and' subject to the restrictions of this section, moneys' held by the Trustee in the Trust Fund may-_be withdrawn by Yankee-exclusively for the following purposes:

(1)

To reimburse Yankee _for expenditures made

~

by it which constitute part of the Unit Decommissioning Expenses, or to-pay obligations-incurred which, when paid, will constitute part of the Unit Decommissioning Expenses; provided that~

any amounts so withdrawn shall be used exclusively-for satisfying,'in whole or in part,. any liability of Yankee or'any other person contributing to the.

Trust Fund for the decommissioning of the Unit.

(2)

To make refunds of amounts held in the r

Trust Fund if required to do'so by-a valid order of,

.g T.-

FERC.or-any other regulatory agency having

' jurisdiction (the1" Regulatory Refunds").

[

(3)- To pay taxes due-and payable by Yankee I with respect to income on the Trust Fund (the

" Income Taxes")..

W Any amounts. withdrawn from-the Trust Fund underL(1) or (2) above shall, 'unless otherwise ordered by FERC or f any;other governmental regulatory agency having. jurisdiction, first be withdrawn from the'Nonqualified Trust-B Fund.until such Nonqualified Trust-B Fund is exhausted, then from the Nonqualified Trust-A Fund until such Nonqualified Trust-A Fund is exhausted, and then only may amounts be withdrawn from the Qualified Trust Fund. Any amounts withdrawn from the Trust Fund under (3) above may be withdrawn only from the Nonqualified Trust-B. Fund, unless otherwise ordered.by.

FERC or any other governmental regulatory agency having jurisdiction.

In no event shall any; amount.be withdrawn from the Qualified Trust Fund'for'any purpose whica bould cause the disqualification.of such;1 rust'Eund'from the e

application of Section 468A.

i In computing the' amount which may be withdrawn t

under (1), (2) or (3):'above, the gross amount ofian expenditure or obligation shall be reduced by any; refunds or payments. received by Yankee with respectLthereto. LAny such-refund or payment received after the certification'of'the expenditure or obligation to which it relates and;which has V

not previously been'taken into account shall be applied within three months after its receipt to reduce the amount-of a withdrawal from the Trust Fund made under this Section-or be redeposited in-the Trust Fund.

(b)

Unit Decommissioning Expenses shall include (1)- All costs land expenses of-removing the Unit from service, including without limitation, dismantling, mothballing, entombment, removing d

radioactive waste material:to-temporary or permanent storage sites, decontaminating, restoring and supervising the site', and any costs and-1J expenses incurred in connection with proceedings.

before governmental' regulatory authorities relating to the authorization to decommission said Unit;,

(2)

All costs of labor and services, including, without limiting the generality of the foregoing, services of foremen,[ inspectors, supervisors, surveyors, engineers, counsel.and l

accountants, and security personnel, performed or 1

rendered in connection with the decommissioning of the Unit'and supervising the site; and all costs of materials, supplies, machinery, construction equipment and apparatus acquired or used (including rental charges for machinery,-_ equipment or-apparatus hired) for or,in connection with the-4 decommissioning of the Unit, it being understood

l H

. 4

that:any amount (exclusive of proceeds of insurance)_ realized,by Yankee _as salvage on any machinery,-construction equipment and apparatus, the cost of which-shall have been charged'to the Unit Decommissioning Expense, shall.be treated asia deduction from the amounts otherwise withdrawable p

on account-of the cost of. decommissioning of the-i Unit; and i

l (3)

All overhead costs _ applicable to the Unit j

s r.

f during its decommissioning period, including,'

without limiting the generality of the-foregoing,-

I taxes-(other-than' taxes on or in respect of income), licenses, excises-and assessments, I

casualties, surety bond premiums and insurance i

premiums,

].

Without limiting the generality of the foregoing,-

amounts expended or to be-paid with respect-to j

i decommissioning'the Unit shall constitute part of the Unit.

l Decommissioning ^ Expenses if they are, or,when paid will be',

either (i) properly-chargeable to any accountirelated to I

decommissioning of a nuclear generating unit:in accordance with the_ Uniform. System as then in effect; or (ii)_ properly.

{

chargeable to decommissioning of a nuclear. generating unit in accordance with then applicable regulations of_the-NRC or

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FERC or any other regulatory agency having jurisdiction.

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}

1

'(c)

A withdrawal-under this Section'from the Trust Fund i

shall be paid upon receipt by 'the Trustee of:

t (1)' An Officers' certificate dated the date of i

i the withdrawal application:

2 (A) stating the amount to be withdrawn,

.the purposesLfor which the amount is to be used and the Trust Fund ~(or Trust Funds) from which the amount is to be withdrawn; (B) specifying in reasonable detail by-general:classificaSion the underlying items of expenditures and obligations (after.giving effect to any. deduction required under.

subsection (a)) which will constitute part of the Unit Decommissioning Expenses, Regulatory Refunds or Income Taxes, as'the case-may be,.

and stating that such expenditures constitute, or obligations-when paid.will constitute, p art.-

of Unit Decommissioning Expenses,-Regulatory.

Refunds or Income Taxes,=as the case may be, and that none of such expenditures-and obligations has been made the basis lof a prior withdrawal under=this section;

.(C) stating that any moneys.which have previously been withdrawn from the Trust Fund to pay obligations have been or are in the process of being' expended on account of items

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=

+

of cost which constitute _part of Unit Decommissioning Expenses, Regulatory Refunds or Income Taxes, as the. case may be; (D) stating that the amount to be withdrawn will not cause the disqualification of the Qualified Trust Fund from the-application of Section 468A; a'nd

~

(E)-

stating that no regulatory approval for such withdrawal is necessary or, if at any 1

time the making of withdrawals herefrom becomes subject to the jurisdiction of FERC or any other governmental regulatory agency, d

stating that such-regulatory approval has been 1

obtained and furnishing a copy thereof..

-i

'i (2)

An accountant's certificate' dated the date of j

the' withdrawal application:

(A) certifying'that the-items of j

k expenditures and obligations specified inithe

-j accompanying Officers' Certificate constitute, or when paid will constitute, partLof.the. Unit Decommissioning Expenses, Regulatory Refunds j

i!

u I

or Income Taxes, as the case may be.-

'i i

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(3)

An Opinion of Counsel, dated the date'of the withdrawal application:

l (A) stating that the instruments which are therewith delivered to the Trustee conform f

16 -

I

O to the requirements of this Restated Indenture, and that, on the i sis of such application, the Trust Fund mor.eys whose withdrawal is then requested may be lawfully paid over under this Eect'.on; and (B) stating that fankee is duly authorized to make such withdrawal.

(4)

In the case of a withdrawal on account of items of cost which constitute part of Unit Decommissioning Expenses, an engineer's certificate dated the date of the withdrawal application:

(A) stating the current status of dscommissioning of the Unit; and (B) stating that the expenditures and obligations specified in (B) of the accompanying Officers' Certificate are reasonable.

(d)

The right of Yankee to make withdrawals pursuant to this Section is in no way contingent upon compliance with the covenants in Article II hereof.

Section 3.04.

Prohibited Transactions.

With respect to the Qualified Trust Fund the Trustee shall not engage in any act of self dealing as defined in Section 4951(d) of the Code for so long as said Trust shall be subject to said Section.

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ARTICLE IV s

Consolidation, Merger,' Conveyance er. Transfer Section 4.01..

Yankee-May consolidate, etc., on Certain i

Terms.

Subject to compliance with the provisions-of this Article, nothing in this. Restated Indenture shall prevent-any consolidation or merger of Yankee with or into any;other entity or entities, or the conveyance or' transfer of all or substantially all_of Yankee's properties or'right, title and-

)

interest in the Unit to any such entity orientities;L provided, however, that upon'any.such1 consolidation, merger,

conveyance or transfer, the successor entity or entities

~

i shall be lawfully entitled to acquire and operate such properties and shall execute and deliver - to the Trustee, simultaneously with such consolidation,- merger, : conveyance or transfer, an indenture supplemental hereto:in form satisfactory to the Trustee,.containing an agreement on the part of.such successor entity or entities: to assume the due and punctual performance and observance-of all the covenants-and conditions of this Restated Indenture, with the.same-l effect and.to.the same extent as if such successor entity or entities had been the party of the first part hereto.

Section 4.02.

Other Successors.

Nothing in this

' Indenture shall prevent Yankee from transferring its right, title and interest in, and its obligations with respect to, the Unit to any agent, representativ,, authority, agency, commission or other entity or entities, authorized by

-- i,

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o

.o applicable state and federal statutes or regulations to assume responsibility for the decommissioning of nuclear facilities.

Section 4.03-Successor Substituted.

In the event Yankee, pursuant to-Section 4.01 or 4.02, shall consolidate with or merge into cny other entity'or shall convey or transfer all or substantially all its properties or right, I

title and interest in the Unit to any such entity, the successorientity, upon-causing lto be executed and delivered the supplemental indenture referred to in Section 4.01, shall succeed to=and be substituted for Yankee hereunder l

with the same'effect as if it had been named herein as-the party of the first part.

ARTICLE V l

The Trustee Section 5.01.

Acceptance of Trusts; certain Terms of the Trusts.

The Trustee, for'itself and its-successors, hereby accepts the trusts of this Restated Indenture, but i-only upon the terms herein set forth, including tdie.

i following:

(a)

The recitals herein (except the Trustee's certificate of' authentication thereon)=shall be taken as the=

statements of Yankee and shall not be considered as made by, or imposing any obligation or liability upon, the Trustee.

The Trustee makes no representations as to the.value or condition of the Trust Fund or any part thereof, and the !

1 i

p

' i Trustee shall incur no liability or responsibility in

' respect of any_of such matters.-

(b)

The Trustee shall-be under no responsibility or duty with respect to the disposition of any moneys paid to Yankee or upon Yankee's order under any provision hereof.

(c)

The Trustee shall not rely upon any default under any covenant in Article II hereof as-a defense _against' performing its trusts and powers hereunder and may execute-q i

any of the trusts or powers hereof and-perform any duty.

1 I

hereunder either directly or through its agents or attorneys.

(d)

The Trustee may, at the expense:of. Yankee, consult with legal counsel to be~ selected by it-(who;may be counsel i

for Yankee), and the_Trastee shall not be, liable for any 1

action taken or suffered by it in good-faithein.accordance-l j

wih the advice of such counsel, j

(e)

The Trustee shall have the right,-from time to-

)

1 1

time, to apply any Trust Fund moneys held.by'it hereunder to.

i compensate itself reasonably for all services rendered and to reimburse itself for all reasonable expenses incurred'in the administration of the trusts created'hereby.

Any amounts withdrawn.from tie Trust Fundf by the Trustee for the foregoing. purposes shall be withdrawn from the Qualified

' Trust Fur.d,.the Nonqualified Trust-A Fund and the l

Nonqualified Trust-B Fund pro rata in accordance'with;the j

relative, size of those Funds, unless'otherwise directed by 1

u Yankee or unless otherwise ordered by FERC;or any_other governmental regulatory agency'having jurisdiction.. Yankee agrees to indemnify the Trustee against any liability it may

'I sustain, in good faith and without negligence, in the I

performance of its duties. hereunder.

(f)

The Trustee shall be protected in acting upon any notice, resolution, request, consent, order, certificate, l

report, opinion, statement, obligation, appraisal or other document believed by it to be genuine and to have been j

signed by the proper party or parties.

The Trustee shall accept a Board Resolution as conclusive evidence that a-j resolution has been duly. adopted and is in full force and effect.

Except as otherwise expressly provided, an i

Officers' Certificate as to the Trustees' rights under this Restated Indenture shall be accepted by the Trustee as conclusive evidence of the facts therein stated, and shall constitute full protection to the Trustee for_any action taken or omitted to be taken by it in good faith, in reliance thereon.

(g)

The Trustee shall maintain appropriate records of all deposits, investments and earnings thereon received by the Qualified Trust Fund and by each of the Nonqualified Trust Funds and all disbursements made from. each such. Trust Fund and at least annually provide an account thereof to ti Yankee and to any State or Federal authority or agency, if any, having jurisdiction over the the application of the

! i

r 1

Trust Fund? Yankee ~and itst agents shall have the right to review, inspect and audit the books and records-of.the Trustee relating,to the Qualified Trust Fund-and each of the Nongaalified~ Trust Funds.-

.(h)

The: Trustee shall cause appropriate tax returns with respect to income earned by the Trust Fund to be prepared and filed and shall pay any. taxes shown to be due out of the. Trust Fund.

Section 5.02.

Entities Eligible for Appointment as the t

Trustee.

The Trustee shall at all times lue a bank or trust-company having its. principal office and place.of business in-The Commonwealth of Massachusetts, and shall at all times be a corporation organized and doing' business under the lawo of-the United States or of The Commonwealth of Massachusetts, with a combined capital and surplus of at least $100,000,000 and authorized under such laws;to exercise corporate trust-powers and subject to supervision or examination ~by Federal-or State authority. 'If the Trustee publishes reports of 3

condition at least annually, pursuant to law or to.the requirements of any supervising or examining, authority t

referred to in this Section, then,'for the purposes of.this Section, the combined capital and surplus of-the-Trustee shall be deemedito be its combined capital,and: surplus as set forth in its most recent report of. condition so i

published.,

L

~.,

In the event ^the Trustee ceases to be eligible under this section, it shall resign immediately in the manner and with the effect'specified in Section-5.03; if the Trustee does'not so resign, it shall be removed forthwith by Yankee, by written notice'in the form provided.in Section 5.03, such removal to take effectLupon delivery of;the notice to the-Trustee.

Section 5.03.

Resignation'and Removal.

The. Trustee may I

resign and be discharged from the trusts hereby created by' giving ninety (90) days' prior written. notice thereof to-Yankee.

Such resignation shall become effective on the day specified in such notice.or upon the appointment of a successor and such successor's acceptance, whichever is.

earlier.

Yankee may at any time remove the Trustee with<or without cause upon six weeks' prior written notice,Esuch notice to be in the' form of a certificate signed'by the President or Treasurer of Yankee declaring'such removal'and' i

L specifying the successor Trustee appointed pursuant to,

Section 5.04.

The Trustee, after resignation or removal, shall' nevertheless retain a lien upon the in) Trust moneys:to secure the amounts due to it. under any provision: of this Restated-Indenture.

Section 5.04.

Appointment of Successor'to-the Trustee.

In the event the Trustee resigns, is removed, -or becomes,

1

u i

incapable of acting or is adjudged as bankrupt or insolvent, or if a receiver of the Trustee or its property is appointed or a public officer takes charge or control of the Trustee or its property or affairs for the purpose of i

rehabilitation, conservation or liquidation, a vacancy shall--

f be-deemed to exist in the office of the Trustee, and a J

successor shall be appointed by Yankee to fill such vacancy, by written notice signed by the President or Treasurer of

{

Yankee.

The validity of any such' appointment, however, shall not be impaired or affected by failure to give such-notice or by any defect therein.

If, in a proper case, no successor Trustee shall have I

been appointed pursuant to the foregoing provisions of this Section, or if appointed, shall not have accepted the i

appointment, within 30 days after the resignation'of, or the occurrence of a vacancy in the office of,.the Trustee,7the i

Secretary of State of The Commonwealth of Massachusetts.may 1

u j

apply to any court of competent jurisdiction to t appoint a l

successor Trustee.

Section 5.05.

Acceptance of Appointment by Successor.

Trustee.

A successor Trustee appointed' hereunder shall execute an' instrument accepting-such appointment-and deliver-o one counterpart thereof'each'to Yankee,<the retiring Trustee, and, if applicable, the court making such I

appointment.

Thereupon,.without any further act, such.

successor Trustee-shall become vested with all the i

!f I

l n

properties, rights,-powers, trusts and' duties of the.

-retiring Trustee-astif originally named.under this Indenturej however, each retiring Trustee, when requested by.

the successor Trustee in writing or by Yankee andJupon I

payment of any;1 awful charges andLdisbursements, shall-nevertheless' execute'and deliver an' instrument or instruments conveying ~and transferring to such successor.

Trustee all:its properties, rights, powers, and, trusts and shall duly' assign, t"ransfer-and deliver to such successor i

Trustee all property and money held'by it' hereunder.

.If the I

i successor Trustee, reasonably? requests an instrument from j

Yanke'e for the purpose of more fully and certainly vesting j

in and confirming to it said properties, rights,_ powers _and trusts, then any,such instrument shall be executed, l

1 acknowledged and delivered by Yankee.

Section 5.06.

Merger or Consolidation of the Trustee.-

l

s Subject to the requirements of Section-5.02 hereof, any_

4-corporation into which the Trustee may;be. merged or with which it may be consolidated or any corporation:resulting from anyLmerger or consolidation to which the Trustee shall i

be a party or any corporation to which substantially all the business and assets of the Trustee may be-transferred, shall be the Trustee under this Indenture, without further act.

Y

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l s

ARTICLE VI Distribution of Assets upon Termination L

Section 6.01.

.TransferL to Successor Trust.

In.the event that, after the_date hereof, legislation is enacted by either'the government of the United States or The-Commonwealth <of Massachusetts creating an independent, governmentally administered trust or fund with a purpose which encompasses the purpose of this YD Trust as set forth 1

herein, then Yankee shall have the right,.to the extent permitted by Section 468A of the Code,'by, written notice to the Trustee, to - elect to have all or part of this YD Trust 1

subsumed into either such governmental trust.or fund, such written notice to be signed by the President or Treasurer of Yankee, and to notify the Trustee of'such election and;to direct the Trustee'to' transfer all or part-of the:YD. Trust moneys to the specified successor trust.

Upon-the completion of a. transfer of all.the YD Trust moneys to.the i

successor Trust, this YD Trust shall terminate.

Section 6.02.

Final Distribution.

Any property 1

remaining in the Trust Fund upon termination of the term l

' hereof in accordance with clause (2) or clause (4) of Section 1.04 hereof shall be distributed by the Trustee to the customers of Yankee's stockholders'in accordance with the terms and conditions ordered by FERC vr any other-

[

governmental regulatory body having jurisdiction.

• 'Q t-ARTICLE VII

[

Definitions and General Provisions Section 7.01.

Defined _ Terms.- For all purposes of this instrument, unless the context;otherwise specifies or requires:

(a)

" Accountant" shall mean an individual or a partnership or corporation engaged in accounting work or business whether or not employed by or in any way: affiliated with Yankee.

(b)

" Commercial Operation" means any operation of the Unit after the date hereof pursuant to the terms and provisions of the Operating License.

(c)

" Engineer" shall mean an-individual or a partnership or corporation engaged in. engineering work or' business relating to the production or transmission of a

ciectricity, whether or not employed-by or in'any_way affiliated with Yankee.

(d). " Federal Energy. Regulatory Commission" or "FERC" shall mean the United States Federal' Energy Regulatory.

Commission or any governmental agency or agencies substituted therefor.

e (e)

" Nuclear Regulatory Commission" or "NRC" shall mean the United States Nuclear Regulatory Commission or any governmental agency or agencies substituted therefor.

(f) " Officers Certificate" shall mean a. certificate signed by the President or a Vice President and the :

,4

• ~

o; Treasurer or an Assistant' Treasurer of Yankee'or executives of_ Yankee'with equivalent responsibilities, and delivered:to the Trustee.

Wherever it is provided in:this Indenture that-an Officers' Certificate shall be accompanied by a J.,

certificate of an engineer, legal counsel, accountant or p

other expert, such engineer, legal' counsel, accountant or E

other expert shall be a person, whc may be in the employsof 4

Yankee, selected by. Yankee and approved by the-Trustee in L

the exercise of reasonable care.

Each Officers' -Certificate ji shall contain the statements provided for in Section 7.02.

(g).The " Operating: License" shall-mean Operating Licensu a

No ~. DPR-3, dated June 23, 1961, as heretofore or hereafter-amended, originally issued'by the Atomic Energy Commission u

l (now the NRC).

(h) " Opinion of Counsel".shall mean'a written opinion.of counsel, who may-be counsel for Yankee, selected by Yankee.

Each Opinion of Counsel shall contain the statements provided for in Section 7.02.

(1)

The " Trustee" shall.mean, with respect to each trust hereunder, State Street Bank and Trust Company, and its successors which shall become such in the manner-prescribed in Section 5.04 for the' time _being in office.

(j)

The " Uniform System" shall-mean.the Uniform System i

of Accounts prescribed by.FERC for Class A and Class B Public Utilities and Licensees as from time to time in

+,

4 h

J e

es l

effect or any system of accounts hereafter promulgated in substitution therefor-(k)

The " Unit" shall mean the nuclear reactor presently owned by Yankee and located in Rowe, Macsachusetts, together l

a with auch structures, components and equipment now or hereafter associated therewith, which, because of i

radioactive contamination caused by its operation, become subject to decommissioning regulations of the NRC.

(1)

" Yankee" shall mean Yankee and its legal representatives, so long as Yankee continues to own the Unit, and thereafter " Yank'ee" shall mean any corporation or corporations which succeed Yankee in the manner prescribed in Article IV or any other entity or entities which succeed to the rights and obligations of Yankee with respect to the Unit.

Section 7.02.

Compliance Certificates and opinions.

I Every certificate or opinion with respect to compliance with 1'l' a condition or covenant providad for in this Restated l

Indenture shall includes (a)

A statement that erch person making such certificate or opinion has read such covenant or condition I

and the definitions herein relating thereto.

(b)

A brief statement as to the nature and scope of the l

examination or investigation upon which the statements or opinions' contained in such certificate or opinion are based, s

29 -

i a

(c)

A statement that, in the opinion of each such person, he has made or caused to be made such examination or investigation as is necessary to enable him to cxpress an i

informed opinion as to whether or not such covenant or condition has been complied with.

(d)

A statement as to whether or not, in the opinion of each such person, such condition or covenant has been complied with.

Section 7.03.

General Provisions.

In any case where several matters are required to be certified by, or covered by an opinion of, any specified person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such person, or that they be so certified or covered by only one document, but one such person may certify or give an opinion with respect to some matters and one or more other such persons as to other matters, and any such person may certify or give an opinion as to such matters in one or several documents.

If any determination affecting the YD Trust is made with respect to a period ending within twenty-one years after the death of the last survivor of a group of individuals living at the creation of the YD Trust, the measuring lives shall be all graduates from time to time of Harvard college, in Cambridge, Massachusetts, who were living on April 16, 1981.

A W ARTICLE VIII Miscellaneous Section 8.01.

Supplemental Indentures.

This Restated I

Indenture may be amended or supplemented from time to time il by the execution and delivery of one or more supplemental indenturms by and between Yankee and the Trustee, provided that the amendment or supplement has been approved or accepted by FERC.

Section 8.02.

Applicable Law.

This Restated Indenture shall be governed by and construed in accordance with the laws of The Commonwealth of Massachusetts.

I o

PART 2.

NO LIABILITY FOR RECITALS.

The recitals contained herein shall be taken as the statements of Yankee and the Trustee assumes no responsibility for the correctness of the same.

The Trustee shall not be responsible for the effect, authorization, execution or

~

delivery of this Restated Indenture except as expressly set forth herein.

The Trustee shall not be taken impliedly to waive by this Restated Indenture any right it wc'ad otherwise have.

PART 3.

THE ORIGINAL INDENTURE.

This Restated

[

Indenture is expressly made in substitution of and shall amend and replace in its entirety the Original Indenture. i 1

se g i

4 4

1 PART 4.

EFFECT OF HEADINGS.

The headings of the different Parts, Articles and Sections of this Restated Indenture are inserted for convenience of reference, and are not to ba taken to be any part of those provisions, or to contre. or lect the meaning, construction or effect of the same.

PART 5.

COUNTERPARTS.

This Restated Indenture is being simultaneously exrecuted in several counterparts, all of which are identical, and all said counterparts are'to be deemed to constitute but one and the same it.strument.

IN WITNESS WHEREOF, the parties hereto have caused this Restated Indenture to be duly executed by their respective officers thereunto duly authorized as of the day and year first above written.

YANKEE ATOMIC ELECTRIC COMPANY

]

By m - 1'1

Title:

M /f A 6 44 4[

STATE STREET BANK AND TRUST COMPANY, as Trustee I

h=

By l

hr.Nbt.- fMbl$

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COMMONWEALTH OF MASSACHUSETTS COUNTY OF kc.<.<4-;..aw, 1985, personally Before me, this um day of appeared Armand R. Soucy, who, being duly sworn, acknowledged that he is Treasurer of Yankee Atomic Electric Company, a Massachusetts corporation, and that the foregoing l

instrument was duly signed by him on behalf of said corporation and that said instrument is his and said corporation's free act and deed.

f otary Public fJ l

My Commission exp.irest-

' JOHN %. NKE, Rolf4 F05f?J -

?!/ C:i'mtiort Exc!res cctober 13,1989 COMMONWEALTH OF MASSACHUSETTS COUNTY OF S u f fe '<.

I l

Before me, this 2 Y day of November, 1985, oersonally appeared I-1 t N

bA#.3

, who, being duly sworn, I

Se J.c acknowledged,t)3atche is a Vice President of State Street Bank and Trust Company, a Ma ssachusetts banking corporation, and that the foregoing instrument was duly signed by him on behalf of said corporation and that said instrument is his hnd said corporation's free act and deed.

1 1-.

6 Ndtary Publ y )

r My Commission expires:

si.... a. s.,e.m.:

w.i., coin v,....r i.. -.a.w,.. s.,i...., t r. t $ s t w

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Exhibit A i

Trust Fund Investment Guidelines For purposes of Section 3.02 of this Restated Indenture, the term " Permitted Investments" shall mean, with respect to any investment of moneys held as part of the Trust Fund, investments ins (1)

Bonds, notes, certificates of deposit or other debt j

obligations issued or fully guaranteed by the full faith and credit of the United States Government or by any agency or instrumentality of the United States Government.

(2)

Bonds, notes, certificates ef deposit or other debt obligations issued or fully guarante9d by the full faith and s

credit of any State or by any agency. instrumentality or political subdivision of any State, provided that the l

investment security has received, at the time of purchase, the highest rating by Moody's and Star.dard and Poor's (or their successors) or equivalent with insurance knd provided, further, that no more than thirty-five percent (35%) of the

. Trust Fund may be invested in debt obligations within one single State.

(3) Guaranteed Interest Contracts with those insurance companies organized under the laws of the United States or any State, provided that those insurance companies are rated at least A+ by the Best Insurance Rating Service.

(4)

Temporary short-term investments in government i

backed, tax exempt project notes or U.S. Treasury. bills.

of the Trustee %ythe.t funds or similar investment vehicleschoice but only as a te (5)

Moneyyg ehere it is not practical to invest the amount of money in the Trust Fund not otherwise invested in the investments described in clauses (1) through (4) above.

Investments must be marketable (i.e. no private <

placements except for direct placements of Guaranteed Interest Contracts and of tax exempt securities insured by the Municipal Bond Insurance Association).

Fu rthe'r, no investment shall-be made if such investment 3-shall place the Trust Fund in a position where investments in the securities of any one issuer, except-securities issued or fully guaranteed by the full faith and' credit of the United States Government,' exceeds ten percent (10%) of

[

the total amount of moneys held-in the Trust Fund.

~

A k:]StateStreet

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YANKEE ATONIC ELECTRIC COMPANY l

i Billed or charged to accounts _ quarterly.

Principal ree:

Annual Rates

.20% of assets Minimum Annual ree:

$15,000.00 L

Income tax services:

Services will be computed at $100.00 per hour.

i 1

i s

9 i

t l

I FIRST SUPPLEMENTAL INDENTURE, dated as of July 1,1987, between Yankee Atomic Electric Company, of Framingham, Massachusetts (" Yankee"), and State Street Bank and Trust. Company, as Trustee, of Boston, Massachusetts (the " Trustee").

WHEREAS, -Yankee and the Trustee have heretofore entered into an Indenture of Trust, dated as of April 16, 1981 (the

" orig nal Indenture"), to make provision for financing the decommissioning of Yankee's nuclear reactor, which original Indenture was amended and restated by Amended and Restated.

Indenture of Trust, dated as of November 29, 1985, between Yankee and the Trustee (the original Indenture as from time i

to time amended or supplemented being hereinafter referred

)

to as the " Indenture"); and WHEREAS, Section 8.01 of the Indenture provides:that the Indenture may be further amended or supplemented from tihe to time by one or more supplemental indentures by and between Yankee and the Trustee; and WHEREAS, sufficient funds have accumulated under the Ind'enture so that it would be_ prudent to provide for one or more fund managers to supervise the investment thereof; NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt whereof is hereby acknowledged, and in confirmation of and' supplementing the original Indencure, as previously t

'o l

i restated, Yankee has executed'and delivered this First f

Supplemental Indenture to the Trustee, and to its successor i

or successors in trust, and said Trustee does by these presents agree, on behalf of itself and its successor or successors in trust, to hold all property and rights conveyed-to it or them pursuant to the Indenture upon the trusts and subject to the conditions therein set forth.

5 And it is hereby covenanted, declared and agreed, upon the trusts and for the purposes aforesaid, as set forth in the following covenants, agreements, conditions and provisions, viz.:

ARTICLE I l

Modification to Original Indenture Section 1.01.

Section 3.02 of the Indenture is hereby L

deleted in its entirety and the foll'owing Sections 3.02 and 3.02A are inserted in lieu thereof l

"Section 3.02.

Investment of Moneys in Fund.

l Subject to Section 3.02A, any moneys held as part of the Qualified Trust Fund shall be invested by the Trustee,

. as the Trustee may from time to time determine, only,in investments permitted byf ection 468A.

The-Trustee l

shall review at least annually the specific investment guidelines permitted by such section, including those m

set forth in Section 501(c)(21)(B)(ii) of the Code, if 4

s applicable.

Subject to Section 3.02A', any moneys held

• 5

• \\

r as part of the Nonqualified Trust Funds shall be invested by the Trustee, as the Trustee may from time to i

time determine, only in Permitted Investments as set i

forth in Exhibit A to the Indenture, a

i In no event shall investments be made by the Trustee which carry a remaining life to maturity in excess of five years or the then announced date for cessation of commercial operation of the Unit, whichever

[

is earlier.

It is recognized that as the announced date for cessation of commercial operation of the Unit approaches and the decommissioning expenditure schedule is known, the above maturity guidelines will have to be adapted to meet that expenditure schedule.

Any interest earned on invested funds shall be added to the principal of the Trust Fund and reinvested by the Trustee.

The Trustee shall not commingle moneys in the Qualified Trust Fund with those'in either Nonqualifi'ed Trust Fund.

For purposes of this Section' 3.02, the Trustee may, but is not required to, commingle moneys in the Nonqualified Trust Funds, provided that the Trustee

, shall maintain separate trust accounts for each Nonqualified Trust Fund and shall allocate principal'and-

'/

interest earned in the Nonqualified Trust Funds to said separate accounts in accordance with generally accepted

~

trust accounting principles.

l t

3-

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i Section 3.02A.

Fund Managers.

Yanxea shall have the power to appoint from time to time one or more Fund l

Managers to manage, or direct, the acquisition, holding or disposition of a designated portion of trust assets j

f in accordance with the applicable investment criteria referred to in Section 3.?2 and the terms of a written i

appointment made by Yankee.

Any such Fund Manager shall, unless its appointment provides otherwise, have the power to direct the Trustee in the exercire of those powers expressly given the Trustee under Section 3.02 with respect to such designated portion of the trust moneys and the Trustee shall, upon receipt of a copy of such Fund Manager's appointment, as well as written acceptance of such appointment, both in a form i

satisfactory to the Trustee, exercise such powers as directed in writing by such Fund Manager.

The Trustee shall be exonerated from any liability for action or inaction taken at the direction of a Fund Manager.

With respect to any part or all of the trust assets for which a Fund Manager has not been so appointed by Yankee, the Trustee shall have full authority to invest and reinvest such portion or all of the trusts in accordance with Section 3.02 hereof and shall not be required to follow i

the investment directions of any other person."

i;.

4

Section 1.02.

Section 8.01 of the Indenture is hereby deleted in its entirety and the following inserted in lieu thereof:

"Section 8.01.

Supplemental Indentures.

This Restated Indenture may be amended or supplemented from j

time to time by the execution and delivery of one or more supplemental indentures by and between Yankee and-i the Trustee."

i ARTICLE II Miscellaneous Provisions Section 2.01.

No Liability for Recitals.

The recitals contained herein shall be taken as the statements of Yankee and the Trustee assumes no responsibility for the

~

~

correctness of the same.

The Trustee makes no j

representations as to the value of the pledged property or any part thereof, or as to the title of Yankee thereto; or I

l as to the validity of the Indenture.

The Trustee shall not j

P l

be responsible for the effect, authorization, execution or l-delivery of this First Supplemental Indenture,[yxcept as expressly set forth in the Indenture 7 The Trustee shall not be taken irnliedly.to waive by this First Supplemental Indenture any right it would otherwise have.

Section 2.02.

The original Indenture.

This First Supplemental Indenture is expressly made supplemental to, 4

v and shall form a part of, the-Indenture, as heretofore a

h

l j/amendedandrestated, and is subject to all of the condit.ons, tovenants and warranties in the Indenture

~

contained, and the use of terms and expressions herein is in i

accordance with the definitions and constructions contained in the indenture.

This First Supplemental Indenture shall i

become void when the Original Indenture. shall be void.

Section 2.03.

Effect of Headingr;.

The headings of the different Sections of this First Supplemental Indenture are inserted for convenience of reference, and :are not to be taken to be any part of those provisions, or to control or affect the meaning, construction or effect of the same.

Section 2.04.

Counterparts.

This First Supplemental Indenture is being simultaneously executed in several counterparts, all of which are identical, and all said counterparts are to be deemed to constitute but one and the i

same instrument.

IN WITNESS RGEREOF, the parties hereto have caused this First Supplement.al Indenture to be duly executed by their respective officers thereunto duly authorized as of the day

/

and year first above written.

YANKEE ATOMIC ELECTRIC COMPANY

[.

l By ( j

_ m & M ^f

"/ d4 A G a itr4% '

STATE STREET BANK AND TRUST COMPANY MM By

,/

Assis, tant Vice President

/

4

's i-t COMMONWEALTH OF MASSACHUSETTS COUNTY OF SUFFOLK i

i l

Before me, this

/

day of I4dy, 1987, personally appeared Armand R. Soucy, who, being duly sworn, acknowledged that he is the Treasurer of Yankee-Atomic Electric Company, a Massachusetts corporation,'and that the foregoing instrument was duly signed by him on behalf of, said corporation and that said instrument is his and said corporation's free act and deed'.

naWR1 I

Net'afy Public I

My commission expires: /0.jr, py COMMONWEALTH OF MASSACHUSETTS COUNTY OF SUFFOLE Before me, this c/M day of f, 1987, personally appeared

• k, h

, who, being duly-_ sworn,'

p' acknowledged that he is a Vice President of-State. Street Bank and Trust Company, a Massachusetts banking corporation,.

l and that the foregoing instrument was duly signed by him on L

behalf of said corporation and that said instrument is his I

and. said cerporation's free act and deed.-

i:

Notary Public i

My commission expires:

A= us. n o,wi.

_7_.

My conne.% n,.. a,,a u. au

+

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SECOND SUPPLEMENTAL INDENTURE, dated as of September 12, 1988, between Yankee Atomic Electric Company, of Framingham, Massachusetts (" Yankee"), and State Street' Bank and Trust company, as Trustee, of Boston, Massachusetts (the

" Trustee").

WHEREAS, Yankee and the Trustee have heretofore entered into an Indenture of Trust, dated as of April 16, 1981 (the

" Original Indenture"), to make provision for financing the decommissioning of Yanket's nuclear reactor, which original N\\

Indenture was, amended and restated by Amended and Restated Indenture of Trust, dated as of November 29, 1985, between e

Yankee and the Trustee and amended by a First Supplemental Indenture dated as of fuly 1, 1987 (the original Indenture'as 1

from time to time amended or supplemented being hereinafter referred to as the " Indenture"); and

)

WHEREAS, Section 8.01 of the Indenture provides that the T

Indenture ma1 be further amended or supplemented from time to time by one or more supplemental indentures by and between Yankee ar the Trustee; and WHEREAS, Yankee believes it desirable to modify the investment criteria under the Indenture; NOW, THEREFORE, in consideration of the premises and i

)

other good and valuable consideration,'the receipt whereof is i

hereby acknowledged, and in confirmation of and supplementing the original Indenture, as previously restated, Yankee has executed and delivered this Second Supplemental Indenture to

.~

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l i

the Trustee, and to its successor or successors in trust, and i

said Trustee does by these presents agree, on behalf of itself and its successor or successors in trust, to hold all r'

property and rights conveyed to it or them pursuant to the Indenture upon the trusts and subject to the conditions l

therein set forth, f

And it is hereby covenanted, declared and agreed, upon

[

the trusts and.for the purposes aforesaid, as set forth in the following covenants, agreements, conditions and provisions, viz.:

j t

ARTICLE I Modification to oriainal Indenture l

Section 1.01.

The second paragraph of Section 3.02 of the Indenture is hereby amended by. deleting in the first sentence thereof the words "five years" and inserting in lieu L

thereof the words " ten years".

ARTICLE II Miscellaneous Provisions Section 2.01.

No Liability for Recitals.

The recitals i

contained herein shall be taken as.the statements of Yankee and the Trustee assumes no responsibility for the correctness of the same.

The Trustee makes no representations as to the

]

value of the pledged property or any part thereof, or, as to.

i the title of Yankee thereto; or as to the validity of the r

y-g-m.--p v

=+yn e

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l i

i Indenture.

The Trustee shall not be responsible for the effect, authorization, execution or delivery of this Second Supplemental Indenture, except as expressly set forth in the Indenture.

The Trustee shall not be taken impliedly to waive by this Second supplemental Indenture any right it would

]

(

otherwise have.

Section 2.02.

The Oricinal Indenture.

This Second-l Supplemental Indenture is expressly made supplemental to, and shall form a part of, the Indenture, as heretofore amended and restated, and is subject to all of the conditions, covenants and warranties in the Indenture contained, and the use of terms and expressions herein is in accordance with the definitions and constructions contained in the Indenture.

This Second Supplemental Indenture shall become void when the original Indenture shall be void, Section 2.03.

Effect of Headinas.

The headings of the t.,

different Sections of this Second Supplemental Indenture are 4

inserted for convenience of reference, and are not-to be taken to be any part of those provisions, or to control or affect the meaning, construction or effect of the same.

i Section 2.04.

countercarts.

This Second Supplemental L

Indenture is beinc simultaneously executed in several l

counterparts, all of which are identical, and all said~

counterparts are to be deemed to constitute but one and the same instrument. t

r j

e 4

I i

1 IN WITNESS WHEREOF, the parties hereto have caused this Second Supplemental Indenture to be duly executed by their

]

4 respective officers thereunto duly authorized as of the day l

1 and year first above written.

i YANKEE ATOMIC ELECTRIC COMPANY By

--A Armand.R. Soucy, Vice Pr g ent and Treasurer STATE STREET BANK AND TRUST COMPANY NM By

/

t AstsistantlVice President 1

i s

I P

e t

i 7

6.-

y

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1 i

,.?

h COMMONWEALTH OF MASSACHUSETTS COUNTY OF -C" TC2 /MZODLESEX f

4' Before me, this ///

day of September, 1988, personally appeared Armand R. Soucy, who, being duly sworn, f

acknowledged that he is the Treasurer of Yankee Atomic Electric Company, a Massachusetts corporation, and that the forageing instrument was duly signed by him on behalf of said i

corporation and-that said instrument is his and said P'

corporation's free act and deed.

msAu Not'ary Public My commission expires:

/4 //fA f

COMMONWEALTH OF MASSACHUSETTS COUNTY OF SUFFOLK Before me, this MAday et 6<pfeder,' 1988, personally W

appeared R. K. Dunn, who, being duly sworn, acknowledged that l

Atf7 he is a,Vice President of State Street Bank and Trust Company, a Massachusetts-banking corporation, and that the foregoing-instrument was duly signed by him on behalf of said corporation and that said instrument is his and said corporation's free act and deed.

t vf..n,A

_,N a

Notary Public DONNA M.LUTl My commisslon expires:

., 22"J.0'."2 n. m j

-q )

1 i

)

i i

I, Kirk L. Ramsauer, Clerk of Yankee Atomic Electric Company i

(the "Compar.y"), hereby certify that the attached document is a i

true copy of the Power contract compiled through Amendment No. 6 that the Company has in effect with each of its power purchasers on the date hereof.

WITNESS my hand and the seal of the company this 25th day of July, 1990.

2 I

Kirk L. Ramsauer clerk 7

t l

i JAllENCL2.YA l

l

)

Connosite Conformed Cony

)

J Yankee Atomic Electric Company POWER CONTRACT i

(Tht following is a composite Power contract as amended through i

Amendment No. 6 dated as of July 1, 1989.

Please note that the i

"whereas" clauses for each amendment have been omitted, and that f

conforming signature data for the original counterpart only is 4

included in the Appendix.

Also please note that Amendment No. 3 restated the entire power contract.

This composite power contract has been prepared as a resource tool and is not the formal contract among the parties.)-

POWER' CONTRACT dated June 30, 1959, as revised April 1, 1975, between YANKEE ATOMIC ELECTRIC. COMPANY (" Yankee") and (the names of the customers appear in the attached Appendix) (the-

" Customer").

" Yankee is a Massachusetts electric company, organized'in 1954, which has constructed and placed in operation n_ nuclear power plant, the output of which is sold to the New England utilities which are its stockholders.

The plant iJ located at a site owned by Yankee in Rowe, Massachusetts, and consists of a pressurized water reactor and associated. steam electric I

L generating, transformation and auxiliary equipment have a net electrical capacity of 176,000 KW (the " plant").

The Atcmic 1

j Energy Commission has authorized opveation of the plant during an initial 40-year term extending to November 4, 1997, pursuant to j

License No. DPR-3.

The percentages of Yankee's outstanding stock held by the Customer and other stockholders of Yankee and the percentages of JARPOWER.YA

._j

)

the capacity and not electrical output of the plant being

)

purchased by them are as follows:

Stock Power

.r Percentage Percentage New England Power Company 30.0%

30.0%

The Connecticut Light and Power Company 24.5*

24.5*

Boston Edison Company 9.5 9.5 central Maine Power Company 9.5 i

Western Massachusetts Electric Company 7.0 7.0 Public Service Company of New Hampshire 7.0 16.5**

Montaup Electric Company 4.5 4.5 Commonwealth Electric Company 2.5 2.5 Cambridge Electric Light Company 2.0 2.0 i

Central Vermont Public Service Corporation 3.5_

3.5 100.0%

100.0%

?

a

• Represents the consolidation of two prior existing contracts, one with The connecticut Light and Power Company for 15% and one with The Hartford Electric Light Company for 9.5%, those two companies having merged.

• • Public Service company of New Hampshire has agreed to supply power to Central Maine Power Company in amounts equivalent to i

9.5% of the net electrical output of the Yankee plant, after appropriate allowance for transmission losses.

The parties hereto agree as follows:

1.

Scoes of Contract Yankee will sell and f.eliver to the customer and the Customer will take and pr.y for its power percentage of the net electrical output of thei plant during the term of this contract.

2.

Term of Contract This contcact shall continue in full force and effect until the expiration of any license as issued by the Nuclear Regulatory commission, or any successor agency, with respect to the plant under applicable provisions of the Atomic Energy Act of 1954, as amended from time to time, provided, however, that if the stockholders of Yankee, by vote of not less than 75% in interest

_2-l e,w-

- - - +

of the outstanding stock having general voting rights, shall at any time vote to discontinue the operation of the plant or to liquidate Yankee and wind up its affairs, the obligations of the parties hereunder shall thereupon terminate.

Notwithstanding the foregoing, the applicable provisions of this contract shall continue in effect after any termination hereof to the extent necessary (i) to complete the billings and payments required hereunder with respect to the customer's obligation to pay its power percentage of the full cost of decommissioning the plant in accordance herewith and (ii) to permit final billings and adjustments hereunder with respect to all other obligations of the parties hereunder.

3.

Operatien of the Plant Yankee will operate and maintain the plant in accordance with good utility practice and all applicable laws and rules and regulations thereunder, including the applicable provisions of the Atomic Energy Act of 1954.

Yankee reserves the exclusive right to control scheduling of the operation and maintenance of the plant, including outages.for inspection, maintenance, refueling, and repairs and replacements.

Subject to the foregoing, and until otherwise determined by' Yankee's board of directors, the plant shall be subject to central dispatch pursuant to Section 12 of the New England Power Pool Agreement dated as of September 1, 1971, as from time to time amended. !

]

4.

Customer's Entitlement 4

The Customer shall be entitled, throughout the term of this

)

contract, to its power percentage of the capacity and net electrical output of the plant.

5.

Deliveries and Meterina.

Deliveries will be made in the form of three-phase, 60-E cycle, alternating current at a nominal voltage of 115,000 volts, at a step-up substation owned by Yankee at the plant site.

The customer will make suitable arrangements for the transmission of the electricity so delivered to it by Yankee.

Yankee will supply all necessary metering equipment for determining the quantity and conditions of supply of all i

electricity delivered hereunder, and will maintain the accuracy l

of such equipment within limits of 2% up or down.

In addition to regular routine tests, Yankee will'have any such meter tested at L

any time upon the written request of the customer, and if such i

meter shall prove tc be accurate within 2% up or down,.the-expense of the test shall be borne by the customer.. Yankee.will f

furnich the Customer monthly, or oftener if requested byithe-Customer, with a summary of the meter readings relating to the

^

services rendered hereunder, and upon request will make available its metering records for the customer's inspection and review.

6.

Payment With respect to each month commencing on and after April'1, 1985, the customer will pay. Yankee an amount equal to the 5

_4

customer's power percentage of the total' cost of service for such month to all customers of Yankee.

The " total cost of service" for any month shall be the sum of (a) Yankee's operating expenses for such month with respect to the plant, plus (b) an amount equal to one-twelfth of the l

composite percentage for such month of the not plant rate base.

j

" Uniform System" shall mean the Uniform System of Accounts prescribed by the Federal Energy Regulatory Commission for Class A and class B Public Utilities and Licensees, as from time to time in effect.

Yankee's " operating expenses" shall include all amounts properly chargeable to operating expense accounts, less any applicable credits thereto, in accordance with the Uniform cystem; it being understood that for purposes of this contract

" operating expenses" shall include (i) depreciation accrued at a b

rate at least sufficient to fully amortize the non-salvageable

~

plant investment over the estimated remaining useful life of the plant; (ii) obligations incurred in connection with the leasing of fuel inventory; and (iii) interest charges not associated with outstanding indebtedness; and (iv) accrual

• to any reserve i

established by Yankee's board of directors to provide for decommissioning the plant over the estimated remaining useful life of the plant.

The parties agree that the timing and amount of any billings by Yankee of the accrual referred to in the preceding clause (iv), and the' Customer's continuing obligation to pay the same, are subject to the jurisdiction of the Federal P t

c I

l Energy Regulatory Commission or its successor agency as provided by law.

The aggregate amounts of the annual accrual to the l

l f

decommissioning reserve shall be as from time to time approved by the Federal Energy Regulatory Commission, such amounts to be accrued in equal monthly installments.

Consistent with

{

paragraphs 1 and 2 of Section 6 of this power Contract, monthly payments by the customer to the decommissioning reserve shall be equal to the Customer's power percentage of the total i

decommissioning accrual for that month.

Composite percentage shall be computed as of the last day of each month (the " computation date") and for any month the composite percentage shall be that computed as of the last day of the previous month.

Composite percentage as of a computation i

date shall be the sum of (i) the annual percentage rate for return on equity then in effect as authorized by the Federal Energy Regulatory Commission multiplied by the percentage which equity investment (excluding any equity investment which relates to construction work in progress not included in net plant rate t

base) as of such date is of the total capit:1 as of such dater plus (ii) the effective interest rate per annum of each principal amount of indebtedness (excluding any principal amount of indebtedness which relates to construction work in progress not included in net plant rate base) outstanding on such date for money borrowed multiplied by the percentage which such principal amount is of total capital as of such date.

l :

i

i I

" Equity investment" as of any date shall consist of the sum of (i) all amounts theretofore paid to Yankee for all capital stock theretofore issued, plus all capital contributions, less i

the sum of any amounts paid by Yankee in the form of stock retirements, repurchases or redemptions or return of capital; plus (ii) any credit balance in the capital surplus account not t

included under (i) and any credit balance in the earned surplus account on the books of Yankee as of such date.

7

" Total capital" as of any date shall be the equity investment plus the total of all indebtedness then outstanding for money borrowed.

The " net plant rate base" shall be determined monthly and t

shall consist of (i) the aggregate amount properly chargeable to Yankee's utility plant accounts, including nuclear fuel accounts, in accordance with the Uniform System; less (11) the amount of any accumulated provisions for depreciation and for amortization of nuclear fuel assemblies (exclusive of any decommissioning reserve); plus or less (iii) amounts recorded in accumulated deferred income tax accounts, as appropriate, in accordance with the applicable section of the regulation issued by the Federal Energy Regulatory Commission (which as of the date hereof is codified at 18 C.F.R.

$35.25); plus (iv) such allowances for materials, supplies, and prepaid items as may from time to time be determined by Yankee's board of directors; plus (v) allowances for cash working capital as permitted from time to time by the Federal Energy Regulatory Commission or its successor agency.

, w e

I Payments shall be made in cash promptly after receipt by the i

Customer of statements rendered by Yankee in such detail as the

]

Customer may reasonably require.

Such statements may be rendered on an estimated basis subject to corrective adjustments in l

a subsequent billing periods.

Simple interest at the prime rate then in effect at The First National Bank of Boston shall accrue I

on any payment delayed beyond thirty days after receipt by the Customer of a monthly statement.

If any payment (other than amounts in dispute) shall be delayed beyond six months, Yankee i

may, by written notice, terminate this contract at the end of the next succeeding calendar month.

Notwithstanding any other provision of this contract, the treatment of construction work in progress for purposes of any calculations relevant to the computation of monthly payments under this Section 6 shall conform to the applicable section of the Federal Energy Regulatory Commission's regulations.respecting such items (which as of the date of this Amendment hereof is I

codified at 18 C.F.R.

535.26), as such regulations may be modified from time to time.

7.

Audit Yankee's books and records, insofar as they pertain to the service rendered hereunder or to any charges made therefor, shall be open to the Customer's inspection and audit.

8.

Arbitration In case any dispute shall arise as to the interpretation of this contract which cannot be settled by mutual agreement, such

' t

P dispute shall be submitted to arbitration.

The parties shall, if E

possible, agree upon a single arbitrator.

In case of failure to agree Cpon an arbitrator within 15 days after the-deliver by either party to the other of a written notice requesting arbitration, either party may request the American Arbitration Association to appoint-the arbitrator.

The arbitrator, after opportunity for each of the parties to be heard, shall consider and decide the dispute and notify the parties in writing cf his

~

~

decision.- Such decision shall be binding upon the parties,: and.

l the expenseLof the arbitration shall be borne equally by them.

I 9.

Regulation Performance of this contract is subject to all applicable-state and federal laws and to all rules, regulations and orders properly issued-thereunder by any governmental agency having jurisdiction in the premises.

10.

Effective Date This revised contract shall '.come effective-on April-1, I

1985, subject to any suspension order duly issued'by the Federal.

Energy Regulatory Commission.

11.

Amendments Upon authorization by its board of directors of a. uniform amendment'to all customer power contracts, Yankee shall h' ave the right to amend the provisions of Section 6 hereof by serving an appropriate statement of such amendment upon the Customer and filing the same with the Federal Energy Regulatory Commission (or such other regulatory agency as may have jurisdiction in the j,

i e

,--y,--

i l

premises)- in accordance with the provisions of applicable laws 1

and any. rules _and regulations thereunder,7and1the amendment shall thereupon become effective on the'date specified therein, subject

.l l

j to any suspension. order duly issued by such agency.- All other

]

H amendments to this contract shall be by mutual agreement',

evidenced by a_ written amendment signed by the parties hereto.

I 12.

Interoretation i

The' interpretation and performance of this contract shall be l

l in accordance with and controlled by the. laws of-the Commonwealth of Massachusetts.

13.

Addresses Except as the parties may.from time to time otherwise= agree, i

any notice, request, demand, statement, bill or payment provided-for in this contract or any'other notice which either party may desire to give to the other, shall be in writing and shall'be effective upon delivery to the other party.

Any such l

l communication shall be considered asLduly_ delivered when mailed

-l by either registered or ordinary mail to the respective post office addresses shown following the signatures of the parties a

hereto.

14.

Corocrate oblication-l This contract is the corporate;act.and. obligation of the t

parties hereto, and any claim hereunder'against any stockholder, director or officer of either party,.as-such, is expressly _

waived."

'I ;

IN WITNESS WHEREOF the parties havo executed-this' revised contract by'their respective officers thereunto duly' authorized t-as of the captioned date.

r I

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i i

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1 - - _____--_-

i i

f Appendia Separate Power Cosirects were estered. inte, identical.in form with g

[.the foregoint except ass to the esecution thereof and ancept that os page 6 4.the nasks of the respective customers were insarted.

1 The Power contracts were executed by the respeattve parties thereto.-

+

l ender their corporate seals, as follows:

~

(

I YANKEE ATOMIC ELECTRIC COMPANT By. D. C. Alles, Presidant 20 Turnpike Road Attest:

Frederic E. u eenman, Asst. Clerk Westborough, Massachusetts.01581 NEW ENGLAND POWER COMPANY e -.

.By J. E. Tribble, Vice President f.

~

-Attest 20 Turnpike Road Robert K. Pulf f,- Clerk Westborough, Massachusetts 01581 i.

THE CONNECTICUT LIGHT AND POWER COMPANY t

l By E. L. Crove, Jr., Vice President j

t Attest:

Selden Street

.. F. L. Kinney, Secretary Berlin.-Connecticut 06037 rr BOSTON EDISON COMPANT

(

I By. Benjamin E. Weiner, Vice President-

{ Attests 800 Boylston Street-

[

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']Ja es S. Cousens, Clerk '

Boston, Massachusetts 02199 7

THE HARTFORD ELECTRIC LIGHT COMPANY.

By: E. L. Crove, Jr., Vice President

. Attest:

176 Cumberland Avenue I* L. Kinney, Secretary Wethersfield, Connecticut; 06109

(

WESTERN MASSACHUSETTS ELECTRIC COMPANY By E. L. Crove, Jr... Vice President-test:

176 drush-Bill Avenue L;j

• L. Kinney, As s t. Clerk West Springfield, Massachusetts,0108 l

- PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE By W. C7 Tallman, President-I test 1000 Ela' Street A* Winslow, Clerk Manchester, New Hampshire 03105 l

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-- MONTAUF E1J:CTRIC COMPANY Sy John F.: C.' Eichern President-F.O. Sos:391-aggest:

Fall River, Massachusstes 02722-F, O'Connor, Asst. Clerk NEW SEDFORD CA$~ AND EDISON. LIGHT COMPAm i f

By C. R. Anderson, President l

673 Massachusetts Avenue Attestat H.- McMorrow, Clerk

~ Cambridge, Massachusetts 02139.

1 CAMBRIDCE ELECTRIC LIGHT C0HPANY; t

r; By; C. E.' Anderson, President 1 J

673 Massachusetts Avenue Artest:I.

- M. McMorrow, Clark Cambridge, Massachusetts 02139

(

CEhTRAL VERM0ht PUBLIC S'.;? ICE CORPOP.AT:

By James'E. Criffin,1 resident

. Attest:

77:Crove Street Alice De1Bianco, Secretary Rutland, Vermont. 05701 l

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= YANKEE ATONIC it!CTRlt COMPANY ENCLOSURE 34 (IN000'$)

4 iANNUALTAII$t

- g ANNUAL.

ANNUAL-

'ONCOLLEC110NSAND_ <AN0UNTIN1 CUNULAllViTA1 10ikt -

PfR100:

CONTRIBU110N5:

EARNINGS-ORFUND(ARNING$1 TRU$1?

-CARRYBACK!

AVAllABLE'

.iNDINSL (A)

'll)E

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(D)-

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(F)'

BALANCEA1 314ec 89 e48,807

.6,151 54,958' s

,. 83,778 '

$46,075 142,297 L

- 314ec-10 '

85,650:-

- 83,233:

$2,313 114ec 91l 10,0428

-3,750>

2,50V L60,096 8,654

=68,750) t 314ec 92 5,650 4,665 t 2,766 67,645:

11,420':

119,065p q

4 314ec 93

-,650 -

_5,265:

2,918:

c75,642-

--14,338 i89,980l 5

314ec 45,650

' ~5,901f 3,078 -

s84,115 17,4165 101,531.

314ec-54 0 5,650 -

'6,575 3,248 -

_93,092 20,664:

113,7567 3tiec 96

~5,650-7,288-3,427:

102'603

_ 14,091L L126,694L 314ec-97 '

i5,650

=8,042 3,615'.

112,680 27,706:

--140,386-c 314ec-98!

. 5,650 1 8,842:-

E3,814y 123,358~

' 31',520_

'154,878_

314ec 99 5,650; 9,688.

4,024:

134,672i 35,544l 170,216 09 hl-2000 _

2,825-.

5,293 2,123 140,667-37,667-178,334l j

1 45,650 REGULAR CONTRIBUTION PLU$'84,392 TAI' PEFUND FRON '84-86,

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.YANLif A10NIC ELECTRIC COMPANY:

- [

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g JCOMPl.R!$0N Of TAI CARRYHCL W!iH IAli$ ACTUALLY PAIDD

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PERIOD:

TAX:CARRYBACK INDING-PER SCHEDUlf A.

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' _ 83,778 i d815,028L "t

- CUNULAi!VI A1 ;31-Dec-19'

2,373

3,700 '

n lNCREASE FM

31-Dec-103 t'~

~31-Dec-91.

!2,503; 3,399

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^

L I,illi

- 4,270:

'31 Dec-92 1

gf

'31Dec-93 L2,916j 14,634:

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.31Dec-94~

'3,078 L5,138/ '

'31-Dec-96

'- 3',246

'i,122

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.31-Dec-96i

-3,427; 6,119 31 Dec-91' 3,815'

-6,569 ;

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'31Dec98c 3,8141

1,'137.

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L31Dec-99'-

4,0241

-6,022' l

.09Jukt000' t,123 l 4,341

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• FIGURESFOR1990LANDFUTURIYEARSARiPROJECT10NS.

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