ML20207F414
| ML20207F414 | |
| Person / Time | |
|---|---|
| Site: | Vermont Yankee File:NorthStar Vermont Yankee icon.png |
| Issue date: | 03/04/1999 |
| From: | Wiggett B VERMONT YANKEE NUCLEAR POWER CORP. |
| To: | NRC OFFICE OF INFORMATION RESOURCES MANAGEMENT (IRM) |
| References | |
| BVY-99-36, NUDOCS 9903110235 | |
| Download: ML20207F414 (65) | |
Text
VERMONT YANKEE g')
NUCLEAR: POWER ' CORPORATION L
_185 Old Ferry Road, Brattleboro, VT 05301 7002
-(802) 257-5271 March 4,1999 BVY 99-36 United St tes Nuclear Regulatory Commission ATTN: Document Control Desk Washington,DC 20555
Reference:
(a) 10 CFR, Section 50.75(f)(1)
Subject:
Ver.mont Yankee Nuclear Power Station License No. DPR-28 (Docket No. 50-271)
Vermont Yankee 10 CFR 50.7Hf)(1) Biennial Decommissionine Fund Status Report In accordance with the requirements of 10 CFR 50.75(f)(1), enclosed is the Biennial Decommissioning Fund Status Repon for Vermont Yankee Nuclear Power Corporation. This report provides a status as of 12/31/98, if you should have any questions, please call me at (802) 258-4117.
)
Sincerely, VERMONT YANKEE NUCLEAR POWER ORPORATION ruce W. Wiggett Vice President, Finance and Treasurer l
cc:
USNRC Region 1 Administrator j
USNRC Resident inspector-VYNPS I
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USNRC Project Manager-VYNPS l
Vermont Depanment of Public Service 1
9903110235 990304
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PDR l
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VERMONT YANKEE NUCLEAR POWER CORPORATION BIENNIAL DECOMMISSIONING FUND STATUS REPORT As Required by 10 CFR 50.75(f)(1)
Due Date: March 31,1999
- 1. Decommissioning Funds Estimated to be Required per 10 CFR 50.75(b) and (c)
Exhibit I contains the calculation of the decommissioning funds estimated to be required per 10 CFR 50.75(b) and (c). The calculation, which assumes burial of waste at the Barnwell site with a waste vendor, results in an estimated decommissioning funding requirement of
$318.9 million (in December 1998 dollars).
l
- 2. Decommissioning Funds Accumulated as of December 31,1998 Exhibit 2 provides certified investment sammaries for the decommissioning trust accounts.
)
The summaries indicate the total market value of the decommissioning funds accumulated as of December 31,1998 to be $228.4 million.
- 3. Schedule of Remaining Amounts to be Collected for Decommissioning The current schedule of remaining amounts to be collected for decommissioning is shown below. The amounts are from a schedule approved by the Federal Energy Regulatory Commission in 1994 for rates effective on January 1,1995. Vermont Yankee is required to file an updated decommissioning cost estimate with the FERC in 1999 that may result in a revised collection schedule beginning January 1,2000.
Collection Period Annual Collection i
1999
$12,897,960 2000-2004
$16,777,380 2005-2009
$21,823,641 2010-2011
$28,387,703 2012
$ 7,096,926
- 4. Assumptions Used in Decommissioning Funding Projections The annual collections shown above are based on the following assumptions:
- Decommissioning cost (1993 dollars)
$312.7 million
- Decommissioning cost (1998 dollars)
$406.8 million
- Escalation rate for decommissioning costs 5.4%
- Rates of earnings for decommissioning funds 7.68% (pre-tax)
- 5. Contracts Upon Which the Licensee is Relying Pursuant to 10 CRF 50.75(e)(1)(ii)(C) i-Vermont Yanked has Power Contracts, dated as of February 1,1968, as amended, and Additional Power Contracts, dated as of February 1,1984, with each ofits sponsoring i
1 utilities which obligate said sponsoring utilities in the aggregate to purchase the output and capacity of the Vermont Yankee plant and to pay therefor 100% of Vermont Yankee's costs, including decommissioning, whether or not its plant is operating. These contracts are valid and enforceable obligations of the parties thereto and have been approved as rates by the i
FERC. Composite conformed copies of the Power Contracts and Additional Power 3
Contracts are filed herewith es Exhibit 3 and Exhibit 4, respectively. Pursuant to these J
contracts the obligation of each sponsoring utility to pay its pro rata share of the decommissioning costs is irrevocable and remains in effect until the decommissioning of the l
Vermont Yankee plant has been completed.
- 6. Modifications to the Licensee's Method of Providing Financial Assutance since the Last Submitted Report i
)
None. Vermont Yankee continues to maintain an external sinking fund within the meaning of 10 CRF 50.75(e)(ii). The Bank of New York has replaced The Howard Bank as Trustee.
A composite copy of the Trust is submitted herewith as Exhibit 5 in compliance with the requirements of 10 CFR 50.75(b). Based upon the assumptions listed in item 4 above, the amount anilable to decommission the plant in March 2012 (the end of the current license life), including future collections from sponsors under the Power Contracts and Additional Power Contracts, anticipated earnings on the amounts deposited and estimated income tax benefits (of approximately $101 million) on future decommissioning expenditures, is $816.6 million. This amount compares favorably to the current minimum funding amount $640.1 million calculated in accordance with 10 CFR 50.75(c) and escalated by Vermont Yankee's assumed inflation rate of 5.4%.
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h Based on the foregoing, Vermont Yankee hereby certifies that financial assurance for decommissioning for the Vermont Yankee plant will be provided in an aggregate amount of not less than the inflation adjusted minimum amount required by 10 CFR 50.75(c).
Respectfully submitted, VERMONT YANKEP NUCLEAR POWER CORPORATION
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March 1,1999
.By:
V/ A// /
Bfqke W. Wiggett, Vicpesident, Finance and Treasurer finance \\ laser \\d_ drive \\decomm\\nrc\\03_99 assurance. doc
l 1998 VERMONT YANKEE NRC MINIMUM FUNDING CALCULATIONS i
PER 10.CFR PART_50.75_(C) AND NUREG 1307 REV. 8
[1]
MINIMUM EUNDING.EORMULA PER.10.CER 50.75 ct(1986 dollars) l
$104 MILLION + (.009
- 1593 MW THERMAL) =.
l $118.337 mIon Base 1988 l
NOTE: 5104 million and.0d9 are constants provided by 10 CFR 10.75 and 1593 is VY's thennal output
[2]
_ ESCALATION FACTORS:
Per 10 CFR 50.75(C)(2) and NUREG 1307, the amount in [1] above will be escalated by the formula below:
l Weighted Index 4Q '9[
Escalation Weightind Etcalation Jan-86 Index Factor Factor Factor L=
170.50 216.92 1.66 0.65 1.08 E=
See P & F below 0.62 0.13 0.08 B=
1.56 n/al 6.97 0.22 1.53 1 81.1
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ractor EO
!.'.c.U O.a,wgeg".A.r.cne io swag.II,Ts# %afEscT*m*t'UpT M 31Y * " ")
UEE UU,"MU".
w c comens
.23te). 77<r) j
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EO.I"E"U*eE' E."*.'.D.onna.
Bus Esca tson inden ior Samwen waste tar 1 costs (wth a waste vendor) as pubhshed in NURcG 1307 8 (Dated December 1998)-
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o-e.n,,,,.u.se 1 19 as ba
- Thus, a
m ye x U. c lue(12198)
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[3]
NRC. MINIMUM EUNDING_ CALCULATION. EOR LATEST.AVAILABLEDATAJN [2] ABOVE:
l$118.337 MILUON *165%
- LJ +liJ%
- El+_J22%
- B2]=
$318.877 mean m issa aoan l NOTE: The minimum funding calculation above utilizes the indices noted in section 2. Disposal at the Bamwell site with a waste vendor is assumed. January 1998 costs are assumed consistent with NUREG 1307-8.
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[4]
CURRENT 3ERMONT_YANKETEEROAPPROVED_ DECOMMISSIONING. COST _ ESTIMATE:
1993 FERC Approved Decomm Cost Estimate 312.7 million * (1.054^(1998-1993)):
( $406.800.wm in 1.
non.r._J
]
(De.:it)/ Excess over Minimum Funding Requirement =
1
$ll7.923 mmoninie98coun l r
[5]
CURRENT.AND PROJECTEDJERMONTlANKEE DECOMMISSIONING _ TRUST EUND ASSETS:
T DECOMM BALANCE
_ year 2012 Dec-9_8_
Trust Fund Market Value
$715.0
$228.4 Section 468A Tax Refunds Receivable
$101.6
$10.9 Total Funding Available
__ $816,6
$239,3, moon NOTE: The trust fund balance assumptions are based on the FERC approved decommissioning funding schedule (eq5yS_4.wk3) which assumes a $312.7 million decommissioning cost estimate (1993 5's), and a 5.4% annual cost esumate escalation factor.
The tax refund assumption is based on Section 468A of the tax code.
Prapared by: [//
Reviewed by:
p-e,eauc.o.y c.,*on.,n, sury o.p.,im.,.
j FILE LASER.LECoMW NRC NRcMIN98 wk4 26-Feb e9 10.02 AM i
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Exhibit 1 1
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THE B&NE C-T NEW YeRE HEREBY CERTIFIES THIS STATEMENT AND ACCOMPANYING SCHEDULES ARE y-m COMPLETE AND ACCURATE.
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Executive VicP President VERMONT YANKEE NDT-CASH RECEIPTS NON-Q ACCOUNT NUMBER:
000871894 ANNUAL REPORT / TRADE DATE BASIS JANUARY 01, 1998 - DECEMBER 31, 1998 t
l BOBBI KILBURN, TREASURY ANALYST VERMONT :\\NKEE 185 OLL iltRY ROAD BRATTLEBs41 VT 05301-7002 w
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a VERMOWT TANRIE NUCLEAR POWER CORP.
TIEMONT TANREE WDT-CASE RECEIPT 5 NOW-g ACC0FNT NVMBER 000871834 AltNTAL REPORT / TRADE DATE BASIS JANVIRI 01, 1958 - DECEMBER 31, 1938 y
COMPARATIVE INVESTMENT
SUMMARY
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,,%dDESCRIP710Nhy*s~gh'.-+f:i. * -F u p; i J-y~f ', ?n
,lB00E VALUE'
< F,... B00E VALUE2 -
MARRIT VALUE-
[MAREETVALUEJ v
f[ifd61,g%Edijif' y[s,.[2k
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} CURRENTi.3 PRIOR
- CURRENT.;.
- rPRIOR. ;._
5HORT TERM INVESTHENTS POOLED FUNDS & MUTUAL FUNDS 215,351.74 2,921,928.43 215,351.74 2,921,928.43 TOTAL 53017 TERM IWYESTMENTS 215,351.74 2,121,528.43 215,351.74 2,321,928.43 TOTAL INVESTMENT 5 215,351.74 2,321,528.43 215,351.74 2,521,928.43 P1 TABLES 0.00 0.00 0.00*
0.00 FICEITABLES 0,09 0.00 0.00 0.00 C12R 0.00 0.00 0.00 0.00 SUBTOTAL 215,351.*i4 2,921,328.43 215,351.74 2,921,528.43 ACCRVED INCOME 2,182.73 8,381.38 2,182.73 8,381.38 TOTAL FUND 217,534.47 2,930,309.81 217,534.47 2,530,309.81 PAGE 1
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YME BANK OF MEW TORK HEREBY CERTIFIES THIS STATEMENT AND ACCOMPANYING SCHEDULES ARE m
COMPLETE AND ACCURATE.
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Executive Vic M resident.
VERMONT YANKEE NDT.NON QUAL DEL INVT EQ ACCOUNT NUMBER:
000871899 ANNUAL REPORT / TRADE DATE BASIS JANUARY 01, 1998 - DECEMBER 31, 1998 BOBBI KILBURN, TREASURY ANALYST VERMONT YANKEE 185 OLD FERRY ROAD BRATTLEBORO VT 05301-7002 1
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2 o-IANKEE M CLEAR POWER CORP.
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NONT TANKEE NDT NON 9W&L dei. INTT EQ
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ACCOUNT M M ER 000871899 pg ANNWAL REFORT / TR&DE DATE BASIS A.K1,
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JAM ART 01, 1998
- DECEIWER 31, 1998-g COMPARATIVE INVESTMENT
SUMMARY
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'M(n;&yu%p m y%m x dim fiBOOK TALVE?SO Idhs ;
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J N M d w p [+ M m " a hi R[ N i m c = = M ? } R&RRET VALWK 5 ;$ [ 17% c = n l; a
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4M]9ESCRIFT!
R&RRET VALUE W%?
= = > -
IQUITIES COMMON SIUCK 13,234,083.12 12,227,837.48 17,771,060.13 19,837,739.39 TOTAL EQWITIES 13,234,083.12 12,227,837.48 17,771,060.13 19,837,739.39 FIEED INCOM INTESTMNTS NON CONVERTIBLE PREFERRED 308,500.00 0.00 397,250.00 0.00 TOTAL TIEED INCORE INTESTRENTS 308,500.00 0.00 397,250.00 0.00 f
SEORY TERM IMESTMNTS POOLED FUNDS in MUTUAL FUNDS 452,085.08 668,580.97 452,085.08 668,580.97 i
TOTAL SEORT TERN INTESTRENTS 452,085.08 668,580.97 452,085.08 668,580.97 l
t TOTAL INTESTMENTS 13,994,668.20 12,896,418.45 18,620,395.21 20,506,320.36 FATABLES (1,117,881.50) 0.00 (1,117,881.50) 0.00 RECEITABLIS 0.00 0.00 O.00 0.00 CASE 0.00 0.00 0.00 0.00 SYSTOTAL 12,876,786.70 12,896,418.45 17,502,513.71 20,506,320.36 ACCRVED INCOME 33,888.42 40,427.73 33,888.42 40,427.73 TOTAL FUND
.12,910,675.12 12,936,846.18 17,536,402.13 20,544,748.09 y
6 PACE 1
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TEE CAME OF NEW YORK HEREBY CERTIFIES THIS STATEMENT AND ACCOMPANYING SCHEDULES ARE m
-s4 COMPLETE AND ACCURATE.
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Executive Vic Feresident i
1 VERMONT YANKEE NDT-QUAL PHOENIX DUFF ACCOUNT NUMBER:
000871898 ANNUAL REPORT / TRADE DATE BASIS JANUARY 01, 1998 - DECEMBER 31, 1998 BOBBI KILBURN, TREASURY ANALYST VERMONT YANKEE 185 OLD FERRY ROAD BRATTLEBORO VT 05301-7002 I
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VERMONT TANEEE WCLEAR POWER CORP.
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VERMONT TANKEE NDT-9WAL P90EWII WFF
~l' g ACCONT NWH8ER 900871898
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ANNVAL REPORT / TRADE DATE BASIS JANUART 01, 1998 - DECElmER 31, 1998 COMPARATIVE INVESTMENT
SUMMARY
lOE Mme#Raf@ MEN _rd7Nbw.i,fe =
"9CNi: c== w. '- h ;.' MAREET VALWE'A ?;'
h IBOOK TALFEE
. a= -
i 1MARRET VALBE' th 1
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VALTE
=
i FIEED INCOME INVESTMENTS CORPORATE BONDS 7,902,316.65 13,114,277.80 7,943,942.88 13,484,110.89 TAK EXEMPT BONDS 12,692,612.08 17,999,845.15 13,175,711.43 18,612,732.20 1
00VERNMENT BONDS.
44,533,543.70 41,433,339.23 46,299,599.80 43,875,198.56 70TlL FIEED INCOME IWYESTMENT5 65,128,472.43 72,547,462.18 67,419,254.11 75,972,041.65 SNORT TERM INVESTMENTS POOLED FONDS & MUTUAL FUNDS 464,678.16 743,258.97 464,678.16 743,258.97 I
TOTAL SNORT TERM INVESTMENTS 464,678.16 743,258.97 464,678.16 743,258.97 TOTAL INVESTRENTS 65,593,150.59 73,290,721.15 67,883,932.27 76,715,300.62 PAYA8LES 0.00 0.00 0.00 0.00 i
RECEITABLI5 0.00 0.00 0.00 0.00 i
CASE 0.00 0.00 0.00 0.00 SWBTOTAL 65,593,150.59 73,290,721.15 67,883,932.27 76,715,300.62
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ACCRTED INCOME 826,142.65 908,928.93 826,142.65 908,928.93 TOTAL FWND 66,419,293.24 74,199,650.08 68,710,074.92 77,624,229.55 f
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2 THE BANE OF MEW YORK HEREBY CERTIFIES D IS 3
STATEMENT AND ACCOMPANYING SCHEDULES ARE COMPLETE AND ACCURATE.
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Executive Vic FPresident i
VERMONT YANKEE NDT' QUAL-DEL INVEST ADV ACCOUNT NUMBER:
000871896 ANNUAL REPORT / TRADE DATE BASIS JANUARY 01, 1998 - DECEMBER 31, 1998 l
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i BOBBI KILBURN, TREASURY ANALYST VERMONT YANKEE 185 OLD FERRY ROAD BRAYTLEBORO VT 05301-7002 1
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y YERMONT TANKEE NWctyas POWER CORP.
VERMONT YANKEE NDT 9WAL-DEL INVEST ADT
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ACCOVNT NTNBER 000871896 ANNVAL REPORT / TRADE DATE BASIS JANUARY 01, 1998 - DECEMBER 31, 1998 4
COMPARATIVE INVESTMENT
SUMMARY
TORK I/j f h DESCRIPT10N h M pQl3O9r4ffag ?y attg%MQ@ ;
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y e yfe
' q;f> f ',2?B00RiTALVE Q ff 1 A, BOOK VALVE..
Y.kkfd$hk k[py g Q *; i 53 q.PRIORg; k qgj Q, "; y CURRENT,J' J'
MARKET YALUEl
- MARKET YALUE' '
. PRIOR
- r CVRRENT FIEED INCOME INTESTMENTS CORPORATE BONDS 22,841,965.7?
17,566,316.60 23,7.11 '48.64 18,139,281.93 TAX EXEMPT BONDS 15,379,958 18 30,542,371.36
.15,783,100 44 31,751.871.80 COVERNMENT BONDS 20,123,947.15 24,023,837.77 20,383,183.72 24,798,404.31 OTHER BOIIDS 2,561,273.22 0.00 2,566,369.75 0.00
' TOTAL FIEED INCOME INVESTMENTS 60,907,143.84 72,132,525.73 61,944,302.65 74,689,558.04 SNORT TERM INVESTMENTS POOLED FUNDS & MUTVAL FUNDS 680,270.66 516,129.43 680,270.66 516,129.43 COMMERCIAL PAPER 3,578,298.75 0.00 3,577,293.78 0.00 TOTAL 5NORT TERM INTESTMENTS 4,258,569.41 i16,129.43 4,257,564.44 516,129.43 TOTAL INVESTMENTS 65,165,713.25 7+
_3,655.16 66,201,867.09 75,205,687.47 FATABLE5 0.00 0.00 0.00 0.00 RECEITABLE?
2,453.84 0.00 2,453.84 0.00 CASE 0.00 0.00 0.00 0.00 SUBTOTAL 65,168,167.09 72,648,655.16 66,204,320.33 75,205,687.47 ACCRVED INCOME 942,979.71 1,257,440.17 342,979.71 1,257,440.17 TOTAL FUND 66,111,146.80 73,906,095.33 67,147,300.64 76,463,127.2*
PAGE 1
h.
THE BANK OF NEW YORK HEREBY CERTIFIES THIS STATEMENT AND ACCOMPANYING SCHEDULES ARE 3
COMPLETE AND ACCURATE.
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t VERMONT YANKEE NDT QUAL-KELLON BANK ACCOUNT NUMBER:
000871897 ANNUAL REPORT / TRADE DATE BASIS JANUARY 01, 1998 - DECEMBER 31, 1998 BGBBI KILBURN, TREASURY ANALYST VERMONT YANKEE 185 OLD FERRY ROAD BRATTLEBORO VT 05301-7002 l
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VERRONT T&NM E NUCLEAR POWER CORF.
VERRONT TANRM NDT 95&L-MLLON BANK g A-ACCOUNT NUMER 000871497 12n.
ANNW&L REPORT / TR&DE DATE B& SIS
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JANEART 01, 1998 - DECEMBER 31, 1998 -
COMPARATIVE INVESTMENT
SUMMARY
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. q; ;L 3jp. q'. iR&aRET.TALTEI;^ M R&RRET.TALUEi
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@&MW@;rRIOR gyq{$g ggq} BOOK VALWE %
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'u CvRRmyw ii TOTAL OTEER ASSETS 25,890,311.99 26,585,885.55 39,472,833.81 50,828,604.61
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SEORT TERR INTESTMNTS POOLED FUNDS & MUTUAL FUNDS 29,837.21 30,015.29 29.837.21 30,015.29 TOTAL SNORT TERN INTESTRENTS 29,837.21 30,015.29 29,837.21 30,015.29 TOTAL INTESTRENTS 25,920,153.20 26,615,900.84 39,50.,671.02 50,858,619.90 P&TABLIS (83,393.66)
(126,107.05)
(83,333.66)
(126,107.09)
RECEIVABLES 83,393.66 126,107.09-83,393.66 126,107.09 CASE 0.00 0.00 0.00 0.00
[
i SWBTOTAL 25,920,153.20 26,615,900.84 39,502,671.02 50,858,619.30 8
ACCRWED INCont 33.45 0.00 33.45' O.00 i
TOTAL FUND 25,020,186.65 26,615,900.84 39,502,704.47 50,858,619.30 l
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PACE 1
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[ COMPOSITE CONFORMED COPY *]
j POWER CONTRACT, dated as of February 1,1968, between VERMONT YANKEE NUCLEAR POWER CORPORATION (" Vermont Yankee"), a Vermont corporation, and (The names of the Purchasers appear in the attached Appendix) (the " Purchaser").
It is agreed as follows:
- 1. Basic Understandings.
Vermont Yankee has been organized to provide for the supply of power to its ten sponsoring utility companies (including the Purchaser), which utilities are hereinafter called the " sponsors" In the spring of 1967,it commenced the construction of a nuclear electric generating unit of the boiling water type, which is being designed to have a maximum net capability of approximately 540 megawatts electric, at a site adjacent to the Connecticut River at Vernon, Vermont ( the unit being herein, together with the site and all related facilities to be owned by Vermont Yankee, referred to as the " Unit"). Construction of the Unit is being carried out under contracts with General Electric Company and Ebasco Services Incorporated. It is presently estimated that construction costs and working capital will aggregate approximately
$115,000,000, exclusive of fuel.
The Unit is to be operated to supply power to Vermont Yankee's sponsors, each of which is undertaking to purchase a fixed percentsge of the capacity and output of the Unit. The names of the sponsors and their respective percentages (" entitlement percentages") of the capacity and output of the Unit are as follows:
Entitlement Sponsor Percentage Central Vermont Public Service Corporation.
35.0 %
Green Mountain Power Corporation.
20.0 %
New England Power Company.-
20.0 %
The Connecticut Light and Power Company--
6.0%
Central Maine Power Company;-
4.0%
Public Service Company of New Hampshire-4.0%
The Hanford Electric Light Company-3.5%
Western Massachusetts Electric Company =
2.5%
Montaup Electric Company...
2.5%
Cambridge Electric Light Company.
2.5%
Vermont Yankee and its other sponsors are entering into power contracts which are identica) to this contract except for necessary changes in the names of the parties.
- 2. Efective Date and Term.
This contract shall become effective upon receipt by the Purchaser of notice that Vermont Yankee has j
entered into power contracts, as contemplated by Section I above, with each ofits other sponsors. The
)
term of this contract shall expire 30 years aster the plant completion date.
I I
The " plant completion date" shall be the earlier of(i) Deumber 31,1972, or (ii) the date on which J
the Unit is placed in commercial operation, as determined by Vermont Yankee (the " commercial operation date").
- As amended by eight amendments, dated as of June 1,1972, April 15,1983, April 24,1985, June I,1985, May 6,1988, May 6,1988, June 15, IP and December 1,1989, respectively.
Exhibit 3
(
Conformed Copy of h
Power Contracts k.
j
e i
- 3. Construction of the Unit.
Vermont Yankee will proceed with due diligence with construction of the Unit, and will exercise its best efforts to mmplete and place it in commercial operation by July 1,1971, on the presently estimated l
schedule therefor and within present cost estimates, and will keep the Purchaser reasonably informed as to the progress of construction, material modifications in cost estimates, and expected plant completion date.
j i
- 4. Operation and Maintenance of the Unit.
Vermont Yankee will operate and maintain the Unit in accordance with good utility practice under
/
the circumstances and all applicable law, including the applicable provisions of the Atomic Energy Act of 1954, as amended, and of any lic.nses issued thereunder to Vermont Yankee. Within the limits imposed by good utility practice under the circumstances and applicable law, the Unit will be operated at its k
maximum capability and on a long hour use basis.
i l
Outages for inspection, maintenance, refueling and repairs and replacements will be scheduled m accordance with good utility practice and insofar as practicable shall be mutually agreed upon by Vermont I
Yankee and the Purchaser. In the event of an outage, Vermont Yankee will use its best efforts to restore the Unit to service as promptly as practicable.
- 5. Purchaser's Entitlement.
i The Furchaser will,'throughout the term of this contract, be entitled and obligated to take its i
entitlement percentage of the capacity and net electrical output of the Unit, at whatever level the Unit is operated or operable, whether more or less than 540 megawatts electric.
1
- 6. Deliveries and Metering.
The Purchaser's entitlement percentage of the output of the Unit will be delivered to and accepted by it at the step-up substation at the site. All deliveries will be made in the form of 3-phase,60 cycle, i
alternating current at a nominal voltage of 345,000 volts. The Purchaser will raake its own arrangements for the transmission ofits entitlement percentage of the output of the Unit.
Vermont Yankee will supply and maintain all necessary metering equipment for determining the quantity and conditions of supply of deliveries under this contract, will make appropriate tests of such equipment in accordance with good utility practice and as reasonably requested by the Purchaser, and will maintain the accuracy of such equipment within reasonable limits. Vermont Yankee will furnish the Purchaser with such summaries of meter readings as the Purchaser may reasonably request.
- 7. Payment i
With respect to each month commencing prior to the plant completion date, the Purchaser will pay Vermont Yankee at the rate of 4 mills per kilowatt hour, for the Purchaser's entitlement percentage of the net electrical output (if any) of the Unit during the particular month.
With respect to each month commencing on or after the plant completion date or, in the case of
/
payments under clause (b) below, commencing on or after the date authorized by FERC, the Purchaser N
will pay Vermont Yankee an amount equal to the Purchaser's entitlement percentage of the sum of (a)
Vermont Yankee's total fuel costs for the month with respect to the Unit, plus (b) the Total Decommissioning Costs for the month with respect to the Unit, plus (c) Vermont Yankee's total operating expenses for the month with respect to the Unit, plus (d) an amount equal to one-twelfth of the composite percentage for such month of the net Unit investment as most recently determined in accordance with this Section 7.
" Composite percentage" shall be mmputed as of the plant mmpletion date and as of the last day of each month thereafter (the " computation date") and for any month the composite percentage shall be that computed as of the most recent computation date. " Composite percentage"as f a computation date
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a shall be the sum of (i) the equity percentage as of such date multiplied by the percentage which equity investment as of such date is of the total capital as of such date; plus (ii) the stated interest rate per annum of each principal amount of indebtedness bearing a panicular rate of interest outstanding on such date for mo..ey borrowed from other than sponsors multiplied by the percentage which such principal amount is of total capital as of such date.
" Equity percentage" as of any date shall be eight and one-half percent (8%%) or such greater percentage, if any, as shall be obtained by dividing (a) the sum of (i) twelve and one-quarter percent (12.25%) multiplied by common stock equity investment as of such date plus (ii) the stated dividend rate per annum of cach issue of preferred stock bearing a particular dividend rate outstanding on such date multiplied by the aggregate par value of said issue, by (b) equity investment as of such date.
" Common stock equity investment" as of any date shall consist of equity investment as of such date less the aggregate par value of all issues of preferred stock outstanding on such date.
" Equity investment" as of any date shall consist of not less than the sum of(i) all amounts theretofore paid to Vermont Yankee for all capital stock theretofore issued (taken at the total par value thereof plus the total of all amounts in excess of such par value paid thereon); plus all capital contributions, loans and advances theretofore made to Vermont Yankee by its sponsors, less the sum of any amounts distributed by Vermont Yankee to its sponsors or stockholders in the form of stock repurchases or redemptions, return of capital or repayments ofloans and advances; plus (ii) any credit balance in the capital surplus account (not included under (i)) and in earned surplus account on the books of Vermont Yankee as of such date.
" Total capital" as of any date shall be the equity investment plus the total of all indebtedness then outstanding for money borrowed from other than Vermont Yankee's sponsors.
" Uniform System" shall mean the Uniform System of Accounts prescribed by the Federal Power Commission for Class A and Class B Public Utilities and Licensees as in effect on the date of this contract and as said System may be hereafter amended to take acmunt of private ownership of special nuclear material.
Vermont Yankee's " fuel costs" for any month shall include (i) 1 mounts chargeable in accordance with the Uniform System in such month as amortization of costs of fuel assemblies and components and burn-up of nuclear materials for the Unit; plus (ii) a!! other amounts properly chargeable in accordance with the Uniform System to fuel msts for the Unit less any applicable credits thereto; plus (iii) to the extent not so chargeable, all payments (or accruals therefor) with respect to lease obligations incurred in connection with such fuel assemblies and components, including nuclear materials, for the Unit.
Vermont Yankee's " operating expenses" shall include all amounts properly chargeable to operating expense accounts (other than such amounts which are included in Vermont Yankee's fuel costs),less any applicable credits thereto, in accordance with the Uniform System; provided, however, that for purposes of this contract, the accrual of depreciation as an operating expense shall commence on the plant completion date at the rate of 3.846% per annum, whether or not the Unit is then in operation, and during each of the first 26 years after the plant completion date, the amount included in operating expenses on account of depreciation accruals (and amortization, if any, of property losses) shall in no event be less than 3.846% of the excess of:
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(a) the amount properly chargeable at the plant completion date in accordance with the Uniform System to electric plant accounts (including construction work in progress) with respect to the depreciable portion of the Unit (or, if the plant completion date is prior to the commercial operation date and the amount so chargeable with respect to the depreciable portion of the Unit on the commercial operation date is greater than it was on the plant completion date, then such greater amount),
over (b) the amount of net available cash.
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The " net Unit investment" shall consist, in och case with respect to the Unit, of (i) the aggregate
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amount properly chargeable at the time in accordance with the Uniform System of Vermont Yankee's i
electric plant accounts (including construction work in progress), less the sum of (x) the aggregate minimum amount required by this Section 7 to be included in operating expenses from the plant completion date to the date in question on account of depreciation accruals (and amortization, if any, of property losses) reduced by the aggregate of all amounts charged during such period against the accumulated provision for depreciation plus (y) the amount of net available cash; plus (ii) the aggregate amount properly chargeable at the time in accordance with the Uniform System to accounts representing fuel assemblies and components (including nuclear materials) and other materials and supplies, less the l
balance,if any, at the time of the accumulated amortization thereof; plus (iii) such reasonable allowances f
for prepaid items and cash working capital as may from time to time be determined by Vermont Yankee.
However, for purposes of this contract, the net amount included at any date after the plant completion date d
in net Unit investment under clause (i) of the immediately preceding sentence shall in no event be less than the excess of:
(a) the amount properly chargeable at the plant completion date in accordance with the Uniform System to electric plant accounts (including construction work in progress) with respect to the Unit (or, if the plant completion date is prior to the commercial operation date and the amount so chargeable with respect to the Unit on the commercial operation date is greater than it was on the j
plant completion date, then such greater amount),
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. (b) the sum of(x) the aggregate minimum amount required by this Section 7 to be included in j
operating expenses from the plant completion date to the date in question on account of depreciation accruals (and amortization, if any, of property losses) plus (y) the amount of net available cash.
The net Unit investment shall be determined as of the plant completion date and thereafter as of the commencement of each calendar year, or, if Vermont Yankee elects, at more frequent intervals.
" Net available cash" means, at any date as of which the amount thereofis to be determined, the excess of(a) the aggregate amount received by Vermont Yankee after the plant completion date and prior I
to two yesrs before the determination date as insurance proceeds on account ofloss or damage to the Unit or as the proceeds of a sale or condemnation of a portion of the Unit, over (b) the aggregate amount expended after the plant completion date and prior to the determination date on account of rebuilding, repairs, replacements and additions to the Unit, provided that insurance proceeds received with respect to a particular loss shall be taken into account for purposes of the foregoing computation only if the amount received with respect to the loss exceeds $150,000.
" Total Decommissioning Costs" for any month shall mean the sum of(x) an amount equal to all accruals in such month to any reserve, as from time to time established by Vermont Yankee and approved by its board of directors, to p wide for the ultimate payment of the Decommissioning Expenses of the Unit plus (y) Decommissioning Tax Liability for such month. It is understood (i) that such funds may be held by Vermont Yankee or,if required, by an independent trust or other separate fund, as determined by said board of directors. (ii) that, upon compliance with Section 20 hereof, the amount, custody and/or timing of such accruals may from time to time during the term hereof be modified by said board of directors in its discretion or to comply with applicable statutory or regulatory requirements or to reflect changes in the amount, custody or timing of anticipated Decommissioning Expenses, and (iii) that the use of the term 'to decommission' herein encompasses compliance with all requirements (other than those relating to spent nuclear fuel) of the Nuclear Regulatory Commission or its successors (NRC) for permanent cessation of operation of a nuclear facility.
" Decommissioning Expenses" shall include:
(1) All msts and expenses of removing the Unit from service, including without limitation, dismantling, mothballing, removing radioactive material (excluding spent nuclear fuel) to temporary and/or permanent storage sites, demntaminating, restoring and supervising the site, and any costs and expenses incurred in connection with proceedings before governmental regulatory authorities relating to any authorization to decommission the Unit or remove the Unit from service; 4
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(2) All costs of labor and services, whether directly or indirectly incurred, including without limitation services of foremen, inspectors, supervisors, surveyors, engineers, security personnel, counsel and accountants, performed or rendered in connection with the decommissioning of the Unit and the removal of the Unit from service, 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..) connection with the decommissioning of the Unit and the removal of the Unit from service, and all administrative costs, including services of counsel and fmancial advisers, of any applicable independent trust or other separate fund; it being understood that any amount, exclusive of proceeds of insurance, realized by Vermont Yankee as salvage on any machinery, construction equipment and apparatus, the cost of which was chttrged to Decommissioning Expense, shall be treated as a reduction of the amounts otherwise chargeable on account of the costs of g
decommissioning of the Unit, and (3) All overhead costs applicable to the Unit during its decommissioning period, including, without limiting the generality of the foregoing, taxes (other than taxes on or in respect ofincome),
licenses, excises and assessments, casualties, surety bond pretriums and insurance premiums.
" Decommissioning Tax Liability" for any month shall be an amount established by Vermont Yankee and approved by its board of directors to meet possible income tax obligations, which amount shall not exceed: the amount to be included in the clause (x) portion of Tota. Decommissioning Costs for such month multiplied by a fraction whose numerator is equal to the combio d highest statutory Federal and state marginal income tax rate and whose denominator is equal to.)ne minus the combined highest statutory Federal and state marginalincome tax rate. Vermont Yankt c will use its best efforts to obtain as promptly as possible favorable tax treatment of the payments for Tor 41 Decommissioning Costs hereunder so that Decommissianing Tax Liability may be minimized.
Without limiting the generality of the foregoing, amounts expended or to be paid with respect to decommissioning of the Unit or removal of the Unit from service shall constitute part of the Decommissioning Expenses if they are, or when paid will be, either (i) properly chargeable to any account related to decommissioning of a nuclear generating unit in accordance with the Uniform System or generally accepted accounting principles 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 the Federal Energy Regulatory Commission or its successors (FERC) or any other regulatory agency having jurisdiction.
Vermont Yankee will bill the Purchaser, as soon as practicable after the end of each month, for all amounts payable by the Purchaser wi n respect to the particular month. Such bills will be rendered in such detail as the Purchaser may reasonably request and may be rendered on an estimated basis subject to corrective adjustments in subsequent billing periods. All bills shall be paid in full within 10 days after receipt thereof by the Purchaser.
7A. Decommissioning Fund.
Vermont Yankee agrees to cause an appropriate decommissioning fund to be established in accordance with applicable regulatory requiremerits. It is anticipated that FERC may require an
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independent trust or other separate fund to be created which will have the necessary powers to hold and invest all funds collected for the decommissioning of the Unit and to disburse the same to pay, or to reimburse Vermont Yankee for, such costs when actually incurred for decommissioning of the Unit or removal of the Unit from service. If during the term of such trust or fund federal or state legislation or regulations are promulgated which so permit or require, or an alternative entity is created for funding decommissioning of the Unit, such trust will have the authority, with the concurrence of Vermont Yankee, to transfer its trust estate to such newly authorized entity for the purpose of providing for the decommissioning of the Unit or removal of the Unit from service.
Vermont Yankee agrees to pay to, or cause to be paid to, said decommissioning fund or trust all funds collected hereunder for the express purpose of decommissioning the Unit or removing the Unit from 5
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service and further agrees that, after the tax consequences of decommissioning collections have been resolved, any funds collected hereunder to meet Decommissioning Tax Liability which are not used for that purpose will be refunded to Purchaser.
- 8. Make-up Term and Option Term.
i (a) The Purchaser may elect to extend the contract term by written notice to Vermont Yankee upon the'following conditions and for the following period or periods-(i) In the event that the Unit is not in commercial operation on the plant completion date, the contract term may be extended for a period equal to the number of consecutive days by which commercial operation is delayed beyond the plant completion date; and 1
(ii) if at any time after the commencement of commercial operation no deliveries are made under this contract for a period of at least 120 consecutive days, the contract may be extended for a i
period equal to the aggregate of such periods during which no deliveries were made.
i If the term of the contract is extended pursuant to the provisions of this subsection (a), all of the contract provisions shall remain in effect for the extended term.
(b) Upon expiration of the initial term of this contract or upon expiration of the term as extended in l
accordance with subsection (a) of this Section 8, the Purchaser shall condnue to be entitled, at its option, to its entitlement percentage of the capacity and output of the Unit upon terms at least as favorable as those obtained by any other person.
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- 9. Cancellation of Contract.
1 If deliveries cannot be made to the Purchaser because either (i) the Unit is damaged to the extent of being completely or substantially completely destroyed, or (ii) the Unit is taken by exercise of the right of eminent domain or a similar right or power, or (iii) (a) the Unit cannot be used because of contamination, or because a necessary license or other necessary public authorization cannot be obtained or is revoked, or because the utilization of such a license or authorization is made subject to specified conditions which are not met, and (b) the situation cannot be rectified to an extent which will permit Vermont Yankee to make deliveries to the Purchaser from the Unit; then and in any such case, the Purchaser may cancel the provisions of this contract, except that in all cases other than those described in clause (ii) above, the provisions relating to the payment of Total Decommissioning Costs shall, whether or not the Unit is operated or operable and notwithstanding any earlier termination of the service life of the Unit, remain in full force and effect until Decernber 31,2002 or the completion of decommissioning, whichever is earlier. Such cancellation shall be effected by written notice given by the Purchaser to Vermont Yankee. In the event of such cancellation, all continuing obligations of the parties other than the obligations relating to the payment and application of Total i
Decommissioning Costs to the extent excluded from such cancellation by the second preceding sentence, but including the Purchaser's obligations to mntinue payments pursuant to clauses (a), (c) and (d) of the l
second paragraph of Section 7 hereof, shall cease forthwith. Any dispute as to the Purchaser's right to cancel this contract pursuant to the foregoing provisions shall be referred to arbitration in accordance with i
the provisions of Section 12.
Notwithstanding any:hing in this contract elsewhere contained, the Purchaser may cancel this contract or be relieved of its obligations to make payments hereunder only as provided in the next preceding paragraph of this Section 9.
Further, if for reasons beyond Vermont Yankee's reasonable control, deliveries are not made as contemplated by this contract, Vermont Yankee shall have no liability to the Purchaser on accouni of such non-delivery.
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- 10. Insurance.
Prior to the first shipment of fuel to the plant site, Vermont Yankee will obrt, and thereafter will at all times maintain, insurance to cover its "public liability" for personal injury and property damage I
resulting from a " nuclear incident" (as those terms are defined in the Atomic Energy Act of 1954 as amended), with limits not less than Vermont Yankee may be required to maintain to qualify for J
governmental indemnity under said Act and shall execute and maintain an indemnification agreement with the Atomic Energy Commission as provided by said Act. Vermont Yankee will also at all times maintain such other types ofliability insurance, including workmen's compensation insurance, in such amounts, as is customary in the case of other similar electric utility companies, or at may be required by law.
Vermont Yankee will at all times keep insured such portions of the Unit (other than the fuel assemblies and components, including nuclear materials) as are of a character usually insured by electric utility companies similarly situated and operating like properties, against the risk of a " nuclear incident" l
and such other risks as electric utility companies, similarly situated and operating like properties, usually
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insure against; and such insurance shall to the extent available be carried in amounts sufficient to prevent Vermont Yankee from becoming a co-insurer. Vermont Yankee will at all times keep its fuel assemblies and components (including nuclear materials) insured against such risks and in such amounts as shall,in the opinion of Vermont Yankee, provide adequate protection.
1 l. A udit.
Vermont Yankee's books and records (including metering records) shall be open to reasonable inspection and audit by the Purchaser.
I2. Arbitration.
In case any dispute shall arise as to the interpretation or performance of this contract which cannot be settled by mutual agreement, such dispute shall be submitted to arbitration. The parties shall if possible agree upon a single arbitrator. In case of failure to agree upon an arbitrator within 15 days after the delivery 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, ader opportunity for each of the parties to be heard, shall consider and decide the dispute and notify the parties in writing of his decision. Such decision shall be binding upon the parties, and the expenses of the arbitration shall be borne equally by them.
- 13. Regulation.
l This contract, and all rights, obligations and performance of the parties hereunder, are subject to all l
applicable state ar.d federal law and to all duly promulgated orders and other duly authorized action of governmental authority having jurisdiction in the premises.
i I4. Assignment.
t This contract shall be binding upon and shaliinure to the benefit of, and may be performed by, the successors and assigns of the parties, except that no assignment, pledge or other transfer of this contract by either party shall operate to release the assignor, pledgor or transferor from any cf its obligations under this contract unless consent to the release is given in writing by the other party, or, if the other party has theretofore assigned, pledged or otherwise transferred its interest in this contract, by the other party's assignee, pledgee or transferee, or unless such transfer is mcident to a merger or consolidation with, or j
transfer of all or substantially all of the assets of the transferor to, another sponsor which shall, as a part of r
such succession, assume all the obligations of the transferor under this contract.
l l5. Right of Setof.
l The Purchaser shall not be entitled to set oif against the payments required to be made by it under this contract (i) any amounts owed to it by Vermont Yankee or (ii) the amount of any claim by it agamst I
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Vermont Yankee. However, the foregoing shall not affect in any other way the Purchaser's right and remedies with respect to any such amounts owed to it by Vermont Yankee or any such claim by it agamst Vermont Yankee.
l6. Interpretation.
The interpretation and performance of this contract shall be in accordance with and controlled by the law of the State of Vermon:.
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- 17. Addresses.
Except as the parties may otherwise agree, any notice, request, bill or other communication from one pany to the other, relating to this contract, or the rights, obligations or performance of the parties hereunder, shall be in writing and shall be effective upon delivery to the other party. Any such
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communication shall be considered as duly delivered when delivered in person or mailed by registered or certified mail, postage prepaid, to the respective post office address of the other party shown following the signatures of such other party hereto, or such other address as may be designated by written notice given as provided in this Section 17.
- 18. Corporate Obligations.
This contract is the corporate act and obligation of the parties hereto, and any claim hereunder against any stockholder, director or officer of either party, as such, is expressly waived.
I9. AllPrior Agreements Superseded.
j This contract represents the entire agreement between us relating to the subject matter hereof, and all previous agreements, discussions, communications and correspondence with respect to the subject matter are hereby superseded and are of no further force and effect.
- 20. Amendments Upon authorization by Vermont Yankee's board of directors of uniform amendments to all the sponsor power contracts Vermont Yankee shall have the right to amend the provisions of Section 7 hereof
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insofar as they relate to the amounts collectible by Verriiont Yankee pursuant to clause (b) of the second
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paragraph of Section 7 hereof or to the timing of such collections by serving an appropriate statement of l
such amendment upon the Purchaser and filing the same with FERC (or such other regulatory agency as may have jurisdiction in the premises) in accordance with the provisions of applicable laws and any rules i
and regulations thereunder, and the amendment shall thereupon become effective on the date specified therein, subject to any suspension order duly issued by such agency All other amendments to this contract shall be by mutual agreenient, evidenced by a written amendment signed by the parties hereto.
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'IN WITNES$ WHEREOF, the parties have executed this contract by their respective omcers thereunto 5
duly authorized as of the date first above written.
VERMONT YANKEE NUCLEAR POWER I
CORPORATION i
By ALBERT A. CREE '
l President l
77 Grove Street
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Rutland, Vermont 05701 (Purchaser)
By (Oscer and Title)
I (Address) 1 1
1 i
i I
a 1
1 9
r.
APPENDIX Separate Power Contracts and amendments thereto have been entered into, identical in form with the foregoing except as to the execution thereof and except that on page I the names of the respective Purchasers were inserted.
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The original Power Contracts were executed by the respective parties thereto, as follows:
VERMONT YANKEE NUCLEAR POWER PUsuc SERvict COMPANY OF CORPORATION NEw HAMPSHIRE By ALBERT A. CREE By W. C. TALLMAN Its President Its President I
77 Grove Street.
1087 Elm Street Rutland, Vermont 05701 Manchester, New Hampshire 03105 CENTRAL VERMONT PUsuc service THE HARTFORD ELECTRIC LIGHT CORPORATION COMPANY By ALBERT A. CREE By C. L. DERRICK Its Chairman Its President 77 Grove Street P.O. Box 2370 Rutland, Vermont 05701 Hartford, Connecticut 06101 GREEN MOUNTAIN POWER WESTERN MASSACHUSETTS ELECTRIL CORPORATION COMPANY By GLEN M. McKiaBEN By PAUL H. MEHRTENS Its President Its President i Main Street 174 Brush Hill Avenue Burlington, Vermont 05401 West Springfield, Massachusetts 01089 l
I NEw ENGLAND POWER COMPANY MONTAUP ELECTRIC COMPANY i
l By R. LEsoH FITzGERALD By ROaERT F. DINNIE l
Its Financial Vice President Its Vice President l
441 Stuart Street P.O. Box 391 i
Boston, Massachusetts Fall River, Massachusetts 02722
. THE CONNECTICUT LIGHT AND CAMaRIDGE ELECTRIC LIGHT g
power COMPANY COMPANY i
By PAUL V. HAYDEN By ' JOHN F. Rich f
Its President Its President Post Office Box 2010 130 Austin Street Hartford, Connecticut 06101 Cambridge, Massachusetts 02139 CENTRAL MAINE POWER COMPANY By WILUAM H. DUNHAM
- Its President 9 Green Street
. Augusta, Maine 04330 10 l
[ 7., y o j
u l
l COMPOSITE CONFORMED COPY l
l ADDITioNAt. POWER CONTaACT, dated as of February 1,1984, between VanuoNT YANKEE ND T IAa f
Powna ConroKATION (" Vermont Yankee"), a Vermont corporation, and (the names of the Purchasers appear in the attached Appendix) (the " Purchaser").
it is agreed as follows:
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- 1. Basic Understandings.'
Vermont Yankee was organized in 1966 to provide for the supply of power to its sponsoring' utility companies (including the Purchaser), which utilities are hereinafter called the" sponsors". It constructed a nucicar electric generating unit of the boiling water type, having a maximum net capability of approximately 540 megawatts electric, at a site adjacent to the Connecucut River at Vernon, Vermont i
(said unit being herein, together with the site and all related facilities owned or to be owned by Vermont j
. Yankee, referred to as the " Unit"). On February 28, 1973 Vermont Yankee was issued a full-term, j
operating license for the Unit from the Atomic Energy Commission (now the Nuclear Regulatory i
Commission which, together with any successor agency or agencies, is hereafter called the "NRC"), which i
license expires on December 11,2007, and the Unit commenced commercial operation on November 30, j
1972.
l The Unit is operated to supply power to Vermont Yankee's sponsors, each of which by a Power Contract dated as of February 1,1%8, as amended (collectively the " Initial Power Contracts"), has j
undertaken to purchase a Axed percentage of the capacity and output of the Unit for a term extending i
through November 30,2002. The nan 4es of the sponsors and their respective percentages (" entitlement percentages") of the capacity and output of the Unit are as follows:
Enddament Spammer Percenseen Central Vermont PublicService Corporation 35.0 %
Green Mountain Power Corporation.
20.0 %
New England Power Company 20.0%
The Connecticut Light and Power Company 9.5%
Central Maine Power Company 4.0%
Public Service Company of New Hampshire 4.0%
Western Massachusetts Electne Company 2.5%
Montaup Electric Company
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2.5%
Cambridge Electric Light Company 2.5%
The sponsors have resold portions of their entitlement percentages of capacity and output of the Unit under the Initial Power Contracts to other utilities (the " secondary purchasers") on terms and conditions substantially equivalent to those in the Initial Power Contracts: in 1969, the two Vermont sponsors resold an aggregate of 7.426% of the Unit's capacity and output to other utilities in Vermont; and in 1970 the non. Vermont sponsors resold an aggregate of 4.5451% of the Unit's capacity and output to other New England utilities outside of Vermont (collectively the " Resale Contracts"). In 1983 the Initial Power Contracts were amended to incorporate provisions for collection of funds to defray the ultimate cost of decommissioning the Unit, which costs are being borne pro rara by said secondary purcharers under the Resale Contracts.
i Vermont Yankee and its sponsors desire to provide for the orderly continuation of the sale and purchase of the capacity and output of the Unit during the usefullife of the Unit to the extent it continues Exhibit 4 Conformed Copy of Additional Power Contracts
i beyond the termination date of the Initial Power Contracts and to provide appropriate provisions for t collection of funds for and the payment of decommissioning and any other costs with respect theretoi during and after the useful life of the Unit.
i Vermont Yankee and its other sponsors are entering into i
Additional Power Contracts which are identical to this contract except for necessary changes in the of the parties.
- 2. Efective Date Term and Waiver.
This contract shall become efective upon receipt by the Purchaser of notice that Vermont Yankee haI entered into additional power contracts, as contemplated by Section I above, with each of its other sponsors. The operative term of this contrac2t fact that the usefubgIylge.jife gf tim.Unitmay ha1yhall_ commence on Dece_m_ber1200 j
been terminated prior to that date, and shall terminate upo,st the_Just lc~ occur pf (i) 30 dayLsft'er the date on which the_last_of_the financial. obligations of Vermont Yank.ee which_ constitute elements of the purchase price calculated _pursua_nt_to Section I
contract has been extinguished by Vermont Yankee or (ii) 30 days after the date on which Vermont Yankee is Anally relieved of any obligations under the last of any licenses (operating and/or po which it now holds from, or which may hereafter be issued to it by, the NRC with respect to the Unit unde applicable provisions of the Atomic Energy Act of 1954, as amended from time to time (the "Act").
' Ver1nont Yankee and the Purchaser acknowledge that, if the useful service life of the Unit is terminated prior to December 1, 2002, then only the provisions of this contract applicable to decommissioning of the Unit will apply during the operative term of this contract.
The Purchaser hereby irrevocably waives its right to extend the contract term of its Initial Power.
l Contract pursuant to subsections (a) or (b) of Section 8 thereof.
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- 3. Qperation andMaintenance of the Unit.
i Vermont Yankee will operate and maintain the Unit in accordance with good utility practice unde the circumstances and all applicable law, including the applicable provisions of the Act and of any licen I
assued thereunder to Vermont Yankee.
Within the limits imposed by good utility practice under the aces and applicable law, the Unit will be operated at iu maximum capability and on a long hour circu Outages for inspection. maintenance, refueling and repairs and replacements will be scheduled in accordance with good utility practice and insofar as practicable shall be mutually agreed upon by Vermont Yankee and the Purchaser. In the event of an outage, Vermont Yankee will use its best efforts to restore the Unit to service as promptly as practicable.
- 4. Decommissioning.
After commercial operation of the Unit permanently ceases, Vermont Yankee will decommission the Unit in a manner authorized by Vermont Yankee's board of directors and approved by the NRC ir; accordance with the Act and the rules and regulations thereunder then in effect and by any agency having jurisdiction over decommissioning of the Unit.
It is understood that, pursuant to the Initial Power Contracts and the Resale Contracts, the sponsors and secondary purchasers are currently being billed for Total Decommissioning Costs which, as of the date of this contract, are being accumulated in a separate fund which was established for the purpose of reimbursing Vermont Yankee for Decommissioning Expenses incurred in the process of demmmission
' the Unit and that such billings are subject to change in accordance with the provisions of the Initial Power Contracts, subject to the jurisdiction of FERC. It is contemplated that sufficient funds will be accumulated
. pursuant to those contracts and parageaph 7 hereof to reimburse Vermont Yankee for the full cost of decommissionics the Unit.
- 5. Purchaser's Entitlement.
The Purchaser will, tnroughout the term of this contract, be entitled and obligated to take its entitlement percentage of the capacity and net electrical output of the Unit, at whatever level the Unit is operated or operable, whether more or less than 540 megawatts electric.
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- 6. Deliveries and Metering.
The Purchaser's entitlement percentage of the output of the Unit will be delivered to and accepted by it at the step-up substation at the site. All deliveries will be made in the form of 3-phase,60 cycle.
alternating current at a nominal voltage of 345,000 volts. The Purchaser will make its own arrangements for the transmission ofits entitlement percentage of the output of the Unit.
Vermont Yankee will supply and maintain all necessary metering equipment for determining the quantity and conditions of supply of deliveries under this contract, will make appropriate tests of such equipment in accordance with good utility practice and as reasonably requested by the Purchaser, and will maintain the accuracy of such equipment within reasonable limits. Vermont Yankee will furnish the Purchaser with such summaries of meter readings as the Purchaser may reasonably request.
- 7. Payment.
With respect to each month commencing on or after December 1,2002, the Purchaser will pay Vermont Yankee an amount equal to the Purchaser's entitlement percentage of the sum of(a) Vermont Yankee's total fuel costs for the month with respect to the Unit, plus ( b) the Total Decommissioning Costs for the month with respect to the Unit, plus (c) Vermont Yankee's total operating expenses for the month with respect to the Unit, plus (d) an amount equal to one-twelfth of the composite percentage for such month of the net Unit investment as most recently determined in accordance with this Section 7.
" Composite percentage" shall be computed as of the last day of each month during the term hereof (the " computation date") and for any month the composite percentage shall be that computed as of the most recent computation date. " Composite percentage" as of a computation date shall be the sum of(i) the equity percentage as of such date multiplied by the percentage which equity investment as of such date is of the total capital as of such date; plus (ii) the stated interest rate per annum of each principal amount ofindebtedness bearing a particular rate ofinterest outstanding on such date for money borrowed from other than sponsors multiplied by the percentage which such principal amount is of total capital as of such date.
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" Equity percentage" as of any date after the commencement of the operative term hereof shall be that percentage which was the " equity percentage"in effect on the last day of the term of the Initial Power Contracts or such other percentage as may from time to time thereafter be approved by the Federal Energy Regulatory Commission or any successor agency thereto ("FERC").
" Common stock equity investment" as of any date shall consist of equity investment as of such date less the aggregate par value of allissues of preferred stock outstanding on such date.
" Equity investment" as of any date shall consist of not less than the sum of(i) all amounts theretofore paid to Vermont Yankee for all capital stock theretofore issued (taken at the total par value thereof plus the total of all amounts in excess of such par value paid thereon); plus all capital contributions, loans and advances theretofore made to Vermont Yankee by its sponsors,less the sum of any amounts distributed by Vermont Yankee *o its sponsors or stockholders in the form of stock repurchases or redemptions, return of capital or repayments ofloans and advances; plus (ii) any credit balance in the capital surplus account (not included under (i)) and in the earned surplus account on the books of Vermont Yankee as of such date.
" Total capital" as of any date shall be the equity investment plus the total of all indebtedness then outstanding for money borrowed from other than Vermont Yankee's sponsors.
" Uniform System" shall mean the Uniform System of Accounts prescribed by the FERC for Class A and Class B Public Utilities and Licensees as from time to time in effect.
Vermont Yankee's " fuel costs" for any month shall include (i) amounts chargeable in accordance with the Uniform System in such month as amortization of costs of fuel assemblies and components and burn-up of nuclear materials for the Unit; plus (ii) all other amounts properly chargeable in accordance with the Uniform System to fuel costs for the Unit less any applicable credits thereto; plus (iii) to the cuent not so chargeable, all payments (or accruals therefor) with respect to lease or other financing U
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obligations incurred in connection with such fuel assemblies and components, including nuclear materials, for the Unit (provided such fuel assemblies and components are not included in net Unit investment), and with the temporary or permanent storage or disposal thereof.
Vermont Yankee's " operating expenses" shall include all amounts properly chargeable to operating expense accounts (other than such amounts which are included in Vermont Yankee's fuel costs), less any applicable credits thereto,in accordance with the Uniform System;it being understood that for purposes of this contract " operating expenses" shall include (i) depreciation accrual at a rate at least sufficient to fully amortize the non-salvageable plant investment over the estimated remaining useful life of the plant; and (ii) obligations incurred in connection with the leasing of plant facilities.
The " net Unit investment" shall consist, in each case with respect to the Unit, of (i) the aggregate amount properly chargeable at the time i.a ar:ordance with the Uniform System to Vermont Yankee's electric plant accounts (including construction work in progress) less the amount of any accumulated provisions for depreciation thereof; plus (ii) the aggregate amount properly chargeable at the time in accordance with the Uniform System to accounts representing fuel assemblies and components (including nuclear materials) and other materials and supplies,less the balance,if any, at the time of the accumulated amortization thereof; plus (iii) such reasonable allowances for prepaid items and cash working capital as may from time to time be determined by Vermont Yankee. The net Unit investment shall be determined as of the commencement of each calendar year, or,if Vermont Yankee elects, at more frequent intervals.
" Total Decommissioning Costs" for any month shall mean the sum of (x) an amount equal to all accruals in such month to any reserve, as from time to time established by Vermont Yankee and otmed by its board of directors, to provide for the ultimate payment of the Decommissiortmg Expenses of tr. J 2 plus (y) Decommissioning Tax Liability for such month. It is understood (i) that such funds may be held by Vermont Yankee or by an independent trust or other separate fund, as determined by said board of directors, (ii) that, upon compliance with Section 17 hereof, the amount, custody and/or timing of such
' accruals may from time to time during the term hereof be modified by said board of directors in its discretion or to comply with applicable statutory or regulatory requirements or to reflect changes in the amount, custody or timing of anticipated Decommissioning Expenses, and (iii) that the use of the term "to decommission" herein encompasses compliance with all requirements (other than those relating to spent nuclear fuel) of the NRC for permanent cessation ofoperation of a nuclear facility and any other activities reasonably related thereto. " Decommissioning Expenses" shall include:
(1) All costs and expenses of removing the Unit from service, including without limitation, dismantling, mothballing, removing radioactive material (excluding spent naclear fuel) to temporary and/or permanent storage sites, decontaminating, restoring and supervising the site, and any costs and expenses incurred in connection with proceedings before governmental regulatory authorities relating to any authorization to decommission the Unit or remove the Unit from service; (2) All costs of labor and services, whether directly or indirectly incurred, including without limitation services of foremen, inspectors, superviso counsel and accountants, performed or rendered in con,rs, surveyors, engineers. security p nection with the decommissioning of the Unit and the removal of the Unit from service, 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 decommissioning of the Unit and the removal of the Unit from service, and all administrative costs, including services of counsel and financial advisers, of any applicable independent trust or other separate fund; it being understood that any amount, exclusive of proceeds of insurance, realh.ed by Vermont Yankee as salvage on any machinery, construction equipment and apparatus, the cost of which was charged to Decommissioning Expense, shall be treated as a reduction of the amounts otherwise chargeable on account of the costs of decommissioning of the Unit; and (3) All overhead costs applicable to the Unit during n> decommissioning period, including, without limiting the generality of the foregoing, taxes (other than taxes on or in respect ofincome),
charges, licenses, excises and assessments, casualties, surety bond premiums and insurance premiums.
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" Decommissioning Tax Liability" for any month shall be an amount established by Vermont Yankee and approved by its board of directors to meet possible income tax obligations, which amount shall not s
exceed: the amount to be included in the clause (x) portion of Total Decommissioning Costs for such month multiplied by a fraction whose numerator is equal to the combined highest statutory Federal and state marginal income tax rate and whose denominator is equal to one minus the combined highest statutory Federal and state marginal income tax rate.
l Without limiting the generality of the foregoing, amounts expended or to be paid with respect to decommissioning of the Unit or removal of the Unit from service shall constitute part of the Decommissioning Expenses if they are, or when paid will be, either (i) properly chargeable to any account related to decommissioning of a nuclear generating unit in accordance with the Uniform System or generally accepted accounting principles as then in effect, or (ii) properly chargeable to decommissioning l
of a nuclear generating unit in accordance with then applicable regulations of the NRC or the FERC or any other regulatory agency having jurisdiction.
- 8. Billing.
Vermont Yankee will bill the Purchaser, as soon as practicable after the end of each month, for all amounts payable by the Purchaser with respect to the particular month pursuant to Section 7 hereof. Such 1
bills will be rendered in such detail as the Purchaser may reasonably request and may be rendered on an estimated basis subject to corrective adjustments in subsequent billing periods. All bills shall be due and payable when rendered and any amount remaining unpaid 10 days following the date ofissuance of bills should bear interest at an annual rate equal to 2% in excess of the current prime rate then in effect at The First National Bank of Boston, from the due date to the date payment is received by Vermont Yankee.
- 9. Decommissioning Fund.
Vermont Yankee agrees to cause an appropriate decommissioning reserve to be maintained in accordance with applicable regulatory requirements. As of the date hereof, FERC has required an independent trust or other separate fund to be created which has the necessary powers to hold and invest all funds collected for the decommissioning of the Unit and to disburse the same to pay, or to reimburse Vermont Yankee for, such costs when actually incurred for decommissioning of the Unit or removal of the Unit from service. If during the term of such trust or fund federal or state legishtion or regulations are promulgated which so permit or require, or an alternative entity is created for funding decommissioning of the Unit, such trust has the authority, with the concurrence of Vermont Yankee, to transfer its trust estate to such newly authorized entity for the purpose of providing for the decommissioning of the Unit or removal of the Unit from service.
I Vermom Yankee agrees to credit to, or cause to be credited to, the appropriate decommissioning I
reserve all funds collected hereunder for the express purpose of decommissioning the Unit or removing the Unit frorn service and further agrees that, after the tax con.equences of decommissioning collections have been resolved, any funds collected hereunder to meet Decommissioning Tax Liability which are not used for that purpose will be refunded to Purchaser.
- 10. Cancellation of Contract.
If deliveries cannot be made to the Purchaser because either l
(i) the Unit is dama;;ed to the extent of being completely or substantially completely destroyed, or (ii) the Unit is taken by exercise of the right of eminent domain or a similar right or power, or l
(iii) (a) the Unit cannot be used because of contammation, or because a necessary license or other necessary public authorization cannot be obtained or is revoked. or because the utilization of such a license or authorization is made subject to specified conditions which are not met. and (b) the situation cannot be rectified to an extent which will permit Vermont Yankee to make deliveries to the i
Purchaser from the Unit:
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j then and in any such case the Purchaser may cancel the provisions of this contract, except that in all cases other than those described in clause (ii) above, the provisions relating to the payment of Total Decommissioning Costs and of costs of permanent storage or_ disposal of spent nuclear fuel shall, wheth or not the Unit is operated or operable and notwithstanding any earlier termination of the service ' life of A
the Unit, remain in full force and efect until the expiration of the term hereof,it being recognized that such costs represent deferred payments in connection with power theretofore delivered by Vermont Yankee l
Such cancellation shall be effected by written notice given by the Purchaser to Vermont
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hereunder.
Yankee.
In the event of such cancellation, alLeontinuing obligations of the parties hereunder as to subsequently incurred costs of Vermont Yankee other than the obligations relating to the payment and
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application of Total Decommissioning Costs and of costs of permanent storage or disposal of spent nucle fuel to the extent excluded from such cancellation by the second preceding sentence, but including the Purchaser's obligations to continue payments pursuant to clause (a) (other than those related to the costs of permanent storage or disposal of spent nuclear fuel) and clauses (c) and (d) of the first paragraph of 1
Section 7 hereof, shall cease forthwith. Notwithstanding the foregoing, the applicable provisions of this contract sha!! continue in effect after the cancellation hereof to the extent necesary to permit final billings and adjustments hereunTeiwiMes~p'e'ct to obligations 'ideur' red through the date of EncellatIod aiWthe
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collection thereof. Any dispute as to the Purcidser's right to cancel this Ential:t pursuant to thTf'orWoIng provisions shall be referred to arbitration in accordance with the provisions of Section 13.
Notwithstanding anything in this contract elsewhere contained, the Purchaser may cancel this contract or be relieved of its obligations to make payments hereunder only as provided in the next preceding paragraph of this Section 10.
Funher, if, for reasons beyond Vermont Yankee's reasonable control, deliveries are not made as contemplated by this contract, Vermont Yankee shall have no liability to the Purchaser on account of such non-delivery.
- 11. Insurance.
Vermont Yankee presently has in effect, and hereafter will at all times maintain until the expiration of the term hereof, insurance to cover its "public liability" for personal injury and property damage resulting from a " nuclear incident" (as those terms are defined in the Act), with limits not less than Vermont Yankee may be requhed to maintain to qualify for' governmental indemnity under the Act and shall execute and maintaja an indemnification agreement with the NRC as provided by the Act. Vermont i
Yankee will also at all times maintain such other types of liability insurance, including workmen's compensation insurance, in such amounts, as is customary in the case of other similar electric utility companies, or as may be required by law.
Vermont Yankee will at all times keep insured such portions of the Unit (other than the fuel assembl:es and coraponents, including nuclear materials) as are of a sharacter usually insured by electric utility companies similarly situated and operating like properties, apinst the risk of a " nuclear incident" and such other risks as electric utility companies, similarly situated ard operating like properties, usually irtsure against: and such insurance shall to the extent available be carried in enounts sufficient to prevent h nont Yankee from becoming a coinsurer. Vermont Yankee will at Q times keep its fuel assemblies and components (including nuclear materials) insured against such risks and in such amounts as shall,in the opinion of Vermont Yankee, provide adequate protection.
I2. Audit.
Vermont Yankee's books and records (including metering records) shall be open to reasonable inspection and audit by the Purchaser.
- 13. Arbitration.
In case any dispute shall arise as to the interpretation or performance of this contract which cannot be settled by mutual agreement, such dispute shall be submitted to arbitration. The parties shall if possible
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agree upon a single arbitrator. In case of failure to agree upon an arbitrator within 15 days after the delivery by either party to the other of a written notice requesting arbitration, either party may request the 7
American Arbitration Association to appoint the arbitrator. The arbitrator, after opportunity for each of 4
the parties to be heard, shall consider and decide the dispute and notify the parties in writing of his decision. Such decision shall be binding upon the parties, and the expenses of the arbitration shall be borne equally by them.
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- 14. Regulation.
This contract, and all rights, obligations and performance of the parties hereunder, are subject to all applicable state and federal law and to all duly promulgated orders and other duly authorized action of governmental authority having jurisdiction in the premises.
- 15. Assignment.
This contract shall be binding upon and shall inure to the benefit of, and may be performed by, the successors and assigns of the parues, except that no assignment, pledge or other transfer of this contract by either party shall operate to release the assignor, pledgor or transferor from any ofits obligations under this contract unless consent to the release is given in writing by the other pany, or, if the other party has theretofore assigned, pledged or otherwise transferred its interest in this contract, by the other party's assignee, pledgee or transferee, or unless such transfer is incident to a merger or consolidation with, or transfer of all or substantially all of the assets of the transferor to, another sponsor which shall, as a part of such succession, assume all the obligations of the transferor under this contract.
- 16. Right of Setof.
The Purchaser shall not be entitled to set off against the payments required to be made by it under this contract (i) any amounts owed to it by Vermont Yankee or (ii) the amount of any claim by it against Vermont Yankee. However, the foregoing shall not affect in any other way the Purchaser's right and remedies with respect to any such amounts owed to it by Vermont Yankee or any such claim by it against Vermont Yankee.
- 17. Amendments.
Upon authorization by Vermont Yankee's board of directors of uniform amendments to all the Additional Power Contracts with sponsors, Vermont Yankee shall have the right to amend the provisions of Section 7 hereof by serving an appropriate statement of such amendment upon the Purchaser and filing the same with FERC (or such other regulatory agency as may have jurisdiction in the premises) in accordance with the provisions of applicable laws and any rules and regulations thereunder, and the amendment shall thereupon become effective on the date specified therein, subject to any suspension order issued by such agency. All other amendments.to this contract shall be by mutual agreement, evidenced by a w'ritten amendment signed by the parties hereto.
I8. Interpretation.
The interpretation and performance of this contract shall be in accon.ance with and controlled by the lar. af the State of Vermont.
I9. Addresses.
Except as the parties may otherwise agree, any notice, request, bill or other coinmunication from one party to the other, relating to this contract, or the rights, obligations or performance of the parties hereunder, shall be in writing and shall be effective upon delivery to the other party. Any such communication shall be considered as duly delivered when delivered in person or mailed by registered or certified mail, postage prepaid, to the respective post office address of the other party shown following the signatures of such other party hereto, or such other address as may be designated by written notice given as provided in this Section 19.
- 20. Corporate Obligations.
This contract is the corporate act and obligation of the parties hereto, and any claim hereunder against any stockholder, director or officer of either party, as such, is expressly waived.
- 21. All Prior Agreements Superseded.
This contract represents the entire agreement between the parties relating to the subject matter hereof during the operative term hereof (l.c., post-December 1,2002), and all previous agreements, discussions, communications and correspondence with respect to the subject matter are hereby superseded and are of no further force and effect.
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IN WITNESS WHEREOF. the parties have executed this contract by their respective officers thereunto duly authorized as of the date Arst above written.
n VERMONT YANKEE NUC1. EAR PowsR CORPORATION By WIu.1AM F. CONWAY 1
President R. D. 5 Ferry Road Box 167 Brattleboro, Vermont 05301 (Purchaser)
By
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.c APPENDIX Separate Additional Power Contracts have been entered into, identical in form with the fore except as to the execution thereof and except that the names of the respective Purchasers were inserted in the opening paragraph, executed as follows:
CsNTRAL YERMONT Punuc SERVICE.
Putuc SuvicE COMPANY OF CORPORATION NEw H AMP 5 HIRE By-JAMES E. GRIFPIN By R. J. H ARRISON President and Chig President and Chief Execurlue Ofcar Executive Ofcer 77 Grove Street 1000 Elm Street, P.O. Box 330 Rutland. Vermont 05701 Manchester, New Hampshire 03105 CENTaAL MAINE PowEn CoWPANY MONTAUP ELECTRIC COMPANY By JOHN W. RowE By JOHN F. G. ElcHoRN, JR.
President President Edison Drive One Liberty Square, P.O. Box 2333 Augusta, Maine 04336 Boston, Massachusetts 02107 NEw ENGLAND Pown COMPANY CAMBRIDGE ELECTRIC LIGHT COMPANY By J. F. KAsLOw By E. G. CHENEY President Financial Vice President 25 Research Drive 675 Massachusetts Avenue Westborough, Massachusetts 01581 Cambridge, Massachusetts 02139 WESTERN MAsSACHU$ETTs ELECTRIC GREEN MOUNTAIN POWER COMPANY CORPORATION By E. JAME5 FERLAND By JOHN V. CLEARY, JR.
President and Chief President i
Operating Ofcer P.O. Box 850 i
107 Selden Street South Burlington, Vermont 05402
.I Berlin, Connecticut 06037 THE CONNECTICUT LIGHT AND -
power COMPANY By E. JAMES FERLAND President and Chief Operating Ofcer
- 107 Selden Street Berlin, Connecticut 06037 9
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DATE w,j 3/ (
REFEGRED Tn
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,, y ROPES & GRAY SIGFAT"ar ey ONE INTERNATIONAL PLACE APPROVED By
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BOSTON, MASSACHUSETTS O2110-2624
't. N m 8000 #ENNSYLVAhaA 30 mENNE07 PLAZA (617)951 7000 suitt i200 sou -
l mmovicENCL R. I. 02903 doi) 835 4400 (202) 626 3902 T ELtcopit R: (dO4) d S 5 *
- dos WRITER'S DIRECT DIAL NUMBER: (517) 951 7322 TELtc0 pita: (202) 626 ase 1
l August 21,1995 l
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Stephen Weis Vice President The Bank of New York One Wall Street New York, New York 10286 j
- 67/$W@
Re: Vennont Yankee Decommissioning Trust
Dear Steve:
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Enclosed for your working files are five composite conformed copies of the Vermont j
Yankee Decommissioning Trust, ref!ecting all the changes to date. This should facilitate operations in the future.
Very truly youts, Jo A. Ritsher JAR /jmf: mot 2
Enclosures -
cc:
John H. Byington, Jr., Esq. (2 copies)
Linda S. Griffin (4 copies) i
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Exhibit 5 Decommissioning Trust Document (BNY)
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COMPOSITE CONFORMFn COPY
- l VERMONT YANKFF DECOMMIRSIONING TRUST 4
INDENTURE OF TRUST, dated as of March 11,1988, between VERMONT YANKEE NUCLEAR POWER CORPORATION, a Vermont corporation having its principal i
office in Brattleboro, Vermont (" Vermont Yankee"), and THE BANK OF NEW YORK, a New York hanking corporation having its principal office in New York City, as successor trustee (the " Trustee").
1, WHEREAS, Vermont Yankee owns and operates a nuclear reactor (the " Unit") as the energy source in an electric generating plan located in Vernon, Vermont, which activity is performed pursuant to an Operating License issued by the United States Atomic Energy Commission (now the Nuclear Regulatory Commission (the "NRC")), which license by its terms expires on December 11,2007; and WHEREAS, the rules and regulations of the NRC impose upon Vermont Yankee responsibility for payment of the costs of an eventual permanent shutdown of the Unit and
- maintenance of such facility in a safe condition after said shutdown, a process referred to as decommissioning the Unit; and
- Reflecting Supplemental Indentures dated as of May 15,1990, August 31,1992, March 31,1995 and August 4,1995.
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l WHEREAS, in accordance with the FERC Order Vermont Yankee commenced the collection of decommissioning funds effective September 24,1983 as part of the cost of power
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which it sells to its mne sponsor compames (the " sponsors"), and has been segregating those i
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collections in the possession of an Escrow Agent pursuant to a Decommissioning Escrow Agreement, dated October 24,1983, between Vermont Yankee and The Howard Bank, as r~
Escrow Agent, for the purpose of ultimately meeting the decommissioning expenses relating to i
the Unit or tax obligations with respect to such collections; and
'WHEREAS, as contemplated by the FERC Order, Vermont Yankee now desires to L
establish a trust to receive, hold and administer any funds heretofore or hereafter collected for the purpose of making provision for financing the decommissioning of the Unit or tax obligations with respect thereto in accordance with the rules and regulations of the NRC and to assure its financial ability to meet its obligations to the NRC, other applicable regulatory bodies, the general public and its ultimate customers in connection with said tiecommissioning; and WHEREAS, the Internal Revenue Code of 1986 (as amended from time to time, the
" Code") contains provisions relating to the costs incurred for the decommissioning of a nuclear reactor, including Section 468A (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 Section 468A and thereby be aUowed as a deduction, subject to certain
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L limitations and qualifications, the amount of payments made to a " nuclear decommissioning i
reserve fund" (as therein defined); and j
WHEREAS, Vermont Yankee desires to have these trusts created so that, among other reasons, it may implement an election pursuant to said Section 468A; and WHEREAS, all conditions and requirements necessary to make this Indenture a valid and legal instrument, in accordance with its terms and for the purposes herein expressed, have i
1 been performed and fulfilled and the execution and delivery hereof have been duly authorized.
i NOW, THEREFORE, in consideration of the premises and of the sum of One Dollar j
duly paid by Vermont Yankee to the Trustee, and of other good and valuable consideration, the receipt whereof is hereby acknowledged, and for the purposes of creating the two separate trusts herein provided for and securing the faithful performance and observance of the l
l covenants and conditions hereinafter set forth, Vermont Yankee has executed and delivered this Indenture to the Trustee 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 1
pursuant hereto upon the trusts and subject to the conditions herein set forth.
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:
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ARTICT F I Nature and Duration of the Trust i
i Section 1.01. Name. This trust instrument and all the trusts hereunder shall be named the " Vermont Yankee Decommissioning Trust" (hereinafter referred to collectively as the "VY Decommissioning Trust").-
Section 1.02. Crantion of Two Senarate Trust Funds. The property held in trust hereunder shall be divided into two separate trusts as follows:
(1)
The " Qualified Trust Fund" shall be a Nuclear Decommissioning Reserve Fund as defined in Section 468A and shall at all times be adminictered in accordance with such Section; and (2)
The "Nonqualified Trust Fund" shall not be subject to Section 468A.
The Qualified Trust Fund and the Nonqualified Trust Funds are sometimes hereinafter together referred to as the " Trust Funds" or individually as a " Trust Fund."
i Section 1.03. Nature and Purnose. The VY Decommissioning Trust is intended to assure provision for payment of all, or as great a portion as reasonably possible, of the expenses associated with the decommissioning of the Unit following the cessation of i
commercial operation thereof.
The Qualified Trust Fund is established as a " nuclear decommissioning reserve fund" contemplated by Section 468A and the regulations promulgated thereunder.
30e(r'83.01 '
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1 The VY Decommissioning Trust will constitute a vehicle independent of Vermont L Yankee and its stockholders which will hold and dispense, in accordance with the provisions hereof, the moneys collected from the customers of Vermont Yankee's sponsors for the 1
purpose of defraying such decommissioning expenses. Such an independent vehicle assures the availability, when needed, of such moneys by removing them from Vermont Yankee's -
control and may reduce the effective cost of decommissioning charged to such customers when l
combir ed with an election pursuant to Section 468A. If, after completion of the deConJnissioning process for the Unit, it is determined that excess moneys may have been collected or accumulated, the Trustee shall distribute any such excess pursuant to Article VII 1.
hereof.
l The VY Decommissioning Trust is irrevocable, provided, however, that it may be merged into a successor trust as provided in Section 7.01 hereof and that the VY l
I Decommissioning Trust may be amended in accordance with Section 9.01 as may be required, or desirable in the discretion of Vermont Yankee, to comply with any law, order, rule or regulation of any governmental body or agency having jurisdiction over the decommissioning i
l of the Unit oi Vermont Yankee; subject, however, to the right of the Trustee to decline to l
l-enter into any such ammiment if, in its opinion, such amendment does not afford adequate l
i protection of the Trustee. The VY Decommissioning Trust may also be amended in accordance with Section 9.01 for any other purpose requested by Vermont Yankee so long as such somes.ot
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amendment does not affect the use of the assets of the Trust Funds to pay the Decommissioning Expenses of the Unit.-
Section 1.04. Duration. Each tmst hereunder shall terminate at the earliest of: (1) the j
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exhaustion of all moneys in such trust at a time when Vermont 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 Vermont Yankee to have the trust merged into a tmst created in accordance with legislative action by the federal government or by the State of Vermont or a trust required by regulatory action and to effect the transfer of all the moneys in j
the trust to such successor trust, all in accordance with Section 7.01 hereof. It is recognized that, depending upon the amounts accumulated in the trusts and the method or methods of decommissioning the Unit authorized by the NRC and other governmental agencies having jurisdiction, the trusts may extend for an indefinite period.
Upon termination of any trust hereunder, any then remaining trust property shall,be I
i distributed as provided in Article VII below.
j ARTICT F H i
Parth-ninr Covenants of Vermont Yankaa Vermont Yankee hereby covenants as follows:
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30407D.01.
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Section 2.01. Title to Unit. At the time of the execution and delivery of this instmment, Vermont Yankee is well seized and possessed of the real property in Vernon, l
I Vermont, on which the Unit is located, the Unit itself and all personal property appurtenant l
thereto.
Section 2.02. Cornorate Existence. Except as otherwise specifically permitted by this Indenture, Vermont 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 in full force and effect its existence, rights and franchises.
Section 2.03. Payment of Taxes. Vermont Yankee will promptly pay and discharge or cause to be paid and discharged all taxes, assessments and governmental charges or levies imposed upon it or upon its income or profits or upon any of its property, real, personal or mixed, or upon any part thereof, as well as all claims for labor, materials and supplies which, if unpaid, might by law become a lien upon its property; provided, however,-that Vermont Yankee shall not be required to pay any such tax, assessment, charge, levy or claim if the validity thereof is contested currently in good faith by appropriate proceedings.
Section 2.04. Maintenance of the Unit. So long as the Unit remains in commercial operation, Vermont Yankee will maintain and keep the Unit as it shall from time to time exist in 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 Vermont so o n m L
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L Yankee may be necessary or appropriate to comport with industry practice or applicable I
regulations.
I Section 2.6. NRC T.icencec. At the time of the execution and delivery of this instrument, Vermont Yankee, as licensee under the Operating License, is subject to the authority of the NRC. Vermont Yankee will obtain and thereafter maintain, to the extent within its reasonable capacity, in full force and effect, all licenses and other public authorizations, necessary or required (i) for the operation of the Unit to the extent Vermont Yankee continnes such operation, (ii) for the decommissioning of the Unit, and (iii) for subsequent possession and surveillance of the site.
Section 2.06. InstrJments of Further Assurance. Vermont Yankee will execute and deliver such further instruments and do such further acts as it considers necessary or proper to carry out more effectually the purposes of this Indenture or to transfer to any new Trustee or i
i Trustees the funds held in trust herenader.
J Section 2.07, Annointment of Sneceunt Trn= tee. Whenever necessary to avoid or fill
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a vacancy in the office of Trustee, Vermont Yankee will, in the manner provided in Section 5.04, appoint a Tmstee so that there shall at all thoes be a Trustee hereunder which is eligible
' and qualified in accordance with the provisions of Section 5.02.
Section 2.08. Schadnte of nuline Amounte. As soon as practicable after the i
i establishment of the VY Decommissiening Trust and from time to time thereafter as required, l
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l Vermont Yankee will seek to obtain a Schedule of Ruling Amounts with respect to its I
contributions to the Qualified Trust F!md as provided for in Section 468A and will promptly provide the Trustee with a copy of such schedule (and any revisions thereof).
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. Section 2.09. Vermont Yankee Renreentatives. Promptly after the delivery of this i
instrument, the Board of Directors of Vermont Yankee will designate certain individuals to act on its behalf in any transactions authorized or required to be performed by Vernmnt Yankee hereunder, except any such transactions with respect L which this instrument specifies who shall act on behalf of Vermont Yankee. Vermont Yankee shall provide the Trustee with a written statement setting forth the names and specimen signatures of such individuals.
Section 2.10. Additional Information. Vermont Yankee shall provide to the Trustee such additional documents, information and records as Trustee may reasonably request in order to perform its duties hereunder. Without limiting the generality of the foregoing,
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1 Vermont Yankee shall at least serninnnually provide the Trustee with a list of-corporations having contractual relationships of the type referred to in the last paragraph of Exhibit A hereto. The Trustee shall be justified, and shall be fully protected, in relying on the documents, information and records so provided and, until notified differently by Vermont Yankee, the accuracy and completeness thereof; and shall have no duty to make an independent investigation with respect to such accuracy and completeness either at the time of receipt of any such j
documents, information or records or at any future time. 30em.oi
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i L
ARTICLE III l
1
' Decnmmiecinnine Fund j
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' Section 3.01.' Danneite inen Tmst Fund. Vermont P te shall make, or cause to be
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made, deposits in cash or securities into any one or more of the Qualified Trust Fund or the t
l Nonqualified Trust Fund from time to time in accordance with the FERC Order or any l
. superseding order of FERC as may then be in effect or any applicable Schedule of Ruling Amounts with respect to the estimated costs of decommissioning the Unit and in compliance with its obligations under the Operating i irance. Wir never deposits are due Vermont Yankee shall deliver to the Trustee an Officer's Certificate, certifying that the aggregate amount thereof complies with the applicable FERC order and that, to the best of their knowledge, any amount payable into the Qualified Trust Fund conforms to Section 468A.
- Section 3.02. Subsequent Adjustments. The Trustee and Vermont Yankee understand and agree that the contributions made by Vermont Yankee to ths Qualified Trust Fund may from time to time exceed the amount permitted to be paid into such Trust Fund pursuant to i-Section 468A and any regulations thereunder, based upon changes in estimates, subsequent 1
develap=='a or any other event or occurrence which could not reasonably have been foreseen by Vermont Yankee at the time such contribution was made (" Excess Contribution"). Upon receipt of a CaWm.4e from Vermont Yankee setting forth the amount of an Excess Contribution and stating that such Fuceae Contribution should be transferred to the messai _
l 1
a Nonqualified Trust Fund or paid to any person or entity, including Vermont Yankee, the Trustee shall transfer or pay such Excess Contribution, as the case may be, to the 1
Nonqualified Trust Fund, or to the person or entity specified by Vermont Yankee in the l
Certificate. Such Certificate shall be accompanied by an opinion of legal counsel stating that such distribution will not lead to disqualification of the Qualified Trust Fund from the
. application of Section 468A and that such distribution will not constitute a violation of the l
FEP.C Ord:r.
Section 3.03. Ponline of Trnete. The Trustee may pool the assets of the Qualified and Nonqualified Trust Funds for the purpose of investing them in the investments described in Section 3.04 below, provided that the Trustee separately accounts for the contributions, earnings, expenses and distributions of each such trust, the earnings and expenses are reasonably apportioned between them and the books and records of the tmsts are kept on this basis.
Section 3.04. Invaatment of Monevs in Tmu Fund. Any moneys held as part of the Qualified Trust Fund shall be invested and sinvested by the Trustee, as the Trustee may from time to time determine (except as otherwise provided in Section 6.01 hereof), only in Permitted Qualified Investments. Any moneys held as part of the Nonqualified Trust Fund shall be invested and reinvested by the Trustee, as the Trustee may from time to time l mom.oi i
l n
i i-determine (except as otherwise provided in Section 6.01 hereof), only in Permitted Non-Qualified Investments.
Subject to Section 6.01, in investing, reinvesting, exchanging, selling and otherwise managing the Trust Fund, the Trustee shall discharge its duties with the care, skill, prudence and diligence under the circumstances then prevailing which persons of prudence, acting in a like capacity and familiar with such matters, would use in the conduct of an enterprise of a like character.
i Section 3.05. Withdrawal of Trust Fund Monevs.
l l
(a)
Upon compliance with the requirements and subject to the restrictions of this Section, moneys held by the Trustee in the rust Fund may T
be withdrawn by Vermont Yankee exclusively for the following purposes:
I (1)
To reimburse Vermont Yankee for expenditures made by it or which are rer.sonably expected to be made within 90 days thereafter and which constitute or, when made will constitute, part of the Decommissioning Expenses of the Unit, or to pay obligations incurred or accrued and payable within 90 days thereof which, when paid, will constitute part of the Decommissioning Expenses of the Unit; (2)
To make refunds of amounts held in the Trust Fund if L
requested to do so by Vermont Yankee on the basis of an order of FERC -
1 l
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)
o or any other regulatory agency having jurisdiction over Vermont Yankee (the " Regulatory Refunds");
(3)
To pay any federal income taxes due and payable with 1
I respect to income of the Nonqualified Trust Fund (the " Income Taxes")
i by Vermont Yankee; and 1
(4)
To pay reasonable administrative expenses of the Trust Fund.
Any amounts withdrawn from the Trust Funds under clause (1) or (2) above shall, unless otherwise ordered by FERC or any other governmental regulatory agency having jurisdiction, first be withdrawn from the Nonqualified Trust Fund until such Nonqualified Trust Fund is exhausted, and then only may amounts be withdrawn from the Qualified Trust Fund. Any amounts withdrawn from the Trust Funds under clause (3) above may be withdrawn only from the Nonqualified Trust Fund, unless otherwise ordered by FERC or any other governmental regulatory agency having jurisdiction over Vermont Yankee. Any amounts withdrawn under l
l clause (4) shall be allocated as provided in subsection (d) hereof. In no event shall any amount be withdrawn from the Qualified Trust Fund for any purpose not specified herein which would cause the disqualification of such Trust Fund from the application of Section 468A.
-In computing the amount which may be withdrawn under clause (1) above, the gross amount of an expenditure or obligation shall be reduced by any refunds or payments received m oi -.
~
.c by Vermont Yankee with respect thereto. Any such refund or payment received after the certification of the expenditure or obligation to which it relates and which has not previously been taken into account shall, within three months after its receipt by Vermont Yankee, either i
I L
be applied to reduce the amount of a withdrawal from the Trust Fund made under this Section 1
or, to the extent permitted by Section 468A, be redeposited in the Trust Fund.
(b)
Vermont Yankee shall be entitled to make a withdrawal under this Section for purposes set forth in clause (1), (2) or (3) of subsection (a)
. above upon receipt by the Trustee of:
1 (1) An Officer's Certificate dated the date of the withdrawal application:
(A) stating the amount to be withdrawn, the l
purposes for which the amount is to be used and the Trust i'
Fund (or Trust Funds) from which the amount is to be I
withdrawn; I
(B) specifying in reasonable detail by general i
classification the underlying items of expenditures and obligations (after giving effect to any deduction required under subsection (a) above or stating that no such i
deduction is applicable) which will constitute part of the l )
m m-1
/
i t
Decommissioning Expenses of the Unit (specifying which items, if any, relate to disassembly of the Unit),
Regulatory Refunds or Income Taxes, as the case may be, and stating that such expenditures constitute, or obligations when paid will constitute, part of Decommissioning Expenses of the Unit, Regulatory Refunds or Income Taxes, as the case may be, and that none of such expenditures and obligations has been made the basis of a prior withdrawal under this Section; (C) stating that any mone,s which have previously been withdrawn from the Trust Funds to pay obligations have been or are in the process of being expended on account of items of cost which constitute part of Decommissioning Expenses of the Unit, Regulatory Refunds or Income Taxes, as the case may be; (D) if a withdrawalis to be made from the Qualified Trust Fund, stating that such withdrawal will not cause the disqualification of the Qualified Trust Fund from the application of Section 468A; and '
~15-somam.
t (E) stating that no regulatory approval for such withdrawal is necessary or, if at any time the making of
,l withdrawals herefrom becomes subject to the jurisdiction of FERC or any other governmental regulatory agency, i
. stating that such regulatory approval has been obtained and furnishing a copy thereof.
i
)
(2) An accountant's certificate dated the date of the I
withdrawal application:
c (A) certifying that the items of expenditures and i
obligations specified in the accompanying Officers' L
Certificate constitute, or when paid will constitute, part of l
the Decommissioning Expenses of the Unit, Regulatory i
i Refunds or Income Taxes, as the case may be.
t (3) An opinion of counsel, dated the date of the withdrawal application:
(B) stating that the instruments which are l
therewith delivered to the Trustee conform to the l
requirements of this Indenture, and that, on the basis of i
such application, the Trust Fund moneys whose
~16-mnesm
withdrawal is then requested may be lawfully g a over 3
under this Section; j
i (C) stating that Vermont Yankee is duly
?
l authorized to make such withdrawal; and j
(D) stating that the actions directed in such withdrawal application do not constitute an act of "self-dealing" within the meaning of section 4951 of the Code.
(4) In the case of a withdrawal on account of items of cost which are directly associated with disassembly of the' Unit and which constitute part of the Decommissioning Expenses of the Unit, an engineer's certificate dated the date of the withdrawal application:
(A) stating the current status of decommissioning of the Unit; and (B) stating that the expenditures and obligations specified in (B) of the accompanying Officer's Certificate are reasonable.
(c) The Trustee may withdraw money from the Qualified Trust Fund for payment of taxes due with respect to such Trust Fund in accordance with tax returns prepared pursuant to Section 3.06 hereof.
j i
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1 l'
I
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i i
(d) The Trustee may withdraw money from the Trust Funds under i
i clause (4) of subsection (a) above for the reasonable administrative expenses of the trusts not paid from other sources including, but not limited to, the j
t Trustee's fees in amounts approved by Vermont Yankee (which approval shall not be unreasonably withheld), the Fund Managers' fees, accounting expenses, k
actuarial expenses, brokerage commissions and legal expenses. Such l
administrative expenses shall, unless otherwise ordered by FERC or any other i
i governmental regulatory agency having jurisdiction, be allocated between Trust j
~
i Funds as directed by Vermont Yank:e.
. (e) The right of Vermont Yankee to make withdrawals pursuant to this l
Section is in no way contingent upon compliance with the covenants in Article II hereof. Notwithstanding anything contained in this Indenture to the contrary, assets in the Qualified Trust Fund must be used as authorized by.Section 468A and the regulations thereunder.
Section 3.06. Tax Returns. The Trustee shall cause appropriate federal and Vermont tax returns with respect to income earned by the Qualified Trust Fund to be prepared and filed and shall pay any taxes shown to be due out of the Qualified Trust Fund. The Trustee shall also cause to be prepared and filed such other state tax returns as may be requested by l
. Vermont Yankee with respect to income earned by or the assets of any trust hereunder and )
mem.oi i
s;..
J shall pay any taxes due thereon out of the related Trust Fund, provided that sufficient information to permit timely filing of such returns is supplied by Vermont Yankee.
. Section 3.07. Prohibited Trancactions. Notwithstanding anything contained in this Agreement to the contrary, the Tmstee may not authorize or carry out any sale, exchange or other transaction with respect to the Qualified Trust Fund which would constitute an act of "self-dealing" within the meaning of section 4951 of the Code, as such section is made applicable to the Qualified Trust Fund by Section 468A(e)(5) of the Code, any regulations t
thereunder, and any applicable successor provision. If the Trustee engages in an act of "self-dealing" in violation of this Agreement, the Trustee (and not the Qualified Trust Fund) shall I
J pay any tax imposed pursuant to section 4951 of the Code as such section is made applicable to the Qualified Tmst Fund or the Truste:.
The Trustee reserves the right not to comply with any written instructions of Vermont r
l Yankee or a Fund Manager which the Trustee deems will involve an act of "self-dealing" under section 4951 of the Code, until Vermont Yankee provides the Trustee with an opinion of legal counsel that the actions directed in such instmetions do not constitute an act of "self-dealing" within the meaning of section 4951 of the Code. The opinion of such counsel shall i
be full
- 1 complete authorization and protection in respect of any action taken in accordance with the written instructions of Vermont Yankee or a Fund Manager. m n n oi
l I
ARTICI F IV t
' Consnlidatinn. Merger. Conveyance or Transfer i
Section 4.01. Vermont Ynnkaa May Consolidate. etc.. on Certain Terms. Subject to i
compliance with the provisions of this Article, nothing in this Indenture shall prevent any consolidation or merger of Vermont Yankee with or into any other entity or entities; provided,
{
however, that upon any such consolidation or merger, the successor entity or entities that shall be lawfully entitled to acquire and operate such properties shall execute and deliver to the t
Trustee, simultaneously with such consolidation, merger, conveyance or transfer, an Iadenture l
. 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 Indenture, with the same effect and to the same 4
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 Vermont Yankee from transferring its right, title and interest in, and its obligations with respect to, the Unit to any agent, representative, authority, agency, commission or other entity or entities, authorized by applicable state and federal statutes or regulations to assume responsibility for the decommissioning of nuclear facilities.
Section 4.03. Successor Substimted. In the event Vermont Yankee, pursuant to l-
- Section 4.01, shall consolidate with or merge into any other entity, the successor entity, upon
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i i
causing to be executed and delivered the supplemental indenture referred to in Section 4.01, shall succeed to and be substituted for Vermont Yankee hereunder with the same effect as if it had been named herein as the party of the first part.
ARTICTR V l
The Trustee Section 5.01. Ace..ars of Trnetc certain Terms of the Trnetc. The Trustee, for itself and its successors, hereby accepts the trusts created by this Indenture and agrees to perform the same, but only upon the terms herein set forth, including the following:
(a)
The recitals herein shall be taken as the statements of Vermont 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 Funds or any part thereof to achieve the purposes of this Trust Agreement and the trusts created herein, and the 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 Vermont Yankee or upon Vermont Yankee's order under any provisions hereof.
(c)
. The Trustee shall not rely upon any default under any covenant in Article II hereof as a defense against, nor shall it be precluded as a result of 3ownn.o
1
,=
and such default from, performing its trusts and powers hereunder and may execute any of the trusts or powers hereof and perform any duty hereunder either directly or through its agents or attorneys.
(d)
The Trustee may consult with legal counsel to be selected by it (who may be counsel for Vermont Yan' ee), and the Trustee shall not be liable for any acdon taken or suffered by it in good faith in accordance with the advice 4
of such counsel.
(e)
The Trustee shall be protected in acting upon any notice, resolution, request, consent, order, certificate, report, opinion, statement, 1
obligation, appraisal or other document believed by it to be genuine and to have -
been signed by the proper party or parties. The Trustee shall accept a duly certified copy of any' action of the Board of Directors of Vermont Yankee as conclusive evidence that an action has been duly adopted and is in full force and effect. Except as otherwise expressly provided, an Officer's Certificate as to the Trustee's rights under this Indenture shall be accepted by the Trustee as conclusive evidence of the facts therein stated, and shall constitute full pstion to the Trustee for any action taken or omitted to be taken by it in good faith, in reliance thereon.
1' -m
i (f)
The Trustee shall maintain appropriate records of all deposits, investments and earnings thereon received by the Qualified Trust Fund and by the Nonqualified Trust Fund and all disburaments made from each such Trust J
Fund and within 35 days following the close of each month shall provide an
/
account thereof to Vermont Yankee and to any State or Federal authority or 1
agency, if any, having jurisdiction over the application of the Tnist Fund which may request the same. Unless objection is raised in writing to such account within 90 days from the date such account is provided, the Trustee shall be forever released and discharged from all liability or accountability to anyone with respect thereto. In the event that any objection raised with respect to an account cannot be amicably adjusted, the objecting party may, within one year of the date of such objection, present such objection to a court having jurisdiction for resolution. Any objection not so presented within one year shall be deemed waived and any liability of the Trustee with respect thereto shall be deemed released. The Trustee shall provide adequate safekeeping for any securities acquired by it as part of any trust hereunder. Vermont Yankee and its agents shall have the right to review, inspect and audit the books and records of the Trustee relating to the Qualified Trust Fund and the Nonqualified Trust Fund.
so.om.ot ; '
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F' w%
i (g)
Without in any way limiting'the powers and reathority conferred upon the Trustee by other provisions of this Indenture or by law, the Trustee is i
expressly authorized and empowered as follows:
i i
To sell, exchange, convey, transfer or otherwise dispose of any property l
. held by it, by public or private sale. No person dealing with the Trustee 1
J shall be bound to see to the application of the purchase money or to inquire into the validity or expediency of any such sale or other l
l disposition; To make execute, acknowledge and deliver any and all documents of l
transfer and conveyance and any and all other instruments that may be necessary or appropriate to carry out the powers granted in this L
Indenture, i
Section 5.02. Fntitien Flioible for Annointment as the Tmstee. The Trustee shall at i h
'all times be a bank or trust company having its principal office and place of business n t e l
State of Vermont, any other New England state, or the State of New York, and shall at all J
i times be a corporation organized and doing business under the laws of the United States, the
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l:
State of Vermont, The Commonwealth of Massachusetts or the State of New York, with a j
i combined capital and surplus of at least $50,000,000 for the initial Tmstee and at least
$100,000,000 for any successor Trustee and authorized under such laws to exercise corporate
, ann.m I
L-1
.i f
. trust powers and subject to supervision or examination by Federal or State authority. If the E
Trustee publishes reports of condition at least annually, pursuant to law or to the requirements 1
. of any supervising or examining authority referred to in this Section, then, for the purposes of e
- this Section, the combined capital and surplus of the Trustee shall be deemed to be its I
combined capital and surplus as set forth in its most recent report of condition so published.
In the event the Trustee ceases to be eligible under this Section, it shall resign l
immediately in the manner and with the effect specified in Section 5.03; if the Trustee does not j
so resign, it shall be removed forthwith by Vermont Yankee, by written notice in the form provided in Section 5.03, such removal to take effect upon delivery of the notice to the Trustee
. and appointment of the successor.
Section 5.03. Raciaantian or Damoval. The Trustee may resign and be discharged l
from the trusts hereby created by giving sixty (60) days' prior written notice thereof to l
l Vermont Yankee. Such resignation shall become effective on the date specified in such notice
. or upon the date of appointment of a successor and such successor's acceptance, whichever date is later. If no successor Trustee shall have accepted appointment within sixty (60) days of 1
the Trustee's resignation, the Trustee may apply to any court of competent jurisdiction to appoint a successor Trustee.
Vermont Yankee may at any time remove the Trustee with or without cause upon not 1
less than four weeks' prior written notice, such notice to be in the form of a certificate signed L m e ns m iI'
- i by the President or Treasurer of Vermont Yankee declaring such removal and specifying the successor Trustee appointed pursuant to Section 5.04.
The Trustee, after resignation or removal, shall nevertheless retain a lien upon the VY i
Decommissioning Trust moneys to secure the amounts due to it under any prov'.sion of this i
Indenture.
I i
Section 5.04. Annointment of Snee*=ent to the Trn=tae. In the event the Trustee t
I l
' resigns, is removed, or becomes 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
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control of the Trustee or its property or affairs for the purpose of rehabilitation, conservation
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4 d
i or liquidation, a vacancy shall be deemed to exist in the office of the Trustee, and a successor
[
shall be appointed by Vermont Yankee to fill such vacancy, by written notice signed by the l
l President or Treasurer of Vermont Yankee. The validity of any such appointment, however, 3
f shall not be impaired or affected by failure to give such notice or by any defect therein.
I If, in a proper case, no successor Trustee shall have been appointed pursuant to the
' foregoing provisions of this Section, or if appointed, shall not have accepted the appointment, within 30 days after the resignation of, or the occurrence of a vacancy in the office of, the Trustee, the Secretary of State of Vermont may apply to any court of cu+ test jurisdiction to appoint a successor Trustee.
! mnum
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l Section 5.05. Arcantance of Apnointment by Successor Trustee. A successor Trustee appointed hereunder shall execute an instrument accepting such appointment and delivery one counterpart thereof each to Vermont Yankee, the retiring Trustee, and, if applicable, the court making such appointment. Thereupon, without any further act, such successor Trustee shall become vested with all the properties, rights, powers, trustees and duties of the retiring Trustee as if originally named under this Indenture; however, each retiring Tmstee, when i
requested by the successor Tmstee in writing or by Vermont Yankee and upon payment of any lawful charges and disbursements, shall nevertheless execute and deliver an instrument or i
instruments conveying and transferring to such successor Trustee all'its properties, rights, i
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i powers, and trusts and shall duly assign, transfer and deliver to such successor Trustee all j
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l
. property and money held by it thereun:ler. If the successor Trustee reasonably requests an instrument from Vermont Yankee for the purpose of more fully and certainly vesting in and j
confirming to it said properties, rights, powers and trusts, then any such instrument shall be 1
executed, acknowledged and delivered by Vermont Yankee.
Section 5.06. Merger or comolidatinn of the Trmtee. Subject to the requirements of Section 5.02 hereof, any corporation into which the Trustee may be merged or with which it may be consolidated or any corporation resulting from any merger or consolidation to which the Trustee shall be a party or any corporation to which substantially all the business and somes.oi
assets of the Trustee may be transferred, shall be the Trustee under this Indenture, without further act.
I Section 5.07. I imited I inhility and indemnification. Nothing in this Indenture shall be interpreted to impose any obligation upon the Trustee (in its individual capacity) for any liability, claim, demand, debt, right or cause of action, loss, damages, costs or charges which i
may arise from the insufficiency of the moneys held in the Trust Fund to defray fully the l
Decommissioning Expenses of the Unit. This Indenture shall not be interpreted to impose any duty, responsibility, obligation or liability upon the Trustee in addition to those which are I
imposed by law or expressly specified herein. Vermont Yankee agrees to indemnify the Trustee against any liability it may sustain, in good faith and without gross negligence, in the performance of its duties hereunder.
ARTICT F VI Fund Mannyers Section 6.01. Apoointment. Vermont Yankee shall have the power to appoint from time to time one or more Fund Managers to manage, or direct, the acquisition, holding or disposition of a designated portion of trust assets in accordance with the applicable investment criteria referred to in Section 3.04 and the terms of a written appointment made by Vermont Yankee not inconsistent therewith. Any Fund Manager appointed pursuant to this Section
- xenai
- - -. - ~
i t
V l
l shall be a qualified individual or institution which is independent of Vermont Yankee or the t
i Trustee.
i Any such Fund Manager shall, unless its appointment provides otherwise, have the j
i power to direct the Trustee in the investment of such designated portion of the trust assets and l
l l
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 satisfactory to the Trustee, invest such i
designated portion as directed in writing by such Fund Manager. The Trustee shall be j
i released and relieved of all investment duties, responsibilities and liabilities with respect to any i
portion of the trust assets as to which a Fund Manrger is designated and as to such assets the j
Trustee shall act only as custodian. With respect to any part or all of the trust assets for which a Fund Manager has not been so appointed by Vermont Yankee, the Trustee shall have fall authority to invest and reinvest such portion or all of the trusts in accordance with Section 3.04 hereof and shall not be required to follow the investment directions of any other person.
ARTICIR VII Distrilwtinn of Accate unon Terminatinn Section 7.01. Tranerer to h. =:m Tmst. In the event that, after the date hereof, legislation is enacted by either the government of the United States or the State of Vermont creating an iP.~ gom - - =11y administered trust or fund with a purpose which menses the purpose of this VY Decommiazioning Trust as set forth herein or in the event mnem l
f r,
n.
c.
1 l
V.
i that a governmental regulatory agency having jurisdiction so requires, then with the specific l
i authorization of its Board of Directors, Vermont Yankee shall have the right, to the extent -
l l
permitted by Section 468A of the Code, by written notice to the Trustee, to elect to have all or l
3 part of this VY Decommissioning Trust merger into any such governmental trust or fund or.
l l
)
other required fund, such written notice to be signed by the President or Treasurer of Vermont
.j i
Yankee, and to notify the Trustee of such election and to direct the Trustee to transfer all or i
l part of the VY Decommissioning Trust moneys to the specified successor trust. Upon the completion of a transfer of all the Trust Funds to the successor Trust, this VY Decommissioning Trust shall terminate.
i Section 7.02. Final Distribution. Any property remaining in the Trust Fund upon termination of the term hereof in accordance with clause (2) of Section 1.04 hereof shall be f
distributed by the Trustee for the benefit of the customers of Vermont Yankee's sponsors in
' i accordance with the terms and conditions ordered by FERC or any other governmental regulatory body having jurisdiction.
ARTICLE VIII l
I nefinicians and nenerm1 Provininne Section 8.01. Defined Terms. Form all purposes of this instrument, unless the context otherwise specifies or requires:
j i mann.m
l (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 Vermont 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)
'" Decommissioning Expenses of the Unit" shall have the same meaning as the term " decommissioning costs" as defined in Treasury Reg. fl.468A-1(b)(5), as amended from time to time, which to the extent not inconsistent with such definition shall be deemed to l
include:
)
(1)
All costs and expenses of removing the Unit from service, 1
including without limitation, dismantling, mothballing, entombment, i
removing radioactive waste material to temporary or permanent storage sites, decon+=minating, restoring and supervising the site, and any costs and expenses incurred in connection with proceedings before governmental regulatory authorities relating to the authorization to decommission said Unit; (2)
All costs oflabor and services, including, without limiting the generality of the foregoing, services of foremen, inspectors, l
supervisors, surveyors, engineers, counsel and accountants, and security una.oi
_ _ _ _ _ = _ _ _ _ _.. _ _. _
personnel, performed or 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 decommissioning of the t
Unit, it being understood that any amount (exclusive of proceeds of insurance) realized by Vermont Yankee as salvage on any machinery, construction equipment and apparatus, the cost of which shall have been charged to the Decommissioning Expense of th'e Unit, shall be treated as a deduction from the amounts otherwise withdrawable on account of the cost of decommissioning of the Unit; and (3)
All overhead costs applicable to the Unit during its i
decommissioning period, including, without limiting the generality of the 1
I foregoing, taxes (other than taxes on or in respect of income), licenses, excises and assessments, casualties, surety bond premiums and insurance i
premiums.
Without limiting the generality of the foregoing, amounts expended or to be paid with l
respect to decommissioning the Unit shall constitute part of the Decommissioning Expenses of the Unit if they are, or when paid will be, either (i) properly chargeable to any account
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relating to decommissioning of a nuclear generating unit in accordance with the Uniform i
' System as then in effect, or (ii) properly chargeable to decommissioning of a nu:: lear generating unit in accordance with then applicable regulations of the NRC or FERC or any other regulatory agency having juris,iiction.
(d)
Engineer" shall mean an individual or a Partnership or corporation
.l 1
)
engaged in engineering work or business relating to the production or transmission of electricity, whether or not employed by or in any way affiliated with Vermont Yankee.
(c)
" Escrow Agreement" shall mean the Decommissioning Escrow Agreement dated October 24,1983, between Vermont Yankee and The Howard Bank, as Escrow Agent.
(f)
" Federal Energy Regulatory Commission" or "FERC" shall mean the United States Federal Energy Regulatory Commission or any governmental agency or agencies substituted therefor.
(g)
"FERC Order" shall mean the order, dated April 3,1984, issued by FERC in Docket No. ER 83-342000, which authorized the collection of a decommissioning reserve as part of the cost of power sold by Vermont Yankee and any superseding order issued by FERC as from time to time in effect.
(h)
" Income Taxes" shall have the me ming defined in Section 3.05(a)(3) hereof.
f(i)
" Nuclear Regulatory Ccmmission" or "NRC" shall mean the United States Nuclear Regulatory Commission or any goves.<--=21 agency or ageni:ies substituted therefor. sounss.ot T
a
)
(j)
" Officer's Certificate" shall mean a certificate signed by the President or a Vice President or the Treasurer or an' Assistant Treasurer of Vermont Yankee. Wherever it is provided in this Indenture that an Officer's Certificate shall be accompanied by a certificate of an engineer, legal counsel, accountant or other expert, such engineer, legal counsel, 1
accountant or other expert shall be a person (who may be in the employ of Vermont Yankee) selected by Vermont Yankee and approved by the Tmstee in the exercise of reasonable care.
Each Officer's Certificate shall contain the statements provided for in Section 8.02.
(k)
The " Operating License" shall mean Operating License No. DPR-28, dated February 28,1973, as heretofore or hereafter amended, originally issued by the Atomic Energy Commission (now the NRC).
(1)
" Opinion of Counsel" shall mean a written opinion ei counsel (who may be t
counsel for Vermont Yankee) selected by Vermont Yankee. Each Opinion of Counsel shall contain the statements provided for in Section 8.02.
(m)
" Permitted Investments" shall have the meaning provided in Exhibit A to this
. Indenture.
L (n)
" Permitted NonWified Investments" shall have the meaning provided in
- Exhibit A to this Indenture.
(o)
" Permitted Qualified Investments" shall have the meaning provided in Exhibit
)
A to this Indenture.
1 30eCN.01 '-
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- (p) -
" Regulatory Refunds".'shall have the meaning defined in Section 3.05(a)(2) hereof.
(q)
" Schedule of Ruling Amounts" shall have the meaning provided in Treasury Reg. i 1.468A-3(a)(1), as from time to time amended, (r)
' The " Trustee" shall mean, with respect to each tmst hereunder, The Bank of l
New York, and its successors in trust which shall become such in the manner prescribed in Section 5.04, for the time being in office.
-(s)
The " Uniform System" shall mean the Uniform System of Accounts prescribed 4
by FERC for Class A and Class B Public Utilities and Licensees as from time to time in effect or any system of accounts hereafter promtigated in substitution therefore.
(t)
The " Unit" shall mean the nuclear reactor presently owned by Vermont Yankee
)
and located in Vernon, Vermont, together with such structures, components and equipment now or therewith, which, because of radioactive contamination caused by itstperation, become subject to decommissioning regulations of the NRC.
(u)
" Vermont Yankee" shall mean Vermont Yankee Nuclear Power Corporation, a Vermont corporation, and its legal representatives, so long as Vermont Yankee continues to 4 '
own the Unit and the Operating License with respect thereto, and thereafter " Vermont Yankee" shall mean any corporation or corporations which succM Vermont Yankee in the a smemm
rnanner prescribed in Article IV or any other entity or entities which succeed to the rights and obligations of Vermont Yankee with respect to the Unit and the Operating License.
i i
. Section 8.02. Comnliance Certific='a and Onininns. Every certificate or opin on w th respect to compliance with a condition or covenant provided for in this Indenture shall include:
(a)'
A statement that each person making such certificate or opinion has read such covenant or condition and the definitions herein relating thereto.
(b).
A brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based.
(c)
A statement that, in the opinion of each such person, he had made or caused to be made such examination or investigation as is msary to enable him to express an 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 8.03. 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 i
wh matters be certifu by, or covered by the opinion of, only one such person, or that they be so certhd or covered by only one document, but one such person may certify or give an opinion with respect to sonne matters am. or or more other such persons as to other matters, j
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and any such person may certify or give an opinion as to such matters in one or several documents.
ARTICLE IX l
Miscellaneous Section 9.01. Supplemental indentures. This Indenture may be amended from time to j
time by the execution and delivery of one or more supplemental indentures by and between Vermont Yankee and the Trustee, provided that the amendment or supplement has been approved by the Board of Directors of Vermont Yankee and receive any required approval or acceptance by any governmental body having jurisdiction, provided, however, that this f
Indenture may not be amended so as to violate Section 468A of the Code or the regulations thereunder.
Section 9.02. Appliemble law. This Indenture shall be governed by and construed in accordance with the laws of the State of New York.
Section 9.03. Section 468A. Notwithstanding anything herein to the contrary, this Indenture shall be interpreted so as to assure that the Qualified Trust Fund established hereunder shall comply with the requirements of a " nuclear decommissioning reserve fund" under Section 468A of the Code and the regulations promulgated thereunder. The parties hereto shall not take any action or make any amendment hereto which would disqualify such l
Qualified Trust Fund as a nuclear decommissioning reserve fund under Section 468A. 3ounna l
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In the event that Section 468A is repealed, in whole or in part, and certain provisions of this Indecture cease to be required, such provisions shall thereupon be ineffective without
. the necessity of further amendment of this Indenture.
Section 9.04. Unenforraahle Provisions. Any provision of this Indenture which is prohibited or is determined to be unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
. Section 9.05. Written Chanaes and Noticea. No term or provision of this Indenture may be changed, waived, discharged or termia=W, except by an instrument in writing signed by the party or other person against whom enforcement of the change, waiver, discharge or termination is sought; and any waiver of the terms hereof shall be effective only in the specific instance and for the specific purpose given.
Section 9.06. Co.mterparts. This Indenture may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but j
. all such cou.-.g4 shall together constitute but one and the same instrument. soansa.oi i
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r Section 9.07. Headings. The headings of the various Articles and Sections herein are for convenience of reference only and shall not define or limited any of the terms or prov]
hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed by their respective officers thereunto duly authorized as of the day and year first above written.
VERMONT YANKEE NUCLEAR POWER CORPORATION By /s/ John T. Pearson John T. Pearson, Treasurer
[CHITTENDEN TRUST COMPANY, as Trustee By Is/ Innis J. Baanlieu louis J. Beaulieu, Vice President]
[THE HOWARD BANK, as [ initial successor] Trustee By /s/ Frank E. Cevner Frank E. Ceyner, Vice President)
THE BANK OF NEW YORK, By /s/ Stenhen P. Weis Stephen P. Weis, Vice President 4
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.. STATE OF VERMONT COUNTY OF CHITTENDEN Before me, this day of March,1988, personally appeared John T. Pearson, who, begin duly sworn, acknowledged that he is Treasurer of Vermont Yankee Nuclear Power Corporation, a Vermont corporation, and that the foregoing instrument was duly signed by
(
him on behalf of said corpontion and that said instrument is his and said corporation's free act i
and deed.
l Notary Public i
STATE OF VERMONT COUNTY OF CHITTENDEN Before me, this day of March,1988, personally appeared Louis J. Beaulieu, f
who, being duly sworn, acknowledged that he is a Vice President of Chittenden Trust i
company, a Vermont 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.
Notary Public d
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3040783.01 ~
N EXHIBIT A (August _,1995)
Investment Guidelines The following guidelines specify the Permitted Investments which are acceptable in the Qualified Trust Fund or the Non-qualified Trust Fund, all of which are to be made within the primary investment objective of this Trust, namely: to assure reasonable preservation of principal while seeking to attain the rate of a real return per annum authorized by the FERC Rate Order in effect from time to time.
(a) The term " Permitted Investments" shall mean investments which comply with the criteria set forth below.
Permitted Investments shall include marketable instruments which are sold in a recognized market or exchange, excluding any securities which were issued in private placements, except for direct placements of tax-exempt securities with maturities of one (1) year or less issued within the full faith and credit of the State of Vermont, all as described in more detail in the appended Equity Portfolios Investment Criteria and Fixed Income Portfolio Investment Criteria which have been approved by FERC.
Within a specific Fund, except for investments in securities issued by the United States Government or the State of Vermont, no investment shall constitute a Permitted Investment if such investment would, as of the date oi such purchase, place the Fund in a position where more than twenty percent (20%) of the Fund assets would be invested 1
in securities issued by issuers located in, or organized under the laws of, a single state.
Within a specific Fund no investment shall constitute a Permitted Investment if such investment would, as of the date of such purchase, place the Fund in a position where the average dollar-weighted maturity of all investments in such Fund having stated maturities would exceed ten (10) years or the number of years until the estimated completion of the dismantlement of the Vermont Yankee nuclear plant, whichever is lesser. Permitted Investments shall exclude any investment having a stated maturity exceeding the number of years from the date of purchase until the estimated completion of plant diamantlement. Within a specific Fund, no investment shall constitute a Permitted Investment if such investment would, as of the date of such purchase, place the Trust Fund in a position where investments in the securities of any one issuer, except securities issued by the United States Government or the State of Vermont, exceeds ten percent (10%) of the total book value of the Fund.
, m e m s:
1
- (b) Permitted Qualified Investments shall mean, with respect to any investment
- of moneys held as part of the Qualified Tmst Fund, Permitted Investments which fall in one of the following categories:
(1) Public debt securities of the United States, including bonds, notes bills or other debt obligations issued by the United States Treasury; (2) Obligations of a State or local government that are not in default as l
i to principal or interest, including bonds, notes, or other debt obligations issued by any 5 ate or by any agency, instrumentality or political subdivision of any State; provided that the investment security has received, at the time of purchase, any of the three highest ratings by Moody's or S'.andard and Poor's (or their successors) or equivalent with insurance; and provided, further, that no investment shall be made in industrial development bonds issued on behalf of any sponsor of Vermont Yankee or in the obligation of any issuer having an equity interest in Vermont Yankee or a purchase agreement with respect to power produced by Vermont Yankee; (3) Time or demand deposits in any bank located in the United States; i
provided that the long-term debt securities of such bank have received, at the time of purchase, any of the three highest ratings by Moody's or Standard and Poor's (or their successors).
(4) Permissible Securities described in the appended Equity Portfolio Investment Criteria.
Permitted Qualified Investments shall further be allocated among the investment alternatives described in clauses (1) through (3) above in a manner such that the i
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maximum dollar a!!ocation for any single investment will not exceed the percentage of all Permitted Investments as stated below:
Maximum Percentage Allocation of Clause Total Permitted Invesi..ent Term Reference Investments -
U.S. Treasury Securities (1) 100 %
Vermont Municipal Bonds (2) 50%*
Non-Vermont Municipal Bonds (2) 90 %
i
' Bank Time or Demand Deposits (3) 60% -
- Any Vermont Municipal Bonds held in any fund on April 16.1990 constitutes Permined Qualified Investments notwithstanding this limit.
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'(c)
" Permitted Non-qualified Investments" shall mean, with respect to any
{
investments of moneys held as part of the Non-qualified Trust Fund, Permitted j
Investments which fall in one of the following categories:
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(1)
Any Permitted Qualified Investments; 1
(2)
. Such other investments as the Federal Energy Regulatory Commission i
(FERC) and the Board of Directors of Vermont Yankee may from time f
to time approve; including without limitation the Permissible Investments described in the appended Fixed Income Portfolio Investment Criteria; i
(3)
Money Market funds or similar investment vehicles of the Trustee's or f
Fund Manager's choice, but only as a temporary investment where it is not practical to invest the amount of money in the Trust Fund not l
otherwise invested in the investments described in clauses (1) and (2) i above.
Permitted Investments shall not include any securities issued by corporations j
which supplied any of the components or fuel used in the Plan or which, at the time of purchase, have a contractual relationship with Vermont Yankee.
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- 0 Eaulty Portfolio Invsher.: Criteria 1.
Diversification No more than 30% of the market value of the total decommissioning trust shall be comprised of equity investments.
At a point in time three years kom the projected decommissioning date, a phasecut of the equity portfolio shall begin such that when there remains two years until the projected decommissioning date, equity investments may comprise only 20% of the market value of the total decommissioning trust and when one year remains to the expected decommissioning date, all equities have been liquidated.
No more than 5% of the direct investments of the equity portfolio at cost and 10% at market value, shall be invested in any one company.
No more than 2% of the outstanding shares of any one issuer will be directly held.
The market value of the directly held securities of any one industry shall not exceed 10% of the market value of the equity portfolio. The allocction to any I
one economic sector should not exceed 25%.
' No more than 15% of the market value of the equity portfolio shall be comprised of foreign investments. The market value of the securities of any one foreign country shall not exceed 5% of the market value of the equity portfolio.
2.
Permincible Senrities Common stocks or preferred stocks listed on the New York, American or NASDAQ exchanges (including foreign securities listed in the U.S.) with a total market capitalization greater than $100 million (capitalization shall be computed on an overall weighted average basis for a commingled fund and shall not apply J to broad market index funds or derivatives).
Put or call cptions only to protect or realize achieved returns.
Bank collective funds and commingled funds investing in the above. When collective or commingled fhnds are utilized, the selection criteria which shall apply at time of pudese are:
1 (1)
The fund must have a minimum ten year operating history.
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(2)
' The fund performance during the last ten calendar years prior to purchase, must place it in the top 50% of funds with similar investment objectives.
Q) _
The fund standard deviation of return for the past ten calendar years prior to purchase must be no more than 1% greater than standard deviation of either the Standard & Poor's 500 Index or Russell 1000 index or Wilshire 5000 index or successor broad market indices.
(4)-. Foreign equity funds must be invested via stock markets or exchanges which have at least 20 years of operation.
Securities convertible into common or preferred stock.
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Futures positions on market indices to protect or realize achieved returns or to gain exposure to the market in a percentage no greater than 5% of the equity portfolio.
3.
Imnermicsihte items Short sales or margin purchases, letter stock, private or direct placements of stock.
Securities of the asset manager, the custodian, or any security which could be considered a self-dealing transaction.
Equity securities of a corporation with debt currently in default.
Securities of utilities with nuclear plant ownership.
Securities of utilities _with nuclear plan ownership or sponsorship.
Major suppliers of nuclear reactors or nuclear fuel (major shall be defined as providing over 20% of that company's revenues).
Major suppliers of or contractors whose billings to Vermont Yankee during the most recent calendar year provide 20% of that company's revenues.
Securities of companies with less than three years of operating history.
The above criteria shall not apply to the security holdings of an index or commingled fund which is utilizing or replicating the components of a broad based equity index such as the S&P 500, Russell 1000 or Wilshire 5000.
Commodities contracts.
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Fixed Income Portfolio Investment Criteria Diversifientiom No more than 5% of the fixed income portfolio (at cost) shall be invested in any one issuer (except U.S. Treasury Securities). No more I
- than 35 % of the market value of the total decommissioning trust shall be
. comprised of corporate bonds.-
For municipal bond holdings, no more than 20% of the municipal bond portfolio shall be invested in securities issued by issuers located in, or organized under the laws of a single state.
The average dollar weighted maturity of all fixed income investments shall not exceed 10 years.
No security shall have a stated maturity exceeding the number of years from date of purchase until the estimated completion of plant dismantlement.
The market value of the corporate bonds of any one industry shall not exceed 10% of the market value of the fixed income portfolio. The corporate bond allocation to any one economic sector should not exceed 25% of the market value of the fixed income portfolio.
No more than 15% of the market value of the fixed income portfolio shall be comprised of foreign investments.
2.
Onlity Direct investments in fixed income securities shall have at the time of f
purchase, an A-or A3 grade or better rating as provided by Standard &
Poor's and Moody's, respectively. If a bond should have differing o
ratings then the Duff & Phelps rating will be employed to determine the rating based on a two of three majority rating. If a Duff & Phelps rating is not available, the higher rating will be utilized unless the security has been placed on Credit Watch by either rating agency or the rating been
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' down.yraded in the six months prior to purchase in which case the lower rating will apply. Municipal bonds may fulfill the rating criteria with insurance and the resulting implied rating or by pre-refunding with U.S.
. Treasury obligations. The credit rating of a commingled fund or collective fund shall be its weighted average rating. If the credit rating
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of a security already in the portfolio is downgraded to below an a-/A3 rating, an immediate sale is not required, rather an action recommendation shall be provided by the fund manager to the Investment Committee.
3.
Permittible Investn sats U.S. Treasury and agency securities
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Municipal Bonds -
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Mortgage-backed and asset-backed securities l
Corporate Bonds, debentures, notes Bank collective funds and commingled funds investing in the above.
When collective or commingled funds are utilized, the selection criteria which shall apply at time of purchase are:
(1)
The fund must have a minimum ten year operating history.
(2)
The fund performance during the last calendar year prior to purchase, must place it in the top 50% of funds with similar investment objectives.
(3)
The fund standard deviation of return for the past ten years must be no more than 1% greater than standard deviation of the Salomon Brothers Long-Term High-Grade Corporate Bond Index or a successor high grade corporate bond index.
'(4)
The fund cannot have as its stated investment objectives, purchase of below investment grade bonds.
Financial derivative transactions only to protect or realize achieved returns.
4, Imnermittible Inveeen;i i
Private placements, except those with maturities of less than one year.
Securities denominated in foreign currencies.
Securities of utilities with nuclear plan ownership or sponsorship.
Major suppliers of nuclear reactors or nuclear fuel (major shall be defined as providing over 20% of that company's revenues.
Major suppliers of or contractors to Vermont Yankee (major shall be
' defined as those suppliers and contractors whose billings to Vermont
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Yankee during the most recent calendar year provide 20% of that company's revenues.
Securities of the asset manager, the custodian, or any security which could be considered a self-dealing transaction.
The above impermissible items shall not apply to the use of an index or commingled fund which is utilizing or replicating',the components of a broad based equity index such as the Lehman Govt / Corp index.
Speculative financial derivative transactions.
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