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     .l eu the form of which is prescribed in Exhibit SA-IV to the        i L                                                                        !
     .l eu the form of which is prescribed in Exhibit SA-IV to the        i L                                                                        !
r Sales' Agreement. The boundaries of the Brunswick Plant, each unit thereof'and certain of the support facilities are illus-
r Sales' Agreement. The boundaries of the Brunswick Plant, each unit thereof'and certain of the support facilities are illus-trated in Exhibit SA-XV to the Sales Agreement.        Transmission facilities located at the site, including step-up transformers having a high side transmission voltage, are not included as part of the Brunswick Plant.
;
trated in Exhibit SA-XV to the Sales Agreement.        Transmission facilities located at the site, including step-up transformers having a high side transmission voltage, are not included as part of the Brunswick Plant.
1.9          Brunswick Unit Brunswick Unit No. 1 or Brunswick Unit No. 2, which are i
1.9          Brunswick Unit Brunswick Unit No. 1 or Brunswick Unit No. 2, which are i
the individual nuclear-fueled electric generating units, associ-ated support facilities, spare parts, tools and equipment and any capitalized construction materials and supplies on hand, located at the Brunswick Plant.      Brunswick Unit No. 1 and Brunswick Unit No. 2 are collectively referred to herein as the " Brunswick Units."
the individual nuclear-fueled electric generating units, associ-ated support facilities, spare parts, tools and equipment and any capitalized construction materials and supplies on hand, located at the Brunswick Plant.      Brunswick Unit No. 1 and Brunswick Unit No. 2 are collectively referred to herein as the " Brunswick Units."
1.10        CP& L Annual System Peak The highest CP&L Monthly Peak Demand as defined in Sec-tion 1.11 during each calendar year.
1.10        CP& L Annual System Peak The highest CP&L Monthly Peak Demand as defined in Sec-tion 1.11 during each calendar year.
l 1.11        CP& L Monthly Peak Demand
l 1.11        CP& L Monthly Peak Demand
;
               ' ae highest sixty (60) minute net integrated peak demand in megawatts recorded by CP&L for the Combined System during each month adjusted as follows:
               ' ae highest sixty (60) minute net integrated peak demand in megawatts recorded by CP&L for the Combined System during each month adjusted as follows:
l              (A)  Less the SEPA capacity allocation for wheeling by CP&L to SEPA's preference customers included in the net integrated peak auove; l-3
l              (A)  Less the SEPA capacity allocation for wheeling by CP&L to SEPA's preference customers included in the net integrated peak auove; l-3
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1.15        Combined System l
1.15        Combined System l
The Combined System, for purposes of this Agreement and the Related Agreements, shall consist of the generating facilities at the Joint Facilities, New Resources which may be used to meet
The Combined System, for purposes of this Agreement and the Related Agreements, shall consist of the generating facilities at the Joint Facilities, New Resources which may be used to meet
;
_ Hourly Resource Demand pursuant to Article 6 and all other gen-erating and transmission facilities owned and/or operated by CP& L' I
_ Hourly Resource Demand pursuant to Article 6 and all other gen-erating and transmission facilities owned and/or operated by CP& L' I
!                    at present or in the future.
!                    at present or in the future.
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l I      Powe'r Agency's or a Participant's side of a Point of Connec-tion.
l I      Powe'r Agency's or a Participant's side of a Point of Connec-tion.
t l.23        Delivery Point The point on the transmission system of CP&L at 115 KV or higher voltage (except as otherwise agreed by the parties l
t l.23        Delivery Point The point on the transmission system of CP&L at 115 KV or higher voltage (except as otherwise agreed by the parties l
in a letter concerning certain Municipal Systems dated con-l currently herewith) the delivery of power to Power Agency or
in a letter concerning certain Municipal Systems dated con-l currently herewith) the delivery of power to Power Agency or a Participant is to be measured.
  ;
a Participant is to be measured.
1.24        Delivery Point Data Sheel The document, in the fora of Exhibit PCA-VII, which shall be prepared and executed for each Delivery Point in accor-dance with Section 13.7.
1.24        Delivery Point Data Sheel The document, in the fora of Exhibit PCA-VII, which shall be prepared and executed for each Delivery Point in accor-dance with Section 13.7.
1.25        Demand Related Production O&M Expenses set forth in column 2 of Exhibits PCA-I-23A and 23B.
1.25        Demand Related Production O&M Expenses set forth in column 2 of Exhibits PCA-I-23A and 23B.
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1.37      Fossil Share Surplus In any hour to which Section 7.3 applies, the excecs that exists when Power Agency's Actual Entitlement from fossil-fueled Joint Units exceeds its Fossil-Fueled Share.
1.37      Fossil Share Surplus In any hour to which Section 7.3 applies, the excecs that exists when Power Agency's Actual Entitlement from fossil-fueled Joint Units exceeds its Fossil-Fueled Share.
I 1.38      Harris Plant The-Harris Plant, formally designated the Shearon Harris Nuclear Power Plant, is an electric generating facility presently being constructed near New Hill, North Carolina, which will con-sist or four nuclear-fueled generating units designated Harris-Unit No. 1. Harris Unit No. 2, Harris Unit No. 3 and Harris Unit l
I 1.38      Harris Plant The-Harris Plant, formally designated the Shearon Harris Nuclear Power Plant, is an electric generating facility presently being constructed near New Hill, North Carolina, which will con-sist or four nuclear-fueled generating units designated Harris-Unit No. 1. Harris Unit No. 2, Harris Unit No. 3 and Harris Unit l
l  No . 4, support facilities, spare parts, tools and equipment and l  any capitalized construction materials and supplies on hand, all
l  No . 4, support facilities, spare parts, tools and equipment and l  any capitalized construction materials and supplies on hand, all as more completely described in the Bill of Sale, the form of l
;
as more completely described in the Bill of Sale, the form of l
which is prescribed in Exhibit SA-IV to the Sales Agreement.
which is prescribed in Exhibit SA-IV to the Sales Agreement.
The boundaries of the Harris Plant, each unit thereof and certain of the support facilities are illustrated in Exhibit SA-XVI to the Sales Agt7ement. Transmission facilities located at the site, l
The boundaries of the Harris Plant, each unit thereof and certain of the support facilities are illustrated in Exhibit SA-XVI to the Sales Agt7ement. Transmission facilities located at the site, l
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(
(
at all times, Power Agency's Ownership Interest in the Bruns-wick Units'and Roxboro Unit No. 4 shall  a subject to adjustment in accordance with Sections 14.3 and 14.4 of the Sales Agreement.
at all times, Power Agency's Ownership Interest in the Bruns-wick Units'and Roxboro Unit No. 4 shall  a subject to adjustment in accordance with Sections 14.3 and 14.4 of the Sales Agreement.
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l-20
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l    Points of Power Agency and its Participants (provided, however, the 60-minute demand of the town of Louisburg shall be adjusted l
l    Points of Power Agency and its Participants (provided, however, the 60-minute demand of the town of Louisburg shall be adjusted l
in accordance with Section 4.2(A)); adjusted for transmis-sion losses in each hour pursuant to Section 4.3. When sit-uations created through the application of Section 6.1 and Section 15.1(C) require a'lteration of metering equipment locations, the addition of metering equipment, or the summation l    of meter readings in order tha* "    proper 60-minute demands j    of Power Agency and its Participants be included in Power Agency's Hourly Resource Demand, Power Agency agrees that such location changes, additions, or summations shall be made.
in accordance with Section 4.2(A)); adjusted for transmis-sion losses in each hour pursuant to Section 4.3. When sit-uations created through the application of Section 6.1 and Section 15.1(C) require a'lteration of metering equipment locations, the addition of metering equipment, or the summation l    of meter readings in order tha* "    proper 60-minute demands j    of Power Agency and its Participants be included in Power Agency's Hourly Resource Demand, Power Agency agrees that such location changes, additions, or summations shall be made.
Power Agency's Hourly Resource Demand shall be supplied, first by Retained Capacity (or by the backstand arrangements for 4-1
Power Agency's Hourly Resource Demand shall be supplied, first by Retained Capacity (or by the backstand arrangements for 4-1 l
                                                                            ;
l


Retained Capacity) and by any other generating resources pro-vided by Power Agency (including the backstand arrangements therefor), the delivery of which is reflected in the demands i
Retained Capacity) and by any other generating resources pro-vided by Power Agency (including the backstand arrangements therefor), the delivery of which is reflected in the demands i
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the requirements of Power Agency's other Participants in deter-mining Dower Agency's llourly Resource Demand under this Agree-ment.
the requirements of Power Agency's other Participants in deter-mining Dower Agency's llourly Resource Demand under this Agree-ment.
(B) In.the event that SEPA enters into new contracts with Power Agency or its Participants or with CP&L, or in the
(B) In.the event that SEPA enters into new contracts with Power Agency or its Participants or with CP&L, or in the l-  event that the existing SEPA contracts with CP&L and with Par-l  ticipants are modified, changes in the procedures set forth in l  Sections 4.2(A) and 4.3 that may be appropriate, if any, shall be negotiated with Power Agency and, if appropriate, with Parti-cipants.
;
l-  event that the existing SEPA contracts with CP&L and with Par-l  ticipants are modified, changes in the procedures set forth in l  Sections 4.2(A) and 4.3 that may be appropriate, if any, shall be negotiated with Power Agency and, if appropriate, with Parti-cipants.
i 14 . 3 Transmission Losses The basis for determining the appropriate transmis-sion losses for purposes of this Agreement shall be as follows:
i 14 . 3 Transmission Losses The basis for determining the appropriate transmis-sion losses for purposes of this Agreement shall be as follows:
Load flow studies will be made by CP&L simulating, through the use of computers, projected system conditions for the calendar yea:: for which the study is made for (1) the annual maximum peak load hour; (2) the annual minimum load hour; and (3) cne intermediate load hour reasonably representative of average loads, of the combined loads of CP&L and Power Agency.
Load flow studies will be made by CP&L simulating, through the use of computers, projected system conditions for the calendar yea:: for which the study is made for (1) the annual maximum peak load hour; (2) the annual minimum load hour; and (3) cne intermediate load hour reasonably representative of average loads, of the combined loads of CP&L and Power Agency.
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Power Agency declares for purposes of reducing Supplemental j    Capacity and (b) capacity and associated energy from such New
Power Agency declares for purposes of reducing Supplemental j    Capacity and (b) capacity and associated energy from such New
{    Resource which is in excess of the amounts for which Power l
{    Resource which is in excess of the amounts for which Power l
Agency is actually credited in each month under this Agreement;
Agency is actually credited in each month under this Agreement; provided, however, that the E ecific terms and conditions of this Agreement with respect to Surplus Energy, backstand and transmission service shall not apply to auch excess capacity and associated energy unless CP&L so agrees in said power coor-      ,
;
provided, however, that the E ecific terms and conditions of this Agreement with respect to Surplus Energy, backstand and transmission service shall not apply to auch excess capacity and associated energy unless CP&L so agrees in said power coor-      ,
dination agreement and CP&L shall not unreasonably withhold such agreement. Either party may make .ppropriate w          application to FERC for detern.ination of such terms and conditions for in-terconnection at any-time that it appears to such party that negotiations'will not produce such an agreement.
dination agreement and CP&L shall not unreasonably withhold such agreement. Either party may make .ppropriate w          application to FERC for detern.ination of such terms and conditions for in-terconnection at any-time that it appears to such party that negotiations'will not produce such an agreement.
(2) Upon arriving at'a power coordination agree-ment under Section 6.l(E)(1) for a New Resource,.the amount 6-11
(2) Upon arriving at'a power coordination agree-ment under Section 6.l(E)(1) for a New Resource,.the amount 6-11
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(1)  If CP&L's actual reserve level as computed in accordance with Section 7.4(A) in the year following the end 6-13
(1)  If CP&L's actual reserve level as computed in accordance with Section 7.4(A) in the year following the end 6-13


4
4 of the notice. period provided in Section 6.l(D) or 6.l(E), as applicable,,is twenty percent (20%) or greater with CP&L sup-plying the Supplemental Capacity Reduction, Power Agency shall pay CP&L for the Supplemental Capacity Reduction at the appli-cable Supplemental Lapacity rate.
                                                                                                      ;
of the notice. period provided in Section 6.l(D) or 6.l(E), as applicable,,is twenty percent (20%) or greater with CP&L sup-plying the Supplemental Capacity Reduction, Power Agency shall pay CP&L for the Supplemental Capacity Reduction at the appli-cable Supplemental Lapacity rate.
(2)  If CP&L's actual reserve level as computed in accordance with~Section 7.4(A) in the year following the end of
(2)  If CP&L's actual reserve level as computed in accordance with~Section 7.4(A) in the year following the end of
,  the notice period provided in Section 6.l(D) or 6.l(E), as ap-plicable, is less than twenty percent (20%) with CP&L supplying
,  the notice period provided in Section 6.l(D) or 6.l(E), as ap-plicable, is less than twenty percent (20%) with CP&L supplying
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       . - .      .      ...                                , -. .                          . .                            -                .      ~ .. . .                  . .
       . - .      .      ...                                , -. .                          . .                            -                .      ~ .. . .                  . .
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1
1
  ;                  such-revised Supplemental Capacity _ charge at any: time that it
  ;                  such-revised Supplemental Capacity _ charge at any: time that it
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1 1
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1 l-1 4
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ARTICLE.7 POWER AGENCY'S ENTITLEMENTS TO CAPACITY AND ENERGY FROM RETAINED CAPACITY AND ASSOCI ATED BACKSTAND
ARTICLE.7 POWER AGENCY'S ENTITLEMENTS TO CAPACITY AND ENERGY FROM RETAINED CAPACITY AND ASSOCI ATED BACKSTAND
     -7.1  Power Agency's Actual Entitlement from Joint Facilities (A)  After the Final Closing Date, in each hour, Power Agency    itall be entitled to Output from each of the Joint -Facil-ities (Actual Entitlement) in proportion to Power Agency's Ulti'  -
     -7.1  Power Agency's Actual Entitlement from Joint Facilities (A)  After the Final Closing Date, in each hour, Power Agency    itall be entitled to Output from each of the Joint -Facil-ities (Actual Entitlement) in proportion to Power Agency's Ulti'  -
i mate Ownership Interest (as %) [ Commitment Ratio (as %) x Owner-ship Offering.(as %)] pursuant to the Sales Agreement times Scheduled Retained Capacity Percentage, as applicable, as set forth in Section 5.3, all as more specifically set forth in the
i mate Ownership Interest (as %) [ Commitment Ratio (as %) x Owner-ship Offering.(as %)] pursuant to the Sales Agreement times Scheduled Retained Capacity Percentage, as applicable, as set forth in Section 5.3, all as more specifically set forth in the following formulas:
;
following formulas:
(1)  Power Agency's Actual Entitlement from Brunswick Unit No. 1=
(1)  Power Agency's Actual Entitlement from Brunswick Unit No. 1=
l Commitment Ratio (as %) x 18.70% x i                                  Output of Brunswick Unit No. 1 (2)  Power Agency's Actual Entitlement from Brunswick Unit No. 2=
l Commitment Ratio (as %) x 18.70% x i                                  Output of Brunswick Unit No. 1 (2)  Power Agency's Actual Entitlement from Brunswick Unit No. 2=
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q (D)  .If, after.the fact, it is determitted that Power    ,
q (D)  .If, after.the fact, it is determitted that Power    ,
1 L Agency has sold more energy than it was entitled to sell pur-suant to Section 11.2, Power Agency shall pcy to CP&L a charge for energy supplied by. CP&L to Power Agency for such sale whion is the greater of (i) the price which Power Agency received for the energy in making the sale, or (ii) one and one-tenth (1.1) times the Deficiency Energy rate as determined in accordance with Section 7.6; provided, however, that nothing in this Sec-tion 7.2(D) shall be deemed to have created an obligation of CP&L to supply energy for sales by Power Agency in excess of the level at which Power Agency is entitled to sell pursuant to Section 11.2.
1 L Agency has sold more energy than it was entitled to sell pur-suant to Section 11.2, Power Agency shall pcy to CP&L a charge for energy supplied by. CP&L to Power Agency for such sale whion is the greater of (i) the price which Power Agency received for the energy in making the sale, or (ii) one and one-tenth (1.1) times the Deficiency Energy rate as determined in accordance with Section 7.6; provided, however, that nothing in this Sec-tion 7.2(D) shall be deemed to have created an obligation of CP&L to supply energy for sales by Power Agency in excess of the level at which Power Agency is entitled to sell pursuant to Section 11.2.
7.3  Effect of Output Reduction -- Insufficient Load j            (A)  During any hour in which it is necessary to reduce the output of one or more nuclear units below the level at which j  they would otherwise be operating because (i) the combined loads
7.3  Effect of Output Reduction -- Insufficient Load j            (A)  During any hour in which it is necessary to reduce the output of one or more nuclear units below the level at which j  they would otherwise be operating because (i) the combined loads of ( 2&L and Power Agency are insuf ficient to utilize all avail-able nuclear capacity, or (ii) fossil-fueled units must be kept in service to meet the requirements of the system, or (iii) a combination of conditions (i) and (ii) exists, the prov!sions of this Section 7.3 shall apply; provided, however, that during the Transition Period, as defined in Section 4.l(B), the provisions of this Section 7.3 shall apply during an hour described in this Section 7.3 only if Power Agency's Retained Capacity in nuclear Joint Units exceeds eighty-eight and one-half percent (88.5%) of Hourly Resource Demand in such hou" 7-8
;
of ( 2&L and Power Agency are insuf ficient to utilize all avail-able nuclear capacity, or (ii) fossil-fueled units must be kept in service to meet the requirements of the system, or (iii) a combination of conditions (i) and (ii) exists, the prov!sions of this Section 7.3 shall apply; provided, however, that during the Transition Period, as defined in Section 4.l(B), the provisions of this Section 7.3 shall apply during an hour described in this Section 7.3 only if Power Agency's Retained Capacity in nuclear Joint Units exceeds eighty-eight and one-half percent (88.5%) of Hourly Resource Demand in such hou" 7-8


c (B)(1)  During each such hour in which Power Agency s
c (B)(1)  During each such hour in which Power Agency s
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                               .(D)  Any-remaining requirement for energy to reacn the level of total Retained Capacity shall be classified as Deficiency Energy.
                               .(D)  Any-remaining requirement for energy to reacn the level of total Retained Capacity shall be classified as Deficiency Energy.
8.3      Classification of Hourly Resource Demand Above the Level of Power Agency's Total Retained Capacity In each hour, Power Agency's llourly Resource Demand i
8.3      Classification of Hourly Resource Demand Above the Level of Power Agency's Total Retained Capacity In each hour, Power Agency's llourly Resource Demand i
   ;            above the level of its total Retained Capacity shall be clas-sified as energy supplied from Supplemental Capacity and the
   ;            above the level of its total Retained Capacity shall be clas-sified as energy supplied from Supplemental Capacity and the amount of Supplemental Capacity for which Power          ~ancy shall be charged shall be fixed in accordance with Section 6.1.
;
amount of Supplemental Capacity for which Power          ~ancy shall be charged shall be fixed in accordance with Section 6.1.
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I    9.2  Amount of Purchased Energy (A)  For each Unit, the amount of Purchased Energy to which CP&L shall be entitled in any given hour from the-output l-j    of a Harris or Mayo Unit from which it has Purchased Capacity shall be determined as follows:
I    9.2  Amount of Purchased Energy (A)  For each Unit, the amount of Purchased Energy to which CP&L shall be entitled in any given hour from the-output l-j    of a Harris or Mayo Unit from which it has Purchased Capacity shall be determined as follows:
CP&L's Purchased Energy = [ Ownership Interest (as
CP&L's Purchased Energy = [ Ownership Interest (as
                                             %) x Output of the respec-tive Unit] x-Scheduled
                                             %) x Output of the respec-tive Unit] x-Scheduled Purchased Capacity Percen-i                                          tage in such Unit deter-(
;
Purchased Capacity Percen-i                                          tage in such Unit deter-(
mined pursuant to Section 5.3.
mined pursuant to Section 5.3.
l-              (B)  CP&L's total Purchased Encrgy shall be the sum of the Purchased Energy from the Harris and Mayo Units as deter-determined in accordance with Section 9.2(A).
l-              (B)  CP&L's total Purchased Encrgy shall be the sum of the Purchased Energy from the Harris and Mayo Units as deter-determined in accordance with Section 9.2(A).
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9-2
9-2


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           ,                                      t
           ,                                      t
                                                                                                             ~~
                                                                                                             ~~
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(3)  For liarris Unit No. 3 and Harris Unit  o. 4:
(3)  For liarris Unit No. 3 and Harris Unit  o. 4:
Three full years after the applicable date not forth in Section 7.2(A) of the Sales Agreement.
Three full years after the applicable date not forth in Section 7.2(A) of the Sales Agreement.
(B)  In computing the Trigger Date for a particular i                            Mayo or liarris Unit, the running of the one, two or three year periods prescribed in Section 10.2(A) for such Unit shall be i                            tolled during any period of delay in the Commercial Operation
(B)  In computing the Trigger Date for a particular i                            Mayo or liarris Unit, the running of the one, two or three year periods prescribed in Section 10.2(A) for such Unit shall be i                            tolled during any period of delay in the Commercial Operation of such Unit caused by Force Majmire.
;
of such Unit caused by Force Majmire.
10.3                                Period of Availability (A)  The availability of Interim Capacity shall be-
10.3                                Period of Availability (A)  The availability of Interim Capacity shall be-
                             - gin on the applicable Trigger Date for such Mayo or Harris Unit.
                             - gin on the applicable Trigger Date for such Mayo or Harris Unit.
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   .m (E)  In the event CP&L does not exercise its rights pursuant to Section 11.3(D) and a ssle is made to another entity, Power Agency shall pay CP&L any identifiable costs incurred by CP&L in connection with such sale.
   .m (E)  In the event CP&L does not exercise its rights pursuant to Section 11.3(D) and a ssle is made to another entity, Power Agency shall pay CP&L any identifiable costs incurred by CP&L in connection with such sale.
11.4  Charge to CP&L for Gurplus Energy                        i l
11.4  Charge to CP&L for Gurplus Energy                        i l
When CP&L purchases Surplus Energy pursuant to Sec-l    tion 11.1, CP&L shall pay for such Surplus Energy at a rate per kilowatt hour calculated in accordance with Section 16.4
When CP&L purchases Surplus Energy pursuant to Sec-l    tion 11.1, CP&L shall pay for such Surplus Energy at a rate per kilowatt hour calculated in accordance with Section 16.4 and Exhibit PCA-III-6 through 9.
;
and Exhibit PCA-III-6 through 9.
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allocable portion of Delivery Facilities owned by CP&L which are used jointly by CP&L and Power Agency or its Participants; (3) Protection Stations owned by CP&L which are used exclu-sively by Power Agency or its Participants; (4) a properly allocable portion of Protection Stations owned by CP&L which are jointly used by CP&L and Power Agency or its Participants; and (5) a properly allocable portion of all nietering, telemeter-ing and related equipment owned by CP&L and necessary for meas-uring power deliveted to Power Agency or its Participants. Ex-cept for (1) cdditional f acilities on CP&L's side of the Deliv-ery Points agreed to by CP&L and installed at Power Agency's written request; (2) Protection Stations installed at a Delivery Point; and (3) a properly allocable portion of metering, telemet-ering and related equipment necessary for measuring power deliv-cred to Power Agency or its Participants, transmission delivery f acilities up to the Delivery ?oints shall not be included in the additional facilities to be covered by the Leased Facilities Charge but shall be included in the calculation of the Transmis-sion Use Charge. Costs of facilities covered by the Leased Fa-cilities Charge shall not be included in the calculation of the Transmission Use Charge provided for in Section 13.2. The Leased Pacilities Charge shall be calculated in accordance with Exhibits PCA-I-66 through PCA-I-70 and shall be shown for each Delivery Point. The Points of Connection of the Municipal 13-3
allocable portion of Delivery Facilities owned by CP&L which are used jointly by CP&L and Power Agency or its Participants; (3) Protection Stations owned by CP&L which are used exclu-sively by Power Agency or its Participants; (4) a properly allocable portion of Protection Stations owned by CP&L which are jointly used by CP&L and Power Agency or its Participants; and (5) a properly allocable portion of all nietering, telemeter-ing and related equipment owned by CP&L and necessary for meas-uring power deliveted to Power Agency or its Participants. Ex-cept for (1) cdditional f acilities on CP&L's side of the Deliv-ery Points agreed to by CP&L and installed at Power Agency's written request; (2) Protection Stations installed at a Delivery Point; and (3) a properly allocable portion of metering, telemet-ering and related equipment necessary for measuring power deliv-cred to Power Agency or its Participants, transmission delivery f acilities up to the Delivery ?oints shall not be included in the additional facilities to be covered by the Leased Facilities Charge but shall be included in the calculation of the Transmis-sion Use Charge. Costs of facilities covered by the Leased Fa-cilities Charge shall not be included in the calculation of the Transmission Use Charge provided for in Section 13.2. The Leased Pacilities Charge shall be calculated in accordance with Exhibits PCA-I-66 through PCA-I-70 and shall be shown for each Delivery Point. The Points of Connection of the Municipal 13-3


l
l Systems existing on the date of this Agreement are listed in Exhibit PCA-V. Charges shall begin on the First CJosing Date for all Delivery Facilities not purchased by Power Agency pur-suant to Section 13.5 and, for new Delivery Facilities, on
;-
Systems existing on the date of this Agreement are listed in Exhibit PCA-V. Charges shall begin on the First CJosing Date for all Delivery Facilities not purchased by Power Agency pur-suant to Section 13.5 and, for new Delivery Facilities, on
[  the date on which such Delivery Facilities owned by CP&L are ready for service.
[  the date on which such Delivery Facilities owned by CP&L are ready for service.
13.4  Delivery Facilities Provided by Power Agency It shall be Power Agency's responsibility to provide
13.4  Delivery Facilities Provided by Power Agency It shall be Power Agency's responsibility to provide
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13-6
13-6


l L  13.6. Facilities at New Delivery Points (A)  If Power Agency desires a new Delivery Point after the First Closing Date, it shall so inform CP&L in writ-l  ing, designating the proposed location, the required capacity
l L  13.6. Facilities at New Delivery Points (A)  If Power Agency desires a new Delivery Point after the First Closing Date, it shall so inform CP&L in writ-l  ing, designating the proposed location, the required capacity and the delivery voltage desired.      Subject to the provisions
;
and the delivery voltage desired.      Subject to the provisions
!  of Section 13.6(B), CP&L shall provide the new Point of Con-nection at a mutually acceptable location on its then existing
!  of Section 13.6(B), CP&L shall provide the new Point of Con-nection at a mutually acceptable location on its then existing
!  facilities. The Delivery Point for such new Point of Connec-tion shall be fixed by CP&L and the provisions of Sections 13.6(C) and 13.6(D) shall apply.      Subject to the provisions of Section 13.6(B), CP&L shall extend its transmission system if I  necessary to any location which can reasonably be justified, taking into account the transmission and distribution costs to both parties and the future need for the facilities.      Power' Agency shall not request locations for new Delivery Points in furtherance of a plan or pattern to minimize the delivery cost of Power Agency or its Participants by obtaining additional investment in transmission facilities by CP&L; and CP&L shall not deny requests in furtherance of a plan or pattern to mini-mize it.s delivery cost or to increase the delivery cost of Power Agency or its Participants by obtaining additional in-vestment in transmission or distribution facilities by Power Agency. CP&L shall not be committed hereby to extending its              l 115 KV lines where an extension of its 230 KV lines could reas-l-
!  facilities. The Delivery Point for such new Point of Connec-tion shall be fixed by CP&L and the provisions of Sections 13.6(C) and 13.6(D) shall apply.      Subject to the provisions of Section 13.6(B), CP&L shall extend its transmission system if I  necessary to any location which can reasonably be justified, taking into account the transmission and distribution costs to both parties and the future need for the facilities.      Power' Agency shall not request locations for new Delivery Points in furtherance of a plan or pattern to minimize the delivery cost of Power Agency or its Participants by obtaining additional investment in transmission facilities by CP&L; and CP&L shall not deny requests in furtherance of a plan or pattern to mini-mize it.s delivery cost or to increase the delivery cost of Power Agency or its Participants by obtaining additional in-vestment in transmission or distribution facilities by Power Agency. CP&L shall not be committed hereby to extending its              l 115 KV lines where an extension of its 230 KV lines could reas-l-
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t
t


F
F r
;
l purpose described.in the preceding sentence. Upon the ter-l mination of this Agreement in accordance with Article 25 or where appropriate upon default in accordance with Article 21, the same rights of access shall exist for the removal of the property of the party requiring access.
r l
purpose described.in the preceding sentence. Upon the ter-l mination of this Agreement in accordance with Article 25 or where appropriate upon default in accordance with Article 21, the same rights of access shall exist for the removal of the property of the party requiring access.
I
I
! 13.13  Assignment of Delivery Elghts and 6bT1W tTons, Facilities and Leased Facilities Upon termination of a Supplemental Power Sales. Agree-ment with a Participant, Power Agency may assign to such Parti-cipant all rights and obligations associated with Delivery Facilities and Leased Facilities related to such Participant provided in this Article, including the obligation to make payments of Leased Facilities Charges and any payments for Net Loss In Salvage. Upon the effective date of such assign-ment, Power Agency's obligations with respect to Delivery Facilities and Leased Facilities including the obligation to make payments to CP&L shall cease.
! 13.13  Assignment of Delivery Elghts and 6bT1W tTons, Facilities and Leased Facilities Upon termination of a Supplemental Power Sales. Agree-ment with a Participant, Power Agency may assign to such Parti-cipant all rights and obligations associated with Delivery Facilities and Leased Facilities related to such Participant provided in this Article, including the obligation to make payments of Leased Facilities Charges and any payments for Net Loss In Salvage. Upon the effective date of such assign-ment, Power Agency's obligations with respect to Delivery Facilities and Leased Facilities including the obligation to make payments to CP&L shall cease.
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shall bill Power Agency on the basis of such estimate, which shall be based on all known pertinent facts and on the princi-I  ples set-forth in Exhibit PCA-XIII. CP&L shall refund or credit
shall bill Power Agency on the basis of such estimate, which shall be based on all known pertinent facts and on the princi-I  ples set-forth in Exhibit PCA-XIII. CP&L shall refund or credit
!  to Power Agency, or Power Agency shall pay to CP&L, whichever is applicable, the difference between the amount billed and the
!  to Power Agency, or Power Agency shall pay to CP&L, whichever is applicable, the difference between the amount billed and the estimated amount which should have been billed for service sup-plied during the_immediately preceding ninety (90) day period.
;
estimated amount which should have been billed for service sup-plied during the_immediately preceding ninety (90) day period.
If the metering equipment has not been in service for twelve
If the metering equipment has not been in service for twelve
   -(12) full preceding billing periods, or if'the date of error-can be fixed to be within such ninety (90) day period,-then l
   -(12) full preceding billing periods, or if'the date of error-can be fixed to be within such ninety (90) day period,-then l
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CP&L shall place each such statement in the mail on the date of the statement. The amounts due from Power Agency and from CP&L shall be due and payable by the party owing same as provided in Section 16.7.            The party from whom payment is due shall deliver said payments to '.he payee or to the account of the payee at a bank designated by the payee in Raleigh, North Carolina.            CP&L shall supply Power Agency with a master magnetic tape containing metered data for each Delivery Point as soon as available on a tape furnished l    by Power Agency. Costs of accounting and billing shall be paid by Power Agency in accordance with Exhibit PCA-I-64.
CP&L shall place each such statement in the mail on the date of the statement. The amounts due from Power Agency and from CP&L shall be due and payable by the party owing same as provided in Section 16.7.            The party from whom payment is due shall deliver said payments to '.he payee or to the account of the payee at a bank designated by the payee in Raleigh, North Carolina.            CP&L shall supply Power Agency with a master magnetic tape containing metered data for each Delivery Point as soon as available on a tape furnished l    by Power Agency. Costs of accounting and billing shall be paid by Power Agency in accordance with Exhibit PCA-I-64.
16.2  Computation of Monthly Rates and Charges for Supple-mental Capacity, Reserve Capacity and Tran2 mission Use (A) Commencing at least ninety (90) days prior to j    the First Closing Date, and thereaf ter by December 1 of each year, CP&L shall provide to Power Agency estimates of the monthly rates.in dollars per KW for Supplemental Capacity, 16-1
16.2  Computation of Monthly Rates and Charges for Supple-mental Capacity, Reserve Capacity and Tran2 mission Use (A) Commencing at least ninety (90) days prior to j    the First Closing Date, and thereaf ter by December 1 of each year, CP&L shall provide to Power Agency estimates of the monthly rates.in dollars per KW for Supplemental Capacity, 16-1
;


Reserve Capacity and . Transmission Use.              Except as otherwise provided.in.this Section 16.2, these estimated rates shall be applied by CP&L respectively in the remainder of the first'
Reserve Capacity and . Transmission Use.              Except as otherwise provided.in.this Section 16.2, these estimated rates shall be applied by CP&L respectively in the remainder of the first'
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Monthly charges for Supplemental Capacity, Reserve Capacity and Transmission Use shall be based on:                  (1) the esti-mated rates for such services as described in the preceding paragraph; and (2) the actual monthly levels of Supplemental Capacity, Reserve Capacity and Transmission Use purchased by Power Agency as determined in Sections 6.1, 7.4, and 13.1, respectively.
Monthly charges for Supplemental Capacity, Reserve Capacity and Transmission Use shall be based on:                  (1) the esti-mated rates for such services as described in the preceding paragraph; and (2) the actual monthly levels of Supplemental Capacity, Reserve Capacity and Transmission Use purchased by Power Agency as determined in Sections 6.1, 7.4, and 13.1, respectively.
At any time that CP&L estimates, either at its own                        ,
At any time that CP&L estimates, either at its own                        ,
option or in response to a request by Power Agency, that the expected total amount of Demand Related Production O&M expense to be included in the charge for Supplemental Capacity and Reserve
option or in response to a request by Power Agency, that the expected total amount of Demand Related Production O&M expense to be included in the charge for Supplemental Capacity and Reserve C'apacity for the then calendar year deviates more than plus or minus five percent (+5%) from the amount of such expense which 16-2
;
C'apacity for the then calendar year deviates more than plus or minus five percent (+5%) from the amount of such expense which 16-2
\^
\^
i
i
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j  directly or indirectly interconnected with these systems, I
j  directly or indirectly interconnected with these systems, I
which involves automatic or manual interruption, curtailment or reduction of the supply of electricity to some customers or areas, eacn party agrees to take such steps as may be ne-cessary and apprcpriate to limit the extent of or damage by the adverse condition or disturbance, or to prevent damage i
which involves automatic or manual interruption, curtailment or reduction of the supply of electricity to some customers or areas, eacn party agrees to take such steps as may be ne-cessary and apprcpriate to limit the extent of or damage by the adverse condition or disturbance, or to prevent damage i
:  to generation, transmission or transformation facilities,
:  to generation, transmission or transformation facilities, 17-1
;
17-1


                           +
                           +
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( that neither party shall be in default if the amount it owes hereunder can be offset, within sixty (60) days after the date on which such amount became due and payable, by the party to whom that sum is owed in whole under the Operating Agreement.
( that neither party shall be in default if the amount it owes hereunder can be offset, within sixty (60) days after the date on which such amount became due and payable, by the party to whom that sum is owed in whole under the Operating Agreement.
(B)  Willful failure by CP& L to provide or deliver energy, transmission services, or Leased Facilities, all as j required under this Agreement, or willful failure by Power l Agency to provide or deliver Purchased Energy in accordance I with the provisions of this Agreement.
(B)  Willful failure by CP& L to provide or deliver energy, transmission services, or Leased Facilities, all as j required under this Agreement, or willful failure by Power l Agency to provide or deliver Purchased Energy in accordance I with the provisions of this Agreement.
(C)(1)  The insolvency, bankruptcy or equivalent
(C)(1)  The insolvency, bankruptcy or equivalent thereof, of Power Agency or CP&L or either party's inability or admission in writing of its inability to pay its debts as they mature, or the making of a general assignment for 21-1
;
thereof, of Power Agency or CP&L or either party's inability or admission in writing of its inability to pay its debts as they mature, or the making of a general assignment for 21-1


i l
i l
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i l
i l
l                              21-2 i
l                              21-2 i
;
{
{


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4 Purchased Energy. under this Agreement in the then next suc-ceeding twelve (12) months.                  Also, by such date, Power Agency shall provide to CP&L a written certification of the amount
4 Purchased Energy. under this Agreement in the then next suc-ceeding twelve (12) months.                  Also, by such date, Power Agency shall provide to CP&L a written certification of the amount
;      so placed in such Special Reserve Fund.                  The amounts in such Special Reserve Fund shall be held by an escrow agent under
;      so placed in such Special Reserve Fund.                  The amounts in such Special Reserve Fund shall be held by an escrow agent under J
  ;
an escrow arrangement which shall be substantially in the form annexed hereto as Exhibit PCA-XI and which shall provide h    that, in the event Power Agency is in default pursuant to Section 21.1(A)-the funds so escrowed, or any portion thereof,
J an escrow arrangement which shall be substantially in the form annexed hereto as Exhibit PCA-XI and which shall provide h    that, in the event Power Agency is in default pursuant to Section 21.1(A)-the funds so escrowed, or any portion thereof,
:    shall be paid over to CP&L by the escrow agent pursuant to the terms of the escrow arrangement set forth in Exhibit i
:    shall be paid over to CP&L by the escrow agent pursuant to the terms of the escrow arrangement set forth in Exhibit i
PCA-XI.          A transfer of funds pursuant to that arrangement from the Reserve Account to a Disbursement Account (as defined j    in Exhibit PCA-XI) shall not cure any Event of Default as such cure shall not be ef fected until the sums owed to CP& L are actually paid over to CP&L.
PCA-XI.          A transfer of funds pursuant to that arrangement from the Reserve Account to a Disbursement Account (as defined j    in Exhibit PCA-XI) shall not cure any Event of Default as such cure shall not be ef fected until the sums owed to CP& L are actually paid over to CP&L.
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   ;      his service, then either party may petition the Senior Resident Judge of the Superior Court of Wake County of the State of North Carolina for the appointment of an Arbitrator, or a
   ;      his service, then either party may petition the Senior Resident Judge of the Superior Court of Wake County of the State of North Carolina for the appointment of an Arbitrator, or a
]        substitute Arbitrator, and such Arbitrator may be, but need not be, selected from the current Approved Arbitrators List.
]        substitute Arbitrator, and such Arbitrator may be, but need not be, selected from the current Approved Arbitrators List.
1 (5)  Upon the selection of an' Arbitrator, the Initiating Party shall immediately notify the proposed Arbitra-tor of his selection by the parties to become Arbitrator of the
1 (5)  Upon the selection of an' Arbitrator, the Initiating Party shall immediately notify the proposed Arbitra-tor of his selection by the parties to become Arbitrator of the i        dispute and immediately provide such Arbitrator with a copy of the Notice, the Answering Statement, if any, and copies of this i
  ;
i        dispute and immediately provide such Arbitrator with a copy of
  ;
the Notice, the Answering Statement, if any, and copies of this i
   ;                                                            Copies of this selection Agreement and the Related Agreements.
   ;                                                            Copies of this selection Agreement and the Related Agreements.
i notics and all correspondence and other documents relating to the Arbitration between either party and the Arbitrator shall be sent to the- Other Party to this Agreement.
i notics and all correspondence and other documents relating to the Arbitration between either party and the Arbitrator shall be sent to the- Other Party to this Agreement.
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27.4  Ileadings Not to Affect Meaning The descriptive headings of the various Articles l  and Sections of this Agreement have been inserted for conveni-l ence of reference only and shall in no way modify or restrict any of the terms and provisions hereof.
27.4  Ileadings Not to Affect Meaning The descriptive headings of the various Articles l  and Sections of this Agreement have been inserted for conveni-l ence of reference only and shall in no way modify or restrict any of the terms and provisions hereof.
!  27.5  No Partnership; Tax Matters l
!  27.5  No Partnership; Tax Matters l
l Notwithstanding any provision of this Agreement, the parties do not intend to create hereby any joint venture, l  partnership, association taxable as a corporation, or other
l Notwithstanding any provision of this Agreement, the parties do not intend to create hereby any joint venture, l  partnership, association taxable as a corporation, or other l  entity for the conduct of any business for profit, and, if it i
;
l  entity for the conduct of any business for profit, and, if it i
!  should appear that one or more changes to this Agreement l'
!  should appear that one or more changes to this Agreement l'
!  would b,            9 quired in order not to create an entity referred l
!  would b,            9 quired in order not to create an entity referred l
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27-3
27-3


27.9  Severability of Provisions If FERC or any other governmental agency or court of      I competent jurisdiction holds that any provision of this Agree-ment is invalid, and if no party withdraws from this Agreement            l pursuant to Article 19, then the remainder of this Agreement shall not be affected thereby and shall continue in full force
27.9  Severability of Provisions If FERC or any other governmental agency or court of      I competent jurisdiction holds that any provision of this Agree-ment is invalid, and if no party withdraws from this Agreement            l pursuant to Article 19, then the remainder of this Agreement shall not be affected thereby and shall continue in full force and effect.
                                                                            ;
and effect.
27.10  Entire Agreement This Agreement and, as applicable, the Related .4 gree-ments, shall constitute the entire understanding between the parties hereto, superseding any and all previous understandings, oral or written, pertaining to the subject matter contained i  herein.      The parties hereto have entered into this Agreement in reliance upon the representations and mutual undertakings contained herein and not in reliance upon any oral or written i  representation or information provided to one party by any 4
27.10  Entire Agreement This Agreement and, as applicable, the Related .4 gree-ments, shall constitute the entire understanding between the parties hereto, superseding any and all previous understandings, oral or written, pertaining to the subject matter contained i  herein.      The parties hereto have entered into this Agreement in reliance upon the representations and mutual undertakings contained herein and not in reliance upon any oral or written i  representation or information provided to one party by any 4
representative of the other party.
representative of the other party.
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27.18  Change to heflect Ownership Interests in Joint Facili-Hes bl% her Entitles fi                  Power Agency recognizes that CP&L may sell an inte-j        rest in the Joint Facilities or any portion thereof to another entity or entities, and in connection with such sales Power-Agency agrees that CP&L may transfer or assign certain.of j        CP&L's rights and obligations under this Agreement to 'one f;        or more of such entities.      In the event any other entity.
27.18  Change to heflect Ownership Interests in Joint Facili-Hes bl% her Entitles fi                  Power Agency recognizes that CP&L may sell an inte-j        rest in the Joint Facilities or any portion thereof to another entity or entities, and in connection with such sales Power-Agency agrees that CP&L may transfer or assign certain.of j        CP&L's rights and obligations under this Agreement to 'one f;        or more of such entities.      In the event any other entity.
purchases such an ownership. interest in the Joint Facilities, i-j        the provisions of this Agreement shall be amended, if.neces-sary, to reflect such other entity's ownership interest.          In no event shall such purchase and sale diminish Power Agency's
purchases such an ownership. interest in the Joint Facilities, i-j        the provisions of this Agreement shall be amended, if.neces-sary, to reflect such other entity's ownership interest.          In no event shall such purchase and sale diminish Power Agency's
;
  ~
  ~
rights under this Agreement.
rights under this Agreement.
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27.19    Rounding of Kilowatts Whenever the provisions of this Agreement require the use of kilowatts or kilowatt hours, the. actual kilowatt
27.19    Rounding of Kilowatts Whenever the provisions of this Agreement require the use of kilowatts or kilowatt hours, the. actual kilowatt
  ;      or kilowatt hour figure involved shall be adjusted by rounding
  ;      or kilowatt hour figure involved shall be adjusted by rounding
,        upward to the next-full kilowatt or kilowatt hour if the i        actual figure is .5 kilowatt or kilowatt hour, or higher- or
,        upward to the next-full kilowatt or kilowatt hour if the i        actual figure is .5 kilowatt or kilowatt hour, or higher- or downward to the last full kilowatt or kilowatt hour if tne actual figure is less than .5 kilowatt or kilowatt hour.
;
downward to the last full kilowatt or kilowatt hour if tne actual figure is less than .5 kilowatt or kilowatt hour.
i 27.20        Singular to Include Plural and Plural to Include Singular
i 27.20        Singular to Include Plural and Plural to Include Singular
]
]
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i 27-8 i
i 27-8 i


ARTICLE 28 SURVIVORSHIP 28.1  Survivorship of Obligat, ions The termination of this Agreement shall not dis-charge any party from any obligation it owes to the other party 'under this Agreement by reason of any transaction,
ARTICLE 28 SURVIVORSHIP 28.1  Survivorship of Obligat, ions The termination of this Agreement shall not dis-charge any party from any obligation it owes to the other party 'under this Agreement by reason of any transaction, loss, cost, damage, expense or liabili*.y which shall occur or arise (or the circumstances, events or bases which shall J  occur or arise) prior to such termination.      It is the intent
  ;
;  of the parties hereby that any such obligation owed (whether j  the same shall be known or unknown at the termination of this Agreement or whether the circumstances, events or bases of the 4
loss, cost, damage, expense or liabili*.y which shall occur or arise (or the circumstances, events or bases which shall J  occur or arise) prior to such termination.      It is the intent
;  of the parties hereby that any such obligation owed (whether
;
j  the same shall be known or unknown at the termination of this Agreement or whether the circumstances, events or bases of the 4
crme shall be known or unknown at the termination of thia
crme shall be known or unknown at the termination of thia
;  Agreement) will survive the termination of this Agreement.
;  Agreement) will survive the termination of this Agreement.
28.2  Survivorship of Provisions
28.2  Survivorship of Provisions The provisions of Sections 20.1 through 20.4, i
;
The provisions of Sections 20.1 through 20.4, i
;
including specifically, but without limitation, the indemnifi-i cation provisions thereof, shall remain operative and in full force and effect, regardless of any termination or cancellation of this Agreement, except with respect to actions of the Owners occurring after such termination or cancellation.
including specifically, but without limitation, the indemnifi-i cation provisions thereof, shall remain operative and in full force and effect, regardless of any termination or cancellation of this Agreement, except with respect to actions of the Owners occurring after such termination or cancellation.
28-1 I
28-1 I
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POWER COORDINATION AGREEMENT (PCA)
POWER COORDINATION AGREEMENT (PCA)
INDEX OF EXHIBITS Exhibit No.          Exhibit Title            Page No.
INDEX OF EXHIBITS Exhibit No.          Exhibit Title            Page No.
.        I    Determination of Reserve, Supple-mental, Deficiency, Transmission Use and Certain Other Charges under this PCA (11 Parts)                PCA-I-l II    Determination of Monthly Purchased Capacity Charges Payable to Power Agency by CPGL                      PCA-II-l l    III      Determination of Monthly Purchased Energy and Surplus Energy Charges Payable to Power Agency by CP&L    PCA-III-l IV      Determination of Monthly Replacement Energy Charge Payable to CP&L                            PCA-IV-1 V    Points of Connection with Municipal Systems Served by CP&L as of the Date of This Agreement              PCA-V-1
.        I    Determination of Reserve, Supple-mental, Deficiency, Transmission Use and Certain Other Charges under this PCA (11 Parts)                PCA-I-l II    Determination of Monthly Purchased Capacity Charges Payable to Power Agency by CPGL                      PCA-II-l l    III      Determination of Monthly Purchased Energy and Surplus Energy Charges Payable to Power Agency by CP&L    PCA-III-l IV      Determination of Monthly Replacement Energy Charge Payable to CP&L                            PCA-IV-1 V    Points of Connection with Municipal Systems Served by CP&L as of the Date of This Agreement              PCA-V-1 VI      Delivery Facilities Sales Agreement PCA-VI-1 VII      Delivery Point Data Sheets          PCA-VII-1 VIII      Seasonci "~..aand and Annual Energy Forecast                            PCA-VIII-l IX      Summary of Monthly Billing Statement Format and Supporting Detail                              PCA-IX-1 X    Determination of ecst of Funds      PCA-X-1 XI      Escrow Agreement                    PCA-XI-l XII      Customers Whose Contracts are Being Terminated                          PCA-XII-l XIII      Guidelines for Estimation of Missing or Erroneous Metered Data  PCA-XIII-l
;
VI      Delivery Facilities Sales Agreement PCA-VI-1 VII      Delivery Point Data Sheets          PCA-VII-1 VIII      Seasonci "~..aand and Annual Energy Forecast                            PCA-VIII-l IX      Summary of Monthly Billing Statement Format and Supporting Detail                              PCA-IX-1 X    Determination of ecst of Funds      PCA-X-1 XI      Escrow Agreement                    PCA-XI-l XII      Customers Whose Contracts are Being Terminated                          PCA-XII-l XIII      Guidelines for Estimation of Missing or Erroneous Metered Data  PCA-XIII-l


l t
l t
t'l i
t'l i
i i
i i
;
i t
i t
;                          BXHIBIT PCA-I i
;                          BXHIBIT PCA-I i
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account 255 i
account 255 i
i I
i I
;


l 4
l 4
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l                                            However, any transactions in Account 283 which are not of an l                                            operating nature and therefore not recognized for ratemaking l
l                                            However, any transactions in Account 283 which are not of an l                                            operating nature and therefore not recognized for ratemaking l
purposes in determining Deferred Income Tax Expense shall be I
purposes in determining Deferred Income Tax Expense shall be I
excluded. Such determination shall be based on an analysis of
excluded. Such determination shall be based on an analysis of l                                              the Company's books.      However, if at any time in the future the NCUC, as a result of a decision or general rule making directly i
;
l                                              the Company's books.      However, if at any time in the future the
;
NCUC, as a result of a decision or general rule making directly i
!                                              affecting CP&L, is utilizing a different methodology concerning l                                              the treatment of accumulated deferred income taxes, CP&L may, at l                                              its option, for the purposes of this Agreement, adopt such l                                              revised methodology.      Such adoption would affect the computation l                                              of Reserve Capacity rates, Supplemental Capacity rates and l
!                                              affecting CP&L, is utilizing a different methodology concerning l                                              the treatment of accumulated deferred income taxes, CP&L may, at l                                              its option, for the purposes of this Agreement, adopt such l                                              revised methodology.      Such adoption would affect the computation l                                              of Reserve Capacity rates, Supplemental Capacity rates and l
l                                              Purchased Capacity rates.
l                                              Purchased Capacity rates.
Line 2,025: Line 1,949:
e D
e D
l l
l l
;
l l
l l


Line 2,115: Line 2,038:
tut o fis                              f.i na 2, Columns (!) atsovo and ( 3) frua PCA-I-21 tauto Cs                                1.i ne 3, Column (1) f rom PCA-I- 22, Line 6.                                                                          Line 3, Column (3).shall be determined as provided in Article 16.
tut o fis                              f.i na 2, Columns (!) atsovo and ( 3) frua PCA-I-21 tauto Cs                                1.i ne 3, Column (1) f rom PCA-I- 22, Line 6.                                                                          Line 3, Column (3).shall be determined as provided in Article 16.
Etc lbs                                8.Ine 4, Column (1) f rom PEleC-8, Page Ill, Line 33.                                                                            f.ine 8, Column ( 3 ) sha !! be equa l . t o Line 4, Col umn ( 4 ) .
Etc lbs                                8.Ine 4, Column (1) f rom PEleC-8, Page Ill, Line 33.                                                                            f.ine 8, Column ( 3 ) sha !! be equa l . t o Line 4, Col umn ( 4 ) .
;
t-6                                                r                T            * ' ' +                                                        *                                                - - - - - - - - - - - - -
t-6                                                r                T            * ' ' +                                                        *                                                - - - - - - - - - - - - -


Line 2,276: Line 2,198:
: 7.                          CP&L's Monthly Energy Related Costs:                                The Monthly Energy Related Costs shall be determined in accordance with PCA-I 34.                                                                                        -
: 7.                          CP&L's Monthly Energy Related Costs:                                The Monthly Energy Related Costs shall be determined in accordance with PCA-I 34.                                                                                        -
I l
I l
;
                                                             .-                                        ~    ~        --.      . - _ , -        . - -
                                                             .-                                        ~    ~        --.      . - _ , -        . - -


Line 2,396: Line 2,317:
,            during the calendar year, values for the most recent calendar l              year CP&L did install distribution capacitors shall be 'used.
,            during the calendar year, values for the most recent calendar l              year CP&L did install distribution capacitors shall be 'used.
l l
l l
;
i
i


Line 2,440: Line 2,360:
I l
I l
l
l
                                                                                                                      .;
                      . . _ .  . . _ , _ . , , _ ,      _ ._ ,. _.___;.-._.,                          _ _ . - - ,


r
r
Line 2,481: Line 2,399:
tkate D: 11ac treatment of outraordinary property losses, FEHC account 182, mhail be consistent with the most r ecent NCUC decision or general ruimaking.                            '
tkate D: 11ac treatment of outraordinary property losses, FEHC account 182, mhail be consistent with the most r ecent NCUC decision or general ruimaking.                            '


                                                      ;.
PCA-1-52 TRAasaI$5IOne ti1ATED sta.".TSIC PLArt? la ScaVICE 12 noesTHS BMDING DECDeBER 31, SYST13e                            TBAnSal$$f0M Line                                                                                    (1)                                        425 No.        Iten                                                  aeference            Amount              Deference              Ascent ChCSS Pt.Ast? IN Stav!CE (note al s 1      Flaat la Service (note Ci                              seote F          5                      Isote F          S 2      CWIP for Pollution Control                              slote F                                  Note F 2      Ceneral Flaat and Intangible Plant                                        note F                                  mote R 4      Total                                                Line 1+2+3          $                    Line 142+3          5_ _
PCA-1-52 TRAasaI$5IOne ti1ATED sta.".TSIC PLArt? la ScaVICE 12 noesTHS BMDING DECDeBER 31, SYST13e                            TBAnSal$$f0M Line                                                                                    (1)                                        425 No.        Iten                                                  aeference            Amount              Deference              Ascent ChCSS Pt.Ast? IN Stav!CE (note al s 1      Flaat la Service (note Ci                              seote F          5                      Isote F          S 2      CWIP for Pollution Control                              slote F                                  Note F 2      Ceneral Flaat and Intangible Plant                                        note F                                  mote R 4      Total                                                Line 1+2+3          $                    Line 142+3          5_ _
5      Percent Allocated to Trancaiselom Plaat                                              L.4 Col. (2)
5      Percent Allocated to Trancaiselom Plaat                                              L.4 Col. (2)
Line 2,693: Line 2,610:
hydro generation for the month on which the bill is based.                        q ,
hydro generation for the month on which the bill is based.                        q ,
TF =    Revenue Related Tax Factor (PCA-I-63, Item 5)
TF =    Revenue Related Tax Factor (PCA-I-63, Item 5)
            ;


i I                                                                      !
i I                                                                      !
Line 2,728: Line 2,644:
PART 11 DETERMINATION OF LEASED FACILITIES CHARGE For the Month of                                                    ,
PART 11 DETERMINATION OF LEASED FACILITIES CHARGE For the Month of                                                    ,
Line No. Item                                                                                    Reference              Amount 1    Investment in Leased Facilities                                                          PCA-I-67        $
Line No. Item                                                                                    Reference              Amount 1    Investment in Leased Facilities                                                          PCA-I-67        $
                                                                                                                                                                        ;
2    Leased Facilities Monthly Rate                                                          PCA-I-70 3    Monthly Leased Facilities Charge                                                    Line 1 x Line 2      S (Note A)
2    Leased Facilities Monthly Rate                                                          PCA-I-70 3    Monthly Leased Facilities Charge                                                    Line 1 x Line 2      S (Note A)
Note A: The above charges shall not include costs which are included elsewhere in PCA-I, and the costs included elsewhere shall not include these Costs.
Note A: The above charges shall not include costs which are included elsewhere in PCA-I, and the costs included elsewhere shall not include these Costs.
Line 2,770: Line 2,685:
POWER AGENCY BY CPEL i                                        ,                                                        ;
POWER AGENCY BY CPEL i                                        ,                                                        ;
7 f
7 f
                                                                                                  ;
5 l
5 l
i i
i i
Line 2,785: Line 2,699:
  ,                            Col. (3)                S            _
  ,                            Col. (3)                S            _
l  2    Harris Unit No. 2      PCA-II-2B, Line 4, Col. (3)                  __
l  2    Harris Unit No. 2      PCA-II-2B, Line 4, Col. (3)                  __
3    Harris Unit No. 3      PCA-II-2C, Line 4, Col. (3) 4    Harris Unit No. 4      PCA-II-7D, Line 4,
3    Harris Unit No. 3      PCA-II-2C, Line 4, Col. (3) 4    Harris Unit No. 4      PCA-II-7D, Line 4, Col. (3)                            _
;
Col. (3)                            _
5    Mayo Unit No.1        PCA-II-2E, Line 4, Col. (3)                  - - . . .
5    Mayo Unit No.1        PCA-II-2E, Line 4, Col. (3)                  - - . . .
6    Mayo Unit No. 2        PCA-11-2F, Line 4, Col. (3) 7      Total              Add Lines 1 thru 6      $_-
6    Mayo Unit No. 2        PCA-11-2F, Line 4, Col. (3) 7      Total              Add Lines 1 thru 6      $_-
Line 2,909: Line 2,821:
<                            Capacity Percentage'                                                                                            Note A 7                    Annual Amount                                                                                                (Line 5)x(Line 6)
<                            Capacity Percentage'                                                                                            Note A 7                    Annual Amount                                                                                                (Line 5)x(Line 6)
;                            Applicable to CP&L i                            Purchased Capacity                                                                                                                                                S i
;                            Applicable to CP&L i                            Purchased Capacity                                                                                                                                                S i
j        8                  Monthly Amount                                                                                                  (Lfne 7)/12 Applicable to CP&L i                              Purchased Capacity                                                                                                                                              S
j        8                  Monthly Amount                                                                                                  (Lfne 7)/12 Applicable to CP&L i                              Purchased Capacity                                                                                                                                              S i
;
1 Note A:                                Expressed as a decimal fraction.
i 1
Note A:                                Expressed as a decimal fraction.
                                                                                                                                   -.1
                                                                                                                                   -.1


Line 2,935: Line 2,845:
a 1
a 1
PCA-II-7A POWER AGENCY'S PRODUCTION RELATED GENERAL TAXES s                                                                      (EXCLUDING REVENUE RELATED TAXES)
PCA-II-7A POWER AGENCY'S PRODUCTION RELATED GENERAL TAXES s                                                                      (EXCLUDING REVENUE RELATED TAXES)
UNIT NAME    Harris Unit No. 1 YEAR ENDING DECEMBER 31,
UNIT NAME    Harris Unit No. 1 YEAR ENDING DECEMBER 31, Line No.              Item                      Reference        Amount RELATED _TO WAGES AND SALARIES 1      N.C. Onemployment                    Note A      S 2      S.C. Unemployment                    Note A i                                                        3      Federal Social Security and Unemployment                      Note A 4            Subtotal                        (Add Lines 1  S thru 4)
                                                                    ;
Line No.              Item                      Reference        Amount RELATED _TO WAGES AND SALARIES 1      N.C. Onemployment                    Note A      S 2      S.C. Unemployment                    Note A i                                                        3      Federal Social Security and Unemployment                      Note A 4            Subtotal                        (Add Lines 1  S thru 4)
I
I
                                                                 > PROPERTY AND OTHER TAXES RELATED TO PLANT INVESTMENT l
                                                                 > PROPERTY AND OTHER TAXES RELATED TO PLANT INVESTMENT l
Line 2,966: Line 2,874:
             ' Inventory Tax associated with the Unit.
             ' Inventory Tax associated with the Unit.


PCA-II-8A POWER AGENCY'S PRODUCTION-RELATED INSURANCE UNIT NAME      Harris Unit No. 1 YEAR ENDING DECEMBER 31, 2ine No.        Item                      Reference              Amount
PCA-II-8A POWER AGENCY'S PRODUCTION-RELATED INSURANCE UNIT NAME      Harris Unit No. 1 YEAR ENDING DECEMBER 31, 2ine No.        Item                      Reference              Amount 1    Property Insurance            Note A            S 2    Liability Insurance            Noce A              _
;
1    Property Insurance            Note A            S 2    Liability Insurance            Noce A              _
3    Other Insurance                Note A 4
3    Other Insurance                Note A 4
4    Total                        (Add Lines 1 thru 3)            S Note A:  The costs of insurance payable by Power Agency to CPEL l            pursuant to the Operating and Fuel Agreement which are'
4    Total                        (Add Lines 1 thru 3)            S Note A:  The costs of insurance payable by Power Agency to CPEL l            pursuant to the Operating and Fuel Agreement which are'
Line 3,003: Line 2,909:
1 PCA-II-10A' PM AGENCT'S PRODUCTION RELATED ADMINISTRATI'/E AND GENERAL EXPENSE UNIT NAME      Harris Unit No. 1 TEAR ENDING DECEMBER 31, Line No.                Ites                                ~A g eIt/Referance    Amount 1    A & G Wages and Salaries                                  920-      3 2    offirs Supplies and Expenses                              921 1
1 PCA-II-10A' PM AGENCT'S PRODUCTION RELATED ADMINISTRATI'/E AND GENERAL EXPENSE UNIT NAME      Harris Unit No. 1 TEAR ENDING DECEMBER 31, Line No.                Ites                                ~A g eIt/Referance    Amount 1    A & G Wages and Salaries                                  920-      3 2    offirs Supplies and Expenses                              921 1
3    A & G Expense Transferred (Cr.)                            922 4    Outside Services                                          923 5    Injuries and Damages                                      925 6-  Employee Pensions and Benefits                            926 7    Duplicate Charges..                                      929 8    General Advertising                                      930.1        _
3    A & G Expense Transferred (Cr.)                            922 4    Outside Services                                          923 5    Injuries and Damages                                      925 6-  Employee Pensions and Benefits                            926 7    Duplicate Charges..                                      929 8    General Advertising                                      930.1        _
;
9    Miscellaneous General Expenses                            930.2 10    Maintenance of General Plant                              931 i
9    Miscellaneous General Expenses                            930.2 10    Maintenance of General Plant                              931 i
: 1. Total A & G Expenses                                    IGote A      S        ,
: 1. Total A & G Expenses                                    IGote A      S        ,
j      12    Power Agency's Fees & Other Costs                        Meta B                                      l 13    Total A a G Expenses and hos                      (Line 12 + Line 13) 5 Note As The account listings are for refsrence purposes only. Amounts shown represent the total administrative and general expenses payable by Power Agency to CPEL pursuant to the Ooerating and Fuel Agreement
j      12    Power Agency's Fees & Other Costs                        Meta B                                      l 13    Total A a G Expenses and hos                      (Line 12 + Line 13) 5 Note As The account listings are for refsrence purposes only. Amounts shown represent the total administrative and general expenses payable by Power Agency to CPEL pursuant to the Ooerating and Fuel Agreement
,              which are properly allocaele to the Unit and which are not included in PCA-II-9A.
,              which are properly allocaele to the Unit and which are not included in PCA-II-9A.
;
Note 5: The total of all fees and cther costs payable by Power Agency to CPEL pursuant to Sections 7.11 and 12.2 of the operating and ruel Agreement which are allocable to the Unit and which are not otherwise included herein.
Note 5: The total of all fees and cther costs payable by Power Agency to CPEL pursuant to Sections 7.11 and 12.2 of the operating and ruel Agreement which are allocable to the Unit and which are not otherwise included herein.
f 15 A  4 4
f 15 A  4 4
Line 3,048: Line 2,952:
PCA-II-13 i
PCA-II-13 i
PCA-II-5, Column 2 - Additions This column represents the cumulative additions placed in service subsequent to the gross original investment calculated en an annual basis. This column shall- include property additions, renewals and betterments made after the Units are placed    into Commercial Operation, including indirect costs and AFUDC.
PCA-II-5, Column 2 - Additions This column represents the cumulative additions placed in service subsequent to the gross original investment calculated en an annual basis. This column shall- include property additions, renewals and betterments made after the Units are placed    into Commercial Operation, including indirect costs and AFUDC.
;
l    PCA-II-4 and 5, Column,3 - Depreciation Depreciation expense shall be calculated as though CPEL were the sole owner of each Unit using the same depreciation method and depreciation life utilized by CP&L for each Harris and Mayo Unit i
l    PCA-II-4 and 5, Column,3 - Depreciation Depreciation expense shall be calculated as though CPEL were the sole owner of each Unit using the same depreciation method and depreciation life utilized by CP&L for each Harris and Mayo Unit i
plus any annual amortization of extraordinary retire.aents, if any. The amount of the annual depreciation charge used in Column 3 shall be:    (i) the gross depreciable property which shall            j reflect all retirements from the gross investment depreciated 4
plus any annual amortization of extraordinary retire.aents, if any. The amount of the annual depreciation charge used in Column 3 shall be:    (i) the gross depreciable property which shall            j reflect all retirements from the gross investment depreciated 4
Line 3,072: Line 2,975:
: 4. Combined Income Tax Rate        Note C                          %
: 4. Combined Income Tax Rate        Note C                          %
: 5. Deferred Income Taxes on Tax Basis                      (Line 3 x Line 4)
: 5. Deferred Income Taxes on Tax Basis                      (Line 3 x Line 4)
: 6. Deferred Income Taxes on Basis Difference                  Note D i                                    7. Total Deferred Income
: 6. Deferred Income Taxes on Basis Difference                  Note D i                                    7. Total Deferred Income Taxes                            (Line 5 + 6)
;
Taxes                            (Line 5 + 6)
Note G
Note G
: 8. Accumulated Deferred 4
: 8. Accumulated Deferred 4
Line 3,275: Line 3,176:
d=                the KWM not gen 9tation for Harris Unit No.1 in which the calculation is made (Note A) .
d=                the KWM not gen 9tation for Harris Unit No.1 in which the calculation is made (Note A) .


PCA-III-3E                                                            l
PCA-III-3E                                                            l 1
                                                                                                                                                      ;
DETERMINATION OF MONTHLY PURCHASED ENERGY RATE IN DOLLARS PER KWH MAYO UNIT NO. 1 FOR THE MONTH OF                ,
1 DETERMINATION OF MONTHLY PURCHASED ENERGY RATE IN DOLLARS PER KWH MAYO UNIT NO. 1 FOR THE MONTH OF                ,
Line No.                              Item                                              Reference
Line No.                              Item                                              Reference
                                                                       ,                                                              Amount 1  Net KWB Generation Mayo Unit No. 1                                                              Note A                                                  KWR 2  Maye                                                    a. 1              PCA-IXI-5E, Ene                                                  __ cod                Line 16 OEM w,s                                                                                                              3                        1 3    Mayo Unit No. 1                                                              PCA-III-4E, Fuel Cost                                                                    Line 5 4    Mayo Unit No. 1 Energy Related Cost Line 2 + Line 3                                                                                                    $
                                                                       ,                                                              Amount 1  Net KWB Generation Mayo Unit No. 1                                                              Note A                                                  KWR 2  Maye                                                    a. 1              PCA-IXI-5E, Ene                                                  __ cod                Line 16 OEM w,s                                                                                                              3                        1 3    Mayo Unit No. 1                                                              PCA-III-4E, Fuel Cost                                                                    Line 5 4    Mayo Unit No. 1 Energy Related Cost Line 2 + Line 3                                                                                                    $
Line 3,330: Line 3,230:
!    7    Maintenance of Structures    529 8    Maintenance of Reactor i        Plant Equipment                530 9    Mainterance of Electric Plant                          531                                                      ,
!    7    Maintenance of Structures    529 8    Maintenance of Reactor i        Plant Equipment                530 9    Mainterance of Electric Plant                          531                                                      ,
10    Naintenance of Miscellaneous Nuclear Plant                  532 11    Total Nuclear Power            (Add Lines 1 thru 10) $                  $_            $
10    Naintenance of Miscellaneous Nuclear Plant                  532 11    Total Nuclear Power            (Add Lines 1 thru 10) $                  $_            $
l
l Note As Same methodology as used on PCA-I-35A and 35B: Note C.
                                                                                                            ;
Note As Same methodology as used on PCA-I-35A and 35B: Note C.
180ts 8: The amounts shown dall be the total that would have been recorded on CPEL's books had CPEL been the sole owner of the Harris Unit No.1.
180ts 8: The amounts shown dall be the total that would have been recorded on CPEL's books had CPEL been the sole owner of the Harris Unit No.1.
Note C: Rowever, in say month in which there is no not output from the Unit, all costs on this Exhibit PCA-III.-5A shall be classified as demand related.
Note C: Rowever, in say month in which there is no not output from the Unit, all costs on this Exhibit PCA-III.-5A shall be classified as demand related.
Line 3,355: Line 3,253:
Note C    However, in any month in which there is no net output from the Unit, all costs on thi. Exhibit PCA-III-5E shall be classified as demand related.
Note C    However, in any month in which there is no net output from the Unit, all costs on thi. Exhibit PCA-III-5E shall be classified as demand related.


                                                                                                    ;
                                                           -PCA-III-6 DETERMINATION OF SURPLUS ENERGY CHARGE TO BE PAID BY CP&L FOR THE MONTH OF                                      ,
                                                           -PCA-III-6 DETERMINATION OF SURPLUS ENERGY CHARGE TO BE PAID BY CP&L FOR THE MONTH OF                                      ,
: 1. Surplus Energy Monthly Charge                                    The monthly charge is              ,
: 1. Surplus Energy Monthly Charge                                    The monthly charge is              ,
Line 3,397: Line 3,294:
{
{
is purchased by CP&L pursuant to Section 11.1 shall be
is purchased by CP&L pursuant to Section 11.1 shall be
;
;                  determined on the basis of the Monthly Average Energy Cna*= af che highest cost CP&L generating units (excluding IC turbines) arranged in descending order of such donthly Average Energy Costs, simultaneously supplying an equivalent amount of energy to serve load located in the area ~ served by CP&L.
;                  determined on the basis of the Monthly Average Energy Cna*= af che highest cost CP&L generating units (excluding IC turbines) arranged in descending order of such donthly Average Energy Costs, simultaneously supplying an equivalent amount of energy to serve load located in the area ~ served by CP&L.
t NOTE C: Power Agency's Incremental Cost shall be the estimated current cost, at the time the sale is made, in dollars          '
t NOTE C: Power Agency's Incremental Cost shall be the estimated current cost, at the time the sale is made, in dollars          '
Line 3,425: Line 3,321:
1 i
1 i
i 1
i 1
;
1                                                                                                                  .
1                                                                                                                  .
i 1
i 1
Line 3,465: Line 3,360:
l 1
l 1
: 8. All exhibits attached to this Agreement shall be        !
: 8. All exhibits attached to this Agreement shall be        !
incorporated into and be a part of this Agreement.                    l IN WITNESS WHEREOF, the parties have caused this
incorporated into and be a part of this Agreement.                    l IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized representatives k
;
Agreement to be executed by their duly authorized representatives k
i cs of the date hereinabove first written.
i cs of the date hereinabove first written.
e CAROLINA POWER & LIGHT COMPANY i
e CAROLINA POWER & LIGHT COMPANY i
Line 3,519: Line 3,412:
   't i
   't i
i
i
                                                                                                                  ;
                                                                                                                 -3 i
                                                                                                                 -3 i
EXHIBIT PCA-IX
EXHIBIT PCA-IX
Line 3,629: Line 3,521:
I
I


  ,, ,; , , ,          .-    -
                                       , <3, I
                                       , <3, I
lm PCA-IX-4                                                                      l CLASSIFICATIces OF East 3G7 WON-INSUFFICIENT EDAD hoops leONTE , day, REAR Col, 4                        Col. 6      Col. 7          Col. 8            Col. 9      Col. 10 Col. I                Col. 1                    Col. 5
lm PCA-IX-4                                                                      l CLASSIFICATIces OF East 3G7 WON-INSUFFICIENT EDAD hoops leONTE , day, REAR Col, 4                        Col. 6      Col. 7          Col. 8            Col. 9      Col. 10 Col. I                Col. 1                    Col. 5
Line 3,651: Line 3,542:
T.
T.
vi mid a.::t.        .
vi mid a.::t.        .
                                                                    ;  ,
l I
l
                                  &-                                -;
I
: _.t.:
: _.t.:
l JI al h. II J          -
l JI al h. II J          -
Line 3,725: Line 3,613:
                                                                                   . ::44: .4.=!
                                                                                   . ::44: .4.=!
e.::nxiak':sla:_:
e.::nxiak':sla:_:
                                    ;                          -;
: r. s
: r. s
                                     ; -.-......_.__ t_........:=_4                          ......
                                     ; -.-......_.__ t_........:=_4                          ......
Line 3,732: Line 3,619:
                                                                                                                       = ==
                                                                                                                       = ==
III assa
III assa
  ;
     . h.                                    _ _ _ . . .
     . h.                                    _ _ _ . . .


Line 3,768: Line 3,654:
il 3
il 3
* 1 3                                            l 3!{)
* 1 3                                            l 3!{)
3        l3s
3        l3s ii I 3 ,i l )2, I,
                                ;
ii I 3 ,i l )2, I,
I
I
                                 ''                                      ~ii la                          I.          ,
                                 ''                                      ~ii la                          I.          ,
Line 3,874: Line 3,758:
                                   '                                                    2                                          a. .::
                                   '                                                    2                                          a. .::
t                                                                                                . m.c :
t                                                                                                . m.c :
;                                                                                      :
i
i
         -.e 1                                                                            a
         -.e 1                                                                            a
:1.4                  <
:1.4                  <
i        BIE                    *:                                                                                  -                          I out .n                                                                        i..                                          .:
i        BIE                    *:                                                                                  -                          I out .n                                                                        i..                                          .:
                                                                                                                 -. i.s!                i.i t3
                                                                                                                 -. i.s!                i.i t3 I5.'.
;
I5.'.
j                  -
j                  -
133-                                                    *
133-                                                    *
Line 3,932: Line 3,813:
2a as      ze 8:: :
2a as      ze 8:: :
* A **2                          - .3:.:::    3 0%l6*
* A **2                          - .3:.:::    3 0%l6*
a2 :: 41::4 1
a2 :: 41::4 1 I      a4 ea:
                                                                        ;
I      a4 ea:
gs .  ..... : .e ---.......:7
gs .  ..... : .e ---.......:7
                                                                                   .; ,; . . .y;y                                                          r saa ::: ss s ::::.:. s&
                                                                                   .; ,; . . .y;y                                                          r saa ::: ss s ::::.:. s&
Line 3,999: Line 3,878:
I    -
I    -
1 i
1 i
1
1 1
;
1
:                                      l l
:                                      l l
;                                      1 I
;                                      1 I
Line 4,137: Line 4,014:
* The City of New Bern has two separate service agreements.
* The City of New Bern has two separate service agreements.


;
I 2
I 2
J i.
J i.
Line 4,143: Line 4,019:
I              EXHIBIT PCA-XIII i
I              EXHIBIT PCA-XIII i
l 2
l 2
;
GUIDEI,INES FOR ESTIMATION OF MISSING OR ERRONEOUS METERED DATA i
GUIDEI,INES FOR ESTIMATION OF MISSING OR ERRONEOUS METERED DATA i


Revision as of 10:35, 17 February 2020

Power Coordination Agreement Between Cp&L & Nc Municipal Power Agency Number 3 & Exhibits.
ML20010F060
Person / Time
Site: Harris, Brunswick  Duke Energy icon.png
Issue date: 07/30/1981
From: Sitterson S, Shawn Smith
CAROLINA POWER & LIGHT CO., NORTH CAROLINA MUNICIPAL POWER AGENCIES
To:
Shared Package
ML18017B453 List:
References
NUDOCS 8109090320
Download: ML20010F060 (440)
v • d • e


Text

{{#Wiki_filter:75% ~ ~ ' 1 ,, 

                                 ~l POWER COORDINATION AGREEMENT                  -

EETWEEN CAROLINA POWER & LIGHT COMPAN AND NORTH CAROLINA MUNICIPAL POWE . AGENCY NUMBER 3 AND EXHIBITS JULY 30,1981 

   '8 N d683 a                                t PDR

POWER COORDINATION AGREEMENT TABLE OF CONTENTS Page RECITALS .........................,...................... 1 ARTICLE 1 DEFINITIONS ................................ 1-1 ARTICLE 2 INTERCONNECTION AND PROTECTION OF SYSTEMS .. 2-1 - I l ARTIC' s 3 SC'lFDULING AND DISPATCilING ................. 3-1 ARTICLE 4 RESOURCE DEMAND ............................ 4-1 4.1 Determination of Peak and Hourly Resource Demand ..................... 4-1 4.2 Capacity and Energy from SEPA .............. 4-4 4.3 Transmission Losses ............... ........ 4-5 ARTICLE 5 RETAINED CAPACITT AND PURCHASED CAPACITY SCHEDULE .......................... 5-1 5.1 Power Agency's Retained Capacity ........... 5-1 5.2 Total Retained Capacity .................... 5-3 5.3 Scheduled Retained Capacity Percentage and Scheduled Purchased Capacity Percentage .... 5-3 ARTICLE 6 SUPPLEMENTAL CAPACITY AND ENERGY ........... 6-1 6.1 Amount of Supplemental Capacity and Energy ................................. 6-1 6.2 Utilization of Supplenental ' Capacity and Energy ..... .................. 6-16 6.3 Charges for Supplemental Capacity and Energy .................................. 6-16 , ARTICLE 7 POWER AGENCY' S ENTITLEMENTS TO CAPACITY AND ENERCY FROM RETAINED CAPACITY AND ASSOCIATED - BACKSTAND .................................. 7-1 7.1 Power Agency's Actual dntitlement from Joint Facilities . .................... 7-1 - i.2 Effect of Output Reduction -- Replacement Energy ......................... 7-4 

                                                            -i -                                                                                        =--

E Y Page R- 

                                                                                                         =

7.3 Ef fect of Output Reduction -- Insufficient Load .......................... 7-8 ]f 

  ^

7.4 Reserves . . . . ............................... 7-12 _ l 7-13 8 7.5 Unused Supplemental Capacity .............. 7.6 De f i c i e n c y E n e rg y . . . . . . . . . . . . . . . . . . . . . . . . . 7-14 - ARTICLE 8 AFTER-THE-FACT CLASSIFICATION .............. 8-1 1 8.1 General Provision on Classification ........ 8-1 - 8.2 Classification of Hcurly Resource Demand up to the Level of Power Agency's q-_ Total Retained Capacity .................... 8-1 r 8.3 Classification of U9urly Rescurce ' Demand Above the Level of Power Agency's Total Retained Capacity .................... 8'e . m ARTICLE 9 CP&L' S ENTITLEMENTS TO CAPACITY hMD ENERGY. . 9-1 

                                                                                                            +

9.1 Amount of Purchased Capacity ............... 9-1  ; 9.2 Amount of Purchaced Energy ................. 9-1 - 9.3 Application of Scheduled Purchased Capacity Percentage Table ........ 9-1  : 9.4 Charges for Purchased Capacity " and Purchased Energy ....................... 9-2 9.5 Jbligation to Pay .......................... 9-2 9.6 Commencement Date .....:... ................ 9-2 . ARTICLE 10 INTERIM CAPACITY ........................... 10-1 10.1 Availability ............................... 10-1 " 10.2 Trigger Dates .............................. 10-2 , 10.3 Period of Availability ..................... 10-2 10.4 Amount of Interim Capacity ................. 10-3 10.5 Use of Interim Capacity .................... 10-3 10.6 Rate for Interim Capacity .................. 10-4 

                                               - ii -

J 

               .i             M

 ,p                                                                   .- -                         __

t Page 10.7 Effect of Postponement on Purchased Capacity ......................... 10-4 

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ARTICLE 11 OUT."UT IN EXCESS OF POWER AGENCY NEEDS ..... 11-1 11.1 Surplu3 Energy Purchased by CP&L ........... 11-1 11.2 Surplus Energy Sales to Others ............. 11-1 11.3 Procedure for Sales of Surplus Energy to Others ........................... 11-2 11.4 Charge to CP&L for Surplus Energy ....... .. 11-6 ARTICLP, 12 MAXIMUM NET DEPENDABLE CAPABILITY .......... 12-1 12.1 Description . .............................. 12-1 12.2 Change in MNDC ............................. 12-1 ARTICLE 13 TRANSMISSION SERVICES AND DELIVERIES ....... 13-1 13.1 Transmission of Capacity and Energy ........ 13-1 13.2 Transmission Use Charge .................... 13-2 13.3 Leased Facilities Charge ................... 13-2 13.4 Delivery Facilities Provided b y Pow e r Ag e n c i' . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13-4 13,5 Facilities at Existing Delivery Pr.ints ..... 13-4 13.6 Facil.ities at New Delivery Points .......... 13-7 13.7 Modification and Termination of Delivery Facilities ..................... 13-10 13.8 Notice of Delivery Points and Capacities ............................. 13-13 13.9 Load Switching Between Delivery Points ..... 13-14 13.10 Net Cost of Line Reconstru- tion or Relocation Required by Participant ...... 13-15 13.11 Ownership of, and Access to, Facilities Covered by the Leased Facilities Charge .... 13-15 13.12 Access to Facilities ....................... 13-16 

                                    - iii -

7  ; 1 Page 13.13 Assignment of Delivery Facilities and Leased Facilities Rights and Obligations ... 13-17 AITICLE 14' REACTIVE POWER SUPPLY ...................... 14-1 l 14.1 Obligation to Provide Capacittrs ........... 14-1 l '14.2 Charges for Reactive Power ................. 14-2 1 ARTICLE 15 METERING ................................... 15-1 15.1 Responsibility for and Location of Meters and Metering Eg'lipment ........... 15-1 15.2 Character and Improvements of Meters ....... 15-3 15.3 Testing and Adjustment of Meters ........... 15-4 15.4 Metering Charges ........................... 15-5 ARTICLE 16 BILLING AND PAYMENTS ....................... 16-1 , l 16.1 Monthly Billing ............................ 16-1 16.2 Computation of Monthly Rates and Charges for Supplemental Capacity, Reserve , Capacity and Transmission Use .............. 16-1 i 16.3 Computation of Monthly Capacity Charge for Purchased Capacity .............. 16-5 l 16.4 Computation of Monthly Energy l Rates and Charges .......................... 16-8 16.5 Cha rg e f o r Reac t ive Powe r . . . . . . . . . . . . . . . . . . 16-9 16.6 Charge for Leased Facilities ............... 16-9 16.7 Payments ................................... 16-9 16.8 Proration .................................. 16-9 16.9 Offsets .................................... 16-11 16.10 Billing Adjustments and Challenges ......... 16-12 16.11 Estimates .................................. 16-13 ARTICLE 17 LOAD FORECASTS AND REDUCTIONS .............. 17-1 17.1 Load Forecasts ............................. 17-1 

                                    - iv -

D L 

     . ,. _ , + : : .

n Iw Page 17.2 Load Reduction . . . . ......................... 17-1 ARTICLE-18' REPORTS AND INFORMATION .................... 18-1 18.1 Government Filings ard Reports ............. 18-1

j. 18.2 Power Agency's Responsibilities ............ 18-1 18.3 CP&L's Responsibilities .................... 18-2 ARTICLE 19 GOVERNMENTAL AND REGULATORY APPROVALS ...... 19-1 19.1 Initial Filing . . . . ......................... 19-1 19.2 Subsequent Regulatory Action ............... 19-1 ARTICLE 20 LIABILITY AND SERVICE INTERRUPTIONS ........ 20-1 20.1 Liability .................................. 20-1 20.2 Responsibility on Either Side of Point of Connection ..................... 20-3 t 20. 1 Consequential Damages ...................... 20-6 20.4 Force Majeure . . . . . ......................... 20-6 20.5 Pumping for Fires . ......................... 20-8 ARTICLE 21 DEFAULT . . . . . . . . . . . ......................... 21-1 21.1 Events of Default .......................... 21-1 21.2 CP&L's Rights on Default of Power Agency . . . 21-3 21.3 Power Agency 's Rights on Def ault of CP& L . . . 21-4 21.4 Disputes Concerning Default ................ 21-5 21.5 Additional Obligations ..................... .21-6 21.6 Injunctive Relief .......................... 21-6 21.7 No Remedy Exclusive ........................ 21-7 21.8 Waivers .................................... 21-7 21.9 Agreement to Pay All Costs to Cure Def ault . . 21-8
                                                  - v-n vs

e Page 21.10 Initia1' Establishment of Special Reserve Fund ............................... 21-8 21.11 Subsequent Contributions to the. Special Reserve Fund ....................... 21-9 21.12 Withdrawal of Excess Amounts .... .......... 21-10 21.13 Termination of Escrow ...................... 21-10 l ARTICLE 22 RESOLUTION OF DISPUTES ..................... 22-1 2%.1 Cha11ence .................................. 22-1

2:2. 2 Arbitrat ion ................................ 22-1 l

22.3 Arbitration Procedure ...................... 22-2 22.4 Court Proceedings .......................... 22-8 22.5 Payment of Fees and Costs .................. 22-8 l ARTICLE 23 ACCESS TO BOOKS AND RECORDS ................ 23-1 1 l 23.1 Access to CP&L's Books and Records ......... 23-1 23.2 Access to Power Agency's Books and Records.. 23-2 l ARTICLE 24 AM E N DM E N T . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24-1 i ARTICLE 25 TERM OF AGREEMENT .......................... 25-1 ARTICLE 26 REPRESENTATIONS, WARRANTIES AND COVENANTS .. 26-1 l 26.1 Power Ageney's Representations, l Warranties and Covenants ................... 26-1 l l 26.2 General Covenant by the Parties ............ 26-4 ARTICLE 27 MISCELLANEOUS .............................. 27-1 l 27.1 No O? lay ............................. 3 . . . . 27-1 27.2 F u r th e r Doc ume n t a t io n . . . . . . . . . . . . . . . . . . . . . . 27-1 27.3 Notice ..................................... 27-1 27.4 Headings Not to Affect Meanin0 ............. 27-2 27.5 No Partr.ership; Tax Matters ................ 27-2 

                                       - vi -

Page 27.6 Successors and Assigns ..................... 27-3 27.7 Counterparts ............................... 27-3 27.8 Incorporation of Exhibits .................. 27-3 27.9 Severability,of Provisions ................. 27-4 27.10 Entire Agreement ........................... 27-4 27.11 Applicable Law ............................. 27-4 27.12 Effect of PURPA ............................ 27-4 27.13 Assignment ................................. h7-5 27.14 No Waiver .................................. 27-6 27.15 Security of Information .................... 27-6 27.16 Computation of Time ........................ 27-6 . 27.17 Ef fect of Def ault Upon Terms - of this Agreement .......................... 27-7 27.18 Change to Reflect Ownership Interests in Joint Facilities by Other Entities ......... 27-7 27.19 Rounding of dilowatts ...................... 27-8 27.20 Singular to Include Plural and Plural to Include Singular ................. 27-8 27 .21 References to Articles, Sections and Exhibits ............................... 27-8 27.22 Termination of Existing Service Agreements.. 27-8 ARTICLE 28 SURVIVORSiiIP .............. ................ 28-1 28.1 Survivorship of Obligations ................ 28-1 28.2 Survivorship of Provisions ................. 28-1 

                                  - vii -

POWER COORDINATION AGREEf!ENT This Ayre .ie n t , dated as of July 30, 1981, is be-tween CAROLINA POWER & LIGHT COMPANY ("CP&L"), a corporation organized and existing under Chapter 55 of the General Statutes of North Carolina, known as the Business Corporation Act, with offices in Raleigh, North Carolina, and NORTH CAROLINA NUNICIPAL POhER AGENCY NUMBER 3 (" Power Agency"), a public body and body corporate and politic organized and existing under Chapter 159B of the General Statutes of North Carolina, known as the Joint Municipal Electric Power and Energy Act, with offices in Raleigh, l North Carolina. RECITALS (A) CP&L is engaged in the business of generating, transmitting and distributing electric power in portions of the states of North Carolina and South Carolina, and operates its own electric generation facilities. l l (B) Power Agency is a joint agency organized by its l member municipalities pursuant to Chapter 159B of the General l Statutes of North Carolina, known as the Joint Municipal ! Electric Power and Energy Act, to undertake to plan, finance, develop, own and operate facilities for the generation, trans-mission, sale and supply of electric power and energy. (C) CP&L and Power Agency have entered into a Purchase, Construction and Ownership Agreement (Sales Agreement) i l of even date herewith for the sale by CP&L to Power Agency I of certain undivided ownership interests in the following gen-erating facilities and in Associated Fuel as defined in Sec-tion 1.4 of the Sales Agreement (Joint Facilities): Brunswick Unit No. 1 Ilarris Unit No. 1 Brunswick Unit No. 2 Harris Unit No. 2 Roxboro Unit No. 4 Harris Unit No. 3 Mayo Unit No. 1 Harris Unit No. 4 Mayo Unit No. 2 l ( D) CP&L and Power Agency also have entered into an Operating and Fuel Agreement of even date herewith providing for l l the operation and fueling of the Joint Facilities by CP&L on l behalf of itself and Power Agency. i (E) CP&L and ' Power Agency desire to establish the terms and conditions for provision by CP&L to Power Agency of certain power services and for other matters. t I m e

POWER COORDINATION AGREEMENT 

                                     ..  . ARTICLE 1 DEFINITIONS 1.1        Actual Entitlement Power. Agency's entitlement to Output from Joint Facil-ities determined in accordance with Section 7.1.

1.2 Adjustment Interest Rate For any month, the prime rate being charged by the Chase Manhattan Bank of New York on the first day of such month, less one percentage point, divided by twelve, expressed in percentage points, to the nearesf. hundredth. 1.3 Allowance for Funds Used During Construction (AFUDC) Capital carrying costs incurred by CP&L during con-struction which are capitalized as a cost of plant on the

books of CP& L in accordance with the FERC Uniform System of Accounts. For the purposes of this Agreement and the Related Agreements, such capital costs shall not reflect any credits associated with inclusion of construction work in progress in the rate base for retail jurisdictions, but shall reflect credits associated with inclusion of pollution control con-struction work in progress in the rate base for sale for resale jurisdictions.

1-1 e Y

1.4 Annual Peak Resource pemand The amount of Power Agency's highest lionthly Peak Re-source demand during a calendar year as determined in accordance with Section 4.1. 1.5 Approved Arbitrators List The list of Arbitrators to be used in resolution of disputes in accordance with Section 22.3(B)(3). , 1.6 Arbitrator The person selected to conduct arbitration in accord-ance with Section 22.3. 1.7 Available Retained Capacity In any hour, Power Agency's Available Retained Capac-ity in each Joint Unit is Power Agency's Retained Capacity in such Unit less proportionate Forced Reductions, if any, incurred on such Unit. 1.8 Brunswick Plant The Brunswick Plant, formally designated the Brunswick Steam Electric Plant, is an electric generating facility _ located near Couthport, North Carolina, consisting of two (2) operating nuclear-fueled generating units designated Brunswick Unit No. 1 and Brunswick Unit No. 2, support facilities, spare parts, tools and equipment and any capitalized construction materisis and sup-plies on hand, all as more completely described in the Bill of 1-2

r 1 l i l 

   .l eu the form of which is prescribed in Exhibit SA-IV to the         i L                                                                         !

r Sales' Agreement. The boundaries of the Brunswick Plant, each unit thereof'and certain of the support facilities are illus-trated in Exhibit SA-XV to the Sales Agreement. Transmission facilities located at the site, including step-up transformers having a high side transmission voltage, are not included as part of the Brunswick Plant. 1.9 Brunswick Unit Brunswick Unit No. 1 or Brunswick Unit No. 2, which are i the individual nuclear-fueled electric generating units, associ-ated support facilities, spare parts, tools and equipment and any capitalized construction materials and supplies on hand, located at the Brunswick Plant. Brunswick Unit No. 1 and Brunswick Unit No. 2 are collectively referred to herein as the " Brunswick Units." 1.10 CP& L Annual System Peak The highest CP&L Monthly Peak Demand as defined in Sec-tion 1.11 during each calendar year. l 1.11 CP& L Monthly Peak Demand 

              ' ae highest sixty (60) minute net integrated peak demand in megawatts recorded by CP&L for the Combined System during each month adjusted as follows:

l (A) Less the SEPA capacity allocation for wheeling by CP&L to SEPA's preference customers included in the net integrated peak auove; l-3

U l (B) Less Power Agency's Retained Capacity; (C) Less the capacity of New Resources to the extent used to meet Hourly Resource Demand pursuant to the provisions of Article 6. 1.12 CP& L Operating Practice (A) CP& L Operating Fractice means any practice, method or act which, in the exercise of reasonable judgment in light of tLa facts known at the time a decision is made, would be expected to accomplish the desired result at a reasonable cost consistent with reliability and safety. . (B) The parties acknowledge and agree that in applying this Section 1.12 the following principles shall govern: (1) CP& L's ownership interests in the facilities subject to this Agreement provide CP&L with the incentive to l choose practices, methods and acts which meet the standard des-cribed in this Section 1.12; l (2) CP& L Operating Practice includes, but is not limited to, any practice, method or act engaged in or approved by a significant portion of the electric industry; and (3) CP& L Operating Practice includes, but is not limited to, practices, methods or acts which are not used by other participants in the electric industry. (C) CP& L Operating Fractice is not limited to the opti-mum practice, method or act, to the exclusion of all others, but rather includes a number of possible practices, methods or acts. 1-4

n - - l 1.13' CP&L Power Resources . The total 1 capacity of CP& L's ' ownershipI interest -in the i I Joint Facilities at the MNDC'of the Joint' Units as used in this i. ( 

                    ' Agreement and the Related Agreements plus the total' net plant l:

l capability of CP&L's other generating facilities-on the same basis h as reported in PERC Form'12, Schedule 1, Col. 101 Any firm pur- 

                    . chase being made by CP&L ~at the time of the CP& L Annual System l

Peak shall be added to such capacity, but- the SEPA' capacity allo- 

                    ' cation for wheeling .by CP&L to SEPA's preference customers shall not be so added.

l 11.14 CP&L System All facilities constructed, operated or owned-(in whole or in'part) by CP&L (except those owned by CP&L but leased to l l Power Agency or a Participant pursuant to Section 13.3) or any subsidiary for the' purpose of generation, transmission or dis-tribution of electric energy, or related thereto. 1.15 Combined System l The Combined System, for purposes of this Agreement and the Related Agreements, shall consist of the generating facilities at the Joint Facilities, New Resources which may be used to meet _ Hourly Resource Demand pursuant to Article 6 and all other gen-erating and transmission facilities owned and/or operated by CP& L' I ! at present or in the future. 1-5

i 

 -1.16       Commercial Operation (A)  For purposes of.this' Agreement and the Related Agreements, Commercial Operation commenced for the Brunswick i

! Units and Roxboro Unit No. 4 on the following dates: Brunswick Unit No. 1 - March 18, 1977-Brunswick-Unit No. 2 - November 3, 1975 Roxboro Unit No. 4 - September' 16,.1980 (B) For purposes of this Agreement and the Related I i Agreements, Commercial Operation commences for each Mayo Unit and Harris Unit at 12:01 A.M. the day after one of the following conditions is met:- l (1) Continuous operation of the Unit for fifty (50) hours at ninety-nine percent (99%) or greater of its' unit - design. capability (in the case of a Mayo Unit) or one hundred L (100) hours at ninety-nine percent (99%) or greater of its li-l censed reactor power level (in the case of a Harris Unit); ( 2) Continuous operation for fifty (50) hours 

                                                                       ~

(in the case of a Mayo Unit) or one hundred (100) hours (l'n l the case of a Harris Unit) within one percent (1%) of any lower l capability;1evel established by regulatory or other operating restriction the time period for which is expected to extend beyo.d thirty..(30) days; or (3) Continuous operation for fifty (50) hours at a point below its unit design capability (in the case of a Mayo:

Unit) or one hundred (100) hours at a point below its licensed reactor power level (in the case of a Harris Unit) as mutually 1-J

agreed upon by CP&L and Power Agency, provided that- neither l l 4 l party shall unreasonably withhold its agreement. l i 1.17 Commitment Ratio Power Agency's Commitment Ratio is the ratio of the projected 1982 Annual Peak Resource Demand (as defined in Sec-tion 1.4) of Power Agency's Participants to the projected 1982 Annual Peak Resource Demand of Power Agency's members listed in Exhibit SA-I to the Sales Agreement. Such projection shall be furnished to CP&L by Power Agency at least sixty (60) days i prior to the First Closing Date. 1.18 Compensatory Interest Rate For any month, the capital related costs of the party to whom interest is owed as described in Exhibit PCA-X, di-vided by twelve, expressed in percentage points to the nearest hundredth. i 1.19 Construction i As relates to the Mayo Units and the Harris Units, Con-struction shall aean the acquisition and construction of any portion of the Mayo Plant and the Harris Plant, and shall include, without liaitation, the planning, design, engineering, licensing, completion and start-up of,_and purchasing, accounting, training, qualiti assurance and administration for, such Units including any additions or modifications thereto commenced or authorized l-7 I '*'r r 

 . prior to the date of Commercial Operation of the Mayo Unit or Harris Unit as to which such addition or modification relates.

l As relates to the Brunswick Units and Roxboro Unit No. 4, Con-struction shall mean the acquisition and construction of any addition to or modification of the Brunswick Units or Roxboro. Unit No. 4 which was commenced or authorized prior to the First-i Closing Date and shall include, without limitation, the planning, design, engineering and completion of, and purchasing, accounting, training, quality assurance and administration for, such addition or modification. 1.20 Cumulative Closing Ratio The sum of the First Closing Ratio plus all Subsequent Closing Ratios through the closing to which a subsequent Closing I Ratio is applicable, without regard to the application of the l ! Service atio. 1.21 Deficiency Energy Energy supplied by CP&L in accordance with Sections l ! 7.6 and 8.2( D) . l 1.22 Delivery Facilities The facilities owned by CP& L which are used to deliver electric power and energy to Power Agency or a Participant located between the Delivery Point and the Point of Connection including, but not limited to, transformers, switches, conduc-tors, insulators, poles and metering equipment, and metering 1-8

t H L l and relaying equipment owned by CP&L which is located on J l I Powe'r Agency's or a Participant's side of a Point of Connec-tion. t l.23 Delivery Point The point on the transmission system of CP&L at 115 KV or higher voltage (except as otherwise agreed by the parties l in a letter concerning certain Municipal Systems dated con-l currently herewith) the delivery of power to Power Agency or a Participant is to be measured. 1.24 Delivery Point Data Sheel The document, in the fora of Exhibit PCA-VII, which shall be prepared and executed for each Delivery Point in accor-dance with Section 13.7. 1.25 Demand Related Production O&M Expenses set forth in column 2 of Exhibits PCA-I-23A and 23B. 1.26 Disbursement Account I The account defined in Exhibit PCA-XI, from which funds may be disbursed to CP&L in accordance with Section 21.10. i 1.27 Events of Enfault The events described in Section 21.1. 1-9

1.28 Expected MNDC For each Harris Unit, the Expected MNDC is 900 MW, and for each Mayo Unit, the Exrjected MNDC is 720 MW. nl.29 Federal Energy Regulatory Commission (FERC) The Federal Energy Regulatory Commission (FERC) is the commissi sn that has jurisdiction over CP& L rates and charges con-tained in this Agreement and over the system of accounts used by CP& L. FERC shall also mean any successor regulatory commission, agency or departnent having jurisdiction over those rates,, charges and accounting systems. 1.30 Final Closing Date The date of the Subsequent Closing on which Power Agency completes the purchase, and CP&L completes the conveyance, of the Ultimate ownership Interest in the Joint Facilities to which Power Agency is committed to purchase under the Sales Agreement. i 1.31 First Closing Da te i l The closing date on which Power Agency first purchases, and CP&L first conveys, any part of the undivided ownership inter-rests'in iToint Facilities to which Power Agency is committed to purchase under the Sales Agreement. 1.32 First Closing Ra tio Power Agency's First Closing Ratio is the ratio of the portion of Power Agency's 'J1timate Ownership Interest in the Joint 1-10

1 1 i _ Facilities which Power Agency shall purchase and' CP&L shall convey ) 

    ' on ' the First Closing Date ~ (without-togard to the application of b                                                                                     ,
     .the Service Ra tio), to Power- Agency's Ultimate Ownership Interest in'each Joint Facility which Power Agency is committed'to pur-e L

chaso under the Sales Agreement. 1.33 _ Force Majeure The events or circumstances described in Section 20.4. 1.34 Forced Reduction ,. Any reduction in the Output of a Unit other than (1) l l a reduction caused by the availability of a more economical or equally economical source of power or (2) a~ reduction due to (a) insuf ficient combined loads of CP&L and Power Agency to utilize all available nuclear capacity, or (b) fossil units having to be kept in service to meet the requirements cf the system, or (c) a combination of (a) and (b).' Forced Peductions shall be [ determined on an af ter-the-fact basis for purposes of determin-f l ing amounts and pricing ot energy purchased and sold pursuant to l this Agreement. 1.35 Fossil-Fueled Share Power Agency's responsibility for supplying fossil-fueled generation during any hour to which Section 7.3 applies. 1.36 Fossil Share - Replacement In any hour to which Section 7.3 applies, the excess t i 1-11

i that exists when Power Agency's Fossil-Fueled Share exceeds its-Actual Entitlement from fossil-fueled Joint Units. 1.37 Fossil Share Surplus In any hour to which Section 7.3 applies, the excecs that exists when Power Agency's Actual Entitlement from fossil-fueled Joint Units exceeds its Fossil-Fueled Share. I 1.38 Harris Plant The-Harris Plant, formally designated the Shearon Harris Nuclear Power Plant, is an electric generating facility presently being constructed near New Hill, North Carolina, which will con-sist or four nuclear-fueled generating units designated Harris-Unit No. 1. Harris Unit No. 2, Harris Unit No. 3 and Harris Unit l l No . 4, support facilities, spare parts, tools and equipment and l any capitalized construction materials and supplies on hand, all as more completely described in the Bill of Sale, the form of l which is prescribed in Exhibit SA-IV to the Sales Agreement. The boundaries of the Harris Plant, each unit thereof and certain of the support facilities are illustrated in Exhibit SA-XVI to the Sales Agt7ement. Transmission facilities located at the site, l incleding step -up transformers having a high side transmission i voltage, are not included as part of the Harris Plant. i 1.39 Harris Unit I Harris Unit No. 1, Harris Unit No. 2, Harris Unit lic. 3 or Harris Unit Go. 4, which are the individual nuclear-fueled 1-12

electric generating units, associated support facilities, spare 

     ~ parts,-tools and equipment and any capitalized construction-materials and supplies on hand, being constructed at the Harris Plant. Harris-Unit No. 1, Harris Unit No. 2, Harris Unit No. 3 and Harris Unit No. 4 are collectively referred to herein as the " Harris Units."

! 1.40 Hourly Resource Demand In each-hour, the sum of all the loads of Power Agency's Participants for which there is in effect a Supplemental Power Sales Agreement, as determined pursuant to Section 4.1. 1.41 Incentive Interest Rate For any month, one twelfth (1/12) of the sum of: (i) the capital related costs of the party to vhom interest is-owed, l as described in Exhibit PCA-X; and (ii) the difference, on the first day of such month, between the most recently published Moody's electric utility bond yield for the rating category in which CP& L's first mortgage bonds are rated and the correspond-ing electric utility bond yield for the next lowest rating cate-gory. The Incentive Interest Rate shall be expressed in percen-tage points to the nearest hundredth. 1.42 Initial Fuel Core Nuclear Fuel Material and Nuclear Fuel Services associ-ated with those fuel batches in the reactors at the Brunswick 1-13

Plant as of any closing and Nuclear Fuel Material and Nuclear 

 -Fuel _ Services associated with those fuel batches required for the initial start-up and initial operation of the liarris Units.

1.43 Initial Fuelirg - Initial Fueling is the process of acquiring and utilizing the Initial Fuel Cores in the case of nuclear fuel, or the Initial Stockpile in the case of fossil (coal and start-up fuel oil) fuel, necessary and sufficient for the start-up and placing into Com-mercial Operation of the Harris Units and the Mayo Units, respec-tively, and for the operation for an initial period consistent with the fuel plan for such Units (including the fuel cycle for nuclear fuel and the stockpile for fossil fuel). Initial Fuel-ing shall include (but shall not be limited to), with respect to j such fuel, the solicitation and acceptance of bids for the supply ( thereof, the securing of necessary fuel-processing services, the transportation to a Harris Unit or a Mayo Unit and the handling and consumption at any liarris Unit or Mayo Unit. In the case l of n'1 clear fuel, Initial Fueling does not include Reload. Fuel, as defined in Section 1.77. In the case of fossil fuel, Initial Fueling does not include fossil fuel in excess of Initial Stockpiles. The Owners' rights and obligations with respect to fossil fuel other than Initial Stockpiles are covered by the Operating Agreement. 1-14

l 

                                                                        \

1.44 Initial Stockpile l i l The Initial Stockpile shall be that coal and start-up l fuel oil inventory (i) required for the initial start-up, testing and commencement of snstained operation of each coal-fired unit at the Mayo Plant, and (ii) stored at the Roxboro Plant as of ea.ch Closing Date which is to be used in the operation of (or properly allocable to) Roxboro Unit No. 4. 1.45 Interim Capacity Capacity available to Power Agency pursuant to l Article 10. 1.46 Joint Facilities The Joint Facilities are the Brunswick Units, the l Harris Units, the Mayo Units, Roxboro Unit No. 4, and Associ- ! ated Fuel (as defined in Section 1.4 of the Sales Agreement) for such Units, or any of them or any portion thereof, owner-ship interests in which are to be conveyed to Power Agency pursuant to this Agreement. . 1.47 Joint Units The Joint Units are Brunswick Unit No. 1 and Brunswick Unit No. 2, Mayo Unit No. I and Mayo Unit No. 2, Harris Unit No. 1, Harris Unit No. 2, Harris Unit No. 3 and Harris Unit No. 4 and Roxboro Unit No. 4, ownership interests in which are to be con-veyed to Power Agency pursuant to the Sales Agreement. 1-15

s 

 -1.48       Late Payment Interest Rate For any' month, the capital related costs of CPAL as described in Exhibit PCA-X, divided by twelve, expressed in percentage points to the nearest hundredth.

1.49 Leased Facilities i Facilities covered by the Leased Facilities Charge in accordance with Section 13.3. 1.50 Leased Facilities Charge The charge provided for in Section 13.3. 1.51 MNDC Maximum Nat Dependable Capability (l1NDC) in kilowatts (KW) shall be the dependably attainable value for nain unit capability less auxiliaries of the Brunswick Units, the Mayo Units, the liarris Units, and Roxboro Unit No. 4 as such level is estab-lished frca time to time after Commercial Operation in accordance with Article 12. 1.52 flayo Plant The Mayo Plant, formally designated the Mayo Electric Generating Plant, is an electric generating facility presently being constructed in Person County, North Carolina, which will consist of two coal-fired generating units designated llayo Unit No. I and liayo Unit No. 2, support facilitien, spare parts, tools and equipment and any capitalized construction materials and sup-plies on hand, all as more completely described in the Bill of 1-16 

         ,-                     -c--

I Sale, tae form of which is prescribed in Exhibit SA-IV to the Sales Agreement. The boundaries of the Mayo Plant, each unit thereof and certain of the support facilities are illustrated in Exhibit SA-XVII to the Sales Agreement. Transmission facilities located at the site, includirig step-up transformers havir.g a high side transtaission voltage , are not included as part of the Mayo Plant. 1.53 Mayo Unit Mayo Unit No. 1 or Mayo Unit No. 2, which are the indi-vidual coal-fired electric generating units, associated support facilities, spare parts, tools and equipment and any capitalized construction materials and supplies on hand, being constructed at the Mayo Plant. Mayo Unit No. 1 and Mayo Unit No. 2 are collec-tively referred to herein as the " Mayo Units." 1.54 Monthly Average Energy Cost The monthly average fuel cost of a generating unit in dollars per KWH determined in accordance with Exhibit PCA-I-41, Item 7, plus the most recent twelve-month average energy related operation and maintenance costs of that unit (exclusive of fuel costs) in dollars per KWrf, deterrained in accordance with Exhibit PCA-I-41, Item 6. 1.55 Monthly Ave' ne Fossil-Fueled Operating Cost The Monthl, nyerage Energy Cost of a fossil-fueled Joint Unit. 1-17

1.56 Monthly Average Nuclear Operating Cost The Monthly Average Energy Cost of a nuclear Joint Unit. 1.57 Monthly Coincident Peak Resource Demand Power Agency's Hourly Resource Demand during the hour of the Combined System monthly peak demand. 1.58 Monthly Peak Resource Demand The highest Hourly Resource Demand incurred by Power Agency during any month, as determined pursuant to Section 4.1. 1.59_ Municipal System A municipality in No+th Carolina which has become, or which may hereafter become a member of Power Agency. A list of the Municipal Systems is attached as Exhibit SA-II to the Sales Agreement. 1.60 North Carolina Utilities Commission (NCUC) The North Carolina Utilities Commission (NCUC) or any successor regulatory commission, agency or department having juris-diction over the retail sale of electricity by_CP&L in North Carolina. 1.61 -New Resource A generating resource other than Retained Capacity pro-vided by Power Agency in accordance with Sections 6.l(C) through 1 6.l(G). 1-18

1.62 Nuclear Share Pow? Agency's share of the Output of all of the nuclear-fueled units on the Combined bystem during any hour to which.Sec-tion 7.3 is applicable, determined in accordance with Sections 7.3(B)(1) and 7.3(B)(2). 1.63 Nuclear Share Replacement In any hour to which Section 7.3 applies, the excess s that exists when Power Agency's Nuclear Share exceeds its nuclear Actual Entitlement from nuclear-fueled Joint Units. 1.64- Nuclear Share Surplus During any hour to which Section 7.3 applies, the excess that exists when Power Agency's Actual Entitlement from nuclear-fueled Joint Units exceeds its Nuclear Share. 1.65 Operating Agreemenc The agreement, dated concurrently herewith, between CP&L anF Power Agency establishing the terms and conditions for the operation and fueling of the Joint Fccilities by CP&L on behalf of itself and Power Agency, which is entitled the Operat-ing and Fuel. Agreement. 1.66 Output . The net amount of electric power, measured i6 kilowatt-hours, supplied in any hour by a generating unit to the transmis-sion cystem. Output is determined by subtracting all auxiliary . power used by the unit durirg each hour from the metered gross 1-19 y._ _ 

                             .        _                      v

kilowatt hours generated by the unit during each such hour, but, as used in this-Agreement shall not be less than zero. 

     -1.67      Owner

[ Either CP&L (in CP&L's capacity as an owner of interests in Joint Facilities) or Power Agency. 1.68 Ownership Interest Power Agency's Ownership Interest in any Joint Facility at any time is the aggregate of the undivided ownership interests ! (expressed as percentages) which Power Agency has purchased, and CP&L has conveyed to Power Agency, at and through the closings provided for in Article 2 of the Sales Agreement. Ownership Interest in the !!ayo Unitr and the Harris Units at any time shall be a percentage equal to the product of the Ultimate Ownership Interest times the Cumulative Closing Ratio; provided, however, that.at all times, Power Agency's Ownership Interest in the flayo Units and the Harris Units shall be subject to adjustment as set forth in Sections 14.3, 14.4 and 2S.i of the Sales Agreement. Ownership Interest in the Brunswick l Plant and Roxboro Unit No. 4 shall be a percentage equal to the product of the Ultimate Ownership Interest times the Cumulative-Closing Ratio times the Service Ratio; provided, however, that ( at all times, Power Agency's Ownership Interest in the Bruns-wick Units'and Roxboro Unit No. 4 shall a subject to adjustment in accordance with Sections 14.3 and 14.4 of the Sales Agreement. l-20

Following_the Final Closing Date, Ownership Interest in any Joint Facility shall be equal to the Ultimate ownership Interest'except- 

     ~

as Ownership Interest may be modified pursuant to Sections 14.3, 14.4 or 25.1 of the Sales Agreenent. l 1.69' Ownership Offering As relates to any Joint Facility, the Ownership Offering l in a unit.or_other facility is the undivided ownership interest (expressed at a percentage) which CP&L has made available for purchase by Power Agency pursuant to the Sales Agreement. The Ownership Offering in each of the Joint Facilities is set forth in Section 2.1(A) of the Sales Agreement. 1 i f 1.70 Participant A Municipal System which prior to the Firnt Closing Date has entered into a Project Power Sales Agreement and a Supple-mental Power Sales Agreement with Power Agency, in the forms prescribed in Exhibits SA-VII and SA-VIII to the Sales Agreement, for the supply by Power Agency of capacity and energy to such Participant. 1.71 Point of Connection Any point at which the conductors owned by CP&L connect h ! with the conductors owned by (i) Power Agency, (ii) a Participant, or (iii) any other entity t^r the purpose of delivering electric power in accordance with the provisions of this Agreement. 1-21

r 1.72 . Project Power Sales Agreement ! An agreement which is in the form of Exhibit SA-VII to the Sales Agreement between Power Agency and a Participant. 1.73 Protection Station A station owned by CP&L which is installed at a loca- 

     . tion suitable for protecting the safety, reliability, continuity, or . operating characteristics of the CP& L system from the effects of supplying electric power to Power Agency or a Participant, I

and which includes the materials and equipment necessary to pro-l vide such protection. 9 1.74 Purchased Capacity Capacity purchased by CP&L in accordance with Section 9.1. 1.75 Purchased, Energy Energy associated with Purchased Capacity as described in Section 9.2. 1.76 Related Agreements Those agreements described in Sections 1.65 and 1.84. l 1.77 Reload Fuel' Nuclear Fuel Material and Nuclear Fuel Services associ-ated with those fuel batches which are not part of the Initial Fuel Cores for the Brunswick and Harris Units, but which have been 1-22

cpecifically designahd to a particular Brunswick or.!!arris Unit in accordance with Section'3.2 of the Operating Agreement. 1.78 Replacement Energy l 2nergy supplied to Power Agency in accordance with Sec-l tion 7.2. -

1.79 ,

Reserve Account l The account, defined in Exhibit PCA-XI, in which funds provided by Power Agency in accordance with Section 21.10 are held. l l 1.80 Reserve Capacity Capacity sold by CP& L in accordance with Section 7.4(A). l 1.81 Reserve Energy Energy associated with Reserve Capacity as described in Sections 7.4 and 8.2(B) . 1.82 Retained Capacity The capacity retained by Power Agency pursuant to Article 5. t 1.83 Roxboro Unit No. 4 Roxboro Unit No. 4 is the individual coal-fired electric l generating unit placed in Commercial Operation in 1980 at the Rox-boro Steam Electric Plant near Roxboro, North Carolina, the support 1-23

facilities directly associated solely with such unit, spare parts, tools and equipment and any capitalized construction materials and supplies on hand, all as more completely described in the Bill of Sale, the form of which is prescribed in Exhibit SA-IV to the Sales Agreement. The boundaries of Roxboro Unit No. 4 art illus-trated in Exhibit SA-XVIII to the S61es Agreement. Transmission facilities located at the site, including step-up transformert having a high side transmission voltage, are not included as part , of Roxboro Unit No. 4. l 1.84 Sales Agreement The agreement, entitled the Purchase, Construction and Ownership Agreement, dated concurrently herewith, between CP&L and 

;                        Power Agency establishing the terms and conditions for the sale to Power Agency of certain undivided ownership interests in the Joint i                        Facilities, and for the Construction, Initial Fueling and placing
 ,                       into Commercial Operation by CP&L of the Joint Facilit'ies.

i i 1.85 Scheduled Purchased Capacity Percentage I The Scheduled Purchased Capacity Percentage as deter-mined in accordance with Section 5.3. l.86 Scheduled Retained Capacity Fercentage The Scheduled Retained Capacity Percentage as deter-mined in accordance with Section 5.3. 1.87 SEPA The Southeastern Power Administration. . 1-24 

               .       .    .          .-       .    .    ,         .=-   .

L . Q' + 

                                 ~

L 1.88 Service Patio For the period beginning with the First Closing Date 

      - through November 30, 1982, the Service Ratio used in any closing shall be a decimal fraction equal to .69 divided by the Cumulative i

j Closing Ratio, but not greater than 1.0. For the period beginning with December 1, 1982, the Service Ratio used in any closing shall be 1.0. [489 Special Reserve Fund The fund to be established and maintained by Power Agency in accordance with Section 21.10. l ! 1.90 Spinning Reserve Generating capacity that is on line with capability to pick up additional load on demand or capacity that can be started and loaded within ten (10) minutes .in compliance with the usual l l l practice of CP&L in its interconnected operations with other I utilities. l 1.91 Subsequent Closing Ratio l-l As is applicable to each Lubsequent Closing, Power l l 

        -Agency's Subsequent Closing Ratic is the ratio of the portion of

! Power Agency's Ultimate Ownership Interest in the Joint Facilities 

<        which Power Agency shall purchase and CP&L shall convey at such              .

Subsequent Closing (without regard to the application of the Ser-vice Ratio), to Power Agency's Ultimate Ownership Interest in each Joint Facility. 1-25

1.92 Subsequent Closings The closings provided for in Section 2.l(D)(1)(b) of the Sales Agreement after the First closing Date at and through which Power Agency shall purchase and CP&L shall convey the remaining portion of Power Agency's Ultimate Ownership Interest i in each Joint Facility. 1.93 Supplemental Capacity Capacity sold by CP&L to Power Agency in accordance with Section 6.1. 1.94 Supplemental Capacity Reduction The amount of capacity, in KW, by which Power Agency plans to reduce Supplemental Capacity, as stated in a notice given by Power Agency pursuant to Section 6.l( D) or 6.l(E) . 1.95 Supplemental Energy Energy associated with Supplemental Capacity as ac-scribed in Sections 6.1, 7.5, 8.2(C) and 8.3. 1.96 Supplemental Power Sales Agreement An agreement in the form of Exhibit SA-VIII to the 4 Sales Agreement between Power Agency and a Participant. 1.97 Surplus Ene rgy Energy from Joint Pacilit.4's which is purchased from Power Agency by CP&L, or sold by Power Agency to entities other than Participants, as determined in accordance with Article 11.. 1-26

l I i 1.9p LTransition Period l= The period between'the First Closing Date and a date j in the month of December 1983 to be specified by Power Agency at l- least ten (10) days before such date. i . . l 1.99 Transmission Use Charge The charge for transmission services to Power Agency's Delivery Points or to Participant's Delivery Points, pursuant to ' Article 13 calculated in accordance with Exhibit PCA-I-45 through 61. This charge will include facilities from the low voltage side of the generator step-up transformer (as described in Article 2) to the Delivery Points of Power Agency or a Par-ticipant as described in Section 13.1(A). 1.100 Trigger Dates The dates on which Interim capacity may become avail-oble pursuant to Section 10.2. 1.101 Ultimate Ownership Interest Power Agency's Ultimate Ownership Interest in any Joint Facility is the Ownership Offering in such Joint Facility times the Commitment Ratio. 1.102 Unit i Brunswick Unit No. 1; Brunswick Unit No. 2; Mayo Unit No. 1; Mayo Unit No. 2; Harris Unit No, 1; Harris Unit No. 2; i Harris Unit No. 3; Harris Unit No. 4; or Roxboro Unit No. 4. , l l l l-27 b 

                               -    -       =-        -
                                                           .        -c   s   .

1.103 Unused Supplemental Capacity Capacity that is available to meet Power Agency's liourly Resource Demand in accordance with Section 7.5. l l l i l 1-28

c ARrACLE 2 INTERCONNECTION AND PROTECTION O_FF SYSTEMC Pursuant to the Sales Agreement, Power Agency owns certain undivided interests in the Joint Pacilities, as fully described in Article 2 of the Sales Agreement. Participants in Power Agency are various Municipal Systems which own elec-tric distribution systems serving consumers in North Carolina. Pursuant to this Power Coordination Agreement, CP&L will inter-connect its generation and transmission system with the Joint Faci'litics at the point where the generator leads of the Joint Facilities connect to CP&L's generator step-up transformer and with the Points of Connection for the systems owned by the Par-ticipants. Through these interconnections of the systems and through other Delivery Points as described more fully in Sec-tion 13.6, CP&L will deliver Power Agency's power and will provide the supplemental and backstand services described in this Agreement. Through these interconnections of the systems, CP&L will purchase from Power Agency the capacity and energy f rom the Joint Facilities as provided for in this Agreement. In carrying out the transactions provided for herein, each of the parties shall cooperate and assist the other in fulfilling. and discharging the responsibilities assumed under this Agree-ment. This general undertaking of mutual cooperation and 2-1

l assistance shall not be deemed to replace or modify in any respect the specific responsibilities and obligations of the parties hereto. Power Agency shall install, maintain and operate, and shall require its Participants to install, maintain and operate,  ! such protective equipment and switching, voltage control, load shedding and other facilities as shall be required in order to (1) assure continuity and adequacy of service and the stability of the interconnected facilities of CP&L and Power Agency and its Par'icipants, c and (2) provide adequate protection for CP&L's facilities, and its services to other customers, against trouble originating on the system of Power Agency and its Participants. The parties to this Agreement shall. avoid and refrain from, and Power Agency shall require its Participants to avoid and refrain from, any acts or transactions, rr the use of any equipment, appliance or device, which (1) would have a signi-ficant adverse effect upon the reliability or operating charac-teristics of the CP&L System, or of the interconnected facili-ties of Power Agency or its. Participants, including, but not limited to, such adverse effects caused by interconnections be- > tween Delivery Points or (2) would interconnect the CP&L system through the systems of Power Agency or its Participants with other power suppliers without prior agreement between the par-ties on reasonable measures or conditions, if any. for parallel 2-2

operation. The parties shall maintain, and Power Agency shall l require its Participants to .aaintain, a reasonable electrical balance between the phases at each Delivery Point. 2-3

1 J r ARTICLE 3  ; I SCHEDULING AND DISPATCHING CP&L shall have sole responsibility for the sched-uling and dispatching of the available capacity of the Joint' Facilities. CP&L shall schedule and dispatch the Joint Facil-ities in accordance with CP&L's standard scheduling and dis-patching procedures to serve the combined loads of CP&L and Power Agency. Power Agency shall be responsible for providing CP&L promptly with any and all information reasonably deemed necessary by CP&L in order to carry out its dispatch function, including, but not limited to, the telemetering of Delivery i Point data of Power Agency or its Participants where such tele-4 metering is-reasonably deemed necessary by CP&L to carry out its scheduling and dispatch function. 4 4 w 9

  • 3-1 4
          ~p ,       . . . -              r      --                     .~ _

               .A :

l l i i ARTICLE 4 RESOURCE DEMAND 4.1 Determination o{ Peak and Hourly Resource Demand (A) Power Agency's Hourly Pnnource Demand shall be l the sum of all of the loads of Power Agency's Participants for l which there is in effect a Supplemental Power Sales Agreement l l except for loads excluded pursuant to Section 6.l(A). Power Agency's Hourly Resource Demand shall be determ ned by summing the 60-minute demands, taking account of Sectic - i 4.l(B), in each clock hour (compensated, where ,op1 in accordance with dection 15.l(A), to reflect lotses from the meter location back to the Delivery Point) at the Delivery l l Points of Power Agency and its Participants (provided, however, the 60-minute demand of the town of Louisburg shall be adjusted l in accordance with Section 4.2(A)); adjusted for transmis-sion losses in each hour pursuant to Section 4.3. When sit-uations created through the application of Section 6.1 and Section 15.1(C) require a'lteration of metering equipment locations, the addition of metering equipment, or the summation l of meter readings in order tha* " proper 60-minute demands j of Power Agency and its Participants be included in Power Agency's Hourly Resource Demand, Power Agency agrees that such location changes, additions, or summations shall be made. Power Agency's Hourly Resource Demand shall be supplied, first by Retained Capacity (or by the backstand arrangements for 4-1 l

Retained Capacity) and by any other generating resources pro-vided by Power Agency (including the backstand arrangements therefor), the delivery of which is reflected in the demands i at Delivery Points, and second by Supplemental Capacity pur-l chased from CP&L. Monthly Peak Resource Demand in any month l refers to the highest flourly Resource Demand during such month. Power Agency's Monthly Coincident Peak Resource Demand in any month refers to Power Agency's flourly Resource Demand I during the hour of the Combined System monthly peak resource demand for such month. Annual Peak Resource Demand in any calendar year refers to the highest Monthly Peak Resource Demand during such calendar year. (B) During the Transition Period (the period between l l the First Closing Date and a date in the month of December 1983 to be specified by Power Agency at least ten (10) days before

such date), the 60-minute demands or those Participants who are not supplied by CP&L prior to the date of this Agreement shall l

l be deemed to be the hourly energy deliveries made by CP&L to Virginia Electric and Power Company for such Participants. l Such deliveries shall be dispatched by CP&L in accordance, as nearly as practicable, with weekly schedules prepared by Power Agency and submitted to CP&L by G:00 A.M. on Tuesday of the week before the deliveries are to cccur. Such weekly schedule shall begin at 12:01 A.M. Monday and shall set forth the deliveries for each hour during the week. The amount to be 4-2

l scheduled for delivery in each hour shall not be less than l l one-half of th'e' amount of the maximum delivery scheduled in l any hour of that week. The actual deliveries under such schedule shall be L l reduced by the CP&L dispatcher in any hour that the output asso-ciated with Power Agency's Retained Capacity in megawatts is reduced by Forced Reductions on Joint Units by an amount in excess of the megawatts of Reserve Capacity to which Power , l l Agency is entitled. As nearly as practicable, such reduction l i shall be made in four (4) mcgawatt increments and shall be based on a fixed relationship between the megawatts of delivery reduction and the megawatts of Forced Reduction in excess of t l Reserve Capacity. Such relationship of delivery reduction to l Forced Reduction in excess of Reserve Capacity shall be fur-nished to CP&L by Power Agency at least thirty (30) days prior i to the First Closing Date and at least thirty (30) days prior to each Subsequent Closing during the Transition Period. The l total megawatt hour deliveries each day shall adhere as nearly as practicable to the scheduled deliveries adjusted for such Forced Reductions. Such deliveries shall not exceed (1) ninety-five (95) megawatts for the period from the First Closing Date to a date in the month of December 1982 specified by Power Agency at least tea (10) days prior to such date; and (2) one hundred thirty-eight (138) metawattr for the period from such date in 4-3 7

l l i i December 1982 to the end of the Transition Period, without the l prior written consent of CP&L. 4.2 Capacity and Energy from SEPA (A) Pursuant to existing contracts between the United States of America and CP&L, the United S'tates of America and the town of Louisburg, North Carolina, and between CP&L and the town of Louisburg, CP&L shall continue to deliver to Louisburg the capacity and energy, including deficiency energy, to which it is entitled from the Southeastern Power Administra-tion ("SEPA") under such contracts. Except for the SEPA power, Power Agency shall provide the power requirements for Louisburg. For purposes of determining Power Agency's and CP&L's obliga-tions for capacity and energy under this Agreement, CP&L shall, for the period of the existing SEPA contract, deduct Louisburg's SEPA capacity allocation in kilowatts from Louisburg's maximum monthly metered demand. The remainder of Louisburg 's SEPA monthly allocation cf energy shall be prorated over each other hour in such . month by multiplying the ratio of each of Louisburg 's hourly demands to its maximum he rly demand in such month by Louisburg 's SEPA capacity allocation, and the resulting capacity for each such hour shall be deducted from such hourly demand requirement. The remainder of Louisburg's hourly demand requirements in each month, af ter deducting the SEPA allocations, shall be added to 4-4 Q- , _ _ - - - - 

                                                      ~.a     -

the requirements of Power Agency's other Participants in deter-mining Dower Agency's llourly Resource Demand under this Agree-ment. (B) In.the event that SEPA enters into new contracts with Power Agency or its Participants or with CP&L, or in the l- event that the existing SEPA contracts with CP&L and with Par-l ticipants are modified, changes in the procedures set forth in l Sections 4.2(A) and 4.3 that may be appropriate, if any, shall be negotiated with Power Agency and, if appropriate, with Parti-cipants. i 14 . 3 Transmission Losses The basis for determining the appropriate transmis-sion losses for purposes of this Agreement shall be as follows: Load flow studies will be made by CP&L simulating, through the use of computers, projected system conditions for the calendar yea:: for which the study is made for (1) the annual maximum peak load hour; (2) the annual minimum load hour; and (3) cne intermediate load hour reasonably representative of average loads, of the combined loads of CP&L and Power Agency. l l Prom the values determined for these hours, a curve will be derived relating Combined System losses in percentage to the-Combined System load level expressed as a percent of the lar-l l gest combined coincident annual peak load of CP&L and Power Agency. From this curve, a percentage loss factor applicable 4-5 l 

              -,r               e

r I- ' ! Jto the Combined System hourly resource demand in each hour dur-i t ing the year shall be determined. Power Agency's 60-minute j demands in each such hour shall be adjusted for transmission losses by dividing such 60-minute demands, after adjustment in accordance with Section 4.2(A), and after compensation, where l applicable, in accordance with Section 15.1(A), for losses l-between meter location and Delivery Point, by 1.0 minus the i loss factgr thus derived for such hour expressed as a decimal fraction. 

                                                         .The first load flow study shall be conducted by CP&L

[ not more than one (1) year nor less than ninety (90) days prior to the First Closing Date, and thereafter such studies shall be conducted by CP&L at intervals. determined by changes in > system parameters deemed by CP&L to have a significant effect ! on system losses, but at least annually unless mutually agreed otherwise. Power Agency shall have the right to request that l [ CP&L perform a new load flow study at any other time and the l l cost thereof shall be borne by Power Agency. The losses determined from a study shall apply until superseded by a new l study. CP&L shall supply Power Agency with a description and the results of each load flow study CP&L conducts to deter-mine losses. To the extent that the summation of the hourly Power Agency kilowatt hour transmission losses for any year determined 4-6 x 

 'by the methodology described above differs from the losses which would be determined by multiplying the system average annual transmission loss factor for the combined loads of CP&L and Power Agency (as determined by computer studies) times the sum of the flourly. Resource Demands without regard to transmis-sion losses, an adjustment will be made, up or.down, to correct to the latter figure.          The rate applicable to the number of kilowatt hours so determined as the adjustment shall be the average cost to Power Agency of all Supplemental Energy deliv-ered by CP&L to Power Agency in the year for which the adjust-ment is made.       Such charges or credit shall be determined and be l  payable in accordance with the procedures set forth in Section f   16.2(B).

\ .. l 1 4-7 l

ARTICLE 5 RETAINED CAPACITY AND PURCHASED 

                            ,C_APACITY SCHEDULE 5.1   Power Agency's Retained Capacity (A)  Aftet the Final Closing Date, the amount of capa-city from each Joint Facility in Commercial Operation availab)e .
 .>. to Power Agency as a resource for the service of its load (Re-tained Capacity) shall be in proportion to Power Agency's Ulti-mate Uwnership Interest (as %) (Committaent Ratio (as %) times Ownership Offering (as %)] pursuant to the Sales Agreement times Scheduled Retained Capacity Percentage, as applicable, as set
forth in Section 5.3, all as more specifically set forth in i

the following formulas: (1) Power Agency's Brunswick Unit No. 1 Retained Capacity = Commitment Ratio (as %) x 18.70% x MNDC of Brunswick Unit No. 1 l (2) Power Agency's Brunswick Unit No. 2 Retained Capacity = Commitment Ratio (as %) x 18.70% x MNDC of Brunswick Unit No. 2 i i (3) Power Agency's Roxboro Unit No. 4 Retained Capacity = l l Commitment Ratio (as %) x 13.20% x MNDC of Roxboro Unit No. 4 (4) Power Agency's Harris Unit No. 1 Retained Capacity = ((Scheduled Retained Capacity Percen-tage) x (Commitment Ratio (as %) x 16.50%)] x MNDC of Harris Unit No. 1 l 5-1

l: (5) Power Agency's Harris Unit No. 2 Retained Capacity = [(Scheduled Retained Capacity Percen-tage) x (Commitment Ratio (as %) x 16.503)] x MNDC of Harris Unit No. 2 (6) Power Agency's Harris Unit No. 3 Retained Capacity = [(Scheduled Retained Capacity Percen-tage) x (Commitment Ratio (as %) x 16.50%)) x MNDC of Harris Unit No. 3 (7) Power agency's Harris Unit No. 4 Retained Capacity = [(Scheduled Retained Capacity Percen-tage) x (Commitment Ratio (as %) x 16.50%)] x MNDC of Harris Unit No. 4 (8) Power Agency's Mayo Unit No. 1 Retained Capacity = [(Scheduled Retained Capacity Percen-tage) x (Commitment Ratio (as %) x 16.50%)] x MNDC of Mayo Unit No. 1 (9) Power Agency's Mayo Unit No. 2 Retained Capacity = [(Scheduled Retained Capacity Percen-tage) x (Commitment Ratio (as %) x 16.50%)] x MNDC of Mayo Unit No. 2

(B) During the period between the First Closing Date and the Final Closing Date, the amount of Retained Capacity shall be in proportion to Power Agency's Ownership Interest (as %) [ Cumulative Closing Ratio (at last Greceding closing) -

(as %) times Service Ratio, if any, (at last preceding closing) (as %) times Commitment Ratio (as %) tintes Ownership Of fering 1 (as %)] pursuant to the Sales Agreement times Scheduled Retained Capacity Percentage, as applicaole, as set forth in Section 5.3, all as more specifically set forth in the following formulas: 5-2

(1) Power Agency's Brunswick Unit No. 1 Retained Capacity = Cumulative Closing Ratio (at last preceding cicsing) (as %) x Service Ratio (at last preceding closing) (as %) x Commitment Ratio (as %) x 18.70% x MNDC of Brunswick Unit No. 1 (2) Power Agency's Brunswick Unit No. 2 Retained Capacity = Cumulative Closing Ratio (at last preceding closing) (as %) x Service Ratio (at last preceding closing) (as %) x Commitment Ratio (as %) x 18.70% r MNDC of Brunswick Unit No. 2 (3) Power Agency's Roxboro Unit No. 4 Retained Capacity = Cumulative Closing Ratio (at last preceding closing) (as %) x Service Ratio (at last preceding closing) (as %) x Commitment Ratio (as %) x 13.20% x MNDC of Roxboro Unit No. 4 (4) Power Agency's Mayo Unit No. 1 Retained Capacity = Cumulative Closing Ratio (at last preceding closing) (as %) x Sche-duled Retained Capacity Percentage x Commitment Ratio (as %) x 16.50% x MNDC of Mayo Unit No. 1 5.2 Total Detained Capacity Power Agency's total Retained Capacity shall be the sum of the Retained Capacity from each Joint Pacility as deter-mined in accordance with Section 5.1. 5.3 Scheduled Retained Capacity Percentage and Scheduled Purchased Capacity Percentage (a) The Scheduled Retained Capacity Percentage and Scheduled Purchased Capacity Percentage for the Harris and Mayo Units to be utilized in this Agreement shall be in accordance with the following schedules: 5-3

l l Scheduled Retained Scheduled Purchased Year Capacity Percentage Capacity Percentage 1 50.000% 50.000% 2 53.333 46.667 3 56.667 43.333 4 60.000 40.000 5 63.333 36.667 6 66.667 33.333 7 70.000 30.000 8 73.333 26.667 , 9 76.667 23.333 ' 10 80.000 20.000 11 83.333 16.667 12 86.667 13.333 13 90.000 10.000 14 93.333 6.667 15 96.667 3.333 16 and subsequent years 100.000 0.000 With respect to Mayo Unit No. 1 only, the foregoing schedules shall be modified during the Transition Period des-cribed in Section 4.l(B) by multiplying the Scheduled Retained Capacity Percentage for Year 1 times 0.69 and by multiplying the Scheduled Purchased Capacity Percentage for Year 1 times 1.31. (B) For each of the Harris and Mayo Units, Year 1 shall begin on the date of Commercial Operation of such Unit. f If such date of Commercial Operation occurs prior to July 1, Year 1 shall end on December ~31 of that calendar year. If such date of Commercial Operation occurs on or after July 1, Year 1 shall end on December 31 of the next succeeding calendar year. 5-4

f-ARTICLE 6 SUPPLEMENTAL CAPACITY AND ENERGY t 6.1 Amraunt of Supplemental Capacity and Energy (A) Commencing with the First Closing Date, CP&L shall sell, and Power Agency shall purchase, Supplemental f Capacity and Energy which shall be available to Power Agency as a resource for the service of its load. CP&L undertakes hereby to provide Supplemental Capacity and Energy in the amounts required by Power Agency so that its Participants, including its Participants not supplied fully by CP&L prior i to the First Closing Date, can serve their present and future loads, other than increases in such loads which arise from an undertaking by Power Agency, or one or more of its Participants, to serve: (1) a source of demand outside the geographical _ area served by CP&L; provided, however, that CP&L shall provide Sup-plemental Capacity for loads of a Participant not located in 4 the geographical area in which CP&L serves, or in which CP&L proposes to serve, if such loads are in an area adjacent to or in reasonable proximity to an area served by such a Participant, and would be served directly by euch Participant; or (2) any additional load of a Participant which .ucause of its type and size would not be included by CP&L in planning its system and which, if served, (a) would compel an enlargement of CP&L's gen-erating facilities not otherwise included by CP&L in its system planning, including planning for Power Agency's Supplemental 6-1 

         = ._.        ._

i. L. i Capacity requirements; or (b) would impair CP&L's. ability to render adequate service to its retail and wholesale customers, including Power Agency. Prior to the First. Closing Date and in each calendar year thereafter, CP&L shall.. inform representa-tives designated by Power Agency of the basis.on which the load projections utilized by CP&L in its system pla6ning, inc1u' ding planning for Power Agency's Supplemental Capacity requirements, - are developed.- (D) ' Commencing on the First Closing Date, the amount of Suppleniental Capacity purchased by Pcwer Agency in each cal- , endar month shall be Power Agency's Monthly Peak Resource Demand, as defined in Section 4.1, in that month less its total Retained Capacity from Joint Facilities in Commbrcial Operation during ' that month. Such amount shall be adjusted in accordance with Section 6.1(D), (E), (F) or (G) where applicable. (C)(1) A resource or resources provided by Power Acency either i:1 dependently or with entities'other than CP&L shall be a New Resource under this Agreement if (c) Power Agency provides backstand sufficient to meet the intended use of such rrsource in providing Power Agency with a firm power supply; and (b) the sum of (1) the firm c pacity of such resourcer (ii) Retained Capacity; and (iii) the firm capacity of_other New Re-sources o? sting or for which notice has been given to CP&L pur-suant to Section 6.1(D) or (E), does not exceed Power Agency's projected Annual Peak Resource Demand in any calendar year

  • 6-2

following the projected date of Commercial Operation of such resource. (2) Power Agency (or a Participant) may, for any calendar year, meet a portion of its load with resources provided by it, either independently or with entities other than CP&L, but such resources may not be used to meet Hourly Resource Demand unless they are New Resources. (3) If a resource to be provided by Power Agency is not a New Resource, CP&L and Power Agency shall undertake negotiations for an interconnection agreement concerning such resource. Either party may makt appropriate application to FERC concerning such interconnection at any time such party concludes that such negotiations will not produce an agreement. (4) Power Agency shall be responsible for mak-ing the necessary arrangements, if any, to have the output of New Resources delivered to CP&L's transmission system. (5) When Power Agency begins to consider use of a resource or a New Resource, it shall advise CP&L of such con-sideration at the earliest stage which is reasonably feasible and, in any event, Power Agency shall advise CP,sL as soon as a decision is made to recommend to the Board of Powel Agency the expenditure of funds for study or construction of a specific resource or New Resource. (D) Notwithstanding the provisions of Section 6.1(B), if Power Agency plans to provide the required backstand for a 6-3 

                       ./

New Resource by purchasing. Reserve Capacity for such New Re-source from CP&L at the same reserve level required by Section 7.4(A) (but including the capacity of the New Resource in sucn calculation), and if Power Agency plans for such New Resource to be' dispatched against the Combined System loads under CP&L's dispatch control, and if such New Resource is located on the line side of a Delivery Point or is located on the load side of. a Delivery Point but has a mode of operation which precludes the transmission of energy from such resource into the CP&L System, Power Agency may meet its Hourly Resource Demand with such Nets Resource and may obtain the required backstand capacity and energy from CP&L under the applicable provisions of this Agree-ment if the New Resource is located on the line side of a De-livery Point and may reduce the amount of Supplemental Capacity to be taken by giving written notice to CP&L not later than December 31 of the calendar year eight (8) years prior to the calendar year to which the notice applies. Any notice here-under shall state the expected dependable capacity of such New Resource, its source, the means proposed.by Power Agency for the backstand of the New Resource, the period during which the N2w Resource is expected to be available t'o Power Agency, and the amount of capacity, in KW, which Power Agency intends to declare for the purpose of reducing Supplemental Capacity. In such event, the following provicions shall app?y: 6-4

w (1 )' ' Power Agency shall notify CP&L of its intention to ' bring on such - a New Resource and CP&L and Power Agency shall I undertake negotiations for a power coordination agreement appli-cable to that New Resource;'such negotiations to include, if the New Resource is to be located on the load side of a Delivery l Point (1) whether CP&L shall provide backstand capacity and energy; (2) rates, terms and conditions relating to provision of backstand capacity and energy, whether provided by CP&L or

others; and (3) rates, terms and conditions relating to trans-l mission service. The ter.ns of such power coordination agreement l

shall include the provisions of this Agreement. applicable to such New Resource;'provided, however, that in the case of New l Resources which have intermittent or limited useability of i ! capacity, the determination of MNDC and the required reserve 

 ~

level shall be subject to negotiation which takes account of such intermittent or limited useability of capacity from such resources. The terms of such power coordination agreement i shall also include provisions for the disposition by Power l Agency to CP&L or others of (a) capacity and ar.oociated energy from such New Resource which is in excess of the capacity which Power Agency. declares for purposts of reducing Supplemental Capacity and (b) capacity and associated energy from such New Resource which.is in excess of the . mounts-for which Power Agency is actually credited in each month under this Agreement; [ 

                                ,              6-5

provided, however, that the specific terms and conditions of this Agreement with respect to Surplus Energy, backstand and. 

   . transmission service shall not-apply to such excess capacity and associated energy unless CP&L so agrees in said power coordination agreement and CP&L shall not unreasonably.withold such agreement.      Either party may make appropriate application to PERC for determination of the terms and conditions for inter-connection at any time that it appears to such party that nego-tiat]ons will not produce such an agreement.

(2) Upon arriving at a power coordination agreement under Section 6.1(D) or Section 6.1(E), the amount of Supple-mental Capacity to be purchased from CP&L by Power Agency when bringing on such a New Resource either pursuant to Section 6.l(D) or Section 6.1(E) shall be as follows: l l (a) If Power Agency has given eight (8) years no-tice to CP&L pursuant to Section 6.l(D) or Section 6.1(E) with respect to a New Resource but the eight (8) year notice period has not expired, Power Agency may nonetheless, upon at leasc eighteen (18) months prior written notice, schedule such New-Resource to serve llourly Resource Demand in less than eight j (8) years; provided, however, that in such circumstances, the [ Supplemental Capacity to be purchased by Power Agency in each l ! month shall not Se reduced below zero and shall be the higher-l l of: l 6-6

1 (i) A- [B+C] (This calculation shall be made with respect to .l cach New Resource and the ' hignest result obtained shall be used.); or (ii) A - D; or (iii) A - E; Where "A" = Power Agency's Monthly Peak Resource Demand in KW in that month less the sum of (1) Power Agency's Retained Capacity from Joint Facilities in Com-mercial Operation during that month and (2) the total capacity (as defined in the power coordina-tion agreement negotiated pursuant to Section 6.1 ( D) or 6.1(E)) of New Resources for which l the eight (8) year notice period has expired l l that are in Commerc!.a1 Operation during that month. L i 

       "B" =  "A"   times .04 times the number of full calendar years which have elapsed since December 31 of         ,

I the culendar year in which the eight (8) year notice was given on such New Resource in Com-mercial Operation; provided, hovever, that the result in KW shall not be greater than the l capacity of each such New Resource (as defined in the power coordination agreement negotiated i pursuant to Section 6.1(D) or 6.1(E)). 6-7 

                             ~
                         "C" = The sum of the capacities allowed for that month of all New' Resources which are in Commercial Operation and whose eight (8) year notice period   j has not expired, exclusi.ve of the capacity of the )

1 New Resource in Commercial Operation for which the result in (i) herein is being calculated. i "D" = "A" times .04 times the number of full calendar years which have elapsed since December 31 of the calendar year in which the eight (8) raar notice was given on the New Resource which is in Commercial Operation and has the longest unexpired notice period; provided, however, the result in KW sLall not be greater than the capacity (as defined in the power coordi-nation agreement negotiated pursuant to Sec-tion 6.l(D) or 6.l(E)) of all such New Resources then in Commercial Operation for which the eight (8) year notice period has not expired. 

                          "U" = The sum of the capacities allowed for that month of all New Resources which are in Com-mercial Operation and whose eight (8) year notice period has not expired.

6-8

C i L Only those New Resources in Commercial Operation pliar to the hour in which the Monthly Peak Resource Dem2nd is established shall be used in the apt ication of the formulas in this Section 6.l(D)(2)(a). (b) If Power Agency has given eight (8) years no-tice to CP&L pursuant to Section 6.l(D) or Section 6.l(E) with

respect to New Resources and all such notice periods have ex-pired, the Supplemental Capacity purchased by Power Agency in each month shall be equal to the amount in KW resulting fram l the calculation of the term "A" in the formula set forth in Section 6.1(DJ(2)(a).

(3) If the New Resource is available for use and the required power coordination arrangement has neither been agreed to by the parties nor is effective through application to PERC, ! CP&L agrees to sell Power Agency backstaad capacity on an in-terim basis under this Agreement until such power coordination arrangement is effective; provided that following such sale CP&L shall have available to it reserve capacity of twenty percent (20%) or more. If Power Agency wishes to purchase such backstand capacity on an interim basis, it shall give CP&L sixty (60) days notice. If Power Agency does not choose to purchase backstand capacity from CP&L or if CP&L does not have such backstand capac-ity available for sale, the New Resource involved shall not be utilized by Power Agency unless and until the requisite power coordination arrangement is in effect, either as a result of 6-9

w b agreement between CP&L and Power' Agency or through an order of

PERC; provided,;howevar,-(a)'that neither Power Agency nor CP&L waives j its - rights to seek rehearing or judicial review of .such
       - FERC order or to seek a stay of such an order from FERC or from a-court; and.(b) that any - relief granted as a result of rehear-ing or judicial review shall.be given ef.fect'as of the effective date of the PERC order.

(E) Notwithstanding.the provisions'of Section 6.1(B), if Power Agency plans to meet a portion of its flourly Resource Demand during any hour of any calendar year either (1) with a New Resource the backstand capacity for which is to be provided by an entity other than CP&L, or (2) with a New Resource the backstand capacity for which is to be provided by CP&L and which is to be located on the load side of a Delivery Point and has a 

       ' mode of operation which contemplates the transmission of energy from such New Resource into the CP&L system, Power Agency may reduce the amount of Supplemen'al Capacity to be taken by giving written notice to CP&L not later then December 31 of the calendar year eight (8) years prior to the calendar year to which the notice applies. Any notice hereunder shall state the expected dependable capacity of such New Resource, its source, the means proposed by Power Agency for the backstand of the New Resource, the period during which the New-Resource is expected to be avail-able to Power Agency, and the" amount of capacity, in KW, which Power Agency intends-to declare for the purpose of reducing 6-10 g _

s , Supplemental Capacity. In such event, the following provisions l shall apply: l (1) Power Agency shall notify CP&L of its inten-tion to bring on such a New Resource and CP&L and Power Agency shall promptly undertake negotiations for a power coordination agreement to reflect the terms and conditions applicable to that New Resource. The terms of such power coordination agree-l ment shall also include orovisions for-the disposition by Power i I l Agency to CP&L or others of ia) capacity and associated energy from such New Resource which is in excess of the capacity which l Power Agency declares for purposes of reducing Supplemental j Capacity and (b) capacity and associated energy from such New { Resource which is in excess of the amounts for which Power l Agency is actually credited in each month under this Agreement; provided, however, that the E ecific terms and conditions of this Agreement with respect to Surplus Energy, backstand and transmission service shall not apply to auch excess capacity and associated energy unless CP&L so agrees in said power coor- , dination agreement and CP&L shall not unreasonably withhold such agreement. Either party may make .ppropriate w application to FERC for detern.ination of such terms and conditions for in-terconnection at any-time that it appears to such party that negotiations'will not produce such an agreement. (2) Upon arriving at'a power coordination agree-ment under Section 6.l(E)(1) for a New Resource,.the amount 6-11 

                              ~

r- . n l Iv of Supplemental Capacity to be purchased from CP&L by Power Agency when bringing on such New Resource shall'be as follows: (a) Where (i) the backstand sufficient to pro-vide firm power from such New Resource is to be provided by an 

      ' entity other than CP&L and (11) such New Resource is to be. dis-patchad by CP&L, the Supplemental Capacity to be purchased by l

Power Agency in each month shall be determined pursuant to.Sec-tion 6.l( D) ( 2) . (b) Where the conditions set forth in Section 6.l(E)(2)(a) are not met, the Supplemental Capacity to be pur-chased by Power Agency in each month shall be determined in the

manner agreed to in the power coordination agreement negotiated pursuant to Section 6.l(E)(1). ,

(3) If the New Resource is available for use and ! the required power coordination arrange.nent bRs neither been l agreed to by the parties nor iu effective through application to FERC, CP&L agrees to sell Power Agency backstand capacity on an interim basis under this Agreement until such power coordina-tion arrangement is effective; provided that following such sale CP&L snall h' ave available to it reserve capacity of twenty per-cent (20%) or more. If Power Agency wishes to purchase such backstand capacity on an interim basis', it shall give CP5L sixty (60) days notice. If Power Agency does not choose to purchase-backstand capacity from CP&L or if CP&L does not have such back-stand capacity available for sale, the New Resource involved

4 6-12 g- _

shall not be utilized by Power Agency unless and until the requisite power coordination arrangement is in ef fect, either as a result of aureement between CP&L and Power Agency or through an order of FERC; provided, however, (a) that neither Power 7,gency nor CP&L waives its rights to seek rehearing or judicial review of such FERC order or to seek a stay of such an order from FERC or from a court; and (b) that any relief granted as a result of rehearing or judicial review shall be given ef fect as of the ef fective date of the FERC order. (F) Subject to Section 6.l(A), if the New Resource planned by Power Agency to implement the noticed Supplemental Capacity redinction (Supplemental Capacity Reduction) is no,t available at the end of the eight (8) year notice period pro-vided for in Section 6.l(D) or 6.l(E), or such shorter notice period provided to CP&L pursuant to Section 6.l(D)(2)(a), as applicable, for any reason other than the status of the power coordination arrangement referred to in Section 6.l(D) or 6.l(E), CP&L shall, upon request by Power Agency, supply the Supplemental Capacity Reduction; provided that the Supplemental Capacity Reduc-tion shall not be available to Power Agency for use as Unused Sup-plemental Capacity. Power Agency shall pay for such Supplemental Capacity Reduction on the following basis: (1) If CP&L's actual reserve level as computed in accordance with Section 7.4(A) in the year following the end 6-13

4 of the notice. period provided in Section 6.l(D) or 6.l(E), as applicable,,is twenty percent (20%) or greater with CP&L sup-plying the Supplemental Capacity Reduction, Power Agency shall pay CP&L for the Supplemental Capacity Reduction at the appli-cable Supplemental Lapacity rate. (2) If CP&L's actual reserve level as computed in accordance with~Section 7.4(A) in the year following the end of , the notice period provided in Section 6.l(D) or 6.l(E), as ap-plicable, is less than twenty percent (20%) with CP&L supplying 

  . the Supplemental Capacity Reduction,-Power Agency will pay Cf&L for the demand component of the Supplemental Capacity Reduction at the higher of-the Supplemental Capacity rate or CP&L's actual cost of obtaining'such capacity from other suppliers.                                       -

(3) Power Agency shall pay CP&L for the energy com-ponent of the Supplemental Capacity Reduction at the Deficiency Energy rate. Such energy component shall be the energy deliv- ~ ered when, and to the extent that, the Supplemental' Capacity V demand in any hour exceeds what the m >nthly peak Supplemental Capacity demand would have-been had the New Resource been in service at the capacity declared by Power Agency in its notice given to CP&L for reducing Supplemental Capacity pursuant to - 1 Sections 6.l(D) and 6.l(E) during the hour that the Monthly Peak Resource Demand was established. 2 (4) The' terms of this Section 6.l(F) shall apply only to the period beginning.with the_ commencement of the . 6-14 s

l period of availability of the af fected New Resource as stated in the . notice provided pursuant to Section 6.l(D) or 6.l(E)~ l or the shorter notice. period pursuant' to Section 6.l(D)(2)(a), I as applicable, and continuing until either (i) the capa'.ity of - the New Resource as stated in the notice provided pursuant to Section 6.l(D) or 6.l(E) becomes available; (ii) eight-(8) years af ter Power Agency gives CP&L written notice of Power Agency's intent permanently to cancel, retire, or decommission the New Resource or to dispose permanently of the output of the New Resource; or (iii) Power Agency obtains or acquires, and -continues to provide, pursuant to Section 6. l(G), another 11ew Resource (Substitute New Resource) to replace capacity and energy which otherwise would have been available from the former New Resource (Former New Resource) to the extent the Substitute New Resource so replaces the Former New Resource. l (G) The eight (8) year notice provisions of Sections 6.l(D) and 6.l(E) and the shorter notice provisions of Section l l 6. l ( D ) ( 2 )'( a ) , and the limitations in Section 6.l(D)(2)(a) on 1 i the amount of capacity that Power Agency can utilize from a l l New Resource to reduce Supplemental Capacity shall not be ap-plied to a substitute New Resource to the extent that such Substitute New Resource replaces capacity or energy or both capacity and energy of a Former N(. . Resource which is cancelled or is delayed for any reason beyond the eight (8) year notice provided pursuant to Section '6.l(D) or 6.l(E) or Cle shorter 

                                                                   ~

L 6-15 

                         /

notice provided pursuant to Section 6.l(D)(2)(a). In addition, if the delay-or cancellation of any Joint Unit results in dan-L , gerously low reserve levels for CP;L, Power. Agency, or the Combined System,.CP&L shall, upon_ request, enter into negotia-tions with Power Agency with respect to waiving the notice pro-visions and limitations on '.he amotnt of capacity Power Agency can utilize from any New Resoutee that Power Agency has sched-uled or could schedule that would alleviate such dangerously low reserve levels. Similarly, if Power Agency is considering the addition of a New Resource which could be made available tt in less than eight (8) years and which if placed in Commercial Operation would cause abnormally high reserve levels on the Combined System or the CP&L system, Power Agency shall, upon request, enter into negotiations with CP&L with respect to the 

    -timing of completion of such New Resource that would alleviate such abnormally high reserve levels.                  -

6.2 Utilization of Supplemental Capacity and Energy l The extent to which Power Agency utilizes Supplemenial l Capacity in each hour shall be determined in accordance with Secticns 7.5, 8.2(C) and 8.3. f 6.3 Charges for , Supplemental Capacity and Energy (A) . Power Agency shall pay a monthly capacity charge for Supplemental Capacity calculated in accordance with Section 16.2 and Exhibit PCA-I-27. Power .Tgency shall pay for energy associated with Supplemental Capacity at a rate per kilowatt 6-16 

             +

hourJealculated.in accordance with Section 16.4 and Exhibit PCA-I-36. (B) If Power Agency notifies CP&L in accordance with . 

      'Section 6.l(C), (D) or (E) that it plans' to meet a portion of its flourly Resource Demand with a New Resource or with any other resource to be provided by it, either independently or with an entity other than CP&L, and if the sum of the capacity i

of such New Resource or other resource, plus the capacities of Power Agency's other resources (including Retained Capacity), exceeds eighty percent (80%) of Power Agency's projected Annuai Peak Resource Demand in any calendar year following the projec-ted date of Commercial Operation of such New Resource or other resource, Power Agency and CP&L shall promptly undertake nego-tiations for a revised monthly capacity ch'arge for Supplemental 5 Capacity which appropriately takes account of the annual pattern 

                                               ~

of Supplemental Capacity usage in such circumstances: provided, however, that if Power Agency declares that the capacity of the New Resource or other resource utilized to serve its liourly Re- 

      . source Demand shall be limited to an amount such that the sum of capacities described above does not exceed eighty percent (80%) of the projected Annual Peak Resource Denand described above, the monthly capacity charge for Supplemental Capacity set forth in Section 6.3(A) need not be renegotiated. Either patty may make appropriate applicction to FERC for determination of 6-17
                                       -r        --e-

     . - .      .      ...                                , -. .                           . .                            -                .       ~ .. . .                   . .

1 

;                  such-revised Supplemental Capacity _ charge at any: time that it

) - 

                                                                                                                                                 +

L appears:to such party that negotiations will not produce such t-j an agreement. , 4 4 1 b< 7 4 i ) t 4 i t i i k r 1 1 1 l-1 4 i l. J a 1 i i 4 3 i- ( 

                                                                                             .s                                                                                       . .s l

4 . 6-18 i .

f. * -

c y . .s--- , , - - , _ - , , .-,e v,. - , - , . - - c,5..y.-- 3- -n-,. , - + --, , - , , - , , , , , , , - . . , ~ -,,-. . , ,, , _

ARTICLE.7 POWER AGENCY'S ENTITLEMENTS TO CAPACITY AND ENERGY FROM RETAINED CAPACITY AND ASSOCI ATED BACKSTAND 

    -7.1  Power Agency's Actual Entitlement from Joint Facilities (A)  After the Final Closing Date, in each hour, Power Agency    itall be entitled to Output from each of the Joint -Facil-ities (Actual Entitlement) in proportion to Power Agency's Ulti'   -

i mate Ownership Interest (as %) [ Commitment Ratio (as %) x Owner-ship Offering.(as %)] pursuant to the Sales Agreement times Scheduled Retained Capacity Percentage, as applicable, as set forth in Section 5.3, all as more specifically set forth in the following formulas: (1) Power Agency's Actual Entitlement from Brunswick Unit No. 1= l Commitment Ratio (as %) x 18.70% x i Output of Brunswick Unit No. 1 (2) Power Agency's Actual Entitlement from Brunswick Unit No. 2= Commitment Ratio (as %) x 18.70% x Output of Brunswick Unit No. 2 (3) Power Agency's Actual Entitlement from , Roxboro Unit No. 4= Commitment Ratio (as-%) x 13.20% x Output of Roxboro Unit No. 4 (4) Power Agency's Actual Entitlement from liarris Unit No. 1= [(Scheduled Retained Capacity Per-centage) x (Commitment Ratio (as %) x 16.50%)] x Output of Harris Unit No. 1 

                                     .7-1

(5) Power Agency's Actual Entitlement from Harris Unit No. 2= [(Scheduled Retained Cchacity Per-centage) x (Commitment Ratio (as %) x 16.50%)] x Output of Harris Unit No. 2 (6) Power Agency's Actual. Entitlement from Harris Unit No. 3= [(Scheduled R.$.ained Capacity Per-centage) x (Commitment Ratio (as %) x 16.50%)] x Output of Harris Unit No. 3 (7) Power Agency's Actual Entitlement from Harris Unit No. 4= ((Scheduled Retained Capacity Per-centage) x (Commitment Ratio (as %) x 16.50%)! x Output of Harris Unit No. 4 (8) Power Agency's Actual Entitlement from Mayo Unit No.,1 = [(Scheduled Retained Capacity Per-centage) x (Commitment Ratio (as %) x 16.50%)] x Output of Mayo Unit l No. 1 l l (9) Power Agency's Actual Entitlement from Mayo Unit No. 2= i [(Scheduled Retained Capacity Per-centage) x (Commitment Ratio (as %) x 16.50%)] x Output of Mayo Unit No. 2 (B) During the period between the First Closing Date and the Final Closing Date, in each hour, Power Agency shall he entitlea to Output from each of the Joint Facilities (Actual Entitlement) in proportion to Power Agency's Ownership Interest (as %) (Cumulative Closing Ratio (at last preceding closing) (as %) times Service Ratio, if any, (at last preceding closing) 7-2

l. l (as %) times Commitment Ratio (as %) times Ownership Offering l

(as %)] pursuant to the Sales Agreement times Scheduled Retained Capacity Percentage as set forth in Section 5.3, all as more specifically set forth in the following formulas: (1) Power Agency's Actual dntitlement from Brunswick Unit No. 1= [ Cumulative Closing Ratio (at last preceding closing) (as %)'x Service

Ratio (at last preceding closing) l (as %) x Commitment Ratio (as %)

x 18.70%] x Output of Brunswick Unit 

                        ^

! No. 1 (2) Power Agency's Actual Entitlement from Brunswick Unit No. 2= ! [ Cumulative Closing Ratio (at last. preceding closing) (as %) x Service l Ratio (at last preceding closing) i (as %) x Commitment Ratio (as %) x 18.70%) x Output of Brunswick Unit No. 2 (3) Power Agency's Actual Entitlement from Roxboro Unit No. 4= l [ Cumulative Closing Ratio (at last preceding closing) (as %) x Service  : Ratio (at last preceding closing) t (as %) x Commitment Ratio (as %) l x 13.20%) x Output of Roxboro Unit No. 4 (4) Power Agency's Actual Entitlement from Mayo Unit Wo. 1= [ Cumulative Closing Ratio (at last preceding closing) (as %) r. Sched-uled Retained Capacity Percentage

x. Commitment Ratio (as %) x 16.50%]

x Output of Mayo Unit No. 1 (C) Total Actual Entitlem'ent -- Power Agency's total Actual Entitlement.chall be the sum of the Actual Entitlements 7-3

p - f rcm each Joint Unit as determined in accordance with.Section 7.1(A) or (B). 7.2 Ef fect of ' Output Reduction -- Replacement Energy (A) In any hour te which-the provisions of Section 

 '7.3 do not apply, and in which Power Agency's Actual Entitle-ment from'any Joint Unit is reduced below Power Agency's Avail-i able -Retained Capacity from such Joint Unit for reasons other a
                                                     ~

than Forced Reduction (because CP&L has a more or equally eco-i nomical source of power), CP&L shall supply Power Agency with energy to replace that which was unavailable by virtue of such I reduction (Peplacement Energy) . The total amount of sucn Fe-1 placement Energy in any hour shall be determined by subtracting Power Agency's Total Actual Entitlement fro n the lesser of (1) Power Agency's total Availdale Retained Capacity, or (2) Po we-Agency's flourly Resource Demand plus the total amount of Power Agency's sales to entities other than Participants. In deter-mining Power Agency's Available Retained Capacity from Joint Units, CP&L shall utilize its energy accounting system, which shall maintain an hourly record of the generating capability of each Joint Unit taking into account Forced Reductions as de- - fined in t'his Agreement. In no event shall CP&L supply Replace-l ment Energy to Power Agency for disposition as Surplus Energy i 1 l purchased by CP&L pursuant to Section 11.1. , l 

            ,   (B)  For the purpose of determining the price of Replacement Energy pursuant to Section 7.2(C), the following 7-4
                                                                          \

1 

      . methodology shall be used to assign Replacement Encrgy in any

! hour to individual Joint Units: (1) The Joint Units from which there is Avail-able Retained Capaci ty shall be ranked and listed in ascending i l order of Monthly Average Energy Cost. i I (2) Replacement Energy shall be deemed to be first supplied for that Joint Unit lowest in rank on such list t l for which Power Agency's Actual Entitlement therefrom is less l than the Available Retained Capacity thereof. Replacement l Energy for each successively higher ranking Joint Unit on such list shall be deemed to be supplied to the extent necessary to i I replace the difference between Power Agency's Actual Entitle-l ment therefrom and the Available Retained Capacity thereof to l meet the requirements of Section 7.2(A). (3) Energy to meet Power Agency's Hourly Resource Demand shall be deemed to be supplied first from Power Agency's Actual Entitlements and, if necessary, then from the associated Replacement Energy for all of those successive Joint Units or l portions thereof lowest on the list whose Available Retained i l Capacities do not in the aggregate exceed such Hourly Resource Demand. (4) ' Energy for Power Agency's sales to entities other than Participants resulting from and not exceeding the delivery schedule included in the contract notice provided thirty (30) days in advance of such delivery pursuant to Section 7-5

W 11.3(A)(1)'shall be deemed to be supplied first from any Actual Entitlement not required to meet Hourly Resourcc Demand and, if necessary, then from the associated Replacement Energy from all of those successive Joint Units or portions thereof next on such list whose Available Retained Capacities do not, in the aggregate, exceed the amount of such sales. (5) Energy for any additional sales by Power Agency to entities other than Participants which are the result of delivery schedule increases made by Power Agency by 2:00 P.M. of the. day before the delivery is to begin pursuant to Section 11.J(A)(2) shall be deen, ' *o be first supplied from any remain-ing Actual Entitlements and, if necessary, then from associated Replacement Energy up to the Available Retained Capacity at the l remaining Joint Units or portions thereof. (C)(1) For each kilowatt hour of Replacement Energy utilized by Power Agency to supply Hourly Resource Demand, Power Agency shall pay to CP&L a charge per kilowatt hour equal to the energy cost, calculated in accordance with Exhibit PCA-IV, which Power Agency would have incurred if the Replacement Energy had been generated by the Joint Unit or Joint Units for which such Replacement Energy is supplied in accordance with the pro-cedures set forth in Section 7.2(B). (2) For each kilowatt hour of Replacement Energy utilized by Power Agency in a sale of energy to an entity other than a Participant pursuant to Section 11.2, Power Agency shall pay to CP&L a charge per kilowatt hour as follows: 7-6

e ? (a) For Replacement Energy supplied when the delivery of Surplus Energy is made up to the delivery schedule 

     -included in the contract notice provided by Power Agency to CP&L thirty (30) days-in advance of such delivery pursuant to Section ll.3(A')(1), a charge equal to the energy cost, calcu-

} lated in accordance with Exhibit PCA-IV, which Power Agency would have incurred if the Replacement Energy had been gener-ated by the Joint Unit or Joint Units for which such Replace-ment Energy is supplied in accordance with the procedures set forth in Section 7.2(B), plus two (2) mills per KWII. (b) For additional Replacement Energy supplied to Power Agency by CP&L when th. delivery of Surplus Energy is the result of delivery schedule increases made by Power Agency by 2:00 P.M. of the day before the delivery is to begin as pro-vided for in Section 11.3(A)(2), a charge determined by averag-ing (i) the energy cost, calculated in accordance with Exhibit PCA-IV, which Power Agency would have incurred if the Replace-ment Energy had been generated by the Joint Unit or Joint Units for which suca Replacement Energy is supplied in accordance with the procedurea set forth in Section 7.2(B), and (ii) the sale price Power Agency received for the energy in making the sale, but not less than a charge equal to the energy cost which Power Agency would have incurred had such Replacement Energy been generated by such Joint Unit or Joint Units, plus one (1) mill per KWil. 7-7 C

y e - l l q (D) .If, after.the fact, it is determitted that Power , 1 L Agency has sold more energy than it was entitled to sell pur-suant to Section 11.2, Power Agency shall pcy to CP&L a charge for energy supplied by. CP&L to Power Agency for such sale whion is the greater of (i) the price which Power Agency received for the energy in making the sale, or (ii) one and one-tenth (1.1) times the Deficiency Energy rate as determined in accordance with Section 7.6; provided, however, that nothing in this Sec-tion 7.2(D) shall be deemed to have created an obligation of CP&L to supply energy for sales by Power Agency in excess of the level at which Power Agency is entitled to sell pursuant to Section 11.2. 7.3 Effect of Output Reduction -- Insufficient Load j (A) During any hour in which it is necessary to reduce the output of one or more nuclear units below the level at which j they would otherwise be operating because (i) the combined loads of ( 2&L and Power Agency are insuf ficient to utilize all avail-able nuclear capacity, or (ii) fossil-fueled units must be kept in service to meet the requirements of the system, or (iii) a combination of conditions (i) and (ii) exists, the prov!sions of this Section 7.3 shall apply; provided, however, that during the Transition Period, as defined in Section 4.l(B), the provisions of this Section 7.3 shall apply during an hour described in this Section 7.3 only if Power Agency's Retained Capacity in nuclear Joint Units exceeds eighty-eight and one-half percent (88.5%) of Hourly Resource Demand in such hou" 7-8

c (B)(1) During each such hour in which Power Agency s is not making a sale to an entity other than a Participant, Power Agency's responsibility for supplying fossil-fueled gen-eration (Fossil-Fueled' Share) during each hour shall be equal to Commi tment Ratio times eleven and one-half percent (11.5%) of the amount by which the Output of fossil-fueled generation during such hour exceeds the total amount of off-system sales for the Combined System. The difference between Power Agency's Hourly Resource Demand and its Fossil-Fueled Share shall be its Nuclear Share. (2) During each such hour in which Power Agency ' is making a cale to any entity other than a Participant, Power Agency's Fossil-Fueled Share and its Nuclear Share shall be computed as follows: (a) Power Agency's Nuclear Share shall be the lesser of the following amounts: (i) Available Retained Capacity in nuclear Joint Units; (ii) (HRD + PAS) minus [(TFO minus TSS) times (11.5% x Commitment Ratio)], but not less than zero. Where: HRD = Power Agency's Hourly Resource Demand in such hour PAS = Power Agency's total sales to entities other than Partici-pants in such hour 7-9

i TFO = Total Ottput of fossil- ' fueled generation on the Combined System in such j hour TSS = Total of f-syc tem sales f rom the Combined System in such hour, but not greater than TPO. (b) Power Agency's Fossil-Fueled Share shall be ' the amcunt by which Power Agency's Hourly Resource Demand plus the amount of such sales to entities other than participants exceeds its Nuclear Share. 5 (c) During each such hour, the total amount of sales in such hone by Power Agency to entities other than Parti-cipants shall not exceed P)wer Agency's Available Retained Capa-city minus Hourly Resource Demand. j (C)(1) If Power A9 9ncy's nuclear Actual Entitlement 0xceeds its Nuclear Share, CP&L shall purchase such excess t (Nuclear Share Surplus) from Power Agency at a price per kilo-i watt hour based upon the Monthly Average Nuclear Operating Cost of the nuclear Joint Unit in operation during such hour ! which has the highest Monthly Average Nuclear Operating Cost. Monthly Average Nuclear Operating Cost shall mean the amortized fue; cost per kilowatt hour as calculated for CP&L in accordance with Exhibit PCA-I-41, Item 7, plus energy-related operation and ! maintenance cost per kilowatt hour calculated in accordance with Exhibit PCA-I-41, Item 6. If Power Agency's Nuclear Share exceeds its Irtual Entitlement from nuclear Joint Units, Power Agency shall purchase such excess (Nuclear Share Replacement) 7-10

from CP&L at a price per kilowatt hour based upon the Monthly 

 . Average Nuclear Operating Cost of the nuclear Joint Unit in operation during such hour which' has the highest Monthly Aver-age Nuclear Operating Cost. If no nuclear Joint Unit is in operation during such hour, the price per kilowatt hour shall        ,

be based upon the Monthly Average Nuclear Operating Cost of the operable nuclear Joint Unit which has the lowest Monthly Averige Nuclear Operating Cost. (2) If Power 'gency's fossil-fueled Actual Entitle-ment exceeds its Fossil-Fueled Share, CP&L shall purchase such l excess (Fossil Share Surplus) from Power Agency at a price per i kilowatt hour based upon the Monthly Average Fossil-Fueled Operating Cost of the fossil-f ueled Joint Unit in operation during such hour which has the highest Monthly Average Fossil-l Fueled Operating Cost. Monthly Average Fossil-Fueled Operating Cost shall mean the fuel cost per kilowatt hour as calculated for CP&L in accordance with Exhibit PCA-I-41, Item 7, plus energy-related operation and maintenance cost per kilowatt hour calculated in accordance with Exhibit PCA-I-41, Item 6. If < Power Agency's Fossil-Fueled Share exceeds its Actual Entitle-ment f rom fossil-f ueled Jo. int Units, Power Agency shall purchase l such excess (Fossil Share Replacement) from CP&L at a price per j kilowatt hour based upon the Monthly Average Fossil-Fueled Oper-l ating Cost of the fossil-fueled Joint Unit in operation during such hour which has the highest Monthly Average Fossil-Fueled Operating Cost. l 7-11

r If no fossil-fueled Joint Unit is in operation during such hour, the price per kilowatt hour shall be based upon the Monthly Average Fossil-Fueled Operating Cost of the operable fossil-fueled Joint Unit which has the lowest Monthly Average Fossil-Fueled Operating Cost. l 7.4 Reserves l (A) Each year CP&L shall cell, and Power Agency shall l purchcse, Reserve Capacity in an amount determined in accordance I with this Section 7.4. In each month of each calendar year, Power Agency shall purchase Reserve Capacity in an amount deter-mined by multiplying its total Retained Capacity in Commercial Operation in that month by a percentage which is equal to the percentage reserve carried by CP&L in the immediately preceding calendar year. The following formula, using actual resources ( and actual peak values from the preceding calendar year, -shall i I be used in computing the CP&L percentage reserve: [CP&L Power Resources plus Power Agency's Retained l Capacity at the time of the CP&L Annual System Peak] l minus [the CP&L Annual System Peak plus Power Agency's l Retained Capacity at the time of the CP&L Annual i System Peak] - I ( The CP&L Annual System Peak plus Power Agency's Retained i Capacity at the time of the CP&L Annual System Peak Power Agency's use of such Reserve Capacity as a resource for the service of its load shall be determined in accordance with Section 8.2(B). At all times that such Reserve Capacity, or j any of it, is not actually being used to offset the loss of 7-12 - l l

h. Power Agency's Retained Capacity, as determined pursuant to Section 8.2(B), such Reserve Capacity shall.6e available to 4-CP&L~for any use thereof determined by-CP&L. . (B) Power Agency shall pay a monthly Reserve Capac-ity charge per kilowatt for each kilowatt of Reserve Capacity purchased in an amount calculated in accordance with Section 16.2 and Exhibit PCA-I-5. Power Agency shall pay for each kilowatt hour of Peserve Energy actually used to offset the less of the energy associated with its Retained Capacity, as 

   .such amount of' Reserve Energy is determined pursuant to Sec-tion 8.2(B), at a rate per kilowatt hour calculated in accord-9    ance with Section 16.4 and Exhibit PCA-I-31.

(C) A portion of the Reserve Capacity which CP&L shall sell and Power Agency shall purchase shall be Spinning . Reserve. The amount and charges for Spinning Reserve shall be determined in accordance with Exhibit PCA-I-62. 7.5 Unused Supplemental Capacity Unused Supplemental Capacity shall be available for the classification cf Power Agency's load pursuant to Article 8 when its Hourly Resource Demand during any hour is less than its Monthly Peak Resource Demand for the month involved. Ex-L cept to the extent otherwise provided in Sections 6.l(F) and 10.5, the amount-of Unused Supplemental Capacity is the amount by which Power Agency's Hourly Resource Demand during any hour of any month is less than its Monthly Peak Resource Demand in 7-13 

                   , &^. , '

4-Y - 

 ;+                                        -

that month, ,but shall not be higher than Power Agency's Supple-mental Capucity for the" month involved. 7.6 Deficiency Energy. 

                       #                                                                               r (A)  CP&L shall' sell, and Power Agency shcIl purchase, Deficiency Energy in any hour in an amount determined pursuant to Section-8.2 9).

(B) Power Agency shall pay for each kilowatt hour of Deficiency Energy delivered to it4 by CP&L at a rate per kilowatt' hour calculated in accordance with Section'16.4 and Exhibit PCA-i I-37 As between Power Agency and any other entity to which CP&L l makes a sale of energy priced on the basis of incremental costs in a manner similar to that specified in Exhibit-PCA-I-37, the prica of energy sold shall be determined on the basis that Power 1 - j Agency sha]1 have first priority among purchasers of energy so i priced, so that, in' pricing energy in descending order of energy 

  " " " " ~

cost in accordance with Exhibit PCA-I-37, the price to other pur- , chasers of energy priced in a similar manner shall be calculated first, and the price to Power Agency,of Deficiency Energy shall i j thereaf ter be calculated at the next lower cost, with the order of priority among such purchasers other than Power Agency est - , lished in such manner as CP&L determines. If CP&L sells owner-l uhip interests in Joint Units ~to entities other than Power Agency, such entities shall have the same priotity as Power Agency in

pricing the equivalent of Deficiency Energy sold to them. '

l 

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7-14 . l t a , - . , - - ,

x: l e , s- . ARTICLE 8 AFTER-THE-FACT CLASSIFICATION 

                                                                                 .1 i

81 General Provision on Classification Power Agengy's Hourly Resource Demand shall be laeas-ured in each hour pursuant to Article 4 and shall be classi-U 

         .ied by CP&L, after the fact, by determining in accordance with Sections 8.2 and 8.3 which types of capacity and energy were used by Power Agency in each particular hour.

8.2 Classification of Hourly Resource Demand Ju to the Level of Power Agency's. Total Retained Capacity In each hour, Power Agency's Hourly Resource Demand up to the level of its total Retained Capacity shall be classi-fled on an after-the-fact basis as follows: (A) Power Agency shall first be credited, if appli-cable, with energy entitlements determined in accordance with Sections 7.1 and-7.2, or, if applicable, in accordance with Section 7.3. In any hour to which Section 7.3 does not apply, the dntitlements determined in accordance with Sections 7.1 and-7.2 shall be credited from the Joint Units in ascending order of Monthly Average-Energy Cost of each such Joint Unit. (B) Power Agency next shall be credited with the energy associated with its Reserve Capacity. Power Agency's 

        -Reserve Capacity shall be an amount determined in accordance with Section 7.4.
    .,                                       8-1
                                                                               +
                                         *o#        1

I 

                             -(C) ' Power Agency next shall be credited with energy
             ~from Unused Supplemental Capacity, if available.           The amount and availability of Unused Supplemental Capacity shall be 4

determined _in accordance with Section 7.5. 

                             .(D)   Any-remaining requirement for energy to reacn the level of total Retained Capacity shall be classified as Deficiency Energy.

8.3 Classification of Hourly Resource Demand Above the Level of Power Agency's Total Retained Capacity In each hour, Power Agency's llourly Resource Demand i 

 ;            above the level of its total Retained Capacity shall be clas-sified as energy supplied from Supplemental Capacity and the amount of Supplemental Capacity for which Power          ~ancy shall be charged shall be fixed in accordance with Section 6.1.

s 1 1 i 9 L 4 r i k 8-2 

  ~

T L s AP*ICLE 9 CP&L'S ENTITLEMENTS TO CAPACITY AND ENERGY i- '9.1 Amou>t'of Purchased Capacity 1.. arcu;._ of. Purchased Capacity to which CP&L is entitled from each of the Mayo and Harric Units in any given year shall be determined in accordance with the following 

    -formula:

CP&L's Purchased Capacity = [ Ownership Interest (as 

                                              %) x MNDC of the respec-tive Unit] x Scheduled Purchased Capacity Per-centage in such Unit determined pursuant to Section 5.3.

I 9.2 Amount of Purchased Energy (A) For each Unit, the amount of Purchased Energy to which CP&L shall be entitled in any given hour from the-output l-j of a Harris or Mayo Unit from which it has Purchased Capacity shall be determined as follows: CP&L's Purchased Energy = [ Ownership Interest (as 

                                           %) x Output of the respec-tive Unit] x-Scheduled Purchased Capacity Percen-i                                           tage in such Unit deter-(

mined pursuant to Section 5.3. l- (B) CP&L's total Purchased Encrgy shall be the sum of the Purchased Energy from the Harris and Mayo Units as deter-determined in accordance with Section 9.2(A). i 9.3- Application of' Scheduled Purchased Capacity Percentage o Table In applying the formulas in Sections 9.1 and 9.2 it 9-1 l

shall first be determined in which Year, as that term is used in Li.e table set out pursuant to Section 5.3, the purchase is being made and the Scheduled Purchased Capacity Parcentage for the resptctive Unit for that Year shall be utilized. 9.4 Charges for Purchased Capacity and Purchased Energy CP&L shall pay a monthly capacity charge for Pur-chased Capacity in an amount calculated in accordance with Section 16.3 and Exhibit PCA-II. CP&L shall pay for Pur-chased Energy at a rate per kilowatt hour calculated in ac-cordance with Section 16.4 and Exhibit PCA-III. 9.5 Obligation to,Pg CP&L shall make the payments required to be made hereunder in accordance with Section 16.3 and Exhibit PCA-IX for Purchased Capacity from each Harris and Mayo Unit following the date of Commercial Operation of such Unit whether or not the Unit is subsequently operating, operable or retired and l notwithstanding the suspension, interruption, interference, reduction, or curtailment of the output of such Unit for any ! reason. Such payments are subject to the provisions for off-sets and credits as provided for in Article 16. , 9.6 Coramencement Date l The transactions set forth in this Article 9 shall commence as to each Harris t.n6 Mayo Unit en the date of that Unit's Commercial Operation. 9-2 

         ,                                       t
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i - 

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l ARTICLE 10 l l IWlERIM. CAPACITY r 10.1- Availability Upon thirty (30) days prior written. notice, Power - Agency,at~itsableoption,mayinitiatedelivery'ofInterim l Capacity with respect to any Mayo or Harris Unit and CP&L shall l l provide Power Agency such Interim Capacity in the amount set forth in Section-10.4 provided that the following conditions Gre met: L ! (A) The scheduled Commercial Operation date of any Mayo or Harris Unit in postponed beyond the Trigger Dates t { established by Section 10.2. (B) The postponement beyond the Trigger Date is in addition to ray delay caused by Force Majeure. (C) Power Agency demonstrates by a study undertaken following the announcement cf any st!ch postponement that its total cost of power under this Agreement and the Related Agree- ' ments will be greater followin'g such postponement-than it would have been if such postponement had not occurred. Such study-chall employ'a study period which begins'on the scheduled date of. Commercial Operation set for tb in Section 7.2( A) of the Sales Agreement and extends through'eny period of postponement beyond , f .that date caused by Force Majeure and through a further period l 

     .of-fifteen (15) full years following the date of Commercial L
, a 10~1
                         ^

a _ _ .. . _ . _ . . _s - . ~ . . _ _ . . _ . . _ ._ -.~., ,-

IY i Operation scheduled as a result of the postponement covered by Sections 10.1(A) and (B). 10.2 ., Trigger Dates (A), Subject to Section 10.2(B), the Trigger Dates df ter which Interim Capacity' may _ become available to Power Agency pursuant to Section 10.1 shall be as follows: (1) For Mayo Unit No. 1 and Harris Unit No. 1: One full year.after the applicable date set forth in Section 7.2(A) of the Sales Agree-ment. I (2) For Mayo Unit No. 2 and Harris Unit No. 2: Two full years after the applicable date set forth in Section 7.2(A) of the Sales Agree-ment. (3) For liarris Unit No. 3 and Harris Unit o. 4: Three full years after the applicable date not forth in Section 7.2(A) of the Sales Agreement. (B) In computing the Trigger Date for a particular i Mayo or liarris Unit, the running of the one, two or three year periods prescribed in Section 10.2(A) for such Unit shall be i tolled during any period of delay in the Commercial Operation of such Unit caused by Force Majmire. 10.3 Period of Availability (A) The availability of Interim Capacity shall be- 

                           - gin on the applicable Trigger Date for such Mayo or Harris Unit.

(B) The availability of Interim capacity with regard

to each postponed Mayo or liarris Unit shall end on the earlier of the following dates

10-2 4 1- ,. m

w y W' (1) The, actual date of Commercial Operation of-such postponed Mayo or Harris Unit. (2) The date on which CP&L announces that such postponed Mayo or Harris Unit has been cancelled. (3) The date on which such postponed Mayo or Harris Unit becomes subject to further postponement by reason of Force Majeure. When such period of further postponement caused by Force Majeure ends, Interim Capacity shall once again l become available until the earlier of the events described it: Section 10.3(B)(1), (2) or (4). l (4) The expiration of five (5) full years dur-ing which Interim Capacity has been available for e.uch Mayo or Harris Unit. 10.4 Amount of Interim ;'apacity The amount of Interim Capacity available with respect to each postpoaed Mayo or Harris Unit which meets the require-ments of Sections 10.l( A), (B) and (C) sball be as fo? lows: 8.25% x ' Commitment Ratio x Fxpected MNDC of l each such postponed Mayo or Harris Unit. 10.5 Use of Interim Capacity j In each month in which Interim Capacity is actually received, the total amount of such Interim Capacity with raspect to all postponed Mayo or Harris Units shall be credited by CP&L against the billing units for Supplemental Capacity for which Power Agency would otherwise be charged for such month. If, in any month, the amount of Power Agency's Supplemental Capacity 10-3 l. e

is less than the amount of Interim Capacity available to Power Agency, Power Agency shall not be entitled to credit or carry forward any amount of Interim Capacity in excess of such Sup-plemeEtal Capacity. Interim Capacity shall not be deemed to produce Surplus Energy within the meaning of Article 11. In-terim Capacity shall not be available to Power Agency to re-place Retained Capacity not available to Power Agency for any reason. Therefore, the amount of Unused Supplemental Capacity that would have been available in any hour before crediting In;erim Capacity against Supplemental Capacity shall be reduced by the amount of the Interim Capacity. 10.6 Rate for Interim Capacity The rate for Interim Capacity shall be S.005/KW day for each day on which Interim Capacity is available to Power Agency. The rate for energy associated with Interim Capacity shall be the rate for Supplemental Energy established in accor-dance with Sections 6.3 and 16.4 and Exhibit PCA-I-36. 10.7 Effect of Postponement on Purchased Capacity If the date of Commercial Operation of a Mayo or Har-ris Unit is postponed beyond its applicable Trigger Date r the provisions of Article 9 shall be applied as follows: (A) An analysis of the total number of days of post-ponement beyond the Trigger Date shall be made, and it shall be determined how many such days were attributable to: 10-4

s b l (1) postponement caused by Force Majeurc; E _ (2) postponement caused by a decision of l CP&L based upon load projections; and (3) postponement caused by other reason. (B) 70 the extent the postponement beyond the Trig-ger Date of Sny Mayo or Harris Unit is attributable to the cause set forth in Section 10.7(A)(1) or 10.7(A)(2), as determined pursuant to Section 10.7(A), Year 1 as described in Sections 5.3 l and 9.3 shall begin as to each postponed Mayo or Harris Unit on the date of that Unit's Commercial Operation. The transactions described in Article 9 shall commence as to such postponed Unit l % effective on such actual date of Commercial Operation ~with Pur-chased Capacity at the level indicated on the table set out in Section 5.3 for Year 1. Such transactions shall continue for the balance of Year 1 and for each of the tourteen (14) remain-j ing Years in said table set out in Section 5.3. l (C) To the extent the postponement beyond the Trigger Date of any Mayo or Harris Unit is attributable to the causes set l l forth in Section 10.7(A)(3), as determined pursuant to Section l 10.7(A) and Power Agency initiates the delivery of Interim Capac-ity pursuant to this Article 10 with respect to any -iayo or'Har-ris Unit, then: (1) Year 1, as described in Sections 5.3 and 9.3 shall begin on a date determined by adding to the scheduled date of Commercial Operation set forth in Section 7.2(A) of the 10-5 

                            ~

3 

        >                                                               l
i t

Sales Agreement, the number of days of postponemant attribu-table to the causes set forth in Sections 10.7(A)(1) and 10.7(A)(2) and a revised scheduled date of Commercial Opera-tion shall be determined. (2) To such revised scheduled date of Commercial-Operation, there shall be added the number of days during which

Power Agency has actually been credited with Interim Capacity associated with such Unit, but not more than the number of days attributable to the cause set forth in Section 10.7(A)(3), in order to determine which Year, as that term is used in the table set out in Section 5.3, shall be used to establish the. level of Purchased Capacity upon the actual Commercial Operation of such postponed Unit. If such Year, as thus determined, begins prior 4

to July 1, such Year shall end on December 31 of that calendar year. If such Year, as determined, begins af ter July 1, such

- Year shall end on December 31 of.the next succeeding calendar year.

(3) The transactions described in Article 9 shall . commence as to such postponed Unit on the actual date of Commer-cial Operation and shall continue for the balance of the Year determined pursuant to Section 10.7(C)(2) and for each of the the Years remaining thereafter in the table set out in Section 5.3. 10-6

t ARTICLE 11 OtfrPUT g EXCESS OF POWER AGENCY NEEDS 11.1 Surplus Energy l Purchased by CP&L In any hour to which Section 7.3 does not apply, CP&L shall purchase the portion of Power Agency's Actual Entitle-ments from Joint Facilities, as determined in accordance with Section 7.1, which is not utilized by Power Agency in meeting the Hourly Resource Demand of its Participants or 'in making sales to entities other than Participants pursuant to Sections 11.2 and 11.3. The extent to which Power Agency has utilized its Actual Entitlements from Joint Facilities in each hour to meet Hourly Resource Demand of its Participants shall be deter-mined in accordance with the pre isions concerning classifica-tion of deliveries set out in Section 8.2 and the extent to which Power Agency 'as utilized such Actual Entitlements in making sales pursuant to Section 11.2 shall be determined in accordance with the provisions concerning such sales in Sec-tions 11.2 and 11.3. 11.2 SurSius Energy Sales to Others When the requirements set forth in Section 11.3 are met, Power Agency shall have the right-during any hour to sell to entities other than its Participants energy from its Avail-able Retained Capacity which is not utilized by Power Agency to meet s Hourly Resource Demand. The amount of such energy 11-1

which may be sold in any hour shall be limited to the excess of energy available or that could be made available from Avail-I able Retained Capacity over the energy required to meet the llourly Resource Demand of Power Agency Participants other than load attributable to sales to other power suppliers for resale; provided, however, that when CP&L exercises the right granted it by Section 11.3(D) to match terms and conditions for such sales up to the excess of Power Agency's total Avail-able Retained Capacity over the energy required to meet ilourly l Resource Demand, the energy involved shall be treated a, though it were a sale to an entity other than a Participe it 'jursuant l to this Section 11.2. I 11.3 Procedure for Sales of Surplus Energy to Others (A)(1) Except as otherwise provided in Section ll.3(D), Power Agency may enter into contractual arrangements for sales of energy described in Section 11.2. Power Agency shall provide CP&L with a copy of an executed contract for such sales at least thirty (30) days before any deliveries under such contract are to commence. Such contract shall provide for the amount of such Surplus Energy expected to be sold each hour and a schedule under which deliveries are proposed to be made and shall be accompanied by a factual demonstration that the energy for such sales is reas-onably expected to be available in each such scheduled hour. The executed copy of the contract between Power Agency and the other 11-2 

                                     .                            ~

i i entity shall set forth the actual or estimated price per mega-watt hour at which the sale would be made, or the formula by which such price can be determined, exclusive of other costs l CP&L may impose ,as provided for in Section 11.3(B) or 11. 3(E ) . Such contract shall be subject to the provisions of Section i 11.3(D), and the provisions of any such contract between Power Agency and an entity other than CP&L shall not be inconsistent with, or interfere with the administration of, the arrangements and classifications provided for in this Agreement. Within fifteen (15) days af ter CP&L receives the executed contract for such a sale, CP&L may inform Power Agency of any respect in which such contract is inconsistent with, or interferes with l the administration of, this Agreement. Unless such contract is l modified by Power Agency -to cure the defect thus designated, the sale shall not be made. (2) A specific notice for each hourly delivery, the sum of which deliveries shall not exceed the estimated amount l of Available Retained Capacity less Power Agency's estimated l Hourly Resource Demand set forth in che schedule accompanying the contract, shall be furnished to CP&L by 2:00 P.M. one (1)- I calendar day prior to each day in which such deliveries are to be made and upon request by CP&L shall be confirmed in writing. (R) If the particular sale under Section 11.2 can reasonably be accommodated by CP&L's transmission system from 11-3 l-

I L a functional and technical standpoint and does not constitute the wheeling of power to a re' tail customer, CP&L shall wheci energy disposed of by Power Agency for the sale pursuant to Section 11.2 to a delivery point fixed by mutual agreement between CP&L and Power Agency. If the delivery of the energy for the sale is oftected in such a manner that it is not in-cluded in metered demand at a D611very Point, the llourly Re-source Demand, as determined in accordance with Section 4.1, shall be adjusted upward to reficct such delivery for purposes of the application of Sections 4.3 and 13.1(U). Power Agency shall be responsible for reimbursing CP&L for all costs of metering such deliveries of energy for sales made pursuant to Section 11.2; provided, however, that nothing contained herein shall preclude Power Agency from passing such costs of metering through to the other entity involved in the sale pursuant to Section 11.2. (C) In agreeing to wheel energy for sales pursuant to Section 11.2, CP&L makes no commitment to, and shall not be required to, construct or add transmission f acilities to f acil-itate such sales unicas it is demonstrated by Power Agency that such usage of such f acilities will pr oduce revenues for CP&L sufficient to justify the' investment required to provide the facilities. It is understood and agreed that, in considering whether to provide such facilities, the fact that sales pur-suant to Section 11.2 will be made on an "as available" basis 11-4

a must be taken into account. In no event shall CP&L be required i-to construct or. add such transmission facilities if doing so would jeopardize CP&L's ability to finance or construct on reas-onable terms facilities needed to meet the anticipated require-ments, exclusive of such sales, of the Combined System. (D) In the event Power Agency enters into a contract for a sale pursuant to Section 11.2, CP&L shall have the right to match the terms and conditions of such proposed sale for.all or any part of the scheduled deliveries thereunder. In order to exercise this right, CP&L shall be required to give Power Agency notice thereof no later than 2:00 P.M. five (5) calendar days prior to hny day on which a delivery has been scheduled in the contract and, upon request by Power Agency, CP&L shall confirm such notice in w?:iting. Upon the exercise of such right by CP&L, Power Agency shall sell to CP&L, and CP&L shall purchase, the portion of the energy involved in the cale for which CP&L has exercised its option up to the amount contem-plated in the executed contract on the schedule proposed when the executed controvt was furnished to CP&L, but not greater than the excess of Power Agenci's total Available Retained Capacity over the energy required to meet Hourly Resource De-mand, at a price per kilowatt hour equal to that which would have been derived from the contract between Power Agency and the other entity. 11-5 

 .m (E)  In the event CP&L does not exercise its rights pursuant to Section 11.3(D) and a ssle is made to another entity, Power Agency shall pay CP&L any identifiable costs incurred by CP&L in connection with such sale.

11.4 Charge to CP&L for Gurplus Energy i l When CP&L purchases Surplus Energy pursuant to Sec-l tion 11.1, CP&L shall pay for such Surplus Energy at a rate per kilowatt hour calculated in accordance with Section 16.4 and Exhibit PCA-III-6 through 9. l l I h 11-6

l ARTICLE 12 l ! MAXIMUM NET DEPENDABLE CAPABILITY 12.1 Description Maximum Net Dependable Capability (MNDC) is the main unit capability less auxiliaries and is intended to te a depend-ably attainable va'ue. MNDC is demonstrated by 24 hours of con-tinuous operation after which the resultant capability is cor-rected for any factors as shall have a seasonal limiting effect on the Unit's capability. The parties anticipate that the high-est cooling inlet water temperature will have the most adverse effect on a Unit's capability. Should operating experience show that some other factors have a more limiting effect on a Unit's capability, then such other factors shall be applied for correc- 

                  ~

tion. The MNDC of any Unit shall reflect any special lim _ cations imposed on the Unit by any fuel management program and/or by any governmental or regulatory agency. 12.2 Changg in MNDC llhenever there is an indication of a capability change of at least +5% in a Joint Unit that is reasonably expected to l last one (.L) year or more, either party to this Agreement may institute a joint investigation of operating conditions at the Unit affected. If either party concludes on the basis of that investigation that the change in capability is of a continuing nature and is not a temporary forced change, that-party may 12-1 l l

call for a test to be performed within thirty (30) days of the date on which the joint investigation is instituted. After such test, if both parties hereto agree that the indicated i i change in capability will last for more than one (1) year following the completion of the test, then the MNDC of the Unit so tested shall be established at the level indicated by the results of the test. If both parties do not agree as to the amount of the indicated change in capability or that such change will Jast more than one (1) year, the MNDC of the Unit so tested shall be set at a leve] which CP&L determines in 

                       ~

accordance ith CP&L Operating Practice to be appropriate on the basis of the test for the period that the capacity change is reasonably expected to last, if CP&L determines that such period of time will be more than one (1) year. Notwithstand-ing the foregoing, upon agreement of both the parties, the MNDC of any Unit may be changed without an invectigationi and test. i 12-2

ARTICLE 13 TRANSMISSION SERVICES A.ND DELIVERIES ,. 13.1 Transmission of Capacity and Energy (A) CP&L shall provide Power Agency with transmis- 

 ;   sion services to Power Agency's Delivery Points, or to its Participant's Delivery Points, and, where applicable, further delivery services pursuant to Section 13.3 to the Points of Connection of Power Agency or its Participants.      Through these a

transmission and other delivery services, CP&L will deliver to Power Agency, or for Power Agency's account, resources utilized by it pursuant to this Agreement it: meeting its Hourly Resource Demand. Notwithstanding the foregoing, CP&L shall not be re- 

,    quired to transmit any capacity and energy directly to any retail customer of Power Agency or of a Participant.

(B) The amount of capacity for which a Transmission Use Charge shall be paid by Power Agency in each calendar month s shall be the higher of the following amounts: (1) Power Agency's Monthly Peak Resource Demand, as defined in Section 4.1, in the then current calendar month; or (2) Power Agency's Retained Capacity. (C) If Power Agency plans to meet a portion of its load with a New Resource (whether owned or purchased), whether delivered to Power Agency or a Participant'through Delivery 13-1

1 i' 'c l l 1 [< C Pointn' or otherwise, the written notice to CP&L required by L l Section 6.l( D) or 6.1( E) shall (1) state the means by which l L ' such resource will be delivered to Power Agency or its Parti-cipant; and (2) contain a plan to be placed into effect by Power Agency to ensure the integrity.of the CP&L transmission 2 system in the event the.New Resource so noticed is not avail-able at the time or in the amount stated in the notice. 13.2 Transmission Use Charge Power Agency shall phy a monthly Transmission Use I

Charge calculated in accordance with Section 16.2 and Exhibit PCA-I-45.

13.3 Leased Facilities Charge The Transmission Use Charge provided for in Section 13.2 is based on providing transmission service to the Delivery Points. CP&L's cost of providing facilities beyond the Deliv-ery Points and facilities installed at Power Agency's request 4 ' on CP&L's side of the Delivery Points as provided in this ar-ticle 13 shall be recovered through a Leased Facilities Charge which Power Agency shall pay each month. Facilities beyond-the Delivery Poi'...s are those which are necessary from an engineer-ing and technical standpoint, taking into account CP&L's normal l-l Planning and design criteria in accordance with CP&L Operating l [ Practice, or are agreed upon by CP&L'and Power Agency, and will include: (1) Delivery Facilities owned by CP&L which are used exclusively.by Power Agency or its Participants; ( 2)- a properly 

                                       .13-2

allocable portion of Delivery Facilities owned by CP&L which are used jointly by CP&L and Power Agency or its Participants; (3) Protection Stations owned by CP&L which are used exclu-sively by Power Agency or its Participants; (4) a properly allocable portion of Protection Stations owned by CP&L which are jointly used by CP&L and Power Agency or its Participants; and (5) a properly allocable portion of all nietering, telemeter-ing and related equipment owned by CP&L and necessary for meas-uring power deliveted to Power Agency or its Participants. Ex-cept for (1) cdditional f acilities on CP&L's side of the Deliv-ery Points agreed to by CP&L and installed at Power Agency's written request; (2) Protection Stations installed at a Delivery Point; and (3) a properly allocable portion of metering, telemet-ering and related equipment necessary for measuring power deliv-cred to Power Agency or its Participants, transmission delivery f acilities up to the Delivery ?oints shall not be included in the additional facilities to be covered by the Leased Facilities Charge but shall be included in the calculation of the Transmis-sion Use Charge. Costs of facilities covered by the Leased Fa-cilities Charge shall not be included in the calculation of the Transmission Use Charge provided for in Section 13.2. The Leased Pacilities Charge shall be calculated in accordance with Exhibits PCA-I-66 through PCA-I-70 and shall be shown for each Delivery Point. The Points of Connection of the Municipal 13-3

l Systems existing on the date of this Agreement are listed in Exhibit PCA-V. Charges shall begin on the First CJosing Date for all Delivery Facilities not purchased by Power Agency pur-suant to Section 13.5 and, for new Delivery Facilities, on [ the date on which such Delivery Facilities owned by CP&L are ready for service. 13.4 Delivery Facilities Provided by Power Agency It shall be Power Agency's responsibility to provide 

  ' the distribution delivery stations, and any other facilities beyond the Delivery Point ( Delivery Facilities) for deliveries under this Agreement. Power Agency may meet this responsibility L   through the means provided in Section 13.5 for all Points of Connection in existence on the First Closing Date. For all new Points of Co..aection af ter that date, the provision of Delivery l

Facilities solely for the use of Power Agency or a Participant shall be Power Agency's sole responsibility and shall be under-taken in accordance with Section 13.6. 13.5 Facilities at Existing Delivery Points (A) With respect to Delivery Facilities which are in existence on the First Closing Date, and which will be used exclusively by Power Agency or its Participants, Power Agency or its Participants shall have the option of (1) purchasing such Delivery Pacilitica pursuant to a Delivery Facilities Sales Agreement in the form of Exhibit PCA-VI; or ( 2) paying for~such Facilities through the Leased Facilities Charge in accordance 13-4

with Section 13.3. With respect to each Delivery Facility lo- 

    . cation which Power Agency or a Participant chooses to purchase at the First Closing Date, Power Agency or its Participant shall provide CP&L with written notice of that choice not less than ninety (90) days prior to thL First Closing Date. Thereafter, Power Agency or its Participants may exercise the purchase op-tion upon ninety (90) days written notice. The Delivery Facil-ities Sales Agreement set forth as Exhibit PCA-VI may be assigned by Power Agency to individual Participants.

, As to Delivery Facilities which Power Agency chooses to purchase on the First Closing Date, CP&L shall take an inven-tory at each such Delivery Point and provide Power Agency with the same, together with a schedule detailing the computation of the sales price of such Delivery Facilities, not later than thirty (30) days prior to the First Closing Date. As to Deliv-ery Facilities purchased af ter the First Closing Date, CP&L 4 shall provide Power Agency with said inventory and purchase price computation within sixty (60) days of receipt of Power Agency's notice exercising the purchase option. The sales price for all Delivery Facilities purchased by Power Agency shall be computed at the replacement cost depreciated (replacement cost 

    -less accumulated depreciation using CP&L's depreciation rates applied to such replacement cost but not less than twenty-five percent (25%) of replacement cost) of the Delivery Facilities 4

13-5 f "

l l l as of the date of purchase, as calculated in accordance with Exhibit PCA-VI-4. The inventory and sales price schedule shall reflect projected expenditures to be made in the period between the preparation of the inventory and the date of pur-chase. Within sixty (60) days after the date of purchase, CP&L shall prepare and furnish to Power Agency or the Participant an adjusted inventory and sales price schedule for any Delivery Facility purchased as is necessary to' reflect actual conditions as of such date of purchase and any adjustments in the sales price shall be made between the parties within thirty (30) days thereafter. i For those Delivery Facilities purchased by Power l l Agency, title shall pass and the purchase price shall be due and payable on the date of purchase. CP&L shall bear the risk l l of loss or damage prior to such date of purchase. (B) With respect to Delivery Facilities which will be used jointly by CP&L and Power Agency or its Participants, l Power Agency shall pay a monthly Leased Facilities Charge l _ determined in accordance with Section 13.3 which shall becorae l l effective on the First Closing Date. (C) CP&L shall have the right to install Protection Stations in those instances where Power Agency or a Participant purchases a Delivery Facility pursuant to Section 13.5(A) or otherwise owns such Facility. Such Protection Stations shall be covered by the Leased Facilities Charge as provided in Section 13.3. 13-6

l L 13.6. Facilities at New Delivery Points (A) If Power Agency desires a new Delivery Point after the First Closing Date, it shall so inform CP&L in writ-l ing, designating the proposed location, the required capacity and the delivery voltage desired. Subject to the provisions ! of Section 13.6(B), CP&L shall provide the new Point of Con-nection at a mutually acceptable location on its then existing ! facilities. The Delivery Point for such new Point of Connec-tion shall be fixed by CP&L and the provisions of Sections 13.6(C) and 13.6(D) shall apply. Subject to the provisions of Section 13.6(B), CP&L shall extend its transmission system if I necessary to any location which can reasonably be justified, taking into account the transmission and distribution costs to both parties and the future need for the facilities. Power' Agency shall not request locations for new Delivery Points in furtherance of a plan or pattern to minimize the delivery cost of Power Agency or its Participants by obtaining additional investment in transmission facilities by CP&L; and CP&L shall not deny requests in furtherance of a plan or pattern to mini-mize it.s delivery cost or to increase the delivery cost of Power Agency or its Participants by obtaining additional in-vestment in transmission or distribution facilities by Power Agency. CP&L shall not be committed hereby to extending its l 115 KV lines where an extension of its 230 KV lines could reas-l- onably be used to provide the requested Delivery Point. 13-7

l l (B) The following standards shall apply to any trans-l mission extension undertaken for Power Agency pursuant to this l Section 13.6 and to the provision of new Points of Connection ! and Delivery Points on (i) CP&L's transmission system without l the need for extension or (ii) at distribution substations: (1) Where a new Point of Connection is to be provided at any voltage less than 230 KV, such Point of Con-m nection shall be (a) at 115 KV only if a special agreement between the parties can be reached; or (b) located at the secondary busses of CP&L's genar9l distribution high tension substations in existence or planced at the time that the re-quest for such new Point of Connection is made at 23 KV (22,860 volts) or, where such service can be provided from facilities in existence at the First Closing Date, at 12 KV (12,470 volts). (2) CP&L shall not be required to undertake any such transmission line extension or to provide a new Delivery Point without extension unless (a) it is technically feasible to do so; and (b) the necessary rights of way and equipment have been obtained at a sufficient time prior to the date of commencement of service. (3) All such transmission line extensions shall be constructed in accordance with CP&L Operating Practice. (4) Where a Power Agency request for' a new De-livery Point would require extension of a 115 KV transmission 13-8

line, such transmission line extension shall be made only by special agreement between the parties. (5) Such transmission line extension shall be made in the area served by CP&L. (6) Delivery Points on, or extensions from, the 115 KV or 230 KV transmission system shall be for a load of 5000 KW or greater. (7) No Delivery Point shall be connected to a transmission line with a nominal voltage of more than 230 KV, whether a new extension or a then existing linc, unless the proposed arrangement is technically and economically sound and feasible and is agreeable to both parties. (C) Power Agency shall be responsible for providing l (either directly or by its Participante, the Delivery Facilities l for all new Delivery Points where the Delivery Facilities are l used exclusively to serve Power Agency or its Participants. l Power Agency or its Participants shall have the option of pro-viding such Delivery Facilities by constructing and owning them, l or by having CP&L construct and own them with Power Agency pay-ing for such Delivery Facilities through the Leased Facilities Charge in accordance with Section 13.3. Where CP&L constructs and owns such Delivery Facilities in the first instance, Power Agency or its Participants shall also have the option of pur-chasing such Delivery Facilities in accordance with the terms set out in Section 13.5(A). Where the Delivery Facilities 13-9

l are to be used jointly by CP&L and Power Agency or its Parti-l cipante, CP&L shall provide the Delivery Facilities and Power i l Agency shall pay a Leased Facilities Charge in accordance with Section 13.3. (D) CP&L shall have the right to install Protection Stations in those instances where Power Agency or Participants own Delivert Facilities pursuant to Section 13.6(C). Such Protection Stations shall be covered by the Leased Pacilities Charge as provided in Section 13.3. 13.7 Modification and Termination of Delivery Facilities (A) For each Delivery Point, there shall be a com-pleted and executed Delivery Point Data Sheet, all of which together shall comprise Exhibit PCA-VII. No revisions or modifications (other than necessary maintenance) of the Deliv-ery Facilities shall be undertaken for the purpose of modifying the characteristics of the delivery set out in the Delivery Point Data Sheet in Exhibit PCA-VII unless both CP&L and Power Agency so agree and a revised Delivery Point Data Sheet is first executed. CP&L and Power Agency shall agree on the amount of firm capacity required by the Power Agency at a De-livery Point, taking into account the firm load expected to be s,eved at that Point, and such amount shall be recorded on line 6.D of the Delivery Point Data Sheet. A reasonable allowance will be included if growth is anticipated. Power Agency shall not place loads on a Delivery Point in excess of 13-10

l the firm capacity amount so agreed to and recorded on the De-livery Point Data Sheet without first negotiating a new Data Sheet; provided, however, that CP&L shall not unreasonably withhold its agreement for an increase in the firm capacity amount. ? Should Power Agency want more capacity at a Deliv-ery Point than is reasonably necessary to serve the continuous load at that point for the purpose of switching load between l Delivery Points, the provisions of Section 13.9 shall apply. Whenever it is anticipated by CP&L or Power Agency that the load on a Delivery Point may exceed the firm capacity l shown on line 6.D of the Delivery Point Data Sheet, or may be ! reduced so as to otherwise cause the provisions of Section 13.9 to apply, a new Delivery Point Cata Sheet shall be negotiated with as much lead time as possible. CP&L and Power ..gency shall also agree on the effec-tive date shovn on line 3 of the Delivery Point Data Sheet. (B) Notwithstanding Section 13.7(A), CP&L shall have the right to make such revisions and modifications in those Deliveuy Facilities and Protection Stations and other facili-ties which are covered by the Leased Facilities Charge as are deemed appropriate by CP&L, in accordance with CP&L's standard practice at its other substation and distribution facilities, for the purpose of maintaining integrity, reliability, quality and safety of service. 13-11 

                ^
 .+

l j (C) Changes in CPleL-owned equipment, including, but.- not limited to, Leased' Facilities required by Delivery Point l l capacity increases pursuant to Section 13.7(A), shall be made by CP&L and paid for by Fower Agency under Section 13.3, but l l such increases.shall be limited to equipment replacement or line reconductoring in accordance with CP&L's standard prac-tice at existing voltage. .Regrests for capacity requirements beyond the normal operating cr.pacity of the existing transmis-sion or distribution system e, hall be treated as a new Delivery Point request pursuant to the provisions of Section 13.6. l (D) If a Delivery Point capacity change involves modification in CP&L-owned equipment which has been in service for less than ten (10) years, Power Agency shall pay to CP&L the Net Loss In Salvage of such facilities less ten percent (10%) per year for each full year such facilities have been in service. (E) A Delivery Point may be terminated by eitner JP&L or Power Agency. If CP&L is the initiator of a termina-tion where the Delivery Facilities are owned by Power Agency and the Delivery Point has been in service for less than ten (10). years since the most recent capacity change involving modification of equipment, CP&L shall pay to Power Agency the i Net Loss In Salvage of Delivery Facilities owned by Power Agency, less ten percent (10%) per year for each full year such ( Delivery Facilities have been in service. If Power Agency is the I 13-12 l g D --? - 

 -y initiator of the termination where the Delivery Facilities are             ,

owned by CP&L and the Delivery Point has been in service f ar 

         . less than ten (10) years since the most recent capacity change involving modification of equipment, Power Agency shall pay to CP&L the Net Loss In Salvage of Delivery Facilities owned l          by CP&L, less ten percent (10%) per year for each full year such Delivery Pacilities have been in service.- If there has been no capacity change involving modification of equipment for ten (10) years or more, neither party will be responsible for any termination charge to the other party.           Net Loss In Salvage shall mean the construction cost plus the removal cost of facil-ities being removed less the salvage value of the facilities removed.

13.8 Notice of Delivery Points and Capacities j On the First Closing Date, and thereafter prior to July 1 of each year, in conjunction with the load forecast provided pursuant to Section 17.1, Power Agency shall provide CP&L with written notice of its projected capacity requirements at each Delivery Point for the next ten (10) calendar years. The projected capacity requirement shall be for the. load reas-onaoly expected to exist in the area served by that Delivery

. Point. Such notice shall also state the proposed location, delivery voltage and estimated capacity requirements of each new Delivery Point desired by Power Agency for the next ten (10) calendar years.

13-13  ; I 

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5 13.9 Load Switching Bptween Delivery Points (A) -If Power Agency or a Participant desires the capability of switching loads between Delivery Points, such-capability shall be provided by CP&L following execution of a special agreement relating thereto. Where additional trans-mission or other facilities are required, such agreement shall' provide for payment by Power Agency of a Leased Facilities Charge to cover such investment. Alternatively, Power Agency or a Participant may provide such capability through its own facilities upon giving written notice to CP&L sufficient to enable CP&L to accommodate such an arrangement. (B) Notwithstanding the provisions of Section 13.9(A), Power Agency agrees that it will not operate its system in such a manner that alectrical interconnection is made within a Parti-cipant's system of electric service from two or more Delivery Points, and that it shall require its Participants to agree with Power Agency to the same effect; provided, however, in cases where interruptions of electric service of a circui* that can be energized from more than one Delivery Point would cause unusual hardsnip (such as extensive clean-up operations prior to restart of a continuous production process or critical computer opera-tions) for a customer of a Participant and where Participant has installed all equipment necessary to accomplish it, CP&L may permit, by express approval in each instance, che Delivery 13-14 

 , Points to be interconnected through such circuit momentarily for switching purpones.

13.10 Net Cost of Line Reconstruction or Relocation Required { Participant i Except for a Delivery Point change pursuant to Sec-tion 13.6 or Section 13.7, if a Participant requires the relo-cation or reconstruction, either overhead or undergiound, of ! any-portion of CP&L's lines crossing the lands of ;thers, under l circumstances in which elsewhere on its system-in serving retail load CP&L would seek reimbursement from others of an amount f equal to the not cost (installed cost of new facilities, plus removal cost, less salvage value) incurred in such relocation or reconstruction, Power Agency s' hall reimburse, or shall re-quire the Participant to reimburse, CP&L for the net costa in-curred in such relocation or reconstruction but not reimbursed l l by others.

13.11 Ownership of, and Access to, Facilitiea Covered by the l

Leased FacITities Charge (A) The materials and equipment covered by the Leased i Facilities Charge are and shall remain the sole property of CP&L, and Po; tar Agency shall have no right, title or interest therein except as expressly set forth in this Agreement. CP&L's owner-ship interest in any personal property covered by the Leased Facilities Charge sha.~.1 not be affected in any manner whatsoever; notwithstanding that such personal property is now, or may here-after be, attached to real property. 13-15

I 

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l t (B) -CP&L, its agents, employees and representatives may enter the facilities covered by the Leased. Facilities Charge at any time, and.any such entry by or on behalf of CP&L shall not be or constitute an eviction, partial eviction or deprivation of any right of Power Agency and shall not alter the obligations of Power Agency hereunder or create any right in Power Agency adverse to the interest of CP&L. Power Agency's' agents, employees or representatives shall not, at any time, t enter said f acilities without prior permission of CP&L either I in the form of an authorization for a particular entry or in accordance with an established procedure authorizing such entry. l (C) CP&L shall have the exclusive right and respon-l sibility to see that all materials and equipment covered by the l l Leased Facilities Charge are kept repaired and in working order in accordance with CP&L's standard practice at other similar i facilities. 13.12 Access to Facilities Except as otherwise provided in Section 13.ll(E), tne ! duly authorized represeitatives either party shall have the i l l right of access to the premises of the other at all reasonable hours for the purpose of installing facilities at agreed loca-tions, reading meters, inspecting its wiring and apparatus and changing, exchanging, or repairing its property. CP&L is t hereby designated as a duly authorized representative of Power l Agency for access to the premises of Participants for the l 13-16 l l . t

F r l purpose described.in the preceding sentence. Upon the ter-l mination of this Agreement in accordance with Article 25 or where appropriate upon default in accordance with Article 21, the same rights of access shall exist for the removal of the property of the party requiring access. I ! 13.13 Assignment of Delivery Elghts and 6bT1W tTons, Facilities and Leased Facilities Upon termination of a Supplemental Power Sales. Agree-ment with a Participant, Power Agency may assign to such Parti-cipant all rights and obligations associated with Delivery Facilities and Leased Facilities related to such Participant provided in this Article, including the obligation to make payments of Leased Facilities Charges and any payments for Net Loss In Salvage. Upon the effective date of such assign-ment, Power Agency's obligations with respect to Delivery Facilities and Leased Facilities including the obligation to make payments to CP&L shall cease. i 13-17

1 ARTICLE 14 REACTIVE POWER SUPPLY 14.1 Obligation tc[ Provide Capacitors (A) Power Agency shall install, or shall require its Participants to install, capacitors, and shall operate, or shall require its Participants to operate, switched capacitors, suf-ficient to maintain, as clo'sely as practical, zero reactive power flow between CP&L and Power Agency at Delivery Points when conductors of Participants or Power Agency are connected to con-ductors owned by CP&L. Prior to October 1 of each year, CP&L shall provida Power Agency the ratio of kilovars to kilowatts anticipated on its distribution system for the next summer load period determined by dividing (1) the sum of the kilovars of capacitors already installed and those planned for installation on CP&L's distribution system prior to May 1 of the next year by (2) CP&L's next anticipated system summer peak load in kilo-watts (the "CP&L Capacitor Ratio"). Prior to May 1 of the next 1 year, Power Agency or its Participants shall install on the dis- ^ tribution systems of Participants whose Systems are connected to coriductors owned by CP&L suf ficient capacitors to maintain a ratio of kilovars of capacitors to the next anticipated summer peak load in kilowatts of such Participants not less than the CP&L Capacitor Ratio. To the extent practical, the CP&L Capaci-tor Ratio shall be maintained on each such Participant's distri-bution system beyond each Delivery Point. 14-1

t 1 i (B) Arrangements between Power Agency and any other entity.for the delivery of electric power to Part3;ipants whose [ conductors are not connected to conductors ownea by CP&L shall i be such as to preclude adverse impacts upon reactive power flows l between CP&L and such other entity arising from such delivery. j 14.2 Charges for Reactive Power L When the maximum reactive power demand (KVAR) during the current billing period at any Delivery Point where conduc-l tors of Power Agency or of a Participant are corinected to con- ! doctors' owned by CP&L exceeds forty-eight percent (48%) of the maximum kilowatt (KW) metered demand associated with such De-l livery Point, Power Agency shall make a payment for the' excess reactive power demand determined in accordance with Exhibit PCA-I-43. The reactive demand shall be measured by a demand meter suitable for measuring the demand during a one (1) hour interval, or, calculated froa other metered information when demand meter information is not available. , l 14-2 1

( ARTICLE 15 METERING 15.1 Responsibility for and Location of Meters and Metering Equipment (A) The electric power delivered under this Agree-ment shall be measured at, or as of, the Delivery Point. When L metering is made at any location other than a Delivery Point, provision shall be made to compensate for losses between the , point of metering and the Delivery Point. I (B) For deliveries of power to Power Agency or a Participant where conductors owned by CP&L and conductors owned by Power Agency or a Participant are connected, CP&L shall pro-i vide 'all meters and metering equipment required under this Agree-l ment and Power Agency shall pay a charge therefor in accordance l l with Section 15.4. l l (C) For del.sveries of power to Power Agency or a Participant where conductors owned by CP&L and conductors owned by Power Agency or a Participant are not connected, it shall be the obligation of Power Agency to provide CP&L, in a manner acceptable to CP&L, with timely, ac arate, and reliable meter readings and if CP&L incurs any costs in connection with obtain-ing such timely, accurate and reliable meter readings, Power Agency shall reimburse CP&L therefor. Where appropriate to ob-tain such readings, CP&L shr..t have the right to install, own, l maintain or check, or shall have the right to require Power 15-1

i L R t-I I f Agency-to. install, own, maintain or check, meters or metering-equipment. CP&L may exercise these rights to provide metering-Lat the point where it delivers power for Power Agency or a Participant to an entity other than Power Agency or a Part.ici-f -pant or at the point where an entity other than CP&L delivers power to Power Agency or a Participant. l l (.D) For deliveries covered by Section 15.1(B), CP&L shall own, maintain, add and replace meters and metering equip-ment for all existing Delivery Points serving Power Agency or its Participants and shall install, own, maintain, add and replace such meters and metering equipment in accordance with CP&L Operating Practice for future Delivery Points which may be established. (E) Meters presently installed, whether on the high side or low side of any transformation, if existent, shall re-main in their present high side or low cide locations, so long as properly located to indicate power delivery or, at Power Agency's ption and where technically feasible, shall be relo-cated. Meters at future Delivery b>ints shall be installed on  ; the low side of any transformation, if existent, except'(1) where it is not technically feasible to do so; (2) where it is more economical to install the meters on the high side of the transformation; or (3) where Power Agency requests instal-1ation on the high side of a transformation. l 15-2

l l i f l 

              ~(F)L For deliveries ~ covered by Section 15.l(B), when l   metering equipment is to be located on Power Agency's side'of the Point of Connection, Power Agency shall provide a location acceptable to CP&L for th'e installation of such metering equip-ment..

(G) For deliveries covered by Section 15.l(B), where l , the meter is installed at any location other than a Delivery Point, CP&L shall install compensating devices which adjust the meter registrations to reflect losses from the meter loca-tions back to the Delivery Points. CP&L shall own, maintain i and replace compensating devices e id such devices shall be deemed a part of the metering eculpment. 15.2 Character and Improvements of Meters l Meters and metering equipment shall t.e designed to provide: (1) an automatic record to indicate the kilowatt hours delivered for each clock hour; (2) a continuous integra-ting record of kilowatt hours delivered; (3) an hourly record to indicate the kilovar hours; and (4) any scheduling and dis-patching information reasonably deered necessary by CP&L pur-suant to Article 3. Timing devices of all meters shall be maintained in time synchronism to the maximum practical ex-tent. The parties recognize that redundancy in metering may be required in order to assure the desired degree of accuracy in metering. Power Agency may provide similar equipment as check meters for any Delivery Point, and all costs therefor, 15-3 s. 

   ,-  .,               ,-     ,  ,                 ,   -e   .- ~ ., - , ,

including the cost of maintaining such equipment, shall be 

 . borne by Power Agency. Subject . to CP&L's approval, Power Agency may use CP&L's metering facilities for the purpose of installing check meters. Upon written request of Power Agency, CP&L shall provide metering pulses from CP&L-owned. metering facilities where available on a Leased Facilities Charge basis.

15.3 Testing and Adjustment of Meters (A) CP&L shall make periodic tests of its metering equipment but not less than once every forty-eight (48) months. At Power Agency's request, CP&L shall test its metering equip-ment at no charge to Power Agency provided CP&L has not made a test within the. preceding twenty-four (24) months. If the met-ering equipment has been tested within the preceding twenty-four_ (24) months and on the requested test is found to be measuring within the limits of plus or minus two percent (+ 2%) accuracy, Power Agency shall reimburse CP&L for the cost of the requested l l test. p (B) If, at any time, CP&L's metering equipment fails to record, Power Agency's check netering equipment shall be used, ] provided such equipment is functioning properly. (C) In the event that' metering equipment fails to record within the limits of two percent ('%)4 fast or slow, or for any other reason fails to record the amount of electricity received by Power Agency, CP&L shall estimate the amount and 15-4 l

shall bill Power Agency on the basis of such estimate, which shall be based on all known pertinent facts and on the princi-I ples set-forth in Exhibit PCA-XIII. CP&L shall refund or credit ! to Power Agency, or Power Agency shall pay to CP&L, whichever is applicable, the difference between the amount billed and the estimated amount which should have been billed for service sup-plied during the_immediately preceding ninety (90) day period. If the metering equipment has not been in service for twelve 

  -(12) full preceding billing periods, or if'the date of error-can be fixed to be within such ninety (90) day period,-then l

the. estimated amount to be refunded by CP&L or paid by Power Agency shall reflect these factors. 15.4 Metering Charges Power Agency shall pay a monthly Leased Facilities Charge to Cr&L in regard to metering in accordance with l Section 13.3. I 15-5 4

t P ARTICLE 16 BILLING AND PAYMENTS 16.1 Monthly Billing Within a reasonable time after the close of each t month, CP&L shall prepare statements, substantially in the form of Exhibit PCA-IX, covering all amounts due from Power Agency to CP&L, and from CP&L to Power Agency, for all trans-actions pursuant to this Agreement during the preceding month. CP&L shall place each such statement in the mail on the date of the statement. The amounts due from Power Agency and from CP&L shall be due and payable by the party owing same as provided in Section 16.7. The party from whom payment is due shall deliver said payments to '.he payee or to the account of the payee at a bank designated by the payee in Raleigh, North Carolina. CP&L shall supply Power Agency with a master magnetic tape containing metered data for each Delivery Point as soon as available on a tape furnished l by Power Agency. Costs of accounting and billing shall be paid by Power Agency in accordance with Exhibit PCA-I-64. 16.2 Computation of Monthly Rates and Charges for Supple-mental Capacity, Reserve Capacity and Tran2 mission Use (A) Commencing at least ninety (90) days prior to j the First Closing Date, and thereaf ter by December 1 of each year, CP&L shall provide to Power Agency estimates of the monthly rates.in dollars per KW for Supplemental Capacity, 16-1

Reserve Capacity and . Transmission Use. Except as otherwise provided.in.this Section 16.2, these estimated rates shall be applied by CP&L respectively in the remainder of the first' 

  ; calendar year in which this Agreement is in effect and there-                             i i

af ter in the next calendar year following the December 1 esti- { l mate in computing charges to Power Agency for said services. j CP&L shall inform Power Agency of the basis on which these rates were estimated. It is agreed, however, that the per-centage allowed by the ECUC in CP&L's most current rate case as of the time the estimate is made as a return on its com-mon equity inrestment in electric operations shall be used to compute an. estimated rate pursuant t'o this Section 16.2. Monthly charges for Supplemental Capacity, Reserve Capacity and Transmission Use shall be based on: (1) the esti-mated rates for such services as described in the preceding paragraph; and (2) the actual monthly levels of Supplemental Capacity, Reserve Capacity and Transmission Use purchased by Power Agency as determined in Sections 6.1, 7.4, and 13.1, respectively. At any time that CP&L estimates, either at its own , option or in response to a request by Power Agency, that the expected total amount of Demand Related Production O&M expense to be included in the charge for Supplemental Capacity and Reserve C'apacity for the then calendar year deviates more than plus or minus five percent (+5%) from the amount of such expense which 16-2 \^ i

was included in the original estimate for such rates, CP&L (1) shall provide Power-Agency with a revised estimate of the monthly rates for Supplemental Capacity and Reserve Capacity for such year reflecting the change in the estimate of the Demand Related ' Production O&M component; and (2) may, if the revised estimated rates are more than five percent (5%) higher, and shall, if the revised estimated rates are more than five percent (5%) lower than the original estimate, bill Power Agency using such new rates for the balance of that calendar year, beginning with service rendered in the second billing month following the month in which such revised estimates were delivered to Power Agency. At any time that CP& L estimates, either at its otin option or in response to a request by Power Agency, that the expected total amount of Transmission O&M expense to be includ-ed in the charge for Transmission Use for the then calendar year deviates more than- plus or minus five percent (+5%) from the amount of such expense which was included in the original estimate for such rate, CP& L (1) shall provide Power Agency with a revised estimate of the monthly rate for Transmission Use for such year reflecting this change in the~ estimate of the Transmission O&M component; and (2) may, if the revised estimated rate is more than five percent (5%) higher, and r i shall, if the revised estimated. rate is more than five percent 4 j (5%) lower than the original estimate, bill Power Agency using t 16-3 l l

such new rate for the. balance of that calendar year, beginning 

                                                                                                                                                                                                                                                      ^

with service rendered in the second billing month following the month in which such revised estimate was delivered to Power i Agency. If Power Agency challenges CP& L's estimated rates i and, as a result of such challenge, new estimated rates are l l determined, such new estimate shall be used prospectively 1 only. ~No interest shall be due or payable on any differences i l i between charges based on different estimated rates or between i charges based on rates estimated and actual amounts due. (B) On February 15 or as soon thereafter as avail-able, but in any event not later than April 1 of each year, l 1 l CP&L shall provide Power Agency with a computation of the l charges for Supplemental Capacity, Reserve Capacity and l Transmission Use actually due and payable for the preceding l calendar year in accordance with Exhibit PCA-1, and any adjust-l ment between the estimater1 payments made and the actual amount due shall be payable by or be credited to Power Agency on the next monthly statement. In computing the charges actually due and payable.in accordance with Exhibit PCA-I, the cost of common equity for the year shall be the actual experienced return earned by CP&L on its common equity invest-ment in its electric operations for the immediately preceding i year plus one-quarter of one percent (.25%), but not less l than the percentage allowed by the NCUC in CP& L's then most- ! current rate case order less three-quarters of one percent l l l l 16-4 l {

(.75%) _ nor more than such percentage allowed plus one-quarter of one percent (.25%). CP& L's then most current rate - case 4 order shall mean the most current order as of the end of the calendar year for which the charges actually due and payable are being computed. If Power Agency challenges CP&L's computation of charges actually due and payable for the preceding calendar year, such challenge shall be subject to Section 16.10 ad if, as a result of such challenge a new adjustment is determined, CP&L shall credit or increase Power Agency's next monthly

statement in an amount to correct the adjustment plus simpic I

interest calculated at the Adjustment Interest Rate. Such interest shall accrue from the date of payment of the statement on which the original adjustment was made by CP&L. 16.3 Computation of Monthly Capacity Charge for Purchased 

                         ~~

Capacity (A) Commencing at least sixty (60) days prior to natimated date of the Commercial Operation of the first 

)

Mayo or llarris Unit placed into Commercial Operation, and i thereaf ter by December 1 of each year, CP& L shall provide to Power Agency an estimate of the amount CP&L shall pay for Purchased Capacity respectively in the remainder of the first calendar year in which the first Mayo or llarris Unit 1 is placed into Commercial Operation and thereafter la the next calendar year following the December 1 estimatr.. Except 4 as otherwise provided in this Section 16.3, these estimates 16-S

shall be used by CP& L in making monthly payments for Purchased l Capacity. CP&L shall inform Power Agency of the basis on which the estimates are made. It is agreed, however, that the percentage allowed by the NCUC in CP& L's most current i rate case as of the time the estimate is made as a return } Hon its common equity investment in electric operations shall  ; l be used to compute any estimated charge pursuant to this l l Section 16.3. At any time that CP&L estimates, either at its own option or in response to a request by Power Agency, that the l expected total amount of Demand Related Production O&ll expense l to be included in the charge for Purchased Capacity for the l then calendar year deviates more than plus or minus ten per-cent (+10%) from the amount of such expense which was includ-ed in the original estimate, CP& L (1) shall provide Power Agency with a revised estimate of the monthly Purchased Capacity charge for such year reflecting the change in the estimate of the Demand Related Production O&M component; and (2) shall, if the revised estimated charge is more than ten percent (10%) higher, and may, if the revised estimated charge is more than ten percent (10%) lower than the original estimate, pay for Purchased Capacity using the revised estimated charge for the balance of that calendar year, beginning with service rendered in the second billing month following the month in which such revised estimates were delivered to Power Agency. 16-6

If Power Agency challenges the estimated charge pro- l vided under this Section 16.3-and, as a result-of such chal- I lenge, a new estimated charge-is determined, such new estimate shall be used prospectively only. No interest shall be due or , payable on any differences between charges based on different estimates or between charges based on estimates and actual amounts due. (B) On February.15 or as soon thereafter as avail-able, out in any event not later than April 1 of each year, CP&L shall provide Power Agency with a computation of the charge for Purchased Capacity actually due and payable to Power Agency for the preceding calendar year in accordance with Exhibit PCA-II. Any adjustment between the estimated payments made and the actual amount due shall be payable l by or be credited to CP&L and such amount shall be reflected in the next monthly statement submitted to Power Agency. In computing the charges actually due and payable in accordance with Exhib'.t PCA-II, the cost of common equity for the year shall be the actual experienced return earned by CP&L on its common equity investment in its electric operations for the immediately preceding year plus one-quarter of one parcent (.25%), but not less than the percentage allowed by the NCUC i in CP&L's then most current rate case order less three-quarters of one-percent (.75%) nor more than such percentage allowed plus one-quarter of one percent (.25%). CP& L's then most current 16-7 a %-- - r-- -- 

                                                                      -3

l i rate case order'shall mean the most current order as of l the end of the calendar year for which the charges actually L l^ due and payable are being computed. If Power Agency challenges-1 

                                                                                                                                             ~

i CP&L's computation, such challenge .shall be subject to Section l l 16.10 ar.d if, as a result of such challenge a new adjustment 

              . is' determined, CP&L shall credit or increase Power Agency's.

next monthly _ statement in an amount to correct the adjustment, plus simple interest calculated at the Adjustment Interest Rate. Such interest shall accrue from the date of.the payment 

                                                                                                                                                  ~

of the statement on which the original adjustment was made by CP& L. 16.4 Computation of . Monthly Energy Rates and Charges Monthly charges for energy provided as Supplemental, Reserve , Deficiency, Surplus, Nuclear Share Surplus, Fossil Share Surplus, Replacement, Nuclear Share Replacement, Fossil Share Replacement and Purchased Energy shall be based on: (a) the actual kilowatt hours consumed during the month; and (b) an estimated energy rate per kilowatt hour prepared by CP&L for use during that month. When the data required for computing the actual energy charge for any given month- i becomes known, CP&L shall recompute the charge for the month in question by using the actual data. A charge or credit based on such recomputation shall be refleeced in the amount due and payable on the next bill rendered. l 16-8 

          -      - - . . .                                             .   ~                  -              _ - ______-                       __   _                         -_

l 16.5 Charge for Reactive Power The monthly charge for Reactive Power shall be as provided in Section 14.2. 16.6 Charge for Leased Facilities The monthly charge for Leased Facilities shall be as provided in Sectio 13.3. 16.7 Payments Bills are due when rendered and payable in full within fifteen (15) days of the date shown on the bill. This period shall be calculated as set out in Section 27.16. Simple interest, calculated at the Late Payment Interest Rate, shall thereafter accrue each month or portion thereof on the delinquent amount, including any previously unpaid late charge. 16.8 Proration (A) As of midnight of the First Cloding Date, ser-vice to Participants under CP&L's applicable Resale Service Schedule shall terminate and the transactions provided for in this Agreement shall begin. If the end of a full monthly billing period falls on the First Closing Date, the scheduled meter readings shall be delayed one day and the monthly bill for service rendered to Participants whose meter readings are so scheduled shall be calculated in accordance with the applicable Resale Service Schedule for the period ending at midnight of the First Closing Date. Such bills shall 16-9

not be prorated. CP& L Ghall calculate the bill for Partici-pants whose last monthly meter reading for service from CP&L 1 l occurred prior to the First 01? sing Date under the provisions of the applicable Resale Service Schedule, using the full customer charge, and the billing demand established between the time of the Icst monthly meter reading and midnight of-4 the First Closing Date. To determine energy usage for such billing, the total energy (in kilowatt hours) used between the time of the last monthly meter reading and midnight of

the First Closing Date shall be divided by the number of hours in such period multiplied'by 720. The total bil.'.ing amount 7

so determined for each such Participant shall than be prorated on the basis of the ratio of the number of hours between the time of the last monthly meter reading and midnight of the First Closing Date divided by 720. Billing for additional i 1 facilities charges in effect prior to the First Closing Date, if any, shall be determined by applying the ratio determined above to_the then applicable monthly additional facilities charge. Bills for service supplied to Participants prior to the First Closing Date under the applicable Resale Service Schedule shall be rendered to and payable by the individual i Participant in accordance with the terms and conditions of such Resale Service Schedule. 16-10 1 - 

          -(B)  For the month in which the First Closing Date occurs, the billing for services providr' Car in this Agreement other.than energy shall be prorated based on the ratio of the number of days remaining in the month after midnight of the First Closing Date divided by the number of days in that calen-dar month. The demands applicaole for calculating billings of each such type of service shall be those occurring between midnight of the First Closing Date and the end of the calendar month.

Bills for services supplied after the First Closing Date shall be rendered in accordance with the terms and condi-tions of this Agreement. (C) When the investment in Leased Facilities is increased or decreased during a calendar month, the charge for such facilities will be prorated for such month based on the number of days the facilities were in service during such month and the number of days in such month. 16.9 Offsets Payments under this Agreement may be offset first-against any delinquent payments under the Operating Agreement and only then may any remaining amounts be offset against payments due under this Agreement. Payments due and payable hereunder shall not be subject to any offset of any nature arising outside this Agreement or outside the Operating Agreement. 16-11 l l

16.10 Billing Adjustments and Challenges CP&L shall supply Power ' Agency with the basis for establishing all estimated charges and the basis for all computations of actus1 charges at the time when such estimated or actual charges are made. Charges billed to Power Agency may be challenged by Power Agency only if its objections, in writing, are received by CP& L no later than April 1 of the second year after the year in which the challenged bill was rendered to Power Agency; provided, however, that challenges i to the annual adjustment set forth in Section 16.2(B) must be submitted in writing to CP& L not later than April 1 in l l the year following the year in which the adjustment is first made. Notwithstanding the existence of any challenge or the lack thereof, CP&L shall have the right (1) to initiate correction of errors in any bill by giving Pbwer Agency notice

t. hereof no later than April 1 of the second year e f ter the I

year in which the bill was rendered, and (2) ..o initiate cor-rection of errors in the annual adjustment set forth in Section 16.2(B) by giving notice thereof not later than April 1 in the year following the year in which the adjust-ment is first made. The parties shall undertake to resolve I challenges or corrections within a reasonable time and if the matter is unresolved for sixty (60) days after the challenge by Power Agency or correction by CP&L is initiated, either l party at any time following such sixty (60) day period may 16-12 w""- - 

 -inform the other party, in writing, that a formal dispute exists. Within sixty-(60) days following such notice, the party giving notice shall submit the dispute for arbitration pursuant to Article 22 and, if not submitted to arbitration within such sixty (60) days, the challenge or correction shall be conclusively terminated and without effect. In the event of such a challenge or correction, the review of the challenged or corrected bill shall not be limited to the items challenged by Power Agency or corrected by CP& L, but shall include any other items which CP&L chooses to raise in a challenge or Power Agency chooses to raise in a correc-tion and any such item shall also be subject to adjustment.

l l No challenge, disagreement or dispute relating to the reason-ableness or correctness of any such charge or fee shall l permit Power Agency to delay or withhold any payment due l hereunder. 16.11 Estimates At least thirty (30) days prior to the First Closing Date and thereaf ter by December 1 of each year, CP&L shall r l provide to Power Agency (1) estimates of monthly rates and charges to be paid for Leased Facilities (identified by individual Participant's Delivery Facilities), Supplemental l l Energy, Reserve Energy, Deficiency Energy, Surplus Energy, Replacement Energy and Purchased Energy, and (2) estimates i i 16-13 t

h of monthly amounts (in kilowatts) of Reserve Capacity, Supple-mental Capacity, Transmission Use and Purchased Capacity. l Such estimates shall be provided only for the purpose of assisting Power Agency-in its planning and budgeting activities, and CP& L shall not be required to use such estimates in l~ . computing monthly. bills. . I l l l' l l L l 16-14

ARTICLE-17 LOAD. FORECASTS AND REDUCTIONS 17.1 Load Forecasts Prior to July 1 of each year, commencing in the year following the year in which the First Closing Date takes place r Power Agency shall provide to CP& L, in writing, its projected annual energy use and winter peak and summer peak loads for ,. l Power Agency for the then next twenty (20) calendar years. l Power Agency shall provide CP&L with the methodology underly-l ing such projections in accordance with Exhibit PCA-VIII. Prior to December 1 of each year, commencing in the year following the year in which the First Closing Date takes place, CP&L shall provide to Power Agency, in writing, CP& L's t l projected annual energy use and summer peak and winter peak l l loada for the then next twenty (20) calendar years. f l 17.2 Load Red uc tion l l In the event of an adverse condition or disturbance l l on the CP& L or Power Agency system, or on any other system i j directly or indirectly interconnected with these systems, I which involves automatic or manual interruption, curtailment or reduction of the supply of electricity to some customers or areas, eacn party agrees to take such steps as may be ne-cessary and apprcpriate to limit the extent of or damage by the adverse condition or disturbance, or to prevent damage i

to generation, transmission or transformation facilities, 17-1
                          +

or to expedite restoration of service and to cooperate and i coordinate with each other to ensure-the integrity of the l CP& L System and the system of Power Agency and each Partici-pant. In the event CP&L undertakes load management in non-l emergency situations, where the Combined System capacity resources are expected to be inadequate to meet combined l system loads and maintain' adequate reserves to avoid emergency conditions, through a program of pre-planned steps to reduce usage of capacity during peak hours, Power Agency shall take all reasonable and appropriate actions as it can, or encourage i its Participants to take such actions, to reduce Power Agency's demand on CP&L's system under a program which treats similar customers of CP& L and Participants in a consistent manner and which, in any event, is designed to achieve results on a com-parabic basis. The parties shall meet periodically to discuss-and consider programs, seminars, joint research projects and other matters relating to load management and shall invite the Par-ticipants to attend such meetings, i 17-2

ARTICLC 18 , REPORTS AND INFORMATION 18.1 Government Filings and Reports CP& L, on behalf of the owners, shall prepare, exe-cute and file all. applications, amendments, reports and other documents and filings relating to this Agreement and the trans-actions provided for herein required to be submitted to FERC or any other governmental agency. Power Agency shall pay all costs arising as a result of such actions by CP&L involving Power Agency only and a properly allocable share of all costs arising as a result of such actions by CP&L involving Power Agency and other customers of CP& L. 18.2 Power Agency's Responsibilities Power Agency promptly shall provide to CP& L any in-formation or assistance requested by CP&L: (1) for the purpose of preparing or submitting any report or information described in Section 18.1; or ( 2) in order to facilitate CP&L's dispatch function pursuant to Article 3 and Section 4.l(B); or (3) for any other purpose relating to the transactions provided for in this. Agreement. Power Agency's assistance to CP& L shall in-clude, without limitation, joining with CP&L in the filing of any documents to be filed with any governmental authority, ob-taining information from or the cooperation of its Participants, executing all such documents and doing all such other acts and things as are necessary, appropriate or helpful. j 18-1 

                                                                          .1

        .e t

I 18.3 CP& L's Responsibilities l-At the request of Power Agency, CP& L shall make ! available for inspection by Power Agency copies of any written l l report or written information prepared by CP& L pursuant to j Section 18.1 and provide copies thereof to Power Agency. Iloweve r , CP& L need not make available to Power Agency any reports or information relating to personnel matters, stafting i or labor relations at or connected,with the Joint Facilities.. l l l l 18-2 ,

ARTICLE 19 GOVERNilENTAL AND REGULATORY APPROVALS 19.1 Initial Filing As a condition precedent to closing pursuant to , l Article 2 of the Sales Agreement, this Agreement must be l l approved without modification after hearing, or accepted for filing without suspension and hearing, by PERC. If FERC con-l ditions its initial a ceptance or approval of this Agreement in a final order which requires modifications hereto which l any party is unwilling to accept, the parties shall undertake, j during the ninety (90) days immediately following the issuance of such order, to renegotiate this Agreement to achieve such modifications as are necessary to restore the overall economic benefits to each party to the levels provided for in this Agreement as originally executed. Disputes arising out of such renegotiation shall not be subject to arbitration hereunder. If such renegotiation does not produce a modified Agreement during j the aforesaid ninety (90) day period, each party hall have the absolute right to withdraw from this Agreement as well as from l l any of the Related Agreements. l 19.2 Subsequent Regu. a f.ory Action The parties hereto mutually recognize and agree that subsequent to initial acceptance or approval of this Agreement, PERC has jurisdiction to modify, with prospective effect, the-tarms and conditions hereof and agree, in that connection: 19-1 L_ _ J 

          ~   _       . _ - - -      _             _     _  _ __ ..

O \ (1) that in any proceeding, however initiated, relating to this Agreement or the Related Agreements, the standards'ex-pressed in FPC v. Sierra Pacific Power Co. , 350 U.S. 348 , i (1956) and United Gas Pipe Line Co. v. flobile Gas Service Corp., 350 U.S. 332 (1956), shall not apply and that the j rates provided herein would be unjust and unreasonable if they do not produce a reasonable rate of return for CP& L; and (2) that the parties have bargained at arm's length in good faith and on equal terms for economic benefits to each party which are closely interrg'ated and which produce an overall result which is considered by the parties to be just and reasonable. In reccgnition of these two mutually recognized propositions, the parties agree that, if FERC or any other govarnmental agency or court having jurisdiction to do so, modifies this Agreement in a manner which alters the economic benefits flowing to any party, the parties shall forthwith undertake renegotiauion of this Agreement in order to achieve such modifications as are necessary to restore the overall economic benefits to each party to the levels provided for in the Agreement as originally executed. i No party shall be required to renegotiate before such order becomes final and non-appealable or while any appeal from such final order is pending. If, at any point, any party concludes that such renegotiations have failed to produce, or wil) fail to produce, the objective of restoring economic 19-2 i

benefits to the levels originally provided for, suc>. r.srty may institute arbitration proceedings in accordance with  ; Article 22. The sole purpose of such arbitration shall be the determination of-the means by which the restoration of the originally provided for economic benefits should be accomplished. 4 l 1 1 4 4 4 

                                                                                        )

i j l l 4 19-3

1 ARTICLE 20 LIABILITY AND SERVICE INTERRUPTIONS 20.1 Liability (A) In providing the services called for by this Agreement, CP&L does not guarantee continuous service but shall use reasonable diligence at all times to provide an un-interrupted supply of electricity, and, having used reasonable diligence, shall not be liable to Power Agency for damages for failure of, or for interruptions or suspension of these ser-I vices. CP&L shall use reasonable diligence promptly to restore service which has failed, been interrupted or suspended and Power Agency shall cooperate with CP&L in so doing. Neither party shall be liable to the cther party for any damage or loss resulting from the interruption, prevention, suspension, or failure of service caused by: (1) Force Majeure, as defined in Section 20.4; (2) An emergency action due to an adverse condition or disturbance on a party's system (including all actions taken pursuanL to Section 17.2) or on any other system directly or indirectly interconnected with a party's system, which requires automatic or manual interruption of the supply of electricity to some customers or areas in order to limit the extent of, or damage caused by, the adverse condition or disturbance, or to prevent damage to generation, transmission or transformation facilities, or to expedite restoration of service, or to effect 20-1

a reduction in service to compensate for an emergency condi- ' tion on an interconnected system; and/or (3) The making of necessary inspections of, ad-justments'to, changes in or repairs to a party's lines, sub-stations, or other facilities, and by discontinuing service to avoid endangering persor,s or property. CP&L shall coordinate with Power Agency or a Participant any scheduled or planned outages at any Delivery Point which will interrupt service to Power Agency or such Participant. In the case of urt.che-duled outages, each party upon request shall give the other its estimate as of that time as to the cause and expected duration of such outages, if known. Ilowever, neither party shall be liable to the other party should the duration of an unscheduled outage exceed the estimated time given by the party making the estimate to the other party. (B) CP&L shall not be liable to Power Agency for any change in price to Power Agency for power under this Agreement by reason of the suspension, interruption, inter-ference, reduction or curtailment of the output of the Bruns-wick, Roxboro, liarris or Mayo Units or any other generating unit or transmission facilities on the CP&L System caused by the negligent operation of the same by CP&L, its agents, servants or employees. The foregoing, however, does not extend to liability imposed by law for willful or wanton 20-2

misconduct or reckless action of CP&L, its agents, servants, or employees. 20.2 Responsibility on Either Side of Point of Connection Neither party shall be responsible for the trans-mission, control, use or application of electric power pro-vided under this Agreement on the other party's side of the Point of Connection therefor and shall not, in any event, be liable for damage or injury to any person or property whatso-ever aricing, accruing, or resulting from, in any manner, the l receiving, transmission, control, use, apolication, or distri-i bution by either party of said electric power. Where one party has facilities and equipment located on the premises of the other party, the party owning the premises shall permit no one but the other party's authorized representatives to have access to or handle those facilities and equipment. Each party shall indemnify, ho'J and save harmless the other party for any loss or damage to that other party's premises caused by or arising out of the negligence of the party owning the facilities and equipment, or its j representatives, while on the premises of the other party, j Each party shall indemnify, hold and save harmless the other party from and against any and all legal and othut expenses, claims, costs, losses, suits or judgments for damages, injuries to or death of persons, or damage to or destruc-tion of property, arising in any manner directly or indirectly 20-3 

          +                                        , ,

by reason of acts of negligence of either party's authorized representative while on the premises of the other party under l the right of access provided in this Section 20.2. CP&L and Power Agency shall indemnify, hold and save 1 each cther harmless from any and all loss or damage sustained, j and from any and all liability, including, but not limited l to, any liability arising out of a claim for indemnification by a Participant under Section 12(e) of a Supplemental Power

Sales Agreement, to any person or property incurred by one i

! party (the indemnified party) by reason of any act or perfor-mance, or failure to act or perform, by the other party (the indemnifying party), its officers, agenta or employees or, where the indemnifying party is Power Agency, by a Participant, l its officers, agents or employees, in constructing, maintaining 1 or operating the indemnifying party's apparatus, appliances or property, or in the transmission, control or application, ! red:.stributior, delivery, or sale of said power and energy 1 on the indemnifying party's side of said Point of Connection. Whenever any claim is made against either party, whether the indemnified party or the indemnifying party, the party against whom the claim is made shall give notice to the other party within a reasonable time after the party against whom the claim is made becomes aware of any f acts which could reasonably cause*it to conclude that the claim is covered by this indemni-fication. Except as otherwise specifically provided in this 20-4 

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Section 20.2, such indemnification shall hold harmless the indemnified party, its agents, servants and employees, from and against any and all liability and any and all losses, damages, injuries, costs and expenses, including expenses [. incurred by the indemnified party, its agents, servants or employees, in connection with defending any claim or action, and including reasonable attorneys' fees incurred or suffered by the indemnified party, its agentr servants or employees, by reason of the assertion of any such claim against it or

its agents, servants or employees. The indemnification provided for in this Section 20.2 shall not cover the following expenses: (1) the expense or investigating any claim prior 3 to the time that notice is given to the other party that said
!   claim is covered by this indemnification; (2) compensation for time of employees of the indemnified party spent in i

defending any action; (3) attorneys' fees incurred by an 1 indemnified party after an indemnifying party has assumed l the defense of an action as provided in this Section 20.2. At any time, the indemnifying party may, at its option, assume on behalf of the indemnified party, its agents, servants and i 

!  employees, following written notification by the indemnified

)I party of the existence of such a claim, the defense of any 1 action at law or in equity which may be brought against the indemnified party, its agents, servants or employees. The indemnifying party, regardless of whether it assumes the 20-5

t l defense of any such action, will pay on behalf of the indem-nified party, its agents, servants or employees, the amount of any judgment that may be entered against the indemnified party, its agents, servants or employees in any such action, 20.3 Consequential Damages In no event shall any owner be liable to the other Owner for any indirect, special, incidental or consequential damages, with respect to any claim arising out of this Agree-ment, whether based upon contract, tort (including negligence), patent, trademark or servicemark, or otherwise. Power Agency shall indemnify and hold harmless CP&L from and against any claim or liability for such consequential loss or damage aris-Ing out of this Agreement by customers of Power Agency or customers of its Participants. CP&L shall indemnify and hold harmless Power Agency from and against any claim or liability for consequential loss or damage by customers of CP&L arising out of this Agreement, including, but not limited to, any claim or liability for consequential loss or damage by customers of CP&L for which Power Agency incurs liability because of a claim for indemnification of such consequential loss or damage by a Participant under Section 12(e) of a Supplemental Power Sales Agreement. 20.4 Force Majeure The term " Force Majeure" as used herein shall mean any cause beyond the control of the party affected and which 20-6 i 

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by reasonuble efforts the party affected is unable to over-come, including without limitation the following: acts of God; fire, flood, landslide, lightning, earthquake, hurricane, volcanic eruption, tornado, storm, freeze, or drought; blight, famine, epidemic or quarantine; strike, lockout or other labor difficulty; act or failure to act of the other party (and such party so acting or failing to act shall not use its act or failure to act to excuse any other obligation which it has under this Agreement); act or failure to act of any regulatory agency or other governmentrl authority; changes in the work or delays caused by public bidding re-quirements; theft; casualty; accident; equipment breakdown; l failure or shortage of, or inability to obtain from usual sources, goods, labor, equipment, information or drawings, machinery, supplies, energy, fuel or materials; embargo; injunction; litigation or arbitration with suppliers or vendors; shortage of rolling stock; arrest; war; civil disturbance; explosion; acts of public enemies; sabotage; l l invasion; or breach of contract by any supplier, contractor, subcontractor, laborer or materialman. Either party rendered unable to fulfill any obligation under this Agreement by rea-son of Force Majeure shall make reasonable efforts to remove such inability within a reasonable time. G.S. 25-2-615 of the North Carolina General Statutes shall be inapplicable to this Agreement, and neither party l 20-7

l l l l I shall'be excused from its obligations under this Agreement on the ground that' performance as agreed has become commerci-l ally impracticable. i ! 20.5 -Pumping for Fires i It is expressly understood and agreed that the par-ties do not hereby contract to furnish power for pumping water for extinguishing fires. I i i 9 l l { j 20-8 ?

ARTICLE 21 DEPAULT l 21.1 Events of Def ault The following shall be " Events of Default" under this Agreement: l (A) Failure by either Owner to make any payment to the other Owner required under this Agreement within sixty (60) days after the date on which such payment becomes due, or failure by CP&L to give any credit to Power Agency required under this Agreement for a period of sixty (60) days after the date on which such credit becomes due; provided, however, ( that neither party shall be in default if the amount it owes hereunder can be offset, within sixty (60) days after the date on which such amount became due and payable, by the party to whom that sum is owed in whole under the Operating Agreement. (B) Willful failure by CP& L to provide or deliver energy, transmission services, or Leased Facilities, all as j required under this Agreement, or willful failure by Power l Agency to provide or deliver Purchased Energy in accordance I with the provisions of this Agreement. (C)(1) The insolvency, bankruptcy or equivalent thereof, of Power Agency or CP&L or either party's inability or admission in writing of its inability to pay its debts as they mature, or the making of a general assignment for 21-1

i l the benefit of, or entry into any composition or arrangement 1 I with, its. creditors; or  ; 1 l (2) Either party's application for, or consent j l (by admission of material allegations of a petition or other-l wise) to, the appointment of a receiver, trustee or liquidator i for such party or for all or substantially all of such party's assets, or either party's authorization of or consent to such application or the commencement of any proceedings seeking such appointment against it without such a0thorization, l consent or application, which proceedings continue undismissed ! or unstayed 2or a period of one hundred eighty (180) days; l or (3) The authorization or filing by Power Agency l or CP&L of a voluntary petition in bankruptcy or application for, or consent (by admission of material allegations of a j petition or otherwise) to, the application of any bankruptcyr i reorganization, readjustment of debt, insolvency, dicsolution, liquidation or other similar law of any jurisdiction, or the institution of such proceedings against Power Agency or against CP&L without such authorization, application or consent, which proceedings remain undismissed or unstayed for ninety (90) days,

or which result in an adjudication of bankruptcy or insolvency within such time.

i l l 21-2 i {

21.2 CP&L's Rights on Default of Power Agency Whenever any Event of Default by Power Agency re-ferred to in Section 21.1 shall have occurred and shall not have been fully cured, CP&L shall have the following rights: (A) Upon demand by CP&L, Power Agency shall enforce any Supplemental Power Sales Agreement, described in Section 26.1 to which Power Agency is a party and if CP&L seeks a temporary or permanent injunction specifically to enforce this obligation of Poser Agency, Power Agency agrees that CP&L need not prove the inadequacy of legal remedies. The enforcement of j any auch Supplemental Power Sales Agreement, whether upon de-mand by CP&L or pursuant to a court directive, shall not affect any rights of CP&L against Power Agency whether arising under this Agreement, at law, in equity, provided by statute, or otherwise. (B) If a Participant defaults under a Supplemental Power Sales Agreement, (1) ,o'.er Agency may terminate its Supplemental Power Sales Agreement with the defaulting Par-ticipant; or (2) if such default by a Participant causes Power Agency to be in default under this Agreement for a period of one (1) year, CP&L shall have the right to demand that Power Agency terminate its Supplemental Power Sales Agreement with the defaulting Participant. In either such event, Power Agency shall forthwith notify such Participant of such termination. 21-3

In the event a Supplemental Power Sales Agreement is terminated pursuant to this Section 21.2(B), CP&L agrees to serve the defaulting Participant if reqdested to do so by such Participant but if such Participant is not directly served from CP&L's transmission system, it shall be the responsibility of such Participant to aake arrangements for the delivery of electric service supplied by CP&L. Such service shall be at CP& L's wholesale rate in ef fect at the time of the termination if there is such a rate then on file with the appropriate re-gulatory agency which is applicable by its terms to the defaul-ting Participant or, if there is no such rate on file, at the all-requirements rate being charged the Participant by Power Agency immediately prior to the termination of the Supplemental Power Sales Agreement. CP&L may at any time and from time to l time thereafter, if it so elects, file and place into effect pursuant to Section 205 of the Federal Power Act any supersed-ing rate, charge, fee or any other term or condition for ser-Vice to such Participant. 21.3 Power Agency's Rights on Default of CP&L Whenever any Event of Default of CP&L referred to in Section 21.1 shall have occurred and shall not have been fully cured, Power Agency shall have the right to ss.11 the Purchased Capacity and Purchased Energy which CP& L otherwise would pur-chase from Power Agency pursuant to Article 9 to another entity. If Power Agency elects to make such a sale, it shall give CP&L 21-4

at least thirty (30) days notice thereof and shall make dili-gent efforts to obtain the best price available. Such sale shall. be for the account of CP&L and shall terminate when CP&L shall have fully cured the default. If the amount paid by the other entity for such capacity and energy is less than the amount which CP&L would have paid to Power Agency therefor, CP& L shall pay the dif fer-ence to Power Agency upon being notified thereof by Power Agency. Said payment shall be made in accordance with Article 16. 21.4 Disputes Concerning De f ault In the event that either Owner or CP& L as operator shall dispute an asserted default by it, then such party shall pay the disputed payment or perform the disputed obligation, but may do no under protest. The protest shall be in writing, I shall precede or accompany the disputed payment or performance of the disputed obligation, and shall specify the reasons upon t which the protest is based. In the event it is determined that the protesting party is entitled to a refund of all or any por-j tion of a disputed payment or payments, or is entitled to reim-7 burseaent of the cost of performing a disputed obligation there-tofore made or performed, then the protesting party shall be reimbursed such amount with simple interest calculated at the Compensatory Interest Rate. 21 -5

21.5 Additional Obligations (A) With respect to any party as to which an Event of Default has occurred, such party shall make all reasonable efforts to take any and all such further actions and shall exe-cute, and file where appropriate, any and all such further legal documents and papers as may be reasonable under the cir-cumstances in order to facilitate the carrying out of this . 1 Agreement er otherwise effectuate its purposes including, but not limited to, action to seek any required governmental or regu).atory approval and to obtain any other required consent, release, amendment or other similar documents. (B) The parties hereto agree not to take any action, or ctherwise consent to any agreement or amendments to any agreement, which would prohibit, or the purpose of which is to make illegal or to prevent, hinder or delay, the taking of any action contemplated by this Agreement in the event of a default. 21.6 Injunctive Relief The parties hereto agree and acknowledge that the failure to perform any of their obligations under this Agree-ment, including the execution of legal documents which may be reasonably requested as set forth in this Article 21, would cause irreparahle injury to the other party and that the remedy at law for any violations or threatened violation thereof would oc inadequate, and agree that the other party 21-6

shall.be entitled to a temporary or permanent injunction or other equitable relief specifically to enforce such obligation without the necessity of proving the inadequacy of its legal remedies. 21.7 No Remedy Exclusive No remedy conferred upon or reserved to the parties hereto in this Artic16 ?1 is intended to be exclusive of any other remedy or remedies a'rallable hereunder or now or here-after existing at law, in equity, or by statute or otherwise, but each and every such remedy shall be cumulatize and shall j be in addition to every other such remedy. The pursuit by either party of any specific remedy shall not be deemed to be an election of that remedy to the exclusion of any other or others, whether provided hereunder or by law, equity or statute. 21.8 Waivers No waiver of any default or Event of Default here-under shall extend to or affect any subsequent default or Event of Default or shall impair any rights or remedies consequent thereon. No delay or omission to exercise any remedy available upon any Event of Default shall impair either party's right to exercise such remedy or shall be !' construed to be a waiver thereof, but any such remedy may i l be exercised from time to time and as often as may be deemed expedient. In order to entitle each party hereto to exercise i 21-7 1 

                                                                 .j

any remedy conferred upon or reserved to it in this Article 21, it shall not be necessary to give any notice, other than such notice as may be expressly required by this Agreement. I 21.9 Ag reement to Pay All Costs to Cure De f a ult (A) Simple interest shall accrue on any anount in default at a rate equal to the Incentive Interest Rate. (B) if any Event of Default should occur and a party not in default should employ attorneys or incur other expenses for the collection of any payment or the enforcement of performance or observation of any condition or obligation on the part of a defaulting party, or for the exercise of any other remedy hereunder, the defaulting party agrees that it shall on demand therefor reimburse the other party for its reasonable expenses of such attorneys and such other expenses so incurred. No default shall be deemed cured .;ntil all costs payable under this Article 21, including any attor-noys' fees incurred by the party not in default, and payments pursuant to this Agreement shall have been paid or reimbursed. 21.10 Initial Establishment of Special Reserve Fund , On the First Closing Date, Power Agency shall estab-lish and thereafter maintain a Special Reserve Fund in an amount equal to the greater of (1) one million dollars ($1,000,000); or (2) one percent (1%) of Power Agency's estimated payments to CP&L under this Agreement af ter credit for any estimated payments to Power Agency from cps L tor Purchased Capacity and 21-8

4 Purchased Energy. under this Agreement in the then next suc-ceeding twelve (12) months. Also, by such date, Power Agency shall provide to CP&L a written certification of the amount

so placed in such Special Reserve Fund. The amounts in such Special Reserve Fund shall be held by an escrow agent under J

an escrow arrangement which shall be substantially in the form annexed hereto as Exhibit PCA-XI and which shall provide h that, in the event Power Agency is in default pursuant to Section 21.1(A)-the funds so escrowed, or any portion thereof,

shall be paid over to CP&L by the escrow agent pursuant to the terms of the escrow arrangement set forth in Exhibit i

PCA-XI. A transfer of funds pursuant to that arrangement from the Reserve Account to a Disbursement Account (as defined j in Exhibit PCA-XI) shall not cure any Event of Default as such cure shall not be ef fected until the sums owed to CP& L are actually paid over to CP&L. l 21.11 Subsequent Contributions tg che Special Reserve Fund Power Agency shall include in its annual budget, or i j amendments thereto, and shall reflect in the rates it charges for service to its Participants, a provision for quarterly deposits into the Special Reserve Fund, established pursuant

to Section 2_.10 of an amount, if any, as is necessary to bring the balance of the Special Reserve Fund to an amount equal to the amount established pursuant to said Section 21.10. Such deposits shall be made no later than fif teen j 21-9
  -(15) days after the end of each quarter of each fiscal year and by such dates Power Agency shall provide to CP&L a written certification of the amount of such deposits. Such quarterly deposits to the Special Reserve Fund pursuant to this Section b   21.11 shall be made notwithstanding at any time a transfer of funds from the Reserve Account to a Disbursement Account,       j 1

as the same are described in Exhibit PCA-XI or the extent of 1 any funds on deposit in the Disbursement Account.  ! 21.12 Withdrawal of Excess Amounts If the Special Fund on the first business day of any quarter exceeds the applicable limit as determined above, the excess amount may be withdrawn from escrow by Power Agency. 21.13 Termination of Escrow In the event this Agreement is terminated as to Power Agency, any amount then owed to CP&L by Power Agency under this Agreement shall be paid over to CP& L by the escrow agent and the balance remaining, if any, then may be withdrawn from escrow and returned to Power Agency. l t 21-10

i l ARTICLE 22 f RESOLUTION OF DISPUTES 22.1 Challenge ! Except for all matters regarding (1) CP&L's dispatch l l function pursuant to Article 3 and Section 4.l(B), (2) Delivery Point Connections to voltages higher than 230 KV in i accordance with Section 13.6(B)(7), and (3) renego&iation or withdrawal in accordance with Article 19, the classification, computations, and other actions and determinations called for by this Agreement are subject to challenge by any party not l initially making such decision or taking such action. 22.2 Arbitration (A) Except as provided in Section 22.2(B) any unresolved dispute arising out of or relating to the matters set forth in this Agreement shall be settled by arbitration in accordance with the procedures set forth in this Article 22, l and judgment upon the award rendered by the Arbitrator may be entered in the Superior Court for Wake County of the State of North Carolina or in any other state or federal court having j jurisdiction thereof. In addition, disputes relating to the arbitration provisions of this Agreement, including, without i limitation, disputes as to the applicability of such provisions to a particular dispute, shall be submitted for arbitration. (B) Any dispute arising out of or relating to 22-1

I Article 20 or 21 shall not be sebmitted to or determined l by arbitration unless the parties agree to do so in writing. 22.3 Arbitration Procedure (A) Applicability of Provisions -- Arbitration of disputes subject to arbitration hereunder shall be conducted in accordance with the procedures set forth in this Section i 22.3. l (B) Initiation of Arbitration and Selection of Arbitrator -- Arbitration hereunder shall be initiated and i i the Arbitrator selected in the following manners (1) The initiating party (the " Initiating Party") shall give written notice (the " Notice") to the other party (the "Other Party") of its intention to arbitrate, which Notice shall set forth the nature of the dispute, the Initiating Party's estimate of the amount involved, if any, and the remedy sought. With the Notice, the Initiating Party shall submit to the other Party in writing the names of three (, oersons acceptable to the Initiating Party as arbitrators, the 9 arrangements required by each s:tch person, and a state-ment th, such persons have agreed to serve if requested. (2) Within ten (10) days of its receipt of the Notice and . 1.ated information, the other Party may, if it so desires, serve on the Initiating Party an answering statement (the " Answering Statement") with respect to the matters set 1 forth in the Notice and shall notify the Initiating Party in 22-2 _ _ _ =

writing either of its acceptance of one of the proposed ar-bitrators or of its rejection of all such arbitrators. In the event the Other Party notifies the Initiating Party of its acceptance of one of the proposed arbitrators, such proposed arbitrator shall thereupon become the Arbitrator. (3) In the event the Other Party does not ac-cept one of the proposed arbitrators submitted by the Initiat-ing Party as provided above and the parties are otherwise un-able to agree on an Arbitratot within twenty (20) days of the receipt of the Notice by the nther Party, the Arbitrator shall be selected from among the persons on the Approved Arbitrators List, as hereinaf ter defined, in the following manner: (a) The Initiating Party shall give five (5) days written notice of its demand that an Arbitrator be selected from the Approved Arbitrators List, which notice shall set a day, within fourteen (14) days of the date of such notice, time and place for a meeting of representatives of the parties to make such selection. At such meeting, which shall be held. at a location in Raleigh, North Carolina (or at such other place as the parties may designate), the parties shall strike names from the Approved Arbitrators List alternately, with the Other Party striking first, until a single person's name remains on such list, which person shall become the Arbitrator. In the eve..t such person is unable to serve as Arbitrator, the process 22-3

T l shall be repeated one additional time with the romaining names on the Approved Arbitrators List. (b) Tne Approved Art itrators List shall consist of not less than three (3) nor more than eleven (11) l persons qualified in the field of electric utility operations. l l l and power coordination. On the First Closing Date, the par-ties shall mutually agree as to the names on the Approved Arbitrators List, and each name thereon shall require mutual confirmation of approval by the parties during the month of January each year thereafter. No person approved or confirmed for incluelon on the List shall be removed except: (i) upon such person's demise or incapacitation; (ii) upon such person's l request; (iii) upon such person's failure to receive such annual mutual confirmation of approval; (iv) upon such person's employment or compensation by a party other than for services as an arbitrator; or (v) upon the mutual consent of the parties. Upon any such removal, a person mutually acceptable to the parties shall be named as a replacement. It is the intention of the parties that the Approved Arbitrators List shall consist of as many persons, up to eleven (31), as are qualified. Accordingly, at any time the List contains less ( than eleven (11) persons, each party shall continue to seek additional qualified persons acceptable to the Other Party for inclusion on the List. 22-4 i l

e-(4) In the event the selection procedure provided for herein does not result in the. selection of an 

       - Arbitrator within the time periods allotted, or in the event a designated Arbitrator fails to serve or fails to complete I
 ;      his service, then either party may petition the Senior Resident Judge of the Superior Court of Wake County of the State of North Carolina for the appointment of an Arbitrator, or a

] substitute Arbitrator, and such Arbitrator may be, but need not be, selected from the current Approved Arbitrators List. 1 (5) Upon the selection of an' Arbitrator, the Initiating Party shall immediately notify the proposed Arbitra-tor of his selection by the parties to become Arbitrator of the i dispute and immediately provide such Arbitrator with a copy of the Notice, the Answering Statement, if any, and copies of this i 

 ;                                                             Copies of this selection Agreement and the Related Agreements.

i notics and all correspondence and other documents relating to the Arbitration between either party and the Arbitrator shall be sent to the- Other Party to this Agreement. (C) Initiation and Completion of Hearings -- The Arbitrator shall initiate the hearings as promptly and expedi-t 1 tiously as possible after his selection (and both parties shall 1 cooperate to this end), and shall conclude the hearings within { thirty (30) calendar days of their commencement unless the l . Arbitrator expressly finds that additional time is necessary i 22-5

for completion of the hearings for reasons in the best interest of the parties and directed toward the development of an adequ-ate record. The Arbitrator shall expressly designate the number of days by which the hearings shall be extended. Such extension shall be limited to the minimum amount of time which, in the Arbitrator's judgment, is necessary to conclude the hearings. ( D) Time and Finality of Award -- The award of the Arbitrator shall be made no later than thirty (30) days from the date of the closing of hearings, and such award and any judgment thereon, entered pursuant to Section 22.2(A), shall be conclusive, final and binding except as specifically pro-vided in Sections 22.3(G) and (H). . (E) Location -- Unless the Initiating Party and Other Party otherwise agree in writing, arbitration under this Agreement shall be conducted in Raleigh, North Carolina. (F) Applicable Rules -- Arbitration under this Agreement shall be governed by the provisions of the General Statutes of North Carolina relating to arbitration, as the same are in effect at the time the Notice is given by the , Initiating Party, provided that any specific provision hereof that conflicts therewith shall govern. (G) Vacation of Arbitration Award -- Upon applica-tion of either Party to the Arbitration, an Arbitrator's 22-6

f award shall be vacated by a court where: (1) The award was procured by corruption, fraud or other undue means; (2) There was evident partiality by an Arbi-tratnr or corruption of an Arbitrator or misconduct prejudic-j ing the rights of either party; (3) The Arbitrator exceeded his powers; or [ (4) The Arbitrator refused to postpone the l hearing upon sufficient cause being shown therefor to hear evidence material to the controversy or otherwise so conducted the hearing, contrary to the provisions of Chapter 1, Article 45A of the General Statutes of North Carolina, as to prejudice substantially the rights of either party. , (H) Trial De Novo -- When the prevailing party to i j an arbitration applies to the ceurt for enforcement of the I arbitration award and the cc's k dVtermines that one or more of the following elemen;,e Aa n asent in such award, the non-i prevailing party shall have the right to a trial de novo in a 1 court of competent jurisdiction: (1) Where such award for any l one proceeding exceeds five million dollars (S5,000,000) against such non-prevailing party; or (2) where such cvard requires the performance by the non-prevailing party of any act which i (a) is not lawful, (b) is contrary to_the provisions of the i l non-prevailing party's security instruments, (c) violates the l conditions of any governmental or regulatory approval required 22-7 l t

l l herein or jeopardizes the obtaining, retaining, transferring or amending of such governmental or regulatory approvals, (d) has the effect of interrupting, suspending or terminating operation or fueling of the Joint Facilities or any major portions thereof, for a period of at least ninety (90) days contrary to the provisions of this Agreement or (e) has the ef fect of creating an Event of Default for the non-prevailing party under the terms of this Agreement. 22.4 Court Proceedings Any unresolved dispute arising under Article 20 or j 21 shall (unless the party affected agrees otherwise) b6 re- ! solved by a court of competent jurisdiction in accordance with the law of North Carolina. 22.5 Payment of Fees and Costs (A) Where no money damages are claimed by the party

initiating the arbitration or court proceedings, the payment of the Arbitrator's fee and the cost of the arbicration or court proceedings, not including attorneys' fees, shall be l

borne by the party the Arbitrator or the court rules against unless the Arbitrator or the court directs otherwise, in which event, the Arbitrator's - the court's allocation of said fee and costs shal] be binding. (B) Where money damages are claimed by the party initiating the arbitration or court proceedings or where a party seeks to vacate an arbitration award, such party shall 22-8

pay to the defending party a portion of the defense costs, including investigations, engineering fees, attorneys' fees,

expert witnesses' fees, and any other expenses of defense actually incurred in regard to the particular arbitration 1

or' court proceeding in question. Such portion of the defense costs payable shall bear the same relation to the total de-l fense costs as the dollar amount of the claims of the party initiating the proceeding which were not sustained by the

Arbitrator or the court hears to the total dollar amount of such party's claims. Such determination shall be made only after the entry of a decision or order no longer subject to appeal. Payment of any defense costs to the defending party shall be made by the party initia. ting the arbitration or court proceeding within thirty (30) days after the defending party to be paid furnishes such Initiating Party with an itemized and verified listing of the defense costs actually incurred.

i l l l 22-9

ARTICLE 23 ACCESS TO BOOKS AND RECORDS 23.1- Access to CP& L's. Books and Records During normal business hours and subject to condi-tior.8 consistent with the conduct by CP&L of'its regular business affairs and responsibilities, CP&L shall provide Power Agency, or its authorized representatives, with access in a timely manner to those of CP&L's books, records and other documents, and upon request, copies thereof, which set forth: (1) matters, including costs and methods of cost allocation, applicable to the transactions described in this Agreement to the extent necessary to enable Power Agency to verify the costs for which it is billed pursuant to the provisions of this Agreement; (2) matters relating to the transactions and duties of CP&L described in this Agree-ment; and (3) ma.tters relating to dealings in regard to this Agreement between CP&L and any regnlatory body or governmental agency. Such right of access shall not include internal audit reports or documents prepared by CP&L's internal audit staff, or any books, records and other documents subject to a valid claim of privilege by CP&L. Power Agency shall maintain the confidentiality of any non-public information obtained through such access and shall not disclose any such information except as required by law. Power Agency shall bear the cost of any copying, review or audit of such books and records. 23-1

23.2 Access to Power Agency's Books and Records During normal-business hours and subject to condi-tions consistent with the conduct of its regular business affairs and responsibilities, Power Agency shall provide CP& L, or its other authorized representatives, with access in a timely manner to such books, records and other documents,  ; 1 and, upon request, copies thereof, relating to this Agreement, as are necessary to enable CP&L to verify billings and other matters covered by this Agreement. CP&L shall bear the cost of any copying, review or audit of such books and records, which set forth: (1) matters, including costs and methods of cost allocation, applicable to the transactions described in this Agreement to the extent necessary to enable CP&L to verify any costs or load data which may be taken into account in determining any of the fees or charges specified in this Agreement; (2) matters relating to the transactions and duties of Power Agency described in this Agreement; and (3) matte s relating to dealings in regard to this Agreement between Power Agency and any regulatory body or governmental agency. Such right of access shall not include any internal audit reports or documents prepared by the staf f of Power Agency or by any other organization performing a staff func-tion for Power Agency on a continuing basis or any books, records and other documents subject to a valid claim of pri-vilege by Power Agency. CP&L shall maintain the confidentiality 23-2

of any non-public information obtained through such access and shall not disclose any such information except as required by law. 23-3 

  )

ARTICLE 24 AMENDMENT This -Agreement .or any Exhibit hereof may be amended or supplemented by and only by a written instrument duly exe-cutuo by each of.the parties. The parties further recognize the existence of-regulatory jurisdiction over-this Agreement as provided in Article 19. ) 24-1 }

ARTICLE 25 TERM OF AGREEMENT This Agreement shall become effectise upon the First Closing Date as defined in the Sales Agreement. The Retained Capacity including the backstand arrangement, entitlement from Joint Facilities, Supplemental Capacity and Purchased Capacity arrangements provided for herein shall begin on the dates pro-vided for in the sections pertinent thereto. This Agreement shall terminate: (1) January 1, 2032, or (2) upon tha date on which the last Joint Facility is retired, whichever is later; provided, however, that (a) subject to the provisions of Article 28, Power Agency may terminate this Agreement in its entirety upon eight (8) years written notice to CP&L; and (b) Power Agency may, through the notice provided for in Section 6.l(D) or (E) terminate the Supplemental Capacity arrangement upon eight (8) years written notice. s l l 25-1

ARTICLE 26 REPRESENTATIONS, WARRANTIE3 AND COVENANTS 26.1 Power Agency's Representations, Warranties and Covenants Power Agency hereby represents, warrants and cove-nants to CP&L as follows: (A) Exhibit SA-VIII of the Sales Agreement pre-scribes the form of Supplemental Power Sales Agreement which Power Agency shall enter into with its Participants for the supply by Power Agency of capacity and energy to each such Participant, which agreements, in the aggregate, shall be designed to provide Power Agency with funds sufficient to meet its obligations under this Agreement. In the event Power Agency shall enter into such a Supplemental Power Sales Agreement with any other Municipal System, whether before or after the closings provided for in the Sales Agree-ment, Power Agency shall, forthwith upon execution of said agreement by both parties, notify CP&L thereof and furnish CP&L with a copy of such agreement. Power Agency covenants and agrees that it shall fix, charge and take all steps necessary to collect rents, rates, fees and charges for the i sale of electric power and energy and other facilities and commodities sold, furnished or supplied to its Participants at a level sufficient to provide Power Agency with revenues i adequate to meet its obligations under this Agreement and the Related Agreements and to pay any and all other amounts payable 26-1

from or constituting a charge or lien upon such revenues. Each Supplemental Power Sales Agreement shall provide: (1) that the signatory Participant shall fix, charge and collect rents, rates, fees and charges for the sale of electric power and energy and other services, facilities and commodities. sold, furnished or supplied through its electric system at a level sufficient to provide revenues adequate to meet its obligations under such Supplemental Power Sales Agreement and to pay any and all other amounts payable from or consti-tuting a charge or lien upon such revenues; (2) that the signatory Participant shall take no action the effect of which would be to prevent, hinder or delay Power Agency from the timely fulfillment of its obligations under this Agreement or the Related Agreements; (3) that' Power Agency shall have the right to terminate such agreement as to the defaulting Participant in accordance with Section 21.2(B); and (4) that upon failure of the Participant to make any pay-ment in full when due under the Supplemental Power Sales Agreement or to perform any other obligation in such agreement, Power Agency s' ball make demand upon the Participant for pay-l ment or performance and if said failure is not cured within fifteen (15) days from the date of such demand, it shall l constitute a default by the Participant at.the expiration of such period and notice of such event of default shall forthwith be given to the Participant. Each such agreement 26-2 l l

shall further provide that it shall not be amended or re-scinded with respect to the provisions specified in clauses (1), (2), (3), and (4) of the preceding sentence without the prior written consent of CP&L. (B) Except as provided in Secti,n 21.2(B), Power Agency shall continue each of such agreements in full force and effect and shall enforce all such Supplemental Power Sales Agreements in accordance with'their terms as amended from time to time. (C) Each Project Power Sales Agreement as identified in Section 1.52 of the Sales Agreement, and each Supplemental Power Sales Agreement shall provide that the charges which Power Agency makes to euch Participant thereunder shall be separately identified on the monthly billings to the Partici-pant and that the revenues received in any month from a Participant making less than rull payment of such billings shall be applied pro rata to the separate charges under each agreement in the ratio that each separate charge bears to the total monthly bill rendered. ( D) The charges which Power Agency makes to each Participant pursuant to its Project Power Sales Agreements as described in the Sales Agreement and its Supplemental Power Sales Agreements as described in Section 26.l(A) shall be se-parately identified on the monthly billings to each Participant 26-3

and the revenues actually received in any month from a Parti-cipant making less than full payment of such billings shall be applied pro rata to-the separate charges in the ratio that each separate charge bears to the total monthly bill rendered and the resulting amounts shall be credited to the appropriate accounts on the books of Power Agency and shall be applied solely to the separate obligations of Power Agency which were the basis for the separate charges on the billings. l (E) Power Agency shall take no action the effect of which would be to pledge, assign, or otherwise create a right superior to CP&L in any third party to any of the revenues it a receives f rom any Participant under the Supplemental Power Sales Agreement described in Section 26.l(A). 4 (F) Fower Agency shall promptly furnish CP&L a copy of any notification to a Participant of an event of default by such Participant under the provisions of a Supplemental Power Sales Agreement. ] 26.2 General Covenant by the Parties Each party hereto covenants and agrees that if any event shall occur or condition exists which constitutes, or l which after notice, lapse of time, or both, would constitute an l I Event of Def ault on its part pursuant to Section 21.1 of this Agreement, it shall linmediately notify the other party thereof, specifying the nature tb reof and any action taken or proposed to be taken with respect thereto. 26-4

a i ARTICLE 47 MISCELLANEOUS L 27.1 _N_o Delay No disagreement or_ dispute of any kind between the parties to this Agreement or between any party and any other entit'y, concerning any matter including, without limitation,

the amount of any payment due from said party or the cortect-l ness of any billing made to the party, shall permit the .9 aid party, or either of them, to delay or withhold any payment or the performance by any party of any other obligation pursuant to this Agrcement. Each party shall promptly and L

j diligently undertake to resolve such disagreement and dispute without undue delay. 27.2 Further Documentation From time to time after the execution of this Agree-ment, the parties hereto sha within their legal authority 1 l execute any other documents a. may be necessary, helpful or appropriate to carry out the terms of this Agreement. i 27.3 Notice Any notice, consent or other communication permitted or required by this Agreement shall be in writing and shall be deemed given when delivered by hand or (unless otherwise-required by the terms of this Agreement) when deposited in the' United State 5 mail, first class postage prepaid, and if 27-1

to CP&L addressed to: Vice President -- Power Supply Carolina Power & Light Company P.O. Box 1551 

                                'Raleigh, North Carolina 27602 and if to Power Agency, addressed to' General Manager North Caroli..: Municipal Power Agency l

Number 3 P.O. Box 9516? Raleigh, North Carolina 27625  ! i l unless a different officcr or addrons shall have been designa-l l ted by the respective party by notice in writing, i 27.4 Ileadings Not to Affect Meaning The descriptive headings of the various Articles l and Sections of this Agreement have been inserted for conveni-l ence of reference only and shall in no way modify or restrict any of the terms and provisions hereof. ! 27.5 No Partnership; Tax Matters l l Notwithstanding any provision of this Agreement, the parties do not intend to create hereby any joint venture, l partnership, association taxable as a corporation, or other l entity for the conduct of any business for profit, and, if it i ! should appear that one or more changes to this Agreement l' ! would b, 9 quired in order not to create an entity referred l l to above, the parties agree to negotiate promptly and in good i faith with respect to such changes. Upon the request of a ! party, the other party agrees to take, in a timely manner, l 27-2 l l

n -3 (f all voluntary action as.may be necessary to be excluded from icaatment as-a partnership under the Internal Revenue Code of 1954,.as amended. Upon the request of a party, the other party agrees to take, in a timely manner, all voluntary ac-tion as may be necessary to obtain a ruling from the Internal Revenue. Service: (a) that no association taxable as a corpora-tion hat- been created by this Agreement or the Related Agree-ments; and (b) that neither this Agreement nor the Related Agreements would cause the loss of the tax-exempt status of the bonds of Power Agency. 27.6 Successors and Assigns This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and assigns. Nothing in this Agreement, express or implied, is intended to confer upon any other person any rights or e remedies hereunder. 27.7 Counterparts This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. 

    -27.8  Incorporation of Exhibits All Exhibits attached to this Agreement shall be incor-porated into and a part of this Agreement.

27-3

27.9 Severability of Provisions If FERC or any other governmental agency or court of I competent jurisdiction holds that any provision of this Agree-ment is invalid, and if no party withdraws from this Agreement l pursuant to Article 19, then the remainder of this Agreement shall not be affected thereby and shall continue in full force and effect. 27.10 Entire Agreement This Agreement and, as applicable, the Related .4 gree-ments, shall constitute the entire understanding between the parties hereto, superseding any and all previous understandings, oral or written, pertaining to the subject matter contained i herein. The parties hereto have entered into this Agreement in reliance upon the representations and mutual undertakings contained herein and not in reliance upon any oral or written i representation or information provided to one party by any 4 representative of the other party. 27.11 Applicable Law 5 This Agreement is made under and shall be governed s by the law of the State of North Carolina. 27.32 Effect of PURPA Notwithstanding any other provisions of this Agree-ment, CP&L shall provide Power Agency with capacity and energy, 1 or transmission services, as required by the provisions of Section 210 of the Public Utility Regulatory Policies Act 27-4

of 1978 (16 U.S.C. S 824a-3) and its implementing regulations (PURPA Requirements) in connection with the service of loads by Power Agency or its Participants pursuant to the PURPA Requirements. If Power Agency takes all steps necessary to qualify capacity and energy purchased or received by Power Agency or a Participant pursuant to PURPA Requirements as a New Resource, CP&L shall credit Power Agency for ruch capacity and energy as though such capacity and energy were a New Resource. If Power Agency seeks capacity and energy or transmission services from CP&L, or a credit from CP&L for capacity and energy received by Power Agency or its Participants, in connection with lead served or capacity and energy received pursuant to PURPA Requirements, and if CP&L is not required by PURPA Requirements to take the action sought by Power Agency, CP&L and Power Agency shall promptly under-take negotiations for an agreement relating to Power Agency's request, including any appropriate modifications to this Agreement. If either party concludes that such negotiations will not produce an agreement, such party may make an appro-priate filing with FERC, or any other appropriate regulatory agency, to seek a determinacion as to the appropriate terms and conditions for the transaction sought by Power Agency, including any appropriate modifications to tnis Agreement. 27.13 Assignment Except as provided in Sections 13.5, 13.13 and 27-5

27.18, this Agreement, or any part hereof, chall not be as-signed except'upon the prior written consent of the other party. I 27.14 Na Waiver The failure of either party to enforce at any time any of the proeisions of this Agreement, or to require at any time performance by the other party of any of the provisions hereof, shall in no way be construed to be a whiver of such provisions, nor in any way to affect the validity of this Agreement or any part hereof, or tha right of such party thereafter to enforce each and every such provision. 27.15 Security of Information The Owners agree that any information provided under this Agreement will not be used in a manner which (a) would compromise any part of the security system of any Joint Facility, (b) would be in contravention of any applicable governmental regulation, or (c) would cause an Owner to vio-e late any arrangement regarding confidentiality or proprietary rights which such Owner has with any third party. 27.16 Computation of Time In computing any period of time prescribed or allowed under this Agreement, the day of the act, event or default from whicit the designated period of time begins to run shall be included. If the last day of the period so computed is a 

  . Saturday, a Sunday or a legal holiday in North Carolina, then 27-6

i i- . I 

;        the period will run until the end of-the'next day which is not a. Saturday, a1 Sunday or a' legal holiday in' North Carolina.

i 27.17 Ef fect of Default Upon Terms of this Agreement 

  ,                 In the event that the remedies set'forth in Section I        14.3_or Section 14.4 of the Sales Agreement are invoked and applied in connection with an Event of Default (as defined 1

in ,Section 14.1 of the Sales Agreement), the terms of this Agreement shall be applied in a manner which takes account of i I 

        'the changes in ownership interests or entitlements resulting-
from such application of Section 14.3 or Section 14.4 of the Sales Agreemen'.

27.18 Change to heflect Ownership Interests in Joint Facili-Hes bl% her Entitles fi Power Agency recognizes that CP&L may sell an inte-j rest in the Joint Facilities or any portion thereof to another entity or entities, and in connection with such sales Power-Agency agrees that CP&L may transfer or assign certain.of j CP&L's rights and obligations under this Agreement to 'one f; or more of such entities. In the event any other entity. purchases such an ownership. interest in the Joint Facilities, i-j the provisions of this Agreement shall be amended, if.neces-sary, to reflect such other entity's ownership interest. In no event shall such purchase and sale diminish Power Agency's 

~

rights under this Agreement. d 27-7

27.19 Rounding of Kilowatts Whenever the provisions of this Agreement require the use of kilowatts or kilowatt hours, the. actual kilowatt 

;       or kilowatt hour figure involved shall be adjusted by rounding

, upward to the next-full kilowatt or kilowatt hour if the i actual figure is .5 kilowatt or kilowatt hour, or higher- or downward to the last full kilowatt or kilowatt hour if tne actual figure is less than .5 kilowatt or kilowatt hour. i 27.20 Singular to Include Plural and Plural to Include Singular ] Throughout this Agreement, whenever any word in the singular number is used, it shall include the plural unless the context otherwise requires; and whenever the plural . ncsber is used, it shall include the singular unless the l context otherwise requires. I L 27.21 References to Articles , Sections and Exhibits Unless otherwise expressly indicated, all references i~ to Articles, Sections and Exhibits are references to Articles and Sections of, and Exhibits to, this Agreement. I 27.22 Termination of Existing Service Agreements The existing Service Agreements between CP&L and Participants as listed in Exhibit PCA-XII for both rate schedule ! and tariff forms'of filings will be terminated at 12:00 Mid-night of the First Closing Date. Upon termination of CP&L's filed Service Agreements, the Participants will thereafter i be customers of the Power Agency. i 27-8 i

ARTICLE 28 SURVIVORSHIP 28.1 Survivorship of Obligat, ions The termination of this Agreement shall not dis-charge any party from any obligation it owes to the other party 'under this Agreement by reason of any transaction, loss, cost, damage, expense or liabili*.y which shall occur or arise (or the circumstances, events or bases which shall J occur or arise) prior to such termination. It is the intent

of the parties hereby that any such obligation owed (whether j the same shall be known or unknown at the termination of this Agreement or whether the circumstances, events or bases of the 4

crme shall be known or unknown at the termination of thia

Agreement) will survive the termination of this Agreement.

28.2 Survivorship of Provisions The provisions of Sections 20.1 through 20.4, i including specifically, but without limitation, the indemnifi-i cation provisions thereof, shall remain operative and in full force and effect, regardless of any termination or cancellation of this Agreement, except with respect to actions of the Owners occurring after such termination or cancellation. 28-1 I I

IN WITNESS THEREOF, the parties have caused this Power Coordination Agreement to be signed and sealed as of the day and year first above written, by their duly authorized rep-resentatives. l CAROLINA POWER & LIGHT COMPANY ' 4 ATTEST: 4- / Chairman /Presi' dent 'V' Secrdt Q (/ NORTH CAROLINA MUNICIPAL POWER AGENCY NUMBER 3 AT T-Chairm 

                                                  ~

a"rd ~o mm Np ' Secretary /

a a i J I i i .i 0 2 1 POWER COORDINATION AGREEMENT ! EXHIBITS r 1 l 

                                       \

POWER COORDINATION AGREEMENT (PCA) INDEX OF EXHIBITS Exhibit No. Exhibit Title Page No. . I Determination of Reserve, Supple-mental, Deficiency, Transmission Use and Certain Other Charges under this PCA (11 Parts) PCA-I-l II Determination of Monthly Purchased Capacity Charges Payable to Power Agency by CPGL PCA-II-l l III Determination of Monthly Purchased Energy and Surplus Energy Charges Payable to Power Agency by CP&L PCA-III-l IV Determination of Monthly Replacement Energy Charge Payable to CP&L PCA-IV-1 V Points of Connection with Municipal Systems Served by CP&L as of the Date of This Agreement PCA-V-1 VI Delivery Facilities Sales Agreement PCA-VI-1 VII Delivery Point Data Sheets PCA-VII-1 VIII Seasonci "~..aand and Annual Energy Forecast PCA-VIII-l IX Summary of Monthly Billing Statement Format and Supporting Detail PCA-IX-1 X Determination of ecst of Funds PCA-X-1 XI Escrow Agreement PCA-XI-l XII Customers Whose Contracts are Being Terminated PCA-XII-l XIII Guidelines for Estimation of Missing or Erroneous Metered Data PCA-XIII-l

l t t'l i i i i t

BXHIBIT PCA-I i

DETERMINATIud OF RESERVE, SUPPLEMENTAL, j DEFICIENCY, TRANSMISSION USE AND CERTAIN OTHER CHARGES 4 UNDER THIS PCA i I. 4 I i a + i L 4 I d T 

                     - ,,               ,e>-   - - - , . - - -, - - .. , , . - - - -. -

c i l PCA-I-1 EXHIBIT PCA-I DETERMINATION OF RESERVE, SUPPLEMENTAL, DEFICIENCY, TRANSMISSION USE AND CERTAIN OTHER CHARGES UNDER THIS POWER COORDINATION AGREEMENT 

                          . TABLE OF CONTENTS Part                        Title                        Page 1       General Information                           PCA-I-2 2       Determination of Power Agency's Reserve Capacity Charge                               PCA-I-5 3        Determination of Power Agency's Supplemental Capacity Charge                               PCA-I-27 4        Determination of Power Agency's Reserve Energy Charge                                 PCA-I-31 5        Determination of Power Agency's Supplemental Energy Charge                                 PCA-I-36 6        Determination of Power Agency's Deficiency Energy Charge                                 PCA-I-37 7        Determination of Power Agency's Reactive Power Charge                                   PCA-I-43 8       Determination of F7wer Agency's Transmission Use Charge                        PCA-I-45 9       Determination of' Power Agency's Spinning Reserve Charge                                 PCA-I-62 10        Determination of Charge to Cover Costs of Accounting and Billing                PCA-I-64 l

11 Determination of Leased Facilities Charge PCA-I-66

PCA-I-2 PART 1 GENERAL INFORMATION The computation of the rates and charges in all Exhibits to this Power Coordination Agreement (PCA) involves allocations of j investments and expenses. When an allocation is called for, but no allocation basis is described in either an exhibit or in this PCA, the allocation shall be made on the basis of the allocation method utilized in CP&L's cost of service study which formed the i most current NCUC rate order. In the computation of rates and charges in all exhibits to this PCA there shall be no duplication of charges. As to any investment, CP&L shall not simultaneously capitalize an allowanc'e for funds and charge a return on such investment. These computations also are based on costs reflected in certain specifically referenced accounts under the FERC Uniform System of Accounts as of the effective date of this PCA. If changes are made in the Uniform System of Accounts after cuch date which cause the costs to be shown after such date in accounts other than those referenced herein, the computation shall continue to reflect those costs despite the change in accounting methods. CP&L's subaccount numbers are shown on various exhibitJ for reference purposes only.

r-l t l 1 l PCA-I-3 The rates described in these Exhibits include factors which shall recover taxes, fees, assessments, other expenses and adjustments. The factors would cover such items existing at the commencement of transactions hereunder and shall be adjusted as necessary to reflect (1) any applicable changes in such existing taxes, fees, assessments, other expenses a,nd adjustments; (2) the imposition of such applicable charges; or (3) the inclusion of accounts currently allowed by FERC but not used by CP&L. l Allowance for Funds Used During Construction (AFUDC) (includ.ing Allowance for Borrowed Funds Used During Construction) and associated costs used in the determination of the rates and charges in these Exhibits shall be calculated as though no Construction Work in Progress (CWIP) is included in the Rate Base except for pollution control CWIP. This shall include adding AFUDC on all expenditures included in CWIP except for pollution control CWIF. j The AFUDC rate for purposes of these Exhibits shall be the rate actually used for the year shown on page 428 of the Annual Report of CP&L to the Federal Energy Regulatory Commission j (P.P.C. Form 1), hereaf ter referred to as FERC-1. If AFUDC is

PCA-I-4 not ' calculated for any plant investment on the CP&L system, then the AFUDC rate shall be calculated as prescribed by the NCUC as of the Ef fective Date of this PCA. As of the Ef fective Date of this PCA, CP&L's AFUDC rate is calculated net of income taxes. Should CP&L change its method of calculation of the AFUDC rate so that the rate is not net of income taxes b'ut is a gross rate, then deferred income taxes shall be appropriately reflected. The monthly capacity and energy charges specified in these Exhibits shall reflect the provisions set forth in Article 16. 4 4

PCA-I-5 PART 2 DETERMINATION OF POWER AGENCY'S RESERVE CAPACITY CHARGE FOR THE MONTH OF _ ,

1. Monthly Reserve Capacity Charger The monthly charge shall be calculated by multiplying the monthly Reserve Capacity rate in dollars per kilowatt (W) by Power Agency's Reserve Capacity Billing W.

PORMULAiS. CHAmet e RATE x newma nw WMEMt R ATE (S / MW) AS DETERMINED IN P eiwmo uw iS S.ECiFiEO sw PCA CA 4-5. 

                                                                . rTEM S   ITEM 2
2. Monthly Reserve Capacity Rate: 'Ihe monthly rate in dollars per W shall be calculated by dividing CP&L's System Annual Production Demand Related Cost by the sum of CP&L's Monthly Power R0 sources in W at the time of each CP&L Monthly Peak Demand during the calendar year and multiplying the result by an cppropriate tax factor.

FORMULA ISe RATE = x yr PR WHEREs RATE e RESERVE CAPACITY MONTHLY R ATE PC e CP4L'S SYSTEM ANNUAL PRODUCTION DEMAND RELATED COST (PCA-4-4. ITEM 8) PR e SUM OF THE II MONTHLY POWEP RESOURCES AT THE TIME OF E ACM MONTHLY PEAK (PCA 4-6. ITEM 3) TP e REVENUE RELATED TAM PACTOR JPCA M. ITEM 4)

PCA-I-6

3. Monthly Power Resources: This value in KW shall be calculated in the same manner as CP&L Power Resources but at the time of each CP&L Monthly Peak Demand during the calendar year. CP&L Power Resources is defined in Section 1.12.
4. Revenue Related Tax Factor (TF): This factor shall be based on the revenue related taxes or assessments applicable to i

the revenues billed under the Reserve Capacity monthly rates. The f actor shall be derived as follows: FOR MULA 18: TF e WHERE: TF = REVENUE RELATED TAX FACTOR l CTR = , COMPOSITE TAX RATE OF REVEMUE RELATED TAXE5

5. Reserve Capacity Billing KW: This value shall be the percentage reserve as determined under Section 7.4, times Power Agency's Total Retained Capacity in Commercial Operation at the time of the CP&L Monthly Peak Demand in each month.
6. Annual Production Demand Related Costs: In any year this includes the production costs for CP&L owned capacity plus costs associated with capacity purchased less revenue associated with capacity sold. The methodologies set forth

l PCA-I-7 below describe the calculations shown in exhibits PCA-I-12 through PCA-I-26. i A. Return on Investment: This item of annual Demand l Related cor:.t shall be computed by multiplying the System Investment in Production Facilities by the embedded weighted composite cost of capital. (a) System Investment in Production Facilities: This investment consists of Production Plant and an allocated portion of General Plant and Intangible Plant balances (including related purchased plant balances not classified, if any) less related

accumulated depreciation, less related accumulated deferred income taxes, plus applicable nuclear fuel investment, Pollution Control CWIP, and allocated l

portions of normal working capital. f , (b) Composite Cost of Capital: Four item of cost of capital are computed. These are as follows: ! (1) long-term debt (2) preferred stock (3) common stock (4) job development investment tax credits in i account 255 i i I

l 4 i PCA-I-8 ( l l l The embedded cost of capital of each of these elements, stated as ) a percent, is weighted on the basis of capitalization ration, and summed to arrive at the composite cost of capital. For long-term debt and preferred stock, weighted annual net costs to CP&L of each'are computed. For common equity, the percentage allowed shall be es described in Article 16. For accumulated deferred l job development investment tax credits, the cost shall be the composite cost of capital. Accumulated Deferred Income Taxes shall be deducted from system net investment based on the I following formula of FERC accounts: (281 + 282 + 283 - 190). l However, any transactions in Account 283 which are not of an l operating nature and therefore not recognized for ratemaking l purposes in determining Deferred Income Tax Expense shall be I excluded. Such determination shall be based on an analysis of l the Company's books. However, if at any time in the future the NCUC, as a result of a decision or general rule making directly i ! affecting CP&L, is utilizing a different methodology concerning l the treatment of accumulated deferred income taxes, CP&L may, at l its option, for the purposes of this Agreement, adopt such l revised methodology. Such adoption would affect the computation l of Reserve Capacity rates, Supplemental Capacity rates and l l Purchased Capacity rates. l 1

PCA-I-9 B. Operation and Maintenance Expenses: Production Operation and Maintenance Expenses consist of the demand related cost portion of accounts 500 through 555 and account 557 plus an allocated portion of Administrative and General Expenses in accounts 920 through 932. C. Depreciation Expense: Depreciation shall be the sum of the Production Plant Depreciation Expense reported on Page 429 of FERC-1 as adjusted for accounts 404 through 40', if applicable, plus an allocated portion of General Plant Depreciation Cxpense reported on Page 429 of FERC-1, adjusted to eliminate the effects of non-pollution control CWIP in the rate base and to reflect the inclusion of pollution control CWIP in the rate base. D. Taxes Other Than Income Taxes: Two items of taxes other than income taxes are computed. One is for taxes related to production wages and salaries, and the other is for taxes related to property. (a) Tax Expense Related to Production Waces and Salaries: This item includes taxes directly assignable to production wages and-salaries and an allocated portion of taxes assignable to administrative and general l wages and salaries. (b) Property and Other Tax Expense Related to Plant , Investment: Taxes directly assignable to Production l Plant, if any, are identified and remaining plant

PCA-I-10 taxes not directly assignable to any plant classification are allocated on the basis of gross book plant (accounts 101 and 106) with a portion of the General Plant taxes further allocated to production on the basis of production related General j Plant. l l E. Income Tax: Income tax expense is computed based on the product of the Return on Investment, adjusted for Interest j on Long-Term Debt, and the then cur ent Combined Income Tax Factor. F. Non-Associated Utility Sales for Resale Revenues: These are capacity related revenues associated with firm sales to Non-Associated Utilities as reported in account 447 (excluding revenue related taxes collected through the Revenue Related Tax Factor) . These revenues shall be deducted from the total costs determined in Items A through E, above. Revenues associated with sales of Supplemental Capacity and Reserve Capacity to Power Agency (or any other similar joint owner) pursuant to this PCA (or its equivalent for any other similar joint owner) shall not be included as I sales to Non-Associated Utilities. l i t o' I 

                                                    ,_                y    4 --     - -        -   _  _.   ,_.

a PCA-I-ll

7. Detail Exhibits for CP&L's System Annual Production Demand Related Cost:

TITLE PAGE , Annual Production Demand Related Cost PCA-I-12 Return on Production Related Investment PCA-I-13 Production Related Electric Plant In Service PCA-I-14 Production Related Other Investment PCA-I-15 Production Related Working Capital PCA-I-16 ' Production Related Administrative & General Expense Allocation PCA-I-17 Composite Cost of Capital PCA-I-18 Long-Term Debt PCA-I-19 Long-Term Debt - Capital Structure PCA-I-20 Preferred and Preference Stock PCA-I-21 Connon Equity PCA-I-22 Annual Demand Related Production O&M

Expense Excluding Fuel Used In Electric Generation PCA-I-23 Production Related Depreciation and Amortization Expense PCA-I-24 I

Production Related Taxes Other Than i Income and Revenue Related Taxes PCA-I-25 CP&L System Annual Production Cost Incoma Tax Calculation PCA-I-26 l l l 1

i PCA-I-12 1 r l CP&L SYSTEM ANNUAL PRODUCTION DEMAND RELATED COST 12 MONTHS ENDING DECEMBER 31, l Line PRODUCTION 1 No. Item Reference Amount l 1 Return on Investment PCA-I-13, Line 11 S 2 Operation & Maintenance Expense (Excluding Fuel Used in Flectric PCA-I-23B,.Line 53, i Generation) Col (2) l l 3 Depreciation Expense PCA-I-24,.Line 7 4 Taxes Other than Income Taxes PCA-I-25, Line 6, t ! Col (2) l i ! 5 Income Tax PCA-I-26, Line 13 ' 5 Non-Associated Utility dales for Resale PCA-I-10, Item F 7 Annual Droduction Demand Sum of Lines 1 thru Related Cost 5 minus Line 5 S 

           - - . . , - - . _ _                           -   .         ., - ..a

PCA-I-13 RETURN ON PRODUCTION RELATED INVESTMENT 12 MONTNS ENDING DECEMBER 31, Line P'RODUCTION No. Item - Reference Amount ELECTRIC PLANT IN SERVICE: 1 Grose Plant in Service PCA-I-14, L. 4. Col. (2) $ 2 !Asg s Accumulated Deprec. PCA-I-14, L. 4, Col. (2) 3 !as Js Accumulated Deferred . Income Tax PCA-I-14, L. 12, Col. (2) 4 Plues Nuclear Fuel PCA-I-14, L. 17, Col. (2) 5 Net Plant in Service Line 1-2-3+4 S OTHER INVESTMENTS: 6 Electric Plant Neld foe Future Use PCA-I-15, L.3, Col. ( 2) 3, 7 Extraordinary Property I4 eves PCA-I-15, L.4, Col. (2) S S Working Capital PCA-I-16, L.16, Col. (2) S 9 TOTAL INVESTMENT Lines 5 thru 8 3 10 COMPOSITE COST OF CAPITAL PCA-I-18, L.9, Col. (4) 11 RETURN ON INVESTMENT Line 9 x Line 10 $ e D l l l l

PCA- t- 14 Pac 00CTION RELATRO ELECTRIC PLANT IN $ENV!CE 12 NONT!!$ CN0!NG DECEMDEA 31, , SYSTEM PRODUCTION Lin.3 (4) y No. ftem Re f e rence Amount Re ference Ang, njE . CROSS PLANT IN SEsVICE fNote Als 1 Plant in Service (Note C) Note F S Note F $ _ 2 - Pollution Control CWIP Note F Note F 3 Ceneral Plant and Intangible Plant Note F Note H 4 Total ' Lines 1+2*3 s Lines 1+2+3 3 S Percent Allocated to Production Plant L.4 Col. (2) + L.4, Col. (1) ACCUMULATED DEPRECIATION (Note Alt 4 Plant in Service (Note C) $ Note F $ 7 Allocated Ceneral Plant Note 3 8 Tbtal Lines 6+7 Lines 6*7 3 ACCunULAfro erremoto tNCOME TAM (Note Ele 9 Plant in Service (Note C) $ Note C $__ 10 Pollution control CWIP Note C 11 Allocated General Plant Note D 12 total Lines 9+10*11 5 Lines 9+10+11 3 NUCLEAR FUEL (Note A): 13 Nuclear ruel Stock FERC-1, p. 200, Note I $ Acct. 120.2 14 Nuclear ruel in peactor PtmC-1, p. 200, Note ! 3 Ace t . 120.3 15 Spent Nuclear ruel Note r 3 15 Accue. Prov. for Amort. Note J $ 17 T3tal Nuclear ruel Lines 13+14+15-16 $ Nota At Thirteen months average balance of items listed in FtRC-1. Mots 8: Allocation = [Noto H. PCA- t- 14 ) a (13 mos. average Cenoral Plant Accunulated Deproc. f rom rtRC-1, p. 408,L. 25. Col. (c)l. Note Cs The accumulated deferred income tan related to gross production plant in service Le provided by a functional analysts of Company books. Note De The ace.nulated def erred income tat related to gross general plant in service (Note C, aoovel allocated to production Dased on general plant allocation percentago f rom PCA-t-14 Note H. Not9 Es The treatment of accumulated deferred incomo tamos shall conform to the methodology used pursuant to PCA- t-8. Note ?g Analysts ot Company Doots. Note Ce Plant Balance escludini General . Plant and Intangible Plant adjusted to reflect for the etteet of Cu!P in the Rate 3ase. Note Mt. Allocation f actor cased upon ratio of productton wages and salarios in electric operatton anJ maantenance cupenses to total dages and sJiaries in electric operatsc3 and maintenance cuoenses exclu1 Lng adesnistrative and general wages anJ sJiarles inC14ied th@re(n. Note Is The treit*ent of fr3 fit Jr 14ss on inc sale of nucicar fadi material kne1JJed in this account snaLL not to inconsistent w t th the then r.ost recent decision of the MCUC attectisq CP6L. Note Ja Analysis of Account 103.5.

_ _ _ _ _ _ _ _ _ _ _ _ . _ _ _ _ _ _ _ _ _ , . _ _ . . __. . . _ _ _ . _ _ . . _ . _ _ . _ _ _ . _ , . .._m _ __ PCA-t-15 PRODUCTION RELATED OTliER INVES11 TENT 12 MONTHS ENGING DECEnaER 31, SYSTEM PRODUCTION Line tao . Ites (1) (2) heference Amount keference Amount-Electric Plant Held For Future Use (Note A): 1 Cross Investment (Acct. 105) Note B $ Note B $ 2 Accumulated IMpreciation 1 Note C Note B 1 Total Line 1-2 $ Line 1-2 $ _ 4 Estraordinary Property losses FEAC-1, p. 110, (Acct. 182) Line 35. Col. (d) and Note D. $ Note D $ Note As 1hirteen months average balance of items Aasteo in FERC-1. Note B: Cross Investment includes (1) any land which has a designated date of transfer to CWIP (account 107) of 10 

                                       . years or earliers (2) any new facilities which have never been included in plant in service (account 101) and hich have a designated date of transfer to CWIP -(account 107) of 5 years or earlier. Any facititles transIstred from plant in service (account 101) to account 105 cnall w included in accordance with then current NCUC treatment of such facilities.

Note Cs Analysis of Company Books. Note Ds 1he treatment of Entraordinary Property losses, FERC account 182, shall be consistent with the most recent NCUC decisicer or general rulemaking. For the purpose of this Agreement, this account shall not include unamortized balances associated with the Mayo (Jnits or the Harris Units even if the NCUC allows their inclusion. In addition, unamortized balances associated with the Brunswick Cooling Towers and the South River project shall not be included in this account for the purposes of this Agreement. n

9 FCA !-16 j Pm000CTION RELATED NOREING CAPITAL l 12 NONTNS SNDING DECEM8EA 31, l I l Line SYSTEM PRODUCTION ill (2) No. Itee Reference Amyunt poterence Amount Waterlate s Su q1tes (Note A) 1 Fuel Stocks - Non Nuclear F8mC-1, p. 207 8 1004 S Mon-Puel 2 Production Note 5 5,, 1004 S 3 ftansmission Note 8 04 4 Distribution Note 5 ,__ On 5 General Note a Note a 6 Total (Lines 2 thru 5) FamC-1, p. 207 5 5 7 Prepayments FERC-1, p. 110, 5 Note C S CASM proutatntNTS 8 Production 06M Espense FERC-1,*). 418 5 9 Purchased Power FtaC-1, p. 418 10 Nuclear ruel Account 518, FERC-1, p. 417 11 rose 11 ruel pote D 12 Allocated A60 EzPense PC A- t - 17, Line 17 Col.(2) 13 Adjusted ObM for Cash Requirements Line f-9-10 11+12 S 14 OsM Cash Requirements 1/8 s Line 13 S 15 roset t ruel Cash requirements 1/12 Line 11 5 16 Total Production Deleted Working Capital Lines 1+6+7 

                                                                                        +14+15                                     5 Nota As thirteen months average balance of items listed on FERC-1, p. 207.

Mots as Analyets from Company books. Mots C: A11 aation percent f rom PCA-t-14 Line 5, Col. ( 2) . Mots on Burned f uel portions included in accounts 501 and 547.

PCA-I-17 PRODUCTILN RELATED ADMINISTRATIVE AND GENERAL EXPENSE ALLOCATION 12 MONTHS ENDING DECEMBER 31, Line No. Item Description System Production Pelated (1) Allocation (2) Account Eeference Amount Factor Amount Related to Wages & Salaries: 1 A&C Salaries 920 FERC-1,

p. 419 S
    ?     Office Supplies & Expenses            921       FERC-1,
p. 419 J Administrative Expenses 922 FLRC-1, Transferred Credit p. 419 4 Outside Services 923 FERC-1,
p. 419 5 Injuries & Damages 925 Note A (Excl. Nuc. Liab. Ins.)

6 Employee Pensions & 926 FERC-1, Benefits P. 419 7 Franchise Requirements 927 FERC-1,

p. 419 8 Duplicate Charges 929 FERC-1,
p. 419 9 General Advertising 930.1 FERC-1,
p. 419 10 Misc. General Expense 930.2 FERC-1,
p. 419 11 Rents 9 31 FERC-1,
p. 419 12 Maintenance of General Plant 932 FERC-1,
p. 420 13 Total-W&S Related Add Lineu 1 thru 12 S Note B $

Specifically Assigned: 14 Property Insurance 924 Note C S Note C S 15 Nuclear Liability Insurance 925 Note D S Note C S 16 Regulatory Comm. Assessments 928 FERC-1,

p. 419 Note C S 17 Tota $ Ads. & General Expenses Add Lines 13 and 14 thru 16 S S l

Note As Injurieo and Damages expenses, account 925, from FERC-1, p. 419, less Nuclear Liability Insurance expenses included therein. ! Note B: Allocation f actor based upon ratio of production wages and salaries in electric operation and maintenance expenses to total wages and salaries in electric operation and maintenance expenses excluding administrative and general wages and salaries included therein. Note Cs Analysis of Company Books. Note De Nuclear Liability Insurance expenses included in account 925, from FERC-1, p. 419.

e7 w PCA-I-!$ CtetNti t1tt: COST OF CAPITAL 12 M4W4TilS CNDING Dt%E:MHEk 31, (4) ., Total Company capitalization (31- Composito Coat -l Line ili (2) Cost of Capital of Capitat N. I t em Reference Amount Percesitage Porcentage sc ot. 2 Col. 3) t 

                                                ' l.                            le<}-Tera Debt                                                   Note A                                                 $          ,

t 4  % 4

2. Puuterred & Preferenco Stock Nte B __

, I. Usammon Eigaity Nte C

4. Total without ITC . I.i no ' l + 2 + ) $_ _ 100.00 t _,_

4 5. Em;-Tea m' Datat No'te A $  % & , t 

                                                '6.                           Pruferred          6. Preference Stocit                                                             Note 8                                                                                      %                                                     '%                                                                 $
                                                -7.                          Common Equity                                                      hte C                                                     _                                                                                                                                                        ,

S. Jcds OcVelopment ITC- Note D

9. Total'with'ITC Lines 5
  • 6 +7 +8 $ 100.00 t g Note As S. A no 1, Coltman (1) alsove from N;A-I-20. Line 1, Column (3) from PCA-I-19.

tut o fis f.i na 2, Columns (!) atsovo and ( 3) frua PCA-I-21 tauto Cs 1.i ne 3, Column (1) f rom PCA-I- 22, Line 6. Line 3, Column (3).shall be determined as provided in Article 16. Etc lbs 8.Ine 4, Column (1) f rom PEleC-8, Page Ill, Line 33. f.ine 8, Column ( 3 ) sha !! be equa l . t o Line 4, Col umn ( 4 ) . t-6 r T * ' ' + * - - - - - - - - - - - - -

PCA-I-IV IIWG-TElet DEBT I2 MONT11S ENDING DECEMBER 31, ($1 (!) (2) (3) (4) Annualized Principal Het Proceeds Interest Cost Rate Interest for Amount from Sale for Year to Maturity Year To t .e l ( F t'kC- 1, P. 219d, Line 24, Col. I and P. !!6A, Line 4u, Col. 3) $___ S S __ S _ _ . _ $_____ Total, Col. 5 $ aM4*JJ.<1 Costs a Total, Col. 2=5 =  %

_ , - , - . . _- - ~ , .. .. , -.- - . . . . . , + c _ e PCA-t-20 Los0G-TEWa DEST CAPITAL STRUCTUtsE 12 NOffTitS ENDING DECEM8ER ll, (1) (2) (3) (4). (5) (6) Principal unamort! sed Unsoort1med unamorttmed Unamortiaed toss Amount Preelue Discount Debt Espense on Reacquired Debt Net Proccols jNote A) (Note R) (Note C) (Note D) (Note E) (Col. (+2-3-4-5) I 8 8 8 8 8 - _ _ _ _ Note As Principal Amount from FERC-1, p. 2190, Line 24, Col. 4. 

                  ' lote 8: Unamortised Prealue 2 s long-Tere Debt from FERC-1, p. 111, Line 17, Col. d.

. Note Cs Unamortised Discount on long-Tere Debt fion FERC-1, p. 111, Line 18, Col. d. Note Ds lanamortlaed Debt Espense from FERC-1, p. 110, Line 34, Col. d. tsote E Unamortised foes on Reacquired Debt from FERC-1, p. 110, Line 42 Col. d. l 4 4 i

r PCA-I-21 PRET' ERRED AND PREFERENCE S'IOCK 12 MONTHS ENDING DECEMBER 31, (1) (2) (3) Preferred and Number of Principal Preference Stock Annual Reference Shares Outstanding Amount Dividend FERC-1,, S S

p. 215, 215A Total S S Total, Col. (3) S Emin3ded Cost = Total, Col. (2) =S =  %

PCA-I-22 COMMON EQUITY 12 MONTilS ENDING DECEMBER 31, Line No. Item Reference Amount 1 Common stock issued FERC-1, p.111, Line 1 S . 2 Retained earnings FERC-la p. 111, Line 10 3 Unappropriated and FERC-1, p. 111, undistributed Line 11 subsidiary earnings 4 Accumulated li' ability PERC-1, p. 224, for customer fuel Line 33 l credits __ 5 Deferred taxes FERC-1, p. 214d associated with accumulated liability for customer fuel credits 6 Total Line 1 + 2 + 3 + 4-5 S 1 3 I

l t PCA-I-23A ANNUAL DEMAND RELATED PRODUOTION 06M EXPENSE EXCI.UDING FUEL CSED IN ELECTRIC CENERATICN 12 MONTES END14C DecemDer 31. (Col. 1) (Col. 21 (Col. 31 Line hof. or FERC g Total Production Production ftee Account No. Company Oceand Energy se.a. Power 1 Operation Supervision and Engineering 500 (Note Al s s O s 0 2 sale of Fly Asa (Rev.) 501.1 a 3 Eale of Fly Aan (Esp.) 501.2 G 4 fuel - Lapor & Miscellaneous Espense 501.4 0 5 stese Espense 502 0 6 Electric Espense 505 0 7 Miscellaneous Steae Power Espense 506 0 0 Rente 507 o 9 Maintenance Supervieton and Engineering $10 (Note A) 0 0 10 Maintenance of Structuree $11 11 a Maintenance of no11er Plant 512 o 12 Maintenance of Electric Plant 513 a 13 Maintenance of Miscellaneous steam Plant 514 0 14 Total Steam Power ( Add Lines 1 thru 13) s s s_ Nuclear Powers 13 operation Supervision and Engineering 517 (Note A) 3 s O s 0 16 Coolants and Nater 519 a 17 Steam Espensee 520 la Electric trpensee c 523 0 19 Miscellaneous nuclear Power Espensee 524 20 0 Maintenance Supervieton and Engineering 528 (Note A) 0 0 21 Maintenance of St?uctures 129 c 22 Maintenance of heactor Plant Equipment 530 0 23 mantenance of Electric Plant 531 0 i 24 Maintenance of Miscellaneous l muelee. Plant 532 0 25 Total Maclear Power ( Add Lanee 15 thru 24 8 s s s__ nydraulic Power

  • 26 Operation Supervision and Engineering 535 (Note Al s s o s 0 27 Water for Power 536 0 28 Nydraulic Espensee 537 a 29 Electric Espensee 53s 30 c Maintenance of Rydraulic Power Generation tapensee 539 0 i 11 Maintenance Supervleton i

and Engineering 5 41 ( No te A) 0 0 l 32 Maintenance of structures 542 - l 33 Maintenance of Reserrotro. l Danc. and waterways 543 0 34 Maintenance of Electric Plant 544  ; 35 Maintenance of Miscellaneous BN rau11e Plant 545 0 34 Total Brdraulie Power ( Add Linee 26 enru 35) 5 - s s

P *A-d= 233 ANNUAL DEMA3C ARLATED P hDUCTIO?e 04M EXPEMBE EXCLUDissG FUEL UstD IN ELECTRIC CCMCAA?!Ott 12 now;s5 tuolart DECEMsta 31. feni. Il (Col. 2) Leet. 31 

   *1ne                                      met or frac           TotaA     Productaan troouctios
w. Account no. Company Demand Energy other Powers ~

37 operation Supervia1on and taginee ring 544 (Note A) S S 0 8 0 38 011 se?.dling Comm. Turtine $47.4 , o 39 Generanon taponse S48 a 40 Miscel;aneoue Other Power Generalised tapensee S49 0 41 hente 150 0 42 maintesence Supervieton and Engineering 551 (note A) 0 0 43 Mainteunce of Structures SS2 0 44 maintenance of Generating and tiectric Plant 533 0 45 maintesance of Miscellaneoue other Power Generating Plant 554 _ o 46 Total Dther Pnuer (Md Lines 37 tAru 45) S S S Other power supply rupensees 47 Purchased Power S$$ (note 3) 8 8 8 48 Systee Control and Imad Dispetening 554 (Note C) 0 0 49 other tapensee , SS7 (Note 03 0 50 Total other Power supply (Add Lines Espensee 47 tAru 48) S S S S1 Total Production tapanee tacauding Peel Good in ( Add Lines 14 e S 8 8 tiestric Generation 23 + 26 + 44 + S0) - 52 AaG tsponse (PCA-I-17, Line (17), Col. [21) 8 S S ' 0 53 Total Production can Coet ( Add Linee S 8 8 

               ,                               31 and $2)

Note As All superviaton and engineering related 06M esponses art redistributed to the approoriate functional aconents based upon the later component ratio of these nosounts to the total escluding supervision and engineering. Note 5: Analyste of Company tooke. het of Purenesed and Interchange Power included in account SSS. escluding credits for sales of capacity to Power Agency pursuant to this PCA f or to any other joint owner), it any. Note Ce systee control and imad Dispatching (Account SS6) enall be included or PCA-1-16. note De tacaudee not provisions for Deferred Puel Coat (Account 557.1) and Lintuity foe customer Puol Credits (Accounta S57.2 and S57.3).

4 PCA-I-24 PRODUCTION RELATED DEPRECIATION AND AMORTIZATION EXPENSE 12 MONTHS ENDING DECEMBER 31, (1) Line Depreciation No. Item Expense (Note A) PRODUCTION PLANT 1 Steam S 2 Nuclear 3 Hydro 4 Other Production 5 Production Related General Plant 6 Adjustment For Pollution Control CWIP _ 7 Total Depreciation ( Add Lines 1 thru 6) S Note A: Production depreciation will be the sum of the production plant depreciation expense based on an analysis of the values reported on page 429 of FERC-1, as adjusted for accounts 404 through 407 if applicable, plus an allocated portion of general plant depreciation expense (allocated according to % from PCA-I-14, Note H) reported on page 429 of FERC-1, adjusted to reflect the effects of CWIP in the rate base. Account 407, Amortization of Property Losses, shall not, for the purposes of this Agreement, include costs resulting from the cancellation or decommissioning of any Mayo Unit or Harris Unit prior to Commercial Operation.

PCA-t-25 PRODUCT &ON BLELATED TAXES OTHER TtlAN INCOME AND REVENUE RElATED TAXES 12 990NTHS ENDING DECENSER 31, Systes Production Line Tasos Other h an income Tax And (1) (2) No. Revenue Related Tases Reference Amount 4 Amount Tases Related to Wages & Salaries: 1 N. C. Unemployment Note A $ 2 S. C. Unemployment Note A 1 red. Soc. Sec. 6 Ureemployment Note A 4 Total (Add Lines 1 thru 3) $ Note B $ 5 Preparty & Other Tas Espense Related To Production Plant Investment Hotes A&C Note O $ 6 Total Taxes Other man Lines 4 + 5 $ income Taxes Note As Tases other than income Tases shall be those (reported on FERC-1, p. 222) as listed above. Note De Allocatlon factor based upon ratto of production wages and salaries in clectric operation amt maintenance espenses to total wages ami salarles in electric operation and maintenance espenses escluding adelnistrative and general wages and salaries included therein. Note C Production plant related property tases include North and South Carolina Property Tames (FERC-1, p. 222) and in South Carolina the property related portion of the S. C. Public Ut!!!ty Corporation Licenses. Note D Other taxes are a!!ocated based on ratio of production plant to total plant in service stated on a 12 months ending balance. 

                                                                                                    +

d

9 PCA-1-26 CP6L SYSTDI ANNUAL /, OfAJCTION COST INCCME b f. CALCULATION 12 MONTNS ENCING DECEMBER 31, Li>E No.  !?tM P EFr3ENCE AA000NT BAe!$ FOR TA1ASLE 'NCOMEs

1. Return on Investment PCA-t-13, Line 11
2. Deferred Income Tases Note A
3. Amort. Investment Tas Credit Note 3 4 Interest Espense Allowene. PCA-t-18, Line 5 s PCA-I-13, Line 9
5. Additional Income Tas Deductione Note C
4. Suetotal Line 1 e Line 2
  • L1ne 3 -

Line 4 - Line 5 S

7. Income Tas Espanelon factor Note O
8. Tasable Income Line 6 e Line 7 8 TAX COMPUTATIOefe
9. Tea Rate , Mote E
10. Current income Tas Allowance Line 3 a Line 9 $
11. Deferrwd Income Tanee Line 2
12. Amort. Investment hs Credit Line 3
13. Total thcome Tas Allowance Line 10 e Line 11 - Line 12 8 MOTE At Me not of the functionalised portions of Account 410.1 (Provision for Deterred Income Tases, Utility Operating income) and Account 411.1 (Provision for Deferred Income Tames, Credit - Utility operating income) associated with production facilities.

NOTE St Se amounto credited to Account 411.4 (Investment Tas Cred1P Adjustments, Ct111ty Operations) and dentted to Account 255 ( Accumulated Deferred Investment Ten Creditt for proportionate aeounts of tas credit deferrate allocated over the average useful life (or such wher appropriate period of time) of electric utility property related to product 1 ort to which the tas credits relate. NOTE Cs ne not production-related amounts required to adjust for dif ferences between booked utility income and esponses and those ut111:ed for tan purposes, as included in the Company *e Income Tas Vouchers and on Page 223 of FERC-1. Suca amounto shall not duplicate costs or charges provided for in Lina 2 tarv 4 hereof. NOTE De he f actor cocputed as one (1.0) ennus t,, where t la the current composite ef f ective income tas rate (see Note E be, low). NOTE Es ne current co posite ef fective income tas rate. t,, computed from the following formulas t, = tg e to * % f, t where tg to tr,e current statutory federal income tan rate (presently 

         .46) and where to is the current statutory North Caroline State income tas rete (presently .04).

PCA-I-27 PART 3 DETERMINATION OF POWER AGENCY'S SUPPLEMENTAL CAPACITY CHARGE FOR THE MONTH OF ,

1. Monthly Supplemental Capacity Charge: The monthly charge is calculated by multiplying the monthly Supplemental Capacity rate in dollars per KW by Power Agency's Supplemental Capacity Monthly Billing KW.

I POR MULA ISs CHARGE e R ATE X BILLING MW WHERE: R ATE (S / MW) AS DETERMINED IM PCA.4 27. BTEM 2 RILLING MW A5 DETERMINED IN PCA.8 29. ITEM S

2. Monthly Supplemental Capacity Rate The monthly rate in dollars per KW is calculated by dividing CP&L's System

! Annual Production Fixed Cost less Power Agency's Adjusted Annual Reserve Capacity Charge by the sum of Power Agency's 12 monthly Peak Supplemental Demands during the calendar year and multiplying the result by the Allocation Factor and by the Revenue Related Tax Factor. PO R MULA Its RATE e PCMC X AP X TP PO WME R E a PC e CP&L*S SYSTEM ANNUAL PRODUCTION DEMANO RELATED COSTS (PCA4 20. lTEM 3) CC e POWER AGENCY'S ADJUSTED ANNUAL RESERVE CAPACITY CHARGE (PCA-4 20,lTEM el PO e SUM OF POWER AGENCY'S 12 MONTHLV PE AK SUPPLEMENT AL DEM ANOS (PCA.I.28, ITEM ll AP e ALLOCATION PACTOR (PCA.4 29, ITEM S) TP

  • REVENUE RELATED TAX PACTOR (PCA.S 29. ITEM 7)

PCA-I-28

3. CP&L's System Annual Production Demand Related Cost: See PCA-I-6, Item 6 for the determination of this value.

i l

4. Power Agency's Adjus'ted Annual Reserve Capacity Charge:

This is the sum of 7/ower Agency's 12 monthly Reserve Capacity charges, during the calendar year, divided by the Revenue Related Tax Factor. l 1 MCC FORMULA IS: CHARGE o y WHERE: MCC e POWER AGENCY'S 32 MON (HLY RESERVE CAPACITY CHARGES IN THE CALENDAR YE AR OPCA.I.5, ITEM l} TF e REVENUE RELATED TAM PACTOR (PCA 8 24. ITEM 7)

5. Monthly Power Agenc 's Supplemental Capacity Billing KW ,

(Monthly Peak Supplemental Demand): This shall be Power Agency's Monthly Peak Resource Demand (Section 1.58)1ess-Power Agency's Retained Capacity at the time of Power Agency's Monthly Peak Resource Demand in such month. Such amounta shall be adjusted for New Resources in accordance with Section 6.1(D),(E),(F), or (G) where applicable and credited for Interim Capacity in accordance with Section

10. 5.' This value shall not be less than zero.

PCA-I-29

6. Allocation Factor: This Supplemental Capacity Allocation Factor is used to determine Power Agency's proportionate share of CP&L's System Annual Production Demand Related Cost.

PO=Mui.4 iS. AP 4 WME REa SCO

  • sum OF POWER AGENCY'S la MONTHLY SUNt EMENTAL COINCIDENT PEAM DEMANOS (PCA-4 30. ITEM Al peg e sum OF CP&L*S 4 3 asONTHLy PS AM DEM ANOS (PCA-8 38. ITEM 91
7. Revenue Related Tax Factor: This factor is based on the revenue related taxes or assessments applicable to the revenues billed under the Supplemental Capacity monthly rate.. The factor is derived as follows:

PORMut.A 4Es TP

  • I 1-CTR WHERE: TP =

RAVGNUE RELATED tax PACTOR CTR = COAAPOSITE TAX RATE 07 REVENUE RELATED TAXES w, c - , ., - -- ,,

PCA-I-30

8. Monthly Peak Supplemental Coincident Demand : This shall be Power Agency's Hourly Resource Demand (Section 1.40) coincident with the hour of CPEL's Monthly Peak Demand less Power Agency's Retained Capacity at the time of CPEL's Monthly Peak Demand in such month. Such amounts shall be adjusted for New Raources in accordance with Section 6.1(D), (E), (F), or (G), where applicable, and credited for Interim Capacity in accordance with Section 10.5. This value shall not be less than zero.
9. CPEL's Monthly Peak Demand: This value shall be as described in Section 1.11.

PCA-I-31 PART 4 DETERMINATION OF POWER AGENCY'5 RESERVE ENERGY CHARGE FOR THE MONTH OF ,

1. Mon *.hly Reserve Energy Charge: The monthly charge shal!. be calculated by multiplying the monthly Reserve Energy rate in dollars per kilowatt hour (KWH) by Power Agency's monthly Jteserve Energy billing KWE.

PO RMuLA ISa CHARSE(S)

  • RATE X 88bb88'G KW" WHE R Es R ATV (S/MwM) AS DETERM8MED IN PCA.e.3L ITEM 3 eskuno === As oETERM.=ED eN PCA 32. rTEM a
2. Monthly Reserve Energy Rate: The monthly rate in dollars per KWH shall be calculated by dividing CP&L's actual monthly energy related costs for the month in which Power Agency used the energy by the corresponding net generated and purchased KWH and multiplying the result by the Revenue Related Tax Factor (PCA-I-33, Item 5).

PORMULA ISa MONT>LY RATE

  • X TF MET MWM WMEREa Mk e CP&L'S MONTMLY ENERGY RELATED COSTS (PCA.4 33, f7EM 7)

NET atWM e CP&L4 NET MWM CENER ATED AhD PURCHASED (PCA 4 32. ITVM 3) TP e REVEMut RELATED TAX PACTOR (N. ITEM 5)

l PCA-I-32 l

3. CP&L's Net KWH Generated and Purchased KWH: This information shall be obtained from CP&L's energy accounting system. Net KWH generated and purchased shall be reduced by the KWH sales associated with the energy related revenues derived from Non-Associt.ted Utility Sales as defined in PCA-I-32, Item 4.
4. Non-Associated Utility Sales for Resale Revenues: These revenues shall be energy related revenues associated with sales to Non-Associated Utilities as reported in account 447 (exclusive of revenue related taxes collected through the Pavenue Related Tax Factor) . Revenues associated with sales of Supplemental Energy and R,eserve Energy to Power Agency pursuant to this PCA (or to any other such joint owner), and the Power Agency's payments to CP&L for Spinning Reserve (PCA-I-62) shall not be included.
5. Revenue Related Tax Factor: This faccor shall be based on the revenue related taxes or sssessments applicable to the revenues billed under the Reserve Energy monthly rates.
Tne factor shall be derived as follows

PORMUULISs TF = .- t - CT R WHERE: TP e REVENUE RELATED TAM PACTOR CTR = COMPOSITE TAX R ATE OF HEVENUE RELATED TAXE5

PCA I-33 l 

                                                                                                                                   ~
6. Reserve Energy Billing KWH: This quantity shall'be the sum of' the integrated hourly uses of - Reserve Capacity. by I

l Power Agency during each month of the calendar year. The use of Reserve .Capacit.y shall be determined in accordance l . with Section 8.2(B).

7. CP&L's Monthly Energy Related Costs: The Monthly Energy Related Costs shall be determined in accordance with PCA-I 34. -

I l 

                                                           .-                                        ~     ~         --.      . - _ , -        . - -

PCA- t = 3 4 DCTERMINATION Or ACTtlAL MONTHLY ENCACT SELATED COSTS FOR *!tt MON 71 Cr __ , 11ne wo. tige Account Re f e rence Amount rossil ruel Espense (Note C) 1 Boiler ruel 'oal 50131 Note A $ 2 boiler ruel - 62 011 50132 Note A 3 Boiler ruel - e6 011 50133 mote A 4 Boiler ruel - Cae 50134 Note A 5 aoiler ruel - 43 011 (other Production) 54732 mote A 6 Boiler fuel - Cas (Other Production) 54734 Note A beal rossil real s Nuclear ruel +=oenee (Note C) 4 C76L Owned--Surn-up Charge 5180 sote A S 9 Nu it.;- Fuel - Le=oor - megewett-Sour Charge 5181 Note A i0 suclear ruel - Lessor = other Charsee 5182 Mote A It Nuclear ruel - Lessee Charges 5183 Mote A 12 Nuclear ruel Espense - Dispoo 6 Cost 5184 Mote A 13 Nuclear ruel tapense - Amortization of spent ruel $185 Note A , 

 .4   Nuclear Fusi Espense - Amortisation of
      $penc 'qe! Disposal Coet                               5186         Note A 4

15 Nuclear fuel Espense - Tax Cain on Sale of Nuclear ruet 5137 Mote A 16 Toal suelear ruel 5 l' other Production Coot FCA-t-358 Energy aelated Line 51. Col. 3 s 18 Totai Production Cost Linee 7 + 16 + 17 S Energy selatcJ 19 Mon-associated Ctility Sales for assale Revenues Note S S 10 Totai Ene rgy Weisted Costs Lines 18 - 19 5 Mote As from the Comp..y's sontnly financial and aperating reports. Note 5 see PCA-t-32. Its5 4. Note Cs roasti tael expense and nuclear *uel expense sna'i include only ourned taal :csts, dad the fuel nanditng and scher costs related to fuel snail ce included in PCA-t-35A and 358.

PCA-I- 3 5A DETEAMINATION Of MONT1tLT ENEROY RELATED PRODUCTION 06M EXPCMSC EXCLUDING FUEL U$tD IN ELECTRIC CENCAATION FCP. THE MCetTR OF , Col. 1 Col. 2 Col. 3 Line pet. or fthC Total Production Production no. It se Account No. Company Demand Enerov Steam Powers 1 operation Supervision and Engineering SCO (Note Al 5 5 0 $ 0 2 Sale of Fly Aan (Ree.1 501.1 0 3 Eale of Fly Aan (Esp.) $01.2 0 4 Tuol - Labor 6 Miscellaneous s Es pense $01.4 0 S Steam tapense 502 0 6 tiectrte Espense 505 0 j 

                                                                                                         ""~~

7 Miscell6neous Steam Power Espeete 506 0 

              $             Rents                                 $07                                                                   0 9             Maintenance Surervision and Engineering                       510 (Note At                                  0               'O 10              Maintenance of Structures             511                                                                   0 11              Maintenance of toiles F3 ant          $12                                           0 12              Maintenance of Electsig Ptant         513                                           0 13              Maint9 nance of Miscellaneous (team Plant                       514                                                                   0 14              Total Steam Power                     ( Add Linea 1 thru 131              S            S ser S

nuclear Power 15 Operation Supervision and tagineering $17 (Note Al S S 0 $ 0 16 Coolants and water $19 0 17 Steam Espensee $20 0 18 Electric Espenses 523

  • 0 19 Miscellaneous Nuclear Power tapensee $24 0 20 Maintenance Supervieton and Engirseeing 528 (Note At 0 0 21 Maintenance of Structuree $29 0 22 Maintenance of heactor Plant Equipment $30 ""

0 23 Maintenance of tiectric Plant $31 0 24 Maintenance of Miscellaneous Nuclear Plant 532 0 25 Total Nuclear Power ( Add Lines 15 thru 24) $ S S muuransas Mydraulic Power l 26 Operation Supervision and Engineering $35 (Note Al 5 5 0 $ 0 27 water for Power $36 0 28 Wydraulic Expensee 537 c 29 taectric Espensee 534 0 30 Maintenance of Nydraulic Power Generation tapenses 539 0 ~~ 31 Maintenance Supervieton and Engineering 541 (Note At 0 0 32 Maintenance of Structuree $4' a 33 Maintensnee of Reservoice, 3ame, and waterwaye $43 ___ 

                                                                                                                            ~-

34 Mairrenonce of tiectric Plant 544 0 35 Maintenance of Miscellaneous Hydraulic Plant $45 0 36 Totai Rydraulic Power ( Add Lines 26 taru 35) $_ $ S

t PC A= != 3 53 DETEPA! NATION Of MONTMLY ENEDGY REI,ATED 

                ~                          PRODUCTICN C6M EXPENSE EXCLUDING FUEL U$tD IN ELECTRIC CENERA!!ON FOR THE MONTH OF                        .

Col. 1 Col. 2 Col. 3 Line Def. or Frac Totai Production mi. tres Productaon Account No. Comeany tenand ene rew Other Power 37 Operation Supervibion and 30 Engineering 546 (Note Al 3 $ 0 $ 0 Oil Randitag Como. Turbine 547.4 0 39 Generation Empense 548 0 40 Miscellaneous Other Power Generalised tapenses 549 0 41 Rents 550 0 42 Maintenance Supervision and Engineering 551 (note Al 0 0 43 Maintenance of Structures 552 

                                                                                -~

J 44 9aintenance of Generating

  • and Electric Plant 553 3 45 Maintenance of Miscellaneous
  • Other Power Generating Plant 554 ,~~ 3 46 Total Other Power 1 Add Lines 37 thru 45) S_ $ $

Other Power supply tapenses 47 Purchased Power 48 System Control and 555 (Note WI $ S 0 5 3 Load Dispatching 556 ENote C) 0 0 49 Otner tapenses 50 

                                              $57 (Note DI                            O Total Other Posee Supply             ( Add Lines Espenses                         47 thru 49) S                  S                  S 51      Total Production Espense Excluding ruel Used in tiectric Generation

( Add Lines 14

  • 5 1 S 25 + 36 + 46 + Sol -

Note As All supervision and engineering related 06M espenees are redistributed to t"e appropriate func*1onal accounts ,_ased upon the labor component ratio of these secountz to the total excluding supervieton and engineering. Note 8: Net of Pur' chased and Interchange Power included in account $55 excluding credits f or sales of energy to Power Agency purplant to PCA tor to any otner *oint owner), If any. Note Cs Systee Control and Load Dispatching ( Account 5561 shall be included on PCA=I-40. Note De tacaudes not provisions for Deterred ruel Cost (Account 557.11 and Liant1 tty for Customer ruel Credits ( Accounts 557.2 and $57.J).

PCA-I-36 PART 5 DETEIU4INATION OF POWER AGENCY' S SUPPLEMENTAL ENERGY CHARGE- , FOR Tile MON'Ill OF , , l Monthly Suppletaental Energy Charge: The monthly charge.is 1. calculated by multiplying the monthly Supplemental Energy rate in dollars per KWH by Power Agency's monthly Supplemental Energy Billing KWii. CHARGE (S) e R ATE X SfLL8M4 M*H POR MULA IS: WHERE: R ATE (S / KWM) AS DETERMIMED IM PCA.S. 34 JTEM 2 SILLiteG MWM AS DETERMINED IN PCA.s. 34 ITEM 3 i-

2. Monthly Supplemental Energy Rate: This rate shall be the same as the monthly heserve Energy rate determined in PCA-I-31, Item 2.
            . Supplemental Energy Billing KWH:                      'Ihe sum of the hourly 3.

billing KWil as determined pursuant ta Section 8.3 shall be added to the hourly billing KWH associated with Unused Supplemental Capacity as determined pursuant to Section 8.2(C) of this PCA in determining the total billing of KWH for the month.

PCA-I-37 PART 6 DETERMINATION OF POWER AGENCY'S DEFICIENCY ENERGY CHARGE FOR THE MONTH OF ,

1. Monthly Deficiency Energy Charge: For each hour in which CP&L supplies Deficiency Energy to Power Agency, the power sources in operation during such hour shall be ranked in descending order of cost, using Monthly Average Energy Costs for CP&L units and, for purchased power from each source, the total cost to CP&L from each source divided by the KWH purchased from each source. Subject to taking account of sales to others in accordance with Section 7.6.(B), the highest cost source or sources of energy in such hour shall be used to supply the Deficie. ,y Energy. Should the power from the highest cost source not be sufficient to have supplied the Deficiency Energy, the next highest cost source shall be used, and this procedure shall be continued until the Deficiency Energy requirement in that hour is satisfied.

The hourly amounts of Deficiency Energy thus supplied from each sdurce during each month shall be summed and the KWH so determia?d shall be multiplied by the rate applicable to such source to obtain the monthly charge for the energy supplied from such smarce. Startup costs incurred to provide Deficiency Energy by any source shall be included in the Deficiency Energy charge for that month from that

PCA-I-38 source. The sam of the charges from all sources supplying Deficiency Energy in a month (including applicable startup costs) times the revenue related tax factor, shall be the Power Agency's Monthly Deficiency Energy Charge in that inon th . 7armula is: Charge = [I Charges from all sources required 1 to supply Deficiency Energy] x Tax Factor. Where: Charge from each source = (Rate x Billing KWH) 

                    + Adjusted Startup Costs Rate (S/KWH) as determiaed in PCA-I-38, Item 2.

Billing KWH as determined 1. iCA-I-40, Item 3. Adjusted startup cost (s) as determined in PCA-I-40, Item 4. Tax Factor as determined in PCA-I-40, Item 5.

2. Deficiency Energy Rate:
a. CP&L Generation: For each CP&L generating unit which supplied Deficiency Energy in a month, the unit monthly rate in dollars per KWH shall be tne' sum c the following

PCA-I-39 l costs for such unit s (1) 1.1 times the energy related portion of the monthly average plant operation and maintenance costs (exclusive of fuel) in dollars per KWH, including allocated common plant O&M, (2) 100% of monthly average fuel costs in dollars per KWH, a nd (3) .001 dollars per KWH times the Fuel Index. Formula is: Rate in S/KWH - = (1.1 x POM) +F+ ( .001 x FI) Where: POM = Energy related portion of average O&M (exclusive.of fuel), PCA-I-41, Item 6 F = Monthly average fuel cost (PCA-I-41, Item 7) FI = Fuel Index (PCA-I-42, Item 8) B. Purchased by CP&L from Third Party: In the event that CP&L utilizes a purchase from a third party in supplying Deficiency Energy, the rate in dollars per KWH shall be the total cost to CP&L for each such purchase divided by / the total KWH supplied by the third party plus a factor for miscellaneous and unquantifiable costs-in dollars per KWH. Formula ist Rate in S/KWH = (PC + CA) Where: PC = For each purchase utilized to supply Deficiency Energy, the total cost in dollars paid by CP&L for each such purchase divided by the total KWH supplied by the third party.

PCA-I-40 CA = Pactor for miscellaneous and unquantifable costs for third party transactions (PCA-I-42, Item 9)

3. Deficiency Energy Billing KWH: This value shall be determined for each source supplying Deficiency Energy as I

described in PCA-I-37,-Item 1. The total KWH of. Deficiency l l Energy supplied in each hour shall be determined in accordance with Section 8.2 (D). I

4. Adjusted Startup Costs: Whenever Power Agency is purchasing Deficiency Energy, Power Agency shall be charged with those startup costs which would not have been incurred but for the need to supply Deficiency Energy. The startup cost charged to Power Agency shall be based upon the methodology and l

values utilized by CP&L in determining startup costs in .the dispatch of its system. These costs times 1.1 shall be the Adjusted Startup Costs.

5. Revenue-Related Tax Factor: This factor is based on the revenue-related taxes or assessments applicable to the revenues billed under the Deficiency Energy rate. The f actor is derived as follows:

PCA-I-41 l Formula is: TF = 1 1-CTR Where: TF = Revenue-related tax factor CTR = Composite tax rate of revenue related taxes

6. Energy Related Portion of O&M Costs (Exclusive of Fuel):

Energy related O&M costs (exclusive of fuel) stated in dollars per KWH for an individual fossil steam unit shall be such unit's total 12-month O&M costs (exclusive of fuel) divided by the corresponding 12-month generation and the resultant rate in dollars per KWH mutliplied by the ratio of (i) the most recent 12-month energy related O&M cost (exclusive of fuel) as determined in accordance with PCA-I-35A and 35B for all CP&L fossil steam units to (ii) the most recent 12-month total O&M cost (exclusive of feel) for all CP&L fossil steam units. Energy related O&M cost for combustion turbines and nuclear units shall be determined by using a similar calculation, utilizing the applicable costs for the fuel source involved.

7. Monthly Fuel Costs: For any given generation unit, this value in dollars per KWH shall be the monthly total fuel expense for such unit divided by the net KWh output of such unit during that month. Startup costs specifically charged to Power Agency or others shall be excluded in determining Monthly Fuel Costs.

PCA-I-42

8. Fuel Index: This factor is derived as follows:

Formula is: FI = FLCR 

                          .FBASE Where:      FLCR = Total CP&L Fossil Fuel costs for the last calendar year in dollars per KWH FBASE = Total CP&L Fossil Fuel costs for the
                      -    calendar year 1980 in dollars per KWH
9. Factor for Miscellaneous and Unquantifiable Third Party Transactions: The factor in dollars per - KWH shall be the v lue allowed in CP&L's interchange contracts in effect during the month in which the transaction occurs.

4

r PCA-I-43 FART 7 DETERMINATION OF POWER AGENCY'S REACTIVE POWER CHARGE AT EACH DELIVERY POINT FOR THE MONTH OF ,

1. Monthly Charge'at Each Delivery Point: The monthly charge for reactive power shall be determined for each Delivery Point by
 .nultiplying the monthly rate per KVAR (S/KVAR) by the Excess Reactive Power Demand (KVAR).                  These calculations shall be in accordance with Article 14.                 Charges for each Point of Connection are carried forward to PCA-IX-13.                       The charge, if applicable, shall be calculated as follows:

PORMULA IS RATE X EXCESS KVAR WNEREsEXCESS R ATE ($/KVAR) MVAR

  • AS DETERMINEO IN PCA MS. ITEM 2 MAXIMUM RdACTIVE POWEt, DEMAND OURING THE BILLING PERICO LESS 48 % OF MAXIMUM MW DEMANO DURING TNE SILLING PERIGO(PCA-W ITEM 30)
2. Monthly Rate Per KVAR: The monthly rate in doJ '.trs per KVAR is c/11culateri as- folloits:

A. Amount of capacitors installed by CP&L on its distribution system during the calendar year (NOTE A) KVAR B. Investment required to purchase and 

     ,         install the capacitors specified in Item 2A, above (NOTE A)                                     $
       'C. Leased Facilities monthly rate specified o.. PCA-I-70.

s-I-. PCA-I-44 I D. Multiply Item 2B, above, by Item 2C, above $ E. Divide' Item 2D, above, by Item 2A, l above S /KVAR

3. Excess Reactive Power Demand (KVAR): This value is determined for each Delivery Point as follows:

Billing Period _, thru , A.- Maxirsa Reactive Power Demand during the billing period , _KVAR B. Maximum KW Demand during the billing period KW C. 48% of Item 3B, above: l 0. 48 x _ KW = KVAR D. Excess reactive power demand equals Item 3A,-above, less Item 3C, above: (If negh eive, enter zero) FVAR NOTE A: In the event CP&L does not install any distribution ~ capacitors , during the calendar year, values for the most recent calendar l year CP&L did install distribution capacitors shall be 'used. l l i

PCA-I-45 PART 8 DETERMINATION OF POWER AGENCY'S MONTHLY TRANSMISSION USE CHARGE FOR THE MONTH OF ,

1. Monthly Transmission Use Charge: The monthly charge shall be calc,ulated by multiplying the monthly Transmission Use rate in dollars per KW by Power Agency's Monthly Transmission Use Billing Demand in KW.

PO R MULA ISs CHARGEE RATE X TUS WHE R E: R ATE (6/KW) AS DETERMINED IN PCA 4-48, ITEM 3 TUS = POWER AGENCY'S MO,4TMLY TR ANSMISSION USE SILLING DEMAND (KW) AS DETERMINED IN PCA444, ITEM S

2. Transmission Use Monthly Rate: The monthly rate in dollars per KW is calculated by dividing CP&L's System Annual '

Transmission Cost by the sum of Power Agency's 12 monthly Transmission Use Billing Demands during the calendar year and multiplying the result by an Allocation Factor and by the Revenue Related Tax Factor (PCA-I-46, Item 4). PORMULA ISs RATE = X AP X TP Tus a WHERE: TC e CP&L*S SYSTEM ANNUAL TR ANSMISSION COST (PCA 1-47,lTEM 8) TUS= SUM OF POWER AGENCY'S 13 MONTHLY TR ANSMISSION USE SILLING DEMANOS (PCA-64, ITEM 5) AP e ALLOCATION PACTOR AS DETERMINED IN PCA-8-44, ITEM 3) TP e REVENUE RELAT ED TAM PACTOR

PCA-I-46

3. Allocation Factor: This allocation factor is used to determine Power Agency's proportionate share of CP&L's System Annual Transmission Cost.

POReeULA ISs AP e CTUS CPO WHEREsCTUS e SUM OF POWER ASEMCY113 meOfffMLY COINCf DEffr TR AMSMISS40M USEDEMA8eOg y aaam gygg gg CPO e SUM OF THE ComestesEO SYSTEtes 12 heONTMLY PEAIC DEMANOS ( N 7 BTE M 7) l

4. Revenue Related Tax Factor: This factor is based o:: the revenue related taxes or assessments applicable to the revenues billed under the Transmission Use monthly rate.

l The factor is derived as follows: 1 PORMULA ISs TF s 1=CTR WHEREsTP = REVENt;E RELATED TAX P ACTOR CTRe ComePOEITE TAX RATE OF REVEMUE RELATED TAXES

5. Power Agency's Monthly Transmission Use Billing Demand:

This value shall be the higher of the following amounts: (1) Power Agency's Monthly Peak Resource Demand, as defined in Section 4.1, in the then current calendar month; or (2) Power Agency's Retained Capacity.

6. Monthly Co~ incident Transmissi< . Use Demand: This value shall be the higher of the following amounts: (1) Power

PCA-I-47 Agency's Hourly Resource Demand coincident with the hour of Combined System Monthly Peak Demand (PCA-I-47, Item 7) in the then current calendar month; or (2) Power Agency's Retained Capacity.

7. Combined System Monthly Peak Demand: This value shall be the highest 60 minute net integrated peak in KW recorded by CP&L during each calendar month for the Combined System less the SEPA capacity allocation for wheeling by CP&L to SEPA's preference custcr.ers included in such integrated peak.
8) CP&L's System Annual Transmission Cost: The detailed Exhibits are listed below:

_ TITLE PAGE , CP&L System Annual Transmission Cost PCA-I-49 Return on Transmission Related Investment PCA-I-50 Transmission Related Other Investment PCA-I-51 Transmission Related Electric Plant In Service PCA-I-52 Transmission Related Working Capital PCA-I-53 Transmission Related Administrative and General Expense Allocation PCA-I-54

i t: PCA-I ! l-l l ~ Composite Cost of Capital ,, PCA-I-55 Long-Term Debt - PCA-I-56 Long-Term Debt Capital Structure PCA-I-57 l' referred and Preference Stock PCA-I-58 ) Common. Equity PCA-I-59 l Transmission O&M, Depreciation, and Other Tax Expenses PCA-I-60 

      .CP&L . System Annual Transmission Cost Income Tax' Calculation                                                PCA-I-61 l

1 I l c r i . I , I l l

r 

                                                                             .t.,

h PCA-I-49 CP&L SYSTEM' ANNUAL TRANSMISSION COST 12 MONTHS ENDING DECEMBER 31, - LINE (1) (2) NO. ITEM REFERENCE AMOUNT 1 Return on Investment PCA-I-50, Line 10 S 2 Goeration & Maintenance Expense PCA-I-60, Line 4 3 Depreciation Expense PCA-I-60, Line 7 4 Taxes Other than Income 

           'and Revenue Related Taxes      PCA-I-60, Line 13 5     Income Tax                     PCA-I-61, Line 13           _

6 Transmission Rents Acct. 454, FERC-1 (Note A) 7 Non-Associated Utility Acet. 456, FERC-1 Wheeling Charges (Note B) 8 Transmission Annual Line 1 + 2 + 3 + Cost 4+5-6-7 S 

       , Note A:    Includes Leased Facilities Charge applicable to Transmission facilities.

Note B: Wheeling revenues, exclusive of revenue related taxes, associated with wheeling of capacity not included in the 

                 , demand placed on CP&L's transmission system.

1

g i PCA-I-50' RETUM CN TRANSMISSION RELATED INVESDIENT 

  '~

12 MONTHS ENDING DECEMBER 31, C,ine TRANSMISSION No. feen ,, Reference Amount l Electric Plant in Service ,. A Croce Plant PCA-I-52, Line 4, Col, (2) S 3 Accumulated Depreciation PCA-I-52, Line 8, o Col. (2) S 3 Accum alated Deferred Income Tas PCA-I-52, Line 12. Col. (2) 1 4 Net'Flant in Service Lines 1 1 5 Y , other Investments 5 Electric Plant Held for Future Use PCA-t-51, Line 3, Col. (2) S' F 6 Estraordinary Property Ineses PCA-I-51, Line 4, Col. (2) S 7 Working Capital PCA-I-53 Line 11, Col. (2) S I 8 TOTAL INVESTMENT Add Lines 4 thru 7 S^ 9 COMPOSITE COST OF CAPITAL PCA-I-55, Line 9, Col. (4) 10 RETURN ON INVESTMENT Line 8 x Line 9 5 

                                  /

y e-4 w e - -

PCA-1-51 TRANSMISSION RELATED OTHER INVESTMENT 12 MONTHS ENDING DECEM8ER 31, SYSTEM TRANSNISSION Line No. Item (1) (2) Reference. Amount Reference Amount Electric Plant Held For Future Use (Note A): l~ Gross Investment (Acct. 105) Note B $, Note B -S ,f -. 3 Accumulated flepreciation Note C Note C _ 1 1otal Line 1-2 $ Line 1-2 

                                                                                                                              ===

4 Extraordinary Property losses (Acct. 182) FERC-t, p. 110, Line 3fy Col..(d) .$ Note D 'S , Note A: 11:1rteen months average balance of items listed in FERC-1. ICote H Gross Investment includes: (1) ant land which has a designated date Of transfer to CWIP (account 107) of 10 years or earliers (2) any new facilities which have never been included in plant in service (account 101) and which have a designated date of transfer to CWIP (account 107) of 5 years or earlier. Any facilities transferred from plant in service (account 101) to account 105 shall be included in accordance with then current NCUC treatment of such fac!!! ties. tsote C: Analysis of Company Books. tkate D: 11ac treatment of outraordinary property losses, FEHC account 182, mhail be consistent with the most r ecent NCUC decision or general ruimaking. '

PCA-1-52 TRAasaI$5IOne ti1ATED sta.".TSIC PLArt? la ScaVICE 12 noesTHS BMDING DECDeBER 31, SYST13e TBAnSal$$f0M Line (1) 425 No. Iten aeference Amount Deference Ascent ChCSS Pt.Ast? IN Stav!CE (note al s 1 Flaat la Service (note Ci seote F 5 Isote F S 2 CWIP for Pollution Control slote F Note F 2 Ceneral Flaat and Intangible Plant note F mote R 4 Total Line 1+2+3 $ Line 142+3 5_ _ 5 Percent Allocated to Trancaiselom Plaat L.4 Col. (2)

  • L.4, Col. $ 1) _

ACCUsectJTED OCPRECIATIOst ( Ete Als 

                                                                                   $                      teote F           S 6       riant la serv!ce (Note G) 7       A!!acated General Plant                                                                          Note S S       Total                                                  Line 6+7           S                     Line 6+1           8 ACCtmoutAttD otrtmarD Incases TA3 (note Ele 9       Plant la service (seote G3                                                8                      sente C           S Cwsp for pollution Control                                                                       smote C Ita

!! Allocated General Flaat Note D 12 Total Llae 9+1S+11 $ Lane Sel4+14 8__ saate As Mittete months average balance of iteme !!ated la FESC+1. seote as Allocation = IMate e, PCA-1-523 s 13 3 moe. sverage generat plant accumulated depreciation from rtaC-1, p. 40s, L. 25. Col. fcil. aiote Cs Mcumulated deferead lacone tan related to groes transmiselon plast la service te provided by a tuactional analyste of Coopany books. note Ds accumulated def erred income taa related to groen general plant la service (Note C, abowel a!!ocated to transmission based om general plant allocation pert:%tage f rom PCA-I-52, smote W. esote es Treatment of acc.anulated deferreJ !acome tases sha!! conform to the met.bodology used by the NCUC la CML's thea acet current rate order. 380te Fs Analyste of Company books. Note Cs Flaat balance escludang general plaat aaJ 1staagtble plant adjusted to reflect the ef fect of CWIP in the Date Saee. Note Ms Allocation factor based upon ratio of tramanteeton uages and salaries in electric operation and malatemance espense to total wages and salaries la electric operation and malatemance espenses escludtag adelaistrat!we and general wages and salaries include $ therein. , 

  .   .n.-      .                  .+. - . .              --.                                                                      .

11 PCA-t-53 T14ANSMISS ION REl.ATEta WuaEll0G CAPITAL 8 2 MopsT11S ENDING DECEMeta 31, SYSTEM 'TRANbMISSION Line 

                                                                                            ~

Mo. Item ll) - [2[ ~ Reference Amount Reference Amount Maternals & Supt!!as (Note A[ p -Fuel 

              !   ProJw* tion                                      Note S

. S 06 $__ _ 2 Transelssion Note 3 4004 -- I Dis t r(Inst ion hte t St .~. 4 General Hote 5 Mote B 5 Total ( Lf *=9 1 thru 4) FERC-8, p. 207 $ 6 Prepayments FERC-8, p. 110 $ Note C $ 

                                                                                                                    -.-_.--a I

CAS11 REQUIRENFNTSs 1/8 06M Opense 7 Transelssion 06M Espense FENC-1, p.4te- $ _ _ , 8 A&G Allwated to Transmission PCA.I.54 Line 17 Col. (2) ... 9 Total (Lines 7 + el 5 - < m az :: to Cash Raslutrements 1/8 s Line 9 5 ma 2 m : In Total Transeisston laciated Working Capital (Lince 5 + 6 + 10) .3 

                                                                                                                    =-.::ar:

Note As .1hirteen months overaJu balance of items listeil on FE84C-8, p. 207. Huto Os A47.alysts of Company Dooks. Note Cs . Allocatim percunt from PCA*l-52 3.i nu 5, Col , (24

s-r e 3 PCA-I-54 i TRANSMISSION RELATED. ADMINISTRATIVE AND GENERAL EXPENSE ALLOCATION 

                                                                                                 .12 MONTMS ENDING DECEMBER 31, s

Line . 

                               ~No.  ~~    ~

Item 1 SYSTEM TRA!!SMISSION (1) A;1ocation (2) Account Re f erence Amount Factor 4 Amount 

                                                                                      ~

Related to Weges 6 Salaries i A&G Salaries 920 FERC-1,

p. 419 5 2 Office Supplies 6.Espenses 921 FERC-1,
p. 419 3 Administrative Expenses 922- FERC-1, Transferred Credit- p. 419 4 Injuries 6 Damages -925 Note A (Faci. Nuc. Lieb. Inc.)

s 5- Employee Pensions 6 - 926 PERC-1, Be ne f it s P. 419 

                                 -6          Duplicate Charges                                                 929            FERC-1,
p. 419 7 Rents 931 FERC-1,
p. 419 8 Naintenance of General Plant 932 FERC-1, ,
p. 420 9 Outside Services 923 FERC-1,
p. 419 10 isanchise Requirements 927 FERC-1, i
p. 419 11 General Advertising 930.1 FE9C-1.
p. 419 12 ' Misc. General Expense 930.2 FERC-1,
p. 419
                                                                                                                                                                                                                                                +

13 Total-W65 Re ? ac ed Add Lines 1 thru 13 $ Note a 3 14 Property Inmusance 924 Note C > 1$ Nuclear Lisbility Insurance 925 Note D Note C la Regulatory Ccmm. Assessments 928 FERC-1,

p. 419 Note C 17 Tbtal Adm. 6 General Expenses Add Lines 13 and 14 ..

thru 16 $ $ Note As Injuries and Damages expenses, account 925, from FERC-1, p. 419, less Nuclear Liability Insurance expenses -included therein. 

                               - Note.B:          Allocation factor based upon ratio sf transmission wages and salaries in electric operation and maineenance expenses to total wages and salaries in electric operatisn

, and maintenance expenses excluding administrative and general wages and salaries

included therein.

Note Ca. Analysis of Company Books. Note De Nuclear Liability Insurancs expenses included in account 925, from FERC-1, p.' 419. s. e b

4 .. - 0-a l l 

                                              ,                          PCA-1-55 COMPOS 111 COST OF CAPITAL 12 NONTIIS ENDING DECEMBER 31, ._                   __
'                                                                                                                             (4)                         J Total company capitalisation                           (3)           Composite Cost
    !.! ne                                                      (I f                 (2)             Cost of Capital of Capital

_No. ItcG Reference Amount Fercentage Percentage (Col. 2m Col. 3)

1. Lona-Ters Debt Note A $ t t t
4. Preferred & Preference Stock Note B
                                                                                                                                       ~~~
3. Common Equity Note C
4. Total without ITC L!ne 1+2+3 $ 100.00 ~. t
5. Iong-Term Debt Note A S t t
                                                                                                                                            't'         .
6. Preferred & Preference #

Stock Note B 4 4 4-

7. Common Equity Note C -
                                                                                      ~

, 8. Job Development 11C Note D I 9. Total with ITC Lines 5+6+7+8 $ 100.00 t t Note At I.ine 1, Column (1) above from PCA-I-57. Lino 1, Column (3) f rom PCA-I- 56. Noto 3: 1.Ino 2, Columns (1) above and . ( 3) from PCA-I-58 g .. Vote "' Lino 3, Column (1) from PCA-I-59, Line 6. Line J. Column (3) shat! he determined as provided in Article 16. Note De f.Inc 8, Column (!) f rom P ERC-1, Page li t, l.ino 3 3. Line 8, Column (3) shall te equal to IInc 4, Column (4). M r W 

      . . - . ._ - . ~ _ - - . ..               m  .-   . . . . - - . . _ . . . -     _ _ _ . . - ~ , , . . . . . . _        ...._m._     - . -

y , j, 1 \A , :li. . I i i i l < ' PCA-1-56 1 ' 1400G-TEIDI DEST 12 MO90T'AS ENDIIGG DECEMSER 31, (S) (1) (2) ( 3) (4) Annua 1ir.ed j i. Principal Net Proceeds Interest Cost Rate Interest for i _ Amount from Sale for Year to MaturiLY. Year. 

                          'Ib t 41 (FEkC-1,    P. 219d, f.ine 24,
j. Col. I and P. I16A, y ,

1.i ne 4 0, - % 1. 31 s s -. ,i - f Total, Col. 5 8 Embedded Costs = T3 aT, col. 2-s - i 4 m. b 1 5 h I 4 1 ' - i _ _ _ _ . . . _ , -l

PCA-I-57 (DHG-TEHN DEST CAPITAL STpCOME ~ 12 MONTiss ENDING DECEMBER 31, (1) (2) :ll (4) (5) Principat unamortised Unamortized Amount Unamortlaed Unamortized toss 

                                  ' Premium        Discount                      Debt Espense                                         'th)

(Note A) on kcacquired Debt (Note B) (Note C) Net Proceeds (Note D) _ (Note E) ( C01.__16 2- 3 5 [ 8_ _ _ 8 8 3 8 S-e Note As Pr hclpal. Amount from FERC-1, p. 219D, Line 24, Col. d. 

      . Note D      Unamortired Premium on long-Term Debt from FERC-1, ya. 111, Line 17, Co!, d.

Note Cs Unamortized Discount on long-Term Debt f rom FERC-1, p. 111, l.ine id, Col. d. Note D Unamortised Debt Espense from FERC-1, p. 110, Line 34, Col . d. Note Es Unamortized fosas on Reacquired Debt from FERC-1, p.*110, Line 42, Col. d. w a s- - -- - -

PCA-I-58 PREFERRED AND PREFERENCE S'IOCK 12 MONTHS ENDING DECEMBER 31, (1) (2) (3) Preferred and Number of Principal Annual Preference Stock Reference Shares Outstanding Amount Dividend FBRC-1,, S S

p. 215, 215A Total S S Total, Col. (3) S Embedded Cost = Total, Col. (2) =$ = t

PCA-I-59 COMMON EQUITY ! 12 MONTHS ENDING DECEMF'R 31, Line No. Item Reference Amount j 1 Common stock issued FERC-1, p.lli, ! Line 1 S ! 2 Re tained earnings FERC-1, p. 111, Line 10 3 Unappropriated and FERC-1, p. 111,

undistributed Line 11 subsidiary earnings l

i 4 Accumulated liability FERC-1, p. 224, r for customer fuel Line 33 credits - I 5 Deferred taxes FERC-1, p. 214d associated with ! accumulated liability l for customer fuel credits i 6 Total Line 1 + 2 + 3 + 4-5 S

l l PCA-t-60 TPAt85MI5310t8 06M, OEPRECIA?!CN, AND OTHER TAX EX.PENSES 12 MONTHS ENDING DECEMSER 31, _ 

 "Ane Mo. Ites (1)                                                                                      (2)

Ooerstion and Maintenance Expen se s Reference Amount 

   &   Transmission Expense                                        FERC-1, page 418                                                             8 3   System Control s Load Dispatching                           FERC Acet. 556 3  A&G Expense (?mlated to Transmission)                       PCA-I-54, L. 17. Col. ( 2) 4  Total Transeission CLM Expensee                             Line 1 + 2 + 3                                                               s Deereciation Exoense 5  Transmission Depreciation Expense                           FERC-1, p. 429                                                                2 6  Oopreciation Expense on Transmission Related General Plant                                       Mote E times % from PCA- t-$ 2 , po t e M
    ?  Total Transmission Depreciation Exponee                     Line S
  • 6 S Taxes Other than income !a s And Revenue Rela t ed Tames Sveten Transmission Re f e rence Amount KeTelence Amount Related To wages 6 Salaries:

I NC Unemployment Note A $ 9 SC Unemployment Note A 16 rederal soc. sec. 6 Onempicy. %ote A 11 Total ( Add Lines a taru 5_ Mote a S 13 Property 6 Other Tax Expense pelated To Transmienton Plant Inves tment Notes A 6 C 5 Kote D 1 4 13 Total Transmission Taxes other Thar Income Taxes $ Line 11 + 12 s note Ai Taxes other taan income taxes as reported in FERC-1,

p. 222, consisting of transmission plant related payroll taxes listed above.

Note 5: Allocation f actor based upon ratio of transmission wages and k salaries in electric operation and maintenance expenses to I total wages and solaries in electric operation and saintenance expenses excluding admiststrative and general wages and salaries included tnerean. Note Cs Transmission plant related prooerty taxes includ ed in tne north Carolina and Souta Carolina Taxes (FERC-1, p. 222) and in South Carolina the property tax portion of the SC Puo11e Utility Corporation Licenses. Note 3: Stner taxes are allocated tened on ratio of transatssion piant to total plant in service stated on a 12 montas ending calance.

oce te Analysts of Sepany's 3oots.

I' P"A-t-61 CP&L SYSTEM Ar*AL TRANSMISS10r; 00fT liiO'ME TAX CALOOLATIO!; 12 M0!!*!!S INDING DECEMBER 31, LINI No. ITEM PEFEREMOE AMOUt!T BASIS FOR TAXAB'.E INOOME:

1. Return on Investment P A-I-50, Line 10 $
2. Deterred Income taxes Note A
3. Amort. Investment Tax Credit Note 5
4. Interest Expense Allowance P:A-I-b5, Line 5. Col. 4 x P"A-I-50. Line 9
1. Addii onal Inccme Tax Deductions Note C
6. Suetotal Line 1
  • Line 2
  • Line 3 -
                                                                 -ane 4 - Line 5                            S
  • Note D
          . Incmae Tax Espansion rector
8. Taxsole income Line 6 e Line 7 S ,,,,,,,,

TAA COMPU*A*{O?a j

9. Ta x Ra te Note C
10. 0...ont ineone Tax Allowance Line 8 x Line 9 $
      '.1.      Deterr d income taxes                            Line 2
12. Amors. Investment Tax Credit Line 3
13. Total income Tax Allowance Line 10 + Line 11 - Line 12 2,,,,,,,

NOTC At The net of the functionalised portions of Account 410.1 (Pro.ision for Def erred Ir.Asas taxes. Utility operating income) and Account 411.1 (Provision f or Def erred Inasme TA3es. Credit - Utility Operating Income) associated witn transmiasion facilitzes. NOTT 3: The amounts credited to Account 411.4 (Investment Tax Oredit Adjustments, Utility Operations) ent debated to Account 255 ( Accumulated Deferred Investment Tax Caeditt for proporticnate amounts of tax credit ' def errals allocated over tne average usef ul life f or suc5 otaer appropriate period of timer of electric utility property related to transmiss>on to weien the tax credits relate. Nott 0: The not transmission-related amounts required to adjust for differences between booned utility income and expenses and tnose utilised for tax purposes, as included in tne Company's Income Tax vouchers and on Page 223 of FERC-1. Sucr. amounts anall not duplicate costs or charges provideo for in Line 2 thru 4 hereof. NOTT De The f actor computed as one (1.01 min 6 - t,, wnere t, is the current composite effective income tax rate (see Note E below). NOTE En The current composite effective income tax rate, t,, computed from the followity formulas t, a tg

  • t, - tgts i

where ta is tne current statutory federal income tas rate tyrvsently .46) and wnere t s as tne current statutory Neren Carolina State income tax rate (presently .06), t i L

l PCA-I-6'4 PART 9 l DETERMINATION OF POWER AGENCY' S l SPINNING RESERVE CHARGE i Spinni.9 Reserve is generating capacity that is on-line with capability to pick up additional load on demand or capacity that can be started and loaded within ten minutes in compliance,with the usual practice of CP&L and its interconnected operations with other utilities. Power Agency shall be obligated to provide an amount of Spinning Reserve on its Retained Capacity pursuant to Section 7.4(C). The Spinning Reserve charge shall be determined as set forth below:

1. . Monthly Spinning Reserve Charge: The monthly charge shall be calculated by multiplying the Spinning Reserve monthly rate in dollars per KW-day times Power Agency's Spins.ing Reserve billing KW times the number of days in the month.

Formula is Charge = Rate x Billing KW x pays Where Rate (S/KW-day) as determined in PCA-I-62, Item 2. Billing KW as specified in PCA-I-63, Item 3. Days are the number of days in the month.

2. ppnthly Spinning Reserve Rate:
                              ' Fo rmula is t    Ra te = A x B x TF                                        ,

1 Where: A= the BTU per mi day (1/10 of the q annual average BTU /KWH of the { previous calendar year for generation by fossil, nuclear and , hydro units, times 24). i B= the monthly average S/ BTU of all fuels including fossil, nuclear and  ; hydro generation for the month on which the bill is based. q , TF = Revenue Related Tax Factor (PCA-I-63, Item 5)

i I  ! PCA-I-63  !

3. Power Agency's Spinning Reserve Billing KW: The value.shall be calculated by multiplying the ratio of Retained Capacity to the Combined Annual Peak times the combined system Spinning Reserva Requirement.

Formula is: Billing KW = Ratio x CSSRR Where: Ratio is Retained Capacity ( Article 5 divided by the Combined Annual Peak (Section 1.14) CSSRR is the combined system Spinning Reserve Requirement as specified in PCA-I-63, Item 4.

4. Combined System Spinning Reserve Requirement: This value in kilowatts (KW) shall be the spinning reserve requirement determined in compliance with the usual practice of CP&L in its interconnected operations with other utilities for the combined systems of CP&L and Power Agency.
5. Revenue Related Tax Factor (TP): This factor is based on the '

revenue related taxes or assessments applicable to the revenues billed under the Spinning Reserve rates. The factor 

    .is derived as follows:

1 Formula is: TF = l-CTR Where: TF = Revenue Related Tax Factor CTR = Composite Tax Rate of Revenue Related Taxes l

PCA-I-64 PART 1G DETERMINATION OF CHARGE TO COVER COSTS OF ACCOUNTING AND BILLING FOR THE MONTH OF , The monthly charge for accounting and billir.g shall be the costs incurred by CP&L in the billing and record keeping under this Agreement associated with each of Power Agency's and its Participants' Points of Connection for (a) labor (including

overheads and benefits), either assigned or allocated ; (b) materials and supplies; and (c) equipment utilization. Power Agency shall pay all costs of developing new accounting systems or modifying existing accounting systems required for accounting and billing under this Agreement. If CP&L sells ownership interests in any of its generating facilities to an entity other e

than Power Agency, and if such deve lopment of new accounting systems or such modifications to existing accounting systems are used in accounting and billing for such other entity, CP&L shall pay Power Agency a portion of the development or modification costs previously paid by Power Agency for such developmemt or modification. Such portion shall be equal to the proportion of 

                                                             --w   - _ - _ _     __--__--_-.----_m
PCA-I-65 I such other owner's ownership interest in generating facilities jointly owned with CP&L (in megawatts) to the total ownership interests in generating facilities jointly owned with CP&L (in

! megawatts) of all such other owners (including Power Agency). ( Such payments shall be made upon the closing .date for the acquisition of such ownership interest by such other owner. Power Agency shall also pay all costs incurred by CP&L arising ( l out of special requests by Power Agency associated with billing and accounting under this Agreement. The charge so described j above shall be adjusted to reflect all applicable revenue related taxes. l ! The above charges shall not include costs which are included l l elsewhere in PCA-I, and the costs included elsewhere shall not include these costs. l

_ . . . _ _ _ . . . . . _ _ _ _ _ _ _ _ _ . - . . . . _ _ _ _ . _ _ _ . - _ _ _ . - - . . _ _ _ .. _m._ _ _ . .. . PCA-I-66 , PART 11 DETERMINATION OF LEASED FACILITIES CHARGE For the Month of , Line No. Item Reference Amount 1 Investment in Leased Facilities PCA-I-67 $ 2 Leased Facilities Monthly Rate PCA-I-70 3 Monthly Leased Facilities Charge Line 1 x Line 2 S (Note A) Note A: The above charges shall not include costs which are included elsewhere in PCA-I, and the costs included elsewhere shall not include these Costs. ( I f s V 

                                    +
                                                                                                                        '              C        =r v    ____ m _____

r PCA-I-67 DETERMINATION OF CP&L'S INVEETMENT Ih LEASED FACILITIES 12 Months Ending December 31, I-b For Leased Facilities in service at the time transactions under this PCA first begin, and for which the Participant is not paying a f acility charge, the Leased Facilities investment shall be based on replacement cost depreciated (replacement cost less accumulated depreciation using CP&L's depreciation rates applied to such replacement cost, but not less than twenty-five percent (25%) of replacement cost) for such Leased Facilities. For the Leased Facilities on which a Participant is paying a facilities charge as of the First Closing Date, the present investment on which the charge is being paid shall be incorporated as part of Power Agency's Leased Facilities. For new Leased Facilities installed af ter the date transactione under this PCA first begin and for facilities installed at Power Agency's request in addition to those normally required for service, r_he Leased Facilities investment shall ba based on the estimated installed cost, including the current cost of new materials and labor, of such facilities. If changes are made in facilities which are under the Leased Facilities Charge, a new investment shall be determined by adding to the existing investment the installed

PCA-I-68 cost of the new facilities plus the removal cost of the. existing facilities less the salvage value of facilities being removed. If the f acilities being removed are in CP&L's judgment reusable, the salvage value will be the greater of (1) CP&L's stock value of such facility or (ii) if identifiable, the value of the f acility included in the then applicable Leased Facilities investmeat. If the Leased Facilities investment includes facilities to provide se.vice to both CP&L customers and Power Agency or its Participant, the investment, removal cost and salvage value shall be prorated between CP&L and Power Agency. However, if the Leased Facilities were installed at Power Agency's request, the investment, removal cost and salvage value will not 'be prorated even if such facility is used to provide service to both CP&L customers and Power Agency, unless or until such facility is needed Lc provide service to CP&L customers based on CP&4's normal planning and design criteria in accordance with CP&L's operating practice. The investment in Leased Facilitius shall include, but shall not' be limited to, the following:

1. Metering, telemetering, and related equipment for development of af ter-the-fact hourly records of l .

i L

PCA-I-69 kilowatt demands and kilowatt-hour energies delivered to each of Power Agency's or its Participants' Point (s) of Connection and such equipment owned by CP&L located on another utility's system for the purpose of determining the power delivered to a Participant. Any duplicate metering equipment requested by Power . Agency and supplied by CP&L shall be considered s Leased Facilities.

2. Delivery Facilities leased by Power Agency as described in Section 1.22 and not included in item 1 obove. ,
3. Protection Stations as described in Section 1.73 of this PCA.
4. Facilities requested by Power Agency and supplied by CP&L in addition to those normally required for service installed on the transmission system of CP&L.

A

PCA-I-70 DETERMINATION OF LEASED FACILITIES MONTHLY RATE 12 Months Ending December 31, I The Leased Facilities monthly rate is a percentage value which is

applied to CP&L's investment in Leased Facilities and shall be l the same percentage as CP&L's then most current additional facilities monthly rate approved by the NCUC as applicable to facilities where CP&L provides the investment; however, for the first two (2) full years following the First Closing Date, such j rate shall be two ( 2) percent. In the event that the NCUC
eliminates an additional facilities monthly rate for CP&L, the l

Leased Facilities monthly rate sh611 be calculated annually using i the same methodology as used in determining the additional facilities monthly rate, applicable to facilities where CP&L provides the investment, which is in effect prior to its termination.

j. i 1 l l 1 i I I l EXHIBIT PCA-II, I DETdRMINATION OF MONTHLY PURCHASED . CAPACITY CHARGES PAYABLE TO  ! POWER AGENCY BY CPEL i ,  ; 7 f 5 l i i l t t

r PCA-II-1

SUMMARY

OF MONTHLY PURCHASED CAPACITY CHAPGE TO BE PAID BY CP&L FOR THE MONTH OF , Line i No. - Unit Reference Amount 4 1 Harris Unit No. 1 PCA-II-2A, Line 4, 

,                             Col. (3)                 S             _

l 2 Harris Unit No. 2 PCA-II-2B, Line 4, Col. (3) __ 3 Harris Unit No. 3 PCA-II-2C, Line 4, Col. (3) 4 Harris Unit No. 4 PCA-II-7D, Line 4, Col. (3) _ 5 Mayo Unit No.1 PCA-II-2E, Line 4, Col. (3) - - . . . 6 Mayo Unit No. 2 PCA-11-2F, Line 4, Col. (3) 7 Total Add Lines 1 thru 6 $_- NOTE: PCA-II-2E thru 10E illustrate the method for determining the Purchased Capacity Charge for Mayo Unit No. 1 e:Kept for PCA-II-6A and PCA-II-9A which illustrate Production Expenses for Harris Unit No.1. Corresponding pages for the other Mayo and Harris Units will be prepared as necessary to meet the requirements of this ' PCA. , l 1 _ J

_ _. __ _ , _ .. .. .m.. _ __. _ _ _ _ _ _ . _ . _ _ _ _ _ .- . - - PCA-II-2A DETERMINATION OF MONTHLY PURCHASED CAPACITY CHARGE TO BE PAID BY CP&L UNIT NAME Harris Unit No. 1 FOR THE MONTil OF , Line Amount No. Item , Reference 1 Capital Costa PCA-II-3A Line 11 $ 2 Demand Related PCA-II-6A Production Expenses Line 9 Line 1 + Lino 2 $ 3 Total _ 4 Charges adjusted for any revenue related taxes other $ than income taxes Note A Note A Revenue related taxes shall include any taxes applicable to gross , 

              . revenues.
                                        ^      -             - - _ _ _ . . _ _ _ -_ _ _ _   _

                                                         ._-.. -.-_~      ~ . -   .   --  -.. -   -       -

PCA-II-2E DETERMINATION OF MONTHLY PURCHASED CAPACITY CHARGE TO BE PAID BY CP&L UNIT NAME Mayo Unit No. 1 POR THE MONTH OF , Line No. Item Reference Amount PCA-II-3E 1 Capital Costa Line 11 $ 2 Demand Related PCA-II-6E Production Expenses Line 9 3 Total Line 1 + Line 2 S 4 Charges adjusted for any revenue related taxes other than income taxes Note A $ 4 i Note As Revenue related taxes shall include any taxes applicable to gross revenues. I e-

4 (

PCA-II-3A DETERMINATION OF MONTHLY CAPACITY COSTS APPLICABLE TO CP&L PURCHASED CAPACITY UNIT NAME Harris Unit No. 1 i

! YEAR ENDING DECEMBER 31, l

l l Line No. Item Reference Amount l

l 1 Levelized Depreciation PCA-II-4A + SA S l Line 1 2 Levelized Return PCA-II-4A + 5A l Line 2 l 3 Levelized Income Taxes PCA-II-4A + 5A _ Line 3 l 4 Levelized Investment PCA-II-4A + 5A Tax Credit Line 4 l 5 Total Invelized Annual ( Add Lines 1 l Capital Costs thru 4) . S 6 Adjusted Annual Capital (Line 5) x 0.945 Co sts l 7 Power Agency's Owner- Note A ship Interest [ 8 Annual Capital Costs (Line 6)x(Line 7) l Attributable to Power l Agency's Ownership 9 Scheduled Puchased Note A Capacity Parcentage 10 Annual Capital Costa (Line 8)x(Line 9) S' - Applicable to CP&L Purchased Capacity { 3 11 Monthly Capacity Costs (Line 10)/12 S Applicable to CP&L Purchased Capacity l

  • l I

Note A: Expretwed as a decimal fraction. ( i i

i e PCA-II-3E DETERMINATION OF MONTHLY CAPACITY COSTS APPLICABLE TO CP&L PURCHASED CAPACITY UNIT NAME Mayo Unit No. 1

YEAR ENDING UECEMBER 31, Line No. Item Reference Amount 1 Levelized Depreciation PCA-II-4E + SE S

! Line 1 l' j 2 Levelized Return PCA-II-4E + SE j Line 2 Levelized Income Taxes 3 PCA-II-4E + SE Line 3 4 Levelized Investment PCA-II-4E + SE ' Tax Credit Line 4 5 Total Levelized Annual ( Add Lines 1 Capital Costs thru di S 6 Adjusted Ar.ncal Capital (Line 5) x 0.945 Costs 7 Power Ago.cy's Ownership Note A 

            . Interest 8     Annual Capital Costs            (Line 6)x(Line 7)

Attributable to Power Agency's Ownership 9 Scheduled Puchased Note A - Capacity Percentage 10 Annual Capital Costs (Line 8)x(Line 9) .S - 

                                                                              "~~

Applicable to CP&L Purchased Capacity 11 Monthly Capacity Costs (Line 10)/12 S Applicable to CP&L Purchased capacity Note A: Expressed as a decimal fraction. f- 

                               ..       .   -     -              - - . - ~            ..  . = . .     .                 -      .-.       -                       -                 .

J PCA-II-43 CAPITAL Cn375 OF PURCNASED CAPACITY POR ORI?!NAL INVESTI45NT HARRIS UNIT NO. I 7 EAR ENDING . Present Worth at n for Items meesiring tavelisation (0) (9) (10) (11) (12) la33 (l) (2) (3) (4) (5) (6) (7) Incoes Amorti-Book Value Ac % latad Average hetern 3 Teses t ration Income Original Deprect- Accumulated year Defeated Income Bernings 0 of ITC Return Ba1 Tasas Aterage Base 4 Ta sis _ Y*r Investment atton Depreclation Average II I F _E (E EJ a) (note B) (Note C) 8 8 4 6 9 1 8 8 8 2 3 4-5 4' 1 4 9 i le 11 12 13 14 15 16 17 18 19 20 21 . 22 23 24 25 26 27 24 29

3) Si 3- 9 8

8 5 Leve11 sed Payment Totcl $_ $ i Line Componente M l Note As The number of years shown shall be equal to the book depreciation No, t.eveliset Annuak Pa,menM Deference f whole life, before considering salvage and removal costs, used by CP&L far CP&L's Nuclear or Coal (whichever is applicable) Production Plant tepreciation $ Column 3 la the year in which the calculation is made. I 2 meturn Column 10 3 Income Tases Coluna 11 ' Nots Cs The Original Investment shall be the amount that would have been 4 Amort. of ITC Column 9 rscorJed on CP6L's books had CP&L been the sole owner of the Unit

  • including AFUDC that would have been booked to date of completion. The apt lDC s, hall be calculated on all espenditures that would have been charged to Coastruction Work in Progress without regard to the inclusion af such CWIP in rate base by CP&L for any other purpose. Cost of land t.nd other common f acilities shall be included with first Unit to go lato Coereccial Operation.

. Note Cs Ossed upeu li) CP6L's original investment adjusted to reflect rstirements from the original investment (determined in accordance with Note a) depreciatad over the number of years in Col (1), plus (11) any renual amorttaation of estraord,inary retirements over the number of y:ars in Column Ill. 

  ~

Acciations on __this m is - - __ _ _ __ y

PCA-II-43 CAPITIL CCSTS OF Ir?Faf tASED CAPACITT POR ORIIINAL INVESTMENT MAYO UNIT NO. 1 YF/ A ENDING Present Worth at t for Itees pequiring Leveli s a t ion (1) (2) (3) (4) (5e (6) (7) ( I) (9) (10) (!!) (12) (13) 8o4 Valee Accumulated Average Income Amorti-Origtnal Deprac t-- 'evaulated Yeat Deterred Income Earnings Return 4 Teses sation Income 

. Year    Investeent        atton       t  preciation    Fed    Average     Tases Average                               Base                           t      S       %                of ITC                       Re t .s ta                 Teses graote Al-{ Lote ai      (Note C)                                                                                                                                                     Il     1 S                          I I     5               5
  • 2 3

4 5 6 7 e 9 le Il 12 Il 14 8% lb 57 it 89 20 21 22 21 24 2% 26 27 da 2) 10 St ) S S TotaI $ $ """"" """" Levelised Paymeat $_ S Flote As The number of years st. awn shall be equal to the book depreclation Lino Cospsaente of whole life, before considering salvage and removal costs, used ty CP6L Mo. Levelised Anr. gal Paymente Refe ence for CP&L's fluclear or Coal (whichever is applicable) Production Plant in the year in which the calculation is made. I Depreciation S Column 3 2 Deturn Column 10 Note 8: The Original Investment shall be the amount that would have been 3 Income Tases Column 11 retcorded on CP&L's books had CP6L been the sole owner of the Unit 4 Amort. of ITC Column e including AFUDC that would have been booked to date of completion. The AFUDC shall be calculated on a!! espenditures that would have been chargtd to Construction Work in Progress without regard to the inclueton of such CWIP in rate base by CP6L for any other purpose. Cost of fsnd and other common facilities shall be included with first Unit to go into Commercial operation. fonte Cs Based upon (1) CP&L's original Investeer.t adjusted to r.flect retirements from the original investment (determined in accordance with Note BI depreciated over the number of years in Col (!), plus (ii) any annual amortisation of estraordinary retirements over the number of g years in Column (1). Note Dr A narrative =splanation of the cost calculations on thle page is contained in PCA-II-11 through 25.

PCA-II-SA CAPITAL COSTS Of PURCMASED CAPACITT PCS ADO!TIOnAL IEWS*MWT NA2 DIS TWIT WO. 1 TEAR EBCING Present Worth et 4 for Items toquirf me tevellaat ton ISI (6) (7) (g) (g) (IS) till (12) (12) (Il (2) (3) (4) IDopee Amort!" Book value Accumelated Average facome Deprect. Accumeletti Tear Deferred Income Bernings heters 6 Taees setton Teees Year AA itional Inveetaset atton Depreciattom Sad Aversee Taaes Average Base t O_4 of ITC 5( ) Beters 5 T (pote A) (Note B) (Note C) 0 9 8 8 8 8 8 1 5 2 3 4 5 6 7 8 3 le Il 12 13 14 IS 16 17 18 19 28 28 22 23 24 25 26 27 28 2g C 30 u s Total 8 0- Leve11eed Payment S 8, _ anote As The swaber o* yeare above shall be egeal to the book deprecletioN Lime Componente of se, Levelised Anaval permerte Reference whole life, before comeldering selvage ar4 removal costo, moed by Cr6L for CP6L's Muclear or Coal (whichever le applicablel Prodection Plant 1 Depreciation $ Colson 3 in the year in whicfk the calculation le made. 2 Botern Column it 3 Jacome Tames Coloma il pote 5: The Additiona! Investment shall be the amount that would have been 4 Amort. of ITC Column 9 recorded on CP6L's icoke had CP6L been the sole owner of the Unit including APUDC that would have beca booked to date of completion. The APUDC shall be calculated on all expenditores tAat would have been charged to Construction teork in Prospress without regard to the incluelon of such Cwir in rate bene by CF6L for any other gerpose. Coat of land and other common fac!!! ties shad be included with first Unit to go into Commercial Operat.on. loote Cs Based upon (!) CPEL's original investment adjested to reflect retiremente from the osiginal investment (determined in accordance with Isote 5) depreciated orar the number of years la Col ill, plus (til any annual amortlestion of estraordinary retirements over the number of years in Column (fl. smote as A narrative esplanation of the cost calculations on this pega le contained in FCA-II-22 throegh 29.

PCA-II-SE CAPITAL COSTS or PuncaASED CAractTT rom ADDITIONAL INVESTMENT naro UNIT m.1 YEAR BWDING Present Wrth at t for 

                                                                                                                                          ~ items Dequiring Levellsation til       63)             (3)          fel        (51       I6I            (71            (O)         191          II8I      IIII           IIII                                 IIII sook Valse         Accomolsted      Average                  Income    Amort!=

Additional Deprect- Accumulated Year Deferred Income Earnings Return 0 Teses sation Income Year Investment atton Depreciatic , Bad Average Tesee Aversee Base 4 0- 8 of ITC Betern Tosca SE6T. AINT. II gnote cl II 3 8 8 1 8 9 0 $ $ $ $ $ 3 

     -3 4

5 8 Y 0 9 19 11 la 13 14 15 15 17 < 10 19 29 al 33 33 24 25 16 27 30 39 30 Sy 8 8 M *I O 

                                    'an======                                                              Levelised Payoont        S             6 Isote As The number of years shown shall be equal to the book depreciation             Line          Componente of whole !!fe, before conaldeel      salvage and removal oosts, used by CPsL       No. Levellsed Anneal Personte       Reference for CPsL's leuclear or Coal 1. Ichever le applicablel Production riant in the year in which the calculation le sede.                                   1    Depreclation 9                  Colmen 3 3    Detern                          Column le Isota Be Tho Additionaltsveetnut shall be the enount that woeld have been                 3    Income Tesee                    Colson 11 reevreed on CPsL's hooks had CPsL been the sole omrner of the Unit               4    Amort. of ITC                   Colossi 9 including AFUCC that would have been booked to date of complekton. The AFUDC shall be feloelated on til esponditures that would have been charged to Construction teork an Progress withos t regard to the inclu?'on of each OsIF ist rete base by CPsL for any other purpose. Coet of le#                                                                                                                  {

and other coemon feellittee shall be isoledd with first Unit to go into Commercist operation. Isot3 Cs assed upon (1) CPsL's original th?oetsent adjested to reflect retiremente from LPAs original Investment (determined in accordance with Isote el depreetated over the number of years in Cet (13, plus (!!I any anneal amortisation of estraordinary retisemente over the member of yeare in Column til. Isot3 De A narrative esplanation of the cost calculations on thle page le contained in PCA-II-23 through 25.

l I PCA-II-6A POWER AGENCY'S DEMAND RELATED EXPENSES UNIT NAME Harris Unit No. 1  !

YEAR ENDING DECEMBER 31, Line No. Item Reference __,

Amount 1 General Taxes PCA-II-7A, Line 8 $ 4 2 Insurance PCA-II-8A, Line 4 3 Operation and i Maintenance Expenses PCA-II-9A, Line 3 l 4' Administrative and General Expenses PCA-II-10A. Line 14 5 Total (Add Lines 1 thru 4) S i 6 Scheduled Purchased < Capacity Percentage' Note A 7 Annual Amount (Line 5)x(Line 6)

Applicable to CP&L i Purchased Capacity S i

j 8 Monthly Amount (Lfne 7)/12 Applicable to CP&L i Purchased Capacity S i 1 Note A: Expressed as a decimal fraction. 

                                                                                                                                 -.1

1 I 

                      ,                                                                              c PCA-II-6E POWER AGENCY'S DEMAND RELATED PRODUCTION EXPENSES UNIT NAME        Mayo Unit No. 1 sYEAR ENDING DECEMBER 31, e                                                         -

I Line . No. Item Reference Amount

  • l 1 -

General Taxes FCA-II-7E, Line 8 $ l-2 Insurance PCA-II-8E, Line 4 3 Operation and ! Maintenance Expenses PCA-II-9E,'Line 3 - 4 Administrative and General Expenses PCA-II-10E, Line 14 5 Total ( Add Lines 1 thru 4) S . l l 6 Scheduled Purchased , l Capacity Percentage Note A 7 Annual Amount (Line 5)x(Line 6)

  • Applicable to CP&L Purchased Capacity 8 Monthly Amount (Line 7)/12 Applicable to CP&L l

Purchased Capacity S l Note A: Expressed as a decimal fraction. 

  \
    ?L y-                 - - , , ,         w     - - - - -       ,,,y.

F , a 1 PCA-II-7A POWER AGENCY'S PRODUCTION RELATED GENERAL TAXES s (EXCLUDING REVENUE RELATED TAXES) UNIT NAME Harris Unit No. 1 YEAR ENDING DECEMBER 31, Line No. Item Reference Amount RELATED _TO WAGES AND SALARIES 1 N.C. Onemployment Note A S 2 S.C. Unemployment Note A i 3 Federal Social Security and Unemployment Note A 4 Subtotal (Add Lines 1 S thru 4) I 

                                                                > PROPERTY AND OTHER TAXES RELATED TO PLANT INVESTMENT l

5 Production Plant l Property Tax Note B $ 

                                                        '6       Inventory Tax                         Note C 1
7 Subtotal (Line 5 + S Line 6 -

8 Power Agency's Total . Production Related-Related

General Taxes (Line 4 + S aine 7) .'  !

i i Note As Amounts payable by Power Agency to CP&L for each item 7 pursuant to the Operating and Fuel Agreement. i Note B: Amounts payable by Power Agency to CP&L'for property L taxes associated with the Unit pur:suant to the Operating and Fuel Agreement plus any amounts payable by Power Agency in lieu of property taxea for the Unit'to any taxing authorities. l l Note.C: Amounts payable by Power Agency for or in lieu-of any l Inventory Tax associated with the Unit.

I 

                                            - PC A-II-7E' POWER AGENCY'S PRODUCTION RELATED GENERAL TAXES (EXCLUDING REVENUE RELATED TAXES)

UNIT NAME Mayo-Unit No. 1 YEAR ENDING DECEMBER 31, Line Nq. Item Reference Amount RELATED TO WAGES AND SALARIES , 1 N.C. Unemployment Nota A S 2 S.C. Unemployment Note A 3 Federal Social Security and Unemployment Note A 4 Subtotal ( Add Lines 1 $ thru 4) PROPERTY AND OTHER TAXES RELATED TO PLANT INVESTMENT 5 Production Plant Property Tax Note B $ 

                    ~

6 Inventory Tax Note C 7 Subtotal (Line 5 + $ Line 6) 8 Power Agency's Total Production Related-Related General Taxes (Line 4 + $ s Line 7) , 

 . Note A: Amounts payable by Power Agency to CPEI. for each item pursuant to the Operating and Fuel Agreement.
       ~

Note Bt Amount? payablu by Power Agency to CP&L for property taxes associated with the Unit pursuant to the Operating and Fuel Agreement plus any amounts payable by Power Agency in lieu of property taxes for the Unit to any taxing authorities. Note C: Amounts payable by Power Agency for or in lieu of any- 

           ' Inventory Tax associated with the Unit.

PCA-II-8A POWER AGENCY'S PRODUCTION-RELATED INSURANCE UNIT NAME Harris Unit No. 1 YEAR ENDING DECEMBER 31, 2ine No. Item Reference Amount 1 Property Insurance Note A S 2 Liability Insurance Noce A _ 3 Other Insurance Note A 4 4 Total (Add Lines 1 thru 3) S Note A: The costs of insurance payable by Power Agency to CPEL l pursuant to the Operating and Fuel Agreement which are' 

 !           properly allocable to the Unit and which are not included i             in PCA-II-10A, plus the costs of other insurance obtained      {

j directly which are properly allocable to the Unit. t l i j e 2 1 L

i PCA-II-8E POWER. AGENCY'S PRODUCTION-RELATED INSURANCE UNIT NAME , Mayo Unit No. 1 YEAR ENDING DECEMBER 31, Line Na. Item Reference Amount i 1 Property Insurance Note A $ 2 Liability Insurance Note A 3 Other Insurance Note A 4 Total ( Add Lines 1 thru 3) S 4 Note A: The costs of insurance payable by Power Agency to CP&L pursuant 'c o the Operating and Fuel Agreement which are properly allocable to the Unit and which are not included in PCA-II-10E, plus the costs of other insurance obtained directly which are properly allocable to the Uni' . l

l PCA-II-9A f POWER AGENCY'S DEMAND-RELATED PRODUCTION OPERATION & MAINTENANCE EXPENSES 4 UNIT NAME Harris Unit No. 1 YEAR ENDING DECEMBER 31, 3 Line ^ No. Item Reference Amount 1 Operations Note A S 2 Maintenance Note A i 3 Total (Line 1 + Line 2) S i Note A: The costs of demand-related production operation and maintenance payable by Power Agency to CP&L pursuant to the Operating and Fuel Agreement which are properly allocable to the Unit and chargeable to Account 517 - 532 l and which are not included in PCA-II-10A. Such costs shall be the annual sums of the corresponding monthly amounts shown on Exhibit PCA-III-5A. I i [' l. 4

4 PCA-II-9E POWER AGENCY'S DEMAND-RELATED PRODUCTION OPERATION & MAINTENANCE EXPENSES UNIT NAME Mayo Unit No. 1 YEAR UNDING DECEMBER 31, Line No. __ Item Reference Amount 1- Operations Note A 3 2 Ma'intenance Note A 3 Tctal (Line 1 + Line 2) S s Note A: The demand-related production operation and maintenance expenses related to production payable by Power Agency to CP&L pursuant to the Operating and Fuel Agreement which are properly allocable to the Unit and chargeable to Accounts 501- 514 and which are not included in PCA-II-10E. Such costs shall be the annual sums of the corresponding monthly amounts shown on Exhibit PCA-III-5E. t 4 m

1 PCA-II-10A' PM AGENCT'S PRODUCTION RELATED ADMINISTRATI'/E AND GENERAL EXPENSE UNIT NAME Harris Unit No. 1 TEAR ENDING DECEMBER 31, Line No. Ites ~A g eIt/Referance Amount 1 A & G Wages and Salaries 920- 3 2 offirs Supplies and Expenses 921 1 3 A & G Expense Transferred (Cr.) 922 4 Outside Services 923 5 Injuries and Damages 925 6- Employee Pensions and Benefits 926 7 Duplicate Charges.. 929 8 General Advertising 930.1 _ 9 Miscellaneous General Expenses 930.2 10 Maintenance of General Plant 931 i

1. Total A & G Expenses IGote A S ,

j 12 Power Agency's Fees & Other Costs Meta B l 13 Total A a G Expenses and hos (Line 12 + Line 13) 5 Note As The account listings are for refsrence purposes only. Amounts shown represent the total administrative and general expenses payable by Power Agency to CPEL pursuant to the Ooerating and Fuel Agreement , which are properly allocaele to the Unit and which are not included in PCA-II-9A. Note 5: The total of all fees and cther costs payable by Power Agency to CPEL pursuant to Sections 7.11 and 12.2 of the operating and ruel Agreement which are allocable to the Unit and which are not otherwise included herein. f 15 A 4 4

l PCA-II-10E l 1 

                                   ?OWER AGENCY'S PRODUCTION RELATED                             l ADMINISTRATIVE AND GENERAL EXPENSE UNIT NAME     Mayo Unit No. 1 YEAR ENDING DECEMBER 31,                                    $

Line No. Item , Account /Re ference Amount 1 A & G Wages and Jalaries 920 $ 

                                                                                            '?

2 office Supplies and Expenses 921 

    '3     A & G Expense Transferred (Cr.)                     922 4     Outside Services                                    923 5     Injuries and Damages                                925 6     Employee Pensions and Benefits                      926 7     Duplicate Charges                                   929 8     General Advertising                                 930.1           ,

9 Miscellaneous General Expenses 930.2 10 Maintenance of General Plant 931 11 Total A & G Expenses Note A $ 12 Power Agency's Fees & Other Costs Note B 13 Total A s G Expenses and rees (Line 12 + Line 13) $ tota At The account listings are for reference purposes only. Amounts shown represent the total administrative and general expenses payable by Power Agency to CPsL pursuant to the Operating and Fuel Agreement which are properly allocable to the Unit a which are not included in PCA-II-9E. Note Be The total of all fees and other costs payable by Power Agency to CPEL . pursuant to Sections 7.11 and 12.2 of the Operating and ruel Agreement which are allocable to the Unit and which are not otherwise included herein. P O w 

     .? '                         k PCA-II-ll s

CAROLINA POWER & LIGHT COMPANY 

                             -HARRIS &-MAYO PLANTS CAPITAL-COSTS OF PURCHASED CAPACITY i

NARRATIVE EXPLANATION OF COST CALCULATION SHOWN ON PCA-II-4 AND 5 General Introduction The purpose of the following narrative explanation is to describe the components of each column of PCA-II-4 and 5. An illustrative example of the computation for a Mayo Unit is set out on PCA-II-27 for the Original Investment. I j Explanations for PCA-II-4 and 5, Column 1 - Year  : 1 This column shows the years, numbered from 1 through 30, (25 in the case of a Harris Unit) representing the current depreciable i whole life (excluding the effect of any estimate f'or salvage and/or removal cost) of the Unit. Year 1 represents the first > year of the Unit's operation, measured from the month in which it goes into Commercial Operation. Year 30 represents the_last year CP&L's gross original investment in a Mayo Unit would be deprecicted on its books (25 years in the case of a Harris Unit) ct the current depreciation rate. , 3 

                                         --                             -             ,e

l' PCA-II-12 I PCA-II 9, Column 2 - Original Investment CP&L's original total investment in the Unit, expressed in terms of dollars, is shown in Column 2. CP&L's construction costs of the Harris and Mayo Units are presently being accumulated in these work orders:

BI/ER Number Brief Description 35801 Harris 1 35901 Harris 2 l 36001 Harris 3 l 3t101 Harris 4 l 32901 Harris Land l 37301 Mayo 1

! 37401 Mayo 2 l 51801 Mayo Land The above BI/ER's are accumulating, and shall continue to cccumulate during the construction period of each Unit, all direct and indirect costs CP&L incurs and would have charged to 1 the Harris and Mayo accounts assuming the Units had not been cold. Direct costs include those costs described in Section 1.18 of the Sales Agreement. Indirect costs include allowance for funds used during construction (AFUDC). AFUDC shall be calculated as if CP&L were the sole owner of the Unit and AFUDC chall be calculated on all expenditures that would have been 

                                                                      ^

charged to Construction Work in Progress (CWIP) without regard to the inclusion of such CWIP in rate base by CP&L for any other purpose. Indirect entts also shall include all other indirect costo chargeable to the Units pursuant to the Sales Agreement. 1

PCA-II-13 i PCA-II-5, Column 2 - Additions This column represents the cumulative additions placed in service subsequent to the gross original investment calculated en an annual basis. This column shall- include property additions, renewals and betterments made after the Units are placed into Commercial Operation, including indirect costs and AFUDC. l PCA-II-4 and 5, Column,3 - Depreciation Depreciation expense shall be calculated as though CPEL were the sole owner of each Unit using the same depreciation method and depreciation life utilized by CP&L for each Harris and Mayo Unit i plus any annual amortization of extraordinary retire.aents, if any. The amount of the annual depreciation charge used in Column 3 shall be: (i) the gross depreciable property which shall j reflect all retirements from the gross investment depreciated 4 over the number of years in Column 1, plus (ii) any annual i amortization of extraordinary retirements over the number of i

years in Column 1. To the extent there are changes in additions or retirements from the gross original investment in a particular year, the annual depreciation charges on PCA-II-4 and 5 for all years of the Unit's depreciable life, on a whole life basis, shall be redetermined by considering that such chanc 3 in additions or retirements from the gross original investment occurred in Year 1.

PCA-II-14 1 PCA-II-4 and 5, Column 4 - Accumulated Depreciation Accumulated Depreciation shall be calculated by adding the current year's depreciation to the prior year's Accumulated Depreciation. For year one (1), the prio'r year's Depreciation chn11 be zero (0) . PCA-II-4 and 5, Column 5 - Book Value-Year End Book Value-Year End shall be calculated by subtracting Accumulated Depreciation (column (4)) from Original Investment ' (column (2)). For gross additions on PCA-II-5, the Book Value-Year End shall be calculated in the same manner, and any increase in gross additions occurring in years subsequent to year ona (1) shall be considered as if they had been made in year one (1) for purposes of calculating the book value of the additions. PCA-II-4 and 5, Column 6 - Book Value-Average Book Value-Average shall be calculated by averaging the book value-year end for the current year and the prior year. For year ono (1), the Book value-Average shall be the average of the Original Investment and the Book Value-Year End for year one , (1).

PCA-II-15 PCA-II-4 and 5, Column 7 - Accumulated Deferred Income Taxes - ) Average { Accumulated Deferred Income Taxes Average for each year shall be calculated for each Unit as follows:

1. Tax Depreciation Note A S
                                                .                                                              j
2. Annual Book Depreciation Note B on Tax-Basis
3. Difference (Line 1 - Line 2) i
4. Combined Income Tax Rate Note C  %
5. Deferred Income Taxes on Tax Basis (Line 3 x Line 4)
6. Deferred Income Taxes on Basis Difference Note D i 7. Total Deferred Income Taxes (Line 5 + 6)

Note G

8. Accumulated Deferred 4

Income Taxes-Year End Note E

9. Accurulated Deferred j Income Taxes-Average Note F i
  • Note A: Tax depreciation shall be computed 'using the double-declining-balance method for years one and two, and, thereafter, the sta-of-the-years digits method based on the remaining tax life. The tax life shall, be the tax life used by CP&L for the Unit.

1 

                                    ' Tote B:   Annual Book Depreciation on Tax Basis shall be calculated by dividing the tax basis by the number of years in column 1.

l l l PCA-II-16 Note C: The Combined Income Tax Ratt shall be the composite of the State and Federal statutory income tax rates. Note D: Deferred Income Taxes on Basis Difference shall be calculated by dividing the Accumulated Deferred Income Taxes - Basis Difference balance as of the date of Commercial Operation by the number of years in column 1. Basis difference as used in this Exhibit PCA-II shall include differences between book basis and tax basis other than AFUDC. Note C: Accumulated Deferred Income Taxes-' Year End shall be calculated by adding Total Deferred Income Taxes (line

7) to Accumulated Deferred Income Taxes-Year End for the prior year. In Year 1, the Accumulated Deferred Income Taxes-Year End shall be calculated by adding the Total Deferred Income Taxes to the balance as of the date of Commercial Operation for Accumulated Deferred Income Taxes - Basis Difference.

Note F: Accumulated Deferred Income Taxes-Average shall be calculated sy averaging the Accumulated Deferred Income Taxes-Year End for the current year and the prior year. For the first year, Accumulated Deferred Income Taxes - Average shall be calculated by averaging the Accumulated Deferred Income Taxes-Year End for Year 1 and the balance as of the date of Commercial Operation for Accumulated Deferred Income Taxes - Basic Difference. Note G: The cumulative total of the Total Deferred Income Taxes on Line 7 plus the balance as of the date of commercial operations for Accumulated Deferred Income Taxes - Basis Difference shall not be less than zero. 6

l' PCA-II-17 PCA-II-4 and 5, Column 8 - Average Earnings Base This column contains the average net investment outstanding for each year. It is' calculated by subtracting Accumulated Deferred Income Taxes-Average from Book Value-Average. It is used in determining the annual amounts of the return (Column 9) and income taxes (Column 10) . PCA-II- 4 and 5, Columns 9 and 10 - Return and Income Taxes These columns are considered together because they are inextricably related to one another, and both are dependent on capitalization ratios, costs of capital, and the average earnings base. Return is obtained by multiplying the calculated rate of return times the average earnings base. Income taxes are obtained by multiplying the income tax percentage associated with the calculated return times the average earnings base. As can be seen in the illustrative example on PCA-II-27, both return and , income taxes decline from year to year because the average 

  . earnings base declines each year while the rate of return and                                  .

associated income tax rate is held constant over the life of the investment at the time each year such determinations regarding rate of return are made (see later comments with respect to annual calculations). .

PCA-II-18 Determination of Composite Rate of Return and R31ated Income Taxes for Original Investment In determining the composite rate of return and related income taxes, CP&L shall use the following methodology: Total Company Capitalization Cost Composite Description Ratio Rate Rate Long-term debt X% Y%  % Preferred stock X% Y%  % Common equity X% Y%  % 100%  % The total company capitalization ratio shall be determined by uaing the CP&L capital structure as of the end of the calendar year preceding the month in which the Unit is placed into Commercial Operation. Cost of debt equals the weighted average cost to CP&L of debt securities outstanding, issued by it during the period beginning January 1, 1978, and ending on December 31 preceding the date the Unit is placed into Commercial Operation. For Common Equity, the percentage allowed shall be as daccribed in Article 16.

PCA-II-19 Fcderal and State income taxes shall be cniculated using the existing combined Federal and North Carolina and South Carolina otatutory income t'ax rates applied to the preferred (and preference) stock and common equity components of the composite rate of return in accordance with the folicwing formula: Where C = Combined statutory income tax rate S = State statutory income tax rate F = Federal statutory income tax rate l Then C = S + F(1-S) Present statutory income tax rates are Federal, 46%, and North Carolina and South Carolina, 6%, producing a combined rate of 49.24%, (State income taxes are deductible for Federal income tax purposes). If any income tax rate is changed in the future or if any change is made affecting the taxability of the long-term f debt, preferred (or preference) stock or common equity components of the composite cost of capital, then this f.ormula will be appropriately changed or revised. The application of the combined statutory income tax rate to the earnings base is illustrated as follows: Suppose CP&L has the following composite cost of capital: Composite Cost Cost Description Ratio Rate Rate Long-term debt 50.0% 9.0%_ 4.500%. Preferred stock 15.0% 10.0% 1.500% Common equity 35.0% 13.5% 4.725% 100.0% 10.725%

PCA-II-20 Since interest on long-term debt is deductible for income l taxes but preferred (and preference) dividends and return on common equity (incitiding common dividends) are not deductible, l then a determination must be made of the pre-tax cost of preferred (and preference) stock and cummon equity in order to calculate the related income taxes. This can be done by dividing the equity return by 1.0 minus the combined statutory income tax rate expressed as a decimal fraction. There fore ,

1. Preferred stock after-tax cost
2. 1.500%

Common equity after-tax cost 4.725

3. Combined equity return
4. 6.225 5.

Tax factor (1.0 - 0.4924) t .5076 Combined pre-tax cost of equity 12.264

6. Combined af ter-tax cost (Line 3)
7. 6.225 Income taxes (Line 5 - Line 6) 6.03Vi
8. Composite rate of retu'rn
9. 10.725%

10. Income taxes (Line 7) 6.039 Composite pre-tax rate of return 16.764% (Line 8 + Line 9) Proof of this can be seen as follows, assuming a $100 investment: Pre-tax income (return) before deduction of interest on long-term debt S 16.764 Less: Interest on long-term debt 4.500 Income before taxes 12.264 Less: Income taxes at 49.24% , Net Income 6.039 Less: Preferred dividends 6.225 Earnings for common stock 1.500 S 4.725

PCA-II-21 Using the example above, the return in Column 9 of PCA-II-4 and 5 l would be calculated by multiplying 10.725% times the average carnings base. Income taxes _(Column 10) would be calculated as folloss:

1. Average Earnings Base -
2. Income Taxes 6.039  %
3. Income Taxes on Return (Line 1 x Line 2) _
4. Depreciation of AFUDC (Note A) _
5. Tax Factor (1.0 .4924) .5076-
6. Depreciation of AFUDC - Before Tax (Line 4 t Line 5)
7. Income Tax Rate .4924
8. Income Taxes on Depreciation of AFUDC (Line 6 x Line 75
9. Income Taxes (Line 3 + Line 8)

Note A: Depreciation of AFUDC shall be calculatad by dividing the AFUDC which is included in the Original Investment (column 2) by the number of years in column 1. s e ll

PCA-II-22 Determination of Composite Rate of Return rnd Related Income Taxes for Additions The previously described procedure for determining composite rate of return and related income taxes shall be performed with regard to each Unit at the end of every year, beginning with the year of its Commercial Operation date, in which there is an addition for that Unit. The procedure for additions shall utilize CP&L's current cost of new capital by applying that year's debt and preferred stock issues and CP&L's capital structure at the end of auch year. The cost of any addition shall be determined as though CP&L had been the sole owner of the Unit. A new composite rcte of return shall then be determined by multiplying the cumulative composite rate of return (Column 9 of PCA-II-5 ) for the year prior to the year the increase in additions occurs by the cumulative net investment for that prior year, plus the cost of the addition multiplied by the composite rate of return for the year of the new additica and dividing the sum of these two products by the sum of the net investment for the prior year plus the cost of the new addition. The resultant rate of return will be used in Column 9 of PCA-II-5 and will be used to compute a new income tax factor which will be used in Column 10 of PCA-II-5 and _ _ - _ _ _ _ _ _ i 

 ~

L -PCA-II-23 in determining the levelized payment components in Columns 12 and 13 of PCA-II-5. Once the composite rate of return and income tcxes-have been determined, the increase in additions shall be considered to have occurred'in Year 1 and shall be added to any 

   .cdditions previously made.- The above procedure shall be repeated for PCA-II-5'for each calendar year for which it is necessary to cdjust1the rate of return on common equity- to that described on PCA-II-18, even if no new additions were completed"in such year.

PCA-II-4 and 5, Column 11 -. Amortization of-Investment Tax Credit (ITC) The investment tax credit shall be calculated by multiplying the applicable rate (presently 10%) by the tax basis investment. The amount of the investment tax credit so calculated shall.be divided by the number o years shown in Column 1 (30 for Mayo, 25 for Harris) to determine the annual amortization of the investment tax credit. The innual amount so calculated shall then be divided by one minus the combined statutory income tax rate (expressed as a decimal fraction) to place the amortization on a revenue requirements basis. This final amount that shall be used for each year in Column 11. PCA-II-4 and 5, Columns 12 and 13 - Present . Worth for Items Requiring Levelization In.those two columns, the Return (Column 12) and Income Taxes 

     -(Column 13) shown in Columns 9 and 10 respectively, are discounted using the cate of return shown on PCA-II-18 to obtain the present worth of each of these items.

8

i PCA-II-24 Levelized Payments The levelized payments shown below the totals of the present worth of Columna 12 and 13 on PCA-II-4 and 5 represent the annual level payment that is required to realize the stated rate of u return. The amounts of the levelized payments are determined by i 

 . dividing the present worth of an annuity ( s determined below) l into the totals of Columns 12 and 13. The present worth of         an l  annuity is determined ~according to the following formula:

1- ( 1 ) Present Worth n of an annuity = (1 + i ) 1 Where: I i = discount rate n = number of years of depreciable whole life Components of Levelized Payment The tables on PCA-II-4 and 5 are summaries of the results obtained; and the individual amounts of depreciation, income 

  .texes, amortization of ITC, and return are cross-referenced to PCA-II-3, where certain totals from PCA-II-4 and 5 are added and             -

oummarized, the amounts for income taxes and returns are the. calculated levelized payment amounts- from Columns 13 and 12, respective.ly. The amounts for depreciation and amortization of ITC are the annual straight-line amounts shown in Columns' 3 and 11, respectively.

I PCA-II-25 Other Considerations As.previously noted, the-determination of Purchased Capacity Capital Costs to be paid by CP&L to Power Agency shall be recalculated each year. After the end of each calendar ysar and no later than April 1, a, calculation of the Capital Costs of CP=L shall be made on the basis of the determinations on PCA-II-li through 27, utilizing the return on common equity determined li. accordance with Article 16; and on actual additions and i retirements, the cost thereof shall be calculated as if CP&L , j owned 100% of each Unit. This calculation shall be used to adjust, if necessary, the billing for the immediately preceding year. In each subsequent year, the number of years in the l levelized payment calculation shall remain the book depreciation whole life. 

                                                                         \

l r PCA-II-26 l I COMPONENTS OF LEVELI:ED ANNUAL COST Line f No. REFERENCE S000

1. Depreciation (Column 3) PCA-II-27 17,000
2. Return (Column 12) PCA-II-27 35,430
3. Income Taxes (Cclumn 13) PCA-II-27 23,183
4. Amortir2 tion of ITC (Column 11) PCA-II-27 (2,627)
5. Levelized Annual Cost 72,987 Notes Referenced on PCA-II-27 l

Noto As The number of years shown shall be equal to the book depreciation whole life, before considering salvage and removal costs, used by CP&L for CP&L's Nuclear or Coal (whichever is applicable) Production Plant in the year J.n which the calculation is made. l ~) Noto Be The Original Investment shall be the amount that would have been recorded on CP&L's books had CP&L been the sole owner of the Unit including- AFUCC that would have been booked to date of completion. i l The AFUDC shall be calculated on all expenditures that would have been chaeged to Construction Work in Pr; ogress without regard to the inclusion of such CWIP in rate base by CP&L for any other purpose. Cost of land and other common facilities shall be included with first Unit to go into Commercial Operation. Noto C Based upon (i) CP&L's original investment adjusted to reflect retirements from the original investment (determined in accordance with Note B) depreciated over the number of years in Col. (1), plus (ii) any annual amortization of extraordinary retirements over the number of years in Col. (1). Noto D A narrative explanation of the cost calculations on PCA-II-27 is contained in PCA-II-il through 25. O

PCA-II-27 CAROLINA POWER 6 LIQff COMPANY MAYO UNIT No. 1 CAPITAL COST 9 OF PURCNA8ED CAPACITY FOR 0812INAL INVkSTMS$rf P02 YEAAING ENDED 12/31/ i l (6) (7) (8) (S) (10) (11) (12) (13) (1) (2) (3) (4) (5) Present Worth at Amorti- 10.725% for Items Acc as. De *. Average sattou Resmit ire] tevotisation income Tases Earninge Return at Income of Inc55e Original Depreciation Accumulated Book Value ITC meturn Tames Espense Deprectetton Year End Average Average sese 18.7254 Tames ~~ Year Inve s t ment .(stota A) (Note W ~~ (862t e C) 501186 53752 33500 (2627) 49545 30255 520000 17000 17000 503000 511500 10314 :1481 25995 1 494500 20314 474186 50856 31870 (2627) 2 520000 17000 34000 486000 (2627) 35421 22327 51000 469000 477500 29161 44633* 48084 30309 3 520000 17000 423238 45392 28793 (2627) 30199 19156 520000 17000 66000 452000 460500 37262 4 435000 443500 44622 398878 . 42788 27122 (2627) 2%70% Iset? 5 520000 17000 85000 40247 25895 (2627) 21849 14052 102000 418000 426500 51240 375260 6 520000 17000 352384 37793 24514 (2627) 18522 12014 17000 119000 401000 409500 57116 15677 10259 7 520000 62250 330250 35419 23177 (2627) 520000 17000 136000 384000 392500 (2627) 13242 8749 

   .8 367000      375500             66643       308857     33125      21885 9        520000        17003         153000                                                              30920      20638      (2627)                          11159                7451 170000        350000      358500             70295      288205 10        520000        17000 73205      268295      28775      19346      (2627)                           f382                6317 520000        17 G00        187000        333000      341500                                                          12627)                           7868                5382 11                                                              3J4500             75374      249126      26719      18278 12        520000        11000         204000        316000                                                           17165      (2627)                           6580                4565 299000      307500             76802      230698      24742 13        520000        17000         221000                                                              22846      16097      (2627)                           5481                3866 238000        282000      230500             77484      213012 34        520000        17000                                                                             21028      15074      (2627)                           4562                3270 255000        265000      273500             17432      196068 15        520000        17000                                                                 179865      39291      14096      (2627)                           3779                2762 17000         272000        240000      256500             76635                                                                                             2329 16        520000 239500             75096      164404      17632      13162      (2627)                           3120 17        520000        17000         289000        231000                                                16054      12273      (2627)                           2565                1961 306000        214000      222500            72816       149684 18        520000        17000                                                                 13'.706     14554      11429      (2627)                           1100                1469 323000        197000      205500             69794                                                                                             1385 19        520000        17000                                                      66031       1:l!69     13135      10629      (2627)                           1712 520000        17000         340000        180000      188500                                                9875      (2627)                           1388                1162 20                                                              171500             61527      105973      11795                                                                            i 21        520000        17030         357000        163000                                                10534       9165      (2627)                           1120                 974 146000      154500             56281        98213 22        520000        17000         374000                                                    87207      9353       8500      (2627)                            898                 816 391000        129000      137500             50293                                                                          714                 682 23        520000        17000                                                      43749        76751      8232       7869      (2627) 520000        17000         408000        112000      120500                                                7248      (2627)                            558                 568 24 95000      103500             37020        66480      7130 25        520000        17000         425000                                                    56209      6028       6628      (2627)                            426                 469 442000         78000        86500            30291                                                                                               3s4 26        520000        17000                                     69500            23562        45938      4927       6004      (2627)                            315 520000        17000         459000         61000                                                 3825       5387      (2627)                            221                 311 27                                                   44000        52500 _          16833        35667 28        520000        17000         476000                                                    25396      2724       4767      (2627)                            142                 248 493000         27000         35500           10104                                                                           76                 195 29        520000        17000 18500            3370        15130      1623       4147      (2627) 520000        17000         $10000         10000 30 689305   485136      j78810)                         314804            208990 510000         510000 TOTAL Levelined Payment 35430                                   23183

( e

h4- 4Am e- 4--Me eW JJdi,W ha,. 4 ._ 34 . 4 446= GAB M<.W4.J Jh N Mik-E.4A 4 Jap..h_M4_ Cge s. M-E%24J*pM 5 api WGA -+4 5416 4 i-4 -cJJes 4* +E--$MM ' WM.44--h- .6_ 

                                                 /                                                                                                                                           d
      +

EXHIBIT PCA-III DETERMINATION OF MONTHLY. PURCHASED ENERGY AND SURPLUS ENERGY CHARGES PAYABLE TO POWER AGENCY BY CPEL 4 

                                                                                                                                         ' 8<
                                          t.
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                                                                                                                                                                                       ?

PCA-III-1

SUMMARY

OF PURCHASED ENERGY CHARGES FOR THE MONTH OF , Purchased Line Energy No. Item Reference Charge 1 Hscris Unit No. 1 PCA-III-2A, Line 2 S 2 Harris Unit No. 2 PCA-III-2B, Line 2 3 Harris Unit No. 3 PCA-III-2C, Line 2 4 Harris Unit No. 4 PCA-III-2D, Line 2 5 SUBTOTAL Add Lines 1 thru 4 6 Mayo Unit No. 1 PCA-III-2E, , Line 2 S 7 Mayo Unit No. 2 PCA-III-2F, Line 2 8 SUBTOTAL Add Lines 6 and 7 and 7 9 TOTAL PURCHASED ENERGY CHARGE Add Lines 5 and 8 $ NOTE: Reference pages for Harris Unit No. I and Mayo Unit No. I have been prepared; corresponding pages for the other Mayo and Harris Units will be prepared as necessary to meet the ' requirements of this PCA. 

                                                                                                                         ~

(

PCA-III-2A DETERMINATION OF MONTHLY PURCHASED ENERGY CHARGE TO BE PAID BY CP&L HARRIS UNIT NO. 1 I FOR THE MONTil OP , I l I (1) (2) (3) Rate Purchased KWH Amount Line Per XWH For the Month (Col.1 x Col. 2) No. (Note A) (Note B) 1 ' Monthly Purchased Energy Charge $ 2 Charge adjusted for any revenue related taxes (other than $ (Note D) income taxes) (Note C) PCA-III-3A, Line 7. Note A: Note B: KWH of Purchased Energy determined pursuant to Section 9.2. Note C: Revenue related taxes intended to include any taxes applicable to either gross _ revenues or KWH sales. Note D: Carry forward to PCA-III-1, Line 1. l 

                                          ~

PCA-III-2E DETERMINATION OF MONTHLY PURCHASED ENERGY CHARGE TO BE PAID BY CP&L MAYO UNIT NO. 1 FOP. THE MONTH OF , i (1) (2) (3) Rate Purchased KWH Amount Line Per KWH For the Month (Col.1 x Col. 2) No. (Note A) (Note B) 1 Monthly Purchased Energy Charge S 2 Charge adjusted for any revenue related l taxes (other than income taxes) (Note C) $___ (Note D) Note A: PCA-III-38, Line 7. Note B: KWH of Purchased Energy determined purssant to Section 9.2. i Note C: Revenue related taxes intended to include any taxas applicable to either gross revenues or KWH sales. Note D: Carry forward to PCA-III-1, Line 6. O

F*A-III-3A DETERMINATION OP NONTHLY PURCHASED ENERGY RATE IN DOLLARS PER KWH HAARIS UNIT NO. 1 POR THE MONTH OP , Line No. Itee _ Reference 8 mount 1 Net KWE Generation By Harris Unit No. 1 Note A KWW 2 Marras Unit No. 1 PCA-III-SA, Energy Related OEM Cost Line 11 S t 3 Marrie Unit No. 1 PCA-III-4A, 5 Puel Cost Line 9 l l 4 Harris Unit No. 1 Energy Related Cost Line 2 + Line 3 _ 5 Marris Unit No. 1 l Cost /KWN Line 4 e [ Line 1 $/KWR l 6 Return and Tames Note a associated with Undaortised Nuclear Puel Investment S/KWE 7 Total Barris Unit No. 1 Energy Related Cost per KWM Line 5 + Line 6 ., Note As The not Kwn generated shall be the gross KWM generation less Harris Unit No. 1 Ausiliary use. Note 8: The cost per KWR calculation in accordance with the formulas 3/KWH = a (b+c) , 12 x 0.890 d where a= the investment in unamortized nuclear fuel as though CPEL were the sole owner of Barris Unit No. I for the month in which the calculation is made. b= ~ the composite cost of capital as shown on , PCA-I-18, Line 9, Col. 4. e= the tax factor (t) obtained by applying the methodology described on pages PCA-II-19 I through PCA-II-21 to the composite cost of capital components shown on PCA-I-18. d= the KWM not gen 9tation for Harris Unit No.1 in which the calculation is made (Note A) .

PCA-III-3E l 1 DETERMINATION OF MONTHLY PURCHASED ENERGY RATE IN DOLLARS PER KWH MAYO UNIT NO. 1 FOR THE MONTH OF , Line No. Item Reference 

                                                                      ,                                                              Amount 1   Net KWB Generation Mayo Unit No. 1                                                              Note A                                                  KWR 2   Maye                                                     a. 1               PCA-IXI-5E, Ene                                                   __ cod                 Line 16 OEM w,s                                                                                                              3                         1 3    Mayo Unit No. 1                                                              PCA-III-4E, Fuel Cost                                                                    Line 5 4    Mayo Unit No. 1 Energy Related Cost Line 2 + Line 3                                                                                                    $

l 5 Mayo Unit No. 1 1 Cost /KWE Line 4 e Line 1 6 Return and Taxes Associated i,10 Coal Inventory Investment Note B S/KWE 7 Total Mayo Unit No. 1 Ene m y Related Cost per KWE Line 5 + Line 6 _. S/KWR Note As The not KWE generated shall be the gross KWE generation less Mayo Unit No. 1 Auxiliary use. Note B: The cost per KWE calculation in accordance with the formula: S/KWH = a x (b+e) , 12 x 0.890 4 where: a = the investment in coal inventory as though CP&L were the sole owner of Mayo Unit No.1 for the month in which the calculation is e.ade. , b = the composite cost of capital as shown on PCA-I-18, Line 9, Col. 4. e = the tax factor (t) obtained by applying the methodology described on pages PCA-II-19 through PCA-II-21 to tbs composite cost of capital components shcwn on PCA-I-18. d = The KWB not generation for Mayo Unit No. I for the month in which the calculation is made (Note A) .

PCA-III-4A DETERMINATION OF EARRIS UNIT NO. 1 F m co m FOR TEE MONTE CP&L Amount Lint Aeooent Ne. Reference (Note A) _NA Item Nuclear Fue'. Expense (Nota A) 5180 Note C $_ 1 CP&L Surn-Op Chargs Nuclear Fuel - Leesor - negewett-sour Charge C'21 3 " 5162 _ 3 Nuclear Fuel - Leesor - Other CharTes " Nuclear Fuel - Lessee Chargss 5183 4 Nuclear Fuel Espone - Disposal Coot 5184 _ 5 Nuclear Fuel Expense - Amort - of spent Fuel 5185 6 l Nuclear Fuel Expense - " 7 5184 Amort. of Spent Fuel Disposal Cost 8 Nuclear Fuel Expanse -

  • 5187 Tas Gain on Sale of wuclear Fool Add Lines 9 TOTAL FUEL EAPERSE 1 thru 8 3
       %te A:     Amortizati.wi and cost deteM==* ice to be consir';ent with the methodology used by CP&L at  its other nuclear tatits at the time the calculation it ande, as included la FEsc acooast 518.

Note Bs The aeounts shown shall be the total tbtf. 6 have been recorded ce CF&L's books had CP&L been the sole owner cf the Barris Unit No. 1. Note C From CP&L s monthly financial sad opers. tion reports. i 9 ._ . _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ - _ -

PCA-I2Ia4E DETERMINATICN OF MAYO UNIT NO. 1 ENERGT RELATED COSTS FOR TZE MCNTH OF , Line CPSL Amount No. Item Account No. Reference (Note 8) STEAM-POSSIL FUEL EXPENSES (Note Al i Boiler Fuel - Coal 50131 Note C 2 Boiler Fuel - 42 011 50132

  • 3 Boiler Fuel - 96 011 50133
  • 4 Boiler Fue* - Gas 50134
  • Add Lines 5 M rAL FUEL EXPENSE 1 thru 4 5 Note As Cost d4 termination to be consistent with the methodology used by CP&L at its other fossil units at the time the calculation is made, as included in FERC account 501.

Note Be The maourts shown shall be the total that would have been recorded on CPEL's books had CP&L been the sole owner of the Mayo Unit No. 1. Note C From CPGL's monthly financial and operation reports. l e 9 ?

PCA-III-5A ENERGY RELATED OEM EXPENSE EXCLUDING FUEL USED IN ELECTRIC GENERATION FOR RA?AIA UNIT NO. 1 FOR TRE MONTE OF , l Col. 1 Col. 2 Col. 3 Line Ref. or FERC Production Production ' Account No. Total OEM (Desand) (Energy) f No. Ites ~ gNote B) (Note A) (Note A) Nucle ar Power: 1 Operatior. Supervision and Engineering 517 3 $ S_ 2 :oolants and Water 519 3 Steam Expensee 520 4 Electric Espanses 523 5 Miscellaneouc Nuclear Power Zapensou 524 6 Neintonacco Supervision and Engineering 528 ! 7 Maintenance of Structures 529 8 Maintenance of Reactor i Plant Equipment 530 9 Mainterance of Electric Plant 531 , 10 Naintenance of Miscellaneous Nuclear Plant 532 11 Total Nuclear Power (Add Lines 1 thru 10) $ $_ $ l Note As Same methodology as used on PCA-I-35A and 35B: Note C. 180ts 8: The amounts shown dall be the total that would have been recorded on CPEL's books had CPEL been the sole owner of the Harris Unit No.1. Note C: Rowever, in say month in which there is no not output from the Unit, all costs on this Exhibit PCA-III.-5A shall be classified as demand related. I r

  • A k

l l 1 1 PCA-III-5E ENERGT RELATED CEM EXPENSES EXCLUDING FUEL USED EN ELECTRIC GENERATION FOR MAYO UNIT NO. 1 FOR THE MONTE Or , Col. I col. 2 Col. 3 Line Ref. or FERC Yotal Production Production N9 Title Account No. C&M (Energy) JDemand) operatten (Note 8) (Note A) (Note A) 

    ',   operation Supervision and Engineering                             500         $            3             3 2     PJe1 - Fly Ash Proceeds                 5011 3    ruel - Fly Ash Expenses                 5012 4    ruel - Labor & Misc. Expenses           5014 5    Steam Expense - Ash Bandling, Boiles, Coal Randling e.nd Eandling and Pre Soiler Cycle           502                               _,              ,

I 6 Electric Expense 505 7 Misc. Steam Power Expenses 506 l 8 Rents 507 l 9 Subtotal ( Add Lines 1 thLu 8) $ S 8,_,. i _ Maintenance l 10 Maintenance Supervision and Engineering 510 $ S S 4 11 Maintenance of Structures 511 12 Maintenance cf Doller Plant 512 . 13 Maintenance of Electric Plant 513 -- 14 , Maint? nance of Misc. Steam Plant 514 15 Subtotal ( Add Lines to thru 14) $ $ $ .- 16 Energy Related Expense Portion of O&M (Add Iine 9 and Line 15? 8 S S A Noto As Same methodology as used on PCA-I-35A and 358: Note C. Noto B Tne amounts shown shall be the total that would have bee 1 recorded on CPEL's books had CP6L been the sole owner of the Mayo Unit No.1. Note C However, in any month in which there is no net output from the Unit, all costs on thi. Exhibit PCA-III-5E shall be classified as demand related. 

                                                          -PCA-III-6 DETERMINATION OF SURPLUS ENERGY CHARGE TO BE PAID BY CP&L FOR THE MONTH OF                                       ,
1. Surplus Energy Monthly Charge The monthly charge is ,

l determined by summing each of the hourly Surplus Energy charges for the month. FO"MULA IS: Charge = IHSCC WHERE: HSEC = Hourly Surplus Energy Charge (PCA-III-6, Item 2)

2. Hourly Surplus Erergy Charge: The total hourly charge for Surplus Energy shall be determined by summing (1) ?.he charge for Surplus Energy purchased for CP&L load described in PCA-III-7, Item 3 and (2) the charge for Surplus Energy utilized by CP&L in economy interchange transactions described in PCA-III-7, Item 4.

! FORMULA IS: CHARGE = CHARGE + CHARGE H 1 2 WHERE: CHARGE = HOURLY SURPLUS ENERGY CHARGE IN H DOLLARS , CHARGE = CHARGE DETERMINED IN PCA-III-6, 1 Item 3. CHARGE = CHARGE DETEP, MINED IN PCA-III-7, 2 Item 4.

PCA-III-7

3. Charge for Surplus Energy Purchased for CP&L Load: This -

charge shall be de*. ermined by multiplying the rate described in PCA-III-7, Item 5 by the Surplus Energy purchased for CP&L load described in PCA-III-8, Item 6A. FORMULA IS: CHARGE = RATE x SURPLUS ENERGY KWH WHERE: RATE = Rate described in PCA-III-8, Item SA SURPLUS ENERGY KWH is described in PCA-III-8, Item 6A.

4. Charge for Surplus Energy Utilized By CP&L In An Economy Interchange Transaction: This charge is determined by multiplying the rate described in PCA-III-7, Item 5B by the Surplus Energy utilized by CP&L in an economy interchange transaction described in PCA-III-8, Item 6B.

FORMULA IS: CHARGE = RATE x SURPLUS ENERGY MWF WHERE: RATE = Rate described in PCA-III-8, Item SB. SURPLUS ENERGY KWH is described in PCA-III-8, Item 6B.

5. Surplus Energy Rates A. Purchased for CP&L Load: The rate in dollars per KWH shall be the sum of (1) Power Agency's cost of supplying '

Surplus Energy as defined in PCA-III-9, Note A and (2) CP&L's cost of an equivalent amount of energy.as defined in PCA-III-9, Note B, divided by two; but not less than Power Agency's cost of supplying Surplus Energy, as defined in PCA-III-9, Note A.

PCA-III-8 FORMULA IS: RATE (S/KWH) = (PAC + CPLC)  ; but not less 2 than PAC. WHERE: PAC = Power Agency's cost of supplying Surplus Energy as defined in PCA-III-9, Note A. CPLC = CP&L's cost of an equivalent amount of energy as defined in PCA-III-9, Note B. B. Utilized By CP&L In An Economy Interchange Transaction: The rate in dollars per KWH shall be the sum of (1) Power Agency's incremental cost per KWH to supply the Surplus Energy and (2) the amount received per KWH by CP&L for the sale of the Surplus Energy, divided by two; but not less than Power Agency's incremental cost to supply Surplus Energy. FORMULA IS: RATE (S/KWH) = (PIC + AR) , but not 2 less,than PIC. WHERE: PIC = Power Agency's Incremental Costs Per KWH (PCA-III-9, Note C) AR = Amount Received Per KWH by CP&L for the Surplus Energy sold. I

6. A. Purchased for CP&L Load: The amount of Surplus Energy in KWH purchased for CP&L load in an hour (PCA-III-9, Note O).

B. Utilized By CP&L In An Economy Interphange Transaction: i The amount of Surplus Energy in KWH utilized by CP&L in an economy interchan9e transaction for an hour (PCA-III-9, dote D).

PCA-III-9 NOTE A. Power Agency's cost of supplying Surplus Energy in 

                                                                        ~

dollars per kilowatt-hour for each hour in which r ?lus Energy is purchased by CP&L pursuant to Section 11.1 shall be determined on the basis of the Monthly Average Energy Cost (s) of the Joint Unit (s) supplying the Surplus 

 ,,                Energy. In each hour, Power Agency's Actual Entitlements, as determined pursuant to Section 7.1, shall be credited to the total amount of Surplus Energy j                   supplied from the Joint Units in descending order of Monthly Average Energy Cost.

l NOTE B. CP&L's cost of an equivalent amount of energy in dollars per kilowatt-hour for each hour in which Surplus Energy { is purchased by CP&L pursuant to Section 11.1 shall be

determined on the basis of the Monthly Average Energy Cna*= af che highest cost CP&L generating units (excluding IC turbines) arranged in descending order of such donthly Average Energy Costs, simultaneously supplying an equivalent amount of energy to serve load located in the area ~ served by CP&L.

t NOTE C: Power Agency's Incremental Cost shall be the estimated current cost, at the time the sale is made, in dollars ' 

 \

per KWH, of replacing the additional fuel used to supply the Surplus Energy from the Joint Units. 

      ' NOTE D: The sum of the KWH of Surplus Energy described in PCA-III-8, Item 6A and in PCA-III-8, Item 6B shall equal the total amount of Surplus Energy for an hour determined in accordance with Section 11'.l.                                    1

h l l l EXHIBIT PCA-IV DETERMINATION OF MONTHLY REPLACEM2NT ENERGY CHARGE PAYABLE 'lO CP&L

Y l 4 PCA-IV-1 DETERMINATION OF REPLACEMENT ENERGY CHARGES FOR THE MONTH OF , l The Replacement Energy charges shall be determined in i Eccordance with Section 7.2(8) and (C). The energy cost in i dollars per kilowatt hour (KWH) which Power Agency would have incuteed if the Replacement Energy had bee'n generated by the Joint Unit or Joint Units for which such replacement Energy is supplied shall be the Monthly Average Energy Cost of the cpplicable Joint Unit or Joint Units plus any applicable start-up costs which Power Agency would have incurred if the Replacement Energy had been generated by the Joint Unit or Joint Units. Note .'.: Format of supporting detail to be provided as agreed to by CP&L and Power Age-tcy. l l I i

1 i 1 i 4 1 4 I l l l . i 1 1 i i 1 1 . i 1 I .i i l. 1 i i i EXHIBIT PCA-V i i t

1 i

LIST OF POWER AGENCY'S POINTS OF CONNECTION' i e m_ -..--.,,..%.. _ . . -,....-_-- , , .._,_ _ . . , _ , , . - _ ,

PCA-V-1 POINTS OF CONNECTION WITH MUNICIPAL SYSTEMS SERVED BY CP&L AS OF THE DATE OF THIS AGREEMENT Municipal System Point of Connection Town of Apex No. 1 Town of Ayden No. 1 Town of Benson No. 1 Town of Clayton No. 1 Town of Farmville No. 1 Town of Fremont No. 1 Town of Hookerton No. 1 City of Kinston No. 1 Town of LaGrange No. 1 City of Laurinburg No. 1 Town of Louisburg No. 1 City of Lumberton No. 1 No. 2 City of New Bern No. 1 No. 2 Town of Pikeville No. 1 Town of Red Springs No. 1 City of Rocky Mount No. 1 No. 2 Town of Selma No . ' l No. 2 Town of Smithfield No. 1 City of Southport No. 1 Town of Wake Forest No. 1 Town of Waynesville No. 1 City of Wilson No. 1 - Serves Sub No. 1 No. 2 - Serves Sub No. 2 No. 3 - Serves Sub No. 3& No. 8 No. 4 - Serves Sub RE-1 No. 5 - Serves Sub No. 5 No. 6 - Serves Sub No. 6 No. 7 - Serves Sub RW-1 No. 8 - Serves Firestone . No. - 9 - Serves Sub No. 10 k._._.- ~,

EXHIBIT PCA-VI DELIVERY E'ACILITIES SALES AGREEMENT O

PCA-VI-1 DELIVERY FACILITIES SALES AGREEMENT THIS AGREEMENT, dated as of , 19 , by cnd between CAROLINA POWER & LIGHT COMPANY, a corporation organized and existing under the laws of the State of North Carolina with offices in Raleigh, North Carolina ("CP&L") and NORTH CAROLINA MUNICIPAL POWER AGENCY NUMBER. 3, a public body and body corporace and politic existing under the laws of the State of North Carolina with offices in Raleigh, North Carolina, or 

                   , a municipal corporation of the State of North Carolina (hereinafter referred to as " Buyer").

W I T N E S S E T H:

1. That CP&L for and in consideration of the sum of and other good and valuable consideration, che receipt of which is hereby acknowledged by CP&L, has granted, sold and transferred unto Puyer, its successors and assigns, subject to the terms and conditions contained in this Agreement, all Dalivery Facilities including goods and equipment, except l matering devices, located at or near any distribution delivery cration on the Purchase Date located as shown by the outline in reu ink on the map attached hereto. Said Delivery Facilities include, but are not limited to, a property '~ist attached to this -

Delivery Facilities Sales Agreement.

2. CP&L and the Buyer expressly agree that CP&L shall hcve the free right to enter upon and egress from a distribution dolivery station to install, inspect, test, read, main'tain, '

rcpair, replace, remove or otherwise deal with meters or metering cquipment at such distribution delivery station.

PCA-VI-2

3. THE DELIVERY FACILITIES DESCRIBED ABOVE ARE'BEING SOLD AND TRANSFERRED ON AN "AS IS" BASIS. CPTL MAKES NO WARRANTY OR REPRESENTATION WHATSOEVER, EXCEPT AS SET OUT IN THIS AGREEMENT IN PARAGRAPH 4, EXPRESS, IMPLIED OR STATUTORY AND DISCLAIMS ANY f

I- AND ALL WARRANTIES, INCLUDING WITHOUT LIMITATION, ANY REPRESENTATION OR WARRANTY AS TO THE VALUE, QUANTITY, QUALITY, , CONDITION, SALABILITY, OBSOLESCENSE, MERCHANTABILITY, F~WESS FOR A PARTICULAR PURPOSE OR SUITABILITY FOR USE, OR WORKING ORDER OF ALL OR ANY PART OF SAID DELIVERY FACILITIES. BUYER IS PURCHASING SAID DELIVERY FACILITIES "AS IS" AND IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF THIS AGRSEMENT. BUYER AGREES THAT THIS DISCLAIMER OF WARRANTIES HAS BEEN SET OUT " CONSPICUOUSLY" AS REQUIRED BY THE UNIFORM COMMERCIAL CODE.

4. CPEL warrants that this sale is made free and clear of any and all liens, mortgages or encumbrances and that it has authority to make this sale.
5. This Agreement is made under and shall be governed by the laws of the State of North Carolina.
6. This Agreement shall inure to the bencfit of and be binding upon the parties hereto and their respective successors ,

and assigns. Nothing in this Agreement, express or implied, is intended to confer upon any other person any rights or remedies hereunder.

7. This Agreement may be executed simultaneously in two ,or more counterparts, each of which shall be deemed an 7, s ,,n s orig'inal' but all of which together shall constitute one and the same instrument.

a i PCA-VI-3 l l 1

8. All exhibits attached to this Agreement shall be  !

incorporated into and be a part of this Agreement. l IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized representatives k i cs of the date hereinabove first written. e CAROLINA POWER & LIGHT COMPANY i ) ! By _. Title

(Power Agency) i i

B y ,_ Title l

PCA-VI-4 Format of Inventory and Sales Price of Delivery Facilities Purchased by Power Agency from CP&L [To Be Provided At Such Date That Power Agency chooses to Purchase Delivery Facilities Pursuant to Section 13.51 h 2 

 . . . _ _ _ _ . _ . _ _ _ _ _ _ _ . _ _  - . - . .   .                                               w.      .

l L EXHIBIT PCA-VII DELIVERY POINT DATA SHEETS e [

SHEET NUMBER SUPERSEDING SHEET SIGNED ON PCA-VII-1 DELIVERY POINT DATA SHEET

1. Participant
2. Location
3. Effective Date
4. Delivery Point Name and Location
5. Delivery Point Voltage >
6. Point of Connection A. Name B. Number C. Physical Location ,

D. Firm Capacity of KW E. Voltage , 3 Phase Wires F. Metered Voltage G. Location of P.ater

7. Special Facilities or Conditions:

DATE SIGNED: By . (Power Agency) Title DATE ACCEPTED: By _ 

                                                                               -(CP&L)

Title NOTE: Delivery Point Data Sheet shall be executed for each Point of ConTection. -- - - - - - - - - - - - - - - -

! PCA-VII-2 INTERCONNECTION POINTS BETWEEN CAROLINA POWER & LIGHT COMPANY AND VIRGINIA- ELECTRIC POWER COMPANY Location of Line Voltage Interchange Meters Roxboro S.E.P. - Halifax. 230 KV Halifax Rocky Mount - Lakeview 230 KV Rocky Mount Rocky Mount - Everette 230 KV Rocky Mount Farmville - Greenville 230 KV Farmville New Bern - Greenville 230 KV Greenville Rocky Mount - Battleboro 115 KV Rccky Mount Wake - Carson 500 KV Carson Henderson - Kerr Da:a 115 KV Kerr Dam , Note: Interconnection points may -be added, removed or modified from time to time. 

                                                                             /

EXHIBIT PCA-VIII SEASONAL DEMAND AND ANNUAL ENERGY FORECAST 9 _ _ _ _ . _ __ - _ - - - - - - - - - - - ~ - -

l I PCA-VIII-1 I l NORTH CAROLINA MUNICIPAL POWER AGENCY !WMBER 3 SEASONAL DEMAND AND ANNUAL ENERGY FORECAST Pursuant to Section 17.1, Power Agency's demand and energy forecast shall be developed to the generation level of the CP&L System. The demand values shall be reported as the es-:imated winter and summer loads of the Participants for the hoar of the Combined System peak demand occurring in both summer and winter periods. For this purpose, the winter period shall be November cnd December of one year and January and February of the year next following; and the summer period shall be June, July, August Cnd September. Power Agency shall also provide CP&L with the 

 ~

methodology underlying each forecast. For all reported values, projections for the Participants shall be grouped separately for (i) those Participants where conductors owned by CP&L and conductors owned by Power Agency or o Participant are connected and for (ii) those where such conductors are not connected. Estimated demand and energf losses used in developing tha projections shall be indicated for both groupings. In addition, Power Agency shall provide CP&L with the , ostimated contribution of the Participants grouped in (i) and (ii) to the demand values furnished, as well as for the maximum Peak Resource Demands occurring for such month. For the first forecast provided subsequent to the First closing Date, Power Agency shall provide all historical data used in developing the forecast and indicate the types of measurements cnd locations thereof.

j --..-~_- -+ - - - _- ...- .,- - - --..-.- . ..-_.-..~.2-- -.--,~~~.2- _ -- - a . u m m I 

 't i

i 

                                                                                                                -3 i

EXHIBIT PCA-IX

SUMMARY

OF MONTHLY BILLING STATEMENT FORMAT AND SUPPORTING DETAIL e k s

PCA-IX-1

SUMMARY

MONTMLY BILLING STATEMENT PORNAT CP&L STAIEME;iT GF POWER COORDINATION AGREENUT CHARGES FOR THE MONt?! 0F , (Col.1) (Col.21 (Col.31 DETAIL SECTION CETAIL SECTION DESCRIPTION AMOUNT TOTA'J5 REFERENCE A. CAPACITY CHARCES

1. Suppared to Power Agency:

(a) Supplemental S PCA-IX-3, A.1(a), Col. 3 (b) Reserve PCA-IX-3, A.1(b), Col. 3

2. Supplied to Carolina Power and Light Company:

(a) Purchased PCA-II-1

3. NET CAPAC1Tf CHARCES S Add Lines A.1(a) thru A.1(c) minus A.2(a)
8. FNERCY CMARCES
1. Supplied to Power Agencys (a) Replacement PCA-IX-3, 8.1(a) , Col. 3 (b) Replacement Energy 'A' PCA-IX-3, 8.1(b), Col. 3 (c) Replacement Energy 'R' PCA-IX-3, 5.1(c), Col, 3 (d) Nucleet Shars '~

Replacement PCA-IX-3, 5.1(C), Col. 3 (el Fossil Share Replacement PCA-IX-3, B.ite), f.ol. 3 (f) R... eve PCA-IX-3, 8.Itf), Col. 3 (g) Unused Supplemental PCA-IX-3, B.1(g), Col. 3 (h) Deficiency PCA-IX-3, 8.1(h), Col. 3 (1) Supplemental PCA-IX-3, 8.1(1), Col. 3

2. Supplied to Carolina Power and Light Cospanya (a) Surplus PCA-IX-3, 3.2(a), Col. 3 (b) Nuclear Shars surplus PCA-IX-3, s.2(b), Col. 3 (c) rossil Share Surplus (d) Purchemed xA-IX-3, 3.2(c), Col. 3 PCA-111-1
3. NET ENERCY CHARCES S Add Lines S.1(a) thru (1)

C. OTHER CHARGtS PAYABLE TO CPsL minus Lines 3.2(a) thru (d)

1. Transmission Use PCA-IX-1, C.1, Col. 3
2. 14ased racilities
1. Accounting & Billing PCA-I-66 (Note A)
4. Reactive Power PCA-I-64 (Note A)
5. Spinning Reserve PCA-IX-13 PCA I-62 and PCA-I-63
6. NET OTHER CHAJtCES S Add Lines C.1 thru C.3 D. AtuUSTNENTS FROM PRIOR MONTHS (Detail) S S Note A E. LATE PAYME' 7 CHARGE (Detail) $ S Note A F. NET AMOUNT PAYABLE TO CPsL 5 Lines A.3 + B.3 +

C.4 + D + E Moto As . The fotu of the detailed data eupportit4 the charges shown on this statement shall be provided or made available as agreed upon by CP&L av Power Agency. i

1l l4 

                           )

F E CE E08 T GAO t LN t AA( i l B EC E T 1C Atf b l 

             )1 0     )A 1uEAN (r9 t T C 0

AAMO CP0T8 8 C(T T C AEE LTJ AB RU S 4 L O C 

              )
  • 6 E-s

( i 2 L t E O G C n S u A o B m C a K T C t N O n E ) I S e M S R u Y ( E q A F n. P E ie R tt E aa T dR A , L et Y hs D NG te N OR r A ;E ne 

                         ?N                                                               ot 2S          )         AE                                                                    n t        4         t                                                               fI 1f 4        (          UL                                                              o                     v et 1E                    4A 1U                                                              rn M                                                     ,

e ATF AT h% CSO CC PU7l i A __ _ ty a aT . nP AO B o O ie TM E tt E C S ra ol Nel a ) I E p FT 3 R e O ( E rh R F ot NO E . OF I R e ht t ta T A a R n, o N me g 

      !                   LE                                                        t N                  AT                                                        s     hr t

l NA e ca E ) Io r ah T 2 G! e ec E ( IT t D RS n ee OE ~ _ I ut ra t cl n c e ad m i y la a l p P an hu e s y t t nt a el gs es me l ru 

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  • y c e s us l u h hi cve c

n ac y yl a a l l e pl t e ggpl t a rp e tr g rrep n eS ur b np A eeR e v su s e my r nn h me EEe re eu e l l yn e re l l sl L re i aa p w ttta r p asp 6 ar w g o nnnha pytar P ha - P eeeSh ucn u C Shd e en mmm S S n e gS Se t ti o eeer e emn o sr t s ual a a r ad l u t cccal vdieis l aaaeirecl ns l elh d llll sesipne d pl ec e ec Y e pppcssuf ric e rcsr h hn eee oeneupn i u ou T Ti G i R E l p sRRNFDUDSSE l p SMrP . 

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                                             . . . .S ...... u             ....       A     B

( S abcd E E E P T T Y . . O O T 1 2 N N r , 1 I

l FCA-In-s MONTELY BILLING CIAACE CP6", STATEMENT or Powt2 C00RDINATICut AGREEMDtT CRAACES FOR TEC PCerTE OF , l RA*T QUA.*F*!"Y cr.ACr Coi. A coa. 2 col. J (Col. 1 : Col. 2) itCT 'CM Ot3CRIPTION S S/WW hef. RW Rdf. ~ A. CAPAC;'"7 CRAACTS ~ Montaly

1. Sgtplied to Fowe* Agency PCA=I-27, PCA-I-28 (a) Supplemental Ites 2 Item 5 PCA-I-5, PCA-I-6, (b) asserve Item 2 _ Item 5 RATE _ CUANTT"Y CHARCT GoA. A GoA. 2 coa. J (Col, J z Col. 2)

B. tNtaCY CaAmCES 8.4!!!!! Mfe. ~ 

                                                                                                   '""          A-J -               -

5 Fons.nTy

5. Supplied to Power Agency (a) nepleaseent PCA-II-

__ Section 7 2(c)(1) Col. 4 (b) hopleeement Energy ' A' Section 7.2(e)(2) PCA-II- 11 (c) Mplacement EnerTy 'B' section 7.2(e)(2) PCA-IX-11 (d) maclear f. hare neplaomment PCA-IX-5 

                                                            ,   section 7.2(el(1)                         Col. 11 te) Poesil Share                                                                          Pct ;h5 Replacement                               Seition 7.2(c)(2)                    _ Col. 11 FCh=I-11                                 PCArI;-4 (f) heoarve                                     Itse 2                                   Col. 4 FCh-I-34                                 PCA-IX-4 (g) Onesed supplemental                         Item 2                                   Col. 5 PCA-I-385                                PCA-II-4 (h) Deficiency                                   Ites 2                       _

Col. 5 PCA-I-34 PCA-II-4 (1) Supplemental Item 2 ,,, col. 7

2. Supplied to Carolin poser and Light Company (a) Surplue Section 7.3(c)(1) PCA-IX-4 PCA-III-4 thru 9 col 10 (bl Muclear Share surplea PCA-11-5 (c) Poseil Share Ser.p1Se Section 7.2(c)(1) Col. 10 ~

PCA-IX-5 Section 7.2(c)(2) Col. 12

3. Det Eneru Chargee RATt OUANTITT CMARCE Cal. A col. 2 coa. J S/ww mof. rw met, (Col.1 is Col. 2)

OTTER CIAP4ES PAYABLE TO ~ ~ (.A ROLIN A POWYR AND I,1CET PCA-I-45. Section

5. Tsar.eaiselon Dee Itse 2 1.2.1( b)

I 

                                     , <3, I

lm PCA-IX-4 l CLASSIFICATIces OF East 3G7 WON-INSUFFICIENT EDAD hoops leONTE , day, REAR Col, 4 Col. 6 Col. 7 Col. 8 Col. 9 Col. 10 Col. I Col. 1 Col. 5 _ Col. 2 if Col. I le greater tham Col. 3 If Col. 3 is greater than Col. I Onused Total Aea11abit Adjusted

5. gly Tots! Power surplus sesource Detataed Agency's met Reserve supplemental Ceficiency supplemental Surplus Energy surpl6s Energy Sales to Others Ene rg y Ene rg y Ene rg y From Output Demand Capacity Eatitlemente Ene rg y Energy (su) jpsal 1:wul (swn) jsm) (sw) (zwn) (rint) Jew 1 Tsme .few) ~(pote a) (n 7ote Isote os -(sc.te El (note el (sote G1 (note al Tuote 13 (hote Al 12 l AM l-2 l 2-3 l 3-4 4-5 5-6 l 6-7 7-8 8-9 9-10 la-la ll-Noom 12-1 Pst 1-2 2-3 3-4 4-$

5-4 4-7 7-8 

              . 8-9 9-10 10-18 11-monit                                                                                           -

TOTAL gwil - Note As Hourly Resource Demand as determined on PCA-!M-6, Col. 6. Note sa Power Aqsacy's Net Entitlement is the sua of the hourly not entitlements ( PCA-II-9, Col. 5) for all Joint Daits teote ca peserve Ene,2y = col. I less Col. 3 lese Col. 7 oot to exceed the Reserve Cqacity provided for la Section (7.4) of this PCA Note Da Unused Supplemental Energy

  • Col. I tess Col. 3 lese Cul. 4 less Col. 1. Unused supplemental shall not escoed ue Supplemental Capacity Monthly Billing EW 1ese Col. 7.

Note Es Deficiency Energy

  • Col. I less Col. 3 less Col. 4 two Col. 5 less Ct 1. 7.

Note Fs Supplemente! Enesgy = Col. I less the greater of Col. 2 or Col. 3 Mote Cs Total Available Se.rplue Energy = col. 3 less Col.1 Note us Adjusted Surplus Energy Sales To Othere as determined on PCA-11-6, Col. 14. Note is Surplus Energy purchased by CP&L = Col. S less Col. 9. If Col. 8 is lese Col. 9, Col. 10 equals sero. 1"*' . s

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PCA-IX-7 IIOORLY RESOURCE DEMAND Delivery Po. tnt Monthly SEvA Capacity Allocation KW (faite Al Col. 1 Col. 2 ro l. 3 Col. 4 hourly SEPA Ratio of Allocation Metered KsJH Less Tie c KWil I!ourly KWII To Monthly Peak KWil (Col. 2 x Monthly SEPA SEPA Capa:!ty Allocation) (Note B) lNote C) Col. 1 - Col. } 12-1 AM l-2 

   .!- 3 3-4 4-5 5-6 6-7 7-8 8-9 9-10 10-11 1I-Noon 12-1 PM l-2 2-3 3-4 4-5 5-6 6-7 7-8 8-9 9-10 1P-!!

Il-Mdnit. - Daily Total (Klut) _ Note As ,aarsuant to Section 4.2. Notu B Heasured at or compensated to the Point of Delivery. Note C llourly SEPA allocation determined purdulnt to S6ction 4.2. 

   <t PCA-IX-8                                                                                                                     "

DETERNICATION OF R3 PLACEMENT ENEIGY , TO NEET tvWER AGENC1f'S HOUILY RESOUkCE DEMAND WITHOUT 

 ,                                                                                                                sat.ES TO OTHERS NONTtt, DAY, YEAR Col. 5                               Col. 6 Col. 3                                                            Col. 4                                                                                              .

Col. 1 Col. 2 If Col. 1 is Units Whose Output Has Bacn Reduced For Economic-Reasons Total Gteater Than Col. 2 Unit No. Unit ak.. Hourly DIFFERENCF. Unit No. Actual h placement Ene Q y Replacement Ene6y Replacement EneFgy 

                    ' Resource Domand        Entitlement                        Col. 1 - Col. 2                                                                         (KWH)                     (EWN) lKWH)

(KWH) (KWH) (Note C) (Note C) Time kWH - (Note C) TNoto A) (Note B) 12 .t am 1-2 2-3 3-4 4-5'- 5-6 i 6-7 7-8 8-9 9-10 10 11 11-Noon r 12-1 pm 1-2 2-3 3-4 , 4-5 5-6 6-7 

         '/-8                                                                                                                                                                                                                                                    <

8-9' 9-10 10-11 11-Ndnt Daily Total _ (EWH) l Note A's Total Hourly Resource Demand as determined on PCA-IX-6, Col. 6.in PCA-14-9, Col. 3 for all Joint Units. l Note B Total Actual Entit lesent la thc .ips of tie hourly amounts ll be listed in Joint Units, whose Output has bein reduced because CP&L has a more C:al. economical 5 next arw? source, then sha 6. Power Note C: aScendini ordOr of energy Cost starting With Col. 4 and going CC, 4 up tcCol. Lo the a:nount in Col. Agency shall be credited with % placement Energy f rom is reached before meating Col. 3,each unit starting with (WLthen the next unit'will be

3. If a Jnint Unit's Replacement Energy limit il Col. 4 credited with Replacement Energy and so on until all available Replacement Energy is credited or untEach Unit's Replace 6

3, whichever is lower. Col. 5 + Col. 6 equals Col.'ined Capacity less its proportionate Forced Reductions less its Actus! Entitlement.

PCA-II-9 POWEA AGENCW'S E :TITLEMENTS AND CP6L'c PURCHASED ENERGY FOR UN!? NO. (Nots A) Month, Day, Y:cr Col. 1 Col. 2 Col. 3 Col. 4 Col. 5 Col. 6 Col. 1 Col. 8 Col, e cog, go Power Agency's

  • Power Actual Power Agency's CP6L CP&L Unit Entiticaent Replacement Agency's Net Replacement Rep
  • acement Purcha sed rutchased Retained Output - ( KWH ,' Energy Entitlement Energy ' A' Energy 'B' Capacity Time Capacity W4 (EWH) Col. I a Col. 2 Energy (EWill Sarplus (EWH) (EWW) (EWH) (4) lNote B) . (Note C) (Notn D) (Notw E) ~

(EWH) (Col. 8 m Col. 2? Energy (Note F) THote c) (Note a) n 12-1 an 1-2 2-3 3-4 4-5 5-6 6-7 T-8 8-9 9-10 10-11 ll-noon 12 1 pa 1-2 2-3 3-4 4-5 5-6 6-7 7-8 8-9 9-10 10-11 ll-Mont ___ Total (kWH) - - - - 

                                                                                                 .y :=                 =,               _ _ . _ _ _

Note As Amount calculated separate ly for cach unit. Nots Da Power Agency's Retained Capacity determined pursuant to Article 5 divided by the Unit's MNDC, Nots Cs Replacement Energy is 4 =termined on PCA-IM-S, Col. 4-6 and in accordance with Section 7.2. Note Da Power Agency's entitle'ents

  • Col. 3 + Col. 4.

Nats Es As determined oa PCA . -10 for the applicable Un1L. Noto F: An determined on PCA-IX-11 for the applicable Unit. Noto Gs CP&L Purchased Capacity (t) equals the Scheduled Purchased Capacity Percentage times the Ownership Interest for such Unit in accordance with Article 9. Nots its As determined on PCA-IX-12 for the applicable Unit. 6

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FCb-II-Il CAeoLlaen pcarte 4 LIGff ConFAeV Dtfran3ESTion of SEPLACaeSNT ButeGy et' Tu mas? DGesP AGancy's OFF-StiTDs SalJe to Ofusma fausf75 Daf. TRAS C 

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                                                                                                                                                                                   ..e ee,5        -er,, e             i., w atu m~. .rv 4 3- 8 Ast INU              ~TSIdi                   T[fsrrI TSE5r ~TNIr                                          '

s N rl s E ri t I N FS 8-J 3-1 3-4 45 S-4 67 7-0 6-9 9 13 IS-Il ll-moon 

    *2-4 Ed 3-2 21 3-4 6-5 5 -6 6-7 2S S-9 9-14
   . 2- I k I t-eksn e t .

he al RWH _ 4e075 &e Total hourly Boeoerce Demand se determined en PCA-St-6, Cok. G. ia>Tt De Total adjusted Gesploe Snesgy sales to Othere se detarained on PCA-85-4. Cel. 84. tar E Cs Total Asteel Entitlement as determined on PCA-II-4 Col. 2. th TL De Total toplacement Energy le equei ts the een of Col. 4 e Col. 5 e Col. 4 PCA-85-4. entfL te Total Berlacement Energy 'A' le equel to the owe of Col. 6 e Col. 7

  • Col. 9, PCA-II-89 seuTE Fe Joint Unite whose Output has been seduced becewea CP&L hee a more econcelcel coerce, eball be llored Cot, t anal in then ascendlag to Ces.oeder
9. of Rathay Power Average Agoney shall beEnergy creetledCost withstarting with Col.

aspsacement 7 and seergy 'S joing to enlee starting with Col. 9 up to the aeW at la Col. 4. If a Joint Unit's Geplaceerst tres each. Baergy ag Sielt le reached before equettag Col. 4, thee the most enft will be esedited with Deplacemeet Energy *s' a la credited og entil Cet. 7

  • Col. e o Col. and so en estil 9 equale Col. all soallette Replacement 6 shlebeoor le lower. Eachtoergy Un.t *'s'geplacesent snergy ' A' sheit not eaceeJ lte f etained Capaclay lose its proportiomete Forced Bedectlene Rose 8te Actmet t

Fatitlement lose ate Deplacement Energy and lese its Belilacement Snergy 'A' in any hows. I I 1 l 1 i 1 i e

D 1 1 PCA-IX-12 DETERMINATION OF SURPLUS ENERGY PURCHASED BY CP&L MONTE, DAY, YEAR Col. 1 Col. 2 Col. 3 Col.~ 4 UNITS CENE1tATIMLUS ENERGY Surplus Energv

  • Unit No. Unit teo. Unit No.

Purchased Surplus En Irgy Surplus En Irgy Surplus ETn rgy Time by CP&L FWE KWH KWB Note A Note B Note < hote B 12-1 AM 1-3 2-3 3-4 4-9 5-0 6-7 7-8 8-9 9-10 10-11 11-Noon 12-1 PM 1-3 3-3 3-4 4-5 5-4 7-8 8-9 9-10 10-11 11-Midnight NOTE A Surplus Energy purchased by CPsL as determined on PCA-II-4, Col.10. NOTE 3: Joint Units generating Surplus Energy shall be listed in descending cost of energy I l ! sta".ing in Col. 2. Power Agency will be credited with Surplus Energy from each unit beginning with cal. 2 up to the level of its Actual Entitlement ( PCA-IX- 9, Col. 3 ) until the total from Col.1 is reached.

r-PCA-IX-13 REACTIVE POWER CHARGES BY POINT OF CONNECTION l FOR THE MONTH OF , The reactive power charges for.each Point of Connection listed below are determined in accordance with Exhibit I, Part 7, PCA-I-43. The monthly total determined from this worksheet is carried forward to the Monthly Billing Statement, PCA-IX-1, Line C.4 Col. 1 Col. 2 Col. 3 Point of Connection Rate Billing KVAR ' 

                                                             . mount
1. S 2.

Total S I

I - 1 i 1 1

l l
1 I

l }

1 i

l EXHIBIT PCA-X I i DETERMINATION OF COST OF FUNTJS 4

PCA-X-1 DETERMINATION OF COST OF FUNDS CP&L's Capital Related Costs CP&L's, capital related costs (current cost of new capital) shall consist of return and income taxes as calculated in accord 6nce with the methodology set forth in Exhibits PCA-I-18 

  . through PCA-I-21, except that the capitalization ratios shall be calculatad using weighted daily average capitalization amounts for the most recent twelve-month period at the time the calculation is made and the cost of debt and preferred (and preference) shall be calculated using the cost of the most recent issue of debt and preferred (or preference), respectively.

Power Agency's Capital Related Costs Power Agency's capital related costs shall be calculated as follows: Formula is: Percent = (A x B) -D (8 - C) Where: A = Weighted average coupon interest rate (%) on all outstanding debt issued by Power Agency; B = Aggregate principal amount of bonds (S) issued and outstanding by the Power Agency to the date of calculation; and C = Total amount paid by Power Agency for: (1) Bond discount including original issue discount, if any, paid from bond proceeds; plus (2) Required deposit from bonds proceeds into a reserve account in the bond fund; plus (3) Required deposil into a renewal and replacement fund from bond proceeds. D = Any interest earnings that may accrue in the reserve accotnts described in C(2) and (3) above. bo

9 f i i l i l f i 4 6 1 1 j EXHIBIT PCA-XI ESCRCM AGREEMENT l l

i l PCA-XI-l l ESCROW AGREEMENT This Agreement, dated as of , 19 , by 

   ' and among CAROLINA POWER & LIGHT COMPANY, a corporation organized cnd existing under the laws of the State of North Carolina with offices in Raleigh, North Carolina ("CP&L"), NORTH CAROLINA MUNICIPAL POWER AGENCY NUMBER 3, a public body and body corporate and politic existing under the laws of the State of North Carolina with offices in Raleigh, North Carolina (" Power Agency"), and                                            ("the Agent Bank") as agent for Power Agency:

W I T N E S S E T H: Whereas, Power Agency and CP&4 are parties to a Power Coordination Agreement ("PCA") dated as of , 19 , which provides, among other things, for the sale and purchase of specified capacity and energy from CP&L to Power Agency and from Power Agency to CP&L and for certain other services, including 4 transmission service purchased from CP&L by Power Agency, all at charges to be determined and paid by CP&L and Power Agency as more fully described therein, and

PCA-XI-2 Whereas, Power Agency has, in Section 21.10 of the PCA, agreed to establish a Special Reserve Fund to provide a source of funds to be available to CP&L in the event of a default by Power Agency; Now, therefore, in consideration of the premises and other good and valuable consideration the receipt and sufficiency of which _a hereby acknowledged, Power Agency hereby agrees with CP&L and the Agent Bank as follows: Section 1. As used herein the following terms shall , have the following meanings: Agent Bank shall naan or I any successor thereto appointed pursuant to Section 11 of this Escrow Agreement. Default shall mean an event of default by Power Agency l as defined in Section 21.1 of the PCA. Disbursement Account shall mean the Account by that name established pursuant to Section 5 of this Agreement.G

i PCA-XI-3 Investment Securities shall mean and include any of the following securities, if and to the extent the same are at the i 

   ' time legal for investre nt         a of Power Agency's funds:

(i) any bonds or other obligations which as to principal and interest constitute direct obligations of, or are unconditionally guaranteed cy, the United States of America, including obligations of any of the Federal agencies set forth in clause (ii) below to the extent unconditionally guatanteed by the United States of America; (ii) obligations of the Federal National Mortage Association, the Government National Mortgage Association, the Federal Financing Pa.nk, the Federal Intermediate Credit Banks, Federal Banks for Cooperatives, Federal Land Banks, Federal Home Loan Banks, Farmers Home Administration and Federal Home Loan Mortgage Association; (iii) New Housing Authority Bonds issued by public agencies or municipalities and fully secured as to the payment of both principal and interest by a pledge of

PCA-XI-4 annucl contributions under an Annual Contributions Contract or Contracts with the United States of America; or Project Notes issued by public agencies or municipc)ities and fully secured as to the payment of both principal and interest by a requisition or payment agre ment wich the United States of America; (iv) direct and general obligations of any state within the United States, to the payment of the principal of and interest on which the full faith and credit of such state is pledged, provided that at the time of their purchase hereunder such obligations are rated in either of the two highest rating categories by a national.'.y recognized bond rating agency; (v) certificates of deposit, whether negotiable or nonnegotiable, issued by an3 bank or trust company organized under the laws of any state of the United States or any national banking asociation (including the Agent Bank), provided that such certificates of deposit shall be purchased directly from such a bank, trust company or national banking association and shall

PCA-XI-5 I be either (1) continuously and fully insured by the Federal Deposit Insurance Corporation, or (2) ' continuously and fully secured by such securities as are described in clauses (i) through (ii) inclusive, above which shall have a .asrket val:)e (exclusive of accrued interest) at all times at least equal to the principal amount of such certificates of deposit and shall be lodged with the Agent Bank, as custodian, by the bank, trust company e7 national banking association issuing such certificat es of deposit, and the bank, trust company or national banking association issuing each such certificate of depc31t required to be so secured to it that the aggregate market value of such obligations securing each such certificate of deposit will at all times be an amount equal to the principal amount of each such certificate of deposit and the Agent Bank shall be entitled to rely on each such a undertakir 7; and (vi) any repurchase agreement with any bank or trust company organized under the laws of any state of the United States or any national banking association or government bond dealer reporting to, trading with, l and recognized as a primary dealer by the Federal Reserve Bank of New York, which such agreements are

l PCA-XI-6 fully secured by any one or more of the securities described in clausea (i) and (ii). Pledged Assets shall mean the moneys and securities held in the Reserve Account and the Disbursement account hereunder and the proceeds thereof. Power Agency Budget shall mean, for any period, the budget prepared by Power Agency showing in reasonsble detail all revenues and expenses of Power Agency for such period. PCA (Power Coordination Agreement) shall mean the 19 agreement bearing such name, dated as of , , I between Power Agency and CP&L, as the same may be amended or supplemented from time to time. Reserve Account shall mean the account by that name established pursuant to Section 5 of this Escrow Agreement. Reserve Account Requirement shall mean, as of any date of calculation, an amount equal to the greater of (a) S1,000,000 or (b) one percent of the Power Agency's estimated payments to CP&L under the PCA (after any allowable offset of any estimated

PCA-XI-7 payments to Power Agency from CP&L for Purchased Capacity and Purchased Erargy under the PCA), in the then next succeeding twelve (12) months. Section 2. Power Agency hereby grants a security interest in and pledges and assigns the Pledged Assets to the Agent Bank as further assurance for the payment of obligations of Power Agency owing to CP&L under the Power Coovdination Agreement, the Pledged Assets to be held by the Agent Bank under i 

 .und in accordance with the provisions of this Agreement all as more particularly described in Section 7 of this Agreement cubject, however, to the provisions contained in this Agreement regarding disposition of the moneys and securities in the Reserve Account and the Disburseme'tn Account. All Pledged Assets held by the Agent Bank hereunder shall be and shall be deemed to be held by the Agent Bank solely in its capacity as agent of the Power      ~

Agency in trust for the purposes of this Agreement. Section 3. Power Agency represents .nd warrants as follows:

PCA-XI-8 (a) The making and performance of this Agreement does not require goveinmental registration or approval (or, if such 

     . registration or approval is required, such has been obtained) and ooes not conflict with or result in the breach of or constitute a                       ,

default under any of the terms, conditions or provisions of any applicable law or regulation, order, writ, injunction or decree of any court or government .nstrumentality, domestic or foreign, or of any obligations, covenants or conditions contained in any debt obligation or other material agreement or instrument to which Power Agency is a party; . (b) This Agreement is a legal, val _id and f inding obligation of Power Agency; (c) Power Agency has full right and power to enter into this Aareement and to grant the security interest in and pledge, assign and deliver the Pledged Assets hereunder; and (d) Except for the pledge and grant of the security interest hereunder, the Pledged Assets have not been otherwise pledged, assigned or made the subject of a security interest by Power Agency.

i l PCA-XI-9 l Section 4. On the First Closing Date, Power Agency shall, pursuant to Section 21.10 of the PCA provide for deposit in the Reserve Account an amount equal to the Reserve Account l Requirevient. Terms used in the preceding sentence not defined herein shall have the meaning ascribed to them in the PCA. On the First Closir.g Date, Power Agency shall provide to CP&L written certification of the amount so placed in the Reserve Account. l l~ Power Agency shall furnish to CP&L and the Agent Bank a Power Agency Budget not less frequently than annually. Section 5. There are hereby established the follcwing accounts: ' (a) The Reserve Account shall be held and maintained by the Agent Bank and the '.noneys and securities from time to time held therein shall be trust funds which shall be dealt with only in the manner provided in this Agreement. Power Agency shall initially deposit into the Reserve Account, in accordance with Section 4 of thir Escrow Agreement, the Reserve AccetInt Requirement. If at the beginning of any fiscal quarter the amount on deposit in the Reserve Account is less than the Reserve Account Requirement as of such date, Power Agency shall make a deposit not more than 15 days after the end of the previous

l PCA-XI-10 4:iscal quarter of an amount equal to such difference and by such date shall provide written certification of such deposit to CP&L. (b) The Disbursement Account shall be held and maintained by the Agent Bank and the money and securities from time to time held therein shall be trust funds which shall be dealt with only in the manner provided in this Agreement. No amount shall be deposited in the Disbursement Account except to the extent provided in Section 7 of this Agreement. Section 6. If at tne beginning of any fiscal quarter the amount on deposit in the Reserve Account is in excess of the Reserve Account Requirement as of such date, Power Agency shall so certify to the Agent Bank, and the Agent Bank shall promptly pay over to Power Agency such excess. Section 7. (a) If CP&L shall certify in writing to the Agent Bank and Power Agency that a Def ault has occurred and is continuing, 

         - - - - - - - _ _ - _ _ ~

I l l PCA-XI-11 specifying the amount of such Default, the Agent Bank shall promptly upon receipt of such certification withd. caw from the Reserve Account and deposit in the Disburse nent Account cash . and/or Investment Securities with an aggregate value, to the extent available in the Reserve Account, sufficient to cure the , Def ault specified by CP&L. On the twenty-first day following the Agent Bank's receipt of such certification by CP&L, the Agent Bank shall pay over to CP&L such amount as is necessary to cure the Default, unless the Power Agency, prior to such date, shall have objected to such certification and filed suit pursuant to Section 22.4 of the PCA in a court of competent jurisdiction seeking to have such certification set aside, in which event no payment shall be made by the Agent Bank JP&L unless and to the extent there is a final determination in such suit that a Default exists. In the event cf a final determination that a Default exists the Agent Bank shall pay over to CP&L the amount determined to be in default, to the extent available in the Disbursement Account and the Reserve Account, and any excess over such amount shall be paid to Power Agency. In the event of a final determination that no Def ault exists, the Agent Bank shall pay over tc Power Agency the amount then on deposit in the Disbursement Account. _ _ _ _ - _ - _ - _ _ _ _ _ _ _ _ - _ _ . _ . _ . 1

j PCA-XI-12 1 l (b) If at any time the Agent Bank shall make a transfer from the Reserve Account to the Disbursement Account and there shall already be an amount on deposit in the Disbursament Account, the Agent Bank shall establish separate subaccounts for each such amount, and each such subaccount shull be deemed to be the Disbursement Account for purposes of Section 7(a) of this Escrew Agreement. Section 8. (a) Amounts in the Reserve Account created hereunder may be invested in Investment Securities maturing not later than twenty (20) years from the date the investment is made. So long as CP&L has not certified to the Agent Bank that a Default has occurred, such investments shall be made and disposed of at the direction of Power Agency. If CP&L has so certified, then from the tile of the Agent Bank's receipt of sitch certification until a final determination as to the Default has been made or upon Power Agency's curing the Def ault, whichever occura sooner, such - investments shall be made and disposed of in the discretion of the Agent Bank. Investment Securities held in the Reserve Account shall be valued at the lower of par or maxket value. All

PCA-XI-13 I income on ir. vestments held in the Reserve Account shall be paid into such account as earned. (: Amounts in the Dis' aursement Account created hereunder may be invested in Investment Securities maturing not later than one year from the date the investment is made; provided that no Investment Securities trcnsferred from the Reserve Account need be sold or disposed of by Power Agency prior to transfer to a Disbursement Account or to CP&L if (i) such securities have a maturity of longer than six months from the date of transfer and (ii) such securities are directly assignable to CPE,L without the consent of any thfrd party and without any restriction as to their subsequent sale or conversion into cash by CP&L. All investments shall Se made and disposed of in the Disbursement Account shall be valued at tne lower of par or market value. All income on investments held in the Disbursement Account shall be paid into the Reserve Account as earned. (c) The Agent Bank shall render monthly statements to Power Agency and CP&L as to all transactions in the Reserve Account and Disbursement Account during the period from the date as of which the last such statement was rendered. Such statement shall set forth, among other things,-all deposits made in such accourt, all payments made out of such account, all invest:4ents

PCA-XI-14 made with amounts on deposit in such account and all dispositions of investments held in such account. Section 9. In making any payment or disbursement as provided in this Agreement from the Reserve Account or Disbursement Account the Agent Bank may rely upon all such certificates submitted to it hereunder and shall have no liability for acting hereunder in reliance thereon. Section 10. No modification or waiver of any provision of this Agreement shall be effective unless in writing and signed by Power Agency and CP&L, and any such modification or waiver shall be effective only in the specific instance and for the specific purpose for which granted. Section 11. Power Agency shall have ti.e right to remove the Agg,nt Bank and, in the event of any such removal or the resignation of the Agent Bank, shall have the right to designate a successor Agent Bank. Section 12. At such time as the PCA shall terminate as to Power Agency, then upon the written certification of Power Agency and CP&L to such effect delivered to the Agent Bank, this Agreement and the rights and interest hereby granted shall cease, determine and become null and void and forthwith the right, title

FCA-XI-15 f and interest of the Agent Bank in and to the. Pledged Assets shall thereupon cease, determine and become null and void and the Agent Bank shall pay over to CP&L any amount finally determined to be owed to CP&L by Power Agency and the balance (s) remaining, if any, in the Rescrve Account and the Disbursement Account (s) shall be paid over to Power Agency. Section 13. This Agreement, or any part thereof, shall not be assigned except upon the prior written consent of the other parties hereto, which consent shal) not be unreasonably withheld. Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the successors and assigns of such party, and all covenants and agreements in this Agreement by or on behalf of the parties hereto shall bind and inure to the benefit of the respective successors and assigns of the parties bareto. Section 14. All notices and other communications under this Agreement between Power Agency and the Agent Bank or between CP&L and the Agent Bank shall be in writing, shall be copied to the other party hereto and shall be mailed first-class, postage prepaid, and addressed to North Carolina Municipal Purer Agency Number 3 at P. O. Box 95162 Raleigh, North Carolina, 27625,

PCA-XI-16 l l l Attention: General Manager; to CP& L at P. O. Box 1551, Raleigh, North Carolina 27602, Attention: Vice President - Power Supply l and to the Agent Bank, at , 

 -Attention:                        . A different officer or address may be designated by any of the re'3pective parties hereto by notice in writing.

Section 15. This Agreement shall be deemed to have been made under the laws of the State of North Carolina and shall be governed by and construed in accordance with the laws of said I State. CAROLINA POWER & LIGHT COMPANY AGENT BANK By By (Name aiid Title) (Name and Title) NORTH CAROLINA MUNICIPAL POWER AGENCY NUMBER 3 By (Name and Title)

l I EXHIBIT PCA-XII l CUSTOMERS WHOSE CONTRACTS ARE BEING TERMINATED I

PCA-XII-1 Municipal Resale Customers of Carolina Power & Light Company 

             . Whose Service Agreements Will Be Terminated Provided They Become Participants A. Tariff Form of Filing Town of Ayden Town of Farmville Town of Bookerton City of Laurinburg City of Lumbe ton
  • City of New Bern Town of Selma B. Rate Schedule Form of Filing Customer FERC No.

Town of Apex 72 Town of Benson 73 Town of Clayton 74 Town of Fremont 81 City of Kinston 99 Town of LaGrange 83 Town of Louisburg 68

  • City of New Bern 84 Town of Pikeville 85 Town of Red Springs 77 City of Rocky Mount 94 Town of Smithfield 87 City of Southport 79 Town of Wake Forest 88 Town of Waynesville 89 City of Wilson 90
  • The City of New Bern has two separate service agreements.

I 2 J i. i 4 I EXHIBIT PCA-XIII i l 2 GUIDEI,INES FOR ESTIMATION OF MISSING OR ERRONEOUS METERED DATA i

PCA-XIII-1 G.IDELINES FOR ESTIMATION OF MISSING OR ERRONEOUS METERED DATA

1. In the event that CP&L installs dual metering equipment and/or dual recording equipment for a Delivery Point, one equipment configuration shall be designated as primary and '

the other as back-up. So long as the primary equipment provides acceptable data pursuant to Section 15.3 or pursuant to CP&L Operating Practices, data acquired from the back-up equipment shall not be utilized for billing purposes. Power Agency shall be advised of the equipment configuration so 6esignated as primary.

2. In the event that the priuary equipment fails to provide acceptable data, the back-up equipment shall be used to determine acceptable substitute data on an hour-by-hour basis.

3.- In the event that neither the primary nor the back-up equipment provides acceptable data for a portion of a billing l period, statistical methods of interval est:mation shall ve utilized to supply the missing interval or intervals on an hour-by-hour basis.

4. In the event that neither the primary nor the back-up equipment provides acceptable data for a portion of a billing period, for any reason, that cannot be estimated in accordance with Guideline 3, the estimates for the period shall be based on historical data using the r.ust recent load profiles from the same or a similar Delivery Point.
5. Such estimated data, when developed, shall be considered as actual recorded data for billing purposes unless new information conflicts with estimated data. New information shall not be considered beyond 30 days af ter the original estimate.

PCA-XIII-2 Methcds employed shall meet the following guidelines:

a. Models must be readily adaptable to automated handling facilities in use by CP&L.
b. Models which require the utilization of variable data, such as weather data, shall be employed to the extent that such data is reasonably available.
c. Models shall be tested and the results available for review by Power Agency and CP&L. *
d. Models may be updated from time to time to a more accurate method as agreed to by both parties.
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