1 32 PM '99. March 1 1, Ms. Jan Sanders, Secretary Arkansas Public Service Commission P.O. Box Center Street Little Rock, AR

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1 ...4 -!. >? 1 32 PM '99 Entergy Arkansas, Inc. 425 West Capitol Avenue P 0 Box551 Little Rock AR T? Fax Steven K. Strickland Director Rrgulatoiy Affairs March 1 1, 1999 Ms. Jan Sanders, Secretary Arkansas Public Service Commission P.O. Box Center Street Little Rock, AR Re: Docket No F Public Utility Regulatory Policies Act Dear Ms. Sanders: Pursuant to Rule 3.2(d) of the Arkansas Public Service Commission Cogeneration Rules and the Public Utility Regulatory Policies Act, Entergy Arkansas, Inc. submits an original and thirteen (1 3) copies of the following purchased power agreement: 0 Agreement for Purchased Power from Qualified Cogeneration and Small Power Production Facilities between Cross Oil Refining & Marketing, Inc. and Entergy Arkansas, Inc. dated February 16, Please let me know if additional information is needed. Since re I y, SKS/wm Attachment

2 AGREEMENT FOR PURCHASED POWER FROM QUALIFIED COGENERATION AND SMALL POWER PRODUCTION FACILITIES THIS AGREEMENT is made this 16th day of February, 1999, between Cross Oil Refining & Marketing, Inc., hereinafter called the Producer and/or Customer, and Entergy Arkansas, Inc., an Arkansas corporation, hereinafter called the Company. WITNESSETH: WHEREAS, the Producer owns or will own and operate a Qualified Cogeneration Facility, qualifying under Section 201 of Public Utility Regulatory Policies Act of 1978 ( PURPA), the regulations thereunder of the Federal Energy Regulatory Commission ( FERC Regulations ), and the Cogeneration Rules of the Arkansas Public Service Commission ( APSC Rules ), operated in accordance therewith; and, WHEREAS, the Producer wishes to sell, and the Company agrees to purchase, electric energy from such facility in accordance with rules and regulations of the appropriate regulatory authorities; NOW, THEREFORE, in consideration of and subject to the mutual covenants contained herein, it is agreed: ARTICLE I - DEFINITIONS Whenever used in this Agreement, Appendices and Attachments hereto, the following terms shall have the following meanings: Interconnection Facilities - All facilities installed in order to interconnect and deliver power from Producer s Facility to the Company s system including, but not limited to, connection, transmission, distribution, engineering, administrative, transformation, switching, metering and safety equipment. Interconnection Facilities shall include any additions and/or reinforcements to the Company s system, that the Company, in a reasonable exercise of its judgment, deems to be necessary. Metering Point - The point, shown in Appendix A, where the Metering Facilities of the Company measure the energy delivered to the Company by the Producer. 1

3 Net Energy Delivered - The energy available at the Metering Point for purchase by the Company from the Producer's Facility, less step-up transformation losses, if any, to the high voltage bus, as shown in Appendix A. Operation Date - The day on which the Company's and the Producer's systems are energized in parallel operation, commencing at 0O:Ol hours, following the day on which the completion of Interconnection Facilities and equipment of the Producer's Facility to the Company's and Producer's mutual satisfaction has been confirmed by an exchange of letters between the Company and the Producer. Point of Delivery - The location at which the Producer's primary conductors connect to the Company's primary deadends at the Company's primary meter pole at the Producer's contractor gate on Tenth Street on the south side of the Producer's refinery, as shown on Appendix A. Producer's Facility - That qualifying cogeneration facility described in Article I1 of this Agreement. Special Facilities - Those certain Interconnection Facilities installed and maintained by the Company, but at the Producer's expense, and which Facilities are subject to the provisions of Article V, subsection B6, and Appendix C of this Ag reemen t. System Protection Facilities - The equipment required to protect (1) the Company's system and its customers from faults occurring on the Producer's Facility or system, and (2) the Producer's Facility from faults occurring on the Company's system or on the system of any other party to which the Company's system is directly or indirectly connected. System Quality - Those characteristics that are a normal part of the electric system operations which limit voltage excursions, distortion of the sine wave, or transient impulses and are described in pertinent industry standards including IEEE 519, ANSI C84.1, and other comparable standards. IEEE - "Institute of Electrical and Electronic Engineers" ANSI - "American National Standards Institute" NEC - "National Electrical Code" NEMA - "National Electrical Manufacturers Association" APSC - 'Arkansas Public Service Commission" 2

4 FERC - "Federal Energy Regulatory Commission" ARTICLE II - SALE AND PURCHASE OF POWER A. The Producer agrees to sell and deliver, and the Company agrees to purchase and accept such Net Energy Delivered as the Producer decides to make available to the Company, at any given time, up to the Nameplate Rating of the Producer's Generator, as stated in Article ll(b). B. The Producer's 3,600 kwe Facility located at Smackover, Arkansas shall be the source of the energy referred to above. Producer has self-certified the Producer's Facility as a qualifying facility (QF ) pursuant to FERC regulations. Producer represents and warrants that the Producer's Facility meets all requirements for qualification as a qualifying facility pursuant to the provisions of PURPA, the FERC Regulations and the APSC Rules. ARTICLE TERM OF AGREEMENT This Agreement shall be binding upon execution and shall remain in effect for a term of five (5) years from the Operation Date; provided, that the Producer may terminate this Agreement by giving written notice of its intent to do so to the Company, not less than thirty (30) days prior to the effective date of such termination. Following conclusion of the primary term, this Agreement shall remain in effect on a year-to-year basis for successive calendar months; provided, that either the Producer or Company may terminate this Agreement by giving written notice of its intent to do so to the other party not less than ninety (90) days prior to the effective date of such termination. Neither party's agreement to the foregoing termination rights, nor any termination hereunder, shall constitute, or be construed as, a waiver by either party of any of its rights under PURPA, the FERC Regulations, the APSC Rules, or any other applicable law. The Company may suspend receipt of deliveries, purchases, and payment hereunder if the Producer's failure to comply with this Agreement adversely affects the Company's operations. If, for any reason, delivery, purchase, and/or payment hereunder are suspended, delivery, purchase, and/or payment shall promptly resume upon correction or elimination of the condition that gave rise to the suspension. ARTICLE IV - PURCHASE PRICE AND METHOD OF PAYMENT A. BILLING In addition to the Customer Charge applicable for Standby Power services, Producer shall pay a Monthly Customer Charge of $

5 B. ENERGY PAYMENT Energy generated by Producer and delivered into Company's system at the point of interconnection shall be billed to Company at the highest avoided energy cost on the Entergy system at the time energy is purchased from the Producer. C. CAPACITY PAYMENT The maximum dependable output of Producer's facility will receive a capacity payment based on the $/kw value of whatever capacity addition has been avoided on the system of any Entergy System operating company. Capacity payments will not be provided until capacity additions are actually avoided on the EA1 system. When capacity payments are made pursuant to this Article IV, Paragraph C, any rates for the purchase of energy from Producer's Facility shall be based on the same capacity assumed for the purposes of calculating the avoided capacity payment. Capacity payments will be based on the formula found in Service Schedule MSS-4 of the Entergy System pool "Agreement among...", or any superceding rate schedule. Such avoided capacity costs shall be adjusted based on the factors specified in APSC - Cogeneration Rules - Section 3.4(e). D. MONTHLY PAYMENT The Company will prepare an internal invoice monthly reflecting the total energy (kwh), if any, purchased in each hour at the avoided cost appropriate for that hour. The Company shall pay the Purchaser no later than fourteen (14) calendar days after the date of the invoice. Producer will be supplied a report of energy purchased in each hour, if any, and the avoided cost in each hour on a monthly basis. ARTICLE V - POWER PURCHASE GENERAL TERMS AND CONDITIONS A. ELECTRIC SERVICES SUPPLIED BY THE COMPANY This Agreement does not provide for any electric service by the Company to the Producer. The Producer shall enter into separate contract arrangements with the Company in accordance with the Company's applicable electric tariffs on file with and authorized by the appropriate regulatory authority. The separate Agreement for Service is attached hereto and made a part hereof. 4

6 B. CONSTRUCTION 1. Land Rights The Producer agrees to furnish at no cost to the Company all necessary rights of way upon, over, under, and across lands owned or controlled by the Producer and/or its affiliated interests for the construction and operation of necessary lines, substations, and other equipment to accomplish interconnection under this Agreement and shall, at all reasonable times, give the Company, or its agents, free access to such lines, substations, and equipment. An accessible, protected and satisfactory site selected upon mutual agreement by the Parties and located on the Producer's premises shall be provided by and at the Producer's expense for installation of metering devices, unless the Company elects to install meters on poles or other locations controlled by it. The Producer grants to the Company at all reasonable times the right of free ingress and egress to the Producer's premises for the purpose of installing, testing, reading, inspecting, and repairing, operating, altering or removing any of the Company's property located on the Producer's premises or for other purposes necessary to enable the Company to receive electric energy or determine the Producer's compliance with this Agreement. If any part of Company's facilities are to be installed on property owned by any person other than the Producer, the Producer may procure from the owners thereof all necessary permanent rights of way and easements, in a form satisfactory to the Company, for the construction, operation, maintenance and replacement of the Company facilities upon such property. In the event the Producer is unable or elects not to secure them and the Company secures them by condemnation proceedings or by other means, the Producer shall reimburse the Company for all costs incurred by the Company in securing such rights. 2. Producer's Facility and Equipment Design and Construction The Producer shall be fully responsible for the design, construction, installation, ownership, operations maintenance of the Producer's Facility and all equipment needed to generate and deliver energy specified herein, except for any Special Facilities constructed, installed and maintained by the Company pursuant to Appendix C - Special Facilities. The Producer's Facility and equipment shall meet all requirements of applicable codes, including, without limitation, those of IEEE, NEMA, ANSI, NEC, and all requirements of any duly constituted regulatory authority having jurisdiction. The Producer shall submit all specifications for the Producer's Facility and equipment, including System Protection Facilities, as defined in Article I and more fully described in Article V, Paragraph C(2) of this Agreement, to the Company for review prior to connecting such facilities and equipment to the Company's system. The Company's review of the Producer's specifications shall be construed neither as confirming nor as endorsing the design, nor as any warranty as to fitness, safety, durability or reliability of Producer's Facility or any of the equipment. The Company shall not, by reasons of 5

7 such review or failure to review, be responsible for strength, details of design, adequacy or capacity of the Producer's Facility or equipment, nor shall the Company's acceptance be deemed to be an endorsement of any Facility or equipment. 3, Changes to the Interconnection Facilities The Producer agrees to make changes to its Interconnection Facilities as may be reasonably required to comply with and remain in compliance with technical specifications of Company's system as contained in Specification No. DR07-01, "Parallel Operation of Non-Utility Generators on the Distribution System.". It is agreed that each Party will make such reasonable and necessary changes to its facilities on its respective side of the Point of Delivery, at its own expense. Each party agrees to give the other party advance written notice of the time such changes are to be completed, and a reasonable opportunity for the other party to accomplish these changes. Contemporaneous with such notice, the party giving notice shall supply complete engineering information and specifications for the other to use in determining what changes will be necessary on the other's side of the Point of Delivery. 4. Costs of Interconnection Facilities The Producer shall be obligated to construct, install, own and maintain any facilities on the Producer's side of the Point of Delivery, which may be required for the Company to receive energy from the Producer's Facility. 5. Meterina The Company shall provide, install, own and maintain metering consistent with the purposes of this Agreement. If necessary, metering shall be located, at Company's option, in such manner to account for any transformation or interconnection losses. Metered quantities, in digital form, shall be provided to Producer. All costs necessary to account for transformation or interconnection losses or associated with the administration of metering shall be borne by the Producer. All costs associated with either the initial installation of metering or any changes requested by the Producer to metering shall be borne by the Producer. 6. Special Facilities The Company's Interconnection Facilities shall be of a size sufficient to accommodate the delivery of the power and energy designated in Article II(A) of this Agreement. In the event it is necessary for the Company to install any Special Facilities essential to accomplishing the purposes of this Agreement, the Company, may require a contribution, facilities charge, or other compensation, at the Producer's option, to make such facilities available. Such charges shall be determined and agreed upon by the parties prior to the purchase and installation of any Special Facilities. 6

8 Should the projections derived from the model (ETAP) on which this agreement was made not be borne out by actual operating conditions, any objectionable voltage drop in excess of three percent (3%) must be corrected at the Producer s expense. In the event that objectionable voltage drop does occur, then Producer and Company shall work together to mutually resolve the issue in a reasonable manner. The corrective measures may include installation of a dedicated feeder. In the event this is necessary, the Producer shall pay to the Company the initial and continuing costs of any dedicated feeder that the Company determines at any time is necessary to maintain voltage regulation in conformity with accepted industry practices and any applicable laws or regulations, and to avoid objectionable voltage flickers or similar operational problems. The Company retains the right to disconnect the Producer s Facilities if necessary to avoid or eliminate such problems. In accordance with Rate Schedule No. 26, the Producer shall pay to the Company the initial and continuing cost of any additional facilities, including special metering facilities, which are made necessary by interconnection with Producer s Facility. (Appendix B) C. OPERATION 1. Reactive Power In association with power generated by the Producer for sale to the Company, the Producer shall operate its generating system so as to help support a 13.2 kv system voltage by maintaining a power factor no less than 95% and no more than 100% as practicable for power flowing across the Point of Delivery. 2. Protection and System Quality It shall be the Producer s obligation, at its expense, to install or have installed and keep operative System Protective Facilities, including such protective and regulating devices as are identified in Appendix A by order, rule or regulation of any duly constituted regulatory authority having jurisdiction, or as are otherwise necessary to protect personnel and equipment and to minimize deleterious effects to the Company s electric service operation. Any such protective or regulating devices that may be required on the Company s facilities shall be installed by the Company at the Producer s expense, and Producer shall reimburse Company for its actual expenses. a. Requirements for Protection: Producer shall provide relays, circuit breakers, and all other devices reasonably necessary to promptly remove any fault contribution of the Producer s generating equipment to any short circuit occurring on the Company s system not otherwise isolated by the Company equipment. Such protective equipment shall include, without limitation, a disconnecting device or switch with load interrupting capability to be located 7

9 between the Producer s Facility and the Company s system at an accessible, protected, site at the Producer s 10th Street location. The Producer shall be responsible for protection of its Facilities and equipment from such conditions as negative sequence currents, over- or under-frequency, sudden load rejection, over- or undervoltage, and generator loss-of-field. The Producer shall be solely responsible for provisions to disconnect its generation when a disturbance on the Company s system results in the Producer s generation becoming isolated from the Company s generation. b. System Quality: The Producer s Facility and equipment shall not cause excessive voltage excursions nor cause the voltage to drop below or rise above the extent of the range maintained by the Company without the Producer s generation. The Producer s Facility and equipment shall not cause excessive voltage flickers nor introduce excessive distortion to the sinusoidal voltage or current waves. c. Inspection: The Company shall have the right, but shall have no obligation or responsibility to: (i) (ii) (iii) observe the Producers tests and/or inspections of any of the Producer s protective equipment; review the settings of the Producer s protective equipment; and review the Producer s maintenance records relative to the Producer s Facility and/or protective equipment. d. The Company may exercise the foregoing rights from time to time as deemed reasonably necessary by the Company upon reasonable notice to the Producer. Provided however, if and to the extent the Company exercises the foregoing rights of observation, review or inspection, then in such event: (i) the Company will disclose to the Producer in writing the Company s determination, if any, of the Producer s noncompliance with this Agreement or of conditions adversely affecting either party in its fulfillment of this Agreement; and (ii) (iii) the Company will provide the Producer a copy of the data collected in connection with any such observation, review or inspection; and the exercise or non-exercise by the Company of any of the foregoing rights of observation, review or inspection shall not be construed as an endorsement or confirmation of any aspect, feature, element, or condition of the Producer s Facility or a

10 protective equipment or the operation thereof, or as a warranty as to fitness, safety, desirability, or reliability of same. 3. Meters a. Testing: The Company shall, at the Producer s expense, as part of its monthly service charge to the Producer, inspect and test all Company owned meters upon their installation and at least once every two years thereafter. If requested to do so by the Producer, the Company shall inspect or test a meter more frequently than every two years, at the additional expense of the Producer. The Company shall give reasonable notice of the time when any inspection or test shall take place, and the Producer may have representatives present at the test or inspection. If a meter is found to be inaccurate or defective, it shall be adjusted, repaired or replaced at the Producer s expense, in order to provide accurate metering. b. Adjustments: If a meter fails to register, or if the measurement made by a meter during a test varies by more than two percent (2%) from the measurement made by the standard meter used in the test, adjustment shall be made correcting all measurements made by the inaccurate meter for: (i) (ii) the actual period during which inaccurate measurements were made, if the period can be determined, or if not, the period immediately preceding the test of the meter equal to one-half the time from the date of the last previous test of the meter; provided, that the period covered by the correction shall not exceed twelve months. If hourly readings and daily energy readings are available and if such data are requested by the Company, the Producer shall report same to the Company s representatives as designated pursuant to Article V, Paragraph C(4) of this Agreement, by telephone, on a schedule to be agreed upon. At the Company s discretion, and at the Producer s expense, and in accordance with Article V, Paragraph C(4)(b) of this Agreement, the Producer s output information shall be telemetered to a location designated by the Company. 4. Communications a. At the Producer s expense, the Producer shall maintain operating communications with Company s System Operations Center, or representative, as designated by Company, at all times. Any required maintenance of such communications equipment shall be performed at the Producer s expense, but may be performed by the Producer or by the Company. The operating communications shall include, but not be limited to, system paralleling or 9

11 separation, scheduled and unscheduled shutdowns, equipment clearances, and hourly and daily load data. b. The Remote Terminal Unit, purchased by the Producer, installed and maintained by the Company at the Producer's expense, shall be the main communications link between the Company and the Producer. Instantaneous analog watt and Var flow information shall be telemetered directly to it. Company and Producer shall work together to create an effective means of communicating an estimated and actual avoided cost on an hourly basis in order for Producer to determine Producer's export targets for energy and capacity. 5. Disconnection The Company shall have the right to disconnect without notice the Interconnection Facilities if, in the Company's opinion, a hazardous condition exists and immediate disconnection is necessary to protect persons, Company facilities, or other customer facilities from damages or interference caused by the Producer's interconnection andlor generating equipment, or lack of proper or properly operating protective devices. For purposes of this Article V, Paragraph C(5), protective devices may be deemed by the Company to be not properly operating if the Company's review under Article V, Paragraph C(2)(c) discloses irregular or otherwise insufficient maintenance on such devices or that maintenance records do not exist or are otherwise insufficient to demonstrate that adequate maintenance has been and is being performed. If the condition causing the disconnection occurs on the Company's side of the Delivery Point, the Company shall use its best reasonable efforts to remove, as soon as reasonably possible, any such condition. To the extent actions are required of the Company in order for the Producer to remove conditions existing on the Producer's side of the Delivery Point, which conditions have resulted in a disconnection, the Company agrees to cooperate with the Producer in assisting it to remove such conditions. D. ADJUSTMENTS In the event adjustments to billing statements are required as a result of measurements made by inaccurate meters, the Parties shall use the corrected measurements described in Article V, Paragraph C(3) to compute the amounts due from or to the Company for the energy delivered under this Agreement during the period of inaccuracy. If the total amount, as computed, due from a Party for the period of inaccuracy varies from the total amount due as previously computed, and the payment of the previously computed amount has been made, the difference in the amounts shall be paid to the Party entitled to it within thirty (30) days after the paying Party is notified of the recomputation. 10

12 E. CONTINUITY OF SERVICE The Company shall not be obligated to accept, and the Company may require the Producer to curtail, interrupt or reduce deliveries of energy from time to time if such delivery of energy affects the Company's ability, other than for financial reasons, to construct, install, maintain, repair, replace, remove, investigate or inspect any of its equipment or any part of its system or if it determines that curtailment, interruption or reduction is necessary because of emergencies, forced outages, operating conditions on its system or for any reason othenvise permitted by PURPA, as amended, or by applicable rules or regulations promulgated by a regulatory agency having jurisdiction over such matters. Company will not be required to purchase electric energy or capacity during any period in which, due to technical operating problems such as reverse power flows, purchases from Producer will result in costs greater than the Company's avoided costs, and the Parties shall have available to them the remedies, among others, provided by the Cogeneration Rules or other applicable rules, or regulations of the APSC, or of the FERC. Except in case of emergency, in order not to interfere unreasonably with the other Party's operations, the curtailing, interrupting or reducing Party shall give the other Party reasonable prior notice of any curtailment, interruption or reduction, the reason for its occurrence and its probable duration. In case of emergency, notice shall be given as soon as reasonably possible and without undue delay. The Producer always shall notify the Company no less than seven (7) days in advance of any planned or anticipated complete or partial unavailability of the Producer's Facility. F. FORCE MAJEURE 1. The term "Force Majeure" as used herein shall mean only acts of God, acts of war or the public enemy, flood, fire, explosion, or strikes by employees of one of the Parties hereto. The Party unable to carry out an obligation, imposed on it by this Agreement, due to "Force Majeure," shall notify the other Party in writing or by telephone within a reasonable time after the occurrence of the cause relied on. 2. The Company shall not be responsible for any non-performance under the Agreement, except for the obligation to make payments of money for electric energy previously received by the Company pursuant to this Agreement, or failure to purchase electric energy under the Agreement due to "Force Majeure" whether occurring on the Company's electric system or any connecting electric system affecting the Company's operations. The Company shall be excused from whatever performance is affected only while a "Force Majeure" situation exists and the Company attempts in good faith to alleviate such situation. 11

13 3. If the Producer, because of "Force Majeure," is rendered wholly or partially unable to perform an obligation imposed on it by this Agreement, except for the obligation to make payments of money, the Producer shall be excused from whatever performance is affected, but only while a "Force Majeure" situation exists and the Producer attempts in good faith to alleviate such situation. G. INDEMNITY The Producer agrees to fully indemnify and hold the Company, its shareholders, directors, officers, agents, representatives, employees, servants, its affiliated and associated companies, their respective shareholders and/or its assigns, harmless from and against any and all claims, demands, liability, losses, damage, costs or expenses (including attorney's fees and other costs of defense), of any nature or kind whatsoever, including, but not limited to, claims, demands and/or liability for personal injury to (including death 09 any person whomever (including payments and awards made to the Company's employees or other individuals under any workers' compensation law or under any plan for employees' disability and death benefits) and for damage to any property whatsoever (including the Producer's Facility and the Company's system) arising out of or otherwise resulting from the use, ownership, maintenance, or operation of the Producer's Facility, regardless of whether such claims, demands or liability are alleged to have been caused by negligence or to have arisen out of the Producer's status as the owner or operator of any facilities involved; provided, however, that the provisions of this Paragraph shall not apply if any such personal injury or property damage is held to have been caused by the negligence or the willful misconduct of the Company, its agents or employees. The Company agrees to fully indemnify and hold the Producer, its shareholders, directors, officers, agents, representatives, employees, servants, its affiliated and associated companies, their respective shareholders and/or its assigns, harmless from and against any and all claims, demands, liability, losses, damage, costs or expenses (including attorney's fees and other costs of defense), of any nature or kind whatsoever, including, but not limited to, claims, demands and/or liability for personal injury to (including death 09 any person whomever (including payments and awards made to the Producer's employees or other individuals under any workers' compensation law or under any plan for employees' disability and death benefits) and for damage to any property whatsoever (including the Producer's Facility and the Company's system) arising out of or otherwise resulting from the use, ownership, maintenance, or operation of the Company's Facilities, regardless of whether such claims, demands or liability are alleged to have been caused by negligence or to have arisen out of the Company's status as the owner or operator of any facilities involved; provided, however, that the provisions of this Paragraph shall not apply if any such personal injury or property damage is held to have been caused by the negligence or the willful misconduct of the Producer, its agents or employees. 12

14 Neither Party shall be liable in contract, in tort (including negligence), or otherwise to the other Party for any incidental or consequential loss or damage whatsoever, including, but not limited to, loss of profits or revenue on work not performed, for loss of use of or under-utilization of the other Party's facilities, or loss of use of revenues or loss of anticipated profits, resulting from either Party's performance or non-performance of an obligation imposed on it by this Agreement H. WAIVER Any waiver at any time by either Party of its rights with respect to a default under this Agreement, or with respect to any other matters arising in connection with this Agreement, shall not be deemed a waiver with respect to any subsequent default or other matter. 1. ASSIGNMENT Neither Party shall voluntarily assign its rights nor delegate its duties under this Agreement, or any part of such rights or duties, without the written consent of the other Party, which consent shall not be unreasonably withheld.. J. GOVERNMENTAL JURISDICTION AND AUTHORIZATION This Agreement is subject to present and future valid laws and valid orders, rules and regulations of duly constituted regulatory authorities having jurisdiction. This Agreement shall not become effective until filed with and approved by the Arkansas Public Service Commission, to the extent such approval is required, and/or accepted by any other regulatory bodies having jurisdiction, if any. Each Party expressly reserves, however, the right to appeal and otherwise contest any change ordered by a governmental agency or court having jurisdiction in the rights, terms or conditions specified in this Agreement. K. NOTICES Any notice, demand or request required or permitted to be given by either Party to the other and any instrument required or permitted to be tendered or delivered by either Party to the other may be so given, tendered or delivered, as the case may be, by depositing the same in any United States Post Office with postage prepaid, for transmission by certified or registered mail, addressed to the Party, or personally delivered to the Party, at the address set out below: 13

15 To Company: President Entergy Arkansas, Inc. 425 West Capitol Little Rock, Arkansas To Producer: Cross Oil Refining 8t Marketing, Inc. 484 E. Sixth Street Smackover, Arkansas Attention: Ronnie Jackson Vice President - Refining ARTICLE VI - INSURANCE Without limiting any obligations or liabilities under th,; Agreemen,, Producer shall, at its own expense, provide and maintain, in effect for the life of this Agreement, minimum insurance coverage as follows: A. Workers' Compensation Insurance in accordance with all applicable State, Federal, and Maritime laws, including Employer's Liability Insurance in the minimum amount of $500,000. Said Policy shall be endorsed to include a Waiver of Subrogation in favor of the Company and its affiliated and associated companies. 6. Comprehensive General Liability Insurance, including Contractual Liability Coverage for liabilities assumed under this contract and Personal Injury coverage, with combined single limit of not less than $5,000,000 each occurrence. Producer shall furnish to the Company an Additional Insured Endorsement with respect to such insurance in substantially the form shown in Appendix D. All of the Producer's policies of insurance shall be placed with responsible carriers and shall provide the Company with thirty (30) days prior written notice of cancellation, expiration or material adverse change. Prior to the date the Producer's facilities are first operated in parallel with the Company's electric system and annually thereafter during the term of this Agreement, the Producer shall furnish a Certificate of Insurance to the Company. All insurance policies of either party shall provide for a waiver of subrogation. ARTICLE VI1 - GENERAL PROVISIONS The Company shall not be liable for any costs or damages due to the inability of the Producer or its designated representatives to obtain any licenses or permits required by any authority having jurisdiction over such matters. 14

16 This Agreement constitutes the entire agreement between the Parties hereto with reference to the subject matter hereof, and no change or modification as to any of the provisions hereof shall be binding on either Party unless reduced to writing and approved by the authorized officer or agent of the Producer and the President or a Vice President of the Company. The terms and conditions of this Agreement and every Appendix referred to herein shall be amended, as agreed to by the Parties, to comply with changes or alterations made necessary by a valid applicable order of any governmental regulatory authority, or any court, having jurisdiction hereof. This Agreement includes the following checked appendices which are attached and incorporated herein: - X - X - X - X Appendix A - Interconnection Facilities Appendix B - Schedule of Rates Appendix C - Special Facilities Appendix D - Additional Insured Endorsement IN WITNESS WHEREOF, the Parties hereto have cause this Agreement to be duly executed b their duly authorized officers on the day and year first above written. /A WITNESSES. Title: c DATE v 15

17 APPENDIX A - INTERCONNECTION FACILITIES Appendix A of Agreement For Purchased Power From Qualified Cogeneration and Small Power Production Facilities made and entered into on the 16th day of February, 1999, by and between Cross Oil Refining & Marketing, Inc. and Entergy Arkansas, Inc. See Drawing No. 71A-SK02, which is attached hereto and made a part hereof. IN WITNESS WHEREOF, the Parties hereto have caused this Appendix A to be duly executed by their duly authorized officers on the d ear first above written. WITNESSES: ENTERGY ARKANSAS, INC. 16

18 APPENDIX A ATTACHMENT CROSS OIL REFINING AND MARKETING INTERCONNECTION FACILITIES GENERAL EQUIPMENT, CONTROL AND RELAYING DESCRIPTION Cross Oil Refining and Marketing, Inc. of Smackover, Arkansas (Producer) is installing a MVA cogeneration unit at the refinery site that will operate in parallel with Entergy Arkansas, Inc. (Company). The intertie configuration is shown on the relay one-line diagram 7 1 A-SK02. At present, the plant is fed from a 13.2kV to 480V pad mount transformer and a 13.2kV to 4.16kV pole mount transformer located on the customers property. There is an additional tank farm load fed from an open delta 50kVA transformer bank on the customer's site. All transformers have individual meters. It has beer! agreed :hat Company will relocate the meter point near the prcperty iine and that the customer will purchase the last few spans of primary with the 50kVk transformer bank. Company will then remove the 480V and 4.16kV transformers. This woilld establish a single meter point at 13.2kV. One-Line Diaqram Producer will build an intertie substation and supply all customer side equipment shown in the attached drawings, including the transfer trip cabinet and leased communication line. A 13.2kV interconnection is proposed with a 3 phase, gang operated air breaker switch with pad locking provisions. A GE 15kV class three cycle vacuum circuit breaker (52L) will be the main protective interconnection device. The breaker will be a substation class outdoor type located in a fenced yard. Protective Relayinq (Breaker 52L) The intertie will be protected with modern Schweitzer relays as primary and backup protection. A SEL 321 will be used for high speed primary phase, ground distance, and negative sequence overcurrent protection. A SEL 351 will be used for backup protection with frequency, voltage and other elements as required. The 52L breaker will include breaker failure backup protection. Transfer Trip Transfer trip (TT) will be used at the interconnection to trip 52L in the event of the feeder breaker trip at the Smackover substation. 52L will not be reclosed after TT or any trip until approval from the Company system operations. See the attached transfer trip panel layout, materials and connection diagram #071 -A AC9': 4 'pa.c~~ 1

19 The TT equipment will provide multiple communication channels for breaker pcsition, data, etc. to the Company TT cabinet at the Smackovcr substation. SEL 351 relays with fiber optic interface to modems to the phone company will be used. Intertie Transformer A 13.2kV wye to 4.16kV delta, 5000kVA, intertie transformer will be used. This will isolate and provide impedance between the systems. Transformer differential and backup overcurrent protection will be provided. 52TL is used for transformer low side protection and breaker failure in the event of 52L failure or 52G failure. Svnchronizinq Synchronizing will be provided on Breakers 52L, 52TL and 52G. Automatic sync1 tronizing will be the primary method with frequency and volrage matching. Manual backup synchronizing with relay supervision will also be provided. ODerating Modes The system will be capable of parallel or isolated operation. Parallel operation will utilize automatic watt and var import/export control. Instrumentation will be provided for manual backup control. System Studies Fault, load flow, transient stability, and large motor start studies have been implemented using system data from Company and the Producer system. Fault duties and contributions have been determined on equipment and ffom these values relay settings will be developed for optimum protection.

20 r ENTERGY SMACKOMR SUBSTATION :V CIIST. FEEDER 115KV SYSTW eus PTS EO LINE 7 STATUS OUTPUTS TO ENTERGY SCADA TRANSFER FOR BKR POSlTIONS AND GEN ON LINE SEL 351 hf I RROR BIT IMAGE WITH SERIAL COMMUNICATION AND DEAD LINE CLOSE PERH[SSIM 0 CROSS OIL AND REFINING I RELAY ONE-LINE DIAGRAM I I 1 \ DATE: 3/98 DWG No: 71A-SK02 SWE: NOYF afj 0

21 1 t, '_ 7" SLANK (FUT. DEVICE) I I - X 0 X x - x c 1-1 X - X IO I BLANK FU-1 10A FU-2 3 O A FRONT VIEW SIDE VIE INTERNAL DIAGRAM I DESCRlPnON 1 DRN Br I Consultlng Engineers COGEN RELAY PANELS LAYOUT, MATERIALS & CONNECTION DIAGRAM SULE: 1 l/z-=l'-o- ME: ow8 DWG No: 071-A012 Ita 0

22 APPENDIX B - SCHEDULE OF RATES Appendix B of Agreement For Purchased Power from Qualified Cogeneration and Small Power Production Facilities made and entered into on the 16th day of February, 1999, by and between Cross Oil Refining & Marketing, Inc. ( Producer ) and Entergy Arkansas, Inc. ( Company ). Company shall receive and pay for electric energy in accordance with the provisions of the Agreement for Purchased Power from Qualified Cogeneration and Small Power Production Facilities ( Agreement ) of which this Appendix B is a part. IN WITNESS WHEREOF, the parties hereto have caused this Appendix B to be duly executed by their duly authorized officers on the day and year first above written. n WITNESSES: ENTERGY ARKANSAS, INC. BY Title 17

23 Replacing Entergy Arkansas, Inc. Name of Company Kind of Service: Electric Sheet No. Class of Service: Commercialllndustrial I 36 PM '99 Part Ill. Rate Schedule No.: 26 Title: Additional Facilities Charge Rider (AFC) ADDITIONAL FACILITIES CHARGE RIDER PSC File Mark Only (NR) AVAILABILITY (CT) To all customers who execute a term contract as provided herein. Applicable to service delivered and metered at voltages of 13,2OOYn,620 or greater DESCRIPTION (CT) Where, because of the character of the Customer's demand, Customer's need for duplicate facilities, legal or engineering requirements with which the customer must comply, Customer requests Entergy Arkansas, Inc. ('EAI" or the "Company") to install facilities in addition to those which Company would normally install for the Customer's demand and service requirements, Company will install and maintain such additional facilities ('Additional Facilities") subject to the following conditions: The location and design of the Additional Facil'ities must meet Company's engineering and operating standards and practices. The Company will not install Additional Facilities on the Customer's side of the point of delivery which cross public street, roads, or alleys, or inside Customer's building In cases where Company would normally provide secondary metering and the Customer requests primary metering, the difference in the installed cost of the primary and secondary metering will be considered as Additional Facilities Title to all facilities installed by Company shall be vested in and will be maintained by Company, and Customer will provide all easements and rights-of-way satisfactory to Company at no cost to Company... The Customer will enter into a Facilities Agreement with the Company and pay to the Company a net monthly charge based on the investment by Company in such facilities and the monthly percentages from either Option A or Option B below, as appropriate. At the execution of each Facilities Agreement, the Customer will have a one-time election to select either Option A or Option B for the definition of the monthly rate associated with Company's investment in the Additional Facilities. Any subsequent capital additions, replacements, or modifications of facilities will be treated as described in Option A and Option B below OPTION A Customers that select Option A for Additional Facilities must pay a net monthly facilities charge of percent (0.900%) per month of the installed cost of all facilities included in the Facilities Agreement. Subsequent capital modifications or additions to such facilities will be subject to the above rate as applied to the cost of the additions or modifications. Subsequent replacement of an Additional Facilities component will be subject to the above rate, as applied to the excess of the cost of replacement over the original installed cost of the replaced facilities. THIS SPACE FOR PSC USE ONLY

24 AKKANSA5 PUSLIC SERVICE COMMISSION Oricinal L Let No ARK. I St :?WN. ' im. Replacing Sheet No. MhR I I I 36 PM '99 Entergy Arkansas, Inc. Name of Company Kind of Service: Electric Class of Service: Commercial/lndustriaI Part Ill. Rate Schedule No.: 26 Title: Additional Facilities Charge Rider (AFC) PSC File Mark Only OPTION B Customers that select Option B for Additional Facilities must define in the Facilities Agreement the number of years (the "Recovery Term") that will define the appropriate monthly rates to be applied to the Company's investment. The Recovery Term cannot be longer than 10 years. The following table specifies the monthly percentages for application during the selected Recovery Term and any years following the Recovery Term. These percentages will apply monthly to the installed cost of all facilities included in the required Facilities Agreement. Selected Recovery Term (Years) Monthly O h During Recoverv Term Monthly % Post- Recovery Term (AV % 4.926% 3.476% 2.754% 2.322% 2.036% 1.a32y % 1.564% 1.472% 0.160% 0.160% 0.160% 0.160% 0.160% 0.160% 0.160% 0.160% 0.160% 0.160% Subsequent modifications and additions to Additional Facilities covered by a Facilities Agreement shall be subject to a new Option B Facilities Agreement covering the installed cost of such facilities, wherein Customer must select a Recovery Term that will define the appropriate monthly rate for such cost. Subsequent replacement of an Additional Facilities component shall be subject to a new Facilities Agreement covering the installed cost of such item and the customer may select either Option A or Option B for such item. If the Facilities Agreement covering the replaced item remains in effect because there was not a total replacement of the Additional Facilities covered by the Facilities Agreement, the costs covered by such agreement shall be reduced by the original cost of the replaced facility. If the replacement occurs prior to the end of the Recovery Term for the replaced facility, the replacement installed cost shall be reduced by the salvage value of the replaced facility, if any. THIS SPACE FOR PSC USE ONLY

25 Orici na I Sii-dt NO Replacing Sheet No. H~B Entergy Arkansas, Inc. Name of Company Kind of Service: Electric Part Ill. Rate Schedule No.: 26 Class of Service: Commercial/lndustriaI I I PM '99 Title: Additional Facilities Charge Rider (AFC) PSC File Mark Only ADDITIONAL FACILITIES EXISTING AT THE TIME OF SCHEDULE AFC EFFECTIVE DATE Customers presently receiving billings for Additional Facilities under existing policies will be given a one-time opportunity to switch to Option B rates within one year of the effective date of this rate schedule. For such customers, the installed cost covered by the new Option B Facilities Agreement will be the lower of installed cost of such facilities or the fair market value of the subject facilities, to be determined in a mutually agreeable, generally acceptable method OPERATION AND MAINTENANCE OF CUSTOMER-OWNED FACILITIES Customers that own distribution substations and/or other distribution facilities may enter into an agreement with the Company for the ongoing operation and maintenance of such facilities ('O&M Service"), subject to Company inspection of subject facilities and approval of the agreement. The cost of such facilities will be defined in the agreement'as the current estimated cost of replacement facilities. The net monthly charge for all facilities included in agreement will be % per month of such defined cost of such facilities. Alternatively, the Company and such Customers may enter into an arrangement wherein the Customer is assessed a charge to reimburse the Company on a task or activity basis CONTRACT TERM The initial term of any contract for Additional Facilities (Facilities Agreement) under paragraph above provided hereunder shall be for not less than ten years and shall be automatically extended for successive periods of one year each until terminated by written notice given by one party to the other not more than six months nor less than three months prior to the expiration date of the original term or any anniversary thereof. If Customer ceases to take electric service from Company, Company may remove said Additional Facilities and Customer shall pay Company the termination charges set forth below. In the event the Customer does not require the Additional Facilities for the full term of the contract and wishes to cancel the contract prior to the expiration date, Company reserves the right to remove such Additional Facilities and will consent to the cancellation of the contract provided Customer pays to Company the lesser of the following: 1. The applicable monthly charge for the remaining months of the contract 2. The amount computed under the following formula; provided, however, such amount shall never be less than zero: Where: [A + B - C] X D A = Original installed cost of the facilities B = Cost of removing facilities