OPERATING AGREEMENT BETWEEN THE PUERTO RICO ELECTRIC POWER AUTHORITY AND WHEELING CUSTOMERS

Transcription

1 Operating Agreement OPERATING AGREEMENT BETWEEN THE PUERTO RICO ELECTRIC POWER AUTHORITY AND WHEELING CUSTOMERS Date of Issue Date Effective [insert date here] [insert date here] Issued by The Puerto Rico Electric Power Authority

2 Operating Agreement Sheet No. i Table of Contents I. INTRODUCTION Preamble Definitions... 1 II. SCHEDULING AND DISPATCH General System Operating Principles Scheduling Procedures Dispatching Redispatching, Curtailment, and Load Shedding Emergencies Non-Scheduled Outages Authority Responsibilities... 8 III. METERING AND COMMUNICATIONS Metering Communications IV. BILLING PROCEDURES Billings Payments V. CUSTOMER RESPONSIBILITIES Maintenance of Facilities Ancillary Services Connected Generation Resources Charges Credit Obligations Representations, Warranties, and Covenants VI. LIABILITY AND INDEMNITY Indemnification Workman s Compensation Liability Resolution of Disputes Gross Negligence or Willful Misconduct VII. MISCELLANEOUS PROVISIONS Books and Records Assignment Choice of Law Entire Agreement Unilateral Changes and Modifications Effective Date Term... 18

3 Operating Agreement Sheet No. ii 32. Notice Interpretation Severability Force Majeure Further Assurances Counterparts No Third-Party Beneficiaries Confidentiality VIII. AMENDMENT Amendment Procedure ATTACHMENT A. ADDRESSES FOR DELIVERY OF NOTICES AND BILLINGS... 25

4 Operating Agreement Sheet No. 1 I. INTRODUCTION 1. Preamble This Operating Agreement sets out the terms and conditions under which the Puerto Rico Electric Power Authority (Authority) and the Wheeling Customer will cooperate. The Parties shall operate and maintain their respective systems in a manner that will allow the Authority to perform its obligations consistent with Good Utility Practice. 2. Definitions The definitions of Section 1 of the Authority s Open Access Transmission Tariff apply to this Operating Agreement. The following definitions reiterate or add to the Tariff definitions. Authority. The Puerto Rico Electric Power Authority. Automatic Generation Control. Physical controls that automatically adjust a generator s power output level for the purpose of helping maintain power system frequency as close as possible to 60 cycles per second (60 Hertz). Automatic Voltage Regulation. Physical controls that automatically stabilize voltages. Available Capacity. For any hour, the net generation capacity made available at the Interconnection Point for dispatch from the generator to the Authority for that hour. Behind-the-Meter Generation. A generating unit that delivers energy to load without using the Transmission System or the Distribution System. Billing Period. The time period between meter readings, as set forth in Section Business Day. A weekday that is not an official holiday in Puerto Rico. Commercial Operation Date. The date on which the Generating Facility commences commercial operation as agreed to by the Parties pursuant to Attachment E to the Standard Generator Interconnection Agreement. Delivering Party. The entity supplying capacity and energy to be transmitted at Points of Receipt. Dependable Capacity. The net electric generating capacity for a Generating Facility (gross electric generating capacity minus station use) expressed in kilowatts and made available to the Transmission System or the Distribution System at the relevant Interconnection Point. Designated Representative. A person or entity chosen to represent the Authority or the Wheeling Customer. Dispatch. The process by which the Authority s Transmission Center schedules and controls, directly or indirectly, manually or automatically, the availability and output of Generating Facilities in accordance with Good Utility Practice and Generating Facility Operating Limits. Dispute Resolution. The procedures for the resolution of disputes set forth in Section 8 of the Open Access Transmission Tariff.

5 Operating Agreement Sheet No. 2 Distribution System. The facilities used by the Authority to provide distribution service. Emergency Condition. A condition or situation that the Authority determines is imminently likely to cause a material adverse effect on the security of or damage to the Transmission or Distribution Systems. Force Majeure. Any act of God, labor disturbance, act of the public enemy, war, insurrection, riot, fire, storm, or flood; explosion, breakage, or accident to machinery or equipment; any Curtailment, order, regulation, or restriction imposed by governmental military or lawfully established civilian authorities; or any other cause beyond any Party s control. A Force Majeure event does not include an act of negligence or intentional wrongdoing. Generating Facility. A device for the supply of electricity through generation or storage, excluding any associated Interconnection Facilities. Good Utility Practice. Any of the practices, methods, and acts engaged in or approved by a significant portion of the electric utility industry during the relevant time period; or any of the practices, methods, and acts which, in the exercise of reasonable judgment in light of the facts known at the time the decision was made, could have been expected to accomplish the desired result at a reasonable cost consistent with good business practices, reliability, safety, and expedition. Good Utility Practice is not intended to be limited to the optimum practice, method, or act to the exclusion of all others, but rather to be generally accepted practices, methods, or acts. Maintenance Program. The schedule of maintenance established by the Authority. Net Electrical Output. The electrical output of a generator minus the generator s own use of electricity. Non-Scheduled Outage. An outage of a generator that is not scheduled, including forced outages. Operating Agreement. This Operating Agreement, including all Schedules, Exhibits, Appendices, addenda, or supplements hereto, as amended from time to time. Operating Limits. A Generating Facility s minimum and maximum output levels, maximum ramping rates, and other physical constraints on its performance. Parties. The Authority and the Wheeling Customer receiving service under the Open Access Transmission Tariff and Open Access Distribution Tariff. Points of Delivery. One or more locations on the Transmission System where capacity and energy transmitted by the Authority will be made available to the Receiving Party or to the Distribution System. Receiving Party. The entity receiving the capacity and energy transmitted by the Authority to Points of Delivery. Remote Terminal Unit. A device that collects data from data acquisition equipment attached to a generating unit and transmits the data to the main control center for the transmission system over a wired or wireless network. Scheduled Outage. A generator outage, arranged by the Wheeling Customer or the Authority, that is in accordance with the Maintenance Program.

6 Operating Agreement Sheet No. 3 Tariffs. The Authority s Open Access Transmission Tariff and Open Access Distribution Tariff. Transmission Center. The facility housing the personnel and equipment necessary to exercise continuous control of the dispatch of all generation interconnected to the Transmission and Distribution Systems. Transmission System. The facilities used by the Authority to provide Transmission Service. II. SCHEDULING AND DISPATCH 3. General The Authority will schedule and dispatch generation on the basis of either: a) least-cost, security-constrained dispatch for those generators that choose to participate in least-cost dispatch; or b) must-run status for those generators that do not choose to participate in least-cost dispatch. The scheduling and dispatch process will meet both energy requirements and ancillary services requirements. Regardless of generators choices, Wheeling Customers will pay for Energy Imbalance Service and Ancillary Services as specified in the Open Access Transmission Tariff. Information exchanged by the Parties for scheduling and dispatch purposes will be used only for those purposes, and will not be disclosed to third parties absent mutual consent or an order of a court or regulatory agency. 4. System Operating Principles The Wheeling Customer must design, construct, and operate its facilities safely and efficiently in accordance with Good Utility Practice, industry standards, criteria, and applicable manufacturer s equipment specifications, and within the operating physical parameter ranges (voltage schedule, load power factor, and other parameters) required by the Authority. The Authority reserves the right to inspect the facilities and operating records of the Wheeling Customer upon mutually agreeable terms and conditions. Electric service, in the form of three-phase, approximately sixty (60) hertz alternating current, shall be delivered at the designated Points of Delivery and nominal voltage(s) listed in the Transmission Service Agreement. When multiple Points of Delivery are identified in the Transmission Service Agreement, they shall not be operated in parallel by the Wheeling Customer without the approval of the Authority. The Designated Representatives of the Authority and the Wheeling Customer shall establish the procedure for obtaining such approval. The Designated Representatives shall also establish and monitor standards and operating rules and procedures to assure that transmission system integrity and the safety of the Wheeling Customer, the public, and Authority employees are maintained or enhanced when such parallel operations are permitted either on a continuing basis or for intermittent switching or other service needs. Each Party shall exercise due diligence and reasonable care in maintaining and operating its facilities so as to maintain continuity of service. If the function of any Party s facilities is impaired, the capacity of any Point of Delivery is reduced, or synchronous operation at any Point(s) of Delivery becomes interrupted, either

7 Operating Agreement Sheet No. 4 manually or automatically, as a result of force majeure or maintenance coordinated by the Parties, the Parties will cooperate to remove the cause of such impairment, interruption, or reduction, so as to restore normal operating conditions expeditiously. The Authority reserves the sole right to take any action necessary during an actual or imminent emergency to preserve the reliability and integrity of the Transmission System and Distribution System, limit or prevent damage, expedite restoration of service, ensure safe and reliable operation, avoid adverse effects on the quality of service, or preserve public safety. In an emergency, the reasonable judgment of the Authority, in accordance with Good Utility Practice and equipment Operating Limits, shall be the sole determinant of whether the operation of the Wheeling Customer Generating Facility, loads, or equipment adversely affects the quality of service or interferes with the safe and reliable operation of the Transmission System or the Distribution System. The Authority may discontinue Transmission Service or Distribution Service to such Wheeling Customer, disconnect the customer s facilities, or reduce the amount of Net Electrical Output until the power quality or interfering condition has been corrected. Such curtailment of load, redispatching, or load shedding shall be done on a non-discriminatory basis, to the extent practicable. The Authority will provide reasonable notice and an opportunity to alleviate the condition by the Wheeling Customer to the extent practicable. 5. Scheduling Procedures Via an electronic medium specified by the Authority, the Wheeling Customer shall provide to the Authority expected hourly energy schedules for all energy flowing through the Transmission System or the Distribution System. The Wheeling Customer shall provide this information for each week prior to the beginning of each week, and for the next Calendar Day on the preceding Calendar Day. The Wheeling Customer may modify its hourly energy schedules up to twenty (20) minutes before the start of the next clock hour provided that the Delivering Party and Receiving Party (if different from the Wheeling Customer) also agree to the schedule modification. The hourly schedule must be stated in increments of 100 kw. Wheeling Customers with multiple requests for Transmission Service at a Point of Receipt, each of which is less than 100 kw, may consolidate their service requests at a common point of receipt into units of 100 kw for scheduling and billing purposes. Wheeling Customers shall submit all schedules and scheduling changes electronically in a form and at times specified by this Section, or at other times as mutually agreed upon by the Wheeling Customer and the Authority. Schedules and scheduling changes submitted after the applicable deadlines will be accommodated, if practicable. In the event of a system contingency such as a generation, transmission, or distribution outage, scheduling changes will be implemented as soon as practicable. If the Wheeling Customer, Delivering Party, or Receiving Party revise or terminate any schedule, such party shall immediately notify the Authority, and the Authority shall have the right to adjust accordingly the schedule for capacity and energy to be received and to be delivered. The Authority has the right to start up or shut down Wheeling Customers generators that are participating in least-cost dispatch. The Wheeling Customer s Service Agreement will specify the notification requirements, maximum numbers of start-ups and shut-downs, and any other operating limitations that may apply to such generating facilities.

8 Operating Agreement Sheet No. 5 The Wheeling Customer shall use all reasonable efforts to comply with the Authority s Maintenance Program, which is designed to coordinate generation outages and thereby minimize their impacts on power system reliability and costs. In the event the Wheeling Customer has reason to believe that the actual duration of its generator s Scheduled Outage will exceed the planned duration of the Scheduled Outage, the Wheeling Customer shall notify the Authority as soon as possible of the cause(s) for such delay and of the additional time required to end the Scheduled Outage. In such an event, the Wheeling Customer will use all reasonable means to return the Generating Facility to operation in the shortest possible time. The Wheeling Customer shall use reasonable efforts to notify the Authority of and coordinate all Non-Scheduled Outages with the Authority. The Wheeling Customer shall use reasonable efforts to schedule Non-Scheduled Outages to occur during times when the Generating Facility is not projected to be dispatched, during Scheduled Outages, or at such times as will minimize any adverse effect on the operation of the Transmission System and the Distribution System. The Wheeling Customer shall use reasonable efforts to perform and complete Non-Scheduled Outages in a timely manner consistent with Good Utility Practice. Wheeling Customer shall employ qualified personnel for monitoring its Generating Facility and for coordinating operations of its Generating Facility with the Authority s system. No less than thirty (30) Calendar Days prior to the Commercial Operation Date (and periodically thereafter as personnel changes occur), the Wheeling Customer shall provide the Authority with a list and qualifications of the Wheeling Customer s personnel who will be responsible for supervising the operation and maintenance of its Generating Facility and for coordinating operations with the Authority s system. The Authority may waive the requirement for qualifications of personnel if the generation technology makes the provision of such information unnecessary. For Facilities or aggregations of Facilities larger than 5 MW, the Wheeling Customer shall ensure that listed supervisory personnel will be on duty at all times, twenty-four (24) hours per day, and seven (7) days per week. The Authority may waive this requirement if the nature of the Generating Facility implies safe operation without round-the-clock staffing. For Facilities or aggregations of Facilities larger than 5 MW, the Wheeling Customer will give the Authority s dispatcher a status report of the Wheeling Customer s Generating Facility conditions on a periodic basis as agreed to by the Authority and the Wheeling Customer, including any operating restrictions and recent hourly integrated net generation. The Wheeling Customer shall notify the dispatcher immediately if there is any pertinent change in its Generating Facility s status. The Wheeling Customer shall make available through the Generating Facility s Remote Terminal Unit (RTU) the actual Generating Facility load limit adjustment. 6. Dispatching The Wheeling Customer will have the option of having the Authority dispatch their generators on either of two bases: a. On a least-cost, security-constrained dispatch basis. In this case, the Wheeling Customer s generator(s) will follow the Authority s dispatch instructions. The Wheeling Customer must provide the Authority with generation bids that may vary by generation output level and over time; and their Transmission Service Agreement must include

9 Operating Agreement Sheet No. 6 arrangements for purchasing any necessary replacement power (or disposing of any surplus power) through the Authority. b. On a must-run basis. In this case, the Authority will accept all power produced by the Wheeling Customer s generator(s) except under Emergency Conditions, when the generator(s) will be required to follow the Authority s dispatch orders. The Wheeling Customer on must-run dispatch may offer voluntary redispatch service as per Attachment B of the Open Access Transmission Tariff. The Authority s dispatch of Wheeling Customers generators, whether under normal conditions or Emergency Conditions, will respect the generators needs for safe operation within their Operating Limits. Wheeling Customers Standard Generator Interconnection Agreements may place explicit limits on dispatch due to the particular operating characteristics of their generators. Wheeling Customers will provide the Authority with day-ahead notice of their generators abilities, if any, to operate at levels in excess of their Dependable Capacity during the following day and the prices, expressed in cents per kilowatt hour, at which such excess capacity will be available to the Authority, based on the length of time such excess capacity will be available. If the Authority chooses to dispatch such excess capacity, the Authority will pay the prices named by the Wheeling Customer for energy thus dispatched. For both dispatch bases, the Wheeling Customer may offer Reactive Supply and Voltage Control from Generation Service, Regulation and Frequency Response Service, Operating Reserve - Spinning Reserve Service, and Operating Reserve - Supplemental Reserve Service per Schedules 2, 3, 5, and 6 of the Open Access Transmission Tariff. 7. Redispatching, Curtailment, and Load Shedding To relieve existing or potential transmission system constraints, the Authority will redispatch generators in accordance with Attachment F of the Open Access Transmission Tariff. Generators that are dispatched on a least-cost, security-constrained dispatch basis, including all of the Authority s own generators, may be redispatched to relieve constraints. Must-run generators may be redispatched only if they offer voluntary redispatch service or if there is an Emergency Condition. The Wheeling Customer shall respond immediately to requests for redispatch from the Authority. The Authority will charge or credit the Wheeling Customer for energy as indicated by Schedule 4 of the Open Access Transmission Tariff. The Parties shall implement load-shedding procedures to maintain the reliability and integrity for the Transmission System in accordance with applicable North American Electric Reliability Corporation standards, the Authority s reliability requirements, and Good Utility Practice. Load shedding may include automatic load shedding, manual load shedding, and rotating interruption of customer load. The Wheeling Customer will coordinate with the Authority to ensure sufficient load shedding equipment is in place to meet the Authority s requirements. When manual load shedding or rotating interruptions are necessary, the Authority shall notify the Wheeling Customer s dispatchers of the required action and the Wheeling Customer shall comply immediately.

10 Operating Agreement Sheet No Emergencies The Authority, with the assistance of the Wheeling Customers dispatchers as it may request, shall be responsible for monitoring the operation of the power system, for declaring the existence of an Emergency Condition, and for directing the operations of Wheeling Customers as necessary to manage, alleviate, or end an Emergency Condition. The standards, policies and procedures of the Authority for declaring the existence of an Emergency Condition and for managing, alleviating, or ending an Emergency Condition, shall apply to all Wheeling Customers on a non-discriminatory basis. Actions by the Authority and the Wheeling Customers shall be carried out in accordance with this Operating Agreement, North American Electricity Corporation reliability criteria, and Good Utility Practice. The Authority will have the right to purchase or sell energy on behalf of Wheeling Customers to meet an Emergency Condition, with the resulting purchases or sales priced as indicated in Schedule 4 of the Open Access Transmission Tariff. To the extent load must be shed to alleviate an Emergency Condition, the Authority shall, to the maximum extent practicable, direct the shedding of load in those situations where load shedding would be necessary, such as to prevent isolation of facilities, prevent voltage collapse, or restore system frequency following a system collapse. Load shedding shall be implemented consistent with North American Electric Reliability Corporation standards. If an Emergency Condition is declared by the Authority, the Authority s Transmission Center will notify Wheeling Customer s personnel. If the Authority so requests, the Wheeling Customer s personnel shall place their generation within the exclusive control of the Authority s Transmission Center for the duration of such Emergency Condition. Without limiting the generality of the foregoing, the Authority s Transmission Center may require Wheeling Customer s personnel to raise or lower production of energy generated by the Generating Facility to maintain safe and reliable load levels and voltages on the Authority s Transmission System and/or Distribution System, provided, however, any changes in the level of generation required by the Authority shall be implemented in a manner consistent with Good Utility Practice and within the generator s Operating Limits. Wheeling Customers shall cooperate with the Authority in establishing emergency plans, including without limitation, recovery from a local or widespread electrical blackout, voltage reduction in order to effect load curtailment, and other plans addressing circumstances that may arise. The Wheeling Customer shall provide to the Authority all pertinent technical references available in relation to start-up times and minimum load-carrying ability. If the Wheeling Customer has a scheduled outage and such scheduled outage occurs or would occur coincident with an Emergency Condition, thus making operation of the Generating Facility necessary or desirable, the Wheeling Customer shall make best efforts to reschedule the outage or, if the outage has begun, to expedite the completion thereof. During an Emergency Condition, the Authority will have the sole discretion to reduce the output of a Wheeling Customer s generator(s) and to disconnect such generator(s) from the Transmission System or the Distribution System. Disconnection may occur without prior notice: a) if a failure to disconnect operations would create or contribute to an Emergency Condition; b) if immediate maintenance operations are required; or c) whenever the Authority deems it necessary to do so in the interest of safety and integrity of the Authority s system. Disconnected generator(s) will remain disconnected from the Authority s system until the Wheeling Customer

11 Operating Agreement Sheet No. 8 has received permission to reconnect from the Authority s Transmission Center. In all cases, however, any such Authority requests for generation output reductions or disconnections shall be based on and implemented in a manner consistent with Good Utility Practice and within generators Operating Limits. 9. Non-Scheduled Outages Each Wheeling Customer shall: a) coordinate all Non-Scheduled Outages with the Authority to the extent possible; b) use reasonable efforts to notify the Authority at least twenty four (24) hours in advance of a Non-Scheduled Outage, if possible; c) advise the Authority of an actual Non-Scheduled Outage as promptly as possible; d) provide the Authority with the expected date and time that the generation resource will return to service; and e) make a record of the events and circumstances giving rise to the Non-Scheduled Outage. A Wheeling Customer shall not be expected to provide energy or other services, or to satisfy delivery obligations, from a generation resource undergoing a Non-Scheduled Outage; though the Wheeling Customer will be expected to purchase from others, including the Authority, any energy or other services that are required to satisfy its contractual obligations and its obligations under the Open Access Transmission Tariff and the Open Access Distribution Tariff. 10. Authority Responsibilities The Authority shall have the following responsibilities with respect to the management and analysis of information pertaining to scheduling and dispatch: a. The Authority shall perform seasonal operating studies to assess the forecasted adequacy of generating reserves and of the Transmission and Distribution Systems. b. The Authority shall maintain and update tables setting forth objectives for Regulation and Frequency Response Service reserves, Operating Reserves, and other operating objectives. c. The Authority shall maintain such data and information relating to generation and transmission facilities as may be necessary or appropriate to conduct the scheduling and dispatch of the power system. d. The Authority shall maintain an historical database of all transmission and distribution facility ratings. Any dispute between the Authority and the Wheeling Customer concerning transmission and distribution facility ratings shall be resolved in accordance with the Dispute Resolution procedures of the Open Access Transmission Tariff; provided, however, that the rating level determined by the Authority shall govern and be effective during the pendency of any such dispute. Except as provided by specific terms of the Wheeling Customer s Service Agreement, the Authority shall be under no obligation to accept a Wheeling Customer s surplus power output or to provide power to a Wheeling Customer to resolve a power deficiency except through the Energy Imbalance Service described in Schedule 4 of the Open Access Transmission Tariff. Regardless of the size of a Wheeling Customer s imbalances, however, the Authority will not disconnect a Wheeling Customer s resources or loads except for the purpose of addressing an Emergency Condition.

12 Operating Agreement Sheet No. 9 III. METERING AND COMMUNICATIONS 11. Metering Purpose The quantities of electric energy applicable to the determination of billing amounts shall be ascertained by means of meters installed, maintained, and read either at the expense of the party on whose premises the meters are located or as otherwise provided for by agreement between the parties concerned Meter Locations and Installation The meter locations to be used by the Wheeling Customers in determining their energy transactions shall be as reasonably determined from time to time by the Wheeling Customer or the Authority as appropriate according to Good Utility Practice. The Authority shall own and maintain all meters and metering devices used to measure the delivery and receipt of Energy and/or Capacity for payment purposes. The Wheeling Customer shall pay for the installation of meters, associated metering equipment, and associated telemetering equipment Meter Reading The Wheeling Customer shall permit the Authority s representative to have access to meter reading equipment at all reasonable hours and for any reasonable purpose, and shall not permit unauthorized persons to have access to the space housing the equipment. Starting with the initiation of the Wheeling Customer s Transmission Service or Distribution Service, the Authority shall read the meters at least once a month, which monthly Billing Period shall not exceed thirty-three (33) Calendar Days nor be less than twenty-eight (28) Calendar Days, to determine the amount of Energy wheeled by the Authority during the immediately preceding Billing Period. The meters will be read according to the schedule determined by the Authority and submitted to the Wheeling Customer on or before January 1 st of each calendar year. The Authority shall notify the Wheeling Customer in advance of any change on the meter reading program. The Wheeling Customer may be present, at its option, during all meter readings. The Authority shall provide the Wheeling Customer with a written statement (such as a bill) containing the results of such meter readings within fifteen (15) Business Days following the reading Measurement All metering of energy shall be the integration of megawatt hours in the clock hour, and the quantities thus obtained shall constitute the megawatt load for such clock hour; provided, however, that adjustment shall be made for other contractual obligations of any Wheeling Customer as may be required to determine the quantity, and for transmission losses.

13 Operating Agreement Sheet No. 10 All metering of demand shall be the peak average megawatt use during any quarter hour (fifteen minutes) of the billing period Behind-the-Meter Generation Metering Generating units designated as Behind-the-Meter Generation, individually rated at 10 megawatts (MW) or greater or that otherwise have been identified by the Authority as requiring metering for operational security reasons, must have both revenue-quality metering and telemetry equipment for operational security purposes. Multiple Behind-the-Meter generating units that are individually rated less than 10 MW but together total more than 10 MW and are identified by the Authority as requiring revenue-quality metering and telemetry equipment may meet these metering requirements by being metered as a single unit Testing Procedures with respect to maintenance, testing, calibrating, correction and registration records, and precision tolerance of all metering equipment shall be in accordance with Good Utility Practice. The Authority shall bear the expense of testing meters, which it shall recover as part of its Annual Transmission Revenue Requirement; except that when a meter is tested upon request of the Wheeling Customer and is found to register within the tolerance described below, the Wheeling Customer shall bear the expense of such test. The Authority shall test metering equipment at least every two (2) years, and the accuracy of registration shall be maintained in accordance with standards acceptable to the Authority and consistent with Good Utility Practice. The Authority shall give the Wheeling Customer ten (10) Business Days prior written notice of metering tests. The Wheeling Customer shall have the right to be present at all routine or special tests and whenever any readings for purposes of settlement are taken from meters not having an automated record. If any test of metering equipment discloses an inaccuracy exceeding two percent (2%), the accounts of the parties shall be adjusted. Such adjustment shall apply to the period over which the meter error is shown to have been in effect or, where such period is indeterminable, for one-half the period since the prior meter test. Should any metering equipment fail to register, the amounts of energy delivered shall be estimated from the best available data. 12. Communications The Wheeling Customer shall, at its own expense, install and maintain the following communication facilities linking its generator(s) with the Authority s Transmission Center: a. For the purpose of telemetering, data acquisition, and Automatic Generation Control by the Authority: i. One dual ported RTU, including setup installation and configuration, which shall be specified by the Authority. ii. Two voice-grade telecommunications circuits for the RTU, one for communication with Monacillos Transmission Center (Monacillos TC).

14 Operating Agreement Sheet No. 11 iii. A voice telephone extension for the purpose of accessing Authority s dial-up metering equipment and for communicating with Authority s Transmission Center. iv. Telephone line and equipment to transmit and receive facsimile messages to confirm oral communications between the Authority and the Wheeling Customer. v. Communications facilities providing digital access using Authority s TDM (Time Division Multiplexer) and Ethernet Network. vi. One voice-grade telecommunications circuit for the Generating Facility backup telemeter s communication with Monacillos TC. vii. A Dynamic System Monitor (cabinet version) for recording power disturbances and measuring generating units responses to disturbances. b. Items approved by the Wheeling Customer in accordance with this section shall be subject to the approval of the Authority, which approval shall not be unreasonably withheld or delayed. For all generators providing power on behalf of the Wheeling Customer, the following telemetry readings to the Authority are required: a. Analog MW b. Integrated MWHRS/HR c. Analog MVARS d. Integrated MVARHRS/HR A Wheeling Customer electing to self-supply Ancillary Services by securing them from a third party shall confirm that the third party s generator(s) have the foregoing capabilities for communicating between the generating resource(s) providing such Ancillary Services and the Authority. If such capabilities are lacking, either the Wheeling Customer or the third party shall, at their own expense, install and maintain such capabilities. IV. BILLING PROCEDURES 13. Billings The Authority shall prepare a billing statement each Billing Period for each Wheeling Customer in accordance with the charges and credits specified in the Open Access Transmission Tariff and the Open Access Distribution Tariff. The billing statement will show the net amount to be paid or received by the Wheeling Customer, and will do so in sufficient detail to allow verification of the billing amounts and completion of the Wheeling Customer s internal accounting. A comprehensive billing and settlement calendar will be posted on the Authority s website prior to December 1 for the upcoming calendar year to communicate the schedule of holidays for settlement and billing purposes.

15 Operating Agreement Sheet No Payments A Wheeling Customer shall make full and timely payment, in accordance with the terms specified by the Authority, of all bills rendered in connection with or arising under or from the Open Access Transmission Tariff and the Open Access Distribution Tariff, notwithstanding any disputed amount; but any payment of a disputed amount shall not be deemed a waiver of any right with respect to such dispute, which shall be resolved as per the Dispute Resolution procedures. With respect to any payment that the Authority is required to make to a Wheeling Customer in connection with or arising under this Operating Agreement, the Open Access Transmission Tariff, or the Open Access Distribution Tariff, the Authority shall have a right of setoff equal to any amount that the Wheeling Customer is required to pay the Authority in connection with or arising under or from this Operating Agreement, the Open Access Transmission Tariff, or the Open Access Distribution Tariff. All payments tendered in satisfaction of a Wheeling Customer s or other entity s obligations shall be made in the form of immediately available funds payable to the Authority, or by wire transfer to a bank named by the Authority. Unless delayed by Force Majeure, payments made by the Authority for amounts due to Wheeling Customers and other entities shall be paid no later than 5:00 p.m. Atlantic Standard Time on the Business Day following the payment due date for net amounts owed to the Authority. Except in case of Force Majeure, a Wheeling Customer shall be in default when a payment is more than thirty (30) Calendar Days past due; and the bill specifying said payment due date will serve as written notice of default. Interest on any unpaid amounts shall be calculated from the due date of the bill to the date of payment. When payments are made by mail, bills shall be considered as having been paid on the date of receipt by the Authority. V. CUSTOMER RESPONSIBILITIES 15. Maintenance of Facilities The Wheeling Customer shall maintain its facilities necessary to reliably deliver or receive energy and capacity to or from the Authority s Transmission System and/or Distribution System consistent with Good Utility Practice. The Authority may curtail service under this Operating Agreement to limit or prevent damage to generating, transmission, or distribution facilities caused by the Wheeling Customer s failure to maintain its facilities in accordance with Good Utility Practice, and the Authority may seek as a result any appropriate relief from the Regulatory Entity. To maintain system reliability and minimize costs, the Designated Representatives of the Authority and the Wheeling Customer shall establish procedures to coordinate the maintenance schedules and the returns to service of generating, transmission, and distribution facilities, to the greatest extent practical. The Wheeling Customer shall obtain concurrence from the Authority before beginning any scheduled maintenance of facilities that could impact the operation of the Transmission System and/or Distribution System over which Wheeling Service is provided by the Authority. If the Authority requires rescheduling of previously scheduled generation maintenance, the generation owner will be compensated as indicated in Attachment E of the Open Access Transmission Tariff. The Wheeling Customer shall notify the Authority as soon as

16 Operating Agreement Sheet No. 13 practical at the time when any Non-Scheduled Outages occur and again when such Non- Scheduled Outages end. The Wheeling Customer shall submit to the Authority, at least thirty (30) Calendar Days prior to the commencement of service, a proposed Scheduled Outage program for the Wheeling Customer s resources for the first year of service. Thereafter, the Wheeling Customer shall submit to the Authority by September 1 of each year its proposed Scheduled Outage Program for the following calendar year. Within sixty (60) Calendar Days of receipt of each proposed Scheduled Outage Program, the Authority shall notify the Customer whether the proposed outage periods are acceptable. If the Authority cannot accept any of the proposed scheduled outage periods, the Authority shall advise the Wheeling Customer of the time period(s) closest to the proposed period(s) when the outage can be scheduled. The Wheeling Customer shall only schedule outages during periods approved by the Authority, and such approval shall not be unreasonably withheld. Wheeling Customers shall not schedule an outage during the period of August 1 st to October 31 st of any year that would decrease the capacity output of the Generating Facility below its Dependable Capacity without the prior written consent of the Authority. Notwithstanding the above, Non-Scheduled Outages may be conducted during the Off-Peak Periods. The Wheeling Customer shall make its best efforts to comply with the Scheduled Outage Program. In the event the Wheeling Customer has reason to believe that its generator(s) will exceed the total allowable scheduled outage hours, the Wheeling Customer shall notify the Authority as soon as possible of the cause or causes for such delay and of the additional time required to end the outage. In such event, the Wheeling Customer will use its best efforts to return the generator(s) to operation in the shortest possible time. The Authority shall have the right, upon six (6) months prior written notice, to revise, but not lengthen, the period during which Wheeling Customers shall not schedule an outage. The Authority shall not direct operations of generators in such a manner as to deprive Wheeling Customers of the scheduled outage periods required in accordance with Good Utility Practice. 16. Ancillary Services The Wheeling Customer must purchase in appropriate amounts all of the required Ancillary Services described in the Open Access Transmission Tariff from the Authority or, where applicable, self-supply or third-party provision of such Ancillary Services. Where the Wheeling Customer elects to self-supply or have a third party provide Ancillary Services, the Wheeling Customer must demonstrate to the Authority that it has either acquired the Ancillary Services from another source or is capable of self supplying the services. 17. Connected Generation Resources The Wheeling Customer s connected generation resources that have Automatic Generation Control and Automatic Voltage Regulation (AVR) shall be operated and maintained consistent with operating standards, and the Wheeling Customer or Authority shall operate, or cause to be operated, such resources to avoid adverse disturbances or interference with the safe and reliable operation of the Transmission System and the Distribution System.

17 Operating Agreement Sheet No Charges The Wheeling Customer shall be responsible for all costs incurred by the Wheeling Customer and the Authority for on-going operation and maintenance of the facilities required to implement the provisions of this Operating Agreement including, but not limited to: engineering, administrative, and general expenses; and material and labor expenses associated with the specification, design, review, approval, purchase, installation, maintenance, modification, repair, operation, replacement, checkouts, testing, upgrading, calibration, removal, and relocation of equipment or software, to the extent that the direct assignment of such costs is consistent with Regulatory Entity policy. Each Wheeling Customer shall be assessed the charges specified in the Open Access Transmission Tariff and the Open Access Distribution Tariff, as appropriate. 19. Credit Obligations The Authority shall terminate a Wheeling Customer s right to Wheeling Service if it determines that the Wheeling Customer does not continue to meet the obligations set forth in this Operating Agreement, including but not limited to the obligation to be in compliance with the Authority s Credit Policy and the obligation to make timely payment, provided that the Authority has notified the Wheeling Customer of any such deficiency and afforded the Wheeling Customer a reasonable opportunity to cure as described below. The Authority shall reinstate a Wheeling Customer s right to Wheeling Service upon demonstration by the Wheeling Customer that it has come into compliance with the obligations set forth in this Operating Agreement. Upon notification of a deficiency, the Wheeling Customer may remedy such asserted deficiency by: a) paying all amounts asserted to be due, along with interest on such amounts; and b) demonstrating to the satisfaction of the Authority that the Wheeling Customer has taken appropriate measures to meet any other obligation of which it was deemed to be in breach; provided, however, that any such payment or demonstration may be subject to the Dispute Resolution procedures; and provided, further, that any such determination by the Authority may be subject to review by the Regulatory Entity upon request of the Wheeling Customer. If a Wheeling Customer has not remedied a breach by the 2nd Business Day following receipt of the Authority s notice, or receipt of the Regulatory Entity s decision on review, if applicable, then the Wheeling Customer shall be in default and subject to such remedies as may be available to the Authority. A Wheeling Customer found to be in default shall take all possible measures to mitigate the continued impact of the default. No claim seeking an adjustment in the billing for any service, transaction, or charge under this Operating Agreement may be asserted with respect to a month, if more than two years has elapsed since the first date upon which the billing for that month occurred. The Authority may make no adjustment to billing with respect to a month for any service, transaction, or charge under this Operating Agreement, if more than two years has elapsed since the first date upon which the billing for that month occurred, unless a claim seeking such adjustment had been received by or instigated by the Authority prior thereto.

18 Operating Agreement Sheet No Representations, Warranties, and Covenants Each Wheeling Customer makes the following representations and warranties at such date as the Wheeling Customer shall become a Wheeling Customer of the Authority. a. The Wheeling Customer is an entity duly organized, validly existing and in good standing under the laws of the Commonwealth of Puerto Rico. b. The Wheeling Customer has the full power and authority to execute, deliver, and perform this agreement and to carry out the transactions contemplated hereby. c. The execution and delivery of this Operating Agreement by the Wheeling Customer and the performance of its obligations hereunder have been duly authorized by all requisite action on the part of the Wheeling Customer, and do not conflict with any applicable law or with any other agreement binding upon the Wheeling Customer. The Operating Agreement has been duly executed and delivered by the Wheeling Customer and constitutes the legal, valid, and binding obligation of the Wheeling Customer, enforceable against it in accordance with the terms thereof, except insofar as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium, or other similar laws affecting the enforcement of creditors rights generally, and to general principles of equity whether such principles are considered in proceedings in law or in equity. d. No authorization, consent, approval or order of, notice to or registration, qualification, declaration or filing with, any governmental authority is required for the execution, delivery, and performance by the Wheeling Customer of this Operating Agreement or the carrying out by the Wheeling Customer of the transactions contemplated hereby other than such authorization, consent, approval or order of, notice to or registration, qualification, declaration or filing that is pending before such governmental authority. e. None of the execution, delivery, and performance by the Wheeling Customer of this agreement, the compliance with the terms and provisions hereof, and the execution of the transactions contemplated hereby, conflicts or will conflict with or will result in a breach or violation of any of the terms, conditions, or provisions of any law, governmental rule or regulation, or the charter documents or bylaws of such Wheeling Customer, or any applicable order, writ, injunction, judgment, or decree of any court or governmental authority against such Wheeling Customer or by which it or any of its properties, is bound, or any loan agreement, indenture, mortgage, bond, note, resolution, contract, or other agreement or instrument to which such Wheeling Customer is a party or by which it or any of its properties is bound, or constitutes or will constitute a default thereunder or will result in the imposition of any lien upon any of its properties. f. There are no actions at law, suits in equity, proceedings or claims pending or, to the knowledge of the Wheeling Customer, threatened against the Wheeling Customer before any federal, state, foreign, or local court, tribunal, or government agency or authority that might materially delay, prevent, or hinder the performance by the Wheeling Customer of its obligations hereunder. All representations and warranties contained in this Section shall survive the execution and delivery of this Operating Agreement.

19 Operating Agreement Sheet No. 16 VI. LIABILITY AND INDEMNITY 21. Indemnification Except as may be otherwise agreed upon between individual Wheeling Customers, each Wheeling Customer will indemnify and hold harmless each other Wheeling Customer and its directors, officers, employees, agents, or representatives, from any and all damages, losses, claims, demands, suits, recoveries, costs, and expenses (including all court costs and reasonable attorneys fees) caused by reason of bodily injury, death, or damage to property of any third party, resulting from or attributable to the fault, negligence, or willful misconduct of such Wheeling Customer, its directors, officers, employees, agents, or representatives, or resulting from, arising out of, or in any way connected with the performance of its obligations under this Operating Agreement; excepting only, and to the extent, such cost, expense, damage, liability, or loss may be caused by the fault, negligence, or willful misconduct of any other Wheeling Customer. The duty to indemnify under this Operating Agreement will continue in full force and effect notwithstanding the expiration or termination of this Operating Agreement or the withdrawal of a Wheeling Customer from this Operating Agreement, with respect to any loss, liability, damage, or other expense based on facts or conditions which occurred prior to such termination or withdrawal. The amount of any indemnity payment arising hereunder shall be reduced (including, without limitation, retroactively) by any insurance proceeds or other amounts actually recovered by the Wheeling Customer seeking indemnification in respect of the indemnified action, claim, demand, costs, damage, or liability. If any Wheeling Customer shall have received an indemnity payment for an action, claim, demand, cost, damage, or liability and shall subsequently actually receive insurance proceeds or other amounts for such action, claim, demand, cost, damage, or liability, then such Wheeling Customer shall pay to the Wheeling Customer that made such indemnity payment the lesser of the amount of such insurance proceeds or other amounts actually received and retained or the net amount of the indemnity payments actually received previously. No Wheeling Customer or its directors, officers, employees, agents, or representatives shall be liable to any other Wheeling Customer or its directors, officers, employees, agents, or representatives, whether liability arises out of contract, tort (including negligence), strict liability, or any other cause of or form of action whatsoever, for any indirect, incidental, consequential, special or punitive cost, expense, damage, or loss, including but not limited to loss of profits or revenues, cost of capital of financing, loss of goodwill, or cost of replacement power, arising from such Wheeling Customer s performance or failure to perform any of its obligations under this Operating Agreement; provided, however, that nothing herein shall be deemed to reduce or limit the obligations of any Wheeling Customer with respect to the claims of persons or entities that are not parties to this Operating Agreement. 22. Workman s Compensation Liability Each Wheeling Customer shall be solely responsible for all claims of its own employees, agents, and servants growing out of any Workers Compensation Law.