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HomeMy WebLinkAboutCSD-012-07 ~, Cl~mglOn REPORT COMMUNITY SERVICES DEPARTMENT Date: GENERAL PURPOSE AND ADMINISTRATION COMMITTEE September 4, 2007 Resolution #:~O-07 Meeting: Report #: CSD-012-07 File#: By-law #: Subject: HYDRO ONE NETWORKS INC. - CAPITAL COST RECOVERY AGREEMENT, NEWCASTLE & DISTRICT RECREATION COMPLEX Recommendations: It is respectfully recommended that the General Purpose and Administration Committee recommend to Council the following: 1. THAT Report CSD-012-07 be received; and 2. THAT the Mayor and Municipal Clerk be authorized to execute the Capital Cost Recovery Agreement between the Municipality and Hydro One Networks Inc. contained as Attachment #1. h . Caruana or of Community Services Reviewed by: ()~6J1<- Franklin Wu Chief Administrative Officer JPC/GNwg CORPORATION OF THE MUNICIPALITY OF CLARINGTON 40 TEMPERANCE STREET, BOWMANVILLE, ONTARIO L 1C 3A6 T (905)623-3379 F (905)623-5506 REPORT NO.: CSD-012-07 PAGE 2 1.0 BACKGROUND 1.1 The Newcastle & District Recreation Complex on Rudell Road, Newcastle is located within the service area of Hydro One Networks Inc. and as such they will be responsible for the installation of the hydro service for the new facility. 1.2 Hydro One has estimated the capital cost of the installation at $125,000.00. The costs include the extension of hydro lines from Cobbledick Road, east on Highway #2, south along Rudell Road to a hydro kiosk at the property line of the facility and the supply and installation of the pad mounted transformer. Hydro One is proposing the execution of this capital recovery agreement, which would relieve the Municipality of any of the capital costs. 1.3 In exchange for the capital costs, Hydro One is looking to secure the Municipality as a customer for a ten year period and to ensure an annual guaranteed incremental revenue for the ten (10) year term as stipulated in Schedule A to Attachment #1. Incremental revenue, as defined by Hydro One, relates to the direct costs for power demand and usage, excluding all delivery and regulatory charges as well as debt retirement charges that are included in monthly invoices. 1.4 During the term of this agreement any guaranteed revenues in excess of the minimum will be applied forward to retire the commitment earlier. In the event the minimums are not met on any given year, the shortfall will be invoiced by Hydro One at the end of the year of the agreement in question. 1.5 The Municipal solicitor has reviewed Capital Cost Recovery Agreement and advises it is acceptable. 2.0 COMMENT 2.1 Based on the expenditures for hydro budgeted for this facility and comparisons with other recreation facilities, staff are confident the annual guaranteed incremental revenue will be achieved each year during the term of the proposed agreement. Attachments: Attachment # 1- Hydro One Capital Cost Recovery Agreement Attachment #1 to CSD-OI2-07 "'/ hydro0 one Capital Cost Recovery Agreement THIS DISTRIBUTION CONNECTION and COST RECOVERY AGREEMENT made in duplicate as of the 03rd day of July 2007 between Hydro One Networks Inc. ("Networks") and Municipality of Clarington. ("the Customer"); WHEREAS the Customer and Networks have entered into a Connection Service Contract: New Connections and Service Upgrades dated July 3"', 2007 which is attached hereto as Appendix "c" (the "Contract") whereby the Customer has requested and Networks has agreed to construct a modification or addition of a connection to Hydro One Networks' Distribution System (the "Project") which triggers any or a combination or all of the following: (i) upgrades, (il) modifications; and/or (iii) addition of facilities, which require capital expenditure by Hydro One Networks; WHEREAS in order to reduce the Customer's capital contribution, the Customer has agreed to guarantee a minimum amount of revenue to be derived from Incremental Load in accordance with the terms and conditions of this Agreement; NOW THEREFORE in consideration of the mutuai covenants, agreements, terms and conditions herein and other good and valuable consideration, the receipt and sufficiency of which is hereby irrevocably acknowledged, the parties agree as follows: DEFINITIONS: 1. Throughout this Agreement, the following terms shall have the following meanings: "Actual Cost" means Networks' charge for equipment, labour and materials including Networks' standard overheads and interest thereon. "Actual Incremental Revenue" means the actual amount of revenue attributable to the Incremental Load received by Networks through the Distribution Rates paid by the Customer for the annual period specified in Appendix" A". "Applicable Laws" means any and all applicable laws, including environmental laws, statutes, codes, licensing requirements, treaties, directives, rules, regulations, protocols, policies, by-laws, orders, injunctions, rulings, awards, judgements or decrees or any requirement or decision or agreement with or by any government or government department, commission, board, court authority or agency. "Distribution Rates" means the rates approved by the Ontario Energy Board for the distribution of electricity by Networks pursuant to Section 78(2) of the Ontario Energy Board Act, 1998 (being Schedule "B" to the Energy Competition Act, S.O. 1998, c. 15). "Guaranteed Incremental Revenue" means the minimum amount of revenue specified in Appendix "A" attributable to the Incremental Load to be received by Networks through the Distribution Rates paid by the Customer for the annual period specified in Appendix "A". "Good Utllity Practice" means any of the practices, methods and acts engaged in or approved by a significant portion of the electrical utility industry in North America during the relevant time period, or any of the practices, methods and acts which, in the exercise of reasonable judgement 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 optimum practice, method or act to the exclusion of all others, but rather to Include all practices, methods or acts generally accepted in North America. Page 1 ,j hydro~ one "Guaranteed Incremental Revenue Date" means 10 years after the Ready for Service Date. "Incremental Load" means the average monthly peak load in excess of the Minimum Average Monthly Peak Load. "Incremental Revenue" means Networks distribution related revenues associated with the' Incremental Load. Incremental Revenue does not include the relevant commodity, transmission and IMO related charges. "In Service Date" means the date upon which the Networks Connection Work is fully and completely constructed, installed, commissioned and energised. Tentatively scheduled for August 2007 construction pending delivery of material. "Minimum Average Monthly Peak Load" means 0 kW. "Networks Connection Work" means the work to be performed by Networks described in Section 2.0 and 3.0 of the Contract. TERM: 2. This Agreement shall be binding on the parties as of the date first written above (the "Effeclive Date") and shall expire on the earlier of the Guaranteed Incremental Revenue Date and the date that the debt owed by the Customer pursuant to Section 3 is reduced to zero (the "Term"). TERMS AND CONDITIONS: 3(a) Networks shall construct the Networks Connection Work at an estimated cost of $ 125,000 (plus applicable taxes) (the 'Estimate"). (b) The Customer shall pay Networks a capital contribution of $ 0.00 (plus applicable taxes) (c) If the Actual Cost of the Networks Connection Work: (i) exceeds the Estimate, the Customer shall pay an additional capital contribution proportionate to the difference between the Actual Cost of the Networks Connection Work and the Estimate (plus applicable taxes) within 60 days after the date of Networks' invoice therefor; or (ii) is less than the Estimate, Networks shall refund part of the capital contribution proportionate to the difference between the Actual Cost of the Networks Connection Work and the Estimate (plus applicable taxes) within 180 days after the In Service Date. (d) The difference between the Actual Cost of the Networks Connection Work and the capital contrlbution(s) paid by the Customer pursuant to the terms of this Agreement is a debt owed to Networks by the Customer and subject to Sections 4 and 5 below, that debt shall be paid by the Customer to Networks on the earlier of the following dates: I. the Guaranteed incremental Revenue Date; and il. the date of termination of this Agreement. 4(a). Notwithstanding Section 3, the parties further agree that provided that the Actual Incremental Revenue received by Networks is equal to or exceeds the Guaranteed Incremental Revenue for a specified period, Networks will forgive an amount of the foregoing debt equal to the amount of the Guaranteed Incremental Revenue specified for the period in question. Page 2 hydrQ0 ~Jne (b) If the Actual Incremental Revenue received by Hydro One Networks is less than the Guaranteed Incremental Revenue specified for the annual period in Appendix "A" in question, the Customer shall pay Networks the difference by no later than 30 days after the date of Networks' invoice therefor. (c) If the Actual Incremental Revenue received by Networks is more than the Guaranteed Incremental Revenue specified for the annual period in Appendix "A" in question. the surplus amount shall be carried forward to the next annual period specified in Appendix "A", This may have the effect of shortening the Term of this Agreement. (d) Once a year throughout the Term of this Agreement, the Customer may request that Networks calculate a present value of the total outstanding Guaranteed Incremental Revenue for the remainder of the Term of the Agreement (the "Guaranteed Incremental Revenue Present Value"), The methodology used to determine the Guaranteed Incremental Revenue Present Value would be at Networks' sole discretion, Within 60 days of Networks providing the Customer with the Guaranteed Incremental Revenue Present Value, the Customer shall have the right to terminate this Agreement by paying Networks the Guaranteed Incremental Revenue Present Value, 5, If the Project Is cancelled, or this Agreement is terminated for any reason whatsoever other than breach of this Agreement by Networks, or the Customer defers the Project, the Customer shall pay all Actual Costs incurred by Networks on and prior to the date that the Project is deferred, cancelled or terminated and all costs associated with the winding up of the Project, including, but not limited to, storage costs and facility removal expenses. The Customer understands and agrees that all materials ordered for the Project by Networks' shall remain as Networks' property and that the salvage value of the material will be credited against the Actual Costs referred to above, ASSIGNMENT: 6. This Agreement shall extend to, be binding upon and endure to the benefit of the Parties hereto and their respective successors and assigns. Notwithstanding the foregoing, the Customer shall not assign Its Interest in this Agreement or any portion thereof in any way without the prior written consent of Networks, which consent may not be unreasonably withheld. For the purposes of this clause, transfer of contractual rights and obligations hereunder to an entity resulting from the amalgamation or merger of the Customer shall be deemed to require the consent of Networks. In the event that the Customer sells, leases or otherwise transfers or disposes of the Customer's Facilities to a third party during the Term of this Agreement, the Customer shall cause the third party to enter into an assumption agreement with Networks' to assume all of the Customer's obligations under this Agreement. SECURITY REQUIREMENTS: 7. The Customer, whenever required by Hydro One Networks' to do so, shall furnish security satisfactory to Networks' for the performance by the Customer of its obligations under this Agreement. and shall maintain the security in full force and effect during the continuance of this Agreement. Contemporaneously with the execution of this Agreement, the Customer shall provide Hydro One Networks' with security in the amount of (Nil). DEFAULT AND EARLY TERMINATION: 8, Each of the following events shall constitute an "Event of Default" under this Agreement: Page 3 hydr~;{:~ mle (a) failure by the Customer to pay any amount due under this Agreement, including any amount payable pursuant to Sections 3, 4 or 5 within the time stipulated for payment; (b) breach by the Customer or Hydro One Networks' of any term, condition or covenant of this Agreement or the Contract; and (c) the making of an order or resolution for the winding up of the Customer or of its operations or the occurrence of any other dissolution or liquidation proceeding instituted by or against the Customer. 9. In the Event of Default by the Customer hereunder (other than those specified in sub- section 8 (c) of the Agreement, for which no notice is required to be given by Networks), Networks' shall give the Customer written notice of the Event of Default and allow the Customer 30 days from the date of receipt of the notice to rectify the Event of Default, at the Customer's sole expense. If such Event of Default is not cured to Networks' reasonable satisfaction within the 30-day period, Networks may, in its sole discretion, exercise any remedies that may be available to Networks under the terms of this Agreement, at common law or in equity; and deem this Agreement to be terminated and, after giving the Customer at least 10 days' prior written notice thereof, recover, as liquidated damages and not as a penalty, the balance of the amounts payable by the Customer. 10. In the Event of Default by Networks' hereunder, the Customer shall give Networks' written notice of the Event of Default and shall allow Networks' 30 days from the date of receipt of the notice to remedy the Event of Default at Networks' sole expense. If such Event of Default is not cured to the Customer's reasonable satisfaction within the 3D-day period, the Customer may pursue any remedies available to it at law or in equity. In addition to any other remedy provided hereunder, all overdue amounts that are outstanding for longer than 30 days shall bear interest at 18% per annum (calculated monthly). STANDARD OF PERFORMANCE, LIABILITY AND FORCE MAJEURE: 11. The Customer and Networks shall perform their respective obligations outlined in this Agreement In a manner consistent with Good Utility Practice, In compliance with all Applicable Laws and using duly qualified and experienced people, 12. Other than for sums payable under this Agreement, the Customer shall only be liable to Networks and Networks shall only be liable to the Customer for any damages that arise directly out of the wilful misconduct or negligence In meeting their respective obligations under this Agreement. Despite the foregoing, neither Party shall be liable under any circumstances whatsoever for any loss of profits or revenues, business interruption losses, loss of contract or loss of goodwill, or for any indirect, consequential or incidental damages, including but not limited to punitive or exemplary damages, whether any of the said liability, loss or damages arise In statute, contract, tort or otherwise. In any event, the total iiability of Networks to the Customer for any and all claims for damages under this Agreement whether it arises by statute, contract, tort or otherwise, will not exceed the Actual Cost of the Networks' Connection Work. This provision shall survive the termination of this Agreement. 13. Neither party shall be considered to be in default in the performance of its obligations under this Agreement or the Contract, except obligations to make payments with respect to amounts already accrued, to the extent that performance of any such obligation is prevented or delayed by any cause, existing or future, which is beyond the reasonable control of, and not a result of the fault or negligence of, the affected party ("Force Majeure") and includes, but is not Page 4 i''l hydrl'l\~,' ene limited to, strikes, lockouts and any other labour disturbances and manufacturer's delays for equipment or materials required for the Networks Connection Work. 14 If a party is prevented or delayed in the performance of any such obligation by Force Majeure, such party shall immediately provide notice to the other party of the circumstances preventing or delaying performance and the expected duration thereof. Such notice shall be confirmed in writing as soon as reasonably possible. The party so affected by the Force Majeure shall endeavour to remove the obstacles which prevent performance and shall resume performance of its obligations as soon as reasonably practicable, except that there shall be no obligation on the party so affected by the Force Majeure where the event of Force Majeure is a strike, lockout or other labour disturbance. NOTICES: 15. Any written notice required by this Agreement shall be deemed properly given only if either mailed or delivered to the Secretary, Hydro One Networks inc., 483 Bay Street, South Tower, 10th Floor, Toronto, Ontario M5G 2P5, fax no: (416) 345-6240 on behalf of Networks, and to the person at the address specified in Appendix "B" on behalf of the Customer. A faxed notice will be deemed to be received on the date of the fax if received before 3 p.m. or on the next business day if received after 3 p,m. Notices sent by courier or registered mail shall be deemed to have been received on the date indicated on the delivery receipt. The designation of the person to be so notified or the address of such person may be changed at any time by either party by written notice. GENERAL: 16. Any reference in this Agreement to any Act or statute or Section thereof or any regulation made pursuant thereto shall be deemed to be a reference to such Act or statute or Section or regulation as amended or re-enacted from time to time. Words importing the singular number include the plural and vice versa. 17. This Agreement and the Contract constitutes the entire agreement between the parties with respect to the subject matter of this Agreement and supersedes all prior oral or written representations and agreements concerning the subject matter of this Agreement. Appendices "A", "B" and "C" attached hereto are to be read with and form part of this Agreement. 18. No amendment, modification or supplement to this Agreement shall be valid or binding unless set out in writing and executed by the parties with the same degree of formality as the execution of this Agreement. 19. The failure of any party hereto to enforce at any time any of the provisions of this Agreement or to exercise any right or option which is herein provided shall in no way be construed to be a waiver of such provision or any other provision nor in any way affect the validity of this Agreement or any part hereof or the right of any party to enforce thereafter each and every provision and to exercise any right or option. The waiver of any breach of this Agreement shall not be held to be a waiver of any other or subsequent breach. Nothing shall be construed or have the effect of a waiver except an instrument in writing signed by a duly authorized officer of the party against whom such waiver is sought to be enforced which expressly waives a right or rights or an option or options under this Agreement. 20. This Agreement shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the laws of the Province of Ontario and the laws of Canada applicable therein, and the courts of Ontario shall have exclusive jurisdiction to determine all disputes arising out of this Agreement. Page 5 !/ hydrQ\.:;' one 21. This Agreement may be executed in counterparts. including facsimile counterparts, each of which shail be deemed an original, but all of which shall together constitute one and the same agreement. 22. The obligation to pay any amount due and payable hereunder, including, but not limited to, any amounts due under Sections 3, 4, 5 and 9 shail survive the termination of this Agreement. [WHERE CUSTOMER IS AN INDIVIDUAL) IN WITNESS WHEREOF the Customer has set his hand and seal, and Hydro One has caused this Agreement to be executed by the signature of its proper officer duly authorized in that behalf as of the day and year first above written. SIGNED, SEALED AND DELIVERED in the presence of: Witness (Insert Customer Name) /' Name: e Troliey Title: Business and Customer Servic s Manager I have the authority to bind the C rporation Page 6 [WHERE CUSTOMER IS A CORPORATION] IN WITNESS WHEREOF, the Parties hereto, intending to be legaily bound. have caused this Agreement to be ~xecuted by the signatures of their proper officers duiy authorized In their behalf. HYDRO ONE NETWORKS INC. Name: Tltie: I have the authority to bind the Corporation INSERT CUSTOMER'S FUll CORPORATE NAME Name: Title: I have the authority to bind the Corporation Schedule AppendIx "A": GUARANTEED INCREMENTAL REVENUE Period: rr hydro\.::: one Guaranteed Incremental Revenue Year 2008 Year 2009 Year 2010 Year 2011 Year 2012 Year 2013 Year 2014 Year 2015 Year 2016 Year 2017 Year 2018 $17.935 $35,870 $35,870 $35.870 $35.870 $35.870 $35.870 $36,870 $35,870 $35.870 $17935 Page 7 I~ hydro'''''' one "Schedule Appendix "B": Customer Notice Information: Municipality of Clarington Community Services Department Attention: Address: George Acorn, Facilities Manager 40 Temperance Street Bowmanville, Ontario L 1C 3A6 Page 8