-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JMsRsU+JUUSGEq9AILhK+g70feApqqvt13HTX4ZWFdBg0zOxSZLCe8GcgecxbvAw /9rg5Ij3U0gTrvbY32yLnQ== 0000912057-96-026403.txt : 19961118 0000912057-96-026403.hdr.sgml : 19961118 ACCESSION NUMBER: 0000912057-96-026403 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961114 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: OGLETHORPE POWER CORP CENTRAL INDEX KEY: 0000788816 STANDARD INDUSTRIAL CLASSIFICATION: COGENERATION SERVICES & SMALL POWER PRODUCERS [4991] IRS NUMBER: 581211925 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 033-07591 FILM NUMBER: 96664442 BUSINESS ADDRESS: STREET 1: 2100 EAST EXCHANGE PL STREET 2: P O BOX 1349 CITY: TUCKER STATE: GA ZIP: 30085-1349 BUSINESS PHONE: 4042707600 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------ FORM 10-Q (MARK ONE) [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ___________ TO _____________ COMMISSION FILE NO. 33-7591 --------------------- OGLETHORPE POWER CORPORATION (AN ELECTRIC MEMBERSHIP GENERATION & TRANSMISSION CORPORATION) (Exact name of registrant as specified in its charter) GEORGIA 58-1211925 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) POST OFFICE BOX 1349 2100 EAST EXCHANGE PLACE TUCKER, GEORGIA 30085-1349 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (770) 270-7600 Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject of such filing requirements for the past 90 days. YES _X_ NO ___ Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date. THE REGISTRANT IS A MEMBERSHIP CORPORATION AND HAS NO AUTHORIZED OR OUTSTANDING EQUITY SECURITIES. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- OGLETHORPE POWER CORPORATION INDEX TO QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1996 PAGE NO. -------- PART I - FINANCIAL INFORMATION Item 1. Financial Statements Condensed Balance Sheets as of September 30, 1996 (Unaudited) and December 31, 1995 3 Condensed Statements of Revenues and Expenses (Unaudited) for the Three Months and Nine Months Ended September 30, 1996 and 1995 5 Condensed Statements of Cash Flows (Unaudited) for the Nine Months Ended September 30, 1996 and 1995 6 Notes to the Condensed Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 15 SIGNATURES 16 2 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS OGLETHORPE POWER CORPORATION CONDENSED BALANCE SHEETS SEPTEMBER 30, 1996 AND DECEMBER 31, 1995 - ------------------------------------------------------------------------------- (dollars in thousands)
1996 1995 ASSETS (Unaudited) -------------------------- ELECTRIC PLANT, AT ORIGINAL COST: In service $5,719,078 $5,699,213 Less: Accumulated provision for depreciation (1,458,271) (1,362,431) ---------- ---------- 4,260,807 4,336,782 Nuclear fuel, at amortized cost 95,437 94,013 Plant acquisition adjustments, at amortized cost 4,419 5,214 Construction work in progress 40,658 35,753 ---------- ---------- 4,401,321 4,471,762 ---------- ---------- INVESTMENTS AND FUNDS: Decommissioning fund, at market 77,886 74,492 Bond, reserve and construction funds, at market 53,024 56,511 Investment in associated organizations, at cost 15,424 15,853 ---------- ---------- 146,334 146,856 ---------- ---------- CURRENT ASSETS: Cash and temporary cash investments, at cost 95,864 201,151 Other short-term investments, at market 90,375 79,165 Receivables 107,572 99,559 Inventories, at average cost 92,807 82,949 Prepayments and other current assets 14,288 14,325 ---------- ---------- 400,906 477,149 ---------- ---------- DEFERRED CHARGES: Premium and loss on reacquired debt, being amortized 202,737 200,794 Deferred amortization of Scherer leasehold 89,715 87,134 Discontinued projects, being amortized 22,776 24,305 Deferred debt expense, being amortized 20,900 21,135 Other 22,632 9,361 ---------- ---------- 358,760 342,729 ---------- ---------- $5,307,321 $5,438,496 ---------- ---------- ---------- ----------
The accompanying notes are an integral part of these condensed statements. 3 OGLETHORPE POWER CORPORATION CONDENSED BALANCE SHEETS SEPTEMBER 30, 1996 AND DECEMBER 31, 1995 - -------------------------------------------------------------------------------- (dollars in thousands)
1996 1995 EQUITIES AND LIABILITIES (Unaudited) ------------------------- CAPITALIZATION: Patronage capital and membership fees (including unrealized loss of ($276) at September 30, 1996 and gain of $3,570 at December 31, 1995 on available-for-sale securities) $361,273 $338,891 Long-term debt 4,122,458 4,207,320 Obligations under capital leases 294,381 296,478 ---------- ---------- 4,778,112 4,842,689 ---------- ---------- CURRENT LIABILITIES: Long-term debt and capital leases due within one year 109,545 89,675 Deferred margins to be refunded within one year 7,927 32,047 Accounts payable 43,958 48,855 Accrued interest 20,806 91,096 Accrued and withheld taxes 22,486 1,785 Other current liabilities 11,708 18,007 ---------- ---------- 216,430 281,465 ---------- ---------- DEFERRED CREDITS AND OTHER LIABILITIES: Decommissioning reserve 118,970 114,049 Accumulated deferred income taxes 65,510 65,510 Gain on sale of plant, being amortized 59,113 60,868 Sale of income tax benefits, being amortized 44,170 50,194 Other 25,016 23,721 ---------- ---------- 312,779 314,342 ---------- ---------- $5,307,321 $5,438,496 ---------- ---------- ---------- ----------
The accompanying notes are an integral part of these condensed statements. 4 OGLETHORPE POWER CORPORATION CONDENSED STATEMENTS OF REVENUES AND EXPENSES (UNAUDITED) FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995 - -------------------------------------------------------------------------------- (dollars in thousands)
Three Months Ended Nine Months Ended September 30, September 30, 1996 1995 1996 1995 ----------------------- ------------------------ OPERATING REVENUES: Sales to Members $268,939 $284,476 $771,378 $764,793 Sales to non-Members 17,709 33,060 61,187 91,519 -------- -------- -------- -------- TOTAL OPERATING REVENUES 286,648 317,536 832,565 856,312 -------- -------- -------- -------- OPERATING EXPENSES: Fuel 54,807 62,813 158,465 164,484 Production 31,296 30,578 93,293 92,443 Purchased power 67,217 85,706 189,443 207,220 Power delivery 4,110 3,817 11,974 11,885 Depreciation and amortization 36,684 35,820 109,774 102,959 Taxes other than income taxes 7,035 7,181 21,761 19,601 Other operating expenses 10,490 8,672 26,764 24,039 -------- -------- -------- -------- TOTAL OPERATING EXPENSES 211,639 234,587 611,474 622,631 -------- -------- -------- -------- OPERATING MARGIN 75,009 82,949 221,091 233,681 -------- -------- -------- -------- OTHER INCOME (EXPENSE): Interest income 8,698 4,806 17,438 12,717 Amortization of deferred margins 6,966 5,229 24,120 16,649 Allowance for equity funds used during construction 47 68 137 1,635 Other 2,769 3,242 7,805 9,505 -------- -------- -------- -------- TOTAL OTHER INCOME 18,480 13,345 49,500 40,506 -------- -------- -------- -------- INTEREST CHARGES: Interest on long-term-debt and other obligations 81,488 86,429 245,848 254,961 Allowance for debt funds used during construction (507) (791) (1,485) (20,186) -------- -------- -------- -------- NET INTEREST CHARGES 80,981 85,638 244,363 234,775 -------- -------- -------- -------- NET MARGIN $12,508 $10,656 $26,228 $39,412 -------- -------- -------- -------- -------- -------- -------- --------
The accompanying notes are an integral part of these condensed statements. 5 OGLETHORPE POWER CORPORATION CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995 - -------------------------------------------------------------------------------- (dollars in thousands)
1996 1995 ------------------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net margin $ 26,228 $ 39,412 --------- --------- ADJUSTMENTS TO RECONCILE NET MARGIN TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Depreciation and amortization 132,565 149,588 Amortization of deferred margins (24,120) (16,649) Allowance for equity funds used during construction (137) (1,635) Other (2,998) (416) CHANGE IN NET CURRENT ASSETS, EXCLUDING LONG-TERM DEBT DUE WITHIN ONE YEAR AND DEFERRED MARGINS TO BE REFUNDED WITHIN ONE YEAR: Receivables (8,013) 6,524 Inventories (9,858) 8,736 Prepayments and other current assets 37 (1,915) Accounts payable (4,897) (19,757) Accrued interest (70,290) (19,735) Accrued and withheld taxes 20,701 21,121 Other current liabilities (6,299) (5,885) --------- --------- TOTAL ADJUSTMENTS 26,691 119,977 --------- --------- NET CASH PROVIDED BY OPERATING ACTIVITIES 52,919 159,389 --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Property additions (69,211) (107,989) Net proceeds from bond, reserve and construction funds 3,060 13,397 Decrease in investment in associated organizations 429 1,210 Increase in other short-term investments (14,629) (69,239) Increase in decommissioning fund (4,970) (5,254) --------- --------- NET CASH USED IN INVESTING ACTIVITIES (85,321) (167,875) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Debt proceeds, net 3,092 142,341 Debt payments (75,809) (139,730) Other (168) (1,193) --------- --------- NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES (72,885) 1,418 --------- --------- NET DECREASE IN CASH AND TEMPORARY CASH INVESTMENTS (105,287) (7,068) CASH AND TEMPORARY CASH INVESTMENTS AT BEGINNING OF PERIOD 201,151 190,642 --------- --------- CASH AND TEMPORARY CASH INVESTMENTS AT END OF PERIOD $ 95,864 $ 183,574 --------- --------- --------- --------- CASH PAID FOR: Interest (net of amounts capitalized) $ 301,675 $ 239,485 Income taxes - -
The accompanying notes are an integral part of these condensed statements. 6 OGLETHORPE POWER CORPORATION NOTES TO CONDENSED FINANCIAL STATEMENTS SEPTEMBER 30, 1996 AND 1995 (A) The condensed financial statements included herein have been prepared by Oglethorpe Power Corporation (Oglethorpe), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). In the opinion of management, the information furnished herein reflects all adjustments (which included only normal recurring adjustments) necessary to present fairly, in all material respects, the results for the periods ended September 30, 1996 and 1995. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such SEC rules and regulations, although Oglethorpe believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these condensed financial statements be read in conjunction with the financial statements and the notes thereto included in Oglethorpe's latest Annual Report on Form 10-K, as filed with the SEC. 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL PROPOSED RESTRUCTURING As reported in its Annual Report on Form 10-K for the fiscal year ended December 31, 1995 and in its Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1996, Oglethorpe is planning to divide itself into three specialized companies to respond to increasing competition and deregulation in the electric industry. In June and July of 1996, the Boards of Directors of Oglethorpe, Georgia Transmission Corporation (GTC) and Georgia System Operations Corporation (GSOC) unanimously approved a First Amended and Restated Restructuring Agreement (the Restructuring Agreement) which sets forth the terms and conditions on which the restructuring and related changes will occur. The current target date for full implementation of the restructuring is January 1, 1997; however, such effective date may, by the terms of the Restructuring Agreement, be extended by the three companies. On October 1, 1996, Oglethorpe transferred its system operations assets, consisting of its control center and related energy control and revenue metering systems equipment to GSOC, a newly formed wholly owned subsidiary of Oglethorpe. The purchase price of these assets totaled approximately $9.4 million and was funded by GSOC's assumption of Oglethorpe's obligations under an existing Rural Utilities Service (RUS) note and by delivery of a purchase money note payable to Oglethorpe. GSOC will not become fully operational until the effective date of the restructuring. At that time, it is expected that the Members will also become members of GSOC. GSOC will then operate the control center as a separate entity and provide system operations services to the Members, Oglethorpe, GTC and third parties. Under the Restructuring Agreement, Oglethorpe will transfer its transmission business and assets to GTC, a newly formed electric membership corporation, which will thereafter own and operate the transmission system and provide transmission services to the Members, Oglethorpe and third parties. In preparation for the restructuring, Oglethorpe's Members have become members of GTC. Oglethorpe's investment in transmission and distribution plant less accumulated depreciation as of December 31, 1995 was approximately $650 million. The purchase price for the transmission business will be based on an appraisal of the fair market value of such business as of the closing date as determined by an independent appraiser. The purchase price will be paid by GTC's assumption of a portion of Oglethorpe's long-term secured debt and by cash obtained through third-party borrowing. Oglethorpe also will make a special patronage capital distribution to the Members which can be used by the Members to establish equity in and to provide initial working capital to GTC. In June and July of 1996, the Boards of Directors of Oglethorpe, GTC and GSOC unanimously approved an agreement (the Member Agreement) which sets forth those matters contemplated in the Restructuring Agreement that directly involve the Member corporations. The Member Agreement specifies the form of the new wholesale power contracts, transmission contracts and 8 system operations contracts to be signed by the Members. The Member Agreement and related contracts and documents were distributed to the Members for consideration and approval by their own Boards of Directors. All of the Member Boards have approved these documents; however, some Members have conditioned their approvals on implementation of a long-term power supply swap transaction. See POWER SUPPLY ARRANGEMENTS below for the status of implementation of a long-term power supply swap transaction. In addition to delivery of the Member Agreement by the Members and delivery of new wholesale power contracts, transmission contracts and system operations contracts, the restructuring remains subject to a number of additional conditions specified in the Restructuring Agreement, including (1) receiving a favorable ruling from the Internal Revenue Service that implementation of the new governance structure would not affect Oglethorpe's status as a cooperative for federal income tax purposes, (2) RUS approval of the restructuring, (3) governmental, lender and other third party consents, authorizations, waivers, orders and approvals, (4) receipt by GTC of certain capital contributions by the Members and (5) assurances from rating agencies that the ratings on Oglethorpe's outstanding fixed rate pollution control revenue bonds (PCBs) would not be lowered as a result of the restructuring and that such rating agencies would assign to any comparable bonds issued by GTC the same or better credit rating as assigned to Oglethorpe's fixed rate PCBs. Most of these conditions can be waived by Oglethorpe's Board, subject to RUS approval in certain instances. Three rating agencies have recently issued new indicative ratings for secured debt issued by or on behalf of Oglethorpe and have issued indicative credit ratings for GTC (both to be effective subsequent to the restructuring). Standard & Poor's Ratings Group, a division of McGraw-Hill, Inc., rated Oglethorpe's debt A and rated GTC AA; Fitch Investors Service, Inc. rated Oglethorpe's debt A and rated GTC A+; and Moody's Investors Service rated Oglethorpe's debt A3 and rated GTC A3. From the rating agency reports, it is not clear if these ratings meet the ratings condition of the Restructuring Agreement; however, if necessary, it is expected that Oglethorpe's Board will waive this condition. As part of the restructuring, Oglethorpe also expects to replace the RUS Mortgage under which its existing secured debt is secured with a new Indenture providing for a lien on substantially all of the real and tangible personal property of Oglethorpe. A draft of the Indenture was made available to the rating agencies before they issued the ratings stated above. It is expected that GTC will enter into a similar Indenture. Under Oglethorpe's existing RUS Mortgage, an indenture may be substituted for the RUS Mortgage with the consent of RUS and certain other secured parties, but without the consent of the trustees for certain outstanding PCB indebtedness of Oglethorpe, so long as two rating agencies advise Oglethorpe that the ratings on such PCB indebtedness will not be withdrawn or reduced as a result of the substitution of the Indenture for the RUS Mortgage. Oglethorpe expects to be able to satisfy this condition. The Oglethorpe Board of Directors recently approved a contingent rate mechanism that would be implemented in lieu of the rate schedules included in the new wholesale power contract, transmission contract and system operations contract in the event that Oglethorpe, GTC and GSOC decide to extend the effective date of the restructuring beyond January 1, 1997. This rate would remain in effect until such time as the restructuring becomes effective and essentially utilizes the 9 same rate structure that is in place for 1996 applied to the approved and somewhat lower budgeted costs for 1997. In light of the significant conditions that remain to be satisfied, including RUS and other governmental and third-party approvals and implementation of a long-term power supply swap transaction, Oglethorpe cannot now predict the actual timing of or the ultimate likelihood of full implementation of the restructuring or the governance changes previously described in Oglethorpe's 1995 Annual Report on Form 10-K. Until the restructuring is implemented, Oglethorpe currently anticipates that it will continue its current operations, and until the conditions applicable to the new governance structure have been satisfied, Oglethorpe will continue under its existing governance structure. POWER SUPPLY SWAP ARRANGEMENTS As a means of reducing the cost of power provided to the Members, Oglethorpe is continuing to utilize short-term power supply swap agreements. The initial agreement was with Enron Power Marketing, Inc. (EPMI) and was in place from January 4, 1996 through August 31, 1996. Effective September 1, Oglethorpe selected Duke/Louis Dreyfus L.L.C. (DLD) for a short-term power supply swap transaction that will supply Oglethorpe's requirements for the remainder of 1996. Under both of the swap agreements, the power marketer was required to sell to Oglethorpe at a favorable fixed rate all the energy necessary to meet the Members' requirements and Oglethorpe was required to sell to the power marketer at cost, subject to certain limitations, upon request all energy available from Oglethorpe's total power resources. Under both agreements, Oglethorpe continued to operate the power supply system and continued to dispatch the generating resources to ensure system reliability. See "OPERATING REVENUES" and "OPERATING EXPENSES" below for a discussion of the impact of the power supply swap agreements on the results of operations for the first nine months of 1996. Oglethorpe has negotiated and obtained Board approval to sign a long-term power supply swap agreement for approximately 50% of its Members' load requirements with LG&E Power Marketing Inc. (LPM). This agreement is structured to commence on January 1, 1997, initially on a short-term basis if RUS approval of the agreement has not been received. This agreement will convert into a long-term agreement at the time of RUS approval, if received on or before June 1, 1997. Oglethorpe now expects to focus its negotiations on completing a long-term contract with either EPMI or DLD for the remaining approximately 50% of its load. Oglethorpe may enter into an additional short-term power supply swap arrangement for the remaining approximately 50% of its load while it finalizes and obtains RUS approval of the long-term arrangements. STRATEGIC ALLIANCE WITH INTELLISOURCE In conjunction with the restructuring and as a part of its continuing efforts to reduce costs, Oglethorpe has signed a letter of intent to form a business alliance between its support services division and Intellisource, Inc., a nationally known service corporation. Under the agreement, approximately 130 employees of Oglethorpe's support services division, which provides accounting, auditing, communications, human resources, facility management, purchasing, telecommunications and information technology services, will be transferred to Intellisource, 10 effective in early 1997. Oglethorpe, GTC and GSOC will be key customers and will be served on-site by the same managers and employees. PLANT WANSLEY AMENDMENTS As discussed in its Annual Report on Form 10-K for the fiscal year ended December 31, 1995, RUS has now approved the amendments to the Plant Wansley Operating Agreement which give Oglethorpe the right to dispatch separately its ownership share of Wansley Units No. 1 and No. 2. Oglethorpe expects to begin separately dispatching Wansley Units No. 1 and No. 2 within the next six months. ROCKY MOUNTAIN LEASE TRANSACTION Oglethorpe is in the process of negotiating a lease transaction, which will be characterized as a sale for income tax purposes and as a lease for state law purposes, for Oglethorpe's 74.61% ownership interest in the Rocky Mountain pumped storage hydroelectric facility (Rocky Mountain). This transaction will provide a substantial up-front cash payment to Oglethorpe which will be amortized over the term of the lease to reduce revenue requirements from the Members. Substantially all of the net cash benefit is expected to be used by Oglethorpe to reduce long-term debt. Oglethorpe expects to close at least a portion of this transaction in late 1996 and to close any remaining portion in early 1997. RESULTS OF OPERATIONS FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995 Oglethorpe's net margin for the three months and nine months ended September 30, 1996 was $12.5 million and $26.2 million compared to $10.7 million and $39.4 million for the same periods of 1995. Net margin was higher for the nine month period of 1995 compared to 1996 primarily due to unbudgeted savings in 1995 from the continued capitalization of costs of Rocky Mountain due to the delay in commercial operation of the initial unit from April 1995 to June 1995. OPERATING REVENUES Member revenues for the three months ended September 30, 1996 were lower compared to the same period of 1995 due to lower energy revenues (discussed below). The increase in Member revenues for the nine months ended September 30, 1996 compared to the same period of 1995 was due to the recovery of additional fixed costs of Rocky Mountain and the increased fixed cost responsibility resulting from the scheduled end of Sell-back revenues from Georgia Power Company (GPC) under the plant operating agreements (discussed below). Energy revenues from sales to Members for the three months and nine months ended September 30, 1996 were 16.3% and 6.5% lower then same periods of the prior year despite the fact that megawatt-hour (MWh) sales were virtually unchanged for the current quarter and increased 7.7% year-to-date. Under the DLD and EPMI power supply swap agreements, the power marketers sold to Oglethorpe at a favorable fixed rate all of the energy necessary to meet the Members' requirements, which resulted in savings in energy costs of approximately $28.6 million in the first nine months of 1996. These savings were immediately passed through to the Members. Oglethorpe's average Member energy 11 revenue per MWh for the three months and nine months ended September 30, 1996 was 16.3% and 13.1% less than the same periods of 1995, respectively. Sales to non-Members were primarily made pursuant to three different types of contractual arrangements with GPC and from energy sales to other non-Member utilities. The following table summarizes the amounts of non-Member revenues from these sources for the three months and nine months ended September 30, 1996 and 1995:
Three Months Nine Months Ended September 30, Ended September 30, ------------------- ------------------- 1996 1995 1996 1995 ---- ---- ---- ---- (dollars in thousands) GPC- Plant operating agreements $ - $ 89 $ - $10,096 GPC- Power supply arrangements 2,959 12,139 11,054 30,712 ITS transmission agreements 1,817 3,770 6,874 9,377 Sales to power marketers 1,150 - 8,846 - Sales to other utilities 11,783 17,062 34,413 41,334 ------- ------- ------- ------- Total $17,709 $33,060 $61,187 $91,519 ------- ------- ------- ------- ------- ------- ------- -------
The first two types of non-Member revenues were derived from contractual agreements with GPC. Under the plant operating agreements, GPC purchased capacity and energy from Oglethorpe on a declining scale in the early years of operation of certain co-owned generating units. As scheduled, effective June 1, 1995, revenues from GPC pursuant to all of the plant operating agreements ended. The second source of non-Member revenues is derived pursuant to power supply arrangements with GPC. These revenues are derived from energy sales arising from dispatch situations whereby GPC causes Plant Wansley to be operated when Oglethorpe's system does not require all of its contractual entitlement to the generation. These revenues compensate Oglethorpe for its costs since, under the operating agreements, Oglethorpe is responsible for its share of fuel costs any time a unit operates. Such sales were significantly lower in 1996 compared to the same period of 1995. The third source of non-Member revenues was primarily payments from GPC for use of the Integrated Transmission System (ITS) and related transmission interfaces. GPC compensates Oglethorpe to the extent that Oglethorpe's percentage of investment in the ITS exceeds its percentage use of the system. In such case, Oglethorpe is entitled to income as compensation for the use of its investment by the other ITS participants. The decline in these revenues for the three month and nine month periods of 1996 compared to 1995 was the result of relatively greater usage by Oglethorpe compared to its relative investment. Under the DLD, and previously, the EPMI power supply swap agreement, sales to the power marketers represented the net energy transmitted on behalf of DLD and EPMI off-system on a daily basis from Oglethorpe's total resources. Such energy was sold to DLD and EPMI at Oglethorpe's cost, subject to certain limitations. Sales to other non-Member utilities were initiated by DLD and EPMI in 1996 while in 1995 these sales were made by Oglethorpe directly with the non-Member 12 utilities. While Oglethorpe maintains the contractual relationship with these other utilities and administers the transactions, all profits on these sales to other utilities from Oglethorpe's total resources accrued to DLD and EPMI. OPERATING EXPENSES The decrease in operating expenses for the three months and nine months ended September 30, 1996 compared to the same periods of 1995 was primarily attributable to decreases in fuel and purchased power costs. The decrease in fuel costs resulted partly from an unplanned outage during the month of July 1996 at Scherer Unit No. 1 which resulted in a 10% decrease in generation during the third quarter of 1996 compared to the same period of 1995 and partly due to the utilization of lower price spot market coal at Plant Wansley. The decrease in purchased power energy costs from 1995 to 1996 reflected offsetting cost savings and additional amounts of power purchased. As noted under "OPERATING REVENUES" above, energy cost savings of $28.6 million were realized in the first nine months of 1996 from the DLD and EPMI power supply swap agreements. In addition, the power marketers utilized 11.7% greater MWhs of purchased power in the first nine months of 1996 compared to 1995 to provide for Oglethorpe's Member load and for sales to other utilities. OTHER INCOME Other income for the three months and nine months ended September 30, 1996 increased compared to the same period of 1995 primarily as a result of higher income from amortization of deferred margins and higher interest income. Oglethorpe's Board of Directors authorizes the amount of deferred margins to be returned to the Members each year. For 1996, the remaining annual amount of $32 million was authorized as compared to $16 million for 1995. Interest income was higher in 1996 compared to 1995 partly due to higher average cash balances and partly due to higher interest rates. INTEREST CHARGES The decrease in net interest charges for the three months ended September 30, 1996 compared to the same period of 1995 are a result of savings from the most recent refinancings. The increase in net interest charges for the nine months ended September 30, 1996 compared to 1995 resulted from Rocky Mountain becoming commercially operable in June 1995 (interest was capitalized for the first six months). FINANCIAL CONDITION Total assets and total equity plus liabilities as of September 30, 1996 were $5.3 billion which was $131 million less than the total at December 31, 1995 due to depreciation of plant and due to the decrease in cash and temporary cash investments. 13 ASSETS Property additions for the nine months ended September 30, 1996 totaled $69.2 million and included additions, replacements and improvements to transmission and distribution facilities and existing generation facilities. The decrease in cash and temporary cash investments was partly due to property additions funded from cash and scheduled debt service payments. Other short-term investments is composed of those investments whose maturity periods exceed three months. During the first quarter of 1996, an additional $10 million was transferred into investments with maturities of more than three months. The increase in inventories primarily resulted from higher coal inventories at Plant Scherer due to an unplanned outage at Scherer Unit No. 1. In addition, coal inventories at Plant Scherer were lower than normal at year-end. The increase in other deferred charges primarily resulted from the deferral of $14.7 million of nuclear refueling outage costs related to Vogtle Units No. 1 and No. 2 and Hatch Unit No. 1 which are being recovered through rates over a period of eighteen months starting in May and November 1996. EQUITY AND LIABILITIES Deferred margins to be refunded within one year decreased by $24.1 million which is the amount that was refunded to the Members for the first nine months of 1996. Accounts payable declined as of June 30, 1996 as a result of normal variations in the timing of payables activity. Accrued interest decreased primarily due to normal payments and accruals of interest. Accrued and withheld taxes increased as a result of the normal monthly accruals of property taxes, which are generally paid in the fourth quarter of the year. Other current liabilities decreased partly due to the year-end accrual for employee incentive pay (subsequently paid in March 1996) and partly due to normal activity. LIQUIDITY AND REFINANCING TRANSACTIONS In anticipation of the proposed restructuring and Oglethorpe's ongoing liquidity needs, Oglethorpe is evaluating its unsecured credit facilities. Oglethorpe does not anticipate renewing its $70 million uncommitted line of credit with CoBank, ACB, which expires on December 1, 1996. Prior to year-end, Oglethorpe may defease up to $309 million of PCBs and may issue commercial paper, on an interim basis, or refunding PCBs to finance the defeasance. 14 PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) EXHIBITS Number Description - ---------- ----------- 2.1(1) First Amended and Restated Restructuring Agreement, dated August 1, 1996, by and among Oglethorpe, Georgia Transmission Corporation (An Electric Membership Corporation) and Georgia System Operations Corporation. 3(ii) Bylaws of Oglethorpe as amended September 9, 1996. 10.5.2(a) Amendment, dated as of January 15, 1995, to the Plant Hal Wansley Operating Agreements by and among Georgia Power Company, Oglethorpe, Municipal Electric Authority of Georgia and City of Dalton, Georgia. 10.29(2) Master Power Purchase and Sale Agreement between Duke/Louis Dreyfus L.L.C. and Oglethorpe, dated as of August 31, 1996. 27.1 Financial Data Schedule (for SEC use only). - ---------------- (1) Pursuant to 17 C.F.R. 229.601(b)(2), the schedules and exhibits to this document are identified on a list of schedules and exhibits included within this document and are not filed herewith; however, the registrant hereby agrees that such schedules and exhibits will be provided to the Commission upon request. (2) Certain portions of this document have been omitted as confidential and filed separately with the Commission. (b) REPORTS ON FORM 8-K No reports on Form 8-K were filed by Oglethorpe for the quarter ended September 30, 1996. 15 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Oglethorpe Power Corporation (An Electric Membership Generation & Transmission Corporation) Date: August 14, 1996 By: /s/ T. D. Kilgore -------------------------- T. D. Kilgore President and Chief Executive Officer (Principal Executive Officer) Date: August 14, 1996 /s/ Gary M. Bullock -------------------------- Gary M. Bullock Secretary-Treasurer (Principal Financial Officer) Date: August 14, 1996 /s/ Larry N. Brownlee -------------------------- Larry N. Brownlee Controller (Principal Accounting Officer) 16 EX-2.1 2 EXHIBIT 2.1 EXHIBIT 2.1 FIRST AMENDED AND RESTATED RESTRUCTURING AGREEMENT BY AND AMONG OGLETHORPE POWER CORPORATION (AN ELECTRIC MEMBERSHIP GENERATION & TRANSMISSION CORPORATION), GEORGIA TRANSMISSION CORPORATION (AN ELECTRIC MEMBERSHIP CORPORATION) AND GEORGIA SYSTEM OPERATIONS CORPORATION AUGUST 1, 1996 TABLE OF CONTENTS ARTICLE 1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . 2 (a) "Business Day" . . . . . . . . . . . . . . . . . . . . . 2 (b) "Closing". . . . . . . . . . . . . . . . . . . . . . . . 2 (c) "Closing Conditions" . . . . . . . . . . . . . . . . . . 2 (d) "Closing Date" . . . . . . . . . . . . . . . . . . . . . 2 (e) "Effective Date" . . . . . . . . . . . . . . . . . . . . 2 (f) "Existing Wholesale Power Contracts" . . . . . . . . . . 2 (g) "FERC" . . . . . . . . . . . . . . . . . . . . . . . . . 2 (h) "FFB". . . . . . . . . . . . . . . . . . . . . . . . . . 2 (i) "GSOC Asset Transfer Date" . . . . . . . . . . . . . . . 2 (j) "GTC Assumed OPC Debt" . . . . . . . . . . . . . . . . . 3 (k) "GTC CoBank Note". . . . . . . . . . . . . . . . . . . . 3 (l) "GTC Credit Suisse Note" . . . . . . . . . . . . . . . . 3 (m) "GTC FFB Note(s)". . . . . . . . . . . . . . . . . . . . 3 (n) "GTC Indenture". . . . . . . . . . . . . . . . . . . . . 3 (o) "GTC PCB Assumption Agreements". . . . . . . . . . . . . 3 (p) "GTC RUS Note(s)". . . . . . . . . . . . . . . . . . . . 3 (q) "ITSA" . . . . . . . . . . . . . . . . . . . . . . . . . 4 (r) "ITSA O&M Agreement" . . . . . . . . . . . . . . . . . . 4 (s) "Joint Committee Agreement". . . . . . . . . . . . . . . 4 (t) "Member Agreement" . . . . . . . . . . . . . . . . . . . 4 (u) "New Wholesale Power Contracts". . . . . . . . . . . . . 4 (v) "Net Book Value" . . . . . . . . . . . . . . . . . . . . 4 (w) "OPC Bylaw Amendments" . . . . . . . . . . . . . . . . . 4 (x) "OPC Closing Date Distribution". . . . . . . . . . . . . 4 (y) "OPC Indenture". . . . . . . . . . . . . . . . . . . . . 4 (z) "OPC Mortgage" . . . . . . . . . . . . . . . . . . . . . 4 (aa) "PCB Trustees" . . . . . . . . . . . . . . . . . . . . . 5 (ab) "Purchase Price Adjustment". . . . . . . . . . . . . . . 5 (ac) "Purchase Price Adjustment Event". . . . . . . . . . . . 5 (ad) "RUS". . . . . . . . . . . . . . . . . . . . . . . . . . 5 (ae) "SEC". . . . . . . . . . . . . . . . . . . . . . . . . . 5 (af) "System Operations Assets" . . . . . . . . . . . . . . . 5 (ag) "System Operations Business" . . . . . . . . . . . . . . 6 (ah) "System Operations Contracts". . . . . . . . . . . . . . 6 (ai) "System Operations Employees". . . . . . . . . . . . . . 6 i (aj) "System Operations Liabilities". . . . . . . . . . . . . 6 (ak) "Transmission Assets". . . . . . . . . . . . . . . . . . 6 (al) "Transmission Business". . . . . . . . . . . . . . . . . 7 (am) "Transmission Contracts" . . . . . . . . . . . . . . . . 7 (an) "Transmission Employees" . . . . . . . . . . . . . . . . 7 (ao) "Transmission Liabilities" . . . . . . . . . . . . . . . 7 1.2 Other Definitions . . . . . . . . . . . . . . . . . . . . . . 7 ARTICLE 2 THE RESTRUCTURING . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 2.1 The Restructuring and Division of Functions . . . . . . . . . 8 (a) Systems Operations Business. . . . . . . . . . . . . . . 8 (b) OPC Closing Date Distribution. . . . . . . . . . . . . . 8 (c) Transmission Business. . . . . . . . . . . . . . . . . . 8 2.2 New Wholesale Power Contracts . . . . . . . . . . . . . . . . 8 2.3 OPC Closing Date Distribution . . . . . . . . . . . . . . . . 8 (a) Allocation Among Members . . . . . . . . . . . . . . . . 9 (b) Methodology for Charging Each Member's Patronage Account. . . . . . . . . . . . . . . . . . . . . . . . . 9 2.4 Acquisition of Transmission Business. . . . . . . . . . . . . 9 (a) Purchase and Sale of Transmission Assets . . . . . . . . 9 (b) Assumption of Transmission Liabilities . . . . . . . . . 10 (c) Purchase Price . . . . . . . . . . . . . . . . . . . . . 10 (d) Payment of Purchase Price. . . . . . . . . . . . . . . . 10 (e) Transfer of Employees. . . . . . . . . . . . . . . . . . 11 (f) Adjustment to Purchase Price Resulting from Certain Events Subsequent to the Closing Date. . . . . . 11 (g) Assets Owned in Common . . . . . . . . . . . . . . . . . 11 2.5 Transmission Contracts. . . . . . . . . . . . . . . . . . . . 11 2.6 Transfer of System Operations Business. . . . . . . . . . . . 12 (a) Purchase and Sale of System Operations Assets. . . . . . 12 (b) Assumption of System Operations Liabilities. . . . . . . 12 (c) Purchase Price . . . . . . . . . . . . . . . . . . . . . 12 (d) Transfer of Employees. . . . . . . . . . . . . . . . . . 13 2.7 System Operations Contracts . . . . . . . . . . . . . . . . . 13 2.8 Change of OPC Name. . . . . . . . . . . . . . . . . . . . . . 13 2.9 Provision of Administrative Services. . . . . . . . . . . . . 13 2.10 Office Space Leases . . . . . . . . . . . . . . . . . . . . . 13 ii 2.11 Employee Benefit Plans. . . . . . . . . . . . . . . . . . . . 14 (a) Amendments To Be Adopted . . . . . . . . . . . . . . . . 14 (b) Allocation of Costs. . . . . . . . . . . . . . . . . . . 14 (c) Plans Covered. . . . . . . . . . . . . . . . . . . . . . 14 (d) Right to Terminate Sponsorship . . . . . . . . . . . . . 14 2.12 Further Assurances. . . . . . . . . . . . . . . . . . . . . . 14 ARTICLE 3 OPC GOVERNANCE MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . 15 3.1 New OPC Governance. . . . . . . . . . . . . . . . . . . . . . 15 (a) Conditions to Full Implementation of Governance Changes. . . . . . . . . . . . . . . . . . . . . . . . . 15 (b) Possible Modifications . . . . . . . . . . . . . . . . . 15 3.2 Interim Governance. . . . . . . . . . . . . . . . . . . . . . 16 ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF OPC . . . . . . . . . . . . . . . . . 16 4.1 Organization and Qualification, Etc.. . . . . . . . . . . . . 16 4.2 Authorization, Etc. . . . . . . . . . . . . . . . . . . . . . 16 4.3 Non-Contravention . . . . . . . . . . . . . . . . . . . . . . 16 4.4 Governmental Consents, Etc. . . . . . . . . . . . . . . . . . 17 ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF GTC AND GSOC. . . . . . . . . . . . . 17 5.1 Organization and Qualification, Etc.. . . . . . . . . . . . . 17 5.2 Authorization, Etc. . . . . . . . . . . . . . . . . . . . . . 17 5.3 Non-Contravention . . . . . . . . . . . . . . . . . . . . . . 18 5.4 Governmental Consents, Etc. . . . . . . . . . . . . . . . . . 18 ARTICLE 6 ADDITIONAL COVENANTS AND AGREEMENTS . . . . . . . . . . . . . . . . . . 19 6.1 Conduct of Business . . . . . . . . . . . . . . . . . . . . . 19 6.2 Interim Cost Allocations. . . . . . . . . . . . . . . . . . . 19 6.3 HSR Act Filings . . . . . . . . . . . . . . . . . . . . . . . 19 iii 6.4 Consents, Authorizations, Etc.. . . . . . . . . . . . . . . . 19 (a) OPC Closing Date Distribution. . . . . . . . . . . . . . 19 (b) New Wholesale Power Contracts. . . . . . . . . . . . . . 20 (c) Release from OPC Mortgage. . . . . . . . . . . . . . . . 20 (d) GTC Assumption Documents . . . . . . . . . . . . . . . . 20 (e) OPC Indenture. . . . . . . . . . . . . . . . . . . . . . 20 (f) Transmission Contracts . . . . . . . . . . . . . . . . . 20 (g) GSOC Matters . . . . . . . . . . . . . . . . . . . . . . 20 (h) System Operations Contracts. . . . . . . . . . . . . . . 20 (i) Other Matters Contemplated Hereby. . . . . . . . . . . . 20 6.5 IRS Ruling. . . . . . . . . . . . . . . . . . . . . . . . . . 20 6.6 Access; Confidentiality . . . . . . . . . . . . . . . . . . . 20 (a) Access . . . . . . . . . . . . . . . . . . . . . . . . . 20 (b) Confidentiality. . . . . . . . . . . . . . . . . . . . . 20 6.7 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . 21 6.8 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . 21 6.9 Actions to Avoid and Notices of, Breaches of Representations and Warranties. . . . . . . . . . . . . . . . 21 6.10 Additional Agreements . . . . . . . . . . . . . . . . . . . . 21 ARTICLE 7 CLOSING CONDITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . 22 7.1 Closing Conditions. . . . . . . . . . . . . . . . . . . . . . 22 (a) Governance Changes . . . . . . . . . . . . . . . . . . . 22 (b) Member Agreement . . . . . . . . . . . . . . . . . . . . 22 (c) RUS Approvals. . . . . . . . . . . . . . . . . . . . . . 22 (d) Hart-Scott-Rodino. . . . . . . . . . . . . . . . . . . . 23 (e) PUHCA Matters. . . . . . . . . . . . . . . . . . . . . . 23 (f) Federal Power Act Matters. . . . . . . . . . . . . . . . 23 (g) No Injunction, Etc.. . . . . . . . . . . . . . . . . . . 23 (h) Other Consents, Authorizations, Etc. . . . . . . . . . . 23 (i) Representations and Warranties; Compliance With Covenants and Obligations. . . . . . . . . . . . . . . . 23 (j) Confirmation of Ratings. . . . . . . . . . . . . . . . . 24 (k) New Wholesale Power Contracts. . . . . . . . . . . . . . 24 (l) Membership In GTC. . . . . . . . . . . . . . . . . . . . 24 (m) Transmission Contracts . . . . . . . . . . . . . . . . . 24 (n) Membership In GSOC . . . . . . . . . . . . . . . . . . . 24 iv (o) System Operations Contracts. . . . . . . . . . . . . . . 24 (p) State Tax Matters. . . . . . . . . . . . . . . . . . . . 24 (q) Opinions of Counsel and Certified Resolutions. . . . . . 24 7.2 Waiver of Conditions. . . . . . . . . . . . . . . . . . . . . 24 ARTICLE 8 CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 8.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 8.2 Pre-Closing . . . . . . . . . . . . . . . . . . . . . . . . . 25 8.3 Deliveries at or prior to GSOC Asset Transfer Date. . . . . . 25 ARTICLE 9 TERMINATION AND ABANDONMENT . . . . . . . . . . . . . . . . . . . . . . 26 9.1 Termination and Abandonment . . . . . . . . . . . . . . . . . 26 (a) By Mutual Action . . . . . . . . . . . . . . . . . . . . 26 (b) By OPC . . . . . . . . . . . . . . . . . . . . . . . . . 26 9.2 Procedure for Termination . . . . . . . . . . . . . . . . . . 26 9.3 Effect of Termination . . . . . . . . . . . . . . . . . . . . 26 ARTICLE 10 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 10.1 Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . 26 10.2 Dispute Resolution and Arbitration. . . . . . . . . . . . . . 26 (a) Arbitration Procedures . . . . . . . . . . . . . . . . . 27 (b) Arbitration Decision . . . . . . . . . . . . . . . . . . 27 10.3 Specific Performance, Etc.. . . . . . . . . . . . . . . . . . 27 10.4 Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 10.5 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 10.6 Counterparts; Facsimile Delivery. . . . . . . . . . . . . . . 28 10.7 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . 29 10.8 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . 29 10.9 Severability. . . . . . . . . . . . . . . . . . . . . . . . . 29 10.10 Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . 29 v LIST OF SCHEDULES AND EXHIBITS SCHEDULES Schedule 1.1(af) System Operations Assets Schedule 1.1(aj) Certain System Operations Liabilities Schedule 1.1(ao) Certain Transmission Liabilities Schedule 2.3 Methodology for Determining OPC Closing Date Distribution and Members' Capital Contribution to GTC Schedule 2.4(d)(i) Debt Allocation Methodology EXHIBITS Exhibit A Draft of Indemnity Agreement between OPC and GTC Exhibit B Draft of Assumption Agreement between GTC and the PCB Trustees vi LIST OF CERTAIN DEFINED TERMS DEFINED IN SECTIONS OTHER THAN SECTION 1.1 Term Section - ---- ------- Additional OPC Contract 4.2 Additional GSOC Contract 5.2 Additional GTC Contract 5.2 Agreement Preamble Applicable Additional Contract 6.4 Closing 8.1 Confidential Material 6.6(b) Employee Benefit Plan 2.11(c) Final Appraisal 2.4(c) GSOC Preamble GSOC Assumed OPC Debt 2.6(c) GSOC Assumption Agreement 2.6(c) GSOC Purchase Money Note 2.6(c) GTC Preamble GTC Assumed OPC Deferred Charges 2.4(c) HSR Act 4.4 IRS Ruling 3.1(a) Members Preamble OPC Preamble OPC Closing Date Distribution 2.3 Pre-Closing 8.2 Purchase Price Premium 2.4(c) Representatives 6.6(b) vii FIRST AMENDED AND RESTATED RESTRUCTURING AGREEMENT This First Amended and Restated Restructuring Agreement (this "Agreement") is dated as of August 1, 1996, by and among Oglethorpe Power Corporation (An Electric Membership Generation & Transmission Corporation) ("OPC"), Georgia Transmission Corporation (An Electric Membership Corporation) ("GTC") and Georgia System Operations Corporation ("GSOC"). BACKGROUND STATEMENT Since its formation, OPC has provided generation, transmission and ancillary and other related services for the 39 electric membership cooperatives that are members of OPC (the "Members") in order to satisfy the Members' requirements for power. Because of the increasing competition occurring in the electric industry and related changes in law and regulation, OPC and the Members have determined that it is in their mutual best interests to restructure OPC to provide greater flexibility for the future and to settle certain issues and controversies confronting OPC and the Members, as contemplated by a Statement of Agreement, dated November 21, 1995, among representatives of OPC and certain Members named therein, as approved by the OPC Board of Directors on December 4, 1995. On March 29, 1996, the Boards of Directors of OPC, GTC and GSOC approved the Restructuring Agreement, dated as of March 29, 1996 (the "Original Agreement"), by and among OPC, GTC and GSOC and the restructuring and other transactions and matters contemplated thereby. Also on March 29, 1996, the Boards of Directors of OPC, GTC and GSOC approved the "Member Agreement" (as defined in Section 1.1) for the purpose of submitting the Member Agreement to the Members for their consideration. The Board of Directors of OPC also has recommended to the Members that they join OPC, GTC and GSOC in executing the Member Agreement and thereby agree among themselves and with OPC, GSOC and GTC as to those matters contemplated hereby and thereby that directly involve the Members in their capacities as separate corporations. This Agreement amends and restates the Original Agreement and, as of the date of this Agreement, replaces and supersedes the Original Agreement in its entirety to set forth the terms on which the restructuring and related changes will occur. Among other things, the restructuring will separate OPC's "Transmission Business" substantially as an entirety and its "System Operations Business" substantially as an entirety (as such terms are defined in Section 1.1) from OPC's generation business and any other retained business. OPC will transfer the Transmission Business to GTC and the System Operations Business to GSOC. AGREEMENT In consideration of the mutual representations, warranties, covenants and agreements contained herein, the parties agree as follows: ARTICLE 1 DEFINITIONS 1.1 DEFINED TERMS. For the purposes of this Agreement, the following terms, whether singular or plural, shall have the meanings set forth below: (a) "BUSINESS DAY" shall mean any day on which both: (i) OPC is open for business, and (ii) commercial banks in the City of Atlanta or in the City of New York are not authorized or required to close. (b) "CLOSING" shall have the meaning specified in Section 8.1. (c) "CLOSING CONDITIONS" shall mean all of the conditions set forth in Article 7 of this Agreement. (d) "CLOSING DATE" shall mean the date on which the Closing occurs pursuant to Article 8 of this Agreement. (e) "EFFECTIVE DATE" shall mean (i) January 1, 1997 or (ii) such other date as the parties to this Agreement may mutually agree. (f) "EXISTING WHOLESALE POWER CONTRACTS" shall mean the Amended and Consolidated Wholesale Power Contracts, dated as of December 1, 1988, between OPC and each of OPC's 39 Members pursuant to which the Members currently purchase electric power and transmission services from OPC. (g) "FERC" shall mean the Federal Energy Regulatory Commission. (h) "FFB" shall mean the Federal Financing Bank, which is an instrumentality and wholly owned corporation of the United States of America. (i) "GSOC ASSET TRANSFER DATE" shall mean the date on which the System Operations Assets are sold and transferred to GSOC and GSOC assumes certain System Operations Liabilities, as provided in Section 2.6. 2 (j) "GTC ASSUMED OPC DEBT" shall mean that portion of OPC's indebtedness that GTC assumes pursuant to the GTC CoBank Note, the GTC Credit Suisse Note, the GTC FFB Note(s), the GTC RUS Note(s) and the GTC PCB Assumption Agreements. (k) "GTC COBANK NOTE" shall mean a note or other agreement or instrument in the form required by CoBank pursuant to which GTC will assume, and replace OPC as an obligor with respect to, that portion of OPC's indebtedness to CoBank outstanding as of the Effective Date that OPC and GTC have agreed will be assumed as part of the payment of the purchase price pursuant to Section 2.4(d)(i). (l) "GTC CREDIT SUISSE NOTE" shall mean a note or other agreement or instrument in the form required by Credit Suisse pursuant to which GTC will assume, and replace OPC as an obligor with respect to, that portion of OPC's indebtedness to Credit Suisse as of the Effective Date that OPC and GTC have agreed will be assumed as part of the payment of the purchase price pursuant to Section 2.4(d)(i). (m) "GTC FFB NOTE(S)" shall mean the note(s) in the form required by FFB pursuant to which GTC will assume, and replace OPC as an obligor with respect to, that portion of OPC's indebtedness to the FFB outstanding as of the Effective Date that OPC and GTC have agreed will be assumed as part of the payment of the purchase price pursuant to Section 2.4(d)(i). (n) "GTC INDENTURE" shall mean an indenture to be agreed to by GTC and RUS prior to the Closing, or any other form of real and personal property security document(s) that GTC and RUS shall mutually agree upon, pursuant to which GTC will pledge, and grant security title to and a security interest in, substantially all of the Transmission Assets to secure the GTC FFB Note(s), the GTC RUS Note(s), the GTC CoBank Note, the GTC Credit Suisse Note and the GTC PCB Assumption Agreements. (o) "GTC PCB ASSUMPTION AGREEMENTS" shall mean collectively the Indemnity Agreement between GTC and OPC and the Assumption Agreements between GTC and the PCB Trustees based on the drafts attached hereto as EXHIBITS A and B, respectively, as such drafts may be revised from time to time and, when they become available, the final forms of such agreements as they may be agreed upon by OPC and GTC prior to Closing, pursuant to which GTC will agree to assume the obligation to pay that portion of OPC's pollution control debt secured under the OPC Mortgage (and related obligations under swap agreements) that OPC and GTC have agreed will be assumed as part of the payment of the purchase price pursuant to Section 2.4(d)(i). (p) "GTC RUS NOTE(S)" shall mean the note(s) in the form required by RUS pursuant to which GTC will assume, and replace OPC as an obligor with respect to, that portion of OPC's indebtedness to RUS outstanding as of the Effective Date that OPC and GTC have agreed will be assumed as part of the payment of the purchase price pursuant to Section 2.4(d)(i). 3 (q) "ITSA" shall mean the Revised and Restated Integrated Transmission System Agreement, dated as of November 12, 1990, between OPC and Georgia Power Company. (r) "ITSA O&M AGREEMENT" shall mean the Transmission Facilities Operation and Maintenance Contract between Georgia Power Company and OPC, dated as of June 9, 1986. (s) "JOINT COMMITTEE AGREEMENT" shall mean the Joint Committee Agreement, dated as of August 27, 1976, among Georgia Power Company, OPC, Municipal Electric Authority of Georgia and the City of Dalton, Georgia, as amended by the First Amendment thereto, dated as of June 19, 1978. (t) "MEMBER AGREEMENT" shall mean the Member Agreement based on the draft presented to and approved by the OPC Board of Directors at their July 8, 1996 meeting, as such draft may be revised from time to time and, when it becomes available, such Member Agreement in final form as executed and delivered by and among the Members that become parties thereto, OPC, GTC and GSOC (as it may be amended and supplemented thereafter). (u) "NEW WHOLESALE POWER CONTRACTS" shall have the meaning specified in the Member Agreement. (v) "NET BOOK VALUE" of any asset shall mean at any given time the amount, net of depreciation, at which such asset is recorded on the books of the owner of such asset. (w) "OPC BYLAW AMENDMENTS" shall mean the amendments to OPC's Bylaws relating to the election of directors in the form adopted by the OPC member representatives at their March 29, 1996 annual meeting, subject to the conditions set forth in Section 3.1(a), as such Bylaw amendments may be amended pursuant to Section 3.1(b). (x) "OPC CLOSING DATE DISTRIBUTION" shall mean the distribution to be made by OPC on the Closing Date, as contemplated by Section 2.3. (y) "OPC INDENTURE" shall mean an indenture to be agreed to by OPC and RUS prior to the Closing, or any other form of real and personal property security document(s) that OPC and RUS shall mutually agree upon, pursuant to which OPC will pledge, and grant security title to and a security interest in, substantially all of the real and tangible personal property of OPC to secure the obligations currently secured under OPC Mortgage as to which OPC is not released from liability in connection with the assumption by GTC of the GTC Assumed OPC Debt. (z) "OPC MORTGAGE" shall mean the Consolidated Mortgage and Security Agreement, dated as September 1, 1994, by and among OPC, the United States of America, acting through the Administrator of the RUS, CoBank, ACB, as successor in interest to National Bank for Cooperatives, Credit Suisse, acting by and through its New York Branch, and SunTrust Bank, Atlanta, as successor to Trust Company Bank (as trustee under certain pollution control 4 bond indentures), as mortgagees, either as originally executed or as the same may from time to time be supplemented, modified, amended, renewed, extended or consolidated, or any alternate mortgage, deed to secure debt, deed of trust, trust indenture or other security instrument entered into by OPC as a substitute or replacement for such mortgage, which secures equally and ratably the payment of principal of and interest on the obligations thereunder and creates a lien on substantially all of the real and tangible personal property of OPC in favor of such mortgagees and/or additional and/or substitute mortgagees or secured parties. (aa) "PCB TRUSTEES" shall mean SunTrust Bank, Atlanta, acting as trustee under the several pollution control bond indentures identified in the OPC Mortgage. (ab) "PURCHASE PRICE ADJUSTMENT" shall mean: (A) 75% of that amount, if any, by which (i) the consideration received by GTC for any sale, lease or exchange of any part or all of the Transmission Assets constituting a Purchase Price Adjustment Event exceeds the amount paid to OPC for such Transmission Assets, or (ii) the value of the Transmission Assets reflected in the consideration received by GTC or its members in any merger or consolidation of GTC or any other disposition or reduction of the GTC members' capital interests constituting a Purchase Price Adjustment Event exceeds the amount paid to OPC for such Transmission Assets, in each of the cases (i) and (ii) net of taxes and other expenses attributable to the transaction, MINUS (B) any Purchase Price Adjustment previously paid with respect to such Transmission Assets. (ac) "PURCHASE PRICE ADJUSTMENT EVENT" shall mean the consummation by GTC or one or more members of GTC of any one or more transactions after the Closing Date and prior to the fifth anniversary of the Effective Date (or thereafter if consummated pursuant to a binding contract entered into after the Closing Date and prior to the fifth anniversary of the Effective Date) pursuant to which: (i) GTC sells, leases or exchanges 20% or more, in the aggregate (measured based on Net Book Value at the time of the transaction or during the time of any series of related transactions), of the Transmission Assets, or merges or consolidates with another entity, or (ii) any member or members of GTC, in a transaction or series of transactions involving any party which is not one of the 39 Members of OPC as of the Effective Date, dispose of or in any other manner reduce the capital interests in GTC of those entities constituting the members of GTC as of the Effective Date (tested separately based on both the dollar value of such members' capital interests and the percentage such members' capital interests represent of the total GTC capital interests, in each case at the time of the transaction or during any series of related transactions). (ad) "RUS" shall mean the Rural Utilities Service, as successor to the Rural Electrification Administration, which is an agency of the United States Department of Agriculture, or any governmental agency succeeding to its powers and functions. (ae) "SEC" shall mean the Securities and Exchange Commission. (af) "SYSTEM OPERATIONS ASSETS" shall mean the computers, other equipment, equipment leases, and other property of OPC identified on SCHEDULE 1.1(af) as constituting the 5 System Operations Assets, as such Schedule may be amended by OPC and GSOC from time to time, all of which assets are used to perform system operations services. (ag) "SYSTEM OPERATIONS BUSINESS" shall mean the performance of system operations services and the use and ownership of and rights to the System Operations Assets and shall include the System Operations Liabilities. (ah) "SYSTEM OPERATIONS CONTRACTS" shall mean the contracts (i) relating to system operations services to be agreed to between GSOC and OPC and between GSOC and GTC, respectively, as such contracts are executed and delivered by the parties thereto, (ii) the "Member System Operations Contracts" between GSOC and each Member, as defined in the Member Agreement, and (iii) the generation services contract to be agreed to between GSOC and OPC, as such contract is executed and delivered by the parties thereto. (ai) "SYSTEM OPERATIONS EMPLOYEES" shall mean those individuals so designated by the President and Chief Executive Officer of OPC. (aj) "SYSTEM OPERATIONS LIABILITIES" shall mean (i) the obligations assumed by GSOC from OPC under the leases and other contractual undertakings identified on SCHEDULE 1.1(aj) as such obligations exist as of the GSOC Asset Transfer Date; (ii) OPC's obligations relating to the System Operations Employees as such obligations exist as of the Effective Date; and (iii) such other obligations relating to the performance of system operations services as OPC and GSOC shall agree upon from time to time. (ak) "TRANSMISSION ASSETS" shall mean all assets of OPC of every kind and description and wherever located, which, as of the Effective Date, (A) are properly classified as transmission assets under accounts 350 to 397 of the System of Accounts as prescribed by RUS in effect on the Effective Date, or (B) qualify for treatment as "Transmission Facilities" under the ITSA or (C) are shown on OPC's books as of the Effective Date as transmission assets, plus the warehouse facility located in Conyers, Georgia, and all inventories relating to the transmission assets contained therein, all claims and rights under work in progress, contracts (including the right to provide transmission services to the Members in the manner contemplated by the Transmission Contracts), leases, licenses or other agreements (whether governmental or private) and rights in condemnation proceedings and other litigation matters (including by way of counterclaim), in each case, used in or otherwise relating to its Transmission Business; provided, however, that the Transmission Assets shall not include: (i) any accounts receivable of OPC; (ii) any of the real property, buildings and fixtures constituting OPC's headquarters facility or, except as OPC and GTC may mutually agree, any equipment (except the types expressly specified above), furniture and other personal property located at OPC's headquarters facility (subject to OPC's obligations under Section 2.10 to enter into certain office space leases); (iii) any books or records (subject to OPC's obligations to provide access and copies pursuant to Section 6.6); (iv) any assets which OPC owns as a tenant in common with others (except to the extent otherwise provided by the third sentence of Section 2.4(g)); or (v) any step-up substation transformers 6 located at generation facilities. For all purposes of this Agreement, including all provisions relating to the Purchase Price Adjustment, "Transmission Assets" shall be limited to the assets acquired or to be acquired by GTC from OPC effective as of the Effective Date. (al) "TRANSMISSION BUSINESS" shall mean the performance of the Transmission Functions and the use and ownership of and rights to the Transmission Assets and shall include the Transmission Liabilities. (am) "TRANSMISSION CONTRACTS" shall mean the "Member Transmission Contracts" as defined in the Member Agreement and the contract(s) to be executed and delivered between GTC and OPC relating to Transmission Functions in substantially the form of the Member Transmission Contracts (the "OPC Transmission Contract"). (an) "TRANSMISSION EMPLOYEES" shall mean those individuals so designated by the President and Chief Executive Officer of OPC. (ao) "TRANSMISSION LIABILITIES" shall mean (i) all obligations, taxes and liabilities of every kind and nature, known or unknown, contingent or otherwise, that exist as of the Effective Date and are primarily related to the Transmission Business or the Transmission Employees; and (ii) that portion of OPC's costs, expenses and other liabilities (except for the OPC Closing Date Distribution) incurred in effecting the transactions and actions contemplated hereby that corresponds to the portion of OPC's debt assumed pursuant to Section 2.4(d)(i); provided, however, that any obligations or liabilities otherwise covered by clause (i) above shall not be included as Transmission Liabilities to the extent OPC's President and Chief Executive Officer determines that it would not be in the best interests of OPC and GTC to so include them and so notifies GTC at least 10 Business Days prior to Closing. Without in any way limiting the foregoing, but subject to the foregoing proviso, the Transmission Liabilities shall include any and all costs, expenses, obligations and liabilities incurred in connection with or otherwise relating to any litigation described on SCHEDULE 1.1(ao) and not paid prior to the Effective Date. Notwithstanding the foregoing, Transmission Liabilities shall not include: (A) the GTC Assumed OPC Debt; (B) any taxes or accounts payable to the extent they arise from the conduct of the Transmission Business prior to the Effective Date; (C) any taxes of any kind imposed on OPC by reason of the consummation of the transactions contemplated by this Agreement; (D) or any taxes imposed on any Members of OPC. 1.2 OTHER DEFINITIONS. Certain other terms are defined elsewhere in this Agreement and have the meanings so indicated. A List of Certain Defined Terms immediately following the Table of Contents has been included for the convenience of the parties to assist in locating such definitions, but such list shall not affect the interpretation of this Agreement. 7 ARTICLE 2 THE RESTRUCTURING 2.1 THE RESTRUCTURING AND DIVISION OF FUNCTIONS. On the terms and conditions set forth herein, the Transmission Business and the System Operations Business shall be separated from OPC's other business functions, assets and liabilities (including those relating to the generation of power). OPC shall retain all of its business functions, assets and liabilities that are not being sold to and assumed by GTC or GSOC. (a) SYSTEMS OPERATIONS BUSINESS. (i) As soon as all required approvals have been obtained and the conditions contained in Section 7.1(e) and (f), to the extent they relate to the sale and transfer of the System Operations Assets, have been satisfied or waived, and without waiting for the Closing of the other transactions contemplated hereby, the System Operations Assets and the System Operations Liabilities shall be transferred and sold to and assumed by GSOC, as contemplated by and subject to the provisions contained in Section 2.6. (ii) At the Closing, OPC shall transfer to GSOC the System Operations Employees to the extent contemplated by Section 2.6(d), and GSOC shall begin providing system operations and related services pursuant to the System Operations Contracts, as contemplated by Section 2.7. (b) OPC CLOSING DATE DISTRIBUTION. At the Closing, OPC shall effect the OPC Closing Date Distribution contemplated by Section 2.3. (c) TRANSMISSION BUSINESS. At the Closing, the Transmission Business shall be transferred and sold to and assumed by GTC, as contemplated by Section 2.4. Also at the Closing, OPC shall transfer to GTC the Transmission Employees to the extent contemplated by Section 2.4(e), and GTC shall begin providing transmission and related services pursuant to the Transmission Contracts, as contemplated by Section 2.5. 2.2 NEW WHOLESALE POWER CONTRACTS. To facilitate the restructuring, including the transfer of the Transmission Business to GTC, OPC shall seek to execute and deliver at or before Closing a New Wholesale Power Contract with each Member pursuant to the terms of the Member Agreement. Commencing as of the Effective Date, provided RUS approval has been obtained, each New Wholesale Power Contract shall govern the purchase and sale of power between OPC and each respective Member that is a party to such a New Wholesale Power Contract. 2.3 OPC CLOSING DATE DISTRIBUTION. On the Closing Date, OPC shall make a special patronage capital distribution to (or at the direction of) its Members in an aggregate amount 8 determined using the methodology set forth on SCHEDULE 2.3 (the "OPC Closing Date Distribution"). (a) ALLOCATION AMONG MEMBERS. The OPC Closing Date Distribution shall be made to (or at the direction of) the Members based on allocation percentages determined by dividing each Member's patronage capital in OPC as of December 31, 1995, by the total of all Members' patronage capital in OPC as of December 31, 1995. (b) METHODOLOGY FOR CHARGING EACH MEMBER'S PATRONAGE ACCOUNT. For purposes of charging each Member's patronage account, such distribution shall be allocated on a proportional basis to each annual period through December 31, 1995, for which any portion of such Member's total patronage capital has been allocated. 2.4 ACQUISITION OF TRANSMISSION BUSINESS. At the Closing, the Transmission Business shall be transferred by OPC to GTC in a complete and bona fide liquidation of OPC's Transmission Business. The parties shall cooperate with one another in taking such actions and making such adjustments as shall be appropriate to cause the economic consequences of such actions and changes to be effective, to the maximum extent feasible and reasonable, as of the Effective Date. The parties acknowledge and agree that the precise identity of certain of the Transmission Assets and the Transmission Liabilities, as well as the amount of the purchase price, initially and preliminarily will be based on OPC's projected financial statements and records as of December 31, 1996, and shall be subject to adjustment when OPC's actual financial statements and records as of December 31, 1996 become available in final form. The parties shall cooperate with each other in taking such actions as shall be appropriate to effect and reflect such adjustments. (a) PURCHASE AND SALE OF TRANSMISSION ASSETS. At the Closing, effective as of the Effective Date, OPC shall sell, convey, transfer, assign and deliver to GTC, and GTC will receive, accept and pay for all of the Transmission Assets. At the Closing, OPC shall deliver to GTC limited warranty deeds conveying to GTC all of OPC's right, title and interest in and to the real property included in the Transmission Assets, subject to the reservation by OPC of nonexclusive easements to use such property in any way that does not interfere with GTC's use of such property to conduct the Transmission Business, and bills of sale, endorsements, assignments and other good and sufficient instruments of conveyance and transfer as shall be effective to vest in GTC all of OPC's right, title and interest in and to all other Transmission Assets. At the Closing, OPC will take such other steps as may be reasonably required to put GTC in actual possession and operating control of the Transmission Assets and Transmission Business. From time to time after the Closing, at GTC's request and expense but without further consideration, OPC will execute and deliver such other instruments of conveyance and transfer and take such other actions as GTC reasonably may require to vest more effectively in GTC, and to put GTC in possession of, the Transmission Assets, subject to the above mentioned easement reserved by OPC. 9 (b) ASSUMPTION OF TRANSMISSION LIABILITIES. At the Closing, effective as of the Effective Date, GTC shall execute and deliver to OPC and to such other persons and entities as may be appropriate all such assumptions of liability, endorsements, acknowledgments of assignment, and such other instruments as shall be effective to evidence and effect GTC's assumption and agreement to pay, perform and discharge all Transmission Liabilities. (c) PURCHASE PRICE. The purchase price for the Transmission Business shall be the sum of: (i) OPC's Net Book Value of the Transmission Assets as of the Effective Date; plus (ii) That portion of OPC's deferred charges relating to OPC's debt secured under the OPC Mortgage as of the Effective Date which is determined in accordance with the allocation formula set forth on Schedule 2.4(d)(i) (the "GTC Assumed OPC Deferred Charges"); plus (iii) An amount, if any, by which the Purchase Price Premium exceeds the GTC Assumed OPC Deferred Charges. As of the date of this Agreement, a preliminary appraisal has been completed. The appraisal shall be updated by the appraiser at a date selected by OPC nearer the closing (the "Final Appraisal"). For purposes of the provisions of this Section 2.4, the term "Purchase Price Premium" shall be the amount identified as such in the Final Appraisal. If the Purchase Price Premium is greater than an amount equal to 6% of OPC's Net Book Value for the Transmission Assets used in preparing the Final Appraisal, then GTC's payment of the amount called for by this Section 2.4(c) must be approved by GTC's Board of Directors. If the appraisal names a range of values and a most likely value within the range, the Purchase Price Premium shall be deemed to be the Purchase Price Premium named by the appraisal as the one most likely to be paid. For purposes of determining the amount of the purchase price to be paid at Closing, the amount set forth in subsection (i) and the GTC Assumed OPC Deferred Charges shall be determined on a preliminary basis based on OPC's projected financial statements and records as of December 31, 1996. Not later than March 15, 1997, for purposes of determining the final purchase price, the amount set forth in subsection (i) and the GTC Assumed OPC Deferred Charges shall be determined based on OPC's actual financial statements and records as of December 31, 1996. (d) PAYMENT OF PURCHASE PRICE. GTC shall pay the purchase price as follows: (i) GTC shall assume, effective as of the Effective Date (as evidenced and effected by delivery of the GTC Indenture, the GTC FFB Note(s), the GTC RUS Note(s), the GTC CoBank Note, the GTC Credit Suisse Note and the GTC PCB Assumption Agreements), 10 that portion of OPC's debt secured under the OPC Mortgage which is determined by the allocation formula set forth on SCHEDULE 2.4(d)(i), along with certain related obligations under swap agreements; and (ii) The balance due (based on OPC's projected financial statements as of December 31, 1996) shall be paid in cash by wire transfer on the Closing Date, net of the booked value of the Transmission Liabilities assumed (based upon such projected financial statements). Any additional payment due from GTC (or any refund by OPC of a portion of the initial payment made by GTC) based on OPC's actual financial statements as of December 31, 1996, shall be paid by the party owing such amount in cash by wire transfer within 10 Business Days after such actual financial statements become available in final form. (e) TRANSFER OF EMPLOYEES. As of the Effective Date, OPC will terminate the employment of all Transmission Employees of OPC. GTC immediately thereupon shall have the right to employ such employees upon such terms and conditions as GTC shall determine. For any such employees so hired, the provision of any benefits under the "Employee Benefit Plans" (as hereinafter defined) shall be pursuant to Section 2.11. This paragraph (e) does not and shall not be construed to create any rights (of continued employment or otherwise) in any employee or any other third party. (f) ADJUSTMENT TO PURCHASE PRICE RESULTING FROM CERTAIN EVENTS SUBSEQUENT TO THE CLOSING DATE. Upon the occurrence of any Purchase Price Adjustment Event, the purchase price for the Transmission Assets purchased from OPC pursuant to this Agreement, as determined pursuant to Section 2.4(c), shall be increased by an amount equal to the Purchase Price Adjustment, if any. The Purchase Price Adjustment, if any, shall be paid to OPC by GTC (or any successor entity) in cash within 90 days after the occurrence of the applicable Purchase Price Adjustment Event. (g) ASSETS OWNED IN COMMON. Any asset that would be a Transmission Asset but for the exclusion of assets owned in common under clause (iv) of the definition of Transmission Assets in Section 1.1 shall be the subject of a lease or other agreement between OPC and GTC pursuant to which, from and after the Effective Date and for mutually agreed consideration from GTC to OPC, GTC shall have the right to use, possess and operate such assets as fully as may be permitted by the terms of any agreements relating to the common ownership of such assets. Any such lease or other agreement shall be upon such terms as OPC and GTC shall agree. If OPC is permitted by the terms of any agreements relating to the common ownership of such assets and by any necessary consents, waivers or other actions of the other co-owner(s) of such assets to transfer OPC's interest in the title to such assets, then such assets, to the extent of OPC's interest therein, shall be treated as part of the Transmission Assets. Nothing in this Section 2.4(g) shall affect the exclusion from Transmission Assets of step-up substation transformers located at generation facilities. 2.5 TRANSMISSION CONTRACTS. At or before the Closing, GTC shall seek to execute and deliver Member Transmission Contract(s) with each Member pursuant to the Member Agreement, 11 and GTC and OPC shall execute and deliver OPC Transmission Contract(s), pursuant to which GTC shall provide transmission and related services to the Members and to OPC. 2.6 TRANSFER OF SYSTEM OPERATIONS BUSINESS. As soon as all required approvals have been obtained and the conditions contained in Sections 7.1(e) and (f), to the extent they relate to the sale and transfer of the System Operations Business, have been satisfied or waived (which may be earlier, but no later, than the Closing), OPC and GSOC shall mutually determine the GSOC Asset Transfer Date which shall be the date on which the System Operations Assets shall be transferred and sold to GSOC and GSOC shall assume the System Operations Liabilities. (a) PURCHASE AND SALE OF SYSTEM OPERATIONS ASSETS. On the GSOC Asset Transfer Date, OPC shall sell, convey, transfer, assign and deliver to GSOC, and GSOC will receive, accept and pay for, all of the System Operations Assets, subject to the continuing lien of the OPC Mortgage. On the GSOC Asset Transfer Date, OPC shall deliver to GSOC such bills of sale, endorsements, assignments and other good and sufficient instruments of conveyance and transfer as shall be effective to vest in GSOC all of OPC's title to and interest in the System Operations Assets, subject to the continuing lien of the OPC Mortgage. On the GSOC Asset Transfer Date, OPC will take such other steps as may be reasonably required to put GSOC in actual possession and operating control of the System Operations Assets and System Operations Business. From time to time thereafter, at GSOC's request and expense but without further consideration, OPC will execute and deliver such other instruments of conveyance and transfer and take such other actions as GSOC reasonably may require to vest more effectively in GSOC, and to put GSOC in possession of, the System Operations Assets, subject to the continuing lien of the OPC Mortgage. OPC and GSOC will enter into appropriate agreements to permit OPC such use of the System Operations Assets as it may require prior to the Closing Date. (b) ASSUMPTION OF SYSTEM OPERATIONS LIABILITIES. On the GSOC Asset Transfer Date, GSOC shall execute and deliver to OPC all such assumptions of liability, endorsements, acknowledgments of assignment, and such other instruments as shall be effective to evidence and effect GSOC's assumption and agreement to pay, perform and discharge all System Operations Liabilities. (c) PURCHASE PRICE. The purchase price for the System Operations Assets shall be the Net Book Value of such assets on the GSOC Asset Transfer Date. Such purchase price shall be paid on the GSOC Asset Transfer Date: (i) By GSOC's assumption of OPC's obligations under that certain Note from OPC, dated June 1, 1984, in the original principal amount of $5,543,000, payable to the United States of America with a final maturity of May 31, 2019, as such obligations of OPC exist from time to time (the "GSOC Assumed OPC Debt"), which assumption shall be evidenced by GSOC's execution and delivery of an assumption document in the form required by RUS (the "GSOC Assumption Agreement"); and 12 (ii) By GSOC's execution and delivery to OPC of a purchase money note (the "GSOC Purchase Money Note") for the portion of the purchase price in excess of: (A) the balance assumed by GSOC under the RUS Note identified in clause (i) above and (B) the booked value of any (I) capital lease or (II) obligation relating to the System Operations Employees assumed as part of the System Operations Liabilities. The GSOC Assumption Agreement and the GSOC Purchase Money Note shall contain such terms and conditions as RUS shall approve (with the concurrence of OPC in the case of the GSOC Purchase Money Note). (d) TRANSFER OF EMPLOYEES. On or before the Closing, OPC will terminate the employment of all System Operations Employees of OPC. GSOC shall immediately thereupon have the right to employ such employees upon such terms and conditions as GSOC shall determine. For any such employees so hired, the provision of any benefits under the Employee Benefit Plans shall be pursuant to Section 2.11. This paragraph (d) does not and shall not be construed to create any rights (of continued employment or otherwise) in any employee or any other third party. 2.7 SYSTEM OPERATIONS CONTRACTS. On or before the Closing Date, GSOC and the other parties identified in this Section shall execute and deliver the following contracts; (a) a System Operations Contract to be agreed to with OPC, (b) a System Operations Contract to be agreed to with GTC, (c) a Member System Operations Contract as required by the Member Agreement with each Member, and (d) a generation services contract to be agreed to with OPC. 2.8 CHANGE OF OPC NAME. Before or promptly after the Closing Date, OPC's name shall be changed to "Oglethorpe Power Corporation (An Electric Membership Corporation)." OPC shall execute and file the appropriate documents with the Georgia Secretary of State to effect such name change. 2.9 PROVISION OF ADMINISTRATIVE SERVICES. At or before the Closing, OPC and GTC shall execute and deliver an administrative services contract, and OPC and GSOC shall execute and deliver an administrative services contract, both substantially in the form recommended by OPC's President and Chief Executive Officer, subject to such changes as the parties thereto may mutually agree upon. Effective as of the Effective Date, OPC shall begin providing to GTC and GSOC pursuant to the administrative services contracts the administrative services specified therein. 2.10 OFFICE SPACE LEASES. At or before the Closing, OPC and GTC shall execute and deliver an office space lease, and OPC and GSOC shall execute and deliver an office space lease, both substantially in the form recommended by OPC's President and Chief Executive Officer, subject to such changes as the parties thereto may mutually agree upon. Effective as of the Effective Date, OPC shall begin leasing office space to GTC and GSOC pursuant to the office space leases. 13 2.11 EMPLOYEE BENEFIT PLANS. As soon as practical after the Closing Date, OPC shall amend its "Employee Benefit Plans," as hereinafter defined, to permit the Employee Benefit Plans to be jointly sponsored by OPC, GTC, GSOC and any other employer acceptable to OPC. Each such Employee Benefit Plan shall be a single plan, with all plan assets available to pay benefits to participating employees of any sponsoring employer. (a) AMENDMENTS TO BE ADOPTED. Each such Employee Benefit Plan shall be amended: (i) to credit employees of OPC, GTC, GSOC and any other sponsoring employer with service with, and compensation paid by, OPC, GTC, GSOC or any other sponsoring employer; (ii) to authorize the Board of Directors of OPC to appoint the plan administrator of such plan; and (iii) to authorize the Board of Directors of OPC to amend such plans, provided that any amendment that materially increases the benefit cost to GTC, GSOC or any other sponsoring employer shall be subject to the approval of the Board of Directors of GTC, the Board of Directors of GSOC or the governing body of such other sponsoring employers, which approval may not be unreasonably withheld by such Board of Directors or other governing body. (b) ALLOCATION OF COSTS. The benefit and administrative cost of each such Employee Benefit Plan shall be allocated among OPC, GTC, GSOC and every other sponsoring employer, in a manner determined by the actuary or contract administrator then engaged by OPC on behalf of the plan, so as to most equitably allocate such costs, including extraordinary one time costs, to the employer whose employees are covered by the Plan; provided, however, in the case of employee health care costs, such costs shall be allocated among OPC, GTC, GSOC and every other sponsoring employer so as to most equitably spread the risk of adverse claim experience among all such sponsoring employers in proportion to the number of participating employees employed by such sponsoring employers. (c) PLANS COVERED. For purposes of this Section 2.11, "Employee Benefit Plan" shall include the following plans currently sponsored by OPC: (i) the Retirement Income Plan; (ii) the Retirement Savings Plan; (iii) the Health Insurance Plan; (iv) the Flexible Spending Account Plan; (v) the Long Term Disability Plan; (vi) the Group Life Insurance Plan; (vii) the Deferred Compensation Plan for Key Employees; and (viii) the Business Travel Accident Insurance Plan. (d) RIGHT TO TERMINATE SPONSORSHIP. OPC, GTC or GSOC may terminate its sponsorship of any Employee Benefit Plan upon 90 days advance written notice to the other parties. 2.12 FURTHER ASSURANCES. If at any time after the Closing Date for GTC or after the GSOC Asset Transfer Date for GSOC, any further assignments or assurances are necessary or desirable to vest or to perfect or confirm of record in GTC or GSOC the title to any property or right included in the Transmission Assets or the System Operations Assets, respectively (subject to the easement reserved by OPC pursuant to Section 2.4(a)), or to evidence and effect the assumption by GTC or GSOC of the Transmission Liabilities or the System Operations Liabilities, respectively, or otherwise to carry out the provisions of this Agreement, the officers of OPC, 14 GTC and GSOC are hereby authorized and empowered on behalf of such respective corporations, in the name of and on behalf of the appropriate corporation, to execute and deliver any and all things necessary or proper to vest or to perfect or confirm title to such property or rights in GTC or GSOC (subject to the aforementioned easement) or to evidence and effect such assumption by GTC or GSOC, and otherwise to carry out the purposes and provisions of this Agreement. ARTICLE 3 OPC GOVERNANCE MATTERS 3.1 NEW OPC GOVERNANCE. Subject to satisfaction of the conditions specified below prior to the full implementation of the governance changes contemplated by the OPC Bylaw Amendments, OPC shall take appropriate steps on a timely basis to elect a new Board of Directors in accordance with the OPC Bylaw Amendments and to implement the new governance structure contemplated by the OPC Bylaw Amendments. (a) CONDITIONS TO FULL IMPLEMENTATION OF GOVERNANCE CHANGES. The terms of the individuals elected as the new Board of Directors of OPC pursuant to the OPC Bylaw Amendments shall commence, and the other governance changes contemplated by the OPC Bylaw Amendments shall be fully and unconditionally implemented, only on the Effective Date (or if earlier, on the fifth Business Day following satisfaction or waiver of the following conditions) and shall be conditioned upon satisfaction of all of the following conditions (or waiver by the existing OPC Board of Directors of either or both of the conditions contained in paragraphs (i) and (ii), provided that any waiver of the condition in paragraph (ii) is also approved by RUS): (i) A ruling from the Internal Revenue Service (the "IRS Ruling") shall have been received to the effect that the adoption and implementation of the OPC Bylaw Amendments and the New Wholesale Power Contracts will not affect OPC's status for federal income tax purposes as a corporation operating on a cooperative basis; and (ii) Either a New Wholesale Power Contract, including RATE SCHEDULE A, shall have become effective for each Member or an OPC rate schedule which allocates to each Member responsibility for the fixed percentage of all costs of OPC's existing resources as provided in Exhibit 1 to Appendix 1 of RATE SCHEDULE A to the New Wholesale Power Contracts shall have otherwise become legally binding and effective as to each Member. (b) POSSIBLE MODIFICATIONS. If any changes in the governance provisions contemplated by the OPC Bylaw Amendments are required in order to obtain the IRS Ruling, OPC and the Members may develop changes that are mutually acceptable to OPC, the Members and the IRS. Any such modification to the OPC Bylaw Amendments may be adopted only by the requisite vote of the Members prescribed by applicable law and by OPC's Bylaws. 15 3.2 INTERIM GOVERNANCE. Until the terms of the individuals elected as the new OPC Board of Directors commence and the other governance changes contemplated by the OPC Bylaw Amendments are fully implemented in accordance with Section 3.1(a), the existing Board of Directors of OPC shall continue to serve as the directors of OPC. ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF OPC OPC represents and warrants to GTC and GSOC as follows: 4.1 ORGANIZATION AND QUALIFICATION, ETC. OPC is an electric membership corporation duly organized, validly existing and in good standing under the laws of the State of Georgia and has the corporate power and authority to own its properties and assets and to carry on its business as it is now being conducted. 4.2 AUTHORIZATION, ETC. OPC has the corporate power and authority to execute and deliver this Agreement and each additional contract which this Agreement contemplates will be executed and delivered by OPC (each such contract being referred to as an "Additional OPC Contract") and to consummate the transactions and actions contemplated hereby and thereby on the part of OPC. The execution and delivery by OPC of this Agreement and each Additional OPC Contract and the consummation by OPC of the transactions and actions contemplated on its part hereby and thereby have been duly authorized by the Board of Directors of OPC, and the Members of OPC have adopted the OPC Bylaw Amendments. This Agreement has been duly executed and delivered by OPC and is a valid agreement of OPC, enforceable against OPC in accordance with its terms, subject to (a) bankruptcy, insolvency and other laws of similar import, (b) principles of equity and (c) applicable public policy. 4.3 NON-CONTRAVENTION. Except as may be contemplated by this Agreement, the execution and delivery by OPC of this Agreement and each Additional OPC Contract and the consummation of the transactions and actions contemplated hereby and thereby, do not and will not: (a) violate any provision of the Articles of Incorporation or Bylaws of OPC; (b) violate, or result (with the giving of notice or the lapse of time or both) in a violation of any provision of, or result in the acceleration of or entitle any party to accelerate (whether after the giving of notice or lapse of time or both) any obligation under, or result in the creation or imposition of any lien, charge, pledge, security interest or other encumbrance upon any of the property of OPC pursuant to any provision of, any mortgage, lien, lease, agreement, license, instrument, law, ordinance, regulation, order, arbitration award, judgment or decree to which OPC is a party or by which OPC is bound; (c) violate or conflict with any other restriction of any kind or character to which OPC is subject or by which any assets of OPC may be bound; or (d) constitute an event permitting termination of any mortgage, lien, lease, agreement, license or instrument to which OPC is a party, in each case, if such violation, acceleration, entitlement to accelerate, creation or imposition of a lien, charge, pledge, security interest or other encumbrance, conflict, or event would, when 16 taken together with all such other violations, accelerations, entitlements to accelerate, creations and impositions of liens, charges, pledges, security interests and other encumbrances, conflicts, and events, affect materially and adversely the business of OPC or OPC's ability to consummate the transactions and actions contemplated by this Agreement. 4.4 GOVERNMENTAL CONSENTS, ETC. Except for the RUS approvals contemplated by Section 7.1(c), the IRS Ruling contemplated by Section 3.1(a), any filings and other coordination with the SEC and FERC contemplated by Sections 7.1(e) and (f), and any filings that may be required with the Federal Trade Commission and the Department of Justice under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), no consent, authorization, order or approval, or filing or registration with, any governmental commission, board or other regulatory body is required to be made or obtained by OPC for or in connection with the execution and delivery by OPC of this Agreement and each Additional OPC Contract and the consummation by OPC of the transactions and actions contemplated hereby and thereby, other than such as have been or, prior to the Closing Date, will be made or obtained. ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF GTC AND GSOC Each of GTC and GSOC represents and warrants to OPC and each other as follows, each such corporation making each representation and warranty severally as to itself only: 5.1 ORGANIZATION AND QUALIFICATION, ETC. GTC is an electric membership corporation duly organized, validly existing and in good standing under the laws of the State of Georgia. GSOC is a non-profit corporation duly organized, validly existing and in good standing under the laws of the State of Georgia. Each such corporation has the corporate power and authority to own the properties and assets it will own following the Closing Date (or following the GSOC Asset Transfer Date in the case of GSOC) and to carry on its business as it will be conducted following the Closing Date. 5.2 AUTHORIZATION, ETC. Such corporation has the corporate power and authority to execute and deliver this Agreement and each additional contract which this Agreement contemplates will be executed and delivered by GTC or GSOC, as the case may be (each such contract being referred to as an "Additional GTC Contract" or an "Additional GSOC Contract," respectively) and to consummate the transactions and actions contemplated hereby and thereby on the part of such corporation. The execution and delivery by such corporation of this Agreement and each Additional GTC Contract or each Additional GSOC Contract, as the case may be, and the consummation by such corporation of the transactions and actions contemplated on its part hereby and thereby have been duly authorized by the Board of Directors of such corporation. This Agreement has been duly executed and delivered by such corporation and is a valid agreement of such corporation, enforceable against such corporation in accordance with its terms, subject to 17 (a) bankruptcy, insolvency and other laws of similar import, (b) principles of equity and (c) applicable public policy. 5.3 NON-CONTRAVENTION. Except as may be contemplated by this Agreement, the execution and delivery by such corporation of this Agreement and each Additional GTC Contract or Additional GSOC Contract, as the case may be, and the consummation of the transactions and actions contemplated hereby and thereby, do not and will not: (a) violate any provision of the Articles of Incorporation or Bylaws of such corporation; (b) violate, or result (with the giving of notice or the lapse of time or both) in a violation of any provision of, or result in the acceleration of or entitle any party to accelerate (whether after the giving of notice or lapse of time or both) any obligation under, or result in the creation or imposition of any lien, charge, pledge, security interest or other encumbrance upon any of the property of such corporation pursuant to any provision of, any mortgage, lien, lease, agreement, license, instrument, law, ordinance, regulation, order, arbitration award, judgment or decree to which such corporation is a party or by which such corporation is bound; (c) violate or conflict with any other restriction of any kind or character to which such corporation is subject or by which any assets of such corporation may be bound; or (d) constitute an event permitting termination of any mortgage, lien, lease, agreement, license or instrument to which such corporation is a party, in each case, if such violation, acceleration, entitlement to accelerate, creation or imposition of a lien, charge, pledge, security interest or other encumbrance, conflict, or event would, when taken together with all such other violations, accelerations, entitlements to accelerate, creations and impositions of liens, charges, pledges, security interests and other encumbrances, conflicts, and events, affect materially and adversely the business of such corporation or such corporation's ability to consummate the transactions and actions contemplated by this Agreement. 5.4 GOVERNMENTAL CONSENTS, ETC. Except for the RUS approvals contemplated by Section 7.1(c), the IRS Ruling contemplated by Section 3.1(a), any filings and other coordination with the SEC and FERC contemplated by Sections 7.1(e) and (f), and any filings that may be required with the Federal Trade Commission and the Department of Justice under the HSR Act, no consent, authorization, order or approval, or filing or registration with, any governmental commission, board or other regulatory body is required to be made or obtained by such corporation for or in connection with the execution and delivery by such corporation of this Agreement and each Additional GTC Contract or Additional GSOC Contract, as the case may be, and the consummation by such corporation of the transactions and actions contemplated hereby, other than such as have been or, prior to the Closing Date, will be made or obtained. 18 ARTICLE 6 ADDITIONAL COVENANTS AND AGREEMENTS 6.1 CONDUCT OF BUSINESS. OPC covenants that during the period from the date hereof to the Closing Date, it shall conduct its operations in the ordinary and usual course of business, except as otherwise provided in or contemplated by this Agreement. 6.2 INTERIM COST ALLOCATIONS. Subject to any subsequent amendments or other changes by OPC's Board of Directors (and all necessary approvals thereof), the interim rate, OPC-15ir, approved and adopted by OPC's Board of Directors at its meeting on December 4, 1995 and currently applicable under the Existing Wholesale Power Contracts, shall continue in effect in accordance with its terms until the earlier of the Effective Date or December 31, 1996. 6.3 HSR ACT FILINGS. Following the execution of this Agreement, each party shall make appropriate filings as may be required, if any, with the Federal Trade Commission and the Department of Justice under the HSR Act, with respect to the transactions contemplated by this Agreement. In connection with any such filings, each party shall, in cooperation with each other, and from time to time thereafter, make all such further filings and submissions, and take such further actions, as may be required in connection therewith. Each party shall furnish the other all information in its possession necessary for compliance by the other with the provisions of this Section. No party shall withdraw any such filing or submission prior to the termination of this Agreement without the written consent of each other party required to file under the HSR Act. 6.4 CONSENTS, AUTHORIZATIONS, ETC. Each party hereto will use its reasonable efforts to obtain all consents, authorizations, waivers, orders and approvals from any governmental commission, board or other regulatory body, and to make all related filings and registrations, which may be necessary or desirable in connection with the consummation of any of the transactions and actions contemplated by this Agreement and by each additional contract which this Agreement contemplates will be executed by such party (each such contract applicable to a respective party being referred to as an "Applicable Additional Contract"). Each party also will use its reasonable efforts to obtain all consents, authorizations, waivers and approvals from any non-governmental third party which may be necessary or desirable in connection with the consummation of the transactions and actions contemplated by this Agreement and by each Applicable Additional Contract. Each party will cooperate fully with the other parties in assisting them to obtain such consents, authorizations, waivers, orders and approvals that the other parties are required to obtain or make. Without in any way limiting the foregoing, the parties shall use reasonable efforts to obtain the approval of RUS of all of the following (as well as the approvals and related actions by FFB, CoBank, Credit Suisse and the PCB Trustees necessary to implement the matters referenced in subsections (c) and (d)): (a) OPC CLOSING DATE DISTRIBUTION. The OPC Closing Date Distribution contemplated by Section 2.3; 19 (b) NEW WHOLESALE POWER CONTRACTS. The New Wholesale Power Contracts; (c) RELEASE FROM OPC MORTGAGE. Appropriate instruments to release from the OPC Mortgage and to permit the transfer by OPC to GTC of the Transmission Business; (d) GTC ASSUMPTION DOCUMENTS. The GTC PCB Assumption Agreements, the GTC Indenture, the GTC FFB Note(s), the GTC RUS Note(s), the GTC CoBank Note and the GTC Credit Suisse Note; (e) OPC INDENTURE. The OPC Indenture; (f) TRANSMISSION CONTRACTS. The Transmission Contracts between GTC and the Members and GTC and OPC; (g) GSOC MATTERS. The transfer to GSOC of the System Operations Business and the assumption by GSOC of the GSOC Assumed OPC Debt; (h) SYSTEM OPERATIONS CONTRACTS. The System Operations Contracts between GSOC and GTC, GSOC and OPC, and GSOC and the Members; and (i) OTHER MATTERS CONTEMPLATED HEREBY. Such other transactions, actions and contracts contemplated by this Agreement to the extent OPC determines that approval by the RUS of such matters is necessary. 6.5 IRS RULING. OPC shall use its reasonable efforts to obtain a favorable tax ruling of the Internal Revenue Service meeting the requirements of Section 3.1(a). 6.6 ACCESS; CONFIDENTIALITY. (a) ACCESS. Prior to and following the Closing Date, GTC and GSOC shall continue to have access to the premises, books and records, officers and employees of OPC at reasonable hours and the right to copy all books and records relating to the Transmission Business and the System Operations Business, respectively, as may be necessary or desirable for the conduct of the Transmission Business and the System Operations Business, respectively. The officers of OPC will furnish GTC and GSOC with such financial and operating data and other information with respect to the Transmission Business and the System Operations Business as GTC and GSOC may request from time to time. (b) CONFIDENTIALITY. Except as otherwise required in filings which any party makes with regulatory entities, any information which any party provides to the other or to the other's Representatives, whether written or oral, which is confidential or identified as confidential shall be treated as confidential material (the "Confidential Material"), except that this shall not apply to information that is generally available to the public or becomes generally available to the public other than as a result of a disclosure by the receiving party or its Representatives. For 20 purposes of this Agreement, the term "Representatives" shall mean a party's directors, officers, employees, attorneys, accountants, investment bankers, brokers, bankers and others engaged by such party or intended to be engaged by such party to advise it regarding the Confidential Material or the transactions contemplated hereby or to assist in financing the transactions contemplated hereby and who receive Confidential Material. It is hereby agreed that the Confidential Material will be used by the receiving party and/or its Representatives only for purposes of evaluating and facilitating the transactions contemplated hereby, and that the Confidential Material will be kept confidential by the receiving party and its Representatives; provided, however, that (i) any of such information may be disclosed to the receiving party's Representatives who need to know such information for purposes relating to the transactions contemplated hereby (it being understood that such Representatives shall be informed by the receiving party of the confidential nature of such information and shall be directed by the receiving party to treat such information confidentially), and (ii) any other disclosure of such information may be made to which the party providing the information consents in writing. The provisions of this Section 6.6(b) shall remain in effect for a period of three years after the date hereof; provided, however, that following the Effective Date, GTC and GSOC and their respective Representatives shall not be restricted hereunder with respect to any information regarding the Transmission Business and the System Operations Business, respectively. 6.7 EXPENSES. Whether or not the transactions and actions contemplated by this Agreement are consummated, all costs and expenses (including reasonable attorneys' and accountants' fees) incurred in connection with this Agreement and the transactions and actions contemplated hereby shall be allocated by agreement among the parties hereto, subject to the obligation of GTC to assume that portion of OPC's expenses included in the definition of Transmission Liabilities. 6.8 PUBLICITY. Except as otherwise required by law, OPC shall coordinate any press releases or other public announcements through the Closing Date with respect to this Agreement and the transactions contemplated hereby, and neither GTC nor GSOC shall act unilaterally in this regard without prior consultation with OPC. 6.9 ACTIONS TO AVOID AND NOTICES OF, BREACHES OF REPRESENTATIONS AND WARRANTIES. Each party: (a) shall take such actions so that such party's representations and warranties in this Agreement remain true and correct and shall not take any action that would cause such representations and warranties to cease to be true and correct; and (b) shall inform the other parties hereto promptly of any facts or circumstances that could be reasonably expected to constitute or result in a breach of any such party's representations and warranties in this Agreement. 6.10 ADDITIONAL AGREEMENTS. Subject to the terms and conditions herein provided, each of the parties hereto agrees to use its reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable to consummate and make effective, as soon as reasonably practicable, the transactions and actions contemplated by this Agreement. 21 ARTICLE 7 CLOSING CONDITIONS 7.1 CLOSING CONDITIONS. Subject in each case to the rights of OPC (with the approval of RUS when applicable) to waive (in whole or in part) any condition pursuant to Section 7.2, each party's obligation to consummate the transactions and actions contemplated by this Agreement is subject to the fulfillment, to the reasonable satisfaction of such party, of each of the following conditions, prior to or contemporaneously with the Closing; provided, however, that the full implementation of the OPC Bylaw Amendments and related governance changes are subject only to the fulfillment (or waiver) of the conditions contained in Section 3.1(a), and provided further that the transfer of the System Operations Assets and Liabilities to GSOC is subject only to the fulfillment (or waiver) prior to or contemporaneously with the GSOC Asset Transfer Date of the condition that the parties receive such approvals and consents described below that are specifically applicable to such transfer of the System Operation Assets and Liabilities and of the conditions contained in Sections 7.1(e) and (f) to the extent they relate to the sale and transfer of the System Operations Assets. (a) GOVERNANCE CHANGES. The conditions set forth in Section 3.1(a) shall have been satisfied or waived in accordance with the provisions of Section 3.1(a), the OPC Bylaw Amendments shall have been implemented on a full and unconditional basis, and the terms of the individuals elected as the new Board of Directors of OPC pursuant to the OPC Bylaw Amendments shall have commenced. (b) MEMBER AGREEMENT. The Member Agreement shall have been executed and delivered by and among all Members, OPC, GTC and GSOC. (c) RUS APPROVALS. RUS shall have approved: (i) The OPC Closing Date Distribution; (ii) The New Wholesale Power Contracts; (iii) The transfer of the Transmission Business to GTC, the related release from the OPC Mortgage contemplated by Section 6.4(c) (which release shall be joined in by the other secured parties under the OPC Mortgage), the GTC PCB Assumption Agreements, the GTC Indenture, the GTC FFB Note(s), the GTC RUS Note(s), the GTC CoBank Note, the GTC Credit Suisse Note, the Transmission Contracts, the transfer of the System Operations Business to GSOC, the assumption by GSOC of the GSOC Assumed OPC Debt, and the System Operations Contracts; (iv) The OPC Indenture; and 22 (v) The other transactions, actions and contracts contemplated by this Agreement to the extent OPC determines that approval by the RUS of such matters is necessary. (d) HART-SCOTT-RODINO. Any applicable waiting period under the HSR Act shall have expired or been terminated, and no proceeding by the Department of Justice or the Federal Trade Commission shall be pending or threatened with respect to the transactions contemplated by this Agreement, which, if determined adversely, would have a material adverse effect on the financial condition or results of operations of OPC, GTC or GSOC. (e) PUHCA MATTERS. A no-action letter shall have been obtained from the SEC to the effect that none of the members of GTC or GSOC shall be deemed a public utility holding company within the meaning of the Public Utility Holding Company Act of 1935, or there shall have otherwise been obtained assurance satisfactory to OPC that the parties will be exempt from compliance or in compliance with such Act and related regulations of the SEC. (f) FEDERAL POWER ACT MATTERS. There shall have been obtained assurance satisfactory to OPC that the parties will be exempt from compliance or in compliance with the Federal Power Act and related regulations of FERC. (g) NO INJUNCTION, ETC. There shall be no judgment, decree, injunction, ruling or order of any court, governmental department, commission, agency or instrumentality outstanding against OPC, GTC or GSOC which prohibits, restricts or delays consummation of the transactions and other actions contemplated hereby or limits the right of GTC to control in any material respect the Transmission Business after the Closing or the right of GSOC to control in any material respect the System Operations Business after the transfer of such business to GSOC. (h) OTHER CONSENTS, AUTHORIZATIONS, ETC. In addition to the approvals described under any of the foregoing provisions of this Section 7.1, all other consents, authorizations, waivers, orders and approvals of, and filings and registrations with, any governmental commission, board or other regulatory body or any non-governmental third party which are required for or in connection with the execution and delivery by OPC, GTC and GSOC of this Agreement and each Applicable Additional Contract and the consummation by OPC, GTC and GSOC of the transactions and actions contemplated hereby shall have been obtained or made. (i) REPRESENTATIONS AND WARRANTIES; COMPLIANCE WITH COVENANTS AND OBLIGATIONS. In the case of each party: (A) the representations and warranties of each of the other parties contained in this Agreement shall have been true and correct at the date hereof and also shall be true and correct in all material respects at and as of the Closing (and, to the extent applicable, at and as of the GSOC Asset Transfer Date), except for changes contemplated by this Agreement, with the same force and effect as if made at and as of the Closing (and, to the extent applicable, at and as of the GSOC Asset Transfer Date); (B) each of the other parties shall have performed and complied with in all material respects all agreements and covenants required by this Agreement to be performed or complied with by it at or prior to the Closing (and, to the extent applicable, at or prior to the GSOC Asset Transfer Date); and (C) each party shall have 23 received one or more certificates of the President or other senior executive officer of each of the other parties certifying, to the best of his or her knowledge, all of the foregoing effects. (j) CONFIRMATION OF RATINGS. OPC shall have received confirmation from two rating agencies then rating OPC's outstanding fixed rate uninsured pollution control bonds that the ratings assigned by such rating agencies to such bonds shall not be lowered as a result of the consummation of the transactions and actions contemplated hereby. Such rating agencies also shall have provided satisfactory assurance that they would assign to any comparable bonds issued directly by GTC the same or higher ratings as those assigned to OPC's fixed rate uninsured pollution control bonds on the Effective Date. (k) NEW WHOLESALE POWER CONTRACTS. A New Wholesale Power Contract shall have been executed, delivered and approved by RUS for each Member. (l) MEMBERSHIP IN GTC. The Members shall have completed the actions necessary to become Members of GTC. (m) TRANSMISSION CONTRACTS. A Transmission Contract between GTC and each Member and between GTC and OPC shall have been executed, delivered and approved by RUS. (n) MEMBERSHIP IN GSOC. The Members shall have completed the actions necessary to become Members of GSOC. (o) SYSTEM OPERATIONS CONTRACTS. The System Operations Contracts between GSOC and OPC, GSOC and GTC, and GSOC and each Member shall have been executed, delivered and approved by RUS. (p) STATE TAX MATTERS. Satisfactory assurance shall have been obtained from the Georgia Department of Revenue (or otherwise) with respect to Georgia sales tax associated with the transfer of the Transmission Assets from OPC to GTC. (q) OPINIONS OF COUNSEL AND CERTIFIED RESOLUTIONS. All opinions of counsel to each Member and all certificates from each Member as to such legal matters as RUS shall require to be covered by any opinions or certificates and all certified resolutions evidencing approval of the Member Agreement and each Additional Member Contract (as defined in the Member Agreement), in the form required by RUS, shall have been delivered. 7.2 WAIVER OF CONDITIONS. At its option, the Board of Directors of OPC may waive any or all of the conditions (in whole or in part) contained herein, except for those contained in Sections 7.1(c) and 7.1(d). 24 ARTICLE 8 CLOSING 8.1 CLOSING. Provided that all of the conditions set forth in Article 7 shall have been satisfied or waived, evidence of the fulfillment or waiver of such conditions shall be provided, and all documents and payments required to be delivered or made or otherwise necessary or desirable to consummate the transactions contemplated hereby (other than those consummated on the GSOC Asset Transfer Date) shall be executed and delivered and paid, by the parties hereto to each other at a closing (the "Closing") to be held at the offices of Sutherland, Asbill & Brennan, 999 Peachtree Street, N.E., Atlanta, Georgia 30309 at 10:00 a.m. Eastern time, on January 3, 1997 (or at such other date, time and place as OPC, GTC and GSOC may mutually agree). If the parties mutually agree to reschedule the Closing from January 3, 1997 to another date, the parties also shall cooperate with each other to make and appropriately document all adjustments as may be necessary or desirable in other dates contained in this Agreement which relate to the timing of the Closing. 8.2 PRE-CLOSING. The parties hereto shall cooperate with one another and shall seek the cooperation of the Members so that: (a) a pre-Closing (the "Pre- Closing") can occur at the Atlanta offices of Sutherland, Asbill & Brennan on a date and at a time to be set by the OPC Board (on or before December 2, 1996, if possible); and (b) all documents that are a condition to Closing can be executed and delivered at or before such Pre-Closing, with such delivery being either to each other or to Sutherland, Asbill & Brennan to be held in escrow until the Closing Date and then delivered. The parties hereto agree, and the parties shall seek to obtain each Member's agreement in the Member Agreement, that any document delivered in escrow to Sutherland, Asbill & Brennan may be delivered on the Closing Date to the appropriate recipient(s) without further authorization, unless Barrett K. Hawks or Cada T. Kilgore, III of Sutherland, Asbill & Brennan actually receives a written notice from the party or Member that executed such document: indicating that a representation, warranty, certification, opinion or similar matter in such document is no longer true; setting forth the specific reason why such document cannot be delivered; and providing a substitute document which conforms as nearly as possible to the requirements applicable to the original document. 8.3 DELIVERIES AT OR PRIOR TO GSOC ASSET TRANSFER DATE. Provided that all applicable conditions to the sale and transfer of the System Operations Assets and Liabilities have been satisfied or waived, at or prior to the GSOC Asset Transfer Date (or any mutually agreed date for pre-closing such transaction), OPC and GSOC shall execute and deliver all documents necessary or desirable to consummate such transaction and evidence the satisfaction or waiver of applicable conditions. 25 ARTICLE 9 TERMINATION AND ABANDONMENT 9.1 TERMINATION AND ABANDONMENT. This Agreement and all transactions and actions contemplated hereby may be terminated and abandoned in either manner set forth below at any time prior to the Closing Date, subject to any earlier implementation of the effectiveness of the OPC governance changes contemplated by, and effected pursuant to, Article 3 and subject to any earlier completion of the transfer of the System Operations Assets and Liabilities to GSOC on the GSOC Asset Transfer Date: (a) BY MUTUAL ACTION. By mutual action of the Boards of Directors of OPC, GTC and GSOC. (b) BY OPC. By OPC if any condition set forth in Section 7.1 shall not have been complied with or performed in any material respect and such non- compliance or non-performance shall not have been cured or eliminated (or by its nature cannot be cured or eliminated other than by waiver) on or before March 15, 1997. 9.2 PROCEDURE FOR TERMINATION. The termination and abandonment of this Agreement and/or any of the transactions and actions contemplated hereby other than pursuant to mutual action under Section 9.1(a) shall be effective only when OPC gives written notice, signed by OPC, stating the grounds for such termination and abandonment, to the other parties. 9.3 EFFECT OF TERMINATION. In the event of the termination and abandonment of this Agreement and/or any of the transactions and actions contemplated hereby, no party shall have any liability (regardless of fault or control) if such termination and abandonment is by mutual action pursuant to Section 9.1(a), and no party hereto shall have any liability if this Agreement and/or any of the transactions and actions contemplated hereby are otherwise terminated or abandoned in accordance with Section 9.1, unless the failure to consummate or fulfill a condition is within the reasonable control of such party, in which case the party or parties having such reasonable control shall continue to be liable hereunder. ARTICLE 10 MISCELLANEOUS 10.1 SURVIVAL. The representations and warranties of the parties contained in Articles 4 and 5 hereof shall not survive the Closing. The covenants and other agreements contained in Sections 2.4(c), 2.4(d), 2.4(f), 2.8, 2.11, 2.12, 6.6, 6.7 and 10.2 shall survive the Closing. 10.2 DISPUTE RESOLUTION AND ARBITRATION. In the event of any disputes under this Agreement, the parties agree to try in good faith to settle the dispute by mediation under the 26 Commercial Mediation Rules of the American Arbitration Association, before resorting to arbitration or some other dispute resolution procedure; provided that a party may not invoke mediation unless it has provided the other with written notice of the dispute and has attempted in good faith to resolve such dispute through negotiation. If the parties involved in such dispute shall not have reached agreement by negotiation or mediation within 120 days as to the matter in question, then the matter in dispute shall be submitted to and settled by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association (subject to the provisions stated below). Notwithstanding the foregoing, any party may seek immediate equitable relief, without attempting to settle a dispute through mediation, in any case where such party is entitled to equitable relief by the terms of this Agreement or otherwise. (a) ARBITRATION PROCEDURES. The arbitrators shall have the right to employ experts to assist them in any arbitration proceeding under this Section and shall have the right to render equitable, as well as other, awards and relief. Before submitting a list of potential arbitrators to the parties for their consideration, the American Arbitration Association shall consult with each party to discuss the applicable qualifications for the proposed arbitrators. Upon request by the parties involved in the dispute, the American Arbitration Association shall select a panel of at least three arbitrators, but if no such request is made by the time the parties comment on any proposed list of arbitrators, the American Arbitration Association may select a single arbitrator unless the American Arbitration Association determines that a greater number of arbitrators is appropriate. (b) ARBITRATION DECISION. Any decision of the arbitrator(s) shall be satisfied as provided in the order of the arbitrator(s). If necessary, any such decision and satisfaction procedure may be enforced by the prevailing party in any court of record having jurisdiction over the subject matter or over any of the parties. 10.3 SPECIFIC PERFORMANCE, ETC. The parties hereto acknowledge that the rights of the other parties to consummate the transactions contemplated hereby are special, unique, and of extraordinary character, and that, in the event that any party violates or threatens to violate or fails and refuses to perform any covenant made by it herein, then the other parties hereto will be without adequate remedy at law. Therefore, each party agrees, that, in the event it violates, breaches, threatens to violate or breach, or fails and refuses to perform any covenant made by it herein, then the other applicable party or parties hereto, so long as it or they are not in breach hereof, may, in addition to any remedies at law, institute and prosecute an action in a court of competent jurisdiction to enforce specific performance of such covenant or seek any other equitable relief against the defaulting party. 10.4 WAIVER. The failure of any party hereto at any time or times to require performance of any provisions hereof shall in no manner affect the right to enforce the same. No waiver by any party of any condition, or the breach of any term, provision, warranty, representation, agreement or covenant contained in this Agreement or the other contracts contemplated hereby, whether by conduct or otherwise, in any one or more instances shall be deemed or construed as a further or continuing waiver of any such condition or breach or a waiver 27 of any other condition or of the breach of any other term, provision, warranty, representation, agreement or covenant herein or therein contained. 10.5 NOTICES. Any notices or other communications required or permitted hereunder shall be sufficiently given if either (a) delivered personally, by courier or nationally recognized next business day delivery service or Express Mail, (b) transmitted by telecopy mechanism, provided that any notice so given is also sent for delivery as provided in clause (a) or mailed as provided in clause (c), or (c) sent by registered or certified mail, postage prepaid, addressed to each applicable party at the address shown below (or to such other address or person as any party shall have designated by notice to the other party): If to OPC: Oglethorpe Power Corporation 2100 East Exchange Place Tucker, Georgia 30085-1349 Attention: President and Chief Executive Officer Fax: (770) 270-7977 If to GTC: Georgia Transmission Corporation 2100 East Exchange Place Tucker, Georgia 30085-1349 Attention: President Fax: (770) 270-7977 If to GSOC: Georgia System Operations Corporation 2100 East Exchange Place Tucker, Georgia 30085-1349 Attention: President Fax: (770) 270-7977 Each such notice or other communication shall be effective (i) if given by telecopy, when transmitted to the applicable number so specified in (or pursuant to) this Section and an appropriate answer back is received, or (ii) if given by any other means, when actually received at such address. 10.6 COUNTERPARTS; FACSIMILE DELIVERY. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Any party may deliver an executed copy of this Agreement and an executed copy of any documents contemplated hereby by facsimile transmission to another party except when the law expressly requires physical delivery with respect to stock certificates or other special types of documents, and such delivery shall have the same force and effect as any other delivery of a manually signed copy of this Agreement or such other document. 28 10.7 HEADINGS. The headings herein are for convenience of reference only, do not constitute a part of this Agreement, and shall not be deemed to limit or affect any of the provisions hereof. 10.8 AMENDMENT. This Agreement may be amended at any time by OPC, GTC and GSOC by written instrument executed by the parties affected by such amendment. 10.9 SEVERABILITY. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law or public policy, all other terms and provisions of this Agreement will nevertheless remain in full force and effect so long as the economic or legal substance of the transactions and other actions contemplated hereby is not affected in any manner adverse to any party hereto. Upon any such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto will negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that the transactions and other actions contemplated by this Agreement are consummated to the extent possible. 10.10 MISCELLANEOUS. This Agreement (a) constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, among the parties, with respect to the subject matter hereof; (b) is not intended to confer upon any person other than the parties hereto any rights or remedies hereunder; (c) shall not be assigned, by operation of law or otherwise; and (d) shall be governed in all respects, including validity, interpretation and effect, by the laws of the State of Georgia except that the Federal Arbitration Act shall govern any arbitration proceedings. [Signatures are on the following page.] 29 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed, and their seals affixed, on the date first above written. OPC: [CORPORATE SEAL] OGLETHORPE POWER CORPORATION (AN ELECTRIC MEMBERSHIP GENERATION & TRANSMISSION CORPORATION) By: /s/ J. Calvin Earwood ---------------------------------------------- J. Calvin Earwood, Chairman of the Board Attest: /s/ Gary M. Bullock - ----------------------------------------- Gary M. Bullock, Secretary-Treasurer GTC: [CORPORATE SEAL] GEORGIA TRANSMISSION CORPORATION (AN ELECTRIC MEMBERSHIP CORPORATION) By: /s/ Charles R. Fendley ---------------------------------------------- Charles R. Fendley, Chairman of the Board Attest: /s/ Roy Tollerson, Jr. - ----------------------------------------- Roy Tollerson, Jr., Secretary GSOC: [CORPORATE SEAL] GEORGIA SYSTEM OPERATIONS CORPORATION By: /s/ James E. Estes ---------------------------------------------- James E. Estes, Chairman of the Board Attest: /s/ Jarnett W. Wigington - ----------------------------------------- Jarnett W. Wigington, Secretary-Treasurer 30 EX-3.II 3 EXHIBIT 3(II) EXHIBIT 3(ii) OGLETHORPE POWER CORPORATION (AN ELECTRIC MEMBERSHIP GENERATION & TRANSMISSION CORPORATION) BYLAWS AS AMENDED BY THE MEMBERS SEPTEMBER 9, 1996 TABLE OF CONTENTS Article I. Membership . . . . . . . . . . . . . . . . . . . . . . . 1 Section 1. Qualifications for Membership. . . . . . . . . . . . . . 1 Section 2. Membership Fee . . . . . . . . . . . . . . . . . . . . . 1 Section 3. Purchase of Capacity and Energy by Members . . . . . . . 1 Section 4. Payment by Members of Obligations to the Corporation . . 1 Section 5. Non-liability of Members for Debts of the Corporation. . 1 Section 6. Expulsion of Member. . . . . . . . . . . . . . . . . . . 1 Section 7. Withdrawal of Member . . . . . . . . . . . . . . . . . . 2 Section 8. Transfer of Membership . . . . . . . . . . . . . . . . . 2 Article II. Meetings of Members. . . . . . . . . . . . . . . . . . . 2 Section 1. Annual Meeting of Members. . . . . . . . . . . . . . . . 2 Section 2. Special Meetings of Members. . . . . . . . . . . . . . . 2 Section 3. Notice of Meetings of Members. . . . . . . . . . . . . . 2 Section 4. Quorum for Meetings of Members; Adjournment. . . . . . . 3 Section 5. Voting; Member Action. . . . . . . . . . . . . . . . . . 3 Section 6. Member Representative. . . . . . . . . . . . . . . . . . 3 Section 7. Notification of Corporation of Identity of Member Representative and Alternate Representative. . . . . . . 4 Section 8. Written Consent of Members . . . . . . . . . . . . . . . 4 Article III. Directors. . . . . . . . . . . . . . . . . . . . . . . . 4 Section 1. General Powers of Board of Directors . . . . . . . . . . 4 Section 2. Number of Directors and Alternate Directors. . . . . . . 4 Section 3. Qualifications of Directors and Alternate Directors. . . 5 Section 4. Powers and Duties of Alternate Directors . . . . . . . . 5 Section 5. Nomination and Election of Directors and Alternate Directors . . . . . . . . . . . . . . . . . . 5 Section 6. Term of Directors . . . . . . . . . . . . . . . . . . . 5 Section 7. Filling Vacancies on Board of Directors . . . . . . . . 6 Section 8. Removal of Directors. . . . . . . . . . . . . . . . . . 6 -i- Section 9. Compensation of Directors . . . . . . . . . . . . . . . 7 Section 10. Power of Directors to Adopt Rules, Regulations and Policies. . . . . . . . . . . . . . . . 7 Section 11. Power of Board of Directors or Chairman of the Board to Appoint Committees . . . . . . . . . . . . . . . . . 7 Article IV. Meetings of Directors . . . . . . . . . . . . . . . . . 7 Section 1. Regular Meetings of Directors . . . . . . . . . . . . . 7 Section 2. Special Meetings of Directors . . . . . . . . . . . . . 7 Section 3. Notice of Special Meetings of Directors . . . . . . . . 7 Section 4. Quorum for Meeting of Directors . . . . . . . . . . . . 8 Section 5. Action of Board of Directors. . . . . . . . . . . . . . 8 Section 6. Written Consent of Directors. . . . . . . . . . . . . . 8 Article V. Officers. . . . . . . . . . . . . . . . . . . . . . . . 9 Section 1. Officers; Qualifications. . . . . . . . . . . . . . . . 9 Section 2. Election and Term of Office of Officers . . . . . . . . 9 Section 3. Removal of Officers . . . . . . . . . . . . . . . . . . 9 Section 4. Vacancies of Offices. . . . . . . . . . . . . . . . . . 9 Section 5. Chairman of the Board . . . . . . . . . . . . . . . . . 9 Section 6. Vice Chairman of the Board. . . . . . . . . . . . . . . 9 Section 7. Secretary . . . . . . . . . . . . . . . . . . . . . . . 10 Section 8. Treasurer . . . . . . . . . . . . . . . . . . . . . . . 10 Section 9. President and Chief Executive Officer . . . . . . . . . 10 Section 10 Appointment of Officers and Agents. . . . . . . . . . . 10 Section 11 Bonds of Officers . . . . . . . . . . . . . . . . . . . 10 Section 12 Compensation of Officers. . . . . . . . . . . . . . . . 10 Article VI. Cooperative Operation . . . . . . . . . . . . . . . . . 11 Section 1. Interest or Dividends on Capital Prohibited . . . . . . 11 Section 2. Patronage Capital in Connection with Furnishing Electric Energy . . . . . . . . . . . . . . . . . . . . 11 Section 3. Accounting System and Reports . . . . . . . . . . . . . 12 Article VII. Indemnification and Insurance . . . . . . . . . . . . . 12 Section 1. Indemnification . . . . . . . . . . . . . . . . . . . . 12 -ii- Section 2. Insurance . . . . . . . . . . . . . . . . . . . . . . . 12 Article VIII. Seal. . . . . . . . . . . . . . . . . . . . . . . . . . 13 Article IX. Amendment . . . . . . . . . . . . . . . . . . . . . . . 13 -iii- ARTICLE I MEMBERSHIP SECTION 1. QUALIFICATIONS FOR MEMBERSHIP. Any "EMC" (as defined in Section 46-3-171(3) of the Georgia Electric Membership Corporation Act) shall be eligible to become a Member. An EMC desiring to become a Member shall submit to the Secretary of the Corporation an application for membership in writing. The application shall be presented to the Board of Directors at the next meeting of the Board held ninety days or more after the date of submission of the application. The applicant shall become a Member at such time as the Board of Directors has approved its application and the EMC has: (a) Paid the membership fee established pursuant to Section 2 of this Article I; (b) Executed an agreement to purchase capacity and energy at wholesale from the Corporation on terms and conditions satisfactory to the Board of Directors; (c) Agreed to comply with and be bound by the Articles of Incorporation and Bylaws of the Corporation, as amended from time to time, and such policies, rules and regulations as may from time to time be adopted by the Board of Directors; and (d) Satisfied all other conditions established for membership by the Board of Directors. SECTION 2. MEMBERSHIP FEE. The amount of the fee for admission to membership shall be established from time to time by the Board of Directors. SECTION 3. PURCHASE OF CAPACITY AND ENERGY BY MEMBERS. Each Member shall purchase capacity and energy from the Corporation on such terms and conditions as are provided in the Wholesale Power Contract between the Corporation and the Member as the same may exist from time to time. SECTION 4. PAYMENT BY MEMBERS OF OBLIGATIONS TO THE CORPORATION. Each Member shall pay any and all amounts which may from time to time become due and payable by the Member to the Corporation as and when the same shall become due and payable. SECTION 5. NON-LIABILITY OF MEMBERS FOR DEBTS OF THE CORPORATION. A Member shall not, solely by virtue of its status as such, be liable for the debts of the Corporation; and the property of a Member shall not, solely by virtue of its status as such, be subject to attachment, garnishment, execution or other procedure for the collection of such debts. SECTION 6. EXPULSION OF MEMBER. Any Member which shall have violated or refused to comply with any of the provisions of the Articles of Incorporation of the Corporation, these Bylaws, or any policy, rule or regulation adopted from time to time by the Board of Directors may be expelled from membership by the affirmative vote of not less than two-thirds of all of the Directors. Any Member so expelled may be reinstated as a Member by a majority vote of all of the Directors. Termination of membership shall not release the Member from its debts, liabilities or obligations to the Corporation, including, without limitation, its obligations under the Wholesale Power Contract between the Member and the Corporation. -1- SECTION 7. WITHDRAWAL OF MEMBER. Any Member may withdraw from membership upon payment in full, or making adequate provisions for the payment in full, of all its debts to the Corporation and upon satisfying or making adequate provisions for the satisfaction of all its liabilities and obligations to the Corporation, including, without limitation, its obligations under the Wholesale Power Contract between the Member and the Corporation, and upon compliance with such other terms and conditions as the Board of Directors may prescribe. SECTION 8. TRANSFER OF MEMBERSHIP. Upon consolidation, merger or sale of substantially all its assets, a Member may transfer its membership to its corporate successor or the purchaser of such assets if such successor or purchaser is otherwise eligible for membership and has met the requirements for membership set forth in this Article I, upon satisfying or making adequate provisions for the satisfaction of all its liabilities and obligations to the Corporation including, without limitation, its obligations under the Wholesale Power Contract between the Member and the Corporation, and upon satisfying any additional terms and conditions the Board of Directors may establish for such transfer, including, without limitation, the payment of a reasonable fee for the transfer. A membership in the Corporation shall not otherwise be transferable. ARTICLE II MEETINGS OF MEMBERS SECTION 1. ANNUAL MEETING OF MEMBERS. The annual meeting of Members shall be held during the month of March each year at a time and place within the service area of the Corporation designated by the Board of Directors; provided that failure to hold the annual meeting shall not work a forfeiture nor shall such failure affect otherwise valid corporate acts. SECTION 2. SPECIAL MEETINGS OF MEMBERS. Special meetings of Members may be called by the Chairman of the Board, twenty- five percent of the directors, or upon written request of at least ten percent of all the Members. Members shall request the call of a special meeting of Members by presenting to the Secretary of the Corporation resolutions of their Boards of Directors authorizing such action. Special meetings of the Members shall be held at the time specified by the person or persons calling the meeting, and at such place within the service area of the Corporation as the Board of Directors shall designate from time to time. In the case of any special meeting of Members called upon the request of less than twenty-five percent of the Members, a majority of the Members present at such meeting may by vote assess all of the expenses of such meeting against the Members requesting the call of the meeting. SECTION 3. NOTICE OF MEETINGS OF MEMBERS. Written notice stating the place, the day and the hour of a meeting of Members and, in case of a special meeting, the purpose or purposes for which the meeting is called, shall be provided not less than five nor more than ninety days before the date of the meeting by any reasonable means, by or at the direction of the Chairman of the Board, the Secretary or the persons calling the meeting. Reasonable means for providing such notice shall include, but not be limited to, United States mail -2- and personal delivery. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail with adequate prepaid first class postage thereon addressed to the Member at its address as it appears on the record books of the Corporation. The notice of any special meeting of Members shall state the purpose or purposes for which the meeting is called. Notice of any meeting of Members need not be given to any Member who signs a waiver of notice, either before or after the meeting. Attendance of a Member at a meeting shall of itself constitute waiver of notice of such meeting and waiver of any and all objections to the place of the meeting, the time of the meeting, or the manner in which it has been called or convened, except when a Member attends the meeting solely for the purpose of stating, at the beginning of the meeting, any such objection or objections to the transaction of business. SECTION 4. QUORUM FOR MEETINGS OF MEMBERS; ADJOURNMENT. A majority of the Members shall constitute a quorum for any meeting of Members. A majority of those present may adjourn the meeting from time to time, whether or not a quorum is present. When a meeting is adjourned to another time or place, it shall not be necessary to give any notice of the adjourned meeting if the time and place to which the meeting is adjourned are announced at the meeting at which the adjournment is taken; and at the adjourned meeting, any business may be transacted that might have been transacted on the original date of the meeting. If, however, after the adjournment, the Members fix a new record date for the adjourned meeting, a notice of the adjourned meeting shall be given to each Member in compliance with Section 3 of this Article II. SECTION 5. VOTING; MEMBER ACTION. (a) Each Member shall be entitled to one vote upon each matter submitted to a vote at a meeting of Members. If a quorum is present at a meeting, the affirmative vote of a majority of the Members represented at the meeting shall be the act of the membership unless the vote of a greater number is required by law, the Articles of Incorporation or these Bylaws. (b) The Corporation shall not, without the affirmative vote of three-fourths of the Members, study, finance or participate in any transfer of assets, Corporate reorganization or other transaction the result of which would be to allow the Corporation or another corporation which controls or is controlled by the corporation to own or control in any manner all or a substantial portion of the assets of one or more of the Members. Notwithstanding the provisions of Article IX hereof, the provisions of this Subsection (b) may not be altered, amended or repealed except by the affirmative vote or three-fourths of the Members. SECTION 6. MEMBER REPRESENTATIVE The Board of Directors of each Member shall appoint a member of such Board to represent and cast the vote of the Member at all meetings of Members and shall appoint as an Alternate Representative the General Manager or a person having the duties of a General Manager of the Member. Each Member shall be entitled to have a representative and alternate representative present at each meeting of Members. If the Representative is absent from a meeting of Members, the Alternate Representative may represent and cast the vote of the Member at such meeting. If the Representative shall die, resign or be removed, then the Alternate Representative may represent and cast the vote of the Member until a new Representative is appointed. If a Member has no Representative and no Alternate Representative, an officer of the Member may represent and cast the vote of the Member. -3- In case of conflicting representation by the officers of a Member, the Member shall be deemed to be represented by its senior officer in the order specified in Section 46-3-266(c) of the Georgia Electric Membership Corporation Act. The person authorized to cast the vote of a Member in accordance with this Section 6 shall be conclusively presumed to be authorized to vote as he sees fit on all matters submitted to a vote of the Members unless such Member shall specifically limit the voting power of its Representative, Alternate Representative or officers, as the case may be, by a written statement executed by the President or Vice President and the Secretary under its corporate seal pursuant to a resolution duly adopted by its Board of Directors, and delivered to the Secretary of the Corporation. SECTION 7. NOTIFICATION OF CORPORATION OF IDENTITY OF MEMBER REPRESENTATIVE AND ALTERNATE REPRESENTATIVE. Each Member shall file with the Secretary of the Corporation a written statement executed by the President or Vice President and the Secretary of the Member under its corporate seal, stating the name of its Representative and Alternate Representative and, in the case of the representative, the date of expiration of his respective term as a director of the Member. The statement shall contain a certification that the Member Representative and Alternate Representative have been appointed in accordance with a resolution duly adopted by the Board of Directors of the Member. A Member may, at any time by resolution of its Board of Directors and notice to the Corporation, terminate the appointment of its Representative or Alternate Representative. Notice to the Corporation of such action shall be by a written statement executed by the President or Vice President and the Secretary of such Member under its corporate seal. SECTION 8. WRITTEN CONSENT OF MEMBERS. Any action required to be taken at a meeting of the Members, or any action which may be taken at a meeting of the Members, may be taken without a meeting if a written consent setting forth the action so taken shall be signed by persons duly authorized to cast the vote of each Member. ARTICLE III DIRECTORS SECTION 1. GENERAL POWERS OF BOARD OF DIRECTORS. The business and affairs of the Corporation shall be managed by a Board of Directors which shall be elected by the Members. SECTION 2. NUMBER OF DIRECTORS AND ALTERNATE DIRECTORS. The Board of Directors of the Corporation shall consists of as many directors as there are Members. There shall be an Alternate Director for each Director. -4- SECTION 3. QUALIFICATIONS OF DIRECTORS AND ALTERNATE DIRECTORS. A Director must be a director of the Member which has the right to nominate him and his Alternate Director must be the General Manager, or the person who has the duties of a general manager, of such Member. Any Director who ceases to be a director of the Member which nominated him and any Alternate Director who ceases to be the General Manager or person having the duties of a general manager of the Member which nominated him shall simultaneously cease to be a Director or Alternate Director, as the case may be, of the Corporation, and the vacancy so created shall be filled in the manner set forth in Section 7 of this Article III. SECTION 4. POWERS AND DUTIES OF ALTERNATE DIRECTORS. Each Alternate Director may attend all meetings of the Board of Directors and may advise with Directors at such meetings. An Alternate Director may vote and be counted for quorum purposes and shall have all other powers and duties of a Director only during the period when the directorship is vacant or at any meeting of the Board of Directors from which the Director is absent. Any notices required by law or these Bylaws to be given to the Director shall also be given to the Alternate Director. SECTION 5. NOMINATION AND ELECTION OF DIRECTORS AND ALTERNATE DIRECTORS. At least forty-five days prior to the annual meeting of Members, the Secretary of the Corporation shall give written notice by first class United States mail to each Member which has a director serving on the Board of Directors of the Corporation and a general manager or a person having the duties of a general manager serving as Alternate Director whose terms will expire on or prior to the date of such annual meeting, that it is the duty of the Board of Directors of the Member to nominate by resolution a person to serve as a Director of the Corporation and a person to serve as an Alternate Director for such Director, for the ensuing term. Each such Member shall deliver a certified copy of its nominating resolution to the Secretary of the Corporation. In the event, and only in the event, any Member fails to submit to the Secretary a resolution nominating a Director and Alternate Director, nominations for such positions may be made from the floor during the annual meeting of Members. The nominations shall be submitted to the annual meeting of Members held on the date of expiration of the Director and Alternate Director terms. SECTION 6. TERM OF DIRECTORS. The terms of a Director and his Alternate Director shall be the same and shall be arranged by the Members so that approximately one-third expire each year on the date of the annual meeting of Members. Notwithstanding the foregoing, the term of each Director and Alternate Director shall expire contemporaneously with the commencement of the term of Directors elected pursuant to any amendment to these Bylaws adopted by the Members which reduces the number of Directors that constitute the Board of Directors. Any Director or Alternate Director may succeed himself in office. Notwithstanding the provisions of Article IX hereof, the provisions of this Section 6 may not be altered, amended or repealed by the Directors. -5- SECTION 7. FILLING VACANCIES ON BOARD OF DIRECTORS. Vacancies occurring among the Directors or Alternate Directors shall be filled by the Board of Directors at its next meeting held sixty days or more after the occurrence of the vacancy unless: (a) the Member which has the right to nominate the successor to such Director or Alternate Director requests by notice to the Secretary of the Corporation that the vacancy be filled at the next meeting of the Board of Directors following the date of such request, (b) the Member which has the right to nominate the successor to such Director or Alternate Director requests by notice to the Secretary of the Corporation within thirty days after the occurrence of the vacancy that the vacancy be filled by the Members. If such a notice is received by the Secretary, the vacancy shall be filled at the next annual meeting of Members held after such request or, if the next annual meeting of Members is or may be scheduled more than ninety days after the occurrence of the vacancy, and if such Member so requests in its notice to the Secretary of the Corporation, the vacancy shall be filled at a special meeting of Members called for such purpose within sixty days after the occurrence of the vacancy. The Member which had the right to nominate the Director or Alternate Director who created the vacancy shall have the right to nominate his successor, by delivering to the Secretary of the Corporation a resolution of its Board of Directors making the nomination prior to the date of the meeting of the Board of Directors, the annual meeting or specially called meeting, as the case may be, at which the vacancy is to be filled. In the event the vacancy is created by an increase in the number of Directors upon the admission of a new Member, the new Member shall deliver the resolution making nominations for the new Director and Alternate Director. The nominations shall be submitted to the next meeting of the Board of Directors held sixty days or more after the occurrence of the vacancy, or, according to the request of the Member, at the next meeting of the Board of Directors following the date of such request, or at the next annual meeting of Members following the occurrence of the vacancy, or at the special meeting of Members called for the purpose of filling the vacancy. In the event, and only in the event, a nomination for a vacant position is not delivered by the appropriate Member, nominations for such position may be made from the floor. SECTION 8. REMOVAL OF DIRECTORS. Any Member or Director may bring charges against a Director for neglect or breach of duty or other action or inaction which is or may be injurious to the Corporation by filing them in writing with the Secretary, together with a petition signed by twenty-five percent of the Members, requesting that the matter be brought before a meeting of Members. The removal shall be voted upon at the next regular or special meeting of the Members. A majority vote of the Members present at the meeting shall determine such removal. The Director against whom such charges have been brought shall be informed in writing of the charges at least fifteen days prior to the meeting and shall have an opportunity at the meeting to be heard in person or by counsel and to present evidence; and the person or persons bringing the charges against him shall have the same opportunity. A vacancy -6- created by such removal shall be filled as provided in Section 7 of this Article III. Any Director removed pursuant to this Section 8 shall be eligible to again be nominated to serve as a Director of the Corporation only with the consent of a majority of the Members present and voting at a meeting at which the question is presented. SECTION 9. COMPENSATION OF DIRECTORS. The compensation, if any, of Directors and Alternate Directors for their services as such shall be on a per diem basis, and shall be fixed by the Board of Directors. Directors and Alternate Directors also shall be reimbursed for expenses actually and necessarily incurred by them in the performance of their duties. SECTION 10. POWER OF DIRECTORS TO ADOPT RULES AND REGULATIONS AND POLICIES. The Board of Directors shall have the power to adopt policies, rules and regulations, not inconsistent with law, the Articles of Incorporation and these Bylaws, for the management, administration and regulation of the business and affairs of the Corporation. SECTION 11. POWER OF BOARD OF DIRECTORS OR CHAIRMAN OF THE BOARD TO APPOINT COMMITTEES. The Board of Directors may establish (and abolish) committees comprised of Directors, Alternate Directors and others which shall not have any of the powers of the Board of Directors and which shall perform such functions as are designated from time to time by the Board of Directors. The members of any such committees shall be appointed in accordance with such policies, rules and regulations as may from time to time be adopted by the Board of Directors. A majority of the full Board of Directors may also appoint committees of the Board pursuant to the Georgia Electric Membership Corporation Act Section 46-3-297. ARTICLE IV MEETINGS OF DIRECTORS SECTION 1. REGULAR MEETINGS OF DIRECTORS. A meeting of the Board of Directors shall be held without notice immediately after, and at the same place as, the annual meeting of the Members. A regular meeting of the Board of Directors shall also be held quarterly or more often at such time and place as the Board of Directors may provide by resolution. Such regular meetings may be held without notice. SECTION 2. SPECIAL MEETINGS OF DIRECTORS. Special meetings of the Board of Directors may be called by the Chairman of the Board or by twenty-five percent of the Directors then in office. The persons calling a special meeting may fix the time and place for the holding of the meeting. SECTION 3. NOTICE OF SPECIAL MEETINGS OF DIRECTORS. Notice of the time, place and purpose of any special meeting of the Board of Directors shall be given by or at the direction of the Chairman of the Board, the Secretary or the person or persons calling the meeting. -7- The notice shall be given to each Director and each Alternate Director, at least five days prior to the meeting, by written notice delivered personally or mailed to each Director and Alternate Director at their respective last known addresses. If mailed, such notice shall be deemed delivered when deposited in the United States mail so addressed, with first-class postage thereon prepaid. Notice of a meeting of the Board of Directors need not be given to any Director or Alternate Director who signs a waiver of notice either before or after the meeting. Attendance of a Director or his Alternate Director at a meeting shall constitute a waiver of notice of such meeting and waiver of any and all objections to the place of the meeting, the time of the meeting or the manner in which it has been called or convened, except when the Director or his Alternate Director states, at the beginning of the meeting, any such objection or objections to the transaction of business. SECTION 4. QUORUM FOR MEETING OF DIRECTORS. A majority of the Board of Directors (with Alternates representing absent Directors) shall constitute a quorum for the transaction of business at any meeting of the Board of Directors. A majority of the Directors present may adjourn the meeting to another time and place without further notice, whether or not a quorum is present. SECTION 5. ACTION OF BOARD OF DIRECTORS. (a) The vote of a majority of Directors present and voting at the time of the vote, if a quorum is present at such time, shall be the act of the Board of Directors unless the vote of a greater number is required by law, the Articles of Incorporation, or these Bylaws. (b) Notwithstanding the provisions of Subsection (a) of this Section 5., the affirmative vote of two-thirds of the Directors shall be required to (i) modify, amend or rescind any Member Rate Policy then in effect, or, (ii) revise any rate for electric power and energy furnished under the Wholesale Power Contracts between each Member and the Corporation. Notwithstanding the provisions of Article IX hereof, the provisions of this Subsection (b) may not be altered, amended or repealed by the Directors except by the affirmative vote of two-thirds of the Directors. SECTION 6. WRITTEN CONSENT OF DIRECTORS. Any action required to be taken at a meeting of the Board of Directors or any action that may be taken at a meeting of the Board of Directors may be taken without a meeting if a written consent, setting forth the action so taken, is signed by all the Directors and filed with the minutes of the proceedings of the Board of Directors. -8- ARTICLE V OFFICERS SECTION 1. OFFICERS; QUALIFICATIONS. The officers of the Corporation shall be a Chairman of the Board, a Vice Chairman of the Board, a Secretary, a Treasurer, and a President and Chief Executive Officer. The Chairman of the Board and Vice Chairman of the Board shall be Directors. The Secretary and Treasurer shall be Directors or Alternate Directors. Any two or more offices may be held by the same person, except the offices of Chairman of the Board, President and Chief Executive Officer and Secretary. SECTION 2. ELECTION AND TERM OF OFFICE OF OFFICERS. The Chairman of the Board, Vice Chairman of the Board, Secretary and Treasurer shall be elected annually at the first meeting of the Board of Directors held after the annual meeting of the Members or as soon thereafter as practicable. Each such officer shall hold office until the first meeting of the Board of Directors following the next succeeding annual meeting of the Members and until his successor shall have been elected or appointed and shall have qualified, or until his earlier resignation, removal from office, or death. The President and Chief Executive Officer shall be appointed by the Board of Directors and shall hold office until his successor shall have been appointed and shall have qualified, or until his earlier resignation, removal from office or death. SECTION 3. REMOVAL OF OFFICERS. Any officer or agent elected or appointed by the Board of Directors may be removed by the Board of Directors whenever in its judgment the best interest of the Corporation will be served thereby. SECTION 4. VACANCIES OF OFFICES. A vacancy in any office may be filled by the Board of Directors for the unexpired portion of the term. SECTION 5. CHAIRMAN OF THE BOARD. The Chairman of the Board shall: (a) preside at meetings of the Members and of the Board of Directors and oversee the management of the Corporation by the President and Chief Executive Officer; (b) have the power to enter into and execute contracts on behalf of the Corporation and to sign certificates, contracts or other instruments on behalf of the Corporation; and (c) have such other duties and powers as are incident to his office and such other duties and powers as may be prescribed by the Board of Directors from time to time. SECTION 6. VICE CHAIRMAN OF THE BOARD. In the absence of the Chairman of the Board or in the event of his inability or refusal to act, the Vice Chairman of the Board shall perform the duties of the Chairman of the Board, and when so acting, shall have all the powers and duties of the Chairman of the Board. The Vice Chairman of the Board shall perform such other duties as may from time to time be assigned to him by the Board of Directors. -9- SECTION 7. SECRETARY. The Secretary shall be responsible for seeing that minutes of all meetings of the Members and the Board of Directors are kept and shall have authority to certify as to the corporate books and records, and shall keep a register of the address of each Member, Director and Alternate Director. The Secretary shall perform such other duties and have such other powers as may from time to time be delegated to him by the Chairman of the Board or the Board of Directors. SECTION 8. TREASURER. The Treasurer shall oversee the management of the financial affairs of the Corporation by the staff, and shall perform the other duties incident to the office of Treasurer and have such other duties as from time to time may be assigned to him by the Chairman of the Board or the Board of Directors. SECTION 9. PRESIDENT AND CHIEF EXECUTIVE OFFICER. The President and Chief Executive Officer shall: (a) manage the day-to-day operations and activities of the Corporation; (b) subject to such Corporate Policies as are established by the Board of Directors from time to time, have the power to enter into and execute contracts on behalf of the Corporation and to sign certificates, contracts or other instruments on behalf of the Corporation; and (c) have such other duties and powers as are incident to his office and such other duties and powers as may be prescribed by the Board of Directors from time to time. SECTION 10. APPOINTMENT OF OFFICERS AND AGENTS. The Board of Directors may appoint from time to time one or more additional officers and assistant officers and agents as the Board of Directors may determine. Each such officer, assistant officer and agent shall perform such duties as the action appointing him provides and, unless the action otherwise provides, shall perform the duties which are generally performed by the elected officers or assistant officers having the same title. SECTION 11. BONDS OF OFFICERS. The Board of Directors shall require all officers and employees of the Corporation to give bond in such sum and with such surety as the Board of Directors shall determine. SECTION 12. COMPENSATION OF OFFICERS. The compensation, if any, of any officer who is also a Director or Alternate Director shall be determined by the Board of Directors. The compensation of any other officers, agents, and employees shall be fixed by the Board of Directors or by a person or persons designated by the Board of Directors. -10- ARTICLE VI COOPERATIVE OPERATION SECTION 1. INTEREST OR DIVIDENDS ON CAPITAL PROHIBITED. The Corporation shall at all times be operated on a cooperative basis for the mutual benefit of its Members. No interest or dividends shall be paid or payable by the Corporation on any capital furnished by Members. SECTION 2. PATRONAGE CAPITAL IN CONNECTION WITH FURNISHING ELECTRIC ENERGY. In the furnishing of electric energy the Corporation's operation shall be so conducted that all Members will through their patronage furnish capital for the Corporation. The Corporation is obligated to account on a patronage basis to all Members for all amounts received and receivable from the furnishing of electric energy in excess of operating costs and expenses properly chargeable against the furnishing of electric energy. All such amounts in excess of operating costs and expenses at the moment of receipt by the Corporation are received with the understanding that they are furnished by Members as capital. The Corporation is obligated to credit to one or more capital accounts for each Member all such amounts in excess of operating costs and expenses. The books and records of the Corporation shall be set up and kept in such a manner that at the end of each fiscal year the amount of capital, if any, so furnished by each Member is clearly reflected and credited in an appropriate record to one or more capital accounts for each Member, and the Corporation shall within a reasonable time after the close of the fiscal year notify each Member of the amount of capital so credited to its account or accounts. All such amounts credited to a capital account of any Member shall have the same status as though they had been paid to the Member in cash in pursuance of a legal obligation to do so and the Member had then furnished the Corporation corresponding amounts for capital. All other amounts received by the Corporation from its operations in excess of costs and expenses shall, insofar as permitted by law, be (a) used to offset any losses incurred during the current or any prior fiscal year and (b) to the extent not needed for that purpose, allocated to the Members on a patronage basis and any amounts so allocated shall be a part of the capital credited to an appropriate account for each Member. In the event of dissolution or liquidation of the Corporation, after all its outstanding indebtedness shall have been paid, outstanding capital credits shall be retired without priority on a pro rata basis before any payments are made on account of property rights of Members. If, at any time prior to dissolution or liquidation, the Board of Directors shall determine that the financial condition of the Corporation will not be impaired thereby, capital then credited to Members' accounts and the accounts of former Members may be retired in full or in part. Any such retirements of capital from a particular type account shall be made in order of priority according to the year in which the capital was furnished and credited, the capital first received by the Corporation being first retired. Notwithstanding the preceding sentence, retirements of each Member's capital credits made pursuant to the First Amended and Restated Restructuring Agreement, dated as of August 1, 1996, by and among the Corporation, Georgia Transmission Corporation and Georgia System Operations Corporation, as such agreement may be amended, shall be allocated among and charged to the -11- Members' capital accounts as provided therein. Capital credited to the accounts of Members shall be assignable only on the books of the Corporation to a transferee of a Member's membership, pursuant to written instruction from the Member and then only upon satisfaction of all requirements for a transfer of membership established by or pursuant to these Bylaws. SECTION 3. ACCOUNTING SYSTEM AND REPORTS. The Board of Directors shall cause to be established and maintained a complete accounting system which shall conform to applicable law and to the requirements of the Corporation's lenders. After the close of each fiscal year, the Board of Directors shall also cause to be made a full and complete audit of the accounts, books and financial condition of the Corporation as of the end of such fiscal year. A report on the audit for the fiscal year immediately preceding each annual meeting of Members shall be submitted to the Members at such annual meeting. ARTICLE VII INDEMNIFICATION AND INSURANCE SECTION 1. INDEMNIFICATION. The Corporation shall indemnify each person who is or was a Director, officer, employee or agent of the Corporation (including the heirs, executors, administrators or estate of such person) or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise to the full extent permitted under Sections 46-3-306(b), (c) and (d) of the Georgia Electric Membership Corporation Act or any successor provisions of the laws of the State of Georgia. If any such indemnification is requested pursuant to Sections 46-3- 306(b) or (c) of said Act or laws, the Board of Directors shall cause a determination to be made (unless a court has ordered the indemnification) in one of the manners prescribed in Section 46-3-306(e) of said Act or laws as to whether indemnification of the party requesting indemnification is proper in the circumstances because he has met the applicable standard of conduct set forth in Sections 46-3-306(b) or (c) of said Act or laws. Upon any such determination that such indemnification is proper, the Corporation shall make indemnification payments of liability, cost, payment or expense asserted against, or paid or incurred by, him in his capacity as such a director, officer, employee or agent to the maximum extent permitted by said Sections of said Act or laws. The indemnification obligation of the Corporation set forth herein shall not be deemed exclusive of any other rights, in respect of indemnification or otherwise, to which any party may be entitled under any other bylaw provision or resolution approved by the Members pursuant to Section 46-3-306(g) of said Act or laws. SECTION 2. INSURANCE. The Corporation may purchase and maintain insurance at its expense, to protect itself and any Director, officer, employee or agent of the Corporation (including the heirs, executors, administrators or estate of any such person) against any liability, cost, payment or expense described in Section 1 of this Article VII, whether or not the Corporation would have the power to indemnify such person against such liability. -12- ARTICLE VIII SEAL The seal of the Corporation shall be in such form as the Board of Directors may from time to time determine. In the event it is inconvenient to use such a seal at any time, the words "Corporate Seal" or the word "Seal" accompanying the signature of an officer signing for and on behalf of the Corporation shall be the seal of the Corporation. ARTICLE IX AMENDMENT These Bylaws may be amended at any meeting of the Board of Directors by the affirmative vote of not less than a majority of the Directors present at a meeting at which a quorum is present provided notice of such meeting containing a copy of the proposed amendment shall have been given not less than five nor more than ninety days prior thereto; provided, however, that the Board of Directors shall not have the power to alter, amend or repeal provisions of these Bylaws or adopt new bylaw provisions directly relating to the election of the Board of Directors. Any bylaw provision adopted by the Board of Directors may be altered, amended or repealed and new provisions adopted by the Members by the affirmative vote of not less than a majority of the Members present at a meeting at which a quorum is present, provided notice of such meeting containing a copy of the proposed amendment shall have been given. The Members may prescribe that any bylaw provisions adopted by them shall not be altered, amended or repealed by the Board of Directors -13- EX-10.5-2(A) 4 EXHIBIT 10.5.2(A) EXHIBIT 10.5.2(a) AMENDMENT, DATED AS OF JANUARY 15, 1995, TO THE PLANT HAL WANSLEY OPERATING AGREEMENTS by and among GEORGIA POWER COMPANY and OGLETHORPE POWER CORPORATION (AN ELECTRIC MEMBERSHIP GENERATION & TRANSMISSION CORPORATION) and MUNICIPAL ELECTRIC AUTHORITY OF GEORGIA (A PUBLIC CORPORATION AND INSTRUMENTALITY OF THE STATE OF GEORGIA) and CITY OF DALTON (AN INCORPORATED MUNICIPALITY IN THE STATE OF GEORGIA) AMENDMENT TO THE PLANT HAL WANSLEY OPERATING AGREEMENT TABLE OF CONTENTS Section No. 1. Certain Definitions. . . . . . . . . . . . . . . . . .2 2. Amendment to Create Section 9. . . . . . . . . . . . .2 3. Amendment to Section 1(b). . . . . . . . . . . . . . 10 4. Amendment to Section 1 (d) . . . . . . . . . . . . . 10 5. Amendment to Create Section 1(e) . . . . . . . . . . 10 6. Amendment to Create Section 1(f) . . . . . . . . . . 14 7. Amendment to Create Section 1(g) . . . . . . . . . . 25 8. Amendment to Create Section 1(h) . . . . . . . . . . 34 9. Amendment to Section 2(a). . . . . . . . . . . . . . 41 10. Amendment to Section 2(b). . . . . . . . . . . . . . 44 11. Amendment to Create Section 2(c) . . . . . . . . . . 46 12. Amendment to Section 3(b). . . . . . . . . . . . . . 47 13. Amendment to Section 3(d). . . . . . . . . . . . . . 56 14. Amendment to Create Section 10 . . . . . . . . . . . 56 15. Effectiveness of this Amendment. . . . . . . . . . . 57 16. Miscellaneous. . . . . . . . . . . . . . . . . . . . 58 APPENDICES A. Captital Budgets, Operating Budgets, Scheduling and Dispatch Budget, Maintenance Schedules and Fuel Plan B. Plant Wansley Operations and Maintenance Expenses THIS AGREEMENT, dated as of January 15, 1995, is by and among GEORGIA POWER CORPORATION ("GPC"), a corporation organized and existing under the laws of the State of Georgia, OGLETHORPE POWER CORPORATION (AN ELECTRIC MEMBERSHIP GENERATION & TRANSMISSION CORPORATION), an electric membership corporation organized and existing under the laws of the State of Georgia and formerly known as Oglethorpe Electric Membership Corporation ("OPC"), MUNICIPAL ELECTRIC AUTHORITY OF GEORGIA, a public corporation and an instrumentality of the State of Georgia ("MEAG"), and the CITY OF DALTON, an incorporated municipality in the State of Georgia ("Dalton") and is the Amendment to those certain Plant Hall Wansley Operating Agreements, dated as of March 26, 1976, August 27, 1976 and April 19, 1977 (the "Operating Agreements"), between GPC and Oglethorpe Electric Membership Corporation, GPC and MEAG, and GPC and Dalton, respectively. W I T N E S S E T H: A. The Participants have previously entered into the Operating Agreements providing, among other things, for the management, control, maintenance and operation of Plant Hal Wansley. B. The Participants mutually desire to alter and modify in this Agreement certain provisions of their respective Operating Agreements relating to fuel procurement and accounting and relating to scheduling and dispatching of the Units such that the Participants' prior agreements and understandings shall be superseded hereby. NOW, THEREFORE, in consideration of the premises and the mutual promises and agreements herein set forth, the Participants amend each of their respective Operating Agreements and mutually agree among themselves as follows: 1. Certain Definitions. Capitalized terms and phrases used and not otherwise defined in this Agreement shall have the respective meanings assigned to them by the Operating Agreements, unless the context or use clearly indicates otherwise. All rules of interpretation, construction, or both, set forth in the Operating Agreements shall apply with equal force and effect to this Amendment. 2. Amendment to Create Section 9 of the Operating Agreements. Section 9 of each of the Operating Agreements hereby reads as follows: "9. Certain Definitions. (a) APPLICABLE ACCOUNTING PERIOD. "Applicable Accounting Period" shall mean that period of operation which occasioned the need to incur the particular Operating Cost incurred. Depending -2- on the particular Operating Cost involved, such period may be a month, a calendar year or a longer period. For example, for planned, periodic maintenance of the Units, the Applicable Accounting Period shall be the time since the last planned maintenance outage during which the same or similar maintenance was last conducted. If such a period cannot be readily determined for a particular Operating Cost, then the Applicable Accounting Period shall be the most recent 12 calendar months. (b) COMMON COAL STOCKPILE. "Common Coal Stockpile" shall refer to that portion of the Plant Wansley Coal Stockpile attributable to the ownership interests of the Common Coal Stockpile Participants from time to time pursuant to Section 1(g) of this Agreement. (c) COMMON COAL STOCKPILE COSTS. "Common Coal Stockpile Costs" shall mean all costs incurred by GPC on its own behalf and as agent for the other Common Coal Stockpile Participants that are allocable to the acquisition, processing, transportation, delivering, handling, storage, accounting, analysis, measurement and disposal of coal for the Common Coal Stockpile, including, without limitation, any advance payments in connection therewith, less credits related to such costs applied as appropriate, and including, without limitation, that portion of administrative and general expenses which is properly and reasonably allocable to acquisition and management of coal for the Common Coal Stockpile and for which the incurring party has not been otherwise reimbursed by the other Common Coal Stockpile Participants. -3- Common Coal Stockpile Costs shall not include Other Fuel Costs, Separate Coal Stockpile Costs and amortization of the Plant Wansley initial fossil fuel supply (including, without limitation, unrecoverable base coal). (d) COMMON COAL STOCKPILE PARTICIPANTS. "Common Coal Stockpile Participants" shall mean such Participants as are participating in the Common Coal Stockpile from time to time. (e) COMMON DISPATCH PARTICIPANT. "Common Dispatch Participant" shall mean those Participants which are not Separate Dispatch Participants. (f) COMMITTING PARTICIPANTS. "Committing Participants" shall have the meaning assigned in Section 3(b)(iii) of this Agreement. (g) COMMON PROCUREMENT. "Common Procurement" shall have the meaning assigned in Section 1(f)(i) of this Agreement. (h) COMMON PROCUREMENT PARTICIPANT. "Common Procurement Participant" shall mean, initially, the Common Coal Stockpile Participants and each Separate Coal Stockpile Participant (i) which has not exercised its rights under Section 1(e)(i) of this Agreement, (ii) which has not otherwise been found by a vote of the Common Procurement Participants owning at least a majority percentage undivided ownership interest in Plant Wansley of the aggregate undivided ownership interests in Plant Wansley of the then Common Procurement Participants (excluding the percentage ownership interest in Plant Wansley of the Common Procurement Participant under consideration), to have violated the policies -4- and rules for Common Procurement Participants established from time to time by GPC or (iii) which has been reestablished as a Common Procurement Participant pursuant to Section 1(f) of this Agreement. (i) FERC. The "FERC" shall mean the Federal Energy Regulatory Commission or any entity succeeding to the powers and functions thereof. (j) GEORGIA INTEGRATED TRANSMISSION SYSTEM. "Georgia Integrated Transmission System" shall mean the integrated transmission system owned by GPC, OPC, MEAG and Dalton pursuant to those certain Agreements between GPC and OPC dated as of January 6, 1975 and June 9, 1986, those certain Agreements between GPC and MEAG dated as of August 27, 1976, and those certain Agreements between GPC and Dalton dated as of August 27, 1976, as any one or more of those Agreements may be amended, modified, revised, restated or superseded from time to time, or any successor transmission system thereto. (k) NONCOMMITTING PARTICIPANTS. "Noncommitting Participants" shall mean as of any particular time, those Participants which at such time are not Committing Participants pursuant to Section 3(b)(iii) of this Agreement. (l) OPERATING AGREEMENTS. "Operating Agreements" shall refer to the Plant Hal Wansley Operating Agreements between (i) GPC and OPC, dated as of March 26, 1976, (ii) GPC and MEAG, dated as of August 27, 1976, and (iii) GPC and the City of Dalton, Georgia, dated as of April 19, 1977. -5- (m) OPERATING COSTS. "Operating Costs" shall mean all expenses incurred by GPC in respect to Plant Wansley and properly recordable in accordance with the Operating Expense Instructions and in appropriate accounts as set forth in the Uniform System of Accounts, but shall not include Common Coal Stockpile Costs, Separate Coal Stockpile Costs, or Other Fuel Costs. (n) OTHER FUEL COSTS. "Other Fuel Costs" shall mean all costs and expenses, other than Common Coal Stockpile Costs and Separate Coal Stockpile Costs, incurred by GPC on its own behalf and as agent for the other Participants that are allocable to the acquisition, processing, transportation, delivering, handling, storage, accounting, analysis, measurement and disposal of fossil materials required for Plant Wansley, including, without limitation, any advance payments in connection therewith, less credits related to such costs applied as appropriate, and including, without limitation, that portion of administrative and general expenses which is properly and reasonably allocable to acquisition and management of fossil fuel (other than coal for the Common Coal Stockpile and the Separate Coal Stockpiles) for Plant Wansley. Other Fuel Costs shall not include Common Coal Stockpile Costs, Separate Coal Stockpile Costs and amortization of the Plant Wansley initial fossil fuel supply (including, without limitation, unrecoverable base coal). (o) OWNERSHIP AGREEMENTS. "Ownership Agreements" shall refer to the Plant Hal Wansley Purchase and Ownership Participation Agreement between (i) GPC and OPC, dated as of -6- March 26, 1976, (ii) GPC and MEAG, dated as of August 27, 1976 and (iii) GPC and the City of Dalton, dated as of April 19, 1977. (p) PARTICIPANT. "Participant" and "Participants" shall refer, individually or collectively, as the case may be, to GPC, OPC, MEAG, and Dalton and to any transferee or assignee of any of them pursuant to Section 5(f) of the Ownership Agreement. (q) PLANT WANSLEY. "Plant Wansley" shall have the meaning set forth in Section 1(a) each of the respective Ownership Agreements. (r) PLANT WANSLEY COAL STOCKPILE. The "Plant Wansley Coal Stockpile" shall mean the coal stockpile maintained from time to time for the Units. (s) PLANT WANSLEY PARTICIPATION AGREEMENTS. "Plant Wansley Participation Agreements" shall mean the Ownership Agreements, and Operating Agreements, collectively. (t) SEPARATE COAL PROCUREMENT. "Separate Coal Procurement" shall mean the procurement of coal pursuant to the standards and procedures set forth under Section 1(e)(i) of this Operating Agreement. (u) SEPARATE COAL STOCKPILE. "Separate Coal Stockpile" shall have the meaning assigned in Section 1(g) of this Agreement. (v) SEPARATE COAL STOCKPILE COSTS. "Separate Coal Stockpile Costs" shall mean with respect to each Separate Coal Stockpile Participant all costs incurred by GPC as agent for such Separate Coal Stockpile Participant that are allocable to the -7- acquisition, processing, transportation, delivering, handling, storage, accounting, analysis, measurement and disposal of coal for such Separate Coal Stockpile Participant, including, without limitation, all costs incurred by GPC in administering fuel and transportation contracts entered into by such Separate Coal Stockpile Participant pursuant to any one or more of Sections 1(e)(i), 1(f) or 1(g) of this Agreement, and including any advance payments in connection therewith, less credits related to such costs applied as appropriate, and including that portion of administrative and general expenses which is properly and reasonably allocable to acquisition and management of coal for such Separate Coal Stockpile Participant's Separate Coal Stockpile and for which the incurring party has not otherwise been reimbursed. Separate Coal Stockpile Costs shall not include Common Coal Stockpile Costs, Other Fuel Costs and amortization of the Plant Wansley initial fossil fuel supply, including, without limitation, unrecoverable base coal. (w) SEPARATE COAL STOCKPILE PARTICIPANT. "Separate Coal Stockpile Participant" shall mean the Participants making an election to discontinue participation in the Common Coal Stockpile pursuant to 1(g)(iii) of this Agreement, or which has otherwise entered into an agreement with GPC to become a Separate Coal Stockpile Participant pursuant to subsection (vi) of Section 1(g) of this Agreement. Such Participants are referred to individually as a "Separate Coal Stockpile Participant" and collectively as "Separate Coal Stockpile Participants." -8- (x) SEPARATE DISPATCH PARTICIPANT. "Separate Dispatch Participant" shall mean those Participants which have become Separate Coal Stockpile Participants pursuant to the provisions of 1(g) of this Agreement and which exercise separate dispatch rights under Section 3(b)(iii) of this Agreement. (y) SEPARATE PROCUREMENT PARTICIPANT. "Separate Procurement Participant" shall mean each Separate Coal Stockpile Participant (i) which has exercised its rights under Section 1(e)(i) of this Agreement, or (ii) which has been found by a vote of the Common Procurement Participants owning at least a majority percentage undivided ownership interest in Plant Wansley of the aggregate undivided ownership interests in Plant Wansley of the then Common Procurement Participants (excluding the percentage ownership interest in Plant Wansley of the Common Procurement Participant under consideration) to have violated the policies and rules for Common Procurement Participants established from time to time by GPC and which has not been reestablished as a Common Procurement Participant pursuant to Section 1(f) of this Agreement. (z) SPOT COAL. "Spot Coal" shall mean all coal purchased for the Common Coal Stockpile or any Separate Coal Stockpile under an arrangement of acquisition for a period of less than one year. (aa) UNIFORM SYSTEM OF ACCOUNTS. The "Uniform System of Accounts" shall mean the FERC Uniform System of Accounts prescribed for Public Utilities and Licensees subject to the -9- provisions of the Federal Power Act, as the same now exist or may be hereafter amended by the FERC. (bb) UNITS. The "Units" shall refer to Wansley Unit No. 1 and Wansley Unit No. 2 collectively." 3. Amendment to Section 1(b) of the Operating Agreements. The first and second sentences of Section 1(b), AUTHORITY FOR OPERATION AND MANAGEMENT, of each of the Operating Agreements, are hereby amended to add the phrase "(e), (f), (g) and (h)" after the words "provisions of Section 1(d)." 4. Amendment to Section 1(d) of the Operating Agreements. The second paragraph of Section 1(d), OPERATION, of each of the Operating Agreements, is hereby amended to add the following sentence to the end thereto. "Notwithstanding the foregoing, in no event shall the provisions of this second paragraph of Section 1(d) apply to a Separate Dispatch Participant." 5. Amendment to Create Section 1(e) of the Operating Agreements. Section 1, GENERAL OBLIGATIONS AND RIGHTS OF PARTIES, of each of the Operating Agreements, is hereby amended to add the following subsection (e) thereto. "(e) Fuel Procurement by Participants other than GPC. (i) Separate Procurement by Separate Procurement Participants - Generally. Any Separate Coal Stockpile -10- Participant shall be permitted to supply, solely for its own account and solely for its Separate Coal Stockpile, its coal requirements for its undivided ownership interests in the Units upon the following conditions: (A) Prior to entering into each coal supply arrangement, such Separate Coal Stockpile Participant must demonstrate that such arrangement complies with the provisions of this Section 1(e)(i) and must demonstrate (1) that the proposed coal to be procured meets or exceeds the quality and compatibility standards set by GPC and will enable the Units to operate at their normal operational levels in compliance with all governmental regulations applying thereto; (2) that transportation for such coal can be arranged by such Separate Coal Stockpile Participant which is compatible with the transportation and fuel delivery facilities at Plant Wansley; and (3) all parties associated with the supply of such coal, including, without limitation, the vendor, broker, mine operator and transporter are reliable and technically and financially qualified. Within six months following the date of the first election by a Separate Coal Stockpile Participant to discontinue participation in the Common Coal Stockpile, GPC shall develop written guidelines setting forth standards and procedures for compliance by a Separate Coal Stockpile Participant with the provisions of this Section 1(e)(i)(A), including, without limitation, standards relating to the -11- operational characteristics of the Units and setting forth the standard contract terms and provisions referred to in Section 1(e)(i)(B). (B) At least 90 days prior to the first scheduled delivery of coal from any such arrangement, the Separate Coal Stockpile Participant proposing to participate in the arrangement shall give GPC written notice of its intent to enter into such coal supply arrangement, shall make the demonstrations set forth in (A) above to the reasonable satisfaction of GPC, as agent, and, thereafter shall enter into a valid, binding and enforceable contract for such coal containing such standard terms and conditions as are required by the guidelines established by GPC (other than price, quantity, and duration), which contract shall be consistent with the demonstrations provided for in (A) above and providing by its terms for GPC (or any successor agent hereunder) to have sole authority for all administration with respect thereto, including, without limitation, coordination with the mine operator, scheduling of deliveries, transportation arrangements and testing; provided, however, that except as otherwise set forth herein, the Separate Coal Stockpile Participant shall have sole authority, subject to the policies and procedures adopted or revised from time to time by GPC, to make or direct major economic decisions which are not administrative in nature, including, without limitation, to extend, -12- terminate or renegotiate the contract or exercise options thereunder and to sue the supplier. Except as set forth in Section 1(f) of this Agreement, GPC shall have no obligation to purchase, arrange for or contract for the purchase of coal for any Separate Coal Stockpile Participant. If, at any time, any one or more deliveries of coal from any such coal supply arrangement fail in any respect to satisfy the requirements as to quality and characteristics specified in clause (A) above, fail to comply with any material provision of a contract governing such coal supply arrangements or are incompatible with the Units or any governmental regulations applying thereto, then, GPC may decline to use the coal from any such delivery, may order a suspension of any further deliveries from such coal supply arrangement until receipt of adequate assurances satisfactory to it that all future deliveries of coal will conform to the delivery schedules and to all of the other requirements of the Plant Wansley Coal Stockpile and the Units, as the case may be, and may take any other action and exercise any other rights which may be permitted by law or by the provisions of any contracts with respect to such coal supply arrangement. GPC shall not be liable to any other Participant for any actions taken by it under this Section 1(e)(i), and the Separate Procurement Participant participating in any such coal supply arrangement shall indemnify and hold GPC and the other -13- Participants harmless from and against any and all costs, expenses, claims, judgments and fines, including, without limitation, legal fees incurred in defense of any lawsuit or other proceeding, as a result of any such action taken by GPC, except that GPC shall not be so indemnified and held harmless from the payment of legal fees incurred in defense of any lawsuit brought by a Separate Procurement Participant proposing to participate in such arrangement seeking specific performance or injunctive relief against GPC to reverse GPC's determination that such a proposed arrangement does not comply with the terms and conditions of this Section 1(e)(i)." 6. Amendment to Create Section 1(f) of the Operating Agreements. Section 1, GENERAL OBLIGATIONS AND RIGHTS OF PARTIES, of each of the Operating Agreements, is hereby amended to add the following subsection (f) thereto. "(f) Fossil Fuel. (i) (A) Coal and Transportation Procurement by GPC - Initiation Until Receipt of Offers. Subject to the provisions of Section 1(d) and 1(e) of this Agreement, GPC, on its own behalf and as agent for the other Participants, shall have sole authority to and shall arrange for and acquire all fossil fuel and fuel transportation for the Units consistent with such policies and procedures with respect thereto as may be -14- adopted from time to time by GPC and shall have sole authority to administer all fuel and fuel transportation standards for fossil fuel for the Units consistent with such standards with respect thereto as may be adopted from time to time by GPC. GPC, on its own behalf and as agent for the other Participants, shall procure coal and transportation from time to time for the Common Coal Stockpile and for each of the Separate Coal Stockpile Participants which is at such time a Common Procurement Participant. At such times as GPC deems it appropriate to procure coal or transportation for the Common Coal Stockpile, GPC shall consult with each of the Separate Coal Stockpile Participants which are then Common Procurement Participants to determine their procurement requirements for their Separate Coal Stockpiles and to determine the procurement strategy desired by each of the Common Procurement Participants. At any other time a Separate Coal Stockpile Participant which at such time is also a Common Procurement Participant may request that GPC commence a coal or transportation procurement for the requirements of such Separate Coal Stockpile Participant's Separate Coal Stockpile, and GPC likewise shall consult with the other Separate Coal Stockpile Participants which are then Common Procurement Participants to determine their procurement -15- requirements for their Separate Coal Stockpiles and to determine the procurement strategy desired by each of the other Common Procurement Participants. In each case, GPC, on its own behalf and as agent for the other Common Coal Stockpile Participants which are then Common Procurement Participants and for the Separate Coal Stockpile Participants expressing a desire to participate in such Common Procurement, shall use its reasonable best efforts to develop a procurement strategy to accommodate the requirements and procurement strategies of GPC for the Common Coal Stockpile and of the Separate Coal Stockpile Participants which are then Common Procurement Participants expressing a desire to participate in such Common Procurement; provided, however, that GPC shall not be required to accommodate the requirements or procurement strategy of any Separate Coal Stockpile Participant which is a Common Procurement Participant that is incompatible with the guidelines with respect to Common Procurement adopted from time to time by the Plant Wansley Operating Committee or which is incompatible with the requirements or procurement strategy desired by the Common Procurement Participants initiating the Common Procurement. GPC, on its own behalf and as agent for the other Common Coal Stockpile Participants and for each of the Separate Coal -16- Stockpile Participants which are then Common Procurement Participants electing to participate in such Common Procurement, shall then initiate a Common Procurement in an effort to obtain offers from coal vendors to sell coal, offers from transporters to provide transportation, or both (individually, an "Offer" and collectively, "Offers") to meet the requirements and procurement strategy of GPC for the Common Coal Stockpile and of each of the Separate Coal Stockpile Participants which are Common Procurement Participants electing to participate in such Common Procurement for its Separate Coal Stockpile. (B) Coal and Transportation Procurement by GPC - After Receipt of Offers. Upon receipt of one or more Offers, GPC, on its own behalf and as agent for the other Participants, shall offer the Separate Coal Stockpile Participants which are Common Procurement Participants electing to participate in such Common Procurement the opportunity to participate in each such Offer. If two or more of such Common Procurement Participants (including, without limitation, GPC on behalf of the Common Coal Stockpile) elect to participate in any particular Offer, GPC, as agent for the Common Coal Stockpile and each Separate Coal Stockpile Participant which is a Common Procurement Participant shall have the right to participate in such -17- Offer up to the proportion that such Common Procurement Participant's percentage undivided ownership interest in Plant Wansley bears to the aggregate of the percentage undivided ownership interests in Plant Wansley of all Common Procurement Participants electing to participate in such Offer, and for such purpose, in computing GPC's percentage undivided ownership interest in Plant Wansley there shall be added to GPC's percentage undivided ownership interest in Plant Wansley the percentage undivided ownership interest in Plant Wansley of the other Participants which are then Common Coal Stockpile Participants. If GPC, as agent for the Common Coal Stockpile, or any of the Separate Coal Stockpile Participants which are Common Procurement Participants elect to participate in any such Offer on a timely basis, GPC will negotiate with the supplier of such Offer in an effort to develop final contract terms and conditions satisfactory to GPC, as agent for the Common Coal Stockpile, and the Separate Coal Stockpile Participants which are Common Procurement Participants electing to participate in such Offer, and GPC, as agent for the Common Coal Stockpile, and each participating Separate Coal Stockpile Participant which is a Common Procurement Participant shall enter into a separate contract with such supplier, which contract for such Separate Coal -18- Stockpile Participant shall provide that GPC shall be the exclusive agent on behalf of such Separate Coal Stockpile Participant for the administration of such contract upon such terms and conditions as are satisfactory to GPC; provided, however, that except as otherwise set forth herein, such Separate Coal Stockpile Participant shall have sole authority, subject to the policies and procedures adopted or revised from time to time by the Plant Wansley Operating Committee, to make or direct major economic decisions which are not administrative in nature, including, without limitation, to extend, terminate or renegotiate the contract or exercise options thereunder and to sue the supplier. GPC makes no representation or warranty that any Common Procurement effort will satisfy either the requirements or the procurement strategy of any Participant, and GPC shall have no liability to any Participant in these regards. (C) Separate Procurement. Upon (i) exercise by any Separate Coal Stockpile Participant of a Separate Procurement under Section 1(e)(i) of this Operating Agreement or (ii) violation by any Separate Coal Stockpile Participant, which has been found by a vote of the Common Procurement Participants owning at least a majority percentage undivided ownership interest in Plant Wansley of the aggregate undivided ownership -19- interest in Plant Wansley of the then Common Procurement Participants (excluding the percentage undivided ownership interest in Plant Wansley of the Common Procurement Participant under consideration), of any policy or rule for Common Procurement Participants established from time to time by the Plant Wansley Operating Committee, such Separate Coal Stockpile Participant shall immediately cease to be a Common Procurement Participant, and GPC shall have no obligation to procure coal or transportation on behalf of such Separate Coal Stockpile Participant other than for Spot Coal. The remaining Common Procurement Participants owning in the aggregate more than 50% undivided ownership interest in Plant Wansley out of the total percentage undivided ownership interest in Plant Wansley of the then remaining Common Procurement Participants may vote to reestablish such Separate Coal Stockpile Participant's status as a Common Procurement Participant. Otherwise, GPC shall have no obligation to procure coal or transportation on behalf of any Separate Coal Stockpile Participant which has ceased to be a Common Procurement Participant, other than for Spot Coal. A Separate Procurement Participant shall have no right to receive or review any information relating to any Common Procurement effort or any Offers or contracts resulting from a Common Procurement effort -20- except as may otherwise be provided in subsection (i)(E) of this Section 1(f) relating to Spot Coal. (D) Review of Offers. Any Common Procurement Participant that initiates a Common Procurement and any Common Procurement Participant (other than GPC as agent) that elects to review information relating to any Offer shall pay that portion of the costs of the Common Procurement resulting in such Offer in the proportion that such Common Procurement Participant's percentage undivided ownership interest in Plant Wansley bears to the aggregate of the percentage undivided ownership interests in Plant Wansley of the Common Procurement Participants participating in such Common Procurement or reviewing any information relating to any Offer, whether or not such Common Procurement Participant elects to participate in any such Offer and all other Common Procurement Participants electing to participate in any such Offer (which shall include the Common Coal Stockpile Participants if GPC, as agent for the Common Coal Stockpile, elects to participate in such Offer) shall each pay a portion of such costs computed on the same basis. Upon request, GPC shall inform a Separate Coal Stockpile Participant which is a Common Procurement Participant that did not initiate the subject Common Procurement of the approximate cost to review the -21- information pertaining to the Offer. No Participant shall use any information furnished to it by or on behalf of GPC, or any other Common Procurement Participant concerning any such Offers in a manner to prejudice the efforts of GPC and the other Common Procurement Participants in any Common Procurement effort. As to any particular information such prohibition shall terminate two years following the date such information was received by such Participant. (E) Spot Coal Procurement. Notwithstanding the foregoing provisions of Sections 1(e), 1(f) and 1(g) of this Agreement, GPC shall be the exclusive agent to act on behalf of itself and all other Participants for the procurement, transportation and delivery of Spot Coal. All Offers to sell Spot Coal shall be made available to GPC on its own behalf and on behalf of the other then Common Coal Stockpile Participants, and to each Separate Coal Stockpile Participant (whether or not such Separate Coal Stockpile Participant is then a Common Procurement Participant) on the same basis that an Offer under a Common Procurement is made available to the Common Procurement Participants. GPC shall remain a Common Procurement Participant (both as buyer and seller) so long as there remains one or more other Common Procurement Participants. -22- (ii) Each Participant shall have the right to make whatever financial arrangements it may desire, whether by lease, security transaction or otherwise, for the discharge of its fossil fuel payment obligations so long as such arrangements do not adversely affect the rights of the other Participants. (iii) Except as otherwise agreed by the Common Coal Stockpile Participants or as otherwise provided in Sections 2(c) and 3(b) of this Agreement, the Common Coal Stockpile Participants shall pay Common Coal Stockpile Costs and shall own coal in the Common Coal Stockpile in proportion to their respective undivided ownership interests in the Common Coal Stockpile. (iv) Except as otherwise agreed to by the Participants or as otherwise provided in Sections 2(c) and 3(b) of this Agreement, each Separate Coal Stockpile Participant shall pay all Separate Coal Stockpile Costs which are properly and reasonably allocable to such Separate Coal Stockpile Participant's Separate Coal Stockpile, determined in accordance with GPC's standard accounting practices, which shall comply with the Uniform System of Accounts in effect from time to time except as provided in subsection (vii) of Section 1(g) hereof. -23- (v) Except as otherwise agreed to by the Participants or as otherwise provided in Sections 2(c) and 3(b) of this Agreement, the Participants shall pay Other Fuel Costs and shall own fossil fuel (other than coal allocated to the Common Coal Stockpile and to the Separate Coal Stockpiles) in proportion to their respective percentage undivided ownership interests in Plant Wansley. (vi) If on or prior to 30 days following OPC's receipt of approval of this Amendment from the Administrator of the Rural Electrification Administration, any Participant exercises its election to become a Separate Coal Stockpile Participant, then within six months following the date of the first election by a Separate Coal Stockpile Participant, GPC shall develop written procedures for Separate Coal Procurement and Common Procurement and shall submit such procedures to the other Participants which shall adopt such procedures by vote of Participants owning at least an aggregate 85% undivided ownership interest in Plant Wansley within two months of submission or which shall revise such procedures, such revisions to be approved by Participants owning at least an aggregate 85% undivided ownership interest in Plant Wansley. In the absence of such adoption or approval of revisions within two months of submission, the procedures submitted by GPC shall go into effect as the procedures adopted by the Participants. The procedures may -24- be revised thereafter only by approval of such Participants owning at least an aggregate 85% undivided ownership interest in Plant Wansley. In the absence of the approval of any revisions to the procedures by such 85% vote, the revisions to the procedures shall go into effect as submitted by GPC." 7. Amendment to Create Section 1(g) of the Operating Agreements. Section 1, GENERAL OBLIGATIONS AND RIGHTS OF PARTIES, of each of the Operating Agreements, is hereby amended to add the following subsection (g) thereto. "(g) Common Coal Stockpile and Separate Coal Stockpiles. (i) In order to provide for the ownership by the Participants of interests in a Common Coal Stockpile and to provide for the sharing among the Participants of Common Coal Stockpile Costs, the Participants agree that initially, all Participants shall participate in the Common Coal Stockpile. GPC shall cause an adjustment to be made to the account of each Common Coal Stockpile Participant (A) so that the quantity of coal in the Common Coal Stockpile shall thereafter be allocated to the Common Coal Stockpile Participants according to such Common Coal Stockpile Participant's percentage undivided -25- ownership interest in the Common Coal Stockpile as set forth in the following sentence, and (B) so that the average cost per ton or, following a division of the Plant Wansley Coal Stockpile into the Common Coal Stockpile and one or more Separate Coal Stockpiles pursuant to Section 1(g)(iii) of this Agreement, the average cost per British Thermal Unit ("Btu") of the coal in the Common Coal Stockpile is the same for each Common Coal Stockpile Participant, with appropriate charges and credits to be made to the accounts of such Common Coal Stockpile Participants, all in accordance with GPC's standard accounting practices which shall comply with the Uniform System of Accounts in effect from time to time except as provided in subsection (vii) of Section 1(g) hereof. Following each such allocation, each Common Coal Stockpile Participant shall own a percentage undivided ownership interest in the Common Coal Stockpile in the proportion that such Common Coal Stockpile Participant's percentage undivided ownership interest in Plant Wansley bears to the aggregate of all Common Coal Stockpile Participants' percentage undivided ownership interest in Plant Wansley. (ii) All Common Coal Stockpile Costs incurred in connection with the Common Coal Stockpile shall be allocated among the Common Coal Stockpile Participants -26- at the time such Common Coal Stockpile Costs are incurred in the same respective percentages of each Common Coal Stockpile Participant's undivided ownership interest from time to time in the Common Coal Stockpile at that particular time and, subject to the provisions of Sections 2(c) and 3(b) of this Agreement, the Common Coal Stockpile Costs shall be paid as provided in Sections 1(f), 2(b) and 2(c) of this Agreement; provided, however, that at the end of each calendar month, GPC shall cause an adjustment to be made among the Common Coal Stockpile Participants in accordance with the amount of coal (or, following a division of the Plant Wansley Coal Stockpile into the Common Coal Stockpile and one or more Separate Coal Stockpiles pursuant to Section 1(g)(iii) of this Agreement, the amount of Btus) actually consumed by each of the Common Coal Stockpile Participant's undivided ownership interest in each of the Units, all in accordance with GPC's standard accounting practices which shall comply with the Uniform System of Accounts in effect from time to time except as provided in subsection (vii) of Section 1(g) hereof. All Other Fuel Costs incurred in connection with the Units shall be allocated among the Participants at the time such Other Fuel Costs are incurred in the same respective percentages of each Participant's percentage -27- undivided ownership interest in Plant Wansley at that particular time, and the Other Fuel Costs shall be paid as provided in Sections 1(f), 2(b) and 2(c) of this Agreement; provided, however, that at the end of each calendar month, GPC shall cause an adjustment to be made among the Participants in accordance with the amount of fuel (other than coal) actually consumed by each of the Participants all in accordance with GPC's standard accounting practices which shall comply with the Uniform System of Accounts in effect from time to time except as provided in subsection (vii) of Section 1(g) hereof. (iii) Each Participant (other than GPC) may elect to discontinue participation in the Common Coal Stockpile by delivery of written notice to GPC of such election not later than 30 days following OPC's receipt of approval of this Amendment from the Administrator of the Rural Electrification Administration. Within six months following the date of the first election by a Separate Coal Stockpile Participant, GPC, as agent for the other Participants, shall cause an adjustment to be made to the Common Coal Stockpile and to the account of each Separate Coal Stockpile Participant so that (A) the quantity of coal allocated to the Common Coal Stockpile will equal the percentage undivided ownership interests of the remaining Common Coal Stockpile -28- Participants and so that the quantity of coal allocated to each Separate Coal Stockpile Participant's account will equal its percentage undivided ownership interest in the Common Coal Stockpile at the time such adjustment is made, and (B) the average cost per ton and average cost per Btu for the Common Coal Stockpile and for each Separate Coal Stockpile are the same. GPC shall notify each of the Participants immediately after such an adjustment has been made of (l) the quantity of coal in the Common Coal Stockpile and in each Separate Coal Stockpile and (2) the average cost per ton and average cost per Btu for the Common Coal Stockpile and for each Separate Coal Stockpile. Thereafter, each Separate Coal Stockpile Participant shall be entitled only to use coal available in its Separate Coal Stockpile account for the operation of its undivided ownership interests in the Units, and the remaining Common Coal Stockpile Participants shall be entitled to use only coal available in the account of the Common Coal Stockpile for the operation of their undivided ownership interests in the Units. Except as otherwise provided in subsection (ii) of this Section 1(g), no Participant shall be required to sell or otherwise supply coal to any other Participant; however, GPC, on its own behalf and as agent for the other Common Coal Stockpile Participants, and each Separate Coal -29- Stockpile Participant may buy, sell, trade or otherwise supply coal in the Plant Wansley Coal Stockpile from their respective accounts to one another upon such terms as they may agree and upon prior written notice to GPC; provided, however, that all offers to sell coal by a Common Procurement Participant must be offered to all of the Common Procurement Participants on the same basis as an Offer under a Common Procurement. There shall be allocated to each Separate Coal Stockpile Participant's account and each Separate Coal Stockpile Participant shall take and pay for a portion of subsequent deliveries of coal and associated costs (including, without limitation, "buy-out" costs, if any) through December 1997 from that certain agreement entered into on December 6, 1972, as amended, between Georgia Power Company and Arch Mineral Corporation in an amount equal to such Separate Coal Stockpile Participant's percentage undivided ownership interest in the Units. In addition, there shall be allocated to each Separate Coal Stockpile Participant's account all coal procured on behalf of such Separate Coal Stockpile Participant by GPC pursuant to Section 1(f) of this Agreement or procured by such Separate Coal Stockpile Participant pursuant to Section 1(e)(i) of this Agreement. GPC shall account for all coal allocated to the account of each Separate Coal Stockpile Participant -30- and for coal consumed by such Separate Coal Stockpile Participant's undivided ownership interests in the Units, all in accordance with GPC's standard accounting practices which shall comply with the Uniform System of Accounts in effect from time to time except as provided in subsection (vii) of Section 1(g) hereof. No Separate Coal Stockpile Participant nor any purchaser of an undivided ownership interest in the Units from a Separate Coal Stockpile Participant may elect to become a Common Coal Stockpile Participant without the written consent of a majority of the percentage undivided ownership interest in Plant Wansley of the then remaining Common Coal Stockpile Participants, including, without limitation, GPC so long as GPC is a Participant. (iv) Except as otherwise provided in subsection (vi) of this Section 1(g), unless otherwise agreed to by Participants owning in the aggregate at least an 85% undivided ownership interest in Plant Wansley, the Participants recognize and agree, that the division of the Common Coal Stockpile and each Separate Coal Stockpile is for the purposes only of accounting, payment and settlement of costs and entitlement to use; that there will be no physical separation of coal at Plant Wansley among the Common Coal Stockpile and the Separate Coal Stockpiles and that the Common Coal -31- Stockpile and the Separate Coal Stockpiles will be physically combined and commingled into one common coal stockpile at Plant Wansley; and that existing coal and future deliveries of coal at Plant Wansley allocated among the Common Coal Stockpile and the Separate Coal Stockpiles will all be physically commingled and may be used for the operation of the undivided ownership interests of any Participant so long as the account of such Participant demonstrates that there is sufficient coal credited to its account for such operation. Nothing in this Section 1(g)(iv) shall preclude Participants owning in the aggregate at least an 85% undivided ownership interest in Plant Wansley from agreeing, upon such terms and conditions as they may agree to, to physically separate the Plant Wansley Coal Stockpile in the future. (v) All discrepancies between the book inventory and the physical inventory of the Plant Wansley Coal Stockpile shall be charged or credited, as appropriate, among the Common Coal Stockpile and the Separate Coal Stockpiles and to the respective accounts of each Participant in accordance with the amount of coal actually consumed by the undivided ownership interests of each Participant during the physical inventory period to which such discrepancy relates, all as determined in accordance with GPC's standard accounting -32- practices which shall comply with the Uniform System of Accounts in effect from time to time except as provided in subsection (vii) of Section 1(g) hereof. (vi) GPC and each of the other Common Coal Stockpile Participants or any purchaser of an undivided ownership interest in the Units may enter into whatever other arrangements GPC and such other Common Coal Stockpile Participant (or purchaser) may agree to with respect to such Common Coal Stockpile Participant's (or purchaser's) ownership interest in the Common Coal Stockpile, including, without limitation, the creation of further Separate Coal Stockpiles without requiring the consent of any other Participant, so long as such arrangement provides for Common Coal Stockpile Costs to be paid as contemplated by this Agreement. (vii) If on or prior to 30 days following OPC's receipt of approval of this Amendment from the Administrator of the Rural Electrification Administration, any Participant exercises its election to become a Separate Coal Stockpile Participant, then within six months following the date of the first election by a Separate Coal Stockpile Participant, GPC shall develop written procedures for Separate Coal Stockpile accounting and Common Coal Stockpile accounting and shall submit such procedures to the other Participants which shall adopt such procedures by -33- vote of Participants owning at least an aggregate 85% undivided ownership interest in Plant Wansley within two months of submission or which shall revise such procedures, such revisions to be approved by Participants owning at least an aggregate 85% undivided ownership interest in Plant Wansley. In the absence of such adoption or approval of revisions within two months of submission, the procedures submitted by GPC shall go into effect as the procedures adopted by the Participants. The procedures may be revised thereafter only by approval of such Participants owning at least an aggregate 85% undivided ownership interest in Plant Wansley. In the absence of the approval of any revisions to the procedures by such 85% vote, the revisions to the procedures shall go into effect as submitted by GPC." 8. Amendment to Create Section 1(h) of the Operating Agreements. Section 1, GENERAL OBLIGATIONS AND RIGHTS OF PARTIES, of each of the Operating Agreements, is hereby amended to add the following subsection (h) thereto. "(h) Budgets, Schedules and Plans to be Provided by GPC to the Participants. (i) Capital Budgets. By the date set forth in -34- Appendix A, GPC shall use its reasonable best efforts to provide to each Participant a written budget estimate of capital costs anticipated to be incurred for a five-year budget period for Wansley Unit No. 1 and Wansley Unit No. 2. Each capital budget estimate shall be based on information reasonably available. Also to be included in the capital budget are any projects which may be charged to a Participant on the basis of its ownership pursuant to the Ownership Agreement. This budget estimate is to consist of project estimate sheets for each project. For the five-year budget period, a summary of estimates of capital expenditures and retirements will be provided, the first year by month and the remaining four years by annual total. GPC may from time to time propose changes in the capital budget estimates and revised capital budget estimates as necessary to reflect any changes in construction, purchasing or payment schedules, plans, specifications or costs related to completions, renewals, additions, replacements, modifications and disposal in connection with the Units and GPC shall similarly submit such proposed changes to all Participants. Each capital budget estimate and revised capital budget estimate shall be in a format such that for the next calendar year each month's estimated costs are listed by reference to the applicable Uniform System of Accounts account number. In addition, each capital budget estimate -35- and revised capital budget estimate shall be in a format showing expected amounts that the Participant will be billed. GPC shall attempt to make all such completions, renewals, additions, replacements, modifications and disposals in connection with the Units in accordance with the then current capital budget estimate, but GPC makes no representation, warranty or promise of any kind as to the accuracy of any of such capital budget estimates or that such attempt to make all such completions, renewals, additions, replacements, modifications and disposals in accordance with the then current capital budget estimate will be successful, and in no event shall GPC have any liability to any other Participant in these regards. Notwithstanding the foregoing provisions of this Section 1(h)(i) with respect to the information to be provided by GPC and applicable times and dates, the matters set forth in Appendix A attached hereto relating to capital budgets, as the same may be revised from time to time by agreement among all of the Participants and GPC as agent for the Participants, shall govern and control any such conflicting or contrary provisions of this Section 1(h)(i). (ii) Operating Budgets. By the date set forth in Appendix A, GPC shall use its reasonable best efforts to provide to each Participant a written budget estimate of -36- Operating Costs including, without limitation, scheduled outage costs (by month for the following year and in summary fashion for the succeeding four years) anticipated to be incurred for a five-year budget period for Wansley Unit No. 1 and Wansley Unit No. 2. Each operating budget estimate shall be based on information reasonably available. Each operating budget estimate and revised operating budget estimate shall be in a format such that for the next calendar year each month's estimated costs are listed by reference to the applicable Uniform System of Accounts account number. In addition, each operating budget estimate and revised operating budget estimate shall be in a format showing expected amounts that the Participant will be billed. The operating budget for each calendar year shall be revised as deemed necessary by GPC to reflect changed operating conditions in such calendar year, and promptly upon any such revision GPC shall provide to each of the other Participants a revised operating budget. Each revised operating budget shall include Operating Costs incurred by GPC in the operation and maintenance of the Units prior to the time such revised operating budget becomes effective but not included in prior operating budgets, and shall be supported by detail reasonably adequate for the purpose of each Participant's reasonable review thereof. GPC shall attempt to manage, control, operate and -37- maintain the Units in accordance with the then current operating budget so that payments to be made by the Participants for the costs contained therein shall be, as nearly as practicable, within the then current operating budget and the schedules of expenditures contained therein. Notwithstanding the foregoing, GPC makes no representation, warranty or promise of any kind as to the accuracy of any estimate contained in an operating budget or revised operating budget or that any such attempt referred to in the preceding sentence will be successful, and in no event shall GPC have any liability to any of the other Participants in these regards. Notwithstanding the foregoing provisions of this Section 1(h)(ii) with respect to the information to be provided by GPC and applicable times and dates, the matters set forth in Appendix A attached hereto relating to operating budgets, as the same may be revised from time to time by agreement among all of the Participants and GPC as agent for the Participants, shall govern and control any such conflicting or contrary provisions of this Section 1(h)(ii). (iii) Maintenance Schedule. GPC agrees to submit to the other Participants on or before the date set forth in Appendix A, a scheduled maintenance plan for the ensuing five calendar years. Each such plan shall describe in -38- reasonable detail the contemplated time and duration of each outage and maintenance work to be done and the estimated cost thereof. In formulating the plan to be submitted to the Participants, GPC shall consider any comments submitted by the Participants to GPC prior to the date set forth in Appendix A, and GPC shall use its reasonable best efforts to minimize any period during which the Units are scheduled to be out of service for maintenance at the same time. Scheduled maintenance plans may be changed by GPC from time to time as deemed appropriate by GPC and when so changed shall be delivered to the other Participants. Should any major changes be made to the maintenance schedule within a calendar year, GPC shall use its reasonable best efforts to provide each Participant with a revised schedule. GPC makes no representation, warranty or promise of any kind as to the accuracy of any estimate or other information contained in any scheduled maintenance plan and in no event shall GPC have any liability to any of the other Participants in these regards. A Common Dispatch Participant shall receive maintenance schedules for the territory. Notwithstanding the foregoing provisions of this Section 1(h)(iii) with respect to the information to be provided by GPC and applicable times and dates, the matters set forth in Appendix A attached hereto relating to maintenance schedules, as the same may be revised from time to time by agreement among all of the Participants and GPC -39- as agent for the Participants, shall govern and control any such conflicting or contrary provisions of this Section 1(h)(iii). (iv) Fuel Plan. By the date set forth in Appendix A, GPC shall prepare and submit to the other Participants for their approval a fuel supply plan covering at least a five-year period for the Units (the "Fuel Plan"). Each Fuel Plan shall describe in reasonable detail each action or contemplated action and payment and the estimated dates thereof relating to the acquisition, transportation, delivery and storage of fossil fuel for the Units, the entitlement (or estimates thereof) of each Participant to the energy generated by each of the Units for each calendar year of the Fuel Plan pursuant to Sections 3(b) hereof, a cash flow analysis of forecasted expenditures and credits for each Participant for each major cost component of the Fuel Plan by year for the period covered by the Fuel Plan, and cash flow by months (or such other period as agreed to by the Participants) for the first three years of each such period. GPC may amend the Fuel Plan from time to time as it deems appropriate and shall deliver to the other Participants such amended Fuel Plan. GPC shall attempt to acquire, transport, deliver and store fuel for the Units in accordance with the Fuel Plan to the extent reasonably practicable; provided, however, that GPC makes no -40- representation, warranty or promise of any kind as to the accuracy of any estimate or forecast or other information contained in any Fuel Plan or that any attempt to acquire, transport, deliver and store fuel for the Units in accordance with the Fuel Plan will be successful, and in no event shall GPC have any liability to any of the other Participants in these regards. Notwithstanding the foregoing provisions of this Section 1(h)(iv) with respect to the information to be provided by GPC and applicable times and dates, the matters set forth in Appendix A attached hereto relating to Fuel Plans, as the same may be revised from time to time by agreement among all of the Participants and GPC as agent for the Participants, shall govern and control any such conflicting or contrary provisions of this Section 1(h)(iv)." 9. Amendment to Section 2(a) of the Operating Agreements. Section 2(a), SHARING OF COSTS - GENERAL, of each of the Operating Agreements is hereby amended by deleting such Section 2(a) in its entirety and by substituting, in lieu thereof, the following: "(a) Sharing of Costs - General. The Participants shall be responsible for payment of Cost of Construction in accordance with the provisions of the Ownership Agreement -41- and shall be responsible for the payment of Separate Coal Stockpile Costs, Common Coal Stockpile Costs and Other Fuel Costs in accordance with the provisions of Sections 1(f), 1(g), 2(b), and 3(d) of this Agreement. Except as otherwise provided in this Section 2, each Participant shall be responsible for the payment of its respective share of all Operating Costs. Each Participant's respective share of such Operating Costs, to the extent feasible, shall be equivalent to the proportion that the output of energy from its undivided ownership interest in the Units bears to the total output of energy from the Units during the Applicable Accounting Period; provided, however, that if there is no output of energy from the Units during the Applicable Accounting Period, each Participant's respective share of such Operating Costs shall be equivalent to its respective percentage undivided ownership interest during such accounting period in the Units, and, for those Operating Costs which cannot be feasibly allocated based on the Participant's output of energy from their respective undivided ownership interests in the Units, each Participant's respective share of such Operating Costs shall be equivalent to its respective percentage undivided ownership interest in the Units during such accounting period. Operating Costs incurred in connection with Plant Wansley shall be allocated as provided in Appendix "B" attached hereto and incorporated herein by reference as the -42- same may be revised from time to time by approval of all of the Participants. It is the absolute intent of the Participants to share all items of cost, obligation and liability incurred in connection with the Units and Plant Wansley (other than the financing of each Participant's respective undivided ownership interest in the Units), and not otherwise expressly provided for, in the proportion equivalent to each Participant's undivided ownership interest in the Units. Notwithstanding the foregoing provisions of this Section 2(a) or any other provision of this Agreement, in the event any Participant sells to any other person (including, without limitation, a Participant) any undivided ownership interest in the Units or any portion thereof in accordance with the provisions of Section 5(f) of the Ownership Agreement (other than a sale or conveyance as security for an indebtedness or in connection with the financing of pollution control facilities), such selling Participant's rights and obligations hereunder as a Participant and co-owner of the Units, including the obligation to make payments of the Operating Costs, Common Coal Stockpile Costs, Separate Coal Stockpile Costs, Other Fuel Costs and any other costs to be shared by the Participants hereunder, shall be reduced to the extent of such costs attributable to the undivided ownership interest so sold, and all Participants shall look solely to such -43- purchaser for payment of the corresponding portion of the Operating Costs, Common Coal Stockpile Costs, Separate Coal Stockpile Costs, Other Fuel Costs and other costs to be shared by the Participants hereunder; provided, however, that no such sale shall relieve any Participant from its obligations under Section 3(d) hereof." 10. Amendment to Section 2(b) of the Operating Agreements. Section 2(b), PAYMENT AND SETTLEMENT OF COSTS, of the Operating Agreements is hereby amended as follows: (i) Section 2(b)(i) of each of the Operating Agreements is hereby amended to delete the words "and acquisition of fuel" therefrom. (ii) The second sentence of Section 2(b)(iii) is hereby amended to delete the words: In the OPC Operating Agreement: "of its 30% share of such Operating Costs of Plant Wansley" In the MEAG Operating Agreement: "of its 15.1% share of such Operating Costs of Plant Wansley" In the Dalton Operating Agreement: "of its 1.4% share of such Operating Costs of Plant Wansley," -44- and to substitute in each instance in lieu thereof, the words "of its share of Operating Costs as provided in Section 2(a), SHARING OF COSTS-GENERAL." (iii) Section 2(b) of each of the Operating Agreements is hereby amended to add the following section (vi) to the end thereof. "(vi) Notwithstanding the foregoing provisions of this Section 2(b), GPC agrees to establish depository reconcilement accounts for use in billing and payment of costs at Plant Wansley and to develop, after consultation with the other Participants, procedures for the implementation of such accounts. The establishment of such accounts and the development of such procedures shall be consistent, to the extent practicable, with the methodologies used by GPC for the billing and payment of costs at GPC's other jointly owned generating facilities which implement depository reconcilement accounting." 11. Amendment to Create Section 2(c) of the Operating Agreements. Section 2, GENERAL FINANCIAL OBLIGATIONS, of each of the Operating Agreements is hereby amended to add the following subsection (c) thereto. -45- "(c) Common Coal Stockpile Costs, Separate Coal Stockpile Costs, and Other Fuel Costs. (i) Each Participant which is at any given time a Common Coal Stockpile Participant shall own an undivided ownership interest in the Common Coal Stockpile, and shall be responsible for the payment of Common Coal Stockpile Costs in the proportions set forth in Sections 1(f)(iii) and 1(g) of this Agreement. Each Participant which is at any given time a Separate Coal Stockpile Participant shall own the coal allocated to its account and shall be responsible for payment of Separate Coal Stockpile Costs pursuant to Sections 1(f)(iv) and 1(g) of this Agreement. Each Participant shall own other fossil fuel and shall be responsible for payment of Other Fuel Costs for the Units in proportion to its percentage undivided ownership interest from time to time in the Units. Not later than 120 days prior to the beginning of each calendar year, GPC shall deliver to the other Participants an estimate of the Common Coal Stockpile Costs or Separate Coal Stockpile Costs, as the case may be, and Other Fuel Costs to be paid by each Participant for such calendar year; -46- (ii) For each calendar year, GPC shall keep an hourly record of the kilowatt-hours of energy delivered to each Participant from each of Wansley Unit No. 1 and Wansley Unit No. 2 and shall report such amounts each month along with the cumulative amount of energy delivered to each Participant since the beginning of that calendar year." 12. Amendment to Section 3(b) of the Operating Agreements. Section 3(b), SCHEDULING AND DISPATCHING, of each of the Operating Agreements is hereby amended by deleting such Section 3(b) in its entirety and by substituting, in lieu thereof, the following: "(b) Scheduling and Dispatching. (i) Subject to the further provisions of this Section 3(b), GPC, on its own behalf and as agent for the other Participants shall have sole authority for the scheduling and dispatching of the output of each of Wansley Unit No. 1 and Wansley Unit No. 2 and shall schedule and dispatch such outputs on a continuous economic dispatch basis, to the extent each such unit is capable of such dispatch, in accordance with GPC's standard scheduling and dispatching procedures to serve, in part, the electric capacity and energy load within the State of Georgia. By the date set forth in -47- Appendix A, as the same may be revised from time to time with respect to such information by agreement among all of the Common Dispatch Participants and GPC as agent for the Common Dispatch Participants, GPC shall use its reasonable best efforts to provide to each Common Dispatch Participant a written budget estimate of the estimated operating levels of Wansley Unit No. 1 and Wansley Unit No. 2 based upon the anticipated economic dispatch of such Units for the five-year budget period. Each budget estimate shall be based on information reasonably available. (ii) Any Common Dispatch Participant having an undivided ownership interest in Wansley Unit No. 1, Wansley Unit No. 2, or both, shall have the right to request and receive during such calendar year energy on an hourly basis from either of Wansley Unit No. 1 or Wansley Unit No. 2 or both in excess of its proportionate share of the energy generated by such unit operating on an economic dispatch basis, up to a maximum of such Participant's proportionate share of the energy which could be generated by such unit operating at its maximum practicable capability at any given time, if (1) such Participant, gives GPC such advance notice as is reasonably acceptable to GPC of its desire to receive such additional energy from such unit and the amount of such additional energy and such -48- increased generation can be reasonably accommodated within GPC's scheduling and dispatching procedures; and (2) such Participant agrees to be responsible, as of the date of such notice, for any and all additional costs resulting from such increased generation of energy, including all prepayments in connection with the acquisition of coal and other fuel, whether or not it requires or takes the additional energy during such calendar year and whether or not any additional energy is generated. (iii) Subject to the provisions of Section 3(b)(iv) of this Agreement, commencing within six months following the date of the first election by a Separate Coal Stockpile Participant to discontinue participation in the Common Coal Stockpile, GPC shall use its reasonable best efforts to dispatch the undivided ownership interests of each Separate Dispatch Participant in Wansley Unit No. 1 and Wansley Unit No. 2 to match the schedules provided by such Separate Dispatch Participant. Except as provided for in Section 3(b)(iv) or in the third paragraph of this Section 3(b)(iii), GPC shall have no right to dispatch the undivided ownership interests in Wansley Unit No. 1, Wansley Unit No. 2, or both, of the Separate Dispatch Participants on any basis or for any purpose other than to match the schedules provided by such -49- Separate Dispatch Participants. The Separate Dispatch Participants having undivided ownership interests in Wansley Unit No. 1, Wansley Unit No. 2, or both, and GPC agree to develop software and to install any equipment at Wansley Unit No. 1 and Wansley Unit No. 2 which GPC and such Separate Dispatch Participants deem reasonable and necessary for the separate scheduling and dispatching of the undivided ownership interests of the Separate Dispatch Participants in Wansley Unit No. 1 and Wansley Unit No. 2. The costs associated with procuring, developing, installing and operating such equipment and software shall be borne solely by the Separate Dispatch Participants having undivided ownership interests in the Units, and each such Separate Dispatch Participant shall pay that portion of such costs in the proportion that its undivided ownership interest in the Units bears to the aggregate of undivided ownership interests of Separate Dispatch Participants in the Units. GPC and the Separate Dispatch Participants having undivided ownership interests in Wansley Unit No. 1, Wansley Unit No. 2, or both, shall establish mutually agreeable notification procedures for the startup and shutdown of Wansley Unit No. 1 and Wansley Unit No. 2 which shall be subject to approval by the Participants by vote of Participants owning at least an aggregate -50- 85% undivided ownership interest in the Units and upon failure to secure such approval, such notification procedures shall be those proposed by GPC. Such procedures shall consider, among other things, operational characteristics of Wansley Unit No. 1 and Wansley Unit No. 2 as well as factors affecting the operation of Wansley Unit No. 1 and Wansley Unit No. 2 as a component of Plant Wansley integrated with the Georgia Integrated Transmission System. Either GPC, on its own behalf and as agent for the other Common Dispatch Participants, or any Separate Dispatch Participant having undivided ownership interests in Wansley Unit No. 1, Wansley Unit No. 2, or both, may commit such of Wansley Unit No. 1, Wansley Unit No. 2, or both, in which it has an undivided ownership interest, when available, for start-up. The Participant or Participants committing a Unit for start-up shall pay and be solely responsible for all costs associated with the start-up of the Unit, including, without limitation, start-up fuel and personnel costs, with each such Committing Participant being responsible for a portion of such costs in the proportion that its undivided ownership interest in the committed Unit bears to the aggregate of the undivided ownership interests of the Committing Participants in the committed Unit. For this purpose, if GPC commits -51- Wansley Unit No. 1, Wansley Unit No. 2, or both, for start-up, all Common Dispatch Participants having an undivided ownership interest in Wansley Unit No. 1 or Wansley Unit No. 2 shall be deemed Committing Participants. If one or more of the Committing Participants desire to shutdown Wansley Unit No. 1 or Wansley Unit No. 2 and one or more Committing Participant desires to maintain the commitment of such Unit, then the Committing Participant or Participants desiring to maintain the commitment may do so and shall be responsible for all costs associated therewith. During any period of commitment of Wansley Unit No. 1, Wansley Unit No. 2, or both, by Committing Participants, if another Participant or Participants having the right to schedule or dispatch output from the committed Unit or Units does so, then such Participant or Participants shall become Committing Participants and shall pay or reimburse the preexisting Committing Participants for that portion of the costs associated with start-up of the Unit for which the preexisting Committing Participants were liable pursuant to the third paragraph of this Section 3(b)(iii), which is properly and reasonably allocable to each new Committing Participant, all in accordance with GPC's standard operating and accounting procedures which shall be submitted for approval by the -52- Participants by vote of Participants owning at least an aggregate 85% undivided ownership interest in the Units and upon failure to secure such approval, such operating and accounting procedures shall be those proposed by GPC. Each Separate Dispatch Participant shall be responsible for any and all costs resulting from its operation of Wansley Unit No. 1, Wansley Unit No. 2, or both. (iv) It is recognized by the Participants that the operation of the Georgia Integrated Transmission System under both normal and abnormal conditions can be impacted by the operation of Wansley Unit No. 1 and Wansley Unit No. 2, and it is further recognized that the operation of Wansley Unit No. 1, Wansley Unit No. 2 and the remainder of Plant Wansley, including, without limitation, maintenance of voltage regulation and electrical and mechanical stability, can be impacted by the operation of the Georgia Integrated Transmission System. The Participants agree that GPC, as agent, shall have the right to take such actions relating to the operation or shutdown of the Participants' undivided ownership interests in the Units as are reasonable for the safe and reliable operation of Wansley Unit No. 1, Wansley Unit No. 2, the remainder of Plant Wansley and the Georgia Integrated Transmission System. -53- The Participants recognize and agree that (1) GPC shall have sole authority to control the reactive power output of Wansley Unit No. 1 and Wansley Unit No. 2 in order to control voltage at the Plant Wansley step-up substation and auxiliary electric systems, maintain reasonable voltage profiles on the Georgia Integrated Transmission System, and provide reactive power to the system, and (2) GPC may take actions to override the dispatch of the Participants' undivided ownership interests in Wansley Unit No. 1, Wansley Unit No. 2, or both, including, without limitation, startup or shutdown of Wansley Unit No. 1, Wansley Unit No. 2, or both, in the event GPC reasonably determines that such action is necessary or appropriate to maintain reliability and integrity of Wansley Unit No. 1, Wansley Unit No. 2, the remainder of Plant Wansley, the Georgia Integrated Transmission System or any combination of them. GPC shall notify each Participant having an undivided ownership interest in Wansley Unit No. 1, Wansley Unit No. 2, or both, as soon as reasonably practicable when such actions or similar actions are necessary. Procedures for such notification shall be included in the dispatch procedures to be developed by GPC and submitted to the Participants for approval by the Participants by vote of Participants owning at least an aggregate 85% -54- undivided ownership interest in the Units and upon failure to secure such approval, such notification procedures shall be those proposed by GPC. All costs for any additional energy produced by operation of the Participants' undivided ownership interests in Wansley Unit No. 1, Wansley Unit No. 2, or both, pursuant to the foregoing provisions of this Section 3(b)(iv), shall be borne by the Participants in proportion to their undivided ownership interests in the Units and the Participants will be entitled to such additional energy in the same proportions whether or not any such Participant requires or can utilize such additional energy. The rights granted GPC pursuant to this Section 3(b)(iv) shall remain in full force and effect even if GPC is removed as agent for the Units and Plant Wansley Coal Stockpile, or any combination thereof. (v) The Participants agree that GPC shall have no obligation to generate energy which cannot be transmitted either due to transmission restrictions or lack of necessary transmission arrangements. (vi) For the purpose of this Section 3(b), the capacity associated with a Participant's undivided ownership interest in the Units shall include, in the -55- case of GPC, the capacity purchased by GPC from time to time pursuant to Section 3(d) of this Agreement. 13. Amendment to Section 3(d) of the OPC Operating Agreement. Section 3(d), GPC ENTITLEMENT OF OEMC CAPACITY AND ENERGY, of the OPC Operating Agreements is hereby amended to delete subsection (iv) in its entirety therefrom and to renumber the remaining subsections 3(d)(v) and 3(d)(vi) as 3(d)(iv) and 3(d)(v). 14. Amendment to Create Section 10 of the Operating Agreements. Section 10 of each of the Operating Agreements hereby reads as follows: "10. Plant Wansley Operating Committee. (a) Establishment of Plant Wansley Operating Committee. There is hereby established by the Participants a "Plant Wansley Operating Committee" which shall be comprised of one representative and one alternate of each Participant. The Plant Wansley Operating Committee shall establish its own rules of procedure which shall be agreed to by all of the Participants to become effective. (b) Responsibilities of the Plant Wansley Operating Committee. The Plant Wansley Operating Committee shall supersede the role of the Joint Committee with respect to Plant Wansley and shall administer the rights and obligations of the Participants -56- under the Plant Wansley Participation Agreements. The procedures approved by the Joint Committee and Joint Subcommittee relating to Plant Wansley currently in effect shall continue in full force and effect and shall be implemented by the Plant Wansley Operating Committee. In addition, the Plant Wansley Operating Committee shall be responsible for the following: (i) The development of coal procurement procedures as contemplated by Section 1(f)(vi) hereof. (ii) The development of Separate Coal Stockpile and Common Coal Stockpile accounting procedures as contemplated by Section 1(g)(vii) hereof. (iii) The development of dispatch procedures as contemplated by Sections 3(b)(iii) and (iv) hereof. (iv) Such other duties as may be conferred upon it by mutual agreement of the Participants." 15. Effectiveness of this Amendment. Neither this Amendment nor any of the obligations of the parties hereto shall be effective until the receipt of all requisite approvals, including, without limitation, the approval of the Securities and Exchange Commission ("SEC") under the Public Utility Holding Company Act of 1935, the written approval of the Administrator of the Rural Electrification Administration and the approval of all other persons, entities and regulatory bodies having a right or the jurisdiction to approve or consent to an amendment to the Operating Agreements, but upon receipt of such approvals this -57- Amendment and the obligations of the parties hereto shall be effective. The parties hereby agree to use their respective best efforts to expeditiously obtain all such requisite approvals. 16. Miscellaneous. Any and all notices, requests, certificates and other instruments executed and delivered after the execution and delivery of this Amendment may refer to the Operating Agreements without making specific reference to this Amendment, but nevertheless all such references shall be deemed to include this Amendment unless the context shall otherwise require. This Amendment shall be construed in connection with and as a part of the Operating Agreements, and all terms, conditions and covenants contained in the Operating Agreements, except as herein modified, shall be and remain in full force and effect, and the parties hereto agree that they are bound by the terms and conditions of the Operating Agreements as amended hereby. This Amendment may be executed in any number of counterparts, each executed counterpart constituting an original but altogether one and the same instrument. [Remainder of Page Intentionally Left Blank.] -58- IN WITNESS WHEREOF, the undersigned Parties hereto have duly executed this Amendment under seal as of the date first above written. Signed, sealed and delivered GEORGIA POWER COMPANY in the presence of: /s/ Scott A. Hudson By: /s/ Fred D. Williams - ------------------------------ -------------------------------------- /s/ Judith D. Gesa Name: Fred D. Williams - ------------------------------ -------------------------------------- Notary Public Title: Senior Vice President Attest: /s/ Cherry C. Hudgins ------------------------------- Name: Cherry C. Hudgins --------------------------------- Title: Assistant Corporate -------------------------------- Secretary -------------------------------- (CORPORATE SEAL) Signed, sealed and delivered OGLETHORPE POWER CORPORATION in the presence of: (AN ELECTRIC MEMBERSHIP GENERATION & TRANSMISSION /s/ Charles E. Roundtree CORPORATION) - ------------------------------ /s/ Joann Smith By: /s/ T.D. Kilgore - ------------------------------ -------------------------------------- Notary Public Name: T.D. Kilgore --------------------------------- Title: President & CEO -------------------------------- Attest: /s/ Patricia N. Nash ------------------------------- Name: Patricia N. Nash --------------------------------- Title: Assistant Secretary -------------------------------- (CORPORATE SEAL) [Signatures continued on next page] -59- [Signatures continued from previous page] Signed, sealed and delivered MUNICIPAL ELECTRIC AUTHORITY in the presence of: OF GEORGIA By: /s/ Frank L. Olson - ------------------------------ ----------------------------------- /s/ E. Michail Samford Name: Frank L. Olson - ------------------------------ --------------------------------- Notary Public Its: President ---------------------------------- Attest: /s/ Robert P. Johnston ------------------------------- Name: Robert P. Johnston --------------------------------- Its: Assistant Secretary- ---------------------------------- Treasurer ---------------------------------- (OFFICIAL SEAL) Signed, sealed and delivered CITY OF DALTON, GEORGIA in the presence of: /s/ Faye M. Kenenear By: /s/ James A. Middleton - ------------------------------ ----------------------------------- Name: James A. Middleton - ------------------------------ --------------------------------- Notary Public Its: Mayor ---------------------------------- Attest: /s/ Faye L. Martin ------------------------------- Name: Faye L. Martin --------------------------------- Its: Clerk ---------------------------------- (OFFICIAL SEAL) Signed, sealed and delivered BOARD OF WATER, LIGHT AND in the presence of: SINKING FUND COMMISSIONERS By: /s/ DeForrest Parrott - ------------------------------ ----------------------------------- /s/ Linda K. Carlisle Name: DeForrest Parrott - ------------------------------ --------------------------------- Notary Public Its: Secretary ---------------------------------- Attest: /s/ W.R. Seaton, Jr. ------------------------------- Name: W.R. Seaton, Jr. --------------------------------- Its: Assistant to General ---------------------------------- Manager ---------------------------------- (OFFICIAL SEAL) -60- APPENDIX A TO OPERATING AGREEMENT CAPITAL BUDGET, OPERATING BUDGET, SCHEDULING AND DISPATCH BUDGET, MAINTENANCE SCHEDULES AND FUEL PLANS Capital Budget. By August 15 of each calendar year, GPC shall use its reasonable best efforts to provide to each Participant a written budget estimate of capital costs anticipated to be incurred for the five-year budget period for Wansley Unit No. 1 and Wansley Unit No. 2. Each budget estimate shall be based on information reasonably available. Also to be included in the capital budget are any projects which may be charged to a Participant on the basis of its ownership pursuant to the Ownership Agreement. This budget estimate is to consist of project estimate sheets for each project. For the five-year budget period, a summary of estimates of capital expenditures and retirements will be provided, the first year by month and the remaining four years by annual total. Each capital budget estimate and revised capital budget estimate shall be in a format such that for the next calendar year each month's estimated costs are listed by reference to the applicable Uniform System of Accounts account number. In addition, each capital budget estimate and revised capital budget estimate shall be in a format showing expected amounts that the Participant will be billed. Operating Budget. By August 15 of each calendar year, GPC shall use its reasonable best efforts to provide each Participant a written budget estimate of Operating Costs including, without limitation, scheduled outage costs (by month for the following year and in summary fashion for the succeeding four years) anticipated to be incurred for the five-year budget period for Wansley Unit No. 1 and Wansley Unit No. 2. Each operating budget estimate shall be based on information reasonably available. Each operating budget estimate and revised operating budget estimate shall be in a format such that each month's estimated costs are listed by reference to the applicable Uniform System of Accounts account number. In addition, each operating budget estimate and revised operating budget estimate shall be in a format showing expected amounts that the Participant will be billed. Finally, a report on materials and supplies purchased during the preceding calendar year shall be provided along with the operating budget estimate. Scheduling and Dispatching Budget. By August 15 of each year, GPC shall provide each Common Dispatch Participant with a budget estimate of the estimated operating levels of Wansley Unit No. 1 and Wansley Unit No. 2. Maintenance Schedules. In formulating the maintenance schedule to be submitted to the Participants, GPC shall consider any comments submitted by the Participants prior to August 1 of each year. On or before August 15 of each calendar year, GPC shall use its reasonable best efforts to provide each Participant with a written scheduled outage plan for Wansley Unit No. 1 and -2- Wansley Unit No. 2. Should any major changes be made to the maintenance schedule within a calendar year, GPC shall use its reasonable best efforts to provide each Participant with a revised schedule. A Common Dispatch Participant shall receive maintenance schedules for the territory. Fuel Plans. By September 1 of each year, GPC shall provide each Participant with a Fuel Plan. -3- APPENDIX B TO OPERATING AGREEMENTS PLANT WANSLEY OPERATIONS AND MAINTENANCE EXPENSES For the purposes of allocating costs, all FERC accounts other than Operations and Maintenance on the Boiler and Turbine (FERC's 502, 505, 512, and 513) are designated as fixed costs to be allocated based upon the respective undivided ownership interests in Wansley Units 1 and 2. The Operations and Maintenance on Boiler and Turbine costs shall be divided between labor and nonlabor. All labor, both straight time and overtime, shall be designated as fixed costs. All other costs charged to these FERC Accounts (502, 505, 512, 513) shall be considered variable, and allocated to owner based on relative generation during the "applicable accounting period." A flow chart of this information is attached thereto. B-1 APPENDIX B PLANT WANSLEY O & M COST ALLOCATION METHODOLOGY I. FERC Accounts Non-Labor in 502, 505, 512, 513 A. Costs Related to Output 1. Applicable Accounting Period a.) Output i.) Shared by Generation b.) No Output i.) Shared by Ownership II. FERC Accounts 500, 501, 506, 507, 510, 511, 514 Labor in 502, 505, 512, 513 A. Costs not Related to Output 1. Applicable Accounting Period a.) Shared by Ownership III. Cost Method Not Described B-2 EX-10.29 5 EXHIBIT 10.29 EXHIBIT 10.29 MASTER POWER PURCHASE AND SALE AGREEMENT BETWEEN DUKE/LOUIS DREYFUS L.L.C., A NEVADA LIMITED LIABILITY COMPANY AND OGLETHORPE POWER CORPORATION (AN ELECTRIC MEMBERSHIP GENERATION & TRANSMISSION CORPORATION) Dated as of August 31, 1996 ACKNOWLEDGMENT REGARDING CONFIDENTIAL INFORMATION: Oglethorpe Power Corporation (An Electric Membership Generation & Transmission Corporation ) (the "Company") acknowledges that certain confidential information is contained throughout the Master Power Purchase and Sale Agreement and the Exhibits attached thereto and therefore such confidential information has been omitted from the copy filed with this Quarterly Report on Form 10-Q for the quarter ended September 30, 1996, and an asterisk (*) has been inserted indicating such omission at the exact place in the Agreement and the Exhibits where such confidential information has been omitted. A copy of this Agreement without any omission of confidential information has been filed separately with the Secretary of the Commission as an attachment to a request for confidentiality with respect to the omitted information. MASTER POWER PURCHASE AND SALE AGREEMENT BETWEEN DUKE/LOUIS DREYFUS L.L.C., A NEVADA LIMITED LIABILITY COMPANY AND OGLETHORPE POWER CORPORATION (AN ELECTRIC MEMBERSHIP GENERATION & TRANSMISSION CORPORATION) TABLE OF CONTENTS PAGE ARTICLE 1 DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . 2 ARTICLE 2 SCOPE OF AGREEMENT AND TERM. . . . . . . . . . . . . . . . . . 2 2.1 Transactions . . . . . . . . . . . . . . . . . . . . . . . . . 2 2.2 Confirmations. . . . . . . . . . . . . . . . . . . . . . . . . 2 2.3 Effective Date . . . . . . . . . . . . . . . . . . . . . . . . 3 ARTICLE 3 TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . 3 3.1 General Obligations of Seller and Buyer. . . . . . . . . . . . 3 3.2 Transmission and Scheduling. . . . . . . . . . . . . . . . . . 3 3.3 Title and Risk of Loss . . . . . . . . . . . . . . . . . . . . 4 3.4 Failure to Deliver or Receive. . . . . . . . . . . . . . . . . 4 3.5 Sales by OPC . . . . . . . . . . . . . . . . . . . . . . . . . 5 3.6 Sales by Power Marketer. . . . . . . . . . . . . . . . . . . . 8 3.7 Transformer and Transmission Loss Adjustments. . . . . . . . . 9 3.8 SEPA Energy. . . . . . . . . . . . . . . . . . . . . . . . . . 10 3.9 Imbalances and Regulation Deviation Errors . . . . . . . . . . 10 3.10 Non-Territorial Contractual Delivery Obligations . . . . . . . 11 ARTICLE 4 PRICE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 4.1 OPC's Contract Price . . . . . . . . . . . . . . . . . . . . . 11 4.2 Power Marketer's Contract Price. . . . . . . . . . . . . . . . 11 4.3 Amounts Due to OPC and Power Marketer. . . . . . . . . . . . . 11 4.4 Netting of Payment Obligations . . . . . . . . . . . . . . . . 14 4.5 Amendments, Modifications of OPC Contracts . . . . . . . . . . 14 ARTICLE 5 CONFIDENTIAL INFORMATION . . . . . . . . . . . . . . . . . . . 14 5.1 Prior Confidentiality Agreement Superseded; Authorization to Use Information. . . . . . . . . . . . . . . . . . . . . . 14 5.2 Authorized Disclosure. . . . . . . . . . . . . . . . . . . . . 15 5.3 Return of Confidential Information . . . . . . . . . . . . . . 15 5.4 Right to Remedies. . . . . . . . . . . . . . . . . . . . . . . 15 5.5 Georgia Trade Secrets Act. . . . . . . . . . . . . . . . . . . 15 -i- ARTICLE 6 RECORDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 6.1 Records of Transactions. . . . . . . . . . . . . . . . . . . . 16 ARTICLE 7 BILLING AND PAYMENT. . . . . . . . . . . . . . . . . . . . . . 16 7.1 Billing Statements . . . . . . . . . . . . . . . . . . . . . . 16 7.2 Offset of Payment Obligations. . . . . . . . . . . . . . . . . 16 7.3 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 7.4 Audit Rights . . . . . . . . . . . . . . . . . . . . . . . . . 17 7.5 Subsequent Payment Adjustments . . . . . . . . . . . . . . . . 17 ARTICLE 8 TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 8.1 Seller's Obligation. . . . . . . . . . . . . . . . . . . . . . 17 8.2 Buyer's Obligation . . . . . . . . . . . . . . . . . . . . . . 17 8.3 Exemption Certificates . . . . . . . . . . . . . . . . . . . . 17 ARTICLE 9 INDEMNIFICATION AND REMEDIES . . . . . . . . . . . . . . . . . 18 9.1 General Indemnity. . . . . . . . . . . . . . . . . . . . . . . 18 9.2 Limitation on Remedies . . . . . . . . . . . . . . . . . . . . 18 9.3 Duty to Mitigate . . . . . . . . . . . . . . . . . . . . . . . 18 9.4 DISCLAIMER . . . . . . . . . . . . . . . . . . . . . . . . . . 19 9.5 Credit Support from Power Marketer . . . . . . . . . . . . . . 19 9.6 OPC Limitation on Liability. . . . . . . . . . . . . . . . . . 19 ARTICLE 10 REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . 19 10.1 Mutual Representations . . . . . . . . . . . . . . . . . . . . 19 10.2 Additional OPC Representations . . . . . . . . . . . . . . . . 20 10.3 Additional Power Marketer Representations. . . . . . . . . . . 20 10.4 Good Title . . . . . . . . . . . . . . . . . . . . . . . . . . 20 10.5 Continuing Representations and Warranties. . . . . . . . . . . 20 ARTICLE 11 DEFAULTS AND REMEDIES. . . . . . . . . . . . . . . . . . . . . 20 11.1 Events of Default. . . . . . . . . . . . . . . . . . . . . . . 20 11.2 Early Termination; Remedies. . . . . . . . . . . . . . . . . . 21 11.3 Special Early Termination Right. . . . . . . . . . . . . . . . 21 11.4 Failure to Pay . . . . . . . . . . . . . . . . . . . . . . . . 22 11.5 Effect of Regulation . . . . . . . . . . . . . . . . . . . . . 22 ARTICLE 12 FORCE MAJEURE. . . . . . . . . . . . . . . . . . . . . . . . . 22 12.1 Effect of Force Majeure. . . . . . . . . . . . . . . . . . . . 22 ARTICLE 13 MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . 22 13.1 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . 22 13.2 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 13.3 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . 23 -ii- 13.4 Survival of Obligations. . . . . . . . . . . . . . . . . . . . 23 13.5 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . 23 13.6 No Partnership . . . . . . . . . . . . . . . . . . . . . . . . 23 13.7 Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . 23 13.8 Third Parties. . . . . . . . . . . . . . . . . . . . . . . . . 23 13.9 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 13.10 Character of Transactions. . . . . . . . . . . . . . . . . . . 24 13.11 Severability . . . . . . . . . . . . . . . . . . . . . . . . . 24 13.12 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . 24 13.13 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 13.14 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 24 EXHIBITS -iii- MASTER POWER PURCHASE AND SALE AGREEMENT BETWEEN DUKE/LOUIS DREYFUS L.L.C., A NEVADA LIMITED LIABILITY COMPANY AND OGLETHORPE POWER CORPORATION (AN ELECTRIC MEMBERSHIP GENERATION & TRANSMISSION CORPORATION) This Master Power Purchase and Sale Agreement dated as of August 31, 1996 ("Master Agreement," and together with all Transactions, collectively, this "Agreement"), is entered into by and between Oglethorpe Power Corporation (An Electric Membership Generation & Transmission Corporation), a corporation organized and existing under Title 46 of the Official Code of Georgia Annotated ("OPC"), and Duke/Louis Dreyfus L.L.C., a Nevada limited liability company ("Power Marketer"). WITNESSETH WHEREAS, OPC is an electric generation and transmission corporation which operates on a cooperative basis and which supplies the electric requirements of the EMCs for the operation of their respective electric distribution systems pursuant to the EMC Contracts; WHEREAS, OPC also has entered into OPC Off-System Sales Contracts listed on Exhibit 3.5.2 and may, subject to the terms of this Agreement, enter into additional OPC Off-System Sales Contracts with third parties from time to time; WHEREAS, Power Marketer is a power marketer authorized by the Federal Energy Regulatory Commission to purchase and sell electric energy for resale at negotiated rates; WHEREAS, OPC desires to purchase Electric Energy in order to supply the electric requirements of the EMCs pursuant to the terms of the EMC Contracts and to satisfy its obligations under the OPC Off-System Sales Contracts and has selected Power Marketer for such purpose during the Term of this Agreement; WHEREAS, Power Marketer desires to purchase Electric Energy from OPC for resale (i) to OPC at prices consistent with this Agreement and (ii) to third parties at negotiated prices; WHEREAS, the Parties believe that their respective objectives can be achieved if OPC sells to Power Marketer all of the Electric Energy OPC is obligated to take or purchase from Must Run Resources and offers to sell to Power Marketer all of the other Electric Energy which OPC is entitled to take or purchase, as more specifically set forth herein, and if Power Marketer agrees to supply OPC with Electric Energy it has purchased from OPC or from other sources; WHEREAS, the Parties understand and acknowledge that Power Marketer shall have and shall use Confidential Information in the course of satisfying its obligations under, and in implementing the terms and conditions of, this Agreement and the Parties desire to protect the Confidential Information in accordance with the provisions of this Master Agreement. NOW, THEREFORE, in consideration of the premises and mutual covenants set forth herein, and for other good and valuable consideration, OPC and Power Marketer hereby agree as follows: ARTICLE 1 DEFINITIONS All capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in Appendix A hereto. ARTICLE 2 SCOPE OF AGREEMENT AND TERM 2.1 TRANSACTIONS. The Parties shall enter into Transactions for the purchase or sale of Electric Energy hereunder. Each Transaction shall be effectuated and evidenced in accordance with this Master Agreement and shall constitute a part of this Agreement. The Parties are relying upon the fact that all Transactions, together with this Master Agreement, shall constitute a single integrated agreement, and that the Parties would not otherwise enter into any Transactions. Any conflict between this Master Agreement and a Transaction shall be resolved in favor of this Master Agreement. This Master Agreement shall govern all Transactions between the Parties from and after the Effective Date unless expressly stated otherwise. 2.2 CONFIRMATIONS. Each Transaction shall be effectuated and evidenced by (i) a recorded telephone conversation between the Parties whereby an offer and acceptance shall constitute the agreement of the Parties or (ii) a Transaction Agreement executed by the Parties (including by facsimile or counterparts). The specific terms to be established and agreed upon by the Parties shall include the Period of Delivery, the Contract Price, the Delivery Point(s), the Contract Quantity and such other terms as the Parties shall agree that are not in conflict with this Master Agreement; PROVIDED, HOWEVER, that the Parties may modify the Contract Price, Contract Quantity and Delivery Points with respect to the purchase and sale of Electric Energy pursuant to the terms of this Master Agreement. Power Marketer may confirm a -2- Transaction by forwarding to OPC a Confirmation which shall be executed by OPC (with any objections noted thereon) and returned to Power Marketer within two Business Days or else be deemed correct as sent; PROVIDED, HOWEVER, that failure to send a Confirmation shall not invalidate any Transaction agreed to by the Parties. The Parties agree not to contest or assert any defense to the validity or enforceability of telephonic Transactions entered into in accordance with this Master Agreement under Laws relating to whether certain agreements are to be in writing or signed by the Party to be thereby bound, or the authority of any employee of such Party to enter into a Transaction. Each Party consents to the recording of its representatives' telephone conversations without any further notice. All recordings may be introduced into evidence to prove oral agreements between the Parties. 2.3 EFFECTIVE DATE. This Master Agreement shall become effective on the date first written above (the "Effective Date"), provided that the delivery of Electric Energy pursuant to this Master Agreement shall commence at one minute and one second prior to 12:01 a.m. EPT on September 1, 1996 ("Commencement Date"), and shall remain in effect until one minute and one second prior to 12:01 a.m. EPT on January 1, 1997 (the "Termination Date") unless earlier terminated pursuant to this Master Agreement (the "Term"); PROVIDED, HOWEVER, that all Transactions shall terminate no later than the Termination Date. The applicable provisions of this Master Agreement shall continue in effect after the Termination Date in accordance with Section 13.4 hereof. ARTICLE 3 TRANSACTIONS 3.1 GENERAL OBLIGATIONS OF SELLER AND BUYER. With respect to each Transaction, Seller shall sell and deliver, or cause to be delivered, and Buyer shall receive, or cause to be received, at the Delivery Point(s) the Contract Quantity, and Buyer shall pay Seller the Contract Price, as adjusted in accordance with Article 4 hereof. Except as otherwise specifically addressed in Section 3.7 hereof, Seller shall be responsible for any costs or charges imposed on or associated with the delivery of the Contract Quantity (including control area services, transmission losses and loss charges relating to the transmission of the Contract Quantity) up to the Delivery Point. Except as otherwise specifically addressed in Section 3.7 hereof, Buyer shall be responsible for any costs or charges imposed on or associated with the Contract Quantity (including control area services, transmission losses and loss charges relating to the transmission of the Contract Quantity) at and from the Delivery Point. 3.2 TRANSMISSION AND SCHEDULING. (a) Seller shall provide, pay for, and be responsible for transmission service to the Delivery Point and shall Schedule or arrange for Scheduling services with its Transmission Providers to deliver the Contract Quantity to the Delivery Point. Buyer shall provide, pay for, and be responsible for transmission service at and from the Delivery Point -3- and shall Schedule or arrange for Scheduling services with its Transmission Providers to receive the Contract Quantity at the Delivery Point. Each Party shall designate authorized representatives to effect the Scheduling of the Contract Quantity required to be delivered and received pursuant to a Transaction. Each Party shall promptly notify the other of any differences between Scheduled quantities and actual quantities delivered and received. (b) Notwithstanding the foregoing, with respect to Transactions involving or relating to transmission service on the ITS, OPC shall be responsible for transmission service and shall arrange for any Scheduling with Georgia Power Company in accordance with Power Marketer's requests. For Delivery Points which are Points of Interconnection, at Power Marketer's request OPC shall Schedule up to the full transfer capability of OPC's allocation entitlement at each interface set forth on Exhibit 3.2. (c) The parties recognize that third persons, not parties to this Agreement, may obtain rights to utilize OPC's transmission resources, including OPC's allocation entitlement at each interface set forth in Exhibit 3.2, pursuant to the requirements of applicable Law, including FERC Order 888. Notwithstanding anything to the contrary contained in this Agreement, OPC's sale of transmission services to a third party pursuant to the requirements of applicable Law, including FERC Order 888, shall not constitute a breach of OPC's obligations hereunder, and Power Marketer's obligation to provide Electric Energy to OPC in the quantities and at the times required by this Agreement shall not be diminished by any such sale of OPC's transmission resources. OPC's obligations to Power Marketer shall not be affected by such utilization of OPC's transmission resources by such third persons; PROVIDED HOWEVER, that OPC's obligation to deliver Electric Energy as Properly Requested by Power Marketer shall be limited by the availability of sufficient interface capacity to effect Power Marketer's requests. Notwithstanding the foregoing, if OPC provides transmission service to third parties pursuant to this Section 3.2(c), and OPC's revenues from providing such service exceed OPC's incremental costs of providing such service, such excess shall be paid to Power Marketer. 3.3 TITLE AND RISK OF LOSS. As between the Parties, Seller shall be deemed to be in exclusive control (and responsible for any damages or injury caused thereby) of the Contract Quantity prior to the Delivery Point and Buyer shall be deemed to be in exclusive control (and responsible for any damages or injury caused thereby) of the Contract Quantity at and from the Delivery Point. Title to and risk of loss of the Contract Quantity shall transfer from Seller to Buyer at the Delivery Point. 3.4 FAILURE TO DELIVER OR RECEIVE. (a) Unless excused by Force Majeure or the failure of Buyer's performance, if Seller fails to deliver, or cause to be delivered, the Contract Quantity, Seller shall pay Buyer, on the date payment would otherwise be due, an amount for each MWh of such deficiency equal to the positive difference, if any, obtained by subtracting (i) the Contract -4- Price for that portion of the Contract Quantity which was not delivered from (ii) the Replacement Price. "Replacement Price" means the price at which Buyer, acting in a commercially reasonable manner, purchases substitute Electric Energy not delivered by Seller (plus any additional transmission charges incurred by Buyer, if any, to the Delivery Point), including, for example, charges incurred by the Buyer in respect of purchases of Electric Energy pursuant to Section 3.4(c) hereof, or absent a purchase, the market price for such quantity at the Delivery Point as determined by Buyer in a commercially reasonable manner. (b) Unless excused by Force Majeure or the failure of Seller's performance, if Buyer fails to receive, or cause to be received, the Contract Quantity, Buyer shall pay Seller, on the date payment would otherwise be due, an amount for each MWh of such deficiency equal to the positive difference, if any, obtained by subtracting (i) the Sales Price from (ii) the Contract Price for that portion of the Contract Quantity which was not received. "Sales Price" means the price at which Seller, acting in a commercially reasonable manner, resells the Electric Energy not received by Buyer (less any additional transmission charges incurred by Seller, if any, from the Delivery Point to the point of sale), including, for example, charges incurred by Seller in respect of sales of Electric Energy pursuant to the CSA, or, absent a resale, the market price for such quantity at the Delivery Point, as determined by Seller in a commercially reasonable manner. (c) If the Electric Energy supplied by Power Marketer in any hour is less than OPC Load or if the Electric Energy supplied by OPC in any hour is less than the amount of OPC Energy Properly Requested by Power Marketer, the deficiency may be corrected by a purchase by OPC from Georgia Power Company pursuant to the applicable schedule of the CSA. Unless excused by Force Majeure, the charge for such purchase shall be borne by OPC if the deficiency is caused by OPC's failure to make available the OPC Energy that Power Marketer Properly Requested, or by Power Marketer if the deficiency is caused by Power Marketer's failure to make available from sources other than OPC Resources the difference between the OPC Load and OPC Energy that Power Marketer Properly Requested to be delivered to OPC. 3.5 SALES BY OPC. For each hour of the Term, OPC shall promptly inform Power Marketer of the OPC Resources that are available for the delivery of OPC Energy, including nuclear OPC Resources and other "must run" resources which are listed on Exhibit 3.5 hereto ("Must Run Resources") and dispatchable resources. 3.5.1 MUST RUN RESOURCES. OPC shall sell and Power Marketer shall purchase all of the OPC Energy associated with Must Run Resources that are available during each hour of the Term. OPC shall use commercially reasonable efforts to make Must Run Resources available for the production and sale of OPC Energy to Power Marketer during the Term, subject to the terms, conditions and limitations, if any, contained in the OPC Contracts. -5- 3.5.2 DISPATCHABLE OPC RESOURCES. With respect to OPC Resources other than Must Run Resources, OPC shall and hereby does offer to enter into Transactions to sell to Power Marketer on an exclusive basis and Power Marketer is hereby given the exclusive right, but not the obligation, to purchase from OPC any OPC Energy that is available during each hour of the Term; PROVIDED, HOWEVER, that OPC shall be permitted to make OPC Off-System Sales pursuant to the OPC Off-System Sales Contracts, which Electric Energy shall be provided to OPC by Power Marketer pursuant to Section 3.6 and at the prices set forth in Section 4.2 hereof. OPC shall use commercially reasonable efforts to make such dispatchable OPC Resources available for the production and sale of OPC Energy to Power Marketer during the Term, subject to the terms, conditions and limitations, if any, contained in the OPC Contracts. Power Marketer shall effect the acceptance of OPC's offer pursuant to the first sentence of this Section 3.5.2 by complying with the procedures set forth in Section 2.2 and 3.5.4 hereof. Except with respect to the power purchasers under the OPC Off-System Sales Contracts listed on Exhibit 3.5.2, OPC shall not be permitted to make off-system sales of Electric Energy during the Term to parties other than Power Marketer without the prior consent of Power Marketer. 3.5.3 OPC CONTRACTS, RESOURCES AND COSTS. OPC shall be responsible for compliance with the OPC Contracts and shall take such rights and obligations into consideration when entering into Transactions to sell Electric Energy to Power Marketer. Nothing in this Agreement shall be construed to assign, impose or otherwise transfer any rights or obligations under such agreements to Power Marketer and OPC shall retain all of its rights and obligations, including but not limited to its obligation to maintain generation and transmission system stability and reliability. Notwithstanding any other provision of this Agreement, OPC shall not be required to take any action inconsistent with its rights and obligations under the OPC Contracts, the NERC or SERC guidelines, or applicable Laws. Nothing in this Agreement shall affect the rights or obligations of the parties to the EMC Contracts. OPC acknowledges and agrees that Power Marketer requires information concerning OPC Contracts, OPC Resources, OPC Load and Energy Cost in order to satisfy Power Marketer's obligations hereunder. OPC has delivered to Power Marketer the following information: (i) a list of all OPC Resources and OPC Contracts and any proposed or pending amendments to the OPC Contracts, which list is attached as Exhibit 3.5.3(i) hereto; (ii) a statement of the expected availability and the transformer loss factor of each OPC Resource, including nuclear generating units, which statement is attached as Exhibit 3.5.3(ii) hereto; and (iii) a schedule of the Energy Costs expected to apply to Electric Energy produced by each OPC Resource during the Term ("Forecast Energy Costs"), which schedule is attached as Exhibit 3.5.3(iii) hereto. OPC hereby agrees to update such information promptly as new information becomes available -6- to OPC during the Term and to promptly provide such updated information to Power Marketer. 3.5.4 SCHEDULING. The Parties agree to adopt procedures to facilitate Power Marketer's ability on an hourly basis (or more frequently if permissible) to purchase and Properly Request OPC Energy. The Parties shall also establish procedures whereby OPC shall communicate to Power Marketer on an hourly basis the projected OPC Load and the availability of, and estimated Energy Cost for, each OPC Resource, as such availability and Energy Cost may change from time to time. Upon communication of such information, Power Marketer shall notify OPC of its desire to enter into a Transaction pursuant to Section 2.2 and, upon confirmation of the Transaction pursuant to Section 2.2, Properly Request the amounts of Electric Energy that Power Marketer desires to purchase from each such OPC Resource in excess of its obligation to purchase OPC Energy from Must Run Resources. To the extent reasonably possible, OPC shall, if so requested by Power Marketer, make real time changes to Schedules of Properly Requested Electric Energy. In each hour of the Term, OPC shall sell, Schedule and deliver, or cause to be delivered, and Power Marketer shall purchase and receive, or cause to be received, the sum of (i) OPC Energy that is attributable to Must Run Resources and (ii) other OPC Energy that Power Marketer Properly Requests for purchase during that hour. The Period of Delivery for OPC Energy purchased by Power Marketer from OPC Resources other than Must Run Resources shall be as specified by Power Marketer pursuant to the applicable Transaction. 3.5.5 DELIVERY POINTS. Power Marketer, in its reasonable discretion, shall specify one or more Delivery Points for the OPC Energy for each Transaction in which Power Marketer is Buyer. OPC shall use commercially reasonable efforts to accommodate Delivery Point designations by Power Marketer consistent with OPC's interests and rights in the ITS, the terms, conditions and limitations, if any, under the OPC Contracts, and the requirements of applicable Laws, including FERC Order 888. OPC shall promptly inform Power Marketer of any transmission constraints or other impediments to satisfying Power Marketer's Delivery Point designations so that Power Marketer may notify OPC of appropriate changes to, or the amount of OPC Energy to be delivered at, such Delivery Points. 3.5.6 DEEMED ENERGY COST IN THE EVENT OF OPC FAILURE TO DELIVER FROM CERTAIN OPC RESOURCES. In the event that an OPC Resource is available for the production of OPC Energy during an hour, Power Marketer Properly Requests OPC Energy therefrom and, contrary to Power Marketer's Proper Request, OPC delivers OPC Energy to Power Marketer from another OPC Resource, then the Energy Cost for the OPC Energy made available shall be deemed to be the lower of (i) the Forecast Energy Cost for the OPC Energy that Power Marketer Properly Requested or (ii) the actual Energy Cost of the Electric Energy that OPC made -7- available if such Electric Energy is produced from or attributable to an OPC Resource or, if not, the actual cost of the Electric Energy acquired by OPC for delivery to Power Marketer. The foregoing provision shall not apply in the event that OPC shall demonstrate (either before or after the fact) that its failure to deliver OPC Energy from the OPC Resource Properly Requested by Power Marketer is or was a direct result of a reasonable determination made by OPC, acting in good faith after consultation with Power Marketer to the extent reasonably practicable, that failure to comply with Power Marketer's request was reasonably required to assure the stability and reliability of OPC's generation and transmission system; PROVIDED, HOWEVER, that in such circumstances the Energy Cost of the OPC Energy delivered to Power Marketer shall be the Energy Cost of the OPC Resource Scheduled by OPC; and PROVIDED, FURTHER, that in such circumstances OPC shall endeavor to dispatch the OPC Resource having the lowest Energy Cost consistent with maintaining the stability and reliability of OPC's generation and transmission system. OPC shall use commercially reasonable efforts to provide Power Marketer with advance notice of possible transmission constraints, voltage deterioration or similar system events or occurrences that might result in a prospective failure by, or inability of, OPC to Schedule or deliver OPC Energy Properly Requested by Power Marketer, either as a result of Power Marketer's request for OPC Energy or otherwise, such that Power Marketer, to the extent practicable, shall be able to select whether to purchase and Properly Request OPC energy from another OPC Resource consistent with the good-faith and reasonable stability or reliability concerns of OPC (in which case the original Transaction shall be replaced by such new purchase) or, alternatively, to bear the risk of Properly Requesting OPC Energy from the OPC Resource from which it made its original purchase; PROVIDED, HOWEVER, that it is specifically agreed by the Parties that in the event Power Marketer affirms its original purchase and Proper Request for OPC Energy from a specific OPC Resource or does not purchase and Properly Request OPC Energy from a specific OPC Resource consistent with the good-faith and reasonable recommendation of OPC, and as a result thereof, OPC incurs additional incremental costs that would not have been incurred in the absence of OPC complying with Power Marketer's request, such amounts (including charges under the CSA) shall be reimbursed by Power Marketer to OPC; and provided further that (i) such affirmation by Power Marketer shall not preclude OPC from taking such actions as may be necessary to maintain generation and transmission system stability and reliability and (ii) any failure by OPC to deliver or receive Electric Energy or capacity to or from Power Marketer, which failure results from OPC's acting in accordance with Power Marketer's decision to affirm its original purchase and Proper Request, shall not be a breach by OPC of this Agreement or any Transaction Agreement. -8- 3.5.7 EMISSION ALLOWANCES. At no cost to Power Marketer, OPC shall surrender or cause to be surrendered all emission allowances necessary for the utilization, to the full extent Properly Requested by Power Marketer in accordance with this Master Agreement, of the Hal B. Wansley Plant (Units 1 and 2) and other jointly-owned OPC generating resources and to effect the purchase of energy under the block power purchase and sale agreement between OPC and Georgia Power Company. Power Marketer shall not be deemed to have acquired any sulfur-free generation for use in a reduced utilization plan by reason of entering into this Agreement. 3.6 SALES BY POWER MARKETER. In each hour of the Term, Power Marketer shall Schedule, deliver and sell, or cause to be delivered, and OPC shall purchase and receive, or cause to be received, an amount of Electric Energy equal to the sum of the OPC Load and the OPC Off-System Sales in that hour. Power Marketer's obligation to supply OPC with Electric Energy for the purpose of serving OPC Load shall be treated as a single Transaction under this Master Agreement for which no further authorization or request by OPC other than this Master Agreement shall be required; PROVIDED, HOWEVER, that OPC shall be responsible for providing certain ongoing load following, Scheduling and related ancillary services necessary to effect the sales of Electric Energy by Power Marketer to OPC. 3.6.1 DELIVERY POINTS. Power Marketer, in its reasonable discretion, shall specify one or more Delivery Points for the Electric Energy for each Transaction in which Power Marketer is Seller. OPC shall use commercially reasonable efforts to accommodate Delivery Point designations by Power Marketer consistent with OPC's interests and rights in the ITS, the terms, conditions and limitations, if any, under the OPC Contracts, and the requirements of applicable Laws, including FERC Order 888. OPC shall promptly inform Power Marketer of any transmission constraints or other impediments to satisfying Power Marketer's Delivery Point designations so that Power Marketer may notify OPC of appropriate changes to, or the amount of Electric Energy to be delivered at, such Delivery Points. 3.7 TRANSFORMER AND TRANSMISSION LOSS ADJUSTMENTS. (a) With respect to Transactions in which Power Marketer purchases OPC Energy from an OPC Resource that is a generating plant which interconnects directly into the ITS, Power Marketer shall provide for the transformer losses from the generator to Level B-1. This shall be effected by Power Marketer's purchase of an amount of MWh equal to the MWh that OPC delivers to Level B-1 divided by the loss factor stated on Exhibit 3.5.3(ii) for that particular OPC Resource. -9- (b) For purposes of supplying OPC with Electric Energy to serve OPC Load, Power Marketer shall provide for transmission losses which shall be effected by Power Marketer delivering, or causing to be delivered, to OPC at one or more Delivery Points an amount of MWh equal to OPC Load divided by 1 minus the ITS Loss Factor, as determined pursuant to the ITSA, in effect at the time of each delivery. Power Marketer shall not be responsible for any other costs or charges imposed or associated with the delivery of Electric Energy pursuant to this Section 3.7(b). (c) For purposes of supplying OPC with Electric Energy to satisfy OPC's Off-System Sales obligations, Power Marketer shall provide for transmission losses which shall be effected by Power Marketer delivering, or causing to be delivered, to OPC at one or more Delivery Points an amount of MWh equal to OPC Off-System Sales divided by 0.97. (d) For purposes of supplying Electric Energy to satisfy Power Marketer's sales obligations to third parties that accept delivery on the ITS or for delivery at Points of Interconnection, Power Marketer shall provide for transmission losses which shall be effected by Power Marketer delivering, or causing to be delivered, to OPC at one or more Delivery Points on the ITS an amount of MWh equal to the amount Power Marketer desires to receive at the Delivery Point divided by 0.97. (e) For purposes of supplying Electric Energy to permit OPC to pump water to the upper reservoir at the Rocky Mountain Pumped Storage Hydroelectric Generating Facility ("Rocky Mountain"), Power Marketer shall provide for transmission losses which shall be effected by Power Marketer delivering, or causing to be delivered, to OPC at one or more Delivery Points an amount of MWh equal to the amount delivered to Rocky Mountain divided by 0.97. 3.8 SEPA ENERGY. Each of the EMCs is entitled to an allocation of hydroelectric power from SEPA, the cost of which is billed directly by SEPA to each EMC. OPC and Power Marketer agree that Power Marketer's obligation to serve the power supply requirements of OPC pursuant to this Agreement shall be reduced by the SEPA Energy Scheduled for delivery to the EMCs pursuant to the SEPA Contracts; PROVIDED, HOWEVER, that OPC shall Schedule delivery of SEPA Energy to the EMCs as requested by Power Marketer consistent with the CSA. 3.9 IMBALANCES AND REGULATION DEVIATION ERRORS. (a) The Parties recognize that the actual OPC Load may vary in any hour even when the OPC Load has been reasonably forecast by Power Marketer and Electric Energy has been Scheduled as Properly Requested by Power Marketer. Such variances are expected to be accounted for pursuant to the CSA (which accounts for various types of imbalances and regulation deviation errors). If such imbalances and regulation deviation errors occur, Power Marketer shall pay the additional charges for which OPC is responsible pursuant to the CSA as a result thereof, and Power Marketer shall -10- receive the benefit, if any, of any revenue or credit received by OPC pursuant to the CSA; PROVIDED, HOWEVER, that OPC shall be solely responsible for, and shall pay for charges, credits and revenues, if any, resulting from imbalances and regulation deviation errors resulting from a failure to supply Electric Energy as Properly Requested from Power Marketer. (b) In the event that OPC determines that there are material imbalances and regulation deviation errors which are causing problems in relationships between OPC and Georgia Power Company, OPC shall so notify Power Marketer, and the chief executive officers of OPC and Power Marketer shall meet to establish procedures to correct such problems. 3.10 NON-TERRITORIAL CONTRACTUAL DELIVERY OBLIGATIONS. For purposes of supplying Electric Energy to satisfy Power Marketer's sales obligations to third parties that accept delivery on the ITS or delivery at Points of Interconnection, Power Marketer shall be responsible for and shall pay charges arising from any Non-Territorial Contractual Delivery Obligations in the event and to the extent such charges are imposed on and paid by OPC pursuant to the ITSA. ARTICLE 4 PRICE 4.1 OPC'S CONTRACT PRICE. Subject to Section 4.3 hereof, the Contract Price for Electric Energy sold by OPC to Power Marketer shall be the Energy Cost for OPC Energy that Power Marketer Properly Requests. 4.2 POWER MARKETER'S CONTRACT PRICE. Subject to Section 4.3 hereof, (i) with respect to sales of Electric Energy by Power Marketer to OPC relating to OPC Load, the Contract Price shall be equal to the $/MWh charges as reflected on Exhibit 4.2 ("Power Marketer Sales Price"), and (ii) with respect to sales of Electric Energy by Power Marketer to OPC relating to OPC Off-System Sales, the Contract Price shall be as agreed to by the Parties (the "Power Marketer Off- System Sales Price"); PROVIDED, HOWEVER, that with respect to the OPC Off-System Sales Contracts listed on Exhibit 3.5.2 hereto, Power Marketer and OPC have agreed that the Contract Price shall be equal to the price charged by OPC under such OPC Off-System Sales Contracts. 4.3 AMOUNTS DUE TO OPC AND POWER MARKETER. Each month OPC shall charge Power Marketer an amount equal to the aggregate Energy Costs attributable to the OPC Energy that is Properly Requested by Power Marketer, including amounts, if any, owing under the CSA pursuant to Section 3.4(c) and 3.9 above. Each month Power Marketer shall charge OPC an amount equal to the product of (i) the OPC Load purchased by OPC during the month and (ii) the Power Marketer Sales Price, PLUS an amount equal to the product of (i) each OPC Off-System Sales quantity purchased by OPC from Power Marketer during the month and -11- (ii) the Power Marketer Off-System Sales Price applicable to each such OPC Off-System Sale; PROVIDED, HOWEVER, that the amounts so determined shall be subject to the following adjustments: 4.3.1 AVAILABILITY OF NUCLEAR OPC RESOURCES. (a) The Power Marketer Sales Price has been computed based upon certain assumptions relating to the expected availability of the nuclear OPC Resources during the four-month period commencing September 1, 1996 and ending on the Termination Date. Such price assumes (i) expected cumulative availability (measured in MWh) of [ ]* MWh for Plant Hatch (Units 1 and 2 combined) and [ ]* MWh for Plant Vogtle (Units 1 and 2 combined) for such period, as reflected on Exhibit 4.3.1 hereto. Adjustments to the amounts otherwise due to Power Marketer or OPC shall be made to reflect and take into account any deviation between the expected availability of Plant Hatch and Plant Vogtle, respectively, and the actual availability of such nuclear OPC Resources. If Plant Hatch or Plant Vogtle generates Electric Energy in excess of the assumed MWh availability, additional amounts (as described below) shall be payable by Power Marketer to OPC; alternatively, if Plant Hatch or Plant Vogtle generates Electric Energy less than the expected MWh availability, then OPC shall owe additional amounts (as described below) to Power Marketer. (b) If the total actual OPC nuclear generation (in MWh) ("Total Actual OPC Nuclear Generation") for Plant Hatch or Plant Vogtle, respectively, shall exceed the total expected OPC nuclear generation (in MWh) as determined pursuant to paragraph (a) above ("Total Expected OPC Nuclear Generation") for the respective generation facilities ("Excess Generation"), then Power Marketer shall pay to OPC an amount equal to the product of: (i) the amount of such Excess Generation and (ii) [ ]*/MWh if the nuclear OPC Resource that shall have experienced Excess Generation is Plant Hatch and [ ]*/MWh if the nuclear OPC Resource that shall have experienced Excess Generation is Plant Vogtle. If the Total Actual OPC Nuclear Generation for Plant Hatch or Plant Vogtle is less than the Total Expected OPC Nuclear Generation for the respective plants ("Generation Shortfall"), regardless of whether the Generation Shortfall results from or is the result of a scheduled or forced outage, a limited load operating condition or other event or condition that adversely affects the availability of such nuclear OPC Resource, then OPC shall - --------------------------- * Indicates information that has been filed separately with the Secretary of the Commission as an attachment to a request for Confidentiallyity with respect to the ommitted information. -12- pay to Power Marketer an amount equal to the product of: (i) the Generation Shortfall and (ii) [ ]*/MWh if the nuclear OPC Resource that shall have suffered a Generation Shortfall is Plant Hatch and [ ]*/Mwh if the nuclear OPC Resource that shall have suffered a Generation Shortfall is Plant Vogtle. (c) The Total Actual OPC Nuclear Generation for Plant Hatch and Plant Vogtle shall be compared to Total Expected OPC Nuclear Generation for Plant Hatch and Plant Vogtle, respectively, computed on a cumulative basis from the Commencement Date; PROVIDED, HOWEVER, that as set forth on Exhibit 4.3.1 hereto, the differences between the Total Actual OPC Nuclear Generation and the Total Expected Nuclear Generation at the end of each month during the Term shall be settled financially between OPC and Power Marketer on a monthly basis. (d) Exhibit 4.3.1 sets forth the intended operation of this Section 4.3.1, reflecting possible variances in availability (in MWh) on a month-to-month basis, resulting in payments between the Parties on account of Excess Generation in certain months and Generation Shortfalls in others. 4.3.2 DEVIATION FROM FORECAST ENERGY COSTS. As soon as reasonably practicable after the end of each month, OPC shall compare the actual average monthly Energy Cost for each of the OPC Resources with the Forecast Energy Cost for each such OPC Resource as shown on Exhibit 3.5.3(iii) hereto. If the actual average monthly Energy Cost exceeds [ ]*% of the Forecast Energy Cost for any of the OPC Resources during the month, then the amount otherwise due Power Marketer pursuant to this Section 4.3 shall be increased by an amount equal to the product of (i) the amount of the actual average monthly Energy Cost of any OPC Resource in excess of [ ]*% of the Forecast Energy Cost of such OPC Resource for such month and (ii) the Electric Energy Properly Requested by Power Marketer from such OPC Resource during such month. No adjustment shall be made to the extent that the actual average monthly Energy Cost does not exceed [ ]*% of the Forecast Energy Cost for an OPC Resource during any month. Power Marketer may, from time to time, provide for the cost of fuel for the account of OPC in order to permit the owner of Hartwell Units 1 and 2 ("Hartwell") to produce Electric Energy and, consequently, no adjustment shall be made to Energy Cost under this Section 4.3.2 for Hartwell. - --------------------------- * Indicates information that has been filed separately with the Secretary of the Commission as an attachment to a request for Confidentiallyity with respect to the ommitted information. -13- 4.3.3 ROCKY MOUNTAIN "TRUE-UP" ADJUSTMENT. On the Commencement Date and at the end of the Term, OPC shall determine the water level in the upper reservoir of Rocky Mountain to determine the estimated megawatt hours of generation in storage in accordance with Exhibit 4.3.4, column 1 (Upper Reservoir Level Ft.) and column 4 (estimated MWh in Storage Generating). In the event that the beginning megawatt hours minus the ending megawatt hours is positive, then Power Marketer shall pay OPC this difference (in MWh) times the Power Marketer Sales Price in effect for the last month of the Term. In the event that the beginning megawatt hours minus the ending megawatt hours is negative, then OPC shall pay Power Marketer an amount equal to this difference (in MWh) times the Power Marketer Sale Price in effect for the last month of the Term. 4.3.4 CERTAIN SALES FOR RESALE. The Parties understand and agree that the Power Marketer Sales Price applies to all Electric Energy required to enable OPC to satisfy its obligations under the EMC Contracts to meet the requirements of each of the EMCs for the operation of their electric distribution systems, including serving the "customer choice" customers which are not situated within the territorial service area of any such EMC; PROVIDED, HOWEVER, that if, on or after the Effective Date, an EMC enters into a contract with a customer for the sale of Electric Energy for resale, the Power Marketer Sales Price for Electric Energy sold to OPC to serve such wholesale sale by such EMC shall be adjusted to cover the actual cost of such Electric Energy. OPC and Power Marketer shall negotiate to determine the actual cost of providing such Electric Energy. 4.4 NETTING OF PAYMENT OBLIGATIONS. The Parties shall satisfy their respective financial obligations to each other by netting the amounts due to OPC from Power Marketer against amounts due to Power Marketer from OPC hereunder, subject to the provisions of Section 7.2, and such netting shall be a condition to each Party's duty of payment hereunder. 4.5 AMENDMENTS, MODIFICATIONS OF OPC CONTRACTS. The Parties agree and understand that the Power Marketer Sales Price is based upon and reflects the OPC Contracts in effect on the Effective Date and the pending or proposed amendments thereto, if any, which are listed on Exhibit 3.5.3(i). In the event that additional amendments or modifications to the OPC Contracts become effective and, as a result thereof, the economic benefit anticipated to be derived by Power Marketer pursuant to this Agreement would reasonably be expected to be materially and adversely affected, Power Marketer and OPC agree to negotiate in good faith modifications to this Agreement in order to substantially preserve the economic return that would have been derived by Power Marketer in the absence of such amendments or modifications. -14- ARTICLE 5 CONFIDENTIAL INFORMATION 5.1 CONFIDENTIAL INFORMATION. Each Party agrees that any Confidential Information which has been disclosed or will be disclosed directly or indirectly to it by or on behalf of the other Party shall, indefinitely in the case of trade secrets as defined under the Georgia Trade Secrets Act of 1990, and for three (3) years in the case of Confidential Information that is not a trade secret: (i) not be disclosed by it to any other person who is not an employee, officer, director, advisor, lender, representative, or Affiliate of such Party, and their respective employees, officers, directors advisors, lenders, representatives, or Affiliates (collectively "Representatives"), who need to know and agree to maintain the confidentiality of such Confidential Information in accordance with the terms hereof; (ii) be maintained by it in confidence in a manner so as to ensure that it will not be viewed or taken by any unauthorized person or further disclosed in a manner not authorized by this Agreement; and (iii) not be used except for the purposes of performing this Agreement. OPC expressly authorizes and grants its consent to Power Marketer to use Confidential Information, whether acquired before or after the Effective Date, pertaining to OPC Contracts, OPC Resources, OPC Load, and OPC Off-System Sales for the purpose of exercising Power Marketer's rights under this Agreement, including Power Marketer's right to buy Electric Energy from OPC or any other person and to sell Electric Energy to OPC or any other person, whether Electric Energy is produced by or attributable to OPC Resources or other resources. 5.2 AUTHORIZED DISCLOSURE. Notwithstanding anything contained in this Article 5, Confidential Information may be disclosed to any governmental, judicial or regulatory authority requiring such Confidential Information, provided that: (i) such Confidential Information is submitted under applicable provisions, if any, for confidential treatment by such governmental, judicial or regulatory authority; (ii) prior to such disclosure, the Party who supplied the Confidential Information is given notice of the disclosure requirement so that it may take whatever action it deems appropriate, including intervention in any proceeding and the seeking of an injunction to prohibit such disclosure; and (iii) the Party subject to the governmental, judicial or regulatory authority endeavors to protect the confidentiality of any Confidential Information to the extent reasonable under the circumstances and uses its good faith efforts to prevent the further disclosure of any Confidential Information provided to any governmental judicial or regulatory authority. 5.3 RETURN OF CONFIDENTIAL INFORMATION. Upon (i) the termination of this Agreement and (ii) the request of a Party, the other Party shall return all written Confidential Information (including written confirmation of oral communications) provided by the requesting Party which was stamped "confidential" and shall not retain any copies of such written Confidential Information. In the event of such request, all documents, analyses, compilations, studies or other materials prepared by the returning Party or its Representatives that contain or reflect Confidential Information (other than computer archival and backup tapes or archival and backup files (collectively "Computer Tapes") and billing and trading records -15- (collectively, "Other Records")) shall be destroyed and no copy thereof shall be retained (such destruction to be confirmed in writing by a duly authorized officer of the returning Party). Computer Tapes and Other Records shall be kept confidential in accordance with the terms of this Agreement. 5.4 RIGHT TO REMEDIES. In the event of an unauthorized disclosure to a third party, the limitations on remedies contained in Section 9.6 shall not apply, but the limitations on liability of Section 9.2 shall apply, and in the event of a breach neither Party will have an adequate remedy at law and accordingly shall, in addition to any other available legal or equitable remedies, be entitled to an injunction against such breach without any requirement to post a bond as a condition of such relief. Each Party shall be responsible for any breach by its Representatives of the obligations of confidentiality contained in this Agreement and shall hold harmless and indemnify the damaged Party from any damages caused by any unauthorized disclosure by such persons. 5.5 GEORGIA TRADE SECRETS ACT. Except as expressly provided in Article 5 of this Agreement, including OPC's consent to the use by Power Marketer of Confidential Information in its trading operations pursuant to this Agreement, the rights of the Parties under this Agreement are in addition to and not in lieu of their rights under Georgia law, including but not limited to the Georgia Trade Secrets Act of 1990. Nothing in this Article 5 shall be construed as a waiver on the part of any Party of any privilege or objection of any kind to the disclosure or use of Confidential Information. ARTICLE 6 RECORDS 6.1 RECORDS OF TRANSACTIONS. Each Party shall keep such records as may be needed to afford a clear history of the Scheduled deliveries and Transactions hereunder. In maintaining such records, OPC and Power Marketer may rely upon the logs and other meter information routinely recorded by Transmission Providers or utilities responsible for coordination of the Transactions. ARTICLE 7 BILLING AND PAYMENT 7.1 BILLING STATEMENTS. OPC shall deliver to Power Marketer no later than on the tenth (10th) day of each month, a statement (the "Statement") setting forth the amounts of Electric Energy purchased by OPC from Power Marketer at the applicable Power Marketer Sales Price and the respective Power Marketer Off-System Sales Prices as adjusted pursuant to Section 4.3, and the amounts of Electric Energy purchased by Power Marketer from OPC at the applicable Energy Cost and any amounts owed to Power Marketer pursuant to Section -16- 3.2(c). To the extent that OPC has not yet received or been able to compile the applicable Energy Cost figures as of such date, OPC may set forth on such Statement its good-faith estimate of the Energy Cost of an OPC Resource, PROVIDED that in no event shall such estimate exceed [ ]*% of the corresponding Forecast Energy Cost for such OPC Resource; and PROVIDED, FURTHER, that OPC shall compile the actual Energy Costs and "true-up" such estimates as promptly as practicable pursuant to Section 7.5 hereof. 7.2 OFFSET OF PAYMENT OBLIGATIONS. The Parties shall discharge their obligations to pay through netting, in which case the Party, if any, owing the greater aggregate amount shall pay to the other Party the difference between the amounts owed. Each Party reserves to itself all rights, setoffs, counterclaims and other remedies and defenses, consistent with Article 9, which such Party has or may be entitled to arising from or out of this Agreement. All outstanding Transactions and obligations to make payment in connection therewith or under this Agreement or any other agreement between the Parties may be offset against each other, set-off or recouped therefrom. 7.3 PAYMENTS. Payments shall be due on or before the later of the following: (i) the tenth (10th) Business Day after receipt of the Statement or (ii) the twentieth (20th) day of the month in which the Statement is received. The Party owing to the other shall render by wire transfer payments of the amount due for Transactions during the preceding month. Payment shall be made to the payment address provided in Exhibit 13.2 hereto. If either Party, in good faith, disputes any part of any statement, it shall provide a written explanation of the basis for the dispute and pay the portion of such statement conceded to be correct no later than the due date as calculated in accordance with the preceding sentence. If any amount disputed is determined to be due to the other Party, it shall be paid within ten days of such determination, along with interest calculated at the Interest Rate from the original due date until the date paid. Absent such a good faith dispute, overdue payments shall bear interest from, and including, the due date to, but excluding, the date of payment at a rate equal to the Interest Rate. 7.4 AUDIT RIGHTS. Each Party or any third party representative of a Party shall have the right, at its sole expense and during normal working hours, to examine the records of the other Party to the extent reasonably necessary to verify the accuracy of any statement, charge or computation made pursuant to this Agreement. If requested, a Party shall provide to the other Party statements evidencing the quantities of Electric Energy delivered at the Delivery Point. If any such examination reveals any inaccuracy in any statement, the necessary adjustments in such statement and the payments thereof will be promptly made and shall bear interest calculated at the Interest Rate from the date the overpayment or underpayment was made; PROVIDED, HOWEVER, that no adjustment for any statement or payment will be made unless objection to the accuracy thereof was made prior to the lapse of two - --------------------------- * Indicates information that has been filed separately with the Secretary of the Commission as an attachment to a request for Confidentiality with respect to the ommitted information. -17- (2) years from the rendition thereof; and PROVIDED, FURTHER, that this provision of this Agreement will survive any termination of this Agreement for a period of two (2) years from the date of such termination for the purpose of such statement and payment objections. 7.5 SUBSEQUENT PAYMENT ADJUSTMENTS. The Parties understand that in certain cases monthly billings will need to be made on an estimated basis, including with respect to the calculation of Energy Cost for each of the OPC Resources. Each Party shall cooperate in good-faith with the other Party to obtain the requisite information and perform the necessary computations so as to "true-up" any estimated billings promptly. ARTICLE 8 TAXES 8.1 SELLER'S OBLIGATION. Seller is liable for and shall pay, or cause to be paid, or reimburse Buyer if Buyer has paid, all Taxes applicable to a Transaction arising prior to the Delivery Point(s). If Buyer is required to remit any such Tax, the amount shall be deducted from any sums becoming due to Seller. Seller shall indemnify, defend and hold harmless Buyer from any Claims for such Taxes. 8.2 BUYER'S OBLIGATION. Buyer is liable for and shall pay, cause to be paid, or reimburse Seller if Seller has paid, all Taxes applicable to a Transaction arising at and from the Delivery Point(s), including any Taxes imposed or collected by a taxing authority with jurisdiction over Buyer. Buyer shall indemnify, defend and hold harmless Seller from any Claims for such Taxes. 8.3 EXEMPTION CERTIFICATES. Either party, upon written request of the other, shall provide a certificate of exemption or other reasonably satisfactory evidence of exemption if either Party or a Transaction is exempt from Taxes, and shall use reasonable efforts to obtain and cooperate with obtaining any exemption from or reduction of any Taxes. Each Party shall use reasonable efforts to administer this Agreement and implement the provisions in accordance with the intent to minimize Taxes. ARTICLE 9 INDEMNIFICATION AND REMEDIES 9.1 GENERAL INDEMNITY. Subject to Section 9.2 hereof, Seller and Buyer shall each indemnify, defend and hold harmless the other Party from any Claims or other losses arising from any act or incident occurring when title to the Contract Quantity is vested in the indemnifying Party pursuant to Section 3.3 hereof. -18- 9.2 LIMITATION ON REMEDIES. THE PARTIES CONFIRM THAT THE EXPRESS REMEDIES AND MEASURES OF DAMAGES PROVIDED IN THIS AGREEMENT SATISFY THE ESSENTIAL PURPOSES HEREOF. FOR BREACH OF ANY PROVISION FOR WHICH AN EXPRESS REMEDY OR MEASURE OF DAMAGES IS PROVIDED, SUCH EXPRESS REMEDY OR MEASURE OF DAMAGES SHALL BE THE SOLE AND EXCLUSIVE REMEDY, THE OBLIGOR'S LIABILITY SHALL BE LIMITED AS SET FORTH IN SUCH PROVISION AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN EQUITY ARE WAIVED. IF NO REMEDY OR MEASURE OF DAMAGES IS EXPRESSLY HEREIN PROVIDED, THE OBLIGOR'S LIABILITY SHALL BE LIMITED TO DIRECT ACTUAL DAMAGES ONLY, SUCH DIRECT ACTUAL DAMAGES SHALL BE THE SOLE AND EXCLUSIVE REMEDY AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN EQUITY ARE WAIVED. UNLESS EXPRESSLY HEREIN PROVIDED, NEITHER PARTY SHALL BE LIABLE FOR CONSEQUENTIAL, INCIDENTAL, PUNITIVE, EXEMPLARY OR INDIRECT DAMAGES, LOST PROFITS OR OTHER BUSINESS INTERRUPTION DAMAGES, BY STATUTE, IN TORT OR IN CONTRACT UNDER ANY INDEMNITY PROVISION OR OTHERWISE. IT IS THE INTENT OF THE PARTIES THAT THE LIMITATIONS HEREIN IMPOSED ON REMEDIES AND THE MEASURE OF DAMAGES BE WITHOUT REGARD TO THE CAUSE OR CAUSES RELATED THERETO, INCLUDING THE NEGLIGENCE OF ANY PARTY, WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR CONCURRENT, OR ACTIVE OR PASSIVE. TO THE EXTENT ANY DAMAGES REQUIRED TO BE PAID HEREUNDER ARE LIQUIDATED, THE PARTIES ACKNOWLEDGE THAT THE DAMAGES ARE DIFFICULT OR IMPOSSIBLE TO DETERMINE, OTHERWISE OBTAINING AN ADEQUATE REMEDY IS INCONVENIENT AND THE LIQUIDATED DAMAGES CONSTITUTE A REASONABLE APPROXIMATION OF THE HARM OR LOSS. 9.3 DUTY TO MITIGATE. Each Party agrees that it has a duty to mitigate damages and covenants that it will use commercially reasonable efforts to minimize any damages it may incur as a result of the other Party's performance or non-performance of this Agreement. 9.4 DISCLAIMER. EXCEPT AS EXPRESSLY SET FORTH HEREIN, OPC, WITH RESPECT TO THE SALE OF ELECTRIC ENERGY TO POWER MARKETER, AND POWER MARKETER, WITH RESPECT TO THE SALE OF ELECTRIC ENERGY TO OPC, EXPRESSLY NEGATES ANY OTHER REPRESENTATION OR WARRANTY, WRITTEN OR ORAL, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY REPRESENTATION OR WARRANTY WITH RESPECT TO CONFORMITY TO MODELS OR SAMPLES, MERCHANTABILITY, OR FITNESS FOR ANY PARTICULAR PURPOSE. -19- 9.5 SATISFACTORY CREDIT SUPPORT FROM POWER MARKETER. A condition to the effectiveness of this Agreement shall be the delivery by Power Marketer of a corporate guaranty in an amount not less than [ ]* and in a form and from a person, which may include Power Marketer's parent corporation, satisfactory to OPC in its sole discretion. OPC may, in its sole discretion, accept other forms of credit support in lieu of such guaranty. 9.6 OPC LIMITATION ON LIABILITY. In no event shall either Party be liable to the other for damages under this Agreement in an amount greater than [ ]*; PROVIDED that the foregoing limitation shall not apply to payments on account of or attributable to Electric Energy purchased by either Party from the other. ARTICLE 10 REPRESENTATIONS AND WARRANTIES 10.1 MUTUAL REPRESENTATIONS. On the date hereof, the Effective Date and the date of entering into each Transaction, each Party represents and warrants to the other Party: (i) it is duly organized, validly existing and in good standing under the laws of the state of its incorporation and, in the case of Power Marketer, is doing business as a foreign corporation in the State of Georgia; (ii) it has all requisite corporate power to own, operate and lease its properties and carry on its business as now conducted; (iii) it has all regulatory authorizations, including any required authorization from the Rural Utilities Service of the United States Department of Agriculture ("RUS"), necessary for it to legally perform its obligations under this Agreement and each Transaction; (iv) the execution, delivery and performance of this Agreement and each Transaction are within its powers, have been duly authorized by all necessary action and do not violate any of the terms or conditions in its governing documents, any contract or other agreement to which it is a party or any Law applicable to it; (v) each of this Master Agreement and each Transaction when entered into in accordance with this Agreement constitutes its legally valid and binding obligation enforceable against it in accordance with its terms, subject to any Equitable Defenses; (vi) there are no Bankruptcy Proceedings pending or being contemplated by it or, to its knowledge, threatened against it; (vii) there are no Legal Proceedings that would be reasonably likely to materially adversely affect its ability to perform this Agreement and each Transaction; and (viii) it has knowledge and experience in financial matters and in the electric industry that enable it to evaluate the merits and risks of this Agreement and each Transaction. 10.2 ADDITIONAL OPC REPRESENTATIONS. OPC further represents and warrants that on the date hereof, the Effective Date and the date of entering into each Transaction: (i) the EMC Contracts are and will be in full force and effect throughout the Term and will not be - --------------------------- * Indicates information that has been filed separately with the Secretary of the Commission as an attachment to a request for Confidentiality with respect to the ommitted information. -20- amended so as to affect OPC's ability to perform its obligations under this Agreement; (ii) except as set forth on Exhibit 3.5.3(ii) hereto, there are no planned outages or other limitations on the availability of any of the OPC Resources during the Term; (iii) Exhibit 3.5.3(i) hereto sets forth a true and complete list of each OPC Resource and each material written OPC Contract; (iv) correct and complete copies of the OPC Contracts listed on Exhibit 3.5.3(i) hereto have previously been delivered to Power Marketer by OPC; (v) except as stated on Exhibit 3.5.3(i) hereto, no amendments to the OPC Contracts are proposed or pending as of the Effective Date that would affect this Agreement; (vi) each OPC Contract is valid, binding and in full force and effect and enforceable by or against the respective parties thereto in accordance with its terms; (vii) OPC has fulfilled, and will continue to fulfill during the Term, all of its obligations under each OPC Contract; (viii) there has not occurred any default by OPC or any event which, with the lapse of time or the giving of notice or both will become a default of OPC under any of the OPC Contracts; and (ix) OPC is not in arrears in respect of the performance or satisfaction of the terms or conditions to be performed or satisfied by it under any of the OPC Contracts, and, to the best knowledge of OPC, no waiver of any of such terms or conditions has been granted thereunder by any of the parties thereto. 10.3 ADDITIONAL POWER MARKETER REPRESENTATIONS. Power Marketer further represents and warrants that it is a power marketer authorized by the FERC to purchase and sell Electric Energy at negotiated rates and in accordance with the terms of this Agreement. 10.4 GOOD TITLE. Each Party represents and warrants that it will deliver to the other good title to Electric Energy delivered hereunder, free and clear of all liens, claims and encumbrances arising prior to transfer of title at the Delivery Point. 10.5 CONTINUING REPRESENTATIONS AND WARRANTIES. Each Party covenants that it will cause these representations and warranties to be true and correct throughout the term of this Agreement. ARTICLE 11 DEFAULTS AND REMEDIES 11.1 EVENTS OF DEFAULT. An "Event of Default" shall mean with respect to a Party ("Defaulting Party"): 11.1.1 The failure by the Defaulting Party to make, when due, any payment required if such failure is not remedied within five Business Days after written notice of such failure is given to the Defaulting Party by the other Party ("Notifying Party"); PROVIDED, that the payment is not the subject of a good faith dispute as described in Section 7.3 hereof; or -21- 11.1.2 Any material representation or warranty made by the Defaulting Party herein shall prove to have been false or misleading in any material respect when made or deemed to be repeated; or 11.1.3 The failure by the Defaulting Party to perform any covenant set forth in this Agreement (other than its obligations to make any payment or obligations which are otherwise specifically covered in this Section 11.1 as a separate Event of Default or its obligations to deliver or receive Electric Energy, a remedy for which is provided in Section 3.4 hereof) and such failure is not excused by Force Majeure or cured within five Business Days after written notice thereof to the Defaulting Party; or 11.1.4 The Defaulting Party shall be subject to a Bankruptcy Proceeding. 11.2 EARLY TERMINATION; REMEDIES. If an Event of Default occurs with respect to a Defaulting Party at any time during the Term, the other party ("Non-Defaulting Party") may, for so long as the Event of Default is continuing, (i) establish a date (which date shall be between five and ten Business Days after the Non-Defaulting Party delivers notice to the Defaulting Party) ("Early Termination Date") on which any or all Transactions selected by it shall terminate (individually, a "Terminated Transaction" and collectively the "Terminated Transactions") and (ii) withhold any payments due to the Defaulting Party under this Agreement; PROVIDED, HOWEVER, that if the Event of Default is that the Defaulting Party becomes subject to a Bankruptcy Proceeding, then all Transactions and this Agreement shall automatically terminate without notice and without any other action by either Party as if an Early Termination Date had been immediately declared prior to such Event of Default. Regardless of whether an Early Termination Date is declared, if an Event of Default shall have occurred, the Non-Defaulting Party shall be entitled to exercise any remedy available at law or equity consistent with Article 9 hereof to recover its damages, including attorneys' fees, resulting from any Event of Default. 11.3 SPECIAL EARLY TERMINATION RIGHT. OPC shall have the right to terminate this Agreement prior to the end of the Term in the event that Power Marketer's failure to supply OPC with Electric Energy sufficient for OPC to service the OPC Load results in the interruption by Georgia Power Company of the flow of Electric Energy to the EMCs pursuant to Section 16.3 of the CSA, regardless of whether and when such condition is subsequently cured; PROVIDED, HOWEVER, that under no circumstances shall this provision apply if Power Marketer's failure to supply Electric Energy or the interruption caused by Georgia Power Company is the result of Force Majeure or the imposition of a rolling "brownout" or "blackout" or other similar demand-side management controls or practices employed in the geographical area. Neither OPC nor Power Marketer shall have any liability for damages in the event OPC exercises this early termination right. Notwithstanding the foregoing, OPC and Power Marketer each shall remain liable for any amounts on account of Electric Energy -22- furnished to the other Party prior to the effective date of such early termination and for any other amounts accrued as of such date. Power Marketer and OPC shall agree to a final accounting and settlement of their obligations to each other as soon as practicable as provided in Section 13.4 hereof. 11.4 FAILURE TO PAY. Notwithstanding any other provision of this Agreement, if either Party fails to pay the other any amounts when due, the other Party shall have the right to (i) suspend performance under this Agreement until such amounts plus interest have been paid and/or (ii) exercise any remedy available at law or in equity to enforce payment of such amount plus interest; PROVIDED, HOWEVER, that if the Defaulting Party, in good faith, shall dispute the amount of any such billing or part thereof and shall pay such amounts as it concedes to be correct, no suspension shall be permitted. 11.5 EFFECT OF REGULATION. In the event OPC is or becomes regulated by a federal, state or local regulatory body, and such body shall disallow all or any portion of any costs incurred or yet to be incurred by OPC under any provision of this Agreement, such action shall not operate to excuse OPC from performance of any obligation nor shall such action give rise to any right of OPC to any refund or retroactive adjustment of any amounts payable hereunder. ARTICLE 12 FORCE MAJEURE 12.1 EFFECT OF FORCE MAJEURE. If either Party is rendered unable by a Force Majeure to carry out, in whole or part, its obligations hereunder and such Party gives notice and full details of the event to the other Party as soon as practicable after the occurrence of the event, then during the pendency of such Force Majeure but for no longer period, the obligations of the Party affected by the event (other than the obligation to make payments then due or becoming due with respect to performance prior to the event) shall be suspended to the extent required. The Party affected by the Force Majeure shall remedy the Force Majeure with all reasonable dispatch. ARTICLE 13 MISCELLANEOUS 13.1 ASSIGNMENT. Neither Party shall assign this Agreement or its rights hereunder without the prior written consent of the other Party; PROVIDED, HOWEVER, either Party may, without the consent of the other Party (and without relieving itself from liability hereunder), (i) transfer, pledge, encumber or assign this Agreement or the accounts, revenues, or proceeds hereof in connection with any financing or other financial arrangements, (ii) transfer or assign this Agreement to an Affiliate of such party, or (iii) transfer or assign -23- this Agreement to any person or entity succeeding to all or substantially all of the assets of such Party; PROVIDED, HOWEVER, that in each such case, this Agreement shall be binding upon any such assignee, such assignee shall agree in writing to be bound by the terms and conditions hereof and each of the representations of a Party shall be true with respect to such Party's assignee as of the effective date of such assignment. 13.2 NOTICES. All notices, requests, statements or payments shall be made as specified in Exhibit 13.2 hereto. Notices required to be in writing shall be delivered by letter, facsimile or other documentary form. Notice by facsimile or hand delivery shall be deemed to have been received by the close of the Business Day on which it was transmitted or hand delivered (unless transmitted or hand delivered after close, in which case it shall be deemed received at the close of the next Business Day). Notice by overnight mail or courier shall be deemed to have been received two Business Days after it was sent. A Party may change its address by providing notice of same in accordance herewith. 13.3 APPLICABLE LAW. THIS AGREEMENT AND THE RIGHTS AND DUTIES OF THE PARTIES ARISING OUT OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED, ENFORCED AND PERFORMED IN ACCORDANCE WITH THE LAWS OF THE STATE OF GEORGIA, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. 13.4 SURVIVAL OF OBLIGATIONS. Upon the expiration of the Parties' sale and purchase obligations under this Agreement, any monies, penalties or other charges due and owing Seller shall be paid, any corrections or adjustments to payments previously made shall be determined, and any refunds due Buyer made, as soon as practicable. All indemnity and confidentiality obligations and audit rights shall survive the termination of this Agreement. The Parties' obligations provided in this Agreement shall remain in effect for the purpose of complying with the provisions of this Section. 13.5 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between the Parties relating to the subject matter contemplated by this Agreement and supersedes all prior agreements, whether oral or written. 13.6 NO PARTNERSHIP. Nothing in this Agreement shall ever be deemed to create or constitute a partnership, joint venture or association between the Parties, or to impose a trust or partnership duty, obligation or liability on or with regard to the Parties. 13.7 AMENDMENT. No amendment or modification to this Master Agreement shall be enforceable unless reduced to writing and executed by both Parties. 13.8 THIRD PARTIES. The provisions of this Agreement shall not impart rights enforceable by any person or entity not a Party or not a permitted successor or assignee of a Party bound by this Agreement. -24- 13.9 WAIVER. No waiver by either Party hereto of any one or more defaults by the other in the performance of any of the provisions of this Agreement or terms of any Transaction shall be construed as a waiver of any other default or defaults, whether of a like kind or different nature. 13.10 CHARACTER OF TRANSACTIONS. The sale by OPC to Power Marketer of OPC Energy under this Agreement does not constitute either a sale, lease, or the dedication of ownership of any OPC Resource. 13.11 SEVERABILITY. Any provision declared or rendered unlawful by a court of law or regulatory agency with jurisdiction over the Parties or deemed unlawful because of a statutory change will not otherwise affect the lawful obligations that arise under this Agreement. 13.12 INTERPRETATION. The term "including" when used in this Agreement shall not be considered in any way to be in limitation. 13.13 HEADINGS. The headings used for the Articles herein are for convenience and reference purposes only. 13.14 COUNTERPARTS. This Master Agreement may be executed in multiple counterparts to be construed as one effective as of the Effective Date. IN WITNESS WHEREOF, the Parties hereto have caused this Master Agreement to be executed by their duly authorized officers and copies delivered to each Party. OGLETHORPE POWER CORPORATION By: /s/ T. D. Kilgore Attest: /s/ Patricia Nash ------------------------------ ------------------------------ Title: President and Chief Executive Title: Assistant Secretary Officer DUKE/LOUIS DREYFUS L.L.C. By: /s/ Steven E. Eckert Attest: /s/ Ruby H. Melton ------------------------------ ------------------------------ Title: Senior Vice President Title: Assistant Secretary -25- APPENDIX A All capitalized terms used in this Agreement and not otherwise defined shall have the respective meanings set forth below, whether singular or plural. "Affiliate" means, with respect to any person, any other person (other than an individual) that directly or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control with, such person. For this purpose, "control" means the direct or indirect ownership interest of more than fifty (50) percent of the outstanding capital stock or other equity interests having ordinary voting power. "Bankruptcy Proceeding" means, with respect to a Party, that such Party (i) makes any general assignment or any general arrangement for the benefit of creditors, (ii) files a petition or otherwise commences, authorizes or acquiesces in the commencement of a proceeding or cause of action under any bankruptcy or similar law for the protection of creditors, or has such a petition involuntarily filed against it and such petition is not withdrawn or dismissed within 30 days after such filing, (iii) otherwise becomes bankrupt or insolvent (however evidenced), or (iv) is unable to pay its debts as they fall due. "Business Day" means a day on which the Federal Reserve Member Banks in New York City are open for business; and a Business Day shall open at 8:00 a.m. and close at 5:00 p.m. local time for each Party's principal place of business. "Buyer" means the Party to a Transaction who is obligated to purchase and receive, or cause to be received, Electric Energy during a Period of Delivery. "Claims" means all claims or actions, threatened or filed and whether groundless, false or fraudulent, that directly or indirectly relate to the subject matter of an indemnity, and the resulting losses, damages, expenses, attorneys' fees and court costs, whether incurred by settlement or otherwise, and whether such claims or actions are threatened or filed prior to or after the termination of this Agreement. "Commencement Date" has the meaning specified in Section 2.3 hereof. "Computer Tapes" has the meaning specified in Section 5.3 hereof. "Confidential Information" means written data or information (or an oral communication if the party requesting confidentiality for such oral communication promptly confirms such communication in writing) which is privileged, confidential or proprietary or which constitutes a trade secret under the Georgia Trade Secrets Act of 1990, except information which (i) is a matter of public knowledge at the time of its disclosure or is thereafter published in or otherwise ascertainable from any source available to the public without breach of this Agreement, (ii) constitutes information which is obtained from a third A-1 party (who or which is not an Affiliate of one of the Parties hereto) other than by or as a result of unauthorized disclosure, or (iii) prior to the time of disclosure had been independently developed by the receiving Party or its Affiliates not utilizing improper means. Confidential Information shall remain Confidential and protected under this Agreement when and as such Confidential Information is incorporated into information, data, notes, or analyses prepared with or from such Confidential Information. "Confirmation" means a written notice confirming the specific terms of a Transaction which confirmation may be substantially in the form set forth on Exhibit 2.2 hereto. "Contract Price" means the price in United States dollars (per MWh) to be paid by Buyer to Seller for the purchase of Electric Energy that is Scheduled or Properly Requested pursuant to a Transaction. "Contract Quantity" means the amount of Electric Energy that Seller agrees to sell and deliver, or cause to be delivered, to Buyer and Buyer agrees to purchase and receive, or cause to be received, from Seller pursuant to the terms of a Transaction. "CSA" means that certain Coordination Services Agreement between Georgia Power Company and Oglethorpe Power Corporation (An Electric Membership Generation & Transmission Corporation), dated as of November 12, 1990, as amended from time to time. "Defaulting Party" has the meaning specified in Section 11.1 hereof. "Delivery Point" means any point on the Integrated Transmission System at which title to Electric Energy passes from Seller to Buyer, including at any Point of Interconnection as shown on Exhibit 3.2. "Early Termination Date" has the meaning specified in Section 11.2 hereof. "Effective Date" has the meaning specified in Section 2.3 hereof. "Electric Energy" means energy in the form of electricity expressed in megawatt-hours (MWh) (or in kilowatt-hours when energy is measured at the points of delivery to the EMCs). "EMC" means an electric membership corporation as defined in Section 46-3-171(3) of the Georgia Electric Membership Corporation Act, which is a member of OPC on the Effective Date, as shown on Exhibit 1.1 hereto. "EMC Contract" means one of those certain Amended and Consolidated Wholesale Power Contracts between OPC and an EMC, which contract is dated as of December 1, 1988, A-2 as amended from time to time, pursuant to which OPC sells and such EMC purchases all Electric Energy required to meet the energy requirements of its customers for the operation of its system. "EMC Metering Point" means that certain point at which deliveries of Electric Energy to each EMC, respectively, are measured and received pursuant to the EMC Contracts. "Energy Cost" means the (i) actual cost of fuel (and not any other costs), in United States Dollars (per MWh), incurred by OPC with respect to Electric Energy produced by OPC Resources (other than the power contracts described below in this definition), as determined pursuant to the applicable OPC Contracts; (ii) the actual cost of fuel and variable operations and maintenance expenses under the block power purchase and sale agreements with Georgia Power Company; (iii) the costs described on Exhibit 3.5.3(iii) hereto with respect to the power purchase agreements with Big Rivers Electric Corporation and Entergy Power, Incorporated; PROVIDED, HOWEVER, that the Energy Cost with respect to Hartwell shall be deemed to be zero to the extent Power Marketer arranges for the delivery of gas at its expense to such plant. The energy cost associated with pumping water at Rocky Mountain is deemed to be at Power Marketer's expense pursuant to Section 4.3.4 of this Agreement. "EPT" means Eastern Prevailing Time and refers to the time in effect in the Eastern Time Zone of the United States, whether Eastern Standard Time or Eastern Daylight Savings Time. "Equitable Defenses" means bankruptcy, insolvency, reorganization and other laws affecting creditors' rights generally, and with regard to equitable remedies, the discretion of the court before which proceedings to obtain the same may be pending. "Event of Default" has the meaning specified in Section 11.1 hereof. "Excess Generation" has the meaning set forth in Section 4.3.1 hereof. "FERC" means the Federal Energy Regulatory Commission or any successor agency which enforces the Federal Power Act. "Force Majeure" means an event not anticipated as of the Effective Date, which is not within the reasonable control of the Party (or, in the case of third party obligations or facilities, the third party) claiming suspension (the "Claiming Party"), and which by the exercise of due diligence the Claiming Party is unable to overcome or obtain or cause to be obtained a commercially reasonable substitute performance therefor. Force Majeure includes, but is not restricted to: failure of transmission facilities; acts of God; fire; civil disturbance; labor dispute; labor or material shortage; sabotage; action or restraint by court order or public or governmental authority (so long as the Claiming Party has not applied for or assisted in the application for, and has opposed where and to the extent reasonable, such government action); A-3 PROVIDED, HOWEVER, that neither (i) the loss of Buyer's markets nor Buyer's inability economically to use or resell Electric Energy purchased hereunder, nor (ii) the loss or failure of Seller's Electric Energy supply, nor (iii) Seller's ability to sell Electric Energy to a market at a more advantageous price, shall constitute an event of Force Majeure. Interruption by a Transmission Provider shall not be deemed to be Force Majeure unless (i) the Party contracting with such Transmission Provider shall have made arrangement with such Transmission Provider for the firm transmission, as defined under the Transmission Provider's tariff, of the Electric Energy to be delivered or received hereunder and (ii) such interruption is due to a force majeure as defined under the Transmission Provider's tariff. "Forecast Energy Cost" has the meaning specified in Section 3.5.3 hereof, as reflected on Exhibit 3.5.3(iii) hereto. "Generation Shortfall" has the meaning set forth in Section 4.3.1 hereof. "Hartwell" has the meaning specified in Section 4.3.2 hereof. "Integrated Transmission System" or "ITS" means the Transmission Facilities as defined in the Revised and Restated Integrated Transmission System Agreement between Oglethorpe Power Corporation (An Electric Membership Generation & Transmission Corporation) and Georgia Power Company, dated as of November 12, 1990, as amended from time to time. "Interest Rate" means the Prime Rate plus two percent, or the maximum lawful rate permitted by applicable Law, whichever is less. "ITS Loss Factor" means the EMC transmission loss factor determined pursuant to the ITSA applicable to deliveries of Electric Energy from any point on the ITS to any EMC Metering Point, which loss factor is currently 3.7271%. "ITSA" means the Revised and Restated Integrated Transmission System Agreement between Oglethorpe Power Corporation (An Electric Membership Generation & Transmission Corporation) and Georgia Power Company, dated as of November 12, 1980, as amended from time to time. "Law" means any law, rule, regulation, order, writ, judgment, decree or other legal or regulatory determination by a court, regulatory agency or governmental authority of competent jurisdiction. "Legal Proceeding" means any suit, proceeding, judgment, ruling or order by or before any court or any governmental authority. A-4 "Level B-1" means the high side of the step-up transformer of a generating plant that is an OPC Resource which interconnects directly into the ITS. "MWh" means megawatt-hour. "Must Run Resources" has the meaning specified in Section 3.5 hereof. "Non-Defaulting Party" has the meaning specified in Section 11.2 hereof. "NERC" means the North American Electric Reliability Council. "Notifying Party" has the meaning specified in Section 11.1.1 hereof. "Non-Territorial Contractual Delivery Obligations" means an obligation, based on a quantity of capacity, energy, or both, which an ITS participant is contractually committed to deliver or make available from or through the ITS to a non-territorial entity, as further defined in the ITSA. "OPC Contracts" means, as of a particular date, all contracts, operating procedures and understandings (whether written or oral, and if oral, written statements of the terms thereof) in effect on such date affecting OPC's rights and obligations with respect to OPC Resources and to the ITS. "OPC Energy" means all of the available Electric Energy which OPC owns, purchases or otherwise has a right to take from OPC Resources. "OPC Load" means, as of a particular hour, the entire Electric Energy requirements of the EMCs measured at each EMC Metering Point, after reducing such requirements to reflect the EMCs' aggregate allocation of SEPA Energy Scheduled for delivery to the EMCs. "OPC Off-System Sales" means transactions undertaken by OPC pursuant to the OPC Off-System Sales Contracts. "OPC Off-System Sales Contracts" means the contracts listed on Exhibit 3.5.2 and, subject to the consent of Power Marketer, contracts entered into between OPC and third parties pursuant to which OPC sells Electric Energy to such third parties. "OPC Resource" means the capacity entitlement or other rights with respect to generating facilities from which, or power purchase contracts, interchange agreements or other contracts or agreements under which, OPC is required or has the right to take, purchase or otherwise acquire Electric Energy during the Term. A-5 "Other Records" has the meaning specified in Section 5.3 hereof. "Party" and "Parties" mean a party or the parties, respectively, to this Agreement, including permitted assignees of each pursuant to this Agreement. "Period of Delivery" means the period from the date physical delivery of the Electric Energy is to commence to the date physical delivery is to terminate pursuant to a Transaction. "Plant Hatch" means those two nuclear generating facilities (and associated common facilities) having a rated capacity of 810 MW for Unit 1 and 820 MW for Unit 2. "Plant Vogtle" means those two nuclear generating facilities (and associated common facilities) having a rated capacity of 1160 MW for Unit 1 and 1160 MW for Unit 2. "Point of Interconnection" means any point of interconnection between the ITS and the transmission facilities of an interconnected utility, electric cooperative or other transmission owner or operator, as set forth on Exhibit 3.2. "Power Marketer Off-System Sales Price" has the meaning specified in Section 4.2 hereof. "Power Marketer Sales Price" has the meaning specified in Section 4.2 hereof. "Prime Rate" means for any date, the per annum rate of interest announced from time to time by Citibank, N.A., as its "prime" rate for commercial loans, effective for such date as established from time to time by such bank. "Properly Requested" or "Properly Requests" means that Power Marketer has, subject to provisions of the OPC Contracts, NERC and SERC guidelines, and applicable Laws, Scheduled OPC Resources in accordance with a Transaction entered into in accordance with Section 2.2 hereof; PROVIDED, that all Electric Energy attributable to Must Run Resources (which Power Marketer is obligated to purchase pursuant to Section 3.5.1 hereof) shall be deemed to be Properly Requested for purposes of this Agreement. "Regulatory Approvals" means all current and future valid and applicable Laws, orders, statutes, and regulations of courts or regulatory bodies (state or federal) having jurisdiction over a Party or any Transaction. "Replacement Price" has the meaning specified in Section 3.4(a) hereof. "Representatives" has the meaning specified in Section 5.1 hereof. A-6 "Rocky Mountain" has the meaning specified in Section 3.7(e) hereof. "RUS" has the meaning specified in Section 10.1(iii) hereof. "Sales Price" has the meaning specified in Section 3.4(b) hereof. "Scheduling," "Scheduled" or "Schedule" means or relates to the acts of Seller, Buyer and their designated representatives, including each Party's Transmission Providers, if applicable, of notifying, requesting and confirming to each other the quantity of Electric Energy to be delivered hourly on any given day or days during a Delivery Period at a specified Delivery Point. "Seller" means the Party to a Transaction who is obligated to sell and deliver, or cause to be delivered, Electric Energy during a Period of Delivery. "SEPA" means the Southeastern Power Administration, a federal agency of the United States Government. "SEPA Energy" means the aggregate amount of Electric Energy Scheduled for delivery to the EMCs pursuant to the SEPA Contracts. "SEPA Contracts" means those certain power purchase and sale agreements between each EMC and SEPA pursuant to which each EMC purchases Electric Energy from SEPA. "SERC" means the Southeastern Electric Reliability Council. "Statement" has the meaning specified in Section 7.1 hereof. "Taxes" means any or all ad valorem, property, occupation, severance, generation, first use, conservation, Btu or energy, transmission, utility, gross receipts, privilege, sales, use, consumption, excise, lease, transaction, and other or new Taxes, governmental charges, licenses, fees, permits and assessments, or increases therein, other than taxes based on net income or net worth. "Term" has the meaning specified in Section 2.3 hereof. "Terminated Transaction" has the meaning specified in Section 11.2 hereof. "Termination Date" has the meaning specified in Section 2.3 hereof. "Total Actual Nuclear Generation" shall have the meaning set forth in Section 4.3.1 hereof. A-7 "Total Expected Nuclear Generation" shall have the meaning set forth in Section 4.3.1 hereof. "Transaction" means a particular transaction agreed to by the Parties relating to the purchase and sale of Electric Energy pursuant to this Master Agreement, including sales by OPC pursuant to Section 3.5 and sales by Power Marketer pursuant to Section 3.6. "Transaction Agreement" means a written agreement executed by the Parties to form and effectuate a Transaction which agreement may be in substantially the form set forth on Exhibit 1.2 hereto. "Transmission Provider" means the entity or entities transmitting Electric Energy on behalf of Seller or Buyer to or from the Delivery Point(s) in a particular Transaction. A-8 EXHIBIT 1.1 Electric Membership Corporations of Oglethorpe Power Corporation ALTAMAHA EMC AMICALOLA EMC CANOOCHEE EMC CARROLL EMC CENTRAL GEORGIA EMC COASTAL EMC COBB EMC COLQUITT EMC COWETA-FAYETTE EMC EXCELSIOR EMC FLINT EMC GRADY EMC GREYSTONE POWER CORPORATION, AN EMC HABERSHAM EMC HART EMC IRWIN EMC JACKSON EMC JEFFERSON EMC LAMAR EMC LITTLE OCMULGEE EMC MIDDLE GEORGIA EMC MITCHELL EMC OCMULGEE EMC OCONEE EMC OKEFENOKE RURAL EMC PATAULA EMC PLANTERS EMC RAYLE EMC SATILLA RURAL EMC SAWNEE EMC SLASH PINE EMC SNAPPING SHOALS EMC SUMTER EMC THREE NOTCH EMC TRI-COUNTY EMC TROUP EMC UPSON COUNTY EMC WALTON EMC WASHINGTON EMC EXHIBIT 1.2 FORM OF TRANSACTION AGREEMENT To Be Agreed Upon EXHIBIT 2.2 FORM OF CONFIRMATION To Be Agreed Upon EXHIBIT 3.2 INTERCONNECTION POINTS WITH THE GEORGIA ITS Alabama Electric Cooperative Florida Power Corporation Florida Power & Light Company Duke Power Company Jacksonville Electric Authority South Carolina Electric & Gas Company South Carolina Public Service Authority Southern Companies Tallahassee Electric Department Tennessee Valley Authority EXHIBIT 3.2 (CONTINUED) OPC ALLOCATION OF FIRST CONTINGENCY TOTAL TRANSFER CAPABILITY (FCTTC) UNDER NORMAL OPERATING CONDITIONS (EFFECTIVE JUNE 1, 1996) FCTTC (MVA) INTERFACE WITH GEORGIA ITS To Georgia ITS From Georgia ITS - -------------------------- -------------- ---------------- Florida [ ]* [ ]* Sale to GPC [ ]* Sale to GPC [ ]* Sale to Entergy (3/1/96) [ ]* ---------------- [ ]* Alabama Power [ ]* [ ]* Duke Power [ ]* [ ]* SC Public Service Authority [ ]* [ ]* SC Electric and Gas [ ]* [ ]* Savannah Power [ ]* [ ]* Gulf Power [ ]* [ ]* Tennessee Valley Authority [ ]* [ ]* Purchase from GPC [ ]* --------- [ ]* Alabama Electric Cooperative [ ]* [ ]* - --------------------- * Indicates information that has been filed separately with the Secretary of the Commission as an attachment to a request for confidentiality with respect to the omitted information. EXHIBIT 3.5 OPC RESOURCES(1) TYPE OF RESOURCE OPC Resources That Are NOT Must Run Minimum Maximum Resources (MW) (MW) Generating Units Rocky Mountain 1 [ ]* [ ]* Rocky Mountain 2 [ ]* [ ]* Rocky Mountain 3 [ ]* [ ]* Scherer 1(2) [ ]* [ ]* Scherer 2(2) [ ]* [ ]* Tallassee [ ]* [ ]* Wansley 1 [ ]* [ ]* Wansley 2 [ ]* [ ]* Wansley CT [ ]* [ ]* OPC Resources That Are Must Run Minimum Maximum Resources (MW) (MW) Generating Units Hatch 1 [ ]* [ ]* Hatch 2 [ ]* [ ]* Vogtle 1 [ ]* [ ]* Vogtle 2 [ ]* [ ]* QF [ ]* [ ]* - --------------------- (1) The figures contained in this Exhibit shall not serve to limit the actual output available from any OPC Resource. (2) Scherer minimum could be [ ]* if Georgia Power is not taking electric energy from its ownership share of the generating facility. - --------------------- * Indicates information that has been filed separately with the Secretary of the Commission as an attachment to a request for confidentiality with respect to the omitted information. EXHIBIT 3.5 (CONTINUED) Other OPC Resources Minimum Maximum (MW) (MW) Purchased Power GPC Block 1(3) [ ]* [ ]* GPC Block 2(3) [ ]* [ ]* GPC Block 3(3) [ ]* [ ]* GPC Block 4(3) [ ]* [ ]* GPC Block 5(3) [ ]* [ ]* GPC Block 6(3) [ ]* [ ]* Big Rivers [ ]* [ ]* Entergy [ ]* [ ]* Hartwell 1 [ ]* [ ]* Hartwell 2 [ ]* [ ]* - --------------------- (3) [ ]* availability - minimum applies when energy is being scheduled under the particular block. - --------------------- * Indicates information that has been filed separately with the Secretary of the Commission as an attachment to a request for confidentiality with respect to the omitted information. EXHIBIT 3.5.2 POWER PURCHASE AND SALE AGREEMENTS UNDER WHICH OPC IS OBLIGATED TO SELL ELECTRIC ENERGY Letter of Commitment to sell power to Alabama Electric Cooperative beginning January 1, 1996, and extending through December 31, 1996, dated as of December 15, 1995. EXHIBIT 3.5.3(i) OPC RESOURCES AND OPC CONTRACTS OPC RESOURCE OPERATIONS GOVERNED BY - ------------ ---------------------- Georgia Power Blocks Block Power Sale Agreement between Georgia Power Company and OPC, dated as of November 12, 1990. Letters dated as of December 30, 1992 and December 8, 1993, extending term of Block Power Sale Agreement. Letter dated as of August 30, 1994, electing to reduce capacity OPC is obligated to purchase under Block Power Sale Agreement. Vogtle, Units 1 & 2 Alvin W. Vogtle Nuclear Units Numbers One and Two Purchase and Ownership Participation Agreement among Georgia Power Company, OPC, Municipal Electric Authority of Georgia and City of Dalton, Georgia, dated as of August 27, 1976; Amendment, dated as of January 18, 1977; Amendment Number Two, dated as of February 24, 1977. Alvin W. Vogtle Nuclear Units One and Two Operating Agreement among Georgia Power Company, OPC, Municipal Electric Authority of Georgia and City of Dalton, Georgia, dated as of August 27, 1976. Hatch, Units 1 & 2 Edwin I. Hatch Nuclear Plant Purchase and Ownership Participation Agreement between Georgia Power Company and OPC, dated as of January 6, 1975. Hatch Operating Agreement between Georgia Power Company and OPC, dated as of January 6, 1975. Scherer, Units 1 & 2 Plant Robert W. Scherer Units Numbers One and Two Purchase and Ownership Participation Agreement among Georgia Power Company, OPC, Municipal Electric Authority of Georgia and City of Dalton, Georgia, dated as of May 15, 1980; Amendment, dated as of December 30, 1985; Amendment Number Two, dated as of July 1, 1986; Amendment Number Three, dated as of August 1, 1988; Amendment Number Four, dated as of December 31, 1990. Plant Robert W. Scherer Units Numbers One and Two Operating Agreement among Georgia Power Company, OPC, Municipal Electric Authority of Georgia and City of Dalton, Georgia, dated as of May 15, 1980; Amendment, dated as of December 30, 1985; Amendment Number Two, dated as of December 31, 1990. Plant Scherer Managing Board Agreement among Georgia Power Company, OPC, Municipal Electric Authority of Georgia EXHIBIT 3.5.3(i) (CONTINUED) and City of Dalton, Georgia, dated as of December 31, 1990. Letter of Intent re: Use of Eastern and Western Coal at Scherer, dated as of January 16, 1992; Letter Agreement re: Capital Modifications and Expenditures for the use of Western Coal at Plant Scherer, dated as of July 7, 1992 (partially executed). Letter Agreement re: Additional Amendments to the Scherer and Wansley Agreements, dated as of December 31, 1990. Wansley, Units 1, 2, & CT Plant Hal B. Wansley Purchase and Ownership Participation Agreement between Georgia Power Company and OPC, dated as of March 26, 1976; Plant Hal Wansley Operating Agreement between Georgia Power Company and OPC, dated as of March 26, 1976. Plant Hal Wansley Combustion Turbine Agreement between Georgia Power Company and OPC, dated as of August 2, 1982; Amendment dated as of October 20, 1982. Definitive Agreement Concerning Transfer Units Under Phase I of the Clean Air Act Amendments, dated as of October 30, 1992. Tallassee, Units 1 & 2 No Operative Documents. Big Rivers Purchase Long Term Firm Power Purchase Agreement between Big Rivers Electric Corporation and OPC, dated as of December 17, 1990. Letter dated March 12, 1992. Long Term Firm Power Purchase Agreement, dated as of July 19, 1989, by and between OPC and Big Rivers Electric Corporation. Entergy Purchase Unit Capacity and Energy Purchase Agreement between OPC and Entergy Power, Incorporated, dated as of October 11, 1990; Amendment, dated as of September 29, 1992. Letter Agreement Regarding Offer to Sell Energy, dated as of April 23, 1992; Amendment, dated as of February 25, 1993. Hartwell Energy Limited Partnership Purchase Power Purchase Agreement between OPC and Hartwell Energy Limited Partnership, dated as of June 12, 1992. Agreement for Purchase of 230KVS Switchyard and ITS Interconnection Facilities Agreement, dated as of August 31, 1992. EXHIBIT 3.5.3(i) (CONTINUED) Rocky Mountain Pumped Storage Resource Rocky Mountain Pumped Storage Hydroelectric Project Ownership Participation Agreement, dated as of November 18, 1988, by and between OPC and Georgia Power Company. Rocky Mountain Pumped Storage Hydroelectric Project Operating Agreement by and between OPC and Georgia Power Company, dated as of November 18, 1988. Pumped Storage Hydroelectric Project Option Agreement, dated as of November 18, 1988. Reciprocity Letter Agreement, dated as of November 18, 1988. Letters Relating to Rocky Mountain (Title Defects Letter; Floyd County Prepayment Letter; Letter Re: Other Commitments; Letter Re: Cost of Construction). QF Agreements Interconnection Policy of OPC and Members for Cogeneration and Small Power Producers, dated as of January 1994. Agreement for Purchase of Power between Habersham Electric Membership Corporation and Herschel Webster, dated as of July 26, 1981; Amendment, dated as of July 8, 1985; Second Amendment, dated as of June 1993. Agreement for Purchase of Power from Georgia Waste Systems, Inc., dated January 1993. Agreement for Purchase of Power from Southeast Paper Manufacturing Co., dated as of February 29, 1988; Amendment, dated as of November 11, 1991. Agreement for Purchase of Power from Spartan Mills, dated as of April 6, 1992. Proposed Amendments Amendment No. 1 to the CSA between GPC and OPC dated Draft as of November 7, 1995. Proposed sale of FLA ITS Interface capability to GPC from OPC dated December 21, 1995. Proposed sale of FLA ITS Interface capability to Entergy Power Inc. from OPC dated December 29, 1995. Proposed Amendment to Plant Hal B. Wansley Operating Agreement among GPC, OPC, MEAG, and the City of Dalton. EXHIBIT 3.5.3(i) (CONTINUED) OTHER AGREEMENTS Integrated Transmission System Agreement Revised and Restated Integrated Transmission System Agreement between OPC and Georgia Power Company, dated as of November 12, 1990. ITSA, Power Sale and Coordination Umbrella Agreement between OPC and Georgia Power Company, dated as of November 12, 1990. Coordination Services Coordination Services Agreement between Georgia Power Company and OPC, dated as of November 12, 1990. Transmission O&M Transmission Facilities Operation and Maintenance Contract between Georgia Power Company and OPC, dated as of June 9, 1986. ITS Transfer Capability Purchase of TVA ITS Interface capability from Municipal Electric Authority of Georgia to OPC dated December 17, 1990. Purchase of TVA ITS Interface capability from GPC to OPC dated November 12, 1990. Sale of FLA ITS Interface capability to GPC and from OPC dated May 30, 1995. SEPA SEPA Contract No. 89-00-1501-912 between SEPA and OPC dated May 28, 1991 and amended in Supplemental Agreement No. 1 dated November 26, 1991, Supplemental Agreement No. 2 dated May 23, 1994, Supplemental Agreement No. 3 dated January 30, 1995. SEPA Contract No. 89-00-1501-916 between SEPA and OPC dated December 29, 1993 and amended in Supplemental Agreement No. 1 dated June 17, 1994, Supplemental Agreement No. 2 dated July 28, 1995, Supplemental Agreement No. 3 dated November 24, 1995. Operating Procedures Rocky Mountain Pumped Storage Hydroelectric Plant Coordination Procedures Agreement between Oglethorpe Power Corporation and Georgia Power Company effective June 1, 1995. Plant Scherer Units #1 and #2 Dispatch Procedures Rev. 6.. Hartwell Energy Facility Operation and Maintenance Procedure for Unit Dispatch effective June 6, 1994. Operating Procedures for use between System Control Center and Rocky Mountain Plant effective November 18, 1994. EXHIBIT 3.5.3(ii) EXPECTED AVAILABILITY OF EACH OPC RESOURCE OPC RESOURCE PLANNED OUTAGES DUE TO FORCED LOSS FACTOR SCHEDULED MAINTENANCE OUTAGE AFFECTING THE TERM RATE 1996 SCHEDULED OUTAGES (Latest Version of Schedule) FROM TO Hatch 1(4) [ ]* [ ]* [ ]* Hatch 2(4) [ ]* [ ]* [ ]* Rocky Mountain [ ]* [ ]* [ ]* - Unit 1 [ ]* [ ]* [ ]* - Unit 2 [ ]* [ ]* [ ]* - Unit 3 [ ]* [ ]* [ ]* Scherer 1 [ ]* [ ]* [ ]* Scherer 2 [ ]* [ ]* [ ]* Tallassee 1& 2 [ ]* [ ]* [ ]* Vogtle 1(4) [ ]* [ ]* [ ]* Vogtle 2(4) [ ]* [ ]* [ ]* Wansley 1 [ ]* [ ]* [ ]* Wansley 2 [ ]* [ ]* [ ]* Wansley CT [ ]* [ ]* [ ]* Hartwell [ ]* [ ]* [ ]* - --------------------- * Nuclear planned outages exclude ramp down period prior to full expected planned outages above. - --------------------- * Indicates information that has been filed separately with the Secretary of the Commission as an attachment to a request for confidentiality with respect to the omitted information. EXHIBIT 3.5.3(iii) FORECAST ENERGY COST OF EACH OPC RESOURCE ($/MWH) TYPE OF RESOURCE OPC RESOURCE FORECAST ENERGY COST Sept. Oct. Nov. Dec. Purchased Power GPC Block 1(5) [ ]* [ ]* [ ]* [ ]* GPC Block 2(5) [ ]* [ ]* [ ]* [ ]* GPC Block 3(5) [ ]* [ ]* [ ]* [ ]* GPC Block 4(5) [ ]* [ ]* [ ]* [ ]* GPC Block 5(5) [ ]* [ ]* [ ]* [ ]* GPC Block 6(5) [ ]* [ ]* [ ]* [ ]* Big Rivers(6) [ ]* [ ]* [ ]* [ ]* Big Rivers(7) [ ]* [ ]* [ ]* [ ]* QF [ ]* [ ]* [ ]* [ ]* - --------------------- *The Forecast Energy Costs for the Georgia Power Company block purchases are comprised of fuel and variable O&M, as calculated pursuant to the BPSA. *Historical rate plus [ ]* per MWh for transmission on TVA [ ]* TVA losses. Rate is comprised of fuel, variable O&M and emission costs. Price is based on blended on-peak and off-peak price. *Includes transmission costs plus [ ]* energy losses. Reflects average of prices from TVA/Georgia ITS interface and the APC/Georgia ITS interface. - --------------------- * Indicates information that has been filed separately with the Secretary of the Commission as an attachment to a request for confidentiality with respect to the omitted information. EXHIBIT 3.5.3(iii) (CONTINUED) Sept. Oct. Nov. Dec. Generating Units(8) Hatch 1 [ ]* [ ]* [ ]* [ ]* Hatch 2 [ ]* [ ]* [ ]* [ ]* Scherer 1 [ ]* [ ]* [ ]* [ ]* Scherer 2 [ ]* [ ]* [ ]* [ ]* Vogtle 1 [ ]* [ ]* [ ]* [ ]* Vogtle 2 [ ]* [ ]* [ ]* [ ]* Wansley 1 [ ]* [ ]* [ ]* [ ]* Wansley 2 [ ]* [ ]* [ ]* [ ]* Wansley CT [ ]* [ ]* [ ]* [ ]* Hartwell 1 & 2 [ ]* [ ]* [ ]* [ ]* Rocky Mountain [ ]* [ ]* [ ]* [ ]* 1, 2 & 3 - --------------------- (8) Fuel prices only - does not include variable O&M or emission allowances. - --------------------- * Indicates information that has been filed separately with the Secretary of the Commission as an attachment to a request for confidentiality with respect to the omitted information. EXHIBIT 4.2 1. D/LD will provide energy required (exclusive of energy provided by SEPA) up to the maximum quantities indicated below at the following Contract Price: MONTH MAXIMUM QUANTITY CONTRACT PRICE September 1996 [ ]* [ ]* October 1996 [ ]* [ ]* November 1996 [ ]* [ ]* December 1996 [ ]* [ ]* 2. D/LD will provide energy required in excess of the maximum quantities indicated in (1) above at the following Contract Price: MONTH CONTRACT PRICE September 1996 [ ]* October 1996 [ ]* November 1996 [ ]* December 1996 [ ]* - --------------------- * Indicates information that has been filed separately with the Secretary of the Commission as an attachment to a request for confidentiality with respect to the omitted information. EXHIBIT 4.3.1 [ ]* - --------------------- * Indicates information that has been filed separately with the Secretary of the Commission as an attachment to a request for confidentiality with respect to the omitted information. EXHIBIT 4.3.4 ROCKY MOUNTAIN MEGAWATT HOUR STORAGE TABLE
Upper Lower Reservoir Estimated Estimated Upper Reservoir Volume MW hrs MW hrs Accumulated Estimated MW hrs MW hrs per Reservoir Level Ft. change in in storage change Generation MW hrs Pumping Acre ft Level Ft. (optimum) Acre Ft. Generating Generating Tool Pumping to fill pool 1392 690.5 5992.0 7652.3 1391 691.0 218 5861.4 130.5 130.6 7485.5 166.8 0.599 Generating 1390 691.6 216 5732.0 129.4 260.0 7320.3 332.0 0.765 Pumping 1389 692.0 216 5602.6 129.4 389.4 7155.0 497.3 1388 692.6 216 5473.2 129.4 518.8 6989.8 662.5 1387 693.1 215 5344.5 128.8 647.5 6825.3 827.0 Conversion Factors 1386 693.6 214 5216.3 128.2 775.7 6661.6 990.7 43,560 cu. ft. = 1 acre ft. 1385 694.1 214 5088.1 128.2 903.9 6497.9 1154.4 1384 694.6 213 4960.5 127.6 1031.5 6335.0 1317.3 CFS - flow = zone ft. per hr. 1383 695.1 212 4833.5 127.0 1158.5 6172.8 1479.5 1382 695.6 212 4706.5 127.0 1285.5 6010.6 1641.7 4000 330.6 1381 696.0 212 4579.5 127.0 1412.5 5848.4 1803.9 4100 338.8 1380 696.5 210 4453.7 125.8 1538.3 5687.8 1964.5 4200 347.1 1379 697.0 210 4327.9 125.8 1664.1 5527.1 2125.2 4300 355.4 1378 697.4 210 4202.1 125.9 1789.9 5366.5 2285.8 4400 363.6 1377 697.9 209 4076.9 125.2 1915.1 5206.6 2445.7 4500 371.9 1376 698.3 208 3952.3 124.6 2039.7 5047.5 2604.8 4600 380.2 1375 698.8 208 3827.7 124.6 2164.3 4888.4 2763.9 4700 388.4 1374 699.2 208 3703.1 124.6 2288.9 4729.2 2923.1 4800 396.7 1373 699.6 206 3579.7 123.4 2412.3 4571.6 3080.7 4900 405.0 1372 700.1 206 3456.3 123.4 2535.7 4414.1 3238.2 5000 413.2 1371 700.5 206 3332.9 123.4 2659.1 4256.5 3385.8 5100 421.5 1370 700.9 205 3210.1 122.8 2781.9 4099.6 3552.7 5200 429.8 1369 701.4 204 3087.9 122.2 2904.1 3943.6 3708.7 5300 438.0 1368 701.8 204 2965.7 122.2 3026.3 3787.5 3864.8 5400 446.3 1367 702.2 204 2843.5 122.2 3148.5 3631.5 4020.8 5500 454.5 1366 702.5 202 2722.5 121.0 3269.5 3478.9 4175.4 5600 462.8 1365 703.0 202 2501.5 121.0 3390.5 3322.4 4329.9 5700 471.1 1364 703.4 202 2480.5 121.0 3511.5 3167.9 4484.4 5800 479.3 1363 703.8 201 2360.1 120.4 3631.9 3014.1 4638.2 5900 487.6 1362 704.1 200 2240.3 119.8 3751.7 2861.1 4791.2 6000 496.9 1361 704.5 200 2120.5 119.8 3871.5 2708.1 4944.2 6100 504.1 1360 704.9 200 2000.7 119.8 3991.3 2555.1 5097.2 6200 512.4 1359 705.2 184 1890.5 110.2 4101.5 2414.3 5238.0 6300 520.7 1358 705.6 184 1780.3 110.2 4211.7 2273.6 5378.7 6400 528.9 1357 705.9 183 1670.7 109.8 4321.3 2133.6 5518.7 6500 537.2 1356 706.3 182 1561.6 109.0 4430.4 1994.4 5657.9 1355 706.6 182 1452.6 109.0 4539.4 1855.1 5797.2 1354 706.9 180 1344.8 107.8 4647.2 1717.4 5934.9 1353 707.3 180 1237.0 107.8 4755.0 1579.7 6072.6 1352 707.6 180 1129.2 107.8 4862.8 1442.0 6210.3 1351 707.9 178 1022.5 106.6 4969.5 1305.9 6346.4 1350 708.2 178 915.9 106.6 5076.1 1169.7 6482.6 1349 708.5 177 809.9 106.0 5182.1 1034.3 6818.0 1348 708.8 176 704.4 105.4 5287.6 899.6 6752.7 1347 709.1 176 599.0 105.4 5393.0 765.0 6887.3 1346 709.4 174 494.8 104.2 5497.2 631.9 7020.4 1345 709.8 174 390.6 104.2 5601.4 498.8 7153.5 1344 710.0 164 292.3 98.2 5699.7 373.3 7279.0 1343 710.3 164 194.1 98.2 5797.9 247.9 7404.4 1342 710.6 162 97.0 97.0 5895.0 123.9 7526.4 1341 710.9 162 0.0 97.0 5992.0 7652.3 .51 20.4 10003 5992.0
EXHIBIT 13.2 NOTICES AND PAYMENT ENRON POWER MARKETING, INC.: NOTICES AND CORRESPONDENCE PAYMENTS Duke/Louis Dreyfus L.L.C. Duke/Louis Dreyfus L.L.C. 10 Westport Road Chase Manhattan Wilton, CT 06897 Acct. No. 9102740744 Attn: Vice President Operations ABA No. 021000021 Facsimile No. (203) 761-8378 Telephone No. (203) 761-8258 INVOICES Duke/Louis Dreyfus L.L.C. 10 Westport Road Wilton, CT 06897 Attn: Helen Lovely OGLETHORPE POWER CORPORATION: NOTICES AND CORRESPONDENCE PAYMENTS 2100 East Exchange Place SunTrust Bank, Atlanta P.O. Box 1349 ABA Routing No. 061-0001-04 Tucker, Georgia 30085-1349 Oglethorpe Power Corporation Attn: Manager, System Control Account No. 670108800599634 FAX# (404) 270-7663 Confirmation: Oglethorpe Power Corporation Samatha Cofield (770) 270-7191 EX-27.1 6 EXHIBIT 27.1
UT THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM OGLETHORPE POWER CORPORATION'S CONDENSED BALANCE SHEET AS OF SEPTEMBER 30, 1996 AND RELATED STATEMENTS OF REVENUES AND EXPENSES AND CASH FLOWS FOR THE PERIOD ENDED SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 9-MOS DEC-31-1996 JAN-01-1996 SEP-30-1996 PER-BOOK 4,401,321 146,334 400,906 358,760 0 5,307,321 0 0 361,273 0 0 0 4,122,458 0 0 0 105,088 0 294,381 4,457 419,664 5,307,321 832,565 0 611,474 611,474 221,091 49,500 270,591 244,363 26,228 0 0 0 53,595 52,919 0 0 $361,273 REPRESENTS TOTAL RETAINED PATRONAGE CAPITAL. THE REGISTRANT IS A MEMBERSHIP CORPORATION AND HAS NO AUTHORIZED OR OUTSTANDING EQUITY SECURITIES.
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