Message-ID: <25718407.1075845884113.JavaMail.evans@thyme>
Date: Wed, 28 Mar 2001 03:51:00 -0800 (PST)
From: john.rigby@enron.com
To: bob.carter@enron.com, dean.russell@enron.com, john.rigby@enron.com, 
	kay.mann@enron.com, kent.shoemaker@ae.ge.com, 
	michael.barnas@ps.ge.com, pthompson@akllp.com, 
	roseann.engeldorf@enron.com, sheila.tweed@enron.com, 
	stephen.swift@ps.ge.com, scott.dieball@enron.com
Subject: World Hunger- Performance LD Refund Reduction language.
Mime-Version: 1.0
Content-Type: text/plain; charset=us-ascii
Content-Transfer-Encoding: 7bit
X-From: John G Rigby
X-To: Bob Carter, Dean Russell, John G Rigby, Kay Mann, kent.shoemaker@ae.ge.com, michael.barnas@ps.ge.com, pthompson@akllp.com, Roseann Engeldorf, Sheila Tweed, stephen.swift@ps.ge.com, Scott Dieball
X-cc: 
X-bcc: 
X-Folder: \Kay_Mann_June2001_2\Notes Folders\Ge general
X-Origin: MANN-K
X-FileName: kmann.nsf

During one of the World Hunger calls a couple weeks ago I noted that the 
later half of Performance Liquidated Damage refund provision in Section 
10.9.8 was slighty  broken.   I volunteered to find what I thought it should 
look like.   In reviewing the Arcos contract I found the corresponding 
provision that seems to capture what I was concerned about.  I have included 
the ARCOS provision below for everyone's review.  Some of the defined terms 
do not match, but.....


14.18.2.2 If the corrections to reduce a Shortfall are completed before the 
Power Island achieves Acceptance and:
(i) such corrections are made and are complete prior to commercial operation 
of the Station, and
(ii) such corrections cause a reduction in the performance Shortfall
then Purchaser shall:
(a) refund to Seller an amount equal to the Performance Liquidated Damages 
associated with such reduction in the Shortfall, and/or 
(b) reduce the offset associated with such reduced Shortfall; however, such 
reduction in offset or amount of refund shall not exceed the amount actually 
offset (payment withheld) in accordance with Clause 30.8 or paid in 
accordance with Clause 14.15 for such Shortfall.
14.18.2.3 If the corrections to reduce a Shortfall are completed after the 
Power Island achieves Acceptance, and such corrections are completed within 
one hundred eighty (180) days after the Power Island achieved Acceptance, and 
such corrections cause a reduction in the performance Shortfall, then 
Purchaser shall:
(a) refund to Seller an amount equal to the Performance Liquidated Damages 
associated with such reduction in the Shortfall, and/or 
(b) reduce the offset associated with such reduced Shortfall;
however, such refund of Performance Liquidated Damages or reduction of offset 
will not exceed the amount actually offset in accordance with Clause 30.8 or 
paid in accordance with Clause 14.15 for such Shortfall and the amount of 
such refund or reduction of offset shall itself be reduced by the following 
amounts for each day that passes from date of the Performance Test on which 
the Performance Liquidated Damages were originally based upon until the date 
that Seller demonstrated the improved performance:
(c) At a rate of $0.23/day for each kW that the Net Electrical Output 
Shortfall of the Power Island is reduced (the "Output Liquidated Damages 
Refund Reduction").
(d) At a rate of $45.00/day for each kj/kWh that the Net Heat Rate Shortfall 
of the Power Island is reduced (the "Heat Rate Liquidated Damages Refund 
Reduction").
14.18.2.4 No refund of Performance Liquidated Damages shall be made if the 
corrections are made after one hundred eighty (180) days after Acceptance of 
the Power Island, unless Purchaser elects to do so as a result of the 
corrective action plan presented by Seller prior to the expiry of such one 
hundred eighty (180) day period.  In the event Seller determines the cause of 
a portion or all of the Shortfall prior to the expiry of the one hundred 
eighty (180) day period following Acceptance, but in spite of its reasonable 
efforts is not able to effect the necessary corrections to the Plant, Seller 
may present a correction plan that extends beyond such one hundred and eighty 
(180) day period. Purchaser, at its sole discretion, may elect to permit 
Seller the opportunity to make such corrections.