FULL REQUIREMENTS SERVICE AGREEMENT
BALTIMORE GAS AND ELECTRIC COMPANY
CONSTELLATION POWER SOURCE, INC.
AUGUST 23, 2001
The asterisks on pages 12, 24, 25 and A1 denote that confidential portions of
Exchange Act of 1934. The confidential portions have been submitted separately
to the Securities and Exchange Commission.
TABLE OF CONTENTS
ARTICLE 1. Definitions 1
ARTICLE 2. Term 7
ARTICLE 3. Supplier Responsibilities 7
ARTICLE 4. BGE Responsibilities 9
ARTICLE 5. Billing and Payment 10
ARTICLE 6. Price 12
ARTICLE 7. Events of Default; Remedies 13
ARTICLE 8. Credit Support 16
ARTICLE 9. Indemnification 18
ARTICLE 10. Limitation of Liability 19
ARTICLE 11. Force Majeure 19
ARTICLE 12. Representations and Warranties 21
ARTICLE 13. Miscellaneous 21
APPENDIX A SAMPLE PJM BILL
APPENDIX B GENERATION SHOPPING CREDITS
APPENDIX C LITIGATION DISCLOSURE
APPENDIX D CPS GUARANTY
APPENDIX E BGE GUARANTY
FULL REQUIREMENTS SERVICE AGREEMENT
THIS FULL REQUIREMENTS SERVICE AGREEMENT ("Agreement"), made and
entered into as of this day of August, 2001 by and between Baltimore Gas and
Electric Company, a Maryland Corporation ("BGE") and Constellation Power
Source, Inc., a Delaware corporation ("Supplier") (each individually a "Party",
or collectively, the "Parties").
W I T N E S S E T H
WHEREAS, on April 8, 1999, Maryland enacted the Electric Choice and
Competition Act authorizing customer choice and competition among electric
WHEREAS, on November 10, 1999 the Maryland Public Service Commission
issued an order approving the terms of a settlement providing for retail choice
within BGE's service territory;
WHEREAS, the Maryland PSC Order directs BGE to supply electric service
for a period of up to six years to those retail customers within BGE's retail
service territory that choose not to purchase their power supply from
alternative competitive suppliers;
WHEREAS, Supplier is authorized to makes sales of energy, capacity and
ancillary services at market based rates pursuant to Constellation Power Source,
Inc., 79 FERCP. 61,167 (1997) and its market based rates tariff, Constellation
Power Source, Inc. Rate Schedule FERC No. 11, Revision No. 2 in accordance with
FERC Delegated Letter Order of March 29, 2000 in FERC Docket No. ER00-1598-000
(the "Supplier Tariff");
WHEREAS, Supplier and BGE are entering into this Agreement for the
purpose of establishing the terms and conditions under which Supplier will
supply such full requirements service to BGE.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants set forth herein, the Parties hereto agree as follows:
1.1 Definitions. For all purposes of this Agreement, the following
terms as used in this Agreement shall have the following meanings. Except where
the context otherwise requires, definitions and terms expressed in the singular
will include the plural and vice versa.
"Affiliate" means, with respect to a Person, any other Person that,
directly or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with such first Person. The
term "control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of
a Person, whether through the ownership of voting securities, by
contract or otherwise.
"Agreement" means this Full Requirements Service Agreement, including
the Appendices, as amended, modified or supplemented from time to time.
"Alternate SOS Supplier" means a retail supplier that is responsible
for supplying former BGE SOS Customers as a result of Retail Bidding.
"Alternate SOS Supplier Customers" means former BGE SOS Customers that
are provided SOS from Alternate SOS Supplier as a result of Retail
"Ancillary Services" means those services, or their successors, that
are necessary to support the transmission of Energy from generation
resources to loads, as set forth in the PJM OATT, including, but not
limited to, PJM Scheduling, System Control and Dispatch Service; RTO
Scheduling, System Control and Dispatch Service; Reactive Supply and
Voltage Control from Generation Sources Service; Regulation and
Frequency Response Service; Energy Imbalance Service; Operating Reserve
- Spinning Reserve Service; and Operating Reserve - Supplemental
"BGE SOS Customers" means the customers receiving SOS from BGE.
"BGE" means Baltimore Gas and Electric Company, a Maryland corporation
and its successors and permitted assigns hereunder.
"Business Day" means a day on which Federal Reserve member banks in
Baltimore Maryland are open for business; and a Business Day shall open
at 8:00 a.m. and close at 5:00 p.m. Eastern Standard (or Daylight
"Creditworthiness Criteria" with respect to a Party or its guarantor
means (i) an unsecured rating of "Baa3" or better from Moody's, "BBB-"
or better from S&P or investment grade as determined by another
nationally recognized rating service reasonably acceptable to the other
Party and (ii) a Net Worth of at least Two Hundred Million Dollars
"Contract Classes" means those customers that receive SOS from BGE
under certain contractual terms that may differ from the schedules
found in the Retail Electric Service Tariff.
"Customer Classes" means (i) Schedules R, RL-1, RL-2, ES, G Option 1, G
Option 2, GS Option 1, GS Option 2, GL Secondary, GL Primary, SL, PL
and DS, as defined in the Retail Electric Service Tariff and (ii)
"Delivery Point" means any point on the PJM Transmission System as
elected by Supplier.
"Delivery Term" means the period commencing July 1, 2003 and ending on
June 30, 2006, unless this Agreement is earlier terminated in
accordance with its terms.
"Effective Date" means the date upon which this Agreement is executed.
"Electricity Supplier Coordination Tariff" means the BGE Electricity
Supplier Coordination Tariff approved by the Maryland PSC, as amended,
modified or supplemented from time to time.
"Energy" means the electrical output of electric generation facilities,
usually stated in kilowatt-hours or megawatt-hours.
"FERC" means the Federal Energy Regulatory Commission and any successor
"Fixed Transmission Rights" shall have the meaning as set forth in the
"Full Requirements Service" means all-requirements electric service on
a continuous basis, including, but not limited to, the following
products: Energy, Unforced Capacity, Ancillary Services, Unaccounted
For Energy and associated losses necessary to fulfill all PJM
obligations as they may change from time to time associated with
providing all-requirements electric service to the SOS Load, as further
defined pursuant to Article 3. Such Full Requirements Service shall
include changes in customer demand for any reason, including, but not
limited to, seasonal factors, daily load fluctuations, increased or
decreased usage, transmission and distribution outages, customer
decisions regarding whether to take generation service from an
alternate supplier, demand side management activities, extremes in
weather, and other similar events.
"Generation Shopping Credits" means the prices stated in Appendix B,
unless altered as provided in Section 6.1.b.
"Governmental Authority" means the government of any federal, state,
municipal or other political subdivision, including all agencies and
instrumentalities of such governments and political subdivisions.
"Intermediate-Peak" shall have the meaning set forth in the Retail
Electric Service Tariff as of the Effective Date.
"Interest Rate" means, for any date, the lesser of (a) two (2) percent
over the per annum rate of interest equal to the prime lending rate as
may from time to time be published in The Wall Street Journal under
"Money Rates" and (b) the maximum rate permitted by applicable law.
"Load Serving Entity (LSE)" means an entity, including a load
aggregator or power marketer, that: (i) is serving end-users within the
PJM Control Area, and (ii) has been granted the authority, or has an
obligation pursuant to state or local law, regulation or franchise, to
sell electric energy to end-users within the PJM Control Area.
"Load Response Resources" means those resources that, under BGE's
direction, have the effect of reducing the electric supply for SOS due
to a customer's reduction in consumed electricity and/or an increase in
customer-owned generation, and includes, but is not limited to (i) BGE