SERVICE AGREEMENT NO. 2710

SERVICE AGREEMENT NO. 2710
 AMENDED AND RESTATED

MERCHANT TRANSMISSION FACILITY
 INTERCONNECTION AGREEMENT

AMONG THE

NEW YORK INDEPENDENT SYSTEM OPERATOR, INC.
 AND

NEW YORK POWER AUTHORITY
 AND

CHPE LLC

Dated as of July 8, 2024

(Champlain Hudson Power Express)

SERVICE AGREEMENT NO. 2710

TABLE OF CONTENTS

Page Number

ARTICLE 1.   DEFINITIONS...........................................1

ARTICLE 2.   EFFECTIVE DATE, TERM AND TERMINATION..................10

2.1 Effective Date......................................... 10

2.2 Term of Agreement..................................... 10

2.3 Termination.......................................... 10

2.4 Termination Costs...................................... 11

2.5 Disconnection......................................... 12

2.6 Survival............................................. 12

ARTICLE 3.   REGULATORY FILINGS...................................12

ARTICLE 4.   SCOPE OF INTERCONNECTION SERVICE......................12

4.1 Provision of Service..................................... 12

4.2 No Transmission Delivery Service........................... 13

4.3 No Other Services...................................... 13

ARTICLE 5.   INTERCONNECTION FACILITIES ENGINEERING,   PROCUREMENT,

AND CONSTRUCTION..............................................13

5.1 Options............................................. 13

5.2 General Conditions Applicable to Option to Build................. 15

5.3 Liquidated Damages.................................... 17

5.4 Reserved............................................ 18

5.5 Equipment Procurement.................................. 18

5.6 Construction Commencement.............................. 18

5.7 Work Progress........................................ 19

5.8 Information Exchange................................... 19

5.9 Other Interconnection Options.............................. 19

5.10 Developer’s Attachment Facilities (“DAF”)..................... 20

5.11 Connecting Transmission Owner’s Attachment Facilities Construction... 21

5.12 Access Rights......................................... 21

5.13 Lands of Other Property Owners............................ 22

5.14 Permits............................................. 22

5.15 Early Construction of Base Case Facilities...................... 22

5.16 Suspension........................................... 23

5.17 Taxes.............................................. 23

5.18 Tax Status; Non-Jurisdictional Entities........................ 28

5.19 Modification.......................................... 29

ARTICLE 6. TESTING AND INSPECTION................................30

6.1 Pre-Commercial Operation Date Testing and Modifications........... 30

6.2 Post-Commercial Operation Date Testing and Modifications.......... 30

6.3 Right to Observe Testing................................. 30

6.4 Right to Inspect........................................ 30

ARTICLE 7. METERING............................................31

7.1 General............................................. 31

7.2 Check Meters......................................... 31

7.3 Standards............................................ 31

i

SERVICE AGREEMENT NO. 2710

7.4 Testing of Metering Equipment............................. 31

7.5 Metering Data......................................... 32

ARTICLE 8.   COMMUNICATIONS.....................................32

8.1 Developer Obligations................................... 32

8.2 Remote Terminal Unit................................... 32

8.3 No Annexation........................................ 33

ARTICLE 9.   OPERATIONS..........................................33

9.1 General............................................. 33

9.2 NYISO and Connecting Transmission Owner Obligations............ 33

9.3 Developer Obligations................................... 33

9.4 Start-Up and Synchronization.............................. 34

9.5 Real and Reactive Power Control and Primary Frequency Response..... 34

9.6 Outages and Interruptions................................. 35

9.7 Switching and Tagging Rules............................... 38

9.8 Use of Attachment Facilities by Third Parties.................... 38

9.9 Disturbance Analysis Data Exchange......................... 39

9.10 Phasor Measurement Units................................ 39

ARTICLE 10. MAINTENANCE.........................................40

10.1 Connecting Transmission Owner Obligations.................... 40

10.2 Developer Obligations................................... 40

10.3 Coordination......................................... 40

10.4 Secondary Systems..................................... 40

10.5 Operating and Maintenance Expenses......................... 40

ARTICLE 11. PERFORMANCE OBLIGATION..............................41

11.1 Developer’s Attachment Facilities........................... 41

11.2 Connecting Transmission Owner’s Attachment Facilities............ 41

11.3 System Upgrade Facilities and System Deliverability Upgrades........ 41

11.4 Special Provisions for Affected Systems....................... 41

11.5 Provision of Security.................................... 41

11.6 Developer Compensation for Emergency Services................. 42

11.7 Line Outage Costs...................................... 42

ARTICLE 12. INVOICE..............................................42

12.1 General............................................. 42

12.2 Final Invoice......................................... 43

12.3 Payment............................................ 43

12.4 Disputes............................................ 43

ARTICLE 13. EMERGENCIES.........................................43

13.1 Obligations.......................................... 43

13.2 Notice.............................................. 43

13.3 Immediate Action...................................... 44

13.4 NYISO and Connecting Transmission Owner Authority............. 44

13.5 Developer Authority.................................... 45

13.6 Limited Liability....................................... 45

ARTICLE 14. REGULATORY REQUIREMENTS AND GOVERNING LAW..........45

14.1 Regulatory Requirements................................. 45

14.2 Governing Law........................................ 46

ii

SERVICE AGREEMENT NO. 2710

ARTICLE 15. NOTICES..............................................46

15.1 General............................................. 46

15.2 Billings and Payments................................... 46

15.3 Alternative Forms of Notice............................... 46

15.4 Operations and Maintenance Notice.......................... 46

ARTICLE 16. FORCE MAJEURE.......................................46

ARTICLE 17. DEFAULT.............................................47

17.1 General............................................. 47

17.2 Right to Terminate...................................... 47

ARTICLE 18. INDEMNITY, CONSEQUENTIAL DAMAGES AND INSURANCE......47

18.1 Indemnity........................................... 47

18.2 No Consequential Damages................................ 49

18.3 Insurance............................................ 49

ARTICLE 19. ASSIGNMENT..........................................51

ARTICLE 20. SEVERABILITY.........................................52

ARTICLE 21. COMPARABILITY.......................................52

ARTICLE 22. CONFIDENTIALITY......................................52

22.1 Confidentiality........................................ 52

22.2 Term............................................... 52

22.3 Confidential Information.................................. 53

22.4 Scope.............................................. 53

22.5 Release of Confidential Information.......................... 53

22.6 Rights.............................................. 53

22.7 No Warranties........................................ 53

22.8 Standard of Care....................................... 54

22.9 Order of Disclosure..................................... 54

22.10 Termination of Agreement................................ 54

22.11 Remedies............................................ 54

22.12 Disclosure to FERC, its Staff, or a State........................ 55

22.13 Required Notices Upon Requests or Demands for Confidential Information . 55

ARTICLE 23. DEVELOPER AND CONNECTING TRANSMISSION OWNER NOTICES OF

ENVIRONMENTAL RELEASES........................................55

ARTICLE 24. INFORMATION REQUIREMENT.............................56

24.1 Information Acquisition.................................. 56

24.2 Information Submission by Connecting Transmission Owner.......... 56

24.3 Updated Information Submission by Developer................... 56

24.4 Information Supplementation............................... 57

ARTICLE 25. INFORMATION ACCESS AND AUDIT RIGHTS..................57

25.1 Information Access..................................... 57

25.2 Reporting of Non-Force Majeure Events....................... 57

25.3 Audit Rights.......................................... 58

25.4 Audit Rights Periods.................................... 58

25.5 Audit Results......................................... 58

ARTICLE 26. SUBCONTRACTORS.....................................58

26.1 General............................................. 58

26.2 Responsibility of Principal................................ 59

iii

SERVICE AGREEMENT NO. 2710

26.3 No Limitation by Insurance................................ 59

ARTICLE 27. DISPUTES.............................................59

27.1 Submission.......................................... 59

27.2 External Arbitration Procedures............................. 59

27.3 Arbitration Decisions.................................... 60

27.4 Costs............................................... 60

27.5 Termination.......................................... 60

ARTICLE 28. REPRESENTATIONS, WARRANTIES AND COVENANTS...........60

28.1 General............................................. 60

ARTICLE 29. MISCELLANEOUS.......................................61

29.1 Binding Effect........................................ 61

29.2 Conflicts............................................ 61

29.3 Rules of Interpretation................................... 61

29.4 Compliance.......................................... 62

29.5 Joint and Several Obligations............................... 62

29.6 Entire Agreement...................................... 62

29.7 No Third Party Beneficiaries............................... 62

29.8 Waiver............................................. 63

29.9 Headings............................................ 63

29.10 Multiple Counterparts.................................... 63

29.11 Amendment.......................................... 63

29.12 Modification by the Parties................................ 63

29.13 Reservation of Rights.................................... 63

29.14 No Partnership........................................ 64

29.15 Other Transmission Rights................................ 64

Appendices

iv

SERVICE AGREEMENT NO. 2710

AMENDED AND RESTATED MERCHANT TRANSMISSION FACILITY
 INTERCONNECTION AGREEMENT

THIS AMENDED AND RESTATED MERCHANT TRANSMISSION FACILITY

INTERCONNECTION AGREEMENT (“Agreement”) is made and entered into this 8th day of July, 2024, by and among CHPE LLC, a limited liability company organized and existing under the laws of the State of New York (“Developer”), the New York Independent System Operator, Inc., a not-for-profit corporation organized and existing under the laws of the State of New York (“NYISO”), and New York Power Authority a corporate municipal instrumentality organized and existing under the laws of the State of New York (“Connecting Transmission Owner”).  Developer, the NYISO, or Connecting Transmission Owner each may be referred to as a “Party” or collectively referred to as the “Parties.”

RECITALS

WHEREAS, NYISO operates the New York State Transmission System and Connecting
Transmission Owner owns certain facilities included in the New York State Transmission
System;

WHEREAS, Developer’s proposed 1000 MW HVDC transmission facility (NYISO Queue No. 631) and its proposed 250 MW expansion of the transmission facility (NYISO Queue No. 887) are participating in the Class Year Interconnection Facilities Study for Class Year 2021, and both projects are collectively the Merchant Transmission Facility subject to this Agreement as
detailed in Appendix C to this Agreement;

WHEREAS, Developer intends to own, lease and/or control and operate the Merchant Transmission Facility; and

WHEREAS, Developer, NYISO, and Connecting Transmission Owner have agreed to enter into this Agreement for the purpose of interconnecting the Merchant Transmission Facility with the New York State Transmission System;

NOW, THEREFORE, in consideration of and subject to the mutual covenants contained herein, it is agreed:

ARTICLE 1.   DEFINITIONS

Whenever used in this Agreement with initial capitalization, the following terms shall have the

meanings specified in this Article 1.  Terms used in this Agreement with initial capitalization that are not defined in this Article 1 shall have the meanings specified in Section 1 of the ISO OATT, Section 30.1 of Attachment X of the ISO OATT, Section 25.1.2 of Attachment S of the ISO
OATT, the body of the LFIP or the body of this Agreement.

Affected System shall mean an electric system other than the transmission system owned, controlled or operated by the Connecting Transmission Owner that may be affected by the proposed interconnection.

1

SERVICE AGREEMENT NO. 2710

Affected System Operator shall mean the entity that operates an Affected System.

Affected Transmission Owner shall mean the New York public utility or authority (or its

designated agent) other than the Connecting Transmission Owner that (i) owns facilities used for the transmission of Energy in interstate commerce and provides Transmission Service under the Tariff, and (ii) owns, leases or otherwise possesses an interest in a portion of the New York State Transmission System where System Deliverability Upgrades, System Upgrade Facilities, or
Network Upgrade Facilities are or will be installed pursuant to Attachment P, Attachment X, Attachment Z, or Attachment S to the ISO OATT.

Affiliate shall mean, with respect to a person or entity, any individual, corporation, partnership, firm, joint venture, association, joint-stock company, trust or unincorporated organization,
directly or indirectly controlling, controlled by, or under common control with, such person or entity.  The term “control” shall mean the possession, directly or indirectly, of the power to direct the management or policies of a person or an entity.  A voting interest of ten percent or more shall create a rebuttable presumption of control.

Ancillary Services shall mean those services that are necessary to support the transmission of Capacity and Energy from resources to Loads while maintaining reliable operation of the New York State Transmission System in accordance with Good Utility Practice.

Applicable Laws and Regulations shall mean all duly promulgated applicable federal, state and local laws, regulations, rules, ordinances, codes, decrees, judgments, directives, or judicial or administrative orders, permits and other duly authorized actions of any Governmental Authority, including but not limited to Environmental Law.

Applicable Reliability Councils shall mean the NERC, the NPCC and the NYSRC.

Applicable Reliability Standards shall mean the requirements and guidelines of the Applicable Reliability Councils, and the Transmission District to which the Developer’s Merchant
Transmission Facility is directly interconnected, as those requirements and guidelines are
amended and modified and in effect from time to time; provided that no Party shall waive its
right to challenge the applicability or validity of any requirement or guideline as applied to it in the context of this Agreement.

Attachment Facilities shall mean the Connecting Transmission Owner’s Attachment Facilities
and the Developer’s Attachment Facilities.  Collectively, Attachment Facilities include all
facilities and equipment between the Merchant Transmission Facility and the Point of
Interconnection, including any modification, additions or upgrades that are necessary to
physically and electrically interconnect the Merchant Transmission Facility to the New York
State Transmission System.  Attachment Facilities are sole use facilities and shall not include
Stand Alone System Upgrade Facilities, Distribution Upgrades, System Upgrade Facilities or
System Deliverability Upgrades.

Base Case shall mean the base case power flow, short circuit, and stability data bases used for the Interconnection Studies by NYISO, Connecting Transmission Owner or Developer;
described in Section 30.2.3 of the Standard Large Facility Interconnection Procedures.

2

SERVICE AGREEMENT NO. 2710

Breach shall mean the failure of a Party to perform or observe any material term or condition of this Agreement.

Breaching Party shall mean a Party that is in Breach of this Agreement.

Business Day shall mean Monday through Friday, excluding federal holidays.

Byway shall mean all transmission facilities comprising the New York State Transmission

System that are neither Highways nor Other Interfaces.  All transmission facilities in Zone J and Zone K are Byways.

Calendar Day shall mean any day including Saturday, Sunday or a federal holiday.

Capacity Region shall mean one of four subsets of the Installed Capacity statewide markets
comprised of (1) Rest of State (i.e., Load Zones A through F); (2) Lower Hudson Valley (i.e.,
Load Zones G, H and I); (3) New York City (i.e., Load Zone J); and (4) Long Island (i.e., Load
Zone K) , except for Class Year Interconnection Facility Studies conducted prior to Class Year
2012, for which “Capacity Region” shall be defined as set forth in Section 25.7.3 of Attachment
S to the ISO OATT.

Capacity Resource Interconnection Service (“CRIS”) shall mean the service provided by

NYISO to Developers that satisfy the NYISO Deliverability Interconnection Standard or that are
otherwise eligible to receive CRIS in accordance with Attachment S to the ISO OATT; such
service being one of the eligibility requirements for participation as a NYISO Installed Capacity
Supplier.

Class Year Deliverability Study shall mean an assessment, conducted by the NYISO staff in
cooperation with Market Participants, to determine whether System Deliverability Upgrades are
required for Class Year CRIS Projects under the NYISO Deliverability Interconnection Standard.

Commercial Operation shall mean the status of a Merchant Transmission Facility that has
commenced transmitting electricity for sale, excluding electricity transmitted during Trial
Operation.

Commercial Operation Date of a unit shall mean the date on which the Merchant Transmission Facility commences Commercial Operation as agreed to by the Parties, notice of which must be provided to the NYISO in the form of Appendix E-2 to this Agreement.

Confidential Information shall mean any information that is defined as confidential by Article 22 of this Agreement.

Connecting Transmission Owner shall mean the New York public utility or authority (or its designated agent) that (i) owns facilities used for the transmission of Energy in interstate
commerce and provides Transmission Service under the Tariff, (ii) owns, leases or otherwise possesses an interest in the portion of the New York State Transmission System or Distribution System at the Point of Interconnection, and (iii) is a Party to this Agreement.

3

SERVICE AGREEMENT NO. 2710

Connecting Transmission Owner’s Attachment Facilities shall mean all facilities and

equipment owned, controlled or operated by the Connecting Transmission Owner from the Point
of Change of Ownership to the Point of Interconnection as identified in Appendix A to this
Agreement, including any modifications, additions or upgrades to such facilities and equipment.
Connecting Transmission Owner’s Attachment Facilities are sole use facilities and shall not
include Stand Alone System Upgrade Facilities, System Upgrade Facilities, or System
Deliverability Upgrades.

Contingent Facilities shall mean those Attachment Facilities and System Upgrade Facilities
and/or System Deliverability Upgrades associated with Class Year Projects upon which the
Merchant Transmission Facility’s Class Year Project Cost Allocations are dependent, and if
delayed or not built, could impact the actual costs and timing of the Merchant Transmission
Facility’s Project Cost Allocation for System Upgrade Facilities or System Deliverability
Upgrades.

Control Area shall mean an electric power system or combination of electric power systems to
which a common automatic generation control scheme is applied in order to:  (1) match, at all
times, the power output of the Generators within the electric power system(s) and capacity and
energy purchased from entities outside the electric power system(s), with the Load within the
electric power system(s); (2) maintain scheduled interchange with other Control Areas, within
the limits of Good Utility Practice; (3) maintain the frequency of the electric power system(s)
within reasonable limits in accordance with Good Utility Practice; and (4) provide sufficient

generating capacity to maintain Operating Reserves in accordance with Good Utility Practice.  A Control Area must be certified by the NPCC.

Default shall mean the failure of a Party in Breach of this Agreement to cure such Breach in accordance with Article 17 of this Agreement.

Developer shall mean an Eligible Customer developing a Merchant Transmission Facility, proposing to connect to the New York State Transmission System, in compliance with the NYISO Minimum Interconnection Standard.

Developer’s Attachment Facilities shall mean all facilities and equipment, as identified in

Appendix A of this Agreement, that are located between the Merchant Transmission Facility and the Point of Change of Ownership, including any modification, addition, or upgrades to such
facilities and equipment necessary to physically and electrically interconnect the Merchant
Transmission Facility to the New York State Transmission System.  Developer’s Attachment
Facilities are sole use facilities.

Distribution System shall mean the Connecting Transmission Owner’s facilities and equipment
used to distribute electricity that are subject to FERC jurisdiction, and are subject to the
NYISO’s Large Facility Interconnection Procedures in Attachment X to the ISO OATT or Small
Generator Interconnection Procedures in Attachment Z to the ISO OATT under FERC Order
Nos. 2003 and/or 2006.  The term Distribution System shall not include LIPA’s distribution
facilities.

4

SERVICE AGREEMENT NO. 2710

Distribution Upgrades shall mean the additions, modifications, and upgrades to the Connecting
Transmission Owner’s Distribution System at or beyond the Point of Interconnection to facilitate
interconnection of a Merchant Transmission Facility and render the transmission service
necessary to affect the Developer’s wholesale sale of electricity in interstate commerce.
Distribution Upgrades do not include Attachment Facilities, System Upgrade Facilities, or
System Deliverability Upgrades.  Distribution Upgrades are sole use facilities and shall not
include Stand Alone System Upgrade Facilities, System Upgrade Facilities, or System
Deliverability Upgrades.

Effective Date shall mean the date on which this Agreement becomes effective upon execution by the Parties, subject to acceptance by the Commission, or if filed unexecuted, upon the date specified by the Commission.

Emergency State shall mean the condition or state that the New York State Power System is in when an abnormal condition occurs that requires automatic or immediate manual action to
prevent or limit loss of the New York State Transmission System or Generators that could
adversely affect the reliability of the New York State Power System.

Energy Resource Interconnection Service (“ERIS”) shall mean the service provided by

NYISO to interconnect the Developer’s Merchant Transmission Facility to the New York State
Transmission System or to the Distribution System in accordance with the NYISO Minimum
Interconnection Standard, to enable the New York State Transmission System to receive Energy
and Ancillary Services from the Merchant Transmission Facility, pursuant to the terms of the
ISO OATT.

Environmental Law shall mean Applicable Laws and Regulations relating to pollution or protection of the environment or natural resources.

Federal Power Act shall mean the Federal Power Act, as amended, 16 U.S.C.  §§ 791a et seq. (“FPA”).

FERC shall mean the Federal Energy Regulatory Commission (“Commission”) or its successor.

Force Majeure shall mean any act of God, labor disturbance, act of the public enemy, war,
insurrection, riot, fire, storm or flood, explosion, breakage or accident to machinery or
equipment, any order, regulation or restriction imposed by governmental, military or lawfully
established civilian authorities, or any other cause beyond a Party’s control.  A Force Majeure
event does not include acts of negligence or intentional wrongdoing by the Party claiming Force
Majeure.

Good Utility Practice shall mean any of the practices, methods and acts engaged in or approved
by a significant portion of the electric industry during the relevant time period, or any of the
practices, methods and acts which, in the exercise of reasonable judgment in light of the facts
known at the time the decision was made, could have been expected to accomplish the desired
result at a reasonable cost consistent with good business practices, reliability, safety and
expedition.  Good Utility Practice is not intended to be limited to the optimum practice, method,
or act to the exclusion of all others, but rather to delineate acceptable practices, methods, or acts
generally accepted in the region.

5

SERVICE AGREEMENT NO. 2710

Governmental Authority shall mean any federal, state, local or other governmental regulatory
or administrative agency, court, commission, department, board, or other governmental
subdivision, legislature, rulemaking board, tribunal, or other governmental authority having
jurisdiction over any of the Parties, their respective facilities, or the respective services they
provide, and exercising or entitled to exercise any administrative, executive, police, or taxing
authority or power; provided, however, that such term does not include Developer, NYISO,
Affected Transmission Owner, Connecting Transmission Owner, or any Affiliate thereof.

Hazardous Substances shall mean any chemicals, materials or substances defined as or

included in the definition of “hazardous substances,” “hazardous wastes,” “hazardous materials,” “hazardous constituents,” “restricted hazardous materials,” “extremely hazardous substances,” “toxic substances,” “radioactive substances,” “contaminants,” “pollutants,” “toxic pollutants” or words of similar meaning and regulatory effect under any applicable Environmental Law, or any other chemical, material or substance, exposure to which is prohibited, limited or regulated by any applicable Environmental Law.

Highway shall mean 115 kV and higher transmission facilities that comprise the following

NYCA interfaces:  Dysinger East, West Central, Volney East, Moses South, Central East/Total
East, and UPNY-ConEd, and their immediately connected, in series, bulk power system facilities
in New York State.  Each interface shall be evaluated to determine additional “in series”
facilities, defined as any transmission facility higher than 115 kV that (a) is located in an
upstream or downstream zone adjacent to the interface and (b) has a power transfer distribution
factor (DFAX) equal to or greater than five percent when the aggregate of generation in zones or
systems adjacent to the upstream zone or zones that define the interface is shifted to the
aggregate of generation in zones or systems adjacent to the downstream zone or zones that define
the interface.  In determining “in series” facilities for Dysinger East and West Central interfaces,
the 115 kV and 230 kV tie lines between NYCA and PJM located in LBMP Zones A and B shall
not participate in the transfer.  Highway transmission facilities are listed in ISO Procedures.

Initial Synchronization Date shall mean the date upon which the Merchant Transmission

Facility is initially synchronized and upon which Trial Operation begins, notice of which must be provided to the NYISO in the form of Appendix E-1.

In-Service Date shall mean the date upon which the Developer reasonably expects it will be

ready to begin use of the Connecting Transmission Owner’s Attachment Facilities to obtain back feed power.

Interconnection Facilities Study shall mean a study conducted by NYISO or a third party

consultant for the Developer to determine a list of facilities (including Connecting Transmission
Owner’s Attachment Facilities, Distribution Upgrades, System Upgrade Facilities and System
Deliverability Upgrades as identified in the Interconnection System Reliability Impact Study),
the cost of those facilities, and the time required to interconnect the Merchant Transmission
Facility with the New York State Transmission System or with the Distribution System.  The
scope of the study is defined in Section 30.8 of the Standard Large Facility Interconnection
Procedures.

6

SERVICE AGREEMENT NO. 2710

Interconnection Facilities Study Agreement (“Class Year Study Agreement”) shall mean the form of agreement contained in Appendix 2 of the Standard Large Facility Interconnection
Procedures for conducting the Interconnection Facilities Study.

Interconnection Request shall mean a Developer’s request, in the form of Appendix 1 to the
Standard Large Facility Interconnection Procedures, in accordance with the Tariff, to
interconnect a new Merchant Transmission Facility to the New York State Transmission System
or to the Distribution System, or to materially increase the capacity of, or make a material
modification to the operating characteristics of, an existing Merchant Transmission Facility that
is interconnected with the New York State Transmission System or with the Distribution System.

Interconnection Study shall mean any of the following studies: the Optional Interconnection Feasibility Study, the Interconnection System Reliability Impact Study, and the Interconnection Facilities Study described in the Standard Large Facility Interconnection Procedures.

Interconnection System Reliability Impact Study (“SRIS”) shall mean an engineering study,
conducted in accordance with Section 30.7 of the Standard Large Facility Interconnection
Procedures, that evaluates the impact of the proposed Merchant Transmission Facility on the
safety and reliability of the New York State Transmission System and, if applicable, an Affected
System, to determine what Attachment Facilities, Distribution Upgrades and System Upgrade
Facilities are needed for the proposed Merchant Transmission Facility of the Developer to
connect reliably to the New York State Transmission System or to the Distribution System in a
manner that meets the NYISO Minimum Interconnection Standard in Attachment X to the ISO
OATT.

IRS shall mean the Internal Revenue Service.

Material Modification shall mean those modifications that have a material impact on the cost or timing of any Interconnection Request with a later queue priority date.

Merchant Transmission Facility shall mean generally a merchant facility for the transmission of electricity, and specifically the Developer’s facility for the transmission of electricity as
described in this Agreement and the Appendices hereto.

Merchant Transmission Facility Interconnection Agreement shall mean this Agreement.

Metering Equipment shall mean all metering equipment installed or to be installed at the Point of Interconnection, including but not limited to instrument transformers, MWh-meters, data
acquisition equipment, transducers, remote terminal unit, communications equipment, phone
lines, and fiber optics.

NERC shall mean the North American Electric Reliability Council or its successor organization.

New York State Transmission System shall mean the entire New York State electric

transmission system, which includes (i) the Transmission Facilities Under ISO Operational Control; (ii) the Transmission Facilities Requiring ISO Notification; and (iii) all remaining transmission facilities within the New York Control Area.

7

SERVICE AGREEMENT NO. 2710

Notice of Dispute shall mean a written notice of a dispute or claim that arises out of or in connection with this Agreement or its performance.

NPCC shall mean the Northeast Power Coordinating Council or its successor organization.

NYISO Deliverability Interconnection Standard - The standard that must be met, unless

otherwise provided for by Attachment S to the ISO OATT, by (i) any generation facility larger

than 2MW in order for that facility to obtain CRIS; (ii) any Class Year Transmission Project; (iii) any entity requesting External CRIS Rights, and (iv) any entity requesting a CRIS transfer
pursuant to Section 25.9.5 of Attachment S to the ISO OATT.  To meet the NYISO
Deliverability Interconnection Standard, the Developer must, in accordance with the rules in
Attachment S to the ISO OATT, fund or commit to fund any System Deliverability Upgrades identified for its project in the Class Year Deliverability Study.

NYISO Minimum Interconnection Standard - The reliability standard that must be met by
any generation facility or Class Year Transmission Project that is subject to NYISO’s Large
Facility Interconnection Procedures in Attachment X to the ISO OATT or the NYISO’s Small
Generator Interconnection Procedures in Attachment Z, that is proposing to connect to the New
York State Transmission System or Distribution System, to obtain ERIS.  The Minimum
Interconnection Standard is designed to ensure reliable access by the proposed project to the
New York State Transmission System or to the Distribution System.  The Minimum
Interconnection Standard does not impose any deliverability test or deliverability requirement on
the proposed interconnection.

NYSRC shall mean the New York State Reliability Council or its successor organization.

Other Interfaces shall mean the following interfaces into Capacity Regions: Lower Hudson

Valley [i.e., Rest of State (Load Zones A-F) to Lower Hudson Valley (Load Zones G, H and I)]; New York City [i.e., Lower Hudson Valley (Load Zones G, H and I) to New York City (Load Zone J)]; and Long Island [i.e., Lower Hudson Valley (Load Zones G, H and I) to Long Island (Load Zone K)], and the following Interfaces between the NYCA and adjacent Control Areas: PJM to NYISO, ISO-NE to NYISO, Hydro-Quebec to NYISO, and Norwalk Harbor
(Connecticut) to Northport (Long Island) Cable.

Party or Parties shall mean NYISO, Connecting Transmission Owner, or Developer or any combination of the above.

Point of Change of Ownership shall mean the point, as set forth in Appendix A to this Agreement, where the Developer’s Attachment Facilities connect to the Connecting Transmission Owner’s Attachment Facilities.

Point of Interconnection shall mean the point, as set forth in Appendix A to this Agreement, where the Attachment Facilities connect to the New York State Transmission System or to the Distribution System.

Provisional Interconnection Service shall mean interconnection service provided by the ISO
associated with interconnecting the Developer’s Merchant Transmission Facility to the New
York State Transmission System (or Distribution System as applicable) and enabling the

8

SERVICE AGREEMENT NO. 2710

transmission system to receive electric energy from the Merchant Transmission Facility at the Point of Interconnection, pursuant to the terms of the Provisional Large Facility Interconnection Agreement and, if applicable, the ISO OATT.

Provisional Merchant Transmission Facility Interconnection Agreement shall mean the

interconnection agreement for Provisional Interconnection Service established between the ISO, Connecting Transmission Owner(s) and the Developer.  This agreement shall take the form of the Merchant Transmission Facility Interconnection Agreement, modified for provisional
purposes and type of facility.

Reasonable Efforts shall mean, with respect to an action required to be attempted or taken by a
Party under this Agreement, efforts that are timely and consistent with Good Utility Practice and
are otherwise substantially equivalent to those a Party would use to protect its own interests.

Services Tariff shall mean the NYISO Market Administration and Control Area Tariff, as filed
with the Commission, and as amended or supplemented from time to time, or any successor tariff
thereto.

Stand Alone System Upgrade Facilities shall mean System Upgrade Facilities that are not part
of an Affected System that a Developer may construct without affecting day-to-day operations of
the New York State Transmission System during their construction.  NYISO, the Connecting
Transmission Owner and the Developer must agree as to what constitutes Stand Alone System
Upgrade Facilities and identify them in Appendix A to this Agreement.  If NYISO, the
Connecting Transmission Owner and the Developer disagree about whether a particular System
Upgrade Facility is a Stand Alone System Upgrade Facility, NYISO and the Connecting
Transmission Owner must provide the Developer a written technical explanation outlining why
NYISO and the Connecting Transmission Owner does not consider the System Upgrade Facility
to be a Stand Alone System Upgrade Facility within fifteen (15) days of its determination.

Standard Large Facility Interconnection Procedures (“Large Facility Interconnection Procedures” or “LFIP”) shall mean the interconnection procedures applicable to an
Interconnection Request pertaining to a Merchant Transmission Facility that are included in Attachment X of the ISO OATT.

System Deliverability Upgrades shall mean the least costly configuration of commercially available components of electrical equipment that can be used, consistent with Good Utility Practice and Applicable Reliability Requirements, to make the modifications or additions to Byways and Highways and Other Interfaces on the existing New York State Transmission
System and Distribution System that are required for the proposed project to connect reliably to the system in a manner that meets the NYISO Deliverability Interconnection Standard at the requested level of Capacity Resource Interconnection Service.

System Protection Facilities shall mean the equipment, including necessary protection signal
communications equipment, required to (1) protect the New York State Transmission System
from faults or other electrical disturbances occurring at the Merchant Transmission Facility and

(2) protect the Merchant Transmission Facility from faults or other electrical system disturbances

9

SERVICE AGREEMENT NO. 2710

occurring on the New York State Transmission System or on other delivery systems or other
generating systems to which the New York State Transmission System is directly connected.

System Upgrade Facilities shall mean the least costly configuration of commercially available
components of electrical equipment that can be used, consistent with Good Utility Practice and
Applicable Reliability Requirements, to make the modifications to the existing transmission
system that are required to maintain system reliability due to:  (i) changes in the system,
including such changes as load growth and changes in load pattern, to be addressed in the form
of generic generation or transmission projects; and (ii) proposed interconnections.  In the case of
proposed interconnection projects, System Upgrade Facilities are the modifications or additions
to the existing New York State Transmission System that are required for the proposed project to
connect reliably to the system in a manner that meets the NYISO Minimum Interconnection
Standard.

Tariff shall mean the NYISO Open Access Transmission Tariff (“OATT”), as filed with the
Commission, and as amended or supplemented from time to time, or any successor tariff.

Trial Operation shall mean the period during which Developer is engaged in on-site test
operations and commissioning of the Merchant Transmission Facility prior to Commercial
Operation.

ARTICLE 2.   EFFECTIVE DATE, TERM AND TERMINATION

2.1 Effective Date.

This Agreement shall become effective upon execution by the Parties, subject to

acceptance by FERC, or if filed unexecuted, upon the date specified by FERC.  The NYISO and Connecting Transmission Owner shall promptly file this Agreement with FERC upon execution in accordance with Article 3.

2.2 Term of Agreement.

Subject to the provisions of Article 2.3, this Agreement shall remain in effect for a period of thirty (30) years from the Effective Date and shall be automatically renewed for each
successive one-year period thereafter.

2.3 Termination.

2.3.1   Written Notice.

This Agreement may be terminated by the Developer after giving the NYISO and

Connecting Transmission Owner ninety (90) Calendar Days advance written notice, or by the NYISO and Connecting Transmission Owner notifying FERC after the Merchant Transmission Facility permanently ceases Commercial Operation.

2.3.2   Default.

Any Party may terminate this Agreement in accordance with Article 17.

10

SERVICE AGREEMENT NO. 2710

2.3.3   Compliance.

Notwithstanding Articles 2.3.1 and 2.3.2, no termination of this Agreement shall become effective until the Parties have complied with all Applicable Laws and Regulations applicable to such termination, including the filing with FERC of a notice of termination of this Agreement, which notice has been accepted for filing by FERC.

2.4 Termination Costs.

If a Party elects to terminate this Agreement pursuant to Article 2.3.1 above, the

terminating Party shall pay all costs incurred (including any cancellation costs relating to orders
or contracts for Attachment Facilities and equipment) or charges assessed by the other Parties, as
of the date of the other Parties’ receipt of such notice of termination, that are the responsibility of
the terminating Party under this Agreement.  In the event of termination by a Party, all Parties
shall use commercially Reasonable Efforts to mitigate the costs, damages and charges arising as
a consequence of termination.  Upon termination of this Agreement, unless otherwise ordered or
approved by FERC:

2.4.1   With respect to any portion of the Connecting Transmission Owner’s Attachment
Facilities that have not yet been constructed or installed, the Connecting Transmission Owner
shall to the extent possible and with Developer’s authorization cancel any pending orders of, or
return, any materials or equipment for, or contracts for construction of, such facilities; provided
that in the event Developer elects not to authorize such cancellation, Developer shall assume all
payment obligations with respect to such materials, equipment, and contracts, and the

Connecting Transmission Owner shall deliver such material and equipment, and, if necessary,

assign such contracts, to Developer as soon as practicable, at Developer’s expense.  To the extent
that Developer has already paid Connecting Transmission Owner for any or all such costs of
materials or equipment not taken by Developer, Connecting Transmission Owner shall promptly
refund such amounts to Developer, less any costs, including penalties incurred by the Connecting
Transmission Owner to cancel any pending orders of or return such materials, equipment, or
contracts.

If Developer terminates this Agreement, it shall be responsible for all costs incurred in association with Developer’s interconnection, including any cancellation costs relating to orders or contracts for Attachment Facilities and equipment, and other expenses including any System Upgrade Facilities and System Deliverability Upgrades for which the Connecting Transmission Owner has incurred expenses and has not been reimbursed by the Developer.

2.4.2   Connecting Transmission Owner may, at its option, retain any portion of such

materials, equipment, or facilities that Developer chooses not to accept delivery of, in which case Connecting Transmission Owner shall be responsible for all costs associated with procuring such materials, equipment, or facilities.

2.4.3   With respect to any portion of the Attachment Facilities, and any other facilities
already installed or constructed pursuant to the terms of this Agreement, Developer shall be

11

SERVICE AGREEMENT NO. 2710

responsible for all costs associated with the removal, relocation or other disposition or retirement of such materials, equipment, or facilities.

2.5 Disconnection.

Upon termination of this Agreement, Developer and Connecting Transmission Owner will take all appropriate steps to disconnect the Developer’s Merchant Transmission Facility from the New York State Transmission System.  All costs required to effectuate such
disconnection shall be borne by the terminating Party, unless such termination resulted from the non-terminating Party’s Default of this Agreement or such non-terminating Party otherwise is responsible for these costs under this Agreement.

2.6 Survival.

This Agreement shall continue in effect after termination to the extent necessary to

provide for final billings and payments and for costs incurred hereunder; including billings and payments pursuant to this Agreement; to permit the determination and enforcement of liability and indemnification obligations arising from acts or events that occurred while this Agreement was in effect; and to permit Developer and Connecting Transmission Owner each to have access to the lands of the other pursuant to this Agreement or other applicable agreements, to
disconnect, remove or salvage its own facilities and equipment.

ARTICLE 3.   REGULATORY FILINGS

NYISO and Connecting Transmission Owner shall file this Agreement (and any

amendment hereto) with the appropriate Governmental Authority, if required.  Any information
related to studies for interconnection asserted by Developer to contain Confidential Information
shall be treated in accordance with Article 22 of this Agreement and Attachment F to the ISO
OATT.  If the Developer has executed this Agreement, or any amendment thereto, the Developer
shall reasonably cooperate with NYISO and Connecting Transmission Owner with respect to
such filing and to provide any information reasonably requested by NYISO and Connecting
Transmission Owner needed to comply with Applicable Laws and Regulations.

ARTICLE 4.   SCOPE OF INTERCONNECTION SERVICE

4.1 Provision of Service.

NYISO will provide Developer with interconnection service of the following type for the term of this Agreement.

4.1.1   Product.

NYISO will provide Energy Resource Interconnection Service and Capacity Resource Interconnection Service to Developer at the Point of Interconnection.

4.1.2   Developer is responsible for ensuring that its actual Merchant Transmission

Facility output matches the scheduled delivery from the Merchant Transmission Facility to the
New York State Transmission System, consistent with the scheduling requirements of the

12

SERVICE AGREEMENT NO. 2710

NYISO’s FERC-approved market structure, including ramping into and out of such scheduled delivery, as measured at the Point of Interconnection, consistent with the scheduling
requirements of the ISO OATT and any applicable FERC-approved market structure.

4.2 No Transmission Delivery Service.

The execution of this Agreement does not constitute a request for, nor agreement to

provide, any Transmission Service under the ISO OATT, and does not convey any right to

deliver electricity to any specific customer or Point of Delivery.  If Developer wishes to obtain Transmission Service on the New York State Transmission System, then Developer must request such Transmission Service in accordance with the provisions of the ISO OATT.

4.3 No Other Services.

The execution of this Agreement does not constitute a request for, nor agreement to

provide Energy, any Ancillary Services or Installed Capacity under the NYISO Market

Administration and Control Area Services Tariff (“Services Tariff”).  If Developer wishes to

supply Energy, Installed Capacity or Ancillary Services, then Developer will make application to do so in accordance with the NYISO Services Tariff.

ARTICLE 5.   INTERCONNECTION FACILITIES ENGINEERING,
 PROCUREMENT, AND CONSTRUCTION

5.1 Options.

Unless otherwise mutually agreed to by Developer and Connecting Transmission Owner, Developer shall select the In-Service Date, Initial Synchronization Date, and Commercial
Operation Date; and either the Standard Option or Alternate Option set forth below, and such
dates and selected option shall be set forth in Appendix B hereto.  At the same time, Developer
shall indicate whether it elects to exercise the Option to Build set forth in Article 5.1.3 below.  If the dates designated by the Developer are not acceptable to the Connecting Transmission Owner, the Connecting Transmission Owner shall so notify the Developer within thirty (30) Calendar
Days.  Upon receipt of the notification that Developer’s designated dates are not acceptable to
the Connecting Transmission Owner, the Developer shall notify the Connecting Transmission
Owner within thirty (30) Calendar Days whether it elects to exercise the Option to Build if it has not already elected to exercise the Option to Build.

5.1.1   Standard Option.

The Connecting Transmission Owner shall design, procure, and construct the Connecting
Transmission Owner’s Attachment Facilities and System Upgrade Facilities and System
Deliverability Upgrades, using Reasonable Efforts to complete the Connecting Transmission
Owner’s Attachment Facilities and System Upgrade Facilities and System Deliverability
Upgrades by the dates set forth in Appendix B hereto.  The Connecting Transmission Owner
shall not be required to undertake any action which is inconsistent with its standard safety
practices, its material and equipment specifications, its design criteria and construction
procedures, its labor agreements, and Applicable Laws and Regulations.  In the event the

13

SERVICE AGREEMENT NO. 2710

Connecting Transmission Owner reasonably expects that it will not be able to complete the Connecting Transmission Owner’s Attachment Facilities and System Upgrade Facilities and System Deliverability Upgrades by the specified dates, the Connecting Transmission Owner shall promptly provide written notice to the Developer and NYISO, and shall undertake Reasonable Efforts to meet the earliest dates thereafter.

5.1.2   Alternate Option.

If the dates designated by Developer are acceptable to Connecting Transmission Owner,
the Connecting Transmission Owner shall so notify Developer and NYISO within thirty (30)
Calendar Days, and shall assume responsibility for the design, procurement and construction of
the Connecting Transmission Owner’s Attachment Facilities by the designated dates. If
Connecting Transmission Owner subsequently fails to complete Connecting Transmission
Owner’s Attachment Facilities by the In-Service Date, to the extent necessary to provide back
feed power; or fails to complete System Upgrade Facilities or System Deliverability Upgrades by
the Initial Synchronization Date to the extent necessary to allow for Trial Operation at full power
output, unless other arrangements are made by the Developer and Connecting Transmission
Owner for such Trial Operation; or fails to complete the System Upgrade Facilities and System
Deliverability Upgrades by the Commercial Operation Date, as such dates are reflected in
Appendix B hereto; Connecting Transmission Owner shall pay Developer liquidated damages in
accordance with Article 5.3, Liquidated Damages, provided, however, the dates designated by
Developer shall be extended day for day for each day that NYISO refuses to grant clearances to
install equipment.

5.1.3   Option to Build.

Developer shall have the option to assume responsibility for the design, procurement and
construction of Connecting Transmission Owner’s Attachment Facilities and Stand Alone
System Upgrade Facilities on the dates specified in Article 5.1.2; provided that if an Attachment
Facility or Stand Alone System Upgrade Facility is needed for more than one Developer’s
project, Developer’s option to build such facility shall be contingent on the agreement of all
other affected Developers.  NYISO, Connecting Transmission Owner and Developer must agree
as to what constitutes Stand Alone System Upgrade Facilities and identify such Stand Alone
System Upgrade Facilities in Appendix A hereto.  Except for Stand Alone System Upgrade
Facilities, Developer shall have no right to construct System Upgrade Facilities under this
option.

5.1.4   Negotiated Option.

If the dates designated by Developer are not acceptable to the Connecting Transmission
Owner, the Developer and Connecting Transmission Owner shall in good faith attempt to
negotiate terms and conditions (including revision of the specified dates and liquidated damages,
the provision of incentives or the procurement and construction of all facilities other than the
Connecting Transmission Owner’s Attachment Facilities and Stand Alone System Upgrade
Facilities if the Developer elects to exercise the Option to Build under Article 5.1.3.  If the two
Parties are unable to reach agreement on such terms and conditions, then, pursuant to Article

14

SERVICE AGREEMENT NO. 2710

5.1.1 (Standard Option), Connecting Transmission Owner shall assume responsibility for the design, procurement and construction of all facilities other than the Connecting Transmission Owner’s Attachment Facilities and Stand Alone System Upgrade Facilities if the Developer elects to exercise the Option to Build.

5.2 General Conditions Applicable to Option to Build.

If Developer assumes responsibility for the design, procurement and construction of the Connecting Transmission Owner’s Attachment Facilities and Stand Alone System Upgrade Facilities, the following conditions apply:

5.2.1   Developer shall engineer, procure equipment, and construct the Connecting
Transmission Owner’s Attachment Facilities and Stand Alone System Upgrade Facilities (or portions thereof) using Good Utility Practice and using standards and specifications provided in advance by the Connecting Transmission Owner;

5.2.2   Developer’s engineering, procurement and construction of the Connecting

Transmission Owner’s Attachment Facilities and Stand Alone System Upgrade Facilities shall comply with all requirements of law to which Connecting Transmission Owner would be subject in the engineering, procurement or construction of the Connecting Transmission Owner’s
Attachment Facilities and Stand Alone System Upgrade Facilities;

5.2.3   Developer agrees to comply with all applicable provisions of Section 220 of the New York Labor Law (“Section 220”), as it may be amended from time to time.  Pursuant to the requirements of Section 220, Developer agrees that, for work performed on existing Connecting Transmission Owner facilities (i.e., “public work”):

(i) Each laborer, workman or mechanic shall be paid no less than the prevailing wages as defined in Section 220,

(ii) The filing of payrolls shall be made in a manner consistent with subdivision threea (3(a)) of Section 220; this is a condition precedent to payment of any sums due and owing to any person for work done upon the project, and

(iii) No laborer, worker, or mechanic shall be permitted or required to work more than
eight hours in any one calendar day or more than five days in any one week except in
cases of extraordinary emergency including fire, flood, or danger to life or property.

Developer reserves its rights set forth in Section 220 to obtain dispensation permitting laborers, workers and mechanics to work additional hours or days per week.

5.2.4   Connecting Transmission Owner shall review and approve the engineering design, equipment acceptance tests, and the construction of the Connecting Transmission Owner’s Attachment Facilities and Stand Alone System Upgrade Facilities;

15

SERVICE AGREEMENT NO. 2710

5.2.5   Prior to commencement of construction, Developer shall provide to Connecting
Transmission Owner and NYISO a schedule for construction of the Connecting Transmission
Owner’s Attachment Facilities and Stand Alone System Upgrade Facilities, and shall promptly
respond to requests for information from Connecting Transmission Owner or NYISO;

5.2.6   At any time during construction, Connecting Transmission Owner shall have the right to gain unrestricted access to the Connecting Transmission Owner’s Attachment Facilities and Stand Alone System Upgrade Facilities and to conduct inspections of the same;

5.2.7   At any time during construction, should any phase of the engineering, equipment
procurement, or construction of the Connecting Transmission Owner’s Attachment Facilities and
Stand Alone System Upgrade Facilities not meet the standards and specifications provided by
Connecting Transmission Owner, the Developer shall be obligated to remedy deficiencies in that
portion of the Connecting Transmission Owner’s Attachment Facilities and Stand Alone System
Upgrade Facilities;

5.2.8   Developer shall indemnify Connecting Transmission Owner and NYISO for

claims arising from the Developer’s construction of Connecting Transmission Owner’s

Attachment Facilities and Stand Alone System Upgrade Facilities under procedures applicable to Article 18.1 Indemnity;

5.2.9   Developer shall transfer control of Connecting Transmission Owner’s Attachment
Facilities and Stand Alone System Upgrade Facilities to the Connecting Transmission Owner;

5.2.10 Unless the Developer and Connecting Transmission Owner otherwise agree,

Developer shall transfer ownership of Connecting Transmission Owner’s Attachment Facilities and Stand Alone System Upgrade Facilities to Connecting Transmission Owner;

5.2.11 Connecting Transmission Owner shall approve and accept for operation and maintenance the Connecting Transmission Owner’s Attachment Facilities and Stand Alone System Upgrade Facilities to the extent engineered, procured, and constructed in accordance with this Article 5.2; and

5.2.12 Developer shall deliver to NYISO and Connecting Transmission Owner “as built” drawings, information, and any other documents that are reasonably required by NYISO or
Connecting Transmission Owner to assure that the Attachment Facilities and Stand Alone
System Upgrade Facilities are built to the standards and specifications required by Connecting
Transmission Owner.

5.2.13 If Developer exercises the Option to Build pursuant to Article 5.1.3, the

Developer shall pay the Connecting Transmission Owner the agreed upon amount of

$10,785,000 for the Connecting Transmission Owner to execute the responsibilities enumerated
to Connecting Transmission Owner under Article 5.2.  The Connecting Transmission Owner

16

SERVICE AGREEMENT NO. 2710

shall invoice Developer for this total amount to be divided on a monthly basis pursuant to Article

12.

5.3 Liquidated Damages.

The actual damages to the Developer, in the event the Connecting Transmission Owner’s Attachment Facilities or System Upgrade Facilities or System Deliverability Upgrades are not
completed by the dates designated by the Developer and accepted by the Connecting
Transmission Owner pursuant to subparagraphs 5.1.2 or 5.1.4, above, may include Developer’s fixed operation and maintenance costs and lost opportunity costs.  Such actual damages are
uncertain and impossible to determine at this time.  Because of such uncertainty, any liquidated damages paid by the Connecting Transmission Owner to the Developer in the event that
Connecting Transmission Owner does not complete any portion of the Connecting Transmission Owner’s Attachment Facilities, System Upgrade Facilities or System Deliverability Upgrades by the applicable dates, shall be an amount equal to 1/2 of 1 percent per day of the actual cost of the Connecting Transmission Owner’s Attachment Facilities and System Upgrade Facilities and
System Deliverability Upgrades, in the aggregate, for which Connecting Transmission Owner
has assumed responsibility to design, procure and construct.

However, in no event shall the total liquidated damages exceed 20 percent of the actual

cost of the Connecting Transmission Owner Attachment Facilities and System Upgrade Facilities
and System Deliverability Upgrades for which the Connecting Transmission Owner has assumed
responsibility to design, procure, and construct.  The foregoing payments will be made by the
Connecting Transmission Owner to the Developer as just compensation for the damages caused
to the Developer, which actual damages are uncertain and impossible to determine at this time,
and as reasonable liquidated damages, but not as a penalty or a method to secure performance of
this Agreement.  Liquidated damages, when the Developer and Connecting Transmission Owner
agree to them, are the exclusive remedy for the Connecting Transmission Owner’s failure to
meet its schedule.

Further, Connecting Transmission Owner shall not pay liquidated damages to Developer
if: (1) Developer is not ready to commence use of the Connecting Transmission Owner’s
Attachment Facilities or System Upgrade Facilities or System Deliverability Upgrades to take
the delivery of power for the Developer’s Merchant Transmission Facility’s Trial Operation or to
transmit power from the Developer’s Merchant Transmission Facility on the specified dates,
unless the Developer would have been able to commence use of the Connecting Transmission
Owner’s Attachment Facilities or System Upgrade Facilities or System Deliverability Upgrades
to take the delivery of power for Developer’s Merchant Transmission Facility’s Trial Operation
or to export power from the Developer’s Merchant Transmission Facility, but for Connecting
Transmission Owner’s delay; (2) the Connecting Transmission Owner’s failure to meet the
specified dates is the result of the action or inaction of the Developer or any other Developer
who has entered into a Merchant Transmission Facility Interconnection Agreement with the
Connecting Transmission Owner and NYISO, or action or inaction by any other Party, or any
other cause beyond Connecting Transmission Owner’s reasonable control or reasonable ability to
cure; (3) the Developer has assumed responsibility for the design, procurement and construction
of the Connecting Transmission Owner’s Attachment Facilities and Stand Alone System
Upgrade Facilities; or (4) the Connecting Transmission Owner and Developer have otherwise

17

SERVICE AGREEMENT NO. 2710

agreed.  In no event shall NYISO have any liability whatever to Developer for liquidated

damages associated with the engineering, procurement or construction of Attachment Facilities or System Upgrade Facilities or System Deliverability Upgrades.

5.4 Reserved.

5.5 Equipment Procurement.

If responsibility for construction of the Connecting Transmission Owner’s Attachment Facilities or System Upgrade Facilities or System Deliverability Upgrades is to be borne by the Connecting Transmission Owner, then the Connecting Transmission Owner shall commence design of the Connecting Transmission Owner’s Attachment Facilities or System Upgrade Facilities or System Deliverability Upgrades and procure necessary equipment as soon as
practicable after all of the following conditions are satisfied, unless the Developer and
Connecting Transmission Owner otherwise agree in writing:

5.5.1   NYISO and Connecting Transmission Owner have completed the Interconnection Facilities Study pursuant to the Interconnection Facilities Study Agreement;

5.5.2   The NYISO has completed the required cost allocation analyses, and Developer
has accepted its share of the costs for necessary System Upgrade Facilities and System
Deliverability Upgrades in accordance with the provisions of Attachment S of the ISO OATT;

5.5.3   The Connecting Transmission Owner has received written authorization to

proceed with design and procurement from the Developer by the date specified in Appendix B hereto; and

5.5.4   The Developer has provided security to the Connecting Transmission Owner in accordance with Article 11.5 by the dates specified in Appendix B hereto.

5.6 Construction Commencement.

The Connecting Transmission Owner shall commence construction of the Connecting Transmission Owner’s Attachment Facilities and System Upgrade Facilities and System
Deliverability Upgrades for which it is responsible as soon as practicable after the following additional conditions are satisfied:

5.6.1   Approval of the appropriate Governmental Authority has been obtained for any facilities requiring regulatory approval;

5.6.2   Necessary real property rights and rights-of-way have been obtained, to the extent
required for the construction of a discrete aspect of the Connecting Transmission Owner’s
Attachment Facilities and System Upgrade Facilities and System Deliverability Upgrades;

5.6.3   The Connecting Transmission Owner has received written authorization to

proceed with construction from the Developer by the date specified in Appendix B hereto; and

18

SERVICE AGREEMENT NO. 2710

5.6.4   The Developer has provided security to the Connecting Transmission Owner in accordance with Article 11.5 by the dates specified in Appendix B hereto.

5.7 Work Progress.

The Developer and Connecting Transmission Owner will keep each other, and NYISO, advised periodically as to the progress of their respective design, procurement and construction efforts.  Any Party may, at any time, request a progress report from the Developer or Connecting Transmission Owner.  If, at any time, the Developer determines that the completion of the
Connecting Transmission Owner’s Attachment Facilities will not be required until after the
specified In-Service Date, the Developer will provide written notice to the Connecting
Transmission Owner and NYISO of such later date upon which the completion of the
Connecting Transmission Owner’s Attachment Facilities will be required.

5.8 Information Exchange.

As soon as reasonably practicable after the Effective Date, the Developer and Connecting Transmission Owner shall exchange information, and provide NYISO the same information, regarding the design and compatibility of their respective Attachment Facilities and
compatibility of the Attachment Facilities with the New York State Transmission System, and shall work diligently and in good faith to make any necessary design changes.

5.9 Other Interconnection Options

5.9.1   Limited Operation.

If any of the Connecting Transmission Owner’s Attachment Facilities or System Upgrade Facilities or System Deliverability Upgrades are not reasonably expected to be completed prior
to the Commercial Operation Date of the Developer’s Merchant Transmission Facility, NYISO
shall, upon the request and at the expense of Developer, in conjunction with the Connecting
Transmission Owner, perform operating studies on a timely basis to determine the extent to
which the Developer’s Merchant Transmission Facility and the Developer’s Attachment
Facilities may operate prior to the completion of the Connecting Transmission Owner’s
Attachment Facilities or System Upgrade Facilities or System Deliverability Upgrades consistent with Applicable Laws and Regulations, Applicable Reliability Standards, Good Utility Practice, and this Agreement.  Connecting Transmission Owner and NYISO shall permit Developer to
operate the Developer’s Merchant Transmission Facility and the Developer’s Attachment
Facilities in accordance with the results of such studies.

5.9.2 Provisional Interconnection Service.

Prior to the completion of the Large Facility Interconnection Procedures and prior to

completion of requisite Attachment Facilities, Distribution Upgrades, System Upgrade Facilities,
System Distribution Upgrades, or System Protection Facilities, the Developer may request an
evaluation for Provisional Interconnection Service.  NYISO, in conjunction with the Connecting
Transmission Owner, shall determine, through available studies or additional studies as
necessary, whether stability, short circuit, thermal, and/or voltage issues would arise if the

19

SERVICE AGREEMENT NO. 2710

Developer interconnects without modifications to the Merchant Transmission Facility or the

New York State Transmission System (or Distribution System as applicable).  NYISO, in

conjunction with the Connecting Transmission Owner, shall determine whether any Attachment
Facilities, Distribution Upgrades, System Upgrade Facilities, System Deliverability Upgrades, or
System Protection Facilities, which are necessary to meet Applicable Laws and Regulations,
Applicable Reliability Standards, and Good Utility Practice, are in place prior to the
commencement of interconnection service from the Merchant Transmission Facility.  Where
available studies indicate that the Attachment Facilities, Distribution Upgrades, System Upgrade
Facilities, System Deliverability Upgrades, or System Protection Facilities are required for the
interconnection of a new, modified and/or expanded Merchant Transmission Facility but such
facilities are not currently in place, NYISO, in conjunction with the Connecting Transmission
Owner, will perform a study, at the Developer’s expense, to confirm the facilities that are
required for Provisional Interconnection Service.  The maximum permissible output of the
Merchant Transmission Facility in the Provisional Merchant Transmission Facility
Interconnection Agreement shall be studied, at the Developer’s expense, and updated annually.
The NYISO shall issue the study’s findings in writing to the Developer and Connecting
Transmission Owner(s).  Following a determination by NYISO, in conjunction with the
Connecting Transmission Owner, that the Developer may reliably provide Provisional
Interconnection Service, NYISO shall tender to the Developer and Connecting Transmission
Owner, a Provisional Large Facility Interconnection Agreement.  NYISO, Developer, and
Connecting Transmission Owner may execute the Provisional Merchant Transmission Facility
Interconnection Agreement, or the Developer may request the filing of an unexecuted
Provisional Merchant Transmission Facility Interconnection Agreement with the Commission.
The Developer shall assume all risk and liabilities with respect to changes between the
Provisional Merchant Transmission Facility Interconnection Agreement and the Merchant
Transmission Facility Interconnection Agreement, including changes in output limits and the
cost responsibilities for the Attachment Facilities, System Upgrade Facilities, System
Deliverability Upgrades, and/or System Protection Facilities.

5.10 Developer’s Attachment Facilities (“DAF”).

Developer shall, at its expense, design, procure, construct, own and install the DAF, as set forth in Appendix A hereto.

5.10.1 DAF Specifications.

Developer shall submit initial specifications for the DAF, including System Protection Facilities, to Connecting Transmission Owner and NYISO at least one hundred eighty (180) Calendar Days prior to the Initial Synchronization Date; and final specifications for review and comment at least ninety (90) Calendar Days prior to the Initial Synchronization Date.
Connecting Transmission Owner and NYISO shall review such specifications to ensure that the DAF are compatible with the technical specifications, operational control, and safety
requirements of the Connecting Transmission Owner and NYISO and comment on such
specifications within thirty (30) Calendar Days of Developer’s submission.  All specifications provided hereunder shall be deemed to be Confidential Information.

20

SERVICE AGREEMENT NO. 2710

5.10.2 No Warranty.

The review of Developer’s final specifications by Connecting Transmission Owner and NYISO shall not be construed as confirming, endorsing, or providing a warranty as to the design, fitness, safety, durability or reliability of the Merchant Transmission Facility, or the DAF.
Developer shall make such changes to the DAF as may reasonably be required by Connecting Transmission Owner or NYISO, in accordance with Good Utility Practice, to ensure that the DAF are compatible with the technical specifications, operational control, and safety
requirements of the Connecting Transmission Owner and NYISO.

5.10.3 DAF Construction.

The DAF shall be designed and constructed in accordance with Good Utility Practice.
Within one hundred twenty (120) Calendar Days after the Commercial Operation Date, unless
the Developer and Connecting Transmission Owner agree on another mutually acceptable
deadline, the Developer shall deliver to the Connecting Transmission Owner and NYISO “as-
built” drawings, information and documents for the DAF, such as: a one-line diagram, a site plan
showing the Merchant Transmission Facility and the DAF, plan and elevation drawings showing
the layout of the DAF, a relay functional diagram, relaying AC and DC schematic wiring
diagrams and relay settings for all facilities associated with the Developer’s step-up
transformers, the facilities connecting the Merchant Transmission Facility to the step-up
transformers and the DAF, and the impedances (determined by factory tests) for the associated
step-up transformers and the Merchant Transmission Facility.  The Developer shall provide to,
and coordinate with, Connecting Transmission Owner and NYISO with respect to proposed
specifications for the excitation system, automatic voltage regulator, Merchant Transmission
Facility control and protection settings, transformer tap settings, and communications, if
applicable.

5.11  Connecting Transmission Owner’s Attachment Facilities Construction.

The Connecting Transmission Owner’s Attachment Facilities shall be designed and

constructed in accordance with Good Utility Practice.  Upon request, within one hundred twenty
(120) Calendar Days after the Commercial Operation Date, unless the Connecting Transmission
Owner and Developer agree on another mutually acceptable deadline, the Connecting
Transmission Owner shall deliver to the Developer “as-built” drawings, relay diagrams,
information and documents for the Connecting Transmission Owner’s Attachment Facilities set
forth in Appendix A.

The Connecting Transmission Owner shall transfer operational control of the Connecting Transmission Owner’s Attachment Facilities and Stand Alone System Upgrade Facilities to the NYISO upon completion of such facilities.

5.12 Access Rights.

Upon reasonable notice and supervision by the Granting Party, and subject to any

required or necessary regulatory approvals, either the Connecting Transmission Owner or

Developer (“Granting Party”) shall furnish to the other of those two Parties (“Access Party”) at

21

SERVICE AGREEMENT NO. 2710

no cost any rights of use, licenses, rights of way and easements with respect to lands owned or
controlled by the Granting Party, its agents (if allowed under the applicable agency agreement),
or any Affiliate, that are necessary to enable the Access Party to obtain ingress and egress at the
Point of Interconnection to construct, operate, maintain, repair, test (or witness testing), inspect,
replace or remove facilities and equipment to: (i) interconnect the Merchant Transmission
Facility with the New York State Transmission System; (ii) operate and maintain the Merchant
Transmission Facility, the Attachment Facilities and the New York State Transmission System;
and (iii) disconnect or remove the Access Party’s facilities and equipment upon termination of
this Agreement.  In exercising such licenses, rights of way and easements, the Access Party shall
not unreasonably disrupt or interfere with normal operation of the Granting Party’s business and
shall adhere to the safety rules and procedures established in advance, as may be changed from
time to time, by the Granting Party and provided to the Access Party.  The Access Party shall
indemnify the Granting Party against all claims of injury or damage from third parties resulting
from the exercise of the access rights provided for herein.

5.13 Lands of Other Property Owners.

If any part of the Connecting Transmission Owner’s Attachment Facilities and/or System
Upgrade Facilities and/or System Deliverability Upgrades is to be installed on property owned
by persons other than Developer or Connecting Transmission Owner, the Connecting
Transmission Owner agrees, to the extent consistent with applicable law, at Developer’s expense
to use efforts, similar in nature and extent to those that it typically undertakes for its own or
affiliated generation or transmission facilities, including use of its eminent domain authority, and
to the extent consistent with state law, to procure from such persons any rights of use, licenses,
rights of way and easements that are necessary to construct, operate, maintain, test, inspect,
replace or remove the Connecting Transmission Owner’s Attachment Facilities and/or System
Upgrade Facilities and/or System Deliverability Upgrades upon such property.  Notwithstanding
the previous sentence, the Connecting Transmission Owner’s exercise of powers and rights to
acquire real property or any rights in real property, pursuant to this Section 5.13, is subject to the
provisions of the New York Public Authorities Law (or any amendments thereto), including
Section 1007.

5.14 Permits.

NYISO, Connecting Transmission Owner and the Developer shall cooperate with each other in good faith in obtaining all permits, licenses and authorizations that are necessary to
accomplish the interconnection in compliance with Applicable Laws and Regulations.  With respect to this paragraph, Connecting Transmission Owner shall provide permitting assistance to the Developer comparable to that provided to the Connecting Transmission Owner’s own, or an Affiliate’s generation or transmission facilities, if any.

5.15 Early Construction of Base Case Facilities.

Developer may request Connecting Transmission Owner to construct, and Connecting
Transmission Owner shall construct, subject to a binding cost allocation agreement reached in
accordance with Attachment S to the ISO OATT, including Section 25.8.7 thereof, using
Reasonable Efforts to accommodate Developer’s In-Service Date, all or any portion of any

22

SERVICE AGREEMENT NO. 2710

System Upgrade Facilities or System Deliverability Upgrades required for Developer to be

interconnected to the New York State Transmission System which are included in the Base Case of the Class Year Study for the Developer, and which also are required to be constructed for another Developer, but where such construction is not scheduled to be completed in time to
achieve Developer’s In-Service Date.

5.16 Suspension.

Developer reserves the right, upon written notice to Connecting Transmission Owner and
NYISO, to suspend at any time all work by Connecting Transmission Owner associated with the
construction and installation of Connecting Transmission Owner’s Attachment Facilities and/or
System Upgrade Facilities and/or System Deliverability Upgrades required for only that
Developer under this Agreement with the condition that the New York State Transmission
System shall be left in a safe and reliable condition in accordance with Good Utility Practice and
the safety and reliability criteria of Connecting Transmission Owner and NYISO.  In such event,
Developer shall be responsible for all reasonable and necessary costs and/or obligations in
accordance with Attachment S to the ISO OATT including those which Connecting
Transmission Owner (i) has incurred pursuant to this Agreement prior to the suspension and (ii)
incurs in suspending such work, including any costs incurred to perform such work as may be
necessary to ensure the safety of persons and property and the integrity of the New York State
Transmission System during such suspension and, if applicable, any costs incurred in connection
with the cancellation or suspension of material, equipment and labor contracts which Connecting
Transmission Owner cannot reasonably avoid; provided, however, that prior to canceling or
suspending any such material, equipment or labor contract, Connecting Transmission Owner
shall obtain Developer’s authorization to do so.

Connecting Transmission Owner shall invoice Developer for such costs pursuant to

Article 12 and shall use due diligence to minimize its costs.  In the event Developer suspends

work by Connecting Transmission Owner required under this Agreement pursuant to this Article

5.16, and has not requested Connecting Transmission Owner to recommence the work required under this Agreement on or before the expiration of three (3) years following commencement of such suspension, this Agreement shall be deemed terminated.  The three-year period shall begin on the date the suspension is requested, or the date of the written notice to Connecting
Transmission Owner and NYISO, if no effective date is specified.

5.17 Taxes.

5.17.1 Developer Payments Not Taxable.

The Developer and Connecting Transmission Owner intend that all payments or property transfers made by Developer to Connecting Transmission Owner for the installation of the
Connecting Transmission Owner’s Attachment Facilities and the System Upgrade Facilities and the System Deliverability Upgrades shall be non-taxable, either as contributions to capital, or as an advance, in accordance with the Internal Revenue Code and any applicable state income tax laws and shall not be taxable as contributions in aid of construction or otherwise under the
Internal Revenue Code and any applicable state income tax laws.

23

SERVICE AGREEMENT NO. 2710

5.17.2 Representations and Covenants.

In accordance with IRS Notice 2001-82 and IRS Notice 88-129, as applicable to the
Merchant Transmission Facility, Developer represents and covenants that (i) ownership of the
electricity transmitted on the Merchant Transmission Facility will pass to another party prior to
the transmission of the electricity on the New York State Transmission System from the Point of
Interconnection, (ii) for income tax purposes, the amount of any payments and the cost of any
property transferred to the Connecting Transmission Owner for the Connecting Transmission
Owner’s Attachment Facilities will be capitalized by Developer as an intangible asset and
recovered using the straight-line method over a useful life of twenty (20) years, and (iii) any
portion of the Connecting Transmission Owner’s Attachment Facilities that is a “dual-use
intertie,” within the meaning of IRS Notice 88-129, is reasonably expected to carry only a de
minimis amount of electricity in the direction of the Merchant Transmission Facility.  For this
purpose, “de minimis amount” means no more than 5 percent of the total power flows in both
directions, calculated in accordance with the “5 percent test” set forth in IRS Notice 88-129.
This is not intended to be an exclusive list of the relevant conditions that must be met to conform
to IRS requirements for non-taxable treatment.

At Connecting Transmission Owner’s request, Developer shall provide Connecting

Transmission Owner with a report from an independent engineer confirming its representation in clause (iii), above.  Connecting Transmission Owner represents and covenants that the cost of the Connecting Transmission Owner’s Attachment Facilities and System Upgrade Facilities paid for by Developer will have no net effect on the base upon which rates are determined.

5.17.3 Indemnification for the Cost Consequences of Current Tax Liability Imposed
 Upon the Connecting Transmission Owner.

Notwithstanding Article 5.17.1, Developer shall protect, indemnify and hold harmless

Connecting Transmission Owner from the cost consequences of any current tax liability imposed against Connecting Transmission Owner as the result of payments or property transfers made by Developer to Connecting Transmission Owner under this Agreement, as well as any interest and penalties, other than interest and penalties attributable to any delay caused by Connecting
Transmission Owner.

Connecting Transmission Owner shall not include a gross-up for the cost consequences
of any current tax liability in the amounts it charges Developer under this Agreement unless (i)
Connecting Transmission Owner has determined, in good faith, that the payments or property
transfers made by Developer to Connecting Transmission Owner should be reported as income
subject to taxation or (ii) any Governmental Authority directs Connecting Transmission Owner
to report payments or property as income subject to taxation; provided, however, that Connecting
Transmission Owner may require Developer to provide security, in a form reasonably acceptable
to Connecting Transmission Owner (such as a parental guarantee or a letter of credit), in an
amount equal to the cost consequences of any current tax liability under this Article 5.17.
Developer shall reimburse Connecting Transmission Owner for such costs on a fully grossed-up
basis, in accordance with Article 5.17.4, within thirty (30) Calendar Days of receiving written
notification from Connecting Transmission Owner of the amount due, including detail about how
the amount was calculated.

24

SERVICE AGREEMENT NO. 2710

This indemnification obligation shall terminate at the earlier of (1) the expiration of the ten-year testing period and the applicable statute of limitation, as it may be extended by the Connecting Transmission Owner upon request of the IRS, to keep these years open for audit or adjustment, or (2) the occurrence of a subsequent taxable event and the payment of any related indemnification obligations as contemplated by this Article 5.17.

5.17.4 Tax Gross-Up Amount.

Developer’s liability for the cost consequences of any current tax liability under this

Article 5.17 shall be calculated on a fully grossed-up basis.  Except as may otherwise be agreed
to by the parties, this means that Developer will pay Connecting Transmission Owner, in
addition to the amount paid for the Attachment Facilities and System Upgrade Facilities and
System Deliverability Upgrades, an amount equal to (1) the current taxes imposed on Connecting
Transmission Owner (“Current Taxes”) on the excess of (a) the gross income realized by
Connecting Transmission Owner as a result of payments or property transfers made by
Developer to Connecting Transmission Owner under this Agreement (without regard to any
payments under this Article 5.17) (the “Gross Income Amount”) over (b) the present value of
future tax deductions for depreciation that will be available as a result of such payments or
property transfers (the “Present Value Depreciation Amount”), plus (2) an additional amount
sufficient to permit the Connecting Transmission Owner to receive and retain, after the payment
of all Current Taxes, an amount equal to the net amount described in clause (1).

For this purpose, (i) Current Taxes shall be computed based on Connecting Transmission
Owner’s composite federal and state tax rates at the time the payments or property transfers are
received and Connecting Transmission Owner will be treated as being subject to tax at the
highest marginal rates in effect at that time (the “Current Tax Rate”), and (ii) the Present Value
Depreciation Amount shall be computed by discounting Connecting Transmission Owner’s
anticipated tax depreciation deductions as a result of such payments or property transfers by
Connecting Transmission Owner’s current weighted average cost of capital.  Thus, the formula
for calculating Developer’s liability to Connecting Transmission Owner pursuant to this Article

5.17.4 can be expressed as follows: (Current Tax Rate x (Gross Income Amount - Present Value Depreciation Amount))/(1 - Current Tax Rate).  Developer’s estimated tax liability in the event taxes are imposed shall be stated in Appendix A, Attachment Facilities and System Upgrade Facilities and System Deliverability Upgrades.

5.17.5 Private Letter Ruling or Change or Clarification of Law.

At Developer’s request and expense, Connecting Transmission Owner shall file with the
IRS a request for a private letter ruling as to whether any property transferred or sums paid, or to
be paid, by Developer to Connecting Transmission Owner under this Agreement are subject to
federal income taxation.  Developer will prepare the initial draft of the request for a private letter
ruling, and will certify under penalties of perjury that all facts represented in such request are
true and accurate to the best of Developer’s knowledge.  Connecting Transmission Owner and
Developer shall cooperate in good faith with respect to the submission of such request.

25

SERVICE AGREEMENT NO. 2710

Connecting Transmission Owner shall keep Developer fully informed of the status of
such request for a private letter ruling and shall execute either a privacy act waiver or a limited
power of attorney, in a form acceptable to the IRS, that authorizes Developer to participate in all
discussions with the IRS regarding such request for a private letter ruling.  Connecting
Transmission Owner shall allow Developer to attend all meetings with IRS officials about the
request and shall permit Developer to prepare the initial drafts of any follow-up letters in
connection with the request.

5.17.6 Subsequent Taxable Events.

If, within 10 years from the date on which the relevant Connecting Transmission Owner
Attachment Facilities are placed in service, (i) Developer Breaches the covenants contained in
Article 5.17.2, (ii) a “disqualification event” occurs within the meaning of IRS Notice 88-129, or
(iii) this Agreement terminates and Connecting Transmission Owner retains ownership of the
Connecting Transmission Owner’s Attachment Facilities and System Upgrade Facilities and
System Deliverability Upgrades, the Developer shall pay a tax gross-up for the cost
consequences of any current tax liability imposed on Connecting Transmission Owner,
calculated using the methodology described in Articles 5.17.3 and 5.17.4 and in accordance with
IRS Notice 90-60.

5.17.7 Contests.

In the event any Governmental Authority determines that Connecting Transmission

Owner’s receipt of payments or property constitutes income that is subject to taxation,

Connecting Transmission Owner shall notify Developer, in writing, within thirty (30) Calendar
Days of receiving notification of such determination by a Governmental Authority.  Upon the
timely written request by Developer and at Developer’s sole expense, Connecting Transmission
Owner may appeal, protest, seek abatement of, or otherwise oppose such determination.  Upon
Developer’s written request and sole expense, Connecting Transmission Owner may file a claim
for refund with respect to any taxes paid under this Article 5.17, whether or not it has received
such a determination.  Connecting Transmission Owner reserves the right to make all decisions
with regard to the prosecution of such appeal, protest, abatement or other contest, including the
selection of counsel and compromise or settlement of the claim, but Connecting Transmission
Owner shall keep Developer informed, shall consider in good faith suggestions from Developer
about the conduct of the contest, and shall reasonably permit Developer or an Developer

representative to attend contest proceedings.

Developer shall pay to Connecting Transmission Owner on a periodic basis, as invoiced
by Connecting Transmission Owner, Connecting Transmission Owner’s documented reasonable
costs of prosecuting such appeal, protest, abatement or other contest, including any costs
associated with obtaining the opinion of independent tax counsel described in this Article 5.17.7.
The Connecting Transmission Owner may abandon any contest if the Developer fails to provide
payment to the Connecting Transmission Owner within thirty (30) Calendar Days of receiving
such invoice.  At any time during the contest, Connecting Transmission Owner may agree to a
settlement either with Developer’s consent or after obtaining written advice from nationally-
recognized tax counsel, selected by Connecting Transmission Owner, but reasonably acceptable

26

SERVICE AGREEMENT NO. 2710

to Developer, that the proposed settlement represents a reasonable settlement given the hazards
of litigation.  Developer’s obligation shall be based on the amount of the settlement agreed to by
Developer, or if a higher amount, so much of the settlement that is supported by the written
advice from nationally-recognized tax counsel selected under the terms of the preceding
sentence.  The settlement amount shall be calculated on a fully grossed-up basis to cover any
related cost consequences of the current tax liability.  The Connecting Transmission Owner may
also settle any tax controversy without receiving the Developer’s consent or any such written
advice; however, any such settlement will relieve the Developer from any obligation to
indemnify Connecting Transmission Owner for the tax at issue in the contest (unless the failure
to obtain written advice is attributable to the Developer’s unreasonable refusal to the
appointment of independent tax counsel).

5.17.8 Refund.

In the event that (a) a private letter ruling is issued to Connecting Transmission Owner
which holds that any amount paid or the value of any property transferred by Developer to
Connecting Transmission Owner under the terms of this Agreement is not subject to federal
income taxation, (b) any legislative change or administrative announcement, notice, ruling or
other determination makes it reasonably clear to Connecting Transmission Owner in good faith
that any amount paid or the value of any property transferred by Developer to Connecting
Transmission Owner under the terms of this Agreement is not taxable to Connecting
Transmission Owner, (c) any abatement, appeal, protest, or other contest results in a
determination that any payments or transfers made by Developer to Connecting Transmission
Owner are not subject to federal income tax, or (d) if Connecting Transmission Owner receives a
refund from any taxing authority for any overpayment of tax attributable to any payment or
property transfer made by Developer to Connecting Transmission Owner pursuant to this
Agreement, Connecting Transmission Owner shall promptly refund to Developer the following:

(i)  Any payment made by Developer under this Article 5.17 for taxes that is
attributable to the amount determined to be non-taxable, together with interest thereon,

(ii)  Interest on any amounts paid by Developer to Connecting Transmission Owner for such taxes which Connecting Transmission Owner did not submit to the taxing authority, calculated in accordance with the methodology set forth in FERC’s regulations at 18 C.F.R. §35.19a(a)(2)(iii) from the date payment was made by Developer to the date Connecting
Transmission Owner refunds such payment to Developer, and

(iii)  With respect to any such taxes paid by Connecting Transmission Owner, any
refund or credit Connecting Transmission Owner receives or to which it may be entitled from
any Governmental Authority, interest (or that portion thereof attributable to the payment
described in clause (i), above) owed to the Connecting Transmission Owner for such
overpayment of taxes (including any reduction in interest otherwise payable by Connecting
Transmission Owner to any Governmental Authority resulting from an offset or credit);
provided, however, that Connecting Transmission Owner will remit such amount promptly to
Developer only after and to the extent that Connecting Transmission Owner has received a tax

27

SERVICE AGREEMENT NO. 2710

refund, credit or offset from any Governmental Authority for any applicable overpayment of income tax related to the Connecting Transmission Owner’s Attachment Facilities.

The intent of this provision is to leave both the Developer and Connecting Transmission Owner, to the extent practicable, in the event that no taxes are due with respect to any payment for Connecting Transmission Owner’s Attachment Facilities and System Upgrade Facilities and System Deliverability Upgrades hereunder, in the same position they would have been in had no such tax payments been made.

5.17.9 Taxes Other Than Income Taxes.

Upon the timely request by Developer, and at Developer’s sole expense, Connecting

Transmission Owner shall appeal, protest, seek abatement of, or otherwise contest any tax (other
than federal or state income tax) asserted or assessed against Connecting Transmission Owner
for which Developer may be required to reimburse Connecting Transmission Owner under the
terms of this Agreement.  Developer shall pay to Connecting Transmission Owner on a periodic
basis, as invoiced by Connecting Transmission Owner, Connecting Transmission Owner’s
documented reasonable costs of prosecuting such appeal, protest, abatement, or other contest.
Developer and Connecting Transmission Owner shall cooperate in good faith with respect to any
such contest.  Unless the payment of such taxes is a prerequisite to an appeal or abatement or
cannot be deferred, no amount shall be payable by Developer to Connecting Transmission
Owner for such taxes until they are assessed by a final, non-appealable order by any court or
agency of competent jurisdiction.  In the event that a tax payment is withheld and ultimately due
and payable after appeal, Developer will be responsible for all taxes, interest and penalties, other
than penalties attributable to any delay caused by Connecting Transmission Owner.

5.18 Tax Status; Non-Jurisdictional Entities.

5.18.1 Tax Status.

Each Party shall cooperate with the other Parties to maintain the other Parties’ tax status.
Nothing in this Agreement is intended to adversely affect the tax status of any Party including
the status of NYISO, or the status of any Connecting Transmission Owner with respect to the
issuance of bonds including, but not limited to, Local Furnishing Bonds.  Notwithstanding any
other provisions of this Agreement, LIPA, NYPA and Consolidated Edison Company of New
York, Inc. shall not be required to comply with any provisions of this Agreement that would

result in the loss of tax-exempt status of any of its Tax-Exempt Bonds or impair their ability to issue future tax-exempt obligations.  For purposes of this provision, Tax-Exempt Bonds shall include the obligations of the Long Island Power Authority, NYPA and Consolidated Edison Company of New York, Inc., the interest on which is not included in gross income under the
Internal Revenue Code.

5.18.2 Non-Jurisdictional Entities.

LIPA and NYPA do not waive their exemptions, pursuant to Section 201(f) of the FPA, from Commission jurisdiction with respect to the Commission’s exercise of the FPA’s general ratemaking authority.

28

SERVICE AGREEMENT NO. 2710

5.19 Modification.

5.19.1 General.

Either the Developer or Connecting Transmission Owner may undertake modifications to
its facilities covered by this Agreement.  If either the Developer or Connecting Transmission
Owner plans to undertake a modification that reasonably may be expected to affect the other
Party’s facilities, that Party shall provide to the other Party, and to NYISO, sufficient
information regarding such modification so that the other Party and NYISO may evaluate the
potential impact of such modification prior to commencement of the work.  Such information
shall be deemed to be Confidential Information hereunder and shall include information
concerning the timing of such modifications and whether such modifications are expected to
interrupt the flow of electricity from the Merchant Transmission Facility.  The Party desiring to
perform such work shall provide the relevant drawings, plans, and specifications to the other
Party and NYISO at least ninety (90) Calendar Days in advance of the commencement of the
work or such shorter period upon which the Parties may agree, which agreement shall not
unreasonably be withheld, conditioned or delayed.

In the case of Merchant Transmission Facility modifications that do not require

Developer to submit an Interconnection Request, the NYISO shall provide, within sixty (60) Calendar Days (or such other time as the Parties may agree), an estimate of any additional
modifications to the New York State Transmission System, Connecting Transmission Owner’s Attachment Facilities or System Upgrade Facilities or System Deliverability Upgrades
necessitated by such Developer modification and a good faith estimate of the costs thereof.  The Developer shall be responsible for the cost of any such additional modifications, including the cost of studying the impact of the Developer modification.

5.19.2 Standards.

Any additions, modifications, or replacements made to a Party’s facilities shall be

designed, constructed and operated in accordance with this Agreement, NYISO requirements and Good Utility Practice.

5.19.3 Modification Costs.

Developer shall not be assigned the costs of any additions, modifications, or replacements that Connecting Transmission Owner makes to the Connecting Transmission Owner’s
Attachment Facilities or the New York State Transmission System to facilitate the
interconnection of a third party to the Connecting Transmission Owner’s Attachment Facilities or the New York State Transmission System, or to provide Transmission Service to a third party under the ISO OATT, except in accordance with the cost allocation procedures in Attachment S of the ISO OATT.  Developer shall be responsible for the costs of any additions, modifications, or replacements to the Developer’s Attachment Facilities that may be necessary to maintain or upgrade such Developer’s Attachment Facilities consistent with Applicable Laws and
Regulations, Applicable Reliability Standards or Good Utility Practice.

29

SERVICE AGREEMENT NO. 2710

ARTICLE 6.   TESTING AND INSPECTION

6.1 Pre-Commercial Operation Date Testing and Modifications.

Prior to the Commercial Operation Date, the Connecting Transmission Owner shall test
the Connecting Transmission Owner’s Attachment Facilities (including required control
technologies and protection systems) and System Upgrade Facilities and System Deliverability
Upgrades and Developer shall test the Merchant Transmission Facility and the Developer’s
Attachment Facilities to ensure their safe and reliable operation.  Similar testing may be required
after initial operation.  Developer and Connecting Transmission Owner shall each make any
modifications to its facilities that are found to be necessary as a result of such testing.  Developer
shall bear the cost of all such testing and modifications.  Developer shall transmit test energy
over the Merchant Transmission Facility only if it has arranged for the injection into the New
York Control Area of such test energy in accordance with NYISO procedures.

6.2 Post-Commercial Operation Date Testing and Modifications.

Developer and Connecting Transmission Owner shall each at its own expense perform
routine inspection and testing of its facilities and equipment in accordance with Good Utility
Practice and Applicable Reliability Standards as may be necessary to ensure the continued
interconnection of the Merchant Transmission Facility with the New York State Transmission
System in a safe and reliable manner.  Developer and Connecting Transmission Owner shall
each have the right, upon advance written notice, to require reasonable additional testing of the
other Party’s facilities, at the requesting Party’s expense, as may be in accordance with Good
Utility Practice.

6.3 Right to Observe Testing.

Developer and Connecting Transmission Owner shall each notify the other Party, and the NYISO, in advance of its performance of tests of its Attachment Facilities and the Merchant Transmission Facility.  The other Party, and the NYISO, shall each have the right, at its own expense, to observe such testing.

6.4 Right to Inspect.

Developer and Connecting Transmission Owner shall each have the right, but shall have
no obligation to: (i) observe the other Party’s tests and/or inspection of any of its System
Protection Facilities and other protective equipment; (ii) review the settings of the other Party’s
System Protection Facilities and other protective equipment; and (iii) review the other Party’s
maintenance records relative to the Attachment Facilities, the System Protection Facilities and
other protective equipment.  NYISO shall have these same rights of inspection as to the facilities
and equipment of Developer and Connecting Transmission Owner.  A Party may exercise these
rights from time to time as it deems necessary upon reasonable notice to the other Party.  The
exercise or non-exercise by a Party of any such rights shall not be construed as an endorsement
or confirmation of any element or condition of the Attachment Facilities or the System
Protection Facilities or other protective equipment or the operation thereof, or as a warranty as to
the fitness, safety, desirability, or reliability of same.  Any information that a Party obtains

30

SERVICE AGREEMENT NO. 2710

through the exercise of any of its rights under this Article 6.4 shall be treated in accordance with Article 22 of this Agreement and Attachment F to the ISO OATT.

ARTICLE 7.   METERING

7.1 General.

Developer and Connecting Transmission Owner shall each comply with applicable
requirements of NYISO and the New York Public Service Commission when exercising its
rights and fulfilling its responsibilities under this Article 7.  Unless otherwise agreed by the
Connecting Transmission Owner and NYISO approved meter service provider and Developer,
the Connecting Transmission Owner shall install Metering Equipment at the Point of
Interconnection prior to any operation of the Merchant Transmission Facility and shall own,
operate, test and maintain such Metering Equipment.  Net power flows including MW and
MVAR, MWHR and loss profile data to and from the Merchant Transmission Facility shall be
measured at the Point of Interconnection.  Connecting Transmission Owner shall provide
metering quantities, in analog and/or digital form, as required, to Developer or NYISO upon
request.  Developer shall bear all reasonable documented costs associated with the purchase,
installation, operation, testing and maintenance of the Metering Equipment.

7.2 Check Meters.

Developer, at its option and expense, may install and operate, on its premises and on its
side of the Point of Interconnection, one or more check meters to check Connecting
Transmission Owner’s meters.  Such check meters shall be for check purposes only and shall not
be used for the measurement of power flows for purposes of this Agreement, except as provided
in Article 7.4 below.  The check meters shall be subject at all reasonable times to inspection and
examination by Connecting Transmission Owner or its designee.  The installation, operation and
maintenance thereof shall be performed entirely by Developer in accordance with Good Utility
Practice.

7.3 Standards.

Connecting Transmission Owner shall install, calibrate, and test revenue quality Metering Equipment including potential transformers and current transformers in accordance with
applicable ANSI and PSC standards as detailed in the NYISO Control Center Communications Manual and in the NYISO Revenue Metering Requirements Manual.

7.4 Testing of Metering Equipment.

Connecting Transmission Owner shall inspect and test all of its Metering Equipment

upon installation and at least once every two (2) years thereafter.  If requested to do so by

NYISO or Developer, Connecting Transmission Owner shall, at Developer’s expense, inspect or
test Metering Equipment more frequently than every two (2) years.  Connecting Transmission
Owner shall give reasonable notice of the time when any inspection or test shall take place, and
Developer and NYISO may have representatives present at the test or inspection.  If at any time
Metering Equipment is found to be inaccurate or defective, it shall be adjusted, repaired or
replaced at Developer’s expense, in order to provide accurate metering, unless the inaccuracy or

31

SERVICE AGREEMENT NO. 2710

defect is due to Connecting Transmission Owner’s failure to maintain, then Connecting

Transmission Owner shall pay.  If Metering Equipment fails to register, or if the measurement
made by Metering Equipment during a test varies by more than two percent from the
measurement made by the standard meter used in the test, Connecting Transmission Owner shall adjust the measurements by correcting all measurements for the period during which Metering
Equipment was in error by using Developer’s check meters, if installed.  If no such check meters are installed or if the period cannot be reasonably ascertained, the adjustment shall be for the
period immediately preceding the test of the Metering Equipment equal to one-half the time from the date of the last previous test of the Metering Equipment.  The NYISO shall reserve the right
to review all associated metering equipment installation on the Developer’s or Connecting
Transmission Owner’s property at any time.

7.5 Metering Data.

At Developer’s expense, the metered data shall be telemetered to one or more locations
designated by Connecting Transmission Owner, Developer and NYISO.  Such telemetered data
shall be used, under normal operating conditions, as the official measurement of the amount of
energy delivered from the Merchant Transmission Facility to the Point of Interconnection.

ARTICLE 8.   COMMUNICATIONS

8.1 Developer Obligations.

In accordance with applicable NYISO requirements, Developer shall maintain

satisfactory operating communications with Connecting Transmission Owner and NYISO.

Developer shall provide standard voice line, dedicated voice line and facsimile communications
at its Merchant Transmission Facility control room or central dispatch facility through use of
either the public telephone system, or a voice communications system that does not rely on the
public telephone system.  Developer shall also provide the dedicated data circuit(s) necessary to
provide Developer data to Connecting Transmission Owner and NYISO as set forth in Appendix
D hereto.  The data circuit(s) shall extend from the Merchant Transmission Facility to the
location(s) specified by Connecting Transmission Owner and NYISO.  Any required
maintenance of such communications equipment shall be performed by Developer.  Operational
communications shall be activated and maintained under, but not be limited to, the following
events: system paralleling or separation, scheduled and unscheduled shutdowns, equipment
clearances, and hourly and daily load data.

8.2 Remote Terminal Unit.

Prior to the Initial Synchronization Date of the Merchant Transmission Facility, a Remote
Terminal Unit, or equivalent data collection and transfer equipment acceptable to the Parties,
shall be installed by Developer, or by Connecting Transmission Owner at Developer’s expense,
to gather accumulated and instantaneous data to be telemetered to the location(s) designated by
Connecting Transmission Owner and NYISO through use of a dedicated point-to-point data
circuit(s) as indicated in Article 8.1.  The communication protocol for the data circuit(s) shall be
specified by Connecting Transmission Owner and NYISO.  Instantaneous bi-directional analog

32

SERVICE AGREEMENT NO. 2710

real power and reactive power flow information must be telemetered directly to the location(s) specified by Connecting Transmission Owner and NYISO.

Each Party will promptly advise the appropriate other Party if it detects or otherwise learns of any metering, telemetry or communications equipment errors or malfunctions that require the attention and/or correction by that other Party.  The Party owning such equipment shall correct such error or malfunction as soon as reasonably feasible.

8.3 No Annexation.

Any and all equipment placed on the premises of a Party shall be and remain the property of the Party providing such equipment regardless of the mode and manner of annexation or
attachment to real property, unless otherwise mutually agreed by the Party providing such
equipment and the Party receiving such equipment.

ARTICLE 9.   OPERATIONS

9.1 General.

Each Party shall comply with Applicable Laws and Regulations and Applicable

Reliability Standards.  Each Party shall provide to the other Parties all information that may

reasonably be required by the other Parties to comply with Applicable Laws and Regulations and Applicable Reliability Standards.

9.2 NYISO and Connecting Transmission Owner Obligations.

Connecting Transmission Owner and NYISO shall cause the New York State

Transmission System and the Connecting Transmission Owner’s Attachment Facilities to be operated, maintained and controlled in a safe and reliable manner in accordance with this
Agreement and the NYISO Tariffs.  Connecting Transmission Owner and NYISO may provide operating instructions to Developer consistent with this Agreement, NYISO procedures and Connecting Transmission Owner’s operating protocols and procedures as they may change from time to time.  Connecting Transmission Owner and NYISO will consider changes to their
respective operating protocols and procedures proposed by Developer.

9.3 Developer Obligations.

Developer shall at its own expense operate, maintain and control the Merchant

Transmission Facility and the Developer’s Attachment Facilities in a safe and reliable manner
and in accordance with this Agreement.  Developer shall operate the Merchant Transmission
Facility and the Developer’s Attachment Facilities in accordance with NYISO and Connecting
Transmission Owner requirements, as such requirements are set forth or referenced in Appendix
C hereto.  Appendix C will be modified to reflect changes to the requirements as they may
change from time to time.  Any Party may request that the appropriate other Party or Parties
provide copies of the requirements set forth or referenced in Appendix C hereto.

33

SERVICE AGREEMENT NO. 2710

9.4 Start-Up and Synchronization.

Consistent with the mutually acceptable procedures of the Developer and Connecting

Transmission Owner, the Developer is responsible for the proper synchronization of the

Merchant Transmission Facility to the New York State Transmission System in accordance with NYISO and Connecting Transmission Owner procedures and requirements.

9.5 Real and Reactive Power Control and Primary Frequency Response.

9.5.1   Power Factor Design Criteria

Developer shall design the Merchant Transmission Facility to maintain an effective power delivery at maximum rated power of 0.95 inductive to 0.95 capacitive at the Point of Interconnection.

9.5.2   Voltage Schedules.

Once the Developer has synchronized the Merchant Transmission Facility with the New
York State Transmission System, NYISO shall require Developer to operate the Merchant
Transmission Facility to produce or absorb reactive power within the design capability of the
Merchant Transmission Facility set forth in Article 9.5.1 (Power Factor Design Criteria).
NYISO’s voltage schedules shall treat all sources of reactive power in the New York Control
Area in an equitable and not unduly discriminatory manner.  NYISO shall exercise Reasonable
Efforts to provide Developer with such schedules in accordance with NYISO procedures, and
may make changes to such schedules as necessary to maintain the reliability of the New York
State Transmission System.  Developer shall operate the Merchant Transmission Facility to
maintain the specified output voltage or power factor at the Point of Interconnection within the
design capability of the Merchant Transmission Facility set forth in Article 9.5.1 (Power Factor
Design Criteria) as directed by the Connecting Transmission Owner’s system operator or the
NYISO.  If Developer is unable to maintain the specified voltage or power factor, it shall
promptly notify NYISO.

9.5.3   Payment for Reactive Power.

NYISO shall pay Developer for reactive power or voltage support service that Developer provides from the Merchant Transmission Facility in accordance with the provisions of Rate Schedule 2 of the NYISO Services Tariff.

9.5.4   Voltage Regulators.

Whenever the Merchant Transmission Facility is operated in parallel with the New York
State Transmission System, the automatic voltage regulators shall be in automatic operation at all
times. If the Merchant Transmission Facility’s automatic voltage regulators are not capable of such
automatic operation, the Developer shall immediately notify NYISO, or its designated representative,
and ensure that such Merchant Transmission Facility’s real and reactive power are within the design
capability of the Merchant Transmission Facility’s transmission facilities and steady state stability
limits and NYISO system operating (thermal, voltage and transient stability) limits. Developer shall

34

SERVICE AGREEMENT NO. 2710

not cause its Merchant Transmission Facility to disconnect automatically or instantaneously from the New York State Transmission System or trip any transmission facilities comprising the Merchant Transmission Facility for an under or over frequency condition unless the abnormal frequency
condition persists beyond the limits set forth in Table 1 below.

9.6 Outages and Interruptions.

9.6.1 Outages.

9.6.1.1 Outage Authority and Coordination.

Developer and Connecting Transmission Owner may each, in accordance with NYISO
procedures and Good Utility Practice and in coordination with the other Party, remove from
service any of its respective Attachment Facilities or System Upgrade Facilities and System
Deliverability Upgrades that may impact the other Party’s facilities as necessary to perform
maintenance or testing or to install or replace equipment.  Absent an Emergency State, the Party
scheduling a removal of such facility(ies) from service will use Reasonable Efforts to schedule
such removal on a date and time mutually acceptable to both the Developer and the Connecting
Transmission Owner.  In all circumstances either Party planning to remove such facility(ies)
from service shall use Reasonable Efforts to minimize the effect on the other Party of such
removal.

9.6.1.2 Outage Schedules.

The Connecting Transmission Owner shall post scheduled outages of its transmission
facilities on the NYISO OASIS.  Developer shall submit its planned maintenance schedules for
the Merchant Transmission Facility to Connecting Transmission Owner and NYISO for a
minimum of a rolling thirty-six month period.  Developer shall update its planned maintenance
schedules as necessary.  NYISO may direct, or the Connecting Transmission Owner may
request, Developer to reschedule its maintenance as necessary to maintain the reliability of the
New York State Transmission System.  Compensation to Developer for any additional direct
costs that the Developer incurs as a result of rescheduling maintenance, including any additional
overtime, breaking of maintenance contracts or other costs above and beyond the cost the
Developer would have incurred absent the request to reschedule maintenance, shall be in
accordance with the ISO OATT.  Developer will not be eligible to receive compensation, if
during the twelve (12) months prior to the date of the scheduled maintenance, the Developer had
modified its schedule of maintenance activities other than at the direction of the NYISO or
request of the Connecting Transmission Owner.

35

SERVICE AGREEMENT NO. 2710

9.6.1.3 Outage Restoration.

If an outage on the Attachment Facilities or System Upgrade Facilities or System

Deliverability Upgrades of the Connecting Transmission Owner or Developer adversely affects the other Party’s operations or facilities, the Party that owns the facility that is out of service
shall use Reasonable Efforts to promptly restore such facility(ies) to a normal operating
condition consistent with the nature of the outage.  The Party that owns the facility that is out of service shall provide the other Party and NYISO, to the extent such information is known,
information on the nature of the Emergency State, an estimated time of restoration, and any
corrective actions required.  Initial verbal notice shall be followed up as soon as practicable with written notice explaining the nature of the outage.

9.6.2   Interruption of Service.  If required by Good Utility Practice or Applicable
Reliability Standards to do so, the NYISO or Connecting Transmission Owner may require
Developer to interrupt or reduce transmission of electricity over the Merchant Transmission Facility if such transmission could adversely affect the ability of NYISO and Connecting
Transmission Owner to perform such activities as are necessary to safely and reliably operate and maintain the New York State Transmission System.  The following provisions shall apply to any interruption or reduction permitted under this Article 9.6.2:

9.6.2.1 The interruption or reduction shall continue only for so long as reasonably necessary under Good Utility Practice;

9.6.2.2 Any such interruption or reduction shall be made on an equitable, nondiscriminatory basis with respect to all generating and merchant transmission facilities directly connected to the New York State Transmission System;

9.6.2.3 When the interruption or reduction must be made under circumstances

which do not allow for advance notice, NYISO or Connecting Transmission Owner shall notify Developer by telephone as soon as practicable of the reasons for the curtailment, interruption, or reduction, and, if known, its expected duration.  Telephone notification shall be followed by written notification as soon as practicable;

9.6.2.4 Except during the existence of an Emergency State, when the interruption or reduction can be scheduled without advance notice, NYISO or Connecting Transmission Owner shall notify Developer in advance regarding the timing of such scheduling and further notify Developer of the expected duration.  NYISO or Connecting Transmission Owner shall coordinate with each other and the Developer using Good Utility Practice to schedule the
interruption or reduction during periods of least impact to the Developer, the Connecting
Transmission Owner and the New York State Transmission System;

9.6.2.5 The Parties shall cooperate and coordinate with each other to the extent necessary in order to restore the Merchant Transmission Facility, Attachment Facilities, and the New York State Transmission System to their normal operating state, consistent with system conditions and Good Utility Practice.

36

SERVICE AGREEMENT NO. 2710

9.6.3   Under-Frequency and Over Frequency Conditions.

The New York State Transmission System is designed to automatically activate a load-
shed program as required by the NPCC in the event of an under-frequency system disturbance.
Developer shall implement under-frequency and over-frequency relay set points for the
Merchant Transmission Facility as required by the NPCC to ensure “ride through” capability of
the New York State Transmission System.  Merchant Transmission Facility response to
frequency deviations of predetermined magnitudes, both under-frequency and over-frequency
deviations, shall be studied and coordinated with the NYISO and Connecting Transmission
Owner in accordance with Good Utility Practice.  The term “ride through” as used herein shall
mean the ability of a Merchant Transmission Facility to stay connected to and synchronized with
the New York State Transmission System during system disturbances within a range of under-
frequency and over-frequency conditions, in accordance with Good Utility Practice and with
NPCC Regional Reliability Reference Directory # 12, or its successor.

9.6.4   System Protection and Other Control Requirements.

9.6.4.1 System Protection Facilities.  Developer shall, at its expense, install,
operate and maintain System Protection Facilities as a part of the Merchant Transmission
Facility or Developer’s Attachment Facilities.  Connecting Transmission Owner shall install at
Developer’s expense any System Protection Facilities that may be required on the Connecting
Transmission Owner’s Attachment Facilities or the New York State Transmission System as a
result of the interconnection of the Merchant Transmission Facility and Developer’s Attachment
Facilities.

9.6.4.2 The protection facilities of both the Developer and Connecting

Transmission Owner shall be designed and coordinated with other systems in accordance with Good Utility Practice and Applicable Reliability Standards.

9.6.4.3 The Developer and Connecting Transmission Owner shall each be

responsible for protection of its respective facilities consistent with Good Utility Practice and Applicable Reliability Standards.

9.6.4.4 The protective relay design of the Developer and Connecting

Transmission Owner shall each incorporate the necessary test switches to perform the tests

required in Article 6 of this Agreement.  The required test switches will be placed such that they allow operation of lockout relays while preventing breaker failure schemes from operating and causing unnecessary breaker operations and/or the tripping of the Developer’s Merchant
Transmission Facility or the Connecting Transmission Owner’s facilities.

9.6.4.5 The Developer and Connecting Transmission Owner will each test, operate and maintain System Protection Facilities in accordance with Good Utility Practice, NERC and NPCC criteria.

9.6.4.6 Prior to the In-Service Date, and again prior to the Commercial Operation
Date, the Developer and Connecting Transmission Owner shall each perform, or their agents
shall perform, a complete calibration test and functional trip test of the System Protection

37

SERVICE AGREEMENT NO. 2710

Facilities.  At intervals suggested by Good Utility Practice and following any apparent

malfunction of the System Protection Facilities, the Developer and Connecting Transmission Owner shall each perform both calibration and functional trip tests of its System Protection Facilities.  These tests do not require the tripping of any in-service generation unit.  These tests do, however, require that all protective relays and lockout contacts be activated.

9.6.5   Requirements for Protection.

In compliance with NPCC requirements and Good Utility Practice, Developer shall
provide, install, own, and maintain relays, circuit breakers and all other devices necessary to remove any fault contribution of the Merchant Transmission Facility to any short circuit
occurring on the New York State Transmission System not otherwise isolated by Connecting Transmission Owner’s equipment, such that the removal of the fault contribution shall be
coordinated with the protective requirements of the New York State Transmission System.
Developer shall be solely responsible to disconnect the Merchant Transmission Facility and Developer’s other equipment if conditions on the New York State Transmission System could adversely affect the Merchant Transmission Facility.

9.6.6   Power Quality.

Neither the facilities of Developer nor the facilities of Connecting Transmission Owner
shall cause excessive voltage flicker nor introduce excessive distortion to the sinusoidal voltage
or current waves as defined by ANSI Standard C84.1-1989, in accordance with IEEE Standard
519, or any applicable superseding electric industry standard.  In the event of a conflict between
ANSI Standard C84.1-1989, or any applicable superseding electric industry standard, ANSI
Standard C84.1-1989, or the applicable superseding electric industry standard, shall control.

9.7 Switching and Tagging Rules.

The Developer and Connecting Transmission Owner shall each provide the other Party a copy of its switching and tagging rules that are applicable to the other Party’s activities.  Such switching and tagging rules shall be developed on a nondiscriminatory basis.  The Parties shall comply with applicable switching and tagging rules, as amended from time to time, in obtaining clearances for work or for switching operations on equipment.

9.8 Use of Attachment Facilities by Third Parties.

9.8.1   Purpose of Attachment Facilities.

Except as may be required by Applicable Laws and Regulations, or as otherwise agreed to among the Parties, the Attachment Facilities shall be constructed for the sole purpose of
interconnecting the Merchant Transmission Facility to the New York State Transmission System and shall be used for no other purpose.

38

SERVICE AGREEMENT NO. 2710

9.8.2   Third Party Users.

If required by Applicable Laws and Regulations or if the Parties mutually agree, such
agreement not to be unreasonably withheld, to allow one or more third parties to use the
Connecting Transmission Owner’s Attachment Facilities, or any part thereof, Developer will be
entitled to compensation for the capital expenses it incurred in connection with the Attachment
Facilities based upon the pro rata use of the Attachment Facilities by Connecting Transmission
Owner, all third party users, and Developer, in accordance with Applicable Laws and
Regulations or upon some other mutually-agreed upon methodology.  In addition, cost
responsibility for ongoing costs, including operation and maintenance costs associated with the
Attachment Facilities, will be allocated between Developer and any third party users based upon
the pro rata use of the Attachment Facilities by Connecting Transmission Owner, all third party
users, and Developer, in accordance with Applicable Laws and Regulations or upon some other
mutually agreed upon methodology.  If the issue of such compensation or allocation cannot be
resolved through such negotiations, it shall be submitted to FERC for resolution.

9.9 Disturbance Analysis Data Exchange.

The Parties will cooperate with one another and the NYISO in the analysis of

disturbances to either the Merchant Transmission Facility or the New York State Transmission
System by gathering and providing access to any information relating to any disturbance,
including information from disturbance recording equipment, protective relay targets, breaker
operations and sequence of events records, and any disturbance information required by Good
Utility Practice.

9.10 Phasor Measurement Units

A Developer or the Connecting Transmission Owner shall install, at Developer’s

expense, a phasor measurement unit (“PMU”) if the Developer meets the following criteria: (1)
completed a Class Year after Class Year 2017; and (2) proposes a new Large Facility that either

(a) has a maximum net output equal to or greater than 100 MW or (b) requires, as Attachment Facilities or System Upgrade Facilities, a new substation of 230kV or above.

The PMU shall be installed on the high side of the Point of Interconnection. The PMU
must be capable of performing phasor measurements at a minimum of 60 samples per second
which are synchronized via a high-accuracy satellite clock. To the extent Developer or
Connecting Transmission Owner installs similar quality equipment, such as relays or digital fault
recorders, that can collect data at least at the same rate as PMUs and which data is synchronized
via a high-accuracy satellite clock, such equipment would satisfy this requirement.

Developer or Connecting Transmission Owner shall be required to install, at Developer’s
expense, PMU equipment, which includes the communication circuit capable of carrying the
PMU data to the Connecting Transmission Owner’s data concentrator.  Connecting Transmission
Owner will store the PMU data locally for thirty days.  The Developer’s and Connecting
Transmission Owner’s responsibilities concerning the PMU and PMU equipment shall be set
forth in Appendix A to this Agreement.  Connecting Transmission Owner shall provide the
NYISO all necessary and requested information through its and the NYISO’s synchrophasor

39

SERVICE AGREEMENT NO. 2710

system, including the following: (a) gross MW and MVAR measured at the high side of the

Point of Interconnection; (b) terminal voltage and current magnitudes and angles at the high side of the Point of Interconnection; (c) terminal frequency and frequency rate of change at the high side of the Point of Interconnection; and (d)  breaker status, if available. The Connecting
Transmission Owner will provide for the ongoing support and maintenance of the network
communications linking its data concentrator to the NYISO, consistent with ISO Procedures detailing the obligations related to SCADA data.

ARTICLE 10.  MAINTENANCE

10.1 Connecting Transmission Owner Obligations.

Connecting Transmission Owner shall maintain its transmission facilities and Attachment Facilities in a safe and reliable manner and in accordance with this Agreement.

10.2 Developer Obligations.

Developer shall maintain its Merchant Transmission Facility and Attachment Facilities in a safe and reliable manner and in accordance with this Agreement.

10.3 Coordination.

The Developer and Connecting Transmission Owner shall confer regularly to coordinate
the planning, scheduling and performance of preventive and corrective maintenance on the
Merchant Transmission Facility and the Attachment Facilities.  The Developer and Connecting
Transmission Owner shall keep NYISO fully informed of the preventive and corrective
maintenance that is planned, and shall schedule all such maintenance in accordance with NYISO
procedures.

10.4 Secondary Systems.

The Developer and Connecting Transmission Owner shall each cooperate with the other
in the inspection, maintenance, and testing of control or power circuits that operate below 600
volts, AC or DC, including, but not limited to, any hardware, control or protective devices,
cables, conductors, electric raceways, secondary equipment panels, transducers, batteries,
chargers, and voltage and current transformers that directly affect the operation of Developer or
Connecting Transmission Owner’s facilities and equipment which may reasonably be expected
to impact the other Party.  The Developer and Connecting Transmission Owner shall each
provide advance notice to the other Party, and to NYISO, before undertaking any work on such
circuits, especially on electrical circuits involving circuit breaker trip and close contacts, current
transformers, or potential transformers.

10.5 Operating and Maintenance Expenses.

Subject to the provisions herein addressing the use of facilities by others, and except for
operations and maintenance expenses associated with modifications made for providing
interconnection or transmission service to a third party and such third party pays for such
expenses, Developer shall be responsible for all reasonable expenses including overheads,

40

SERVICE AGREEMENT NO. 2710

associated with: (1) owning, operating, maintaining, repairing, and replacing Developer’s

Attachment Facilities; and (2) operation, maintenance, repair and replacement of Connecting Transmission Owner’s Attachment Facilities.  The Connecting Transmission Owner shall be entitled to the recovery of incremental operating and maintenance expenses that it incurs associated with System Upgrade Facilities and System Deliverability Upgrades if and to the extent provided for under Attachment S to the ISO OATT.

ARTICLE 11.  PERFORMANCE OBLIGATION

11.1 Developer’s Attachment Facilities.

Developer shall design, procure, construct, install, own and/or control the Developer’s Attachment Facilities described in Appendix A hereto, at its sole expense.

11.2  Connecting Transmission Owner’s Attachment Facilities.

Connecting Transmission Owner shall design, procure, construct, install, own and/or control the Connecting Transmission Owner’s Attachment Facilities described in Appendix A hereto, at the sole expense of the Developer.

11.3  System Upgrade Facilities and System Deliverability Upgrades.

Connecting Transmission Owner shall design, procure, construct, install, and own the

System Upgrade Facilities and System Deliverability Upgrades described in Appendix A hereto. The responsibility of the Developer for costs related to System Upgrade Facilities and System
Deliverability Upgrades shall be determined in accordance with the provisions of Attachment S to the ISO OATT.

11.4 Special Provisions for Affected Systems.

For the re-payment of amounts advanced to Affected System Operator for System

Upgrade Facilities or System Deliverability Upgrades, the Developer and Affected System

Operator shall enter into an agreement that provides for such re-payment, but only if

responsibility for the cost of such System Upgrade Facilities or System Deliverability Upgrades is not to be allocated in accordance with Attachment S to the ISO OATT.  The agreement shall specify the terms governing payments to be made by the Developer to the Affected System Operator as well as the re-payment by the Affected System Operator.

11.5 Provision of Security.

At least thirty (30) Calendar Days prior to the commencement of the procurement,

installation, or construction of a discrete portion of a Connecting Transmission Owner’s

Attachment Facilities, Developer shall provide Connecting Transmission Owner, at Developer’s
option, a guarantee, a surety bond, letter of credit or other form of security that is reasonably
acceptable to Connecting Transmission Owner and is consistent with the Uniform Commercial
Code of the jurisdiction identified in Article 14.2.1 of this Agreement.  Such security for
payment shall be in an amount sufficient to cover the cost for the Developer’s share of
constructing, procuring and installing the applicable portion of Connecting Transmission

41

SERVICE AGREEMENT NO. 2710

Owner’s Attachment Facilities, and shall be reduced on a dollar-for-dollar basis for payments made to Connecting Transmission Owner for these purposes.

In addition:

11.5.1   The guarantee must be made by an entity that meets the commercially

reasonable creditworthiness requirements of Connecting Transmission Owner, and contains

terms and conditions that guarantee payment of any amount that may be due from Developer, up to an agreed-to maximum amount.

11.5.2   The letter of credit must be issued by a financial institution reasonably

acceptable to Connecting Transmission Owner and must specify a reasonable expiration date.

11.5.3   The surety bond must be issued by an insurer reasonably acceptable to Connecting Transmission Owner and must specify a reasonable expiration date.

11.5.4   Attachment S to the ISO OATT shall govern the Security that Developer provides for System Upgrade Facilities and System Deliverability Upgrades.

11.6 Developer Compensation for Emergency Services.

If, during an Emergency State, the Developer provides services at the request or direction of the NYISO or Connecting Transmission Owner, the Developer will be compensated for such services in accordance with the NYISO Services Tariff.

11.7 Line Outage Costs.

Notwithstanding anything in the ISO OATT to the contrary, the Connecting Transmission Owner may propose to recover line outage costs associated with the installation of Connecting Transmission Owner’s Attachment Facilities or System Upgrade Facilities or System
Deliverability Upgrades on a case-by-case basis.

ARTICLE 12.  INVOICE

12.1 General.

The Developer and Connecting Transmission Owner shall each submit to the other Party,
on a monthly basis, invoices of amounts due for the preceding month.  Each invoice shall state
the month to which the invoice applies and fully describe the services and equipment provided.
The Developer and Connecting Transmission Owner may discharge mutual debts and payment
obligations due and owing to each other on the same date through netting, in which case all
amounts one Party owes to the other Party under this Agreement, including interest payments or
credits, shall be netted so that only the net amount remaining due shall be paid by the owing
Party.

42

SERVICE AGREEMENT NO. 2710

12.2 Final Invoice.

Within six months after completion of the construction of the Connecting Transmission
Owner’s Attachment Facilities and the System Upgrade Facilities and System Deliverability
Upgrades, Connecting Transmission Owner shall provide an invoice of the final cost of the
construction of the Connecting Transmission Owner’s Attachment Facilities and the System
Upgrade Facilities and System Deliverability Upgrades, determined in accordance with
Attachment S to the ISO OATT, and shall set forth such costs in sufficient detail to enable
Developer to compare the actual costs with the estimates and to ascertain deviations, if any, from
the cost estimates.  Connecting Transmission Owner shall refund to Developer any amount by
which the actual payment by Developer for estimated costs exceeds the actual costs of
construction within thirty (30) Calendar Days of the issuance of such final construction invoice.

12.3 Payment.

Invoices shall be rendered to the paying Party at the address specified in Appendix F

hereto.  The Party receiving the invoice shall pay the invoice within thirty (30) Calendar Days of
receipt.  All payments shall be made in immediately available funds payable to the other Party,
or by wire transfer to a bank named and account designated by the invoicing Party.  Payment of
invoices will not constitute a waiver of any rights or claims the paying Party may have under this
Agreement.

12.4 Disputes.

In the event of a billing dispute between Connecting Transmission Owner and Developer,
Connecting Transmission Owner shall continue to perform under this Agreement as long as
Developer: (i) continues to make all payments not in dispute; and (ii) pays to Connecting
Transmission Owner or into an independent escrow account the portion of the invoice in dispute,
pending resolution of such dispute.  If Developer fails to meet these two requirements for
continuation of service, then Connecting Transmission Owner may provide notice to Developer
of a Default pursuant to Article 17.  Within thirty (30) Calendar Days after the resolution of the
dispute, the Party that owes money to the other Party shall pay the amount due with interest
calculated in accord with the methodology set forth in FERC’s Regulations at 18 C.F.R. §

35.19a(a)(2)(iii).

ARTICLE 13.  EMERGENCIES

13.1 Obligations.

Each Party shall comply with the Emergency State procedures of NYISO, the applicable Reliability Councils, Applicable Laws and Regulations, and any emergency procedures agreed to by the NYISO Operating Committee.

13.2 Notice.

NYISO or, as applicable, Connecting Transmission Owner shall notify Developer

promptly when it becomes aware of an Emergency State that affects the Connecting

Transmission Owner’s Attachment Facilities or the New York State Transmission System that

43

SERVICE AGREEMENT NO. 2710

may reasonably be expected to affect Developer’s operation of the Merchant Transmission

Facility or the Developer’s Attachment Facilities.  Developer shall notify NYISO and

Connecting Transmission Owner promptly when it becomes aware of an Emergency State that affects the Merchant Transmission Facility or the Developer’s Attachment Facilities that may reasonably be expected to affect the New York State Transmission System or the Connecting Transmission Owner’s Attachment Facilities.  To the extent information is known, the
notification shall describe the Emergency State, the extent of the damage or deficiency, the expected effect on the operation of Developer’s or Connecting Transmission Owner’s facilities and operations, its anticipated duration and the corrective action taken and/or to be taken.  The initial notice shall be followed as soon as practicable with written notice.

13.3 Immediate Action.

Unless, in Developer’s reasonable judgment, immediate action is required, Developer

shall obtain the consent of Connecting Transmission Owner, such consent to not be unreasonably withheld, prior to performing any manual switching operations at the Merchant Transmission
Facility or the Developer’s Attachment Facilities in response to an Emergency State either
declared by NYISO, Connecting Transmission Owner or otherwise regarding New York State
Transmission System.

13.4 NYISO and Connecting Transmission Owner Authority.

13.4.1 General.

NYISO or Connecting Transmission Owner may take whatever actions with regard to the
New York State Transmission System or the Connecting Transmission Owner’s Attachment
Facilities it deems necessary during an Emergency State in order to (i) preserve public health and
safety, (ii) preserve the reliability of the New York State Transmission System or the Connecting
Transmission Owner’s Attachment Facilities, (iii) limit or prevent damage, and (iv) expedite
restoration of service.

NYISO and Connecting Transmission Owner shall use Reasonable Efforts to minimize
the effect of such actions or inactions on the Merchant Transmission Facility or the Developer’s
Attachment Facilities.  NYISO or Connecting Transmission Owner may, on the basis of
technical considerations, require the Merchant Transmission Facility to mitigate an Emergency
State by taking actions necessary and limited in scope to remedy the Emergency State, including,
but not limited to, directing Developer to shut-down, start-up, increase or decrease the real or
reactive power output of the Merchant Transmission Facility; implementing a reduction or
disconnection pursuant to Article 13.4.2; directing the Developer to assist with blackstart (if
available) or restoration efforts; or altering the outage schedules of the Merchant Transmission
Facility and the Developer’s Attachment Facilities.  Developer shall comply with all of the
NYISO and Connecting Transmission Owner’s operating instructions concerning Merchant
Transmission Facility real power and reactive power output within the manufacturer’s design
limitations of the Merchant Transmission Facility’s equipment that is in service and physically
available for operation at the time, in compliance with Applicable Laws and Regulations.

44

SERVICE AGREEMENT NO. 2710

13.4.2 Reduction and Disconnection.

NYISO or Connecting Transmission Owner may reduce Energy Resource

Interconnection Service and Capacity Resource Interconnection Service or disconnect the

Merchant Transmission Facility or the Developer’s Attachment Facilities, when such reduction
or disconnection is necessary under Good Utility Practice due to an Emergency State.  These
rights are separate and distinct from any right of Curtailment of NYISO pursuant to the ISO
OATT.  When NYISO or Connecting Transmission Owner can schedule the reduction or
disconnection in advance, NYISO or Connecting Transmission Owner shall notify Developer of
the reasons, timing and expected duration of the reduction or disconnection.  NYISO or
Connecting Transmission Owner shall coordinate with the Developer using Good Utility Practice
to schedule the reduction or disconnection during periods of least impact to the Developer and
the New York State Transmission System.  Any reduction or disconnection shall continue only
for so long as reasonably necessary under Good Utility Practice.  The Parties shall cooperate
with each other to restore the Merchant Transmission Facility, the Attachment Facilities, and the
New York State Transmission System to their normal operating state as soon as practicable
consistent with Good Utility Practice.

13.5 Developer Authority.

Consistent with Good Utility Practice and this Agreement, the Developer may take

whatever actions or inactions with regard to the Merchant Transmission Facility or the

Developer’s Attachment Facilities during an Emergency State in order to (i) preserve public

health and safety, (ii) preserve the reliability of the Merchant Transmission Facility or the

Developer’s Attachment Facilities, (iii) limit or prevent damage, and (iv) expedite restoration of service.  Developer shall use Reasonable Efforts to minimize the effect of such actions or
inactions on the New York State Transmission System and the Connecting Transmission
Owner’s Attachment Facilities.  NYISO and Connecting Transmission Owner shall use
Reasonable Efforts to assist Developer in such actions.

13.6 Limited Liability.

Except as otherwise provided in Article 11.6 of this Agreement, no Party shall be liable
to another Party for any action it takes in responding to an Emergency State so long as such
action is made in good faith and is consistent with Good Utility Practice and the NYISO Tariffs.

ARTICLE 14.  REGULATORY REQUIREMENTS AND GOVERNING LAW

14.1 Regulatory Requirements.

Each Party’s obligations under this Agreement shall be subject to its receipt of any

required approval or certificate from one or more Governmental Authorities in the form and

substance satisfactory to the applying Party, or the Party making any required filings with, or

providing notice to, such Governmental Authorities, and the expiration of any time period

associated therewith.  Each Party shall in good faith seek and use its Reasonable Efforts to obtain
such other approvals.  Nothing in this Agreement shall require Developer to take any action that
could result in its inability to obtain, or its loss of, status or exemption under the Federal Power

45

SERVICE AGREEMENT NO. 2710

Act or the Public Utility Holding Company Act of 2005 or the Public Utility Regulatory Policies Act of 1978, as amended.

14.2 Governing Law.

14.2.1 The validity, interpretation and performance of this Agreement and each of its

provisions shall be governed by the laws of the state of New York, without regard to its conflicts of law principles.

14.2.2 This Agreement is subject to all Applicable Laws and Regulations.

14.2.3 Each Party expressly reserves the right to seek changes in, appeal, or otherwise contest any laws, orders, rules, or regulations of a Governmental Authority.

ARTICLE 15.  NOTICES

15.1 General.

Unless otherwise provided in this Agreement, any notice, demand or request required or permitted to be given by a Party to the other Parties and any instrument required or permitted to be tendered or delivered by a Party in writing to the other Parties shall be effective when
delivered and may be so given, tendered or delivered, by recognized national courier, or by
depositing the same with the United States Postal Service with postage prepaid, for delivery by certified or registered mail, addressed to the Party, or personally delivered to the Party, at the
address set out in Appendix F hereto.

A Party may change the notice information in this Agreement by giving five (5) Business Days written notice prior to the effective date of the change.

15.2 Billings and Payments.

Billings and payments shall be sent to the addresses set out in Appendix F hereto.

15.3 Alternative Forms of Notice.

Any notice or request required or permitted to be given by a Party to the other Parties and not required by this Agreement to be given in writing may be so given by telephone, facsimile or email to the telephone numbers and email addresses set out in Appendix F hereto.

15.4 Operations and Maintenance Notice.

Developer and Connecting Transmission Owner shall each notify the other Party, and

NYISO, in writing of the identity of the person(s) that it designates as the point(s) of contact with respect to the implementation of Articles 9 and 0 of this Agreement.

ARTICLE 16.  FORCE MAJEURE

16.1  Economic hardship is not considered a Force Majeure event.

46

SERVICE AGREEMENT NO. 2710

16.2  A Party shall not be responsible or liable, or deemed, in Default with respect to
any obligation hereunder, (including obligations under Article 4 of this Agreement) , other than
the obligation to pay money when due, to the extent the Party is prevented from fulfilling such
obligation by Force Majeure.  A Party unable to fulfill any obligation hereunder (other than an
obligation to pay money when due) by reason of Force Majeure shall give notice and the full
particulars of such Force Majeure to the other Parties in writing or by telephone as soon as

reasonably possible after the occurrence of the cause relied upon.  Telephone notices given

pursuant to this Article shall be confirmed in writing as soon as reasonably possible and shall

specifically state full particulars of the Force Majeure, the time and date when the Force Majeure occurred and when the Force Majeure is reasonably expected to cease.  The Party affected shall exercise due diligence to remove such disability with reasonable dispatch, but shall not be
required to accede or agree to any provision not satisfactory to it in order to settle and terminate a strike or other labor disturbance.

ARTICLE 17.  DEFAULT

17.1 General.

No Breach shall exist where such failure to discharge an obligation (other than the

payment of money) is the result of Force Majeure as defined in this Agreement or the result of an
act or omission of the other Parties.  Upon a Breach, the non-Breaching Parties shall give written
notice of such to the Breaching Party.  The Breaching Party shall have thirty (30) Calendar Days
from receipt of the Breach notice within which to cure such Breach; provided however, if such
Breach is not capable of cure within thirty (30) Calendar Days, the Breaching Party shall
commence such cure within thirty (30) Calendar Days after notice and continuously and
diligently complete such cure within ninety (90) Calendar Days from receipt of the Breach
notice; and, if cured within such time, the Breach specified in such notice shall cease to exist.

17.2 Right to Terminate.

If a Breach is not cured as provided in this Article 17, or if a Breach is not capable of

being cured within the period provided for herein, the non-Breaching Parties acting together shall thereafter have the right to declare a Default and terminate this Agreement by written notice at any time until cure occurs, and be relieved of any further obligation hereunder and, whether or not those Parties terminate this Agreement, to recover from the defaulting Party all amounts due hereunder, plus all other damages and remedies to which they are entitled at law or in equity. The provisions of this Article will survive termination of this Agreement.

ARTICLE 18.  INDEMNITY, CONSEQUENTIAL DAMAGES AND INSURANCE

18.1 Indemnity.

Each Party (the “Indemnifying Party”) shall at all times indemnify, defend, and save

harmless, as applicable, the other Parties (each an “Indemnified Party”) from, any and all

damages, losses, claims, including claims and actions relating to injury to or death of any person
or damage to property, the alleged violation of any Environmental Law, or the release or
threatened release of any Hazardous Substance, demand, suits, recoveries, costs and expenses,

47

SERVICE AGREEMENT NO. 2710

court costs, attorney fees, and all other obligations by or to third parties (any and all of these a
“Loss”), arising out of or resulting from (i) the Indemnified Party’s performance of its
obligations under this Agreement on behalf of the Indemnifying Party, except in cases where the
Indemnifying Party can demonstrate that the Loss of the Indemnified Party was caused by the
gross negligence or intentional wrongdoing of the Indemnified Party or (ii) the violation by the
Indemnifying Party of any Environmental Law or the release by the Indemnifying Party of any
Hazardous Substance.

18.1.1 Indemnified Party.

If a Party is entitled to indemnification under this Article 18 as a result of a claim by a third party, and the Indemnifying Party fails, after notice and reasonable opportunity to proceed under Article 18.1.3, to assume the defense of such claim, such Indemnified Party may at the expense of the Indemnifying Party contest, settle or consent to the entry of any judgment with respect to, or pay in full, such claim.

18.1.2 Indemnifying Party.

If an Indemnifying Party is obligated to indemnify and hold any Indemnified Party

harmless under this Article 18, the amount owing to the Indemnified Party shall be the amount of such Indemnified Party’s actual Loss, net of any insurance or other recovery.

18.1.3 Indemnity Procedures.

Promptly after receipt by an Indemnified Party of any claim or notice of the

commencement of any action or administrative or legal proceeding or investigation as to which
the indemnity provided for in Article 18.1 may apply, the Indemnified Party shall notify the
Indemnifying Party of such fact.  Any failure of or delay in such notification shall not affect a
Party’s indemnification obligation unless such failure or delay is materially prejudicial to the
Indemnifying Party.

Except as stated below, the Indemnifying Party shall have the right to assume the defense
thereof with counsel designated by such Indemnifying Party and reasonably satisfactory to the
Indemnified Party.  If the defendants in any such action include one or more Indemnified Parties
and the Indemnifying Party and if the Indemnified Party reasonably concludes that there may be
legal defenses available to it and/or other Indemnified Parties which are different from or
additional to those available to the Indemnifying Party, the Indemnified Party shall have the right
to select separate counsel to assert such legal defenses and to otherwise participate in the defense
of such action on its own behalf.  In such instances, the Indemnifying Party shall only be
required to pay the fees and expenses of one additional attorney to represent an Indemnified
Party or Indemnified Parties having such differing or additional legal defenses.

The Indemnified Party shall be entitled, at its expense, to participate in any such action,
suit or proceeding, the defense of which has been assumed by the Indemnifying Party.
Notwithstanding the foregoing, the Indemnifying Party (i) shall not be entitled to assume and
control the defense of any such action, suit or proceedings if and to the extent that, in the opinion

48

SERVICE AGREEMENT NO. 2710

of the Indemnified Party and its counsel, such action, suit or proceeding involves the potential

imposition of criminal liability on the Indemnified Party, or there exists a conflict or adversity of
interest between the Indemnified Party and the Indemnifying Party, in such event the
Indemnifying Party shall pay the reasonable expenses of the Indemnified Party, and (ii) shall not
settle or consent to the entry of any judgment in any action, suit or proceeding without the
consent of the Indemnified Party, which shall not be unreasonably withheld, conditioned or
delayed.

18.2 No Consequential Damages.

Other than the liquidated damages heretofore described and the indemnity obligations set
forth in Article 18.1, in no event shall any Party be liable under any provision of this Agreement
for any losses, damages, costs or expenses for any special, indirect, incidental, consequential, or
punitive damages, including but not limited to loss of profit or revenue, loss of the use of
equipment, cost of capital, cost of temporary equipment or services, whether based in whole or in
part in contract, in tort, including negligence, strict liability, or any other theory of liability;
provided, however, that damages for which a Party may be liable to another Party under separate
agreement will not be considered to be special, indirect, incidental, or consequential damages
hereunder.

18.3 Insurance.

Developer and Connecting Transmission Owner shall each, at its own expense, procure and maintain in force throughout the period of this Agreement and until released by the other
Parties, the following minimum insurance coverages, with  insurance companies licensed to
write insurance or approved eligible surplus lines carriers in the state of New York with a
minimum A.M. Best rating of A or better for financial strength, and an A.M. Best financial size category of VIII or better:

18.3.1  Employers’ Liability and Workers’ Compensation Insurance providing

statutory benefits in accordance with the laws and regulations of New York State.

18.3.2  Commercial General Liability (“CGL”) Insurance including premises and

operations, personal injury, broad form property damage, broad form blanket contractual liability
coverage products and completed operations coverage, coverage for explosion, collapse and
underground hazards, independent contractors coverage, coverage for pollution to the extent
normally available and punitive damages to the extent normally available using Insurance
Services Office, Inc. Commercial General Liability Coverage (“ISO CG”) Form CG 00 01 04 13
or a form equivalent to or better than CG 00 01 04 13, with minimum limits of Two Million
Dollars ($2,000,000) per occurrence and Two Million Dollars ($2,000,000) aggregate combined
single limit for personal injury, bodily injury, including death and property damage.

18.3.3  Comprehensive Automobile Liability Insurance for coverage of owned

and non-owned and hired vehicles, trailers or semi-trailers designed for travel on public roads, with a minimum, combined single limit of One Million Dollars ($1,000,000) per occurrence for bodily injury, including death, and property damage.

49

SERVICE AGREEMENT NO. 2710

18.3.4 If applicable, the Commercial General Liability and Comprehensive

Automobile Liability Insurance policies should include contractual liability for work in

connection with construction or demolition work on or within 50 feet of a railroad, or a separate Railroad Protective Liability Policy should be provided.

18.3.5 Excess Liability Insurance over and above the Employers’ Liability,

Commercial General Liability and Comprehensive Automobile Liability Insurance coverages, with a minimum combined single limit of Twenty Million Dollars ($20,000,000) per occurrence and Twenty Million Dollars ($20,000,000) aggregate.  The Excess policies should contain the same extensions listed under the Primary policies.

18.3.6  The Commercial General Liability Insurance, Comprehensive Automobile

Insurance and Excess Liability Insurance policies of Developer and Connecting Transmission

Owner shall name the other Party, its parent, associated and Affiliate companies and their

respective directors, officers, agents, servants and employees (“Other Party Group”) as additional
insureds using ISO CG Endorsements: CG 20 33 04 13, and CG 20 37 04 13 or CG 20 10 04 13
and CG 20 37 04 13 or equivalent to or better forms.  All policies shall contain provisions
whereby the insurers waive all rights of subrogation in accordance with the provisions of this
Agreement against the Other Party Group and provide thirty (30) Calendar days advance written
notice to the Other Party Group prior to anniversary date of cancellation or any material change
in coverage or condition.

18.3.7  The Commercial General Liability Insurance, Comprehensive Automobile

Liability Insurance and Excess Liability Insurance policies shall contain provisions that specify that the policies are primary and non-contributory.  Developer and Connecting Transmission Owner shall each be responsible for its respective deductibles or retentions.

18.3.8  The Commercial General Liability Insurance, Comprehensive Automobile

Liability Insurance and Excess Liability Insurance policies, if written on a Claims First Made Basis, shall be maintained in full force and effect for at least three (3) years after termination of this Agreement, which coverage may be in the form of tail coverage or extended reporting period coverage if agreed by the Developer and Connecting Transmission Owner.

18.3.9 If applicable, Pollution Liability Insurance in an amount no less than

$7,500,000 per occurrence and $7,500,000 in the aggregate.  The policy will provide coverage for claims resulting from pollution or other environmental impairment arising out of or in
connection with work performed on the premises by the other party, its contractors and and/or subcontractors.  Such insurance is to include coverage for, but not be limited to, cleanup, third party bodily injury and property damage and remediation and will be written on an occurrence basis. The policy shall name the Other Party Group as additional insureds, be primary and
contain a waiver of subrogation.

18.3.10  The requirements contained herein as to the types and limits of all

insurance to be maintained by the Developer and Connecting Transmission Owner are not

50

SERVICE AGREEMENT NO. 2710

intended to and shall not in any manner, limit or qualify the liabilities and obligations assumed by those Parties under this Agreement.

18.3.11  Within ninety (90) days following execution of this Agreement, and as

soon as practicable after the end of each fiscal year or at the renewal of the insurance policy and in any event within ninety (90) days thereafter, Developer and Connecting Transmission Owner shall provide certificate of insurance for all insurance required in this Agreement, executed by each insurer or by an authorized representative of each insurer.

18.3.12  Notwithstanding the foregoing, Developer and Connecting Transmission

Owner may each self-insure to meet the minimum insurance requirements of Articles 18.3.1
through 18.3.9 to the extent it maintains a self-insurance program; provided that, such Party’s
senior debt is rated at investment grade, or better, by Standard & Poor’s and that its self-
insurance program meets the minimum insurance requirements of Articles 18.3.1 through 18.3.9.
In the event that a Party is permitted to self-insure pursuant to this Article 18.3.12, it shall notify
the other Party that it meets the requirements to self-insure and that its self-insurance program
meets the minimum insurance requirements in a manner consistent with that specified in Articles

18.3.1 through 18.3.9 and provide evidence of such coverages.  For any period of time that a Party’s senior debt is unrated by Standard & Poor’s or is rated at less than investment grade by Standard & Poor’s, such Party shall comply with the insurance requirements applicable to it under Articles 18.3.1 through 18.3.9.

18.3.13  Developer and Connecting Transmission Owner agree to report to each

other in writing as soon as practical all accidents or occurrences resulting in injuries to any person, including death, and any property damage arising out of this Agreement.

18.3.14  Subcontractors of each party must maintain the same insurance

requirements stated under Articles 18.3.1 through 18.3.9 and comply with the Additional Insured requirements herein.  In addition, their policies must state that they are primary and non-
contributory and contain a waiver of subrogation.

ARTICLE 19.  ASSIGNMENT

This Agreement may be assigned by a Party only with the written consent of the other

Parties; provided that a Party may assign this Agreement without the consent of the other Parties
to any Affiliate of the assigning Party with an equal or greater credit rating and with the legal
authority and operational ability to satisfy the obligations of the assigning Party under this
Agreement; provided further that a Party may assign this Agreement without the consent of the
other Parties in connection with the sale, merger, restructuring, or transfer of a substantial
portion or all of its assets, including the Attachment Facilities it owns, so long as the assignee in
such a transaction directly assumes in writing all rights, duties and obligations arising under this
Agreement; and provided further that the Developer shall have the right to assign this
Agreement, without the consent of the NYISO or Connecting Transmission Owner, for collateral
security purposes to aid in providing financing for the Merchant Transmission Facility, provided
that the Developer will promptly notify the NYISO and Connecting Transmission Owner of any
such assignment.  Any financing arrangement entered into by the Developer pursuant to this
Article will provide that prior to or upon the exercise of the secured party’s, trustee’s or

51

SERVICE AGREEMENT NO. 2710

mortgagee’s assignment rights pursuant to said arrangement, the secured creditor, the trustee or
mortgagee will notify the NYISO and Connecting Transmission Owner of the date and
particulars of any such exercise of assignment right(s) and will provide the NYISO and
Connecting Transmission Owner with proof that it meets the requirements of Articles 11.5 and

18.3.  Any attempted assignment that violates this Article is void and ineffective.  Any

assignment under this Agreement shall not relieve a Party of its obligations, nor shall a Party’s obligations be enlarged, in whole or in part, by reason thereof.  Where required, consent to assignment will not be unreasonably withheld, conditioned or delayed.

ARTICLE 20.  SEVERABILITY

If any provision in this Agreement is finally determined to be invalid, void or

unenforceable by any court or other Governmental Authority having jurisdiction, such

determination shall not invalidate, void or make unenforceable any other provision, agreement or
covenant of this Agreement; provided that if the Developer (or any third party, but only if such
third party is not acting at the direction of the Connecting Transmission Owner) seeks and
obtains such a final determination with respect to any provision of the Alternate Option (Article

5.1.2), or the Negotiated Option (Article 5.1.4), then none of these provisions shall thereafter have any force or effect and the rights and obligations of Developer and Connecting
Transmission Owner shall be governed solely by the Standard Option (Article 5.1.1).

ARTICLE 21.  COMPARABILITY

The Parties will comply with all applicable comparability and code of conduct laws, rules and regulations, as amended from time to time.

ARTICLE 22.  CONFIDENTIALITY

22.1 Confidentiality.

Certain information exchanged by the Parties during the term of this Agreement shall
constitute confidential information (“Confidential Information”) and shall be subject to this
Article 22.

If requested by a Party receiving information, the Party supplying the information shall provide in writing, the basis for asserting that the information referred to in this Article warrants confidential treatment, and the requesting Party may disclose such writing to the appropriate Governmental Authority.  Each Party shall be responsible for the costs associated with affording confidential treatment to its information.

22.2 Term.

During the term of this Agreement, and for a period of three (3) years after the expiration or termination of this Agreement, except as otherwise provided in this Article 22, each Party shall hold in confidence and shall not disclose to any person Confidential Information.

52

SERVICE AGREEMENT NO. 2710

22.3 Confidential Information.

The following shall constitute Confidential Information:  (1) any non-public information that is treated as confidential by the disclosing Party and which the disclosing Party identifies as Confidential Information in writing at the time, or promptly after the time, of disclosure; or (2) information designated as Confidential Information by the NYISO Code of Conduct contained in Attachment F to the ISO OATT.

22.4 Scope.

Confidential Information shall not include information that the receiving Party can

demonstrate: (1) is generally available to the public other than as a result of a disclosure by the
receiving Party; (2) was in the lawful possession of the receiving Party on a non-confidential
basis before receiving it from the disclosing Party; (3) was supplied to the receiving Party
without restriction by a third party, who, to the knowledge of the receiving Party after due
inquiry, was under no obligation to the disclosing Party to keep such information confidential;

(4) was independently developed by the receiving Party without reference to Confidential

Information of the disclosing Party; (5) is, or becomes, publicly known, through no wrongful act
or omission of the receiving Party or Breach of this Agreement; or (6) is required, in accordance
with Article 22.9 of this Agreement, Order of Disclosure, to be disclosed by any Governmental
Authority or is otherwise required to be disclosed by law or subpoena, or is necessary in any
legal proceeding establishing rights and obligations under this Agreement.  Information
designated as Confidential Information will no longer be deemed confidential if the Party that
designated the information as confidential notifies the other Party that it no longer is
confidential.

22.5 Release of Confidential Information.

No Party shall release or disclose Confidential Information to any other person, except to
its Affiliates (limited by FERC Standards of Conduct requirements), subcontractors, employees,
consultants, or to parties who may be considering providing financing to or equity participation
with Developer, or to potential purchasers or assignees of a Party, on a need-to-know basis in
connection with this Agreement, unless such person has first been advised of the confidentiality
provisions of this Article 22 and has agreed to comply with such provisions.  Notwithstanding
the foregoing, a Party providing Confidential Information to any person shall remain primarily
responsible for any release of Confidential Information in contravention of this Article 22.

22.6 Rights.

Each Party retains all rights, title, and interest in the Confidential Information that each Party discloses to the other Party.  The disclosure by each Party to the other Parties of
Confidential Information shall not be deemed a waiver by any Party or any other person or entity of the right to protect the Confidential Information from public disclosure.

22.7 No Warranties.

By providing Confidential Information, no Party makes any warranties or representations
as to its accuracy or completeness.  In addition, by supplying Confidential Information, no Party

53

SERVICE AGREEMENT NO. 2710

obligates itself to provide any particular information or Confidential Information to the other
Parties nor to enter into any further agreements or proceed with any other relationship or joint
venture.

22.8 Standard of Care.

Each Party shall use at least the same standard of care to protect Confidential Information it receives as it uses to protect its own Confidential Information from unauthorized disclosure, publication or dissemination.  Each Party may use Confidential Information solely to fulfill its obligations to the other Parties under this Agreement or its regulatory requirements, including the ISO OATT and NYISO Services Tariff.  The NYISO shall, in all cases, treat the information it receives in accordance with the requirements of Attachment F to the ISO OATT.

22.9 Order of Disclosure.

If a court or a Government Authority or entity with the right, power, and apparent

authority to do so requests or requires any Party, by subpoena, oral deposition, interrogatories,

requests for production of documents, administrative order, or otherwise, to disclose Confidential
Information, that Party shall provide the other Parties with prompt notice of such request(s) or
requirement(s) so that the other Parties may seek an appropriate protective order or waive
compliance with the terms of this Agreement.  Notwithstanding the absence of a protective order
or waiver, the Party may disclose such Confidential Information which, in the opinion of its
counsel, the Party is legally compelled to disclose.  Each Party will use Reasonable Efforts to
obtain reliable assurance that confidential treatment will be accorded any Confidential
Information so furnished.

22.10 Termination of Agreement.

Upon termination of this Agreement for any reason, each Party shall, within ten (10)
Calendar Days of receipt of a written request from the other Parties, use Reasonable Efforts to
destroy, erase, or delete (with such destruction, erasure, and deletion certified in writing to the
other Parties) or return to the other Parties, without retaining copies thereof, any and all written
or electronic Confidential Information received from the other Parties pursuant to this
Agreement.

22.11 Remedies.

The Parties agree that monetary damages would be inadequate to compensate a Party for
another Party’s Breach of its obligations under this Article 22.  Each Party accordingly agrees
that the other Parties shall be entitled to equitable relief, by way of injunction or otherwise, if the
first Party Breaches or threatens to Breach its obligations under this Article 22, which equitable
relief shall be granted without bond or proof of damages, and the receiving Party shall not plead
in defense that there would be an adequate remedy at law.  Such remedy shall not be deemed an
exclusive remedy for the Breach of this Article 22, but shall be in addition to all other remedies
available at law or in equity.  The Parties further acknowledge and agree that the covenants

contained herein are necessary for the protection of legitimate business interests and are

reasonable in scope.  No Party, however, shall be liable for indirect, incidental, or consequential

54

SERVICE AGREEMENT NO. 2710

or punitive damages of any nature or kind resulting from or arising in connection with this Article 22.

22.12 Disclosure to FERC, its Staff, or a State.

Notwithstanding anything in this Article 22 to the contrary, and pursuant to 18 C.F.R.
section 1b.20, if FERC or its staff, during the course of an investigation or otherwise, requests
information from one of the Parties that is otherwise required to be maintained in confidence
pursuant to this Agreement or the ISO OATT, the Party shall provide the requested information
to FERC or its staff, within the time provided for in the request for information.  In providing the
information to FERC or its staff, the Party must, consistent with 18 C.F.R. section 388.112,
request that the information be treated as confidential and non-public by FERC and its staff and
that the information be withheld from public disclosure.  Parties are prohibited from notifying
the other Parties to this Agreement prior to the release of the Confidential Information to the
Commission or its staff.  The Party shall notify the other Parties to the Agreement when it is
notified by FERC or its staff that a request to release Confidential Information has been received
by FERC, at which time the Parties may respond before such information would be made public,
pursuant to 18 C.F.R. section 388.112.  Requests from a state regulatory body conducting a
confidential investigation shall be treated in a similar manner if consistent with the applicable
state rules and regulations.  A Party shall not be liable for any losses, consequential or otherwise,
resulting from that Party divulging Confidential Information pursuant to a FERC or state
regulatory body request under this paragraph.

22.13  Required Notices Upon Requests or Demands for Confidential Information

Except as otherwise expressly provided herein, no Party shall disclose Confidential

Information to any person not employed or retained by the Party possessing the Confidential

Information, except to the extent disclosure is (i) required by law; (ii) reasonably deemed by the
disclosing Party to be required to be disclosed in connection with a dispute between or among
the Parties, or the defense of litigation or dispute; (iii) otherwise permitted by consent of the
other Party, such consent not to be unreasonably withheld; or (iv) necessary to fulfill its
obligations under this Agreement, the ISO OATT or the NYISO Services Tariff.  Prior to any
disclosures of a Party’s Confidential Information under this subparagraph, or if any third party or
Governmental Authority makes any request or demand for any of the information described in
this subparagraph, the disclosing Party agrees to promptly notify the other Party in writing and
agrees to assert confidentiality and cooperate with the other Party in seeking to protect the
Confidential Information from public disclosure by confidentiality agreement, protective order or
other reasonable measures.

ARTICLE 23.  DEVELOPER    AND    CONNECTING    TRANSMISSION    OWNER
 NOTICES OF ENVIRONMENTAL RELEASES

Developer and Connecting Transmission Owner shall each notify the other Party, first
orally and then in writing, of the release of any Hazardous Substances, any asbestos or lead
abatement activities, or any type of remediation activities related to the Merchant Transmission
Facility or the Attachment Facilities, each of which may reasonably be expected to affect the
other Party.  The notifying Party shall:  (i) provide the notice as soon as practicable, provided

55

SERVICE AGREEMENT NO. 2710

such Party makes a good faith effort to provide the notice no later than twenty-four hours after
such Party becomes aware of the occurrence; and (ii) promptly furnish to the other Party copies
of any publicly available reports filed with any Governmental Authorities addressing such
events.

ARTICLE 24.  INFORMATION REQUIREMENT

24.1 Information Acquisition.

Connecting Transmission Owner and Developer shall each submit specific information regarding the electrical characteristics of their respective facilities to the other, and to NYISO, as described below and in accordance with Applicable Reliability Standards.

24.2  Information Submission by Connecting Transmission Owner.

The initial information submission by Connecting Transmission Owner shall occur no
later than one hundred eighty (180) Calendar Days prior to Trial Operation and shall include
New York State Transmission System information necessary to allow the Developer to select
equipment and meet any system protection and stability requirements, unless otherwise mutually
agreed to by the Developer and Connecting Transmission Owner.  On a monthly basis
Connecting Transmission Owner shall provide Developer and NYISO a status report on the
construction and installation of Connecting Transmission Owner’s Attachment Facilities and
System Upgrade Facilities and System Deliverability Upgrades, including, but not limited to, the
following information:  (1) progress to date; (2) a description of the activities since the last
report; (3) a description of the action items for the next period; and (4) the delivery status of
equipment ordered.

24.3 Updated Information Submission by Developer.

The updated information submission by the Developer, including manufacturer

information, shall occur no later than one hundred eighty (180) Calendar Days prior to the Trial Operation.  Developer shall submit a completed copy of the Merchant Transmission Facility data requirements contained in Appendix 1 to the Standard Large Facility Interconnection Procedures. It shall also include any additional information provided to Connecting Transmission Owner for the Interconnection Facilities Study.  Information in this submission shall be the most current
Merchant Transmission Facility design or expected performance data.  Information submitted for stability models shall be compatible with NYISO standard models.  If there is no compatible
model, the Developer will work with a consultant mutually agreed to by the Parties to develop and supply a standard model and associated information.

If the Developer’s data is different from what was originally provided to Connecting

Transmission Owner and NYISO pursuant to an Interconnection Study Agreement among

Connecting Transmission Owner, NYISO and Developer and this difference may be reasonably
expected to affect the other Parties’ facilities or the New York State Transmission System, but
does not require the submission of a new Interconnection Request, then NYISO will conduct
appropriate studies to determine the impact on the New York State Transmission System based
on the actual data submitted pursuant to this Article 24.3.  Such studies will provide an estimate

56

SERVICE AGREEMENT NO. 2710

of any additional modifications to the New York State Transmission System, Connecting

Transmission Owner’s Attachment Facilities or System Upgrade Facilities or System

Deliverability Upgrades based on the actual data and a good faith estimate of the costs thereof. The Developer shall not begin Trial Operation until such studies are completed.  The Developer shall be responsible for the cost of any modifications required by the actual data, including the cost of any required studies.

24.4 Information Supplementation.

Prior to the Commercial Operation Date, the Developer and Connecting Transmission
Owner shall supplement their information submissions described above in this Article 24 with
any and all “as-built” Merchant Transmission Facility information or “as-tested” performance
information that differs from the initial submissions or, alternatively, written confirmation that
no such differences exist.  The Developer shall conduct tests on the Merchant Transmission
Facility as required by Good Utility Practice.  Developer shall provide the Connecting

Transmission Owner and NYISO validated test recordings showing the responses of the Merchant Transmission Facility.

Subsequent to the Commercial Operation Date, the Developer shall provide Connecting
Transmission Owner and NYISO any information changes due to equipment replacement, repair,
or adjustment.  Connecting Transmission Owner shall provide the Developer and NYISO any
information changes due to equipment replacement, repair or adjustment in the directly
connected substation or any adjacent Connecting Transmission Owner substation that may affect
the Merchant Transmission Facility or Developer Attachment Facilities equipment ratings,
protection or operating requirements.  The Developer and Connecting Transmission Owner shall
provide such information no later than thirty (30) Calendar Days after the date of the equipment
replacement, repair or adjustment.

ARTICLE 25.  INFORMATION ACCESS AND AUDIT RIGHTS

25.1 Information Access.

Each Party (“Disclosing Party”) shall make available to another Party (“Requesting

Party”) information that is in the possession of the Disclosing Party and is necessary in order for
the Requesting Party to: (i) verify the costs incurred by the Disclosing Party for which the
Requesting Party is responsible under this Agreement; and (ii) carry out its obligations and
responsibilities under this Agreement.  The Parties shall not use such information for purposes
other than those set forth in this Article 25.1 of this Agreement and to enforce their rights under
this Agreement.

25.2 Reporting of Non-Force Majeure Events.

Each Party (the “Notifying Party”) shall notify the other Parties when the Notifying Party
becomes aware of its inability to comply with the provisions of this Agreement for a reason other
than a Force Majeure event.  The Parties agree to cooperate with each other and provide
necessary information regarding such inability to comply, including the date, duration, reason for
the inability to comply, and corrective actions taken or planned to be taken with respect to such

57

SERVICE AGREEMENT NO. 2710

inability to comply.  Notwithstanding the foregoing, notification, cooperation or information

provided under this Article shall not entitle the Party receiving such notification to allege a cause for anticipatory breach of this Agreement.

25.3 Audit Rights.

Subject to the requirements of confidentiality under Article 22 of this Agreement, each
Party shall have the right, during normal business hours, and upon prior reasonable notice to
another Party, to audit at its own expense the other Party’s accounts and records pertaining to the
other Party’s performance or satisfaction of its obligations under this Agreement.  Such audit
rights shall include audits of the other Party’s costs, calculation of invoiced amounts, and each
Party’s actions in an Emergency State.  Any audit authorized by this Article shall be performed
at the offices where such accounts and records are maintained and shall be limited to those
portions of such accounts and records that relate to the Party’s performance and satisfaction of
obligations under this Agreement.  Each Party shall keep such accounts and records for a period
equivalent to the audit rights periods described in Article 25.4 of this Agreement.

25.4 Audit Rights Periods.

25.4.1 Audit Rights Period for Construction-Related Accounts and Records.

Accounts and records related to the design, engineering, procurement, and construction of Connecting Transmission Owner’s Attachment Facilities and System Upgrade Facilities and
System Deliverability Upgrades shall be subject to audit for a period of twenty-four months
following Connecting Transmission Owner’s issuance of a final invoice in accordance with
Article 12.2 of this Agreement.