POWER CONTRACT - ROCK ISLAND JOINT SYSTEM BETWEEN PUBLIC UTILITY DISTRICT NO. 1 OF CHELAN COUNTY and PUGET SOUND POWER & LIGHT COMPANY POWER CONTRACT - ROCK ISLAND JOINT SYSTEM
Exhibit
10.12
POWER
CONTRACT - ROCK ISLAND JOINT SYSTEM
BETWEEN
PUBLIC
UTILITY DISTRICT NO. 1
OF CHELAN
COUNTY
and
PUGET
SOUND POWER & LIGHT COMPANY
TABLE OF
CONTENTS
POWER
CONTRACT - ROCK ISLAND JOINT SYSTEM
|
Section
Number
|
Title
|
|
Recitals
|
|
|
2
|
Term
of Contract
|
|
3
|
Construction
of System II
|
|
4
|
Joint
System Output, Joint System Peaking Capability
and
Joint System Pondage
(A) System I
(B) System II
(C) Joint
System Pondage
|
|
5
|
Payments
by Puget to the District
(A) System I
(B) System II
- Period Prior to Initial Date of Delivery
(C) System II
- Initial Delivery Period
(D) System II
- Interim Delivery Period
(E) System II
- Commercial Operating Period
(F) Allocation
of Operating Expenses
(G) Allocation
of Taxes and Other Charges
(H) Debt
Service Payments
(I) Adjustment
of Contract Debt Service
(J) Computations
for Partial Contract Years
|
|
6
|
Exhibits
|
|
7
|
Withdrawal
of Power by the District
(A) System I
(B) System II
(C) System II
Surplus
|
|
8
|
Payments
by District
(A) System I
(B) System II
|
|
9
|
Advance
Payment for Power
|
|
10
|
Billings
|
|
11
|
Issuance
of Additional Bonds
(A) System I
(B) System II
(C) General
|
|
12
|
Establishment
of Use of Funds
(A) System I
(B) System II
(C) Investment
|
|
13
|
Books
of Account and Auditing
|
|
14
|
Reactive
Power
|
|
15
|
Operation,
Maintenance, Engineering and Planning
(A) Operation
(B) Maintenance
(C) Engineering
and Planning
(D) Inspection,
Books and Records
|
|
16
|
Character
of Service
|
|
17
|
Points
of Delivery
(A) System I
(B) System II
|
|
18
|
Use
of Rocky Reach Project Facilities
|
|
19
|
Scheduling
|
|
20
|
Metering
(A) Generator
Bus
(B) Other
Metering
(C) Reading
Meters
(D) Testing
|
|
21
|
Losses
|
|
22
|
Electric
Disturbances
|
|
23
|
▇▇▇▇▇'s
Right to Use System I Facilities
|
|
24
|
District's
Right to Use of Transmission Facilities
(A) Original
Facilities
(B) Added
Facilities
(C) Limitations
(D) Alternative
Facilities
|
|
25
|
Rocky
Reach Downstream Replacement Power
(A) The
District
(B) Puget
(C) System
Responsibilities
(D) Exchanges
|
|
26
|
Joint
System Operations - Arbitration
(A) Recommendations
(B) Notices
(C) Procedures
(D) Matters
to be Arbitrated
(E) Divisibility
|
|
27
|
Notices
|
|
28
|
Benefited
Parties
|
|
29
|
Amendment
to Contract
|
|
30
|
District's
Bond Resolution and License
|
|
31
|
Liabilities;
Waiver of Subrogation
(A) Releases
(B) Charges
(C) Waiver
|
|
32
|
Conflict
of Laws
|
|
33
|
Waiver
of Default
|
|
34
|
Insurance
|
|
35
|
Assignment
of Contract
|
|
36
|
Force
Majeure
|
|
37
|
Supersedence
of June 8, 1962 Power Contract
|
|
Exhibits
|
POWER CONTRACT - ROCK ISLAND
JOINT SYSTEM
THIS
AGREEMENT made and entered into this 19th day of June 1974, by and between
PUBLIC UTILITY DISTRICT NO. 1 OF CHELAN COUNTY, WASHINGTON (hereinafter
called the "District"), a municipal corporation organized and existing under the
laws of the State of Washington, and PUGET SOUND POWER & LIGHT COMPANY
(hereinafter called "Puget"), a corporation organized and existing under the
laws of the State of Washington;
RECITALS:
1. The
District is authorized under the laws of the State of Washington to own and
operate an electric public utility system or systems for the purpose of
furnishing the District and the inhabitants thereof and any other person,
including public and private corporations within or without its limits, with
electric power and energy for all uses.
2. The
District on December 20, 1955, adopted Resolution No. 1137 which
resolution (i) established a plan and system for the ownership and
operation of an electric utility system known as the Columbia River-Rock Island
Hydro-Electric System, to consist of the generation and transmission facilities
and related equipment to be acquired as a separate utility system pursuant to
said resolution, and all additions, betterments and improvements to and
extensions of said facilities added to said system by resolution of the
Commission
of the
District through refunding of outstanding revenue bonds of the District issued
pursuant to District Resolution No. 292, adopted by the Commission of the
District on April 23, 1951, or constructed or acquired by the District and
(ii) provided for the issuance and sale of $31,830,000 principal amount of
Columbia River-Rock Island Hydro-Electric System Revenue Bonds, Issue of 1955,
First Series.
3. Pursuant
to Resolution No. 3443 adopted on May 24, 1962, the District issued
and sold $41,425,000 principal amount of Columbia River-Rock Island
Hydro-Electric System Revenue Bonds, Issue of 1955, Second Series, for the
purpose of refunding the District's Rock Island Hydro -Electric System Electric
Revenue Bonds, Series of 1951, and for the purpose of providing for the cost of
the ▇▇▇▇▇▇ Development and for expenses incurred and to be incurred in
connection with development of the hydroelectric power potential of Wenatchee
River upstream from the ▇▇▇▇▇▇ Plant.
4. The
District, by issuance and sale of said Second Series Bonds pursuant to said
Resolution No. 3443, effected consolidation into the System as defined in
Resolution No. 1137 of (i) the generation and transmission facilities
and related properties of the Rock Island Hydro-Electric Production System, as
defined in Resolution No. 292, (ii) the electric utility properties
and assets of the Columbia River-Rock Island Hydro-Electric System, acquired
pursuant to said Resolution No. 1137, and (iii) the electric utility
properties and assets constituting the ▇▇▇▇▇▇ Generating Plant theretofore
comprising a part of the District's Electric System.
5. The
District and Puget were parties to a certain Power Contract (Rock Island) dated
January 6, 1956, as amended, which contract was superseded by that certain
Power Contract between the District and Puget dated June 8, 1962, as
amended.
6. The
District is aware of the serious long-range power shortage in the Pacific
Northwest with the result that the District will not have an adequate power
supply in the foreseeable future unless it develops additional power
sources. In order to provide for the foreseeable future power needs
of the District, the District has determined that expansion of the Rock Island
Project on the Columbia River is the most feasible source of additional electric
power and energy available to the District.
7. The
District intends to expand the Rock Island Project which expansion includes
adding a second powerhouse containing eight 54-MVA turbine generator units of
horizontal shaft bulb type together with other equipment and facilities, all as
more particularly set forth in Exhibit A to this contract.
8. The
District has been granted an amendment to its license by the Federal Power
Commission to expand the Rock Island Project, which license amendment was issued
under date of March 29, 1974.
9. The
District is issuing its revenue bonds in the approximate amount of $207,500,000
pursuant to District Resolution No. 4950 adopted the 19th day of June 1974,
in order to obtain the monies presently estimated to be necessary and
sufficient, together with other available monies, to pay all costs of acquiring
and constructing the proposed expansion of the Rock Island
Project. In the event
such
monies are not sufficient to place the expansion facilities in commercial
operation and complete such expansion, the District will use its best efforts to
issue additional revenue bonds necessary and and sufficient, for such
purposes.
NOW,
THEREFORE, for and in consideration of the mutual covenants and agreements
herein contained and other good and valuable considerations, the parties hereto
mutually covenent and agree as follows:
Section 1. Definitions. As
used in this contract, the following words and phrases shall have the meanings
hereinafter set forth unless the context shall clearly indicate that another
meaning is intended.
(A) "Added
Facilities" shall mean the following transmission, substation and related
facilities of System I:
(1) Squilchuck
Substation and tap line.
(2) Coles
Corner tap line.
(3) That
part of the North Wenatchee Substation rated in excess of 33,000
kVA.
(4) That
part of the Wenatchee Substation rated in excess of 45,000 kVA.
(5) Substation,
tap lines and related facilities of System I constructed subsequent to the
effective date of this contract pursuant to provisions of Section 24(B)
hereof.
(B) "Bond
Resolution" shall mean all resolutions adopted by the Commission of the District
authorizing the issuance of outstanding System I Bonds and System II
Bonds, including Refunding Bonds, and providing for the
security
therefor as such resolutions may be from time to time superseded, amended,
modified, or supplemented in accordance with provisions thereof.
(C) "Bonneville"
shall mean the United States of America, Department of the Interior, acting by
and through the Bonneville Power Administrator, or any officer or agency
succeeding to the powers and functions of the Bonneville Power Administrator as
may be hereafter provided by law.
(D) "Contract
Bonds Outstanding" for any series of Bonds shall mean the amount of said Bonds
that would have been outstanding as shown in the computation of Contract Debt
Service applicable to such series.
(E) "Contract
Debt Service" with respect to any series of System II Bonds shall mean for
any Contract Year an amount equal to the amount of annual interest and principal
payments including premiums, if any, that would have been payable by the
District on such series during said Contract Year computed on the assumptions
that:
(1) An
amount of principal, if any, equal to the amount of System II Reserve Funds
and System II Working Capital provided from the proceeds of such series
would mature on the date of final maturity of such series, with such principal
amount not amortized but bearing interest only prior to the date of final
maturity:
(2) The
remaining amount of principal is assumed to be amortized on an essentially level
annual debt service basis with the amortization period to be that specified in
this contract for such series;
(3) The
coupon rates used in the computation of Contract Debt Service requirements for
bonds computed to mature in any Contract Year shall be, as nearly as
practicable, the actual coupon rates for bonds of such series maturing in such
year; provided, however, that if in any year prior to the last year of maturity
of serial bonds of such series no bonds of such series actually mature, the
coupon rates applicable to such year used in the computation of Contract Debt
Service shall be determined by interpolation from actual coupon rates; provided,
further, if the actual maturities of bonds are different from the assumed
maturities and the actual coupon rates for any bonds are thereby affected, the
coupon rates to be used in the computations of Contract Debt Service shall be
those that would have been effective if actual maturities had been equal to
assumed maturities; provided, further, however, that the amount of Contract
Debt. Service for any series of Refunding Bonds shall not exceed the
amount of the Contract Debt Service on the series of bonds being
refunded. Contract Debt Service on any series shall be initially
computed within ten days after the issuance, and sale of such series and such
computation shall show for each Contract Year the amount of Bonds of such series
that would have been outstanding if actual maturities had had been equal to
those assumed in such computation.
(F) "Contract
Year" shall mean the twelve-month period commencing at 0001 hours Pacific Time
on July 1 of each year during the term of this contract; provided, however,
that the first Contract Year shall commence on
July 1,
1974 and the last Contract Year shall end at 2400 hours Pacific Time on the
last day of the term of this contract.
(G) "Date
of Commercial Operation" of System II shall mean the date the District
notifies Puget that it is ready to deliver power and energy from the last of
eight (8) additional generating units to be installed in System II
after each of said eight (8) units has been installed and in the opinion of
the District has been placed or is available to be placed in normal continuous
operation at not less than 90% of the capability of each such generating unit
which the District, in its opinion, expects to achieve upon completion of
construction.
(H) "Date
of Initial Financing" shall mean July 1, 1974.
(I) "District's
Electric System" shall mean the District's distribution and transmission system
as described in District Resolution No. 870 and all additions and
betterments thereto and extensions thereof which have been made prior to the
date of this contract and which are made in the future, including, without
limitation, generating facilities, transmission facilities, distribution
facilities, intangible plant and general plant facilities as those terms are
used in the Uniform System of Accounts.
(J) "District's
Other Power" shall mean the amount of the District's power flowing over Original
Facilities and Added Facilities that is in excess of the District's Squilchuck
Power.
(K) "District's
Squilchuck Power" shall mean the amount of power shown on Exhibit D hereof and
flowing over Original Facilities and Added Facilities.
(L) "District's
System I Share" shall mean for any Contract Year the decimal fraction share
of System I Output and System I Peaking Capability as set forth in
column 1 of Exhibit B hereof.
(M) "District's
System II Share" shall mean for any Contract Year the decimal fraction
share of System II Output and System II Peaking Capability taken by
the District in accordance with the provisions of Section 7(B)
hereof.
(N) "Generator
Bus" shall mean the point or points on the low voltage side of the Rock Island
Project transformer banks at which Joint System Output and Joint System Peaking
Capability are determined.
(O) "Initial
Date of Delivery" shall mean 0001 hours Pacific Time on the date the District
first notifies Puget that it is ready to deliver power and energy from one or
more of the generating units which shall have been installed in System II
and, in the opinion of the District, are available to be scheduled on a
continuous operating basis.
(P) "Initial
Delivery Period" shall mean the period of time beginning on the Initial Date of
Delivery and ending 0001 hours Pacific Time on the date which is five years
after the Date of Initial Financing.
(Q) "Interim
Delivery Period" shall mean the period of time, if any, beginning on the Initial
Date of Delivery or the date which is five years after the Date of Initial
Financing, whichever is later, and ending on the Date of Commercial
Operation.
(R) "Joint
System" shall mean System I and System II.
(S) "Joint
System Output" shall mean for any period of time the sum of the
following:
(1) The
amount of electric energy and reactive power capable of being produced by the
Joint System from the inflow water supply to the Rock Island Project during such
period, including test power, adjusted for the losses to the Generator Bus,
under the operating conditions existing during such period, after deducting the
amount of electric energy required for station service use and service to Rock
Island suvisors' cottages and the amount of Rocky Reach Encroachment Power
during such period;
(2) The
amount of Joint System Wanapum Encroachment Power during such period;
and
(3) The
amount of Rocky Reach Downstream Replacement Power supplied by Puget and the
District to System II during such period in accordance with Section 25
hereof.
(T) "Joint
System Peaking Capability" shall mean at anytime the sum of the
following:
(1) The
maximum generating capability of the Joint System under the operating conditions
existing at such time after deducting the amount of electric capacity required
for station service use and service to Rock Island supervisors' cottages and the
amount of Rocky Reach Encroachment Power at such time;
(2) The
amount of Joint System Wanapum Encroachment Power at such time; and
(3) The
amount of Rocky Reach Downstream Replacement Power supplied by Puget and the
District to System II at such time.
(U) "Joint
System Pondage" shall mean the total usable pondage of the Joint
System.
(V) "Joint
System Wampum Encroachment Power" shall mean the electric capacity and energy
required to be delivered to the Rock Island Project by Public Utility District
No. 2 of Grant County, Washington ("Grant") as compensation for the
encroachment of the Wanapum Reservoir on the tailwater of the Rock Island
Project.
(W) "Operating
Expenses" shall mean all expenses (excluding depreciation expenses), less
credits properly related thereto, chargeable to Operation and Maintenance
Expense Accounts under the Uniform System of Accounts and shall include costs of
renewals and replacements of Minor Items of Property as such term is used in the
Uniform System of Accounts; provided, however, that in classification of such
costs of renewals and replacements, the District shall adhere to practices
generally followed by electric utilities operating like properties, including
past practices of the District. Operating Expenses shall not include
costs of improvements and extensions and costs for renewals and replacements of
Retirement Units as the latter term is used in the Uniform System of
Accounts.
(X) "Original
Facilities" shall mean the following transmission, substation and related
facilities of System I:
(1) ▇▇▇▇▇▇▇▇-Rocky
Reach-Chelan 115-kV transmission line.
(2) ▇▇▇▇▇▇▇▇-North
Wenatchee 115-kV transmission line.
(3) ▇▇▇▇▇▇▇▇-Summit
115-kV transmission line.
(4) ▇▇▇▇▇▇-kV
tap line.
(5) That
part of the North Wenatchee Substation rated at 33,000 kVA.
(6) That
part of the Wenatchee Substation rated at 45,000 kVA.
(7) ▇▇▇▇▇▇▇▇
115-kV Switching Station.
(Y) "outstanding"
when used with reference to System I Bonds and System II Bonds shall
have the meaning set forth in District Resolution No. 4950.
(Z) "Puget's
System I Share" shall mean for any Contract Year the decimal fraction share
of System I Output and System I Peaking Capability made available to
Puget during such year and shall be determined by subtracting the District's
System I Share from one (1.000).
(AA) "Puget's
System II Share" shall mean for any Contract Year the decimal fraction
share of System II Output and System II Peaking Capability made
available to Puget during such year and shall be determined by subtracting the
District's System II Share from one (1.000).
(BB) "Refunding
Bonds" shall mean the principal amount of bonds issued and sold by the District
to provide funds in amounts necessary (but no greater amounts than necessary) to
refund, in whole or in part at any time any one or more series of outstanding
System II Bonds including all costs and expenses of such
refunding.
(CC) "Rock
Island Project" shall mean the works, plants and facilities of the Columbia
River-Rock Island Hydro-Electric System as defined in Resolution Nos. 1137,
3443 and 4950.
(DD) "Rocky
Reach Downstream Replacement Power" shall mean the electric capacity and energy
which would have been delivered to the Rock Island Project by the Rocky Reach
Project or to the Rocky Reach Project by the Rock Island Project in accordance
with provisions of Section 5A of the Rocky Reach Power Sales Contracts
entered into as of November 14, 1957 as amended by Amendment entered into
as of June 1, 1968, if System II had not been
constructed. For the purpose of this contract, Rocky Reach Downstream
Replacement Power delivered to the Rock Island Project shall be considered to be
positive and Rocky Reach Downstream Replacement Power delivered to the Rocky
Reach Project shall be considered to be negative.
(EE) "Rocky
Reach Encroachment Power" shall mean the electric capacity and energy delivered
to the Rocky Reach Project by the Rock Island Project as compensation for losses
resulting from raising the maximum pool at the Rock Island Project above
elevation (606.9 U.S.C. & G.S. Datum) (608.0 U.S.G.S. Datum) in
accordance with provisions of Section 5A of the Rocky Reach Power Sales
Contracts entered into as of November 14, 1957, as amended by Amendment
entered into as of June 1, 1968.
(FF) "System I"
shall mean:
(1) The
generation and transmission facilities and related equipment, all properties
real, personal and mixed, all other assets of the District's Columbia River-Rock
Island Hydro-Electric System acquired and established pursuant to the District's
Resolution Nos. 1137 and 3443 with proceeds of Columbia
River-Rock
Island
Hydro-Electric System Revenue Bonds, Issue of 1955, First Series and Second
Series, and all additions, betterments and improvements thereto and extensions
thereof except System II; and
(2) The
electric utility properties and assets constituting the District's ▇▇▇▇▇▇
Generating Plant located on the Wenatchee River near ▇▇▇▇▇▇ in Chelan County,
Washington.
(GG) "System I
Bonds" shall mean the Columbia River-Rock Island Hydro-Electric System Revenue
Bonds, Issue of 1955, First Series and Second Series issued pursuant to the
District's Resolution Nos. 1137 and 3443, at any time outstanding, and any
additional bonds or other evidences of indebtedness hereafter issued and
outstanding in accordance with the provisions of Section 11(A)
hereof.
(HH) "System I
Output" shall mean for any period of time the sum of the following:
(1) The
amount of electric energy and reactive power capable of being produced by
System I during such period from the inflow water supply to the Rock Island
Project if System II had not been constructed, adjusted for losses to the
Generator Bus, under operating conditions existing during such period other than
those operating conditions caused by raising the maximum pool elevation from
606.9 U.S.C. & G.S. Datum, after deducting the amount of electric energy
which would have been required for station use and service to Rock Island
supervisors' cottages if System II had not been constructed and until the
Initial Date of Delivery
or
June 1, 1977, whichever is earlier, the amount of Rocky Reach Encroachment
Power delivered during such period;
(2) The
amount of System I Wanapum Encroachment Power during such period;
and
(3) The
amount of Rocky Reach Downstream Replacement Power which would have been
delivered to the Rocky Reach Project and to the Rock Island Project during such
period if System II had not been constructed.
Provided,
however, that until the Initial Date of Delivery or June 1, 1977, whichever
is earlier, System I Output shall be equal to Joint System
Output.
(II) "System I
Peaking Capability" shall mean at any time the sum of the
following:
(1) Maximum
generating capability of System I, which would have existed at such time if
System II had not been constructed, under operating conditions existing at
such time other than those conditions caused by raising the maximum forebay pool
elevation from 606.9 U.S.C. & G.S. Datum, after deducting the
electric capacity which would have been required for station use and Rock Island
supervisors' cottages at such time;
(2) The
amount of System I Wanapum Encroachment Power at such time;
and
(3) The
amount of Rocky Reach Replacement Power that would have been delivered to the
Rocky Reach Project and to the Rock Island Project at such time if
System II had not been constructed.
(JJ) "System I
Pondage" shall mean at any time that portion of total pondage of the Joint
System that would have been available between forebay elevations 602.9 and 606.9
U.S.C. & G.S. Datum and usable by System I if System II had
not been constructed.
(KK) "System I
Wanapum Encroachment Power" for any period shall mean the amount of Joint System
Wanapum Encroachment Power that would have been received by the Rock Island
Project during such period if System II had not been constructed, provided
that the total of such amounts during any calendar week shall not exceed the
amount of Joint System Wanapum Encroachment Power actually delivered to the Rock
Island Project during such week.
(LL) "System II"
shall mean the facilities described in Exhibit A hereto and all additions,
betterments and improvements thereto and extensions thereof.
(MM) "System II
Bonds" shall mean:
(1) Any
outstanding electric revenue bonds issued at one time or from time to time by
the District pursuant to the Bond Resolution for the purpose of providing funds
for the payment of (a) the Cost of Construction as such term is defined in
District Resolution No. 4950 and (b) amounts necessary to provide
System II Reserve Funds; and
(2) Any
outstanding electric revenue bonds or other evidences of indebtedness issued by
the District under the Bond Resolution and in accordance with provisions of
Section 11(B) hereof.
(NN) "System II
Output" for any period of time shall mean the amount of electric energy and
reactive power obtained by subtracting System I Output from the Joint
System Output for such period of time.
(00) "System II
Peaking Capability" shall mean at any time the amount of electric capacity in
kilowatts obtained from subtracting System I Peaking Capability from Joint
System Peaking Capability at such time.
(PP) "System II
Pondage" shall mean the quantity obtained by subtracting System I Pondage
from Joint System Pondage.
(QQ) "System II
Reserve Account" shall mean the account created and established by the District
pursuant to provisions of the Bond Resolution for the purpose of providing a
reserve for debt service.
(RR) "System II
Reserve and Contingency Fund" shall mean the Columbia River-Rock Island
Hydro-Electric System Expansion Reserve and Contingency Fund created and
established by District Resolution No. 4950 as a reserve to be used in
accordance with the provisions thereof.
(SS) "System II
Reserve Funds" shall mean the System II Reserve Account and the
System II Reserve and Contingency Fund.
(TT) "System II
Revenue Account" shall mean the Revenue Account established by District
Resolution No. 4950.
(UU) "System II
Working Capital" shall mean the amount of funds set aside by the District in the
System II Revenue Account as working capital pursuant to provisions of the
Bond Resolution.
(VV) "Uncontrollable
Forces" shall mean any cause reasonably beyond the control of the District
including but not limited to an act of God, fire, flood,
explosion,
strike, sabotage, an act of the public enemy, civil or military authority
including court orders, injunctions, and orders of governments, failure of
equipment, or inability to obtain or ship materials or equipment, which
Uncontrollable Forces, by exercise of due diligence, the District could not
reasonably have been expected to prevent or overcome.
(WW) "Uniform
System of Accounts" shall mean the Uniform System of Accounts prescribed by the
Federal Power Commission for Class A Public Utilities and Licensees in
effect on January 1, 1973.
(XX) "Wenatchee
River Properties" shall mean all property and assets acquired by the District
with funds deposited in the special account provided for in Section 6.2(6)
of District Resolution No. 3443, together with rents, income and receipts
derived therefrom, and the accumulated earnings from investment of funds
deposited in said special account, except the sum of $7,111,000, and the
earnings derived therefrom subsequent to the Initial Date of
Financing.
Section 2. Term of
Contract. This contract shall become effective on the date of
delivery by the District of the first series of System II Bonds to, and
payment therefor by the initial purchasers thereof and shall continue in full
force and effect until 2400 hours Pacific Time on June 7, 2012 or
until the Columbia River-Rock Island Hydro-Electric System Revenue Bonds, Issue
of 1955, First Series, issued by the District pursuant to Resolution
No. 1137 and the Columbia River-Rock Island Hydro-Electric System Revenue
Bonds, Issue of 1955, Second Series issued by the District pursuant to
Resolution No. 3443 are paid or provision is made for retirement thereof in
accordance with said resolutions, whichever is later; provided, however, that
any unpaid or undischarged oblication of either party to the
other
party, arising under the provisions and during the term hereof then due or
accrued at the time of such termination shall continue to be due and payable
until finally paid or discharged notwithstanding the termination
thereof.
Section 3. Construction of
System II. The District will use its best efforts to
finance on a timely basis all of the Cost of Construction as that term is
defined in District Resolution No. 4950 and will diligently proceed with
the construction of System II until it is completed. The
District estimates that the Initial Date of Delivery will be approximately
August 1, 1977 and the Date of Commercial Operation will be approximately
October 1, 1978.
The
District will prepare or cause to be prepared and submit to Puget monthly
reports of progress during the period of construction of System II and
quarterly reports including data as to the date of expected completion of
System II and a comparison of estimated construction time and cost with
estimates made prior to commencing construction and shall promptly advise Puget
of and consult with Puget on any substantial engineering and construction
problems as they arise.
At its
option and expense, Puget may maintain observers at the Rock Island Project who
shall be given full access at reasonable times to the Project and to all plans,
records or other documents under control of the District relating to the
Project.
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Section 4. Joint System Output,
Joint System Peaking Capability and Joint System
Pondage
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(A) System I. The
District shall make available to Puget for any period during each Contract Year,
Puget's System I Share of System I Output and Puget's System I
Share of System I Peaking Capability for such period.
(B) System II. The
District shall make available to Puget for any period during each Contract Year
Puget's System II Share of System II Output and Puget's System II
Share of System II Peaking Capability for such period.
(C) Joint
System Pondage.
(1) During
any period Puget shall be entitled to use a portion of the Joint System Pondage
for regulation of Puget's System I Share of System I Output and
Puget's System II Share of System II Output to meet its hourly load
requirements during such period. The portion of Joint System Pondage
available to Puget shall be equal to the sum of (i) System I Pondage
multiplied by Puget's System I Share and (ii) System II Pondage
multiplied by Puget's System II Share.
(2) During
any period the District shall be entitled to use a portion of the Joint System
Pondage for regulation of the District's System I Share of System I
Output and the District's System II Share of System II Output to meet
its hourly load requirements during such period. The portion of Joint
System Pondage available to the District shall be equal to the sum of
(i) System I Pondage multiplied by the District's System I Share
and (ii) System II Pondage multiplied by the District's System II
Share.
Section 5. Payments
by Puget to the District.
(A) System I. Puget
agrees to pay to the District, in monthly installments, for Puget's
System I Share of System I Output and System I Peaking Capability
made available to Puget pursuant to the provisions of
Section 4(A)
hereof,
annual amounts for each Contract Year equal to the sum of the following items of
cost incurred or paid by the District for such contract year in connection with
System I whether or not the operation of System I is interrupted,
suspended, or interfered with in whole or in part for any cause whatsoever
during the term of this contract or during any portion of said time, to
wit:
(1) That
portion, allocated to System I pursuant to provisions of Section 5(F)
hereof, of Operating Expenses of the Joint System;
(2) That
portion, allocated to System I pursuant to the provisions of
Section 5(G) hereof, of (i) governmental taxes, assessments or other
similar charges, or payments in lieu thereof, lawfully imposed upon the District
due to the District's ownership, operation or sale of power from the Joint
System and (ii) any amounts paid by the District to any governmental agency
for fire protection for the Joint System;
(3) An
amount equal to the amount annually required to pay principal of and interest
on, and premiums, if any, which are required to be paid on System I
Bonds;
(4) The
amount of the bonds issued to the Fiscal Agent of the District pursuant to
District Resolution No. 1138 that mature during such Contract
Year;
(5) An
amount equal to 11.675% of the payments specified in paragraph (3) of this
Section 5(A) to be paid into the System I Reserve and Contingency
Fund;
(6) The
amounts required, if any, for necessary renewals and replacements to
System I which are in excess of monies available in the System I
Reserve and Contingency Fund plus proceeds from any applicable insurance and
plus proceeds from sale of additional bonds or proceeds of other financing or
both as provided in Section 11(A) hereof.
(7) An
amount equal to $31,250 annually for the period ending at 2400 hours
Pacific Time on January 5, 2004;
(8) All
other costs, less credits properly related thereto, not included in the
foregoing paragraphs (1) through (7) of this Section 5(A) associated
with the ownership, operation and maintenance of and renewals and replacements
to System I, including those essential and necessary to effect delivery of
System I Output and System I Peaking Capability to the Points of
Delivery to Puget and the Points of Delivery to the District as herein
specified;
(9) Such
additional amounts, if any, as shall be mutually agreed upon between the
parties.
(B) System II - Period
Prior to Initial Date of Delivery. All System II costs
prior to the Initial Date of Delivery shall be charged to cost of construction
of System II.
(C) System II - Initial
Delivery Period. During the Initial Delivery Period, ▇▇▇▇▇
agrees to pay to the District, in monthly installments, for Puget's
System II Share of System II Output and System II Peaking
Capability
made
available to Puget pursuant to the provisions of Section 4(B) of this
contract, annual amounts for each Contract Year equal to the sum of the
following amounts for such Contract Year applicable to
System II:
(1) That
portion of the amount of Operating Expenses of the Joint System which is in
excess of the amount of Operating Expenses that System I would have
incurred had System II not been constructed.
(2) That
portion, allocated to System II pursuant to provisions of Section 5(G)
hereof, of (i) governmental taxes, assessments or other similar charges or
payments in lieu thereof, lawfully imposed upon the District due to the
District's ownership, operation or sale of power from the Joint System, and
(ii) any amounts paid by the District to any governmental agency for fire
protection for the Joint System;
(3) Such
additional amounts, if any, applicable to System II as shall be mutually
agreed upon between the parties hereto.
(D) System II - Interim
Delivery Period. During the Interim Delivery Period, Puget
agrees to pay to the District in monthly installments, for Puget's
System II Share of System II Output and System II Peaking
Capability made available to Puget pursuant to the provisions of
Section 4(B) of this contract, annual amounts for each Contract Year equal
to the sum of the following amounts for such Contract Year applicable to
System II multiplied by Puget's System II Share:
(1) That
portion of the amount of Operating Expenses of the Joint System which is in
excess of the amount of Operating Expenses that System I would have
incurred had System II not been constructed.
(2) That
portion, allocated to System II pursuant to provisions of Section 5(G)
hereof, of (i) governmental taxes, assessments or other similar charges or
payments in lieu thereof, lawfully imposed upon the District due to the
District's ownership, operation or sale of power from the Joint System and
(ii) any amounts paid by the District to any governmental agency for fire
protection for the Joint System;
(3) The
amount obtained by multiplying the following costs by the lesser of one
(1) or the decimal fraction determined by dividing System II Peaking
Capability of the generating units of System II that are, in the opinion of
the District, ready and available to be scheduled on a continuous operating
basis, by 414,000 kilowatts. For the purpose of this
paragraph (3) the System II Peaking Capability shall be computed on
the assumption that (i) all System I generating units are in full
operation, (ii) inflow is 225,000 cubic feet
per
second, (iii) the Rock Island forebay pool elevation is 613.0 feet
above mean sea level U.S.C. & G.S. Datum, (iv) the Wanapum forebay
pool elevation is 571.5 feet above mean sea level U.S.C.& G.S. Datum,
(v) Rocky Reach releases total 225,000 cubic feet per second and
(vi) the generating units of System II that are available for
operation are operating at 0.95 power factor.
(a) For
each series of System II Bonds issued prior to the date the Construction
Engineer files the report pursuant to the provisions of Section 8.6 of
District Resolution No. 4950, an amount equal to Contract Debt Service for
such series less an amount equal to the product of the amount of System II
Reserve Funds funded from proceeds of such series multiplied by the interest
rate assumed for such System II Reserve Funds in such Contract Debt
Service. The amortization period of such series for such Contract
Debt Service shall be the lesser of 50 years or the number of years from
the date of delivery of and payment for such series to the date which is
55 years after the Date of Initial Financing;
(b) For
each series of System II Bonds issued to finance renewals, replacements and
additions to System II in accordance with paragraph (1) of
Section 11(B) hereof, an amount equal to the Contract Debt Service for such
series less an amount equal to the product of the amount of System II
Reserve Funds funded from proceeds of such series multiplied by the interest
rate assumed for such System II Reserve Funds in such Contract Debt
Service. The amortization period of each series to be used in
computing such Contract Debt Service shall be the number of years equal to the
lesser of 50 years or the estimated service life of the facility which is
acquired or constructed from proceeds of such series;
(c) In
the event any of the series of bonds referred to in the foregoing
subparagraphs (a) and (b) of this paragraph (3) or this
subparagraph (c) are refunded in accordance with paragraph (2) of
Section 11(B) hereof, the annual amounts applicable to each such series of
Refunding Bonds shall be equal to the lesser of the Contract Debt Service
applicable to the bonds being refunded or the Contract Debt Service applicable
to such series, less in each case an amount equal to the product of the amount
of System II Reserve Funds funded from proceeds of such series multiplied
by the interest rate assumed for such System II Reserve Funds in such
Contract Debt Service. The amortization period of such series to be
used in computing such Contract Debt Service shall be the amortization period
for the bond issue being refunded by such series less the number of years
between the date of delivery of and payment for such series of Refunding Bonds
and the later of the date of delivery of and payment for such bonds being
refunded or the date which is five years after the Date of Initial
Financing.
(4) Such
additional amounts, if any, applicable to System II, as shall be mutually
agreed upon between the parties hereto;
(5) From
the aggregate of the foregoing amounts there shall be deducted any credits
applicable to System II not credited to the Construction Fund pursuant to
the provisions of District Resolution No. 4950 or not deducted pursuant to
paragraph (1) of this Section 4(D) by reason of receipt of any
revenues and other income applicable to System II and derived from sources
other than direct sale of power from System II.
(6) For
the purpose of the foregoing paragraph (3) of this Section 4(D) costs
and payments shall be calculated and charged as if they had accrued on a daily
basis.
(E) System II - Commercial
Operating Period. Beginning on the later of the end of the
Initial Delivery Period or the Date of Commercial Operation Puget agrees to pay
to the District in monthly installments for Puget's System II Share of
System II Output and System II Peaking Capability made available to
Puget pursuant to the provisions of Section 4(B) of this contract annual
amounts for each Contract Year equal to the sum of the following amounts for
such Contract Year applicable to System II multiplied by Puget's
System II Share, whether or not operation of System II is interrupted,
suspended or interfered with in while or in part for any cause whatsoever during
such Contract Year.
(1) That
portion allocated to System II pursuant to provisions of Section 5(F)
hereof of Operating Expenses of the Joint System;
(2) That
portion allocated to System II pursuant to provisions of Section 5(G)
hereof, of (i) governmental taxes, assessments or other similar charges or
payments in lieu thereof lawfully imposed upon the District due to the
District's ownership, operation or sale of power from the Joint System and
(ii) any amounts paid by the District to any governmental agency for fire
protection for the Joint System;
(3) For
each series of outstanding System II Bonds issued prior to the date the
Construction Engineer files the report pursuant to the provisions of
Section 8.6 of District Resolution No. 4950 an amount equal to the
Contract Debt Service for such series. The amortization period of
such
series to
be used in computing such Contract Debt Service shall be the lesser of
50 years or the number of years from the date of delivery of and payment
for such series to the date which is 55 years after the Date of Initial
Financing.
(4) For
each series of outstanding System II Bonds issued to finance renewals,
replacements and additions to System II in accordance with provisions of
paragraph (1) of Section 11(B) hereof, an amount equal to Contract
Debt Service for such series. The amortization period of such series
to be used in computing such Contract Debt Service shall be the lesser of
50 years or the estimated service life of the facility which is acquired or
constructed from proceeds of such series.
(5) In
the event any of the series of outstanding bonds referred to in
paragraphs (3) or (4) of this Section 5(E) or this paragraph (5)
are refunded in accordance with paragraphs (2) and (3) of
Section 11(B) hereof, the annual amounts applicable to each such series of
Refunding Bonds shall be equal to the lesser of Contract Debt Service applicable
to the bonds being refunded or Contract Debt Service applicable to such
series. The amortization period of such series to be used in
computing such Contract Debt Service shall be the amortization period for the
bond issue being refunded by such series less the number of years between the
date of delivery of and payment for such series of Refunding Bonds and the later
of the date of delivery of and payment for such bonds being refunded or the date
which is five years after the Date of Initial Financing.
(6) An
amount equal to 10% of the amounts specified in paragraphs (3), (4) and (5)
of this Section 5(E);
(7) Amounts
required, if any, for necessary renewals and replacements which are in excess of
monies available in the System II Reserve and Contingency Fund plus
proceeds from any applicable insurance and plus proceeds from the sale of
additional System II Bonds or proceeds of additional financing or both in
accordance with paragraph (1) of Section 11(B) hereof;
(8) All
other costs, less credits properly related thereto and excluding debt service
costs on System II Bonds, not included in the foregoing
paragraphs (1), (2), (6) and (7) of this Section 5(E) associated with
ownership, operation and maintenance of System II and renewals and
replacements to System II, including those essential and necessary to
effect delivery of System II Output to System II Points of Delivery as
herein specified;
(9) Such
additional amounts, if any, applicable to System II as shall be mutually
agreed upon between the parties hereto; and
(10) From
the aggregate of the foregoing amounts, there shall be deducted any revenue or
income of System II properly creditable to Account Nos. 451, 453, 454,
455 and 456 and 415, 416, 417, 418, 419 and 421 of the Uniform System of
Accounts excluding (i) amounts properly credited to the Construction Fund
pursuant to the provisions of District
Resolution
No. 4950 and (ii) gain on purchase of System II
Bonds.
(F) Allocation of Operating
Expenses. For the purpose of determining the Operating
Expenses of System I and System II to be included in costs pursuant to
paragraph (1) of Section 5(A) and paragraph (1) of
Section 5(E), the following shall apply:
(1) For
the period beginning on the Date of Commercial Operation and ending on the date
of termination of this contract (i) 89% of the Operating Expenses of the
Joint System chargeable to Account Nos. 535, 537, 538 and 539 of the
Uniform System of Accounts shall be charged to System I and 11% shall be
charged to System II, and (ii) all other Operating Expenses of the
Joint System shall be charged to the System for which the expense was
incurred;
(2) It
is the intent of this Section 5(F) that Operating Expenses of the Joint
System chargeable to System I be in the same amount as the Operating
Expenses of System I would have been if System II had not been
constructed. The allocation of charges provided for in this
Section 5(F) shall be reviewed at the request of either party to the other
not more frequently than once each Contract Year, and, adjusted, if necessary,
to conform to this intent. Unless otherwise agreed by the parties to
this contract, no such changes shall be effective for any period more than 6
months prior to the date on which the review request was made.
(G) Allocation of Taxes and
Other Charges. For the purpose of determining costs of
System I and System II pursuant to paragraph (2) of
Sections 5(A),
5(C),
5(D) and 5(E), the portion of governmental taxes, assessments or other similar
charges, or payments in lieu thereof lawfully imposed upon the District due to
the District's ownership, operation or sale of power from the Joint System and
any amounts paid by the District to any governmental agency for fire protection
for the Joint System that is allocated to System II shall be that portion
which will result in the amount of such costs of System I being the same as
it would have been if System II had not been constructed. The
balance of such costs of the Joint System shall be charged to
System I. All such costs properly chargeable to Construction
Costs of System II as defined in District Resolution No. 4950 shall
not be charged to taxes and other charges of the Joint System for the purpose of
computing Puget's annual payments hereunder
(H) Debt
Service Payments.
(1) That
portion of the amounts payable by Puget to the District for each Contract Year
attributable to the amounts specified in paragraph (3) of Section 5(A)
and paragraphs (3), (4) and (5) of Section 5(E) shall be paid in
substantially equal monthly installments on or before the 20th day of each
calendar month prior to billing for such month as advance payments on account of
the bills to be submitted by the District pursuant to Section 10
hereof. That portion of the amounts payable by Puget to the District
attributable to the amounts specified in paragraph (3) of Section 5(D)
shall be paid on or before the 20th day of each calendar month prior to billing
for such month as similar advance payments.
(2) In
the event in any Contract Year that portion of the amounts payable by Puget to
the District for such Contract Year attributable to the amounts specified in
paragraphs (3) and (4) of Section 5(E) hereof ("First Amount") is less
than the product obtained by multiplying Puget's System II Share by the
District's actual payments for principal and interest for System II Bonds
for such Contract Year ("Second Amount") then Puget agrees to pay the District
the difference between the First Amount and the Second Amount.
(3) Notwithstanding
any other provision of this contract, it is not intended that Puget by this
contract assumes any obligation or liability as guarantor, endorser, surety or
otherwise with respect to System I Bonds, System II Bonds or other
securities issued by the District; provided, however, that Puget agrees that it
will not sell, dispose of or otherwise utilize the Joint System Output and Joint
System Peaking Capability in any way that would jeopardize the federal tax
exempt status, pursuant to Internal Revenue Service Tax Ruling T:I:I:2:3 dated
July 7, 1972, of those System II Bonds issued prior to the date that the
Construction Engineer files the report pursuant to the provisions of
Section 8.6 of District Resolution No. 4950, or, that would in any way
jeopardize the federal tax exempt status of any other series of System II
Bonds under federal laws and regulations that are not more restrictive with
respect to the sale, disposition or utilization of Joint System Output and Joint
System Peaking Capability than those existing on July 7, 1972.
(I) Adjustment of Contract Debt
Service. Notwithstanding the provisions of Sections 5(D)
and 5(E), if the proceeds from the issuance of any series of Bonds exceeds the
amounts required for the purposes for which such series was issued, the amount
of such excess shall be used to retire, by purchase or call, Bonds in advance of
maturity and Contract Debt Service and Contract Bonds Outstanding applicable to
such series shall be reduced to reflect such retirement.
In the
event that any Bonds are purchased by the District at a discount either from the
Sinking Fund established in the Bond Resolution or otherwise the amount of
Contract Debt Service and Contract Bonds Outstanding shall be appropriately
reduced to reflect such discount.
(J) Computations for Partial
Contract Years. For the purposes of determining the amounts
described in Section 5(D) and Section 5(E) hereof until the end of the
Contract Year in which the Date of Commercial Operation occurs and for the last
Contract Year hereof such amounts shall be deemed to have accrued on a daily
basis and with respect to the amounts described in Section 5(D) hereof the
applicable proportion thereof shall be determined from time to time as
additional generating units are, in the opinion of the District, ready and
available to be scheduled on a continuous operating basis.
Section 6. Exhibits. Exhibits
A, B, C, D and E are by this reference incorporated herein and made a part of
this contract as fully as though set forth verbatim in the body of this
contract.
Section 7. Withdrawal
of Power by the District.
(A) System I. The
District shall take from System I the District's System I Share of
System I Output and System I Peaking Capability during each Contract
Year.
(B) System II. The
District reserves the right to withdraw from System II during each Contract
Year up to fifty percent (50%) of System II Output and System II
Peaking Capability for the purpose of furnishing the District and the
inhabitants of Chelan County, including public and private corporations, with
electric current for all uses for ultimate utilization therein, and for
supplying electric current for ultimate use in Townships 26 and 27 North, Range
23 E.W.M., ▇▇▇▇▇▇▇ County, Washington, and in the vicinity of ▇▇▇▇▇▇▇ Pass in
King County, Washington and in the vicinity of Colockum Pass in Kittitas County,
Washington and In the Antoine Valley in Okanogan County, Washington; provided,
that (i) the District shall give five years advance written notice of such
withdrawal, (ii) no such notice shall be given which will provide for
withdrawal of System II Output and System II Peaking Capability prior
to the Contract Year commencing July 1, 2000, (iii) the amounts withdrawn
pursuant to the first such notice shall not exceed ten percent (10%) of
System II Output and System II Peaking Capability, (iv) no such
notice shall be given pursuant to which the amounts withdrawn by the District
for any Contract Year will exceed the amounts withdrawn by the District for the
immediately preceding Contract Year by more than ten percent (10%) of
System II Output and System II Peaking Capability, and (v) each
withdrawal by the District of a share of System II Output shall be
accompanied by an equal withdrawal of System II Peaking
Capability.
(C) System II
Surplus. Any portion of System II Output and
System II Peaking Capability withdrawn by the District pursuant to
Section 7(B) which is surplus to the requirements of the District for the
purposes described in Section 7(B), shall first be offered for sale to
Puget at the same cost as Puget would have been required to pay for such portion
of System II Output and System II Peaking Capability if it had not
been withdrawn and if not so purchased by Puget may be disposed of as the
District shall determine, notwithstanding the provisions of Section 7(B)
above.
Section 8. Payments
by District.
(A) System I.
(1) The
District agrees to pay to Puget monthly installments, for System I Output
and System I Peaking Capability made available to the District, annual
amounts for each Contract Year calculated by multiplying the decimal fraction
shown on Column 1 of Exhibit C for each Contract Year by the total of the
following: (i) the total amount of the annual cost of
System I chargeable to Puget in accordance with Section 5(A) hereof
(without reducing such amount for any credit pursuant to the provisions of
Section 9 hereof), (ii) less the amount specified in
paragraph (7) of Section 5(A) and (iii) less the amount of
payment to Puget by the District in accordance with paragraph (3) of this
Section 8(A), whether or not the operation of System I is interrupted,
suspended or interfered with in whole or in part for any cause whatsoever during
the term of this Contract or during any portion of said term.
(2) Puget
shall have no right, interest or claim to the Wenatchee River Properties or to
the rents, income, receipts or proceeds of any sale or disposition
thereof. In the event monies derived from the Wenatchee River
Properties are used to pay any portion of System I costs or are deposited
in or used in connection with any fund maintained for System I, thereby
reducing System I costs, the full benefit thereof shall be reflected in a
reduction in the District's share of System I costs.
(3) The
District also agrees to pay to Puget each Contract Year in monthly installments
an amount equal to the sum of the following amounts for such Contract
Year:
(a) Revenues
or income of System I properly creditable to Accounts 451, 453, 454, 455
and 456, inclusive, or to Accounts 415, 416, 417, 418, 419 and 421, inclusive,
of the Uniform System of Accounts, excluding (i) revenues from investment
of monies in the Bond Fund and in the Reserve and Contingency Fund established
pursuant to District Resolution Nos: 1137 and 3443, (ii) rents, income and
receipts of Wenatchee River Properties and (iii) gain on purchase of
System I Bonds;
(b) Revenues
received by the District from sales of power and energy to serve Rock Island
Project supervisors' cottages;
(c) All
costs and expenses of the Wenatchee River Properties including renewals and
replacements, if any, or such properties; and
(d) Governmental
taxes, assessments or other similar charges or payments in lieu thereof lawfully
imposed upon the District due to District's ownership or operation of the
Wenatchee River Properties and any amounts paid by the District to any
governmental agency for fire protection for the Wenatchee River
Properties.
(4) Should
the District from time to time require, from one or more of the District's
Points of Delivery connected to that portion of the Joint System's 115-kV
transmission facilities extending from the District's ▇▇▇▇▇▇▇▇ switching station
to ▇▇▇▇▇▇▇ Pass Summit, delivery of Squilchuck Power in excess of 20,000
kilowatts of coincidental clock-hour integrated demand, the District
shall:
(a) Pay
to Puget from funds other than funds of the Joint System the amount of any
increased cost to Puget relating to transmission of power and energy from the
Joint System caused by the District's taking in excess of said 20,000
kilowatts;
(b) Give
Puget not less than eighteen (18) months prior written notice of the
District's intention to take in excess of said 20,000 kilowatts;
and
(c) Consult
with Puget in advance on any changes in transmission system operating
arrangements that may be thereby required in order to minimize the effect on
Puget's system of the District's taking of such excess power and
energy.
(5) For
use by the District of each Added Facility, the District also agrees to pay to
Puget in monthly installments annual amounts for each Contract Year equal to the
product of the following:
(a) The
amount of the District's Other Power at the time of the District's Electric
System peak, divided by the total of (i) the amount of the District's
Squilchuck Power and (ii) the amount of the District's Other Power;
and
(b) An
amount determined by multiplying the total investment of System I in each
Added Facility by 0.085.
(6) The
District covenants and agrees that it will establish, maintain and collect rates
or charges for power and energy taken by the District from System I and
sold or delivered to customers of the District other than Puget, including other
systems of the District, which shall be adequate to provide revenues sufficient
to enable the District to pay all amounts payable by the District to Puget as
provided in this Section 8(A) and any other obligations payable from said
revenues as the same severally become due and payable, and that all such
revenues will be segregated, deposited and held separate and apart from all
other revenues of the District arising out of the ownership of electric public
utility properties other than System I and used only for System I
purposes.
(B) System II. The
District agrees to pay into the Revenue Fund to the credit of the System II
Revenue Account in monthly installments, annual amounts equal to all of the
District's annual costs associated with ownership,
operation
and maintenance of, and renewals and replacements to System II, including
those essential and necessary to effect delivery of System II Output and
System II Peaking Capability to the System II Points of Delivery as
herein specified, not required to be paid by Puget under the provisions of
Section 5 of this contract, including in such annual cost an amount to be
paid into the System II Reserve and Contingency Fund equal to payments
required to be made by Puget in accordance with provisions of
paragraphs (6) and (7) of Section 5(E) hereof multiplied by the
decimal fraction determined by dividing the District's System II Share by
Puget's System II Share, whether or not operation of System II is
interrupted, suspended or interferred with in whole or in part for any cause
whatsoever during such Contract Year.
Section 9. Advance Payment for
Power. The amount of advance payment by ▇▇▇▇▇ for purchase of
power credited to Puget on the District's books as of the effective date of this
contract in accordance with Section 8 of the Power Contract dated
June 8, 1962 between the District and Puget, will be carried forward on
said books. The District agrees to credit against the amount annually
payable by ▇▇▇▇▇ as provided in Section 5(A) hereof an amount annually
equal to $31,250 computed and credited monthly until 2400 hours Pacific
Time January 5, 2004, or until such time as the credit for advance payment
for power has been reduced to zero.
Section 10. Billings. Billing
for sums due the District from Puget in accordance with provisions of this
contract shall be rendered monthly by the District upon an estimated basis for
the preceding month and shall be paid by
Puget at
the office of the District in Wenatchee, Washington within twelve (12) days
after the date of the bill. For practical purposes, but without
changing any obligations of the parties hereto under this contract, the District
will render net bills to Puget in order to facilitate settlement under Sections
5 and 8 of this contract, and amounts due Puget from the District in accordance
with the provisions of this contract shall be computed monthly upon an estimated
basis for the preceding month and shall be offset against amounts due to the
District from Puget.
Each
party shall submit to the other party such supporting data with regard to all
bills under this contract as are reasonably necessary to enable the auditor or
financial officer of such other party to effect proper accounting
thereof.
A final
accounting of all transactions in each calendar year shall be rendered to Puget
by the District, and to the District by ▇▇▇▇▇, on or before May 15 of the
succeeding year. Any balance due by either party to the other shall
be paid within thirty (30) days from said May 15.
If
payment of any bill rendered by either party to the other is not made in full on
or before the close of business on the thirtieth (30th) day after the date of
the bill, or if payment of any sum due in advance of billing is not paid when
due as provided in this contract, a delayed-payment charge of two percent (2%),
which shall be in addition to interest automatically accruing at the rate of six
percent (6%) per annum of the unpaid amount of the bill, will be made (except
that in case of a bona fide dispute as to the correct amount of the bill, the
delayed-payment charge shall be applicable only to the portion
thereof
admittedly
due and not paid), provided, however, that such late payment charge shall not be
assessed unless payment is not received on the first banking day following the
date the District has notified Puget by telephone that payment when due has not
been received.
Whenever
a bill by either party to the other remains unpaid subsequent to the sixtieth
(60th) day after the date of the bill (except as to such portion thereof which
may in good faith be disputed), or whenever any amounts payable in advance of
billing shall remain unpaid subsequent to the sixtieth (60th) day after such
amount is due and payable as provided in this contract, the party to whom such
bill or amount is payable may, thereafter upon giving thirty (30) days
advance notice in writing, discontinue service to the other party until such
▇▇▇▇ is paid.
No such
discontinuance of service shall affect either party's liability for any amounts
accrued prior thereto, nor be deemed to waive any right to
damages. If at any time service is discontinued to Puget as provided
in this Section 10, ▇▇▇▇▇ agrees that it will nevertheless continue to make
the payments required to be paid by it to the District as though service had not
been discontinued. In any suit or action by either party against the
other, for breach of this contract or for recovery of any sums payable to the
other party under this contract, the prevailing party shall be entitled to
recover reasonable attorney's fees to be fixed by the Court.
Remittances
received by mail will be accepted without assessment of the two percent (2%)
delayed-payment charge or interest, provided the postmark indicates payment was
mailed on or before the thirtieth (30th) day after
the date
of the bill or the due date of sums payable in advance of billing. If
the thirtieth (30th) day after the date of the bill or the due date of sums
payable in advance of billing is a Sunday or a Holiday, the next following
business day shall be the last day on which payment can be made without addition
of interest and the delayed-payment charge.
If a bill
from the District to Puget remains unpaid subsequent to the 150th day after the
date of the bill (except as to such portion which may in good faith be
disputed), or whenever any amounts payable in advance of billing remain unpaid
subsequent to the 150th day after such amount is due and payable as provided in
this contract the District may, upon giving 30 days advance notice in writing,
terminate this contract and ▇▇▇▇▇'s rights hereunder unless Puget pays the bill
or amounts payable in advance specified in such notice within said 30-day
period.
If Puget
fails to perform any of its obligations under this contract other than its
obligations to make payments when due, the District may, upon giving 30 days
advance notice in writing of such default, terminate this contract and Puget's
rights hereunder unless Puget corrects such default within the 30-day period, or
if the default is such that is cannot be corrected within 30 days, corrects such
default within a reasonable period of time.
For the
purpose of this Section 10, the "date of the bill" shall mean the date the
bill was mailed, or if delivered by any other method, the date actually
delivered.
Section 11. Issuance
of Additional Bonds.
(A) System I.
(1) The
District agrees that should the cost to the District in connection with any
major loss or damage or major renewals of or replacements to System I or
any major additions, improvements and betterments or modifications required by
any governmental agency having jurisdiction to System I be in excess of
monies then in System I Reserve and Contingency Fund plus proceeds of
insurance policies, if any, covering such loss or damage, the District will,
unless an alternative method of financing is mutually agreed upon, issue and
sell additional bonds payable from the revenues of System I to pay that
portion of such costs, including necessary reserves, which exceed the sum of
(a) proceeds, if any, of insurance policies and (b) monies then in the
System I Reserve and Contingency Fund, provided that the District can then
legally issue such bonds and that such bonds can be marketed. If it
is necessary to issue and sell additional bonds under the above described
circumstances, the District shall take all reasonable steps to establish the
legality of and to sell such bonds payable from the revenues of System I
and on a parity with System II Bonds. The District shall fix the
maturities of such bonds in such amounts and at such times that will result in
total annual payments for interest and principal being approximately equal
during the amortization period of the bonds. For the purpose of this
Section 11(A), monies in System I Reserve and Contingency Fund shall
not include amounts transferable from the Reserve Account in the System I
Bond
Fund. As
used in this Section 11(A) and in Section 11(B) hereof the term "bond"
or "bonds" shall mean bonds or other evidences of indebtedness or
both.
(2) Puget
agrees that the District shall have the right in the future to refund
System I Bonds in order to effect cost savings and other policy objectives
of the District, and agrees that it will negotiate in good faith necessary
modifications to this contract in order to accomplish such refunding; provided
that the refunding does not (i) result in an increase in the net annual
payments required to be made by Puget under this contract, or (ii) result
in an increase in the cost of power and energy to Puget from System I or
(iii) prejudice ▇▇▇▇▇'s right and interests with respect to the
System I Revenue Fund, Bond Fund and Reserve and Contingency Fund as
established pursuant to Resolution Nos. 1137 and 3443.
(B) System II.
(1) The
District agrees that should the cost to the District in connection with any
major loss or damage or major renewals of or replacements to System II or
any major additions, improvements and betterments or modifications required by
order of any governmental agency having jurisdiction to System II be in
excess of monies then in System II Reserve and Contingency Fund plus the
proceeds from insurance policies, if any, covering such loss or damage, the
District will, unless an alternative method of financing is mutually agreed
upon, issue additional bonds, payable from the revenues of System II on a
parity with
the
System II Bonds, to pay that portion of such costs, including necessary
reserves, which exceed the proceeds, if any, of insurance policies, provided
that the District can then legally issue such bonds and that such bonds can be
marketed. The District shall take all reasonable steps to establish
the legality of and to sell such bonds.
(2) The
District agrees that it will use its best efforts to issue and sell during the
term of this contract one or more series of Refunding Bonds to refund or Advance
Refund in whole or in part any one or more series of System II Bonds in
order to obtain the optimum amounts of reductions in Contract Debt Service and
in cost to the District and Puget for System II Output and System II
Peaking Capability to the extent feasible and practicable.
If the
District shall Advance Refund in whole or in part any series of System II
Bonds, the District shall prepare a table similar to the table of Contract Bonds
Outstanding applicable to the Advance Refunding Bonds but based on the
assumption that the District would not Advance Refund such Bonds but would
refund them on the first call date of such series at the same interest rate and
costs of refunding as the interest rate and costs of refunding applicable to the
Advance Refunding Bonds. Puget's payments under Section 5(B)
hereof during the Contract Year beginning July 1, 2000 and each Contract
Year thereafter during the remainder of
the term
of this Contract shall be increased by an amount equal to the amount required to
pay interest and principal on an amount of bonds equal to the difference between
the computed amount of bonds that would be outstanding on June 30, 2012 as
shown in such table and Contract Bonds Outstanding on June 30, 2012 for
such series. Such increased amount shall be computed based on the
following assumptions:
(a) The
interest rate on the bonds shall be the average interest rate of the Advance
Refunding Bonds.
(b) The
bonds shall be retired over a 12-year period.
(c) The
sum of interest and principal payments for each year during such 12-year period
shall be approximately equal.
For the
purpose of this paragraph (2) the term Advance Refund shall mean the
proceedings adopted and action taken to refund in whole or in part any one or
more series of System II Bonds in advance of the first call date of such
System II Bonds by defeasing such System II Bonds at the time of such
advance refunding through the issuance of Refunding Bonds. The
Refunding Bonds so issued are referred to in this paragraph (2) and
paragraph (3) as Advance Refunding Bonds.
If the
District shall refund or Advance Refund less than the whole amount of any series
of System II Bonds, an appropriate adjustment shall be made in the amount
of Contract Debt Service and Contract Bonds Outstanding applicable to the series
of Bonds being partially refunded to reflect the effect of such
refunding.
(3) Notwithstanding
the other provisions of this Section 11(B) the District reserves the right
to issue Refunding Bonds other than Advance Refunding Bonds to refund in whole
any one or more of the series of System II Bonds at any time prior to
maturity thereof, provided that such refunding shall not result in (i) an
increase in any Contract Year in the net annual payments required to be made by
Puget under this contract, or (ii) an increase in the cost of power and
energy to Puget from System II. For the purposes of computing
Contract Debt Service on each series of such Refunding Bonds, the amount of
Bonds in such series shall not exceed the amount of Contract Bonds Outstanding
applicable to each series of Bonds being refunded, plus the costs of such
refunding, including in such costs the discount, if any, and deducting from such
costs the premium, if any, on the Refunding Bonds.
(C) General. The
District, in issuing Refunding Bonds shall act prudently and shall use its best
efforts to issue such bonds at the lowest practicable costs consistent with the
District's policy objectives sought to be achieved by such
refunding.
Section 12. Establishment
and Use of Funds.
(A) System I.
(1) The
District agrees that it will maintain during the term of this contract the
Revenue Fund created and established by District Resolution No. 1137 and
the provisions of said Resolution 1137 applicable to the Revenue Fund are
incorporated herein by reference. The District further agrees that it
will pay into the Revenue Fund as promptly as practicable after receipt thereof,
all income, revenues, receipts and profits derived by the District through the
ownership and operation of the Joint System, including all amounts received from
Puget and the District pursuant to the provisions of Sections 5 and 8 hereof,
and all other monies required to be deposited in the Revenue Fund pursuant to
District Resolution No. 1137 and the Bond Resolution, other than the
amounts expressly required or permitted by District Resolution Nos. 1137
and 3443 and the Bond Resolution to be deposited in any other fund.
(2) The
District agrees that it will maintain the System I Bond Fund created and
established by Resolution No. 1137, so long as the System I Bonds are
outstanding and unpaid, and that it will transfer monthly from the Revenue Fund
to said Fund the amounts received from Puget pursuant to the provisions of
paragraph (3) of Section 5(A) hereof.
(3) The
District agrees that it will maintain during the term of this contract the
System I Reserve and Contingency Fund created and established by Resolution
No. 1137, into which will be transferred from the proceeds of the issuance
of the first series of System II Bonds an
amount
sufficient as of the Date of Initial Financing to increase said Fund to
$2,928,735. The District agrees that it will transfer monthly from
the Revenue Fund to the System I Reserve and Contingency Fund the amounts
received from Puget pursuant to the provisions of paragraphs (5) and (6) of
Section 5(A) hereof. Monies in the System I Reserve and
Contingency Fund may be used solely for the purposes of:
(a) Making
up any deficiency which may occur in the Bond Fund of
System I;
(b) Paying
the cost of renewals to and replacements of System I;
(c) Paying
extraordinary operation and maintenance costs of System I;
(d) Paying
the cost of extensions of and betterments to the System to the extent of not
more than $25,000 in any calendar year, except for the acquisition and
construction of extensions of and betterments to System I as provided for
in Sections 23 and 24(B) of this contract, without the mutual agreement of
the parties, and to any extent with such agreement, and
(e) Paying
the cost of renewals to, replacements of, extensions of and betterments to
System II to the extent that proceeds from sale of System II surplus
property or salvage are deposited in the System I Reserve and Contingency
Fund.
Whenever
the value of cash and investments in the System I Reserve and Contingency
Fund exceeds 3.998% of the total amount of System I Bonds, the amount of
such excess shall be withdrawn at least annually for the purchase or redemption
of System I Bonds, so long as any System I Bonds are outstanding and
unpaid.
The
District agrees that it will not expend monies in the System I Reserve and
Contingency Fund for extensions of or betterments to System I which are not
reasonably necessary to the conduct of the business of such System, or which are
uneconomical.
Monies in
the System I Reserve and Contingency Fund shall be invested and reinvested
by the District to the fullest extent practicable. All monies earned
as a result of any such investment or reinvestment shall accrue to and be
deposited in such Fund.
(4) The
District agrees that it will maintain during the term of this Contract the
Wenatchee River Development Fund, created and established in accordance with the
provisions of Section 6.2(6) of Resolution No. 3443, and two accounts
within such fund as follows:
(a) A
Rock Island Expansion Account into which will be transferred $7,111,000 as of
the Date of Initial Financing. Said monies shall be set aside and paid from time
to time as may be necessary to the System II Construction Fund Trustee for
deposit to the System II Construction Fund. Prior to the payment
of said sum to said Trustee it shall be invested by the District and the
earnings from the investments thereof shall be retained in said
Account.
From said
investment earnings there shall be paid into the Revenue Fund as a credit to
System I costs the amount of said earnings to the extent of $17,666.67 per
month, plus all Operating Expenses in connection with the ▇▇▇▇▇▇ property (dam,
headworks, irrigation canals and flumes). The transfers to the
Construction Fund Trustee of the principal balance in said Account together with
investment earnings shall be scheduled in a manner consistent with the cash flow
requirements of construction of System II and shall be completed on the
later of the date which is five years after Date of Initial Financing or the
Date of Commercial Operation. In scheduling such transfers the
District shall use its best efforts to maximize the amount of investment
earnings in order to avoid, to the extent possible, any increase in costs to the
District and Puget associated with System I prior to the Date of Commercial
Operation of System II.
(b) A
Wenatchee River Properties Account into which will be transferred the Wenatchee
River Properties and all rent, income and receipts or proceeds of any sale or
other disposition of the Wentachee River Properties. Earnings from
the investment of such monies may at the option of the District be retained in
said Account and used for the purposes for which other monies in said Account
may be used or may be paid into the Revenue Fund as directed by the
District. Puget shall have no right, interest or
claim to
any monies in said Account or to earnings from investments of money therein or
to any additions, improvements, facilities, properties or other assets acquired
with monies from said Account. Notwithstanding the provisions of
Sections 5 and 8 hereof any monies transferred from this Account into the
Revenue Fund shall not be considered as credits, operating revenues or income of
System I but may be used by the District to offset payments to Puget
pursuant to the provisions of Section 8(A) hereof.
(5) Such
other special funds and accounts of System I as may be required pursuant to
provisions of System I Bond Resolution.
(B) System II.
(1) The
District agrees that it will create and maintain during the term of this
contract a separate account within the Revenue Fund to be known as the
System II Revenue Account. All income, revenues, receipts and
profits derived by the District through the ownership and operation of
System II shall be credited to such Account. All costs to the
District of the ownership and operation of System II shall be charged to
said Account. Said account shall be established in the initial amount
of $750,000 from the proceeds of the sale of System II Bonds to be used as
Working Capital.
After
making all payments required to be made from the Revenue Fund pursuant to the
provisions of the Bond Resolution, there may be transferred to the District from
the Revenue Fund each Contract Year after the Date of Commercial Operation the
amount, if any, by
which
that portion of the amounts payable by Puget to the District for such Contract
year attributable to the amounts specified in paragraphs (3), (4) and (5) of
Section 5(E) hereof, exceed the sum of (i) payments made by the
District for interest, principal and premium, if any, of Sys-II Bonds for such
year and (ii) investment earnings on the Principal Account, Interest
Account and Bond Retirement Account and any other account established for the
purpose of retirement of System II Bonds by the Bond Resolution to the
extent that such earnings reduce the payments in the foregoing clause
(i) which would have been made by the District if there were no such
earnings.
For
purposes of this Section 12(B), principal payments shall be deemed to
include payments into any account established pursuant to the provisions of the
Bond Resolution authorizing System II Bonds for the purpose of retiring
System II Bonds.
The
District shall fix maturities and sinking fund requirements for System II
Bonds in such amounts and at such times that the product obtained by multiplying
the District's payments for principal and interest on all System II Bonds
by Puget's System II Share shall not for any Contract Year exceed that
portion of the amounts payable by Puget to the District for such Contract Year
attributable to the amounts specified in paragraphs (3), (4) and (5) of
Section 5(E) hereof. In the event Puget makes any payment
pursuant to the provisions of Section 5(H)(2) hereof then the District
shall concurrently reimburse Puget from other revenues of the District for the
amount of any such payments.
(2) The
District agrees that it will create and maintain during the term of this
contract, System II Bond Funds pursuant to the provisions of the Bond
Resolution, said Funds to be used solely for the purpose of paying the principal
of, premium, if any, and interest on the System II Bonds and additional
bonds issued on a parity therewith, and of retiring the System II Bonds and
additional bonds issued on a parity therewith, prior to maturity. The
District will transfer monthly from the Revenue Fund to said Funds the amounts
required by the Bond Resolution.
(3) The
District agrees that it will create and maintain during the term of this
contract an Expansion Reserve and Contingency Fund (herein referred to as the
System II Reserve and Contingency Fund) as a reserve to be used as provided
in Section 6.4 of District Resolution No. 4950, provided, however,
that except as otherwise specifically provided in this contract payment for the
costs of extensions of and betterments to System II in excess of a
cumulative amount of $25,000 in any calendar year shall be made only with the
consent of Puget; and, provided further, that any amount of the System II
Reserve and Contingency Fund monies deposited in the System I Reserve
Account, as that account is defined in Resolution Nos. 1137 and 3443, shall
be reimbursed to the System II Reserve and Contingency Fund from the first
revenues available for such purposes from System I.
Monies in
the System II Reserve and Contingency Fund shall be invested and reinvested
by the District to the fullest extent practicable
in
accordance with the provisions of District Resolution
No. 4950. All monies earned as a result of any such investment
or reinvestment prior to the Date of Commercial Operation shall accrue to and be
deposited in the Construction Fund established by the District in Resolution
No. 4950. After the Date of Commercial Operation, all monies
earned as a result of any such investment or reinvestment shall accrue to and be
deposited in the Revenue Fund.
The
District agrees that it will not expend monies in the System II Reserve and
Contingency Fund for extensions of or betterments to System II which are
not reasonably necessary to the conduct of the business of such System or which
are uneconomical.
The
System II Reserve and Contingency Fund shall be established in the initial
amount of $3,000,000 from proceeds of issuance of System II Bonds and,
subject to the provisions of Section 6.4 of District Resolution
No. 4950, shall be maintained at said amount until the Date of Commercial
Operation. If the amount in said Fund is less than $3,000,000 on the
Date of Commercial Operation, the District will transfer into said Fund, from
the proceeds of the issuance of the first series of System II Bonds issued
after the Date of Commercial Operation an amount equal to the difference between
$3,000,000 and the amount actually in said Fund on the Date of Commercial
Operation. In addition to payments required to be made into such Fund
by the District in accordance with provisions of Section 8(B) hereof, all
payments by Puget pursuant to provisions of paragraph (6) of
Section 5(E) hereof shall be
deposited
in such Fund. An amount equal to the excess in such Fund, at the end
of any month after taking into account commitments or obligations of the
District chargeable against such fund and which are expected to become due and
payable within 90 days after the end of such month, over $3,000,000
multiplied by Puget's System II Share for such month shall be credited
against payments to be made by Puget pursuant to the provisions of
Section 5(E) during the following month and the balance of such excess
shall be credited to the District against payments to be made by the District
pursuant to provisions of Section 8(B) during the following
month.
(4) Such
other special funds and accounts of System II as may be required pursuant
to the provisions of System II Bond Resolution.
(5) The
District will carry out the provisions of the following sections of District
Resolution No. 4950 authorizing the issuance and sale of the first series
of System II Bonds, and such sections are attached hereto as Exhibit
E.
Section 6.6 Construction
Fund
Section 6.7 Investment
of Monies in Construction Fund
Section 6.8 Cost
of Construction
Section 6.10 Distribution
of Monies in Construction Fund
Section 6.11 Monies
in Construction Fund pending application thereof.
(C) Investment. The
District agrees that, to the extent authorized by the Bond Resolution and all
applicable laws, rules and regulations of governmental authorities, it will use
its best efforts to invest and keep invested available funds of System I
and System II to maximize interest earnings therefrom consistent with
prudent investment practice and System I and System II
needs.
Section 13. Books of Account and
Auditing. The District shall cause proper books of account to
be kept for the District showing as a separate utility system the accounts of
the Joint System segregated to show separately the accounts of System I and
System II in accordance with the rules and regulations prescribed by any
governmental agency authorized to prescribe such rules, including the Division
of Municipal Corporations of the State Auditor's Office of the State of
Washington, or other State department or agency succeeding to such duties of the
State Auditor's Office, and in accordance with the Uniform System of Accounts
prescribed by the Federal Power Commission or other Federal agency having
jurisdiction over electric public utility companies owning and operating
properties similar to the electric properties operated by the District, whether
or not the District is required by law to use such system of accounts, and such
accounting records shall be available for inspection and utilization by the duly
authorized representatives of Puget at all reasonable times. The
District shall supply monthly to Puget such reports of the operation and
maintenance of the Joint System and of System I and System II as Puget
may from time to time reasonably request. The District shall cause
such books of account to be audited
by
independent certified public accountants, experienced in electric utility
accounting and of national reputation, to be employed by the
District. The audits to be made by such independent certified public
accountants, shall be made annually and shall cover each calendar year during
the term of this contract shall be completed within one hundred twenty
(120) days following the end of each such calendar year. A copy
of each such annual audit, including any recommendations of the accountants with
respect thereto, shall be made available by the District to Puget.
Section 14. Reactive
Power. The parties recognize that voltage levels of the
District's power system and other interconnected systems are affected by the
amounts of reactive power supplied from the Joint System as well as from other
sources. The District will operate the Joint System to provide
reactive power necessary together with other reactive power made available to
maintain proper voltage levels at the Points of Delivery. If it is
determined by the parties hereto that the reactive power requirements of the
loads of either the District or Puget are resulting in a reduction in
kilowatt-hour output of the Joint System, the party responsible for such
reactive power requirements shall at its own expense limit such reactive power
requirements to a point that such kilowatt-hour output shall not be thereby
reduced.
Section 15. Operation,
Maintenance, Engineering and Planning.
(A) Operation. The
parties hereto agree to cooperate on matters relating to operation, maintenance
and repair of the Joint System. It is the intent of the parties
hereto that the Joint System shall be operated to assure optimum availability of
usable Joint System Output coordinated to the load requirements of Puget and the
District and that capacity and energy made available hereunder to Puget and the
District shall be fully coordinated with other resources available to the
parties and with the Northwest Power Pool; provided, however, operation of the
Joint System shall be subject to provisions of the Federal Power Commission
License No. 943-Washington as now or hereafter amended or reissued and that
certain agreement between the Great Northern Railway and the Washington Electric
Company dated April 15, 1931 as now or hereafter amended.
(B) Maintenance. The
District will use its best efforts to operate and maintain the Joint
System In good operating condition at all times in an efficient, economical
and workmanlike manner and consistent with good business and operating practices
followed by other electric utilities in the Pacific Northwest, and will make
renewals and replacements thereof as needed. Maintenance, repairs,
renewals and replacements shall be scheduled and performed by the District with
the intent of obtaining the optimum operation of the Joint System as required to
meet the respective requirements of the parties hereto. The District,
in order to prevent injury to persons or to avoid damage to property or
equipment may in an emergency without consultation with Puget temporarily
interrupt or reduce deliveries of electric energy hereunder but only for as long
as such
emergency
shall exist. In the event of any failure of or damage whatsoever to
facilities of the Joint System, or any reduction in the delivery of power and
energy therefrom from causes other than water conditions, the District agrees
that it will, with due diligence, expedite repair or replacement of said
facilities or remedy the condition causing such reduction to the end that
delivery of power and energy will be re-established as soon as reasonably
possible.
(C) Engineering and
Planning. The District shall advise and consult with Puget
from time to time on matters relating to engineering studies, planing, operation
of the Joint System and maintenance and repair thereof. Such matters
shall include engineering studies as required to maintain or increase usable
power and energy, exchange of operating information and data, cooperation with
respect to unresolved problems, contractual arrangements with other utilities
for storage and wheeling requirements, system operating studies and other
related problems.
(D) Inspection, Books and
Records. Authorized representatives of Puget shall at all reasonable
times have access to the Joint System for the purpose of inspection, and all
books and records pertaining to operation and maintenance of the Joint System
shall be made available to Puget by the District at all reasonable
times.
Section 16. Character of
Service. Power and energy made available hereunder shall be in
the form of three-phase current alternating at a frequency of approximately
sixty (60) Hertz and deliveries thereof shall be at Points
of
Delivery to Puget and the District and at delivery voltages hereinafter
specified.
Section 17. Points
of Delivery.
(A) System I. The
District will use the facilities of System I and System II as such
facilities may from time to time exist to deliver System I Output and
System I Peaking Capability to the System I Points of Delivery
hereinafter specified:
(1) To
Puget: The System I Output and System I Peaking Capability
made available to Puget pursuant to the provisions of Section 4(A) hereof,
less transmission and transformation losses between the Generator Bus and Points
of Delivery determined in accordance with the provisions of Section 21
hereof, shall be delivered at the following System I Points of Delivery and
at the voltages specified:
(a) Summit
Point of Delivery:
Location - At the
point of connection with Puget on the 115-kV transmission facilities of
System I.
Delivery Voltage -
Approximately 115 kV.
(b) Rocky
Reach Points of Delivery:
Location - At the
point or points of connection between the 230-kV bus at the District's Rocky
Reach 230-kV switchyard and transmission facilities which are or may be
available to Puget.
Delivery Voltage -
Approximately 230 kV.
(c) ▇▇▇▇▇▇▇▇
Point of Delivery:
Location - At the
point of connection between the 115-kV bus at the District's ▇▇▇▇▇▇▇▇ Switching
Station and facilities which are or may be available to Puget.
Delivery Voltage -
Approximately 115 kV.
(d) Chelan
Interconnection Point of Delivery:
Location - At the
point of connection between System I Rocky Reach-Chelan 115-kV transmission
line and the District's Lake Chelan Hydro -Electric System.
Delivery Voltage -
Approximately 115 kV.
(e) Valhalla
Points of Delivery:
Location - At the
points of connection between the faciliites of System I and Bonneville's
Valhalla Substation and the facilities of System II and Bonneville's
Vahalla Substation.
Delivery Voltage -
Approximtely 115 kV.
(f) Other
Points of Delivery:
At such
other Points of Delivery and at such Delivery Voltages as the parties hereto may
mutually agree upon from time to time.
(2) To
the District: System I Output and System I Peaking Capability taken by
the District pursuant to the provisions of Section 7(A) hereof, less
transmission and transformation losses between the Generator
Bus and
Points of Delivery, shall be delivered at the following Points of Delivery and
at delivery voltages specified:
(a) Wenatchee-North
Wenatchee Points of Delivery:
Locations - At the
low voltage side of the Wenatchee and North Wenatchee substations of
System I.
Delivery Voltage -
Approximately 34.5 kV.
(b) ▇▇▇▇▇▇
Point of Delivery:
Location - At the
point of connection between the facilities of the District's Electric System and
the facilities of System I in the vicinity of the Town of
▇▇▇▇▇▇.
Delivery Voltage -
Approximately 115 kV.
(c) Summit
Point of Delivery:
Location - At the
point of connection between the facilities of the District's Electric System and
the facilities of System I at the ▇▇▇▇▇▇▇ Pass Summit.
Delivery Voltage -
Approximately 115 kV.
(d) Berne
Point of Delivery:
Location - At the
point of connection between facilities of the District's Electric System and
facilities of System I at the District's Berne Substation.
Delivery Voltage -
Approximately 115 kV.
(e) ▇▇▇▇▇▇▇▇
Points of Delivery:
Location - At the
points of connection between the 115-kV bus at the District's ▇▇▇▇▇▇▇▇ Switching
Station and facilities which are or may be available to the
District.
Delivery Voltage -
Approximately 115 kV.
(f) Valhalla
Point of Delivery:
Location - At the
point of connection between facilities
of
System II and Bonneville's Valhalla Substation.
Delivery Voltage -
Approximately 115 kV.
(g) Squilchuck
Point of Delivery:
Location - At the low
voltage side of the Squilchuck Substation of System I.
Delivery Voltage -
Approximately 12.5 kV.
(h) Coles
Corner Point of Delivery:
Location - At the
point of connection between facilities of the District's Electric System and
System I at the District's Coles Corner Substation.
Delivery Voltage -
Approximately 115 kV.
(i) College
Point of Delivery:
Location - At the
point of connection between facilities of the District's Electric System and the
facilities of System I in the vicinity of the District's College
Substation.
Delivery Voltage -
Approximately 115 kV.
(j) Leavenworth
Point of Delivery:
Location - At the
point of connection between facilities of the District's Electric System and the
facilities of System I in the vicinity of the Town of
Leavenworth.
Delivery Voltage -
Approximately 115 kV.
(k) Other
Rock Island-North Wenatchee Points of Delivery:
Location - At such
other points on the 115-kV transmission lines of System I between the
District's ▇▇▇▇▇▇▇▇ Switching Station and the North Wenatchee Substation as the
District directs.
Delivery Voltage - As
the District determines.
(l) Other
Points of Delivery:
Location - At such
other points on the 115-kV transmission lines of System I as the District
directs between the District's ▇▇▇▇▇▇▇▇ Switching Station and the ▇▇▇▇▇▇▇ Pass
Summit and between the ▇▇▇▇▇▇▇▇ Switching Station and the point of
interconnection between the Rock Island-Rock Reach-Chelan transmission line and
the District's Lake Chelan Hydro-Electric System.
Delivery Voltage - As
the District determines.
(B) System II. The
District will use the facilities of System I and System II as such
facilities may from time to time exist to deliver System II Output and
System II Peaking Capability to the System II Points of Delivery
hereinafter specified:
(1) To
Puget: The System II Output and System II Peaking
Capability made available to Puget pursuant to the provisions of
Section 4(b) hereof, less transmission and transformation losses between
the Generator Bus and System II Points of Delivery determined in accordance
with provisions of Section 21 hereof, shall be delivered at the following
System II Points of Delivery and delivery voltages:
(a) ▇▇▇▇▇▇▇▇
Point of Delivery:
Location - At the
point of connection between the 115-kV bus at the District's ▇▇▇▇▇▇▇▇ Switching
Station and facilities which are or may be available to Puget.
Delivery Voltage -
Approximately 115 kV.
(b) Valhalla
Points of Delivery:
Location - At the
points of connection between facilities of System I and Bonneville's
Valhalla Substation and the facilities of System II and Bonneville's
Valhalla Substation.
Delivery Voltage -
Approximately 115 kV.
(c) Other
Points of Delivery:
At such
other Points of Delivery and at such Delivery Voltages as the parties hereto may
mutually agree upon from time to time.
(2) To
the District: System II Output and System II Peaking
Capability made available to the District pursuant to the provisions
of
Section 7(B)
hereof, less transmission and transformation losses between the Generator Bus
and System II Points of Delivery shall be delivered at the following
System II Points of Delivery voltages:
(a) ▇▇▇▇▇▇▇▇
Point of Delivery:
Location - At the
point of connection between the 115-kV bus of the District's ▇▇▇▇▇▇▇▇ Switching
Station and facilities which are or may be available to the
District.
Delivery Voltage -
Approximately 115 kV.
(b) Valhalla
Point of Delivery:
Location - At the
point of connection between facilities of System II and Bonneville's
Valhalla Substation.
Delivery Voltage -
Approximately 115 kV.
(c) Other
Points of Delivery:
At such
other Points of Delivery and at such Delivery Voltages as the parties hereto may
mutually agree upon from time to time.
Section 18. Use of Rocky Reach Project
Facilities. The District will use the transmission facilities
of the Rocky Reach Project as such facilities may from time to time exist to
deliver System I Output and System I Peaking Capability to
System I Points of Delivery; provided, however, that the use of such
facilities to deliver power and energy to Puget pursuant to provisions of this
contract shall be limited to the remaining capacity thereof (including capacity
made
available
by opposed power flows) after first use by the District to deliver power and
energy to the District's loads within Chelan and ▇▇▇▇▇▇▇ Counties and for
deliveries of Rocky Reach Project power and energy and shall at all times be
subject to provisions of the District's Bond Resolutions No. 1412,
No. 1860 and No. 4198 and to the provisions of the license issued by
the Federal Power Commission for Rocky Reach Project No. 2145 and to the
provisions of all contracts entered into by the District for sale of power and
energy produced by the Rocky Reach Project; and provided further, however, that
if said use of facilities of the Rocky Reach Project to deliver System I
Output and System I Peaking Capability to Puget hereunder should at any
time result in increased cost or expanse to the District or to the Rocky Reach
Project or both, Puget shall reimburse the District for such increased cost or
expense.
Section 19. Scheduling. Prior
to 1600 hours of each work day, Puget shall make available to the District
an hourly estimate of requested total energy deliveries from System I and
from System II for the following day or days to and including the next work
day. Such estimated schedule including revisions thereof and
deliveries thereunder shall not exceed the sum of (i) Puget's System I
Share of System I Output; (ii) the amount of energy in Puget's
System I Share of System I Pondage available to Puget during such
period; (iii) Puget's System II Share of System II Output; and
(iv) the amount of energy in Puget's System II Share of System II
Pondage available to Puget during such period. At no time shall the
scheduled rate of such deliveries exceed the sum of (i) Puget's
System I Share of System I Peaking Capability and (ii) Puget's
System II Share of System
II
Peaking Capability. Revisions in such schedules for any day may be
made by Puget (i) at any time on request to the District or
(ii) continuously through appropriate use of automatic load control
equipment or otherwise.
The
District may schedule energy deliveries from System I and System II up
to the sum of (i) the District's System I Share of System I
Output; (ii) the amount of energy in the District's System I Share of
System I Pondage available to the District during such period;
(iii) the District's System II Share of System II Output; and
(iv) the amount of energy in the District's System II Share of
System II Pondage available to the District during such
period. At no time shall the scheduled rate of such deliveries exceed
the sum of (i) the District's System I Share of System I Peaking
Capability and (ii) the District's System II Share of System II
Peaking Capability.
Section 20. Metering. Unless
otherwise agreed by the parties hereto metering shall be maintained by the
District as follows:
(A) Generator
Bus. The District shall provide and maintain suitable
watt-hour, var-hour and recording demand meters on the Generator Bus at the
power plants of System I and System II.
(B) Other
Metering. The District shall provide and maintain suitable
meters at the Summit Point of Delivery and at other points as may be necessary
to carry out the terms of this contract.
(C) Reading
Meters. The District shall read its meters mentioned in this
contract at appropriate intervals so as to maintain a record of energy
transactions under this contract.
(D) Testing. The
District will test its metering equipment mentioned in this contract at least
once every two (2) years and, if requested to do so by Puget, it will make
additional tests or inspections of such metering equipment, the expense of which
will be paid by Puget unless such additional tests or inspections show such
metering equipment to be inaccurate as specified below. The District
will give reasonable notice to Puget of the time when any such test or
inspection is to be made. If any meter mentioned in this contract
fails to register or if the measurement made by such meter during a test made,
as provided above, varies by more than one per cent (1%) from the
measurement made by the standard meter used in such test, adjustment shall be
made correcting all measurements made by such inaccurate meter for (1) the
actual period during which such inaccurate measurement was made, if such period
can be determined, or (2) if not, the period immediately preceding the test
of such meter which is equal to one-half the time from the date of the last
preceding test of such meter; provided, however, that the period during which
such correction is to be made shall not exceed six (6) months.
Section 21. Losses. The
amounts of power and energy delivered to Puget at Puget's System I and
System II Points of Delivery shall be adjusted for computed transmission
and transformation losses between the Generator Bus and said Points of Delivery
in accordance with the following:
(1) For
deliveries at the Summit Point of Delivery an amount equal to the metered
quantities at said Point of Delivery multiplied by the appropriate loss
factor:
(2) For
deliveries at the ▇▇▇▇▇▇▇▇ Point of Delivery an amount equal to the scheduled
quantities multiplied by appropriate loss factors.
(3) For
all deliveries not included in the foregoing paragraphs (1) and (2) no
adjustment will be made.
In
developing said loss factors reverse flow shall be considered.
Section 22. Electric
Disturbances. In the use of peaking capacity and energy
delivered under this contract, the parties hereto agree that they will exert
every effort to avoid causing electric disturbances which may be reasonably
expected to result in damage to or impair service from the Joint System or
electric facilities of the other party. In the event such disturbance
shall occur, the party responsible will, at its own expense, install such
equipment as is necessary to prevent or eliminate such
disturbances.
Section 23. Puget's Right to Use
System I Facilities. The District hereby grants to Puget
for the term of this contract the right to use transmission facilities of
System I for the purpose of continuing the coordination and integration of
its operations with other utilities to the full extent that capacity is
available therefor after delivering power and energy to the District and Puget
pursuant to the provisions of Sections 17 and 24(A), 24(B) and 24(C)
hereof; provided, however, that notwithstanding the provisions of
Sections 17 and 24(A), 24(B) and 24(C) hereof, use by the District of the
Rock Island-Rocky Reach-Chelan 115-kV transmission line of
System I,
for the
purposes of delivering power and energy to the District and Puget pursuant to
other provisions of this contract, shall not, at any time during the term
hereof, reduce the thermal capacity of said line available for use by Puget
pursuant to this Section 23 to an amount less than 80,000 kilovoltamperes;
and provided further, that at the request of Puget the District will make such
modifications to the Rocky Reach-Chelan section of said lines as are necessary
to increase the thermal capacity thereof available to Puget for the purposes
described in this Section 23 to an amount not less than 108,000
kilovoltamperes if sufficient funds are available for that purpose in the
Reserve and Contingency Fund of System I and in accordance with the
District's Resolution No. 1137 can be used for such purposes.
Section 24. District's
Right to Use of Transmission Facilities.
(A) Original
Facilities. Except as limited in Section 24(C) hereof,
the District shall have the right to use at no additional cost to the District,
the Original Facilities for the purpose of transmitting power and energy to the
District and to and for the account of other systems of the District to the full
extent that capacity is available therefor after delivering Joint System Output
and Joint System Peaking Capability to the District and Puget pursuant to the
other provisions of this contract.
(B) Added
Facilities. The District shall have the right to use the Added
Facilities for the purpose of transmitting power and energy to the District and
to and for the account of other systems of the District to the full extent that
capacity is available therefor after delivering Joint System Output and Joint
System Peaking Capability to the District and Puget pursuant to the other
provisions
of this
contract. The District may construct additional substation capacity
and associated tap lines as Added Facilities; provided that each tap line shall
not exceed one mile in length; and provided further, that the total amount of
substation capacity included as Original Facilities and Added Facilities shall
not exceed 200,000 kilovoltamperes of transformer maximum nameplate
rating.
(C) Limitations. The
District's right to the use of transmission facilities of System I shall be
subject to the following limitations:
(1) The
District's right to use of the ▇▇▇▇▇▇▇▇-Summit 115-kV transmission facilities
existing on the date of this contract for purposes set forth in the foregoing
Section 24(A) shall be limited to transmission of a maximum of 20,000
kilowatts of coincidental clock-hour integrated demand less the amount of the
District's Squilchuck Power taken coincidentally by the District at the
District's Points of Delivery connected to said transmission facilities;
provided that during any time transmission capacity available to Puget pursuant
to Section 23 hereof is not used by Puget, including any transmission
capacity made available by opposed power flow, such capacity shall be available
for use by the District.
(2) The
District's right to use of the Rocky Reach-Chelan section of the Rock
Island-Rocky Reach-Chelan 115-kV transmission facilities existing on the date of
this contract for purposes set forth in the foregoing Section 24(A) shall
be limited to transmission of a maximum of 28,000 kilowatts of coincidental
clock-hour integrated demand less the amount of the District's Squilchuck power
taken coincidentally by the District at the
District's
Points of Delivery connected to said Rocky Reach-Chelan section of transmission
line and shall be increased to not more than 37,000 kilowatts less the amount of
the District's Squilchuck power taken coincidentally by the District at the
District's Points of Delivery connected to said Rocky Reach-Chelan section of
transmission line at such time as capacity available to Puget is increased to
108,000 kilovoltamperes as provided in Section 23 hereof, provided,
however, that during any time the transmission capacity available to Puget
pursuant to Section 23 hereof is not used by Puget, including any
transmission capacity made available by opposed power flow, such capacity shall
be available for use by the District.
(D) Alternative
Facilities. Other systems of the District may construct
additional facilities within the District's Electric System providing additional
capacity for transmitting power to the Summit Point of Delivery to Puget and to
the Chelan Interconnection Point of Delivery to Puget. In such an
event, the District may use the transmission capacity of the ▇▇▇▇▇▇▇▇-Summit
115-kV transmission line and the Rocky Reach-Chelan section of the
▇▇▇▇▇▇▇▇-Rocky Reach-Chelan 115-kV transmission line in excess of amounts
provided in Section 24(C) as limited by Section 23; provided, however,
that Puget's transmission rights and capability over the
▇▇▇▇▇▇▇▇-Summit
115-kV
transmission line and over such additional facilities after such construction
shall be equivalent to Puget's transmission rights and capability over the
▇▇▇▇▇▇▇▇-Summit 115-kV transmission line prior to such construction and Puget's
transmission rights and
capability
over the Rocky Reach-Chelan section of the ▇▇▇▇▇▇▇▇-Rocky Reach-Chelan 115-kV
transmission line and over such additional facilities after such construction
shall be equivalent to Puget's transmission rights and capability over such
Rocky Reach-Chelan section prior to such construction.
Section 25. Rocky
Reach Downstream Replacement Power.
(A) The
District. The District shall make available to System II
or System II shall make available to the District, as appropriate, each
hour during the term hereof an amount of energy equal to the amount of Rocky
Reach Downstream Replacement Power for such hour, if any, multiplied by the
District's percentage withdrawal of the output of the District's Rocky Reach
Project after deducting from such percentage the percentage of such output
equivalent to the amount of power sold to the Public Utility District No. 1
of ▇▇▇▇▇▇▇ County, Washington (▇▇▇▇▇▇▇) pursuant to the provisions of the
contract between the District and ▇▇▇▇▇▇▇ dated October 30, 1957, as
amended, relating to the sale of such output.
(B) Puget. Puget
shall make available to System II or System II shall make available to
Puget, as appropriate, each hour during the term hereof an amount of energy
equal to the amount of Rocky Reach Downstream Replacement Power for such hour,
if any, multiplied by ▇▇▇▇▇'s percentage purchase of the output of the Rocky
Reach Project which percentage shall not include output assigned to Puget by any
other Rocky Reach purchaser.
(C) System
Responsibilities. System II shall make available to
System I or System I shall make available to System II, as
appropriate, each hour during
the term
hereof an amount of energy equal to the amount of Rocky Reach Downstream
Replacement Power for such hour, if any.
(D) Exchanges. During
each hour that System II Output is less than the total of Rocky Reach
Downstream Replacement Power plus the amount of Rocky Reach Encroachment Power
for such hour, the District shall supply to System II an additional amount
of energy equal to such difference multiplied by the District's System II
Percentage and Puget shall supply to System II an additional amount of
energy equal to such difference multiplied by Puget's System II
Percentage. The amount of energy supplied to System II by each
Party shall be returned to such Party from the first energy available from
System II Output.
Section 26. Joint
System Operations - Arbitration.
(A) Recommendations. Puget
may make recommendations to the District with reference to matters concerning
the Joint System.
The
District will give due consideration to recommendations of Puget. In
considering such recommendations, the District shall give due regard to the
objective of achieving the optimum electric power availability from the Joint
System consistent with economy, reliability and facility of operation and the
District's statutory duties. If, in the opinion of Puget, the
District has given inadequate consideration to its informal recommendations,
written recommendations may be made to the District by Puget. Such
written recommendations shall be forwarded to the District with appropriate
supporting data. The District shall take action on such
recommendations within a reasonable time by adopting, modifying or rejecting
such recommendations. If the District modifies or rejects said
recommendations, it shall notify Puget of its action in writing giving reasons
therefor.
(B) Notices. The
District shall give Puget reasonable notice, in no case less than thirty (30)
days except in the event of an emergency requiring immediate action, whenever it
proposes: (i) to replace items of major equipment in the Joint
System, or (ii) to enter into new or special contractual arrangements
relating to the Joint System and substantially modifying the operation of the
Joint System or the cost of power therefrom, or (iii) to apply for or
consent to an amendment, modification or change of the license for the Rock
Island Project if such amendment, modification or change would materially modify
the operation of the Joint System or increase the cost of power
therefrom.
(C) Procedures. If
the District modifies or rejects a written recommendation from Puget dealing
with matters which may be arbitrated as set forth in Section 26(D) hereof,
and made in accordance with the procedure set forth in Section 26(B)
hereof, Puget may submit the recommendation to a Board of Arbitrators within
15 days of the date on which Puget receives written notice from the
District of such modification or rejection. If Puget shall fail to
seek arbitration within the aforesaid 15-day period its rights to arbitration
hereunder shall be waived. The Board of Arbitrators shall be composed
of three (3) persons, one of whom shall be appointed by the District, one
of whom shall be appointed by ▇▇▇▇▇, and the third person shall be appointed by
the two persons so appointed. In the event said two members do not
agree upon the appointment of a third person, then such third person shall be
appointed by the Chief Justice of the Supreme Court of the State of
Washington. The procedure for arbitration shall be governed by the
laws of the State of Washington. Insofar as the parties hereto may
legally do so, they agree to abide by the decision of said Board; provided, that
the
District
shall not be bound by any decision of the Board of Arbitration to the extent
that such decision is retroactive beyond the date when the matter arbitrated was
made the subject of written recommendation of ▇▇▇▇▇.
(D) Matters to be
Arbitrated. Matters which may be arbitrated in accordance with
the preceding Section 26(C) shall consist of all matters pertaining to the
construction of, the maintenance and operation of, additions or betterments to,
extensions of, replacements or renewals to the Joint System, insurance to be
carried on said Joint System (which in no event shall be less than that required
under the terms of the Bond Resolution), computation of Contract Debt Service
and Contract Bonds Outstanding, amounts to be charged to the cost of operating
the Joint System as a result of voluntary payments in lieu of taxes, amendment,
modification or change of the Federal Power Commission license for the Rock
Island Project and all other matters materially affecting the cost of power to
Puget, except such of the matters hereinabove described in this paragraph as are
by law vested exclusively in the discretion of the District.
(E) Divisibility. In
the event this Section 26, or any paragraph, sentence, clause or phrase
thereof, or Section 11(B) hereof or any paragraph, sentence, clause or
phrase thereof, or any parts or all of both, shall be finally adjudicated by a
court of competent jurisdiction to be invalid or illegal, the remainder of this
contract shall remain in full force and effect as though such section or
sections, or parts thereof so adjudicated to be invalid had not been included
herein.
Section 27. Notices. Any
notice, recommendation or demand by Puget under this contract shall be deemed
properly given if given by registered mail, postage prepared, addressed to
Public Utility District No. 1 of Chelan County,
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and any notice, recommendation or
demand by the District under this contract shall be deemed properly given if
given by registered mail, postage prepaid, addressed to Puget Sound
Power & Light Company, Puget Power Building, Bellevue, Washington
98009. The designation of the name and address to which any such
notice, recommendation or demand is to be directed may be changed at any time
and from time to time by either party by similar notice.
Section 28. Benefited
Parties. This contract shall be binding upon and inure to the
parties hereto, and their successors and assigns, and is not intended to and
shall not confer upon any third party any rights or benefits
hereunder. Nothing herein contained is intended to adversely affect
any rights or benefits inuring to the holders from time to time of bonds of the
District payable from the revenue of the System.
Section 29. Amendment of
Contract. It is agreed by the parties hereto that no provision
of this contract constitutes an amendment to or other action that will reduce
the payments or extend the time of making payments that were provided for in
that certain Power Contract (Rock Island) between the District and Puget dated
January 6, 1956 (which contract was superseded by that certain Power
Contract between the District and Puget dated June 8, 1962,which is in turn
superseded by this contract on the date of delivery of and payment for
System II Bonds, except for accrued and undischarged obligations of the
parties thereunder), or otherwise impairs or adversely affects the rights of
holders from time to time of the District's Columbia River-Rock Island
Hydro-Electric System Revenue Bonds, Issue of 1955, First Series.
It is
further agreed by the parties hereto that no provision of this contract
consistutes an amendment to or other action in connection with the June 8,
1962 Power Contract which in any manner adversely affects the security of the
District's Columbia River-Rock Island Hydro-Electric System Revenue Bonds, Issue
of 1955 First Series and Second Series upon which holders from time to time of
such bonds have relied as an inducement to purchase and hold said
bonds.
The
District and Puget agree that this contract shall not be amended, modified or
otherwise altered by agreement of the parties in any manner that will adversely
affect the security for System I Bonds afforded by the provisions of this
contract covering the purchase and sale of power hereunder upon which the
holders from time to time of said bonds have relied as an inducement to purchase
and hold said bonds. The District and Puget agree that so long as any
System II Bonds are outstanding, this contract shall not be amended,
modified or otherwise altered by agreement of the parties in any manner which
will reduce the payments or extend the time of payments provided herein or which
will in any manner impair or adversely affect the rights of the holders from
time to time of the System II Bonds.
Section 30. District's Bond Resolution
and License. It is recognized by the parties hereto that the
District in its operation of the Joint System and in delivery of power and
energy hereunder to Puget and to the District, must comply with
(i) requirements of Resolution Nos. 1137 and 3443 so long as any of
the Columbia River-Rock Island Hydro-Electric System Revenue Bonds, Issue of
1955, First Series and Second Series are outstanding, (ii) the
requirements
of
Resolution No. 4950 during the time that any of the Columbia River-Rock
Island Hydro-Electric System Revenue Bonds, Series of 1974 are outstanding,
(iii) the requirements of any of the District's Resolutions authorizing any
other System I Bonds and System II Bonds during the period that any
such bonds are outstanding, and (iv) the license for the construction and
operation of Federal Power Commission License Project No. 943-Washington
and amendments thereof from time to time made and with the provisions contained
in renewals or reissuance of said license, and it is therefore accordingly
agreed that this contract is made subject to terms and provisions of
(i) each of said resolutions, during the time any bond issued pursuant to
the provisions of such resolution are outstanding and (ii) said license,
including renewals or reissue of said license. At the appropriate time the
District shall make due and proper application for a renewal or reissuance of
said license and make a diligent effort to obtain a renewal or reissuance of
said license.
If, upon
relicensing, Project No. 943-Washington is licensed to a licensee other
than the District, and the new licensee is not required to assume and fulfill
this contract, then this contract shall terminate on the date that the District
ceases to operate the Rock Island Project and to make available from such
project to Puget, Puget's System I Share of System I Output and
System I Peaking Capability and Puget's System II Share of
System II Output and System II Peaking Capability.
Section 31. Liabilities;
Waiver of Subrogation.
(A) Releases. The
District and Puget release each other, their agents and employees from any claim
for loss or damage, arising out of the construction,
operation,
maintenance, reconstruction and repair of the Joint System due to negligence,
including gross negligence, including any loss of profits or revenues, loss of
use of power system, cost of capital, cost of purchased or replacement power,
other substantially similar liability or other consequential loss or damage, but
not any claim for loss or damage resulting from breach of any contract relating
to the Joint System, including this contract, or for willful or wanton
misconduct.
(B) Charges. Any
loss, cost liability, damage and expense to the District or Puget or both, other
than damages to either resulting from loss of use and occupancy of the Joint
System or any part thereof, resulting from the construction, operation,
maintenance, reconstruction or repair of the Joint System and based upon injury
to or death of persons, or damage to or loss of property of others, to the
extent not covered by collectible insurance, shall be charged to Cost of
Construction, as defined in District Resolution No. 4950, or annual costs,
whichever may be appropriate.
(C) Waiver. The
District and Puget shall cause its insurers to waive any rights of subrogation
against each other, their agents and employees for losses, costs, damages or
expenses arising out of the construction, operation, maintenance, reconstruction
or repair of the Joint System.
Section 32. Conflict of
Laws. The parties hereto agree that this contract shall be
governed by the laws of the State of Washington.
Section 33. Waiver of
Default. Any waiver at any time by either party hereto of its
rights with respect to the other party or with respect to any other
matter
arising in connection with this contract shall not be considered a waiver with
respect to any subsequent default or matter.
Section 34. Insurance. The
District agrees that it will, to the extent available at reasonable cost with
responsible insurers and at least to the extent that similar insurance is
usually carried by electric utilities operating like properties, keep or cause
to be kept the works, plants and facilities comprising the properties of the
Joint System and the operation thereof insured, with policies payable to the
District for the benefit of the Joint System and Puget as their interest may
appear, against risks of direct physical loss, damage to or destruction of the
Joint System, against loss caused by suspension or interruption of generation or
transmission of power and energy caused by such loss, damage or destruction and,
against accidents, casualties, or negligence, which insurance shall include
liability insurance and employers liability.
In the
event of any loss or damage to properties of the Joint System covered by such
insurance, (i) prior to the Date of Commercial Operation of System II,
the District will transfer insurance proceeds received by the District covering
damage or loss to System II to the System II Construction Fund;
(ii) after the Date of Commercial Operation of System II, the District
will transfer insurance proceeds received by the District covering loss or
damage to System II to the System I Reserve and Contingency Fund and
such proceeds, to the extent required, shall be applied to the cost of replacing
such loss or reparing such damage and (iii) the District will transfer
insurance proceeds received by the District covering loss or damage to
System I to the System I
Reserve
and Contingency Fund. In case of loss of revenue covered by
insurance, proceeds received by the District from any insurance policy or
policies covering such loss of revenue shall be paid into the Revenue Fund to
the credit of System I or System II costs, as
appropriate.
Section 35. Assignment of
Contract. This contract shall inure to the benefit of, and
shall be binding upon the respective successors and assigns of the parties to
this contract. No assignment or transfer of this contract shall
relieve the parties hereto of any obligation incurred
hereunder. Subject to the foregoing sentence, the interest of Puget
under this contract may be assigned and transferred as set forth below, but not
otherwise:
(A) To
any mortgagee, trustee, or secured party, as security for bonds or other
indebtedness of Puget, present or future, and such mortgagee, trustee or secured
party may realize upon such security in foreclosure or other suitable
proceedings and succeed to all right, title and interests of Puget;
(B) To
any corporation or other entity acquiring all or substantially all the property
of Puget;
(C) To
any corporation or entity into which or with which Puget may be merged or
consolidated;
(D) To
any corporation or entity, the stock or ownership of which is wholly owned by
Puget; and
(E) To
any other person or entity with the prior written approval of the
District.
Section 36. Force
Majeure. The District shall not be liable for any default in
the performance of its obligations under this contract, other than
its
obligations
to make when due all payments required hereunder, due to Uncontrollable
Forces. If the District is rendered unable to fulfill any obligations
by reason of uncontrollable forces it shall exercise due diligence to remove
such inability with all reasonable dispatch. Nothing contained herein
shall be construed so as to require the District to settle any strike or labor
dispute in which it may be involved.
Section 37. Supersedence of June 8,
1962 Power Contract. The June 8, 1962 Power Contract
between the District and Puget relating to the Rock Island Project is superseded
by this contract between Puget and the District and said June 8, 1962 Power
Contract shall terminate on the effective date of this contract, provided,
however, that all of the provisions of the June 8, 1962 Power Contract with
respect to System I will remain in full force and effect until commencement
of the first Contract Year under this contract, except that from and after
0001 hours on the Date of Initial Financing the District shall be relieved
and release from the obligation to pay to Puget the sum of $212,000 annually, or
any part thereof, as provided in Section 7(b)(6) of the June 8, 1962
Power Contract, and any costs in connection with the ▇▇▇▇▇▇ property (dam,
headworks, irrigation canals, flume).
IN
WITNESS WHEREOF, the parties hereto have caused this agreement to be executed by
their proper officers respectively, being thereunto duly authorized and their
respective corporate seals be hereto affixed the day and year first above
written.
|
(Seal)
|
PUBLIC
UTILITY DISTRICT NO. 1
OF
CHELAN COUNTY, WASHINGTON
By /s/ [Signature
Illegible]
President
|
|
|
Attest
|
By /s/ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
Vice
President
|
|
|
/s/
▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
|
||
|
Secretary
|
||
|
PUGET
SOUND POWER & LIGHT COMPANY
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
Executive
Vice President
|
||
|
(Seal)
|
||
|
Attest:
|
||
|
/s/ ▇.
▇▇▇▇▇▇
Secretary
|
EXHIBIT
A
SYSTEM II
FACILITIES
The
facilities of System II shall include, but not be limited to, the
following:
|
|
1.
|
A
second powerhouse in the location of the nonoverflow section, the spillway
bays 33 through 37 and the right bank fish ladder containing eight 54-MVA
turbine generator units of the horizontal shaft bulb type with generators
housed in watertight encpubmerged in the water passages, together with
necessary auxiliary equipment, controls, and appurtenances for the
complete operation of these machines and two step-up power transformers
each rated at 210 MVA. The powerhouse structure will be of the
semi-outdoor type, having dimensions of approximately 470 x 130 feet
exclusive of the erection area, with the draft tube extending an
additional 70 feet downstream.
|
|
|
2.
|
Two
single-circuit, 115-kV, 3-phase transmission lines from the powerhouse for
a distance of approximately two miles to the District's existing ▇▇▇▇▇▇▇▇
switchyard, and Bonneville Power Administration's Valhalla Substation and
any other necessary transmission
line.
|
|
|
3.
|
A
new fish passage facility which will have inlets above the draft tubes at
both ends of the second powerhouse and an inlet at the right abutment
downstream of the draft tubes. All of the
entrances
|
will lead
into a ladder located on the right side of the powerhouse with exit in the
forebay along the right riverbank.
|
|
4.
|
Additional
spillway crest gate sections and reinforced spillway structures with
post-tensioned foundation anchors so that the forebay elevation may be
raised to elevation 613.0 (USC
&GS)
|
|
|
5.
|
Necessary
changes in the left bank and middle fish facilities upstream for their
proper functioning at the raised forebay
level.
|
|
|
6.
|
Necessary
modifications to the left bank retaining walls and other structures to
accommodate the raised forebay
level.
|
|
|
7.
|
Necessary
modifications to spillway regulating gates and emergency gates, and the
hoisting equipment resulting from raising of the forebay level and removal
of spillway bays 33 through
37.
|
|
|
8.
|
Any
additional parcels of land or rights to lands in the vicinity of the
forebay as required for the higher reservoir
elevation.
|
|
|
9.
|
Any
other modifications for construction of the new powerhouse and adjacent
areas in the forebay and tailrace as necessary for satisfactory
operations.
|
EXHIBIT
B
DISTRICT'S SYSTEM I
SHARE
|
Column
1
|
||||
|
Contract
Year
|
District's
System I Share
|
|||
|
July
1, 1974 – June 30,
1975
. . . . . . . . . . . . . . . . . . . . . . . .
|
0.129
|
|||
|
July
1, 1975– June 30,
1976
. . . . . . . . . . . . . . . . . . . . . . . .
|
0.129
|
|||
|
July
1, 1976– June 30,
1977
. . . . . . . . . . . . . . . . . . . . . . . .
|
0.129
|
|||
|
July
1, 1977– June 30,
1978
. . . . . . . . . . . . . . . . . . . . . . . .
|
0.129
|
|||
|
July
1, 1978 – June 30,
1979
. . . . . . . . . . . . . . . . . . . . . . . .
|
0.129
|
|||
|
July
1, 1979 – June 30,
1980
. . . . . . . . . . . . . . . . . . . . . . . .
|
0.129
|
|||
|
July
1, 1980 – June 30,
1981
. . . . . . . . . . . . . . . . . . . . . . . .
|
0.129
|
|||
|
July
1, 1981 – June 30,
1982
. . . . . . . . . . . . . . . . . . . . . . . .
|
0.129
|
|||
|
July
1, 1982 – June 30,
1983
. . . . . . . . . . . . . . . . . . . . . . . .
|
0.129
|
|||
|
July
1, 1983 – June 30,
1984
. . . . . . . . . . . . . . . . . . . . . . . .
|
0.150
|
|||
|
July
1, 1984 – June 30,
1985
. . . . . . . . . . . . . . . . . . . . . . . .
|
0.172
|
|||
|
July
1, 1985 – June 30,
1986
. . . . . . . . . . . . . . . . . . . . . . . .
|
0.193
|
|||
|
July
1, 1986 – June 30,
1987
. . . . . . . . . . . . . . . . . . . . . . . .
|
0.215
|
|||
|
July
1, 1987 – June 30,
1988
. . . . . . . . . . . . . . . . . . . . . . . .
|
0.236
|
|||
|
July
1, 1988 – June 30,
1989
. . . . . . . . . . . . . . . . . . . . . . . .
|
0.258
|
|||
|
July
1, 1989 – June 30,
1990
. . . . . . . . . . . . . . . . . . . . . . . .
|
0.279
|
|||
|
July
1, 1990 – June 30,
1991
. . . . . . . . . . . . . . . . . . . . . . . .
|
0.300
|
|||
|
July
1, 1991 – June 30,
1992
. . . . . . . . . . . . . . . . . . . . . . . .
|
0.322
|
|||
|
July
1, 1992 – June 30,
1993
. . . . . . . . . . . . . . . . . . . . . . . .
|
0.343
|
|||
|
July
1, 1993 – June 30,
1994
. . . . . . . . . . . . . . . . . . . . . . . .
|
0.365
|
|||
|
July
1, 1994 – June 30,
1995
. . . . . . . . . . . . . . . . . . . . . . . .
|
0.386
|
|||
|
July
1, 1995 – June 30,
1996
. . . . . . . . . . . . . . . . . . . . . . . .
|
0.408
|
|||
|
July
1, 1996 – June 30,
1997
. . . . . . . . . . . . . . . . . . . . . . . .
|
0.429
|
|||
|
July
1, 1997 – June 30,
1998
. . . . . . . . . . . . . . . . . . . . . . . .
|
0.451
|
|||
|
July
1, 1998 – June 30,
1999
. . . . . . . . . . . . . . . . . . . . . . . .
|
0.472
|
|||
|
July
1, 1999 – June 30, 2000 and thereafter
|
0.500
|
|||
EXHIBIT
C
|
Contract
Year
|
Column
1
|
|||
|
July
1, 1974 – June 30,
1975
. . . . . . . . . . . . . . . . . . . . . . . .
|
0.086
|
|||
|
July
1, 1975– June 30,
1976
. . . . . . . . . . . . . . . . . . . . . . . .
|
0.086
|
|||
|
July
1, 1976– June 30,
1977
. . . . . . . . . . . . . . . . . . . . . . . .
|
0.086
|
|||
|
July
1, 1977– June 30,
1978
. . . . . . . . . . . . . . . . . . . . . . . .
|
0.086
|
|||
|
July
1, 1978 – June 30,
1979
. . . . . . . . . . . . . . . . . . . . . . . .
|
0.086
|
|||
|
July
1, 1979 – June 30,
1980
. . . . . . . . . . . . . . . . . . . . . . . .
|
0.021
|
|||
|
July
1, 1980 – June 30,
1981
. . . . . . . . . . . . . . . . . . . . . . . .
|
0.021
|
|||
|
July
1, 1981 – June 30,
1982
. . . . . . . . . . . . . . . . . . . . . . . .
|
0.021
|
|||
|
July
1, 1982 – June 30,
1983
. . . . . . . . . . . . . . . . . . . . . . . .
|
0.021
|
|||
|
July
1, 1983 – June 30,
1984
. . . . . . . . . . . . . . . . . . . . . . . .
|
0.043
|
|||
|
July
1, 1984 – June 30,
1985
. . . . . . . . . . . . . . . . . . . . . . . .
|
0.043
|
|||
|
July
1, 1985 – June 30,
1986
. . . . . . . . . . . . . . . . . . . . . . . .
|
0.043
|
|||
|
July
1, 1986 – June 30,
1987
. . . . . . . . . . . . . . . . . . . . . . . .
|
0.043
|
|||
|
July
1, 1987 – June 30,
1988
. . . . . . . . . . . . . . . . . . . . . . . .
|
0.043
|
|||
|
July
1, 1988 – June 30,
1989
. . . . . . . . . . . . . . . . . . . . . . . .
|
0.043
|
|||
|
July
1, 1989 – June 30,
1990
. . . . . . . . . . . . . . . . . . . . . . . .
|
0.064
|
|||
|
July
1, 1990 – June 30,
1991
. . . . . . . . . . . . . . . . . . . . . . . .
|
0.086
|
|||
|
July
1, 1991 – June 30,
1992
. . . . . . . . . . . . . . . . . . . . . . . .
|
0.107
|
|||
|
July
1, 1992 – June 30,
1993
. . . . . . . . . . . . . . . . . . . . . . . .
|
0.129
|
|||
|
July
1, 1993 – June 30,
1994
. . . . . . . . . . . . . . . . . . . . . . . .
|
0.172
|
|||
|
July
1, 1994 – June 30,
1995
. . . . . . . . . . . . . . . . . . . . . . . .
|
0.236
|
|||
|
July
1, 1995 – June 30,
1996
. . . . . . . . . . . . . . . . . . . . . . . .
|
0.300
|
|||
|
July
1, 1996 – June 30,
1997
. . . . . . . . . . . . . . . . . . . . . . . .
|
0.365
|
|||
|
July
1, 1997 – June 30,
1998
. . . . . . . . . . . . . . . . . . . . . . . .
|
0.408
|
|||
|
July
1, 1998 – June 30,
1999
. . . . . . . . . . . . . . . . . . . . . . . .
|
0.451
|
|||
|
July
1, 1999 – June 30, 2000 and thereafter
|
0.500
|
|||
EXHIBIT
D
DISTRICT'S SQUILCHUCK
POWER
|
Contract
Year
|
District's
Squilchuck Power MW
|
|||
|
July
1, 1974 – June 30,
1975
. . . . . . . . . . . . . . . . . . . . . . . .
|
48
|
|||
|
July
1, 1975– June 30,
1976
. . . . . . . . . . . . . . . . . . . . . . . .
|
51
|
|||
|
July
1, 1976– June 30,
1977
. . . . . . . . . . . . . . . . . . . . . . . .
|
55
|
|||
|
July
1, 1977– June 30,
1978
. . . . . . . . . . . . . . . . . . . . . . . .
|
58
|
|||
|
July
1, 1978 – June 30,
1979
. . . . . . . . . . . . . . . . . . . . . . . .
|
62
|
|||
|
July
1, 1979 – June 30,
1980
. . . . . . . . . . . . . . . . . . . . . . . .
|
65
|
|||
|
July
1, 1980 – June 30,
1981
. . . . . . . . . . . . . . . . . . . . . . . .
|
72
|
|||
|
July
1, 1981 – June 30,
1982
. . . . . . . . . . . . . . . . . . . . . . . .
|
80
|
|||
|
July
1, 1982 – June 30,
1983
. . . . . . . . . . . . . . . . . . . . . . . .
|
87
|
|||
|
July
1, 1983 – June 30,
1984
. . . . . . . . . . . . . . . . . . . . . . . .
|
95
|
|||
|
July
1, 1984 – June 30,
1985
. . . . . . . . . . . . . . . . . . . . . . . .
|
102
|
|||
|
July
1, 1985 – June 30,
1986
. . . . . . . . . . . . . . . . . . . . . . . .
|
109
|
|||
|
July
1, 1986 – June 30, 1987 and Thereafter
|
116
|
|||
EXHIBIT
E
SECTIONS OF DISTRICT
RESOLUTION NO. 4950
SECTION 6.6. Construction
Fund. There is hereby created a special fund of the District
to be known as the "Columbia River-Rock Island Hydro-Electric System Expansion
Construction Fund" (hereinafter referred to as the "Construction Fund") which
shall be held in trust by the Construction Fund Trustee for the benefit of the
District and the holders of the Bonds, as their interests may
appear. There is also hereby created in the Construction Fund a
special account to be known as the "Construction Interest Account"
A. Immediately
upon the issuance and delivery of any Series of Bonds, there shall be paid into
the Construction Fund such amount of the proceeds derived from the sale of such
Series of Bonds as is to be applied to the payment of the Cost of
Construction. The amount of said proceeds to be applied to the
payment of interest on the Bonds shall be credited to the Construction Interest
Account.
B. From
the proceeds derived from the 1974 Bonds there shall be deposited:
1. With
the Construction Fund Trustee for credit to the Construction Interest Account an
amount equal to the accrued interest on said Bonds paid as part of the purchase
price thereof;
2. With
the Construction Fund Trustee for credit to the Construction Interest Account an
amount equal to the interest to accrue on said Bonds from the date thereof to
July 1, 1979,
less the
amount of the accrued interest paid into said Account pursuant to subparagraph 1
above, which shall be used to pay interest on said Bonds during such
period;
3. With
the Bond Fund Trustee for credit to the Reserve Account in the Expansion Bond
Fund an amount equal to the Reserve Account Requirement;
4. Into
the Expansion Reserve and Contingency Fund the sum of Three Million Dollars
($3,000,000);
5. Into
the Original Reserve Fund an amount sufficient as of the date of delivery of and
payment for the 1974 Bonds to increase said Fund to the amount required to be on
deposit therein pursuant to the Basic Resolution, but only to the extent that
moneys have theretofore been expended therefrom in connection with the Second
Powerhouse.
6. Into
the Revenue Fund the sum of Seven Hundred Fifty Thousand Dollars ($750,000) to
be used for working capital; and
7. With
the Construction Fund Trustee for credit to the Construction Fund the balance of
such Bond proceeds, which shall be applied to the Cost of
Construction.
C. From
the proceeds derived from each Series of Bonds other than the 1974 Bonds, there
shall be deposited:
1. With
the Construction Fund Trustee for credit to the Construction Interest Account an
amount equal to the accrued interest on said Bonds paid as a part of the
purchase price thereof;
2. With
the Construction Fund Trustee for credit to the Construction Interest Account an
amount which, together with amounts then in such Account, shall be equal to the
interest to accrue on said Bonds and all other Bonds, if any, then outstanding,
to July 1, 1979, or to the then estimated Date of Commercial Operation,
whichever is later, less the amount of the accrued interest paid into said
Account pursuant to subparagraph 1 above, which shall be used to pay interest on
said Bonds during such period;
3. With
the Bond Fund Trustee for credit to the Reserve Account in the Expansion Bond
Fund an amount equal to the Reserve Account Requirement; and
4. With
the Construction Fund Trustee for credit to the Construction Fund the balance of
such Bond proceeds, which shall be applied to the Cost of
Construction.
D. Moneys
in the Construction Interest Account shall be used for the purpose of paying
interest on the Bonds. On or before the 25th day of the month next
preceding the maturity of an installment of interest on the Bonds the
Construction Fund Trustee shall transfer from the Construction Interest Account
to the Bond Fund Trustee for deposit in the Interest Account in the Expansion
Bond Fund an amount which, together with any moneys theretofore received or held
by the Bond Fund Trustee for that purpose, shall be sufficient to pay such next
maturing installment of interest on said Bonds. If at any
time
moneys in
the Construction Interest Account and other available moneys are inadequate for
such purpose, the Construction Fund Trustee shall transfer from the Construction
Fund to the Construction Interest Account such amount of moneys as is required
to permit such transfer to the Bond Fund Trustee.
E. All
moneys received by the District by reason of the breach of default of
contractors in connection with the construction of the Second Powerhouse shall
be paid to the Construction Fund Trustee for deposit in the Construction
Fund.
SECTION 6.7. Investment of Moneys in
Construction Fund. The Construction Fund Trustee may, and at
the direction of the District shall, invest the moneys in the Construction Fund
from time to time in Investment Securities, which Investment Securities shall
mature, or which shall be subject to redemption at the option of the holder
thereof, in not more than five (5) years from the date of
purchase. Any investment made by the Construction Fund Trustee and
any direction given by the District shall be made or given with due regard to
the latest estimate of the Construction Engineer filed with or certified to the
Construction Fund Trustee pursuant to Section 8.3 and Section 8.6 of
this Resolution with respect to the amounts needed from time to time to pay Cost
of Construction and the estimated dates of such payments. All
interest earned by reason of such investments shall accrue to the Construction
Fund. In the event moneys so invested are needed in the Construction Fund to
meet obligations thereof for which funds are not otherwise available, then the
Construction Fund Trustee shall sell, or present for redemption, said
investments to the extent required to provide for such purpose. The
Construction Fund Trustee shall not be liable for any depreciation in the value
of any of such investments or deposits made at the direction of the
District.
SECTION 6.8. Cost
of Construction. Payment of the Cost of Construction shall be made
from the moneys in the Construction Fund and from moneys made available therefor
from the special account provided for by Section 6.2.6 of Resolution
No. 3443 of the District adopted by the Commission of the District on
May 24, 1962. For the purpose of this Resolution, the Cost of
Construction shall include all costs of constructing, acquiring and installing
the Second Powerhouse as generally described in Section 2.2 hereof and
shall include, but not be limited to, the following:
A. Paying
or reimbursing the cost of preliminary surveys, investigations, engineering and
other expenses and fees properly incurred for the Second
Powerhouse.
B. Paying
the cost of obtaining any and all permits and licenses required by any
governmental agency or authority having jurisdiction and any other licenses,
permits, approvals or legal rights of any kind required for, or used or useful
in the construction, acquisition and installation of the Second
Powerhouse.
C. Paying
obligations incurred for labor and materials and to contractors, builders and to
material suppliers in connection with the construction, acquisition and
installation of the Second Powerhouse, for machinery and equipment, for the
restoration and relocation of property damaged or destroyed in connection with
such construction, for the removal or relocation of structures and for the
clearing of lands.
D. Paying
the cost of acquiring by purchase, if such purchase shall be deemed expedient,
and the amount of any deposit in court or award or final judgment in or any
settlement or compromise of any proceeding to acquire by condemnation or by the
exercise of the power of eminent domain such lands, property, rights of way,
franchises, easements, or other interests in land as may be deemed by the
District to be used or useful for the construction, acquisition, installation,
maintenance and operation of the Second Power house, options and partial
payments thereon, the amounts of any damages incident to or consequent upon the
construction, acquisition, installation, maintenance and operation of the Second
Powerhouse, options and partial payments thereon, the amounts of any damages
incident to or consequent upon the construction, acquisition, installation and
operation of the Second Powerhouse.
E. Paying
interest on the Bonds accruing until July 1, 1979, or the Date of
Commercial Operation, whichever is later.
F. Paying
the fees and expenses of the Construction Fund Truste for all services rendered
under this Resolution during the Period of Construction, and of the Bond Fund
Trustee and of the Paying Agents for all services rendered under this Resolution
until July 1, 1979 or the Date of Commercial Operation, whichever is later;
taxes or other municipal or governmental charges lawfully levied or assessed
against the Second Powerhouse and any taxes levied against property acquired
therefor or payments required in lieu thereof, in each case to the Date of
Commercial Operation, and premiums on insurance in connection with the
construction of the Second Powerhouse during the Period of
Construction.
▇. ▇▇▇▇▇▇
the cost to the District of the performance of the duties of the Construction
Engineer and the Consulting Engineer and other engineering and professional
services rendered to the District in connection with the acquisition and
construction of the Second Powerhouse and the placing of the Second Powerhouse
in operation, or the issuance of Bonds therefor.
H. Paying
or reimbursing the District for expenses incident and properly allocable to the
acquisition and construction of the Second Powerhouse and the placing of the
same in operation, including per diem compensation or salaries of the
Commission, legal, engineering, financing, accounting and other professional
expenses and fees, costs of printing and preparing and issuing the Bonds, wages
of office and clerical employees, administrative management expenses, pension
requirements, health and hospitalization insurance and all other items of
expense not specified elsewhere in this Section which are incident and properly
allocable to the acquisition and construction of the Second Powerhouse and
placing the same in operation (including the premiums on any insurance and
fidelity bonds required or obtained during construction), including
miscellaneous fees and costs in connection with the acquisition of lands, rights
of way, property rights, franchises, easements, costs of abstracts of title,
title insurance, cost of surveys and appraisals.
I. Paying
into the Expansion Reserve and Contingency Fund the amounts necessary to
maintain said Fund at Three Million Dollars ($3,000,000) on or prior to the Date
of Commercial Operation.
Notwithstanding
any other provision of this Resolution, prior to July 1, 1979, or the Date
of Commercial Operation, whichever is later, the costs and expenses, including
taxes of the District in connection with the operation and maintenance of the
Second Powerhouse, and the cost of all repairs, renewals and replacements to the
Second Powerhouse, shall be paid from the Construction Fund. Prior to
July 1, 1979, or the Date of Commercial Operation, whichever is later, all
revenues, income, receipts and other moneys derived from the operation of the
Second Powerhouse shall be deposited in the Construction Fund.
In any
event, amounts in the Construction Fund shall be applied to the payment when due
of principal of and interest on the Bonds to the extent that other moneys are
not available therefor and such amounts are hereby pledged as additional,
payments to the Expansion Bond Fund to the extent required for any such
deficiency.
SECTION 6.10. Distribution of Moneys in
Construction Fund. As soon as practicable after the
Construction Engineer shall have filed the report required by Section 8.4
hereof, any balance then remaining in the Construction Fund shall be used and
applied by the Construction Fund Trustee as follows in the following
order:
First, to
pay to the Bond Fund Trustee for credit to the Interest Account in the Expansion
Bond Fund that amount, if any, of the interest to accrue on the Bonds to
July 1, 1979; and to the extent of any remainder of such
balance,
Second,
to set aside in the Construction Fund the amounts specified in such report
pursuant to clauses (c), (d), (e), and (f) of Section 8.4 hereof, and
to apply the same to the payment of the Cost of Construction in accordance with
the provisions of Section 6.9 hereof; and to the extent of any remainder of
such balance,
Third, to
pay to the Bond Fund Trustee for deposit in the Reserve Account the amount of
any deficiency in such Account; and to the extent of the remainder of such
balance,
Fourth,
to pay to the Bond Fund Trustee such remainder for credit to the Bond Retirement
Account.
As soon
as practicable after the Construction Engineer shall have led the report
required by Section 8.5 hereof, the Construction Fund Trustee shall pay to
the Bond Fund Trustee the amount specified in such report
pursuant
to clause (b) of such Section for deposit in the Reserve Account to the
extent of any deficiency in such Account, and to the extent of any remainder of
such amount the Construction Fund Trustee shall pay to the Bond Fund Trustee
such remainder for credit to the Bond Retirement Account.
SECTION 6.11. Moneys in Construction Fund
Pending the Application Thereof. The moneys in the
Construction Fund and in the Construction Interest Account therein, pending
their application as provided in this Resolution, shall be held in trust and
shall be subject to a prior and paramount lien and charge in favor of the
holders of the Bonds, and the holders of the Bonds shall have a valid claim on
such moneys for the further security of said Bonds until paid out or transferred
as herein provided.