CONSTRUCTION AND OWNERSHIP AGREEMENT INDEX
Exhibit
10.10
CONSTRUCTION
AND OWNERSHIP
AGREEMENT
INDEX
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TITLE
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WITNESSETH
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1.
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Definitions
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2.
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Ownership
of Project
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3.
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Design,
Engineering and Construction Management
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4.
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Construction
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5.
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Construction
Cost
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6.
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Payment
of Cost of Project
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7.
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Accounting
and Reports
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8.
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Licenses
and Permits
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9.
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Insurance
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10.
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Owners'
Committee
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11.
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Damage
to or Destruction of Project: Disposition upon
Abandonment
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12.
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Liabilities
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13.
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Defaults
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14.
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Uncontrollable
Forces
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15.
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Waiver
of Right to Partition
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16.
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Transfer
and Assignments: Secured Interests
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17.
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Obligations
Are Several
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18.
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Successors
and Assigns
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19.
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Notices
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20.
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Additional
Documents
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21.
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Capital
Additions and Retirements
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22.
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Construction
of Additional Generating Units
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23.
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Regulatory
Approval
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24.
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Arbitration
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25.
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Rule
Against Perpetuities or Similar Or Related Rules
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26.
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Term
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CONSTRUCTION
AND OWNERSHIP
AGREEMENT
THIS
AGREEMENT, made as of the 30th day of July 1971, by and between THE MONTANA
POWER COMPANY, a Montana corporation, hereinafter referred to as "Montana" and
PUGET SOUND POWER & LIGHT COMPANY, a Washington corporation, hereinafter
referred to as "Puget".
WITNESSETH:
WHEREAS,
the parties desire to establish the terms and conditions relating to their
ownership, as tenants in common, and the planning, financing, acquisition,
construction, operation and maintenance of the Colstrip Steam Electric
Generating Project and related facilities, as hereinafter defined;
NOW,
THEREFORE, for and in consideration of the mutual covenants and agreements
herein stated and the performance thereof, all as hereinafter set forth, the
parties hereto mutually agree as follows:
1. Definitions
(a) "Project." Project
means the coal-fired thermal generating plant, consisting of two units, each of
350 megawatt nominal rating and related facilities as described in
Exhibit "A" attached hereto and the necessary real property, property
rights, including access easements and appurtenances, as described in Exhibit
"B" hereto, located near Colstrip, Montana.
(b) "Project
Agreements" means this Agreement together with the following
agreements:
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(i)
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Agreement
for the Operation and Maintenance of Colstrip Steam Electric Generating
Plant, hereinafter referred to as the "Operating
Agreement";
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(ii)
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Coal
Supply Agreement, Colstrip Steam Electric Generating Project, hereinafter
called the "Coal Agreement";
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(iii)
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Transmission
Agreement.
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(c) "Owners"
shall mean Montana and Puget or their successor or assigns.
(d) "Ownership
Agreement" shall mean this Agreement.
2. Ownership of
Project
Subject
to the terms and conditions hereinafter set forth, ownership of the Project
shall be as follows:
(a) The
Project other than coal shall be owned by the parties hereto as tenants in
common, with each party's respective undivided interests being in the following
percentages:
Montana
- 50%
Puget - 50%
Such
percentages are hereafter referred to as the "Ownership
Percentages". Each Owner shall be entitled to schedule and take an
amount of generation up to but not to exceed its Ownership Percentage of the
Project's net generating capability.
(b) All
of the respective covenants and agreements set forth and contained in the
Project Agreements are incorporated herein by this reference and shall bind and
shall be and become the respective obligations of each Owner, its successors and
assigns. It is the specific intention of this provision that, except
for the parties' mutual Waiver of Right to Partition as set forth in
subsection 15(b) of this Ownership Agreement, all of the covenants and
conditions of all of the Project Agreements shall be personal to the parties and
not covenants running with the land and shall be binding upon any party which
acquires any rights, title or interest of any Owner of the Project in, to and
under the Project Agreements, pursuant to subsections (b) through (e) of
Section 16.
3. Design, Engineering and
Construction Management
Montana
has entered into a Contract for Engineering, Procurement and Construction with
▇▇▇▇▇▇▇ Corporation, (hereinafter "Bechtel Contract") dated January 23,
1970. Puget became a party to said contract as of July 30,
1971. Unless otherwise agreed, Montana and Puget will retain on a
continuous basis, the ▇▇▇▇▇▇▇ Corporation or some other construction engineer or
engineering firm of national reputation recognized for knowledge, skill and
experience in the design and construction managements of electrical generating
facilities until the parties mutually agree that the Project has been
completed.
4. Construction
(a) The
Project shall be constructed at the lowest reasonable cost and in a prudent and
skillful manner in accord both with standards prevailing in the utility industry
for projects of a similar size and nature and with applicable laws and final
orders or regulations of regulatory agencies having jurisdiction and
substantially in accordance with the description set forth in the attached
Exhibit "A". The Project shall substantially conform to designs,
plans, specifications and
construction schedules which have been or will be made available to the parties
as such are available. It is intended that the contracts for purchase
of equipment and construction of the Project shall be scheduled so as to provide
for a date of initial test and operation of the Project, presently scheduled for
May 1, 1975, for the first unit and May 1, 1976, for the second unit and for the
commercial operation of the first unit of the Project not later than July 1,
1975, and for the completion and commercial operation of the second unit of the
Project not later than July 1, 1976.
(b) Any
agreements, purchase contracts and orders entered into by Montana in its own
name providing for the purchase of materials, equipment and services for the
Project are hereby dedicated to the Project and ratified by
Puget. Montana, with reasonable expedition as agent for itself and
Puget, shall enter into additional contracts for such purposes as well as
contracts for the construction of the Project; Montana will continue as agent
for itself and Puget to incur obligations and make expenditures relating to the
engineering and other services necessary for continued Project planning and
engineering.
(c) With
the assistance of Puget, Montana on its own behalf as to its own interest and as
agent for Puget shall supervise and perform engineering and other services in
connection with the engineering and construction of the
Project. Montana shall consult with Puget prior to making major
decisions involving the design and other engineering, purchasing, subcontracting
and construction of the Project.
(d) As
soon as practical after the execution of this Agreement, Montana shall submit to
Puget an estimate of total cost and a schedule setting forth the estimated costs
of constructing and completing the Project separately by
months. Montana shall thereafter submit quarterly revisions of such
schedule to Puget, together with a summary report of the Construction Costs
accumulated to date and other pertinent data including, when requested, copies
of construction contracts, purchase orders and other agreements relating to
construction progress.
(e) Montana
will maintain, or cause to be maintained separately, appropriate documentation
and records of all Project expenditures and charges made and incurred by
Montana, together with all other charges, payments and any expenses or receipts
relating to Project construction. Such records of Montana shall be
made available for inspection by Puget at all reasonable times.
(f) Puget
authorizes and directs Montana to schedule deliveries of appropriate quantities
of coal and other fuel to permit testing of the first and second units of the
Project as each said unit becomes ready therefor. Montana shall
appropriately record coal and other fuel used for such purposes and furnish a
copy of such record to Puget. Montana
will schedule generation from testing to the Owners according to their
respective Ownership Percentages.
(g) Surplus
commodities, materials, equipment and the other personal property resulting from
construction of the Project shall be disposed of in accordance with
Section XVI(b) of the Operating Agreement.
5. Construction
Cost
Construction
Cost of the Project shall consist of payments made and obligations incurred by
either party in connection with the construction, installation and acquisition
of the Project, other than interest during construction, for:
(a) All
costs of preliminary investigation in the Colstrip-▇▇▇▇▇▇▇ area, land and land
acquisition, water development, development labor and other costs, design,
engineering, contractors' fees, construction labor, materials and supplies,
operator and other personnel training, testing, preparation of Operation and
Maintenance Manuals, and all other costs properly allocable to Construction
Costs. Any net receipts relating to construction shall be credited
against Construction Costs;
(b) All
costs of insurance obtained pursuant to paragraph 9 hereof, and applicable to
the period of construction;
(c) All
costs relating to injuries and damage claims which may be payable and paid
arising out of the construction of the Project less proceeds of insurance
maintained under paragraph 9 hereof or under the Bechtel Contract;
(d) All
federal, state or local taxes imposed upon the Project during the construction
period but excluding state and federal net income taxes levied upon income
derived by the Owners during said period;
(e) The
cost of all services performed and materials furnished by Montana and Puget
directly applicable to Project construction including:
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(i)
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Payroll
of employees, including principal department heads and officers based upon
an actual time or other agreeable basis, including all normal and usual
related employee benefit costs such as Social Security taxes, unemployment
insurance expense, group life insurance, group hospitalization and medical
insurance, pension funding expense, workmen's compensation, long-term
disability and other insurance, vacations, holidays, sick leave,
etc.;
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(ii)
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Materials
and supplies, including related purchasing and handling
costs;
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(iii)
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Travel
expenses, including use of Owners' transportation
equipment;
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(iv)
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Construction
power costs;
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(v)
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Other
miscellaneous costs.
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(f) No
administration and general expenses will be allocated to the Project during
construction as all applicable overhead costs will be included with the direct
costs charged to the Project under subsection (e) above.
6. Payment of Cost of
Project
(a) Montana
and Puget shall share Construction Costs according to their respective Ownership
Percentages. Notwithstanding completion of the Project, each Owner
shall remain liable for any claims arising out of the construction of the
Project and shall be entitled to any refunds, repayments, settlements or other
credits with such claims and credits divided according to their respective
Ownership Percentage share.
(b) Montana
shall submit to Puget a detailed accounting of all Construction Costs and
receipts through June 30, 1972 and Puget shall submit such an accounting to
Montana. Within fifteen (15) days after receipt of Montana's
accounting, Puget shall make an initial advance to Montana equal to one-half
(1/2) of the difference between Montana's statement and Puget's statement,
subject to later verification and acceptance of said
accountings. Montana's accounting shall include such carrying costs
as are mutually agreed by the Owners.
(c) From
and after the date hereof, not later than the 20th day of each month, Montana
will notify Puget of the estimated sums required for disbursements on account of
the construction of the Project during the succeeding calendar
month.
(d) Montana
will continue to process and pay Construction Costs on the Project in its usual
manner. Montana and Puget will establish a system of advances
mutually agreeable to both parties to provide Montana with funds to cover
Puget's share of Project's cost.
7. Accounting and
Reports
(a) Montana
shall at all times maintain and appropriately preserve separate books of account
containing detailed entries of all items of cost and receipts applicable to the
construction of the Project. Accounting
for all of such costs shall be in accordance with customary practices in the
electric utility industry and the basic records and documents shall be made
available to Puget for inspection at all reasonable times. Montana
shall furnish to Puget upon request, photocopies of all construction contracts
and purchase orders and of all accounting entries and vouchers in such detail as
may be necessary in order that each Owner may properly record its percentage of
the Construction Cost of the Project on such Owner's own books and
records.
(b) Montana
shall furnish to Puget monthly Construction Costs and progress reports and such
other reports as may from time to time reasonably be requested by
Puget. At the request of Puget, Montana shall provide certificates
signed by a responsible officer of Montana or an individual designated by him
for such signature setting forth the status of Project Construction costs and
application of funds. The certificate shall be in such form and
contain such information as is reasonably requested by Puget.
(c) Montana's
books and records relating to Project Construction Costs shall be open to
inspection by Puget or any independent auditors nominated by
them. Either party may request an independent audit of such Project
costs at any time during construction and at the completion thereof, the cost of
which shall be a Construction Cost. The records shall also be made
available on written request by any of the companies to independent auditors and
representatives of any regulatory body or taxing authority having jurisdiction
for inspection, copying, audit or other proper business
requirements.
8. Licenses and
Permits
Upon the
expiration of any licenses or permits required for the ownership, construction,
maintenance, or operation of the Project or in the event new such licenses or
permits shall be required, the Owners as tenants in common agree to file timely
applications for the same as may be necessary or appropriate, such licenses or
permits to be held as tenants in common in accord with each parties' respective
Ownership Percentage.
9. Insurance
(a) The
Owners shall procure at the earliest practicable time and thereafter maintain in
effect at all times hereinafter provided, to the extent available at reasonable
cost and in accord with standards prevailing in the utility industry for
projects of similar size and nature, adequate insurance coverage of the Project
with responsible insurers, with each Owner as a named assured and with losses
payable to the respective Owners for their benefit as their respective interests
may appear, to protect and insure against:
Workmen's
Compensation and Employer's Liability, public liability for bodily injury and
property damage, all risks of physical damage to property or equipment,
including transportation and installation perils, and such other insurance as
the Owners deem necessary, with reasonable limits and subject to appropriate
exclusions and deductibles. Self insurance under the State of
Montana's Workmen's Compensation laws may be substituted for the referenced
Workmen's Compensation and Employee's Liability insurance and the Owners agree
to cooperate to establish a procedure whereby the cost of such self insurance
shall be levelized over a three to five year period.
(b) The
premium costs for insurance coverages until the completion of construction shall
be a Construction Cost of the Project, and shall thereafter be an operating
expense and shall be borne by the Owners in their respective percentage
interests.
(c) To
the extent permitted by its insurance policies, each Owner waives any rights of
subrogation against the other Owner, its agents and employees, for losses,
costs, damages or expenses arising out of the construction, operation,
maintenance, reconstruction or repair of the Project.
10. Owners'
Committee
(a) As
a means of securing effective cooperation, interchange of information and
management of the property owned as tenants in common, on a prompt and orderly
basis in connection with various administrative and technical problems which may
arise from time to time under the terms and conditions of the Project
Agreements, the Owners hereby establish an Owner's Committee.
(b) Each
Owner shall notify the other Owner promptly of the designation of its
representative on the Owners' Committee and of any subsequent change in its
designation. Either of the Owners may, by written notice to the other
Owner, designate an alternate or substitute to act as its representative, to act
on the Committee in the absence of the regular member of the Committee, or to
act on specified occasions or with respect to specified matters.
(c) The
Owners' Committee shall have no authority to modify any of the provisions of
this Agreement.
(d) The
Owners' Committee shall meet at such times and places as agreed upon by the
members or when requested by either Owner upon 10 days' notice in
writing.
(e) Each
Owner shall have the right through its officers, employees or agents to inspect
the Project and Project records at any reasonable time and to require that the
Project be constructed in
accordance with the standards provided in paragraph 4.
11. Damage to or Destruction of
Project: Disposition upon Abandonment
(a) If
all or substantially all of the project be destroyed or damaged beyond repair or
damaged to the extent that the cost of repair substantially exceeds the proceeds
of insurance available for reconstruction or repair and the Owners do not agree
to reconstruct or repair the Project, or if for any reason the Owners determine
to abandon the Project, the salvageable portion of the Project and the plant
site shall be disposed of in accordance with a procedure agreed upon by the
Owners; the proceeds from such disposition shall be distributed to the Owners in
accordance with their respective percentages; any demolition, removal and
cleanup costs shall be charged against and borne by the Owners in accordance
with their respective percentages; provided, however, that if either of the
Owners of the Project elect to reconstruct the Project, the value of the Project
shall be appraised by independent appraisers and an amount of money equal to
such value multiplied by the percentage of such Owner not so electing shall be
paid by the Owner so electing; such Owner so receiving payment shall convey its
interest in the Project to the Owner so electing to reconstruct.
(b) In
the event that less than substantially all of the Project shall be destroyed or
damaged, and the cost of repair, restoration or reconstruction does not
substantially exceed the proceeds of applicable insurance, unless otherwise
agreed by Owners the Project shall be repaired, restored, or reconstructed by
the Owners in such manner as to restore the Project to substantially the same
general character and use as the original project.
12. Liabilities
(a) Each
of the Owners releases the other Owner, its agents and employees, for any
consequential losses or damages arising out of the construction, operation,
maintenance, reconstruction and repair of the Project, including but not limited
to loss of use and loss of profit.
(b) Any
loss, cost, liability, damage and expense to the Owners or any Owner, other than
damages to Owners resulting from loss of use and occupancy of the Project or any
part thereof, resulting from the construction, operation, maintenance,
reconstruction or repair of the Project and based upon injury to or death of
persons or damage to or loss of property including the Project and other
property of Owners or other parties, to the extent not covered by collectible
insurance, shall be charged to Project Construction Costs or Project Operating
Expenses, whichever may be appropriate.
13. Defaults
(a) Each
Owner hereby agrees that it will make all payments and perform all other
obligations by it to be made or performed pursuant to all of the terms,
covenants and conditions contained in the several Project Agreements and that a
default of any of the terms, covenants and conditions contained in any of the
Project Agreements shall be an act of default under this Agreement.
(b) In
the event either Owner shall dispute an asserted default by it, then such Owner
shall make payment of any sums in dispute or perform the obligation in dispute
but may do so under protest. Such protest shall be in writing and
shall specify the reasons upon which the protest is based by copies thereof
being mailed to the other Owner. Upon resolution of such dispute,
then the payments advanced or made between Owners, as in this paragraph
provided, shall be adjusted appropriately.
14. Uncontrollable
Forces
No Owner
shall be considered to be in default in the performance of any of the
obligations hereunder; other than obligations of either Owner to pay costs and
expenses, if failure of performance shall be due to uncontrollable
forces. The term "uncontrollable forces" shall mean any cause beyond
the control of the Owner affected and which, by the exercise of reasonable
diligence, the party is unable to overcome, and shall include but not be limited
to an act of God, fire, flood, explosion, strikes, labor disputes, labor or
material shortages, sabotage, an act of the public enemy, civil or military
authority, including court orders, injunctions, and orders of government
agencies with proper jurisdiction prohibiting acts necessary to performance
hereunder or permitting any such act only subject to unreasonable conditions,
insurrection or riot, an act of the elements, failure of equipment, or inability
to obtain or ship materials or equipment because of the effect of similar causes
on suppliers or carriers. Nothing contained herein shall be construed
so as to require an Owner to settle any strike or labor dispute in which it may
be involved. Any party rendered unable to fulfill any obligation by
reason of uncontrollable forces shall exercise due diligence to remove such
inability with all reasonable dispatch.
15. Waiver of Right to
Partition
(a) The
Owners and each of them shall accept title to the Project, as tenants in common,
and agree that their interests therein shall be held in such tenancy in
common.
(b) So
long as the Project or any part thereof as originally constructed, reconstructed
or added to is used or useful for the generation of electric power and energy,
or to the end of the period permitted
by applicable law, whichever first occurs, the Owners waive the right to
partition whether by partition in kind or sale and division of the proceeds
thereof, and agree that they will not resort to any action at law or in equity
to partition and further waive the benefit of all laws that may now or hereafter
authorize such partition of the properties comprising the Project. It
is agreed this covenant shall be deemed to run with the land.
16. Transfer and
Assignments: Secured Interests
The
undivided interest of either Owner in the Project, and all or any part thereof,
and in the Project Agreements, may be transferred and assigned as follows but
not otherwise:
(a) To
any mortgagee, trustee, or secured party, as security for bonds or other
indebtedness of such Owner, 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 such
Owner;
(b) To
any investor-owned corporation or entity in the utility business into which or
with which the Owner making the transfer may be merged or
consolidated;
(c) To
any corporation or entity the stock or ownership of which is wholly owned by the
Owner making the transfer;
(d) To
any other person; provided that the Owner shall first offer to transfer its
interest or any part thereof to the other Owner, at the amount of, and on terms
not less advantageous than, those of a bona fide offer from a buyer able and
willing to purchase such Owner's interest. The offer shall remain
open for the period specified by the Owner but not less than six
(6) months;
(e) To
any other person where the Owners consent to such transfer in advance in
writing.
No
transfer or assignment of any interest in the Project or any Project Agreement
pursuant to subparagraphs (b) through (e) above may be made unless
simultaneously the Owner's interest or part thereof in all other Project
Agreements is similarly transferred or assigned to the same person or persons,
and such person or persons have assumed in writing all the duties and
obligations of the Owner transferring or assigning under this Agreement and
under all other Project Agreements. Transfers or assignments shall
not relieve an Owner of any obligation hereunder, except to the extent agreed in
writing by all other Owners.
17. Obligations are
Several
The
duties, obligations and liabilities of Montana and Puget hereunder are intended
to be several and not joint or collective and neither shall be jointly or
severally liable for the acts, ommission, or obligations of the
other. Nothing herein contained shall be construed
to create an association, joint venture, partnership, or impose a partnership
duty, obligation or liability, between Montana and Puget. Neither
party shall have a right or power to bind the other party without its express
written consent, except as expressly provided in this Agreement. This
Agreement shall be construed in accordance with the laws of the State of
Montana.
18. Successors and
Assigns
Subject
to the restrictions on transfer and assignment herein provided, all of the
respective covenants and obligations of each of the Owners shall be and become
the respective obligations of the successors and assigns of each such
Owner. It is the specific intention of this provision that all such
covenants and obligations shall be binding upon any party which acquires any of
the right, title or interest of either of the Owners in the Project pursuant to
subsections (b) through (e) of Section 16.
19. Notices
Any
notice, demand or request provided for in this Agreement served, given or made
in connection therewith shall be deemed properly served, given or made if given
in person or sent by registered or certified mail, postage prepaid, addressed to
the party or parties at its or their principal place or places of business to
the attention of the president or chief executive officer of Montana or
Puget. Either party may at any time, and from time to time, change
its designation of the person to whom notice shall be given by giving notice to
the other party as hereinabove provided.
20. Additional
Documents
Each
Owner, upon request by the other Owner, shall make, execute and deliver any and
all documents reasonably required to implement the terms of this
Agreement.
21. Capital Additions and
Retirements
Capital
improvements, betterments, replacements and additions shall be made and
accounted for as provided in Article XII of the Operating
Agreement. Capital retirements shall be made as mutually agreed by
the Owners.
22. Construction of Additional
Generating Units and Provisions For Additional Facilities
(a) Each
Owner shall have the right to install and operate on the Project land such
facilities as are reasonably required to enable it to deliver to its own system
the power to which it is entitled under the Project Agreements, and to establish
interconnections between its system and that of the other Owner; provided,
however, that the facilities of either Owner shall be so installed and operated
as not to burden or unreasonably interfere with those of the other Owner or the
Project, the construction on the Project land of generating units in addition to
the first two units, or the ultimate full utilization of the land. In
the event that an Owner proposes to install or operate facilities which would
require the relocation of previously installed facilities of the other Owner, or
of the Project, but would otherwise meet the requirements of the preceding
sentence, the Owner desiring to install or operate such facilities shall have
the right to call for such relocation if it bears the cost thereof.
(b) Montana
either individually or jointly with other parties shall have the right to
construct and operate on Project real property (subject to the provisions of
subparagraph (c) giving Puget a right to participate therein) additional
generating units and necessary appurtenances thereto; provided, however, that no
unit with a planned net capability less than 180 MW shall be so constructed
and operated without the consent of Puget and that any additional generating
units and related appurtenances shall be so installed and operated as not to
burden or unreasonably interfere with the facilities of Puget, the Project, or
the ultimate full utilization of the Project Site for electric power
generation. In the event Montana individually or jointly with any
other party decides to construct and operate an additional generating unit or
units and appurtenances which would require the relocation of previously
installed facilities of Puget or the Project, it shall have the right to call
for or accomplish such relocation, as the case may be, if it bears the cost
thereof. In connection with any such additional units Montana
individually or jointly with other parties shall have the right to use any
facilities installed as part of the Project and to modify such facilities for
use in connection with the installation or operation of such additional
generating units and appurtenances; provided, however, that such use of Project
facilities shall not burden or unreasonably interfere with the Project, that the
cost of any modification shall be borne by Montana, and that Montana shall pay
to the Project Owners a reasonable monthly facilities' charge based on the
portion of the Project facilities devoted to the use of the additional units as
compared to the portion devoted to the generating units of the Project, which
charge shall take into account such costs as capital and other carrying charges,
depreciation, O & M, taxes, insurance and return on
investment.
(c) To
the extent Montana individually or jointly with any other party decides to
construct and operate additional steam electric generating units at the Project
Site, Puget shall have the right to participate in the ownership of such units
to the extent it elects, but not to exceed fifty percent (50%) of the total
ownership of each unit, under terms and conditions substantially similar to
these Project Agreements taking into account intervening
changes in construction, ownership and operating costs and
conditions. Such right shall be exercised with respect to each
individual additional generating unit at the time that Montana makes a firm
decision to construct said additional unit and may not be cumulated for
application against later generating units.
(d) In
the event any or all of the next 1400 MW of such additional generation, not
including generation from units agreed to be constructed under the Project
Agreements, is not constructed on the Project Site but is constructed elsewhere
in Montana by Montana using Colstrip coal, Puget shall have the right to
participate in the ownership of such plants to the extent it elects but not to
exceed fifty percent (50%) of the total ownership of each unit under terms and
conditions substantially similar to these Project Agreements taking into account
intervening changes in construction, ownership and operating costs and
conditions. Such right to participate in off-site generation shall
not extend, however to generating facilities owned in whole or in part by
Montana constructed to serve a specific industrial load, generation developed or
utilized as a by-product of an industrial process, generation undertaken jointly
with another Montana utility, or generation undertaken jointly with a public or
quasi public agency and any such generation in which Puget does not have a right
to participate shall not reduce Puget's entitlement to participate in the
aforementioned 1400 MW of additional generation; provided, however, that to
the extent Puget has a right to participate in future generation under this
subsection (d) it must exercise such right with respect to each individual
additional generating unit at the time that Montana makes a firm decision to
construct said additional unit and such right to participate may not be
cumulated for application against later generating units.
(e) After
Montana has offered to Puget the opportunity to participate in 1400 MW of
additional generation under paragraphs (c) or (d) above, Puget shall have
the right to participate in the ownership of any steam electric generation
undertaken by Montana which uses Colstrip area coal to the extent it elects but
not to exceed twenty-five percent (25%) of the total ownership in any such
generation plant. Puget's right to participate shall be upon a right
of first refusal basis whereby Montana will offer such right to Puget at the
time that Montana makes a firm decision to construct an additional unit upon
terms and conditions not less favorable to Puget than would be offered to any
other bona fide proposed participant. Such right shall not extend,
however, to generating facilities owned in whole or part by Montana constructed
to serve a specific industrial load, generation developed as a by-product of an
industrial process, generation undertaken jointly with another Montana utility,
generation undertaken jointly with a public or quasi public agency or to
generating facilities owned and operated solely by Montana.
(f) All
of the rights of Puget described in paragraphs (d) and (e) above shall be
subject to the following limitations:
(1) Such
rights to participate shall terminate to the extent not previously exercised on
June 1, 1992;
(2) If
Puget elects to participate pursuant to subsections (c), (d), or (e) above,
it will so advise Montana in writing within ninety (90) days of the receipt
by it of written notice from Montana that it has made a firm
decision. Prior to sending such notice, Montana shall make available
to Puget any relevant information it has concerning the proposed
plant;
(3) Such
rights are not assignable by Puget to any other entity without the consent of
Montana except to a corporation whose stock or other ownership is wholly owned
by Puget or except to a successor corporation to Puget resulting from a
corporate reorganization in which there is no substantial change in beneficial
ownership;
(4) Such
rights to the extent not previously exercised, may be withdrawn by Montana with
respect to a proposed plant upon a sufficient showing of unsound financial or
other adverse operating condition of Puget which has or may have a significant
material bearing upon Puget's ability to perform its obligations and discharge
its liabilities under agreements reasonably necessary to construct, own and
operate such additional generating units;
(5) Montana,
unless otherwise mutually agreed, shall be the Operator of any steam electric
generating plants constructed under the terms of this Section 22;
and
(6) Nothing
contained in this Section 22 shall be construed to constitute a dedication
of coal reserves owned by Western Energy Company, a subsidiary of Montana, nor
an agreement to dedicate such reserves.
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(g)
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(1)
|
"Colstrip
Area Coal" or "Colstrip Coal" as used in this Section 22 means those
coal reserves now or hereafter owned or controlled by Western Energy
Company, a Montana corporation, within the sections shown on
Exhibit "C" attached;
|
(2) "Project
Site" as used herein shall include the real property, property rights, easements
and appurtenances described in Exhibit B.
23. Regulatory
Approval
It is
understood that transfers of property under this Agreement to
another party hereto may be subject to the jurisdiction of state or federal
regulatory agencies and this Agreement shall not be effective as to such
transfers until approved by all regulatory authorities having
jurisdiction.
24. Arbitration
Any
controversies arising out of or relating to any of the Project Agreements other
than the "Coal Agreement" including any failure of the Owners to agree with
respect to any matter requiring Owners' agreements hereunder, which cannot be
resolved through negotiations between the parties hereto within thirty
(30) days after inception of the matter in dispute, shall be submitted to
an Arbitrator, competent and experienced in electric utility industry accounting
and operations. If the parties cannot mutually agree upon such
Arbitrator, then upon petition of either party, such Arbitrator shall be
appointed by the senior United States District Judge for the District of
Montana. The arbitration shall be conducted under the rules of the
American Arbitration Association. The Arbitrator shall render his
decision in writing not later than thirty (30) days after the matter has been
submitted to him, and such decision shall be conclusive and binding upon the
parties. The costs incurred by any arbitration proceedings shall be
borne equally by the Owners.
25. Rule Against Perpetuities Or
Similar Or Related Rules
If the
duration of any term or condition of the Project Agreements shall be subject to
the rule against perpetuities or a similar or related rule then the
effectiveness of such term or condition shall not extend beyond (i) the
maximum period of time permitted under such rule, or (ii) the specific
applicable period of time expressed in this Agreement, whichever is
shorter. For purposes of applying the rule against perpetuities or a
similar or related rule the measuring lives in being shall be those of the
officers of Montana listed by name on page 104, Schedule of Officers, of
the annual report, FPC Form 1, filed by Montana with the Federal Power
Commission for the year ended on December 31, 1971, and the officers of
Puget listed by name on page 104, Schedule of Officers, of the annual
report, FPC Form 1, filed by Puget with the Federal Power Commission for
the year ended on December 31, 1971, together with all those officers'
children that are living on the date of execution of the Project
Agreements. As used in this paragraph the word "children" shall have
its primary and generally accepted meaning of descendants of the first
degree.
26. Term
This
Agreement shall continue for so long as the Project or any part thereof as
originally constructed, reconstructed or added to is used or useful for the
generation of electric power and energy, or to the end of the period permitted
by applicable laws, whichever first occurs.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement in several
counterparts.
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ATTEST:
/s/
▇.
▇▇▇▇▇▇
Secretary
|
PUGET
SOUND POWER & LIGHT COMPANY
By /s/
▇▇▇▇▇
▇. ▇▇▇▇▇
President
|
|
|
ATTEST:
/s/
▇▇▇▇
▇. ▇▇▇▇▇
Secretary
|
THE
MONTANA POWER COMPANY
By [Signature
Illegible]
President
|
|
STATE
OF
WASHINGTON
)
)
COUNTY
OF
KING
)
|
ss
|
On this
1st day of Sept, 1972, before me, the undersigned, a Notary Public in and for
the State of Washington, personally appeared ▇▇▇▇▇ ▇ ▇▇▇▇▇, known to me to be
president of PUGET SOUND POWER & LIGHT COMPANY and acknowledged to me that
he executed the within instrument on behalf of that corporation.
IN
WITNESS WHEREOF, I have hereunto set my hand and affixed my Notarial Seal the
day and year in this certificate first above written.
|
[Signature
Illegible]
Notary
Public for the State of Washington
Residing
at Bellevue
My
Commission
expires: 5/3/73
|
|
STATE
OF
MONTANA
)
)
COUNTY
OF SILVER
BOW )
|
ss
|
On this
11th day of September, 1972, before me, the undersigned, a Notary Public in and
for the State of Montana, personally appeared Geo. ▇. ▇'▇▇▇▇▇▇, known to me to
be the President of THE MONTANA POWER COMPANY and acknowledged to me that he
executed the within instrument on behalf of that corporation.
IN
WITNESS WHEREOF, I have hereunto set my hand and affixed my Notarial Seal the
day and year in this certificate first above written.
|
[Signature
Illegible]
Notary
Public for the State of Montana
Residing
at Butte, Montana
My
Commission expires: July 17,
1974
|
EXHIBIT
A
Construction
and Ownership Agreement
Colstrip
Units #1 and #2
DESCRIPTION
OF PROJECT
The
Project, located in Rosebud County, Montana, a coal-fired electric power plant,
will consist of two 350 MW nominally rated units, each with a turbine-generator,
coal-fired steam generator, condenser, pumps, motors, feedwater heaters, cooling
tower, pollution control system, and main and auxiliary power systems; and
facilities common to the two units, such as coal receiving and coal storage
systems, water treating systems, water pipeline, intake and pumping system from
the Yellowstone River, water storage facilities, ash handling and disposal
systems, waste water disposal systems, roads, utility systems and other site
development, offices, warehouses and machine shops, laboratory and all other
appurtenances and structures required for the efficient and reliable operation
of a modern steam-electric power plant up to and including the high voltage
terminals of the main power transformers. The Project shall include
trucks, automobiles, mobile equipment, machine shop equipment, laboratory
equipment, spare parts and other miscellaneous personal property required for
the efficient and reliable operation of a modern steam-electric power
plant. The Project shall also include the Project lands described in
Exhibit B, together with appurtenances, but excluding The Montana Power
Company substation site shown thereon. The easements or other real
property rights for the pipeline, intake and pumping station from the
Yellowstone River shall be part of the Project and shall be described in a
supplement to Exhibit B at the time acquired. Any necessary
related facilities located off the Project lands described in Exhibit B,
together with related real property rights, to the extent mutually agreed upon
shall be a part of the Project and shall be described in a supplement to
Exhibit B at the time acquired.