HomeMy WebLinkAbout7 UAMPS Intermountain Power Project Agenda Item # 7
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Public Utility District
Wo rl�cs h o p
To: Board of Directors
From: Stephen Hollabaugh
Date: October 13, 2006
Subject: UAMPS Intermountain Power Project Unit #3
History-
The District is a UAMPS member and is active within the IPP#3 Project
This project has progressed and is in the Development Phase of the Project and
the District will soon enter into the Power Sales Contract of the project
New Information
Stephen Hollabaugh will present a presentation and lead a discussion of the
Intermountain Power Project Unit 3 (IPP3) and its progress. Truckee Donner
PUD's interest in the project is 24,100 W.
The District has funded of the Development Phase of IPP#3 and is heading
toward the Power Sales Contract phase of the project.
Stephen Hollabaugh will discuss Truckee Donner PUD's load and resource
needs during the time period that this electric generation plant comes on line and
into the future. Attached within the presentation will be a few graphs that will
help explain the District future power needs.
Attached are the following documents
• Draft Power Sales Contract for the IPP Unit 3 Project
• Letter of September 26 from Doug Hunter giving a status of the Power
Sales Contract and the IPP#3 project.
The District has entered into a Development Agreement for the IPP#3 project
and will soon be asked to go to the next step of approving the Power Sales
Contract PUD that pertains to the Development Agreement and the amount of
entitlement share of IPP3 that Truckee-Donner PUD is interested in (24,100 kW).
This is a workshop so there isn't any action required at this meeting.
Staff will bring back an action item on the November 1, 2006 meeting to approve
the Power Sales Contract between UAMPS and Truckee Donner PUD.
UAWIk
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UTAH ASSOCIATED MUNICIPAL POWER SYSTEMS
2825 East Cottonwood Parkway
Suite 200
Salt Lake City, UT 84121-7055
Phone: 801-566-3938
Toll Free: 800-872-5961
Fax: 801-561-2687
MEMORANDUM
TO: Unit 3 Participants
FROM: Doug Hunter
DATE: September 26, 2006
SUBJECT: Unit 3 status as of September 22, 2006
At the most recent UAMPS IPP Unit 3 Project Management Committee ('PMC")meeting
(September 18, 2006)an overview of the Power Sales Contract("PSC")was made as well as a
presentation of UAMPS' Request For Proposals("RFP")for the position of UAMPS' Underwriter for
its'funding requirements for the construction of Unit 3.
While there was good discussion I thought that it might be helpful to provide an overview of the
PSC and the issuance of a RFP for financing.
POWER SALES CONTRACT
Pursuant to the discussions at the PMC there will be a revised draft PSC issued shortly.
"Recitals"and Section 1, "Definitions and Rules of Construction". These provisions of the
PSC were reviewed in summary fashion due to the self-evident nature of the sections. Please note
that, as used in the PSC, the term "Unit 3"refers to the entire 900 MW third generating unit to be
constructed at the Intermountain Generating Station, and the term "Project"refers to only that
portion of Unit 3 that is owned by UAMPS.
Section 2, "Term of Contract". The PSC becomes effective on the "Effective Date". This is the
date that UAMPS has received executed PSCs from the Participants with Entitlement Shares
totaling at least 90% (additional detail in Section 3).
Memorandum
September 26,2006
Page 2
The PSC will terminate 50 years from the Effective Date (this 50 year limitation is imposed by the
Utah Interlocal Cooperation Act), or it may be terminated earlier on the last to occur of 1)the Bonds
being paid off, or 2)the Project is taken out of service and all decommissioning costs are fully
funded. If the PSC terminates on its' 50th anniversary and the Project is still in service, UAMPS is
required to offer renewal power sales contracts to the Participants on substantially the same terms
as the PSC.
The PSC may also terminate, not withstanding the above paragraph, if 1) Unit 3 isn't fully
subscribed to under the Development Agreement, 2)the Ownership Agreement(the agreement
between UAMPS and the other co-owners of Unit 3) isn't executed, or 3) Bond Anticipation Notes
have not been issued by UAMPS by dates still to be determined; all as described in Section 30.
Section 3, "Acquisition of the Project; Financing of Initial Facilities; Sale and Purchase of
Entitlement Share". Once the PSC is effective, UAMPS may exercise its' option to participate in
Unit 3 with an undivided ownership interest(equivalent to the Entitlement Shares of all
Participants), but not greater than its' Development Cost Share.
Under the Ownership Agreement, UAMPS will be responsible for its portion of Unit 3 Construction
Costs. UAMPS will obtain construction financing for its share of the cost of Unit 3 by issuing Bond
Anticipation Notes that mature not earlier than six months after the estimated Commercial
Operation Date of Unit 3. After the Commercial Operation Date, the Bond Anticipation Notes will
then be refinanced with long-term Bonds. Section 5 describes the Participants'option to"bring
their own money to the table"for their share of the refinancing of the Bond Anticipation Notes.
There was considerable discussion on this topic, specifically over the use of a financing agent,
during the RFP presentation, which is reviewed below.
If, for some reason, Unit 3 doesn't have all of the necessary permits, the PMC may authorize the
issuance of Bond Anticipation Notes for any equipment purchase that would be necessary to
maintain the construction schedule.
One of the longest discussions in the meeting was concerning Section 3(d). As currently written,
UAMPS may adjust your initial Entitlement Share. In no event, shall the adjustment be less than
85%or greater than 115%. If you remember the Effective Date definition, the PSC becomes
effective when it is executed by both UAMPS and enough Participants that the sum of their
Entitlement Shares is equal to or greater than 90%. The PMC agreed to allow the increase up to
115%but requested that the provision permitting a reduction in Participants' Entitlement Shares be
deleted.
Section 4, "Construction of the Initial Facilities and Additional Facilities". This section
contains UAMPS covenants that it will, through the Project Agreements for Unit 3, 1)proceed with
the construction of the Project, 2) report monthly on its' progress, 3)provide a full accounting of the
construction costs and 4)construct Additional Facilities as determined by the PMC.
Memorandum
September 26, 2006
Page 3
Section 5, "Capital Cost Payments; Calculation of Capital Cost Payment Percentage". This
section provides each Participant with the right to elect to"bring its own money"for the refinancing
of the Bond Anticipation Notes, The Capital Cost Payment option will enable each Participant to
Put its own long-term financing in place for the Capital Costs of constructing the Project.
UAMPS must notify the Participants of 1)the date that the election must be made, 2)the Cost of
the Project, and 3)the Participant's Capital Cost Payment. This will occur no sooner than six
months after the Commercial Operation Date, and will likely occur when the PMC has determined a
substantially final cost of construction of the Project.
The current draft of the PSC requires the election by a Participant to bring all of the money required
to refinance its share of UAMPS' Bond Anticipation Notes. Some Participants requested that
partial Capital Cost Payments be allowed. UAMPS will consider this concept in the next draft.
If a Participant does not elect or fails to make a Capital Cost Payment, UAMPS will issue Bonds to
refinance that Participants' share of the Bond Anticipation Notes.
Section 6, "Operation, Maintenance and Management of the Project". UAMPS will cause the
operation, maintenance and management of the Project in an efficient and economical manner so
that the Participants will fully realize the benefits of their joint and cooperative undertaking.
This section also confirms the establishment of the PMC that will oversee the Project and details
the authority of the PMC over Project decisions.
Section 7, "Billing Periods, Billing and Payment". Typical billing periods as currently used by
UAMPS. The Participant has the obligation to make payments as billed by UAMPS regardless of
the availability of the Project to produce electricity(Take-or-Pay).
Section 8, "Scheduling of Electric Energy; Coordination with UAMPS Pool". The PMC will
approve the Operating and Scheduling Procedures needed for each Participant to use their
Entitlement Share.
Each Participant agrees to assign their Entitlement Share to the UAMPS Pool for the accounting of
the hourly position of the Participant as to the Project.
Section 9, "Point of Delivery; Transmission Contracts; Risk of Loss; Metering; Reactive
Power". In this Project, each Participant will be responsible to arrange for transmission from the
bus bar to their meter. Of course, UAMPS will assist you in fulfilling this requirement.
All Participants will need to wheel over the Intermountain Power Agency("IPA') Northern
Transmission System ("NTS")that interconnects to the common switchyard at the IPP site. IPA is
pursuing the arrangements for this service. IPA will be at the October 2nd meeting to explain the
status of these arrangements. If IPA fails in obtaining access, UAMPS has proposed that the
Memorandum
September 26, 2006
Page 4
UAMPS Pool(all 23 Utah Purchasers of Units 1 and 2 are Participants in the UAMPS Pool)make
the necessary transmission arrangements for Unit 3 to wheel from the Project bus to Mona or
Gonder. Several UAMPS Participants have already requested UAMPS to perform this service.
Wheeling from Mona or Gonder to the Participant's meter is already done for those Participants on
the PacifiCorp transmission system through UAMPS'Transmission, Scheduling and Operating
Agreement. For those Participants not on the PacifiCorp transmission system, UAMPS is currently
working with each of you to acquire transmission agreements.
Section 10, "Interruption or Reduction of Deliveries"and Section 11, "Availability of Electric
Energy". These sections state that everything will be done to make Unit 3 available for the
production of electricity but it will need to be taken off-line for routine maintenance and, of course,
forced outages from time to time.
Section 12, "Insurance", Section 13, "Annual Budget; Accounting", Section 14, "Information
to be Made Available"and Section 15, "Additional Bonds and Refunding Bonds".
UAMPS shall acquire insurance for the Project as required by the PSC and the Project
Agreements.
UAMPS will produce, for PMC approval, an annual budget of all of the known and anticipated
costs.
At each PMC meeting (held at least quarterly), the Annual Budget will be presented in terms of
actual costs. The PMC may amend the Annual Budget, as necessary.
As is the case in all UAMPS Projects, each Participant will have access to all accounts,
documents, contracts, financing records, insurance policies as well as any other document
applicable.
The Participant agrees to provide UAMPS with all applicable information requested.
The PMC may issue Additional Bonds as needed for the Project. They may also retire Bonds with
the issuance of Refunding Bonds. If Additional Facilities are to be added to the Project that require
additional financing, the PMC will determine if Participants may"bring their own money'in lieu of
the issuance of Additional Bonds by UAMPS.
Section 16, "Disposition or Termination of the Project'. UAMPS shall not dispose of the
Project, in any manner, without the consent of all of the Participants. If the Project is terminated,
UAMPS shall salvage the value and if there are outstanding Bonds apply proceeds to them or if
not, distribute the proceeds to the Participants.
Memorandum
September 26, 2006
Page 5
Section 17, `Representations, Warranties, Covenants and Power Sales Contracts of the
Participant". The Participant represents and warrants 1) it is duly created under the laws of its'
State, 2)the PSC was duly authorized by its'governing body, 3) its' execution of the PSC is valid,
and 4)there is no pending proceeding affecting the enforceability of the PSC.
The Participant covenants that it will 1)maintain electric service rates sufficient to meet its'
obligations under the PSC, 2)treat all payments made to UAMPS as an operating expense, and 3)
keep its'electric system in good working order. This phrase, "keep its'electric system in good
working order", caused a discussion of it purpose. The topic is being researched and will be
reported back to the PMC. This covenant continues by requiring the Participant, before entering
into other take-or-pay power sales contracts or granting franchises, to undertake an impact study
by a Qualified Independent Engineer as to Participant's continuing ability to meet its obligations
under the PSC.
The Participant also covenants that it will 1) not sell its electric system nor any y part of its
Entitlement Share without allowing UAMPS to structure the transaction to protect the Project, 2)
follow Prudent Utility Practice, and 3) not operate its'electric system nor sell its'output of the
Project in any manner that will adversely impact the tax exempt status of UAMPS' Bonds.
Section 18, `Reserve and Contingency Fund'. UAMPS may establish funds as needed for the
Project, which would be billed to the Participant.
Section 19, "Pledge of Payments". This section authorizes UAMPS to pledge the amounts
payable under the PSCs to secure its Bond Anticipation Notes and Bonds.
Section 20, "Default by Participant", Section 21, "Continuing Obligation of Participant; Right
of UAMPS to Discontinue Service", Section 22, "Transfer of Entitlement Share Following
Default; Other Actions by UAMPS", Section 23, "Other Default by Participant", Section 24,
"Default by UAMPS; Dispute Resolution", Section 25, "Abandonment of Remedy"and
Section 26, "Waiver of Default". All of these sections deal with default.
A Participant is in default if it 1)fails to make any payment to UAMPS, 2)fails to observe any
covenants, agreements or obligations in the PSC, or 3)files for bankruptcy.
If a Participant does not cure its default, UAMPS may terminate its Entitlement Share and allocate
it to the other Participants. The other Participants are obligated to take their pro rata share of the
defaulting Entitlement Share, subject to a maximum mandatory Entitlement Share increase of 25%.
In addition, if some Participants desire more Entitlement Share than that the pro rata amount, those
Participants taking a mandatory increase will be relieved by the pro rata amount thereof. As a last
effort, UAMPS can try and sell any Entitlement Share not desired by a pick-up Participant. In no
case shall the defaulting Participant be relieved of repaying UAMPS for any un-recovered funds.
Memorandum
September 26, 2006
Page 6
If UAMPS defaults as to any Participant, the Participant must bring such dispute to PMC for
resolution. If the PMC is unable to resolve the issue, the Participant may take legal action.
If any default is abandoned, the Parties return to their status before such action was taken. Waiver
of a default does not alter any future action of either Party.
Section 27, "Relationship to and Compliance with Other Instruments", Section 28, "Liability
of Parties"and Section 29, "Assignment of Power Sales Contract".
These sections incorporate 1)the Financing Documents, and 2)the Project Agreements and the
Permits into the PSC. Both UAMPS and the Participant agree to the responsibility and liability of
operating the Project.
Neither UAMPS nor the Participant may assign its interests under the PSC, provided that UAMPS
may assign its interests pursuant to the Financing Documents to secure its Bond Anticipation
Notes and Bonds. The Participant shall assign its' Entitlement Share to the UAMPS Pool as
discussed in Section 7.
Section 30, "Termination or Amendment of Power Sales Contract". This section discussed in
Section 2.
Section 31, "Notices and Computation of Time", Section 32, "Relationship of UAMPS and
the Participant; Relationship among Participants",Section 33, "No Recourse Against
Officers, Etc. of UAMPS or Participant", Section 34, "Applicable Law; Construction"and
Section 35, "Severability; No Merger".
These sections provide for 1)proper notice, 2)the PSC sets forth the entire relationship between
UAMPS and the Participant with respect to the Project, 3) no person is individually liable for actions
under the PSC, 4)the PSC will be governed by the laws of the State of Utah, and 5) if any part of
the PSC is judged invalid it has no effect on the other sections.
This Power Sales Contract constitutes the entire and complete agreement between the Parties.
ISSUANCE OF RFP FOR FINANCING
The final discussion of the meeting was over the issuance of a RFP for the position of UAMPS'
Underwriter for its'funding requirements as to the construction of Unit 3. There was a concern
expressed by a few Participants that UAMPS should not pursue its'financing until after IPA has
made a presentation to the PMC related to IPA providing all financing for the Project. IPA will be
making this presentation during the October 2nd meeting.
As was discussed in the review of the Power Sales Contract, UAMPS is obligated to provide
financing for the Participants(Section 3) unless they elect to bring their own money(Section 5).
Memorandum
September 26, 2006
Page 7
The current financing structure for UAMPS' portion of Unit 3 Construction Costs is that UAMPS will
use Bond Anticipation Notes to be "taken-out"no earlier than six months from the Commercial
Operation Date.
This strategy 1)should decrease the interest during construction and 2) reduce the financing risk
during construction of Unit 3. The pro forma for the Project assumes three financings over the
four-year construction period for UAMPS' share of the Cost of Construction (-$1 billion). The first
financing will be at the beginning of construction (early date, June '07, late date, 1st quarter of`08).
The second financing will be approximately a year and one-half later. The final financing will be
approximately one-year before Commercial Operation Date.
Over a four-year construction period the financial markets will change. The credit rating of any or
all of the Participants could change. If Participants are allowed to bring their own money to each of
these financings, the potential that one or both of these market changes may occur could have a
negative impact on the Participant's financing ability. One Participant, or a small group of
Participants or their financial agent has a much higher risk of being negatively impacted by market
changes than the whole group.
The results, to the rest of the Participants, of any one Participant or group of Participants not
getting their money to UAMPS are disastrous. It could result in a default by those Part
Agreement. icipants,
which may put UAMPS in jeopardy of a default to the other three Owners under the Ownership
In Section 5, of the PSC, the Participants have the option to "bring their money to the table"for
their share of the refinancing of UAMPS Bond Anticipation Notes. Each Participant can issue its
own bonds, obtain its own loan or use a financing agent or conduit to obtain the funds necessary
for it to make the Capital Cost Payment.
As most of you know, there are currently four potential financing agents other than UAMPS that
desire to provide financial services to Unit 3 Participants. These are:
1. Idaho Energy Resource Authority. IERA has bonding authority for the Participants that
serve retail utility customers in Idaho. The UAMPS Participants considering using IERA
are Idaho Falls, and IDEA members - Burley, Heyburn, and Rupert. There have also been
discussions by the RUS Cooperative members of IDEA about using IERA.
2. Intermountain Power Apenc_v. IPA will be making a presentation to the PMC on Monday,
October 2nd. The UAMPS Participants considering using IPA are the current 23 Members
of IPA.
3. Cooperative Finance Cooperation. CFC has indicated that they will be in position to
finance the four cooperative and one PUD members within IDEA and UAMPS.
4. Silver State Association. Silver State currently doesn't have any bonding authority under
Nevada law but they are still discussing their alternatives and may form something similar
Memorandum
September 26,2006
Page 8
to IERA. The UAMPS Participants discussing this option are Overton PUD, Lincoln County
PUD, Boulder City and Valley REA(Valley and Overton may also use CFC).
Each Participant has the right(but not the obligation)to"bring its own money'for its share of the
refinancing of UAMPS' Bond Anticipation Notes.
It is important to note that the right to bring money for the take-out of the Bond Anticipation Notes is
solely that of the Participant. If a Participant desires to elect to use a financial agent, such a
relationship is outside the four corners of the PSC or Project Agreements. This will require a
separate contract between you and the financing agent. Financing arrangements between a
financial agent and a Unit 3 Participant must not have any impact on the PSC.
Once the Project is completed and in operation, each Participant will be allowed to bring their
money. The risk of construction will have passed and each Participant will then be in a better
position to evaluate the credit and financing risks.
DRAFT
10/05/06
INTERMOUNTAIN UNIT 3 PROJECT
POWER SALES CONTRACT
BETWEEN
UTAH ASSOCIATED MUNICIPAL POWER SYSTEMS
AND
{PARTICIPANT}
DATED AS OF DECEMBER 1, 2006
2062950.01.15.B.doc
0866665/JCB/mo
Section 33. Relationship of UAMPS and the Participant; Relationship
among Participants.............................. ..............................43
Section 34. No Recourse Against Officers, Etc. of UAMPS or
Participant............................................................................................43
Section 35. Applicable Law; Construction.............................................................43
Section 36. Severability; No Merger.......................................................................44
SCHEDULE I Schedule of Participants,Entitlement Shares, Capital Cost Payment
Percentages, Debt Service Percentages and Debt Service Shares
EXHIBIT I Description of Initial Facilities
EXHIBIT II Form of Participant's Annual Information Report
EXHIBIT III Form of Participant's Certificate
EXHIBIT IV Form of Participant's Bring-Down Certificate
EXHIBIT V Form of Opinion of Counsel to the Participant
EXHIBIT VI Form of Bring Down Opinion of Counsel to the Participant
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WHEREAS, prior to its authorization of the execution, delivery and performance by the
Participant of this Power Sales Contract, the governing body of the Participant has reviewed (or
caused a review to be made on its behalf) various descriptions and summaries of the Project, the
Project Agreements and this Power Sales Contract, the Engineering Studies and Reports and the
Participant's current and reasonably anticipated future requirements for Electric Power and
Electric Energy, and the governing body of the Participant has determined that it is necessary and
desirable for the Participant to enter into this Power Sales Contract in order to obtain a long-
term, cost-based supply of Electric Energy by the acquisition of an Entitlement Share pursuant to
the terms and conditions of this Power Sales Contract;
WHEREAS, pursuant to the Power Sales Contracts and subject to the provisions of the
Project Agreements, UAMPS will operate or cause the Project to be operated and will schedule
the Project Output for the joint and ratable benefit of all of the Participants and, in order to
maximize the benefits of the Project to the Participant and to all other Participants, the
Participant desires to authorize UAMPS to cause the Project to be operated in accordance with
Prudent Utility Practice and to take certain other actions with respect to the disposition of the
Project Output, all as provided herein; and
WHEREAS, UAMPS and the Participant are duly authorized under applicable provisions
of law, to execute, deliver and perform this Power Sales Contract and their respective governing
bodies and any regulatory agencies having jurisdiction have taken all necessary actions and
given all necessary approvals in order to constitute this Power Sales Contract as the legal, valid
and binding obligation of the parties.
NOW, THEREFORE, for and in consideration of the mutual covenants and agreements
herein contained, it is agreed by and between the parties to this Power Sales Contract as follows:
Section L Definitions and Rules of Construction. (a) As used in this Power Sales
Contract and in the recitals set out above:
"Act" means the Interlocal Cooperation Act, Title 11, Chapter 13, Utah Code Annotated
1953, as amended, and other applicable provisions of law.
"Additional Bonds" means additional Bonds from time to time issued by UAMPS
pursuant to the Financing Documents and in accordance with Section 16.
"Additional Facilities" means capital additions, betterments and replacements and other
capital items (other than the Initial Facilities) directly and functionally related to the Project,
including electric transmission, fuel supply, transportation and related facilities, additional
electric generating and related facilities located at the Project site, fuel supplies for the use of the
Project and any other facilities, improvements and properties, all as approved by the Project
Management Committee. UAMPS may own any Additional Facility by itself or may own an
undivided interest therein with others.
"Annual Budget" means the budget adopted by UAMPS for each Contract Year pursuant
to the provisions of Section 14.
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"Commercial Operation Date" means (1) with respect to the Initial Facilities, means the
"Date of Firm Operation" as defined in the Ownership Agreement and (2) with respect to any
Additional Facilities, means the date on which such Additional Facilities are capable of
continuous firm operation, as determined under the applicable Construction Agreements.
"Commercially Reasonable"or "Commercially Reasonable Efforts" means, with respect
to any action required to be made, attempted or taken by UAMPS under this Power Sales
Contract, such efforts as a reasonably prudent business would undertake, consistent with Prudent
Utility Practice, for the protection of its own interest under the conditions affecting such action,
including without limitation, the amount of notice of the need to take such action, the duration
and type of the action, the competitive environment in which such action occurs, the contractual
and legal obligations of UAMPS and the risk to UAMPS in connection with such action.
"Common Facilities Agreement" means the Common Facilities and Site Agreement by
and among the Owners, LADWP and IPA providing for the acquisition, utilization and operation
of interests in or rights to use certain existing common facilities at IGS in connection with
Unit 3.
"Construction Agreements" means the and each other agreement providing
for the acquisition and construction of any part of the Initial Facilities and any Additional
Facilities.
"Construction, Lease, Use and Services Agreement" means the Unit 3 Construction,
Lease, Use and Services Agreement by and among the Owners, LADWP and IPA.
"Cost" or "Cost of the Project" means all costs and expenses paid or incurred by
UAMPS in connection with the acquisition and construction of the Project, whether prior or
subsequent to the Effective Date, including but not limited to amounts paid or payable under the
Common Facilities Agreement, the Construction Agreements and the Construction, Lease, Use
and Services Agreement and all costs and expenses incurred by UAMPS in connection with its
investigation, negotiation and review of the Project and the Project Agreements, all expenses
preliminary and incidental thereto, and the cost of planning, designing, acquiring, constructing
and placing in operation the Initial Facilities and any Additional Facilities. "Cost" or "Cost of
the Project" also includes, but is not limited to, the following:
(1) amounts payable pursuant to the Development Agreement and the
Development Coordination Agreement;
(2) payment to UAMPS or any Participant to reimburse advances and
payments made or incurred for costs preliminary or incidental to the acquisition and
construction of the Project;
(3) planning and development costs, engineering fees, contractors' fees,
fiduciaries' fees, auditors' and accountants' fees, costs of obtaining all permits and
approvals, the cost of real property, labor, materials, equipment, supplies, training and
testing costs, insurance premiums, legal, financial advisory and financing costs and
-4-
(2) the portion of the next due principal payment accruing on Bond
Anticipation Notes or Bonds during such Billing Period, calculated in accordance with
the Financing Documents;
(3) the amounts payable during such Billing Period under any Interest Rate
Contract with respect to Bond Anticipation Notes or Bonds;
(4) any amounts required by the Financing Documents to be deposited into the
Bond Fund to provide or replenish debt service reserve requirements for the Bonds;
(5) the accruing principal of and interest on any obligations subordinate to the
Bonds issued by UAMPS pursuant to the Financing Documents and amounts necessary to
provide or replenish any necessary reserves in connection with such obligations;
(6) Trustee, paying agent, escrow agent and other fiduciaries' fees and
expenses payable under the Financing Documents; fees and expenses of remarketing
agents, broker-dealers, auction agents and others providing services with respect to
Bonds or Bond Anticipation Notes; and
(7) the amounts required to be paid to maintain any credit or liquidity
facilities for and ratings on the Bonds and other costs payable by UAMPS from time to
time in connection with the Bonds.
"Debt Service Percentage" means, with respect to each Participant and as of any date of
determination, the percentage obtained by subtracting the Participant's Capital Cost Payment
Percentage from the Participant's Entitlement Share. The Participant's initial Debt Service
Percentage is set forth on SCHEDULE I.
"Debt Service Share" means, with respect to each Participant and as of any date of
determination, the actual percentage of Debt Service Costs payable by the Participant,
determined by dividing the Participant's Debt Service Percentage (expressed as a decimal) by the
sum (expressed as a decimal) of the Debt Service Percentages of all Participants, including the
Participant whose Debt Service Share is being determined. The Participant's initial Debt Service
Share is set forth on SCHEDULE I.
"Development Agreement" means the Intermountain Power Project Unit 3 Development
Agreement dated as of May 1, 2005, among the Development Participants and IPA, as
Development Manager.
"Development Coordination Agreement" means the Intermountain Power Project Unit 3
Development Coordination Agreement dated as of May 1, 2005, between the Development
Participants and IPA.
"Development Costs Share" has the meaning assigned to such term in the Development
Agreement.
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agreement entered into by UAMPS with respect to Bonds or Bond Anticipation Notes pursuant
to the provisions of the State Money Management Act, Title 51, Chapter 7, Utah Code Annotated
1953, as amended.
"IPA" means Intermountain Power Agency, a political subdivision of the State of Utah.
"IPP Unit 3 Project Agreement" means the IPP Unit 3 Project Agreement dated as of
July 15, 2005 between UAMPS and the Participant.
"Joint Action Agreement" means the Utah Associated Municipal Power Systems
Amended and Restated Agreement for Joint and Cooperative Action dated as of February 17,
1999, as amended and supplemented from time to time.
"Joint Operating Agreement" means the Joint Operating Agreement between the Owners
and LADWP, as Joint Operating Agent, providing for the joint operation and maintenance of
Unit 3 and the existing generating units at IGS, as amended and supplemented from time to time.
"LADWP" means The City of Los Angeles, acting by and through its Department of
Water and Power.
"Members" means, collectively, each public agency which has executed the Joint Action
Agreement or a supplement thereto.
"Month" means a calendar month.
"Non-Elected Amount" has the meaning assigned to such term in the Development
Agreement.
"NTS" means the existing transmission system commonly known as the "Northern
Transmission System" consisting of 345 kV transmission facilities extending from IGS to Mona,
Utah and 230 kV transmission facilities extending from IGS to Gonder,Nevada.
"Operating and Scheduling Procedures" means those standards, procedures and criteria
determined by UAMPS and approved by the Project Management Committee with respect to the
operation of the Project and the Project Capability and the scheduling of the Project Output
which shall, to the extent practicable, promote the efficient and economic utilization of the
Project, the Project Capability and the Project Output consistent with Prudent Utility Practice for
the benefit of the Participants taken as a whole. The initial Operating and Scheduling Procedures
shall be approved by the Project Management Committee and put into effect prior to the
Commercial Operation Date of the Initial Facilities and may be revised by UAMPS from time to
time upon the approval of the Project Management Committee.
"Operation and Maintenance Costs" means, with respect to each Billing Period of each
Contract Year, all costs and expenses (other than Transmission Costs and Debt Service Costs)
attributable to the Project that are paid, payable, incurred or accrued by UAMPS during each
Billing Period resulting from the ownership, operation, maintenance, decommissioning and
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"Operator" means (1) the entity acting as Joint Operating Agent under the Joint
Operating Agreement and (2) any other entity that performs all or a substantial portion of the
operation and maintenance work on the Project.
"Orphan Share" means all or the affected portion of the proposed Entitlement Share of a
prospective Participant (as shown on the SCHEDULE I attached to the Power Sales Contracts at
the time of their approval and execution by the Participants) that fails or is unable to execute a
Power Sales Contract with an Entitlement Share equal to its proposed Entitlement Share for any
reason.
"Owners" means UAMPS and each other owner of an undivided interest in Unit 3
pursuant to the Ownership Agreement.
"Ownership Agreement" means the Ownership Agreement to be entered into by the
Owners of Unit 3.
"Participant" is defined in the preamble of this Power Sales Contract.
"Participants" means the Participant and the other entities named on SCHEDULE I.
"Participant's Representative" means (1) the officer, employee or other agent of the
Participant designated from time to time by the Participant as the Representative of the
Participant for purposes of the Joint Action Agreement, to whom all notices and other
communications to be given by UAMPS to the Participant hereunder shall be sent or (2) in the
event that the individual appointed as the Participant's Representative is absent or unavailable to
act on behalf of the Participant, the individual duly appointed or designated by the Participant as
its alternate Representative pursuant to the Joint Action Agreement.
"Permits and Approvals" means all certificates, permits, licenses, approvals, rulings,
orders or other authorizations from any federal, state or local governmental body, board or
agency having jurisdiction over UAMPS, the Project or both that are required to be obtained or
maintained for the construction, operation, maintenance or repair of the Project or any
component of it.
"Permitted Contract" means (1) a contract with a term (including all renewal options)
not longer than three years and (2) requirements-type contracts, other than requirements
contracts providing for electricity sales at wholesale, with retail consumers or other end users of
electricity.
"Point of Delivery" means the point or points of physical interconnection of the Project
with the transmission facilities that are connected to IGS.
"Pooling Agreement" means, collectively, the Power Pooling Agreements between
UAMPS and the Members and certain other entities providing for the establishment and
operation of the UAMPS Pool and related matters, including all supplements and appendices
thereto.
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"Refunding Bonds" means refunding Bonds from time to time issued by UAMPS
pursuant to the Financing Documents and in accordance with Section 16.
19. "Reserve and Contingency Fund"means the fund, if any, established pursuant to Section
"Subscription Notice"means the offer to acquire undivided ownership interests in Unit 3
to be given by [IPA] pursuant to the Development Coordination Agreement to the Development
Participants in satisfaction of the requirements of Section 301(1) of the Act.
"System Point of Receipt" means (1) the point of interconnection between the
Participant's electric utility system and the transmission facilities of the applicable control area
utility or (2) such other point for the receipt by the Participant of Electric Energy from the
Project, as set forth in the Operating and Scheduling Procedures.
"Transmission Agreements" means each transmission contract, agreement or tariff
entered into by UAMPS or the Participant that is used or necessary for the delivery of Electric
Power and Electric Energy from the Point of Delivery to the Participant's System Point of
Receipt, whether by direct transmission, displacement,exchange or otherwise.
"Transmission Costs" means, for each Billing Period of each Contract Year, all capital,
operating and other costs and expenses paid, payable, incurred or accrued by UAMPS during
such Billing Period for the transmission of Electric Energy from the Project to the Participant's
System Point of Receipt pursuant to the Transmission Agreements or otherwise. The Participant
shall be responsible for the payment of Transmission Costs to UAMPS hereunder only to the
extent that UAMPS has entered into Transmission Agreements at the request of the Participant
for the transmission of Electric Energy from the Point of Delivery to the Participant's System
Point of Receipt.
"Trustee" means the bank or trust company acting as the trustee under the Financing
Documents.
"UAMPS" is defined in the preamble of this Power Sales Contract. All references to
UAMPS in this Power Sales Contract shall include Authorized Officers of UAMPS and their
delegees acting pursuant to specific authorization by the Board.
"UAMPS Pool" means that certain electric power pool established pursuant to the
Pooling Agreement under which UAMPS provides certain services with respect to the
scheduling, dispatch and the sale of Electric Power and Electric Energy and other matters
pursuant to the operating criteria and procedures provided for in the Pooling Agreement.
"Uncontrollable Force" means any cause, event or force beyond the control of the party
affected, including, but not restricted to failure, or threat of failure of facilities, flood, earthquake,
storm, fire, lightning, epidemic, war, terrorism, acts of a public enemy, riot, civil disturbance or
disobedience, labor dispute, labor or material shortage, sabotage, and restraint by court or public
authority and action or non-action by, or inability to obtain the necessary authorizations or
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Section 3. Sale and Purchase of Entitlement Share; IPP Unit 3 Project Agreement;
Adjustments to Entitlement Share. (a) From and after the Effective Date, UAMPS shall sell to
the Participant, and the Participant shall purchase from UAMPS, the Participant's Entitlement
Share. The Participant's Entitlement Share set forth on the SCHEDULE I attached to this Power
Sales Contract on the date of its approval and execution by the Participant is not less than the
"entitlement share" shown opposite the Participant's name on Appendix I to the IPP Unit 3
Project Agreement, unless the Participant has otherwise agreed to a change. UAMPS and the
Participant agree that the IPP Unit 3 Project Agreement shall (notwithstanding the provisions of
Section 2 thereof) terminate on the Effective Date of this Power Sales Contract and that all
actions and the relationship of UAMPS and the Participant with respect to the Project shall be
governed by and subject to this Power Sales Contract;provided that the termination of the IPP
Unit 3 Project Agreement between UAMPS and the Participant shall not affect the term of any
other IPP Unit 3 Project Agreement.
(b) As of the Effective Date of the execution of this Power Sales Contract, the
Entitlement Shares of the Participants set forth on SCHEDULE I are preliminary and subject to
adjustment in the event that there are Orphan Shares. Orphan Shares may result from (1) the
failure of one or more prospective Participants to approve and execute a Power Sales Contract
(2) the inability of one or more prospective Participants to execute a Power Sales Contract due to
a failure to obtain all required authorizations, consents and approvals or(3) other factors (which
may be outside of the control of UAMPS). In the event that there are Orphan Shares as of the
Effective Date, UAMPS shall give notice of such fact to the Project Management Committee.
The Project Management Committee shall direct all actions to be taken with respect to the
Orphan Shares to provide for a full allocation of Project Capability. Such actions may include
(x) offering the Orphan Shares first to those Participants that elect to increase their Entitlement
Shares (pro rata,based upon their original Entitlement Shares) and second to any other entity that
elects to enter into a Power Sales Contract with UAMPS and (y) providing for temporary or
interim allocations of Orphan Shares. The Project Management Committee may also require that
the Entitlement Shares of all Participants be increased (pro rata, based upon their original
Entitlement Shares) to absorb all Orphan Shares; provided, however, that in no event shall the
increased Entitlement Share of any Participant be greater than 115% of its Entitlement Share
shown on the SCHEDULE I attached to this Power Sales Contract on its execution date, unless
such Participant shall have agreed in writing to the increase in its Entitlement Share. Promptly
after the execution of Power Sales Contracts by Participants with Entitlement Shares totaling
100% or the completion of the allocation of all Orphan Shares (such that the Entitlement Shares
of all Participants total 100%), but in any event not later than the first issuance of Bond
Anticipation Notes or Bonds UAMPS shall prepare and deliver to each Participant a revised
SCHEDULE I that shows the final Entitlement Shares of all Participants. The final Entitlement
Share of the Participant may change during the term of this Power Sales Contract as provided in
Sections 18(b) and 22.
(c) In consideration of the sale of its Entitlement Share, the Participant shall, in
accordance with and subject to the provisions of Section 8, pay to UAMPS in each Billing
Period: (1) for its share of Debt Service Costs, an amount determined by multiplying Debt
Service Costs for such Billing Period by the Participant's Debt Service Share; (2) for its share of
Operation and Maintenance Costs, an amount determined by multiplying Operation and
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UAMPS shall (1) report monthly to the Project Management Committee regarding the current
status of construction, and any changes to the estimated Commercial Operation Date and cost of
construction, of the Initial Facilities and (2) give prompt notice to the Project Management
Committee and all Participants of the occurrence of the Commercial Operation Date of the Initial
Facilities.
(d) A general description of the Initial Facilities is attached as EXHIBIT I. This
description will be revised from time to time as the components of the Initial Facilities are
designed, engineered, constructed, installed and tested. UAMPS and the Participant agree that in
no event will any such revisions alter or affect their respective rights and obligations under this
Power Sales Contract.
(e) As soon as practicable after the Commercial Operation Date of the Initial Facilities,
UAMPS shall prepare a complete statement and reconciliation of the final (or substantially final)
Cost of the Initial Facilities and submit the same to the Project Management Committee for its
review and approval. In the event that a substantially final statement of the Cost of the Initial
Facilities is submitted to and approved by the Project Management Committee, UAMPS shall
provide periodic reports to the Project Management Committee regarding the Cost of the Initial
Facilities until a final statement is available for its review and approval.
(f) UAMPS may from time to time recommend the acquisition or construction of
Additional Facilities to improve or add to the Project. Any Additional Facilities shall be
approved by the Project Management Committee.
Section S. Financing of the Project. (a) UAMPS shall finance the Cost of the Initial
Facilities pursuant to a plan of financing approved by the Project Management Committee
providing for the issuance of one or more series of Bond Anticipation Notes or Bonds. Such
plan of financing shall provide that(1) any Bond Anticipation Notes shall mature not earlier than
six months after the estimated Commercial Operation Date of the Initial Facilities, (2) any Bonds
shall be subject to redemption by UAMPS at such time as shall enable UAMPS to comply with
its obligations under Section 6 and (3) the interest on all Bond Anticipation Notes and Bonds
shall be capitalized to the estimated Commercial Operation Date of the Initial Facilities and for
such additional period as shall be approved by the Project Management Committee. Following
the Commercial Operation Date of the Initial Facilities, each Participant may elect to make a
Capital Cost Payment to UAMPS pursuant to Section 6, and UAMPS shall issue Bonds to
provide long-term financing for that portion of the cost of retiring any Bond Anticipation Notes
and the Cost of the Initial Facilities that is not funded through Capital Cost Payments.
(b) In the event that Additional Facilities are undertaken, UAMPS shall issue Bond
Anticipation Notes or Additional Bonds pursuant to Section 16 to finance the Cost of such
Additional Facilities as determined by the Project Management Committee.
Section 6. Capital Cost Payments; Calculation of Capital Cost Payment Percentage,
Debt Service Percentage and Debt Service Share. (a) Following the Commercial Operation
Date and the approval by the Project Management Committee of a final (or substantially final)
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Capital Cost Payment by the Trustee upon the direction of UAMPS to retire a portion of
UAMPS' Bond Anticipation Notes and for deposit into such funds and accounts as may be
established by the Financing Documents to finance a portion of the Cost of the Initial Facilities.
(d) The Participant acknowledges and agrees that the amount of the Capital Cost
Payment to be made by the Participant may be based upon a substantially final estimate of the
Cost of the Initial Facilities and, in such event, will be subject to adjustment to reflect the final
Cost of the Initial Facilities as approved by the Project Management Committee. Not more than
30 days following the determination and approval of the final Cost of the Initial Facilities,
UAMPS shall render a final accounting statement to the Participant setting forth a computation
of the final Cost of the Initial Facilities (adjusted in the same manner as Capital Cost), the
amount of and interest earnings on the Capital Cost Payment and any amount payable by or
credited to the Participant in respect of the final Cost of the Initial Facilities. The Participant
agrees that it will pay any additional amount payable by it on or before the 30th day following
the date of such final accounting statement, or on such later date as may be approved by the
Project Management Committee.
(e) After Capital Cost Payments have been made by all electing Participants, UAMPS
shall complete (or revise, as applicable) SCHEDULE I and provide a copy of the completed or
revised SCHEDULE I to each of the Participants. With respect to all Participants and at all times,
Schedule I shall show that:
(1) the sum of each Participant's Capital Cost Payment Percentage and Debt
Service Percentage equals its Entitlement Share;
(2) the sum of the Capital Cost Payment Percentages and Debt Service
Percentages of all Participants equals 100%; and
(3) the sum of the Debt Service Shares of all Participants equals 100%.
UAMPS' calculation and determination of Capital Cost and the Participant's Capital Cost
Payment Percentage, Debt Service Percentage and Debt Service Share shall be conclusive and
binding upon UAMPS and the Participant.
(f) The Participant acknowledges and agrees with UAMPS that:
(1) its election to make a Capital Cost Payment shall be irrevocable and under
no circumstances whatsoever shall the Participant be entitled to a return or rebate of all or
any portion of any Capital Cost Payment, including without limitation, Uncontrollable
Force or other circumstances that result in the suspension, interruption, interference,
reduction, curtailment or termination of the Project or the Project Output;
(2) the Capital Cost Payment shall not be deemed to constitute an investment
by the Participant and the Participant shall not be entitled to any investment earnings or
rate of return on the Capital Cost Payment, except with respect to interest earnings on the
Capital Cost Payment pending its application as provided above; and
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be required to obtain any consent or approval required hereunder during the existence of
such default or to constitute a quorum of the Project Management Committee;
(2) A unanimous vote of all Project Management Committee Representatives
shall be required on all decisions which would result in the termination of the Project;
and
(3) All decisions made by the Project Management Committee shall be made
by resolution, order or other appropriate action of the Project Management Committee
and, before such resolution, order or action of the Project Management Committee shall
take effect, the same shall be ratified and approved by resolution, order or action of the
Board, acting in accordance with the Joint Action Agreement and the By-Laws of
UAMPS.
The Participants acknowledge that the Joint Action Agreement provides, among other things,
that decisions of the Board with respect to the Project shall be made only upon the
recommendation of the Project Management Committee and that weighted votes may be called
for on any recommendation or decision to be made by the Project Management Committee or the
Board,respectively, all as more fully provided in the Joint Action Agreement.
(e) In addition to its other responsibilities under the Power Sales Contracts, the Project
Management Committee shall:
(1) review, provide advice and direction to and consult with UAMPS
regarding the Project;
(2) review, approve and provide advice and direction to UAMPS on the
Project Agreements and any modifications or amendments thereto, appoint all
representatives of UAMPS serving under the Project Agreements and approve the
Operator of Unit 3 under the Joint Operating Agreement;
(3) review and approve the plan of financing for the Bond Anticipation Notes
to be issued by UAMPS;
(4) supervise and provide direction to UAMPS during the construction of the
Project, including approval of the construction budget for the Project and approval of all
notices to proceed and notices to construct given under the Construction Agreements;
(5) review, modify, and approve or otherwise act on the quarterly estimates of
the Cost of the Project by the first day of the month prior to the beginning of each
quarter;
(6) review, approve and provide advice and direction to UAMPS regarding
the declaration of the Commercial Operation Date of the Project under the Construction
Agreements;
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by or credited to such Participant pursuant to this Power Sales Contract or the Financing
Documents and not otherwise shown, including items of the Cost of the Project not then or not to
be financed by the issuance of Bonds or Capital Cost Payments which have theretofore been
incurred or are then due and payable by UAMPS. The Participant shall pay the total of such
amounts at the time specified in paragraph (c) of this Section 8, as the same may be revised from
time to time. The billing statement for each Billing Period shall be based, to the fullest extent
practicable, upon the actual operation of the Project during such Billing Period. To the extent
that any billing statement rendered by UAMPS shall have included any estimated amounts in
respect of the Participant's share of Operation and Maintenance Costs, Debt Service Costs or the
Transmission Costs or other costs allocable to the Participant, such estimated amounts shall be
reconciled at least once during each Contract Year with the actual operation and scheduling of
the Project and the Participant shall receive a bill or credit, as applicable, to reflect such
reconciliations pursuant to clause (4)of this paragraph (b).
(c) Payments required to be paid by the Participant to UAMPS pursuant to this Section
8 shall be due and payable to UAMPS at the principal office of UAMPS, or such other address as
UAMPS shall designate in writing to the Participant, on the 15th day following the date on
which the billing statement was rendered or at such other time as may be established by UAMPS
pursuant to paragraph(a) above.
(d) If payment in full is not made on or before the close of business on the due date,
UAMPS shall impose a delayed-payment charge on the unpaid amount due for each day overdue
at a rate equal to the lesser of one percent per month, compounded monthly, or the maximum
rate lawfully payable by the Participant;provided, however, that UAMPS, acting upon the
direction of the Board, may elect to waive such delayed-payment charge but only to the extent
that any such waiver will not adversely affect the ability of UAMPS to meet its payment
obligations under the Project Agreements or the Financing Documents. If said due date is not a
business day,payment shall be made on the next following business day.
(e) In the event of any dispute as to any portion of the billing statement for such Billing
Period, the Participant shall nevertheless pay the full amount of the disputed charges when due
and shall give written notice of the dispute to UAMPS not later than the 60th day after such
billing statement was submitted. Such notice shall identify the disputed billing statement, state
the amount in dispute and set forth a full statement of the grounds for such dispute. No
adjustment shall be considered or made for disputed charges unless such notice is given by the
Participant. UAMPS shall give consideration to such dispute and shall advise the Participant
with regard to its position relative thereto within thirty (30) days following receipt of such
written notice. Upon final determination (whether by agreement or determination by the Board)
of the correct amount, any difference between such correct amount and such full amount shall be
accounted for in the billing statement next submitted to the Participant after such determination.
(f) Debt Service Costs, including any adjustments thereto, shall be determined by
UAMPS in accordance with the Financing Documents. Operation and Maintenance Costs,
including any adjustments thereto, shall be determined by UAMPS in accordance with the
applicable provisions of this Power Sales Contract and the Project Agreements. UAMPS and the
Participant acknowledge and agree that certain categories of costs may be financed as a Cost of
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UAMPS shall schedule or cause to be scheduled such Electric Energy in accordance with the
Operating and Scheduling Procedures approved by the Project Management Committee.
UAMPS shall provide the Participant with notice of any amendment to or modification of the
Operating and Scheduling Procedures.
(b) The Participant agrees that (1) prior and as a condition to the first delivery of
Electric Energy under this Power Sales Contract, it will execute and deliver to UAMPS the
Pooling Agreement and an appendix thereto (in a form approved by the Project Management
Committee) that assigns the Electric Energy allocable to the Participant's Entitlement Share to
the UAMPS Pool and (2) it will perform its obligations under and will not take any action to
terminate the Pooling Agreement and such appendix during the term of this Power Sales
Contract. At any time the Project is operable or operating the Participant shall not be entitled to
use in any hour Electric Energy in excess of that which is allocable to the Participant's
Entitlement Share, unless arrangements have been made for a planned purchase of such Electric
Energy through the UAMPS Pool. Any surplus Electric Energy attributable to the Participant's
Entitlement Share shall be sold or otherwise disposed of by the Participant only in accordance
with the provisions of such appendix to the Pooling Agreement. In addition to any sales of
surplus Electric Energy requested by the Participant through the UAMPS Pool, UAMPS will
utilize Commercially Reasonable Efforts to sell, exchange or otherwise dispose of any incidental
surplus Electric Power and Electric Energy attributable to the Project for the benefit of the
Participants.
(c) Prior to the first delivery of Electric Energy under this Power Sales Contract, the
Participant shall provide to UAMPS a written schedule of the Participant's available electric
resources and the order in which such resources are to be applied to meet the Participant's
requirements for Electric Power and Electric Energy. UAMPS shall verify all such resources
and promptly notify the Participant of any rejection of such resources. The Participant may
revise or modify such schedule upon written notice to UAMPS at least one business day prior to
the beginning of any Billing Period.
Section 10. Point of Delivery; Transmission Contracts. (a) The Electric Energy
allocable to the Participant's Entitlement Share shall be delivered at the Point of Delivery. The
Participant shall be responsible for, and shall pay all costs of, (1) the transmission of Electric
Energy from the Point of Delivery to its System Point of Receipt and (2) the distribution and
delivery of Electric Energy from its System Point of Receipt to its customers.
(b) Upon the request of the Participant, UAMPS will use Commercially Reasonable
Efforts to enter into one or more Transmission Agreements, or will utilize its transmission rights
under existing Transmission Agreements, to provide for transmission service for the Electric
Energy allocable to the Participant's Entitlement Share from the Point of Delivery to the
Participant's System Point of Receipt. Any Transmission Agreements entered into by UAMPS
for or on behalf of the Participant shall be approved by UAMPS and the Participant, and the
Participant shall pay all Transmission Costs thereunder. The Participant agrees that it shall
maintain (or cause UAMPS to maintain) during the term of this Power Sales Contract, such
Transmission Agreements as shall be necessary for the firm transmission of the Electric Energy
allocable to its Entitlement Share from the Point of Delivery to its System Point of Receipt,
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(b) The Participant acknowledges and agrees that deliveries of the Electric Energy
allocable to its Entitlement Share to the Point of Delivery are not firm and are contingent upon
the operation of the Project and other factors. The Participant agrees that it is solely responsible
for any firming transactions with respect its Entitlement Share.
Section 13. Insurance. UAMPS shall maintain, or during the construction of the Initial
Facilities shall cause each contractor under the Construction Agreements to maintain, in force, as
part of the Cost of the Project or Operation and Maintenance Costs, as appropriate, insurance
with responsible insurers with policies against risk or direct physical loss, damage or destruction
of the Project, including liability insurance and employers' liability insurance, all to the extent
consistent with Prudent Utility Practice and to the extent available at reasonable cost, but in no
case less than will satisfy applicable regulatory requirements and requirements of the Financing
Documents.
Section 14. Annual Budget;Accounting. (a) On or before 15 days prior to the estimated
commencement of the first Contract Year and on or before the beginning of each Contract Year
thereafter, UAMPS shall prepare and mail to the Participant an Annual Budget for the Project
recommended by the Project Management Committee and approved by the Board, based, to the
extent appropriate, on budgets received under the Project Agreements, showing an annual
estimate for the following Contract Year of (1) Operation and Maintenance Costs and Debt
Service Costs, and the Participant's share of each, and (2) the Transmission Costs payable by the
Participant. The Participant shall, to the extent and in the manner deemed appropriate by the
Participant, incorporate the estimates shown on the Annual Budget in its annual budgetary
process.
(b) At the end of each quarter during each Contract Year and at such other times as it
shall deem desirable, UAMPS shall review the Annual Budget of Operation and Maintenance
Costs and Debt Service Costs for the Contract Year. In the event such review indicates that the
Annual Budget does not or will not substantially correspond with actual receipts or expenditures,
or if at any time during such Contract Year there are or are expected to be extraordinary receipts,
credits or expenditures of costs substantially affecting Operation and Maintenance Costs and
Debt Service Costs, UAMPS shall prepare and provide to the Participant's Representative a
revised Annual Budget, recommended by the Project Management Committee and approved by
the Board, incorporating adjustments to reflect such receipts, credits or expenditures which shall
thereupon supersede the previous Annual Budget. The revised Annual Budget and any written
materials that accompany it shall specifically identify the changes from the Annual Budget that
was previously in effect.
(c) UAMPS agrees that it will, from and after the date of the acquisition by UAMPS of
the Project, keep accurate records and accounts relating to the Project, the Cost of the Project,
Capital Cost, Operation and Maintenance Costs, Transmission Costs and Debt Service Costs in
accordance with the Financing Documents and the Uniform System of Accounts, separate and
distinct from its other records and accounts;provided that UAMPS may establish revenue and
operation and maintenance funds that account for more than one project of UAMPS so long as
UAMPS shall maintain books and records adequate to show the amounts in each of such funds
allocable to each such Project. Said accounts shall be audited annually by a firm of certified
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UAMPS acknowledges that disclosure to third parties of the information and documents
described in EXHIBIT II and other information provided to UAMPS by the Participant pursuant to
this paragraph (c) could cause immediate and substantial financial and commercial harm to the
Participant. UAMPS agrees to take all actions necessary on its part to classify such information
and documents as "protected records" within the meaning of the Government Records Access
and Management Act, Title 63, Chapter 2, Utah Code Annotated 1953, as amended("GRAMA").
Such classification shall be based upon, among other things, the immediate and substantial
financial and commercial harm that would be suffered by the Participant and UAMPS as a result
of the disclosure of such information and documents to actual or potential competitors. UAMPS
agrees that it will use Commercially Reasonable Efforts, to the extent permitted by GRAMA, to
avoid disclosing to any person the commercial information contained in such information and
documents. In the event that UAMPS receives a request for disclosure of the material described
in this paragraph, UAMPS agrees that it will immediately notify the Participant and afford it an
opportunity to contest any disclosure of the same.
(d) Concurrently with its execution and delivery of this Power Sales Contract, the
Participant shall deliver to UAMPS (1) a certificate, executed by the Mayor or other executive
officer of the Participant and the City Recorder, Town Clerk or Secretary of the Participant, as
applicable, and Participant's Representative, together with attached exhibits, in substantially the
form attached hereto as EXHIBIT III and (2) an opinion of counsel to the Participant, in
substantially the form attached hereto as EXHIBIT V. Concurrently with each issuance of Bonds
by UAMPS, the Participant shall deliver to UAMPS (1) a bring-down certificate executed by the
Mayor or other executive officer of the Participant and the City Recorder, Town Clerk or
Secretary of the Participant, in substantially the form attached hereto as EXHIBIT IV, and (2) a
bring-down opinion of counsel to the Participant, in substantially the form attached hereto as
EXHIBIT VI.
Section 16. Additional Bonds and Refunding Bonds. (a) Additional Bond Anticipation
Notes and Additional Bonds may be sold and issued by UAMPS in accordance with the
provisions of the Financing Documents at any time and from time to time for the purpose of
paying the Cost of the Project, including the cost of any Additional Facilities. UAMPS may
incur other obligations pursuant to the Financing Documents to achieve purposes deemed
beneficial to the Project.
(b) Any Additional Bonds shall be secured by the pledge made pursuant to the
Financing Documents of the payments required to be made by the Participant under Section 8, as
such payments may be increased and extended by reason of the issuance of Additional Bonds,
and of other revenues of UAMPS attributable to the Project. Additional Bonds may be issued in
amounts sufficient to pay the full amount of such costs and to provide such reserves as may be
determined by UAMPS to be reasonably necessary. Any Additional Bonds issued in accordance
with the provisions of this Section 16 may rank on a parity as to the security provided by this
Power Sales Contract with all Bonds previously issued.
(c) In the event that Additional Facilities are financed by the issuance of Additional
Bonds, the Project Management Committee shall determine whether to make a capital cost
payment option available to the Participants and if so, the procedures therefore.
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(4) This Power Sales Contract is the legal, valid, and binding obligation of the
Participant, enforceable in accordance with its terms.
(5) As of the date of this Power Sales Contract, there is no pending or, to the
Participant's knowledge, threatened action or proceeding affecting the Participant which
purports to affect the legality, validity,or enforceability of this Power Sales Contract.
(b) The Participant covenants and agrees with UAMPS as follows:
(1) Maintenance of Rates. The Participant shall establish, maintain, revise,
charge and collect rates for electric service rendered by it to its customers so that such
rates shall provide revenues which, together with other funds reasonably estimated to be
available, will be sufficient to meet the Participant's obligations to UAMPS under this
Power Sales Contract, to pay all other operating expenses of the Participant's electric
system and to provide revenues sufficient to pay all obligations of the Participant payable
from, or constituting a charge or lien on, the revenues of its electric system and, to the
extent being paid from the revenues of its electric system, all general obligation bonds of
the Participant now or hereafter outstanding.
(2) Maintenance of Revenues. The Participant shall at all times comply with
all terms, covenants and provisions of all Utility Contracts to which it is a party. The
Participant shall promptly collect all charges due for electric utility services supplied by it
as the same become due. The Participant shall at all times maintain and promptly and
vigorously enforce its rights against any person, customer or other entity that does not
pay such charges when due.
The Participant shall not hereafter (A) enter into any contract pursuant to which the
Participant will be obligated to take or pay for Electric Power and Electric Energy or for
transmission service furnished to the Participant, in either case on a basis substantially
similar to the provisions contained in Section 8(g), or (B) grant any new franchise for
competing electric service within its service area, except upon 90 days' prior notice to
UAMPS and delivery to UAMPS of a certificate and report from a Qualified Independent
Engineer and a written determination by the governing body of the Participant, in each
case to the effect that the performance by the Participant of its obligations under such
contract or the granting of such franchise, as applicable, will not adversely affect the
ability of the Participant to meet its obligations under this Power Sales Contract. The
provisions of this paragraph shall not apply to (X) any contract between the Participant
and UAMPS or(Y) any franchises or similar arrangements required by law.
To the extent permitted by law, the Participant shall vigorously defend and enforce its
exclusive right to provide electric distribution services within its service area.
(3) Sale or Assignment of Electric System or Power Sales Contract. During
the term of this Power Sales Contract, the Participant shall not sell, lease or otherwise
dispose of all or substantially all of its electric system, except upon compliance with the
following provisions respecting the transfer or assignment of its Entitlement Share.
-30-
notice referred to in the first sentence of this subparagraph and shall provide a written
copy of such determinations to the Participant.
In the event any sale, lease or other disposition is permitted pursuant to this subparagraph
(3), UAMPS may require as additional security to assure the flow of revenues under this
Power Sales Contract, and the transferring and assigning Participant shall provide or
cause to be provided the funds necessary to establish, an escrow deposit equivalent to the
sum of(X) the product of the Participant's Debt Service Share (expressed as a decimal)
and Debt Service Costs plus (Y) the product of the Participant's Entitlement Share and
the sum of the estimated Operation and Maintenance Costs and Transmission Costs, in
each case for such period of time as shall be determined by the Project Management
Committee.
(4) Prudent Utility Practice. The Participant shall, in accordance with
Prudent Utility Practice, (A) at all times operate its electric system and the business
thereof in an efficient manner, (B) maintain its electric system in good repair, working
order and condition, and (C) from time to time make all necessary and proper repairs,
renewals, replacements, additions, betterments and improvements with respect to the
electric system, so that at all times the business thereof shall be properly conducted.
(5) Operating Expenses. UAMPS and the Participant intend that the
payments to be made by the Participant to UAMPS pursuant to this Power Sales Contract
(A) will be payable as an operating expense of the Participant's electric system and a cost
of purchased electric power and energy and (B) will be payable (together with all other
operating expenses) as a first charge on the revenues derived from the operation of its
electric system. The Participant covenants to and agrees with UAMPS that it will include
the annual payments required to be made by it under this Power Sales Contract as a cost
of purchased electric power and energy as an operating expense in the annual operating
budget of its electric system and in any resolution, ordinance or indenture providing for
future borrowings for the Participant's electric system.
(6) Tax Status. (A) The Participant shall not use or permit to be used any of
the Electric Energy acquired under this Power Sales Contract or operate its system in any
manner or for any purpose or take or omit to take any action which could, either alone or
in conjunction with any other similar actions by the Participant or other Participants,
result in loss of the exclusion from gross income for federal income tax purposes of the
interest on any Bond or Bonds theretofore issued or thereafter issuable by UAMPS as tax
exempt obligations pursuant to the provisions of the Internal Revenue Code of 1986, as
amended, and applicable regulations and rulings thereunder.
(B) At the time of execution of this Power Sales Contract the Participant has
no contracts (and has no current expectation of entering into any contracts) to provide
electric service to any entity that is not a state or local government, except for Permitted
Contracts and such contracts as may be listed on EXHIBIT III hereto. At least thirty (30)
days prior to entering into any such contract, the Participant shall notify UAMPS of its
intent to enter into such contract and provide copies of such contract to UAMPS. Within
-32-
Section 22. Continuing Obligation of Participant; Right of UAMPS to Discontinue
Service. (a) In the event of any default referred to in Section 21, the Participant shall not be
relieved of its liability for payment of any amounts in default or its failure to observe its
covenants, agreements and obligations hereunder and UAMPS shall have the right to recover
from the Participant any amount in default. In enforcement of any such right of recovery,
UAMPS may bring any suit, action, or proceeding in law or in equity, including mandamus and
action for specific performance, as may be necessary or appropriate to enforce any covenant,
agreement or obligation of the Participant hereunder or the obligation of the Participant to make
any payment for which provision is made in this Power Sales Contract.
(b) In addition to proceeding with its rights against a defaulting Participant pursuant to
paragraph (a) above, UAMPS may, upon not less than thirty days' written notice from UAMPS
to the defaulting Participant, suspend or terminate the Participant's right to receive the Electric
Energy allocable to its Entitlement Share under this Power Sales Contract. In connection with its
determination to suspend or terminate a defaulting Participant's right to receive the Electric
Energy allocable to its Entitlement Share, UAMPS shall take into account, among such other
matters as UAMPS in its sole discretion shall deem relevant, the amounts and due dates of its
payment obligations under the Project Agreements and the Financing Documents and the funds
and revenues available to UAMPS to enable it to meet its obligations thereunder. Any such
suspension or termination of the Participant's right to receive the Electric Energy allocable to its
Entitlement Share under this Power Sales Contract shall not, however, terminate, reduce or
modify the Participant's obligations and liabilities hereunder.
(c) In the event that UAMPS has suspended (but not terminated) a defaulting
Participant's right to receive the Electric Energy allocable to its Entitlement Share, such
Participant may restore its right to receive such Electric Energy by (1) taking all actions on its
part necessary to cure or remedy the default, (2)paying all amounts necessary to compensate the
nondefaulting Participants and UAMPS for costs and losses incurred by them as a result such
default and (3) taking such other action and paying such amounts, including the posting of
security for the Participant's future obligations under the Power Sales Contract, all as determined
by the Project Management Committee.
Section 23. Transfer of Electric Energy or Entitlement Share Following Default; Other
Actions by UAMPS. UAMPS and the Participant acknowledge that a default by any of the
Participants under its Power Sales Contract could reduce the revenues available to UAMPS
which are necessary in order for UAMPS to meet its obligations under the Project Agreements
and the Financing Documents on a timely basis. In the event of an insufficiency of revenues and
an inability on the part of UAMPS to meet its obligations under the Project Agreements and the
Financing Documents on a timely basis, the ability of UAMPS to deliver Electric Energy from
the Project and the interests of all of the Participants will be materially and adversely affected.
The provisions of this Section 23 are intended to provide a means to assure the sufficiency of
revenues to UAMPS following a default by a Participant under its Power Sales Contract. The
Participants agree that the provisions of this Section 23 are reasonable and necessary in order for
them to achieve the benefits of their joint and cooperative undertaking with respect to the
Project.
-34-
Participant elects to acquire from any other nondefaulting Participant that may elect to
retain less than all of the defaulting Participant's Entitlement Share allocated to it
pursuant to subparagraph (1) above; or(B) to retain none or less than all of the defaulting
Participant's Entitlement Share allocated to the Participant pursuant to subparagraph (1)
above. Any Participant that shall have elected to retain all of that portion of the
defaulting Participant's Entitlement Share allocated to it pursuant to subparagraph (1)
above shall be deemed to have fully satisfied its obligations to UAMPS under this
Section 23 and shall not thereafter be required to accept any additional allocation of the
defaulting Participant's Entitlement Share.
(3) Within thirty days after its receipt of the elections of all nondefaulting
Participants pursuant to subparagraph (2) above, UAMPS shall determine whether the
nondefaulting Participants have elected to retain all of the Entitlement Share of the
defaulting Participants pursuant to subparagraph (2). In the event that any of the
Participants shall have elected to retain less than all of its allocation of the defaulting
Participant's Entitlement Share, UAMPS shall proportionally reallocate the remaining
amount of the defaulting Participant's Entitlement Share among those nondefaulting
Participants that have requested additional amounts of the defaulting Participant's
Entitlement Share pursuant to clause (A) of subparagraph (2) above. To the extent
necessary to provide for a complete reallocation of the defaulting Participant's
Entitlement Share, UAMPS shall next reallocate any remaining portion of the defaulting
Participant's Entitlement Share among those Participants that did not elect to retain all of
their initial allocations of such Entitlement Share pursuant to subparagraph (2) above,
with there being reallocated to each such Participant the unallocated portion of the
defaulting Participant's Entitlement Share that is equal to the quotient that is obtained by
dividing the product of the unallocated portion of the defaulting Participant's Entitlement
Share and the nondefaulting Participant's Entitlement Share by the sum of the
Entitlement Shares of all of such nondefaulting Participants. In no event shall any
reallocation of a defaulting Participant's Entitlement Share, or the total of all mandatory
reallocations of Entitlement Shares in the event of two or more Participant defaults under
the Power Sales Contracts, cause any nondefaulting Participant's Entitlement Share to
increase by more than 25% over its original Entitlement Share set forth on SCHEDULE 1.
In the event that this limitation affects any of the nondefaulting Participants to which a
mandatory reallocation is being made, UAMPS shall proportionally reduce the
mandatory reallocations to all other nondefaulting Participants.
(4) UAMPS shall, at the time of each allocation or reallocation of a defaulting
Participant's Entitlement Share pursuant to this paragraph (b), proportionally allocate or
reallocate, as the case may be, the Capital Cost Payment Percentage and the Debt Service
Percentage of the defaulting Participant to the nondefaulting Participants which receive
an allocation or reallocation of the defaulting Participant's Entitlement Share. The
Capital Cost Payment Percentage and the Debt Service Percentage of the defaulting
Participant shall be allocated to each of such nondefaulting Participants in respective
amounts equal to the quotient that is obtained by dividing the product of the defaulting
Participant's Capital Cost Payment Percentage or Debt Service Percentage, as the case
may be, and the nondefaulting Participant's Entitlement Share by the sum of the
-36-
(2) UAMPS shall then seek to sell all or any part of such portion of the
defaulting Participant's Entitlement Share or the Electric Energy associated therewith on
the best obtainable terms and conditions.
Subject to the provisions of the Financing Documents, no sale, transfer or other disposition of all
or a part of an Entitlement Share shall be made pursuant to this paragraph (c) if such sale,
transfer or disposition will adversely affect the exclusion from gross income for federal income
tax purposes of the interest on any of the Bonds issued as tax exempt obligations.
(d) In the event that UAMPS is unable to sell or dispose of any portion of the defaulting
Participant's Entitlement Share pursuant to paragraph (c) above within 180 days of commencing
Commercially Reasonable Efforts so to do and UAMPS, based upon determinations by the
Project Management Committee and the Board, determines that the inability to sell or dispose of
the defaulting Participant's Entitlement Share will materially and adversely affect the ability of
the nondefaulting Participants to meet their obligations under the Power Sales Contract or the
ability of UAMPS to meet its obligations under the Project Agreements and the Financing
Documents, then UAMPS shall take such actions as UAMPS in its sole discretion shall deem
necessary to ensure the availability of sufficient funds and revenues to enable UAMPS to meet
its obligations under the Project Agreements and the Financing Documents. Such actions may
include, without limitation, any of the following measures (or any combination thereof):
(1) UAMPS may sell all or any portion of the Project that is allocable to the
defaulting Participant's Entitlement Share on such terms and conditions as UAMPS
deems to be in the best interest of UAMPS and the nondefaulting Participants and shall
apply the proceeds of such sale to the purchase, redemption or defeasance of the Bonds or
to other purposes related to the Project; or
(2) UAMPS may enter into contractual arrangements for the sale of all or any
portion of the defaulting Participant's Entitlement Share or the Electric Energy associated
therewith on such terms and conditions as will maximize the revenues available to
UAMPS without regard to any adverse effect that such sale may have on the exclusion of
interest on the Bonds from gross income for federal income tax purposes.
In the event that UAMPS makes any sale pursuant to clause (2) above, UAMPS will obtain an
opinion of nationally recognized bond counsel addressing the tax status of interest on the Bonds
issued as tax exempt obligations. UAMPS will take such remedial actions as are available to it
to preserve the tax exempt status of interest on such Bonds. In the event that such opinion
indicates that interest on the Bonds is or will become includible in gross income for federal
income tax purposes, the Participant acknowledges that it may be necessary for UAMPS to pay
additional amounts as interest or penalties on the Bonds and that the Debt Service Costs payable
by the Participant pursuant to Section 8 will increase correspondingly. The Participant agrees to
pay its Debt Service Share of such increased Debt Service Costs pursuant to the provisions of
this Power Sales Contract.
(e) Upon any sale or disposition of all or any portion of a defaulting Participant's
Entitlement Share or the Electric Energy associated therewith or any sale of the Project pursuant
-38-
any other matter arising in connection with this Power Sales Contract, shall not be a waiver with
respect to any subsequent default, right or matter.
Section 28. Relationship to and Compliance with Other Instruments. (a) It is
recognized by the parties hereto that UAMPS, in undertaking, or causing to be undertaken, the
planning, financing, construction, acquisition, operation and maintenance of the Project, must
comply with the requirements of the Financing Documents, the Project Agreements and all
Permits and Approvals necessary therefor, and it is therefore agreed that this Power Sales
Contract is made subject to the terms and provisions of the Financing Documents, the Project
Agreements and all such Permits and Approvals.
(b) UAMPS covenants and agrees that it will use Commercially Reasonable Efforts for
the benefit of the Participant to comply in all material respects with all terms, conditions and
covenants applicable to it contained in the Financing Documents, the Project Agreements and all
Permits and Approvals, and that it will not, without the consent of the Participant, enter into any
amendment or modification of the Financing Documents or the Project Agreements which will
change the Participant's Entitlement Share or which will materially and adversely affect the
rights and obligations of the Participant hereunder.
Section 29. Liability of Parties. UAMPS and the Participant shall assume full
responsibility and liability for the maintenance and operation of their respective properties and
each shall, to the extent permitted by law, indemnify and save harmless the other from all
liability and expense on account of any and all damages, claims, or actions, including injury to or
death of persons arising from any act or accident in connection with the installation, presence,
maintenance and operation of the property and equipment of the indemnifying party and not
caused in whole or in part by the negligence of the other party;provided that any liability which
is incurred by UAMPS through the operation and maintenance of the Project or pursuant to the
Project Agreements and not covered, or not covered sufficiently, by insurance shall be paid
solely from the revenues of UAMPS hereunder, and any payments made by UAMPS to satisfy
such liability shall, except to the extent paid from proceeds of Bonds or Capital Cost Payments,
become part of Operation and Maintenance Costs.
Section 30. Assignment of Power Sales Contract. (a) This Power Sales Contract shall
inure to the benefit of and shall be binding upon the respective successors and assigns of the
parties to this Power Sales Contract;provided, however, that neither this Power Sales Contract
nor any interest herein shall be transferred or assigned by either party hereto except as follows:
(1) UAMPS may assign its interests under this Power Sales Contract or all or
any portion of the amounts payable by the Participant hereunder pursuant to the
Financing Documents as described in paragraph(b)below;
(2) UAMPS may sell, transfer or reallocate all or any portion of the
Participant's Entitlement Share following a default by the Participant and a
discontinuance of service as provided in Section 23;
-40-
Power Sales Contract. So long as any of the Bonds are outstanding or until adequate provisions
for the payment thereof have been made in accordance with the provisions of the Financing
Documents, this Power Sales Contract shall not be amended, modified, or otherwise altered in
any manner which will reduce the payments pledged as security for the Bonds or extend the time
of such payments provided herein or which will in any manner impair or adversely affect the
rights of the owners from time to time of the Bonds.
(c) No Power Sales Contract entered into between UAMPS and another Participant may
be amended so as to provide terms and conditions that are substantially and materially different
from those herein contained except upon written notice to and written consent or waiver by each
of the other Participants, and upon similar amendment being made to the Power Sales Contract
of any other Participants requesting such amendment after receipt by such Participant of notice
of such amendment.
(d) In connection with any revision or amendment of the billing procedures provided
for in Section 8 or of any of the Exhibits attached hereto, UAMPS shall promptly provide a copy
of the revision or amendment to the Participant.
Section 32. Notices and Computation of Time. Any notice or demand by the Participant
to UAMPS under this Power Sales Contract shall be deemed properly given if mailed postage
prepaid and addressed to UAMPS at its principal office or if telecopied to UAMPS with receipt
confirmed, followed by a written copy of such notice or demand mailed to UAMPS postage
prepaid; any notice or demand by UAMPS to the Participant under this Power Sales Contract
shall be deemed properly given if mailed postage prepaid and addressed to the Participant's
Representative at his address on file with UAMPS or if telecopied to the Participant's
Representative with receipt confirmed, followed by a written copy of such notice or demand
mailed to the Participant's Representative postage prepaid. In computing any period of time
from such notice, such period shall commence at noon, Salt Lake City time, on the date mailed
or telecopied, as applicable. The designations of the name and address to which any such notice
or demand is directed may be changed at any time and from time to time by either party giving
notice as above provided.
Section 33. Relationship of UAMPS and the Participant; Relationship among
Participants. (a) This Power Sales Contract is not intended to create, nor shall it be deemed to
create, any relationship between UAMPS and the Participant other than that of independent
parties contracting with one another for the purpose of effectuating the provisions of this Power
Sales Contract.
(b) The covenants, obligations, liabilities, rights and benefits of the Participant under
this Power Sales Contract are individual and not joint and several, or collective, with those of
any other Participant. Other than giving effect to the joint and cooperative action of UAMPS on
behalf of the Participants, the Power Sales Contracts shall not be construed to create an
association, joint venture, trust or partnership, or to impose a trust or partnership covenant,
obligation or liability on, between or among the Participant and any one or more of the
Participants. No Participant shall be or be deemed to be under the control of, nor shall any
Participant control or be deemed to control, any or all of the other Participants or the Participants
-42-
IN WITNESS WHEREOF, the parties hereto have caused this Power Sales Contract to be
executed by their proper officers respectively, being thereunto duly authorized, and their
respective corporate seals to be hereto affixed, as of the day, month and year first above written.
-44-
SCHEDULED
SCHEDULE OF PARTICIPANTS,ENTITLEMENT SHARES,
CAPITAL COST PAYMENT PERCENTAGES,DEBT SERVICE PERCENTAGES
AND DEBT SERVICE SHARES
PRELIMINARY AND SUBJECT TO ADJUSTMENT
t Capital Cost Payment Percentage, Debt Service Percentage and Debt Service Shares have been calculated based
upon Capital Cost of$ ,determined as of
* Columns may not total precisely due to rounding.
SI-1
PARTICIPANT
FISCAL YEAR
EXHIBIT II
FORM OF PARTICIPANT'S ANNUAL INFORMATION REPORT'
SYSTEM DESCRIPTION
Incorporated area of municipality square miles.
Service area of utility square miles.
Transmission and distribution lines miles.
Number of employees in electrical department (Include sum of shared
employees' time in other city offices to determine equivalent full-time employees.)
Number of customers served outside the city limits
Service area outside of the city limits square miles.
NUMBER OF ELECTRICAL CUSTOMERS
AND TYPE OF LOAD SERVED
TYPE OF CUSTOMER NUMBER OF CUSTOMERS
Residential
Commercial
Industrial
A ricultural and Pumping
Militya and Other
Total
Annual audit will be sent to UAMPS as soon as completed after the fiscal year.
Electric Rate Schedules for the above classes of service are attached hereto.
* Under Section 15(c)of the Power Sales Contract,UAMPS has agreed to classify the information provided
by the Participant on this Exhibit II as a"protected record". The Participant must also take any actions
necessary on its part to appropriately classify and protect the information provided in this Exhibit.
II-1
GENERATION
PRODUCED FOR SYSTEM LOAD
GENERATING UNIT PRODUCTION
#1 #2 #3 #4
kW kWh kW kWh kW kWh kW kWh
Jul
August
September
October
November
December
January
February
March
April
May
June
TOTAL
SYSTEM PEAK INCLUDING LOAD
COVERED BY OWN GENERATION
kW kW
July January
August February
September March
October Aril
November May
December June
II-3
EXHIBIT III
CERTIFICATE OF PARTICIPANT
STATE OF )
COUNTY OF )
The undersigned hereby certify that they are the and
of (the "Participant"), a member of Utah Associated
Municipal Power Systems ("UAMPS"), and that as such they are authorized to execute this
Certificate on behalf of the Participant and hereby certify as follows:
1. This Certificate has been executed in connection with the Intermountain Unit 3
Project Power Sales Contract, dated as of December 1, 2006 (the "Power Sales Contract"),
between the Participant and UAMPS.
2. (a) The Participant is a , duly created and validly existing
under the laws of the State of and is governed by a (the
"Governing Body") composed of«number» members.
3. Attached hereto as Exhibit A is a true, complete and correct copy of the Power Sales
Contract. Attached hereto as Exhibit B is a true and correct copy of excerpts from the minutes of
a regular public meeting of the Governing Body held on , including a resolution
adopted at such meeting authorizing the execution and delivery of the Power Sales Contract and
related matters (the "Contract Resolution"). The Contract Resolution is in full force and effect
and has not been amended, modified,repealed or supplemented.
4. The names of the [Executive Officer] and the members of the Governing Body, the
[Secretary/Clerk/Recorder] and [Attorney], together with the dates of commencement and
expiration of the term of office of the[Executive Officer] and the members of the Governing
Body, are as follows:
DATE OF
COMMENCEMENT OR DATE OF EXPIRATION
NAME OFFICE CURRENT TERM OF CURRENT TERM
«officer» «office» «commencement» «expiration»
5. In accordance with all open meeting requirements of state law applicable to the
Participant, the [Secretary/Clerk/Recorder] of the Participant gave public notice of the meeting
of the Governing Body at which the Contract Resolution was adopted, as well as any required
notice of the Governing Body's annual meeting schedule.
III-1
13. The payments to be made by the Participant to UAMPS under the Power Sales
Contract will constitute operating expenses of the System and a cost of purchased electric
energy.
14. There is no action, suit, proceeding, inquiry or investigation by or before any court,
governmental agency, public board or administrative body pending or, to the best of our
knowledge threatened, against the Participant which (a) challenges, contests or questions the due
and regular adoption of the Contract Resolution or the validity thereof affects or seeks to
prohibit, restrain or enjoin the Participant from complying with the obligations contained in the
Power Sales Contract, including the payment obligations to UAMPS contained therein, (b) in
any way affects or questions the validity or enforceability of the UAMPS Joint Action
Agreement or the Power Sales Contract, nor, to the best of our knowledge, is there any basis
therefor, (c) challenges or affects the corporate existence of the Participant or the titles of its
officers to their respective offices, (d) seeks to prohibit, restrain or enjoin the collection of
revenues from the System to be used to make payments to UAMPS under the Power Sales
Contract, or (e) involves any of the property or assets of the Participant which involves the
possibility of any judgment or liability, not fully covered by insurance, which may result in any
material adverse change in the business, properties, assets or in the condition, financial or
otherwise, of the System.
15. (a) The payments to be made to UAMPS by the Participant pursuant to the
Power Sales Contract will not be, directly or indirectly (i) secured by any interest in (A) property
used or to be used in a trade or business carried on by any person other than a state or local
governmental unit or (B) payments in respect of such property, or (ii) derived from payments
(whether or not by or to the Participant), in respect of property, or borrowed money, used or to
be used in a trade or business carried on by any person other than a state or local governmental
unit.
(b) No user of the System will use the System on any basis other than the same basis as
the general public; and no person other than a state or local governmental unit will be a user of
the System as a result of(i) ownership, or (ii) actual or beneficial use pursuant to a lease or a
management or incentive payment contract, or(iii) any other similar arrangement.
16. The information provided by the Participant to UAMPS pursuant to Section 14(b)
and (c) of the Power Sales Contract and attached as EXHIBIT II thereto with respect to the
Participant and the System is true, correct and complete. The Participant has duly authorized
UAMPS to use such information in connection with the preparation of an official statement of
UAMPS with respect to the bonds to be issued to provide financing for the initial costs of
acquisition and construction of the Project and to provide such information to interested parties.
III-3
ExMBIT A
[Attach Copy of Power Sales Contract]
A-1
WHEREAS, the Participant acknowledges that the obligation of the Participant to make the
payments provided for in the Power Sales Contract will be a special obligation of the Participant
and an operating expense of the Participant's electric system, payable from the revenues and
other available funds of the electric system, and that the Participant shall be unconditionally
obligated to make the payments required under the Power Sales Contract whether or not the
Project or any portion thereof is acquired, constructed, completed, operable or operating and
notwithstanding the suspension, interruption, interference, reduction or curtailment of the output
thereof for any reason whatsoever;
WHEREAS, in connection with the Project, it is necessary and desirable for the Participant
to approve, authorize and execute the Second Amendment dated as of , 2006 (the
"Second Amendment") to the Joint Action Agreement to provide for the continuation of the
existence of UAMPS through the date on which the Project has been removed from service and
all indebtedness of UAMPS relating to the Project has been fully paid or discharged; and
WHEREAS, the Participant now desires to authorize and approve the Power Sales
Contract, the Second Amendment and the Pooling Agreement;
Now, THEREFORE, BE IT RESOLVED by the Governing Body of
follows: , as
Section 1. Approval of Resource Plan. The Resource Plan of the Participant attached
hereto as Annex A is hereby authorized and approved.
Section 2. Execution and Delivery of the Power Sales Contract. (a) The Power Sales
Contract, in substantially the form attached hereto as Annex B, including the Participant's
% Entitlement Share (representing approximately kW of capacity) is hereby
authorized and approved, and the [Executive Officer] is hereby authorized, empowered and
directed to execute and deliver the Power Sales Contract on behalf of the Participant, and the
[Clerk/Recorder/Secretary] is hereby authorized, empowered and directed to attest and
countersign such execution and to affix the corporate seal of the Participant to the Power Sales
Contract, with such changes to the Power Sales Contract from the form attached hereto as
Exhibit B as shall be necessary to complete the form of the Power Sales Contract or to correct
any minor irregularities or ambiguities therein and as are approved by the [Executive Officer],
his execution thereof to constitute conclusive evidence of such approval.
Section 3. Approval of Second Amendment. The Second Amendment, in substantially
the form attached hereto as Annex C is hereby authorized and approved, and the [Executive
Officer] is hereby authorized, empowered and directed to execute and deliver the Second
Amendment on behalf of the Participant, and the [Clerk/Recorder/Secretary] is hereby
authorized, empowered and directed to attest and countersign such execution and to affix the
corporate seal of the Participant to the Second Amendment.
Section 4. Miscellaneous; Effective Date. (a) This resolution shall be and remain
irrepealable until the expiration or termination of the Power Sales Contract in accordance with its
terms.
B-2
ADOPTED AND APPROVED this_day of , 2006.
[PARTICIPANT]
By
ATTEST:
[Secretary/Clerk/Recorder]
[SEAL]
B-4
ANNEX B
[Attach Power Sales Contract]
BB-1
IN WITNESS WHEREOF, the undersigned Member of UAMPS has caused this Second
Amendment to be executed and attested by its duly authorized officers.
DATED as of this day of .32006.
[MEMBER]
By
[Title]
ATTEST:
By
[Title]
This Second Amendment is hereby
approved as being in proper form and
compatible with the laws of the State
of Utah.
Authorized Attorney
BC-2
EXHIBIT D
[Attach Schedule of Bonds, Notes, Contracts,Etc.]
[(a) list outstanding bond issues of the Participant secured by the revenues of
the System;
(b) the Power Sales Contract, dated as of June 1, 1982 as amended, between
UAMPS and the Participant, relating to the Hunter Steam Electric Generating Unit No.
II;
(c) the Power Sales Contract, dated as of September 28, 1978, as amended,
between Intermountain Power Agency ("IPA") and the Participant, relating to the
Intermountain Power Project;
(d) the Lay-Off Power Purchase Contract, dated as of February 1, 1983,
among Utah Power & Light Company, IPA and the Participant, relating to the
Intermountain Power Project;
(e) the Transmission Service Contract for the Western Colorado-Bonanza
Transmission Project and the Bonanza-Mona Transmission Project, dated as of
January 20, 1989, between UAMPS and the Participant;
(f) the Transmission Service Agreement for the Central-St. George 138 kV
Transmission Project, dated July _, 1989 as amended and supplemented, between
UAMPS and the Participant;
(g) the San Juan Project Power Sales Contract, dated as of July 1, 1993,
between UAMPS and the Participant;
(h) the Master Firm Power Sales Agreement, dated as of June 16, 1999 and
Transaction Schedule No. 1 thereunder, between UAMPS and the Participant; and
(i) the Payson Power Project Power Sales Contract, dated as of June 1, 2002,
between UAMPS and the Participant].
D-1
EXHIBIT V
Utah Associated Municipal Power Systems
2825 East Cottonwood Parkway, Suite 200
Salt Lake City, Utah 84121
Ladies and Gentlemen:
I have acted as counsel to (the "Participant") as a purchaser of electric
energy under the Intermountain Unit 3 Project Power Sales Contract, dated as of December 1,
2006 (the "Power Sales Contract"), between the Participant and Utah Associated Municipal
Power Systems ("UAMPS") and in connection with the matters referred to herein. Pursuant to
the Power Sales Contract, UAMPS will, for the benefit of the Participant and certain other
members of UAMPS that have executed Power Sales Contracts with UAMPS, exercise
Commercially Reasonable Efforts to expeditiously and economically acquire and construct the
Project. Capitalized terms used and not defined herein have the meanings assigned to such terms
in the Power Sales Contract.
As such counsel I have examined (i) those documents relating to the existence,
organization and operation of the Participant and its electric system (the "System"), (ii) all
resolutions and proceedings of the Participant relating to the due authorization, execution and
delivery by the Participant of the Power Sales Contract, (iii) an executed counterpart of the
Power Sales Contract, and (iv) such other documents, information, facts and matters of law as
are necessary for me to render the opinions contained herein.
Based upon the foregoing, I am of the opinion that:
[1. The Participant is a [municipal corporation and/or political subdivision of the State
of (the "State"), duly created and validly existing under the laws of the State and
duly qualified to own,operate and furnish electric service through the System.]
[1. The Participant is a , duly created, organized and existing under the
laws of the State of (the "State"), and duly qualified to own, operate and furnish
electric service through the System.]
2. The Participant has full legal right, power and authority to enter into the Power
Sales Contract and to carry out and consummate all of the transactions contemplated thereby,
and the Participant has complied with the provisions of applicable law which would be a
condition precedent to entering into the Power Sales Contract or carrying out and consummating
such transactions.
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8. The obligations of the Participant to make payments to UAMPS under the Power
Sales Contract shall constitute an obligation of the Participant payable as an operating expense of
the System solely from the revenues and other available funds of such electric system. Such
payments shall constitute a cost of purchased electric energy and an operating expense of the
System. The application of the revenues and other available funds of the System to make such
payments to UAMPS is not subject to any prior lien, encumbrance or restriction.
9. The rates charged by the Participant for System services to customers located within
the corporate boundaries of the Participant are not subject to regulation by any authority of the
State or the United States and have been duly and validly adopted by the Participant and are
legally enforceable in accordance with the laws of the State of Utah.
10. The Participant has lawful authority to own the System and to fix and collect rates,
fees and other charges in connection with such System.
11. The Participant has good and merchantable title to the System as it now exists.
12. Except for those portions of the System which are laid in, on or under public roads,
highways, streets or alleys which have been heretofore dedicated to the public for road, highway,
street or alley purposes and which have actually been in use for such purpose for more than five
years past, all of the System is located either on land of the Participant as to which the
Participant has good and merchantable fee simple title or as to which the Participant has acquired
good and valid permanent easements, rights-of-way, licenses or permits not terminable by action
of any party without the consent of the Participant sufficient to permit the Participant to maintain
and operate the System.
13. The Participant has obtained all necessary permits, licenses and approvals required
by law, whether state or federal, to be obtained by the Participant in connection with the
operation of the System, and such permits, licenses and approvals are in full force and effect.
14. There is no present unsatisfied judgment heretofore rendered against the Participant
constituting or which will constitute a lien on any part of the System.
15. There are no contracts, laws, regulations, court orders or consent decrees that will
restrict the ability of the Participant to comply with its covenants regarding rates for System
services set forth in the Power Sales Contract.
16. The Participant has duly authorized, executed and delivered the Joint Action
Agreement and the Pooling Agreement and each such agreement constitutes the legal, valid and
binding obligation of the Participant enforceable against the Participant in accordance with its
terms.
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EXHIBIT VI
Utah Associated Municipal Power Systems
2825 East Cottonwood Parkway, Suite 200
Salt Lake City, Utah 84121
Dear Sirs:
I have acted as counsel to (the "Participant") in connection with the
execution by the Participant of the Intermountain Unit 3 Project Power Sales Contract dated as of
1, 2006 (the "Power Sales Contract") between the Participant and Utah Associated
Municipal Power Systems ("UAMPS") I have been advised that UAMPS has made
arrangements for the issuance and sale of the date hereof of its Intermountain Unit 3 Project
Revenue Bonds, Series (the "Bonds").
In connection with the execution and delivery by the Participant of the Power Sales
Contract, I rendered to UAMPS an approving legal opinion, dated (the "Prior
Opinion"), with respect to the Participant. In connection with the issuance and sale by UAMPS
of the Bonds, I hereby reaffirm the Prior Opinion, as though it was dated the date hereof, in the
form it was so rendered on
In addition to the foregoing, I have examined (i) the material describing the Participant
and its electric system contained under the caption "THE PARTICIPANTS — " in
the Official Statement, dated (together with any supplements or am adments thereto
as of the date hereof, the "Official Statement") of UAMPS relating to the Bonds and (ii) such
other documents, information, facts and matters of law as are necessary for me to render the
following opinion. Based upon the foregoing, I am of the opinion that the statements and
information with respect to the Participant and its electric system in the Official Statement under
the section entitled "THE PARTICIPANTS — " are true and correct in all
material respects as of the date of the Official Statement and as of the date hereof, and no facts
have come to my attention which would lead me to believe that, as of the date of the Official
Statement and as of the date hereof, the statements in the Official Statement under such caption
contained or contain any untrue statement of a material fact or omitted to state or omit to state
any material fact necessary in order to make such statements, in the light of the circumstances
under which they were made, not misleading.
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