HomeMy WebLinkAbout8 UAMPS Intermountain Power Project Agenda Item #
Public Utility District
E y,.
Memorandum
To: Board of Directors
From: Stephen Hollabaugh
Date: November 8, 2006
Subject: UAMPS Intermountain Power Project Unit #3
History-
The District is a UAMPS member and is active within the IPP#3 Project. The District has
been involved with this project for about the last five years. The District participated in
funding for the Development Phase of IPP#3. This project has progressed to the
Development Phase, and the District will soon enter into the Power Sales Contract of the
project.
At the Nov 1 Board meeting we discussed in addition to the Power Sales Contract the
following Documents:
• TDPUD future Resource Plan (also attached to this staff report)
• Power Sales Contract (most recent)
At the October 18 Board meeting the following were reviewed and discussed
• Ownership Agreement
• Unit 3 Construction Lease, Use and Services Agreement
• Common Facilities and Site Agreement
New Information
Peter Holzmeister will present a the Power Sales Contract with the assistance of Steve
Gross who has been in contact with UAMPS and had input to the final form of this contract.
A presentation of Truckee Donner PUD's load and resource needs during the time period
that this electric generation plant comes on line and into the future (TDPUD future
Resource Plan) will be available.
• TDPUD Power Supply Resource Plan:
o Base Load power supply and the future need for on peak energy:
Truckee Donner PUD's interest in the project is 20,000 kW.
• Why 20,000 kW?
o When analyzing the Districts load data and forecasted load and resource
mix, a base load resource should be somewhere between our minimum load
UAMPS IPP3
and our average maximum load. This analysis comes up with a minimum in
2012 of about 14,000 kW and maximum of about 22,000 kW. I propose that
the District entitlement share of this base resource be 20,000 kW. At 20,000
kW as a base resource, it provides balance to support additional energy
resource options including conservation efforts, renewable and other fuel
resources.
• Economics of IPP Unit 3
o As a base load resource the District can stabilize its power supply needs for
our customers. The estimated cost of IPP Unit three is under $40 MWh.
This is compared to a market price of about $70 MWh. What does this
difference represent? At a conservative $30 MWh difference this
represents about $5,000,000 a year savings to our customers. If we do
not enter into this contract and incur the additional cost of $5,000,000
annually we will require approximately a 25% to 30% rate increase to
just cover the cost of the base resource.
• Current WAPA contract and possible future small hydro generation
(Stampede) within the TDPUD resource mix.
o The District worked on acquiring a WAPA allocation since the 1980's and
was stopped by PG&E and Sierra Pacific Power Company who denied the
District transmission access. The District finally acquired a small allocation
of WAPA that started in 2005. As one can see, it takes a long time and a lot
of work to acquire hydro based generation. This varies with hydro conditions
and may represent 2% to 5% of our energy portfolio.
o The District submitted a proposal with the City of Fallon for the Stampede
Generation on June 7, 2006 this generation will be a great asset to our power
supply portfolio. The generation is a run of the river non-firm energy product.
Our submittal was the only submittal for this generation. Stay tuned to future
updates. Making progress with a Federal agency can sometimes take time.
The District is hopeful that by April of 2007 it might have access to some of
this generation. This may represent about 5000 MWhs a year or about 2% to
3% of our energy portfolio.
• Current District efforts concerning Green building and alternative energy.
o District staff (Scott Terrell) is a member of both the Town of Truckee Green
Building Committee and the Sierra Green Building Association. Scott has
worked with SiGBA, the Town of Truckee, CATT and others to put together
green building education and training programs, classes and a Regional
Green Building Resource Guide to help contractors, businesspersons and
homeowners make use of the benefits of green building. Staff works closely
with the Truckee building community and homeowners to integrate green
design in as many projects as possible. Truckee is considered the Greenest
Small Town in America 2010 based on the square footage of commercial
green buildings per capita anywhere in the country. The District was also
instrumental in working with the Truckee Recreation and Parks District to
pilot a small Biomass Gasification electric and heat generation project
located at the Truckee Regional Park.
2 UAMPS IPP3
Frequently Asked Questions:
• What advantages does a coal-fired resource offer?
o As Truckee and our electric energy use grow, our power needs continue to
expand. Steps must be taken now to ensure balance between future energy
needs and available resources. Coal-fired energy provides for the base load
requirements and supplies balance to support additional energy resource
options including conservation efforts, renewable and other fuel resources.
Even with the utilization of all available and alternative resources, current and
future electrical energy needs cannot be met economically without continued
use of coal. Coal-fired electricity provides a low-cost foundation to stabilize
electricity costs, allowing for development of alternative energy resources.
• What advantages does IPP Unit 3 offer over other coal-fired
resource development?
o IPP Unit 3 has the desired designation of a brown field project because
infrastructure already exists. This offers tremendous environmental and
economic advantages over development of a new project, referred to as a
green field.
IPP Unit 1 and 2 are functioning coal generation facilities with well
established track record of environmental performance above and beyond
regulatory requirements. The third unit will take advantage of the existing
infrastructure including coal supplies, coal transportation systems and
existing electric transmission facilities. These same transmission lines are
used by the District to receive its current power today. The proven history
and experience at IPP will ensure a continued level of high environmental
performance and cost effective operation.
On a MWh basis, IPP Unit 3 is the cleanest coal-fired plant in the nation
that is licensed.
IPP Unit 3 has acquired an Approval Order from the Utah Division of Air
Quality and will be one of the cleanest coal-fired units in the United States
through utilization of the Best Available Control Technology (BACT). This will
allow the facility to operate in the cleanest way required by law.
• What should we understand about the environmental impact?
o The state-of—the-art, coal fired Unit 3 will not only burn lower sulfur coal , but
will be one of the cleanest coal-fired units in the United States. The state-of-
the-art exhaust gas clean-up systems include three major components
consisting of a fabric filter system, a wet limestone Flue Gas
Desulphurization scrubbing system and a selective catalytic reduction system
with advanced burner and over fire air combustion technologies.
• What is the Generation mix within the United States?
o See the attached graph and information from the Energy Information
Administration, Electric Power Monthly, October 2006.
3 UAMPS IPP3
Power Sales Contract:
Steve Gross will present the Power Sales Contract that will be presented at the November
15, 2006 meeting in substantially complete form.
Conclusion:
If the District is able to secure a low cost base resource, it provides balance to our
portfolio allowing additional energy resource options including conservation efforts,
renewable and other fuel resources. The IPP Unit 3 meets the needs of the District for a
base load resource and is located where transmission is available for reliable delivery.
Recommendation:
The Board of Directors adopts and authorize the Board President to sign the Power Sales
Contract in substantially the form presented.
Generation and Consumption of Fuels for Electricity
Generation, July 2006
Energy Information Administration, Electric Power Monthly, October 2006
Year-to-date,48.6 percent of the Nation's electric power was generated at coal-fired plants (Figure
1). Nuclear plants contributed 19.5 percent, 19.5 percent was generated by natural gas-fired plants,
and 1.6 percent was generated at petroleum-fired plants. Conventional hydroelectric power provided
8.0 percent of the total, while other renewables (primarily biomass, but also geothermal, solar, and
wind) and other miscellaneous energy sources generated the remaining electric power.
Figure 1. Net Generation Shares by Energy Source:
Total (All Sectors), Year-to-Date through July,2006
3_C 1_
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APR 3�YR6 la' �%4
161MNt3[�lfll{I� s a t m,
19.
7.
Coal Hydroelectric
Natural Gas Nuclear
11 Other Energy Sources z' Petroleum
4 UAMPS IPP3
Agenda Item #
DONNER
Public Utility District
Memorandum
To: Board of Directors
From: Stephen Hollabaugh
Date: November 8, 2006
Subject: UAMPS Intermountain Power Project Unit #3
History-
The District is a UAMPS member and is active within the IPP#3 Project. The District has
been involved with this project for about the last five years. The District participated in
funding for the Development Phase of IPP#3. This project has progressed to the
Development Phase, and the District will soon enter into the Power Sales Contract of the
project.
At the Nov 1 Board meeting we discussed in addition to the Power Sales Contract the
following Documents:
• TDPUD future Resource Plan (also attached to this staff report)
• Power Sales Contract (most recent)
At the October 18 Board meeting the following were reviewed and discussed
• Ownership Agreement
• Unit 3 Construction Lease, Use and Services Agreement
• Common Facilities and Site Agreement
New Information
Peter Holzmeister will present a the Power Sales Contract with the assistance of Steve
Gross who has been in contact with UAMPS and had input to the final form of this contract.
A presentation of Truckee Donner PUD's load and resource needs during the time period
that this electric generation plant comes on line and into the future (TDPUD future
Resource Plan) will be available.
• TDPUD Power Supply Resource Plan:
o Base Load power supply and the future need for on peak energy:
Truckee Donner PUD's interest in the project is 20,000 kW.
• Why 20,000 kW?
o When analyzing the Districts load data and forecasted load and resource
mix, a base load resource should be somewhere between our minimum load
UAMPS IPP3
and our average maximum load. This analysis comes up with a minimum in
2012 of about 14,000 kW and maximum of about 22,000 kW. I propose that
the District entitlement share of this base resource be 20,000 kW. At 20,000
kW as a base resource, it provides balance to support additional energy
resource options including conservation efforts, renewable and other fuel
resources.
• Economics of IPP Unit 3
o As a base load resource the District can stabilize its power supply needs for
our customers. The estimated cost of IPP Unit three is under $40 MWh.
This is compared to a market price of about $70 MWh. What does this
difference represent? At a conservative $30 MWh difference this
represents about $5,000,000 a year savings to our customers. If we do
not enter into this contract and incur the additional cost of $5,000,000
annually we will require approximately a 25% to 30% rate increase to
just cover the cost of the base resource.
• Current WAPA contract and possible future small hydro generation
(Stampede) within the TDPUD resource mix.
o The District worked on acquiring a WAPA allocation since the 1980's and
was stopped by PG&E and Sierra Pacific Power Company who denied the
District transmission access. The District finally acquired a small allocation
of WAPA that started in 2005. As one can see, it takes a long time and a lot
of work to acquire hydro based generation. This varies with hydro conditions
and may represent 2% to 5% of our energy portfolio.
o The District submitted a proposal with the City of Fallon for the Stampede
Generation on June 7, 2006 this generation will be a great asset to our power
supply portfolio. The generation is a run of the river non-firm energy product.
Our submittal was the only submittal for this generation. Stay tuned to future
updates. Making progress with a Federal agency can sometimes take time.
The District is hopeful that by April of 2007 it might have access to some of
this generation. This may represent about 5000 MWhs a year or about 2% to
3% of our energy portfolio.
• Current District efforts concerning Green building and alternative energy.
o District staff (Scott Terrell) is a member of both the Town of Truckee Green
Building Committee and the Sierra Green Building Association. Scott has
worked with SiGBA, the Town of Truckee, CATT and others to put together
green building education and training programs, classes and a Regional
Green Building Resource Guide to help contractors, businesspersons and
homeowners make use of the benefits of green building. Staff works closely
with the Truckee building community and homeowners to integrate green
design in as many projects as possible. Truckee is considered the Greenest
Small Town in America 2010 based on the square footage of commercial
green buildings per capita anywhere in the country. The District was also
instrumental in working with the Truckee Recreation and Parks District to
pilot a small Biomass Gasification electric and heat generation project
located at the Truckee Regional Park.
2 UAMPS 1PP3
Frequently Asked Questions:
• What advantages does a coal-fired resource offer?
o As Truckee and our electric energy use grow, our power needs continue to
expand. Steps must be taken now to ensure balance between future energy
needs and available resources. Coal-fired energy provides for the base load
requirements and supplies balance to support additional energy resource
options including conservation efforts, renewable and other fuel resources.
Even with the utilization of all available and alternative resources, current and
future electrical energy needs cannot be met economically without continued
use of coal. Coal-fired electricity provides a low-cost foundation to stabilize
electricity costs, allowing for development of alternative energy resources.
• What advantages does IPP Unit 3 offer over other coal-fired
resource development?
o IPP Unit 3 has the desired designation of a brown field project because
infrastructure already exists. This offers tremendous environmental and
economic advantages over development of a new project, referred to as a
green field.
IPP Unit 1 and 2 are functioning coal generation facilities with well
established track record of environmental performance above and beyond
regulatory requirements. The third unit will take advantage of the existing
infrastructure including coal supplies, coal transportation systems and
existing electric transmission facilities. These same transmission lines are
used by the District to receive its current power today. The proven history
and experience at IPP will ensure a continued level of high environmental
performance and cost effective operation.
On a MWh basis, IPP Unit 3 is the cleanest coal-fired plant in the nation
that is licensed.
IPP Unit 3 has acquired an Approval Order from the Utah Division of Air
Quality and will be one of the cleanest coal-fired units in the United States
through utilization of the Best Available Control Technology (BACT). This will
allow the facility to operate in the cleanest way required by law.
• What should we understand about the environmental impact?
o The state-of—the-art, coal fired Unit 3 will not only burn lower sulfur coal , but
will be one of the cleanest coal-fired units in the United States. The state-of-
the-art exhaust gas clean-up systems include three major components
consisting of a fabric filter system, a wet limestone Flue Gas
Desulphurization scrubbing system and a selective catalytic reduction system
with advanced burner and over fire air combustion technologies.
• What is the Generation mix within the United States?
o See the attached graph and information from the Energy Information
Administration, Electric Power Monthly, October 2006.
3 UAMPS IPP3
Power Sales Contract:
Steve Gross will present the Power Sales Contract that will be presented at the November
15, 2006 meeting in substantially complete form.
Conclusion:
If the District is able to secure a low cost base resource, it provides balance to our
portfolio allowing additional energy resource options including conservation efforts,
renewable and other fuel resources. The IPP Unit 3 meets the needs of the District for a
base load resource and is located where transmission is available for reliable delivery.
Recommendation:
The Board of Directors adopts and authorize the Board President to sign the Power Sales
Contract in substantially the form presented.
Generation and Consumption of Fuels for Electricity
Generation, July 2006
Energy Information Administration, Electric Power Monthly, October 2006
Year-to-date, 48.6 percent of the Nation's electric power was generated at coal-fired plants (Figure
1). Nuclear plants contributed 19.5 percent, 19.5 percent was generated by natural gas-fired plants,
and 1.6 percent was generated at petroleum-fired plants. Conventional hydroelectric power provided
8.0 percent of the total, while other renewables (primarily biomass, but also geothermal, solar, and
wind) and other miscellaneous energy sources generated the remaining electric power.
Figure 1. Net Generation Shares by Energy Source:
Total (All Sectors), Year-to-Date through July,2006
13 5%
C'n.Wiksvp3dlkN.Z r'k. 5 {E` y..s
f✓rfR"iC'+k.fA'.}4�"F+a+'/sa"'#'rP ye4; ' .a�mrx r�
an'rlR
t9.5�6
7.8%
Coal i Hydroelectric
Natural Gas Nuclear
11 Other Energy Sources Petroleum
4 UAMPS IPP3
fi
DONNER
Resolution No. 2006 - XXX
A Resolution authorizing and approving:
(1) a power supply resource plan; (2) the Intermountain Unit 3 Project
Power Sales Contract with Utah Associated Municipal Power Systems
("UAMPS"); (3) the Second Amendment to the UAMPS Agreement
for Joint and Cooperative Action; and (4) related matters.
WHEREAS, Truckee Donner Public Utility District (the "Participant") is a member of Utah
Associated Municipal Power Systems ("UAMPS") pursuant to the provisions of the Utah
Associated Municipal Power Systems Amended and Restated Agreement for Joint and Cooperative
Action, as amended (the "Joint Action Agreement");
WHEREAS, one of the purposes of UAMPS under the Joint Action Agreement is the
acquisition and construction of electric generating, transmission and related facilities in order to
secure reliable, economic sources of electric power and energy for its members;
WHEREAS, UAMPS has proposed to participate as a joint owner in the acquisition and
construction of a coal-fired electric generating facility at the Intermountain Generating Station in
Millard County, Utah,together with related facilities and equipment(the "Project");
WHEREAS, the Board of Directors of the Participant (the "Governing Body") has reviewed
the long-term power supply resource plan (the "Power Supply Resource Plan") of the Participant
which sets forth the needs of the Participant for long-term, reliable, cost-based supplies of electric
power and energy, has reviewed engineering studies and reports with respect to the Project and has
considered, among other things, the following: (a) the economies and efficiencies of scale to be
achieved through the acquisition and construction by UAMPS of the Project for the benefit of the
Participant and the other members of UAMPS participating in the Project, (b) the need of the
Participant for the electric energy represented by its Entitlement Share in the Project to meet its
current and reasonably expected power supply requirements and to provide reserve capacity, (c) the
estimated useful life of the Project, (d) the estimated time necessary for the acquisition and
construction of the Project and the length of time in advance necessary to obtain, acquire or
construct an additional or alternative power supply, (e) the reliability and availability of the
Participant's existing power supply sources, the Project and alternative power supply sources and
the cost or estimated cost thereof, and (f) all such other matters as were deemed necessary or
appropriate by the Participant as a basis for and in connection with its authorization and execution
of the Power Sales Contract;
WHEREAS, the Governing Body has also reviewed (or caused to be reviewed on its behalf)
copies of the current drafts of the Project Agreements (as defined in the Power Sales Contract) or
summaries thereof, and representatives of the Participant have participated in discussions and
conferences with UAMPS and others regarding the Project and have received from UAMPS all
Resolution 2006-XX l
requested information and materials necessary for the decision of the Governing Body to authorize
and approve the Power Sales Contract;
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 Supply Resource
Plan, the Power Sales Contract and the Second Amendment;
Now, THEREFORE, BE IT RESOLVED by the Governing Body of Truckee Donner Public
Utility District, as follows:
Section 1. Approval of Power Supply Resource Plan. The Power Supply 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; Participant's
Representative. (a) The Power Sales Contract, in substantially the form attached hereto as Annex B,
including the Participant's 4.444% Entitlement Share (representing approximately 20,000 kW of
capacity) is hereby authorized and approved, and the President is hereby authorized, empowered
and directed to execute and deliver the Power Sales Contract on behalf of the Participant, and the
Clerk of the Governing Body 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 conform to the Participant's legal status, to complete the form of the Power
Sales Contract or to correct any minor irregularities or ambiguities therein and as are approved by
the President, his execution thereof to constitute conclusive evidence of such approval.
(b) The appointment of Stephen Hollabaugh as the Participant's Representative to
UAMPS and of Peter L. Holzmeister and J. Ron Hemig as alternate Representatives is hereby
confirmed. Such Representative (or, in his or her absence, such alternate(s)) is hereby delegated
full authority to act on all matters that may come before the Project Management Committee
established by the Power Sales Contract, and shall be responsible for reporting regularly to the
Governing Body regarding the activities of the Project Management Committee.
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 President is hereby
Resolution 2006-XX 2
authorized, empowered and directed to execute and deliver the Second Amendment on behalf of the
Participant, and the Clerk 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) All previous acts and resolutions in conflict with this resolution or any part hereof are
hereby repealed to the extent of such conflict.
(c) In case any provision in this resolution shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
(d) This resolution shall take effect immediately upon its adoption and approval.
PASSED AND ADOPTED by the Board of Directors of the Truckee Donner Public Utility District
in a meeting duly called and held within said District on the 151h day of November, 2006.
AYES:
NOES:
ABSTAIN:
ABSENT:
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
J. Ron Hemig, President
ATTEST:
Peter L. Holzmeister, Clerk of the Board
[SEAL]
Resolution 2006-XX 3
DRAFT
11/10/06
INTERMOUNTAIN UNIT 3 PROJECT
POWER SALES CONTRACT
BETWEEN
UTAH ASSOCIATED MUNICIPAL POWER SYSTEMS
AND
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
DATED AS OF DECEMBER 1, 2006
Power-IPP3-power sales contract-clean
0866665/ETH/mo Truckee Donner PSC
Section 33. Relationship of UAMPS and the Participant; Relationship
amongParticipants...............................................................................44
Section 34. No Recourse Against Officers, Etc. of UAMPS or
Participant............................................................................................44
Section 35. Applicable Law; Construction.............................................................45
Section 36. Severability; No Merger.......................................................................45
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
-11- Truckee-Donner PSC
derived by UAMPS from the operation of the Project, including the payments to be made by the
Participants under the Power Sales Contracts;
WHEREAS, in connection with its authorization of the execution, delivery and
performance by the Participant of this Contract, the governing body of the Participant has
reviewed (or caused there to be reviewed on its behalf) various descriptions and summaries of the
Project, the Project Agreements and this Contract, the Engineering Studies and Reports and the
Participant's Power Supply Resource Plan, and the governing body of the Participant has
determined that it is necessary and desirable for the Participant to enter into this 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 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 Contract and their respective governing bodies have
taken all necessary actions and all Required Approvals have been obtained in order to constitute
this 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 Contract as follows:
Section 1. Definitions and Rules of Construction. (a) As used in this 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.
-2- Truckee-Donner PSC
"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 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 each contract or agreement providing for the
acquisition and construction of any part of Unit 3, the Initial Facilities or 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.
"Contract" means this Intermountain Unit 3 Project Power Sales Contracts dated as of
December 1, 2006 between UAMPS and the Participant and any amendments permitted pursuant
to Section 31.
"Contract Resolution" means the resolution of the Participant's governing body
approving and authorizing the execution of this Contract, in substantially the form attached to
EXHIBIT III.
"Contract Year" means the Fiscal Year, except that the first Contract Year shall begin on
the Effective Date and shall end on the last day of the then-current Fiscal Year. In the event that
UAMPS changes its Fiscal Year for accounting purposes, Contract Year shall, without further
action, be amended to conform to such Fiscal Year.
"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:
-4- Truckee-Donner PSC
relating to the Project and incurred during the period of the acquisition or construction
thereof; and
(11) all other costs incurred by UAMPS, and properly allocable to the
acquisition and construction of the Project, including all costs financed by the issuance of
Additional Bonds.
"Debt Service Costs" means, for each Billing Period of each Contract Year, an amount
equal to the sum of:
(1) the interest accruing on Bond Anticipation Notes and Bonds during such
Billing Period, except to the extent that amounts are on deposit under the Financing
Documents to pay such interest from the proceeds of Bond Anticipation Notes or Bonds;
(2) the portion of the next due principal installment (other than any
Refundable Principal Installment) accruing on Bond Anticipation Notes and Bonds
during such Billing Period, calculated in accordance with the Financing Documents;
(3) such amounts as shall be necessary to amortize any unpaid Refundable
Principal Installment (as to the principal thereof and the interest thereon until such
principal amount is paid in full) over a period ending not later than the earlier of(a) thirty
years from the maturity date of the Refundable Principal Installment and (b) fifty years
from the first Effective Date of any Power Sales Contract;
(4) the amounts payable during such Billing Period under any Interest Rate
Contract with respect to Bond Anticipation Notes or Bonds;
(5) any amounts required by the Financing Documents to be deposited into the
Bond Fund to provide or replenish debt service reserve requirements for Bond
Anticipation Notes or Bonds;
(6) 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;
(7) 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 Bond
Anticipation Notes or Bonds; and
(8) 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;
provided, however, that as provided in Section 5, any additional interest expense on or in respect
of any Bond Anticipation Notes, Bonds or subordinate obligations that are subject to federal
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"Entitlement Share" means that percentage of the Project Capability shown opposite the
name of the Participant on SCHEDULE I, as the same may be adjusted pursuant to Section 3,
Section 4, Section 18 or Section 23.
"Financing Documents" means the bond resolution, indenture, trust agreement or other
instrument or instruments providing for the issuance of and the security for Bond Anticipation
Notes or Bonds and all amendments thereof and supplements thereto.
"Fiscal Year" means the annual accounting period of UAMPS as from time to time in
effect, initially a period commencing on April 1, of each calendar year and ending on March 31
of the next succeeding calendar year.
"Fuel Agent" means any entity retained pursuant to the Project Agreements or by
UAMPS to manage or facilitate the acquisition or management of fuel for the operation of the
Project or the transportation of fuel to the Project.
"Fuel Agreement" means any agreement entered into by or on behalf of UAMPS for the
acquisition, management, transportation, handling, processing or storage of fuel for the operation
of the Project.
"Full Subscription Date" means the first date on which the sum of the Entitlement
Shares of all Participants equals 100%.
"7GS" means the Intermountain Generating Station.
"Initial Facilities" means the real and personal property, facilities, structures,
improvements and equipment comprising Unit 3, as generally described on EXHIBIT 1, all to the
extent of the undivided ownership interest of UAMPS therein.
"Interest Rate Contract" means any International Swap Dealers Association, Inc. (ISDA)
Master Agreement, together with the schedules and confirmations thereto, or any similar
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.
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(2) the costs of operating and maintaining the Project and of producing and
delivering Electric Power and Electric Energy therefrom during such Billing Period,
including the operation and maintenance expenses and fuel costs of the Project, fees,
expenses, incentives and other compensation payable to the Operator and any Fuel Agent,
the portion of UAMPS' administrative and general expenses allocable or directly charged
to the Project, working capital and reserves for the payment of operation and maintenance
expenses, and all other costs and expenses (but excluding depreciation) not included in
the costs specified in the other items of this definition and properly chargeable to the
Project;
(3) legally required or permitted federal, state and local taxes, including gross
receipts taxes and ad valorem taxes or payments in lieu of ad valorem taxes, in each case
related to the Project;
(4) amounts to be deposited into the Reserve and Contingency Fund
established pursuant to Section 19;
(5) legal, engineering and accounting fees and expenses, the cost of any
litigation related to the Project, the Project Agreements, the Power Sales Contracts and
the interests and transactions contemplated by the Project Agreements and the Power
Sales Contracts, the costs of technical and advisory services and the cost of all Permits
and Approvals, all to the extent allocable to the Project;
(6) the Cost of Additional Facilities, but only to the extent not paid or
financed as a portion of the Cost of the Project;
(7) all other amounts payable by UAMPS under the terms of the Joint
Operating Agreement; and
(8) the costs of, or reserves for the costs of, decommissioning or removing
from service all or any part of the Project.
"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 (1) all or the affected portion of the proposed Entitlement Share
of a prospective Participant (as shown on the form of 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 and (2) the Entitlement Share of a Participant whose Power Sales Contract
is terminated by the Project Management Committee upon the written request of the Participant
pursuant to Section 31(a)(2).
"Owners" means UAMPS and each other owner of an undivided interest in Unit 3
pursuant to the Ownership Agreement.
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"Power Supply Resource Plan" means the Participant's analysis of its long-term power
supply requirements and resources, attached as Annex A to the Contract Resolution.
"Project" means the acquisition, construction, improvement and equipping of the Initial
Facilities and any Additional Facilities.
"Project Agreements" means, collectively, the Ownership Agreement, the Common
Facilities Agreement, the Construction, Lease, Use and Services Agreement, the Construction
Agreements, the Joint Operating Agreement, each Fuel Agreement and the Transmission
Agreements.
"Project Capability" means the nominal Electric Power and associated Electric Energy
which the Project is capable of producing. Project Capability initially means the aggregate
amount of Electric Power shown on SCHEDULE I and associated Electric Energy.
"Project Management Committee" means the committee of the Participants established
pursuant to Section 7.
"Project Output" means the amount of Electric Power and Electric Energy, if any, which
is actually generated by the Project in any particular hour.
"Prudent Utility Practice" means, as of any particular time, any of the practices, methods
and acts engaged in or approved by a significant portion of the electric utility industry at such
time, or which, in the exercise of reasonable judgment in light of facts known at such time, could
have been expected to accomplish the desired results at the lowest reasonable cost consistent
with good business practices, reliability, safety and expedition. Prudent Utility Practice is not
intended to be limited to the optimum practice, method or act to the exclusion of all others or to
be limited to the lowest-cost practice, method or act, but rather to be a spectrum of possible
practices, methods and acts, having due regard for manufacturers' warranties and the jurisdiction.
"Qualified Independent Engineer" means a licensed or registered engineer or firm of
such engineers acceptable to UAMPS and recognized to be qualified in matters related to electric
generation and/or transmission facilities who shall (1) not be an officer or employee of the
Participant or UAMPS and (2) not have any substantial interest with, or be under the domination
of, the Participant or UAMPS.
"Refundable Principal Installment" means any principal installment for any Bond
Anticipation Notes or Bonds designated by UAMPS pursuant to the Financing Documents as
payable from the proceeds of Capital Cost Payments or other Bond Anticipation Notes or Bonds.
"Refunding Bonds" means refunding Bonds from time to time issued by UAMPS
pursuant to the Financing Documents and in accordance with Section 16.
"Required Approvals" means all governmental, regulatory and lender approvals, consents
and authorizations required or necessary for (1) the execution, delivery and performance of this
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approvals from, any governmental agency or authority, which by exercise of due diligence and
foresight such party could not reasonably have been expected to avoid and which by exercise of
due diligence it shall be unable to overcome.
"Uniform System of Accounts" means the Federal Energy Regulatory Commission
Uniform Systems of Accounts Prescribed for Public Utilities and Licensees Subject to the
Provisions of the Federal Power Act, 18 C.F.R. Part 101, as the same may be modified, amended
or supplemented from time to time or such other system of accounting as may be applicable by
law to UAMPS.
IGS. "Unit 3" means the 900 MW (net), coal-fired electric generating facility to be located at
"Utility Contracts" means all contracts of the Participant for the purchase or sale by the
Participant of any or all of Electric Power, Electric Energy and transmission service, including
contracts pursuant to which the Participant agrees to take or pay, or take and pay, for any or all of
Electric Power, Electric Energy and transmission service, all to the extent related to the
Participant's electric system.
(b) References to Sections, Schedules and Exhibits are to the Sections of and Schedules
and Exhibits to this Contract, unless otherwise provided. Article and Section headings are
included herein for convenience of reference only and shall not constitute a part of this Contract
for any other purpose or be given any substantive effect. Any of the defined terms may, unless
the context otherwise requires, be used in the singular or the plural, depending on the reference.
The use of the word"include" or its derivations shall not be construed as language of limitation.
Section 2. Term of Contract. (a) This Contract shall be in effect on and as of the
Effective Date and will, unless this Contract is terminated pursuant to Section 31, continue until
the last to occur of the following: (1) the date on which the principal of, premium, if any, and
interest on all Bond Anticipation Notes and Bonds have been paid or sufficient funds shall have
been irrevocably set aside for the full defeasance thereof and all other obligations of UAMPS
under the Financing Documents have been paid or satisfied, all as determined in accordance with
the Financing Documents; and (2) the date on which the Project shall be taken out of service and
terminated and all decommissioning costs shall have been paid or fully funded; provided,
however, that in compliance with the Act, the term of this Contract shall not extend for more than
fifty years from the Effective Date.
(b) If the terms of the Power Sales Contracts expire as a result of the limitation stated at
the end of paragraph (a) and the operation of the Project is then continuing, UAMPS shall, to the
fullest extent then permitted by applicable law, offer to all the Participants continuing
participation in the rights and benefits of the Project in proportion to their respective Entitlement
Shares under the Power Sales Contracts. Unless otherwise agreed to by UAMPS and all of the
Participants that elect continuing participation in the Project, such future participation shall be on
substantially the same terms and conditions as provided for by the Power Sales Contracts.
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(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) from the Effective Date to the date of the first issuance of Bond Anticipation Notes or
Bonds, the product of its Entitlement Share and all Costs of the Project associated with the
development thereof for such Billing Period, (2) the product of its Debt Service Share and all
Debt Service Costs for such Billing Period; (3) the product of its Entitlement Share and all
Operation and Maintenance Costs for such Billing Period; and (4) the Transmission Costs, if any,
incurred by UAMPS for the account of the Participant for such Billing Period. The first Billing
Period shall commence not sooner than the month in which the Effective Date occurs. Each such
payment is to be computed and made as provided in Section 8.
Section 4. Acquisition and Construction of the Project. (a) From the Effective Date of
this Contract to the Full Subscription Date, UAMPS shall continue with those development
activities with respect to the Project and Unit 3 provided for in the IPP Unit 3 Project Agreement.
Upon receipt of the Ownership Subscription Notice, UAMPS shall elect to acquire an undivided
ownership interest in Unit 3 in an amount equal to its Development Costs Share or in such other
amount as may be directed by the Project Management Committee, at the time and in the manner
required under the Development Agreement. In the event there is any Non-Elected Amount
under the Development Agreement, UAMPS shall give immediate notice to the Project
Management Committee of (1) the existence of a Non-Elected Amount, (2) the decisions that
must be made regarding the disposition of the Non-Elected Amount and (3) the date by which
such decisions must be made and, as applicable, that time is of the essence in making such
decisions. UAMPS shall take such actions with respect to the Non-Elected Amount as shall be
approved by the Project Management Committee at the time and in the manner required by the
Development Agreement. The Project Management Committee may elect to increase UAMPS'
ownership interest in Unit 3 to assume all or any part of a Non-Elected Amount only if(x) one or
more Participants elect to increase their respective Entitlement Shares or (y) another qualified
entity approved by the Project Management Committee elects to become a Participant under a
Power Sales Contract with UAMPS, in either case so as to provide for a full allocation of the
Project Capability of UAMPS' increased ownership interest in Unit 3. In such event, UAMPS
shall prepare and distribute to the Project Management Committee and the Participants a revised
SCHEDULE I showing the adjusted Entitlement Shares of all Participants and the total Project
Capability.
(b) UAMPS and the Participant acknowledge and agree that: (1) as of the Effective
Date of this Contract, various Permits and Approvals necessary for the construction and
operation of the Project may not have been obtained and certain Permits and Approvals are or
may be subject to continuing regulatory, administrative and judicial proceedings; (2) UAMPS
shall use Commercially Reasonable Efforts to cause all such Permits and Approvals to be
obtained in a timely manner and to defend all challenges thereto; (3) from and after the
Substantial Subscription Date and pending receipt of final Permits and Approvals that are not
subject to further regulatory, administrative and judicial proceedings, and in order that the
Commercial Operation Date may occur as scheduled, UAMPS will, upon the approval and at the
direction of the Project Management Committee as provided in Section 7, proceed with the
acquisition of equipment and take other actions preliminary to the construction of the Project; (4)
all preliminary Costs of the Project so incurred by UAMPS will be financed by the issuance of
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its obligations under Section 6 and (3) 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.
(b) 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 Long-Term Bonds to the extent necessary and in an amount sufficient to finance that
portion of the cost of retiring any Bond Anticipation Notes or Bonds then outstanding and the
Cost of the Initial Facilities that is not funded through Capital Cost Payments. Prior to the giving
by UAMPS of the notice required by Section 6(a), the Project Management Committee shall
determine whether any additional interest expense on or in respect of any Bond Anticipation
Notes, Bonds or subordinate obligations that are scheduled to be outstanding after the
Commercial Operation Date and that are subject to federal income taxation shall be allocated to
those Participants whose legal status or use of the Project Capability or the Project Output gives
rise to "private business use" (within the meaning of the Internal Revenue Code of 1986 and the
U.S. Treasury Regulations thereunder). In the event the Project Management Committee
determines to make such allocation, the notice required by Section 6(a) shall include such
information as shall be necessary to generally inform the affected Participants of the additional
Debt Service Costs, if any, that will be payable by them in the event they elect not make a Capital
Cost Payment.
(c) 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)
statement of the Cost of the Initial Facilities, UAMPS shall give written notice to the Participant
of:
(1) its right to elect to make a Capital Cost Payment;
(2) the date (which shall be not earlier than 30 days after the date of such
notice) by which it must notify UAMPS of its election;
(3) the final (or substantially final) Cost of the Initial Facilities approved by
the Project Management Committee;
(4) UAMPS' calculation of the Capital Cost of the Initial Facilities; and
(5) the product of the Capital Cost of the Initial Facilities and the Participant's
Entitlement Share, being the maximum amount of the Participant's Capital Cost Payment.
The Participant may elect to make a partial Capital Cost Payment equal to the amount of retained
earnings or other legally available funds not derived from any external borrowing that it
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(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
(3) any Capital Cost Payment made by the Participant shall not change or
affect UAMPS' ownership in the Project or any of the rights and obligations of UAMPS
and the Participant under this Contract, except as specifically provided herein, including
the right of UAMPS to suspend or terminate the Participant's right to receive the Electric
Energy allocable to its Entitlement Share as provided in Section 22.
Section 7. Operation, Maintenance and Management of the Project. (a) UAMPS
covenants and agrees that it will use Commercially Reasonable Efforts consistent with and
subject to the terms and provisions of the Project Agreements to operate, maintain and manage
the Project or cause the same to be operated, maintained and managed in an efficient and
economical manner pursuant to the Ownership Agreement and the Joint Operating Agreement in
accordance with Prudent Utility Practice for the joint and ratable benefit of all of the Participants.
UAMPS agrees with and covenants to the Participant that UAMPS will vigorously enforce and
defend its rights under the Project Agreements. The Participant acknowledges and agrees that
UAMPS may (as authorized by the Board acting upon the recommendation of the Project
Management Committee) from time to time enter into amendments of and supplements to any or
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(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, approve the Operator
of Unit 3 under the Joint Operating Agreement and provide such direction to UAMPS as
shall be necessary to enable UAMPS to meet timely its obligations and responsibilities
under the Project Agreements;
(3) review and approve the plan of financing for Bond Anticipation Notes and
Bonds 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;
(7) determine and declare the Project Capability upon the Commercial
Operation Date of the Initial Facilities and from time to time thereafter as its deems
necessary to reflect the actual capability of the Project;
(8) prior to the Commercial Operation Date of the Initial Facilities, review and
approve the Operating and Scheduling Procedures and the form of the appendix to the
Pooling Agreement described in Section 9(b);
(9) review and consult with UAMPS regarding the acquisition and
management of supplies of coal and any other necessary fuels for the Project and review
and approve each Fuel Agreement and any Fuel Agent to be appointed by UAMPS;
(10) review, modify and recommend the Annual Budget and any amendments
thereto to the Board;
(11) review, recommend and approve any Additional Facilities to the Board;
and
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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 (or portion thereof) 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 the Power Sales Contracts and the Project Agreements. UAMPS and the
Participant acknowledge and agree that certain categories of costs may be financed as a Cost of
the Project (and paid by the Participant as Debt Service Costs or through Capital Cost Payments)
or paid by the Participant as Operation and Maintenance Costs, as determined by the Project
Management Committee, but without duplication of any item of cost. Transmission Costs,
including any adjustments thereto, shall be determined by UAMPS in accordance with the
applicable provisions of this Contract and the Transmission Agreements. The Participant shall
pay all such amounts pursuant to this Section 8.
(g) The obligation of the Participant to make the payments for Operation and
Maintenance Costs, Transmission Costs, Debt Service Costs and other amounts payable by the
Participant pursuant to this Section 8 is a several obligation and not a joint obligation with those
of any other Participant. The obligation of the Participant to make such payments shall constitute
an obligation of the Participant and an operating expense of the Participant's electric system
payable solely from the revenues and other available funds of the electric system and shall
constitute a cost of purchased Electric Power and Electric Energy. Such payments shall be made
whether or not the Project or any portion thereof is acquired, completed, operable or operating
and notwithstanding the suspension, interruption, interference, reduction or curtailment of the
Project Output, termination of any of the Project Agreements, loss or interruption of transmission
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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 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; Risk of Loss. (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. Without limiting the generality of the foregoing, UAMPS
shall take all actions necessary to obtain, secure or make available transmission rights, service or
access across the NTS for the use and benefit of all Participants, as directed by the Project
Management Committee. 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 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, except as may be otherwise
approved by the Project Management Committee. The Participant shall provide UAMPS with
copies of all Transmission Agreements utilized by it and with such other information regarding
its transmission arrangements as UAMPS may reasonably request.
(c) Electric Energy delivered hereunder and risk of loss shall pass from UAMPS to the
Participant at the Point of Delivery. As between the parties to this Contract, UAMPS shall be
deemed to be in exclusive control and possession of the Electric Energy delivered hereunder, and
responsible for any damage or injury caused thereby, prior to the time such Electric Energy shall
have been delivered to the Participant at the Point of Delivery. After delivery of Electric Energy
to the Participant at the Point of Delivery, the Participant shall be deemed to be in exclusive
control and possession thereof and responsible for any injury or damage caused thereby.
UAMPS assumes all liability for and shall indemnify, defend and hold harmless the Participant
(individually) from any claims, including death of persons, arising from any act or incident
occurring when title to Electric Energy is vested in it. All costs and expenses incurred by
UAMPS under the foregoing indemnity shall constitute a Cost of the Project or an item of
Operation and Maintenance Costs, as determined by the Project Management Committee. The
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to procure such additional insurance as the Project Management Committee deems necessary or
appropriate.
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
public accountants, experienced in public finance and electric utility accounting and of national
reputation, to be employed by UAMPS. A copy of each annual audit, including all written
comments and recommendations of such accountants, approved by the Members shall be
furnished by UAMPS to the Participant not later than 180 days after the end of each Contract
Year.
Section 15. Information to Be Made Available. (a) UAMPS shall make available for
examination by the Participant (subject to their availability to UAMPS under the applicable
provisions of the Project Agreements):
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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 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. In connection with each issuance of Bonds by UAMPS and at
such other times as UAMPS may reasonably request, 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 the
Power Sales Contracts 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.
(d) In the event Debt Service Costs may be reduced by the refunding of any Bonds then
outstanding or in the event it shall otherwise be advantageous, in the opinion of UAMPS, to
refund any Bonds, UAMPS may issue and sell Refunding Bonds in accordance with the
Financing Documents. Any such Refunding Bonds may be secured by the pledge made pursuant
to the Financing Documents of the payments required to be made by the Participant under
Section 8 and of other revenues of UAMPS attributable to the Project. Any Refunding Bonds
issued in accordance with the provisions of this Section 16 and secured by the pledge of such
payments and such revenues may rank on a parity as to the security afforded by the provisions of
this Contract with all Bonds theretofore issued pursuant to and secured in accordance with the
provisions of the Power Sales Contracts.
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(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
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 shall exercise
Commercially Reasonable Efforts to 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 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 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.
The Participant shall not assign or transfer all or any part of its Entitlement Share or any
or all of its interests under this Contract, except upon one hundred twenty (120) days'
prior written notice to UAMPS and compliance with the provisions set forth below.
Within thirty days after receipt of such notice from the Participant (and if such notice
indicates that the Participant proposes to assign its Entitlement Share), UAMPS shall
notify all of the other Participants of the proposed assignment or transfer by the
Participant of all or part of its Entitlement Share. Each of the other Participants shall
have the option of acquiring all or any portion of the Entitlement Share that is proposed to
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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 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 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 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 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 thirty (30)
days after receipt of such notice, UAMPS shall advise the Participant as to whether, in the
opinion of counsel of recognized standing in the field of law relating to municipal bonds
selected by UAMPS, such contract would result in a violation of the covenant in clause
(A) above. The cost of such opinion and other reports necessary in connection therewith
shall be borne by the Participant.
Section 19. Reserve and Contingency Fund. (a) In addition to various funds and
accounts established under the Financing Documents, UAMPS may establish an additional fund
with respect to the Project known as the "Reserve and Contingency Fund" to be funded, held and
applied as provided herein. Amounts on deposit in the Reserve and Contingency Fund may be
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(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 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 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 of such
default, and (3) taking such other action and paying such amounts, including prepaying or
posting security for the Participant's future obligations under the Power Sales Contract, as may
be reasonably required 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.
(a) In the event of a default by any Participant with a Debt Service Share of 0.0000
(zero) and suspension or termination of the Participant's right to receive the Electric Energy
allocable to its Entitlement Share pursuant to Section 22 of such Participant's Power Sales
Contract, but only if the Project has not been terminated, UAMPS shall offer the right to
purchase and receive the Electric Energy attributable to the defaulting Participant's Entitlement
Share to all of the nondefaulting Participants. Any Participant accepting such offer shall be
obligated to pay the Operation and Maintenance Costs allocable to the defaulting Participant's
Entitlement Share. In the event that two or more of the nondefaulting Participants elect to accept
an aggregate amount of Electric Energy that exceeds the Electric Energy allocable to the
defaulting Participant's Entitlement Share, then the right to receive the Electric Energy allocable
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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 Entitlement Share as set forth on SCHEDULE I on the
Full Subscription Date, as such Entitlement Share may have previously been (x) adjusted
pursuant to Section 4(a) or (y) increased upon the Participants' election pursuant to
Section 18(b)(3). 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
Entitlement Shares of all of the nondefaulting Participants to which such allocation or
reallocation is being made, with the Capital Cost Payment Percentage, Debt Service
Percentage and all Entitlement Shares being expressed as decimals for purposes of such
computation. The standards set forth in Section 6(b) shall apply to the foregoing
computations.
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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 the Project Management Committee and the
Board determine 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 Contracts or the ability of UAMPS to meet its obligations
under the Project Agreements and the Financing Documents, then UAMPS shall take such
actions as it deems necessary to ensure the continuing sufficiency of funds and revenues
necessary to meet its obligations under the Project Agreements and the Financing Documents.
Such actions may include (1) a sale of all or any portion of the defaulting Participant's
Entitlement Share or the Electric Energy associated therewith or(2) a sale of all or any portion of
the Project that is allocable to the defaulting Participant's Entitlement Share, in either case on
such terms and conditions as UAMPS deems to be in the best interest of UAMPS and the
nondefaulting Participants.
(e) In connection with any action taken by it pursuant to this Section 23, UAMPS shall
obtain an opinion of nationally recognized bond counsel addressing whether such action has an
adverse effect on the exclusion of interest on the Bonds from gross income for federal income tax
purposes and the actions required to remediate such adverse effect pursuant to the provisions of
the Internal Revenue Code and U.S. Treasury Regulations thereunder. UAMPS shall exercise
Commercially Reasonable Efforts to implement such remedial actions. The Participant
acknowledges that such remedial actions may require UAMPS to pay additional interest on the
Bonds or penalties 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 Contract.
(f) In connection with any action taken by it pursuant to this Section 23, UAMPS shall
take into account the proceeds realized or the revenues to be received from such sale or
disposition and shall, to the extent necessary, make adjustments to the Entitlement Share, Capital
Cost Payment Percentage, Debt Service Percentage and Debt Service Share of each of the
nondefaulting Participants to reflect such sale or disposition and to ensure the receipt of revenues
sufficient to enable UAMPS to meet its obligations under the Project Agreements and the
Financing Documents. The Participant acknowledges that such adjustments may, under certain
circumstances, result in a change in the Participant's share of Operation and Maintenance Costs
and Debt Service Costs without a corresponding change in the Participant's Entitlement Share.
Upon the completion of the procedures provided for in this Section 23, UAMPS shall prepare
and send to each of the Participants a final revised SCHEDULE I, setting forth the Entitlement
Shares, the Capital Cost Payment Percentages, Debt Service Percentages and Debt Service
Shares, respectively, of the nondefaulting Participants reflecting the procedures and actions taken
pursuant to this Section 23.
Section 24. Other Default by Participant. In the event of a failure of the Participant to
observe, keep and perform any of the covenants, agreements or obligations on its part contained
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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 acquisition, construction, 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 Contract shall inure to the
benefit of and shall be binding upon the respective successors and assigns of the parties to this
Contract;provided, however, that neither this 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 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;
(3) after such point in time as all Bonds issued under the Financing
Documents have been paid or deemed to have been paid as provided in the Financing
Documents, UAMPS may, upon the approval of the Project Management Committee,
assign this Contract and pledge the amounts payable by the Participant hereunder;
(4) the Participant shall assign the Electric Energy allocable to the
Participant's Entitlement Share to the UAMPS Pool as provided in Section 9(b); and
(5) the Participant may assign or transfer all or any portion of its Entitlement
Share or its interests under this Contract only as provided in Section 18(b)(3).
(b) The Participant acknowledges and agrees that UAMPS may assign and pledge to the
Trustee designated in the Financing Documents all or any portion of its right, title, and interest in
and to the payments to be made to UAMPS under the provisions of this Contract, as security for
the payment of the principal (including sinking fund installments) of, premium, if any, and
interest on Bond Anticipation Notes and Bonds and, upon such assignment and pledge, UAMPS
may grant to the Trustee any rights and remedies herein provided to UAMPS, and thereupon any
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(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. (a) All notices, demands and other
communications made pursuant to this Contract (each, a "Notice") may be sent by facsimile,
electronic mail, other mutually acceptable electronic means, a nationally recognized overnight
courier service, first class mail or hand delivery. Notice shall be given when received by the
addressee, unless received on a day that is not a Business Day or received after 5:00 p.m.
(receiving party's local time) on a Business Day, in which case Notice shall be deemed to have
been received on the next following Business Day. In the absence of proof of the actual receipt
date, the following presumptions will apply: (i) Notice sent by facsimile or electronic mail shall
be deemed to have been received upon the sending party's receipt of electronic confirmation of
successful transmission; (ii) Notice sent by overnight mail or courier shall be deemed to have
been received on the next Business Day after it was sent or such earlier time as is confirmed by
the receiving party; and (iii) Notice sent by first class mail shall be deemed to have been received
five Business Days after mailing.
(b) All Notices shall be sent by UAMPS to the business address, facsimile address or e-
mail address of the Participant's Representative. All Notices shall be sent by the Participant to
the business address, facsimile address or designated e-mail address of UAMPS. Either party
may change its Notice address(es) by Notice to the other party.
Section 33. Relationship of UAMPS and the Participant, Relationship among
Participants. (a) This 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 Contract.
(b) The covenants, obligations, liabilities, rights and benefits of the Participant under
this 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 as a group. No Participant shall
be bound by the actions of any other Participant, nor shall any Participant be deemed to be the
agent of any other Participant or have the right to bind any other Participant.
Section 34. No Recourse Against Officers, Etc. of UAMPS or Participant. No member
of the governing body, nor any officer or employee of UAMPS or the Participant shall be
individually or personally liable for any payment under this Contract or be subject to any
personal liability or accountability by reason of the execution of this Contract; provided,
however, that this Section shall not relieve any officer or employee of UAMPS or the Participant
from the performance of any official duty imposed by law.
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TRUCKEE DONNER PUBLIC UTILITY DISTRICT
By:
President
[SEAL]
ATTEST AND COUNTERSIGN
By:
Clerk
Date of Execution and
Delivery:
Approved as to proper form and
compliance with applicable law:
By:
Attorney for Participant
UTAH ASSOCIATED MUNICIPAL POWER
SYSTEMS
By:
Chairman
[SEAL]
ATTEST AND COUNTERSIGN
By:
Secretary
Date of Execution and
Delivery:
Approved as to proper form and
compliance with applicable law:
By:
Attorney for UAMPS
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CAPITAL COST DEBT
ENTITLEMENT PAYMENT SERVICE DEBT SERVICE
PARTICIPANT KW SHARE PERCENTAGE' PERCENTAGE' SHARE'
Spring City 500 0.l 111%
Springville 25,000 5.5556%
Strawberry 7,000 1.5556%
Truckee Donner 24,100 5.3556%
Valley Electric 50,000 11.1111%
Washington 15,000 3.3333%
Weber Basin 8,000 1.7778%
TOTAL 450,000 100.0000%
t Capital Cost Payment Percentage, Debt Service Percentage and Debt Service Shares will be calculated by UAMPS
and this Schedule I will be completed as provided in Section 6(e) of the Power Sales Contract. From the Effective
Date to the date a Capital Cost Payment is made by the Participant, the Participant's Capital Cost Payment
Percentage is 0.0000(zero)and its Debt Service Percentage and Debt Service Share are each equal to its Entitlement
Share.
* The expected participating members of IDEA include Lower Valley, Raft River, Salmon River and United, and any
other distribution utility that elects to succeed to the Entitlement Shares of the expected participating members.
SI-2 Truckee-Donner PSC
PARTICIPANT
FISCAL YEAR
EXHIBIT II
FORM OF PARTICIPANT'S ANNUAL INFORMATION REPORT*
SYSTEM DESCRIPTION
Service area of utility square miles.
Transmission and distribution lines miles.
Number of employees in electrical department
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
Agricultural and Pumping
Military 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 Truckee-Donner PSC
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
11-3 Truckee-Donner PSC
EXHIBIT III
CERTIFICATE OF PARTICIPANT
STATE OF CALIFORNIA )
COUNTY OF NEVADA )
The undersigned hereby certify that they are the President and Clerk of Truckee Donner
Public Utility District (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 public utility district, duly created and validly existing
under the laws of the State of California, and is governed by a Board of Directors (the
"Governing Body") composed of five 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 November 15, 2006, 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 President, the members of the Governing Body, the Clerk and
Attorney, together with the dates of commencement and expiration of the term of office of the
President and the members of the Governing Body, are as follows:
DATE OF
COMMENCEMENT OR DATE OF EXPIRATION
NAME OFFICE CURRENT TERM OF CURRENT TERM
Joe Aguera Director ,
Ron Hemig Director ,
Pat Sutton Director ,
Tim F. Taylor Director ,
William L. Thomason Director ,
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11. Except as listed on Exhibit D, the Participant has no outstanding bonds, notes or
other evidences of indebtedness, or agreements to take or pay for power and energy, payable
from any revenues of the System, other than the Power Sales Contract.
12. 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.
13. 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.
14. (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.
15. The information provided by the Participant to UAMPS pursuant to Section 15(b)
and (c) of the Power Sales Contract and attached as EXHIBIT I1 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.
I11-3 Truckee-Donner PSC
EXHIBIT A
[Attach Copy of Power Sales Contract]
A-1 Truckee-Donner PSC
WHEREAS, the Governing Body has also reviewed (or caused to be reviewed on its
behalf) copies of the current drafts of the Project Agreements (as defined in the Power Sales
Contract) or summaries thereof, and representatives of the Participant have participated in
discussions and conferences with UAMPS and others regarding the Project and have received
from UAMPS all requested information and materials necessary for, the decision of the
Governing Body to authorize and approve the Power Sales Contract;
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 Supply
Resource Plan, the Power Sales Contract and the Second Amendment;
Now, THEREFORE, BE IT RESOLVED by the Governing Body of Truckee Donner Public
Utility District, as follows:
Section 1. Approval of Power Supply Resource Plan. The Power Supply 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; Participant's
Representative. (a) The Power Sales Contract, in substantially the form attached hereto as
Annex B, including the Participant's 4.444% Entitlement Share (representing approximately
20,000 kW of capacity) is hereby authorized and approved, and the President is hereby
authorized, empowered and directed to execute and deliver the Power Sales Contract on behalf of
the Participant, and the Clerk of the Governing Body 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 conform to the Participant's legal status, to
complete the form of the Power Sales Contract or to correct any minor irregularities or
ambiguities therein and as are approved by the President, his execution thereof to constitute
conclusive evidence of such approval.
(b) The appointment of Stephen Hollabaugh as the Participant's Representative to
UAMPS and of Peter L. Holzmeister and J. Ron Hemig as alternate Representatives is hereby
B_2 Truckee-Donner PSC
ADOPTED AND APPROVED this 15th day of November, 2006.
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
By
President
ATTEST:
Clerk
[SEAL]
B_4 Truckee-Donner PSC
ANNEX B
[Attach Power Sales Contract]
BB-1 Truckee-Donner PSC
(c) five years after UAMPS has abandoned, decommissioned, or
conveyed or transferred all of its interest in its facilities and improvements; or
(d) five years after the facilities and improvements of DAMPS are no
longer useful in providing the service, output, product, or other benefit of the
facilities and improvements.
Section 5. Section 11.1 of the Original Agreement is amended as follows:
11.1 The Board shall consist of the Member Representatives participating in
each Project, which Member Representatives shall represent a Public Agency and shall be
elected or deemed elected as Directors as provided in this Section 11. The total number
of Directors of the Board shall not be less than two, nor greater than the total number of
Members and Equity Members. Directors shall be elected or deemed elected by the
Member Representatives participating in each Project as follows:
(a) One Director for every participant in the Project if there are eleven
or fewer participants in the Project; or
(b) If there are more than eleven participants in a Project, each of the
four participants that have the greatest percentage entitlement share to the benefits
of the Project shall automatically have their Member Representative deemed
elected as Directors, and the other participants shall elect seven additional
Directors from among the other Project participants. Directors deemed elected
from the four participants that have the greatest percentage entitlement shares
shall serve only for so long as the participant the represent has one of the four
greatest percentage entitlement shares to the benefits of the Project. Entitlement
share percentages shall be determined annually; and
(c) Election of the Board shall comply with Section 11-13-206(2) of
the Act notwithstanding anything in this Section or this Joint Action Agreement to
the contrary.
Section 6. The first sentence of Section 11.9 of the Original Agreement is amended as
follows:
The Members acknowledge and agree that the protection afforded to the Members under
the Governmental Immunity Act of Utah, Title 63, Chapter 30d, Utah Code Annotated
1953, as amended, shall be extended to UAMPS and its Member Representatives,
officers, and employees pursuant to Section 11-13-222 of the Act.
Section 7. The first sentence of Section 14.1 of the Original Agreement is amended as
follows:
In furtherance of the purposes set forth in this Joint Action Agreement, UAMPS shall
have all powers conferred upon UAMPS as a separate legal entity pursuant to the Act,
BC-2 Truckee-Donner PSC
APPENDIX A
BC-4 Truckee-Donner PSC
EXHIBIT D
[Attach Schedule of Bonds, Notes, Contracts, Etc.]
(a) The Truckee Donner Public Utility District Revenue Certificates of
Participation, Series 2003, $16,930,000, Series 2003A and $9,335,000, Series 2003B;
(b) The Constellation Power Source Power Purchase and Sale Agreement
Confirmation Letter, dated March 7, 2003, between Truckee Donner Public Utility
District and Constellation Power Source, Inc.;
(c) The United States Department of Energy Western Area Power
Administration Sierra Nevada Region, Custom Product Contract for Variable Resource
Service with Truckee Donner Public Utility District, Contract 04-SNR-00731, dated
August 13, 2004;
(d) The Master Firm Power Supply Agreement for the Shaped Capacity and
Energy Transaction Schedule, Agreement dated December 21, 2005, between UAMPS
Pool and UAMPS Firm and Truckee Donner Public Utility District.
(e) The Service Agreement for Network Integration Transmission Service,
dated September 13, 1999, between Sierra Pacific Power Company and Truckee Donner
Public Utility District.
D-1 Truckee-Donner PSC
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 Truckee Donner Public Utility District (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, DAMPS 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 -,f 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 public utility district of the State of California (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.
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.
3. No approval, consent or authorization of any governmental or public agency,
authority, commission or person of the Power Sales Contract or of the Participant's participation
in the transactions contemplated thereby is required for the execution and delivery by the
`I-1 Truckee-Donner PSC
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, the principal operating properties of the System are 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.
Respectfully submitted,
V-3 Truckee-Donner PSC
I hereby authorize the reference to this opinion and to the Prior Opinion set forth under
the caption, "APPROVAL OF LEGAL PROCEEDINGS," in the Official Statement. I hereby further
authorize Chapman and Cutler LLP, bond counsel, and , as representative of
the underwriters of the Bonds, to rely on the Prior Opinion and on this opinion in each case as
though addressed to them.
Respectfully submitted,
VI-2 Truckee-Donner PSC
Truckee Donner PUD
Power Supply Resource Plan
November 15, 2006
Stephen Hollabaugh
Yearly Power Supply Plans
Projected Cost to Serve Load
200,000
12,000
180,000
10,000 160,000
140,000
o ^
0 8,000 s
120,000
100,000 0
c 6,000
0 80,000
U �
d
4,000 60,000
40,000
2,000
20,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
w I- i
CPS SCE IPP#3
�-Load MWh
2
2008 options for Power Supply
Estimated Cost of 2008 Power Supply Options
$80.00
14,000
$75.00
12,000 $70.00
10,000 $60.28 $65.00
c $60.00
8,000
$55.00
o �
U 6,000 $50.00
$45.00
4,000
$40.00
2,000 $35.00
$30.00
0
2005 2006 2007 2008
--�Market Otion
E -
—�-UAMPS Option
P
E Cost w/UAMPS 2008 Cost w/Market 2008 _ P
3
Estimated Rate Impact
Estimated % Increase in Retail Electric Rates
Due to Power Supply Costs
20.0%
14,000
18.0%
12,000 16.41% o
16.0/o
10,000 14.0%
12.0%
0 8,000 10.0%
0
0
0
6,000 5.80% 8.0%
6.0%
4,000
4.0%
2,000 0.90% 0.11% 2.0%
0.0%
2005 2006 2007 2008
_ — — -- — Increase w/LIAMPS
—+—Increase w/Market
C�Cost w/iJAMPS 2008 Cost w/Market 2008
4
IPP UNIT 3 PROJECT - 2006 FACTS
• Facts about Intermountain Power Plant UNIT 3 (Handed out at
Oct 15th and Nov 1 St Board Meetings)
— Executive Summary
— Energy Demand
— IPP Unit 3 Project
— Energy Resource Options
— Coal Technology Today
— IPP Emission Controls
— Partners in Power — UAMPS, Intermountain Power Plant Unit 3
Brochure
f
5
IPP#3 - Power Sales Contract & Project Agreements
• Power Sales Contract
Project Agreements: (Discussed at Oct 18 Board Meeting)
— Ownership Agreement
— Joint Operating Agreement
— Common Facilities and Site Agreement
— Unit 3 Lease, Use and Service Agreement
• Truckee Donner PUD Load and Energy Resources Charts
Truckee-Donner Peak Load & Resources
60
at 20 000 kW (Capacity) � - -Truckee-Donner IPP#3 IPP 3
and 166,440 MWh Energy entitlement,
it _ -
Graph-shows Capacity y - -- _ -- - - +2% Growth
30 - - - -- - - - - - -�-1 /o Growth'
20 - - - - - - '� �-No Growth
10
-+-Avg
Monthly
Peak
oO N � History
C70 O N COCD COCD CD C> �
O N G4 CO O N d CD N N N N N C'7 M C7CD
O O O CD CD /O O O O CD
o N N N N N N N N CV.. N. CV
11/15/2006
Year
Truckee-Donner Energy Load & Resources
700,000
Truckee Donner PUD, IPP#3 at 20,000 kW Capacity,
600'000 -and166,440 -MWh Energy entitlement;
Graph shows energy
500,000
- _ IPP 3
400,000
--
— -- ---a-4% Growth,
300,000
f
f
2% Growth',
200,000 — — — --
-*-No Growth
100,000 --
Energy
+ 9Y
History
CO N CO CM CO C3 O
C
O N � CO 00 O N � N N N N
O CD _CD CD CD O O O CZ) O
O O O O O O N N CV N CV N N N N N N N N N N
Year 11/15/2006
Yearly Power Supply Plans
Projected Cost to Serve Load
200,000
12,000
180,000
10,000 160,000
140,000
o ^
0 8,000 3
120,000
b
100,000 a
w 6,000
041
c 80,000
U �
4,000 60,000
40,000
2,000
20,000
12
} 2005 2006 2007 2008 2009 SCE
CPS 2010 2011 21 2013 2014
IPP#3
� -- —�
�-Load MWh
k 9
Post March, 2009 Power Supply
• TDPUD has several options for the 2009 time period
— Extend UAMPS SCE product, if available
— Execute contract similar to existing arrangement with active
power marketers
• In building a power supply resource plan, you take a building
block approach with the base load resource that provides a low-
cost foundation to stabilize electricity costs allowing for
development of alternative energy sources and on-peak peaking
generation to match the load profile. IPP Unit 3 is this initial
building block.
— Participate in IPP3 — 2012 timeframe
• Action item for Power Sales Contract on
November 15, 2006 agenda. 10
MEMPV TRUCKEE DONNER
System Description
Truckee Donner Public Utility District
Stephen Hollabaugh
Calendar Year 2006
Truckee Donner Public Utility District(Truckee Donner) is a public utility district of the
state of California engaged in the transmission,distribution, sale and delivery of electric power
and energy. The District is a transmission-dependent utility located high on the Eastern slope of
the Sierra Nevada,within Sierra Pacific's control area,and is not interconnected with any other
utility. During the Fiscal Year ended December 31, 2005, the Electric System served 12,684
customers, comprised of 10,905 residential customers,and 1779 commercial and other customers.
During such period,the Electric System supplied 136,338,872 kWh of energy and had a peak
demand of 31,179 kW.
Truckee Donner is a network transmission service customer under the currently effective
joint Sierra/NPC GATT. Truckee uses this network service to import into and transport across
Sierra's grid all of the power necessary to serve Truckee's load.
Truckee Donner electric service territory is comprised of approximately 44 square miles
in eastern Nevada County and approximately 1.5 square miles in adjacent Placer County. The
Electric System serves the vast majority of the service area of the District and has more than 202
miles of 12.47 kV distribution lines, including about 67 miles of underground distribution cables.
The number of employees in the electric department is thirty seven(37). (Includes sum of shared
employees' time in other district departments to determine equivalent full-time employees.)
II-1
NUMBER OF ELECTRICAL CUSTOMERS
AND TYPE OF LOAD SERVED
Truckee Donner Public Utility District
As of September 2006
TYPE OF CUSTOMER NUMBER OF CUSTOMERS
Residential 11,238
Commercial 1,660
Industrial 0
Agricultural and Pumping 0
Military 0
Other 31
TOTAL 12,929
II-1
wFe
* IlR ;
4
Truckee Donner Public Utility District
Retail Rates
As of
March 2006 March 2005 January 2004
Domestic Electric Rates: Permanent Residents
Rate P 10
Customer Charge: per month $6.13 $5.84 $5.00
Energy Charge per kilowatt-hour $0.120 $0.114 $0.114
Domestic Electric Rates:Non-Permanent Residents
Rate S 10
00
Customer Charge: per month $ $5. $5.
Energy Charge per kilowatt-hour $00.13.137 $0.130 $0.130
Small Commercial Rates:Commercial Customers with monthly demand of less than 50 kilowatts
Rate 15
Customer Charge: per month $11.89 $11.32 $9.70
Energy Charge per kilowatt-hour $0.144 $0.137 $0.137
Medium Commercial Rates:Commercial Customers with monthly demand greater than 50 kW and less than 200 kW
Rate 20
Customer Charge: per month $118.69 $113.04 $96.85
Energy Charge per kilowatt-hour $0.0852 $0.0811 $0.811
Demand Charge per kilowatt of demand $11.67 $11.11 $11.11
Large Commercial Rates:Commercial Customers with monthly demand -greater than 200 kilowatts
Rate 25
Customer Charge: per month $520.62 $495.83 $425.00
Energy Charge per kilowatt-hour $0.877 $0.0835 $0.0835
Demand Charge per kilowatt of demand $11.15 $10.62 $10.62
�IITRUCKEE
I ril III
Public Utility District
Ordinance No. 2006 - 04
AMENDING THE ELECTRIC RETAIL RATES
WHEREAS District staff has prepared a budget for District operation for 2006; and
WHEREAS, on January 4, 2006 a public hearing was held to receive comments from the public
concerning the 2006 budget; and
WHEREAS the budget for 2006 recommends that electric retail rates be increased to cover
increases in the costs of providing District services; and
WHEREAS on January 4,2006 a public hearing was held to receive public comments on proposed
rate increases;
NOW, THEREFORE, BE IT ENACTED by the Board of Directors of the Truckee Donner Public
Utility District as follows:
Section 1. Effective 30 days from the date this ordinance is adopted the following monthly electric
rates shall be effective.
Domestic Electric Rates: Permanent Residents
Rate P10
Customer Charge: per month $6.13
Energy Charge per kilowatt-hour $0.120
Domestic Electric Rates: Non-Permanent Residents
Rate S10
Customer Charge: per month $6.13
Energy Charge per kilowatt-hour $0.137
Small Commercial Rates
Rate 15
Customer Charge: per month $11.89
Energy Charge per kilowatt-hour $0.144
Medium Commercial Rates
Rate 20
Customer Charge: per month $118.69
Energy Charge per kilowatt-hour $0.0852
Demand Charge per kilowatt of demand $11.67
Ordinance 2006-04 1
Larae Commercial Rates
Rate 25
Customer Charge: per month $520.62
Energy Charge per kilowatt-hour $0.0877
Demand Charge per kilowatt of demand $11.15
Section 2. If no protest is made pursuant to Public Utilities Code Section 16078, then this
ordinance shall be effective thirty days after adoption by the board of directors of the District.
Section 3. The Clerk of the District shall immediately cause a copy of this ordinance to be
published in a newspaper of general circulation and posted in three places within the District.
Section 4. The provisions of other Ordinances shall remain if effect to the extent that they do not
conflict with this ordinance.
PASSED AND ADOPTED by the Board of Directors of the Truckee Donner Public Utility District at a
meeting duly called and held within the District on the first day of February 2006 by the following roll
call vote:
AYES: Directors Aguera, Hemig, Sutton, Taylor and Thomason
NOES: None
ABSENT: None
TRUCKEE DONS Iijh PUBLIC UTIk"V DISTRICT
B � �'� ��
Y
J. R."micif, Prbsident of the oard
ATTEST: .
Peter L. Holzmeister, Clerk of the Board
Ordinance 2006-04 2
ri`s
Ar
Truckee Donner Public Utility District
Calendar Year 2005
CUSTOMER SALES BY CLASS
Total sales to our customers was 136,338,872 kWh during the calendar year 2005.
Revenues from energy sales to your customers was $17,541,092 during the calendar year
2005.
KWH SALES REVENUES $
Residential 70,072,056 $9,171,599
Commercial 66,018,260 $8,369,493
Industrial 0 $0
Agricultural 0 $0
Other 248,556 $0
TOTAL 136,338,872 $17,541,092
PUhlI,
FIVE LARGEST CUSTOMERS BY LOAD
Calendar Year 2005
12 Months
Customer Type of Business KWH Sold Electrical Billings
11,070,472 $1,375,255
Truckee Donner PUD Water Department* Water Utility 1, 70, 72 $375,155
Tahoe Truckee Sanitation Agency* Sewer Plant 6,512,309 $688,153
Tahoe Forest Hospital* Hospital
58,$3062
640
Truckee Tahoe Unified School District* Education 2,122,200 2,862,168 168 $ 8,062
Safeway Stores Inc Grocery Store
748
* Denotes that this customer has multiple meters and service locations and the KWH
Sold and the Electrical Billings are a sum of these meter locations.
II - 4
Jo/[8m
SMT Draft
INTERMOUNTAIN POWER PROJECT UNIT 3
OWNERSHIP AGREEMENT
AMONG
AS OWNERS
,2006
TABLE OF CONTENTS
Page
0--hip Agrt Aug 3.d-
1.1.15"Date of Firm Operation': The first date that the Operating Committee
determines the Project to be reliable as a source of Capacity and Energy and can reasonably be
expected to operate steadily at any level of Capacity greater than Minimum Generating
Capability up to its Unit Rating.
1.1.16"Debt": For any Person (a) indebtedness for borrowed money; (b)
obligations evidenced by bonds,debentures,notes or other similar instruments;(c)amounts due
under Project Agreements,(d)obligations under capitalized or operating leases:(e)obligations
for direct or indirect guarantees in respect of,and obligations to purchase or otherwise acquire,
or otherwise to assure a creditor against loss in respect of,indebtedness or obligation of another
Person;(f)all obligations tinder interest rate or currency protection agreements or other hedging
instruments;(g)all obligations to purchase securities(or other property)which arise out of or in
connection with the sale of the same or substantially similar securities(or property);(h)all
deferred obligations of such Person to reimburse any bank or other Person in respect of amounts
paid or advanced under a letter of credit or other instrument;and(i)indebtedness or obligations
of others of the kinds referred to in clauses(a)through(h)secured by any Lien on or in respect
of such Person's Ownership Interest.
1.1.17"Default": As defined in Section 13.1.
1.1.18"Default Purchase Price': As defined in Section 13.2.3.
1.1.19"Defaulting Owner": As defined in Section 13.2.
1.1.20"Deficiency Amount": As defined in Section 13.2.1.
1.1.21 "Dispute": As defined in Section 15.1.1.
1.1.22"Enerev":The use of the Capacity over time,expressed in megawatts per
hour("MWh").
1.1.23 "Facility': The three coal-Erred electric generating units,and power plant
complex located near Delta,Utah,consisting of the Project,the existing generating units known
as"Unit t"and"Unit 2,"and the Common Facilities for those units and the Project.
1.1.24"FERC Accounts': The Federal Energy Regulatory Commission's
"Uniform System of Accounts Prescribed for Public Utilities and Licenses"in effect as of the
date of this Ownership Agreement and as such may be amended from time to time.
1.1.25 "Final Completion Report": A complete listing and description of the
Construction Work along with the Construction Costs and a listing of each Owner's contribution
to Construction Costs.
1.1.26"Fixed Operating Costs': All Operating Costs that are not classified as
Variable Operating Costs.
1.1.27 "Fue": The quantities of coal,coal products,oil,oil products,gas,gas
products and other fuels required for the production of Energy by the Project.
3
1.1.28"Fuel Operating Plan': The plan adopted by the Operating Committee for
the management,acquisition,transportation and supply of Fuel necessary for the operation of the
Project.
1.1.29"General Service Requirements': The Energy required during any period
for the testing,start—up,or operation of all processes and auxiliary equipment and systems used
or useful in connection with the operation and maintenance of the Project.
1.1.30"High Voltage Switchyard': The 345,000 volt switchyard located at the
Facility.
1.1.31 "Involuntary Transfer': Any Transfer occurring as the result of an
Insolvency Event or the foreclosure of or execution upon a Lien other than a Permitted Lien.
1.1.32"Insolvency Event": With respect to any Person,(a)such Person's(i)
failure to generally pay its debts as such debts become due.(it)admitting in writing its inability
to pay its debts generally or Oil)making a general assignment for the benefit of creditors:(b)any
proceeding being instituted by or against such Person 0)seeking to adjudicate it as bankrupt or
insolvent,(ii)seeking liquidation.winding up,reorganization,arrangement,protection,relief.or
composition of it or its debts under any law relating to bankruptcy,insolvency or reorganization
or relief of debtors or(in)seeking the entry of an order for relief or the appointment of a
receiver.trustee or other similar official for it or for any substantial part of its property and,in
the case of any such proceeding instituted against such Person.either such proceeding shall
remain undismissed for a period of 30 days or any of the actions sought in such proceeding shall
occur:or(c)such Person's taking any action to authorize any of the actions set funh above in
this definition.
1.1.33"1EA":Intermountain Power Agency,a political subdivision of the Slate
of Utah.
1.1.34"Joint Operating Agreement': The Joint Operating Agreement entered
into among the Owners,LADWP and IPA for the operation of the Project,as amended from time
to time.
LL35"LADW'P': The City of Los Angeles acting by and through the
Department of Water and Power.
1.1.36"LICn': Any mortgage,deed of trust, lien,pledge,charge or security
interest, including liens for taxes or .assessments, builder, mechanic. warehouseman,
utaterialman,contractor,workman,repairman or carrier lien or other similar liens.
1.1.37"Loss": Any and all losses,liabilities,damages,fines,penalties,costs,
espen,es and judgment,lincluding reasonable attorneys' fees and disbursemenw of any and
every character arising out of any Claim.
1.L38"Materials and Supplies": Materials, supplies, spare and replacement
parts which are stocked for the Project.
4
1.1.62"Project": The Project as described in Appendix A. including the
Common Facilities.
1.L63"Project Agreements': This Ownership Agreement, the Construction
Agreements, the Joint Operating Agreement, the Common Facilities Agreement, the
Construction Lease Agreement and any agreements between the Owners or any of them and any
third party for the purchase or lease of any property,land or land rights or water rights for the
Project,and any other agreements as the Owners agree to designate as Project Agreements in
Appendix G.
1.1.64"Project Budget': The initial budget setting forth the Construction Costs
anticipated as of the date of this Agreement to be incurred through the Date of Firm Operation as
shown on Appendix D. which Project Budget may be amended from time to time by the
Operating Committee. The final Construction Costs will be set forth in the Final Completion
Report.
1.1.65"Project Manager": The Person,initially_,appointed as the Project
Manager under the Construction Agreements,and any other Person subsequently appointed by
the Operating Committee to be responsible for the performance of Construction Work.
1.1.66"Shared Liability": Liability of one or more Owners for Claims by anyone
other than an Owner, whether or not resulting from the negligence of such Owner(s), its
directors,officers,employees or any other Person whose negligence could be imputed to such
Owner(s),arising out of,resulting from or in any way connected with(i)the performance or
nonperformance of the Construction Work or the Operating Work; 00 from the design or
construction of the Project or the Capital Improvements;or(iii)the use,operation or ownership
of the Project,provided that Work Liability will not include a liability for any Willful Action.
1.1.67"Testing and Start-Up Capacity and Energy": The amount of Capacity
and Energy required for the purposes of testing of any component or system of the Project
associated with the initial stag-up of the Project or any start-up after any outage of the Project as
determined by the Operating Committee.
1.1.68'Tract a":To directly or indirectly sell,assign,transfer,pledge,Iease.
mortgage or otherwise encumber,whether voluntarily,involuntarily or by operations of law.The
terms'Transferring",`Transferred",and'-Transferee"shall have corresponding meanings.
1.1.69"Uncontrollable Force": As defined in Section 19.
LL70"Unit Rating": The effective Available Generating Capability as
determined from time to time by the Operating Committee to reflect changes in the Project. The
initial Unit Rating shall be 950 MW.
1.1.71 "Variable Operating Costs": All Operating Costs that increase or decrease
in a direct relation to(a)the amount of Energy generated,such as charges for water,water
treatment and reactant or(b)the amount of Fuel combusted to generate such Energy,together
with any other Operating Costs chat so fluctuate and are designated from time to time as Variable
7
Operating Costs by the Operating Committee or in the Operating Budget in order to equitably
allocate the Operating Costs among the Owners.
1.1.72"Variable Operating Cost Share': With respect to each Owner,the total of
the Variable Operating Costs multiplied by the ratio of such Owner's scheduled Energy
deliveries during the relevant time period to the total of Energy deliveries from the Project
during such relevant time period.
1.1.73"Willful Action': .Action taken or not taken by an Owner,at the direction
of its directors, members, members of its governing bodies, officers or employees having
management or administrative responsibility affecting its performance under any of the Project
Agreements,which action is knowingly or intentionally taken or not taken.with conscious
indifference to the consequences thereof,or with intent that injury or damage would result or
would probably result therefrom. Willful Action does not include any act or failure to act,which
is merely involuntary,accidental or negligent. The phrase"employees having management Or
administrative responsibility"means employees of a Party who are responsible for one or more
of the executive functions of planning,organizing,coordinating,directing, controlling,and
.Supervising such Party's performance under any of the Project Agreements.
ARTICLE 2. OWNERSHIP AND TITLE TO THE PROJECT
Section 2.1 Tenants in Common Interest. Each Owner shall accept,acquire and
own its Ownership Interest as a tenant in common in the Project and in all Capital
Improvements. Each Owner will fund when due its Percentage Share of all amounts
required to be paid under the Project Agreements to acquire such interest in the Project
Section 2.2 Concurrent Vesting, The Ownership Interest of each Owner shall be
deemed to have vested.simultaneously in the Owners with the execution of this Agreement
and the other Project Agreements so that the estate of each shall be deemed to be
concurrent as to time,right and priority. The Ownership Interest of the Ownen in and
title to Capital Improvements shall be deemed to have vested upon completion of such
Capital Improvements.
Section 2.3 Assignment of Interest Any Owner who acquires in its name an
interest in any real or personal property or contract which is part of the Project shall
transfer and assign an undivided interest therein to the other Owners so that the ownership
and rights of the Owners in such properly or contract shall be equal to their respective
Ownership Interests.
Section 2.4 Further Writings. At any time as the Operating Committee or any
(honer may reasonably demand in writing,the Owners shall jointly make,execute and
deliver one or more writings in recordable form, which shall describe, with such
particularity and detail as determined by the Operating Committee,the Project and the
rights,titles and interests of each Owner therein,provided that such writing shall not be
construed to alter,amend or interpret the Project Agreements.
8
tools,Materials and Supplies necessary for the performance of the Operating Work and Capital
Improvements.
4.25 Provide supervision of the Operating Agent as to progress,performance
and completion of Operating Work and Capital Improvements.
4.2.6 Develop procedures for the review and auditing of costs of Operating
Work and Capital Improvements consistent with the provisions of the Project Agreements and
Accounting Practice and develop procedures for making forecasts and requests for funds
pursuant to this Ownership Agreement.
4.2.7 Establish an Operating Account and expend the Operating Funds
advanced in accordance with the terms and conditions of the Project Agreements.
4.2.8 Keep and maintain such records of monies received and expended,
obligations incurred,credits accrued.all written statistical and administrative reports,accounting
records,budgets,information and other records relating to Construction Work,Operating Work
and Capital Improvements and the funding thereof and agreements entered into for the
performance of Construction Work,Operating Work and Capital Improvements as may be
necessary or useful in carrying out Project Agreements or required to permit an audit of the
Construction Work, Operating Work and Capital Improvements, and make such records
available for inspection by any Owner at all reasonable times.
4.2.9 Apply for and obtain the issuance,modification,extension or renewal of,
and monitor compliance with,all governmental approvals relating to the Project or any portion
thereof and supervise and ensure compliance with any and all laws applicable to the Project and
the performance of Construction Work,Operating Work and Capital Improvements,including
the establishmem of any required environmental compliance program through the Joint
Operating Agreement.
4.2.10 Arrange for the placement and maintenance of Operating Insurance and
present. adjust, settle and prosecute all Claims against insurer and indentation providing
Operating Insurance or indemnities in respect of any loss of or damage to any property of the
Project or liability of any Owner to third parties.
4.2.11 Review,discuss,act upon and resolve disputes between and among the
Owners arising under the Project Agreements in accordance with Section 15.
4.2.12 Subject to the other provisions of this Ownership Agreement,investigate.
defend and settle Claims against any Owner arising out of or attributable to the past or future
performance or nonperformance of the obligations and duties of any Owner under or pursuant to
the Project Agreements,including but not limited to any Claim resulting from death or injury to
persons or damage to property, when said Claims are not covered by valid and collectible
Operating Insurance and prosecute Claims against any third party for any costs, losses and
damages incurred in connection with such Claims.
4.113 Establish a quality assurance program to be followed in the Operating
Work and Capital Improvements,including without limitation in-service inspections and other
II
surveillance procedures and techniques,regulations governing the delegation of authority for
checking. auditing, inspecting or other verifying compliances with the quality assurance
program.
4.2.14 Exercise general supervision over and resolve matters referenced to it by
any standing or ad hoc committees.
4.2.15 Establish and,as circumstances from time to time warrant,revise the
Appendices.
4.2.16 On the request of any Owner,authorize,on such terms and conditions as
may be deemed appropriate by the Operating Committee,the installation at the Project of any
structures.facilities or equipment by any one or more Owners or any third party for its or their
own use,which structures,facilities or equipment shall be deemed not to be a part of the Project.
4.2.17 Review,modify and approve a form of contract for and on behalf of all
Owners concerning mutual assistance among the Panics thereto in the nature of temporary
borrowing,loan or exchange of personnel,equipment or material.
4.2.18 Develop,review,modify and approve criteria and guidelines to be utilized
concerning(i)the sale,transfer or disposal of Property,equipment or materials acquired for use
in the performance of Operating Work and Capital Improvements,which are no longer required
for such purposes.
4.2.19 Review, modify, approve or otherwise act upon items related to the
performance of Operating Work or Capital Improvements as follows:
(a) The Project Budget,the annual capital expenditures budget,
annual manpower requirements budget and operation and maintenance budget.
(b) The Unit Rating and any recommended revisions thereof.
(c) The Planned Outages schedule.
(d) The policies and procedures for establishing the Materials
and Supplies inventory.
(e) The written statistical and administrative reports and other
information reports and the form thereof.
(I) The policies. criteria and procedures for determining
General Service Requirements, Maximum Generating Capability, Minimum Generating
Capability.and Testing and Stan-Up Capacity and Energy.
(') The procedures for performance and efficiency testing.
th) The procedures for scheduling deliveries of Capacity.
Energy,"Pesting and Stan-up Capacity and Energy and Fuel.
Owners stating the amount required to be deposited into the Operating Account for
Payments of Construction Costs due on or before the tenth day of the succeeding month
and each Owner shall pay the total amount invoiced to it in accordance with Section 9.3.To
the extent funds are available in the Operating Account,the Operating Committee shall
pay or cause the Project Manager to pay all Construction Costs due and payable under
Construction Agreements. If circumstances require,the Operating Committee or the
Project:Manager shall notify the Owners that.additional funds are required to be deposited
into the Operating Account for the payment of Construction Costs and promptly furnish
copies of relevant invoices, supporting materials and such other information as the
Operating Committee or any Owners may require to understand the need for additional
funds.The Owners shall pay such additional invoices promptly in accordance with Section
8.3.The Owners hereby acknowledge and approve lit the costs and expenditures incurred
by the Owners prior to the date of this Ownership Agreement as shown on Appendix D and
(ii)the acquisition costs under the Common Facilities Agreement,all of which will be part
of the Construction Costs. OPERATING REQUIREMENTS
Section 6.1 Post Firm Operations. At all times after the Date of Firm Operation,
each Owner shall own as its separate property and not in common with the other Owners,
and shall be entitled to schedule for its account, Capacity and Energy equal to its
Percentage Share of the Net Energy Generation.
Section 6.2 Reserves. Each Owner shall be obligated to provide its own electric
reserve requirements as determined by the Operating Committee, including spinning
reserves,for the product of its Percentage Share and The Available Generating Capability.
Section 6.3 Minimum Generating Capability. At all times, except during
Operating Emergencies or Planned Outages,each Owner shall be obligated to take delivery
of its Percentage Share of the Net Energy Generation of the Minimum Generating
Capability.Any Owner who fails to schedule delivery of such share of the Minimum
Generating Capability shall be responsible for all incremental costs incurred by the other
Owners to the extent directly resulting from such failure. A failure to satisfy its minimum
scheduling requirements shall not reduce the defaulting Owner's obligation to pay its
proportionate share of all Fixed Operating Costs
Section 6A Owner Schedules Each Owner agrees to schedule for its account as
determined by the Operating Committee and the Joint Operating Agreement, Its
Percentage Share of the General Service Requirements during any period that the Project
is operated. No Owner may utilize the Capacity,Energy or report operating reserves
(spinning or nonspinning)of another Owner,without the express written consent of such
other Owner.
Section 6.5 Curtailments The Capacity of the Project shall be subject to Planned
Outages,Operating Emergencies or other restrictions as determined by the Operating
Agent, the Operating Committee or imposed by any regulatory authority having
jurisdiction over the Project. In the event of partial failure or limitation of the Capacity of
the Project,the Owners shall only be entitled to their Percentage Shares of the Capacity
available based on their Percentage Shares. The Owners shall,if necessary,revise their
15
schedules to reflect the actual Net Energy Generation during the period of the Capacity
reduction.
Section 6.6 Capacity Delivery Net Energy Generation scheduled by the Owners
shall be delivered at the High Voltage Switchyard and accounted for on the basis of such
schedules or in accordance with any revisions thereto as set forth in the Joint Operating
Agreement.The provisions of this Agreement shall not confer upon any Owner the right to
use existing transmission facilities of any of the other Owners to transmit its portion of its
Capacity to its load area,or for any other purpose. The difference between each Owner's
schedule and the actual Net Energy Generation produced by the Project shall be kept in an
account all as set forth in the Joint Operating Agreement.
Section6.7 'resting and Start-Up Capacity and Energy. Each Owner shall
schedule and deliver to the High Voltage Switchyard its Percentage Share of the Testing
and Start-Up Capacity and Energy as determined by the Operating Committee or the
Operating Agent. The costs of such Testing and Start-Up Capacity and Energy shall be
home by each(honer. Energy produced by the Project between the start-up and the date
of commercial operation shall be apportioned among the Owners based on their Percentage
shares,unless the Owners subsequently agree to a different disposition of such Energy.
Section 6.8 Shares of Operating Costs.All Operating Costs shall be shared by the
Owners and shall be advanced by them and disbursed and accounted for in accordance
with Article S. Operating Costs shall be allocated depending on whether they are fixed or
variable costs Fixed Operating Costs shall be shared by the Owners in proportion to their
Percentage Shares. Variable Operating Costs shall be shared in accordance with their
Variable Operating Cast Share.
Section 6.9 Owner's Fuel. Before the initial Fuel Operating Plan is adopted by
The Operating Committee,each Owner may elect to bring to the Project all or part of its
Percentage Share of the Fuel required to meet the Maximum Generating Capability for the
term of the Fuel Operating Plan.
Section 6.10 Environmental Laws The Operating Committee shall comply,and
cause the Project Manager and the Operating Agent to comply,in all material respects
with all applicable environmental laws, including laws with respect to all hazardous
materials emanating from or arising out of the construction or operation of the Project.
Operating Costs include the costs relating to such compliance and the costs of remediatiop
of any environmental condition. Each Owner shall be entitled to its Percentage Share of
any rights.credits entitlements,or allowances created by the Project associated with
applicable environmental laws. Each Owner's rights to Capacity,scheduled Energy and
other attributes shall be conditioned upon such Owner's compliance with such
environmental laws, and such (boner's possession of required environmental rights,
credits,entitlements or allowances needed for such generation. The Operating Committee
shall regularly advise the Owners regarding rights,credits,entitlements or allowances that
have been used or consumed by each Owner. Each[honer shall keep the Operating
Committee and the Operating Agent informed as to that Owner's available rights,credits,
entitlements or allowances for use at the ProjecL
16
or permit any Lien upon the Project(or any portion thereof),other than the following
Liens:
(a) Permitted Liens;
(b) Liens expressly permitted under the Project Documents;
(c) Liens for taxes which are either not yet due or are the
subject of a goal faith contest approved by the Operating Committee(as to which bonds or
reserves in an amount sufficient to pay the underlying obligation of such Lien shall have been
obtained and remain in effect);
(d) defects, easements, rights of way, restrictions,
irregularities,encumbrances(other than for Debt)and clouds on title and statutory liens that do
riot materially impair the value or use of the property affected;
(e) deposits or pledges of funds or investment .securities
securing the performance of bids,equipment leases or contracts in amounts approved by the
Operating Committee;and
(f) mechanics', workmen's, materialmen's, suppliers',
construction or other similar Liens arising in the ordinary course of business or incident to the
construction, operation, maintenance, repair, restoration or improvement of the Project for
obligations which are not yet due or which are the subject of a good faith contest approved by the
Operating Committee or the Operating Agent,and as to which,bonds or reserves in an amount
sufficient to pay the underlying obligation of such Liens shall have been obtained and remain in
effect.
Section 9.2 Permitted Liens. Each Owner shall have the right at any time to
create a Permitted Lien to an Owner Lender. Any Owner Lender may,without need for
the prior written consent of any other Owner,succeed to and acquire all the rights,titles
and interests of such(honer in the Ownership Interest,and may take over possession of or
foreclose upon said property,rights,titles and interests of such Owner;provided that such
Owner Lender agrees in writing to assume and be obligated fully to perform and discharge
all of the obligations of such Owner under this Agreement and any other Project
Agreements.
Section 93 Riahts of Transfer. Except for Permitted Transfers,no Owner may
directly or indirectly Transfer all or any portion of its Ownership Interest without the
prior written consent of the Operating Committee. No consent of the Operating
Committee or any other Owner shall be required for any of the following Transfers(each,
a"Permitted Transfer"):
93.1 A Transfer pursuant to Permitted Lien;
93.2 A Transfer by an Owner of some or all of its Ownership Interest to one or
more of its Affiliates,provided that such Affiliate(s)are Creditworthy.
19
9.33 A Transfer to another Owner that is not in default of its obligations under
this Ownership Agreement.
93.4 A Transfer by an Owner to any Creditworthy Person.
Section 9.4 Right of First Refusal. Far any Permitted Transfer described in
Section 9.2.4,the Transferring Owner and the Transferee shall jointly notify each of the
other Owners in writing of such proposed Transfer. Such notice(the-Transfer Notice")
shall contain the Transferee's name,the Ownership Interest proposed to be Transferred
(the "Transferred Interest"), the purchase price for such Ownership Interest (the
"Purchase Price"),and the other terms of the proposed Transfer in complete detail.
9.4.1 For six months(the"Option Period")after receipt of the Transfer Notice
from the Transferring Owner,the other Owners shall have the option(the"Option')to purchase
all(but not less than all)of the Transferred Interest at the Purchase Price and on the other
material terms contained in the Transfer Notice. If more than one Owner elects to acquire a
portion of the Transferred Interest.each such Owner shall be entitled to purchase that portion of
the Transferred Interest represented by the percentage obtained by dividing the exercising
Owner's Percentage Share by the sum of the Percentage Shares of all such exercising Owners. If
the other Owners do not exercise the Option to purchase the Transferred Interest within the six
month period,the Transferring Owner shall he free to complete the Transfer to the proposed
Transferee.
9.4.2 The Transferring Owner must complete the Transfer to the proposed
Transferee within 60 days after the expiration of the Option for the Purchase Price and on the
terms contained in the Transfer Notice and shall furnish to each Owner evidence of such
Transfer. If the Transfer is not completed within 60 days of the expiration of the Option Period.
then the Transfer shall be deemed to have failed and the Ownership Interest will he retained by
the Owner. Any subsequent Transfer shall he subject to the procedures of this Article 9.
9,43 Notwithstanding Section 9.3,in order for any Permitted Transfer to be
vaiid and effective,(i)all amounts dde and owing by a Tramf,�rring Owner trader the Project
.agreements.shall have been paid and(ii)the Transferee shall have assumed responsibility for
performance of all of the obligations of the Transferring Owner relating to the Transferred
Interest pursuant to a written instrument of assignment and assumption in a form reasonably
acceptable to the Operating Committee. The assignment cal assumption agreement .shalt
provide that each Owwr is a third party beneficiary thereof and shall require that the Transferee
become a party to the Project Agreements and agree to be bound by the terms thereof. The
consummation of the Transfer shall release the Transferring Owner from any of its obligations
under the Project Agreements that are expressly assumed by the Transferee.
Section 9.5 Additional Restrictions. Permitted Transfers shall also be subject to
the following:(a)the Transfer may not result in a default or event of default under any
Project Agreement and Ib)the Transfer may not cause the Project or any(honer to be
subject to any applicable law to which it was not previously subject Except for a
Permitted Lien,no Transfer of an Ownership Interest shall be permitted,or shall become
etTective, unless the Transferred Interest includes a corresponding Transfer of all
20
11.1.6113usiness Interruption Insurance. Business interruption insurance
covering 100%of continuing normal Project operating expenses,payroll and debt service for a
period of 12 months for a loss caused by physical damage resulting from an insured peril.
Coverage will be written with industry standard deductibles for the specified insured perils.
Coverage will also include contingent business interruption and extra expense, subject to
industry standard sublimity and deductibles.1
11.1.7 [Pollution Insurance. Pollution insurance with a minimum limit of
$ for each occurrence and in the aggregate,including first party clean up expenses
and third party Claims for bodily injury,property damage and clean up expenses./
Section 11.2 Other.Except as otherwise directed by the Operating Committee,the
following provisions shall apply to Operating Insurance.
11-2.1 Additional Insureds. Each Owner shall be named an additional insured,
individually and jointly with the other Owners,on all policies of Operating Insurance,and the
policies of Operating Insurance shall carry cross—liability endorsements and shall be given the
same advance notice of cancellation or material change. Property insurance procured will
contain language that binds the insurer to pay replacement costs on the basis that the Project is
being rebuilt without regard to ownership change after the loss.
11.2.2 Deductibles. Any deductibles shall be apportioned among the Owners on
the basis of their Percentage Shares.
11.2.3 Pnmary Insurance. Operating Insurance policies shall be primary
insurance for all purposes and shall be so endorsed. Any other insurance carried by an Owner
individually shall not participate with Operating Insurance as to any loss or claim for which valid
and collectible Operating Insurance shall apply. Such other insurance shall apply solely as to the
individual interest of the Owner carrying such other insurance;provided,however,that each
Owner shall accept any reasonably restrictive endorsement to its separate insurance policies as
may be required by an insurer as a condition precedent to the issuance of a policy of Operating
Insurance.
11.2.4 Interested Pan . At the direction of the Operating Committee,any party
furnishing services, materials,parts or equipment in connection with the planning,design,
engineering,construction,maintenance,operation or use of the Project may be named as an
insured as its interest may appear in any of the Operating Insurance policies,and the Operating
Committee may waive on behalf of each Owner its right of recovery against any such party for
insured loss of or damage to any property covered by Operating Insurance,provided that no such
waiver shall impair the right to recover any suns otherwise payable to any Owner under the
Operating Insurance.
Section llJ Choice of Insurer. The Operating Committee shall procure
Operating Insurance from such insurers or underwriters, Including stock companies,
mutual funds and pools or groups of insurers or underwriter,provided that any policy,
which obligates any Owner to pay any assessment,shall not be obtained unless such Owner
has agreed in writing to undertake such obligation.
23
Section 11A Refunds and Premiums. Any refunds of premiums or dhidends
received on any Operating Insurance shall be allocated in proportion to each Owner's
Percentage Share.
Section 11.5 Combined Coverage. Nothing herein shall prohibit combining the
coverage required by this Ownership Agreement with coverage outside the scope of that
required by this Ownership Agreement. The Operating Committee shall determine the
portion of the total premium cost,which is allocable to Operating Insurance.
ARTICLE 12. DESTRUCTION
Sedion 12.1 Minor Repairs. If the Project or a portion thereof should be damaged
or destroyed,then to the extent that the cost of repair or reconstruction is estimated to be
less than 150%of the aggregate amount of Operating Insurance coverage of the damaged
or destroyed portion,the Operating Committee shall cause such repairs or reconstruction
to be made so that the Project shall be restored to substantially the same general condition,
character or use as existed prior to such damage or destruction and the Owner shall share
the costs. less Operating Insurance proceeds, of such repairs or reconstruction in
proportion to their Percentage Shares.
Section 122 NIaior Repairs. If the Project or any portion thereof should be
damaged or destroyed to the extent that the cost of repairs or reconstruction is estimated to
be 150%or more of the aggregate amount of Operating Insurance coverage,then upon
unanimous agreement of the representatives of the Operating Committee,it shall cause
such repairs or reconstruction to be made and the Owners shall share the coals,less
Operating Insurance proceeds,of such repairs or reconstruction in proportion to their
Percentage Shares:provided,however,that should the Operating Committee's vote not be
unanimous and one or more of the Owner desire to make such repair or reconstruction,
then any Owner or Owner who do not agree to restore or reconstruct shall sell their
Percentage Shares and Ownership Interests in the Project to the remaining(honer for a
price equal In amount to their Percentage Shares of the salvage value of the Project. The
Owners agreeing to repair or reconstruct the Project shall share the costs, less their
aggregate Percentage Share of the Operating Insurance proceeds, of repair or
reconstruction in the proportion that the Percentage Share of each bean to the total
Percentage Shares of all such agreeing Owners Any dispute regarding the salvage value
shall be resolved pursuant to Article 15. Simultaneously with the payment of the salvage
value,the selling Owner(s)shall execute and/or deliver to the purchasing Owner(s)all
documents and instruments necessary to transfer the selling Owners'Ownership Interest
to the purchasing Owner(st,free and clear of Liens. in addition,the selling Owners)shall;
cooperate with the purchasing Owner's)after closing and shall execute and deliver such
other documents and lake such other actions as may be reasonably requested by the
purchasing Owner's)in order to complete the transfer of the Ownership Interest(s)into the
name of the purchasing Owner's).
ARTICLE 13. DEFAULT X\D REMEDIES
Section 13.1 Default.The occurrence of any of the following shall be a"Default":
_a
effect the transactions contemplated by this Section. if termination occurs prior to the Date of
Firm Operation,the"Default Purchase Price"shall be an amount equal to 85%of the sum of all
amounts paid through the date of purchase by the Defaulting Owner as Construction Costs less
(ii)the amounts secured by Liens thereon,it being agreed that this amount is a reasonable
measure of the fair market value prior to the Date of Firm Operation,which amount,if such
termination shall be for a portion but not all of the Ownership Interest of the Defaulting Owner,
shall be multiplied by the fraction,the numerator of which is the terminated Ownership Interest
(expressed as a Percentage Share)and the denominator of which is the Percentage Share of the
Defaulting Owner prior to the termination. If termination occurs after the Date of Firm
Operation, the Default Purchase Price shall be the fair market value of such terminated
Ownership Interest,determined in accordance with Section 13.2.3(a),less the amounts secured
by Lien thereon,minus an amount equal to 15%of the fair market value,as liquidated damages
and not as a penalty,to reflect the fact that actual damages resulting from the Default are difficult
or impossible to calculate with reasonable certainty.Any Non-Defaulting Owner that has an
outstanding advance in respect of a Deficiency Amount owing may,at its option,set off the
amount of such advance(plus accrued interest and costs)against any portion of the Default
Purchase Price payable by it or require that such advance(plus accrued interest and costs)he
paid in full from a portion of the Default Purchase Price payable by the other Owners before any
amount thereof is paid to the Defaulting Owner.
(a) The acquiring Owners and the Defaulting Owner each shall
designate a qualified appraiser within 15 days from the determination of the Operating
Committee to terminate the applicable Ownership Interest. A qualified appraiser shall be an
appraiser with at least five years'experience in the appraisal of properties similar to the Project.
Each of the two appraisers shall be directed to determine the fair market value component of the
Default Purchase Price within 30 days of his or her appointment and to notify the Owners of his
or her determination. If the lower of the two determinations is not less than 95%of the higher of
the two determinations,then the fair market value shall be the average of the two determinations.
If the lower of the two determinations is less than 95%of the higher of the two determinations,
then the two appraisers shall,within 15 days thereafter,appoint a third appraiser with similar
qualifications(who shall not have performed any work for any Owner within the five,year period
prior to his appointment)and shall each furnish to such appraiser a written report of his or her
respective determination, Within 30 days of such appointment,the third appraiser shall select
the fair market value of one or the other of the original appraisers and shall notify each Owner of
such determination,which shall be binding upon the Owners. The third appraiser must select
one of the two appraisals and shall not have the right to establish a different fair market value
determination. The acquiring Owners and the Defaulting Owner shall bear the cost of the
appraiser appointed by them,and they shall share equally the frost of the third appraiser.
(b) Within 60 days of receiving the final determination of fair
market value as provided in Section 13.2.3(a),the acquiring Owners shall either(i)notify the
Defaulting Owner that they no longer desire to purchase the Ownership Interest of the Defaulting
Owner,in which case the Non-Defaulting Owners may elect to exercise any remedies provided
for under this Article 13 in respect of the Default or(ii)pay to the Defaulting Owner the Default
Purchase price. Concurrent with the payment of the Default Purchase Price,the Defaulting
Owner shall deliver such instruments of transfer of title and assignment as are reasonably
requested by the acquiring Owners;provided,however,that no representations shall be required
27
to be provided by the Defaulting Owner other than representations that the Defaulting Owner has
the right, power and authority to convey the Ownership Interest. The provisions of this
Section 13.2.4(b) shall survive termination of the Defaulting Owner's rights under this
Agreement for such time period as is necessary to complete the procedures set forth herein.
13.2.4 If a Default occurs after the Date of Firm Operation and continues for a
Period of 180 days,then the Operating Committee,acting upon a vote of the Non-Defaulting
Owners.may have a receiver appointed by a state or federal court,to take control of and exercise
the rights of the Defaulting Owner in respect of its Ownership Interest and perform the
obligations of the Defaulting Owner in accordance with the terms of this Agreement.
Section 13.3 No Remedy Exclusive. Except as otherwise provided in this
Agreement,no remedy conferred upon or reserved to the Owners in this agreement is
intended to be exclusive of any other remedy or remedies available hereunder or now or
hereafter existing at law,in equity,or by statute or otherwise,but each and every such
remedy shall be cumulative and shall be in addition to every other such remedy. The
pursuit by any Owner of any specific remedy shall not be deemed to be an election of that
remedy to the exclusion of any other or others,whether provided hereunder or by law,
equity,or statute.
Section 13.4 Disputes Regarding Default. An Owner may dispute in writing(i)the
existence or nature of a Default asserted in a default notice or di)an amount paid under
protest. The dispute shall specify the reasons upon which the dispute is based. Copies of
such dispute or protest notice shall be mailed by such Owner to all other Owners. In the
event a disputed Default or payment protest is settled,pursuant to Article 15,in favor of
the Defaulting or protesting Owner,such Owner is entitled to a refund of all or any portion
of a disputed payment made,or is entitled to the reasonable equivalent in money of non—
monetary performance of a disputed obligation theretofore made. Upon such
determination,the non—protesting Owners shall pay such amount to the protesting Owner,
together with interest thereon at the rate of 10%per annum whichever is the lesser,from
the dale of payment or from the date of completion of performance of a disputed obligation
to the date of reimbursement. Reimbursement of the amount so paid.shall be made by the
nonprotesting Owners in the ratio of their respective Percentage Shares to the total of the
Percentage Shares of all nouprotesting Owners.
ARTICLE 14. INDEMNIFICATION
Section 14.1 Indemnification. Each Owner,to the maximum extent permitted by
applicable law,shall defend,protect,indemnify and hold the other Owners,their Affiliates
and the officers,directors,employees and agents of each of them, harmless from and
against any and all Third Party Liability. The term"Third Party Liability"means any
Losses of any Third Party resulting from,arising out of or in connection with(a)negligence
or Willful Action of such Owner,its partners,officers,directors,employees,or agents,
arising in connection with this Agreement or the Project(unless such actions arise under a
contract among one or more Owners and a Operating agent or between a Operating Agent
and a third party,in which case the provisions of.such contract shall be applicable),(b)
Personal Taxes of such Owner,(c)Liens in respect of an obligation of such Owner that are
,y
provided. The arbitrators selected by the representatives shall take equal turns striking
names from the list of arbitrators furnished by the American Arbitration Association until
the last name remaining on said list shall be the additional arbitrator. All arbitrators shall
be persons skilled and experienced in the field which gives rise to the Dispute,and no
person shall be eligible for appointment as an arbitrator who is an affiliate,officer or
employee of any of the Parties to the Dispute or is otherwise interested in the matter to be
arbitrated.
Section 15.5 Applicable Rules for Arbitration. Except as otherwise provided in
this Article 15.the arbitration shall be governed by the rules and practices of the American
Arbitration Association (or the rules and practices of a similar organization if the
American Arbitration Association should not at that time exist)from time to time in force,
except that if such rules and practices, shall conflict with mandatory provisions of
applicable state or federal law,as the case may be,then such applicable state or federal
laws shall govern.
Section 15.6 Application of Arbitration Remedy. Included in the issues that may
be submitted to arbitration pursuant to this Article 15 is the issue of whether the right to
arbitrate a particular Dispute is permitted under the Project Agreements. If such issue is
submitted,it shall be resolved before the Dispute is heard.
Section 15.7 Evidence and Submittals.The arbitrators shall examine the notices as
provided for in Section 15.3 and hear evidence submitted by the respective Owners as
requested by the arbitrators.
Section 15.8 Findings of the Arbitrators. The award of the arbitrators shall
contain findings relative to the materiality of the default,the period of time within which
the defaulting party must remedy the default or commence remedial action,and the
remedies that may be exercised by the Non-Defaulting Owners in the event the default is
not remedied within such period of time. The Non-Defaulting Owners may,in submitting
a Dispute to arbitration,request that the arbitrators determine what additional remedies
may be reasonably necessary or required under the circumstances which give rise to the
Dispute including but not limited to the conditions under which the Project may be
operated economically and efficiently during periods when the defaulting Owner's right to
receive its Percentage Share of the Available Generating Capability is suspended or request
that the Operating Committee address that issue.
Section 15.9 Specific Enforceability for Arbitration. This Agreement to arbitrate
shall be specifically enforceable, and the award and findings of a majority of the
arbitrators shall be final and binding upon the Owners. Any award may be filed with the
clerk of any court having jurisdiction over the Owners,or any of them,against whom the
award is rendered,and,upon such filing,such award,to the extent permitted by the laws of
the jurisdiction in which said award is filed,shall be specifically enforceable or shall form
the basis of a declaratory judgment or other similar relief.
Section 15.10 Costs and Fees. The fees and expenses of arbitrators shall be shared
by the Owners based upon their Percentage Shares,unless the decision of the arbitrators
31
shall specify some other apportionment of such fees and expenses. All other expenses and
costs of The arbitration shall be borne by the Owner incurring the same.
Section 15.11 Actions Pending Dispute Resolution. If a Dispute should arise which
is not resolved pursuant to Section 15.1,then,pending the resolution of the Dispute
pursuant to Section 15.2 or 15.3,as applicable,the Operating Committee shall proceed
with Construction Work, Operating Work or Capital Improvements in a manner
consistent with the Project Agreements and generally accepted practice in the electric
utility industry, and the Owners shall advance the funds required to perform such
Construction Work,Operating Work or Capital Improvements in accordance with the
applicable provisions of the Project Agreements.
ARTICLE 16.TERM AND TERMINATION
Section 16.1 Effective Date. This Ownership Agreement shall become effective on
, provided that it shall have been then duly executed by all of the
Uwnen.
Section 16.2 Termination Date. This Ownership Agreement shall terminate on the
later of:(i)December 31, 2057.or(11)the date on which the Project shall have been
permanently removed from service by the Operating Committee:provided,however,that
any obligations of any Owner to one or more of the other Owners under any provision of
this Ownership Agreement or tinder any other Project Agreement which has not been
satisfied prior to any termination of this Ownership Agreement shall survive and be fully
enforceable against such Owner after such termination.
Section 163 Surviving Rights and Obligations Notwithstanding the termination
of this Agreement,The following rights and obligations shall continue:
163.1 The rights and obligations of the Operating Committee and the Owners
under any Project Agreement that shall expressly survive the termination date,hall continue to
he binding.
16.3.2 The rights of any Owner in any unexpended balance of any fund or
reserve established at any time for the Project or the Owners for the payment of any liability or
obligation pursuant to any Project Agreement or any Insurance policy providing Operating
Insurance or any Project self-insured arrangement which termination date.is not due or payable.
is the subject of a dispute,or is indeterminate or contingent,including without limitation(i)any
liability or obligation arising from any litigation instituted or Claims asserted or anticipated prior
to the termination date against the Project.any or all Owners,the Operating Agent with respe t
to any Operating Work or Capital Improverents,00 any contingent liability for workers'
compensation.employers' liability,employees' health,retirement or other benefits.(iii)any
reserve or other funds held by any insurers on the termination date which under the terms of anv
insurance policy are or may become subject to refund or otherwise payable to the Owners.
(iv)any liability for other Claims of any nature as may he asserted subsequent it,the termination
date against the Project or any or all Owners.
32
Section 20.2 Relationship of Owners. The covenants,obligations and liabilities of
the Owners under this Agreement are several and not joint or collective.Each Owner shall
be individually responsible for its own covenants,obligations and liabilities as herein
provided. No Owner or group of Owners shall be under the control of or shall be deemed
to control any other Owner or the Owners as a group. No Owner shall be the agent of or
have a right or power to bind any other Owner without its express written consent,except
as expressly provided in the Project Agreements. Neither the execution of the Project
Documents,nor the consummation of the transactions contemplated thereunder,shall
create or constitute a partnership,joint venture,trust,limited liability company,corporate
or any other form of business organization or arrangement among the Owners Except as
is expressly agreed to in writing in the Project Agreements,no Owner(or any of its agents,
officers or employees)shall be an agent or employee of another Owner,nor shall an Owner
(or any of its agents,officers or employees)have any power to assume or create any
obligation on behalf of the other Owners In their relations with each other under the
Project Agreements,the Owners shall not be considered fiduciaries,but rather shall be free
to act on an arm's length basis in accordance with their own respective self-Interest No
Owner shall be precluded from engaging in any activities similar to those to be conducted
by the other Owners in respect of the Project or any activities incidental or related thereto.
Section 2" Further Assurances. Each Owner agrees,upon request by the other
Owners,to make,execute and deliver any and all documents reasonably required to
implement the purposes of the Project Agreements.
Section 20.4 Tax Exempt Status. It is the intent of the Owners that the Operating
Committee,any Project Manager and Operating Agent not take any action(a)that would
result in private use within the meaning of Section 141 of the Internal Revenue Code of
19K as amended,(b)to sell,transfer or exchange Energy,Capacity or any other attribute
from the Project or credits arising therefrom If such sale would jeopardize the tax-exempt
status of any Non-Defaulting Owner or any tax-exempt debt Instrument issued by or on
behalf of such a Non-Defaulting Owner,or(c)would jeopardize the tax-exempt status of
any Owner under Section 501(cN12)of the Code.
Section 20.5 Indt2Mdent Terms. Each term, covenant and condition of this
Ownership Agreement and the other Project Agreements Is deemed to be an independent
term,covenant and condition,and the obligation of any Owner to perform any or all of the
terms,covenants and conditions to be kept and performed by it is not dependent on the
performance by the other Owners of any or all of the terms,covenants and conditions to be
kept and performed by them.
Section 20.6 Invalidity. In the event that any of the terms,covenants or conditions
of this Ownership Agreement or any of the other Project Agreements,or the application of
any such term, covenant or condition, shall be held Invalid as to any Person or
circumstance by any court having jurisdiction,all other terms,covenants or conditions of
such agreements and their application shall not be affected thereby,but shall remain in
force and effect
35
Section 20.7 No Third Party Beneficiaries Except as otherwise specifically
provided in this Ownership Agreement or the other Project Agreements,the Owners do
out intend to create rights in or to grant remedies to any third parry as a beneficiary of this
Ownership Agreement or the other Project agreements or of any duty, covenant,
obligation or undertaking established therein.
Section 20.8 Waiver. No waiver of any provision of the Project Agreements shall
be valid or enforceable unless in writing and signed by the Party against whom such waiver
I,to be enforced. No failure or delay of any Owner or the Operating Committee in
exercising any power,right or remedy under this Agreement or in insisting upon the strict
performance by any Owner of such Owner's covenants,obligations or agreements under
this Agreement,shall operate as a waiver thereof,nor shall any written waiver in one
instance preclude any future insistence on strict performance or the exercise of any other
right power or remedy.
Section 20.9 Surviv Articles 14, 15, 19 and 20 and any other provision it)
expressly providing for survival or 00 providing for indemnification or limitation of or
protection against liability will survive the termination,cancellation or expiration of this
Agreement
Section 20.10 Governing Law. This Ownership Agreement shall be governed by
and construed and enforceable in accordance with the laws of the State of Utah.
XRTICLE 21.NOTICES
Section 21.1 Addresses for Notice any notice,demand or request provided for in
this Ownership Agreement or any other Project Agreement shall be in writing and shall be
deemed properly served,given or made if delivered in person or sent by a nationally
recognized overnight carrier or by registered or certified mail,postage prepaid,to the
persons specified below:
_21.1.1
21.1.2
21.L3
21.1.4
36
By:
Its:
By:
Its:
INSERT NOTARY BLOCKS HERE
39
,APPENDIX A
DESCRIPTION OF THE PROJECT
[TO BE INSERTED[
APPENDIX D
PROJECT BUDGET
[TO BE INSERTEDI
APPENDIX E
OPERATING EMERGENCY
[TO BE INSERTED1
• DRAFT OF APRIL 10,20%
COMMON FACILITIES AND SITE AGREEMENT
BY AND AMONG
INTERMOUNTAIN POWER AGENCY
THE CITY OF LOS ANGELES
ACTING BY AND THROUGH
THE DEPARTMENT OF WATER AND POWER
AS IPP PROJECT MANAGER AND
OPERATING AGENT
AND
THE UNIT 3 OWNER PARTICIPANTS
REFERRED TO HEREIN
Dated as of ,200_
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS AND CONSTRUCTION.................................._...................5
SectionI.I Definitions...........................................................................................5
Section1.2 Construction.........................................................................................9
ARTICLE11 UNIT 3...........................................................................................................10
Section 2.1 Description of Unit 3.........................................................................10
Section2.2 Unit 3 Site..........................................................................................10
Section 2.3 Construction of Unit 3........._............................................................I l
Section 2.4 Operation and Maintenance of Unit 3................................................l I
ARTICLE III COMMON FACILITIES_ __............................................................. 12
Section 3.1 Existing Common Facilities...............................................................12
Section 3.2 Required Common Facilities.Additions and Improvements..............14
Section 3.3 Joint Common Facilities......................................,.............................14
Section 3.4 Future Common Facilities..................................................................15
.ARTICLE IV CONVEYANCE OF UNIT 3 S[TE AND RIGHTS AND INTERESTS
IN AND TO JOINT COMMON FACILITIES.............................................16
Section 4.1 Conveyance of Unit 3 Site._..............................................................16
Section 4.2 Unit 3 Owner Participants'Percentage Interests in Joint
Common Facilities.... _................................................. l7
Section 4.3 Conveyance of Rights and Interests in Joint Common Facilities......17
Section 4.4 'As Is"Conveyance...._................................................_.................22
Section 4.5 Waiver of Right of Partition.............................................................._3
ARTICLE V PURCHASE OF UNIT 3 SITE AND RIGHTS AND INTERESTS IN
JOINT COMMON FACILITIES........_.........................................................23
Section 5.1 Purchase of Unit 3 Site......................................................................23
Section 5.2 Acquisition of and Installment Payments for Joint Common
Facilities Rights and Interests............................................................23
Section 5.3 Conditions to Closing........................................................................25
Section 5.4 Use of Joint Common Facilities.........................................................27
Section5.5 Survivai....................................................................._.......................27
ARTICLE V I PAYMENT OBLIGATIONS AND DETERMINATIONS OF THE
UNIT 3 OWNER PARTICIPANTS..............................................................27
Section 6.1 Payment Obligations Based on Unit 3 Ownership Interests_...........17
TABLE OF CONTENTS
(continued)
Page
Section 27.4 Independent Decisions of Parties........................................................l9
Section 27.5 Relationship of Parties;No Partnership.............................................50
Section27.6 Exhibits............................._...............................................................50
Section 27.7 Counterparts.......................................................................................50
EXHIBIT A Description of Unit 3.......................................................................................................A-I
EXHIBIT B Ownership Interests of Unit 3 Owner Participants................................................._........B-t
EXHIBITC Existing Common Facilities..........................................................................................._C-1
EXHIBIT D Required Common Facilities Additions and Improvements............................................D.1
EXHIBIT E Joint Common Facilities...................................................... ....E-1
........................................
EXHIBIT F Form of Unit 3 Site Warranty Deed.........................................................................F-1
. .. . . .. .
EXHE31TG Joint Common Facilities Percentages.. ..........._.......................................................G.1
EXHIBIT H Form of Joint Common Facilities Bill of Sale-- ....................... .................H-1
EXHIBIT I Form of Joint Common Facilities Warranty Deed for Deeds]................... ...........1-1
EXHIBIT J Description of the Property of Intermountain Power Project Facilities.............................J-1
Excepted from Conveyance
EXHIBIT K Form of Water Lease Agreement....................................................................................K-I
„gnu x
iv-
COMMON FACILITIES AND SITE AGREEMENT
This Common Facilities and Site Agreement,dated as of I.200_.as it may
be amended or supplemented from time to time tthe"Common Facilities Agreement'),by and among
INTERMOUNTAIN POWER .AGENCY C-IPA"), a political subdivision of the State of Utah
organized and existing under the Interlocal Cooperation Act constituting Title 11,Chapter 13 of the Utah
Code Annotated, 1953,u amended(the"Act'). THE CITY OF LOS ANGELES,a municipal
corporation organized and existing under the Charter of the City of Los Angeles and the laws of the State
of California,acting by and through THE DEPARTMENT OF WATER AND POWER P'LOS
ANGELESn,in its capacity as Project Manager and Operating Agent of the INTERMOUNTAIN
POWER PROJECT,(INSERT NAMES OF UNIT 3OWNER PARTICIPANTS1(collectively referred
to herein as the"Unit 3 Owner Participants',and IPA,Los Angeles and the Unit 3 Owner Participants arc
referred to herein individually as a"Party"and collectively as"Parties')is made with reference to the
following:
RECITALS
IPA owns and operates the Intermountain Power Project.which consists of(i)two coal-fired
steam-electric generating units and a switchyard(the [GS Sw itchyurd'),located new Ly nndyL to Millard
County.Urah,together with attendant facilities including a microwave communications system and a
railcar service center located in Springville,in Utah County.Utah,and certain water rights and coal
pmperties and supplies(the--Intermountain Generating Station).Oil a 500-kV direct current transmission
line approximately 19U miles in length from and including a convener station adjacent to the IGS
Switchyard to and including a corresponding convener station at Adelanto.California(the"Soulhem
Transmission System'I,and(tit)two 50-mile 345-kV alternating current transmission lines from the IGS
Switchyard to the Mona Switchyard in the vicinity of Mona,Utah,and a I33-mile 230-kV alternating
-I-
modifications thereof,could be used or useful in the operation of Unit 3 in common with the operation of
Units I and 2,and the Parties have agreed upon values or estimates of values thereof,subject to
adjustment as provided in the Common Facilities Agreement
The Unit 3 Owner Participants desire to acquire from IPA certain ownership interests and other
rights and interests in such lands.improvements to land facilities,equipment,water supply,rolling stock
and other personal property,both tangible and intangible.in connection with the operation of Unit 3 at the
IPP Site,and IPA desires to make the same available to the Unit 3 Owner Participants for such purpose
upon the terms and conditions set forth in the Common Facilities Agreement.
IPA and the IPP Coordinating Committee have determined that the use by the Unit 3 Owner
Participants of such ownership interests and other rights and interests in such lands,improvements to
land,facilities,equipment.water supply,rolling stock and other personal property in connection with the
operation of Unit 3 as provided in and subject to the terms and conditions of the Common Facilities
Agreement is desirable and in the best interests of IPA and the Power Purchasers;and IPA,Los Angeles
and the IPP Coordinating Committee have determined that the agreed upon values or estimates of values
as set forth in the Common Facilities Agreement represent fair value therefor.subject to adjustment as
provided in the Common Facilities Agreement.
IPA has also determined that the sale,transfer,conveyance and assignment of the ownership
interests and other rights and interests in and to the lands,improvements to land,facilities,equipment,
water supply.rolling stock and other personal property,both tangible and intangible,to the Unit 3 Owner
Participants,as provided in the Common Facilities Agreement,will not interfere with or impede the
operation of or of any construction with respect to Units I and 2 or any other facility of the Intermountain
Power Project or in any manner impair or adversely affect the rights or security of the holders of IPA
Bonds.
3562111?.r ..t.
IPA,the IPP Coordinating Committee.Los Angeles and the Unit 3 Owner Participants have
approved the terms and provisions of this Common Facilities Agreement.
THEREFORE,in consideration of the terms of the Agreement and the mutual covenants and
agreements hereinafter set forth.it is agreed by and among the Parties as follows:
ARTICLE 1
DEFINITIONS AND CONSTRUCTION
Section 1.1 Dr aiti
The capitalized terms used in the Common Facilities Agreement and not otherwise defined in the
Common Facilities Agreement shall have the meanings specified below:
",lddirional IPA Facilfrfes"means any additional electric generating unit or units or electric
transmission facilities.Including all appurtenances,constructed,installed"improved and operated at the
IPP Site or any enlargemems,modifications,replacements,improvements or additions to Units I and 2.
the southern Transmission System or the Northern Transmission System,as provided for in Article VIL
"Closing"means the transaction consisting of delivery by IPA of deeds.bills of sale.instruments
of transfer and assignment and other instruments.certificates and documentation with respect to the Unit
3 Site and the ownership interests and rights and interests in the Joint Common Facilities and payment by
the Unit 3 Owner Participam s of the balance of the Joint Common Facilities Purchase Price therefor.all
as provided in Articles IV and V.
-,Closing Dare"means the date of the Closing which shall be held on reasonable notice given by
the Unit 3 Owner Participants on a date that,hall be within_business days prior to the scheduled
Commercial Operation Date of Unit 3.
methods or acts engaged in or approved by a significant portion of the electrical utility industry prior
thereto)known at the time the decision was made,would have been expected to accomplish the desired
result at the lowest reasonable cost consistent with good business practices,reliability, safety and
expedition,taking into account the fact that Prudent Utility Practice is not intended to be limited to the
optimum practice, the desired result,methods of act to the exclusion of all others,but rather to a
spectrum of possible practices,methods or acts which could have been expected to accomplish the desired
result at the lowest reasonable cost consistent with reliability,safety and expedition. Prudent Utility
Practice includes due regard for manufacturers'warranties and requirements of govemmental agencies of
competent jurisdiction.
"Required Common Facilities Additions and Improvements"means the real and personal
property constituting the Required Additions and Improvements as provided in Section 3.2.
"UeUs I and 2"means the two generating units of he Intermountain Power Project located at the
IPP Site,each with a rated net capacity of 900 MW,together with all facilities,appurtenances,rights,
interests and other properties,whether tangible or intangible,now or hereafter associated therewith or
with the renewal,addition,modification or replacement thereof.
"Unit 3"means the generating unit to be constructed on the Unit 3 Site and described pursuant to
Section 2.1,together with all facilities,appurtenances,rights,interests and other properties,whether
tangible or intangible, associated therewith or with any renewals, additions, modifications or
replacements thereof.
"Unit 3 Construction Lease and Agreement"means the Unit 3 Construction Lease.Use and
Services Agreement dated as of ,200_,by and among IPA,Los Angeles and each of the
Unit 3 Owner Panicipants,as the same may be hereafter amended.
ash--n.s _g_
"Unit 3 Owners Committee"means the committee by that name established by and conducting
proceedings under the Unit 3 Ownership Agreement.
"Unit 3 Ownership Agreement"means the Unit 3 Ownership Agreement,dated
200_by and among the Unit 3 Owner Participants,as the same may be hereafter amended.
"Unit 3.Site"means the site of Unit 3 to he purchased as provided in Section 2.2.
Section 1.2 Construction
Except where the context otherwise requires:
(i) singular words shall connote the plural as well m the singular.
and vice versa(exzept as indicated).as may be appropriate;
(ii) unless otherwise indicated,references to Articles.Sections or
Exhibits are references to the Article,Section or Exhibit of the Common Facildes Agreement;
(iii) the headings,subheadings and table of contents in the Common
Facilities Agreement are solely for convenience of reference and.hall o r e—timte a pan of the
Common Facilities Agreement nor shall they affect the meaning.construction or effect of any
provision thereof;
(iv) references m any Person shall include such Person,its successors
and permitted asirms and transferees;
Iv) .wept as other—, z,presly provided, r.fcr,,c to any
agreement or contract means such agreement or contract as amended,modified or supplemented
from time to time in accordance with the applicable provisions thereof;
-9-
ARTICLE III
COMMON FACILITIES
Section It E.ristiar Common facilities
(a) As lairially Determined. IPA,Los Angeles and the Unit 3 Owner Participants have each
determined that the land. buildings and other improvements to land and real property, facilities,
equipment,water supply,rolling stock and other personal property and rights and interests therein,
whether tangible or intangible,of the Intermountain Power Project as set forth in Exhibit C.together with
any replacements.neconstnaction or renewals thereof or additions or improvements thereto as provided in
Section 3.1(bl.shall constitute the Existing Common Facilities which shall be used in the operation,
maintenance,repair,replacement and improvement of Unit 3 in common with Units I and 2.The Parties
have also agreed on the values of the Existing Common Facilities as of the Effective Date as set forth in
Exhibit C,subject to adjustment as provided in Section 3.1(b).
(b) Replacements Reconstnatfon and Renewals-1dditi ns and! rotements.The Existing
Common Facilities shall be replaced,reconstructed and renewed and additions or improvements thereto
acquired constructed installed or added (other than Required Common Facilities Additions and
Improvements provided pursuant to Section 3.2)as follows,
(i) any item or pan of the Existing Common Facilities shall be
replaced,reconstructed or renewed prior to the Closing Date as a result of damage or destruction
thereof or as otherwise necessary in the reasonable judgment of Los Angeles to maintain the
Existing Common Facilities or any pan thereof in good operating condition pursuant to the IPP
Agwernems;or
(it) any addition or improvement to the Existing Common Facilities
shall he acquired,constructed installed or supplied after the Effective Date and prior to the
.wnu+s .12-
Closing Date provided that the Parties shall have determined that the same shall be useful in the
operation,maintenance,repair,replacement or improvement of Unit 3 in common with Units 1
and 2.
Such replaced,reconstructed or renewed item or pan of the Existing Common Facilities or such addition
or improvement thereto shall be provided at the cost and expense of(PA. The value of each portion of
the Existing Common Facilities replaced,reconstructed or renewed and the value of each part of the
Existing Common Facilities added to or improved,as set forth in Exhibit C as of the date of acquisition or
completion of such replacement,reconstruction or renewal m such addition or improvement shall be
adjusted to reflect the acuul cost of such replacement,reconstruction,or renewal,or of such addition or
improvement,and Exhibit C shall be revised so as to describe such replacement,reconstruction or
renewal and such addition or improvement.
(c) Other Adiustments of Values. The values of the Existing Common Facilities that include
inventories of supplies,goods or materials and the spare pans inventory,>hall be adjusted as of the
Closing Date to reflect the actual measure,count or amount thereof and Exhibit C shall be revised so as to
provide for such adjustments. The applicable values of the Existing Common Facilities shall also be
adjusted as appropriate.to reflect and take into account the Occurrence of any of the contingencies
referred to in Sections 4.31e)or 4.3tt1 or as otherwise agreed to by the Parties.
(d) E i u rion. The value of the Existing Common Facilities shall be escalated as of the
Closing Date as follows (A)in the case of any Existing Common Facilities the value of which was
adjusted pursuant to Section 3.3(bx it,the applicable value,as adjusted pursuant to Section 3.11 bNil,shall
be escalated at the Ekalation Rare from the date of such adjustment pursuant to Section 3.IIh)(i)to the
Closing Dale leschtdmg any—lino.of the salute thereof for the period prior to the date of such
adjustment);and(B)an amount equal to the value as of the Effective Date of the Existing Common
Facilities(other than Existing Common Facilities with values escalated as provided in clause(A)of this
-13-
completion thereof. Any Future Common Facilities shall be paid for as provided in the Joint Operating
Agreement. Such deeds,bills of sale,licenses and other instruments of transfer and assignment shall be
provided by the appropriate Party or Parties so as to vest the title.rights and interests in and to such
Future Common Facilities as necessary for the same to constitute Joint Common Facilities as provided in
the Common Facilities Agreement.
ARTICLE IV
CONVEYANCE OF UNIT 3 SITE AND RIGHTS AND INTERESTS
IN AND TO JOINT COMMON FACILITIES
Section 4.1 Conveyance of Unit 3 Site
Subject to the terms and conditions of the Common Facilities Agreement.IPA shall sell and
convey to the Unit 3 Owner Participants by Special Warranty Deed in substantially the form set forth in
Exhibit F(which shall be revised as necessary to reflect and include any revisions thereto agreed to by the
Parties)and the Unit 3 Owner Participants shall purchase as provided in Article V good and marketable
fee title,as tenants in common,in accordance with their respective ownership interests in the Unit 3 Site
as provided in Section 2.2.Asset forth therein,such Deed shall except and reserve to EPA from such sale
and conveyance a nonexclusive easement in,upon,over,under,through and across the properties of the
Unit 3 Site for the benefit of Units I and 2 but for use and exercise only for such limited purposes as set
forth in such Deed.together with a nonexclusive easement for ingress and egress to and from and over
and across the Unit 3 Site for the use of the aforesaid casement;provided that no exercise or use of such
easement rights shall interfere(except with the approval of the Unit 3 Owner Participants,which approval
shall not be unreasonably withheld)with the use of Unit 3 for any of the purposes thereof. Nlivery of
such Deed by IPA shall he accompanied by such other instruments of conveyance,as shall be necessary
or appropriate,to evidence the vesting in the Unit 3 Owner Participants of title as aforesaid.
isn-.u-s -16-
Section 4.2 Unit 3 Owner Participants'Percentage Interests in
Joint Common Facilities
The Parties agree that the aggregate of the ownership interests and other rights and interests in
and to the Joint Common Facilities to be sold,transferred,granted,conveyed and assigned by IPA to and
purchased by the Unit 3 Owner Participants shall he in the proportion that the electric capacity of Unit 3
(net of station use)bears to the aggregate electric capacity of Units I and 2 and Unit 3(in each case net of
station use),i.e.33 I/3%. Such proportionate aggregate ownership interests and rights and interest in and
to the Joint Common Facilities shall entitle the Unit 3 Owner Participants to that proportion of the rights,
capacity and use of the Joint Common Facilities as will provide sufficient capability for the services and
support to be provided by the Joint Common Facilities for the operation,maintenance,repair,replacement
and improvement of Unit 3 in common with that of Units I and 2,all as provided in the Joint Operating
Agreement. Based on the 33 113%ownership interest and rights and interests in the Joint Common
Facilities sold,transferred,conveyed.granted and assigned by IPA,the Unit 3 Owner Participants,
respectively,shall acquire individual ownership interests and other rights and interests in the Joint
Common Facilities in accordance with their respective Joint Common Facilities Percentages u set forth
in Exhibit G. Exhibit G shall be revised upon notice which shall be given by or on behalf of the Unit 3
Owner Participants to reflect any change in the percentage interests of Unit 3 Owner Participants as a
result of a change in ownmhip interests in Vnil 3 due to a d.-fault by any Unit 3 Owner Participant under
the Unit 3 Ownership Agreement or any transfer or assignment of any right or interest in and to the
Common Facilities Agreement permitted by Article XXI.
Section J.3 Conveyance of Rights and Interests in Joint Common Facilities
tat Certain Personal Prooem.Subject to the terms and conditions of the Common Facilities
A'-re-ment IP 1 shall sell.transfer,eram.coney,license and assign to the Unit 3 Owner Partic ipanrs and
the Unit 3 Owner Participants shall purchase as provided in Article V undiv idwl ownership interests and
rights and interests.in accordance with their respective Joint Common Facilities Percentage,in and to all
aM_ti_v -17-
Section 4.3(b)(ii)above and described in Exhibit 1 for the benefit of Unit 3 but for use and
exercise only for such limited purposes as.set forth in such form of feed(or Deeds(,together
with a nonexclusive easement for ingress and egress to and from and over and across such
properties described in Exhibit 1 for the use of the aforesaid easement;provided that no exercise
or use of such casement rights shall interfere with or impede(except with the reasonable approval
of IPA and Los Angeles)the use of such properties described in Exhibit 1 for any of the purposes
thereof,and
(iv) except and reserve from such sale and conveyance the right of
IPA,which shall run with the land,to develop and locate Additional IPA Facilities at or on the
properties described in Exhibit I to the extent and in the manner as provided in Article VIL
Delivery of such Deed for Deeds(by IPA shall be accompanied by such other instruments of conveyance,
as shall be necessary or appropriate,to evidence the vesting in the Unit 3 Owner Participants of title as
aforesaid.
(c) Warer Lease. IPA agrees to lease to the Unit 3 Owner Participants and the Unit 3 Owner
Participants agree to lease from IPA undivided rights and interests,in accordance with their respective
Joint Common Facilities Percentages,in the water available lother than such water in the amount of
that is used for the Southern Transmission System converter.station at the IPP Sile)
derived from IPA's water rights and water shares of stock in the five mutual irrigation companies.
including IPA's ground water right%from its production welts at the IPP Site,as provided in Article V.
Such water shall constitute Joint Common Facilities and shall be leased under and pursuant to a Water
Lease Agreement entered into by IPA with the Unit 3 Owner Participants which shall be substantially in
the form.set forth in Exhibit K(which shall be revised as necessary to include any changes approved by
the Parties). The term of such Water Lease Agreement shall be SO years with two successive 20 year
renewal options of the Unit 3 Owner Participants,subject,however,to early termination thereof upon the
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retirement from service and decommissioning of Unit 3 as provided in Section 16.2.The rent under such
Water Lease Agreement shall he prepaid for such term by the Unit 3 Owner Participants as part of the
Joint Common Facilities Purchase Price paid as provided in Article V.
(d) Vit—u e Cvnrnunkatien Fariri8rr. IPA agrees to scll,transfer,grant,convey and
assign to the Unit 3 Owner Participants and the Unit 3 Owner Participants agree to purchase as provided
in Article V,ownership interests and other rights and interests,in accordance with their respective Joint
Common Facilities Percentages,in the Microwave Communication Facilities,including fee.Ieasehod and
other property interests(exclusive of the portions of the Microwave Communication Facilities allocated
and providing service for the Southern Transmission System and the Northern Transmission System)
which constitute Joint Common Facilities;provided that such sale.transfer conveyance and assignment
shall be subject to obtaining any required licenses,permits or approvals from regulatory or other
governmental bodies. Such sale,transfer.grant,conveyance and assignment shall be effected pursuant to
appropriate deeds,bills of sale,licenses and other instruments of transfer and assignment provided by IPA
and reasonably acceptable to the Unit 3 Owner Participants.
(e) Pvmirr Lu ensrs Etc IPA agrees to sell,transfer and assign to the Unit 3 Owner
Participants and the Unit 3 Owner Participants agree to purchase as provided in.Article V riehts and
mterests,in accordance with their respective Joint Common Fc Imes Percentages,in and to IPA's rights
and interests in and to the permits,licenses,software.training programs,studies,approvals and other
similar intangible property constituting Joint Common Facilities,subject to obtaining any required
ceulatory.governmental or other approvals or consents. Such sale.transfer and assignment shall be
pursuant to appropriate instruments of transfer and assignment, licenses, certificates and ether
docurnentatinn pnn,ided by 1p%and reasonably acceptable to the Unit 3 Owner Participants.
(a) Acquisition of!dim C mman Faciliries Rights and Inter rtt.Subject to the simultaneous
purchase of the Unit 3 Site as provided in Section 5.1 and fulfilment of the conditions to Closing as
provided in Section 5.3.the Unit 3 Owner Participants shall acquire and purchase the ownership interests
and other rights and interests in and to the Joint Common Facilities sold,transferred,conveyed,leased
and assigned as provided under Section 4.3 and pay the Joint Common Facilities Purchase Price therefor
as provided in paragraph(b)of this Section 5.2.
(b) Payment of Installments of Purchase Price. Payments to IPA of the Joint:Common
Facilities Purchase Price for the ownership interests and other rights and interest in the Joint Common
Facilities shall be made by the Unit 3 Owner Participants in immediately available funds and in
installments as follows:
(i) S by the date of the start of construction of Unit
3 at the IPP Site;and
(ii) 5 by the first day of the 24"calendar month
following the calendar month in which the start of construction of Unit 3 at the IPP Site shall
occur.and
(iii) an amount equal to the balance of the Joint Common Facilities
Purchase Price(which includes the credit for the actual costs to the Unit 3 Owner Participants of
the Required Common Facilities Additions and Improvements)shall be paid at the Closing.
Any taxes and payments in lieu of taxes applicable to the Joint Common Facilities shall be apportioned as
between IPA and the Unit 3 Owner Participants as of the Closing Date.
(c) Escrowed Funds. The amounts paid to IPA prior to the Closing Date as set forth in
paragraph(bNi)and(it)of this Section 5.2 shall be held in escrow by IPA and deposited in an escrow
account under an escrow,agreement with a bank selected by IPA.The terms and provisions of the escrow
,.n_.n_s .24-
agreement shall comply with the provisions of the Common Facilities Agreement and shall he reasonably
satisfactory to the Unit 3 Owner Participants. The escrow agreement shall provide for the release of the
escrowed funds to IPA on the Closing Date,unless prior thereto the construction of Unit 3 shall be
abandone4 terminated or permanently discominued,as determined under the Unit 3 Construction lease
and Agreement,in which case the amount of the escrow,account shall be first applied to pay the costs,not
otherwise paid or provided for,of the restoration of the Unit 3 Site and other affected areas of the IPP Site
as provided in.Article XV of the Unit 3 Construction Lease and Agreement,and the remaining amount.if
any,shall be refunded to the Unit 3 Owner Participants,respectively,in proportion to their respective
ownership interests in Unit 3. Pending application in accordance with this Section 5.2,amounts in the
escrow account shall be invested upon direction of IPA in bonds or other obligations of the United States
of America or of Federal agencies fully and unconditionally guaranteed as n timely pay men(of principal
and interest by the United Slates of America or in repurchase agreements collateralized by such bonds or
other obligations,each of which shall mature nor later than the then estimated Closing Date. hrcome Met
of any losses)from such investments shall be paid to IPA as received.
Section 5.3 Conditions to Ch"Mr
The sale,transfer,conveyance,lease and assignment of the ownership interests and other rights
and interests In and to the Joint Common Facilities and the payment of the Joint Common Facilities
Purchase Price therefor by the Unit 3 Owner Participants as set forth in Section 5.2 and the sale and
conveyance of(he Unit 3 Site and the payment of the purchase price thereof as provided in Section 5.1
shall be subject to the following occurring prior to or at the Closing:
(i) the Unit 3 Construction Lease and Agreement and the Joint
Operating-%greemem shall have been authorized,executed and delivered by each of the parties
thereto:
obligated on the same basis and such obligations shall be payable to IPA in the same manner and in
accordance with the same terms and conditions as apply under the Unit 3 Ownership Agreement to the
payment by the Unit 3 Owner Participants of construction costs of Unit 3. (The foregoing 6 subject to
revision following a review of the Unit 3 Ownership Agreement]. Except as otherwise provided by
Section 8.2,the respective payment obligations of the Unit 3 Owner Participants,respectively,shall be in
the same proportion as their respective ownership interests in Unit 3 m set forth in Exhibit B.
Section 6.2 Collective Action by Unit 3 Owner Pardriaanls
Whenever pursuant to the provisions of the Common Facilities Agreement the Unit 3 Owner
Participants are to make any determination,grant any approval or consent,or otherwise direct any action,
such determination,grant of approval or consent or direction of action shall be controlled by the Unit 3
Owner Participants owning_%or more of the undivided ownership interests in Unit 3 and decided
pursuant to action of the Unit 3 Owners'Committee under and pursuant to the terms of the Unit 3
Ownership Agreement. [The foregoing is subject to revision following a review of the Unit 3
Ownership Agreement].
ARTICLE VII
ADDITIONAL FACILITIES AT IPP SITE
Section 7.1 Additional IPA Generation or Transmission Facilities
Notwithstanding anything to the contrary in the Common Facilities Agreement,EPA shall have
the right to cause the installation,construction or improvement and the operation at the IPP Site of any
additional electric generating unit or units and electric transmission facilities,including all appurtenances;
provided that the same shall not interfere(except with the approval of the Unit 3 Owner Participants.
-28-
which approval shall not be unreasonably withheld)with the use of Unit 3 for any of the purposes thereof
or the support and services provided by the Joint Common Facilities for Unit 3.
Section 7.2 additions to and A aMcations of F.xistine FaciGtier
IPA shall have'tie right to cause the enlargement,modification,replacement,reconstruction.
improvement or addition to Units I and 2 and the facilities of the Southern Transmission System or the
Northern Transmission System at the IPP Site; provided that such enlargement modification,
replacement,reconstruction.improvement or addition to and the operation thereof shall not interfere
(except with the approval of the Unit 3 Owner Participants,which approval shall not be unreasonably
withheld)with the use of Unit 3 for any of the purposes thereof or the support and services provided by
the Joint Common Facilities for Unit 3.
Section 7.3 Instruments of Conveyance
The Unit 3 Owner Participants agree to furnish any instruments of conveyance and other
documentation as may be reasonably requested by IPA to provide it with good title to any properties on
which any Additional IPA Facilities complying with Sections 7.1 or 7.2.as applicable,shall be located or
which any such Additional IPA Facilities shall rxherwise utilize.
ARTICLE V1II
EFFECT ON TAX EXEbIPT STATUS OF IPA BONDS
Section 8.1 Y.Adverse Ef ect oa Tax Esemat Stars
It is understocd by the Panics that;he IPP\.�recmerns preclude rmy•ale or disposition of rights.
properties, facilities and appurtenances of the Intermountain Power Project for the construction or
operation of other units.facilities or properties at the IPP Site that adversely affect the eligibility for
ARTICLE X
INSURANCE
Section 10.1 Insurance Prior to Closing Date
At all limes prior to the Closing Date IPA shall maintain or cause to be maintained with respect to
the Joint Common Facilities all risk property insurance,general liability insurance with respect to third
party personal injury and property damage and such other insurance in amounts and with such insurers as
provided for in the[PP Agreements and consistent with Prudent Utility Practice.Proceeds of such
insurance shall be applied as provided for in the[PP Agreements.
Section][0.2 Insurance On or After Closine Date
At all times on and after the Closing Date IPA and the Unit 3 Owner Participants shall procure
and maintain or cause to be procured and maintained insurance with respect to the Joint Common
Facilities,all as provided in the Joint Operating Agreement.
ARTICLE XI
TAXES
Section 11.1 Jmoosition of Tares. Parmend or Fees in lieu of Taxes and Impact
Alleviation or:Niliaatian Parmenrs
From and after the Closing Date.IPA and the Unit 3 Owner Participants shall each separately
report,file returns with respect to and otherwise be responsible for the payment of all property taxes.
assessments,payments or fees in lieu of taxes and impact alleviation or mitigation payments with respect
to their respective undivided ownership interests in the Joint Common Facilities or gross receipts
therefrom.Each of them shall use its best efforts to have any taxing or other governmental authority
-32-
levying.imposing or olherw ist charging any taxes,assessments,payments or fees in lieu of taxes or
impact alleviation or mitigation payments,levy,impose or charge the same directly against the ownership
interest of such Party or gross receipts therefrom.All such taxes,assessments,payments or fees in lieu
of taxes or impact alleviation or mitigation payments Imposed,levied or charged against or with respect
to IPA's or any of the Unit 3 Owner Participants undivided ownership interests in the Joint Common
Eacilkies or gross receipts therefrom shall be the sole responsibility of and+lull be paid by or on behalf of
the Party on whose ownership interest of gross receipts therefrom such taxes,assessments.payments or
fees in lieu of taxes or impact alleviation or mitigation payments are imposed levied or charged.
Section 11.2 Exemptions
it is recognized that certain Parties,based on their governmental status,may be entitled to certain
exemptions from taxes,assessments,payments or fees in lieu of taxes or impact alleviation or mitigation
payments with respect to their respective ownership interests in the Joint Common Facilities or gross
receipts therefrom. Accontingly.the Parties agree to furnish all reasonable cooperation in order that the
benefits from such tax exemptions may be obtained to the extent permitted by applicable law,provided
that each Party claiming exemption from any taxes,assessments,payments or fees in lieu of taxes or
impact alleviation or mitigation payments shall be responsible for and pay all expenses in connection with
pursuing such exemptions or claims thereto.
Section 1.1.3 Oh r Tares and Fees
The Unit 3 Owner Participants shall he responsible for pay men of all sales and transfer taxes and
—ording fees,if any,incurred in connection with the sale,conveyance,transfer or assignment of the real
or personal property under and pursuant to the Common Facilities Agreement.
ARTICLE XII
33-
failure of any governmental agency to timely act.Nothing contained herein shall be construed so as to
require a Party to settle any snake or labor dispute in which it may be involved.
(b) Renoval of Uncontrollable Force.Any Party rendered unable to fulfill any obligation by
reason of uncontrollable forces shall exercise due diligence to remove such inability with all reasonable
dispatch and shall take reasonable steps to mitigate any damages incurred by it during the period when
such uncontrollable force resulted in such inability.
ARTICLE XV
CLAISIS AND LITIGATION
Section 15.1 China and Lfo'tradoa
Each of the Parties shall notify the other Parties of any claim,demand or right of action asserted
or any action,suit or proceeding threatened or instituted against it which arises out of its undivided
ownership interest or other rights or interests in the Joint Common Facilities or the operation thereof or
involves in whole or in material part the interpretation or performance of the Common Facilities
Agreement
ARTICLE XVI
RETIREMENT FROM SERVICE
Section 16.1 Retfrenent o(L'nfts 1 and 2
-36-
Upon the retirement from service and decommissioning of both Units I and 2 while Unit 3
continues in operation.IPA shall restore the Units I and 2 site as provided under the Joint Operating
Agreement. In such event IPA shall sell,transfer,convey and assign to the Unit 3 Owner Participants
undivided ownership interests and other rights and interests in accordance with their respective ownership
interests in Unit 3 and the Unit 3 Owner Participants shall purchase from IPA all IPA's ownership
interests and other rights and interests in the Joint Common Facilities(other than IPA's water rights
constituting Joint Common Facilities).Unless the Parties shall agree otherwise,the purchase price
therefor to be paid by the Unit 3 Owner Participants in accordance with their respective ownership
interests in Unit 3 shall be an amount equal to the estimated salvage value allocated to 1PA's ownership
interests and other rights and interests in the Joint Common Facilities sold and conveyed. Such estimated
salvage value shall he determined by a Decommissioning Consultant selected by IPA and Ls Angeles
and reasonably acceptable to the Unit 3 Owner Participants. if IPA,Los Angeles and the Unit 3 Owner
Participants are not able to agree on the selection of such Decommissioning Consultant,the Parties agree
that such selection shall be made pursuant to the dispute resolution procedures set forth in the Joint
Operating Agreement.
Section 16.2 Retirement of Unit 3
Upon the retirement from service and decommissioning of Pail 3 while Units I and'_or tither of
them,continue operations,the Unit 3 Owner Participants shall restore the Unit 3 Site as provided under
the Joint Operating Agreement In such event the Unit 3 Owner Participants shall sell.transfer.convey
and assign to IPA and IPA shall purchase from the Unit 3 Owner Participants the Unit 3 Site and all the
Unit 3 Owner Participants ownership interests and other rights and interests in the Joint Common -
Facilities. Unless the Panics agree otherwise.the purchase price therefor to be paid by IPA shall be an
amount equal to the e<timawd salsage value allocated to such ownership Imcrents end other rights and
interests in the Joint Common Facilities iohher than the leasehold interest in the water constituting a Joint
Common Facility which reverts to IPA upon termination of such lease)sold and conveyed. Such
Section 18.2 Defaaft bs IPA
(a) Demand for Payment or Performance. Upon the failure of IPA to make any payment
when due under the Common Facilities Agreement or upon the failure of IPA or Los Angeles to perform
or cause to be performed any other obligation to be performed by it pursuant to the terms and provisions
of the Common Facilities Agreement,the Unit 3 Owner Participants or any of them may make written
demand upon IPA for such payment or performance. Copies of such demand shall be concurrently
delivered to all other Parties.
(b) Pavmenr Default. In the case of the failure of IPA to make any payment when due under
the Common Facilities Agreement and such failure is not cured within ten days from the date of demand
made pursuant to Section 19?la),such failure shall constitute a default of IPA at the expiration of such
ten day period.
(c) Failure of Performance. In the case of a failure of IPA or Los Angeles to perform any
obligation under the Common Facilities Agreement other than to make payments when due thereunder
and such failure is not cured within thirty days from the date of demand made pursuant to Section I8.2(a)
or,if such failure could not be cured within said thirty days,within a reasonable period after the date of
such demand so long as IPA or L. Angeles is diligently pursuing a cure.such failure shall constitute a
default of IPA at the expiration of such thirty day period or longer period,as applicable.
(d) Remedies. Upon the occurrence and continuance of any default by IPA arising from a
failure of payment or performance under the Common Facilities Agreement. the Unit 3 Owner
Participants may take any action at law or in equity,including an action for specific performance,to
enforce the Common Facilities Agreement against IPA and to recover from IPA any loss,damage or
costs.Including attorneys'fees and disbursements and court and collection cost.%incurred by reason of
such default.
Section 18.3 F.er^ire of Remedies by a Party
No remedy available to a Party under this Article XVIII is intended to be exclusive of any other
remedy available to such Party under this Article XVIII,but every such remedy,hall be cumulative and
may be exercised by such Party from time to time and as often as may be deemed expedient,except where
the esercise of any one of such remedies precludes its further exercise or the exercise of any other
remedy. No delay or failure by a Party to exercise any remedy provided under this Ankle XVIIt shall
impair the right of such Party to exercise any—h remedy or be construed to be a waiver of such right or
of any default by another Party.
ARTICLE XIX
REPRESENTATIONS.AND WARRANTIES
Section 19.1 R,aresenrations and fVarrandes of the Parties
Each Party hereby represents and warrants to each of the other Parties as follows:
(i) it is duly organized,validly existing and in goal,landing under
the laws of the State of its incorporation and has the corporate power and authority to enter into
the Common Facilities Agreement,to perform its obligations thereunder and to consummate the
[ran+�ntions contemplated thereby;
(it) it has full power and authority to execute.deliver and perform ax
obligations under the Common Facilities Agreement and the Common Facilities Agreement has
been duty executed and delivered by it and constitutes its legal.valid and binding obligation
enforceable in accordance with its terms,except as enforcement thereof may be limited by
applicable bankruptcy,insolvency.reorganaafton or similar laws affecting the enforcement of
creditor:rights generally and general equitable principles;
Section 20.2 Adverse Effect on Tar Er r�A Bonds
Notwithstanding Section IU.I, no conveyance, assignment or transfer. including, without
limitation,any conveyance,transfer or assignment pursuant to a foreclosure sale or other exercise of
remedies upon a default,shall be permitted if IPA shall determine that such conveyance,transfer or
assignment will result in an adverse effect on the Federal tax exempt status of interest on the IPA Bonds
unless such adverse effect shall be remediated in accordance with the Internal Revenue Code and
regulations thereunder or provision reasonably acceptable to IPA shall be made for such remediation and
IPA shall be fully indemnified and held harmless from any and all additional debt service and other
amounts,costs and expenses associated with such remediation.
ARTICLE XXI
IPP AGREEMENTS
Section 21.1 Obligations of 1PA and Los Anreks
The Parties recognize that IPA is the owner of the Intermountain Power Project and Los Angeles
serves as the Project Manager and Operating Agent thereof and as parties to the IPP Agreements each of
them has obligations,duties and responsibilities with respect to the Intermountain Power Project and to
the IPP Power Purchasers and other patties under the IPP Agreements. Accordingly,it is understood and
agreed by the Parties that IPA's and Los Angeles' performance of such obligations, duties and
responsibilities under the IPP Agreements and their observance of the rights and interests of the IPP
Power Purchasers and the other parties thereto and of the terms and previsions of the IPP Agreements
shall not be deemed to contravene or to constitute a conflict of interest or a breach or default by either of
them under the Common Facilities.Agreement. Nothing in the Common Facilities Agreement shall be
construed as requiring either IPA or Los Angeles to take,or cause the taking of.any action in violation of,
or to prevent IPA or Los Angeles from exercising,or causing the exercise of,any of its rights under.the
IPP Agreements,or that would impair the rights of,or have any other adverse consequences to.any IPP
Power Purchaser under the IPP.Agreements.
Section 21.2 Per by Praiect 1lamerr and Operaine.Arent
It is further recognized by the Parties that pursuant to the IPP Amended and Restated CM&O
Agreement Los Angeles acts in its rapacity as the Project Manager and Operating Agent of the
Intermountain Power Project and as such Los Angeles is responsible,among other things.for the
negotiating,contracting for and administering the Intermountain Power Project. Accordingly,as a Party
under the Common Facilities Agreement.performance by Los.Angeles under the Common Facilities
Agreement shall be consistent with and Los Angeles shall be carrying out its duties and responsibilities
under the LPP Amended and Restated CNI&O Agreement
ARTICLE XXII
COOPERATION AND APPROVALS
Section 22.1 C'ooperadon
The Parties w ill cooperate.each with the other,in the activities provided for under the Common
Facillues Agrecment rotating to Unit?and the Joint Co—st Foe h—,including.H irhout!imitation,the
execution and filing of applications for authorizations,permits and licenses,deeds of conveyance of tide
to properties and interests therein,bills of sale,instruments of assignment and such other documentation
as may he reasonable necessary to carry out the provisions of the Common Facilities Agreement:
provided however that such cooperation shall not rnaul it result in any unreasonable interference with
respect to the operations of the Intermountain Power Project.
Section 22.2 .Approvals
n_s 45_
Any Party may,at any time,by written notice to the other Parties,designate a different address or
a different person for the receipt of notices under the Common Facilities Agreement.
ARTICLE XXVI
GOVERNING LAW
Section 26.1 Governine few
The Common Facilities Agreement shall be interpreted.governed by and constmed under the
laws of the State of Utah,provided that the laws of the State under which a Party was created or
organized shall determine the authority of such Party to execute and perform its obligations under the
Common Facilities Agreement.
ARTICLE XXVII
MISCELLNEOUS
Section27.1 Further Assurances
Each Party wilt execute and deliver such instruments,documents and assurances.or take such
further action,upon the reasonable request of another Party,as may be necessary or appropriate(i)to
carry out the intent and purpose of the Common Facilities Agreement,(ii)to protect any of the rights and
remedies provided or intended to be provided by the Common Facilities Agreement,or(iii)to effect a
change in an Exhibit required or intended to be made by the Common Facilities Agreement..
Section 27.2 No Implied Waiver
Any waiver at any time by any Parry of its rights with respect to a default or any other matter
arising in connection with the Common Facilities Agreement shall not be deemed a waiver with respect to
any subsequent default or matter.
Section 27.3 Severabiffty
48-
[n the event that any provision of the Common Facilities Agreement shall be determined m be
invalid or unenforceable in any respect,swh determination shall not affect any other provision of the
Common Facilities Agreement.which shall remain in full force and effect
Section 27.4 Independent Decisions ofParNes
Each Party hereby represents and agrees as follows:
(i) it is acting for its own account,has been represented by attorneys
selected by it in connection with the negotiation and execution of the Common Facilities
Agreement,and has made its own independent decision to enter into the Common Facilities
Agreement and as to whether the Common Facilities Agreement is appropriate or proper for it
based upon its own judgment and upon advice from such attorneys and other advisers as it has
deemed necessary;
(if) it is not relying on any communication(written or oral)of any
other Party as advice or a recommendation to enter into the Common Facilities Agreement or as
any assurance or guarantee as to the results of the Common Facilities Agreement;it being
understood that information and explanations related to the terms and conditions of the Common
Facilities Agreement shall no be considered advice or a recommendation to enter into the
Common Facilities Agreement and any communication Iwnuen or oral)received from another
Party shall not be deemed to be an assurance or guarantee as to the expected results of(he
Common Facilities Agreement;
On) it is capable of assessing the merits of and understanding(on its
own behalf or throueh independent professional advice)and understands and accepts.the terms.
conditions and ri kx of the Common Facditics.X reement and It is also capable of-soning.and
assumes.the risks of the Common Facilities.agreement:and
EXHIBIT A
DESCRIPTION OF UNIT 3
A-I
EXHIBIT B
OW NERSHIP INTERESTS OF UNIT 3 OWNER PARTICIPANTS
EXHIBIT C
Description of Existing ComValuss of Exiatl mon Facilities Fair Value for Unit Ws
! Common Fadlif� ; Shand Existing
I Common FaeiliUss
Settling Basin Raiaim PnmDing Sys[em
Recovered Water Pumping System
I Water Treatment: i1,0s3000 5351,000
_Waa ter Treatment Building j
Water Treatment Facility(Control Building) _ —
Water Supply Pumps --
Solids Contact Units �—
SCU Sure Tanks —�—
IGme ---
Soda Ash Silo_
Soda Ash Feed and? ton Systems
Lime Slaker S stems
Coagulant Storage&Feed Systems j
�—
Pretreaftnent Sludge Thickener System
Sodium Hypochlorite Feed System
-Cycle Makeup Feed Tank
Cycle Makeup Treatment System
De-mineralized Water Storage Tanks _
De_minrralized Water Tralufer System_
Water Analysis Lab and Equipment
Circulatin Water Treatments tem —-----------------------
X.Ash HardBn
Ash Water Recycle Pum Station&Pi in -
Flyash Silos
Ash Fluidizing System
XI.Sludge HandlhM T—
Sludge Conveyors —
Slud¢r Emergency S[ackout Facility__ �
Sludrr Stxkout Fa dity__
SIu�Landfill
Dust Collector Sysems__. __ ''
XII.MucilLyConditionfialt
C-1
EXHIBIT C
Yalusa of E:istlng Fair Valus far UnH we
Descripdoo of Existing Common Facilities I Common FecI'M Shen a Existing
'� Common Facllitles
SIaJkCondivompf,Building
Sludge Transfer Buildin s 1.3&4 __-..___
Sludge Transfer Structure 2
Shidge Emergency Radial Stacker 1
Sludge Radial Slacker 2
Thickeners... —
ThickenerFeedMixTank
Filter Feed Tank
Thickener Feed PurnLm Recycle fumpl,Filter Feed Pump
i
Polymer Addition Systems � _._ -..____ —
Sludge/FIXash Puvimill Mixing Stems __ _-
DuctCol4ction
X►11. Warehousing______-- $20 9000_—_--.-_. S_8.763.000--
Main Warehouse(located in GSB Structure)
Construction Warehouses I thru 4
Lube Oil Storage Building
Paint.&Solvent Storage Building
Saivag_e Evaluation
X►V. C,--Bu idin /tire Note I td w.l 5�3,912 000 S119,637 333 _
Utility Services Building
:>dministration Building
Construction Management Office Buitding_
She Sr:nwes Buddies_______
Common Control Room(located in Control —
BulkStore a Buildin¢` ___.___
General Services Bmldin _
Weld Testing Facility___
XV. Communications and Com inter Equipment $7.432,000 _ $2,477_333
llobile Radios&_Pagers_ —
FiFwO tie Neiaork
EXHIBIT C
Values of Existing Fair Vslw for Unit S's
Description of Existing Common Facilitip Common Facilities Slays of ExMnq
Commas Fsdlitlas
Pertoitted Landfills(Sanitary and Combustion B�Productsl
Sewage Trea[mrnt Faeilit_ ay nd Equipment
Warehouse Inventor_
Vcw Tmining-Simulator and other Tmim&-_ ra -n Pro ms —�—__ -- — —
.XXI.OperstimW Undeney/GoodwiWDeveloprmnt Fee S82,at3.0uo s27.471 o00
mun Cost Reductions +.-- -
Design Cost Savin s Based on Existing i.ayouts
[m t!Ni[i anon Payments
- --
Environmental Impact Study --
S my//Rouung Study
PcrmitsO", rovals j
Coordination Br[ween Design En inert and Environmental Consultant _
Owner Cost Savings _ �-
6ptoratinut Agent Cost Savings
T —
TOTAL: -- -
-----------------------_.----------
4F
Votes: —.—..—
I.Values of Existing Common Facilities arc subject to adustmen[as
provided in Article III of the Common Facilities.4grcrment. I
2.All buildings include space conditioning,lighting,power.plumbing
and furnishings.
C.7
-I
s a�
I
I 3
s it i �
I
i
1?Xillltl'1'F: EXHIBIT E
Ikxriptiou or Joint C•umnim.Facililin Dtscripdon of Joint Common Fadhfies
_ Coal Stm.kout S)-wm -
I. Linwsi ne Preparadun _ _.. Coal Reclaim System and Facility
Lutx t ne.Prepammon Buildutt _. Fuel Od Truck UnloadiUFacility
l utx,ame Ctu ftrr Building Fuel Od Stom$t Tanks
Lau one Dal Dm and k•ede �+mnw _ Fuel Od Disl-but(_ _
1 t tx t ie Pul t i etas System Dust Control Systems
Limestone tone Clas,th ation,�tem. —-_
Lin—t t•Slun)Storeye,Tan" III. Fuel Ana
I tnw i t Shirt)Dstrihutimi tilueno_-- Fuel l..dt and Analysis E.1mpnent - -
Pre 1,e;anwnt ShWj_e Sturm 7 a tk and Feed sy tent__--. _-.- _ As-R 'ved Fucl Samplinj Systems(Railcar and Truck)
Rail ar Identificnuon and Wei�ht�Sy tent_ _
Water ti hg h a xxiattd w ith IV. Yroyerty Site
Sure It a water nou,in 5 mutual water c m u i•s Property at the Oenetaling Station ite consisting of the sues or the
_--- ---- ---- -_-- - Joint Cunntwn Facilities but txeludutthe UnitlSite
On Site Well W 11 Consm act n&Will P t t}'+.__.. V. 1 nmeslnne H+utdlirrg,__
Limeswrw Truck Unlua tajj mil in
A)Pu
S 11. Water tiupply _ _... _..__ Lirmu ix linluad
mp m�wuun m System.
.,_ Lirne t nr Smmg Sdo
Lime tux,Rrcluim Sy.4m.
Limestone Convey ors
On,ur Raw Water SuP1ll S}shm _.— _--
Ltmesume Emergent Reclaim System
Deming taliinti<m Mukcu t Water So t,I�.Sstem
EXHIBIT F.
FCllllll'1'1?
Demriptiva of Juint Con on Facilittea
Drauriptiun uF Joint Cwnmuu Facdilie
Thickener Ferd pumps,Re ce._..-m Fe._d.._Pu._m.._a
XV ('ummuntatiuls nJ(omFrer Fyuipnau Sudg VavumFilersSyste_ . -.___..
P.1 uwr Addition
Mrh-le N:rJiu.S Pain .._ ___...._.. _.... Sluff/F�ualr Pu mlll Miain Sal•nta -
F•-optic Network _.. ..___.. _... _._. Dusl Wit lm S Melly _ -
C mlwtor Srr.•ruipnxnt
P r 11 Sr Spo,ifw Task Cl ulluterq_- _._. X111 Warehuusin� _ _
Tc le phone,A C lbllna Mam Warehouse(located iu GSB Slr lure l
PBX I•lepholx:Suucll _ .._.. ......_._ _. Conn moon Wa houses I tlnu 3
1 x Lyulpnxnl _ _ __.- .. _ .. -_.. --._.. Lube 011 Stw'ake Building
Nelw,rrk Printery _. - _ _ __-.._ - Paint K Solvent Stara&Buildiu
Saly�,Evalwlion Bu IJiI�.._ _
pl In 1'✓�Iq and I:nx•r •Ix C ml unie;ll y.SYalema
MalctwL Mern Ssu•m Srhw.ue _-
_ XIV. Caumon Buildi (Sen Note 1 Beluw.)
VVL Electrical ___.__.. _ __.__._ _.__ utility'S'"ices,BuiIdin
E ixrerncY G�nclalion SYyt ma.A._B A C _._ _.... .._ _ Admurl t.firm Buildin�__,..._
Lllxl ,..ncY C'n nt on Buildln
SreuuJmY Llnu S huauona _ _, _ Site S"-lic s Building---
m
_._...
Comon Control Roum l loeatul In Cuntrtd Building
I. l ,,t h 1 kV s-wher r I tie break,,"I ea_h uu 1 11 ItehV` Bulk Slura a BuilJin
I nrnn,uw"n Sw_ildlEmj F olility ___..._. G—ral Scmces Buildin
I til.a lun S r i.c Ra, (It:wk,K�I-1 WeIJ I•,tine Fncilil
Eb
E-7
1
EXHIBIT E
h:XHlltl'I'li
Ueacriptnm of Joint Common Facilities
Description of Joint Common FaaillrLn
_..... .. -__ iv.hn Water Pumps
F..'i lnn."WI imp._t Sludy _._...__.____._____._____. Caunl Lmed Drams Pitches ..
Siu Ix/Roulin#.Study, _.__ _ .._ .._.... ._..-...__.. Potable\4,r(er SYstcnu __
_..__..... . -._. Fi�dr ern Swrgc and Delivery Sy taw
Coordinaliun Brlwear Iksiyn F.nbincer auJ Grvironrrxnlal Auzilur'y Builer Systems
Vehide Fuel Dispensir�Slalion
Ow t(.ust Sa'ius - - .._.__. _ Site Rud Cunstrtxuun
Coral Wti n Gate Slrucmrc -
_
Drairu2 and Site Work ...—.._.___._.._..
Nolrs: .......... ...__... _. ._. Sitef
First At,]Clinic_. _ _..._________.
1'ennittul Landfills(Sanitary_and Cumhustion k_Pruducls)-
1.All huildinbs include space cundiuuning,1191111119,Puwer. --
Trcauntm hit dit�an-
up d Frjnrenl
.Plums ur•anJ(u ushm s. .___ -
N=w_'I rairrirtii_Sinutlator and ollwr Traini'Ia_NM rann
XXL o rLervuonxl EfBcirnr t/GoudwiWDevel nenl Fee__,_,_,_
Desr i Cosl Savi_n�+B_aud on Lztstw�h.zyans._._.___ _..__.._-
Im act h116936un Pa menu
E-Ill
EXHIBIT
FORMS OF JOINT COMMON FACILITIES BILL OF SALE.LICENSE
AND ASSIGNMENT 08 INSTRUMENT OF TRANSFER
H-1
EXIIJB T i
FORM OF JOINT COMMON FACILITIES SPECIAL
WARRANTY DEED IOR Dt'EUSI
DRAFT OF 4/12/06
UNIT 3 CONSTRUCTION LEASE,USE AND
SERVICES AGREEMENT
BY AND AMONG
INTERMOUNTAIN POWER AGENCY
THE CITY OF LOS ANGELES
ACTING BY AND THROUGH
THE DEPARTMENT OF WATER AND POWER
AS IPP PROJECT MANAGER AND
OPERATING AGENT
AND
THE UNIT 3 OWNER PARTICIPANTS
REFERRED TO HEREIN
Dated as of 200—
45669950.7
TABLE OF CONTENTS
(continued)
Page
Section 7.2 Unit 3 Plans and Specifications .........................................................26
Section 7.3 Completion of Unit 3.........................................................................26
ARTICLE VIII CONSTRUCTION ACTIVITIES; OWNERSHIP OF UNIT 3
LEASEHOLD IMPROVEMENT............................................................27
Section 8.1 Use of Unit 3 Construction Properties and Facilities......................... 27
Section 8.2 Design and Construction; Switchyard Additions............................... 28
Section 8.3
Licenses, Permits and Approvals.......................................................29
Section 8.4 No Warranties ...................................... 29
..............................................
Section 8.5 Right of Entry .................................................................................... 30
Section 8.6 Hazardous Materials.......................................................................... 31
Section 8.7 Liability for Activities........................................................................ 31
Section 8.8 Environmental Compliance ............................................................... 32
Section 8.9 As Built Plans and Specifications...................................................... 33
Section 8.10 The Unit 3 Leasehold Improvement Owned by the Unit 3
OwnerParticipants............................................................................. 33
ARTICLE IX ELECTRIC,WATER AND OTHER SERVICES .................................. 34
Section 9.1 Electric Service.................................................................................. 34
Section 9.2 Water Service..................................................................................... 35
Section 9.3 Other Services.................................................................................... 36
ARTICLEX INSURANCE........................................................................................... 38
Section10.1 In General...........................................................................................39
Section 10.2 General Liability Insurance................................................................40
Section 10.3 Auto Liability Insurance ..................40
..................................................
Section 10.4 Workers' Compensation and Employers' Liability Insurance...........40
Section 10.5 Aircraft Liability Insurance................................................................41
Section 10.6 Pollution Legal Liability Insurance ...................................................41
Section 10.7 Professional Liability Insurance ........................................................41
Section 10.8 Other Insurance..................................................................................42
ARTICLE XI TAXES AND OTHER IMPOSITIONS ..................................................43
Section 11.1 Payment of Taxes and Impositions....................................................43
Section11.2 Exemptions ........................................................................................44
45669150.7 -11-
TABLE OF CONTENTS
(continued)
Page
ARTICLE XIX DISPUTE RESOLUTION ................•... 57
Section 19.1 Settlement By Project Consultant ............57
..........................................
Section 19.2 Effectiveness of Settlement................................................................ 58
Section 19.3 Prohibitions........................................................................................ 58
Section 19.4 Costs and Expenses............................................................................ 59
Section 19.5 No Waiver of Right to Judicial Action.............................................. 59
ARTICLE XX REPRESENTATIONS AND WARRANTIES.......................... ............60
Section 20.1 Representations and Warranties of the Parties...................................60
ARTICLE XXI SUCCESSORS AND ASSIGNS.............................................................62
Section 2 1.1 Transfer or Assignment......................................................................62
Section 21.2 Affect on Tax Exempt Status of IPA Bonds......................................64
ARTICLE XXII PAYMENT OBLIGATIONS AND DETERMINATIONS OF
UNIT 3 OWNER PARTICIPANTS........................................................64
Section 22.1 Several Obligations............................................................................65
Section 22.2 Determinations...................................................................................65
ARTICLE XXIII COOPERATION .......66
Section 23.1 Cooperation Among the Parties.........................................................66
ARTICLE XXIV OBLIGATIONS UNDER IPP AGREEMENTS .....................................66
Section 24.1
Obligations of IPA and Los Angeles.................................................66
ARTICLE XXV PERFORMANCE UNDER IPP AGREEMENTS ..................................67
Section 25.1 Performance by IPP Project Manager and Operating Agent;
Liability..............................................................................................67
Section 25.2 Performance by Intermountain Power Service Corporation..............68
ARTICLEXXVI NOTICES........................ ........................................................................68
Section26.1 Notices ...............................................................................................68
Section 26.2 Change in Designation.......................................................................69
ARTICLE XXVII GOVERNING LAW.........................................................................
Section 27.1 Governing Law ..................................................................................69
ARTICLE XXVIII FURTHER ASSURANCES .....................••.70
............................................
Section 28.1 Further Assurances............................................................................. 70
ARTICLE XXIX NO IMPLIED WAIVER..........................................................................70
45669950.7 -iv-
UNIT 3 CONSTRUCTION LEASE,USE AND SERVICES AGREEMENT
This Unit 3 Construction Lease, Use and Services Agreement, dated as of
, 200_, by and among INTERMOUNTAIN POWER AGENCY ("IPA"),
a political subdivision of the State of Utah organized and existing under the Interlocal
Cooperation Act constituting Title it, Chapter 13 of the Utah Code Annotated, 1953, as
amended, THE CITY OF LOS ANGELES, a municipal corporation organized and existing
under the Charter of the City of Los Angeles and the laws of the State of California, acting by
and through the DEPARTMENT OF WATER AND POWER ("LOS ANGELES"), in its
capacity as Project Manager and Operating Agent of the INTERMOUNTAIN POWER
PROJECT ("IPP"), [INSERT NAVIES OF UNIT 3 OWNER PARTICIPANTS] (collectively
referred to herein as the "Unit 3 Owner Participants", and IPA, Los Angeles and each of the Unit
3 Owner Participants are referred to herein individually as a "Party" and collectively as
"Parties") is made with reference to the following:
RECITALS
IPA owns and operates IPP, which consists of two coal-fired steam-electric generating
units, switchyard facilities and other related improvements, properties, equipment and facilities
("Units 1 and 2" as defined herein), and other facilities, located on a site (the "IPP Site") near
Lynndyl, in Millard County, Utah, together with transmission systems, including all additions
thereto and renewals and replacements thereof hereafter constructed or acquired.
All of the capacity and output of the Intermountain Power Project have been sold by IPA
to 36 entities (collectively, the "IPP Power Purchasers") pursuant to separate power sales
45669950.7 -1-
Project or impair or adversely affect the rights or security of the holders of bonds or other
indebtedness of IPA ("IPA Bonds" as defined herein), and have further determined that the
acquisition and use by the Unit 3 Owner Participants of interests in certain Intermountain Power
Project common facilities and the coordinated operation of Unit 3 with Units I and 2 will be
beneficial to and in the best interests of IPA and the IPP Power Purchasers.
IPA has also determined that this Agreement and the conveyance, granting or assignment
of the leases, licenses, easements and other rights with respect to the Intermountain Power
Project under this Agreement does not and will not have any adverse effect on the federal tax
exempt status of the IPA Bonds, or if there be any such adverse effect, it has been remediated in
accordance with the Internal Revenue Code and regulations thereunder or provision acceptable to
IPA has been made for such remediation.
IPA, the IPP Coordinating Committee, Los Angeles and the Unit 3 Owner Participants
have approved the terms and conditions of this Agreement.
THEREFORE, in consideration of the terms of this Agreement and the mutual
covenants and agreements hereinafter set forth, it is agreed by and among the Parties as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATIONS
Section 1.1 De tnitions
5669950.7 -3
"Hazardous Materials"means any pollutant, contaminant, dangerous or toxic substance,
hazardous or extremely hazardous waste, liquid, industrial or other waste or agent that is
nt or
regulated by a governmental agency in connection with the protection of the environme
human safety or health.
"IPA Bonds" means the bonds and other indebtedness now outstanding and hereafter
issued by IPA to finance or refinance the Intermountain Power Project.
"IPP"means the Intermountain Power Project.
"IPP Agreements"means the IPP Power Sales Contracts, the IPP Amended and Restated
CM and O Agreement, the Power Supply Revenue Bond Resolution, adopted by IPA on
September 28, 1978, as heretofore and as it may be hereafter amended and supplemented, and
any other bond resolution, indenture, loan agreement, trust agreement or other instrument
pursuant to which IPA Bonds shall be issued or secured.
"IPP Confidential Information" means all information and materials pertaining to IPP
that IPA or Los Angeles shall designate as confidential in a written notice to the Unit 3 Owners
Committee and each Unit 3 Owner Participant, so long as (i) IPA and/or Los Angeles have made
reasonable efforts to maintain the confidentiality thereof, (ii) such information or materials are
not public information, and (iii) such information or materials have not been obtained
independently by the Unit 3 Owners Committee or any Unit 3 Owner Participant from a source
that is lawfully entitled to disclose the same
45609950.7 -S-
(i) utility, access and other easements and rights of way, restrictions, encumbrances
and exceptions which do not materially interfere with or materially impair the licensing,
construction, installation, testing or start-up of Unit 3;
(ii) all existing liens, charges, encumbrances, easements, encroachments, restrictions,
concessions, conditions and other matters of record;
(iii) all rights and reservations of IPA as set forth in the Construction Lease and
Agreement, and all ownership interests, leaseholds, easements, licenses, covenants, conditions,
restrictions and all other rights and interests in and to or in any way pertaining to the Unit 3 Site,
the Joint Common Facilities and other properties at the JPP Site that are provided by or pursuant
to the Common Facilities and Site Agreement and the Joint Operating Agreement;
(iv) any mechanic's, laborer's, materialman's, supplier's or vendor's lien if payment
is not yet due or if such lien is being contested;
(v) any liens for taxes, assessments, payments or fees in lieu of taxes or impact
alleviation and mitigation payments not yet due or being contested by appropriate proceedings so
long as such proceedings do not involve a material risk of the sale, forfeiture or loss of the
properties subjected to such lien or liens;
(vi) any liens, defects or irregularities of title that normally exist with respect to
properties similar in character to the IPP Site and which do not materially adversely interfere
with or materially impair the licensing, construction, installation, testing or start-up of Unit 3;
(vii) zoning laws and similar restrictions, and any reservations, restrictions, conditions
or limitations generally mandated by governmental authorities; and
45669950.7 -7
"Unit 3" means the coal-fired generating unit and related facilities and appurtenances, as
described in Exhibit A-1, to be constructed and installed on the Unit 3 Site in accordance with
the Unit 3 Plans and Specifications.
"Unit 3 Confidential Information" means all information and materials pertaining to
Unit 3 that the Unit 3 Owners Committee shall designate as confidential in a written notice to
IPA and Los Angeles, so long as (i) the Unit 3 Owner Participants have made reasonable efforts
to maintain the confidentiality thereof, (ii) such information or materials are not public
information, and(iii) such information or materials have not been obtained independently by IPA
or Los Angeles from a source that is lawfully entitled to disclose the same.
"Unit 3 Construction Properties and Facilities" means (i) Unit 3 being constructed and
installed on the Unit 3 Site, and (ii) the leasehold estates, licenses, properties, easements and
other rights and interests conveyed, transferred, granted and assigned under and pursuant to
Articles III, IV, V and VI in connection with the licensing, construction, installation, testing and
start-up and the Commercial Operation of Unit 3 and the activities related and incidental thereto,
as provided in the Construction Lease and Agreement.
"Unit 3 Owners Committee" means the committee so designated that is established
pursuant to the Unit 3 Ownership Agreement.
"Unit 3 Ownership agreement" means the Unit 3 Ownership Agreement, dated as of
, 200_, by and among the Unit 3 Owner Participants, as the same may be hereafter
amended or supplemented from time to time.
45669950.7 _9-
(iii) the headings, subheadings and table of contents in the
Construction Lease and Agreement are solely for convenience of reference and shall not
constitute a part of the Construction Lease and Agreement nor shall they affect the
meaning, construction or effect of any provision thereof;
(iv) except as otherwise expressly provided, reference to any
agreement or contract means such agreement or contract as amended, modified or
supplemented from time to time in accordance with the applicable provisions thereof;
(v) except as otherwise expressly provided, a reference to a law
includes any amendment or modification to such law and any rules or regulations issued
thereunder or any law enacted in substitution or replacement therefor; and
(vi) references to "including" or "include" shall mean including
without limiting the generality of any description preceding such term and for purposes
hereof the rule of ejusdem generis shall not be applicable to limit a general statement,
followed by or referable to an enumeration of specific matters, to matters similar to those
specifically mentioned.
Each of the Parties and its counsel have reviewed the Construction Lease and Agreement
and the usual rule of construction that any ambiguities are to be resolved against the drafting
party shall be inapplicable in the construction and interpretation of the Construction Lease and
Agreement.
.ARTICLE II
AGREEMENT TERM
45669950.7 -11-
Section 2.2 Early Termination
The Construction Lease and Agreement shall be terminated early upon the occurrence of:
(a) notification to IPA and Los Angeles by the Unit 3 Owner Participants of the
completion of the licensing, construction, installation, testing and start-up and the Commercial
Operation of Unit 3 and compliance in full with the provisions of the Construction Lease and
Agreement;
(b) abandonment or permanent discontinuance of the licensing, construction,
installation, testing and start-up and the Commercial Operation of Unit 3 as provided in Article
XV; or
(c) exercise of the remedy to terminate the Construction Lease and Agreement in the
case of a continuance of an Event of Default of the Unit 3 Owner Participants as provided in
Section 16.2.
Section 2.3 Termination of Certain Leases and Other Interests
Upon Conveyance of Joint Common Facilities
Upon the conveyance, transfer, granting and assignment under the Common Facilities
and Site Agreement of the Unit 3 Site and the undivided ownership interests and other rights in
and to the real and personal properties with respect to the Joint Common Facilities, the lease of
the Unit 3 Site and the leases, licenses and other rights to the use of the Joint Common Facilities,
together with easements with respect to the Unit 3 Site and the Joint Common Facilities, all as
provided by the Construction Lease and Agreement, shall forthwith terminate and all rights and
interests therein and thereto under the Construction Lease and Agreement shall be deemed
surrendered, delivered and released to IPA, but the remaining real and personal property leases
45669950.7 -13-
shall provide that the Unit 3 Owner Participants or any contractor thereof shall have reserved the
right to dismantle, remove and take away any buildings, structures, infrastructure or other
improvements constructed or installed as provided in Section 3.1(c), then the determination of
IPA or Los Angeles as to such dismantling, demolishing, removal or clearance of such buildings,
structures, infrastructure or other improvements shall be inapplicable so long as the Unit 3
Owner Participants or such contractor, as applicable, shall exercise such reserved right in a
timely manner and pay all costs and expenses in connection therewith. Upon completion of such
restoration of the Unit 3 Construction Properties and Facilities the Unit 3 Owner Participants
shall surrender, deliver and release to IPA all such properties in good order and condition and the
Construction Lease and Agreement, unless earlier terminated, shall forthwith be terminated and
no longer be of any force and effect. The obligations and liabilities of the Unit 3 Owner
Participants arising under the provisions of this Section 2.4 shall survive the expiration of the
term of the Construction Lease and Agreement as set forth in Section 2.1 or, if extended, the
expiration of the term of such extension.
ARTICLE III
CONSTRUCTION LEASES—REAL PROPERTY
Section 3.1 Leases of Real Property
Upon the terms and conditions set forth in the Construction Lease and Agreement IPA
hereby delivers and leases to the Unit 3 Owner Participants and the Unit 3 Owner Participants
hereby accept and lease from IPA for the term of the Construction Lease and Agreement and any
extension thereof as provided for in Section 2.1, unless earlier terminated as provided in Section
2.2, certain real property located at the IPP Site as set forth below; and the Unit 3 Owner
45669950.7 -15-
(d) The tracts and parcels of land, together with all the rights, privileges and
appurtenances belonging or otherwise pertaining thereto, being more particularly delineated and
described in Exhibit D-1, including the existing buildings, structures, infrastructure and other
improvements thereon to be reconstructed, renovated or demolished in accordance with the
provisions of the Unit 3 Plans and Specifications specified in Exhibit D-2, at the cost and
expense of the Unit 3 Owner Participants, all as described and set forth in Exhibit D-2, and the
schedules of the rental payments therefor and certain terms and conditions pertaining thereto, all
as set forth in Exhibit D-3.
(e) The areas and space of existing buildings and structures delineated and described
in Exhibit E-1, including the additions thereto and reconstruction or renovations thereof in
accordance with the provisions of the Unit 3 Plans and Specifications specified in Exhibit E-2, at
the cost and expense of the Unit 3 Owner Participants, all as described and set forth in Exhibit E-
2, and the schedules of the rental payments therefor and certain terms and conditions pertaining
thereto, all as set forth in Exhibit E-3.
Section 3.2 Abatement of Rental
In the event of any damage or destruction (other than that caused by the Unit 3 Owner
Participants or any of their officers, employees, agents or contractors) (i) of any building,
structure, infrastructure or other improvement (or the delineated area or space thereof), leased as
provided in Section 3.1(b), (c), (d) or(e) above, the rental with respect thereto shall be abated for
any period during which by reason of such damage or destruction there is a substantial
interference with the use and occupancy thereof, or (ii) of any portion of any such building,
structure, infrastructure or other improvement (or such delineated area or space thereof), the
rental with respect to such building, structure, infrastructure or other improvement (or such area
4566995U -17-
with respect thereto and any modifications of or additions to the terms and conditions pertaining
thereto, and the applicable Exhibit shall be revised accordingly.
ARTICLE IV
CONSTRUCTION LEASES—PERSONAL PROPERTY
Section 4.1 Leases of Personal Property
Upon the terms and conditions set forth in the Construction Lease and Agreement IPA
hereby leases to the Unit 3 Owner Participants and the Unit 3 Owner Participants hereby accept
and lease from IPA for the term of the Construction Lease and Agreement and any extension
thereof as provided for in Section 2.1, unless earlier terminated as provided in Section 2.2, the
items of equipment, apparatus and other facilities and the vehicles, all as delineated and
described in Exhibit F-1, and the Unit 3 Owner Participants agree to pay IPA rent for the lease of
such equipment, apparatus and other facilities and vehicles in the amounts and on the dates
during such term or extension thereof in accordance with the respective rental schedules therefor
as set forth in Exhibit F-2, and in addition to the terms and provisions of the Construction Lease
and Agreement, such leaseholds shall be subject to the terms and conditions pertaining thereto as
also provided in Exhibit F-2.
Section 4.2 Abatement of Rental
In the event of any damage or destruction (other than that caused by the Unit 3 Owner
Participants or any of their officers, employees, agents or contractors) of any item of equipment,
apparatus or other facilities or any vehicle as described in Section 4.1, the rental with respect
thereto shall be abated during any period in which by reason of such damage or destruction there
45669950.7 -19-
Upon the terms and conditions set forth in the Construction Lease and Agreement IPA
hereby grants non-exclusive licenses to the Unit 3 Owner Participants and the Unit 3 Owner
Participants hereby accept the non-exclusive licenses from IPA for the term of the Construction
Lease and Agreement and any extension thereof as provided for in Section 2.1, unless earlier
terminated as provided in Section 2.2, for the use of certain properties at the IPP Site (other than
any use or services with respect to any properties that are provided for under Section 9.3), as set
forth below, and the Unit 3 Owner Participants agree to pay to IPA fees and charges for such
licenses in the amounts and on the dates during such term and any extension thereof in
accordance with the respective schedules of fees and charges set forth below, and, in addition to
the terms and provisions of the Construction Lease and Agreement, such licenses granted hereby
shall be subject to the terms and conditions pertaining thereto provided below, as follows:
(a) The land, buildings, structures and facilities as delineated and described in
Exhibit G-1 and the schedules of fees and charges therefor, as set forth in Exhibit G-2, and such
licenses granted hereby shall be subject to the terms and conditions pertaining thereto as also
provided in Exhibit G-2.
(b) The equipment, apparatus, machinery and other facilities and the vehicles as
delineated and described in Exhibit H-1 and the schedule of the fees and charges therefor and
certain terms and conditions as to the operation and scheduling of the operation or use thereof
and other matters pertaining thereto, all as set forth in Exhibit H-2.
Section 5.2 Rights and Assignments
Upon the terms and conditions set forth in the Construction Lease and Agreement IPA
hereby grants and assigns to the Unit 3 Owner Participants non-exclusive rights to the use of and
45660950.7 -21-
modified to provide for additions thereto and exclusions and releases therefrom, together with
any revisions to the applicable schedules of fees and charges therefor, and any modifications of
or additions to the terms and conditions pertaining thereto, and the applicable Exhibit shall be
revised accordingly.
ARTICLE VI
EASEMENTS
Section 6.1 Grant by IPA of Easements
Upon the terms and conditions set forth in the Construction Lease and Agreement, IPA
hereby grants and conveys to the Unit 3 Owner Participants and the Unit 3 Owner Participants
hereby accept from IPA for the term of the Construction Lease and Agreement and any extension
thereof as provided for in Section 2.1, unless earlier terminated as provided in Section 2.2
temporary non-exclusive easements over, under and across the IPP Site, as set forth below:
(a) Easements for conduits and facilities for electric, water and sanitary and storm
sewers, telephone and other communications and such other utilities, all as delineated and
described in Exhibit K-1.
(b) Rights of way and other easements for ingress and egress with respect to Unit 3
Construction Properties and Facilities as delineated and described in Exhibit K-2.
Section 6.2 Easements Reserved by IPA
IPA hereby reserves from the leasehold estates, licenses and rights and interests
conveyed, transferred, granted and assigned pursuant to Articles III, IV and V, the rights of way,
easements for electric, water, sewer, telephone and other utility lines, wires, poles, pipes,
45669950.7 -23-
PARTICIPATION RIGHTS;
APPROVAL OF PLANS AND SPECIFICATIONS;
COMPLETION OF UNIT 3
Section 7.1 Participation of IPA and Los Anjeeles
With respect to each of the matters listed in subsections (a) through (d) of this Section
7.1, the Unit 3 Owner Participants shall (i) keep, or cause to be kept, each of IPA, Los Angeles
and IPSC fully informed, on a current basis, of their plans, strategies and actions pertaining to
the licensing, construction, installation, testing, start-up and Commercial Operation of Unit 3, (ii)
permit IPA, Los Angeles and IPSC to attend all meetings with third parties in which the Unit 3
Owners Committee, any Unit 3 Owner Participant, or any authorized officer, representative or
agent acting on behalf of the Unit 3 Owners Committee or any Unit 3 Owner Participant will
participate, (iii) provide IPA, Los Angeles and IPSC reasonable advance notice of all such
meetings, and (iv) take into consideration any and all input IPA, Los Angeles or IPSC may have
with respect to such matters. IPA or Los Angeles may object to any aspect of the activities,
plans or proposals in connection with any such matter and, so long as such objection is based
upon a determination by IPA or Los Angeles that the activity, proposal or plan could have a
material adverse effect on any IPP Facilities or on the IPP Power Purchasers, in their capacities
as such, neither the Unit 3 Owners Committee nor any Unit 3 Owner Participant or any
authorized officer, representative or agent thereof shall proceed in such matter until the objection
of IPA or Los Angeles is resolved to its reasonable satisfaction. Such matters shall include each
of the following:
(a) The application for and obtaining of all permits, licenses or approvals relating to
Unit 3, or any amendment to or modification of any existing permit, license or approval with
45669950.7 -25-
The Unit 3 Owner Participants shall proceed with the licensing, construction, installation,
testing and start-up and the Commercial Operation of Unit 3, at their sole cost and expense, in
accordance with the Unit 3 Plans and Specifications, with reasonable diligence and in accordance
with Prudent Utility Practice so as to complete such licensing, construction, installation, testing
and start-up of Unit 3 and the Commercial Operation thereof, including site restoration as
provided in Section 2.4. not later than , 20_, unless prevented by
Uncontrollable Forces. In the case of a failure to complete such licensing, construction,
installation, testing and start-up of Unit 3 and the Commercial Operation thereof, including such
site restoration, by such date by reason of any Uncontrollable Forces, completion of such
licensing, construction, installation, testing and start-up of Unit 3 and the Commercial Operation
thereof, including such site restoration, shall take place within such period following
20_, as shall be equal to the aggregate of the time delays of such
licensing, construction, installation, testing and start-up of Unit 3 and the Commercial Operation
thereof, including such site restoration, due to such Uncontrollable Forces.
ARTICLE VIII
CONSTRUCTION ACTIVITIES;
OWNERSHIP OF UNIT 3 LEASEHOLD IMPROVEMENT
Section 8.1 Use of Unit 3 Construction Properties and Facilities
The Unit 3 Owner Participants shall use the Unit 3 Construction Properties and Facilities
only for the licensing, construction, installation, testing and start-up and the Commercial
Operation of Unit 3, including site restoration and activities related and incidental thereto, all as
provided in the Construction Lease and Agreement.
45669y50.7 -27-
the power flows of Unit 3 in addition to those of Units 1 and 2. It is agreed by the Parties that
any such addition or modifications shall be deemed to be Required Common Facilities Additions
and Improvements (as defined in the Common Facilities and Site Agreement) and shall be
installed and constructed and paid for as provided in Section 3.2 of the Common Facilities and
Site Agreement and ownership interests therein shall be sold, conveyed and transferred and shall
be otherwise governed by and in accordance with the provisions of the Common Facilities and
Site Agreement applicable to Common Facilities Additions (as so defined) and Joint Common
Facilities.
Section 8.3 Licenses, Permits and Approvals
The Unit 3 Owner Participants shall use their best efforts to seek and obtain all licenses,
permits, regulatory approvals and other rights necessary for the design, licensing, construction,
installation, testing and start-up of Unit 3 and the Commercial Operation thereof. A list of the
licenses, permits and regulatory approvals for Unit 3 obtained prior to the Effective Date of the
Construction Lease and Agreement is set forth in Exhibit M.
Section 8.4 No Warranties
The Unit 3 Owner Participants acknowledge that they have inspected the Unit 3
Construction Properties and Facilities prior to the Effective Date and agree to accept the same
"as is", without representation or warranty, expressed or implied in fact or in law, by IPA or Los
Angeles, and without recourse to IPA or Los Angeles (or any of their respective officers,
employees or agents), as to the nature, condition or usability thereof, or the uses to which the
Unit 3 Construction Properties and Facilities or any part thereof are to be put. Neither IPA nor
Los Angeles makes any warranty or representation or accepts any liability or responsibility with
respect to or for the adequacy, efficiency or suitability of, or defects in, the Unit 3 Plans and
45669950.7 -29-
representatives and agents in order to provide information and respond to inquiries concerning
matters under the Construction Lease and Agreement.
Section 8.6 Hazardous Materials
No Hazardous Materials shall be used, stored, released, handled, produced or installed in
or around, or transported to or from, Unit 3 Construction Properties and Facilities, except as
permitted by and in accordance with applicable laws and regulations of governmental agencies.
In the event of a breach of this provision, IPA and Los Angeles shall each, in addition to all its
rights and remedies under the Construction Lease and Agreement and pursuant to applicable law,
have the right to remove at the sole cost and expense of the Unit 3 Owner Participants, or the
right to require the Unit 3 Owner Participants to remove, any such Hazardous Materials from the
Unit 3 Construction Properties and Facilities in the manner provided by applicable law for such
removal. The obligations and liabilities of the Unit 3 Owner Participants and the rights of IPA
and Los Angeles arising under the provisions of this Section 8.6 shall survive any termination or
expiration of the term or any extended term of the Construction Lease and Agreement.
Section 8.7 Liability for Activities
In the event any activities in connection with the design, licensing, construction,
installation, testing or start-up or the Commercial Operation of Unit 3, including activities related
or incidental thereto, other than those pursuant to the Unit 3 Plans and Specifications approved
by IPA and Los Angeles (or as to which approval was unreasonably withheld) as provided in
Section 7.2 or otherwise permitted under the Construction Lease and Agreement, shall require
any modification of or addition to Units 1 or 2 or other IPP Facilities not otherwise provided for
in the Construction Lease and Agreement or result in an increase in the operation, maintenance
or other costs of Units 1 and 2 or any other IPP Facilities, or result in an increase in the cost of
45669950.7 -31-
testing, start-up and Commercial Operation of Unit 3. The Unit 3 Owner Participants shall also
cause such contractors and engineers to carry out their own duties and responsibilities with
respect to Unit 3 for permitting and other environmental compliance and shall in this connection
coordinate with Los Angeles and IPSC in the development of risk management and other
emergency planning programs as required under applicable environmental and safety laws,
regulations and orders.
Section 8.9 As Built Plans and Specifications
Upon completion of the licensing, construction, installation, testing and start-up of Unit
3, the Unit 3 Owner Participants shall furnish or cause to be furnished to IPA and Los Angeles,
promptly following the issuance thereof, copies of all appropriate documentation, including, but
not limited to, "as built" Unit 3 Plans and Specifications, certificates of occupancy and all other
licenses, approvals, authorizations, permits and certificates evidencing, among other things, that
the licensing, construction, installation, testing and start-up and the Commercial Operation of
Unit 3, including site restoration, has been performed and completed in accordance with the Unit
3 Plans and Specifications and all applicable laws and regulations.
Section 8.10 The Unit 3 Leasehold Improvement Owned by the Unit 3 Owner
Participants
Unit 3 as constructed and installed on the Unit 3 Site shall constitute a leasehold
improvement that shall be owned by, and fee title as to which shall vest in, the Unit 3 Owner
Participants and Unit 3 shall otherwise be subject to the terms and provisions of the Construction
Lease and Agreement.
45669950.7 -33-
electric service, other than pursuant to Section 9.1(b) above, arranged by the Unit 3 Owner
Participants. In the event that IPA and Los Angeles shall agree to provide or cause IPSC to
provide black start service or any other electric service (other than pursuant to (b) above) from
the net generation of Units 1 and 2, arrangements satisfactory to IPA and Los Angeles shall be
made by the Unit 3 Owner Participants for the return of such capacity and energy at the IPP
switchyard or at such other interconnection as shall be agreeable to IPA and Los Angeles.
Section 9.2 Water Service
IPA and Los Angeles shall furnish or cause IPSC to furnish to the Unit 3 Owner
Participants water service, consisting of both potable and non-potable water, to meet the
requirements for the licensing, construction, installation, testing and start-up and the Commercial
Operation of Unit 3, including activities relating and incidental thereto, as follows:
(a) Los Angeles shall install or cause IPSC to install, at the sole cost and expense of
the Unit 3 Owner Participants, water meters and related facilities so that all water furnished shall
be metered to provide for proper measurement and accounting for water use. At the request of
the Unit 3 Owner Participants Los Angeles will furnish or cause IPSC to furnish demineralized
water for use in the Unit 3 boiler blow-down;
(b) The Unit 3 Owner Participants shall pay IPA for water service , including for the
treatment and supply of demineralized water, in accordance with the rate schedules set forth in
Exhibit O;
(c) Los Angeles shall develop and submit to the Unit 3 Owner Participants for their
approval, which approval shall not be unreasonably withheld, metering and accounting protocols
45669950.7 -35-
(c) The use of the existing landfill at the IPP Site shall be made available for the
disposal of construction waste associated with the construction and installation of Unit 3
including all supporting and related activities. Los Angeles shall furnish the Unit 3 Owner
Participants with protocols and procedures pertaining to the location and methods of disposal of
such waste, along with the cost-based charges payable by the Unit 3 Owner Participants for such
use and service. Upon the Commercial Operation of Unit 3, appropriate arrangements shall be
made by IPA and Los Angeles for the conveyance and transfer to the Unit 3 Owner Participants
of the portion of such landfill as shall consist primarily of construction waste from Unit 3
construction.
(d) The services of the existing IPP fire brigade, together with ambulance services,
shall be provided for the Unit 3 Construction Properties and Facilities in addition to the IPP
Facilities, provided that no representation or warranty is or shall be made as to the adequacy of
the capabilities of any such existing services for the purpose of the Unit 3 Construction
Properties and Facilities or any activities thereon. Los Angeles shall prescribe the charges for
such services which charges shall be cost-based and payable by the Unit 3 Owner Participants.
(e) The existing IPP Hazmat response and mitigation service with respect to
Hazardous Materials shall be provided for the Unit 3 Construction Properties and Facilities in
addition to the IPP Facilities, provided that no representation or warranty shall be made as to the
adequacy of the capabilities of any such service for the purposes of the Unit 3 Construction
Properties or Facilities or any activities thereon. Los Angeles shall prescribe the charges for
such service which charges shall be cost-based and payable by the Unit 3 Owner Participants.
-15669950.7 -37-
Section 10.1 In General
The Unit 3 Owner Participants, at their sole cost and expense, shall at all times maintain
or cause to be maintained the insurance required by this Article X (other than insurance required
to be provided as set forth in Section 10.8) with nationally recognized insurers or sureties eligible
to do business in the State of Utah that are acceptable to IPA and Los Angeles. All policies of
such insurance (other than workman's compensation and employer's liability insurance) shall
name IPA, Los Angeles and IPSC and their respective members, boards, officers, employees and
agents as additional insureds (the "Additional Insureds") as their respective interests may appear
and shall provide that the insurers or sureties waive all claims for premiums from and any rights
of setoff, counterclaim, deduction or subrogation against the Additional Insureds. Evidence of
such insurance coverage from the insurers or sureties in form and content acceptable to IPA and
Los Angeles shall be furnished by the Unit 3 Owner Participants to IPA, Los Angeles and IPSC
and shall provide that the coverage and other protections thereunder may not be cancelled or
changed without at least 30 days prior notice to the Additional Insureds. The policy deductibles
and any insurance retention (other than with respect to workman's compensation and employer's
liability insurance) with respect to any such insurance coverage shall be acceptable to IPA and
Los Angeles. All such insurance shall be primary and any insurance carried by any of the
Additional Insureds shall be deemed to be non-contributory and excess for all purposes of the
Construction Lease and Agreement. Each policy of such insurance (other than workman's
compensation and employer's liability insurance) shall contain a Severability of Interest and
Cross Liability clause that applies such insurance separately to the Unit 3 Owner Participants and
each Additional Insured, as well as a Contractual Liability Endorsement that extends the
insurance coverage thereunder to apply to the liability assumed by the Unit 3 Owner Participants
under the Construction Lease and Agreement.
45669950.7 -39-
however, that, if the Unit 3 Owner Participants shall be eligible therefor under applicable law,
such worker's compensation and employer's liability exposure may be self-insured, but only if
IPA, Los Angeles and IPSC are furnished with appropriate documentation from the State of Utah
governmental agency having jurisdiction certifying such self-insurance participation.
Section 10.5 Aircraft Liability Insurance
The Unit 3 Owner Participants shall provide aircraft liability insurance which shall
include coverage for liability arising out of the use of owned, chartered or any other aircraft in
connection with the construction, installation, testing, start-up and Commercial Operation of Unit
3 and the activities related and incidental thereto, undertaken under the Construction Lease and
Agreement. Such insurance shall provide coverage in an amount not less than $100 million
combined single limit per occurrence, and shall include coverage for acts of terrorism.
Section 10.6 Pollution Lezal Liability Insurance
The Unit 3 Owner Participants shall provide pollution legal liability insurance insuring
against loss or liability with respect to any spill or release of any Hazardous Material or with
respect to any other pollution incident occurring as a result of or arising by reason of the design,
construction, installation, testing, start-up or Commercial Operation of Unit 3 or any activity
related or incidental thereto, undertaken under the Construction Lease and Agreement. Such
pollution legal liability insurance shall provide coverage in an amount not less than $100 million
combined single limit per occurrence and shall include coverage for acts of terrorism.
Section 10.7 Professional Liability Insurance
The Unit 3 Owner Participants shall provide professional liability insurance insuring
against liability resulting from professional errors and omissions arising by reason of or incident
45669950.7 41-
(B) waiver by the insurer of all rights of subrogation against the
insureds and their boards, members, officers, employees and agents; and
(C) coverage providing adequate limits to assure the highest value of
the aggregate amount of construction equipment on the IPP Site at any
time.
(b) All such insurance shall be primary so that any other insurance policy of any of
the insureds which may be applicable shall be excess and non-contributing in the event of any
loss with respect to Unit 3 or the Joint Common Facilities arising by reason of or incident to the
design, licensing, construction, installation, testing, startup or Commercial Operation of Unit 3
and such coverage shall have a full waiver of subrogation in favor of the insureds.
(c) Evidence of such insurance coverage from the insurers or sureties in form and
content acceptable to IPA and Los Angeles shall be furnished by the Unit 3 Owner Participants
to IPA, Los Angeles and IPSC. Such insurance coverages and the other terms and conditions of
each of the policies of such insurance may not be cancelled or changed without at least 30 days
prior notice to IPA and Los Angeles and any such cancellation or change shall be subject to the
approval of IPA and Los Angeles as above provided.
ARTICLE XI
TAXES AND OTHER IMPOSITIONS
Section 11.1 Payment of Taxes and Impositions
45669950.7 -43-
Section 12.1 IndemniFcation by Unit 3 Owner Participants
In addition to any other indemnification provisions in the Construction Lease and
Agreement the Unit 3 Owner Participants shall indemnify and save IPA, Los Angeles and IPSC
and their respective members, officers, employees and agents harmless from and against, and
shall reimburse IPA, Los Angeles and IPSC, as applicable, and their respective members,
officers, employees and agents, for all losses, liabilities, obligations, damages, fines, penalties,
claims, demands, costs, expenses and judgments, including reasonable attorneys' fees and
disbursements, of any kind or nature (including all costs, expenses and liability for
environmental investigations, monitoring, containment, abatement, removal, repair, cleanup,
restoration, remediation, response, penalties and fines arising from the violation of any local,
regional, state or federal environmental laws or regulations whether founded in tort, contract or
otherwise), arising as a result of or by reason of any of the following:
(a) The design, licensing, construction, installation, testing, start-up or Commercial
Operation of Unit 3, including activities related or incidental thereto, undertaken under the
Construction Lease and Agreement;
(b) The use, possession, condition, operation, maintenance or management of the
Unit 3 Construction Properties and Facilities;
(c) Any violation of laws, covenants, restrictions, easements or conditions affecting
the Unit 3 Construction Properties and Facilities; or
45669950.7 -45-
design, construction, installation, testing, start-up or Commercial Operation of Unit 3 or any
activities related or incidental thereto, undertaken under the Construction Lease and Agreement.
Section 12.4 Survival of Provisions
The obligations and liabilities of the Unit 3 Owner Participants arising under the
provisions of this Article shall survive any termination or expiration of the term or any extended
term of the Construction Lease and Agreement as provided for by Section 2.1.
ARTICLE XIII
COMPLIANCE WITH LAWS
Section 13.1 Compliance with respect to Construction Properties and Facilities
The Unit 3 Owner Participants will, at their sole cost and expense, comply with all laws,
rules, ordinances, regulations, orders, decrees and requirements (collectively "Laws") of duly
constituted governmental authorities, commissions and courts, applicable to the Unit 3
Construction Properties and Facilities or to the design, licensing, construction, installation,
testing and start-up and the Commercial Operation of Unit 3, including activities relating or
incidental thereto, and will not use or permit the use of the Unit 3 Construction Properties and
Facilities for any unlawful purpose or in violation of any Laws or government permits, licenses,
authorizations or approvals applying to or affecting the Unit 3 Construction Properties and
Facilities, or suffer any action to be taken or any condition to exist with respect to the Unit 3
Construction Properties and Facilities which may constitute a public or private nuisance.
45669950.7 -47-
ARTICLE XV
ABANDON-MENT OR DISCONTINUANCE OF CONSTRUCTION;
TERNIINATION OF AGREEMENT
Section 15.1 Restoration of Properties
In the event the design, licensing, construction, installation, testing, start-up or
Commercial Operation of Unit 3 shall be abandoned or permanently discontinued or the
Construction Lease and Agreement shall be terminated due to an Event of Default by the Unit 3
Owner Participants, the Unit 3 Owner Participants shall, except to the extent IPA and Los
Angeles shall otherwise agree in writing, to be obligated, at their sole cost and expense, to
proceed with reasonable expedition to restore the Unit 3 Construction Properties and Facilities to
the state and condition thereof existing on the Effective Date, including, without limitation,
causing the dismantling, demolition, removal and salvaging of all buildings, structures,
infrastructure or other improvements or equipment, apparatus and facilities erected, placed or
located thereon in connection with the construction, installation, testing or start-up or the
Commercial Operation of Unit 3, including activities related or incidental thereto, and the
clearance and disposal of all materials and debris resulting from such construction and
installation, and shall surrender and deliver to IPA all such properties in good order and
condition free and clear of all liens and encumbrances other than those existing on the Effective
Date or Permitted Encumbrances; provided that, except as provided in the next sentence, the
buildings, structures, infrastructure and other improvements constructed or installed as provided
in Section 3.1(c) or the existing buildings, strictures, infrastructure and other improvements
45669950.7 -49-
If the Unit 3 Owner Participants do not comply with their obligations under Section 15.1
above and are in default of such performance for a period exceeding 120 days, IPA and Los
Angeles, or either of them, may at their or its option, as applicable, upon 30 days notice enter in
or upon the Unit 3 Construction Properties and Facilities and proceed to restore the same and the
Unit 3 Owner Participants shall indemnify IPA and/or Los Angeles, as applicable, for any and all
costs incurred by them or by it for such restoration.
Section 15.4 Rikhts and Remedies
Any rights or remedies exercised by IPA or Los Angeles under this Article XV shall be in
addition to, and not in substitution for, any and all other rights and remedies that IPA or Los
Angeles shall be entitled to under the Construction Lease and Agreement or pursuant to
applicable law.
Section 15.5 Survival of Provisions
The obligations and liabilities of the Unit 3 Owner Participants arising under the
provisions of this Article XV shall survive any termination of the Construction Lease and
Agreement.
ARTICLE XVI
DEFAULT BY UNIT 3 OWNER PARTICIPANTS
Section 16.1 Events of Default
Each of the following events shall constitute an Event of Default with respect to the Unit
3 Owner Participants:
45669950.7 -51-
Upon the occurrence and continuance of any Event of Default, IPA or Los Angeles at any
time may give written notice to the Unit 3 Owner Participants stating that the Construction Lease
and Agreement and the leases, licenses, easements and other rights created under the
Construction Lease and Agreement shall terminate on the date specified in such notice, which
shall be at least 10 days after the giving of such notice, and on the date specified in such notice,
if such Event of Default shall be continuing, the Construction Lease and Agreement and the term
thereof and each and every lease, license and other right conveyed, granted, transferred or
assigned under the Construction Lease and Agreement shall absolutely cease and terminate with
the same force and effect as though the date of expiration of the term of the Construction Lease
and Agreement shall have occurred; provided, however, that such termination shall not relieve
the Unit 3 Owner Participants of their liability and obligation with respect to the restoration of
the Unit 3 Construction Properties and Facilities as provided in Article XV or their other
liabilities and obligations that under the terms of the Construction Lease and Agreement survive
such termination, all of which liabilities and obligations shall survive any such termination.
Section 16.3 Other Rights and Remedies
IPA or Los Angeles, in the case of the occurrence and continuance of any Event of
Default may exercise any other right or remedy, including an action for specific performance,
which may be available under applicable law to enforce the Construction Lease and Agreement
and to recover any loss, damage or cost, including all attorneys' fees and disbursements and
court and collection costs, incurred by IPA or Los Angeles by reason of such Event of Default.
Section 16.4 Remedies Cumulative
No remedy available to IPA or Los Angeles is intended to be exclusive of any other
remedy available to IPA or Los Angeles, but every such remedy shall be cumulative and may be
-45669950.7 -53-
could not be cured within said 90 days, within a reasonable period after the date of such notice so
long as IPA or Los Angeles are diligently pursuing a cure.
Section 17.2 Riehts and Remedies
Upon the occurrence and continuance of any Event of Default by IPA or Los Angeles, the
Unit 3 Owner Participants may exercise any right or remedy, including an action for specific
performance, which may be available under applicable law to enforce the Constriction Lease
and Agreement against IPA or Los Angeles and to recover from IPA any loss, damage or costs,
including attorneys' fees and disbursements and court and collection costs, incurred by the Unit
3 Owner Participants by reason of such Event of Default.
Section 17.3 Remedies Cumulative
No remedy available to the Unit 3 Owner Participants is intended to be exclusive of any
other remedy available to the Unit 3 Owner Participants, but every such remedy shall be
cumulative and may be exercised by the Unit 3 Owner Participants from time to time and as
often as may be deemed expedient, except where the exercise of any one of such remedies
precludes its further exercise or the exercise of any other remedy. No delay or failure by the
Unit 3 Owner Participants to exercise any remedy shall impair the right of the Unit 3 Owner
Participants to exercise any such remedy or be construed to be a waiver of their right to exercise
any remedy or a waiver of any default by IPA or Los Angeles.
ARTICLE YVIII
CONFIDENTIAL INFORMATION
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-i5669950.7
appropriate protective order or waive compliance with the confidentiality terms of this Article
XV III, and (ii) cooperate fully with IPA and Los Angeles to seek whatever order or assurance is
necessary to ensure that confidential treatment will be accorded to the IPP Confidential
Information
ARTICLE XIX
DISPUTE RESOLUTION
Section 19.1 Settlement By Project Consultant
If the Parties cannot agree on any matter arising out of or relating to a payment or other
performance under the Construction Lease and Agreement, including any proposal that may be
made by any of the Parties (the "Disputed Matter"), a Project Consultant shall be appointed by
the Parties to settle the dispute. In the absence of agreement as to the selection of a Project
Consultant, any Party may request the American Arbitration Association to appoint the Project
Consultant. The Project Consultant shall proceed as follows:
(a) it shall consider all written arguments and factual materials which have been
submitted to it by the Parties (or by counsel to a Party if the Party is represented by counsel)
within 30 days following its appointment; and
(b) as promptly as possible thereafter, it shall make a written determination as to
whether the Disputed Matter referred to it is or is not in compliance with the Construction Lease
and Agreement and would or would not be consistent with Prudent Utility Practice; and
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45669950.7
(c) IPA or Los Angeles deems that such determination or recommendation would
violate any law or any regulatory or other governmental requirements applicable to the
Intermountain Power Project or contravene or cause a breach of or default under the IPP
Agreements; or
(d) The Unit 3 Owner Participants deem that such determination or recommendation
would violate any regulatory or other governmental requirements applicable to the licensing,
construction, installation, testing or start-up or the Commercial Operation of Unit 3 or any
activities related or incidental thereto.
Section 19.4 Costs and Expenses
The costs of employing the Project Consultant shall be borne and paid for solely by the
Unit 3 Owner Participants. Each Party shall be responsible for paying the fees and expenses of
any counsel representing it with respect to the proceedings in connection with a Disputed Matter
under the provisions of this Article XIX.
Section 19.5 No Waiver of Riuht to Judicial Action
The above provisions for dispute resolution shall in no event be construed to constitute a
waiver or surrender by any Party of its right to any judicial action to enforce the provisions of the
Construction Lease and Agreement or its rights under the Construction Lease and Agreement or
under applicable law, and any determination or recommendation by the Project Consultant shall
not be binding on any Party if contested in a judicial proceeding. However, in the event of any
judicial proceedings by a Party on account of a Disputed Matter, the Parties shall proceed in
accordance with the provisions for dispute resolution with a Project Consultant until the
Disputed Matter has been determined by final judicial action. In the event of referral of a
45669950.7 -59-
(c) Neither the execution or delivery by it of the Construction Lease and Agreement
nor its compliance with any of the terms and provisions thereof (A) contravenes any applicable
law, order, writ, judgment, injunction, termination or award applicable to it or any of its
respective properties or assets, (B) conflicts with, breaches or contravenes the provisions of its
enabling legislation, organizational documents or any indenture, mortgage, bond resolution,
contract or other instrument to which it is a party or by which it is bound, or (C) results in a
condition or event that constitutes (or that, upon notice or lapse of time or both would constitute)
a default or event of default under any indenture, mortgage, bond resolution, contract or other
instrument to which it is a party or by which it is bound;
(d) No authorization, consent, approval or other action by, and no notice to or other
filings with, any governmental or regulatory authority is required for its authorization of, or is
required in connection with, its execution, delivery and performance of, the Construction Lease
and Agreement,except for any that it has obtained; and
(e) There are no actions, suits or proceedings at law or in equity by or before any
court or administrative body or agency now pending or, to the best of its knowledge after due
inquiry, threatened, against or affecting it or any of its properties or rights before any court or
administrative body or agency which could reasonably be expected to materially adversely affect
its right or ability to perform its obligations under the Construction Lease and Agreement, or
which questions or challenges the validity of the Construction Lease and Agreement or any
action taken or to be taken by it pursuant to the Constriction Lease and Agreement or in
connection with the transactions contemplated by the Construction Lease and Agreement.
ash L)950.7 -6 t-
(a) any trustee secured party, as security for bonds or other indebtedness of such
Unit 3 Owner Participant, and such trustee or secured party may, if so empowered, sell or
or
otherwise realize upon such security in foreclosure or other similar proceedings, possess or take
control thereof or cause a receiver to be appointed with respect thereto and otherwise succeed to
all rights, title and interest and assume the obligations of such Unit 3 Owner Participant under
the Construction Lease and Agreement, provided, however, in no event shall such Unit 3 Owner
Participant be relieved from its obligations under the Construction Lease and Agreement;
(b) any corporation or other entity acquiring all or substantially all the property of the
Unit 3 Owner Participant making the mortgage, conveyance, transfer or assignment, provided
that the Unit 3 Owner Participant shall not be relieved of its obligations under the Construction
Lease and Agreement unless the instrument of such mortgage, conveyance, transfer or
assignment shall so specify and the prior consents of the other Parties shall be obtained; or
(c) any corporation or other entity into which or with which such Party making the
mortgage, conveyance, transfer or assignment shall be merged or consolidated.
Notwithstanding the foregoing, no Unit 3 Owner Participant may convey, mortgage,
transfer or assign its rights and interest in and to the leasehold estates, conveyances, licenses or
any other rights or interests under the Construction Lease and Agreement, unless such Unit 3
Owner Participant shall at the same time convey, transfer or assign such percentage of its
ownership interest in Unit 3 in accordance with the Unit 3 Ownership Agreement as shall equal
the percentage of such leasehold estates, licenses and other rights and interests under the
Construction Lease and Agreement conveyed, transferred, mortgaged or assigned by such Unit 3
Owner Participant to such transferee or assignee. in the case of any mortgage or other transfer or
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45669950.7
PAYMENT OBLIGATIONS AND DETERiVIINATIONS
OF UNIT 3 OWNER PARTICIPANTS
Section 22.1 Several Oblizations
The obligations of the Unit 3 Owner Participants to make payments under the
Construction Lease and Agreement shall be several and not joint, and the Unit 3 Owner
Participants shall be obligated on the same basis and such obligations shall be payable to IPA [in
the same manner and in accordance with the same terms and conditions as shall apply under the
Unit 3 Ownership Agreement to the payment by the Unit 3 Owner Participants of construction
costs of Unit 3. [The foregoing is subject to revision following a review of the Unit 3
Ownership Agreement]. The payment obligations of the Unit 3 Owner Participants,
respectively, shall be in the same proportion as their respective ownership interests in Unit 3 as
set forth in Exhibit P.
Section 22.2 Determinations
Whenever pursuant to the provisions of the Construction Lease and Agreement the Unit 3
Owner Participants are to make any determination, grant any approval or consent, or otherwise
direct any action, such determination, grant of approval or consent or direction of action shall be
controlled by the Unit 3 Owner Participants owning _% or more of the undivided ownership
interests in Unit 3 and decided pursuant to action of the Unit 3 Owners' Committee under and
pursuant to the terms of the Unit 3 Ownership Agreement. [The foregoing is subject to
revision following a review of the Unit 3 Ownership Agreement].
45669950.7 -65-
that IPA's and Los Angeles' performance of such obligations, duties and responsibilities under
the IPP Agreements and their observance of the rights and interests of the IPP Power Purchasers
and the other parties thereunder and of the terms and provisions of the IPP Agreements shall not
be deemed to contravene or to constitute a conflict of interest or a breach or default by either of
them under the Construction Lease and Agreement. Nothing in the Construction Lease and
Agreement shall be construed as requiring either IPA or Los Angeles to take, or cause the taking
of, any action in violation of, or to prevent IPA or Los Angeles from exercising, or causing the
exercise of, any of its rights under, the IPP Agreements, or that would impair the rights of, or
have any other adverse consequences to, any IPP Power Purchaser under the IPP Agreements.
ARTICLE XXV
PERFORMANCE UNDER IPP AGREEMENTS
Section 25.1 Performance by IPP Project Manager and Operating Agent:Liability
It is recognized by the Parties that pursuant to the IPP Amended and Restated CM and O
Agreement Los Angeles acts in its capacity as the Project Manager and Operating Agent of IPP
and as such Los Angeles is responsible, among other things, for negotiating, contracting for and
administering IPP to the extent provided in the IPP Amended & Restated CM and O Agreement,
and that Los Angeles is a Party to the Construction Lease and Agreement in its capacity as such
Project Manager and Operating Agent. Accordingly, notwithstanding anything in the
Construction Lease and Agreement to the contrary, as a Party under the Construction Lease and
Agreement, performance by Los Angeles under the Construction Lease and Agreement shall be
-15669950.7 -67-
Any notice, demand, request, consent or other communication permitted or required by
the Construction Lease and Agreement shall be in writing and shall be deemed properly served,
given, or made if delivered in person or sent by registered or certified mail, postage prepaid, or
by facsimile or other electronic transmission to the applicable Party at the address set forth
below:
[TO BE PROVIDED]
Section 26.2 Change in Designation
Any Party may, at any time, by written notice to the other Parties, designate a different
address or a different person for the receipt of notices under the Construction Lease and
Agreement
ARTICLE XXVII
GOVERNING LAW
Section 27.1 Governing Law
The Construction Lease and Agreement shall be interpreted, governed by and construed
under the laws of the State of Utah, provided that the laws of the State under which a Party was
created or organized shall determine the authority of such Party to execute and perform its
obligations under the Construction Lease and Agreement.
45669950.7 -69-
Section 30.1 Severability
In the event that any provision of the Construction Lease and Agreement shall be
determined to be invalid or unenforceable in any respect, such determination shall not affect any
other provision of the Construction Lease and Agreement, which shall remain in full force and
effect.
ARTICLE XXXI
INDEPENDENT DECISIONS
Section 31.1 Independent Decisions of Parties
Each Party hereby represents and agrees as follows:
(a) It is acting for its own account,has been represented by attorneys selected by it in
connection with the negotiation and execution of the Construction Lease and Agreement, and has
made its own independent decision to enter into the Construction Lease and Agreement and as
to whether the Construction Lease and Agreement is appropriate or proper for it based upon its
own judgment and upon advice from such attorneys and other advisers as it has deemed
necessary;
(b) It is not relying on any communication (written or oral) of any other Party as
advice of a recommendation to enter into the Construction Lease and Agreement or as any
assurance or guarantee as to the results of the Constriction Lease and Agreement; it being
45669950.7 -71-
or more of the Parties. Each Party shall be individually responsible for its own covenants,
obligations and liabilities under the Construction Lease and Agreement.
ARTICLE XXXIII
EXHIBITS
Section 33.1 Exhibits
Each Exhibit attached hereto shall be deemed to be incorporated into and be a part of the
Construction Lease and Agreement. Any revision of an Exhibit pursuant to the Construction
Lease and Agreement shall replace the previous applicable Exhibit and shall be deemed to be
incorporated into and become a part of the Construction Lease and Agreement.
ARTICLE XXXIV
COUNTERPARTS
Section 34.1 Counterparts
The Construction Lease and Agreement may be executed simultaneously in two or more
counterparts, each which shall be deemed an original but all of which together shall constitute
one and the same instrument.
45669950.7 -73-
EXHIBIT
OF THE MASTER FIRM POWER SUPPLY AGREEMENT FOR THE
SHAPED CAPACITY AND ENERGY TRANSACTION SCHEDULE
Agreement: Shaped Capacity&Energy Agreement("Agreement")dated
December 21,2005 between Uamps Pool and Uamps Firm attached
hereto.
Seasonal Entitlement Share: Each Participant will receive each month the monthly
capacity amounts,as listed on Addendum attached hereto.
Energy associated with the monthly capacity amounts shall be the
sum of its HLH block schedule and LLH block schedule as listed on
Addendum attached hereto. The HLH block energy and the LLH
block energy can not exceed the monthly capacity.
The HLH block energy means the sum of the HLH block schedule
per hour for each day of the month including Sundays and NERC
holidays starting hour ending 0800 through hour ending 2300 MPT
The LLH block energy means the sum of the LLH block schedule per
hour for each day of the month including Sunday and NERC holidays
starting hour ending 2400 through hour ending 0700 MPT.
Term: December 21,2005 to March 24,2009
Rate: Capacity and rates will be as listed in Exhibit 2 to the Agreement plus
administrative and general costs,scheduling and wheeling fees as
approved by the Board of Directors in the budget for the LAMPS
Master Firm Project.
TRUCKEE-DONNER PUD
By
Date
UTAH ASSOCIATED MUNICIPAL
POWER SYSTEMS
B
Y
Date U�°
ADDENDUM
Capacity HLH Block Schedule LLH Block Schedule
Truckee kW) kW) kW
January 2006
February 2006
March 2006
April 2006
May 2006
June 2006
July 2006
August 2006
September.2006
October 2006
November 2006
December 2006
January 2007
February 2007
March 2007
April 2007
May 2007
June 2007
July 2007
August 2007
September 2007
October 2007
November 2007
December 2007
January 2008 23,000 23,000 19,000
February 2008 2� ooG 23 000 18,000
March 2008 19,000 19,000 16,000
April 2008 17,000 17,000 14,000
May 2008 17,000 17,000 14,000
June 2008 18,000 18,000 14,000
July 2008 20 ,C1� :: r 15,000
August 2008 19,000 19,000 15,000
September 2008 18,000 18,000 14,000
October 2008 1�o 0 15,000
November 2008 21 000 21.000 17,000
December 2008 24.000 24.000 20,000
January 2009 24.000 24.000 20,000
February 2009 23,000 23.000 19,000
March 2009 20.000 20 000 16,000