HomeMy WebLinkAbout13 Payson/Nebo Gas Generation Agenda Item # 13
p ublic Utility District
ACTION
To: Board of Directors
From: Stephen Hollabaugh
Date: November 05, 2008
Subject: Approve Payson/Nebo Natural Gas Generation Contract
1. WHY THIS MATTER IS BEFORE THE BOARD
This matter is before the Board for possible approval of the Payson Project, Natural
Gas Power Generation assignment and assumption agreement/Power Sales Contract.
2. HISTORY
Information concerning the Payson Project was presented in a workshop on May 7th
and in an action item on June 4th, 2008.
The Payson natural gas contract is a UAMPS project and is owned by UAMPS
members. This project has been discussed with the Board numerous times between
2005 and 2008. The Board approved and executed the pooling appendix between the
City of Payson and Truckee Donner PUD in June 2008.
The City of Payson is interested in selling their portion of their allocation at the NEBO
plant (Payson Project). This transaction can be handled through UAMPS and was
initially done through the pooling appendix.
3. NEW INFORMATION
Natural Gas Power Generation: The Payson Natural Gas Project has been named the
Nebo power plant. The "Information Concerning the Payson Project .has a final page
which shows a current table of the Mona/Nebo Forward Spark Spread (price of gas
versus market) and Forward Power Price data. This natural gas plant will be a good fit
with the other District's power supply. It gives the District a high load hour generation
source and will give the District a supply to back up wind or geothermal resources.
The City of Payson is interested, in selling a portion of their allocation at the Nebo
power plant. This transaction can be handled through UAMPS and initially through a
pooling appendix. There are five steps for finalizing this transaction which include:
1. Approve and Execute the Pooling Appendix by City of Payson and Truckee Donner
PUD (completed June 2008).
2. Submit the offer to the Payson Project participants (first right of refusal, completed
Oct 2008).
3. Approve and execute an Assignment and Assumption Agreement/Power Sales
Contract (This action item)
* Resolution with attached Power Supply Resource Plan, Assignment
Agreement, and Power Sales Contract
• Certificate of Participant
4. Obtain FSA approval
5. Transfer effective
The cost to the District will be the All-In Cost of operating the transferred percentage
of the plant plus a one time fee of $164,287 upon consummation of the permanent
entitlement share transfer. The one time fee is what the City of Payson has paid into
the maintenance account for this portion of the plant that may be transferred.
4. FISCAL IMPACT
Nebo Natural Gas Electric Generation project will represent a portion of the Electric
Supply Procurement budget that might otherwise be purchased at from the market.
Current average difference ranges from $1 to $37 MWH below market.
The price of this Nebo natural gas generation is All-In cost plus a one time fee of
$164,287, paid from the purchased power budget, upon the consummation of the
permanent entitlement share transfer.
5. RECOMMENDATION
Approve and authorize the President of the Board to execute the Assignment and
Assumption Agreement/Power Sales Contract concerning the transfer of 3.6765%
Entitlement share of the Payson Project from the City of Payson to Truckee Donner
PUD.
Stephen Hollabaugh M i c ael FDHolley
Assistant General Manager General Manager
INFORMATION CONCERNING
THE PAYSON PROJECT
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PAYSON PROJECT DESCRIPTION
PROJECT SITE
The Project is located in northwest Payson City on approximately 7 acres of land next to the
Payson City wastewater treatment plant, 50 miles south of Salt Lake City and just west of I-15.
PROJECT DESCRIPTION
The Project consists of a General Electric (GE) Frame 7EA combustion turbine-generator
capable of producing 67 MW of power at 98°F, a duct-fired heat recovery steam generator and a 73
MW dual-pressure steam turbine, to provide gross combined cycle generating capacity of 140.5 MW
(estimated summer net capability is 136 MW) at design conditions of 98°F/25% humidity with duct
burners in service and foggers in operation.
The Project utilizes dry low-NOx combustors with selective catalytic reduction ("SCR") and
meets Best Available Control Technology (`BACT") requirements. Oxides of nitrogen ("NOx") and
carbon monoxide ("CO") emissions are controlled to 5.0 parts per million by volume, dry. Other
Project facilities include control and administrative buildings, a wet mechanical-draft cooling tower,
water treatment facilities and storage tanks and other ancillary facilities. The Project also includes on-
site pipelines for natural gas and water supply, wastewater discharge piping, site access and parking.
The Project provides a back-up dispatch center for UAMPS and has 24-hour video monitoring and
surveillance.
The Project was built and is currently operated by Colorado Energy Management of Lafayette,
Colorado.
WATER AND WATER TREATMENT
Approximately 400 million gallons of Type 1 treated wastewater is available from the adjacent
sewage treatment plant. This closely approximates the anticipated annual requirements for the
Project cooling needs. However, disparities between hourly flow and utilization characteristics may
require the purchase of up to 45 million gallons of additional water annually. The only significant
waste stream generated by the plant is blowdown from the cooling tower and added to the outflow
of the wastewater treatment plant.
FUEL SUPPLY
The Project is fueled entirely of natural gas. The Project's gas pipeline interconnects with
Questar Pipeline's 104 gas transmission system line at the Nebo Tap.
The Project does not own any primary firm gas transportation on Questar Pipeline's 104 system.
The Project currently contracts for firm natural gas delivery at Nebo Tap from various gas suppliers
in the region. There is every indication that primary gas transportation capacity may become
available through an upgraded system on Questar Pipeline's 104 Line through open-season offerings
or on the secondary market as available should the Project determine a need for its own gas
transportation. The ability to backhaul off the Kern River Gas Line is also available.
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ELECTRIC INTERCONNECTION
The Project lies approximately 8.5 miles southwest of the Southern Utah Valley Power System's
(SUVPS) Dry Creek Substation. The Project interconnects with SUVPS and Rocky Mountain Power
(formerly known as Utah Power) at the Dry Creek Substation via 46kV and 138kV circuits.
MARKET POSITION OF THE PAYSON PROJECT
COMPETITIVE RESOURCE
The Project lies in north-central Utah in the heart of Rocky Mountain Power's Eastern Control
Area, known as PACE. PACE resources consist mostly of base-load, coal-fired power plants in
Wyoming and Utah. There are several old gas-fired resources within the control area to meet
"peaking" needs. The Project was the first gas-fired combined cycle gas resource in the control area.
Rocky Mountain Power has since built two, large, intermediate, gas-fired, combined cycle plants in
the area to meet load growth on the Wasatch Front. The Project is still a competitive resource in the
area despite these new plants.
RELATIVE POSITION IN THE MARKET
The Project can be measured relative to other similar resources by comparing Heat Rates as
listed below in Table 1.
Table 1.
Capacity Heat Rate
Plant Name Owner (MW) (Btu/kWh)
Lakeside oc y tn. ower 7,1861
Currant Creek Rocky Mtn.Power 525 7,462
Nebo Power Station UAMPS 140 8,400
West Valley 1 Rocky Mtn.Power 40 9,878
West Valley 2 Rocky Mtn.Power 40 9,878
West Valley 3 Rocky Mtn.Power 40 9,878
West Valley 4 Rocky Mtn.Power 40 9,878
West Valley 5 Rocky Mtn.Power 40 9,878
Gadsby 4 Rocky Mtn.Power 40 10,695
Gadsby 5 Rocky Mtn.Power 40 10,695
Gadsby 6 Rocky Mtn.Power 40 10,695
Gadsby 1 Rocky Mtn.Power 60 13,495
Gadsby 2 Rocky Mtn.Power 75 13,495
Gadsby 3 Rocky Mtn.Power 100 13,495
Little Mountain Rocky Mtn.Power 1 14 1 16,574
DETERMINING THE PROJECTS RELATIVE VALUE
As a natural gas-fired resource, the proper financial measure of the Project relative value to the
market is formulaically determined by the "spark spread". The spark spread is the theoretical
measure of income (or loss) from buying natural gas and converting it to electricity. Defined, the
spark spread in dollars ($) is equal to the market price for power in $/MWh less the cost of gas in
$/MMBtu multiplied by the operational heat rate (HR) in Btu/MWh). UAMPS conservatively
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estimates a Project Heat Rate of 8,400 Btu/MWh. If the price of natural gas is $5.00/MMBtu, the
fuel cost for Nebo is $41.00/MWh. If the market price were $50.00/MWh, the spark spread would
be a positive$9.00.
The relative value of the Project can be determined as far into the future as there is a viably
accurate forward power and gas market,which is usually up to 5 years. Longer term forecasts can be
made based on prudent, but usually conservative assumptions. As an indication, the derived
Mona/Nebo Forward spark spreads as of August 21,2007 are shown below in Table 2.
Table 2.
Mona/ Nebo Spark Spread (On-Peak)
Heat Rate Aug Sept Oct Q4-07 Q1-08 Q2-08 2008 2009 2010
8.00 S 44.27 3220 2449 10,69 12.1 0 13.97 16.53 14.64 13.61
SS 8.20 S 43.66 '31 58 23.68 9 61 1�1 78, 12 66 15 15 13.14 12 10
SS 8.30 S 43.35 3 i.26 2327 9. G 12 01 14 46 2 2:9 11.;35
Full 8.40 43-0_ 30.95 22.86 €521 946 13 78 11 65 io 59
Full 8.45 e 42.89 36.79 2266 8.26 9 1v 1.+i3 1343 11 27 10.22
8.50SS 4274 30 64 22 46 7,99 8=81-1 0 70 13,09 0 901 984
SC 12.50 S C..50 18.11 620 (13.67) (17.65) (15.44) (14.40) (18.98) (20.31)
SS=Nebo SweetSpot Full=Fully Loaded SC=Simple Cycle Green=ln the I.loney Red=Out of the Money
Grey=Marginal Call
PROJECTED FORWARD POWER AND GAS MARKETS
For the Project, the most accurate and relative power and gas markets are Mona Substation
("Mona") and Opal Plant ("Opal"), respectively. Mona is generally recognized and transactable
power hub physically located approximately 13 miles south of the Project. Mona is relatively illiquid
in the forward markets due to the lack of parties that trade there and is usually priced as a derivative
of the more liquid hub of Palo Verde ("PV") located just west of Phoenix,Arizona. Opal is a natural
gas processing plant operated by Williams and is located in southwest Wyoming. Gas is traded
physically and financially at Opal with several viable and published indices. Opal is less physically
related to the Project but acts as a legitimate proxy to the Project's Nebo Tap. Nebo Tap, on the
Questar Pipeline 104 system is not a generally accepted market hub and is only used for the Project.
Nevertheless, Nebo Tap has in the past and is expected in the future to price at least equal to or at a
discount to Opal due to the system constraints on the Questar Pipeline 104 system. The most recent
indicative forward power prices in the region, specifically Mona hub, as of August 21, 2007 are
shown below in Table 3.
Table 3.
HUB Aug Sept Oct Q4.07 Ql-08 Q2.08 2008 12009. 2010 2011 2012 12013 2014 2015 2016
OnPeak Mona $ 68.75 $57.25 $ 57.00 $54.00 $ 65.00 $66.25 $ 71.50 $74.40 $73.90 $72.15 $73.15 $73.90 $74.15 $74.65 $75.15
OffPeak Mona s 47 f)r, ^ 4 75 44'vr c 42 35 e 5200 4450 IS 5' e �n 5 5:"25 c 515n S 52.00 S 52 5G0 $527 5 5325 S 54 0
Vu• 4 LJ.JU v,)4 04. W V W v v
Flat Mona $ 59.23 $51.34 $ 51.31 $48.90 $ 59.31 $56.73 $ 62.31 $64.93 $64.43 $63.12 $63.90 $64.54 $64.79 $65.29 $65.90
Flat PV $ 59.23 $51.34 $ 51.311$50.34 $ 59.31 $56.73 $ 62.31 $64.93 $64.43 $63.12 $63.90 $64.54 $64.79 $65.29 $65.90
Flat MidC $ 53.66 $52.30 $ 53.69 $57.36 $ 63.50 $45.22 $ 61.53 $63.93 $64.04 $62.82 $63.88 $64.38 $64.85 $65.35 $66.10
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INTENDED USE OF THE PAYSON PROJECT
The Project was constructed to meet Participant's needs for an additional power supply resource
that would be reliable, economical and cost-based supply of electric energy. While the Project is
available all hours of the year it tends to provide power supply during the "high load hours"
("HLH")—the 112 hours each week covered by the period from 7:00 AM to 11:00 PM; Monday
through Sunday. Such a resource is characterized as an"Intermediate"Resource.
ANALYSES OF PAYSON PROJECT
The Project is an important development for UAMPS that has provided a significant new power
supply resource. UAMPS' analyses of the Project operations indicate that the cost of energy from
the Project compares favorably with projected forward market prices of electricity. UAMPS expects
that the Project will produce significant benefits for the Participants by reducing their exposure to
market purchases of energy during HLH. Overall, UAMPS believes that the Project is a prudent
investment by the Participants that will enable them to achieve greater price stability and enhanced
reliability in their wholesale power supplies.
RECENT OPERATIONS OF PAYSON PROJECT
While not without some difficulties since commencing commercial operations in June of 2004,
the Project has proven effective and much in-line with the pro-forma analyses performed by
UAMPS. Like many new projects for relatively small organizations such as UAMPS, some
Participants are experiencing excess capacity produced on the front end of the Project's expected life
has been a challenge. UAMPS and the Participants have used various means, including power sales
and tolls to address that challenge.
Price volatility has also been a challenge due to the volatility in the gas markets, especially with
the effects of Hurricane Katrina. Nevertheless, the Project has proven to provide much better prices
relative to the corresponding power markets.
FUTURE OPERATIONS OF PAYSON PROJECT
As Project Participant loads continue to grow, and as new Participants step into the surplus
capacity it is fully expected that the Project will be utilized for internal needs.
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Mona/ Nebo Spark Spread (On-Peak)(As of 10-30-2008)
Heat Rate Nov Dec Jan Q1-08 Q2-09 Q3-09 2009 2010 2011
SS 8.20 $ 8.03 3.98 5.61 4.93 15.88 31,03 14.78 14.87 12.23
SS 8.30 $ 7.70 3.48 5.03 4.37 15.36 30.48 1424 14.26 11.60
SS 8.40 $ 736 2.97 4.46 3.82 14.85 29.92 13.69 13.64 10.97
Full 8.50 $ 7.03 2.46 3.88 3.26 14.34 29.36 13.15 13.03 10.35
Full 9.50 $ 3.68 (2.60) (1.90) (2.29) 9.20 23.80 7.73 6.92 4.10
10.00 $ 2.00 (5.13) (4.79) (5.07) 6.63 21.02 5.02 3.86 0.97
SC 12.50 $ (6.38) (17.79) (19.24) (18.97) (6.21) 7.11 (8.54) (11.42) (14.66)
SS=Nebo SweetSpot Full=Fully Loaded SC=Simple Cycle Green=ln the Money Red=Out of the Money Grey=Marginal Call
WECC FORWARD POWER PRICES (As of 10-30-2008)
HUB Nov Dec Jan Q1-08 Q2-09 Q3-09 2009 2010 2011 2012
OnPeak Mona $ 35.50 $ 45.50 $ 53.00 $ 50.50 $ 58.00 $ 76.65 $ %25 $ 65.00 $ 63.50 $ 63.25
OffPeak Mona $ 28.00 $ 31.00 $ 39.00 $ 38.00 $ 45.00 $ 49.00 $ 39.25 $ 43.00 $ 41_50 $ 41.25
Flat Mona $ 32.22 $ 39.16 $ 46.88 $ 45.03 $ 52.31 $ 64.55 $ 50.50 $ 55.38 $ 53.88 $ 53.63
Flat PV $ 33.09 $ 40.03 1 $ 47.75 $ 44.47 $ 50.63 $ 63.71 $ 50.22 $ 55.09 $ 53.59 $ 53.34
Flat MidC $ 46.751 $ 56.101 $ 57.25 $ 52.81 $ 33.30 $ 61.47 $ 50.78 $ 55.91 $ 54.91 $ 55.08
For WECC Standard Products:6X16,HLH;and 6X8+24 LLH,January through December
Truckee Donner Public Utility District
November 5, 2008
The Board of Directors (the "Governing Body") of Truckee Donner Public Utility
District ("TDPUD"), pursuant to due notice met in regular public session on November 5, 2008,
at the hour of 6:00 p.m., at its regular meeting place at 11570 Donner Pass Road, Truckee,
California. The meeting was duly called to order by the President with the following members of
the Governing Body being present, constituting a quorum of the Governing Body:
NAME TITLE
Tim Taylor President
Pat Sutton Vice President
Joe Aguera Board Member
Ron Herring Board Member
William L. Thomason Board Member
Absent:
Also Present:
NAME TITLE
Michael D Holley General Manager
Stephen Hollabaugh Assistant General Manager
Steve Gross Attorney
Payson Transfer(2)resolution.doc TDPUD Reso.&Minutes
0865790/JCB/CJ/wlc
After the conduct of business not pertinent to the following, the following resolution was
then introduced in written form and pursuant to motion duly made and seconded, was adopted
and approved by the following vote:
Aye:
Nay:
The resolution was thereupon signed by the President, was attested and countersigned by
the Clerk, and was ordered recorded in the official records of TDPUD. The resolution is as
follows:
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RESOLUTION NO.
A RESOLUTION AUTHORIZING AND APPROVING: (1) A POWER
SUPPLY RESOURCE PLAN; (2)THE ACQUISITION OF AN ENTITLEMENT
SHARE IN THE PAYSON POWER PROJECT; (3) AN ABSOLUTE
ASSIGNMENT AGREEMENT; (4) THE PAYSON POWER PROJECT
POWER SALES CONTRACT WITH UTAH ASSOCIATED MUNICIPAL
POWER SYSTEMS("UAMPS");AND(5)RELATED MATTERS.
WHEREAS, Truckee Donner Public Utility District ("TDPUD") 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
ownership and operation of electric generating, transmission and related facilities in order to
secure and provide reliable, economic sources of electric power and energy for its members;
WHEREAS, UAMPS has acquired and constructed and now owns and operates a gas-fired
electric generating facility in Payson, Utah, together with related facilities and equipment (the
"Project");
WHEREAS, all of the capacity and output of the Project has been sold to participating
members of UAMPS (collectively, the "Participants"), pursuant to separate Payson Power
Project Power Sales Contracts, each dated as of June 1, 2002 (each a "Power Sales Contract"
and collectively, the "Power Sales Contracts")between UAMPS and each of the Participants;
WHEREAS, capitalized terms used and not otherwise defined in this resolution shall have
the meanings assigned to them in the Power Sales Contracts;
WHEREAS, one of the Participants, Payson City, Utah ("Payson") has notified UAMPS
that it proposes to transfer all of its rights and obligations with respect to 4,118 kW of the
Project's optimum operating capability (5,000 kW of the Project's maximum operating
capability) to TDPUD, by the assignment of an Entitlement Share of 3.6768% and a Debt Service
Share of 3.8888% (collectively, the "Assigned Interest") to TDPUD, pursuant to and in
compliance with the provisions of the Power Sales Contract, and TDPUD has notified UAMPS
that it desires to absolutely assume and acquire the Assigned Interest;
WHEREAS, there has been prepared and delivered to TDPUD the form of an Absolute
Assignment Agreement (the "Assignment Agreement"), among Payson, UAMPS and TDPUD,
providing for the absolute assignment and transfer of the Assigned Interest to TDPUD;
- 3 - TDPUD Reso.&Minutes
WHEREAS, TDPUD desires to execute a Power Sales Contract to acquire an Entitlement
Share in the Project, through which TDPUD will hold and own the Assigned Interest;
WHEREAS, the Board of Directors of TDPUD (the "Governing Body") has reviewed the
long-term power supply resource plan (the "Power Supply Resource Plan") of TDPUD which
sets forth the needs of TDPUD for long-term, reliable, cost-based supplies of electric power and
energy, and has considered, among other things, the following: (a)the economies and efficiencies
of scale achieved and to be achieved through the ownership and operation by UAMPS of the
Project for the benefit of the Participants, (b) the need of TDPUD for the electric energy
represented by the Assigned Interest 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
length of time in advance necessary to obtain, acquire or construct an additional or alternative
power supply, (e) the reliability and availability of TDPUD's existing power supply sources, the
Project and alternative power supply sources and the cost or estimated cost thereof, (f) the
financial, regulatory, and technical feasibility of operating the Project, and (g) all such other
matters as were deemed necessary or appropriate by TDPUD 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)
certain descriptions and summaries of the Project, the Power Sales Contract and the Project
Agreements, and representatives of TDPUD 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, TDPUD acknowledges that the obligation of TDPUD to make the.payments
provided for in the Power Sales Contract will be a special obligation of TDPUD and an operating
expense of TDPUD's electric system, payable from the revenues and other available funds of the
electric system, and that TDPUD 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; and
WHEREAS, TDPUD now desires to authorize and approve the acquisition of the Assigned
Interest and its Entitlement Share, the Assignment Agreement and the Power Sales Contract;
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 TDPUD attached hereto as Annex A is hereby authorized and approved.
Section 2. Execution and Delivery of the Assignment Agreement. The Assignment
Agreement, in substantially the form attached hereto as Annex B, including the Assigned Interest
thereunder, is hereby authorized and approved, and the President is hereby authorized,
- 4 - TDPUD Reso.&Minutes
empowered and directed to execute and deliver the Assignment Agreement on behalf of TDPUD,
and the Clerk is hereby authorized, empowered and directed to attest and countersign such
execution and to affix the corporate seal of TDPUD to the Assignment Agreement, with such
changes to the Assignment Agreement from the form attached hereto as Annex A as shall be
necessary to complete the form of the Assignment Agreement or to correct any minor
irregularities or ambiguities therein and as are approved by the President, his or her execution
thereof to constitute conclusive evidence of such approval.
Section 3. Execution and Delivery of the Power Sales Contract; Participant's
Representative. (a) The Power Sales Contract, in substantially the form attached hereto as Annex
C, including TDPUD's 3.6768% Entitlement Share and the resulting Debt Service Percentage
and Debt Service Share, 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
TDPUD, and the Clerk is hereby authorized, empowered and directed to attest and countersign
such execution and to affix the corporate seal of TDPUD to the Power Sales Contract, with such
changes to the Power Sales Contract from the form attached hereto as Annex C° as shall be
necessary to conform to TDPUD'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 for TDPUD. 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 4. Further Authority. The President, Clerk and Attorney for TDPUD are
hereby authorized and directed to take all actions on their part necessary or desirable in
connection with the execution and delivery of the Assignment Agreement, Power Sales Contract
and Second Supplement and the completion of the transactions contemplated thereby, including
the execution and delivery of such closing certificates and opinions of counsel as may be
necessary. If (a) the President or (b) the Clerk shall be unavailable to execute or attest and
countersign, respectively, the foregoing agreements and contracts, the same may be executed, or
attested and countersigned, respectively, by (i) the Vice President or any other member of the
Board of Directors, or(ii) any Assistant Clerk.
Section S. 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.
- 5 - TDPUD Reso.&Minutes
(d) This resolution shall take effect immediately upon its adoption and approval.
ADOPTED AND APPROVED this 5th day of November, 2008.
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
By
Tim F. Taylor, President
ATTEST:
Michael D. Holley, Clerk of the Board
[SEAL]
- 6 - TDPUD Reso.&Minutes
ANNEX A
[Attach Power Supply Resource Plan]
Annex A-1 TDPUD Reso.&Minutes
Truckee-Donner
(Shortage /Surplus
Energy Growth Growth Energy Energy Forecast (Shortage)/Surplus Long-Term Total Average MW Percentage
Year Rate Rate History No Growth 2%Growth 4%Growth No Growth 2%Growth 4%Growth Hunter San Juan CRSP Nebo IPP 1&2 Idaho IPP 3 Contracts Mem Gen Resources 2%Growth 4%Growth 2%Growth 4%Growth
2000 135,643 0 0 0 0 0 0
2001 132,162 0 0 0 0 0 0
2002 135,569 0 0 0 0 0 0
2003 2% 4% 136,900 0 0 0 0 0 0
2004 2% 4% 143,970 0 0 0 0 0 0
2005 2% 4% 146,631 0 0 0 0 9,424 0 9,424
2006 2% 4% 146,631 149,564 152,496 -126,577 -129,510 -132,442 0 0 0 0 20,054 0 20,054
2007 2% 4% 146,631 152,555 158,596 -124,457 -130,381 -136,422 0 0 0 0 22,174 0 22,174
2008 2% 4% 146,631 155,606 164,940 9,957 982 -8,352 0 0 0 32,713 100,326 0 23,549 0 156,588
2009 2% 4% 146,631 158,718 171,538 8,807 -3,280 -16,099 0 0 0 32,713 99,176 0 23,549 0 155,438
2010 2% 4% 146,631 161,892 178,399 ! 8,478 -6,783 -23,290 0 0 0 31,870 99,691 0 23,549 0 155,109
2011 2% 4% 146,631 165,130 185,535 8,861 -9,638 -30,043 0 0 0 31,730 100,214 0 23,549 0 155,492
2012 2% 4% 146,631 168,433 192,956 -92,688 -114,489 -139,013 0 0 0 30,395 0 0 23,549 0 53,943 -13.1 -15.9 -68% -72%
2013 2% 4% 146,631 171,802 200,675 92,823 -117,994 -146,867 0 0 0 30,259 0 0 23,549 0 53,808 -13.5 -16.8 -69% -73%
2014 2% 4% 146,631 175,238 208,702 94,228 -122,834 -156,298 0 0 0 28,855 0 0 23,549 0 52,403 -14.0 -17.8 -70% -75%
2015 2% 4% 146,631 178,742 217,050 -95,082 -127,193 -165,500 1 0 0 0 28,001 0 0 23,549 0 51,549 -14.5 -18.9 -71% -76%
2016 2% 4% 146,631 182,317 225,732 -95,315 -131,001 -174,416 0 0 0 27,767 0 0 23,549 0 51,316 -15.0 -19.9 -72% -77%
2017 2% 4% 146,631 185,964 234,761 -95,930 -135,263 -184,060 0 0 0 27,152 0 0 23,549 0 50,701 -15.4 -21.0 -73% -78%
2018 2% 4% 146,631 189,683 244,151 -96,281 -139,333 -193,801 0 0 0 26,801 0 0 23,549 0 50,350 -15.9 -22.1 -73% -79%
2019 2% 4% 146,631 193,476 253,917 -96,900 -143,746 -204,187 0 0 0 26,182 0 0 23,549 0 49,731 -16.4 -23.3 -74% -80%
2020 2% 4% 146,631 197,346 264,074 -98,476 -149,191 -215,919 0 0 0 24,607 0 0 23,549 0 48,155 -17.0 -24.6 -76% -82%
2021 2% 4% 146,631 201,293 274,637 -99,056 -153,718 -227,062 0 0 0 24,026 0 0 23,549 0 47,575 -17.5 -25.9 -76% -83%
2022 2% 4% 146,631 205,319 285,623 -99,424 -158,112 -238,416 0 0 0 23,658 0 0 23,549 0 47,207 -18.0 -27.2 -77% -83%
2023 2% 4% ' 146,631 209,425 297,048 100,564 -163,358 -250,981 0 0 0 22,518 0 0 23,549 0 46,067 -18.6 -28.7 -78% -84%
2024 2% 4% 146,631 213,614 308,929 100,564 -167,547 -262,863 0 0 0 22,518 0 0 23,549 0 46,067 -19.1 -30.0 -78% -85%
2025 2% 4% I 146,631 217,886 321,287 100,564 -171,819 -275,220 0 0 0 22,518 0 0 23,549 0 46,067 -19.6 -31.4 -79% -86%
2026 2% 4% 146,631 222,244 334,138 -100,564 -176,177 -288,071 0 0 0 22,518 0 0 23,549 0 46,067 -20.1 -32.9 -79% -86%
2027 2% 4% 146,631 226,689 347,504 -100,564 -180,622 -301,437 0 0 0 22,518 0 0 23,549 0 46,067 -20.6 -34.4 -80% -87%
2028 2% 4% 146,631 231,222 361,404 -124,113 -208,704 -338,886 ! 0 0 0 22,518 0 0 0 22,518 -23.8 -38.7 -90% -94%
2029 2% 4% 146,631 235,847 375,860 -124,113 -213,329 -353,342 i 0 0 0 22,518 0 0 0 22,518 -24.4 -40.3 -90% -94%
2030 2% 4% 146,631 240,564 390,894 -124,113 -218,046 -368,376 0 0 0 22,518 0 0 0 22,518 1 -24.9 -42.1 -91% -94%
Average 11/21/2006 18.0 -26.9 -77% -83%
Peak Growth Growth Peak Peak Forecast (Shortage)/Surplus Long-Term Total
Year Rate Rate History No Growth 2%Growth 4%Growth No Growth 2%Growth 4%Growth Hunter San Juan CRSP Nebo IPP 1&2 Idaho IPP 3 Contracts Mem Gen Resources
2000 28.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
2001 29.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
2002 30.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
2003 2% 4% 32.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
2004 2% 4% 32.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0
2005 2% 4% 32.2 0.0 0.0 0.0 0.0 0.0 2.3 0.0 2.3
2006 2% 4% 32.2 32.8 33.5 -29.1 -29.7 -30.4 0.0 0.0 0.0 0.0 0.0 3.1 0.0 3.1
2007 2% 4% 32.2 33.5 34.8 -28.1 -29.4 -30.7 0.0 0.0 0.0 0.0 0.0 4.1 0.0 4.1
2008 2% 4% 32.2 34.1 36.2 -8.0 -10.0 -12.1 0.0 0.0 0.0 5.4 14.6 0.0 4.1 0.0 24.1
2009 2% 4% 32.2 34.8 37.6 -8.3 -11.0 -13.8 0.0 0.0 0.0 5.4 14.3 0.0 4.1 0.0 23.9
2010 2% 4% 32.2 35.5 39.2 -8.2 -11.6 -15.2 0.0 0.0 0.0 5A 14.5 0.0 4.1 0.0 24.0
2011 2% 4% 32.2 36.2 40.7 -8.1 -12.1 -16.6 0.0 •0.0 0.0 5.4 14.6 0.0 4.1 0.0 24.1
2012 2% 4% 32.2 37.0 42.3 -22.7 -27.5 -32.8 0.0 0.0 0.0 5.4 0.0 0.0 0 4.1 0.0 9.5
2013 2% 4% 32.2 37.7 44.0 -22.7 -28.2 -34.5 0.0 0.0 0.0 5.4 0.0 0.0 0 4.1 0.0 9.5
2014 2% 4% 32.2 38.5 45.8 -22.7 -29.0 -36.3 0.0 0.0 0.0 5.4 0.0 0.0 0 4.1 0.0 9.5
2015 2% 4% 32.2 39.2 47.6 -22.7 -29.7 -38.1 0.0 0.0 0.0 5.4 0.0 0.0 0 4.1 0.0 9.5
2016 2% 4% 32.2 40.0 49.5 -22.7 -30.5 -40.0 0.0 0.0 0.0 5.4 0.0 0.0 0 4.1 0.0 9.5
2017 2% 4% 32.2 40.8 51.5 -22.7 -31.3 -42.0 0.0 0.0 0.0 5.4 0.0 0.0 0 4.1 0.0 9.5
2018 2% 4% 32.2 41.6 53.6 -22.7 -32.1 -44.1 0.0 0.0 0.0 5.4 0.0 0.0 0 4.1 0.0 9.5
2019 2% 4% 32.2 42.5 55.7 -22.7 -33.0 -46.2 0.0 0.0 0.0 5.4 0.0 0.0 0 4.1 0.0 9.5
2020 2% 4% 32.2 43.3 58.0 -22.7 -33.8 -48.4 0.0 0.0 0.0 5.4 0.0 0.0 0 4.1 0.0 9.5
2021 2% 4% 32.2 44.2 60.3 -22.7 -34.7 -50.8 0.0 0.0 0.0 5.4 0.0 0.0 0 4.1 0.0 9.5
2022 2% 4% 32.2 45.1 62.7 -22.7 -35.6 -53.2 0.0 0.0 0.0 5.4 0.0 0.0 0 4.1 0.0 9.5
2023 2% 4% 32.2 46.0 65.2 -22.7 -36.5 -55.7 0.0 0.0 0.0 5A 0.0 0.0 0 4.1 0.0 9.5
2024 2% 4% 32.2 46.9 67.8 -22.7 -37.4 -58.3 0.0 0.0 0.0 5.4 0.0 0.0 0 4.1 0.0 9.5
2025 2% 4% 32.2 47.8 70.5 -22.7 -38.3 -61.0 0.0 0.0 0.0 5.4 0.0 0.0 0 4.1 0.0 9.5
2026 2% 4% 32.2 48.8 73.3 -22'7 -39.3 -63.8 0.0 0.0 0.0 5.4 0.0 0.0 0 4.1 0.0 9.5
2027 2% 4% 32.2 49.7 76.3 -26.8 -44.3 -70.9 0.0 0.0 0.0 5.4 0.0 0.0 0 0.0 5.4
2028 2% 4% 32.2 50.7 79.3 -26.8 -45.3 -73.9 0.0 0.0 0.0 5.4 0.0 0.0 0 0.0 5.4
2029 2% 4% 32.2 51.8 82.5 -26.8 -46.4 -77.1 0.0 0.0 0.0 5.4 0.0 0.0 0 0.0 5.4
2030 2% 4% 32.2 52.8 85.8 -26.8 -47.4 -80.4 0.0 0.0 0.0 5.4 0.0 0.0 0 0.0 5.4
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O IN � (fl CC) O IN � O 00 O N � CD 00 O
T T- N N N N N M
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Year
ANNEX B
[Attach Assignment Agreement]
Annex B-1 TDPUD Reso.&Minutes
ABSOLUTE ASSIGNMENT AGREEMENT
This ABSOLUTE ASSIGNMENT AGREEMENT (this "Agreement") is made and entered into
this 1st day of December, 2008 (the "Effective Date") by and between the Payson City, a Utah
municipal corporation ("Payson") and Truckee Donner Public Utility District, a California
public utility district ("TDPUD"). Payson and TDPUD are sometimes individually referred to
herein as a"Party" and collectively as the "Parties". Utah Associated Municipal Power Systems,
a political subdivision of the State of Utah ("UAMPS"), has joined in this Agreement in order to
facilitate and administer the transaction between the Parties.
RECITALS:
A. DAMPS and Payson have previously entered into that certain Payson
Power Project Power Sales Contract dated as of June 1, 2002 (the "Power Sales
Contract") for the purchase by Payson of power and energy from the Payson Power
Project of UAMPS (the "Project"). Pursuant to the Power Sales Contract, Payson has an
Entitlement Share of 11.7470%, and a Debt Service Share of 12.4247%.
B. Payson has determined that the capacity and energy available to it from its
Entitlement Share exceed its present power supply requirements and desires to transfer its
rights and obligations with respect to a 3.6768% Entitlement Share and a 3.8888% Debt
Service Share under the Power Sales Contract, representing approximately 5,000 kW of
capacity at the Project's maximum net operating capability of 136,000 kW ("PM4X")
and approximately 4,118 kW of capacity at the Project's optimum operating capability of
1129000 kW ("Sweet Spot"), and any and all other privileges, claims, and responsibilities
of every type and description that Payson may have under its Power Sales Contract in
connection therewith(the "Assigned Interest"), to TDPUD by assignment hereunder.
C. TDPUD, subject to the conditions set forth in this Agreement and the
terms and provisions of the New Power Sales Contract (defined below) between it and
DAMPS, desires to accept and assume the Assigned Interest.
D. The Board of Directors of UAMPS has by resolution determined that the
absolute and unconditional assignment of the Assigned Interest pursuant to this
Agreement (i) is in the best interest of DAMPS and the Participants, and (ii) will not
adversely affect UAMPS, any of the Participants or the security for the payment of the
Bonds
Now, THEREFORE, in consideration of the foregoing, the mutual promises, waivers, and
releases contained herein, and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the Parties agree as follows:
Section 1. Definitions and Construction. Initially capitalized terms used and not
otherwise defined in this Agreement have the meanings assigned to them in the Power Sales
AAA.Payson City Transfer.doc
0865790/JCB/CJ
Contract. In addition to the terms defined in the preamble to and the recitals of this Agreement,
the following terms shall have the following meanings when used in this Agreement:
"Government Agency" means the United States of America, any state thereof, or any
local jurisdiction, or any political subdivision of any of the foregoing including, but not limited
to courts, administrative bodies, departments, commissions, boards, bureaus, agencies,
municipalities or other instrumentalities.
"New Power Sales Contract" means a Payson Power Project Power Sales Contract
between UAMPS and TDPUD, in substantially the form of the Power Sales Contract, with
certain revisions to reflect TDPUD's acquisition of the Assigned Interest and its status as a
California public utility district.
"Time of Transfer" means the later of (i) 12:01 a.m., prevailing Mountain Time, on
December 1, 2008. or (ii) 12:01 a.m., prevailing Mountain Time, on the day immediately
following the business day on which all of the conditions precedent specified in Section 2(b)
have been satisfied.
Section 2. Assignment of Assigned Interest; Conditions Precedent. (a) Effective at
and as of the Time of Transfer, (i) Payson hereby transfers and assigns to TDPUD and its
respective successors and assigns, the Assigned Interest, and (ii) TDPUD hereby acquires and
accepts the transfer and assignment of the Assigned Interest from Payson. It is the intention and
understanding of each of the Parties that the transfer and assignment of the Assigned Interest is
and shall be absolute, unconditional, and irrevocable, and that the Assigned Interest represents
the specified amounts of Payson's Entitlement Share and Debt Service Share to be assigned to
TDPUD as set forth in the Recitals above.
(b) Notwithstanding anything to the contrary herein, the assignment and assumption of
the Assigned Interest as contemplated hereunder will not become effective and the Time of
Transfer will not occur until UAMPS shall have received:
(i) a fully-executed New Power Sales Contract, together with such certificates
and opinions of TDPUD and its counsel as are contemplated by the New Power Sales
Agreement or as UAMPS may reasonably require;
(ii) an opinion of nationally recognized bond counsel to DAMPS to the effect
that the assignment and assumption of the Assigned Interest will not by itself adversely
affect the tax exempt status of interest on any of the Bonds; and
(iii) the written consent of Financial Security Assurance, Inc. to the assignment
and assumption of the Assigned Interest.
Section 3. Effect of Assignment; Final Billing. (a) Upon the occurrence of the Time
of Transfer (i) all right, title, interest and Entitlement Share of Payson in, under and to its Power
Sales Contract with respect to the Assigned Interest shall terminate, (ii) Payson"s Entitlement
Share and Debt Service Share under the Power Sales Contract shall be reduced to 8.0705% and
2
8.5361%, respectively, (iii) TDPUD shall own the Assigned Interest and shall have and hold all
rights and obligations associated therewith, all upon and subject to the terms and provisions of
the New Power Sales Contract, and (iv) to the extent permitted by law, TDPUD shall indemnify
and hold harmless Payson against all obligations or liabilities arising with respect to the
Assigned Interest from and after the Time of Transfer.
(b) Payson shall remain obligated to UAMPS with respect to the Assigned Interest
under the provisions of the Power Sales Contract up to the Time of Transfer. All costs, expenses
and obligations accruing to Payson with respect to the Assigned Interest up to the Time of
Transfer shall be included in the next regular billing statement submitted to Payson by UAMPS
pursuant to the provisions of Section 7 of the Power Sales Contract at the time and in accordance
with UAMPS' regular monthly billing cycle for the Project. The rights and obligations of
Payson with respect to such billing statement in accordance with the Power Sales Contract shall
survive the Time of Transfer. To the extent permitted by law, Payson shall indemnify and hold
harmless TDPUD against all obligations and liabilities arising with respect to the Assigned
Interest up until the Time of Transfer.
Section 4. Representations, Warranties and Agreements of the Parties. As a material
inducement to entering into this Agreement, each Party, with respect to itself, hereby represents
and warrants to and agrees with each other Party as of the Effective Date as follows:
(a) it is duly organized and validly existing under the laws of the state in
which it is organized, and has all requisite power and authority, corporate or otherwise, to
enter into and to perform its obligations hereunder and to carry out the terms and
conditions hereof and the transactions contemplated hereby;
(b) there is no litigation, action, suit, proceeding or investigation pending or,
to the best of such Party's knowledge, threatened, before or by any Government Agency,
which could reasonably be expected to materially and adversely affect the performance
by such Party of its obligations hereunder, or that questions the validity, binding effect or
enforceability of this Agreement, any action taken or to be taken by such Party pursuant
to this Agreement or any of the transactions contemplated by this Agreement;
(c) the execution, delivery and performance of this Agreement by such Party
have been duly authorized by all necessary action on the part of such Party and do not
require any approval or consent of any holder (or any trustee for any holder) of any
indebtedness or other obligation of such Party, except for such approvals and consents as
have been obtained;
(d) this Agreement has been duly executed and delivered on its behalf by a
duly authorized officer of such Party and constitutes the legal, valid and binding
obligation of such Party, enforceable against it in accordance with its terms, as such
enforceability may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors' rights generally and by general
principles of equity;
3
(e) the execution, delivery and performance of this Agreement by such Party
shall not violate any provision of any law, rule, regulation, order, writ,judgment, decree
or other legal or regulatory determination applicable to it;
(f) the execution, delivery and performance by such Party of this Agreement,
and the consummation of the transactions contemplated hereby and thereby, including the
incurrence by such Party of its financial obligations hereunder, shall not result in any
violation of any term of any material contract or agreement applicable to it, or any of its
charter or bylaws or of any license, permit, franchise, judgment, writ, injunction or
regulation, decree, order, charter, law, ordinance, rule or regulation applicable to it or any
of its properties, or to any obligations incurred by it or by which it or any of its properties
or obligations are bound or affected, or of any determination or award of any arbitrator
applicable to it, and shall not conflict with, or cause a breach of, or default under, any
such term or result in the creation of any lien upon any of its properties or assets;
(g) to the best of the knowledge and belief of such Party, no consent,
approval, order or authorization of, or registration, declaration or filing with, or giving of
notice to, obtaining of any license or permit from, or taking of any other action with
respect to, any Government Agency is required in connection with the valid
authorization, execution, delivery and performance by such Party of this Agreement or
the consummation of any of the transactions contemplated hereby, except for such
consents, approvals and similar requirements as shall have been previously obtained; and
(h) it hereby waives compliance by the other Party with all notices required to
be given by such Party and any other actions required to be taken by such Party under
Section 17(c) of the Power Sales Contract in connection with the assignment and transfer
of the Assigned Interest.
Section 5. Additional Representations, Warranties and Agreements of Payson. As a
material inducement to the execution and performance of this Agreement by UAMPS and the
acceptance by TDPUD of the Assigned Interest, Payson hereby represents and warrants and
agrees with DAMPS and TDPUD as of the Effective Date as follows:
(a) it has made no assignment of any of the Assigned Interest to any person or
entity except as set forth herein;
(b) it has the unqualified right to sell, assign and transfer the Assigned
Interest, subject only to the provisions of the Power Sales Contract, and has done no act,
nor failed to do any act, which might prevent TDPUD from exercising (to the extent of
the Assigned Interest), on and after the Time of Transfer, any of the rights, powers and
privileges conferred upon Payson by the Power Sales Contract;
(c) it has, and hereby transfers to TDPUD, good title to the Assigned Interest,
free and clear of any liens, charges or encumbrances; and
4
(d) the agreements, covenants and obligations of TDPUD contained in this
Agreement, including its assumption of the Assigned Interest, constitute full and
complete consideration and fair value for the transfer and assignment of the Assigned
Interest.
Section 6. Further Assurances. The Parties agree to execute, to cause to be
acknowledged and to deliver to one another and to any other parties such other and further
instruments, documents, agreements, and certificates, and to perform such other and further acts
as may be required to accomplish the transactions contemplated by this Agreement.
Section 7. Contemporaneous Deliveries. The following documents shall be delivered
by each Parry contemporaneously with the execution of this Agreement:
(a) an original or certified copy of the resolution of its governing body
authorizing it to execute and deliver this Agreement and to enter into the transactions
contemplated hereby; and
(b) a legal opinion to the effect that this Agreement has been duly authorized,
executed and delivered by it and constitutes its legal, valid and binding obligation,
enforceable in accordance with its terms.
Section 8. Renewal and Replacement Fund Deposit; Costs of Assignment. (a)
Pursuant to Section 18 of the Power Sales Contracts, DAMPS has previously established_a
Reserve and Contingency Fund with respect to the Project, and pursuant to the Annual Budgets
for the Project has billed to and collected from Payson $524,923, which is now on deposit in the
Reserve and Contingency Fund. On or before the business day preceding the Time of Transfer,
TDPUD shall transfer to UAMPS for deposit into the Reserve and Contingency Fund $164,287,
being an amount that bears the same proportion to Payson's existing deposit as the Entitlement
Share acquired by TDPUD bears to Payson's original Entitlement Share. UAMPS agrees to (i)
deposit the transferred amount upon receipt into the Reserve and Contingency Fund and (ii)
release an equal amount from the Reserve and Contingency Fund and pay or credit the same to
Payson.
(b) Promptly after the Time of Transfer, UAMPS shall provide a statement to TDPUD
setting forth all costs and expenses incurred by UAMPS in connection with the assignment of the
Assigned Interest, including the preparation, review and authorization of this Agreement and the
New Power Sales Contract. TDPUD hereby agrees that it shall pay all amounts set forth in such
statement within 30 days of receipt of such statement.
Section 9. Entire Agreement. This Agreement constitutes the entire understanding and
agreement between the Parties relating to the assignment of the Assigned Interest. This
Agreement may be modified only by written amendment signed by all the Parties hereto or their
successors in interest.
5
Section 10. Severability. The invalidity or unenforceability of any particular provision
of this Agreement shall not affect the other provisions hereof, and this Agreement shall be
construed in all respects as if such invalid provisions were omitted.
Section 11. Governing Law; Venue. This Agreement shall be governed by the laws of
the State of Utah;provided that the power and authority of TDPUD to enter into and perform
this Agreement shall be determined under the laws of the State of California. Any litigation
among the Parties arising out of or related to this Agreement will be conducted exclusively in the
Third District Court of the State of Utah in Salt Lake County, Utah, and each Party consents to
the venue of, and jurisdiction by, such court.
Section 12. Counterparts and Facsimile Signatures. This Agreement may be executed
in one or more counterparts with the same effect as if all of the signatures on such counterparts
appeared on one document. All executed counterparts shall together constitute one and the same
agreement. Facsimile signatures shall be considered as original signatures.
[Signature Pages Follow]
6
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective Date.
PAYSON CITY,UTAH
By
Burtis Bills, Mayor
[SEAL]
Attest:
Jeanette Curtis, City Recorder
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
By
Tim F. Taylor, President of the Board
[SEAL]
Attest and Countersign:
Michael D. Holley, Clerk of the Board
7
UTAH ASSOCIATED MUNICIPAL POWER SYSTEMS
By
Jack Taylor, Chair
[SEAL]
Attest:
Jackie Coombs, Assistant Secretary
8
ANNEX C
[Attach Power Sales Contract]
Annex C-1 TDPUD Reso.&Minutes
PAYSON POWER PROJECT
POWER SALES CONTRACT
BETWEEN
UTAH ASSOCIATED MUNICIPAL POWER SYSTEMS
AND
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
DATED AS OF DECEMBER 1,2008
Payson Power Sales Contract.doc
0865790/JCB/CJ
Section 34. Applicable Law; Construction.............................................................40
Section 35. Severability; No Merger.......................................................................40
Section 36. Representations and Warranties of Participant....................................40
SCHEDULE I Schedule of Participants, Entitlement Shares, Prepayment 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-
WHEREAS, UAMPS desires to enter into this Power Sales Contract with the Participant
(as identified in the preamble to this Power Sales Contract) to provide for the acquisition by the
Participant of the Assigned Interest, and the Participant desires to enter into this Power Sales
Contract with UAMPS in order to obtain a long-term, cost-based supply of Electric Energy by
the acquisition of an Entitlement Share, through which the Participant shall hold and own the
Assigned Interest, pursuant to the terms and conditions of this Power Sales Contract;
WHEREAS, prior to its authorization of the execution, delivery and performance by the
Participant of this Power Sales Contract, the governing body of the Participant has reviewed (or
caused a review to be made on its behalf) various descriptions and summaries of the Project, the
Project Agreements and this Power Sales Contract, and the Participant's current and reasonably
anticipated future requirements for Electric Power and Electric Energy, and the governing body
of the Participant has determined that it is necessary and desirable for the Participant to enter into
this Power Sales Contract in order to obtain a long-term, cost-based supply of Electric Energy by
the acquisition of an Entitlement Share pursuant to the terms and conditions of this Power Sales
Contract;
WHEREAS, pursuant to the Power Sales Contracts and subject to the provisions of the
Project Agreements, UAMPS will operate or cause the Project to be operated and will schedule
the Project Output for the joint and ratable benefit of all of the Participants and, in order to
maximize the benefits of the Project to the Participant and to all other Participants, the
Participant desires to authorize DAMPS to cause the Project to be operated in accordance with
Prudent Utility Practice and to take certain other actions with respect to the disposition of the
Project Output, all as provided herein; and
WHEREAS, UAMPS and the Participant are duly authorized under applicable provisions
of law, to execute, deliver and perform this Power Sales Contract and their respective governing
bodies and any regulatory agencies having jurisdiction have taken all necessary actions and given
all necessary approvals in order to constitute this Power Sales Contract as the legal, valid and
binding obligation of the parties.
Now, THEREFORE, for and in consideration of the mutual covenants and agreements
herein contained, it is agreed by and between the parties to this Power Sales Contract as follows:
Section 1. Definitions and Explanations of Terms. In addition to the terms defined in
the preamble and recitals, as used in this Power Sales Contract and in the recitals set out above:
"Act" means the Interlocal Cooperation Act, Title 11, Chapter 13, Utah Code Annotated
1953, as amended, and other applicable provisions of law.
"Additional Bonds" means additional Bonds from time to time issued by UAMPS
pursuant to the Financing Documents and in accordance with this Power Sales Contract.
"Additional Facilities" means capital additions, betterments and replacements and other
capital items directly and functionally related to the Project, including electric transmission, fuel
transportation and related facilities, additional electric generating and related facilities located at
VI-2
thereto, and the cost of planning, designing, acquiring, constructing and placing in operation the
Initial Facilities and any Additional Facilities. "Cost" or "Cost of the Project" also includes, but
is not limited to, the following:
(1) working capital and reserve requirements of the Project, including, without
limitation, amounts for deposit into the Reserve and Contingency Fund and those items
set forth in the definition of Operation and Maintenance Costs, as may be determined
from time to time by UAMPS;
(2) interest accruing in whole or in part on Bonds issued to pay all or any
portion of the Cost of the Project or the Cost of Additional Facilities prior to and during
the acquisition and construction thereof and for such additional period as UAMPS may
determine to be reasonably necessary for placing the Project or the Additional Facilities in
operation in accordance with the provisions of the Financing Documents;
(3) the deposit or deposits, if any, required to be made under the Financing
Documents from the proceeds of Bonds into any fund or account established pursuant to
the Financing Documents to meet debt service reserve requirements for the Bonds and
premiums and fees payable for any credit or liquidity facilities with respect to the Bonds;
(4) the deposit or deposits required to be made under the Financing
Documents from the proceeds of Bonds into any fund or account established pursuant to
the Financing Documents which deposit or deposits are required by the Financing
Documents;
(5) the payment of principal or redemption price of and interest on any Bond
Anticipation Notes issued for the purpose of providing short-term financing for the Cost
of the Project;
(6) planning and development costs, engineering fees, contractors' fees,
fiduciaries' fees, auditors' and accountants' fees, costs of obtaining all permits and
approvals, the cost of real property, labor, materials, equipment, supplies, training and
testing costs, insurance premiums, legal, financial advisory and financing costs and
issuance costs of the Bonds, costs of any litigation related to the Project, the Project
Agreements, this Power Sales Contract or the interests and transactions contemplated by
such agreements and this Power Sales Contract, amounts payable under the Host City
Agreement during or in connection with the acquisition and construction of the Project,
any amounts payable under the Ground lease during the acquisition and construction of
the Project, administrative and general costs, and all other costs properly allocable to the
acquisition and construction of the Project and placing the same in operation;
(7) all costs relating to litigation, claims or judgments not otherwise covered
by insurance and arising out of the acquisition, construction or operation of the Project;
VI-4
liquidity instruments for and ratings on the Bonds and other costs payable by UAMPS from time
to time in connection with the Bonds.
"Debt Service Percentage" means, with respect to each Participant and as of any date of
determination, the percentage obtained by subtracting the Participant's Prepayment Percentage
from the Participant's Entitlement Share. The Participant's initial Debt Service Percentage is set
forth on Schedule I attached hereto.
"Debt Service Share" means, with respect to each Participant and as of any date of
determination, the actual percentage of Debt Service Costs payable by the Participant,
determined by dividing the Participant's Debt Service Percentage (expressed as a decimal) by the
sum (expressed as a decimal) of the Debt Service Percentages of all Participants, including the
Participant whose Debt Service Share is being determined. The Participant's initial Debt Service
Share is set forth on Schedule I attached hereto.
"Effective Date" means, with respect to this Power Sales Contract, the date and time that
is simultaneous with the Participant's receipt of the Assigned Interest, as set forth in the
Assignment Agreement.
"Electric Power" means electric power expressed in kilowatts (kW).
"Electric Energy" means electric energy expressed in kilowatt-hours (kWh).
"Entitlement Share" means, with respect to each Participant, that percentage of the
initial Project Capability shown opposite the name of such Participant in Schedule I attached
hereto, as the same may be revised from time to time in accordance with the provisions of this
Power Sales Contract.
"EPC Agreement" means the Engineering, Procurement and Construction Agreement
between DAMPS and the EPC Contractor.
"EPC Contractor" means the firm or corporation appointed as the engineering,
procurement and construction contractor pursuant to the EPC Agreement.
"Financing Documents" means the bond resolution, indenture, trust agreement or other
instrument or instruments providing for the issuance of and the security for the Bonds and any
Bond Anticipation Notes 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 appointed by DAMPS to manage or facilitate the
acquisition or management of fuel for the operation of the Project or the transportation of fuel to
the Project.
VI-6
"Operation and Maintenance Costs" means, with respect to each Billing Period of each
Contract Year, all costs and expenses (other than Wheeling Costs and Debt Service Costs)
attributable to the Project that are paid, payable, incurred or accrued by UAMPS during each
Billing Period resulting from the ownership, operation, maintenance and termination of, and
repairs, renewals, replacements, additions, improvements, and betterments and modifications to,
the Project. Operation and Maintenance Costs shall further include, without limitation, the
following items of cost:
(1) any amount which UAMPS may be required during such Billing Period to
pay for the prevention or correction of any unusual loss or damage or for renewals,
replacements, repairs, additions, improvements, modifications and betterments which
arise out of or are required by the Project Agreements for which UAMPS shall be
obligated, but only to the extent that funds for such payment are not provided by the
issuance of Bonds or Prepayments made by the Participants;
(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 pursuant
to the Project Agreements, amounts payable under the Operating Agreement and each
Fuel Agreement (including fees, expenses, incentives and other compensation payable to
the Operator and the Fuel Agent), the portion of DAMPS' 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 and ad valorem
taxes or payments in lieu of ad valorem taxes, in each case related to the Project;
(4) all other amounts, including fuel costs, payable by UAMPS pursuant to
the provisions of the Project Agreements;
(5) any additional amount not specified in the other items of this definition
which must be paid by UAMPS during such Billing Period under the Project Agreements,
including all amounts payable under the Host City Agreement and all rents and other
amounts payable under the Ground Lease;
(6) amounts to be deposited into the Reserve and Contingency Fund
established pursuant to Section 18 hereof;
(7) legal, engineering and accounting fees and expenses, the cost of any
litigation related to the Project, the Project Agreements, this Power Sales Contract and the
interests and transactions contemplated by such agreements and this Power Sales
Contract, the costs of technical and advisory services and the cost of all Permits and
Approvals, all to the extent allocable to the Project;
VI-8
UAMPS and the Participants entered into in connection with the Project, including (1) the
Original Power Sales Contracts (in certain cases, as supplemented by First Supplements to the
Payson Power Project Power Sales Contract, dated as of November 1, 2007, and Second
Supplements to the Payson Power Project Power Sales Contract, dated as of April 1, 2008, each
between DAMPS and certain of the original Participants), and (2) any Power Sales Contracts
hereafter entered into by DAMPS. All of the Power Sales Contracts are and shall be uniform in
all material respects in their terms, conditions and provisions, with the exception of the
Entitlement Share, the Prepayment Percentage, the Debt Service Percentage and the Debt Service
Share for each of the Participants and the other matters set forth in the Exhibits attached hereto.
"Prepayment" means any payment or payments made to UAMPS by the Participant
pursuant to Section 4 of this Power Sales Contract and designated as a Prepayment. Any
Prepayment made by the Participant is a prepayment of all or a part of the Debt Service Costs
which, but for such Prepayment, would otherwise be payable by the Participant.
"Prepayment Percentage" means, with respect to each Participant and as of any date of
determination, the percentage obtained by dividing (1) the sum of all Prepayments made by or
credited to the Participant, by (2) the sum of all Reference Project Costs as of such date as
determined and allocated to such computation by UAMPS, all as more fully provided in
Section 4 hereof. The Participant's initial Prepayment Percentage shall be calculated by UAMPS
and set forth on Schedule I attached hereto as provided in Section 4(i)hereof.
"Project" means the acquisition, construction, improvement and equipping of the Initial
Facilities and any Additional Facilities.
"Project Agreements" means, collectively, the Construction Agreements, the Operating
Agreement, the Ground Lease, the Host City 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 hereto and associated Electric Energy.
"Project Management Committee" means the committee of the Participants initially
established under the Original Power Sales Contracts and continued pursuant to Section 6 hereof
which shall make certain decisions and recommendations with respect to the operation and
management of the Project as provided herein.
"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
VI-10
"Trustee" means the bank or trust company acting as the trustee under the Financing
Documents.
"DAMPS" means Utah Associated Municipal Power Systems, a political subdivision
organized and existing under the laws of the State of Utah, the Act and the Joint Action
Agreement, and its successors. All references to DAMPS in this Power Sales Contract shall
include Authorized Officers of UAMPS and their delegees acting pursuant to specific
authorization by the Board.
"UAMPS Pool" means that certain electric power pool established pursuant to the
Pooling Agreement between UAMPS and the Members and certain other entities under which
UAMPS provides certain services with respect to the scheduling, dispatch and the sale of Electric
Power and Electric Energy and other matters pursuant to the operating criteria and procedures
provided for in the Pooling Agreement.
"Uncontrollable Force" means any cause, event or force beyond the control of the party
affected, including, but not restricted to failure, or threat of failure of facilities, flood, earthquake,
storm, fire, lightning, epidemic, war, acts of a public enemy, riot, civil disturbance or
disobedience, labor dispute, labor or material shortage, sabotage, and restraint by court or public
authority and action or non-action by, or inability to obtain the necessary authorizations or
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.
"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.
"Wheeling Costs" means, for each Billing Period of each Contract Year, all capital,
operating and other costs and expenses paid, payable, incurred or accrued by UAMPS during
such Billing Period for the transmission of Electric Energy from the Project to the Participant's
Point of Delivery pursuant to the Transmission Agreements or otherwise.
Section 2. Term of Contract. (a) This Power Sales Contract will become effective
upon the Effective Date, and will continue until the last to occur of the following: (1) the date on
which the principal of, premium, if any, and interest on all 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
VI-12
obligations under the Financing Documents. In connection with each Prepayment that may be
made by the Participant pursuant to this Section 4, the Participant acknowledges and agrees with
UAMPS that:
(1) each Prepayment shall be held, invested and applied in accordance with
the provisions of, and subject to the limitations set forth in, the Financing Documents;
(2) the Participant's election to make a Prepayment 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 Prepayment, including without limitation, circumstances such
as the suspension, interruption, interference, reduction, curtailment or termination of the
Project or the Project Output;
(3) in the event of a default by the Participant hereunder, the Entitlement
Share of the Participant may be allocated or reallocated to the other Participants pursuant
to the procedures set forth in Section 22 hereof and, in the event that the Participant fails
to cure such default within the period provided for in Section 22, the Prepayment
Percentage of the defaulting Participant may be reduced to 0%;
(4) no Prepayment shall be deemed to constitute an investment by the
Participant and the Participant shall not be entitled to any interest, investment earnings or
rate of return on any amounts paid by it to UAMPS as a Prepayment; and
(5) notwithstanding any Prepayment by the Participant, UAMPS shall be
obligated to provide the Electric Energy allocable to the Participant's Entitlement Share
only in accordance with the terms and provisions of this Power Sales Contract.
(b) UAMPS and the Participant agree that the following standards and parameters shall
govern the calculation by UAMPS from time to time of the amount of any Prepayment to be
made by the Participant and the calculation by UAMPS from time to time of the Participant's
Prepayment Percentage, Debt Service Percentage and Debt Service Share:
(1) as of any date of determination, the sum of the Participant's Prepayment
Percentage and the Participant's Debt Service Percentage shall equal the Participant's
Entitlement Share;
(2) as of any date of determination, the sum of the Prepayment Percentages
and Debt Service Percentages of all Participants shall equal 100%;
(3) as of any date of determination, the sum of the Debt Service Shares of all
Participants having Prepayment Percentages that are less than their respective Entitlement
Shares shall equal 100%; and
(4) UAMPS shall have absolute and exclusive authority to establish escrow
arrangements governing the deposit and disbursement of each Prepayment and to
determine and calculate from time to time the Reference Project Costs and the
VI-14
(2) the Participant will deposit or has deposited, as applicable, with the
Trustee appointed under the Financing Documents, an amount equal to the estimated
amount of the Prepayment to be made by the Participant, all in accordance with
Prepayment escrow instructions provided by DAMPS.
(f) If the governing body of the Participant elects to make any such Prepayment,
UAMPS will then provide the Participant with at least 15 days notice of the date by which the
Participant must deposit the amount of the Prepayment into the escrow established by UAMPS.
The arrangements for such special escrow account shall provide for the investment of the amount
so deposited and for the disbursement of such amount and the investment earnings thereon by the
Trustee upon the direction of UAMPS to pay a portion of the Cost of the Project.
(g) The Participant acknowledges and agrees that the estimated amount of the
Prepayment to be made by the Participant will be subject to adjustment to reflect the actual cost
of the various items included in Reference Project Costs. Not more than 90 days following the
date on which UAMPS shall have made a final disbursement of a Prepayment to pay the Cost of
the Project (or such later date as may be necessary), UAMPS shall render a final accounting
statement to the Participant setting forth a final computation of the amount of the Prepayment,
the amount deposited into the special escrow account by the Participant, the investment earnings
thereon and the amount disbursed therefrom upon the order of UAMPS, and any additional
amount payable by the Participant in respect of the Prepayment or any amount remaining on
deposit in the special escrow account to be credited to the Participant or applied in accordance
with the provisions of the Financing Documents. The Participant agrees that it will pay any
additional amount payable by it in respect of the Prepayment on or before the 15th day following
the date on which such final accounting statement was rendered.
(h) Promptly after the issuance of any Additional Bonds or other obligations pursuant to
the Financing Documents, UAMPS shall make any necessary recalculations of the Prepayment
Percentage, Debt Service Percentage and the Debt Service Share of the Participant and provide
the Participant with a revised form of Schedule I, which shall also set forth the Reference Project
Costs. No action by the Board or the Project Management Committee shall be necessary in
connection with any such recalculation.
Section 5. Description of Initial Facilities; Additional Facilities. (a) A general
description of the Initial Facilities and all Additional Facilities in existence as of the Effective
Date is attached as Exhibit I.
(b) UAMPS may from time to time recommend the acquisition or construction of
Additional Facilities to improve or add to the Project. Any such Additional Facilities shall be
approved by the Project Management Committee.
(c) Upon completion of any Additional Facilities, UAMPS shall submit to the Project
Management Committee, a final breakdown of all Costs of the Project.
Section 6. Operation, Maintenance and Management of the Project. (a) UAMPS
covenants and agrees that it will use its best efforts to operate, maintain and manage the Project
VI-16
respectively, all as more fully provided in the Joint Action Agreement. The provisions of
Sections 11.3, 11.4, 11.5, 13.3 and 13.4 of the Joint Action Agreement respecting such voting
procedures and rights, as in effect on the date of this Power Sales Contract, are hereby
incorporated into and made a part of this Power Sales Contract. No subsequent amendment to
the Joint Action Agreement may affect such incorporated sections for purposes of this Power
Sales Contract, unless such amendment is unanimously approved by the respective governing
bodies of all Participants.
(d) The Project Management Committee shall:
(1) review, provide advice and recommendations to and consult with DAMPS
regarding the Project,
(2) review, provide advice and recommendations to UAMPS on, and approve
the Project Agreements, the Operating and Scheduling Procedures and any modifications
or amendments thereto;
(3) 1 Subparagraph (d)(3) of Section 6 of the Original Power Sales Contract,
relating to supervision of the construction of the Project, is no longer applicable and has
been deleted from this Power Sales Contract.1
(4) 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;
(5) 1 Subparagraph (d)(5) of Section 6 of the Original Power Sales Contract,
relating to declaration of completion of the Facility under and as defined in the EPC
Agreement, is no longer applicable and has been deleted from this Power Sales Contract.)
(6) determine and declare the Project Capability from time to time as its
deems necessary to reflect the actual capability of the Project;
(7) review and approve the Operating and Scheduling Procedures and any
Operator of the Project to be appointed by UAMPS;
(7) review and consult with UAMPS regarding the acquisition and
management of supplies of natural gas and any other necessary fuels for the Project and
review and approve each Fuel Agreement and any Fuel Agent to be appointed by
UAMPS;
(9) review, modify and recommend the Annual Budget and any amendments
thereto to the Board;
(10) review, recommend and approve any Additional Facilities to the Board;
and
VI-18
address as UAMPS shall designate in writing to the Participant, on the 15th day following the
date on which the billing statement was rendered or at such other time as may be established by
UAMPS pursuant to paragraph (a) above.
(d) If payment in full is not made on or before the close of business on the due date,
UAMPS shall impose a delayed-payment charge on the unpaid amount due for each day overdue
at a rate equal to the lesser of one percent per month, compounded monthly, or the maximum rate
lawfully payable by the Participant; provided, however, that DAMPS, acting upon the direction
of the Board, may elect to waive such delayed-payment charge but only to the extent that any
such waiver will not adversely affect the ability of UAMPS to meet its payment obligations under
the Project Agreements or the Financing Documents. If said due date is Saturday, Sunday or a
holiday, the next following business day shall be the last day on which payment may be made
without the addition of the delayed-payment charge.
(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 the date
on which such billing statement was sent by DAMPS to the Participant. 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
DAMPS in accordance with the Financing Documents. Operation and Maintenance Costs and
Wheeling Costs, including any adjustments thereto, shall be determined by UAMPS in
accordance with the applicable provisions of this Power Sales Contract and the Project
Agreements. The Participant shall pay all such amounts pursuant to this Section 7.
(g) The obligation of the Participant to make the payments under this Section 7 for
Operation and Maintenance Costs, Wheeling Costs, Debt Service Costs and other amounts
payable by the Participant pursuant to this Section 7 is a several obligation and not a joint
obligation with those of any other Participant. The obligation of the Participant to make the
payments under this Section 7 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, and in no event shall the Participant be obligated or required to levy or collect ad
valorem property taxes or assessments to meet its payment obligations under this Power Sales
Contract. 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, or any termination of any of the
Project Agreements, for any reason whatsoever, in whole or in part. The obligations of the
VI-20
will utilize its best efforts to sell, exchange or otherwise dispose of any incidental surplus
Electric Power and Electric.Energy attributable to the Project for the benefit of the Participants.
(c) Prior to the first delivery of Electric Energy under this Power Sales Contract, the
Participant shall provide to UAMPS a written schedule of the Participant's available electric
resources and the order in which such resources are to be applied to meet the Participant's
requirements for Electric Power and Electric Energy. UAMPS shall verify all such resources and
promptly notify the Participant of any rejection of such resources. The Participant may revise or
modify such schedule upon written notice to DAMPS at least one business day prior to the
beginning of any Billing Period.
Section 9. Point of Delivery; Metering; Reactive Power. (a) In accordance with the
Transmission Agreements, Electric Energy delivered to the Participant pursuant to Section 8 of
this Power Sales Contract will be delivered at the Participant's Point of Delivery and the
Participant shall pay its share of Wheeling Costs as determined by UAMPS. As indicated on
Exhibit I, the Project is initially interconnected to the transmission facilities of SUVPS. Through
its Transmission Agreement with PacifiCorp (or its successor as the control area utility),UAMPS
will provide for the displacement of the Electric Energy allocable to the Participant's Entitlement
Share to the Mona Substation (or elsewhere) for transmission to the Participant's Point of
Delivery.
(b) The Participant shall be responsible for the delivery of Electric Energy from its
Point of Delivery to the Participant's electric system and the payment of all costs of such
delivery.
(c) UAMPS will install, maintain and operate metering equipment necessary to measure
at the Participant's Point of Delivery the Participant's load, power factor and such other data as
shall be necessary to enable UAMPS to meet its obligations hereunder. At least once in each
Contract Year, UAMPS or its designee will make or cause to be made such tests and inspections
of the metering equipment as may be necessary to maintain them at standards of accuracy
consistent with Prudent Utility Practice. UAMPS shall provide the Participant with reasonable
notice of the date and time of such tests and inspections and shall permit representatives of the
Participant to be present when such tests and inspections are being made. UAMPS shall provide
the Participant with the results of such tests and inspections.
(d) From and after the Effective Date, the Participant shall be obligated to maintain an
appropriate power factor at the Participant's Point of Delivery consistent with the provisions of
the Transmission Agreements. Should the power factor, as metered at such Point of Delivery,
not be maintained within the limits established under the Transmission Agreements, the
Participant shall be notified and requested to correct such power factor. If the Participant has not
begun corrective action at the end of 90 days, UAMPS may take corrective action and the
Participant shall be obligated to reimburse or compensate UAMPS for all sums expended and all
services contracted for or performed by UAMPS or for which UAMPS shall be obligated relating
to such corrective action.
VI-22
(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, Wheeling 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, Wheeling 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,
Reference Project Costs, Operation and Maintenance Costs, Wheeling 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 14. Information to Be Made Available. (a) From and after the Effective Date of
this Power Sales Contract and subject to their availability under the applicable provisions of the
Project Agreements, UAMPS shall make available for examination by the Participant:
(1) all books of accounts, records, documentation and contracts in the
possession of UAMPS relating to the operation of the Project;
(2) copies of all agreements and data in the possession of UAMPS relating to
the financing of the Project;
(3) copies of all operating and financial records and reports relating to the
Project in the possession of UAMPS;
(4) copies of policies of insurance carried pursuant to Section 12 hereof; and
(5) such other information and documents with respect to the Project as the
Participant may reasonably request from time to time.
VI-24
down opinion of counsel to the Participant, in substantially the form attached hereto as EXHIBIT
VI.
Section 15. Additional Bonds and Refunding Bonds. (a) 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. DAMPS 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 f
Financing Documents of the payments required to be made by the Participant under Section
this Power Sales Contract, as such payments may be increased and extended by reason of the
issuance of Additional Bonds, and of other revenues of DAMPS 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 15 shall rank on a
parity as to the security provided by this Power Sales Contract with all Bonds previously issued.
(c) 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 7 of this Power Sales Contract and of other revenues of DAMPS attributable to the
Project. Any Refunding Bonds issued in accordance with the provisions of this Section 15 and
secured by the pledge of such payments and such revenues shall rank pari passu as to the security
afforded by the provisions of this Power Sales Contract with all Bonds theretofore issued
pursuant to and secured in accordance with the provisions of this Power Sales Contract.
Section 16. Disposition or Termination of the Project. Except as provided
in
Section 22(c) and this Section 16, UAMPS shall not sell, lease or otherwise dispose of the
Project or any substantial part of the Project without the consent of all of the Participants.
Subject to the provisions of the Financing Documents, this Section 16 shall not prohibit a merger
or consolidation or sale of all or substantially all of the property of UAMPS. Subject to the
applicable provisions of the Project Agreements, if the Project shall be terminated, UAMPS shall
use its best efforts to cause the Project to be economically salvaged, discontinued disposed of or
sold in whole or in part. UAMPS shall make accounting statements for each Billing Period to the
Participant of all costs associated therewith. Such accounting statements shall continue for such
Billing Periods until the Project has been salvaged, discontinued or finally disposed of hereunder
and provision for the payment of the Bonds has been made in accordance with the Financing
Documents, at which time a final accounting statement with respect thereto shall be made by
UAMPS at the earliest reasonable time. The costs of salvage, discontinuance or disposition shall
include, but shall not be limited to, all accrued costs and liabilities resulting from the acquisition,
construction, operation (including cost of fuel), maintenance of and renewals and replacements to
the Project.
VI-26
To the extent permitted by law and except as otherwise permitted by the preceding
paragraph and paragraph (g) below, the Participant shall vigorously defend and enforce its
exclusive right to provide electric distribution services within its service area.
(c) Sale or Assignment of Electric System or Power Sales Contract. The
Participant shall not sell, lease or otherwise dispose of all or substantially all of its electric
system, nor shall the Participant assign all or any part of its Entitlement Share or any or
all of its interests under this Power Sales Contract, except upon one hundred twenty(120)
days' prior written notice to DAMPS. Within forty-five 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 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 be assigned and shall notify UAMPS of its exercise of such option
within forty-five days of its receipt of the notice from UAMPS referred to in the
preceding sentence. In the event that two or more of the other Participants shall exercise
their options with respect to the assigning Participant's Entitlement Share in amounts
which exceed the total Entitlement Share proposed to be assigned, UAMPS shall, to the
extent necessary, make a pro rata allocation of the such Entitlement Share among the
Participants which have exercised their options, based upon the existing Entitlement
Shares of the requesting Participants. In the event that less than all of such Entitlement
Share shall be acquired by other Participants, UAMPS shall notify the other Members of
DAMPS of the proposed assignment of an Entitlement Share and shall provide such
Members with an opportunity to acquire the remaining portion of the Participant's
Entitlement Share.
In connection with and as a condition of any sale, assignment or other disposition referred
to in the preceding paragraph, UAMPS shall require the Participant and its purchaser,
assignee or lessee to satisfy the following conditions: (1) at the sole option of UAMPS
either (A) the purchaser, assignee or lessee shall assume all obligations of the Participant
under this Power Sales Contract in such a manner as shall assure UAMPS to its sole
satisfaction that the Participant's Entitlement Share to be purchased hereunder and the
amounts to be paid therefor will not be reduced, and if and to the extent deemed
necessary by UAMPS in its sole discretion to reflect such assignment and assumption,
UAMPS and such purchaser, assignee or lessee shall enter into an agreement
supplemental to this Power Sales Contract to clarify the terms upon which the
Participant's Entitlement Share is to be sold hereunder by UAMPS to such purchaser,
assignee or lessee; or (B) such purchaser, assignee or lessee shall enter into a new
contract with UAMPS for the purchase of the Participant's Entitlement Share at a price
and on terms which UAMPS in its sole discretion determines not to be less beneficial to it
and the other Participants than is this Power Sales Contract; (2) the senior debt, if any, of
such purchaser, assignee or lessee, if such purchaser, assignee or lessee is not a
Participant shall be rated by at least one nationally recognized bond rating agency in a
category generally recognized to be "investment grade"; (3) DAMPS shall by resolution
determine that such sale, lease or other disposition will not adversely affect UAMPS, the
other Participants or the security for the payment of Bonds; and (4) UAMPS shall have
VI-28
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.
(2) At the time of execution of this Power Sales Contract the Participant has
no contracts and has no current expectation of entering into any contracts whereby any
person, corporation, partnership or other non-governmental entity agrees to purchase
electric service from the Participant on a basis different from that on which the
Participant provides electric service to the public generally, except as shown on Exhibit
III hereto. At least sixty (60) days prior to entering into any contract whereby any person,
corporation, partnership or other nongovernmental entity agrees to purchase electric
service from the Participant on a basis different from that on which the Participant
provides electric service to the public generally, the Participant shall notify DAMPS of its
intent to enter into such contract and provide copies of such contract to DAMPS. Within
sixty (60) 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 DAMPS, the entering into of such contract would result in a
violation of the covenant in clause (1) above. The cost of such opinion and other reports
necessary in connection therewith shall be borne by the Participant. Any determination
by UAMPS that any such contract would violate the covenant set forth in clause (1)
above shall be made by UAMPS based upon such opinion of counsel and such other
reports as UAMPS deems necessary. In the event that allocations are necessary to
determine whether entering into any such contract violates the covenant set forth in clause
(1) above, UAMPS shall make such allocations, in its sole discretion, after receipt of an
opinion of counsel of recognized standing in the field of law relating to municipal bonds
selected by UAMPS and other reports necessary in connection therewith and paid for by
the Participant.
(g) Electric Utility Restructuring. In the event that federal or state legislation
is enacted that requires or permits the Participant to provide direct access to the
consumers now served by its electric utility system by competing suppliers of electric
service, the Participant covenants and agrees with UAMPS that it will take all actions
permitted on its part by such legislation to preserve and protect the operating and
financial integrity of its system. To the extent permitted by law, the Participant will (1)
establish and collect such transition charges and charges for the distribution and other
services it continues to provide after the enactment of such electric utility restructuring
legislation that will enable it to meet its obligations to UAMPS under this Power Sales
Contract and (2) include in such transition charges its costs under this Power Sales
Contract.
Section 18. Reserve and Contingency Fund. (a) In addition to various funds and
accounts established under the Financing Documents, UAMPS shall 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
used to pay or provide reserves for unusual or extraordinary Operation and Maintenance Costs of
VI-30
agreement or obligation of the Participant hereunder or the obligation of the Participant to make
any payment for which provision is made in this Power Sales Contract against the Participant.
(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 DAMPS
to the Participant, cease and discontinue providing all or any portion of the Participant's
Entitlement Share and may terminate the Participant's right to receive the Electric Energy
allocable to its Entitlement Share under this Power Sales Contract. In connection with its
determination to discontinue providing all or any portion of a defaulting Participant's 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
DAMPS to enable it to meet its obligations thereunder. Any such termination of the Participant's
Entitlement Share under this Power Sales Contract shall not, however, terminate, reduce or
modify the Participant's outstanding obligations and liabilities hereunder.
Section 22. Transfer of 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 22 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 by the
reallocation of the defaulting Participant's Entitlement Share. As set forth below, UAMPS
agrees to take certain actions to mitigate the impact of any such reallocation on the nondefaulting
Participants. The Participants agree that the provisions of this Section 22 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 and discontinuance of service pursuant to
Section 21 of such Participant's Power Sales Contract, but only if the Project has not been
terminated, UAMPS and the nondefaulting Participants shall take the following actions in the
order set forth below:
(1) UAMPS shall immediately make a mandatory allocation of the defaulting
Participant's Entitlement Share among all of the nondefaulting Participants, pro rata on
the basis of their original Entitlement Shares. UAMPS shall provide written notice to the
nondefaulting Participants of the mandatory allocation of the defaulting Participant's
Entitlement Share which notice shall (a) set forth the date of the mandatory allocation, (b)
include a revised Schedule I showing the increased Entitlement Shares and (to the extent
applicable) the revised Prepayment Percentages, Debt Service Percentages and Debt
Service Shares of the nondefaulting Participants as a result of such allocation, (c) direct
each of the nondefaulting Participants to make an election pursuant to subparagraph (2)
VI-32
reallocation of a defaulting Participant's Entitlement Share, or the total of all mandatory
reallocations of Entitlement Shares in the event of two or more Participant defaults under
the Power Sales Contracts, cause any nondefaulting Participant's Entitlement Share to
increase by more than 25% over its original Entitlement Share set forth on Schedule I. 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 (a), proportionally allocate or
reallocate, as the case may be, the Prepayment 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
Prepayment 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
Prepayment 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 Prepayment Percentage, Debt Service Percentage and all Entitlement Shares
being expressed as decimals for purposes of such computation. The standards set forth in
Section 4(b) of this Power Sales Contract shall apply to the foregoing computations.
(5) UAMPS shall deliver, promptly after making the determinations and
reallocations required by this paragraph (a), a notice to the nondefaulting Participants
which notice shall (A) set forth the reallocation of the defaulting Participant's Entitlement
Share made by UAMPS pursuant to subparagraph (3) above, and the effective date of
such reallocation, (B) set forth the amount, if any, of the Entitlement Share of the
defaulting Participant that has been mandatorily reallocated to nondefaulting Participants
that did not elect to retain or acquire the same, and (C) include a revised Schedule I
showing the revised Entitlement Shares, Prepayment Percentages, Debt Service
Percentages and Debt Service Shares, respectively, of the nondefaulting Participants as a
result of the reallocation provided for under subparagraph (3) above. The Entitlement
Shares, Prepayment Percentages, Debt Service Percentages and Debt Service Shares
shown on such revised Schedule I shall thereafter be the Entitlement Shares, Prepayment
Percentages, Debt Service Percentages and Debt Service Shares of the nondefaulting
Participants; provided, however, that if less than all of the defaulting Participant's
Entitlement Share shall have been optionally retained or accepted pursuant to this
paragraph (a), such revised Entitlement Shares, Prepayment Percentages, Debt Service
Percentages and Debt Service Shares shall remain in effect until the completion of the
procedures provided for in this Section 22.
(6) Any portion of the Entitlement Share of a defaulting Participant
transferred pursuant to this paragraph (a) to a nondefaulting Participant shall become a
part of and shall be added to the Entitlement Share of each transferee Participant, and
from and after the date of such transfer the transferee Participant shall be obligated to pay
VI-34
ensure the availability of sufficient funds and revenues to enable DAMPS to meet its obligations
under the Project Agreements and the Financing Documents. Such actions may include, without
limitation, any of the following measures (or any combination thereof):
(1) UAMPS may sell all or any portion of the Project that is allocable to the
defaulting Participant's Entitlement Share on such terms and conditions as UAMPS
deems to be in the best interest of UAMPS and the nondefaulting Participants and shall
apply the proceeds of such sale to the purchase, redemption or defeasance of the Bonds or
to other purposes related to the Project; or
(2) UAMPS may enter into contractual arrangements for the sale of all or any
portion of the defaulting Participant's Entitlement Share or the Electric Energy associated
therewith on such terms and conditions as will maximize the revenues available to
UAMPS without regard to any adverse effect that such sale may have on the exclusion of
interest on the Bonds from gross income for federal income tax purposes.
In the event that UAMPS makes any sale pursuant to clause (2) above, UAMPS will obtain an
opinion of nationally recognized bond counsel addressing the tax status of interest on the Bonds
issued as tax exempt obligations. UAMPS will take such remedial actions as are available to it
to preserve the tax exempt status of interest on such Bonds. In the event that such opinion
indicates that interest on the Bonds is or will become includible in gross income for federal
income tax purposes, the Participant acknowledges that it may be necessary for UAMPS to pay
additional amounts as interest or penalties on the Bonds and that the Debt Service Costs payable
by the Participant pursuant to Section 7 hereof will increase correspondingly. The Participant
agrees to pay its Debt Service Share of such increased Debt Service Costs pursuant to the
provisions of this Power Sales Contract.
(d) Upon any sale or disposition of all or any portion of a defaulting Participant's
Entitlement Share or the Electric Energy associated therewith or any sale of the Project pursuant
to paragraphs (b) and (c) above, 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, Prepayment 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, Wheeling 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 22, UAMPS shall prepare and send to each of the
Participants a final revised Schedule I, setting forth the Entitlement Shares, the Prepayment
Percentages, Debt Service Percentages and Debt Service Shares, respectively, of the
nondefaulting Participants after the procedures and actions provided for in this Section 22.
Section 23. 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
in this Power Sales Contract, UAMPS may, in addition to its other rights hereunder, bring any
VI-36
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 Prepayments, become part of
Operation and Maintenance Costs.
Section 29. Assignment of Power Sales Contract. (a) This Power Sales Contract shall
inure to the benefit of and shall be binding upon the respective successors and assigns of the
parties to this Power Sales Contract; provided, however, that neither this Power Sales Contract
nor any interest herein shall be transferred or assigned by either party hereto except as follows:
(1) UAMPS may assign its interests under this Power Sales Contract or all or
any portion of the amounts payable by the Participant hereunder pursuant to the Financing
Documents as described in paragraph (b) below;
(2) UAMPS may sell, transfer or reallocate all or any portion of the
Participant's Entitlement Share following a default by the Participant and a
discontinuance of service as provided in Section 22 hereof;
(3) UAMPS may assign this Power Sales Contract to any successor of
UAMPS or to the Participants as contemplated by Section 2 hereof;
(4) 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 assign this Power Sales Contract and pledge the amounts
payable by the Participant hereunder without limitation;
(5) the Participant shall assign the Electric Energy allocable to the
Participant's Entitlement Share to the UAMPS Pool as provided in Section 8(b) hereof;
and
(6) subject to the provisions of Section 17 hereof, the Participant may assign
or transfer all or any portion of its Entitlement Share or its interests under this Power
Sales Contract.
(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 Power Sales Contract, as
security for the payment of the principal (including sinking fund installments) of, premium, if
any, and interest on Bonds and, upon such assignment and pledge, UAMPS may grant to the
Trustee any rights and remedies herein provided to UAMPS, and thereupon any reference herein
to UAMPS shall be deemed, with the necessary changes in detail, to include the Trustee which
on behalf of and together with the owners from time to time of the Bonds shall be third party
beneficiaries of the covenants and agreements of the Participant herein contained.
Section 30. Termination or Amendment of Power Sales Contract. (a) This Power Sales
Contract shall not be terminated by either party under any circumstances, whether based upon the
VI-38
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 33. 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 Power Sales Contract or be subject to
any personal liability or accountability by reason of the execution of this Power Sales 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 or this Power Sales
Contract.
Section 34. Applicable Law; Construction. This Power Sales Contract is made under
and shall be governed by the law of the State of Utah;provided, however, that if the Participant is
organized or created pursuant to the laws of another state, then the authority of the Participant to
execute and perform its obligations under this Power Sales Contract shall be determined under
the laws of such state. Headings herein are for convenience only and shall not influence the
construction hereof.
Section 35. Severability; No Merger. (a) If any section, paragraph, clause or provision
of this Power Sales Contract shall be finally adjudicated by a court of competent jurisdiction to
be invalid, the remainder of this Power Sales Contract shall remain in full force and effect as
though such section, paragraph, clause or provision or any part thereof so adjudicated to be
invalid had not been included herein.
(b) This Power Sales Contract constitutes the entire and complete agreement of
UAMPS and the Participant in respect of the Project and shall not be nor shall it be deemed to be
modified, amended or superseded by any other agreement or contract between UAMPS and the
Participant in respect of any other project or subject.
Section 36. Representations and Warranties of Participant. The Participant hereby
represents and warrants that it has reviewed, or caused a review to be made on its behalf of, all
financial and operating information pertaining to the Project, including the Project Agreements
and this Power Sales Contract, and that it has received or been afforded access to all other
information which it deems necessary to make an informed decision for the execution of this
Power Sales Contract. The Participant understands and agrees that it shall be bound by the terms
and conditions of this Power Sales Contract.
[Signature page follows.J
VI-40
UTAH ASSOCIATED MUNICIPAL POWER
SYSTEMS
By:
Chairman
[SEAL]
ATTEST AND COUNTERSIGN
By:
Assistant Secretary
Date of Execution and
Delivery:
Approved as to proper form and
compliance with applicable law:
By:
Attorney for UAMPS
VI-42
ABSOLUTE ASSIGNMENT AGREEMENT
This ABSOLUTE ASSIGNMENT AGREEMENT (this "Agreement") is made and entered into
this 1 st day of December, 2008 (the "Effective Date") by and between the Payson City, a Utah
municipal corporation ("Payson") and Truckee Donner Public Utility District, a California
public utility district ("TDPUD"). Payson and TDPUD are sometimes individually referred to
herein as a "Party" and collectively as the "Parties". Utah Associated Municipal Power Systems,
a political subdivision of the State of Utah ("UAMPS"), has joined in this Agreement in order to
facilitate and administer the transaction between the Parties.
RECITALS:
A. UAMPS and Payson have previously entered into that certain Payson
Power Project Power Sales Contract dated as of June 1, 2002 (the "Power Sales
Contract") for the purchase by Payson of power and energy from the Payson Power
Project of UAMPS (the "Project"). Pursuant to the Power Sales Contract, Payson has an
Entitlement Share of 11.7470%, and a Debt Service Share of 12.4247%.
B. Payson has determined that the capacity and energy available to it from its
Entitlement Share exceed its present power supply requirements and desires to transfer its
rights and obligations with respect to a 3.6768% Entitlement Share and a 3.8888% Debt
Service Share under the Power Sales Contract, representing approximately 5,000 kW of
capacity at the Project's maximum net operating capability of 136,000 kW ("PMAX")
and approximately 4,118 kW of capacity at the Project's optimum operating capability of
112,000 kW ("Sweet Spot"), and any and all other privileges, claims, and responsibilities
of every type and description that Payson may have under its Power Sales Contract in
connection therewith (the "Assigned Interest"), to TDPUD by assignment hereunder.
C. TDPUD, subject to the conditions set forth in this Agreement and the
terms and provisions of the New Power Sales Contract (defined below) between it and
UAMPS, desires to accept and assume the Assigned Interest.
D. The Board of Directors of UAMPS has by resolution determined that the
absolute and unconditional assignment of the Assigned Interest pursuant to this
Agreement (i) is in the best interest of UAMPS and the Participants, and (ii) will not
adversely affect UAMPS, any of the Participants or the security for the payment of the
Bonds
Now, THEREFORE, in consideration of the foregoing, the mutual promises, waivers, and
releases contained herein, and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the Parties agree as follows:
Section 1. Definitions and Construction. Initially capitalized terms used and not
otherwise defined in this Agreement have the meanings assigned to them in the Power Sales
Payson City Transfer,Absol uteAssignAgrmnt.doc
0865790/JCB/CJ
8.5361%, respectively, (iii) TDPUD shall own the Assigned Interest and shall have and hold all
rights and obligations associated therewith, all upon and subject to the terms and provisions of
the New Power Sales Contract, and (iv) to the extent permitted by law, TDPUD shall indemnify
and hold harmless Payson against all obligations or liabilities arising with respect to the
Assigned Interest from and after the Time of Transfer.
(b) Payson shall remain obligated to DAMPS with respect to the Assigned Interest
under the provisions of the Power Sales Contract up to the Time of Transfer. All costs, expenses
and obligations accruing to Payson with respect to the Assigned Interest up to the Time of
Transfer shall be included in the next regular billing statement submitted to Payson by UAMPS
pursuant to the provisions of Section 7 of the Power Sales Contract at the time and in accordance
with DAMPS' regular monthly billing cycle for the Project. The rights and obligations of
Payson with respect to such billing statement in accordance with the Power Sales Contract shall
survive the Time of Transfer. To the extent permitted by law, Payson shall indemnify and hold
harmless TDPUD against all obligations and liabilities arising with respect to the Assigned
Interest up until the Time of Transfer.
Section 4. Representations, Warranties and Agreements of the Parties. As a material
inducement to entering into this Agreement, each Party, with respect to itself, hereby represents
and warrants to and agrees with each other Party as of the Effective Date as follows:
(a) it is duly organized and validly existing under the laws of the state in
which it is organized, and has all requisite power and authority, corporate or otherwise, to
enter into and to perform its obligations hereunder and to carry out the terms and
conditions hereof and the transactions contemplated hereby;
(b) there is no litigation, action, suit, proceeding or investigation pending or,
to the best of such Party's knowledge, threatened, before or by any Government Agency,
which could reasonably be expected to materially and adversely affect the performance
by such Party of its obligations hereunder, or that questions the validity, binding effect or
enforceability of this Agreement, any action taken or to be taken by such Party pursuant
to this Agreement or any of the transactions contemplated by this Agreement;
(c) the execution, delivery and performance of this Agreement by such Party
have been duly authorized by all necessary action on the part of such Party and do not
require any approval or consent of any holder (or any trustee for any holder) of any
indebtedness or other obligation of such Party, except for such approvals and consents as
have been obtained;
(d) this Agreement has been duly executed and delivered on its behalf by a
duly authorized officer of such Party and constitutes the legal, valid and binding
obligation of such Party, enforceable against it in accordance with its terms, as such
enforceability may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors' rights generally and by general
principles of equity;
3
(d) the agreements, covenants and obligations of TDPUD contained in this
Agreement, including its assumption of the Assigned Interest, constitute full and
complete consideration and fair value for the transfer and assignment of the Assigned
Interest.
Section 6. Further Assurances. The Parties agree to execute, to cause to be
acknowledged and to deliver to one another and to any other parties such other and further
instruments, documents, agreements, and certificates, and to perform such other and further acts
as may be required to accomplish the transactions contemplated by this Agreement.
Section 7. Contemporaneous Deliveries. The following documents shall be delivered
by each Party contemporaneously with the execution of this Agreement:
(a) an original or certified copy of the resolution of its governing body
authorizing it to execute and deliver this Agreement and to enter into the transactions
contemplated hereby; and
(b) a legal opinion to the effect that this Agreement has been duly authorized,
executed and delivered by it and constitutes its legal, valid and binding obligation,
enforceable in accordance with its terms.
Section 8. Renewal and Replacement Fund Deposit, Costs of Assignment. (a)
Pursuant to Section 18 of the Power Sales Contracts, UAMPS has previously established a
Reserve and Contingency Fund with respect to the Project, and pursuant to the Annual Budgets
for the Project has billed to and collected from Payson $524,923, which is now on deposit in the
Reserve and Contingency Fund. On or before the business day preceding the Time of Transfer,
TDPUD shall transfer to DAMPS for deposit into the Reserve and Contingency Fund $164,287,
being an amount that bears the same proportion to Payson's existing deposit as the Entitlement
Share acquired by TDPUD bears to Payson's original Entitlement Share. UAMPS agrees to (i)
deposit the transferred amount upon receipt into the Reserve and Contingency Fund and (ii)
release an equal amount from the Reserve and Contingency Fund and pay or credit the�same to
Payson.
(b) Promptly after the Time of Transfer, UAMPS shall provide a statement to TDPUD
setting forth all costs and expenses incurred by UAMPS in connection with the assignment of the
Assigned Interest, including the preparation, review and authorization of this Agreement and the
New Power Sales Contract. TDPUD hereby agrees that it shall pay all amounts set forth in such
statement within 30 days of receipt of such statement.
Section 9. Entire Agreement. This Agreement constitutes the entire understanding and
agreement between the Parties relating to the assignment of the Assigned Interest. This
Agreement may be modified only by written amendment signed by all the Parties hereto or their
successors in interest.
5
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective Date.
PAYSON CITY,UTAH
By
Burtis Bills, Mayor
[SEAL]
Attest:
Jeanette Curtis, City Recorder
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
By
Tim F. Taylor, President of the Board
[SEAL]
Attest and Countersign:
Michael D. Holley, Clerk of the Board
7
After the conduct of other business not pertinent to the foregoing, it was moved and
carried that the Governing Body adjourn.
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
By
Tim F. Taylor, President of the Board
ATTEST:
By
Michael D. Holley, Clerk of the Board
[SEAL]
- 8 - TDPUD Reso.&Minutes
STATE OF CALIFORNIA )
)
COUNTY OF NEVADA )
I, the undersigned, do hereby certify that I am the duly qualified and acting Clerk of
Truckee Donner Public Utility District ("TDPUD"). I further certify that the above and
foregoing constitutes a true and correct copy of the minutes of a regular public meeting of the
Governing Body (the "Governing Body") of TDPUD, held on November 5, 2008, including a
resolution adopted at such meeting, together with the exhibits attached thereto, as said minutes,
resolution and exhibits are recorded in the regular official book of minutes of the proceedings of
the Governing Body kept in the office of the Clerk, that said proceedings were duly had and
taken as therein shown, that the meeting therein shown was in all respects called, held and
conducted in accordance with law, and that the persons therein named were present at said
meeting, as therein shown.
IN WITNESS WHEREOF, I have hereunto subscribed my official signature and impressed or
imprinted hereon the official seal of TDPUD, this 5th day of November, 2008.
Michael D. Holley, Clerk of the Board
Truckee Donner Public Utility District
[SEAL]
- 9 - TDPUD Reso.&Minutes
CERTIFICATE OF PARTICIPANT
DATED: ,2008.
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 Absolute Assignment
Agreement, dated as of December 1, 2008 (the "Assignment Agreement"), among Payson City,
Utah, UAMPS and the Participant, and the Power Sales Contract, dated as of December 1, 2008
(the "Power Sales Contract" and, together with the Assignment Agreement, the "Agreements"),
between the Participant and UAMPS.
2. The Participant is a public utility district, duly created and validly existing under the
laws of the State of California (the "State") and is governed by a Board of Directors (the
"Governing Body") composed of five (5) members.
3. Attached hereto as Exhibit A is a true, complete and correct copy of excerpts from
the minutes of a regular public meeting of the Governing Body held on November 5, 2008,
including a resolution adopted at such meeting authorizing the execution and delivery of the
Agreements and related matters (the "Resolution"). The Resolution is in full force and effect
and has not been amended, modified, repealed or supplemented.
4. The names of the President and the members of the Governing Body, the Clerk and
the Participant's 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:
Payson Transfer certificate.doc TDPUD Certificate of Participant
0865790/CJ/wlc
DATE OF
COMMENCEMENT OR DATE OF EXPIRATION
NAME OFFICE CURRENT TERM OF CURRENT TERM
Tim F. Taylor President 12/3/04 12/3/08
Pat Sutton Vice-President 12/1/06 12/3/10
Joseph Aguera Board Member 12/3/04 12/3/08
J. Ronald Hemig Board Member 12/1/06 12/3/10
William Thomason Board Member 12/3/04 12/3/08
5. The meeting of the Governing Body at which the Resolution was adopted was duly
called and held in accordance with the Ralph M. Brown Act.
6. (a) No referendum petition was filed with the Participant or any of its officers
seeking to refer the Resolution to the electors of the Participant in accordance with the provisions
of state law; and (b) no litigation has been instituted, is pending or has been threatened to require
a referendum election on the Resolution.
7. The Participant now owns and operates a local electric utility system(the "System")
and furnishes electric energy to all persons desiring such service within its service area. The
electric energy to be provided by its Entitlement Share in the Project (each as defined in the
Power Sales Contract) will be used by the Participant to provide electric service within its service
area. There is attached hereto as Exhibit B a true, correct and complete copy of the rates, fees
and charges now in effect for the electric services provided by the System.
8. By resolutions heretofore duly adopted by the Governing Body, the Participant has
duly authorized, executed and delivered the Utah Associated Municipal Power Systems
Amended and Restated Agreement for Joint and Cooperative Action dated as of February 17,
1999 and all amendments thereof and supplements thereto (the "UAMPS Joint Action
Agreement") and that certain Power Pooling Agreement (the "Pooling Agreement") between the
Participant and UAMPS relating the power pool administered by UAMPS for the benefit of its
members (the "UAMPS Power Pool") and the UAMPS Joint Action Agreement and the Pooling
Agreement constitute the legal, valid and binding agreements of the Participant.
9. Stephen Hollabaugh has been duly appointed by the Governing Body as the
representative of the Participant to UAMPS.
10. Prior to the adoption of the Resolution and the execution of the Agreements, the
Governing Body determined the needs of the Participant for electric power and energy and
considered, among other things, the following: (a) the economies and efficiencies of scale to be
achieved through the ownership and operation 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
2
current requirements and to provide reserves and peaking capacity, (c) the estimated useful life of
the Project, (d) 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, (f) the financial, regulatory, and technical feasibility of operating the
Project, and (g) 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 Agreements.
11. Except as listed on Exhibit C, 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 Resolution or the validity thereof or affects or seeks to prohibit,
restrain or enjoin the Participant from complying with the obligations contained in the
Agreements, including the payment obligations to DAMPS contained in the Power Sales
Contract, (b) in any way affects or questions the validity or enforceability of the UAMPS Joint
Action Agreement or the Agreements, 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, and (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 DAMPS 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 14(c) of
the Power Sales Contract and attached as Exhibit II thereto with respect to the Participant and the
System is true, correct and complete. The Participant has duly authorized UAMPS to use such
3
information in connection with the preparation of any official statement of UAMPS with respect
to any Bonds (as defined in the Power Sales Contract) to be issued and to provide such
information to interested parties.
[Signature page follows.J
4
DATED as of the day and year first above written.
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
By
Tim F. Taylor, President of the Board
By
Michael D. Holley, Clerk of the Board
[Seal]
5
EXHIBIT A
[Attach Copy of Resolution]
A-1
EXHIBIT B
[Attach Copy of Resolution or Ordinance Establishing Rates]
B-1
TRUCKEE DONNER
Pub i
Ordinance No. 2007 - 03
AMENDING THE ELECTRIC RETAIL RATES AND
ESTABLISHING THE CALIFORNIA SOLAR INITIATIVE CUSTOMER CHARGE
WHEREAS District staff has prepared a budget for District operation for 2008; and
WHEREAS, on November 7 and 19, 2007 a public hearing was held to receive comments
from the public concerning the 2008 budget; and
WHEREAS, the budget for 2008 recommends that electric retail rates be increased by 7%
for the year 2008 and 3% for the year 2009 to cover increases in the costs of providing
District services; and
WHEREAS, on November 7 and 19, 2007 a public hearing was held to receive public
comments on proposed electric rate increase;
WHEREAS, the state of California has enacted The California Solar Initiative, through the
signing of SB-1; and
WHEREAS, the California Solar Initiative requires that electric utility companies must raise,
through customer charges, a specified amount of money to fund the required solar rebate
program; and
WHEREAS, the Truckee Donner Public Utility District must raise $177,400 annually for the
solar rebate program.
NOW, THEREFORE, BE IT ENACTED by the Board of Directors of the Truckee Donner
Public Utility District as follows:
Section 1. Effective January 1, 2008, the following monthly electric rates shall be effective.
Domestic Electric Rates: Permanent Residents
Rate P 10
Customer Charge: per month $6.56
Energy Charge per kilowatt-hour $0.128
Domestic Electric Rates: Non-Permanent Residents
Rate S 10
Customer Charge: per month $6.56
Energy Charge per kilowatt-hour $0.147
Small Commercial Rates
Rate 15
Customer Charge: per month $12.72
Energy Charge per kilowatt-hour $0.154
Ordinance 2007-03 1
Medium Commercial Rates
Rate 20
Customer Charge: per month $127.00
Energy Charge per kilowatt-hour $0.091
Demand Charge per kilowatt of demand $12.49
Large Commercial Rates
Rate 25
Customer Charge: per month $557.06
Energy Charge per kilowatt-hour $0.094
Demand Charge per kilowatt of demand $11.93
Section 2. Effective January 1, 2009, the following monthly electric rates shall be effective.
Domestic Electric Rates: Permanent Residents
Rate P10
Customer Charge: per month $6.76
Energy Charge per kilowatt-hour $0.132
Domestic Electric Rates: Non-Permanent Residents
Rate S 10
Customer Charge: per month $6.76
Energy Charge per kilowatt-hour $0.151
Small Commercial Rates
Rate 15
Customer Charge: per month $13.10
Energy Charge per kilowatt-hour $0.159
Medium Commercial Rates
Rate 20
Customer Charge: per month $130.81
Energy Charge per kilowatt-hour $0.094
Demand Charge per kilowatt of demand $12.86
Large Commercial Rates
Rate 25
Customer Charge: per month $573.78
Energy Charge per kilowatt-hour $0.097
Demand Charge per kilowatt of demand $12.29
Section 3: Effective January 1, 2008, the following monthly solar initiative customer charge
shall be effective.
Domestic (both permanent and non- permanent) $0.60
Small Commercial $5.00
Medium Commercial $10.00
Large Commercial $15.00
Ordinance 2007-03 2
Section 4. If no protest is made pursuant to Public Utilities Code Section 16078, then this
ordinance shall be effective January 1, 2008 and January 1, 2009.
Section 5. 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 6. 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 nineteenth day of
November 2007 by the following roll call vote:
AYES: Directors Aguera, Hemig, Sutton and Taylor
NOES: Director Thomason
ABSTAIN: None
ABSENT: None
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
By
Tim F. Taylor, President of the Board
ATTEST:
John L. Ulrich, Clerk of the Board
Ordinance 2007-03 3
EXHIBIT C
SCHEDULE OF BONDS,NOTES,CONTRACTS,ETC.
(a) $26,570,000 aggregate principal amount of Truckee Donner Public Utility
District Revenue Certificates of Participation, Series 2003A and Taxable Series 2003B,
issued pursuant to an Installment Purchase Agreement dated as of March 1, 2003,
between Truckee Donner Public Utility District and Truckee Donner Public Utility
District Financing Corporation; and
(b) the Master Firm Power Sales Agreement, dated as of June 16, 1999 and
Transaction Schedule No. 1 thereunder,between UAMPS and the Participant.
C-1