HomeMy WebLinkAbout9 UAMPS Horse Butte Agenda Item # 9
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TRUCKEE DONNER
Public Utility District
ACTION
To: Board of Directors
From: Stephen Hollabaugh
Date: August 04, 2010
Subject: Consideration of a Power Sales Contract for the UAMPS Wind
Project at Horse Butte
1. WHY THIS MATTER IS BEFORE THE BOARD
This item is before the Board for the consideration of a Power Sales Contract with
UAMPS for the Horse Butte Wind Project in Idaho.
2. HISTORY
Renewable Portfolio Standard (Excerpt) - TDPUD
• At such time that projected resources do not exceed projected demand,
TDPUD will strive to include qualifying resources to meet projected demand.
• Truckee Donner PUD resource mix will have a minimum of 21% of renewable
resources by 2010. Renewable resources are defined as non-fossil fueled
electric generating resources, including hydroelectric.
Conservation is considered first resource for all new energy purchases.
District forecast assumes that load increases by 1% annually over the next three
years. Conservation is expected to account for 1-3% of total load, therefore
conservation will offset growth that would otherwise require additional resources. The
District forecasted load will be flat and conservation will account for any growth the
District may have.
Truckee Donner PUD is in the resource project at UAMPS. The resource project is
used to investigate possible generation resources prior to starting a study project. The
UAMPS Horse Butte Wind project moved into a study project in which Truckee is a
participant. A workshop was given to the Board on November 4, 2009 and April 7,
2010. At the April 7, 2010 workshop, the draft Power Sales Contract was reviewed
along with a project overview.
The project is now moving into the approval of the Power Sales Contract phase in
which this item is being brought to the Board.
3. NEW INFORMATION
The project is now at the power sales contract stage and a commitment by the Board
is required.
Project Status:
The Horse Butte Wind project will be about 50 to 100 MW depending on member
subscription. It is a private/public project using federal tax credits & tax exempt
financing. The project is in the final development and permitting stage that includes:
construction contract, turbine vendor, permits, etc.
The turbine vendor was selected by the Project Management Committee (PMC) of
UAMPS at the July 17, 2010 meeting. The vendor selected is Vestas who have over
39,000 installed wind turbine generators in 63 countries. Vestas has employees in
Oregon and Colorado. The turbine selected is the V100 1.8MW model. This is based
on a mature, reliable 2.0 MW platform. the V100 is designed to capture and maximize
energy production from lower wind regimes. The turbine selection drivers were: lowest
overall cost per installed kW, energy production, balance of plant (BOP) impact on
cost, reliability and availability, service and maintenance, large fleet, and financeable.
The cost estimate has reduced since the last update due to reduced transmission and
substation requirements and lower financing costs. The cost estimate is approximately
(Mona equivalent) of $76/MWh. This includes the busbar cost plus an estimate of the
Bonneville Power Administration (BPA) transmission costs. Staff believes this is
probably the lowest busbar cost for a wind project that the District will see compared
to any other wind projects.
At the April Board meeting, the Board gave staff direction to subscribe up to 8,000 kW
of the Horse Butte Wind Project. Staff is now recommending to the Board to subscribe
up to 9,000 kW of the Horse Butte Wind project. This project has a projected load
factor of just over 30%. Therefore a 9,000 kW subscription will yield and average of
3,000 kWh of energy per hour.
Power Sales Contract:
TDPUD's Power Sales Contract, authorizing resolution, certificate, legal opinion, and
executive summary are included in the Board package. The Power Sales Contract
was reviewed in April and will be reviewed at this Board meeting again.
4. FISCAL IMPACT
The Horse Butte Wind project will represent a portion of the Electric Supply
Procurement budget that might otherwise be purchased at from the market. This
project has a projected load factor of just over 30%. Therefore up to 9,000 kW
subscription will yield and average of 3,000 kWh of energy per hour. The estimated
cost including BPA transmission is approximately $76/MWh. This cost includes the
associated renewable energy credits (REC's) with the energy.
5. RECOMMENDATION
Approve the Board President to sign a resolution authorizing and approving the Horse
Butte Wind Project Power Sales Contract with Utah Associated Power Systems; and
related matters in substantially the form attached.
Stephen Hollabaugh Michael D. Holley
Assistant General Manager General Manager
HORSE BUTTE WIND PROJECT
POWER SALES CONTRACT
BETWEEN
UTAH ASSOCIATED MUNICIPAL POWER SYSTEMS
AND
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
DATED AS OF AUGUST 1,2010
Horse Butte-power sales contract.doc
8702011/0
TABLE OF CONTENTS
PAGE
RECITALS 1
Section 1. Definitions and Rules of Construction...................................................2
Section 2. Term of Contract..................................................................................14
Section 3. Sale and Purchase of Entitlement Share; Adjustments to
EntitlementShare.................................................................................14
Section 4. Development, Acquisition and Construction of the
Facility; Additional Facilities...............................................................15
Section 5. Financing of the Project.......................................................................17
Section 6. Capital Contributions; Calculation of Capital
Contribution Percentage, Debt Service Percentage and
DebtService Share...............................................................................17
Section 7. Operation, Maintenance and Management of the Facility...................19
Section 8. Billing Periods, Billing and Payment...................................................22
Section 9. Scheduling of Electric Energy; Coordination with
DAMPSPool .......................................................................................24
Section 10. Point of Delivery; Transmission Contracts; Risk of Loss....................25
Section 11. Interruption or Reduction of Deliveries...............................................26
Section 12. Availability of Electric Energy; Disposition of
Environmental Attributes.....................................................................26
Section13. Insurance..............................................................................................27
Section 14. Annual Budget; Accounting.................................................................27
Section 15. Information to Be Made Available ......................................................28
Section 16. Additional Bonds and Refunding Bonds .............................................29
Section 17. Disposition or Termination of the Project ...........................................29
Section 18. Representations, Warranties, Covenants and Agreements
ofthe Participant..................................................................................30
Section 19. Reserve and Contingency Fund ...........................................................33
Section 20. Pledge of Payments..............................................................................33
Section 21. Default by Participant..........................................................................34
Section 22. Continuing Obligation of Participant; Right of DAMPS
to Discontinue Service.........................................................................34
Section 23. Transfer of Entitlement Share Following Default; Other
Actionsby UAMPS .............................................................................35
Section 24. Other Default by Participant................................................................38
Section 25. Default by DAMPS; Dispute Resolution.............................................38
Section 26. Abandonment of Remedy....................................................................39
Section 27. Waiver of Default ................................................................................39
Section 28. Relationship to and Compliance with Other Instruments....................39
Section 29. Liability of Parties................................................................................39
Section 30. Assignment of Power Sales Contract...................................................40
Section 31. Termination or Amendment of Power Sales Contract.........................41
Section 32. Notices and Computation of Time.......................................................41
Section 33. Relationship of UAMPS and the Participant; Relationship
amongParticipants...............................................................................42
Section 34. No Recourse Against Officers, Etc. of UAMPS or
Participant............................................................................................42
Section 35. Governing Law; Jurisdiction and Venue .............................................42
Section 36. Severability; No Merger.......................................................................43
SCHEDULE I Schedule of Participants, Entitlement Shares, Capital Contribution
Percentages, Debt Service Percentages and Debt Service Shares
EXHIBIT I Description of the Facility
EXHIBIT II Form of Participant's Annual Information Report
EXHIBIT III Form of Participant's Certificate
EXHIBIT IV Form of Participant's Bring-Down Certificate
EXHIBIT V Form of Opinion of Counsel to the Participant
EXHIBIT VI Form of Bring-Down Opinion of Counsel to the Participant
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HORSE BUTTE WIND PROJECT
POWER SALES CONTRACT
This HORSE BUTTE WIND PROJECT POWER SALES CONTRACT made and entered into as
of August 1, 2010, is by and between UTAH ASSOCIATED MUNICIPAL POWER SYSTEMS, a
political subdivision of the State of Utah and TRUCKEE DONNER PUBLIC UTILITY DISTRICT, a
public utility district organized under the laws of the State of California.
RECITALS:*
WHEREAS, UAMPS was organized by the Members under the Act and the Joint Action
Agreement as a separate legal entity to accomplish the Members' joint and cooperative action,
including securing power supply and transmission resources for the Members' present and future
needs;
WHEREAS, DAMPS is organized as an energy services interlocal entity under the Act
with the power, among other things, to (i) acquire supplies of electric power and energy by the
acquisition or construction of electric generation and transmission facilities or by contracting for
the purchase of electric power and energy and (ii) enter into contracts for the sale of the output,
services and other benefits provided by such facilities or contracts to public agencies and others
inside or outside the State of Utah;
WHEREAS, the Municipal Electric Utility Carbon Emission Reduction Act, Title 10,
Chapter 19, Utah Code Annotated 1953, as amended, requires municipal electric utilities in Utah
to use electricity from renewable energy sources to serve at least twenty percent of their retail
loads by 2025 (subject to a determination of cost effectiveness and other conditions), and
municipal utilities in other states are subject to similar or more stringent requirements;
WHEREAS, UAMPS has examined the feasibility of a renewable energy project to be
known as the "Horse Butte Wind Project," a wind-powered electric generating project to be
located in Bonneville County, Idaho;
WHEREAS, Project Company has been organized for the purpose of acquiring,
constructing, owning, operating and selling the output of the Facility, and proposes to enter into
the Development Agreement and the Power Purchase Agreement with UAMPS;
WHEREAS, pursuant to the Development Agreement, Project Company will appoint
UAMPS as its agent for purposes of developing, acquiring and constructing the Facility and
arranging financing for the development, acquisition and construction costs of the Facility and
UAMPS will take all other actions necessary to prepare the Facility for commercial operation and
to vest in Project Company title to all of the assets comprising the Facility;
Capitalized terms used and not defined in the recitals have the meanings assigned to them in Section 1.
WHEREAS, pursuant to the Development Agreement and in order to facilitate the timely
and cost-effective construction of the Project, UAMPS (i) will agree to be primarily liable for the
repayment of all amounts borrowed under the Construction Loan Agreement, together with the
interest thereon and other amounts due thereunder and (ii) may co-sign, or otherwise obligate
itself for the payments due under, the Construction Agreements for the initial acquisition and
construction of the Facility;
WHEREAS, pursuant to the Power Purchase Agreement, Project Company will agree to
sell and DAMPS will agree to purchase all of the Electric Power, Electric Energy and
Environmental Attributes from the Facility, and UAMPS will have an option to purchase the
Facility at the times and upon the terms set forth therein;
WHEREAS, UAMPS will sell Electric Power, Electric Energy and Environmental
Attributes from the Project to the Participant pursuant to this Contract and to the other
Participants pursuant to the other Power Sales Contracts;
WHEREAS, UAMPS will issue Bonds to finance the Prepayment required under the
Power Purchase Agreement and may issue Additional Bonds to finance the Cost of the Project,
with all such Bonds being special and limited obligations of UAMPS, payable solely from a
pledge of the revenues derived by UAMPS from the payments to be made by the Participants
under the Power Sales Contracts and other amounts pledged pursuant to the Financing
Documents;
WHEREAS, the Participant desires to enter into this Contract in order to obtain a long-
term, cost-based supply of Electric Power, Electric Energy and Environmental Attributes by the
acquisition of an Entitlement Share pursuant to the terms and conditions of this Contract; and
WHEREAS, UAMPS and the Participant are duly authorized under applicable provisions
of law, to execute, deliver and perform this Contract and their respective governing bodies have
taken all necessary actions and all Required Approvals have been obtained in order to constitute
this Contract as the legal, valid and binding obligation of the parties.
Now, THEREFORE, for and in consideration of the mutual covenants and agreements
herein contained, it is agreed by and between the parties to this Contract as follows:
Section 1. Definitions and Rules of Construction. (a) As used in this Contract and in
the recitals set out above:
"Acquisition Date" means the date of the acquisition of the Facility by UAMPS if(i) it
elects to exercise its purchase option under the Power Purchase Agreement or (ii) it otherwise
acquires ownership of the Facility.
"Act" means the Interlocal Cooperation Act, Title 11, Chapter 13, Utah Code Annotated
1953, as amended, and other applicable provisions of law.
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"Additional Bonds" means additional Bonds from time to time issued by UAMPS
pursuant to the Financing Documents and in accordance with Section 16.
"Additional Facilities" means capital additions, betterments and replacements and other
capital items, including electric transmission facilities and other facilities, improvements and
properties directly and functionally related to the Facility that may be undertaken and owned by
DAMPS. Any additions and improvements to the Facility that may be undertaken by Project
Company prior to the Acquisition Date shall not constitute Additional Facilities, but shall be
addressed under the provisions of the Power Purchase Agreement. Additional generating
facilities located at the Facility site shall not be undertaken as Additional Facilities but may be
undertaken as a separate phase of the Project as provided in Section 4(g).
"Annual Budget"means the budget adopted by UAMPS for each Contract Year pursuant
to the provisions of Section 14.
"Authorized Officer of UAMPS"means the Chairman or Vice-Chairman of the Board, or
the Secretary, Treasurer, General Manager, or other officer or employee of UAMPS authorized or
having delegated authority to perform specific acts or duties under the Power Sales Contracts by
resolution duly adopted by the Board.
"Billing Period" means such period of time as shall be established from time to time by
UAMPS for the preparation, calculation and billing of the amounts payable by the Participant
hereunder.
"Board" means the Board of Directors of UAMPS or such other governing body of
UAMPS as may be established from time to time pursuant to the Joint Action Agreement and the
Act.
"Bond Counsel" means a firm of attorneys of recognized standing in matters relating to
the tax status of municipal bonds, experienced in matters relating to public power systems and
selected by UAMPS.
"Bond Fund"means the Bond Fund created by the Financing Documents, consisting of a
Debt Service Account, a Debt Service Reserve Account and a Capitalized Interest Account.
"Bonds" means (i) bonds, notes and other obligations issued from time to time by
UAMPS pursuant to the Financing Documents to finance all or any part of the Cost of the
Project, (ii) the payment obligations of UAMPS under the Construction Loan Agreement whether
or not evidenced by bonds or notes of UAMPS and (iii) any Additional Bonds and Refunding
Bonds.
"BPA" means the Bonneville Power Administration of the United States Department of
Energy.
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"Capital Contribution"means a payment made to UAMPS by the Participant pursuant to
Section 6 in an amount equal to the product of Participant's Entitlement Share and the
Prepayment Amount or in such lesser amount as may be permitted pursuant to Section 6(a).
"Capital Contribution Percentage" means with respect to each series of Bonds, a
percentage determined by UAMPS obtained by dividing (i) the dollar amount of the Capital
Contribution made by the Participant, by (ii) the Prepayment Amount, all as more fully provided
in Section 6.
"Code" means the Internal Revenue Code of 1986, as amended. References to herein to
the Code are deemed to include the applicable U.S. Treasury Regulations thereunder.
"Commercial Operation Date" (i) with respect to the Facility, has the meaning assigned
to such term in the Power Purchase Agreement and (ii) with respect to any Additional Facilities,
means the date on which such Additional Facilities are capable of continuous firm operation, as
determined under the applicable Construction Agreements.
"Commercially Reasonable" or "Commercially Reasonable Efforts"means, with respect
to any action required to be made, attempted or taken by a party under this Contract or one of the
Project Agreements, such efforts as a reasonably prudent business would undertake, consistent
with Prudent Utility Practice, for the protection of its own interest under the conditions affecting
such action, including without limitation, the amount of notice of the need to take such action,
the duration and type of the action, the competitive environment in which such action occurs, the
terms and provisions of the Project Agreements and the Financing Documents, the contractual
and legal obligations of, and the risk to, such party in connection with such action.
"Construction Agreements" means each contract or agreement providing for the
acquisition or construction of any part of the Facility, including each turbine supply agreement,
balance-of-plant ' contract and construction contract, and each contract providing for the
acquisition and construction of any Additional Facilities.
"Construction Loan Agreement"means the agreement among Project Company, UAMPS
and the lender providing financing for the Cost of the initial acquisition and construction of the
Facility.
"Contract" means this Horse Butte Wind Project Power Sales Contract dated as of
August 1, 2010 between DAMPS and the Participant and any amendments permitted pursuant to
Section 31.
"Contract Resolution" means the resolution of the Participant's governing body
approving and authorizing the execution of this Contract, in substantially the form attached to
EXHIBIT III.
"Contract Year"means the Fiscal Year, except that the first Contract Year shall begin on
the Effective Date and shall end on the last day of the then-current Fiscal Year. In the event that
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DAMPS changes its Fiscal Year for accounting purposes, Contract Year shall, without further
action,be amended to conform to such Fiscal Year.
"Cost of the Project, " "Cost of Additional Facilities" or "Cost" means all costs and
expenses paid or incurred by UAMPS in connection with the Facility, the Additional Facilities or
the Project (as the context requires), whether prior or subsequent to the Effective Date, including
but not limited to all costs and expenses incurred by UAMPS in its investigation, negotiation and
review of the Project and the Project Agreements and all expenses preliminary and incidental
thereto. Cost includes all costs incurred by UAMPS in providing development services under the
Development Agreement in connection with the planning, designing, acquisition and
construction of the Facility which costs are not otherwise reimbursed by Project Company, and
the amounts payable by DAMPS under the Construction Loan Agreement and the Construction
Agreements. Cost includes the cost of planning, designing, acquiring, constructing and placing
in operation Additional Facilities. As and to the extent properly allocable to the Project at any
time, "Cost" also includes, but is not limited to, the following:
(1) payments to UAMPS or any Participant to reimburse advances and
payments made or incurred for costs preliminary or incidental to the development,
acquisition or construction of the Facility or any Additional Facilities;
(2) the Prepayment Amount payable by UAMPS pursuant to the Power
Purchase Agreement;
(3) planning and development costs; engineering and contractors' fees;
fiduciaries', 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, financing and Bond issuance costs;
amounts payable under the Project Agreements during or in connection with the
acquisition or construction of the Facility or any Additional Facilities; administrative and
general costs; and all other costs properly allocable to the acquisition or construction of
the Facility or any Additional Facilities or placing the same in operation;
(4) interest on Bonds for such period as may be reasonably necessary for
placing the Facility or any Additional Facilities in operation in accordance with the
provisions of the Financing Documents;
(5) the payment of principal or redemption price of and interest on any Bonds
issued as bond anticipation notes;
(6) 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 Power Supply Costs;
(7) deposits into the Bond Fund and any other fund or account required to be
funded by the Financing Documents;
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(8) 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 or
otherwise related to the Project, the Project Agreements, the Power Sales Contracts or the
transactions contemplated thereby;
(9) federal, state and local taxes or payments in lieu of such taxes relating to
the Project and incurred during the period of the acquisition or construction thereof,
(10) the cost of acquiring the Facility upon DAMPS' election to exercise its
purchase option under the Power Purchase Agreement; and
(11) all other costs incurred by UAMPS, and properly allocable to the
acquisition and construction of the Project, including all costs financed by the issuance of
Additional Bonds.
"Debt Service Costs" means, for each Billing Period of each Contract Year, an amount
equal to the sum of:
(1) the interest accruing on Bonds during such Billing Period, calculated (or
estimated) in accordance with the Financing Documents, except to the extent that
amounts are on deposit under the Financing Documents to pay such interest, together
with any other amounts required by the Financing Documents to be deposited into the
Bond Fund in respect of the interest payments on the Bonds;
(2) the portion of the next due principal installment accruing on Bonds during
such Billing Period, calculated in accordance with the Financing Documents, together
with any other amounts required by the Financing Documents to be deposited into the
Bond Fund in respect of the principal payments on the Bonds;
(3) the amounts payable during such Billing Period under any Interest Rate
Contract;
(4) any amounts required by the Financing Documents to be deposited into the
Bond Fund to provide or replenish debt service reserve requirements for Bonds;
(5) the accruing principal of and interest on any obligations subordinate to the
Bonds issued by UAMPS pursuant to the Financing Documents and amounts necessary to
provide or replenish any necessary reserves in connection with such obligations;
(6) Trustee, paying agent, escrow agent and other fiduciaries' fees and
expenses payable under the Financing Documents; fees and expenses of remarketing
agents, broker-dealers, auction agents and others providing services with respect to
Bonds; and
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(7) the amounts required to be paid to maintain any credit or liquidity facilities
for and ratings on the Bonds and other costs payable by UAMPS from time to time in
connection with the Bonds.
provided, however, that the additional interest expense on or in respect of any Bonds or
subordinate obligations that are subject to federal income taxation(and not eligible for tax credits
or interest subsidy payments) may, as determined by the Project Management Committee
pursuant to Section 5(b), be allocated to those Participants whose legal status or use of the
Project Capability or the Project Output adversely affects the Tax Status of such Bonds. In the
event of such allocation, the Debt Service Costs payable by such Participants shall be increased
to include amounts sufficient to pay any such additional interest expense.
"Debt Service Percentage" means, with respect to each Participant and as of any date of
determination, the percentage obtained by subtracting the Participant's Capital Contribution
Percentage from the Participant's Entitlement Share. The Participant's initial Debt Service
Percentage is set forth on SCHEDULE I.
"Debt Service Share" means, with respect to each Participant and as of any date of
determination, the 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 1.
"Development Agreement" means the Horse Butte Wind Project Development
Agreement between DAMPS and Project Company.
"Effective Date" means the date on which (i) this Contract has been executed and
delivered by DAMPS and the Participant and all Required Approvals have been obtained and (ii)
all of the Power Sales Contracts have become effective in accordance with the provisions of
Section 2(a).
"Electric Power"means electric power expressed in kilowatts (M).
"Electric Energy"means electric energy expressed in kilowatt-hours (kWh).
"Environmental Attributes" (i) from the Effective Date to the Acquisition Date, has the
meaning assigned to such term in the Power Purchase Agreement, and (ii) from and after the
Acquisition Date, means all environmental and renewable energy allowances, benefits,
certificates, credits, offsets or reductions resulting from the generation of renewable energy and
the resulting displacement of conventional energy generation. Environmental Attributes include
avoided emissions of carbon dioxide, methane, sulfur oxides, nitrogen oxides, carbon monoxide,
particulate matter or any other gas recognized as a greenhouse gas or gas, solid or liquid
recognized as a source of air, water or soil pollution. Units of Environmental Attributes shall be
allocated to units of generation from the Project, as determined by the Project Management
Committee. Environmental Attributes do not include any tax credits, depreciation or other
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deductions, or cash grants available under state or federal law to Project Company or any other
owner of the Facility.
"Entitlement Share" means the Participant's entitlement (expressed as a percentage) to a
portion of Project Capability and Environmental Attributes as set forth on SCHEDULE I, as the
same may be adjusted pursuant to Section 18 or Section 23.
"Facility" means the real and personal property, facilities, structures, improvements and
equipment comprising the wind energy generating facility known as the "Horse Butte Wind
Project" and owned by Project Company on the Commercial Operation Date. A description of
the Facility is attached as EXHIBIT I to this Contract.
"Financing Documents" means the bond resolution, indenture, trust agreement or other
instrument or instruments providing for the issuance of and the security for Bonds and all
amendments thereof and supplements thereto.
"Fiscal Year" means the annual accounting period of DAMPS 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.
"Interconnection Agreement" means the Large Generator Interconnection Agreement
providing for the interconnection of the Facility with the transmission facilities of BPA and all
supplements and amendments thereto, together with any successor or replacement agreement
providing for the interconnection of the Facility with the transmission grid.
"Interest Rate Contract" means an International Swap Dealers Association, Inc. (ISDA)
Master Agreement, together with the schedules and confirmations thereto, or any comparable
successor agreement entered into by UAMPS with respect to Bonds pursuant to the provisions of
the State Money Management Act, Title 51, Chapter 7, Utah Code Annotated 1953, as amended.
"Joint Action Agreement" means the Utah Associated Municipal Power Systems
Amended and Restated Agreement for Joint and Cooperative Action dated March 20, 2009, as
amended and supplemented from time to time.
"Members"means, collectively, the parties to the Joint Action Agreement.
"Month"means a calendar month.
"Operating Agreement" means any agreement providing for the operation and
maintenance of all or any portion of the Facility or any Additional Facilities.
"Participant" means the second party named in the preamble of this Contract and its
permitted successors and assigns hereunder.
"Participants"means the Participant and the other entities named on SCHEDULE I.
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"Participant's Representative" means (i) the officer, employee or other agent of the
Participant designated from time to time by the Participant as the Representative of the
Participant for purposes of the Joint Action Agreement, to whom all notices and other
communications to be given by DAMPS to the Participant hereunder shall be sent or (ii) in the
event that the individual appointed as the Participant's Representative is unavailable to act on
behalf of the Participant, the individual duly appointed or designated by the Participant as its
alternate Representative pursuant to the Joint Action Agreement.
"Permits and Approvals" means all certificates, permits, licenses, approvals, rulings,
orders or other authorizations from any federal, state or local governmental body, board or
agency having jurisdiction over DAMPS, the Project or both that are required to be obtained or
maintained in connection with the acquisition, construction, operation, maintenance or repair of
the Project or any component thereof.
"Permitted Contract"means (i) a contract with a term (including all renewal options) not
longer than three years and (ii) requirements-type contracts, other than requirements contracts
providing for electricity sales at wholesale, with retail consumers or other end users of electricity.
"Point of Delivery" means (i) initially, the "Point of Delivery" specified in the Power
Purchase Agreement, and (ii) from and after the Acquisition Date, the point or points of physical
interconnection of the Facility with the electric transmission grid, as determined pursuant to the
Interconnection Agreement.
"Pooling Agreement" means, collectively, the Power Pooling Agreements between
UAMPS and the Members and certain other entities providing for the establishment and
operation of the UAMPS Pool and related matters, including all supplements and appendices
thereto.
"Power Purchase Agreement" means the Power Purchase Agreement providing for the
purchase and sale of all of the Electric Energy generated by the Project between Project
Company, as seller, and UAMPS, as buyer.
"Power Sales Contracts" means all of the Horse Butte Wind Project Power Sales
Contracts dated as of August 1, 2010 between UAMPS and the Participants (including this
Contract between UAMPS and the Participant), all of which are uniform in all material respects
in their term, conditions and provisions, with the exception of the Entitlement Share, the Capital
Contribution 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.
"Power Supply Costs"means, with respect to each Billing Period, all costs and expenses
(other than Transmission Costs and Debt Service Costs) attributable to the Project that are paid,
payable, incurred or accrued by UAMPS during each Billing Period resulting from the
ownership, operation, maintenance, decommissioning and termination of, and repairs, renewals,
replacements, additions, improvements, and betterments and modifications to, the Project,
including amounts payable by UAMPS under the Project Agreements.
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Without limiting the generality of the foregoing (it being the intention and understanding
of DAMPS and the Participants that "Power Supply Costs" shall include all of DAMPS costs
with respect to the Project(other than Transmission Costs and Debt Service Costs):
(a) from the Commercial Operation Date to any Acquisition Date, it is expected that
Power Supply Costs will consist primarily of the amounts payable by DAMPS under the
Power Purchase Agreement (including the cost of "Additional Energy," as defined
therein, but excluding the Prepayment) and under the other agreements described in
clause (i) of the definition of"Project Agreements";
(b) from and after any Acquisition Date, it is expected that Power Supply Costs will
consist primarily of the amounts payable by UAMPS under the agreements described in
clause(ii) of the definition of"Project Agreements" and the following items of cost:
(1) the costs of operating and maintaining the Facility and any Additional
Facilities and of producing and delivering Electric Power and Electric Energy to the Point
of Delivery during such Billing Period, including the operation and maintenance expenses
of the Project, fees, expenses, incentives and other amounts payable under any Operating
Agreement;
(2) 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 DAMPS shall be
obligated, and amounts necessary to fund or replenish reserves therefor, but only to the
extent not funded by Bonds or Capital Contributions;
(3) legally required federal, state and local taxes, including gross receipts
taxes and ad valorem taxes or payments in lieu of ad valorem taxes, in each case related
to the Project;
(4) the Cost of Additional Facilities, but only to the extent not paid or
financed as part of the Cost of the Project; and
(5) the costs of, or reserves for the costs of, decommissioning or removing
from service all or any part of the Project; and
(c) at all times, Power Supply Costs will include the following items of cost:
(1) 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;
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(2) amounts to be deposited into the Reserve and Contingency Fund
established pursuant to Section 19;
(3) legal, engineering and accounting fees and expenses, the cost of any
litigation related to the Project, the Project Agreements, the Power Sales Contracts and
the interests and transactions contemplated by the Project Agreements and the Power
Sales Contracts, and the costs of technical and advisory services, of all Permits and
Approvals and of certifying, qualifying or registering the Environmental Attributes
associated with the Project, all to the extent allocable to the Project; and
(4) costs imposed upon the Project by an independent system operator,
regional transmission organization or similar entity, costs of ancillary services and other
operational costs necessary to comply with reliability requirements.
"Prepayment" means the lump sum advance payment to be made by DAMPS under the
Power Purchase Agreement on the Commercial Operation Date of the Facility for a specified
quantity of Electric Energy.
"Prepayment Amount" means the dollar amount of the Prepayment with such
adjustments as may be approved by the Project Management Committee.
"Project" means the Horse Butte Wind Project undertaken by UAMPS for the use and
benefit of the Participants as provided in the Power Sales Contracts. Until the occurrence of the
Acquisition Date, the Project shall consist of DAMPS' rights, interests, obligations and liabilities
under the contractual arrangements described in clause (i) of the definition of "Project
Agreements," including particularly the right to purchase and the obligation to pay for all of the
Project Capability pursuant to the Power Purchase Agreement. From and after the Acquisition
Date, the Project shall consist of the acquisition, ownership and operation of the Facility by
UAMPS, the rights, interests, obligations and liabilities of DAMPS under the contractual
arrangements described in clause (ii) of the definition of "Project Agreements" and the
acquisition, construction, improvement and equipping of any Additional Facilities. This
definition may be amended by UAMPS as provided in Section 4(c).
"Project Agreements" means (i) prior to the Acquisition Date, the Development
Agreement, the Construction Agreements (to the extent UAMPS is a party thereto), the
Construction Loan Agreement, the Power Purchase Agreement, the Security Agreement and the
Transmission Agreements, and (ii) from and after the Acquisition Date, any Construction
Agreements, any Operating Agreement, the Interconnection Agreement and the Transmission
Agreements. This definition may be amended by UAMPS as provided in Section 4(c).
"Project Capability"means (i) prior to the Acquisition Date, all of UAMPS' right under
the Power Purchase Agreement to the Electric Power and associated Electric Energy from the
Facility, and (ii) from and after the Acquisition Date, the Electric Power and associated Electric
Energy that the Facility and any Additional Facilities are capable of producing. The Project
Capability initially available to UAMPS will be the aggregate nameplate rating of the generating
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units included in the Facility, which is expected to equal the amount of Electric Power shown on
SCHEDULE I, and associated Electric Energy.
"Project Company"means Horse Butte Wind I LLC, an Idaho limited liability company.
"Project Management Committee" means the committee of the Participants initially
established under Section 7.
"Project Output"means the amount of Electric Power and Electric Energy, if any, which
is generated by the Facility or available under the Project Agreements 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 with
respect to wind powered electric generating facilities at such time, or which, in the exercise of
reasonable judgment in light of facts known at such time, could have been expected to
accomplish the desired results at the lowest reasonable cost consistent with good business
practices, reliability, safety and expedition. Prudent Utility Practice is not intended to be limited
to the optimum practice, method or act to the exclusion of all others or to be limited to the
lowest-cost practice, method or act, but rather to be a spectrum of possible practices, methods
and acts, having due regard for manufacturers' warranties and the jurisdiction.
"Qualified Use" means the sale of electricity to retail customers located within the
established service area of a municipal utility pursuant to generally applicable and uniformly
applied rate schedules or tariffs; provided that Qualified Use shall not include any sale of
electricity that gives rise to "private business use" or a "private loan" within the meaning of
Section 141 of the Code; and provided further that "Qualified Use" shall include such additional
uses of electricity as may be approved by UAMPS with a favorable opinion of Bond Counsel.
For purposes of this definition: (i) the established service area of a utility consists of any area that
is a "qualified service area"within the meaning of Section 141(d) of the Code and an"electricity
service area" within the meaning of U.S. Treasury Regulation Section 1.148-1(e)(2)(iii); and (ii)
a municipal utility is a state or local government unit that owns and operates an electric
distribution utility.
"Refunding Bonds" means refunding Bonds from time to time issued by UAMPS
pursuant to the Financing Documents and in accordance with Section 16.
"Required Approvals"means all governmental, regulatory and lender approvals, consents
and authorizations required or necessary for (i) the execution, delivery and performance of this
Contract (or any amendment hereto) by the Participant and (ii) this Contract (or any amendment
hereto) to be the legal, valid and binding obligation of the Participant; provided, however, that
"Required Approvals"does not include approval by the Participant's governing board or body.
"Reserve and Contingency Fund" means the fund, if any, established pursuant to
Section 19.
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"Security Agreement" means the Security Agreement from Project Company to secure
the performance of its obligations to UAMPS under the Power Purchase Agreement.
"System Point of Receipt" means (i) the point(s) of interconnection between the
Participant's electric utility system and the transmission facilities of the applicable control area
utility or (ii) such other point(s) for the receipt by the Participant of Electric Energy from the
Project as may be agreed to by the parties.
"Tax Status"means (i) the exclusion from gross income for federal income tax purposes
of the interest on any Bonds issued as tax exempt obligations or (ii) the right of a bondowner(or
other investor) to receive tax credits or the right of UAMPS to receive interest subsidy payments
on any Bonds issued as tax credit bonds or interest subsidy bonds, respectively, in each case
pursuant to the provisions of the Code.
"Transmission Agreements" means each transmission contract, agreement or tariff
entered into by UAMPS or the Participant that is used or necessary for the delivery of Electric
Power and Electric Energy from the Point of Delivery to the Participant's System Point of
Receipt, whether by direct transmission, displacement, exchange or otherwise.
"Transmission Costs" means, for each Billing Period of each Contract Year, all capital,
operating and other costs and expenses paid, payable, incurred or accrued by UAMPS during
such Billing Period for the transmission of Electric Energy from the Point of Delivery to the
Participant's System Point of Receipt pursuant to the Transmission Agreements or otherwise.
The Participant shall be responsible for the payment of Transmission Costs to UAMPS hereunder
only to the extent that UAMPS has, at the request of the Participant, entered into or utilized
Transmission Agreements for the transmission of Electric Energy from the Point of Delivery to
the Participant's System Point of Receipt.
"Trustee" means the bank or trust company acting as the trustee under the Financing
Documents.
"UAMPS" means the first party named in the preamble of this Contract. All references
to UAMPS in this Contract shall include Authorized Officers of UAMPS and their delegees
acting pursuant to specific authorization by the Board.
"UAMPS Pool" means that certain electric power pool established pursuant to the
Pooling Agreement under which UAMPS provides certain services with respect to the
scheduling, dispatch and the sale of Electric Power and Electric Energy and other matters
provided for in the Pooling Agreement.
"Uncontrollable Force" means any cause, event or force beyond the control of the party
affected, including, but not restricted to failure, or threat of failure of facilities, flood, earthquake,
storm, fire, lightning, epidemic, war, terrorism, acts of a public enemy, riot, civil disturbance or
disobedience, labor dispute, labor or material shortage, sabotage, and restraint by court or public
authority and action or non-action by, or inability to obtain the necessary authorizations or
approvals from, any governmental agency or authority, which by exercise of due diligence and
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foresight such party could not reasonably have been expected to avoid and which by exercise of
due diligence it shall be unable to overcome. Prior to the Acquisition Date, Uncontrollable Force
includes events of"Force Majeure"under(and as defined in) the Power Purchase Agreement.
"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.
(b) References to Sections, Schedules and Exhibits are to the Sections of and Schedules
and Exhibits to this Contract, unless otherwise provided. Article and Section headings are
included herein for convenience of reference only and shall not constitute a part of this Contract
for any other purpose or be given any substantive effect. Any of the defined terms may, unless
the context otherwise requires, be used in the singular or the plural, depending on the reference.
The use of the word"include" or its derivations shall not be construed as language of limitation.
Section 2. Effectiveness of Power Sales Contracts; Term of Contract. (a) Promptly
upon the approval of this Contract by its governing body's adoption of the Contract Resolution,
the Participant shall (i) cause this Contract to be executed by its authorized officers, and (ii)
deliver to UAMPS an executed counterpart of this Contract together with its completed
certificate and the exhibits to it (in substantially the form attached hereto as EXHIBIT III). Upon
the receipt by UAMPS of executed Power Sales Contracts and certificates from Participants that
have requested Entitlement Shares totaling 50,000 kW or more of Electric Power, UAMPS shall
cause all such Power Sales Contracts to be executed by its authorized officers and the Effective
Date of all such Power Sales Contracts shall occur. The Effective Date of executed Power Sales
Contracts subsequently received by UAMPS shall occur as provided in the definition of Effective
Date.
(b) This Contract shall be in effect on and as of the Effective Date and will, unless this
Contract is terminated pursuant to Section 31, continue until the determination of-the Project
Management Committee to terminate the Project and to cause all of the Power Sales Contracts to
expire on a date certain following the last to occur of. (i) the date on which all Bonds have been
paid in full as to principal, premium and interest, or sufficient funds shall have been irrevocably
set aside for the full defeasance thereof and all other obligations of UAMPS under the Financing
Documents and the Project Agreements have been paid or satisfied; and(ii)the date on which the
Facility and any Additional Facilities shall be taken out of service and terminated and all
decommissioning costs shall have been paid or fully funded.
(c) UAMPS shall give notice to the Participant of the occurrence of the Effective Date
and shall prepare and deliver to each Participant a completed SCHEDULE I that shows the
Entitlement Shares of all Participants.
Section 3. Sale and Purchase of Entitlement Share; Adjustments to Entitlement Share.
(a) From and after the Effective Date, UAMPS shall sell to the Participant, and the Participant
shall purchase from UAMPS, the Participant's Entitlement Share.
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(b) In consideration of the sale of its Entitlement Share, the Participant shall, in
accordance with and subject to the provisions of Section 8, pay to UAMPS in each Billing
Period: (i) from the Effective Date to the date of the first issuance of Bonds, the product of its
Entitlement Share and all Costs of the Project associated with the development thereof for such
Billing Period, (ii) from and after the first issuance of Bonds, the product of its Debt Service
Share and all Debt Service Costs for such Billing Period; (iii) the product of its Entitlement
Share and all Power Supply Costs for such Billing Period; and (iv) the Transmission Costs, if
any, incurred by DAMPS for the account of the Participant for such Billing Period. The first
Billing Period shall commence not sooner than the month in which the Effective Date occurs.
Each such payment is to be computed and made as provided in Section 8.
Section 4. Development, Acquisition and Construction of the Facility; Additional
Facilities. (a) UAMPS and Project Company shall enter into the Development Agreement to
provide for the development, acquisition and construction of the Facility. DAMPS shall act as
agent of Project Company and shall develop, acquire and construct the Facility, arrange financing
for the development, acquisition and construction costs of the Facility and shall take all other
actions necessary to prepare the Facility for commercial operation, all in accordance with Prudent
Utility Practice. In order to promote the efficient and economical development and construction
of the Facility and the financing for the costs thereof, UAMPS (i) will agree to be primarily liable
for the repayment of all amounts borrowed under the Construction Loan Agreement, together
with the interest thereon and other amounts due thereunder and (ii) may co-sign, or otherwise
obligate itself for the payments due under, the Construction Agreements for the initial acquisition
and construction of the Facility
(b) UAMPS shall perform its obligations under the Development Agreement and shall:
(i) use Commercially Reasonable Efforts consistent with and subject to the
terms and provisions of the Project Agreements to cause the Facility to be expeditiously
and economically acquired and constructed pursuant to the Construction Agreements;
(ii) diligently defend and protect the rights of Project under the Construction
Agreements;
(iii) enforce the contractors' obligations under such Agreement;
(iv) report monthly to the Project Management Committee regarding the
current status of construction of, and any changes to the estimated Commercial Operation
Date and cost of construction of the Facility; and
(v) give prompt notice to the Project Management Committee and the
Participant of the occurrence of the Commercial Operation Date of the Facility.
(c) UAMPS has filed a request to interconnect the Facility with the transmission
facilities of BPA. As of the date of this Contract, UAMPS expects that either Project Company
will enter into the Interconnection Agreement with BPA or that UAMPS will enter into the
Interconnection Agreement and will assign its interests thereunder to Project Company. If
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contrary to such expectations, UAMPS enters into the Interconnection Agreement but does not
assign its rights to Project Company, UAMPS shall provide an interconnection and transmission
services agreement to Project Company upon such terms and provisions as shall be approved by
the Project Management Committee. DAMPS may, by notice to the Participants, provide revised
definitions of"Project," "Facility" and "Project Agreements" to conform to its ownership of any
interconnection facilities and its provision of interconnection and transmission services to Project
Company.
(d) A general description of the Facility is attached as EXHIBIT I. This description may
be revised from time to time as the components of the Facility are designed, engineered,
constructed, installed and tested and to conform to the description of the "Facility" under(and as
defined in) the Power Purchase Agreement. UAMPS and the Participant agree that in no event
will any revisions to EXHIBIT I (nor any revisions to the definitions referenced in subsection (d)
above) alter or affect their respective rights and obligations under this Contract.
(e) As soon as practicable after the Commercial Operation Date of the Facility, UAMPS
shall prepare a complete statement and reconciliation of the final (or substantially final) cost of
construction of the Facility and submit the same to the Project Management Committee for its
review and acceptance. In the event that a substantially final statement of the cost of
construction of the Facility is submitted to and accepted by the Project Management Committee,
UAMPS shall provide periodic reports to the Project Management Committee regarding the cost
of construction of the Facility until a final statement is available for its review and approval.
(f) UAMPS may from time to time recommend the acquisition or construction of
Additional Facilities to improve or add to the Facility. Any Additional Facilities shall be
approved by the Project Management Committee. The Participant acknowledges and agrees that
(i) Additional Facilities shall not include additional generating units, (ii) additional generating
units may be developed, constructed, operated and financed as a separate phase of the Project as
provided in paragraph (h) below and (iii) such separate Project phase may purchase or use
surplus capacity in the gathering system, in other common facilities and under the
Interconnection Agreement at such prices as may be determined by the Project Management
Committee. Upon the approval of the Project Management Committee, UAMPS may enter into
or approve such amendments and supplements to the Project Agreements as it deems necessary
or desirable in connection with such separate phase.
(g) UAMPS may from time to time recommend the acquisition and construction of
additional generating units as a separate phase of the Project. Any such separate phase, and any
amendments and supplements to the Project Agreements in connection therewith, shall be
approved by the Project Management Committee. If so approved, UAMPS shall offer the
Participants the opportunity to participate in such separate phase under a supplement to this
Contract or under a separate agreement, as determined by the Project Management Committee.
Each Participant may elect to participate in such separate phase with an entitlement share up to
its then-current Entitlement Share. In the event that any Participant elects not to participate in the
separate phase or elects a reduced entitlement share, the available entitlement shares shall first be
offered by UAMPS to the other Participants and then to such other entities as directed by the
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Project Management Committee. The supplement to this Contract for any separate phase of the
Project shall constitute a separate agreement between the parties for all purposes.
Section S. Financing of the Project. (a) UAMPS shall enter into the Construction
Loan Agreement with Project Company and the construction lender and will be primarily liable
for the payment of the amounts due thereunder. The payment obligations of UAMPS under the
Construction Loan Agreement shall constitute payment obligations on Bonds of UAMPS for all
purposes of this Contract. In addition, DAMPS shall issue Bonds to finance (i) the Prepayment
Amount and other items of the Cost of the Project related thereto and (ii) the Cost of any
Additional Facilities pursuant to plans of financing approved by the Project Management
Committee.
(b) Each Participant may elect to make a Capital Contribution to UAMPS pursuant to
Section 6, and DAMPS shall issue Bonds to the extent necessary and in an amount sufficient to
finance that portion of the Prepayment Amount that is not funded through Capital Contributions.
Prior to the giving by UAMPS of the notice required by Section 6(a), the Project Management
Committee shall determine whether any additional interest expense on or in respect of taxable
Bonds (not eligible for tax credits or interest subsidy payments) shall be allocated to those
Participants whose legal status or use of Project Output requires the issuance of such Bonds. In
the event the Project Management Committee determines to make such allocation, the notice
required by Section 6(a) shall include such information as shall be necessary to generally inform
the affected Participants of the additional Debt Service Costs, if any, that will be payable by them
in the event they elect not to make a Capital Contribution.
Section 6. Capital Contributions; Calculation of Capital Contribution Percentage,
Debt Service Percentage and Debt Service Share. (a) Not less than 90 days prior to the date on
which it is required to make the Prepayment, DAMPS shall give written notice to the Participant
of
(1) its right to elect to make a Capital Contribution;
(2) the date by which it must notify UAMPS of its election, which shall be not
earlier than 30 days after the date of such notice;
(3) the Prepayment Amount (or an estimate thereof) approved by the Project
Management Committee; and
(4) the amount of the Participant's Capital Contribution, being the product of
such Prepayment Amount and the Participant's Entitlement Share.
The Participant may elect to make a partial Capital Contribution equal to the amount of retained
earnings or other legally available funds not derived from any external borrowing that it
determines to apply to the Capital Contribution. In all other circumstances, a Participant may
elect to make a Capital Contribution in whole and not in part.
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(b) The Participant's election to make a Capital Contribution shall be made by written
resolution adopted by its governing body, which resolution shall be in substantially the form
approved by the Project Management Committee. An original or certified copy of such
resolution shall be submitted to UAMPS with the Participant's notice of its election to make the
Capital Contribution. In the event that the Participant does not notify UAMPS of the
determination of its governing body by the date specified in the notice provided by DAMPS, the
Participant shall be deemed to have elected not to make a Capital Contribution.
(c) Following receipt of the Participant's election to make the Capital Contribution,
UAMPS will provide the Participant with notice of:
(1) the date (which shall be not earlier than 30 days after the date of such
notice)by which the Participant must make the Capital Contribution;
(2) instructions for the deposit of the Capital Contribution into a separate and
segregated special escrow account established under the Financing Documents; and
(3) a written statement of information regarding DAMPS, the Project and the
Project Agreements for the Participant's use in any offering material for any indebtedness
to be issued to finance the Capital Contribution.
The Capital Contribution shall be held and invested in accordance with the provisions of the
Financing Documents, which shall provide for the investment of the Capital Contribution, the
crediting of any interest earnings for the account of the Participant and the application of the
Capital Contribution by the Trustee upon the direction of DAMPS to fund a portion of the
Prepayment Amount and for deposit into certain funds and accounts established by the Financing
Documents. If the Participant fails to make the Capital Contribution as and when required by the
DAMPS' notice, it shall be deemed to have rescinded its election to make the Capital
Contribution.
(d) The Participant acknowledges and agrees that the amount of the Capital
Contribution to be made by the Participant may be based upon a substantially final estimate of
the Prepayment Amount and, in such event, will be subject to adjustment to reflect the final
Prepayment Amount approved by the Project Management Committee. Not more than 30 days
following the determination of the final Prepayment Amount, DAMPS shall render a final
accounting statement to the Participant showing the final Prepayment Amount, the amount of and
interest earnings on the Capital Contribution and any amount payable by or credited to the
Participant in respect of the final Prepayment Amount. The Participant agrees that it will pay any
additional amount payable by it on or before the 30th day following the date of such final
accounting statement, or on such later date as may be approved by the Project Management
Committee.
(e) After Capital Contributions have been made by all electing Participants, UAMPS
shall complete (or revise, as applicable) SCHEDULE I and provide a copy of the completed or
revised SCHEDULE I to each of the Participants. With respect to all Participants and at all times,
SCHEDULE I shall show that:
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(1) the sum of each Participant's Capital Contribution Percentage and Debt
Service Percentage equals its Entitlement Share;
(2) the sum of the Capital Contribution Percentages and Debt Service
Percentages of all Participants equals 100%; and
(3) the sum of the Debt Service Shares of all Participants equals 100%.
DAMPS' calculation and determination of Prepayment Amount and the Participant's Capital
Contribution Percentage, Debt Service Percentage and Debt Service Share in accordance with
(1), (2) and (3) above shall be conclusive and binding upon DAMPS and the Participant.
UAMPS shall revise Schedule I from time to time as provided herein so that it sets forth the
correct Entitlement Shares, Capital Contribution Percentages, Debt Service Percentages and Debt
Service Shares of all Participants.
(f) The Participant acknowledges and agrees with UAMPS that:
(1) its election to make a Capital Contribution shall be irrevocable and under
no circumstances whatsoever shall the Participant be entitled to a return or rebate of all or
any portion of any Capital Contribution in the event that Uncontrollable Force,
termination of any Project Agreements or other circumstances result in the suspension,
interruption, interference, reduction, curtailment or termination of the Project or the
Project Output;
(2) the Capital Contribution shall not be deemed to constitute an investment
by the Participant and the Participant shall not be entitled to any investment earnings or
rate of return on the Capital Contribution, except with respect to interest earnings on the
Capital Contribution pending its application as provided above; and
(3) any Capital Contribution made by the Participant shall not change or affect
UAMPS' ownership in the Project or any of the rights and obligations of UAMPS and the
Participant under this Contract, except as specifically provided herein, including the right
of UAMPS to suspend or terminate the Participant's right to receive the Electric Energy
allocable to its Entitlement Share as provided in Section 22.
Section 7. Operation, Maintenance and Management of the Project. (a) UAMPS
covenants and agrees that it will use Commercially Reasonable Efforts consistent with and
subject to the terms and provisions of the Project Agreements to cause the Project to be operated,
maintained and managed in an efficient and economical manner in accordance with Prudent
Utility Practice for the joint and ratable benefit of all of the Participants. UAMPS agrees with
and covenants to the Participant that UAMPS will vigorously enforce and defend its rights under
the Project Agreements. The Participant acknowledges and agrees that UAMPS may, upon the
approval of the Project Management Committee, from time to time enter into amendments of and
supplements to any or all of the Project Agreements and that, except as otherwise required by
Section 28(c), UAMPS will not be required to obtain the consent or approval of the Participant in
connection with any such supplement or amendment.
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(b) The Participant hereby acknowledges and agrees that, in order to promote the
efficient and economical utilization of the Project and to fully realize the benefits to the
Participants of their joint and cooperative undertaking, it is necessary and desirable that UAMPS
control the operation of the Project (to the extent provided in the Project Agreements) and
schedule the Project Output in accordance with the provisions of the Power Sales Contracts and
the directions of the Project Management Committee, and the Participant hereby authorizes
UAMPS to take all actions necessary or desirable in this regard.
(c) The Participants hereby establish and confirm the Project Management Committee,
which shall consist of one voting representative from each Participant (who shall be the
Participant's Representative) and shall be chaired by a Participant's Representative elected by the
Project Management Committee. Pursuant to the Contract Resolution, the Participant has
delegated full and complete authority to its Participant's Representative to act on all matters and
decisions that come before the Project Management Committee.
(d) An Authorized Officer of DAMPS shall attend all meetings of the Project
Management Committee and shall cause minutes to be kept of all such meetings. The Joint
Action Agreement and the bylaws of DAMPS shall govern the procedures for and the voting
rights on the Project Management Committee,provided that:
(1) The Participant's Representative of any Participant that is in default
hereunder shall not be entitled to vote on any matter during the period of such default and
the consent or approval of such Participant or such Participant's Representative shall not
be required to obtain any consent or approval required hereunder during the existence of
such default or to constitute a quorum of the Project Management Committee;
(2) A unanimous vote of all Project Management Committee Representatives
shall be required on all decisions which would result in the termination of the Project; and
(3) All decisions made by the Project Management Committee shall be made
by resolution, order or other appropriate action of the Project Management Committee
and, before such resolution, order or action of the Project Management Committee shall
take effect, the same shall be ratified and approved by resolution, order or action of the
Board, acting in accordance with the Joint Action Agreement and the bylaws of DAMPS.
The Participants acknowledge that the Joint Action Agreement provides, among other things, that
decisions of the Board with respect to the Project shall be made only upon the recommendation
of the Project Management Committee and that weighted votes may be called for on any
recommendation or decision to be made by the Project Management Committee or the Board,
respectively, all as more fully provided in the Joint Action Agreement.
(e) In addition to its other responsibilities under the Power Sales Contracts, the Project
Management Committee shall:
(1) review, provide advice and direction to and consult with UAMPS
regarding the Project;
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(2) review, approve and provide advice and direction to UAMPS on the
Project Agreements and any modifications or amendments thereto, appoint all
representatives of DAMPS serving under the Project Agreements and provide such
direction to DAMPS as shall be necessary to enable DAMPS to meet timely its
obligations and responsibilities under the Project Agreements;
(3) review and approve the plan of financing for all Bonds to be issued by
DAMPS;
(4) supervise and provide direction to UAMPS with respect to the
construction of the Facility, including approving the construction budget for the Facility
and the notices to proceed and notices to construct given under the Development
Agreement and the Construction Agreements;
(5) review, modify, and approve or otherwise act on the quarterly estimates of
the Cost of the Project by the first day of the month prior to the beginning of each quarter;
(6) review, approve and provide advice and direction to UAMPS regarding the
declaration of the Commercial Operation Date of the Facility and any Additional
Facilities under the applicable Project Agreements;
(7) determine and declare the Project Capability upon the Commercial
Operation Date of the Facility and from time to time thereafter as its deems necessary to
reflect the actual capability of the Project;
(8) review and approve the form of the appendix to the Pooling Agreement
described in Section 9(b) and any operating and scheduling procedures and procedures or
standards for the allocation of Environmental Attributes that may be deemed necessary or
desirable in connection with the Project;
(9) review, modify and recommend the Annual Budget and any amendments
thereto to the Board;
(10) review, consider and provide direction to DAMPS regarding the exercise
of its purchase option under the Power Purchase Agreement, any financing arrangements
for the purchase option price and the terms upon which a Capital Contribution option will
be made available to the Participants in connection with any financing of the purchase
option price;
(11) review, recommend and approve any Additional Facilities to the Board;
and
(12) review, recommend and approve any actions or remedies to be taken by
DAMPS under Section 22 or 23.
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Section 8. Billing Periods, Billing and Payment. (a) The initial Billing Period to be
used for the preparation, calculation and billing of the amounts payable by the Participant
hereunder shall be a Month. In order to promote the efficient and economic administration of the
Project, UAMPS may, at any time after the end of the initial Contract Year and from time to time
thereafter, adopt another standard period of time as the Billing Period hereunder. In addition to
the foregoing, UAMPS may, upon the approval of the Project Management Committee, from
time to time revise the billing and payment procedures provided for in this Section 8 to promote
the efficient and economic administration of the Project or to conform such billing procedures to
those utilized in connection with other projects of DAMPS. Any change in the Billing Period or
in such billing and payment shall be made in the Annual Budget provided for in Section 14 and
shall not be effective for at least 15 days after the mailing of notice of such change in the Billing
Period or in the billing and payment procedures to the Participant. At the time of the mailing of
such Annual Budget, DAMPS shall send to the Participant a revised form of paragraphs (b) and
(c) of this Section 8, which shall reflect any changes in the dates of billing and payment and the
method thereof that are necessary or desirable to make this Section 8 correspond to the new
Billing Period, such changes to become effective on the date the new Billing Period takes effect.
In no event shall any such change in the Billing Period or in the billing and payment procedures
increase the amounts payable by the Participant pursuant to this Section 8 in respect of Power
Supply Costs, Transmission Costs and Debt Service Costs.
(b) For so long as the Billing Period is a Month,on or before the 25th day after the end
of each Billing Period beginning with the first Billing Period in the first Contract Year, DAMPS
shall render to the Participant a billing statement showing the amount payable by the Participant
for such Billing Period in respect of (i) Power Supply Costs; (ii) Transmission Costs; (iii) Debt
Service Costs; and (iv) any other amounts, adjustments or reconciliations payable by or credited
to the Participant pursuant to this Contract or the Financing Documents and not otherwise shown,
including items of the Cost of the Project not then or not to be financed by the issuance of Bonds
or Capital Contributions which have theretofore been incurred or are then due and payable by
DAMPS. The Participant shall pay the total of such amounts at the time specified in paragraph
(c) of this Section 8, as the same may be revised from time to time. The billing statement for
each Billing Period shall be based, to the fullest extent practicable, upon the actual operation of
the Project during such Billing Period. To the extent that any billing statement rendered by
UAMPS shall have included any estimated amounts in respect of the Participant's share of Power
Supply Costs, Debt Service Costs or the Transmission Costs or other costs allocable to the
Participant, such estimated amounts shall be reconciled at least once during each Contract Year
with the actual operation and scheduling of the Project and the Participant shall receive a bill or
credit, as applicable, to reflect such reconciliations pursuant to clause(iv) of this paragraph(b).
(c) Payments required to be paid by the Participant to DAMPS pursuant to this
Section 8 shall be due and payable to DAMPS at the principal office of DAMPS, or by wire
transfer to such account as DAMPS shall designate in writing to the Participant, on the loth day
of the Month following the Month in which the billing statement was rendered or at such other
time as may be established by DAMPS pursuant to paragraph (a) above.
(d) If payment in full is not made on or before the close of business on the due date,
DAMPS shall impose a delayed payment charge on the unpaid amount due for each day overdue
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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 Project Management Committee, may elect to waive such delayed payment charge (or
portion thereof) but only to the extent that any such waiver will not adversely affect the ability of
UAMPS to meet its payment obligations under the Project Agreements or the Financing
Documents. If said due date is not a business day, payment shall be made on the next following
business day.
(e) In the event of any dispute as to any portion of the billing statement for such Billing
Period, the Participant shall nevertheless pay the full amount of the disputed charges when due
and shall give written notice of the dispute to UAMPS not later than the 60th day after such
billing statement was submitted. Such notice shall identify the disputed billing statement, state
the amount in dispute and set forth a full statement of the grounds for such dispute. No
adjustment shall be considered or made for disputed charges unless such notice is given by the
Participant. DAMPS 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 Project
Management Committee) 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. Power Supply Costs, including any
adjustments thereto, shall be determined by DAMPS in accordance with the applicable
provisions of the Power Sales Contracts and the Project Agreements. UAMPS and the
Participant acknowledge and agree that certain categories of costs may be financed as a Cost of
the Project (and paid by the Participant as Debt Service Costs or through Capital Contributions)
or paid by the Participant as Power Supply Costs, as determined by the Project Management
Committee, but without duplication of any item of cost. Transmission Costs, including any
adjustments thereto, shall be determined by DAMPS in accordance with the applicable
provisions of this Contract and the Transmission Agreements. The Participant shall pay all such
amounts pursuant to this Section 8.
(g) The obligation of the Participant to make the payments for Power Supply Costs,
Transmission Costs, Debt Service Costs and other amounts payable by the Participant pursuant to
this Section 8 is a several obligation and not a joint obligation with those of any other Participant.
The obligation of the Participant to make such payments shall constitute an obligation of the
Participant and an operating expense of the Participant's electric system payable solely from the
revenues and other available funds of the electric system and shall constitute a cost of purchased
Electric Power and Electric Energy, 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 Contract. Such payments shall be made whether or not the Project or any portion thereof is
acquired, completed, operable or operating and notwithstanding the damage or destruction of the
Project, the suspension, interruption, interference, reduction or curtailment of the Project Output,
termination of any of the Project Agreements, loss or interruption of transmission from the Point
of Delivery or termination of any Transmission Agreement, for any reason whatsoever, in whole
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or in part. The obligations of the Participant to make such payments shall not be subject to any
reduction, whether by offset, counterclaim, or otherwise, and shall not be conditioned upon the
performance by DAMPS under this or any other agreement or instrument.
(h) Subject to the provisions of the Project Agreements, UAMPS shall use
Commercially Reasonable Efforts to collect or cause to be collected amounts arising from
insurance proceeds, condemnation awards, damages due from contractors, subcontractors or
others and proceeds from the sale or other disposition of surplus property, all related to the
Project, and shall apply all receipts, revenues and other moneys received by it or credited to it
from the foregoing sources to the repair, reconstruction or replacement of the Project, to the
retirement or defeasance of Bonds (in whole or in part), by purchase, redemption or other
arrangements therefor, to the payment of other costs and expenses of UAMPS in connection with
the Project or to the credit, pro rata, of the Participants, based upon their Entitlement Shares in
the Project, all as provided in the Financing Documents.
(i) In the event that the failure of a Participant to make its payments in accordance with
its Power Sales Contract shall have resulted in the application of amounts in any reserve or
working capital funds for the Project, any amounts thereafter paid to DAMPS, including delayed-
payment and interest charges, by such defaulting Participant in respect of past due payments (i)
shall be used to replenish such fund or (ii) to the extent that the other Participants shall have
made up the deficiency created by such application or paid additional amounts into any such
funds, shall be credited, pro rata, on the billing statements of such other Participants in the next
Billing Period or Billing Periods as shall be appropriate.
Section 9. Scheduling of Electric Energy; Coordination with UAMPS Pool. (a) From
and after the Commercial Operation Date of the Facility, the Participant shall be entitled to use
pursuant to this Section 9 the Electric Energy allocable to the Participant's Entitlement Share.
UAMPS shall schedule or cause to be scheduled such Electric Energy in accordance with this
Contract and the provisions of the Project Agreements. In its discretion, the Project Management
Committee may adopt operating and scheduling procedures to promote the efficient utilization of
the Project, and UAMPS shall provide a copy of any such procedures to the Participant. The
Participant acknowledges and understands that the Project will be a variable resource and that
UAMPS' ability to forecast the schedule of the Project Output will be limited.
(b) The Participant agrees that(i) prior and as a condition to the first delivery of Electric
Energy under this Contract, it will execute and deliver to UAMPS the Pooling Agreement and an
appendix thereto (in a form approved by the Project Management Committee) that assigns the
Electric Energy allocable to the Participant's Entitlement Share to the UAMPS Pool and (ii) it
will perform its obligations under and will not take any action to terminate the Pooling
Agreement and such appendix during the term of this Contract. The assignment of the Electric
Energy allocable to the Participant's Entitlement Share pursuant to the Pooling Agreement and
appendix shall be solely for operating and scheduling purposes and shall not constitute an
assignment or transfer of the Participant's right, title and interest in and to such Electric Energy.
At any time the Project is operable or operating the Participant shall not be entitled to use in any
hour Electric Energy in excess of that which is allocable to the Participant's Entitlement Share,
unless arrangements have been made for a planned purchase of such Electric Energy through the
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UAMPS Pool. Any surplus Electric Energy attributable to the Participant's Entitlement Share
shall be sold or otherwise disposed of by the Participant only in accordance with the provisions
of such appendix to the Pooling Agreement. In addition to any sales of surplus Electric Energy
requested by the Participant through the DAMPS Pool, UAMPS will utilize Commercially
Reasonable Efforts to sell, exchange or otherwise dispose of any incidental surplus Electric
Power and Electric Energy attributable to the Project for the benefit of the Participants.
(c) Prior to the first delivery of Electric Energy under this Contract, the Participant shall
provide to DAMPS 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. DAMPS shall verify all such resources and promptly notify the
Participant of any rejection of such resources. The Participant may revise or modify such
schedule upon written notice to UAMPS at least one business day prior to the beginning of any
Billing Period.
Section 10. Point of Delivery; Transmission Contracts; Risk of Loss. (a) The Electric
Energy allocable to the Participant's Entitlement Share shall be delivered at the Point of
Delivery. The Participant shall be responsible for, and shall pay all costs of, (i) the transmission
of Electric Energy from the Point of Delivery to its System Point of Receipt and (ii) the
distribution and delivery of Electric Energy from its System Point of Receipt to its customers.
The Participant shall give written notice to UAMPS of its System Point of Receipt prior to the
Commercial Operation Date of the Facility, and shall give prompt written notice to UAMPS of
any change to its System Point of Receipt.
(b) Upon the request of the Participant, UAMPS will use Commercially Reasonable
Efforts to enter into one or more Transmission Agreements, or will utilize its transmission rights
under existing Transmission Agreements, to provide for transmission service for the Electric
Energy allocable to the Participant's Entitlement Share from the Point of Delivery to the
Participant's System Point of Receipt. Any Transmission Agreements entered into by UAMPS
for or on behalf of the Participant shall be approved by UAMPS and the Participant, and the
Participant shall pay all Transmission Costs thereunder. The Participant agrees that it shall
maintain (or cause UAMPS to maintain) during the term of this Contract, such Transmission
Agreements as shall be necessary for the firm transmission of the Electric Energy allocable to its
Entitlement Share from the Point of Delivery to its System Point of Receipt, except as may be
otherwise approved by the Project Management Committee. The Participant shall provide
UAMPS with copies of all Transmission Agreements utilized by it and with such other
information regarding its transmission arrangements as UAMPS may reasonably request.
(c) Electric Energy delivered hereunder and risk of loss shall pass from UAMPS to the
Participant at the Point of Delivery. As between the parties to this Contract, UAMPS shall be
deemed to be in exclusive control and possession of the Electric Energy delivered hereunder, and
responsible for any damage or injury caused thereby, prior to the time such Electric Energy shall
have been delivered to the Participant at the Point of Delivery. After delivery of Electric Energy
to the Participant at the Point of Delivery, the Participant shall be deemed to be in exclusive
control and possession thereof and responsible for any injury or damage caused thereby.
UAMPS assumes all liability for and shall indemnify, defend and hold harmless the Participant
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(individually) from any claims, including death of persons, arising from any act or incident
occurring when title to Electric Energy is vested in it. All costs and expenses incurred by
UAMPS under the foregoing indemnity shall constitute a Cost of the Project or an item of Power
Supply Costs, as determined by the Project Management Committee. The Participant assumes all
liability for and shall indemnify, defend and hold harmless DAMPS and the other Participants
from any claims, including death of persons, arising from any act or incident occurring when title
to Electric Energy is vested in it. It is the intent of the parties that this indemnity be without
regard to the causes thereof, including, without limitation, the negligence of any indemnified
party, whether such negligence be sole, joint or concurrent, or active or passive or the strict
liability of any indemnified party.
Section 11. Interruption or Reduction of Deliveries. The Participant acknowledges that
deliveries of Electric Energy to the Point of Delivery may be interrupted or reduced if:
(a) deliveries to UAMPS are interrupted or reduced by Project Company pursuant to the terms of
the Power Purchase Agreement; (b) any operator of the Facility determines that such interruption
or reduction is necessary in case of emergencies affecting the Facility or any Additional
Facilities, in order to install equipment, to make repairs and replacements to, to make
investigations and inspections of, or to perform maintenance work on, the Facility or any
Additional Facilities or otherwise carry out its obligations in respect of Facility operations;
(c) such interruption or reduction is required under the Interconnection Agreement or by any
regulatory body, independent system operator, regional transmission organization or similar
entity; or(d) Electric Energy from the Project is otherwise unavailable whether due to an event of
Uncontrollable Force or otherwise.
Section 12. Availability of Electric Energy; Disposition of Environmental Attributes.
(a) Except as provided otherwise by this Contract and subject to the provisions of the Project
Agreements, Electric Energy allocable to the Participant's Entitlement Share shall be made
available in accordance with this Contract during the term hereof, provided, however, that
nondelivery of Electric Energy hereunder for any reason whatsoever (i) shall not relieve the
Participant from its obligation to make its payments under Section 8 and (ii) shall not impose any
liability upon DAMPS for any direct or consequential damages suffered by the Participant.
(b) The Participant acknowledges and agrees that deliveries of the Electric Energy
allocable to its Entitlement Share to the Point of Delivery are not firm and are contingent upon
the operation of the Facility and other factors. The costs of reliability and related requirements
imposed upon the Project by an independent system operator, regional transmission organization
or other regulatory or administrative body shall be payable by the Participants as an item of
Power Supply Costs. To the extent that such costs are imposed upon individual Participants,
they shall be the sole responsibility of the affected Participant(s).
(c) If the Participant determines not to use the Environmental Attributes associated
with its Entitlement Share in connection with the operations of its electric utility system for any
reason and for any period of time, it shall give DAMPS notice to dispose of such Environmental
Attributes for the benefit of the Participant. DAMPS will use Commercially Reasonable Efforts
to sell, remarket or otherwise cause such Environmental Attributes to be advantageously utilized.
DAMPS and the Participant acknowledge that (i) the Project Management Committee may
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establish standards and procedures for the disposition of Environmental Attributes, (ii) any
disposition of Environmental Attributes may constitute a disposition of Bond-financed property
and may be subject to restrictions and limitations necessary to maintain the Tax Status of the
Bonds (which may affect the price obtainable upon any sale of such Environmental Attributes),
and (iii) the other Participants shall have a right of first refusal to acquire such Environmental
Attributes at prevailing market prices or such other prices as the Project Management Committee
may determine to be reasonable in its sole discretion.
Section 13. Insurance. UAMPS shall maintain or pursuant to the Project Agreements
shall cause there to be maintained, as part of the Cost of the Project or Power Supply Costs, as
appropriate, insurance with responsible insurers with policies against risk or direct physical loss,
damage or destruction of the Facility, including liability insurance and employers' liability
insurance, all to the extent consistent with Prudent Utility Practice and to the extent available at
reasonable cost, but in no case less than will satisfy applicable regulatory requirements and
requirements of the Financing Documents.
Section 14. Annual Budget; Accounting. (a) On or before 15 days prior to the estimated
commencement of the first Contract Year and on or before the beginning of each Contract Year
thereafter, DAMPS shall prepare and mail to the Participant an Annual Budget for the Project
recommended by the Project Management Committee and approved by the Board, based, to the
extent appropriate, on budgets received under the Project Agreements, showing an annual
estimate for the following Contract Year of(i) Power Supply Costs and Debt Service Costs, and
the Participant's share of each, and (ii) the Transmission Costs payable by the Participant. The
Participant shall, to the extent and in the manner deemed appropriate by the Participant,
incorporate the estimates shown on the Annual Budget in its annual budgetary process.
(b) At the end of each quarter during each Contract Year and at such other times as it
shall deem desirable, DAMPS shall review the Annual Budget of Power Supply 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 Power Supply 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 keep accurate records and accounts relating to the
Project, the Project Agreements, the Cost of the Project, Power Supply Costs, Transmission
Costs and Debt Service Costs in accordance with the Financing Documents and the Uniform
System of Accounts, separate and distinct from its other records and accounts; provided that
UAMPS may establish revenue and operation and maintenance funds that account for more than
one project of UAMPS so long as UAMPS shall maintain books and records adequate to show
the amounts in each of such funds allocable to each such project. Said accounts shall be audited
annually by a firm of certified public accountants, experienced in public finance and electric
-27-
utility accounting and of national reputation, to be employed by UAMPS. A copy of each annual
audit, including all written comments and recommendations of such accountants, approved by
the Members shall be furnished by UAMPS to the Participant not later than 180 days after the
end of each Contract Year.
Section 15. Information to Be Made Available. (a) UAMPS shall make available for
examination by the Participant (subject to their availability to UAMPS under the applicable
provisions of the Project Agreements):
(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 13; and
(5) such other information and documents with respect to the Project as the
Participant may reasonably request from time to time.
(b) The Participant acknowledges that the ability of UAMPS to sell the Bonds depends
upon, among other things, the credit standing of the Participants and their electric systems and
that it will be necessary for UAMPS to provide certain information with respect to the
Participants and their electric systems in connection with the sale of the Bonds (whether or not
the Participant is making a Capital Contribution). In addition, UAMPS may be required to enter
into continuing disclosure undertakings pursuant to Rule 15c2-12 of the Securities and Exchange
Commission (or other law or regulation) to provide annual financial and operating information.
Consequently, the Participant covenants to and agrees with UAMPS that the Participant will
provide to UAMPS all information with respect to the Participant and its electric system,
including financial and operating information and all contracts, documents, reports, bond
resolutions and indentures, as may be requested by UAMPS or its counsel in connection with the
financing of the Project, the issuance of the Bonds and compliance with such continuing
disclosure undertakings.
(c) The Participant covenants to and agrees with UAMPS that the Participant will
furnish to UAMPS (i) concurrently with its execution and delivery of this Contract and not later
than 180 days after the end of each fiscal year of the Participant thereafter(or such earlier date as
may be required by law), (A) a copy of the most recent annual financial statements of the
Participant and its electric enterprise fund, audited by an independent certified public accountant
or firm of such accountants, together with copies of all management letters and written
recommendations and comments submitted by the accountants making such audit, and (B) the
information and documents described in EXHIBIT II attached hereto, and (ii) such other
information and documents as UAMPS may reasonably request from time to time.
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The Participant may notify UAMPS if non-public information is contained in the
materials provided under EXHIBIT II. DAMPS agrees to (i) classify any such non-public
information as "protected records" within the meaning of the Utah Government Records Access
and Management Act and (ii) notify the Participant of any demand for disclosure of such
information and will cooperate with the Participant in contesting any such disclosure demand.
(d) Concurrently with its execution and delivery of this Contract, the Participant shall
deliver to UAMPS (i) a certificate, together with attached exhibits, in substantially the form
attached hereto as EXHIBIT III and (ii) an opinion of counsel in substantially the form attached
hereto as EXHIBIT V. In connection with each issuance of Bonds by UAMPS and at such other
times as DAMPS may reasonably request, the Participant shall deliver to DAMPS (iii) a bring-
down certificate in substantially the form attached hereto as EXHIBIT IV, and (iv) a bring-down
opinion of counsel in substantially the form attached hereto as EXHIBIT VI.
Section 16. Additional Bonds and Refunding Bonds. (a) Additional Bonds may be sold
and issued by DAMPS in accordance with the provisions of the Financing Documents at any
time and from time to time for the purpose of financing the Cost of the Project, including the
purchase payable upon the exercise of DAMPS' purchase option under the Power Purchase
Agreement and 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
Financing Documents of the payments required to be made by the Participant under Section 8, as
such payments may be increased and extended by reason of the issuance of Additional Bonds,
and of other revenues of 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 DAMPS to be reasonably necessary. In the event that the Project Management
Committee approves the issuance of Additional Bonds, it shall determine whether to make a
capital contribution option available to the Participants and the procedures therefore.
(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 DAMPS, to
refund any Bonds, DAMPS may issue and sell Refunding Bonds in accordance with the
Financing Documents.
(d) Any Additional Bonds or Refunding Bonds may be secured by the pledge made
pursuant to the Financing Documents of the payments required to be made by the Participant
under Section 8 and of other revenues of DAMPS attributable to the Project and may rank on a
parity as to the security afforded by the provisions of this Contract with all Bonds theretofore
issued pursuant to and secured in accordance with the provisions of the Power Sales Contracts.
Section 17. Disposition or Termination of the Project. (a) Except as provided in
Section 23(d) and this Section 17, 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 and the Project Agreements, this Section
17 shall not prohibit a merger or consolidation or sale of all or substantially all of the property of
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DAMPS. For the avoidance of doubt, this Section 17 shall not be deemed to apply to any
disposition of membership interests in Project Company.
(b) Subject to the applicable provisions of the Project Agreements, if the Project shall
be terminated, UAMPS shall use Commercially Reasonable Efforts to cause the Project to be
economically salvaged, discontinued, disposed of or sold in whole or in part. DAMPS shall
make accounting statements for each Billing Period to the Participant of all costs and any net
proceeds associated therewith. Such accounting statements shall continue for such Billing
Periods until the Project has been salvaged, discontinued or finally disposed of, 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 or maintenance of and renewals and replacements to the Project. Such costs and,
subject to the provisions of the Financing Documents, the net proceeds, if any, from the sale or
salvage of Project components or assets shall be allocated among the Participants based upon
their respective Entitlement Shares.
Section 18. Representations, Warranties, Covenants and Agreements of the Participant.
(a) The Participant represents and warrants to DAMPS as follows:
(1) The Participant is a public utility district, duly created and validly existing
under the laws of the State of California, and has the corporate power and authority to
enter into and perform its obligations under this Contract.
(2) This Contract has been duly authorized, executed and delivered by the
Participant and constitutes its legal, valid and binding obligation enforceable in
accordance with its terms.
(3) All Required Approvals have been obtained.
(4) As of the date of this Contract, there is no pending or, to the Participant's
knowledge, threatened action or proceeding affecting the Participant which purports to
affect the authorization, legality, validity or enforceability of this Contract, the Joint
Action Agreement or the Pooling Agreement.
(b) The Participant covenants and agrees with DAMPS as follows:
(1) Maintenance of Rates. The Participant shall establish, maintain, revise,
charge and collect rates for electric service rendered by it to its customers so that such
rates shall provide revenues which, together with other funds reasonably estimated to be
available, will be sufficient to meet the Participant's obligations to DAMPS under this
Contract, to pay all other operating expenses of the Participant's electric system and to
provide revenues sufficient to pay all obligations of the Participant payable from, or
constituting a charge or lien on, the revenues of its electric system and, to the extent being
paid from the revenues of its electric system, all general obligation bonds of the
Participant now or hereafter outstanding.
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(2) Maintenance of Revenues. The Participant shall promptly collect all
charges due for electric utility services supplied by it as the same become due. The
Participant shall at all times maintain and shall exercise Commercially Reasonable
Efforts to enforce its rights against any person, customer or other entity that does not pay
such charges when due.
(3) Sale or Assignment of Electric System or Power Sales Contract. During
the term of this Contract, the Participant shall not sell, lease or otherwise dispose of all or
substantially all of its electric system, except upon compliance with the following
provisions respecting the transfer or assignment of its Entitlement Share.
The Participant shall not assign or transfer all or any part of its Entitlement Share or any
or all of its interests under this Contract, except upon one hundred twenty (120) days'
prior written notice to UAMPS and compliance with the provisions set forth below.
Within thirty days after receipt of such notice from the Participant (and if such notice
indicates that the Participant proposes to assign its Entitlement Share), UAMPS shall
notify all of the other Participants of the proposed assignment or transfer by the
Participant of all or part of its Entitlement Share. Each of the other Participants shall
have the option of acquiring all or any portion of the Entitlement Share that is proposed to
be assigned or transferred and shall notify UAMPS of its exercise of such option within
forty-five days of its receipt of the notice from DAMPS 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 Entitlement Share that is proposed to be assigned or
transferred 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, DAMPS 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 the event that less than all of the Entitlement Share proposed to be transferred or
assigned is to be acquired by other Participants or other Members of DAMPS, the
Participant may proceed to transfer or assign its Entitlement Share and its rights under
this Contract upon satisfaction of the following conditions: (A) at the sole option of
UAMPS either (i) the purchaser or assignee shall assume all obligations of the Participant
under this Contract in such a manner as shall assure DAMPS 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 DAMPS in its
sole discretion to reflect such assignment and assumption, UAMPS and such purchaser or
assignee shall enter into an agreement supplemental to this Contract to clarify the terms
upon which the Participant's Entitlement Share is to be sold hereunder by UAMPS to
such purchaser or assignee; or (ii) such purchaser or assignee shall enter into a new
contract with DAMPS 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
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and the other Participants than this Contract; (B) the senior debt, if any, of such purchaser
or assignee, if such purchaser or assignee is not a Participant shall be rated by at least
"Baa2" by Moody's Investors Service or "BBB" by Standard & Poor's Credit Market
Services; (C) the Project Management Committee shall by resolution determine that such
sale, lease or other disposition will not adversely affect DAMPS, the other Participants or
the security for the payment of Bonds; and (D) UAMPS shall have received an opinion of
Bond Counsel to the effect that such sale, assignment or disposition will not by itself
adversely affect the Tax Status of Bonds theretofore issued or thereafter issuable.
UAMPS shall make the determinations required by this subparagraph (3) within one
hundred twenty (120) days of receipt by UAMPS of the notice referred to in the first
sentence of this subparagraph and shall provide a written copy of such determinations to
the Participant.
In the event any sale, lease or other disposition is permitted pursuant to this subparagraph
(3), UAMPS may require as additional security to assure the flow of revenues under this
Contract, and the transferring and assigning Participant shall provide or cause to be
provided either a prepayment or a security deposit for amounts due under this Contract in
such amounts as shall be determined by the Project Management Committee.
Upon the completion of any such sale, lease or other disposition, UAMPS shall prepare
and send to each of the Participants a revised SCHEDULE I, setting forth the Entitlement
Shares, Capital Contribution Percentages, Debt Service Percentages and Debt Service
Shares of the Participants, as revised to reflect such sale, lease or other disposition.
(4) Prudent Utility Practice. The Participant shall, in accordance with
Prudent Utility Practice, (A) at all times operate its electric system and the business
thereof in an efficient manner, (B) maintain its electric system in good repair, working
order and condition, (C) from time to time make all necessary and proper repairs,
renewals, replacements, additions, betterments and improvements with respect to the
electric system, so that at all times the business thereof shall be properly conducted and
(D) duly perform its obligations under all power supply and transmission service
agreements to which it is a party.
(5) Operating Expenses. UAMPS and the Participant intend that the
payments to be made by the Participant to UAMPS pursuant to this Contract (A) will be
payable and as an operating expense of the Participant's electric system and a cost of
purchased electric power and energy and (B) will be payable (together with all other
operating expenses) as a first charge on the revenues derived from the operation of its
electric system. The Participant covenants to and agrees with UAMPS that it will include
the annual payments required to be made by it under this Contract as a cost of purchased
electric power and energy as an operating expense in the annual operating budget of its
electric system and in any resolution, ordinance or indenture providing for future
borrowings for the Participant's electric system.
(6) Tax Status. (A) The Participant agrees that it will apply all of the Electric
Energy acquired under this Contract to a Qualified Use and that it will not take or omit to
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take any action (whether with respect to the Electric Energy or Environmental Attributes
acquired under this Contract or otherwise) which could, either alone or in conjunction
with any other similar actions by the Participant or other Participants, adversely affect the
Tax Status of any Bond or Bonds theretofore issued or thereafter issuable by DAMPS.
Upon any breach of the foregoing covenants, the Participant shall take and pay the costs
of all remedial actions as may be directed by UAMPS in order to maintain the Tax Status
of the Bonds.
(B) At the time of execution of this Contract the Participant has no contracts
(and has no current expectation of entering into any contracts) to provide electric service
to any entity that is not a state or local government, except for Permitted Contracts. At
least thirty (30) days prior to entering into any such contract, the Participant shall notify
UAMPS of its intent to enter into such contract and provide copies of such contract to
UAMPS. Within thirty (30) days after receipt of such notice, DAMPS shall advise the
Participant as to whether, in the opinion of Bond Counsel, such contract would result in a
violation of the covenant in clause (A) above. The cost of such opinion and other reports
necessary in connection therewith shall be borne by the Participant.
(C) The Participant agrees to provide such information as UAMPS may
request and to comply with such additional instructions as may be provided by UAMPS
in order to confirm and maintain the Qualified Use of the Electric Energy sold under this
Contract and its use of Environmental Attributes in accordance with the provisions of this
Section and Section 12(c).
Section 19. Reserve and Contingency Fund. (a) In addition to various funds and
accounts established under the Financing Documents, UAMPS may establish an additional fund
with respect to the Project known as the "Reserve and Contingency Fund"to be funded, held and
applied as provided herein. Amounts on deposit in the Reserve and Contingency Fund may be
used to pay or provide reserves for unusual or extraordinary Power Supply Costs, renewals,
repairs, replacements, additions or betterments of or to any items included in the Project, the cost
of any Additional Facilities or the cost of or reserves for decommissioning and termination of the
Facility and any Additional Facilities.
(b) The Project Management Committee may direct UAMPS to include in the Annual
Budget adopted pursuant to Section 14 an amount for deposit into the Reserve and Contingency
Fund. This amount may represent either an appropriation of excess revenues from the operation
of the Project during the preceding Fiscal Year or amounts to be billed to and collected from the
Participants as an item of Power Supply Costs during the Fiscal Year covered by the Annual
Budget.
Section 20. Pledge of Payments. All payments required to be made by the Participant
pursuant to the provisions of Section 8, together with other revenues of UAMPS attributable to
the Project may be pledged by UAMPS pursuant to the Financing Documents to secure the
payment of Bonds.
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Section 21. Default by Participant. Each of the following shall constitute a"default"by
the Participant under this Contract:
(a) failure of the Participant to make to DAMPS any of the payments for
which provision is made in this Contract within five business days after the due date of
any such payment; or
(b) failure by the Participant to observe any of the covenants, agreements or
obligations on its part contained herein and failure to remedy the same for a period of
sixty days after written notice thereof, specifying such failure and requiring the same to
be remedied, shall have been given by or on behalf of DAMPS; or
(c) bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings, including without limitation proceedings under Title 11, Chapter 9, United
States Code or other proceedings for relief under any federal or state bankruptcy law or
similar law for the relief of debtors, are instituted by or against the Participant and, if
instituted against the Participant, said proceedings are consented to or are not dismissed
within thirty days after such institution.
Section 22. Continuing Obligation of Participant; Right of UAMPS to Discontinue
Service. (a) In the event of any default referred to in Section 21, the Participant shall not be
relieved of its liability for payment of any amounts in default or its failure to observe its
covenants, agreements and obligations hereunder and UAMPS shall have the right to recover
from the Participant any amount in default. In enforcement of any such right of recovery,
DAMPS may bring any suit, action, or proceeding in law or in equity, including mandamus and
action for specific performance, as may be necessary or appropriate to enforce any covenant,
agreement or obligation of the Participant hereunder or the obligation of the Participant to make
any payment for which provision is made in this Contract.
(b) In addition to proceeding with its rights against a defaulting Participant pursuant to
paragraph (a) above, DAMPS may, upon not less than thirty days' written notice from UAMPS
to the defaulting Participant, suspend or terminate the Participant's right to receive its
Entitlement Share under this Contract. Such notice shall be entitled "NOTICE OF DEFAULT
UNDER HORSE BUTTE WIND PROJECT POWER SALES CONTRACT" and shall: (i) describe the type
and amount of payments that are then due and unpaid (in the case of a default under Section
21(a)) or the nature of such default (in the case of a default under Section 21(b) or (c)); and (ii)
state that the failure to make full and timely payment of all amounts due and payable hereunder,
or otherwise to cure such default, within thirty days from the date such notice is received by the
defaulting Participant (as determined pursuant to Section 32) could result in the suspension or
termination of its Entitlement Share, in whole or in part. UAMPS shall have no obligation to
provide further notice of the default and its consequences to the defaulting Participant.
(c) If the defaulting Participant in good faith disputes the basis for or the validity of the
default(s) described in the written notice of DAMPS, including any amounts stated in the notice
as being due and unpaid, it shall nevertheless make such payment within said 30-day period
under written protest directed to UAMPS specifying the basis upon which the protest is based.
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Protested payments shall be treated as a dispute in a monthly billing statement and DAMPS shall
consider such dispute as provided in Section 8(e). All other disputes shall be addressed as
provided in Section 25(b).
(d) In connection with its determination to suspend or terminate a defaulting
Participant's Entitlement Share, UAMPS shall take into account, among such other matters as
DAMPS 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.
(e) In the event that UAMPS has suspended (but not terminated) a defaulting
Participant's right to receive the Electric Energy allocable to its Entitlement Share, such
Participant may restore its right to receive such Electric Energy by(i) taking all actions on its part
necessary to cure or remedy the default, (ii) paying all amounts necessary to compensate the
nondefaulting Participants and UAMPS for fees, costs, expenses and losses incurred by them as a
result of such default, and (iii) taking such other action and paying such amounts, including
providing such adequate assurances of performance (such as a prepayment or the posting of a
security deposit) as may be reasonably required by the Project Management Committee.
(f) The suspension or termination of a defaulting Participant's right to receive its
Entitlement Share and any actions taken by DAMPS pursuant to Section 23 shall not terminate,
reduce or modify the defaulting Participant's obligations and liabilities under its Power Sales
Contract. The defaulting Participant shall remain liable under all billing statements rendered by
DAMPS, whether prior or subsequent to the default, and UAMPS for itself and on behalf of the
nondefaulting Participants shall be entitled to recover from the defaulting Participant all
damages, legal fees, costs and expenses incurred by DAMPS and the nondefaulting Participants
as a result of such default. UAMPS shall exercise Commercially Reasonable Efforts to mitigate
the damages resulting from the Participant's default.
Section 23. Transfer of Entitlement Share Following Default; Other Actions by
UAMPS. (a) DAMPS 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 of UAMPS to meet timely such obligations, the ability of UAMPS to deliver Electric
Energy from the Project and the interests of all of the Participants will be materially and
adversely affected. The provisions of this Section 23 are intended to provide a means to assure
the sufficiency of revenues to UAMPS following a default by a Participant under its Power Sales
Contract. The Participants agree that the provisions of this Section 23 are reasonable and
necessary in order for them to achieve the benefits of their joint and cooperative undertaking with
respect to the Project.
(b) In the event of a default by any Participant and suspension or termination of the
Participant's right to receive its Entitlement Share pursuant to Section 22, 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:
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(1) UAMPS shall immediately allocate all of the defaulting Participant's
Entitlement Share among all of the nondefaulting Participants, pro rata on the basis of
their then-current Entitlement Shares, which shall remain in effect only until the
completion of the procedures provided for in this paragraph (b). UAMPS shall provide
written notice to the nondefaulting Participants of the initial allocation of the defaulting
Participant's Entitlement Share which notice shall (A) set forth the date of the initial
allocation, (B) include a revised SCHEDULE I showing the increased Entitlement Shares
and (to the extent applicable) the revised Capital Contribution 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) below, and (D) set forth the date by which each of the nondefaulting
Participants must notify UAMPS of such election. The initial allocation of the defaulting
Participant's Entitlement Share and the increased Entitlement Shares and the revised
Capital Contribution Percentages, Debt Service Percentages and Debt Service Shares of
the nondefaulting Participants as a result of such allocation (as shown on the revised
SCHEDULE I prepared by UAMPS) shall remain in effect until the completion of the
procedures provided for in this paragraph (b). During such period, each of the
nondefaulting Participants shall have all of the rights, benefits, obligations and
responsibilities associated with its increased Entitlement Share and its revised Capital
Contribution Percentage, Debt Service Percentage and Debt Service Share as a result of
such allocation.
(2) Within sixty days after the initial allocation of the defaulting Participant's
Entitlement Share, each nondefaulting Participant shall notify UAMPS in writing of its
election to: (A)retain all of its initial allocation of the defaulting Participant's Entitlement
Share; or (B) retain none or less than all of such allocation. Any Participant that elects to
retain all of its initial allocation of the defaulting Participant's Entitlement Share shall be
deemed to have fully satisfied its step-up obligations under this Section 23 and shall not
thereafter be required to accept any additional allocation of the defaulting Participant's
Entitlement Share; provided that any such nondefaulting Participant may give notice to
UAMPS of its request to acquire additional amounts of the defaulting Participant's
Entitlement Share as may be available.
(3) Within thirty days after its receipt of the elections of all nondefaulting
Participants pursuant to subparagraph (2), UAMPS shall determine whether the
nondefaulting Participants have elected to retain all of the defaulting Participant's
Entitlement Share. In the event that one or more of the nondefaulting Participants elected
to retain less than all of the initial allocations of the defaulting Participant's Entitlement
Share, UAMPS shall reallocate the remaining amounts of the defaulting Participant's
Entitlement Share proportionally among those nondefaulting Participants that have
requested additional amounts of the defaulting Participant's Entitlement Share. To the
extent that any part of the defaulting Participant's Entitlement Share is then unallocated,
UAMPS shall next reallocate the remaining portion of the defaulting Participant's
Entitlement Share proportionally among those Participants that did not elect to retain all
of their initial allocations of such Entitlement Share. Proportional reallocations shall be
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based upon the Entitlement Shares of the nondefaulting Participants in effect immediately
prior to the defaulting Participant's default.
(4) In no event shall the final allocation of a defaulting Participant's
Entitlement Share pursuant to subparagraph (3) (or the total of all such allocations in the
event of multiple Participant defaults) cause any nondefaulting Participant's Entitlement
Share to increase by more than 25% over its "Adjusted Entitlement Share" without such
Participant's consent. The "Adjusted Entitlement Share" is the Participant's Entitlement
Share shown on SCHEDULE I on and as of the Effective Date, as such Entitlement Share
may have previously been increased upon the Participant's election pursuant to Section
18(b)(3).
(5) Each allocation or reallocation of a defaulting Participant's Entitlement
Share shall also allocate or reallocate the defaulting Participant's Capital Contribution
Percentage and Debt Service Percentage to the nondefaulting Participants receiving such
allocation or reallocation. The Capital Contribution Percentage and the Debt Service
Percentage of the defaulting Participant shall be allocated to each of such nondefaulting
Participants proportionally based upon the respective amounts of the defaulting
Participant's Entitlement Share that are allocated or reallocated to them. The standards
set forth in Section 6(e) shall apply to the foregoing computations.
(6) UAMPS shall deliver, promptly after making the determinations and
reallocations required by this paragraph (b), a notice to the nondefaulting Participants
which notice shall (A) set forth the final allocation of the defaulting Participant's
Entitlement Share pursuant to subparagraph (3), and the effective date of the final
allocation, and (B) include a revised SCHEDULE I showing the revised Entitlement Shares,
Capital Contribution Percentages, Debt Service Percentages and Debt Service Shares,
respectively, of the nondefaulting Participants upon the final allocation pursuant to
subparagraph (3). The Entitlement Shares, Capital Contribution Percentages, Debt
Service Percentages and Debt Service Shares shown on such revised SCHEDULE I shall
thereafter be the Entitlement Shares, Capital Contribution Percentages, Debt Service
Percentages and Debt Service Shares of the nondefaulting Participants.
(7) Any portion of the Entitlement Share of a defaulting Participant allocated
or reallocated to a nondefaulting Participant pursuant to this paragraph (b) shall become a
part of and shall be added to the Entitlement Share of the nondefaulting Participant, and
from and after the date of such transfer the nondefaulting Participant shall be obligated to
pay for its increased Entitlement Share pursuant to the terms and provisions of this
Contract. The defaulting Participant shall remain liable to UAMPS and the nondefaulting
Participants for costs incurred and damages suffered by them in connection with the
actions taken with respect to the defaulting Participant's Entitlement Share provided for
in this Section 23.
(c) If, as a result of the limitation stated in subparagraph (b)(4) above, any portion of a
defaulting Participant's Entitlement Share remains unallocated or upon the request of any
nondefaulting Participant, UAMPS shall use Commercially Reasonable Efforts to sell or dispose
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of the unallocated or designated Entitlement Share or the associated Project Capability and
Environmental Attributes. In the event that UAMPS, based upon the advice of Bond Counsel,
determines that any such sale or disposition could adversely affect the Tax Status of any Bonds,
UAMPS will, in a Commercially Reasonable manner, take such remedial actions as may be
designated by Bond Counsel in order to maintain the Tax Status of such Bonds. The defaulting
Participant shall be liable for the costs, fees and expenses incurred by UAMPS in connection
with any such sale, disposition or remedial action.
(d) In connection with any action taken by it pursuant to this Section 23, UAMPS shall
take into account the proceeds realized or the revenues to be received from such sale or
disposition and shall, to the extent necessary, make adjustments to the Entitlement Share, Capital
Contribution 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 Power Supply Costs and Debt
Service Costs without a corresponding change in the Participant's Entitlement Share. Upon the
completion of the procedures provided for in this Section 23, UAMPS shall prepare and send to
each of the Participants a final revised SCHEDULE I, setting forth the Entitlement Shares, the
Capital Contribution Percentages, Debt Service Percentages and Debt Service Shares,
respectively, of the nondefaulting Participants reflecting the procedures and actions taken
pursuant to this Section 23.
Section 24. Other Default by Participant. In the event of a failure of the Participant to
observe, keep and perform any of the covenants, agreements or obligations on its part contained
in this Contract, UAMPS may, in addition to its other rights hereunder, bring any suit, action, or
proceeding in law or in equity, including mandamus, injunction and action for specific
performance, as may be necessary or appropriate to enforce any covenant, agreement or
obligation of this Contract against the Participant.
Section 25. Default by UAMPS; Dispute Resolution. (a) In the event of any default by
UAMPS under any covenant, agreement or obligation of this Contract, the Participant's sole
remedy for such default shall be limited to mandamus, injunction, action for specific
performance or any other available equitable remedy as may be necessary or appropriate and in
no event shall the Participant withhold or offset any payment owed to UAMPS hereunder.
(b) Prior to and as a condition to the filing of any action with respect to this Contract
under paragraph (a) above, the Participant shall first submit the dispute or matter in question to
the Project Management Committee for mediation by giving notice in writing to UAMPS and the
Chair of the Project Management Committee describing the dispute or matter and the issue or
issues to be resolved. The Participant agrees to participate fully and in good faith in all
mediation proceedings of the Project Management Committee. In the event that the Project
Management Committee is unable to resolve or mediate such dispute or matter within 120 days
after UAMPS has received written notice of the dispute, the Participant shall have the right to
initiate such proceedings as it may deem necessary pursuant to paragraph(a).
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Section 26. Abandonment of Remedy. In case any proceeding taken on account of any
default shall have been discontinued or abandoned for any reason, the parties to such proceedings
shall be restored to their former positions and rights hereunder, respectively, and all rights,
remedies, powers and duties of DAMPS and the Participant shall continue as though no such
proceedings had been taken.
Section 27. Waiver of Default. Any waiver at any time by either UAMPS or the
Participant of its rights with respect to any default of the other party hereto, or with respect to any
other matter arising in connection with this Contract, shall not be a waiver with respect to any
subsequent default, right or matter.
Section 28. Relationship to and Compliance with Other Instruments. (a) It is
recognized by the parties hereto that UAMPS, in undertaking, or causing to be undertaken, the
planning, financing, construction, acquisition, operation and maintenance of the Project, must
comply with the requirements of the Financing Documents, the Project Agreements and all
Permits and Approvals necessary therefor, and it is therefore agreed that this Contract is made
subject to the terms and provisions of the Financing Documents, the Project Agreements and all
such Permits and Approvals.
(b) The Participant acknowledges that until such time, if any, as the Acquisition Date
occurs, (i) Project Company will be the owner of the Facility for all purposes, (ii) UAMPS' rights
and obligations with respect to the Facility will be as set forth in the applicable Project
Agreements, including particularly the Power Purchase Agreement, (iii) UAMPS' rights under
the Power Purchase Agreement and the related Project Agreements are limited to those
specifically set forth therein, and (iv) upon any default or performance failure by Project
Company, UAMPS' remedies will be limited to those set forth in the applicable Project
Agreements, particularly the Power Purchase Agreement and the Security Agreement.
Accordingly, the Participant understands and agrees that, prior to any Acquisition Date (v)
UAMPS' control over the Facility will be limited to its contractual rights and remedies under the
Project Agreements and (vi) the ability of the Project Management Committee to control and
direct the actions of UAMPS with respect to the Project will be similarly limited.
(c) UAMPS covenants and agrees that it will use Commercially Reasonable Efforts for
the benefit of the Participant to comply in all material respects with all terms, conditions and
covenants applicable to it contained in the Financing Documents, the Project Agreements and all
Permits and Approvals, and that it will not, without the consent of the Participant, enter into any
amendment or modification of the Financing Documents or the Project Agreements which will
change the Participant's Entitlement Share or which will materially and adversely affect the
rights and obligations of the Participant hereunder. To the extent that the Power Sales Contracts
provide that UAMPS, the Board or the Project Management Committee has discretion over a
particular matter, UAMPS (acting upon the recommendation of the Project Management
Committee and the approval of the Board) may agree in the Financing Documents or the Project
Agreements to limitations, conditions or restrictions on such discretion.
Section 29. Liability of Parties. UAMPS and the Participant shall assume full
responsibility and liability for the maintenance and operation of their respective properties and
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each shall, to the extent permitted by law, indemnify and save harmless the other from all
liability and expense on account of any and all damages, claims, or actions, including injury to or
death of persons arising from any act or accident in connection with the installation, presence,
maintenance and operation of the property and equipment of the indemnifying party and not
caused in whole or in part by the negligence of the other party;provided that any liability which
is incurred by DAMPS through the acquisition, construction, operation and maintenance of the
Project or pursuant to the Project Agreements and not covered, or not covered sufficiently, by
insurance shall be paid solely from the revenues of DAMPS hereunder, and any payments made
by UAMPS to satisfy such liability shall, except to the extent paid from proceeds of Bonds or
Capital Contributions,become part of Power Supply Costs.
Section 30. Assignment of Power Sales Contract. (a) This Contract shall inure to the
benefit of and shall be binding upon the respective successors and assigns of the parties to this
Contract;provided, however, that neither this Contract nor any interest herein shall be transferred
or assigned by either party hereto except as follows:
(1) UAMPS may assign its interests under this Contract or all or any portion
of the amounts payable by the Participant hereunder pursuant to the Financing Documents
as described in paragraph (b)below;
(2) UAMPS may sell, transfer or reallocate all or any portion of the
Participant's Entitlement Share following a default by the Participant and a
discontinuance of service as provided in Section 23;
(3) after such point in time as all Bonds issued under the Financing
Documents have been paid or deemed to have been paid as provided in the Financing
Documents, UAMPS may, upon the approval of the Project Management Committee,
assign this Contract and pledge the amounts payable by the Participant hereunder;
(4) the Participant shall assign the Electric Energy allocable to the
Participant's Entitlement Share to the UAMPS Pool as provided in Section 9(b); and
(5) the Participant may assign or transfer all or any portion of its Entitlement
Share or its interests under this Contract only as provided in Section 18(b)(3).
(b) The Participant acknowledges and agrees that UAMPS may assign and pledge to the
Trustee designated in the Financing Documents all or any portion of its right, title, and interest in
and to the payments to be made to UAMPS under the provisions of this Contract, as security for
the payment of the principal (including sinking fund installments) of, premium, if any, and
interest on 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.
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(c) The Participant acknowledges and agrees that it may not pledge, assign, encumber
or transfer its interests under this Contract to secure any financing undertaken by or for it to fund
any Capital Contribution to DAMPS.
Section 31. Termination or Amendment of Power Sales Contract. (a) This Contract
shall not be terminated by either party under any circumstances, whether based upon the default
of the other party under this Contract or any other instrument or otherwise except as specifically
provided in this Contract. The Project Management Committee may establish a date certain for
the termination of this Contract upon its determination to terminate the Development Agreement;
provided, however, that any such termination date of this Contract shall not occur until the later
of (x) the date on which UAMPS shall have made a final accounting for, and shall have
recovered from the Participants, all Costs of the Project previously incurred and (y) the date on
which the principal of and interest on all Bonds have been fully paid or provision for such
payment has been made.
(b) This Contract shall not be amended, modified, or otherwise altered in any manner
that will adversely affect the security for the Bonds afforded by the provisions of this Contract.
So long as any of the Bonds are outstanding or until adequate provisions for the payment thereof
have been made in accordance with the provisions of the Financing Documents, this Contract
shall not be amended, modified, or otherwise altered in any manner which will reduce the
payments pledged as security for the Bonds or extend the time of such payments provided herein
or which will in any manner impair or adversely affect the rights of the owners from time to time
of the Bonds. For the avoidance of doubt, any actions taken by UAMPS or the Participant under
or pursuant to this Contract that are required or permitted by this Contract shall not be deemed to
constitute an amendment, modification or alteration of this Contract within the meaning of this
paragraph.
(c) No Power Sales Contract entered into between DAMPS and another Participant may
be amended so as to provide terms and conditions that are substantially and materially different
from those contained in this Contract except upon written notice to and written consent or waiver
by each of the other Participants, and upon similar amendment being made to the Power Sales
Contracts of any other Participants requesting such amendment after receipt by such Participants
of notice of such amendment. No amendment to this Contract shall become effective until all
Required Approvals have been obtained by or on behalf of the Participant.
(d) In connection with any revision or amendment of the billing procedures provided for
in Section 8 or of any of the Exhibits attached hereto, UAMPS shall promptly provide a copy of
the revision or amendment to the Participant.
Section 32. Notices and Computation of Time. (a) All notices, demands or other
communications made pursuant to this Contract (each, a "Notice") may be sent by facsimile,
electronic mail, other mutually acceptable electronic means, a nationally recognized overnight
courier service, first class mail or hand delivery. Notice shall be deemed given when received by
the addressee, unless received on a day that is not a business day or received after 5:00 p.m.
(receiving party's local time) on a business day, in which case Notice shall be deemed to have
been received on the next following business day. In the absence of proof of the actual receipt
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date, the following presumptions will apply: (i) Notice sent by facsimile or electronic mail shall
be deemed to have been received upon the sending party's receipt of electronic confirmation of
successful transmission; (ii) Notice sent by overnight mail or courier shall be deemed to have
been received on the next business day after it was sent or such earlier time as is confirmed by
the receiving party; and (iii) Notice sent by first class mail shall be deemed to have been received
five business days after mailing.
(b) All Notices shall be sent by UAMPS to the business address, facsimile address or e-
mail address of the Participant's Representative. All Notices shall be sent by the Participant to
the business address, facsimile address or designated e-mail address of DAMPS. Either party
may change its Notice address(es)by Notice to the other party.
Section 33. Relationship of UAMPS and the Participant; Relationship among
Participants. (a) This Contract is not intended to create, nor shall it be deemed to create, any
relationship between UAMPS and the Participant other than that of independent parties
contracting with one another for the purpose of effectuating the provisions of this Contract.
(b) The covenants, obligations, liabilities, rights and benefits of the Participant under
this Contract are individual and not joint and several, or collective, with those of any other
Participant. Other than giving effect to the joint and cooperative action of DAMPS on behalf of
the Participants, the Power Sales Contracts shall not be construed to create an association, joint
venture, trust or partnership, or to impose a trust or partnership covenant, obligation or liability
on, between or among the Participant and any one or more of the Participants. No Participant
shall be or be deemed to be under the control of, nor shall any Participant control or be deemed
to control, any or all of the other Participants or the Participants as a group. No Participant shall
be bound by the actions of any other Participant, nor shall any Participant be deemed to be the
agent of any other Participant or have the right to bind any other Participant.
Section 34. No Recourse Against Officers, Etc. of UAMPS or Participant. No member
of the governing body, nor any officer or employee of UAMPS or the Participant shall be
individually or personally liable for any payment under this Contract or be subject to any
personal liability or accountability by reason of the execution of this Contract; provided,
however, that this Section shall not relieve any officer or employee of UAMPS or the Participant
from the performance of any official duty imposed by law.
Section 35. Governing Law; Jurisdiction and Venue. (a) This 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 Contract shall be determined under the laws of
such state.
(b) All judicial proceedings brought against either party arising out of or relating hereto
shall be brought exclusively in the courts of the State of Utah or of the United States of America
for the District of Utah. By executing and delivering this Contract, each party, for itself and in
connection with its properties, irrevocably accepts generally and unconditionally the
nonexclusive jurisdiction and venue of such courts; waives any defense of forum non conveniens;
-42-
agrees that service of all process in any such proceeding in any such court may be made by
registered or certified mail, return receipt requested, to the party at its address provided in
accordance with Section 32; and agrees that service as provided above is sufficient to confer
personal jurisdiction over the party in any such proceeding in any such court, and otherwise
constitutes effective and binding service in every respect.
Section 36. Severability; No Merger. (a) If any section, paragraph, clause or provision
of this Contract shall be finally adjudicated by a court of competent jurisdiction to be invalid, the
remainder of this 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 Contract constitutes the entire and complete agreement of DAMPS 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 DAMPS and the Participant
in respect of any other project or subject.
(Signature pages follow.)
-43-
IN WITNESS WHEREOF, the parties hereto have caused this Contract to be executed by
their proper officers respectively, being thereunto duly authorized, and their respective corporate
seals to be hereto affixed, as of the day, month and year first above written.
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
By:
President
[SEAL]
ATTEST AND COUNTERSIGN
By:
Clerk
Date of Execution and
Delivery:
Approved as to proper form and
compliance with applicable law:
By:
Attorney for Participant
-44-
UTAH ASSOCIATED MUNICIPAL POWER
SYSTEMS
By:
Chairman
[SEAL]
ATTEST AND COUNTERSIGN
By:
Secretary
Date of Execution and
Delivery:
Approved as to proper form and
compliance with applicable law:
By:
Attorney for DAMPS
-45-
SCHEDULE I
SCHEDULE OF PARTICIPANTS,ENTITLEMENT SHARES,
CAPITAL CONTRIBUTION PERCENTAGES,DEBT SERVICE PERCENTAGES
AND DEBT SERVICE SHARES
PRELIMINARY AND SUBJECT TO ADJUSTMENT AS PROVIDED
IN THE POWER SALES CONTRACTS
CAPITAL DEBT
PARTICIPANT KW ENTITLEMENT CONTRIBUTION SERVICE DEBT SERVICE
AMOUNT SHARE PERCENTAGE' PERCENTAGE' SHARE#
Beaver
Blanding
Eagle Mountain
Enterprise
Ephraim
Fallon
Fillmore
Heber
Hurricane
Hyrum
Idaho Falls
Kaysville
Lehi
Lower Valley
Morgan
Mt .Pleasant
Oak City
Paragonah
Parowan
Plumas-Sierra
Santa Clara
Springville
TDPUD
Washington
TOTAL 100.0000%
Capital Contribution Percentage, Debt Service Percentage and Debt Service Shares will be calculated by UAMPS
and this Schedule I will be completed as provided in Section 6(e) of the Power Sales Contracts. From the Effective
Date to the date a Capital Contribution is made by the Participant, the Participant's Capital Contribution Percentage
is 0.0000(zero)and its Debt Service Percentage and Debt Service Share are each equal to its Entitlement Share.
SI-1
EXHIBIT I
DESCRIPTION OF THE FACILITY
The Facility consists of the acquisition and construction of the following properties,
facilities, machinery, equipment, rights and interests:
1. Real Property.
2. Generating Facilities.
3. Gathering and Ancillary Facilities.
4. Transmission and Interconnection Facilities.
The foregoing description is preliminary, broad in scope and general in terms, and is
subject to the provisions of the Power Purchase Agreement. UAMPS and the Participants
acknowledge and agree that this description will be revised by UAMPS to conform to the
description of the "Facility" attached to the Power Purchase Agreement to reflect the actual
components comprising the Facility upon the Commercial Operation Date, and will be updated
thereafter as necessary. No revisions to this description shall affect the rights and obligations of
UAMPS and the Participants under the Power Sales Contracts.
I-1
PARTICIPANT
FISCAL YEAR
EXHIBIT II
FORM OF PARTICIPANT'S ANNUAL INFORMATION REPORT*
SYSTEM DESCRIPTION
Incorporated area of municipality square miles.
Service area of utility square miles.
Transmission and distribution lines miles.
Number of employees in electrical department (Include sum of shared
employees' time in other city offices to determine equivalent full-time employees.)
Number of customers served outside the city limits
Service area outside of the city limits square miles.
NUMBER OF ELECTRICAL CUSTOMERS
AND TYPE OF LOAD SERVED
TYPE OF CUSTOMER NUMBER OF CUSTOMERS
Residential
Commercial
Industrial
Agricultural and Pumping
Military and Other
Total
Annual audit will be sent to UAMPS as soon as completed after the fiscal year.
* Under Section 15(c) of the Power Sales Contract,UAMPS has agreed to classify certain of the information
provided by the Participant on this Exhibit II as a"protected record", pursuant to the Participant's request.
The Participant must also take any actions necessary on its part to appropriately classify and protect such
information provided in this Exhibit.
II-1
Electric Rate Schedules for the above classes of service are attached hereto.
II-2
Customer Sales by Class
Total sales to your customers kWh.
Revenues from energy sales to your customers in $
KWH SALES REVENUES $
Residential
Commercial
Industrial
A icultural
Other
Total
II-3
GENERATION
PRODUCED FOR SYSTEM LOAD
GENERATING UNIT PRODUCTION
#1 #2 #3 #4
kW kWh kW kWh kW kWh kW kWh
Jul
Augyst
September
October
November
December
January
February
March
April
May
June
TOTAL
SYSTEM PEAK INCLUDING LOAD
COVERED BY OWN GENERATION
kW kW
July January
August February
September March
October Aril
November May
December June
II-4
FIVE LARGEST LOADS
TYPE OF ANNUAL,
BUSINESS KWH SOLD ELECTRICAL BILLINGS
1.
2.
3.
4.
5.
ACHIEVEMENTS
Provide below the achievements of your utility for the year.
II-5
EXHIBIT III
FORM OF CERTIFICATE OF PARTICIPANT
STATE OF )
)
COUNTY OF )
The undersigned hereby certify that they are the [Executive Officer] and
[Clerk/Recorder/Secretary] of (the "Participant"), a
member of Utah Associated Municipal Power Systems ("UAMPS"), and that as such they are
authorized to execute this Certificate on behalf of the Participant and hereby certify as follows:
1. This Certificate has been executed pursuant to Section 15(d) of the Horse Butte
Wind Project Power Sales Contract, dated as of 1, 2010 (the "Power Sales
Contract"), between the Participant and UAMPS, in connection with the initial financing of the
cost of construction of the Project. Capitalized terms used and not otherwise defined herein have
the meanings assigned to them in the Power Sales Contract.
2. The Participant is a , duly created and validly existing under the
laws of the State of , and is governed by a (the "Governing
Body") composed of«number»members.
3. Attached hereto as Exhibit A is a true, complete and correct copy of a resolution
authorizing the execution and delivery of the Power Sales Contract and related matters (the
"Contract Resolution"). The Contract Resolution was duly adopted by a majority of the
Governing Body present and voting at a [regular/special] public meeting of the Governing Body
held on , 2010, at which a quorum was present and acted throughout, all in
accordance with law and applicable procedural rules of the Governing Body. The Contract
Resolution is in full force and effect and has not been amended, modified, repealed or
supplemented.
4. The names of the [Executive Officer] and the [Secretary/Clerk/Recorder] authorized
to execute and deliver the Power Sales Contract on behalf of the Participant are as follows:
NAME OFFICE
«officer» «office»
officer» «office»
5. The 2010, meeting of the Governing Body in connection with the
authorization of the Power Sales Contract was open to the public at all times and was duly called,
noticed and held in conformity with applicable laws of the State and procedural rules of the
Governing Body.
III-1
6. (a) No petition was filed with the Participant or any of its officers seeking to
refer the Contract 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 Contract Resolution.
7. The Participant owns and operates an electric utility system (the "System") that
distributes and furnishes electric energy to consumers located within the established service area
of the System.
8. The Participant has previously executed the Utah Associated Municipal Power
Systems Amended and Restated Agreement for Joint and Cooperative Action dated as of March
201 2009 and all amendments thereof and supplements thereto (the "Joint Action Agreement')
and that certain Power Pooling Agreement (the "Pooling Agreement") between the Participant
and UAMPS relating to the power pool administered by DAMPS. The Joint Action Agreement
and the Pooling Agreement are each in full force and effect and constitute the legal, valid and
binding agreements of the Participant.
9. «Rep» has been duly appointed by the Governing Body as the Participant's
representative to DAMPS.
10. The representations and warranties of the Participant in Section 18(a) of the Power
Sales Contract are true and correct on and as of the date of this certificate.
11. The Participant will use all of the electric energy from its Entitlement Share in a
Qualified Use(as defined in the Power Sales Contract).
12. The information provided by the Participant to UAMPS pursuant to Section 15(b)
and (c) of the Power Sales Contract and attached as EXHIBIT II thereto with respect to the
Participant and the System is true, correct and complete. The Participant has duly authorized
UAMPS to use such information in connection with the preparation of an official statement of
UAMPS with respect to the bonds to be issued to provide financing for the costs of acquisition
and construction of the Project and to provide such information to interested parties.
Dated:
[PARTICIPANT]
By
[Executive Officer]
By
[Clerk/Recorder/Secretary]
[Seal]
III-2
EXHIBIT A
[Form of Contract Resolution]
RESOLUTION NO.
A RESOLUTION AUTHORIZING AND APPROVING THE HORSE
BUTTE WIND PROJECT POWER SALES CONTRACT WITH UTAH
ASSOCIATED MUNICIPAL POWER SYSTEMS; AND RELATED
MATTERS.
WHEREAS, (the "Participant") is a member of Utah Associated
Municipal Power Systems ("UAMPS") pursuant to the provisions of the Utah Associated
Municipal Power Systems Amended and Restated Agreement for Joint and Cooperative Action,
as amended (the "Joint Action Agreement");
WHEREAS, one of the purposes of UAMPS under the Joint Action Agreement is the
acquisition and construction of electric generating, transmission and related facilities in order to
secure reliable, economic sources of electric power and energy for its members;
WHEREAS, UAMPS proposes to acquire a long-term supply of renewable energy from a
wind-powered electric generating facility to be located Bonneville County, Idaho known as the
Horse Butte Wind Project (the "Project, " as further defined in the Power Sales Contract), by
entering into a Power Purchase Agreement providing for the purchase and sale of all of the
electric power, energy and environmental attributes from the Project;
WHEREAS, the Governing Body has reviewed (or caused to be reviewed on its behalf)
certain descriptions and summaries of the Project, the Power Sales Contract and the Project
Agreements ("Project Agreements" and other capitalized terms used and not defined herein shall
have the meanings assigned to them in the Power Sales Contract), and representatives of the
Participant have participated in discussions and conferences with UAMPS and others regarding
the Project and have received from UAMPS all requested information and materials necessary
for the decision of the Governing Body to authorize and approve the Power Sales Contract;
WHEREAS, the Participant acknowledges that the obligation of the Participant to make the
payments provided for in the Power Sales Contract will be a special obligation of the Participant
and an operating expense of the Participant's electric system, payable from the revenues and
other available funds of the electric system, and that the Participant shall be unconditionally
obligated to make the payments required under the Power Sales Contract whether or not the
Project or any portion thereof is acquired, constructed, completed, operable or operating and
notwithstanding the suspension, interruption, interference, reduction or curtailment of the output
thereof for any reason whatsoever; and
A-1
WHEREAS, the Participant now desires to authorize and approve the Power Sales
Contract;
NOW, THEREFORE, BE IT RESOLVED by the Governing Body of as
follows:
Section 1. Execution and Delivery of the Power Sales Contract; Participant's
Representative. (a) The Power Sales Contract, in substantially the form attached hereto as
Annex A, is hereby authorized and approved, and the [Executive Officer] is hereby authorized,
empowered and directed to execute and deliver the Power Sales Contract on behalf of the
Participant, and the [Clerk/Recorder/Secretary] is hereby authorized, empowered and directed to
attest and countersign such execution and to affix the corporate seal of the Participant to the
Power Sales Contract, with such changes to the Power Sales Contract from the form attached
hereto as Annex A as shall be necessary to conform to the Participant's legal status, to complete
the form of the Power Sales Contract or to correct any minor irregularities or ambiguities therein
and as are approved by the [Executive Officer], his execution thereof to constitute conclusive
evidence of such approval.
(b) An Entitlement Share representing up to 9,000 kW of capacity, as such capacity
amount may be rounded by the Project Management Committee pursuant to the Power Sales
Contract to provide a whole number of turbine generator sets, is hereby authorized and approved.
(c) The appointment of Stephen Hollabaugh as the Participant's Representative to
UAMPS is hereby confirmed. Such Representative (or, in his absence, such alternate(s) as may
be appointed from time to time) is hereby delegated full authority to (i) approve any appendix to
the Pooling Agreement between DAMPS and the Participant that may be necessary or desirable
in connection with the utilization of the Participant's Entitlement Share and (ii) 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 2. Compliance with Tax Covenants. The Participant agrees in the Power Sales
Contract that it will apply all of the energy acquired under the Power Sales Contract to a
Qualified Use and that it will not take or omit to take any action which could adversely affect the
Tax Status of any Bond or Bonds theretofore issued or thereafter issuable by DAMPS. In
furtherance of that agreement, the Governing Body of the Participant hereby agrees that the
energy acquired under the Power Sales Contract shall be used solely to serve retail customers of
the Participant located in areas that have been served by the Participant since January 1, 2001,
and hereby allocates such energy to such use.
Section 3. 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.
A-2
(c) In case any provision in this resolution shall be invalid, illegal or unenforceable,
the validity, legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
(d) This resolution shall take effect immediately upon its adoption and approval.
ADOPTED AND APPROVED this_day of ,
[PARTICIPANT]
By
ATTEST:
[Secretary/Clerk/Recorder]
[SEAL]
A-3
ANNEX A
[Attach Power Sales Contract]
AA-1
EXHIBIT IV
FORM OF BRING DOWN CERTIFICATE OF THE PARTICIPANT
STATE OF )
)
COUNTY OF«COUNTY» )
The undersigned hereby certify that they are the [Executive Officer] and
[Clerk/Recorder/Secretary] of (the "Participant"), a member of Utah
Associated Municipal Power Systems ("UAMPS"), and that as such they are authorized to
execute this Certificate on behalf of the Participant and hereby certify as follows:
1. This certificate has been executed in connection with the issuance by UAMPS of its
Horse Butte Wind Project Revenue Bonds, Series (the "Bonds"), as more fully
described in the Official Statement of UAMPS dated (the "Official Statement")
prepared in connection with the offering and sale of the Bonds.
2. Pursuant to Section 15(d) of the Horse Butte Wind Project Power Sales Contract,
dated as of 11 2010, between the Participant and UAMPS, in connection with the
initial financing of the cost of construction of the Horse Butte Wind Project, the undersigned
executed and delivered a certificate dated (the "Original Certificate"). The
undersigned hereby reaffirm the statements made in the Original Certificate on and as of the date
hereof. Capitalized terms used and not otherwise defined herein have the meanings assigned to
them in the Original Certificate.
[3. The undersigned have reviewed the statements and financial and operating
information relating to the Participant and its System contained in the Official Statement under
the caption "THE PARTICIPANTS" and such statements and information (a) are true and correct in
all material respects and fairly and accurately present the financial and operating position of the
System for the periods and as of the dates presented and (b) do not omit to state a material fact
necessary in order to make such statements and information not misleading. As of the date
hereof, there has been no change in the business, financial position, results of operations or
condition of the System that would (x) materially affect the accuracy and completeness of such
statements and information or (y) materially and adversely affect the ability of the Participant to
meet its obligations under the Power Sales Contract.]
Dated this day of
[PARTICIPANT]
By
Its
[SEAL]
IV-1
EXHIBIT V
FORM OF OPINION OF COUNSEL TO THE PARTICIPANT
Utah Associated Municipal Power Systems
[Address]
Ladies and Gentlemen:
I have acted as counsel to (the "Participant") in connection with the
Horse Butte Wind Project Power Sales Contract, dated as of 11 2010, between the
Participant and Utah Associated Municipal Power Systems ("UAMPS"). Pursuant to the Power
Sales Contract, UAMPS has undertaken the Project and has sold all of Electric Power and
Electric Energy and Environmental Attributes of the Project to the Participant and others that
have executed Power Sales Contracts with UAMPS.
This opinion is being delivered to you pursuant to Section 15(d) of the Power Sales
Contract in connection with the initial financing of the cost of construction of the Project.
Capitalized terms used and not defined herein have the meanings assigned to such terms in the
Power Sales Contract.
As counsel to the Participant, I have examined (i) those documents relating to the
existence, organization and operation of the Participant and its System, (ii) all resolutions and
proceedings of the Participant relating to the due authorization, execution and delivery by the
Participant of the Power Sales Contract, (iii) an executed counterpart of the Power Sales
Contract, and (iv) such other documents, information, facts and matters of law as are necessary
for me to render the opinions contained herein.
Based upon the foregoing, I am of the opinion that:
[I. The Participant is a [municipal corporation and/or political subdivision of the State
of (the "State"), duly created and validly existing under the laws of the State and
duly qualified to own, operate and furnish electric service through the System.]
[l. The Participant is a , duly created and validly existing under the
laws of the State of (the "State"), and duly qualified to own, operate and furnish
electric service through the System.]
2. The Participant has full legal right, power and authority to enter into the Power
Sales Contract and to carry out and consummate all of the transactions contemplated thereby, and
V-1
the Participant has complied with the provisions of applicable law which would be a condition
precedent to entering into the Power Sales Contract or carrying out and consummating such
transactions.
3. Each of the Power Sales Contract, the Joint Action Agreement and the Pooling
Agreement has been duly authorized, executed and delivered by the Participant and constitutes
the legal, valid and binding obligation of the Participant and is enforceable under the present law
of the State in accordance with its terms, except as enforceability may be limited by bankruptcy,
insolvency, moratorium, reorganization or other laws affecting creditors' rights generally or usual
equity principles in the event equitable remedies should be sought.
4. The Participant's obligation to make payments to UAMPS under the Power Sales
Contract is a special obligation payable solely from the revenues and other available income of
the System as a cost of purchased electric energy and an operating expense of the System. The
application of the revenues and other available funds of the System to make such payments is not
subject to any prior lien, encumbrance or restriction.
5. [The Participant has obtained all Required Approvals] {or} [There are no Required
Approvals].
6. There is no pending or, to my knowledge, threatened, action or proceeding affecting
the Participant (nor to my knowledge is there any basis therefor), which (a) purports to affect the
authorization, legality, validity or enforceability of the Power Sales Contract, the Joint Action
Agreement or the Pooling Agreement or (b) involves the possibility of any judgment or liability,
not fully covered by insurance, which may result in any material adverse change in the business,
affairs, properties or assets, or in the condition, financial or otherwise, of the System.
7. The execution, delivery and performance by the Participant of the Power Sales
Contract will not conflict with or constitute a breach of or default under any agreement,
indenture, bond, note, resolution or other instrument to which the Participant is a party or by
which it or the properties of the System is bound or affected, or any applicable law, ruling,
regulation, ordinance,judgment, order or decree to which the Participant (or any of its officers in
their respective capacities as such) or its properties is subject.
8. No event has occurred an is continuing which with the passage of time or the giving
of notice, or both, would constitute a material default or event of default under any agreement,
indenture, bond, note, resolution or other instrument to which the Participant is a party or by
which it or the properties of the System is bound or affected, which breach or default would have
a material adverse impact on DAMPS' ownership or operation of the Project or the ability of the
Participant to fully perform its obligations under the Power Sales Contract.
9. The Participant has lawful authority to fix and collect rates, fees and charges for the
services provided by the System. Such rates, fees and charges for utility services provided to
customers located within the corporate boundaries of the Participant are not subject to regulation
by any authority of the State or the United States and have been duly and validly adopted by the
Participant and are in full force and effect.
V-2
10. The Participant has lawful authority to own the System and, to my knowledge, the
Participant (a) has good and merchantable title to the properties comprising the System and (b)
holds all permits, licenses and approvals necessary for the operation of the System.
I hereby authorize Project Company, [construction lender/other reliance party] and
Chapman and Cutler LLP, as bond counsel, to rely on this opinion as though addressed to them.
Respectfully submitted,
V-3
EXHIBIT VI
FORM OF BRING-DOWN OPINION OF COUNSEL TO THE PARTICIPANT
Utah Associated Municipal Power Systems
[Address]
Ladies and Gentlemen:
I have acted as counsel to (the "Participant") in connection with the
Horse Butte Wind Project Power Sales Contract dated as of 11 2010 (the "Power
Sales Contract") between the Participant and Utah Associated Municipal Power Systems
("UAMPS"). I have been advised that UAMPS has made arrangements for the issuance and sale
on the date hereof of its Horse Butte Wind Project Revenue Bonds, Series (the
"Bonds
Pursuant to Section 15(d) of the Power Sales Contract in connection with the initial
financing of the cost of construction of the Horse Butte Wind Project, I rendered to UAMPS an
approving legal opinion, dated (the "Prior Opinion"), with respect to the Participant.
In connection with the issuance and sale by UAMPS of the Bonds, I hereby reaffirm the Prior
Opinion, as though it was dated the date hereof, in the form it was so rendered on
[In addition to the foregoing, I have examined the material describing the Participant and
its electric system contained under the caption "THE PARTICIPANTS" in the Official Statement,
dated (together with any supplements or amendments thereto as of the date hereof,
the "Official Statement") of UAMPS relating to the Bonds and such other documents,
information, facts and matters of law as are necessary for me to render the following opinion.
Based upon the foregoing, I am of the opinion that the statements and information with respect to
the Participant and its electric system in the Official Statement under such caption (excluding
financial, operating, statistical or accounting data contained or incorporated therein, as to all of
which I do not express any opinion or belief) are true and correct in all material respects as of the
date of the Official Statement and as of the date hereof, and no facts have come to my attention
which would lead me to believe that, as of the date of the Official Statement and as of the date
hereof, the statements in the Official Statement under such caption contained or contain any
untrue statement of a material fact or omitted or omit to state any material fact necessary in order
to make such statements, in the light of the circumstances under which they were made, not
misleading.]
VI-1
I hereby authorize the reference to this opinion and to the Prior Opinion set forth under
the caption, "APPROVAL OF LEGAL PROCEEDINGS," in the Official Statement. I hereby further
authorize [Bond Counsel], [ , as representative of the underwriters of the
Bonds], and [other reliance party] to rely on the Prior Opinion and on this opinion in each case as
though addressed to them.
Respectfully submitted,
VI-2
Public Utility District
RESOLUTION NO. 2010 - XX
A RESOLUTION AUTHORIZING AND APPROVING THE HORSE BUTTE
WIND PROJECT POWER SALES CONTRACT WITH UTAH ASSOCIATED
MUNICIPAL POWER SYSTEMS;AND RELATED MATTERS.
WHEREAS, Truckee Donner Public Utility District (the "Participant") is a member of
Utah Associated Municipal Power Systems ("UAMPS") pursuant to the provisions of the Utah
Associated Municipal Power Systems Amended and Restated Agreement for Joint and
Cooperative Action, as amended (the "Joint Action Agreement");
WHEREAS, one of the purposes of UAMPS under the Joint Action Agreement is the
acquisition and construction of electric generating, transmission and related facilities in order to
secure reliable, economic sources of electric power and energy for its members;
WHEREAS, UAMPS proposes to acquire a long-term supply of renewable energy from a
wind-powered electric generating facility to be located Bonneville County, Idaho known as the
Horse Butte Wind Project (the "Project, " as further defined in the Power Sales Contract), by
entering into a Power Purchase Agreement providing for the purchase and sale of all of the
electric power, energy and environmental attributes from the Project;
WHEREAS, the Governing Body has reviewed (or caused to be reviewed on its behalf)
certain descriptions and summaries of the Project, the Power Sales Contract and the Project
Agreements ("Project Agreements" and other capitalized terms used and not defined herein shall
have the meanings assigned to them in the Power Sales Contract), and representatives of the
Participant have participated in discussions and conferences with UAMPS and others regarding
the Project and have received from UAMPS all requested information and materials necessary
for the decision of the Governing Body to authorize and approve the Power Sales Contract;
WHEREAS, the Participant acknowledges that the obligation of the Participant to make the
payments provided for in the Power Sales Contract will be a special obligation of the Participant
and an operating expense of the Participant's electric system, payable from the revenues and
other available funds of the electric system, and that the Participant shall be unconditionally
obligated to make the payments required under the Power Sales Contract whether or not the
Project or any portion thereof is acquired, constructed, completed, operable or operating and
notwithstanding the suspension, interruption, interference, reduction or curtailment of the output
thereof for any reason whatsoever; and
WHEREAS, the Participant now desires to authorize and approve the Power Sales
Contract;
Horse Butte PSC Resolution V2.doc
8702011/CJ/wc
Now, THEREFORE, BE IT RESOLVED by the Governing Body of Truckee Donner Public
Utility District, as follows:
Section 1. Execution and Delivery of the Power Sales Contract; Participant's
Representative. (a) The Power Sales Contract, in substantially the form attached hereto as
Annex A, is hereby authorized and approved, and the President is hereby authorized, empowered
and directed to execute and deliver the Power Sales Contract on behalf of the Participant, and the
Clerk is hereby authorized, empowered and directed to attest and countersign such execution and
to affix the corporate seal of the Participant to the Power Sales Contract, with such changes to the
Power Sales Contract from the form attached hereto as Annex A as shall be necessary to conform
to the Participant's legal status, to complete the form of the Power Sales Contract or to correct
any minor irregularities or ambiguities therein and as are approved by the President, his
execution thereof to constitute conclusive evidence of such approval.
(b) An Entitlement Share representing up to 9,000 kW of capacity, as such capacity
amount may be rounded by the Project Management Committee pursuant to the Power Sales
Contract to provide a whole number of turbine generator sets, is hereby authorized and approved.
(c) The appointment of Stephen Hollabaugh as the Participant's Representative to
UAMPS is hereby confirmed. Such Representative (or, in his absence, such alternate(s) as may
be appointed from time to time) is hereby delegated full authority to (i) approve any appendix to
the Pooling Agreement between UAMPS and the Participant that may be necessary or desirable
in connection with the utilization of the Participant's Entitlement Share and (ii) 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 2. Compliance with Tax Covenants. The Participant agrees in the Power Sales
Contract that it will apply all of the energy acquired under the Power Sales Contract to a
Qualified Use and that it will not take or omit to take any action which could adversely affect the
Tax Status of any Bond or Bonds theretofore issued or thereafter issuable by UAMPS. In
furtherance of that agreement, the Governing Body of the Participant hereby agrees that the
energy acquired under the Power Sales Contract shall be used solely to serve retail customers of
the Participant located in areas that have been served by the Participant since January 1, 2001,
and hereby allocates such energy to such use.
Section 3. 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.
-2-
(c) In case any provision in this resolution shall be invalid, illegal or unenforceable,
the validity, legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
(d) This resolution shall take effect immediately upon its adoption and approval.
Signature page follows.
-3-
ADOPTED AND APPROVED this_day of 12010.
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
By
President
ATTEST:
Clerk
[SEAL]
-4-
ANNEX A
[Attach Power Sales Contract]
A-1
CERTIFICATE OF PARTICIPANT
DATED: [CLOSING DATE OF CONSTRUCTION FINANCING]
STATE OF CALIFORNIA )
)
COUNTY OF NEVADA )
The undersigned hereby certify that they are the Presid t and,;,Clerk of Truckee Donner
Public Utility District (the "Participant"), a member of 1ta1 Assated Municipal Power
Systems ("UAMPS"), and that as such they are authorized toll: xecute tlrtificate on behalf of
the Participant and hereby certify follows:certi as f ows:
ursuant to
1. This Certificate has been executed ' ; "'o n 15 d` :.
p :.: ( :: the Horse Butte
Wind Project Power Sales Contract dated as of August 1 2 .a e "Pow "
J gu .... �: lesContract ,
.....
between the Participant and UAMPS, in connection with the ijl financi the cost of
construction of the Project. Capitalized terms used antQt othervi ;.defined� ein have the
me
anings s as
signed ed t o them in the Power S 1
g � .........
2. The Participant is a public utilitydistr, t dulycred and existin under the
laws of the State of California (the "State.,"), a is gov d y a b rd of directors(the
"Governing Y
e nin Bod
y composed f
) posed 0 5 mem
R
3. At
tached hereto
e eto as Ex " '
...................
lx4 its a true, ct t `and corr ;; of a resolution
authorizingthe e .:::::;::, ;. ::::::: :::::::::::::::.delive x ... d.._.:.. ry f.the Power 1 "Contract and related matters (the
"Contract Res -1ution"). "h Contract 1solution was duly adopted by a majority of the
Governing y present and v :at a [r :ar/special] public meeting of the Governing Body
h
eld on . : :;:: 2010, at h a QQt4m was present and acted throughout, all in
accordance w ":1aw and a lica rocedut' rules of the pp p Governing Body. The Contract
Resolution is dill force and dfflct and has not been amended, modified, repealed or
supplemented.
4. The nari22.
;.of the President and the Clerk authorized to execute and deliver the
Power Sales Contract' ehalf cf.11he Participant are as follows:
NAME OFFICE
Jeff Bender President
Michael D. Holley Clerk
5. The 2010, meeting of the Governing Body in connection with the
authorization of the Power Sales Contract was open to the public at all times and was duly called,
noticed and held in conformity with applicable laws of the State and procedural rules of the
Governing Body.
TDPUD certif 2844694 0101 B.doc
8702011/CJ/mo
6. (a) No petition was filed with the Participant or any of its officers seeking to refer
the Contract 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 Contract Resolution.
7. The Participant owns and operates an electric utility system (the "System") that
distributes and furnishes electric energy to consumers located within the established service area
of the System.
t
8. The Participant has previously executed the T Tassiated Municipal Power
Systems Amended and Restated Agreement for Joint and Cc perative' h dated as of March
20, 2009 and all amendments thereof and supplements ther (the ". .Action Agreement")
and that certain Power Pooling Agreement (the "Pooling ' een the Participant
and DAMPS relating to the power pool administered by UAlV ; ; The J6 ;Action Agreement
and the Pooling Agreement are each in full force and effect ' ; legal, valid and
binding
d agreements
ements of the Participant.
e Parti i
g ' ant.
9. has been duly apppi ,,,. by the ; overning Body as the
p
Participant's representative to DAMPS.
10. The representations and warranties o��'`� e Parti ; .
p c t i Sectit 18(a) of the Power
Sales Contra
ct are t rue rr o n and c ect o and
a �the ` `;�-'�� of this;� °:::�����ate.
11. The Participant will use_ a the electner. :. from its. ntlement Share in a
..............:..:::::::: :::::
Qualified Use as df ::: ':: :. e Power'::°."`. e :Contr
Q ( :J ...th act).
12. information"""::T ' ' ed b ' Partici ant to DAMPS pursuant to Section 15 b
Y.:: :: P p ( )
and c of :P O . ;::. h :: ower Sales Cot and"" ched as EXHIBIT II thereto with respect to the
......... ..........
p
Participait ahe System is trud." ± rrect aidcomplete. The Participant has duly authorized
UAMPS to U.ch information immonnectio with the of an official statement of
preparation
DAMPS with r ' t to the bonds t 'be issued to provide financing for the costs of acquisition
and construction a ` ' Project and tt ' rovide such information to interested parties.
(Signature page follows.)
- 2 -
Dated as of the day and year first above written.
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
By
President
By
Clerk
SEAL
- 3 -
EXHIBIT A
[Attach Contract Resolution]
A-1
Kelley R. Carroll*t Timothy D. Casey, Of Counsel **
Peter H. Cuttitta* Dennis W. De Cuir, A Law
Steven C. Gross* lil Corporation, Of Counsel
Brian C. Hanley* Joseph W.Tillson, Of Counsel t
O ,,,�
Stephen C. Lieberman E R M O N
James L. Porter,Jr.*
James E. Simon t Certified Specialist in Estate
Planning,Trust& Probate Law
*Also licensed in Nevada
Reply to Truckee Office **Also licensed in District of
Columbia
DATED: [CLOSING DATE OF CONSTRUCTION FINANCING]
Utah Associated Municipal Power Systems
2825 East Cottonwood Parkway, Suite 200
Salt Lake City, Utah 84121
Ladies and Gentlemen:
I have acted as counsel to Truckee Donner Public Utility District (the "Participant") in
connection with the Horse Butte Wind Project Power Sales Contract, dated as of August 1, 2010,
between the Participant and Utah Associated Municipal Power Systems ("UAMPS"). Pursuant
to the Power Sales Contract, DAMPS has undertaken the Project and has sold all of Electric
Power and Electric Energy and Environmental Attributes of the Project to the Participant and
others that have executed Power Sales Contracts with DAMPS.
This opinion is being delivered to you pursuant to Section 15(d) of the Power Sales
Contract in connection with the initial financing of the cost of construction of the Project.
Capitalized terms used and not defined herein have the meanings assigned to such terms in the
Power Sales Contract.
As counsel to the Participant, I have examined (i) those documents relating to the
existence, organization and operation of the Participant and its System, (ii) all resolutions and
proceedings of the Participant relating to the due authorization, execution and delivery by the
Participant of the Power Sales Contract, (iii) an executed counterpart of the Power Sales
Contract, and (iv) such other documents, information, facts and matters of law as are necessary
for me to render the opinions contained herein.
Based upon the foregoing, I am of the opinion that:
1. The Participant is a public utility district, duly created and validly existing under the
laws of the State of California (the "State"), and duly qualified to own, operate and furnish
electric service through the System.
2. The Participant has full legal right, power and authority to enter into the Power
Sales Contract and to carry out and consummate all of the transactions contemplated thereby,
and the Participant has complied with the provisions of applicable law which would be a
condition precedent to entering into the Power Sales Contract or carrying out and consummating
such transactions.
{00178482.DOC 1)
I F1 JC 1'(, is 40200 Truckee Airport Road, Truckee,California 96161 phone (530) 587-2002 fax (530) 587-1316
RP,10 '3'.0 J A K E'FA H¢...;;:. �'JC� H.H',E#s 3 A( �;;
Page 2 of 3
3. Each of the Power Sales Contract, the Joint Action Agreement and the Pooling
Agreement has been duly authorized, executed and delivered by the Participant and constitutes
the legal, valid and binding obligation of the Participant and is enforceable under the present law
of the State in accordance with its terms, except as enforceability may be limited by bankruptcy,
insolvency, moratorium, reorganization or other laws affecting creditors' rights generally or
usual equity principles in the event equitable remedies should be sought.
4. The Participant's obligation to make payments to UAMPS under the Power Sales
Contract is a special obligation payable solely from the revenues and other available income of
the System as a cost of purchased electric energy and an operating expense of the System. The
application of the revenues and other available funds of the System to make such payments is not
subject to any prior lien, encumbrance or restriction.
5. There are no Required Approvals.
6. There is no pending or, to my knowledge, threatened, action or proceeding affecting
the Participant (nor to my knowledge is there any basis therefor), which (a) purports to affect the
authorization, legality, validity or enforceability of the Power Sales Contract, the Joint Action
Agreement or the Pooling Agreement or (b) involves the possibility of any judgment or liability,
not fully covered by insurance, which may result in any material adverse change in the business,
affairs, properties or assets, or in the condition, financial or otherwise, of the System.
7. The execution, delivery and performance by the Participant of the Power Sales
Contract will not conflict with or constitute a breach of or default under any agreement,
indenture, bond, note, resolution or other instrument to which the Participant is a party or by
which it or the properties of the System is bound or affected, or any applicable law, ruling,
regulation, ordinance,judgment, order or decree to which the Participant (or any of its officers in
their respective capacities as such) or its properties is subject.
8. No event has occurred an is continuing which with the passage of time or the giving
of notice, or both, would constitute a material default or event of default under any agreement,
indenture, bond, note, resolution or other instrument to which the Participant is a party or by
which it or the properties of the System is bound or affected, which breach or default would have
a material adverse impact on DAMPS' ownership or operation of the Project or the ability of the
Participant to fully perform its obligations under the Power Sales Contract.
9. The Participant has lawful authority to fix and collect rates, fees and charges for the
services provided by the System. Such rates, fees and charges for utility services provided to
customers located within the corporate boundaries of the Participant are not subject to regulation
by any authority of the State or the United States and have been duly and validly adopted by the
Participant and are in full force and effect.
10. The Participant has lawful authority to own the System and, to my knowledge, the
Participant (a) has good and merchantable title to the properties comprising the System and (b)
holds all permits, licenses and approvals necessary for the operation of the System.
100178482.DOC 1}
Page 3 of 3
I hereby authorize Project Company, [construction lender/other reliance party] and
Chapman and Cutler LLP, as bond Counsel, to rely on this opinion as though addressed to them.
Respectfully submitted,
Very truly yours,
PORTER SIMON
Professional Corporation
STEVEN C. GROSS
gross_sportersimon.com
SCG
{00178482.DOC 11
DRAFT
7/3 0/10
EXECUTIVE SUMMARY
UTAH ASSOCIATED MUNICIPAL POWER SYSTEMS
HORSE BUTTE WIND PROJECT
INTRODUCTION AND OVERVIEW
INTRODUCTION
This Executive Summary describes UAMPS' proposed Horse Butte Wind Project and
summarizes the provisions of the Power Sales Contracts and the Project Agreements. The
information contained in this Executive Summary is intended to provide prospective Participants
with an overview of the Project, the Power Sales Contracts and the Project Agreements in
connection with their decision to participate in the Project by entering into a Power Sales
Contract with UAMPS.
This Executive Summary has five parts: Part 1 provides definitions of terms used herein;
Part 2 provides a description of the Project and the Facility; Part 3 describes interconnection and
transmission matters; Part 4 summarizes the principal provisions of the Power Sales Contracts;
and Part 5 summarizes the various Project Agreements.
The descriptions and summaries contained in this Executive Summary are necessarily
broad and general. To the extent that you have any questions or require any additional
information, please contact Jackie Coombs, UAMPS' Manager of Customer Services, at 801-
327-6602 or by e-mail to jackie@uamps.com.
OVERVIEW
The Horse Butte Wind Project will be a wind-powered electric generating facility to be
constructed in Bonneville County, Idaho, with an expected generating capacity of approximately
100 MW. In the Power Sales Contracts and this Executive Summary, the term "Facility" refers
to the physical assets that comprise this wind-powered electric generating facility, and the term
"Project" refers to UAMPS' rights and obligations under various contractual arrangements
relating to the Facility that it will enter into with Project Company, a special purpose entity
formed to own and operate the Facility.
The Project is being undertaken as a structured transaction to enable the costs of
acquisition and construction of the Facility to be funded with a combination of(i) the cash grant
for 30% of the qualifying costs of renewable energy projects provided by the American Recovery
and Reinvestment Act, (ii) a prepayment made by UAMPS for the expected minimum energy
production of the Project for a period of twenty years and (iii) an equity contribution made by the
ultimate owner(s) of Project Company. The energy prepayment will be made by UAMPS on or
about the commercial operation date of the Facility, and will be financed with tax exempt bonds
issued by UAMPS. It is expected that this combination of funding sources will result in a least-
cost financing for the capital costs of the Facility.
8702011
PART 1: DEFINITIONS
The following terms have the following meanings in this Executive Summary:
"Acquisition Date"means any date on which UAMPS acquires ownership of the Facility,
whether by exercise of its purchase option under the Power Purchase Agreement or otherwise.
"BOP Contract" means the Balance of Plant Contract entered into by Project Company
and DAMPS with the Contractor providing, in general, for all of the work necessary to construct
the Facility and place it into commercial operation (but excluding the acquisition of the wind
turbine generator sets under the Turbine Supply Agreement).
"BPA"means the Bonneville Power Administration of the U.S. Department of Energy.
"Construction Loan Agreement"means the agreement among Project Company, UAMPS
and the construction lender providing financing for the costs of the initial acquisition and
construction of the Facility. Wells Fargo Bank, N.A., or one of its affiliates is presently expected
to be the construction lender.
"Contractor" means the contractor under the BOP Contract, presently expected to be
Aubrey Silvey Enterprises, Inc.
"Development Agreement" means the Horse Butte Wind Project Development
Agreement between Project Company and UAMPS under which, Project Company will appoint
UAMPS as its agent for purposes of developing, acquiring and constructing the Facility and
arranging financing for the development, acquisition and construction costs of the Facility.
"Entitlement Share" means each Participant's percentage entitlement to the capability of
the Project and the Environmental Attributes from the Project.
"Facility" means the real and personal property, facilities, structures, improvements and
equipment comprising the wind energy generating facility known as the Horse Butte Wind
Project, including the wind turbine generators, the collection system, the interconnection
facilities and all related facilities.
"Interconnection Agreement" means the Large Generator Interconnection Agreement
providing for the interconnection of the Facility with the transmission facilities of BPA.
"Leases" means the leases and other property rights and interests necessary for the
construction and operation of the Facility.
"Operation and Maintenance Agreement" means the agreement providing for the
operation and maintenance of all or any portion of the Facility.
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"Participants"means the power purchasers under the Power Sales Contracts.
"Power Purchase Agreement" means the Power Purchase Agreement between UAMPS
and Project Company providing for the purchase and sale of all of the energy production of the
Facility.
"Power Sales Contracts" means the Horse Butte Wind Project Power Sales Contracts
between DAMPS and the Participants.
"Prepayment" means the lump sum advance payment to be made by UAMPS under the
Power Purchase Agreement on the commercial operation date of the Facility for the"P99" energy
output of the Facility for the ensuing 20 years.
"Project"means (i) prior to any Acquisition Date, the rights and obligations of UAMPS
under the Development Agreement, the Construction Loan Agreement and the Power Purchase
Agreement and other related rights and interests and (ii) after any Acquisition Date, DAMPS'
ownership and operation of the Facility and any Additional Facilities, and related rights and
interests, all as further described and defined in the Power Sales Contracts.
"Project Agreements" means the Power Purchase Agreement, the Security Agreement,
the Development Agreement, the Construction Loan Agreement, the Turbine Supply Agreement,
the BOP Contract, the Leases, the Operation and Maintenance Agreement, the Service and
Maintenance Agreement, the Interconnection Agreement and the Transmission Agreements.
"Project Company" means Horse Butte Wind I LLC, an Idaho limited liability company
created for the sole purpose of developing, constructing, owning, operating and maintaining the
Facility pursuant to the Project Agreements.
"Security Agreement" means the security agreement and/or deed of trust pursuant to
which Project Company will grant a first lien security interest in the Facility to UAMPS to secure
the performance of its obligations under the Power Purchase Agreement.
"Service and Maintenance Agreement" means the Service and Maintenance Agreement
between Project Company and the turbine supplier providing for certain service and maintenance
on the wind turbines.
"Transmission Agreements" means each transmission contract, agreement or tariff
entered into by UAMPS or the Participant that is used or necessary for the delivery of power and
energy from the Point of Deliver to the Participant's System Point of Receipt, whether by direct
transmission, displacement, exchange or otherwise.
"Turbine Supply Agreement" means the Turbine Supply Agreement among Project
Company, UAMPS and the turbine supplier providing for the acquisition of the wind turbines for
the Facility. It is presently expected that Vestas-American Wind Technology, Inc. ("Vestas")
will be the turbine supplier.
-3-
PART 2: THE PROJECT AND THE FACILITY
The following is a summary description of the Project.
OVERVIEW OF PROJECT STRUCTURE
Section 1603 of the American Recovery and Reinvestment Act of 2009 provides a cash
grant to the owner of a renewable energy project that begins construction before January 1, 2011
and is placed in service (achieves commercial operation) before January 1, 2013. Various
conditions and requirements must be met in order to qualify for the cash grant, including a
requirement that the renewable energy project be owned by a taxable entity on, and for at least
five years after, its commercial operation date. The cash grant is equal to 30% of the qualifying
costs of a renewable energy project. Qualifying costs include most of the capital costs of
constructing a renewable energy facility and placing it into commercial operation, but do not
include interconnection and transmission costs. The Facility is one of the types of renewable
energy projects that qualify for the cash grant.
Under regulations issued by the U.S. Treasury in 2003, municipal utilities (and joint
action agencies acting on their behalf) may issue tax exempt bonds to prepay for long-term
supplies of electricity. The principal requirement of these regulations is that at least 90% of the
prepaid electricity must be delivered to retail consumers located in areas that have been served by
a municipal utility for at least five years or areas recognized as a municipal service area under
state or federal law.
In order to enable most of the costs of acquisition and construction of the Facility to be
funded with a combination of the 30% cash grant under the Recovery and Reinvestment Act and
a electricity prepayment financed with tax exempt bonds issued by DAMPS, it will be necessary
for the Facility to be owned and controlled by a taxable entity. Project Company will be
organized for this purpose as an Idaho limited liability company. Project Company will be a
special purpose entity and will be required to restrict its activities to the Facility and the related
Project Agreements. The primary agreements between DAMPS and Project Company will the
Development Agreement and the Power Purchase Agreement.
Neither UAMPS nor any of its members or Participants may own or control Project
Company. The Idaho Energy Resources Authority, a constituted authority of the State of Idaho
which was created for the purpose of facilitating and financing energy projects in Idaho (the
"Idaho ERA"), has agreed to act as the majority(likely 99%) owner of Project Company until the
commercial operation date of the Facility.
In order to enable Project Company to develop, construct and finance the Facility, it will
enter into the Development Agreement with DAMPS. DAMPS will act as the agent of Project
Company for all purposes and will negotiate the terms of the Construction Loan Agreement, the
Turbine Supply Agreement, the BOP Contract and other agreements necessary for the acquisition
and construction of the Facility. As Project Company has no meaningful assets or income until
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the Facility is completed and in order to enable the Facility to be economically constructed and
financed on favorable terms, DAMPS will co-sign and be primarily liable for making the
payments required under the Construction Loan Agreement, the Turbine Supply Agreement, the
BOP Contract and related agreements.
Concurrently with the commercial operation date of the Facility, the Idaho ERA will sell
its membership interest in Project Company to an entity affiliated with Citigroup under the terms
of a membership interest purchase agreement. This purchase agreement will establish the
purchase price calculation, the closing process and the disposition of the sale proceeds, and will
address issues that are typically part of the sale of any business, such as representation and
warranties, conditions to closing, indemnification and the transfer process.
The proceeds from the sale of the membership interests, will be applied first, to the
payment in full of the construction loan for the Project, second to the payment of the
development fee owed to DAMPS under the Development Agreement and amounts payable to
the Idaho ERA, and third to the payment of any other unpaid Project expenses. Any remaining
amounts would be used to provide a return to the members of Project Company in consideration
of their participation in the development of the Project.
On the commercial operation date of the Facility, UAMPS will issue bonds to make the
Prepayment to Project Company for the "P99" energy output of the Facility over a 20-year term.
For practical purposes, the P99 energy output of the Facility is the amount of energy that a
recognized wind expert certifies as the annual amount of energy that the Facility can be expected
to generate in 99 out of 100 years. See "Wind Resource Assessment and Wind Energy Potential"
below in this PART 1, and "PART 5. PROJECT AGREEMENTS — Power Purchase Agreement"
below.
As described in further detail below under "PART 4. POWER SALES CONTRACTS —
Financing," the amount of Bonds necessary to be issued to finance the Prepayment will be
reduced by (i) any Capital Contributions paid by Participants and (ii) the application of any
Development Fee to the Prepayment. It is expected that this combination of funding sources will
result in a least-cost financing for the capital costs of the Facility.
Following the commercial operation date of the Facility, DAMPS will receive the prepaid
(P99) energy from Project Company, and will also receive and make monthly payments for all
additional energy generated by the Facility and all of the Environmental Attributes associated
with the Facility (including the P99 energy output) at the prices specified in the Power Purchase
Agreement. UAMPS will also pay or reimburse Project Company for all operation and
maintenance costs, taxes and insurance costs of the Facility. Under the Power Purchase
Agreement, UAMPS will have an option to purchase the Facility on the sixth anniversary of its
commercial operation date and periodically thereafter. The purchase option price will be the
then-current fair market value of the Facility, subject to certain offsets, all as determined under
the Power Purchase Agreement. In the event that it elects to exercise the purchase option,
UAMPS would expect to issue additional Bonds to finance the purchase price, net of any Capital
Contributions paid by Participants at the time. DAMPS will have no ownership interest in the
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Facility unless and until it determines to exercise its purchase option under the Power Purchase
Agreement.
The following table summarizes the overall chronology and events related to the Project.
PROJECT PHASE ACTIONS AND STATUS
Project Development and Construction 1. Participants execute Power Sales Contracts.
2. Project Company organized by the Idaho
ERA.
3. UAMPS and Project Company execute
Development Agreement and Power Purchase
Agreement.
4. UAMPS and Project Company execute
Construction Loan Agreement, Turbine Supply
Agreement and BOP Contract.
5. Manufacture of wind turbines and
construction of the Facility begin; acquisition
and construction costs paid with drawings
under the Construction Loan Agreement.
6. UAMPS directs and supervises acquisition
and construction activities as provided in the
Development Agreement.
Commercial Operation Date to Purchase 1. Commercial operation of the Facility is
Option Date declared as provided in Project Agreements.
2. Citigroup affiliate purchases membership
interests in Project Company. Proceeds
applied to retire Construction Loan Agreement
drawings, pay development fees to UAMPS
and completion fee to Idaho ERA.
Development Agreement expires per its terms.
3. Project Company files application with U.S.
Treasury for cash grant for 30% of the
qualifying costs of the Facility. Grant expected
to be received by Project Company within 60
days.
-6-
4. UAMPS issues Bonds to finance 20-year
prepayment to Project Company for P99 output
of the Facility.
5. Project Company grants a mortgage and
security interest in the Facility to secure the
performance of its obligations to UAMPS
under the Power Purchase Agreement.
6. Deliveries of prepaid and pay-as-you go
energy and Environmental Attributes begin
under the Power Purchase Agreement.
7. Participants begin receiving energy and
Environmental Attributes under the Power
Sales Contracts.
Purchase Option Dates and after 1. Purchase option may be exercised on 6th,
7th5 loth or 20th anniversary of commercial
operation date.
2. Decision on whether to purchase the Facility
is made by the Project Management
Committee.
3. If UAMPS elects to purchase the Facility, it
will issue Bonds to finance purchase price, and
Participants will have the option to make a
Capital Contribution for their share of the
purchase price.
4. On the purchase date, the Power Purchase
Agreement will terminate and from and after
the purchase date UAMPS will own the
Project.
5. If UAMPS does not exercise the purchase
option, the Power Purchase Agreement will
continue in accordance with its terms.
6. In either case, the Participants continue to
receive and pay for energy and Environmental
Attributes under the Power Sales Contracts.
-7-
COST OF ENERGY FROM THE PROJECT
UAMPS and Citigroup have developed a pro forma model to project the cost of energy
and Environmental Attributes from the Project, together with a set of underlying assumptions
regarding the costs of construction and operation of the Facility. Selected information from the
pro forma model has been posted to the Horse Butte Project portal at DAMPS' website:
https://spoint.uamps.com/sites/idahowind/default.aspx, and prospective Participants are
encourage to review carefully this information and the other information posted to the Horse
Butte Project portal at DAMPS' website.
THE FACILITY
The Facility will be a wind-powered electric generating facility project located in
Bonneville County, Idaho. The Facility is expected to have an initial generating capacity of
approximately 100 MW, consisting of fifty-six Vestas V-100, 1.8 MW wind turbine generators
with 100 meter rotors on 80 meter hub-height towers.
Vestas was selected as the wind turbine supplier after a lengthy, multi-step process
conducted by DAMPS and its consultants at Sagebrush Energy. The first step in this process
involved a qualitative review of a large number of wind turbine manufacturers that examined
their track records and presence in the United States, the operating history and any operating
issues associated with their wind turbines, the acceptance of their wind turbines for financing by
commercial lenders and in the capital markets, whether their wind turbines were manufactured in
the U.S. and other factors. Based on the qualitative review a smaller number of manufacturers
were selected and requested to provide power curve and pricing information for their wind
turbines. This data was then reviewed and normalized on a per-kW basis (taking into account
pricing, power production, BOP Contract costs and related consideration) to rank turbine
suppliers. Based on this ranking, DAMPS recommend and the Project Management Committee
approved the selection of Vestas as the preferred turbine supplier. In addition to the factors
discussed above, Vestas offers a mature product with service and parts readily available in the
region surrounding the Facility.
The output from the Facility will be delivered to BPA's Palisades-Goshen 115 kV line,
which is within the boundaries of the Facility site. The interconnection to BPA will be designed
as a 100 MW interconnection.
The Facility will include site roads to each turbine generator, foundations, a 34.5 kV
collection system (including but not limited to power cables, grounding conductor, junction
boxes, and fiber optic cable), and a 161-115kV/34.5kV, 100 MVA substation.
A detailed description of the Facility will be attached as Exhibit I to the Power Sales
Contracts.
-8-
WIND RESOURCE ASSESSMENT AND WIND ENERGY POTENTIAL
Wind Resource Assessment. The Facility was determined to be feasible as a quality,
"class 3" wind resource based on six years of meteorological data and wind data analyses
provided by the Idaho National Laboratory of the U.S. Department of Energy ("INL"). As part
of its development of the Facility, UAMPS engaged V-Bar, LLC, a nationally recognized
meteorological firm specializing in wind 'energy assessment and development through data
collection and modeling. UAMPS will rely on V-Bar for projecting the Facility's energy
production based on the measured wind data, site terrain, turbine model power curves and current
wind modeling methodologies. The scope of V-Bar's work includes (i) meteorological tower
siting and data management, (ii) third-party review and confirmation of INL analysis, (iii) wind
speed analysis, (iv) energy production analysis and (v) turbine selection and preliminary turbine
layout.
Wind Energy Potential. V-Bar has collected data regarding the wind energy potential at
the Facility site from four 60-meter meteorological (or "met") towers located at the Facility site.
The long-term meteorological data collected from one of the met towers, which has been located
at the site for seven years, indicate that the Facility will be a "class 3" resource having a long-
term 60-meter mean wind speed of 6.61 meters per second (m/s) (14.7 miles per hour) and
extrapolated 80-meter mean wind speed of 6.86 m/s. The daily correlation coefficients of the
three other met towers at the Facility site all exceed .95, indicating consistency of the wind
resource across the site.
Utilizing the meteorological data collected at the Facility, V-Bar has modeled the
expected capacity factor of the wind turbines expected to be installed at the Facility (the Vestas
1.8 MW, 80-meter hub height turbine). The gross capacity factor is approximately 38.05%. The
gross to net conversion factor is conservatively estimated at 14.5% and discounts for turbine
availability, electrical losses, wake losses, turbulence, extreme weather and other factors. The
expected (P50) net capacity factor is 32.91%.
The capacity factor of the Facility and the amount of energy that the Facility will generate
in any particular period are inherently uncertain due to the intermittent and variable nature of the
wind resource. This uncertainty is addressed through probability analysis and "p-values." An
amount of output (or net capacity factor) associated with a p-value represents the output
predicted to be generated with a probability of exceedance of the stated percentage. For example,
the amount of energy predicted to be generated during a given period with a probability of
exceedance of 99% is referred to as "P99" energy. Extrapolated ten-year p-values and
corresponding net capacity factors for the Vestas model turbine described above at the Facility
site are shown in the following table.
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P-VALUE NET CAPACITY
FACTOR(%)
P99 25.02
P75 30.60
P50 32.91
P10 37.99
As indicated in the above table, there is a high probability(P99) that the net capacity factor of the
Facility will be at least 25.02%, a middle probability (P50) that the net capacity factor of the
Facility will be at least 32.91%.
ENGINEERING,CONSTRUCTION AND FINANCING
Preliminary Engineering and Construction Matters. In order to facilitate preliminary
engineering and construction matters with respect to the Facility, UAMPS has solicited numerous
local and national qualified "balance-of-plant" contractors and requested qualifications and
proposals for a defined scope of work. Thorough a qualitative process UAMPS has engaged
Aubrey Silvey Wind Enterprises, Inc. as the expected Contractor for the Facility under the BOP
Contract. Aubrey Silvey has extensive experience in the design and construction of substations
and electrical systems with strong background in EPC contracts involving electrical substation
and renewable energy projects. Under an executed Letter of Intent, Aubrey Silvey's initial work
includes preliminary design, value-added engineering, preliminary geotechnical work,
interconnection support and other work in support of early site development prior to the
execution of the definitive BOP Contract.
UAMPS has retained Intermountain Consumers Power Engineering to support and
corroborate the project design and work.
Construction Financing. With regard to construction financing, UAMPS initially
received a proposal for construction financing from Citigroup as a part of the overall plan of
financing for the Project. DAMPS solicited additional proposals from commercial banks
experienced in working with UAMPS and/or renewable energy projects for joint action agencies.
Based on a review of the submitted proposals, the Project Management Committee preliminarily
selected Wells Fargo Bank as the construction lender. Definitive discussions with Wells Fargo
are expected to begin in early August.
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As described herein, DAMPS will be primarily liable for the repayment of the drawings
made under the Construction Loan Agreement to fund the costs of acquisition and construction
of the Facility. While these repayment obligations will constitute "Bonds" for purposes of the
Power Sales Contracts, it is expected that the amounts drawn under the Construction Loan
Agreement and the interest thereon will be repaid from the proceeds from the sale of the
membership interests in Project Company on the commercial operation date of the Facility. See
"Overview of Project Structure" above.
See also "PART 4. POWER SALES CONTRACTS — Financing" and "PART 5. PROJECT
AGREEMENTS—Construction Loan Agreement"below.
Engineering and Construction of Facility; Schedule. Pursuant to the BOP Contract, the
Contractor will provide generally all construction and engineering and other design professional
services necessary for the acquisition and construction of the Facility, other than the acquisition
of the wind turbine generator sets. Work performed under the BOP Contract is expected to
include, for example, construction of foundations and access roads and assembling of the sets at
the Facility site. The wind turbine generator sets will be purchased pursuant to the Turbine
Supply Agreement.
DAMPS is currently negotiating the Turbine Supply Agreement and the BOP Contract.
Upon execution of the Turbine Supply Agreement, Project Company will make a down payment
to secure the purchase of turbine generator sets or components thereof. Physical construction
under the BOP Contract is expected to begin as early as the late third quarter of calendar year
2010. The commercial operation date of the Facility is estimated to occur by late 2011. Various
factors could affect the proposed construction schedule and completion date of the Facility.
For summaries of the Turbine Supply Agreement and the BOP Contract, see "PART 5.
PROJECT AGREEMENTS"below.
UAMPS' Services Under Development Agreement. DAMPS will be formally engaged to
act as Project Company's agent for the purpose of developing, acquiring and constructing the
Facility and arranging financing for the costs therefor pursuant to the Development Agreement.
As described above, pursuant to the Development Agreement, UAMPS will also agree to be
primarily liable for repayment of all amounts due under the Construction Loan Agreement.
UAMPS may co-sign or otherwise obligate itself for payments due under construction
agreements Project Company enters into for the acquisition and construction of the Facility(e.g.,
the BOP Contract and the Turbine Supply Agreement). See "PART 5. PROJECT AGREEMENTS —
Development Agreement."
For its services rendered pursuant to the Development Agreement, UAMPS may receive a
development fee from Project Company (the "Development Fee"). Any Development Fee
received by UAMPS is expected to be used to reduce the amount of Bonds issued to finance the
Prepayment to be made to Project Company on the commercial operation date of the Facility
pursuant to the Power Purchase Agreement.
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PERMITS AND APPROVALS
Conditional Use Permit. The Bonneville County Planning and Zoning Board approved
DAMPS' application for a conditional use permit for the Facility on February 24, 2009. Upon an
appeal, the Bonneville County Commission met and upheld the Planning and Zoning Board's
approval of the conditional use permit. The permit for conditional use became effective June 4, 2009.
While the executed Leases for the Facility site are sufficient to support 100 MW of wind generation,
additional acreage has been added to the existing Facility area for optimal wind resource development
(e.g., optimal turbine siting and placement). DAMPS intends to request an amendment to the permit
to include the additional Leases sometime in the third quarter of 2010. Such an amendment will not
affect the status of the currently effective permit.
Permits Obtained by the Contractor. A permit from the State of Idaho relating to storm
water discharge from construction activities will need to be obtained, and it is possible certain
building and associated construction permits will be required. The Contractor will obtain all
such permits pursuant to the BOP Contract.
BLM Permit. Delivery of turbine components via truck may require the widening of a
Bonneville County road that is on the Bureau of Land Management's land. The widening may
exceed Bonneville County's road easement on the BLM land. In such case, a permit under the
National Environmental Policy Act will be required, which will require a minimal environmental
assessment. DAMPS does not expect the procurement of this permit to affect the current
schedule for construction of the Facility described above.
BPA Approval. BPA's approval will be required pursuant to the Interconnection
Agreement before any interconnection construction can be commenced. UAMPS presently
expects such approval will be received by October 2010. No permits from BPA will be required
in connection with the Interconnection Agreement.
FAA and DOD Permits. Upon siting of specific turbine locations, UAMPS will apply to the
Federal Aviation Administration for clearance and obstruction permits and will apply to the
Department of Defense for permits for radar interference. Due to the long queue with these agencies,
permits may not be granted for up to six months. UAMPS has contracted with Aviation Systems and
INL for services to navigate, mitigate and expedite permitting with these agencies. Preliminary
consultation indicates the permits should be granted based on current agency practices.
Wildlife Permits. UAMPS has engaged and continues consultation with the U.S. Fish and
Wildlife Service ("USFW') with respect to species protected by the Endangered Species Act, the
Migratory Bird Treaty Act and the Bald and Golden Eagle Protection Act. USFW has provided input
with respect to biological surveys and survey methodologies. USFW also participates in the siting of
project specific infrastructure,providing input with respect to known biological constraints.
OPERATION OF THE FACILITY;TURBINE SERVICE AND MAINTENANCE
Project Company may contract with third parties for the general operation and
maintenance of the Facility. Project Company will enter into an Operation and Maintenance
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Agreement to provide for such services, as described below under "PART 5. PROJECT
AGREEMENTS."
Project Company may contract with third parties for service and maintenance of the wind
turbine generator sets at the Facility. It is presently expected that the turbine supplier under the
Turbine Supply Agreement will initially provide such services pursuant to the Service and
Maintenance Agreement, described below under"PART 5. PROJECT AGREEMENTS."
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PART 3: TRANSMISSION OF PROJECT POWER AND ENERGY
The Participants will take delivery of output from the Facility over two or three separately
owned transmission systems which will require transmission service contracts with each
transmission provider. Transmission costs are estimated using current rates and are subject to
change.
TRANSMISSION FROM HORSE BUTTE INTERCONNECTION TO GOSHEN AND LOWER VALLEY ENERGY
The Facility will be interconnected to the BPA transmission system at BPA's Goshen-
Palisades 115 kV transmission line which crosses the Facility site. All of the Participants, except
possibly Lower Valley Energy and Idaho Falls Power, will require transmission service from
BPA to the Goshen Substation, which is approximately 19 miles from the interconnection point.
This transmission service is contemplated to be a "point-to-point" service schedule under BPA's
current Open Access Transmission Tariff("OATT"), although the service may be eligible for a
"use-of-facilities" service schedule.
Lower Valley Energy is directly connected to the Goshen-Palisades transmission line at
Palisades, which is approximately 32 miles from the Facility interconnection point, and may be
able to transmit the power and energy attributable to its Entitlement Share on its current network
transmission agreement with BPA. Idaho Falls Power also has a network transmission contract
with BPA which may be utilized for the transmission of the power and energy attributable to its
Entitlement Share.
The Goshen-Palisades 115 kV transmission line interconnects at Palisades with the
United States Bureau of Reclamation's Palisades Power Plant, Lower Valley Energy and forms a
looped system with BPA's Palisades-Swan Valley-Goshen 115 kV transmission line. At
Goshen,both lines interconnect with PacifiCorp and Idaho Power Company.
In order to acquire the transmission rights on the BPA transmission system, UAMPS has
submitted a transmission request with BPA for long term firm point-to-point transmission rights
from the Facility interconnection to Goshen.
Point-to-point transmission service from BPA will be at the BPA OATT rate. Currently
the rate is $1.298 per kW-month, but because of the short distance to Goshen, DAMPS rate will
be approximately 70% of the tariff rate or $0.91 per kW-month plus $0.203 per kW-month for
ancillary services on a take-or-pay basis (or about $4.63 per MWh at a capacity factor of 32.91%
for the Facility generation) and line losses of 1.9%. UAMPS will pursue changing the service to
use-of-facilities service if it is economic to do so.
The Goshen-Palisades 115 kV transmission line is planned to be upgraded to 161 kV in
2027. DAMPS will be responsible to provide for this upgrade to a higher voltage at the Facility
interconnection through installing a duel voltage transformer at the interconnection point.
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TRANSMISSION FROM GOSHEN TO POINTS OF DELIVERY ON THE PACIFICORP SYSTEM
DAMPS has a network transmission agreement with PacifiCorp that will provide network
service to Participants connected to the PacifiCorp transmission system in Utah and Southeast
Idaho. All such Participants are currently points of delivery on the network transmission
agreement.
Transmission service charges on the DAMPS network transmission agreement is
currently $1.718 per kW-month and 4.48% line losses. Currently, UAMPS charges $3.25 per
MWh to its members to cover this transmission service. There will be an additional charge for
spinning and non-spinning reserve ancillary services. Currently, UAMPS charges $0.279 per
MWh for these services.
TRANSMISSION FROM GOSHEN TO POINTS OF DELIVERY ON THE SIERRA PACIFIC SYSTEM
One Participant, Truckee-Donner Public Utility District ("TDPUD"), is interconnected
on the Sierra Pacific transmission system and has a network transmission agreement with Gonder
as the point of receipt. It is anticipated that UAMPS system resources will be utilized through
displacement mechanisms to deliver the power and energy attributable to this Participant's
Entitlement Share and no changes to the transmission service are contemplated. The
displacement mechanism would be charged to the Participant at the current UAMPS network
transmission charge of$3.25 per MWh plus the ancillary service charge of$0.279.
Another Participant, Plumas-Sierra REC, is interconnected on the Sierra Pacific
transmission system and has a network transmission agreement with Gonder as the point of
receipt. As with TDPUD, it is anticipated that UAMPS system resources will be utilized through
displacement mechanisms to deliver the power and energy attributable to this Participant's
Entitlement Share and no changes to the transmission service are contemplated. The
displacement mechanism and the ancillary service charge would be the same as for TDPUD.
If displacement mechanisms are not available, two point-to-point transmission contracts
will need to be executed—one on the PacifiCorp system from Goshen to Mona, Utah and one on
the LADWP system from Mona to Gonder. At the forecasted capacity factor of 32.91% the
charges under each contract will be:
• Point-to-point transmission service with ancillary services on under the
PacifiCorp OATT at the Facility's capacity factor will be $8.43 per MWh plus
4.48% transmission losses.
• Point-to-point transmission service with ancillary services on under the LADWP
OATT at the Facility's capacity factor will be $16.52 per MWh plus 4.8%
transmission losses.
Both of these point-to-point transmission costs will be lower if, as anticipated, other resources
are transmitted under these agreements that raise the usage or capacity factor of the transmission
capacity.
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Network transmission service charges on the Sierra Pacific transmission system under
TDPUD's network transmission agreement are currently $2.84 per kW-month. Currently, the
approximate MWh cost is $5.40 per MWh and 2.34% line losses at TDPUD's load factor.
Point-to-point transmission service charges on the Sierra Pacific transmission system
under Plumas-Sierra's point-to-point transmission agreement are currently $2.84 per kW-month.
Currently, the approximate MWh cost is $12.74 per MWh and 2.34% line losses at the capacity
factor of 32.91%. It is anticipated that other resources would be using this point-to-point
transmission capacity raising the capacity factor and thus reducing the MWh cost to as low as
$4.81 per MWh.
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PART 4: THE POWER SALES CONTRACTS
The following provides a summary description the basic terms and provisions of the
Power Sales Contracts between UAMPS and its the Participants. This Executive Summary does
not summarize or describe all of the provisions of the Power Sales Contracts, and Participants
should refer to the complete Power Sales Contract for further details.
THE PROJECT
As discussed above, until such time as UAMPS elects to exercise its option to purchase
the Facility under the Power Purchase Agreement, the Facility will be owned by Project
Company. Consequently, the Project will initially consist of UAMPS' rights and obligations
under the Project Agreements. During the development and construction of the Facility, the
operative Project Agreements are the Development Agreement, the Construction Loan
Agreement, the BOP Contract and other agreements related to the acquisition and construction of
the Facility.
Upon any election by UAMPS to exercise its option to purchase the Facility under the
Power Purchase Agreement, UAMPS will own the Facility and the "Project" will consist mainly
of the Facility and any Additional Facilities
A summary description of the properties that comprise the Facility will be attached to the
Power Sales Contract as EXHIBIT I.
SALE OF OUTPUT AND ENVIRONMENTAL ATTRIBUTES
UAMPS will sell all of the capability and Environmental Attributes from the Project to
the Participants pursuant to the Power Sales Contracts.
"Environmental Attributes" are defined in the Power Sales Contracts and are commonly
referred to as "renewable energy credits" ("RECs") or "green tags." Participants that do not use
the Environmental Attributes must notify UAMPS, in which event UAMPS will use
commercially reasonable efforts to sell or market the Environmental Attributes for the
Participant's benefit. The Project Management Committee may establish standards and
procedures for such disposition of Environmental Attributes. Other Participants have a right of
first refusal with respect to such Environmental Attributes, and the Project Management
Committee may determine the price at which such Environmental Attributes are sold to the other
Participants. The sale of Environmental Attributes may be considered the sale of bond-financed
property and therefore may be subject to limitations and restrictions necessary to maintain the tax
status of Bonds.
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TERM
Each of the Power Sales Contracts shall become effective upon the receipt by UAMPS of
executed Power Sales Contracts and authorizing resolutions from Participants that have
requested Entitlement Shares totaling 50,000 kW or more of capacity
Each of the Power Sales Contracts will have a term that extends to the later of(a) the
final payment of the Bonds and (b) the date the Facility and any Additional Facilities are taken
out of service.
The Project Management Committee may determine to terminate the Power Sales
Contracts early, in the event it determines to terminate the Development Agreement. Such early
termination may not occur, however, until the later of(i) the date on which UAMPS shall have
made a final accounting for, and shall have recovered from the Participants, all costs of the
Project previously incurred and (ii) the date on which the principal of and interest on all Bonds
have been fully paid or provision for such payment has been made.
ENTITLEMENT SHARES
Under the Power Sales Contracts, each Participant will acquire an Entitlement Share in
the Project.
Each Entitlement Share is a contractual right to receive a specific percentage of the
Project capability and Environmental Attributes and a contractual obligation to take or pay for a
corresponding percentage of all of the costs of the development, ownership, financing and
operation of the Project.
Each Participant's Entitlement Share may be adjusted initially to account for the fact that
the individual turbine generator sets that will comprise the Facility may not be capable of
producing a number of kW of electricity that is an even multiplier of 50,000 kW. (For example,
the Vestas turbine generator sets have an expected capability 1,800 kW, and 56 whole turbine
generator sets would have 100,800 kW of capacity. As set forth in each Participant's authorizing
resolution, each Entitlement Share may be rounded by the Project Management Committee
pursuant to the Power Sales Contracts to provide for a whole number of turbine generator sets to
be installed at the Facility site.
FINANCING
Construction financing for the Project will be provided under the Construction Loan
Agreement entered into by DAMPS pursuant to which UAMPS will agree to be primarily liable
for all amounts borrowed by Project Company thereunder. As described above, it is expected
that proceeds from the sale of the membership interests in Project Company on the commercial
operation date will be used to repay the drawings made under the Construction Loan Agreement
and the interest thereon. In the event that proceeds are not available from the sale of Project
Company membership interests or other sources to repay amounts due under the Construction
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Loan Agreement, UAMPS will utilize any term-out provisions under the Construction Loan
Agreement or will exercise reasonable efforts to issue Bonds to repay such amounts. In either
case, the amounts payable by UAMPS under the Construction Loan Agreements or such Bonds
will constitute Debt Service Costs payable by the Participants in amounts proportionate to their
respective Debt Service Shares.
Upon the Commercial Operation Date of the Facility, UAMPS will issue Bonds to make
the Prepayment. The amount of Bonds issued will be equal to the amount necessary to finance
the Prepayment after taking into account any Capital Contributions (described below) and the
application of any Development Fee to the Prepayment amount. In the event that it elects to
exercise its purchase option under the Power Purchase Agreement, UAMPS may issue Bonds in
order to finance the purchase price (net of any Capital Contributions made by the Participants at
the time), all as directed by the Project Management Committee.
Additional Bonds may be issued as parity or subordinated obligations to pay future costs
of the Project. Refunding Bonds may be issued by DAMPS to reduce debt service costs or to
achieve other objectives.
The Project Management Committee will determine at the time of issuing additional
Bonds whether to make a capital contribution option available to Participants.
Pursuant to the applicable provisions of the Internal Revenue Code 1986, as amended,
UAMPS may incur additional interest expense in respect of its non-municipal Participants or
certain other Participants whose legal status or use of output requires the issuance of certain
taxable Bonds in connection with the Prepayment. The Project Management Committee will
determine whether such costs will be allocated to such Participants or shared by all Participants.
SECURITY FOR BONDS
The Bonds will be secured by a pledge of all of the revenues produced by the operation of
the Project, including the amounts paid under the Power Sales Contracts. Neither the Facility nor
the Project will be mortgaged to secure the Bonds, although Project Company will mortgage the
Facility to secure the performance of its obligations to UAMPS under the Power Purchase
Agreement.
The Bonds will be special obligations of DAMPS and will have no claim on any of the
revenues or assets of UAMPS from its other projects. The Bonds will not be debts or obligations
of the Participants.
PARTICIPANT'S OPTION TO MAKE A CAPITAL CONTRIBUTION
Prior to UAMPS' issuance of Bonds to finance the cost of the Prepayment, each
Participant will be given the option in its Power Sales Contract to make a Capital Contribution to
pay its proportionate share of the Prepayment that would otherwise be payable by the Participant
under the Power Sales Contract (or, if the Participant's Capital Contribution is funded with
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retained earnings or other legally available moneys not derived from any borrowing by the
Participant, to pay a portion of such costs). Capital Contributions will be used by UAMPS to pay
a portion of the Prepayment, and UAMPS will not issue Bonds to finance the portion of the
Prepayment that is paid from Capital Contributions.
Not less than 90 days prior to the date on which it is required to make the Prepayment,
DAMPS will provide written notice to the Participants of their right to elect to make a Capital
Contribution and the amount of their Capital Contributions. Each Participant that has elected to
make a Capital Contribution will be required to deposit the payment in a segregated escrow
account established under the financing documents for the Bonds.
The Project Management Committee will determine whether to make a capital
contribution option available to the Participants in connection with the issuance of additional
Bonds from time to time, including any issuance of Bonds in connection with DAMPS' exercise
of its purchase option under the Power Purchase Agreement to acquire the Facility.
PRICE
The Entitlement Share will be sold at cost. Each Participant will pay its proportionate
share (the ratio of its Entitlement Share to the sum of all Entitlement Shares) of all of the costs of
the Project, including:
• amounts payable by UAMPS under the Power Purchase Agreement,
including operation and maintenance expenses of the Facility and the cost of energy
produced by the Facility each year in excess of the P99 Annual Output, as described
below;
• other operation and maintenance expenses of the Project;
• Debt Service Costs with respect to Bonds issued to finance the costs of the
Project, including the Prepayment (except that Participants that make a Capital
Contribution to DAMPS will have no obligation to pay for Debt Service Costs on Bonds
issued to finance the Prepayment to the extent of such Capital Contribution, except in the
event of a reallocation of a defaulting Participant's Entitlement Share pursuant to the
terms of the Power Sales Contracts) and any obligations of UAMPS under the
Construction Loan Agreement;
• Any amounts payable by UAMPS pursuant to the construction agreements
it will co-sign as described below under"PART 5. PROJECT AGREEMENTS;"
• the cost of acquiring of the Facility upon DAMPS' election to exercise its
purchase option under the Power Purchase Agreement;
• costs of capital improvements, replacements and additions to the Facility
approved by the Project Management Committee; and
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• All other costs incurred in connection with the Project.
Certain items of cost may be either financed with the issuance of Bonds or expensed, as
determined by the Project Management Committee, however, there shall be no duplication of any
item of cost.
Costs will be allocated proportionately to all Entitlement Shares, except that Debt Service
Costs on the Bonds issued to finance the Prepayment will be allocated only to those Participants
that do not make Capital Contributions. Additionally, each Participant will pay all Transmission
Costs allocable to the transmission of Project output from the Point of Delivery to the
Participant's system. The amounts paid by the Participants will be sufficient to enable UAMPS
to pay all of the costs of the ownership, operation and financing of the Project.
BILLINGS AND PAYMENTS
Billings and payments initially will be made monthly. UAMPS may establish a different
standard period of time as the billing period. All payments will be made on a"take-or-pay"basis
(i.e., "Come Hell or High Water") and are not subject to counterclaim, offset or reduction for any
reason.
The payment obligations of Participants under the Power Sales Contracts are several and
not joint.
PROJECT MANAGEMENT COMMITTEE
The Project Management Committee will be established under the Power Sales Contracts
and the UAMPS Joint Action Agreement. The Project Management Committee will function in
the same manner as the project management committees for UAMPS' other projects. The
Project Management Committee will recommend decisions on the Project to the UAMPS Board
of Directors.
ANNUAL OPERATING BUDGETS
UAMPS will develop, and the Project Management Committee and the Board of
Directors will approve, annual budgets for the Project that will cover all of the costs of the
Project (see "PRICE" above). The annual budget will be the basis for the monthly billings and
payments for the Project. The annual operating may be revised from time to time as necessary to
reflect the actual costs of the Project.
PROJECT OUTPUT
Each Participant will assign the output attributable to its Entitlement Share to the
UAMPS Power Pool for operating and scheduling purposes.
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Project output will be delivered to the Participants at the point of physical interconnection
of the Facility with the transmission facilities that are connected to the Facility. Each Participant
will be responsible for, and shall pay all costs of, the transmission of Project output from the
Point of Delivery to the Participant's System Point of Receipt and the distribution and delivery of
output from its System Point of Receipt to its customers.
CAPITAL REPLACEMENTS,IMPROVEMENTS AND ADDITIONS
The Project Management Committee will have authority to approve capital replacements,
improvements and additions to the Facility and to determine whether to expense or capitalize and
finance the cost of capital items. In the event that such items are financed by the issuance of
Bonds, the Project Management Committee will determine whether to make a capital
contribution option available to the Participants.
ADDITIONAL GENERATING UNITS AS SEPARATE PHASES
UAMPS may from time to time recommend the acquisition and construction of additional
generating units as a separate phase of the Project. Any such separate phase and any
amendments or supplements to the Project Agreements in connection therewith must be
approved by the Project Management Committee. Participants may elect to participate in such a
separate phase under an agreement separate from the Power Sales Contract. Separate phases will
not constitute a part of the Project and Participants not electing to participate in such separate
phases will not be responsible to pay the costs of such separate phases.
DEFAULTS AND REMEDIES; STEP-UP OF NON-DEFAULTING PARTICIPANTS
Upon a default by any Participant, DAMPS is authorized to exercise various remedies in
order to ensure that it will have sufficient revenues to meet its obligations as owner of the Project
and to pay the debt service on the Bonds. Among other things, DAMPS is authorized to
terminate a defaulting Participant's Entitlement Share and to make a mandatory reallocation of
such Entitlement Share to the other Participants.
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PART 5: THE PROJECT AGREEMENTS
The following provides a summary description of the basic terms and provisions of the
principal Project Agreements providing for the acquisition, construction and operation of the
Facility and the Project.
As described in further detail below, UAMPS will co-sign certain of the Project
Agreements relating to the initial construction of the Facility, and will thereby agree to be fully
and primarily liable for all payment obligations under such agreements. UAMPS will assist
Project Company in the negotiation and development of other agreements that are necessary or
desirable in connection with the Facility, several of which agreements may not be fully effective
until commercial operation of the Facility, and which would not be co-signed by UAMPS.
Except for the Power Purchase Agreement, most of the Project Agreements are presently
in draft form and subject to continuing negotiations by the parties. Approval by the Project
Management Committee of each Project Agreement is required before its execution. This
Executive Summary does not summarize or describe all of the provisions of the Project
Agreements and Participants should refer to the copies of such agreements, as available, or
contact UAMPS for further details.
THE DEVELOPMENT AGREEMENT
UAMPS will enter into the Development Agreement with Project Company in order to
provide for the acquisition and construction of the Facility.
Under the Development Agreement, UAMPS, acting as Project Company's agent, will
develop, acquire and construct the Facility and arrange financing for the development,
acquisition and construction costs of the Facility. UAMPS will take all other actions necessary
to prepare the Facility for commercial operation and to vest in Project Company title to all of the
assets comprising the Facility.
In addition, in order to facilitate the timely and cost-effective construction of the Facility,
under the Development Agreement UAMPS will agree to be primarily liable for the repayment of
all amounts borrowed under the Construction Loan Agreement, together with interest thereon and
other amounts due thereunder, and may co-sign or otherwise obligate itself for payments due
under other construction agreements entered into by Project Company for the initial acquisition
and construction of the Facility, including the Turbine Supply Agreement and the BOP Contract.
Project Company will agree to limit its activities to those that are necessary or desirable
with respect to the Project, will not engage in any unrelated businesses and will take no
significant actions without the approval and direction of UAMPS.
The Development Agreement will provide for the Development Fee, if any, to be paid to
UAMPS upon the completion of construction and commercial operation of the Facility.
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The obligations of UAMPS under the Development Agreement and the construction
agreements that it will co-sign will be special and limited obligations of UAMPS payable solely
from the amounts payable to it under the Power Sales Contracts, with no recourse to any other
assets or revenues of DAMPS. In the case of the Construction Loan Agreement, UAMPS may
pledge, assign and grant a security interest in the amounts payable to it under the Power Sales
Contracts in favor of the construction lender.
THE POWER PURCHASE AGREEMENT
UAMPS will enter into a Power Purchase Agreement with Project Company providing
for, among other things, the purchase by UAMPS of all of the capability of the Facility and
related Environmental Attributes from Project Company. All such capability and Environmental
Attributes will be sold to the Participants under the Power Sales Contracts as described above.
Term. The Power Purchase Agreement will become effective upon the execution thereof
by UAMPS and Project Company and will remain in effect for a period of twenty years following
the commercial operation date of the Facility. The Power Purchase Agreement may terminate
early upon the occurrence of specified events, including any Acquisition Date, as described
below.
The Facility. The Power Purchase Agreement provides that Project Company shall
construct, own, operate and maintain the Facility. Pursuant to the Development Agreement
described below, UAMPS will act as Project Company's agent and will arrange for construction
financing and construction of the Facility.
Pursuant to the terms of the Power Purchase Agreement, the commercial operation date
of the Facility will occur upon satisfaction of various conditions, including that (i) the Facility
and all interconnection facilities are capable of generating, transmitting, transforming and
delivering all of the energy from the Facility to the Point of Delivery, (ii) the wind turbines have
been commissioned by the manufacturer, (iii) if required by the Interconnection Agreement, BPA
has issued written confirmation that the interconnection facilities are complete and operational
and (iv) all required insurance and necessary permits, consents, licenses, approvals and
authorizations for the operation of the Facility have been obtained.
Common Facilities and Interconnection Facilities. As part of the Facility, Project
Company will construct or acquire certain site common facilities (including, for example, certain
transmission facilities, access roads, SCADA systems and operation, maintenance and storage
buildings) and interconnection facilities providing for the interconnection of the Facility with
BPA's transmission grid. These facilities will be usable in connection with capacity in addition
to the Facility capacity. As owner of these facilities, Project Company could sell interests in or
rights to use such facilities to other entities. Project Company must, however, from and after the
first date on which DAMPS may exercise its purchase option, maintain sufficient interests in the
site common facilities to support the Facility's entire capacity and any capacity of additional
phases of the Project as described above. Project Company must also, at all times, maintain
sufficient interests in the interconnection facilities to support and deliver to the Point of Delivery,
the Facility's entire capacity. All such sales are subject to satisfaction of several other
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conditions, as described in the Power Purchase Agreement. In the case of such a proposed sale,
UAMPS will have a right of first refusal.
Prepayment for P99 Energy. Upon the commercial operation date of the Facility,
DAMPS will make the Prepayment for all of the P99 energy output expected to be generated by
the Facility over the 20-year term of the Power Purchase Agreement. The expected P99 energy
output of the Facility in each year is referred to herein as the "P99 Annual Output" and will be
set forth in a written certification of an independent wind expert of recognized standing prior to
the commercial operation date of the Facility. The amount of the Prepayment will be a dollar
amount per MWh (to be specified in the Power Purchase Agreement) multiplied by P99 Annual
Output multiplied by 20.
In the event the Power Purchase Agreement is terminated early for any reason, the Power
Purchase Agreement will require Project Company to return to UAMPS a scheduled amount in
respect of the P99 energy prepaid for that was not delivered at the time of early termination,
which amount is expected to be sufficient to repay any outstanding Bonds issued to finance the
Prepayment.
Makeup of Shortfall Energy. In the event the Facility fails to produce the P99 Annual
Output in any year, Project Company will be required to make up such a shortfall with additional
energy deliveries from the Facility. In the event such a shortfall exists for three consecutive
years, Project Company must provide other "replacement energy," including associated
Environmental Attributes, if so requested by UAMPS within the time specified in the Power
Purchase Agreement. If Project Company does not so provide "replacement energy," it must
reimburse UAMPS for any replacement energy purchased by DAMPS. Additionally, UAMPS
has the right to "step in" and operate the Facility as agent for Project Company. DAMPS will be
reimbursed by Project Company for expenses incurred in such operation.
Notwithstanding the foregoing, if Project Company's failure to deliver P99 Annual
Output in any year is caused by events of force majeure, DAMPS shall have no right to
replacement energy or reimbursement therefor or step-in rights if Project Company has
commenced, and is proceeding diligently to complete remediation of the Facility.
Upon early termination of the Power Purchase Agreement as described below, Project
Company must pay DAMPS for all such shortfall energy at the same price per MWh that
DAMPS paid in connection with the Prepayment.
Purchase of Additional Energy. DAMPS will be obligated to purchase energy generated
by the Facility annually in excess of the P99 Annual Output. DAMPS will pay a dollar amount
per MWh (to be specified in the Power Purchase Agreement) for additional energy up to the
"P50" output level (the annual amount of energy predicted to be generated by the Facility with a
probability of exceedance of 50%). For any additional energy above the P50 level, UAMPS will
pay a separate dollar amount per MWh(to be specified in the Power Purchase Agreement).
Point of Delivery; Scheduling. Project Company will deliver Facility output to, and will
transfer title and risk of loss of such output to DAMPS at, the Point of Delivery. Project
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Company will read electric meters at the end of each month to determine the amount of energy
delivered to DAMPS. UAMPS will have all necessary access to the electric metering devices.
Project Company will be responsible for scheduling the forecast of energy to the Point of
Delivery on a non-binding basis, in accordance with the terms of the Interconnection Agreement
and any dispatch and scheduling procedures that may be updated from time to time by DAMPS.
Project Company may be required to curtail energy to the Point of Delivery under certain
circumstances (including, for example, conditions on transmission systems downstream from the
Point of Delivery), in which case Project Company may receive a credit for such energy against
the P99 Annual Output.
Other Amounts to be Paid by UAMPS. In addition to paying for additional energy as
described above, UAMPS must pay Project Company for operation and maintenance expenses
related to the Facility, including taxes and operating insurance, and for Environmental Attributes
(to the extent Environmental Attributes are not paid for by UAMPS as part of the Prepayment, as
described above).
Billing. Project Company will bill UAMPS monthly for all amounts owed, and UAMPS
must pay each monthly bill within 20 days of the date of the invoice. Late unpaid balances
accrue interest. Bills in dispute must nonetheless be paid when due and UAMPS must provide
written notice of the dispute. The Power Purchase Agreement provides for a resolution process
in the event of such a dispute and the pursuit of available legal remedies in the event such dispute
resolution is unsuccessful within a specified timeframe.
Changes in Law Resulting in Increased Costs. It is possible that during the term of the
Power Purchase Agreement, a change in law will occur that results in additional costs to Project
Company in connection with its operation of the Facility such that continued operation would be
infeasible or uneconomic. Such a change in law could include, for example, changes in legal
requirements relating to safety equipment for wind turbines.
In such a case, Project Company will have the right to submit a request to UAMPS for an
additional payment per MWh of delivered energy, which request must include, among other
things, a description of the change in law and such revenue and cost projections as are necessary
to enable UAMPS to verify the proposed cost increase. If UAMPS (acting upon the approval of
the Project Management Committee) determines to agree to such request, it must so indicate
within 90 days of the date of the request, and the parties will then amend the Power Purchase
Agreement. If UAMPS does not respond within 90 days, Project Company may terminate the
Power Purchase Agreement.
Performance Security. In order to secure Project Company's performance of its
obligations under the Power Purchase Agreement, Project Company will grant to UAMPS a
perfected first lien and priority security interest in the Facility, subject only to certain permitted
encumbrances as specified in the Power Purchase Agreement. The amount of the security
interest will be equal to the early termination payment and any shortfall energy payment, as
described below. In the event of a foreclosure by UAMPS on the security interest, Project
Company must pay all reasonable legal expenses of UAMPS.
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UAMPS'Purchase Option. DAMPS will have the option at various times to purchase the
Facility. It is currently anticipated that the purchase option dates will be the sixth, seventh and
tenth anniversaries of the commercial operation date of the Facility and the stated expiration date
of the Power Purchase Agreement. The purchase price of the Facility will be its then-current fair
market value as determined by UAMPS and Project Company, taking into account certain
considerations specified in the Power Purchase Agreement, or, if the parties cannot so agree, as
determined by an independent appraiser. For three months after provision of such notice,
UAMPS will have the right to conduct due diligence with respect to the Facility.
Ownership of the Facility will be transferred to UAMPS on an "as-is" basis, free and
clear of all liens and encumbrances, except permitted encumbrances.
Defaults and Remedies. Failure by either party to pay amounts due or to perform any
covenants or agreements or material obligations under the Power Purchase Agreement (subject to
written notice of the failure and specified cure periods), bankruptcy of either party, and any
inaccuracy in representations or warranties made by either party in the Power Purchase
Agreement each constitutes an event of default under the Power Purchase Agreement.
If UAMPS defaults by reason of nonpayment, Project Company may suspend service
under the Power Purchase Agreement. If Project Company defaults for any reason, UAMPS may
exercise its step-in rights and operate the Facility, as described above. UAMPS also may
foreclose on its security interest. Either party may terminate the Power Purchase Agreement
and/or bring court action if the other defaults for any reason. Any such action taken by either
party must be executed in the manner and pursuant to the procedures therefor provided in the
Power Purchase Agreement.
Restrictions on Entitlement Share Assignments. UAMPS will agree in the Power
Purchase Agreement that it will not agree to non-recourse assignments of Entitlement Shares
under the Power Sales Contracts that would materially and adversely affect the overall credit
composition of the Participant group without a rating confirmation or the consent of Project
Company.
Early Termination. The Power Purchase Agreement may terminate early by reason of
UAMPS' exercise of its purchase option or foreclosure on its security interest in the Facility,
UAMPS' determination not to pay for increased costs as a result of a change in law or upon
default by UAMPS or Project Company.
In the event of early termination of the Power Purchase Agreement due to UAMPS'
determination not to pay for increased costs as a result of a change in law or upon default by
either party, Project Company must pay to UAMPS an "early termination payment." While the
early termination payment will be set forth on a schedule attached to the Power Purchase
Agreement and is expected to be at least sufficient to repay any outstanding Bonds issued to
finance the Prepayment. The amount will be determined prior to execution of the Power
Purchase Agreement. In addition, Project Company must pay UAMPS a "shortfall energy
payment" for any shortfall energy existing at the time of the termination of the Power Purchase
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Agreement. The payment will be the same price per MWh that UAMPS paid in connection with
the Prepayment.
The obligations of Project Company to make the early termination and shortfall energy
payments are required to be satisfied solely from Project Company's assets and none of Project
Company's affiliates will have any liability with respect to such payments.
THE CONSTRUCTION LOAN AGREEMENT
Project Company and UAMPS will enter into the Construction Loan Agreement with the
construction lender in order to obtain financing for the initial acquisition and construction of the
Facility. DAMPS will be primarily liable for the repayment of all amounts borrowed under the
Construction Loan Agreement, together with interest thereon and other amounts due thereunder.
Wells Fargo Bank has been preliminarily selected as the construction lender. It is
presently expected that amounts will be drawn under the Construction Loan Agreement from
time to time as necessary to pay costs in connection with the acquisition and construction of the
Facility. All amounts borrowed under the Construction Loan Agreement, together with interest
thereon and other amounts due thereunder, will be due and payable upon completion of
construction and commercial operation of the Facility.
THE TURBINE SUPPLY AGREEMENT
Project Company will enter into the Turbine Supply Agreement with a turbine supplier
(expected to be Vestas-American Wind Technology, Inc., a California corporation) for the
acquisition of the wind turbines for the Facility. UAMPS will co-sign the Turbine Supply
Agreement and accordingly, will agree to be primarily liable for and to fully perform all of
Project Company's obligations thereunder.
Scope of Turbine Supplier's Work; Warranty. The turbine supplier will provide the wind
turbines for the Facility and may perform the necessary work to commission the wind turbines in
accordance with specifications and the other requirements of the Turbine Supply Agreement. A
detailed description of the scope of work will be included in the exhibits to the Turbine Supply
Agreement. The turbine supplier will perform its work in accordance with a specified project
schedule, including milestones and guaranteed delivery and commissioning completion dates,
and will provide notification with respect to achievement milestones and mechanical completion
of the turbines. Such dates are dependent on Project Company and DAMPS timely completing
the construction of the remainder of the Facility. The Turbine Supply Agreement sets forth the
turbine supplier's administrative responsibilities, including communication and coordination
with Project Company and DAMPS.
The turbine supplier agrees to commence manufacture of the turbines within thirty days
of the from the date of the Turbine Supply Agreement. The turbine supplier's parent company
will execute a guaranty in favor of Project Company and DAMPS guarantying the performance
of the turbine supplier.
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The turbine supplier will provide certain warranties with respect to the wind turbines for a
period of two years from the date of commissioning of the wind turbines.
Contract Price And Payment. Project Company and DAMPS, as co-signor, will be
responsible to pay a specified dollar amount to the turbine supplier as the contract price, which is
further detailed in the exhibits to the Turbine Supply Agreement. The contract price will be paid
in accordance with a payment schedule, which includes a down payment, progress payments,
payments on delivery and payments upon commissioning. Final payment will be due upon final
completion of the turbines (which is achieved, among other conditions, when all of the wind
turbines have achieved commissioning), subject to holdbacks for punch list items. All amounts
paid by Project Company are nonrefundable, including the down payment. Project Company and
UAMPS are responsible for paying all sales taxes related to the turbines and equipment. To
secure payment, the turbine supplier will be granted a security interest in the turbine equipment.
Default and Termination. Project Company will have the right to terminate the Turbine
Supply Agreement in the event of a default on the part of the turbine supplier that is not cured
within the applicable cure period, provided that no right to terminate is permitted for any default
for which liquidated damages from the turbine supplier are provided under the Turbine Supply
Agreement, as described therein. The turbine supplier will have the right to terminate the
Turbine Supply Agreement in the event of a default on the part of Project Company that is not
cured within the applicable cure period.
Miscellaneous Provisions. The Turbine Supply Agreement contains provisions, among
others, relating to indemnification, liquidated damages payable by the turbine supplier in the
event of certain failures to perform (including limitations thereon), limitations on liability of the
turbine supplier, dispute resolution, restrictions on assignment of the Turbine Supply Agreement
to third parties and governing law.
THE BALANCE OF PLANT CONTRACT
Project Company will enter into the BOP Contract with the Contractor to provide for
generally all of the acquisition and construction of the Facility other than the acquisition of the
wind turbines. As with the Turbine Supply Agreement and other agreements, UAMPS will co-
sign the BOP Contract and will accordingly agree to be primarily liable for and to fully perform
all of Project Company's obligations thereunder.
Scope of Contractor's Work; Warranty. Under the BOP Contract, the Contractor will
perform generally all necessary and incidental work to bring the wind turbine generators to full
completion and operation, such that the Facility may be operated as a fully-integrated wind-
powered electricity generating plant, including, among other things, (i) design (as necessary) and
installation of all required temporary and permanent civil infrastructure, including all necessary
access roads, crane paths, laydown areas and crane pads and staging areas, (ii) design and
construction of wind turbine generator foundations, (iii) design and installation of a collection
system, (iv) transportation of the wind turbine generator components to the Facility site (if
necessary) and receiving, inspection and erection of the wind turbines, (v) construction of a new
34.5 kV/115-161 kV substation and transmission line and completion of interconnection of the
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Facility with BPA's grid and (vi) quality control and various testing in connection with the
foregoing (excluding testing and commissioning of the wind turbines, which is expected to be
performed by the turbine supplier or other third party).
The work will be completed in accordance with a project schedule with specified
milestones and completion dates. The Contractor may be required to pay damages in the event
an item is not completed by its guaranteed completion date, and the amount of such damages
may be limited.
It is expected that the Contractor will provide a two-year warranty with respect to the
work to be performed under the BOP Contract, with certain exclusions.
Contract Price. Project Company and DAMPS will be responsible to pay the Contractor
a specified single dollar amount, to be set forth in the BOP Contract. Such contract price may be
adjusted to account for, possibly among other things, scope of work changes from time to time
under the BOP Contract. In addition to the contract price, Project Company and UAMPS may be
responsible to pay other costs, such as interest on delayed payments, sales tax reimbursement,
costs associated with indemnification and a termination payment in the event the BOP Contract
is terminated by Project Company and DAMPS without cause, as authorized by the BOP
Contract.
The contract price will be payable from time to time (presently expected to be twice
monthly) as provided in the BOP Contract. A percentage of each payment may be withheld as
retainage, as security for the performance of Contractor's obligations under the BOP Contract.
The retained amounts will be fully released upon final completion of all work under the BOP
Contract by the Contractor.
Default and Termination. The BOP Contract specifies events that constitute a default by
either party, including, with respect to the Contractor, a material breach by it under the BOP
Contract and, with respect to Project Company or DAMPS, the failure to make payment when
due (in each case, subject to specified cure periods). In the event of a Contractor default, Project
Company and UAMPS may terminate the BOP Contract and take possession and use of various
equipment located at the job site for the purpose of completing the remaining work, subject to the
terms and conditions provided in the BOP Contract. In the event of a default by Project
Company or DAMPS, the Contractor may suspend service and/or terminate the BOP Contract, in
which case the Contractor shall be entitled to a termination payment as specified in the BOP
Contract.
It is possible the BOP Contract may also terminate as a consequence of, among other
things, an event of force majeure, upon satisfaction of the procedures and payment of a
termination payment as described in the BOP Contract.
Miscellaneous Provisions. The BOP Contract contains provisions, among others,relating
to indemnification, liquidated damages payable by the Contractor(including limitations thereon),
limitations on liability of the Contractor, limitations on assignment of the BOP Contract and
dispute resolution.
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THE OPERATION AND MAINTENANCE AGREEMENT
Project Company will enter into the Operation and Maintenance Agreement to provide
for the general day-to-day operation and management of the Facility, including, for example,
operation and control of a gathering system and SCADA equipment.
The Operation and Maintenance Agreement will not become effective the commercial
operation date of the Facility. DAMPS will not co-sign the Operation and Maintenance
Agreement.
THE SERVICE AND MAINTENANCE AGREEMENT
It is expected that Project Company will enter into the Service and Maintenance
Agreement with the turbine supplier in connection with the commissioning of the wind turbines.
The term of the Service and Maintenance Agreement is presently expected to be approximately
six years. DAMPS will not co-sign the Service and Maintenance Agreement.
Scope of Turbine Supplier's Work. During the term of the Service and Maintenance
Agreement, the turbine supplier will perform all maintenance, diagnostics, repair and
replacement services on the wind turbines, including all scheduled maintenance in accordance
with a specified maintenance calendar. During the warranty period, the turbine supplier will
perform all diagnostic services on the wind turbines not included within scheduled maintenance
that the turbine supplier determines are necessary to perform its obligations under the Turbine
Supply Agreement. The Service and Maintenance Agreement also specifies the turbine
supplier's administrative responsibilities, including communication with and reporting to Project
Company.
The Service and Maintenance Agreement contains certain exclusions from the scheduled
and unscheduled maintenance required to be performed by the turbine supplier and specifies
circumstances under which turbine supplier is not liable for any loss or damage to turbine
equipment or any reduced availability of the turbines.
During the term of the Service and Maintenance Agreement, Project Company will not
procure any services or parts for the serviced turbine equipment from any person other than the
turbine supplier and will not itself perform any services on the serviced equipment without the
express written consent of the turbine supplier.
Fees. Project Company will pay the turbine supplier specified initial and interim service
fees for the period from the commissioning of the first wind turbine until the final
commissioning of all wind turbines, after which Project Company will pay the turbine supplier a
fee per wind turbine per year. This annual fee will be adjusted on each year for inflation and will
be paid in quarterly installments. Project Company will pay all service sales taxes.
Default and Termination. Project Company will have the right to terminate the Service
and Maintenance Agreement in the event of a default on the part of the turbine supplier,
including a default under the Turbine Supply Agreement. The turbine supplier will have the right
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to terminate the Service and Maintenance Agreement in the event of a default on the part of
Project Company, including a default under the Turbine Supply Agreement.
Miscellaneous Provisions. The Service and Maintenance Agreement contains provisions
relating to, among other things, indemnification, limitations on liability of the turbine supplier
and remedies, dispute resolution, restrictions on assignment of the Service and Maintenance
Agreement to third parties and governing law.
THE SITE LEASES
UAMPS has obtained all Leases and other property rights and interests necessary for the
construction and operation of the Facility. DAMPS will assign or sublease to Project Company
all or specified portions of the Leases previously executed by it covering the Facility site. As
described above, while the current Lease are sufficient for the development of 100 MW of wind
generation, additional acreage has been added to the Facility site for optimal wind resource
development(e.g., optimal turbine siting and placement).
THE INTERCONNECTION AGREEMENT
The Interconnection Agreement will be the standard form Large Generator
Interconnection Agreement from BPA's OATT. UAMPS expects that either Project Company
will enter into the Interconnection Agreement with BPA or that DAMPS will enter into the
Interconnection Agreement and will assign its interests thereunder to Project Company. If,
contrary to such expectations, DAMPS enters into the Interconnection Agreement but does not
assign its rights to Project Company, DAMPS will provide an interconnection and transmission
services agreement to Project Company upon such terms and provisions as are approved by the
Project Management Committee.
UAMPS or Project Company, as applicable, will be responsible to pay for all facilities
and equipment needed for the interconnection and its own O&M expenses. The Interconnection
Agreement will last for a term of at least 10 years, or longer at DAMPS' or Project Company's
request, and will be automatically renewed for one-year periods thereafter, subject to termination
as provided in the Interconnection Agreement.
THE TRANSMISSION AGREEMENTS
The Transmission Agreements will consist of (i) a standard point-to-point service
schedule from BPA's OATT (as described above, Idaho Falls Power and Lower Valley Energy
may be able to utilize their BPA network transmission agreements) and (ii) the Amended and
Restated Transmission Service and Operating Agreement between DAMPS and PacifiCorp.
DAMPS presently expects that the point-to-point service schedule will last for a term of
20 to 25 years. The rates under the service schedule will be BPA's rates, as adjusted annually,
and will be payable monthly.
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The Amended and Restated Transmission Service and Operating Agreement is a
perpetual contract for as long UAMPS is in existence. Rates payable under the agreement are
PacifiCorp's rates as adjusted from time to time, and DAMPS is billed monthly.
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