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HomeMy WebLinkAbout15 UAMPS Master Agreement Agenda Item # 15 TRUCKEE DONNER PuLAc Utility District ACTION To: Board of Directors From: Stephen Hollabaugh Date: December 07, 2011 Subject: Consideration of a Natural Gas Generation Master Agreement with UAMPS 1. WHY THIS MATTER IS BEFORE THE BOARD This matter is before the Board for possible approval of the Natural Gas Master Agreement between Utah Associated Municipal Power Systems (DAMPS) and Truckee Donner Public Utility District (District) and a resolution authorizing natural gas transactions. 2. HISTORY The District has been in the Payson Project since 2008 and the purchase and hedging for the natural gas has been included within the Payson Project. The purchase and sale of natural gas is being "moved" into the Natural Gas Project while the operation of the Payson Project will stay with that project. 3. NEW INFORMATION With the move of the natural gas procurement for the Payson Project moving to the Natural Gas Project, the District and DAMPS still has a need to manage its natural gas procurement for this plant. The District desires to become a Participating Member in DAMPS Natural Gas Project by executing the Natural Gas Project Master Agreement (Attachment 1) for the purpose of efficiently acquiring, selling, transporting, storing and hedging natural gas. The District also desires to have the additional capability with respect to natural gas purchases. • Ability to purchase and sell natural gas in connection with the operation of our electric distribution system (System) • Flexibility to engage in a program to store or hedge natural gas for the purpose of managing the cost of natural gas for our System A resolution (Attachment 2) authorizing natural gas transactions has been prepared to authorize the DAMPS representative and enter into one or more confirmations with the following limitations: • The amount of gas purchased under all Confirmations may not exceed 280,000 MMBTU in any calendar year. • The term of any transaction under a Confirmation may not exceed ten years unless such Confirmation is for the purchase of prepaid gas in which case the term may not exceed thirty years. • At the time of execution, the expected average price for gas purchases in a calendar year shall not exceed $10/MMBTU. For purpose of limitation, a forward curve as of the date of any Confirmation shall be used to approximate the price of any index based transaction. The District counsel has reviewed the "Natural Gas Project Master Agreement and the resolution Authorizing Natural Gas Transactions". 4. FISCAL IMPACT Entering into the Natural Gas Master Agreement and approving the resolution Authorizing Natural Gas Transactions will enable the District to manage the costs of natural gas for the District's system. This agreement will enable the District to manage in an effective, efficient and fiscally responsible manner. 5. RECOMMENDATION a) Approve and authorize the President of the Board to execute the Natural Gas Project Master Agreement between Utah Associated Municipal Power Systems and Truckee Donner Public Utility District b) Approve and authorize the President of the Board to sign Resolution No. 2011-XX Authorizing Natural Gas Transactions. Stephen Hollabaugh Michael D. Holley Assistant General Manager General Mana er g Attachment 1 NATURAL GAS PROJECT MASTER AGREEMENT BETWEEN UTAH ASSOCIATED MUNICIPAL POWER SYSTEMS AND TRUCKEE DONNER PUBLIC UTILITY DISTRICT This Natural Gas Project Master Agreement is made and entered into as of December 1, 2011, between Utah Associated Municipal Power Systems, a political subdivision of the State of Utah("UAMPS"), and Truckee Donner Public Utility District, a public utility district of the State of California, and a member of UAMPS ("Participant"). UAMPS and Participant are sometimes hereafter referred to collectively as the "Parties"and individually as "Party." RECITALS: WHEREAS,UAMPS is organized as an Energy Services Interlocal Entity under the Utah Interlocal Cooperation Act, Utah Code Ann. §§ 11-13-101 et seq., and pursuant to its Amended and Restated Agreement for Joint and Cooperative Action, as amended from time to time(the "Joint Action Agreement") for certain purposes, including acquiring reliable and economic supplies of energy for the benefit of the public agencies that are parties to the Joint Action Agreement(the "Member(s)")• and WHEREAS,UAMPS, through its Board of Directors,has approved the formation of a separate Project of UAMPS that will possess all the rights,powers,privileges, exemptions, and obligations afforded UAMPS' Projects under the Joint Action Agreement and that will be known as the Natural Gas Project(the "Project"); and WHEREAS, UAMPS and Participant now enter into this Natural Gas Project Master Agreement to set forth terms and conditions upon which UAMPS and the Participant will purchase, sell, transport,hedge or store natural gas ("Gas') as provided herein. NOW,THEREFORE, in consideration of the mutual promises contained herein and other good and valuable consideration,the receipt and sufficiency of which is hereby acknowledged,the Parties agree as follows: Section 1. Definition and Explanations of Terms. Capitalized terms used in this Natural Gas Project Master Agreement shall have the meanings assigned to such terms in the recitals set out above, in the Joint Action Agreement,in any Transaction Confirmation, in any Credit Support Document, and the following terms shall have the following meanings: "Additional Contract Charges"means a pro-rata share of the following costs: (i) the costs to develop or execute a Related Gas Agreement that have not been capitalized; (ii)the costs to terminate a Related Gas Agreement that are not payable from the proceeds of such termination; (iii)any extraordinary costs incurred in connection with a Related Gas Agreement; (iv) any charges specified in Section 3(h) incurred in connection with a Related Gas Agreement; and(v) any other specific charges that may be set forth in a Transaction Confirmation. "Agreement"means this Natural Gas Project Master Agreement and all Transaction Confirmations or Credit Support Documents entered into by UAMPS and the Participant and any amendments thereto. "Annual Budget"means the annual budget prepared for the Project as recommended by UAMPS and approved by the Project Management Committee and the Board. The Annual Budget shall coincide with the Fiscal Year. "Board"means the Board of Directors of UAMPS or such other governing body of DAMPS as may be established from time to time pursuant to the Joint Action Agreement. "Business Day"means any day except(i) Saturday, Sunday,and any day on which banks located in the State of Utah or the State of New York are required or authorized by law or other governmental action to close and(ii)any day on which the New York Mercantile Exchange or the trustee for any revenue bonds sold by UAMPS to acquire Prepaid Gas is closed. "Buyer"means the Party that has agreed to receive Gas at the Delivery Point. "Buyer Receipt Failure"means Buyer's failure on any day, for any reason other than Force Majeure, to meet its obligation to take delivery from Seller at the applicable Delivery Point of the quantity of Gas delivered,tendered for delivery, or deemed delivered to such Delivery Point on such day. "Contract Price"means the amount expressed in U.S. Dollars per MMBtu to be paid by Buyer to Seller for(i)the purchase of Gas,which shall include all applicable delivery charges, or(ii)capacity to store or transport Gas, as agreed to by the Parties in a Transaction Confirmation. "Cover Standard"means that if there is a Seller Delivery Failure pursuant to this Agreement, then the Buyer shall use commercially reasonable efforts to obtain Gas at a price reasonable for the delivery or production area, as applicable,consistent with: the amount of notice provided by the Seller; the immediacy of the Buyer's Gas consumption needs; the quantities involved; and the anticipated length of failure by the Seller. 2 "Credit Support Document"means any document between the Parties that describes the arrangements for meeting any Credit Support Obligation, such as an irrevocable standby letter of credit, a margin agreement, a security interest in an asset, a performance bond, guaranty, or other good and sufficient security of a continuing nature. "Credit Support Obligation(s)"shall mean any obligation(s)to provide or establish credit support for or on behalf of a Party to this Agreement that may be required pursuant to a Transaction Confirmation or by UAMPS pursuant to Section 15(b). "Daily Contract Quantity" shall mean the quantity of Gas to be delivered and taken as agreed to by the Parties in a Transaction. "Delivery Point"means,with respect to each Transaction, the point of delivery for Gas delivered by Seller to Buyer, as specified as either a primary delivery point or an alternate delivery point in each Transaction Confirmation or the point of delivery specified in a Spot Transaction. "Firm"shall mean that either Party may interrupt its performance without liability only to the extent that such performance is prevented for reasons of Force Majeure. "Fiscal Year"means the fiscal year of DAMPS,which at the time of execution begins on the first day of April and end on the last day of March. "Fixed Administrative Fee"means the fixed amount payable monthly by each Participating Member as determined in the Annual Budget. "Force Majeure" shall have the meaning ascribed in Section 16. "Gas"shall mean natural gas, specifically, any mixture of hydrocarbons and noncombustible gases in a gaseous state consisting primarily of methane. "Gas Purchase Agreement"means an agreement entered into by UAMPS and either a Participating Member or a third party for the purchase of Gas for a period of one month or longer. For purposes of this definition, each transaction confirmation for a period of one month or longer executed by UAMPS under industry standard master agreements shall be considered a separate Gas Purchase Agreement. "Hedge Payment" means any payment due to or from Participant pursuant to a Transaction Confirmation that is related to a Hedge Transaction. "Hedge Transaction"means any transaction related to managing the price of Gas using an industry standard financial contract. Hedge transactions may include, but are not limited to, Gas swaps,basis swaps, caps, floors or collars. 3 1 "Imbalance Charges" shall mean any fees, penalties, costs or charges (in cash or in kind) assessed by a transporter for failure to satisfy the transporter's balance and/or nomination requirements. "Interruptible"shall mean that either Party may interrupt its performance at any time for any reason,whether or not caused by an event of Force Majeure,with no liability. "Market Disruption Event"means with respect to an index,any of the following events: (1)the failure of the index to announce or publish information necessary for determining the applicable index price; (ii)the failure of trading to commence or the permanent discontinuation or material suspension of trading in the relevant options contract or commodity on the exchange or market acting as the index; (iii) the temporary or permanent discontinuance or unavailability of the index; (iv)the temporary or permanent closing of any exchange acting as the index; or(v)a material change in the formula for or the method of determining the applicable index price. "MMBtu"means one million British thermal units,which is equivalent to one dekatherm. "Monthly Gas Charges"means the aggregate of the product of(1)the quantity of Gas sold by UAMPS to Participant pursuant to a Spot Sale, and(ii)the relevant price in accordance with Section 3(d), for each day of a month. "Monthly Gas Proceeds"means the aggregate of the product of(1)the quantity of Gas purchased by UAMPS from Participant pursuant to a Spot Purchase that is not a Remarketing Purchase; and(ii)the relevant price in accordance with Section 3(c), for each day of a month. "Other Gas Agreement"means an agreement entered into by UAMPS to acquire Gas storage or transportation capacity, or Gas reserves, for a period of one month or longer. "Participant Gas Representative(s)"means the officer, employee or other agent of the Participant authorized by the Participant to transact for purposes of this Agreement. "Participating Member(s)"means all Members of UAMPS who have executed a Natural Gas Project Master Agreement in a form substantially similar to this Agreement. "Prepaid Gas"means Gas acquired by UAMPS,pursuant to a Gas Purchase Agreement, an Other Gas Agreement for the acquisition of Gas reserves, or through any other means,which was purchased with the proceeds of revenue bonds. "Prime Rate"means,as of any time,the then current interest rate published in The Wall Street Journal as the prime rate of interest,as it may be adjusted from time to time. 4 "Proceeds Subject to Remediation"means the proceeds of a sale in which DAMPS sells Gas acquired by UAMPS in a Remarketing Purchase for other than a Qualified Use, together with all interest and other investment income on such proceeds which are not to be rebated to the United States of America as required by any bond indenture or Gas Purchase Agreement executed by UAMPS in connection with the acquisition of Prepaid Gas. "Project Management Committee"means the Natural Gas Project Management Committee of DAMPS,which is to provide for the coordinated management of the Project in accordance with the Joint Action Agreement. "Qualified Use"means(i)a use that does not give rise to"private business use" as defined in Section 141 of the Internal Revenue Code and regulations promulgated thereunder; and(ii)a use which, in the opinion of a nationally recognized bond counsel, does not adversely affect the tax-exempt status of any bonds sold to acquire Prepaid Gas. "Related Gas Agreement"means a Gas Purchase Agreement, an agreement related to a Hedge Transaction, or an Other Gas Agreement as specified in a Transaction Confirmation. "Remarketing Price"means the price at which UAMPS resells Gas acquired through a Remarketing Purchase. "Remarketing Proceeds"means for each Remarketing Purchase, the product of (i)the Remarketing Price, and(ii)the quantity of Gas subject to such Remarketing Purchase. "Remarketing Purchase"means a Spot Purchase that involves Prepaid Gas that cannot be used by a Participating Member as more fully described in Section 7(b)(iii). "Remediation Fund"means a certain fund so designated and held by UAMPS and into which DAMPS shall deposit all Proceeds Subject to Remediation. "Remediation Use"means, with respect to Proceeds Subject to Remediation, any of the following: (a)the purchase of Gas with such Proceeds Subject to Remediation and the sale of such Gas for a Qualified Use; or; (c)the application of Proceeds Subject to Remediation to the purchase of electricity in compliance with Treasury Regulation Section 1.148-1(e)(2)(iii)B)(2). "Seller"means the Party that has agreed to deliver Gas to the Delivery Point. "Seller Delivery Failure"means the Seller's failure, for reasons other than Force Majeure, on any day to deliver to the applicable Delivery Point the quantities of Gas required to be delivered to such Delivery Point on such day pursuant to this Agreement. 5 "Spot Price"means unless otherwise determined by the Project Management Committee,the price listed in Gas Daily,under the listing applicable to the geographic location closest in proximity to the Delivery Point for the relevant day;provided, if there is no single price published for such location for such day,but there is published a range of prices,then the Spot Price shall be the average of such high and low prices. If no price or range of prices is published for such day,then the Spot Price shall be the average of the following: (i)the price(determined as stated above) for the first day for which a price or range of prices is published that next precedes the relevant day; and(ii)the price (determined as stated above)for the first day for which a price or range of prices is published that next follows the relevant day. "Spot Purchase"means a purchase of Gas by UAMPS from a Participating Member for a period of less than one month. "Spot Sale"means a sale of Gas by UAMPS to a Participating Member for a period of less than one month. "Spot Transaction"shall mean either a Spot Sale or a Spot Purchase. "Taxes"shall mean any taxes, fees, levies,penalties, licenses or charges imposed by any government authority on or with respect to Gas. "Transaction"means a Gas purchase, sale, storage,transport, or hedge transaction for a specific period in excess of one month between UAMPS and the Participant pursuant to this Agreement and as set forth on a Transaction Confirmation. "Transaction Confirmation"means a written schedule setting forth the specific terms of a Transaction,and the specific Related Gas Agreement to which it relates, which upon execution by the Parties shall be incorporated into this Agreement. "Transaction Fee"means the fee to be paid by each Participating Member for each MMBtu of Gas purchased, sold, transported, stored or hedged by UAMPS as set forth in the Annual Budget. "Uniform System of Accounts"means generally accepted accounting principles in accordance with the FERC Uniform System of Accounts Prescribed for Natural Gas Companies Subject to the Provisions of the Natural Gas Act, as codified in 18 C.F. R. § 201 et seq., as amended or modified from time to time,together with any pronouncements of the Financial Accounting Standards Board or successor agency or body setting forth financial accounting and reporting standards. Section 2. Term and Termination. (a) This Agreement shall be effective on the date first written above and shall remain in full force and effect through the later of(i) the termination date as determined pursuant to Section 2(b); or(ii)the termination date of UAMPS under the Joint Action Agreement. 6 (b) In the event that no Transaction Confirmation is in then in effect, either Party may terminate its purchase or sale obligations under this Agreement by giving written notice to the other Parry at least sixty(60) days prior to the end of DAMPS' Fiscal Year. Such notice shall specify a termination date which,unless otherwise determined by the Project Management Committee, shall be the last day of the Fiscal Year in which the notice is given. Such termination shall not relieve Participant from any Additional Contract Charges attributable to a Transaction that may arise after such termination. The rights of the Parties under Section 11 and Section 15 and the obligations to make payment hereunder shall survive the termination of the Agreement. (c) Upon termination by either Party as described in Section 2(b) above, Participant shall withdraw from the Project pursuant to the terms and conditions of the Joint Action Agreement. (d) The Parties may provide for the early termination of a Transaction Confirmation. A Transaction Confirmation containing an early termination provision will designate the terms under which DAMPS or Participant may terminate a Transaction and the procedures for such termination, including but not limited to any payments to be made in connection with such termination. Such provisions may enable DAMPS to immediately terminate any Transaction Confirmation for failure of Participant to meet its obligations under Section 9(c) hereunder. Section 3. Authorized Transactions;Purchase and Sale of Natural Gas; Hedging; Storage and Transport;Liquidity. (a)UAMPS and Participant agree to sell and deliver,or to receive and purchase,the Daily Contract Quantity for a particular Transaction in accordance with the terms of this Agreement and any Transaction Confirmation. Sales and purchases will be on a Firm or Interruptible basis,as agreed to by the Parties in a Transaction Confirmation. (b) During the term of this Agreement, UAMPS shall enter into one or more Gas Purchase Agreements. Prior to execution of each Gas Purchase Agreement,UAMPS shall notify Participating Members of the negotiation and general terms of all such Gas Purchase Agreements. Participant shall indicate its interest or lack of interest in purchasing Gas obtained by DAMPS pursuant to specific Gas Purchase Agreements as directed by the Project Management Committee. Unless otherwise agreed by DAMPS, prior to execution of a Gas Purchase Agreement,UAMPS shall enter into one or more transaction confirmations as a Seller which in the aggregate(i)have a Daily Contract Quantity that is equal to the Daily Contract Quantity in the Gas Purchase Agreement, and (ii)produce sufficient revenues to enable UAMPS to meet its obligations under the Gas Purchase Agreement. (c) During the term of this Agreement,UAMPS shall make Spot Purchases of Gas offered by a Participating Member. The price paid by UAMPS for Spot Purchases that are not also Remarketing Purchases shall be the Spot Price, or such other price as may be specified in a transaction confirmation. The price paid by UAMPS for Remarketing Purchases shall be the Remarketing Price. 7 (d) During the term of this Agreement,DAMPS shall make Spot Sales of Gas requested for delivery to a Participating Member. UAMPS shall acquire additional Gas as necessary and make all Spot Sales to Participating Members at a price equal to the Spot Price or such other price as may be specified in a transaction confirmation. (e) During the term of this Agreement,UAMPS may sell revenue bonds to finance the purchase of Prepaid Gas. (f) During the term of this Agreement, UAMPS may execute one or more Other Gas Agreements. Participant shall indicate its interest or lack of interest in purchasing storage or transportation capacity or reserves obtained by UAMPS pursuant to specific Other Gas Agreements as directed by the Project Management Committee. Unless otherwise agreed by DAMPS,prior to execution of an Other Gas Agreement, DAMPS shall enter into one or more transaction confirmations as a Seller which in the aggregate(i)have a Daily Contract Quantity, or in the case of the acquisition of Gas reserves an expected daily contract quantity,that is equal to the Daily Contract Quantity, or in the case of the acquisition of Gas reserves an expected daily contract quantity, in the Other Gas Agreement, and(ii)produce sufficient revenues to enable UAMPS to meet its obligations under the Other Gas Agreement. (g) During the term of this Agreement,UAMPS may enter into one or more Hedge Transactions. Participant shall indicate its interest or lack of interest in participating in a Hedge Transaction arranged by DAMPS as directed by the Project Management Committee. Prior to execution of a Hedge Transaction, UAMPS shall enter into one or more transaction confirmations which in the aggregate shall(i)have a Daily Contract Quantity, that is equal to the Daily Contract Quantity, in the Hedge Transaction, and(ii)produce sufficient revenues to enable DAMPS to meet its obligations under the Hedge Transaction. (h) During the term of this Agreement, UAMPS may arrange one or more lines of credit or other financial liquidity arrangement,including but not limited to bank loans or cash reserves, for the benefit of the Project or a Related Gas Agreement. To the extent such arrangement is for the benefit of all Participating Members, any fees or expenses related to such arrangement shall be included in the administrative and general budget for the Project. To the extent such arrangement is for the benefit of a Related Gas Agreement, any fees or expenses related to such arrangement shall be included in the Additional Contract Charges for such Related Gas Agreement. (1) During the term of this Agreement, DAMPS may enter into agreements with Participating Members to provide additional services including but not limited to forecasting, scheduling and load balancing. 0) During the term of this agreement,UAMPS shall use its best efforts to limit Imbalance Charges among Participating Members,by matching Spot Purchases to Spot Sales to the extent possible when scheduling Gas with third parties and/or 8 transporters. UAMPS shall use its discretion in balancing purchases and sales on a daily or monthly basis to minimize Imbalance Charges. Gains and losses from such decisions will accrue to the Project. (k) The Parties shall enter into a Transaction Confirmation for each Transaction. Notwithstanding anything else to the contrary in this Agreement, to the extent that the terms, definitions or operating and scheduling procedures included in a Transaction Confirmation differ from this Agreement,the Transaction Confirmation shall govern. Section 4. Operating and Scheduling Procedures. (a)The Parties shall coordinate their nomination activities,giving sufficient time to meet the deadlines of the affected transporter(s). Each Party shall give the other Party timely prior notice,sufficient to meet the requirements of all transporter(s)involved in the transaction,of the quantities of Gas to be delivered and purchased each Day. Unless otherwise agreed in a Transaction Confirmation, the timing for notices regarding nominations and scheduling for Spot Purchases and Spot Sales shall be as determined by the Project Management Committee. (b) Seller shall have the sole responsibility for transporting the Gas to the Delivery Point(s). Buyer shall have the sole responsibility for transporting the Gas from the Delivery Point(s). (c) Participant agrees that UAMPS shall have no obligation to provide Gas or make storage or transport capacity available to Participant in the event of any force maj eure under a Related Gas Agreement. (d) The Parties shall use commercially reasonable efforts to avoid imposition of any Imbalance Charges. If DAMPS or Participant receives an invoice from a transporter that includes Imbalance Charges,the Parties shall determine the validity as well as the cause of such Imbalance Charges. If the Imbalance Charges were incurred as a result of Buyer's receipt of quantities of Gas greater than or less than the scheduled Gas,then Buyer shall pay for such Imbalance Charges or reimburse Seller for such Imbalance Charges paid by Seller. If the Imbalance Charges were incurred as a result of Seller's delivery of quantities of Gas greater than or less than the scheduled Gas,then Seller shall pay for such Imbalance Charges or reimburse Buyer for such Imbalance Charges paid by Buyer. Section S. Seller Delivery Failure. (a)Upon the occurrence of a Seller Delivery Failure,the Party that first learns of such Seller Delivery Failure shall notify the other Party of such failure promptly by telephone or electronic transmission. Any failure to give such notices, or any delay in giving such notices, shall not affect Buyer's rights under this Section 5. Buyer shall have no obligation to pay for any of the Gas that was not delivered as a result of a Seller Delivery Failure. Unless otherwise specified in a Transaction Confirmation,to the extent that Buyer acquires replacement Gas using the Cover Standard from third parties for Gas not received by Buyer, Seller shall pay Buyer, the positive difference, if any,between the cost of such replacement Gas and either the Contract Price or the applicable price for a Spot Transaction as the case may be. 9 (b) Except with respect to the payment of Imbalance Charges pursuant to Section 4(d),unless otherwise specified in a Transaction Confirmation,the remedy set forth in this Section 5 shall be Buyer's sole and exclusive remedy for any Seller Delivery Failure. Section 6. Buyer Receipt Failure. (a)Upon the occurrence of a Buyer Receipt Failure, the Party that first learns of such Buyer Receipt Failure shall notify the other Party of such failure promptly by telephone or electronic transmission;provided that any failure to give such notice, or any delay in giving such notice, shall not affect Seller's rights under this Section 6. Unless otherwise specified in a Transaction Confirmation,upon a Buyer Receipt Failure with respect to any portion of the Gas the following shall occur: (i) Buyer shall pay the Contract Price,or the applicable price for a Spot Transaction, for the portion of Gas as to which there is a Buyer Receipt Failure; and (ii) To the extent that Seller receives payments from third parties for Gas not received by Buyer, Seller shall credit Buyer with such payments against the payments due from Buyer in any month in an amount up to the Contract Price or the applicable price of a Spot Transaction. (b) Except with respect to the payment of Imbalance Charges pursuant to Section 4(d),unless otherwise specified in a Transaction Confirmation,the remedies set forth in this Section 6 shall be the sole and exclusive remedies of the Parties for any Buyer Receipt Failure. Section 7. Transactions Involving Prepaid Gas. (a) Participant and UAMPS agree to notify the other Party if Gas to be sold by UAMPS to Participant or by Participant to UAMPS is Prepaid Gas prior to confirming such sale. (b) Participant covenants and agrees with UAMPS with respect to Prepaid Gas as follows: (i) Participant will use all Prepaid Gas for a Qualified Use. Participant will provide UAMPS with a certificate as to such use as requested; (ii) Participant will use all Prepaid Gas first in its operations. In the event that Participant has acquired Prepaid Gas in more than one Transaction, Gas used by Participant will be allocated among such Transactions on a pro-rata basis; (iii) At any time that Participant cannot use Prepaid Gas for its own use,Participant will give notice to UAMPS of the need for a Remarketing Purchase in at least the amount of the Prepaid Gas that cannot be used by Participant in accordance with this Agreement, or as otherwise specified in a Transaction Confirmation; 10 (iv) Notwithstanding the mandatory remarketing described in Section 7(b)(iii)above,Participant agrees to pay UAMPS the Contract Price for all Prepaid Gas which shall be deemed to have been delivered to Participant, on a timely basis; and (v) Participant will cooperate with UAMPS to the extent necessary to confirm that Prepaid Gas was used in Participant's operations. (c) During the term of this agreement,UAMPS shall use its best efforts to sell Prepaid Gas acquired pursuant to a Remarketing Purchase for a Qualified Use by matching Remarketing Purchases to Spot Sales to the extent possible on a daily basis. To the extent UAMPS acquires Gas through a Remarketing Purchase and has not resold such Gas through a Spot Sale,UAMPS shall use its best efforts to sell such Gas to third parties for a Qualified Use. To the extent that UAMPS sells such Gas for a Qualified Use, DAMPS shall pay the Remarketing Proceeds to Participant in accordance with Section 8(b). In the event DAMPS ultimately sells such Gas for other than a Qualified Use, the related Proceeds Subject to Remediation shall be retained by DAMPS in the Remediation Fund for the benefit of the Participating Member who initiated the Remarketing Purchase. (d) Unless otherwise determined by the Project Management Committee, UAMPS will use its best efforts to utilize Proceeds Subject to Remediation for a Remediation Use by the end of the month that follows the month in which the Remarketing Purchase that resulted in Proceeds Subject to Remediation occurred. (e) UAMPS shall keep detailed records of all Remarketing Purchases, sales of gas acquired by DAMPS in a Remarketing Purchase, and the Remediation Use to which Proceeds Subject to Remediation are applied. Section 8. Amounts to be Paid by UAMPS and Participant. (a)Participant shall pay UAMPS (i)the Contract Price for all Gas delivered by, or deemed delivered by, UAMPS, or capacity to store or transport Gas provided by UAMPS,pursuant to a Transaction Confirmation, (ii)Additional Contract Charges,(iii)Monthly Gas Charges, (iv)Imbalance Charges, (v) any charges required to be made by Participant pursuant to Section 5 or Section 6, (vi) any Hedge Payment due from Participant, and(vii)the Fixed Administrative Fee, and(viii)the Transaction Fee. (b) UAMPS shall pay Participant(i)the Contract Price for all Gas delivered by Participant,pursuant to a Transaction Confirmation in which UAMPS is the Buyer, (ii) Monthly Gas Proceeds, (iii) Imbalance Charges, (iv) any charges required to be made by UAMPS pursuant to Section 5 or Section 6, (v)Remarketing Proceeds that are not Proceeds Subject to Remediation, (vi) amounts released from the Remediation Fund that were held for the benefit of the Participant pursuant to Section 7(c)and have been applied to a Remediation Use pursuant to Section 7(d), and(vii) any Hedge Payment due to Participant. 11 Section 9. Billing Period, Billing and Payment. (a) Unless otherwise specified in a Transaction Confirmation,the billing period to be used for the preparation, calculation, and billing of the amounts payable hereunder shall be a calendar month. 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 UAMPS, the Project Management Committee,may,at any time, adopt another standard period of time as the billing period for charges billed under Sections 8(a)(ii), 8(a)(vii), or 8(a)(viii). Any change in the billing period shall be made in the Annual Budget and shall not be effective for at least 15 days after the mailing of notice of such change in the billing period to Participant. (b) On or before the 251h day of each billing period beginning with the first billing period following the effective date of this Agreement,UAMPS shall render to Participant a billing statement showing(1)the estimated amount payable by Participant pursuant to Section 8(a) for such billing period, (ii)the estimated amount payable by UAMPS pursuant to Section 8(b), and(iii)any, adjustments or reconciliations payable by or credited to Participant. For clarity, the Parties shall pay estimated amounts for all contracted Gas based on the assumption that Gas or transport capacity is scheduled and delivered in accordance with any Transaction Confirmation. UAMPS shall use its best efforts to include the actual amount and price of all Spot Purchases and Spot Sales that occur prior to the 25th day of each billing period in each monthly invoice. UAMPS may estimate,based on Participant's recent activity,the amount and price of Spot Purchases and Spot Sales for the remainder of the billing period. (c) UAMPS shall reconcile all estimated quantities and prices on each invoice with the actual quantities and prices and the Participant shall receive a bill or credit, as applicable,to reflect such reconciliations pursuant to clause(b)of this paragraph (9). (d) Unless otherwise specified in a Transaction Confirmation,payments required to be paid pursuant to Section 8 by UAMPS and Participant shall be netted and the net amount shall be due and payable to the Party who is owed at the office of such Party, or such other address as UAMPS or Participant shall designate in writing, on the 151h day following the date on which the billing statement was rendered or at such other time as may be established by UAMPS pursuant to Section 9(a) above. If said due date is not a Business Day,payment shall be due on the next Business Day. If Participant shall fail to make any payment when due,UAMPS shall immediately provide notice of such failure to Participant. The Parties acknowledge that Transactions associated with Prepaid Gas may require separate payments to minimize credit costs. (e) If payment in full is not made on or before the close of business on the due date, UAMPS or Participant shall pay interest on the unpaid amount due for each day overdue. Unless otherwise specified in a Transaction Confirmation, interest shall accrue at a rate equal to the lesser of(1)the Prime Rate,plus two percent(2%)per annum; or(ii) the maximum rate lawfully payable by UAMPS or the Participant. 12 (f} In the event of a dispute as to any portion of any billing statement,the Participant shall nevertheless pay the full amount of the invoice when due and shall give written notice of the dispute to DAMPS not later than the 151h 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 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 Board)of the correct amount,any difference between such correct amount and such full amount shall be accounted for in the billing statement next submitted to Participant after such determination. Interest on such overpayment or underpayment shall accrue at the rate for the applicable month published by the Utah Public Treasurer's Investment Fund. (g) The obligation of Participant to make the payments under this Section 9 for amounts payable by Participant pursuant to Section 8 or this Section 9 is a several obligation and not a joint obligation with those of any other Participating Member. The obligation of Participant to make the payments under this Section 9 shall constitute an obligation of Participant and an operating expense of the Participant's electric system, Gas system, or combined utility system("Utility")payable solely from the revenues and other available funds of the Utility. The obligations of Participant to make such payments shall not be subject to any reduction,whether by offset, counterclaim, or otherwise,and further shall not be conditioned upon the performance by UAMPS under any other agreement or instrument between UAMPS and the Participant. (h) The obligation of UAMPS to make the payments under this Section 9 for amounts payable by UAMPS pursuant to Section 8 or this Section 9 shall constitute an obligation of the Project payable solely from the revenues and other available funds of the Project. Section 10. Annual Budget;Accounting. (a) On or before the beginning of each Fiscal Year,UAMPS shall prepare and mail to Participant the Annual Budget. Unless otherwise directed by the Project Management Committee, in the preparation of the Annual Budget,UAMPS shall apply the net gains and/or losses accrued to the Project as an offset or addition as the case may be to the administrative and general charges included in the Annual Budget. Participant shall,to the extent and in the manner deemed appropriate by the Participant, incorporate the amounts shown on the Annual Budget in its annual budgetary process for Participant's Utility. (b) At the end of each quarter during each Fiscal Year and at such other times as it shall deem desirable, UAMPS shall review the Annual Budget. 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 Fiscal Year there are or are expected to be extraordinary receipts, credits or expenditures of costs substantially affecting the Project, UAMPS shall prepare and mail to Participant a revised Annual 13 Budget,as 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. (c) UAMPS will keep accurate records and accounts relating to the Project in accordance with 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 DAMPS 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 of national reputation, experienced in public finance and electric utility accounting,to be employed by UAMPS. A copy of each annual audit, including all written comments and recommendations of such accountants, approved by the Board shall be furnished by UAMPS to Participant not later than 180 days after the end of each Fiscal Year. Section 11. Review and Audit. Either Party, at its sole expense, shall have the right, at all reasonable times, to review and audit the books,records and documents of the other Party directly pertaining to the billings required to administer this Agreement and any Related Gas Agreement. All information obtained by either Party's representatives in examining the other Party's applicable records to verify such billings shall not be disclosed to third parties except as required by law. Prior written notice of any such disclosure shall be provided to the audited Party. Section 12: Quality and Measurement. All Gas delivered by UAMPS or Participant shall meet the pressure, quality, and heat content requirements of the transporter. The unit of quantity measurement for purposes of this Agreement shall be one MMBtu dry. Measurement of Gas quantities hereunder shall be in accordance with the established procedures of the transporter. Section 13. Taxes. Unless otherwise specified in a Transaction Confirmation, Seller shall pay or cause to be paid any Taxes on or with respect to the Gas prior to the Delivery Point(s). Participant shall pay or cause to be paid any Taxes on or with respect to the Gas at the Delivery Point(s)and all Taxes after the Delivery Point(s). If a Party is required to remit or pay Taxes that are the other Party's responsibility hereunder,the Party responsible for such Taxes shall promptly reimburse the other Party for such Taxes. Any Party entitled to an exemption from any such Taxes or charges shall furnish the other Party any necessary documentation thereof. Section 14. Title. Unless otherwise specifically agreed, title to the Gas shall pass from Seller to Buyer at the Delivery Point(s). Seller shall have responsibility for and assume any liability with respect to the Gas prior to its delivery to Buyer at the specified Delivery Point(s). Buyer shall have responsibility for and any liability with respect to said Gas after its delivery to Buyer at the Delivery Point(s). 14 Section 15. Financial Security. (a) To the extent that DAMPS, or a party to a Gas Purchase Agreement with DAMPS,requires financial security, UAMPS may include a Credit Support Obligation in a Transaction Confirmation. (b) If DAMPS has reasonable grounds based on its own determination for insecurity regarding the performance of any obligation under this Agreement by Participant (including, without limitation, the occurrence of a material change in the creditworthiness of Participant), UAMPS may provide Participant with a written notice imposing a Credit Support Obligation on Participant. The amount of such Credit Support Obligation shall be determined by UAMPS in a commercially reasonable manner. Upon receipt of such notice, Participant shall deliver cash or a Credit Support Document which satisfies such Credit Support Obligation within five(5)Business Days. Section 16. Force Majeure. (a) Except with regard to a Party's obligation to make payment(s) hereunder, neither Party shall be liable to the other for failure to perform an obligation under this agreement,to the extent such failure was caused by Force Majeure. (b) The term "Force Majeure" as employed herein means any cause not reasonably within the control of the Party claiming suspension,including,but not be limited to, the following: (i)physical events such as acts of God, landslides, lightning, earthquakes, fires, storms or storm warnings, such as hurricanes, which result in evacuation of the affected area, floods, washouts, explosions, breakage or accident or necessity of repairs to machinery or equipment or lines of pipe; (ii)weather related events affecting an entire geographic region, such as low temperatures which cause freezing or failure of wells or lines of pipe; (iii) interruption and/or curtailment of Firm transportation and/or storage by transporters; (iv) acts of others such as strikes, lockouts or other industrial disturbances, riots, sabotage, insurrections, or wars; and (v) governmental actions such as necessity for compliance with any court order, law, statute, ordinance, regulation, or policy having the effect of law promulgated by a governmental authority having jurisdiction. (c) Neither Party shall be entitled to the benefit of Force Majeure to the extent performance is affected by any or all of the following circumstances: (i) the curtailment of Interruptible or secondary Firm transportation unless primary, in-path, Firm transportation is also curtailed; (ii) the Party claiming excuse failed to remedy the condition and to resume the performance of such covenants or obligations with reasonable dispatch; or (iii) economic hardship, to include, without limitation, UAMPS' ability to sell Gas at a higher or more advantageous price than the Contract Price, Participant's ability to purchase Gas at a lower or more advantageous price than the Contract Price, or a regulatory agency disallowing, in whole or in part, the pass-through of costs resulting from this Agreement; (iv) the loss of Participant's market(s) or Participant's inability to use or resell Gas purchased hereunder, except, in either case, as provided in Section 16(b); or (v) the loss or failure of DAMPS' Gas supply or depletion of reserves, except, in either case, as provided in Section 16(b). The Party claiming Force Majeure shall not be excused from its responsibility for Imbalance Charges. 15 (d) Notwithstanding anything to the contrary herein, the Parties agree that the settlement of strikes, lockouts or other industrial disturbances shall be within the sole discretion of the Party experiencing such disturbance. (e) The Party whose performance is prevented by Force Majeure must provide notice to the other Party. Initial notice may be given orally; however,written notice with reasonably full particulars of the event or occurrence is required as soon as reasonably possible. Upon providing written notice to the other Parry, the affected Party will be relieved of its obligation, from the onset of the Force Majeure event, to make or accept delivery of Gas, as applicable, to the extent and for the duration of Force Majeure, and neither Party shall be deemed to have failed in such obligations to the other during such occurrence or event. (f) Notwithstanding the provisions of this Section 16,the Parties may agree to alternative Force Majeure provisions in a Transaction Confirmation. (g) Any gains or losses experienced by DAMPS as a result of Force Majeure shall accrue to the Project. Section 17. Separate Agreement. This Agreement does not modify any existing or future rights, obligations,performances, or procedures of UAMPS or Participant related to Participant's membership in UAMPS except as specifically agreed herein. Section 18. Representations and Warranties. (a)Each Party represents and warrants to the other that(i)it possesses all legal power and authority necessary on its part to enter into this Agreement, including all Transaction Confirmations and Credit Support Documents and to perform its obligations hereunder and thereunder; and(ii)this Agreement has been duly authorized, executed and delivered and constitutes a legal, valid, and binding obligation,enforceable in accordance with its terms. Upon the request of the other Party, each Party agrees that it will provide such certificates and legal opinions as may be reasonably necessary to confirm the foregoing representations and warranties to third parties. (b)Participant represents that the attached resolution, executive order or other authorizing document duly authorizes its Participant Gas Representative(s)to enter into each Transaction, Spot Purchase or Spot Sale. Section 19. Waiver. A waiver at any time by a Party of its rights with respect to a default under or breach of this Agreement,or with respect to any other matter arising in connection with this Agreement, shall not be deemed a waiver with respect to any subsequent default or breach. No delay, short of the statute of limitations, in asserting or enforcing any right hereunder shall be deemed a waiver of such right. 16 Section 20. Assignment. Participant shall not assign or transfer this Agreement or any of its rights or obligations hereunder without the written consent of DAMPS, which consent may be withheld at DAMPS'sole discretion. Section 21. Relationship of Parties. (a) This Agreement is not intended to create,nor shall it be deemed to create, any relationship between DAMPS and Participant other than that of independent parties contracting with one another for the purpose of effectuating the provisions of this Agreement. (b) The covenants, obligations, liabilities, rights and benefits of Participant under this Agreement are individual and not joint and several,or collective,with those of any other Participating Member. This Agreement 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 Participant and any one or more of the Participating Members. No Participating Member shall be or be deemed to be under the control of,nor shall any Participating Member control or be deemed to control, any or all of the other Participating Members or the Participating Members as a group. No Participating Member shall be bound by the actions of any other Participating Member, nor shall any Participating Member be deemed to be the agent of any other Participating Member or have the right to bind any other Participating Member. Section 22. No Recourse. No member of the governing body,nor any officer or employee of DAMPS or Participant shall be individually or personally liable for any payment under this Agreement or be subject to any personal liability or accountability by reason of the execution of this Agreement;provided,however,that this Section shall not relieve any officer or employee of UAMPS or Participant from the performance of any official duty imposed by law or this Agreement. Section 23. Applicable Law. Unless otherwise stated in a Transaction Confirmation,this Agreement is made under and shall be governed by the law of the State of Utah. Section 24. Severability. If any section,paragraph, clause or provision of this Agreement shall be finally adjudicated by a court of competent jurisdiction to be invalid, the remainder of this Agreement 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. Section 25. Entire Agreement. This Agreement constitutes the entire and complete agreement of DAMPS and Participant in respect of the Project and shall not be nor shall it be deemed to be modified, amended or superseded by any other agreement or contract between UAMPS and Participant. Section 26. Notices. Any notice or demand by Participant to UAMPS under this Agreement shall be deemed properly given if mailed postage prepaid and addressed to the contact below at its principal office or if faxed to UAMPS with receipt confirmed, 17 followed by a written copy of such notice or demand mailed to DAMPS postage prepaid. Any notice or demand by UAMPS to Participant under this Agreement shall be deemed properly given if mailed postage prepaid and addressed to the contact specified below or if faxed to Participant's contact with receipt confirmed, followed by a written copy of such notice or demand mailed to Participant's contact postage prepaid. In computing any period of time from such notice, such period shall commence at noon, Salt Lake City time, on the date mailed or faxed, as applicable. The designations of the name and address to which any such notice or demand is directed may be changed at any time and from time to time by either Party giving notice as above provided. Notices: UAMPS Truckee Donner PUD General Manager Board President 155 North 400 West, Suite 480 11570 Donner Pass Road Salt Lake City,Utah 84103 Truckee, CA 96160 Confirmations: DAMPS Truckee Donner PUD Customer Services Administrator UAMPS Representative 155 North 400 West, Suite 480 11570 Donner Pass Road Salt Lake City,Utah 84103 Truckee, CA 96160 Invoices and Payments: DAMPS Truckee Donner PUD 155 North 400 West, Suite 480 11570 Donner Pass Road Salt Lake City,Utah 84103 Truckee, CA 96160 Section 27. Default by Participant. (a)Other than a Seller Delivery Failure or a Buyer Receipt Failure for which an express remedy or measure of damages is provided herein, in the event of a failure of Participant to observe,keep, and perform any of the covenants, agreements, or obligations contained herein,UAMPS may 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 Agreement. (b) In the event of a failure to pay within two (2)Business Days of the day notice is provided by UAMPS pursuant to Section 9(d), any amounts payable by Participant to DAMPS pursuant to this Agreement, DAMPS shall,with written notice to Participant, suspend any further(i)deliveries of Gas to Participant, or(ii)use of any storage or transport capacity by Participant,until all past due amounts are paid in full. During the period of suspension, Participant shall no longer have a vote on the Project Management Committee. 18 (c) In the event Participant fails to maintain any Credit Support Document or cash deposit delivered to meet the Credit Support Obligation included in any Transaction Confirmation, or fails to satisfy any other Credit Support Obligation imposed by UAMPS pursuant to Section 15(b) within the time specified in Section 15(b),DAMPS shall,with written notice to Participant, suspend any further(i)deliveries of Gas to Participant,or (ii)use of any storage or transport capacity by Participant,until all past due amounts are paid in full. During the period of suspension, Participant shall no longer have a vote on the Project Management Committee. Section 28. Default by UAMPS. Other than a Seller Delivery Failure or a Buyer Receipt Failure for which an express remedy or measure of damages is provided herein, in the event of any default by UAMPS under any covenant, agreement,or obligation contained herein, other than UAMPS' obligation to deliver or receive Gas, 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 Participant withhold or offset any payment owed to UAMPS hereunder. Section 29. Market Disruption Event. If a Market Disruption Event has occurred with respect to a price index that is referenced both in this Agreement and a Related Gas Agreement, the replacement price shall be determined in accordance with the market disruption procedures set forth in the Related Gas Agreement. If a Market Disruption Event has occurred with respect to a price index that is not referenced in a Related Gas Agreement, the Parties shall negotiate in good faith to agree on a replacement price(or a method for determining the price at issue), and if the Parties have not so agreed on or before the 141h business day following the first trading day on which the Market Disruption Event occurred or existed, then the replacement price shall be determined by the majority of a panel of three independent dealers in the Gas market or other recognized experts in the field of pricing Gas. The Parties shall each select one dealer or other expert and the two dealers or other experts selected by the Parties shall mutually agree on the third dealer or expert. Section 30. Price Correction. For purposes of determining the relevant prices for any day, if, during the term of this Agreement, the Spot Price published is corrected no later than thirty(30) Days after the original publication and the correction is published or announced by the person responsible for that publication or announcement, either Party may notify the other Party of(i) that correction and (ii) the amount (if any) that is payable as a result of that correction. If a Party gives notice that an amount is so payable, the Party that originally either received or retained such amount shall,not later than three (3) business days after the effectiveness of that notice, pay, subject to any applicable conditions precedent, to the other Party that amount, together with interest for the period from and including the day on which payment originally was (or was not) made to but excluding the day of payment of the refund or payment resulting from that correction. Interest shall accrue at the Prime Rate, determined as of the date the obligation to pay interest arises. 19 Section 31. Amendment. This Agreement shall not be amended, modified, or otherwise altered in any manner that may adversely affect the security for any revenue bonds that UAMPS may have sold to acquire Prepaid Gas. So long as any revenue bonds are outstanding or until adequate provisions for the payment thereof have been made in accordance with the terms of any Gas Purchase Agreement, Other Gas Agreement,or any agreement related to a Hedge Transaction, this Agreement shall not be amended , modified, or otherwise altered in any manner which will reduce the payments pledged as security for such revenue 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 such revenue bonds. Section 32. Financial and Utility Information. Participant shall provide audited financial information and such other information about Participant's utility system as UAMPS may request from time to time. Participant agrees to the use of such information by UAMPS in (i) the negotiation of any Gas Purchase Agreement, Hedge Agreement or Other Gas Agreement, or(ii) any offering document or continuing disclosure prepared in connection with Prepaid Gas. Section 33. Power and Authority of the Project Management Committee: The Project Management Committee shall coordinate all activities of the Project. Representation, and other procedures of the Project Management Committee shall be in accordance with the Joint Action Agreement and DAMPS' Bylaws. Each Participant shall have one vote on the Project Management Committee. For purposes of this Agreement,the Project Management Committee shall have the following specific duties, responsibilities and powers: (a) The Project Management Committee shall determine the procedures by which a Participating Member shall indicate its interest in purchasing Gas, storage or transportation capacity obtained by DAMPS pursuant to specific Gas Purchase Agreements or Other Gas Agreements. The Project Management Committee shall also determine the procedures by which a Participating Member shall indicate its interest in participating in Hedge Transactions arranged by UAMPS pursuant to Other Gas Agreements. (b) The Project Management Committee shall determine a process whereby Participating Members can request DAMPS to negotiate Gas Purchase Agreements, Other Gas Agreements or Hedge Transactions for specified quantities of Gas,delivery locations and terms. (c) The Proj ect Management Committee shall determine a process for the execution and delivery of Transaction Confirmations. Such process may include telephonic or electronic communication confirmed in writing within a specified period. (d) The Proj ect Management Committee shall determine the timing and process for delivery of notices regarding nominations and scheduling for Spot Purchases and Spot Sales including any special provisions for Spot Purchases that are Remarketing 20 Purchases. The Project Management Committee shall not have authority to alter operating and scheduling procedures that are specified in a Transaction Confirmation. (e) The Project Management Committee may designate an alternative daily index for a specific delivery location other than the daily index used in the definition of "Spot Price"which price shall be used for Spot Purchases and Spot Sales. If an index price is specified in a Transaction Confirmation, the Project Management may not designate an alternative daily index for such Transaction. (f) The Project Management Committee shall approve, and recommend to the Board for approval, the Annual Budget. (g) The Project Management Committee shall approve,and recommend to the Board for approval, a revised annual budget in the event the review required by Section 10(b) indicates that the Annual Budget will not substantially correspond with actual receipts or expenditures. (h) The Project Management Committee may direct DAMPS to apply the net gains and/or losses accrued to the Project differently than as provided in Section 10(a). (i) The Proj ect Management Committee may designate a termination date that is prior to the last day of the Fiscal Year in which a termination notice is given in accordance with Section 2(b). (j) The Project Management Committee,may, at any time,adopt a standard period of time other than monthly as the billing period for charges billed under Sections 8(a)(ii), 8(a)(vii), or 8(a)(viii). (k) The Project Management Committee may direct DAMPS to utilize Proceeds Subject to Remediation for a Remediation Use in a timeframe that differs from the direction provided in Section 7(c). (1) The Project Management Committee shall determine the Four Large Participants for purposes of Board Elections on an Annual basis. (m) The Project Management Committee shall approve any letter of credit or financial liquidity arrangement put in place for the benefit of all Participating Members. 21 IN WITNESS WHEREOF,the Parties have caused this Agreement to be executed by their authorized officers as of the date first above written. UTAH ASSOCIATED MUNICIPAL POWER SYSTEMS By: Chair Attest and Countersign: By: Assistant Secretary TRUCKEE DONNER PUBLIC UTILITY DISTRICT By: Board President Attest and Countersign: By: Secretary 22 n Attachment 2 R esolution No. 2011 - XX _771 AUTHORIZING NATURAL GAS TRANSACTIONS WHEREAS, Truckee Donner PUD ("District") desires to purchase and sell natural gas in connection with the operation of its electric distribution system (the "System"); and WHEREAS, the District desires the flexibility to engage in a program to store or hedge natural gas for the purpose of managing the cost of natural gas for the System; and WHEREAS, the District is a Member of the Utah Associated Municipal Power Systems CUAMPS"), a political subdivision of the State of Utah; and WHEREAS, the District desires to become a Participating Member in UAMPS Natural Gas Project for the purpose of efficiently acquiring, selling, transporting, storing, and hedging natural gas; WHEREAS, the District desires to enter into a Natural Gas Project Master Agreement, including, without limitation, related confirmations and credit support annexes or any necessary amendments thereto (the "Agreement") with UAMPS which will provide for (i) long term purchases or sales of natural gas [which may be sourced from gas prepaid with the proceeds of tax-exempt bonds], (ii) short term purchases or sales of natural gas, including remarketing of prepaid gas, (iii) transportation or storage of natural gas, and (iv) hedging of the rate to be paid by the District with respect to a notional amount of natural gas during a stated period (each a "DAMPS Gas Transaction"); and WHEREAS, each UAMPS Gas Transaction will be evidenced by a written confirmation issued under the Natural Gas Project Master Agreement between UAMPS and the District or other electronic means setting forth the terms and conditions of such UAMPS Gas Transaction (a "Confirmation" and collectively, the "Confirmations"); and WHEREAS, the payments to be made by the District to UAMPS under the Natural Gas Project Master Agreement constitute a cost of natural gas and constitute operation and maintenance expenses of the System; NOW THEREFORE, BE IT RESOLVED: 1. The entry by the District into the Natural Gas Project Master Agreement or subsequent amendments thereto including one or more Confirmations is hereby approved. The payments to be made by the District thereunder constitute operation and maintenance expenses of the System. 2. The Board President, and the Secretary (collectively, the "Primary Authorized Officers") are hereby authorized to execute and deliver the Natural Gas Project Master Agreement, on behalf of the District, in such form as the Primary Authorized Officer executing it may 1 Resolution 2011 -XX Attachment 2 approve, such approval to be conclusively evidenced by the execution thereof. 3. The Primary Authorized Officers, and UAMPS Representative (collectively, the "Participant Gas Representatives") are hereby authorized to enter into, from time to time, one or more Confirmation in such form as the Officer executing it may approve, issued under an Agreement in accordance with the following parameters. (a) The notional amount of gas purchased under all Confirmation may not exceed 280,000 MMBtu in any calendar year; (b) The term of any transaction under a Confirmation may not exceed 10 years, unless such Confirmation is for the purchase of Prepaid Gas in which case the term may not exceed (thirty) years; (c) At the time of execution, the expected average price for gas purchases in a calendar year shall not exceed $10/MMBtu. For purposes of this limitation, a forward curve as of the date of any Confirmation shall be used to approximate the price of any index based transaction. PASSED AND ADOPTED by the Board of Directors at a meeting duly called and held within the district on the 7th day of December 2011 by the following roll call vote: AYES: NOES: ABSTAIN: ABSENT: TRUCKEE DONNER PUBLIC UTILITY DISTRICT By , President ATTEST: Michael D. Holley, Clerk of the Board 2 Resolution 2011 -XX