20080616AVU to Staff 25, 69, 71, 73, etc.pdf

Avista Corp.
1411 East Mission P.O. Box 3727
Spokane. Washington 99220-0500
Telephone [phone]
Toll Free 800-727-9170
¡;~ ::D
J.~JiI'STA.
Corp.
zoun JUri l 6 9: 0 !
June 13,2008
Idaho Public Utilities Commission
472 W. Washington St.
Boise, il 83720-0074
Attn: Scott Woodbury
Deputy Attorney General
Re: Production Request of the Commission Staff in Case Nos. AVU-E-08-01 and
A VU-G-08-01
Dear Mr. Woodbury,
Enclosed are an original and three copies of Avista's responses to IPUC Staffs production
requests in the above referenced docket. Included in this mailing are Avista's responses to
production requests 025, 069, 071, 073, 076-077, 089-090, 093, 102, 106, 114, 119, 122 & 133-
134. The electronic versions of the responses were emailed on 6/13/08 and are also being
provided in electronic fonnat on the CDs included in this mailing.
If there are any questions regarding the enclosed information, please contact me at (509) 495-
8620 or via e-mail atpat.ehrbar~avistacorp.com
Sincerely,Q~~
Patrick Ehrbar
Regulatory Analyst
Enclosures
.
A VISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JUSDICTION:
CASE NO:
REQUESTER:
TYE:
REQUEST NO.:
IDAHO
A VU-E-08-01 / A VU-G-08-01
IPUC
Production Request
Staff-025
DATE PREPARD:
WITESS:
RESPONDER:
DEPARTMENT:
TELEPHONE:
6/11/08
Elizabeth Andrews
Adam Munson
Finance
[phone]
REQUEST:
Please provide a list of all leased items in 2007 and to date in 2008. Please separate capital leases
from operating leases and show the dates, terms, amounts and accounts used for each lease.
RESPONSE:
The attached schedule is for leases with terms in excess of 12 months as disclosed in our 2007
10K. There have been no substantial changes in this list since December 2007.
Lease Tenn (MM.YYY)
Annual Payment
Item I Counterparty Lease Type Start End (thousands)Account.Corporate Aircraft Operating 02-2005 02-2010 $949 931000
Airplane hangar Operating 02-2005 02-2010 $24 931000
Dark Fibre Lease - Columbia Fiber . Operating 07-2004 07-2009 $2 931000
Dark Fibre Lease - Columbia Fiber Operating 06-2004 06-2009 $7 931000
Utilty Poles (Joint Use Agreements)Operating various 07-2009 $204 589000
US Department of Lands - FERC Operating 03-2000 03-2045 $65 540000
Post Falls Park Operating n/a 12-2025 $25 537300
BPA Microwave Operating 10-2003 09-2008 $2 935000
BPAOther Operating 12-2002 12-2011 $84 935000
Gearon Building Operating 03-2007 03-2009 $4 935000
Glen Thompson Operating 10-2006 10-2009 $27 935000
Island West Roseberg Operating 03-2007 03-2009 $30 935000
Wilson Brothers Operating 04-2007 04-2009 $22 935000
Idaho Department of Lands Operating 01-2004 12-2013 $2 931000
Lewiston Communication site Operating 04-2004 04-2008 $2 935000
WFL Services Operating 08~2006 08-2009 $16 426400
Steam Plant Square Operating 03-2004 04-2010 $68 935000
Washington state parks Operating 01-2006 12-2009 $5 931000
State of Montana Operating 01-2007 NA $4,000 186360
Gas Servce Vehicles Capital 03-2004 03-2009 $305 227/431
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JURISDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
REQUEST:
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
IDAHO
A VU-E-08-01 1 A VU-G-08-01
IPUC
Production Request
Staff-069
DATE PREPARED:
WITESS:
RESPONDER:
DEP ARTMENT:
TELEPHONE:
06/11/2008
Elizabeth Andrews
Patrick Ehrbar
State & Federal Reg.
[phone]
Please provide a schedule that identifies the' expected Date in Service of all 2008 capital projects
included within the Company's case and identify the source of this information for each project.
Please consider this an ongoing request and provide updates to those dates during the course of this
case. Please provide the printout of this information and a CD in Excel format with formulas
activated.
RESPONSE:
The estimated dates in service for all 2008 capital projects was included as Company witness Mr.
DeFelice's workpapers and provided electronically to staff during their site visit in May. Updates
of actual transfers to plant in service wil be provided as soon as they are available.
.
.
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JUSDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
REQUEST:
A VISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
IDAHO
A VU-E-08-01 1 A VU-G-08-01
IPUC
Production Request
Staff-071
DATE PREPARD:
WITESS:
RESPONDER:
DEPARTMENT:
TELEPHONE:
06/11/2008
Elizabeth Andrews
Patrick Ehrbar
State & Federal Reg.
[phone]
Please provide all materials prepared and used to project the costs of 2008 plant in service by
project contained in this rate case. In addition to printouts, please also provide any materials in
Excel format on CD with formulas activated.
RESPONSE:
By agreement of the parties, materials prepared and used to project the costs of 2008 plant in
service by project contained in this rate case wil be provided to Staff during their site visit during
the week of June 23,2008.
.
.
.
JUSDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
REQUEST:
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
IDAHO
A VU-E-08-01 1 A VU-G-08-01
IPUC
Production Request
Staff-073
DATE PREPARD:
WITSS:
RESPONDER:
DEP ARTMENT:
TELEPHONE:
06/11/08
Bruce Howard
Bruce Howard
Environmental Affairs
[phone]
Please provide detail supporting the costs included in this case for Spokane River Relicensing not
already included in Company witness Howard's workpapers (reference Company witness
Howard, page 9, lines 10 - 22). In addition to printouts, please also provide any materials in Excel
format on CD with formulas activated.
RESPONSE:
Please see Avista's response to Staff-072.
.
.
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A VISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JUISDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
IDAHO
A VU-E-08-01 1 A VU-G-08-01
IPUC
Production Request
Staff-076
REQUEST:
DATE PREPARD:
WITSS:
RESPONDER:
DEP ARTMENT:
TELEPHONE:
06/13/08
Scott Kinney
Jeanne Pluth
State & Federal Reg.
[phone]
Please provide reports, printout and an electronic version on CD in Excel format with formulas
activated, by project, which includes at least the following items: the project number, expenditure
type, vendor description, transaction description, transaction amount, date posted,
document/transaction number, and total amount posted. Please provide a report(s) showing each.
of the following projects:
a. Pine Creek Substation,
b. Beacon-Rathdrum 230 kV,
c. Dry Creek Substation,
d. Beacon-Bell #4 230 kV,
e. Beacon-Bell #5230 kV,
f. Spokane Valley Reinforcement,
g. WoH Telecom,
h. WoH Telecom Line Upgrades,
1. Clark Fork RAS,
J. Palouse Reinforcement, and
k. Lolo Substation.
RESPONSE:
The detailed cost information has been provided as follows:
. Transmission Upgrade Projects (2003) - see "StafCPR_076-Attachment A.xls"
. Transmission Upgrade Projects (2004) - see "StafCPR_076-Attachment B.xls"
. Transmission Upgrade Projects (2005-2007) - see "StafCPR _ 076-Attachment C.xls"
The detail for costs incurred prior to 2003 ($2,972 milion) has not been provided due to the costs
being incurred over multiple years and the small dollar amount in relation to total project costs.
Electronic Excel spreadsheets have been provided in the files. Due to the voluminous nature of
this data, it is being provided in electronic format only.
.
.
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AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JUSDICTION:
CASE NO:
REQUESTER:
TYE:
REQUEST NO.:
DATE PREPARD:
WITSS:
RESPONDER:
DEPARTMENT:
TELEPHONE:
06/13/08
Scott Kinney
Jeanne Pluth
State & Federal Reg.
[phone]
IDAHO
A VU-E-08-01 1 A VU-G-08-01
IPUC
Production Request
Staff-077
REQUEST:
If the project totals of the reports provided in response to the previous request do not equal those
delineated by Company witness Kinney's Direct Testimony, page 17, Table 1, please provide a
reconciliation in Excel format that accounts for any differences. Please include within your response the
reason for any differences.
RESPONSE:
A revised Exhibit No. 10, Schedule 2, page 2 is being submitted with this Production Request (see file
"PR 077 - Exhibit 1 0, Schedule 2, Page 2-REVISED.xls"). It was determined that the original exhibit as
filed had 2 errors, as follows:
Spokane Valley Reinforcement Project - 2004 Annual Costs were shown as $8.359 milion. Actual
costs were $6.220 milion.
Lolo Substation Project - $251,000 of costs were listed as 2003 expenditure. Actual costs were
incured in 2004.
The revised total cost of the Transmission Upgrade Project is $134,289,000.
After these two adjustments, there are stil minor varances between the revised exhibit and the Detail of
Costs Reports provided in StafCPR_076, as follows:
Per Revised Detail
Exhibit Expenses Variance Deta iled Information
Prior $2,972,000 $2,972,000 $(Detail not provided)
2003 20,995,000 21,040,232 45,232 (Staff_PR_076-Attachment A)
2004 21,443,000 20,961,663 (481,337)(Staff_PR_076-Attachment B)
2005 26,974,000 27,080,441 106,441 (Staff_PR_076-Attachment C)
2006 30,084,000 30,021,020 (62,980)(Staff_PR_076-Attachment C)
2007 30,312,000 30,343,698 31,698 (Staff_PR_076-Attachment C)
$ 132,780,000 $ 132,419,053 $(360,947)
The variances between the revised exhibit and the detailed expense analysis provided ($360,947) are due
to a variety of reasons. Primarly, because the Transmission Upgrade Project was multi-year, multiple
project, and the timing of expenditure recording versus in-servce dates, it is diffcult to track the
expenses by year. Due to the immateriality of the varance, the Company did not investigate this
varance further.
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JUSDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
REQUEST:
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
IDAHO
A VU-E-08-01 1 A VU-G-08-01
IPUC
Production Request
Staff-089
DATE PREPARD:
WITSS:
RESPONDER:
DEP ARTMENT:
TELEPHONE:
06113/08
Greg Paulson
Jeane Pluth
State & Federal Reg.
[phone]
Please provide a schedule of all meter reading expenses by year from 1995 through 2007. Please
also include monthly meter reading expenses for Januar 2008 through present and additional
months as they become available.
RESPONSE:
Data has been provided in StafCPR _ 089-Attachment A.
AVISTA UTILTIES
ELECTRIC.SYSTEM n IDAHO
Direct Allocated Total Direct Allocated Total
1995 1,701,766 13,715 1,715,481 594,282 4,474 598,756
1996 1,855,410 34,072 1,889,482 656,417 11,230 667,647
1997 1,912,661 16,486 1,929,147 671,530 5,453 676,983
1998 1,961,716 36,096 1,997,812 680,337 11,994 692,331
1999 1,829,588 9,950 1,839,538 614,196 3,313 617,509
2000 2,032,774 11,982 2,044,756 699,769 4,010 703,779
2001 2,044,791 34,946 2,079,737 705,515 11,691 717,206
2002 2,290,798 30,183 2,320,981 757,384 10,129 767,513
2003 2,480,779 13,164 2,493,943 811,712 4,425 816,137
2004 2,595,364 8,959 2,604,323 903,000 3,022 906,022
2005 2,681,652 (40,415)2,641,237 914,440 (13,699)900,741
2006 2,415,032 2,415,032 686,250 686,250
2007 2,138,175 23 2,138,198 360,696 8 360,704
NATURAL GAS
SYSTEM n IDAHO
Direct Allocated Total Direct Allocated Total
1995 818,641 6,553 825,194 278,383 1,834 280,217
1996 872,545 16,049 888,594 282,610 4,621 287,231
1997 957,845 8,258 966,103 320,562 2,441 323,003
1998 1,032,447 6,951 1,039,398 341,324 2,109 343,433
1999 1,001,985 3,949 1,005,934 327,907 1,220 329,127.2000 1,175,917 5,329 1,181,246 388,123 1,668 389,791
2001 1,197,995 17,913 1,215,908 397,255 5,644 402,899
2002 1,334,105 14,014 1,348,119 436,008 4,443 440,451
2003 1,453,112 4,571 1,457,683 465,434 1,459 466,893
2004 1,495,814 3,672 1,499,486 490,132 1,193 491,325
2005 1,431,477 (23,502)1,407,975 419,801 (7,687)412,114
2006 1,292,242 1,292,242 287,296 287,296
2007 1,214,172 14 1,214,186 168,207 5 168,212
TOTAL
SYSTEM n IDAHO
Direct Allocated Total Direct Allocated Total
1995 2,520,407 20,268 2,540,675 872,665 6,308 878,973
1996 2,727,955 50,121 2,778,076 939,027 15,851 954,878
1997 2,870,506 24,744 2,895,250 992,092 7,894 999,986
1998 2,994,163 43,047 3,037,210 1,021,661 14,103 1,035,764
1999 2,831,573 13,899 2,845,472 942,103 4,533 946,636
2000 3,208,691 17,311 3,226,002 1,087,892 5,678 1,093,570
2001 3,242,786 52,859 3,295,645 1,102,770 17,335 1,120,105
2002 3,624,903 44,197 3,669,100 1,193,392 14,572 1,207,964
2003 3,933,891 17,735 3,951,626 1,277,146 5,884 1,283,030
2004 4,091,178 12,631 4,103,809 1,393,132 4,215 1,397,347
2005 4,113,129 (63,917)4,049,212 1,334,241 (21,386)1,312,855
2006 3,707,274 3,707,274 973,546 973,546
2007 3,352,347 37 3,352,384 528,903 13 528,916.Note: System includes only Washington and Idaho; Oregon costs are not included
Annual 1995-2007 StafCPR_089-Attachment A.xls Page 1 of 2
AVISTA UTILTIES
I
ELECTRIC.SYSTEM n IDAHO
Direct Allocated Total Direct Allocated Total
Jan-08 184,364 184,364 24,445 24,445
Feb-08 196,168 196,168 12,641 12,641
Mar-08 177,068 177,068 15,118 15,118
Apr-08 193,417 193,417 21,514 21,514
May-08
Jun-08
Jul-08
Aug-08
Sep-08
Oct-08
Nov-08
Dec-08
NATURAL GAS
SYSTEM n IDAHO
Direct Allocated Total Direct Allocated Total
Jan-08 114,364 114,364 18,421 18,421
Feb-08 113,683 113,683 4,811 4,811
Mar-08 104,134 104,134 6,620 6,620
Apr-08 109,414 109,414 9,453 9,453
May-08
Jun-08.Jul-08
Aug-08
Sep-08
Oct-08
Nov-08
Dec-08
TOTAL
SYSTEM n IDAHO
Direct Allocated Total Direct Allocated Total
Jan-08 298,728 298,728 42,866 42,866
Feb-08 309,851 309,851 17,452 17,452
Mar-08 281,202 281,202 21,738 21,738
Apr-08 302,831 302,831 30,967 30,967
May-08
Jun-08
Jul-08
Aug-08
Sep-08
Oct-08
Nov-08
Dec-08
Note: System includes only Washington and Idaho; Oregon costs are not included.
Monthly 2008 StafCPR_ 089-Attachment A.xls Page 2 of 2
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JUSDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
REQUEST:
A VISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
IDAHO
A VU-E-08-01 1 A VU-G-08-01
IPUC
Production Request
Staff-090
DATE PREPARD:
WITSS:
RESPONDER:
DEP ARTMENT:
TELEPHONE:
06/13/08
Greg Paulson
Jeanne Pluth
State & Federal Reg.
[phone]
Please provided the amount budgeted by Avista for meter reading expensès for 2008 and 2009.
RESPONSE:
Budgeted meter reading expenses for 2008 was $3,037,028. This amount is for all of Avista's
services and jurisdictions since A vista does not budget to this leveL. 2009 budget data is not
available since it wil be prepared later in 2008 during the annual budgeting process.
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AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION: IDAHO
CASE NO: A VU-E-08-01 1 A VU-G-08-01
REQUESTER:IPUC
TYPE: Production Request
REQUEST NO. Staff-093
DATE PREPARD:
WITNESS:
RESPONDER:
DEPARTMENT:
TELEPHONE:
06/13/08
Liz Andrews
Theresa Melvin
State & Federal Regulation
[phone]
REQUEST:
Please provide the total straight time payroll (excludes overime and bonuses) per year for each of
the past ten years for non-offcers. Please separate the bargaining unit employee payroll from the
non-bargaining unit employee payroll.
RESPONSE:
Please see attached worksheet, "Staff PR 093- Attachment-AxIs", which provides total anual
straight-time pay for each year 2004 through 2007. Total straight time payroll excludes overtime
and bonuses and is broken down by Officers, Exempt, Non Exempt, Union and TotaL.
Due to limitations with our payroll systems, requested data prior to 2004 is limited and compiling
the data is a very manual process. However, in order to provide a level of historical information for
review prior to 2004, the Company has provided Non-exempt, Exempt and Total straight-time pay
infonnation (excluding overtime and bonuses) for the years 2000 and 2003, and again for years
2004 through 2007 for comparson purposes. Please see attached worksheet, "StafCPR _ 093-
Attachment - B.xls".
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AVISTA UTILITIES
Total Straight-time Payroll
Year Non-exempt Exempt Total
2000 $42,482,320.86 $28,801,Ò13.08 $71,283,333.94
2003 $45,584,744.60 $32,411,980.81 $77,996,725.41
2004 $49,991,872.98 $35,931,562.60 $85,923,435.58
2005 $48,615,217.03 $36,837,108.80 $85,452,325.83
2006 $49,070,617.04 $38,803,617.10 $87,874,234.14
2007 $51,100,337.04 $40,902,256.11 $92,002,593.15
Note: Straight-time payroll includes regular pay, one leave taken, short-term
disability, alternateldual pay, holiday, workers comp, severance, jury
duty, retroactive pay, and military pay.
StafCPR_093- Attachment-B.xls Page 1 of 1
.
.
.
JURISDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
REQUEST:
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
IDAHO
A VU-E-08-01 1 A VU-G-08-01
¡PUC
Production Request
Staff-l 02
DATE PREPARD:
WITNESS:
RESPONDER:
DEPARTMENT:
TELEPHONE:
6110/08
Brian Hirschkorn
Brian Hirschkorn
State & Federal Reg.
[phone]
What retail load was used by Company witness Hirschkorn to develop proposed rates? How was
the load developed?
RESPONSE:
Recorded/iled retail load is used as a staring point to determine pro forma loadslrevenue and to
develop the proposed rates. Large customer bilings are examined and adjusted for any known and
measurable changes (schedule changes, biling adjustments, plant closing, etc.). As actual load is
recorded on a biling period basis, a detailed unbiled revenue adjustment is prepared and applied
to actual loads to reflect loads on a calendar year basis (unbiled revenue booked during the year is
reversed). Calendar year loads are weather normalized to result in pro forma test year load. This
process is ilustrated in Mr. Hirschkorn's workpapers and Ms. Knox's (weather normalization)
workpapers.
.
.
.
JUSDICTION:
CASE NO:
REQUESTER:
TYE:
REQUEST NO.:
REQUEST:
A VISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
IDAHO
A VU-E-08-01 1 AVU-G-08-01
IPUC
Production Request
Staff-106
DATE PREPARD:
WITSS:
RESPONDER:
DEPARTMENT:
TELEPHONE:
06110/2008
Elizabeth Andrews
Elizabeth Andrews
State & Federal Reg.
[phone]
What is the total anual revenue requirement requested in this case due to relicensing the five
Spokane River hydroelectric projects (excluding Little Falls)?
RESPONSE:
The total net revenue requirement included in the Company's general rate case due to relicensing
the five Spokane River hydroelectric projects is approximately $2.5 milion (net revenue
requirement, see below):
Spokane River Relicensing PF9:
Less:
Production Factor Adj. Associated with
the Spokane River Relicensing PF2:
Net Spokane River Relicensing Rev. Req.
Rev. Reg.
$2,885
($ 367)
$2,518
.
.
.
JUISDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
REQUEST:
A VISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
IDAHO
A VU-E-08-01 1 A VU-G-08-01
IPUC
Production Request
Staff-114
DATE PREPARD:
WITSS:
RESPONDER:
DEPARTMENT:
TELEPHONE:
06111/08
Don Kopczynski
Chrstine McCabe
Community Relations
[phone]
Other than Project Share, did the Company or its shareholders contribute to community-based
organizations for the purpose of providing services to or paying energy bils of low-income
customers in Idaho? If so, please identify the organization and the dollar amount contrbuted by
Avista in each of the past four years (2004-2007).
RESPONSE:
No, however the Company does have other programs in Idaho to provide additional service or rate
assistance for low income customers, such as payment plans, comfort level biling, and CARS
(Customer Assistance Referral and Evaluation Service).
.
.
.
JURSDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
REQUEST:
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
IDAHO
A VU-E-08-01 1 A VU-G-08-01
IPUC
Production Request
Staff-119
DATE PREPARD:
WITNESS:
RESPONDER:
DEPARTMENT:
TELEPHONE:
06/05/08
Don Kopczynski
Amanda Reinhardt
Customer Service
[phone]
In each of the last 4 calendar years (2004-2007), how many customers who were on the Winter
Payment Plan did not declare the need for winter protection from disconnection (Moratorium)?
RESPONSE:
In order to qualify for the Winter Payment Plan, customers must declare the need for winter
protection from disconnection (Moratorium). There are no customers on the Winter Payment Plan
who have not already declared for protection.
.
.
.
JUSDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
REQUEST:
A VISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
IDAHO
A VU-E-08-01 1 A VU-G-08-01
IPUC
Production Request
Staff-122
DATE PREPARD:
WITSS:
RESPONDER:
DEP ARTMENT:
TELEPHONE:
06/11/2008
Don Kopczynski
DJ Kinservik
Customer Servce
[phone]
Please provide the Company's wrtten record of complaints and requests for conferences for
calendar year 2007 kept pursuant to Rule 403 of the Commission's Utility Customer Relations
Rules (UCRR) IDAPA 31.21.01.403.
RESPONSE:
In December 2006, A vista began utilzing an escalated queue to assist customers that need further
assistance beyond the first representative they speak with. The escalated queue is handled by
senior customer servce representatives who can assist these customers or transfer them to a Team
Lead/Manager.
In 2007, there were 23 complaints noted on Idaho accounts (see attached file
"Staff PR 122-Attachment AxIs"). Roughly half were received via wrtten communication and
the other h~lfthrough phone interaction with the customers. None of these complaints resulted in
a Commission Complaint. Below is a breakdown of the general natue of these complaints:
Number of Complaints
Service 4
Biling 5
Rates 1
Miscellaneous 10
Collection 2
Constrction 1
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JUSDICTION:
CASE NO:
REQUESTER:
TYE:
REQUEST NO.:
REQUEST:
A VISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
IDAHO
A VU-E-08-0l 1 A VU-G-08-0l
IPUC
Production Request
Staff-B3
DATE PREPARED:
WITESS:
RESPONDER:
DEP ARTMENT:
TELEPHONE:
06/10/2008
Wiliam Johnson
Wiliam Johnson
Power Supply
[phone]
Please provide copies of the Priest Rapids contract that became effective after October 31, 2005
and Wanapum contract that wil become effective November 1, 2009.
RESPONSE:
Attached are the 2001 contracts for the Priest Rapids Project. Under the new contract, the Priest
Rapids Project consists of the Priest Rapids Development and the Wanapum Development.
The original Priest Rapids contract expired October 31, 2005. The original Wanapum contract
expires October 31, 2009.
There are two Priest Rapids Project contracts, the "Priest Rapids Project Additional Product Sales"
(Attachment A) and the "Priest Rapids Project Reasonable Portion" (Attachment B) contracts.
The "Priest Rapids Project Additional Product Sales" contract provides the Company with a small
slice (approximately .5%) of the Project at project cost (via Conversion Amendment) and the
"Priest Rapids Project Reasonable Portion" contract provides the Company with approximately
3% of the project at a market price determined by an anual auction. The Company share of
Wanapum until November 1,2009 is 8.2%.
E 02- Doqrei
.
.
ADDITIONAL PRODUCTS SALES AGREEMENT
.
StafCPR_133 _Attachment-A. pdf Page 1 of 23
.
.
.
Section
Section 1.
Section 2.
Section 3.
Section 4.
Section 5.
Section 6.
Section 7.
Section 8.
Section 9.
Section 10.
Section 11.
Section 12.
Section 13.
Section 14.
Section 15.
Section 16.
Section 17.
Section 18.
Section 19.
Section 20.
INDEX TO SECTIONS
Page
Term of Contract ........ ..................... .......... ............. ..... ........ ................ ...... .......................1
Definitions ................... ................ ............... ... ...................... ....... .............. ................. .......1
Purchaser's Products .... ......... ........... ............. ... ...... ............... .................... ............... .........2
Treatment of the Reasonable Porton...............................................................................2
Deternation of Product Availability and Product Costs ................ ..............................2
Scheduling of Products; Points of Delivery and Risk of Loss ........................................3
Payment for Products ....;.................................................................................................3
Liability of Pares ............................................................................................................4
Notices and Computation of Time.......................................................... .........................4
Governg Law .................................................................................................................5
Assignent of Agreement................................................................................................5
Remedies...........................................................................................................................5
Venue and Attorney Fees .............................. ..................... ..............................................5
Compliance With Law......................................................................................................5
Headings ...........................................................................................................................6
Entire Agreement; Modification ......................................................................................6
No Parership or Thrd Par Rights ..............................................................................6
Representations and Waranties.. ....... ............. .......... ........... ................. .............. .... ..... .... 6
Conflicts. . . . ... . .. ... . ., . .. .... .. . ... .. . ... .. . .., . . . . . . .. . . .. .. . .. . .. . .. . .. . .. . .. .... .. ... . .. . .... 7
Counterparts. . . . . . . . .. . . . . . . . . . . . . . . . . .. . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . ..7
Exhibits
Exhibit 1 - Non-Firm Generation Product
Staff PR 133-J\tachment.A.pdf- - -Page 2 of 23
.
.
.
ADDITIONAL PRODUCTS SALES AGREEMENT
Executed by
PUBLIC UTILITY DISTRICT NO.2
9F GRAT COUNTY
And
A VISTA CORPORATION
This Additional Products Sales Agreement ("Agreement") is entered into as of December 1t1 ,
2001 between Public Utility Distrct No. 2 of Grant County, Washington (the "Distrct"), a
muncipal coiporation of the State of Washington, and Avista Coiporation (the "Purchaser"), a
coiporation of the State of Washington. The District and the Purchaser are referred to as a "Par
and collectively as "Parties."
SECTION 1. TERM OF AGREEMENT.
Except as otherwise provided herein, this Agreement shall be in full force and effect from and after
it has been executed by the District and the Purchaser. Unless sooner terminated pursuant to other
provisions, this Agreement shall remain in effect until the earlier of expiration or termnation of the
New FERC License or such time that the Distrct no longer has authority to market Priest Rapids
Project Produ~ts. Except as otherwise provided herein, all obligations accruing under this
Agreement are preserved until satisfied.
SECTION 2. DEFINITIONS.
As used in this Agreement, the following terms when intial capitalization herein shall
have the
meaning ascribed to them in the Priest Rapids Project Product Sales Contract, or as set forth
below:
"Agreements" shall mean ths Agreement and simlar agreements between the Distrct and other
Purchasers.
"Heavy Load Hours" shall mean those hours, as defined by then curent industr standards, that
constitute the higher value, or higher demand hours in the week. Curently, these hours are defined
as hour ending 0600 thrugh hour ending 2200, Monday though Saturday excluding holidays
defied by the National Electrc Reliabilty CounciL.
"Interest Rate" shall mean the Prime Rate for Large Bans as reported in the Wall Street Joural,
as reported on the first day of the month in which payment was received by the District.
"Light Load Hours" shall mean those hours, as defied by then current industr standards, that
constitute the lower value, or 10wer demand hours in the week. Currently, these hours are
defined as all hours that are not Heavy Load Hours.
"Products" means those products that the Distrct agrees to sell to the Purchaser, and the Purchaser
agrees to purchase as more parcularly described in Sections 3 and 5 hereof.
StafCPR _133 =.lttachment-A pdf Page 30f23
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"Purchasers" shall mean the Purchaser and each person or entity that has entered into an
agreement with the District substantially similar to this Agreement.
SECTION 3. PURCHSER'S PRODUCTS.
Subject to the terms and conditions of this Agreement, Purchaser hereby agrees to purchase and
the District hereby agrees to make available and sell to the Purchaser the Product set below.
Non-Firm Generation Product
SECTION 4. TREATMENT OF THE SALE OF THE REASONABLE PORTION.
Pursuant to the PL83-544 Orders, the Reasonable Portion must be offered for sale. Purchaser
has no claim or right under this Agreement to receive any of the Reasonable Portion, or any
proceeds from the sale thereof; provided, however, that nothng in thís Agreement shall be
interpreted as prohibiting the Distrct and the Purchaser from entering one or more separate
agreements regarding the Reasonable Portion and the disposition of the proceeds of the sale
of the Reasonable Porton.
SECTION 5. DETERMNATION OF PRODUCT AVAILABILITY AND PRODUCT
COSTS.
(a) The amount of each Product that the Distrct wil make available to Purchaser during each
Contract Year, and the cost of each Product that wil be charged to the Purchaser, will be
determned by the terms of the exhibit listed below:
N on-firm Generation Product - Exhíbit 1.
(b) Purchaser agrees to pay to the Distrct, in accordance with Section 7, the costs of the Product
listed in Section 5(a).
(c) Deliveries of Product pursuant to this Agreement wil be termnated if the Distrct does not
obtain an Anual FERC License or New FERC License, and may be reduced under any of
the following conditions as determned by the Distrct:
(1) Pursuant to Section 5.
(2) If the Distrct is unable to deliver the Product to the Purchaser due to Uncontrollable
Forces.
(3) If failure to reduce dèliveries, together with deliveries to all other Purchasers and
deliveries to the Distrct, would result in exceeding Priest Rapids Project Output or
subject it or its operation to undue hazard or violate the FERC License, any applicable
law, regulation, or Operating Agreement.
(4) In case of emergencies or in order to install equipment in, ma1ce repairs to, make
betterments, renewals, replacements, and additions to ("Improvements"), investigations and
inpections of, or perform other maintenance work on the Priest Rapids Project.
'StafCPR_13:f_~itachment-A.Pdf Page 4 of23
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The Distrct wil use its reasonable effort to give advance notice to the Purchaser regarding
any planed interrption or reduction, giving the reason therefor and statig the probable
duration thereof.
SECTION 6. SCHEDULING OF PRODUCT DELIVERIS; METERING,
TRASMISSION LOSSES, POINTS OF DELIVERY AN RISK OF LOSS.
(a) The scheduling of deliveries ofthe Product provided hereunder shall be governed by
the provisions of Exhbit 1.
(b) The treatment of meterig, transmission losses and Points of De Ii very of the Product provided
hereunder shall be governed by the provisions of Exhibit 1.
(c) Unless otherwise provided in Exhibit 1, title to and nsk of loss for the Product provided
hereunder sha11 reside with the District until such Product reaches the Point of Delivery, at
which time risk ofloss and title to such Product shall reside with the Purchaser.
SECTION 7. PAYMENT FOR PRODUCT.
(a) The Distrct shall provide to Purchaser for each Product provided hereunder as specified in
Exhbit i, either a pro forma annual statement of estiated Product costs, or a monthly invoice
for the costs ofthe Product made available to the Purchaser in the preceding month.
(b) The monthly payments set fort in the pro forma annual statement of estimated Product costs
shall be due and payable by Purchaser by electronic fuds transfer to the Distrct's account,
designated in wrting by the Distrct, on the 20th calendar day of each month. The payment of
monthly invoices by Purhaser shall be due and payable by electronic funds transfer to the
Distrct's account, designated in writing by the Distrct, on the 20th calendar day after the
date of issuance of the monthly invoice.
(c) If payment in full of any monthly payment amount set forth on a pro forma anual statement
or a monthly invoice is not received by the Distrct on or before the due date as set fort in
Subsection 7(b), a delayed payment charge of 2% of the unpaid amount due will be made.
Any bil which remains unpaid for more than 30 days after the due date shall, in addition to the
delayed payment charge, accrue interest at the lesser of 1.5% per month or the maxmum rate
allowed by law. If the due date as set forth in Subsection 7(b) is a Saturday, Sunday or a
Distrct recognzed holiday, the next followig business day shall be the last day on which
payment may be received without the addition of the delayed-payment charge. Additionally, if
payment due to the Distrct under this Section 7 remains unpaid 30 days after the due date, the
Distrct may thereafter suspend delivery of Products to the Purchaser which would otherwise
occur until payment in full of all amounts due and owing (including any interest and delay
charges) is received by the Distrct.
(d) For Products that are biled on a pro forma anual statement of estimated Product costs, on or
before 180 days after the end of each Contract Year, the Distrct will either credit against
estimated Product costs due from Purchaser in the then curent Contract Year, or bil to
Purchaser, the true-up amount, if any, as determined pursuant to the provisions of Exhibit i;
Staff _PR _133:¡ttachment-A. pdf Page 50f23
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provided, that if a refund of costs are due to Purchaser following the expiration of this
Agreement, the District shall make a cash refud of such amount to the Purchaser.
( e) In the event that the Purchaser in good faith disputes a monthly invoice, Purchaser shall pay
the amount of the monthly invoice in full and designate in writing to the Distrct on or before
the due date the portion of the monthly invoice that is subject to the dispute. The Paries shall
in good faith attempt to resolve such dispute. If upon the final resolution of such dispute,
whether by agreement of the Parties or otherwse, payment of all or any porton of the
disputed amount is due to the Purchaser, such payment amount shall include interest on the
amount to be paid to the Purchaser, calculated from the date of payment by Purchaser to the
date of payment to Purchaser, using the Interest Rate.
(f) If a payment due from Purchaser to the District pursuant to this Section 7 is due and unpaid
for a period of sixty (60) days or more, the District may terminate this Agreement by
providing to the Purchaser written notice of such termination not less than ten (10) days prior
to the date of termination.
SECTION 8. LIABILITY OF PARTIES.
(a) Except as otherwise provided in this Agreement, each Pary hereby releases the other Par
and its commssioners, officers, directors, agents and employees from any clai for 10ss or
damage arsing out of the ownership, operation, and matenance of the Prest Rapids Project
including any loss of profits or revenues, 10ss of use of power system, cost of capital, cost of
purchased or replacement power, other substantialy similar liabilty or other diect or indirect
consequential loss or damage, except as provided in the Agreement Limiting Liabilty Among
Western Interconnected Systems for paries to that agreement. Ths release shall not include
any claim by the Purchaser for re:fds for over-payments made to the Distrct nor any claim
for specific performance of the Distrct's obligation to deliver to the Purchaser durg the term
of ths Agreement the Products to which the Purchaser is entitled under this Agreement.
(b) The Purchaser shall have no claim of any tye or right of action against the Distrct: (i) as a
result of a FERC or cour order or amendment; (ii) as a result of the failure to receive an
Anual FERC License or a New FERC license or the adjustment of delivery of Priest Rapids
Products pursuant to Section S(c) whether arising under the terms of this Agreement or
otherwise; and the Purchaser hereby releases the District and its commssioners, offcers,
agents and employees from any claim for loss or damage arising out of the events described
in this paragraph.
SECTION 9. NOTICES AND COMPUTATION OF TIME.
Any notice or demand, except those provided for in Section 7, under this Agreement shall be
deemed properly given if such notice is given pursuant to Section 18 of the Purchaser's Product
Sales Contract. In computing any period of time from such notice, such period shall commence
at 12:00 a.m. (midnight) on the date mailed. The designations of the name and address to which
any such notice or demand is directed may be changed at any time by either Party giving notice
as provided above.
Staff PR 133-'1ttachment-A.Pdf- - -Page 6 of 23
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SECTION 10. GOVERNING LAW.
The Paries agree that the laws of the State of Washington shall govern ths Agreement.
SECTION 11. ASSIGNMENT OF AGREEMENT.
Neither the Purchaser nor the Distrct shall by contract, operation of law or otherwse, assign this
Agreement Qr any right or interest in this Agreement without the prior wrtten consent of the
other Part, which shall not be unreasonably withheld; provided, however, a Pary may, without
the consent of the other Party (and without relieving itselffrom liabilty hereunder) (i) transfer or
assign this Agreement to an affiliate of the Part provided that the affliate's creditworthiness is
equal or higher than that of the Party or (ii) transfer or assign this Agreement to any person or
entity succeeding to all or substantially all of the distrbution and generating facilties of the
Par whose creditworthiness is equal or higher than that of the Par; provided, however, that in
each such case, any such assignee shall agree in wrting to be bound by the terms and conditions
in this Agreement and the transferrg Par shall deliver such tax and enforceability assurance
as the other Party may reasonably request.
SECTION 12. REMEDIES.
(a) A Party may take whatever action at law or in equity as may appear necessar or desirable to
collect the amounts payable by the defaulting Par under this Agreement then due and
thereafter to become due, or to enforce performance and observation of any obligation,
agreement or covenant of the defaulting Par under this Agreement.
(b) No right or remedy conferred upon or reserved to a Par is intended to be exclusive of any
other right or remedy, and each and every right and remedy shall be curulative and in addition
to any other right or remedy given hereunder, or now or hereafer legally existing, upon the
occurrence of any default. Failure of the Par to insist at any tie on the strct observance or
performance by the other Par of any of the provisions of ths Agreement, or to exercise any
right or remedy provided for in ths Agreement shall not impair any such right or remedy nor
be constred as a waiver or relinquishment thereof for the futue. Receipt by the Distrct of
any payment required to be màde hereunder with knowledge of the breach of any provisions of
this Agreement shall not be deemed a waiver of such breach.
SECTION 13. VENUE AN ATTORNEY FEES.
Venue of any action filed to enforce or interpret the provisions of ths Agreement shall be
exclusively in the United States Distrct Cour for the Eastern Distrct of Washigton or the
Superior Court of the State of Washington for Grant County and the Pares irrevocably submit to
the jursdiction of any such cour. In the event of litigation to enforce the provisions of ths
Agreement, the prevailng Par shall be entitled to reasonable attorney's fees in addition to any
other relief allowed.
SECTION 14. COMPLIANCE WITH LAW.
(a) The Parties shall conform to and comply with all
laws, rules, regulations, license conditions or
restrictions promulgated by the FERC or any other governental agency or entity having
jursdiction over the Priest Rapids Project. The Purchaser shall cooperatè and take whatever
action is necessary to cooperate fully with the Distrct in meeting such requirements.
-5-StafCPR _133_ Attachment-A.pdf Page 7 of 23
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Obligations of the Distrct contained in ths Agreement are hereby expressly made subordiate
and subject to such compliance.
(b) The Purchaser shall ensure that Products available to Purchaser under this Agreement are not
sold, resold, distrbuted for use or used outside the Pacific Nortwest in violation of the
Bonneville Project Act, Public Law 75-329, the Pacific Nortwest Consumer Power Preference
Act, Public Law 88-552, the Regional Act or in contravention of any applicable state or federal
law, order, regulation, or policy. If such sales occur in violation of the foregoing, the Purchaser
shall reimburse the District for any penalties imposed on and costs incured by the Distrct as a
consequence of such violation.
SECTION 15. HEADINGS.
The headings of sections and paragraphs of ths Agreement are for convenience of reference only
and are not intended to restrct, affect or be of any weight in the interpretation or constrction of
the provisions of such sections and paragrphs.
SECTION 16. ENTIRE AGREEMENT; MODIFICATION.
Ths Agreement constitutes the entire agreement between the Paries with respect to the subject
matter of ths Agreement, and supersedes all previous communcations between the Pares, either
verbal or written, with respect to such subject matter. No modifications of ths Agreement shall be
binding upon the Pares unless such modifications are in wrting signed by each Par.
SECTION 17. NO PARTNERSIDP OR THIR PARTY RIGHTS.
(a) This Agreement shall not be interpreted or constred to create an association, joint ventue or
parership between the Pares, or to impose any parership obligations or liabilty upon any
Par.
(b) This Agreement shall not be construed to create rights in or grant remedies to any third par
as a beneficiary of this Agreement.
SECTION 18. REPRESENTATIONS AN WARTIES.
Each Part represents and warants to the other Par that:
(a) It is duly organized, validly existing and in good standing under the laws of the
jursdiction of its formation.
(b) The execution, delivery and performance of this Agreement are withn its powers, have
been duly authorized by all necessary action and do not violate any of the terms and
conditions in its governing documents, any contracts to which it is a par or any law,
rule, regulation, or order applicable to it.
(c) This Agreement constitutes a legally valid and binding obligation enforceable agaist it
in accordance with its terms, subject to equitable defenses and applicable banptcy,
insolvency and similar laws affecting creditors' rights generally.
Staff_PR_133-=~ttachment-A.Pdf Page 80f23
. SECTION 19. CONFLICTS
In the event of a confict between any provision of this Agreement and those contained in the
Priest Rapids Project Product Sales Contract, the provisions of the Priest Rapids Project Product
Sales Contract shall prevaiL.
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SECTION 20. COUNTERPARTS.
This Agreement may be executed in counterpars, each of which shall be an original and all of
which shall constitute the same Agreement.
PUBLIC UTILITY DISTRICT NO.2
OF GRANT COUNY, WASHIGTON,
By )I /4
(SEAL)President ~
ATTEST:~ .~
Secar~ L, ~
A VISTA CORPORA nON
(SEAL)
-7-StafCPR_133_Attachment-A.pdf Page 90f23
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EXHIBIT 1
NON-FIRM GENERATION PRODUCT
(and exchange for Load Following Product)
Except as otherwise provided in this Exhibit 1 or in the Agreement, terms used herein with initial
capitalization shall have the meanings set forth in Section 2 of the Priest Rapids Project Product
Sales Contract.
1. Non-Firm Generation Product Description
The Non-Firm Generation Product is a portion of the non-firm energy available to the Distrct
from the Priest Rapids Project as and when such energy is available, as determined by the
Distrct.
2. Purchasers Share of Non-Firm Generation Product
The District wil make available Purchaser's Share (defined below) of the Non-Firm Generation
Product that the Distrct determines is available each day durng the tenn of this Agreement in
accordance with this Exhibit 1. The Purchaser's Share shall be the Purchaser's percent
paricipation in the 1956 Contract divided by 63.5% from November 1, 2005 through October
31,2009 after which it shall be the average of the Purchaser's partcipation in the 1956 and 1959
Contracts divided by 63.5%.
As par of the pro forma statement provided to Purchaser pursuant to Section 5(b) of the Priest
Rapids Project Product Sales Contrct, the Distnct shall provide to Purchaser an estimate for the
next Contract Year of the amount of Priest Rapids Project Non-Firm Generation by month that
the Priest Rapids Project is expected to produce based on information available at the time such
estimate is prepared.
3. Availabilty of Non-Firm Generation Product
The Non-Firm Generation Product wil be available commencing November 1,2005.
The amount of Non-Fir Generation Product for each day is the Project Non-Fir Generation
for such day multiplied by a percentage equal to 100% less the sum of all Purchaser Power
Allocations from all of the Priest Rapids Project Product Sales Contracts, less the Reasonable
Portion and less 36.5%. For puroses of such calculation, Project Non-Firm Generation is the
actual energy generation (in mwhrs) of the Priest Rapids Project Output less the product of firm
energy calculated pursuant to Section 5(b)(2) of the Priest Rapids PrClject Product Sales Contract,
distrbuted on a shaped basis over each day, and a factor of 1.08 for Monday though Friday, and
a factor of 0.8 for Saturdays and Sundays. In the event that the calculation of Project Non-firm
Generation is less than zero, the actual Non-firm Generation wil be zero.
For example: If firm energy is 250 mw and actual generation is 300 mw, then Project Non-Firm
StafCPR_13~Àltachment-A.pdf Page 10 of 23
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Generation on Monday though Friday would be 300-(250*1.08)=30 mw. Project Non-Firm
Generation on Saturday and Sunday would be 300-(250*0.8)=100 mw.
The Distrct wíl estimate the Purchaser's Non-firm Generation Product on a daily preshedule
basis according to available data ("Estimated Purchaser's Non-firm"). On Monday through
Saturday, such schedule shall be delivered with the same amount of megawatt-hours delivered in
Heavy Load Hours as in Light Load Hours. On Sundays, such schedule shall be delivered in
equal hourly amounts over all 24 hours. On an after-the- fact basis, the Distrct wil compute the
amount of Purchaser's Non-firm and wil maintain a deviation account to track the difference in
the daily Estimated Purchaser's Non-firm and the actual Purchaser's Non-firm. Positive and
negative balances in the deviation account wil be used to adjust the daily Estimated Purchaser's
Non-firm that is delivered on a preschedule basis. Positive and negative balances will carr
through from month to month.
Preschedule deliveries to Purchasers wil be reduced or eliminated in realtime in the event of a
contingency that reduces or eliminates the Distrct's ability to generate the daily Estimated
Purchaser's Non-firm at the Priest Rapids Project.
4. Pricing and Payment
For each Contract Year durng the term of this Agreement, the Purchaser shall pay the Distrct in
twelve equal monthly installments the product of the estimated Anual Power Cost contained in
the pro forma statement prepared pursuant to Section 7(a) of the Priest Rapids Project Product
Sales Contract and the ratio of Purchaser Estiated Non-Firm to the average total generation of
the Priest Rapids Project estimated pursuant to the Operating Agreements. The pro forma
statement provided to purchaser pursuant to Section 7(a) of the Priest Rapids Project Product
Sales Contract shall separately set forth the Purchaser's estimated monthly payment obligation
for Non-Firm Generation Product for the next Contract Year.
The payments made by Purchaser for the Non-Fir Generation Product on an estimated basis
will be trued up to actual values not later than 150 days after end of each Contract Year using
actual Anual Power Costs prepared pursuant to Section 7(g) of the Priest Rapids Project
Product Sales Contract, and actual metered amounts of Non-Firm Generation Product. Any
amounts due to Purchaser wil be credited against Purchaser's payment obligation in the then
current Contract Year, and any amounts due from Purchaser to the Distrct will be invoiced to
Purchaser, all in accordance with such Section 7(g).
5. Exchange of Non-Firm Generation Product for Load Following Product
(a) Exchange Defined - The Load Following Product provides capacity and associated
energy for short periods of time. The Purchaser then retus the same amount of energy
within 168 hours.
Upon notice to the District by January 1, 2003, the Purchaser may make a one-time
irrevocable exchange of their entire share of Non-Firm Generation Product for Load
StafCPR_13:L~aChment-A.Pdf Page 11 of 23
.Following Product on the basis of 1.5 megawatts of Load Following Product for each
megawatt of Non-Firm Generation Product. For the purpose of ths calculation of this
exchange the Project Non-firm Generation shall be calculated pursuat to Operating
Agreements based on the average historical river flows.
The total amount exchanged by all Purchasers shall not exceed the Monthly Maximum
Load Following Product defined below which shall be allocated on a first come first
served basis. The Purchaser's Share of Load Following Product wil be the ratio of the
number of megawatts of Non-firm Generation Product exchanged by an individual
Purchaser to the total exchanged by all Purhasers.
(b) Availabilty - The Load Following Product wil be available commencing November
1,2005. Load Following Product wil be available only after all other obligations of
the
Priest Rapids Project, including but not limited to, meeting and following the Distrct's
loads, meeting commercial arangements entered into prior to this Agreement,
requirements of Operating Agreements, meeting regulatory requirements, and after
accounting for water conditions and the status of the Priest Rapids Project.
Notwithstanding the table below the amount of Load Following Product wil be reduced
if the Distrct is unable to meet these obligations or if it would otherwise be forced to the
market to buy Load Following Product.
.The monthly Maximum Load Following Product wil be 50 megawatts from November
2005 through October 31,2009 or 100 megawatts after October 31,2009 and associated
energy.
On or before the tenth day precedig each month the Distrct wil identify to the
Purchaser the estimated Monthly Minimum Load Following Product (in megawatts) that
the District expects to be available durng the next month, but wil not be less than the
firm amounts shown below.
2005-2009
Nov. Dec.Jan.Feb.Mar.Apr.May Jun.Jul.Aug.Sep.Oct.
0 50 50 50 50 0 25 25 50 50 50 0
2009 forward
Nov. Dec. Jan. Feb.Mar.Apr.May Jun.Jut.Aug.Sep.Oct.
100 100 100 100 100 50 100 100 100 100 100 100
Each day, the Distrct shall provide the Purchaser with the Daily Load Following Product
(in megawatts) that the Distrct determines wil be available for the subsequent
preschedule day or days. The actual Daily Load Following Product shall be between the
Monthly Minium Load following Product and the Monthy Maximum Load Following
product.
.The Purchaser's Load Following Product shall be the lesser of the ~mount of Load
Following Product exchanged pursuant to Section Sa of this Exhibit 1 or the Daily Load
StafCPR_133~ÃiaChment-A.Pdf Page 12 of23
.Following Product times the Purchaser's Share.
(e) Return of Energy - Energy associated with the Load Following Product used by
Purchaser shall be retued to the Distrct in like quatities (hour for hour) on like days
168 hours after the delivery by the District to the Purchaser. Energy retured to the
Distrct shall be delivered at the Distrct's Point of Delivery as specified in Section 7 of
ths Exhibit 1.
If, in real-time, the District determines that Purchaser's schedule of return energy to the
Distrct is in excess of the estimated Purchaser's Load Following Product in future hours,
and that such excess wil cause spil, then Distrct may, at its option, require the
Purchaser to reduce its schedule. Purchaser shall reduce its schedule by such excess
amount. Purchaser shall schedule the remaing energy to the Distrct at the earliest time
possible for both Distrct and Purchaser.
District shall meter the actual Load Following Product used to meet Purchasers load
signal in each hour.
.
(d) Charge for Spil - The District wil chage the Purchaser for any spil allocated to
the District if it is determined by the District that such spill was directly attrbutable to
the actions of the Purchaser under this Agreement. Such charge wilequal the product of
such spil (in megawatt-hours) and the Market Energy Rate for the daily diural period
in which such spil occurred.
Market Energy Rate shall mean the rate (in $/mwhr) at which firm energy is available on
the wholesale power market, for quantities comparable to the spil caused by the actions
of Purchaser, durig the diurnal period that the spil occurred, as determined by the
Distrct.
(e) Excess Load Following Product and Energy Not Returned - In the event that
Purchaser takes in any hour Load Following Product in excess of its Purchaser's Share,
Purchaser shall be subject to a charge equal to 150% of the Mid-C Market Capacity Rate
for the daily diurnal period in which the Load Following Product was taken times the
amount of Load Following Product (in megawatts) taen in excess of Purchaser's Share.
Market Capacity Rate shall mean the rate (in $/mw-mo.) as quoted by the Bonneville
Power Administration, for quantities comparable to the Load Following Product made
available to Purchasers, durg the diurnal period that Purchaser took Load Following
Product in excess of its Purchaser's Share.
In the event that Purchaser does not return energy associated with Load Following
Product delivered by Purchaser, then Purchaser shall be considered in Default pursuant to
Section 22 of the Priest Rapids Project Product Sales Contract.
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StafCPR_13t. Ã1\achment-A pdf Page 13 of23
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6. Biling
Purchaser shall pay the amounts set forth in the pro forma statement provided to Purchaser
pursuant to section 7(a) of the Pnest Rapids Project Product Sales Contract.
Not later than ten (10) days after the end of each month durng the ter, the Distrct wil prepare
and provide to the Purchaser an invoice setting forth the payment due from Purchaser to the
Distnct for the Load Following Product made available for the preceding month.
7. Points of Delivery
The District shall make available to the Purchaser the Non-Firm Generation Product at the Points
of Delivery specified in Section 11 ofthe Priest Rapids Project Product Sales Contract.
The Distrct shall make available to the Purchaser the Load Following Product and associated
energy, and Purchaser shall retur energy to the Distrct, at the Points of Delivery specified in
Section 11 of the Priest Rapids Project Product Sales Contract.
8. Metering, Transmission and Losses
Metering, transmission and losses will be in accordance with Section 12 of the Priest Rapids
Project Product Sales Contract.
9. Information and Communications
Purchaser shall be responsible for the costs of installng and maintaining any communcations
equipment necessar to effectuate the delivery of the Non-Firm Generation Product or Load
Following Product between the Distrct and the Purchaser.
10. Scheduling and Accounting
Scheduling and accountig shall be pedonned according to then curent industr standards.
1-5Staff_PR_133_Attachment-A.pdf Page 14 of 23
602 -009l, /
.AMENDMENT NO.1 TO THE
ADDITIONAL PRODUCTS SALES AGREEMENT
The Public Utility District NO.2 of Grant County, Washington, ("Distrct"), and
Avista Corporation ("Purchaser"), hereby agree to this Amendment No. 1 to the
Additional Products Sales Agreement dated December ~, 2001 (the "Product
Agreement"). Unless otherwise defined herein, all capitalized terms defined in the
Product Agreement shall have the meanings set forth therein when used in this
Amendment.
1. Term of Amendment NO.1
This Amendment NO.1 shall take effect on upon the execution by the Distrct and
Purchaser, and shall expire on the earlier of the expiration or termination date of the
Product Agreement.
2. Amendments to Provisions ofthe Product Agreement
Purchaser and the Distrct agree that the Product Agreement is hereby amended as
follows:
.2.1 The first paragraph of Section 2 of Exhibit 1 is amended by adding after
the last sentence thereof the following:
The amount of Non-Fir Generation Product available to
Purchaser shall equal the product of Purchaser's Share and the
Non-Firm Generation Product.
2.2 The second paragraph of Section 3 of Exhbit 1 is deleted in its entirety
and is replaced with the following:
.
The amount of Non-Fir Generation Product for each day is the
Project Non-Firm Generation for such day multiplied by a
percentage equal to 100% less the sum of all Purchaser Power
Allocations from all of the Priest Rapids Project Product Sales
Contracts, less the Reasonable Portion and less 36.5%. For
purposes of such calculation, Project Non-Firm Generation shall be
the actual energy generation (in mwhrs) of the Priest Rapids
Project Output less the firm energy calculated pursuant to Section
5(b )(2) of the Priest Rapids Project Product Sales Contract, times
the shaping factors described below. For example, based on
curent operating requirements of the Priest Rapids Project, the
Project Firm Generation is distrbuted on a shaped basis over the
week, using a factor of 1.08 for Monday through Friday, and a
factor of 0.8 for Satudays and Sundays. These factors wil be
changed by the District to reflect changes in operating constraints
Additional Products Sales Agreement
Amendatory Agreement NO.1 StafCPR_133_AttacñrJñt-A.pdf Page 15 of 23
.applicable to the Priest Rapids Project. In the event that the
calculation of Project Non-firm Generation is less than zero, there
wil be no obligation on the par of the Purchaser to schedule Non-
Fir Generation Product back to the Distrct, but such negative
amount wil be included in the deviation account.
2.3 The third paragraph of Section 3 of Exhibit 1 is deleted in its entirety and
is replaced with the following:
For example: Assume that flows durig the week are 324 MW and
that flows durng the weekend are 240 MW. If firm energy
(critical generation) is 250 MW then Project Non-Finn Generation
on Monday through Friday would .be 324-(250*1.08);:54 MW
times 24 hours ;:1,296 MWh for each weekday. The amount of
power scheduled during the weekend would be 240-(250*0.8)=40
MW times 24 hours;: 960 MWh for each weekend day.
2.4 The fourh and fifth sentences of the fourth paragraph of Section 3 of
Exhibit 1 are revised as follows:
.Whenever they appear in such sentences, the phrase "Estimated
Purchaser's Non-Firm" is revised to read "Estimated Purchaser's
Non-Fir Generation Product", and the phrase "Purchaser's Non-
Firm" is revised to read "Purchaser's Non-Firm Generation
Product".
2.5 The second paragraph of Section 5(a) of Exhibit 1 is deleted in its entirety
and is replaced with the following:
Upon notice to the Distrct by Januar 1,2003, the Purchaser may
make a one-time irevocable exchange of their entire share of Non-
Firm Generation Product for Load Following Product on the basis
of 1.5 megawatts of Load Following Product for each average
anual megawatt of Non-Firm Generation Product. For the
purpose of the calculation of this exchange, the Project Non-firm
Generation shal be calculated pursuant to Operating Agreements
based on the average historical river flows. .
For purposes of determinng Purchaser's entitlement to Load
Following Product, the exchange ratio set forth above shall be
applied to the amount of Non-Firm Generation Product initially
available to Purchaser hereunder, but such ratio shall be applied in
subsequent years to any increased amount of Non-Fir Generation
Product to which the Purchaser would have been entitled absent its
election hereunder..
Additional Products Sales Agreement
Amendatory Agreement NO.1 StafCPR_133_Attacfikñt-A.Pdf Page 16 of23
.2.6 Section 5 of Exhibit 1 is amended by adding a new subsection 5(t) as
follows:
If the one-time exchange has been made as provided in this section
5, Purchaser's compensation to the Distrct for the Load Following
Product shall be limited to the retu of energy and the charges set
fort in Sections S(c), (d) and (e). Purchaser shall not be required to
pay to the District as. compensation for the Load Following Product
any porton of the Anual Power Costs of the Priest Rapids Project
pursuat to section 4 of this Exhbit 1.
2.7 The Product Agreement is amended by adding a new Exhibit 2, Purchasers
Product Percentage Allocations, which is attached hereto.
In Witness Whereof, Purchaser and the District have caused this Amendment No. i to
be executed in their respective names by their dily authorized officers.
AVISTA CORPORATION
.By:
.
PUBLIC UTILITY DISTRICT NO.2 OF
GRAT COUNTY, WASHIGTON
.
BY:_Îh 0. 07
Title: fì1Jlixuri ø£(kJ1IJU$tlXIlß
Dare. ed:~/d~~
~ek'" /!J .rmlS()et.;
Additional Products Sales Agreement
Amendatory Agreement No.1 Staff PR 133 Attacfi~eñt-A.Pdf- - -Page 17 of 23
PUBLIC UTILITY DISTRICT NO.2 OF GRANT COUNTY
MEETING OUR CUSTOMER ENERGY NEEDS IN A COST CONSCIOUS MANNER.
P. O. BOX 878 . EPHRATA, WASHiNGTON 98823 . 509/754-0500
February 11,2002
Mr. Gary Ely, CEO
A vista Corporation
1411 E Mission Avenue
POBox 3727
Spokane W A 99202
Dear Gary:
Attached are executed copies of Priest Rapids Project power sales contracts for your files.
.These contracts have taken many years to prepare. On behalf of my fellow
Commissioners and staff at Grant PUD I wish to acknowledge the steadfast cooperation
and assistance provided by Dick Storro, Kelly Norwood, Lloyd Meyers and Gary Dalhke
and his associates. Their role was in the finest traditions of your company.
We look foiward to working with you in the decades to come.
Sincerely,
fr /"4 ¿Y. .
Mike Conley~";~
Board of Commissioners
MC:mlh
.
StafCPR_133_Attachment-A.pdf Page 18 of 23
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.June 13, 2002
DRAFT
Priest Rapids Project
I've attached the one-page summares of the three Priest Rapids Project contracts.
Product Sales Contract
Reasonable Portion - Power Sales Contract
Additional Products Sales Agreement
These draft summares are for your review and comments.
Thanks,
Doug
.
.
StafCPR_133_Attachment-A.pdf Page 20 of 23
. .
I.PRIEST RAPIDS PROJECT
PRODUCT SALES CONTRACT
Avista Corp. and Grant PUD entered into this contract as of December 12, 200L.
Termnation is either the expiration of new FERC license or Grant no longer has authority to
market Priest Rapids Project products.
First right of refusal is preserved against a successor licensee other than Grant.
Varous sections within the contract take effect on November It 2005.
Contract year is an annual year except the first one (Nov. 1,2005 ending Jan. 1,2006).
Surplus Product: The project output that is surlus to Grant's needs is marketed with up to 25%
available to A vista. The price wil be at cost. If the subscription is greater than 100% then the
product is divided between old purchasers and Idaho co-ops based on retail customers. Then
through Oct. 31, 2009 the surplus product shall be distributed in proportion to participation in the
1956 contract. After Nov. 1,2009 the surplus product shall be distrbuted in proportion to the
sum of participation in the 1956 contract and 1959 contract divided by two.
.
Displacement Product: The project output that is available due to displacement resources being
used to serve Grant's loads with up to 25% available to Avista. This product does not entail the
resale of federal power. Exhibit A has monthly amounts of displacement resource. Grant may
seek a resource to extend the availabilty of power identified in Exhibit A beyond 2011
(replacement contract). The price wil be Grant's cost including the costs of transmission and
necessary services. If the subscription is greater than 100% then the product is divided between
old purchasers and Idaho co-ops based on retail customers. Then through Oct. 31, 2009 the
displacement product shall be distributed in proporton to paricipation in the 1956 contract and
1959 contract weighted 25% and 75%, respectively. After Nov. 1,2009 the displacement product
shall be distributed in proporton to the sum of paricipation in the 1956 contract and 1959
contract divided by two.
Annual power costs wil be all of Grant's costs and expenses resulting from the ownership of the
two mid-Columbia hydro facilities. These costs shall not be limited to O&M, taxes,
prevention/correction of any loss or damage to project, debt principal and interest, reserves,
liabilties not covered by insurance, and license costs (FERC),. dG. "I
A pro forma budget shall be provided by Grant on or prior to July 3 i st of each year, showing an
estimate of project costs, output and Grant's loads.
30 days prior to each contract year Grant shall send out a pro forma statement for the next
contract year with an estimate of annual power costs, cost of surplus product, cost of
displacement product, Avista's estimated cost and monthly payments. Based on these numbers
A vista pays monthly due on the 20th day of each month.
A vista commts to providing support to Grant in the acquisition of a new FERC license.
The scheduling of deliveries of surplus and displacement products is found in Section 9.
Grant wil establish and maintain for A vista a pondage account.
If project output is increased (not the result of law or order) Avista can termnate the contract,
elect not to paricipate in the increase, or continue with its share of increase..
StafCPR_133_Attachment-A.pdf Page 21 of 23
l''e.PRIEST RAPIDS PROJECT
REASONABLE PORTION - POWER SALES CONTRACT
Avista Corp. and GrantPUD entered into this contract as of December 12,2001.
Termination is either the expiration of new FERC license or Grant no longer has authority to market Priest
Rapids Project output.
Various sections within the contract take effect on November 1,2005.
Contrct year is an annual year except the first one (Nov. 1,2005 ending Jan. 1,2006).
Reasonable portion means the 30 percent portion of the Project output offered for sale.
Avista's percentage allocation of the reasonable portion (purchaser revenue allocation) shall be 25%, but
purchaser revenue allocation may not exceed twice the average of participation in the 1956 and 1959
contracts.
The supplementary agreement wìl use the purchaser revenue allocation of the reasonable portion proceeds
to purchase capacity and energy (or cash in lieu of power) for Avista.
Reallocation: if allocations exceed 100% then the allocations are divided first by old purchasers and Idaho
co-ops based on retail customers. Then through Oct. 31, 2009 the purchaser revenue allocations shall be
distributed in proportion to participation in the 1956 contract and 1959 contract weighted 75% and 25%.
respectively. After Nov. 1,2009 the allocations shall be distributed in proportion to the sum of
participation in the 1956 contract and 1959 contract divided by two.
.60 days prior to each contract year, Avista shall provide written notice if it elects to receive cash in lieu of
energy and capacity of its reasonable portion. No action means Grant wil provide power to Avista.
30 days prior to each contract year, Grant shall send a pro forma statement showing: estimated Grant loads,
firm energy (critical water). estimated unmet Grant load, estimated Grant power cost, and estimated
reasonable portion procee.
Grant shall take from the actual reasonable portion proceeds the estimated Grant power cost (cost of
meeting the unmet load which is the 70% of output less Grant load) to meet the unmet Grant load.
Avista shall have supplemental power with an amount equal to the proceeds received by Grant minus
power costs multiplied by Avista's revenue allocation.
If the project is capable of output but Avista's revenue allocation is projected to be zero, Avista may.
terminate the contract.
Annual power costs wil be all of Grant's costs and expenses resulting from the ownership of the two mid-
Columbia hydro facilities. These costs shall not be limited to O&M, taxes, prevention/correction of any
loss or damage to project. debt principal and interest, reserves, liabilties not covered by insurance, and
license costs (FERC), etc.
A pro forma budget shall be provided by Grant on or prior to July 3 i ii of each year, showing an estimate of
project costs, output, revenue allocation and Grant loads.
30 days prior to each contract year Grant shall send out a pro forma statement for the next contract year
with an estimate of annual power costs, cost of surlus product, cost of displacement product, Avista's
estimated cost and monthly payments. Based on these numbers Avista pays monthly due on the 20iJ day of
each month.
On or before 150 days after contract year, Grant wil submit to Avista a detailed statement of estimated cost
and actual cost for the year.
.Avista commits to providing support to Grant in the acquisition of a new FERC license.
Avista revenue allocation of the proceeds shall be paid to Avista monthly and shall be the product of the
allocation and the difference between the actual payments of proceeds and the estimate Grant power costs.
However if Avista elects to have Grant make purchases under the supplementary agreement then Avista
receives power in lieu of these payments.
StafCPR_133_Attachment-A.pdf Page 22 of 23
~ i-
.1.PRIEST RAIDS PROJECT
ADDITIONAL PRODUCTS SALES AGREEMENT
Avista Corp. and Grant PUD entered into this contract as of December 12, 2001.
Terrnation is either the expiration of new FERC license or Grant no longer has authority to
market Priest Rapids Project products.
Grant's products for this agreement ar non-firm generation.
The amount and cost of each product is deterrned by the terms of Exhibit 1.
Grant shall provide to Avista for each product specified in Exhibit 1 either a pro forma annual
statement of estimated product costs, or a monthly invoice for the costs of the product made
available to Avista in the preceding month.
Payments to Grant are due on the 20lh day of each month.
Exhibit 1
Non-firm generation product is a portion of the non-firm energy available from the Priest Rapids
project.
Grant wil make available Avista's share of the non-firm that Grant determnes is available each
day.
Avista's share shall be Avista's percent paricipation in the 1956 contract divided by 63.5% from
November 1, 2005 through October 31,2009 after which it shall be the average of the 1956
contract and 1959 contract divided by 63.5%. (Sentence added: The amount of non-firm
available to Avista equals the product of Avista's share and the non-firm product avaiable..An estimate of available non-firm for next contract year shall be par of the pro forma statement.
Project non-firm generation is actual generation less firm energy according to Product Sales
Contract, with a factor of 1.08 for Monday though Friday and 0.8 for Saturday and Sundays
(these factors can be changed by Grant).
A vista wil pay montWy for the non-finn energy, the product of the estimate annual power cost
contained in the pro forma statement from the Product Sales Contract and the ratio of A vista's
estimated non-firm to the average total generation of Project estimted pursuant to the operating
agreements. The payments wil be trued up to actual values not later than 150 days after end of
each contract year.
Upon notice to Grant by Januar 1, 2003 A vista may make a one time exchange of non-fir for
load following on the basis of 1.5 MW for each MW ofnon-fi. Avista's share Of load
following wil be the ratio of the number ofMWs of non-firm exchanged by Avista to the total
exchanged by all purchasers. Load following product wil be available staring November 1,
2005. Load following product wil be reduced if Grant is unable to meet specified obligations.
The monthly maximum load following wil be 50 MW from November I, 2005 though October
31,2009 and 100 MW after October 31, 2009. On or before the 10lh day precedig each month
Grant wil estimate the monthly minimum load following product. Energy associated with load
following shall be returned 168 hours after the delivery on like days/hours.
Grant wil charge for any spill allocated to Grant if it is deterrned by Grant that such spil was
directly attrbutable to the actions of the purchaser..
Excess load following taken shall be paid for at a rate (in $/mw-mo.) as quoted by BPA..
StafCPR_133_Attachment-A.pdf Page 23 of 23
.
.PRIEST RAPIDS PROJECT
REASONABLE PORTION
POWER SALES CONTRACT
.
StafCPR_133_Attachment-B.pdf
E02- DO'l(PO
Page 1 of 34
.
.
.
Section
Section 1.
Section 2.
Section 3.
Section 4.
INDEX TO SECTIONS
Page
Term of Contract ..............................................................................................................1
Definitions. ........ ............. ........... ..................................... ........ .... .......... ..... ............. ..........1
Proceeds From the Saleofthe Reasonable Portion.........................................................5
Determnation of Estiated Purchaser Revenue Allocation of Reasonable
Porton Proceeds ........ .............. ....... .... .............................. ...... ....... ........ ....... ...... ....... ....... 8
Anual Power Costs. ....................... .......... ....................... ...... ........ .... ...... ........ ......... .....11
Payment For Priest Rapids Project Purchaser Revenue Allocation..............................14
Support and Cooperation................................................................................................16
Payment of the Reasonable Porton Proceeds ................ ....... ........... ....... ......................17
Information to be Made Available to the Purchaser......................................................18
Insurance......... .............. ... .......... ..... ........... ...... ............ ... ...... .... .......... ...... ............... .......19
Project Integration ..........................................................................................................19
Liability of Paries ..........................................................................................................19
Notices and Computation of Time.............................................................. ...................20
Distrct's Bond Resolutions and License.......................................................................20
Governng Law.............. ................. ...... ............ .................... ...... ......... .................. ....... ..20
Assignent of Contract ........ ......... .... ....... ...... ....................... ...... .......... ....................... ..20
Remedies on Default... ......................... ...... ..... ............... ....... ...... ............. ......... ........ .....21
Venue and Attorney Fees ......... ............................................. ................ .........................22
Compliance With Law............... ................ .....................................................................23
Headings .........................................................................................................................23
Entire Agreement; Modification; Confict in Precedence .............................................23
No Partership or Third Par Rights ............................................................................23
Purchasers' Committee; Arbitration ........... ................................... ................................23
Representations and Warranties ...................... ........... ...... ....... ....... ................................25
Counterpars ..... ....... ... .... ..... ......................... .... .......... ........ ...... ...... .................................26
Section 5.
Section 6.
Section 7.
Section 8.
Section 9.
Section 10.
Section 11.
Section 12.
Section 13.
Section 14.
Section 15.
Section 16.
Section 17.
Section 18.
Section 19.
Section 20.
Section 21.
Section 22.
Section 23.
Section 24.
Section 25.
Exhbits
Exhibit A - Bond Resolution Sections
Exhibit B - Areas Served Outside Grant County
Staff_PR_133=-~ttachment-B.pdf Page 2 0134
.
.
.
PRIEST RAPIDS PROJECT REASONABLE PORTION
POWER SALES CONTRACT
Executed by
PUBLIC UTILITY DISTRICT NO.2
OF GRAT COUNTY
And
A VISTA CORPORATION
This contract is entered into as of December ~, 2001 between Public Utilty Distrct No.2 of
Grant County, Washigton (the "Distrct"), a muncipal corporation of the State of Washigton,
and Avista Corporation (the "Purchaset'), a corporation organzed and existing under the laws of
the State of Washington. The Distrct and the Purchaser are referred to as a "Party" and
collectively as "Paries."
SECTION 1. TERM OF CONTRACT.
(a) Except as otherwise provided herein, this contract shall be in full force and effect from and
after it has been executed by the Distrct and the Purchaser. Unless sooner termnated pursuant
to other provisions, this contract shall remain in effect until the earlier of expirtion or
termination of the New FERC License or such time that the Distrct no 10nger has authority to
market Priest Rapids Project Output. Except as otheiwse provided herein all obligations
accruing under this contract are preserved until satisfied.
(b) Notwithstanding Section l(a), the affative obligations of the Parties in Sections 3(a), (b),
(c), (d) and (g), 4 through 6, 8 through 12 and 23 (a) and (b) (1-2, and 5) shall tae effect on
November 1, 2005.
(c) Except as provided in Section l(d), all Eligible Purchasers shall have until December 31, 2001
to execute this contract.
(d) If the City of Forest Grove, McMinnvile, Milton-Freewater or Seattle City Light provides
the District written assurance on or before December 31, 2001, that its superintendent or its
city manager supports the execution of this contract and wil so recommend to its city
council, then if Seattle City Light provides such written assurance it shall have until March
31, 2002, to execute this contrct, and if Forest Grove, McMinnvile or Milton Freewater
provides the Distrct such written assurance, the city providing such written assurance shall
have until February 1,2002, to execute this contract.
SECTION 2. DEFINITIONS.
As used in this contract, the following terms when initially capitalized shall have the following
meanings:
"1956 Contract" shall mean the contract entered into by the Distrct and varous paries durng May
1956 for the sale of capacity and energy from the Priest Rapids Development as supplemented and
amended from time to time.
StafCPR_133_1ttachment-S.Pdf Page 30f34
.
.
.
"1959 Contract" shall mean the contract entered into by the Distrct and varous pares durng June
1959 for the sale of capacity and energy from the Wanapum Development as supplemented and
amended from time to time.
"Anual FERC License" shall mean a license for the Priest Rapids Project issued by FERC to the
Distrct for an interim period before a New FERC License.
"Bond Resolution" shall mean each and all of the resolutions adopted by the Distrct authorizing
the issuance of outstading Debt for the Priest Rapids Project.
"Contract Year" shall mean the 12 month period commencing at 12:01 a.m. on Janua 1 of each
year and ending at 12:01 a.m. on the following January 1; provided, however, that the first
Contract Year shall commence on November 1, 2005, and end the following January 1, 2006,
and that the last Contract Year shall end on the last day of the New FERC License, or such tie
that the Distrct no longer has authority to market Prest Rapids Project Output.
"Contract(s)" shall mean t1s contract and similar contracts between the Distrct and other
Purchasers.
"Debt" shall mean any bonds, notes, or other debt obligations of the District, including, but not
limited to all bonds outstanding at the effective date of this contract, a line of credit, installment
purchase agreement, financing lease, interfund loan, derivative securties or payment obligations
and any other obligation for borrowed money, the proceeds of which wil be used for the benefit
of the Priest Rapids Project, including to finance betterments, renewals, replacements and
additions to the Priest Rapids Project, to refud other debt, or any other lawful purose related to
the Priest Rapids Project. Debt does not include the Columbia River-Priest Rapids llydro-
Electrc Production System Revenue Bonds, Series 1956, which have been paid, or the
Wanapum Hydroelectrc Refunding Revenue Bonds, Series 1963, which are scheduled to be
repaid on or prior to January 1,2004.
''Electrc System" shall mean the separate electrc utilty system of the Distrct, including all
associated generation, transmission and distrbution facilities and any betterents, renewals,
replacements and additions of such system, but does not include the Priest Rapids Project or any
other utilty propertes designated as a separate utility system of the Distrct.
"Eligible Purchasers" means the Purchasers who ar pares to the 1956 and 1959 Contracts, and
the Kootenai Electrc Cooperative, Inc., Clearater Power Company, Idaho County Light and
Power Cooperative Association, Inc., Northern Lights, Inc. and the electrc cooperative members
of the Snake River Power Association, Inc. (collectively, the "Idaho Cooperatives") as of
October 31,2000.
"FERC" shall mean the Federal Energy Regulatory Corrssion or its successor.
"FERC License" shall mean any license for the Priest Rapids Project issued by FERC to the
Distrct.
StafCPR_133~iitachment-B'Pdf Page 4 of 34
.
.
.
"Marketing Plan" shall mean the plan for making available in a fair, equitable, and non-
discriminatory manner pursuant to market-based principles and procedures the Reasonable
Portion as required by applicable law or PL 83-544 Orders.
''New FERC License" shall mean the license issued by FERC to the District followig the
expiration of the Original FERC License for operation of the Priest Rapids Project for a duration
of30 years or 10nger, not including any subsequent anual or other license.
"Operating Agreements" shall mean any agreements to which the Distrct is or may become a
par, which provide for operation of the Priest Rapids Project, including but not limited to, the
Pacific Northwest Coordination Agreement, the Agreement for the Hourly Coordination of
Projects on the Mid-Columbia River, the Western Systems Coordinating Council Agreement, the
Agreement Relating to Wanapum Development Encroachment on the Rock Island Project and the
Northwest Power Pool, which is the voluntar association of utilities formed in the Pacific
Nortwest for the purose of ensurng the adequacy and reliability of the electrc power systems in
the Pacific Northwest.
"Original FERC License" shall mean the Federal Power Commssion License for the Priest Rapids
Project issued to the Distrct on November 4, 1955, together with amendments thereto.
"Pacific Northwest" shall have the meanng ascribed thereto in Section 3(14) ofthe Regional Act.
"Priest Rapids Development" shall mean the separate utilty system ofthe Distrct, including a dam
at the Priest Rapids Development, all generation and transmission facilties associated therewith,
and all betterments, renewals, replacements, and additions to such system, as fuer described in
Section 2(i) of Exhbit 1 of Distrct Resolution No. 390 which is attched as Exhbit A, but shall
not include any additional generation, tranmission and distrbution facilities hereafter constrcted
or acquired by the Distrct as a par of the Electrc System or the Wanapum Development or any
other utilty properties of the Distrct acquired or constrcted as a separate utility system.
"Priest Rapids Project" shall mean the hydroelectrc project on the Columbia River in the State of
Washigton designated by the Federal Power Commssion as Project No. 2114. The Priest Rapids
Project consists of the Priest Rapids Development and the Wanapum Development.
"Priest Rapids Project Output" shall mean the amount of capacity, energy (both firm and non-
firm), pondage, reactive power, ancilary services and any other product from the Priest Rapids
Development from November 1, 2005 to November 1, 2009 and from the Priest Rapids Project
from November 1, 2009 through the term of this contract under the operating conditions which
exist durng the term, including periods when the Priest Rapid Project may be wholly or parially
inoperable for any reason, after correction for encroachment, Canadian entitlement, station and
project use, and depletions required by the FERC License or other regulatory requirements.
"Prudent Utility Practice" mean those practices, methods and acts which: (i) when engaged in are
commonly used in prudent engineering and operations to operate electrc equipment and associated
mechanical and civil facilities lawfully and with safety, reliability, efficiency and expedition or
(ii) in the exercise of reasonable judgment considerig the facts known when engaged in could
StafCPR_133J,ttachment-B.Pdf Page 50f34
. have been reasonably expected to achieve the desired result consistent with applicable law, safety,
reliability, effciency and expedition. Prudent Utilty Practice is not intended to be the optimum
practice, method or act, to the exclusion of all others, but rather to be a spectr of commonly
used practices, methods or acts.
"Public Law 83-544" (or ''PL 83-544") shall mean the legislation passed by the 83rd Congress
authoriing the Distrct to develop the Priest Rapids Project.
"Purchasers" shall mean the Purchaser and each person or entity that has entered into a contract
with the District substantially similar to this contract.
.
"Purchaser Revenue Allocation" shall mean the fixed percentage (stated to the second decimal
point, e.g., 0.01 %) as set fort in Section 3(b) of the proceeds from and the costs ofthe sale of the
Reasonable Portion made available under this contract. For paries to the 1956 and 1959 Contracts,
Purchaser Revenue Allocation may not exceed twce the average of their parcipation in the 1956
and 1959 Contracts except that for those Purchasers that were paries to the 1956 Contracts but
were not paries to the 1959 Contrcts their Purchaser Revenue Allocation for the period
November 1, 2005 to October 31, 2009 may not exceed twice their parcipation in the 1956
Contract. For any individual Idaho Cooperative, Purchaser Revenue Allocation shall not exceed
the Purchaser Product Percentage of any individual par to the 1956 or 1959 Contract that is one
of the Purchasers except when the provisions of Section 3( e) are applied. The Purhaser Revenue
Allocation set fort in Section 3(b) is subject to revision pursuant to Sections 3(e), 3(f), 3(g), 3(h)
and 4(f).
"Reasonable Portion" shall mean that 30% portion of the Priest Rapids Project Output required by
FERC pursuant to Public Law 83-544 to be offered for sale by the Distrct.
''Reasonable Portion Proceeds" shall mean the proceeds derived from the sale of the Reasonable
Portion pursuant to the Marketing Plan.
''Regional Act" shall mean Public Law 96-501, the Pacific Northwest Electrc Power Plang and
Conservation Act.
"Uncontrollable Forces" shall mean any cause reasonably beyond the control of the Par and
which the Par subject thereto has made reasonable efforts to avoid, remove or mitigate, including
but not limited to acts of God, fie, flood, explosion, stre, sabotage, act of the public enemy, civil
or militar authority, including court orders, injunctions, and orders of governent agencies with
proper jurisdiction, insurection or riot, an act of the elements, failure of equipment or contractors,
or inabilty to obtain or ship materials or equipment because of the afect of similar causes on
suppliers or carers; provided, however, that in no event shall an Uncontrollable Force excuse the
Purchaser from the obligation to pay any amount when due and owing under tms contract.
''Wanapum Development" shall mean the second stage of the Priest Rapids Project as more fully
described in Section 2.2 of Distrct Resolution No. 474, which is attached as Exhbit A, but shall
not include any generation, transmission and distrbution facilities hereafter constrcted or.
-4-StafCPR_133_Attachment-B.pdf Page 6 of~4
. acquired by the Distrct as a par of the Electrc System or the Pnest Rapids Development, or any
other utilty properties of the Distrct acquired or constrcted as a separte utility system.
The following terms are defined in the cited sections of this contract:
.
"Act ofDefault" at Section 17(a).
"Anual Power Costs" at Section 5(a).
"Committee" at Section 23.
"Coverage Requirement" at Section 5(a)(9).
"Estimated Distrct Load" at Section 4( c )(1).
"Estimated Distrct Power Costs" at Section 4( c)( 4).
"Estimated Power Cost Shortfall" at Section 8(a)(4).
"Estimated Unmet Distrct Load" at Section 4(c)(3).
"Excess Costs" at Section 6(g).
"Financing Costs" at Section 5(a)(3).
"Idaho Cooperatives" at "Eligible Purchasers,"
"Improvements" at Section 4(f)(4).
"Multi-Year Contracts" at Section 8(a)(3).
"New FERC License Costs" at Section 5(a)(6).
"Par" and "Pares" at the Preamble.
"PL 83-544 Orders" at Section 3(h).
"Purchaser Estimated Costs" at Section 6(a)(5).
''Refud Costs" at Section 6(g).
''Rock Island Hydroelectrc Project" at Section 11(b).
"Zero Year" at Section 8(a)(3).
SECTION 3. PROCEEDS FROM THE SALE OF THE REASONABLE PORTION.
(a) Pursuant to the PL 83-544 Orders, the Reasonable Porton must be offered for sale. The
Distrct, therefore, desires to mitigate the risk associated with generating the Reasonable
Portion including, bllt not liited to, the uncertainty of future Priest Rapids Project Output,
costs and market prices. The Distrct believes that this can be best accomplished by
allocating to Purchasers the costs and proceeds from the sale of the Reasonable Portion.
(b) Upon execution of this contract, Purhaser shall select a percentage allocation of the costs and
proceeds from the sale of the Reasonable Portion as described below. The percentage
allocation of the costs and proceeds from the sale of the Reasonable Portion ("Purchaser
Revenue Allocation") shall be ~ percent. The amount of the proceeds and the costs from
the sale ofthe Reasonable Portion are defined in Sections 4 and 6, respectively.
( c) The District wil use the Purchaser Revenue Allocation of the Reasonable Portion Proceeds
to purchase capacity and energy for the Purchaser pursuant to a supplementar agreement
between the Purchaser and the Distrct. The Distrct wil directly assign to the Purchaser the
cost incured by the District in using the Purchaser Revenue Allocation to purchase such
capacity and energy..
StafCPR_133~l.itachment-B.Pdf Page 7of34
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(d) By notification to the District pursuant to Section 4(b), the Purchaser may elect to receive its
Purchaser Revenue Allocation of Reasonable Porton Proceeds in cash rather than receiving
energy and capacity. i
(e) REALLOCATION. If collectively Purchasers subscribe to Purchaser Revenue Allocations that
total more than 100%, then Purchaser Revenue A110cations wil be determined as follows;
provided, however, that the application of the following formula shall not result in the
Purchasers being assigned a Purchaser Revenue Allocation larger than that included in ths
contract on the date of execution:
(1) Step 1. One-hundred percent of the Purchaser Revenue Allocation will be divided between
the Purchaers who are paries to the 1956 and 1959 Contracts, as a group, and the
Purchasers who are included in the Idaho Cooperatives, as a group, in proportion to the
number of retail electrc customers 10cated in the Pacific Nortwest (deterined by the
number of retail meters) served by each group as of October 31,2000.
(2) Step 2. Each Purchaser's Revenue A110cation wil be determed as follows:
(A) For Purchasers who are paries to the 1956 and 1959 Contracts, the proporton of such
Purchaser Revenue Allocations frm Step 1 above will be distrbuted to individual
Purchasers as follows:
(i)For November 1, 2005 through October 31, 2009 the Purchaser Revenue
Allocations shall be distrbuted in proportion to paricipation in the 1956
Contract and 1959 Contract weighted 75% and 25%, respectively.
For the period afer November 1, 2009 the Purchaser Revenue Allocations shall
be distrbuted in proportion to the sum of parcipation in the 1956 Contrct and
1959 Contract divided by two.
(ii)
(B) For the Purchasers who are included in the Idaho Cooperatives, the proportion of such
Purchaser Revenue Allocations from Step 1 will be distrbuted to such individual
cooperatives in proportion to the number of retail electrc customers located in the
Pacific Northwest (determined by number of retaii meters) each cooperative sered as
of October 31, 2000.
(f) Ifthe reallocation procedure of Section 3(e) is implemented, then for the period November 1,
2005 through October 31,2009, the following shall apply to Purchasers who were parties to
the 1956 Contracts but were not paries to the 1959 Contracts:
(1) The Purchaser Revenue Allocation shall be adjusted to be in proportion to paricipation in
the 1956 Contract (the Purchaser's percent paricipation in the 1956 Contrct divided by
63.5%).
(2) The Distrct shall be obligated to provide the Reasonable Portion Proceeds pursuant to
Section 5 using the Purchaser Revenue Allocation, calculated pursuant to Section 3(f)(1),
and the Purchaser shall be obligated to make payments pursuant to Sections 5 and 6 using
such Purchaser Revenue Allocation.
StafCPR_133~íttachment-B.Pdf Page 8 of 34
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The adjustments to Purchaser Revenue Allocation pursuant to this Section 3(1) wil have no
effect on the Purchaser Revenue Allocation of any other Purchaser.
(g) If a Contract with one of the Purchasers is termnated pursuant to Section i 7 as a result of
such Purchaser's Act of Default, the Distrct shall give the non-defaulting Purchasers notice of
such default. Beginnng with the fist month that is at least 30 days following such notice, the
Revenue Alocations (other than zero) of non-defaulting Purchasers shall be increased pro rata
until either: (i) the Purchaser Revenue Allocation of the defaulting Puchaser have been fully
allocated or (ii) a fuer pro rata increase to the Purchaser Revenue Allocations of the non-
defaulting Purchasers would adversely affect the tax-exempt status of any outstanding Debt. In
the event of (ii), the portion of the Purchaser Revenue Allocation of the defaulting Purchaser
not yet allocated wil be offered to all Purchasers that can accept such allocation without
adversely affecting the tax-exempt status of any outstanding Debt. If afer such offer there
remains some portion of the Purchaser Revenue Allocation of the defaultig Purchaser not yet
allocated, the Distrct at its discretion may elect to accept such unallocated portion. If after all
of the foregoing there remains unallocated Purchaser Revenue Allocation of the defaulting
Purchaser, the Purchaser Revenue A110cations (other than zero) of non-defaulting Purchasers
shall be increased pro rata based on each such non-defaulting Purchaser's Purchaser Revenue
Allocation before any allocation under this Section 3(g). In the event that the allocation
described in the imediately preceding sentence adversely affects the ta-exempt statu of
Debt, any increased costs resultig therefrom wil be included in Anual Power Costs.
Nothng in ths subsection is intended to limt any claims the non-defaulting Purchasers may
assert against the defaulting Purchaser.
(h) REGULATORY APPROVALS. The Distrct and the Purchaser believe tht ths contract fully
complies with the requirements of Public Law 83-544. FERC has ordered that a Reasonable
Portion of the Priest Rapids Project Output be offered for sale based on market priciples and
that Eligible Purchasers are to receive a meaningful priority. Additionally, FERG has stated
that the Distrct may negotiate power contracts as part of the license application process
provided that implementation of such contracts is contingent on receipt of license authority.
The Distrct and the Purchaser agree that nothg in ths contract limits in any way the
Distrct's abilty to conform to these FERC requirements. Nothing in tils contract, other than
Section 7, limits the abilty of the Purchaser from paricipating in any FERC or cour
proceedings that may address Public Law 83-544.
The Paries understand that FERC's orders of Februar 11, 1998 and June 12, 1998 in Docket
No. EL95-35 (the "PL 83-544 Orders") require the Distrct, as par of its application for a New
FERC License, to file the Marketing Plan for makng available the Reasonable Porton in a
fair, equitable and non-discriminatoiy manner pursuant to market-based priciples and
procedures. The Pares furter understand and agree that nothig in this contract is intended to
affect or limit in anyway the right of the Distrct to develop and file the Marketig Plan which
it determines is consistent with the PL 83-544 Orders.
In the event that FERC or a court of competent jursdiction shall by order determine that any
provision of this contract violates a requirement of either PL 83-544 or of any of the PL 83-
Staff _PR _133 jttachment-Sol?df Page 90f34
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544 Orders, the Paries shall, within 30 days of the entr of such an order, commence
negotiations for the purose of reachig agreement on such amendments to this contrct, if
any, as may be needed for the purpose of complying with that order and for the purose of
preserving the basic benefits and obligations of the Paries. If, within 90 days of
commencement of negotiations, the Paries are not able to resolve their differences and to
agree upon any necessar amendments, either Pary may, afer notice to the other Par,
cause the matter to be submitted to binding arbitration as provided in Section 23.
If following the issuance of the arbitration decision, a Pary reasonably determines that
acceptance of such amendments wil result in matenally decreased benefits or matenally
increased obligations when compared to this contract, the Party may by notice to the other
Pary explain its reasons for the determnation and, if given within 10 days of the arbitration
decision, terminate this contract.
SECTION 4. DETERMATION OF ESTIMATED PURCHASER REVENUE
ALLOCATION OF REASONABLE PORTION PROCEEDS.
(a) The estimated Purchaser Revenue Allocation of the Reasonable Portion Proceeds expected to
be available to Purchaser during each Contract Year wil be determined by application of the
following provisions of this Section 4.
(b) On or before 60 days prior to the beginning of each Contract Year, Purchaser shall provide
the Distrct with wrtten notification ifit wishes to elect, pursuant to Section 3(d), to receive
its Purchaser Revenue Allocation of Reasonable Portion Proceeds in cash instead of the
District purchasing energy and capacity therewith. In the event that Purchaser fails to make
such annual election pursuant to this section, tle Distrct wil provide Purchaser with energy
and capacity pursuant to Section 3(c).
(c) For the purpose of determining the estimated Purchaser Revenue A110cation of the
Reasonable Portion Proceeds for the next Contract Year, on or before 30 days prior to the
beginning of each Contract Year, the District shall prepare and mail to the Purchaser a pro
forma statement showing for the next Contract Year:
(1) "Estimated Distrct Loads," which shall mean all projected retail electrc energy loads for
the next Contract Year based on average' weather conditions, plus aggregated losses,
proj ected to be used at 10cations served by" the District durng the next Contrct Year with
the exception of (i) locations outside of the geographic boundares shown on Exhibit B
and (ii) that portion of loads of individual retail customers that dunng a consecutive
12 month period after 2000 exceed by ten average megawatts or more the energy load of
such customer for the immediately preceding consecutive 12 month period. Once load at
a location is included in Estimated Distrct Loads, loads at such 10cation shall continue'to
be included in full in futue Contract Years without regard to the source of supply for such
load. For example, if a 10ad is expected to be served in all or par by an entity other than
the Distrct dunng the next Contract Yea, the entire load shall continue to be included in
Estimated Distrct Loads. If a new load or increased load of one average megawatt or more
at a single retail customer has been included in Estimated Distrct Loads in the curent
Contract Year, and less thn 90% of such new or increased load was actually measured in
Staff_PR_133~iitachment-B.Pdf Page 10 of 34
.the curent year, then Estimated Distrct Loads shall be reduced for the next Contract Year
by the diference between the amount included in the current Contract Year and the amount
measured. If there are more than one such new or increased 1000s for the curent Contract
Year, they shall be combined for determining both the 90% and the amount of any
reduction. If in the curent Contract Year a load of one average megawatt or more is placed
on the Distrct which was not included in the curent Contract Year's Estimated Distrct
Loads, then the next Contract Year's Estimated Distrct Loads shall be increased by the
amount of such load measured in the curent Contract Year. Except for such load
correction. calculations, Estiated Distrct Loads for the next Contract Year shall be not
less than the curent Contract Year's Estimated Distrct Loads.
(2) The estimated amount of firm energy from the Priest Rapids Project for the next Contract
Year based on critical water planing using the procedures of Operatig Agreements in
effect on October 31, 2000, uness the Distrct and Purchasers whose Purchaser Revenue
Allocation total 66% or more mutually agree to use procedures from a subsequent
Operating Agreement.
(3) The monthly amount of "Estimated Unmet Distrct Load" determned as follows:
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(A) Prior to November 1, 2009, the Estiated Distrct Load as calculated in Section 4(c)(I)
less 70% of the estimated fi energy output of the Priest Rapids Development less
36.5% of the estimated fi energy output of the Wanapum Development both as
calculated in Section 4( c )(2).
(B) On or after November 1, 2009, the Estimated Distrct Loads as calculated in
Section 4( c)(1) less 70% of the estimated firm energy output of the Priest Rapids
Project as calculated in Section 4(c)(2).
(C) In the event that the calculation in Section 4(c)(3)(A) or (B) above is less than zero the
Estimated Unmet Distrct Load wil be zero.
(D) The difference so determed will be shaped on a monthly basis using the Distrct's
historic 10ad patterns.
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(4) The "Estimated Distrct Power Costs" which shall equal the estimated cost, including the
costs of transmission and other necessar services, of acquig the monthly amount of
capacity and energy identified in Section 4(c)(3) determed by references to published
futues price data and firm power supply contracts entered into by the Distrct, and rates for
tranmission and other necessar services. Prior to the star of the next Contract Year, any
Purchaser may provide the Distrct with a wrtten fi and irevocable bides) for all or par
of the capacity and energy needed to serve the Estimated Unmet Distrct Load from
Section 4( c )(3) for the next Contract Year, and for which the Distrct has not procured a
firm power supply. If such bides), or in the case of a parial supply bid the combination of
the bid and the Estimated Power Cost for the remaining Estimated Unmet Distrct Load, is
less costly than the Estimated Distrct Power Cost set forth in the pro forma statement as
determined by the Distrct, the Distrct may either: (i) acquire from the PurcNiser the.
-9-Staff_PR_133_Attachment-B.pdf Page 11 of 34
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capacity and energy offered and use the bid price in the calculation of the Estmated
Distrct Power Costs for the Estimated Unmet Distrct load so served; or (ü) substitute the
bid price for the portion of the Estimated Unmet Distrct Load that could have been served
with the capacity and energy so bid in the calculation of Estimated Distrct Power Costs.
(5) The estiated Reasonable Portion Proceeds.
(d) Subject to Section 8, in those Contract Year when the Distrct has Estimated District Power
Costs as determined pursuant to Section 4(c)(4), the Distrct sha11 be entitled to and shall tae
from the actual Reasonable Portion Proceeds the Estimated District Power Costs calculated
pursuant to Section 4(c)(4).
(e) Subject to Section 8, the Purchaser shall have available the capacity and energy purchased
pursuant to Section 3(~) with an amount equal to the-actual Reasonable Portion Proceeds
received by the Distrct, minus the Estimated Distrct Power Costs as calculated in
Section 4(c)(4), multiplied by the Purchaser Revenue Allocation; provided, however, if the
Purchaser has elected to receive cash rather than capacity and energy, Purchaser shall be
entitled to receive in cash an amount equal to the actual Reasonable Portion Proceeds
received by the Distrct, minus the Estimated Distrct Power Costs as calculated in
Section 4(c)(4), multiplied by the Purchaser Revenue Allocation.
(f) The Purchaser Revenue Allocation of the Reasonable Porton Proceeds available to
Purchaser may be reduced if the Distrct does not obtain an Anual FERC License or New
FERC License, and under any of the following conditions as determined by the District:
(1) Pursuant to Section 4.
(2) lfthe Distrct is unable to produce the Reasonable Porton due to Uncontrollable Forces.
(3) If failure to reduce deliveries of the Reasonable Portion would result in exceeding the
capability of the Priest Rapids Project or subject it or its operation to undue hazard or
violate the FERC License, any applicable law, regulation, or Operating Agreement.
(4) In case of emergencies or in order to install equipment ii, make repais to, make
betterments, renewals, replacements, and additions to (''Iprovements''), investigations and
inspections of, or perform other maintenance work on the Priest Rapids Project.
The Distrct wil use its reasonable efforts to give advance notice to the Purchaser regarding
any planed interrption or reduction, giving the reason therefor and stating the probable
duration thereof.
(g) Notwithstanding any other Section of this contract, if the Priest Rapids Project is capable of
producing Priest Rapids Project Output, but the Purchaser Revenue Allocation . of the
Reasonable Portion Proceeds to be madè available to the Purchaser is projected to be zero for a
Contract Year, the Purchaser may give the Distrct wrtten notice, no later than 100 days after
-10-Staff_PR_133_Alachment-B.pdf Page 12 of 34
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the star of the Contract Year, that the Purchaser elects to termnate ths contract. In such event,
ths contrct shall terminate effective upon receipt of such written notice by the Distrct.
SECTION 5. ANNUAL POWER COSTS.
(a) "Amual Power Costs" as used in this contract shall include, for the Priest Rapids
Development beginning November 1, 2005 and for the Priest Rapids Project beginnng
November 1, 2009, all of the Distrct's costs and expenses of every tye, both direct and
indiect, resulting from the ownership, operation, maintenance of and hnprovements that are
incured or paid by the Distrct durng each Contract Year and that are incured consistent
with Prudent Utility Practice. Such costs and expenses sha for any Contract Year include, but
not be limited to the following, in each case without duplication:
(1) All operations costs, maintenance costs, administrative costs, taxes, in lieu of tax
payments relating to production and delivery of Priest Rapids Project Output (excluding
depreciation) including, but not limited to, those specified in the Uniform System of
Accounts as prescribed by the FERC for electrc utilties and licensees.
(2) Amounts that the Distrct determnes are needed to pay for the prevention or correction of
any loss or damage and for Improvements to keep the Pnest Rapids Project in good
operating condition. Subject to Section 23, the Purchaser agrees that the Distrct shall have
the sole right to determne what costs and expenses shall be incured in connection with the
ownership, operation, and maintenance of and Improvements to the Priest Rapids Proj ect.
(3) Subject to Section See), interest that accrues and is payable into the debt service fund with
respect to outstanding Debt; principal that accrues and is payable into the debt service
fund with respect to outstanding Debt, whether at matunty or by reason of redemption
(including premiums for redeeming Debt prior to its scheduled maturity), amounts
required to restore any reserve accounts maintained to secure Debt to the level required
by the resolution authorizing the Debt and Financing Costs. "Financing Costs" include,
but are not limited to, discounts, insurance premiums, letter of credit fees, costs of
hedging Interest rates, costs of compliance with disclosure requirements, legal and bond
counsel fees, independent auditors, priting, financial advisor, bond registrar and trstee
costs.
(4) Subject to Section 5(e), costs of creating and replenishing any reserve or contingency fud
required to be maintaied by any Bond Resolutions and working capital fuds.
(5) Any liabilty or cost, including settlements and judgments, incured as a result of or related
to the ownership, operation or maintenance of the Priest Rapids Project and not covered by
msurance.
(6) Costs incured by the District in applying for a New FERC License as recorded on the
Distrct's books of account for the Priest Rapids Project (account number 183090),
including but not limited to those costs and interest expenses incured before November 1,
2005 ("New FERC License Costs"). New FERC License Costs incurred pnor to
November 1, 2005 will be recovered unformly over a 15-year amortization period
-11-StafCPR_133_Åttachment-B.pdf Page 13 of 34
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commencing with the Contract Year staring on Januar 1, 2006. The estimated New
FERC License Costs incured by the Distrct after November 1,2005 will be included in
Anual Power Costs. In the event of termination of tlus contract for any reason subsequent
to the effective date of the New FERC License, the Purchaser shall pay the Distrct an
amount equal to the unecovered New FERC License Costs multiplied by the Purchaser
Power Allocation at the time of termation. In the event of termnation of this contract for
any reason prior to the effective date of the New FERC License, Purchaser shall have no
liabilty for unecovered New FERC License Costs.
(7) Obligations entered into by the Distrct as par of its effort to obtain a New FERC License,
including but not limited to the cost of replacing Priest Rapids Project Products that may be
committed in such obligations.
(8) Costs incurred by the District to fulfill obligations, if any, to paries to the 1956 and 1959
Contracts who do not sign ths contract, as such costs are required or approved by a cour,
or reasonably approved by the Distrct afer notice to the Purchaser.
(9) An amount equal to 15% of debt service in that Contract Year or such higher amount as
may be required by a Bond Resolution ("Coverage Requirement").
(b) The Distrct shall credit against Anual Power Costs the following:
(1) Any insurance or other proceeds received by the District as reimbursement for damages,
losses, costs or expenses included in the Anual Power Costs, and any insurance or other
proceeds received as a result of the interrption or reduction of Priest Rapids Project
Output.
(2) Revenue, if any, received from obligations entered into by the Distrct as par of its effort
to obtai a New FERC License.
(3) Revenue, if any, received as a result of the Distrct fulfillng obligations to parties to the
1956 or 1959 Contracts that do not sign this contract, pursuant to Section (l)(b) of
those
contracts, excluding revenue required to be paid pursuant to the 1959 Contract.
(4) The Coverage Requirement, to the extent that it is not expended durg a Contract Year
for capital or other costs of the Priest Rapids Project (the amount not spent shall be
credited against Anual Power Costs for the following Contract Year).
(5) Interest earnings on funds of the Priest Rapids Project that are not required to be retained
by such fud by a Bond Resolution.
(c) Costs directly or indirectly associated with the District's Electrc System or any other
separate system of the District shall not be part of Anual Power Costs other than the
payment of Debt held by the Electric System.
-1?-Staff_PR_133_Altachment-B.pdf Page 140134
.(d) Any payment received by the District as a result of the takng of the whole or any portion of
the Priest Rapids Project Output by any state or federal governent agency shall be used by
the District to credit Anual Power Costs or to retire, at or prior to maturity, Debt, whichever
shall be proper under the circumstances existing at the time ofthe takg.
(e) The Purchaser agrees that the Distrct shall have the sole discretion to deterne what porton,
if any, of the Priest Rapid Project financing wil be accomplished by issuance of Debt and the
terms and covenants of any Debt.
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(1) To the extent that the Distrct makes Improvements to the Priest Rapids Project that are
not financed by Debt proceeds, Anual Power Costs will include a cost as determined by
the following: the Distrct shall determine all of the Improvements anticipated for the
Priest Rapids Project for the Contrct Year and the District shall estimate the weighted
average economic service life of the Improvements, and shall calculate a weighted
average market interest rate assuming the Distrct were to issue Debt to finance such
Improvements, both as reasonably determned by the Distrct. Based on such calculations
the District shall include in Anual Power Costs an amount sufficient to amortize the
costs (including both interest and principal pursuant to this Section 5(e)(1)) of such
Improvements on a level basis over a period equal to the estimated weighted average
economic service life of the Improvements. The amortization period for any
Improvements shall not exceed 30 years and land shall be deemed to have a service life
of 30 years. The District may adjust prospectively the amortization of any Improvements
to reflect the actual costs of such Improvements, to correct any error in computation or to
reflect a material change in the Distrct's estimate of the average economic life of the
Improvements. The District shall not be required to amortize capital expenditures that
are estimated to cost below the amount that in accordance with the District's
capitalization policy are not required to be capitalized and may include such costs in
Anual Power Costs.
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(2) To the extent that the District issues Debt (i) with a final matuty that is not earlier than
the expiration of the estimated weighted average service life of the Improvements, to be
financed with the Debt and (ii) the tota anual amounts required for the payment of
interest, principal and sinkng fund requirements of such Debt when due in a Contract
Year do not vary by more than 10% from those required in any other Contract Year, then
Anual Power Costs shall include the actual principal and sinking fud requirements that
accrues and is payable into the debt service fud for that Debt for the Contract Year. To
the extent that the District issues Debt that does not meet the requirements of (i) and
(ii) in the prior sentence, then Anual Power Costs wil include, with respect to such
Debt, an amount as determined by the District as of the date of issuance of the Debt,
suffcient to amortize the original pricipal amount of such Debt on a level debt service
basis over a period equal to the estimated weighted average economic service life of the
Improvements financed or refinanced by such Debt, commencing on the later of (a) the
date of issuance of the Debt or (b) the in service date of such Improvements, and based
on an interest rate equal to, at the election of the Distrct, either (i) the weighted average
interest rate of the Debt or (ii) the weighted average market rate at the time of issuance of
the Debt for debt with similar terms and borrowers similar to the Distrct, as reasonably
Staff_PR_133~~fachment-B.Pdf Page 15 of 34
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determined by the Distrct. The amortization period for any Debt shall not exceed
30 years, land shall be deemed to have an economic useful life of 30 years, and any Debt
proceeds deposited into a reserve account shall be credited against Anual Power Cost in
the final year of the Debt. The Distrct may adjust prospectively the amortization of the
principal amount of any Debt to correct any error in computation or to reflect a material
change in the District's reasonable estimate of the in service date or the average
economic life of the Improvements.
(3) To the extent that the District creates or replenishes reserve and contingency fuds
required by Bond Resolutions or working capital fuds that are not financed by Debt
proceeds, Anual Power Costs will include a cost determned in a manner analogous to
the calculation in Section 5(e)(2) with such amounts amortzed over 15 years. Upon
termination of this contract, any such fuds wil belong to the Distrct.
(f) On or prior to July 31st of each year, for budgetary puroses only and not for determining
Priest Rapids Project Products or Purchaser's payment obligations under this contract, the
Distrct shall provide the Purchaser a pro forma budget showing an estimate of Anual Power
Costs, Priest Rapids Project Output, Purchaser Revenue Allocation and Estimated Distrct
Loads for the following Contract Year.
SECTION 6. PAYMENT FOR PRIEST RAPIDS PROJECT PURCHASER REVENUE
ALLOCATION.
(a) On or before 30 days prior to the beginnng of each Contract Year begig in 2005, the
Distrct shall prepare and mail the Purchaser a pro forma statement for the next Contract
Year showing:
(1) An estimate of Anual Power Costs specifically assigned to the Purchaser. Specific
assignent shall occur whenever a Purchaser or a group of Purchasers cause identifiable
costs to be placed on the Priest Rapids Project.
(2) A detailed estimate of the Anual Power Costs, less those costs specifically assigned in
Section 6(a)(I), for the Contract Year.
(3) An estimate of the cost to the Purchaser attributable to the Purchaser Revenue Allocation
of the costs of the Reasonable Portion, which shall be an amount equal to the product of
the Reasonable Portion and the Anual Power Costs from Section 6(a)(2) multiplied by
the ratio of the estimated Reasonable Portion Proceeds to be received by the Purchaser
calculated pursuant to Section 4(e) to the estimated total Reasonable Portion Proceeds
from Section 4( c)(5).
(4) An estimate of the cost of purchasing capacity and energy with the Purchaser Revenue
Allocation of the Reasonable Portion Proceeds pursuant to Section 3( c).
(5) The sum of amounts (expressed in dollars) calculated pursuant to Sections 6(a)(1), (3),
and (4), hereinafter referred to as the "Purchaser Estimated Cost."
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(6) The amount of the monthly payments to be made by the Purchaser to pay the Purchaser
Estimated Cost durng the next Contract Year.
(b) The pro forma statement provided pursuant to Section 6(a) shall be in lieu of
the issuance of
monthly bils to the Purchaser by the Distrct, and the Purchaser shall be obligated to pay the
monthly amounts contained therein in accordance with this Section 6.
(c) In the event of receipts or payments substantially affecting the Anual Power Costs durng
any Contract Year, the Distrct shall prepare and mail to the Purchaser a revised statement of
estimated Anual Power Costs and Purchaser Estimated Cost, which revised statement shall
supersede any previous statement or revised statement, and the Purchaser shall be obligated
to make monthly payments set forth on such revised statement for the balance of the Contract
Year.
(d) Purchaser Estimated Cost shall continue to accrue and the Purchaser shall make payment for
the same up to the time of termination of this contract for whatever reason, irrespective of the
condition of the Prest Rapids Project and whether or not it is capable of producing Priest
Rapids Project Output, the Reasonable Porton or the Purchaser Revenue Allocation of the
Reasonable Portion Proceeds. If the Priest Rapids Proj ect is not capable of producing Priest
Rapids Project Output then the Purchaser Estimated Cost wil be based on Priest Rapids
Project Output in the last full year of operation. In this event, at the request of the Purchaser,
the Distrct wil makes its reasonable best efforts to acquire replacement Priest Rapids
Products the cost of which wil be added to the Purchaser Estimated Cost.
(e) The monthly payments of Purchaser Estimated Costs set forth in the statement or revised
statement shall be due and payable by electronic fuds transfer to the Distrct's account,
designated in wrting by the Distrct, on the 20th calendar day of each month.
(f) If payment in full of any monthly payment amount set forth on a statement or revised
statement is not received by the Distrct on or before the close of business on the 20th day of
the month, a delayed payment charge of 2 % of the unpaid amount due will be made. Any bil
which remais unpaid for more than 30 days after the due date shall, in addition to the delayed
payment charge, accrue interest at the lesser of 1.5% per month or the maximum rate allowed
by law. If the 20th calenda day of the month is a Satuday, Sunday or a Distrct recognized
holiday, the next following business day shall be the last day on wmch payment may be
received without the addition of the delayed-payment charge. Additionally, if payment due to
the Distrct under tms Section 6 remains unpaid 30 days afer the due date, the Distrct may
thereafter suspend payment of the Purchaser Revenue Allocation to the Purchaser which would
otherwise occur until payment in full of all amounts due and owig (including any interest and
delay charges) is received by the Distrct.
(g) On or before 150 days after the end of each Contract Year, the Distrct wil submit to the
Purchaser a detailed statement of the Purchaser Estimated Cost and the Purchaser Actual Cost
for the Contract Year. Purchaser Actual Cost on such statement shall be calculated in the
same manner as Purchaser Estimated Cost as set forth in Sections 6(a)(1)-(5) but using the
actual costs incurred by the Distrct in the preceding Contract Year; provided, however, that
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the estimated values calculated pursuant to Sections 4(c)(1)-(2) and 4(c)(5) shall not be
modified. If the Purchaser Actual Costs exceed the Purchaser Estimated Costs on such
statement ("Excess Costs"), the Distrct shall bil the Purchaser for an amount equal to such
Excess Costs, and the Purchaser shall pay such bil withn 30 days or be subject to the
delayed-payment and interest charges as provided in Section 6(f). If the Purchaser Actual
Costs are less than the Purchaser Estimated Costs, or if credits are due pursuant to
Section 5(b) or both ("Refud Costs"), the Distrct shall give credit to the Purchaser against
the Purchaser Estimated Costs for the curent Contract Year in an amount equal to such
Refund Costs; provided, that if Refud Costs are due to Purchaser following the expiration of
this contrct, the Distrct shall make a cash refud of such amount to the Purchaser.
(h) The Distrct may use any payments received from the Puchaser under this contract in any
maner that the Distrct, in its sole discretion, shall determne. The Distrct agrees to payor
cause to be paid for the Priest Rapids Project from lawfully available money of the Distrct,
including payments from the Purchaser and other Purchasers, alI the operating costs, taes and
assessments, capital expenditues, payments required for Debt and other costs of the Priest
Rapids Project. If the District issues tax-exempt Debt based on the governental use of the
Priest Rapids Project Output by the Purchaser, the Purchaser covenants that it shall not use
any Priest Rapids Project Output in a maner, or take any other action, that wil or is likely to
adversely affect the tax-exempt status of any Debt.
SECTION 7. SUPPORT AND COOPERATION.
(a) The Distrct shall make application and use reasonable efforts to obtain a New PERC License
and obtain PERC approval of this contract, if required. The Distrct reserves the right to
determe when such applications should be made.
(b) In accordance with FERC direction contained in the PL 83-544 Orders, the Distrct commits
to providing the Eligible Purchasers with a meanigful priority in the sale of the Reasonable
Portion.
(c) Purchasers may also paricipate in the development by the Distrct of a proposed Marketing
Plan. This Marketing PIan wil be submitted to FERC for approval as par of the relicensing
process application; provided, however, that nothing in this Section shall be construed as
compellng the Purchaser to comment on or refrain from commenting on the Marketing PIan.
(d) Purchaser covenants that it shall provide reasonable support, cooperation and assistance to
the District in the Distrct's acquisition of a New and Anual PERC License, any necessar
federal, state or local permits relating to the Priest Rapids Project, FERC approval of this
contract, if FERC approval is requested by the Distrct; provided, however, that nothing in ths
contract shall preclude the Purchaser from filing comments with FERC to protect the
Purchaser's economic benefits provided by ths contract.
(e) In the event that the Distrct believes that the Purchaser has violated any of the above
covenants of Section 7(d), the District may by wrtten notice to the Purchaser describe the
alleged violation in reasonable detail and give the Purchaser no less than 10 business days
within which to cease the activity in question or to provide to the Distrct a written
Staff_PR_133!Á?iãchment-S.Pdf Page 18 of 34
.explanation as to why the Purchaser believes the activity does not constitute a violation of
any of the aforementioned covenants. If the Purchaser does not cure the alleged default and
the Distrct contiues to consider the action to be in breach of the covenants, the matter shall
be resolved pursuant to arbitration conducted under Section 23. If the Purchaser is
determined to be in breach ofthe covenants, the District shall have the right to terminate this
contract effective immediately upon written notice to the Purchaser, without any liabilty or
furter obligation on the par of the District. In the event of such termination, the Distrct
shall have the right to use or sell, in any maner the District determines, the Purchaser
Revenue Allocation the Purchaser would have been otherwise entitled to under this contract.
(f) Purchaser covenants that it shall refrai from filing or supporting any FERC license
application for the Priest Rapids Proj ect other than that filed by the Distrct and refrain from
filing or supporting any effort that would lead to modification of the FERG decisions on
Public Law 83-544 contained in the PL 83-544 Orders, unless such a request or petition is
fied by the Distrct and the Purchaser agrees with that request or petition. For puroses of
this Section 7(f), "refrain from supporting" means prepare no documents, submit no
testimony, sign no other agreement or contract other than this contract for Priest Rapids
Proj ect Output or for other products or that is contingent upon a par other than the District
receiving a license from FERC to operate the Priest Rapids Project, engage in no lobbying
and provide no funding.
.(g) The Purchaser covenants that it wil not take any action which, in the opinion of a neutral
third party, would likely be constred as: (i) having a material adverse effect on the Distrct's
abilty to obtain an Anual FERC License or a New FERC License or on the anticipated
economic benefits of this contract or (ii) constituting a judicial challenge to the authority of
the District or the Purchaser to enter into and implement the provisions of ths contract. This
covenant does not apply to anticipated economic benefits under other agreements between
the Distrct and third pares, such as with the Bonnevile Power Administration.
(h) In the event that the Distrct believes that the Purchaser has violated any of the above
covenants of Section 7(f) or (g), the District may by wrtten notice to the Purchaser describe
the alleged violation in reasonable detail and give the Purchaser no less tha 4 business days
after receipt of such written notice by Purchaser within which to cease the activity in
question or to provide to the District a written explanation as to why the Purchaser believes
.the activity does not constitute a violation of any of the aforementioned covenants. If the
Purchaser does not cure the alleged default and the District continues to reasonably consider
the action to be in breach of the covenants, the Distrct shall have the right to terminate this
contract and the 1956 and 1959 Contracts, effective immediately upon written notice to the
Purchaser, without any Ii ability or further obligation on the par of the Distrct. In the event
of such termination, the District shall have the right to use or sell, in any maner the District
determines, the Purchaser Revenue Allocation the Purchaser would have been otherwise
entitled to under this contrct and any output from the Priest Rapids Project under the 1956
or 1959 Contracts.
.SECTION 8. PAYMENT OF THE REASONABLE PORTION PROCEEDS.
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(a) The Purchaser Revenue Allocation of the Reasonable Portion Proceeds shall be paid to the
Purchaser monthly, as follows:
(1) The monthly payment to the Purchaser shall be the product of the Purchaser Revenue
Allocation and the difference between the actual monthy payments of the Reasonable
Portion Proceeds received by the Distrct and the monthly Estiated Distrct Power Costs
pursuat to Section 4(c)(4); provided, however, if the Purchaser has elected to have. the
Distrct make purchases of capacity and energy under a supplementa agreement puruant
to Section 3(c), then Purchaser will receive such capacity and energy in lieu ofthe proceeds
described in tms Section 8(a)(1). Nothing in ths Section 8(a)(1) will result in a negative
payment or a bil to the Purchaser when such Estimated Distrct Power Costs exceed the
actual monthly Reasonable Portion Proceeds received by the District.
(2) Payments due from the Distrct to Purchaser pursuant to Section 8(a)(1) shall be made in
accordance with the provisions of Section 6, and such payment shall be due not later than
the 20th calendar day of each month.
(3) During the term of this contract, the Distrct may be entitled to take durg a Contract
Year all of the Reasonable Portion Proceeds pursuant to Section 4(d) resulting in a zero
payment to purchaser ("Zero Year"). If in any Zero Year the Distrct has in place one or
more multiple year contracts, the terms of which include or span the Zero Year ("Multi-
Year Contracts"), then the payments to the Purchaser from such Multi-Year Contracts
included in the calculations performed pursuant to Section 4(e) shall be proportional to
the anual market price of power as forecast at the time the Multi-Year Contracts were
agreed to by the District.
(4) If in any month the Estimated Distrct Power Costs from Section 4(c)(4) exceed the
actual Reasonable Porton Proceeds received in such month ("Estimated Power Cost
Shortall"), the Estimated Power Cost Shortfall shall be cared forward to the next month
or months remaining in the Contract Year in which such Estiated Power Cost Shortfall
occurred until paid in full from the Reasonable Portion Proceeds received by the Distrct.
SECTION 9. INFORMTION TO BE MAE AVAILABLE TO THE PURCHASER.
(a) The District agrees to keep records of
the Priest Rapids Project in accordance with the Uniform
System of Accounts as prescribed by FERC for electrc utilties and licensees; provided, if
there are inconsistencies between the Uniform System of Accounts and ths contract, this
contract shall control. The Purchaser, upon at least 30 days advance wrtten notice to the
Distrct, shall have the right to audit or examne operating. and fiancial records relating to the
Priest Rapids Project during the Distrct's normal business hours. To the extent practicable, the
Purchasers shall conduct any such audit or examination jointly to minmie the disruption to
the Distrct's business operations. All costs incured by the Distrct associated with such audit,
including, but not limited to, Distrct labor, materials and reproduction services shall be biled
to the Purchaser, and shall be promptly reimbursed by the Purchaser in accordance with
Section 6(e).
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. (b) Upon request, any audit reports of the Priest Rapids Project by a firm of certified public
accountants employed by the District or by the State Auditor's Office of the State of
Washington wil be provided to the Purchaser.
(c) Policies of insurance cared by the District pursuant to Section 10 shall be available at the
office of the Distrct for inspection by the Purchaser.
(d) The Purchaser's representatives shall at all times be given reasonable access to the Priest
Rapids Project, subject to the Distrct's applicable safety rules and regulations.
(e) Upon request, the Purchaser may obtain information to document the capabilty of
the Priest
Rapids Project to produce Priest Rapids Project Output.
SECTION 10. INSURACE.
The District shall have the right to self-insure and/or obtain and maintai insurance with policies
payable to the Distrct for the following coverage:
(a) Obligations of the Distrct under any state or federal Workmen's Compensation laws or other
employer's liabilty;
(b) Public liabilty for bodily injur and propert damage;.(c) Physical loss or damage to the Priest Rapids Project on a replacement cost basis; and
(d) Any other insurance determined to be necessary.
SECTION 11. PROJECT INTEGRATION.
(a) It is the intention of the Parties hereto that the operation of
the Priest Rapids Project shall be
integrated and that all benefits accruing as a result of such integration shall be shared equally
by the Priest Rapids and Wanapuni Developments. It is also agreed that before November 1,
2009 and after such date if required by any Bond Resolution, all joint costs of the Priest
Rapids and Wanapum Developments shall be equitably allocated between them as
determned by the Distrct.
(b) The Paries agre that any compensation (whether energy or money) due or which may become
due the owner of the Rock Island Hydroelectrc Project because of encroachment by the Priest
Rapids Project after November 1, 2009 on the Rock Island Hydroelectrc Project wil either
proportonately reduce the amount of Priest Rapids Project Output or be included in Anual
Power Costs, as appropriate, but shall not reduce the amount required to be paid by the
Purchaser under Sections 5 and 6. "Rock Island Hydroelectrc Project" shall mean the FERC
Hydroelectrc Project No. 943 curently operated by Public Utilty Distrct NO.1 of Chelan
County, Washington.
.SECTION 12. LIABILITY OF PARTIES.
(a) Except as otherwise provided in this contract, each Pary hereby releases the other Part and
its commissioners, officers, directors, agents and employees from any claim for loss or damage
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arsing out of the ownership, operation, and maintenance of the Priest Rapids Project including
any loss of profits or revenues, loss of use of power system, cost of capital, cost of purhased
or replacement power, other substantially siinlar liability or other direct or indirect
consequentialloss or daage, except as provided in the Agreement Limiting Liability Among
Western Interconnected Systems for paries to that agreement. This release shall not include
any claim by the Purchaser for refuds for over-payments made to the Distrct nor any claim
for specific pedormance of the Distrct's obligation to deliver to the Purchaser durng the term
of ths contract the Purchaser Revenue Allocation to which the Purchaser is entitled under ths
contract.
(b) The Purchaser shall have no claim of any tye or right of action against the Distrct: (i) as a
result of a FERC or court order or amendment described in Section 3(h); (ii) as a result of the
failure to receive an Anual FERC License or a New FERC license or the adjustment of
delivery of Priest Rapids Products pursuant to Section 4(f) whether arsing under the terms of
this contract or otherwise; or (ii) as a result of the Distrct's purchasing power or energy on
behalf of the Purchaser pursuant to Sections 3(c), and the Purchaser hereby releases the
Distrct and its commissioners, officers, agents and employees from any claim for loss or
damage arsing out of the events described in this paragraph.
SECTION 13. NOTICES AND COMPUTATION OF TIME.
Any notice or demand, except those provided for in Section 6, by the Purchaser under this contract
to the Distrct shall be deemed properly given if mailed postage prepaid and addressed to Manager,
Public Utilty Distrct No.2 of Grant County, Box 878, Ephrta Washington 98823; any notice or
demand by the Distrct to the Purchaser under this contract shall be deemed properly given if
mailed postage prepaid and addressed to the Vice President, Energy Resources, Avista
Corporation, P. O. Box 3727, Spokane, Washington 99220.
In computing any period of time from such notice, such period shal commence at 12:00 AM.
(midnght) on the date mailed. The designations of the name and address to which any such notice
or demad is directed may be changed at any time by either par giving notice as provided above.
SECTION 14. DISTRICT'S BOND RESOLUTIONS AN LICENSE.
It is recognized by the Paries that the Distrct, in its operation of the Priest Rapids Project, must
comply with the requirements of the Bond Resolution and with the FERC License together with
aniendments thereof from time to time made, and the Distrct is hereby authorized to take such
actions as the Distrct determines are necessar and appropriate to comply with such Bond
Resolution and FERC License.
SECTION 15. GOVERNING LAW.
The Paries agree that the laws ofthe State of Washington shall govern this contract.
SECTION 16. ASSIGNMENT OF CONTRACT.
Neither the Purchaser nor the Distrct shall by contract, operation of law or otherwse, assign this
contract or any right or interest in this contract without the prior wrtten consent of the other
Party, which shall not be umeasonably withheld; provided, however, a Party may, without the
consent of the other Part (and without relieving itself from liability hereunder): (i) transfer or
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assign this contract to an affiliate of the Part provided that the affliate's creditworthiness is
equal or higher than that of the Pary; or (ii) transfer or assign this contract to any person or
entity succeeding to all or substantially all of thedIstribution and generating facilties of the
Party whose creditworthiness is equal or higher than that of the Party; provided, however, that in
each such case, any such assignee shall agree in writing to be bound by the tenns and conditions
in this contract and the transferring Part shall deliver such tax and enforceability assurance as
the other Par may reasonably request.
SECTION 17. REMEDIES ON DEFAULT.
(a) "Act of Default" shall mean:
(1) The failure of a Part to make, when due, any payment required under this contract if
such failure is not remedied within three days after wrtten notice, provided that the
payment is not the subject of a good faith dispute pursuant to Section 23. If requested by
the Distrct, the Purchaser shall deposit the disputed amount in escrow with a bank
acceptable to the Paries.
(2) Any representation or waranty in this contract is false or misleading in any materal
respect when made or ceases to remain tre durg the ter ofthis contract.
(3) The failure of the Purchaser, after Section 7 or any provision thereof has been found by a
court to be void, unlawful or unenforceable, to perform in accordance with the provisions
of Section 7, including without limitation any provision or provisions found to be void,
unlawful or unenforceable.
(4) A Pary shall make an assignent or any general arrangement for the benefit of creditors;
fie a petition or otherwise commence or acquiesce in the commencement of a proceeding
under any banptcy or similar law for the protection of creditors; or otherwise becomes
banpt or insolvent or unable to pay its debts as they fall due.
(b) If a Par commts an Act of Default durg the tenn of this contract, the non-defaulting Part
may take anyone or more of the following remedial steps:
(1) Take any action or exercise any remedy provided to the Part under the provisions of
Sections 6 or 7.
(2) Except where a different time period is set forth herein, if the defaultig Par fails to
remedy an Act of Default withn ten days after receiving wrtten notification of the default,
then the non-defaulting Par may give a wrtten notice of termation of this contract on a
date specified in such notice, which date shall be not less than 30 days afer the date of such
notice. If the Purchaser is given wrtten notice as provided herein, ths contract shall
termate upon the date specified in such notice, the Purchaser thereafer shall have no
right, title, or interest in, to, or with respect to the Priest Rapids Project, or any Purchaser
Revenue Allocation, or any Priest Rapids Project Output, but the Purchaser shall remain
liable for all amounts due the Distrct which have accrued prior to the date of termination.
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(3) The Distrct may, prior to the termnation of this contract pursuant to Section 17(b)(2), at
any time suspend any and all rights of the Purchaser to the Purchaser Revenue Alocation
upon not less than five days' notice to the Purchaser. The Distrct may, without fuher
notice to the Purchaser, grant any or all of such suspended rights to any person or entity for
the duration of the suspension. In such event, the Purhaser shall, in addition to its other
obligations under this contract, upon demand, pay to the Distrct all expenses and any
losses incured in connection with such suspension and any grant of the suspended rights to
another person or entity. No suspension of any or all of the rights of the Purchaser
Revenue Allocation shal be constred as an election to termate the interests of the
Purchaser in, to, and under ths contract unless a wrtten notice of termation is given to
the Purchaser pursuant to ths contract or uness such termination be decreed by a cour of
competent jursdiction.
(4) The non-defaulting Par may begin and mantai successive proceedings against the
defaulting Par for the recovery of damages or for a sum equal to any and all payments
required to be made pursuant to ths contract.
(5) A Part may take whatever action at law or in equity as may appear necessar or desirable
to collect the amounts payable by the defaulting Part under this contract then due and
thereafter to become due, or to enforce performance and observation of any obligation,
agreement or covenant of the defaulting Par under this contract.
(6) No right or remedy conferred upon or reserved to a Par is intended to be exclusive of any
other right or remedy, and each and every right and remedy shall be cumulative and in
addition to any other right or remedy given hereunder, or now or hereafer legally existig,
upon the occurence of any Act of Default. Failure of the Distrct to insist at any time on
the strct observance or performance by the Purchaser of any of the provisions of ths
contract, or to exercise any right or remedy provided for in this contract shall not impair
any such right or remedy nor be constred as a waiver or relinquishment thereof for the
future. Receipt by the Distrct of any payment required to be made hereunder with
knowledge of the breach of any provisions of this contract shall not be deemed a waiver of
such breach. In addition to all other remedies provided in this contract, the Distrct shall be
entitled, to the extent permitted by applicable law, to injunctive relief in case of the
violation, or attempted or threatened violation, of any of the provisions of ths contract, or
to a decree requing perfonnance of any of the provisions of this contrt or to any other
remedy legally allowed to the Distrct.
(7) The Distrct shall not have the right to accelerate futue payment obligations of the
Purchaser in the event of default under this contract.
SECTION 18. VENUE AND ATTORNEY FEES.
Venue of any action fied to enforce or interpret the provisions of this contract shall be exclusively
in the United States Distrct Court for the Eastern Distrct of Washington or the Superior Cour of
the State of Washington for Grant County and the Paries irrevocably submit to the jurisdiction of
any such cour. In the event of litigation to enforce the provisions of this contract, the prevailing
Par shall be entitled to reasonable attorney's fees in addition t.o any other relief a110wed.
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SECTION 19. COMPLIANCE WITH LAW.
The Paries shall conform to and comply with all laws, rues, regulations, license conditions or
restrctions promulgated by the FERC or any other governental agency or entity havig
jursdiction over the Priest Rapids Project. The Purchaser shall cooperate and take whatever action
is necessar to cooperate fully with the Distrct in meeting such requirements. Obligations of the
Distrct contaied in this contract are hereby expressly made subordinate and subject to such
compliance.
SECTION 20. HEADINGS.
The headings of sections and pargraphs of this contract are for convenience of reference only and
are not intended to restrct, affect or be of any weight in the interpretation or constrction of the
provisions of such sections and paragraphs.
SECTION 21. ENTIR AGREEMENT; MODIFICATION; CONFLICT IN PRECEDENCE.
This contract does not modify the terms and conditions contaed in the 1956 and 1959 Contracts
except as provided in Sections 1(b) and 7. This contrct constitutes the entie agreement between the
Pares with respect to the subject matter of this contract, and supersedes alI previous
communcations between the Paries, either verbal or wrtten, with respect to such subject matter.
No modifications of this contract shall be binding upon the Paries unless such modifications are in
writing signed by each Par. To the extent there are any conflicting provisions between this
contract and the 1956 Contract, or this contrct and the 1959 Contract after November 1,2009, the
terms and conditions in this contract shall take precedence and be controllng and the 1956 and 1959
Contracts are hereby amended accordingly.
SECTION 22. NO PARTNERSHIP OR THI PARTY RIGHTS.
(a) This contract shall not be interpreted or constred to create an association, joint venture or
parership between the Pares, or to impose any parership obligations or liability upon any
Par. Without limiting the foregoing, the Purchaser shall not be liable for, and the Distrct
hefeby releases the Purchaser frm, the payment of Debt except as provided in Sections 5
and 6.
(b) This contract shall not be constred to create rights in or grant remedies to any third part as
a beneficiar of this contract.
SECTION 23. PURCHASERS' COMMITTEE; ARITRATION.
(a) There is hereby established a Purchasers' committee (the "Committee"). Each Puchaser
may appoint one representative (and one alternate) as a Committee member to attend
Committee meetings. The members of the Committee shall elect a char, and may adopt such
rues for the conduct of business as it deems appropriate. Meetings between the Distrct and
Purchasers shall be held routiely, but not more frequently than once a quarer, provided,
however, that such meetings may be held more frequently than once each quarer at the
request of the Distrct Of upon the request of members of the Committee whose Purchaser
Revenue Allocations total 66% or more. All meetings between the Distrct and Purchaser
wil be held in Grant County, Washington, unless the District and the Purchasers agree to
another location.
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(b) In addition to other matters subject to arbitration pursuant to other provisions of
this contract,
if approved by members of the Committee whose Purchaser Revenue Allocations total 66%
or more, the Committee may submit to binding arbitration the following issues:
(1) Have the Estimated Distrct Loads been forecast in accordance with Prudent Utility
Practice and, if not, what is the appropriate Estimated Distrct Loads in accordance with
Prudent Utility Practice for the Contract Year?
(2) Have the Anual Power Costs been determined by the Distrct in accordance with
Prudent Utility Practice and have such costs been incured for the benefit of Priest Rapids
Project Output and, if not, what are the appropriate Anual Power Costs in accordance
with Prudent Utility Practice for the Contract Year; provided that nothng in this
Section shall be interpreted to liit the abilty of the District to meet its payment
obligations under a Bond Resolution?
(3) What modifications to this contract, pursuant to Section 3(h), are necessar to comply
with FERC or court orders and to preserve the basic benefits and obligations of the
Paries?
(4) Has the Purchaser violated the covenants in Section 7(e)?
(5) Are the annual proceeds from the sales of the Reasonable Portion pursuant to Multi-Year
Contracts proportional to the anual market price of power, as forecast at the time the
Multi-Year Contracts were agreed to by the Distrct, and if not, what adjustments are
necessar to the payments to Purchaser pursuant to Section 4(e) to reflect such forecast
anual market price of power for sales made pursuant to such Multi-Year Contracts?
(c) The board of arbitrators shall be composed of three persons, one of whom shall be appointed
. by the Distrct, one of whom shall be appointed by majority vote of the Committee, and the
third person to be appointed by the two persons so appointed. The Distrct and the Commttee
shall appoint their arbitrator within 15 days after notification of the Commttee's vote to
submit a matter to binding arbitration. In the event the two members canot agree upon the
appointment of a third person withn 10 days, then such third person shall be appointed by
the presiding judge of the Superior Court of Kittitas County, Washington. The arbitration
shall be conducted jointly by the participating Purchasers, and under rules as may be
determined by the arbitrators; provided, however, that all paries shall be afforded discovery
consistent with the Federal Rules of Civil Procedure; and, provided furter, if the arbitrators
do not unanimously agree on the rules governng the arbitration, the arbitration shall be
conducted in accordance with the Commercial Arbitration Rules of the American Arbitrtion
Association. The board so designated shall conduct a hearing within 30 days of completion.
of their selection, and within 15 days after the hearng (unless such time is extended by
agreement of the Pares) shall notify the Parties of their decision in wrting, stating the
reasons therefore and separately listing their findings of fact, conclusions of law and order.
Insofar as the Paries hereto may legally do so, they agree to abide by the decision of the
board. All factual determinations made by the board shall be conclusive and binding on the
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Paries and not subject to judicial review. Any conclusions oflaw made by the board shall be
subject to review by a court specified in Section 23; provided, that the order issued by the
board shall be effective unless and until a stay is issued by the board or such court suspends
the effectiveness of the order.
SECTION 24. REPRESENTATIONS AND WARTIES.
Each Party represents and warants to the other Part that:
(a) It is duly organized, validly existing and in good standing under the laws of the jurisdiction
of its formation.
(b) The execution, delivery and performance of this contract are within its powers, have been
duly authorized by all necessary action and do not violate any of the terms and conditions in
its governng documents, any contracts to which it is a pary or any law, rule, regulation, or
order applicable to it.
(c) This contract constitutes a legally valid and binding obligation enforceable against it in
accordance with its terrs, subject to equitable defenses and applicable banptcy,
insolvency and similar laws affecting creditors' rights generally.
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. SECTION25. COUNTERPARTS.
This contract may be executed in counterpars, each of which shall be an original and all of
wluch shall constitute the same contract.
'''E'A' .)~0 . .L
.(SEAL)
.
PUBLIC UTILITY DISTRICT NO.2
OF GRAT COUNTY, WASHIGTONBYk~~
PresidentATTES~ ~
secrei~ -L::
A VISTA CORPORATION
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EXHIBIT A
DEFINITIONS OF PRIEST RAIDS DEVELOPMENT
AND W ANAPUM DEVELOPMENT
RESOLUTION NO. 390 - DEFINITION OF PRIST RAIDS DEVELOPMENT
Section 2(f) of Exhibit 1. "Priest Rapids Development" shall mean those
properties and facilities consisting of the Priest Rapids dam, site, reservoir,
switchyard and power plant, including all generating facilties associated
therewith up to and including the first ten (10) main tubine generator units each
with a nameplate rating of approximately 78,850 kilowatts and any additional
generating facilities which may be installed as provided for in Section 19 of the
Original Power Sales Contract, together with the associated transmission facilities
consisting of two 230 KV transmission lines and terminal facilties
interconnecting the Priest Rapids switchyard and the Bonneville Power
Administration's Midway Substation and an undivided one-half (1/2) interest in
the interconnecting facilities between the . Priest Rapids switchyard and the
Wanapum switchyard.
RESOLUTION NO. 474 - DEFINITION OF "V ANAPUM DEVELOPMENT
Section 2.2. The Distrct specifies and adopts the plan and system hereinafter
set forth for the acquisition, by purchase or condemnation, and constrction of the
following generation and transmission facilties as a separate utility system of the
District constituting the Wanapum Development of the District, to wit:
A. The Distrct shall constrct an electrc generating plant and
associated facilities on the Columbia River at approximately river mile 415 from
the mouth of said river at the Wanapum site on said river, in Grant and Kittitas
Counties, Washington, as authorized by the Federal Power Commission License
for Project No. 2114, originally issued November 4, 1955, and all amendments
thereto; said generating plant to have an installed nameplate rating of
approximately 831,250 kilowatts, and said generating plant and associated
facilities to include, but not limited to, a concrete gravity dam, a fully enclosed
reinforced concrete powerhouse containing ten (10) tubo-generating units with
provisions in the intake strcture for the installation of six (6) additional tubo-
generating units, a reservoir, waterways, fish ladders and other fish protective
devices; provisions for futue installation of navigation locks; transforming
facilties; a switchyard; transmission facilties necessary to connect the
powerhouse to the existing transmission facilities of the Priest Rapids
Development and to the transmission facilities of the Bonneville Power
Administration in the vicinity of said Project; railroad siding, shops, warehouses,
construction camp, offces, and dwellings; and all other strctures; fixtures,
StafCPR_13tÃÅaChment-S.Pdf Page 29 of 34
.equipment or facilities used or useful in the construction, maintenance and
operation of the Wanapum Development; and all necessar water rights,
development rights, pennits and licenses, easements, rights-of-way, flowage
rights and rights permitting the storage of water, riparan rights and shore rights.
.
.
A-2StafCPR_133_Attachment-B.pdf Page 30 of 34
29 30
.Exhibit C
Grant County PUD
Service Area 28
Service Arg Index
Within Grant County
outide Grant County
26
R23E 24
.
T16N
T15N.T14N
Page 31 of 34
T27N
T26N
T25N
T24N
T23N
T21N
T20N
T19N
T18N
T17N
t=O 2 -oo9rao
.AMENDMENT NO. 1 TO THE
PRIEST RAPIDS PROJECT REASONABLE PORTION
POWER SALES CONTRACT
The Public Utility Distrct No.2 of Grant County, Washington, ("Distrct"), and
Avista Corporation ("Purchaser"), hereby agree to this Amendment No.1 to the Priest
Rapids Project Reasonable Portion Power Sales Contract dated December lL, 2001
(the "Reasonable Portion Contract"). Unless otherwise defined herein, all capitalized
terms defined in the Reasonable Portion Contract shall have the meanngs set forth
therein when used in this Amendment.
1. Term of Amendment No. 1
This Amendment No. 1 shall take effect on upon the execution by the District and
Purchaser, and shall expire on the earlier of the expiration or termination date of the
Reasonable Portion Contract.
2. Amendments to Provisions of the Reasonable Porton Contract
Purchaser and the District agree that the Reasonable Portion Contract is hereby
amended as follows:.2.1 The definition of the term Priest Rapids Project Output set fort in Section
2 is deleted in its entirety and replaced with the following:
"Priest Rapids Project Output" shall mean the amount of capacity,
energy (both finn and non-fi), pondage, reactive power,
ancilar services (including dynamic load following services) and
any other product from the Priest Rapids Development from
November 1, 2005 to November 1, 2009 and from the Priest
Rapids Project from November i, 2009 through the term of this
contract under the operatig conditions which exist during the
term, including periods when the Priest Rapid Proj ect may be
wholly or parially inoperable for any reason, after correction for
encroachment, Canadian entitlement, station and project use, and
depletions required by the FERC License or other regulatory
requirements.
2.2 Section 4(c)(4) is amended by adding the following sentence after the last
sentence thereof:
.
After the Distrct has acquired capacity and energy as needed to
serve its Estimated Unmet Distrct Load, the Distrct shall not
subsequently substitute therefore more costly capacity and energy,
in order to provide the less costly capacity and energy to other
wholesale or retail power customers of the District.
Priest Rapids Project Reasonable
Portion Power Sales Contract
Amendatory Agreement NO.1 Staff_PR_13rJuãchment-B.pdf Page 32 of 34
.2.3 Section 7(h) is deleted in its entirety and is replaced with the following:
In the event that the Distrct believes that the Purchaser has
violated any of the above covenants of Section 7(f) or (g), the
Distrct may by wrtten notice to the Purchaser describe the alleged
violation in reasonable detail and give the Purchaser no less than 4
business days after receipt of such wrtten notice by Purchaser
withi which to cease the activity in question or to provide to the
Distrct a written explanation as to why the Purchaser believes the
activity does not constitute a violation of any of the
aforementioned covenants. If the Purchaser does not cure the
alleged default and the District continues to reasonably consider
the action to be in breach of the covenants, the District shall have
the right to terminate this contract, effective immediately upon
wrtten notice to the Purchaser, without any liability or furter
obligation on the par of the Distrct. In the event of such
termination, the Distrct shall have the right to use or sell, in any
maner the Distrct determines, the Purchaser Revenue Allocation
the Purchaser would have been otherwise entitled to under this
contract..2.4 The Reasonable Portion Contract is amended by adding a new Exhibit C,
Purchasers Product Percentage Allocations, which is attached hereto.
In Witness Whereof, Purchaser and the Distrct have caused this Amendment No. 1 to
be executed in their respective names by theIr duly authorized officers.
AVISTA CORPORATION PUBLIC UTILITY DISTRICT NO.2 OF
GRAT COUNTY, WASHINGTON\By.: ~~~ . ~,1
Title: (!./Amm8! 1lFsTf'''
l' (JEO
Date Signed: FEB i 6J 2()O:l
By: 'b.~ ¿~
Tit1;fl.e1 JI7f & .dZ~".-
Date Sjd~t/~~~.. ?1
~e.r7 /y-erd"f
.Priest Rapids Project Reasonable
Porton Power Sales Contract
Amendatory Agreement No.1 StafCPR_133Jtiãchment-B.Pdf Page 33 of 34
.
.
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JURISDICTION:
CASE NO:
REQUESTER:
TYE:
REQUEST NO.:
REQUEST:
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
IDAHO
A VU-E-08-0l 1 A VU-G-08-01
IPUC
Production Request
Staff-134
DATE PREPARD:
WITSS:
RESPONDER:
DEPARTMENT:
TELEPHONE:
06/10/2008
Elizabeth Andrews
Lori Hamilton
Resource Accounting
[phone]
Please provide the account transaction detail for account 253890, the Idaho jursdiction
subaccount for the Clark Fork PM&E expenses, by year, for the years 2005 through 2007, and for
2008 to date. Please provide the account transaction detail in an Excel spreadsheet format,
including all subaccounts. Provide the name of the vendor, voucher number, expenditue type,
transaction description, and jurisdictions that the transaction is spread to. Please provide a print
out as well as an electronic copy of the Excel spreadsheet with formulas activated.
RESPONSE:
See the Excel workbook "StafCPR _134- Attachment AxIs". There is one tab for each of the years
2005 through 2008 to date. Due to the voluminous nature of this workbook, it is being provided in
electronic format only.