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Home My WebLink About20061115Application.pdfIDAHO POWE R CID or;f""\/Cr'ii'\,_. L.LISA D. NORDSTROM Attorney II 2005 NOV \ 4 P!1 4: 43 An IDACORP Company \ D,L.\ \ U \.:'J' ); , ,-- UTI tNgV&nff~~'~i 1 ~~ ~l O~6 Jean D. Jewell , Secretary Idaho Public Utilities Commission 472 West Washington Street P. O. Box 83720 Boise, Idaho 83720-0074 Re:Case No. IPC-06- In The Matter Of The Application Of Idaho Power Company For Approval Of An Executory Sale And Transfer Of Utility Property Pursuant To A Transformer Sharing Agreement Dear Ms. Jewell: Please find enclosed an original and seven (7) copies of Idaho Power Company s Application in the above-referenced matter. I would appreciate it if you would return a stamped copy of this transmittal letter in the enclosed self-addressed , stamped envelope. Very truly yours cKJ r- 1) 11 &td!~ Lisa D. Nordstrom LDN:sh Enclosures Telephone (208) 388-5825 Fax (208) 388-6936 E-maillnordstromtiYidahopower.com LISA D. NORDSTROM ISB #5733 BARTON L. KLINE ISB #1526 Idaho Power Company O. Box 70 Boise, Idaho 83707 Phone: (208) 388-2682 FAX: (208) 388-6936 Email: LNordstrom (g) idahopower.com BKline(g) idahopower.com f) r- f" ("- '" ,- 1\;::vr.:.I;!~:U 2005 Nav /4 PH 4: 44 -- li;,;hu , U j III I 1'-!~r - ;' :iiC';;' -- ,-" "," 11 V - .) \,..', , Attorneys for Idaho Power Company Express Mail Address 1221 West Idaho Street Boise, Idaho 83702 BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION IN THE MATTER OF THE APPLICATION OF IDAHO POWER COMPANY FOR APPROVAL OF AN EXECUTORY SALE AND TRANSFER OF UTILITY PROPERTY PURSUANT TO A TRANSFORMER SHARING AGREEMENT ) CASE NO. IPC-06- ) APPLICATION COMES NOW , Idaho Power Company ("Idaho Power" or the "Company ), and in accordance with the provisions of Idaho Code ~ 61-328, RP 052 and RP 201 et. seq. hereby applies for an order of the Idaho Public Utilities Commission ("the Commission approving the executory transfer and sale of certain utility property as described in greater detail below. This Application is based on the following: On October 13 , 2006 , Idaho Power entered into a Spare Transformer Sharing Agreement ("Sharing Agreement"), a copy of which is attached as Exhibit " with certain participating electric utilities as part of a national collaborative effort to share spare electric transformers with other electric utilities in the event of a deliberate act of APPLICATION , Page terrorism disabling one or more utility substations.A sufficient inventory of spare transformers is critical because transformers have a long manufacturing lead time. As of October 31 , 2006 , forty-seven (47) of the nation s electric utilities have executed this Sharing Agreement, representing more than 60 percent of the Commission-jurisdictional bulk-power transmission system. A list and map of the other participating utilities participating are attached as Exhibit " The Sharing Agreement provides for an electric industry-wide pool of spare electric transformers that can be called upon and transferred from one utility to another utility in the event of a coordinated terrorist attack upon the electric infrastructure in the United States. The Sharing Agreement improves the capability of all participating utilities to recover from the loss of transformers while reducing the burden on any single utility to acquire spare transformers. The Spare Transformer Sharing Agreement provides considerable flexibility for utilities to operate and to utilize assets as they would normally do during the course of business, while at the same time binding utilities to share their committed transformers if a Triggering Event should occur. By entering into this Sharing Agreement , Idaho Power will: (a) support the national effort to protect the electric infrastructure from terrorist activities; and (b) increase system reliability with a higher level of preparedness in the event of an attack or disruption on the electric system. Each of these benefits is discussed in more detail below. By entering into the Sharing Agreement , Idaho Power will be supporting the national effort to protect electric infrastructure from terrorist activities. In the latter part of 2004 , the Edison Electric Institute ("EEl") initiated a focus group to examine what steps , if any, that the electric industry should take to better prepare the industry to APPLICATION , Page 2 respond to an unforeseen terrorist attack on the nation s electric infrastructure. Around the same time , the Federal Energy Regulatory Commission ("FE RC") expressed concerns on the issue of infrastructure protection and initiated a study to determine what steps , if any, needed to be taken by the FERC to ensure the electric industry is prepared to respond in the event of such a terrorist attack. In an effort to develop an industry-wide position on the issue and avoid a FERC-mandated solution, the industry, with the help and facilitation of EEl , developed the agreed-upon provisions of the Sharing Agreement. EEl and the North American Electric Reliability Council actively participated in the development of the Sharing Agreement, and EEl has taken the lead in promoting and implementing the Sharing Agreement with the various utilities across the country. At EEl's urging, the FERC granted1 blanket authorization under Section 203 of the Federal Power Act for any jurisdictional public utility that is party to the Sharing Agreement to engage in future transfers of transformers pursuant to the terms of the Sharing Agreement. To encourage utility participation , the FERC also declared participation in the Sharing Agreement to be prudent, found that the costs participation qualify for single issue rate treatment, and accorded all future jurisdictional signatories to the Sharing Agreement the same benefits as current signatories. Through its participation in the Sharing Agreement Idaho Power will achieve a higher level of preparedness , thereby benefiting Idaho Power customers with increased system reliability. In the event of a coordinated terrorist attack upon the Idaho Power electric system , Idaho Power may need the assistance of the state and Edison Electric Institute on behalf of the Jurisdictional Signatories to the Spare Transformer Sharing Agreement 116 FERC q( 61 280 (September 21 2006). APPLICATION , Page 3 federal government as well as its sister utilities. The electric industry has worked proactively to develop this Sharing Agreement to allow Idaho Power and the other signatories the ability to seek help during a national emergency from the other signatory utilities on an expedited basis. Through this Sharing Agreement, Idaho Power will have ready access to a pool of spare transformers to help restore power to its customers in an expedited , cost-effective and streamlined manner. By entering into the Sharing Agreement, Idaho Power will lower its overall future costs to maintain spare transformers in Idaho Power s inventory, also thereby benefiting the electric rate payers. Although the Company has taken significant steps to protect its infrastructure from a possible terrorist attack, Idaho Power does not believe it would be feasible or economically practical to maintain in its inventory the large number of spare transformers needed to address every 'worst case scenario' for a terrorist attack upon the electric system. This Sharing Agreement will allow Idaho Power and its customers to have the added benefits of access to transformers in a national emergency without the added costs and risk of buying and carrying large surpluses of spare transformers in its inventory. Upon the Commission s approval of this Sharing Agreement, Idaho Power will necessarily "commit" 400 megavolt-amperes (MV A) of spare transformers to the sharing pool in the event another utility in Idaho Power s 230 kV-138 kV equipment class suffers a terrorist attack.2 By committing the spare transformers , Idaho Power nonetheless will maintain ownership and possession of all of its spare transformers and 2 The number of transformers a Participating Utility must own or commit to acquire in each equipment class is determined based on the aggregate needs of the equipment class and the number of transformers that the Participating Utility has in service in that equipment class. APPLICATION , Page 4 shall be entitled to use such spares for equipment failures as long as such spares are replaced within eighteen (18) months.Although Idaho Power assesses the risk of having to sell a spare electric transformer to a participating electric utility pursuant to the Sharing Agreement to be very low, the possibility of a sale does exist if a terrorist attack were to occur and any such sale of a spare electric transformer(s) would require prior Commission approval under Idaho Code ~61-328. A "Triggering Event" under the Sharing Agreement would be (a) a coordinated and deliberate terrorist attack against the system of a participating utility as defined in the Homeland Security Act, and (b) the declaration of a national emergency by the President of the United States pursuant to the National Emergencies Act.4 Given the defined nature of such triggering event in the Sharing Agreement and the need to implement a response in a timely manner, Idaho Power believes that such event would be an exigent circumstance that would not allow Idaho Power sufficient time to apply to this Commission for approval and still meet the sharing commitment under the Sharing Agreement in a timely matter. Therefore, the relief sought in this Application for approval of an executory transfer and sale of a spare electric transformer(s) is reasonable and will serve the best interests of Idaho Power customers. Because the proposed transfer and sale of utility property is executory, appropriate bookkeeping entries will be made at the time of any future transfer and sale. The Company does not seek approval of any ratemaking treatment of the fees5 and inventory required by the terms of the Sharing Agreement at this time. Pursuant to ~2. 3 See the Spare Transformer Agreement, ~ 1., Definitions , and 3., Obligation to Replace.4 Spare Transformer Agreement, ~ 1., Definitions.5 See Spare Transformer Agreement, ~~ 2.1 and 7. APPLICATION , Page 5 of the Sharing Agreement, Idaho Power participation in the Spare Transformer Equipment Project is conditioned on receiving Commission approval. 10.The Company requests that this Application be processed under RP 201 et seq.allowing for consideration of issues to be processed under Modified Procedure i.e., by written submissions rather than by an evidentiary hearing. 11.Service of pleadings, exhibits, orders and other documents relating to this proceeding should be served on the following: Lisa D. Nordstrom Barton L. Kline Idaho Power Company O. Box 70 Boise, I D 83707 -0070 Inordstrom (g) idahopower.com bkline (g) idahopower.com Ric Gale Vice President Regulatory Affairs Idaho Power Company O. Box 70 Boise , ID 83707-0070 rqale (g) idahopower.com WHEREFORE , Idaho Power Company requests that the Idaho Public Utilities Commission issue its order approving an executory transfer and sale of utility property as described in greater detail above. Respectfully submitted this if.- day of November, 2006. Ifl Lf) Lisa D. Nordstro Attorney for Idaho APPLICATION , Page 6 IDAHO POWER COMPANY CASE NO. IPC-O6-02 APPLICA TION EXHIB IT A ABLE OF CONTENTS ARTICLE I DEFINITIONS.... ............. ........ .............. .................... ....... ............. ........ ........... Section 1.1 Definitions............................................................................................ ARTICLE II PARTICIPATING UTILITIES.. ..... .................. ......................................... ...... Section 2.Binding Obligation............................................................................... Section 2.2 Equipment Classes. """"""""""""""""""""""""""""""""'" ........... Section 2.Required Regulatory Approvals. ......................................................... ARTICLE III BASIC OBLIGATIONS ................................................................................. Section 3.Obligation to Commit. ......................................................................... Section 3.Obligation to Acquire. ......................................................................... Section 3.Obligation to Replace. .........................................................................10 Section 3.4 Obligation to Report. ........................................................................... Section 3.Obligation to Maintain. ........................................................................11 Section 3.Obligation to Certify Compliance........................................................ 12 Section 3.Detennining Number of Qualified Spare Transfonners Committed. . . ARTICLE IV CALL RlGHTS............. ....................... ............ ..................................... ......... . Section 4.Exercise of Can Right.......................................................................... Section 4.2 Execution of Gall Right. ...................................................................... Section 4.Objection to Call Right. ....................................................................... Section 4.4 Disputes Concerning Call Rights......................................................... 15 Section 4.Qualified Spare Transfonners with Multiple Owners. ........................ Section 4.Certain Disclaimers............................................................................. . Section 4.Detennination of Purchase Price. ........................................................ ARTICLE V EQUIPMENT COMMITTEE.......................................................................... Section 5.Composition of Equipment Committee. .............................................. Section 5.Subsequent Representatives; Proxies...... ............................... .......... .... Section 5.Equipment Sub-Committees. ...............................................................18 Section 5.4 Responsibilities. ... ...... ....................... ............... ...................... ............ .. Section 5.Meetings. ........... ....................... .................. ........... .......... .......... ........... Section 5.Notice of Meetings........................................................................ ....... Section 5.Telephonic Meetings.......................................................................... .. Section 5.Quorum; Required Vote....................................................................... Section 5.Notices to Equipment Committee or Equipment Sub-Committee....... Section 5.10 Disputes.............................................................................................. ARTICLE VI EXECUTIVE COMMITTEE .........................................................................20 Section 6.1 Composition of Executive Committee................................................. Section 6.Selection of Executive Committee....................................................... Section 6.Vacancies. ........... ..... ........... ........................ ............... ........... .............. . Section 6.4 Responsibilities. ........ ............... ........................ ........... .............. ......... . .21 Section 6.Meetings.... ..................... .................. .............................. ..................... . Section 6.Notice of Meetings................................................................ ............... Section 6.Telephonic Meetings............................................................................ Section 6.Quorum; Required Vote....................................................................... Section 6.Notices to Executive Committee. .................-..........................--......_.._ EXIDBIT A Section 6.10 Project Manager. ................................................................................ ARTICLE VII FINANCIAL MATTERS .............................................................................. Section 7.Cost Sharing......................................................................................... Section 7.Budget; Dues........................................................................................ ARTICLE VIII REPRESENTATIONS AND W ARRANTIES............................................ Section 8.Organization.................... ...... ................................ ....... ....... ....... .......... Section 8.2 Authorization. ......................................................................................24 Section 8.Binding Obligation............................................................................... Section 8.4 No Approvals Necessary.................................................................... .. Section 8.Title to Qualified Spare Transformer................................................... Section 8.Condition of Qualified Spare Transformer. ......................................... ARTICLE IX REMEDIES; INDEMNIFICATION .............................................................. Section 9.Specific Performance. .......................................................................... Section 9.2 Other Remedies. ................. ...... ............... .................. .......... ............... .. Section 9.Cumulative Remedies. ......................................................................... Section 9.4 Limitation on Damages........................................................................ Section 9.Indemnification. ............. ...... ............................................ ........ .......... .. Section 9.Survival of Representations and Warranties........................................ ARTICLE X WITHDRA W AL.............................................................................................. Section 10.Withdrawal Procedure. ...................................................................... Section 10.Effectiveness of WithdrawaL.... ..... ................................ ........ ........... .27 ARTICLE XI CONFIDENTIALITY............... ..... ............................................. ......... ...... .... Section 11.Confidentiality Obligation. ................................................................ Section 11.Permitted Disclosures. ....................................................................... Section 11.Exceptions... ...... ............... ...... ........................ ............... ......... ........... . ARTICLE XII GENERAL PROVISIONS ............................................................................ Section 12.Force Majeure. ................................................................................... Section 12.Assignment. .2 ...................................................................................... Section 12.Amendments. ..................................................................................... Section 12.4 Notices to Parties. .............................................................................. Section 12.5 No Third Party Beneficiaries. ............................................................ Section 12.Interpretation of Agreement............................................................... Section 12.Waiver................................. ...... .............. ........... ............ .......... .......... Section 12.Severability. ....................................................................................... Section 12.Governing Law. ................................................................................. Section 12.10 Independent Parties; No Agency. ...................................................... Section 12.11 Counterparts............... ............ ....... ............ ......... ............ ................. ... Section 12.12 Entire Agreement. .............................................................................. EXECUTION COpy SPARE TRANSFORMER SHARING AGREEMENT This Spare Transfonner Sharing Agreement, dated as of March 15 2006 (this "Agreement") is entered into by and among each entity that executes and delivers this Agreement, as contemplated hereby (each, a "Party" WHEREAS, each Party owns or has rights to own or access , or intends to acquire ownership of or rights to own or access, one or more Qualified Spare Transfonners (as defined below); and WHEREAS, each Party desires to participate in an arrangement to share such Qualified Spare Transfonners under certain circumstances; and WHEREAS, each Party desires to memorialize in a written agreement such circumstances and all related rights, responsibilities and obligations associated therewith in an agreement by and among all such Parties; and WHEREAS , each Party acknowledges that this Agreement is the written agreement so contemplated to be entered into by and among all such Parties. NOW, THEREFORE, in consideration of these premises and the representations, warranties, covenants and agreements contained herein, each Party, intending to be legally bound hereby, agrees as follows: ARTICLE I DEFINITIONS Section 1.Definitions. As used in this Agreement, the following capitalized tenns have the meanings set forth below: Affiliate" means with respect to any Person, each other Person that directly or indirectly, through one or more intennediaries, controls, is controlled by, or is under common control with such Person. For purposes of this definition , " control" means the ability to elect or appoint, directly or indirectly, a majority of the board of directors or other governing body of the relevant Person. Approval Date" means (i) ifthere are Required Regulatory Approvals set forth on a Party's signature page to this Agreement, the earliest of the date on which a Party has obtained all such Required Regulatory Approvals and the date on which a Party detennines that it is no longer required to obtain any such Required Regulatory Approvals, or (ii) if there are no Required Regulatory Approvals set forth on a Party' signature page to this Agreement, the date on which such Party has executed and delivered this Agreement. Business Day" means any day other than Saturday, Sunday and any day which is a day on which banking institutions in the State of New York are authorized by law or other governmental action to close. Call Notice" has the meaning set forth in Section 4. Call Right" has the meaning set forth in Section 4. Commit" or "Committed" or "Committing" means that a Participating Utility unconditionally commits, or has committed, subject to the terms of this Agreement, all or a portion of a specifically designated Qualified Spare Transformer that is owned by such Participating Utility, or that such Participating Utility otherwise has rights to own or access, such that if a Call Right is properly exercised pursuant to the terms of Article IV hereof, the Participating Utility, together with all other Persons that also own or have access to such Qualified Spare Transformer, is obligated to sell, or cause to be sold, such Qualified Spare Transformer pursuant to this Agreement. Commitment Formula" means the formula described below for calculating the MV required to be Committed by Participating Utilities in respect of a particular Equipment Class: In calculating the MV A required to be Committed by Participating Utilities in respect of a particular Equipment Class, each Participating Utility that is a member of such Equipment Class must provide the relevant Equipment Sub- Committee with the following information: (i) the number of banks of spare transformers and the total MV A represented thereby ("Needed MV A") that such Participating Utility would need, in the event that it suffers an S-5 contingency in respect of such Equipment Class (i., it has lost five substations that utilize spare transformers in such Equipment Class), to restore its system to satisfy an N- Contingency, (ii) the total amount of such Participating Utility's connected MV A in such Equipment Class ("Connected MV A"), and (iii) the total number of qualified spare transformers, together with their MV A, that such Participating Utility then owns and is willing to share with others under this Agreement Available Spares ); provided, however, that such number of Available Spares shall in no way be deemed to limit a Participating Utility's Required Obligation in anyway. Based on the foregoing information, the relevant Equipment Sub-Committee will (i) sum the Needed MV A reported by all Participating Utilities in the subject Equipment Class (such sum, the "Aggregate Needed MV A"), (ii) sum the Connected MV A reported by all Participating Utilities in such Equipment Class (such sum, the "Aggregate Connected MV A"), and (iii) determine the "MV A Factor " which shall mean the sum of the Needed MV A reported by the Participating Utility reporting the largest Needed MV A in such Equipment Class and the amount of MV A represented by the Available Spares reported by such Participating Utility. Then, the relevant Equipment Sub-Committee shall detennine the Required Obligation for each Participating Utility in respect of such Equipment Class by calculating, with respect to each Participating Utility, the average of (i) the MV Factor multiplied by the ratio of such Participating Utility's Needed MV A to the Aggregate Needed MV A, and (ii) the MV A Factor multiplied by the ratio of such Participating Utility's Connected MV A to the Aggregate Connected MV A. The resulting average for each Participating Utility shall be the MV A required to be Committed by it for that Equipment Class. For illustrative purposes only, Exhibit B includes an example of the application of the foregoing Commitment Fonnula to detennine the Required Obligation for hypothetical Participating Utilities in a hypothetical Equipment Class. Effective Date" has the meaning set forth in Section 2. Equipment Class" means one of the classes of spare transfonners identified on Exhibit A to this Agreement, provided, however, that the Equipment Committee may revise such Exhibit A, from time to time, to add additional classes of spare transfonners thereto, with any such revisions to become automatically effective for all purposes hereunder upon the affinnative action of the Equipment Committee. Equipment Committee " means the Equipment Committee contemplated by Article V. Equipment Sub-Committee(s)" means the Equipment Sub-Committee(s) contemplated by Article V. Estimated Purchase Price" means the Seller s good faith estimate of the Purchase Price as contemplated by Section 4. Executive Committee" means the Executive Committee contemplated by Article VI. Force Majeure" means an event or circumstance that prevents a Participating Utility . from perfonning its obligations under this Agreement, that is not within the reasonable control of, or the result of the negligence of, such Participating Utility, and that, by the exercise of due diligence, such Participating Utility is unable to overcome or avoid or cause to be avoided. Good Utility Practice" means any of the practices, methods and acts engaged in or approved by a significant portion of the electric utility industry during the relevant time period, or any of the practices, methods and acts which, in the exercise of reasonable judgment in light of the facts known at the time the decision was made, could have been expected to accomplish the desired result at a reasonable cost consistent with good business practices, reliability, safety and expedition. Good Utility Practice is not intended to be limited to the optimum practice, method, or act to the exclusion of all others, but rather to be acceptable practices, methods, or acts generally accepted in the region in which the Participating Utility operates. Initial Fee" has the meaning set forth in Section 2. Initial Measurement Date" means June 30, 2008. Liens" means any mortgages, pledges, liens, claims, charges, security interests conditional and installment sale agreements, activity and use limitations , easements covenants, encumbrances, obligations, limitations, title defects and any other restrictions of any kind, including restrictions on use, transfer or the exercise of any other attribute of ownership. Measurement Date" means the Initial Measurement Date and each anniversary of the Initial Measurement Date. MV A" means megavolt amperes. O Contingency" means, for purposes of this Agreement, a state of the bulk transmission system such that the loss of any single element (N-I), at peak-load conditions, may be expected to result in instability and/or a system in which thennal rating and voltage limits may be exceeded, provided that any such result may reasonably be contained through emergency actions of the transmission operator. Net Book Value" means the net book value of a particular Qualified Spare Transfonner detennined in the ordinary course and consistent with the past practices of the Seller, or if applicable, the other owner( s) of such Qualified Spare Transfonner, so long as such practices confonn to u.s. generally accepted accounting principles, otherwise such net book value shall be detennined in accordance with u.s. generally accepted accounting principles. Objection" has the meaning set forth in Section 4. Participating Utility" has the meaning set forth in Section 2. Pennitted Disposition" means (i) the sale of a Qualified Spare Transfonner pursuant to the tenus of this Agreement, (ii) the placement in service or similar disposition of a Qualified Spare Transfonner not already in service by a Participating Utility for its own use in accordance with Good Utility Practice, (iii) the replacement of a Qualified Spare Transfonner, due to its age, obsolescence, damage or any similar reason, in the ordinary course of business consistent with Good Utility Practice, with another Qualified Spare Transfonner, (iv) the disposition of a Qualified Spare Transfonner pursuant to any rule regulation or order issued by any governmental authority requiring such disposition that is applicable to such Qualified Spare Transfonner and/or the Participating Utility that Committed it hereunder , - (v) the disposition of a Qualified Spare Transfonner to another utility that has suffered a casualty or loss of one of its transfonners pursuant to any voluntary sharing arrangement or similar arrangement or program, including any infonnal arrangements, in which the Participating Utility that Committed such Qualified Spare Transfonner is participating, and (vi) the loss of a Qualified Spare Transfonner in connection with a Triggering Event or other casualty. Pennitted Liens" means (i) statutory Liens for current taxes, assessments or governmental charges not yet due or delinquent or the validity or amount of which is being contested in good faith by appropriate proceedings, (ii) mechanics , carriers workers , repairers , landlords' and other similar Liens arising or incurred in the ordinary course of business relating to obligations as to which there is no default on the part of the Participating Utility or the validity or amount of which is being contested in good faith by appropriate proceedings, (iii) pledges, deposits or other Liens securing the perfonnance of bids, trade contracts, leases or statutory obligations (including workers' compensation unemployment insurance or other social security legislation), (iv) Liens arising or incurred in connection with the purchase of the subject Qualified Spare Transfonner as to which there is no default on the part of the Participating Utility, (v) Liens arising or incurred in connection with any first mortgage or similar general financing instrument of the Participating Utility as to which there is no default on the part of the Participating Utility, (vi) rights reserved to or vested in a governmental entity or obligations or Liens set forth in any federal, state, local or municipal franchise, grant or license, governing ordinance or any provision oflaw under which any portion of the Participating Utility' business is conducted or requested, (vii) rights of condemnation, eminent domain or similar rights, and (viii) Liens created by the obligations imposed on the Participating Utility pursuant to this Agreement. Person" means any individual, partnership, limited liability company, joint venture corporation, trust, unincorporated organization or governmental entity or any department or agency thereof. Project Manager" has the meaning set forth in Section 6.10. Purchase Price" means the sum of (x) at the Seller s sole option, either the Replacement Cost for the subject Qualified Spare Transfonner or the Net Book Value of the subject Qualified Spare Transfonner, plus (y) an amount equal to the sum of (i) any "load-out" costs, including any costs of the Seller, or, if applicable, the other owner( s) of such Qualified Spare Transfonner, to remove such transfonner from its pad, test such transfonner and empty it of oil, (ii) any freight and other transportation costs of the Seller, or, if applicable, the other owner(s) of such Qualified Spare Transfonner associated with delivering such transfonner to the Buyer, and (iii) the tax liability, if any, of the Seller, or, if applicable, the other owner(s) of such Qualified Spare Transfonner attributable to the sale of the subject Qualified Spare Transfonner at the Replacement Cost or Net Book Value, as the case may be. Qualified Participating Utility" means any Participating Utility that (i) on the most recent Measurement Date, had Committed a number of Qualified Spare Transfonners that is at least equal to its Required Obligation as contemplated by Section 3.1 hereof in respect of each Equipment Class that such Participating Utility is then a member of, (ii) on the date on which the detennination is made as to whether such Participating Utility is a Qualified Participating Utility, (x) has Committed all Qualified Spare Transfonners required to be then Committed by it pursuant to Section 3.1 hereof in respect of each Equipment Class that such Participating Utility is then a member of, and (y) if applicable pursuant to Section 3.2 hereof, is, in good faith, using its commercially reasonable efforts to take or cause to be taken all actions necessary to permit such Participating Utility to Commit a number of Qualified Spare Transfonners that is at least equal to its Required Obligation calculated for the next succeeding Measurement Date in respect of each Equipment Class that such Participating Utility is then a member of as soon as practicable but in no event later than the next succeeding Measurement Date, and (iii) is not then in breach of any of its other obligations under this Agreement. Qualified Spare Transfonner" means an electrical transfonner that satisfies those minimum standards set forth on Exhibit A to this Agreement opposite the Equipment Class of such transfonner, with such minimum standards to be reviewed and, as necessary, revised, from time to time, by the relevant Equipment Sub-Committee, with any such revisions to become automatically effective for all purposes hereunder upon the affinnative action of such Equipment Sub-Committee. The number of Qualified Spare Transfonners that any Participating Utility shall be deemed to have Committed hereunder shall be detennined in accordance with Section 3. Related Parties" has the meaning set forth in Section 9.4. Replacement Cost" means all reasonable costs or expenses incurred by a Seller, or, if applicable, the other owner(s) of such Qualified Spare Transfonner, to replace a particular Qualified Spare Transfonner with another transfonner of like specifications which reasonable costs or expenses shall be deemed to include those costs and/or expenses that are appropriate and not excessive under the circumstances prevailing at the time the cost or expense is paid or incurred and may include , but are not limited to, the purchase price for such trans fonner, transportation costs associated with the delivery of such trans fonner, and other direct acquisition costs incurred by the Seller, or, if applicable, the other owner( s) of such Qualified Spare Transfonner; provided, however that in the event that a Seller, or, if applicable, the other owner(s) of such Qualified Spare Transfonner, in connection with or following the sale of a Qualified Spare Transfonner pursuant to the tenns of Article IV, elects to replace such Qualified Spare Transfonner with another Qualified Spare Transfonner owned by such Seller, or, if applicable, the other owner(s) of such Qualified Spare Transfonner, or any oftheirrespective Affiliates or otherwise elects not to purchase a replacement transfonner, the Replacement Cost shall be deemed to be, for all purposes hereunder, the Net Book Value of the Qualified Spare Transfonner so sold. Replacement Date" means, upon any disposition of a Qualified Spare Transfonner Committed hereunder, the date that is eighteen calendar months following the date of such disposition. For purposes of this definition, the phrase "date of such disposition shall refer to the date on which title to the subject transfonner is transferred, the date on which the subject transfonner is replaced, the date ofloss of the subject trans fonner, or the date on which any other disposition of the subject transfonner occurs, as the case may be. Replacement Spare Transfonner" has the meaning set forth in Section 3. Representative" means an individual appointed by a Participating Utility pursuant to Section 5.1 or Section 5.2 hereof to (i) serve as its Representative to the Equipment Committee and (ii) receive, on such Participating Utility's behalf, all infonnation to be delivered to any Participating Utility pursuant to this Agreement, provided that any such Representative shall be required by the Participating Utility that he or she represents to observe the confidentiality provisions set forth in Article XI hereof with respect to such infonnation. Each Representative shall also serve on those Equipment Sub-Committees corresponding to the Equipment Classes that the Participating Utility that he or she represents has joined as a member hereunder. Required Obligation" means, for each ParticipatingUtility, and in respect of each Equipment Class that such Participating Utility is then a member of, that number of Qualified Spare Transfonners representing the MV A required to be Committed by such Participating Utility as calculated for each Measurement Date by the relevant Equipment Sub-Committee pursuant to the Commitment Fonnula, with Exhibit B to this Agreement to be revised, from time to time, by the relevant Equipment Sub-Committee to reflect each such Participating Utility's Required Obligation for the Initial Measurement Date and the Required Obligation calculated for each succeeding Measurement Date, with any such revisions to become automatically effective for all purposes hereunder upon the affirmative action of such Equipment Sub-Committee. Notwithstanding any provision of this Agreement to the contrary, a Participating Utility's Required Obligation in respect of a particular Equipment Class shall be zero until such time as such Equipment Class first has three or more members inclusive of such Participating Utility. Required Regulatory Approvals" means, with respect to a particular Party, those governmental or other approvals or waivers , and notices to any governmental authorities or other Persons, including any federal notices and approvals, that are (i) required to authorize, or are required in connection with, the perfonnance of this Agreement by such Party, including its perfonnance of the obligations of a Participating Utility hereunder and (ii) set forth on such Party's signature page to this Agreement. Triggering Event" means an act or coordinated acts of deliberate, documented terrorism as defined in the Homeland Security Act of2002, 6 US.c. ~1OI(l5), as the same may be amended from time to time, resulting in (1) the destruction or long-tenn disabling of one or more electric transmission substations, and (2) the declaration of a state of emergency by the President of the United States pursuant to the National Emergencies Act, 50 c. ~160l et seq., as the same may be amended from time to time. ARTICLE II PARTICIPATING UTILITIES Section 2.Binding Obligation. A Party is bound by this Agreement upon its execution and delivery of this Agreement, which shall be evidenced by such Party's execution and delivery of a signature page to this Agreement. An executed signature page to this Agreement shall be deemed to be delivered for all purposes hereunder ifit is delivered to the Equipment Committee or, if the Equipment Committee has not yet held its first meeting, to the Project Manager. Contemporaneously with its execution and delivery of its signature page to this Agreement, each Party shall pay the sum of$lO OOO (the "Initial Fee ) to an account established by the Executive Committee to be used for the administration of this Agreement, provided, that until the Executive Committee establishes any such account, the Initial Fee shall be paid to the Project Manager, which Person shall hold such funds on behalf of the Executive Committee to be deposited into such account as soon as it is established by the Executive Committee. A Party shall become a "Participating Utility" for all purposes hereunder (a "Participating Utility"), immediately and without any further action, upon the later of (i) its Approval Date, and (ii) the date on which at least one of the Equipment Classes that it joins as a member, as contemplated by Section 2., first has three or more members inclusive of such Party (the latest of such dates, such Party's "Effective Date ). For the avoidance of doubt, and notwithstanding any other provision ofthis Agreement to the contrary, except for those obligations and rights contemplated by Articles II, VII, VIII, X, XI and XII hereof, until a Party becomes a Participating Utility hereunder it shall owe no obligation hereunder and shall not be entitled to exercise any rights (including any Call Right) or remedies hereunder. Section 2.Equipment Classes . Upon its relevant Approval Date each Party shall provide a written notice to the Equipment Committee and any relevant Equipment Sub-Committee, or if the Equipment Committee has not yet held its first meeting to the Project Manager, that identifies the Equipment Class , or Equipment Classes, such Party is then joining as a member under this Agreement, following which designation, such Party shall be a member of such Equipment Class until it withdraws from such Equipment Class in strict compliance with Section 10.1 hereof. A Party may join as a member of any other Equipment Class at any time by providing written notice of its decision to become a member of any such other Equipment Class to the Equipment Committee and the relevant Equipment Sub-Committee, or if the Equipment Committee has not yet held its first meeting to the Project Manager, but in no event may a Party withdraw as a member of any Equipment Class, except in strict compliance with Section 10.1 hereof. Section 2.Required Regulatory Approvals . Upon its execution and delivery of this Agreement, each Party shall set forth on its signature page to this Agreement all of its Required Regulatory Approvals. Each Party, from and after the date of its execution and delivery of this Agreement, shall promptly prepare and file all necessary applications, notices, petitions, filings and other documents, and to use all commercially reasonable efforts, to obtain all Required Regulatory Approvals; provided however, that the sole remedy for any failure by a Party to use such efforts shall be as set forth in the last sentence of this Section 2.3. If there are Required Regulatory Approvals set forth on a Party's signature page to this Agreement, then no later than the third Business Day following such Party's relevant Approval Date, such Party shall deliver a written notice to the Equipment Committee, or if the Equipment Committee has not yet held its first meeting to the Project Manager, to the effect that it has obtained all such Required Regulatory Approvals or that it is no longer required to obtain such Required Regulatory Approvals. If the relevant Effective Date for a Party has not occurred on or before the date that is the eighteen month anniversary of the date on which such Party has executed and delivered this Agreement, this Agreement shall be null and void and of no further force or effect with respect to such Party. ARTICLE III BASIC OBLIGATIONS Section 3.Obligation to Commit.On each Measurement Date, each Participating Utility shall have Committed a number of Qualified Spare Transfonners that is at least equal to its Required Obligation in respect of each Equipment Class that such Participating Utility is then a member of and, following such Measurement Date such Participating Utility shall continue to Commit such number of Qualified Spare Transfonners through the next succeeding Measurement Date; provided, however, that prior to the first Measurement Date following the date on which a Party becomes a Participating Utility, such Participating Utility shall be deemed to be in compliance with its obligations set forth in this sentence so long as, in the event that it then owns or otherwise has rights to own or access one or more Qualified Spare Transfonners, it Commits at least one of such Qualified Spare Transfonners up to its Required Obligation calculated for such Measurement Date in respect of each Equipment Class that such Participating Utility is then a member of. On or following any Pennitted Disposition by a Participating Utility, so long as such Participating Utility is in compliance with its obligations set forth in Section 3.3 hereof, such Participating Utility shall be deemed to have Committed the Replacement Spare Transfonner (as defined below) as a Qualified Spare Transfonner for purposes of satisfying its obligations set forth in this Section 3. whether or not such Participating Utility yet owns or otherwise has rights to own or access such Replacement Spare Transfonner, with such Replacement Spare Transfonner becoming a Qualified Spare Transfonner that is Committed hereunder upon such Participating Utility's acquisition of ownership, or rights to own or access, such Replacement Spare Transfonner. Upon request by the relevant Equipment Sub- Committee, each Participating Utility shall present such Equipment Sub-Committee with evidence reasonably satisfactory to such Equipment Sub-Committee of such Participating Utility's compliance with its obligations set forth in this Section 3. Section 3.Obligation to Acquire . If, at any time prior to the next succeeding Measurement Date, a Participating Utility has not yet Committed a number of Qualified Spare Transfonners that is at least equal to its Required Obligation calculated for such next succeeding Measurement Date in respect of each Equipment Class that such Participating Utility is then a member of, such Participating Utility shall, in good faith use its commercially reasonable efforts to take or cause to be taken all actions necessary for such Participating Utility to Commit a number of Qualified Spare Transfonners that is at least equal to its Required Obligation calculated for such next succeeding Measurement Date in respect of each Equipment Class that such Participating Utility is then a member of as soon as practicable but in no event later than such next succeeding Measurement Date, except in the case of any Qualified Spare Transfonner that is Committed hereunder and is then disposed of in a Pennitted Disposition, in which case such Participating Utility shall comply with its obligations set forth in Section 3.3 in respect of a Replacement Spare Transfonner. For the avoidance of doubt, such commercially reasonable efforts shall include, without limitation, executing such purchase orders and other contracts, making any necessary payments under such purchase orders or other contracts, and taking all other reasonable action that is consistent with procuring a Qualified Spare Transfonner or rights to own or access a Qualified Spare Transfonner. Upon request by the relevant Equipment Sub-Committee, each Participating Utility shall present such Equipment Sub-Committee with evidence reasonably satisfactory to such Equipment Sub-Committee of such Participating Utility' compliance with its obligations set forth in this Section 3.2. Section 3.Obligation to Replace. If, at any time, a Participating Utility disposes of a Qualified Spare Transfonner that such Participating Utility had Committed pursuant to the tenns of this Agreement in a Pennitted Disposition, or any such Qualified Spare Transfonner is otherwise disposed of, in each case such that the disposition causes the number of Qualified Spare Transfonners Committed by such Participating Utility to be less than its current Required Obligation, then such Participating Utility shall, in good faith, use its commercially reasonable efforts to take or cause to be taken all actions necessary for such Participating Utility to Commit, in the same Equipment Class, another Qualified Spare Transfonner that such Participating Utility owns or has rights to own or access (a "Replacement Spare Transfonner ) in place of the one so disposed of as soon as practicable but in no event later than the Replacement Date. For the avoidance of doubt, such commercially reasonable efforts shall include, without limitation, executing such purchase orders and other contracts making any necessary payments under such purchase orders or other contracts, and taking all other reasonable action that is consistent with procuring a Qualified Spare Transfonner or rights to own or access a Qualified Spare Transfonner. Upon request by the relevant Equipment Sub-Committee, each Participating Utility shall present such Equipment Sub-Committee with evidence reasonably satisfactory to such Equipment Sub-Committee of such Participating Utility's compliance with its obligations set forth in this Section 3. Section 3.4 Obligation to Report. In respect of each Equipment Class that a Participating Utility is a member of, upon becoming a member of such Equipment Class, and from time to time thereafter as requested by the relevant Equipment Sub- Committee, such Participating Utility shall provide the relevant Equipment Sub- Committee with complete and accurate infonnation necessary for such Equipment Sub- Committee to calculate Required Obligations. Exhibit C to this Agreement shall list in respect of each Participating Utility, opposite the name of such Participating Utility, all Qualified Spare Transfonners, by Equipment Class, then Committed by such Participating Utility, together with such additional infonnation regarding each such Qualified Spare Transfonners as may be required, from time to time, by the Equipment Committee, with any revisions to the infonnation required to be set forth on Exhibit C to become automatically effective for all purposes hereunder upon the affinnative action of the Equipment Committee. In Committing any Qualified Spare Transfonners pursuant to the tenus of this Agreement, each Participating Utility shall contemporaneously provide the Equipment Sub-Committee(s) for the Equipment Class(es) of the Qualified Spare Transfonner(s) so Committed with the infonnation contemplated by this Section 3.4 with Exhibit C to this Agreement to be updated as necessary to reflect the same. In addition, in Committing a Qualified Spare Transfonner hereunder, a Participating Utility shall provide the relevant Equipment Sub-Committee with the identity of each and every other Person that has rights to own or access such Qualified Spare Transfonner, together with a description of the nature of any such rights. Each Participating Utility shall promptly, but in no event later than ten (10) Business Days following any loss disposition or acquisition of a Qualified Spare Transfonner Committed or to be Committed hereunder, deliver a written notice to the relevant Equipment Sub-Committee of any loss or disposition of a Qualified Spare Transfonner Committed by such Participating Utility or any acquisition of a Qualified Spare Transfonner to be Committed by such Participating Utility, together with any other infonnation required by this Section 3.4. Each Equipment Sub-Committee shall cause Exhibit C to this Agreement to be updated on a regular basis to reflect any loss, disposition or acquisition so noticed, as well as the most current infonnation in respect of Qualified Spare Transfonners that are Committed hereunder, as contemplated by this Section 3.4, with any such revisions to become automatically effective for all purposes hereunder upon the affinnative action of such Equipment Sub-Committee and a revised copy of Exhibit C to be provided to each Participating Utility's Representative. For the avoidance of doubt, consistent with the confidentiality provisions set forth in Article XI hereof, Exhibit C shall not be made publicly available, but shall be provided only to each Participating Utility' Representative and such other Persons pennitted by Section 11.1 hereof. Section 3.Obligation to Maintain. Each Participating Utility shall in respect of each Qualified Spare Transfonner that it Commits hereunder, (i) store and maintain, or cause to be stored and maintained, such Qualified Spare Transfonner in accordance with Good Utility Practice and with such care and in such a manner that is at least as favorable as that practiced by such Participating Utility in respect of its other assets, (ii) maintain, or cause to be maintained, such Qualified Spare Transfonner with such care and in such a manner that (x) the Participating Utility is able to count it as a spare transfonner on its system, (y) it is a complete transfonner comprised of all of its standard parts and components, and (z) it is capable of being operated on the Participating Utility's system, (iii) maintain and store, or cause to be maintained and stored, such Qualified Spare Transfonner such that it can be shipped to a Buyer as soon as practicable following its receipt of a Call Notice but in no event later than ten (10) calendar days' following its receipt of any such Call Notice , (iv) not subject such Qualified Spare Transformer to, or permit such Qualified Spare Transformer to be subject , any Lien other than Permitted Liens, and (v) not dispose of such Qualified Spare Transformer except in a Permitted Disposition. Section 3.Obligation to Certify Compliance. On or before June 30 of each calendar year, each Participating Utility shall deliver to the Equipment Committee a certificate executed on behalf of such Participating Utility by a duly authorized executive officer thereof certifying that such Participating Utility is in compliance with its obligations set forth in Article III of this Agreement. Section 3.Determining Number of Qualified Spare Transformers Committed. For purposes of determining the number of Qualified Spare Transformers (and the MV A represented thereby) that a Participating Utility shall be deemed to have Committed hereunder, the following rules shall apply: (i) if a Participating Utility owns 100% of a Qualified Spare Transformer and no other Person has rights to own or access such Qualified Spare Transformer, such Participating Utility must Commit its entire interest in such Qualified Spare Transformer in order for such Qualified Spare Transformer (and the MV A represented thereby) to be counted hereunder and such Qualified Spare Transformer (and the MV A represented thereby) shall be multiplied by a factor of 1., (ii) if a Participating Utility owns a percentage less than 100% of a Qualified Spare Transformer (or owns 100% of a Qualified Spare Transformer but has granted any other Person rights to own or access such Qualified Spare Transformer), or otherwise has rights to own or access less than 100% of such Qualified Spare Transformer, each Person that owns, or has rights to own or access, a percentage of such Qualified Spare Transformer must also be a Participating Utility that Commits its interest in or rights to such Qualified Spare Transformer in order for such Qualified Spare Transformer (and the MV A represented thereby) to be counted hereunder and, with respect to each such Participating Utility, such Qualified Spare Transformer (and the MV A represented thereby) shall be multiplied by a factor the numerator of which is the percentage of such Participating Utility's ownership or rights to own or access such Qualified Spare Transformer (or, if such Participating Utility owns 100% of such Qualified Spare Transformer but has granted any other Person rights to own or access such Qualified Spare Transformer, 100 minus the aggregate percentage of such rights granted to all such Persons) and the denominator of which is 100, (iii) if a Participating Utility owns or has rights to own or access a Qualified Spare Transformer as a tenant in common or pursuant to any contract, instrument, agency relationship or other arrangement with one or more other Persons, each such Person must also be a Participating Utility that Commits (or in the case of ownership or other rights as a tenant in common or similar nature, each such Person must have executed an instrument satisfactory to the relevant Equipment Sub-Committee pursuant to which such Person without being granted any rights whatsoever under this Agreement, including Call Rights, grants such Participating Utility the legal right to Commit) its interest in or rights to such Qualified Spare Transformer in order for such Qualified Spare Transformer (and the MV A represented thereby) to be counted hereunder and, with respect to each such Participating Utility, such Qualified Spare Transformer (and the MY A represented thereby) shall be multiplied by a factor the numerator of which is 1 and the denominator of which is that number of Persons (including such Participating Utility) that owns or has rights to own or access such Qualified Spare Transfonner as a tenant in common or pursuant to such contract, instrument, agency relationship or other arrangement. A Qualified Spare Transfonner that is then in service on a particular Participating Utility' system may be Committed and counted hereunder as a Qualified Spare Transfonner, as contemplated by this Section 3.7; however, it is anticipated that any Participating Utility that Commits a Qualified Spare Transfonner that is then in service on its system will do so with due regard to all applicable reliability standards of the electric reliability organization and such Participating Utility's respective regional entity. ARTICLE IV CALL RIGHTS Section 4.Exercise of Call Right.In the event that a Participating Utility is a Qualified Participating Utility and suffers the destruction or long-tenn disabling of one or more electric transmission substations in connection with a Triggering Event (other than in response to a Call Notice), (i) such Participating Utility shall first take all actions necessary to use any and all spare transfonners that it may own or otherwise have rights to own or access in the Equipment Class with respect to which the destruction or long-tenn disabling occurred in an effort to remedy such destruction or long-tenn disabling to the extent necessary to satisfy an N-O Contingency, and (ii) if following such actions, such Participating Utility has not been able to remedy such destruction or long-tenn disabling to the extent necessary to satisfy an N-O Contingency, such Participating Utility (the "Buyer ) shall have the right, subject to the tenns of this Article IV, and only to the extent necessary to provide such Participating Utility with a sufficient number oftransfonners in service on its system to satisfy an N-O Contingency, to purchase, in its sole discretion, any Qualified Spare Transfonner that all or a portion of which is Committed hereunder in an Equipment Class that the Buyer has joined as a member and with respect to which such destruction or long-tenn disabling occucred in consideration for the applicable Purchase Price (the "Call Right"), by delivering a written notice (the "Call Notice ) to any Participating Utility that has Committed such Qualified Spare Transfonner hereunder (the "Seller ) certifying that it (x) is a Qualified Participating Utility, (y) has suffered the destruction or long-tenn disabling of one or more electric transmission substations in connection with a Triggering Event (other than in response to a Call Notice) and (z) has complied with its obligations set forth in clause (i) of this Section 4.1 and nevertheless is unable to satisfy an N-O Contingency (collectively, the "Prerequisites ) and identifying the Qualified Spare Transfonner with respect to which the Call Right is being exercised. Section 4.Execution of Call Right.Upon receipt of a Call Notice the Seller shall, unless it asserts in good faith an Objection (as defined below), sell, or cause to be sold, the Qualified Spare Transfonner that is the subject ofthe Call Notice to the Buyer free and clear of all Liens , other than Pennitted Liens, in consideration for the applicable Purchase Price, with such sale to be consummated on the following tenns: (i) no later than three (3) calendar days following its receipt of a Call Notice, the Seller shall deliver a written notice to the Buyer setting forth the Estimated Purchase Price, (ii) the Buyer shall deliver the Estimated Purchase Price to the Seller, or such other Person as the Seller may designate, by wire transfer in immediately available funds to an account or accounts designated by the Seller or, if acceptable to the Seller, in its sole discretion, by delivering a promissory note, in fonn and substance satisfactory to the Seller, made payable to the Seller, or such other Person as the Seller may designate, in the principal amount of the Estimated Purchase Price or by such other means as are mutually acceptable to the Buyer and the Seller, (iii) the Buyer shall purchase the Qualified Spare Transfonner subject to the disclaimers set forth in Section 4., and the Buyer and the Seller shall provide those indemnities in respect of the purchase of such Qualified Spare Transfonner that are contemplated by Section 9., (iv) unless the Buyer and the Seller agree otherwise, the Buyer shall purchase the Qualified Spare Transfonner, and title thereto shall transfer, at the location at which the Seller is then maintaining, or causing to be maintained, such Qualified Spare Transfonner, with the Buyer responsible for any and all transportation costs, and the Buyer to bear the risk of loss, from such point of sale, (v) the Buyer and the Seller shall execute and deliver, or cause to be executed and delivered such documents or instruments as either the Buyer or the Seller shall reasonably request in connection with evidencing the sale of the subject Qualified Spare Transfonner to the Buyer or the vesting of title thereto in the Buyer, (vi) upon and following the consummation of any such sale, the Seller shall use all commercially reasonable efforts to cancel, satisfy or otherwise remove, or cause to be cancelled, satisfied or otherwise removed, any and all Liens to which the Qualified Spare Transfonner may be subject at the time of sale to the Buyer or otherwise as a result of any acts or omissions of the Seller or any other Person having rights to own or access such Qualified Spare Transfonner and (vii) following the consummation of any such sale, the Buyer and the Seller shall detennine and make, or cause to be made, any payments in respect of the Purchase Price that are required pursuant to Section 4. Section 4.Objection to Call Right.In the event that, upon receipt of a Call Notice, the Seller has a good faith basis to assert that (i) the Prerequisites have not been satisfied, (ii) the Seller, or if applicable the other owner(s) of the subject Qualified Spare Transfonner, has suffered the destruction or long-tenn disabling of one or more electric transmission substations in connection with a Triggering Event (other than in response to a Call Notice) or other casualty that is then still affecting the Seller, or if applicable the other owner(s) of the subject Qualified Spare Transfonner, or (iii) it would be inequitable to require the sale of the subject Qualified Spare Transfonner pursuant to the Call Notice because the Seller has received more than one Call Notice for the same Qualified Spare Transfonner or the Seller has received multiple Call Notices in respect of the same Triggering Event while other Participating Utilities in the same Equipment Class have not received any Call Notices in respect of such Triggering Event, the Seller may make any such assertion by delivering to the Buyer and the Executive Committee no later than one (1) calendar day following the Seller s receipt of a Call Notice, a written notice making such an assertion (an "Objection ), upon receipt of which the Buyer may refer the matter immediately to the Executive Committee, in which case the Executive Committee shall promptly convene to detennine whether or not (i) the Prerequisites have been satisfied, (ii) the Seller, or if applicable the other owner(s) of the subject Qualified Spare Transformer, has suffered the destruction or long-term disabling of one or more electric transmission substations in connection with a Triggering Event (other than in response to a Call Notice) or other casualty that is then still affecting the Seller, or if applicable the other owner(s) of the subject Qualified Spare Transformer, or (iii) it would be inequitable to require the sale of the subject Qualified Spare Transformer pursuant to the Call Notice. In the event the Executive Committee determines that (i) the Prerequisites have been satisfied, (ii) the Seller, or if applicable the other owner(s) of the subject Qualified Spare Transformer, has not suffered the destruction or long-term disabling of one or more electric transmission substations in connection with a Triggering Event (other than in response to a Call Notice) or other casualty that is then still affecting the Seller, or if applicable the other owner(s) of the subject Qualified Spare Transformer and/or (iii) it would not be inequitable to require the sale of the subject Qualified Spare Transformer pursuant to the Call Notice, as applicable, the Seller shall proceed to consummate, or caused to be consummated, the sale of the Qualified Spare Transformer indicated in the Call Notice pursuant to the terms of Section 4.2. In the event the Executive Committee determines that (i) the Prerequisites have not been satisfied, (ii) the Seller, or if applicable the other owner(s) of the subject Qualified Spare Transformer, has suffered the destruction or long-term disabling of one or more electric transmission substations in connection with a Triggering Event (other than in response to a Call Notice) or other casualty that is then still affecting the Seller, or if applicable the other owner(s) of the subject Qualified Spare Transformer, and/or (iii) it would be inequitable to require the sale of the subject Qualified Spare Transformer pursuant to the Call Notice as applicable, the Seller shall be under no obligation to consummate, or cause to be consummated, the sale of the Qualified Spare Transformer indicated in the Call Notice but the Buyer shall be free to deliver another Call Notice to any Participating Utility, including the Seller, at such time, and in such event, as the Buyer in good faith believes that the Prerequisites have been satisfied and that the Participating Utility to which such Call Notice is to be delivered has no good faith basis to assert an Objection. Section 4.4 Disputes Concerning Call Rights In the event of any dispute between the Buyer and the Seller concerning any Call Notice, the satisfaction of the Prerequisites, any Objection, the refusal, for any reason, by the Buyer or the Seller to consummate, or cause to be consummated, a sale pursuant to the terms of this Agreement, or any other matter relating to the consummation of a sale pursuant to the terms of this Agreement shall first be referred to the Executive Committee, by written notice delivered by the Buyer or the Seller, for resolution prior to either the Buyer or the Seller pursuing any remedies set forth in Article IX In the event the Executive Committee fails to propose a resolution to the matter within three (3) Business Days of such matter being referred to it, or in the event the Buyer or the Seller disagree with the Executive Committee s proposed resolution of the matter, the Buyer and the Seller shall be free to exercise any and all available remedies as contemplated by Article IX Section 4.Qualified Spare Transformers with Multiple Owners Each Participating Utility that owns, or has rights to own or access, together with one or more other Participating Utilities, any portion of a particular Qualified Spare Transformer that is Committed hereunder hereby appoints each other Participating Utility that owns or has rights to own or access, any portion of such Qualified Spare Transformer as its true and lawful agent and attorney-in-fact for purposes of consummating, or causing to be consummated, the sale of such Qualified Spare Transfonner in strict compliance with this Article IV such that if any Participating Utility that owns or has rights to own or access any portion of such Qualified Spare Transfonner receives a Call Notice in respect of such Qualified Spare Transfonner it shall have sufficient authority, rights and powers to consummate, or cause to be consummated, the sale of such Qualified Spare Transfonner as a Seller hereunder, without any further action required by any other Participating Utility that owns or has rights to own or access such Qualified Spare Transfonner, with each such Participating Utility declaring that the foregoing powers are coupled with an interest and are irrevocable. Section 4.Certain Disclaimers.For the avoidance of doubt, each Participating Utility acknowledges and agrees that any Qualified Spare Transfonner purchased pursuant to the tenus of this Agreement is, and shall be, sold subject to the following disclaimers: EXCEPT FOR THOSE REPRESENT A TIONS AND WARRANTIES OF THE SELLER SET FORTH IN ARTICLE VIII and EXCEPT FOR THOSE COVENANTS OF THE SELLER SET FORTH IN SECTION 4.2 AND SECTION 9.5 OF THIS AGREEMENT, SUCH QUALIFIED SPARE TRANSFORMER IS SOLD "AS IS , WHERE IS" AND THE SELLER DISCLAIMS ANY OTHER REPRESENT A TIONS OR WARRANTIES OF ANY KIND OR NATURE, EXPRESS OR IMPLIED, AS TO THE CONDITION, VALUE OR QUALITY OF SUCH QUALIFIED SPARE TRANSFORMER, AND SPECIFICALL Y DISCLAIMS ANY REPRESENTATION OR WARRANTY OF MERCHANTABILITY, USAGE SUITABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE, OR AS TO THE WORKMANSHIP THEREOF, OR THE ABSENCE OF ANY DEFECTS THEREIN, WHETHER LATENT OR PATENT. Section 4.Detennination of Purchase Price . No later than six (6) calendar months following any sale consummated pursuant to the tenus of this Agreement, the Seller shall deliver to the Buyer a written notice prepared in good faith and setting forth the Seller s calculation of the Purchase Price, together with written documentation of the Seller s actual costs and expenses incurred in respect of any costs or expenses included in the Purchase Price and of the Seller s tax liability, if any, attributable to the sale of the subject Qualified Spare Transfonner at the Replacement Cost or the Net Book Value, as the case may be. If the Buyer in good faith objects to the Seller s calculation of the Purchase Price, it may object to such calculation by delivering a written notice to the relevant Equipment Sub-Committee and the Seller requesting that such Equipment Sub-Committee review the Seller s calculation of the Purchase Price. For the avoidance of doubt, any dispute concerning the Purchase Price shall first be so referred to the relevant Equipment Sub-Committee prior to either the Buyer or the Seller pursuing any remedies set forth in Article IX. Upon receipt of any such notice, the relevant Equipment Sub-Committee shall promptly convene to detennine the Purchase Price of the subject Qualified Spare Transfonner. In connection with the foregoing, each of the Buyer and the Seller shall fully cooperate with any such review by such Equipment Sub-Committee, including by providing such books and records, and such other information available to it, as is necessary for such Equipment Sub-Committee to conduct such review. In the event that such Equipment Sub-Committee fails to determine the Purchase Price within twenty (20) Business Days of such matter being referred to it, or in the event the Buyer or the Seller disagree with such Equipment Sub-Committee determination of the Purchase Price, the Buyer and the Seller shall be free to exercise any and all available remedies as contemplated by Article Ix. In the event that the Buyer and the Seller agree on the amount of the Purchase Price, the Buyer and the Seller agree with the relevant Equipment Sub-Committee s determination of the Purchase Price or the Purchase Price is finally determined by a court of competent jurisdiction, (i) if the Purchase Price exceeds the Estimated Purchase Price actually paid, the Buyer shall within ten (10) Business Days of such agreement or determination pay to the Seller the amount by which the Purchase Price exceeds the Estimated Purchase Price, and (ii) if the Estimated Purchase Price actually paid exceeds the Purchase Price, the Seller shall within ten (l0) Business Days of such agreement or determination refund to the Buyer the amount by which the Estimated Purchase Price exceeds the Purchase Price. ARTICLE V EO UIPMENT COMMITTEE Section 5.Composition of Equipment Committee. Each Participating Utility shall be entitled to appoint one individual who qualifies as a Representative hereunder to serve as its Representative on the Equipment Committee and on those Equipment Sub-Committees corresponding to the Equipment Classes that such Participating Utility has joined as a member hereunder. In order for an individual to qualify as a Representative hereunder, he or she must (i) have engineering and utility operation experience, (ii) be authorized by the Participating Utility that it represents to bind such Participating Utility in any matters to be acted upon by the Equipment Committee or any Equipment Sub-Committee hereunder, and (iii) be required by such Participating Utility to observe the confidentiality provisions set forth in Article XI hereof. No later than three (3) Business Days following its relevant Effective Date, each Participating Utility shall name its initial Representative, and provide the contact information required by this Agreement for such Representative, by delivering to the Equipment Committee, or if the Equipment Committee has not yet held its first meeting, the Project Manager, a notice setting forth such name and such contact information. The chairperson of the Equipment Committee shall, from time to time, provide all Representatives to the Equipment Committee with an updated list of the names and contact information for all other Representatives to the Equipment Committee. Section 5.Subsequent Representatives; Proxies. Each Participating Utility shall be entitled to remove and replace its Representative at any time, in its discretion, and to fill any vacancy in its Representative, in any case so long as (i) the Representative appointed as a replacement or to fill any vacancy is qualified as a Representative under Section 5.1 hereof and (ii) such Participating Utility provides notice to the Equipment Committee that the Representative so appointed is the current Representative of such Participating Utility. A Representative may execute one or more proxies for purposes of being represented and voting at any meeting of the Equipment Committee or any Equipment Sub-Committee so long as any such proxy is in writing, is signed by the Representative granting the proxy, and the proxy is granted in favor of an employee of the Participating Utility represented by the Representative who would otherwise meet the qualifications of a Representative under Section 5.1 hereunder. Notwithstanding the foregoing, any Representative removed by a Participating Utility, and any Person who is granted a proxy, through such proxy s duration and following its expiration or termination, shall continue to be required by the Participating Utility that he or she represents or represented to observe the confidentiality provisions set forth in Article XI hereof, with such Participating Utility responsible for any failure by any such Person to comply with such provisions. Section 5.Equipment Sub-Committees. The Equipment Committee shall be divided into a number of Equipment Sub-Committees corresponding to the Equipment Classes of Qualified Spare Transformers that have been Committed hereunder, with each Representative serving on those Equipment Sub-Committees that correspond to the Equipment Class or Equipment Classes of any Qualified Spare Transformers that the Participating Utility that he or she represents has Committed hereunder. Section 5.4 Responsibilities. The Equipment Committee shall meet from time to time, to consider and act upon the following matters: (i) elect its chairperson, (ii) elect Participating Utilities for the purpose of appointing members of the Executive Committee, as contemplated by Section 6.2 hereof, (iii) take such other action contemplated by this Agreement to be taken by the Equipment Committee. Each Equipment Sub-Committee shall meet, from time to time, to consider and act upon the following matters: (i) elect its chairperson, (ii) calculate Required Obligations as contemplated by this Agreement, and (iii) take such other action contemplated by this Agreement to be taken by such Equipment Sub-Committee. Each Equipment Sub- Committee shall, as soon as practicable following such time as its Equipment Class first has three or more members, calculate the Required Obligation for each of its members in respect of the Initial Measurement Date, and, as soon as practicable following the Initial Measurement Date and each Measurement Date thereafter, calculate the Required Obligation for each of its members in respect of the next succeeding Measurement Date. In addition, in the event that, following the calculation of any such Required Obligation one or more additional Participating Utilities joins a particular Equipment Class, the relevant Equipment Sub-Committee may, upon the affirmative action of the members of such Equipment Class, recalculate the Required Obligation for each of its members for the next succeeding Measurement Date. Section 5.Meetings. At its first meeting of each calendar year, the Equipment Committee and each Equipment Sub-Committee, respectively, shall meet to elect its respective chairperson and transact such other business as shall properly come before it under this Agreement. The chairpersons of the Equipment Committee and each Equipment Sub-Committee, as the case may be, shall call a meeting of the Equipment Committee and such Equipment Sub-Committee, respectively (i) within 45 days following the beginning of each calendar year, provided, however, that during calendar year 2006, the initial meeting of the Equipment Committee shall be called as soon as practicable following the date hereof, (ii) as necessary to perform the function of the Equipment Committee and such Equipment Sub-Committee, as the case may be, under this Agreement, (iii) at the request of twenty percent of the members of the Equipment Committee or the Equipment Sub-Committee, as the case may be, and (iv) as the chairperson, in his or her discretion, otherwise deems necessary. Section 5.Notice of Meetings . The chairpersons of the Equipment Committee and each Equipment Sub-Committee shall deliver, or cause to be delivered, to each Representative serving on the Equipment Committee and such Equipment Sub- Committee, respectively, a notice, delivered to such Representative s email address containing the date, place, time of, and dial-in instructions for telephone conference participation in, any meeting of the Equipment Committee or such Equipment Sub- Committee, as the case may be, on or before two (2) Business Days prior to such meeting, or on such shorter notice as the chairperson deems necessary under the circumstances. Each Representative is responsible for providing the Equipment Committee with a current email address to use for notice purposes hereunder. Section 5.Telephonic Meetings. The Equipment Committee and each Equipment Sub-Committee may meet in person or by telephone conference call, so long as each member of the Equipment Committee or Equipment Sub-Committee, as the case may be, is able to hear and speak to all other members in attendance at such meeting. Any meeting that is held in person shall also provide adequate means for Representatives to participate by telephone conference as well, as contemplated by the immediately preceding sentence. Section 5.Quorum; Required Vote. A majority of the members of the Equipment Committee or any Equipment Sub-Committee shall constitute a quorum for the conduct of business at any meeting of the Equipment Committee or an Equipment Sub-Committee, respectively. A decision by a simple majority of the votes cast by members of the Equipment Committee or any Equipment Sub-Committee present and voting at any such meeting of the Equipment Committee or such Equipment Sub- Committee at which a quorum is present, respectively, shall constitute the action of the Equipment Committee or such Equipment Sub-Committee, as the case may be. A Representative may be represented and vote at any meeting by means of a proxy, as provided in Section 5.2. In acting upon any matter brought before the Equipment Committee, including the election of any Participating Utility by the Equipment Committee for purposes of appointing a member of the Executive Committee pursuant to Section 6.2 hereof, each Representative shall be entitled to cast a number of votes equal to the amount of MV A represented by the number of Qualified Spare Transformers then deemed to be Committed hereunder by the Participating Utility that such Representative represents , as determined in accordance with Section 3.7. In acting upon any matter brought before any Equipment Sub-Committee, each Representative shall be entitled to cast a number of votes equal to the amount ofMV A represented by the number of Qualified Spare Transformers then deemed to be Committed hereunder in the relevant Equipment Class by the Participating Utility that such Representative represents, as detennined in accordance with Section 3. Section 5.Notices to Equipment Committee or Equipment Sub- Committee. All notices required to be given hereunder to the Equipment Committee or any Equipment Sub-Committee shall be given to the Project Manager until the Equipment Committee or Equipment Sub-Committee, as the case may be, holds its first meeting and elects its first chairperson, and thereafter shall be given to the current chairperson of the Equipment Committee or Equipment Sub-Committee, as the case may , at such email address as such chairperson may provide upon his or her election and from time to time thereafter. Section 5.10 Disputes . Any dispute involving any decision of the Equipment Committee or any Equipment Sub-Committee shall first be referred to the Executive Committee, by written notice delivered to the Executive Committee by any affected Participating Utility, for resolution prior to any such Participating Utility pursuing any remedies set forth in Article Ix. In the event the Executive Committee fails to propose a resolution to the matter within ten (10) Business Days of such matter being referred to it, or in the event any affected Participating Utility disagrees with the Executive Committee s proposed resolution of the matter, any such affected Participating Utility shall be free to exercise any and all available remedies as contemplated by Article Ix. ARTICLE VI EXECUTIVE COMMITTEE Section 6.Composition of Executive Committee. The Executive Committee shall be comprised of eleven (11) members appointed by those eleven (11) Participating Utilities elected by the Equipment Committee for the purpose of appointing a member of the Executive Committee pursuant to Section 6.2 hereof; provided however, that (i) one of such Participating Utilities so elected shall be a Participating Utility whose annual peak load is such that seventy-five percent of all other Participating Utilities have annual peak loads greater than the annual peak load of such Participating Utility, (ii) one of such Participating Utilities so elected shall be a Participating Utility that operates in the geographic area covered by the FRCC region as of the date hereof (iii) one of such Participating Utilities so elected shall be a Participating Utility that operates in the geographic area covered by the SERC region as of the date hereof, (iv) one of such Participating Utilities so elected shall be a Participating Utility that operates in the geographic area covered by the WECC region as of the date hereof, (v) one of such Participating Utilities so elected shall be a Participating Utility that operates in the geographic area covered by the ERCOT region as of the date hereof, (vi) one of such Participating Utilities so elected shall be a Participating Utility that operates in the geographic area covered by the SPP region as of the date hereof, (vii) one of such Participating Utilities so elected shall be a Participating Utility that operates in the geographic area covered by the NPCC region as of the date hereof, (viii) one of such Participating Utilities so elected shall be a Participating Utility that operates in the geographic area covered by the MRO region as of the date hereof, and (ix) one of such Participating Utilities so elected shall be a Participating Utility that operates in the geographic area covered by the Reliability First region as of the date hereof. Section 6.Selection of Executive Committee. At the first meeting of the Equipment Committee of each calendar year (or, during calendar year 2006, at such time as the Equipment Committee deems appropriate), the Equipment Committee shall elect eleven (11) Participating Utilities, in strict compliance with the provisions of Section 6.1 hereof, with each Participating Utility so elected entitled to each appoint one member of the Executive Committee to serve a tenD commencing on the date of such meeting until his or her successor is appointed and duly qualified at the first meeting of the Equipment Committee of the next succeeding calendar year. Each Participating Utility so elected to appoint a member of the Executive Committee shall appoint its chief executive officer or such other senior officer of such Participating Utility as its chief executive officer may designate. No Participating Utility may be elected to appoint more than one member of the Executive Committee during any calendar year, no Participating Utility may be elected to appoint a member of the Executive Committee for more than two (2) consecutive years, and at no time shall two or more Participating Utility's that are Affiliates be elected to appoint a member of the Executive Committee during the same calendar year unless, in each case, there are no other Participating Utilities that would otherwise qualify for election pursuant to this Section 6.2. Section 6.Vacancies. Each Participating Utility that is entitled to appoint a member of the Executive Committee shall be entitled to remove and replace the member it so appointed at any time. In the event of a vacancy, for any reason, in any member of the Executive Committee, the Participating Utility that originally appointed such member shall be entitled to fill such vacancy by naming a new member of the Executive Committee so long as (i) the member appointed to fill any such vacancy is the chief executive officer of such Participating Utility or such other senior officer of such Participating Utility as its chief executive officer may designate and (ii) such Participating Utility provides notice to the Executive Committee that it has filled such vacancy. Section 6.4 Responsibilities. The Executive Committee shall meet from time to time, to consider and act upon the following matters: (i) to elect its chairperson, (ii) to develop a budget, and detennine the dues to be paid by Participating Utilities, for the next succeeding calendar year, as contemplated by Section 7.2 hereof and (iii) to take such other action contemplated by this Agreement to be taken by the Executive Committee. Section 6.Meetings . The first meeting of the Executive Committee of each calendar year shall be held as soon as practicable following the first meeting of the Equipment Committee of such calendar year, upon at least two (2) Business Days prior notice to the members of the Executive Committee delivered by the chairperson of the Equipment Committee, for the purpose of electing the chairperson of the Executive Committee and transacting such other business as shall properly come before it under this Agreement. Thereafter, the chairperson of the Executive Committee shall call a meeting of the Executive Committee (i) as necessary to perform the function of the Executive Committee under this Agreement, (ii) at the request of twenty percent of the members of the Executive Committee, and (iii) as the chairperson, in his or her discretion, otherwise deems necessary. Section 6.Notice of Meetings. Except with respect to the first meeting of the Executive Committee of each calendar year, which shall be noticed as contemplated in Section 6.5 hereof, the chairperson of the Executive Committee shall deliver, or cause to be delivered, to each member of the Executive Committee a notice delivered to such member s emai1 address, containing the date, place, time of, and dial- instructions for telephone conference participation in, any meeting of the Executive Committee on or before one calendar day prior to such meeting, or on such shorter notice as the chairperson deems necessary under the circumstances. Each member is responsible for providing the Executive Committee with a current email address to use for notice purposes hereunder, as well as such member s work, home and cellular telephone contact information. Section 6.Telephonic Meetings. The Executive Committee may meet in person or by telephone conference call, so long as each member of the Executive Committee is able to hear and speak to all other members in attendance at such meeting. Any meeting that is held in person shall also provide adequate means for members to participate by telephone conference as well, as contemplated by the immediately preceding sentence. Section 6.Quorum; Required Vote. A majority of the members of the Executive Committee shall constitute a quorum for the conduct of business at any meeting of the Executive Committee. A decision by a simple majority of the votes cast by members of the Executive Committee present and voting at any such meeting of the Executive Committee at which a quorum is present shall constitute the action of the Executive Committee. No member of the Executive Committee may vote or be represented at any meeting by means of a proxy. In acting upon any matter brought before the Executive Committee, each member shall be entitled to cast one vote. Section 6.Notices to Executive Committee.All notices required to be given hereunder to the Executive Committee shall be given to the chairperson of the Equipment Committee until the Executive Committee holds its first meeting and elects its first chairperson, and thereafter shall be given to the current chairperson of the Executive Committee, at such email address as such chairperson may provide upon his or her election and from time to time thereafter. Section 6.10 Project Manager.The Executive Committee is authorized to enter into such arrangements as it deems necessary and appropriate to retain one or more qualified Persons to serve as the project manager of this Agreement (the "Project Manager ). Any such Project Manager shall be reasonably compensated, and reimbursed for its expenses, by the Executive Committee, with such compensation and expenses to be taken into account by the Executive Committee in preparing the budget and determining dues as contemplated by Section 7.2 hereof. Each Participating Utility acknowledges and agrees that Edison Electric Institute shall, until the Initial Measurement Date or such earlier date as the Executive Committee may determine , serve as the Project Manager and, in such capacity, shall (i) oversee the development of a database of Qualified Spare Transformers that are Committed hereunder, (ii) develop and deliver summary reports on the status of such database, industry participation in this Agreement, and such other matters as may be requested by the Executive Committee or the Equipment Committee, (iii) assist the Executive Committee, the Equipment Committee, and the Equipment Sub-Committees with their respective administrative responsibilities as contemplated by this Agreement, including the coordination of their respective meetings , and the preparation of, and revisions to, the Exhibits to this Agreement as contemplated hereby. ARTICLE VII FINANCIAL MATTERS Section 7.Cost Sharing. Each Party recognizes and agrees that all Parties are responsible for sharing the costs associated with the administration of this Agreement, as provided in this Article VII. Section 7.2 Budget; Dues . Beginning with the calendar year 2006 and continuing each calendar year thereafter, the Executive Committee shall adopt a budget, and determine the dues to be paid by Parties, for the next succeeding calendar year. Dues shall be paid by each Party, on or before the date set by the Executive Committee for the payment of dues for such calendar year, to an account established by the Executive Committee to be used for the administration of this Agreement, provided that until the Executive Committee establishes any such account, all dues shall be paid to the Project Manager, which Person shall hold such funds on behalf of the Executive Committee to be deposited into such account as soon as it is established by the Executive Committee. Notwithstanding any other provision of this Agreement to the contrary, a Party shall be excused from paying dues as contemplated by this Section 7.2 during the calendar year in which such Party executes and delivers its signature page to this Agreement and pays the Initial Fee contemplated by Section 2. ARTICLE VIII REPRESENTATIONS AND WARRANTIES Each Party represents and warrants to all other Parties that: Section 8.Organization. On the date that such Party executes and delivers this Agreement, on the Effective Date, and on the date of any sale consummated pursuant to the terms of this Agreement, such Party is duly organized, validly existing and in good standing under the laws of the state of its organization or by federal statute and has all requisite power and authority to enter into this Agreement, to perfonn its obligations hereunder and to consummate the transactions contemplated hereby. Section 8.Authorization. On the date that such Party executes and delivers this Agreement, on the Effective Date, and on the date of any sale consummated pursuant to the tenns of this Agreement, the execution and delivery of this Agreement and the perfonnance of its obligations hereunder, have been duly authorized by all necessary action on the part of such Party and do not, and will not, violate, conflict with or give rise to a breach or event of default under any of such Party's constituent documents or any agreement by which such Party or any Qualified Spare Transfonner that it Commits hereunder may be bound. Section 8.Binding Obligation. On the date that such Party executes and delivers this Agreement, on the Effective Date, and on the date of any sale consummated pursuant to the tenns of this Agreement, this Agreement is a legal, valid and binding obligation of such Party enforceable against it in accordance with its tenns subject to the qualification, however, that the enforcement of the rights and remedies hereunder may become subject to (i) bankruptcy and other similar laws of general application affecting rights and remedies of creditors and (ii) the application of general principles of equity (regardless of whether considered in a proceeding in equity or at law). Section 8.4 No Approvals Necessary. On the date that such Party executes and delivers this Agreement, except for those Required Regulatory Approvals set forth on its signature page to this Agreement, such Party has obtained any and all Required Regulatory Approvals. On the Effective Date and on the date of any sale consummated pursuant to the tenns of this Agreement, such Party has obtained any and all Required Regulatory Approvals. Section 8.Title to Qualified Spare Transfonner.On the Effective Date and on the date of any sale consummated pursuant to the tenns of this Agreement with respect to each Qualified Spare Transfonner that it Commits, or purports to Commit hereunder, such Party owns or has rights to own or access, directly or indirectly, such Qualified Spare Transfonner free and clear of any Liens, except for Pennitted Liens, such that in the event such Qualified Spare Transfonner is sold to a Buyer pursuant to the tenns of this Agreement, upon the consummation of any such sale, subject only to clause (vi) of Section 4.2 hereof, the Buyer shall have good and valid title to such Qualified Spare Transfonner. Section 8.Condition of Qualified Spare Transfonner.On the Effective Date and on the date of any sale consummated pursuant to the tenns of this Agreement, with respect to each Qualified Spare Transfonner that it Commits, or purports to Commit, hereunder, such Party has maintained each such Qualified Spare Transfonner in strict compliance with Section 3. ARTICLE IX REMEDIES; INDEMNIFICATION Section 9.Specific Perfonnance. Each Participating Utility acknowledges and agrees that all other Participating Utilities that have Committed or plan to Commit a Qualified Spare Transfonner in the Equipment Class or Equipment Classes to which it has Committed a Qualified Spare Transfonner are relying on it to consummate, or cause to be consummated, the sale of such Qualified Spare Transfonner upon the proper exercise of a Call Right under this Agreement, that each such Qualified Spare Transfonner is unique, that it would be virtually impossible to quickly obtain a fully adequate substitute for any such Qualified Spare Transfonner in the event that it fails to consummate, or cause to be consummated, the sale of a Qualified Spare Transfonner pursuant to a properly exercised Call Right under this Agreement, and that the award of damages at law may not be an adequate remedy. Accordingly, each Participating Utility agrees that in the event that it fails to consummate , or cause to be consummated, the sale of a Qualified Spare Transfonner pursuant to a properly exercised Call Right under this Agreement, and in addition to any other remedy contemplated hereby, a court of competent jurisdiction shall have the power and authority to grant a request made by the Buyer for specific perfonnance, including, without limitation, a request for specific perfonnance to enforce the powers granted in Section 4.5 hereof where such specific perfonnance is an appropriate remedy under applicable law or applicable equitable principles. Notwithstanding any provision of this Agreement to the contrary, if any Participating Utility resorts to legal proceedings to specifically enforce this Agreement, the Participating Utility that is the prevailing party in such proceedings will be entitled to recover from the Participating Utility that is not the prevailing party in such proceedings all costs incurred by the prevailing party, including reasonable attorney s fees, in addition to any other relief to which it may be entitled under the tenus hereof; provided, however, that the foregoing recovery of costs shall at all times be subject to the limitations set forth in Section 9.4. Section 9.Other Remedies . For the avoidance of doubt, the remedy provided for in Section 9.1 is not exclusive and is not intended to preclude any Participating Utility from pursuing any other right or remedy that may be available to such Participating Utility at law or in equity, including any such right to recover direct damages or pursue such other legal or equitable relief as may be available under applicable law or applicable equitable principles. Section 9.Cumulative Remedies.For the avoidance of doubt, all rights and remedies of any Participating Utility under this Agreement are cumulative of every other right or remedy that such Participating Utility may otherwise have at law or in equity and the exercise of one or more rights or remedies shall not prejudice or impair the concurrent or subsequent exercise of other rights or remedies. Section 9.4 Limitation on Damages . Notwithstanding any other provision ofthis Agreement to the contrary, (i) no Participating Utility, nor any of its officers, directors, agents, employees , parents, Affiliates, successors, assigns, contractors or subcontractors (collectively, "Related Parties ) shall be liable to any other Participating Utility or its Related Parties for any liabilities, damages, obligations payments, losses, costs, or expenses under this Agreement in any amount in excess of the actual compensatory damages, court costs and reasonable attorneys' fees suffered by such other Participating Utility or its Related Parties in connection with, or resulting from perfonnance or non-perfonnance of this Agreement, or any actions undertaken in connection with or related to this Agreement, (ii) each Participating Utility waives any right to recover incidental, punitive, exemplary, special, indirect, multiple, or consequential damages (including attorneys' fees or litigation costs to recover the same and lost profits) in connection with, or resulting from, perfonnance or non-perfonnance of this Agreement, or any actions undertaken in connection with or related to this Agreement, including any such damages which are based upon causes of action for breach of contract, tort (including negligence and misrepresentation), breach of warranty, or strict liability, and (iii) in no event shall any Participating Utility, in connection with any single event or series of related events , be liable to any other Participating Utility hereunder in any amount in excess of 150% of the Purchase Price for the relevant Qualified Spare Transfonner. Section 9.Indemnification. In respect of any purchase and sale consummated as a result of a Call Right exercised under this Agreement, the Buyer and the Seller shall make the following indemnities: Subject at all times to the limitations set forth in Section 9.4, the Seller agrees to indemnify, defend and hold the Buyer hanDless from and against any loss damage, expense (including reasonable attorneys ' fees) or claim , whether direct or indirect, known or unknown, absolute or contingent, that relates to, results from, or arises in connection with (i) any breach of the Seller s representations and warranties contained in Article VIII, and (ii) any and all Liens to whic~ the subject Qualified Spare Transfonner may be subject at the time of sale to the Buyer or otherwise as a result of any acts or omissions of the Seller or any other Person having rights to own or access such Qualified Spare Transfonner; and Subject at all times to the limitations set forth in Section 9.4, the Buyer agrees to indemnify, defend and hold the Seller hanDless from and against any loss damage, expense (including reasonable attorneys' fees) or claim , whether direct or indirect, known or unknown, absolute or contingent, that relates to, results from, or arises in connection with (i) any breach of the Buyer s representations and warranties contained in Article VIII, (ii) any and all liabilities and obligations in respect of the subject Qualified Spare Transfonner that are attributable to the period of time on and following the time of sale to the Buyer (other than liabilities and obligations attributable to any breach of the Seller s representations and warranties set forth in Article VIII or the Seller s covenants set forth in Section 2), and (iii) any claims made by any third party for personal injury, death property damage or otherwise arising from or incidental to the sale of the subject Qualified Spare Transfonner to the extent such loss, damage, expense, or claim is caused by any act or omission of the Buyer. Section 9.Survival of Representations and Warranties. For purposes of the indemnities contemplated by Section 9., the representations and warranties set forth in Article VIII shall survive the consummation of any sale pursuant to the tenns of Article IV until the second anniversary of the consummation of such sale, except for those representations and warranties set forth in Sections 8.2 and 8., which representations and warranties shall survive indefinitely. ARTICLE X WITHDRAWAL Section 10.Withdrawal Procedure. On and following such time as a Party becomes a member of a particular Equipment Class, a Party may withdraw as a member of such Equipment Class under this Agreement only if on or before the date that is two (2) years prior to the date of such Party's desired date of withdrawal it delivers to the Equipment Committee and the relevant Equipment Sub-Committee a written notice of its intention to withdraw as a member of such Equipment Class; provided, however, that following its Effective Date, a Party may withdraw as a member of a particular Equipment Class without notice, by delivering a written notice to such effect to the Equipment Committee and the relevant Equipment Sub-Committee, in the event that prior to such Party's withdrawal, such Equipment Class does not have at least three members, inclusive of such Party. Section 10.Effectiveness of Withdrawal. A Party shall be deemed to have withdrawn from this Agreement only after it has withdrawn from each Equipment Class in which it was a member pursuant to the provisions of Section 10.1 hereof. Notwithstanding a Party's withdrawal from an Equipment Class or this Agreement, as contemplated hereby, such Party shall continue to enjoy any rights, and shall remain liable for any obligations, that arose or accrued to it under this Agreement prior to the date of any such withdrawal. ARTICLE XI CONFIDENTIALITY Section 11.Confidentiality Obligation. Each Party (i) shall maintain the confidentiality of all infonnation provided to it pursuant to the tenns of this Agreement, including the infonnation set forth on Exhibit C, and shall take all actions reasonably necessary to ensure that only its Representative, and such other Persons directly involved in the administration and perfonnance of this Agreement by such Party, has access to such infonnation, except as otherwise necessary to enforce its rights or comply with its obligations hereunder, and that its Representative, and such other Persons, shall comply with the provisions of this Article XI , (ii) shall not disclose any such infonnation to any other third parties, unless otherwise provided hereunder, and (iii) agrees to use such infonnation only for such purposes and in such manner as is contemplated by the tenns of this Agreement. Notwithstanding the foregoing, each Party shall be pennitted to use any infonnation provided to it under the tenns of this Agreement in support of any claim or counterclaim respecting an alleged breach of any other Party's obligations under this Agreement. Section 11.Pennitted Disclosures . In the event that a Party is required to provide infonnation that was provided to it in respect of another Party under the tenns of this Agreement to the Federal Energy Regulatory Commission, state public utility commission or public service commission, a court, or other governmental authority, such Party shall (i) promptly notify each affected Party, (ii) reasonably cooperate with any such affected Party's request to object to the disclosure of the requested infonnation (unless the disclosing Party is advised by legal counsel that any such request to object would materially prejudice its interest before such governmental authority), and (iii) seek confidential treatment for any such infonnation disclosed. Notwithstanding any other provision of this Agreement to the contrary, each Party acknowledges and agrees that this Agreement and its Exhibits may be filed with any state or federal regulatory agency or commission in connection with securing any Required Regulatory Approvals of any Party hereunder; provided, however, that a Party making any such filing seeks from the applicable agency or commission confidential treatment of the infonnation contained in Exhibit C. Section 11.Exceptions. Notwithstanding any other provision of this Agreement to the contrary, the confidentiality obligations set forth in this Article XI shall not apply to infonnation that (i) is already known or in the possession of the Party receiving such infonnation at the time of disclosure, as evidenced by written documentation, without such Party being bound by a pre-existing, confidentiality agreement or secrecy obligation in respect thereof, (ii) after the time of its disclosure hereunder, becomes subsequently available to such Party on a non-confidential basis from a source not known by such Party to be bound by a confidentiality agreement or secrecy obligation in respect thereof, (iii) is or becomes generally available to the public other than as a result of a breach of the confidentiality obligations set forth in this Article , or (iv) is independently developed by a Party without use, directly or indirectly, of any infonnation disclosed under this Agreement, as evidenced by written documentation. ARTICLE XII GENERAL PROVISIONS Section 12.Force Maieure.To the extent that a Party is prevented by an event of Force Majeure from carrying out, in whole or part, any of its obligations under this Agreement, then to the extent of, and only for so long as the duration of, such Force Majeure event, such Party shall be excused from the perfonnance of those of its obligations under this Agreement so affected by such Force Majeure event, provided, that such Party claiming Force Majeure hereunder promptly gives notice and details of such Force Majeure event to the Equipment Committee and uses all commercially reasonable efforts to remedy such Force Majeure event with all reasonable dispatch. Section 12.Assignment.This Agreement and all of the provisions hereof are binding upon, and inure to the benefit of, the Parties and their respective successors and pennitted assigns. No Party shall assign this Agreement in whole or in part, or any ofthe rights, interests, or obligations hereunder, without the prior written consent of all other Parties that are members of the Equipment Class or Equipment Classes that such Party is then a member of hereunder, except pursuant to the merger consolidation or sale of all or substantially all of the assets of such Party. No assignment (including by reason of a merger, consolidation or sale of all or substantially all of the assets of any Party), transfer, conveyance, pledge or disposition of rights, interests, duties or obligations under this Agreement by any Party shall relieve such Party from liability and financial responsibility for the perfonnance thereof after any such transfer assignment, conveyance, pledge or disposition unless and until the transferee or assignee shall agree in writing to assume the obligations and duties of such Party under this Agreement. Section 12.Amendments. This Agreement may be amended modified or supplemented only by a written instrument executed and delivered by at least two-thirds (66 2/3%) of all Parties that are then parties to this Agreement; provided however, that any amendment or modification to the tenns of Articles III , VIII and , Section 2., this Section 12., and any definitions used in such Articles or Sections including the definition of Triggering Event and Commitment Fonnula, may be so amended or modified only by a written instrument executed and delivered by all Parties that are then parties to this Agreement. Any written instrument contemplated by this Section 12.3 may be executed in more than one (1) counterpart, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Section 12.4 Notices to Parties. All notices and other communications required to be delivered in writing hereunder to a Party shall be deemed given if delivered personally or by facsimile transmission (with confinnation of delivery), or mailed by overnight courier or registered or certified mail (return receipt requested), postage prepaid, or by email transmission (with confinnation of delivery) to the recipient Party at its contact infonnation set forth under its signature on its signature page to this Agreement (or at such other address, facsimile number, or email address, for a Party as shall be designated by such Party in a notice delivered hereunder; provided however, that notices of a change of address, facsimile number, or email address, shall be effective only upon receipt thereof); and provided, further, that in the event of a Triggering Event, a Party may provide notices otherwise required to be delivered hereunder in writing by telephonic means if, to the extent that, and only for so long as, the other means of notice contemplated by this Section 12.4 are unavailable to such Party. Section 12.No Third Party Beneficiaries. Nothing in this Agreement express or implied, is intended to confer on any Person, other than the Parties, any rights interests, obligations or remedies hereunder. Section 12.Interpretation of Agreement.In this Agreement, unless otherwise specified or the context otherwise requires, the singular shall include the plural the masculine shall include the feminine and neuter, and vice versa. The tenn "includes or "including" shall mean "including without limitation." Unless otherwise specified or the context otherwise requires, references to a Section, Article or Exhibit mean a Section Article or Exhibit of this Agreement and reference to a given agreement or instrument shall be a reference to that agreement or instrument as modified, amended, supplemented or restated through the date as of which such reference is made. The Article, Section and Exhibit headings contained in this Agreement are solely for the purpose of reference, are not part of the agreement of the Parties and shall not in any way affect the meaning or interpretation of this Agreement Section 12.Waiver.A waiver of any failure of a Party to comply with any obligation, covenant, agreement, or condition herein by any Party entitled to the benefits thereof shall be effective only by a written instrument signed by such Party granting such waiver, provided, however, that such waiver shall be effective only as between such Parties. In no event shall any such waiver of such obligation, covenant agreement, or condition operate as a waiver of, or estoppel with respect to, any subsequent failure to comply therewith. Section 12.Severability. Each covenant, condition, restriction and other tenn of this Agreement is intended to be, and shall be construed as, independent and severable from each other covenant, condition, restriction and other tenn. If any covenant, condition, restriction or other tenn of this Agreement is held to be invalid by any court of competent authority or governmental authority with appropriate jurisdiction the invalidity of such covenant, condition, restriction or other tenn shall not affect the validity of the remaining covenants, conditions, restrictions or other tenns hereof. In such an event, the Parties shall, to the extent possible, negotiate an equitable adjustment to any provision of this Agreement as necessary to effect the purposes of this Agreement. Section 12.Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to the conflict of law principles thereof (except to the extent that such law is preempted by federa11aw). Section 12.10 Independent Parties; No Agency . This Agreement shall not be interpreted or construed to create an association, joint venture or partnership among or between the Parties or to impose any partnership or fiduciary obligation or liability upon any Party. No Party shall have any right, power or authority to enter into any agreement or undertaking for, or act on behalf of, or to act as or be an agent or representative of, or to otherwise bind, any other Party, except as expressly provided in this Agreement, including as expressly provided in Section 4. Section 12.11 Counterparts. This Agreement may be executed in more than one (1) counterpart, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Section 12.12 Entire Agreement.This Agreement, including the Exhibits attached hereto, embodies the entire agreement and understanding of the Parties in respect of the obligations and requirements set forth in this Agreement. There are no restrictions, promises, representations, warranties, covenants or undertakings, other than those expressly set forth or referred to herein. This Agreement supersedes all prior agreements and understandings between the Parties with respect to the subject matter contained herein. IN WITNESS WHEREOF, the Party set forth below has caused this Agreement to be executed and delivered on its behalf by a duly authorized officer as of the date indicated below. Dated:By: Name: Title: The foregoing Party hereby sets forth its Required Regulatory Approvals as required by Section 2.3 of this Agreement: The foregoing Party hereby provides its contact information as required by Section 12.4 of this Agreement: Exhibit A Exhibit B Exhibit C EXHIBITS Equipment Classes and Certain Minimum Standards Required Obligations of Participating Utilities Committed Qualified Spare Transformers EXHIBIT A Equipment Classes and Certain Minimum Standards Set forth below is a list of all Equipment Classes. In respect of Qualified Spare Transfonners Committed in any Equipment Class, each such Qualified Spare Transfonner must satisfy the following two minimum standards: (i) the Qualified Spare Transfonner must be an autotransfonner (wye to wye), and (ii) the Qualified Spare Transfonner must not be Committed in more than one Equipment Class at anyone time. In addition, Qualified Spare Transfonners must also satisfy the minimum standards, if any, set forth below opposite the Equipment Class in which it is Committed. Equipment Class Minimum Standard 500-345 Must be either (i) a three-phase transfonner with MY A of 400 greater, or (ii) a single-phase transfonner that, when aggregated with any other two single-phase transfonners Committed by the Participating Utility or other Participating Utilities, is sufficient to create at least one full bank of such transfonners with an aggregate MY A of 400 or greater. 500-230 Must be either (i) a three-phase transfonner with MY A of 392 or greater, or (ii) a single-phase transfonner with MY A of 167 or greater that, when aggregated with any other two single-phase transfonners with MY A of 167 or greater Committed by the Participating Utility or other Participating Utilities, is sufficient to create at least one full bank of such transfonners. 500-161 To be detennined by Equipment Sub-Committee. 500-138 To be detennined by Equipment Sub-Committee. 500-115 To be detennined by Equipment Sub-Committee. 500-069 To be detennined by Equipment Sub-Committee. 345-230 Must be either (i) a three-phase transfonner with MY A of336 or greater, or (ii) a single-phase transfonner that, when aggregated with any other two single-phase transfonners Committed by the Participating Utility or other Participating Utilities, is sufficient to create at least one full bank of such transfonners with an aggregate MY A of 336 or greater. 345-161 Must be either (i) a three-phase transfonner with MY A of 400 or greater, or (ii) a single-phase tr~nsfonner that, when aggregated with any other two single-phase transfonners Committed by the Participating Utility or other Participating Utilities, is sufficient to create at least one full bank of such transfonners with an aggregate MV A of 400 or greater. 345-138 Must be either (i) a three-phase transfonner with MV A of 224 or greater, or (ii) a single-phase transfonner that, when aggregated with any other two single-phase transfonners Committed by the Participating Utility or other Participating Utilities, is sufficient to create at least one full bank of such transfonners with an aggregate MV A of 224 or greater. 345-115 If a three-phase trans fonner, must have MV A of 224 or greater. Single-phase transfonner minimum standards are to be detennined by Equipment Sub-Committee. 230-161 To be detennined by Equipment Sub-Committee. 230-138 To be detennined by Equipment Sub-Committee. 230-115 Must be either (i) a three-phase transfonner with MV A of 100 greater, or (ii) any single-phase transfonner that, when aggregated with any other two single-phase transfonners Committed by the Participating Utility or other Participating Utilities, is sufficient to create at least one full bank of such transfonners with an aggregate MV A of 100 or greater. 230-069 If a three-phase trans fonner, must have MV A of 50 or greater. Single-phase transfonner minimum standards are to be detennined by Equipment Sub-Committee. 161-138 To be detennined by Equipment Sub-Committee. 161-115 To be detennined by Equipment Sub-Committee. 161-069 To be detennined by Equipment Sub-Committee. 138-115 To be detennined by Equipment Sub-Committee. 138-069 Must be either (i) a three-phase transfonner with MV A of 50 or greater, or (ii) a single-phase transfonner that, when aggregated with any other two single-phase transfonners Committed by the Participating Utility or other Participating Utilities, is sufficient to create at least one full bank of such transfonners with an aggregate MV A of 50 or greater. 115-069 To be detennined by Equipment Sub-Committee. Ex h i b i t B - E x a m p l e C a l c u l a t i o n o f R e q u i r e d O b l i g a t i o n s . ( R e q u i r e d O b l i g a t i o n s T o B e Ca l c u l a t e d b y E q u i p m e n t S u b - Co m m i t t e e s w h e n F o r m e d ) Pa g e 1 o f 2 Fi v e S u b s t a t i o n S e l f As s e s s m e n t To t a l Hi g h Lo w 1 # 3 # 5- 4 # 5- 4 5- 4 5- 4 5 # Cl a s s Co m p a n y N a m e Ba n k s MV A Ph a s e LT C Ba n k s MV A Ph a s e LT C Ba n k s MV A Ph a s e LT C Ba n k s MV A Ph a s e LT C Ba n k s MV A Ph a s e LT C MV A Ne w P o w e r & L i Q h t 60 0 25 0 50 0 40 0 Bi g M o u n t a i n P o w e r 60 0 25 0 25 0 Ye s 25 0 Ye s 25 0 Ye s 33 2 5 Ut i l i t y O n e 60 0 25 0 50 0 50 0 50 0 50 0 50 0 94 0 0 Bl u e W a t e r P o w e r 60 0 25 0 50 0 50 0 30 3 2 5 Th e L i g h t C o m p a n y 60 0 25 0 50 0 Ye s 57 8 7 We s t G a s & L i g h t 60 0 25 0 42 4 0 Co a s t a l L i g h t C o m p a n y 60 0 25 0 56 0 56 0 56 0 62 1 5 Nu c l e a r L i g h t 60 0 25 0 50 0 50 0 25 0 25 0 50 0 20 9 1 Na t i o n a l G a s & L i Q h t 60 0 25 0 50 0 20 0 0 Cu s t o m e r F i r s t P o w e r 60 0 25 0 11 4 0 Fu t u r e P o w e r 60 0 25 0 25 0 25 0 25 0 16 3 5 Bl a c k R o c k P o w e r 60 0 25 0 50 0 25 0 50 0 23 1 7 7 El e c t r i c L i g h t 60 0 25 0 25 0 72 4 Ch e a p P o w e r 60 0 25 0 21 6 0 0 No r t h S o u t h P o w e r 60 0 25 0 25 0 25 0 25 0 50 0 49 0 0 Ol d P o w e r & L i Q h t 60 0 25 0 25 0 25 0 25 0 25 0 38 0 0 No t e s o n t h e p r o c e s s : St e p 1 - F o r e a c h E q u i p m e n t C l a s s i n w h i c h a P a r t i c i p a t i n g U t i l i t y e l e c t s t o p a r t i c i p a t e , t h e P a r t i c i p a t i n g U t i l i t y s u b m i t s t o t h e P r o j e c t M a n a g e r , o n a f o r m p r o v i d e d b y t h e Pr o j e c t M a n a g e r , i t s d e t e r m i n a t i o n o f t h e M V A n e e d e d t o r e s t o r e s e r v i c e t o l o a d l o s t t h r o u g h t h e d e s t r u c t i o n o f t h e P a r t i c i p a t i n g U t i l i t y s f i v e m o s t c r i t i c a l s u b s t a t i o n s i n t h a t Eq u i p m e n t C l a s s . St e p 2 - F o r e a c h E q u i p m e n t C l a s s , t h e " To t a l M V A N e e d e d " f o r e a c h P a r t i c i p a t i n g U t i l i t y i s c a l c u l a t e d b y s u m m i n g t h e M V A n e e d e d t o r e s t o r e s e r v i c e t o e a c h o f t h e f i v e su b s t a t i o n s i n t h e s u b j e c t E q u i p m e n t C l a s s . St e p 3 - - T h e w o r s t c a s e u t i l i t y i s i d e n t i f i e d a s t h e u t i l i t y w i t h i n a n E q u i p m e n t C l a s s w i t h t h e l a r g e s t T o t a l M V A N e e d e d . T h e W o r s t C a s e M V A T o t a l i s c a l c u l a t e d b y su m m i n g t h e T o t a l M V A N e e d e d o f t h e w o r s t c a s e u t i l i t y w i t h t h e s u m o f t h e M V A o f t h e q u a l i f i e d s p a r e t r a n s f o r m e r s t h a t t h e w o r s t c a s e u t i l i t y r e p o r t s t h a t i t i s w i l l i n g t o sh a r e i n t h e s u b j e c t E q u i p m e n t C l a s s . St e p 4 - C a l c u l a t e C o l u m n A f o r e a c h P a r t i c i p a t i n g U t i l i t y i n s u b j e c t E q u i p m e n t C l a s s , b y 1. S u m m i n g th e T o t a l M V A N e e d e d f o r a l l P a r t i c i p a t i n g U t i l i t i e s i n t h e E q u i p m e n t C l a s s ; a n d t h e n 2. Di v i d i n g t h e T o t a l M V A N e e d e d f o r e a c h P a r t i c i p a t i n g U t i l i t y b y t h i s S u m ; a n d t h e n 3. Mu l t i p l y i n g t h i s n u m b e r b y t h e W o r s t C a s e M V A T o t a l . St e p 5 - C a l c u l a t e C o l u m n B f o r e a c h P a r t i c i p a t i n g U t i l i t y i n s u b j e c t E q u i p m e n t C l a s s , b y 1. S u m m i n g th e T o t a l C l a s s M V A f o r a l l P a r t i c i p a t i n g U t i l i t i e s i n t h e E q u i p m e n t C l a s s ; a n d t h e n 2. Di v i d i n g t h e T o t a l C l a s s M V A f o r e a c h P a r t i c i p a t i n g U t i l i t y b y t h i s S u m ; a n d t h e n 3. Mu l t i p l y i n g t h i s n u m b e r b y t h e W o r s t C a s e M V A T o t a l . St e p 6 - C a l c u l a t e e a c h P a r t i c i p a t i n g U t i l i t y s R e q u i r e d O b l i g a t i o n b y A v e r a g i n g t h e v a l u e r e c o r d e d i n C o l u m n A a n d C o l u m n B b e s i d e e a c h P a r t i c i p a t i n g U t i l i t y . Ex h i b i t B - E x a m p l e C a l c u l a t i o n o f R e q u i r e d O b l i g a t i o n s . ( R e q u i r e d O b l i g a t i o n s T o B e Ca l c u l a t e d b y E q u i p m e n t S u b - Co m m i t t e e s w h e n F o r m e d ) . P a g e 2 o f 2 To t a l To t a l Ob l i g a t Ob l i g a t # B a n k s MV A Cl a s s MV A TM V A MV A Ne e d e d Ne e d e d MV A Co m p a n y N a m e Ne e d e d Ne e d e d Ob l i g a t i o n 10 0 0 14 0 0 Ne w P o w e r & L i g h t 21 3 13 1 75 0 33 2 5 Bi g M o u n t a i n P o w e r 16 0 11 4 13 7 30 0 0 94 0 0 Ut i l i t y O n e 64 0 32 3 48 1 25 0 0 30 3 2 5 Bl u e W a t e r P o w e r 53 3 10 4 2 78 8 50 0 57 8 7 Th e L i g h t C o m p a n y 10 7 19 9 15 3 42 4 0 We s t G a s & L i g h t 14 6 16 8 0 62 1 5 Co a s t a l L i a h t C o m p a r 35 8 21 4 28 6 32 5 0 40 0 0 Nu c l e a r L i q h t 69 3 13 7 41 5 10 0 0 20 0 0 Na t i o n a l G a s & L i g h t 21 3 14 1 11 4 0 Cu s t o m e r F i r s t P o w e r 75 0 16 3 5 Fu t u r e P o w e r 16 0 10 8 17 5 0 23 1 7 7 Bl a c k R o c k P o w e r 37 3 79 7 58 5 25 0 72 4 El e c t r i c L i g h t 21 6 0 0 Ch e a p P o w e r 74 2 37 1 22 5 0 49 0 0 No r t h S o u t h P o w e r 48 0 16 8 32 4 12 5 0 38 0 0 Ol d P o w e r & L i a h t 26 7 13 1 19 9 To t a l Wo r s t C a s e M V A Wo r s t C a r e S p a r e Wo r s t C a r e S p a r e Wo r s t C a r e S p a r e Wo r s t C a s e M V A T o t a l 19 9 3 0 1 2 3 6 6 8 32 5 0 10 0 0 42 5 0 42 5 0 42 5 0 42 5 0 No t e s o n o b l i Q a t i o n c a l c u l a t i o n u s i n Q N e w P o w e r & L i Q h t a s a n e x a m p l e : Co l u m n C i n d i c a t e s t h e t o t a l M V A o b l i g a t i o n f o r e a c h u t i l i t y l i s t e d . Ne w P o w e r & L i g h t ( T o t a l O b l i g a t i o n ) = ( 2 1 3 + 4 8 ) /2 = 1 3 1 Co l u m n A c a l c u l a t i o n i s t h e o b l i g a t i o n f o r t h e t o t a l M V A a c o m p a n y n e e d s t o r e b u i l d a f t e r l o s i n g i t s f i v e m o s t c r i t i c a l s u b s t a t i o n i n Ne w P o w e r & L i g h t ( M V A n e e d e d o b l i g a t i o n ) = (1 0 0 0 / 1 9 9 3 0 ) X 4 2 5 0 = 2 1 3 Co l u m n B c a l c u l a t i o n i s t h e o b l i g a t i o n f o r t h e t o t a l i n - s e r v i c e M V A a c o m p a n y h a s i n a v o l t a g e c l a s s . Ne w P o w e r & L i g h t ( M V A i n - s e r v i c e o b l i g a t i o n ) = (1 4 0 0 / 1 2 3 6 6 8 ) X 4 2 5 0 = 4 8 19 9 3 0 i s t h e t o t a l o f M V A o f a l l u t i l i t i e s p a r t i c i p a t i n g i n t h e c l a s s . 42 5 0 i s t h e t o t a l w o r s t c a s e M V A n e e d e d . T h i s i s t h e s u m o f t h e a c t u a l w o r s t c a s e M V A n e e d e d ( i n t h i s e x a m p l e EXHIBIT C Committed Qualified Spare Transfonners (To Be Provided by Participating Utilities following Calculation of Required Obligations) IDAHO POWER COMPANY CASE NO. IPC--~7 APPLICATION EXHIB IT B Signatories to Spare Transformer Sharing Agreement as of October 31 2006:1. Allegheny Power2. Ameren Services Company3. American Electric Power Service Corporation4. American Transmission Company LLC5. Arizona Public Service Company6. Avista Utilities7. Baltimore Gas & Electric (Constellation Energy)8. Boston Edison Company (NSTAR)9. Cambridge Electric Light Company (NST AR)10. CenterPoint Energy11. Cinergy Corporation (now part of Duke Energy Corporation)12. Commonwealth Edison Company (Exelon Corporation)13. Commonwealth Electric Company (NST AR)14. Consolidated Edison Company of New York, Inc.15. Duke Power, a division of Duke Energy Corporation (now Duke Power Company LLC)16. FirstEnergy Corporation17. Florida Power & Light Company18. Idaho Power19. Indianapolis Power and Light Company20. International Transmission Company21. Kansas City Power and Light Company22. Michigan Electric Transmission Company, LLC (Trans-Elect)23. MidAmerican Energy Company24. New England Power Company (National Grid)25. Niagara Mohawk Power Corporation (National Grid)26. NiSource27. Northeast Utilities Service Company28. Oklahoma Gas and Electric Company29. Pacific Gas and Electric Company30. PECO Energy Company (Exelon Corporation)31. Pepco Holdings, Inc. 32. PPL Electric Utilities Corporation33. Progress Energy Carolinas34. Progress Energy Florida35. Public Service Company of New Mexico (PNM Resources)36. Public Service Electric and Gas Company37. Puget Sound Energy, Inc.38. San Diego Gas & Electric Company39. Sierra Pacific Resources40. Southern California Edison Company (An Edison International Company) 41 . Southern Company42. Tampa Electric Company 43. Texas-New Mexico Power Company (PNM Resources)44. TXU Electric Delivery Company45. Virginia Electric and Power Company46. Westar Energy47. Xcel Energy Services Inc. EXHIBIT B ED I S O N E L E C T R I C IN S T I T U T E Sp a r e T r a n s f o r m e r S h a r i n g A g r e e m e n t as o f O c t o b e r 2 7 20 0 6 Ut i l i t i e s H a v e S i g n e d