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Home My WebLink About20070821Planned sale of facilities to Basin.pdf~ ~~;oo ~OUNTAIN RECEIVED l.\ q: Db 201 South Main , Suite 2300 Salt Lake City, Utah 84111 zaOl AUG 2 I August 21 , 2007 -_' ,, CDhi;~Ji\~.SION nA OVERNIGHT DELIVERY Idaho Public Utilities Commission 472 W. Washington Boise, ID 83702-5983 Attn: Jean D. Jewell Commission Secretary Re:Sale of Transmission Plant Facilities The purpose of this letter is to provide notice from Rocky Mountain Power (Company) to the Idaho Public Utilities Commission (Commission) of the planned sale certain utility transmission plant facilities to Basin Electric Power Cooperative (Basin) and removal of other transmission plant assets related to the sale. Background Rocky Mountain Power owns the Goose Creek radial transmission line consisting of approximately 13.85 miles of230 kV transmission line supported by approximately 180 wood frame structures beginning at the Company s Goose Creek switching station approximately 1- mile north of Sheridan, Wyoming and extending north to a terminus at the Decker 230 kV substation near Decker, Montana which is owned by Flathead Electric Cooperative. In addition to the Goose Creek radial transmission line, structures and miscellaneous support equipment, the Company also owns easements and right-of-way for the Goose Creek radial transmission line. The Company provides wheeling service to Basin under Basin s GATT Network transmission service agreement. The Company wheels resources for Basin southeast over the Yellowtail to Goose Creek transmission line and then north over the Goose Creek radial transmission line to Basin s retail distribution member, Flathead Electric Cooperative, at its Decker 230 kV substation. Transaction Basin has requested to purchase the Goose Creek radial transmission line from the Company for purposes of integrating it with segments of a larger transmission project to be constructed by Basin to serve anticipated load growth on its system. Acquiring the Goose Creek radial transmission line is more cost effective for Basin than building a new transmission line for this segment of Basin s overall project. The proposed sale of the Goose Creek radial transmission line will result in the Goose Creek switching station no longer being needed by or useful to the Company. Upon closing ofthe sale of the Goose Creek radial transmission line, the Company will remove the existing Goose Creek switching station including the equipment, structures, slabs and other above-ground facilities and level the site to a uniform surface. After removal of the Goose Creek switching station the Company s Sheridan to Yellowtail230 kV transmission line must be made continuous for ongoing operation ofthat transmission line. The Company proposes to rebuild the short segment of230 kV transmission line to fill the gap that was previously occupied by the Goose Creek switching station. The Company has entered into a contract to sell the proposed Goose Creek radial transmission line to Basin as described in the Asset Purchase Agreement, included herewith as ATTACHMENT 1 , by and between Basin Electric Power Cooperative and PacifiCorp. The Asset Purchase Agreement includes a physical description and inventory of the assets being sold including all structures, conductors, insulators, cross-arms, miscellaneous fixtures, rights of way and easements related to the Goose Creek radial transmission line. The Asset Purchase Agreement is contingent upon both parties obtaining all required regulatory approvals. Rocky Mountain Power proposes to sell the Goose Creek radial transmission line to Basin including all assets in the Asset Purchase Agreement for the cash sales price of$2 849 152. The methodology used in determining valuation of the assets was replacement cost of new construction less accumulated depreciation less consideration for Basin s activities related to perfecting title to the property. Expenses incurred for the removal of the Goose Creek switching station and replacement of the short segment of230 kV transmission line in its place are not included in the sales price and will be netted against the proceeds of the transaction. Basin has agreed to pay for all regulatory and legal expenses up to a limit of $50 000. When the sale is completed, Basin will be responsible for all future costs of ownership and maintenance of the Goose Creek radial transmission line. Accounting and Regulatory Impacts The sale of the Goose Creek radial transmission line will be accounted for by first removing from the Company s books the original book value of the sold assets with a credit to FERC account 101 , Electric Plant in Service. In addition, the Accumulated Provision for Depreciation in FERC account 108 and Accumulated Deferred Income Tax Reserve in FERC account 282 will be debited to eliminate the balances associated with the Goose Creek radial transmission line. The exact book value of the transactions in the various FERC accounts will not be known until the sale is closed. The net proceeds of the sale will be approximately $1. million consisting of the sale price (approximately $2.85 million), less the net book value (approximately $0.33 million), less income taxes - net of deferred tax liability (approximately $0.60 million) less the cost of removing the Goose Creek switching station and the cost of replacing the short segment of230 kV transmission line in place of the switching station (approximately $0.18 million). The net proceeds from this transaction will be treated as an offset to rate base. The final accounting transaction will be a credit to FERC account 108 Accumulated Provision for Depreciation. Pursuant to the Revised Protocol allocation methodology, the Goose Creek radial transmission line and switching station are system-allocated transmission assets and would be included in rate base in all PacifiCorp jurisdictions. The new transmission line built in place of the switching station as well as the rate base credit to reflect the net proceeds from the transaction would also qualify for system-wide allocation. Sale of the Goose Creek radial transmission line to Basin will not adversely affect any other retail or wholesale customer besides Basin because the Goose Creek radial transmission line is not used to serve retail or other wholesale customers ofthe Company. Basin is the sole wholesale customer being served from this line, and therefore, Basin is the only customer that will be affected by the sale. In addition, the sale recovers the depreciated cost of the facility plus all legal costs up to $50 000 that Rocky Mountain Power will incur for preparing legal and regulatory applications and for supporting the sale of the Goose Creek radial transmission line. The sale of the line to Basin serves the public interest because this sale will reduce the cost of a needed transmission line for Basin s customers. Selling the Goose Creek radial transmission line will not reduce Rocky Mountain Power s service charges to Basin, but it will reduce the transmission rate base against which those transmission charges are made by the net book value of $334 479. In addition, operations and maintenance expense will be reduced for work that was previously associated the Goose Creek radial transmission line. Finally, the Company s rate base for retail rate purposes will also be reduced. Rocky Mountain is presently unaware of any adverse impact to another utility that would result from this transaction. The Company will meet all requirements regarding these transactions required by other public utility commissions having jurisdiction over the Company s retail operations. A copy of filings made with other commissions will be provided if requested. It is respectfully requested that all formal correspondence and staff requests regarding this matter be addressed to one or more of the following: By E-mail (preferred):datareq uest~pacifi corp. com By fax:(503) 813-6060 By regular mail:Data Request Response Center PacifiCorp 825 NE Multnomah, Suite 2000 Portland, OR 97232 Informal inquiries may be directed to: Brian Dickman Manager, Regulation 201 South Main, Suite 2300 Salt Lake City, UT 84111 Telephone: (801) 220-4975 Dean Brockbank Senior Counsel 201 South Main, Suite 2300 Salt Lake City, UT 84111 Telephone: (801) 220-4568 Facsimile: (801) 220-2798 E-mail: Brian.Dickman~PacifiCorp.com Facsimile: (801) 220-3299 E-mail: Dean.Brockbank~PacifiCorp.com Because the proposed transaction is contingent upon the Company receiving the necessary regulatory approvals, Rocky Mountain Power respectfully requests the Commission reply to this letter indicating its receipt and whether or not further action will be required. Sincerely,f!. ~/ Jeffrey K. Larsen Vice President, Regulation Enclosure Attachment ASSET PURCHASE AGREEMENT BETWEEN BASIN ELECTRIC POWER COOPERATIVE AND PACIFICORP Execution Version ASSET PURCHASE AGREEMENT BETWEEN BASIN ELECTRIC POWER COOPERATIVE AND ACIFICORP June 1R 2007 SECTION I SECTION II SECTION III SECTION IV SECTION V SECTION VI SECTION VII SECTION VIII T ABLE OF CONTENTS Page DEFINITIONS ................................................................................................. SALE AND PURCHASE OF ASSETS ........................................................... Assets to be Sold.... ............................................ ............................... ...................... Purchase Price.................................................. ...................................................... Instruments of Conveyance and Transfer..................... """""""" ........... ............... Assumption of Liabilities.................... """"""""""'" ........................ ................... Costs ....................................................................................................................... Meter....................................................................................................................... Property Taxes................................... ........................ ............. ........ ........................ Sales Tax................................................................................................................. Expenses ................................................................................................................. REPRESENTATIONS AND WARRANTIES OF PACIFICORP ................. Organization and Powers of PacifiCorp .......................... ........ .... ...................... .... Authority Relative to Agreement .... .......... ............. """"""""" ........ """"'" ........... Condition of Assets................................................................................................ Environmental Laws............................................................................................... 5 REPRESENTATIONS AND WARRANTIES OF BUYER............................ Organization and Powers of Buyer ................................................ ......................... Authority Relative to Agreement ................. ...... .................... .................. .............. Buyer Financing..................................................... .......................... .......... ............ MUTUAL COVENANTS .................. ........ ...................................................... Press Releases....................... ......................................................................... ......... COVENANTS OF P ACIFICORP .................................................................... Insurance; Risk of Loss .... ....... ........................ ........... ................... .......... ............... Conditions and Best Efforts.................................................................................... Maintain Properties. ................. ...................... .... "'" ........................................... ... .. COVENANTS OF BUYER ........ ..... ..... """" ...... """'" ...... """"""""" "'" ""'" 7 Conditions and Best Efforts.................................................................................... Confidentiality ........................................................................................................ CONDITIONS PRECEDENT TO PACIFICORP'S OBLIGATIONS............ SECTION IX SECTION X 10. 10. SECTION XI 11.01 11. SECTION XII 12. 12. SECTION XIII 13. 13. SECTION XIV 14. 14. 14. 14. 14. 14. 14. 14. 14. 14. 14. Representations, Warranties and Covenants of Buyer ........................................... Third Party Releases and Consents ........................................................................ Litigation ................................................................................................................ Meter....................................................................................................................... Regulatory Approval .. ............................................................. ............."...... .......... CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS ..................... Representations, Warranties and Covenants ofPacifiCorp.................................... Third Party Consents ................................ .......... .................... ........... ......... ............ Litigation ................................................................................................................ NOTICES OF DEVELOPMENT..................................................................... Notice.............. ......................... .............. ............. ................ .................................... Asset Description.................................................................................................... CLOSING............. .......... ...................................... ...................................... ...... Time and Place ....................................................................................................... Further Assurances ............................................................................................... TERMINATION ............................................................................................ Termination .......................................................................................................... Effect of Termination ............. :............................................................................. ASSIGNMENT................. ................. .................. ..................... .......... ......... .. Assignment...... """""""" ................. ................................................................ .... No Discharge ........................................................................................................ MISCELLANEOUS """""""""""""""""""""""""""""""'" .......... ........ .... Indemnification..................................................................................................... Allocation of Purchase Price ..............................,................................................. Termination of Use of Name and Logo........................ .................. """""""""" .. Amendment ..............................,........................................................................... Section and Paragraph Headings .......................................................................... Waiver .............................................,...................... ....................................... ...... . Choice of Law................ .......... .......................... ................ ........ ......................... . Prevailing Party Costs """"""""""""""""""""""""""".................................... Notices.................................................................................................................. Integrated Agreement...................................... ........ ............. ............. ....... ........ .... Counterparts.......................................................................................................... 14. 14. 14. Disclosure ............................................................................................................. Severability ........................................................................................................... No Third Party Beneficiaries... ........................ ......... ..... ...... """""""'" ...... .......... III Schedule 1.02 1.15 14. Title Description of Assets Regulatory Approval Purchase Price Allocation Schedules ASSET PURCHASE AGREEMENT This Asset Purchase Agreement (the "Agreement ), dated this If day of June, 2007, is between Basin Electric Power Cooperative, a North Dakota cooperati~orporation ("BuYer and PacifiCorp, an Oregon corporation ("PacifiCorp SECTION I DEFINITIONS For purposes of this Agreement, the following terms used herein but not otherwise defined herein will have the following meaning when used with initial capitalization, whether singular or plural: 1.01 Agreement" has the meaning given in the preamble. 02 "Assets" means the assets and properties owned by PacifiCorp as described on Schedule 1.02. 03 Assumed Liabilities" means the liabilities ofPacifiCorp to be assumed by Buyer pursuant to Section 2.04. 1.04 Buyer" has the meaning given in the preamble. 1.05 Closing" has the meaning given in Section 11,01. 06 "Closing Date" means the date of the Closing of this Agreement as provided for in Section 11. 1.07 Costs Estimate" has the meaning given in Section 2.05(b). 1.08 Effective Time of Closing" has the meaning given in Section 11.01. 1.09 Intentionally left blank. 1.10 Legal Costs has the meaning given in Section 2.05(a). 1.11 Losses" has the meaning given in Section 14.01(b). 1.12 Meter" has the meaning given in Section 2.06. 13 "Prudent Utility Practice" means those practices, methods and acts which (a) when engaged in are commonly used in prudent engineering and operations to operate electric equipment and associated mechanical and civil facilities lawfully and with safety, reliability, efficiency and expedition or (b) in the exercise of reasonable judgment considering the facts known when engaged in, could have been expected to achieve the desired result consistent with applicable law, safety, reliability, efficiency and expedition. Prudent Utility Practice is not limited to the optimum practiced method or act, but rather a spectrum of possible practices, methods or acts. 1.14 Purchase Price" has the meaning given in Section 2,02. 15 "Regulatory Approval" means approval by the governmental bodies listed on Schedule 1.15 of the sale of the Assets pursuant to this Agreement. 1.16 Reimbursed Termination has the meaning given in Section 12.02. 1.17 Reimbursed Termination Date" has the meaning given in Section 12.02. 1.18 Second Party" has the meaning given in Section 14.01(c). 1.19 Termination Costs" has the meaning given in Section 2.05(a). 1.20 Transfer Costs" has the meaning given in Section 2.05(a). SECTION II SALE AND PURCHASE OF ASSETS 01 Assets to be Sold , Subject to all terms and conditions of this Agreement, PacifiCorp agrees to sell and Buyer agrees to buy all ofPacifiCorp s right, title and interest in the Assets. 02 Purchase Price. The purchase price for the Assets will be $2 849,152.00 plus the assumption of liabilities as set forth in Section 2., plus reimbursement of all Transfer Costs and Legal Costs as set forth in Section 2.05(a) (the Purchase Price ). Except as set forth in Section 2.05(a), the Purchase Price will be paid at Closing. All payments will be by wire transfer to the following account of PacifiCorp or such other account as PacifiCorp may designate in writing prior to the time of transfer: PacifiCorp JP Morgan Chicago, IL ABA 071000013 Account 5531896 03 Instruments of Conveyance and Transfer.At Closing, PacifiCorp will deliver to Buyer such bills of sale, endorsements, assignments, consents and other good and sufficient instruments of conveyance and assignment as will be effective to vest in Buyer title in and to the Assets and will assign to Buyer PacifiCorp s interest in the contracts, permits, authorizations, easements and rights-of-way which are capable of assignment and which are included in the Assets. 04 Assumption of Liabilities. At Closing, Buyer will assume the following debts liabilities and obligations (whether arising from contract, tort, or otherwise) associated with the Assets ("Assumed Liabilities ) consisting of (a) liabilities disclosed to and agreed to in writing by Buyer prior to the Closing Date and (b) the obligations and liabilities with respect to the ownership and operation of the Assets after the Effective Time of Closing, including, without limitation, obligations under, or other liabilities associated with, any easements or rights-of-way included within the Assets. PacifiCorp shall hold Buyer harmless for all claims or liabilities (except Assumed Liabilities) relating to the Assets for periods prior to the Effective Time of Closing. Buyer shall hold PacifiCorp harmless for all claims or liabilities relating to Assumed Liabilities. Costs (a) Costs to be Reimbursed. Buyer will reimburse PacifiCorp for: (i) any costs incurred by PacifiCorp related to the transfer of the Assets to Buyer agreed to by the parties in writing ("Transfer Costs (ii) all legal costs actually incurred by PacifiCorp in connection with the transactions contemplated by this Agreement, not to exceed $50 000 ("Legal Costs and (iii) upon the occurrence of a Reimbursed Termination, all costs incurred by PacifiCorp to reinstate the Assets to their original condition and placement as a result of termination of this Agreement and Legal Costs ("Termination Costs (b) Payment Schedule. Within 45 days after the Closing Date or the Reimbursed Termination Date, as the case may be, PacifiCorp will inform Buyer in writing of the total Transfer Costs, Legal Costs and Termination Costs, if any. Buyer shall pay to PacifiCorp all such costs not previously paid, in cash by wire transfer of immediately available funds in U. dollars not later than the tenth business day after Buyer s receipt ofPacifiCorp s notice of the amount due, to the account specified in Section 2.02 or such other account as PacifiCorp may designate in writing prior to the time of transfer. 06 Meter.Prior to Closing, Buyer will install, or ensure the existence of, metering equipment at the Decker Substation capable of calculating losses on the transmission line between the Goose Creek Switching Station and the Decker Substation (the "Meter ). Buyer will notify PacifiCorp of the Meter s installation or existence at least three business days prior to the Closing. Buyer will be responsible for the operation and maintenance of the Meter. 07 Property Taxes. The property taxes and assessments relating to the Assets for the current tax year shall be pro-rated between PacifiCorp and Buyer at Closing, such that PacifiCorp is responsible for all such taxes up to the Effective Time of Closing and Buyer is responsible for all such taxes thereafter. 08 Sales Tax. All liabilities or obligations for taxes in the nature of sales, use taxes, excise taxes, recordation and transfer taxes incurred as a result of transactions contemplated by this Agreement shall be borne by Buyer. 09 Expenses. Except as provided in Section 2., each party will bear its own expenses in preparing regulatory filings and seeking required consents and approvals, SECTION III REPRESENTATIONS AND WARRANTIES OF PACIFICORP PacifiCorp represents and warrants as follows: 01 Organization and Powers ofPacifiCorp. PacifiCorp is an Oregon corporation duly organized and legally existing under the laws of the State of Oregon. PacifiCorp has all requisite corporate power and authority to own the Assets and to operate the business conducted with the Assets as now being conducted. 02 Authority Relative to Agreement.PacifiCorp has the corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution, delivery and performance by PacifiCorp of this Agreement have been duly and validly authorized by all necessary action of PacifiCorp in accordance with the requirements of applicable law and no other action on the part ofPacifiCorp is required in connection therewith. This Agreement constitutes the valid and binding obligation of PacifiCorp enforceable in accordance with its terms, except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and except that the availability of the equitable remedies of specific performance and injunctive relief are subject to the discretion of the court before which any proceeding may be brought. Except for filings with the state utility regulatory agencies of California, Idaho, Oregon and Wyoming, which PacifiCorp shall make prior to the Closing, no material consent or approval of a governmental authority is required to consummate the transactions contemplated by this Agreement. 03 Condition of Assets. The Assets will be sold to Buyer "AS IS, WHERE IS" and with no representations or warranties of any kind or character, including any warranty of quality, merchantability, fitness for a particular purpose or condition, except as specifically set forth herein or in the conveyance document to be delivered to Buyer at Closing. BUYER ACKNOWLEDGES THAT EXCEPT AS EXPRESSLY STATED IN SECTION III OF THIS AGREEMENT, P ACIFICORP HAS NOT MADE, AND P ACIFICORP EXPRESSLY DISCLAIMS AND NEGATES, ANY IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, RELATING TO THE ASSETS. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, BUYER W AlVES ALL RIGHTS TO CONTRIBUTIONS, OFFSETS AND DAMAGES WHICH IN ANY MANNER RELATE TO THE COMPLIANCE OF THE ASSETS WITH ANY LAW OR REGULATION APPLICABLE THERETO, 04 Environmental Laws. To the best ofPacifiCorp s knowledge, PacifiCorp has not violated any applicable law or regulation relating to the environment with respect to its ownership and operation of the Assets, other than such violations which would not, in the aggregate, have a material adverse effect on the value of the Assets or Buyer s ability to utilize the Assets in the ordinary course of business. SECTION IV REPRESENTATIONS AND WARRANTIES OF BUYER Buyer represents and warrants as follows: 01 Organization and Powers of Buyer. Buyer is a North Dakota cooperative corporation, duly organized and legally existing under the laws of the State of North Dakota. Buyer has all requisite corporate power and authority to own, operate and purchase the Assets. 02 Authority Relative to Agreement.Buyer has the power and authority, and has complied with all applicable laws and statutory requirements necessary to execute and deliver this Agreement and to consummate the transactions, including the acquisition of the Assets as contemplated hereby. The execution, delivery and performance by Buyer of this Agreement have been duly and validly authorized by all necessary action of Buyer in accordance with the requirements of applicable law and no other action on the part of Buyer is required in connection therewith. This Agreement constitutes the valid and binding obligation of Buyer enforceable in accordance with its terms, except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors rights generally and except that the availability of the equitable remedies of specific performance and injunctive relief are subject to the discretion of the court before which any proceeding may be brought. 03 Buyer Financing. Buyer has allocated sufficient funds to finance the purchase of the Assets, including all sales or similar taxes, Transfer Costs and Legal Costs. SECTION V MUTUAL COVENANTS 01 Press Releases. Prior to Closing, no press releases or other public announcements concerning the transactions contemplated by this Agreement will be made by either party without the consent of the other party, which consent shall not be unreasonably withheld; provided, however, that nothing herein will operate to prevent a party from supplying such information or making statements as required by governmental authority or in order for a party to satisfy its legal obligations (prompt prior notice of which shall in any such case be given to the other party). SECTION VI COVENANTS OF P ACIFICORP PacifiCorp covenants and agrees as follows: 01 Insurance: Risk of Loss . Until the Effective Time of Closing, PacifiCorp will continue to self-insure or carry insurance currently in effect related to the Assets, insuring the Assets in accordance with its past practices. PacifiCorp will bear the risk of loss or damage to the Assets prior to transfer of the Assets to Buyer at the Effective Time of Closing. 02 Conditions and Best Efforts. Subject to the terms of this Agreement, PacifiCorp will use its reasonable best efforts to effectuate the transactions contemplated by this Agreement and to fulfill all of the conditions of the parties' obligations under this Agreement and will do all such acts and things as reasonably may be required to carry out PacifiCorp s obligations hereunder and to consummate and complete this Agreement, including without limitation of the foregoing promptly making application for Regulatory Approval. Notwithstanding the foregoing, PacifiCorp will not be required in connection with any necessary approval or consent to agree to any payment or agree to any conditions of approval that are reasonably unacceptable to PacifiCorp. 03 Maintain Properties. Prior to Closing, PacifiCorp will maintain the Assets consistent with past practices and in accordance with Prudent Utility Practice, including, but not limited to, maintenance, repair, replacement or changes to the Assets. At and after the Effective Time of Closing, PacifiCorp shall not have any express or implied obligation to maintain the Assets. SECTION VII COVENANTS OF BUYER Buyer covenants and agrees as follows: 01 Conditions and Best Efforts. Subject to the terms of this Agreement and fiduciary obligations under applicable law, Buyer will use its reasonable best efforts to effectuate the transactions contemplated by this Agreement and to fulfill all of the conditions of the parties obligations under this Agreement and will do all such acts and things as reasonably may be required to carry out Buyer s obligations hereunder and to consummate and complete this Agreement, including without limitation of the foregoing, cooperating promptly with PacifiCorp with respect to the preparation of applications for Regulatory Approval and assisting PacifiCorp in seeking approval of its filings. Buyer will not prior to Closing, without PacifiCorp s prior consent, make any filing with or initiate any discussion or proceeding with, any governmental body having regulatory authority seeking consent to the sale by PacifiCorp, or the purchase by Buyer, of the Assets. Prior to filing applications, pre-filed testimony or responses to data requests in the course of obtaining Regulatory Approval, Buyer will provide such materials to PacifiCorp for its information. Notwithstanding the foregoing, Buyer will not be required in connection with any regulatory approval to agree to any conditions of approval that are reasonably unacceptable to Buyer, 02 Confidentiality.To the maximum extent allowed by law, all material nonpublic information requested and obtained by Buyer from PacifiCorp will be kept confidential by Buyer and used by Buyer solely for the purposes of evaluation of the transactions contemplated by this Agreement and the operation of the Assets. SECTION VIII CONDITIONS PRECEDENT TO P ACIFICORP'S OBLIGATIONS All of the obligations of PacifiCorp to be discharged prior to or at Closing are subject to the fulfillment, prior to or at Closing, of each of the following conditions: 01 Representations. Warranties and Covenants of Buyer. All representations and warranties made in this Agreement by Buyer will be true and correct in all material respects as of the Closing Date as fully as though such representations and warranties had been made on and as of the Closing Date and Buyer will have complied in all material respects with all covenants made by it in this Agreement to be performed prior to Closing. At Closing, Buyer will provide to PacifiCorp a certificate dated as of the date of Closing and signed by the Chief Executive Officer and General Manager of Buyer confirming the accuracy of the matters stated in this Section. 02 Third Party Releases and Consents. PacifiCorp or Buyer will have obtained the written consent of third parties, including government agencies, in form and substance satisfactory to PacifiCorp and its counsel, necessary for consummation of the transactions contemplated by this Agreement, other than those which, if not obtained, would not, in the aggregate, have a material adverse effect on the value of the Assets or Buyer s ability to utilize the Assets in the ordinary course of business. 03 Litigation. At the Closing Date, there will not be in effect any order, decree or injunction of a court of competent jurisdiction restraining, enjoining or prohibiting the consummation of the transactions contemplated by this Agreement (each party agreeing to use its best efforts, including appeals to higher courts, to have any such order, decree or injunction set aside or lifted), and no action will have been taken and no statute, rule or regulation will have been enacted by any state or federal government or governmental agency in the United States which would prevent the consummation of such transactions. Meter. Buyer will have satisfied its Meter obligations under Section 2.06. 05 Regulatory Approval.The Regulatory Approval will have been obtained and be in effect at the Closing Date on terms acceptable to PacifiCorp. SECTION IX CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS All of the obligations of Buyer to be discharged prior to or at the Closing are subject to the fulfillment, prior to or at the Closing, of each of the following conditions: 01 Representations. Warranties and Covenants ofPacifiCorp. All representations and warranties made in this Agreement by PacifiCorp will be true and correct in all material respects as of the Closing Date as fully as though such representations and warranties had been made on and as of the Closing Date. As of the Closing Date, PacifiCorp will have complied in all material respects with all covenants made by it in this Agreement to be performed prior to Closing. At Closing, PacifiCorp will provide to Buyer a certificate dated as of the date of Closing and signed by an authorized officer ofPacifiCorp confirming the accuracy of the matters stated in this Section. 02 Third Party Consents. PacifiCorp or Buyer will have obtained the written consent ofthird parties, including government agencies, in form and substance satisfactory to Buyer and its counsel, necessary for consummation of the transactions contemplated by this Agreement other than those which, if not obtained, would not, in the aggregate, have a material adverse effect on the value of the Assets or Buyer s ability to utilize the Assets in the ordinary course of business. 03 Litigation. At the Closing Date, there will not be in effect any order, decree, or injunction of a court of competent jurisdiction restraining, enjoining or prohibiting the consummation of the transactions contemplated by this Agreement (each party agreeing to use its best efforts, including appeals to higher courts, to have any such order, decree or injunction set aside or lifted), and no action will have been taken and no statute, rule or regulation will have been enacted by any state or federal government or governmental agency in the United States which would prevent the consummation of such transactions. 04 Regulatory Approval. The Regulatory Approval will have been obtained and be in effect at the Closing Date on terms that would not, in the aggregate, have a material adverse effect on the value of the Assets or Buyer s ability to utilize the Assets in the ordinary course of business. SECTION X NOTICES OF DEVELOPMENT 10.01 Notice. PacifiCorp will notify the Buyer in writing of any development known to PacifiCorp prior to Closing which at the time of notification causes any of the representations and warranties in this Agreement to be materially inaccurate. Unless Buyer terminates this Agreement pursuant to Section 12., the written notice pursuant to this Section 10.01 will be deemed to have qualified the representations and warranties, to have amended any schedule referenced in such Sections, and to have caused any representation or breach of warranty that otherwise might have existed hereunder by reason of the development to be cured. 10.02 Asset Description. Buyer acknowledges that changes in the Assets and liabilities relating to the Assets or other information shown on the Schedules may occur after the date of this Agreement and prior to Closing. PacifiCorp may, prior to Closing, deliver to Buyer updated Schedules. Unless Buyer terminates this Agreement pursuant to Section 12., the updated Schedules delivered pursuant to this section will be deemed to replace the applicable Schedule attached hereto, SECTION XI CLOSING 11.01 Time and Place. The closing of the transactions contemplated by this Agreement (the "Closing ) will take place at 10:00 a., Pacific time, on the date ten days following receipt of Regulatory Approval or on such date as may be mutually agreed upon by the parties (the Closing Date ). The transfer of the Assets and the assumption of the Assumed Liabilities will be effective as of 11 :59:59 p.m., Pacific time, on the Closing Date (the "Effective Time of Closing ). The Closing will be held at PacifiCorp s headquarters, 825 NE Multnomah Street Suite 1800, Portland, Oregon, or at such other place as the parties may mutually agree and may be conducted by exchange of documents by facsimile and overnight courier service. 11.02 Further Assurances. From time to time after the Closing, each party, upon the request of the other party, will without further consideration execute, deliver and acknowledge all such further instruments of transfer and conveyance and do and perform all such other acts and things as either party may reasonably require to more effectively carry out the intent of this Agreement. SECTION XII TERMINATION 12.01 Termination.This Agreement may be terminated and abandoned at any time prior to the Closing: (a) if the parties agree in writing to terminate this Agreement by mutual consent; (b) by Buyer if Buyer delivers a written notice to PacifiCorp to the effect that (1) one or more of the conditions to the obligations of Buyer set forth in Section 9 (which will be specified in detail in such notice) cannot be met on or before December 31 , 2007 (or such later date to which the term of this Agreement may be extended pursuant to Subsection 12.01(f)); or (2) PacifiCorp has defaulted in a material respect under one or more of its covenants and agreements contained herein (which will be specified in detail in such notice) and such condition or conditions have not been satisfied or such default or defaults have not been remedied (or waived by Buyer) within 30 days after the date such notice is delivered by Buyer to PacifiCorp; or (3) Buyer is terminating the Agreement as a result of a notice under Section 10.01 or a revised Schedule under Section 10., which notice or revised Schedule has a material adverse effect on the value of the Assets or Buyer s ability to utilize the Assets in the ordinary course of business and such termination occurs within ten (10) days of Buyer s receipt after such notice or revised Schedule; (c) by PacifiCorp ifPacifiCorp delivers a written notice to Buyer to the effect that (1) one or more of the conditions to the obligations ofPacifiCorp set forth in Section 8 (which will be specified in detail in such notice) cannot be met on or before December 31 , 2007 (or such later date to which the term ofthis Agreement may be extended pursuant to Subsection 12.01(f)); or (2) Buyer has defaulted in a material respect under one or more of its covenants and agreements contained herein (which will be specified in detail in such notice), and such condition or conditions have not been satisfied or such default or defaults have not been remedied (or waived by PacifiCorp) within 30 days after the date such notice is delivered by PacifiCorp to Buyer; (d) by either party if any governmental or regulatory body, the consent of which is a condition to the obligations of Buyer and PacifiCorp to consummate the transactions contemplated by this Agreement, will have detennined not to grant its consent and all appeals of such determination will have been taken and have been unsuccessful; (e) by either party if any court of competent jurisdiction in the United States or any state will have issued an order, judgment or decree (other than a temporary restraining order) restraining, enjoining or otherwise prohibiting the purchase of the Assets from PacifiCorp by Buyer and such order, judgment or decree will have become final and nonappealable; or (f) by either party if the Closing does not occur on or before (September 30 2007) (other than by virtue ora default by one of the parties), or such later date to which the term of this Agreement may be extended pursuant to mutual agreement of the parties, provided that one of the parties gives written notice to the other so terminating this Agreement. 12.02 Effect of Termination, Except as provided below and in Section 2., any termination pursuant to this Section 12 will relieve both the parties hereto of all of their obligations set forth herein and any liability with respect thereto; provided that termination of this Agreement does not relieve either party of liability for breach of the Agreement. In the event of termination by Buyer pursuant to Section 12,Ol(b), Buyer shall not be responsible for reimbursement of any Transfer Costs, Legal Costs or Termination Costs incurred by PacifiCorp pursuant to Section 2,05. In the event of termination by PacifiCorp pursuant to Section 12.01 (c)(2), reimbursement for Transfer Costs, Legal Costs or Termination Costs incurred by PacifiCorp pursuant to Section 2.05 shall be paid by Buyer (a "Reimbursed Termination " on the date of such Reimbursed Termination, the "Reimbursed Termination Date ). In the event of termination by PacifiCorp or by Buyer, PacifiCorp will refund to Buyer amounts paid to PacifiCorp by Buyer pursuant to Section 2.05 only to the extent such amounts are in excess of the total Transfer Costs, Legal Costs and Termination Costs actually incurred by PacifiCorp, SECTION XIII ASSIGNMENT 13.01 Assignment.Neither party may assign its rights under this Agreement to any third party without the written consent of the other party to this Agreement which consent shall not be unreasonably withheld. 13.02 No Discharge. No assignment of this Agreement will operate to discharge the assignor of any duty or obligation hereunder without the written consent of the other party. SECTION XIV MISCELLANEOUS 14.01 Indemnification. From and after the Effective Time of Closing, PacifiCorp and Buyer will each indemnify and hold harmless the other party from and against any Losses, as defined below, incurred by reason of any breach or inaccuracy of a representation or warranty or breach of covenant of a party in this Agreement. Any claims for indemnification by Buyer shall not exceed the Purchase Price in the aggregate and all indemnification claims must be brought within one year after the Closing Date. (a) After Closing, the indemnification provided by this section shall be the sole and exclusive remedy for any Losses of a party with respect to any breach or inaccuracy of any representation or warranty or breach of any covenant contained in this Agreement. (b) "Losses shall include actual loss, liability, damage or expense (including reasonable legal fees and expenses but excluding incidental, consequential or punitive damages). (c) Neither party shall be liable under any provision of this Agreement for any Loss to the extent that such Loss was caused or exacerbated by the other party, or to the extent such other party failed to mitigate such Loss as required by Section 14.01(d). (d) Each party entitled to indemnification hereunder shall take all reasonable steps to mitigate all Losses after becoming aware of any event which could reasonably be expected to give rise to any Losses that are indemnifiable or recoverable hereunder or in connection herewith. 14,02 Allocation of Purchase Price, The Purchase Price will be allocated among the Assets in accordance with Schedule 14.02 attached hereto. Neither PacifiCorp nor Buyer will take any action that would be inconsistent with such allocation. 14.03 Termination of Use of Name and Logo. Buyer will not use PacifiCorp s name logo, trade names or trademarks other than use of equipment purchased under this Agreement bearing PacifiCorp s name or logo prior to Closing, and as soon as practicable after the Closing, but in any event within six months after Closing, will obliterate, cover or remove PacifiCorp logo and name from the Assets. 14.04 Amendment.This Agreement may be amended only by an instrument in writing executed by the parties which expressly refers to this Agreement and states that it is an amendment hereto. 14.05 Section and Paragraph Headings. The section and subsection headings contained in this Agreement are for reference purposes only and will not in any way affect the meaning or interpretation of this Agreement. 14.06 Waiver. Any of the terms or conditions of this Agreement may be waived at any time and from time to time, in writing, by the party entitled to the benefit of such terms or conditions. 14.07 Choice of Law. This Agreement will be subject to and be construed under the laws of the State of Wyoming, without giving effect to conflicts of laws principles. 14.08 Prevailing Party Costs. If a party commences an action against the other party because of a breach by that party of its obligations under this Agreement or any documents executed in consummation with the transaction contemplated by this Agreement, the prevailing party in any such action shall be entitled to recover from the losing party its expenses, including reasonable attorneys' fees , incurred in connection with the prosecution or defense of such action and any appeal thereof. 14.09 Notices. All notices, requests, demands and other communications given by Buyer or PacifiCorp will be in writing and will be deemed to have been given when telecopied with confirmed transmission, when hand delivered, when delivered by overnight courier or four business days after deposit into the United States mail, to the following addresses: If to Buyer to:Basin Electric Power Cooperative 1717 East Interstate Avenue With a copy to: If to PacifiCorp, to: With a copy to: Bismarck, ND 58503 Attn: Transmission Department Fax: 701-224-5332 Phone: 701-355-5645 Basin Electric Power Cooperative 1717 East Interstate Avenue Bismarck, ND 58503 Attn: Legal Department Fax: 701-224-5343 Phone: 701-223-0441 PacifiCorp 825 NE Multnomah Street, Suite 1600 Portland, OR 97232 Attn: Transmission DepartmentFax: (503) 813-6893 Phone: (503) 813-7090 Rocky Mountain Power 201 South Main, Suite 2300 Salt Lake City, UT 84111 Attn: Legal DepartmentFax: (801) 220-3299 Phone: (801) 220-4568 or to such other address as Buyer or PacifiCorp may designate in writing. 14.10 Integrated Agreement.This Agreement, the schedules and exhibits hereto, when executed, constitute the entire agreement between the parties hereto and supersedes all prior agreements and understandings, oral and written, between the parties with respect to the subject matter hereof. 14.11 Counterparts. This Agreement may be executed in two or more counterparts each of which will for all purposes be deemed to be an original and both of which will constitute one and the same instrument. 14.12 Disclosure. Disclosure of any fact or item in any schedule or exhibit hereto shall be deemed to have been so disclosed in any other schedule, exhibit or representation or warranty made by PacifiCorp herein, provided disclosure of such fact or item on such schedule or exhibit contains disclosure of facts that would otherwise be required to be disclosed in such other schedules, exhibit or representation or warranty. Matters reflected in the schedules and exhibits hereto are not necessarily limited to matters required by this Agreement to be disclosed. Such additional matters are provided for information purposes only and shall not be deemed to be an admission or acknowledgement by PacifiCorp that such information is material or outside the ordinary course of the business ofPacifiCorp. 14.13 Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision shall be construed as nearly as possible to give effect to the original intent of the parties. 14.14 No Third Party Beneficiaries, Nothing express or implied in this Agreement is intended or shall be construed to confer upon or give to a person, firm, corporation or municipality other than the parties hereto any rights or remedies under or by reason of this Agreement or any transaction contemplated herein. (SIGNATURE PAGE FOLLOWS) IN WITNESS WHEREOF, the parties have signed this Agreement as of the date first above written. BUYER:BASIN ELECTRIC POWER COOPERATIVE By:~\AJ Name: -:Y~...a \. ~..J~"'~ Title: ~c.~ "'\" ~d; c- """ ACIFICORP:ACIFICORP By:Name: ~ ~ Title: res f'o..xv /"" ~ Schedule 1.02 Description of Assets A 230 kilovolt electric transmission line 13.85 miles of wood constructed H frame structure design with 1272 ACSR conductor. The southern end of the line is connected to PacifiCorp Goose Creek switchyard located approximately a mile north of Sheridan, Wyoming. The northern termination of the line is at Flathead Electric Cooperative s Decker substation located near Decker, Montana. Vinta~e Qtv Unit Meas.Descrintion 1971 EA.LAND RIGHTS - TRANS 1971 EA.LAND RIGHTS - TRANS 1971 EA.WOOD POLES, -:::=60 FT. 1976 EA.WOOD POLES, -:::=60 FT. 1971 140 EA.WOOD POLES, :;:.=65 FT. 1976 EA.WOOD POLES, :;:.=65 FT. 1988 EA.WOOD POLES, :;:.=65 FT, 1996 EA.WOOD POLES, :;:.=65 FT. 2001 EA.WOOD POLES, :;:.=65 FT. 2003 EA.WOOD POLES, :;:.=65 FT. 1971 EA.WOOD POLES, :;:.=65 FT. 1971 367 EA.ANCHOR 1988 EA.ANCHOR 1996 EA.ANCHOR 1971 EA.ANCHOR 1971 EA.CROSSARMS & CROSS BRACES 1976 EA.CROSSARMS & CROSS BRACES 1980 EA.CROSSARMS & CROSS BRACES 1996 EA.CROSSARMS & CROSS BRACES 2001 EA.CROSSARMS & CROSS BRACES 1971 EA.CROSSARMS & CROSS BRACES 1971 121610 FT.WIRE, -:::=499 MCM 1971 24664 FT.WIRE, -:::=499 MCM 1971 182415 FT.WIRE, :;:.=1000 MCM 1971 36996 FT.WIRE, :;:.=1000 MCM 1971 2449 EA.DISC INSULATOR 1977 180 EA.DISC INSULATOR 1978 EA.DISC INSULATOR 1979 108 EA.DISC INSULA TOR 1980 EA.DISC INSULATOR 1982 325 EA.DISC INSULATOR 1988 EA.DISC INSULATOR 1992 102 EA.DISC INSULATOR 1997 EA.DISC INSULATOR 1999 EA.DISC INSULATOR 2003 EA.DISC INSULATOR 2004 EA.DISC INSULA TOR 1971 588 EA.DISC INSULATOR 1971 EA.POST INSULATOR The Assets also include all easements and rights-of-way owned by PacifiCorp relating to the 13.85 mile, 230 kilovolt electric transmission line described above, including those listed below. No assurance can be given that the easements and rights-of-way, or other such rights are complete with respect to the Assets. Prescriptive rights may exist or facilities may have been constructed outside of existing easements. Any and all such prescriptive rights that may exist are also included as Assets. Instrument!Grantor(s)Date Location Recordation Central File No.Information Easement John E. Rice & Sons, Inc.11/13/1970 T57N R84W 11/20/1970 L217A11 Sheridan County Bk 179 Pg 257 Easement Wyoming Board of Land 3/29/1971 T57N R84W 4/16/1971 L217/9A12 Commissioners Sheridan County Bk 181 pg 262 Easement Barbula- Turley Ranch, Inc.11/19/1970 T57N R84W 12/1 0/1970 L217A13 Sheridan County Bk 179 Pg 465 Easement Jack C. and Dorothy L. Dow 11/16/1970 T57N R83W 11/20/1970 L217A14 Sheridan County Bk 179 Pg 263 Easement T57N R83W 11/20/1970Jack R. and Hazel M. Wilson 11/13/1970 T57N R84WL217A15Sheridan County Bk 179 Pg 260 Easement Steve and George Chemi 11/14/1970 T57N R83W 11/20/1970 L217A16 Sheridan County Bk 179 Pg 265 Easement Hermina Schreibeis Farenbruch 11/23/1970 T57N R83W 12/10/1970 L217A17 Sheridan County Bk 179 Pg 467 Easement Elmer J, and Suzanne L.11/13/1970 T57 N R83W 11/20/1970 L217A18 Mvdland Sheridan County Bk 179 pg 270 Easement Robert A. Ross 11/9/1970 T57N R83W 11/20/1970 L217A19 Sheridan County Bk 179 Pg 268 Easement Stanley D, and Margaret P.T57N R83W 11/20/197011/16/1970 T58N R83WL217A110PilchSheridan County Bk 179 Pg 249 Easement T58N R83W 12/10/1970 L217A111 Joseph S. and Anna Pilch 11/13/1970 T57N R83W Bk 179 Pg 469Sheridan County Easement E. and Joyce Kukuchka 11/17/1970 T58N R83W 11/20/1970 L217A112 Sheridan County Bk 179 Pg 273 Easement Clyde and Clara Hall 11/10/1970 T58N R83W 11/20/1970 L217A113 Sheridan County Bk 179 Pg 255 Easement Clyde and Clara Hall 11/10/1970 T9S R40E 11/18/1970 L217A113 Big Horn County Bk 59 Pg 620 Easement Arlo W. and LaVon M. Conner 11/12/1970 T9S R40E 11/18/1970 L217A114 Big Horn County Bk 59 Pg 616 Easement Theodore Muller 11/ 1 0/1970L217A115 Easement James D. and Jean s. Muller 11/12/1970L217A116 Easement Emmett and Vada L. Munson 11/19/1970L217A117 Additional right-oI-way interests in the following property: Township 58 North, Range 83 West of the 6th P., Sheridan County, Wyoming: Section 22: Section 23: Section 33: SEY4NEY4; NEY4SEY4 SWY4NWY4 SEI/4NWY4; NWY4SEY4; SWY4SWY4 Township 9 South, Range 40 East of the M., Big Horn County, Montana: Section 33:NWY4NEY4 Schedule 1.15 Regulatory Approval Oregon Public Utility Commission Approval California Public Utilities Commission Approval Wyoming Public Service Commission Approval Idaho Public Utility Commission Approval Total omin Montana Miles of line 13.11. Percentage 100%83.10%16.90% Purchase Price Allocation: Easement Rights $159 275 $132 358 $26 917 Transmission Plant 689 877 235 288 $454 589 Total 849 152 367 646 $481 506 Schedule 14. Purchase Price Allocation