and the Cooperative shall purchase and receive from the Government under the terms and conditions hereinafter set forth, such amounts of power and accompanying energy as the Government is able to deliver and the Cooperative is able to take and use. (b) After the termination of the Pre-Completion Operating Period, the Government shall sell and deliver to the Cooperative and the Cooperative shall purchase and receive from the Government, under the terms and conditions hereinafter set forth, the following amounts of power and such accompanying energy as the Cooperative may require for the services of its Members, to wit: First year, 18,000 kilowatts; second year, 22,000 kilowatts; third year, 26,000 kilowatts; and during the remainder of the term of this agreement, 30,000 kilowatts. SECTION 2. Rates.-(a) The electric power and energy referred to in article I, section 1, hereof shall be sold and delivered by the Government and shall be purchased, received, and paid for by the Cooperative at the following rates and upon the following terms and conditions: Character of Service The electric power and energy shall be delivered hereunder as 3-phase alternating current at a frequency of approximately 60 cycles per second and at nominal delivery voltages as specified under Points of Delivery with an allowable variation of 5% above or below nominal voltage. Monthly Rate Demand Charge: The demand charge shall be $1.35 per kilowatt of billing demand, which payment includes the use of 200 kilowatt-hours per kilowatt per month. Energy Charge: The energy charge shall be 4 mills per kilowatt-hour for all additional kilowatt-hours over and above the kilowatt-hours covered by the demand charge. Minimum Monthly Bill The minimum monthly bill shall be the demand charge. Contract Demand The monthly contract demand hereunder shall be (a) during the PreCompletion Operating Period the average number of kilowatts supplied during the 30-minute period of maximum use during the month, and (b), during the remainder of the term of this agreement, the maximum amount of power which the Government is obligated heerunder to deliver to the Cooperative during the billing period as provided under section 1 (b) of Article I hereof. Billing Demand The billing demand shall be the contract demand or the average number of kilowatts supplied during the 30-minute period of maximum use during the month, whichever is the greater. Power Factor The Cooperative shall maintain a power factor of not less than 80% lagging. The average power factor during the month used for billing purposes shall be obtained from the measured kilowatt-hours and the measured reactive kilovolt-ampere-hours taken during the month. The meters for measurement of reactive kilovolt-ampere-hours will be ratcheted to prevent reverse registration. Power Factor Adjustment If the average power factor during the month is less than 80% lagging, the total bill for that month shall be increased 1% for each 1% or major fraction thereof by which the average power factor during the month is less than 80% lagging. Points of Delivery Electric power and energy provided for hereunder shall be furnished by the Government and taken by the Cooperative at substations operated by the Government at or near the locations given below, at the voltages and at a rate of delivery which shall not exceed the installed substation capacity heerinbelow specified: Provided, That the sum of the maximum actual 30-minute demands at all points of delivery during any month, shall not exceed the contract demand herein provided for under section 1. 60623-50-pt. 4- -4 Such power and energy shall be metered at said voltages at said points of delivery through suitable metering equipment installed, maintained, and operated by the Government. Billing No charges for electric service shall be made until after such service is started hereunder. Bills for power and energy shall be rendered monthly. In the event that the billing is for a fraction of a month, the Government shall make an appropriate adjustment of the demand charge for such period. All bills shall be due and payable at the main office of the Administrator of the Southwestern Power Administration within thirty (30) days from the date of the bill: Provided, however, That if the 30th day be a Sunday or holiday, the following business day shall then become the due date. Failure to receive a bill shall not release the Cooperative from liability for payment. The Government may at any time after the bill is due, and after giving ten (10) days advance notice in writing, discontinue service until all past-due bills are paid. Remittances received by mail after the due date shall be accepted by the Government, without penalty, provided payment was mailed on or before the due date as evidenced by postmark. Discontinuance of service as herein provided shall not relieve the Cooperative of its liability for the agreed monthly payment during the period of time service is discontinued. (b) The above rates, terms, and conditions are in accordance with Rate Schedule "A" of the Southwestern Power Administration, filed with the Federal Power Commission, and by the Federal Power Commission confirmed and approved on February 13, 1947, as amended on August 15, 1947, in its Docket No. IT-5971, which rate schedule is by reference made a part hereof as fully and completely as if copied in full herein. (c) It is understood and agreed that the rates provided for under this section shall remain in force only so long as Rate Schedule "A" (as amended), of the Southwestern Power Administration remains unmodified and effective, and it is understood and agreed that said Rate Schedule "A" of the Southwestern Power Administration may, with the approval of the Federal Power Commission, be modified at any time or from time to time. If said Rate Schedule "A" is so modified at any time and if, upon notice of such modification by registered mail to the Cooperative and copy thereof to the Administrator of the REA, also by registered mail, the Cooperative does not wish to continue service under such modified rate, it shall, within thirty (30) days after notice of such modification, advise the Government in writing of its intention to discontinue service hereunder, but may continue to take service at the modified rate until another power supply is obtained or for a period of twenty-four (24) months from the date of such notice of modification, whichever date is earlier. If the Cooperative does not advise the Government within thirty (30) days after such notice of modification of its desire to discontinue service hereunder, the rate as so modified shall become the contract rate hereunder in lieu of the previously existing rate until again so modified. The modified rate shall become effective on the date so ordered by the Federal Power Commission. In the event the Cooperative refuses to continue service hereunder at such modified rate, this agreement shall ipso facto terminate when the Cooperative has obtained another power supply or at the expiration of said twenty-four (24) months period, whichever date is earlier and shall have no further force or effect. Service received during such period shall be billed and paid for at the modified rate. SECTION 3. Additional load.— (a) If the Cooperative needs capacity in excess of its existing contract demand for service of its Members, the Government shall furnish such additional power capacity at such standard voltages, as the Cooperative may reasonably specify, under the same terms and conditions as provided for herein: Provided, That (1) the Government has available such additional power capacity, and (2) a supplemental agreement in writing is entered into between the parties hereto covering such increase. (b) If the Cooperative exceeds its contract demand and does not promptly acquire the right to additional capacity as provided under 3 (a) hereof, or does not promptly reduce its power requirements so that its contract demand will not thereafter be exceeded, the Government may discontinue service to the Cooperative hereunder upon thirty (30) days' written notice in advance until the Cooperative establishes a new contract demand sufficient to cover such excess capacity by such supplemental agreement or reduces its power requirements to an amount compatible with its existing contract demand. (c) In the event that the Cooperative needs more power than provided by existing contract demand at any time and the Government is unable to supply this additional power and the Cooperative secures the necessary additional power from a source or sources (hereinafter termed the "Supplemental Source"), other than the Government, and delivers it over the Transmission System as provided in the Lease Option Contract, then (a) The Billing Demand in any month shall be the existing Contract Demand or the actual demand computed according to the following formula, whichever is the larger : D=A-B In the above formula the symbols are: D=computed actual kilowatt demand on Government. A sum of the maximum 30-minute kilowatt demands during such month at all Delivery Points serving the Cooperative. B=the sum of the maximum 30-minute kilowatt demands delivered into the Transmission System during such month from such Supplementary Source as metered at the point or points of delivery into the Transmission System. (b) The kilowatt-hours of energy supplied to the Cooperative during any month by the Government shall be computed according to the following formula: KWH P+L-S In the above formula the symbols are: KWH=Computed kilowatt-hours supplied the Cooperative by the Government during the month to be used by the Government in computing the billing to the Cooperative. P=sum of kilowatt-hours delivered during the month to all Delivery Points serving the Cooperative. L=Transmission losses chargeable to the Cooperative and computed in accordance with the provisions of Article III, Section 7, paragraph (c) of the Lease Option Contract. S kilowatt-hours delivered into the Transmission System from such Supplementary Source during the same month as metered at the point or points of delivery into the Transmission System. SECTION 4. Operating Policies.-(a) The Cooperative agrees that it will resell the power and energy purchased from the Government hereunder to its Members under the terms and conditions of said Rate Schedule "A" of the SPA, which is subject to change or modification from time to time as provided under section 2 (c) of this article I. (b) In order to encourage the most widespread use of electric power and energy and make it available to the ultimate consumer at the lowest possible rates consistent with sound business principles, and to insure that such energy will be distributed in accordance with the policy and intent of the Flood Control Act of December 22, 1944, the Cooperative covenants that it will include in all of its power contracts with its Members the following provisions with respect to operating policies, to wit: "1. The Member will sell its electricity to its customers without discrimination between customers of the same class and will not give or make as between customers of the same class any discriminatory rate, rebate, or other special concession. "2. The Member shall keep on file in the office of the SPA schedules of all rates and charges for electricity and such alterations and changes therein as may from time to time be put into effect. "3. The Member agrees to maintain and operate its electric system on a nonprofit, self-supporting and financially sound basis and dispose of its gross revenues from its electric operations in accordance with the following principles of operation: "(i) Revenues shall first be used for the payment of all current operation and maintenance expenses, including, without limitation, salaries, wages, cost of materials and supplies, power at wholesale, taxes, and insurance. "(ii) From remaining revenues, the Member shall provide for interest, current principal maturities, and current sinking fund payments in connection with system indebtedness. "(iii) Thereafter, revenues shall be used for additional working capital to the extent reasonably necessary and to make reasonable provision, including necessary cash reserves, for contingencies and for replacements and extensions of system. (It is not contemplated, however, that major replacements or extensions of system will be provided for out of current earnings.) "(iv) All remaining revenues shall be considered surplus revenues and shall serve as a basis for the reduction of rates. The Member may devote surplus revenues collected in any year to setting up additional cash reserves for replacements or extensions of system, for the purchase or retirement of system indebtedness before maturity or to provide a reserve fund to be used for the retirement of system indebtedness at maturity, if and to the extent that such use hereof is consistent with all the provisions hereof. "4. The Member agrees to: "(i) Keep the general books of account of its electric system according to the system of accounts prescribed for public utilities and licensees of the Federal Power Commission, or according to the system of accounts prescribed by REA for its borrowers, and shall allow the duly authorized agents of the SPA to have free access at all reasonable times to all books and records relating to electric system operations. "(ii) Cause its books of accounts to be audited annually by independent certified public accountants, unless such books are audited by the REA. “(iii) Furnish promptly to the SPA such operating and financial statements relating to electric system operations as may be reasonably requested by it: Provided, That so long as the Member is required to make reports to the REA, the furnishing of copies of such reports to the SPA shall be sufficient. Such requested statements shall be in such form that they may readily be compiled from the accounts and records of the Member. In the event of failure to furnish promptly such operating and financial statements, the SPA, following written notification to the Member of its intention so to do, may, with its own staff, perform all work necessary to collect such data as are reasonably desired, such work to be performed at such times and in such manner as will not unreasonably interfere with the Member's operation. "5. The Member shall maintain and operate its system in accordance with reasonable standards of safety, reliability, and efficiency. "6. The Member shall furnish, install, maintain and operate adequate facilities necessary (1) to enable the Member to take and to use the electric power and energy contracted for, and (2) to protect the facilities of the Cooperative. The plan for the protection of the Cooperative's equipment must be submitted to and approved by the operator of the Cooperative's Transmission System before the installation of the protective equip ment is made." (c) The Cooperative shall sell electricity to its Members without discrimination between Members of the same class and shall not give or make as between Members of the same class any discriminatory rate, rebate, or other special concession. (d) The Cooperative shall keep on file in the office of the SPA Schedules of all of its rates and charges for electricity and such alterations and changes therein as may from time to time be put into effect. ARTICLE II. SALE OF POWER BY COOPERATIVE SECTION 1. Service.-The Cooperative shall sell and deliver to the Government, and the Government shall purchase and receive from the Cooperative, under the terms and conditions hereinafter set forth, electric output of the Generating Plant (hereinafter referred to as "Electric Output"), in such manner and in such amounts from time to time as the Government shall specify and schedule: Provided, That the Government shall not schedule energy at a rate greater than the generating capacity of the Cooperative's Generating Plant, nor in any event at a rate less than that required for stable operation of the Generating Plant in the interconnected Systems, nor in any event at a rate less than 7,500 kilowatts. SECTION 2. Rates.-The electric energy referred to in article II, section 1, hereof, which is a part of the Electric Output of the Cooperative's Generating Plant, shall be sold and delivered by the Cooperative and shall be purchased, received, and paid for by the Government at the following rate and upon the following terms and conditions: Character of Service and Delivery Point The electric energy shall be delivered by the Cooperative to the Government as 3-phase alternating current at a frequency of approximately 60 cycles per second at a nominal delivery voltage of 69 kv, within reasonable voltage limits, at the point where the 69-kv line conductor of the Cooperative's Generating Plant makes connection with the Cooperative's Transmission System. Such electric energy shall be metered at said point of delivery through suitable metering equipment installed, maintained, and operated by the Cooperative. Monthly Rate The monthly rate shall be 4.2 mills per kilowatt-hour for all energy delivered by the Cooperative to the Government during such month. Minimum Amount to be Paid in Any Month The Government agrees to pay a minimum annual bill of $945,000 based on the production of 225,000,000 kilowatt-hours which is arrived at by using approxiately an eighty-five percent (85%) annual load factor for a 30,000kilowatt steam Generating Plant. The Government will pay the Cooperative a minimum monthly bill of $78,750, being one-twelfth (1/12) of the minimum annual payment of $945,000. The monthly payment will entitle the Government to receive 18,750,000 kilowatt-hours per month. In the event the Government schedules and receives kilowatt-hours in any month in excess of 18,750,000 kilowatt-hours, then the Government shall pay 4.2 mills per kilowatt-hour for all kilowatt-hours in excess of said amount. In the event the Government schedules and receives less than 18,750,000 kilowatt-hours in any month, then the Government may schedule and take the deficient kilowatt-hours at any time within the succeeding eleven months with no additional cost to the Government. In the event initial deliveries are made for a fraction of a month, the minimum monthly bill, and the kilowatt-hours to be delivered for said fraction of a month shall be prorated in the ratio that the number of days the plant was in operation bears to the number of days in the month. In the event, for any cause not created by the Government, the Cooperative is unable to deliver to the Government in any month 18,750,000 kilowatthours of energy, if specified and scheduled by the Government, such minimum amount for such month shall be reduced by an amount equal to 4.2 mills per kilowatt-hour times the number of kilowatt-hours of energy specified and scheduled by the Government and not delivered by the Cooperative during such month because of such inability during such period. The minimum monthly bill is based on a rate of 4.2 mills per kilowatt-hour for the energy produced by the Cooperative and delivered to the Government, and in the event said rate of 4.2 mills per kilowatt-hour is increased or de |