Page images
PDF
EPUB

WHEREAS the Supply System is organized under the laws of the State of Washington (Rev. Code of Washington, Ch. 43.52, cum. supp.) and is authorized by law to construct, acquire and operate works, plants, and facilities for the generation and/or transmission of electric power and energy and to enter into contracts with the Administrator and certain other agencies which operate electric utility systems, including hydroelectric generation and transmission facilities, for the disposition and distribution of electric energy produced thereby; and

WHEREAS the Participant, and each of the Participants (hereinafter defined) owns and operates an electric distribution system and is authorized to purchase power and energy from the Supply System and is authorized to exchange such power and energy so purchased for power and energy from the Administrator, and has a Power Sales Contract with the Administrator for the purchase of electric energy; and

WHEREAS the Commission of the Participant and the Board of Directors of the Supply System have found that the execution of this agreement is necessary and advisable in order to provide for the actual and prospective power needs of the Participant and the other Participant member public utility districts of the Supply System, other public utilities and cooperatives which will participate in the use of the Project (hereinafter defined) for the purposes specified herein, and that performance of this agreement will result in substantial economies to Participant throughout the term hereof; and

WHEREAS the Supply System has executed a contract with the Atomic Energy Commission (hereinafter called "the Commission") with respect to the construction and operation by the Supply System of the electric power generating project to be operated in connection with the new production reactor at Hanford, Washington; and

WHEREAS the Administrator is authorized to enter into contracts for the mutual exchange of unused excess power upon suitable exchange terms for the purpose of economical operation or of providing emergency or breakdown relief for the Columbia River power system, and the Administrator has determined that (1) the integration of the output of electric power generated at the Project with the hydroelectric power of the Columbia River power system as provided in this agreement will enable the Administrator to firm up and thereby make available large quantities of electric energy for the term of this agreement (which electric energy otherwise would be wasted) to meet an urgent need for such additional firm power arising before the Project can be completed, to supply the actual and prospective needs of publicly and privately owned public utilities, cooperatives and industries in the Pacific Nortwest; (2) the Administrator, by entering into this agreement, will be enabled to increase substantially the net revenues to be received throughout the period of this agreement in the marketing of power from the Columbia River power system; and (3) the mutual exchange of power as provided herein will result in a more economical operation of the Columbia River power system; and WHEREAS the Participant and all of the other Participants presently purchase all or a portion of their power requirements from the Administrator; and

WHEREAS it is the intent of this agreement that the Participant, and all of the other Participants, shall purchase from the Supply

System and the Project Output (hereinafter defined) and pay to the Supply System for said Project Output in the aggregate an amount equal to the Project Annual Cost (hereinafter defined), and to exchange such Project Output with the Administrator for firm energy, as provided for herein:

Now, THEREFORE, in consideration of the premises and the mutual covenants and agreements herein contained, the parties hereto agree as follows:

1. Definitions and Explanations of Terms.-As used herein:

(a) "Project" means the works, plants and facilities for the generation and transmission of power and energy acquired by purchase, lease or otherwise, or constructed by the Supply System in connection with the operation of the electric power generating plant to be operated in conjunction with the new production reactor of the Commission at Hanford, all as more particularly described in the Bond Resolution.

(b) "Bond Resolution" means collectively the resolution or resolutions adopted by the board of directors of the Supply System authorizing the issuance and sale of revenue bonds to provide funds to pay the cost of construction and for other purposes in connection with the Project. A copy thereof is attached to this agreement as Exhibit B and hereby made a part thereof.

(c) "Revenue Bonds" means the bonds issued by the Supply System in connection with the Project, all as authorized by the Bond Resolution.

(d) "Project Output" means the amount of electric power and energy produced by the Project during the term of this agreement, including periods when the Project may be inoperable in whole or in part.

(e) "Project Annual Costs" means all costs incurred or paid by the Supply System during each Contract Year associated with the construction, ownership, operation, and maintenance of the Project, including all payments and deposits of whatever nature provided for in the Bond Resolution.

(f) "Contract Year" means the twelve-month period commencing at 12:00 p.m. on June 30 of each year in the term hereof, except that the first Contract Year shall begin at 12:00 p.m. on the date of execution and end at 12:00 p.m. on the following June 30.

(g) "Participants" means the Participant and the members of the Supply System and other public utilities whose names are listed in Exhibit A, attached to this agreement.

(h) "Power Sales Contract" means the existing contract and any amendments thereto, and any supplemental, renewal or additional contracts entered into between the Participant and the Administrator for the purchase by Participant of electric energy from the Administrator.

(i) "Aggregate Billing" means an amount computed monthly by applying the firm power rate schedule specified in the Power Sales Contract to the total amounts of power delivered to the Participant hereunder plus the firm power made available under such Power Sales Contract.

(j) "Capacity" means thirty-minute integrated demands, or hourly scheduled amounts, whichever is applicable, as provided in the Power Sales Contract.

86392-62

(k) "Commencement of Commercial Operation" means the date when the first unit of the Project has been certified ready for normal continuous operation by the construction engineer designated as provided in the Bond Resolution.

2. Term of Agreement. This agreement shall be effective commencing at 12:00 p.m. on the date of execution. Subject to the other provisions contained herein, it shall terminate no earlier than the date that the obligations evidenced by the Revenue Bonds are paid or provision is made for the payment or retirement thereof in accordance with the Bond Resolution. It shall continue in effect thereafter until the Administrator gives the Supply System and all of the Participants written notice of his intent to terminate at least six (6) months prior to a stated termination date, whereupon this agreement shall terminate automatically on said date; provided, however, that this agreement shall terminate on the date of acquisition of the Project by the Government under the provisions of section 9(a) hereof; provided, further, that the Administrator at any time may terminate this agreement upon reasonable notice in writing to the Supply System if the Supply System should amend, modify or otherwise change the Bond Resolution without first obtaining the written approval of the Administrator. Any amendment to or modification of the Bond Resolution shall, upon approval by the Administrator, be made a part of Exhibit B attached hereto.

The Administrator may also terminate this agreement on the date specified in a written notice given to the Supply System and all of the Participants at any time prior to the commencement of commercial operation of the Project if, during such period: (1) the construction of the new production reactor by the Commission should be discontinued, or (2) there should occur such events that, in the judgment of the Administrator, the continuation of this agreement could no longer be economically justified. If the agreement is terminated because of the occurrence of either of the immediately preceding events, the Government shall concurrently reimburse the Supply System for all obligations, costs, and expenses paid or incurred by it in connection with the Project up to the date of such termination, including payment of principal of, and interest on, the Revenue Bonds, and the redemption premium, if any, required to pay and redeem such Revenue Bonds; provided, however, that any moneys available to the Supply System in funds or accounts provided for in the Bond Resolution for such purpose shall be applied against such obligations, costs, and expenses in reduction of the amounts payable by the Government hereunder. Upon such reimbursement the Supply System shall convey to the Government the assets of the Project existing or committed up to such date.

3. Financing of the Project. The Supply System shall proceed to issue and sell the Revenue Bonds pursuant to the Bond Resolution as soon as reasonably practicable. If the bid or bids tendered for such Revenue Bonds do not provide for a rate of interest which is acceptable to the Administrator, he may give written notice of termination of this agreement within tenty-four (24) hours after receipt of such bids by the Supply System, such termination to become effective immediately upon delivery. In such event, all costs and expenses incurred or obligated by the Supply System as of the date of termination shall be borne solely by the Supply System and/or the Participants.

4. Construction of the Project.—

(a) The Supply System shall construct the Project, including the switchyard and transmission facilities which are required to deliver the electric power generated at said Project to the Government's system at the 230 kv bus in the Government's Vantage substation. All contracts for the construction of the Project shall be let in compliance with the laws of the State of Washington governing the letting of such contracts. The Supply System shall take all reasonable steps to assure that all contracts relating to such construction shall be performed in accordance with their terms. The first generating unit of the Project shall be ready for commercial operation by October 1, 1965, and the second by December 1, 1965, unless delayed by causes which are beyond the control of the Supply System and not due to its fault or negligence.

(b) All designs, plans, specifications and contracts relating to the construction of the Project shall be prepared by the engineering firm of Burns & Roe, New York City, for the Supply System in cooperation with, and shall be subject to the approval of, the Administrator. The Supply System shall furnish to the Participants and the Administrator with reasonable promptness copies of each and all certificates delivered to it by any engineer or architect in connection with such construction and shall make available for examination by the Administrator, or any representative authorized by him, all papers, records and accounts relating to such construction, at any reasonable time. The Administrator may arrange that an authorized person or persons inspect the construction at such times as he may designate. The Administrator shall notify the Supply System in writing with reasonable promptness as to any matter arising in the course of such construction which he deems to be inconsistent with this agreement, and shall afford the Supply System reasonable opportunity to take corrective measures promptly: Provided, however, That failure to give such written notice shall not relieve the parties of their obligations under this agreement.

5. Exchange of Energy and Payment of Project Annual Costs.

(a) Commencing at the time that the first unit of the Project is ready for Commercial Operation, the Supply System shall sell per cent (%) of the Project Output to the Participant, and the Participant shall purchase such percentage of said Project Output. The Supply System and the Administrator warrant and represent that they have entered into Exchange Agreements substantially similar to this Exchange Agreement for the purchase and sale of all of the Project Output to the Participants, each Participant to receive the respective proportion of the Project Output as set forth in Exhibit A attached hereto and hereby made a part of this agreement. The Participant hereby directs the Supply System as its agent to make available its proportionate share of such Project Output to the Government at the 230 kv bus in the Government's Vantage substation, in the manner provided in section 6 hereof, and thereafter Participant's proportionate share of such Project Output shall be under the complete control of the Government.

The amount of Project Output the Participant is obligated to purchase and pay for pursuant to this subsection (a), and the amount which the Administrator is obligated to make available to the Partic

ipant, shall be automatically increased pro rata with that of the other Participants in the event and to the extent any Participant is unable, or fails or refuses for any reason to perform its obligations under its Exchange Agreement with the Supply System and the Administrator. In the event the Participant or any of the other Participants shall fail or refuse to pay any amounts due to the Supply System hereunder, the fact that the Participants have assumed the obligation to make such payments shall not relieve the defaulting Participant of its liability for such payments under its Exchange Agreement, and the Supply System and the Participants assuming such obligation, either individually or as a member of a group, shall have a right of recovery from the Participant in default for such amount as the Supply System or the Participants sustain as a loss or damage by reason of such default, and may commence such suit, action or proceedings at law or in equity as may be necessary or appropriate to recover the amount of such loss or damage.

(b) At least sixty (60) days prior to the estimated date of the Commencement of Commercial Operation and at least sixty (60) days prior to the termination of each Contract Year thereafter, the Supply System shall adopt a budget of estimated Project Annual Costs for the ensuing Contract Year, in cooperation with, and subject to the written approval of, the Administrator. Such budget shall include all amounts as required in the Bond Resolution, including all expenses for operation and maintenance. The estimated Project Annual Costs for the first Contract Year shall be $. Concurrently with the preparation of each budget, the Supply System shall deliver to the Administrator and to each of the Participants a statement showing the amount of the Project Annual Costs to be paid by each of the Participants, and the estimated amounts which they are each obligated to pay each month during the Contract Year to the Supply System. The total amount paid by the Participants each year to the Supply System shall equal one hundred percent (100%) of the Project Annual Costs. Participant covenants and agrees that it will in each Contract Year pay in monthly installments to the Supply System the amount shown on said statement as the cost to Participant of its share of Project Output purchased hereunder.

(c) On or before the first day of each calendar month of each Contract Year, the Participant shall pay the monthly installment of the Project Annual Cost as shown on the statement delivered pursuant to subsection (b) hereof without further billing. If payment of any amount due hereunder from the Participant to the Supply System is unpaid upon the tenth day of the month, a delayed payment charge of two per centum of the unpaid amount of the bill shall be made, except that in the case of a bona fide dispute as to the amount due, the delayed payment charge shall be applicable only to the portion thereof admittedly due and not paid. If the first or the tenth of the month shall fall upon a Sunday or a holdiay, the following business day shall be the last day in which payment can be made without the addition of the delayed payment charge.

(d) Subject to the other provisions contained herein, the Administrator, in exchange for the Project Output, shall make available electric energy and the capacity associated therewith to the Participant, for each month in the term hereof commencing at the time specified in subsection (a) of this section, under the terms and conditions spec

« PreviousContinue »