(Ilr-646)

(1) THIS CONTRACT, made this 26th day of April, nineteen hundred thirty, pursuant to the Act of Congress approved June 17, 1902 (32 Stat., 388), and acts amendatory thereof or suplementary thereto, all of which acts are commonly known and referred to as the reclamation law, and particularly pursuant to the Act of Congress approved December 21, 1928 (45 Stat., 1057), designated the Boulder Canyon Project Act, between THE United States of America, hereinafter referred to as the United States, acting for this purpose by Ray Lyman Wilbur, Secretary of the Interior, hereinafter styled the Secretary, and, severally, THE CITY OF LOS ANGELES, a municipal corporation, hereinafter styled the City, acting for this purpose by its Board of Water and Power Commissioners, and SOUTHERN CALIFORNIA EDISON COMPANY LTD., a private corporation, hereinafter styled the Company, both of said corporations being organized and existing under the laws of the State of California, and hereinafter styled the Lessees:

WITNESSETH:

EXPLANATORY RECITALS

(2) WHEREAS, for the purpose of controlling the floods, improving navigation and regulating the flow of the Colorado River, providing for storage and for the delivery of the stored waters for reclamation of public lands and other beneficial uses exclusively within the United States, and for the generation of electrical energy, the Secretary, subject to the terms of the Colorado River Compact, is authorized to construct, operate and maintain a dam and incidental works in the main stream of the Colorado River at Black Canyon or Boulder Canyon, adequate to create a storage reservoir of a capacity of not less than twenty million acre-feet of water; also to construct, equip, operate and maintain at or near said dam, or cause to be constructed, a complete plant and incidental structures suitable for the fullest economic development of electrical energy from the water discharged from said reservoir; and

(3) WHEREAS, after full consideration of the advantages of both the Black Canyon and Boulder Canyon dam sites, the Secretary has determined upon Black Canyon as the site of the aforesaid dam, hereinafter styled the Boulder Canyon Dam, and has determined that, the provision for revenues made by this contract, considering all of its provisions, including Article sixteen (16), together with other contracts in accordance with the provisions of the Boulder Canyon Project Act, is adequate in his judgment to insure payment of all expenses of operation and maintenance of the Boulder Canyon Dam and appurtenant works incurred by the United States, and the repayment within fifty (50 years from the date of completion of said works of all amounts advanced to the Colorado River Dam fund under Subdivision (b) of Section (2) of the

Boulder Canyon Project Act, together with interest thereon made reimbursable under said Act; and

(4) WHEREAS, the lessees are desirous severally of entering into contracts of lease of units of a Government built electrical plant, with right to generate

electrical energy;

(5) NOW, THEREFORE, in consideration of the mutual covenants herein contained, the parties hereto agree as follows, to-wit:

CONSTRUCTION BY UNITED STATES

(6) The United States will, at its own cost, construct in the main stream of the Colorado River at Black Canyon, a dam, creating thereby at the date of completion, a storage reservoir having a maximum water surface elevation at about twelve hundred twenty-two (1222) feet above sea level (U. S. Geological Survey datum) of a capacity of about twenty-nine million five hundred. thousand (29,500,000) acre-feet. The United States will also construct in connection therewith outlet works, pressure tunnels, penstocks, power plant building, and furnish and install generating, transforming and high voltage switching equipment for the generation of the energy allocated to the various allottees respectively as stated in Article fourteen (14) hereof.

OPERATION AND MAINTENANCE OF DAM

(7) The United States will operate and maintain the dam, reservoir, pressure tunnels, penstocks to but not inclusive of the shut-off valves at the inlets to the turbine casings, and outlet works, and will have full control of all water passing the dam for any and all purposes. The dam and reservoir will be operated and used: First, for river regulation, improvement of navigation, and flood control; second, for irrigation and domestic uses and satisfaction of present perfected rights in pursuance of Article VIII of the Colorado River compact; and, third, for power.

INSTALLATION OF MACHINERY

(8) The machinery and equipment for the generation of power will be provided and installed and owned by the United States. The City and the Company shall each notify the Secretary of the Interior, in writing, within two (2) months after receipt of written notice from him that diversion of the Colorado River has been effected for the construction of Boulder Canyon Dam, as to their respective generating requirements in order that the United States may be able to determine the type and initial and maximum ultimate capacity of the generating equipment to be installed in the power plant. Generating units

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and other equipment to be installed by the United States shall be in sufficient number and of sufficient capacity to generate the energy allocated to and taken by the lessees and the various allottees, served by each lessee as stated in Article fourteen (14) hereof, upon the load factors stated by the respective allottees with proper allowance for the combined load factors of all allottees served by each lessee. Each lessee shall give notice to the Secretary of the date at which it requires its generating equipment to be ready for operation, such notice to be given at least three years before said date. If a lesser number of generating units is initially installed, the United States will furnish and install, at a later date or from time to time on like terms, such additional units as with the original installation will generate the energy allocated. The City and the Company shall each cooperate with the United States in the preparation of designs for the power plant, and in the preparation of plans and specifications for the machinery and equipment to be installed in connection therewith and required by each respectively.

Each allottee (including lessees) shall have opportunity to be heard by the Secretary or his representatives upon the design, capacity and cost of machinery before contracts therefor are let.

COMPENSATION FOR USE OF MACHINERY

(9) (a) Compensation for the use, for the periods of lease thereof, of machinery and equipment furnished and installed by the United States, for each lessee respectively, for the generation of electrical energy, equal to the cost thereof, including interest charges at the rate of four per centum (4%) per annum, compounded annually from the date of advances to the Colorado River Dam Fund for the purchase of such equipment and machinery to June first of the year next preceding the year when the initial installment becomes due under this article, shall be paid to the United States by the lessees, severally, in ten (10) equal annual installments, so as to amortize the total cost (including interest as fixed above), and interest thereafter upon such total cost at the rate of four per centum (4%) per annum. The first installment payable by each lessee shall be due on June first next following the date the machinery leased by such lessee is ready for operation and water is available therefor, as announced by the Secretary, and the subsequent nine installments shall be paid. on June first of each year thereafter.

(b) No charge shall be made against either lessee on account of cost of, or as compensation for the use of, machinery required to be installed in consequence of execution of a contract for electrical energy by a State pursuant to Article fourteen (14) hereof, unless such machinery is to be used partially for the benefit of such lessee. In such event the charge made by the United States for compensation for the use thereof shall be adjusted between the State and such lessee as they may agree or if they fail to agree then by the Secretary.

LEASE OF POWER PLANT

(10) (a) The United States hereby leases to the City for fifty (50) years from the date at which energy is ready for delivery to the City, as announced by the Secretary, in accordance with Article eleven (11) hereof, such power plant units and corresponding plant facilities and incidental structures as may be necessary to generate the energy allocated to it and energy for those allottees for whom the City is designated the generating agency, together with the right to generate such electrical energy.

(b) The United States hereby leases to the Company such power plant units and corresponding plant facilities and incidental structures as may be necessary to generate the energy allocated to it and energy for those allottees for whom the Company is designated the generating agency, together with the right to generate such electrical energy, for a period beginning with the date at which the first of such power plant units is ready for operation and water is available therefor as announced by the Secretary, and ending at a time fifty (50) years from the date at which energy is ready for delivery to the City as provided in Article eleven (11) (a) hereof.

(c) The machinery and equipment under lease to either lessee shall be operated and maintained by such lessee without interference from or control by the other lessee, but subject nevertheless to the supervisory authority of the Secretary or his representative, under the terms of the lease.

(d) Subject to conditions hereinafter stated, the designation of generating agencies shall be as follows:

Generation of energy allocated to and used by the States of Nevada and Arizona shall be effected by the City.

Generation of energy allocated to the Municipalities, including those contracting under the provisions of the last paragraph of Article fourteen (14), shall be effected by the City.

Generation of energy allocated to the District shall be effected by the City. Generation of energy allocated to the Companies shall be effected by Southern California Edison Company Ltd.

Nevertheless, the foregoing provisions are subject to the following conditions:

(i) Should it prove of material economic advantage to the District to have a portion of its energy generated as off-peak energy, the City, after generating energy for the District to the full extent of the generating capacity which has been installed at the request of the District, with allowance for the contemplated margin of reserve capacity, shall also generate such additional energy as may be needed by the District and as can be generated off-peak with other generating capacity leased to and being operated by the City at such times as such use does not conflict with the needs of the City and other allottees for whom the City is generating energy. The District will pay for the off-peak use of such other generating capacity together with an allowance for a fair proportion of the operation and maintenance expenses at rates to be agreed upon between the District and the City, and if they are unable to agree, to be determined by the Secretary.