(1) THIS CONTRACT, made this twenty-fourth day of September, nineteen hundred thirty-one, between the CITY OF LOS ANGELES, a municipal corpora

tion, and Department of Water and PowER OF THE CITY OF LOS ANGELES, acting for this purpose by its Board of Water and Power Commissioners, hereinafter styled the City, and the CITY OF PASADENA, hereinafter styled the Municipality:

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 of the Interior of the United States 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 ecnnomic 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 of the Interior has determined upon Black Canyon as the site of the aforesaid dam, hereinafter styled the Hoover Dam, and has determined that the provision for revenues made by 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 Hover Dam and apurtenant 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 United States has entered into an agreement with the City of date April 26, 1930, and supplemental agreements of date May 28, 1930, and September 23, 1931, respectively, for the lease and the operation and maintenance of a government-built power plant to be constructed at Hoover Dam, together with the right and obligation on the part of the City, except as in said agreement otherwise provided, to act as the generating and transmission agency in the generation and transmission of all energy contracted for by the Municipality and other municipalities referred to in said agreement; and

(5) WHEREAS, in said agreements the Secretary of the Interior reserved the authority to, and in consideration of the execution thereof was authorized by the City to contract with the Municipality for the furnishing of energy to the Municipality at transmission voltage, in the amount contracted for by the

Municipality, and in accordance therewith the Secretary of the Interior has caused to be prepared and to be submitted to said Municipality for execution, a contract providing among other things for the purchase of electrical energy to be generated at the power plant to be provided for by the Government, and operated by the City as the generating agency in accordance with the provisions of the agreement and supplemental agreements heretofore referred to in Section (4) hereof; and

(6) WHEREAS, the parties hereto are desirous of entering into this agreement for the generation and transmission of the energy contracted for by the Municipality to be generated at said Government-built power plant;

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

GENERATION

(7) Subject to all of the covenants, terms and conditions set forth in the agreement dated April 26, 1930, and the suplemental agreements dated May 28, 1930, and September 23, 1931, respectively, hereinbefore referred to in Section (4) hereof (copies of which are attached hereto, marked Exhibit "A," and by this reference made a part hereof), the City will assume the operation of that portion of the power plant set apart to it under said agreement and supplemental agreements, and will generate the energy contracted for by the Municipality in accordance with the provisions of said agreement and supplemental agreements; and the Municipality hereby agrees to pay to the United States, in the manner and in accordance with the terms and conditions of said agreement and supplemental agreements for credit of the City, the cost incurred by the City in generating energy for the Municipality; and it is agreed that the term "cost" as used with reference to generating energy for the Municipality shall include a proper proportionate allowance for amortization of the amounts for which the City is obligated to the United States on account of the use of machinery and equipment, together with a proper proportionate share of the interest on said amounts which the City is obligated to pay the United States, and interest on the City's prepayments of portions thereof, if any, it being understood that said proper proportionate allowance for amortization shall be paid by the Municipality in ten (10) equal annual installments in a similar manner and at such dates as the City is obligated to make payments for the same by the terms of its agreement and supplemental agreements with the United States; a proper proportionate part of any annuity set-up in accordance with the regulations of the Secretary of the Interior, and any additional expenditures made by the City with the approval of the Secretary for the purpose of meeting the obligation of the City to make replacements; and a proper proportionate part of the actual outlay of the City for operating such machinery and equipment and keeping the same in repair, including reasonable overhead

charges. The extent of the allowance for the several items and the system of accounting therefor shall be prescribed by the Secretary under uniform regulations to be promulgated by him in accordance with the Boulder Canyon Project Act.

TRANSMISSION

(8) The City, pursuant to its agreements hereinbefore referred to, will transmit over its main transmission line constructed for carrying Boulder Canyon power all energy so contracted for by the Municipality, and the Municipality will compensate the City therefor on the basis of its reasonable share of the cost of construction, operation and maintenance of such lines as hereinafter provided.

TRANSMISSION LINE DEFINED

(9) The expression "transmission line" as used herein, shall be understood to mean the main transmission line of the City, consisting of two transmission circuits, constructed to transmit energy from the Hoover Dam to the central receiving station of the City located within the City of Los Angeles, including supporing structures and transmission circuits, the necessary switching stations and equipment, the central receiving station together with stepdown transformers, synchronous condensers and other central receiving station equipment, and the necessary standby and regulating plant of capacity of not less than onefourth and not more than one-third the combined reliable operating capacity of such transmission circuits, together with the necessary transmission line capacity connecting between said standby and regulating plant and said central receiving station.

TRANSMISSION LINE CONSTRUCTION COSTS

(10) The reasonable share of the construction costs of the transmission line, including interest during construction, which the Municipality shall pay to the City shall be determined at the time when energy is available as announced by the Secretary of the Interior, and shall be based on the ratio of the Municipality's designated transmission capacity requirement in kilowatts, as specified in the next succeeding section hereof, to the reliable operating capacity of the transmission line in kilowatts.

The determination of the reliable operating capacity of the transmission line, in conjunction with other more detailed matters, shall be based on the following:

1. The known facts respecting the various portions of the transmission line and the generating machinery installed at the Hoover Dam Power Plant.

2. The determination shall be made through the point by point method whether by computation or the use of a calculator board, using a factor of

80% as the relation of the reliable operating capacity to the maximum kilowatts that can be carried immediately prior and subsequent to a short circuit between two line conductors and ground at the most unfavorable location along the line; the duration of the short circuit being .2 of a second; the short circuit resulting in separating one section of one circuit through relaying; and the standby and regulating plant capacity idling without appreciable load.

3. The determination to be made on the basis of not to exceed 5% difference in voltage between the sending and receiving end of the transmission line, including the step-up and step-down transformers, with the receiving voltage being the lower of the two, and the total load supplied from this source of power including a 40% motor load.

4. The assumption that there will be an additional source of power in the form of steam plant capacity in Los Angeles, in addition to the said standby and regulating steam plant capacity, carrying a load equal to its rated capacity and equal to 25% of the reliable operating capacity of the transmission line, and connected with the said central receiving station through 132,000 volt tie lines and reactors.

The Municipality's aforesaid reasonable share of the construction costs of the transmission line shall be amortized over a 40-year period through paynents in equal monthly installments, including interest on the unpaid balance, from and after the date energy is available as announced by the Secretary of the Interior. Construction costs of the transmission line shall include all moneys and the actual cost to the City of all property used in the construction of said transmission line and appurtenant works which may be properly hargeable under any fixed capital account, including interest during construction and overhead account, in accordance with the uniform system of acounts for electrical corporations prescribed by the Railroad Commission of the State of California; provided, however, that if the actual cost of said property is not readily ascertainable, then the reasonable value of such property shall be deemed to be its actual cost. The City will bill the Municipality for each such monthly payment on, before, or about the fifth of the succeeding month, and the same shall become due an payable on the twentieth of such succeeding month. The Municipality, however, may, on giving the City six months' notice, pay off the unpaid balance of its reasonable share of the construction costs without any penalty being exacted by the City, except such penalties and additional financial burdens or losses which may accrue to the City by reason of such advance payment. Payments under the foregoing terms and conditions may likewise be made by the Municipality of any part of the unpaid balance of its reasonable share of the construction costs; provided, however, that each such payment shall be not less than twenty per cent (20%) of the Municipality's total share of said construction costs.