1. THIS CONTRACT, made this 23rd day of November, 1945, pursuant to the Act of Congress approved June 17, 1902 (32 Stat. 388), and acts amendatory thereof or supplementary 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 (hereinafter referred to as the "Project Act"), and to the Act of Congress approved July 19, 1940 (54 Stat. 774), designated the Boulder Canyon Project Adjustment Act (hereinafter referred to as the "Adjustment Act"), between THE United States oF AMERICA (hereinafter referred to as the "United States"), acting for this purpose by Harold L. Ickes, Secretary of the Interior (hereinafter referred to as the "Secretary”), and the ARIZONA POWER AUTHORITY, a body corporate and politic (hereinafter referred to as the "State"), acting in pursuance of an Act of the Legislature of the State of Arizona entitled "An Act creating and establishing the Power Authority of the State of Arizona as a body corporate and politic, describing its nature, scope, general and special jurisdiction and authority, powers, gov ernment, personnel and routine: providing for the construction of power projects, works and facilities; prescribing also functional and operating features; relating to surveys, plans, investigations and construction; providing for its fiscal powers, income, revenue, tolls, and charges for electricity; and making an appropriation, repealing conflicting statutes, making provisions separable, and declaring an emergency," approved March 27, 1944 (Chapter 32, Session Laws of Arizona, 1944, Second Special Session of the Sixteenth Legislature); WITNESSETH THAT:

EXPLANATORY RECITALS

2. WHEREAS, pursuant to the provisions of the Project Act, the United States entered into a certain contract designated as "Contract for Lease of Power Privilege," dated April 26, 1930, with severally, The City of Los Angeles and its Department of Water and Power and Southern California Edison Company Ltd. (hereinafter referred to as the "City" and "Edison Company," respectively), which contract was thereafter amended by two certain contracts between the same parties, dated May 28, 1930, and September 23, 1931, and was also modified by a certain contract between the United States and the City, dated July 6, 1938, and consented to by Edison Company, which Contract for Lease of Power Privilege, dated April 26, 1930, together with said amendatory and modifying contracts, are hereinafter collectively referred to as the "Lease;" and

3. WHEREAS, by the terms of the Adjustment Act it is provided, among other things, that the Secretary is authorized to negotiate for and enter into a contract for the termination of the existing Lease of the Boulder Power Plant, and that the Secretary, in consideration of such termination of the Lease, is authorized to designate the City and Edison Company as the agents of the United States. for the operation of the Boulder Power Plant; and

4. WHEREAS, under date of May 29, 1941, the United States and the City and Edison Company (hereinafter collectively referred to as "Operating Agents") have executed a contract designated "Contract for the Operation of Boulder Power Plant," a copy of which said contract is attached hereto, marked "Exhibit 1;" and

5. WHEREAS, under date of May 20, 1941, the Secretary approved and promulgated "General Regulations for Generation and Sale of Power in Accordance with the Boulder Canyon Project Adjustment Act," a copy of which is attached hereto, marked "Exhibit 2;" and

6. WHEREAS, at the joint request of the State of Nevada, the cities of Burbank, Glendale and Pasadena (hereinafter referred to as "the Municipalities”), and the City, provisions substantially similar, in so far as applicable to this contract, to the provisions of Article 11 (b) hereof were incorporated in contracts, under the Adjustment Act, for the sale of electrical energy by the United States to the State of Nevada, the Municipalities and the City, respectively;

7. Now, THEREFORE, in consideration of the provisions, covenants and conditions herein contained, the parties hereto agree as follows, to wit:

REGULATIONS AND AGENCY CONTRACT

8. (a) This contract is subject to all the terms and provisions of Exhibit 2 hereof which is hereby made a part hereof as fully and completely as though set out herein at length, and this contract is subject to such other rules and regulations as hereafter may be promulgated by the Secretary pursuant to law and to Article 27 of Exhibit 2 hereof.

(b) The State hereby consents that the United States shall, and the United States agrees that it shall, cause the energy agreed to be delivered hereunder to be generated and delivered in accordance with the provisions of Exhibit 1; and the parties hereto agree that the rights and obligations of the State under this contract shall be controlled by the provisions of Exhibit 1 to the extent that such provisions are applicable to the State as an allottee or contractor for electrical energy; provided, however, that in the event that such Exhibit 1 shall be terminated as to either or both of the Operating Agents therein named, the United States thereafter shall itself generate and deliver the energy agreed by the United States to be generated and delivered through the agent or agents as to which said Exhibit 1 shall have been terminated.

TERMS FOR WITHDRAWAL OF ENERGY

9. No notice of withdrawal of energy shall be given to the United States by the State unless and until the State shall have previously or simultaneously procured a purchaser or purchasers therefor and (1) such purchaser or purchasers shall have furnished an indemnity bond, by a corporation qualified under the laws of the State, payable to the State and the United States, jointly and severally, in an amount equal to the maximum obligation of such purchaser or purchasers for the energy withdrawn for its or their use and benefit for the period of time required by the State to effectively relinquish the energy withdrawn for such purchaser or purchasers, and conditioned for the full and faithful performance of the contract or other agreement of purchase, or (2) until

such purchaser or purchasers shall have furnished in lieu of such indemnity bond other collateral satisfactory to the State and to the United States.

WHEN ENERGY REQUIRED TO BE RELINQUISHED

10. In event of termination or other abrogation of any contract or agree. ment of purchase of energy from the State, the State shall promptly give the United States notice of relinquishment of the energy withdrawn for such purchaser, unless within ninety (90) days thereafter the State shall enter into a contract or contracts with another purchaser or purchasers for the energy covered by such terminated or abrogated contract, and shall require such purchaser or purchasers to furnish bond in the same amount as though such energy had been withdrawn for its or their use and benefit.

DELIVERY OF ENERGY

11. (a) The United States agrees to deliver at transmission voltage at Boulder Power Plant, and the State agrees to take and/or pay for, electrical energy for use by it (directly or under contract) in accordance with the provisions of Article 8 hereof, for the period from the effective date of this contract to May 31, 1987, inclusive, in accordance with notices of withdrawal of energy and notices of relinquishment of energy given as provided in Exhibit 2.

(b) Section G-1 shall be used solely for the service of the City and the Municipalities and the United States, and Section G-3 shall be used solely for the service of the City and the United States, except that the States of Nevada and Arizona shall be entitled to generation of electrical energy of said Section G-3 up to but not exceeding a combined demand of 44,000 kilowatts, and such resale consumers of energy allocated to but not taken by The Metropolitan Water District of Southern California as were served by said Section G-1 on May 29, 1941, shall be entitled to generation of electrical energy by means of said Section G-3 up to but not exceeding a combined demand of 6,000 kilowatts plus such portion of said 44,000 kilowatts as is not in use or required by the States; provided, that such resale consumers shall not be entitled to take in excess of 70,000,000 kilowatt hours of electrical energy in any one year of operation.

The fact that energy generated by means of Section G-3 may in fact reach any of said Municipalities, shall not be deemed to be in violation of the foregoing provisions.

The foregoing provisions of this Article 11 (b) relate only to operating conditions, and are not to be construed as an agreement, contemplated by Article 18 of Exhibit 2, relating to or affecting in any way the apportionment of generating charges. Notwithstanding the operating conditions provided for in this Article 11 (b), generating charges for Sections G-1 and G-3 shall be considered as charges for a single section and shall be apportioned in accordance with the provisions of Article 18 of Exhibit 2.