(1) THIS SUPPLEMENTAL CONTRACT, made this 1st day of November, nineteen hundred thirty-four, 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, 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 styled the Secretary, and THE CITY OF GLENDALE, a municipal corporation organized and existing under and by virtue of the laws of the State of California, hereinafter styled the Municipality: WITNESSETH: EXPLANATORY RECITALS (2) WHEREAS, under date of November 12, 1931, the parties hereto entered into a contract whereby, among other things, the United States agreed to cause electric energy to be delivered to the Municipality at Boulder Dam, under and in pursuance of and subject to the provisions of a certain lease therein referred to, for the period therein specified, in accordance with an allocation therein set forth; and (3) WHEREAS, in said contract dated November 12, 1931, no provision was made for an absorption period for the Municipality similar to that provided for the lessees in the aforesaid lease, and it appears just and equitable that provision for such absorption period should be made; and (4) WHEREAS, The City of Los Angeles by the said lease and by contracts with the Municipality, and with other municipalities, has assumed certain obligations with reference to electric energy allocated to the Municipality, and other municipalities, and not contracted for by them, or contracted for and not used by them, and it is therefore to the interest of said City that the said contract between the United States and the Municipality, and similar contracts between the United States and other municipalities, should be modified as hereinafter provided, and the United States and said City of Los Angeles have entered into a certain contract dated October 22, 1934, by the terms of which the United States, upon considerations therein expressed, has agreed to modify its said contract with the Municipality dated November 12, 1931, and similar contracts between the United States and other municipalities, in the manner hereinafter provided, a copy of which said contract between the United States and said City of Los Angeles, dated October 22, 1934, is hereto attached and made a part hereof; and marked "Exhibit No. 1"; and (5) WHEREAS, The City of Los Angeles has performed the agreements on its part to be performed as set forth in said contract dated October 22, 1934, by conveying to the United States in accordance with the terms of said agreement all its right, title and interest in and to the lands therein described; (6) NOW, THEREFORE, in consideration of the mutual covenants contained herein, and in said contract between the United States and The City of Los Angeles dated October 22, 1934, the parties hereto mutually covenant and agree as follows, to wit: (7) Article twelve (12) of the aforesaid contract of November 12, 1931, is hereby amended so as to read as follows, to wit: CHARGES TO BE PAID THE UNITED STATES (12) In consideration of this contract, the Municipality agrees: (1) To pay the United States for the use of falling water for generation of energy for the Municipality as follows: (a) One and sixty-three hundredths mills ($0.00163) per kilowatt-hour (delivered at transmission voltage) for all firm energy contracted for by it; (b) One-half mill ($0.0005) per kilowatt-hour (delivered at transmission voltage) for energy which under the terms hereof is to be paid for at the rate for secondary energy; (2) To pay the United States, for credit to the City, on account of use of the leased equipment as herein elsewhere provided; and (3) To pay the United States, for credit to the City, on account of maintenance of said equipment in first class operating condition, including repairs to and replacements of machinery; provided, however, that, if the expenditures for replacements shall exceed at any time the sum accumulated by the City as a depreciation reserve in accordance with rules and regulations prescribed by the Secretary, pursuant to the Boulder Canyon project act, less all amounts previously withdrawn for replacements, then the rates aforesaid shall be readjusted as hereinafter provided so as to reimburse the City for such excess expenditures within the term of this contract. At the end of fifteen (15) years from the date of execution of said Exhibit "A" (April 26, 1930), and every ten (10) years thereafter, the above rates of payment for energy shall be readjusted upon demand of either party hereto, either upward or downward as to price, as the Secretary may find to be justified by competitive conditions at distributing points or competitive centers. The rate for falling water for generation of firm energy, which shall be uniform for both lessees and the Municipality, provided for by any such readjustment shall be arrived at by deducting from the price of electrical energy justified by competitive conditions at distributing points or competitive centers: (1) All fixed and operating costs of transmission to such points; (2) all fixed and operating costs of such portion of the power plant machinery as is to be operated and maintained by the several lessees, including the cost of repairs and replacements, together with such readjustments as to replacements is provided for in paragraph 3 in this Article; it being understood that such readjusted rates shall under no circumstances exceed the value of said energy, based upon competitive conditions at distributing points or competitive centers. The charges agreed to be paid by the Municipality to the United States, for credit to the City as generaing agency, in his Article, shall be such proportion of the cost incurred by such generating agency as the Municipality and the City may agree, or failing such agreement, as the Secretary may determine. The term "cost," as used with reference to generating energy, shall include a proper proportionate allowance for amortization of the cost of machinery and equipment as provided in Paragraph a of Article 9 of Exhibit A hereof, and interest on the prepayments thereof made by the City, a proper proportionate part of any annuity set-up in accordance with regulations of the Secretary provided for in Subdivision 3 of Article Sixteen (16) of Exhibit A hereof, 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 in the event of disagreement between the City and Municipality, and the system of accounting therefor, shall be prescribed by the Secretary under uniform regulations as required by Section 6 of the Boulder Canyon project act. (8) Article thirteen (13) of the aforesaid contract of November 12, 1931, is hereby amended so as to read as follows, to wit: MONTHLY PAYMENTS AND PENALTIES (13) The Municipality shall pay monthly for energy in accordance with the rates established or provided for herein, and for the generation thereof as provided in Article twelve (12). When energy taken in any month is not in excess of one-twelfth (1/12) of the minimum annual obligation, bill for such month shall be computed at the rate for firm energy in effect when such energy was taken on the basis of the actual amount of energy used during such month. All energy used during any month in excess of one-twelfth (1/12) of the minimum annual obligation shall be paid for at the rate for secondary energy in effect when such energy was taken; provided, however, that the secondary rate shall not apply to any energy taken during any month unless and until an amount of energy equivalent to one-twelfth (1/12) of the minimum annual obligation has been taken for all months beginning with the month of June immediately preceding; provided, however, that the bill for the month of May shall not be less than the difference between the minimum annual payment, as provided in Article fourteen (14) hereof, and the sum of the amounts charged for firm energy during the preceding eleven months. The United States will submit bills to the Municipality by the fifth of each month immediately following the month during which the energy is generated, and payments shall be due on the first day of the month immediately succeeding. If such charges are not paid when due, a penalty of one per centum (1%) of the amount unpaid shall be added thereto, and thereafter an additional penalty of one per centum (1%) of the amount unpaid shall be added on the first day of each calendar month thereafter during such delinquency. The monthly charge for generation of such energy to be credited to the generating agency shall be in such amount as may be determined in accordance with Article twelve (12) hereof. (9) Article fourteen (14) of the aforesaid contract of November 12, 1931, is hereby amended so as to read as follows, to wit: MINIMUM ANNUAL PAYMENT (14) The minimum quantity of firm energy which the Municipality shall take and/ or pay for each year (June 1st to May 31st, inclusive), under the terms of this contract, and after the same is ready for delivery to the Municipality, as provided in subdivision (a) of Article eleven (11) hereof, shall be 1.8867 per centum of all firm energy as defined in Article nine (9) hereof, available in said year. The total payments made by the Municipality for firm energy available in any year (June 1st to May 31st, inclusive), whether any energy is taken by it, or not, exclusive of its payments for credit to the generating agency, shall be not less than the number of kilowatt-hours of firm energy which the Municipality is obligated to take and/or pay for during said year, multiplied by one and sixty-three hundredths mills ($0.00163), or multiplied by the adjusted rate of payment for firm energy in case the said rate is adjusted as provided in Article twelve (12) hereof. For a fractional year at the beginning or end of the contract period, the minimum annual payment for firm energy shall be proportionately adjusted in the ratio that the number of days water is available for generation of energy in such fractional year bears to three hundred sixty-five (365). Provided, however, that in order to afford a reasonable time for the Municipality to absorb the energy contracted for, the minimum annual payments by it for the first three (3) years after energy is ready for delivery to it, as announced by the Secretary, as herein elsewhere provided, shall be as follows, in percentages of the ultimate annual obligation, to take and/or pay for PROVIDED, FURTHER, that the minimum annual payment shall be reduced in case of interruptions or curtailment of delivery of water as provided in Article seventeen (17) hereof. It is understood, however, that if the requirements of the Municipality shall be greater than the percentages so provided for, the Municipality shall take energy under this contract up to the full amount of its requirements within its allocation (excepting such electricity as may necessarily be generated at steam standby plants in order to keep the same operating as standby plants). During said absorption period, if the quantity of energy taken in any one year (June 1st to May 31st, inclusive), is in excess of the above percentages of the ultimate obligation during such year to take and/or pay for firm energy, such excess shall be paid for at the rate for secondary energy. The total payments made by the Municipality for generation of such energy, to be credited to the generating agency, shall be determined in accordance with Article (12) hereof. FORMER CONTRACT MODIFIED ONLY AS EXPRESSLY AMENDED HEREIN (10) Except as expressly amended hereby the aforesaid contract between The United States of America and The City of Glendale, of date November 12, 1931, shall be and remain in full force and effect, but the execution hereof is without prejudice to the right of the Municipality to present to the Secretary of the Interior in the future application for the extension or modification of the absorption period provided hereby. MEMBER OF CONGRESS CLAUSE (11) No Member of or Delegate to Congress or Resident Commissioner shall be admitted to any share or part of this contract, or to any benefit that may arise therefrom. Nothing, however, herein contained shall be construed to extend to this contract if made with a corporation for its general benefit. IN WITNESS WHEREOF, the parties herto have caused this contract to be executed the day and year first above written. [SEAL] THE UNITED STATES OF AMERICA, By HAROLD L. ICKES, Secretary of the Interior. THE CITY OF GLENDALE, |