[ITEM 57]

BOULDER CANYON PROJECT

CONTRACT FOR RESALE OF ELECTRICAL ENERGY TO BE DEVELOPED AT BOULDER DAM POWER PLANT

1. THIS CONTRACT, made this 7th day of January, nineteen hundred thirtyeight, 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 Oscar L. Chapman, Assistant Secretary of the Interior, hereinafter styled the Secretary, and CITIZENS UTILITIES COMPANY, a corporation organized and existing under and by virtue of the laws of the State of Delaware, hereinafter referred to as the Company:

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 Dam, and has determined that the provisions for revenues made by contracts in accordance with the provisions of the Boulder Canyon project act, are adequate in his judgment to insure payment of all expenses of operation and maintenance of the Boulder 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 two (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 a contract of date April 26, 1930, with The City of Los Angeles (hereinafter styled the City) and Southern California Edison Company Ltd., severally (both hereinafter referred to as the lessees) for the lease, and for the operation and maintenance of a government-built power plant to be constructed at Boulder Dam as aforesaid, together with the right to generate electrical energy as therein stated,

a copy of which said lease-contract, as amended by supplemental contracts of dates May 28, 1930, and September 23, 1931, is attached to Exhibit 1 hereof, marked Exhibit "A"; and

5. WHEREAS, in said lease-contract of April 26, 1930, as amended, the Secretary has reserved the authority to, and in consideration of the execution thereof is authorized by each of the aforesaid lessees, severally, to contract with the other allottees named in the allocation set forth therein for the furnishing of energy to such allottees at transmission voltage in accordance with the allocation to each allottee, and the Secretary is therein granted by each lessee, severally, the power in accordance with the provisions thereof to enforce as against each lessee the rights to be acquired by such other allottees by contracts to be entered into with the United States, and in said lease-contract the City has agreed, among other things, to generate energy allocated to The Metropolitan Water District of Southern California, hereinafter referred to as the District; and

6. WHEREAS, the United States has entered into a contract with the District of date April 26, 1930, for the purchase by and delivery to the District under the terms and conditions therein stated of certain electrical energy to be developed at Boulder Dam power plant, a copy of which said contract as amended by supplemental contract of date May 31, 1930, is attached hereto, marked Exhibit 1, and by this reference made a part hereof as fully and completely as though set out herein at length; and

7. WHEREAS, the District will be unable for a period of years from and after the date when it is required to take and/or pay for firm energy under the provisions of said Exhibit 1 hereof to use a portion of such energy for the only purpose for which energy has been allocated to and purchased by the District, namely, for pumping water into and in its aqueduct, and has requested the Secretary to dispose of such excess energy pursuant to and in accordance with the provisions of Article seven (7) of said Exhibit 1 until required by the District; and each lessee under the said lease, marked Exhibit A attached to Exhibit 1 hereof, has been given the opportunity, as provided in said Article seven (7) to contract for said unused energy upon the terms and conditions herein stated and has declined to so contract; and

8. WHEREAS, the Company is a public utility engaged in the generation, distribution and sale of electrical energy in the State of Arizona, and has made application to the Secretary for the resale to it for the term of this contract of a part of the firm energy contracted for by the District, but which will not be required, temporarily, for pumping water into and in the aforesaid aqueduct;

9. Now, THEREFORE, in consideration of the mutual covenants herein contained the parties hereto agree as follows, to wit:

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SALE OF ENERGY

10. The United States agrees, subject to all the terms and conditions of Exhibit 1 hereof, that of the firm energy to be developed at Boulder Dam power plant, and heretofore allocated to and contracted for by the District, it will cause to be delivered to the Company for a period beginning on the date when energy is first made available to the District in accordance with the provisions of said Exhibit 1, or eight calendar months after the date of execution hereof by the Secretary, whichever date shall be the later, and ending on and including December 31, 1954, so much firm energy as may be required by the Company for distribution to its customers, not, however, exceeding Fifty Million (50,000,000) kilowatt-hours annually (June 1st to May 31st, inclusive); provided that, upon six months' notice in writing to the Company by the Secretary, the said amount of Fifty Million (50,000,000) kilowatt-hours annually may be reduced to an amount not less than Twentyfive Million (25,000,000) kilowatt-hours annually (June 1st to May 31st, inclusive), and not less than an amount equal to that actually taken by the Company during the twelve months immediately preceding the date of such notice, whichever amount is the greater, subject however to the right on the part of the Company to elect, by written notice delivered to the Secretary not later than thirty days after the receipt of the six months' notice heretofore referred to, to fix said maximum amount at a figure in excess of Twenty-five Million (25,000,000) kilowatt-hours annually, but not exceeding Fifty Million (50,000,000) kilowatt-hours annually, effective as of the date of the election to exercise such option and to continue effective during the remaining terms of this contract. In the event that the maximum amount of energy agreed to be delivered hereunder shall be fixed as a result of such six months' notice and/or the exercise of the Company's option, as hereinbefore set out, at an amount exceeding Twenty-five Million (25,000,000) kilowatt-hours annually, the minimum annual payment specified in Article 15 shall be increased as of the effective date of said change, in the ratio that said amount so fixed shall bear to Twenty-five Million (25,000,000) kilowatt-hours annually.

DELIVERY OF ELECTRICAL ENERGY

11. Energy will be delivered to the Company in Arizona at a point to be designated by the Chief Engineer of the Bureau of Reclamation, at 66,000 volts in the form of three (3) phase alternating current at a frequency of sixty (60) cycles per second by means of the 10,000 kv-a. bank of transformers and the circuit used for delivering electrical energy to the State of Nevada. The Company at its sole cost and expense, and prior to the delivery of energy hereunder, shall furnish and install a high voltage automatic oil

circuit breaker and remote control equipment of a type and in manner satisfactory to the Chief Engineer of the Bureau of Reclamation, at the point where its transmission line connects to the circuit supplying energy to the State of Nevada. The United States reserves the right to install a separate and additional bank of transformers for the purpose of increasing the voltage of the circuit delivering electrical energy to the State of Nevada, to 132,000 volts. In the event such separate and additional bank of transformers be installed the Company may either continue to receive electrical energy at 66,000 volts by use of the 10,000 kv-a. bank of transformers theretofore used for delivering energy to it and to the State of Nevada, or the Company may at its option. elect thereafter to receive energy by means of said additional bank of transformers upon concluding appropriate arrangements therefor through the Chief Engineer of the Bureau of Reclamation.

CHARGES TO BE PAID THE UNITED STATES FOR CREDIT TO THE DISTRICT

12. (a) In consideration of this contract, the Company agrees to pay the United States, for credit to the District, for the use of falling water for generation of energy for the Company at the rate of one and sixty-three hundredths mills ($0.00163) per kilowatt-hour (delivered at transmission voltage) and such proportion of the cost incurred by the District for the generation of energy under the provisions of Exhibit 1 hereof as the Company and the District may agree.

(b) The term "cost," as used with reference to generating energy, shall include an equitable allowance for amortization of the cost of machinery and equipment charged to the District under the provisions of Exhibit 1 hereof, a proper proportionate part of any annuity required to be paid by the District. under the provisions of Exhibit 1 hereof, for the purpose of making replacements of machinery and equipment, and a proper proportionate part of charges payable by the District under Article twelve of Exhibit 1 hereof for operating such machinery and equipment and keeping the same in repair. The extent of the allowance for the several items in the event of disagreement between the Company and the District, shall be prescribed by the Secretary.

(c) At the end of fifteen (15) years from the date of execution of Exhibit 1 hereof, the above rate of payment for energy may be readjusted, either upward or downward as to price, as the Secretary may find to be justified by competitive conditions at distribution points or competitive centers; provided that such rate for falling water shall not be fixed at any different rate than that charged the District under the provisions of Exhibit 1 hereof for firm energy.

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