1. THIS CONTRACT, made this 29th day of May, 1941, 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 CITY OF LOS ANGELES, a municipal corporation organized and existing under the laws of the State of California, and its DEPARTMENT OF WATER AND POWER (said Department acting herein in the name of the City, but as principal in its own behalf as well as in behalf of the City; the term "City" as used in this contract being deemed to be both The City of Los Angeles and its Department of Water and Power);

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 and Southern California Edison Company Ltd. (hereinafter referred to as "Edison Company") 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 the 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, the State of Nevada, the cities of Burbank, Glendale and Pasadena (hereinafter referred to as "the Municipalities") and the City have made a joint request on the United States that the provisions of Article 9 (c)

hereof be incorporated as a part of each of the 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 CONTRACTS

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 City 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 City under this contract shall be controlled by the provisions of Exhibit 1 to the extent that such provisions are applicable to the City 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.

DELIVERY OF ENERGY

9. (a) The United States agrees to deliver at transmission voltage at Boulder Power Plant, and the City agrees to take and/or pay for, electrical energy 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 the allocation of energy contained in Exhibit 2.

(b) In addition, if the United States makes available to the City the necessary falling water and machinery and equipment, the City will take and/or pay for the following minimum quantities of energy in addition to the quantities of energy specified in Article 14 (a) hereof:

(i) During the year of operation ending May 31, 1942, five hundred ninety-five million kilowatt-hours (595,000,000 kwh);

(ii) During each year of operation thereafter, until the year of operation ending May 31, 1945, seven hundred million kilowatt-hours (700,000,000 kwh);

Provided, That the City shall not be obligated to take such additional energy in any one month in an amount greater than one-twelfth of the amount of such additional energy which it is obligated to take and/or pay for during that year of operation. The rate to be paid for the use of falling water for the generation of all such addi

tional energy shall be the rate for secondary energy in force at the time such energy is taken. The City shall be entitled, but not obligated, to take energy at the rate for secondary energy in addition to the quantities above stated, if available to it under the provisions of Exhibit 2.

The obligation stated in this Article 9 (b) to take and/or pay for additional energy shall terminate on May 31, 1945.

(c) From the effective date of this contract and until Section G-3 has been placed in operation, Section G-1 shall be used for the service of the City, the Municipalities, the United States, the State of Nevada and such resale consumers of energy allocated to but not taken by The Metropolitan Water District of Southern California as are now served by Section G-1.

After said Section G-1 has been placed in operation, said Section G-1 shall be used solely for the service of the City and the Municipalities and the United States, and said 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 by means of said Section G-3 up to but not exceeding a combined demand of 44,000 kilowatts, and such resale consumers 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 kw-hrs. 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 9 (c) 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 9 (c), generating charges for Sections G-1 and G-3 shall be considered as charges for a single section and shall be apportinned in accordance with the provisions of Article 18 of Exhibit 2.

DELIVERY OF WATER FOR GENERATION OF ELECTRICAL ENERGY

10. (a) Subject to:

(i) The statutory requirement that Boulder Dam and the reservoir created thereby shall be used: First, for river regulation, improvement of navigation, and flood control; second, for irrigation and domestic uses and satisfaction of perfected rights mentioned in Section 6 of the Project Act; and third, for power; and

(ii) The further statutory requirement that this contract is made upon the express condition and with the express covenant that the rights of the City, as a contractor for electrical energy, to the use of the waters of the Colorado River, or its tributaries, shall be subject to and controlled by the Colorado River Compact;

the United States will deliver water in the quantity, in the manner, and at the times necessary for the generation of the energy to which the City is entitled under this contract, in accordance with the provisions of Article 20 of Exhibit 1 hereof, entitled "Integration of Operations". If Exhibit 1 should be terminated as to the City prior to the termination of this contract, the United States will itself generate and deliver energy, subject to (i) and (ii) above, in the manner required by this contract, in the quantity to which the City is entitled hereunder, and in accordance with the City's load requirements.

(b) The United States reserves the right temporarily to discontinue or reduce the delivery of water for the generation of electrical energy at any time for the purpose of maintenance, repairs and/or replacements, or installation of equipment, at the Project, and for investigations and inspections necessary thereto; provided, however, that the United States shall, except in case of emergency, give to the City reasonable notice in advance of such temporary discontinuance or reduction, and that the United States shall make such inspections and perform such maintenance and repair work, after consultation with the City, at such times and in such manner, consistent with any program of integrated operations established under the provisions of Article 20 of Exhibit 1 hereof, as to cause the least inconvenience to the City, and that the United States shall prosecute such work with diligence, and, without unnecessary delay, resume delivery of water so discontinued or reduced.

(c) Should the delivery of water, for any reason or cause, other than any act or omission of the City, be discontinued or reduced below the amount required for the generation of firm energy in accordance with the provisions of this contract, the total number of hours of such discontinuance or reduction in any year shall be determined by taking the sum of the number of hours during which the delivery of water is totally discontinued, plus the product of the number of hours during which the delivery of water is partially reduced and the percentage of said partial reduction below the actual quantity of water required for generation of firm energy. Total or partial reductions in the delivery of water which do not reduce the power output below the amount required at the time for generation of firm energy under any program of integrated operations established under Article 20 of Exhibit 1 hereof, or, if Exhibit 1 be terminated as to the City, below the amount required at the time for the City's load requirements, will not be considered in determining the total hours of discontinuance in any year. The minimum annual payment specified in Article 14 hereof shall be reduced by the ratio that the total number of hours of such discontinuance bears to eight thousand seven hundred sixty (8,760).

(d) In no event shall any liability accrue against the United States, its officers, agents and/or employees, for any damage, direct or indirect, arising on account of drought, hostile diversion, Act of God, or the public enemy, or other similar cause; nevertheless interruptions in delivery of water occasioned by such causes shall be governed as provided in this Article 10. In the event of shortage

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