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 agreement 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of energy from the State, the State shall promptly give the United States notice of relinquishment of the energy withdrawn for such purchaser, unless within ninety (90) days thereafter the State shall enter into a contract or contracts with another purchaser or purchasers for the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and shall require such purchaser or purchasers to furnish bond in the same amount as though such energy had been withdrawn for its or their use and benefit.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.

DELIVERY OF WATER FOR GENERATION OF ELECTRICAL ENERGY

12. (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 State, 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 to the State energy in the manner required by this contract, in the quantity to which the State is entitled hereunder, and in accordance with the State'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 State 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 State, at such times and in such manner as to cause the least inconvenience to the State, 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 State, 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 will not be considered in determining the total hours of discontinuance in any year. The minimum annual payment specified in Article 16 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 12. In the event of shortage of electrical energy at Boulder Power Plant due to shortage of water, the available electrical energy shall be prorated among all allottees concerned, on the basis of their respective obligations to take and/or pay for firm energy in the year of operation in which the shortage occurs.

MEASUREMENT OF ENERGY

13. All electrical energy shall be measured at generator voltage. In all instances in which energy shall be delivered to the State over the facilities of others such energy shall be measured in combination with all energy delivered over such facilities. Suitable correction shall be made in the amounts of energy as measured at generator voltage to cover step-up transformer losses. Suitable metering equipment, satisfactory to the United States, for measuring the energy actually delivered to the State shall be provided, as agreed to by the owner or owners of the facilities over which such energy is transmitted and the State, and if necessary suitable correction shall be made to cover transmission and transformer losses to determine the amount of energy delivered to the State at transmission voltage at Boulder Power Plant. The United States' determination of said amount shall be conclusive. The electrical energy delivered hereunder during any period in which the meters furnished to measure such electrical energy fail to register shall, for billing purposes, be estimated from the best information available. The testing of meters and calibration of testing equip ment shall be in accordance with Article 19 of Exhibit 1. If said exhibit should be terminated, the same provisions shall apply as nearly as may be.

ENERGY RATES AND GENERATING CHARGES

14. The rates and charges to be paid by the State for electrical energy under this contract shall be in accordance with those specified in Exhibit 2.

BILLING AND PAYMENTS

15. (a) The State shall pay monthly for electrical energy and for the genera tion thereof in accordance with the energy rates and generating charges specified in Exhibit 2. The energy bill for each 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; provided, however, that the bill for energy for the month of May of each year shall not be less than the difference between the minimum annual energy payment, as provided in Article 16 hereof, and the sum of the amounts charged for firm energy during the preceding eleven months. The United States will submit bills to the State by the tenth of each

month immediately following the month during which the energy was gen-
erated, and payments shall be due on the first day of the month immediately
succeeding. If such charges (less proper and applicable credits) are not paid
when due an interest charge of one per centum (1%) of the amount unpaid
shall be added thereto, and thereafter an additional interest charge of one per
centum (1%) of the principal sum unpaid shall be added on the first day of
each succeeding calendar month until the amount due, including such interest,
is paid in full, but nothing contained in this article shall be construed as in
any manner abridging, limiting, or depriving the United States of any means of
enforcing any remedy either at law or in equity for the breach of any of the
provisions hereof which it would otherwise have.

(b) In accordance with the provisions of Section 4 (b) of the Adjustment
Act, in the event payments to the States of Arizona and Nevada, or either of
them, under Section 2 (c) of the Adjustment Act, shall be reduced by reason
of the collection of taxes mentioned in said section, adjustments shall be made,
from time to time, with each allottee which shall have paid any such taxes, by
credits or otherwise, for that proportion of the amount of such reductions which
the amount of the payments of such taxes by such allottee bears to the total
amount of such taxes collected.

MINIMUM ANNUAL PAYMENTS

16. The minimum quantity of firm energy which the State shall take and/or
pay for at firm energy rates in each year of operation under the terms of this
contract shall be the total kilowatt hours stated in notices of withdrawal which
are in effect as of June 1 of such year of operation as properly adjusted to ac-
count for the number of kilowatt hours for the remainder of such year of oper-
ation added or subtracted by notices of withdrawal or relinquishment becoming
effective during such year of operation. No period of less than one day will
be considered in making such adjustments. The minimum annual energy pay-
ment shall be reduced in case of interruptions or curtailment of delivery of wa-
ter as provided in Article 12 hereof.

DURATION OF CONTRACT

17. This contract shall remain in effect to and including May 31, 1987, un-
less sooner terminated as elsewhere herein provided. The State, if this contract
has not been terminated prior to said date, shall be entitled to a renewal hereof
upon such terms and conditions as may be authorized or required under the
then existing laws and regulations, unless the property of the State dependent for
its usefulness on a continuation of this contract be purchased or acquired, and
the State be compensated for damages to its property, used and useful in the
transmission and distribution of such electrical energy and not taken, resulting
from the termination of the supply.

NO ENERGY TO BE DELIVERED WITHOUT PAYMENT

18. Unless an extension of time for payment has been first obtained from
the Secretary, in writing, no energy shall be generated for, or delivered to, the
State if it shall be in arrears for more than twelve (12) months in the payment
of any charge due to the United States hereunder.

CONTRACT MAY BE TERMINATED IN CASE OF DEFAULT IN PAYMENT

19. If the State shall be in arrears for more than twelve (12) months in the
payment of any charge, including interest, due to the United States hereunder,
and shall not have obtained an extension of time from the Secretary for the
payment thereof, or, if such extension be obtained, has not made such payment
within the time as extended, then the Secretary shall have the right forthwith
upon written notice to the State to terminate this contract; provided, that the
State shall have the right at any time within four (4) years from date of the
first of the defaults for which the contract is terminated, to become reinstated
hereunder by payment to the United States of all arrearages including interest,
if any, together with any and all loss incurred by the United States by reason of
such termination and compensation to the allottees affected for property rendered
idle by such reinstatement. If the State and the allottees affected fail to agree
on such compensation, the disagreement shall be determined by arbitration as
provided in Article 25 of Exhibit 2. Nothing contained in this contract shall
relieve the State from the obligation to make the United States whole, for the
period of this contract, for all loss and/or damage occasioned by the failure of
the State to take and/or pay for energy as provided in this contract.

ACCESS TO BOOKS AND RECORDS

20. The Secretary or his duly authorized representatives shall have free access
at all reasonable times to the books and records of the State relating to the
transmission and disposal of electrical energy hereunder, with the right at any
time during office hours to make copies of or from the same.

USE OF PUBLIC AND RESERVED LANDS OF THE UNITED STATES

21. The use is authorized of such public and reserved lands of the United
States as may be necessary or convenient for the construction, operation and
maintenance of main transmission lines, to transmit electrical energy generated
at Boulder Dam, together with the use of such public and reserved lands of the
United States as may be designated by the Secretary, from time to time, for
camp sites, residences for employees, warehouses and other uses incident to the
operation and maintenance of such main transmission lines.