EXHIBIT 10.05-01

 

AMENDMENT NO. 14 TO THE

ARIZONA NUCLEAR POWER PROJECT

PARTICIPATION AGREEMENT

 

1.   PARTIES:

 

The Parties to this Amendment No. 14 to the Arizona Nuclear Power Project
Participation Agreement, hereinafter referred to as “Amendment No. 14,” are:
ARIZONA PUBLIC SERVICE COMPANY, a corporation organized and existing under and
by virtue of the laws of the State of Arizona, hereinafter referred to as
“Arizona”; SALT RIVER PROJECT AGRICULTURAL IMPROVEMENT AND POWER DISTRICT, an
agricultural improvement district organized and existing under and by virtue of
the laws of the State of Arizona, hereinafter referred to as “Salt River
Project”; SOUTHERN CALIFORNIA EDISON COMPANY, a corporation organized and
existing under and by virtue of the laws of the State of California, hereinafter
referred to as “Edison”; PUBLIC SERVICE COMPANY OF NEW MEXICO, a corporation
organized and existing under and by virtue of the laws of the State of New
Mexico, hereinafter referred to as “PNM”; EL PASO ELECTRIC COMPANY, a
corporation organized and existing under and by virtue of the laws of the State
of Texas, hereinafter referred to as “El Paso”; SOUTHERN CALIFORNIA PUBLIC POWER
AUTHORITY, a joint powers agency organized and existing under and by virtue of
the laws of the State of California, doing business in the State of Arizona as
SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY ASSOCIATION, hereinafter referred to
as “SCPPA”; and DEPARTMENT OF WATER AND POWER OF THE CITY OF LOS ANGELES, a
municipal corporation organized and existing under and by virtue of the laws of
the State of California, hereinafter referred to as “LADWP,” hereinafter
individually referred to as “Party” and collectively as “Parties.”

 

2.   RECITALS:

 

  2.1   Arizona, Salt River Project, Edison, PNM, El Paso, SCPPA and LADWP are
parties to a certain agreement entitled Arizona Nuclear Power Project
Participation Agreement, dated as of August 23, 1973, as amended by Amendment
No. 1, dated as of January 1, 1974, Amendment No. 2, dated as of August 28,
1975, Amendment No. 3, dated as of July 22, 1976, Amendment No. 4, dated as of
December 15, 1977, Amendment No. 5, dated as of December 5, 1979, Amendment No.
6, effective as of October 16, 1981, Amendment No. 7, effective as of April 1,
1982, Amendment No. 8, executed as of September 12, 1983, Amendment No. 9,
executed as of June 12, 1984, Amendment No. 10, executed as of November 21,
1985, Amendment No. 11, effective January 10, 1987, Amendment No. 12, effective
August 5, 1988, and Amendment No. 13, effective June 15, 1991, hereinafter, as
so amended, referred to as the “Participation Agreement.”

 

  2.2   The Parties wish to establish procedures through this Amendment No. 14
for allocating the costs associated with Postretirement Benefits other than
Pensions in accordance with the Statement of Financial Accounting Standards
(SFAS) 106 adopted by the Financial Accounting Standards Board.

 

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3.   AGREEMENT:

 

For and in consideration of the premises and the mutual obligations of and
undertakings by the Parties as hereinafter provided in this Amendment No. 14 to
the Participation Agreement, the Parties agree as follows:

 

4.   EFFECTIVE DATE:

 

This Amendment No. 14 shall become effective after it has been executed by all
Parties. The procedures for allocating costs that are associated with this
Amendment shall be applied retroactively to January 1, 1993.

 

5.   DEFINED TERMS:

 

  5.1   The italicized words and phrases used in this Amendment No. 14 shall
have meanings ascribed to them in Section 3 of the Participation Agreement as
amended by this Amendment No. 14.

 

  5.2   All references to a “Section” or “Sections” in this Amendment No. 14
shall mean a Section or Sections of the Participation Agreement unless the text
expressly states otherwise.

 

6.   AMENDMENTS TO THE PARTICIPATION AGREEMENT MADE BY THIS AMENDMENT NO. 14:

 

  6.1   Section 3 – DEFINITIONS is amended by:

 

  6.1.1   The addition of new Section 3.44A, which reads in its entirety as
follows:

 

  3.44A     Postretirement Benefits: As defined in SFAS 106, all forms of
benefits, other than retirement income, provided by the Operating Agent to its
retirees.

 

  6.1.2   The addition of a new Section 3.51B, which reads in its entirety as
follows:

 

  3.51B     Return on Assets: The earnings on the investments of the plan assets
intended for the post retirement health and welfare benefits trusts.

 

  6.1.3   The renumbering of Section 3.52A to 3.52B and the addition of a new
Section 3.52A which reads in its entirety as follows:

 

  3.52A     SFAS: Statement of Financial Accounting Standards of the Financial
Accounting Standards Board.

 

  6.1.4   The renumbering of Sections 3.54K and L to 3.54L and 3.54M,
respectively, and the addition of a new Section 3.54K, which reads in its
entirety as follows:

 

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  3.54K     Transition Obligation: The unrecognized amount of the (i)
accumulated Postretirement Benefits obligation in excess of (ii) the fair value
of plan assets plus any recognized accrued post-retirement benefit cost or less
any recognized prepaid post-retirement benefit cost as of the date of adoption
of SFAS 106.

 

  6.2   Appendix E – Cost of Operating Work and Capital Improvements, is amended
by the deletion of Sections E.1.6, E.5.1 and E.5.2 and the substitution in lieu
thereof of new Sections E.1.6, E.5.1, and E.5.2, which reads in their entirety
as follows:

 

  E.1.6   The portion of the Operating Agent’s employee pensions and benefits
expenses as defined under FPC Account 926 (including the Transition Obligation
and related interest and the Return on Assets), which is the sum of the amounts
determined by (1) applying the Benefits Ratio computed in accordance with
Sections E.5.1 and E.5.2 hereof to the total labor charges of ANPP operating and
maintenance expenses, including without limitation the labor portion of expenses
chargeable to ANPP pursuant to Sections E.1.1, E.1.2, E.1.3 and E.1.4 hereof,
(2) the Transition Obligation and related interest pursuant to Sections E.7A.1,
E.7A.2 and E.7A.3 and (3) the Return on Assets pursuant to Sections E.7B.1 and
E.7B.2.

 

  E.5.1     The Benefits Ratio set forth below shall be applied to the labor
expense portion of the ANPP operations and maintenance expenses, to the
Operating Agent’s direct labor charges incurred in effecting Capital
Improvements, and to the labor expenses included in the Operating Agent’s
supervisory and administrative and general expense accounts. Estimated and
actual Benefits Ratios shall be determined, adjusted and used in the manner set
forth in Section E.10 hereof.

 

Benefits Ratio =

  

B

    

L

 

Where:

 

B = The Operating Agent’s total system employee pensions and benefits (as
defined in FPC Account 926, excluding the Transition Obligation and related
interest and the Return on Assets) including Payroll Taxes and worker’s
compensation expense on labor charged to employee pensions and benefits. The
Transition Obligation and related interest will be billed separately and the
expected Return on Assets will be credited separately to the Participants.

 

L = The Operating Agent’s total labor distributed, including accruals less labor
charged to pensions and benefits, less labor charged to injuries and damages.

 

  E.5.2       The following example sets forth the method to be employed by the
Operating Agent to determine the Benefits Ratio:

 

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EXAMPLE COMPUTATION

OF BENEFITS RATIO

 

(Based on Operating Agent’s 1997 Expenses)

 

Pensions and Benefits

  

Labor

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Total

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Employee Pensions and Benefits

  

$

2,542,461

 

  

$

60,804,375

 

Payroll Taxes on Labor at Total Labor Rate

  

 

7.067

%

  

 

179,676

 

Compensation Insurance at Total Labor Rate

  

 

0.502

%

  

 

12,775

 

Less the Transition Obligation related to Postretirement Benefits and Interest
on the Transition Obligation, billed outside of the Benefits Ratio

           

 

17,141,515

 

Less expected Return on Assets

           

 

<8,706,403

>

             

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Total Employee Pensions and Benefits net of the Transition Obligation and
Related Interest and Expected Return on Assets

           

$

52,561,714

 

             

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Labor Base

                 

Labor charged to operation and maintenance, construction and miscellaneous
general ledger accounts

           

$

323,082,848

 

Less total labor charged to Pensions and Benefits

           

 

1,799,288

 

Less total labor charged to Injuries and Damages

           

 

399,809

 

             

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Total applicable labor

           

$

320,883,751

 

             

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Benefits Ratio: $52,561,714/$320,883,751

           

 

16.38

%

 

  6.3     Appendix E – Cost of Operating Work and Capital Improvements, is
amended by adding the new Sections E.7A, E.7B and E.7C which read in their
entirety as follows:

 

  E.7A   Transition Obligation

 

  E.7A.1   The Operating Agent’s Transition Obligation at January 1, 1993 is
$182,918,448 of which $43,000,000 is allocable to Palo Verde. Future changes in
corporate-wide benefit plan levels covered under SFAS 106

 

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that may affect the level of the Operating Agent’s Transition Obligation, shall
be applied to Palo Verde at the rate of 23.508%. Any such changes to the
Transition Obligation will be reflected in the year that the actuarial valuation
reports such changes.

 

  E.7A.2   Interest on the unamortized Transition Obligation balance at January
1 of each year will be calculated using the current year’s discount rate per the
current year’s actuarial valuation. Since the actuarial valuation is usually not
available until mid-year, an estimated rate, based on the prior year’s actuarial
valuation will be used until the current year’s actuarial valuation is
available. At that time, the interest related to the Transition Obligation will
be trued-up to reflect the current year’s valuation. In the event of removal of
one or more Generating Units from service prior to 2013, an actuarial study will
be completed to recalculate the remaining Transition Obligation pertaining to
Palo Verde on a stand-alone basis.

 

  E.7A.3   The Transition Obligation will be amortized over 20 years on a
straight line basis, starting January 1, 1993. The Operating Agent shall bill
the Transition Obligation and related interest for the year on a monthly basis
as set forth below:

 

TRANSITION OBLIGATION AND RELATED INTEREST

BILLED OUTSIDE OF THE BENEFITS LOAD

 

    

TOTAL COMPANY

--------------------------------------------------------------------------------

    

BILLED TO PALO VERDE

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Total Transition Obligation Fixed At 1-1-93 To Be Amortized Over 20 Years

  

$

182,918,448

 

  

$

43,000,000

 

One Year’s Amortization Of the Transition Obligation (“T.O.”)

  

 

9,145,922

 

  

 

2,150,000

 

Interest On The Unamortized Balance Of The T.O. At 1-1-93

  

 

15,090,772

 

  

 

3,547,500

 

    

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Total 1993 Transition Obligation & Interest

  

 

24,236,694

 

  

 

5,697,500

 

    

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Interest On The Unamortized Balance Of the T.O. At 1-1-93

                 

Unamortized Balance At 1-1-93

  

 

182,918,448

 

  

 

43,000,000

 

1993 Discount Rate

  

 

8.25

%

  

 

8.25

%

    

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Interest On Transition Obligation

  

 

15,090,772

 

  

 

3,547,500

 

    

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  E.7B   Return on Assets

 

  E.7B.1   The current year expected Return on Assets will be estimated annually
by the actuary. Any Return on Assets related to any trusts established for the
purpose of obtaining preferential tax treatment (i.e., union versus

 

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non-union), shall be allocated by the actuary to Palo Verde based on the ability
of Palo Verde to participate in such trust.

 

  E.7B.2   As soon as practical after the end of each calendar year, the actual
Return on Assets will be determined by the actuary and allocated to Palo Verde.
The actuary shall then calculate the allocation of total trust(s) assets at the
end of each calendar year to Palo Verde based on current year trust(s)
contributions, earnings and distributions. The allocation of trust assets to
Palo Verde will be the basis for the allocation of expected Return on Assets
annually by the actuary.

 

  E.7C   Funding of Postretirement Benefit Costs

 

  E.7C.1   All Postretirement Benefit costs, other than the expected Return on
Assets and the TransitionObligation and related interest, as defined in SFAS
106, are to be billed through the Benefits Ratio.

 

  E.7C.2   Postretirement Benefits that have been collected either through the
Benefits Load, or as Transition Obligation and related interest, as adjusted for
the Return on Assets, shall be funded by the Operating Agent in irrevocable
external trusts intended for postretirement health and welfare benefits. Funding
will occur within an administratively reasonable time period on approximately a
quarterly basis.

 

7.   EXECUTION BY COUNTERPARTS:

 

This Amendment No. 14 may be executed in any number of counterparts, and upon
execution by all Participants, each executed counterpart shall have the same
force and effect as an original instrument and as if all Participants had signed
the same instrument. Any signature page of this Amendment No. 14 may be detached
from any counterpart of this Amendment No. 14 without impairing the legal effect
of any signature thereon, and may be attached to another counterpart of this
Amendment No. 14 identical in form hereto but having attached to it one or more
signature pages.

 

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8.   SIGNATURE CLAUSE:

 

The signatories hereto represent that they have been appropriately authorized to
enter into this Amendment No. 14 on behalf of the Party for whom they sign.

 

           

ARIZONA PUBLIC SERVICE COMPANY

           

By:

 

/s/ James M. Lewis

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Its:

 

Exec. VP Generation

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Date:

 

3/31/00

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SALT RIVER PROJECT AGRICULTURAL IMPROVEMENT AND POWER DISTRICT

           

By:

 

/s/ William P. Schroder

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Its:

 

President

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Date:

 

2/28/00

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ATTEST AND COUNTERSIGN:

           

By:

 

 

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Its:

 

 

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Date:

 

 

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SOUTHERN CALIFORNIA EDISON COMPANY

           

By:

 

/s/ Harold B. Ray

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Its:

 

Executive Vice President

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Date:

 

3/20/00

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PUBLIC SERVICE COMPANY OF NEW MEXICO

           

By:

 

/s/ Patrick J. Goodman

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Its:

 

VICE PRESIDENT – POWER PRODUCTION

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Date:

 

4-19-00

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EL PASO ELECTRIC COMPANY

           

By:

 

/s/ John C. Horne

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Its:

 

Vice President

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Date:

 

5/11/00

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SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY, doing business in the State of
Arizona as SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY ASSOCIATION

           

By:

 

/s/ Joseph F. Hsu

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Its:

 

President

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Date:

 

April 24, 2000

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ATTEST AND COUNTERSIGN:

           

By:

 

 

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Its:

 

 

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DEPARTMENT OF WATER AND POWER OF THE CITY OF LOS ANGELES

By:

 

/s/ Enrique Martinez

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Its:

 

Asst. General Manager – Power Service

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Date:

 

June 20, 2000

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STATE OF ARIZONA

 

)

   

) ss.

County of Maricopa

 

)

 

On this 31 day of March, 2000, before me, the undersigned Notary Public,
personally appeared James M. Lewis who acknowledged himself to be the Exec. Vice
President of ARIZONA PUBLIC SERVICE COMPANY, an Arizona corporation, and that he
as such officer, being authorized to do, executed the foregoing instrument for
the purposes therein contained by signing the name of the company by himself as
such Exec. Vice President.

 

IN WITNESS WHEREOF, I hereunto set my hand and official seal.

 

   

/s/ Twyla Hannah

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Notary Public

 

My Commission Expires:

  

[SEAL]

 

May 12, 2002

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STATE OF ARIZONA

 

)

   

) ss.

County of Maricopa

 

)

 

On this 28th day of February, 2000, before me, the undersigned Notary Public,
personally appeared WILLIAM P. SCHRADER who acknowledged himself to be the
President of SALT RIVER PROJECT AGRICULTURAL IMPROVEMENT AND POWER DISTRICT, an
Arizona corporation, and that he as such officer, being authorized to do,
executed the foregoing instrument for the purposes therein contained by signing
the name of the company by himself as such SALT RIVER PROJECT AGRICULTURAL
IMPROVEMENT AND POWER DISTRICT.

 

IN WITNESS WHEREOF, I hereunto set my hand and official seal.

 

   

/s/ Karen C. Umber

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Notary Public

 

My Commission Expires:

  

[SEAL]

 

July 30, 2002

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STATE OF CALIFORNIA

 

)

   

) ss.

County of Los Angeles

 

)

 

On this 20th day of March, 2000, before me, the undersigned Notary Public,
personally appeared Harold B. Ray who acknowledged himself to be the Exec. Vice
President of SOUTHERN CALIFORNIA EDISON COMPANY, a California corporation, and
that he as such officer, being authorized to do, executed the foregoing
instrument for the purposes therein contained by signing the name of the company
by himself as such Exec. Vice President.

 

IN WITNESS WHEREOF, I hereunto set my hand and official seal.

 

   

/s/ Marcelda G. Puentes

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Notary Public

 

My Commission Expires:

    

 

4/13/2001

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STATE OF NEW MEXICO

 

)

   

) ss.

County of Bernalillo

 

)

 

On this 19th day of April, 2000, before me, the undersigned Notary Public,
personally appeared Patrick J. Goodman who acknowledged himself to be the Vice
President, Power Prod. of PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico
corporation, and that he as such officer, being authorized to do, executed the
foregoing instrument for the purposes therein contained by signing the name of
the company by himself as such Public Service Company of New Mexico.

 

IN WITNESS WHEREOF, I hereunto set my hand and official seal.

 

   

/s/ Barbara Baker

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Notary Public

 

My Commission Expires:

    

 

6/23/02

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STATE OF TEXAS

 

)

   

) ss.

County of El Paso

 

)

 

On this 11th day of May, 2000, before me, the undersigned Notary Public,
personally appeared John C. Horne who acknowledged himself to be the Vice
President of EL PASO ELECTRIC COMPANY, a Texas corporation, and that he as such
officer, being authorized to do, executed the foregoing instrument for the
purposes therein contained by signing the name of the company by himself as such
Vice President.

 

IN WITNESS WHEREOF, I hereunto set my hand and official seal.

 

   

/s/ Rhonda M. Pyle

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Notary Public

 

My Commission Expires:

    

 

6/10/2003

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STATE OF CALIFORNIA

 

)

   

) ss.

County of Los Angeles

 

)

 

On this 24th day of April, 2000, before me, the undersigned Notary Public,
personally appeared Joseph F. Hsu who acknowledged himself to be the President
of SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY (doing business in the State of
Arizona as SOUTHERN CALIFORNIA POWER AUTHORITY ASSOCIATION), a California joint
powers agency, and that he as such officer, being authorized to do, executed the
foregoing instrument for the purposes therein contained by signing the name of
the company by himself as such President.

 

IN WITNESS WHEREOF, I hereunto set my hand and official seal.

 

   

/s/ Candace Toscano

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Notary Public

 

My Commission Expires:

    

 

May 12, 2003

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STATE OF CALIFORNIA

 

)

   

) ss.

County of Los Angeles

 

)

 

On this 20th day of June, 2000, before me, the undersigned Notary Public,
personally appeared Enrique Martinez who acknowledged himself to be the
Assistant General Manager Power Services of DEPARTMENT OF WATER AND POWER OF THE
CITY OF LOS ANGELES, a department organized and existing under the Charter of
the City of Los Angeles, a California municipal corporation, and that he as such
officer, being authorized to do, executed the foregoing instrument for the
purposes therein contained by signing the name of the company by himself as such
Assistant General Manager – Power Services.

 

IN WITNESS WHEREOF, I hereunto set my hand and official seal.

 

   

/s/ Daisy Cheung

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Notary Public

 

My Commission Expires:

  

[SEAL]

 

November 17, 2002

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