**EXHIBIT 10.81**

 

**CAPROCK ELECTRIC**

**Achievement Based Compensation Contract**

 

**Southwestern Public Service Company Contract**

 

Inaccordance with Cap Rock Electric Cooperative, Inc. (“Cap Rock Electric”) BoardPolicy #143, this contract provides for calculation and payment of incentivecompensation in the form of a percentage of net power cost savings resultingfrom the Southwestern Public Service Company power supply contract.

 

(1)          Responsible Individual:

 

Steven E. Collier, Directorof Power Supply and Regulatory Affairs.

 

(2)          Amount of Achievement Based Compensation:

 

The Achievement Based Compensation will be twopercent (2%) of the net savings, where the net savings is defined as the amountby which SPSCo purchased power costs are less than the purchased power costswould have been had TU Electric remained the full requirements power suppliers.

 

Since a portion of the savings will result from thediversity of the various delivery points that were served under noncoincidentpeak billing by TU Electric and which will be served as a single point ofdelivery under the terms negotiated with SPSCo, and since Cap Rock Electricwould have eventually combined the delivery points into one or two in anyevent, the portion of the savings resulting from diversity will be imputed onlyfor the first five years of the Achievement Based Compensation or until TUElectric implements coincident peak billing, whichever is sooner.

 

(3)          Calculation of the Savings:

 

The net savings will be calculated as the differencebetween the sum of the power bills that would have applied under the standardTU Electric wholesale tariff and the power bill that actually occurs under theSPSCo tariff.

 

Since the various substations that would have beenseparate delivery points under the TU Electric noncoincident billing approachwill be combined into one delivery point for SPSCo, actual noncoincident demandbilling units may not be conveniently available.  If this is the case, the coincident demand of the load served bySPSCo will be converted to an equivalent noncoincident demand for calculationof the TU Electric benchmark bill using the average demand diversity thatexisted among the relevant delivery points for the two years prior to transferto SPSCo.

 

(4)          Term of Achievement Based Compensation:

 

The Achievement Based Compensation will be paiduntil the sooner of the termination of the SPSCo contract or ten years.

 

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(5)          Payment of the Achievement Based Compensation:

 

The Achievement Based Compensation will be paidafter the end of each calendar year based on the above-referenced calculationfor that calendar year after review and approval by the General Manager andBoard of Directors of this contract and the annual approval of theabove-referenced calculation by the General Manager.

 

The Achievement Based Compensation will be paid incash to each eligible individual in a lump sum unless the amount exceeds$10,000.00, in which case Cap Rock Electric will have the option to spread thepayment over as many months as many months as necessary so that any one monthlypayment does not exceed $10,000.00.  Thelump-sum payment or series of payments, if applicable, will be made as providedin Board Policy #143 and with cash availability and overall cash flow of theCooperative considered.

 

The eligible individual shall have the option toelect some or all of the payment to be made to such deferred compensation plansas may be maintained by the individual or Cap Rock Electric.

 

(6)          Conditions and Considerations for Payment:

 

Except upon becoming eligible for benefits under anyCap Rock Electric retirement plan, either early or regular, the AchievementBased Compensation will by payable to the recipient listed below in para. (7)without regard to the continued employment of those individuals by Cap RockElectric or an affiliate or subsidiary thereof, provided that, unless otherwiseagreed by Cap Rock, each individual agrees that he will not voluntarilyterminate his employment by Cap Rock Electric or any affiliate or subsidiary ofCap Rock Electric for the shorter of three years following the date of initialpayment under this contract or until power deliveries have started and thenceased under the SPSCo contract, during the first ten (10) years of saidcontract.  Further, each individualagrees that he will keep the terms of this contract, as well as the terms ofthe transaction causing the awarding and payment of the Achievement BasedCompensation, confidential.

 

(7)          Sharing with Other Individuals:

 

In recognition of the necessary contribution of theentire management team to the continued success of Cap Rock Electric and thesuccessful implementation of the lease-purchase financing arrangements, theAchievement Based Compensation will be shared among the Responsible Individualand the other management team members as follows:

 

Responsible Individuals – 50%

 

Management Team – 50%

a.                                       Chief Executive Officer – 30%

b.                                      Other individuals selected by the CEO andBoard of Directors –20%

i.                                          Ulen North 10%

iii.                                    John D. Parker 10%

 

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Except for the confidentiality and retirementprovisions, the conditions for payment described above in Para. (6) are notapplicable to those persons identified and listed above as “OtherIndividuals”.  It is further understoodand agreed that such conditions for payment as set out in para. (6) areapplicable subject to the amount of such Achievement Based Compensation totalpayment being commensurate and with the condition placed upon the recipients byacceptance of such Compensation.

 

In the event the Responsible Party should violatethe terms of the Agreement, the right to receive future payments under thisAgreement shall immediately cease and such interest or right to future paymentsshall revert to Cap Rock Electric.  Inthe event any individual name herein by the Chief Executive Officer and Boardof Directors as a part of the Management Team shall violate the terms of thisagreement, die, retire, or terminate their employment with Cap Rock Electricfor any reason, the right to receive future payments under this contract shallimmediately cease and the Chief Executive Officer shall have the right toallocate such share among those named individuals or others as he may deem inthe best interests of the Cooperative.

 

Witnessour hands on this 27th day of October, 1992

 

 
| /s/ Steven E. Collier   | 10/27/92 |   |
|-------------------------|----------|--------|
| Responsible Individual  | Date     |   |
|                    |     |   |
|                    |     |   |
| /s/ David W. Pruitt     | 10/27/92 |   |
| Chief Executive Officer | Date     |   |
|                    |     |   |
|                    |     |   |
| /s/ Russell Jones       | 10/27/92 |   |
| Chairman                | Date     |   |
|                         |          |        |  |  |

 

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