**Exhibit 10.21****STANDARD LARGE GENERATOR****INTERCONNECTION AGREEMENT (LGIA)****BETWEEN****ARIZONA PUBLIC SERVICE COMPANY****AND, TOGETHER,****ABITIBI CONSOLIDATED SALES CORPORATION****AND****SNOWFLAKE WHITE MOUNTAIN POWER, LLC****APS CONTRACT NO. 52023**
 

 
**TABLE OF CONTENTS**       **Page** RECITALS  **1**      ARTICLE 1. DEFINITIONS  **2**      ARTICLE 2. EFFECTIVE DATE, TERM,, AND TERMINATION  **11**      **2.1****Effective Date**  11 **2.2 Term Of Agreement**  11 **2.3 Termination Procedures**  11 ***2.3.1 Written Notice***  *11* ***2.3.2 Default***  *11* **2.4 Termination Costs**  11 **2.5 Disconnection**  12 **2.6 Survival**  12      ARTICLE 3. REGULATORY FILINGS  **13**      **3.1 Filing**  13      ARTICLE 4. SCOPE OF SERVICE  **13**      **4.1 Interconnection Product Options**  13 ***4.1.1 Energy Resource Interconnection Service***  *13* **4.1.1.1 The Product**  13 **4.1.1.2 Transmission Delivery Service Implications**  13 ***4.1.2 Network Resource Interconnection Service***  *14* **4.1.2.1 The Product**  14 **4.1.2.2 Transmission Delivery Service Implications**  14 **4.2 Provision Of Service**  16 **4.3 Performance Standards**  16 **4.4 No Transmission Delivery Service**  16 **4.5 Interconnection Customer Provided Services**  16      ARTICLE 5. INTERCONNECTION FACILITIES ENGINEERING, PROCUREMENT, &CONSTRUCTION            **16** **5.1 Options**  16 ***5.1.1 Standard Option***  *16* ***5.1.2 Alternate Option***  *16* ***5.1.3 Option to Build***  *17* ***5.1.4 Negotiated Option***  *17* **5.2General Conditions Applicableto Option to Build  17 **5.3 Liquidated Damages**  19 **5.4  Power System Stabilizers**  20 **5.5 Equipment Procurement**  20 **5.6 Construction Commencement**  20 **5.7 Work Progress  21 **5.8 Information Exchange**  21 
- i -

 
       **Page** **5.9 Limited Operation**  21 **5.10 Interconnection Customer’s Interconnection Facilities (‘icif’)**  21 ***5.10.1 Interconnection Customer’s Interconnection Facility Specifications***  *21* ***5.10.2 Transmission Provider’s Review***  *22* ***5.10.3 ICIF Construction***  *22* **5.11 Transmission Provider’s Interconnection Facilities Construction**  22 **5.12 Access Rights**  22 **5.13 Lands Of Other Property Owners**  23 **5.14 Permits**  23 **5.15 Early Construction of Base Case Facilities  23 **5.16 suspension**  23 **5.17 Taxes**  24 ***5.17.1 Interconnection Customer Payments Not Taxable***  *24* ***5.17.2 Representations and Covenants***  *24* ***5.17.3 Indemnification for the Cost Consequences of Current Tax LiabilityImposed Upon the Transmission Provider***  *25* ***5.17.4 Tax Gross-Up Amount***  *25* ***5.17.5 Private Letter Ruling or Change or Clarification of Law***  *26* ***5.17.6 Subsequent Taxable Events***  *27* ***5.17.7 Contests***  *27* ***5.17.8 Refund***  *28* ***5.17.9 Taxes Other Than Income Taxes***  *29* ***5.17.10 Transmission Owners Who Are Not Transmission Providers***  *29* **5.18 Tax Status**  29 **5.19 Modification**  29 ***5.19.1 General***  *29* ***5.19.2 Standards***  *30* ***5.19.3 Modification Costs***  *30*      ARTICLE 6. TESTING AND INSPECTION  **30**      **6.1 Pre-Commercial Operation Date Testing And Modifications**  30 **6.2 Post-Commercial Operation Date Testing And Modifications**  30 **6.3 Right To Observe Testing**  31 **6.4 Right To Inspect**  31      ARTICLE 7. METERING  **31**      **7.1 General**  31 **7.2 Check Meters**  31 **7.3 Standards**  31 **7.4 Testing Of Metering Equipment**  32 **7.5 Metering Data**  32      ARTICLE 8. COMMUNICATIONS  **32**      **8.1 Interconnection Customer Obligations**  32 **8.2 Remote Terminal Unit**  32 **8.3 No Annexation**  33 
- ii -

 
       **Page** ARTICLE 9. OPERATIONS  **33**      **9.1 General**  33 **9.2 Control Area Notification**  33 **9.3 Transmission Provider Obligations**  33 **9.4 Interconnection Customer Obligations**  33 **9.5 Start-Up And Synchronization**  34 **9.6 Reactive Power**  34 ***9.6.1 Power Factor Design Criteria***  *34* ***9.6.2 Voltage Schedules***  *34* **9.6.2.1 Governors and Regulators**  34 ***9.6.3 Payment for Reactive Power***  *35* **9.7 Outages And Interruptions**  35 ***9.7.1 Outages***  *35* **9.7.1.1 Outage Authority and Coordination**  35 **9.7.1.2 Outage Schedules**  35 **9.7.1.3 Outage Restoration**  36 ***9.7.2 Interruption of Service***  *36* ***9.7.3 Under-Frequency and Over Frequency Conditions***  *37* ***9.7.4 System Protection and Other Control Requirements***  *37* **9.7.4.1 System Protection Facilities**  37 ***9.7.5 Requirements for Protection***  *38* ***9.7.6 Power Quality***  *38* **9.8 Switching And Tagging Rules**  39 **9.9 Use Of Interconnection Facilities By Third Parties**  39 ***9.9.1 Purpose of Interconnection Facilities***  *39* ***9.9.2 Third Party Users***  *39* **9.10 Disturbance Analysis Data Exchange**  39      ARTICLE 10. MAINTENANCE  **40**      **10.1 Transmission Provider Obligations**  40 **10.2 Interconnection Customer Obligations**  40 **10.3 Coordination**  40 **10.4 Secondary Systems**  40 **10.5 Operating And Maintenance Expenses**  40      ARTICLE 11. PERFORMANCE OBLIGATION  **40**      **11.1 Interconnection Customer Interconnection Facilities**  40 **11.2 Transmission Provider’s Interconnection Facilities**  40 **11.3 Network Upgrades And Distribution Upgrades**  41 **11.4 Transmission Credits**  41 ***11.4.1 Repayment of Amounts Advanced for Network Upgrades***  *41* **11.5 Provision Of Security**  42 **11.6 Interconnection Customer Compensation**  43 ***11.6.1 Interconnection Customer Compensation for Actions During EmergencyCondition****43*         ARTICLE 12. INVOICE  **43** 
- iii -

 
       **Page** **12.1 General**  43 **12.2 Final Invoice**  43 **12.3 Payment**  44 **12.4 Disputes**  44      ARTICLE 13. EMERGENCIES  **44**      **13.1 Definition**  44 **13.2 Obligations**  44 **13.3 Notice**  44 **13.4 Immediate Action**  45 **13.5 Transmission Provider Authority**  45 ***13.5.1 General***  *45* ***13.5.2 Reduction and Disconnection***  *45* **13.6 Interconnection Customer Authority**  46 **13.7 Limited Liability**  46      ARTICLE 14. REGULATORY REQUIREMENTS AND GOVERNING LAW  **46**      **14.1 Regulatory Requirements**  46 **14.2 Governing Law**  47      ARTICLE 15. NOTICES  **47**      **15.1 General**  47 **15.2 Billingsand Payments  47 **15.3 Alternative Forms of Notice**  47 **15.4 Operations and Maintenance Notice**  47      ARTICLE 16. FORCE MAJEURE  **47**      ARTICLE 17. DEFAULT  **48**      **17.1 Default**  48 ***17.1.1 General***  *48* ***17.1.2 Right to Terminate***  *48*      ARTICLE 18. INDEMNITY, CONSEQUENTIAL DAMAGES AND INSURANCE  **48**      **18.1 Indemnity**  48 ***18.1.1 Indemnified Person***  *49* ***18.1.2 Indemnifying Party***  *49* ***18.1.3 Indemnity Procedures***  *49* **18.2 Consequential Damages**  50 **18.3 Insurance**  50      ARTICLE 19. ASSIGNMENT  **52**      ARTICLE 20. SEVERABILITY  **52**      ARTICLE 21. COMPARABILITY  **52**      ARTICLE 22. CONFIDENTIALITY  **53**      **22.1 Confidentiality**  53 ***22.1.1 Term***  *53* 
- iv -

 
       **Page** ***22.1.2 Scope***  *53* ***22.1.3 Release of Confidential Information***  *53* ***22.1.4 Rights***  *54* ***22.1.5 No Warranties***  *54* ***22.1.6 Standard of Care***  *54* ***22.1.7 Order of Disclosure***  *54* ***22.1.8 Termination of Agreement***  *54* ***22.1.9 Remedies***  *55* ***22.1.10 Disclosure to FERC, its Staff, or a State***  *55*      ARTICLE 23. ENVIRONMENTAL RELEASES  **56**      ARTICLE 24. INFORMATION REQUIREMENTS  **56**      **24.1 Information Acquisition**  56 **24.2Information Submission by Transmission Provider**  56 **24.3Updated Information Submission by Interconnection Customer**  56 **24.4 Information Supplementation**  57      ARTICLE 25. INFORMATION ACCESS AND AUDIT RIGHTS  **58**      **25.1 Information Access**  58 **25.2Reporting of Non-Force Majeure Events**  58 **25.3 Audit Rights**  58 **25.4 Audit Rights Periods**  58 ***25.4.1 Audit Rights Period for Construction-Related Accounts and Records***  *58* ***25.4.2 Audit Rights Period for All Other Accounts and Records***  *58* **25.5 Audit Results**  59      ARTICLE 26. SUBCONTRACTORS  **59**      **26.1 General**  59 **26.2Responsibility of Principal**  59 **26.3No Limitation by Insurance**  59      ARTICLE 27. DISPUTES  **59**      **27.1 Submission**  59 **27.2 External Arbitration Procedures**  60 **27.3 Arbitration Decisions**  60 **27.4 Costs**  60      ARTICLE 28. REPRESENTATIONS, WARRANTIES, AND COVENANTS  **60**      **28.1 General**  60 ***28.1.1 Good Standing***  *60* ***28.1.2 Authority***  *61* ***28.1.3 No Conflict***  *61* ***28.1.4 Consent and Approval***  *61*      ARTICLE 29. JOINT OPERATING COMMITTEE  **61**      ARTICLE 30. MISCELLANEOUS  **62**      **30.1 Binding Effect**  62 
- v -

 
       **Page** **30.2 Conflicts**  62 **30.3 Rules of Interpretation**  62 **30.4 Entire Agreement**  63 **30.5 No Third Party Beneficiaries**  63 **30.6 Waiver**  63 **30.7 Headings**  63 **30.8  Multiple Counterparts**  63 **30.9 Amendment**  63 **30.10 Modification by the Parties**  63 **30.11 Reservation of Rights**  64 **30.12No Partnership**  64  Appendix A – Interconnection Facilities, Network Upgrades, and Distribution Upgrades Appendix B – Milestones Appendix C – Interconnection Details Appendix D – Security Arrangements Details Appendix E – Commercial Operation Date Appendix F – Addresses for Delivery of Notices and Billings Appendix G – Requirements of a Wind Generating Plant Appendix H – Reliability Management System Agreement
- vi -

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)     **STANDARD LARGE GENERATOR INTERCONNECTION AGREEMENT**     **THIS STANDARD LARGE GENERATOR INTERCONNECTION AGREEMENT**(“Agreement”) is made and entered into this 1st day of November 2006, by andbetween Abitibi Consolidated Sales Corporation (“Abitibi”), a corporation organized and existingunder the laws of the State of Delaware, and Snowflake White Mountain Power, LLC (“Snowflake”), acorporation organized and existing under the laws of the State of Arizona (collectively, the“Interconnection Customer” with a Large Generating Facility), and Arizona Public Service Company(“APS”), a corporation organized and existing under the laws of the State of Arizona (“TransmissionProvider and/or Transmission Owner”). Abitibi and Snowflake hereby agree to be jointly andseverally responsible for all rights and obligations attributed to the Interconnection Customer assuch are set forth in this Agreement. Interconnection Customer and Transmission Provider each maybe referred to as a “Party” or collectively as the “Parties.”**Recitals**     **WHEREAS,**APS, as Transmission Provider operates the TransmissionSystem; and     **WHEREAS,**Abitibi and APS are parties to a grandfathered Interconnection and OperatingAgreement (“IOA”) that provides Interconnection Service to Abitibi Unit #1 and Unit #2;     **WHEREAS,**such preexisting IOA was filed with FERC on October 8, 2002, in Docket No.ER03-22-000, was accepted by FERC as effective on September 9, 2002, *via*letter order issued onDecember 6, 2002, and is designated as APS Contract No. 51637;     **WHEREAS,**Abitibi and APS intend for this Agreement to fully replace and supersede the IOAupon its Effective Date;     **WHEREAS,**Snowflake intends to construct and own a 22 MW Generating Facility on Abitibi’sproperty and shall utilize the pre-existing Point of Interconnection with the Transmission Systemto provide Interconnection Service to such new Generating Facility;     **WHEREAS,**Abitibi and Snowflake have entered into a Lease Agreement dated September 14, 2005that grants Snowflake access and use rights over Abitibi’s Interconnection Facilities in order forSnowflake to obtain Interconnection Service with the Transmission System;     **WHEREAS,**pursuant to the Operations Provisions that are included as Addendum 1 to the LeaseAgreement dated September 14, 2005, Abitibi shall be responsible for the operations of the threeGenerating Facilities to be interconnected to the Transmission System at a singular Point ofInterconnection pursuant to this Agreement;
1

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)          **WHEREAS,**this Agreement shall be considered a “Facility Agreement,” as such term is defined inthe Operations Provisions addendum to the Lease Agreement dated September 14, 2005;     **WHEREAS,**Interconnection Customer intends to own, lease and/or control and operate theGenerating Facility identified as a Large Generating Facility in Appendix C to this Agreement; and,     **WHEREAS,**Interconnection Customer and Transmission Provider have agreed to enter into thisAgreement for the purpose of interconnecting the Large Generating Facility with the TransmissionSystem;     **NOW, THEREFORE,**in consideration of and subject to the mutual covenants contained herein, itis agreed:     When used in this Standard Large Generator Interconnection Agreement, terms with initialcapitalization that are not defined in Article 1 shall have the meanings specified in the Articlein which they are used or the Open Access Transmission Tariff (Tariff).**Article 1. Definitions**     **Adverse System Impact**shall mean the negative effects due to technical or operational limitson conductors or equipment being exceeded that may compromise the safety and reliability of theelectric system.     **Affected System**shall mean an electric system other than the Transmission Provider’sTransmission System that may be affected by the proposed interconnection.     **Affected System Operator**shall mean the entity that operates an Affected System.     **Affiliate**shall mean, with respect to a corporation, partnership or other entity, each suchother corporation, partnership or other entity that directly or indirectly, through one or moreintermediaries, controls, is controlled by, or is under common control with, such corporation,partnership or other entity.     **Ancillary Services**shall mean those services that are necessary to support the transmission ofcapacity and energy from resources to loads while maintaining reliable operation of theTransmission Provider’s Transmission System in accordance with Good Utility Practice.     **Applicable Laws and Regulations**shall mean all duly promulgated applicable federal, state andlocal laws, regulations, rules, ordinances, codes, decrees, judgments, directives, or judicial oradministrative orders, permits and other duly authorized actions of any Governmental Authority.
2

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)          **Applicable Reliability Council**shall mean the reliability council applicable to theTransmission System to which the Generating Facility is directly interconnected.     **Applicable Reliability Standards**shall mean the requirements and guidelines of NERC, theApplicable Reliability Council, and the Control Area of the Transmission System to which theGenerating Facility is directly interconnected.     **Base Case**shall mean the base case power flow, short circuit, and stability data bases usedfor the Interconnection Studies by the Transmission Provider or Interconnection Customer.     **Breach**shall mean the failure of a Party to perform or observe any material term or conditionof the Standard Large Generator Interconnection Agreement.     **Breaching Party**shall mean a Party that is in Breach of the Standard Large GeneratorInterconnection Agreement.     **Business Day**shall mean Monday through Friday, excluding Federal Holidays.     **Calendar Day**shall mean any day including Saturday, Sunday or a Federal Holiday.     **Clustering**shall mean the process whereby a group of Interconnection Requests is studiedtogether, instead of serially, for the purpose of conducting the Interconnection System ImpactStudy.     **Commercial Operation**shall mean the status of a Generating Facility that has commencedgenerating electricity for sale, excluding electricity generated during Trial Operation.     **Commercial Operation Date**of a unit shall mean the date on which the Generating Facilitycommences Commercial Operation as agreed to by the Parties pursuant to Appendix E to the StandardLarge Generator Interconnection Agreement.     **Confidential Information**shall mean any confidential, proprietary or trade secret informationof a plan, specification, pattern, procedure, design, device, list, concept, policy or compilationrelating to the present or planned business of a Party, which is designated as confidential by theParty supplying the information, whether conveyed orally, electronically, in writing, throughinspection, or otherwise.     **Control Area**shall mean an electrical system or systems bounded by interconnection meteringand telemetry, capable of controlling generation to maintain its interchange schedule with otherControl Areas and contributing to frequency regulation of the interconnection. A Control Area mustbe certified by the Applicable Reliability Council.     **Default**shall mean the failure of a Breaching Party to cure its Breach in accordance withArticle 17 of the Standard Large Generator Interconnection Agreement.
3

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)          **Dispute Resolution**shall mean the procedure for resolution of a dispute between the Parties inwhich they will first attempt to resolve the dispute on an informal basis.     **Distribution System**shall mean the Transmission Provider’s facilities and equipment used totransmit electricity to ultimate usage points such as homes and industries directly from nearbygenerators or from interchanges with higher voltage transmission networks which transport bulkpower over longer distances. The voltage levels at which distribution systems operate differ amongareas.     **Distribution Upgrades**shall mean the additions, modifications, and upgrades to theTransmission Provider’s Distribution System at or beyond the Point of Interconnection to facilitateinterconnection of the Generating Facility and render the transmission service necessary to effectInterconnection Customer’s wholesale sale of electricity in interstate commerce. DistributionUpgrades do not include Interconnection Facilities.     **Effective Date**shall mean the date on which the Standard Large Generator InterconnectionAgreement becomes effective upon execution by the Parties subject to acceptance by FERC, or iffiled unexecuted, upon the date specified by FERC.     **Emergency Condition**shall mean a condition or situation: (1) that in the judgment of the Partymaking the claim is imminently likely to endanger life or property; or (2) that, in the case of aTransmission Provider, is imminently likely (as determined in a non-discriminatory manner) to causea material adverse effect on the security of, or damage to Transmission Provider’s TransmissionSystem, Transmission Provider’s Interconnection Facilities or the electric systems of others towhich the Transmission Provider’s Transmission System is directly connected; or (3) that, in thecase of Interconnection Customer, is imminently likely (as determined in a non-discriminatorymanner) to cause a material adverse effect on the security of, or damage to, the GeneratingFacility or Interconnection Customer’s Interconnection Facilities. System restoration and blackstart shall be considered Emergency Conditions; provided, that Interconnection Customer is notobligated by the Standard Large Generator Interconnection Agreement to possess black startcapability.     **Energy Resource Interconnection Service**shall mean an Interconnection Service that allows theInterconnection Customer to connect its Generating Facility to the Transmission Provider’sTransmission System to be eligible to deliver the Generating Facility’s electric output using theexisting firm or nonfirm capacity of the Transmission Provider’s Transmission System on an asavailable basis. Energy Resource Interconnection Service in and of itself does not conveytransmission service.     **Engineering & Procurement (E&P) Agreement**shall mean an agreement that authorizes theTransmission Provider to begin engineering and procurement of long lead-time items necessary forthe establishment of the interconnection in order to advance the implementation of theInterconnection Request.     **Environmental Law**shall mean Applicable Laws or Regulations relating to pollution orprotection of the environment or natural resources.
4

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)          **Federal Power Act**shall mean the Federal Power Act, as amended, 16 U.S.C. §§ 791a et seq.     **FERC**shall mean the Federal Energy Regulatory Commission (Commission) or its successor.     **Force Majeure**shall mean any act of God, labor disturbance, act of the public enemy, war,insurrection, riot, fire, storm or flood, explosion, breakage or accident to machinery orequipment, any order, regulation or restriction imposed by governmental, military or lawfullyestablished civilian authorities, or any other cause beyond a Party’s control. A Force Majeureevent does not include acts of negligence or intentional wrongdoing by the Party claiming ForceMajeure.     **Generating Facility**shall mean Interconnection Customer’s device for the production ofelectricity identified in the Interconnection Request, but shall not include the InterconnectionCustomer’s Interconnection Facilities.     **Generating Facility Capacity**shall mean the net capacity of the Generating Facility and theaggregate net capacity of the Generating Facility where it includes multiple energy productiondevices.     **Good Utility Practice**shall mean any of the practices, methods and acts engaged in or approvedby a significant portion of the electric industry during the relevant time period, or any of thepractices, methods and acts which, in the exercise of reasonable judgment in light of the factsknown at the time the decision was made, could have been expected to accomplish the desired resultat a reasonable cost consistent with good business practices, reliability, safety and expedition.Good Utility Practice is not intended to be limited to the optimum practice, method, or act to theexclusion of all others, but rather to be acceptable practices, methods, or acts generally acceptedin the region.     **Governmental Authority**shall mean any federal, state, local or other governmental regulatoryor administrative agency, court, commission, department, board, or other governmental subdivision,legislature, rulemaking board, tribunal, or other governmentalauthority having jurisdiction over the Parties, their respective facilities, or the respectiveservices they provide, and exercising or entitled to exercise any administrative, executive,police, or taxing authority or power; provided, however, that such term does not includeInterconnection Customer, Transmission Provider, or any Affiliate thereof.     **Hazardous Substances**shall mean any chemicals, materials or substances defined as or includedin the definition of “hazardous substances,” “hazardous wastes,” “hazardous materials,” “hazardousconstituents,” “restricted hazardous materials,” “extremely hazardous substances,” “toxicsubstances,” “radioactive substances,” “contaminants,” “pollutants,” “toxic pollutants” or words ofsimilar meaning and regulatory effect under any applicable Environmental Law, or any otherchemical, material or substance, exposure to which is prohibited, limited or regulated by anyapplicable Environmental Law.     **Initial Synchronization Date**shall mean the date upon which the Generating Facility isinitially synchronized and upon which Trial Operation begins.
5

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)          **In-Service Date**shall mean the date upon which the Interconnection Customer reasonably expectsit will be ready to begin use of the Transmission Provider’s Interconnection Facilities to obtainback feed power.     **Interconnection Customer**shall mean any entity, including the Transmission Provider,Transmission Owner or any of the Affiliates or subsidiaries of either, that proposes tointerconnect its Generating Facility with the Transmission Provider’s Transmission System.     **Interconnection Customer’s Interconnection Facilities**shall mean all facilities and equipment,as identified in Appendix A of the Standard Large Generator Interconnection Agreement, that arelocated between the Generating Facility and the Point of Change of Ownership, including anymodification, addition, or upgrades to such facilities and equipment necessary to physically andelectrically interconnect the Generating Facility to the Transmission Provider’s TransmissionSystem. Interconnection Customer’s Interconnection Facilities are sole use facilities.     **Interconnection Facilities**shall mean the Transmission Provider’s Interconnection Facilitiesand the Interconnection Customer’s Interconnection Facilities. Collectively, InterconnectionFacilities include all facilities and equipment between the Generating Facility and the Point ofInterconnection, including any modification, additions or upgrades that are necessary to physicallyand electrically interconnect the Generating Facility to the Transmission Provider’s TransmissionSystem. Interconnection Facilities are sole use facilities and shall not include DistributionUpgrades, Stand Alone Network Upgrades or Network Upgrades.     **Interconnection Facilities Study**shall mean a study conducted by the Transmission Provider ora third party consultant for the Interconnection Customer to determine a list offacilities (including Transmission Provider’s Interconnection Facilities and Network Upgrades asidentified in the Interconnection System Impact Study), the cost of those facilities, and the timerequired to interconnect the Generating Facility with the Transmission Provider’s TransmissionSystem. The scope of the study is defined in Section 8 of the Standard Large GeneratorInterconnection Procedures.     **Interconnection Facilities Study Agreement**shall mean the form of agreement contained inAppendix 4 of the Standard Large Generator Interconnection Procedures for conducting theInterconnection Facilities Study.     **Interconnection Feasibility Study**shall mean a preliminary evaluation of the system impact andcost of interconnecting the Generating Facility to the Transmission Provider’s Transmission System,the scope of which is described in Section 6 of the Standard Large Generator InterconnectionProcedures.     **Interconnection Feasibility Study Agreement**shall mean the form of agreement contained inAppendix 2 of the Standard Large Generator Interconnection Procedures for conducting theInterconnection Feasibility Study.
6

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)          **Interconnection Request**shall mean an Interconnection Customer’s request, in the form ofAppendix 1 to the Standard Large Generator Interconnection Procedures, in accordance with theTariff, to interconnect a new Generating Facility, or to increase the capacity of, or make aMaterial Modification to the operating characteristics of, an existing Generating Facility that isinterconnected with the Transmission Provider’s Transmission System.     **Interconnection Service**shall mean the service provided by the Transmission Providerassociated with interconnecting the Interconnection Customer’s Generating Facility to theTransmission Provider’s Transmission System and enabling it to receive electric energy and capacityfrom the Generating Facility at the Point of Interconnection, pursuant to the terms of the StandardLarge Generator Interconnection Agreement and, if applicable, the Transmission Provider’s Tariff.     **Interconnection Study**shall mean any of the following studies: the Interconnection FeasibilityStudy, the Interconnection System Impact Study, and the Interconnection Facilities Study describedin the Standard Large Generator Interconnection Procedures.     **Interconnection System Impact Study**shall mean an engineering study that evaluates the impactof the proposed interconnection on the safety and reliability of Transmission Provider’sTransmission System and, if applicable, an Affected System. The study shall identify and detail thesystem impacts that would result if the Generating Facility were interconnected without projectmodifications or system modifications, focusing on the Adverse System Impacts identified in theInterconnection Feasibility Study, or to study potential impacts, including but notlimited to those identified in the Scoping Meeting as described in the Standard Large GeneratorInterconnection Procedures.     **Interconnection System Impact Study Agreement**shall mean the form of agreement contained inAppendix 3 of the Standard Large Generator Interconnection Procedures for conducting theInterconnection System Impact Study.     **IRS**shall mean the Internal Revenue Service.     **Joint Operating Committee**shall be a group made up of representatives from InterconnectionCustomers and the Transmission Provider to coordinate operating and technical considerations ofInterconnection Service.     **Large Generating Facility**shall mean a Generating Facility having a Generating FacilityCapacity of more than 20 MW.     **Loss**shall mean any and all losses relating to injury to or death of any person or damage toproperty, demand, suits, recoveries, costs and expenses, court costs, attorney fees, and all otherobligations by or to third parties, arising out of or resulting from the other Party’s performance,or non-performance of its obligations under the Standard Large Generator Interconnection Agreementon behalf
7

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)     of the indemnifying Party, except in cases of gross negligence or intentional wrongdoing by theindemnifying Party.     **Material Modification**shall mean those modifications that have a material impact on the costor timing of any Interconnection Request with a later queue priority date.     **Metering Equipment**shall mean all metering equipment installed or to be installed at theGenerating Facility pursuant to the Standard Large Generator Interconnection Agreement at themetering points, including but not limited to instrument transformers, MWh-meters, data acquisitionequipment, transducers, remote terminal unit, communications equipment, phone lines, and fiberoptics.     **NERC**shall mean the North American Electric Reliability Council or its successor organization.     **Network Resource**shall mean any designated generating resource owned, purchased, or leased bya Network Customer under the Network Integration Transmission Service Tariff. Network Resources donot include any resource, or any portion thereof, that is committed for sale to third parties orotherwise cannot be called upon to meet the Network Customer’s Network Load on a non-interruptiblebasis.     **Network Resource Interconnection Service**shall mean an Interconnection Service that allows theInterconnection Customer to integrate its Large Generating Facility with the TransmissionProvider’s Transmission System (1) in a manner comparable to that in which the TransmissionProvider integrates its generating facilities to serve native load customers; or (2) in an RTO orISO with market based congestion management, in the same manner as Network Resources. NetworkResource Interconnection Service in and of itself does not convey transmission service.     **Network Upgrades**shall mean the additions, modifications, and upgrades to the TransmissionProvider’s Transmission System required at or beyond the point at which the InterconnectionFacilities connect to the Transmission Provider’s Transmission System to accommodate theinterconnection of the Large Generating Facility to the Transmission Provider’s TransmissionSystem.     **Notice of Dispute**shall mean a written notice of a dispute or claim that arises out of or inconnection with the Standard Large Generator Interconnection Agreement or its performance.     **Optional Interconnection Study**shall mean a sensitivity analysis based on assumptionsspecified by the Interconnection Customer in the Optional Interconnection Study Agreement.     **Optional Interconnection Study Agreement**shall mean the form of agreement contained inAppendix 5 of the Standard Large Generator Interconnection Procedures for conducting the OptionalInterconnection Study.     **Party or Parties**shall mean Transmission Provider, Transmission Owner, InterconnectionCustomer or any combination of the above.
8

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)          **Point of Change of Ownership**shall mean the point, as set forth in Appendix A to the StandardLarge Generator Interconnection Agreement, where the Interconnection Customer’s InterconnectionFacilities connect to the Transmission Provider’s Interconnection Facilities.     **Point of Interconnection**shall mean the point, as set forth in Appendix A to the StandardLarge Generator Interconnection Agreement, where the Interconnection Facilities connect to theTransmission Provider’s Transmission System.     **Queue Position**shall mean the order of a valid Interconnection Request, relative to all otherpending valid Interconnection Requests, that is established based upon the date and time of receiptof the valid Interconnection Request by the Transmission Provider.     **Reasonable Efforts**shall mean, with respect to an action required to be attempted or taken bya Party under the Standard Large Generator Interconnection Agreement, efforts that aretimely and consistent with Good Utility Practice and are otherwise substantially equivalent tothose a Party would use to protect its own interests.     **Scoping Meeting**shall mean the meeting between representatives of the Interconnection Customerand Transmission Provider conducted for the purpose of discussing alternative interconnectionoptions, to exchange information including any transmission data and earlier study evaluations thatwould be reasonably expected to impact such interconnection options, to analyze such information,and to determine the potential feasible Points of Interconnection.     **Site Control**shall mean documentation reasonably demonstrating: (1) ownership of, a leaseholdinterest in, or a right to develop a site for the purpose of constructing the Generating Facility;(2) an option to purchase or acquire a leasehold site for such purpose; or (3) an exclusivity orother business relationship between Interconnection Customer and the entity having the right tosell, lease or grant Interconnection Customer the right to possess or occupy a site for suchpurpose.     **Small Generating Facility**shall mean a Generating Facility that has a Generating FacilityCapacity of no more than 20 MW.     **Stand Alone Network Upgrades**shall mean Network Upgrades that an Interconnection Customer mayconstruct without affecting day-to-day operations of the Transmission System during theirconstruction. Both the Transmission Provider and the Interconnection Customer must agree as to whatconstitutes Stand Alone Network Upgrades and identify them in Appendix A to the Standard LargeGenerator Interconnection Agreement.     **Standard Large Generator Interconnection Agreement (LGIA)**shall mean the form ofinterconnection agreement applicable to an Interconnection Request pertaining to a Large GeneratingFacility that is included in the Transmission Provider’s Tariff.
9

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)          **Standard Large Generator Interconnection Procedures (LGIP)**shall mean the interconnectionprocedures applicable to an Interconnection Request pertaining to a Large Generating Facility thatare included in the Transmission Provider’s Tariff.     **System Protection Facilities**shall mean the equipment, including necessary protection signalcommunications equipment, required to protect (1) the Transmission Provider’s Transmission Systemfrom faults or other electrical disturbances occurring at the Generating Facility and (2) theGenerating Facility from faults or other electrical system disturbances occurring on theTransmission Provider’s Transmission System or on other delivery systems or other generatingsystems to which the Transmission Provider’s Transmission System is directly connected.     **Tariff**shall mean the Transmission Provider’s Tariff through which open accesstransmission service and Interconnection Service are offered, as filed with FERC, and as amended orsupplemented from time to time, or any successor tariff.     **Transmission Owner**shall mean an entity that owns, leases or otherwise possesses an interestin the portion of the Transmission System at the Point of Interconnection and may be a Party to theStandard Large Generator Interconnection Agreement to the extent necessary.     **Transmission Provider**shall mean the public utility (or its designated agent) that owns,controls, or operates transmission or distribution facilities used for the transmission ofelectricity in interstate commerce and provides transmission service under the Tariff. The termTransmission Provider should be read to include the Transmission Owner when the Transmission Owneris separate from the Transmission Provider.     **Transmission Provider’s Interconnection Facilities**shall mean all facilities and equipmentowned, controlled or operated by the Transmission Provider from the Point of Change of Ownership tothe Point of Interconnection as identified in Appendix A to the Standard Large GeneratorInterconnection Agreement, including any modifications, additions or upgrades to such facilitiesand equipment.Transmission Provider’s Interconnection Facilities are sole use facilities and shall not includeDistribution Upgrades, Stand Alone Network Upgrades or Network Upgrades.     **Transmission System**shall mean the facilities owned, controlled or operated by theTransmission Provider or Transmission Owner that are used to provide transmission service under theTariff.     **Trial Operation**shall mean the period during which Interconnection Customer is engaged inon-site test operations and commissioning of the Generating Facility prior to Commercial Operation.
10

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)     **Article 2. Effective Date, Term, and Termination****2.1** **Effective Date.**This LGIA shall become effective upon execution by the Parties subject toacceptance by FERC (if applicable), or if filed unexecuted, upon the date specified by FERC.Transmission Provider shall promptly file this LGIA with FERC upon execution in accordance withArticle 3.1, if required. **2.2** **Term of Agreement.**Subject to the provisions of Article 2.3, this LGIA shall remain in effect fora period of ten (10) years from the Effective Date or such other longer period as InterconnectionCustomer may request and shall be automatically renewed for each successiveone-year period thereafter. Provided, however, that if the Interconnection Customer’s LeaseAgreement dated September 14, 2005 or the Operations Provisions, thereto, are set to terminate orotherwise cease to be effective, Interconnection Customer shall process such terminationconsistent with Article 2.3.1 unless Transmission Provider and Interconnection Customer canmutually agree upon the amendments and/or modifications necessary to retain this Agreement aseffective given such change in circumstances. **2.3** **Termination Procedures.** **2.3.1** **Written Notice**. This LGIA may be terminated by Interconnection Customer after givingTransmission Provider ninety (90) Calendar Days advance written notice, or by Transmission Providernotifying FERC after the Generating Facility permanently ceases Commercial Operation.  **2.3.2** **Default**. Either Party may terminate this LGIA in accordance with Article 17.  **2.3.3** Notwithstanding Articles 2.3.1 and 2.3.2, no termination shall become effective untilthe Parties have complied with all Applicable Laws and Regulations applicable to such termination,including the filing with FERC of a notice of termination of this LGIA, which notice has beenaccepted for filing by FERC.**2.4** **Termination Costs.**If a Party elects to terminate this Agreement pursuant to Article 2.3 above,each Party shall pay all costs incurred (including any cancellation costs relating to orders orcontracts for Interconnection Facilities and equipment) or charges assessed by the other Party, asof the date of the other Party’s receipt of such notice of termination, that are theresponsibility of the Terminating Party under this LGIA. In the event of termination by a Party,the Parties shall use commercially Reasonable Efforts to mitigate the costs, damages and chargesarising as a consequence of termination. Upon termination of this LGIA, unless otherwise orderedor approved by FERC: **2.4.1** With respect to any portion of Transmission Provider’s Interconnection Facilities that havenot yet been constructed or installed, Transmission Provider shall to the extent possible and withInterconnection Customer’s authorization cancel any pending orders of,
11

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)        or return, any materials or equipment for, or contracts for construction of, suchfacilities; provided that in the event Interconnection Customer elects not to authorizesuch cancellation, Interconnection Customer shall assume all payment obligations withrespect to such materials, equipment, and contracts, and Transmission Provider shalldeliver suchmaterial and equipment, and, if necessary, assign such contracts, to InterconnectionCustomer as soon as practicable, at Interconnection Customer’s expense. To the extent thatInterconnection Customer has already paid Transmission Provider for any or all such costsof materials or equipment not taken by Interconnection Customer, Transmission Providershall promptly refund such amounts to Interconnection Customer, less any costs, includingpenalties incurred by Transmission Provider to cancel any pending orders of or return suchmaterials, equipment, or contracts.    If an Interconnection Customer terminates this LGIA, it shall be responsible for all costsincurred in association with that Interconnection Customer’s interconnection, includingany cancellation costs relating to orders or contracts for Interconnection Facilities andequipment, and other expenses including any Network Upgrades for which TransmissionProvider has incurred expenses and has not been reimbursed by Interconnection Customer.  **2.4.2** Transmission Provider may, at its option, retain any portion of such materials, equipment,or facilities that Interconnection Customer chooses not to accept delivery of, in which caseTransmission Provider shall be responsible for all costs associated with procuring such materials,equipment, or facilities.  **2.4.3** With respect to any portion of the Interconnection Facilities, and any other facilitiesalready installed or constructed pursuant to the terms of this LGIA, Interconnection Customershall be responsible for all costs associated with the removal, relocation or otherdisposition or retirement of such materials, equipment, or facilities.**2.5** **Disconnection**. Upon termination of this LGIA, the Parties will take all appropriate steps todisconnect the Large Generating Facility from the Transmission System. All costs required toeffectuate such disconnection shall be borne by the terminating Party, unless such terminationresulted from the non-terminating Party’s Default of this LGIA or such non-terminating Partyotherwise is responsible for these costs under this LGIA. **2.6** **Survival**. This LGIA shall continue in effect after termination to the extent necessary to providefor final billings and payments and for costs incurred hereunder, including billings and paymentspursuant to this LGIA; to permit the determination and enforcement of liability andindemnification obligations arising from acts or events that occurred while this LGIA was ineffect; and to permit each Party to have access to the lands of the other Party pursuant to thisLGIA or other applicable agreements, to disconnect, remove or salvage its own facilities andequipment.
12

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)     **Article 3. Regulatory Filings****3.1** **Filing**. Transmission Provider shall file this LGIA (and any amendment hereto) with the appropriateGovernmental Authority, if required. Interconnection Customer may request that any information soprovided be subject to the confidentiality provisions of Article 22. IfInterconnection Customer has executed this LGIA, or any amendment thereto, InterconnectionCustomer shall reasonably cooperate with Transmission Provider with respect to such filing and toprovide any information reasonably requested by Transmission Provider needed to comply withapplicable regulatory requirements.**Article 4. Scope of Service****4.1** **Interconnection Product Options**. Interconnection Customer has selected the following(checked) type of Interconnection Service: **4.1.1** **Energy Resource Interconnection Service.** **4.1.1.1** **The Product**. Energy Resource Interconnection Service allows InterconnectionCustomer to connect the Large Generating Facility to the Transmission System andbe eligible to deliver the Large Generating Facility’s output using the existingfirm or non-firm capacity of the Transmission System on an “as available” basis.To the extent Interconnection Customer wants to receive Energy ResourceInterconnection Service, Transmission Provider shall construct facilitiesidentified in Attachment A.  **4.1.1.2** **Transmission Delivery Service Implications**. Under Energy ResourceInterconnection Service, Interconnection Customer will be eligible to inject powerfrom the Large Generating Facility into and deliver power across theinterconnecting Transmission Provider’s Transmission System on an “as available”basis up to the amount of MWs identified in the applicable stability and steadystate studies to the extent the upgrades initially required to qualify for EnergyResource Interconnection Service have been constructed. Where eligible to do so(e.g., PJM, ISO-NE, NYISO), Interconnection Customer may place a bid to sell intothe market up to the maximum identified Large Generating Facility output, subjectto any conditions specified in the interconnection service approval, and the LargeGenerating Facility will be dispatched to the extent Interconnection Customer’sbid clears. In all other instances, no transmission delivery service from theLarge Generating Facility is assured, but Interconnection Customer may obtainPoint-to-Point Transmission Service, Network Integration Transmission Service, orbe used for secondary network transmission service, pursuant to TransmissionProvider’s Tariff, up to the maximum output identified in the stability and steadystate studies. In thoseinstances, in order for Interconnection Customer to obtain the right to deliver or
13

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)        inject energy beyond the Large Generating Facility Point of Interconnection or toimprove its ability to do so, transmission delivery service must be obtainedpursuant to the provisions of Transmission Provider’s Tariff. TheInterconnection Customer’s ability to inject its Large Generating Facility outputbeyond the Point of Interconnection, therefore, will depend on the existingcapacity of Transmission Provider’s Transmission System at such time as atransmission service request is made that would accommodate such delivery. Theprovision of firm Point-to-Point Transmission Service or Network IntegrationTransmission Service may require the construction of additional Network Upgrades. **4.1.2** **Network Resource Interconnection Service.** **4.1.2.1** **The Product**. Transmission Provider must conduct the necessary studies and constructthe Network Upgrades needed to integrate the Large Generating Facility (1) in a manner comparableto that in which Transmission Provider integrates its generating facilities to serve native loadcustomers; or (2) in an ISO or RTO with market based congestion management, in the same manner asall Network Resources. To the extent Interconnection Customer wants to receiveNetwork Resource Interconnection Service, Transmission Provider shallconstruct the facilities identified in Attachment A to this LGIA.  **4.1.2.2** **Transmission Delivery Service Implications**. Network ResourceInterconnection Service allows Interconnection Customer’s Large GeneratingFacility to be designated by any Network Customer under the Tariff on TransmissionProvider’s Transmission System as a Network Resource, up to the Large GeneratingFacility’s full output, on the same basis as existing Network Resourcesinterconnected to Transmission Provider’s Transmission System, and to be studiedas a Network Resource on the assumption that such a designation will occur.Although Network Resource Interconnection Service does not convey a reservation oftransmission service, any Network Customer under the Tariff can utilize itsnetwork service under the Tariff to obtain delivery of energy from theinterconnected Interconnection Customer’s Large Generating Facility in the samemanner as it accesses Network Resources. A Large Generating Facility receivingNetwork Resource Interconnection Service may also be used to provide AncillaryServices after technical studies and/or periodic analyses are performed withrespect to the Large Generating Facility’s ability to provide any applicableAncillary Services, provided that such studies and analyses have been or wouldbe required in connection with the provision of such Ancillary Services by anyexisting Network Resource. However, if an Interconnection Customer’s LargeGenerating Facility has not been designated as a Network Resource by any load, itcannot be required to provide Ancillary Services except to the extent suchrequirements extend to all generating facilities that are similarly situated. The
14

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)        provision of Network Integration Transmission Service or firm Point-to-PointTransmission Service may require additional studies and the construction ofadditional upgrades. Because such studies and upgrades would be associatedwith a request for delivery service under the Tariff, cost responsibility forthe studies and upgrades would be in accordance with FERC’s policy for pricingtransmission delivery services.    Network Resource Interconnection Service does not necessarily provideInterconnection Customer with the capability to physically deliver the output ofits Large Generating Facility to any particular load on Transmission Provider’sTransmission System without incurring congestion costs. In the event oftransmission constraints on Transmission Provider’s Transmission System,Interconnection Customer’s Large Generating Facility shall be subject to theapplicable congestion management procedures in Transmission Provider’sTransmission System in the same manner as Network Resources.    There is no requirement either at the time of study or interconnection, or at anypoint in the future, that Interconnection Customer’s Large Generating Facility bedesignated as a Network Resource by a Network Service Customer under the Tariffor that Interconnection Customer identify a specific buyer (or sink). To theextent a Network Customer does designate the Large Generating Facility as aNetwork Resource, it must do so pursuant to Transmission Provider’s Tariff.    Once an Interconnection Customer satisfies the requirements for obtainingNetwork Resource Interconnection Service, any future transmission servicerequest for delivery from the Large Generating Facility within TransmissionProvider’s Transmission System of any amount of capacity and/or energy, up tothe amount initially studied, will not require that any additional studies beperformed or that any further upgrades associated with such Large GeneratingFacility be undertaken, regardless of whether or not such Large GeneratingFacility is ever designated by a Network Customer as a Network Resource andregardless of changes in ownership of the Large Generating Facility. However,the reduction or elimination of congestion or redispatch costs may requireadditional studies and the construction of additional upgrades.    To the extent Interconnection Customer enters into an arrangement for long termtransmission service for deliveries from the Large Generating Facility outsideTransmission Provider’s Transmission System, such request may require additionalstudies and upgrades in order for Transmission Provider to grant such request.
15

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)     **4.2** **Provision of Service**. Transmission Provider shall provide Interconnection Service for the LargeGenerating Facility at the Point of Interconnection. **4.3** **Performance Standards**. Each Party shall perform all of its obligations under this LGIA inaccordance with Applicable Laws and Regulations, Applicable Reliability Standards, and GoodUtility Practice, and to the extent a Party is required or prevented or limited in taking anyaction by such regulations and standards, such Party shall not be deemed to be in Breach of thisLGIA for its compliance therewith. If such Party is a Transmission Provider or TransmissionOwner, then that Party shall amend the LGIA and submit the amendment to FERC for approval. **4.4** **No Transmission Delivery Service**. The execution of this LGIA does not constitute a request for,nor the provision of, any transmission delivery service under Transmission Provider’s Tariff, anddoes not convey any right to deliver electricity to any specific customer or Point of Delivery. **4.5** **Interconnection Customer Provided Services**. The services provided by InterconnectionCustomer under this LGIA are set forth in Article 9.6 and Article 13.5.1. InterconnectionCustomer shall be paid for such services in accordance with Article 11.6.**Article 5. Interconnection Facilities Engineering, Procurement, and Construction****5.1** **Options**. Unless otherwise mutually agreed to between the Parties, Interconnection Customer shallselect the In-Service Date, Initial Synchronization Date, and Commercial Operation Date; andeither Standard Option or Alternate Option set forth below for completion of TransmissionProvider’s Interconnection Facilities and Network Upgrades as set forth in Appendix A,Interconnection Facilities and Network Upgrades, and such dates and selected option shall be setforth in Appendix B, Milestones. **5.1.1** **Standard Option**. Transmission Provider shall design, procure, and construct Transmission Provider’s Interconnection Facilities and Network Upgrades, using ReasonableEfforts to complete Transmission Provider’s Interconnection Facilities and NetworkUpgrades by the dates set forth in Appendix B, Milestones. Transmission Provider shall notbe required to undertake any action which is inconsistent with its standard safetypractices, its material and equipment specifications, its design criteria and constructionprocedures, its labor agreements, and Applicable Laws and Regulations. In the eventTransmission Provider reasonably expects that it will not be able to complete TransmissionProvider’s Interconnection Facilities and Network Upgrades by the specified dates,Transmission Provider shall promptly provide written notice to Interconnection Customerand shall undertake Reasonable Efforts to meet the earliest dates thereafter.  **5.1.2** **Alternate Option**. If the dates designated by Interconnection Customer are acceptable toTransmission Provider, Transmission Provider shall so notify Interconnection Customer withinthirty (30) Calendar Days, and shall assume responsibility for the design,
16

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)        procurement and construction of Transmission Provider’s Interconnection Facilities bythe designated dates.    If Transmission Provider subsequently fails to complete Transmission Provider’sInterconnection Facilities by the In-Service Date, to the extent necessary to provide backfeed power; or fails to complete Network Upgrades by the Initial Synchronization Date tothe extent necessary to allow for Trial Operation at full power output, unless otherarrangements are made by the Parties for such Trial Operation; or fails to complete theNetwork Upgrades by the Commercial Operation Date, as such dates are reflected in AppendixB, Milestones; Transmission Provider shall pay Interconnection Customer liquidated damagesin accordance with Article 5.3, Liquidated Damages, provided, however, the datesdesignated by Interconnection Customer shall be extended day for day for each day that theapplicable RTO or ISO refuses to grant clearances to install equipment.  **5.1.3** **Option to Build**. If the dates designated by Interconnection Customer are not acceptable toTransmission Provider, Transmission Provider shall so notify Interconnection Customer within thirty(30) Calendar Days, and unless the Parties agree otherwise, Interconnection Customer shall have theoption to assume responsibility for the design, procurement and construction of TransmissionProvider’s Interconnection Facilities and Stand Alone Network Upgrades on the dates specified inArticle 5.1.2. TransmissionProvider and Interconnection Customer must agree as to what constitutes Stand AloneNetwork Upgrades and identify such Stand Alone Network Upgrades in Appendix A. Except forStand Alone Network Upgrades, Interconnection Customer shall have no right to constructNetwork Upgrades under this option.  **5.1.4** **Negotiated Option**. If Interconnection Customer elects not to exercise its option underArticle 5.1.3, Option to Build, Interconnection Customer shall so notify TransmissionProvider within thirty (30) Calendar Days, and the Parties shall in good faith attempt tonegotiate terms and conditions (including revision of the specified dates and liquidateddamages, the provision of incentives or the procurement and construction of a portion ofTransmission Provider’s Interconnection Facilities and Stand Alone Network Upgrades byInterconnection Customer) pursuant to which Transmission Provider is responsible for thedesign, procurement and construction of Transmission Provider’s Interconnection Facilitiesand Network Upgrades. If the Parties are unable to reach agreement on such terms andconditions, Transmission Provider shall assume responsibility for the design, procurementand construction of Transmission Provider’s Interconnection Facilities and NetworkUpgrades pursuant to 5.1.1, Standard Option.**5.2** **General Conditions Applicable to Option to Build.**If Interconnection Customer assumesresponsibility for the design, procurement and construction of Transmission Provider’sInterconnection Facilities and Stand Alone Network Upgrades,
17

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)        (1) Interconnection Customer shall engineer, procure equipment, and constructTransmission Provider’s Interconnection Facilities and Stand Alone Network Upgrades (orportions thereof) using Good Utility Practice and using standards and specificationsprovided in advance by Transmission Provider;    (2) Interconnection Customer’s engineering, procurement and construction ofTransmission Provider’s Interconnection Facilities and Stand Alone Network Upgrades shallcomply with all requirements of law and Applicable Reliability Standards to whichTransmission Provider would be subject in the engineering, procurement or construction ofTransmission Provider’s Interconnection Facilities and Stand Alone Network Upgrades;    (3) Transmission Provider shall review and approve the engineering design, equipmentacceptance tests, and the construction of Transmission Provider’s InterconnectionFacilities and Stand Alone Network Upgrades;    (4) prior to commencement of construction, Interconnection Customer shall provide toTransmission Provider a schedule for construction of Transmission Provider’sInterconnection Facilities and Stand Alone Network Upgrades, and shall promptly respondto requests for information from Transmission Provider;    (5) at any time during construction, Transmission Provider shall have the right to gainunrestricted access to Transmission Provider’s Interconnection Facilities and Stand AloneNetwork Upgrades and to conduct inspections of the same;    (6) at any time during construction, should any phase of the engineering, equipmentprocurement, or construction of Transmission Provider’s Interconnection Facilities andStand Alone Network Upgrades not meet the standards and specifications provided byTransmission Provider, Interconnection Customer shall be obligated to remedydeficiencies in that portion of Transmission Provider’s Interconnection Facilities andStand Alone Network Upgrades;    (7) Interconnection Customer shall indemnify Transmission Provider for claims arising fromInterconnection Customer’s construction of Transmission Provider’s InterconnectionFacilities and Stand Alone Network Upgrades under the terms and procedures applicable toArticle 18.1 Indemnity;    (8) Interconnection Customer shall transfer control of Transmission Provider’sInterconnection Facilities and Stand Alone Network Upgrades to Transmission Provider;    (9) Unless Parties otherwise agree, Interconnection Customer shall transfer ownership ofTransmission Provider’s Interconnection Facilities and Stand-Alone Network Upgrades toTransmission Provider;
18

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)        (10) Transmission Provider shall approve and accept for operation and maintenanceTransmission Provider’s Interconnection Facilities and Stand Alone Network Upgrades to theextent engineered, procured, and constructed in accordance with this Article 5.2; and    (11) Interconnection Customer shall deliver to Transmission Provider “as-built” drawings,information, and any other documents that are reasonably required by Transmission Providerto assure that the Interconnection Facilities and Stand-Alone Network Upgrades are builtto the standards and specifications required by Transmission Provider.**5.3.** **Liquidated Damages**. The actual damages to Interconnection Customer, in the eventTransmission Provider’s Interconnection Facilities or Network Upgrades are not completed by thedates designated by Interconnection Customer and accepted by Transmission Provider pursuant tosubparagraphs 5.1.2 or 5.1.4, above, may include Interconnection Customer’s fixed operation andmaintenance costs and lost opportunity costs. Such actual damages are uncertain and impossible todetermine at this time. Because of such uncertainty, any liquidated damages paid byTransmission Provider to Interconnection Customer in the event that Transmission Provider does notcomplete any portion of Transmission Provider’s Interconnection Facilities or Network Upgrades bythe applicable dates, shall be an amount equal to 1/2 of 1 percent per day of the actual cost ofTransmission Provider’s Interconnection Facilities and Network Upgrades, in the aggregate, forwhich Transmission Provider has assumed responsibility to design, procure and construct.   However, in no event shall the total liquidated damages exceed 20 percent of the actual cost ofTransmission Provider’s Interconnection Facilities and Network Upgrades for which TransmissionProvider has assumed responsibility to design, procure, and construct. The foregoing payments willbe made by Transmission Provider to Interconnection Customer as just compensation for the damagescaused to Interconnection Customer, which actual damages are uncertain and impossible to determineat this time, and as reasonable liquidated damages, but not as a penalty or a method to secureperformance of this LGIA. Liquidated damages, when the Parties agree to them, are the exclusiveremedy for the Transmission Provider’s failure to meet its schedule.   No liquidated damages shall be paid to Interconnection Customer if: (1) Interconnection Customeris not ready to commence use of Transmission Provider’s Interconnection Facilities or NetworkUpgrades to take the delivery of power for the Large Generating Facility’s Trial Operation or toexport power from the Large Generating Facility on the specified dates, unless InterconnectionCustomer would have been able to commence use of Transmission Provider’s InterconnectionFacilities or Network Upgrades to take the delivery of power for Large Generating Facility’s TrialOperation or to export power from the Large Generating Facility, but for Transmission Provider’sdelay; (2) Transmission Provider’s failure to meet the specified dates is the result of the actionor inaction of Interconnection Customer or any other Interconnection
19

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)       Customer who has entered into an LGIA with Transmission Provider or any cause beyond TransmissionProvider’s reasonable control or reasonable ability to cure; (3) the Interconnection Customer hasassumed responsibility for the design, procurement and construction of Transmission Provider’sInterconnection Facilities and Stand Alone Network Upgrades; or (4) the Parties have otherwiseagreed. **5.4** **Power System Stabilizers**. The Interconnection Customer shall procure, install, maintain andoperate Power System Stabilizers in accordance with the guidelines and procedures established bythe Applicable Reliability Council. Transmission Provider reserves the right to reasonablyestablish minimum acceptable settings for any installed Power System Stabilizers, subject to thedesign and operating limitations of the Large Generating Facility. If the Large GeneratingFacility’s Power System Stabilizers are removed from service or not capable of automaticoperation, Interconnection Customer shall immediately notify Transmission Provider’s systemoperator, or its designated representative. The requirements of this paragraph shall not apply towind generators. **5.5** **Equipment Procurement**. If responsibility for construction of Transmission Provider’sInterconnection Facilities or Network Upgrades is to be borne by Transmission Provider, thenTransmission Provider shall commence design of Transmission Provider’s Interconnection Facilitiesor Network Upgrades and procure necessary equipment as soon as practicable after all of thefollowing conditions are satisfied, unless the Parties otherwise agree in writing: **5.5.1** Transmission Provider has completed the Facilities Study pursuant to the Facilities StudyAgreement;  **5.5.2** Transmission Provider has received written authorization to proceed with design andprocurement from Interconnection Customer by the date specified in Appendix B, Milestones; and  **5.5.3** Interconnection Customer has provided security to Transmission Provider in accordance withArticle 11.5 by the dates specified in Appendix B, Milestones.**5.6** **Construction Commencement**. Transmission Provider shall commence construction ofTransmission Provider’s Interconnection Facilities and Network Upgrades for which it isresponsible as soon as practicable after the following additional conditions aresatisfied: **5.6.1** Approval of the appropriate Governmental Authority has been obtained for any facilitiesrequiring regulatory approval;  **5.6.2** Necessary real property rights and rights-of-way have been obtained, to the extentrequired for the construction of a discrete aspect of Transmission Provider’sInterconnection Facilities and Network Upgrades;
20

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)      **5.6.3** Transmission Provider has received written authorization to proceed with construction fromInterconnection Customer by the date specified in Appendix B, Milestones; and  **5.6.4** Interconnection Customer has provided security to Transmission Provider in accordance withArticle 11.5 by the dates specified in Appendix B, Milestones.**5.7** **Work Progress**. The Parties will keep each other advised periodically as to the progress of theirrespective design, procurement and construction efforts. Either Party may, at any time, request aprogress report from the other Party. If, at any time, Interconnection Customer determines thatthe completion of Transmission Provider’s Interconnection Facilities will not be required untilafter the specified In-Service Date, Interconnection Customer will provide written notice toTransmission Provider of such later date upon which the completion of Transmission Provider’sInterconnection Facilities will be required. **5.8** **Information Exchange**. As soon as reasonably practicable after the Effective Date, the Partiesshall exchange information regarding the design and compatibility of the Parties’ InterconnectionFacilities and compatibility of the Interconnection Facilities with Transmission Provider’sTransmission System, and shall work diligently and in good faith to make any necessary designchanges. **5.9** **Limited Operation**. If any of Transmission Provider’s Interconnection Facilities or NetworkUpgrades are not reasonably expected to be completed prior to the Commercial Operation Date of theLarge Generating Facility, Transmission Provider shall, upon the request and at the expense ofInterconnection Customer, perform operating studies on a timely basis to determine the extent towhich the Large Generating Facility and Interconnection Customer’s Interconnection Facilities mayoperate prior to the completion of Transmission Provider’s Interconnection Facilities or NetworkUpgrades consistent with Applicable Laws and Regulations, Applicable Reliability Standards, GoodUtility Practice, and this LGIA. Transmission Provider shall permitInterconnection Customer to operate the Large Generating Facility and InterconnectionCustomer’s Interconnection Facilities in accordance with the results of such studies. **5.10** **Interconnection Customer’s Interconnection Facilities (‘ICIF’)**. Interconnection Customer shall, atits expense, design, procure, construct, own and install the ICIF, as set forth in Appendix A,Interconnection Facilities, Network Upgrades and Distribution Upgrades. **5.10.1** **Interconnection Customer’s Interconnection Facility Specifications**. Interconnection Customer shall submit initial specifications for the ICIF, including System ProtectionFacilities, to Transmission Provider at least one hundred eighty (180) Calendar Days priorto the Initial Synchronization Date; and final specifications for review and comment atleast ninety (90) Calendar Days prior to the Initial Synchronization Date. Transmission Provider shall review such specifications to ensure that the ICIF arecompatible with the technical specifications, operational control, and safety requirementsof Transmission Provider and comment on such specifications within thirty (30) Calendar
21

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)        Days of Interconnection Customer’s submission. All specifications provided hereundershall be deemed confidential.  **5.10.2** **Transmission Provider’s Review**. Transmission Provider’s review of InterconnectionCustomer’s final specifications shall not be construed as confirming, endorsing, orproviding a warranty as to the design, fitness, safety, durability or reliability of theLarge Generating Facility, or the ICIF. Interconnection Customer shall make such changesto the ICIF as may reasonably be required by Transmission Provider, in accordance withGood Utility Practice, to ensure that the ICIF are compatible with the technicalspecifications, operational control, and safety requirements of Transmission Provider.  **5.10.3** **ICIF Construction**. The ICIF shall be designed and constructed in accordance withGood Utility Practice. Within one hundred twenty (120) Calendar Days after the CommercialOperation Date, unless the Parties agree on another mutually acceptable deadline,Interconnection Customer shall deliver to Transmission Provider “as-built” drawings,information and documents for the ICIF, such as: a one-line diagram, a site plan showingthe Large Generating Facility and the ICIF, plan and elevation drawings showing the layoutof the ICIF, a relay functional diagram, relaying AC and DC schematic wiring diagrams andrelay settings for all facilities associated with Interconnection Customer’s step-uptransformers, the facilities connecting the Large Generating Facility to the step-uptransformers and the ICIF, and the impedances (determined by factory tests) for theassociated step-up transformers and the Large Generating Facility. The InterconnectionCustomer shall provide Transmission Provider specifications for the excitation system,automatic voltage regulator, Large Generating Facility control and protection settings,transformer tap settings, and communications, if applicable.**5.11** **Transmission Provider’s Interconnection Facilities Construction**. Transmission Provider’sInterconnection Facilities shall be designed and constructed in accordance with Good UtilityPractice. Upon request, within one hundred twenty (120) Calendar Days after the CommercialOperation Date, unless the Parties agree on another mutually acceptable deadline, TransmissionProvider shall deliver to Interconnection Customer the following “as-built” drawings, informationand documents for Transmission Provider’s Interconnection Facilities [include appropriate drawingsand relay diagrams].   Transmission Provider will obtain control of Transmission Provider’s Interconnection Facilitiesand Stand Alone Network Upgrades upon completion of such facilities. **5.12** **Access Rights**. Upon reasonable notice and supervision by a Party, and subject to any required ornecessary regulatory approvals, a Party (“Granting Party”) shall furnish at no cost to the otherParty (“Access Party”) any rights of use, licenses, rights of way and easements with respect tolands owned or controlled by the Granting Party, its agents (if allowed under the applicableagency agreement), or any Affiliate, that are necessary to enable the Access Party to obtain
22

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)       ingress and egress to construct, operate, maintain, repair, test (or witness testing), inspect,replace or remove facilities and equipment to: (i) interconnect the Large Generating Facility withthe Transmission System; (ii) operate and maintain the Large Generating Facility, theInterconnection Facilities and the Transmission System; and (iii) disconnect or remove the AccessParty’s facilities and equipment upon termination of this LGIA. In exercising such licenses,rights of way and easements, the Access Party shall not unreasonably disrupt or interfere withnormal operation of the Granting Party’s business and shall adhere to the safety rules andprocedures established in advance, as may be changed from time to time, by the Granting Party andprovided to the Access Party. **5.13** **Lands of Other Property Owners**. If any part of Transmission Provider or Transmission Owner’sInterconnection Facilities and/or Network Upgrades is to be installed on property owned by personsother than Interconnection Customer or Transmission Provider or Transmission Owner, TransmissionProvider or Transmission Owner shall at Interconnection Customer’s expense use efforts, similar innature and extent to those that it typically undertakes on its own behalf or on behalf of itsAffiliates, including use of its eminent domain authority, and to the extent consistent with statelaw, to procure from such persons any rights of use, licenses, rights of way and easements that arenecessary to construct, operate, maintain, test, inspect, replace or remove Transmission Provideror Transmission Owner’s Interconnection Facilities and/or Network Upgrades upon such property. **5.14** **Permits.**Transmission Provider or Transmission Owner and Interconnection Customer shall cooperatewith each other in good faith in obtaining all permits, licenses, and authorizations that arenecessary to accomplish the interconnection in compliance with Applicable Laws and Regulations.With respect to this paragraph, Transmission Provider or Transmission Owner shall providepermitting assistance to Interconnection Customer comparable to that provided to TransmissionProvider’s own, or an Affiliate’s generation. **5.15** **Early Construction of Base Case Facilities.**Interconnection Customer may requestTransmission Provider to construct, and Transmission Provider shall construct, using ReasonableEfforts to accommodate Interconnection Customer’s In-Service Date, all or any portion of anyNetwork Upgrades required for Interconnection Customer to be interconnected to the TransmissionSystem which are included in the Base Case of the Facilities Study for Interconnection Customer,and which also are required to be constructed for another Interconnection Customer, but where suchconstruction is not scheduled to be completed in time to achieve Interconnection Customer’sIn-Service Date. **5.16** **Suspension.**Interconnection Customer reserves the right, upon written notice to TransmissionProvider, to suspend at any time all work by Transmission Provider associated with theconstruction and installation of Transmission Provider’s Interconnection Facilities and/or NetworkUpgrades required under this LGIA with the condition that Transmission System shall be left in asafe and reliable condition in accordance with Good Utility Practice and Transmission Provider’ssafety and reliability criteria. In such event, Interconnection Customer shall be
23

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)       responsible for all reasonable and necessary costs which Transmission Provider (i) hasincurred pursuant to this LGIA prior to the suspension and (ii) incurs in suspending suchwork, including any costs incurred to perform such work as may be necessary to ensure thesafety of persons and property and the integrity of the Transmission System during suchsuspension and, if applicable, any costs incurred in connection with the cancellation orsuspension of material, equipment and labor contracts which Transmission Provider cannotreasonably avoid; provided, however, that prior to canceling or suspending any suchmaterial, equipment or labor contract, Transmission Provider shall obtain InterconnectionCustomer’s authorization to do so.   Transmission Provider shall invoice Interconnection Customer for such costs pursuant toArticle 12 and shall use due diligence to minimize its costs. In the event InterconnectionCustomer suspends work by Transmission Provider required under this LGIA pursuant to thisArticle 5.16, and has not requested Transmission Provider to recommence the work requiredunder this LGIA on or before the expiration of three (3) years following commencement ofsuch suspension, this LGIA shall be deemed terminated. The three-year period shall begin onthe date the suspension is requested, or the date of the written notice to TransmissionProvider, if no effective date is specified. **5.17** **Taxes.** **5.17.1** **Interconnection Customer Payments Not Taxable.**The Parties intend that all payments orproperty transfers made by Interconnection Customer to Transmission Provider for the installationof Transmission Provider’s Interconnection Facilities and the Network Upgrades shall benon-taxable, either as contributions to capital, or as an advance, in accordance with the InternalRevenue Code and any applicable state income tax laws and shall not be taxable as contributions inaid of construction or otherwise under the Internal Revenue Code and any applicable state incometax laws.  **5.17.2** **Representations and Covenants.**In accordance with IRS Notice 2001-82 and IRSNotice 88-129, Interconnection Customer represents and covenants that (i) ownershipof the electricity generated at the Large Generating Facility will pass to anotherparty prior to the transmission of the electricity on the Transmission System, (ii)for income tax purposes, the amount of any payments and the cost of any propertytransferred to Transmission Provider for Transmission Provider’s InterconnectionFacilities will be capitalized by Interconnection Customer as an intangible assetand recovered using the straight-line method over a useful life of twenty (20)years, and (iii) any portion of Transmission Provider’s Interconnection Facilitiesthat is a “dual-use intertie,” within the meaning of IRS Notice 88-129, isreasonably expected to carry only a de minimis amount of electricity in thedirection of the Large Generating Facility. For this purpose, “de minimis amount”means no more than 5 percent of the total power flows in both directions,calculated in accordance with the “5 percent test” set forth in IRS Notice 88-129.This is not intended to be an exclusive list of the relevant conditions that mustbe met to conform to IRS requirements for non-taxable treatment.
24

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)        At Transmission Provider’s request, Interconnection Customer shall provide TransmissionProvider with a report from an independent engineer confirming its representation inclause (iii), above. Transmission Provider represents and covenants that the cost ofTransmission Provider’s Interconnection Facilities paid for by Interconnection Customerwill have no net effect on the base upon which rates are determined.  **5.17.3** **Indemnification for the Cost Consequences of Current Tax Liability Imposed Upon theTransmission Provider.**Notwithstanding Article 5.17.1, Interconnection Customer shall protect,indemnify and hold harmless Transmission Provider from the cost consequences of any current taxliability imposed against Transmission Provider as the result of payments or property transfersmade by Interconnection Customer to Transmission Provider under this LGIA for InterconnectionFacilities, as well as any interest and penalties, other than interest and penalties attributableto any delay caused by Transmission Provider.    Transmission Provider shall not include a gross-up for the cost consequences of anycurrent tax liability in the amounts it charges Interconnection Customer under this LGIAunless (i) Transmission Provider has determined, in good faith, that the payments orproperty transfers made by Interconnection Customer to Transmission Provider should bereported as income subject to taxation or (ii) any Governmental Authority directsTransmission Provider to report payments or property as income subject to taxation;provided, however, that Transmission Provider may require Interconnection Customer toprovide security for Interconnection Facilities, in a form reasonably acceptable toTransmission Provider (such as a parental guarantee or a letter of credit), in an amountequal to the cost consequences of any current tax liability under this Article 5.17.Interconnection Customer shall reimburse Transmission Provider for such costs on a fullygrossed-up basis, in accordance with Article 5.17.4, within thirty (30) Calendar Days ofreceiving written notification from Transmission Provider of the amount due, includingdetail about how the amount was calculated.    The indemnification obligation shall terminate at the earlier of (1) the expiration ofthe ten year testing period and the applicable statute of limitation, as it may beextended by Transmission Provider upon request of the IRS, to keep these years open foraudit or adjustment, or (2) the occurrence of a subsequent taxable event and the paymentof any related indemnification obligations as contemplated by this Article 5.17.  **5.17.4** **Tax Gross-Up Amount.**Interconnection Customer’s liability for the cost consequences of anycurrent tax liability under this Article 5.17 shall be calculated on a fully grossed-up basis.Except as may otherwise be agreed to by the parties, this means thatInterconnection Customer will pay Transmission Provider, in addition to the amount paid forthe Interconnection Facilities and Network Upgrades, an amount equal to (1) the currenttaxes imposed on Transmission Provider (“Current Taxes”) on the excess of (a)
25

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)        the gross income realized by Transmission Provider as a result of payments or propertytransfers made by Interconnection Customer to Transmission Provider under this LGIA(without regard to any payments under this Article 5.17) (the “Gross Income Amount”) over(b) the present value of future tax deductions for depreciation that will be available asa result of such payments or property transfers (the “Present Value DepreciationAmount”), plus (2) an additional amount sufficient to permit Transmission Provider toreceive and retain, after the payment of all Current Taxes, an amount equal to the netamount described in clause (1).    For this purpose, (i) Current Taxes shall be computed based on Transmission Provider’scomposite federal and state tax rates at the time the payments or property transfers arereceived and Transmission Provider will be treated as being subject to tax at the highestmarginal rates in effect at that time (the “Current Tax Rate”), and (ii) the Present ValueDepreciation Amount shall be computed by discounting Transmission Provider’s anticipatedtax depreciation deductions as a result of such payments or property transfers byTransmission Provider’s current weighted average cost of capital. Thus, the formula forcalculating Interconnection Customer’s liability to Transmission Owner pursuant to thisArticle 5.17.4 can be expressed as follows: (Current Tax Rate x (Gross Income Amount -Present Value of Tax Depreciation))/(1-Current Tax Rate). Interconnection Customer’sestimated tax liability in the event taxes are imposed shall be stated in Appendix A,Interconnection Facilities, Network Upgrades and Distribution Upgrades.  **5.17.5** **Private Letter Ruling or Change or Clarification of Law**. At InterconnectionCustomer’s request and expense, Transmission Provider shall file with the IRS a requestfor a private letter ruling as to whether any property transferred or sums paid, or to bepaid, by Interconnection Customer to Transmission Provider under this LGIA are subject tofederal income taxation. Interconnection Customer will prepare the initial draft of therequest for a private letter ruling, and will certify under penalties of perjury that allfacts represented in such request are true and accurate to the best of InterconnectionCustomer’s knowledge. Transmission Provider and Interconnection Customer shall cooperatein good faith with respect to the submission of such request.    Transmission Provider shall keep Interconnection Customer fully informed of the status ofsuch request for a private letter ruling and shall execute either a privacy act waiver ora limited power of attorney, in a form acceptable to the IRS, that authorizesInterconnection Customer to participate in all discussions with the IRS regarding suchrequest for a private letter ruling. Transmission Provider shall allow InterconnectionCustomer to attend all meetings with IRS officials about the request and shall permitInterconnection Customer to prepare the initial drafts of any follow-up letters inconnection with the request.
26

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)      **5.17.6** **Subsequent Taxable Events**. If, within 10 years from the date on which the relevantTransmission Provider’s Interconnection Facilities are placed in service, (i)Interconnection Customer Breaches the covenants contained in Article 5.17.2, (ii) a“disqualification event” occurs within the meaning of IRS Notice 88-129, or (iii) thisLGIA terminates and Transmission Provider retains ownership of the InterconnectionFacilities and Network Upgrades, Interconnection Customer shall pay a tax gross-up for thecost consequences of any current tax liability imposed on Transmission Provider,calculated using the methodology described in Article 5.17.4 and in accordance with IRSNotice 90-60.  **5.17.7** **Contests**. In the event any Governmental Authority determines that TransmissionProvider’s receipt of payments or property constitutes income that is subject to taxation,Transmission Provider shall notify Interconnection Customer, in writing, within thirty(30) Calendar Days of receiving notification of such determination by a GovernmentalAuthority. Upon the timely written request by Interconnection Customer and atInterconnection Customer’s sole expense, Transmission Provider may appeal, protest, seekabatement of, or otherwise oppose such determination. Upon Interconnection Customer’swritten request and sole expense, Transmission Provider may file a claim for refund withrespect to any taxes paid under this Article 5.17, whether or not it has received such adetermination. Transmission Provider reserves the right to make all decisions with regardto the prosecution of such appeal, protest, abatement or other contest, including theselection of counsel and compromise or settlement of the claim, but Transmission Providershall keep Interconnection Customer informed, shall consider in good faith suggestionsfrom Interconnection Customer about the conduct of the contest, and shall reasonablypermit Interconnection Customer or an Interconnection Customer representative to attendcontest proceedings.    Interconnection Customer shall pay to Transmission Provider on a periodic basis, asinvoiced by Transmission Provider, Transmission Provider’s documented reasonable costs ofprosecuting such appeal, protest, abatement or other contest. At any time during thecontest, Transmission Provider may agree to a settlement either with InterconnectionCustomer’s consent or after obtaining written advice from nationally-recognized taxcounsel, selected by Transmission Provider, but reasonably acceptable to InterconnectionCustomer, that the proposed settlement represents a reasonable settlement given the hazardsof litigation. Interconnection Customer’s obligation shall be based on the amount of thesettlement agreed to by Interconnection Customer, or if a higher amount, so much of thesettlement that is supported by the written advice from nationally-recognized tax counselselected under the terms of the preceding sentence. The settlement amount shall becalculated on a fully grossed-up basis to cover any related cost consequences of thecurrent tax liability. Any settlement without Interconnection Customer’s consent or suchwritten advice will relieve Interconnection Customer from any obligation to indemnifyTransmission Provider for the tax at issue in the contest.
27

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)      **5.17.8** **Refund.**In the event that (a) a private letter ruling is issued to Transmission Providerwhich holds that any amount paid or the value of any property transferred by InterconnectionCustomer to Transmission Provider under the terms of this LGIA is not subject to federal incometaxation, (b) any legislative change or administrative announcement, notice, ruling or otherdetermination makes it reasonably clear to Transmission Provider in good faith that any amountpaid or the value of any property transferred by Interconnection Customer to Transmission Providerunder the terms of this LGIA is not taxable to Transmission Provider, (c) any abatement, appeal,protest, or other contest results in a determination that any payments or transfers made byInterconnection Customer to Transmission Provider are not subject to federal income tax, or (d) ifTransmission Provider receives a refund from any taxing authority for any overpayment of taxattributable to any payment or property transfer made by Interconnection Customer to TransmissionProvider pursuant to this LGIA, Transmission Provider shall promptly refund to InterconnectionCustomer the following:(i) any payment made by Interconnection Customer under this Article 5.17 fortaxes that is attributable to the amount determined to be non-taxable, togetherwith interest thereon,(ii) interest on any amount paid by Interconnection Customer to TransmissionProvider for such taxes which Transmission Provider did not submit to the taxingauthority, calculated in accordance with the methodology set forth in FERC’sregulations at 18 CFR §35.19a(a)(2)(iii) from the date payment was made byInterconnection Customer to the date Transmission Provider refunds such payment toInterconnection Customer, and(iii) with respect to any such taxes paid by Transmission Provider, any refund orcredit Transmission Provider receives or to which it may be entitled from anyGovernmental Authority, interest (or that portion thereof attributable to thepayment described in clause (i), above) owed to Transmission Provider for suchoverpayment of taxes (including any reduction in interest otherwise payable byTransmission Provider to any Governmental Authority resulting from an offset orcredit); as provided, however, that Transmission Provider will remit such amountpromptly to Interconnection Customer only after and to the extent that TransmissionProvider has received a tax refund, credit or offset from any GovernmentalAuthority for any applicable overpayment of income tax related to TransmissionProvider’s Interconnection Facilities.   The intent of this provision is to leave the Parties, to the extent practicable, in theevent that no taxes are due with respect to any payment for Interconnection Facilities andNetwork Upgrades hereunder, in the same position they would have been in had no such taxpayments been made.
28

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)      **5.17.9** **Taxes Other Than Income Taxes**. Upon the timely request by InterconnectionCustomer, and at Interconnection Customer’s sole expense, Transmission Provider mayappeal, protest, seek abatement of, or otherwise contest any tax (other than federal orstate income tax) asserted or assessed against Transmission Provider for whichInterconnection Customer may be required to reimburse Transmission Provider under theterms of this LGIA. Interconnection Customer shall pay to Transmission Provider on aperiodic basis, as invoiced by Transmission Provider, Transmission Provider’s documentedreasonable costs of prosecuting such appeal, protest, abatement, or othercontest. Interconnection Customer and Transmission Provider shall cooperate in good faithwith respect to any such contest. Unless the payment of such taxes is a prerequisite to anappeal or abatement or cannot be deferred, no amount shall be payable by InterconnectionCustomer to Transmission Provider for such taxes until they are assessed by a final,non-appealable order by any court or agency of competent jurisdiction. In the event that atax payment is withheld and ultimately due and payable after appeal, InterconnectionCustomer will be responsible for all taxes, interest and penalties, other than penaltiesattributable to any delay caused by Transmission Provider.  **5.17.10** **Transmission Owners Who Are Not Transmission Providers.**If TransmissionProvider is not the same entity as the Transmission Owner, then (i) all references inthis Article 5.17 to Transmission Provider shall be deemed also to refer to and toinclude the Transmission Owner, as appropriate, and (ii) this LGIA shall not becomeeffective until such Transmission Owner shall have agreed in writing to assume all of theduties and obligations of Transmission Provider under this Article 5.17 of this LGIA.**5.18** **Tax Status**. Each Party shall cooperate with the other to maintain the other Party’s tax status.Nothing in this LGIA is intended to adversely affect any Transmission Provider’s tax exempt statuswith respect to the issuance of bonds including, but not limited to, Local Furnishing Bonds. **5.19** **Modification.** **5.19.1** **General.**Either Party may undertake modifications to its facilities. If a Party plansto undertake a modification that reasonably may be expected to affect the other Party’s facilities,that Party shall provide to the other Party sufficient information regarding such modification sothat the other Party may evaluate the potential impact of such modification prior to commencementof the work. Such information shall be deemed to be confidential hereunder and shall includeinformation concerning the timing of such modifications and whether such modifications are expectedto interrupt the flow of electricity from the Large Generating Facility. The Party desiring toperform such work shall provide the relevant drawings, plans, and specifications to the other Partyat least ninety (90) Calendar Days in advance of the commencement of the work or such shorterperiod upon which the Parties may agree, which agreement shall not unreasonably be withheld,conditioned or delayed.
29

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)        In the case of Large Generating Facility modifications that do not requireInterconnection Customer to submit an Interconnection Request, TransmissionProvider shall provide, within thirty (30) Calendar Days (or such other time as theParties may agree), an estimate of any additional modifications to the TransmissionSystem, Transmission Provider’s Interconnection Facilities orNetwork Upgrades necessitated by such Interconnection Customer modification and agood faith estimate of the costs thereof.  **5.19.2** **Standards.**Any additions, modifications, or replacements made to a Party’s facilitiesshall be designed, constructed and operated in accordance with this LGIA, Applicable ReliabilityStandards, and Good Utility Practice.  **5.19.3** **Modification Costs.**Interconnection Customer shall not be directly assigned for thecosts of any additions, modifications, or replacements that Transmission Provider makes toTransmission Provider’s Interconnection Facilities or the Transmission System to facilitate theinterconnection of a third party to Transmission Provider’s Interconnection Facilities or theTransmission System, or to provide transmission service to a third party under TransmissionProvider’s Tariff. Interconnection Customer shall be responsible for the costs of any additions,modifications, or replacements to Interconnection Customer’s Interconnection Facilities that may benecessary to maintain or upgrade such Interconnection Customer’s Interconnection Facilitiesconsistent with Applicable Laws and Regulations, Applicable Reliability Standards or Good UtilityPractice.**Article 6. Testing and Inspection****6.1** **Pre-Commercial Operation Date Testing and Modifications**. Prior to the Commercial Operation Date,Transmission Provider shall test Transmission Provider’s Interconnection Facilities and NetworkUpgrades and Interconnection Customer shall test the Large Generating Facility and InterconnectionCustomer’s Interconnection Facilities to ensure their safe and reliable operation. Similar testingmay be required after initial operation. Each Party shall make any modifications to its facilitiesthat are found to be necessary as a result of such testing.Interconnection Customer shall bear the cost of all such testing and modifications.Interconnection Customer shall generate test energy at the Large Generating Facility only if ithas arranged for the delivery of such test energy. **6.2** **Post-Commercial Operation Date Testing and Modifications**. Each Party shall at its own expenseperform routine inspection and testing of its facilities and equipment in accordance with GoodUtility Practice as may be necessary to ensure the continued interconnection of the LargeGenerating Facility with the Transmission System in a safe and reliable manner. Each Party shallhave the right, upon advance written notice, to require reasonable additional testing of the otherParty’s facilities, at the requesting Party’s expense, as may be in accordance with Good UtilityPractice.
30

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)     **6.3** **Right to Observe Testing**. Each Party shall notify the other Party in advance of its performanceof tests of its Interconnection Facilities. The other Party has the right, at its own expense, toobserve such testing. **6.4** **Right to Inspect**. Each Party shall have the right, but shall have no obligation to: (i) observethe other Party’s tests and/or inspection of any of its System Protection Facilities and otherprotective equipment, including Power System Stabilizers; (ii) review the settings of the otherParty’s System Protection Facilities and other protective equipment; and (iii) review the otherParty’s maintenance records relative to the Interconnection Facilities, the System ProtectionFacilities and other protective equipment. A Party may exercise these rights from time to time asit deems necessary upon reasonable notice to the other Party. The exercise or non-exercise by aParty of any such rights shall not be construed as an endorsement or confirmation of any elementor condition of the Interconnection Facilities or the System Protection Facilities or otherprotective equipment or the operation thereof, or as a warranty as to the fitness, safety,desirability, or reliability of same. Any information that a Party obtains through the exercise ofany of its rights under this Article 6.4 shall be deemed to be Confidential Information andtreated pursuant to Article 22 of this LGIA.**Article 7. Metering****7.1** **General.**Each Party shall comply with the Applicable Reliability Council requirements. Unlessotherwise agreed by the Parties, Transmission Provider shall install Metering Equipment at thePoint of Interconnection prior to any operation of the Large Generating Facility and shall own,operate, test and maintain such Metering Equipment. Power flows to and from the Large GeneratingFacility shall be measured at or, at Transmission Provider’s option, compensated to, the Point ofInterconnection. Transmission Provider shall provide metering quantities, in analog and/or digitalform, to Interconnection Customer upon request. Interconnection Customer shall bear all reasonabledocumented costs associated with the purchase, installation, operation, testing and maintenance ofthe Metering Equipment. **7.2** **Check Meters**. Interconnection Customer, at its option and expense, may install and operate, on itspremises and on its side of the Point of Interconnection, one or more check meters to checkTransmission Provider’s meters. Such check meters shall be for check purposes only and shall notbe used for the measurement of power flows for purposes of this LGIA, except as provided inArticle 7.4 below. The check meters shall be subject at all reasonable times to inspection andexamination by Transmission Provider or its designee. The installation, operation and maintenancethereof shall be performed entirely by Interconnection Customer in accordance with Good UtilityPractice. **7.3** **Standards**. Transmission Provider shall install, calibrate, and test revenue quality MeteringEquipment in accordance with applicable ANSI standards.
31

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)     **7.4** **Testing of Metering Equipment**. Transmission Provider shall inspect and test all TransmissionProvider-owned Metering Equipment upon installation and at least once every two (2) yearsthereafter. If requested to do so by Interconnection Customer, Transmission Provider shall, atInterconnection Customer’s expense, inspect or test Metering Equipment more frequently than everytwo (2) years. Transmission Provider shall give reasonable notice of the time when any inspectionor test shall take place, and Interconnection Customer may have representatives present at thetest or inspection. If at any time Metering Equipment is found to be inaccurate or defective, itshall be adjusted, repaired or replaced at Interconnection Customer’s expense, in order to provideaccurate metering, unless the inaccuracy or defect is due to Transmission Provider’s failure tomaintain, then Transmission Provider shall pay. If Metering Equipment fails to register, or if themeasurement made by Metering Equipment during a test varies by more than two percent from themeasurement made by the standard meter used in the test, Transmission Provider shall adjust themeasurements by correcting all measurements for the period during which Metering Equipment was inerror by using Interconnection Customer’s check meters, if installed. If no such check meters areinstalled or if the period cannot be reasonably ascertained, the adjustment shall be for theperiod immediately preceding the test of the Metering Equipment equal to one-half the time fromthe date of the last previous test of the Metering Equipment. **7.5** **Metering Data**. At Interconnection Customer’s expense, the metered data shall be telemetered to oneor more locations designated by Transmission Provider and one or more locations designated byInterconnection Customer. Such telemetered data shall be used, under normal operating conditions,as the official measurement of the amount of energy delivered from the Large Generating Facilityto the Point of Interconnection.**Article 8. Communications****8.1** **Interconnection Customer Obligations**. Interconnection Customer shall maintain satisfactoryoperating communications with Transmission Provider’s Transmission System dispatcher orrepresentative designated by Transmission Provider. Interconnection Customer shall providestandard voice line, dedicated voice line and facsimile communications at its Large GeneratingFacility control room or central dispatch facility through use of either the public telephonesystem, or a voice communications system that does not rely on the public telephone system.Interconnection Customer shall also provide the dedicated data circuit(s) necessary to provideInterconnection Customer data to Transmission Provider as set forth in Appendix D, SecurityArrangements Details. The data circuit(s) shall extend from the Large Generating Facility to thelocation(s) specified by Transmission Provider. Any required maintenance of such communicationsequipment shall be performed by Interconnection Customer. Operational communications shall beactivated and maintained under, but not be limited to, the following events: system paralleling orseparation, scheduled and unscheduled shutdowns, equipment clearances, and hourly and daily loaddata. **8.2** **Remote Terminal Unit**. Prior to the Initial Synchronization Date of the Large Generating Facility,a Remote Terminal Unit, or equivalent data collection and transfer equipment acceptable
32

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)       to the Parties, shall be installed by Interconnection Customer, or by Transmission Provider atInterconnection Customer’s expense, to gather accumulated and instantaneous data to be telemeteredto the location(s) designated by Transmission Provider through use of a dedicated point-to-pointdata circuit(s) as indicated in Article 8.1. The communication protocol for the data circuit(s)shall be specified by Transmission Provider. Instantaneous bi-directional analog real power andreactive power flow information must be telemetered directly to the location(s) specified byTransmission Provider.   Each Party will promptly advise the other Party if it detects or otherwise learns of anymetering, telemetry or communications equipment errors or malfunctions that require the attentionand/or correction by the other Party. The Party owning such equipment shall correct such error ormalfunction as soon as reasonably feasible. **8.3** **No Annexation.**Any and all equipment placed on the premises of a Party shall be and remain theproperty of the Party providing such equipment regardless of the mode and manner of annexationor attachment to real property, unless otherwise mutually agreed by the Parties.**Article 9. Operations****9.1** **General.**Each Party shall comply with the Applicable Reliability Council requirements.Each Party shall provide to the other Party all information that may reasonably be required by the otherParty to comply with Applicable Laws and Regulations and Applicable Reliability Standards. **9.2** **Control Area Notification**. At least three months before Initial Synchronization Date,Interconnection Customer shall notify Transmission Provider in writing of the Control Area inwhich the Large Generating Facility will be located. If Interconnection Customer elects to locatethe Large Generating Facility in a Control Area other than the Control Area in which the LargeGenerating Facility is physically located, and if permitted to do so by the relevant transmissiontariffs, all necessary arrangements, including but not limited to those set forth in Article 7 andArticle 8 of this LGIA, and remote Control Area generator interchange agreements, if applicable,and the appropriate measures under such agreements, shall be executed and implemented prior to theplacement of the Large Generating Facility in the other Control Area. **9.3** **Transmission Provider Obligations**. Transmission Provider shall cause the Transmission System andTransmission Provider’s Interconnection Facilities to be operated, maintained and controlled in asafe and reliable manner and in accordance with this LGIA. Transmission Provider may provideoperating instructions to Interconnection Customer consistent with this LGIA and TransmissionProvider’s operating protocols and procedures as they may change from time to time. TransmissionProvider will consider changes to its operating protocols and procedures proposed byInterconnection Customer. **9.4** **Interconnection Customer Obligations**. Interconnection Customer shall at its own expenseoperate, maintain and control the Large Generating Facility and Interconnection Customer’s
33

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)       Interconnection Facilities in a safe and reliable manner and in accordance with this LGIA.Interconnection Customer shall operate the Large Generating Facility and InterconnectionCustomer’s Interconnection Facilities in accordance with all applicable requirements of theControl Area of which it is part, as such requirements are set forth in Appendix C,Interconnection Details, of this LGIA. Appendix C, Interconnection Details, will be modified toreflect changes to the requirements as they may change from time to time. Either Party mayrequest that the other Party provide copies of the requirements set forth in Appendix C,Interconnection Details, of this LGIA. **9.5** **Start-Up and Synchronization.**Consistent with the Parties’ mutually acceptable procedures,Interconnection Customer is responsible for the proper synchronization of the Large GeneratingFacility to Transmission Provider’s Transmission System. **9.6** **Reactive Power.** **9.6.1** **Power Factor Design Criteria**. Interconnection Customer shall design the LargeGenerating Facility to maintain a composite power delivery at continuous ratedpower output at the Point of Interconnection at a power factor within the range of0.95 leading to 0.95 lagging, unless Transmission Provider has establisheddifferent requirements that apply to all generators in the Control Area on acomparable basis. The requirements of this paragraph shall not apply to windgenerators.  **9.6.2** **Voltage Schedules.**Once Interconnection Customer has synchronized the LargeGenerating Facility with the Transmission System, Transmission Provider shallrequire Interconnection Customer to operate the Large Generating Facility toproduce or absorb reactive power within the design limitations of the LargeGenerating Facility set forth in Article 9.6.1 (Power Factor Design Criteria).Transmission Provider’s voltage schedules shall treat all sources of reactive powerin the Control Area in an equitable and not unduly discriminatory manner.Transmission Provider shall exercise Reasonable Efforts to provide InterconnectionCustomer with such schedules at least one (1) day in advance, and may make changesto such schedules as necessary to maintain the reliability of the TransmissionSystem. Interconnection Customer shall operate the Large Generating Facility tomaintain the specified output voltage or power factor at the Point ofInterconnection within the design limitations of the Large Generating Facility setforth in Article 9.6.1 (Power Factor Design Criteria). If Interconnection Customeris unable to maintain the specified voltage or power factor, it shall promptlynotify the System Operator. **9.6.2.1** **Governors and Regulators**. Whenever the Large Generating Facility is operated inparallel with the Transmission System and the speed governors (if installed on the generating unitpursuant to Good Utility Practice) and voltage regulators are capable of operation, InterconnectionCustomer shall operate the Large Generating Facility with its speed governors and voltageregulators in
34

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)        automatic operation. If the Large Generating Facility’s speed governors andvoltage regulators are not capable of such automatic operation, InterconnectionCustomer shall immediately notify Transmission Provider’s system operator, or itsdesignated representative, and ensure that such Large Generating Facility’sreactive power production or absorption (measured in MVARs) are within the designcapability of the Large Generating Facility’s generating unit(s) and steady statestability limits. Interconnection Customer shall not cause its LargeGenerating Facility to disconnect automatically or instantaneously from theTransmission System or trip any generating unit comprising the Large GeneratingFacility for an under or over frequency condition unless the abnormal frequencycondition persists for a time period beyond the limits set forth in ANSI/IEEEStandard C37.106, or such other standard as applied to other generators in theControl Area on a comparable basis. **9.6.3** **Payment for Reactive Power.**Transmission Provider is required to pay InterconnectionCustomer for reactive power that Interconnection Customer provides or absorbs from the LargeGenerating Facility when Transmission Provider requests Interconnection Customer to operate itsLarge Generating Facility outside the range specified in Article 9.6.1, provided that ifTransmission Provider pays its own or affiliated generators for reactive power service within thespecified range, it must also pay Interconnection Customer. Payments shall be pursuant to Article11.6 or such other agreement to which the Parties have otherwise agreed.**9.7** **Outages and Interruptions.** **9.7.1** **Outages.** **9.7.1.1** **Outage Authority and Coordination**. Each Party may in accordance with Good Utility Practice in coordination with the other Party remove from service anyof its respective Interconnection Facilities or Network Upgrades that may impactthe other Party’s facilities as necessary to perform maintenance or testing or toinstall or replace equipment. Absent an Emergency Condition, the Party schedulinga removal of such facility(ies) from service will use Reasonable Efforts toschedule such removal on a date and time mutually acceptable to the Parties. Inall circumstances, any Party planning to remove such facility(ies) from serviceshall use Reasonable Efforts to minimize the effect on the other Party of suchremoval.  **9.7.1.2** **Outage Schedules.**Transmission Provider shall post scheduled outages of itstransmission facilities on the OASIS. Interconnection Customer shall submit its plannedmaintenance schedules for the Large Generating Facility to Transmission Provider for aminimum of a rolling twenty-four month period.Interconnection Customer shall update its planned maintenance schedules as
35

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)        necessary. Transmission Provider may request Interconnection Customer toreschedule its maintenance as necessary to maintain the reliability of theTransmission System; provided, however, adequacy of generation supply shall not bea criterion in determining Transmission System reliability. Transmission Providershall compensate Interconnection Customer for any additional direct costs thatInterconnection Customer incurs as a result of having to reschedule maintenance,including any additional overtime, breaking of maintenance contracts or othercosts above and beyond the cost Interconnection Customer would have incurredabsent Transmission Provider’s request to reschedule maintenance. InterconnectionCustomer will not be eligible to receive compensation, if during the twelve (12)months prior to the date of the scheduled maintenance, Interconnection Customerhad modified its schedule of maintenance activities.  **9.7.1.3** **Outage Restoration**. If an outage on a Party’s Interconnection Facilities orNetwork Upgrades adversely affects the other Party’s operations or facilities,the Party that owns or controls the facility that is out of service shall useReasonable Efforts to promptly restore such facility(ies) to a normal operatingcondition consistent with the nature of the outage. The Party that owns orcontrols the facility that is out of service shall provide the other Party, tothe extent such information is known, information on the nature of the EmergencyCondition, an estimated time of restoration, and any corrective actions required.Initial verbal notice shall be followed up as soon as practicable with writtennotice explaining the nature of the outage.**9.7.2** **Interruption of Service**. If required by Good Utility Practice to do so, TransmissionProvider may require Interconnection Customer to interrupt or reduce deliveries ofelectricity if such delivery of electricity could adversely affect TransmissionProvider’s ability to perform such activities as are necessary to safely and reliablyoperate and maintain the Transmission System. The following provisions shall apply toany interruption or reduction permitted under this Article 9.7.2: **9.7.2.1** The interruption or reduction shall continue only for so long as reasonablynecessary under Good Utility Practice;  **9.7.2.2** Any such interruption or reduction shall be made on an equitable, non-discriminatorybasis with respect to all generating facilities directly connected to the Transmission System;  **9.7.2.3** When the interruption or reduction must be made under circumstances which do notallow for advance notice, Transmission Provider shall notify Interconnection Customer by telephoneas soon as practicable of the reasons for the curtailment,
36

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)        interruption, or reduction, and, if known, its expected duration. Telephonenotification shall be followed by written notification as soon aspracticable;  **9.7.2.4** Except during the existence of an Emergency Condition, when the interruption orreduction can be scheduled without advance notice, Transmission Provider shall notifyInterconnection Customer in advance regarding the timing of such scheduling and further notifyInterconnection Customer of the expected duration.Transmission Provider shall coordinate with Interconnection Customer using GoodUtility Practice to schedule the interruption or reduction during periods ofleast impact to Interconnection Customer and Transmission Provider;  **9.7.2.5** The Parties shall cooperate and coordinate with each other to the extent necessary inorder to restore the Large Generating Facility, Interconnection Facilities, and the TransmissionSystem to their normal operating state, consistent with system conditions and Good UtilityPractice. **9.7.3** **Under-Frequency and Over Frequency Conditions**. The Transmission System is designed toautomatically activate a load-shed program as required by the Applicable Reliability Councilin the event of an under-frequency system disturbance.Interconnection Customer shall implement under-frequency and over-frequency relay setpoints for the Large Generating Facility as required by the Applicable Reliability Councilto ensure “ride through” capability of the Transmission System. Large Generating Facilityresponse to frequency deviations of pre-determined magnitudes, both under-frequency andover-frequency deviations, shall be studied and coordinated with Transmission Provider inaccordance with Good Utility Practice. The term “ride through” as used herein shall meanthe ability of a Generating Facility to stay connected to and synchronized with theTransmission System during system disturbances within a range of under-frequency andover-frequency conditions, in accordance with Good Utility Practice.  **9.7.4** **System Protection and Other Control Requirements**. **9.7.4.1** **System Protection Facilities**. Interconnection Customer shall, at its expense,install, operate and maintain System Protection Facilities as a part of the Large GeneratingFacility or Interconnection Customer’s Interconnection Facilities.Transmission Provider shall install at Interconnection Customer’s expense anySystem Protection Facilities that may be required on Transmission Provider’sInterconnection Facilities or the Transmission System as a result of theinterconnection of the Large Generating Facility and Interconnection Customer’sInterconnection Facilities.  **9.7.4.2** Each Party’s protection facilities shall be designed and coordinated with othersystems in accordance with Good Utility Practice.
37

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)      **9.7.4.3** Each Party shall be responsible for protection of its facilities consistent withGood Utility Practice.  **9.7.4.4** Each Party’s protective relay design shall incorporate the necessary test switches toperform the tests required in Article 6. The required test switches will be placed such that theyallow operation of lockout relays while preventing breaker failure schemes from operating andcausing unnecessary breaker operations and/or the tripping of Interconnection Customer’s units.  **9.7.4.5** Each Party will test, operate and maintain System Protection Facilities inaccordance with Good Utility Practice.  **9.7.4.6** Prior to the In-Service Date, and again prior to the Commercial Operation Date, eachParty or its agent shall perform a complete calibration test and functional trip test of theSystem Protection Facilities. At intervals suggested by GoodUtility Practice and following any apparent malfunction of the System ProtectionFacilities, each Party shall perform both calibration and functional trip tests ofits System Protection Facilities. These tests do not require the tripping of anyin-service generation unit. These tests do, however, require that all protectiverelays and lockout contacts be activated. **9.7.5** **Requirements for Protection**. In compliance with Good Utility Practice,Interconnection Customer shall provide, install, own, and maintain relays, circuitbreakers and all other devices necessary to remove any fault contribution of the LargeGenerating Facility to any short circuit occurring on the Transmission System nototherwise isolated by Transmission Provider’s equipment, such that the removal of thefault contribution shall be coordinated with the protective requirements of theTransmission System. Such protective equipment shall include, without limitation, adisconnecting device or switch with load-interrupting capability located between theLarge Generating Facility and the Transmission System at a site selected upon mutualagreement (not to be unreasonably withheld, conditioned or delayed) of the Parties.Interconnection Customer shall be responsible for protection of the Large GeneratingFacility and Interconnection Customer’s other equipment from such conditions as negativesequence currents, over- or under-frequency, sudden load rejection, over- orunder-voltage, and generator loss-of-field. Interconnection Customer shall be solelyresponsible to disconnect the Large Generating Facility and Interconnection Customer’sother equipment if conditions on the Transmission System could adversely affect the LargeGenerating Facility.  **9.7.6** **Power Quality**. Neither Party’s facilities shall cause excessive voltage flicker norintroduce excessive distortion to the sinusoidal voltage or current waves as defined by ANSIStandard C84.1-1989, in accordance with IEEE Standard 519, or any applicable
38

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)        superseding electric industry standard. In the event of a conflict between ANSI StandardC84.1-1989, or any applicable superseding electric industry standard, ANSI StandardC84.1-1989, or the applicable superseding electric industry standard, shall control.**9.8** **Switching and Tagging Rules.**Each Party shall provide the other Party a copy of its switching andtagging rules that are applicable to the other Party’s activities. Such switching and taggingrules shall be developed on a non-discriminatory basis. The Parties shall comply with applicableswitching and tagging rules, as amended from time to time, in obtaining clearances for work or forswitching operations on equipment. **9.9** **Use of Interconnection Facilities by Third Parties**. **9.9.1** **Purpose of Interconnection Facilities**. Except as may be required by Applicable Laws andRegulations, or as otherwise agreed to among the Parties, the Interconnection Facilities shall beconstructed for the sole purpose of interconnecting the Large Generating Facility to theTransmission System and shall be used for no other purpose.  **9.9.2** **Third Party Users**. If required by Applicable Laws and Regulations or if the Partiesmutually agree, such agreement not to be unreasonably withheld, to allow one or more third partiesto use Transmission Provider’s Interconnection Facilities, or any part thereof, InterconnectionCustomer will be entitled to compensation for the capital expenses it incurred in connection withthe Interconnection Facilities based upon the pro rata use of the Interconnection Facilities byTransmission Provider, all third party users, and Interconnection Customer, in accordance withApplicable Laws and Regulations or upon some other mutually-agreed upon methodology. In addition,cost responsibility for ongoing costs, including operation and maintenance costs associated withthe Interconnection Facilities, will be allocated between Interconnection Customer and any thirdparty users based upon the pro rata use of the Interconnection Facilities by Transmission Provider,all third party users, and Interconnection Customer, in accordance with Applicable Laws andRegulations or upon some other mutually agreed upon methodology. If the issue of such compensationor allocation cannot be resolved through such negotiations, it shall be submitted to FERC forresolution.**9.10** **Disturbance Analysis Data Exchange**. The Parties will cooperate with one another in theanalysis of disturbances to either the Large Generating Facility or Transmission Provider’sTransmission System by gathering and providing access to any information relating to anydisturbance, including information from oscillography, protective relay targets, breakeroperations and sequence of events records, and any disturbance information required by GoodUtility Practice.
39

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)     **Article 10. Maintenance****10.1** **Transmission Provider Obligations.**Transmission Provider shall maintain the Transmission Systemand Transmission Provider’s Interconnection Facilities in a safe and reliable manner and inaccordance with this LGIA. **10.2** **Interconnection Customer Obligations**. Interconnection Customer shall maintain the LargeGenerating Facility and Interconnection Customer’s Interconnection Facilities in a safe andreliable manner and in accordance with this LGIA. **10.3** **Coordination**. The Parties shall confer regularly to coordinate the planning, scheduling andperformance of preventive and corrective maintenance on the Large Generating Facility and theInterconnection Facilities. **10.4** **Secondary Systems**. Each Party shall cooperate with the other in the inspection, maintenance, andtesting of control or power circuits that operate below 600 volts, AC or DC, including, but notlimited to, any hardware, control or protective devices, cables, conductors, electric raceways,secondary equipment panels, transducers, batteries, chargers, and voltage and current transformersthat directly affect the operation of a Party’s facilities and equipment which may reasonably beexpected to impact the other Party. Each Party shall provide advance notice to the other Partybefore undertaking any work on such circuits, especially on electrical circuits involving circuitbreaker trip and close contacts, current transformers, or potential transformers. **10.5** **Operating and Maintenance Expenses**. Subject to the provisions herein addressing the use offacilities by others, and except for operations and maintenance expenses associated withmodifications made for providing interconnection or transmission service to a third party and suchthird party pays for such expenses, Interconnection Customer shall be responsible for allreasonable expenses including overheads, associated with: (1) owning, operating, maintaining,repairing, and replacing Interconnection Customer’s Interconnection Facilities; and (2) operation,maintenance, repair and replacement of Transmission Provider’s Interconnection Facilities.**Article 11. Performance Obligation****11.1** **Interconnection Customer Interconnection Facilities**. Interconnection Customer shall design,procure, construct, install, own and/or control Interconnection Customer InterconnectionFacilities described in Appendix A, Interconnection Facilities, Network Upgrades and DistributionUpgrades, at its sole expense. **11.2** **Transmission Provider’s Interconnection Facilities**. Transmission Provider or Transmission Ownershall design, procure, construct, install, own and/or control the Transmission Provider’sInterconnection Facilities described in Appendix A, Interconnection Facilities, Network Upgradesand Distribution Upgrades, at the sole expense of the Interconnection Customer.
40

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)     **11.3** **Network Upgrades and Distribution Upgrades**. Transmission Provider or Transmission Owner shalldesign, procure, construct, install, and own the Network Upgrades and Distribution Upgradesdescribed in Appendix A, Interconnection Facilities, Network Upgrades and Distribution Upgrades.The Interconnection Customer shall be responsible for all costs related to Distribution Upgrades.Unless Transmission Provider or Transmission Owner elects to fund the capital for the NetworkUpgrades, they shall be solely funded by Interconnection Customer. **11.4** **Transmission Credits**. **11.4.1** **Repayment of Amounts Advanced for Network Upgrades**. Interconnection Customer shallbe entitled to a cash repayment, equal to the total amount paid to Transmission Providerand Affected System Operator, if any, for the Network Upgrades, including any tax gross-upor other tax-related payments associated with Network Upgrades, and not refunded toInterconnection Customer pursuant to Article 5.17.8 or otherwise, to be paid toInterconnection Customer on a dollar-for-dollar basis for the non-usage sensitive portionof transmission charges, as payments are made under Transmission Provider’s Tariff andAffected System’s Tariff for transmission services with respect to the Large GeneratingFacility. Any repayment shall include interest calculated in accordance with themethodology set forth in FERC’s regulations at 18 C.F.R. § 35.19a(a)(2)(iii) from the dateof any payment for Network Upgrades through the date on which the Interconnection Customerreceives a repayment of such payment pursuant to this subparagraph. InterconnectionCustomer may assign such repayment rights to any person.    Notwithstanding the foregoing, Interconnection Customer, Transmission Provider, andAffected System Operator may adopt any alternative payment schedule that ismutually agreeable so long as Transmission Provider andAffected System Operator take one of the following actions no later than five yearsfrom the Commercial Operation Date: (1) return to Interconnection Customer anyamounts advanced for Network Upgrades not previously repaid, or (2) declare inwriting that Transmission Provider or Affected System Operator will continue toprovide payments to Interconnection Customer on a dollar-for-dollar basis for thenon-usage sensitive portion of transmission charges, or develop an alternativeschedule that is mutually agreeable and provides for the return of all amountsadvanced for Network Upgrades not previously repaid; however, full reimbursementshall not extend beyond twenty (20) years from the Commercial Operation Date.    If the Large Generating Facility fails to achieve commercial operation, but it oranother Generating Facility is later constructed and makes use of the NetworkUpgrades, Transmission Provider and Affected System Operator shall at that timereimburse Interconnection Customer for the amounts advanced for the NetworkUpgrades. Before any such reimbursement can occur, the Interconnection Customer, orthe entity that
41

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)        ultimately constructs the Generating Facility, if different, is responsible foridentifying the entity to which reimbursement must be made.  **11.4.2** **Special Provisions for Affected Systems**. Unless Transmission Provider provides, under theLGIA, for the repayment of amounts advanced to Affected System Operator for Network Upgrades,Interconnection Customer and Affected System Operator shall enter into an agreement that providesfor such repayment. The agreement shall specify the terms governing payments to be made byInterconnection Customer to the Affected System Operator as well as the repayment by the AffectedSystem Operator.  **11.4.3** Notwithstanding any other provision of this LGIA, nothing herein shall be construed asrelinquishing or foreclosing any rights, including but not limited to firm transmission rights,capacity rights, transmission congestion rights, or transmission credits, that InterconnectionCustomer, shall be entitled to, now or in the future under any other agreement or tariff as aresult of, or otherwise associated with, the transmission capacity, if any, created by the NetworkUpgrades, including the right to obtain cash reimbursements or transmission credits fortransmission service that is not associated with the Large Generating Facility.**11.5** **Provision of Security**. At least thirty (30) Calendar Days prior to the commencement of theprocurement, installation, or construction of a discrete portion of a Transmission Provider’sInterconnection Facilities, Network Upgrades, or Distribution Upgrades, Interconnection Customershall provide Transmission Provider, at Interconnection Customer’s option, a guarantee, a suretybond, letter of credit or other form of security that is reasonably acceptable to TransmissionProvider and is consistent with the Uniform Commercial Code of the jurisdictionidentified in Article 14.2.1. Such security for payment shall be in an amount sufficient to coverthe costs for constructing, procuring and installing the applicable portion of TransmissionProvider’s Interconnection Facilities, Network Upgrades, or Distribution Upgrades and shall bereduced on a dollar-for-dollar basis for payments made to Transmission Provider for thesepurposes.   In addition: **11.5.1** The guarantee must be made by an entity that meets the creditworthiness requirements ofTransmission Provider, and contain terms and conditions that guarantee payment of any amount thatmay be due from Interconnection Customer, up to an agreed-to maximum amount.  **11.5.2** The letter of credit must be issued by a financial institution reasonably acceptableto Transmission Provider and must specify a reasonable expiration date.  **11.5.3** The surety bond must be issued by an insurer reasonably acceptable to TransmissionProvider and must specify a reasonable expiration date.
42

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)     **11.6** **Interconnection Customer Compensation**. If Transmission Provider requests or directs InterconnectionCustomer to provide a service pursuant to Articles 9.6.3 (Payment for Reactive Power), or 13.5.1 ofthis LGIA, Transmission Provider shall compensate Interconnection Customer in accordance withInterconnection Customer’s applicable rate schedule then in effect unless the provision of suchservice(s) is subject to an RTO or ISO FERC-approved rate schedule. Interconnection Customer shallserve Transmission Provider or RTO or ISO with any filing of a proposed rate schedule at the timeof such filing with FERC. To the extent that no rate schedule is in effect at the time theInterconnection Customer is required to provide or absorb any Reactive Power under this LGIA,Transmission Provider agrees to compensate Interconnection Customer in such amount as would havebeen due Interconnection Customer had the rate schedule been in effect at the time servicecommenced; provided, however, that such rate schedule must be filed at FERC or other appropriateGovernmental Authority within sixty (60) Calendar Days of the commencement of service. **11.6.1** **Interconnection Customer Compensation for Actions During Emergency Condition**.Transmission Provider or RTO or ISO shall compensate Interconnection Customer for itsprovision of real and reactive power and other Emergency Condition services thatInterconnection Customer provides to support the Transmission System during an EmergencyCondition in accordance with Article 11.6.**Article 12. Invoice****12.1** **General.**Each Party shall submit to the other Party, on a monthly basis, invoices of amounts duefor the preceding month. Each invoice shall state the month to which the invoice applies and fullydescribe the services and equipment provided. The Parties may discharge mutual debts and paymentobligations due and owing to each other on the same date through netting, in which case allamounts a Party owes to the other Party under this LGIA, including interest payments or credits,shall be netted so that only the net amount remaining due shall be paid by the owing Party. **12.2** **Final Invoice**. Within six months after completion of the construction of Transmission Provider’sInterconnection Facilities and the Network Upgrades, Transmission Provider shall provide an invoiceof the final cost of the construction of Transmission Provider’s Interconnection Facilities and theNetwork Upgrades and shall set forth such costs in sufficient detail to enable InterconnectionCustomer to compare the actual costs with the estimates and to ascertain deviations, if any, fromthe cost estimates. Transmission Provider shall refund to Interconnection Customer any amount bywhich the actual payment by Interconnection Customer for estimated costs exceeds the actual costsof construction within thirty (30) Calendar Days of the issuance of such final constructioninvoice.
43

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)     **12.3** **Payment**. Invoices shall be rendered to the paying Party at the address specified in Appendix F.The Party receiving the invoice shall pay the invoice within thirty (30) Calendar Days of receipt.All payments shall be made in immediately available funds payable to the other Party, or by wiretransfer to a bank named and account designated by the invoicing Party. Payment of invoices byeither Party will not constitute a waiver of any rights or claims either Party may have under thisLGIA. **12.4** **Disputes**. In the event of a billing dispute between Transmission Provider and InterconnectionCustomer, Transmission Provider shall continue to provide Interconnection Service under this LGIAas long as Interconnection Customer: (i) continues to make all payments not in dispute; and (ii)pays to Transmission Provider or into an independent escrow account the portion of the invoice indispute, pending resolution of such dispute. If Interconnection Customer fails to meet these tworequirements for continuation of service, then Transmission Provider may provide notice toInterconnection Customer of a Default pursuant to Article 17. Within thirty (30) Calendar Daysafter the resolution of the dispute, the Party that owes money to the other Partyshall pay the amount due with interest calculated in accord with the methodology set forth inFERC’s regulations at 18 CFR § 35.19a(a)(2)(iii).**Article 13. Emergencies****13.1** **Definition**. “Emergency Condition” shall mean a condition or situation: (i) that in the judgment ofthe Party making the claim is imminently likely to endanger life or property; or (ii) that, in thecase of Transmission Provider, is imminently likely (as determined in a non-discriminatory manner)to cause a material adverse effect on the security of, or damage to the Transmission System,Transmission Provider’s Interconnection Facilities or the Transmission Systems of others to whichthe Transmission System is directly connected; or (iii) that, in the case of InterconnectionCustomer, is imminently likely (as determined in a non-discriminatory manner) to cause a materialadverse effect on the security of, or damage to**,**the Large Generating Facility or InterconnectionCustomer’s Interconnection Facilities’ System restoration and black start shall be consideredEmergency Conditions; provided, that Interconnection Customer is not obligated by this LGIA topossess black start capability. **13.2** **Obligations**. Each Party shall comply with the Emergency Condition procedures of theapplicable ISO/RTO, NERC, the Applicable Reliability Council, Applicable Laws andRegulations, and any emergency procedures agreed to by the Joint Operating Committee. **13.3** **Notice.**Transmission Provider shall notify Interconnection Customer promptly when it becomes awareof an Emergency Condition that affects Transmission Provider’s Interconnection Facilities or theTransmission System that may reasonably be expected to affect Interconnection Customer’s operationof the Large Generating Facility or Interconnection Customer’s Interconnection Facilities.Interconnection Customer shall notify Transmission Provider promptly when it becomes aware of anEmergency Condition that affects the Large Generating Facility or Interconnection Customer’sInterconnection Facilities that may reasonably be expected to affect
44

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)       the Transmission System or Transmission Provider’s Interconnection Facilities. To the extentinformation is known, the notification shall describe the Emergency Condition, the extent of thedamage or deficiency, the expected effect on the operation of Interconnection Customer’s orTransmission Provider’s facilities and operations, its anticipated duration and the correctiveaction taken and/or to be taken. The initial notice shall be followed as soon as practicable withwrittennotice. **13.4** **Immediate Action**. Unless, in Interconnection Customer’s reasonable judgment, immediate action isrequired, Interconnection Customer shall obtain the consent of Transmission Provider, suchconsent to not be unreasonably withheld, prior to performing any manual switching operations atthe Large Generating Facility or Interconnection Customer’s Interconnection Facilities inresponse to an Emergency Condition either declared by Transmission Provider or otherwiseregarding the Transmission System. **13.5** **Transmission Provider Authority.** **13.5.1** **General**. Transmission Provider may take whatever actions or inactions with regard tothe Transmission System or Transmission Provider’s Interconnection Facilities it deems necessaryduring an Emergency Condition in order to (i) preserve public health and safety, (ii) preserve thereliability of the Transmission System or Transmission Provider’s Interconnection Facilities, (iii)limit or prevent damage, and (iv) expedite restoration of service.    Transmission Provider shall use Reasonable Efforts to minimize the effect of suchactions or inactions on the Large Generating Facility or Interconnection Customer’sInterconnection Facilities. Transmission Provider may, on the basis of technicalconsiderations, require the Large Generating Facility to mitigate an EmergencyCondition by taking actions necessary and limited in scope to remedy the EmergencyCondition, including, but not limited to, directing Interconnection Customer toshut-down, start-up, increase or decrease the real or reactive power output of theLarge Generating Facility; implementing a reduction or disconnection pursuant toArticle 13.5.2; directing Interconnection Customer to assist with blackstart (ifavailable) or restoration efforts; or altering the outage schedules of the LargeGenerating Facility and Interconnection Customer’s Interconnection Facilities.Interconnection Customer shall comply with all of Transmission Provider’s operatinginstructions concerning Large Generating Facility real power and reactive poweroutput within the manufacturer’s design limitations of the Large GeneratingFacility’s equipment that is in service and physically available for operation atthe time, in compliance with Applicable Laws and Regulations.  **13.5.2** **Reduction and Disconnection**. Transmission Provider may reduce InterconnectionService or disconnect the Large Generating Facility or Interconnection Customer’sInterconnection Facilities, when such, reduction or disconnection is necessaryunder Good Utility Practice due to Emergency Conditions. These rights are separateand
45

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)        distinct from any right of curtailment of Transmission Provider pursuant to TransmissionProvider’s Tariff. When Transmission Provider can schedule the reduction or disconnectionin advance, Transmission Provider shall notify Interconnection Customer of the reasons,timing and expected duration of the reduction or disconnection.Transmission Provider shall coordinate with Interconnection Customer using Good UtilityPractice to schedule the reduction or disconnection during periods of least impact toInterconnection Customer and Transmission Provider. Any reduction or disconnection shallcontinue only for so long as reasonably necessary under Good Utility Practice. The Partiesshall cooperate with each other to restore the Large Generating Facility, theInterconnection Facilities, and the Transmission System to their normal operating state assoon as practicable consistent with Good Utility Practice.**13.6** **Interconnection Customer Authority**. Consistent with Good Utility Practice and the LGIA and theLGIP, Interconnection Customer may take actions or inactions with regard to the Large GeneratingFacility or Interconnection Customer’s Interconnection Facilities during an Emergency Condition inorder to (i) preserve public health and safety, (ii) preserve the reliability of the LargeGenerating Facility or Interconnection Customer’s Interconnection Facilities, (iii) limit orprevent damage, and (iv) expedite restoration of service. Interconnection Customer shall useReasonable Efforts to minimize the effect of such actions or inactions on the Transmission Systemand Transmission Provider’s Interconnection Facilities. Transmission Provider shall use ReasonableEfforts to assist Interconnection Customer in such actions. **13.7** **Limited Liability**. Except as otherwise provided in Article 11.6.1 of this LGIA, neither Partyshall be liable to the other for any action it takes in responding to an Emergency Condition solong as such action is made in good faith and is consistent with Good Utility Practice.**Article 14. Regulatory Requirements and Governing Law****14.1** **Regulatory Requirements**. Each Party’s obligations under this LGIA shall be subject to itsreceipt of any required approval or certificate from one or more Governmental Authorities in theform and substance satisfactory to the applying Party, or the Party making any required filingswith, or providing notice to, such Governmental Authorities, and the expiration of any time periodassociated therewith. Each Party shall in good faith seek and use its Reasonable Efforts to obtainsuch other approvals. Nothing in this LGIA shall require Interconnection Customer to take anyaction that could result in its inability to obtain, or its loss of, status or exemption under theFederal Power Act, the Public Utility Holding Company Act of 1935, as amended, or the PublicUtility Regulatory Policies Act of 1978.
46

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)     **14.2** **Governing Law**. **14.2.1** The validity, interpretation and performance of this LGIA and each of its provisionsshall be governed by the laws of the state where the Point of Interconnection is located, withoutregard to its conflicts of law principles.  **14.2.2** This LGIA is subject to all Applicable Laws and Regulations.  **14.2.3** Each Party expressly reserves the right to seek changes in, appeal, or otherwisecontest any laws, orders, rules, or regulations of a Governmental Authority.**Article 15. Notices.****15.1** **General**. Unless otherwise provided in this LGIA, any notice, demand or request required orpermitted to be given by either Party to the other and any instrument required or permitted to betendered or delivered by either Party in writing to the other shall be effective when deliveredand may be so given, tendered or delivered, by recognized national courier, or by depositing thesame with the United States Postal Service with postage prepaid, for delivery by certified orregistered mail, addressed to the Party, or personally delivered to the Party, at the address setout in Appendix F, Addresses for Delivery of Notices and Billings.   Either Party may change the notice information in this LGIA by giving five (5) Business Dayswritten notice prior to the effective date of the change. **15.2** **Billings and Payments**. Billings and payments shall be sent to the addresses set out inAppendix F. **15.3** **Alternative Forms of Notice**. Any notice or request required or permitted to be given by a Party tothe other and not required by this Agreement to be given in writing may be so given by telephone,facsimile or email to the telephone numbers and email addresses set out in Appendix F. **15.4** **Operations and Maintenance Notice**. Each Party shall notify the other Party in writing of theidentity of the person(s) that it designates as the point(s) of contact with respect to theimplementation of Articles 9 and 10.**Article 16. Force Majeure****16.1** **Force Majeure.** **16.1.1** Economic hardship is not considered a Force Majeure event.  **16.1.2** Neither Party shall be considered to be in Default with respect to any obligationhereunder, (including obligations under Article 4), other than the obligation to pay money
47

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)        when due, if prevented from fulfilling such obligation by Force Majeure. A Partyunable to fulfill any obligation hereunder (other than an obligation to pay moneywhen due) by reason of Force Majeure shall give notice and the full particulars ofsuch Force Majeure to the other Party in writing or by telephone as soon asreasonably possible after the occurrence of the cause relied upon. Telephonenotices given pursuant to this article shall be confirmed in writing as soon asreasonably possible and shall specifically state full particulars of the ForceMajeure, the time and date when the Force Majeure occurred and when the ForceMajeure is reasonably expected to cease. The Party affected shall exercise duediligence to remove such disability with reasonable dispatch, but shall not berequired to accede or agree to any provision not satisfactory to it in order tosettle and terminate a strike or other labor disturbance.**Article 17. Default****17.1** **Default** **17.1.1** **General.**No Default shall exist where such failure to discharge an obligation (otherthan the payment of money) is the result of Force Majeure as defined in this LGIA or the result ofan act of omission of the other Party. Upon a Breach, the non-breaching Party shall give writtennotice of such Breach to the breaching Party. Except as provided inArticle 17.1.2, the breaching Party shall have thirty (30) Calendar Days fromreceipt of the Default notice within which to cure such Breach; provided however,if such Breach is not capable of cure within thirty (30) Calendar Days, thebreaching Party shall commence such cure within thirty (30) Calendar Days afternotice and continuously and diligently complete such cure within ninety (90)Calendar Days from receipt of the Default notice; and, if cured within such time,the Breach specified in such notice shall cease to exist.  **17.1.2** **Right to Terminate**. If a Breach is not cured as provided in this article, or if aBreach is not capable of being cured within the period provided for herein, the non-breaching Partyshall have the right to declare a Default and terminate this LGIA by written notice at any timeuntil cure occurs, and be relieved of any further obligation hereunder and, whether or not thatParty terminates this LGIA, to recover from the breaching Party all amounts due hereunder, plus allother damages and remedies to which it is entitled at law or in equity. The provisions ofthis article will survive termination of this LGIA.**Article 18. Indemnity, Consequential Damages and Insurance****18.1** **Indemnity**. The Parties shall at all times indemnify, defend, and hold the other Party harmlessfrom, any and all damages, losses, claims, including claims and actions relating to injury to ordeath of any person or damage to property, demand, suits, recoveries, costs and expenses, courtcosts, attorney fees, and all other obligations by or to third parties, arising out of or resultingfrom the other Party’s action or inactions of its obligations under this LGIA on behalf of the
48

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)       Indemnifying Party, except in cases of gross negligence or intentional wrongdoing by theIndemnified Party. **18.1.1** **Indemnified Person**. If an Indemnified Person is entitled to indemnification under thisArticle 18 as a result of a claim by a third party, and the Indemnifying Party fails,after notice and reasonable opportunity to proceed under Article 18.1, to assume thedefense of such claim, such Indemnified Person may at the expense of the IndemnifyingParty contest, settle or consent to the entry of any judgment with respect to, or pay infull, such claim.  **18.1.2** **Indemnifying Party**. If an Indemnifying Party is obligated to indemnify and hold anyIndemnified Person harmless under this Article 18, the amount owing to the IndemnifiedPerson shall be the amount of such Indemnified Person’s actual Loss, net of any insuranceor other recovery.  **18.1.3** **Indemnity Procedures**. Promptly after receipt by an Indemnified Person of any claim ornotice of the commencement of any action or administrative or legal proceeding or investigation asto which the indemnity provided for in Article 18.1 may apply, the Indemnified Person shall notifythe Indemnifying Party of such fact. Any failure of or delay in such notification shall not affecta Party’s indemnification obligation unless such failure or delay is materially prejudicial to theIndemnifying Party.    The Indemnifying Party shall have the right to assume the defense thereof with counseldesignated by such Indemnifying Party and reasonably satisfactory to the IndemnifiedPerson. If the defendants in any such action include one or more Indemnified Persons andthe Indemnifying Party and if the Indemnified Person reasonably concludes that there maybe legal defenses available to it and/or other Indemnified Persons which are differentfrom or additional to those available to the Indemnifying Party, the Indemnified Personshall have the right to select separate counsel to assert such legal defenses and tootherwise participate in the defense of such action on its own behalf. In such instances,the Indemnifying Party shall only be required to pay the fees and expenses of oneadditional attorney to represent an Indemnified Person or Indemnified Persons having suchdiffering or additional legal defenses.    The Indemnified Person shall be entitled, at its expense, to participate in any suchaction, suit or proceeding, the defense of which has been assumed by the IndemnifyingParty. Notwithstanding the foregoing, the Indemnifying Party (i) shall not be entitled toassume and control the defense of any such action, suit or proceedings if and to theextent that, in the opinion of the Indemnified Person and its counsel, such action, suitor proceeding involves the potential imposition of criminal liability on the IndemnifiedPerson, or there exists a conflict or adversity of interest between the Indemnified Personand the Indemnifying Party, in such event the Indemnifying Party shall pay the reasonableexpenses of the Indemnified Person, and (ii) shall not settle or consent to the entry ofany
49

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)        judgment in any action, suit or proceeding without the consent of the Indemnified Person,which shall not be reasonably withheld, conditioned or delayed.**18.2** **Consequential Damages**. Other than the Liquidated Damages heretofore described, in no event shalleither Party be liable under any provision of this LGIA for any losses, damages, costs or expensesfor any special, indirect, incidental, consequential, or punitive damages, including but notlimited to loss of profit or revenue, loss of the use of equipment, cost of capital, cost oftemporary equipment or services, whether based in whole or in part in contract, in tort, includingnegligence, strict liability, or any other theory of liability; provided, however, that damagesfor which a Party may be liable to the other Party under another agreement will not be consideredto be special, indirect, incidental, or consequential damages hereunder. **18.3** **Insurance**. Each party shall, at its own expense, maintain in force throughout the period of thisLGIA, and until released by the other Party, the following minimum insurance coverages, withinsurers authorized to do business in the state where the Point of Interconnection is located: **18.3.1** Employers’ Liability and Workers’ Compensation Insurance providing statutory benefits inaccordance with the laws and regulations of the state in which the Point of Interconnection islocated.  **18.3.2** Commercial General Liability Insurance including premises and operations, personal injury,broad form property damage, broad form blanket contractual liability coverage (including coveragefor the contractual indemnification) products and completed operations coverage, coverage forexplosion, collapse and underground hazards, independent contractors coverage, coverage forpollution to the extent normally available and punitive damages to the extent normally availableand a cross liability endorsement, with minimum limits of One Million Dollars ($1,000,000) peroccurrence/One Million Dollars ($1,000,000) aggregate combined single limit for personal injury,bodily injury, including death and property damage.  **18.3.3** Comprehensive Automobile Liability Insurance for coverage of owned and non-owned and hiredvehicles, trailers or semi-trailers designed for travel on public roads, with a minimum, combinedsingle limit of One Million Dollars ($1,000,000) per occurrence for bodily injury, includingdeath, and property damage.  **18.3.4** Excess Public Liability Insurance over and above the Employers’ Liability CommercialGeneral Liability and Comprehensive Automobile Liability Insurance coverage, with a minimumcombined single limit of Twenty Million Dollars ($20,000,000) per occurrence/Twenty MillionDollars ($20,000,000) aggregate.  **18.3.5** The Commercial General Liability Insurance, Comprehensive Automobile Insurance and ExcessPublic Liability Insurance policies shall name the other Party, its parent, associated andAffiliate companies and their respective directors, officers, agents,
50

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)        servants and employees (“Other Party Group”) as additional insured. All policies shallcontain provisions whereby the insurers waive all rights of subrogation in accordance withthe provisions of this LGIA against the Other Party Group and provide thirty (30) CalenderDays advance written notice to the Other Party Group prior to anniversary date ofcancellation or any material change in coverage or condition.  **18.3.6** The Commercial General Liability Insurance, Comprehensive Automobile Liability Insuranceand Excess Public Liability Insurance policies shall contain provisions that specify that thepolicies are primary and shall apply to such extent without consideration for other policiesseparately carried and shall state that each insured is provided coverage as though a separatepolicy had been issued to each, except the insurer’s liability shall not be increased beyond theamount for which the insurer would have been liable had only one insured been covered. Each Partyshall be responsible for its respective deductibles or retentions.  **18.3.7** The Commercial General Liability Insurance, Comprehensive Automobile LiabilityInsurance and Excess Public Liability Insurance policies, if written on a Claims First MadeBasis, shall be maintained in full force and effect for two (2) years after termination ofthis LGIA, which coverage may be in the form of tail coverage or extended reporting periodcoverage if agreed by the Parties.  **18.3.8** The requirements contained herein as to the types and limits of all insurance to bemaintained by the Parties are not intended to and shall not in any manner, limit or qualify theliabilities and obligations assumed by the Parties under this LGIA.  **18.3.9** Within ten (10) days following execution of this LGIA, and as soon as practicable afterthe end of each fiscal year or at the renewal of the insurance policy and in any event withinninety (90) days thereafter, each Party shall provide certification of all insurance required inthis LGIA, executed by each insurer or by an authorized representative of each insurer.  **18.3.10** Notwithstanding the foregoing, each Party may self-insure to meet the minimum insurancerequirements of Articles 18.3.2 through 18.3.8 to the extent it maintains a self-insuranceprogram; provided that, such Party’s senior secured debt is rated at investment grade or betterby Standard & Poor’s and that its self-insurance program meets the minimum insurance requirementsof Articles 18.3.2 through 18.3.8. For any period of time that a Party’s senior secured debt isunrated by Standard & Poor’s or is rated at less than investment grade by Standard & Poor’s, suchParty shall comply with the insurance requirements applicable to it under Articles 18.3.2 through18.3.9. In the event that aParty is permitted to self-insure pursuant to this article, it shall notify the otherParty that it meets the requirements to self-insure and that its self-insurance programmeets the minimum insurance requirements in a manner consistent with that specified inArticle 18.3.9.
51

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)      **18.3.11** The Parties agree to report to each other in writing as soon as practical allaccidents or occurrences resulting in injuries to any person, including death, and anyproperty damage arising out of this LGIA.**Article 19. Assignment****19.1** **Assignment**. This LGIA may be assigned by either Party only with the written consent of the other;provided that either Party may assign this LGIA without the consent of the other Party to anyAffiliate of the assigning Party with an equal or greater credit rating and with the legalauthority and operational ability to satisfy the obligations of the assigning Party under thisLGIA; and provided further that Interconnection Customer shall have the right to assign this LGIA,without the consent of Transmission Provider, for collateral security purposes to aid in providingfinancing for the Large Generating Facility, provided that Interconnection Customer will promptlynotify Transmission Provider of any such assignment. Any financing arrangement entered into byInterconnection Customer pursuant to this article will provide that prior to or upon the exerciseof the secured party’s, trustee’s or mortgagee’s assignment rights pursuant to said arrangement,the secured creditor, the trustee or mortgagee will notify Transmission Provider of the date andparticulars of any such exercise of assignment right(s), including providing the TransmissionProvider with proof that it meets the requirements of Articles 11.5 and 18.3. Any attemptedassignment that violates this article is void and ineffective. Any assignment under thisLGIA shall not relieve a Party of its obligations, nor shall a Party’s obligations be enlarged, inwhole or in part, by reason thereof. Where required, consent to assignment will not beunreasonably withheld, conditioned or delayed.**Article 20. Severability****20.1** **Severability**. If any provision in this LGIA is finally determined to be invalid, void orunenforceable by any court or other Governmental Authority having jurisdiction, such determinationshall not invalidate, void or make unenforceable any other provision, agreement or covenant of thisLGIA; provided that if Interconnection Customer (or any third party, but only if such third partyis not acting at the direction of Transmission Provider) seeks and obtains such a finaldetermination with respect to any provision of the Alternate Option (Article 5.1.2), or theNegotiated Option (Article 5.1.4), then none of these provisions shall thereafter have any force oreffect and the Parties’ rights and obligations shall be governed solely by the Standard Option(Article 5.1.1).**Article 21. Comparability****21.1** **Comparability**. The Parties will comply with all applicable comparability and code of conductlaws, rules and regulations, as amended from time to time.
52

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)     **Article 22. Confidentiality****22.1** **Confidentiality.**Confidential Information shall include, without limitation, all informationrelating to a Party’s technology, research and development, business affairs, and pricing, and anyinformation supplied by either of the Parties to the other prior to the execution of this LGIA.   Information is Confidential Information only if it is clearly designated or marked in writingas confidential on the face of the document, or, if the information is conveyed orally or byinspection, if the Party providing the information orally informs the Party receiving theinformation that the information is confidential.   If requested by either Party, the other Party shall provide in writing, the basis for assertingthat the information referred to in this Article 22 warrants confidential treatment, and therequesting Party may disclose such writing to the appropriate Governmental Authority. Each Partyshall be responsible for the costs associated with affording confidential treatment to itsinformation. **22.1.1** **Term**. During the term of this LGIA, and for a period of three (3) years after theexpiration or termination of this LGIA, except as otherwise provided in this Article 22, eachParty shall hold in confidence and shall not disclose to any person Confidential Information.  **22.1.2** **Scope**. Confidential Information shall not include information that the receiving Party candemonstrate: (1) is generally available to the public other than as a result of a disclosure bythe receiving Party; (2) was in the lawful possession of the receiving Party on a non-confidentialbasis before receiving it from the disclosing Party; (3) was supplied to the receiving Partywithout restriction by a third party, who, to the knowledge of the receiving Party after dueinquiry, was under no obligation to the disclosing Party to keep such information confidential;(4) was independently developed by the receiving Party without reference to ConfidentialInformation of the disclosing Party; (5) is, or becomes, publicly known, through no wrongful actor omission of the receiving Party or Breach of this LGIA; or (6) is required, in accordance withArticle 22.1.7 of the LGIA, Order of Disclosure, to be disclosed by any Governmental Authority oris otherwise required to be disclosed by law or subpoena, or is necessary in any legal proceedingestablishing rights and obligations under this LGIA. Information designated as ConfidentialInformation will no longer be deemed confidential if the Party that designated the information asconfidential notifies the other Party that it no longer is confidential.  **22.1.3** **Release of Confidential Information**. Neither Party shall release or discloseConfidential Information to any other person, except to its Affiliates (limited by theStandards of Conduct requirements), subcontractors, employees, consultants, or to partieswho may be or considering providing financing to or equity participation withInterconnection Customer, or to potential purchasers or assignees of InterconnectionCustomer, on a need-to-know basis in connection with this LGIA, unless such person has
53

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)        first been advised of the confidentiality provisions of this Article 22 and has agreed tocomply with such provisions. Notwithstanding the foregoing, a Party providing ConfidentialInformation to any person shall remain primarily responsible for any release ofConfidential Information in contravention of this Article 22.  **22.1.4** **Rights**. Each Party retains all rights, title, and interest in the ConfidentialInformation that each Party discloses to the other Party. The disclosure by each Party to theother Party of Confidential Information shall not be deemed a waiver by either Party or anyother person or entity of the right to protect the Confidential Information from publicdisclosure.  **22.1.5** **No Warranties**. By providing Confidential Information, neither Party makes any warranties orrepresentations as to its accuracy or completeness. In addition, by supplyingConfidential Information, neither Party obligates itself to provide any particular information orConfidential Information to the other Party nor to enter into any further agreements or proceedwith any other relationship or joint venture.  **22.1.6** **Standard of Care**. Each Party shall use at least the same standard of care to protectConfidential Information it receives as it uses to protect its own ConfidentialInformation from unauthorized disclosure, publication or dissemination. Each Party may useConfidential Information solely to fulfill its obligations to the other Party under thisLGIA or its regulatory requirements.  **22.1.7** **Order of Disclosure**. If a court or a Government Authority or entity with the right, power,and apparent authority to do so requests or requires either Party, by subpoena, oral deposition,interrogatories, requests for production of documents, administrative order, or otherwise, todisclose Confidential Information, that Party shall provide the other Party with prompt notice ofsuch request(s) or requirement(s) so that the other Party may seek an appropriate protective orderor waive compliance with the terms of this LGIA.Notwithstanding the absence of a protective order or waiver, the Party may disclose suchConfidential Information which, in the opinion of its counsel, the Party is legallycompelled to disclose. Each Party will use Reasonable Efforts to obtain reliable assurancethat confidential treatment will be accorded any Confidential Information so furnished.  **22.1.8** **Termination of Agreement**. Upon termination of this LGIA for any reason, each Party shall,within ten (10) Calendar Days of receipt of a written request from the other Party, use ReasonableEfforts to destroy, erase, or delete (with such destruction, erasure, and deletion certified inwriting to the other Party) or return to the other Party, without retaining copies thereof, anyand all written or electronic Confidential Information received from the other Party.
54

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)      **22.1.9** **Remedies**. The Parties agree that monetary damages would be inadequate to compensate a Partyfor the other Party’s Breach of its obligations under this Article 22. Each Party accordinglyagrees that the other Party shall be entitled to equitable relief, by way of injunction orotherwise, if the first Party Breaches or threatens to Breach its obligations under this Article22, which equitable relief shall be granted without bond or proof of damages, and the receivingParty shall not plead in defense that there would be an adequate remedy at law. Such remedy shallnot be deemed an exclusive remedy for theBreach of this Article 22, but shall be in addition to all other remedies available at lawor in equity. The Parties further acknowledge and agree that the covenants containedherein are necessary for the protection of legitimate business interests and arereasonable in scope. No Party, however, shall be liable for indirect, incidental, orconsequential orpunitive damages of any nature or kind resulting from or arising in connection with thisArticle 22.  **22.1.10** **Disclosure to FERC, its Staff, or a State**. Notwithstanding anything in this Article 22 tothe contrary, and pursuant to 18 CFR section 1b.20, if FERC or its staff, during the course of aninvestigation or otherwise, requests information from one of the Parties that is otherwiserequired to be maintained in confidence pursuant to this LGIA, the Party shall provide therequested information to FERC or its staff, within the time provided for in the request forinformation. In providing the information to FERC or its staff, theParty must, consistent with 18 CFR section 388.112, request that the information betreated as confidential and non-public by FERC and its staff and that the information bewithheld from public disclosure. Parties are prohibited from notifying the other Party tothis LGIA prior to the release of the Confidential Information to FERC or its staff. TheParty shall notify the other Party to the LGIA when it is notified by FERC or its staffthat a request to release Confidential Information has been received by FERC, at whichtime either of the Parties may respond before such information would be made public,pursuant to 18 CFR section 388.112. Requests from a state regulatory body conducting aconfidential investigation shall be treated in a similar manner if consistent with theapplicable state rules and regulations.  **22.1.11** Subject to the exception in Article 22.1.10, any information that a Party claimsis competitively sensitive, commercial or financial information under this LGIA(“Confidential Information”) shall not be disclosed by the other Party to any person notemployed or retained by the other Party, except to the extent disclosure is (i) requiredby law; (ii) reasonably deemed by the disclosing Party to be required to be disclosed inconnection with a dispute between or among the Parties, or the defense of litigation ordispute; (iii) otherwise permitted by consent of the other Party, such consent not to beunreasonably withheld; or (iv) necessary to fulfill its obligations under this LGIA or asa transmission service provider or a Control Area operator including disclosing theConfidential Information to an RTO or ISO or to a regional or national reliabilityorganization. The Party asserting confidentiality shall notify the other Party in writingof the information it claims is confidential. Prior to any disclosures of the otherParty’s
55

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)        Confidential Information under this subparagraph, or if any third party orGovernmental Authority makes any request or demand for any of the informationdescribed in this subparagraph, the disclosing Party agrees to promptly notify theother Party in writing and agrees to assert confidentiality and cooperate with theother Party in seeking to protect the Confidential Information from publicdisclosure by confidentiality agreement, protective order or other reasonablemeasures.**Article 23. Environmental Releases****23.1** Each Party shall notify the other Party, first orally and then in writing, of the release of anyHazardous Substances, any asbestos or lead abatement activities, or any type of remediationactivities related to the Large Generating Facility or the Interconnection Facilities, each ofwhich may reasonably be expected to affect the other Party. The notifying Party shall: (i)provide the notice as soon as practicable, provided such Party makes a good faith effort toprovide the notice no later than twenty-four hours after such Party becomes aware of theoccurrence; and (ii) promptly furnish to the other Party copies of any publicly available reportsfiled with any Governmental Authorities addressing such events.**Article 24. Information Requirements****24.1** **Information Acquisition**. Transmission Provider and Interconnection Customer shall submitspecific information regarding the electrical characteristics of their respective facilities toeach other as described below and in accordance with Applicable Reliability Standards. **24.2** **Information Submission by Transmission Provider**. The initial information submission byTransmission Provider shall occur no later than one hundred eighty (180) Calendar Days prior toTrial Operation and shall include Transmission System information necessary to allowInterconnection Customer to select equipment and meet any system protection and stabilityrequirements, unless otherwise agreed to by the Parties. On a monthly basis Transmission Providershall provide Interconnection Customer a status report on the construction and installation ofTransmission Provider’s Interconnection Facilities and Network Upgrades, including, but notlimited to, the following information: (1) progress to date; (2) a description of the activitiessince the last report (3) a description of the action items for the next period; and (4) thedelivery status of equipment ordered. **24.3** **Updated Information Submission by Interconnection Customer**. The updated information submission byInterconnection Customer, including manufacturer information, shall occur no later than onehundred eighty (180) Calendar Days prior to the Trial Operation. Interconnection Customer shallsubmit a completed copy of the Large Generating Facility data requirements contained in Appendix 1to the LGIP. It shall also include any additional information provided to Transmission Providerfor the Feasibility and Facilities Study. Information in this submission shall be the most currentLarge Generating Facility design or expected performance data. Information submitted for stabilitymodels shall be compatible with Transmission Provider
56

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)       standard models. If there is no compatible model, Interconnection Customer will work with aconsultant mutually agreed to by the Parties to develop and supply a standard model andassociated information.   If Interconnection Customer’s data is materially different from what was originally provided toTransmission Provider pursuant to the Interconnection Study Agreement between Transmission Providerand Interconnection Customer, then Transmission Provider will conduct appropriate studies todetermine the impact on Transmission Provider Transmission System based on the actual datasubmitted pursuant to this Article 24.3. The Interconnection Customer shall not begin TrialOperation until such studies are completed. **24.4** **Information Supplementation**. Prior to the Operation Date, the Parties shall supplement theirinformation submissions described above in this Article 24 with any and all “as-built” LargeGenerating Facility information or “as-tested” performance information that differs from theinitial submissions or, alternatively, written confirmation that no such differences exist. TheInterconnection Customer shall conduct tests on the Large Generating Facility as required by GoodUtility Practice such as an open circuit “step voltage” test on the Large Generating Facility toverify proper operation of the Large Generating Facility’s automatic voltage regulator.   Unless otherwise agreed, the test conditions shall include: (1) Large Generating Facility atsynchronous speed; (2) automatic voltage regulator on and in voltage control mode; and (3) a fivepercent change in Large Generating Facility terminal voltage initiated by a change in the voltageregulators reference voltage. Interconnection Customer shall provide validated test recordingsshowing the responses of Large Generating Facility terminal and field voltages. In the event thatdirect recordings of these voltages is impractical, recordings of other voltages or currents thatmirror the response of the Large Generating Facility’s terminal or field voltage are acceptable ifinformation necessary to translate these alternate quantities to actual Large Generating Facilityterminal or field voltages is provided. Large Generating Facility testing shall be conducted andresults provided to Transmission Provider for each individual generating unit in a station.   Subsequent to the Operation Date, Interconnection Customer shall provide Transmission Provider anyinformation changes due to equipment replacement, repair, or adjustment. Transmission Providershall provide Interconnection Customer any information changes due to equipment replacement,repair or adjustment in the directly connected substation or any adjacent TransmissionProvider-owned substation that may affect Interconnection Customer’s Interconnection Facilitiesequipment ratings, protection or operating requirements. The Parties shall provide suchinformation no later than thirty (30) Calendar Days after the date of the equipment replacement,repair or adjustment.
57

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)     **Article 25. Information Access and Audit Rights****25.1** **Information Access**. Each Party (the “disclosing Party”) shall make available to the other Partyinformation that is in the possession of the disclosing Party and is necessary in order for theother Party to: (i) verify the costs incurred by the disclosing Party for which the other Party isresponsible under this LGIA; and    (ii) carry out its obligations and responsibilities under thisLGIA. The Parties shall not use such information for purposes other than those set forth in thisArticle 25.1 and to enforce their rights under this LGIA. **25.2** **Reporting of Non-Force Majeure Events**. Each Party (the “notifying Party”) shall notify the otherParty when the notifying Party becomes aware of its inability to comply with the provisions of thisLGIA for a reason other than a Force Majeure event. The Parties agree to cooperate with each otherand provide necessary information regarding such inability to comply, including the date, duration,reason for the inability to comply, and corrective actions taken or planned to be taken withrespect to such inability to comply. Notwithstanding the foregoing, notification, cooperation orinformation provided under this article shall not entitle the Party receiving such notification toallege a cause for anticipatory breach of this LGIA. **25.3** **Audit Rights**. Subject to the requirements of confidentiality under Article 22 of this LGIA, eachParty shall have the right, during normal business hours, and upon prior reasonable notice to theother Party, to audit at its own expense the other Party’s accounts and records pertaining toeither Party’s performance or either Party’s satisfaction of obligations under this LGIA. Suchaudit rights shall include audits of the other Party’s costs, calculation of invoiced amounts,Transmission Provider’s efforts to allocate responsibility for the provision of reactive supportto the Transmission System, Transmission Provider’s efforts to allocate responsibility forinterruption or reduction of generation on the Transmission System, and each Party’s actions in anEmergency Condition. Any audit authorized by this article shall be performed at the offices wheresuch accounts and records are maintained and shall be limited to those portions of such accountsand records that relate to each Party’s performance and satisfaction of obligations under thisLGIA. Each Party shall keep such accounts and records for a period equivalent to the audit rightsperiods described in Article 25.4. **25.4** **Audit Rights Periods.** **25.4.1** **Audit Rights Period for Construction-Related Accounts and Records**. Accounts and recordsrelated to the design, engineering, procurement, and construction of Transmission Provider’sInterconnection Facilities and Network Upgrades shall be subject to audit for a period oftwenty-four months following Transmission Provider’s issuance of a final invoice in accordance withArticle 12.2.  **25.4.2** **Audit Rights Period for All Other Accounts and Records**. Accounts and records related toeither Party’s performance or satisfaction of all obligations under this LGIA
58

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)        other than those described in Article 25.4.1 shall be subject to audit as follows: (i) foran audit relating to cost obligations, the applicable audit rights period shall betwenty-four months after the auditing Party’s receipt of an invoice giving rise to suchcost obligations; and (ii) for an audit relating to all other obligations, the applicableaudit rights period shall be twenty-four months after the event for which the audit issought.**25.5** **Audit Results**. If an audit by a Party determines that an overpayment or an underpayment hasoccurred, a notice of such overpayment or underpayment shall be given to the other Partytogether with those records from the audit which support such determination.**Article 26. Subcontractors****26.1** **General**. Nothing in this LGIA shall prevent a Party from utilizing the services of anysubcontractor as it deems appropriate to perform its obligations under this LGIA; provided,however, that each Party shall require its subcontractors to comply with all applicable terms andconditions of this LGIA in providing such services and each Party shall remain primarily liable tothe other Party for the performance of such subcontractor. **26.2** **Responsibility of Principal**. The creation of any subcontract relationship shall not relieve thehiring Party of any of its obligations under this LGIA. The hiring Party shall be fullyresponsible to the other Party for the acts or omissions of any subcontractor the hiring Partyhires as if no subcontract had been made; provided, however, that in no event shall TransmissionProvider be liable for the actions or inactions of Interconnection Customer or its subcontractorswith respect to obligations of Interconnection Customer under Article 5 of this LGIA. Anyapplicable obligation imposed by this LGIA upon the hiring Party shall be equally binding upon,and shall be construed as having application to, any subcontractor of such Party. **26.3** **No Limitation by Insurance**. The obligations under this Article 26 will not be limited in anyway by any limitation of subcontractor’s insurance.**Article 27. Disputes****27.1** **Submission.**In the event either Party has a dispute, or asserts a claim, that arises out of or inconnection with this LGIA or its performance, such Party (the “disputing Party”) shall provide theother Party with written notice of the dispute or claim (“Notice of Dispute”). Such dispute orclaim shall be referred to a designated senior representative of each Party for resolution on aninformal basis as promptly as practicable after receipt of the Notice of Dispute by the otherParty. In the event the designated representatives are unable to resolve the claim or disputethrough unassisted or assisted negotiations within thirty (30) Calendar Days of the other Party’sreceipt of the Notice of Dispute, such claim or dispute may, upon mutual agreement of the Parties,be submitted to arbitration and resolved in accordance with the arbitration procedures set forthbelow. In the event the Parties do not agree to submit such claim or dispute to arbitration, each
59

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)       Party may exercise whatever rights and remedies it may have in equity or at law consistent withthe terms of this LGIA. **27.2** **External Arbitration Procedures**. Any arbitration initiated under this LGIA shall be conductedbefore a single neutral arbitrator appointed by the Parties. If the Parties fail to agree upon asingle arbitrator within ten (10) Calendar Days of the submission of the dispute to arbitration,each Party shall choose one arbitrator who shall sit on a three-member arbitration panel. The twoarbitrators so chosen shall within twenty (20) Calendar Days select a third arbitrator to chairthe arbitration panel. In either case, the arbitrators shall be knowledgeable in electric utilitymatters, including electric transmission and bulk power issues, and shall not have any current orpast substantial business or financial relationships with any party to the arbitration (exceptprior arbitration). The arbitrator(s) shall provide each of the Parties an opportunity to be heardand, except as otherwise provided herein, shall conduct the arbitration in accordance with theCommercial Arbitration Rules of the American Arbitration Association (“Arbitration Rules”) and anyapplicable FERC regulations or RTO rules; provided, however, in the event of a conflict betweenthe Arbitration Rules and the terms of this Article 27, the terms of this Article 27 shallprevail. **27.3** **Arbitration Decisions.**Unless otherwise agreed by the Parties, the arbitrator(s) shall render adecision within ninety (90) Calendar Days of appointment and shall notify the Parties in writingof such decision and the reasons therefor. The arbitrator(s) shall be authorized only to interpretand apply the provisions of this LGIA and shall have no power to modify or change any provision ofthis Agreement in any manner. The decision of the arbitrator(s) shall be final and binding uponthe Parties, and judgment on the award may be entered in any court having jurisdiction. Thedecision of the arbitrator(s) may be appealed solely on the grounds that the conduct of thearbitrator(s), or the decision itself, violated the standards set forth in the Federal ArbitrationAct or the Administrative Dispute Resolution Act. The final decision of the arbitrator must alsobe filed with FERC if it affects jurisdictional rates, terms and conditions of service,Interconnection Facilities, or Network Upgrades. **27.4** **Costs.**Each Party shall be responsible for its own costs incurred during the arbitration processand for the following costs, if applicable: (1) the cost of the arbitrator chosen by the Party tosit on the three member panel and one half of the cost of the third arbitrator chosen; or (2) onehalf the cost of the single arbitrator jointly chosen by the Parties.**Article 28. Representations, Warranties, and Covenants****28.1** **General**. Each Party makes the following representations, warranties and covenants: **28.1.1** **Good Standing**. Such Party is duly organized, validly existing and in good standingunder the laws of the state in which it is organized, formed, or incorporated, as applicable; thatit is qualified to do business in the state or states in which the Large Generating Facility,Interconnection Facilities and Network Upgrades owned by such Party, as applicable, are located**;**and that it has the corporate power and authority to own
60

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)        its properties, to carry on its business as now being conducted and to enter intothis LGIA and carry out the transactions contemplated hereby and perform and carryout all covenants and obligations on its part to be performed under and pursuant tothis LGIA.  **28.1.2** **Authority**. Such Party has the right, power and authority to enter into this LGIA, tobecome a Party hereto and to perform its obligations hereunder. This LGIA is a legal, valid andbinding obligation of such Party, enforceable against such Party in accordance with its terms,except as the enforceability thereof may be limited by applicable bankruptcy, insolvency,reorganization or other similar laws affecting creditors’ rights generally and by general equitableprinciples (regardless of whether enforceability is sought in a proceeding in equity or at law).  **28.1.3** **No Conflict**. The execution, delivery and performance of this LGIA does not violate orconflict with the organizational or formation documents, or bylaws or operating agreement, of suchParty, or any judgment, license, permit, order, material agreement or instrument applicable to orbinding upon such Party or any of its assets.  **28.1.4** **Consent and Approval**. Such Party has sought or obtained, or, in accordance with thisLGIA will seek or obtain, each consent, approval, authorization, order, oracceptance by any Governmental Authority in connection with the execution, deliveryand performance of this LGIA, and it will provide to any Governmental Authoritynotice of any actions under this LGIA that are required by Applicable Laws andRegulations.**Article 29. Joint Operating Committee****29.1** **Joint Operating Committee**. Except in the case of ISOs and RTOs, Transmission Provider shallconstitute a Joint Operating Committee to coordinate operating and technical considerations ofInterconnection Service. At least six (6) months prior to the expected Initial SynchronizationDate, Interconnection Customer and Transmission Provider shall each appoint one representative andone alternate to the Joint Operating Committee. Each Interconnection Customer shall notifyTransmission Provider of its appointment in writing. Such appointments may be changed at any timeby similar notice. The Joint Operating Committee shall meet as necessary, but not less than onceeach calendar year, to carry out the duties set forth herein. The Joint Operating Committee shallhold a meeting at the request of either Party, at a time and place agreed upon by therepresentatives. The Joint Operating Committee shall perform all of its duties consistent with theprovisions of this LGIA. Each Party shall cooperate in providing to the Joint OperatingCommittee all information required in the performance of the Joint Operating Committee’s duties.All decisions and agreements, if any, made by the Joint Operating Committee, shall be evidenced inwriting. The duties of the Joint Operating Committee shall include the following: **29.1.1** Establish data requirements and operating record requirements.
61

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)      **29.1.2** Review the requirements, standards, and procedures for data acquisition equipment,protective equipment, and any other equipment or software.  **29.1.3** Annually review the one (1) year forecast of maintenance and planned outage schedulesof Transmission Provider’s and Interconnection Customer’s facilities at the Point ofInterconnection.  **29.1.4** Coordinate the scheduling of maintenance and planned outages on the InterconnectionFacilities, the Large Generating Facility and other facilities that impact the normal operation ofthe interconnection of the Large Generating Facility to the Transmission System.  **29.1.5** Ensure that information is being provided by each Party regarding equipmentavailability.  **29.1.6** Perform such other duties as may be conferred upon it by mutual agreement of theParties.**Article 30. Miscellaneous****30.1** **Binding Effect**. This LGIA and the rights and obligations hereof, shall be binding upon and shallinure to the benefit of the successors and assigns of the Parties hereto. **30.2** **Conflicts**. In the event of a conflict between the body of this LGIA and any attachment, appendicesor exhibits hereto, the terms and provisions of the body of this LGIA shall prevail and be deemedthe final intent of the Parties. **30.3** **Rules of Interpretation**. This LGIA, unless a clear contrary intention appears, shall be construedand interpreted as follows: (1) the singular number includes the plural number and vice versa; (2)reference to any person includes such person’s successors and assigns but, in the case of a Party,only if such successors and assigns are permitted by this LGIA, and reference to a person in aparticular capacity excludes such person in any other capacity or individually; (3) reference toany agreement (including this LGIA), document, instrument or tariff means such agreement,document, instrument, or tariff as amended or modified and in effect from time to time inaccordance with the terms thereof and, if applicable, the terms hereof; (4) reference to anyApplicable Laws and Regulations means such Applicable Laws and Regulations as amended, modified,codified, or reenacted, in whole or in part, and in effect from time to time, including, ifapplicable, rules and regulations promulgated thereunder; (5) unless expressly stated otherwise,reference to any Article, Section or Appendix means such Article of this LGIA or such Appendix tothis LGIA, or such Section to the LGIP or such Appendix to the LGIP, as the case may be; (6)“hereunder”, “hereof”, “herein”, “hereto” and words of similar import shall be deemed referencesto this LGIA as a whole and not to any particular Article or other provision hereof or thereof;(7) “including” (and with correlative meaning “include”) means including without limiting the
62

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)       generality of any description preceding such term; and (8) relative to the determination of anyperiod of time, “from” means “from and including”, “to” means “to but excluding” and “through”means “through and including”. **30.4** **Entire Agreement**. This LGIA, including all Appendices and Schedules attached hereto, constitutesthe entire agreement between the Parties with reference to the subject matter hereof, andsupersedes all prior and contemporaneous understandings or agreements, oral or written,between the Parties with respect to the subject matter of this LGIA. Except for theInterconnection Customer’s Lease Agreement Dated September 14, 2005 and Operations Provisionsaddendum thereto, there are no other agreements, representations, warranties, or covenantswhich constitute any part of the consideration for, or any condition to, either Party’scompliance with its obligations under this LGIA. **30.5** **No Third Party Beneficiaries.**This LGIA is not intended to and does not create rights, remedies,or benefits of any character whatsoever in favor of any persons, corporations, associations, orentities other than the Parties, and the obligations herein assumed are solely for the use andbenefit of the Parties, their successors in interest and, where permitted, their assigns. **30.6** **Waiver**. The failure of a Party to this LGIA to insist, on any occasion, upon strict performance ofany provision of this LGIA will not be considered a waiver of any obligation, right, or duty of,or imposed upon, such Party.   Any waiver at any time by either Party of its rights with respect to this LGIA shall not be deemeda continuing waiver or a waiver with respect to any other failure to comply with any otherobligation, right, duty of this LGIA. Termination or Default of this LGIA for any reason byInterconnection Customer shall not constitute a waiver of Interconnection Customer’s legal rightsto obtain an interconnection from Transmission Provider. Any waiver of this LGIA shall, ifrequested, be provided in writing. **30.7** **Headings**. The descriptive headings of the various Articles of this LGIA have been inserted forconvenience of reference only and are of no significance in the interpretation or construction ofthis LGIA. **30.8** **Multiple Counterparts.**This LGIA may be executed in two or more counterparts, each of whichis deemed an original but all constitute one and the same instrument. **30.9** **Amendment.**The Parties may by mutual agreement amend this LGIA by a written instrument dulyexecuted by the Parties. **30.10** **Modification by the Parties**. The Parties may by mutual agreement amend the Appendices to thisLGIA by a written instrument duly executed by the Parties. Such amendment shall become effectiveand a part of this LGIA upon satisfaction of all Applicable Laws and Regulations.
63

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)     **30.11** **Reservation of Rights**. Transmission Provider shall have the right to make a unilateral filingwith FERC to modify this LGIA with respect to any rates, terms and conditions, charges,classifications of service, rule or regulation under section 205 or any other applicable provisionof the Federal Power Act and FERC’s rules and regulations thereunder, and Interconnection Customershall have the right to make a unilateral filing with FERC to modify this LGIA pursuant to section206 or any other applicable provision of the Federal Power Act and FERC’s rules and regulationsthereunder; provided that each Party shall have the right to protest any such filing by the otherParty and to participate fully in any proceeding before FERC in which such modifications may beconsidered. Nothing in this LGIA shall limit the rights of the Parties or ofFERC under sections 205 or 206 of the Federal Power Act and FERC’s rules and regulationsthereunder, except to the extent that the Parties otherwise mutually agree as providedherein. **30.12** **No Partnership**. This LGIA shall not be interpreted or construed to create an association,joint venture, agency relationship, or partnership between the Parties or to impose any partnershipobligation or partnership liability upon either Party. Neither Party shall have any right, power orauthority to enter into any agreement or undertaking for, or act on behalf of, or to act as or bean agent or representative of, or to otherwise bind, the other Party.
64

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)          **IN WITNESS WHEREOF,** the parties may execut this LGIA in duplicate originals, each of which shall constitute and bean original effective Agreement between the Parties.**Arizona Public Service Company**     By: /s/ [ILLEGIBLE]        Title: Manager, Interconnections Developments       Date: 11-1-06  **Abitibi Consolidated Sales Corporation**     By: /s/ John McKee        Title: General Manager       Date: 10/30/2006  **Snowflake White Mountain Power, LLC**     By: /s/ Robert M. Worsley        Title: CEO/OWNER       Date: 10/30/2006  
65

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)     **Appendix A to LGIA****Interconnection Facilities, Network Upgrades and Distribution Upgrades**Interconnection Customer’s Point of Interconnection is preexisting (APS Contract 51637) andInterconnection Customer represents that although the Generating Facility Capacity behind thePoint of Interconnection (identified in this agreement in Appendix C and shown in Exhibit 1 toAppendix A) has increased by 22 MW with the addition of the Snowflake Generating Facilityconsidered in this Agreement, Interconnection Customer does not seek to increase the GeneratingFacilities’ allowable interconnected capacity beyond the existing 41 MVA limitation at the Point ofInterconnection.All facilities necessary for the provision of Interconnection Service to Abitibi prior to theaddition of the 22 MW Snowflake Generating Facility (APS Contract 51637) are currently in place,and are described below for reference purposes only. APS Contract 51637 (Abitibi’s previousInterconnection Agreement) will be terminated and superseded by this Agreement, which now includesthe addition of the Snowflake Generating Facility.**1. Interconnection Facilities:** **(a)** ***Interconnection Customer InterconnectionFacilities:***    Interconnection Customer has constructed, owns, operates, and maintains its 13.8/69 kVsubstation and 69 kV line emanating from Interconnection Customer’s substation to thePoint of Interconnection. Interconnection Customer shall provide to APS the as-builtdiagram(s) and such diagram will be on file at the APS Energy Control Center.    Interconnection Customer may, at its discretion, install, own and maintain at its expense alocal remote switch, test handle and trip scheme in Interconnection Customer’s control housefor the purpose of Interconnection Customer’s emergency use to protect its 41 MVA transformer.The local remote switch shall remain in the “remote location” except for emergency use.    Transmission Provider shall have operational control and jurisdiction of InterconnectionCustomer’s substation 69 kV motor-operated disconnect (APS designation ACX163), theInterconnection Customer’s 69 kV breaker (APS Designation ACX262), and InterconnectionCustomer’s gang-operated switches ACX161 and 69K8861, per drawing attached hereto as Exhibit 1to this Appendix A.  ** **** ****System Protection Facilities:**Interconnection Customer installed, owns, operates, andmaintains at its sole cost and expense an SEL 311 relay that will look toward theTransmission System.
66

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)        **Metering Equipment Furnished by Interconnection Customer****:**InterconnectionCustomer, at Interconnection Customer’s expense, will provide, own, operate, and maintainmetering instrumentation as required for metering the generation output and telemetering to alocation specified by Transmission Provider as follows:Interconnection Customer shall provide communication to the Abitibi RTU forTransmission Provider’s energy management system (EMS); and dedicated phoneline(s) for Transmission Provider’s telemetering as required.Under APS Contract 51637, Abitibi’s previous Interconnection Agreement,Abitibi has established telemetry to the Abitibi RTU presenting the totalvalue of the MW and MVAR for the generating facility at the Point ofInterconnection. This telemetry, at Interconnection Customer’s expense,shall remain in-service and shall provide the value of total MW and MVARfor all generating facilities at the Point of Interconnection under thisAgreement.Interconnection Customer shall provide four sets of billing metering. Oneset shall monitor total power flow at the Point of Interconnection, one setshall monitor combined power flow from Abitibi Unit #1 and Unit #2, one setshall measure power flow from the Snowflake Generating Facility and one setshall measure auxiliary power flow to the Snowflake Generating Facility.In the event there are problems with the metering equipment, InterconnectionCustomer will, within five (5) Business Days after the problem is identified,develop a mutually agreed upon schedule to repair or replace the meteringequipment.Should Transmission Provider have to work on its metering equipment,Interconnection Customer shall (i) provide qualified personnel and proper toolsand equipment; and (ii) establish clearance points from the Customer-owned Systemas required by the Transmission Provider’s representative on site. The Clearanceshall ensure that all equipment is disconnected from all known sources of power,including any possible backfeed from potential transformers. All deenergizedequipment shall be grounded. Interconnection Customer shall allow TransmissionProvider to witness all steps taken to establish the Clearance. InterconnectionCustomer shall also allow Transmission Provider to lock and tag all equipmentinvolved in the Clearance. At Transmission Provider’s discretion, InterconnectionCustomer shall allow Transmission Provider to install additional grounds at themetering equipment as an additional safety precaution.Interconnection Customer shall ensure that the equipment will remain
67

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)     deenergized and grounded, and Interconnection Customer shall not remove, changeor alter the personal tags, locks or equipment associated with clearance pointswithout the prior notification and proper authorization to do so by theTransmission Provider’s representative on site.A “Release of Clearance” is defined as: A statement by the person having theClearance on a line or piece of equipment that the person will not return towork on said line or equipment without first receiving the re-issuance of aClearance for said line or equipment. The Transmission Provider shall, as partof the release, ensure that the electrical grounds have been removed and theequipment is ready to be energized.Interconnection Customer shall supply at Interconnection Customer’sexpense, telemetry of the Snowflake generating unit’s MW and MVAR valuessuitable for the APS EMS. These values shall be delivered to the AbitibiRTU and Interconnection Customer’s responsibility for such telemetry shallinclude any conduit or trench required for the cable or fiber optics toprovide the data from the meters to the Abitibi substation RTU. **(b)** ***Transmission Provider Interconnection Facilities:***Transmission Provider constructed,installed, and owns the interset pole required to interconnect Interconnection Customer’s69 kV line at the Point of Interconnection.    Transmission Provider shall own all facilities in its Transmission System up to the Point ofInterconnection including the interset pole and the billing quality metering, transducers,RTU, Metering CTs and PTs, and metering panel all located in the Interconnection Customer’ssubstation control house.  ** **** ****Metering Equipment Furnished by Transmission Provider:**Transmission Provider, atInterconnection Customer’s expense, will provide, own, operate, and maintain meteringinstrumentation as required for on site metering and telemetering as follows:Bidirectional transdata meter and metering panel located in theInterconnection Customer’s substation control house;Remote terminal unit (RTU), transducers located in the InterconnectionCustomer’s substation control house;Line sharing switch for communications.
68

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)     Interconnection Customer will transfer ownership of the metering CTs and PTs to TransmissionProvider and Transmission Provider will own, operate, and maintain the metering CTs and PTs.Interconnection Customer shall have read-only access to the metered information.The kW and kWh loss factor applicable on the Interconnection Customer-owned interconnectionfacilities from the metering point to the Point of Interconnection is currently 0.004% andshall be applicable to all Interconnection Customer information/billings under this Agreement.Interconnection Customer shall be responsible for the actual cost, including applicable loadsand income tax or other tax effect for the replacement of the Metering Equipment, includingthe CTs, PTs, and the RTU. Interconnection Customer shall pay a monthly direct assignmentcharge for the operation and maintenance of such facilities as set out in Appendix C to thisAgreement.Upon termination of this Agreement, Interconnection Customer shall be responsible for theestimated removal cost less estimated salvage value, if any, plus applicable loads and incometax or other tax effect for the removal of the Transmission Provider-owned metering, CTs, PTs,RTU, and related equipment.**2. Network Upgrades:** **(a)** **Stand Alone Network Upgrades:**None.  **(b)** **Other Network Upgrades:**None.**3. Distribution Upgrades:**None.
69

 
   Arizona Public Service Company APS Contract No. 52023LGIA (Large Generator Interconnection Agreement)     **Exhibit 1 to Appendix A to LGIA****ONE-LINE DIAGRAM****AND****DIAGRAM OF OPERATIONAL CONTROL / JURISDICTION****ABITIBI69 KV**********