Exhibit 10.19


 


Execution
Copy


 


TRANSFER, CONSENT AND
ASSIGNMENT AGREEMENT


 


This Transfer,
Consent and Assignment Agreement dated the 26th day of September 2007
(the “Agreement”).


 


AMONG:


 


PINNACLE WEST MARKETING & TRADING CO., LLC,
a limited liability company organized under the laws of Delaware (the “Transferor”)


 


- and -


 


MORGAN STANLEY CAPITAL GROUP INC., a
corporation organized under the laws of Delaware (the “Transferee”)


 


- and -


 


GOLDEN STATE WATER COMPANY, a corporation
organized under the laws of California
(the “Counterparty”).


 


WHEREAS the
Transferor and the Counterparty are parties to one or more master agreements
and/or general terms and conditions, each as described in Schedule “A”
attached hereto (collectively, the “PWMT
Master Agreement”)  and
to power sales and power purchase transactions entered into pursuant to the
PWMT Master Agreement, copies of the confirmations evidencing such transactions
are identified as “Master Confirmations” on Schedule “B” attached hereto
(such transactions being hereinafter referred to as the “Master Confirmations”  and together with the Master Agreement
hereinafter referred to as the “Assigned
Agreement(s)”);


 


AND WHEREAS the
Transferor has agreed to transfer by assignment to the Transferee and the
Transferee has agreed to accept the transfer by assignment of, all of the
rights, liabilities, duties and obligations of the Transferor under and in
respect of the Assigned Agreement(s) but, for certainty, the Transferor
will not otherwise assign to the Transferee any other transaction(s) that
may be outstanding pursuant to the terms of the PWMT Master Agreement except
those identified on Schedule “B” or any of its rights, title, estate or
interest therein;


 


AND WHEREAS according to that certain Purchase and Sale
Agreement between the Transferor and the Transferee dated as of June 7,
2007 (the “PSA”), the Transferor
will transfer by assignment to Transferee nil of Transferor’s rights,
liabilities, duties and obligations with respect to the Assigned Agreement(s) (the
“Closing”),  subject to the satisfaction of certain
conditions precedent, which conditions precedent include obtaining the prior
consent of the Counterparty to the transfer by assignment of the Assigned
Agreement(s));


 


AND WHEREAS the
Counterparty is willing to consent to such transfer by assignment and to
recognize and accept the Transferee as its counterparty with respect to the
Assigned Agreement(s) in the place and stead of the Transferor pursuant to
the terms of this Agreement;


 


1

















 


AND WHEREAS the
Transferee and the Counterparty have agreed that each reference to Transferor
shall be substituted with the reference to Transferee and each such Master
Confirmation shall be deemed a transaction between Transferee and Counterparty;


 


NOW
THEREFORE, for good
and valuable consideration (receipt and sufficiency of which are hereby
acknowledged), the parties hereto mutually covenant and agree as follows:


 


1.                          Assignment. The Transferor hereby
transfers by assignment to the Transferee effective as of and from the
commencement of the later of (a) the first day of the calendar month
following the calendar month in which the Transferor has given to the
Counterparty written notice of the approval from the federal Energy Regulatory
Commission (“FERC”), specifically,
including FERC’s approval of the assignment from Transferor to Transferee of
the Assigned Agreement(s) under Section 203 of the Federal Power Act
of 1935, as amended; or (b) November 1, 2007 (the “Assignment Effective Date”), its entire
right, title, estate and interest in and to, and its rights, liabilities,
duties and obligations under, such Assigned Agreement(s), for the Transferee’s
sole use and benefit absolutely, subject nevertheless to the terms and
conditions of the Assigned Agreement(s).


 


2.                          Acceptance by Transferee. The
Transferee hereby accepts the aforesaid Assigned Agreement(s) effective as
of and from the Assignment Effective Date for each such Assigned Agreement(s),
and covenants and agrees with the Transferor and the Counterparty that from and
after the Assignment Effective Date it will be bound by, observe and perform,
carry out and fulfill all covenants and agreements, duties and obligations
required to be observed and performed by the Transferor under the terms of the
Assigned Agreement(s) arising from and after the Assignment Effective
Date.


 


3.                          Acceptance by Counterparty. Effective
as of and from the Assignment Effective Date, the Counterparty hereby consents
to transfer by assignment of the Assigned Agreement(s) and accepts the
Transferee as the party to perform the obligations of Transferor under the
Assigned Agreement(s) pursuant to the terms and conditions of the Assigned
Agreement(s), and the Counterparty agrees that it shall not make any claim against
the Transferee (including by way of set-off, book-out or termination of the
Assigned Agreement(s)) as a consequence of or relating to: (i) any
default, breach or non-performance attributable to the Transferor under any
Assigned Agreement(s) which default, breach or non-performance arises or
has arisen prior to the Assignment Effective Date; and (ii) the observance
and performance of the covenants, representations and agreements under any
Assigned Agreement(s), prior to the Assignment Effective Date.


 


4.                          Release


 


(a)                    Effective
as of and from the Assignment Effective Date, the Counterparty hereby releases
and forever discharges the Transferor from further obligations to the
Counterparty with respect to the corresponding Assigned Agreement(s) and
of and from any and all liability as a consequence of or relating to all manner
of action and actions, cause or causes of action, suits, debts, dues, sums of
money, claims and demands whatsoever at law or in equity arising out of, or
which are in any way related to the Assigned Agreement(s) after and
including the Assignment Effective Date; provided  that, for
certainty, the foregoing shall not release or discharge the Transferor in
respect of the settlement, payment or performance of any liabilities or
obligations: (i) arising or accruing prior to the Assignment Effective
Date but which have not been settled, paid or performed as of the Assignment
Effective Date; or (ii) due and payable or due to be performed after the
Assignment Effective Date, but which accrued with respect to or otherwise
related to a


 


2

















 


calculation
period or delivery period (however defined) ending prior to the Assignment
Effective Date (for avoidance of doubt, (i) and (ii) collectively
constitute the “Transferor Excluded
Liabilities”), and all such Transferor Excluded Liabilities shall be
paid or performed by the Transferor in accordance with the terms of the
Assigned Agreement(s).


 


(b)                   Effective
as of and from the Assignment Effective Date, the Transferor hereby releases
and forever discharges the Counterparty from further obligations to the
Transferor with respect to the corresponding Assigned Agreement(s) and of
and from any and all liability as a consequence of or relating to all manner of
action and actions, cause or causes of action, suits, debts, dues, sums of
money, claims and demands whatsoever at law or in equity, arising out of or
which are in any way related to, the Assigned Agreement(s) after and
including the Assignment Effective Date; provided that, for certainty,
the foregoing shall not release or discharge the Counterparty in respect of the
settlement, payment or performance of any liabilities or obligations: (i) arising
or accruing prior to the Assignment Effective Date but which have not been
settled, paid or performed as of the Assignment Effective Date; or (ii) due
and payable or due to be performed after the Assignment Effective Date, but
which accrued with respect to or otherwise related to a calculation period or
delivery period (however defined) ending prior to the Assignment Effective Date
(for avoidance of doubt, (i) and (ii) collectively constitute the “Counterparty Excluded Liabilities”), and
all such Counterparty Excluded Liabilities shall be paid or performed by the
Counterparty in accordance with the terms of each Assigned Agreement(s).


 


5.                          Further Assurances. The Transferor
agrees that it shall, from time to time and at all times hereafter, execute
such further assurances and do all such acts and things as may be reasonably
required for the purpose of vesting in the Transferee the rights and
obligations of the Transferor in the Assigned Agreement(s).


 


6.                          Indemnity. Subject to any other
agreements between the Transferee and the Transferor: (a) the Transferee
shall be liable for and shall indemnify and save harmless the Transferor from
and against all losses, costs, expenses and damages suffered or incurred by the
Transferor as a result of any and all actions, suits, complaints, demands or
causes of action whatsoever arising from or in respect of the Assigned
Agreement(s) in respect of the actions or inactions of the Transferee
occurring from and after the Assignment Effective Date; and (b) the
Transferor shall be liable for and shall indemnify and save harmless the
Transferee from and against all losses, costs, expenses and damages suffered or
incurred by the Transferee as a result of any and all actions, suits,
complaints, demands or causes of action whatsoever arising from or in respect
of the Assigned Agreement(s) in respect of the actions or inactions of the
Transferor occurring prior to the Assignment Effective Date.


 


7.                          Address for Notices.


 


The
address for the Transferee for notices under the Assigned Agreement(s) shall
be:


 


Morgan
Stanley Capital Group Inc.

Commodities Department, 1st Floor

2000 Westchester Avenue

Purchase, NY 10577

Telephone number: (914) 225-4300

Facsimile number: (914) 750-0445


 


3

















 


The
address for the Counterparty for purposes of receiving any notice under this Section 9
shall be:


 


James
B.  Gallagher, Vice President

Golden State Water Company
 2143 Convention Center Way, Suite 110
 Ontario, CA 91764
 Phone: (909) 937-0111
 Fax: (909) 937-0222


 


The
address for the Transferor for purposes of receiving any notice under this Section 9
shall be:


 


Pinnacle
West Marketing & Trading Co., LLC

400 North Fifth Street
 Mail Station 9860
 Phoenix, AZ 85004
 Phone: (602) 250-2780
 Fax: (602) 250-3238


 


8.                          Enurement. This Agreement shall enure
to the benefit of and be binding upon the parties hereto and their respective
successors and assigns.


 


9.                          Counterpart Execution. This Agreement
may be executed in separate counterparts and delivered by facsimile, each of
which when so executed and delivered shall constitute the one and the same
original document.


 


10.                    Governing Law. This Agreement will be
governed by and construed in accordance with the laws of the State of New York,
without giving effect to principles of conflicts of laws. Any judicial action
arising out of, resulting from, or in any way relating to this Agreement shall
be brought only in a state or federal court of competent jurisdiction located
in the state, county and city of New York, and all parties to this Agreement
waive any right to trial by jury in such action. In the event such judicial
proceedings are instituted by any party hereto, the prevailing party or parties
shall be entitled to award of costs and attorneys’ fees incurred in connection
with such proceedings.


 


11.                    Representations, Warranties and Covenants.


 


(a)                    Transferor
hereby represents and warrants that: (i) its assignment of its right,
title and interest in and to the Assigned Agreement(s) is free and clear
of any liens, charges, pledges, options, mortgages, deeds of trust, security
interests, restrictions (whether on voting, sale, transfer, disposition, or
otherwise), easements, whether imposed by law, agreement, understanding, or
otherwise (“Encumbrance”)  whatsoever; (ii) and that it has the
power and authority to effect the sale, assignment and transfer of the Assigned
Agreement(s) and to execute this  Agreement.


 


(b)                   Transferee
hereby represents and warrants that it has the power and authority to accept
the sale, assignment and transfer of the Assigned Agreement(s) and to
execute this Agreement.


 


(c)                    Counterparty
hereby consents to the foregoing sale, assignment and transfer to Transferee.


 


4

















 


(d)                    Each
party hereto represents to the others that: (i) this Agreement does not
and will not violate or conflict with its charter or by-laws (or comparable
constitutive documents), any statute, law, rule, regulation or ordinance, or
any judgment, order, consent order, stipulated agreement, writ, injunction, or
decree of, any court, governmental agency or Independent System Operator
applicable to it or any agreement to which it is a party or by which it or any
of its property is bound; (ii) its obligations hereunder are legal, valid
and binding on it, and enforceable in accordance with their terms; and (iii) the
person signing this agreement for such party is an officer, director, and/or
partner of such party and is authorized and duly empowered to do so.


 


(e)                     Each
of the Counterparty and the Transferee represents for itself to the other as of
the date that it enters into this Agreement that:


 


(i)                       Non-Reliance.  It is acting for its own account, and it
has made its own independent decisions to enter into this Agreement and the
transactions contemplated hereby (the “Assigned
Transactions”) and as to whether the Assigned Transactions are
appropriate or proper for it based upon its own judgment and upon advice from
such advisers as it has deemed necessary. It is not relying on any
communication (written or oral) of the other party as investment advice or as a
recommendation to enter into the Assigned Transactions, it being understood
that information and explanations related to the terms and conditions of the
Assigned Transactions shall not be considered to be investment advice or a
recommendation to enter into the Assigned Transactions. No communication
(written or oral) received from the other party shall be deemed to be an
assurance or guarantee as to the expected results of the Assigned Transactions.


 


(ii)                    Assessment and Understanding.  It is capable of assessing the merits of
and understanding (on its own behalf or through independent professional
advice), and understands and accepts the terms and conditions and risks of the
Assigned Transactions. It is also capable of assuming, and assumes, the risks
of the Assigned Transactions.


 


(iii)                 Status of the Parties.  Neither party hereto is acting as a
fiduciary for or adviser to any other party hereto in respect of the Assigned
Transactions; and each party hereto represents to the others that: (A) this
Agreement and, on and from the Assignment Effective Date, the Assigned
Transactions, do not and will not violate or conflict with its charter or
by-laws (or comparable constitutive documents), any statute, law, rule,
regulation or ordinance, or any judgment, order, consent order, stipulated
agreement, writ, injunction, or decree of, any court, governmental agency or
any other regulated entity applicable to it or any agreement to which it is a
party or by which it or any of its property is bound; (B) its obligations
hereunder and, on and from the Assignment Effective Date, under the Assigned
Transaction are legal, valid and binding on it, and enforceable in accordance
with their terms; and (C) the person signing this Agreement for such party
is an officer, director, and/or partner of such party and is authorized and
duly empowered to do so.


 


5

















 


THIS AGREEMENT executed effective as of the day and year first above
written.


 


	
   

  	
   

  	
   

  	
  TRANSFEROR:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  PINNACLE WEST MARKETING & TRADING CO.,
  LLC

  



 


	
   

  	
     APSMT

  	
   

  	
  By:

  	
  /s/ David A. Hansen

  
	
   

  	
    Contracts

  	
   

  	
  Name:

  	
  David A. Hansen

  
	
   

  	
  Department

  	
   

  	
  Title:

  	
  Vice President 

  
	
  By:

  	
  SM 09/27/07

  	
   

  	
   

  	
  Arizona Public Service Company Marketing and 

  
	
   

  	
   

  	
   

  	
   

  	
  Trading, acting on its own behalf and as agent for 

  Pinnacle West Marketing & Trading Co., LLC

  



 


	
   

  	
   

  	
   

  	
  TRANSFEREE:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  MORGAN STANLEY CAPITAL GROUP INC.

  



 


	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Deborab L. Hart

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Vice President

  



 


	
   

  	
   

  	
   

  	
  COUNTERPARTY:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  GOLDEN STATE WATER COMPANY

  



 


	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  James
  B. Gallagher

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Vice
  President

  



 


6

















 


THIS AGREEMENT executed effective as of the day and year first above
written.


 


	
   

  	
   

  	
   

  	
  TRANSFEROR:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  PINNACLE WEST MARKETING &
  TRADING CO., LLC

  



 


	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  David
  A. Hansen

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Vice
  President

  
	
   

  	
   

  	
   

  	
   

  	
  Arizona
  Public Service Company Marketing and

  Trading, acting on its own behalf and as agent for

  Pinnacle West Marketing & Trading Co., LLC

  



 


	
   

  	
   

  	
   

  	
  TRANSFEREE:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  MORGAN STANLEY CAPITAL GROUP INC.

  



 


	
   

  	
   

  	
   

  	
   

  	
  /s/ Kenneth Carlino

  
	
   

  	
   

  	
   

  	
   

  	
  Kenneth
  Carlino

  
	
   

  	
   

  	
   

  	
   

  	
  Vice
  President

  



 


	
   

  	
   

  	
   

  	
  COUNTERPARTY:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  GOLDEN STATE WATER COMPANY

  



 


	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  James
  B. Gallagher

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Vice
  President

  



 


7

















 


 


THIS AGREEMENT executed effective as of the day and year first above
written.


 


	
   

  	
   

  	
   

  	
  TRANSFEROR:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  PINNACLE WEST MARKETING &
  TRADING CO., LLC

  



 


	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  David
  A. Hansen

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Vice
  President

  
	
   

  	
   

  	
   

  	
   

  	
  Arizona
  Public Service Company Marketing and

  Trading, acting on its own behalf and as agent for

  Pinnacle West Marketing & Trading Co., LLC

  



 


	
   

  	
   

  	
   

  	
  TRANSFEREE:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  MORGAN STANLEY CAPITAL GROUP INC.

  



 


	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Deborab
  L. Hart

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Vice
  President

  



 


	
   

  	
   

  	
   

  	
  COUNTERPARTY:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  GOLDEN STATE WATER COMPANY

  



 


	
   

  	
   

  	
   

  	
  By:

  	
  /s/
  James B. Gallagher

  
	
   

  	
   

  	
   

  	
  Name:

  	
  James
  B. Gallagher

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Vice
  President

  



 


8

















 


SCHEDULE A


 


WSPP Agreement, effective
July 27, 1991 and as amended from time to time


 





















 


SCHEDULE B

Master Confirmations


 


EXISTING CONFIRMATIONS
ATTACHED HERETO


 




















 


	
  (Logo)

  PINNACLEWEST

  CAPITAL CORPORATION

  	
   

  	
  PWMT Contract No. [Illegible]

  

  Ken Wolf

  Marketing & Trading

  P.O. Box [Illegible], M/S 9642

  Phoenix, Arizona 85072-[Illegible]

  Telephone: (602) 250-4313

  Facsimile: (602) 250-3199

  

  September 4, 2002

  



 


CONFIDENTIAL


 


 


To:                 Golden State
Water Company


 


The following terms and
conditions shall govern this agreement on September 3, 2002, between David
[Illegible], on behalf of Southern California Water Company (“SCWC”), and Ken
Wolf, on behalf of Pinnacle West Marketing & Trading (“PWMT”), as
follows:


 


	
  Purchaser:

  	
  Pinnacle West Capital Corporation

  400 N, 5th Street, M/S 9842

  Phoenix, Arizona 85004

  	
   

  	
  Seller:

  	
  Southern California Water Company

  830 E. foothills Blvd.

  San Dimas, CA 91773-9016

  
	
  Confirm

  Administrator:

  	
  

  Tricia Henry

  (602) 250-2811 (phone)

  (602) 371-5256 (fax)

  	
   

  	
  Confirm

  Administrator:

  	
  

  Raymond P. [Illegible]

  (908) 394-3800 X 679 (phone)

  (908) 384-3768 (fax)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Preschedule:

  	
   

  	
  (602) 250-4371

  	
   

  	
  Preschedule:

  	
   

  	
  (909) [Illegible]

  
	
  Real Time:

  	
   

  	
  (602) 250-4470

  	
   

  	
  Real Time:

  	
   

  	
  (909) [Illegible]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Price ($/MWh):

  	
   

  	
  $[Illegible]/MWh

  	
   

  	
  Quantity (MWh):

  	
   

  	
  647,920 MWh

  
	
  Quantity (MW/hr.):

  	
   

  	
  15 Megawatts

  	
   

  	
  Type of energy:

  	
   

  	
  CAISO Firm

  
	
  Start date:

  	
   

  	
  November 1, 2002

  	
   

  	
  End date:

  	
   

  	
  December 31, 2006

  
	
  Day(s) of week:

  	
   

  	
  Monday through Sunday

  	
   

  	
  Hours:

  	
   

  	
  H.E. 0100-2400 Pacific

  
	
   

  	
   

  	
  including NERC holidays

  	
   

  	
   

  	
   

  	
  Prevailing Time (“PPT”)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Price ($/MWh):

  	
   

  	
  $[Illegible]/MWh

  	
   

  	
  Quantity (MWh):

  	
   

  	
  28,992 MWh

  
	
  Quantity (MW/hr.):

  	
   

  	
  [Illegible] Megawatts

  	
   

  	
  Type of energy:

  	
   

  	
  CAISO Firm

  
	
  Start date:

  	
   

  	
  November 1, 2002

  	
   

  	
  End date:

  	
   

  	
  March 31, 2003

  
	
  Day(s) of week:

  	
   

  	
  Monday through Sunday

  	
   

  	
  Hours:

  	
   

  	
  H.E. 0100-2400 Pacific

  
	
   

  	
   

  	
  including NERC holidays

  	
   

  	
   

  	
   

  	
  Prevailing Time (“PPT”)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Price ($/MWh):

  	
   

  	
  $[Illegible]/MWh

  	
   

  	
  Quantity (MWh):

  	
   

  	
  [Illegible] MWh

  
	
  Quantity (MW/hr.):

  	
   

  	
  8 Megawatts

  	
   

  	
  Type of energy:

  	
   

  	
  CAISO Firm

  
	
  Start date:

  	
   

  	
  November 1, 2003

  	
   

  	
  End date:

  	
   

  	
  March 31, 2004

  
	
  Day(s) of week:

  	
   

  	
  Monday through Sunday

  	
   

  	
  Hours:

  	
   

  	
  H.E. 0100-2400 Pacific

  
	
   

  	
   

  	
  including NERC holidays

  	
   

  	
   

  	
   

  	
  Prevailing Time (“PPT”)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Delivery Point:

  	
   

  	
  SP15 (Inter SC Trade)

  	
   

  	
   

  	
   

  	
   

  
	
  Transmission
  Contingencies:         None

  	
   

  	
  Generation Contingencies:
           None

  
										



 


1

















 


And


 


	
  Seller :

  	
  Pinnacie West Capital Corporation

  	
   

  	
  Purchaser:

  	
  Southern California Water Company

  
	
   

  	
  400 N. 5th Street, M/S 9842

  	
   

  	
   

  	
  630 E. Foothills Blvd.

  
	
   

  	
  Phoenix, Arizona 85004

  	
   

  	
   

  	
  San Dimas, CA 91773-9016

  
	
  Confirm

  	
   

  	
   

  	
  Confirm

  	
   

  	
   

  
	
  Administrator:

  	
  Tricia Henry

  	
   

  	
  Administrator:

  	
   

  	
  Raymond P. Juels

  
	
   

  	
  (602) 250-2911 (phone)

  	
   

  	
   

  	
   

  	
  (909) 394-3800 X 679 (phone)

  
	
   

  	
  (602) 371-5256 (fax)

  	
   

  	
   

  	
   

  	
  (909) 394-3768 (fax)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Preschedule:

  	
   

  	
  (602) 250-4371

  	
   

  	
  Preschedule:

  	
   

  	
  (909) 280-9411

  
	
  Real Time:

  	
   

  	
  (602) 250-4470

  	
   

  	
  Real Time:

  	
   

  	
  (909) 280-9411

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Price ($/MWh):

  	
   

  	
  $74.65/MWh

  	
   

  	
  Quantity (MWh):

  	
   

  	
  $11,080 MWh

  
	
  Quantity (MW/hr.):

  	
   

  	
  15 Megawatts

  	
   

  	
  Type of energy:

  	
   

  	
  CAISO Firm

  
	
  Start date:

  	
   

  	
  November 1, 2002

  	
   

  	
  End date:

  	
   

  	
  December 31, 2008

  
	
  Day(s) of week:

  	
   

  	
  Monday through Sunday

  	
   

  	
  Hours:

  	
   

  	
  H.E. 0100-2400 Pacific

  
	
   

  	
   

  	
  including NERC holidays.

  	
   

  	
   

  	
   

  	
  Prevailing Time (“PPT”)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Quantity (MW/hr.):

  	
   

  	
  8 Megawatts

  	
   

  	
  Type of energy:

  	
   

  	
  CAISO Firm

  
	
  Start date:

  	
   

  	
  November 1, 2002

  	
   

  	
  End date:

  	
   

  	
  December 31, 2008

  
	
   

  	
   

  	
  Winter Periods

  	
   

  	
   

  	
   

  	
  Winter Periods

  
	
   

  	
   

  	
  Period 1 - November 1, 2002

  	
   

  	
   

  	
   

  	
  March 31, 2003

  
	
   

  	
   

  	
  Period 2 - November 1, 2003

  	
   

  	
   

  	
   

  	
  March 31, 2004

  
	
   

  	
   

  	
  Period 3 - November 1, 2004

  	
   

  	
   

  	
   

  	
  March 31, 2005

  
	
   

  	
   

  	
  Period 4 - November 1, 2005

  	
   

  	
   

  	
   

  	
  March 31, 2006

  
	
   

  	
   

  	
  Period 5 - November 1, 2006

  	
   

  	
   

  	
   

  	
  March 31, 2007

  
	
   

  	
   

  	
  Period 6 - November 1, 2007

  	
   

  	
   

  	
   

  	
  March 31, 2008

  
	
   

  	
   

  	
  Period 7 - November 1, 2008

  	
   

  	
   

  	
   

  	
  December 31, 2008

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Day(s) of week:

  	
   

  	
  Monday through Sunday

  	
   

  	
  Hours:

  	
   

  	
  H.E. 0100-2400 Pacific

  
	
   

  	
   

  	
  including NERC holidays

  	
   

  	
   

  	
   

  	
  Prevailing Time (“PPT”)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Delivery Point:

  	
   

  	
  SP15 (Inter SC Trade)

  	
   

  	
   

  	
   

  	
   

  
	
  Transmission Contingencies:
         None

  	
   

  	
  Generation
  Contingencies:          None

  
										



 


PWMT and SCWC enter into
this Confirmation Agreement (hereinafter the “Confirmation”) pursuant to and in
accordance with the Western Systems Power Pool Agreement, effective as of July 27,
1991 and as further amended on Septemeber 1, 2002 (hereinafter the “Agreement”),
to which Pinnacle West Capital Corporation and Southern California Water
Company are Parties. Terms used but not defined herein shall have the meanings
set forth in the Agreement.


 


In consideration of the
premises and the agreements contained herein, the Parties agree as follows:


 


1.                          PWMT
shall supply firm energy in accordance with Service Schedule C of the Agreement
utilizing available generation or purchased power resources at the point of
delivery. If, in order to maintain firm energy deliveries, PWMT is required to
obtain additional generation or transmission resources, PWMT shall absorb all
additional costs incurred, including any charges for generation, transmission
or ancillary services.


 


2

















 


2.                          Section C-3.8
(c) of Service Schedule C is deleted in its entirety and replaced with the
following:


 


“where applicable, to
meet Seller’s or its Affiliate’s public utility or statutory obligations to its
customers.”


 


“Affiliate” means, with
respect to Seller, any other entity that, directly or indirectly, through one
or more intermediaries, controls, or is controlled by, or is under common
control with such entity. For this purpose, “control” means the direct or
indirect ownership of fifty percent (50%) or more of the outstanding capital
stock or other equity interests having ordinary voting power.


 


3.                          Deliveries
will be made except during interruptions or reductions which are due to
uncontrollable forces as defined in Section 10 of the Agreement, in which
case the obligations of both Parties will be reduced for the duration of the
interruption or reduction.


 


4.                          Preschedules
shall be exchanged for all deliveries of energy, including identifications of
receiving  and generating control areas
under this Confirmation by 11:00 a.m. Pacific Prevailing Time on the last
work day observed by both Parties prior to the scheduled date of delivery.
Interchange scheduling shall be conducted in accordance with WSPP Operating
Procedure No. 1.


 


5.                          Neither
Party shall transfer or assign all or any part of the Agreement or its rights
or obligations hereunder or otherwise dispose of any right, title or interest
herein without the prior written consent of the other Party, which consent
shall not be unreasonably withheld or delayed. Notwithstanding the foregoing,
either Party may, without the need for consent from the other Party, (a) transfer,
pledge, or assign the Agreement as security for any financing (b) transfer,
assign or delegate the Agreement or its rights or obligations hereunder to an
Affiliate of such party; or (c) transfer, assign or delegate the Agreement
to any person or entity according to all or substantially all of the
[Illegible] of such party; provided, however, that any such assignee shall
agree to be bound by the terms and conditions hereof and, provided, further,
that any transfer, assignment or delegation that does not require consent
hereunder shall not, in any way, relates the assignor from liability for full
performance of any obligations (and only those obligations) arising under the
Agreement prior to the effective date of the transfer, assignment or
delegation. To the extent a transfer does not require consent, the transferring
Party shall provide prompt notice to the other Party of the [Illegible] and the
effective date thereof. Any transfer in violation of this section shall be
deemed null and void. “Affiliate” means, with respect to a Party, any other
entity that, directly or indirectly, through one or more intermediaries,
controls, or is controlled by, or is under common control with such entity. For
this purpose, “control” means the direct or indirect ownership of fifty percent
(50%) or more of the outstanding capital stock or other equity interests having
ordinary voting power.


 


6.                          “CAISO
Firm Energy” means with respect to a Transaction, a product under which the
Seller shall sell and the Purchaser shall purchase a quantity of energy equal
to the hourly quantity without Ancillary Services (as defined in the Tariff)
that is or will  be scheduled as a
schedule coordinator to schedule coordinator transaction pursuant to the
applicable tariff and protocol provisions of the California Independent System
Operator (“CAISO”) (as amended from time to time, the “Tariff”) for which the
only excuse for failure to deliver or receive is an “Uncontrollable Force”. A
CAISO “Schedule Adjustment” (defined as a schedule change implemented by the
CAISO that is neither caused by, or within the control of, either Party) shall
not constitute an Uncontrollable Force.


 


If the above accurately
reflects the terms and conditions of the agreement between PWMT and SCWC on September 3,
2002, please sign a copy of this Confirmation and return it via fax to (602)
371-5256 the PWMT Confirm Administrator listed above.


 


3

















 


Counterparty’s
failure to notify PWMT of any exception to those terms or, the failure to
return on executed Confirmation within five (5) business days of receipt
of this Confirmation will constitute Counterparty’s agreement to the terms
[Illegible] forth herein.


 




	
  PINNACLEWEST CAPITAL CORPORATION

  	
   

  	
   

  	
  SOUTHERN CALIFORNIA WATER COMPANY

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Signature:

  	
  /s/ Steve McAdams

  	
   

  	
   

  	
  Signature:

  	
  /s/ Joel A. Dickson

  	
   

  
	
  Print Name:

  	
  Steve McAdams

  	
   

  	
   

  	
  Print Name:

  	
  Joel A. Dickson

  	
   

  
	
  Title:

  	
  Contracts Manager

  	
   

  	
   

  	
  Title:

  	
  Vice President

  	
   

  
	
  Date:

  	
  9/6/02

  	
   

  	
   

  	
  Date:

  	
  9/15/02

  	
   

  
											






 


PWM&T

Contracts

Department


	
   

  	
  By 

  	
  /s/ [Illegible] 9/5/02

  	
   

  	
   

  



 


4

















 


	
  (Logo)

  PINNACLEWEST

  CAPITAL CORPORATION

  	
   

  	
  PWMT Contract No. [Illegible]

  

  Ken Wolf

  Marketing & Trading

  P.O. Box [Illegible], M/S 9642

  Phoenix, Arizona 85072-[Illegible]

  Telephone: (602) 250-4313

  Facsimile: (602) 250-3199

  

  September 4, 2002

  



 


 


CONFIDENTIAL


 


 


To:                 Golden State
Water Company


 


The following terms and
conditions shall govern this agreement on September 3, 2002, between David
[Illegible], on behalf of Southern California Water Company (“SCWC”), and Ken
Wolf, on behalf of Pinnacle West Marketing & Trading (“PWMT”), as
follows:


 


	
  Purchaser:

  	
  Pinnacle West Capital
  Corporation

  400 N, 5th Street, M/S 9842

  Phoenix, Arizona 85004

  	
   

  	
  Seller:

  	
  Southern California
  Water Company

  830 E. foothills Blvd.

  San Dimas, CA 91773-9016

  
	
  Confirm

  Administrator:

  	
  

  Tricia Henry

  (602) 250-2811 (phone)

  (602) 371-5256 (fax)

  	
   

  	
  Confirm

  Administrator:

  	
  

  Raymond P. [Illegible]

  (908) 394-3800 X 679 (phone)

  (908) 384-3768 (fax)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Preschedule:

  	
   

  	
  (602) 250-4371

  	
   

  	
  Preschedule:

  	
   

  	
  (909) [Illegible]

  
	
  Real Time:

  	
   

  	
  (602) 250-4470

  	
   

  	
  Real Time:

  	
   

  	
  (909) [Illegible]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Price ($/MWh):

  	
   

  	
  $[Illegible]/MWh

  	
   

  	
  Quantity (MWh):

  	
   

  	
  647,920 MWh

  
	
  Quantity (MW/hr.):

  	
   

  	
  15 Megawatts

  	
   

  	
  Type of energy:

  	
   

  	
  CAISO Firm

  
	
  Start date:

  	
   

  	
  November 1, 2002

  	
   

  	
  End date:

  	
   

  	
  December 31, 2006

  
	
  Day(s) of week:

  	
   

  	
  Monday through Sunday

  	
   

  	
  Hours:

  	
   

  	
  H.E. 0100-2400 Pacific

  
	
   

  	
   

  	
  including NERC holidays

  	
   

  	
   

  	
   

  	
  Prevailing Time (“PPT”)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Price ($/MWh):

  	
   

  	
  $[Illegible]/MWh

  	
   

  	
  Quantity (MWh):

  	
   

  	
  28,992 MWh

  
	
  Quantity (MW/hr.):

  	
   

  	
  [Illegible] Megawatts

  	
   

  	
  Type of energy:

  	
   

  	
  CAISO Firm

  
	
  Start date:

  	
   

  	
  November 1, 2002

  	
   

  	
  End date:

  	
   

  	
  March 31, 2003

  
	
  Day(s) of week:

  	
   

  	
  Monday through Sunday

  	
   

  	
  Hours:

  	
   

  	
  H.E. 0100-2400 Pacific

  
	
   

  	
   

  	
  including NERC holidays

  	
   

  	
   

  	
   

  	
  Prevailing Time (“PPT”)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Price ($/MWh):

  	
   

  	
  $[Illegible]/MWh

  	
   

  	
  Quantity (MWh):

  	
   

  	
  [Illegible] MWh

  
	
  Quantity (MW/hr.):

  	
   

  	
  8 Megawatts

  	
   

  	
  Type of energy:

  	
   

  	
  CAISO Firm

  
	
  Start date:

  	
   

  	
  November 1, 2003

  	
   

  	
  End date:

  	
   

  	
  March 31, 2004

  
	
  Day(s) of week:

  	
   

  	
  Monday through Sunday

  	
   

  	
  Hours:

  	
   

  	
  H.E. 0100-2400 Pacific

  
	
   

  	
   

  	
  including NERC holidays

  	
   

  	
   

  	
   

  	
  Prevailing Time (“PPT”)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Delivery Point:

  	
   

  	
  SP15 (Inter SC Trade)

  	
   

  	
   

  	
   

  	
   

  
	
  Transmission
  Contingencies:         None

  	
   

  	
  Generation Contingencies:
           None

  
										



 


1

















 


And


 


	
  Seller :

  	
  Pinnacie West Capital Corporation

  	
   

  	
  Purchaser:

  	
  Southern California Water Company

  
	
   

  	
  400 N. 5th Street, M/S 9842

  	
   

  	
   

  	
  630 E. Foothills Blvd.

  
	
   

  	
  Phoenix, Arizona 85004

  	
   

  	
   

  	
  San Dimas, CA 91773-9016

  
	
  Confirm

  	
   

  	
   

  	
  Confirm

  	
   

  	
   

  
	
  Administrator:

  	
  Tricia Henry

  	
   

  	
  Administrator:

  	
   

  	
  Raymond P. Juels

  
	
   

  	
  (602) 250-2911 (phone)

  	
   

  	
   

  	
   

  	
  (909) 394-3800 X 679 (phone)

  
	
   

  	
  (602) 371-5256 (fax)

  	
   

  	
   

  	
   

  	
  (909) 394-3768 (fax)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Preschedule:

  	
   

  	
  (602) 250-4371

  	
   

  	
  Preschedule:

  	
   

  	
  (909) 280-9411

  
	
  Real Time:

  	
   

  	
  (602) 250-4470

  	
   

  	
  Real Time:

  	
   

  	
  (909) 280-9411

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Price ($/MWh):

  	
   

  	
  $74.65/MWh

  	
   

  	
  Quantity (MWh):

  	
   

  	
  $11,080 MWh

  
	
  Quantity (MW/hr.):

  	
   

  	
  15 Megawatts

  	
   

  	
  Type of energy:

  	
   

  	
  CAISO Firm

  
	
  Start date:

  	
   

  	
  November 1, 2002

  	
   

  	
  End date:

  	
   

  	
  December 31, 2008

  
	
  Day(s) of week:

  	
   

  	
  Monday through Sunday

  	
   

  	
  Hours:

  	
   

  	
  H.E. 0100-2400 Pacific

  
	
   

  	
   

  	
  including NERC holidays.

  	
   

  	
   

  	
   

  	
  Prevailing Time (“PPT”)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Quantity (MW/hr.):

  	
   

  	
  8 Megawatts

  	
   

  	
  Type of energy:

  	
   

  	
  CAISO Firm

  
	
  Start date:

  	
   

  	
  November 1, 2002

  	
   

  	
  End date:

  	
   

  	
  December 31, 2008

  
	
   

  	
   

  	
  Winter Periods

  	
   

  	
   

  	
   

  	
  Winter Periods

  
	
   

  	
   

  	
  Period 1 - November 1, 2002

  	
   

  	
   

  	
   

  	
  March 31, 2003

  
	
   

  	
   

  	
  Period 2 - November 1, 2003

  	
   

  	
   

  	
   

  	
  March 31, 2004

  
	
   

  	
   

  	
  Period 3 - November 1, 2004

  	
   

  	
   

  	
   

  	
  March 31, 2005

  
	
   

  	
   

  	
  Period 4 - November 1, 2005

  	
   

  	
   

  	
   

  	
  March 31, 2006

  
	
   

  	
   

  	
  Period 5 - November 1, 2006

  	
   

  	
   

  	
   

  	
  March 31, 2007

  
	
   

  	
   

  	
  Period 6 - November 1, 2007

  	
   

  	
   

  	
   

  	
  March 31, 2008

  
	
   

  	
   

  	
  Period 7 - November 1, 2008

  	
   

  	
   

  	
   

  	
  December 31, 2008

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Day(s) of week:

  	
   

  	
  Monday through Sunday

  	
   

  	
  Hours:

  	
   

  	
  H.E. 0100-2400 Pacific

  
	
   

  	
   

  	
  including NERC holidays

  	
   

  	
   

  	
   

  	
  Prevailing Time (“PPT”)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Delivery Point:

  	
   

  	
  SP15 (Inter SC Trade)

  	
   

  	
   

  	
   

  	
   

  
	
  Transmission Contingencies:
         None

  	
   

  	
  Generation
  Contingencies:          None

  
										



 


PWMT and SCWC enter into
this Confirmation Agreement (hereinafter the “Confirmation”) pursuant to and in
accordance with the Western Systems Power Pool Agreement, effective as of July 27,
1991 and as further amended on Septemeber 1, 2002 (hereinafter the “Agreement”),
to which Pinnacle West Capital Corporation and Southern California Water
Company are Parties. Terms used but not defined herein shall have the meanings
set forth in the Agreement.


 


In consideration of the
premises and the agreements contained herein, the Parties agree as follows:


 


1.                          PWMT
shall supply firm energy in accordance with Service Schedule C of the Agreement
utilizing available generation or purchased power resources at the point of
delivery. If, in order to maintain firm energy deliveries, PWMT is required to
obtain additional generation or transmission resources, PWMT shall absorb all
additional costs incurred, including any charges for generation, transmission
or ancillary services.


 


2

















 


2.                          Section C-3.8
(c) of Service Schedule C is deleted in its entirety and replaced with the
following:


 


“where applicable, to
meet Seller’s or its Affiliate’s public utility or statutory obligations to its
customers.”


 


“Affiliate” means, with
respect to Seller, any other entity that, directly or indirectly, through one
or more intermediaries, controls, or is controlled by, or is under common
control with such entity. For this purpose, “control” means the direct or
indirect ownership of fifty percent (50%) or more of the outstanding capital
stock or other equity interests having ordinary voting power.


 


3.                          Deliveries
will be made except during interruptions or reductions which are due to
uncontrollable forces as defined in Section 10 of the Agreement, in which
case the obligations of both Parties will be reduced for the duration of the interruption
or reduction.


 


4.                          Preschedules
shall be exchanged for all deliveries of energy, including identifications of
receiving  and generating control areas
under this Confirmation by 11:00 a.m. Pacific Prevailing Time on the last
work day observed by both Parties prior to the scheduled date of delivery.
Interchange scheduling shall be conducted in accordance with WSPP Operating
Procedure No. 1.


 


5.                          Neither
Party shall transfer or assign all or any part of the Agreement or its rights
or obligations hereunder or otherwise dispose of any right, title or interest
herein without the prior written consent of the other Party, which consent
shall not be unreasonably withheld or delayed. Notwithstanding the foregoing,
either Party may, without the need for consent from the other Party, (a) transfer,
pledge, or assign the Agreement as security for any financing (b) transfer,
assign or delegate the Agreement or its rights or obligations hereunder to an
Affiliate of such party; or (c) transfer, assign or delegate the Agreement
to any person or entity according to all or substantially all of the
[Illegible] of such party; provided, however, that any such assignee shall
agree to be bound by the terms and conditions hereof and, provided, further,
that any transfer, assignment or delegation that does not require consent
hereunder shall not, in any way, relates the assignor from liability for full
performance of any obligations (and only those obligations) arising under the
Agreement prior to the effective date of the transfer, assignment or
delegation. To the extent a transfer does not require consent, the transferring
Party shall provide prompt notice to the other Party of the [Illegible] and the
effective date thereof. Any transfer in violation of this section shall be deemed
null and void. “Affiliate” means, with respect to a Party, any other entity
that, directly or indirectly, through one or more intermediaries, controls, or
is controlled by, or is under common control with such entity. For this
purpose, “control” means the direct or indirect ownership of fifty percent
(50%) or more of the outstanding capital stock or other equity interests having
ordinary voting power.


 


6.                          “CAISO
Firm Energy” means with respect to a Transaction, a product under which the
Seller shall sell and the Purchaser shall purchase a quantity of energy equal
to the hourly quantity without Ancillary Services (as defined in the Tariff)
that is or will  be scheduled as a
schedule coordinator to schedule coordinator transaction pursuant to the
applicable tariff and protocol provisions of the California Independent System
Operator (“CAISO”) (as amended from time to time, the “Tariff”) for which the
only excuse for failure to deliver or receive is an “Uncontrollable Force”. A
CAISO “Schedule Adjustment” (defined as a schedule change implemented by the
CAISO that is neither caused by, or within the control of, either Party) shall
not constitute an Uncontrollable Force.


 


If the above accurately
reflects the terms and conditions of the agreement between PWMT and SCWC on September 3,
2002, please sign a copy of this Confirmation and return it via fax to (602)
371-5256 the PWMT Confirm Administrator listed above.


 


3

















 


Counterparty’s
failure to notify PWMT of any exception to those terms or, the failure to
return on executed Confirmation within five (5) business days of receipt
of this Confirmation will constitute Counterparty’s agreement to the terms
[Illegible] forth herein.


 




	
  PINNACLEWEST CAPITAL CORPORATION

  	
   

  	
   

  	
  SOUTHERN CALIFORNIA WATER COMPANY

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Signature:

  	
  /s/ Steve McAdams

  	
   

  	
   

  	
  Signature:

  	
  /s/ Joel A. Dickson

  	
   

  
	
  Print Name:

  	
  Steve McAdams

  	
   

  	
   

  	
  Print Name:

  	
  Joel A. Dickson

  	
   

  
	
  Title:

  	
  Contracts Manager

  	
   

  	
   

  	
  Title:

  	
  Vice President

  	
   

  
	
  Date:

  	
  9/6/02

  	
   

  	
   

  	
  Date:

  	
  9/15/02

  	
   

  
											






 


PWM&T

Contracts

Department


	
   

  	
  By

  	
  /s/ [Illegible] 9/5/02

  	
   

  	
   

  



 


4