exv10w4



 





Exhibit 10.4




Confidential Materials omitted and filed separately with the Securities and

Exchange Commission. Asterisks denote omissions.




AMENDMENT NO. 2 TO THE

COAL TRANSPORTATION AGREEMENT




     THIS AMENDMENT NO. 2 TO THE COAL TRANSPORATION AGREEMENT is entered into as of this
24th day of August, 1998 by and among THE MONTANA POWER COMPANY, a Montana corporation
(“MPC”), PUGET SOUND ENERGY, INC., a Washington corporation formerly known as Puget Sound Power and
Light (“Puget”), THE WASHINGTON WATER POWER COMPANY, a Washington corporation (“Water Power”),
PORTLAND GENERAL ELECTRIC COMPANY, an Oregon corporation (“Portland”), PACIFICORP, an Oregon
corporation (“Pacific”) and WESTERN ENERGY COMPANY, a Montana corporation (“WECO”), MPC, Puget,
Water Power, Portland, Pacific and WECO are sometimes referred to collectively as “Parties” and
individually as “Party.”



Recital




     The Parties desire to amend the Coal Transportation Agreement dated July 10, 1981, as amended
by Amendment No. 1 dated September 14, 1987, to eliminate the price reopeners provided in that
Agreement, to eliminate the gross inequity provisions of that Agreement, and to provide a new
Fee-Operating Profit to be effective July 1, 2001. Unless otherwise defined, capitalized terms
herein shall have the same meaning set forth in the Coal Transportation Agreement.



 









 





Amendments




     The Coal Transportation Agreement is hereby amended as follow:


1. Effective July 1, 2001, Subsection 5.5 is deleted in its entirety and the following is inserted
in lieu thereof:





	 	 	“The Fee- Operating Profit component of the Base Price shall be fifty eight cents
($.58) per ton as of July 1, 2001, and subsequently adjusted as provided in
Subsection 6.6. Such per ton charge, as adjusted, shall be paid on the first [**]
aggregate tons of Contract Coal transported to the Generating Plant on or after July
1, 2001. Upon the date such first [**] aggregate tons of Contract Coal have been
transported to the Generating Plant (“Change in Fee Date”), the then current per ton
charge shall be reduced by [**] ([**]%) percent, and such reduced charge, as
subsequently adjusted by Subsection 6.6 shall be paid on all tons of Contract Coal
transported to the Generating Plant after the Change in Fee Date. For purposes of
this Agreement. Contract Coal shall include all coal transported to the Generating
Plant during the term of this Agreement, whether transported by Western or by any
third party.




2. Effective upon execution of this Amendment No. 2, Subsection 5.10 is deleted in its entirety.



3. Effective upon execution of this Amendment No. 2 Subsection 5.11 is deleted in its entirety.



4. Effective upon execution of this Amendment No. 2 Subsection 6.4 is deleted in its entirety and
the following sentence is inserted in lieu thereof:





	 	 	“Seller shall not extend the conveyor or make any other substantial investment in
the conveyor, other than as is required to maintain the conveyor in operable
condition, except upon mutual agreement of the Parties.”




Page 2 – AMENDMENT NO. 2 TO THE COAL TRANSPORTATION AGREEMENT




 









 







5. Effective July 1, 2001, Subsections 6.6(a), 6.6(b) and 6.6(c) are deleted in their entirety and
the following is inserted in lieu thereof:





	 	 	“6.6 The Base Price shall also be revised to compensate for the effects of inflation
or deflation on Western’s profit per ton under this Agreement as follows:
	 
	 	 	The Fee – Operating Profit shall be adjusted every January 1 and July 1 subsequent
to July 1, 2002 for inflation or deflation subsequent to July 1, 2001. To compute
new values the parties shall use the [**], first published for the three-month
period ending July 1, [**] as the base. Expressed mathematically, the formula is as
follows:






	 	 	 	FOP = $.58/ton *(GX)/(G1)
	 
	 	 	 	          where:
	 
	 	 	 	FOP = Fee – Operating Profit, as adjusted.
	 
	 	 	 	Gx = [**] first published for the three-month period ending the preceding
October 1 (in the case of a January 1 adjustment) or April 1 (in the case of
a July 1 adjustment)
	 
	 	 	 	G1 = [**] first published for the three-month period ending July 1, [**].






	 	 	The parties recognize that the use of $.58/ton in the formula is subject to the
reduction in the Fee –Operating Profit as of the Change in Fee Date as provided in
Subsection 5.5 and upon such Change in Fee Date (a) the reduced Fee – Operating
Profit as provided in Subsection 5.5 shall be substituted for $.58/ton in the
formula and (b) G1 shall become the [**] first published for the nearest three month
period immediately preceding the Change in Fee Date.
	 
	 	 	If the [**] index ceases to be published by [**] or any other federal agency, or is
rebased or otherwise modified, such index shall be replaced by a substantially
equivalent index that after necessary adjustment, if any, provides the most
reasonable substitute for such index and which is mutually agreeable to Plant Owners
and Seller. If an agreement cannot be reached with ninety (90) days of
discontinuance of such index, then the matter shall be submitted to arbitration
pursuant to Section 11.




6. Effective upon execution of this Amendment No. 2, the paragraph marked as Subsection 6.6(d) and
the succeeding paragraph which is the final paragraph in Suction 6 are deleted in their entirety.



Page 3 – AMENDMENT NO. 2 TO THE COAL TRANSPORTATION AGREEMENT




 









 








     IN WITNESS WHEREOF, the Parties have executed this Amendment No. 2 in several counterparts.



	 	 	 	 	 
	 

	 	 	 	THE MONTANA POWER COMPANY
	 
	 	 	 	 
	 

	 	By:
	 	/s/ C.F. Cramer
	 

	 	 	 	 
	 	 	Its Executive Vice President and Chief
	 	 	Operating Officer of Energy Supply
	 
	 	 	 	 
	 

	 	 	 	PUGET SOUND ENERGY, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ W. A. Gaines
	 

	 	 	 	 
	 

	 	Its:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	THE WASHINGTON WATER POWER COMPANY
	 
	 	 	 	 
	 

	 	By:
	 	/s/ signature not legible
	 

	 	 	 	 
	 

	 	Its:
	 	Senior Vice President
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	PORTLAND GENERAL ELECTRIC COMPANY
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Walter Pollack
	 

	 	 	 	 
	 

	 	Its:
	 	Senior Vice President Power Supply
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	PACIFICORP
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Dan R. Bank
	 

	 	 	 	 
	 

	 	Its:
	 	Vice President
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	WESTERN ENERGY COMPANY
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Paul Gatzmeier
	 

	 	 	 	 
	 

	 	Its:
	 	President
	 

	 	 	 	 





Page 4 – AMENDMENT NO. 2 TO THE COAL TRANSPORTATION AGREEMENT