Exhibit 10.9.1C





Exhibit
10.9.1c


AMENDMENT NUMBER 15

TO THE ARIZONA NUCLEAR POWER PROJECT

PARTICIPATION AGREEMENT





	1.	 	PARTIES:
	 
	 	 	The Parties to this Amendment Number 15 to the Arizona Nuclear Power Project Participation
Agreement, hereinafter referred to as “Amendment Number 15,” are: ARIZONA PUBLIC SERVICE
COMPANY, a corporation organized and existing under and by virtue of the laws of the State of
Arizona, hereinafter referred to as “Arizona”; SALT RIVER PROJECT AGRICULTURAL IMPROVEMENT AND
POWER DISTRICT, an agricultural improvement district organized and existing under and by virtue
of the laws of the State of Arizona, hereinafter referred to as “Salt River Project”; SOUTHERN
CALIFORNIA EDISON COMPANY, a corporation organized. and existing under and by virtue of the laws
of the State of California, hereinafter referred to as “Edison”; PUBLIC SERVICE COMPANY OF NEW
MEXICO, a corporation organized and existing under and by virtue of the laws of the State of New
Mexico, hereinafter referred to as “PNM”; EL PASO ELECTRIC COMPANY, a corporation organized and
existing under and by virtue of the laws of the State of Texas, hereinafter referred to as “El
Paso”; SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY, a joint powers agency organized and existing
under and by virtue of the laws of the State of California, doing business in the State of
Arizona as SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY ASSOCIATION, hereinafter referred to as
“SCPPA”; and DEPARTMENT OF WATER AND POWER OF THE CITY OF LOS ANGELES, a municipal corporation
organized and existing under and by virtue of the laws of the State of California, hereinafter
referred to as “LADWP;” all hereinafter individually referred to as “Party” and collectively as
“Parties.”
	 
	2.	 	RECITALS:






	 	2.1.	 	Arizona, Salt River Project, Edison, PNM, El Paso, SCPPA and LADWP are parties to a
certain agreement entitled Arizona Nuclear Power Project Participation Agreement, dated as
of August 23, 1973, as amended by: Amendment Number 1, dated as of January 1, 1974;
Amendment Number 2, dated as of August 28, 1975; Amendment Number 3, dated as of July 22,
1976; Amendment Number 4, dated as of December 15, 1977; Amendment Number 5, dated as of
December 5, 1979; Amendment Number 6, effective as of October 16, 1981; Amendment Number 7,
effective as of April 1, 1982; Amendment Number 8, executed as of September 12, 1983;
Amendment Number 9, executed as of June 12, 1984 Amendment Number 10, executed as of
November 21, 1985; Amendment Number 11, effective January 10, 1987; Amendment Number 12,
effective August 5, 1988; Amendment Number 13, effective June 15, 1991; and, Amendment
Number 14, effective June 20, 2000, retroactive to January 1, 1993, hereinafter, as so
amended, referred to as the “Participation Agreement.”
	 
	 	2.2.	 	Pursuant to and in accordance Section E.11 of Appendix E to the Participation
Agreement, El Paso and PNM filed protests regarding the allocation of certain overhead
expenses of Arizona, and its corporate parent Pinnacle West Capital Corporation, to the
Arizona Nuclear Power Project Participants, as specified in the Participation Agreement,
Appendix E, (the “Protests”).




 


 









 






	 	2.3.	 	After analysis and consideration of the Protests by the appropriate Palo Verde
Participant committees, the Participants were not able to resolve the Protests to the
satisfaction of all of the Participants.
	 
	 	2.4.	 	Prior to the call for submission of the Protests to arbitration as specified in
Sections 24 and E.11.2 of the Participation Agreement, the Participants referred the
Protests to higher authority within each of the respective Participants’ organizations in
accordance with Section 6.10 of the Participation Agreement.
	 
	 	2.5.	 	In December 2009 and January 2010, the Participants’ higher authority (i.e. the Chief
Executive Officers, or the positional equivalent) met and conferred in an attempt to
resolve the Protests. Following these meetings, PNM agreed to withdraw its protest, and
Arizona proposed modifications to certain provisions of the Participation Agreement,
Appendix E, to resolve El Paso’s protest; El Paso agreed to Arizona’s proposed settlement,
and agreed to withdraw its protest provided that all Participants execute this Amendment
No. 15.






	3.	 	AGREEMENT:
	 
	 	 	For and in consideration of the premises and the mutual obligations of and undertakings by the
Parties as hereinafter provided in this Amendment Number 15 to the Participation Agreement, the
Parties agree as follows.






	4.	 	EFFECTIVE DATE:
	 
	 	 	This Amendment Number 15 shall become effective forty-five (45) days after the date that the
Party which last in time executes this Amendment Number 15. The amended procedures for
allocating costs that are associated with this Amendment Number 15 shall be applied
retroactively to January 1, 2010.
	 
	5.	 	DEFINED TERMS:






	 	5.1.	 	The Capitalized and italicized words and phrases used in this Amendment Number 15 shall
have meanings ascribed to them in the Participation Agreement as amended by this Amendment
Number 15.
	 
	 	5.2.	 	All references to a “Section” or “Sections” in this Amendment Number 15 shall mean a
Section or Sections of the Participation Agreement unless the text expressly states
otherwise.






	6.	 	AMENDMENTS TO THE ARIZONA NUCLEAR POWER PROJECT MADE BY THIS AMENDMENT NUMBER 15:






	 	6.1.	 	Delete Section E.1.9.
	 
	 	6.2.	 	Delete Section E.2.3.




 


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	 	6.3.	 	Amend Section E.3.1.4, by deleting the strikethrough text and substituting therefor the
underlined text:
	 
	 	 	 	A portion of the expenses incurred by the Operating Agent’s System Electric Operations
Department, such portion to be determined by multiplying the total of such expenses by a
ratio, the numerator of which is the total payroll for ANPP and the denominator of which is
the total payroll supervised by the Executive Vice President, Engineering and Operations
the annual total net megawatt-hour generation of the ANPP (known and referred to as the
Palo Verde Nuclear Generating Station), and the denominator of which is the annual total net
megawatt-hour generation of all Arizona-operated electric generating facilities plus Arizona
megawatt-hour power purchases plus Arizona megawatt-hour transmission of power for
others. Such expenses shall include, but not be limited to, the following:
	 
	 	6.4.	 	Amend Section E.6.1, by deleting the strikethrough text:
	 
	 	 	 	The Operation and Maintenance A & G Ratio shall be the percentage computed by dividing (i)
the sum of (a) the total amounts charged to FPC Accounts 920 and 921 multiplied by the O & M
Ratio computed in accordance with Section E.8 hereof, (b) the total amounts charged to FPC
Accounts 923 (except any amounts directly chargeable to ANPP) and 935 (formerly 932), (c)
the product of the portion of labor charges included within (a) and (b) above multiplied by
the Payroll Tax Ratio computed in accordance with Section E.4 hereof (d) the product of the
labor charges included within (a) and (b) above multiplied by the Benefits Ratio computed in
accordance with Section E.5 hereof, and (e) the product of the labor charges included within
(a) and (b) above multiplied by the Compensation Insurance Ratio computed in accordance with
Section E.7 hereof, less (f) the one percent (1%) portion of the administrative and general
expenses charged to FPC Accounts 920 and 921 allocable to contract operation and maintenance
by (ii) the direct labor (i.e. total labor less labor charge to clearing accounts)
chargeable to operation and maintenance accounts (exclusive of A & G), to include O & M
labor billed to Participants and the labor portion of Start-Up and Pre-Operation Costs
subject to the Operation and Maintenance A & G Ratio pursuant to Section L.1.3, and to
exclude the labor portion of Start-Up and Pre-Operation Costs subject to the construction
administrative and general expense percentage of one percent (1%) pursuant to Section L.1.3.







	 
	 	6.5.	 	Amend Section E.6.2, by deleting the strikethrough text and substituting therefor the
underlined text:
	 
	 	 	 	The following example sets forth the method to be employed by the Operating Agent to
determine the Operation and Maintenance A & G Ratio:




EXAMPLE COMPUTATION OF OPERATIONS




AND MAINTENANCE A & G RATIO




(Based on the Operating Agent’s 1984 Experience)





	 	 	 	 	 	 	 	 	 
	Labor	 	 	 	 	 	Total	 
	Administrative and General Salaries

	 	 	 	 	 	 	 	 




 


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charged to FPC Account 920
	 	$	17,408,542	 	 	$	17,406,779	 
	Office Supplies and Expenses
charged to FPC Account 921
	 	 	 	 	 	 	7,208,084	 
	 
	 	 	 	 	 	 	 
	[Line 7] Total
	 	$	17,408,542	 	 	$	24,614,863	 
	 
	 	 	 	 	 	 
	Total FPC Accounts 920 and 921,
multiplied by O & M Ratio @ 68.48%
	 	$	11,921,544	 	 	$	16,856,504	 
	FPC Account 923
	 	 	 	 	 	 	919,166	 
	FPC Account 932 (presently 935)
	 	 	1,555,913	 	 	 	3,127,002	 
	 
	 	 	 	 	 	 
	[Line 11] Subtotal
	 	$	13,477,457	 	 	$	20,902,672	 
	Payroll Taxes @ 7.126%
	 	 	 	 	 	 	960,404	 
	Pensions and Benefits @ 13.512%
	 	 	 	 	 	 	1,821,074	 
	Compensation Insurance @ 0.451%
	 	 	 	 	 	 	60,783	 
	Less that 1% portion of A & G allocable
to Contract Operation and Maintenance
	 	 	 	 	 	 	1,483,314	 
	Total administrative and general expenses
allocable to operations and maintenance
	 	$	22,261,619	 	 	$	23,744,933	 
	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Labor Base
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Direct labor charged to system operations and
maintenance, as further defined in Section E.6.1
	 	 	 	 	 	$	148,557,953	 
	Less direct labor charged to administrative and
general expenses (FPC Accounts 920-931 and 935)
	 	 	 	 	 	 	13,160,635	 
	 
	 	 	 	 	 	 	 
	Labor Base
	 	 	 	 	 	$	135,397,318	 






Operation and Maintenance



A & G Ratio for 1984 $22,261,619 ÷ $135,397,318 = 16.442%



Operation and Maintenance



A & G Ratio for 1984 $23,744,933 ÷ $135,397,318 = 17.537%



Note: All labor figures include loading for allowed time.





	 	6.6.	 	Amend Section E.9.1, by deleting the strikethrough text:




 


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	 	 	 	The Capital A & G Ratio shall be the percentage computed by dividing (i) the amounts equal
to (A) the sum of (a) the total amounts charged to FPC Accounts 920 and 921 multiplied by
the Construction Ratio computed in accordance with Section E.8 hereof, and (b) the product
of the portion of labor charges included in (a) above multiplied by the sum of the Payroll
Tax Ratio, the Benefits Ratio and the Compensation Insurance Ratio less (B) the one percent
(1%) portion of administrative and general expenses charged to FPC Accounts 920 and 921
allocable to contract construction (including the administrative and general expenses (i)
recovered on Start-Up and Pre-Operation Costs subject to the construction administrative and
general expense percentage of one percent (1%) pursuant to Section L.1.3, (ii) recovered on
ANPP construction expenses, and (iii) allocable to other contract construction) by (ii) the
direct labor in construction accounts (exclusive of A & G), to include construction labor
billed to Participants, excluding the labor portion of Start-Up and Pre-Operation Costs
subject to the Operation and Maintenance A & G Ratio pursuant to Section L.1.3, less the
labor portion of construction expenses to which the one percent (1%) portion of
administrative and general expenses is applicable, and less the labor portion of Start-Up
and Pre-Operation Costs subject to the construction administrative and general expense
percentage of one percent (1%) pursuant to Section L.1.3.
	 
	 	6.7.	 	Amend Section E.9.2, by deleting the strikethrough text and substituting therefor the
underlined text:
	 
	 	 	 	The following example sets forth the method to be employed by the Operating Agent to
determine the Capital A & G Ratio:





EXAMPLE COMPUTATION OF CAPITAL A & G RATIO




(Based on the Operating Agent’s 1984 Experience)




	 	 	 	 	 	 	 	 	 
	Labor	 	 	 	 	 	Total	 
	Administrative and General Salaries
charged to FPC Account 920
	 	$	17,408,542	 	 	$	17,406,779	 
	Office Supplies and Expenses
charged to FPC Account 921
	 	 	 	 	 	 	7,208,084	 
	 	 	 	 	 	 	 	 
	[Line 7] Total
	 	$	17,408,542	 	 	$	24,614,863	 
	 	 	 	 	 	 	 
	 
	 
	Total FPC Accounts 920 and 921, multiplied
[Line 9] by Construction Ratio
@ 28.355%
	 	$	4,936,192	 	 	$	6,979,544	 
	Payroll Taxes @ 7.126%
	 	 	 	 	 	 	351,753	 
	Pensions and Benefits @ 13.512%
	 	 	 	 	 	 	666,978	 
	Compensation Insurance @ 0.451%
	 	 	 	 	 	 	22,262	 
	Less that 1% portion of A & G allocable
	 	 	 	 	 	 	 	 







 


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to Contract Construction, as further
defined in Section E.9.1
	 	 	 	 	 	 	3,634,919	 
	Total A & G Expense allocable
to Construction
	 	$	4,385,618	 	 	 	8,020,537	 
	 	 	 	 	 	 	 
	Construction Direct Labor
	 	 	 	 	 	 	56,061,726	 
	Less the labor portion of Construction Work,
Start-Up and Pre-Operation Costs subject
to the construction administrative and
general expense percentage of one percent (1%)
	 	 	 	 	 	 	13,496,824	 
	Total Construction Direct Labor Base
	 	 	 	 	 	$	42,564,902	 






Capital A & G Ratio for 1984 $4,385,618
÷ $42,564,902 = 10.303%



Capital A & G Ratio for 1984
$8,020,537 ÷ $42,564,902 = 18.843%



Note: All labor figures include loading for allowed time.




	7.	 	EXECUTION BY COUNTERPARTS:
	 
	 	 	This Amendment Number 15 may be executed in any number of counterparts, and upon execution by
all Participants, each executed counterpart shall have the same force and effect as an original
instrument and as if all Participants had signed the same instrument. Any signature page of
this Amendment Number 15 may be detached from any counterpart of the Amendment Number 15 without
impairing the legal effect of any signature thereon, and may be attached to another counterpart
of this Amendment Number 15 identical in form hereto but having attached to it one or more
signature pages.





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