Document:

exhibit105.htm

    Exhibit
10.5

    

    P O W E R  S A L E
S  C O N T R A C T

     

    Executed
by

     

    PUBLIC UTILITY DISTRICT NO.
2

     

    OF GRANT COUNTY
WASHINGTON

     

    and

     

    PUGET SOUND POWER &
LIGHT COMPANY

     

    INDEX TO
SECTIONS

     

    

    
      
        
          	
                  Section

                	 
      	 
      	 
      
	
                  1.

                	 
      	
                  Term
      of Contract

                	 
      
	
                  2.

                	 
      	
                  Definitions
      and Explanations of Terms

                	 
      
	
                  3.

                	 
      	
                  Amount
      of Energy and Power Sold

                	 
      
	
                  4.

                	 
      	
                  Annual
      Power Costs

                	 
      
	
                  5.

                	 
      	
                  Payment
      for Power Sold

                	 
      
	
                  6.

                	 
      	
                  Scheduling
      of Deliveries

                	 
      
	
                  7.

                	 
      	
                  Point
      of Delivery

                	 
      
	
                  8.

                	 
      	
                  Voltage
      Control and Reactive Deliveries

                	 
      
	
                  9.

                	 
      	
                  Character
      and Continuity of Service

                	 
      
	
                    10.

                	 
      	
                  Metering
      and Transmission Losses

                	 
      
	
                    11.

                	 
      	
                  Accounts

                	 
      
	
                    12.

                	 
      	
                  Information
      to be Made Available to the Purchaser

                	 
      
	
                    13.

                	 
      	
                  Priest
      Rapids Advisory Committee - Arbitration

                	 
      
	
                    14.

                	 
      	
                  Insurance

                	 
      
	
                    15.

                	 
      	
                  Operation
      and Maintenance

                	 
      
	
                    16.

                	 
      	
                  Board
      of Consulting Engineers on Construction Problems

                	 
      
	
                    17.

                	 
      	
                  Construction
      and Financing Contracts

                	 
      
	
                    18.

                	 
      	
                  Completion
      of Construction

                	 
      
	
                    19.

                	 
      	
                  Additional
      Facilities

                	 
      
	
                    20.

                	 
      	
                  Wanapum
      Development

                	 
      

        

      

    

    
      
        	
                  21.

              	 
      	
                Adjustment
      of Power Allocation

              	 
      
	
                  22.

              	 
      	
                Liability
      of Parties

              	 
      
	
                  23.

              	 
      	
                Waiver
      of Default

              	 
      
	
                  24.

              	 
      	
                Notices
      and Computation of Time

              	 
      
	
                  25.

              	 
      	
                Modification
      of Contract Terms

              	 
      
	
                  26.

              	 
      	
                District's
      Bond Resolution and License

              	 
      
	
                  27.

              	 
      	
                Conflict
      of Laws

              	 
      
	
                  28.

              	 
      	
                Assignment
      of Contract

              	 
      
	
                  29.

              	 
      	
                Uniformity
      of Power Sales Contract

              	 
      
	
                EXHIBIT
      "A"

              	
                Distribution
      of the Priest Rapids Development Output

              	 
      
	
                EXHIBIT
      "B"

              	
                Escrow
      Instructions

              	 
      

      

    

     

    
      
        
        

      

      
        
        

        
        

      

      
        
        

      

    

    P 0 W E R  S ALE
S  C O N T R A C T

     

    Executed
by

     

    PUBLIC UTILITY DISTRICT N0.
2

     

    OF GRANT COUNTY,
WASHINGTON

     

    and

     

    PUGET SOUND POWER &
LIGHT COMPANY

     

    

    

    This
contract, entered into this 21st day of May, 1956, by Public Utility District
No. 2 of Grant County, Washington (hereinafter called "the District"), a
municipal corporation of the State of Washington, and Puget Sound Power &
Light Company (hereinafter called "the Purchaser"), a corporation organized and
existing under the laws of the State of Massachusetts.

     

    WITNESSETH:

     

    WHEREAS
the District is a municipal corporation organized under the laws of the State of
Washington and authorized to construct and operate electric generating plants
and transmission lines and to supply electric energy to other electric utilities
and, as specifically authorized by Public Law 544 - 83rd Congress, to develop
the Priest Rapids Hydroelectric Project on the Columbia River; and

    WHEREAS
the District has been granted a license by the Federal Power Commission for the
construction, operation and maintenance of Project No. 2114,
consisting of the Priest Rapids Development and the Wanapum Development, with
the structures, fixtures, equipment and facilities, used or useful in the
maintenance and operation of the Project; and

    WHEREAS
the Purchaser desires to purchase power and energy from the District and the
District desires to sell power and energy from said Project; and

    WHEREAS
the District has the responsibility and authority for the financing,
construction and operation of said Priest Rapids Development and said Wanapum
Development; and

    WHEREAS
said Public Law 544 and the said Federal Power Commission License provide that
the District shall offer a reasonable portion of the power and energy from the
said Project for sale in neighboring states.

    NOW,
THEREFORE, the parties hereto, for and in consideration of the mutual covenants
and agreements herein contained, hereby agree as follows:

     

    
      	
               
      

            	
              SECTION 1.

            	
              TERM OF
      CONTRACT.

            

    

     

    (a)           This
contract shall be in full force and effect from the date of its execution and
until midnight of October 31, 2005.

    (b)           After
October 31, 2005, the Purchaser shall have the fight of first refusal to
purchase that proportionate part of the Priest Rapids Development Output which
is then in excess of the actual and prospective needs of the District for
service to ultimate consumers within the service area of the District, which the
Purchaser's Power Allocation as of October, 2005 shall bear to the total power
allocations of all of the Purchasers; provided, however,
that nothing herein contained shall be construed to limit or waive any rights
which the agencies in neighboring states would have had
to purchase power after October 31, 2005, in the absence of this
subsection (b) of Section 1.  In the event this
Section 1(b) or any sentence, clause or phrase thereof shall be adjudicated
by a court of last resort and of competent jurisdiction to be invalid or
illegal, the remainder of this contract shall be unaffected by such
adjudication, and all other provisions of this contract shall remain in full
force and effect as though this section or such part thereof so adjudicated to
be invalid had not been included herein.

     

    
      	
               
      

            	
              SECTION 2.

            	
              DEFINITIONS AND
      EXPLANATIONS OF TERMS.

            

    

     

    As used
herein:

    (a)           "Contract
Year" shall mean the twelve-month period commencing at 12:01 A.M. on
September 1, of each year, except that the first contract year shall begin
on the date that the District makes available power and energy hereunder, and
end at 12:01 A.M. on the following September 1.

    (b)           "Priest
Rapids Development" shall mean those properties and facilities consisting of the
Priest Rapids dam, site, reservoir, switchyard and power plant, including all
generating facilities associated therewith up to and including the first eight
(8) main turbine generator units each with a name-plate rating of approximately
78,750 kilowatts, and associated transmission facilities consisting of two 230
KV transmission lines and terminal facilities interconnecting the Priest Rapids
switchyard and the Bonneville Power Administration's Midway Substation and an
undivided one-half interest in the interconnecting facilities between the Priest
Rapids switchyard and the Wanapum switchyard.

    (c)           "Wanapum
Development" shall mean those properties and facilities consisting of the
Wanapum dam, site, reservoir, switchyard and power plant, including all
generating facilities associated therewith up to and including the first eight
(8) main turbine generator units each with a nameplate
rating of approximately 71,250 kilowatts, and associated transmission facilities
in the immediate vicinity of said switchyard and an undivided one-half interest
in the interconnecting facilities between Priest Rapids switchyard and Wanapum
switchyard.

    (d)           "Project"
shall mean those properties and facilities known as the Priest Rapids
Development, the Wanapum Development, and all associated transmission facilities
interconnecting said Developments and the transmission facilities which
interconnect the Developments with the electric utility facilities of Purchasers
and the Bonneville Power Administration in the immediate vicinity of said
Developments.

    (e)           "Priest
Rapids Development Output" shall mean the amount of power and energy produced by
said Development during the term of this contract under the operating conditions
which exist during said term including periods when the said Development may be
inoperable, after corrections for encroachment, station and Project use, and
depletions required by said Federal Power Commission License.

    (f)           "Wanapum
Development Output" shall mean the amount of power and energy produced by said
Development during the term of this contract under the operating conditions
which exist during said term including periods when the said Development may be
inoperable after corrections for encroachment, station and Project use, and
depletions required by said Federal Power Commission License.

    (g)           The
word "Month" shall mean a calendar month.

    (h)           "Purchaser's
Power Allocation" shall mean the percentage of the Priest Rapids Development
Output purchased and sold under this contract as set forth in Section 3
hereof as adjusted in accordance with Section 21 hereof.

    (i)           "Debt
Service" shall mean with respect to any period the amount to be paid or accrued
during said period to retire the principal of and pay the interest and premium,
if any, on all Revenue Bonds or other evidences of indebtedness issued at any
time by the District for the purpose of paying the Cost of Acquisition and
Construction and on all bonds issued pursuant to the Bond Resolution in the
manner provided in said Resolution.

    (j)           "Uncontrollable
Forces" shall mean any cause beyond the control of the District, and which by
the exercise of due diligence the District is unable to prevent or overcome,
including but not limited to an act of God, fire, flood, explosion, strike,
sabotage, an act of the public enemy, civil or military authority, including
court orders, injunctions, and orders of government agencies with proper
jurisdiction, insurrection or riot, an act of the elements, failure of
equipment, or inability to obtain or ship materials or equipment because of the
effect of similar causes on suppliers or carriers.

    (k)           The
term "Purchasers" shall mean the Purchaser and other agencies or companies which
enter into contracts with the District to buy a percentage share of the Priest
Rapids Development Output, all as listed under the heading "Purchasers" in
Exhibit "A", entitled "Distribution of the Priest Rapids Development Output,"
attached hereto and made a part hereof.

    (1)           "Revenue
Bonds" shall mean the bonds issued by the District to obtain funds to pay the
cost of Acquisition and Construction and for other purposes, all as authorized
by the Bond Resolution.

    (m)           "Cost
of Acquisition and Construction" shall mean all costs of acquisition,
construction and financing of the Priest Rapids Development, heretofore or
hereafter paid or accrued, including but not limited to:

    

    (1)           Working
Capital in the amount of three million dollars ($3,000,000) from which the cost
of preliminary surveys, investigations, engineering and other fees and expenses
may hereafter be incurred for the Wanapum Development in an amount not to exceed
one and one-half million dollars ($1,500,000) but if so used shall be reimbursed
in the amount used at the time the Wanapum Development is financed;

    (2)           Establishing
the Reserve Account in the Bond Fund pursuant to the Bond
Resolution;

    (3)           Interest
accruing on said revenue bonds prior to and during construction of said
Development;

    (4)           All
fees and expenses properly paid or incurred in connection with said
Development;

    (5)           The
cost of preliminary surveys, investigations, engineering and other fees and
expenses heretofore properly incurred for the Project;

    (6)           The
cost of all facilities included explicitly or implicitly in the Priest Rapids
Development by the definition in Section 2(b) hereof, whenever constructed
or installed.

    (n)           The
term "Uniform System of Accounts" shall mean the Uniform System of Accounts
prescribed by the Federal Power Commission for Electric Utilities and Licensees
in effect at the time this agreement is executed.

    (o)           The
term "Bond Resolution" shall mean the resolution adopted by the District
authorizing the sale of Revenue Bonds to provide funds to pay the cost of
Acquisition and Construction and other purposes in connection with the Priest
Rapids Development, and providing the terms and conditions

    thereof,
a certified copy of which has been delivered to the Purchaser.

    (p)           The
term "Initial Date of Delivery" shall mean 12:01 A.M. of the day the
District is ready to deliver power and energy hereunder from one or more
generating units which shall have been installed, tested and, in the opinion of
the District, are ready for continuous operation as provided in Section 9
hereof.

    
      
      

    

    
    

    
      	
               
      

            	
              SECTION 3.

            	
              AMOUNT OF ENERGY AND
      POWER SOLD.

            

    

     

    (a)           The
District agrees to sell to the Purchaser and the Purchaser agrees to purchase,
solely from the gross revenues of the Purchaser's light and power system, for
the benefit of consumers in the State of Washington, subject to adjustment in
accordance with Section 21 hereof, eight per cent (8%) of the Priest Rapids
Development Output.  Deliveries will be made insofar as possible as
requested by the Purchaser all as provided in Section 6 hereof; provided
that such deliveries, together with deliveries requested by all other Purchasers
(including deliveries to the District pursuant to its reservation under
subsection (b) of Section 3 hereof):

    (1)           Will
be possible of fulfillment under the terms of said Federal Power Commission
License;

    (2)           Will
not exceed the capability of the Development or subject it or its operation to
undue hazard.

    (b)           The
District reserves thirty-six and one-half per cent (36-1/2%) of the said Priest
Rapids Development Output and shall be entitled to the power and energy thus
reserved and to the rights and privileges associated therewith and subject to
the same obligations, including those provided in Section 21 hereof, but
excepting those recited in Section 13 hereof, as it would have if the
District were one of the Purchasers and had rights, privileges and
obligations similar to those of the Purchasers.  The District
covenants and agrees that it will establish, maintain and collect rates or
charges for the power and energy reserved by it from the Development as provided
in Section 3(b) hereof, which shall be fair and nondiscriminatory and
adequate to provide revenues sufficient to enable the District to pay its
pro-rata share of the Annual Power Costs.  All revenues derived by the
District from the sale of the output of the Development to the Purchasers,
together with payments by the District for power and energy reserved by it from
the Development, shall be segregated, deposited and held separate and apart from
all other revenues of the District.

     

    
      	
               
      

            	
              SECTION 4.

            	
              ANNUAL POWER
      COSTS.

            

    

     

    (a)           "Annual
Power Costs" as used in this contract shall be deemed to mean all of the
District's costs resulting from the ownership, operation, maintenance of and
renewals and replacements to the Priest Rapids Development, including, but not
limited to, the items of cost hereinafter mentioned in this Section 4 that
are incurred or paid by the District during each Contract Year in connection
with said Development, to-wit:

    (1)           Amounts
required to be set aside by the District for the payment of Debt Service as
required by the Bond Resolution;

    (2)           An
amount not to exceed six hundred thousand dollars ($600,000) per annum to be
placed in a Reserve for Contingencies, Renewals and Replacements, until the sum
of six million dollars ($6,000,000) in principal amount has been
accumulated.  The moneys in such Reserve Fund shall also be used for
the purpose of making up any deficiency in the Reserve Account in the Bond Fund
as established in the Bond Resolution.  In the event of
withdrawals from
the Reserve for Contingencies, Renewals and Replacements, the funds withdrawn
shall be replaced at the rate of not to exceed six hundred thousand dollars
($600,000) in any one year;

    (3)           Amounts
which may be required to pay for the prevention or correction of any unusual
loss or damage or for major replacements to keep said Development in good
operating condition to the extent that such costs are not covered by insurance,
and by the Reserve for Contingencies, Renewals and Replacements.  In
the event of any such unusual loss or damage, or major replacement which will
cost in excess of the amount of money then in said reserve, plus insurance
proceeds, and plus two million dollars ($2,000,000), the District shall issue
equal lien (pari passu) bonds payable from the revenues of the said Development
to pay the portion of such costs which shall exceed insurance proceeds, if any,
provided, that
such bonds can then be legally issued and can be sold;

    (4)           An
amount which when added to the Annual Costs itemized in Sections 4(a)(2)
and 4(a)(3) hereof will equal fifteen per center (15%) of the annual Debt
Service during the applicable Contract Year.  Such amount shall be
used by the District:  first, for the
purpose of making up any deficiency in the Bond Fund as established by the Bond
Resolution; second, to supplement
the six hundred thousand dollars ($600,000) payment into the Reserve Fund for
Contingencies, Renewals and Replacements provided for in Section 4(a)(2) to
the extent that withdrawals
from said reserve in the previous Contract Year exceeded six hundred thousand
dollars ($600,000); and third, to retire
bonds issued pursuant to the Bond Resolution prior to maturity;

    (5)           All
costs of producing and delivering power and energy (excluding depreciation) not
accounted for by the payments out of funds and reserves specified in the
foregoing subsections and properly chargeable to said Priest Rapids Development
in accordance with the Uniform System of Accounts, less any credits against the
said costs by reason of net revenues from other sources than the direct sale of
power, and also less any credits for interest charged during construction, all
as provided for in said Uniform System of Accounts; provided, however,
that income from interest earned on reserve funds, credited to Account
No. 525, Revenue from Sinking and Other Funds, as defined in said Uniform
System of Accounts, shall be used by the District at least annually to
accumulate and maintain the reserve funds specified in Sections 4(a)(2) and
4(a)(4) hereof, or for the retirement of Revenue Bonds issued by the District
pursuant to the Bond Resolution.

    (b)           Any
payment received by the District as a result of the taking of the whole or any
portion of the output of the Priest Rapids Development by any state or federal
government agency shall be used by the District to reduce the Annual Power Costs
or to retire bonds issued pursuant to the Bond Resolution, whichever shall be
proper under the circumstance existing at the time of said taking.  It
is the intention of the parties hereto that insofar as possible the Annual Power
Costs paid by
the Purchaser shall be reduced in proportion to the loss of availability of
power and energy as a result of such taking.

    (c)           Should
any amount remain in any of the funds established in connection with the Priest
Rapids Development, including working capital and all reserves, in excess of
outstanding obligations against such funds at the expiration of this contract,
there shall be refunded to the Purchaser as excess payment for power and energy
theretofore purchased a share of such remainders determined by multiplying the
total thereof by the percentage of the Priest Rapids Development Output to which
the Purchaser is entitled on October 31, 2005.

     

    
      	
               
      

            	
              SECTION 5.

            	
              PAYMENT FOR POWER
      SOLD.

            

    

     

    (a)           On
or before one hundred and twenty (120) days prior to the Initial Date of
Delivery and on or before one hundred and twenty (120) days prior to the
beginning of each Contract Year thereafter, the District shall prepare and mail
to the Purchaser a pro forma statement showing:

    (1)           The
Initial Date of Delivery and the dates when each then uncompleted generating
unit of the Priest Rapids Development is scheduled for completion (Not
applicable after the completion of the construction of said
Development);

    (2)           A
detailed estimate of the Annual Power Costs of said Development for the
following Contract Year, provided, that the
estimate of the Annual Power Costs for any period prior to the date that eight
(8) generating units are completed, installed and continuously operating shall
be made in accordance with Section 5(h) hereof;

    (3)           An
amount obtained by multiplying the estimated Annual Power Costs by the
Purchaser's Power Allocation.  This amount
(expressed in dollars) is hereinafter referred to as the "Purchaser's Estimated
Cost;"

    (4)           The
amount of the equal monthly payments to be made by the Purchaser to pay said
Purchaser's Estimated Cost during said Contract Year. Said
statement shall be in lieu of the issuance of monthly bills to the Purchaser by
the District.

    (b)           In
the event of the interruption or reduction of power and energy production of the
Development, resulting in the collection by the District of insurance or other
proceeds as indemnity for such interruption or reduction, the District shall
credit the Purchaser's pro-rata share of such proceeds to the Purchaser's
account to be applied toward the reduction of the Purchaser's monthly
payments.

    (c)           In
the event of extraordinary receipts or payments of unusual costs substantially
affecting the Annual Power Costs during any Contract Year, the District shall
prepare and mail to the Purchaser a revised estimate of Annual Power Costs which
shall supersede the previous estimate of Annual Power Costs as a basis for the
Purchaser's monthly payments for the balance of that Contract Year.

    (d)           Said
monthly payments shall be due and payable at the office of the District at
Ephrata, Washington, on the twentieth day of the month in which the Initial Date
of Delivery occurs, and the twentieth day of each month thereafter, whether or
not the Priest Rapids Development is then operating; provided, that for
the first month in which payment is due, subject to the provisions of
Section 5(h) hereof when applicable, the Purchaser may reduce said payment
to an amount equal to the Purchaser's Estimated
Cost divided by the number of days in the first Contract Year and multiplied by
the number of days in such first month during which the District makes power and
energy available hereunder.

    (e)           If
payment in full is not made on or before the close of business on the twentieth
day of the month, a delayed-payment charge of two percent (2%) of the unpaid
amount due will be made.  Remittances received by mail will be
accepted without assessment of the two per cent (2%) delayed-payment charge
provided the postmark indicates the payment was mailed on or before the
twentieth day of the month.  If the twentieth day of the month is a
Sunday or a holiday, the next following business day shall be the last day on
which payment may be made without the addition of the delayed-payment
charge.  Except as to any portion of a monthly payment which may in
good faith be disputed by the Purchaser, the District may, whenever any amount
due remains unpaid subsequent to the thirtieth day after the due date and after
giving thirty (30) day's advance notice in writing, discontinue deliveries to
the Purchaser until such bill and any subsequent payments which have become due
are paid.  No such discontinuance shall relieve the Purchaser from any
of its obligations under this contract; provided, that until
the power allocation of the Purchaser has been reallocated under the provisions
of Section 21 hereof, the District shall sell the power and energy made
available by such discontinuance for the account of the Purchaser.

    (f)           On
or before one hundred twenty (120) days after the end of each Contract Year the
District will submit to the Purchaser a detailed statement of the actual Annual
Power Costs for said Contract Year, based on the annual audit of the accounts of
the Priest Rapids Development provided for in Section 11 hereof, and will
compare said actual Annual Power

    Costs
with the estimated Annual Power Costs for said Contract Year; provided, that the
actual Annual Power Costs for any period prior to the date that eight (8)
generating units are completed, installed and continuously operating shall be
computed in accordance with Section 5(h) hereof.  If said actual
costs exceed said estimated costs, the District shall bill the Purchaser for an
amount equal to such excess multiplied by the Purchaser's Power Allocation for
said Contract Year, and the Purchaser agrees to pay said bill
promptly.  If said actual costs are less than said estimated costs,
the District shall give credit to the Purchaser against the current charges for
power of an amount equal to such difference between said actual costs and said
estimated costs multiplied by the Purchaser's Power Allocation for said Contract
Year; provided,
that if said comparison is made following the expiration of this contract, the
District shall make a cash refund of such amount to the Purchaser.

    (g)           The
District shall pay into the Revenue Fund established by the Bond Resolution that
share of the Annual Power Costs of the Priest Rapids Development determined by
multiplying said Annual Power Costs by the percentage of the Priest Rapids
Output reserved by the District in accordance with Section 3(b)
hereof.  Payments by the District as specified in this
Section 5(g) shall be made by the District out of revenues from the sale of
its reserved share of the Priest Rapids Development Output specified in
Section 3(b) hereof.

    (h)           During
the period of construction of said Development, after the completion of the
first generating unit, the estimated Annual Power Costs from which the
Purchaser's Estimated Cost is computed and the actual Annual Power Costs from
which adjustments specified in Section 5(d) are computed shall be
determined by adding:

    (1)           All
of the costs included in subsections (a) (3) and (a)(5) of Section 4
not properly chargeable to construction; and

    (2)           That
proportion of the amount required to pay the interest on the Revenue Bonds for
the Contract Year, that the number of generating units completed, installed and
continuously operating bears to the number 8.

     

    
      	
               
      

            	
              SECTION 6.

            	
              SCHEDULING OF
      DELIVERIES.

            

    

     

    It is the
intent of the parties hereto that the power and energy purchased hereunder by
the Purchaser shall be fully coordinated with other resources available to the
Purchaser and with the resources of other Purchasers and that the operation of
the Priest Rapids Development shall be coordinated with the operation of the
Northwest Power Pool.  Scheduling of generation from said Development
shall be as requested by the Purchaser, acting singly or as a member of a group
of Purchasers, subject to the limitations set forth in this section and in other
sections of this contract.

    The
Purchaser, acting singly or as a member of a group of Purchasers, shall make
available to the District at least eight (8)  hours before 12:01 A.M.
of each day an hourly schedule of desired total energy deliveries for that
day.  Such schedule shall be based upon the probable water supply to
said Development and the resulting probably output.  Revisions in the
schedule may be made at any time upon the request of the Purchaser if required
by changes in estimated river flows or system loads.  Deviations from
schedules for the Priest Rapids Development Output shall be held to a minimum by
the District and corrected for as promptly as possible on an hourly basis under
conditions as nearly equivalent as

    possible
to those obtaining when the deviations occurred.

    The
schedules requested by the Purchaser shall be in accordance with the
following:

    (a)           The
net hourly schedule for delivery or spill shall be within the limitations of the
Purchaser's Power Allocation and the Purchaser's allocation of the minimum
discharge;

    (b)           The
Purchaser shall be entitled to a share of that part of the Priest Rapids
Development Output resulting from the inflow of the stream each hour determined
by multiplying said part of said Development Output by the Purchaser's Power
Allocation;

    (c)           The
Purchaser shall be entitled to a share of the pondage available at the Priest
Rapids Development (hereinafter called the Purchaser's Allocation of Pondage),
determined by multiplying the total of said pondage available by the Purchaser's
Power Allocation;

    (d)           The
Purchaser may schedule more or less than its share of said Development Output
determined in accordance with subsection 6(b) hereof by scheduling from or
to a pondage account established for each Purchaser.  The aggregate
amount of the energy scheduled from the pondage account shall not exceed the
Purchaser's Allocation of Pondage determined in accordance with
subsection 6(c) hereof and shall subsequently require the scheduling of an
equivalent amount of energy to the account for refill by 7:00 A.M. on the
following Monday.  Scheduling by the Purchaser to its pondage account
shall be only against its prior accumulated pondage draft.  Refill
obligations shall be reduced proportionately when the inflow of the stream
exceeds the hydraulic capacity of the Development and will be cancelled when
spill occurs.

     

    
      	
               
      

            	
              SECTION
      7.

            	
              POINT OF
      DELIVERY.

            

    

     

    Electric
power and energy to be delivered hereunder shall be made available to the
Purchaser at:

    (a)           The
230 KV bus of the Bonneville Power Administration's Midway Sub-station; or, at
the option of the Purchaser, at either

    (b)           The
230 KV bus of the switchyard, when constructed, of the Priest Rapids
Development; or

    (c)           The
230 KV bus of the switchyard, when constructed, of the Wanapum
Development.

     

    
      	
               
      

            	
              SECTION 8.

            	
              VOLTAGE CONTROL AND
      REACTIVE DELIVERIES.

            

    

     

    The
District shall maintain voltage levels at the Priest Rapids Development to best
coordinate with the systems of the Purchasers and the systems operated by
members of the Northwest Power Pool.

    Reactive
kilovolt-amperes shall be made available up to the capability of the equipment
of said Development, consistent with the power generation and voltage level
schedule for said Development at the time.

    The
Purchaser is entitled at any time to a share of the reactive output available at
the time of maximum power output from said Development determined by multiplying
the total reactive output by the Purchaser's Power Allocation specified in
Section 3 hereof.  The Purchaser may take additional reactive
deliveries when available, or otherwise by reducing deliveries of power from
said Development to the Purchaser so as to provide the additional reactive
capability.

     

    
      	
               
      

            	
              SECTION 9.

            	
              CHARACTER AND
      CONTINUITY OF SERVICE.

            

    

     

    Power and
energy supplied hereunder shall be approximately 230 KV, three-phase,
alternating current, at approximately sixty cycles per second.  The
District may temporarily interrupt or reduce deliveries of

    electric
energy to the Purchaser if the District determines that such interruption or
reduction is necessary in case of emergencies.  In order to install
equipment in, make repairs to, replacements, investigations and inspections of,
or perform other maintenance work on the Priest Rapids Development, and in order
that operations of the Purchasers will not be unreasonably interrupted or
interfered with, the District, after consulting with the Purchaser regarding any
such planned interruption or reduction, giving the reason there-for and stating
the probable duration thereof, will to the best of its ability schedule such
interruption at a time which will cause the least interference to the operations
of the Purchaser and the operations of other Purchasers of power from said
Development.

    Except as
interrupted by Uncontrollable Forces or as provided otherwise by this section,
power and energy shall be made available in accordance with this agreement at
all times during the term of this contract commencing with the Initial Date of
Delivery.

     

    
      	
               
      

            	
              SECTION 10.

            	
              METERING AND
      TRANSMISSION LOSSES.

            

    

     

    (a)           The
District shall provide and maintain suitable meters in the generator leads of
the power plant of the Priest Rapids Development to indicate and record the
output of said Development.  The Priest Rapids Development Output
shall be determined from totalized readings from said meters after making
corrections specified in Section 2(e) hereof.  The District shall
also arrange for suitable metering at the point of delivery specified in
Section 7 hereof or at other points as agreed upon.  Meters shall
be read by the District or an agent of the District and records thereof shall be
made available to the Purchaser as may be reasonably required.

    (b)           All
deliveries of power and energy hereunder shall be measured as though they were
made at the low voltage side of the transformers in the power house of the
Development.  All losses of power and energy purchased hereunder
resulting from transformation and transmission shall be borne by the
Purchaser.

     

    
      	
               
      

            	
              SECTION 11.

            	
              ACCOUNTS.

            

    

     

    The
District agrees to keep accurate records and accounts for the Priest Rapids
Development in accordance with the Uniform System of Accounts and in accordance
with the rules and regulations prescribed by the Division of Municipal
Corporations of the State Auditor's Office of the State of Washington, separate
and apart from its other accounting records.  Said accounts shall be
the subject of an annual audit by a firm of certified public accountants,
experienced in electric utility accounting and of national reputation, to be
employed by the District.  Said annual audit shall cover the
transactions of the Contract Year.

    A copy of
each annual audit, including all recommendations of the accountants, shall be
furnished by the District to the Purchaser.

     

    
      	
               
      

            	
              SECTION 12.

            	
              INFORMATION TO BE MADE
      AVAILABLE TO THE PURCHASER.

            

    

     

    (a)           All
drawings, designs, plans, specifications, and terms of contracts relating to the
construction and operation of the Priest Rapids Development are or will be
placed on file in the office of the District at Ephrata, Washington and will be
open to inspection by the Purchaser.

    (b)           All
agreements and data relating to the financing of said Development may be
examined by the Purchaser at the office of the District.

    (c)           All
operating and financial records and reports relating to the said Development may
be examined by the Purchaser at the office of the District.

    (d)           Policies
of Insurance carried by the District pursuant to Section 14 hereof shall be
available at the office of the District for inspection by the
Purchaser.

    (e)           The
Purchaser's representatives shall at all times be given reasonable access to
said Development.

     

    
      	
               
      

            	
              SECTION 13.

            	
              PRIEST RAPIDS ADVISORY
      COMMITTEE - ARBITRATION.

            

    

     

    (a)           In
order that the Purchasers may, in an orderly way, participate in problems
relating to the Priest Rapids Development, there is hereby established the
Priest Rapids Advisory Committee (herein called the "Committee").  The
Purchaser and each of the other Purchasers are entitled to representation on the
Committee and may each appoint a representative to attent Committee
Meetings.  A Chairman shall be elected by the members of the
Committee.  The Committee will meet regularly on the Monday following
the first Tuesday of each month, or as otherwise determined by the Committee,
for the purpose of discussing the problems with respect to said Development and
may make recommendations to the District with reference
thereto.  Special meetings shall be called by the Chairman at the
request of the District or upon the request of members of the Committee
representing two-thirds (2/3) of the power purchased by the
members.  All meetings will be held at the office of the District at
Ephrata, Washington, or at such other place or places as may be determined by
the Committee.

    (b)           Except
in the event of an emergency requiring immediate action, the District shall give
to the Committee reasonable notice, in no case less than thirty (30) days,
whenever it proposes to replace items of major equipment in or to construct
additions to or extensions of said Development, or to enter into additional new
or special contractual arrangements relating to and substantially modifying the
operation and Annual Power Costs of said Development.

    (c)           The
District will give due consideration to the recommendations of the
Committee.  In considering said recommendations, the District shall
give due regard to the objective of achieving from said Development the optimum
electric power production consistent with economy, reliability and facility of
operation and the District's statutory duties.  If in the opinion of
the Committee the District has given inadequate consideration to its informal
recommendations, written recommendations may be made to the District whenever
such recommendations are approved in writing by members of the Committee
representing Purchasers who are purchasing two-thirds (2/3) of the power
purchased by the members.  Such written recommendations shall be
forwarded to the District with appropriate supporting data.  The
District shall take action on such recommendations within a reasonable time by
adopting, modifying, or rejecting such recommendations.  If the
District modifies or rejects said recommendations it shall notify the Committee
of its action in writing, giving the reasons therefor.

    (d)           If
the District modifies or rejects a written recommendation of the Committee
dealing with matters which may be arbitrated as set forth in Section 13(e)
hereof, and made in accordance with the procedures set forth in
Section 13(c) hereof, the Committee may, by affirmative vote of members of
the Committee representing Purchasers who purchase two-thirds (2/3) of the power
purchased by the members, submit the recommendation to a board of
arbitrators.  The board of arbitrators shall be composed of three (3)
persons, one of whom shall be appointed by the District, one of whom shall be
appointed by majority vote of the Committee, and the third person to be
appointed by the two persons so appointed.  In the event said two
members cannot agree upon the appointment of a third person, then such third
person shall be appointed by the Chief Justice of the Supreme Court of the State
of Washington.

    The
procedure for arbitration shall be governed by the laws of the State of
Washington.  Insofar as the parties hereto may legally do so, they
agree to abide by the decision of said board; provided, that the District shall
not be bound by any decision of a board of arbitration to the extent that such
decision is retroactive beyond the date when the matter arbitrated was made the
subject of written recommednation of the Committee.

    (e)           The
matters which may be arbitrated in accordance with Section 13(d) hereof
shall consist of all matters pertaining to the maintenance, operation,
additions, replacements and renewals, insurance to be carried on said
Development and its operation (which in no event shall be less than that
required under the terms of the Bond Resolution), and subsequent financing and
refinancing of the said Development, except such matters which are by law vested
exclusively in the discretion of the District.  All written Committee
recommendations not approved by the District with respect to amounts to be
charged to the Priest Rapids Development as a result of voluntary payments in
lieu of taxes or other voluntary donations made by the District may be
arbitrated in accordance with Section 13(d) hereof.

    (f)           In
the event this Section 13 or any paragraph, sentence, clause or phrase
thereof shall be adjudicated by a court of last resort and of competent
jurisdiction to be invalid or illegal, the remainder of this contract shall be
unaffected by such adjudication, and all other provisions of this contract shall
remain in full force and effect as though this section or such part thereof so
adjudicated to be invalid had not been included herein.

     

    
      	
               
      

            	
              SECTION 14.

            	
              INSURANCE.

            

    

     

    The
District agrees to obtain and maintain in full force and effect during the term
of this contract, to the extent available at reasonable cost, adequate insurance
with responsible insurers with policies payable to the District for the benefit
of the District and the Purchasers as their respective interests may appear,
against:

    (1)           Obligations
of the District under the Workmen's Compensation law of the State of Washington,
and employer's liability;

    (2)           Public
liability for bodily injury and property damage;

    (3)           Physical
loss or damage to the Priest Rapids Development on replacement cost
basis;

    (4)           Business
Interruption loss to the District and/or the Purchasers resulting from delay in
completion of the Development, interruption or reduction of generation or
transmission of power and energy caused by such physical loss, damage or
destruction; and

    (5)           Any
other insurance determined to be necessary.

     

    
      	
               
      

            	
              SECTION 15.

            	
              OPERATION AND
      MAINTENANCE.

            

    

     

    The
District covenants and agrees that it will operate and maintain the Priest
Rapids Development in an efficient and economical manner, consistent with good
business and operating practices of comparable developments.

     

    
      	
               
      

            	
              SECTION 16.

            	
              BOARD OF CONSULTING
      ENGINEERS ON CONSTRUCTION PROBLEMS.

            	
               

            

    

     

    The
District shall establish a Board of five (5) Consulting Engineers during the
construction of the Priest Rapids Development, which shall include two (2)
engineers of outstanding ability and national reputation, selected by the
District from a list of not less than four (4) such engineers submitted by the
Committee to the District.

     

    
      	
               
      

            	
              SECTION 17.

            	
              CONSTRUCTION AND
      FINANCING CONTRACTS.

            

    

     

    The
District agrees that prior to commencing construction of the Priest Rapids
Development it will have completed financing of said Development, shall have let
the major contracts for the construction thereof, and shall have obtained
adequate completion bonds for each of said contracts.  If said
financing is not completed by May 4, 1957, then the Purchaser may cancel
this contract by giving written notice to the District.

     

    
      	
               
      

            	
              SECTION 18.

            	
              COMPLETION OF
      CONSTRUCTION.

            

    

     

    The
District agrees to proceed diligently with the financing and construction of the
Priest Rapids Development and, subject to Uncontrollable Forces, plans to
complete the Priest Rapids Development by September 12, 1961.

     

    
      	
               
      

            	
              SECTION 19.

            	
              ADDITIONAL
      FACILITIES.

            

    

     

    (a)           From
time to time during the term hereof the District may propose to expand the
Priest Rapids Development by installing additional generating
facilities.  Whenever the District proposes to so expand the
Development, it shall give notice in writing or such intent to the Purchaser
stating:

    (1)           The
estimated cost of such additional generating facilities;

    (2)           The
proposed method of financing the cost of said facilities;

    (3)           The
estimated additional power and energy which would be available as a result of
the installation of said facilities;

    (4)           The
estimated incremental cost (i.e. the costs which will be incurred as a result of
installing the proposed additional facilities, which costs would not be incurred
were such proposed additional facilities not installed) of said additional power
and energy on an annual basis; and

    (5)           The
estimated construction period for the installation of said
facilities.

    The
notice shall also contain other available pertinent information.

    (b)           The
Purchaser shall have the option of purchasing a share of said additional power
and energy determined by multiplying the total additional power and energy by
the Purchaser's Power Allocation, specified in Section 3 hereof, and may
exercise such option by giving written notice to the District on or before the
expiration of ninety (90) days from the receipt of said written notice from
the District.  The District shall give a second notice to the
Purchaser if any of the other Purchasers shall fail to exercise its option for
its full share of said power and energy, and the Purchaser may, by giving
written notice to the District within sixty (60) days after the receipt of
the second notice from the District, have its respective share of said power and
energy increased either in proportion or, as shall be mutually agreed upon, so
as to make available to the Purchaser and to the other Purchasers power and
energy available as a result of any of the other Purchasers failing
to elect to take its full share of said additional power and energy; provided, that such
increases shall not be inconsistent with the provisions of said Public Law 544
and said Federal Power Commission License concerning the offering of a
reasonable amount of the capacity and power output of the Project for sale in
states neighboring the State of Washington.  The District, in addition
to its share of said additional power and energy determined by multiplying the
total amount of said additional power and energy by the per cent reservation
specified in Section 3(b) hereof, shall be entitled to the additional power
and energy which the Purchaser and other Purchasers shall not elect to take in
accordance with the foregoing provision.  Failure to exercise its
option to purchase additional power and energy which would be available from the
installation of additional generating facilities proposed for installation by
the District at a later date.

    (c)           If
the Purchaser exercises its option to take its share of said additional power
and energy, it shall pay for said additional power and energy a percentage of
the incremental annual cost of said additional facilities corresponding to the
per cent the share of additional power and energy which it purchases is to the
total additional power and energy available as the result of the installation of
the additional facilities.  If the Purchaser does not elect to take
additional power and energy which would be available from the installation of
additional generating facilities it shall continue to receive the same amount of
power and energy and pay the same annual power cost therefor as if such
additional generating facilities had not been installed.

    (d)           If,
after the Purchaser shall have exercised its option as aforesaid, the District
shall determine that it is not economically feasible for it to
install additional generating facilities as proposed, the District shall be
under no obligation to do so and shall so notify the Purchaser.

    (e)           Notwithstanding
any other provisions of Section 19, hereof, whenever the District is
compelled to install additional facilities at or in the Priest Rapids
Development by any order or decision of the Federal Power Commission or any
state or federal government agency with authority to issue or make and enforce
such an order or decision, the Purchaser shall share the benefits and costs
resulting from the installation of said additional facilities in the same manner
and to the same extent as if the Purchaser had voluntarily exercised its option
to purchase the power and energy resulting from said installation as provided
earlier in Section 19 hereof.

    
      
        
        

      

      
        
        

      

      
        
        

      

    

    
      	
               
      

            	
              SECTION 20.

            	
              WANAPUM
      DEVELOPMENT.

            

    

     

    (a)           Whenever
the District proposes to construct the Wanapum Development, it shall give notice
in writing of its proposal to the Purchaser nine (9) months in advance of the
proposed start of construction.  Such notice shall supplement the
information made available to the Purchaser in accordance with Section 12
hereof and shall state:

    (1)           The
estimated Cost of Acquisition and Construction of the Wanapum
Development;

    (2)           The
proposed method of financing said Cost of Acquisition and Construction of the
Wanapum Development;

    (3)           The
estimated additional power and energy which would be available as a result of
the construction of the Wanapum Development;

    (4)           The
estimated cost of said additional power and energy on
an annual basis; and

    (5)           The
estimated dates of starting and completing the construction of the Wanapum
Development.

    The
notice shall contain any other available pertinent information.

    (b)           As
a part of the consideration for the execution of this contract, the Purchaser
shall have the option of purchasing a share of the additional power and energy
resulting from the construction of the Wampum Development, determined by
multiplying the total of such additional power and energy by the Purchaser's
Power Allocation specified in Section 3 hereof, and shall exercise such
option by giving written notice to the District on or before ninety (90) days
from the receipt of said written notice from the District.  The
District shall give a second notice to the Purchaser if any of the other
Purchasers does not elect to take its full share of said additional power and
energy and the Purchaser may, by giving written notice to the District within
sixty (60) days after receipt of the second notice from the District, have its
respective share of said power and energy proportionately increased, or
increased as shall be mutually agreed upon, so as to make available to the
Purchaser and other Purchasers power and energy available as a result of any of
the other Purchasers failing to elect to take its full share of said additional
power and energy; provided, that such
increases shall not be inconsistent with the provisions of said Public Law 544
and said Federal Power Commission License concerning the offering of a
reasonable amount of the capacity and power output of the Project for sale in
states neighboring the State of Washington.  The District, in addition
to its share of said additional power and energy available as a result of the
construction of the Wanapum Development, determined by multiplying the total
amount of said additional
power and energy by the per cent reservation specified in Section 3(b)
hereof, shall be entitled to the additional power and energy which the Purchaser
and other Purchasers shall not elect to take in accordance with the foregoing
provision.

    (c)           If
the Purchaser exercises its option to purchase additional power and energy to
become available as a result of the construction of the Wanapum Development, the
parties hereto shall execute a contract identical in all pertinent respects to
this contract for the sale of the power from the Priest Rapids Development
except that it shall refer to the Wanapum Development instead of to the Priest
Rapids Development.  The Purchaser and the District shall place in
escrow the executed contract by means of escrow instructions identical in all
pertinent respects to Exhibit "B" attached hereto and made a part
hereof.

    (d)           It
is the intention of the parties hereto that when the Wanapum Development is
constructed, its operation shall be integrated with the operation of the Priest
Rapids Development as required by said Public Law 544 and said Federal Power
Commission License for the Priest Rapids Project.  It is agreed that
all benefits accruing to the Project as a result of such integration shall be
shared equally by the two Developments.  It is also agreed that all
joint costs of the two Developments shall be equitably allocated between them
and such allocation shall be reviewed by the Advisory Committee as provided in
Section 13 hereof.  All payments for the encroachment of the
Wanapum Development upon the Rock Island project (i.e. that project constructed
under Federal Power Commission License Number 943) shall be chargeable solely to
the Wanapum Development.

    (e)           The
parties hereto agree that if operation of the Priest Rapids Development with the
maximum controlled headwater level of 486.5 feet above mean sea level
(determined by reference to the United States Coast and Geodetic Survey Sea
Level Datum of 1929 with supplemental additions of 1947) causes encroachment on
the tailwater of the Wanapum Development, located at or upstream from the
location shown on the License application drawings which were filed with the
Federal Power Commission by the District on June 27, 1955 (approximately
mile 415 on the Columbia River), the Priest Rapids Development shall
compensate the Wanapum Development in kind and coincidentally for one-half of
the loss to the Wanapum Development of capacity and power output.  The
Priest Rapids Development shall compensate the Wanapum Development in kind and
coincidentally for all loss of capacity and power output at the Wanapum
Development caused by controlled headwater levels above said level of
486.5 feet at the Priest Rapids Development.  If the Wanapum
Development is located downstream from the location shown on the said License
application drawings, it shall be compensated in kind and coincidentally for
losses of capacity and power output due to encroachment by the Priest Rapids
Development only to the extent that such encroachment would have occurred at the
location shown on the said application drawings.

     

    
      	
               
      

            	
              SECTION 21.

            	
              ADJUSTMENT OF POWER
      ALLOCATION.

            

    

     

    The
Purchaser's Power Allocation shall be automatically increased pro-rata with that
of the other Purchasers, not in excess of a cumulative maximum of twenty-five
per cent (25%) thereof, in the event of a Default (as hereinafter defined) by
any of the other Purchasers.  The term "Default" as used herein shall
mean the filure by any one of the Purchasers to make the payments specified in
Section 5 hereof and contemporaneously with said

    failure
to make payments there shall exist, with respect to that one of the Purchasers,
any one or more of the following conditions:

    (a)           An
order, judgment or decree shall be entered by any court of competent
jurisdiction:

    (1)           Appointing
a receiver, trustee or liquidator for any of the Purchasers or the whole or any
substantial part of the properties of any of the Purchasers;

    (2)           Approving
a petition filed against any of the Purchasers under the provision of an Act to
Establish a Uniform System of Bankruptcy Throughout the United States, Approved
July 1, 1898, as amended;

    (3)           Granting
relief to any of the Purchasers under an amendment to said Bankruptcy Act which
shall give relief similar to that afforded by said Act; or

    (4)           Assuming
custody or control of the whole or any substantial part of any of the
Purchaser's properties under the provision of any other law for the relief or
aid of debtors; and such order, judgment or decree shall not be vacated or set
aside or stayed (or, in case custody or control is assumed by said order, such
custody or control shall not otherwise be terminated), within sixty
(60) days from the date of the entry of such order, judgment or
decree.

    (b)           Any
of the Purchasers shall:

    (1)           Admit
in writing its inability to pay its debts generally as they become
due;

    (2)           File
a petition in bankruptcy;

    (3)           Make
an assignment for the benefit of its creditors;

    (4)           Consent
to the appointment of a receiver of the whole or any substantial part of its
properties;

    (5)           Be
adjudicated a bankrupt on the basis of a petition in bankruptcy filed against
it;

    (6)           File
a petition or an answer seeking relief under any amendment to said Bankruptcy
Act which shall afford relief substantially similar to that afforded by said
Act; or

    (7)           Consent
to the assumption by any court of competent jurisdiction under the provisions of
any other law for the relief or aid of debtors of custody or control of any of
the Purchasers or of the whole or any substantial part of its
properties;

    provided, that if
prior to an imminent default by any of the Purchasers it shall demonstrate to
the satisfaction of the District and the other Purchasers receiving in the
aggregate at least two-thirds (2/3) of the balance of the Priest Rapids
Development Output its inability to pay for its Power Allocation and its ability
to pay for a smaller Power Allocation, then it shall be allowed to thereafter
take such smaller Power Allocation and shall be thereafter liable for the same
in the same manner as for its original Power Allocation; and, in such event, the
automatic increase in the Purchaser's Power Allocation as above provided shall
apply only to the difference between the original Power Allocation and such
lesser Power Allocation of that one of the Purchasers threatened with
default.

    (c)           If
any of the other Purchasers defaults, and the Purchaser's Power Allocation is
automatically increased in accordance with this section, The
Purchaser either individually or as a member of a group shall have a right of
recovery from that one of the Purchasers in default for such amount as the
Purchaser may sustain as a loss or damage by reason of such default and may
commence such suit, action or proceeding as may be necessary or appropriate to
recover the amount of said loss or damage.

     

    
      	
               
      

            	
              SECTION 22.

            	
              LIABILITY OF
      PARTIES.

            

    

     

    The
District and the Purchaser each assumes full responsibility and liability for
the maintenance and operation of its respective properties and shall indemnify
and save harmless the other party from all liability and expense on account of
any and all damages, claims or actions, including injury to or death of persons,
arising from any act or accident in connection with the installation, presence,
maintenance, and operation of the property and equipment of the indemnifying
party; provided, that any
liability which is incurred by the District through the operation and
maintenance of the Priest Rapids Development and not covered by insurance shall
be paid solely from the revenue of the said Development, and any payments made
by the District to satisfy such liability shall become part of the Annual Power
Cost as set forth in Section 4(a)(5) hereof.

     

    
      	
               
      

            	
              SECTION 23.

            	
              WAIVER OF OF
      DEFAULT.

            

    

     

    Any
waiver at any time by either party to this contract of its rights with respect
to any default of the other party hereto, or with respect to any other matter
arising in connection with such contract, shall not be considered a waiver with
respect to any subsequent default or matter.

     

    
      	
               
      

            	
              SECTION 24.

            	
              NOTICES AND
      COMPUTATION OF TIME.

            

    

     

    Any
notice or demand, except those provided for in Section 6 hereof, by the
Purchaser under this contract to the District shall be deemed properly given if
mailed postage prepaid and addressed to Public Utility District No. 2 of Grant
County, Washington, at Ephrata, Washington; any notice or demand by the District
to the Purchaser under this contract shall be deemed properly given if mailed
postage prepaid and addressed to Puget Sound Power & Light Company, at
Seattle, Washington; and in computing any period of time from such notice, such
period shall commence at 12:00 P.M. (midnight) on the date
mailed.  The designations of the name and address to which any such
notice or demand is directed may be changed at any time and from time to time by
either party by giving notice as above provided.

     

    
      	
               
      

            	
              SECTION 25.

            	
              MODIFICATION OF
      CONTRACT TERMS.

            

    

     

    It is
recognized by the parties hereto that, by virtue of the Bond Resolution, this
contract cannot be amended, modified or otherwise altered by agreement of the
parties in any manner that will impair or adversely affect the security afforded
by the provisions of this contract for the purchase and sale of power for the
payment of the principal, interest, and premium, if any, on said Bonds as they
respectively become payable, so long as any of said bonds are outstanding and
unpaid or until provision is irrevocably made for the payment
thereof.

     

    
      	
               
      

            	
              SECTION 26.

            	
              DISTRICT'S BOND
      RESOLUTION AND LICENSE.

            

    

     

    It is
recognized by the parties hereto that the District in its operation of the
Priest Rapids Development and in the delivery of the power hereunder to the
Purchaser, must comply with the requirements of the Bond

    Resolution
and with the License for the construction and operation of the Development as
issued by the Federal Power Commission and amendments thereof from time to time
made and it is therefore accordingly agreed that this Power Sales Contract is
made subject to the terms and provisions of said resolution and
License.  The District shall not, without the written consent of the
Purchaser, amend, modify or otherwise change the Bond Resolution if such
amendment, modification or change would be to the disadvantage of the
Purchaser.

     

    
      	
               
      

            	
              SECTION 27.

            	
              CONFLICT OF
      LAWS.

            

    

     

    The
parties hereto agree that this contract shall be governed by the laws of the
State of Washington.

     

    
      	
               
      

            	
              SECTION 28.

            	
              ASSIGNMENT OF
      CONTRACT.

            

    

     

    This
contract shall inure to the benefit of, and shall be binding upon the respective
successors and assigns of the parties to this contract.  No assignment
or transfer of this contract shall relieve the parties hereto of any obligation
incurred hereunder.

     

    
      	
               
      

            	
              SECTION 29.

            	
              UNIFORMITY OF POWER
      SALES CONTRACTS.

            

    

     

    The
Purchaser hereunder shall be considered as one of several Purchasers under
contracts similar to this agreement and it is understood and agreed that all of
said contracts for the sale and purchase of power shall be uniform in all
material respects in their terms, conditions and provisions with the exception
of Purchaser's Power Allocations.  If any of said contracts are
amended or replaced so that they contain terms or conditions more favorable than
those granted to the Purchaser under this contract, then this contract shall be
amended to include the same terms and conditions so granted to any of
the other Purchasers, provided, however,
that the District shall have the right to sell power and energy reserved by it
pursuant to Section 3(b) hereof on such terms and conditions as it shall
elect and subject to the requirements of Section 3(b) hereof nothing herein
shall be construed to require the District to offer equal terms and conditions
to the Purchaser.

     

    
      
        
        

      

      
        
        

      

      
        
        

      

    

    
      	
               

               

               

               

               

              (SEAL)

            	
              PUBLIC
      UTILITY DISTRICT NO. 2

              OF
      GRANT COUNTY, WASHINGTON

               

               

              By                        /s/ F. Wm.
      Arlt                      
         

                                                 
      President

            
	 
      	 
      
	
              ATTEST:

            	 
      
	 
      	 
      
	
              by       /s/ Wm. Schempp                           

                                  
      Secretary

            	 
      
	 
      	 
      
	 
      	 
      
	
              (SEAL)

            	
              PUGET
      SOUND POWER & LIGHT COMPANY

               

              By                        /s/ Frank
      McLaughlin              
        

                                                 President

               

            
	 
      	 
      
	
              ATTEST:

            	 
      
	 
      	 
      
	
              By        /s/ Walter S.
      Zachary                      
      

                                    
      Secretary

            	 
      

    

    

    
      
        
        

      

      
        
        

        
        

      

      
        
        

      

    

    EXHIBIT
“A”

     

    Distribution of the Priest
Rapids Development Output

     

    

     

    
      
        	
                
                   

                  Purchasers

                

              	 
      	 
      	
                
                   

                  Percent
      of Priest Rapids Development Output Sold

                

              
	 
      	 
      	 
      
	
                Cowlitz
      County, Public Utility District No. 1 of

              	 
      	
                2.0

              
	
                Eugene
      Water and Electric Board

              	 
      	
                1.7

              
	
                Forest
      Grove, City of

              	 
      	
                .5

              
	
                Kittitas
      County, Public Utility District No. 1 of

              	 
      	
                .4

              
	
                McMinnville,
      City of

              	 
      	
                .5

              
	
                Milton-Freewater,
      City of

              	 
      	
                .5

              
	
                Pacific
      Power and Light Co.

              	 
      	
                13.9

              
	
                Portland
      General Electric Co.

              	 
      	
                13.9

              
	
                Puget
      Sound Power and Light Co.

              	 
      	
                8.0

              
	
                Seattle,
      City of

              	 
      	
                8.0

              
	
                Tacoma,
      City of

              	 
      	
                8.0

              
	
                Washington
      Water Power Co.

              	 
      	
                6.1

              
	
                Aggregate
      Percentage of Priest Rapids

                     
      Development Output Sold to Purchasers

              	 
      	
                63.5

              

      

    

    

    
      
        
        

      

      
        
        

        
        

      

      
        
        

      

    

    EXHIBIT
“B”

     

    E S C R O W  I N S
T R U C T I O N S

     

    To:

     

    The
Peoples National Bank of Washington

     

    Grant
County Branch

     

    Ephrata,
Washington

     

    Re:           Priest Rapids
Project

     

    Gentlemen:

    

    Pursuant
to the negotiations which have been carried on between Public Utility District
No. 2 of Grant County, Washington (hereinafter referred to as the "District")
and ___________________ (hereinafter referred to as the "Purchaser") and other
utility systems providing electric service to the residents of the States of
Washington, Oregon and Idaho, looking toward the sale and purchase of the output
of the above Project, we enclose herewith and attach hereto an executed contract
(in duplicate) setting forth the terms and conditions under which the Purchaser
will take and pay for _____ per cent of the output of the Wanapum Development
portion of said Project.

    

    The
enclosed contract is delivered to you in escrow and one executed copy shall be
delivered to the District and one executed copy to the Purchaser when you shall
have received written authority, or telegraphed instructions from the Purchaser
to release the same.  If you shall not have received such written
authority or telegraphed instructions by ____________________ the enclosed
contract shall be destroyed by you.

     

    
      
        	 
      	
                Yours
      very truly,

                                                                 
      

                 

                By                                              
      

                 

                PUBLIC
      UTILITY DISTRICT NO, 2 OF GRANT COUNTY

                 

                By                                                

              
	 
      	 
      
	
                Accepted
      this _____ day of __________, 1956.

              	 
      
	 
      	 
      
	
                THE
      PEOPLES NATIONAL BANK OF WASHINGTON

              	 
      
	 
      	 
	
                By                                                                    

                                 
      Authorized Officerexhibit106.htm

    Exhibit
10.6

    

    FIRST AMENDMENT TO POWER
SALES CONTRACT

     

    Executed
by

     

    PUBLIC UTILITY DISTRICT NO.
2

     

    OF GRANT COUNTY,
WASHINGTON

     

    and

     

    PUGET SOUND POWER &
LIGHT COMPANY

     

    

    This
agreement entered into this 5th day of August 1958, by Public Utility District
No. 2 of Grant County, Washington (hereinafter called "the District"), a
municipal corporation of the State of Washington, and Puget Sound Power &
Light Company (hereinafter called "the Purchaser"), a corporation organized and
existing under the laws of the State of Massachusetts.

     

    WITNESSETH:

     

    WHEREAS,
the parties hereto did enter into a Power Sales Contract dated the 21st day of
May, 1956, relating to the sale of a portion of the output of the Priest Rapids
Development, and said contract contemplated that the Priest Rapids Development
initially would consist of eight (8) generating units; and

    WHEREAS,
it now appears that ten (10) instead of eight (8) generating units can be
installed initially in the Priest Rapids Development; and

    WHEREAS,
it appears that the initial installation of two additional generating units in
the Priest Rapids Development as a part of the construction of the Development
will not impair or adversely affect the security afforded the bondholders by the
provisions of the May 21, 1956 contract between the parties hereto, or by
the Bond Resolution adopted by the District June 19, 1956.

    NOW,
THEREFORE, in consideration of the agreements hereinafter set forth and the
performance thereof, the parties hereto do agree:

    -I-

     

    That the
Purchaser hereby consents to the installation of and the District agrees to
install ten (10) rather than eight (8) generating units in the Priest
Rapids Development.

    -II-

     

    That the
Power Sales Contract between the parties dated May 21, 1956, shall apply to
ten (10) rather than eight (8) generating units and the reference to "the
first eight (8) main turbine generator units" in Section 2(b) thereof be
and it is hereby amended to "the first ten (10) main turbine generator
units."

    -III-

     

    That
Section 5 of the Power Sales Contract between the parties dated
May 21, 1956, shall remain unchanged.

    -IV-

     

    That this
agreement shall not become effective until all of the Power Purchasers named in
Exhibit "A" to the Power Sales Contract between the parties dated May 21,
1956, have entered into agreements with the District identical in effect to this
agreement.

     

    
      
        
        

      

      
        
        

      

      
        
        

      

    

    IN
WITNESS WHEREOF, the parties hereto have caused this instrument to be executed
by their duly authorized officers the day and year first above
written.

    

    
      	
               

               

               

               

               

              (SEAL)

            	
              PUBLIC
      UTILITY DISTRICT NO. 2

              OF
      GRANT COUNTY, WASHINGTON

               

               

              By                        /s/ F. Wm.
      Arlt                                       

              President

            
	 
      	 
      
	
              ATTEST:

            	 
      
	 
      	 
      
	
              By                 /s/ Wm. Schempp                                                

              Secretary

            	 
      
	 
      	 
      
	 
      	 
      
	
              (SEAL)

            	
              PUGET
      SOUND POWER & LIGHT COMPANY

               

              By                        /s/ Frank
      McLaughlin       

              Executive Vice President
      (Title)

               

            
	 
      	 
      
	
              ATTEST:

            	 
      
	 
      	 
      
	
              By                 /s/
      Ralph M. Davis                                                

              Secretary                                  (Title)

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00158-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00158-of-00352.parquet"}]]