Invalidity of the Settlement Agreement. The Parties have worked diligently to ensure that Amendment No. 1 and the Settlement Agreement are legally sound and will be effective for their respective terms. Some BPA customers, however, have been extremely litigious regarding the implementation of BPA’s Power Subscription Strategy. Given this environment, an invalidity provision addresses the possibility, hopefully slight, that a challenge might render the agreements invalid. Section 3(b) of the Settlement Agreement is replaced by new language. This language provides that if the United States Court of Appeals for the Ninth Circuit finally determines that the Settlement Agreement (or payments under section 4 of the Settlement Agreement) is invalid, then PacifiCorp has two options. First, PacifiCorp can provide written notice to BPA within 30 calendar days that the cash payments provided under the Financial Settlement Agreement satisfy all of BPA’s obligations under or arising out of section 5(c) of the Northwest Power Act for the period following the court’s final determination through September 30, 2006. Second, if PacifiCorp provides no notice, BPA and PacifiCorp agree that the provisions of section 3(a), which establish the satisfaction of BPA’s section 5(c) obligations, will be of no further force or effect. A new section 3(b)(1) of the Settlement Agreement also provides that in the event of the court’s above-noted final determination, the Parties intend that the cash payments pursuant to section 3(d) and the Monetary Benefits provided prior to the court’s final determination should be retained by PacifiCorp, to the maximum extent permitted by law. Also, the satisfaction of BPA’s obligations to PacifiCorp under section 5(c) of the Northwest Power Act prior to the court’s final determination should be preserved, to the maximum extent permitted by law. This would avoid a difficult and complicated process of determining a new agreement and retroactively implementing changes to the benefits for that period. Additional difficulties would lie in the ability of PacifiCorp and the state public utility commissions to implement such changes without creating potential economic harm to consumers. In addition, section 3(b)(1) provides that it is severable and would continue in effect in the event that any other provision of the Agreement was found invalid.
