FORM OF UTILITY SERVICE AGREEMENT [ALSO APPLICABLE TO AFFILIATES THAT SUPPORT
UTILITY OPERATIONS]
SERVICE AGREEMENT
This Service Agreement is made and entered into this____ day of
____________, by and between ________ ("Client Company") and New Century
Services, Inc. ("Service Company).
WITNESSETH
WHEREAS, the Securities and Exchange Commission ("SEC") has approved and
authorized as meeting the requirements of Section 13(b) of the Public Utility
Holding Company Act of 1935 ("Act") the organization and conduct of the
business of Service Company, in accordance herewith, as a wholly-owned
subsidiary service company of New Century Energies, Inc. ("NCE); and
WHEREAS, Client Company is a utility operating company subsidiary of NCE
and an affiliate of Service Company; and [alternatively: Client Company is an
affiliate of Service Company that provides support services for the utility
operations of the utility operating companies within the NCE system; and]
WHEREAS, Service Company and Client Company have entered into this Service
Agreement whereby Service Company agrees to provide and Client Company agrees
to accept and pay for various services as provided herein at cost, with cost
determined in accordance with applicable rules and regulations under the Act,
which require Service Company to fairly and equitably allocate costs among all
associate companies to which it renders services, including Client Company.
NOW THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the parties to this Service Agreement covenant and agree as
follows:
ARTICLE I - SERVICES
Section 1.1 Service Company shall furnish to Client Company, as requested
by Client Company, upon the terms and conditions hereinafter set forth, such of
the services described in Appendix A hereto, at such times, for such periods
and in such manner as Client Company may from time to time request and that
Service Company concludes it is able to perform. Service Company shall also
provide Client Company with such special services, in addition to those
services described in Appendix A hereto, as may be requested by Client Company
and that Service Company concludes it is able to perform. In supplying such
services, Service Company may arrange, where it deems appropriate, for the
services of such experts, consultants, advisers,
1
and other persons with necessary qualifications as are required for or
pertinent to the provision of such services.
Section 1.2 Client Company shall take from Service Company such of the
services described in Section 1.1, and such additional general or special
services, whether or not now contemplated, as are requested from time to time
by Client Company and that Service Company concludes it is able to perform.
Section 1.3 The services described herein or contemplated to be
performed hereunder shall be directly assigned, distributed or allocated by
activity, project, program, work order or other appropriate basis. Client
Company shall have the right from time to time to amend, alter or rescind any
activity, project, program or work order provided that (i) any such amendment
or alteration that results in a material change in the scope of the services
to be performed or equipment to be provided is agreed to by Service Company,
(ii) the cost for the services covered by the activity, project, program or
work order shall include any expense incurred by Service Company as a direct
result of such amendment, alteration or rescission of the activity, project,
program or work order, and (iii) no amendment, alteration or rescission of an
activity, project, program or work order shall release Client Company from
liability for all costs already incurred by or contracted for by Service
Company pursuant to the activity, project, program or work order, regardless
of whether the services associated with such costs have been completed.
Section 1.4 Service Company shall use its best efforts to maintain a
staff trained and experienced in the design, construction, operation,
maintenance, and management of public utility properties.
ARTICLE II - COMPENSATION
Section 2.1 As compensation for the services to be rendered hereunder,
Client Company shall pay to Service Company all costs which reasonably can be
identified and related to particular services performed by Service Company for
or on its behalf. The methods for assigning or allocating Service Company
costs to Client Company, as well as to other associate companies, are set forth
in Appendix A.
Section 2.2 The methods of assignment, distribution or allocation of
costs described in Appendix A shall be subject to review annually, or more
frequently if appropriate. Such methods of assignment, distribution or
allocation of costs may be modified or changed by Service Company; provided,
however, that no changes will be made to the methods of assignment,
distribution, or allocation set forth herein or in Attachment A hereto unless
first authorized by the SEC in accordance with the procedures specified in
Section 2.3. Service Company shall advise Client Company from time to time of
such changes.
Section 2.3 No change in the organization of NC Services, the type and
character of the companies to be serviced, the methods of allocating costs to
associate companies, or in the scope
2
or character of the services to be rendered subject to Section 13 of the Act,
or any rule, regulation or order thereunder, shall be made unless and until
NC Services shall first have given the SEC written notice of the proposed
change not less than 60 days prior to the proposed effectiveness of any such
change. If, upon the receipt of any such notice, the SEC shall notify NC
Services within the 60-day period that a question exists as to whether the
proposed change is consistent with the provisions of Section 13 of the Act,
or of any rule, regulation or order thereunder, then the proposed change
shall not become effective unless and until NC Services shall have filed with
the SEC an appropriate declaration regarding such proposed change and the SEC
shall have permitted such declaration to become effective.
Section 2.4 Service Company shall render a monthly statement to Client
Company that shall reflect the billing information necessary to identify the
costs charged for that month. By the twentieth (20th) day of each month,
Client Company shall remit to Service Company all charges billed to it.
Section 2.5 It is the intent of this Service Agreement that the payment
for services rendered by Service Company to Client Company under this Service
Agreement shall cover all the costs of its doing business (less the costs of
services provided to affiliated companies not a party to this Service Agreement
and to other non-affiliated companies, and credits for any miscellaneous
items), including, but not limited to, salaries and wages, office supplies and
expenses, outside services employed, property insurance, injuries and damages,
employee pensions and benefits, miscellaneous general expenses, rents,
maintenance of structures and equipment, depreciation and amortization,
compensation for use of capital as permitted by Rule 91 of the SEC's
regulations under the Act.
ARTICLE III - TERM
Section 3.1 This Service Agreement shall become effective subject to the
receipt of required regulatory approval, and shall continue in force until
terminated by Service Company or Client Company, upon not less than one year's
prior written notice to the other party. This Service Agreement shall also be
subject to termination or modification at any time, without notice, if and to
the extent performance under this Service Agreement may conflict with the Act
or with any rule, regulation or order of the SEC adopted before or after the
date of this Service Agreement.
ARTICLE IV - LIMITATION OF LIABILITY AND INDEMNIFICATION
Section 4.1 In performing the services hereunder, Service Company will
exercise due care to assure that the services are performed in an appropriate
manner, meet the standards and specifications set forth in any applicable
request for service and comply with the applicable standards of law and
regulation. However, failure to meet these obligations shall in no event
subject Service Company to any claims by or liabilities to Client Company other
than to reperform the services and be reimbursed at cost for such
reperformance. Service Company makes no other
3
warranty with respect to its performance of the services, and Client Company
agrees to accept such services without further warranty of any nature.
Section 4.2 To the fullest extent allowed by law, Client Company shall
and does hereby indemnify and agree to save harmless and defend Service
Company, its agents and employees from liabilities, taxes, losses, obligations,
claims, damages, penalties, causes of action, suits, costs and expenses or
judgments of any nature, on account of, or resulting from the performance and
prosecution of any services performed on behalf of Client Company pursuant to
this Agreement, whether or not the same results or allegedly results from the
claimed or actual negligence or breach of warranty of , or willful conduct by,
Service Company or any of its employees, agents, clients, or contractors or its
or their subcontractors or any combination thereof.
ARTICLE V - MISCELLANEOUS
Section 5.1 All accounts and records of Service Company shall be kept in
accordance with the General Rules and Regulations promulgated by the SEC
pursuant to the Act, in particular, the uniform System of Accounts for Mutual
Service Companies and Subsidiary Service Companies in effect from and after the
date hereof.
Section 5.2 New direct or indirect non-utility subsidiaries of NCE, which
may come into existence after the effective date of this Service Agreement, may
become additional client companies of Service Company and subject to a service
agreement with Service Company. The parties hereto shall make such changes in
the scope and character of the services to be rendered and the method of
assigning, distributing or allocating costs of such services as specified in
Appendix A, subject to the requirements of Section 2.3, as may become necessary
to achieve a fair and equitable assignment, distribution, or allocation of
Service Company costs among all associate companies including the new
subsidiaries.
Section 5.3 Service Company shall permit Client Company access to its
accounts and records, including the basis and computation of allocations.
4
IN WITNESS WHEREOF, the parties hereto have caused this Service Agreement
to be executed as of the date and year first above written.
NEW CENTURY SERVICES, INC.
BY:
-------------------------------
Name:
Title:
[COMPANY]
BY:
-------------------------------
Name:
Title:
5
Appendix A
DESCRIPTION OF SERVICES TO BE PROVIDED BY NEW CENTURY SERVICES, INC.
AND DETERMINATION OF CHARGES FOR SUCH SERVICES TO THE OPERATING
COMPANIES AND AFFILIATES
DESCRIPTION OF SERVICES PROVIDED
A description of the services provided by NCS is detailed below. Identifiable
costs will be directly assigned or distributed to the Operating Companies or
affiliates. For costs which are for services of a general nature that cannot
be directly assigned or distributed, the method of allocation is described
below for each service provided.
A) ELECTRIC COMMODITY SERVICES - BUSINESS DEVELOPMENT.
Description - Provides administrative support services and business
development opportunities to the Operating Companies electric generation
stations.
Methods of Allocation - The Support of Plant Operations will be allocated
to the Operating Companies based on the Electric kWh Generation Ratio.
B) ENERGY SUPPLY MANAGEMENT AND BULK POWER TRANSPORT
Description - Supervises and coordinates the electric transmission system
control operations and dispatching for the Operating Companies.
Methods of Allocation - The Energy Supply Management and Bulk Power
Transport services will be allocated to the Operating Companies based on
the kWh Sales Ratio.
C) PURCHASED POWER AND ELECTRIC TRADING
Description - Purchases power and provides electric trading services to
the Operating Companies electric generation systems.
Method of Allocation - The Purchased Power and Electric Trading services
will be allocated to the Operating Companies based on the Electric kWh
Purchased Power Ratio.
D) TRANSMISSION, SUBSTATION CONSTRUCTION, MAINTENANCE & OPERATIONS
6
Description - Provides management services to the Operating Companies
transmission and substation construction, maintenance and operations
areas.
Method of Allocation - Transmission, Substation Construction, Maintenance
and Operations management services will be allocated to the Operating
Companies based on the Transmission and Substation Construction
Expenditures Ratios.
E) TRANSPORTATION.
Description - Oversees the Operating Companies' Fleet Services Group.
Method of Allocation - Transportation will be allocated to the Operating
Companies as well as other affected affiliates of NCS based on the
Employees Ratio.
F) SUPPLY CHAIN
Description - Provides services in connection with the procurement of
materials including the management of materials and supplies inventories.
Method of Allocation - Materials management will be allocated to the
Operating Companies based on an average of the Revenue Ratio and the
Total Construction Expenditures Ratio.
G) FACILITIES AND REAL ESTATE.
Description - Operates and maintains office buildings and service centers.
Procures real estate and administers real estate leases. Administers
contracts to provide security, housekeeping and maintenance services for
such facilities. Procures office furniture and equipment.
Method of Allocation - Facilities and Real Estate services will be
allocated to the Operating Companies as well as affected affiliates based
on the Square Footage Ratio.
H) ACCOUNTING
Description - Maintains the books and records of New Century Energies,
Inc. and its affected affiliates, prepares financial and statistical
reports, prepares tax filings and supervises compliance with the
applicable laws and regulations. Supports the accounting systems.
7
Method of Allocation - Accounting services will be allocated to the
Operating Companies and affected affiliates based on an average of the
Revenue Ratio, the Total Construction Expenditures Ratio and the Total
Common Equity Ratio, with 20 Percent of Common Equity assigned to New
Century Energies, Inc. Accounting system support services will be
allocated based on the Accounting Transactions Ratio.
I) PAYMENT AND REPORTING
Description - Processes payments to vendors of New Century Energies, Inc.
and its affected affiliates, and prepares statistical reports.
Method of Allocation - Payment and reporting activities will be allocated
to the Operating Companies and affected affiliates based on the Payment
Transaction Ratio.
J) FINANCE AND TREASURY.
Description - Coordinates activities related to securities issuance,
including maintaining relationships with financial institutions, cash
management, investing activities and monitoring the capital markets.
Performs financial and economic analysis.
Method of Allocation - Finance and Treasury activities will be allocated
to the Operating Companies and affected affiliates based on an average of
the Revenue Ratio, the Total Construction Expenditures Ratio and the Total
Common Equity Ratio, with 20 Percent of Common Equity assigned to New
Century Energies, Inc.
K) RATES AND REGULATION.
Description - Determines the Operating Companies' revenue requirements and
rates for electric and gas customers. Coordinates the regulatory
compliance requirements and maintains relationships with the regulatory
bodies.
Method of Allocation - Rates and Regulation services will be allocated to
the Operating Companies based on the Revenue Ratio.
8
L) LEGAL.
Description - Provides legal services related to labor and employment law,
litigation, contracts, rates and regulation, environmental matters, real
estate and other legal matters.
Method of Allocation - Legal services will be allocated to the Operating
Companies and affected affiliates based on an average of the Payroll
Ratio, the Revenue Ratio and the Total Common Equity Ratio, with 20
Percent of Common Equity assigned to New Century Energies, Inc.
M) INTERNAL AUDIT.
Description - Reviews internal controls and procedures to ensure assets
are safeguarded and transactions are properly authorized and recorded.
Evaluates contract risks.
Methods of Allocation - Internal Auditing services will be allocated to
the Operating Companies and affected affiliates based on the average of
the Revenue Ratio, the Total Construction Expenditures Ratio and the Total
Common Equity Ratio, with 20 Percent of Common Equity assigned to New
Century Energies, Inc.
N) CORPORATE COMMUNICATIONS.
Description - Prepares and disseminates information to employees,
customers, government agencies, communities and the media.
Methods of Allocation - Corporate Communications services will be
allocated to the Operating Companies and affected affiliates based on the
Revenue Ratio, the Employee Ratio and the Total Common Equity Ratio, with
20 Percent of Common Equity assigned to New Century Energies, Inc.
O) ENVIRONMENTAL.
Description - Establishes policies and procedures for compliance with
environmental laws and regulations. Researches emerging environmental
issues and monitors compliance with environmental requirements. Oversees
environmental clean up projects.
9
Method of Allocation - Environmental services will be allocated to the
Operating Companies and affected affiliates based on the Revenue Ratio.
P) RESOURCE ACQUISITION AND ANALYSIS
Description - Procures coal, natural gas and oil for the Operating
Companies generation facilities. Ensures compliance with price and
quality provisions of fuel contracts and arranges for transportation of
fuel to the desired location. Purchases power and performs electric and
gas trading services.
Method of Allocation - Resource Acquisition and Analysis services will be
allocated to the Operating Companies based on the Electric kWh Generation
Ratio or the Purchased Power Ratio, whichever is appropriate.
Q) CORPORATE PLANNING.
Description - Facilitates preparation of strategic plans, monitors trends
and evaluates business opportunities. Facilitates process improvements.
Prepares budgets and financial forecasts.
Method of Allocation - Strategic Planning services will be allocated to
the Operating Companies and affected affiliates based on the average of
the Revenue Ratio, the Total Assets Ratio and Total Common Equity Ratio,
with 20 Percent of Common Equity assigned to New Century Energies, Inc.
R) INVESTOR RELATIONS.
Description - Provides communications to investors and the financial
community. Coordinates the transfer agent and shareholder record keeping
functions.
Method of Allocation - Investor Relations services will be allocated to
the Operating Companies and affected affiliates based on the average of
the Revenue Ratio, the Total Assets Ratio and the Total Common Equity
Ratio, with 20 Percent of Common Equity assigned to New Century Energies,
Inc.
10
S) HUMAN RESOURCES.
Description - Establishes and administers policies and supervises
compliance with legal requirements in the areas of employment,
compensation, benefits and employee health, welfare and safety. Processes
payroll and employee benefit payments. Coordinates contract negotiation
and relations with labor unions.
Method of Allocation - Human Resources services will be allocated to the
Operating Companies and affected affiliates based on the Payroll Ratio.
T) CUSTOMER SERVICES.
Description - Performs customer billing, handles customer inquiries and
complaints and provides related customer information services.
Method of Allocation - Customer Services will be allocated based on the
Customers Ratio.
U) INFORMATION SYSTEMS.
Description - Administers the contract for various communications and
electronic data processing services. Such services provided under the
contract include, but are not limited to, development and support of
mainframe computer software applications, procurement and support of
personal computers, operation of a data center and installation and
operation of a communications system.
Method of Allocation - Information Systems will be allocated based on the
Information Systems direct charges.
V) MARKETING SERVICES.
Description - Provides marketing services including market load research
and new product development for Operating Companies and affiliates.
Method of Allocation - Marketing services will be allocated based on the
total Residential, Business, and Large Commercial and Industrial kWh sales
ratio.
W) WHOLESALE AND BULK POWER SALES.
Description - Provides sales and to support to electric wholesale
customers of the Operating Companies.
11
Method of Allocation - Wholesale Sales will be allocated based on the
Electric Wholesale Sales Ratio.
X) RESIDENTIAL AND BUSINESS SALES.
Description - Provides sales and support to electric residential and
business customers of the Operating Companies.
Method of Allocation - Residential and Business Sales will be allocated
based on the Residential and Commercial Sales Ratio.
Y) CUSTOM ACCOUNT SALES.
Description - Provides sales services to large commercial and industrial
customers of the Operating Companies.
Method of Allocation - Custom Account Sales will be allocated based on the
Large Commercial and Industrial Sales Ratio.
Z) STRATEGIC AND KEY ACCOUNT SALES.
Description - Provides sales and support services to niche markets of the
Operating Companies.
Method of Allocation - Strategic Account Sales will be allocated based on
the total of the Large Commercial and Industrial and the Public Authority
Sales Ratios. Key Account Sales will be allocated based on the Large
Commercial and Industrial Sales Ratio.
AA) COMMUNITY AND ECONOMIC DEVELOPMENT
Description - Provides community support and economic development services
to the service territories of the Operating Companies.
Method of Allocation - Community and Economic Development services will
be allocated based on the Total kWh Sales Ratio.
BB) GAS MARKETING, CONTROL, PLANNING AND SUPPLY.
Description - Provides marketing services to gas transport customers.
Coordinates the planning and support for Gas operations of Public Service
Company of Colorado, Cheyenne Light, Fuel and Power and WestGas Interstate
Company including coordinating the operation of the gas system and well as
the
12
purchase of gas for the Operating Companies distribution business from
third parties.
Method of Allocation - Gas Marketing, Control, Planning and Supply
services will be allocated based on the Gas Throughput Ratio.
CC) DESIGN ENGINEERING.
Description - Designs and monitors construction of electric transmission
and distribution lines and substations.
Method of Allocation - Design Engineering services will be allocated based
on the Transmission Construction Expenditures Ratio, the Distribution
Construction Ratio, or a ratio based on the sum of the Transmission and
Distribution Construction Expenditures whichever is appropriate.
DD) SUBSTATION ENGINEERING AND SUPPORT.
Description - Provides management support services to the Substation
Engineering and Support organizations of the Operating Companies.
Method of Allocation - Substation Engineering and Support services will
be allocated based on the Substation Construction Expenditures Ratio.
EE) TRANSMISSION ENGINEERING AND RIGHT OF WAY SERVICES.
Description - Provides management support services to the Transmission
Engineering and Right of Way organizations of the Operating Companies.
Method of Allocation - Transmission Engineering and Right of Way services
will be allocated based on the Transmission Construction Expenditures
Ratio.
FF) DISTRIBUTION SUPPORT SERVICES.
Description - Provides planning, benchmarking, activity tracking and
budget support services to the Construction and Operations and
Maintenance Organization.
Method of Allocation - Distribution Support Services will be allocated
based on the Total Customers Ratio.
13
GG) AVIATION SERVICES.
Description - Provides aviation and travel services to employees.
Method of Allocation - Aviation Services will be allocated to the
appropriate Operating Companies and affiliates based on the Aviation
Department's actual direct charges. (This method will allocate costs
only to those companies who actually use aviation services).
HH) GOVERNMENTAL AFFAIRS.
Description - Lobbies government officials and monitors, reviews and
researches governmental legislation.
Method of Allocation - Governmental Affairs will be allocated based on the
average of the Revenue Ratio, the Employee Ratio, and the Total Common
Equity Ratio, with 20 Percent of Common Equity assigned to New Century
Energies, Inc.
II) PRODUCTION SERVICES.
Description - Provides performance, chemical and water testing and
analysis, technical, and analytical services to the Operating Companies
generation facilities.
Method of Allocation - Production Services will be allocated based on the
kWh Generation Ratio.
JJ) EXECUTIVES.
Description - Provides executive management and general administrative
services.
Method of Allocation - Executive Management Services will be allocated
based on the average of the Revenue Ratio, the Total Assets Ratio and the
Total Common Equity Ratio, with 20 percent of Common Equity assigned to
New Century Energies, Inc.
14
ALLOCATION RATIOS
The following ratios will be utilized as outlined above.
SALES RATIO - Based on firm kilowatt-hour electric sales (and/or the
equivalent cubic feet of natural gas sales based on a Btu content, where
applicable), excluding inter-system sales, for the immediate preceding
twelve consecutive calendar months, the numerator of which is for an
Operating Company or and affiliate and the denominator of which is for all
Operating Companies and affected affiliate companies . This ratio will be
determined annually, or at such time as may be required due to a
significant change.
RESIDENTIAL SALES RATIO - Based on firm kilowatt-hour electric sales to
residential customers for the immediate preceding twelve consecutive
calendar months, the numerator of which is for an Operating Company or an
affiliate and the denominator of which is for all Operating Companies and
affected affiliate companies . This ratio will be determined annually, or
at such time as may be required due to a significant change.
BUSINESS SALES RATIO - Based on firm kilowatt-hour electric sales to
business customers that purchase less than 250 kilowatts for the immediate
preceding twelve consecutive calendar months, the numerator of which is
for an Operating Company or an affiliate and the denominator of which is
for all Operating Companies and affected affiliate companies . This ratio
will be determined annually, or at such time as may be required due to a
significant change.
LARGE COMMERCIAL & INDUSTRIAL SALES RATIO - Based on firm kilowatt-hour
electric sales to large commercial and industrial customers that purchase
greater than 250 kilowatts for the immediate preceding twelve consecutive
calendar months, the numerator of which is for an Operating Company or an
affiliate and the denominator of which is for all Operating Companies and
affected affiliate companies . This ratio will be determined annually, or
at such time as may be required due to a significant change.
ELECTRIC PEAK LOAD RATIO - Based on the sum of the monthly electric
maximum system demands for the immediately preceding twelve consecutive
calendar months, the numerator of which is for an Operating Company and
the denominator of which is for all Operating Companies. This ratio will
be determined annually, or at such time as may be required due to a
significant change.
15
CUSTOMERS RATIO - Based on the sum of total electric customers (and/or gas
customers, or residential, business and large commercial and industrial
customers where applicable) at the end of each month for the immediately
proceeding twelve consecutive calendar months, the numerator of which is
for an Operating Company or an affected affiliate company and the
denominator of which is for all Operating Companies and affected affiliate
companies. This ratio will be determined annually, or at such time as may
be required due to a significant change.
EMPLOYEES RATIO - Based on the sum of the number of employees at the end
of each month for the immediately preceding twelve calendar months, the
numerator of which is for an Operating Company or an affected affiliate
company and the denominator of which is for all Operating Companies and
affected affiliate companies. This ratio will be determined annually, or
at such time as may be required due to a significant change.
CONSTRUCTION EXPENDITURES RATIO - Based on construction or capital
expenditures , net of reimbursements, for the immediately preceding twelve
consecutive calendar months, the numerator of which is for an Operating
Company or an affected affiliate company and the denominator of which is
for all Operating Companies and affected affiliate companies. This ratio
will be determined annually, or at such time as may be required due to a
significant change.
TRANSMISSION CONSTRUCTION EXPENDITURES RATIO - Based on transmission
construction or capital expenditures , net of reimbursements, for the
immediately preceding twelve consecutive calendar months, the numerator of
which is for an Operating Company or an affected affiliate company and
the denominator of which is for all Operating Companies and affected
affiliate companies. This ratio will be determined annually, or at such
time as may be required due to a significant change.
DISTRIBUTION CONSTRUCTION EXPENDITURES RATIO - Based on distribution
construction or capital expenditures , net of reimbursements, for the
immediately preceding twelve consecutive calendar months, the numerator of
which is for an Operating Company or an affected affiliate company and
the denominator of which is for all Operating Companies and affected
affiliate companies. This ratio will be determined annually, or at such
time as may be required due to a significant change.
SUBSTATION CONSTRUCTION EXPENDITURES RATIO - Based on substation
construction or capital expenditures , net of reimbursements, for the
immediately preceding twelve consecutive calendar months, the numerator of
which is for an Operating Company or an affected affiliate company and
the denominator of which is for all Operating Companies and affected
affiliate companies. This ratio will
16
be determined annually, or at such time as may be required due to a
significant change.
TOTAL COMMON EQUITY RATIO, WITH 20 PERCENT OF COMMON EQUITY ASSIGNED TO
NEW CENTURY ENERGIES, INC. - Based on the sum of the common equity at the
end of each month for the immediately preceding twelve calendar months,
the numerator of which is for an Operating Company or an affected
affiliate company and the denominator of which is for all Operating
Companies and affected affiliate companies. This ratio will be determined
annually, or at such time as may be required due to significant changes.
REVENUE RATIO - Based on the sum of the revenue at the end of each month
for the immediately preceding twelve consecutive calendar months, the
numerator of which is for an Operating Company or an affected affiliate
company and the denominator of which is for all Operating Companies and
affected affiliate companies. This ratio will be determined annually, or
at such time as may be required due to significant changes.
WHOLESALE REVENUE RATIO - Based on the sum of the electric wholesale
revenue at the end of each month for the immediately preceding twelve
consecutive calendar months, the numerator of which is for an Operating
Company or an affected affiliate company and the denominator of which is
for all Operating Companies and affected affiliate companies. This ratio
will be determined annually, or at such time as may be required due to
significant changes.
INDUSTRIAL REVENUE RATIO - Based on the sum of the electric industrial
revenue at the end of each month for the immediately preceding twelve
consecutive calendar months, the numerator of which is for an Operating
Company or an affected affiliate company and the denominator of which is
for all Operating Companies and affected affiliate companies. This ratio
will be determined annually, or at such time as may be required due to
significant changes.
PAYROLL RATIO - Based on the sum of the payroll at the end of each month
for the immediately preceding twelve consecutive calendar months, the
numerator of which is for an Operating Company or an affected affiliate
company and the denominator of which is for all Operating Companies and
affected affiliate companies. This ratio will be determined annually, or
at such time as may be required due to significant changes.
ELECTRIC kWh GENERATION - Based on the sum of electric kWh generated
during each month for the immediately preceding twelve consecutive
calendar months, the numerator of which is for an Operating Company and
the denominator of which is for all Operating Companies. This ratio will
be determined annually, or at such time as may be required due to
significant changes.
17
ELECTRIC kWh PURCHASED POWER RATIO - Based on the sum of electric kWh
purchased power during each month for the immediately preceding twelve
consecutive calendar months, the numerator of which is for an Operating
Company and the denominator of which is for all Operating Companies. This
ratio will be determined annually, or at such time as may be required due
to significant changes.
TOTAL ASSETS RATIO - Based on the total assets at year end for the
preceding year, the numerator of which is for an Operating Company or
affected affiliate company and the denominator of which is for all
Operating Companies and affected affiliate companies. This ratio will be
determined annually, or at such time as may be required due to significant
changes.
COST OF GAS SOLD - Based on the sum of the cost of gas sold at the end of
each month for the immediately preceding twelve consecutive calendar
months, the numerator of which is for an Operating Company or an affected
affiliate company and the denominator of which is for all Operating
Companies and affected affiliate companies. This ratio will be determined
annually, or at such time as may be required due to significant changes.
GAS THROUGHPUT RATIO - Based on the sum of the gas throughput MCF's at the
end of each month for the immediately preceding twelve consecutive
calendar months, the numerator of which is for an Operating Company or an
affected affiliate company and the denominator of which is for all
Operating Companies and affected affiliate companies. This ratio will be
determined annually, or at such time as may be required due to significant
changes.
GAS TRANSPORT MCF - Based on the sum of transported gas MCF's at the end
of each month for the immediately preceding twelve consecutive calendar
months, the numerator of which is for an Operating Company or an affected
affiliate company and the denominator of which is for all Operating
Companies and affected affiliate companies. This ratio will be determined
annually, or at such time as may be required due to significant changes.
PAYMENT TRANSACTION RATIO - Based on the sum of the number of payment
transactions processed during each month for the immediately preceding
twelve consecutive calendar months, the numerator of which is for an
Operating Company or an affected affiliate company and the denominator of
which is for all Operating Companies and affected affiliate companies.
This ratio will be determined annually, or at such time as may be required
due to significant changes.
18
ACCOUNTING TRANSACTIONS RATIO - Based on the sum of the number of
accounting transactions processed during each month for the immediately
preceding twelve consecutive calendar months , the numerator of which is
for an Operating Company or an affected affiliate company and the
denominator of which is for all Operating Companies and affected affiliate
companies.
19
