EXHIBIT 10.06
SHIPROCK - FOUR CORNERS PROJECT
345-kV SWITCHYARD
INTERCONNECTION AGREEMENT
AMONG
ARIZONA PUBLIC SERVICE COMPANY
EL PASO ELECTRIC COMPANY
PUBLIC SERVICE COMPANY OF NEW MEXICO
SALT RIVER PROJECT AGRICULTURAL IMPROVEMENT AND POWER DISTRICT
SOUTHERN CALIFORNIA EDISON COMPANY
TUCSON ELECTRIC POWER COMPANY
AND
PUBLIC SERVICE COMPANY OF COLORADO
TRI-STATE GENERATION AND TRANSMISSION ASSOCIATION, INC.
WESTERN AREA POWER ADMINISTRATION
APS CONTRACT NO. 51999
Execution Copy
SHIPROCK - FOUR CORNERS PROJECT
345-KV SWITCHYARD
INTERCONNECTION AGREEMENT
Table of Contents
-----------------
Section Title Page No.
------- ----- --------
1. PARTIES.................................................................................................1
2. RECITALS................................................................................................1
3. ENTIRE AGREEMENT........................................................................................2
4. SECTION HEADINGS AND DEFINITIONS........................................................................3
4.1 230-kV Switchyard..............................................................................3
4.2 230-kV Switchyard Agreement....................................................................3
4.3 230-kV Switchyard Termination Facilities.......................................................3
4.4 345-kV Switchyard..............................................................................4
4.5 Accounting Practice............................................................................4
4.6 Agreement......................................................................................4
4.7 Apparatus .....................................................................................4
4.8 Capital Improvements...........................................................................4
4.9 Common Facilities..............................................................................4
4.10 Common Facilities Use Fee......................................................................4
4.11 Construction Budget ...........................................................................4
4.12 Construction Costs ............................................................................4
4.13 Construction Schedule .........................................................................5
4.14 Construction Work..............................................................................5
4.15 Co-Tenancy Agreement...........................................................................5
4.16 Cost Responsibility Ratio ("CRR")..............................................................5
4.17 Due Date.......................................................................................5
4.18 E&O Committee..................................................................................5
4.19 Enlarged Switchyard............................................................................5
4.20 FERC...........................................................................................5
4.21 Four Corners Participants......................................................................5
4.22 Four Corners Project...........................................................................6
4.23 Function(s)....................................................................................6
4.24 Future Breaker Work............................................................................6
i
4.25 Good Utility Practice..........................................................................6
4.26 In-Service Date................................................................................6
4.27 Interconnection Facilities.....................................................................6
4.28 Interconnection Participants...................................................................6
4.29 ITCC...........................................................................................6
4.30 Leased Lands...................................................................................6
4.31 Operating Agent................................................................................6
4.32 Operating Agreement............................................................................7
4.33 Operating Emergency............................................................................7
4.34 Operating Work.................................................................................7
4.35 RUS............................................................................................7
4.36 Shiprock-Four Corners Transmission Line........................................................7
4.37 Shiprock Substation............................................................................7
4.38 Switchyard Addition............................................................................7
4.39 Willful Action.................................................................................8
4.40 Work Liability.................................................................................8
5. EFFECTIVE DATE AND TERMINATION..........................................................................9
5.1 Effective Date.................................................................................9
5.2 FERC Acceptance and RUS Approval Without Conditions or Modifications...........................9
5.3 FERC Acceptance and RUS Approval With Conditions or Modifications..............................9
5.4 Parties' Acceptance...........................................................................10
5.5 Non-Acceptance by a Party.....................................................................10
5.6 Termination Date..............................................................................10
5.7 Notice........................................................................................10
6. GRANT..................................................................................................11
7. OWNERSHIP..............................................................................................11
7.1 Interconnection Facilities....................................................................11
7.2 345-kV Switchyard.............................................................................11
7.3 Switchyard Addition...........................................................................11
7.4 Designation of Ownership......................................................................11
8. OPERATING AGENT........................................................................................11
8.1 Operating Agent...............................................................................11
8.2 Outage........................................................................................11
8.3 Relocation....................................................................................12
ii
8.4 Performance...................................................................................12
9. COORDINATION AND EXCHANGE OF INFORMATION...............................................................13
10. DESIGN AND CONSTRUCTION................................................................................13
11. PAYMENT FOR USE OF COMMON FACILITIES...................................................................15
12. COST RESPONSIBILITY RATIO..............................................................................15
12.1 Purpose.......................................................................................15
12.2 Method........................................................................................15
13. ALLOCATION OF COSTS....................................................................................15
13.1 Costs of Construction Work....................................................................15
13.2 Costs of Operating Work.......................................................................16
13.3 Costs of Capital Improvements.................................................................16
13.4 Common Facilities.............................................................................16
13.5 Costs of Insurance............................................................................16
13.6 Cost of Future Breaker Work...................................................................16
14. PAYMENT................................................................................................16
14.1 Budget Submittal..............................................................................16
14.2 Budget Approval...............................................................................16
14.3 Invoices......................................................................................17
14.4 Late Payment..................................................................................18
14.5 Disputed Charges..............................................................................18
15. OPERATING PRINCIPLES...................................................................................18
15.1 Entitlement...................................................................................18
15.2 Curtailment...................................................................................19
15.3 Reactive Power................................................................................19
16. OPERATING EMERGENCY....................................................................................19
16.1 345-kV Switchyard and Switchyard Addition.....................................................19
16.2 Interconnection Facilities....................................................................20
16.3 Notice........................................................................................20
16.4 Duties........................................................................................20
16.5 Restoration Without Agreement.................................................................21
16.6 Report........................................................................................21
17. REMOVAL OF 230-KV SWITCHYARD TERMINAL FACILITIES.......................................................21
18. REMOVAL OF INTERCONNECTION FACILITIES..................................................................21
19. SPINNING RESERVES......................................................................................22
iii
20. WESTERN SYSTEMS COORDINATING COUNCIL COMPLIANCE........................................................22
21. SCHEDULING AND DISPATCHING.............................................................................22
21.1 Procedures....................................................................................22
21.2 Schedules.....................................................................................22
21.3 230-kV Switchyard Delivery Points.............................................................22
22. OTHER AGREEMENT........................................................................................23
23. TAXES ..............................................................................................23
23.1 Assessments...................................................................................23
23.2 Responsibility................................................................................23
23.3 Taxes Other Than Income Taxes.................................................................23
23.4 Income Taxes..................................................................................25
24. INSURANCE..............................................................................................25
24.1 Interconnection Facilities....................................................................25
24.2 Insureds......................................................................................25
25. LIABILITY..............................................................................................25
25.1 Covenant Not to Execute.......................................................................25
25.2 Insurance Proceeds............................................................................26
25.3 Responsibility for Work Liability.............................................................26
25.4 Willful Action................................................................................26
25.5 Customer Claims...............................................................................27
25.6 Limitation of Liability.......................................................................27
25.7 No Relief of Insurer..........................................................................28
26. UNCONTROLLABLE FORCES..................................................................................28
27. RELATIONSHIP OF THE PARTIES............................................................................28
28. SUCCESSORS AND ASSIGNS.................................................................................29
28.1 Binding.......................................................................................29
28.2 Notice........................................................................................29
28.3 Conditions....................................................................................29
29. AUDITS.................................................................................................29
29.1 Right.........................................................................................29
29.2 Conditions....................................................................................29
29.3 Costs.........................................................................................30
29.4 Record Retention Period.......................................................................30
29.5 Notice........................................................................................30
iv
30. DEFAULTS...............................................................................................30
30.1 Payment Default...............................................................................30
30.2 Performance Default...........................................................................30
30.3 Cure of Default...............................................................................31
30.4 Default Remedy................................................................................31
31. ARBITRATION............................................................................................32
32. NONDEDICATION OF FACILITIES............................................................................33
33. APPROVALS..............................................................................................33
33.1 Approvals.....................................................................................33
33.2 Fees..........................................................................................33
33.3 Regulatory Filings............................................................................34
34. GOVERNING LAW AND VENUE................................................................................34
35. NOTICES................................................................................................34
36. GENERAL PROVISIONS.....................................................................................37
36.1 Severability..................................................................................37
36.2 Third Party Rights............................................................................37
36.3 Waiver........................................................................................37
36.4 Survival of Obligations and Liabilities.......................................................37
36.5 Amendments and Revisions to Exhibits..........................................................37
36.6 Environmental Compliance......................................................................37
36.7 Contingent Upon Appropriations................................................................37
36.8 Equal Opportunity Employment Practices........................................................38
36.9 Use of Convict Labor..........................................................................38
37. EXECUTION..............................................................................................38
37.1 Execution by Counterparts.....................................................................38
37.2 Execution and Delivery........................................................................38
38. SIGNATURE CLAUSE.......................................................................................39
v
APPENDICES
APPENDIX A - FERC ORDER AND RUS APPROVAL.......................................................................A-1
EXHIBITS
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EXHIBIT 1 - ENLARGED SWITCHYARD DIAGRAM........................................................................E1-1
EXHIBIT 2 - INTERCONNECTION FACILITIES.........................................................................E2-1
EXHIBIT 3 - COMMON FACILITIES COSTS............................................................................E3-1
EXHIBIT 4 - ALLOCATION OF COMMON FACILITIES COSTS..............................................................E4-1
EXHIBIT 5 - CALCULATION OF COMMON FACILITIES USE FEE...........................................................E5-1
EXHIBIT 6 - %-RESPONSIBILITY FOR COSTS.........................................................................E6-1
EXHIBIT 7 - COST RESPONSIBILITY RATIO (CRR)....................................................................E7-1
EXHIBIT 8 - METHOD OF DETERMINING INSURANCE EXPENSES
FOR COMMON FACILITIES........................................................................E8-1
EXHIBIT 9 - INTERCONNECTION FACILITIES CONSTRUCTION BUDGET.....................................................E9-1
EXHIBIT 10 - DETERMINATION OF ITCC COMPOSITE RATE.............................................................E10-1
EXHIBIT 11 - CONSTRUCTION COSTS...............................................................................E11-1
EXHIBIT 12 - CONSTRUCTION SCHEDULE............................................................................E12-1
vi
SHIPROCK - FOUR CORNERS PROJECT
345-KV SWITCHYARD
INTERCONNECTION AGREEMENT
1. PARTIES
-------
The Parties to this SHIPROCK - FOUR CORNERS PROJECT 345-KV SWITCHYARD
INTERCONNECTION AGREEMENT are: ARIZONA PUBLIC SERVICE COMPANY ("APS"),
an Arizona corporation; EL PASO ELECTRIC COMPANY ("EPE"), a Texas
corporation; PUBLIC SERVICE COMPANY OF COLORADO ("PSCO"), a Colorado
corporation; PUBLIC SERVICE COMPANY OF NEW MEXICO ("PNM"), a New Mexico
corporation; SALT RIVER PROJECT AGRICULTURAL IMPROVEMENT AND POWER
DISTRICT ("SRP"), an agricultural improvement district organized and
existing under the laws of the State of Arizona; SOUTHERN CALIFORNIA
EDISON COMPANY ("SCE"), a California corporation; TRI-STATE GENERATION
AND TRANSMISSION ASSOCIATION, INC. ("Tri-State"), a Colorado
cooperative corporation doing business in the states of Colorado,
Nebraska, New Mexico, and Wyoming; TUCSON ELECTRIC POWER COMPANY
("TEP"), an Arizona corporation, formerly known as Tucson Gas &
Electric Company; and THE UNITED STATES OF AMERICA acting by and
through the Administrator, Western Area Power Administration,
Department of Energy ("Western"), represented by the officer executing
this Agreement or a duly appointed successor; individually referred to
as "Party" and collectively as "Parties".
2. RECITALS
--------
This Agreement is made with reference to the following facts, among
others:
2.1 The Four Corners Participants, as defined in Section 4.21, are
owners of the 000-xX Xxxxxxxxxx, xxxxxxx xxxx Xxxxxxxxxx, Xxx
Xxxxxx;
2.2 The Interconnection Participants, as defined in Section 4.28,
have upgraded the Shiprock-Four Corners Transmission Line for
operation at 345-kV and desire to relocate said transmission
line termination from the 230-kV Switchyard to the 345-kV
Switchyard pursuant to this Agreement;
2.3 By resolution dated February 15, 1995, the E&O Committee
recommended approval of the relocation of the Four Corners'
termination of Western's Shiprock-Four Corners Transmission
Line from the 230-kV Switchyard to the 345-kV Switchyard,
subject to: i) the conclusion of negotiations between the Four
Corners Participants and the Interconnection Participants on
the terms and conditions for such terminal relocation, and
ii) the execution of an interconnection agreement. In a
subsequent resolution dated August 18, 1999, the E&O Committee
reaffirmed its resolution of the relocation of Western's
Shiprock-Four Corners Transmission Line from the 230-kV
Switchyard to the 345-kV Switchyard at Four Corners Project.
2.4 The Parties anticipate that the interconnection and operation
of the Shiprock-Four Corners Transmission Line at 345-kV will
provide mutual benefits, which may include: 1) improvements in
reliability, 2) increases in both scheduling and transfer
capability, 3) a means of furnishing emergency assistance and
4) opportunities for increases in market sales, purchases,
and/or exchanges of power and energy. Consequently, the Four
Corners Participants are willing to permit the relocation of
the Shiprock-Four Corners Transmission Line termination from
the 230-kV Switchyard to the 345-kV Switchyard in accordance
with the terms and conditions contained in this Agreement.
2.5 APS acts on behalf of itself and as Operating Agent on behalf
of the Four Corners Participants under the Operating
Agreement. The Interconnection Participants desire that APS
design, construct, own, operate, and maintain the
Interconnection Facilities.
2.6 The Parties understand that the Operating Agent may join an
independent system operator (ISO) or regional transmission
organization (RTO) under FERC jurisdiction. In the event the
Operating Agent either joins or is required to conform to
protocols of an ISO/RTO, the Parties agree that the Operating
Agent may propose contractual language changes necessary to
conform to the terms and conditions required by FERC's
approval of the ISO/RTO in the form of an amendment to this
agreement.
2.7 This Agreement does not provide a right to transmit energy
other than across the Enlarged Switchyard buses except and
only to the extent that all necessary arrangements for
transmission rights and service are in place. Nothing in this
Agreement shall be deemed either expressly or implicitly to
obligate any Party to provide or make available to the
Interconnection Participants any transmission services,
control area services, distribution services, or ancillary
services for the transport of energy and the Four Corners
Participants make no representation in this Agreement
regarding the availability of such services. This Agreement
provides no obligation for any Party to purchase, sell,
transmit, or otherwise provide any rights other than the right
to interconnect.
3. ENTIRE AGREEMENT
----------------
This Agreement embodies the entire agreement between the Parties
concerning the subject matter hereof and supersedes all prior
proposals, representations, negotiations, or letters whether written
2
or oral with respect to the matters herein agreed to. The Parties shall
not be bound by or be liable for any statement, representation,
promise, inducement, or understanding of any kind relating to the
subject matter hereof not set forth in this Agreement. This Agreement
incorporates by reference all documents attached hereto and listed
below or incorporated herein by reference. Included as appendices and
exhibits to this Agreement and attached hereto are:
Appendix A - FERC ORDER AND RUS APPROVAL
Exhibit 1 - ENLARGED SWITCHYARD DIAGRAM
Exhibit 2 - INTERCONNECTION FACILITIES
Exhibit 3 - COMMON FACILITIES COSTS
Exhibit 4 - ALLOCATION OF COMMON FACILITIES COSTS
Exhibit 5 - CALCULATION OF COMMON FACILITIES USE FEE
Exhibit 6 - %-RESPONSIBILITY FOR COSTS
Exhibit 7 - COST RESPONSIBILITY RATIO (CRR)
Exhibit 8 - METHOD OF DETERMINING INSURANCE EXPENSES FOR
COMMON FACILITIES
Exhibit 9 - INTERCONNECTION FACILITIES CONSTRUCTION BUDGET
Exhibit 10 - DETERMINATION OF ITCC COMPOSITE RATE
Exhibit 11 - CONSTRUCTION COSTS
Exhibit 12 - CONSTRUCTION SCHEDULE
4. SECTION HEADINGS AND DEFINITIONS
--------------------------------
Section headings in this Agreement are for convenience only and are not
to be construed to define, limit, expand, interpret, or amplify the
provisions of this Agreement. When initially capitalized in this
Agreement or in amendments or exhibits hereto, the following words or
phrases, whether in the singular or plural, shall have the meanings
specified:
4.1 230-kV Switchyard - The Four Corners 230-kV Switchyard and its
-----------------
related facilities located near Farmington, New Mexico, as
described in Exhibit B to the 230-kV Switchyard Agreement.
4.2 230-kV Switchyard Agreement - The 230-kV Switchyard Agreement,
---------------------------
between APS, PNM, and SRP; dated May 23, 1969, as amended from
time to time.
4.3 230-kV Switchyard Termination Facilities - All related
----------------------------------------
terminal facilities including circuit breakers, disconnect
switches, and appurtenances, excluding line relaying
equipment, for terminating the Shiprock-Four Corners
Transmission Line in the 230-kV Switchyard.
3
4.4 345-kV Switchyard - The Four Corners Project 345-kV Switchyard
-----------------
and its related facilities located near Farmington, New
Mexico, as described in Exhibit 2 to the Co-Tenancy Agreement
and as shown in Exhibit 1, Enlarged Switchyard Diagram,
attached hereto. The 345-kV Switchyard does not include the
Interconnection Facilities or the Switchyard Addition.
4.5 Accounting Practice - Generally accepted accounting
-------------------
principles, applicable to electric utility operations, in
accordance with FERC's "Uniform System of Accounts Prescribed
for Public Utilities and Licensees, Subject to the Provisions
of the Federal Power Act," in effect as of the date of this
Agreement, and as such system of accounts may be amended,
supplemented, or revised from time to time.
4.6 Agreement - This document, as described in Section 3, Entire
---------
Agreement, hereof, constitutes a contract among the Parties,
as it may be amended from time to time.
4.7 Apparatus - Any and all equipment, machinery, material, tools,
---------
spare parts, accessories, and supplies furnished as a part of
and necessary for Construction Work, together with all usual
and appropriate fittings, attachments, appurtenances,
appliances, and special tools necessary for erection and
installation of the Interconnection Facilities.
4.8 Capital Improvements - Any unit of property which is added to
--------------------
the Interconnection Facilities after the In-Service Date, the
enlargement or betterment of any unit of property constituting
a part of the Interconnection Facilities and the replacement
of any unit of property constituting a part of the
Interconnection Facilities, irrespective of whether such
replacement constitutes an enlargement or betterment of that
which it replaces, which additions, betterments, enlargements
and replacements in accordance with Accounting Practice would
be capitalized; provided, however, that the term Capital
Improvements as used herein shall not include Future Breaker
Work.
4.9 Common Facilities - Those certain facilities of the 345-kV
-----------------
Switchyard described in Exhibit 3, Common Facilities, attached
hereto.
4.10 Common Facilities Use Fee - The one time payment by
-------------------------
Interconnection Participants for the non-exclusive use and
benefit of the Common Facilities owned by the Four Corners
Participants. The method for calculating such payment is set
forth in Exhibit 5, Calculation of Common Facilities Use Fee,
hereof.
4.11 Construction Budget - The budget for the Construction Work
-------------------
attached hereto as Exhibit 9 or as such budget may be modified
from time to time, in accordance with the provisions of this
Agreement.
4.12 Construction Costs - The costs to construct and install a
------------------
345-kV terminus at the Enlarged
4
Switchyard to accommodate the transmission line from the
Shiprock Substation, described in Exhibit 11 attached hereto.
4.13 Construction Schedule - The time line for completing benchmark
---------------------
events in the Construction Work as delineated in Exhibit 12,
as such time line may be modified from time to time, in
accordance with the provisions of this Agreement.
4.14 Construction Work - All work performed pursuant to this
-----------------
Agreement, including without limitation, all engineering,
design, contract preparation, purchasing, construction,
supervision, negotiation, preparation and performance of
construction agreements, resolution of disputes, other than
disputes among Parties, pertaining to the construction of the
Interconnection Facilities, acquisition of land or land
rights, expediting, inspection, accounting, testing, and
start-up for each component of the Interconnection Facilities,
any actions of the Operating Agent pursuant to Section 10.3
herein, and preparation of operating and equipment manuals,
all reports required by regulatory authorities and the conduct
of hearings, conferences and other activities incidental to
obtaining requisite permits, licenses and certificates for the
construction and operation of each component of the
Interconnection Facilities or any modification of Enlarged
Switchyard facilities to accommodate the Interconnection
Facilities.
4.15 Co-Tenancy Agreement - The Four Corners Project Co-Tenancy
--------------------
Agreement, between APS, EPE, PNM, SRP, SCE, and TEP; dated
July 19, 1966, as amended from time to time.
4.16 Cost Responsibility Ratio ("CRR") - The ratio of
---------------------------------
responsibility for costs allocated to the Interconnection
Participants as described in Section 12, Cost Responsibility
Ratio, hereof.
4.17 Due Date - For billing invoices submitted by the Operating
--------
Agent with regard to this Agreement, payment shall be due by
the first day of the month in which such expenses and costs
are anticipated to be incurred, or forty-five (45) calendar
days after Operating Agent submits an invoice, whichever last
occurs.
4.18 E&O Committee - The Engineering and Operating Committee,
-------------
established pursuant to the Operating Agreement, and having
the additional responsibilities set forth in this Agreement.
4.19 Enlarged Switchyard - The 345-kV Switchyard, the
-------------------
Interconnection Facilities, and the Switchyard Addition as
shown in Exhibit 1, Enlarged Switchyard Diagram, attached
hereto, including any modifications, additions, or
interconnections thereto as may be made from time to time by
any of the Parties or any third parties.
4.20 FERC - Federal Energy Regulatory Commission or any successor
----
organization.
4.21 Four Corners Participants - APS, EPE, PNM, SRP, SCE, and TEP.
-------------------------
5
4.22 Four Corners Project - As defined in Section 5.16 of the
--------------------
Co-Tenancy Agreement.
4.23 Function(s) - Each 345-kV connection to the Enlarged
-----------
Switchyard buses through power circuit breakers, such as line
connections, generator connections, or transformer
connections.
4.24 Future Breaker Work - Capital improvements to the 345-kV
-------------------
circuit breakers located in the Enlarged Switchyard,
including, without limitation, replacement of such breakers
and associated equipment, if it is determined by the Four
Corners Participants upon completion of studies approved by
the E&O Committee that one hundred percent (100%) of the
continuous current carrying or interrupting capabilities of
said breakers will be exceeded as a result of future
additions, modifications, or interconnections which affect the
Enlarged Switchyard; provided, however, that Future Breaker
Work shall not include any replacement of circuit breakers due
to obsolescence.
4.25 Good Utility Practice - Any of the practices, methods, and
---------------------
acts engaged in or approved by a significant portion of the
electric utility industry during the relevant time period, or
any of the practices, methods, and acts which, in the exercise
of reasonable judgment in light of the facts known at the time
the decision was made, could have been expected to accomplish
the desired result at a reasonable cost consistent with good
business practices, reliability, safety, and expedition. Good
Utility Practice is not intended to be limited to the optimum
practice, method, or act to the exclusion of all others, but
rather to be acceptable practices, methods, or acts generally
accepted in the region.
4.26 In-Service Date - The date that the initial Interconnection
---------------
Facilities are capable of being placed into continuous
operation as determined by Operating Agent and Interconnection
Participants.
4.27 Interconnection Facilities - The equipment and facilities,
--------------------------
including any equipment and facilities located outside the
345-kV Switchyard and which are placed on the Leased Lands,
comprising the interconnection of the Shiprock-Four Corners
Transmission Line to the 345-kV Switchyard, as described in
Exhibit 2, Interconnection Facilities, attached hereto,
including any Capital Improvements as may be added thereto
from time to time.
4.28 Interconnection Participants - PSCO, Tri-State, and Western.
----------------------------
4.29 ITCC - The income tax component of contribution (ITCC) as
----
described in Section 23.4, Income Taxes.
4.30 Leased Lands - As defined in Section 5.19 of the Co-Tenancy
------------
Agreement.
4.31 Operating Agent - The Party that is appointed pursuant to
---------------
Section 8, Operating Agent, hereof.
6
4.32 Operating Agreement - The Four Corners Project Operating
-------------------
Agreement, between APS, EPE, PNM, SRP, SCE, and TEP; dated
March 1, 1967, as amended from time to time.
4.33 Operating Emergency - An unplanned event or circumstance which
-------------------
reduces or may reduce the amount of power and energy that
could otherwise be scheduled by the Parties or any third party
interconnected at the Enlarged Switchyard.
4.34 Operating Work - Labor and material necessary for the
--------------
operation and maintenance of the Enlarged Switchyard
including, but not limited to: engineering, contract
preparation, purchasing, repair, removal, disposition,
restoration, supervision, recruitment, expediting, inspection,
accounting, testing, protection, use, management, replacement,
retirement, reconstruction, material and supplies, inventory
purchases, emergency spare parts, training expenses,
operation, maintenance, and any maintenance work necessitated
by an Operating Emergency. Operating Work shall not include
the design and construction of capital improvements to the
Enlarged Switchyard.
4.35 RUS - United States Department of Agriculture, Rural Utilities
---
Service (formerly known as Rural Electrification
Administration, REA) or any successor organization. Under the
authority of the Rural Electrification Act of 1936, RUS
provides capital to electric utilities, through direct loans
and loan guarantees, to upgrade, expand, maintain, and replace
electric facilities to serve customers in rural areas. The
United States, through RUS, is a noteholder of Tri-State. RUS
Rules and Regulations and loan documents between RUS and
Tri-State provide authority for RUS to review and approve
certain Tri-State contracts. The terms of the Amended and
Consolidated Loan Contract between Tri-State and RUS, dated
November 13, 2001, requires submission by Tri-State of this
Agreement for RUS approval.
4.36 Shiprock-Four Corners Transmission Line - The 345-kV
---------------------------------------
transmission line, owned by Western, between the Shiprock
Substation, located at Shiprock, New Mexico, and Four Corners
Project as defined in Section 5.15 of the Co-Tenancy
Agreement. The transmission line is presently operated at
230-kV by Western and will be connected to the 345-kV
Switchyard pursuant to this Agreement and, thereafter, will be
operated at 345-kV.
4.37 Shiprock Substation - A substation, owned and operated by
--------------------
Western, located near Shiprock, New Mexico.
4.38 Switchyard Addition - An addition to the 345-kV Switchyard
-------------------
constructed, owned, operated, and maintained by APS, as shown
in Exhibit 1, Enlarged Switchyard Diagram, attached hereto.
7
4.39 Willful Action
--------------
4.39.1 Action taken or failed to be taken by a Party at the
direction of its directors, members of its governing
bodies, officers or employees having management or
administrative responsibility affecting its
performance under this Agreement, which action is
knowingly or intentionally taken or failed to be
taken with conscious indifference to the consequences
thereof or with intent that injury or damage would
result or would probably result therefrom.
4.39.2 Action taken or failed to be taken by a Party at the
direction of its directors, members of its governing
bodies, officers or employees having management or
administrative responsibility affecting its
performance under this Agreement, which action has
been determined by final arbitration award or final
judgment or judicial decree to be a material default
under this Agreement and which occurs or continues
beyond the time specified in such arbitration award
or judgment or judicial decree for curing such
default or, if no time to cure is specified therein,
occurs or continues thereafter beyond a reasonable
time to cure such default.
4.39.3 Action taken or failed to be taken by a Party at the
direction of its directors, members of its governing
bodies, officers, or employees having management or
administrative responsibility affecting its
performance under this Agreement, which action is
knowingly or intentionally taken or failed to be
taken with the knowledge that such action taken or
failed to be taken is a material default under this
Agreement.
4.39.4 The phrase "employees having management or
administrative responsibility" as used herein means
employees of a Party who are responsible for one or
more of the executive functions of planning,
organizing, coordinating, directing, controlling, and
supervising such Party's performance under this
Agreement; provided however, that with respect to
employees of the Operating Agent, such phrase shall
refer only to: i) the senior employee of the
Operating Agent who is responsible for the operation
of the Interconnection Facilities, and ii) anyone in
the organizational structure of the Operating Agent
between such senior employees and an officer of the
Operating Agent.
4.39.5 For purposes of this Section 4.39, the term "Party"
means each of the Parties to this Agreement,
including the Operating Agent, acting in such
capacity.
4.40 Work Liability
--------------
Except as provided in Section 25.5, Customer Claims, hereof,
liability of one or more
8
Parties for damages suffered by anyone other than a Party,
whether or not resulting from the negligence or Willful Action
of any Party, its directors, members of its governing bodies,
officers, employees, or any other person or entity whose
negligence or Willful Action could be imputed to such Party,
resulting from the:
i) design, construction, use, maintenance, or
ownership of the Interconnection
Facilities; or,
ii) performance or non-performance of
Operating Work directly related to the
Interconnection Facilities or the making
of Capital Improvements.
5. EFFECTIVE DATE AND TERMINATION
------------------------------
5.1 Effective Date - Except for this Section 5.1, Effective Date,
--------------
through and including Section 5.6, Termination Date, and
Section 33, Approvals, hereof, which shall become effective
when this Agreement is duly executed by and delivered to all
Parties hereto, pursuant to Section 37.2, Execution And
Delivery, hereof; this Agreement shall become effective upon
RUS approval without modification or condition and acceptance
for filing by FERC without modification or condition.
5.2 FERC Acceptance and RUS Approval Without Conditions or
------------------------------------------------------
Modifications - This Agreement shall be subject to acceptance
-------------
for filing by FERC without conditions or modifications and
approval by RUS without conditions or modifications. If so
accepted by FERC, Operating Agent shall provide copies of such
notice of acceptance to the other Parties within fourteen (14)
calendar days after the date of the FERC order. If so approved
by RUS, Tri-State shall provide a copy of the letter or other
communication relating to such acceptance from RUS to the
other Parties within fourteen (14) calendar days after receipt
by Tri-State. Operating Agent shall set forth such FERC notice
and such RUS communication in Appendix A, FERC Order and RUS
Approval, attached hereto.
5.3 FERC Acceptance and RUS Approval With Conditions or
---------------------------------------------------
Modifications - If FERC orders a hearing to determine whether
-------------
this Agreement is just and reasonable and, after such hearing,
requires modifications of, or conditions to, any of the terms,
conditions, rates or charges, or if FERC accepts the Agreement
for filing but requires modifications of or conditions to any
of the terms, conditions, rates, or charges, Operating Agent
shall provide notice of such action by FERC to the other
Parties within seven (7) calendar days after the date of the
FERC order. If RUS requires modification of or conditions to
any of the terms, conditions, rates or charges, Tri-State
shall provide notice of such action by RUS to the other
Parties within seven (7) calendar days after the date of the
RUS notification.
9
5.4 Parties' Acceptance - If no Party takes exception to the FERC
-------------------
or RUS actions within fourteen (14) calendar days after the
postmark date of the notice provided pursuant to Section 5.3,
FERC Acceptance and RUS Approval With Conditions or
Modifications, hereof, this Agreement shall continue to be
effective and the FERC and/or RUS-ordered modifications and
conditions shall become a part of this Agreement. Operating
Agent shall attach the FERC order and the RUS communication as
Appendix A. The Parties shall amend the Agreement as necessary
to comply with the ordered modifications and the Operating
Agent shall re-file the amended Agreement with FERC and
Tri-State shall re-file the amended Agreement with RUS.
5.5 Non-Acceptance by a Party - Any Party or Parties which takes
-------------------------
exception to the FERC and/or RUS modifications or conditions
shall, within fourteen (14) calendar days after the postmark
date of the notice provided pursuant to Section 5.3, FERC
Acceptance and RUS Approval With Conditions or Modifications,
hereof, give notice to all the other Parties of such
exception. In such event, the Parties shall promptly commence
good faith negotiations to amend this Agreement in a manner
acceptable to FERC and/or RUS and to provide similar benefits
as the initial, executed Agreement to the Parties; provided,
however, that if no such amendment is duly executed by all
Parties within sixty (60) calendar days after the postmark
date of the written notice of exception, or any extension
thereof as may be agreed to by the representatives of all the
Parties, this Agreement shall terminate upon the expiration of
such time period and become null and void except with respect
to Section 33.2, Fees, hereof, such fees shall survive the
termination of this Agreement until satisfied.
5.6 Termination Date - This Agreement shall terminate upon the
----------------
first of the following events to occur: i) termination of this
Agreement as provided in Section 5.5, Non-Acceptance by a
Party, hereof; ii) the termination of the Co-Tenancy Agreement
or of any successor agreement thereto; iii) failure of the
In-Service Date to occur within five (5) years after the
effective date of this Agreement or any extension of such five
(5) year period as may be agreed to by the representatives of
all the Parties; iv) written agreement of all Parties to
terminate this Agreement ; or v) termination pursuant to
Section 30.4.3 hereof, and upon acceptance of termination by
FERC.
5.7 Notice - As soon as practicable, Operating Agent shall notify
------
each Party of the effective date and, upon termination, the
termination date.
10
6. GRANT
-----
Subject to the terms and conditions of this Agreement, each Four
Corners Participant, to the extent of its interest therein, hereby
grants to each Interconnection Participant the non-exclusive right to:
i) Interconnect the Shiprock-Four Corners Transmission Line to the
Enlarged Switchyard.
ii) Situate the Interconnection Facilities within the Enlarged
Switchyard as may be required.
ii) Use and benefit from the Common Facilities.
7. OWNERSHIP
---------
7.1 Interconnection Facilities - The Interconnection Facilities
--------------------------
shall be owned by APS.
7.2 345-kV Switchyard - The 345-kV Switchyard and any capital
-----------------
improvements thereto shall continue to be owned by and remain
the property of each Four Corners Participant to the extent of
its interest therein, and Interconnection Participants shall
have no ownership rights or interest therein except for the
use thereof as provided in and during the term of this
Agreement.
7.3 Switchyard Addition - The Switchyard Addition shall continue
-------------------
to be owned by and remain the property of APS, and
Interconnection Participants shall have no ownership rights or
interest therein except for the use thereof as provided in and
during the term of this Agreement.
7.4 Designation of Ownership - The designation of ownership of
------------------------
facilities by APS, as owner of the Switchyard Addition and
Interconnection Facilities, as provided in this Agreement,
shall not be construed in any way to limit, interfere with, or
impair the respective rights of Four Corners Participants in
their sole discretion to interconnect with, operate, maintain,
expand, sell or otherwise dispose of the 345-kV Switchyard as
they may deem necessary or appropriate, or of APS as owner of
the Switchyard Addition, in its sole discretion, to operate,
maintain, expand, sell or otherwise dispose of the Switchyard
Addition as it may deem necessary or appropriate; provided,
however, that the disposition or removal of the
Interconnection Facilities will be subject to the terms and
conditions of this Agreement.
8. OPERATING AGENT
---------------
8.1 Operating Agent - Operating Agent for the Interconnection
---------------
Facilities shall be the Operating Agent of the Four Corners
Project as designated pursuant to the Operating Agreement.
8.2 Outage - The Operating Agent shall coordinate the duration and
------
timing of any scheduled outage(s) of facilities required for
installation of the Interconnection Facilities with all
11
affected entities at the Enlarged Switchyard. If requested by
the Interconnection Participants, Operating Agent will attempt
to vary or adjust the timing of the outage(s) to coincide with
Interconnection Participants' proposed Construction Schedule.
Interconnection Participants shall be responsible, however,
for additional costs, if any, excluding lost opportunity
costs, incurred by the Four Corners Participants as a direct
result of Interconnection Participants' variance request. As
part of Operating Agent's response to Interconnection
Participants request for a schedule variance, Operating Agent
shall provide Interconnection Participants a good faith
estimate of the additional costs incurred, if any.
8.3 Relocation
----------
8.3.1 At no cost to the Interconnection Participants in
such capacity and with the prior approval of the E&O
Committee, Operating Agent may relocate the
Interconnection Facilities as necessary to
accommodate a new interconnection to the Enlarged
Switchyard.
8.3.2 With the prior approval of the E&O Committee,
Operating Agent may relocate the Interconnection
Facilities as necessary to conform to future
modifications to the Enlarged Switchyard. If such
relocation results in costs for the Four Corners
Participants, the Interconnection Participants will
be responsible, along with the Four Corners
Participants, for their share of such costs based on
the CRR as outlined in Section 12 and Exhibit 7
hereto.
8.3.3 Any costs for relocation of the Shiprock-Four Corners
Transmission Line as a result of the relocation of
the Interconnection Facilities under this Section
8.3, shall be included in the costs of such
relocation.
8.3.4 In any such relocation, Operating Agent shall act to
minimize the duration of any scheduled outages which
may be required.
8.4 Performance - Operating Agent shall perform its duties and
-----------
responsibilities in accordance with Good Utility Practice, and
pursuant to the terms and conditions of this Agreement and the
Operating Agreement. In the event any of the terms and
conditions of this Agreement conflict with the terms and
conditions of the Operating Agreement in regard to Operating
Agent's performance of such duties and responsibilities, the
terms and conditions of the Operating Agreement shall govern.
9. COORDINATION AND EXCHANGE OF INFORMATION
----------------------------------------
9.1 As a means of fostering the coordination and exchange of
information on a prompt and
12
orderly basis, in connection with matters under this
Agreement, each Interconnection Participant shall be entitled
to have one non-voting representative attend only that portion
of the meetings of the E&O Committee relating to Enlarged
Switchyard issues. Each Interconnection Participant shall give
written notice to Operating Agent of its representative.
Operating Agent shall provide timely notification of such
E&O Committee meetings to Interconnection Participants'
representatives.
9.2 Each Interconnection Participant shall be entitled to have a
non- voting representative attend the portion of any meeting
of the E&O Committee which deals with the 345-kV Switchyard,
unless the E&O Committee, acting in good faith, elects to go
into executive session for any reason. The Operating Agent
shall provide to the Interconnection Participants' E&O
Committee representatives a copy of the proposed E&O Committee
agenda at the same time such agenda is provided to the E&O
Committee members.
9.3 The Operating Agent will act in good faith to keep the
Interconnection Participants fully and promptly advised of
significant developments in connection with progress,
performance, and completion of Construction Work. The
Operating Agent will also hold project status meetings,
scheduled at least quarterly, for the Interconnection
Participants throughout the development and construction of
the Interconnection Facilities. At such meetings, the
Operating Agent's status report shall include, but not be
limited to the following information: progress to date, the
delivery status of all equipment ordered, and any
determinations made by the Operating Agent regarding
recommended changes, if any, to be made to the Construction
Budget or Construction Schedule.
9.4 The Interconnection Participants shall provide all the
information requested by the Operating Agent. The Parties will
act in good faith to communicate and coordinate information
required to ensure the proper design of the Interconnection
Facilities in order to assure proper overall system
integration.
10. DESIGN AND CONSTRUCTION
-----------------------
10.1 The Operating Agent shall be the project manager for
developing and constructing the Interconnection Facilities and
shall have authority over Construction Work as provided
herein.
10.2 The Operating Agent will act in good faith to design and
construct, or cause to be designed and constructed, the
Interconnection Facilities depicted in Exhibit 1 and listed in
Exhibit 2 hereto, in accordance with Good Utility Practice.
10.3 The Operating Agent will act in good faith using Good Utility
Practice to:
13
10.3.1 Purchase and procure such Apparatus and services as
it may deem necessary or useful for the performance
and completion of Construction Work, from any source
or sources it may select.
10.3.2 Negotiate, execute, perform and enforce all
construction and service agreements for the
Construction Work.
10.3.3 Comply with any and all laws applicable to the
performance of Construction Work, including without
limitation all applicable laws, rules, and
regulations for protection of the environment and all
applicable provisions of any worker's compensation
laws, and the terms and conditions of any contract,
permit or license relating to the Interconnection
Facilities.
10.3.4 Expend the funds advanced to the Operating Agent for
the purposes of Construction Work as provided herein.
10.3.5 Keep and maintain records of monies received and
expended, obligations incurred, credits accrued,
estimates of Construction Costs (excluding ad valorem
taxes or payments in lieu thereof and allowance for
funds used during construction) and contracts entered
into in the performance of Construction Work.
10.3.6 Obtain or cause to be obtained necessary construction
permits, temporary access rights and other licenses
and approvals requisite to performing and completing
Construction Work.
10.3.7 Effect the completion of Construction Work in
accordance with Section 8.2 hereof, Exhibit 9,
Interconnection Facilities Construction Budget, and
Exhibit 12, Construction Schedule, attached hereto.
10.3.8 Prepare and distribute a final completion report to
the Interconnection Participants as soon as
practicable but not later than twelve (12) months
after completing Construction Work, unless otherwise
agreed.
10.3.9 Conduct appropriate tests to verify that specified
characteristics of major equipment items have been
achieved and, if necessary, make or cause to be made
final equipment modifications to meet the specified
requirements hereof.
10.3.10 Not suffer any liens to remain in effect unsatisfied
against the Interconnection Facilities, (other than
liens permitted under the Operating Agreement, if
any, liens for taxes or assessments not yet
delinquent, liens for labor and material not yet
perfected, or undetermined charges or liens
incidental to the performance of Construction Work);
provided, however, that the Operating Agent shall not
be required to pay or discharge any such lien as long
as the Operating Agent in good
14
faith, shall be contesting the same, which contest
shall operate during the pendency thereof to prevent
the collection or enforcement of such lien so
contested.
11. PAYMENT FOR USE OF COMMON FACILITIES
------------------------------------
On or before the In-Service Date, the Interconnection Participants
shall make the Common Facilities Use Fee payment to the Operating Agent
for the accounts of the Four Corners Participants, in accordance with
the Interconnection Participants' percentages as shown in Exhibit 6.
12. COST RESPONSIBILITY RATIO
-------------------------
12.1 Purpose - The CRR shall be computed as set forth in Exhibit 7,
-------
Cost Responsibility Ratio, for the purpose of: (i) allocating
to the Interconnection Participants a portion of the costs set
forth in Section 13 below and the costs of any Work Liability,
and (ii) initially determining the Common Facilities Use Fee
payment pursuant to Section 11 hereof.
12.2 Method - The CRR shall be recomputed by the Operating Agent in
------
accordance with Exhibit 7, Cost Responsibility Ratio, attached
hereto, to reflect the installation of any additional
Function(s) in the Enlarged Switchyard and shall be effective
upon the date of firm operation thereof. Upon completion of
such recomputation, Operating Agent shall revise Exhibit 7
and, as soon thereafter as practicable, submit the revised
Exhibit 7 for approval pursuant to Section 36.5, Amendments
and Revisions to Exhibits, hereof. Within thirty (30) calendar
days after obtaining such approval, Operating Agent shall
provide copies of the approved Exhibit 7 to the Parties.
13. ALLOCATION OF COSTS
-------------------
Operating Agent shall calculate the costs and expenses of Construction
Work, operation, maintenance, Capital Improvements, insurance, taxes,
and Future Breaker Work, including but not limited to overhead
expenses, applicable labor loading charges, administrative and general
overhead expenses, all in accordance with Accounting Practice and the
applicable provisions of the Operating Agreement and exhibits thereto,
and shall allocate and charge to each Interconnection Participant its
proportionate share as set forth in Exhibit 6, % - Responsibility For
Costs, attached hereto, of such costs and expenses as set forth below:
13.1 Costs of Construction Work - All expenses charged for
--------------------------
Construction Work.
15
13.2 Costs of Operating Work
-----------------------
13.2.1 Operation - Interconnection Participants' CRR share
---------
of all expenses charged for operation of the Enlarged
Switchyard.
13.2.2 Maintenance
-----------
i) All expenses charged for maintenance of the
Interconnection Facilities.
ii) Interconnection Participants' CRR share of all
expenses charged for maintenance of the Common
Facilities.
13.3 Costs of Capital Improvements - All costs charged for Capital
-----------------------------
Improvements.
13.4 Common Facilities - Interconnection Participants' CRR share of
-----------------
all capital improvements to Common Facilities.
13.5 Costs of Insurance
------------------
13.5.1 All expenses of insurance for or allocable to the
Interconnection Facilities.
13.5.2 Interconnection Participants' CRR share of all
expenses of insurance for or allocable to the Common
Facilities.
13.5.3 Such insurance expenses shall be calculated in
accordance with Exhibit 8, Method of Determining
Insurance Expenses for Common Facilities.
13.6 Cost of Future Breaker Work - All costs of Future Breaker Work
---------------------------
for the Interconnection Facilities which are not recovered
from a third party.
14. PAYMENT
-------
All costs set forth in this Agreement shall be paid as follows:
14.1 Budget Submittal - Operating Agent shall prepare an initial
----------------
budget for the period from the In-Service Date to the end of
Operating Agent's fiscal year in which the In-Service Date
occurs and an annual budget thereafter for the estimated
monthly expenses and costs allocated to Interconnection
Participants pursuant to Section 13, Allocation of Costs,
hereof, and for any other expenses and costs allocated to
Interconnection Participants under this Agreement. Operating
Agent shall submit such budgets to each Interconnection
Participant and to the E&O Committee concurrently with its
submittal of other budgets to the E&O Committee pursuant to
the Operating Agreement; except, that the initial budget shall
be submitted at least ninety (90) calendar days prior to the
anticipated In-Service Date.
14.2 Budget Approval - The budget for the estimated expenses of
---------------
Operating Work related to the Interconnection Facilities and
any other expenses and costs allocated to Interconnection
Participants under this Agreement shall be subject to the
approval of the E&O Committee.
16
The budget for the estimated costs of Capital Improvements
shall be provided to the Interconnection Participants for
their review. Operating Agent shall not make any Capital
Improvements without prior review by the Interconnection
Participants, except: i) in the case of an Operating Emergency
pursuant to Section 16.1, 345-kV Switchyard and Switchyard
Addition, and Section 16.2, Interconnection Facilities,
hereof, or ii) if required by law, regulations or safety
concerns applicable to the Enlarged Switchyard. The submittal
of the budget to the Interconnection Participants for the
estimated expenses of Operating Work and any other expenses
and costs allocated to Interconnection Participants under
this Agreement shall be for informational purposes only.
14.3 Invoices
--------
14.3.1 Not less than forty-five (45) calendar days prior to
the date payments are due hereunder to Operating
Agent, Operating Agent shall submit invoices to each
Interconnection Participant for the expenses and
costs allocated to Interconnection Participants
pursuant to this Agreement. The initial invoice will
cover the month of the In-Service Date plus the
following month. Each invoice shall indicate the
month in which such expenses and costs are
anticipated to be incurred. Payments shall be
considered made on the date, and to the extent, that
monies are actually received by Operating Agent.
14.3.2 As soon as practicable after incurring any costs
provided for in this Agreement, a Four Corners
Participant shall notify the Operating Agent of such
costs and Operating Agent shall submit invoices to
the Interconnection Participants as provided in
Section 14.3.1.
14.3.3 Each Interconnection Participant shall pay or cause
to be paid to Operating Agent its proportionate share
of amounts invoiced by Operating Agent under this
Agreement by the Due Date. Each Interconnection
Participant's share of expenses and costs hereunder
shall be determined in accordance with Exhibit 6, % -
Responsibility For Costs, attached hereto.
14.3.4 In the event that the monthly payments made, as
projected in the budget, are either less than or
greater than the amount of actual monthly costs
incurred, the deficiency or excess for that month
shall be debited or credited as appropriate, without
interest, in the next succeeding monthly invoice
after determination of the deficiency or excess;
provided, however, that if such adjustment would
occur after the termination of this Agreement, the
adjustment shall be made by payment to or from
Operating Agent, as appropriate.
17
14.4 Late Payment - Invoiced amounts not paid to Operating Agent on
------------
or before the Due Date specified herein, shall bear interest,
prorated on a daily basis from the Due Date to the date of
payment in full, at a rate specified in 18 CFR
[sec].35.19(a)(2)iii.
14.5 Disputed Charges
----------------
14.5.1 If any Interconnection Participant disputes any
portion of any amount specified in an invoice, such
Interconnection Participant shall provide written
notice of such dispute and documentation of the
reason for disputing such amount to Operating Agent
and to each of the other Interconnection
Participants. Notwithstanding such dispute, such
Interconnection Participant shall timely pay or cause
to be paid its full share of the total payment
specified in said invoice.
14.5.2 Operating Agent and such disputing Interconnection
Participant shall audit the disputed amounts and, if
they concur that an underpayment or overpayment has
been made, such amount shall be debited or credited
without interest to each affected Interconnection
Participant in the next succeeding monthly invoice;
provided, however, that if such adjustment occurs
after the termination of this Agreement, the
adjustment shall be made by payment to or from
Operating Agent, as appropriate.
14.5.3 Disputes about charges not resolved by the audit
provided for in Section 14.5.2 above, or by
management representatives of the Operating Agent and
Interconnection Participants(s) shall be arbitrated
as provided in Section 31, Arbitration, hereof,
except for Western which is subject to the
Alternative Dispute Resolution Act, 5 U.S.C. 571-584.
15. OPERATING PRINCIPLES
--------------------
15.1 Entitlement - Under normal operating conditions, each
-----------
Interconnection Participant shall have the right to deliver,
receive, and exchange power and energy with any Four Corners
Participant, or any third party who by agreement with any Four
Corners Participant possesses such rights in the Enlarged
Switchyard up to an amount equal to its share of the capacity
of the Shiprock-Four Corners Transmission Line; provided, that
such use shall not interfere with or impair: i) the rights or
entitlements of any Four Corners Participant as set forth in
Section 24, Capacity Allocation of Switchyard Facilities, of
the Operating Agreement, or of any Four Corners Participant in
the existing electric transmission lines and switchyard
facilities shown in Exhibit 1, Enlarged Switchyard Diagram,
attached hereto; or ii) any Four Corners Participant's use of
the facilities described in Section 24 of
18
the Operating Agreement, or use of the existing electric
transmission lines and switchyard facilities connected thereto
as shown on Exhibit 1.
15.2 Curtailment
-----------
15.2.1 If at any time the facilities described in Section 24
of the Operating Agreement, the Switchyard Addition,
or any electric transmission line or switchyard
facility connected thereto (all as shown on Exhibit
1, Enlarged Switchyard Diagram, attached hereto)
cannot accommodate the power and energy schedules
then existing due to adverse occurrences such as
unscheduled power flow, operating emergencies, or
abnormal operating conditions (collectively and
individually, "Overload Conditions"), Operating Agent
shall take whatever action it deems appropriate to
relieve such Overload Conditions consistent with Good
Utility Practice.
15.2.2 If actions taken by the Operating Agent pursuant to
Section 15.2.1 are not sufficient to relieve Overload
Conditions, then schedules of power and energy,
including those of Interconnection Participants,
which in the sole judgment of Operating Agent
contribute to such Overload Conditions, shall be
curtailed upon the request of Operating Agent until
such Overload Conditions no longer exist. The Parties
shall share the remaining transmission capacity in
proportion to each Party's entitlement in the
transmission path requiring curtailment. Operating
Agent shall limit the request for curtailment to an
amount sufficient to relieve the Overload Conditions.
15.3 Reactive Power - Except as the Parties may otherwise agree,
--------------
none of the Parties shall be obligated to provide or exchange
reactive power with the other Parties. Each Party shall
cooperate with the other Parties to minimize the unintended
flow of reactive power between their electric utility systems.
16. OPERATING EMERGENCY
-------------------
In the event of an Operating Emergency, the Operating Agent shall take
any and all steps reasonably necessary and required to terminate the
Operating Emergency, subject to the provisions of this Section 16.
16.1 345-kV Switchyard and Switchyard Addition - In the event that
-----------------------------------------
the Operating Emergency results in the destruction of
or damage to the Interconnection Facilities and such
destruction or damage impairs the operation of the 345-kV
Switchyard and/or Switchyard Addition, Operating Agent shall
have the authority to expend, in its sole discretion,
19
whatever funds are necessary to repair, restore or reconstruct
the damaged or destroyed Interconnection Facilities to the
extent necessary to restore the operation of the 345-kV
Switchyard and/or Switchyard Addition to substantially the
same general condition as existed prior to the Operating
Emergency. Each Interconnection Participant shall be obligated
to pay its proportionate share, as determined in accordance
with Exhibit 6, % - Responsibility For Costs, attached hereto,
of the costs of such repair, restoration or reconstruction as
soon as practicable but not later than set forth in Section
14.3, Invoices, hereof.
16.2 Interconnection Facilities - In the event that the Operating
--------------------------
Emergency results in the destruction of or damage to the
Interconnection Facilities and such destruction of or damage
to the Interconnection Facilities does not impair the
operation of the 345-kV Switchyard and/or Switchyard Addition,
Operating Agent shall have the authority to expend, in its
sole discretion, up to twenty-five thousand dollars ($25,000)
to terminate such Operating Emergency. Each Interconnection
Participant shall be obligated to pay its proportionate share,
as determined in accordance with Exhibit 6, % - Responsibility
for Costs, attached hereto, of the costs of such repair,
restoration or reconstruction as soon as practicable but not
later than set forth in Section 14.3, Invoices, hereof.
16.3 Notice - After it is determined that an Operating Emergency
------
exists, the Operating Agent shall promptly advise the Parties
of the occurrence of the Operating Emergency, its nature, the
steps taken or to be taken to terminate the Operating
Emergency, and a preliminary estimate of the expenditures
required to terminate the Operating Emergency.
16.4 Duties - In the event the Operating Agent determines that the
------
estimated amount required to terminate an Operating Emergency
which affects the Interconnection Facilities and does not
affect the 345-kV Switchyard or Switchyard Addition exceeds
the amount which it is authorized to expend, the Operating
Agent shall promptly notify the Interconnection Participants
and shall call a meeting of the Interconnection Participants
to be held not later than five (5) working days following such
determination. At such meeting the Operating Agent shall
submit the following information:
16.4.1 The estimated date when the Operating Emergency which
affects the Interconnection Facilities can be
terminated.
16.4.2 An estimate, prepared in accordance with Accounting
Practice, of the costs to terminate the Operating
Emergency.
16.4.3 The amount of overtime, if any, which would be paid
in order to expedite the termination of such
Operating Emergency.
20
16.4.4 Such other information as may be necessary and
required to determine the manner in which such
Operating Emergency is to be terminated.
16.5 Restoration Without Agreement - In the event the
-----------------------------
Interconnection Participants and Operating Agent are unable to
agree on the manner of repair, restoration or reconstruction
of the Interconnection Facilities damaged or destroyed as a
result of an Operating Emergency, Operating Agent, pending the
resolution of such disagreement, shall be authorized to
proceed, in its discretion, with any such repair, restoration
or reconstruction in accordance with Good Utility Practice.
16.6 Report - Following the termination of the Operating Emergency,
------
the Operating Agent shall submit to the Parties a report
containing a summary of the costs incurred and expenditures
made in connection with the repair, restoration or
reconstruction and such other information as may be required
by the Parties.
17. REMOVAL OF 230-KV SWITCHYARD TERMINATION FACILITIES
---------------------------------------------------
At the time the Shiprock-Four Corners Transmission Line is removed from
the terminal in the 230-kV Four Corners Switchyard, the Operating Agent
may elect to remove or cause to be removed, the 230-kV Switchyard
Termination Facilities. If the Operating Agent elects to remove said
facilities and the cost of removing such facilities is greater than
their salvage value, the Interconnection Participants will pay the
removal costs less the salvage value. If the cost of removing the
facilities is less than the salvage value, the Interconnection
Participants will incur no expense whatsoever. If the Operating Agent
elects not to remove the 230-kV Switchyard Termination Facilities, the
Interconnection Participants will incur no expense then or in the
future.
18. REMOVAL OF INTERCONNECTION FACILITIES
-------------------------------------
No later than one-hundred and twenty (120) days after termination of
this Agreement, unless otherwise mutually agreed, Operating Agent shall
remove or cause to be removed the Interconnection Facilities, except
for breaker No. 2036, deliver or cause to be delivered the salvageable
material and equipment of the Interconnection Facilities to Western on
behalf of the Interconnection Participants, and restore or cause to be
restored the site to a clean and neat condition; provided, however,
that Operating Agent shall repair or cause to be repaired any damage to
the Enlarged Switchyard caused by such removal. In the event Operating
Agent removes the Interconnection Facilities pursuant to this Section
18, each Interconnection Participant shall reimburse, or cause to be
reimbursed, the Operating Agent for such Interconnection Participant's
proportionate share (which share shall be determined in accordance
21
with Exhibit 6, % - Responsibility For Costs, attached hereto) of the
costs of such removal, disposition, repair, and restoration, except for
damages caused by Willful Action. Such reimbursement shall be paid to
Operating Agent on the basis of invoices submitted by Operating Agent
to each Interconnection Participant pursuant to Section 14.3, Invoices,
hereof. Costs associated with the disposition of breaker No. 2036 shall
be negotiated between the Interconnection Participants and APS in its
capacity as owner of the Switchyard Addition.
19. SPINNING RESERVES
-----------------
Each Interconnection Participant shall provide or cause to be provided,
maintain or cause to be maintained, or make arrangements for the
maintenance of, spinning reserves in accordance with the requirements
of either: i) the Principles of Interconnected Operation for Four
Corners Project Interconnection Agreement, dated May 12, 1969, as it
may be subsequently revised (as such is attached to a letter, dated May
14, 1969, signed by an authorized representative of each Four Corners
Participant); or ii) the Minimum Operating Reliability Criteria
approved on March 8, 1994, by the Western Systems Coordinating Council,
as such may be revised and approved from time to time.
20. WESTERN SYSTEMS COORDINATING COUNCIL COMPLIANCE
-----------------------------------------------
The Parties to this Agreement are members of the Western Systems
Coordinating Council, or its successor, ("WSCC") and agree to comply by
the terms and conditions of the WSCC Reliability Criteria Agreement and
the WSCC Reliability Management Systems Agreement dated June 18, 1999,
as may be revised and approved from time to time.
21. SCHEDULING AND DISPATCHING
--------------------------
21.1 Procedures - Sixty (60) days prior to the In-Service Date, the
----------
Parties shall establish mutually agreeable operating
procedures that are in conformance with this Agreement and
Good Utility Practice with respect to, among other things,
curtailments, transmission losses, scheduling, and dispatching
for transactions to be conducted by the Parties at the
Enlarged Switchyard and at the Shiprock Substation.
21.2 Schedules - Each Interconnection Participant desiring to
---------
schedule power and energy at the Enlarged Switchyard shall
submit or make arrangements to submit hourly schedules and any
changes thereto in accordance with procedures to be
established pursuant to Section 21.1, Procedures, hereof.
21.3 230-kV Switchyard Delivery Points - The Parties to any
---------------------------------
arrangements which provide for
22
power and energy exchanges at the present termination point of
the Shiprock-Four Corners Transmission Line in the 230-kV
Switchyard or for exchanges between such termination point and
the 345-kV Switchyard shall pursue, as expeditiously as
possible, revisions appropriate to such arrangements to
provide for similar exchanges at the new termination point of
the Shiprock-Four Corners Transmission Line in the Enlarged
Switchyard as well as for exchanges between such termination
point and points in the 230-kV Switchyard.
22. OTHER AGREEMENT
---------------
Except as otherwise set forth herein, should a conflict affecting only
Four Corners Participants arise out of an inconsistency between the
terms and conditions of this Agreement and the terms and conditions of
the Operating Agreement, the terms and conditions of the Operating
Agreement shall govern.
23. TAXES
-----
23.1 Assessments - Each Interconnection Participant shall use its
-----------
best efforts to have any taxing authority imposing any
property taxes or other taxes (excluding any sales or use
taxes) or assessments on the Interconnection Facilities,
impose such taxes or assessments directly upon each
Interconnection Participant on the basis of its respective
responsibility for such costs as set forth in Exhibit 6,
%-Responsibility for Costs.
23.2 Responsibility - Except as otherwise provided in this Section
--------------
23, all taxes and assessments (or contributions in lieu
thereof) levied against the property interest of any Party
shall be the sole responsibility of the Party upon whom said
taxes and assessments are levied, unless such taxes and
assessments are levied directly upon an individual Party on
behalf of any or all of the other Parties, in which case such
taxes and assessments shall be the responsibility of such
Parties.
23.3 Taxes Other Than Income Taxes - Each Interconnection
-----------------------------
Participant shall pay its CRR share of the amount of any
federal, state, or local excise, transaction privilege, sales,
business activity, gross receipts or similar tax, Navajo
Nation taxes, or taxes imposed by any other entity with
authority to impose such taxes ("Other Taxes"), incurred by
the Four Corners Participants as a result of any payment made
by the Interconnection Participants to the Four Corners
Participants.
23.3.1 If, and in the event that, the New Mexico Taxation
and Revenue Department, New Mexico cities or towns,
Federal or other governmental units, or the Navajo
Nation ("Taxing Entity") issues an assessment or
notice of intent to assess (collectively,
23
the "Assessment") to any Four Corners Participant for
such Other Taxes and any associated interest and
penalties:
i) Such assessed Four Corners Participant
shall notify the Operating Agent of such
tax and Operating Agent shall invoice the
Interconnection Participants pursuant to
Section 14.3, Invoices. Each
Interconnection Participant agrees to pay
the same to the Operating Agent and the
assessed Four Corners Participant will
make such payments to the Taxing Entity on
behalf of the Interconnection Participants
and the assessed Four Corners Participant.
The assessed Four Corners Participant
shall have the discretion to make such
payment under protest if requested by the
Interconnection Participant.
ii) Each Interconnection Participant shall
pursue its legal remedies to the extent it
desires, at its own cost and expense and
with counsel and other personnel of its
own choosing. In so doing, the assessed
Four Corners Participant will cooperate
with such Interconnection Participant to
take such action or actions in the
assessed Four Corners Participant's name
whenever the same is required by law or
otherwise appropriate in the
circumstances; provided, however, that no
Interconnection Participant shall take a
position in said action that it knows to
be inconsistent with the interests of the
assessed Four Corners Participant without
the express permission of such Four
Corners Participant. The assessed Four
Corners Participant may, at any time,
withdraw this permission and notify the
Interconnection Participant, applicable
regulatory agency, or court that it has
done so and its reasons for so doing.
iii) Each Interconnection Participant hereby
agrees to reimburse fully the assessed
Four Corners Participant for any tax,
interest, penalty or other cost that may
be found to be due and owing by the
assessed Four Corners Participant as the
result of, or arising out of, the assessed
Four Corners Participant's receipt of its
proportionate share of payment made by
such Interconnection Participant pursuant
to this Section 23.
iv) If any payment of Other Taxes made to a
Four Corners Participant is found to be
excessive or illegal by the appropriate
jurisdictional authority, such excessive
or illegal payment shall be refunded to
the Interconnection Participant upon
notice.
24
23.4 Income Taxes
------------
23.4.1 The Interconnection Participants shall be solely
responsible for any income taxes imposed upon any of
the Four Corners Participants with respect to the
Interconnection Facilities costs and the Common
Facilities Use Fees allocated to the Interconnection
Participants herein (the "ITCC"). The ITCC
percentages are shown on Exhibit 10.
23.4.2 The total ITCC, as a component of Interconnection
Facilities costs and Common Facilities Use Fees,
shall be paid by the Interconnection Participants to
the Operating Agent in accordance with Section 14,
Payment, herein, and be disbursed to the Four Corners
Participants on an annual basis.
23.4.3 If an Interconnection Participant believes that all
or any portion of any ITCC amount which it pays
pursuant to this Agreement is not taxable due to any
clarification of or change in law subsequent to the
Section 5.1, Effective Date, such Interconnection
Participant may notify the Operating Agent and all of
the Four Corners Participants of such clarification
or change and the basis therefor, and the Parties
will act in good faith, including all necessary
communication and cooperation, to determine whether
such a clarification or change has occurred.
24. INSURANCE
---------
24.1 Interconnection Facilities - Operating Agent shall procure and
--------------------------
maintain in force, or cause to be procured and maintained in
force, so as to be effective as of the In-Service Date,
appropriate insurance coverage on the Interconnection
Facilities for liability, property, and surety exposures. Such
insurance will be incorporated in or added to the coverages
cited under Section 21, Operating Insurance, of the Operating
Agreement, and if incorporated or added, Interconnection
Participants shall be named as additional insureds to the
extent permitted, and entitled to the coverages thereof.
24.2 Insureds - Interconnection Participants shall be additional
--------
insureds to the extent permitted under the insurance coverage
provided by Operating Agent pursuant to Section 24.1,
Interconnection Facilities, hereof.
25. LIABILITY
---------
25.1 Covenant Not to Execute - Except for any debt resulting from
-----------------------
any award or judgment rendered pursuant to a disputed charge
as provided for in Section 14.5 and including any award or
judgment obtained by arbitration under Section 31 and except
for any judgment
25
debt for damage resulting from Willful Action and except to
the extent any judgment debt is collectible from valid
insurance provided hereunder and subject to the provisions of
Sections 25.2, 25.3, 25.4, 25.5, and 25.6, each Party hereby
extends to all other Parties, their directors, members of
their governing bodies, officers, and employees its covenant
not to execute, levy or otherwise enforce a judgment obtained
against any of them, including recording or effecting a
judgment lien, for any direct, indirect or consequential loss,
damage, claim, cost, charge or expense, whether or not
resulting from the negligence of such Party, its directors,
members of its governing bodies, officers, employees, or any
other person or entity whose negligence would be imputed to
such Party from: i) the performance or nonperformance of the
obligations of a Party under this Agreement, other than the
obligation to pay any monies which have become due under the
terms of this Agreement, ii) Operating Work and Construction
Work directly related to the Interconnection Facilities, or
iii) the making of Capital Improvements.
25.2 Insurance Proceeds - In the event any insurer providing
------------------
insurance in accordance with Section 24, Insurance, hereof,
refuses to pay any judgment obtained by a Party against
another Party, its directors, members of its governing bodies,
officers, or employees, on account of liability referred to in
Section 25.1, the Party, its directors, members of its
governing bodies, officers, or employees against whom the
judgment is obtained shall, at the request of the prevailing
Party and in consideration of the covenant given in Section
25.1, execute such documents as may be necessary to effect an
assignment of its contractual rights against the nonpaying
insurer and thereby give the prevailing Party the opportunity
to enforce its judgment directly against such insurer. In no
event when a judgment debt is collectible from valid insurance
provided in accordance with Section 24, Insurance, hereof,
shall the prevailing Party execute, levy or otherwise enforce
the judgment (including recording or effecting a judgment
lien) against the Party, its directors, members of its
governing bodies, officers, or employees, against whom the
judgment was obtained.
25.3 Responsibility for Work Liability - Except as provided in
---------------------------------
Sections 25.4, 25.5 and 25.6, each Interconnection Participant
shall pay its proportionate share, determined in accordance
with Exhibit 6, % - Responsibility for Costs, attached hereto,
of the costs and expenses, including but not limited to
reasonable attorneys' fees, of discharging all Work Liability
imposed upon one or more of the Parties for which payment is
not made by the insurance provided hereunder.
25.4 Willful Action - Each Party shall be responsible for any
--------------
damage, loss, claim, cost, charge
26
or expense that is not covered and paid by the insurance
provided in accordance with Section 24, Insurance, hereof,
and results from its own Willful Action as defined in Section
4.39 and such Party shall indemnify and hold harmless the
other Parties, their directors, members of their governing
bodies, officers and employees from any such damage, loss,
claim, cost, charge or expense resulting from such Willful
Action.
25.5 Customer Claims - Except for liability resulting from Willful
---------------
Action, which shall be the responsibility of the willfully
acting Party, and subject to Section 25.6, any Party whose
electric customer shall have a claim or bring an action
against any other Party for any death, injury, loss or damage
arising out of or in connection with electric service to such
customer and caused by the operation or failure of operation
of the Enlarged Switchyard or any portion thereof, shall
indemnify and hold harmless such other Party, its directors,
members of its governing bodies, officers and employees from
and against any liability for such death, injury, loss or
damage.
25.6 Limitation of Liability - Except for Willful Action as defined
-----------------------
in Section 4.39 hereof, and except with respect to claims made
by any Four Corners Participant against another Four Corners
Participant for which the liability limits set forth below
shall not apply hereunder or under the Operating Agreement,
the aggregate liability of any Party to all other Parties for
its Willful Action not covered by insurance provided in
accordance with Section 24, Insurance, hereof, shall be
determined as follows:
25.6.1 All such liability for damages, losses, claims,
costs, charges or expenses of the Operating Agent
shall not exceed $10,000,000 per occurrence.
Interconnection Participants extend to the Operating
Agent, its directors, members of its governing body,
officers, and employees, a covenant not to execute,
levy or otherwise enforce a judgment against the
Operating Agent for any such aggregate liability in
excess of $10,000,000 per occurrence.
25.6.2 Any claim based on Willful Action must be perfected
by filing suit in a court of competent jurisdiction
or settled or agreement reached within three years
after the Willful Action occurs and is known or
should reasonably be known by the claimant. All
claims made after such three-year period relating to
the same Willful Action shall be barred by this
Section 25.6.2. The award to each Interconnection
Participant from the Operating Agent shall be
determined as follows: Any Interconnection
Participant who successfully files suit and obtains a
judgment or settlement for remuneration, shall
receive the lesser of (a) its final judgment awarded
(or settlement made) or (b) its pro rata share of the
$10,000,000
27
maximum recovery established in Section
25.6.1 hereof, based upon the ratio of the
unsatisfied portion of such Interconnection
Participant's judgment or settlement to the total
unsatisfied portion of all such related judgments
and settlements.
25.7 No Relief of Insurer - The provisions of this Section 25 shall
--------------------
not be construed so as to relieve any insurer of its
obligation to pay any insurance proceeds in accordance with
the terms and conditions of any valid and collectible
insurance policies provided in accordance with Section 24,
Insurance, hereof.
26. UNCONTROLLABLE FORCES
---------------------
No Party shall be considered to be in default in the performance of its
obligations hereunder (other than the obligation of said Party to make
payment of invoices rendered hereunder) when a delay in or failure of
performance shall be due to an Uncontrollable Force. The term
"Uncontrollable Force" shall mean any cause beyond the reasonable
control of a Party, including but not restricted to failure of or
threat of failure of facilities, flood, earthquake, storm, fire,
lightning, epidemic, war, riot, civil disturbance or disobedience,
labor dispute, labor shortage, fuel shortage, transportation shortage,
material shortage, sabotage, terrorist acts, regulation or restriction
imposed by governmental or lawfully established authority, restraint by
court order or public authority, which by exercise of due diligence
such Party could not reasonably have been expected to avoid and which
by exercise of due diligence it shall be unable to overcome. Nothing
contained herein shall be construed so as to require a Party to settle
any strike or labor dispute in which it may be involved. Any Party
rendered unable to fulfill any of its obligations hereunder by reason
of an Uncontrollable Force shall give prompt written notice of such
fact to the other Parties and shall exercise due diligence to remove
such inability with all reasonable dispatch.
27. RELATIONSHIP OF THE PARTIES
---------------------------
The covenants, obligations and liabilities of the Parties are intended
to be several and not joint or collective and nothing contained herein
shall ever be construed to create an association, joint venture, trust,
or partnership, or to impose an association, joint venture, trust or
partnership covenant, obligation, or liability on or with regard to any
one or more of the Parties. Each Party shall be individually
responsible for its own covenants, obligations, and liabilities as
herein provided. No Party or group of Parties shall be under the
control of nor shall be deemed to control any other Party or the
Parties as a group. No Party shall be the agent of nor have a right or
power to bind any other Party without its express written consent,
except as expressly provided in this
28
Agreement.
28. SUCCESSORS AND ASSIGNS
----------------------
28.1 Binding - This Agreement shall be binding upon and inure to
-------
the benefit of the Parties and their respective successors and
assigns, or purchasers of any interests of the Parties in the
Enlarged Switchyard.
28.2 Notice - In the event any Party makes an assignment of its
------
interest in this Agreement, such Party shall provide written
notice of the assignment to each of the other Parties in
accordance with Section 35, Notices, within thirty (30) days
after such assignment becomes effective.
28.3 Conditions - No assignment of this Agreement or of any
----------
interest hereunder by an Interconnection Participant shall
relieve the assigning or transferring Interconnection
Participant from full liability and financial responsibility
for performance under this Agreement unless and until: i) all
Four Corners Participants consent in writing thereto, which
consent shall not be unreasonably withheld or delayed, and ii)
the assignee or transferee agrees in writing and demonstrates
financial ability (which may include providing a reasonable
form of security consistent with commercial practices) to
assume all obligations and duties hereunder of the assigning
or transferring Interconnection Participant. The assignee or
transferee shall take and acquire such interest subject to all
the terms and conditions of this Agreement.
29. AUDITS
------
29.1 Right - Subject to Section 29.2, Conditions, hereof, each
-----
Party shall have the right: i) to audit the Operating Agent's
records with regard to any costs, payments, settlements, or
other supporting information pertaining to this Agreement; and
ii) to designate its own representatives to perform such
audit. Prior to requesting an audit, the requesting Party
shall provide notice to the other Parties of its intent to
audit, giving each non-requesting Party a reasonable amount of
time to join in such audit. The Parties agree to fully
cooperate with any such audit(s).
29.2 Conditions - Any audit undertaken by a Party or Parties or by
----------
the representatives thereof shall: i) be conducted only during
Operating Agent's normal business hours; ii) be performed in
conformance with generally accepted auditing standards; and
iii) be initiated within and be limited to the three (3) year
period following the end of the calendar year in which the
costs being audited were invoiced. In no event, however, shall
Operating Agent
29
be audited, pursuant to the provisions of this Agreement,
more than once in a calendar year.
29.3 Costs - All costs and expenses of the auditing Party's or
-----
Parties' representatives, shall be the sole responsibility of
the auditing Party or Parties.
29.4 Record Retention Period - Operating Agent shall retain all
-----------------------
necessary records and documents for the three (3) year audit
period specified in Section 29.2, Conditions, hereof, or until
any audit in progress is completed or until any dispute
arising from such audit is resolved, whichever condition
requires the longer retention.
29.5 Notice - Upon completion of any audit conducted hereunder, the
------
auditing Party shall promptly make such audit results
available to Operating Agent and each Party, and shall notify
Operating Agent and each Party in writing of any exception
taken as a result of an audit. If Operating Agent and such
auditing Party determine that an exception reflects an error
in billing, Operating Agent, in the next succeeding monthly
invoice(s), shall credit or xxxx each Party for the amount of
such exception, without interest.
30. DEFAULTS
--------
Each Party shall perform all of its duties, obligations, and cost
responsibilities pursuant to this Agreement. Any payment not made when
due or any failure to perform any duty or obligation agreed to herein
shall constitute a default under this Agreement.
30.1 Payment Default - Upon a failure by any Party to pay any
---------------
obligation(s) when due under this Agreement and upon a failure
by any Party to make such payment within five (5) business
days after receiving written notice from the Operating Agent
of such failure to pay, Operating Agent shall, as soon as
practicable, give written notice of such payment default to
each Party and to each member of the E&O Committee. Upon cure
of the default, Operating Agent shall notify each Party and
each member of the E&O Committee of such cure.
30.2 Performance Default - Upon the failure by any Party to perform
-------------------
any of its duties and obligations under this Agreement, other
than a failure to make payment as provided in Section 30.1
herein, and upon the failure by any Party to perform such duty
or obligation within thirty (30) calendar days after receiving
written notice that such performance is due, Operating Agent,
as soon as practicable, shall give written notice of such
performance default to each Party and to each member of the
E&O Committee. If the Operating Agent is in default, any other
Party not in default, as soon as practicable, shall give
written notice of such performance default to Operating Agent,
to each Party, and to each member of the
30
E&O Committee. Upon cure of the default, the Party issuing
such notice shall notify each Party and each member of the E&O
Committee of such cure.
30.3 Cure of Default - In the event of a default by any Party in
---------------
any of the terms and conditions of this Agreement, the
defaulting Party shall take all steps necessary to cure such
default promptly and completely.
30.4 Default Remedy
--------------
30.4.1 If within five (5) business days after receiving
written notice of default pursuant to Section 30.1,
Payment Default, hereof, or within thirty (30)
calendar days after receiving written notice of
default of Section 30.2, Performance Default, hereof,
the defaulting Interconnection Participant does not
cure the default, the non-defaulting Interconnection
Participants shall remedy such default either by
advancing the necessary funds and/or rendering the
necessary service, with each non-defaulting
Interconnection Participant contributing to such
remedy an equal share of the payment due and owing,
or, as otherwise agreed, to cover the default.
30.4.2 The defaulting Interconnection Participant shall pay
promptly upon demand to each non-defaulting
Interconnection Participant the total amount of money
and/or the reasonable equivalent in money of
non-monetary performance, if any, made by such
non-defaulting Interconnection Participant to cure
any default by the defaulting Interconnection
Participant together with interest on such money
and/or the costs of non-monetary performance at the
rate of ten percent (10 %) per annum or the maximum
rate of interest legally chargeable, whichever is the
lesser, from the date of the expenditure of such
money and/or the date of completion of such
non-monetary performance by each such non-defaulting
Interconnection Participant to the date of such
reimbursement by the defaulting Interconnection
Participant.
30.4.3 In the event that one or more Interconnection
Participants are in default under this Agreement and
the Operating Agent is not reimbursed as provided for
in Section 30.4.1 herein, the Operating Agent shall,
unless otherwise directed by the E&O Committee: i)
discontinue any of the services provided or made
available hereunder to such defaulting
Interconnection Participant; ii) suspend any right
granted to such Interconnected Participant pursuant
to Section 15, Operating Principles, hereof; iii)
refuse to resume any such discontinued service and to
restore any such suspended right until such default
is cured; and iv) the Operating Agent may, as
directed by the E&O Committee and upon notice to the
31
Interconnection Participants, file a notice of
termination with FERC. Such discontinuance of
service or suspension of rights shall not relieve
such Interconnection Participant of any of its duties
or obligations under this Agreement.
30.4.4 Any default of the Operating Agent or a Four Corners
Participant to perform any obligation or duty owed
hereunder shall be deemed to be a default under the
Operating Agreement. If such default involves an
Interconnection Participant, such Interconnection
Participant shall have the right to give written
notice of such default to Operating Agent, to each
Party, and to each member of the E&O Committee. Such
notice of default given to Operating Agent by any
Party pursuant to Section 30.2, Performance Default,
hereof shall include a statement of the reasons, in
such Party's view, that the Operating Agent or Four
Corners Participant is in breach of this Agreement
and such notice shall be deemed a notice given under
Article 28 of the Operating Agreement.
31. ARBITRATION
-----------
The Parties shall make best efforts to settle all disputes arising
under this Agreement in the normal course of business and without
recourse to either arbitration or litigation. However, should the
Parties involved in a dispute agree that the dispute be submitted to
arbitration, the following shall apply.
31.1 Any arbitration initiated under this Agreement shall be
conducted before a single neutral arbitrator appointed by the
Parties. If the Parties fail to agree upon a single arbitrator
within ten (10) days of the referral of the dispute to
arbitration, each side of the dispute shall choose one
arbitrator who shall sit on a three-member arbitration panel.
The arbitrators so chosen shall within twenty (20) days select
a third arbitrator to chair the arbitration panel. The
arbitrators selected shall be knowledgeable in electric
utility matters including electric transmission and bulk power
issues, WSCC planning and operating criteria and policies, and
have no current or past substantial business or financial
relationships with any Party to the arbitration, except prior
arbitration. Any arbitration shall commence within ninety (90)
days of the demand for submission to arbitration.
31.2 The arbitrator(s) shall have the discretion to establish a
discovery and hearing schedule and procedures for arbitration,
provided, that the arbitrator(s) adhere, as much as possible,
to the rules and practices of the American Arbitration
Association. The arbitrator(s) may conduct the arbitration
based solely upon the written submittal from the Party(ies) on
each
32
side of the dispute, which submittals may include a statement
of position, an accounting of costs incurred in attempting to
remedy an alleged default, and a proposed remedy or action.
Within five (5) calendar days after the conclusion of the
arbitration hearing, both sides to a dispute shall submit a
final proposed arbitration award and the arbitrator(s) shall
adopt in full one of the two proposed awards.
31.3 Unless otherwise agreed, the arbitrator(s) shall render a
decision within forty- five (45) days of concluding the
arbitration hearing and shall notify the Parties in writing of
such decision and the reasons therefor. The arbitrator(s)
shall be authorized to interpret and apply the terms of this
Agreement but shall have no power to modify or change any of
the terms. The decision of the arbitrator(s) shall be final
and binding upon the Parties, and judgment on the award may be
entered in any court having jurisdiction. The decision of the
arbitrator(s) may be appealed solely on the grounds that the
conduct of the arbitrator(s), or the decision itself, violated
the standards set forth in the Federal Arbitration Act and/or
the Administrative Dispute Resolution Act.
31.4 Each Party to the dispute shall be responsible for its own
costs incurred during the arbitration process and for the
following costs if applicable: i) the cost of the arbitrator
chosen to sit on the three-member panel and one-half of the
cost of the third arbitrator chosen; or ii) one half the cost
of the single arbitrator jointly chosen by the Parties to the
dispute.
32. NONDEDICATION OF FACILITIES
---------------------------
The Parties do not intend to dedicate and nothing in this Agreement
shall be construed as constituting a dedication by any Party of its
properties or facilities, or any part thereof, to any other Party or to
the customers of any Party.
33. APPROVALS
---------
33.1 Approvals - Each Party agrees to cooperate to obtain any state
---------
or federal approvals necessary for the full participation of
any Party in the rights and obligations of this Agreement.
Each Party hereto covenants that it shall support the terms
and conditions of this Agreement in any hearings before FERC
or any other competent body to whose jurisdiction this
Agreement may be subject.
33.2 Fees - As soon as practicable after filing this Agreement with
----
FERC, and from time to time thereafter, if required, Operating
Agent shall submit a written invoice to each Interconnection
Participant for its pro-rata share, determined in accordance
with Exhibit 6,
33
% - Responsibility For Costs, attached hereto, for all costs,
including but not limited to all filing fees and regulatory
charges and, attorney and other fees or other costs incurred
by the Operating Agent as a result of this Agreement. Each
Interconnection Participant shall pay or cause to be paid such
amount to Operating Agent within sixty (60) days after its
receipt of such invoice.
33.3 Regulatory Filings
------------------
33.3.1 Nothing contained in this Agreement shall be
construed as affecting in any way the right of a
Party to unilaterally make application to FERC for a
change in rates, charges, terms, conditions,
classification of service, or any rule, regulation or
agreement related thereto, under Section 205 of the
Federal Power Act or any successor statute and
pursuant to FERC rules and regulations promulgated
thereunder.
33.3.2 Nothing contained in this Agreement shall be
construed as affecting in any way the ability of any
Party receiving service hereunder to exercise its
rights under the Federal Power Act or any successor
statute and pursuant to FERC rules and regulations
promulgated thereunder.
34. GOVERNING LAW AND VENUE
-----------------------
This Agreement shall be interpreted in accordance with the substantive
laws of the State of New Mexico and procedural laws of the State of New
Mexico or the United States, whichever is applicable. Any action at law
or judicial proceeding instituted by any Party relating to this
Agreement shall be instituted only in the state or federal courts of
the State of New Mexico, unless otherwise agreed to by all of the
Parties involved in such action.
35. NOTICES
-------
35.1 Recipients - Except as set forth in Section 35.2, any legal
----------
notice or communication required by this Agreement shall be in
writing, and shall be served, given, made, or delivered in
person or sent by facsimile, overnight courier, registered or
certified mail, postage prepaid or e-mail notification with
either e-mail or telephonic confirmation, to the persons
specified below:
34
Arizona Public Service Company
Attn: Secretary
Mail Station 9046
P. O. Box 53999
Phoenix, Arizona 85072-3999
El Paso Electric Company
Attn: Secretary
X.X. Xxx 000
Xx Xxxx, Xxxxx 00000-0000
Public Service Company of Colorado
Attn: Manager Transmission Operations Xxxx
X.X. Xxx 0000
Xxxxxx, XX 00000-0000
Public Service Company of New Mexico
Attn: Secretary
Xxxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxx Xxxxxx 00000
Salt River Project Agricultural Improvement
and Power District
Attn: Secretary
X.X. Xxx 00000
Xxxxxxx, Xxxxxxx 00000-0000
35
Southern California Edison Company
Attn: Secretary
X.X. Xxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
Tri-State Generation and Transmission Association, Inc.
Attn: Executive Vice President and General Manager
X.X. Xxx 00000
Xxxxxx, Xxxxxxxx 00000
Tucson Electric Power Company
Attn: Secretary
X.X. Xxx 000
Xxxxxx, Xxxxxxx 00000
The United States of America
Western Area Power Administration
Colorado River Storage Project Management Center
Attn: CRSP Manager
X.X. Xxx 00000
Xxxx Xxxx Xxxx, Xxxx 00000
35.2 Routine Communication - Communications of a routine nature
---------------------
involving requests for funds and related matters shall be
given in a manner consistent with the arrangements as
established by the E&O Committee.
35.3 Change of Designation - Any Party may, at any time, by written
---------------------
notice to all other Parties, designate different or additional
persons or different addresses for the giving of notices
hereunder.
36
36. GENERAL PROVISIONS
------------------
36.1 Severability - In the event that any term, covenant or
------------
condition of this Agreement, or the application of any such
term, covenant or condition, shall be held invalid as to any
person or circumstance by any court, agency, or entity having
jurisdiction in the premises, the Parties agree that the same
shall not affect the validity of this Agreement as a whole, or
any part of the Agreement other than the term, covenant, or
condition held invalid, and the Parties agree to substitute
for the invalid term, covenant, or condition a valid term,
covenant, or condition which most closely approximates the
economic effect and intent of the invalid term, covenant, or
condition.
36.2 Third Party Rights - Except as otherwise specifically provided
------------------
in this Agreement, the Parties do not intend to create rights
in or to grant remedies to any third party as a beneficiary of
this Agreement or of any duty, covenant, obligation or
undertaking established herein.
36.3 Waiver - No delay in exercising any right or remedy shall
------
constitute a waiver unless such right or remedy is waived in
writing signed by the waiving Party. Any waiver at any time by
any Party of its rights with respect to a default or any other
matter arising in connection with this Agreement shall not be
construed or deemed a waiver with respect to any other right
or remedy or any subsequent default or matter whether of a
similar or different nature.
36.4 Survival of Obligations and Liabilities - The termination of
---------------------------------------
this Agreement shall not relieve any Party of its obligations,
duties, requirements, or rights under this Agreement incurred,
or vested prior to termination of this Agreement or which,
pursuant to the terms hereof, must be fulfilled after the date
of termination of this Agreement.
36.5 Amendments and Revisions to Exhibits - This Agreement shall
------------------------------------
only be modified by an amendment signed by all Parties. The
exhibits may be revised by the Operating Agent as provided in
this Agreement; subject, however, to the approval of the E&O
Committee and Interconnection Participants, which approval
shall not be unreasonably withheld.
36.6 Environmental Compliance - Facilities installed under this
------------------------
Agreement by Operating Agent shall be constructed, operated,
maintained, replaced, and removed subject to compliance with
applicable laws, executive orders, and regulations including
without limitation, the National Environmental Policy Act of
1969, as amended, 00 XXX 000, and the Archeological Resources
Protection Act of 1979.
36.7 Contingent Upon Appropriations - Where activities provided for
------------------------------
in this Agreement extend beyond the current fiscal year,
continued expenditures by Western are contingent upon
37
Congress making the necessary appropriations required for the
continued performance of Western's obligations under this
Agreement. In case such appropriation is not made, the other
Parties hereby release Western from its contractual monetary
obligations and from all liability due to the failure of
Congress to make such appropriation; provided, that PSCO and
Tri-State shall assume the obligations and responsibilities of
Western under this Agreement and will be entitled to Western's
beneficial interests under this Agreement to the extent and
for as long as Western does not receive such appropriations,
provided further that PSCO and Tri-State agree to permit
Western the continued use of the Interconnected Facilities to
meet Western's contractual obligations at the Enlarged
Switchyard subject to an appropriate facility use charge.
36.8 Equal Opportunity Employment Practices - Except as provided in
--------------------------------------
Title 42 U.S.C. [sec].2000e-2(i) and in keeping with any
obligation undertaken by any of the non-Federal Participant
who may be acting as the Operating Agent, or their assigns,
pursuant to the terms of said Title 42 U.S.C. [sec].2000e-2(i)
to give preference for employment to qualified Indians for
work on or near an Indian Reservation, during the performance
of this Agreement, the Operating Agent agrees to abide by
Section 202 of Executive Order No. 11246, 43 Fed. Reg. 46501
(1978), which is incorporated into this Agreement by this
reference, which provides, among other things that Operating
Agent will not discriminate against any employee or applicant
for employment because of race, color, religion, sex, national
origin, age, or disability.
36.9 Use of Convict Labor - Operating Agent agrees not to employ
--------------------
any person undergoing sentence of imprisonment in performing
the contract except as provided by 18 U.S.C. 4082(c)(2) and
Executive Order 11755, December 29, 1973.
37. EXECUTION
---------
37.1 Execution by Counterparts - This Agreement may be executed in
-------------------------
any number of counterparts, and upon execution of this
Agreement by all Parties, the executed counterparts together
shall have the same force and effect as an original instrument
and as if all Parties had signed the same instrument. Any
signature page of this Agreement may be detached from any
counterpart hereof without impairing the legal effect of any
signature thereon, and may be attached to another counterpart
of this Agreement identical in form hereto but having attached
to it one or more signature pages.
37.2 Execution and Delivery - As soon as practical after all of the
----------------------
Parties have reached agreement as to the terms and conditions
of this Agreement, Operating Agent shall
38
distribute a copy of this Agreement with a full set of
signature pages to each Party. Within a reasonable period of
time after receipt, each Party shall execute each of its
signature pages and promptly return same to Operating Agent.
Immediately upon receipt of all signature pages from all the
other Parties, Operating Agent shall: i) execute its signature
pages and fill in the effective date in Section 5.1, Effective
Date, hereof, with the date on which Operating Agent executes
such signature pages, and ii) send to each Party a) by
telecopy, a complete set of signature pages, b) by express
mail, a copy of the Agreement, including a full set of
original signature pages, and iii) file this Agreement with
FERC pursuant to Section 5.1. Immediately upon receipt of a
copy of the executed Agreement, Tri-State shall, at its own
expense, submit this Agreement for RUS approval.
38. SIGNATURE CLAUSE
----------------
The signatories hereto represent that they have been appropriately
authorized to enter into this Agreement on behalf of the Party for whom
they sign.
ARIZONA PUBLIC SERVICE COMPANY
SIGNATURE _______________________________
NAME ____________________________________
TITLE ___________________________________
DATE SIGNED _____________________________
"APS"
EL PASO ELECTRIC COMPANY
SIGNATURE _______________________________
NAME ____________________________________
TITLE ___________________________________
DATE SIGNED _____________________________
"EPE"
39
PUBLIC SERVICE COMPANY OF COLORADO
SIGNATURE _______________________________
NAME ____________________________________
TITLE ___________________________________
DATE SIGNED _____________________________
"PSCO"
PUBLIC SERVICE COMPANY OF NEW MEXICO
SIGNATURE _______________________________
NAME ____________________________________
TITLE ___________________________________
DATE SIGNED _____________________________
"PNM"
SALT RIVER PROJECT AGRICULTURAL
IMPROVEMENT AND POWER DISTRICT
SIGNATURE _______________________________
NAME ____________________________________
TITLE ___________________________________
DATE SIGNED _____________________________
"SRP"
SOUTHERN CALIFORNIA EDISON COMPANY
SIGNATURE _______________________________
NAME ____________________________________
TITLE ___________________________________
DATE SIGNED _____________________________
"SCE"
40
TRI-STATE GENERATION AND
TRANSMISSION ASSOCIATION, INC.
SIGNATURE _______________________________
NAME ____________________________________
TITLE ___________________________________
DATE SIGNED _____________________________
"TRI-STATE"
TUCSON ELECTRIC POWER COMPANY
SIGNATURE _______________________________
NAME ____________________________________
TITLE ___________________________________
DATE SIGNED _____________________________
"TEP"
THE UNITED STATES OF AMERICA
WESTERN AREA POWER ADMINISTRATION
SIGNATURE _______________________________
NAME ____________________________________
CRSP Manager
CRSP Management Center
DATE SIGNED _____________________________
"WESTERN"
41
APPENDIX A
FERC ORDER AND RUS APPROVAL
FOR
SHIPROCK - FOUR CORNERS PROJECT
345-KV SWITCHYARD
INTERCONNECTION AGREEMENT
X-0
XXXXXXX 0
XXX Xxxxxxxx Xx. 00000
ENLARGED SWITCHYARD DIAGRAM
Shiprock-Four Corners Project
345kV Switchyard
Interconnection Agreement
PacifiCorp / Pinto
230/345kV 230/345kV 345/500kV
Transformer Transformer Unit 4 Transformer
POS 1 POS 3 POS 5 POS 7
Enlarged
Switchyard
Breaker No. 2036
Interconnection
Facilities
(Ownership - APS
100%)
345kV
Switchyard
POS 2 POS 4 POS 6 POS 8
APS / Cholla APS / Cholla PNM / West Mesa PNM / San Xxxx
Switchyard Addition Ownership
---------
Western / Shiprock Ownership - - Existing Breakers APS 40.23% PNM 22.62%
APS 100% SCE 12.00% SRP 10.00%
EPE 10.50% TEP 4.65%
E1-1
EXHIBIT 2
INTERCONNECTION FACILITIES
--------------------------
The Interconnection Facilities shall be comprised of the items described below:
1. Dead end structures, poles, and associated equipment.
2. One (1) new 345-kV circuit breaker, one-half (1/2) of existing breaker
2036, two (2) 345-kV disconnect switches, one (1) set of three (3)
current transformers, and one (1) set of three (3) metering quality phase
coupling voltage transformers.
3. Insulators, bus jumpers, conductors, and associated hardware.
4. Protective equipment, metering, and control, monitoring and communication
equipment.
5. Site preparation which consists of foundations, trenches, conduit and
grounding.
6. 345-kV conductors from their points of attachment on Western's dead end
structure to the take-off structure in the 345-kV Switchyard.
7. Any Capital Improvements as may be added to the foregoing from time to
time.
E2-1
EXHIBIT 3
COMMON FACILITIES COSTS
-----------------------
ORIGINAL SWITCHYARD SWITCHYARD ADDITION
COMMON FACILITIES PAID COMMON FACILITIES PAID
FOR AND OWNED BY FOR AND OWNED BY
FOUR CORNERS PARTICIPANTS ARIZONA PUBLIC SERVICE
INSTALLED - 1995 INSTALLED - 1995
------------------------- ------------------------
COLUMN (1) (2)
COMMON FACILITIES
-----------------
LAND LEASED LEASED
YARD LIGHTING $ 9,869 $ 14,900
SITE & YARD WORK $ 46,683 $ 100,765
FENCES & GATES $ 6,802 $ 5,863
CONTROL HOUSE $ 58,147 $ 0
MAIN TRANSF & STRUCTURE $ 786,565 $ 0
BUS CONDUCTOR $ 89,441 $ 25,749
DISCONNECT SWITCHES $ 335,399 $ 0
BATTERY $ 95,829 $ 0
CONTROL & RELAYS $ 441,173 $ 0
CONNECTION & SUPPORT $ 548,131 $ 157,805
CARRIER CURRENT & PW PROTECT $ 365,409 $ 0
COMMUNICATION EQUIPMENT $ 425,270 $ 143,178
TOTAL
DIRECT COST (A) $ 3,208,718 $ 448,260 $ 3,656,978 (3)
NOTES:
------
1. Direct costs for column (1) facilities are actual and taken from APS' final
cost report dated July 1994, plus subsequent project work orders.
2. Direct costs for column (2) facilities are actual and taken from APS' final
cost project work orders from the years 1981 through 1994.
3. Does not include AFUDC
E3-1
EXHIBIT 4
ALLOCATION OF COMMON FACILITIES COSTS
-------------------------------------
ALLOCATION OF ENLARGED SWITCHYARD COMMON FACILITIES COSTS
--------------------------------------------------------------------------------------------------------------------------
Entity: APS SCE EPE PNM SRP TEP
--------------------------------------------------------------------------------------------------------------------------
1. Original 345-kV Switchyard
--------------------------
Responsibility for Costs - % 40.23 % 12.00 % 10.50 % 22.62 % 10.00 % 4.65 % (1)
Direct Cost = (1) x (A1, Exhibit 3) $1,290,867 $ 385,046 $336,915 $ 725,812 $ 320,872 $ 149,205 (2)
AFUDC $ (2) x 0.02 = $ 25,817 $ 7,701 $ 6,738 $ 14,516 $ 6,417 $ 2,984 (3)
Subtotals $1,316,684 $ 392,747 $ 343,653 $ 740,328 $ 327,289 $ 152,189 (4)
2. Switchyard Addition
-------------------
Responsibility for Costs - % 100 % 0 % 0 % 0 % 0 % 0 % (5)
Direct Cost = (5) x (A2, Exhibit 3) $ 448,260 $ 0 $ 0 $ 0 $ 0 $ 0 (6)
AFUDC $ (6) x 0.0163 = $ 7,307 $ 0 $ 0 $ 0 $ 0 $ 0 (7)
Subtotals $ 455,567 $ 0 $ 0 $ 0 $ 0 $ 0
Total (8)
Total Cost of
Common Facilities
= (2) + (3) + ( 6) + ( 7) $1,772,251 $ 392,747 $ 343,653 $ 740,328 $ 327,289 $ 152,189 $3,728,457
Notes
-----
(1) - from Section 7.2, Co-tenancy Agreement
(3) - AFUDC Estimated at 2 %
(7) - 1.63 % AFUDC Based on APS' Records
(8) - Total Common Facilities Costs to be allocated to the Interconnection
Participants (See Exhibit 5)
E4-1
EXHIBIT 5
CALCULATION OF COMMON FACILITIES USE FEE
----------------------------------------
1. Total Common Facility Costs $ 3,728,457
2. Common Facilities
Cost Allocated
to Interconnection (1) X (CRR) $ 372,846
----------------------------------------------------------------------------------------------------------------------
Interconnection Participant Western PSCO Tri-State
----------------------------------------------------------------------------------------------------------------------
3. Responsibility 50 % 25 % 25 %
4. Capital Charge
(2) X (3) $ 186,423 $ 93,211 $ 93,211
5. Gross Receipts Tax
@ 5.75% of (4) $ 10,719 $ 5,360 $ 5,360
6. One Time Charges
(4) + (5) $ 197,142 $ 98,571 $ 98,571
--------- --------- ---------
Total (SIGMA) (6) = $ 394,284
NOTES:
CRR = 10 % (See Exhibit 7)
(1) = Total Cost from Exhibit 4
(5) = Gross Receipts Tax may change from time to time
E5-1
EXHIBIT 6
%-RESPONSIBILITY FOR COSTS
--------------------------
Each Interconnection Participant's percent responsibility for costs and expenses
that are allocable, reasonable and allowable and allocated to it under this
Agreement shall be as follows: Western 50%, PSCO 25%, and Tri-State 25%.
Notes
-----
The following definitions are applicable to the costs as described above.
1. Allowable:
---------
A cost is allowable if it is determined to be reasonable, allocable, or
allowable under this Agreement and the FERC Accounts and is pursuant to
Standard Accounting Principles.
2. Reasonable:
----------
A cost is reasonable if, in its nature and amount, it does not exceed
that which would be incurred by a prudent person in the conduct of
business.
3. Allocable:
----------
A cost is allocable if it is assignable or chargeable to one or more
costs objectives on the basis of relative benefits received or other
equitable relationship. A cost is allocable if it is incurred
specifically by the Operating Agent for the purpose of performing
Operating Work under this Agreement. A cost may also be allocable if it
benefits both the Agreement and other work, and can be distributed to
them in reasonable proportion to the benefits received by them. A cost
is also allocable if it is necessary to the overall operation of the
Four Corners Switchyard as it relates to the Common Facilities or the
Interconnection Facilities.
E6-1
EXHIBIT 7
COST RESPONSIBILITY RATIO (CRR)
-------------------------------
The 1997 plan for the Enlarged Switchyard, as shown on Exhibit 1, provides for
ten (10) Functions: six (6) transmission lines, three (3) power transformer
banks, and one (1) power generating unit. A total of nine (9) Functions
currently exist in the Enlarged Switchyard and one (1) Function will be
installed hereunder for the use of the Interconnection Participants. The initial
computation of the Interconnection Participants' Cost Responsibility Ratio under
the aforementioned plan is as follows:
Y
Cost Responsibility Ratio = -----------
X + Y + Z
X = Number of Functions for the Four Corners Participants
Y = Number of Functions for Interconnection Participants
Z = Number of Functions for Third Parties. (Presently, there are no
Functions for third parties.)
Then: Cost Responsibility Ratio = 1/(9+1+0) = 1/10 = 10.0%
E7-1
EXHIBIT 8
METHOD OF DETERMINING
INSURANCE EXPENSES FOR COMMON FACILITIES
----------------------------------------
1) Total Plant - APS' Share $ 148,552,413 From 1999 FERC Form No. 1, Pg. 403, Line 16
2) Land and Plant Right - APS' Share $ 18,099 From 1999 FERC Form No. 1. Pg.403, Line 13
3) Plant (Less Land and Land Rights)
APS' Share = (1) - (2) $ 148,534,314
4) APS' Share = 15 % From Section 6.2.1, Co-tenancy Agreement
5) Plant (Less Land and Land Rights) - Estimated
Participants' Share = (3) [divide] (4) $ 990,228,760 (Estimated Value) 15% used in (4) does not
apply to common facilities, switchyard
facilities, etc.
6) Annual Insurance Expenses - Participants
All-risk Property $ 209,037
Boiler and Machinery $ 138,409
Liability $ 73,721
Broker/Loss Fees $ 43,583
-------
Total $ 467,750 1999 Expenses
7) Insurance Expenses/plant Cost - %
= (6) [divide] (5) 0.047 %
8) Enlarged Switchyard Common Facilities $ 3,728,457 Total Cost from Exhibit 4
9) Enlarged Switchyard Common Facilities
Insurance Expenses = (8) X (7) $ 1,752
10) Interconnection Participants' Share 10.0 % CRR from Exhibit 7
11) Interconnection Participants' CRR Share
Common Facilities Insurance Expenses = (10) X (9) $ 175
12) Interconnection Facilities Estimated Cost $ 1,096,038 From Exhibit 9
13) Interconnection Participants' CRR 100.0 %
14) Interconnection Participants'
Interconnection Facilities
Insurance Expenses = (12) X (13) X (7) $ 515
15) Interconnection Participants' Total
Annual Insurance Expenses = (11)+ (14) $ 690
E8-1
EXHIBIT 9
INTERCONNECTION FACILITIES CONSTRUCTION BUDGET
----------------------------------------------
Cost Type Amount
--------- ------
1. Engineering and Design and Project Management $ 142,150
2. Construction 252,888
3. Material 561,000
4. Site Preparation (Foundation, Grounding, Trench, and Conduit) 90,000
5. Protective Relays 50,000
-----------
Total $ 1,096,038
E9-1
EXHIBIT 10
DETERMINATION OF ITCC COMPOSITE RATE
------------------------------------
ITCC COMPOSITE RATE
COMMON FACILITIES
-----------------
Company Ownership (%) ITCC (%) Composite (%)
------- ------------- -------- ----------------
(1) (2) (3) = (1) x (2)
APS 40.23 31 12.47
EPE 10.50 35 3.68
PNM 22.62 33 7.46
SCE 12.0 34 4.08
SRP 10.0 0 0
TEP 4.65 40 1.86
Composite Rate (%) = (SIGMA) (3) = 29.55
ITCC COMPOSITE RATE
INTERCONNECTION FACILITIES
--------------------------
Company Ownership (%) ITCC (%) Composite (%)
------- ------------- -------- -------------
APS 100 31 31
E10-1
Exhibit 11
Page 1 of 2
EXHIBIT 11
CONSTRUCTION COSTS
------------------
Construction Costs shall consist of all payments made and all costs, expenses,
or obligations incurred for or in connection with Construction Work. Such costs
shall include, but not be limited to the following:
1. All of the Operating Agent's internal costs of labor, services and
studies performed as a part of Construction Work.
2. Payroll and other expenses of Operating Agent's employees performing
Construction Work, including without limitation properly allocated labor
loading charges, such as department overhead, time-off allowance,
payroll taxes, worker's compensation insurance, retirement and death
benefits and other employee benefits; provided, however, that the
Operating Agent, acting in good faith, may allocate to the Construction
Costs a reasonable percentage of the payroll and other expenses of any
employee who, in accordance with the Operating Agent's standard operating
procedures, does not keep time sheets.
3. All costs for components of Construction Work, including without
limitation overhead costs associated with Construction Work (including
properly allocated department overheads), as set forth in the Electric
Plant Instructions of the FERC System of Accounts.
4. All costs, including those of outside consultants and attorneys incurred
by the Operating Agent or the Four Corners Participants with respect to
the preparation of agreements relating to the Interconnection Facilities
or Construction Work, excluding this Agreement.
5. All costs of Apparatus, including rental charges, and construction power
for Construction Work.
6. All costs of insurance, including any amounts deductible from insured
claims.
7. All Federal, state or local taxes of any character imposed upon the
Interconnection Facilities, Construction Work or upon contributions made
by the Interconnection Participants toward the Construction Costs
(i.e., ITCC).
8. All costs of relocating existing facilities including without limitation
demolition and reconstruction, acquisition or lands and permits, and any
upgrades or modifications required by law or otherwise caused by
Construction Work.
E11-1
Exhibit 11
Page 2 of 2
9. All costs of enforcing or attempting to enforce the provisions of
insurance policies, payment and performance bonds, contracts executed by
the Operating Agent for Construction Work, and warranties obtained by the
Operating Agent and which are extended to the facilities to be provided
hereunder.
10. Any other costs listed or described in Exhibit 9 hereto.
11. An allowance for the Operating Agent's administrative and general
expenses, to cover the costs of services rendered by it in the performance
of Construction Work.
E11-2
EXHIBIT 12
CONSTRUCTION SCHEDULE
---------------------
ACTIVITY DATE
-------- ----
1. Engineering Start 2nd Week January 2001
2. One-line Diagram Complete 1st Week February 2001
3. Order Circuit Breakers and Switches 3rd Week August 2002
4. Receive Relay Information from Western 1st Week September 2002
5. Order Steel 3rd Week September 2002
6. Order Conductor 1st Week November 2002
7. Control Engineering Complete 3rd Week November 2002
8. Order CCVT and CT's 4th Week November 2002
9. Control Design Start 1st Week December 2002
10. Order Control Cable 2nd Week December 2002
11. Order Trenching 3rd Week December 2002
12. Receive Relays from Western 1st Week January 2003
13. Order Hardware 1st Week January 2003
14. Shop Panel Wiring Start 4th Week January 2003
15. Control Design Complete 1st Week February 2003
16. Site Preparation Design Complete 3rd Week February 2003
17. Site Preparation Start 4th Week February 2003
18. Electrical Equipment Design Complete 4th Week March 2003
19. Site Preparation Complete 4th Week March 2003
20. Control - Field Work Start 1st Week April 2003
21. Construction Start 1st Week April 2003
22. Construction Complete 3rd Week June 2003
23. In Service 4th Week June 2003
E12-1
