Exhibit B-1
Form of Service Agreement
This Service Agreement (this "Agreement") is entered into as of the
____day of _______, 2000, by and between [insert name of subsidiary],
a__________ corporation (the "Company") and Sierra Pacific Resources Services
Company, a Nevada corporation ("SPRSC").
WHEREAS, SPRSC is a direct or indirect wholly owned subsidiary of
Sierra Pacific Resources Inc. WHEREAS, SPRSC has been formed for the purpose of
providing administrative, management and other services to subsidiaries of
Sierra Pacific Resources Inc.; and
WHEREAS, the Company believes that it is in the interest of the
Company to provide for an arrangement whereby the Company may, from time to time
and at the option of the Company, agree to purchase such administrative,
management and other services from SPRSC;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto, intending to be legally bound,
hereby agree as follows:
I. SERVICES. SPRSC supplies, or will supply, certain administrative,
management or other services to Company similar to those supplied to other
subsidiaries of Sierra Pacific Resources, Inc. Such services are and will be
provided to the Company only at the request of the Company. Exhibit I hereto
lists and describes all of the services that are available from SPRSC.
II. PERSONNEL. SPRSC provides and will provide such services by
utilizing the services of their executives, accountants, financial advisers,
technical advisers, attorneys and other persons with the necessary
qualifications.
III. COMPENSATION AND ALLOCATION. As and to the extent required by
law, SPRSC provides and will provide such services at cost. Exhibit I hereof
contains rules for determining and allocating such costs.
IV. LIMITATION OF LIABILITY AND INDEMNIFICATION. In performing the
services hereunder, SPRSC will exercise due care to assure that the services are
performed appropriately, meet the standards and specifications set forth in any
applicable request for service and comply with the standards of all applicable
laws and regulations. However, failure to meet these obligations shall in no
event subject SPRSC to any claims by or liabilities to the Company other than to
reperform the services and be reimbursed at cost for such reperformance. SPRSC
makes no other warranty with respect to its performance of the services, and the
Company agrees to accept such services without further warranty of any nature.
To the fullest extent allowed by law, the Company shall and does hereby
indemnify and agree to save harmless and defend SPRSC, its agents and employees
from liabilities, taxes, losses, obligations, claims, damages, penalties, causes
of action, suits, costs and expenses or judgments of any nature, on account of,
or resulting from the performance and prosecution of any services performed on
behalf of the Company pursuant to this Agreement, whether or not the same
results or allegedly results from the claimed or actual negligence or breach of
warranty of, or willful conduct by, SPRSC or any of its employees, agents,
clients, or contractors or its or their subcontractors or any combination
thereof.
V. TERMINATION AND MODIFICATION. The Company may terminate this
Agreement by providing 60 days written notice of such termination to SPRSC.
SPRSC may terminate this Agreement by providing 60 days written notice of such
termination to the Company.
This Agreement is subject to termination or modification at any time
to the extent its performance may conflict with the provisions of the Public
Utility Holding Company Act of 1935, as amended, or with any rule, regulation or
order of the Securities and Exchange Commission adopted before or after the
making of this Agreement. This Agreement shall be subject to the approval of any
state commission or other state regulatory body whose approval is, by the laws
of said state, a legal prerequisite to the execution and delivery or the
performance of this Agreement.
VI. ANNUAL SERVICE REQUESTS. SPRSC will send an Annual Service Request
to the Company each year on or before _____________ of each year listing
services proposed for the coming year based on services provided during the past
year.
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VII. ACCESS TO BOOKS AND RECORDS. To facilitate participation by the
Company in an annual review of the performance of SPRSC to be conducted by all
companies receiving services from SPRSC, the Company shall have access to the
books and records of SPRSC during normal business hours. The Company agrees to
make all reasonable efforts to ensure that such access does not impair the
ability of SPRSC to fulfill its obligations under any service agreement.
VIII. NOTICE. Where written notice is required by this Agreement, all
notices, consents, certificates, or other communications hereunder shall be in
writing and shall be deemed given when mailed by United States registered or
certified mail, postage prepaid, return receipt requested, addressed as follows:
(a) To the Company:
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(b) To SPRSC:
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IX. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Nevada, without regard to their
conflict of laws provisions.
X. MODIFICATION. No amendment, change or modification of this
Agreement shall be valid, unless made in writing and signed by all parties
hereto.
XI. ENTIRE AGREEMENT. This Agreement, together with its exhibits,
constitutes the entire understanding and agreement of the parties with respect
to its subject matter, and effective upon the execution of this Agreement by the
respective parties hereof and thereto, any and all prior agreements,
understandings or representations with respect to this subject matter are hereby
terminated and canceled in their entirety and are of no further force or effect.
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XII. WAIVER. No waiver by any party hereto of a breach of any
provision of this Agreement shall constitute a waiver of any preceding or
succeeding breach of the same or any other provision hereof.
XIII. ASSIGNMENT. This Agreement shall inure to the benefit and shall
be binding upon the parties and their respective successors and assigns. No
assignment of this Agreement or any party's rights, interests or obligations
hereunder may be made without the other party's consent, which shall not be
unreasonably withheld, delayed or conditioned.
XIV. SEVERABILITY. If any provision or provisions of this Agreement
shall be held by a court of competent jurisdiction to be invalid, illegal, or
unenforceable, the validity, legality, and enforceability of the remaining
provisions shall in no way be affected or impaired thereby.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of this ________ day of ________, 2000.
SPRSC
By:
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Name:
Title:
[Subsidiary]
By:
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Name:
Title:
The undersigned requests all of the services listed in Exhibit I from
SPRSC, except for _______________________________________. Services will begin
_____________.
[Subsidiary]
By:
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Name:
Title:
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EXHIBIT I
Description of Services, Cost Accumulation, Assignment and
Allocation Methodologies for SPRSC
This document sets forth the methodologies used to accumulate the
costs of services performed by Sierra Pacific Resources Service Company
("SPRSC") and to assign or allocate such costs to other subsidiaries and
business units within Sierra Pacific Resources ("Client Entities").
Cost of Services Performed
SPRSC maintains an accounting system that enables costs to be
identified by Cost Center, Account Number or Project, Activity, and Resource
("Account Codes"). The primary inputs to the accounting system are time records
of hours worked by SPRSC employees, accounts payable transactions and journal
entries. Charges for labor are made at the employees' effective hourly rate,
including the cost of pensions, other employee benefits and payroll taxes. To
the extent practicable, costs of services are directly assigned to the
applicable Account Codes. The full cost of providing services also includes
certain indirect costs, e.g., departmental overheads, administrative and general
costs, and taxes. Indirect costs are associated with the services performed in
proportion to the directly assigned costs of the services or other relevant cost
allocators. Cost Assignment and Allocation SPRSC costs will be directly
assigned, distributed or allocated to Client Entities in the manner prescribed
below.
1. Costs accumulated in Account Codes for services specifically performed
for a single Client Entity will be directly assigned or charged to
such Client Entity.
2. Costs accumulated in Account Codes for services specifically performed
for two or more Client Entities will be distributed among and charged
to such Client Entities using methods determined on a case-by-case
basis consistent with the nature of the work performed.
3. Costs accumulated in Account Codes for services of a general nature
which are applicable to all Client Entities or to a class or classes
of Client Entities will be allocated among and charged to such Client
Entities by application of one or more of the allocation methods
described below.
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Allocation Methods
The following methods will be applied, as indicated in the Description
of Services section that follows, to allocate costs for services of a general
nature.
a. Commercial Sales Ratio
Based on firm kilowatt-hour electric sales to business customers that
purchase less than 250 kilowatts for the immediate preceding year, the numerator
of which is for an Operating Company or an affiliate and the denominator of
which is for all Operating Companies and affected affiliate companies. This
ratio will be determined annually, or at such time as may be required due to a
significant change.
b. Commercial & Industrial Sales Ratio
Based on kilowatt-hour electric sales to large commercial and
industrial customers that purchase greater than 250 kilowatts for the immediate
preceding year, the numerator of which is for an Operating Company or commercial
and industrial customers that purchase greater than 250 kilowatts for the
immediate preceding year and the denominator of which is for all Operating
Companies and affected affiliate companies . This ratio will be determined
annually, or at such time as may be required due to a significant change.
c. Distribution Plant Ratio
Based on the net distribution plant balance at the end of the
immediate preceding year end, the numerator of which is for an Operating Company
or an affected affiliate company and the denominator of which is for all
Operating Companies and affected affiliate companies. This ratio will be
determined annually, or at such time as may be required due to a significant
change.
d. Electric kWh Generation Ratio
Based on the electric kWh generated for the immediately preceding
year, the numerator of which is for an Operating Company and the denominator of
which is for all Operating Companies. This ratio will be determined annually, or
at such time as may be required due to significant changes.
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e. Electric kWh Purchased Ratio
Based on the electric kWh purchased for the immediately preceding
year, the numerator of which is for an Operating Company and the denominator of
which is for all Operating Companies. This ratio will be determined annually, or
at such time as may be required due to significant changes.
f. Total kWh Sales Ratio
Based on total kilowatt-hour electric sales (and/or the equivalent
cubic feet of natural gas sales based on a Btu content, where applicable),
excluding inter-system sales, for the immediately preceding year, the numerator
of which is for an Operating Company or an affiliate and the denominator of
which is for all Operating Companies and affected affiliate companies . This
ratio will be determined annually, or at such time as may be required due to a
significant change.
g. Payment Transaction Ratio
Based on the sum of the number of payment transactions processed for
the immediately preceding year, the numerator of which is for an Operating
Company or an affected affiliate company and the denominator of which is for all
Operating Companies and affected affiliate companies. This ratio will be
determined annually, or at such time as may be required due to significant
changes.
h. Residential Sales Ratio
Based on kilowatt-hour electric sales to residential customers for the
immediate preceding year, the numerator of which is for an Operating Company or
an affiliate and the denominator of which is for all Operating Companies and
affected affiliate companies . This ratio will be determined annually, or at
such time as may be required due to a significant change.
i. Substation Plant Ratio
Based on the sum of the net substation plant balance for the
immediately preceding year, the numerator of which is for an Operating Company
or an affected affiliate company and the denominator of which is for all
Operating Companies and affected affiliate companies. This ratio will be
determined annually, or at such time as may be required due to a significant
change.
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j. Total Assets Ratio
Based on the sum of the total assets at the end of the immediate
preceding year, the numerator of which is for an Operating Company or affected
affiliate company and the denominator of which is for all Operating Companies
and affected affiliate companies. This ratio will be determined annually, or at
such time as may be required due to significant changes.
k. Total Common Equity Ratio
Based on the common equity at the end of the immediately preceding
year, the numerator of which is for an Operating Company or an affected
affiliate company and the denominator of which is for all Operating Companies
and affected affiliate companies. This ratio will be determined annually, or at
such time as may be required due to significant changes.
l. Total Customers Ratio
Based on the total electric customers (and/or gas or water customers,
or residential, business and large commercial and industrial customers where
applicable) at the end of the immediately preceding year, the numerator of which
is for an Operating Company or an affected affiliate company and the denominator
of which is for all Operating Companies and affected affiliate companies. This
ratio will be determined annually, or at such time as maybe required due to a
significant change.
m. Total Employees Ratio
Based on the number of employees at the end of the immediately
preceding year, the numerator of which is for an Operating Company or an
affected affiliate company and the denominator of which is for all Operating
Companies and affected affiliate companies. This ratio will be determined
annually, or at such time as may be required due to a significant change.
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n. Total Revenue Ratio
Based on the revenue at the end of the immediately preceding year, the
numerator of which is for an Operating Company or an affected affiliate company
and the denominator of which is for all Operating Companies and affected
affiliate companies. This ratio will be determined annually, or at such time as
may be required due to significant changes.
o. Transmission Plant Ratio
Based on the net transmission plant balance at the end of the
immediately preceding year, the numerator of which is for an Operating Company
or an affected affiliate company and the denominator of which is for all
Operating Companies and affected affiliate companies. This ratio will be
determined annually, or at such time as may be required due to a significant
change.
A description of each of the services that may be performed by SPRSC,
which may be modified from time to time, is presented below. As discussed above,
where identifiable, costs will be directly assigned or distributed to Client
Entities. For costs accumulated in Account Codes which are for services of a
general nature that cannot be directly assigned or distributed, the method or
methods of allocation are also set forth. Substitution or changes may be made in
the methods of allocation hereinafter specified, as may be appropriate, and will
be provided to state regulatory agencies and to each affected Client Entity.
a. Accounting
Maintains the books and records of Sierra Pacific Resources and its
affected affiliates, prepares financial and statistical reports,
prepares tax filings and supervises compliance with the applicable
laws and regulations. Supports the accounting systems.
b. Administration Support
Provides mailroom, records management, graphics, aircraft and other
general administrative and support activities.
c. Community And Economic Development
Provides community support and economic development services to the
service territories of the Operating Companies.
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d. Corporate Communications
Prepares and disseminates information to employees, customers,
government agencies, communities and the media.
e. Corporate Planning
Facilitates preparation of strategic plans, monitors trends and
evaluates business opportunities. Facilitates process improvements.
Prepares budgets and financial forecasts.
f. Custom Account Sales
Provides sales services to large commercial and industrial customers
of the Operating Companies.
g. Customer Services
Performs customer billing, performs meter services, handles customer
inquiries, remittance processing and complaints and provides related
customer information services.
h. Design Engineering
Designs and monitors construction of electric transmission and
distribution lines and substations.
i. Business Support Services
Provides planning, benchmarking, activity tracking and budget support
services to the operating companies.
j. Bulk Power Transport
Supervises and coordinates the electric transmission system control
operations for the operating companies.
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k. Environmental
Establishes policies and procedures for compliance with environmental
laws and regulations. Researches emerging environmental issues and
monitors compliance with environmental requirements. Oversees
environmental clean up projects.
l. Executives
Provides executive management and general administrative services.
m. Facilities and Real Estate
Operates and maintains office buildings and service centers. Procures
real estate and administers real estate leases. Administers contracts
to provide security, housekeeping and maintenance services for such
facilities. Procures office furniture and equipment.
n. Finance and Treasury
Coordinates activities related to securities issuance, including
maintaining relationships with financial institutions, cash
management, investing activities and monitoring the capital markets.
Performs financial and economic analysis and administers insurance
program.
o. Governmental Affairs
Lobbies government officials and monitors, reviews and researches
governmental legislation.
p. Human Resources
Establishes and administers policies and supervises compliance with
legal requirements in the areas of employment, compensation, benefits
and employee health, welfare and safety. Processes payroll and
employee benefit payments. Coordinates contract negotiation and
relations with labor unions.
q. Information Systems
Plans, designs, engineers, installs, operates, and maintains the
companies' voice and data networks.
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r. Internal Audit
Reviews internal controls and procedures to ensure assets are
safeguarded and transactions are properly authorized and recorded.
Evaluates contract risks.
s. Legal
Provides legal services related to labor and employment law,
litigation, contracts, rates and regulation, environmental matters,
real estate and other legal matters.
t. Marketing Services
Provides marketing services including market load research and new
product development for operating companies and affiliates.
u. Payment and Reporting
Processes payments to vendors of Sierra Pacific Resources and its
affected affiliates, and prepares statistical reports.
v. Purchased Power and Electric Trading
Purchases power and provides electric trading services to the
operating companies electric generation systems, including risk
management, weather risk, and contract management.
w. Rates and Regulation
Determines the operating companies' revenue requirements and rates for
electric, gas and water customers. Coordinates regulatory compliance
requirements and maintains relationships with the regulatory bodies.
x. Residential and Business Sales
Provides sales and support to electric residential and business
customers of the operating companies.
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y. Resource Acquisition and Analysis
Manages fuels for the operating companies generation facilities.
Ensures compliance with price and quality provisions of fuel contracts
and arranges for transportation of fuel to the desired location.
z. Shareholder Relations
Provides communications to investors and the financial community.
Coordinates the transfer agent and shareholder record keeping
functions.
aa. Substation Engineering and Support
Provides management support services to the substation engineering and
support organizations of the operating companies.
bb. Supply Chain
Provides services in connection with the procurement of materials
including the management of materials and supplies inventories.
cc. Transmission Support Services
Provides management support services to the transmission construction,
maintenance, operations and engineering and right of way organizations
of the operating companies.
dd. Transportation
Oversees the operating companies' fleet.
ee. Wholesale and Bulk Power Sales
Provides sales and to support to electric wholesale customers of the
operating companies.
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ff. Generation Support Services
Provides management, drafting, and engineering services for all power
plants, unit commitment and maintenance scheduling and centralized
maintenance crews that serve power plants, as well as new technology
evaluation.
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