CONTRACT BETWEEN PUBLIC UTILITY DISTRICT NO. 1 OF CHELAN COUNTY, WASHINGTON, AND PUGET SOUND POWER & LIGHT COMPANY
Exhibit
10.3
CONTRACT
BETWEEN PUBLIC UTILITY DISTRICT
NO. 1
OF CHELAN COUNTY, WASHINGTON, AND
PUGET SOUND POWER &
LIGHT COMPANY
THIS
CONTRACT, Made and entered into this 14th day of November, 1957, by and between
PUBLIC UTILITY DISTRICT NO. 1 OF CHELAN COUNTY, WASHINGTON (hereinafter
called the ''District"), a municipal corporation organized and existing under
the laws of the State of Washington, and PUGET SOUND POWER & LIGHT
COMPANY (hereinafter called "Puget"), a private utility corporation organized
and existing under the laws of the State of Massachusetts,
W I T N E
S S E T H :
WHEREAS,
the District has heretofore, to wit: on January 6, 1956, entered into two
power contracts with Puget, one contract for the purchase, sale and interchange
of power and energy between the parties thereto in connection with the Rock
Island Hydro-Electric Production System of the District, created by Resolution
of the District No. 292, and the Columbia River-Rock Island Hydro-Electric
System created by Resolution of the District No. 1137, which power contract
is hereinafter referred to as the "Rock Island Contract," and the other contract
for the sale of power and energy by the District to Puget from the District's
Federal Power Commission licensed project No. 2145, known as the Rocky
Reach Hydro-Electric Power Project, which power contract is hereinafter referred
to as the "Rocky Reach Contract"; and
WHEREAS,
the District and Puget on the twentieth day of November, 1956, entered into a
Supplemental Power Contract (hereinafter referred to as "Supplemental Power
Contract"), modifying and supplementing the Rock Island Contract and the Rocky
Reach Contract; and
WHEREAS,
the Commissioners of the District on the twentieth day of November, 1956 adopted
Resolution No. 1412, providing a plan and system for the acquisition and
construction of an electric utility system known as the Rocky Reach
Hydro-Electric System (Federal Power Commission licensed project No. 2145)
and pursuant thereto issued $23,100,000 of revenue bonds (hereinafter referred
to as "Series of 1956 Bonds") to defray a portion of the cost of the acquisition
and construction of the Rocky Reach Hydro-Electric Power Project (hereinafter
referred to as the "Project"), and
WHEREAS,
at the time said Supplemental Power Contract was entered into and said
Resolution No. 1412 of the District was adopted, it was contemplated that
the balance of the Project could be financed by the issuance of $227,500,000
Subsequent Series Bonds with a resultant estimated average annual cost of power
of not exceeding Nineteen and 93/100 Dollars ($19.93) per kilowatt year (and not
exceeding Twenty-one and 75/100 Dollars ($21.75) per kilowatt year during any
twelve (12) months' period ending July first); and
WHEREAS,
under the terms of said Rocky Reach Contract as modified and supplemented,
neither the District nor Puget was obligated to proceed with the construction of
the Project or to take power therefrom if such power costs should exceed those
specified in the Supplemental Power Contract; and
WHEREAS,
said Project cannot be financed and constructed with resultant power costs
within said limitations on the cost of power and the District is unable, within
the framework of said Rocky Reach Contract as supplemented and modified by the
Supplemental Power Contract to proceed with the construction of the Project and
to perform in accordance with the terms of said Rocky Reach Contract as so
supplemented and modified, and it is in the interest of the District, Puget and
the holders of Series of 1956 Bonds that the construction of the Project proceed
expeditiously and to that end the Rocky Reach Contract and Supplemental Power
Contract be cancelled and superseded by the within contract; and
WHEREAS,
the execution of this contract will enable the District to enter into Power
Sales Contracts for the sale of power from the Project to others and for the
District to proceed with the financing and construction of the Project, which
would not otherwise be possible, and thereby to improve the security of said
bondholders,
NOW,
THEREFORE, for and in consideration of the premises and of the covenants and
undertakings of the parties hereinafter set forth, the parties hereto covenant
and agree as follows:
SECTION
1.
The Rocky
Reach Contract and the Supplemental Power Contract are hereby cancelled and
superseded by the within contract.
SECTION
2. Definitions.
(A) The
term "Rocky Reach Hydro-Electric System Revenue Bonds" shall mean the electric
revenue bonds issued or partly issued and to be issued by the District and at
any time outstanding for the purpose of providing funds for the payment of all
costs of the District incurred in connection with the financing, acquisition and
construction of the Project, including, but without limitation, amounts required
to pay interest on all of said bonds during the estimated period of construction
and for such additional period or periods thereafter as shall be specified in
the resolution or resolutions authorizing the issuance of said bonds, to provide
working capital, to repay any advances made by Puget or others in connection
with the investigation, development and/or construction of the Project which are
repayable out of the proceeds of said bonds, and to provide the amounts required
for the Reserve Account in the Bond Fund and for the Reserve and Contingency
Fund as provided for in the resolution or resolutions authorizing the issuance
of said bonds, and shall include Series of 1956 Bonds and Subsequent Series
Bonds.
(B) The
term "Subsequent Series Bonds" shall mean the Rocky Reach Hydro-Electric System
Revenue Bonds to be issued by the District pursuant to a resolution or
resolutions to be adopted as authorized under the provisions of Resolution
No. 1412, to pay all of the estimated costs of the financing, acquisition
and construction of the Project in the aggregate principal amount estimated to
be necessary for that purpose when supplemented by the proceeds of the Series of
1956 Bonds, including, but without limitation, amounts required to pay the costs
and expenses enumerated in paragraph (A) of this
Section 2.
(C) The
term "Spillway Section of the Project" shall mean that portion of the Project
acquired and constructed with the proceeds of the Series of 1956 Bonds,
including but not limited to the east concrete spillway section and abutment
section, concrete retaining walls, lands, easements, flood rights and water
rights.
(D) The
term "Stage 1 Construction" shall mean that portion of the construction of
the Project as described in the Districts Invitation For Bids For Stage 1
Construction Rocky Reach Hydro-Electric Power Project, dated June 15, 1956,
the Contract Documents relating thereto, and the applicable
addenda.
SECTION
3.
Puget has
heretofore paid to the District, as an advance partial payment for power and
energy to be made available to Puget from the Project, the sum of One Million
and Five Hundred Thousand Dollars ($1,500,000), which amount, together with any
future advances of like kind, shall promptly be repaid to Puget from the
proceeds of the Subsequent Series Bonds initially underwritten.
SECTION
4.
Until the
District has issued, sold and delivered the Subsequent Series Bonds, or until
the indebtedness evidenced by the Series of 1956 Bonds has been paid or
refunded, whichever is earlier, Puget agrees that, in the event of deficiency in
the Bond Fund created and established by Resolution No. 1412 for the
payment of the Series of 1956 Bonds, it will pay to the District in addition to
all other payments by Puget to the District under the Rock Island Contract, in
monthly installments beginning not earlier than July 1, 1958, an annual
surcharge on the amounts payable by Puget to the District pursuant to
Section 4 of the Rock Island Contract (hereinafter referred to as the
"Surcharge"), in an amount equal to the sum of the following costs of the
District:
(a) The
amounts required in any year to make up any deficiency in the amounts required
by the provisions of Resolution No. 1412 to be paid into the Bond Fund for
the payment of the principal of, and interest, and premium, if any, on the
Series of 1956 Bonds at any time outstanding;
(b) The
amounts annually required to pay the necessary costs and expenses of maintenance
of the Spillway Section of the Project, and
(c) The
amounts annually required to pay governmental taxes, assessments or other
similar charges, or reasonable payments in lieu thereof, lawfully imposed upon
or incurred by the District by reason of the additional payments herein provided
to be made by Puget to the District as provided in subparagraphs (a) and
(b) of this Section 4, and by reason of the ownership by the District of
the Spillway Section of the Project.
Puget
shall be entitled to credit on the amounts so to be paid in an amount equal to
the interest received by the District by reason of the investment of moneys in
the Reserve Account in the Bond Fund created by Resolution No. 1412 for the
Series of 1956 Bonds, and any miscellaneous net revenues derived by the District
by reason of the ownership of the Spillway Section of the Project; provided that
during the period of construction of Stage 1 Construction the interest
received by the District by reason of the investment of moneys in said Reserve
Account shall be transferred to the Construction Fund for the
Project.
Sixty per
cent (60%) of any such payments when received by the District shall be deposited
in the Revenue Fund created by said Resolution No. 292, and forty per cent
(40%) thereof in the, Revenue Fund created by said Resolution No. 1137,
and, subject to the requirements of said Resolutions Nos. 292 and 1137, an
amount equal to each of said amounts shall promptly be transferred by the
District from said respective Revenue Funds to the Bond Fund created by
Resolution No. 1412 for the Series of 1956 Bonds.
The
xxxxxxxx provided for in Section 9 of said Rock Island Contract shall
include the Surcharge provided for in this Section 4. Amounts
payable by Puget to the District pursuant to paragraph (a) of this
Section 4 shall be paid on or before the twentieth day of each calendar
month in which such payment is required.
If the
District takes power and energy from the Rock Island Plant under the provisions
of said Rock Island Contract, the District agrees to pay to Puget from that
portion of the revenues received by the District from the ownership and
operation of the Rock Island Plant, other than revenues received from Puget,
including the revenues from the sale of power and energy from said Rock Island
Plant to other systems of the District, in addition to all other payments
payable by the District to Puget under said Rock Island Contract, that
proportionate part of the Surcharge which Puget shall have paid pursuant to this
Section 4 that the District's payments under Section 7 of the Rock
Island Contract bear to Puget's payments under Section 4 of the Rock Island
Contract.
If and
when the District issues, sells and delivers all of the Subsequent Series Bonds,
or the indebtedness evidenced by the Series of 1956 Bonds has been paid or
refunded, then the undertakings of the parties hereto as set forth in Sections 4
and 5 hereof shall thereupon terminate and shall be of no further force or
effect.
SECTION
5.
The
District agrees that on and after December 16, 1958, or on and after such
earlier date as the District is able to obtain delivery of power and energy from
the Bonneville Power Administration in amounts sufficient to serve the load
requirements of the District's distribution system, the District will not take
power and energy from the Rock Island Plant pursuant to Section 6 of the
Rock Island Contract, and the District will not at any time after the date
hereof serve any notice, pursuant to said Section 6, to take power and
energy after December 16, 1958, or such earlier date as the District is
able to obtain delivery of power and enery from Bonneville Power Administration
as aforesaid in excess of the following amounts, to wit:
A. From
December 16, 1958, or such earlier date, until December 31, 1966,
12,000 kilowatts or such portion thereof as is required by the District in
addition to the power and energy obtainable from the Bonneville Power
Administration under rates, terms and conditions consistent with sound business
practices and which will properly and advantageously contribute to the conduct
of the business of the District, to serve the load requirements of the
District's Distribution System; and
B. Thereafter
as set forth in the table below, viz:
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Year
of
Withdrawal
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Amounts
–
Not
More Than:
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||
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1967
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15,500
KW
|
||
|
1968
|
24,500
KW
|
||
|
1969
|
34,000
KW
|
||
|
1970
|
44,000
KW
|
||
|
1971
|
55,500
KW
|
||
|
1972
|
67,500
KW
|
||
|
1973
|
80,500
KW
|
||
|
1974
|
94,500
KW
|
||
|
1975
|
110,000
KW
|
||
|
1976
and thereafter during the life of
the Rock Island Power Contract
|
124,500
KW
|
||
The term
"load requirements of the District's Distribution System" as used herein shall
mean the power and energy required to serve the loads specified in
Section 6 of the Rock Island Contract and the load in Xxxxxxx County,
Washington, in connection with the construction of the Rocky Reach
Project.
SECTION
6. Rock Island
Contract.
The Rock
Island Contract is hereby amended as follows:
1. Section 4
thereof is hereby amended to include in the payments to be made by Puget to the
District pursuant to said Section 4 the payments to be made by Puget to the
District pursuant to Section 4 hereof, the payment of which shall be
enforceable in the manner provided in Section 9 thereof.
2. Section 6
thereof is amended to conform to the provisions of Section 5
hereof.
3. Section 7
thereof is amended to conform to the provisions of Section 4 hereof
relating to the payments by the District to Puget for the payment by the
District of its proportionate share of the Surcharge on power and energy of the
Rock Island Plant taken by the District under the terms of Section 5
hereof.
4. Section 9
thereof relating to xxxxxxxx is amended to conform to the provisions of
Section 4 hereof relating to xxxxxxxx.
5. Section 10
thereof with reference to the use of moneys in the Revenue Funds of the Rock
Island Plant is hereby amended to permit the transfer of the Surcharge to the
Bond Fund created by Resolution No. 1412 for the Series of 1956 Bonds,
pursuant to the provisions of Section 4 hereof.
6. The
last paragraph of Section 14 thereof is hereby amended to permit the use of
the revenues of the System and the Production System (as such systems are
defined in said Rock Island Contract) to be used, to the extent of the
Surcharge, as is herein provided in Section 4 hereof.
7. Section 14
thereof is amended by changing the period at the end of the first paragraph of
said Section to a comma and adding the words, "and the proceeds of any policies
of insurance covering any such loss of revenue shall be paid into the Revenue
Fund and credited against the payments required to be made by Puget to the
District pursuant to Section 4 hereof, and such credit shall be reflected
in xxxxxxxx pursuant to Sections 4 and 7 hereof."
Except as
specifically amended herein, said Rock Island Contract shall remain in full
force and effect.
IN
WITNESS WHEREOF, the parties hereto have hereunto set their hands and seals the
day and year first above written.
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PUBLIC
UTILITY DISTRICT NO. 1
OF
CHELAN COUNTY, WASHINGTON
By /s/ X. X.
Xxxxxxxxxx
President
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ATTEST:
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/s/
Xxxx X.
Xxxxxxx
Secretary
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PUGET
SOUND POWER & LIGHT COMPANY
By /s/ Xxxxx
XxXxxxxxxx
President
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ATTEST:
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/s/
Xxxxx X.
Xxxxx
Secretary
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