HomeMy WebLinkAboutAELP KGCMC PSA final 2005AGREEMENT FOR THE SALE AND PURCHASE
OF
INTERRUPTIBLE ENERGY
between
ALASKA ELECTRIC LIGHT AND POWER COMPANY
and
KENNECOTT GREENS CREEK MINING COMPANY
Section 1
Section 2
Section 3
Section 4
Section 5
Section
Section 7
::Section 8
;Section 9
'Exhibit A
Exhibit B
Exhibit C
Exhibit D
Exhibit E
Exhibit F
Exhibit G
Page
TABLE OF CONTENTS
Recitals ......................................... ..................
1
Definitions..............................................................
3
Electric Service to Be Provided ......................................
6
Rates & Charges; Metering & Billing ...............................
10
Term......................................................................
12
Delivery Facilities&Payment Therefor.. ..........................
15
Operations...............................................................
15
Protecting Equipment & Power Quality ..............................
16
Provisions Relating to Legal Matters ..................................
17
Greens Creek Mine .......................................................
26
Delivery Facilities & Equipment; Points of Interconnection....
29
Intertie and KGCMC Transmission Segment ......................
32
Energy Charges and Related Matters ................................
34
Lake Dorothy Hydroelectric Project Description ...................
41
Transmission Charges ..................................................
47
Prior Interruptible Customers ..........................................
48
■ Id' iali®ui 's�A 1, err i
SPECIAL CONTRACT FOR POWER SALES
THIS SPECIAL CONTRACT FOR POWER SALES (this "Agreement") is entered into
on the 13th day of July, 2005, between Alaska Electric Light and Power Company ("AELP"), an
Alaska corporation whose mailing address is 5601 Tonsgard Court, Juneau, Alaska 99801, and
Kennecott Greens Creek Mining Company ("KGCMC"), a Delaware corporation, whose
mailing: address is P.O. Box 32199, Juneau, Alaska 99803-2199.
Section 1. RECITALS
WITNESSETH:
WHEREAS, KGCMC holds a majority interest in the Greens Creek Joint Venture and, in
,its capacity as the Manager of the Greens Creek Joint Venture, operates the Greens Creek Mine
-;("Mine") and the Hawk Inlet Tails/Ore Loading Facility ("Tails/Ore Loading Facility") on
;Admiralty Island in Southeast Alaska, as described in Exhibit A (Greens Creek Mine); and
WHEREAS, KGCMC is authorized to bind the Greens Creek Joint Venture (and the
individual joint venturers) to perform this special contract; and
WHEREAS, KGCMC's operations at the Mine and the Tails/Ore Loading Facility
provide a major source of local employment and significantly stimulate the local economy; and
WHEREAS, in recognition of these economic benefits, and to help assure that such
benefits continue for as long as possible, the Federal ;government will provide grant funding for
construction of all or significant portions of a transmission line segment linking the Mine (and,
separately, to the extent required for this purpose, the Tails/Ore Loading Facility) with the
transmission line known as the Juneau/Greens Creek/Hoonah Intertie that will ultimately link
the communities of Juneau and Hoonah, Alaska; and
AELP-KGCMC SPECIAL CONTRACT 1
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WHEREAS, absent the KGCMC Transmission Segment and the Intertie, KGCMC would
continue to generate all of its own electric power to meet the load requirements of the Mine and
the Tails/Ore Loading Facility; and
WHEREAS, such self -generation by KGCMC of its entire electric load requirements
would represent a foregone opportunity for KGCMC's loads to benefit other customers of AELP
and. other users of the Intertie, and would also produce air emissions and other potential
environmental impacts that can be avoided if and to the extent that KGCMC is supplied with
electric power via the Intertie and the KGCMC Transmission Segment under terms and
conditions that make it advantageous to KGCMC and AELP's other customers for KGCMC to
buy power from AELP and limit such self -generation; and
WHEREAS, AELP is an electric utility that provides electric power and related services
to customers throughout the Juneau area; and
WHEREAS, AELP currently has surplus electric energy available from the Snettisham
Hydroelectric Project and AELP's other hydroelectric resources, depending on annual water
<conditions; and
WHEREAS, by connecting to the AELP System via the Intertie and the KGCMC
Transmission Segment, and by purchasing otherwise surplus electric energy from AELP,
KGCMC may reduce the operation of its own generators and related facilities and equipment;
and
WHEREAS, KGCMC has agreed to incur the capital costs of constructing and installing,
and to bear all expenses of operating and maintaining, certain KGCMC electrical substations and
related delivery facilities and equipment at the Mine and at the Tails/Ore Loading Facility that
are needed in order to allow KGCMC to receive electric energy from AELP at these locations;
and
WHEREAS, AELP has determined that selling otherwise surplus interruptible electric
energy to KGCMC under the terms and conditions of this Agreement will benefit AELP's other
customers by making revenue contributions that reduce the costs that AELP's other customers
would otherwise bear; and
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WHEREAS, the Intertie will, in the future, provide the opportunity to bring power to the
community of Hoonah; and
WHEREAS, the Regulatory Commission of Alaska, which regulates AELP's rates,
tariffs, and conditions of service, has previously reviewed and approved special contracts for
AELP's sale of interruptible electric energy on terms similar to those set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants herein set forth, the
Parties agree as follows:
Section 2. DEFINITIONS
(a) AELP System. The electric generation and transmission facilities owned or operated
by AELP from time to time (including but not limited to Snettisham, Lake Dorothy, and such
transmission lines and associated transmission facilities as are necessary for AELP to deliver
power from the AELP System to the Intertie for delivery and sale to KGCMC).
(b) Agreement. This special contract for the sale and delivery, and the purchase and
receipt, of electric power by AELP to KGCMC.
(c) Applicable Rate. The energy rate per kilowatt-hour charged by AELP from time to
time as specified in Exhibit D (Energy Charges and Related Rate Matters).
(d) Commercial Operation Date (or "COD"). With respect to Lake Dorothy, the first
date :on which the hydroelectric project, having successfully completed startup and testing, is (i)
certified by the responsible professional engineer as (A) having achieved and maintained on a
continuous basis actual performance that is reasonably consistent with its designed capacity and
energy production capability, and (B) being suitable for providing electric service to AELP's
utility loads, and (ii) formally accepted by AELP by appropriate written notice to the
construction contractor or other suitable individual or entity. Where this Agreement speaks of
Lake Dorothy having "achieved commercial operation," said term shall be understood to refer to
Lake Dorothy having obtained certification and acceptance as specified here.
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(e) Delivery Points. The physical locations at which Interruptible Energy is delivered by
AELP to KGCMC and received by KGCMC from AELP, specified in Exhibit B (Delivery
Facilities & Equipment; Points of Interconnection).
(f) Effective Date. The date on which this Agreement, having first been executed by the
Parties, receives the last of any Necessary Approvals.
(g) Electric Power (or power . Electric energy (measured in kilowatt hours or megawatt
hours), or electric capacity (measured in kilowatts or megawatts), or both, as the context may
require.
(h) Force Majeure. Any cause beyond the control of a Party and which by the exercise
of due diligence that Party is unable to prevent or overcome, including but not limited to an act
of God, fire, flood, volcano, earthquake, explosion, sabotage, an act of the public enemy, an act
of any civil or military authority (including court orders, injunctions, orders of governmental
agencies of competent jurisdiction, and delay or denial of necessary permits on acceptable
;terms), insurrection or riot, an act of the elements, failure of equipment, or the inability to obtain
nor transport equipment or materials because of the effects of similar causes on carriers or
shippers. Strikes, lockouts, and other labor disturbances shall be considered Force Majeure, and
nothing in this Agreement shall require either party to settle a labor dispute against its best
judgment.
( (Interruptible Customers. Customers or loads that AELP normally meets with
electric power service that AELP is entitled, by provisions of tariff or contracts, to curtail or
suspend (whether with notice or not, but, in KGCMC's case, subject to the provisions of Section
3(a) of this Agreement) for reasons in addition to Force Majeure.
0) Interruptible Energy. Electric energy (kilowatt hours) that AELP delivers and sells
to customers, including KGCMC, with no assurance of continued delivery at any time except as
specifically provided by applicable tariff or contract.
(k) Intertie. The electric transmission line and related facilities and equipment (including
the KGCMC Transmission Segment), owned by KWETICO, that comprise or will comprise the
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Juneau/Greens Creek/Hoonah Intertie described in Exhibit C (Intertie and KGCMC
Transmission Segment).
(1) KGCMC Cost Recovery Date. The date on which KGCMC is deemed to have
recovered, through power costs savings realized under this Agreement, computed in accordance
with the avoided cost mechanism set forth in Exhibit D, the capital and related costs of
KGCMC's initial investment in the electrical substations and related delivery facilities and
equipment described in Exhibit B.
(m) KGCMC Transmission Segment. The transmission line(s) linking the Mine and/or
the Tails/Ore Loading Facility (as the context may require) with the other facilities and
equipment of the Intertie, as described in Exhibit C.
(n) KWETICO. The Kwaan Electric Transmission Intertie Cooperative, Inc., or
successor entity, in its capacity as owner of the Intertie.
(o) Lake Dorothy Hydroelectric Project (or Lake Dorothy). The hydroelectric
-generating facility described in Exhibit E (Lake Dorothy Hydroelectric Project Description);
provided, that unless the context otherwise requires, the terms Lake Dorothy Hydroelectric
Project or Lake Dorothy shall be deemed to refer only to Phase 1 of the facility as described in
such Exhibit and not to Phase 2.
(p) Necessary Approvals. Approvals of this Agreement by governmental authorities or
agencies that, bylaw, must be obtained in order for (i) the Agreement to become effective, or (ii)
amendments or modifications to the Agreement to become effective.
(q) O&M. Operations and maintenance.
(r) Operating Agreement. A separate agreement between the Parties, which may be
amended, supplemented and modified from time to time by agreement of the Parties, establishing
the procedures and parameters for interconnecting and operating KGCMC's and AELP's
electrical systems.
(s) Party or Parties. AELP or KGCMC (each a Party), or both (Parties).
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(t) Prior Interruptible Customers. Interruptible Customers who began taking power
from AELP under applicable tariffs or contracts before the Effective Date, and who continue to
do so at times relevant to this Agreement; provided that such Interruptible Customers shall be
considered PriorInterruptible Customers only with respect to the amount of power they were
entitled to take in accordance with such tariffs or contracts as the latter existed on the Effective
Date.
(u) ,Regulatory Cost Charge. An expense imposed on AELP by the RCA to help defray
the RCA's operating costs, which is passed through to AELP's customers, without any added
margin or markup, on a cost-per-kilowatthour basis.
(v) RCA. The Regulatory Commission of Alaska, or any successor established by statute.
(w). Snettisham. The Snettisham Hydroelectric Project, a generating facility from which
AELP obtains power, including Interruptible Energy. For purposes of this Agreement,
Snettisham shall be considered an AELP generating facility, unless the context otherwise
requires.
(x),Subseguent Interruptible Customers. Interruptible Customers, other than KGCMC,
who begin taking power from AELP under applicable tariffs or contracts on or after the Effective
Date.
(y) Transmission Charges. Those charges, described in Exhibit F (Transmission
Charges) applicable to the delivery of Interruptible Energy to KGCMC by means of the AELP
System and the Intertie (including the KGCMC Transmission Segment).
Section 3. ELECTRIC SERVICE TO BE PROVIDED
(a) Interruptible Energy. Except to the extent otherwise specified herein, or to the
extent that AELP and KGCMC may agree from time to time to have KGCMC generate more
electric power to -meet a larger portion of KGCMC's load requirements under specific operating
conditions, AELP will sell and deliver to KGCMC, and KGCMC will purchase and receive from
AELP, at the Delivery Points, Interruptible Energy in the amount of the actual then -operating
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electric power load requirements of the Mine and the Tails/Ore Loading Facility, respectively,
but only if and to the extent that (i) such load requirements actually exist, and (ii) such
Interruptible Energy is available to AELP from AELP's hydroelectric generating facilities at
times appropriate for delivery by AELP and receipt by KGCMC. The physical delivery and
receipt of Interruptible Energy may be interrupted, curtailed, or suspended at any time and for
any reason by either Party; provided that, except as otherwise specifically provided herein
(including without limitation under Section 3(f)(i) through 3(f)(iv) and the provisions of this
Agreement relating to reliability of power deliveries), KGCMC will not interrupt receipt of
Interruptible Energy or terminate this Agreement for the purpose of meeting its actual then -
operating load requirements with electric power from another source, including self -generation;
and ;provided further that, except as otherwise specifically provided herein, AELP will not
interrupt delivery of Interruptible Energy or terminate this Agreement for the purpose of
supplying Interruptible Energy to a Subsequent Interruptible Customer; and provided further that
the interrupting Party shall give the other Party as much advance notice of such interruption,
curtailment, or suspension as is reasonably practical under the circumstances, together with an
.explanation of the reason therefor.
(b) Resale of Interruptible Energy prohibited. The amount of Interruptible Energy
provided hereunder shall be limited at all times to the amount of KGCMC's actual then -
operating load requirements for the Mine and the Tails/Ore Loading Facility at the respective
Delivery Points. Interruptible Energy is provided to KGCMC solely for KGCMC's own use and
consumption at the Mine and the Tails/Ore Loading Facility. KGCMC shall not be entitled to
resell or otherwise dispose of Interruptible Energy to others.
(c) Priority to Interruptible Energy. If available Interruptible Energy is insufficient at
any time to meet the Interruptible Energy requirements of all Interruptible Customers, then (1)
Prior Interruptible Customers shall have priority over KGCMC, and (2) KGCMC shall have
priority over Subsequent Interruptible Customers, for the sale and delivery of such Interruptible
Energy as may be available to AELP and delivered by AELP to Interruptible Customers;
provided, that if and when AELP commences sales of electric power for service to local electric
utility loads in the community of Hoonah, Alaska, and its environs, such sales shall not be
considered sales to a Subsequent Interruptible Customer for purposes of this Agreement, and
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such sales shall have priority over sales to KGCMC with respect to available Interruptible
Energy; and provided further, that if KGCMC suspends operations at the Mine or the Tails/Ore
Loading Facility, then unless KGCMC resumes such operations within nine (9) months and
maintains such operations for a continuous period of six (6) months thereafter, AELP shall be
entitled, at its option, and upon ninety (90) days advance written notice to KGCMC, to give one
or more Subsequent Interruptible Customers priority over KGCMC in the sale and delivery of all
or any portion of the Interruptible Energy to which KGCMC would otherwise enjoy a priority
(except for the amount of Interruptible Energy that KGCMC continued to take and pay for
during the period in which operations were suspended, to which amount KGCMC shall at all
times retain its priority), unless KGCMC in response to such notice agrees in writing to take or
pay for the Interruptible Energy that AELP proposes to sell to such Subsequent Interruptible
Customer(s).
(d) Effect of Lake Dorothy.
(i) Relationship of Lake Dorothy to this Agreement. This Agreement shall
not be construed to commit AELP to construction of Lake Dorothy. However, this
Agreement has been drafted to accommodate the construction of Lake Dorothy, should it
occur.
(ii) Interruptible Energy. When and if (A) electric power is available to AELP
from Lake Dorothy, and (B) the KGCMC Cost Recovery Date has occurred, then AELP
shall no longer be obligated to supply KGCMC Interruptible Energy exclusively from
Snettisham or AELP's other hydroelectric generating resources under this Agreement;
provided, that KGCMC shall be entitled, but not obligated, to terminate this Agreement
(A) in accordance with Sections 5(d)(iii)(A) through 5(d)(iii)(C) if, as a result of Lake
Dorothy, the RCA requires AELP to impose higher total charges on KGCMC than
specified herein, or (B) in accordance with Section5(d)(v) in the event Lake Dorothy has
not achieved commercial operation by December 31, 2013. If KGCMC does not so
terminate this Agreement, then AELP shall thereafter deliver and sell Interruptible
Energy from Lake Dorothy (and/or from AELP's other hydroelectric generating
resources) to KGCMC at the Delivery Points, and the provisions of this Agreement shall
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thereafter be construed to apply to such Interruptible Energy rather than to Interruptible
Energy generated by Snettisham and AELP's other hydroelectric resources alone.
(iii) Nothing in this Agreement shall require AELP to continue selling
Interruptible Energy to KGCMC at rates based on the costs of Phase 1 of Lake Dorothy if
(A) this Agreement remains in effect at a time when Phase 2 of Lake Dorothy has
achieved commercial operation, (B) the average cost of energy from Phase 2 of Lake
Dorothy exceeds the average cost of energy from Phase 1 of Lake Dorothy, and (C)
KGCMC does not agree', at the time to allow AELP to compute KGCMC's Period 3
energy charge at the output -weighted average cost of energy from Phase 1 and Phase 2 of
Lake Dorothy. If, however, KGCMC does so agree at the time, then computation of the
Period 3 energy charge shall be modified to reflect such output -weighted average cost of
energy, and AELP shall continue selling Interruptible Energy to KGCMC. In making
such computation, AELP',shall exclude from the weighted average any Phase 2 output the
costs of which are specifically allocated to a Subsequent Interruptible Customer, by
contract, tariff, RCA order, or otherwise.
(e) Power specifications. The electric service to be provided shall consist of three-
phase alternating current, at the voltages and transformer capacities (WA) that the Parties have
agreed upon for the respective Delivery Points and have set forth in Exhibit B.
(f) KGCMC power generation. KGCMC shall be entitled at all times under this
Agreement to generate electric power for its own use if and to the extent that:
(i) AELP is unable to deliver sufficient power to meet KGCMC's then -
operating load requirements; or
(ii) In KGCMC's judgment, transmission service over the Intertie becomes
excessively unreliable, in which event KGCMC shall have the right to be disconnected
from the Intertie and to halt delivery of Interruptible Energy until the problems of the
transmission system have been resolved to the satisfaction of KGCMC, acting reasonably
and in good faith; or
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(iii) KGCMC in its reasonable discretion chooses to operate its generating
equipment for the purpose of testing and/or maintaining, (A) the operability of such
equipment (including renewals, replacements, modifications, improvements, or repairs
thereto), and/or (B) the skills and training of KGCMC's generating equipment operators;
or
(iv) The Parties are unable to obtain any Necessary Approvals for agreed -upon
modifications to this Agreement.
Section 4. RATES & CHARGES; METERING & BILLING
(a) Applicable Rate and Components of Monthly Bill. The basic monthly rate or
charge for Interruptible Energy delivered to KGCMC in any billing month, exclusive of
Transmission Charges, shall equal the product of (i) the number of kilowatt hours of Interruptible
Energy, delivered to KGCMC in that month multiplied by (ii) the energy charge per kilowatthour
+then applicable to KGCMC's purchases of Interruptible Energy under Section 4(b) below. In
;addition to this basic monthly rate or charge, AELP will also include in its bills or invoices to
KGCMC, and KGCMC will also pay or reimburse AELP for, the following: (i) Transmission
Charges computed in accordance with Exhibit F; (ii) power factor penalties under Section 4(d);
(iii) specified taxes under Section 4(e); (iv) any late payment charges, if applicable; (v) AELP's
then -effective customer charge applicable to manufacturing and ,processing customers taking
power under Schedule 41 of AELP's tariff or successor Schedule or tariff as approved by the
RCA; and ;(vi) a charge per kilowatthour under Section 4(f) as a pass -through, without margin or
markup, of the Regulatory Cost Charge imposed by the RCA.
,(b) Energy charges in each Period; the Periods defined. For purposes of this
Agreement;
(i) Period 1 shall commence upon first delivery of Interruptible Energy to the
Mine and/or the Tails/Ore Loading Facility, as the case may be. Period 1 shall end upon
the KGCMC Cost Recovery Date.
10
0
(ii) Period 2 shall commence on the day after the KGCMC Cost Recovery
Date, unless the KGCMC Cost Recovery Date occurs after Lake Dorothy has achieved
commercial operation and KGCMC has elected to begin receiving service under the
Period 3 provisions of this Agreement, in which event Period 3 will then commence and
no Period 2 shall occur.
(iii) Period 3 shall commence upon the day that Lake Dorothy achieves
commercial operation (provided that the KGCMC Cost Recovery Date has already
occurred and Period 1 is no longer in effect), unless KGCMC terminates this Agreement
in accordance with the provisions of this Agreement that allow such termination in
response to commercial operation of Lake Dorothy. Once commenced, Period 3 will
continue for the duration of this Agreement.
(iv) The applicable energy charges during Periods 1, 2, and 3 shall be
computed in accordance with Exhibit D.
(c) No added demand charge or COPA adjustments. Because of the interruptible
-;nature of the power provided under this Agreement, and because KGCMC will bear all O&M
expenses relating to its substations and related delivery facilities and equipment constructed or
installed for the purpose of receiving power pursuant to this Agreement, AELP will not include
in KGCMC's rates and charges (i) any amounts for electric capacity (demand), or (ii) any
adjustments reflecting upward or downward changes in AELP's balancing account under
AELP's Cost Of Power Adjustment (COPA) rate mechanism.
(d) Power factor. KGCMC shall endeavor to maintain, as nearly as practical, a unity
power factor. If such power factor falls below ninety-five percent (95%) lagging, KGCMC shall
take corrective steps to return the power factor to 95% or higher if, in KGCMC's judgment, such
corrective steps are commercially reasonable. If the necessary corrective steps include
installation of corrective facilities and/or equipment at the Mine or the Tails/Ore Loading
Facility, then KGCMC shall bear (and shall not be reimbursed by AELP for) the expense of such
facilities and/or equipment, including any installation and O&M expense. AELP will charge
KGCMC a power factor penalty of one percent (1%) of the then -applicable energy charge under
this Agreement for each one percent (1%) or fraction thereof (measured against unity, but
rounded to the nearest full percent) by which KGCMC's power factor is less than 95% lagging,
on average, for that month. The formula for determining KGCMC's average power factor in
any given month shall be:
PF = KWH divided by 4 (KWH squared + KVARH squared)
Where
PF = Average monthly power factor
and
KWH = kilowatt hours of Interruptible Energy delivered in a month
KVARH = reactive kilovar hours for that month
(e) Sales taxes. AELP will also bill KGCMC, and KGCMC will pay AELP, for any
sales or other taxes (other than income taxes) imposed on or collected from AELP as a result of
the sale of Interruptible Energy to KGCMC.
(f) Regulatory Cost Charge. AELP will include in its bills to KGCMC, and KGCMC
will pay to AELP, as a pass -through without margin or markup, the RCA's then -applicable
;Regulatory Cost Charge for each kilowatthour of Interruptible Energy sold to KGCMC.
(g) Metering. Metering shall be in accordance with the provisions of the Operating
Agreement.
Section 5. TERM
(a) Effective Date. This Agreement shall become effective on the Effective Date.
The delivery and receipt of Interruptible Energy to the Mine and to the Tails/Ore Loading
Facility, respectively, shall not commence, however, until the respective delivery facilities have
been completed, tested, and placed in commercial operation and the Operating Agreement has
been executed and becomes effective.
(b) Initial term. The term of this Agreement shall commence on the Effective Date
and, unless earlier terminated in accordance with this Agreement, shall continue thereafter for a
period of (i) fifteen (15) years from the date of first delivery and receipt of Interruptible Energy
to the Mine and/or to the Tails/Ore Loading Facility, or (ii) twelve (12) years from the COD of
Lake Dorothy, whichever is longer.
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(c) Potential extension of initial term. The Parties may agree to extend this
Agreement at any time; provided that no extension of the Agreement shall be effective unless
and until it receives any Necessary Approvals.
(d) Termination.
(i) Except as otherwise expressly provided in this Agreement, KGCMC shall
not be entitled to terminate this Agreement for the purpose of meeting the actual then -
operating load requirements of the Mine or the Tails/Ore Loading Facility with power
from other sources, including self -generation.
(ii) AELP shall not be entitled to terminate this Agreement for the purpose of
providing Interruptible Energy to Subsequent Interruptible Customers.
(iii) If Lake Dorothy is built, then KGCMC shall be entitled to terminate this
Agreement in any of three circumstances:
(A) KGCMC may terminate this Agreement effective upon the
commercial operation date ("COD") of Lake Dorothy, if the RCA, in its order
granting initial approval to this Agreement, orders AELP to impose on KGCMC
any higher total charges for, Interruptible Energy during Period 3 than the Parties
have agreed upon in this Agreement.
(B) KGCMC may also terminate this Agreement upon or after the
Commercial Operation Date of Lake Dorothy if at any time subsequent to initial
approval of this Agreement the RCA issues an order modifying this Agreement
and in such order requires AELP to impose on KGCMC any higher total charges
for Interruptible Energy during Period 3 than the Parties have agreed upon in this
Agreement.
(C) KGCMC may also terminate this Agreement on or after the seventh
(7th) anniversary of the Commercial Operation Date of Lake Dorothy, upon sixty
(60) days advance written notice to AELP.
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(iv) The termination rights described in Sections 5(d)(iii)(A) and (B) above shall
be exercised within ninety (90) days of the date of the RCA order referred to in those
Sections; provided that the `Parties hereby agree that the deadline for exercise of such
termination right shall be extended as reasonably necessary in order to take into account
the time required for reconsideration or review of such RCA order, if sought.
(v) KGCMC shall also have the right to terminate this Agreement in the event
Lake Dorothy has not achieved commercial operation by December 31, 2013.
(e) Post -commercial operation additions to costs of Lake Dorothy. Once Period 3 has
commenced, the costs of any post -commercial operation additions, expansions, replacements,
and repairs to Lake Dorothy, and the costs of any post -commercial operation government -
ordered changes in the operation of Lake Dorothy, may at AELP's option be reflected in
reasonable per -kilowatt hour additions or reductions to the otherwise applicable energy charge
for Interruptible Energy during Period 3 without giving KGCMC any right to terminate this
Agreement; provided, (i) that such costs are also reflected in the rates of AELP customers
generally, as additions to or reductions in plant in service, rate base, and/or allowable expenses;
and, (ii) that all such additions or reductions to the energy charge shall be subject to RCA review
in a proceeding of which KGCMC shall have notice and an opportunity to participate, as further
described in Exhibit D; but provided further that, and notwithstanding anything to the contrary
herein, in no event shall KGCMC's total rate for Interruptible Energy during the first seven (7)
years of Period 3 exceed the ten (10) cents per kilowatt hour limit pursuant to Section A(3) of
Exhibit D.
(f) Targeted power taxes. In the event KGCMC becomes subject to taxes based upon
KGCMC's purchase of power under this Agreement (including as a pass -through of such taxes
imposed on AELP, as described in Section 4(e)), and such taxes are not of general application
and impose an unequal burden on KGCMC vis-a-vis other AELP customers, then KGCMC shall
have the right to terminate this Agreement, with such termination to be effective upon the date
KGCMC specifies in a written notice to AELP.
(g) The obligation of KGCMC to pay AELP for all Interruptible Energy actually received
shall survive termination of this Agreement.
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Section 6. DELIVERY FACILITIES & PAYMENT THEREFOR
(a) Delivery facilities, and equipment. The delivery facilities and equipment that
KGCMC will construct and install in order to become able to purchase and receive power
pursuant to this Agreement (including facilities and equipment to allow KGCMC to heat its
buildings or the Mine) shall be those described in Exhibit B. The Parties recognize that, because
these delivery facilities and equipment have not yet been installed or operated, it may prove
necessary or desirable to change the configuration, features, or components of such facilities and
equipment prior to, during, or after installation. Consequently, the Parties agree that the design
specifications and other features of the facilities and equipment described in Exhibit B may be
changed by written agreement of the Parties. No Necessary Approvals shall be required in order
for such change(s) to Exhibit B to be effective, even though such changes may extend the length
of Period 1 under Exhibit D.
(b) KGCMC's delivery facilities and equipment. KGCMC shall be responsible for the
;design, procurement, installation, and maintenance of, and shall own and/or lease (at KGCMC's
,option) and operate, all substations and related delivery facilities and equipment constructed or
installed at the Mine and the Tails/Ore Loading Facility for the purpose of receiving power from
AELP pursuant to this Agreement; provided that AELP shall have the right of reasonable design
review and approval, and the right to provide reasonable specifications, for all such delivery
facilities and equipment. AELP's responsibility for electric service to the Mine and the Tails/Ore
Loading Facility shall end at the points of interconnection described on Exhibit B.
Section 7.OPERATIONS
The procedures for connecting KGCMC to, and disconnecting KGCMC from, the
Interruptible Energy delivery facilities, and procedures for related matters (including
synchronization, transfer of loads, communications, and safety, among others) will be set forth in
a written Operating Agreement to be agreed upon and signed by the Parties. The Parties
recognize that, because the delivery facilities and equipment contemplated hereunder have not
yet been installed or initially operated, it will be impossible to agree upon and sign the Operating
Agreement until such installation or initial operation is complete. However, the Parties agree
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that (i), as of the Effective Date, the Operating Agreement shall be final and complete, to the
extent possible given the inherent uncertainty of the installations and operations which must
occur prior to its completion, (ii) no change to the Operating Agreement shall thereafter be made
which is materially adverse to either Party, and (iii) no Necessary Approvals shall be required for
the Operating Agreement, or in order for the Parties to make such changes as required to the
Operating Agreement for its completion. The Parties may, subsequent to the completion of the
Operating- Agreement, from time to time agree in writing to change the provisions of the
Operating Agreement without such changes or the Operating Agreement itself being considered
modifications or amendments to this Agreement that require Necessary Approvals. AELP shall
not be ,obligated to deliver Interruptible Energy, and KGCMC shall not be obligated to accept
Interruptible Energy, under this Agreement until the Operating Agreement is signed and has
become effective.
Section 8. PROTECTING EQUIPMENT & POWER OUALITY
(a) KGCMC's protection of AELP's quality of power. KGCMC shall at all times use
$:its commercially reasonable best efforts to design, install, operate, and manage its facilities and
s,equipment (including generation and loads) to avoid adverse impacts on the quality and
reliability of power available to AELP and AELP's other customers; provided, that KGCMC
does not warrant the avoidance of such impacts; and provided further, that this Agreement shall
not be construed to create any duty, liability, or other responsibility of KGCMC (other than as
expressly set forth herein) to AELP or any other AELP customer (or any duty, liability, or
responsibility to AELP under this Section 8(a), other than for specific performance of KGCMC's
obligations) for any loss or damage or injury of any kind, whether physical or financial, as a
result of any act or omission of KGCMC in the design, installation, operation, or management of
its facilities and equipment (including generation and loads). AELP shall be entitled to prescribe
reasonable protective measures to implement this requirement. Such provisions, if any, shall be
set forth in the Operating Agreement.
(b) Protection by KGCMC of its own equipment and machinery. During operation of
its facilities, equipments, and loads, KGCMC will at all times take all reasonable steps (including
complying with requirements reasonably imposed by AELP for this purpose) to prevent adverse
16
impacts on KGCMC's equipment and machinery. KGCMC shall, for example, have sole
responsibility to provide, install, inspect, and maintain suitable protective devices (including
suitable motors) for equipment at the Mine and the Tails/Ore Loading Facility, including but not
limited to:
(i) Line starting and overload protective devices;
(ii) Devices to protect against under- and over -voltage, and under- or over -
frequency; and
(iii) Devices to protect three-phase equipment from single-phase operation and
phase reversal, if applicable.
(c) Ready availability of KGCMC's own generating equipment. If and to the extent
KGCMC wishes to protect its operations, equipment, or facilities from the consequences of an
interruption in KGCMC's supply of Interruptible Energy under this Agreement, KGCMC shall at
all times maintain in a state of ready availability sufficient operable generating capability
(including fuel, parts, operators, etc.) to meet that portion of KGCMC's then -existing demand for
:electric capacity, and entire requirements for electric power that KGCMC wishes to assure will
:continue to be served in the event that the delivery of Interruptible Energy is for any reason
"interrupted at any time and for any duration. In interrupting delivery of Interruptible Energy,
AELP will comply with the requirements of Section 3(a), but (other than as expressly set forth
herein) AELP shall have no responsibility to KGCMC or any third party for the consequences of
AELP interrupting delivery of Interruptible Energy to KGCMC as authorized by this Agreement.
Section 9. PROVISIONS RELATING TO LEGAL MATTERS
(a) Covenant of Good Faith and Fair Dealing. The Parties covenant and agree to act
reasonably; in good faith, and with fair dealing in implementing and performing under this
Agreement and its terms.
(b) Events of Force Majeure. In the event either Party, by reason of an event of Force
Majeure, is rendered unable, wholly or in part, to perform its obligations under this Agreement
(other than its obligations to pay money), then upon said Party giving notice and particulars of
such event of Force Majeure, its obligation to perform shall be suspended or correspondingly
17
0
reduced during the continuance of any inability so caused, but in no greater amount than required
by the event of Force Majeure and for no longer period, and the effects of such cause shall, so far
as .possible, be remedied with all reasonable and prompt dispatch.
(c) Indemnification. Subject to Sections 8(a) and (c), each Party shall, as to all actions
taken relevant to this Agreement, indemnify and hold harmless the other Party, its parents,
affiliates and co -venturers, and its and their respective directors, officers, and employees, from
and against all loss, damage, legal expense, and liability to third persons arising from any injury
to, or death of, persons or injury to property to the extent caused by any negligent act or omission
of the indemnifying Party, or its directors, officers, or employees in connection with such Party's
design, construction, ownership, operation or maintenance of, or the failure of, any of its works
or facilities used in connection with this Agreement.
(i) If any legal proceeding shall be instituted, or any claim or demand made,
against any Party hereto (hereinafter called the "Indemnified Party") with respect to
which the other Party (hereinafter called the "Indemnifying Party") may be liable
hereunder, the Indemnified Party shall give prompt written notice thereof, and promptly
deliver a true copy of any summons or other process, pleading or notice to the
Indemnifying Party. The Indemnifying Party shall have the absolute right, at its sole
expense and without the consent of the Indemnified Party, to defend and fully and
completely settle any such legal proceeding, claim or demand. However, the
Indemnifying Party shall give notice to the Indemnified Party of any proposed settlement.
The Indemnified Party may, if it sees fit, participate in defense of any such legal
proceeding, at its own expense.
(ii) If the Indemnified Party, without the prior consent of the Indemnifying
Party (which consent, if requested, shall not be unreasonably withheld), makes any
settlement with respect to any such legal proceeding, claim or demand, the Indemnifying
Party shall be discharged of any obligation to indemnify and hold harmless the
Indemnified Party hereunder with respect thereto.
(iii) The Indemnifying Party shall pay all reasonable costs incurred by the
Indemnified Party in any successful enforcement of this indemnity.
(iv) To the extent AELP has authority to review and approve the design and/or
construction of KGCMC facilities and equipment under this Agreement, AELP's
indemnification of KGCMC shall extend to claims by third parties based on KGCMC's
alleged negligence or intentional misconduct in the design and/or construction of such
facilities and equipment.
(v) The provisions of this Section 9(c) shall survive the expiration or
termination of this Agreement.
(d) Waiver. Any waiver at any time by either Party to this Agreement of its rights
with respect to any default of the other Party, or with respect to any other matter arising in
connection with this Agreement, shall not be considered a waiver with respect to any prior or
subsequent default, right, or matter.
(e) Necessary Approvals. The approval of the Agreement by the RCA shall constitute
a Necessary Approval. The Parties are not aware of any other Necessary Approvals.
(f) Severability. The provisions of this Agreement (including any and all Exhibits
:and Schedules attached hereto) are not intended to be considered in isolation, and each such
provision represents a portion of the consideration agreed upon among the Parties for each other
provision of this Agreement. The Parties believe that it would be impossible, in general, to
invalidate or sever any particular provision of this Agreement without working a potentially
great hardship on one or the other.of the Parties, and without denying one or more of the Parties
of important, bargained -for consideration. Thus, if after this Agreement has become effective
any article, paragraph, clause or provision of this Agreement shall be finally adjudicated by a
court of competent jurisdiction or a regulatory agency with jurisdiction over the Parties to be
invalid or unenforceable, or if any administrative agency with authority over the Parties shall
require changes to this Agreement, then the Parties shall in good faith meet promptly to negotiate
lawful ,amendments or modifications to this Agreement that will effectuate the original intent of
this Agreement and return the Parties as near as possible to the position that each would have
enjoyed in the absence of such judicial, regulatory, or administrative action. Nothing herein shall
limit the rights of any party to terminate this Agreement as provided in Section 9(n) below.
19
(g) Successors and Assigns. This Agreement and all of the terms and provisions
hereof shall be binding upon and inure to the benefit of the respective successors and assigns of
the Parties hereto; provided that each Party intends to contract only with the other Party, and
therefore no assignment or other transfer of this Agreement or any interest hereunder by either
Party (except the granting of security interests, or similar transfers for security purposes, to one
or more third parties by either Party in, to, or respecting its rights under this Agreement) shall be
effective without the other Party's prior written consent, which consent shall not be unreasonably
withheld, conditioned, or delayed; provided further, that any assignment, sale, or other transfer of
any minority interest in the Greens Creek Joint Venture shall not require AELP's consent. Any
assignee (including one realizing upon, or taking pursuant to a realization upon, a security
interest granted by a Party or one exercising rights under a prior transfer for security purposes
made by a Party) must, in the commercially reasonable opinion of the other Party, be capable of
assuming and performing the assignor's obligations under this Agreement. In addition, an
assignment by, or sale or transfer of, KGCMC to which AELP consents shall release KGCMC
:from its obligations under this Agreement; provided, that as a condition of such release AELP
may require that KGCMC or the successor or assignee provide a deposit or other form of
-financial security acceptable to AELP for two (2) months of estimated payments under this
Agreement.
(h) Default and Dispute Resolution.
(i) Upon failure of either Party to perform any obligation hereunder, the Party
to whom such performance is due shall make demand in writing upon the defaulting
Party. If such failure, other than a failure to pay AELP when such payment is due, is not
cured within thirty (30) days from the date of such demand it shall constitute a default at
the expiration of such period. AELP's bills to KGCMC shall constitute a written demand
for payment for purposes of this paragraph, and KGCMC shall be considered to be in
immediate default of its payment obligations if such bills are not fully paid in timely
fashion. Disputed portions of AELP's bills may not be withheld pending resolution of
the dispute, but if KGCMC becomes entitled to a refund of any amount paid to AELP,
that amount shall be refunded with interest at the RCA -approved refund interest rate.
20
(ii) Pending resolution of any dispute, each Party shall continue to perform its
obligations under this Agreement, including, in KGCMC's case, the obligation to pay
bills submitted by AELP. Each Party shall be entitled to seek immediate regulatory
and/or judicial enforcement of this continued performance obligation notwithstanding the
existence of a dispute. Application for such enforcement shall be made either to the RCA
or to the Superior Court for the State of Alaska, Juneau District.
(iii) After notice is delivered and before default occurs under Section 9(h)(i),
the Parties shall in good faith endeavor to meet promptly and to resolve any dispute
through good faith negotiation. If a Party has met its obligation of good faith under this
Section 9(h), and if the dispute has not been resolved before default occurs, then that
Party shall be entitled at any time thereafter to seek immediate enforcement of this
Agreement either by the RCA or by the Superior Court for the State of Alaska, Juneau
District, by bringing any proceeding, suit or action, at law or in equity, including without
limitation mandamus, injunction, damages and action for specific performance, as may be
necessary or appropriate to enforce any covenant, agreement or obligation of this
Agreement.
U Remedies Cumulative. No remedy conferred upon or reserved to the Parties
hereto is intended to be exclusive of any other remedy available hereunder or now or hereafter
existing at law, in equity, by statute or otherwise, but each and every such remedy shall be
cumulative and shall be in addition to every other such remedy. The pursuit by either Party of
any specific remedy shall not be deemed to be an election of that remedy to the exclusion of any
other, whether provided hereunder or by law, equity, statute, or otherwise, but where this
Agreement requires a Party to take a particular action (e.g., consultation with another Party) or to
pursue a :particular remedy prior to pursuing any other remedy, such requirement shall be binding
and enforceable.
(j) Right of Access. Each Party will have access to the premises, facilities, or
property of the other Party at all reasonable times for any purpose necessary or appropriate to the
performance of this Agreement; provided that such access shall be pursuant to the applicable
21
policies and procedures of the Party granting such access, including those policies and
procedures related to safety, security, and environmental protection.
(k) Access to Records. Upon request from the other Party, but only at reasonable
times' and during normal business hours, each Party shall afford the other Party with access to
data and information that are maintained and compiled in the ordinary course of business (or
which have in fact been compiled or prepared) and which are reasonably necessary to permit the
requesting Party to determine whether this Agreement is being performed in the manner intended
by the Parties. A Party that is given access to records pursuant to this Section 6(k) shall take
reasonable steps to maintain as confidential all data and information that is disclosed to such a
Party; provided that nothing herein shall prevent or limit a Party's right to disclose such data and
information to its affiliates and venture partners; but provided further that such affiliates and
venture partners shall be advised of and, by receiving any such disclosure, agree to be bound by
the confidentiality restrictions of this section as a condition of any such disclosure.
U, Applicable Law. The Parties agree that the interpretation and application of this
.Agreement shall be governed by the laws of the State of Alaska.
(m) Modification or amendment by the Parties. Except as provided in Section 9(n)
below, no modification or amendment of this Agreement shall be valid unless it is (i) in writing,
(ii) signed by the Parties, and (iii) has received all Necessary Approvals; provided that written
changes to the Exhibits to this Agreement (other than Exhibits D and F) or to the Operating
Agreement shall not be considered modifications or amendments that require Necessary
Approvals.
(n) Modification or amendment by the RCA. For regulatory purposes, the RCA
considers this Agreement to be a special contract that the RCA may modify at any time by
appropriate agency order in accordance with RCA rules and regulations. If the RCA by order so
modifies this Agreement after having approved the Agreement initially, then either Party shall be
entitled to terminate this Agreement by written notice to the other Party at any time within thirty
(30) days of the official date of such order; provided that the Parties by agreement may extend
the due date of such notice for all or any portion of the period required for reconsideration or
review of such order.
22
(o) Section Headings. The section headings in this Agreement are for convenience
only, and do not purport to and shall not be deemed to define the subject matter, or limit or
extend the scope or intent, of the sections to which they pertain.
(p) Mutual Covenants and Warranties. Each Party covenants and warrants to the other
that it (i) has the legal authority and ability to enter into and perform, and (ii) will at all times
maintain the practical and financial ability to perform, this Agreement and each obligation
assumed by such Party under this Agreement, upon the Agreement receiving all Necessary
Approvals. Each Party also covenants and warrants that prior to executing this Agreement it has
taken all actions necessary to permit its execution of this Agreement to be fully effective and
legally binding in accordance with its terms, subject only to such Necessary Approvals.
(q) Execution in Counterparts. This Agreement may be executed in one or more
identical counterparts, each of which shall be considered a duplicate original and shall have the
same effect as if the counterparts had been a single document executed simultaneously by both
,Pares. The parties agree that this Agreement may be transmitted between them by facsimile
,machine. The parties intend that fax signatures constitute original signatures and that a faxed
:agreement containing the signatures (original or faxed) of all the parties is binding on the parties.
(r) Exhibits. The exhibits attached to this Agreement are incorporated herein by
reference.
(s) No Third Party Beneficiaries. Nothing in this Agreement shall be construed to
create duties to, or rights of enforcement in, any third parties. By this Agreement the Parties
have created duties and obligations only to one another, to be enforced only by one another.
(t) Notices. All notices hereunder must be in writing, and any notice,
correspondence or payment required or permitted under this Agreement shall be delivered by (i)
U.S certified -mail, return receipt requested, with all necessary postage and charges prepaid, or
(ii) reputable overnight express courier and, in any event, shall be addressed as follows:
23
If to KGCMC:
By Mail: By Courier:
Kennecott Greens Creek Mining Company Kennecott Greens Creek Mining Company
P.0 * Box 32199 c/o Four Seasons Marine
Juneau, Alaska 99803 13401 Glacier Highway
Attn: General Manager Juneau, Alaska 99801
Ph: 907-789-8100
Attn: General Manager
R to AELP:
Alaska Electric Light and Power Company
5601 Tonsgard Court
Juneau, Alaska 99801
Attn: General Manager
Notices sent by certified mail shall be deemed given two (2) days following mailing; Notices
sent by overnight express courier shall be deemed given one (1) day following delivery to such
.courier. Any Party hereto may change its address for such receipt at any time by giving written
�notice thereof to the other Party hereto.
24
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
the day and year first above written.
ALASKA ELECTRIC LIGHT KENNECOTT GREENS CREEK
AND POWER_ COMPANY MINING COMPANY (for itself and the
Greens Creek Joint Venture)
B ;- By
Timothy D. McLeod Rich A. Heig
Title: President & General Manager Title: General Manager & Chief Operating Officer
25
EXHIBIT A
Greens Creek Mine
The Greens Creek Mine is located at the north end of Admiralty Island, Alaska (See attached
location maps). Mine development began in 1987 and full production was reached early in 1989.
Production was temporarily halted in 1993 due to low metal prices but re -opened in July 1997.
Since re -opening the mine has had a steady increase in its productive capacity from an initial
production rate of 1320 tons per day (tpd) to over 2200 tpd in 2004. Greens Creek is a
polymetallic (silver, zinc, gold and lead) underground mining operation with a concentrator (or
mill) and a 100 bed camp. The mine and the mill are located about eight miles up from the camp
located at Hawk Inlet. The mine is expected to operate until 2014 based upon 7.9Mt of reserves.
The Greens Creek Mine is the largest private employer in the Juneau area and employs 265
people with an average payroll, including benefits, of $26M. The Mine is operated under a joint
venture agreement between Kennecott Greens Creek Mining Company (57.7505%), Kennecott
:Juneau Mining Company (12.5164%), and Hecla Mining Company (29.7331%). Kennecott
`Greens Creek Mining Company and Kennecott Juneau Mining Companies are direct subsidiaries
of Kennecott Minerals Holdings Company.
All power at the mine is currently self -provided by diesel generators. The powerhouse at the 920
Mine Site is serviced by a 5.0 MW turbine and five reciprocating engine generators of a
combined 10.0 MW, totaling 15 MW of design capacity; 13.2 MW operating capacity. Average
MW draw for the mine 920 Mine Site is about 6.8 MW of power. Over recent years, power draw
has consistently increased incrementally from about 5.8 MW up to the present consumption, and
it is anticipated power consumption will continue to increase slightly with anticipated mine and
mill development.
The 'Tailings and Hawk Inlet facilities are powered with four reciprocating engine generators of
1.26 MW total, capacity. Average power draw is between 0.30 and 0.55 MW, inclusive of when
the ship, loader is in operation.
26
GREENS CREEK MINE
LOCATION MAP
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MINE SITE
ADMIRALTY ISLAND
27
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EXHIBIT B
Delivery Facilities & Equipment; Points of Interconnection
Points of Interconnection and Delivery
There will be two points of delivery of Interruptible Energy to KGCMC. One will be at the
Tails/Ore Loading and Hawk Inlet facilities and the other will be at the KGCMC Mine
Substation. These delivery facilities will be provided by KGCMC. A general description of
each delivery facility and equipment included follows:
Hawk Inlet Substation
69kV= Grounded Wye / 4.16kV Grounded Wye 2 MVA Transformer
Lightning Arrestors
69 KV Fusing
69 KV Disconnect and Ground Switch
SCADA RTU and Installation Labor (AELP to Supply and Bill at Cost to KGCMC)
Fiber Optic Interface Module and Installation Labor (AELP to Supply and Bill at Cost to
KGCMC)
Transfer Trip Module and Installation Labor (AELP to Supply and Bill at Cost to KGCMC)
5 KV Low Side Breaker (Control Interfaced to AELP's SCADA)
5 KV Low Side Revenue Metering with Transformer Loss Offset Calculation Applied
(provisions for remote meter readings via communications)
Protective Relaying (Coordinated with AELP system)
Synchronizing Capabilities
Ground Grid
Fence
MineSubstation
69kV Grounded Wye / (2) 4.16kV Delta 16 MVA Transformer
Lightning Arrestors
69 KV High Side Breaker (AELP to Supply and Bill at Cost to KGCMC)
69 KV Disconnect and Ground Switch
SCADA RTU and Installation Labor (AELP to Supply and Bill at Cost to KGCMC)
Fiber Optic Interface Module and Installation Labor (AELP to Supply and Bill at Cost to
KGCMC)
Transfer Trip Module and Installation Labor (AELP to Supply and Bill at Cost to KGCMC)
69 KV High Side Breaker (Control Interfaced to AELP's SCADA)
69 KV High Side Revenue Metering (provisions for remote readings via communications)
Protective Relaying (Coordinated with AELP system)
Synchronizing Capabilities
191
Ground Grid
Fence
Other Facilities & Equipment (for KGCMC Cost Recovery purposes)
• ' `Engineering, design, purchase, and installation of all equipment and construction of the two
substations described above for the two points of delivery of interruptible energy to
KGCMC, to the extent properly in the capital cost of such equipment and substations.
• All physical and electrical tie-ins to provide interconnection between the two substations
described above and the KGCMC electrical switchgear receiving power from the two
substations described above.
• Any and all modifications required solely for the ability of KGCMC to receive and distribute
electrical energy from AELP and the substations described above. (Any modifications
completed by KGCMC during this installation, not required because of the intertie or the
ability to receive power from AELP, but completed because of efficiency improvements or
upgrades desired by KGCMC at the time, and all engineering, design, purchase, installation,
and construction costs of such modifications, will not be part of the Cost Recovery formula.)
• The capital cost (including engineering, design, purchase, installation, and construction) of
KGCMC facilities and equipment installed to provide heat for KGCMC buildings and the
Mine portal previously heated by heat recovery from the diesel generators.
Cost Cap & Allowance
Absent appropriate documentation showing that KGCMC's costs actually incurred and
properly recoverable in accordance with this Exhibit are higher, the limit on KGCMC's cost
recovery amount shall be two million two hundred thousand dollars ($2,200,000.00), exclusive
of the heating equipment and facilities recovery amount discussed below, reduced by the net
present value of KGCMC's depreciation tax benefits for the substations and related facilities and
equipment to be constructed and installed in accordance with this Exhibit and the Agreement.
Such limit shall be increased at KGCMC's request upon presentation of such documentation to
AELP, if and to the extent that (1) AELP, acting reasonably and in good faith, accepts
KGCMC's request based on such documentation or additional documentation that KGCMC
30
i
l
provides in response to reasonable AELP inquiries, and (2) the RCA approves an increase in
such limit.
In addition to the foregoing, KGCMC shall be entitled to recovery of its investment in
KGCMC facilities and equipment to provide heat to KGCMC buildings and the Mine portal,
subject to the limit set forth below. During the cost recovery period for these facilities and
equipment, (1) AELP will not include the energy charge in KGCMC's otherwise applicable total
rate for electric power delivered to KGCMC, and (2) KGCMC shall be deemed to recover the net
investment through savings per kWh at KGCMC's per -kWh avoided cost of diesel generation.
Once the dollar amount of such savings equals, in total, such net investment, KGCMC shall be
deemed to have recovered the requisite costs, the recovery period shall end, and AELP will
resume including an energy charge in the total rates KGCMC pays for power delivered under
this Agreement.
The cost, in dollars, actually spent, or costs actually accrued by KGCMC, not to exceed
($600,000), to install facilities and equipment to provide heat to KGCMC buildings and the Mine
portal shall (1) include, but only for the period prior to first delivery and receipt of Interruptible
Energy for such facilities, any O&M costs associated with such facilities, equipment,
transmission, and protective devices; (2) not include interest; and (3) be reduced by the net
present value of the tax benefit of any depreciation, any investment tax credits, and other
Federal, state, and local tax savings/benefits attributable to such facilities. Such cost shall be
reasonably' agreed upon by the Parties and subject to verification by the RCA.
31
EXHIBIT C
Intertie and KGCMC Transmission Segment
The Juneau/Greens Creek/Hoonah Intertie (JGCHI) project, including the KGCMC Transmission
Segment, is owned by KWETICO and divided into two segments, Segment 1 from North
Douglas Island to Hawk Inlet and Greens Creek on Admiralty Island and Segment 2 from Hawk
Inlet to Spasski Bay and the village of Hoonah on Chichagof Island. AELP is currently in the
process of constructing Segment 1 of the JGCHI for KWETICO; and Segment 2 will most likely
be constructed in five to six years when federal grant funding is expected to be available. For
the purposes of this agreement, the following description is provided:
Juneau to Greens Creek.
This segment begins at a point of interconnection with AELP's existing 69-kV overhead lines on
Douglas Island (which are part of the AELP System) and includes: 9.5 miles of submarine cable
from North Douglas to Young Bay, 4.5 miles of new overhead lines along the Greens Creek A -
Road to Hawk Inlet, and 9 miles of overhead line on the Greens Creek B-Road to the Mine.
This last 9-mile section of overhead line to the Mine, along with any transmission line linking
the Tails/Ore Loading Facility to the other facilities of the Intertie, constitutes the KGCMC
Transmission Segment as defined in this Agreement.
Beginning, at AELP's West Juneau Substation on Douglas Island, the existing 11.5 mile, 69-kV
overhead ` transmission line (part of the existing AELP system) will interconnect with the
proposed North Douglas Island termination yard. This termination yard, the start of the North
Douglas to Young Bay portion of the Intertie, will contain disconnect switches, breakers, and a
3-phase shunt reactor bank and other required electrical equipment to connect the overhead
transmission system to the submarine cable.
The submarine cable then crosses Stephens Passage for about 9.5 miles where it will land at a
termination yard at Young Bay on Admiralty Island near, but south of the existing Greens Creek
ferry dock. The termination yard at Young Bay will include a cable riser, a ground switch,
lightning arrestors, a 3-phase shunt reactor bank, disconnects, a station service transformer, other
32
required electrical equipment and the connection point to the overhead transmission line on
Admiralty. Island from Young.Bay .to the Hawk Inlet substation.
The overhead transmission line will follow the existing Greens Creek "A" road system for about
4.5 miles to a point at Hawk Inlet on private land near the existing ore loading facility. This line
was constructed in 2004 using wood, single -pole structures.
Another termination yard at Hawk Inlet will provide the interface between the overhead line and
the future submarine cable heading to Hoonah. This is the provisional location for the submarine
cable termination yard to Hoonah at Hawk Inlet. Final submarine cable routing studies for
Hoonah will need to be completed to finalize the termination yard after funding is appropriated
for this segment. The Hawk Inlet termination yard would include breakers, disconnects, lightning
arrestors, a 3-phase shunt reactor bank and other required electrical equipment.
It is assumed that this line segment would remain in service for the community of Hoonah and
other Southeast communities that may be connected as part of the overall Southeast Alaska
'°Intertie Plan, after the Greens Creek mine is permanently closed down. Some or all of the 9-mile
.KGCMC Transmission Segment may be removed when the Greens Creek Mine is closed.
33
EXHIBIT D
Energy Charges and Related Matters
A. Energy Charge During Periods 1, 2, and 3
1. The energy charge portion of KGCMC's rate for Interruptible Energy during Period 1,
i.e., during the period prior to the KGCMC Cost Recovery Date, shall be zero ($0.00lkWh). The
remaining charges included in KGCMC's rate for Interruptible Energy during Period 1 shall be
as specified in Section 4 of the Agreement. [See also Schedule attached hereto.]
2. The energy charge portion of KGCMC's rate for Interruptible Energy during Period 2,
i.e., during any period after the KGCMC Cost Recovery Date but before the date upon which
Lake Dorothy commences commercial operation, shall equal AELP's Off-peak Season energy
charge under AELP's Manufacturing and Processing Rate, as such charge and Rate may be
;.modified and approved by the RCA from time to time. (At the time this Agreement was
.executed, the applicable charge was $0.046/kWh, although a rate increase was expected; see
Schedule 41 of the AELP tariff). The remaining charges included in KGCMC's rate for
Interruptible Energy during Period 2 shall be as specified in Section 4 of the Agreement. [See
also Schedule attached hereto.]
3. The energy charge portion of KGCMC's rate for Interruptible Energy during Period 3,
i.e., during any period after the KGCMC Cost Recovery Date and after the date upon which Lake
Dorothy commences commercial operation, shall equal the average cost of energy from Lake
Dorothy (in accordance with the formula agreed upon by AELP and KGCMC and set forth
under Heading D herein), as such calculation may be modified from time to time and, if
applicable, approved by the RCA for -purposes of this Agreement. The remaining charges
included in KGCMC's rate for interruptible Energy during Period 3 shall be as specified in
Section 4 of the Agreement. [See also Schedule 3 attached hereto.] During the first seven (7)
years of Period 3, if KGCMC's total rate computed in accordance with this paragraph (exclusive
of power factor penalties and taxes) would otherwise exceed ten (10) cents per kilowatt hour,
34
then the rate actually charged (exclusive of power factor penalties and taxes) shall be limited to
ten (10) cents per kilowatt hour.
4. The initial energy charge portion of KGCMC's rate for Interruptible Energy during
Period 3 shall be computed using values calculated by AELP for each variable in the above -
referenced formula. Those values shall reflect appropriate actual _and/or estimated (as the case
may be) cost and performance data for Lake Dorothy at the time of commercial operation, based
upon the capital cost of Lake Dorothy upon completion and a projected first year of project
operation. AELP shall make available to KGCMC and the RCA in readily accessible form the
numerical data for these values and the method AELP uses to compute them, including all
relevant underlying data, which KGCMC and the RCA shall have the right to audit. The energy
charge that AELP computes in accordance with such formula shall become and remain effective
from the outset of Period 3, unless/until and to the extent that AELP adjusts the computation (a)
in response to a request from KGCMC or an order of the RCA, or (b) to reflect more recent cost
and performance data, the latter adjustment to take place not more than once every twelve (12)
_months. KGCMC shall be entitled to seek RCA review of the initial energy charge and any
;:subsequent revision to that charge, and AELP shall cooperate fully in any RCA process or
-proceeding commenced as a result of KGCMC's request for RCA review.
5. Once this Agreement (including the rate provisions thereof) has received RCA
approval, AELP shall not thereafter be required to seek RCA review and approval prior to
making or adjusting KGCMC's actual rates under this Agreement, but AELP recognizes (a)
KGCMC's rights to invoke the dispute resolution provisions of this Agreement and/or to seek
RCA review of such rates once made or adjusted, and (b) the RCA's jurisdiction to order AELP
to adjust such rates, in order to assure that the rates AELP actually charges KGCMC conform to
the rate provisions of this Agreement at all times.
6. Period 3 rates shall be subject to adjustment in order to implement the cost recovery
provisions of Exhibit B regarding KGCMC-installed facilities and equipment needed to allow
heating for KGCMC buildings and the Mine portal. In such implementation, the cost recovery
principles of this Exhibit D shall be applied as appropriate.
35
B. Computation of the KGCMC Cost Recovery Date
For purposes of this Agreement; the KGCMC Cost Recovery Date shall be deemed to
occur on the day on which KGCMC, through power cost savings achieved under this Agreement,
is deemed to have achieved recovery of the net capital cost paid by KGCMC for the delivery
facilities and equipment described in Exhibit B. Such recovery shall be deemed to have occurred
during month "n", when the following equation first becomes true:
n
Where:
C = The net capital cost, in dollars, actually spent, or costs actually accrued (subject to
applicable cost caps), by KGCMC to design and construct the facilities, equipment,
transmission, and protective devices described in Exhibit B. Such net capital costs shall
(1) include, but only for the period prior to first delivery and receipt of Interruptible
Energy, any O&M costs associated with such facilities, equipment, transmission, and
protective devices; (2) not include interest; and (3) be reduced by the net present value of
the tax benefit of any depreciation, any investment tax credits, and other Federal, state,
and local tax savings/benefits attributable to such facilities. Such net capital cost shall be
reasonably agreed upon by the Parties and subject to verification by the RCA;
n
,E = the sum of a series of results, obtained for each month from "month 1" through
"month n", where n is the number of the month in which the equation first becomes true;
P = Power delivered to KGCMC by AELP under this Agreement in each month,
measured in kilowatt hours (kWh);
Y = KGCMC's diesel fuel cost (as further described in this Exhibit) for producing an
equal number of kWh during said month, measured in dollars per kWh;
K = aconstant, equal to one and one -quarter cent ($0.0125) per kWh for each kWh of
Interruptible Energy delivered in said month, which amount the Parties have agreed shall
reflect KGCMC's cost savings per kWh of Interruptible Energy in addition to fuel cost
savings;
and
36
R = Rates actually charged (as the same may have changed from time to time) by AELP
to KGCMC for power delivered under this Agreement during said month, measured in
dollars per kWh.
C. Computation of KGCMC's Diesel Fuel Cost
KGCMC's fuel cost for purposes of computing Y in the above formula is the amount the
Parties have agreed that KGCMC shall be deemed to incur or avoid, on average, to produce or
avoid producing electric power using its own diesel generating equipment and facilities during
any given- month of the KGCMC Cost Recovery Period. The Parties shall compute Y in
accordance with the following formula:
Y (.083 x G)
Where:
Y KGCMC's average diesel fuel cost for said month, measured in dollars per kWh;
.083 = portion of a gallon of diesel fuel that the Parties have agreed KGCMC requires to
produce a kWh using its own generating equipment (at approximately twelve kWh per
gallon); and
G = KGCMC's average cost of diesel fuel in said month, delivered to Hawk Inlet,
measured in dollars and cents per gallon. The average fuel price for a month shall be
calculated based on the daily average posted OPIS Seattle rack price per gallon of No. 2
diesel fuel plus $0.10/gallon for delivery to Hawk Inlet.
D. Computation of the Energy Charge Portion of KGCMC's Period 3 Rate
1. The formula for determining the `energy -charge portion of KGCMC's rate for Interruptible
Energy during Period 3 shall be:
Rate per kWh = L/E, where
L = Annual cost of energy for Lake Dorothy,
and
E = Average annual energy available from Lake Dorothy, namely 74,500,000
kilowatt -hours/year (unless adjusted up or down upon commercial operation)
37
■
2. Annual Cost of Energy for Lake Dorothy ("U')
L, the annual cost of energy for Lake Dorothy in the foregoing formula, is computed
using the following sub -formula:
L= O+D +T+(KxB), where
O = Operating and maintenance expenses of Lake Dorothy (direct + allocated
share of AELP's-otherwise unallocated generation O&M expense)
D = Depreciation applicable to Lake Dorothy capital investment
T = Income taxes accrued by AELP on or appropriately allocated to Lake Dorothy
K = Weighted average cost of capital applicable to Lake Dorothy
and
B = The capital cost of Lake Dorothy, calculated using a rate base methodology
(set forth below).
_3. Cauital Cost of Lake Dorothy (`B") For Purposes Of Computing `If
The calculation of B, at any given time, will be
• the dollar amount of gross plant for Lake Dorothy (exclusive of any amount
specifically disallowed by RCA), plus
• the RCA's annual allowance to AELP for working capital for Lake Dorothy (12.5
percent of Lake Dorothy annual .O&M amount), minus
• accumulated depreciation on Lake Dorothy, and minus
• accumulated deferred taxes, if any, attributable to Lake Dorothy.
4. The Weighted Average Cost of Capital C'K") For Purposes Of Computing `If
The calculation of K, namely the weighted average cost of capital for Lake Dorothy, will
equal:
• the equity percentage of Lake Dorothy's total capitalization multiplied by AELP's
allowed return on equity, plus
• the debt percentage of Lake Dorothy's total capitalization multiplied by the interest
rate on the Lake Dorothy debt.
38
i
NOTE: This method of computing the energy charge presupposes that Lake Dorothy is (or is
treated as) an AELP-owned resource for ratemaking purposes. If contractual arrangements are
such that Lake Dorothy is owned by a different entity and AELP purchases Lake Dorothy power
from that entity under a Power. Sales Agreement (PSA), then AELP would intend to pass through
to KGCMC the per -kWh charge paid by AELP under the PSA for power used to serve KGCMC.
AELP would also use its commercially reasonable best efforts to assure that this did not produce
any higher rates for KGCMC than would be computed under the formula set forth above.
39
EXHIBIT — D: Attached Schedules 1, 2, and 3
Rate
RATE SCHEDULE - KGCMC INTERRUPTIBLE ENERGY
$/KWH
RATE I'
AELP Energy Charge:
0.000000
AELP Cap. Recovery ND Line
0.000000
Kwaan Wheeling Charge
0.004640
RCA Regulatory Charge (current; changes annually)
0.000397
Total Charges/KWH in Rate 1 Period
0.005037
RATE 2 - Off Peak Manufacturing Rate
AELP Energy Charge: Manufacturing Rate as of May 2005
0.046000
AELP Cap. Recovery ND Line
0.011800
Kwaan Wheeling Charge
0.012500
RCA Regulatory Charge(current; changes annually)
0.000397
Total Charges/KWH in Rate 2 Period
0.070697
RATE 3 - Lake Dorothy Interruptible Enerry
LDHI Energy Charge (Estimate Based on 2004 Dollars)
0.070936
AELP Cap. Recovery ND Line
0.011800
Kwaan Wheeling Charge
0.004167
RCA Regulatory Charge(current; changes annually)
0.000397
Total Estimated Charges/KWH in Rate 3 Period
0.087300
Total Charges/KWH not -to exceed
0.100000
Other Monthly Charges;
PF Penalty @ 1 % of Energy Charge for Each 1 % below .95 PF Lagging
Example PF Penalty rate period 3: assume .85PF 5 GWH usage, (.070936*.10*5,000,000)=
$35,468
CBJ Sales Tax @ 5% Cap @ $7,500 =
$375
Customer charge per month=
$95
40
EXHIBIT E
LAKE DOROTHY HYDROELECTRIC PROJECT
PROJECT DESCRIPTION
THE PROJECT
The project would be located on lands within the Tongass National Forest, which are
managed by the US Forest Service (USFS). All Project facilities are on the east side of Taku
Inlet and would be located within an area classified by the USGS as a Power Site Classification
(No. 238; established June 5, 1930). The classification recognizes the potential of the area for
electrical power generation and requires management of the area in compliance with Section 24
of the Federal Power Act (FPA). The FPA requires that any use of the area take into
consideration the power generation potential and gives the FERC a role in reviewing land uses.
The Tongass Land Resources and Management Plan (TLRMP) designates a
Transportation and Utility System (TUS) Land Use Designation overlay on the east side of Taku
'Inlet. This TUS designation extends from the vicinity of the proposed Bart Lake powerhouse,
south to the existing East Terminal intertie point for the Snettisham power line. The designation
of this TUS corridor in the TLRMP indicates that construction of the Bart Lake powerline
corridor is anticipated and considered to be appropriate for this area.
With a hydraulic capacity of 225 cubic feet per second (cfs), the average annual energy
from Phase 1 of the project is estimated to be 74,500 megawatt hours (MWh)'. Firm annual
energy available from the project is estimated at 62,800 MWh. The hydroelectric energy from
the proposed project would add to the available renewable energy sources for use in Juneau,
Alaska.
Phase 1: Bart Lake Phase:
' Reference updated power studies provided by Montgomery Watson Harza letter dated December 18,
2001, Appendix T.
41
The proposed action for Phase 1, called the Bart Lake Phase, consists of a lake tap of Bart
Lake, construction of a power tunnel approximately 935-feet long and a penstock approximately
6,900-feet in length for water conveyance from Bart Lake to a surface powerhouse near
tidewater north of Dale Creek. In order to supply wintertime flows and during other low flow
periods into Bart Lake, Lake Dorothy would also be tapped using a lake tap and a water
transmission tunnel approximately 680 feet long. This water conveyance system will discharge
water from Lake Dorothy into the stream that flows between Lake Dorothy and Lieuy Lake.
Water then flows out of Lieuy Lake into Bart Lake via the natural streambed between Lieuy and
Bart Lakes, thus keeping Bart Lake at optimum levels for power generation. The Bart Lake
power tunnel and penstock would carry the water from Bart Lake to a power plant at tidewater
near Dale Creek. This phase uses water in the drainage basins of Lake Dorothy, Lieuy Lake and
Bart Lake.
The powerhouse would contain a single generating unit with a capacity of approximately
14.3 megawatts (MW) capable of providing an average annual generation capacity of
-approximately 74,500 MWh (firm annual generation at 62,800 MWh). Power would be
,,transmitted to Juneau's power grid by an approximate three and one-half (3-1/2) mile long
,aoverhead transmission line that would intertie with an existing transmission line from the
Snettisham Hydroelectric Project. The intertie point to the Snettisham transmission line is at the
East Terminal in the Taku Inlet. Power is then conveyed through a submarine cable across Taku
Inlet. The Taku Inlet submarine cable -crossing portion of the Snettisham transmission line was
replaced in-1999 and its capacity was upgraded at that time to accommodate the capacity of both
Phase 1 and Phase 2 development of the Lake Dorothy Hydroelectric Project.
Phase 2: Lake Dorothy (future amendment)
When justified by load growth in Juneau, the project owner (AELP or other) would make
an application for the construction of the second phase, called the Lake Dorothy Phase. The
hydraulic capacity of Phase 2 would be 185_cfs. This phase would consist of a new tap of Lake
Dorothy and anew power tunnel and penstock approximately 17,000-feet in length.
42
i—
Water from Lake Dorothy would be conveyed to the powerhouse site built in Phase 1.
Two new generating units would be installed during Phase 2 in the expanded powerhouse with a
combined capacity of about 30.0 MW. Average annual generation capacity from Phase 2 is
approximately 154,5002 MWh; firm annual generation from Phase 2 is estimated to be 144,700
MWh. Power generated from Phase 2 would be transmitted over the overhead line that would be
installed in Phase 1 of the project.
The Phase 1 Bart Lake tap, penstock and generating unit would remain in service using
the water from the Lieuy and Bart Lake drainages. Average annual energy from the Bart Lake
(Phase 1) portion when Phase 2 is complete would be lowered to approximately 14,300 MWh
annually, firm annual energy would be lowered to 4,600 MWh.
When both phases are completed, the project would maintain the flexibility to allow
flows from Lake Dorothy into Bart Lake (as in Phase n during emergency shutdowns,
maintenance functions and reservoir coordination.
The location and general layout of these project features are shown in the attachments to
this Exhibit. Table A-1 summarizes the proposed project features.
2 Reference updated power studies provided by Montgomery Watson Harza letter dated
December 18, 2001, Appendix T.
43
PROJECT FEATURES
PHASE I — BART LAKE
Project Location_
Township 42S, Range 70E, Sections 4, 8, 9, 10,15, 16,17,18,19, 20,
21, 22, and 27; Township 42S, Range 69E, Sec., 13, 23, 24, 26, 35
within the Copper River Meridian.
Diversion Type
Lake tap of Lake Dorothy; and Lake tap of Bart Lake
Reservoir
Lake Dorothy:
Normal Maximum Reservoir Elevation, El. 2,421
Normal Minimum Reservoir Elevation, El. 2,341
Drainage Area: 11.0 square miles (mil)
Active Storage Volume, 70,200 acre-feet
Surface Area at El. 2,421: 950 acres
Bart Lake:
Normal Maximum Reservoir Elevation, El. 986
Normal Minimum Reservoir Elevation, El. 966
Drainage Area: 2.4 mil
Surface Area at El. 986: 250 acres
Tunnels/Penstock
Power Tunnel:
Bart Lake:
Type: Unlined Horseshoe; Size: 8 - 12 foot horseshoe
Horizontal Length: 935 feet
f
Invert slope, percent: 5 to 10 percent
Lake Dorothy: (water conveyance tunnel)
Type: Unlined Horseshoe; Size: 8 —12 foot horseshoe
Horizontal Length: 680 feet
Invert slope, percent: 5 to 10 percent
Penstock:
Type: Welded Steel pipe
Length: 6;900-feet; Diameter: 60 in.
Powerhouse
Location: Near tidewater
Type: Surface
Size: 49-feet wide by 110-feet long by 42-feethigh
Generator Floor El.: approx. 30 mean sea level (msl)
Number of Units: 1; Turbine Type: Pelton
Unit Hydraulic Capacity: 225 cubic feet per second (cfs)
Generator Output: 14.3 MW total
Transmission Line
Voltage: 138kV
Length: 3-1/2 miles; Type: Overhead
Average Annual
74,500 MWh (Firm annual energy: 62,800 MWh)
Energy
PROJECT BOUNDARIES
All lands in the project boundary are within the Tongass National Forest and managed by
the USDA Forest Service. The project boundary includes the following:
Reservoir Area Description:
Lake Dorothy including plus two hundred (200') horizontal feet surrounding mean lake
level of two thousand -four hundred -twenty one feet (2421' ).
Township 42S, Range 70E, C.R.M., Sections 4, 9, 10, 15, 16, 21, 22, 27
Acres: Lake 950 acres, border 188 acres.
Lieuy Lake including plus two hundred (200') horizontal feet surrounding mean lake
level of one thousand -seven hundred eleven feet (1711').
Township 42S, Range 70E, C.R.M., Section 8
Acres: Lake 80 acres, border 34 acres.
Bart Lake including plus two hundred (200') horizontal feet surrounding mean lake level
of nine hundred eighty-six feet (986').
Township 42S, Range 70E, C.R.M., Sections 17, 18
Acres: Lake 250 acres, border 55 acres.
Main Drainage system from Lake Dorothy, Lieuy Lake and Bart Lake centerline
plus/minus one hundred feet (100') wide.
Township 42S, Range 70E, C.R.M., Sections 8, 9, 17, 18
Township 42S, Range 69E, C.R.M., Section: 13
Acres: 88 acres.
Powerhouse/Access Corridor/Penstock/Tunnel Area Description:
Access Corridor/Penstock/Tunnel centerlines plus/minus fifty feet (+/- 100') wide.
Township 42S, Range 70E, C.R.M., Sections Phase I: 18
Sections Phase H: 16, 17, 18, 19, 20
45
Township 42S, Range 69E, C.R.M., Sections Phase I: 13
Sections Phase II: 13
Acres: Phase 1— 52.8 acres; Phase II — 78 acres.
Powerhouse plus two hundred feet (200') border.
Township 42S, Range 69E, C.R.M., Section: 13
Acres: powerhouse 2.6 acres, border 4.1 acres.
Transmission Line Corridor Description:
Transmission line centerline plus/minus one hundred feet (+/- 100') wide.
Township 42S, Range 69E, C.R.M., Sections 13, 23, 24, 25, 26, 35
Acres: 84.9 acres.
Total Land Acreage: 1867.4 acres.
A project boundary survey would be conducted upon final completion of the project. This survey
,would be based on the above lands descriptions excluding the reservoirs and main drainage
systems.
M
Exhibit F
Transmission Charges
There are two components to the transmission charge: The AELP Transmission charge and the
Kwaan Electric Transmission Intertie Cooperative (KWETICO) wheeling charge.
The AELP Transmission charge is based on the capital cost recovery requirements for AELP's
investment in the AELP System facilities on Douglas Island that connect the West Juneau
Substation with the Juneau/Greens Creek[Hoonah Intertie at the North Douglas submarine cable
termination yard. This charge will be fixed at the level shown on the schedule attached to
Exhibit D, until such time as an additional substation is constructed in the vicinity of the North
Douglas submarine cable termination yard to serve other loads on Douglas Island, at which time
the charge is expected to be reduced as a result of such capital cost recovery requirements being
shared with other AELP customers. At such time, the computation and reasonableness of this
,,charge to KGCMC shall be subject to review and approval by the RCA.
'The KWETICO wheeling charge is based on their revenue requirements for (1) administrative
overhead, (2) operations & maintenance expense, and (3) a contribution to a reserve and
repair/replacement fund (and, in addition, recovery of initial capital investment if and to the
extent KWETICO makes a capital investment in the Intertie in addition to Federal grant funds).
AELP will use its commercially reasonable best efforts to persuade KWETICO to continue to
compute this charge (as KWETICO has initially agreed to do) in a manner that results in
KGCMC being responsible for (1) administrative overhead, and (2) operations & maintenance
expenses that are properly allocable to the portion of the Intertie that provides service to
KGCMC. The contribution (3) to the reserve and repair/replacement fund will, however, be
based on the projected reserve and repair/replacement fund for the Intertie as a whole (and takes
the place of a reserve and repair/replacement fund customarily created at the outset of a
transmission project and added to the capital cost of that project). The initial KWETICO rates
for the Transmission Charges are, shown in the schedule attached to Exhibit D of this Agreement.
47
Exhibit G
Prior Interruptible Customers
(as of 3/31/05)
Customer Class
Rate
Code
Number of
Customers
Interruptible — Commercial
25
2
Cruise Ships — Princess
28
1
Interruptible — Government
35
9
Dual Fuel — Residential
95R
124
Duel Fuel - Commercial
95C
4
Duel Fuel - Government
95G
1