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HomeMy WebLinkAboutBPMC Meeting January 25, 1994 2BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MEETING AGENDA Tuesday, January 25, 1994 Chugach Electric Association, Inc. Training Room 10:00 a.m. oS CALL TO ORDER Highers Re ROLL CALL 3. PUBLIC COMMENT 4. AGENDA COMMENTS 5. APPROVAL OF MEETING MINUTES - November 18, 1993 6. TECHNICAL COORDINATING SUBCOMMITTEE REPORT Burlingame 7. BUDGET SUBCOMMITTEE REPORT Ritchey 8. OPERATION AND DISPATCH SUBCOMMITTEE REPORT Wolf 9. REVIEW OF PROJECT STATUS Eberle 10. OLD BUSINESS A. Spinning Reserves Update Lovas Be Master Operating Agreement Update Saxton Cc. HEA O&M Agreement -—- Terms and Conditions McCrohan D. Homer Electric Association/Alaska Energy Authority/Project Management Committee Duties McCrohan 11. NEW BUSINESS A. Approval of Legal Expenses and Other Payments Ritchey B. Insurance Requirements Beardsley Cc. Bradley Lake Budget & Labor Negotiations McCrohan 12 COMMITTEE COMMENTS ‘AS Next Meeting Date Highers 13. ADJOURNMENT BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE DRAFT MEETING MINUTES Training Room - Chugach Electric Association, Inc. Thursday, November 18, 1993 8:00 a.m. CALL TO ORDER Chairman Highers called the meeting of the Bradley Lake Hydroelectric Project Management Committee to order at 8:10 a.m. in the Training Room at Chugach Electric Association in Anchorage, Alaska, to conduct the business of the Committee per the agenda and public notice. All Committee members were present, and a quorum was established. ROLL CALL Alaska Energy Authority Dennis McCrohan, Designated Representative Chugach Electric Association David L. Highers, Designated Representative and Chairman Golden Valley Electric Association Mike Kelly, Designated Representative Golden Valley Electric Association Bradley Evans, Designated Representative City of Seward Dave Calvert, Designated Representative Homer Electric Association Norm Story, Designated Representative Matanuska Electric Association Ken Ritchey, Designated Representative Municipal Light & Power Tom Stahr, Designated Representative Others Present: Sharon Sigafoos, AIDEA Dan Beardsley, AIDEA/AEA Stan Sieczkowski, AEA/AIDEA Dave Eberle, AEA/AIDEA John S. Cooley, Chugach Electric Association Tom Lovas, Chugach Electric Association David Burlingame, Chugach Electric Association Ron Saxton, Ater, Wynne, Hewitt, Dodson & Skerritt Tim McConnell, Municipal Light & Power Jim Hall, Matanuska Electric Bradley Lake Proje Management Committee Meeting Minutes - November 18, 1993 Page 2 of 8 Others Present (Continued): Dave Fair, Homer Electric Myles Yerkes, Homer Electric Association Bob Huffman, Alaska Electric Generation & Transmission Cooperative Larry Wolf, Alaska Energy Authority PUBLIC COMMENT There was no public comment. AGENDA COMMENTS There were no comments regarding the agenda. Chairman Highers welcomed Sharon Sigafoos and Dan Beardsley to the meeting. APPROVAL OF MEETING MINUTES - OCTOBER 26, 1993 MOTION: Mike Kelly moved to approve the minutes of the October 26, 1993 meeting. Seconded by Norm Story. The following corrections and additions were noted: Under paragraph 8, AGREEMENTS SUBCOMMITTEE REPORT, Mr. Story stated that the paragraph which reads: "Mr. Stahr stated that the Agreements Subcommittee had not met since last Tuesday." should be changed to read: "Mr. Sieczkowski stated that the Agreements Subcom- mittee had not met since the last PMC meeting." Mr. Huffman asked that his name be added under "Others Present," as he was in attendance at the October 26th meeting. The recorder stated that several people’s names had been omitted under "Others Present" at the October 26th meeting. She said the omission had been noted, and that would be revised to include the names of all persons present prior to the minutes being submitted for the Chairman's signature. On page 2, Mr. Cooley noted that the word "DEGNET" in the first sentence of the third paragraph of Item 6., TECHNICAL COORDINATING SUBCOMMITTEE REPORT, should be changed to “DECNET." There being no further corrections, the minutes were approved as revised. Bradley Lake Proje Management Committee Meeting Minutes - November 18, 1993 Page 3 of 8 TECHNICAL COORDINATING SUBCOMMITTEE REPORT The Chair stated that this item would be tabled until Mr. Burlingame was present to give the report. Mr. Burlingame, present at the completion of Mr. Ritchey’s report, stated that to his knowledge, all issues are operational issues and have been forwarded to the O&D Committee. Mr. Burlingame reported that, as far as he is aware, the Bradley spinning reserves is the only outstanding technical issue, and it has been referred to the ASCC. In addition, Mr. Burlingame reported that there have been two unit trips since the last PMC meeting. One was due to operator error; the other was a low oil pressure sump. In addition, there have been two more capacitor failures at Soldotna. Mr. Stahr stated that it was his belief the low oil pressure trip affected both units. Mr. Lovas said that was incorrect, that the unit trip he was referring to was a recent incident and only one unit was tripped. Referring to the incident where both units tripped simulta- neously, Mr. Stahr inquired if unit reliability had been analyzed since the incident. Mr. Burlingame responded that they had requested from MEA a list of every scenario that will cause both units to trip simultaneously. He reported that the list was longer than he would have thought. He said that even though most of the scenarios on the list require a multiple failure to trip both units, there are numerous protection systems which will trip both units, and he hadn’t been aware of this until he received the list from MEA in October. He added that the list has been distributed to personnel. Mr. Sieczkowski stated that the O&D Committee is continuing to review and discuss these situations. BUDGET SUBCOMMITTEE REPORT Mr. Ritchey reported that the Budget Subcommittee had met the previous day. A report was presented regarding the FY ‘93 O&M budget, and recommended adjustments will be forthcoming. In addition, the revised budget was discussed. Representatives of Homer Electric discussed the take-over by Homer Electric of the operation of Bradley Lake and the impact on the budget. Mr. Ritchey stated that the subcommittee discussed with Homer Electric and AIDEA representatives HEA’s proposal and the information provided by AIDEA. Many of the subcommittee’s questions were answered during that discussion; however, there are still some administrative tasks that need to be accom- Bradley Lake Proje Management Committee Meeting Minutes - November 18, 1993 Page 4 of 8 10. 11. plished. Mr. Ritchey stated that Homer Electric’s proposal basically looked at FY ‘94 as though HEA was operating the system for a full year, and the two budgets, the current one and Homer’s proposed budget, would have to be consolidated into a workable budget for FY ‘94. In response to a question from Mr. Kelly, Mr. Ritchey said this process should be completed by the first part of December because Homer Electric is supposed to take over the project the first of 1994. Mr. McCrohan agreed that the first of January is their target date; Mr. Ritchey said they would like to be able to accommodate that. AGREEMENTS SUBCOMMITTEE REPORT Mr. Sieczkowski stated that the Agreements Subcommittee had not met since the last PMC meeting. OPERATION AND DISPATCH SUBCOMMITTEE REPORT Mr. Sieczkowski stated that the O&D Subcommittee is scheduled to meet at the conclusion of this Project Management Committee meeting. REVIEW OF PROJECT STATUS Mr. Eberle reported that a proposal has been received from ABB to make the protection changes at the Soldotna SVC, and that proposal is being reviewed at this time. He added that the dollar amount of the project is in the $15,000 to $20,000 range. Mr. Eberle reported that the Project Management Committee is preparing to disburse the State surplus funds. However, prior to disbursement, an audit will be conducted to review the financing costs to ensure that the figures are correct. At completion of that review, the disbursement of surplus funds, estimated at approximately $12,000,000, will be made to the State. He added that because the funds have been held longer than anticipated, there should be some additional interest earnings. Mr. Eberle stated that he would advise the Com- mittee when the auditors have completed the reconciliation. OLD BUSINESS A. Spinning Reserves Update - Mr. Lovas reported that the Reliability Criteria Committee (RCC) continues to meet on the issue of operating reserves. Two items under close scrutiny are the proposed and potential projects ML&P has been successful in procuring for a superconductive magnetic energy storage system and the battery proposals Bradley Lake Proje Management Committee Meeting Minutes - November 18, 1993 Page 5 of 8 as an alternative or a contributor to spinning reserves. He said the Committee is considering suggesting to the appropriate body that the RCC be the technical group designated to coordinate certain aspects of these projects and determine how they would apply in the interconnected system. Mr. Lovas reported that the RCC continues to be concerned with developing a method of monitoring the economic consequences of reliability analyses. He said the RCC is considering changing their emphasis from that of perfor- mance factors and performance evaluations to one that focuses on the economic consequences of the technical conditions on the system overall and provides the ability to contribute toward a method of evaluating the individual impacts and how the benefits and/or the costs of the reliability levels can be dealt with among the utilities. Mr. Lovas stated that the RCC is currently compiling the data they have reviewed in order to provide a definitive status report of the evaluations performed to date and provide a recommendation for the next steps in the process. Referencing the Ron Saxton memo distributed at the October meeting, Mr. Lovas said this objective is, in part, related to the concern regarding outstanding issues which need to be resolved. Mr. Lovas reported that the RCC is also in the process of defining tasks and programs for the University of Alaska, Fairbanks, which has received authorization to expend up to $50,000 to conduct studies and evaluations. Mr. Lovas stated that the RCC is working with UAF to develop programs and actions for 1994 that would contribute to the overall effort of the operating reserve evaluation and to the operation of utilities. Mr. Lovas concluded his report by saying that the next meeting of the RCC is scheduled for December 16, 1993. In response to a question by Mr. Ritchey, Mr. Lovas gave a brief history of the developments to date since the RCC was charged by the ASCC with the responsibility to study the operating reserve requirements of the interconnected system and to develop an appropriate level of operating reserve. Mr. Stahr stated his support for UAF’s participation in the program to determine the appropriate levels of spinning reserves and mixes. He urged the continued involvement of UAF in this process. Discussion followed. Bradley Lake Proje Management Committee Meeting Minutes - November 18, 1993 Page 6 of 8 Mr. Kelly stated that the Healy Clean Coal Project, with construction to commence in 1994, will be a future factor that will bear on this project. Discussion followed regarding the BES and SMES systems. Mr. Burlingame briefly discussed the impact of the new load-shedding unit which has been in place approximately six months. Mr. Stahr concurred with Mr. Burlingame that the installation of the new load-shedding system has been a tremendous improvement. Master Operating Agreement Update HEA O&M Agreement - Terms and Conditions Homer Electric Association/Alaska Ener Authorit Project Management Committee Duties - Mr. Saxton stated that his commentary regarding Item B., Master Operating Agreement Update, will also touch on Items C. and D. Mr. Saxton stated that the BPMC had a draft of the Master Operating Agreement as well as a draft of HEA’s O&M Agreement at the last meeting. He reminded the Committee that he was supposed to have received Committee member comment within one week, then he was to have distributed a compilation of the comments to the Committee members along with a memo scheduling a conference call to discuss them. However, he did not receive any comments during that time. Mr. Saxton reported that he now has the Committee member comments and will be able to get the comments compiled and distributed to the Committee members by Monday, November 22nd. He said a conference call could be scheduled for Monday the 22nd or Tuesday the 23rd, or the conference call could be scheduled for the following week, which would give the Committee members time to review the compiled comments. Mr. Saxton pointed out that HEA and the Alaska Energy Authority are anxious for BPMC to get started, and although he didn’t feel any insurmountable issues had been raised, the member comments provided to him require discussion, and a conference call for this purpose should be scheduled soon. Mr. McCrohan stated that he felt the budget process could be conducted simultaneously with the Agreements, but ultimately, the signing of the Agreements has to precede the budget because if Homer’s duties or the roles of the parties change, it will affect the budget. He recommended that the Agreement process be completed by early December Bradley Lake Proje Management Committee Meeting Minutes - November 18, 1993 Page 7 of 8 12. 13. in order to facilitate having the budget process completed by mid-December. Mr. Saxton reiterated that he would require a couple of days to compile and distribute the Committee member comments, but a conference call meeting needs to be scheduled in order to discuss the comments. Mr. Kelly stated that although he has not been directly involved in this process, he has some cost concerns, from the standpoint of the Budget Committee process, which relate to retention of costs by AEA and level of costs by Homer. Brief discussion followed. Mr. Story concurred that Mr. Saxton should compile and distribute the Committee member comments, with a confer- ence call to be scheduled for the 22nd or 23rd of November to discuss contract concerns. With regard to the budget, Mr. Story stated that the contract is separate from the budget. The contract must be approved before the budget in any event, so required budget changes will be made as a result of the contract revisions. Discussion followed. There was a consensus of the Committee that Mr. Saxton would distribute the compiled contract comments to the Committee members no later than Monday, November 22, and a conference call would be held Wednesday, November 24, 1993, at 9:00 a.n. Mr. Kelly requested that Mr. Ritchey provide an update of the Budget Committee meeting relative to the status of the HEA and AEA costs. Upon request, Mr. Ritchey duplicated his handout on the board and provided an explanatory narrative for the Committee’s benefit. Discussion followed. BUSINESS NEW A. Approval of Legal Expenses and Other Payments MOTION: Mr. Kelly moved to approve payment of approxi- mately $12,000 for Committee legal expenses for the month of October 1993. Seconded by Mr. Ritchey. A roll call vote was taken, and the motion passed unanimously. COMMITTEE COMMENTS A. Next Meeting Date - The Committee discussed issues to be addressed prior to year end. Based on these discussions, there was a consensus of the Committee that a meeting in December may not be required. However, there will be a Bradley Lake Project Management Committee Meeting Minutes - November 18, 1993 Page 8 of 8 14, conference call to discuss Committee member comments regarding the Master Operating Agreement and the HEA O&M Agreement on Wednesday, November 24, 1993, at 9:00 a.m. IBEW Labor Negotiations - Mr. Sieczkowski pointed out that the IBEW labor negotiations are currently suspended pending the decision made at this Committee meeting with regard to HEA’s takeover of the project. If there is a substantial delay in Homer’s takeover, it is likely that IBEW would pursue labor negotiations, and BPMC would be obligated to continue with them. Pre-Meeting - Chairman Highers requested that a brief pre- meeting be held in the Training Room when this meeting adjourns and prior to commencement of the next meeting. ADJOURNMENT There being no further business of the Committee, the meeting was adjourned at 9:15 a.m. BY: David L. Highers, Chairman ATTEST: Dennis V. McCrohan, Secretary BRADLEY LAKE HYDROELECTRIC PROJECT SUMMARY OF OF FINANCING COSTS THROUGH SEPTEMBER 30, 1993 RECONCILIATION WITH CASH BALANCE Total Costs Total Constraction Cost 314,500,000 Financing Costs 12,921,538 Total 327,421,538 Less: Section 31 Costs (2,255,000) Net dividable costs 325,166,538 Add: Section 31 costs 2,255,000 327,421,538 Contributions 340,340,000 Amount to be refunded 12,918,462 Costs to camptetion (9/30/93) 3,419,051 * Required Cash Balance 16,337,513 Available Cash Balance (09/30/93) in Trust 15,672,837 Cash held in State System (AKSAS) 465,685 Interest receivable * 304,463 Total Available Fund 16, 985 Unlocated Difference 105,471 Sar ‘Total Projected Construction Costs including Reser Less: PSA Section 31 Costs (2,255,000) Total other Incurred Canstruction Costs per Progress Report No. 87, after adjustments for Incurred costs not paid 314,500,000 (308,825,949) Net Remaining Construction Costs * 3,419,051 FINCOS19.XLS, 1/5/94; 9:51 AM, Page 3 of 3 Utility Costs AEA Costs 162,583,269 162,583,269 2,255,000 0 164,838,269 162,583,269 165,260,000 175,080,000 AZL,731 12,496,731 VALLT ~ / t L LtE/M GOLDEN VALLEY ELECTRIC ASSOCIATION, INC. Fairbanks, Alaska January 21, 1994 TO: Bradley Lake Project Management Committee FROM: Bradley Evans, IOC Chairman’ SUBJECT: PMC Request for IOC Review of Operating and Reserves Issues At the PMC meeting held on November 18, 1993, it was requested of the Ioc chairman to solicit input from IOC participants regarding operating and reserve issues. It is anticipated IOC members will eventually provide insight regarding the pros and cons to some concerns which are before the railbelt managers. To complement this request, the IOC members were asked to prioritize their concerns. Additionally, it was agreed by IOC members any issue which a member felt was important to reserves or operations should be fair game. Some members requested we eventually put operating issues to an economic test as part of a final presentation. But, before we start on any final reports or analysis, everyone agreed it would be useful to put all the I0c issues on the table. It may prove beneficial for everyone to begin looking at all operating issues, not just a restricted few. Attached are the issues provided by IOC participants. The IOC and its respective members are available to provide details to any of the listed concerns or others, at your convenience. /OA JAN 25 ’94 @8:34AM GVEA OPERATIONS P.2/6 GOLDEN VALLEY ELECTRIC ASSOCIATION, INC. IOC Assignment RAILBELT OPERATING/RESERVE ISSUES INTERCONNECTED ISSUES (GVEA) Eb SHORT TERM 1. Spinning Reserve Limits on Bradley * The AIA does not stipulate requirements for spinning reserve response, Therefore, Bradley should not be restricted until such time as the AIA redefines spinning reserve. . Consequences of an unrestricted Bradley are overstated. The economic gains outweigh the reliability risks, * Other hydro resources are not restricted even though their response may in fact be inferior to Bradley's. 2. Bradley Procedures for Reserve Allocations * There exists no provisions in current procedures for determining operating reserves for multiple users on the same unit. Note: The problem does not exist for all Bradley participants. 3, Multiple SILOS Users * Numerous operating consequences are not anticipated by the AIA, therefore, before any further SILOS is permitted these considerations should be addressed. * A practical limit for SILOS has not been established. 4. Reserves Not on AGC s A fundamental precept imposed by the AIA is in order for spinning reserves to be counted, they must be on AGC, Currently some reserves are counted which do not meet this requirement. 3; Interconnected Operations * Multiple operators for one resource. This practice leads to excessive costs and decreases reliability. Page 1 of 5 JAN 25 ’94 @8:34AM GVEA OPERATIONS P.3/6 IOC Assignment Railbelt Operating/Reserve Issues INTERCONNECTED ISSUES (GVEA) continued: i. LONG TERM i. Unit Reliability * There currendy exist no incentives, other than internal economics, for utilities to raise their overall units reliability. Note: The impact of unit trips have been reduced by the new system UF protective scheme. However, two factors will adversely effect this issue; 1) As utilities progress towards more SILOS, this problem will again become evident. 2) Dispatches rich in hydro and steam spin will result in load shed even under the new UF scheme, 2: Existing Alaska Intertie * Differential loading problem on existing Alaska Intertie. This problem poses a significant safety and reliability risk, 3. SCADA © Performance of the Alaska Intertie Data Network has been substandard. The next generation SCADA systems should require functional networking capabilities. 4. Economic Dispatch ¥ Currently, the Railbelt is not dispatched to the lowest possible cost. It is common to see unloaded steam generation at the same time less cfficient smaller units are fully loaded. While the Railbelt is making progress in planning joint use of transmission, the generation system is mostly left unnoticed from a Railbelt perspective, INTERCONNECTED ISSUES (CEA) The following issues are the interconnect issues Chugach sees as important, listed in the priority of concern and impact on the system as seen from Chugach: 1, System Operations We believe that utilities should not operate equipment not contained within their control area. We believe this degrades the security of the interconnected system and can lead to system collapse, loss of load, or equipment damage. We believe this has an extremely negative impact on the interconnected system and is our greatest concern for resolution. Page 2 of 5 JAN 25 ’934 @8:35AM GVEA OPERATIONS P.4/6 IOC Assignment Railbelt Operating/Reserve Issues INTERCONNECTED ISSUES (CEA) continued: 2. Cost of Intertie Operation We believe the cost of operating the Anchorage - Fairbanks Intertie is severely overinflated. The inflated costs and payment for duties with no direct adverse impacts and minimal actual direct responsibilities adversely effects the transactions of Bradley Lake, firm and non-firm transactions and prohibits the economic operation of the Railbelt system. 3. System Reserves We believe the quantity and quality of reserves being carried by the Railbelt utilities is adequate with the incorporation of the new loadshedding system. However, we believe the rescrves are being incorrectly calculated by the Southern Controller and the Southern Controllers reserves themselves are being overstated. We believe the policy of issuing reports which are incorrect and biased creates an adversarial working relationship among the utilities, prohibits the economic exchange of power and capacity and degrades the benefits of jointly owned resources which is our major concern. 4. Unit Reliability We believe the total number of unit trips in the Railbelt system to be excessive. We believe each unit should have the same reliability and be penalized for reliability which falls below a certain level. However, with the incorporation of the new underfrequency loadshedding system, these concerns are reduced and we do not believe this is a priority item for resolution by the interconnected utilities, 5. Selling of Spin We believe that the selling of spin should not degrade the reliability of the interconnected system. We further believe the selling of spin has historically increased the reliability of utilities not involved in the transactions as evidenced by the historical outage rates. We believe that the incorrect categorization of the history of reserve contributes to a lack of cooperation and inhibits the economic operation of the Railbelt system, The selling of spin is not a major issue, the incorrect characterization is. 6. Bradley Reserves We believe the utility taking delivery and scheduling the energy on a long term commitment, has the responsibility of reserves. We also believe the AEA has, by contract, an operating reserve obligation by virtue of its Bradley Lake contract and Intertie Agreement. This is not a major issued at this ime. 7. SILOS We believe the use of SILOS is acceptable and is not an issue. Page 3 of 5 JAN 25 794 @8:35AM GVEA OPERATIONS P.S/6 IOC Assignment Railbelt Operating/Reserve Issues CONTENTIOUS ISSUES AT THE IOC AND SUBCOMMITTEE LEVEL (ML&P) (1992-1993 Time Period) The reserve requirement (spinning and operating), as defined in the Alaska Intertie Agreement, and how Participants may carry required reserves under the Agreement is at the center of most discussions that have consumed a lot of time, but achieved very litle during the last rwo years, The approach suggested at the last PMC meeting, making known the pros and cons of the issues, to include the economic impact of each issue to the Utility Managers, holds promise. Once these are on the table, the Managers will be in a better position to arrive at a solution for change that does not assess cost disproportionately to any one Unlity. If they cannot, an imposed solution is probably the next best hope -- through the appeal process in the AIA (as Mike Kelly suggested in the PMC meeting that kicked off this effort). Burning Issues for ML&P a Sale of spin clearly undermines the security of the interconnected system and is not allowed under the contract. Remedy this abuse, b. Determine the most cost effective mix of reliability measures we will decide to endorse for a given set of reliability assumptions. (Assumes we have not yet zeroed in on the most desirable solution.) c. Determine the cost of ’b' above, and decide how we will distribute this cost among the Railbelt ratepayers. This is not an exhaustive list from our viewpoint, but resolution of the above should be addressed first CURRENT RAILBELT RESERVE ISSUES - 9/21/93 (HEA) We believe this is a good document leading the way to resolution of issues by the PMC and the IOC as recommended, Our comments are as follows: a. Although AEA may now be a participant under the AIA, they are not signatory to Addendum No. 1 at this time. We question if AIA would have a capacity obligation even if signatory to the Addendum. This argument rests on our interpretation of Bradley Lake capacity responsibility: AIA does not have generation control, but that Bradley output is controlled by and allocated to the purchasers. An independent legal review may be required to resolve this issue. Page 4 of S JAN 25 ’94 @8:36AM GVEA OPERATIONS P.6/6 © IOC Assignment Railbelt Operating/Reserve Issues CURRENT RAILBELT RESERVE ISSUES - 9/21/93 (HEA) continued: b. We disagree with the position on item No. 8 "How should a Jointly-Owned generation unit be treated for the purpose of determining resource obligations?" Assignment of responsibility based upon ownership shares does not consider the right of owners to transfer conrrol, including Bradley shares, to others which include related reserve responsibilities. The current method of allowing HEA to assign its Bradley shares (and related spin requirements) to CEA is proper and should be continued. The IOC does not have the jurisdiction to interpret the AIA and accordingly, does not have jurisdiction in this matter. If necessary, this item should be addressed by the RUG. We disagree with the position that "nothing in the AIA precludes utility participants from making non-firm sales of spinning reserves, ..." (item No. 9). Section B-2.4.1 of Addendum No. 1 to the AIA requires that spinning reserves be calculated as the difference between total machine capability and total machine loading in member system. If the machines are fully loaded, no reserves exist, and the member is simply in violation of the AIA. Although the RUG may wish to consider amending the AIA on this subject, we believe the AIA makes "selling of spin" a clear violation. Should this “loaded” spin be subject to immediate interruption via an approved SILOS program, then technically, the required spin is provided by this SILOS program. We understand this does not presently occur. Page 5 of 5 Alaska Energy Authority MEMORANDUM TOs Bradley Lake Project Management Committee Members FROM: Dennis V. McCrohan, Secretary DATE: January 25, 1994 SUBJECT: Master Operating Agreement Mr. Ron Saxton of Ater Wynne Hewitt Dodson & Skerritt will be providing information on the Master Operating Agreement at the BPMC meeting. No documentation available at this time. 01/25/94 11:03 503 22 179 ATER WYNNE oo2 _—_ R=97% DRAFT 4/21/94 10:15am BRADLEY LAKE HYDROELECTRIC PROJECT MASTER MAINTENANCE AND OPERATING AGREEMENT THIS AGREEMENT dated as of , 1994, is entered into by and among the ALASKA ENERGY AUTHORITY (the "Authority") and the BRADLEY PROJECT MANAGEMENT COMMITTEE ("BPMC"), (collectively the "Parties”). WITNESSETH: WHEREAS, the Authority is a public corporation of the State of Alaska duly crealed, organized and existing pursuant to AS 44.83; WEHEREAS, the Authority has constructed the Bradley Lake Hydroelectric Project (the "Project"), together with Project Related Facilities needed to interconnect the Project with the Bradley Lake Purchasers, and certain related facilities and equipment; WHEREAS, the Authority is the owner of the Project, the Project Related Facilities, and the related facilities and equipment; WHEREAS, facilities and equipment owned, leased and/or operated by certain Bradley Lake Purchasers are needed to enable the Authority and the Bradley Lake Purchasers to fully utilize electric energy and capacity from the Project; WHEREAS, the Bradley Lake Purchasers are all signatories to the Bradley Lake Hydroelectric Project Agreement for the Sale and Purchase of Electric Power ("Power Sales Agreement"); WHEREAS, the BPMC was formed pursuant to the terms of the Power Sales Agreement and is made up of a representative of each of the Bradley Lake Purchasers and the Authority and is delegated certain obligations related to the administration of the Project; 1 - MASTER MAINTENANCE AND OPERATING AGREEMENT 503 226 0079 01-25-94 11:03AM POQO02 #19 01/25/94 11:04 503 227 -179 ATER WYNNE {oo03 R=97% DRAFT 1/21/94 10:15am WHEREAS, the Power Sales Agreement provides that the BPMC shall arrange for the operation and maintenance of the Project and Project Related Facilities and adopt an annual budget of Project Costs; and WHEREAS, the Parties desire to establish a contract administration and budgeting procedure for contracting for the maintenance and operation of the Project, the Project Related Facilities, and the related services, facilities and equipment, and for the lease and/or use of other facilities and equipment in a manner consistent with the requirements of the Power Sales Agreement; NOW, THEREFORE, the parties agree as follows: Section 1. Definitions and Abbreviations. For the purposes of this Agreement, ie following definitions and abbreviations apply: (a) Agreement means this Agreement governing the administration and budgeting for operation and maintenance of the Project. (b) Annual Project Budget means the budget for the Project and Project Related Facilities as adopted or in effect for a particular Fiscal Year, and as amended or supplemented from time to time pursuant to the applicable provisions of the Power Sales Agreement, as provided in the Power Sales Agreement. (c) Authority or AEA means the Alaska Energy Authority, an agency of the State of Alaska. (d) Bradley Lake Hydroelectric Project or Project means the Project described in Exhibit C to the Power Sales Agreement. (e) Bradley Project Management Committee or BPMC means the committes composed of the Authority and the Parties established in Section 13 of the Power Sales Agreement. (f) Bradley Lake Purchasers means Chugach Electric Assucialion, Inc., Golden Valley Electric Association, Inc., the Municipality of Anchorage d/b/a Municipal Light & Power, the City of Seward d/b/a Seward Electric 2 - MASTER MAINTENANCE AND OPERATING AGREEMENT 503 226 0079 01-25-94 11:03AM PO003 #19 01/25/94 11:05 503 25° «(079 ATER WYNNE @ooa R=97% DRAFT 1/21/94 10:15am System, Alaska Electric Generation & Transmission Cooperative, Inc., Homer Electric Association, Inc., and Matanuska Electric Association, Inc. (gq) Contracts means those agreements entered into by the Authority with Contractors to perform services for, or operation or maintenance of, the Project or Project Related Facilities, including any amendments thereto. (h) Contractors means those entities retained pursuant to this Agreement to perform operation or maintenance of the Project or Project Related Facilities pursuant to this Agreement. Contractors may include Bradley Lake Purchasers. (i) | Fiscal Year means that twelve (12) month period defined in the Power Sales Agreement. (j) Power Sales Agreement means the Agreement for the Sale and Purchase of Electric Power by and among the Authority and Chugach Electric Association, Inc., Golden Valley Electric Association, Inc., the Municipality of Anchorage d/b/a Municipal Light & Power, the City of Seward d/b/a Seward Electric System, Alaska Electric Generation & Transmission Cooperative, Inc., Homer Electric Association, Inc., and Matanuska Electric Association, Inc., dated December 8, 1987, as may be modified or amended by the parties thereto. (k) Project Related Facilities means the transmission and other facilities and equipment owned by AEA and used to interconnect Bradley Lake Purchasers with the Project, to deliver power from the Project to the Bradley Lake Purchasers, and any other facilities and equipment hereafter constructed or acquired and designed to enhance the stability or reliability of that power. (I) Prudent Utility Practices for the purposes of this Agreement, shall have the meaning provided in Section 1(x) of the Power Sales Agreement. Section 2. Term. (a) This Agreement shall become effective when it is executed by the Parties. 3 - MASTER MAINTENANCE AND OPERATING AGREEMENT 503 226 0079 01-25-94 11:03AM PO04 #19 01/25/94 = =11:05 503 25° “079 ATER WYNNE Boos R=97% DRAFT 1/21/94 10:15ain (b) This Agreement will remain in effect until the termination of the Power Sales Agreement or until the Authority ceases its legal existence, unless the rights, powers and duties of the Authority are transferred to a successor entity with substantially the same expertise within the intendment of Prudent Utility Practices, powers and duties as the Authority. Section 3. Project Operation and Maintenance. (a) Subject to the provisions of this Agreement, the Authority shall enter into any Contracts necessary to perform services for, or operation and maintenance of, the Project or Project Related Facilities. (b) All Contracts shall be subject to the Master Contract Provisions set forth herein. Each Contract shall contain a specific clause providing that it is subject to the provisions of this Agreement. (c) Prior to executing any Contracts the Authority shall present those Contracts to the BPMC for its review and approval. (d) When executed, all Contracts shall be included as exhibits to this Agreement. (e) All Contracts, other than those required by emergency conditions, shall be planned for, considered, and approved by the BPMC in the development of the Annual Project Budget or at regular meetings of the BPMC designated in advance by the BPMC Chairman. (f) The Authority and each Contractor shall be responsible for preparing plans and budgets for each Contract executed pursuant to this Agreement for operation and maintenance of the Project for submission to the BPMC for review and approval as part of the preparation of the Annual Project Budget. (g) Except as provided by Section 13(e) of the Power Sales Agreement, the Authority shall obtain BPMC approval of any work to be performed by a contractor either through a specific line item in the Annual Project Budget or separate BPMC approval in accordance with BPMC procedures. 4 - MASTER MAINTENANCE AND OPERATING AGREEMENT 503 226 0079 01-25-94 11:03AM PO05 #19 01/25/94 11:06 503 22> 179 ATER WYNNE oo06 R=97% DRAFT 1/21/94 10:15am Section 1. Relationship to Power Sales Agreement. This Agreement implements the terms of the Power Sales Agreement, and in no way is intended to modify the terms of the Power Sales Agreement. Section 5. Third Party Beneficiaries. (a) The Parties intend that the BPMC is the representative of the Purchasers and is a third party beneficiary of all Contracts with the legal right to enforce any Contracts. (b) The BPMC, pursuant to BPMC procedures, may designate one or more of the Purchasers to represent the BPMC in any action to enforce its third party rights hereunder. Section 6. Dispute Resolution. In the event that the Authority and the BPMC cannot agree on the terms and conditions of a particular Contract, either Party may request mediation of the dispute, by providing written notice to the other Party within twenty (20) days of the BPMC. meeting at which the dispute occurs. If a dispute is mediated, that mediation shall be conducted under the Commercial Mediation Rules of the American Arbitration Association. The BPMC shall be responsible for arranging the mediation and both the Authority and the BPMC shall be parties to the mediation. Mediation shall be completed within ninety (90) days of the date notice of the request for mediation is given. lf mediation is unsuccessful, either Party may proceed to arbitration or litigation as provided for in the Power Sales Agreement. Section 7. Master Contract Provisions. All Contracts shall include the general provisions set forth in Exhibit A, together with specific provisions applicable to that Contract, and shall follow substantially the form set forth in Exhibit A. 5 - MASTER MAINTENANCE AND OPERATING AGREEMENT 503 226 0079 01-25-94 11:03AM POO6 #19 01/25/94 11:06 503 22 179 ATER WYNNE {4007 R=97% DRAFT 1/21/94 10:15am Section 8. General Provisions. (a) Amendments. Any amendments or modifications to this Agreement must be in writing and signed by the Parties. (b) Conduct in Accord with Applicable Law. The Parties agree that at all times during the term of this Agreement, they shall conduct themselves in accord with all applicable laws and permits, and they will undertake no action contrary to such codes, laws, or permits. The laws of the State of Alaska shall govern this interpretation and application of this Agreement and the actions of the parties thereunder. (c) Exclusivity of Contract. All terms and provisions of this Agreement will be incorporated in writing into Uhis Agreement selling forth the full intent of the parties. (d) Notice and Communication, Any notice or demand involving this Agreement shall be sent to the appropriate Party by registered or certified mail. Notice to the Authority shall be addressed to the Executive Director. Notice to the BPMC shall be addressed to the Chairman of the Bradley PMC. (e) Prudent Utility Practices. All actions of the Parties under this Agreement shall conform to Prudent Utility Practices. (f) Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the successors, legal representatives or assigns of the Parties. However, this Agreement may not be assigned by any Party without the written consent of the other Party. If the Authority discontinues its current legal existence, this Agreement will be terminated and the obligations of the Authority hereunder will automatically be assigned to the BPMC, without the need for consent by the Contractor, unless the rights, powers and duties of the Authority are transferred to a successor entity with substantially the same expertise within the meaning of Prudent Utility Practices, powers and duties as the Authority. (g) Waiver Not Continuing. Any waiver at any time by any party to this Agreement of its rights with respect to any default of the other party hereto, or with respect to any other matter arising in connection with this 6 - MASTER MAINTENANCE AND OPERATING AGREEMENT 503 226 0079 01-25-94 11:03AM POO7 #19 01/25/94 11:07 503 22 079 ATER WYNNE Moos R=97% DRAFT 1/21/94 10:15am Agreement, shall not be considered a waiver with respect to any subsequent default, right or matter. Any delay short of the statutory period of limitations in asserting or enforcing any right shall not be deemed a waiver of such right. (h) Section Headings. The section headings of this Agreement are for convenience only, and do not purport to, and shall not be deemed to, define, limit or extend the scope or intent of the section to which they pertain. (i) Severability. In the event that any provision of this Agreement shall be finally adjudicated by a court of competent jurisdiction to be invalid or unenforceable, the remainder of the Agreement shall be unaffected by such adjudication and all the remaining provisions of the Agreement shall remain in full force and effect as if such provision so adjudicated to be _ invalid had not been included herein. (j) Bepresentations and Warranties. Each Party represents that it is duly authorized to execute this Agreement and to perform its obligations under this Agreement. Approval of this Agreement by the BPMC shall provide sufficient authority for the Chairman of the BPMC to execute the Agreement. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed the day and year first above written. BRADLEY PROJECT MANAGEMENT COMMITTEE Date: , 1994 By: David L. Highers Chairman 7 - MASTER MAINTENANCE AND OPERATING AGREEMENT 503 226 0079 01-25-94 11:03AM POO08 #19 01/25/94 11:07 503 2: 079 ATER WYNNE Boos DRAFT 1/21/94 10:15am ALASKA ENERGY AUTHORITY Date: , 1994 By: nae William R. Snell Executive Director 8 - MASTER MAINTENANCE AND OPERATING AGREEMENT R=97% §03 226 0079 01-25-94 11:03AM POO9 #19 01/25/94 =11:08 503 22> “379 ATER WYNNE @o1o R=97% DRAFT 1/21/94 10:15am EXHIBIT A NTRACT PROVISIONS (a) Independent Contractor. Unless otherwise agreed to by the Parties, each Contractor entering into a Contract shall perform solely as an independent contractor. (b) Annual Planning and Budget. The Authority shall prepare, or cause the Contractor to prepare, the initial plans and budgets to be submitted to the BPMC for the operation or maintenance service in the Annual Project Budget. (c) Subcontracting. A Contractor may subcontract work on the operation or maintenance of the Project or Project Related Facilities, with the written approval of the Authority and the BPMC, which shall not be unreasonably withheld. (d) Invoices. A Contractor shall submit complete written invoices to the Authority for payment. Invoices shall include supporting documentation as required by Attachment 1. (e) Payment and Dispute Resolution, The Authority shall expeditiously arrange for payment of all invoices, and shall work with the Contractor to promptly resolve any disputed billings. (f) Accounts, Records, and Audits. In keeping records for work performed under a Contract, the Contractor shall utilize the accounting system required of public utilities and licensees by the Federal Energy Regulatory Commission for electric plants. Contractors shall make their records available as required. The Contractor shall retain copies of all invoices, payroll records, and other supporting documents sufficient for an audit of all expenditures, for three (3) years following the close of each Fiscal Year. A Contractor will furnish the Authority with operating and financial statements related to work performed under a Contract as may be reasonably requested by the Authority. If receipt of those statements is hile 503 226 0079 01-25-94 11:03AM PO10 #19 01/25/94 11:08 @503 227°> ~079 ATER WYNNE Moir R=97% DRAFT 1/21/94 10:15am unreasonably delayed, the Authority may, with its own staff or agents, perform all work necessary to collect the data reasonably necessary, but only at such times and in such a manner as will not unreasonably interfere with Contractor’s operations under a Contract. (g) Insurance. During the term of the Contract, the Contractor shall purchase and maintain insurance covering injury to persons or property suffered by the Authority or a third party, as a result of errors or omissions or operations by a Contractor or by its subcontractor which arise both out of and during the course of the Contract. The Contractor shall require all subcontractors providing services directly or indirectly under a Contract to provide the same insurance as required of the Contractor. Coverage shall also provide protection against injuries to all employees of the Contractor and the employees of any subcontractor engaged in work under a Contract. Copies of all required insurance policies shall be furnished to the Authority prior to beginning work under a Contract. These policies will show evidence of coverage and provide for ninety (90) days notice of written cancellation, non-renewal for material change in the coverage. The Contractor shall purchase insurance adequate to cover its operations performed in connection with the work under the Contract. Specifically, each Contractor shall maintain Worker’s Compensation Insurance and Comprehensive General Liability Insurance, including Comprehensive General Liability Broad Form Insurance, Automobile Liability Insurance, Owned Aircraft Insurance (where applicable), and Owned Watercraft (where applicable), in amounts acceptable to the Authority and consistent with the Power Sales Agreement. (h) Indemnity. The Authority, to the extentipermitted by applicable law and subject to the availability of funds, and each Contractor (as "Indemnitor") agrees to and shall indemnify and defend the other, its officers, employees, and agents (as "Indemnitee") for tort liability for all claims for damages and injuries of any character or nature whatsoever arising from the sole negligence of the Indemnitor, including its office, employees or agents in relation to performance under this Agreement. Indemnitor agrees to assume the defense thereof and to pay all expenses (including attorney’s fees) connected therewith. For purposes of this ne 503 226 0079 01-25-94 11:03AM PO11 #19 01/25/94 11:09 @503 2: 079 ATER WYNNE Mo12 DRAFT 1/21/94 10:15arn section, "sole negligence" shall include acts or omissions of the Indemnitor, its officers, employees, or agents, or any combination thereof, and situations where such acts or omissions, in combination with the negligence of third parties combines to cause injury or damage to persons or property. It shall not include situations where the acts or omissions of the Indemnitor, its officers, employees, or agents combines with the negligence of Indemnitee to cause such injury, which situations shall be governed by the provisions of the subsection below relating to concurrent negligence. Each party agrees that liability (including costs of defense and attorney's fees) for claims arising from the concurrent negligence of both Parties shall be apportioned according to the respective percentage of fault attributable to each Party as determined by agreement or by the trier of fact. (i) Amendments. Any amendment or modification to a Contract must be in writing and signed by the Contractor, the Authority and approved by the BPMC. ) | Conduct in Accord with Applicable Law. The Contractor and the Authority agree that at all times during the term of a Contract, they shall conduct themselves in accord with all applicable laws and permits, and they will undertake no action contrary to such laws or permits. The laws of the State of Alaska shall govern this interpretation and application of the Contract and the actions of the parties thereunder. (k) Prudent Utility Practices for the purposes of this Agreement, shall have the meaning provided in Section 1(x) of the Power Sales Agreement. (l) | Contract Hours and Safety Standards. All Contracts are subject to all applicable provisions of state and federal law concerning work hours and safety standards. (m) Equal Employment Opportunity. All Contracts are subject to all applicable provisions of state and federal law concerning Equal Employment Opportunity. R=97% 503 226 0079 01-25-94 11:03AM PO12 #19 | 01/25/94 11:09 503 22 79 ATER WYNNE R=97% DRAFT 1/21/94 10:15am (n) Fxelusivity of Cantract. All terms and provisions agreed to between the Authority and any Contractor will be incorporated into a written Contract setting forth the full intent of the parties. (0) Notice and Communication, Any notice or demand involving a claim of default, breach of a Contract, or notice of a dispute shall be sent to the appropriate party by registered or certified mail. Notice to the Authority shall be addressed to: the Executive Director, Alaska Energy Authority, 480 West Tudor, Anchorage, Alaska 99603. (p) Section Headings. The section headings of a Coniract are for convenience only, and do not purport to, and‘shall not be deemed to, define, limit ar extend the scope or intent of the section to which they pertain. (q) Severability. In the event that any provision of a Contract shall be finally adjudicated by a court of competent jurisdiction to be invalid or unenforceable, the remainder of the Contract shall be unaffected by such adjudication and all the remaining provisions of the Contract shall remain in full force and effect as if such provision so adjudicated to be invalid had not been included herein. (r) Successors and Assigns. A Contract shall be binding upon and inure to the benefit of the successors, legal representatives or assigns of the Contractor and the Authority. However, a Contractor may not assign a Contract or any party thereof without the written consent of the Authority and the BPMC. If the Authority discontinues its current legal existence, its obligations under a Contract will automatically be assigned to the BPMC, without the need for consent by the Contractor, unless the rights, powers and duties of the Authority are transferred to a successor entity with substantially the same expertise within the meaning of Prudent Utility Practices, powers and duties as the Authority. (s) Waiver Not Continuing. Any waiver at any time by any party to a Contract of Its rights with respect to any default of the other party hereto, or with respect to any other matter arising in connection with that Contract, shall not be considered a waiver with respect to any subsequent default, right or matter. Any delay short of the statutory period of limitations in asserting or enforcing any right shall not be deemed a waiver of such right. AS 503 226 0079 01-26-94 11:03AM o13 PO13 #19 01/25/94 11:10 503 2 1079 ATER WYNNE Mor DRAFT 1/21/94 10:15 (t) Third Party Beneficiaries. The BPMC, as representative of the Purchasers, is a third party beneficiary of this Contract, with the legal right to enforce the provisions hereof. In any action by the BPMC for damages, the Contractor shall have the right to assert against the BPMC any defense which it could have asserted against the Authority. The raising of any such defense by the Contractor shall not affect any right of a purchaser or the BPMC under the Master Operating Agreement or Power Sales Agreement. R=97% 503 226 0079 01-25-94 11:03AM PO14 #19 01/25/94 11:10 503 22 )79 ATER WYNNE ois DRAFT 1/21/94 10:15am ATTACHMENT 1 QU ! J Monthly invoices will consist of cost summaries and support documents traceable to the summaries. Examples of support documents included: A. Labor Time sheets, approved by a supervisor, indicating hours spent on operation or maintenance. Labor rates will be applied in the summary. The labor rates will be as approved in the annual budget including overhead and betrefils rales, B. Equipment Charges Hourly rates as approved in the annual budget, for each type of equipment used, multiplied by the hours used. Usage must be traceable to time sheet or summary. This applies only to equipment owned by the Contractor. C. Supplies, Material and Subcontractors Including an Itemization of the Percentage Markup for Contractor of Subcontractor Overheads Copies of paid invoices for purchases, rentals, and subcontracts required for operation or maintenance or Contractor material issue tickets if supplies and/or materials are issued from Contractor’s inventory. Materials or supply prices will be based on Contractor’s average annual inventory cost. Cost summaries shall be broken down into the Federal Energy Regulatory Commission chart of accounts. R=97% 503 226 0079 01-25-94 11:03AM PO15 #19 OPERATION & MAINTENANCE AGREEMENT FOR BRADLEY LAKE PROJECT BETWEEN HOMER ELECTRIC ASSOCIATION, INC. AND ALASKA ENERGY AUTHORITY January 20, 1994 Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section Designated Section Section Section Section Section 10 La 12 i3 14 15 16 17 18 19 20 TABLE OF CONTENTS De hala Cs ONS evcqensyslc) suche sterol elet elletieroilotie te) citenieiohel sielionerey alte 2 Derm GCE BOOM ceca es cc eke es eee ee 4 Qualiitted UcdMity Status). says © siete eeleiere = sie 5 Operator's General; Duties ~a.< ssc = sim « ssieie 3 sisi 5 Operator's Specitic DutLes oi. cee o eicie © sieisie «) elie 6 Accounting and ReECOFGS mc «sce seis 6 ale © see =) clisiis 8 pe ee 9 Extraordinary (COStS . sisd6 a sicie © siei@ 0 sllein @ sfielle 15) ici 10 Emergency Expenditures .................-2008- 10 Disbursement. Of Eunds! .. .4q6 < 466 400 «sams = 5 a6 11 Access to Operator's Facilities ............. vd Use of Project Living Quarters .............. aa SEES ok CU A Re 12 Dispute! RESOLUELONY 2 jie eee sae sieicie © vieiicie © Stele 16 Notices, Time and Holidays Computation, Representatives) ~ sisisis = ssc © cise © o ele & eeie © cicicis © wlieieie 16 =| (Remedies Cumulative onic ose « sise1o aes © Site = ss 16 - Availability of Information ................. 17, =) Termination) oor. « isis selic © sas) © allele © sielie 5) 5 seei6 17 = Eonce) Majeure siii @ secs = cicie © siete « cilsie «cise vices 7, Third Panty Beneficiaries << s.6 ssm« 0 s06- = ac 6 18 Section 21) |- Assignment, of ‘Contract je. oie 3 a oii | olnele ©.- 19 Secediony) 22) )— | acid its) Saito) oy cticitn|o) ol slic oo) siisro) 1 allele) e) ole s\rsirs je} el aietiel ole © 19 Sectiion\23) — | Multiple |iCopiesi cieyeraye1e leis) tele =! ele (e/aioiielel< site lel © > 19 Section 24 - Entire Agreement; Priority of Power Sales TAGTSSMENE Eo Shelse <levielle (oo! sitotielie ol slietle (oe! elle} ©) oil sirerie|o) elfetie. «) eile to\|s) oilelie| 6) efelielte) «) si 19 OPERATION & MAINTENANCE AGREEMENT FOR BRADLEY LAKE PROJECT THIS AGREEMENT dated this___ day of , 1994, is entered into by the HOMER ELECTRIC ASSOCIATION, INC. (HEA) ("Operator") and the ALASKA ENERGY AUTHORITY ("Authority"). WITNESSETH WHEREAS, the Authority is a public corporation of the State of Alaska duly created, organized, and existing pursuant to AS 44.83, and authorized by law to sell electric power generated by the Bradley Lake Project ("Project"); WHEREAS, the Authority is authorized under AS 44.83.396 to enter into agreements for the operation and maintenance of power projects owned by the Authority with a "qualified utility"; WHEREAS, the Bradley Lake Project Management Committee ("BPMC") is authorized under its Bylaws adopted pursuant to the terms of the Bradley Lake Project Power Sales Agreement, to approve agreements for the operation and maintenance of Project facilities; WHEREAS, the Operator has been identified in the "Bradley Lake Hydroelectric Project Agreement for the Wheeling of Electric Power and Related Services" (Services Agreement) dated June 29, 1989 by the participating utilities as one of the two appropriate entities to operate and maintain the Project (the other being the Alaska Electric Generation and Transmission Cooperative, Inc.); 1 - OPERATION & MAINTENANCE AGREEMENT WHEREAS, the Operator is both a qualified utility within the meaning of AS 44.83.425(5) and is authorized to operate and maintain a power project acquired or constructed by the Authority; and WHEREAS, the Operator has agreed to operate and maintain the Project in accordance with the terms and conditions of this Agreement; NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS: Section 1 - Definitions For purposes of this Agreement, the following definitions apply: (a) (b) (d) (e) "Act" or references to AS 44.83, mean Title 44, Chapter 83 of the Alaska Statutes (1989), as amended. "Agreement" means this Agreement. "Authority" means the Alaska Energy Authority as established by the Act, and any successor agency thereto and, unless the context otherwise requires, such officers and agents of the Authority that may be delegated responsibilities and duties under this Agreement. "BPMC" means the Bradley Lake Project Management Committee as established under the December 8, 1987 Power Sales Agreement and operating under the Bylaws adopted on October 19, 1988. "Contract Year" means, except for the first and last Contract Years, the twelve month period starting July 1 of a calendar year through and including June 30 of the next succeeding calendar year. The first Contract Year shall be the period commencing with the effective date of this Agreement and extending through and including the succeeding June 30. The last Contract Year shall be the period commencing after the 2 - OPERATION & MAINTENANCE AGREEMENT 169) (g) (h) (i) G) (k) () (m) (n) (0) last full (i.e., twelve - month) Contract Year and ending on the expiration of this Agreement. "Dispatch" means to schedule daily and remotely monitor and control the voltage, frequency, and real and reactive power flow through the Project. "Dispatch Agreement" means the Agreement for the Dispatch of Electric Power and for Related Services between Chugach Electric Association, Inc. and the Alaska Energy Authority dated February 19, 1992. "Division of Risk Management" means an office which is part of the State Department of Administration and which is established pursuant to AS 44.21.020. "FERC" means the Federal Energy Regulatory Commission, an agency of the United States Department of Energy, or its successor agency. "Master Operating Agreement" means the Master Operating Agreement between the Authority and the BPMC dated , 1994. "O&M" means operation and maintenance of the Project and includes the duties set forth in Section 4 of this Agreement. "Operation and Maintenance Standards" means the Plant Operation and Maintenance Manual, and equipment installation, operation, and maintenance manuals. "Operator" means Homer Electric Association, Inc. (HEA) or its assignee. "Party" or "Parties" means each or all the signatories to this Agreement. "Power" or "Electric Power" means electric energy or electric capacity, or both, except where the context requires a distinction, in which case electric energy is expressed in kilowatt hours, and electric capacity is expressed in kilowatts. 3 - OPERATION & MAINTENANCE AGREEMENT (p) (q) (r) (s) "Power Sales Agreement" means the Bradley Lake Power Sales Agreement, dated December 8, 1987, among the Authority; the Municipality of Anchorage (d.b.a. Municipal Light and Power (ML&P)); the City of Seward (d.b.a. Seward Electric System (SES)); the Chugach Electric Association, Inc. (Chugach); the Golden Valley Electric Association, Inc. (GVEA); the Alaska Electric Generation and Transmission Cooperative, Inc. (AEG&T), the Matanuska Electric Association, Inc. (MEA); and the Homer Electric Association, Inc. (HEA). "Project" means the Bradley Lake power generation facility and the associated transmission and substation facilities described in Exhibit A. "Project O&M Budget" means the budget for the operation and maintenance of the Project as adopted and amended pursuant to this Agreement. "Purchaser" shall have the meaning given to that term by the Power Sales Agreement. Section 2 - Term of Agreement (a) (b) This Agreement shall take effect upon execution by the authorized representatives of all Parties. The term of this Agreement shall be five (5) years from the date on which it takes effect and shall continue from year to year thereafter, except upon written notice to terminate. Notice of termination by the Operator shall be given one (1) year in advance, effective on July 1 of the next Contract Year. Notice of termination by the Authority shall be given one (1) year in advance, effective on July 1 of the next Contract Year; provided, however, if the Authority reasonably determines that termination is necessary to avoid substantial damage to the Project or endangerment to public health or safety, this Agreement may be terminated in accordance with subsection (c). 4- OPERATION & MAINTENANCE AGREEMENT (©) In the event the Authority reasonably determines that the Operator's performance of its obligations under this Agreement, without immediate remedial actions, could cause substantial damage to the Project or endanger public health or safety, the Authority shall promptly notify the Operator and shall identify the areas where performance must be remedied. The Operator shall submit to the Authority a plan for remedial action to correct its performance within twenty-four (24) hours of such notice. The Authority or its designee shall have the right to temporarily take over the duties of the Operator until a remedial action plan reasonably satisfactory to the Authority is agreed to by the Operator. If the Parties fail to agree to a remedial action plan within thirty (30) days of submission, the Authority may terminate this Agreement. Section 3 - Qualified Utility Status The Authority has determined that the Operator is a qualified utility within the meaning of AS 44.83.425(5) and has met all the requirements thereof. Section 4 - Operator's General Duties To the extent authorized by the Project O&M Budget or as otherwise funded in accordance with this Agreement, the Operator shall: (a) (b) Operate and maintain the Project so as to make power available to the Purchasers in an amount equal to the amount the Purchasers may schedule from the Project, within the limitations imposed by available Project capability, available water, and the scheduling procedures adopted by the BPMC; Bring to the attention of the Authority Required Project Work (as defined in the Power Sales Agreement), and perform or cause to be performed such Required Project Work to the extent funds are made available for such purpose. 5- OPERATION & MAINTENANCE AGREEMENT The Operator shall not perform or cause to be performed Optional Project Work (as defined in the Power Sales Agreement) unless such Optional Project Work is approved and funded by the BPMC and assigned to the Operator by the Authority. Section 5 - Operator's Specific Duties To the extent authorized by the Project O&M Budget or as otherwise funded in accordance with this Agreement, the Operator shall: (a) (b) (c) (d) (e) Coordinate operation, maintenance, repair and other work schedules with the Purchasers in accordance with the Bradley Lake Allocation and Scheduling Procedures; Operate, maintain, and repair the Project in accordance with the Operation and Maintenance Standards. In addition the Operator shall use and update the Automated Maintenance Management System or such equivalent system as the Authority may direct. The Operation and Maintenance Standards shall be maintained at the Project site. Any revisions to the Operation and Maintenance Standards shall be effective within a period of time after notice having due regard to the nature of the revisions requested and necessary project budget revisions. Provide all material, labor, engineering and other technical support, subcontract management, and training to operate, maintain, and repair the Project, and all tools, equipment, spare parts, materials, and supplies needed to perform work under this Agreement in accordance with the Operation and Maintenance Standards and written directives by the Authority. Comply with all applicable federal, state, and local government laws, regulations and permits. Ifthe Operator elects to contest an order issued by a local government, state or federal agency (other than the Authority), the Operator shall promptly notify the Authority and the BPMC. Provide security and access in accordance with a mutually agreed plan; 6 - OPERATION & MAINTENANCE AGREEMENT (f) (g) (h) (i) (k) () Read, maintain, and operate all Project metering devices, record such readings, and maintain or forward data, forms, relevant graphs, and/or magnetic tapes as required by the Authority; Make annual recommendations to the Authority and BPMC for: qd) operation, maintenance, repair, replacement, and modification of Project facilities; (2) installation of additional protective relaying, instrumentation, control systems, or other apparatus as necessary to maintain or improve the Project and interconnected system reliability, integrity, efficiency, and safety; (3) a five (5) year schedule of estimated equipment modifications, replacements, additions, and disposals; Prepare monthly and year-end operating and financial statements, in a form acceptable to the Authority relating to the performance of this Agreement; Provide qualified personnel with the ability to perform the duties assigned to the Operator under this Agreement; Prepare and conduct an annual training program that meets the minimum training standards established by the BPMC. The Authority may require the Operator to undertake additional training which the Authority deems necessary, however, funding for such additional training is the responsibility of the Authority; Following a protective relay or alarm action, and upon observation or notification, interpret the cause, identify corrective measures, and take corrective action as the situation warrants. The Operator shall document any such actions within three (3) days of their accomplishment; Take prudent measures to protect equipment, personnel, and the general public from hazards arising from equipment failure such as electrical faults, vandalism, and mechanical 7- OPERATION & MAINTENANCE AGREEMENT (m) (0) (p) (q) (r) (s) () failure and repair and report damaged facilities to the Authority, to the BPMC on behalf of the Authority and any appropriate law enforcement authority, as soon as possible following each occurrence; Record the operating characteristics of the power plant equipment and machinery as required; Maintain the Project living quarters, including expenses for utility services, as a cost of operation and maintenance; Update, keep and make available to the Authority or any Purchaser the required Project documents, as-built drawings, and other records, including records to meet FERC license requirements and records required by any project related insurance agreements; Perform water and power operation studies as required to integrate power from the Project into the Purchasers' systems with due regard for the capability limits of the Project, planned water reserves, and Purchasers' power needs; Arrange for and administer subcontracts or agency agreements related to the O&M of the Project; Conduct all technical, operation, and maintenance inspections of the Project in accordance with FERC and other permits or agency requirements, and submit inspection and other reports to the appropriate entities as directed by the Authority; Support the Project by coordinating related technical and operating activities with the Purchasers; and Perform such other additional duties related to the operation, maintenance and repair of the Project as may be included in the Project O&M Budget. 8- OPERATION & MAINTENANCE AGREEMENT Section 6 - Accounting and Records In keeping any books of account required by Section 5, the Operator shall, to the extent that different rules are not prescribed by this Agreement or federal and state laws, follow the system of accounts prescribed for public utilities and licensees by FERC. Upon reasonable notice, the Operator and its contractors or subcontractors shall allow the Authority, BPMC, or their authorized representatives to audit books of account for the Project O&M and the supporting documents of the Operator and its contractors or subcontractors related to the Project O&M for a period of three (3) years following the close of a Contract Year. The audit shall be performed in such a manner that will not unreasonably interfere with the Operator's duties under this Agreement. Section 7 - Budget (a) (b) (©) (d) After the effective date of this Agreement, and in accordance with schedules provided by the Authority, the Operator shall prepare and submit each year to the Authority and the BPMC a draft O&M budget for the Project for the following Contract Year. The draft O&M budget shall be based upon prudent estimates and anticipated O&M requirements and expenditures, and reflect appropriate accounting and budgetary principles for utilities. The draft budget shall be prepared in a format and schedule provided to the Authority by the BPMC. Not less than 30 days prior to the beginning of a Contract Year the BPMC or the Authority acting pursuant to Section 13 (c) of the Power Sales Agreement shall adopt a Project O&M Budget for the Contract Year. The Operator shall perform its duties in a manner consistent with the Project O&M Budget except as provided in Sections 8 and 9 below. Ifthe Operator makes a determination during any Contract Year that it cannot perform its obligations under this Agreement without an increase in the expenditures authorized under the Project O&M Budget, the Operator shall report such finding to the Authority and the BPMC and shall submit a revised budget for the Authority's and the BPMC's 9 - OPERATION & MAINTENANCE AGREEMENT review and approval. In the event the revised budget is not adopted by the BPMC and the Authority, or the Authority, pursuant to Section 13(e) does not authorize and agree to fund such expenditures, and the Operator determines that it cannot perform its obligations under this Agreement, the Operator may terminate this Agreement upon 90 days notice to the Authority." Section 8 - Extraordinary Costs (a) (b) (c) Extraordinary costs are costs for operations, maintenance, repair or equipment replacement which were not anticipated to materialize in the Contract Year, and not provided for in the Project O&M Budget. If the Operator learns of an event or other contingency which involves an extraordinary cost, the Operator shall promptly notify the Authority and the BPMC of the circumstances and request authorization to make such expenditures. If required by the Authority, the Operator shall develop a scope, schedule, budget and proposed plan of work and deliver the same with a request to proceed as soon as practicable. The Authority shall respond in writing to the Operator's request as soon as practicable after the receipt of the plan. Upon approval by the BPMC and the Authority, or by the Authority alone, pursuant to Section 13(e) of the Power Sales Agreement, the Operator shall perform such work consistent with the plan. The Operator shall not incur any extraordinary costs without the written approval of the BPMC and the Authority, or by the Authority, pursuant to Section 13(e) of the Power Sales Agreement except as provided in Section 9 below. Section 9 - Emergency Expenditures (a) An emergency is an unforeseen combination of circumstances or the resulting state that requires immediate action to protect or preserve the Project, Project personnel, or public health and safety. 10 - OPERATION & MAINTENANCE AGREEMENT (b) The Operator shall take such actions as it reasonably believes are necessary in an emergency. If, in the reasonable judgment of the Operator, the emergency requires the Operator to incur costs prior to obtaining written approval from the Authority, the Operator shall notify the Authority and the BPMC of the emergency as promptly as practicable with due regard to the emergency. Section 10 - Disbursement of Funds (a) (b) (c) (d) The ordinary costs of performing under this Agreement shall be initially paid by the Operator. The Operator shall prepare an invoice identifying the actual costs incurred in a format mutually agreeable to the Authority and Operator. The invoice shall be furnished to the Authority by the fifteenth (15) of the month following the month in which the costs are incurred. All such invoices shall be subject to audit and approval by the Authority, such approval shall not be unreasonably be withheld. Subject to the availability of funds, the Authority shall reimburse the Operator for all costs under this Agreement. Any amounts owed by the Authority to the Operator shall be paid by the Authority within thirty (30) days of receipt of a bill from the Operator. Any amounts not paid within thirty (30) days shall accrue simple interest at the legal rate of interest at the time payment was due, and shall continue until paid by the Authority. Section 11 - Access to Operator's Facilities Authority and BPMC personnel or agents shall be granted reasonable access to the Project and the Project owned equipment and facilities on the Operator's premises upon reasonable notice and subject to security measures, for the purpose of inspection and testing. 11 - OPERATION & MAINTENANCE AGREEMENT Section 12 - Use of Project Living Quarters (a) Use of living quarters is established by the Bradley Work Rules. Modification of the Work Rules requires the approval of the Authority and the BPMC. (b) The Operator shall schedule occupation of the Project living quarters in an efficient manner. The Operator shall include in such scheduling, quarters for visiting employees of the Operator, subcontractors, the Authority, and the BPMC as needed and available. (c) On-site operations and maintenance personnel shall have priority in the use of permanent residences at the Project. Section 13 - Insurance (a) General. Q) (2) (3) Each Party shall be liable for the negligent, willful and grossly negligent acts of its officers, employees, agents and contractors with respect to the ownership, construction, operation, maintenance or repair of the Project. It is recognized that the project insurance does not cover the willful and grossly negligent acts of a Party. Each Party shall be solely liable for the willful and grossly negligent acts of its officers, employees, agents and contractors. During the term of this Agreement, the Operator shall use its best efforts to maintain insurance satisfactory to the Authority and the BPMC covering injury to persons or property suffered by any Party or a third party, as a result of errors, omissions, or operations which arise both out of and during the course of this contract by the Operator or by any of its contractors. Such "Operator insurance" may be obtained either by the Operator or be provided by the Authority or the BPMC under insurance policies covering the Project. Such Operator's insurance shall be the primary coverage for the exposures delineated in subsection (2) above with respect to the State of Alaska, its officers, agents, and employees, the BPMC, its officers, agents, and employees, and the Operator, its officers, agents, and employees, as named insureds. Any additional insurance or self-insurance separately maintained by the State, except insurance 12 - OPERATION & MAINTENANCE AGREEMENT (4) (5) (6) (7) (8) (9) (10) purchased on behalf of the BPMC, shall be in excess of the Operator's insurance and shall not contribute to it. The Operator will bear the cost of the required insurance, which cost shall be included in the Project O&M Budget as an operating cost. If the Operator elects to individually obtain the insurance required by subsection (2) above, it may be maintained as part of any other policy or policies of the Operator so long as the coverage of such policy or policies is substantially the same as if such coverage were maintained under a separate policy. The policy must be acceptable to the Division of Risk Management. Policies maintained under this Agreement must provide that any cancellation, non- renewal or material change be upon thirty (30) days written notice to all named insureds. Insurance Companies shown on the certificate of insurance must be acceptable to the Authority. The Authority shall not unreasonably withhold approval of such Insurance Company. The Operator shall, at least thirty (30) days prior to cancellation, non-renewal, or material change, provide the Authority with written evidence of insurance which replaces or reinstates the required insurance coverage. A copy of the insurance policies required by this Section will be furnished to the Authority prior to beginning work under this Agreement. Prior to February 1 of each year thereafter, evidence of insurance shall be provided by the Operator. The obligation to obtain and maintain insurance coverage pursuant to this Section shall be subject to the general availability of such coverage under reasonable terms and conditions. If one or more of the required insurance coverages is not available under reasonable terms and conditions, the Operator shall, under the guidance and direction of the BPMC and Division of Risk Management, use its best efforts to obtain substantively equivalent insurance coverage acceptable to the BPMC, the Authority, and the Division of Risk Management. If, after utilizing its best efforts, the Operator is unable to obtain the required insurance coverage under reasonable terms and conditions, as reasonably determined by the Operator, the Operator shall request a waiver of the relevant insurance requirement. The request shall outline steps taken by the Operator to obtain such insurance and shall disclose quotations received for coverage. To the 13 - OPERATION & MAINTENANCE AGREEMENT (b) (c) (11) (12) extent the waiver will not materially affect the safe and prudent operation of the Project, the Authority, after consulting with the Division of Risk Management, will not unreasonably withhold approval of the requested waiver. Failure to furnish satisfactory evidence of insurance or failure to maintain the policy without complying with this subsection shall result in a material breach of this Agreement. Any Party, before the expiration date of the existing policy, may reopen the insurance requirements on sixty (60) days notice. The Authority shall annually, prior to February Ist each year, furnish evidence of insurance to the Operators and the BPMC. Workers' Compensation Insurance. Q) (2) G3) The Operator shall maintain, for all employees of the Operator engaged in work under this Agreement, workers' compensation insurance as required by AS 23.30.045. The Operator is responsible for workers' compensation insurance for any of its subcontractors who directly or indirectly provide services under this Agreement. The insurer shall agree to waive all rights of subrogation against the State of Alaska, its officers agents, and employees for losses arising from operation of the Project. Workers' compensation insurance policy must include: (i statutory coverage for states in which employees are engaging in work; (ii) Employer's Liability Protection of not less than $500,000 per occurrence; (iii) | Broad Form All States Endorsement; and (iv) coverage as required by all State and Federal Acts where applicable. Comprehensive General Liability Insurance. (1) The Operator shall maintain comprehensive general liability insurance. The Authority, acting on behalf of the BPMC, has as of the effective date of this Agreement acquired general liability insurance which satisfies part of this 14 - OPERATION & MAINTENANCE AGREEMENT (d) (2) requirement. The Operator shall secure any additional insurance as required to meet its obligations under this subsection to the extent the insurance so acquired by the Authority is not sufficient to meet the Operator's obligations. The BPMC and the Authority shall be included as additional insureds as respects insurance required in this Section and shall not by their inclusion be responsible to the insurance carrier for payment of premium therefor. These insurance policies must also contain a provision providing for cross liability or severability of interest. The comprehensive general liability insurance shall be subject to the following limits of liability: (i) Bodily Injury and Property Damage Liability of a minimum $5,000,000 Combined Single Limits each occurrence and affording insurance for Premises Operations, Owners and Contractors! Protective, Independent Contractors, Products/Completed Operations, Blanket Contractual Liability, Broad Form Property Damage, and personal Injury Liability; (ii) Automobile Liability Insurance covering all vehicles. Such insurance shall provide coverage of not less than $5,000,000 Combined Single Limit each occurrence for Bodily Injury and Property Damage Liability. Additional Liability Insurance. The Operator shall maintain the following additional insurance, where applicable, for aircraft and watercraft owned or contracted for by the Operator. (1) (2) Owned Aircraft and Non-Owned Aircraft with seating capacity of five seats or less, except commercial, scheduled flights, with limits of liability not less than: $5,000,000 for Bodily Injury per occurrence; $1,000,000 for Passenger Liability per seat; and $5,000,000 for Property Damage Liability per occurrence. Coverage must include Slung Cargo exposures. If an aircraft with more than five seat capacity is used, special coverage and limits must be obtained and must be approved by the Authority; and Owned Watercraft and Non-Owned Watercraft with limits of liability not less than $5,000,000 per single occurrence as provided in the "in Rem Endorsement" under "Maritime Coverage B." Subcontractor's insurance. 15 - OPERATION & MAINTENANCE AGREEMENT Any contract entered into with a subcontractor, other than a Purchaser, by the Operator to perform part of its obligations hereunder shall include the indemnity and insurance provisions attached as Exhibit C. The Operator may request a waiver of part or all of such provisions where such waiver will not materially affect the Project and the Operator determines the waiver is necessary to its performance of this Agreement. The Authority will not unreasonably withhold approval of such waiver. Section 14 - Dispute Resolution Pending resolution of a disputed matter, the Parties will continue performance of their respective obligations pursuant to this Agreement. Ifthe Parties cannot reach timely mutual agreement on any matter in the administration of this Agreement, the Operator shall, to the extent necessary for its continued performance, make a determination of such matter without prejudice to the rights of the other Parties. Such determination shall not constitute a waiver of any other remedy belonging to either Party. Section 15 - Notices, Time and Holidays Computation, Designated Representatives (a) (b) Any notice required to be given to any Party by this Agreement shall be effective when it is received by such Party. In computing any period of time from such notice, the period shall commence at 12:01 p.m. on the date of receipt of such notice. Notice to Operator required by this Agreement shall be in writing directed to the General Manager of Homer Electric Association, Inc., 3977 Lake Street, Homer, Alaska 99603. Notice to the Authority required by this Agreement shall be in writing addressed to the Executive Director of the Alaska Energy Authority, 480 West Tudor, Anchorage, Alaska 99503. If the date for making any payment or performing any act is a day on which banking institutions are closed in the place where payment is to be made or a legal holiday, payment may be made or the act performed on the next succeeding day which is neither a legal holiday nor a day when banking institutions are closed. 16 - OPERATION & MAINTENANCE AGREEMENT (c) Each Party shall designate a representative to act for it in matters not requiring formal action by its governing bodies. Either Party may at any time change its designated representative by giving written notice to the other Party. Section 16 - Remedies Cumulative No remedy conferred upon or reserved to the Parties under this Agreement is intended to be exclusive of any other remedy or remedies existing at law or equity. Section 17 - Availability of Information The Parties shall make available to each other, for inspection and copying during business hours, all books, records, plans and other information relating to any calculation or determination to be made under this Agreement. Section 18 - Termination (a) Not less than 75 days prior to the date of any scheduled termination of this Agreement the parties shall meet for the purpose of discussing arrangements necessary for the orderly takeover of the duties of the Operator by the Authority. At or before the meeting the Operator shall submit to the Authority a takeover plan which sets forth the actions which in the opinion of the Operator are reasonably required to accomplish the takeover, and any budget amendments necessary to accomplish the plan. The Authority shall review and either approve or modify the plan and budget. The Operator shall perform in accordance with the approved plan, subject to any budgetary constraints. The Authority shall secure funding for and pay any extraordinary costs reasonably incurred by the Operator in performing its duties hereunder, including close-out and demobilization costs. 17 - OPERATION & MAINTENANCE AGREEMENT (b) Following termination of this Agreement for any cause, the Authority shall have the right and a reasonable amount of time, not to exceed six (6) months, to arrange disposition of Project-owned equipment on the Operator's premises. Section 19 - Force Majeure (a) No Party to the Agreement shall be liable to other Parties for, or be considered to be in breach of or default under this Agreement on account of, any delay in performance or any delay or failure to deliver, receive or accept delivery of energy due to any of the following events: (1) (2) Any cause or condition beyond such Party's reasonable control which such Party is unable to overcome by the exercise of reasonable diligence (including but not limited to: fire, flood, earthquake, volcanic activity, wind, drought and other acts of the elements; court order and act of civil, military or govern- mental authority; strike, lockout and other labor dispute excluding those disputes wrongfully caused by the Operator; riot, insurrection, sabotage and war; breakdown of or damage to facilities or equipment; electrical disturbance originating in or transmitted through such Party's electric system or any electric system with which such Party's system is interconnected; and, any act or omission of any person or entity other than such Party, or Party's contractors or suppliers of any tier or anyone acting on behalf of such Party); or Any action taken by such Party which is reasonably necessary or prudent to protect the operation, performance, integrity, reliability or stability of the Project or of such Party's electric system or any electric system with which such Party's electric system is interconnected, whether such actions occur automatically or manually. 18 - OPERATION & MAINTENANCE AGREEMENT (b) In the event of any delay excused under this section, the time for performance thereby delayed shall be extended by a period of time reasonably necessary to compensate for such delay. No cost adjustment will be allowed, only time extensions as appropriate. Nothing contained in this paragraph shall require any Party to settle any strike, lockout or other labor dispute. Each party shall give the other Parties prompt written notice of any delay which the Party giving notice considers to be an excusable delay of its performance. Section 20 - Third Party Beneficiaries This Agreement gives no rights or benefits to anyone other than the parties, the Operator and the Authority, and the BPMC as a third party beneficiary. The BPMC is the only third party beneficiary. In any action by the BPMC for damages the Operator shall have the right to assert against the BPMC any defense which it could have asserted against the Authority. The raising of any such defense by the Operator shall not affect any right of a purchaser or the BPMC under the Master Operating Agreement or Power Sales Agreement. Section 21 - Assignment of Contract HEA assignment of its rights and responsibilities under this agreement shall be subject to the approval of the Authority and BPMC. HEA expects to request approval to assign its rights and responsibilities under this Agreement to AEG&T. Approval of such assignment request is subject to a finding by the Authority that AEG&T is a qualified operator. No such assignment shall operate to relieve HEA of its obligations under this Agreement. Section 22 - Exhibits The provisions of the following exhibits attached hereto are incorporated by reference herein: Exhibit A - Project Facility Description; Exhibit B - Project Specific Federal and State Agency Requirements; Exhibit C - Insurance and Indemnification; and 19 - OPERATION & MAINTENANCE AGREEMENT Exhibit D - Exhibit A of the Master Operating Agreement Section 23 - Multiple Copies This Agreement shall be executed in several counterparts, each of which shall be an original, but all of which shall constitute one and the same instrument. Section 24 - Entire Agreement; Priority of Power Sales Agreement This Agreement in its entirety including the Exhibits and the Power Sales Agreement represent the entire Agreement of the Operator and the Authority. Nothing in this Agreement is intended to alter the rights and obligations of the Authority and the Purchaser(s) under the Power Sales Agreement. In the event the terms of this Agreement and the Power Sales Agreement are found to be in conflict, the terms of the Power Sales Agreement shall govern. In the event of a conflict between any provision in the body of this Agreement and any provision contained in an exhibit hereto, the former shall control. Any amendments to this Agreement shall be in writing. IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed the day and year first above written. HOMER ELECTRIC ASSOCIATION, INC. By. Title Date (SEAL) ATTEST: 20 - OPERATION & MAINTENANCE AGREEMENT ALASKA ENERGY AUTHORITY Title Date (SEAL) ATTEST: APPROVED: Assistant Attorney General 21 - OPERATION & MAINTENANCE AGREEMENT EXHIBIT "A" - BRADLEY LAKE PROJECT FACILITY DESCRIPTION 22 - OPERATION & MAINTENANCE AGREEMENT EXHIBIT "B" - BRADLEY LAKE PROJECT SPECIFIC FEDERAL AND STATE AGENCY REQUIREMENTS EXHIBIT "C" INSURANCE 1. Contractor to purchase/maintain insurance for duration of agreement, plus one year following final payment. 2D Specified limits are minimum levels. If the policy contains higher limits, contracting agency is entitled to coverage of higher limits. 3. Certificate of insurance must be furnished to contracting agency. ¢ Must provide for 30-day prior notice to the contracting agency of cancellation, reduction in liability. ¢ Failure to furnish constitutes material breach and grounds for termination. Types of Insurance Worker's Compensation: Contractor responsible for subcontractors. Coverage must include statutory coverage for states where employees are engaging in work and employer's liability protection not less than $100,000 per person, $100,000 per occurrence. Where applicable, coverage for all federal acts must also be included. Comprehensive of Commercial General Liability Insurance: Covers all operations of contractor providing insurance for bodily injury and property damage liability including coverage for: ¢ Premises and Operations ¢ Products and Completed Operations ¢ Broad Form Damage; and e Personal Liability Comprehensive Policy: Minimum combined single limit of liability is $300,000 per occurrence, $300,000 aggregate for bodily injury, property damage and personal injury. Commercial Policy: Minimum limits of liability are $300,000 per occurrence (combined single limit) for bodily injury and property damage, $300,000 per occurrence for personal injury, $300,000 aggregate for products-completed operations, and $300,000 general aggregate. Comprehensive Automobile Liability Insurance: Covers all owned, hired, and non-owned vehicles with coverage limits not less than $100,000 per occurrence bodily injury and $50,000 property damage. Professional Liability Insurance: Covers all negligent errors, omissions which the contractor, subcontractor or their employees make in the performance of the agreement which results in financial loss to the contracting agency. Minimum Limits: Combined Single Limit Contract Amount Occurrence and Annual Aggregate Under $100,000 $100,000 $100,000 to $499,999 $250,000 $500,000 to $999,999 $500,000 $1,000,000 and up NEGOTIABLE Contracting agency reserves right to implement an Owner Controlled Insurance Program with option of obtaining Professional Liability Insurance, contractor isn't required to carry Professional Liability Insurance. EXHIBIT C Page 2 of 2 EXHIBIT "D" SECTION 7 OF THE MASTER OPERATING AGREEMENT Alaska Energy Authority December 17, 1993 David L. Highers General Manager Chugach Electric Association, Inc. P.O. Box 196300 Anchorage, Alaska 99519-6300 RE: BPMC Insurance Subcommittee Dear Mr. Highers: During negotiations with Homer Electric Association, Inc. on the Bradley Lake Hydroelectric Project Operation and Maintenance Agreement, several issue regarding insurance coverage have arisen. We request that the necessary actions be taken to re-establish a committee that can meet in early January, in advance of the BPMC meeting: a A list of proposed agenda items is attached along with a brief synopsis of the issues. Dan Beardsley of my staff will put together a package for transmittal to the committee members once the membership and date of the meeting are established. Thank you for your assistance. Very truly yours, Dennis V. McCrohan Deputy Director (Energy) cc: David L. Fair, HEA Bradley Lake Hydroelectric Project Insurance Requirements A. Types of Coverage 1. Project Liability Insurance Property Boiler and Machinery General Liability Watercraft and Aviation 2. Directors and Officer's Liability . Operator's Policy General Liability Watercraft and Aviation Workman's Comp. Marine Insurance Hazardous or Contaminated Materials Coverage Debt Service Self Insurance Ww NAM B. __ Project Specific Issues 1. Indemnification Clauses. 2. Operator/Dispatcher Conflicts Relating to Loss Liability Additional Costs Supplemental Agreements Between Dispatcher and Operator Cc. Coverage Limits for Insurance 1. Term 2. Cost ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT AUTHORITY 480 WEST TUDOR » ANCHORAGE, ALASKA 99503-6690 + (907) 561-8050 » FAX (907) 561-8998 January 20, 1994 Mr. David Highers General Manager Bradley PMC Chairman Chugach Electric Association 5601 Minnesota Drive Anchorage, AK 99519-6300 Re: Bradley Hydroelectric Project Operation and Maintenance Agreement, AEA FY95 Budget and Labor Negotiations Dear Dave: The Bradley Operation and Maintenance Agreement and Master Operating Agreement comments have been received from your attorney. It is our understanding that these documents will come before the PMC on January 25, 1994, for consideration. By this letter, I wanted to notify you and the other members of the Bradley PMC of labor negotiation status and state FY95 budget requirements. Assuming the PMC approves the O&M Agreement, the budget recommendations may be resolved at the Budget Subcommittee meeting on January 31, 1994. The PMC should consider for adoption these budget proposals prior to Homer Electric (the contractor) assuming the O&M duties on February 14, 1994. However, the O&M Agreement can be adopted, in our opinion, without completion of the budget process. If there is no affirmative action by the PMC to approve the Bradley O&M Contractor at the January 25, 1994 PMC meeting, the state will have to perform two tasks. The first will be to file an amended state FY95 budget with the Office of Management and Budget by February 10, 1994. This will include the Bradley Lake Operation and Maintenance staff in AEA's FY95_ budget. The second will be for the AEA to commence labor negotiations on February 9, 1994, for the AEA/IBEW labor agreement as requested by the IBEW. If labor negotiations resume, we may require some help from an independent labor negotiator since we do not have the time or budget to pursue this task. Mr. David Highers January 20, 1994 Page Two Prompt action on these agreements and the budget may, therefore, avoid costly administrative tasks and procedures which are not necessary if the transition can be accomplished. We look forward to your discussion on these matters. Sincerely, Mc Ces \— Dennis V. McCrohan, P.E. Deputy Director (Energy) DVM:ec DOCEVA-272 cc: R. Snell, AIDEA J. Baldwin, Dept. of Law T. Stahr, AML&P R. Saxton, AWHD&S D. Calvert, City of Seward M. Kelly, GVEA N. Story, HEA K. Ritchey, MEA