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Home My WebLink AboutAK Intertie Agreement 1996ALASKA INTERTIE AGREEMENT STAN SIECZKOWSKI 10. 11. ALASKA INTERTIE INVOICE POLICY July 31,1996 The Budget Subcommittee shall meet quarterly and review the summary report of invoices paid to verify the proper coding and amounts.The Utilities shall provide the committee with a quarterly summary showing %spent,authorized amount,and line item balance. All invoices submitted to AEA shall have the proper backup to verify charges.The backup shall consist of payroll sheets,documented contract payments,copies of paid invoices for material and equipment,approved vehicle charges,and line item budgetcodes. { Invoices paid by Utilities for Intertie approved items shall be submitted to AEA within 60 days after the Utility month end closing in which the payment was made.The Utilities shall provide the budget committee a quarterly report describing the non-routine projectsthathavebeenperformed. Thé Utility that has incurred or made a firm commitment to incur an expense for the Intertie that will cross over the fiscal year end,shall notify the Budget Subcommittee by June 30.The notification shall identify the expense,the estimated amount,and theapproximatetimepaymentwilloccur. No invoice shall be paid by AEA if the 10C budget line item amount approved is exceeded until authorized by the Budget Subcommittee. The Budget Subcommittee shall have the authority to modify line item amounts if thetotalIntertiebudgetisnotexceededby5%. All invoices shall be processed in the order received;however,non-Utility invoices shall be processedfirst. abd t 2AEAshallprovidequarterlyreportsbythe45"working day following the end of the fiscal year quarter to the Budget Subcommittee.Revenues,energy projections and use,lineitemexpenses,investments,adjustments and any other pertinent data shall be reported. The budget shall be tied as close as practicable to the maintenance schedule. An audit may be conducted in accordance with Section 10.5 of the Alaska Intertie Agreement. Line item emergency expenditures or modifications,in addition to the approved IOC budget,require Budget Subcommittee review and IOC approval within 90 days of the action. h:\alAstan\lOC\Invoice Policy\Alaska Intertie Invoice Policy -July 31,1996 Article Article Article Article Article Article Article Article 8.loWDLoeee..WHFtnNor[ooooeose)PWNrTABLE OF CONTENTS Definitions Term and Effective Date 2.1 Effective Date 2.2 Termination General Interconnected Operation Utility Responsibility Curtailment of Service Other Agreements DYSULADLVLUtility Participant Associate Participant Associate ParticipantAssociateParticipant's Participation Addendum No.1 to the Agreement -Reserve Capacity Agreement Signatéries Minimum Rights of the Utilities to UsetheIntertieFacilities, Minimum Intertie Transfer Capability.Rights (MITCR) Determination of the Minimum Intertie Transfer Capability Rights (MITCR)'- Intertie Transfer Capability .Modifications and Additions to the Intertie Cantwell Tap Susitna Construction Power Bradley Lake Hydro Electric Generation Project Cost to Utility Participants for Intertie Transfer Capability Rights Intertie Costs Calculation of Unit Intertie Costs Initial Calculation of Unit Intertie Costs Allocation of Intertie Costs ae]ismWD©©MMOYNWWNNNNeyo°o10: 10 ll 12 12 13 13 14 14 14 15 16 16 O Article 9.Oo10woWooe°oeArticle 10. Article Article Article Article Article neboNrlohrNN&NrmwNrTABLE OF CONTENTS (Cont'd) Operating Committee Establishment of the Operating CommitteeProceduralResponsibilitiesofthe Operating Committee Operating Committee Authority,ProceduresandAppealProcurementofServices Waiver of Payment or Right to Recourse Operation of the Intertie Responsibility for Operation of the Intertie Suspension of Work in Performance of Duties of the Intertie . Budget for Operation of the Intertie Accounting and Records Audits Payment of Operators Scheduling of Power and Energy on the Intertie Scheduling Responsibility Power and Energy Schedules Intertie Schedule Limitations Maintenance of the Intertie Facilities Maintenance Responsibility Maintenance Budget and Costs Measurement of Electric Power and Energy Metering Transmission Losses Intertie Transmission and Transmission Service Intertie Transmission Loss Compensation Losses Transmission Service Transmission Service to Access the Intertie Provision for Adequate Transmission Service Facilities Compensation for Transmission Service Transmission Service Rates ii Article Article Article Article Article Article Article Article Article Article Article Article Article Addendum No.1 28. Article A iWhei>(OleedTABLE OF CONTENTS (Cont'd) Billing and Payments Billing Dispute of Billing Insurance and Liability Insurance Types of Insurance Other Insurance Coverage Requirements Indemnity Indemnity Comparative Negligence Warranty Denial and Exlusivity of Contract APA Denial of Warranty Exclusivity of Contract Uncontrollable Forces Waivers Successors and Assigns Successors and Assigns Third-Party Beneficiaries Governing Law Captions Notices Amendments Agreement Approvals and Transmittal Construction of Agreement Reserve Capacity 1-1 Annual Accredited Capability Responsibility iii Article Exhibit Exhibit Exhibit Exhibit TABLE OF CONTENTS (Cont'd) Responsibility for Operating Reserves Operating ReserveTotalOperatingReserve ObligationUtilityParticipantsAllocationof Operating Reserve Operating Reserve Calculation.hoNyhh>WNreAbbreviations and Definitions (Abbreviations:1-9) (Definitions:1-43) Illustration of Intertie Facilities Alaska Intertie Operating Agreement .- Transmission Service Rates APA Minimum Intertie Transfer CapabilityRightsDeterminationExample iv ALASKA INTERTIE AGREEMENT ' Among ALASKA POWER AUTHORITY; MUNICIPALITY OF ANCHORAGE,ALASKA, d.b.a.MUNICIPAL LIGHT AND POWER; CHUGACH ELECTRIC ASSOCIATION,INC.; CITY OF FAIRBANKS,ALASKA, MUNICIPAL UTILITIES SYSTEM; GOLDEN VALLEY ELECTRIC ASSOCIATION,INC.;ALASKA ELECTRIC GENERATION and TRANSMISSION COOPERATIVE,INC. This agreement (hereinafter "Agreement”),is made and enteredintothis2.pee'day of Jreon,4,--,1985,between ALASKAPOWERAUTH»public corporation of the State of Alaska ("APA");THE MUNICIPALITY OF ANCHORAGE,ALASKA,d.b.a.MUNICIPAL LIGHT AND POWER,a municipal corporation ("AMLP");CHUGACH ELECTRIC ASSOCIATION,INC.,a non-profit electric cooperative membership corporation of the State of Alaska ("CEA");THE CITYOFFAIRBANKS,ALASKA,MUNICIPAL UTILITIES SYSTEM,a municipal: corporation ("'FMUS"');GOLDEN VALLEY ELECTRIC ASSOCIATION,INC.,anon-profit electric cooperative membership corporation of theStateofAlaska("GVEA");and ALASKA ELECTRIC GENERATION and TRANSMISSION COOPERATIVE,INC.,(""AEGTC'"')of which Homer Electric Association,Inc.("HEA")and Matanuska Electric Association, Inc.("MEA")are members.These entities are sometimes hereinafter referred to individually as "Participant”orcollectivelyas"Participants".The Participants other than APAaresometimesreferredtoindividuallyas"Utility Participant”or collectively as "Utility Participants." WITNESSETH WHEREAS,AMLP,CEA,FMUS,GVEA,and AEGTC each own and operate electric utility facilities,or will in the future,and are eachengagedinthebusinessofprovidingelectricPowerandEnergyto customers,and WHEREAS,APA is constructing tthe electrical transmission facilities to interconnect the Utility Participants inNorthcentralAlaskawiththeUtilityParticipantsinSouthcentralAlaska("Intertie”)and is willing to make these electrical transmission facilities available to the Utility Participants for electrical Power and Energy transactions to improve reliabilityandeconomicalPowerandEnergydeliveriestotheUtilityParticipants'customers under the Alaska Energy ProgramestablishedbyA.S.44.83.380;and WHEREAS,the Utility Participants desire to improve theirreliabilityandengageintransactionsofelectricalPowerand -l- O Energy with each other under individual contractual arrangementsbetweentheUtilityParticipantsusingtheIntertie;and WHEREAS,the Intertie will interconnect the electric utilitysystemssothattheywillbeoperatedinelectricalsynchronism;and WHEREAS,the Utility Participants desire to establish individualrightsforthetransfercapabilityoftheIntertieandamethodofdeterminingcostsfortheserights;and WHEREAS,AMLP,CEA,FMUS,GVEA,and AEGTC have,in addition, entered into a separate agreement providing for Reserve Capacity and Operating Reserve Responsibility which is included asAddendumNo.1 to this Alaska Intertie Agreement,the purpose oftheAddendumbeingtoprovideaseparateagreementoftheUtilityParticipantswithrespecttoReserves; NOW,THEREFORE,IN CONSIDERATION of the mutual covenants in this Agreement,the Participants agree as follows: ARTICLE 1 Definitions Definitions are specified as Exhibit "A"attachedoOheretoandincorporatedhereinbythisreference.Exhibit "A'shall remain in effect during the term of this Agreement,but may be amended as agreed in writing by all the Participants. ARTICLE 2 Term and Effective Date Section 2.1 Effective Date This Agreement will become effective as of thedatesetforthaboveandwill,unless otherwise terminated as provided for in this Agreement,continue in effect until terminated as provided for in Section 2.2 of this Article.No costs will be assessed against the Participants under thisAgreementuntiltheIntertieisinCommercialOperation.No Participant assumes any obligationbysigningthisAgreementuntilallnamedParticipantshavesigned. Section 2.2 Termination 2.2.1 This Agreement may be terminated at any time by O 2.2.2 2.2.3 Section 3.1 3.1.1 3.1.2 3.1.3 mutual consent of all Participants. Any Participant may terminate its participation inthisAgreementbygivingatleast48monthsadvancewrittennotice.APA may terminate thisAgreementbygivingatleast48monthsadvancewrittennoticewhenAPAdeterminessuchactionto be required to improve Power systems serving theAlaskaRailbeltUtilities.Unless it is otherwise agreed any Participant which terminates its participation will continue to be liable only forIntertie-related costs due and payable before the date of its termination. Any Participant shall have the right to terminate its participation in this Agreement within 30calendardaysfollowingAPA's encumbrance of any debt obligation which is a cost recoverable by APAunderArticle8ofthisAgreement.APA shall notify all Participants in writing at least 90calendardaysinadvanceofanencumbranceofsuchdebtobligation,including the amount and terms of-the obligation.Each Participant shall notify APA in writing of its intention either to terminate or not to-terminate its participation in this Agreement within 60 calendar days followingreceiptofsuchAPAnoticeofitsintentiontoencumberadebtobligation. ARTICLE 3 General Interconnected Operation Participants shall cooperate and assist in atimelymannerintheenergization,testing andoperationoftheIntertiesoasnottoimpairordelaytheinterconnectedoperationofthe Intertie. Participants shall operate their electrictransmissionsystemsinterconnectedand_shallcooperateinfurnishingorreceivingthroughthepoint(s)of interconnection of their systems suchquantitiesofelectricPowerandEnergyasmayfromtimetotimeberequiredbyagreementbetweentheParticipantsinaccordancewiththetermsand provisions of this Agreement. The systems of the Participants shall operateinterconnectedcontinuouslyundernormal 3.1.4 3.1.5 3.1.6 3.1.7 3.1.8 conditions and the Participants shall cooperate inkeepingthefrequencyoftheinterconnectedsystemsoftheParticipantsat60Hzascloselyaspracticable,and in keeping the interchange ofPowerandEnergybetweenthesystemsoftheParticipantsascloselyaspracticabletothescheduledamounts.If synchronous operations oftheParticipants'systems are interrupted,theParticipantsshallcooperatetoremovethecauseoftheinterrupticnassoonaspracticableand restore their systems to normal interconnected operating condition. Participants shall maintain standards established by the Operating Committee for the control of time error and shall take appropriate corrective action to reduce time error upon receipt of a time error correction notification.The Intertie Operator oftheSouthernGrouphastheresponsibilitytoimplementthetimeerrorcorrectionproceduresasdevelopedbytheOperatingCommitteeestablished under Article 9.In addition,the Intertie Operator of the Southern Group will coordinate each time correction to assure that it will start and end at the same time and will be made at the same rate by all interconnected systems. The systems of the Participants shall normally be operated and maintained to minimize,in accordance with Prudent Utility Practices,the likelihood of a disturbance originating in the system of one Participant causing impairment to the service of the system of another Participant or of any other system with which any Participant is interconnected. Each Participant shall be responsible for the reactive volt-ampere requirements of its system.Reactive volt-amperes may be interchanged betweensystemsfromtimetotime,subject to agreement between the Participants. Each Participant shall maintain voltage levels onitssystematanypointofinterconnectionasaredeemedappropriatebytheOperatingCommitteeand are compatible with interconnected operations with other systems. To the extent it can be controlled,no ParticipantshallimposeanyabnormalloaduponthefacilitiesofanotherParticipant.If emergency conditionsariseonthesystemofoneParticipantwhich -4- 3.1.9 overload the facilities of another Participant,the Participant upon whose system the emergencyarisesshalltakestepsimmediatelytoreducetheloadonsuchoverloadedfacilitiestotheirsafe and proper capacity,even though this may requirethatParticipanttodropload. Unintentional interchange of Power and Energybetweeninterconnectedsystemswilloccurbecause of the impossibility of continuously controllinggenerationexactlytoequaltheload.It is recognized that,due to the manner in which the systems of the Participants are interconnected ormaybeinterconnectedwitheachotherandwith other systems,a portion of the Power and Energyscheduledfordeliverybetweentwosuchinterconnectedsystemsmaynotflowdirectlyfromthesuppliertothereceiverovertheintended route through the transmission systems of.theParticipants,but may result in inadvertent flows through other systems.Therefore,because of these conditions: 3.1.9.1 All intentional Power and Energy deliveries between the system of oneParticipantandthesystemofanother Participant will be scheduled inadvance. 3.1.9.2 It shall be the responsibility of each Participant to maintain the net PowerandEnergyflowingintoandoutofits system during each hour so that deliveries are,as near as practicable, equal to the net scheduled amount.The difference between the net scheduled deliveries and the actual net deliveries will be balanced out in-kind in accordance with principles and practices established by the Operating Committee. 3.1.9.3 When there is a scheduled Power and Energy delivery by one Participant toanotherParticipant,and a portion of the scheduled Power and Energy actually flows through other systems which are not part of the scheduled transmissionpath,the portion of the Power andEnergyflowingthroughsuchothersystemswillbeconsideredashaving been delivered by the scheduled supplier by the scheduled transmission path. -5- 3.1.10 3.1.11 3.1.12 3.1.9.4 It is not the intent to grant anyParticipantanyrightgenerallytouse the system of any other Participant as an intermediary in Power and Energyflows,mor will the consent by aParticipanttoanysuchinadvertentflow through its system in a particular casecreateanyrightforthecontinuanceof such flows.When such inadvertent flow is objectionable to a Participantexperiencingtheflow,the Participantsshallcooperatetopreventsuchflow from occurring normally and to minimize inadvertent flows of this character. Each Participant shall provide on its electric system the necessary communications,telemeteringandcontrolfacilitiesatthepoints:of interconnection and other appropriate locations. In addition to meter records,the Participantsshallkeepsuchlogsheetsandotherrecords(as' determined by the Operating Committee)as may be needed to afford a clear history of the various scheduled and actual movements of Power and Energy into and out of the systems of the Participants. The originals of all such meter records,logsheetsandotherrecordsshallbeopen_toinspectionduringnormalbusinesshours'byrepresentativesofeachParticipant.EachParticipantshallfurnishtotheOperatingCommitteeappropriatedatafrommeterregistrationsandothersourcesonthetimebasisrequiredbytheOperatingCommitteewhensuchdataisusefulforsettlements,special tests, operating records or for other purposes not inconsistent with this Agreement. All Intertie Power and Energy transfers betweentheParticipantsshallbescheduledinadvanceandallIntertiebillingsshallbebasedonthoseschedulesratherthanonmeteredquantities.Each Participant will notify the Intertie Operatordispatcher(s)and other Participants with which itisdirectlyinterconnectedbeforeintentionally taking Power or Energy.Additions or modifications to these established schedules may be made by the dispatchers of the ParticipantspursuanttocriteriaestablishedbytheOperating Committee. Oo Section 3.2 3.2.1 3. 3. 3.2. 3. 2.2 2.3 2. 4 5 Utility Responsibility Each Utility Participant is responsible for itsownrealandreactiveload,plus'-reserves necessary and adequate to meet its respectiveobligations,and will operate and maintain itssystemandperformalldutiesandexerciseall rights under this Agreement in a manner consistentwithPrudentUtilityPractices. Each Utility Participant will be responsible foritsReserveCapacityObligationandaportionoftherequiredinterconnectedsystemOperatingReservesasprovidedforinAddendumNo.1 to this Agreement. Each Utility Participant will implement.anautomaticloadsheddingsysteminaccordancewith the criteria developed by the Operating Committee.When such criteria require installation of a coordinated automatic load shedding programapplicabletoaUtilityParticipantandits?wholesale electric utility customers,the UtilityParticipantmustseethatsuchaprogramisimplementedonthewholesaleelectricutilitycustomer's system.In the alternative,if such aprogramisnotimplemented,the UtilityParticipantmustprovidetheequivalentofthewholesaleelectricutility's program requirementandinstallitontheUtilityParticipant's own utility system,which may include,if the wholesale utility customer is not participating intheprograminafashionthatmeetssuchcriteria, automatic shedding of the wholesale utility's total system if necessary.In accordance with the guidelines established by the Operating Committee, Utility Participants shall coordinate,operate and set automatic load shedding systems to achieve maximum benefits to Participants. Through the Operating Committee,Participantsshallcoordinatethesettingandoperationof protective relays and control devices so as to maximize protection of facilities without unnecessarily restricting Power flow or inhibiting system reliability. Utility Participants shall regulate the intercon- nected system real and reactive Power flow and voltage as required by the Intertie Operators, which shall be in accordance with the procedures set down by the Operating Committee. -7- O Section 3.3 Section 3.4 Section 4.1 4.1.1 4.1.2 Curtailment of Service Except as otherwise specifically prohibited,anyUtilityParticipantwillhavetherighttorefusetodeliverPowerorEnergyunderthisAgreement,or,having begun such delivery,to curtail,restrict or discontinue such delivery,whenever,in such Utility Participant's judgment,suchdeliverywillendangeritsfacilitiesorinterferewithitsobligations,now existing or hereaftercreatedconsistentwiththisAgreement,to its customers or to other electric utilities. Other Agreements The respective systems of the Participants are nowormaybeinterconnectedwithothersystems,andotheragreementsforinterconnection,mutualassistance,pooling,Power supply and transmission services may exist.Future agreements may beenteredintobetweenParticipantsandother systems provided they are not in conflict with any'provision of this Agreement.The ParticipantsagreetoconductoperationsunderanyexistingagreementstoavoidaconflictwiththisAgreement.While the Participants intend toassisteachotherwhenrequested,such otheragreementsmaylimitthecapabilitiesavailableto the Participants to provide assistance under thetermsofthisAgreement. ARTICLE 4 Utility Participant Utility Participant An electric utility holding a Certificate of Public Convenience and Necessity from the Alaska Public Utilities Commission,or an organization whose members hold such a certificate and normally operate interconnected with a Participant or Participants signatory to this Agreement,may atitsoptionbecomeaUtilityParticipantunderthis Agreement.APA will become a Utility Participant at such time as it sells Power to a party that is not a Participant and is connected to theParticipants'interconnected system. An electric utility seeking Utility Participant status shall give 48 months written notice to the Participants of its intention.Such changes or modifications to this Agreement necessary to -8- provide for an additional Utility ParticipantshallbemadebyanaddendumtothisAgreementsignedbyallparties. 4.1.3 An electric utility can have Participant statusandrepresentationthroughoneorganizationorcorporateentityonly.No Participant is to havemorethanonevoteorrepresentativedirectlyorindirectlythroughanotherorganizationwithwhichitisaffiliated.It is the intent of this Section to limit Participant representation andvotingsothatnoParticipantcancontrolorexercisecontrolthroughanyorganizationalstructuremorethanitssingleParticipantstatus. ARTICLE 5 Associate Participant Section 5.1 Associate Participant 5.1.1 An electric utility holding a Certificate ofPublicConvenienceandNecessityfromtheAlaska>Public Utilities Commission,or an organizationwhosemembersholdsuchacertificateandnormallyoperateinterconnectedwithaParticipantmaybecomeanAssociateParticipantbycomplyingwithSubsection5.1.2 of this Section.The Alaska Power Administration may become an Associate Participant by complying with Subsection 5.1.2 of this Section. 5.1.2 An electric utility desiring Associate ParticipantstatusshallnotifyAPAinwriting.In the notice,the Associate Participant must designatethenameandaddressofapersontoreceive correspondence, 5.1.3 Upon receiving written notice of an electric utility desiring Associate Participant status,APA shall notify all Participants.The Associate Participant shall receive all subsequent notices, meeting minutes,reports,all correspondencepertainingtothisAgreement,and will be notifiedofthescheduledmeetingsonatimelybasis. Section 5.2 Associate Participant's Participation 5.2.1 An Associate Participant will have the right toattendallmeetingsandreceivecopiesofnotices, meeting minutes and reports on the activities involving this Agreement. O 5.2.2 An Associate Participant may participate in themeetings,but its vote or input on the activities andoperationsoftheIntertiewillbethroughaUtilityParticipantwithwhomtheAssociateParticipantis directly interconnected. ARTICLE 6 Addendum No.1 to the Agreement Section 6.1 Reserve Capacity Agreement Signatories. Utility Participants who sign this Agreement shallalsosignAddendumNo.1,Reserve Capacity andOperatingReserveResponsibility,attached to thisAgreement.If additional Utility ParticipantssignthisAgreement,they must also sign AddendumNo.l. ARTICLE 7 Minimum Rights of the Utilities to Use the Intertie Facilities Section 7.1 Minimum Intertie Transfer Capability Rights("MITCR").oO 7.1.1 Utility Participants shall have the right of firstrefusaltoanallocatedportionofthemaximumIntertietransfercapabilityplusanallotmentofcapabilitynotscheduledorusedbytheotherParticipantsforthepurposeoftransmittingor receiving Power and Energy over the Intertie. 7.1.2 The Intertie transfer capability shall be sharedinproportiontothesizeoftheUtility Participants of the Northern and Southern Groups as described in Section 7.2 of this Article.If a Utility Participant is not using all or part ofitsMITCRineachdirection,other Utility Participants have the right to use that unusedparttomaketransfers'across the Intertie,either as a purchase or sale of Power and/or Energy.Inadditiontoitsminimumrights,each UtilityParticipantshallhavearighttoanallocationofanyunscheduledorunusedMITCRoftheother Participants.. 7.1.3 During emergencies when it is necessary to use the Intertie to transfer Energy to maintain system integrity,a Participant's MITCR will be adjusteduntilsuchEnergyisrescheduledasScheduledOOutageservice.To the extent practical such MITCR adjustment shall be shared proportionally among the Participants. -10- O Section 7.2 7.2.1 The Operating Committee shall determine the MITCRbyJunefirsteachyear,or when a new ParticipantbecomesapartytothisAgreement.The MITCR ofeachParticipantshallbecalculatedasfollows: Determination of the MITCR The MITCR shall be determined by June 1eachyearbasedontheaverageofthethreemostrecentAnnualSystemDemandsoftheUtilityParticipants.The MITCRfortheremainingportionoftheinitialfiscalyearissetoutinExhibitD. Temporary reductions of MITCR may berequiredforinterimperiodsduetomaintenance,safety or equipmentfailure.The MITCR shall be determined separately for the Utility ParticipantsoftheNorthernGroupandoftheSouthernGroup.A Utility Participant'sMITCRshallbetheratioofitsaverageAnnualSystemDemandtothesumofthe- average Annual System Demands of its respective group multiplied by theIntertietransfercapabilityoftheIntertie.(Exhibit D of this Agreementcontainsadeterminationoftheinitial MITCR.) 7.2.2 The minimum Intertie transfer capability notscheduledorusedbyaParticipantshallbeavailabletotheotherParticipantsinthesamegroup(i.e.,Northern or Southern)on an allocated basis in the same proportion as their MITCR is to the total MITCR of their group.A ParticipantwhoseunusedMITCRisbeingusedbyotherParticipantsshallhavetherighttomakeuseofitsfullentitlementimmediatelyuponnotificationoftheParticipantswhoareusingalloraportionofitsMITCR. 7.2.3 A Participant.has the right to transfer on acontractbasisallorpartofitsMITCRtootherParticipantswithreasonablewrittennoticetoall Participants.A Participant whose unused MITCR is being used by another Participant shall be paid at its request by the using Participant a proratedamountoftheIntertieCapacityRatedeterminedby the following formula: -ll- P =ICR x CP x HR/THR P -is the monthly payment due the ParticipantwhoseMITCR,or portion thereof,is being used byanotherParticipant; ICR -is the Intertie Capacity Rate defined inSection8.2.6 of this Agreement; CP -is the average amount of capacity inkilowattswhichisusedbyanotherParticipant; HR -is the number of hours in the month duringwhichtheunusedMITCRwasscheduledbyanotherParticipant;° THR -is the total number of hours in the month. Section 7.3 Intertie Transfer Capability The maximum Intertie transfer capability of the° Intertie is 70 MW.The Operating Committee,with the approval of APA,may establish a different maximum Intertie transfer capability.NoprovisionofthisAgreementshallprohibitAPAfromreducingthemaximumIntertietransfer capability during periods for maintenance, equipment failure,safety considerations or otherreasonablecausesinvolvingPrudentUtilityPractices.Such temporary reductions of maximum Intertie transfer capability shall proportionallyreducetheMITCRofeachUtilityParticipantforthattemporaryperiod. Section 7.4 Modifications and Additions to the Intertie 7.4.1 Modifications and additions to the Intertie shall be designed and constructed so as not to reduce the Intertie reliability,subject to Prudent Utility Practice and reasonable economics.Design for such modifications shall be submitted to the Operating Committee for review and comment.ThecommentsoftheOperatingCommitteeshallbeincorporatedintothedesignofthemodifications and additions as they relate to the operation and reliability of the Intertie. 7.4.2 APA shall have the right to make additions, deletions or changes to the Intertie includingtapstothelinetoprovideelectricalservicesatlocationswhichitdeemsbeneficialand -12- O reasonable.Costs related to modifications oradditionscoveredbythisSection7.4.2 will not be charged to the Participants as a cost of Intertie use unless such modifications are of direct benefit to the Participants as determined in advance by the Operating Committee. 7.4.3 Participants shall have the right to requestadditions,deletions or changes to the Intertie.The request shall be in writing to APA withjustificationfortheaddition,deletion or change.APA will not unreasonably withhold makingsuchadditions,deletions or changes.Anymodificationshallbeattheexpenseofthe requesting Participant(s)unless such modificationisofdirectbenefittootherorallParticipantsasdeterminedinadvancebytheOperatingCommittee,in which case the Operating CommitteeshalldeterminehowtheUtilityParticipantswillsharethecost. 7.4.4 APA shall give reasonable .notice to all' Participants before making any modification as provided herein. O Section 7.5 Cantwell Tap The electric utility serving the community of Cantwell,Alaska located along the route of the Intertie transmission line shall have the right to use Intertie capacity to provide electric service to Cantwell customers.When the utility is a Participant to this agreement,such requiredcapacitywillbeprovidedbythatParticipant's MITCR.The cost of this service to this utility will be the same as for the Participants underArticle8ofthisAgreement.The cost of a substation and associated facilities necessary to provide transmission access to the Intertie shallnotbebornebytheUtilityParticipantsaspart of the cost of the Intertie. Section 7.6 Susitna Construction Power APA is responsible for providing Power and EnergyforconstructionoftheSusitnaHydroElectric Project.APA reserves the right to tap the Intertie and use Intertie capacity as required for construction Power for the Susitna Project.Terms and conditions applicable to such a tap shall besubjecttonegotiationandagreementbyall Participants. -13- O Section 7.7 Bradley Lake Hydro Electric Generation Project APA shall have the right to transfer to participants in the Bradley Lake Project Power and Energy on the Intertie subject to the terms of this Agreement. ARTICLE 8 Cost to Utility Participants forIntertieTransferCapabilityRights Section 8.1 Intertie Costs 8.1.1 Costs incurred in operating and maintaining theIntertieandtheAnnualDebtServiceonanybondsorotherdebtissuedbyAPAfor-the initial Intertie facilities,including the debt incurred on renewals and replacement of those facilities, shall be shared by the Utility Participants.Intertie costs shall be shared by the UtilityParticipantsinaccordancewithAlaskaStatute 44.83.398(£)which includes,at a minimum,the. following costs: all operation costs as provided for inArticle10ofthisAgreementandall maintenance costs as provided for in Article 12 of this Agreement,plus any O 8.1.1.1 "Operation and Maintenance Costs"are applicable taxes,but excludinguninsuredliabilityresultingfromdeductibleprovisionsofpropertyinsurancepolicies.The cost of Transmission Service for the Intertie Facilities owned by Matanuska Electric Association as provided for under the "Transmission Service Agreement between Matanuska Electric Association,Inc., which is a member of AEGTC,and Alaska Power Authority,"dated 1Z/18/&»shall be a part of the pération and Maintenance Costs under this Article 8. 8.1.1.2 "Extraordinary Maintenance and Replace- ment Costs"are uninsured liability resulting from deductible provisions of property insurance policies,costs offacilitymaintenance,renewals,and replacements. 8.1.1.3 "Annual Debt Service Cost"is interest on,and amortization charges sufficient -14- :to retire,any bonds or other debt issued by APA for construction of the Intertie,plus the debt service coveragefactordeterminedbyAPAtobenecessaryforthemarketabilityofitsbonds. 8.1.2 It is anticipated that all costs for construction of the initial Intertie facilities will be paidthroughdirectappropriationfromthelegislatureoftheStateofAlaska.However,any amount not appropriated will be subject to recovery inaccordancewithSection8.1.1 of this Agreement. x 8.1.3 Intertie costs will be estimated and budgeted annually by APA for the ensuing fiscal year,JulyIsttoJune30.APA shall annually develop apreliminaryIntertiebudgetfromtheIntertie maintenance budget,the Intertie operating budget,the Annual Debt Service costs and APA's administrative expense associated with the Intertie.The preliminary Intertie budget shall be provided to the Participants 13 months before:the first day of the budget fiscal year for their review and comment.Written comments of the Participants shall be submitted to APA by JulyO15thofyearprecedingthebudgetfiscalyear. Based on the preliminary Intertie budget and the comments from the Participants,APA shall annually establish the Intertie budget and submit it to the APA Board of Directors for approval. Section 8.2 Calculation of Unit Intertie Costs XK 8.2.1 On or before March Ist of each year the UtilityParticipantsshallsubmittoAPAprojectedusageoftheIntertieinkwh'on a monthly basis for the following fiscal year.. f 8.2.2 APA shall prepare a preliminary Intertie annualusage,estimate in kwh's and provide the same totheParticipantsbyAprillstofthesameyear. The preliminary Intertie annual usage estimateprovidedunderthisSection,with the use of otherhistoricorrelevantinformationshallinnoevent be less than the amount equal to 30 percent of the kwh's that could be transferred by continuous operation of the Intertie at the maximum ratedtransfercapacity,(initially established at 70MW)of the Intertie during that fiscal year.The projected usage in kwh's when in excess of the 30percentdescribedaboveshallnotexceedthetotalDprojectedusageoftheParticipants. ¥otU dedlina da stot : dene KEN woesud)fo MEM.uf)My Mabel &ah id Hote 459 15- 8.2.3 Utility Participants shall provide,by each MayIst,their written comments to APA on_the preliminary Intertie annual usage estimate. 8.2.4 Based on the preliminary Intertie annual usageestimatesoftheParticipantsandcommentsreceived,APA shall establish the estimated annual Intertie usage in kwh's for the following fiscal year. 8.2.5 The "Intertie Energy Rate"for the followingfiscalyear,expressed in cents per kwh shall be calculated by dividing 83.5 percent of the total annual cost of the Intertie as budgeted in theIntertiebudgetunderSection8.1 of this Article by the annual Intertie usage as established under Section 8.2.4 of this Article. 8.2.6 The "Intertie Capacity Rate"for the following fiscal year expressed in dollars per kw shall be calculated by dividing 16.5 percent of the total annual cost of the Intertie as budgeted in the- Intertie budget under Section 8.1 of this Article,by the sum of the Participant's MITCR,asdeterminedunderSection7.2 of Article 7. O Section 8.3 Initial Calculation otf Unit Intertie Costs Following execution of this Agreement,sufficient time may not be available to establish initial Intertie budget,usage and unit Intertie costs inaccordancewithsections8.1 and 8.2 of this Article.Accordingly,such initial budget,usage,and unit Intertie costs for the initial fiscal year,or portion thereof,shall be determined by Section 8.4 Allocation of Intertie Costs 8.4.1 Each Utility shall be obligated to reimburse APA . monthly the sum of the following: ;oe .;,8.4.1.1 The receiving Participant's scheduled(2 pot Sosahp ne.use of the Intertie for the month oe wo multiplied by the Intertie Energy Rate +in effect for that period;plus Se (0):4K 8.4.1.2 The Participant's MITCR in accordanceawithSection7.2 of Article 7 multiplied by one-twelfth of the Intertie Capacity O Rate in effect for that period. <Capes iq \ot ner"Gp heel Yee pelle Doll fly net 8.4.2 8.4.3 8.4.4 8.4.5 8.4.6 Section 9.1 9.1.1 A Utility Participant's obligation to pay inaccordancewiththisSectionmaybereducedifit can be demonstrated that APA has not met its responsibility to maintain the transmission line in accordance with Prudent Utility Practices. Such payment reduction shall be limited to a proration for the period of reduced Intertie transfer capacity. For billing purposes only,the scheduled use of the Intertie in any month shall be the product of the scheduled Intertie transfer at the Intertie Point of Interconnection and the number of hours each schedule was in effect during that calendar month. For billing purposes only,the Participant'sscheduleduseoftheIntertieforeachhourofa day shall be the final schedule for delivery submitted to the Intertie Operator of its group. Should APA's annual revenues received under' Subsection 8.4.1 of this Section exceed actual annual Intertie costs,revenues in excess of the Intertie costs shall be refunded to the contributing Participants in proportion to theamountofdollarsbilledtoParticipantstothetotaldollarsbilledforuseoftheIntertiein the fiscal year in which the revenues were accrued. Should APA's revenues received under Subsection 8.3 of this Section be less than the actual Intertie costs,the revenue deficiency shall be allocated among the Utility Participants in thesameproportionastheUtilityParticipants'MITCRaresharedasdefinedunderArticle7ofthis Agreement.APA shall bill the UtilityParticipantstheirproportionateshareofthis deficiency. ARTICLE 9 Operating Committee Establishment of the Operating Committee The Participants hereby establish an operatingcommittee,the "Operating Committee”.TheOperatingCommitteeshallconsistofonerepresentativeofeachParticipant,designated inwritingbyeachParticipant,and each Participantmayalsodesignateanalternatewhomayactinthesteadoftherepresentativeattheoptionofthat -17- 9.1.2 Section 9.2 9.2.1 9.2.2 9.2.3 Participant.A Participant may at any time changeitsrepresentative,or alternate,on the OperatingCommitteeandshallpromptlynotifyinwritingtheotherparticipantsofanychangeinsuchdesignation.The members of the OperatingCommitteeshalldesignatetheChairmanofthe Operating Committee annually at the first meetingofeachcalendaryear.Recommendations and decisions of the Operating Committee shall beadoptedifapprovedby75percentmajorityvoteofthetotalmembership.Only Utility ParticipantsshallhavetherighttovoteontheOperatingCommitteeonissuescoveredbyAddendumNo.1 and on automatic load shedding issues. The Operating Committee shall establish operatingproceduresandstandardpracticeswithrespecttothisAgreementfortheguidanceofdispatchers.andotheremployeesastomattersaffectingIntertieoperationspursuanttothisAgreementandshallrecommendarrangementsformetering,communications and other services and facilities.> The Operating Committee has no authority to modifyanyoftheprovisionsofthisAgreementortomodifyorsetratesunlessexpresslyprovidedforherein.The establishment of any procedure orpracticeordeterminationbytheOperatingCommittee,within the scope of the OperatingCommittee's responsibility,shall be effective when signed by the designated representatives ofatleast75percentoftheParticipants. Procedural Responsibilities of the Operating Committee The Operating Committee shall meet at least quarterly each year and at such times as deemednecessarybytheChairmanoranytwoofthe Participants. Written minutes shall be kept for all meetings of the Operating Committee,and major decisions oragreementsmadebytheOperatingCommitteeshallbereducedtowriting. The Operating Committee shall prepare and submitanexpensebudgettoAPAundersection10.3 ofthisagreementannuallytoprovideforCommitteeexpensesotherthantheexpensesofeachCommittee member,which shall be borne by the represented Participant. 18- O Section 9.3 Operating Committee Authority,ProceduresandAppeal. 9.3.1 The representatives constituting the OperatingCommitteeshallhaveequalauthority,and all=15-5 decisions made and direction given must be by 75bY.15 4S =percent majority vote of the total members of the Committee.A Participant casting a negative vote in an approved decision of the Operating Committeeshallhavetherighttoappealthedecisioninaccordancewith9.3.2 of this Article.An appealmustbedeliveredinwritingtothechairmanof the Operating Committee within five working daysofcastingthenegativevote. 9.3.2 If the Operating Committee is unable to agree ona Matter within its jurisdiction,such matter shall be resolved by unanimous agreement of the General Managers of the Utility Participants and the Executive Director of the Alaska Power Authorityortheirdesignatedrepresentatives.Should the General Managers of the Utility Participants and°the Executive Director of the Alaska Power Authority or their representatives fail to reach an umanimous agreement within 20 working days,O then the matter shall be submitted to binding arbitration in the following manner. 9.3.2.1 Arbitration shall be conducted before a board of three arbitrators selected under the guidelines of the American Arbitration Association and the arbitration shall be conducted in accordance with the commercial arbitration rules of the American Arbitration Association then in effect. In addition,the arbitrators must have education and experience in the particular matter being arbitrated. 9.3.2.2 The Participant(s)desiring arbitrationshalldemandarbitrationbygiving written notice to the other Participants.The notice shall conformtotheproceduresoftheAmericanArbitrationAssociationandshall >include a statement of the facts or circumstances causing the controversy and the resolution,determination or relief sought. -19- - °9.3.2.3 Before the matter is presented to theBoardofArbitrators,a conference shall be held by the Participants to attempttoresolvethecontroversyor,if resolution is not possible,to stipulatetoasmanyfactsaspossible,to clarifyandnarrowtheissues,and to agree inwritingtotheissuestobesubmittedto arbitration. 9.3.2.4 The Board of Arbitrators shall have no authority,power or jurisdiction to alter,amend,change,modify,add to,or delete any of the provisions of this Agreement,mor to consider any issues arising other than from the language in,and authority derived fron,this Agreement.The opinion and findings oftheBoardofArbitratorsshallbe reduced to writing and shall be binding on the Participants 15 days after the Board of Arbitrators issues a decision- unless all Participants jointly agree onanalternatesolution. 9.3.2.5 The costs incurred in connection withO,the arbitration shall be apportioned by the Board of Arbitrators as it deems appropriate. Section 9.4 Procurement of Services The Operating Committee shall have the right todirectlyprocureservicestheCommitteerequiressolongas_sufficient budgeted funds'areavailable. Section 9.5 Waiver of Payment or Right to Recourse Except for the provisions of Section 9.3 of thisArticle,nothing contained in this Agreement shallbeconstruedtoconstituteawaiverorsurrender by any Participant of its right to any action,inlaworequity,to enforce all provisions of this Agreement and its rights hereunder. Notwithstanding the foregoing,in the event of areferralofamattertoaBoardofArbitrators pursuant to this Agreement,or a judicial oradministrativeproceedingonaccountofanydisputedmatter,all Participant(s)shall continuetomakepaymentsinaccordancewiththisAgreementOuntilthematterhasbeenfinallydetermined,at -20- Section 10.1 10.1.1 10.1.2 10.1.3 which time any necessary adjustments shall be madeasprovidedforinArticle16ofthisAgreement. ARTICLE 10 Operation of the Intertie Responsibility for Operation of the Intertie With the concurrence of the other Participants,APA delegates and AMLP and GVEA assume _theresponsibilityfortheoperationoftheIntertie under the guidelines of this Agreement and the Operating Committee. AMLP shall operate the southern one-half of the Intertie including,but not limited to,the terminal facilities,communication facilities,and the Intertie transmission line to the Midpoint of the transmission line between the Douglas-and Healy Substations (more specifically illustrated and defined in the Intertie facilities diagram in Exhibit B of this Agreement)within AMLP's Control. Area,and the midpoint of the Intertie transmission line shall be deemed to be the point of interconnection between GVEA and AMLP. 10.1.2.1 APA will contract with MEA,which is amemberofAEGTC,for use of a portion of MEA's transmission facilities to provide,along with other facilities provided by APA,transmission facilities that will be a part of the Intertie between the Douglas and Teeland Substations.This being a part of the Intertie,APA delegates to AMLP,-and AMLP assumes,APA's responsibility for operation under the APA -MEA Agreementforthesetransmissionfacilities. GVEA shall operate the northern one-half of theIntertie,including but mot limited to,theterminalfacilities,communication facilities,and the Intertie transmission line to the Midpoint of the Intertie transmission line between the Douglas and Healy Substations (more specificallyillustratedanddefinedintheIntertiefacilities diagram in Exhibit "B”of this Agreement)withinGVEA's Control Area,and the Midpoint of the Intertie transmission line shall be deemed to be the point of interconnection between AMLP and GVEA. -21- 10.1.4 AMLP and GVEA acting in concert shall: 10.1.4.1 Closely and continually coordinate alltheactivitiesandtransactions involving the Intertie operation; 10.1.4.2 Coordinate the Intertie Transactions to insure that at all times,to the extent possible,the Intertie System isoperatedtoprovidereliableand economic service; 10.1.4.3 Coordinate the scheduling of all Intertie Transactions by the Participants in the Northern =andSouthernGroupsinaccordancewiththe provisions of this Agreement,and inform all Participants of the scheduled transactions;; 10.1.4.4 Develop the procedures for restoration of service on the Intertie for- interruptions due to either Scheduled or Forced Outages,and have personnel trained to carry out such operationalprocedurestoinsuretheIntertie reliability; 10.1.4.5 Maintain communications with each other and the other Participants usingadequatemethodsofdataacquisitionsufficientforreliablesystemcontroloftheoperationoftheIntertie; 10.1.4.6 Maintain complete and accurate hourly records of all operations,Intertie Transactions and activities involving the Intertie,and promptly publish and distribute such records to all Participants at regular intervals as established by the Operating Committee. Any Participants who desire it shall be provided,at their own expense,direct access to all telemetry gathered from the Intertie; 10.1.4.7 Coordinate the responsibilities delegated to them in this Agreement tominimizeduplication; 10.1.4.8 Abide by the terms and conditions of other contracts or agreements involving -22- the operation of the Intertie System,so long as they do not conflict with this Agreement; 10.1.4.9 At all times operate the Intertie in a safe and responsible manner consistent with Prudent Utility Practices and the directives and instructions of the Operating Committee. Section 10.2 Suspension of Work in Performance of Duties of the Intertie 10.2.1 Suspension for Convenience.The APA may order AMLP and/or GVEA in writing to suspend,delay,orinterruptalloranypartoftheworkinvolvedin operation of the Intertie for such period of time as the Operating Committee determines to.beappropriatefortheconvenienceof,and in thebestinterestof,Intertie operation. 10.2.2 Adjustments of Cost.If the performance of all or' any part of the work is,for an unreasonableperiodoftime,suspended,delayed,or interruptedbyanactofAPA,or by the failure of APA to actwithinareasonabletime,an adjustment shall be made for any increase in the cost of performance of this Agreement necessarily caused by suchunreasonablesuspension,delay or interruption.However,no adjustment shall be made under this Section for any suspension,delay or interruption to the extent: 10.2.2.1 That performance would have been sosuspended,delayed or interrupted by anyothercause,including the fault or negligence of AMLP or GVEA;or 10.2.2.2 That an adjustment is provided for orexcludedunderanyotherprovisionof this Agreement. 10.2.3 Time Restriction on Claim.No claim under this Article shall be allowed: 10.2.3.1 For any costs incurred more than 20 daysbeforeAMLPorGVEAshallhavenotified APA in writing of the act or failure to act involved (but this requirement shall not apply as to a claim resulting from asuspensionorder);and -23- Section 10.3 10.3.1 Doe May | O Du Ouse | 10.3.2 Ou Gey | 10.3.3 deal)tatty ro 10.3.4 Udil ties O 10.3.5 10.2.3.2 Unless the claim is asserted in writingassoonaspracticableafterthe termination of such suspension,delay,or interruption,but not later than the date of final payment under this Article. Budget for Operation of the Intertie For purposes of calculation of unit Intertie costs pursuant to Article 8,Section 8.2 of thisAgreement,and to provide information required toobtainoperationsbudgetappropriationsfromthelegislature,AMLP and GVEA shall develop annuallyandsubmittoAPAasuggestedscopeofoperationsandbudgetforoperationoftheIntertienolaterthan14monthsbeforethefirstdayofthebudgetfiscalyear.The budget developed by the Intertieoperatorsmayincludealldirectexpensesandanallocatedportionofsuchotherexpensesasinterest,depreciation and margin requirements,among others.All costs allocated to the Intertie' Operator budget shall be consistent with generallyacceptedutilityaccountingprinciples.APA shallestablishapreliminaryscopeofoperationsandbudget,based on the Operating Committee,AMLP and GVEA submittals,and provide it to the UtilityParticipants13monthsbeforethefirstdayofthebudgetfiscalyearfortheirreviewandcomments. Utility Participants shall provide written comments on the preliminary scope of operationsandbudgettoAPA12monthsbeforethefirstdayofthebudgetfiscalyear. Based on the preliminary scope of operations andbudgetandthecommentsreceived,APA.shallestablishtheIntertieoperatingbudget,which isthe-final scope of operations and budget. With the written approval of all Participants,the finak:scope of operations and budget will be deemed to be the fixed cost fee for operation of the Intertie for the ensuing fiscal year.APA will pay AMLP and GVEA under section 10.6 of thisArticle10foroperationofthe Intertie,one-twelfth of the fixed fee thus established. If the Participants are unable to agreeunanimouslythatthefinalscopeofoperationsandbudgetisthefixedcostfeeforoperationoftheIntertie,then AMLP and GVEA shall each determine, -24- using records and accounts maintained underSection10.4 of this Article 10,the cost to its system to provide operation of the Intertie inaccordancewiththisAgreementandshallbillAPA monthly for these services.APA will then reimburse AMLP and GVEA under section 10.6 of this Article 10. APA shall present the final operations budget to"the Alaska Legislature in a manner consistent withthe.Executive Budget Act (AS 37.07 andamendments),and shall take all steps necessary to secure an appropriation,or appropriations,fromthelegislatureinanamountadequatetocoverthe ey,budget submitted and approved under thisHebe,HCE?Agreement.° Section 10.4 Accounting and Records In maintaining accounts for operation of the Intertie,AMLP and GVEA will follow the system of accounts prescribed for public utilities and- licensees by the Federal Energy RegulatoryCommission.AMLP and GVEA will furnish the APA such operating and financial statements relating to operation of the Intertie as may be reasonablyrequestedbytheAPA.If receipt of suchoperatingandfinancialstatementsisundulydelayed,the APA may,with its own staff,perform all work necessary to collect such data as reasonably desired.Such work shall be performed at a time and in a manner to prevent unreasonable interference with AMLP and GVEA operations. Section 10.5 Audits 10.5.1 At the discretion of APA or by request of amajorityoftheParticipants,an audit shall beconductedwithrespecttothemattersprovidedforinthisAgreementbyindependentauditorsaccordingtosuchprogramsandproceduresasagreedtobytheParticipants,and allParticipantsshallbefurnishedcopiesofthereport.The cost of making such audits shall besharedbytheParticipantsinthesameproportionastheMITCRweresharedduringtheperiodcovered by the audit.The Participants,contract agentsandanyotherpartyinvolvedwiththeoperationoftheIntertieshallprovideand/or make available the information and records required for the audit.The cost of any audit required by a Participant beyond the scope of the above auditshallbebornebysuchParticipant. -25- 10.5.2 Section 10.6 Section AMLP and GVEA shall allow their books of accounts to be audited with respect to matters provided forinthisAgreementbysuchstateofficialsor agencies as may be authorized and directed by lawtomakethoseaudits.To the extent permitted bylaw,Participants shall have the same authority toauditthebooksofaccountsoftheAPAwith respect to the operation of the Intertie. Payment of Operators. If a fixed cost fee for operation of the Intertieisestablishedundersection10.3.4 of this article,then within 30 days of the end of eachmonthAPAwillpaytoAMLPandGVEAone-twelfth of the fixed cost fee for operation of the Intertie.If the Participants have not agreed upon a fixedcostfeeforoperationoftheIntertieundersection10.3.4 of this article,then the APA will reimburse AMLP and GVEA within 30 days of thereceiptoftheirinvoices.°However,such reimbursement is subject to adjustment upon.discovery of an error,dispute of billing,oraudit. ARTICLE 11 Scheduling of Power and Energy on the Intertie ll.1 ll. ll. ll. Section 1.1 1.2 1.3 ll.2 ll.2.1 Scheduling Responsibility AMLP shall have the responsibility for schedulingthetransfersontheIntertiefortheParticipantsoftheSouthernGroupandcoordinatingthemwithGVEAundertheprovisionsofthisAgreementandthedirectionoftheOperatingCommittee. GVEA shall have the responsibility for schedulingthetransfersontheIntertiefortheParticipants of the Northern Group and coordinating them with AMLP under the provisions of this Agreement and the direction of the Operating Committee. AMLP and GVEA shall each have the responsibility for coordinating schedules within their respective Groups. Power and Energy Schedules The amount of electric Power and Energy to be transferred on the Intertie under this Agreement will be based upon hourly schedules provided by the Participants making the Intertie Transaction. -26- These schedules shall be provided to,andcoordinatedwith,AMLP and GVEA.AMLP and GVEA will timely inform all Utility Participants of thetransferschedulesontheIntertie. 11.2.2 Power and Energy shall be scheduled on an hourlybasisandtheschedulesmaybemadeforthenext hour(s),day(s),week(s)or month(s)in advance. 11.2.3 Schedules for all transfers on the Intertie shall be furnished to the respective Intertie Operatorsbefore3:00 P.M.prevailing local time each day for Power and Energy to be delivered'across theIntertieforeachclockhourofthefollowing24-hour period.This schedule shall be/updated eachdayandanadditionalone-day schedule will befurnishedtoprovideacontinuingseven-day schedule. 11.2.4 Short-term schedules of transfers on the Intertie may not be made or changed on'an hour-by-hourbasisunlesscoordinatedinadvancewiththe- Intertie Operators. 11.2.5 Provisions of this Section may be modified by action of the Operating Committee as provided for under this Agreement. Section 11.3 Intertie Schedule Limitations The maximum schedule of Power and Energy of any Participant on the Intertie shall be limited totheParticipant's MITCR unless additional MITCR are allocated from the unscheduled and/or unused Intertie Transfer Capability Rights of other Participants.MITCR not being used by theParticipantholdingthemmaybeusedbyotherParticipantsneedingthemtomakeadditionaltransfersoverandabovetheirallocationofMITCR under Article 7 of this Agreement. ARTICLE 12 Maintenance of the Intertie Facilities Section 12.1 Maintenance Responsibility 12.1.1 APA will maintain the Intertie facilities which it owns.APA may provide for the maintenance of theIntertiefacilitiesbycontractingwithqualified -27- parties to perform maintenance on its behalf or provide it by qualified staff under the directionofAPA.Maintenance shall be scheduled,coordinated and accomplished in accordance withPrudentUtilityPracticessoastominimize disturbance on the Intertie that would impairserviceoftheParticipants'systems. 12.1.2 The Intertie shall be maintained in good workingcondition,optimizing the availability of theIntertiewithinpracticalandcostconstraints.After a failure of the Intertie,it shall be returned to service in the shortest possible timewithintheconstraintsofpracticalmaintenance procedures. Section 12.2 Maintenance Budget and Costs 12.2.1 APA'shall develop an Intertie maintenance budget,an annual budget and schedule for the maintenance of the Intertie,each year based on the budgetsdevelopedbyanycontractorsprovidingthe-Intertie maintenance.This budget will be reviewed with the Participants sufficiently inadvanceofthecommencementofthefiscalyearinvolvedsothateachParticipantwillbeableto submit its comments for consideration prior tofinalizationofthebudget.Budgets for more thanoneyearwillberequiredfortheParticipants'long range fiscal requirements.APA will prepareandfurnishtheParticipantsacopyofsuchlongrangefiscalrequirements. 12.2.2 APA will maintain complete and accurate records ofcostsassociatedwithmaintenanceoftheIntertie. Maintenance of the Intertie will follow the system of accounts prescribed for public utilities andlicenseesbytheFederalEnergyRegulatory Commission. ARTICLE 13 Measurement of Electric Power and Energy Section 13.1 Metering 13.1.1 The electric Power and Energy delivered through interconnection facilities of the Intertie shall be measured by nonreversible watt-hour meters and 15-minute interval demand meters. 13.1.2 APA shall be responsible for installation, -28- 13.1.3 Section 14.1 14.1.1 14.1.2 ownership,operation and maintenance of initialfacilitiesnecessary,as determined by APA,tointerfacewithAMLPandGVEAequipmentpresentlyinstalledorbeinginstalled.The AMLP and GVEA equipment shall be that necessary to provide fortheinitialIntertieoperationonly.The initialfacilitiesshallbeprovideddirectlybyAPAorthroughaseparate,reimbursable agreement withtheParticipantinvolved.Participants shallpermitotherParticipantstousetheavailablemetereddataforthepurposeoftelemeteringthedataasrequiredfortheiroperations. The Operating Committee shall agree upon Intertierelatedmeteringequipmentbeforeitsinstalla- tion.Each Participant hereby grants 'to all otherParticipantstherighttoinstallandmaintainat the other Participants'cost,equipment in.theotherParticipants'substations.Each Participanthastherighttoinstallandmaintainatitscost, equipment in another Participant's substation if the equipment is necessary to perform Intertie'functions under this Agreement.The installation and maintenance shall be coordinated with staff of the Participant owning and operating thefacilitiesonwhichthemetersaretobeintalled. Ingress and egress shall be granted to the other Participants to install,remove or maintain the equipment.Each Participant shall coordinate such activities through the other Participant'sdispatcher. ARTICLE 14 Transmission Losses Intertie Transmission and Transmission Service Losses Losses in the Intertie System created by Intertie transfers shall be determined by the Intertie Operators through engineering studies,calculationandPowerflowprograms,and procedures as established by the Operating Committee. The Participant supplying Power and Energy shallalsoprovidePowerandEnergylosseswhichoccurfromthetransfer.Such losses shall be provided at the time of the transfer unless otherwise agreed by the affected Participants. 29- 14.1.3 Transfer schedules shall include losses for such transfers.When transfers reduce losses in a Participant's system which is not a part of the Intertie,the losses in that system caused by thetransfershallbeconsideredzero. Section 14.2 Intertie Transmission Loss Compensation. 14.2.1 The Intertie Facilities located on the AMLP side of the Intertie Point of Interconnection will be operated in AMLP's Control Area;thus the losses that occur on-Intertie Facilities on the AMLP side will occur in AMLP's Control Area as part of AMLP's system losses. 14.2.2 The Intertie Facilities located on.the GVEA side of the Intertie Point of Interconnection will be operated in GVEA's Control Area;thus the lossesthatoccuronIntertieFacilitiesontheGVEA:side will occur in GVEA's Control Area as part of GVEA's system losses.° ARTICLE 15OTransmissionService Section 15.1 Transmission Service to Access the Intertie Each Participant shall have the right to schedule,on the intervening transmission systems of anotherParticipant,transfers of Power and Energy to and from the Alaska Intertie.This right may be exercised when the rated capacity of theinterveningParticipant's transmission facilitiesavailabletotransferPowerandEnergyis determined by the intervening Participant to haveadequatecapacitytoaccommodatethetransfer.Adeterminationofadequatecapacityshallnotbe unreasonably withheld by the interveningParticipant.If the intervening Participantdeterminescapacitytobeinadequate,thisdeterminationshallbedocumentedinwritingto the requesting Participant with the justificationforthelimitationofcapacityinitstransmission system.The intervening Participant reserves theright,within the exercise of Prudent UtilityPractice,to interrupt or curtail such service hereunder at any time the transfer capability ofthetransmissionfacilitiesinvolved,in the O opinion of the intervening Participant,is less -30- Section 15.2 Section 15.3 15.3.1 than the actual or proposed loading of thefacilities.Such interruptions or curtailments,other than for the intervening Participant's owninternaltransmissionrequirementsforitssystem load,shall be shared pro rata among all Power andEnergyschedulesthatreducethetransfer capability of the intervening Participant'stransmissionsystematthetimeofsuch interruption or curtailment.The rated transfer capacity of any intervening Participant's transmission system shall be determined in advance by the intervening Participant,or by anengineeringanalysisacceptabletothe Participants involved. Provision for Adequate Transmission Service Facilities The Participants shall not limit,throughinadequatefacilities,Transmission Service access to the Intertie.If a Participant that is providing,or is to provide Transmission Service'to other Participants for the transmission of Power and Energy across its system for transfer on the Intertie,determines that its transmission system does not have adequate capacity for the desired level of transfer,a Participant desiringahigherleveloftransfermayrequest'the intervening Participant to provide or construct additional transmission capability for the requesting Participant's use.This request shallbegranted,at least to the level of therequestingParticipant's MITCR.The additionalfacilitiesmayrequirespecialcompensationbytherequestingParticipant.The arrangement for andcostsharingofsuchfacilitieswillbeprovided for under a separate agreement between'theParticipantsinvolved,and shall be based on cost of service principles. Compensation for Transmission Service The Participant providing Transmission Serviceshallbecompensatedmonthlyfortheuseofthe Transmission Service Facilities.The Transmission Service billing shall be the appropriateTransmissionServiceRatedefinedinExhibitCof this Agreement,multiplied by the appropriatequantitiesmeteredatthepointofinterconnectionoftheParticipants.Monthly demand billingsshallbetheproductoftheContractTransmissionServicecapabilityratetimesthetransfercapabilitycontractedforduringthebilling period. -3i]- O 15.3.2 Losses that ooccur-as a result of the Transmission Service transfers shall be supplied inkindbytheresponsibleParticipantunderArticle14ofthisAgreement. Section 15.4 Transmission Service Rates 15.4.1 Exhibit C of this Agreement sets out the formula for calculating the Transmission Service Rates.Exhibit C may be amended in writing under Article15ofthisAgreement. 15.4.2 The Participant providing Transmission Serviceshallmakeavailablereasonableexpenseand operating information necessary to verify actionsundertakenunderArticle15ofthisAgreement. ARTICLE 16 Billing and Payments Section 16.1 Billing” Participant monthly,normally not later than 15daysaftertheendofthecalendarmonthtowhich the bills apply.Bills shall be due and payablewithin15daysfromdatethebillsarepostmarkedorhand-delivered.Interest on any unpaid amountfromthedatedueuntilthedatepaymentisreceivedshallaccrueattheannuallegalrateunderAlaskalawforpost-judgment interest,or pro rata fraction thereof. O A supplying Participant shall bill the receiving Section 16.2 Dispute of Billing If a purchasing Participant disputes the charges submitted by a supplying Participant under thisAgreement,the purchasing Participant =shallneverthelesspaythefullamountwhendueand payable and give notification in writing,within 90 days.oof the date the bill is rendered,to the supplying Participant stating the grounds on whichchargesaredisputedandtheamountindispute. If settlement of the dispute results in a refund, the refund shall include interest at the annual legal rate under Alaska law for post-judgmentinterest,or pro rata fraction thereof,from the date of overpayment to the date of refund. 32- , ARTICLE 17 Insurance and Liability Section 17.1 Insurance During the term of this Agreement,eachParticipantshallpurchaseandmaintaininsurance with a carrier or carriers satisfactory to theOperatingCommitteeandtheAPA,covering injurytopersonsorpropertysufferedbyanyParticipantorathirdparty,as a result of errors, omissions,or operations which arise both out of and during the course of this contract by theParticipantorbyanyofitssubcontractors.The coverage shall also provide protection againstinjuriestoallemployeesoftheUtilityParticipantandtheemployeesofanyofitssubcontractorsengagedinworkunderthis Agreement.If approved by the Operating ComitteeandtheAPA,a Participant may self-insure for theWorker's Compensation Insurance and,up to amaximumof$250,000,for the other types of- insurance required by this Article.A copy of theinsurancepoliciesandundertakingtoself-insure,if any,will be furnished to the OperatingCommitteeandtheAPAbeforebeginningoperations under this Agreement. Section 17.2 Types of Insurance 17.2.1 The following insurance must be purchased by eachParticipanttocoverthoseoperationsofthe Participant performed under this Agreement: Worker's Compensation Insurance:Each Participant shall provide and maintain,for all employees of the Participant engaged in work under thisAgreement,Workers'Compensation Insurance as required by AS 23.30.045.The Participant isresponsibleforWorkers'Compensation Insurance for any of its subcontractors who directly or indirectly provide services under this Agreement. Each insurance policy must include: (a)Statutory coverage for states in which employees are engaging in work; (b)Employer's Liability Protection in the amountof$2,000,000 per occurrence; (c)Broad Form All States Endorsement;©(d)Coverage as required by all State and Federal -33- Acts where applicable; (e)Voluntary Compensation Endorsement. The Worker's Compensation Insurance policy shallcontainawaiverofsubrogationinfavoroftheotherParticipants.Any Participant who isself-insured hereby waives subrogation in favor oftheotherParticipants. 17.2.2 Comprehensive General Liability Insurance:EachParticipantshallpurchaseandmaintain comprehensive general liability insurance subjecttothefollowinglimitsofliability: (a)Bodily Injury and Property Damage Liabilityofaminimumof$10,000,000 Combined Single Limitseachoccurrenceandaffordinginsurance|forPremises-Operations,Owners and Contractors'Protective,Independent ;Contractors,Products/Completed Operations,Blanket Contractual Liability,Broad Form Property.Damage,Personal-Injury Liability,Incidental Errors and Omissions. (b)Automobile Liability Insurance covering allvehicles.Such insurance shall provide coverageofnotlessthat$10,000,000 Combined Single LimiteachoccurrenceforBodilyInjuryandPropertyDamageLiability. (c)Owned Aircraft (if applicable)and Non-Owned Aircraft with seating capacity of five seats or less,except for commercial,scheduled flights,with limits of liability not less than: $5,000,000 -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 CargoExposures.If an aircraft with more than five seat capacity is used,special coverage and limits must be obtained and approved by the Operating Committee. (d)Owned Watercraft (if applicable)and Non-Owned Watercraft (if applicable)with limitsofliabilitynotlessthat$5,000,000 peroccurrenceasprovidedinthe"In Rem Endorsement"under "Maritime Coverage B". The other Participants shall be included as additionalinsuredsininsurancerequiredinthisSection17.2.2 ot Article 17 and shall not by their inclusion be responsible to the insurance carrier for payment ofpremiumstherefor.These insurance policies must also -34- O 38contain a cross liability or severability of interestendorsement. Section 17.3 Other Insurance Coverage Requirements 17.3.1 Each Participant will bear the cost of the required insurance.Insurance required to be maintained under this Article 17 may be maintained as part of any other policy or policies of the Participant so long as the coverage of such policyorpoliciesissubstantiallythesameasifsuch coverage were maintained under a separate policy. 17.3.2 These policies must provide that anycancellation,non-renewal or material change beupon30daysnoticetoallnamedinsureds.EachParticipantmustprovidetheOperatingCommittee and the APA with evidence or insurance.Insurance companies,or self-insurers,shown on .thecertificateofinsurancemusthavefinancial ratings acceptable to the APA.Failure to furnish satisfactory evidence of insurance or lapse of the policy is a material breach of this Agreement.° ARTICLE 18 IndemnityOSection18.1 Indemnity 18.1.1 Each Participant shall,as to all actions taken pursuant to or under color of this Agreement,defend and indemnify the other Participants,their agents,servants,employees and officers,from allcostsincludingwithoutlimitationattorneyfees,court costs,any amounts arising or recoveredundertheWorkman's Compensation Act or other law or decree,and any other amounts which the other Participants,their agents,servants,employeesandofficersbecomeobligatedtopayonaccountof any demands,claims,liabilities or losses arisingorallegedlyarisingoutof,or in any wayconnectedwith,the acts or omissions of the indemnifying Participant,its agents,servants, employees or officers. 18.1.2 Each Participant shall defend and indemnify theotherParticipantsfromandagainstanyclaimorliability,including any related loss or cost,caused by or resulting from the design,construction,installation,operation or maintenance of any of the electric facilitiesowned,operated or maintained by the indemnifyingParticipant,or by reason of the acts or omissionsofitsagents,servants or employees in connection therewith. -35- O Section 18.2 Comparative Negligence Each Participant agrees that any Liability,including costs of defense and attorney fees,forclaimsarisingfromtheconcurrentnegligenceoftwoormoreParticipantswillbeapportionedaccordingtotherespectivepercentageoffaultattributabletoeachParticipantasdeterminedbyagreementorbythetrieroffact. ARTICLE 19 Warranty Denial and Exclusivity of Contract Section 19.1 APA Denial of Warranty APA does not warrant the Intertie facilities it owns as fit for their intended use or _§thereliabilityoravailabilityoftheIntertiefor intended operations covered by this Agreement.hoSection 19.Exclusivity of Contract adopted by reference or otherwise incorporatedintothisAgreementsetforththefullintentof the Participants regarding the matters covered bythisAgreement.However,this Agreement does not supercede related Intertie written agreements,such as the maintenance agreements between the APA and Intertie Participants,but is to be interpreted consistently with then. "The terms of this Agreement and any provisions ARTICLE 20 Uncontrollable Forces Section 20.1 20.1.1 A Participant will not be in default in perfor- mance of any obligation hereunder,other than the obligation to make payments as provided in this Agreement,if failure of performance is due touncontrollableforcesandwithoutthefaultor negligence of that Participant.Strikes,lockouts and other labor disturbances are considered uncontrollable forces and nothing in this Agreement will require a Participant to settle alabordisputeagainstitsbetterjudgment. O 20.1.2 If a Participant,by reason of an uncontrollable force,is rendered unable,wholly or in part,to - 36- perform its obligations under this Agreement(other than its obligations to pay money),then upon that Participant giving notice and particulars of the uncontrollable force,its obligation to perform will be suspended during thecontinuanceofanyinabilitysocaused,but for no longer period,and the effects of such cause shall,so far as possible,be remedied with all reasonable dispatch;provided,however,that the settlement of labor disputes shall be considered wholly within the discretion of the Participantinvolved.The affected Participant will not be responsible for its delay in performance under this Agreement during delays caused by an uncontrollable force,nor will such uncontrollable force give rise to claim for damages or constitute default. ARTICLE 21 Waivers Any waiver at any time by a Participant of itsrightswithrespecttoadefaultunderthis Agreement,or with respect to any other matterarisinginconnectionwiththisAgreement,shall not be deemed a waiver with respect to any other default or matter.Any delay short of the statutory period of limitations in asserting orenforcinganyrightshallnotbedeemedawaiver of such right. ARTICLE 22 Successors and Assigns;No Third Party Beneficiaries Section 22.1 Successors and Assigns This Agreement shall be binding upon and inure tothebenefitofthesuccessors,legal representatives or assigns of the respectiveParticipants.However,no Participant shallassignthisAgreementnoranyparthereofwithouttheexpresswrittenconsentoftheotherParticipants,which consent shall not beunreasonablywithheld.Nor shall a Participant berelievedofitsobligationshereunderbyanassignmentoflessthanallofthebenefitsandburdenshereunderorimposeadditionalobligations or burdens on the other Participants by an assignment of this Agreement or any part hereof. -37- - O Section 22.2 No Third-Party BeneficiariesTheprovisionsofthisAgreement shall not create any rights in favor of any person,corporation,or association not a Participant in this Agreement,and the obligations herein assumed are solely fortheuseandbenefitoftheParticipantstothis Agreement. ARTICLE 23GoverningLaw This Agreement is made subject to,and shall be governed by and construed in accordance with,thelawsoftheStateofAlaskaandtheauthority granted to the individual Participants thereunder. ARTICLE 24 Captions Captions of the various articles herein are-intended for convenience of reference only and shall not define or limit any terms or provisions. O ARTICLE 25 Notices Section 25.1 25.1.1 Any notice or demand under this Agreement isproperlygivenifsentbyregisteredorcertifiedmailandaddressedtotheGeneralManager, Municipality of Anchorage,Alaska,Municipal Light and Power,1200 East First Avenue,Anchorage, Alaska 99501;Executive Director,Alaska Power Authority,334 W.Fifth Avenue,Anchorage,Alaska99501;General Manager,Chugach ElectricAssociation,Inc.,Pouch 6300,Anchorage,Alaska 99503 or 5601 Minnesota Avenue,Anchorage,Alaska 99502;General Manager,City of $Fairbanks,Municipal Utilities System,P.O.Box 2215,645FifthAvenue,Fairbanks,Alaska 99707;General Manager,Golden Valley Electric Association,Inc.,P.O.Box 1249,Fairbanks,Alaska 99707 or 758 Illinois Street,Fairbanks,Alaska 99701;and Interim General Manager,Alaska ElectricGenerationandTransmissionCooperative,Inc., P.O.Box 1148,Palmer,Alaska 99645.The - 38- foregoing designations of the name or address towhichnoticesordemandsaretobedirectedmaybechangedatanytimebywrittennoticegivenbyanyParticipanttoallothers. 25.1.2 Any notice or request of a routine character in connection with the delivery of Power and Energy,or in connection with the operation of facilities, shall be given in the manner the OperatingCommittee,or the authorized representatives of the Participants,from time to time arranges. ARTICLE 26 Amendments Neither this Agreement nor any part hereof may beterminated,amended,supplemented,waived or modified except by an instrument in writing signed by all the Participants. ARTICLE 27 Agreement Approval and Transmittal This agreement shall not be effective until theAdministratoroftheRuralElectrification Administration grants any required approval.The APA will transmit this agreement with the Alaska Public Utilities Commission.By signing this agreement,a Participant does not subject itselftorateregulationbytheAlaskaPublicUtilities Commission. ARTICLE 28 Construction of Agreement Each Participant has participated fully in thedraftingandnegotiationofthisAgreement.Accordingly,the Agreement will not be construedagainstanyparticularParticipant,orParticipants,as the drafter. IN WITNESS WHEREOF,the Participants have caused this Agreementtobeexecutedinquintupletbytheirdulyauthorizedofficersorrepresentativesasofthedayandyearfirstabovewritten. - 39- O ALASKA POWER AUTHORITY Approved as to form:Ppa fo,LLLOrficeoftheAttorneyGeneralBy:LO ___Exeatve wine(Title)SUBSCRIBED AND SWORN TO before me this 130 day ofWannabee,1985 last written.oT MUNICIPALITY OF ANCHORAGE, ALASKA dba MUNICIPAL LIGHT & POWER By: 7 ; Mune feces NanaO(Title)Cj SUBSCRIBED AND SWORN TO before me this _27?SCday of»1985 last written. 7 /) ry Public,State of Alaska My Commission Expires:*CZ 99 CHUGACH ELECTRIC ASSOCIATION, INC. By:Liha ¢2 (rhe General Manager O)SUBSCRIBED AND SWORN TO before me this jo 4 day of ,1985 last written. ©ae.(ppiceinaon)"Notary Public,State of AlaskaMyCommissionExpires://-5-98 -40Q- O CHUGACH ELECTRIC ASSOCIATION, INC.sy;(nee m RukhU|<s President of the Board v)SUBSCRIBED AND SWORN TO before me this jf Lh day of,1985 last written. Notary Public,State of AlaskaMyCommissionExpires:/-9-&&F% = CHUGACH ELECTRIC ASSOCIATION, INC. By:aman MN..La a . Vice-President of the Board O SUBSCRIBED AND SWORN TO before me this [74 aay of,1985 last written. / Notary Pablics Se i:AI kaska My Commission Expires://-f-5& Verty MANAGER/(Title) SUBSCRIBED AND SWORN TO before me this /9Z/,day ofLpeceve,,1985 last written. Notary Public,Statg¢or AlaskaOMyCommissionExpires:sy-/7-27 -4l- GOLDEN VALLEY ELECTRIC ASSOCIATION,INC,Ih,MeACony.rite7A SUBSCRIBED AND SWORN TO before me this [e *day ofDecember,1985 last written. O Ati (}GudNotaryPublidyState of AlaskaMyCommissionExpires:»My CommissicnExpires:" January11,1987 ALASKA ELECTRIC GENERATION and* >SUBSCRIBED AND SWORN TO before me this Ae day of\Nectm been ,1985 last written. -42- SNDDNW&WwWBWEXHIBIT A ALASKA INTERTIE AGREEMENT Y1499ABBREVIATIONS AND DEFINITIONS ABBREVIATIONS AMLP -Municipality of Anchorage,Alaska d.b.a.,Municipal Light and Power APAdm -Alaska Power Administration APA -Alaska Power Authority CEA -Chugach Electric Association FMUS -Fairbanks Municipal Utilities System GVEA -Golden Valley Electric Association AEGTC -Alaska Electric Generation and Transmission Cooperative,Inc.,of which Homer Electric Association, Inc.and Matanuska Electric Association,Inc.are members. Definitions Accredited Capability of a Participant -The (a)netgeneratingcapabilityofaParticipant,plus (b)the value in kilowatts assigned to that Participant'spurchasesand/or firm commitments for Power from electric suppliers under contracts now existing or hereafter created,and minus (c)the value in kilowatts assigned to any commitment of that Participant to deliver power to any electric supplier or suppliers pursuant to any valid order or under separate contract or contracts now existing or hereafter created.The Accredited Capability of a Participant may be determined and assigned by the Operating Committee in accordance with the provisions of this Agreement. Annual System Demand -The highest System Demand occurring during the 12-month period ending with the current month. Available Accredited Capability of a Participant - Accredited Capability adjusted for generating capacity out of service for maintenance or repair. Exhibit A -1 of 10 Commercial Operation -That date and time Intertie construction,testing,and energization is complete andAMLPandGVEAareinitiallyinterconnectedinsynchro-nous operation and supporting relaying,metering andcontrolsystemsareadequatetoallowreliabletrans- mission of power and energy across the Intertie. Contract Power -Power and Energy to be available at all times during the period covered by the commitment, except that such Power and Energy may be interrupted intheeventconditionsariseduringtheperiodcoveredby. the commitment which in the judgment of the supplierwouldrequirecurtailmentofelectricservicetothe supplier's own system. Contract Transmission Service -A service providing for transmission of electric Power and Energy in bulk from one utility through the utility's transmission system providing the transmission service to another utility. This service is intended to be available at all times during the period covered by the commitment;provided however,if the transmission system involved has. experienced a reduction in transmission capabilityrequiringareductionintransfers,the utility supplying the transmission service has the right to notify and require the receiving utility to reduce its transfer in the sam=percentage as the reduction in transmission system transfer capability. Control Area -An interconnected system of one or more utilities which manually or automatically controls allgenerationtomeetthetotalload,plus or minus thepoweritisdeliveringorreceivingfromneighboring systems. Control Area Service -Exercising operating control of the resources necessary to meet the loads within acontrolareaonaninstantaneousandcontinuousbasis. The Participant exercising operating control for Control Area Service shall; a.Regulate generating facilities and other powerresourcestoeffectinstantaneousandcontinuous supply of the power requirements of the loads within the Control Area. b.Regulate generating facilities to assist in thecontroloffrequencyandtimecorrection. c.Monitor continuously the power flows between itsControlAreaandtheControlArea(s)with which it is interconnected. Exhibit A -2 of 10 10. ll. 12. 13. 14. Declared Capability -The current capability of ageneratingunitwhichisnotgreaterthanthepublishedcapabilityoftheunit. Decremental Cost -The cost of fuel,operating laborandmaintenancewhichwouldhavebeenincurredto provide the Operating Reserves at any time and whichareavoidedbytheotherParticipant,including thecostofavoidingthestartingandoperatingofageneratingunitorunitsandaproportionalamountof the annual debt service on the capital investment of the highest cost:(per kw)generating unit on the receiving Participant's system.The decremental cost of Operating Reserves shall be the total of such avoided costs to the receiving Participant.In situations where a Participant would have incurred replacement fuel costs which are higher than the cost of existing fuel supply,replacement costs shall be utilized. Decremental Energy Cost -The cost of fuel,operatinglaborandmaintenancewhichwouldhavebeenincurredto” generate the next unit of Energy required at any time and which is avoided by the purchase of Energy from the other Participant,including the cost of avoiding the starting and operating of a generating unit or units. The decremental cost per kilowatt hour for any particular transaction shall be the total of such costsdividedbythekilowatthoursscheduledfordeliveryto the receiving Participant.In situations where a Participant would have incurred replacement fuel costswhicharehigherthanthecostofexistingfuelsupply, replacement costs shall be used. Economy Energy -Energy that is delivered from autilitywithalowerincrementalproductioncosttoautilitytodisplacegenerationatahigherincrementalcost.This Energy schedule may usually be interrupted with little or no notice. Emergency Energy -Energy that is delivered to autilitywhichdoesnot,as a result of a Forced Outage,have sufficient generating capacity,either on its ownsystemorarrangedforfromotherutilities,to carryitscustomerloadresponsibility. Emergency Outage (Forced Outage)-Any unanticipated,unscheduled outage of generating or transmissionfacilitiesforotherreasonsthanplannedmaintenance.Such outage classification shall not exceed a period of four hours. Exhibit A -3 of 10 15. 16. 17. 18. 19. 20. 21. Energy (Electric)-As commonly used in the electricutilityindustry,electric energy means kilowatt hours(kwh). Incremental Cost -The cost of fuel,maintenance and a proportional amount of the annualdebtserviceonthecapitalinvestmentofthenext generating unit that would be used to provide the required capability and Energy. operating labor, It shall include the cost of starting and operating any generating unitrequiredtoprovidesuchEnergy.The incremental cost of supplying Operating Reserve shall be the total of such costs for the period of time situations where a Participant will incur replacement fuel costs which are higher than the existing fuel supply,replacement costs shall be used. Incremental Energy Cost -The cost of fuel, involved.In cost of the operating labor and maintenance to generate the next unit of Energy required at any time,including the cost of starting and operating any generating unit which mustbestartedasaresultofsupplyingsuchEnergy.The- incremental cost per kilowatt hour for any particulartransactionshallbethetotalofsuchcostsdividedby the kilowatt hours scheduled for receiving Participant. delivery In situations to the where a Participant will incur replacement fuel costs which are higher than the cost of existing fuel supply, replacement costs shall be used. Interruptible Transmission Service -A service provid-ing for transmission of electric Energy in bulk fromoneutilitysystemthroughtheutility's transmissionsystemprovidingthetransmissionservicetoanothermadeavailablewiththe understanding that it can be curtailed or interruptedatanytimewithlittleornonoticeatthediscretion utility.This service of the supplier. is Intertie -The transmission facilities under contract to the Alaska Power Authority intercon- necting the Northern Group with the Southern Group. owned by or Intertie Point of Interconnection -The Midpoint of the Intertie transmission line between the Healy Substation and Douglas Substation,which isinterconnectionbetweenAMLP's and GVEA's Areas. Intertie Operators -The operators at the also the point of Control control centers of AMLP and GVEA,which are the utilities that have operational responsibility for the Intertie. Exhibit A 4 of 10 22. 23. 26. 27. 28. 29. 30. 31. 32. 33. functioning as an Intertie System -The ParticipantsIntertieAgreementelectricalsystem. of the Alaska interconnected Intertie Transaction -Transfer of electric energy or acommitmenttoprovidereservecapacitybetweentheutilitiessignatorytotheAlaskaIntertieAgreementintheNorthernGroupandtheSouthernGroupusingthe Intertie. Midpoint of the Intertie -The midpoint of the Intertie is at structure Nod.382. 45°L,three-guyed deadend the Dougla s Substation. structure. The structure is Type E,a It is located approximately 84.6 miles from the initiation point at MITCR -Minimum Intertie Transfer Capability Rights discussed in Article 7. Net Generating Capability -That amount of kilowatts,less station use,that all the generating facilities of a system could normally supply criteria established by the Operating Committee. capability of the generating units which are tempo- rarily out of service for maintenance or repair shall be included in the Net Generating Capability. simultaneously under> The Non-Spinning Reserve -All unloaded generating capabil-ity not meeting the Spinning Reserve criteria that canbemadefullyeffectivein45minutes. Northern Group -FMUS,GVEA. Operating Article 9 Operating Committee -The of this agreement. Reserve -The Non-Spinning Reserves. committee sum of established by Spinning and Operating Reserve Obligation -That amount of SpinningReserveandNon-Spinning Reserve which a Participant isobligatedunderthetermsofthisAgreementtoprovideforthepurposeofmaintainingcontinuityofservice. Planned Maintenance -Any anticipated and scheduledoutageofgeneratingortransmissionfacilitiesthatisplannedinadvanceoftheequipmentbeingremovedfrom service. Participant -Any entity which is a Participant to this Agreement. Exhibit A -5 of 10 34. 35. 36. 37. 38. 39. 40. Power (Electric)-The time rate of generating,trans-ferring or using electric Energy,usually expressed inkilowatts. Prudent Utility Practices decision was made,woul -Prudent Utility Practicesataparticulartimemeansany methods and acts which,in the exercise of reasonable judgment in light of the facts known at the time the d have of the practices, been expected toaccomplishthedesiredresultatthelowestreasonable reliability,safety and expedition,including but not limited to the practices, methods and acts engaged in significant portion of the electrical utility industry prior thereto.In applying the Utility Practices to any matter under the Agreement, cost consistent with equitable consideration should or approved by a standard of Prudent be given to the circumstances,requirements and obligations of each of the Participants,and the fact that the Participants corporations,or politicalsubdivisionsoftheStateofAlaska'with prescribed statutory powers,duties and responsibilities.It is. recognized that Prudent Utility Practice are not in-tended to be limited to the optimum practices,methods or acts to the exclusion of all others,but rather is a ices,methods or acts which could have been expected to accomplish the desiredresultatthelowestreasonablecostconsistentwith reliability,safety and expedition.Prudent Utility are cooperatives,public spectrum of possible pract Practices include due regard for manufacturers' warranties and the requirements of governmental author- ities having jurisdiction. Reserve Capacity -The excess in kilowatts of a system's Net Generating Capability over its maximumSystemDemandforanyperiod. Reserve Capacity Obligation -ThParticipantisobligatedtoreserve and use for thepurposeofmaintainingcontinuityofservice. e capacity which a Scheduled Outage -Any outage of generating or trans- mission facilities which is scheduled in advance to be out of service. Southern Group -AMLP,CEA,AEGTC,APAdm. Spinning Reserve -The amount of unloaded generatingcapabilityofaParticipantsynchronizedwiththeinterconnectedsystemoftheParticipantsandreadytotakeload.Spinning Reserveallocationtoanygeneratorshallnotexceedtheamount Exhibit A -6 of 10 connected to and of generation increase that can be realized immediately from normal governor control. 41.System Demand -That number of kilowatts which is equal to the kilowatt-hours required in any clock hour, attributable to Energy required during such hour forsupplyofEnergytoasystem's consumers,includingsystemlosses,and also including any wheeling lossesoccurringonothersystemsandsuppliedfortrans- mission of such Energy,but excluding generating station uses and excluding wheeling losses supplied by another system. 42.Total Operating Reserve Obligation -That amount of Spinning Reserve and Non-Spinning Reserve of theParticipantscollectivelyrequiredtomaintainconti- nuity of service. 43.Transmission Service -Service provided by the use of the transmission system of a Participant directlyconnectedtotheIntertieforwheelingofpowerand energy through its system for another Participant.> 44.Transmission Service Facilities -The integrated transmission facilities of the transmitting utility, excluding power plant step-up transformation and radial lines to loads or generators. 45.Utility Participant -Any Participant other than APAuntilAPAbecomesaUtilityParticipantunderArticle4 of the Agreement. ALASKA POWER AUTHORITY Office of the Attorney General By:Lit UBSCRIBED AND SWORN TO before me this 23d day of ,1985 last written. Exhibit A -7 of 10 MUNICIPALITY OF ANCHORAGE, ALASKA dba MUNICIPAL LIGHT & POWER ; cBy:Poh,7 "Ll /Muwie wal Nlawager(Title)wi Le SUBSCRIBED AND SWORN TO before me this 3?CdayLlppnfils,1985 last written. |Habe hieNotaPublic,State of Alaska My\Commission Expires:{2%f9 of CHUGACH ELECTRIC ASSOCIATION, INC. \By:a WU General Manager*SUBSCRIBED AND SWORN TO before me this VI dayof,1985 last written. Notary Public,State oMyCommissionExpires:/.ff -§f CHUGACH ELECTRIC ASSOCIATION, INC. "-aotySperageeLPMILES President of the Board iy SUBSCRIBED AND SWORN TO before me this /7/4 dayofWeenter.,1985 last written. Exhibit A -8 of 10 5 "Notary Public,State of AlaskaMyCommissionExpires://-K-5K CHUGACH ELECTRIC ASSOCIATION, INC. -By:.2 oo LE Vice-President of the Board ji SUBSCRIBED AND SWORN TO before me this /7#dayof£/,1985 last written.: Notary Public,State of AlaskaMyCommissionExpires://-§-&& CITY OF FAIRB S,ALASKA IES SYSTEM MANAGER /(Title) Exhibit A -9 of 10 SUBSCRIBED AND SWORN TO before me this 19 £k daof,1985 last written.7 ota@ry Public,Stave o aska My Commission Expires:jo-/7-y¥7 GOLDEN VALLEY ELECTRIC ASSOCIATION,INC. c i fBy:ick.Cle (ey Mec,C.(Tree)q SUBSCRIBED AND SWORN TO before me this /£74 day-¢_[\oogunturn ,1985 last written. Lytad,L Notary Pu State or AlaskaMyCoumisvionExpiressh:22"mitce ixover ALASKA ELECTRIC GENERATION and TRANSMISSION COOPERATIVE,INC. (Title) 9 jUBSCRIBED AND SWORN TO before me this 7%dayof»1985 last written. Exhibit A -10 of 10 EXHIBIT B -INTERTIE FACILITIES DIAGRAM nriFHOWNERSHIPOFINTERTIEPACILITIES(o . '=IN,1 |3 r ':: . rr q i 1]i mae A sy cimcuit ue?re er i Seas talias | 4 yo 2 5 OTA LIME cary CiMCUITwa1byMIY3 | .popeamnt xtoapa:cyta &a Saree meencoseee'COLDHILL \LEGEND t emvcmsomm BOUNDARY OF APA INTERTIE-FACILITIES J _BOUNDARY OF FACILITIES OBNED|on BY PARTICIPATING COMPANIES 'scoccorceennne APA LINE \=== GVEA LINE|a t eweeeneseneceeses:nmememsmomsesrffgee)1bmnieeeaslieeeWee?: 4 |1 m1 it wreeeemmsiwon-)i .D Sam '©CULES to tofparniteit!noe 2 ij >oro 2f 1 FLOOR St ;|°ray :©FLIER 4a :CUE oven}1 ss =8 PAmieaan:i igs bs2.89 we ;iL é =3 ! :i a anyurvmccioeuveofCANTWELL ° «HEALY 2h, weRIDPOIRTOFINTERTIEcone,wtpour?¥AL 5 a poem emrecmee,'-iinwntj Coreen ns :.£79 Sroam x1isey1iSRYproveeeerorveewenes+ome "hy vee FELDERa3:10 MOOKOW vatud 1 wUmG ;J a !Crunagiiiiwey ;Leno.AAPA i DOUGLAS mr wcusit -TEELAND G ae ---I ALASKA INTERTIE AGREEMENT EXHIBIT B-1of } 1. 2. 0 0 The this Exhibit C. EXHIBIT C ALASKA INTERTIE AGREEMENT Ehby ¢CTRANSMISSIONSERVICERATESffperghevtda,4 Es0 Transmission Service Rates shall be accordance with the rate formulas provided in Section 2 ofdevelopedin Such Transmission Service Rates shall be developed using the most recent test period approved forratemakingpurposes.The formulas as provided in thisexhibitshallremainineffectuntil Participants to the Intertie Agreement. Transmission Service Rate Formulas 2.1 2. 2 3 changed by the Calculation of the Interruptible Transmission Service Rate shall be in accordance with the following rateformulaandthedefinitionsinSection2.3 of this Exhibit C. 2.1.1 Interruptible Transmission Service Rate (¢/kwh)formula =a The Contract Transmission Service Rate will be a two part rate:(1)an energy rate and (2)a demand rate and be calculated in accordance with the following rateformulasandthedefinitionsinSection2.3 of this Exhibit C. The demand rate formula is developed as an annual rate. rate shall beForperiodslessthanayear,the proportionally reduced. 2.2.1 Contract Transmission Service Rate formulas: 2.2.1.1 Energy Rate (¢/kwh)=atbteas 2.2.1.2 Annual Demand Rate =d+t+e g ($/kw) 2.2.1.3 Monthly Demand Rate =dt+e ($/kw)I2¢ Transmission Service Rate Definitions a="Operating and Maintenance Expenses"(O &BMExpenses)shall be those expenses defined in the Exhibit C -1 of 6 Federal Energy Regulatory Commission (FERC)Uniform System of Accounts that are associated with the transmission facilities used in providingtheinvolvedTransmissionService.The accounts to be used in the appropriate proportions todeterminetheTransmissionServiceRateareas follows: 556 System control and load dispatching560Operationsupervisionandengineering561Loaddispatching562Stationexpenses 563 Overhead line expense 564 Underground line expense 566 Miscellaneous transmission expense 567 Rents , 568 Maintenance supervision and engineering 569 Maintenance structures 570 Maintenance of station equipment 571 Maintenance of overhead lines 572 Maintenance of underground lines 573 Maintenance of miscellaneous transmission plant Administrative and General Expenses”(A &GExpenses)shall be those expenses defined in the Federal Energy Regulatory Commission (FERC) Uniform System of Accounts that are associatedwiththetransmissionfacilitiesusedinproviding the involved Transmission Service.The accounts to be used in the appropriate proportions to determine the Transmission Service Rate are as follows: 920 Administration and general salaries 921 Office supplies and expenses 923 Outside services employed 924 Property insurance 925 Insurance and damages926Employeepensionand benefits930.2 Miscellaneous general expense932Maintenanceofgeneralplant "Tax Expenses"shall be those tax expenses definedintheFederalEnergyRegulatoryCommissionAccount408.1 directly associated with thetransmissionfacilitiesusedinprovidingthe Transmission Service other than income taxes. "Depreciation Expense"shall be the annual Exhibit C -2 of 6 depreciation expenses defined in Federal EnergyRegulatoryCommissionAccount403and407thatareassociatedwiththetransmissionfacilitiesused in providing the Transmission Service. e ="Capital Costs"shall be the annual interest expenses defined in Federal Energy RegulatoryAccount427onthetransmissionplantofallcapitalizedcostsassociatedwiththetransmission facilities used in providing the Transmission Service. f ="Kilowatt hours"shall be the total annual kilowatt hours at transmission system input to be transferred by the transmission facilities used in providing the Transmission Service for the test period referred to in section 1.0 of this Exhibit Cc. g ="Kilowatts of transfer capacity"shall be the peakloadinkwonthetransmissionfacilities providing the Transmission Service for the test”period referred to in section 1.0 of this Exhibit Cc. MUNICIPALITY OF ANCHORAGE,ALASKA dba MUNICIPAL LIGHT AND POWERDibba Thuanial Danas SUBSCRIBED AND SWORN TO before me this .237day ofthevabd,1985 last written. ALASKA POWER AUTHORITY 'pl DlgAADyfectsi Exhibit C -3 of 6 OQ War SUBSCRIBED AND SWORN TO before me this ze day of thtembee »1985 last written.; Mee ub te Qf Alaskarymubpic,Expires:ish CHUGACH ELECTRIC ASSOCIATION, INC. By:<Lihat Dy,he p General Manager SUBSCRIBED AND SWORN TO before me this LZ day of,1985 last written. fresombex Notary Public,State of AlaskaMyCommissionExpires:Hef -GS CHUGACH ELECTRIC ASSOCIATION, INC. By:eee 2 wring7]J we)(7 President of the Board SUBSCRIBED AND SWORN TO before me this yh day of »1985 last written.(frusteenton)otary Public,State of AlaskaMyCommissionExpires://-(-SS5 CHUGACH ELECTRIC ASSOCIATION, INC. By:(pasceh CL.See ck Vice-President of the Board Exhibit C -4 of 6 SUBSCRIBED AND SWORN TO before me this J7t day ofRecombst,1985 last written. otary Public,Stateo asMyCommissionExpires:/-LIE ANKS,ALASKAILITIESSYSTEM By:/any MANAGER.(fitie) SUBSCRIBED AND SWORN TO before me this ""7Zt day ofLerpetees,1985 last written. No y Public,Staveof AlaskaOMyCommissionExpires:+g -/7_¥7 GOLDEN VALLEY ELECTRIC ASSOCIATION,INC.By:AMAA ALKCrew.Ma(Title)Og SUBSCRIBED AND SWORN TO before me this /G%4 day ofDanny,1985 last written.- My Commission Expires:Ws =:7micvcr Bee Exhibit C -5 of 6 ALASKA ELECTRIC GENERATION and TRANSMISSION COOPERATIVE,INC. " a By: -en ae ab (Title) .SUBSCRIBED AND SWORN TO before me this //%4 day of..l scembes ,1985 last-written. Exhibit C -6 of 6 O ADDENDUM NC.1 fPDO ul.ho 1TOTHE ALASKA INTERTIE AGREEMENT RESERVE CAPACITY AND OPERATING RESERVE RESPONSIBILITY This Addendum No.1 is made this _933,,/day of DecnJ,G5s-,+984;by the Utility Participants,THE MUNICIPALITY OF AN E,ALASKA,d.b.a.MUNICIPAL LIGHT &POWER;CHUGACH ELECTRICASSOCIATION,INC.;THE CITY OF FAIRBANKS,ALASKA,MUNICIPALUTILITIESSYSTEM;GOLDEN VALLEY ELECTRIC ASSOCIATION,INC.and ALASKA ELECTRIC GENERATION AND TRANSMISSION COOPERATIVE,INC.signatories to the Alaska Intertie Agreement,datedDecember23,1985,hereinafter referred to as "Agreement".Thesignatorypartiesarehereinafterreferredtoas"UtilityParticipants" WITNESSETH WHEREAS THE MUNICIPALITY OF ANCHORAGE,ALASKA,d.b.a.MUNICIPAL LIGHT &POWER;CHUGACH ELECTRIC ASSOCIATION,INC.;THE CITY OF FAIRBANKS,ALASKA,MUNICIPAL UTILITIES SYSTEM;GOLDEN VALLEY. ELECTRIC ASSOCIATION,INC.;and ALASKA ELECTRIC GENERATION AND TRANSMISSION COOPERATIVE,INC.are all Utility Participants and signatories to the Alaska Intertie Agreement;and WHEREAS the ALASKA POWER AUTHORITY is a Participant and signatory to the Alaska Intertie Agreement;and WHEREAS the signatories to the Alaska Intertie Agreement desiretohaveaseparateagreementinvolvingonlyUtilityParticipantswithreserverequirementresponsibilityontheinterconnected system; NOW THEREFORE,the Utility Participants agree as follows: ARTICLE A Reserve Capacity Section A-l.l A-1.1.1 Each Utility Participant expects and is expectedtomaintainutilityresponsibilityforitsownloadand,as a part of such responsibility,shallmaintainorotherwiseprovideforannually, Accredited Capability in an amount equal to orgreaterthanitsmaximumSystemDemandforsuchyearplussuchUtilityParticipant's ReserveCapacityObligation,as set forth in SubsectionA-1.1.2 of this Section. A-1.1.2 The Reserve Capacity Obligation of a UtilityParticipant,for any year,shall initially be Addendum No.1 -1 of 8 JasFOVwg.OA-1.1.3 Section B-2.1 B-2.1.1 B-2.1.2 Section B-2.2 B-2.2.1 equal to thirty (30)percent of the projectedAnnualSystemDemandofthatUtilityParticipant.The Reserve Capacity Obligation of theParticipantsmaybeadjustedfromtimetotimebytheOperatingCommittee. The Operating Committee may determine the annualAccreditedCapabilityforeachUtilityParticipant. ARTICLE B Responsibility for Operating Reserve Operating Reserve Each Utility Participant shall provide SpinningReserveandNon-Spinning Reserve as required bySectionB-2.2 of this Article equal to or greaterthantheOperatingReserveObligationoftheParticipant.As soon as practicable,but not toexceedfourhours,after the occurrence of an. incident which uses Operating Reserves,eachUtilityParticipantshallrestoreitsOperatingReserveObligationbytheproceduresdeterminedbytheOperatingCommittee. The Operating Reserves,Operating ReserveObligationandUtilityParticipant's AllocationmaybemodifiedoradjustedfromtimetotimebytheOperatingCommittee. Total Operating Reserve Obligation The Total Operating Reserve Obligation at any timeshallinitiallybeanamountequalto150percentofthecapabilityofthelargestgeneratingunit contingency in operation on the interconnected systems of the Utility Participants. B-2.2.1.1 The Spinning Reserve portion of the total Intertie System shall not be less than an amount equivalent to 100 percentoftheDeclaredCapabilityofthe largest generating unit contingency inoperationontheinterconnectedsystenms.. of the Utility Participants.The Declared Capability will be as determined by the Utility Participant. B-2.2.1.2 The balance of the Total Operating Reserve Obligation shall be maintained with Non-Spinning Reserve. Addendum No.1 -2 of 8 B-2.2.2 B-2.2.3 Section B-2.3. B-2.3.1 Section B-2.4 B-2.4.1 Generating unit capability for Operating Reservesshallbedeterminedbythefollowingcriteria: a.It shall not be less than the load on the machine at any particular time nor greaterthan(b)below. b.It shall not exceed that maximum amount of load (MW)that the unit is capable ofcontinuouslysupplyingforatwo-hour period, or immediately supplying through action ofautomatiegovernorcontrols. The criteria specified in this section may be modified or changed by the Operating Committee. Utility Participant's Allocation of Operating Reserves The Operating Reserve Obligation of a UtilityParticipantshallbethatpercentageoftheTotal Operating Reserve Obligation determined by the'Operating Committee in accordance with thefollowingformulabasedonthecapabilityof largest generating unit contingency in operation at each Utility Participant. B-2.3.1.1 Individual Utility Participant Reserve Allocation Formula IOR =TOR x Us/Ut IOR =Individual Utility Participant Operating Reserve Requirement TOR =Total Operating Reserve Requirement Us =A Utility Participant largeston-line generation unit capability Ut =Sum of each Utility Participant's Us Operating Reserve Calculation System Spinning Reserve shall be calculated at anygiveninstantasthedifferencebetweenthesumofthenetcapabilityofallgeneratingunitsonlineintherespectivesystemandtheintegrated Systems Demand of the system involved. Addendum No.1 -3 of 8 satisfied by an automatically controlled loadsheddingprogram.The load shedding program shallassurethatcontrolledloadcanbedroppedtomeet the requirements of Spinning Reserve and in such amannerastomaintainsystemstabilityandnotcauseobjectionablesystemconditionsorcascadingeffectsinotherUtilityParticipants'systems. The Operating Committee shall review and approvetheUtilityParticipant's load shedding programthatwillbeusedtosatisfyitsSpinningReserve requirements._ O B-2.4.2 A Utility Participant's Spinning Reserve may be B-2.4.3 The Operating Committee may establish procedurestoassurethattheOperatingReserveisavailable on the systems of the Participants at all times.Whenever a Participant is unable to meet its 'Operating Reserve Obligation,that UtilityParticipantwillimmediately,within two hours,advise all other Utility Participants and make arrangements to restore its Operating ReserveObligation.. B-2.4.4 Prudent Utility Practices shall be followed in distributing Operating Reserve,taking into_account effective utilization of capacity in anemergency,time required to be effective,O transmission limitations and local area requirements. B-2.4.5 A Participant may arrange for one or more otherUtilityParticipantstosupplypartorallofits Operating Reserve requirement. B-2.4.6 In an emergency,any Utility Participant,upon request by another Utility Participant,shallsupplytosuchrequestingUtilityParticipantpartorallofitsOperatingReserveuptothefullamountofitsAvailableAccreditedCapability.A Utility Participant experiencing an emergency isnotrequiredtomaintainitsOperatingReserveObligation.There shall be no obligation of aUtilityParticipanttosupplyOperatingReserveiftherequestingUtilityParticipantisnotmakingfulluseofitsAvailableAccreditedCapability. B-2.4.7 Except as otherwise agreed,a Utility ParticipantsupplyingaportionorallofanotherUtilityParticipant's Operating Reserve during any monthshallbepaidbythepurchasingUtilityParticipantanamountequaltowhicheverisOgreaterofthefollowing: Addendum No.1 -4 of 8 Be2.4.7.1 110 percent of the Incremental Cost of supplying such service;or B-2.4.7.2 The Incremental Cost of supplying suchserviceplusone-half of the overallsavingsinvolvedinsuchtransaction, which overall savings shall be equal tothedifferencebetweentheIncremental Cost of the selling Utility Participant and the Decremental Cost of the purchasing Utility Participant. B-2.4.8 If a Utility Participant fails to provide adequate Operating Reserve,other than because of a forcedoutage,during any such period the deficient Participant shall pay to the 'other Utility 'Participants an amount equivalent to two times thecostavoidedbythedeficientUtilityParticipantfornotstartingand/or operating any generatingunitorunitswhichwouldordinarilybeusedto provide adequate Operating Reserve.Should theUtilityParticipantnothaveadequateAccredited:Capability to provide the Operating Reserves,itshallpaytheotherUtilityParticipantstwotimes .the cost for starting and operating the highest cost generating unit on the deficient UtilityParticipant's system.This payment shall besharedbytheotherUtilityParticipantsinthesameproportionthattheirindividualAnnualSystemDemandistothenon-deficient UtilityParticipants'total Annual System Demand.Payments under this section B-2.4.8 of thisArticleBshallbewaivedforthefirstyearof operation of the Intertie. IN WITNESS WHEREOF,the Utility Participants have executed this Addendum No.1 to the Alaska Intertie Agreement in quintuplet bytheirauthorizedofficersorrepresentativesasofthedayand year first above written. MUNICIPALITY OF ANCHORAGE, ALASKA dba MUNICIPAL LIGHT & POWERBy:Sh Adefun2pe|,gPane per O S oe gES.AND SWORN TO before me on theoanday Addendum No.1 -5 of 8 My Commission Expires:LLL CHUGACH ELECTRIC ASSOCIATION, INC. General Manager- UBSCRIBED AND SWORN TO before me on the /YAY dayofLuunter.1985. Notary Public,State of Alas My Commission Expires: CHUGACH ELECTRIC ASSOCIATION, INC. By:Once stocksYU"S AX President of the BoardUBSCRIBEDANDSWORNTObeforemeonthe[7 wt dayoflbeunbery1985. Notary Public,State oMyCommissionExpires:(/-§-§5 CHUGACH ELECTRIC ASSOCIATION, INC. 7By:Quzsck ZZ.ey a - 4 &Vice-President of the Board Addendum No.1 -6 of 8 -,SUBSCRIBED AND SWORN TO before me on the /7 ¥4 dayofLeeonber,1985. ¢- "Notary Public,State of AlaskgMyCommissionExpires:U'-"Se '(Title) SUBSCRIBED AND SWORN TO before me on the /fz%_dayofDeremtae»1985., robles int SS of AlaskaMyCommissionExpires:so-/7-37 GOLDEN VALLEY ELECTRIC ASSOCIATION,INC.By:MWe.5 aCen.Na Ys (Titley} LESUBSCRIBEDANDSWORNTObeforemeonthe_/dayofKeeomber,1985. :wth,otary ruQfic tate o FE ExpiresMyCommissionExpires:Sorezrsit 1957 Addendum No.1 -7 of 8 -™of /'E ALASKA ELECTRIC GENERATION and TRANSMISSION COQPERATIVE,INC. By: Wee "(Title) % UBSCRIBED AND SWORN TO before me on the 17%day ,1985. Addendum No.1 -8 of 8