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HomeMy WebLinkAboutBradley Lake AEA and Project Management Commitee 2003i Christine Schlicker-AW_227871.DOC Page 11 Qos y a) wove A *ay y SE AP a ;7 2)Sor _e A y-Frdver ch fb +ai ;evi ,ne eeQopenree”é 4 fh.iG »oN ay oN 'get Cu om UMEMORANDUMyehwee.Ve TO:Utility Members of the Bradley Lake Project Management Committee FROM:Ron Saxton Gi A \ay DATE:September 17,2003 wate & RE:Powers of the Bradley Lake PMC PURPOSE As you are aware,there has been significant turnover in the people involved in the Bradiey Lake Project ("Project”)since the Project's inception.Given this turnover,Iam concerned that there are some misperceptions as to the division of responsibility between the Alaska Energy Authority ("AEA”)and the Project Management Committee ("PMC”'). Ihave drafted this memorandum and the attached charts to clarify this division of duties as between the AEA and the PMC. Simply put,most authority and responsibility are with the PMC,not the AEA. This is in recognition of the fact that the utilities,not the AEA,bear the financial responsibility for the Project. The powers and authority of the PMC are set forth in and governed by the following documents:(1)The Agreement for the Purchase and Sale of Electric Power between the Alaska Energy Authority the Purchasers'and Additional Parties”dated as of December 8,1987 ("PSA”);(2)The Bradley Project Management Committee Bylaws ('Bylaws');and (3)Alaska Energy Authority Power Revenue Bond Resolution adopted September 7,1989 ("Bond Resolution'). In summary,the PMC is responsible for everything except certain non-delegable duties.The AEA must comply with all applicable state and federal laws and regulations relating to the use and operation of the Project,including compliance with the terms of FERC licenses applicable to the Project.The AEA is also responsible for providing 1 The "Purchasers”are as follows: Chugach Electric Association,Inc.("Chugach”), Golden Valley Electric Association,Inc.("Golden Valley'), Municipality of Anchorage d/b/a Municipal Light and Power (""ML&P”), City of Seward d/b/a Seward Electric System ("Seward”),and Alaska Electric Generation &Transmission Cooperative,Inc.(AEG&T'). ?The Additional Parties are as follows: Homer Electric Association,Inc.("Homer”),and Matanuska Electric Association,Inc.("MEA”). 3 The summary provided is not intended to take the place of the PMC's governing documents or of applicable laws and regulations,which should be consulted for a more comprehensive and precise description of the PMC's rights,powers,and duties. !Christine Schlicker -AW_227871.DOC Page 2) information to the PMC so that the PMC may perform its budget responsibilities.Except for these specific,non-delegable duties reserved by the AEA,the PMC is obligated to carry out all other standard owner/operator responsibilities.That is,the PMC has primary responsibility for the operations and governance of the Project.Key PMC obligations include: (1)Project management,operation,maintenance,and improvement _Establish of maintenance schedules Make and approve operations and maintenance arrangements Schedule,produce,and dispatch Project power Establish water allocation procedures Evaluate and undertake Required Project Work and Optional Project Work Make insurance determinations and secure coverage Adopt and implement procedures relating to electric power reserves (2)Financial Adopt annual budget Hire firm to conduct annual audit Establish estimated annual payment obligation Determine actual annual Project costs and actual annual payment obligation,and compare to estimated annual payment obligation e Evaluate and approve contributions to the Renewal and Contingency Reserve Fund e Establish accounts to manage Project if and when no bonds are outstanding under the Bond Resolution (3)Procedural Hold annual,quarterly,and special meetings Adopt PMC rules of procedure Adopt dispute resolution procedures Approve consultants Elect officers Establish subcommittees (as needed) SUMMARY We negotiated to make the Bradley Lake Project a utility controlled project rather than a state-controlled one.The PMC and its subcommittees need to be cautious about any action that relinquishes or diminishes this important obligation and right to control the Project.bo +Christine Schlicker AW_227103.DOC Page 1} a Summary of Operational Duties Duties PMC or AEA Authority Duty?.: Voting Requirements Summary of PMC Duties Page 1 of 11 227103_1.DOC/JLT/053844-0000 'Christine Schlicker -AW_227103.DOC Page 2} ® Primary Responsibility for Budget of Annual Project Costs Adopt and revise (as necessary)in each fiscal year a budget of Annual Project Costs for that fiscal year.If the PMC fails to adopt this budget by the ninetieth (90")day prior to the beginning of a fiscal year,then the AEA may adopt the budget. The annual budget must include: amounts required for debt service on any outstanding bonds;amounts required for reserved funds created by bond resolution;and costs of producing and delivering power.The budget may include amounts for non- bond funding of additional Project work. The Committee must hire a qualified independent auditing firm to conduct an audit annually. PMC (but AEA may adopt a budget if the PMC fails to do so by the ninetieth (90%)day prior to the beginning of a fiscal year) PSA § 13(c)GiX(C) PMC approval of the sufficiency of the annual budget and the wholesale power rates require the affirmative vote of a majority of the Purchasers and the affirmative vote of the AEA. Summary of PMC Duties Page 2 of 11 227103_1.DOC/JLT/053844-0000 ;Christine Schlicker -AW_227103.DOC Page3] 8 Secondary Duties in the Budget Process Provide annual budget detail listing personnel requirements by work function,their gross payroll,payroll burdens,and the estimated percentage of each work function to be required for operation and maintenance. Provide estimated costs for materials, supplies,engineering,and other costs in sufficient detail to allow the Committee a reasonable basis to analyze the budget in the approval process and to provide a basis for the annual audit of costs. Provide annual budgets detailing the estimated costs relating to FERC license requirements,property insurance,and the Project specific administrative and general costs to be paid to the AEA. AEA Bylaws Art.9.2.2 Summary of PMC Duties Page 3 of 11 227103_1.DOC/JLT/053844-0000 |Christine Schlicker -AW_227103.DOC Page 45 Determine the actual Annual Payment Obligation for each Purchaser for that fiscal year, Determine the amount of any additional payment required from (or refund to be given to)each Purchaser. Costs in a timely fashion,then the AEA may do so) Estimated Annual Payment Obligation |PMC PSA §This action requires the affirmative vote of at e Establish in each fiscal year each 13(c)(i)(D)least four representatives of the Purchasers Purchaser's estimated Annual (but AEA may whose percentage shares of Project capacity are . Payment Obligation,including a undertake if PMC greater than fifty-one percent,and the affirmative schedule of equal monthly payments fails to do so ina vote of the AEA. that each Purchaser must make during |timely fashion) that fiscal year. Actual Annual Project Costs and PMC PSA §Determination of actual Annual Project Costs Actual Annual Payment Obligation 13(c)Gi)(E)requires the affirmative vote of at least four e Determine the actual Annual Project (but if the PMC .representatives of the Purchasers whose Costs after the conclusion of each fails to determine percentage shares of Project capacity are greater fiscal year for that fiscal year,the actual Project than fifty-one percent,and the affirmative vote of the AEA. Summary of PMC Duties Page 4 of 11 227103_1.DOC/JLT/053844-0000 Christine Schlicker -AW_227103.DOC Page 54 Project Operation and Maintenance e Make and approve operations and maintenance arrangements, e Adopt maintenance schedules, PMC duty PSA §13(c)(ii)PMC approval of operations and maintenance arrangements for the Project requires the affirmative vote of a majority of the Purchasers and the affirmative vote of the AEA.Adoption of maintenance schedules requires the affirmative vote of at least four representatives of the Purchasers whose percentage shares of Project capacity are greater than fifty-one percent,and the affirmative vote of the AEA. Scheduling,Production,and Dispatch of Project Power e Adopt procedures for scheduling, production,and dispatch of Project power. PMC PSA § 13(c)(ii)(A) Adoption of such procedures requires the affirmative vote of at least four representatives of the Purchasers whose percentage shares of Project capacity are greater than 51%,and no action by the AEA is required. Summary of PMC Duties Page 5 of 11 227103_1.DOC/JLT/053844-0000 }Christine Schlicker -AW_227103.DOC Page 64 Water Allocation methods (if any)of carrying out and funding Required Project Work. PMC PSA 13(c)(ii)(B)|Establishment of such procedures requires the e Establish procedures for the use of affirmative vote of at least four representatives each Purchaser's Water Allocation in a of the Purchasers whose percentage shares of manner that is consistent with the Project capacity are greater than fifty-one needs and desires of other Purchasers percent.Such matter does not require action by and the capabilities of the Project as the AEA,except in the case of any water necessary.allocation decision which affects performance of the AEA's obligation under its FERC license. Required Project Work PMC PSA §Evaluation of the necessity for and scheduling of e Evaluate and select among alternative 13(c)(iiKF)Required Project Work requires the affirmative vote of at least four representatives of the Purchasers whose percentage shares of Project capacity are greater than fifty-one percent,and the affirmative vote of the AEA.Selection among such alternative methods that do not involve the AEA must be approved by an affirmative vote of at least four representatives of the Purchasers whose Project capacity shares are greater than fifty-one percent.Selection among such alternative methods that do involve the AEA must be approved by an affirmative vote of at least four representatives of the Purchasers whose Project capacity shares are greater than fifty-one percent,and the affirmative vote of the AEA. Summary of PMC Duties Page 6 of 11 227103_1.DOC/JLT/053844-0000 #Christine Schlicker -AW_227103.DOC Page 7# 4 Optional Project Work PMC PSA §PMC evaluation and approval of the undertaking e Adopt provisions to evaluate and 13(c)(ii)(G)of Optional Project Work,and compensation for approve Optional Project work,and to such work,requires the affirmative vote of a determine the compensation (if any)to majority of the Purchasers and the affirmative be provided if the PMC approves such vote of the AEA. Optional Project Work. Insurance Determination PMC PSA §Such action requires the affirmative vote of at ©Make an initial determination of customary insurance (within the meaning of Section 714 of the Bond Resolution), ©Determine the appropriate amount of insurance for the Project and obtain same (in addition to other insurance that may be required by the Bond Resolution), e Advise the AEA from time to time as to the appropriate extent of insurance coverage required by the Bond Resolution. 13¢¢)Gi);PSA §11(b);Bylaws Art.5.10.5(6) least four representatives of the Purchasers whose percentage shares of Project capacity are greater than fifty-one percent,and the affirmative vote of the AEA. Summary of PMC Duties Page 7 of 11 227103_1.DOC/JLT/053844-0000 t Christine Schlicker -AW_227103.DOC Page 8} ° Electric Power Reserves PMC PSA §Approval of such procedures and any individual e Adopt and implement procedures 13(c)(ii)(K)utility agreements relating to electric power relating to electric power reserves for reserves for the Project requires the affirmative the Project.vote of at least four representatives of the Purchasers whose percentage shares of Project capacity are greater than fifty-one percent,and the affirmative vote of the AEA. Renewal and Contingency Reserve PMC PSA §Such action requires the affirmative vote of at Fund 13(c)Gi){L)least four representatives of the Purchasers e Consider the need for and approve an whose percentage shares of Project capacity are additional amount to be added to the greater than fifty-one percent,and the affirmative Renewal and Contingency Reserve vote of the AEA. Fund above the Renewal and Contingency Reserve Requirement provided in the Bond Resolution. Establish Accounts if No Bonds PMC PSA §13(c)qiii).|Such action requires the affirmative vote of at Outstanding e Establish the accounts and take action as necessary to manage the Project if and when no bonds are outstanding under the Bond Resolution. least four representatives of the Purchasers whose percentage shares of Project capacity are greater than fifty-one percent,and the affirmative vote of the AEA. Summary of PMC Duties Page 8 of 11 227103_1.DOC/LT/053844-0000 t Christine Schlicker -AW_227103.DOC Page 9F Actions Required by Law or Agreement e The AEA may take any action which the AEA believes to be required in order for the AEA to comply with federal or state law,the orders of licensing and regulatory agencies,the Bond Resolution,or the Power Sales Agreement. e The AEA is responsible for ensuring that the Project complies with FERC license requirements. AEA Bond Resolution §711(3) Summary of PMC Duties Page 9 of 11 227103_1.DOC/JLT/053844-0000 t Christine Schlicker -AW_227103.DOC Page 104 Summary of Procedural Duties Adopt procedures for conduct of PMC meetings, Adopt dispute resolution procedures, Adopt procedures for approval (including pre-approval)of consultants, Adopt procedure for modification of the PMC's procedural rules, Adopt voting requirements (to the extent that they are not addressed in the PSA). Duties PMC or AEA Authority Voting Requirements :Duty? Hold Meetings (annual,quarterly,and PMC duty PSA §13(a); special meetings)Bylaws Art.5 Adopt PMC Rules of Procedure PMC duty PSA §13(b);Affirmative vote of a majority of the Purchasers Adopt procedures for the periodic Bylaws Art.and the affirmative vote of the AEA selection of PMC officers,5.10.5 (9) Summary of PMC Duties Page 10 of 11 227103_1.DOC/JLT/053844-0000 |Christine Schlicker -AW_227103.DOC Page 11} e Elect a Chairman,Vice Chairman,and Secretary/Treasurer,and other officers and agents as necessary, e Determine officers'term and duties. Dispute Resolution PMC PSA §Adoption or amendment of dispute resolution e Adopt procedures for the resolution of 13(c)(ii)CA)procedures requires unanimous agreement of all disputes that may arise between the PMC members. parties to the PSA regarding the meaning of its terms. Approval of Consultants PMC PSA §13(b)The approval or pre-approval of consultants e Adopt procedures for the approval requires the affirmative vote of at least four (including pre-approval,if needed)of Trepresentatives of the Purchasers whose consultants.percentage shares of Project capacity are greater than fifty-one percent,and the affirmative vote of the AEA. Election of Officers PMC Bylaws Art.7.1 The election of officers requires a majority of Committee member votes,with each member receiving equal votes,including the AEA.The Committee may remove any officer upon the vote of five Committee members. Summary of PMC Duties Page 11 of il 227103_1.DOC/JLT/053844-0000 E Christine Schlicker -AW_227103.DOC Page 12| re Subcommittees The PMC may appoint special purpose subcommittees from time to time,but the designation of subcommittees does not relieve the PMC or any PMC member of any responsibility imposed by law or the PSA. Subcommittees may only act upon PMC matters when given prior authorization by the PMC. The PMC will formalize the authorization by adopting a resolution which details the scope of the subcommittee's authority to act. Subcommittee members serve from the date of appointment until the date of the next annual PMC meeting. PMC Bylaws Art.6.1 Decisions made by the subcommittee must be by affirmative vote of a majority of the members of that subcommittee,unless otherwise directed by the PMC. Summary of PMC Duties Page 12 of 11 227103_1.DOC/JLT/053844-0000 iACOUNTERPART _]_of 21 BRADLEY LAKE HYDROELECTRIC PROJECT AGREEMENT FOR THE SALE AND PURCHASE OF ELECTRIC POWER ("POWER SALES AGREEMENT") by and among THE ALASKA POWER AUTHORITY, An Agency Of The State Of Alaska,("Seller"), and The CHUGACH ELECTRIC ASSOCIATION,INC., The GOLDEN VALLEY ELECTRIC ASSOCIATION,INC., The MUNICIPALITY OF ANCHORAGE d/b/a MUNICIPAL LIGHT AND POWER,The CITY OF SEWARD d/b/a SEWARD ELECTRIC SYSTEM, andTheALASKAELECTRICGENERATION&TRANSMISSION COOPERATIVE,INC., ,("Purchasers") and 'The HOMER ELECTRIC ASSOCIATION,INC.,and The MATANUSKA ELECTRIC ASSOCIATION,INC., (Additional Parties) osIndex Of Sections Section Recitals ..2.2 2 2 6 ©©ew ew ew ew we wwe we 1.Definitions ......ce eee ew 2.Term Of Agreement .2...2 2 2 ee ee ewe 3.Exhibits...ee ee eee ee ee ee 4.Electric ServiceTo Be Furnished....... 5.Electric Power Reserves For The Project ... 6.Obligations Under Bond Resolution;-.§--° Completion Of Project ..2.«««««we «@ 7.Payment Obligation ...2.2 «©©©©©«©©@ 8.Annual Project Costs rr 9.Obligations In The Event Of Default ..... 10.Purchasers'Systems .2...21 2 ee ee ee 11.Bond Resolution a cee 12.Purchasers'Consent To Supplemental Resolutions To Construct The Project ...-«««««e 13.Establishment Of The Committee .......|e 14,End Of The Project ..2.2 2.«©©©©©we we ew 15.Records 2...+--+2 eee ees re 16.Inspection Of Facilities ....-+....-- '17.Covenants To Maintain Integrity Of Agreement . 18.Assignment...6-2 eee ee ee ee ew eee 19.Notices,Computation Of Time And Holidays oe 20.Applicable Law ....«««©««_ceo eee 21.Availability Of Information ..a oe ew 22.Severability e e e e e e e \id «°e e e e e e 3Section .23. 24. 25. 26. 27. 28. 29. 30. 31. 32. Remedies Cumulative ....- Waiver Not Continuing .... Section Headings ....... Multiple Copies 2...ee « Covenant To Act In Good Faith No Third Party Beneficiaries . Excess Payments ...«««« Special Arrangements Regarding Capitalization Of Certain Costs Of Purchasers Efforts To Obtain Intertie......«...e-«e Exhibit "A",Bond Resolution Exhibit "B",Delivery Point AEGET Exhibit "C",Description Of The Project Page 27 28 28 28 28 28 28 30 31 31 Exhibit "D",Purchasers'Percentage Shares Of Project Capacity .And Of Annual Project Costs Exhibit "E",Form Of Certain Supplemental Bond Resolutions odPOWER SALES AGREEMENT THIS AGREEMENT dated as of December 8,1987,is entered into by and among the ALASKA POWER AUTHORITY (the "Authority")and the CHUGACH ELECTRIC ASSOCIATION,INC.,the GOLDEN VALLEY ELECTRIC ASSOCIATION,INC.,the MUNICIPALITY OF ANCHORAGE d/b/a MUNICIPAL LIGHT AND POWER,the CITY OF SEWARD d/b/a SEWARD ELECTRIC SYSTEM,and the ALASKA ELECTRIC GENERA- 'TION &TRANSMISSION COOPERATIVE,INC.(individually a "Purchas- er,"and collectively the "Purchasers"),and the HOMER ELECTRIC ASSOCIATION,INC.,and the MATANUSKA ELECTRIC ASSOCIATION,INC. (as additional Parties with some,but not all,of the rights and responsibilities of Purchasers). WITNES SET H: The Authority recites,agrees,represents and cove- nants as follows: (1)The Authority is a public corporation of the State of Alaska duly created,organized and existing pursuant to AS 44.83; (2)The Authority is authorized,and has taken all steps necessary pursuant to the Constitution and laws of theStateofAlaskaandtheregulationsandby-laws of the Authori- ty,to enter into this Agreement and to comply fully with the terms hereof; (3)The Authority desires to fulfill its legisla- tively established duty of providing residents of the State of Alaska with long-term,stable,and economic sources of powerandanadequate,economic,and reliable long-term supply of.power;and (4)The Authority's execution and performance of this Agreement will not conflict with,violate,or constitute an event of default under any other resolution,contract,ag- reement,bond,note,mortgage,or other obligation of the Auth- ority,or with respect to any order,ruling,or decree of anycourtorregulatoryagencytowhichtheAuthorityissubjectat the time the Authority executes this Agreement. Each Cooperative Purchaser (as hereinafter defined)and the Homer Electric Association,Inc.("HEA")and the Mata- nuska Electric Assocation,Inc.("MEA")recites,agrees,repre- sents and covenants as follows: (1)The Purchaser is a duly organized and constitut- ed electric cooperative under the laws of the State of AlaskaandiscurrentlyaborrowerfromtheRuralElectrificationAd-ministration,United States Departmentof Agriculture,undertheRuralElectrificationActof1936(7 U.S.C.§901 et seq.); BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page l (2)The Purchaser is authorized,and has taken ali steps necessary pursuant to its articles of incorporation andby-laws and applicable laws and regulations,to enter into this Agreement and to comply fully with the terms hereof; (3)The Purchaser performs the functions of a utili- ty and is a wholesale power customer eligible to purchase powerproducedfromaprojectpursuanttoAS44.83;and (4)The Purchaser's execution and performance ofthisAgreementwillnotconflictwith,violate,or constituteaneventofdefaultunderanyotherresolution,contract,ag- reement,bond,note,mortgage,or other obligation of the Pur- chaser,or with respect to any order,ruling,or decree of anycourtorregulatoryagencytowhichthePurchaserissubjectatthetimethePurchaserexecutesthisAgreement. Each Municipal Purchaser (as.hereinafter defined)re-cites,agrees,represents and covenants as follows: (1)The Purchaser is a duly organized and constitut-ed municipal corporation under the Constitution and laws of the State of Alaska; (2)The Purchaser is authorized,and has taken all steps necessary pursuant to the Constitution and laws of the'State of Alaska and other applicable laws and regulations,and pursuant to its charter and ordinances,to enter into this Ag- reement and to comply fully with the terms hereof; (3)The Purchaser performs the functions of a utili- ty and is a wholesale power customer eligible to purchase power produced from a project pursuant to AS 44.83;and (4)The Purchaser's execution and performance ofthisAgreementwillnotconflictwith,violate,or constitute an event of default under any other charter,ordinance,resolu-.tion,contract,agreement,bond,note,mortgage,or.other obli-gation of the Purchaser,or with respect to any order,ruling, or decree of any court or regulatory agency to which the Pur- chaser is subject at the time the Purchaser executes this Ag- reement. NOW,THEREFORE,the parties agree as follows: Section 1.Definitions.For the purposes of this -Agreement,the following definitions apply: (a)"Act"or references to AS 44,83 mean Title 44,Chapter 83 of the Alaska Statutes (AS 44.83)as the same may be amended or supplemented from time to time. BRADLEY LAKE PROJECT POWER SALES AGREEMENT ;Page 2 (b)"Agreement"means this Power Sales Agree- ment. (c)"Annual Payment Obligation"means the total amount payable by a Purchaser in or for a Fiscal Year pur-suant to this Agreement. (d)"Annual Project Budget"means the budgetfortheProjectasadoptedorineffectforaparticularFiscalYear,and amended or supplemented from time to time,pursuant to Section 13. (e)"Annual Project Costs"shall have the mean- ing given it in Section 8 of this Agreement. (£)"Authority"™means the Alaska:Power Authori- ty as established by the Act,and any successor agencythereto. (g)"Bond Resolution"means (i)the documentattachedasExhibit"A",or a resolution adopted by theAuthoritysubstantiallyintheformofExhibit"A",as supplemented and amended from time to time in a manner consistent with Section 11 of this Agreement and with theprovisionsoftheAct,or (ii)a further bond resolution, consistent with Section 11,adopted in connection with theissuanceofbondstorefundtheBonds. (h)"Bonds"means bonds,notes or other evi-dences of indebtedness (including refunding bonds)issued pursuant to the Bond Resolution,the proceeds of which are used to pay or reimburse Costs of Acquisition and Con- struction and Required or Optional Project Work. (i)"Committee"means the Project Management Committee established pursuant to Section 13. (j)"Consultant"means an independent indivi- dual or firm (i)of nationwide and favorable reputation, having demonstrated expertise in the field or the matter or the item referred to it under various specific pro- visions of this Agreement,and (ii)approved by the Auth- ority and the Committee in accordance with rules of pro- cedure to be adopted by the Committee to govern such ap- proval,which approval shall not be unreasonably withheld. (k)"Cooperative Purchasers"means Chugach Electric Association,Inc.,Golden Valley Electric Associ- ation,Inc.,and Alaska Electric Generation &Transmission Cooperative,Inc.The term "Cooperative Purchasers"in- cludes Homer Electric Association,Incec.,and Matanuska Electric Association,Inc.,only to the extent specified in Section 30 of this Agreement. BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 3 (1)"Cost of Acquisition and Contruction"means the Cost of Acquisition and Construction (as defined in Section 101 of the Bond Resolution)of the Project;pro-vided,that for purposes of this Agreement the Cost of Acquisition and Construction of the Project shall not in- clude the Cost of Acquisition and Construction of CapitalImprovements(as defined in Section 101 of the Bond Res- olution). (m)"Date of Commercial Operation"means the date on which engineers retained for this purpose by theAuthorityhavereasonablydeclaredthattheProjectis fully available to be operated at not less than ninetymegawatts(90 MW),and its output can be scheduled on a commercial basis. (n)"Debt Service”means amounts that the Auth- ority is required to set aside for the payment of princi- pal of,premium,if any,sinking fund payments,and inter- est on the Bonds,as the same are scheduled to become due under the Bond Resolution,and not by reason of any accel- eration. (o)"Delivery Point"means the Bradley Junction facilities,as identified and further described in Exhibit B. (p)"Electric power"or "power"means electric energy or electric capacity or both.Where the context of this Agreement requires a distinction,electric energy isspecifiedand/or expressed in kilowatthours or megawatt- hours and electric capacity is specified and/or expressedinkilowattsormegawatts. (q)"Excess Payment Amount"means the amounts,if any,computed as provided in Section 29 and included in_Annual Project Costs. (cr)"Fiscal Year"means that twelve-month peri-od starting July 1 ofa calendar year through and includ-ing June 30 of the succeeding calendar year.The initial Fiscal Year for purposes of this Agreement is that portion of the twelve-month period starting on the Date of Commer-cial Operation through and including the following June30.If the portion of the period is shorter than 90 days the parties shall determine the initial Fiscal Year,which must end on a June 30 and may not be longer than 456 days. The last Fiscal Year for purposes of this Agreement shall be that portion of the twelve-month period between the endofthelastfull(i.e.,twelve month)Fiscal Year and the expiration of this Agreement. .(s)"Municipal Purchaser"means the Municipali- ty of Anchorage d/b/a/Municipal Light and Power,and the BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 4 City of Seward d/b/a Seward Electrical System. (t)"Optional Project Work"means Project re-pairs,renewals and replacements,improvements,better- ments,additions,or expansions that do not constitute Required Project Work. (u)"Percentage Share"means the fraction,ex- pressed as a percent and set forth for each Purchaser inExhibitDasthatExhibitmaybeamendedfromtimeto time,used to compute the amount of each Purchaser's en- titlement to Project Capacity and obligation to pay AnnualProjectCosts. (v)"Project"means the Bradley Lake Hydroelec-_tric Project as described in Exhibit C. (w)"Project Capacity"means the amount of electric capacity capable of being produced by the Project(including capacity attributable to Required or OptionalProjectWork)at any and all times from the Date of Com- mercial Operation until the termination of this Agreement(or any renewal thereof)under the operating conditions that exist during such times,including periods when the Project may be not operating or inoperable or the opera- tion thereof is suspended,interrupted,interfered with, reduced,or curtailed,in each case in whole or in part for any reason whatsoever,after corrections for station and Project use,and depletions required under any federal license for the Project. (x)"Prudent Utility Practice"shall mean at a particular time any of the practices,methods and acts engaged in or approved by a significant portion of the -electric utility industry at such time,or which,in the exercise of reasonable judgment in light of facts known at such time,could have been expected to accomplish the de- sired results at the lowest reasonable cost consistent with good business practices,reliability,safety and rea- sonable expedition.Prudent Utility'Practice is not re- quired to be the optimum practice,method or act to the exclusion of all others,but rather to be a spectrum of possible practices,methods or acts which could have been expected to accomplish the desired result at the lowest reasonable cost consistent with reliability,safety and expedition.Prudent Utility Practice includes due regard for manufacturers'warranties and the requirements of gov- ernmental agencies of competent jurisdiction and shall apply not only to functional parts of a Project,but alsotoappropriatestructures,landscaping,painting,signs,lighting and other facilities.In evaluating whether anymatterconformstoPrudentUtilityPractice,the parties shall take into account (i)the nature of the parties BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 5 hereto under the laws of the State of Alaska and their statutory duties and responsibilities,and (ii)the ob- jective of integrating Project Capacity with the generat- ing resources of the Purchasers,including resources available under contract,to achieve optimum utilization of the resources and achieve efficient and economical op- eration of each Purchaser's System.For purposes of this Agreement,"national standards for the industry"means Prudent Utility Practice. (y)"Purchaser"means,as of any particular time,such of the Municipality of Anchorage d/b/a Munici- pal Light and Power,Chugach Electric Association,Inc.,-Golden Valley Electric Association,Inc.,the City of Seward as.have executed this Agreement,and the Alaska Electric Generation &Transmission Cooperative,Inc. ("AEG&T).The term "Purchaser"includes Homer Electric Association,Inc.,and Matanuska Electric Association, Inc.,only to the extent specified in Section 30 of this Agreement. (z)"Purchaser's System"means a Purchaser's electric utility system for the distribution,transmis- sion,and generation of electrical power and which is owned and operated by the Purchaser.If Purchaser's elec-tric utility system is combined with other utilities of the Purchaser,then "Purchaser's System"includes only those facilities,activities,and revenues properly alloc- able to Purchaser's electric utility service."Purchas- er's System"does not include the Project,regardless of whether the Purchaser operates the Project under a separ- ate agreement with the Authority. (aa)"Purchaser's Water Allocation"means the mumber of acre feet of water from the Project allocated for generation purposes by the Committee to a Purchaser from time to time,based on that Purchaser's Percentage Share. (bb)"Railbelt"means the geographic area served by the Purchasers.. (cc)"Railbelt Energy Fund"means a fund cre- ated by the legislature,the use of which is intended onlyforapprovedpowersupplyandtransmissionprojectsinthe Railbelt. (dd)"REA"means the Rural Electrification Ad- ministration,an agency of the United States Department ofAgriculture. (ee)"Recoverable Construction Cost"means anamountequalto$175,000,000 less one half the amount,if BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 6 any,by which $350,000,000 exceeds the Cost of AcquisitionandConstruction,plus the principal amount of additional Bonds (if any)issued pursuant to Section 31. (££)"Renewal and Contingency Reserve Fund" means the Renewal and Contingency Reserve Fund established pursuant to Section 502 of the Bond Resolution. (gg)"Required Action"means an action that must be taken in order for the Authority to comply with federal or state law,the orders of licensing and regula-tory agencies,the Bond Resolution,or this Agreement. (hh)"Required Project Work"means repairs,maintenance,renewals,replacements,improvements or bet- terments required by federal or state law,a licensing orregulatoryagencywithjurisdictionovertheProject,orthisAgreement,or otherwise necessary to keep the Projectingoodandefficientoperatingcondition,consistent with (1)sound economics for the Project and the Purchasers,and (2)national standards for the industry. (ii)"Revenue Fund"means the Revenue Fund est ablished pursuant to Section 502 of the Bond Resolution. (5)"Trustee"means the trustee appointed pur-suant to Article IX of the Bond Resolution,or that Trust-ee's successor or successors and any other corporation which may at any time be substituted in that Trustee's place under the Bond Resolution. Section2.Term Of Agreement. (a)Effectiveness.This Agreement shall become effective on the first date when (i)the Agreement has been executed and delivered by all Purchasers and by the Authority,and (ii)each Purchaser has obtained all nec- essary approvals of this Agreement and of all transmission and/or services agreements for the.transmission of Project power to the Purchasers.An approval shall not be con- sidered "necessary"for purposes of this Section 2(a)un- less,prior to or contemporaneously with delivery of this Agreement,the person or entity from which such approval must be obtained has been identified to the other parties in writing by the Purchaser requiring such approval.It is the intent of each Purchaser to take all steps rea- sonably within its power to obtain all necessary approvalsfromitsgoverningbodynolaterthanDecember1,1987. (b)Commencement of payment obligations.MThe payment obligations of each Purchaser under this Agreement shall commence on the Date of Commercial Operation;pro-vided,that the Purchasers shall be obligated to pay thoseCommitteecostsreferencedinthelastsentenceofSection BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 7 o)© 13(a)regardless of whether the Date of Commercial Opera-tion occurs. (c)Termination.This Agreement shall termi- nate (i)50 years after the Date of Commercial Operation,or (ii)wHen no Bonds are OutstandingundérthieBondRes=olution and all payment obligations under this Agreement(other than any payment obligations under Section 29)have been satisfied or provided for,whichever occurs later; provided,that if the Date of Commercial Operation does not occur before January 1,1996,then this AgreementshallterminateonJanuary1,1996.The parties may mu-tually agree to terminate or to renew this Agreement priortotermination,subject,however,to the written approvaloftheAdministratorofREAifsuchwrittenapprovalis then required,and the terms and conditions of covenants and agreements between the Authority and holders of Bonds.If such approval is then required,no amendment of thisAgreementshalltakeeffectwithoutthewrittenapprovaloftheAdministratorofREA. (d)Renewal.Any Purchaser may renew this Ag-reement on the same terms and conditions as provided here- in for successive additional terms (such terms to equal forty (40)years or,if shorter,the remaining useful life of the Project),upon written notice to the Authority bythePurchaser.given no less than six and no more than twenty-four months prior to the end of the term of this Agreement.Purchasers electing to renew this Agreement shall be entitled to have their Percentage Shares adjusted pro rata,based on their Percentage Shares as set forth in Exhibit D as that Exhibit exists twenty-four months prior to the end of the initial term of this Agreement,so that the adjusted Percentage Shares of the Purchasers renewing this Agreement total one hundred percent (100%).No re- newing Purchaser shall be required to accept the entiretyofthePercentageSharetowhichthatPurchaserbecomes entitled,.but if the Percentage Shares of all renewingPurchasersdonottotalonehundredpercent,the Authority may sell to any other utility that is a qualified purchas- er of power under the Act any remaining Percentage Share or portion thereof upon the same terms and conditions ap- plicable to the renewing Purchasers,if the Authority rea-sonably determines that such utility is able to carry out the obligations of a Purchaser under this Agreement and that such sale to such utility will not adversely affect the tax exemption of interest on any Bonds Outstanding under the Bond Resolution that originally were issued on a tax-exempt basis.The Authority shall not be obligated to: renew this Agreement if,after reasonable notice to the renewing Purchasers,Percentage Shares that total one hun- dred percent have not been sold to such Purchasers or tootherqualifiedutilitypurchasers. BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 8 ©© Section 3.Exhibits.The following exhibits areincorporatedbyreferenceintothisAgreement: (a)Exhibit "A",Bond Resolution, (b)Exhibit "B",Delivery Point, (c)Exhibit "C",Description of the Project, (ad)Exhibit "D",Purchasers'Percentage SharesofProjectCapacityandofAnnualProject Costs,and (e)Exhibit "E",Form Of Certain Supplemental Bond Resolutions. "Section 4.Electric Service To Be Furnished. (a)Sale and purchase.The Authority herebysells,and each Purchaser hereby purchases,that Purchas- er's Percentage Share of Project Capacity (together withassociatedenergy)from the Project in accordance with this Agreement.The actual delivery (if any)of electric capacity and associated energy to Purchasers from the Pro- ject shall be made in accordance with scheduling proce- dures adopted by the Committee. (b)Available Power.The Authority shall at . all times,except when prevented by a cause or event not'. within the control of the Authority,make power available to the Purchasers from the Project in an amount equal to the amount the Purchasers may schedule from the Project,within the limitations imposed by available Project capab- ility,available water,and the scheduling procedures ad-opted by the Committee.a (c)Required Project Work.The Authority shallmakeorcausetobemadeallRequiredProjectWork,pro- vided that funds are legally available to the Authority for this purpose.The costs of Required Project WorkshallbeincludedinAnnualProjectCostsinthemanner set forth in Section 8(a)(iv).The Authority shall give reasonable notification to all Purchasers prior to making or causing to be made any Required Project Work.Alterna-tive methods (if any)of carrying out and funding Required.Project Work shall be subject to approval by the Committee under rules of procedure to be adopted pursuant to Section 13. BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 9 (d)Optional Project Work.The Authority shallnotmakeorcausetobemadeOptionalProjectWorkunless such Optional Project Work is approved by the Committee. Any Optional Project Work shall be at the expense of the benefitted Purchaser(s),as determined in advance by theCommittee,in proportion to the value of the benefit con- ferred upon each such Purchaser.If such Optional ProjectWorkhasanadverseimpactupontheoperationsorfinances of a Purchaser as determined by the Committee,the bene- fitted Purchaser(s)shall compensate the adversely affect-ed Purchaser(s)for the increased costs and reduced.bene- fits resulting from such impact.In the event the Pur- chasers are unable to agree as to how any increased costs or compensation will be apportioned,or as to the amount of any increased costs or appropriate compensation,the parties shall submit the question to dispute resolution inaccordancewiththedisputeresolutionproceduresadopted by the Committee under Section 13. Section 5.Electric Power Reserves For The Project (a)Need for reserves.The parties recognize that (i)electric power from the Project may be unavail- able periodically because of generation and transmission outages,repairs,maintenance,inspections,testing,and Similar events,and (ii)under the Alaska Intertie Agree- ment or otherwise,each Purchaser is responsible for main- taining (or contracting for the use of)generation re- serves in amounts sufficient to protect its own loads in the event that Project power is unavailable. (b)Reserve procedures.Promptly after its establishment,the Committee shall adopt and implement procedures under which,in as cost-effective a manner as possible: (i)the Authority shall have the right to require the operation of specific amounts of generat- ing capacity owned by a Purchaser and made available to the Authority,and to use the power produced by such operation to provide reserves to requesting Pur- chasers for some or all Project:power,to the extentsuchcapacitywouldotherwisebeidleoritsoutputwouldotherwisenotbeneededbytheownerofthat capacity to enable that Purchaser to meet its own>loads or to make power sales to other utilities; '(ii)the additional costs incurred by any Purchaser in making such capacity available to the Authority and in operating the same for the Authority shall be computed equitably and reimbursed promptly to such Purchaser by the Authority;and BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 10 (iii)the costs of so reimbursing any Pur-chaser shall be included in Annual Project Costs. (c)Alternative reserves.Nothing in Section 5(b)shall: (i)relieve any Purchaser of the responsi-bility set forth in Section 5(a)(ii); (ii)require any Purchaser to make reserve capacity available to the Authority under Section 5(b)(i);or (iii)require any Purchaser to avail it- self of reserve power available from the AuthorityunderSection5(b)(i),or to bear any of the costs of such power if the Purchaser does not avail itself ofsuchpower,if the Purchaser chooses and is able torelyuponitsownreservestomeetitsloadswhen Project power is unavailable. Section 6.Obligations Under Bond Resolution; Com- pletion of Project. (a)Assignment or payment to Trustee.The par- ties recognize and agree that (i)the Authority may assign its rights to receive payments under this Agreement as security for the payment of the Bonds to the Trustee under the Bond Resolution for the benefit of the holders of the Bonds,and (ii)the Authority may direct that amounts pay- able to it under this Agreement be paid directly to the'Trustee. (b)Project funding.The Authority shall issue Bonds,or otherwise obtain funds (including appropria- tions),sufficient to pay or reimburse the Cost of Acqui- sition and Construction.Annual Project Costs shall in clude Debt Service on Bonds issued to pay the Cost of Ac- quisition and Construction in an aggregate principal amount up to but not exceeding the Recoverable Construc- tion Cost.The Authority may estimate the Recoverable Construction Cost and issue Bonds at any time in amounts up to the amount of such estimate.As soon as practicable after the Date of Commercial Operation,the Authority shall adjust (and re-adjust when necessary)Annual Project Costs to reflect actual Recoverable Construction Cost. (c)Covenants of the Authority.The Authority covenants that it will not cause rates for Project Power to increase by reason of any bond resolution,covenant or agreement contained in any trust indenture or trust agree- ment entered into by the Authority in connection with a power project other than the Project,nor on account ofanyinadequacyinitsactualorprojectedaggregate BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 11 revenues,other than revenues from the Project,nor will the Authority include in Annual Project Costs debt service payable on debt incurred for any purpose except in respectoftheProjectasprovidedherein. (d)Project completion and operation.The Authority agrees to use its best efforts to complete theProjectexpeditiouslyandinaccordancewithsoundengin-eering practice and with the provisions of the Bond Reso- lution.The Authority shall also use its best efforts consistent with Prudent Utility Practice to construct and complete,and to operate and maintain the Project (or to arrange for such operation and maintenance)to provide power at the lowest reasonable cost to the Purchasers in a manner that is compatible with the Purchasers'Systems andconsistentwiththeAct,the Bond Resolution,and this Ag- reement. (e)Best efforts by Committee members.To the extent that the cost of Project power is or may be affect- ed by actions of the Committee under Section 13,each Purchaser in its capacity as a member of the Committee agrees to use its best efforts consistent with Prudent Utility Practice to assist in assuring that the Project provides power at the lowest reasonable cost to the Pur- chasers in a manner that is compatible with the Purchas- ers'Systems and consistent with the Act,the Bond Resolu- tion,and this-Agreement. Section 7.Payment Obligation. (a)Payment Obligation.Each Purchaser agrees to pay its Percentage Share of Annual Project Costs for each Fiscal Year.The procedures for determining the amount of and for making such payments are set forth in Section 13 of this Agreement. (b)Purchaser's Obligations.Each Purchaser shall make payments in the amounts and at the times re- quired by this Agreement notwithstanding a suspension or reduction in the amount of power supplied by the Project. Such payments shall not be subject to any reduction,by offset or otherwise.The parties intend and interpret the foregoing two sentences to mean that the obligation to make such payments shall be absolute and unconditional andunaffectedbyanyinterruption,interference,or curtail- ment in whole or in part of power supplied by the Project. In the event that (i)the Project is no longer operable, or its operation is interrupted or curtailed for any rea- son whatsoever in whole or in part,and (ii)the Authority does not restore the Project to full operation within a reasonable time,then the Purchasers may upon reasonable notice to the Authority and at their own expense take such action as they deem necessary to so restore the Project. BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 12 The taking of such action by the Purchasers shall not al- ter each Purchaser's obligation to pay its PercentageShareofAnnualProjectCosts. Me Section 8.Annual Project Costs (a)Annual Project Costs defined.Annual Pro- ject Costs means all of the costs resulting from the own- ership,operation,maintenance of and renewals and re- placements to the Project,properly incurred or paid dur-ing each Fiscal Year,including: (i)Amounts required to be set aside bytheAuthorityforthepaymentofDebtServiceon Bonds issued to pay the Cost of Acquisition and Con- struction in an aggregate principal amount up to but not exceeding the Recoverable Construction Cost; (ii)Amounts required to be set aside for the payment of Debt Service on other Bonds and debt service on other obligations approved in accordance with Sections 11 and 13; (iii)Amounts required to restore the funds established under the Bond Resolution to the levels required by the Bond Resolution to be main-.tained therein; (iv)Amounts which may be required to payforRequiredProjectWork,to the extent that suchcostsarenotcoveredbyinsuranceorBondproceeds or by the Renewal and Contingency Reserve Fund; (v)Other amounts determined by the Com- mittee to be necessary or appropriate to supplement and to be paid into the Funds established under theBondResolution; (vi)Excess Payment Amounts,if any,com- puted in accordance with Section 29; (vii)All other costs of producing and de- livering Project power (excluding depreciation)not accounted for by the payments out of funds and re- serves specified in the foregoing sections and prop- 'erly chargeable to the Project under the Uniform Sys- tem of Accounts,less any credits against said costsbyreasonofrevenuesfromsourcesotherthanthedi-rect sale of power to Purchasers,and also less any credits for interest earned during construction and available for Project purposes;provided,that income from interest earned on reserve funds shall be used at least annually to accumulate and maintain said reserve funds in the amounts required under the Bond BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 13 Resolution or in such greater amounts as may be de-termined by the Committee,or to reduce Annual Pro- ject Costs.Such other costs shall include: (A)Project operating and maintenancecosts,in accordance with the Annual BudgetadoptedinaccordancewithSection13; (B)Costs of Project-related insur-ance,and,to the extent permitted with respecttoeachPurchaserunderSection5,the costs of electric power reserves for the Project; (C)Project-specific administrative and general expenses of the Authority,such as costs of safety inspections and investigations;(D)Costs of 'the Committee,whetherincurredbytheAuthorityorincurredbyaPur- chaser on behalf of the Committee;and ,(E)Such other Project costs as the \,Committee may from time to time approve for in-" clusion in Annual Project Costs in accordance with procedures to be adopted by the Committee. (b)Proceeds of a taking.Any payment received by the Authority as a result of a taking of the whole or any portion of the capacity,facilities,available water, or output of the Project by any state or federal govern- ment agency shall be used by the Authority,after consult- ation with the Committee,to (i)reduce Annual Project Costs,(ii)retire Bonds,or (iii)reimburse the State of Alaska for a portion of the State's capital contribution to the Project (recognizing the separate sources of Pro- ject funding under Section 6(b)),whichever of these uses or combination of such uses shall be equitable and proper under the circumstances existing at the time of the tak-ing. Section 9.Obligations In The Event Of Default. (a)Enforcement.Upon failure of a Purchaser:. to perform any obligation herein,the Authority may bring any suit,action or proceeding at law or in equity - ("Suit"),including mandamus,injunction and action for specific performance,as may be necessary or appropriate. to enforce any covenant,agreement or obligation of this Agreement against that Purchaser.The Authority may bring _ such Suit (i)thirty days after giving the Purchaser a written demand for performance,in the case of default by the Purchaser on any obligation other than a payment obli -gation,and (ii)immediately,in the case of default by,the Purchaser on any payment obligation.Each Purchaser BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 14 oom,shall continue to make payments in the event of any dis-pute regarding performance of any obligation by any partyunderthisAgreementorintheeventofanydisputeundertheBondResolution,and this obligation of continued pay-ment pending resolution of disputes shall be immediatelyenforceablebyanypartyuponapplicationtoanycourtof competent jurisdiction. (b)Additional rights and remedies.In addi- tion to the Authority's rights under Section 9(a),if a Purchaser has for any reason suspended or reduced,or has failed to make or has been prevented from making,payments required under this Agreement,the Authority may terminate or suspend the delivery of power to that non-paying Pur-chaser if,after consulting with the other Purchasers,the Authority reasonably determines that such termination or suspension is more effective than other available alterna- tives in minimizing adverse impacts on such other Purchas- ers. (i)I£the Authority so terminates or sus-pends deliveries,the Authority shall: (A)offer to other Purchasers,on terms and conditions applicable to other power sold under this Agreement,any power not deliv- ered to the non-paying Purchaser,and if neces- Sary allocate such power pro rata on the basis of Percentage Shares among Purchasers acceptingsuchoffer; (B)offer any power not sold under Section 9(b)(i)(A)to any qualified utility (in- cluding the other Purchasers)on terms and con- ditions deemed favorable by the Authority after consultation with the Committee;and (C)if the Authority projects that the amounts to be deposited into the Revenue Fund will nonetheless be insufficient to pay Annual Project Costs,increase every other Purchaser's Percentage Share of Annual Project Costs and Project Capacity pro rata to the extent and for the period necessary to compensate for such in- sufficiency;provided,that no Purchaser's Per-centage Share shall be increased by more than twenty-five (25)percent above the amount set forth in Exhibit D without the written consent of that Purchaser. (ii)I£the Authority determines that the process of offering power to others under Sections 9(b)(i)(A)or (B)would delay exercise of the Author- ity's rights under Section 9(b)(i)(C),and that as a BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 15 result the Authority will be unable to make depositswhenrequiredundertheBondResolution,the Authori- ty may exercise its rights under (C)immediately andtaketheactionsrequiredunder(A)and (if neces- sary)under (B)as soon as practicable thereafter. No exercise by the Authority of any of its rights (oranyfailurebytheAuthoritytoexerciseanyofitsrights)under this Section 9(b)shall relieve anynon-paying Purchaser of any payment obligation under this Agreement or relieve such Purchaser of any lia-bility for damages resulting from non-payment.Inparticular,sales of power under Section 9(b)(i)(A) and (B)are intended to reduce the financial impact of any Purchaser's non-payment on other,paying Pur-.chasers.Such sales are not intended to,nor shall they,reduce the payment obligations of the non- paying Purchaser or the damages for which such non- paying Purchaser may be liable. (iii)To the extent that the AuthorityusesProjectreservefundstopermitittomaketime- ly payments under the Bond Resolution following non- payment by a Purchaser,the amount needed to replen- ish such reserve funds shall be added to the Annual Payment Obligation of the non-paying Purchaser,and if the non-paying Purchaser fails to make payment of its Annual Payment Obligation as so increased,theAuthoritymayexerciseanyoftherightsavailabletoitunder.this Section 9(b). (c)Litigation.If Purchasers'PercentageSharesareincreasedpursuanttoSection9(b)(i)(C),thentheAuthorityshall,and any other Purchaser(s)may,im- mediately initiate and diligently pursue litigation in anycourtofcompetentjurisdictiontocompelfullandtimely payment by the non-paying Purchaser,to recover amounts needed to compensate Purchasers whose Percentage Shares have been increased,and to obtain such other relief as shall be fair and equitable.The same or similar litiga- tion against any non-paying Purchaser may also be initi- ated and pursued by the Authority and/or by any paying Purchaser if in response to any non-payment the Authority takes action pursuant to Sections 9(b)(i)(A)or (B). (d)Default by the Authority.In the event of any default by the Authority under any covenant,agreement or obligation under this Agreement with respect to a Pur-chaser,that Purchaser may,upon thirty (30)days writtennoticetotheAuthority,bring any suit,action or pro- ceeding,at law or in equity,including mandamus,injunc-tion and action for specific performance,as may be neces- sary or appropriate to enforce any covenant,agreement orobligationofthisAgreementagainsttheAuthority.No BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 16 payment obligation of a Purchaser under this Agreement issubjecttooffset,however.: Section 10.Purchasers'Systems. (a)Character of expense.The amounts payableunderthisAgreementareoperatingexpensesofeachPur- chaser's System,and are.valid and binding obligations of each Purchaser,payable only from the gross revenues of said Purchaser's System as a cost of purchased electric power,and not payable from any taxes. (b)Purchasers'rate covenants.In order to afford,permit,and make timely payments as specified in this Agreement,each Purchaser agrees that it will estab- lish,charge and collect rates,fees,and charges withrespecttothat Purchaser's System in accordance with ap-plicable law to provide revenues sufficient to meet its obligations under this Agreement and sufficient to pay,together with any other funds or monies available there- for,any and all other amounts payable from or which con- stitute or may constitute a charge and lien upon such rev- enues including,but not limited to,amounts sufficient to meet obligations to service debt incurred by the Purchaser to finance the Purchaser's System. (c)Operation and maintenance of Purchasers' Systems.Each Purchaser covenants and agrees that it willOperateandmaintainitsSystemingoodrepair,working order and condition,and in accordance with Prudent Utili- ty Practice. (d)Limitation on certain contracts.Each Pur- chaser covenants and agrees not to enter voluntarily into any contract or agreement to take or to take or pay for power,other than this Agreement,payable from the rev- enues of the Purchaser's System on a parity with or super- ior to the payment of its obligations under this Agree- ment,except that a Purchaser may enter into such a con- tract or agreement of not to exceed two years'duration under which the Purchaser's payment obligation is on a parity with the payment of its obligations under this Ag- reement.The limitations of this Section 10(d)shall not apply to contracts or agreements creating obligations on a parity with obligations under this Agreement if a written opinion from a Consultant is rendered that (i)the con- tract or agreement is reasonably expected to contribute to the conduct of the business of the Purchaser's System in an efficient and economical manner consistent with Prudent Utility Practice,and (ii)the contract or agreement will not impair the ability of the Purchaser to raise revenues sufficient to meet its obligations under this Agreement. BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 17 Section 11.Bond Resolution. {a)Amendment or supplementation of Bond Reso- lution.Except as provided in Section 12,the AuthoritywillnotamendorsupplementtheBondResolutioninanymanner,or adopt a new Bond Resolution in connection with the refunding of the Bonds,which would materially ad-versely affect the ability of a Purchaser to fulfill the terms of this Agreement or impose any increased burden or obligation,financial or otherwise,on a Purchaser,with- out the consent of the Purchaser,unless: (i)the Committee has approved the Auth- ority's proposed action by a resolution adopted bytheaffirmativevoteofmemberswhosePercentageSharesequalorexceedeightypercent(80%)of Pro- ject Capacity and of Annual Project Costs;or (ii)the Committee by majority vote of the Purchasers requests that Required Project Work be paid for out of the proceeds of Bonds,and such Work is projected to cost in excess of the amount of moneythenavailableintheRenewalandContingencyReserve Fund established pursuant to the Bond Resolution, plus available insurance proceeds,in which event,if such Bonds can then be legally issued and can be sold,the Authority shall issue such Bonds,payablefromtheRevenuesoftheProject(as defined in the Bond Resolution),to pay the portion of such costs which exceed insurance proceeds,if any,and to re- store said Reserve Fund to its required level. (b)Insurance.The Authority will maintain physical loss insurance to the extent required by the Bond Resolution,and the Authority will consult with the Com- mittee as provided in Sections 12 and 13 with respect to the disposition of proceeds of said insurance received as a consequence of physical destruction or impairment of the Project,including but not limited to disposition for the purpose of redemption of Bonds,replacement of the Pro- ject,or replacement of power.The Committee shall advise the Authority from time to time as to the appropriate ex- tent of insurance coverage. (c)Information.The Authority shall provideeachPurchaseracopyofanyreport,.certificate,letter,or other communication which the Authority is required to furnish to the Trustee under the Bond Resolution or that the Trustee furnishes to the Authority. Section 12.Purchasers'Consent To Supplemental Bond Resolutions To Construct The Project.The Purchasers hereby consent to the adoption by the Authority of supplemental Bond Resolutions pursuant to Section 1ll(a),as necessary to comply BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 18 with the Authority's obligation to finance and construct the Project pursuant to Section 6(b)and the Authority's obligationunderSection6(d)to use its best efforts to complete the Pro- ject expeditiously and in accordance with sound engineeringpracticesandwiththeprovisionsoftheBondResolution.The Authority shall consult with the Purchasers regarding the pro-visions to be included in such supplemental Bond Resolutions, and shall use its reasonable best efforts to comply with the requests of the Purchasers with respect thereto.Unless other- wise approved in accordance with Section 11(a)(i),such supple- mental Bond Resolutions shall: (a)provide that the total amounts required for the payment of Debt Service when due shall be,on an an- nual basis,as nearly equal as practicable; (b)provide that the final maturity of BondsissuedpursuanttosuchsupplementalBondResolutions shall not''be earlier than twenty-five (25)years from the date when the first of such Bonds is issued; (c)be substantially in the form attached here- to as ExhibitE,except to the extent that the AuthorityfindsthatmodificationsarenecessarytoselltheBonds on a tax-exempt basis;and (a)be adopted no earlier than January 1,1989. Section 13.Establishment Of The Committee.- (a)Formation and composition of the Committee. The parties agree that a Project Management Committee ("Committee")shall be established on January 15,1988,or on such earlier date as may be agreed to by the parties. The Committee shall consist of the Authority and the Pur- chasers (including as Purchasers for this purpose both Homer Electric Association,Inc.,and Matanuska Electric Association,Inc.,for themselves and for AEG&T as a Pur- chaser represented by and through those utilities).No Committee member shall obtain an additional vote through merger with,acquisition of,or assignment from any other Committee member,and AEG&T shall have no direct vote,but shall be represented by and through Homer Electric Associ- ation,Inc.,and Matanuska Electric Association,Inc., each of which shall be entitledto vote as a PurchasermemberforpurposesofCommitteeprocedure.Each Commit- tee member entitled to vote shall name one representative to serve on the Committee and one designated alternate for that representative.Each such member shall notify all other members in writing of the names,addresses,and tel- ephone numbers of its representative and designated al- ternate.After it is established,the Committee shall meet not less than once each quarter.Costs of the Com- mittee (other than costs incurred by the Authority)which BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 19 are incurred prior to the Date of Commercial OperationShallbebornebythePurchasersinaccordancewiththe Percentage Shares of each. (b)Adoption of rules of procedure.The Com- mittee shall adopt,by the affirmative vote of a majorityofthePurchasersandtheaffirmativevoteoftheAuthori- ty,procedural rules governing the conduct of the Commit- tee's affairs.Such rules shall address,among other mat- ters,procedures for the periodic selection of Committee officers,the conduct of Committee meetings,dispute res-olution,the approval (including possible pre-approval)ofConsultants,and modification of the Committee's procedur- al rules,and,to the extent not otherwise specified in this Agreement,such rules shall also specify the applic-able voting requirements for approval of mattersto be decided by the Committee.Committee approval of opera-tions and maintenance arrangements for the Project,thesufficiencyoftheannualbudgetandwholesalepowerrates,and the undertaking of Optional Project Work shallrequiretheaffirmativevoteofamajorityofthePurchas- ers and the affirmative vote of the Authority. (c)Committee responsibilities;approval by the Authority. (i)As the legal owner and licensee of the Project,the issuer of Project debt,and the agencychargedbystatutewithvariousdutiesaffectingor affected by the Project,the Authority has certain non-delegable rights,duties,and responsibilities with respect to the Project.Subject to such non- Gelegable rights,duties,and responsibilities,the Committee shall be responsible for the management, operation,maintenance,and improvement of the Pro- ject,in recognition that as take-or-pay purchasers of Project Capacity after the Date of Commercial Op- eration,the Purchasers have substantial long-term financial interests in,and service and planning re- sponsibilities affected by,the Project. (ii)The Committee shall take the follow- ing actions,subject to the provisions of the Bond Resolution,federal and state law,the requirements of licensing and regulatory agencies,and the rights -of the Authority and the Purchasers under other pro- visions of this Agreement: (A)Arrange for the operation and maintenance of the Project,and the scheduling, proé@uction,and dispatch of Project power; (B)Establish procedures for the use of each Purchaser's Water Allocation in a manner BRADLEY LAKE PROJECT POWER SALES AGREEMENT -Page 20 osBRADLEY LAKE consistent with the needs and desires of other Purchasers and the capabilities of the Project; (C)Adopt in each Fiscal Year (and revise as necessary or prudent during such Fisc- al Year)a budget of Annual Project Costs for that Fiscal Year,which budget shall be in an amount estimated by the Committee to be suffic- ient to pay all Annual Project Costs; (D)Establish for each Fiscal Year the estimated Annual Payment Obligation of each Purchaser,together with a schedule for each Purchaser of equal monthly payments that such Purchaser shall be required to make during that Fiscal Year,which payment schedule shall be (I) designedto recover such estimated Annual Pay-ment Obligation from that Purchaser during the Fiscal Year,and (II)revised during such Year to reflect any revisions to the budget of Annual Project Costs for that Fiscal Year; (E)Determine after the conclusion of each Fiscal Year the actual Annual Project Costs for that Fiscal Year,the actual Annual Payment Obligation of each Purchaser for that Fiscal Year,and the amount of any additional payment required from (or the amount of any refund to be returned to)each Purchaser to ensure that the total of all payments received from each Pur- chaser for each Fiscal Year is equal to that Purchaser's actual Annual Payment Obligation for that Fiscal Year; (F)Evaluate and select among altern- ative methods (if any)of carrying out and fund- ing (including through issuance of bonds)Re- quired Project Work; (G)Adopt provisions to evaluate and approve Optional Project Work,and to determine the compensation (if any)to be provided in ac- cordance with Section 4(d)of this Agreement if the Committee approves any such Optional Project Work; (H)Adopt procedures consistent with Section 13(f)for the resolution of disputes that may arise between or among the Purchasers and the Authority concerning the interpretation of this Agreement,the obligations created by this Agreement,or the performance of such ob- ligations; PROJECT POWER SALES AGREEMENT Page 21 D tgs ||eV ok? vag tte they adoptDeetgosConVé,stlhoreiff'on Wey (I)Make an initial determination of"customary"insurance within the meaning ofSection714oftheBondResolutionanddetermine the appropriate amount of,and obtain,insurancefororrelatedtotheProject,in addition tosuchinsuranceasmayberequiredbytheBondResolution; (J)Adopt maintenance schedules for the Project that do not interfere unreasonablywiththeoperationsofthePurchasers; (K)Adopt and implement procedures relating to electric power reserves for the Pro- ject in accordance with Section 5;and (L)Consider the need for and approveanyadditionalamounttobeaddedtotheRenewalandContingencyReserveFundoverandabovethe Renewal and Contingency Reserve Requirement pro- vided under the Bond Resolution. (iii)If and when no Bonds are outstandingundertheBondResolution,and the Bond Resolution is therefore no longer effective,the Committee shall provide for the establishment of such accounts and the taking of such actions as may be necessary to manage the Project. *(d)Payment obligation unimpaired.Notwith- standing any Committee action or inaction under this Ag- reement,each Purchaser's obligation to make the monthly payments necessary to pay its Purchaser's Percentage Share of Debt Service,costs of operation and maintenance,and all other amounts to be paid by Purchasers under this Ag- reement shall be absolute and unimpaired. (e)The Authority's ability to take Required_Action.In the event the Committee fails to take any oftheactionssetforthinSection13{c)(ii)(C)-(E)in a timely fashion,or fails to take any other action which the Authority believes to be a Required Action,and as a result the Authority determines that it will be unable to meet any of its obligations imposed by statute,by the Bond Resolution,by this Agreement,or by any licensing or regulatory agency,then the Authority may (i)adopt a bud-'get of Annual Project Costs,(ii)estimate the Annual Pay- ment Obligation of each Purchaser,(iii)require each Pur-.chaser to make payments on the basis of such estimated Annual Payment Obligation,and (iv)take such other actionastheAuthoritydeemsnecessarytomeetsuchobligations. Failure of the Committee to adopt an Annual Project Budget by the ninetieth (90th)day prior to the beginning of a Fiscal Year shall permit the Authority to adopt an Annual BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 22 Project Budget pursuant to this subsection.All actions and determinations under this Section 13(e)shall be taken and made in accordance with Prudent Utility Practice. (£)Purchasers'duties and rights of review. Each Purchaser shall make payment as required by the Auth-ority as a result of any action taken by the AuthorityunderSection13(e),but such payment shall not constitute a waiver of any Purchaser's rights under this Agreement. Any Purchaser may seek review of such action in accordancewiththedisputeresolutionproceduresadoptedbytheCom-mittee,or may seek to enforce this Agreement judiciallyinaccordancewithSection9(d)if no applicable dispute resolution procedures have been adopted. Section 14.End Of Project (a)Authority's declaration.The AuthorityshalldeclaretheProjectended,and the Authority's ob-ligations to make power available to the Purchasers and to operate and maintain (or to assure the operation and main- tenance of)the Project shall also end,if and when (i) such a declaration is required under Section 14(b),or (ii)the Project can no longer be operated in accordance with Prudent Utility Practice. .(b)Consultant's report.The Authority shall make the declaration described in Section 14(a)if all of the following conditions are met: (i)the Project cannot be operated at full capacity in a manner consistent with Prudent UtilityPracticeabsentrepairs,modifications,or additions ("Repairs")to the Project; (ii)a Consultant retained by the Commit- tee concludes that such Repairs are not cost- effective in comparison with other power supply alt- ernatives then available to the Purchasers;and (iii)Committee members who are Purchasers and whose Percentage Shares total eighty percent (80%)vote that such Repairs should not be undertak- en. (c)Consequences of Authority's declaration. After the Authority has declared the Project ended,each Purchaser shall complete its payment obligation for Pro- ject Capacity and associated energy delivered to such Pur- chaser before the Project ended,and shall do so by paying its Percentage Share of Annual Project Costs until all Bonds have been paid or provision has been made for the payment of the Bonds in accordance with the Bond Resolu-tion;provided,that from the date on which the Authority BRADLEY LAKE PROJECT POWER SALES AGREEMENT .Page 23 declares the Project ended,Annual Project Costs shall no longer include (except with Committee approval)costs oth- ex than those set forth in Sections 8(a)(i),8(a)(ii),'8(a)(iii),8(a)(vii)(C),and 8(a)(vii)(D). Section 15.Records.In addition to meter records,the parties shall keep log sheets and other records as may beneededforthepurposesofthisAgreement.In keeping books of account,each Purchaser will,to the extent that different rules are not prescribed by this Agreement or by federal and state laws or agencies,follow the system of accounts pre-scribed for public utilities and licensees by the Federal Ener- gy Regulatory Commission,except that as long as a Purchaser is a borrower from REA then it shall follow the system of accounts prescribed by REA for its electric borrowers. Section 16.Inspection Of Facilities.For purposes of this Agreement,each party may,but shall not be obligatedto,inspect any other party's facilities relating to the Pro- ject at any time upon reasonable notice,but such inspection or failure to inspect shall not render the inspecting party,itsofficers,agents or employees,liable or responsible for any injury,loss,damage,or accident resulting from defects in such electric installation,or for violation of this Agreement. Section 17.Covenants To Maintain Integrity Of Ag- reement. (a)Retail rate approval.Each Purchaser will affirmatively and promptly pursue all administrative and judicial remedies necessary to secure Alaska Public Utili- ty Commission approval of retail rates required to meet the terms of this Agreement where Commission approval isrequired, (b)Compliance with law.Each Purchaser willtakeallnecessarystepstocomplywithapplicablefederal and state laws and regulations,licenses and permits re- lating to the use and operation of the Purchaser's System. (c)Sales,mergers,and assignments.No Pur- chaser shall abandon,sell,mortgage,lease or otherwise dispose of the Purchaser's System or any assets of that System (including by sale to or merger with any other utility),or assign this Agreement or any interest there- under to any assignee or successor in interest,unless: (1)such disposal or assignment accords with the terms of any of the Purchaser's covenants or agreements with the holders of the Purchaser's bonds, notes or other evidences of indebtedness relating to the abandonment,sale,mortgage,lease or other dis- position of property of the Purchaser's System;and BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 24 (2)such disposal or assignment is: (A)consented to in writing by a maj-ority of the Committee,including the Authori- ty's representative;or (B)made to another utility that is:already a Purchaser under this Agreement and is able to meet the obligations resulting from thedisposalorassignment;or (C)limited to assets that the Pur- chaser determines to be surplus to the needs of that Purchaser's System,but the depreciated value of assets so disposed of or assigned inanygivenyearshallnotexceedfivepercent(5%)of the depreciated value of the assets of the Purchaser's System prior to the disposal or assignment;or (D).evaluated by a Consultant and that Consultant certifies that,taking into ac- count the other obligations of the Purchaser or of the assigneeor successor in interest (as thecasemaybe),the Purchaser or the assigneeorsuccessorininterestwillhave(A)substantial- ly the same or greater ability to produce suf- ficient revenues to meet its payment obligations as would the Purchaser absent the transaction, and (B)the ability to perform all obligations under this Agreement. Any assignee of this Agreement must assumein writing alloftheassigningPurchaser's obligations hereunder,must pay any amounts due and owing from the assigning Purchaserhereunder,and (unless the assignee is already a Purchas-er)must provide the Authority and the Purchasers with an opinion of counsel that this Agreement is enforceable against the assignee. (d)Status of Bonds.The parties will not take any action,including entry into power sales agreements, which would cause the interest on any Bond which is orig- inally issued on a tax-exempt basis to become taxable un- der the Internal Revenue Code of 1986,as the same may be amended from time to time. (e)Licenses and permits.The parties will take all necessary steps within their control to comply with applicable federal and state laws and regulations, and to obtain and thereafter comply with all applicable licenses and permits relating to the use and operation of the Project,including without limitation,the FederalEnergyRegulatoryCommissionlicenseapplicabletothe BRADLEY LAKE PROJECT POWER SALES AGREEMENT |Page 25 Project.The Authority will take all necessary steps tocausetheFederalEnergyRegulatoryCommissionlicenseto 'be renewed,if necessary,so that it is in effect during days. the term of this Agreement or any renewal hereof. Section 18.Assignment. (a)Assignment generally.This Agreement shallinuretothebenefitof,and shall be binding.upon therespectivesuccessorsandassignsofthepartiestothis Agreement;provided,that this Agreement or any interesthereinmaybetransferredorassignedbyaPurchaseronlyinaccordancewiththeprovisionsofSection17(c). (b)Specific rights and transactions.Notwith- standing Sections 17(c)and 18(a): (1)A Cooperative Purchaser shall have the right to assign its assets,including its rights un-der this Agreement for security purposes to REA,ortoalenderorguarantorinconnectionwithloansto such Cooperative Purchaser where the proceeds of such loans are used to refinance obligations of such Coop- erative Purchaser to REA or the Federal Financing Bank under Section 311 of the Rural Electrification Act or otherwise;provided,however,that (A)neither REA nor any secured lender or guarantor exercisinganyrights,powers or privileges with respect to this Agreement under any mortgage,deed of trust or other security agreement shall be entitled to exercise the rights of the Cooperative Purchaser under this Agree-ment unless the obligations of such Cooperative Purchaser hereunder shall have been performed,(B)no such assignment shall in any way relieve such Cooper- ative Purchaser of any obligations hereunder,and (C) no assignment shall be permitted hereunder if such assignment would adversely affect the tax exemption of interest on any Bonds Outstanding under the Bond Resolution that originally were issued on a tax- exempt basis. (2)A Purchaser's agreement to resell pow- er from the Project shall not be deemed a transfer or assignment of this Agreement,but neither shall any such resale of Project power relieve the Purchaser of any payment obligation under this Agreement. Section 19.Notices,Computation Of Time And Holi- Any notice required by this Agreement to be given to any party shall be effective when it is received by such party,and in computing any period of time from such notice,such period shall commence at 12:01 p.m.prevailing time at the place of receipt on the date of receipt of such notice.Whenever this Agreement calls for notice to or notification by any party the BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 26 same (unless otherwise specifically provided)shall be in writ- ing directed to the Authority's executive director or a Pur- chaser's general manager.If the date for making any paymentorperforminganyactisadayonwhichbankinginstitutions are closed in the place where payment is to be made or a legalholiday,payment may be made or the act performed on the next succeeding day which is neither a legal holiday nor a day whenbankinginstitutionsareclosedinsuchplace. Section 20.Applicable Law.The laws of the State of Alaska (including without limitation the equal opportunitylawssetforthinAS18.80.220,as the same may be amended from time to time)shall govern the interpretation and applicationofthisAgreementandtheactionsofthepartieshereunder. Section 21.Availability Of Information.The par-ties shall make available to each other,for inspection andcopyingduringbusinesshours,all books,records,plans and other information relating to any calculation or determination to be made pursuant to this Agreement. Section 22.Severability. (a)Severability generally.If any section, paragraph,clause or provision of this Agreement or anyagreementreferredtointhisAgreementshallbefinallyadjudicatedbyacourtofcompetentjurisdictiontobe invalid or unenforceable,the remainder of this Agreement shall be unaffected by such adjudication and all the re- maining provisions of this Agreement shall remain in full force and effect as if such section,paragraph,clause or provision or any part thereof so adjudicated to be invalidhadnotbeenincludedherein. (b)Correction and substitution.If any sec- tion,paragraph,clause or provision of this Agreement or any agreement referred to in this Agreement shall be fi- nally adjudicated by a court of competent jurisdiction to be invalid or unenforceable,then and in such event the parties agree that they shall exercise their best efforts to correct such invalidation and substitute appropriate agreements and contractual arrangements to achieve the intent of this Agreement. (c)References to REA.From and after the time any Cooperative Purchaser is no longer indebted to REA under any mortgage or other security agreement with REA, 'all references to REA and required approvals of the Admin- istrator of REA provided for in this Agreement shall be of no further force and effect with respect to that Coopera- tive Purchaser. Section 23.Remedies Cumulative.No remedy confer- red upon or reserved to the parties hereto is intended to be BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 27 exclusive of any other remedy or remedies available hereunder or now or hereafter existing at law,in equity,by statute or otherwise,but each and every such remedy shall be cumulative and shall be in addition to every other such remedy. Section 24.Waiver Not Continuing.Any waiver atanytimebyeitherpartytothisAgreementofitsrightswith respect to any default of the other party hereto,or with re- spect to any other matter arising in connection with this Ag-reement,shall not be considered a waiver with respect to anysubsequentdefault,right or matter. Section 25.Section Headings.The section headingsinthisAgreementareforconvenienceonly,and do not purportto,and shall not be deemed to,define,limit or extend the scope or intent of the section to which they pertain. Section 26.Multiple Copies.This Agreement shallbeexecutedinseveralcounterparts,each of which shall be an original,but all of which shall constitute one and the sameinstrument. Section 27.Covenant To Act In Good Faith.In order to permit this Agreement,throughout its term,to be fully ef-fective in accordance with the original intent of the parties, each party agrees that it shall at all times act in good faith in performing its obligations and in exercising its rightsunderthisAgreement. Section 28.No Third Party Beneficiaries.Notwith- standing that the operation of this Agreement may and is in- tended to confer benefits on third parties who are not signa- tories to this Agreement,this Agreement.shall be enforceable only in accordance with its provisions expressly governing en-forcement.In promising performance to one another under this Agreement,the parties intend to create binding legal obliga- tions to and rights of enforcement in (a)one another,and (b) such assignees or successors in interest of the parties as may enjoy a right to enforce this Agreement by virture of provis- ions of this Agreement that expressly create such a right in such assignees or successors in interest.By entering into 'this Agreement,the parties expressly do not intend to create any obligation or promise any performance to any other third party,nor have the parties created for any other third party any right to enforce this Agreement. Section 29.Excess Payments. (a)Payments in Recognition of Efforts to Ob- tain Intertie.In recognition of the Railbelt Energy Council's commitment to continue efforts to obtain a sat isfactory transmission intertie between Fairbanks and the Kenai Peninsula,and the Railbelt Energy Council's recog- nition of the importance of such an intertie to the well- BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 28 being of the Railbelt region and the Purchasers'ratepay-ers,and in anticipation of legislative funding of such anintertie,the Purchasers agree to make the payments de-scribed below in excess of actual debt service requiredforretirementofBondsissuedtopayRecoverableCon- struction Costs.The Purchasers'obligations to make pay-ment under this Section 29 are not contingent upon the success of such continued efforts to obtain a satisfactorytransmissionintertiebetweenFairbanksandtheKenaiPen- insula. (b)Calculation of Excess Payment Amount.Sub- ject to the limitations set forth in Sections 29(e)and 29(f),upon the retirement of all Bonds issued to pay Re- coverable Construction Costs (and of all Bonds issued to refund such Bonds)and the consequent reduction of Debt Service includable in Annual Project Costs,there shall be added to and included in Annual Project Costs an amount(the "Excess Payment Amount")calculated as follows: (i).The average annual Debt Service on such retired Bonds,less (ii)any debt.service included in Annual Project Costs that is associated with bonds or other debt issued to fund Required Project Work. In no event shall the Excess Payment Amount be negative. (c)Payment of Excess Payment Amount.Each Purchaser shall pay its Percentage Share of the Excess Payment Amount as part of that Purchaser's Annual Payment Obligation so long as that Purchaser continues to purchase Project power under this Agreement or any renewal thereof. (d)Disposition of Payments.All Excess Pay-ment Amounts received from Purchasers,and all additionalchargespaidpursuanttoSection29(b),shall be paid to the Authority for deposit into the Railbelt Energy Fund. (e)Limitation.Notwithstanding any other pro- vision of this Section 29,no Purchaser's Annual Payment Obligation shall include a charge with respect to any Ex- cess Payment Amount in excess of four cents ($0.04)perkilowatthourofProjectpowerdeliveredtosuchPurchaser. (f)Duration.The provisions of this Section 29 shall not serve to extend the term of this Agreement or any renewal thereof,and shall cease to be effective upontheexpirationorterminationofthisAgreement(as thesamemaybeextendedthroughanyrenewalthereof). BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 29 Section 30.Special Arrangements Regarding AEGE&T. (a)Contracts acknowledged.The parties recog-nize that Homer Electric Association,Inc.("HEA")and Matanuska Electric Association,Inc.("MEA"),have previ-ously entered into contracts with the Alaska Electric Gen- eration &Transmission Cooperative,Inc.("AEG&T"),and that under such contracts AEG&T is to sell and HEA and MEA are to buy electric power in amounts necessary to meet the full requirements of HEA and MEA,such power to be gen- erated by AEG&T or to be purchased by AEG&T from other suppliers.Under this Agreement,therefore,AEG&T is a Purchaser on behalf of HEA and MEA,and AEG&T's paymentobligationsaresecuredbyHEA's and MEA's respective ob- ligations to provide at all times the monies necessary for the performance of AEG&T's payment obligations,as more fully described in Section 30(b). (b)Treatment of HEA and MEA as Purchasers for certain purposes.HEA and MEA shall have all the rights and obligations of individual Purchasers and/or Coopera- tive Purchasers with respect to Sections 2(a),4(d),6(e), 8(a)(vii)(D),10,13(c),13(d),15,17,18,31,and 32,. unless the context otherwise requires.If AEG&T at anytimefailstomeetitspaymentobligationsunderthisAg- reement,then to the extent of such failure by AEG&T andforsolongassuchfailurecontinues,HEA and MEA shalleachbeobligatedtomeetdirectlyitsrespectiveshareof AEG&T's payment obligations in the same manner as if HEA and MEA were individual Purchasers obligated to make pay- ment in accordance with Section 7 and Section 9.All rights and remedies availableto the Authority and/or totheotherPurchasersagainstAEG&T shall also be available to the Authority and the other Purchasers against HEA andMEAtotheextentoftherespectiveindividualshareof HEA and/or MEA,as applicable.For purposes of this Sec- tion 30(b),HEA's share shall be a Percentage Share of Project Capacity equal to 12.0 percent,and MEA's share shall be a Percentage Share of Project Capacity equal to 13.8 percent. (c)Arrangements among HEA,MEA,and AEG&T.In accordance with the provisions of Section 30(a)and sub- ject to the provisions of Section 30(b),AEG&T as a Pur- chaser hereunder shall act on behalf of HEA and MEA for purposes of power deliveries,billing,payment,notifica-tion,and other communications under this Agreement. AEG&T shall be,on behalf of HEA and/or MEA,the Purchaser from the Authority and the re-seller to HEA and/or MEA of power to be taken by HEA and/or by MEA under this Agree- ment.Further,AEG&T will receive,on behalf of HEA and/or MEA,all billings and other communications under BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 30 this Agreement,and AEG&T will be required to pay suchbillsforandonbehalfofHEAand/or MEA from funds made available to AEG&T by HEA and/or MEA for this purpose. Section 31.Capitalization Of Certain Costs Of Pur- chasers. (a)Promptly after the Committee is formed,andbeforetheAuthorityfirstissuesBonds,the Purchaser members of the Committee shall determine by the affirma- tive vote of members whose Percentage Shares equal or ex- ceed eighty percent (80%)of Project Capacity and of An- nual Project Costs: (i)whether and to what extent the costsbornebythePurchaserspursuanttothelastsentenceofSection13(a)should be capitalized through issu- ance of additional Bonds,with the costs of debt ser- vice on those additional Bonds to be added to AnnualProjectCosts;and- (ii)whether and to what extent the costs incurred by the individual Purchasers in conjunction with this Agreement prior to the Date of Commercial Operation should be capitalized and reimbursed through issuance of additional Bonds,and whether and to what extent the costs of debt service on those additional Bonds should be added to Annual ProjectCostsandallocatedamongPurchaserseitherinac- cordance with their respective Percentage Shares or in some other manner. (b)If the Purchasers provide the Authority with a written determination that additional Bonds should be issued for either or both of the foregoing purposes,then notwithstanding any other provision of this Agree-ment,the Authority shall issue additional Bonds in the requisite principal amount,allocate the proceeds of such additional Bonds among the appropriate Purchasers in ac- cordance with such written determination,and include the costs of debt service on such additional Bonds in Annual Project Costs;provided,that the Authority shall not beobligatedtoissuesuchadditionalBondsunlesstheAuth- ority is reasonably able to do so in conjunction with the issuance of other Bonds;and provided further,that the allocation among Purchasers of the costs of debt service on additional Bonds issued for the purpose set forth in Section 31(a)(ii)shall be made in the manner specified in such written determination. Section 32.Efforts To Obtain Intertie.The Pur- chasers recognize the importance of the completion of a satis-factory high-capacity Fairbanks to Kenai Peninsula transmission BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 31 intertie,and of full $218 million funding for the Project,andagreetocontinueallreasonableeffortstoobtainsufficient state funding for such transmission intertie and Bradley Lake. IN WITNESS WHEREOF,the parties have caused this Ag-reement to be executed the day and year first above written. THE ALASKA POWER AUTHORITY "By As ALASKA ELECTRIC GENERATION &TRANSMISSION COOPERATIVE,INC. a)SisfasallValles)ASi) CHUGACH ELECTRIC ASSOCIATION,INC. hy MnAsDronwh HOMER ELECTRIC ASSOCIATION,INC. wy Arba BL thelrasZA< 'BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 32 GOLDEN VALLEY ELECTRIC ASSOCIATION,INC. MW he SlAsCaw.Wn - \ MATANUSKA ELECTRIC ASSOCIATION,INC. AMEN By As THE MUNICIPALITY OF ANCHORAGE d/b/a MUNICIPAL LIGHT AND POWER By AS ad aoe THE CITY OF SEWARD d/b/a SEWARD ELECTRIC SYSTEM wr (onabl ores as _(%&vi Massage BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 33 EXHIBIT B Delivery Point The Delivery Point of the Project and the point at which the Purchasers accept delivery shall be at the point where the 115 kV Project transmission lines connect to a 115 kV switchingstation(included within the Project)at Bradley Junction on the Fritz Creek -Soldotna transmission line to be built by the Hom- er Electric Association,Inc. POWER SALES AGREEMENT FOR BRADLEY LAKE ENERGY EXHIBIT B --Page l EXHIBITC Description Of The Project The Bradley Lake Hydroelectric Project site is located on 'the Kenai Peninsula,about 105 miles south of Anchorage and 27 miles northeast of Homer,Alaska.Bradley Lake,with an exist- ing elevation of 1,080,is situated in the Kenai Mountain Range. A Project Location Map is attached. The proposed development includes raising the existingBradleyLakelevel100feetbyconstructingadiversiontunnel, dam,spillway and outlet facility at the lake outlet.An 18,760footlong,11 foot diameter concrete lined power tunnel will connect the reservoir intake works with a two 45 MW (nominal rating)unit.powerhouse located just above sea level on thenortheastshoreofKachemakBay. A substation containing step-up transformers will be locat- ed at the power plant.Project transmission facilities includeapproximately20milesoftwoparallel,single circuit,115 kv transmission lines to connect the power plant to a 115 kV switch-. ing station at Bradley Junction (which is also included within the project).The switching station will connect to a 115 kv transmission line (not included in the project)which will transmit power between Fritz Creek and Soldotna on the Kenai Peninsula.The Project also includes the Middle Fork Diversion consisting of a small diversion structure and excavated channel which diverts the upper Middle Fork flows into Bradley Lake,and the construction of a small diversion works at the headwaters of the Nuka River which diverts flows from Nuka Glacier into BradleyLake. The project site is remote and will be designed to be operated as an unattended plant,but will require on-site main- tenance personnel.A supervisory control and data acquisition (SCADA)system will be provided.Site access is by water or airborne transportation.To support construction,operations and maintenance of the Project,a barge basin,airstrip,con- struction camp,permanent housing facilities,and approximatelytenmilesofaccessroadwillberequired. Provisions for adding a third 45 MW turbine-generator will'be included in the Project. A Project Location Map and general plan are attached. POWER SALES AGREEMENT FOR BRADLEY LAKE ENERGY EXHIBIT C --Page l 13. 14. Dam Spillway Power Tunnel Diversion Steel Liner/ Penstock Middle Fork Nuka Diversion Powerhouse Turbines Generators Transmission Barge Dock Access Roads Airstrip PROJECT DATA Concrete-faced,rock £111,610 feet long,125 feet high,362,000 cubic yards rock fill,10,800 cubic yards concrete. Ungated concrete ogee section,175 feet long. ll-foot nominal diameter,fully con- crete lined,18,760 feet long. 21-foot horseshoe tunnel,440 feet long. Steel 11-foot diameter,2,400 feet long tapering to 9 foot diameter manifold with 6 1/2 foot diameter branches. Excavated channel and river diversion structure. 9 foot high gravel fill dike. Above ground,steel superstructure,160 feet long,80 feet wide,92 feet high. 2 each Pelton,vertical shaft. 2 each;63 MVA with nominal output of 45 MW. 115 kV,steel pole,2 parallel single circuits,20 Line miles long,with 115 kv switching station at Bradley Junction. Sheetpile cellular structure,granular fill. 10.8 miles gravel surfaced. Gravel surfaced,2,400 feet long x 75 feet wide. POWER SALES AGREEMENT FOR BRADLEY LAKE ENERGY EXHIBIT C --Page 2 cr i} f.Fy Crog,OnaOY ACO .,Pee|&/\5.fy AaesVANS,pat Se*s '<ga Noo tN :|OME MELE CINE AS SOCLAI IDM 4 v,MS INS \Somts CHECK -fiom Orrren seg ve .|Fase Sens SeD0e Lee NoO :o 1 2 3|J Thane SINS ----TRANSMeS SION ; Loe noure 'Scale in Mies Dd BARGE bOC:n PUrnaantnt ftwatrarowt'.&oe OiULOt fy :MESTING AREA 7K CongtRUCHIOR o POWER 1%*.emtee stancapeate5*,waee'oma " \4 oo.men * o access™.OAAMAEY LANE %,",SCESS SN.Dane Sit i peed One .1 oyTEMPORARYooanre'oesConstnuction 5ACCESSROADii .=o g 88S weovaanr.Sone,3\one sfweSSSai\'to,Omtnt an Ee”° ..«,)(OmA RIVERDIVERsoos a z L)y .cnms Se foaman\t 8 2 -/%4 . Exhibit D Purchasers'Percentage Shares Of Project Capacity And Of Annual Project Costs PURCHASER PERCENTAGE SHARE Alaska Electric Generation & Transmission Cooperative,Inc.25.8 Chugach Electric Association,Inc.30.4 Golden Valley Electric Association,Inc.16.9 Municipality of Anchorage,d/b/a . Municipal Light and Power 25.9 City of Seward,d/b/a Seward ; Electric System 1.0 100.008 POWER SALES AGREEMENT FOR BRADLEY LAKE ENERGY EXHIBIT D --Page l Exhibit E ALASKA POWER AUTHORITY RESOLUTION NO. A SUPPLEMENTAL RESOLUTION AUTHORIZING THE ISSUANCE OF $ POWER REVENUE BONDS,FIRST SERIES BE IT RESOLVED by the Board of Directors of the Alaska Power Authority on the _.day of ,19 , that pursuant to the General Bond Resolution adopted on ,19___,(hereinafter referred to as the "Resolu- tion"),this Supplemental Resolution is adopted as follows: ARTICLE I Definitions and Authority 101.Short Title.This Resolution may hereafter be cited by the Authority,and is hereinafter sometimes referred to as the "First Series Resolution". 102.Definitions.(a)All defined terms contained in the Resolution shall have the same meanings,respectively, in this First Series Resolution as such defined terms are given din Section 102 of the Resolution. (b)In addition,as used in this First Series Resolution,unless the context shall otherwise require,thefollowingtermsshallhavethefollowingrespectivemeanings: "Bonds"or "First Series Bonds"means the Bonds of the Authority of the Series authorized by this First Series Resolution and herein designated "Power Revenue Bonds,First Series".° "Series Bonds"means any First Series Bond maturing on or before . (c)Unless the context shall otherwise indicate, words of the masculine gender shall be deemed and construed to include correlative words of the feminine and neuter genders, words importing the singular number shall include the plural number and vice versa,and words importing persons shall include firms,associations,partnerships (including limited partnerships),trusts,corporations and other legal entities, including public bodies,as well as natural persons. The terms "hereby","hereof","hereto","herein", "hereunder",and any similar terms,as used in this Series Resolution,refer to this Series Resolution and such terms when used in the form of bond herein refer to said bond. 103.Authority for this Resolution.This First |Series Resolution is adopted pursuant to the provisions of the Act and the Resolution. ARTICLE II Authorization,Terms and Issuance 201.Authorization,Principal Amount,Description and Series.In order to provide funds necessary for the purpose specified in Section 203,in accordance with and subject to the terms,conditions and limitations established _herein and in the Resolution,a Series of Power Revenue Bonds is hereby authorized to be issued in the aggregate principal amount of §.The Authority is of the opinion and hereby determines that the issuance of the Bonds in said amount is necessary to provide sufficient funds to be used and expended for the purpose specified in Section 203.In addition to the title "Power Revenue Bond",the Bonds of such Series shall bear the additional designation "First Series"and each as so designated shall be entitled "Power Revenue Bond,First Series".The Power Revenue First Series Bonds shall consist of $principal amount of Serial Bonds and $s principal amount of Term Bonds and shall be issued in fully registered form. 202.Purposes.The purposes for which the _ Series Bonds are being issued are to provide funds for deposit in the Renewal and Contingency Reserve,Capital Reserve Fund, Operating Reserve Account,and Construction Fund,respectively, all to the extent and subject to the limitations and in the amounts provided in the Resolution and in Article III hereof. 203.Issue Date.The First Series Bonds shall be dated ,except as otherwise provided in the Resolution in the case of Bonds issued on or subsequent to 204.Maturities and Interest Rates.The Series Bonds shall mature on the anniversary of their date in RESOLUTION NO. Page 2.A7802FJIG the following years and the Bonds maturing in each such year shall mature in the principal amount and bear interest from the date thereof,payable semi-annually on the first day of each month commencing 6 months and 12 months from date,at the rates set opposite such year in the following table: Amount Interest Amount Interest Years Maturing Rates Years Maturing Rates 205.Denominations,Numbers and Letters.The First Series Bonds maturing in each year shall be issued in denomina- tions of $5,000,or any whole multiple thereof not exceeding the aggregate principal amount of First Series Bonds maturing in such year,in the case of fully registered Bonds.The First Series Bonds shall be lettered A and numbered separately from 1 consecutively upwards in such order as the Trustee in its discretion shall determine. 206.Paying Agents._,in ,and,are hereby appointed the Paying Agents for the Series Bonds pursuant to Section 902 of the Resolu- tion. 207.Redemption at the Election of the Authority and Terms.The Bonds maturing ;__and thereafter shall also be subject to redemption,either as a whole or in part,and in such amount or amounts of such maturity or maturities as the Authority shall elect,on any date (which date shall be deter-mined by the Authority or selected by the Trustee,subjecttotheprovisionsof,and in accordance with,the Resolution and when so determined or selected shall be deemed and is hereby set forth as the redemption date)on and after ' and prior to their respective maturities,upon notice asprovidedinArticleIVoftheResolution,at the respectiveRedemptionPrices(expressed as percentages of the principal-amount of such Bonds to be so redeemed)set opposite such period in the following table,plus in each case interest accrued to the redemption date: RESOLUTION NO. Page 3.A7802FJG Redemption Prices Period (Expressed as a (Both Dates Inclusive)Percentage) 208.Sinking Fund Payments.The Term Bonds shall be subject to redemption in part by operation of the Principal Account through application of Sinking Fund Payments as provid- ed in subsection 507(2)of the Resolution on and on each 1 thereafter as herein provided in each case at a Redemption Price equal to the principal amount of each Bond or portion thereof to be redeemed,together with interest accrued to the redemption date.There shall be due and the Authority shall at any and all-events be required to pay on 1 of each of the years set forth in the following table the amount set opposite each such year in said table and said amount is hereby established as and shall constitute a Sinking Fund Payment for the retirement of the Term Bonds, provided,however,that the amount set opposite in said table shall be payable at the stated maturity date of the Term Bonds and shall not constitute a Sinking Fund Payment: Year Sinking Fund Payments 209.Selection by Lot.If less than all of the First Series Bonds of a like maturity are to be redeemed,the particular Bonds of such maturity to be redeemed shall be selected by lot in accordance with Section 404 of the Resolu- tion. RESOLUTION NO. Page 4.A7802EJG ARTICLE III Disposition of Proceeds 301.Deposits.Upon receipt of the proceeds of sale of the First Series Bonds,there shall be deposited (a)in the Capital Reserve Fund to equal the Capital Reserve Fund Require- ment immediately after delivery of the First Series Bonds,(b)in the Interest Account the amountof accrued interest on theFirstSeriesBondsfromtheirdatetothedateofdelivery thereof and payment therefor,(c)in the Renewal and Contingen- cy Reserve Fund the amount necessary to cause the amount in the Fund to equal the Renewal and Contingency Reserve Requirement, and (d)in the Operating Reserve Account §$. 302.Construction Fund.After the deposits referred to in Section 301 hereof have been made,the balance of the © proceeds of sale of the First Series Bonds shall be deposited in the First Series Bonds Account of the Construction Fund. ARTICLE IV Effective Date 401.This Resolution shall take effect immediately. RESOLUTION NO. Page 5.|A7802FJG