ML19289G197

Application for Permission to Transfer Ownership Interest to Cities of Anaheim & Riverside,Ca & for Amend to CP CPPR-97 & CPPR-98, Vols 1-3

ML19289G197
Person / Time
Site:	San Onofre
Issue date:	07/17/1979
From:	James Drake SOUTHERN CALIFORNIA EDISON CO.
To:
Shared Package
ML19289G195	List: ML19289G194 ML19289G197
References
NUDOCS 7907310286
Download: ML19289G197 (100)

Text

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Docket Nos. 50 261 and 50 3[

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SAN ONOFRE NUCLEAR GENERATING STATION UNITS 2 AND 3 S

Application for Permission to Transfer An Ownership Interest to the Cities of Anaheim and Riverside, California and for Amendments to Construction Permits Nos. CPPR-97 and CPPR-98 Volume 1 ~.

2111 029 7707 3/oc2BC

• sEaSOUTHERN CALIFORNIA EDISON COMPANY SAN DIEGO GAS & ELECTRIC COMPANY

CONTENTS Volume 1 APPLICATION Application for Permission to Transfer an Ownership Interest to the Cities of Anaheim and Riverside, California, and for Amendment to Construction Permits Nos. CPPR-97 and CPPR-98.

N_

APPENDIX A Settlement Agreement Among Southern California Edison Company, and the Cities of Anaheim, Banning, and Riverside.

EXHIBIT A Principles for Agreement on Integrated Operation EXHIBIT B Partial Requirements Service Contract Rate RI EXHIBIT C Transmission Service Agreement EXHIBIT D Network Transmission Service Contract Rate TN EXHIBIT E Point-to-Pcint Transmission Service Contract Rate TP EXHIBIT F San Onofre Participation Principles EXHIBIT,G 220KV and ll5KV to Cities of Anaheim, Riverside, and Banning EXHIBIT H Schedule R Resale Service to the Cities of Anaheim, Riverside, and Banning APP"NDIX B Letter Agreement Among Southern California Edison Company, San Diego Gas &

Electric Company, City of Riverside, and City of Anaheim.

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EXHIBIT A Participation Agreement Among Southern California Edison Company, San Diego Gas & Electric Company, City of Riverside, and the City of Anaheim.

Volume 2 EXHIBIT B Supplemental Agreement for the Integration of Anaheim's Entitlements in San Onofre Units 2 and 3.

EXHIBIT C Supplemental Agreement for the Integration of Riverside's Entitlements in San Onofre Units 2 and 3.

EXHIBIT D Edison - Anaheim San Onof re Transmission Service Agreement.

EXHIBIT E Edison - Riverside San Onofre Transmission Service Agreement.

. APPENDIX C General Information Required Pursuant to 10CFR Section 50.33(a)-(e) - City of Riverside, California.

APPENDIX D Information Submitted by the City of Riverside Pursuant to 10CFR Section 50.33 (f) and 10CFR Part 50, Appendix C, Relating to Financial Qualifications.

APPENDIX E Information Requested by the Attorney General for Antitrust Review - City of Riverside.

APPENDIX F General Information Required Pursuant to 10CFR Section 50.33(a)-(e) - City of Anaheim.

APPENDIX G Information Submitted by the City of Anaheim Pursuant to 10CFR Section 50.33 (f) and 10CFR Part 50, Appendix C, Relating to Financial Qualifications.

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Volu=e 3 APPENDIX H Information Requested by the Attorney General for Antitrust Review - City of Anaheim.

APPENDIX 1 A Resolution of the City Council of the City of Riverside Authorizing and Directing that an Application be Filed with the Nuclear Regulatory Con =ission Seeking to Obtain Permission for Southern California Edison Company to Transfer a Partial Ownership Interest in San Onofre Nuclear Generating Station Units 2 and 3 to the City of Riverside.

APPENDIX J A Resolution of the City Council of the City of Anaheim Authorizing and Directing that an Application be Filed with the Nuclear Regulatory Co= mission Seeking to Obtain Permission for Southern California Edison Company to Transfer a Partial Ownership Interest in San Onofre Nuclear Generating Station Units 2 and 3 to the City of Anaheim.

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APPLICATION APPLICATION FOR PERMISSION TO TRANSFER AN OWNERSHIP INTEREST TO THE CITIES OF ANAHEIM AND RIVERSIDE, CALIFORNIA, AND FOR AMENDMENT TO CONSTRUCTION PERMITS NOS. CPPR-97 AND CPPR-98.

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i UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION In the Matter of )

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SOUTHERN CALIFORNIA EDISON COMPANY, ). Docket Nos.

SAN DIEGO GAS & ELECTRIC COMPANY ) 50-361 and 50-362

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(San Onofre Nuclear Generating )

Station, Units 2 and 3). )

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APPLICATION FOR PERMISSION TO TRANSFER AN OWNERSHIP INTEREST TO THE CITIES OF ANAHEIM AND RIVERSIDE, CALIFORNIA AND FOR AMENDMENT TO CONSTRUCTION PERMITS NOS. CPPR-97 AND CPPR-98 SOUTHERN CALIFORNIA EDISON COMPANY and SAN DIEGO GAS & ELECTRIC COMPANY (collectively " Applicants"), the CITY OF ANAHEIM, CALIFORNIA and the CITY OF RIVERSIDE, CALIFORNIA (collectively " Cities") pursuant to 10 C.F.R. S 50.90 submit herewith this " Application for Permission to Transfer an Ownership IntereLc to the Cities of Anaheim and Riverside, California and for Amendment to Construction Permits Nos.

CPPR-97 and CPPR-98." The purposes of this application are to obtain permission for SOUTHERN CALIFORNIA EDISON COMPANY

(" Edison") to transfer to each of the Cities a partial ownership interest in San Onofre Nuclear Generating Station, Units 2 and 3 (" Units 2 and 3"), the San Onofre Nuclear Generating Station Common Facilities (" Common Facilities"),

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and a portion of Edison's real property interests in the San Onofre site (" San Onofre Real Property Interests"); and to request appropriate amendment of the Units 2 and 3 construc-tion permits upon suc'.. crans*er. Permission to transfer such ownership interests is required under Section 101 of the Atomic Energy Act (42 U.S.C. S 2131).

In support of this application, Applicants and the Cities allege, as follows:

1. On May 28, 1970 Applicants filed an applica-tion with the Atomic Energy Commission (" Commission") for licenses to construct Units 2 and 3. Said application, as amended, contains the general, technical, financie'. and an-titrust review information required by Commission regula-tions. The application, as amended, was reviewed by the Commission Staff. Thereafter, the Commission Staff issued a report which concluded that Units 2 and 3, as proposed in the application, can be constructed and operated at the pro-posed location without undue risk to the health and safety of the public. The application was also reviewed by the Ad-visory Committee on Reactor Safeguards. The Advisory Com-mittee issued its report, dated July 21, 1972, which con-cluded that if due consideration is given to the concerns expressed in its report, Units 2 and 3, as proposed in the application, could be constructed and operated without undue risk to the health and safety of the public. The Commission 2111 036 2.

Staff a' Iso prepared draft and final environmental statements as required by Commission regulations, and the National Environmental Policy Act ot 1969 which concluded that construction and operation of Units 2 and 3 subject to certain conditions would not have an unacceptably adverse impact on the environment.

2. Each of the Cities has at all times referred to herein purchased all of its capacity requirements and most of its energy requirements from Edison. During the period January, 1971 through July 12, 1971, the Department of Justice, Antitrust Division (" Justice"), pursuant to Section 105c (33 U.S.C. S 2135) or the Atomic Energy Act of 1954, as amended (33 U.S.C. SS 2011 eti seq.; the "Act"), re-viewed the question of whether construction of Units 2 and 3 would create or maintain a situation inconsistent with the antitrust laws spacified in Section 105a of the Act (33 U.S.C. S 2135a). On July 12, 1971 Justice completed its re-view of the Units 2 and 3 construction permit applications and recommended to the Atomic Energy Commission that an an-titrust hearing on said applications be held pursuant to Section 105c(5)(c) of the Act. This recommendation was based on the antitrust objections et the Cities, as well as the City of Banning, California, which had been asserted against the Units 2 and 3 construction permit application.

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3. On Augt,L 4, 137i Edison and the Cities of Anaheim, Banning, and P' <rside, California, entered into a Settlement Agreement in part to resolve the dispute des-cribed in Paragraph 2 above. A true and correct copy of said Settlement Agreement is attached as Apgendix A hereto and by this reference is incorporated herein. Under the terms of the said Settlement Agreement, the City of Anaheim, California, obtained the right to purchase from Edison, an undivided 1.66 percent co-tenancy owner 3 hip interest in Units 2 and 3. Likewise, the City of Riverside, California, obtained the right to purchase from Edison an undivided 1.79 .

percent co-tenancy ownership interest in Units 2 and 3.

Under the Settlement Agreement the Cities agreed, among other things, to withdraw their antitrust cbjections to issuance of construction permits to Units 2 and 3.

4. On August 10, 1971 a Notice of Hearing on the application for construction permits for Units 2 and 3 was puolished in the Federal Register. Hearings were thereafter conducted on the application. The Cities were parties in those hearings. The hearing record was formally closed on June 25, 1973. An initial decision on the environmental and safety aspects of the Units 2 and 3 construction permit ap-glication was issued by the Licensing Board on October 15, 1973. A hearing on the antitras: aspects of the application 2111 038 4.

was never held in view of the Lettlement Agreement discussed in Paragraph 3 above.

5. On October 18, 1973 the Atomic Energy Commis-sion issued to Applicants permits to construct Unit 2 (Docket No. 50-361, Construction Permit No. CPPR-97) and Unit 3 (Docket No. 50-362, Construction Permit No.

CPPR-98). The permits did not specify any antitrust condi-tions but were issued subject to the condition in Paragraph 3.D of each that the granting of the permits was without prejudice to subsequent imposition of appropriate antitrust conditions, which may be required by the Commission as the result of the outcome of any antitrust proceeding.

6. On August 15, 1974 the construction permits for Units 2 and 3 were amended by the Commission to add an-titrust conditions. These conditions are compatible with the principles of the Settlement Agreement described in Par-agraph 3 above.

7. On November 1, 1977 Applicants and the Cities entered into the " Letter Agreement Among Southern California Edison Company, San Diego Gas & Electric Company, City of Riverside, and City of Anaheim" (the " Letter Agreement"). A true and correct copy of the Letter Agreement is attached as Appendix B hereto and by this reference is incorporated herein. Under the terms of the Letter Agreement, the Cities and the Applicants agreed, among other things, that the 2111 039 5.

following proposed agreements to which they intend to become parties have been " fully negotiated," are in " final form",

and will be executed by the parties thereto and become effective in accordance with the terms thereof, when each party thereto "is, in its sole discretion", satisfied that the execution of said agreements "will not adversely affect the investment tax credit for those portions" of Units 2 and 3 owned by Applicants:

A. " San Onofre Unit 2 and 3 Participation Agreement among Southern California Edison Company, San Diego Gas & Electric Company, City of Riverside and City of Anaheim" (the " Participation Agreement");

B. " Supplemental Agreement for the Integra-tion of Anaheim's Entitlements in San Onofre Units 2 and 3";

C. " Supplemental Agreement for the Integra-Lir" of Riverside's Entitlements in San Onofre Unit 2 and Unit 3";

D. " Edison-Anaheim San Onofre Transmission Service Agreement"; and E. " Edison-Riverside San Onofre Transmission Service Agreement".

The proposed agreements listed above are attached to and are part of the aforementioned Letter Agreement (Appendix B). The 2111 040 6.

Letter Agreement pursuant to its terms shall have no force and effect after July 1, 1979 provided that Section 8 of the Letter Agreement shall continue in full force and effect and provided further thct Edison, Riverside or Anaheim may seek to resolve the subject question by whatever means any of them deems appropriate, judicial or otherwise.

8. The Participation Agreement, referred to in Paragraph 7 above, sets forth the terms under which the City of Anaheim and the City of Riverside may acquire their respective ownership interests in Units 2 and 3, which were more fully specified-in Paragraph 3 above. The terms of the Participation Agreement are in accord with the principles of k the Settlement Agreement described in Paragraph 3 abcve.

Under the terms of the Participation Agreement, Edison is to maintain its exclusive physical control over Units 2 and 3 as both " Project Director" and " Operating Agent" with sole responsibility, as agent for San Diego Gas & Electric Com-pany, Riverside and Anaheim, and as principal on its own be-half, for the performance and completion of the construction of Units 2 and 3, as well as the operation and maintenance of Units 2 and 3.

9. On November 25, 1977 Edison filed its Appli-cation No. 57707 with the California Public Utilities Com-mission for an Order authorizing it to transfer pursuant to the terms of the Participation Agreement an undivided 2111 041 7.

co-tenancy interest in Units 2 and 3, the Common Facilities, and a portion of the San Onofre Real Property Interests to each of the Cities. By Decision No. 88708, dated April 18, 1978, which became effective thirty days after the date thereof, the California Public Utilities Commission ordered that Edison be authorized to transfer an undivided co-ten-ancy interest in Units 2 and 3, the Common Facilities and a portion of the San Onofre Real Property Interests to each of the Cities.

10. On June 13,1978 the Internal Revenue Service issued Revenue Ruling 78-268, which generally provides that joint ownership of a generating facility by an exempt and non-exempt entity would not, in and of itself, disqualify the ownership interest of the non-exempt entity from invest-ment tax credit.

11. On August 16, 1978 the Internal Revenue Ser-vice issued a Private Letter Ruling to Applicants to the same general effect as Revenue Ruling 78-268. However, this Private Letter Ruling contains certain ambiguous statements upon which Applicants are not prepared to rely.

12. On October 27, 1978 Applicants submitted to the Internal Revenue Service a Request for Modification of the Private Letter Ruling described in Paragraph 11 above.

13. On March 29, 1979, the Internal Revenue Service issued its letter ruling on the Request for 2111 042 8.

Modification of the Private Letter Ruling which ruling satisfied each party that the investment tax credit available to applicants wou.'d not be jeopardized by the Cities' proposed participation in the project.

14. On December 18, 1978 the Commission issued its Order amending Paragraph 3.A in the Unit 2 construction per-mit to reflect that the latest completion date for Unit 2 is now June 1, 1980; and amending Paragraph 3.A in the Unit 3 construction permit to reflect that the latest completion date for Unit 3 is now June 1, 1981.

15. Applicants and the Cities have agreed that certain conditions must be fulfilled prior to transferring to either of the Cities any ownership interest in Units 2 and 3, the Common Facilities, or a portion of the San Onofre Real Property Interests. Among said conditions is acquisition by the Cities of all necessary governmental approvals required by the Cities' lawful ownership of Units 2 and 3.

16. Section 101 of the Atomic Energy Act (42 U.S.C. 2132), as recently interpreted by the Commission, re-quires each of the Cities to obtain Commission approval as a condition precedent to becoming an owner of an interest in Units 2 and 3. Accordingly, Applicants hereby apply for Commission authorization to transfer to the Cities of Anaheim and Riverside the ownership interests hereinabove 2111 043 9.

described; and for amendments to the Unit 2 end 3 construc-tion permits that would add the City of Anaheim and the City of Riverside as " Applicants" under said permits upon notice to the Commission by Edison that said ownership interests had been transferred oy Edison to the Cities.

17. The following information pertaining to the City of Riverside is found attached hereto in the appendices referred to:

A. Appendix C: the general information re-quired by 10 C.F.R. S 50.33; B. Appendix D: the financial qualification information required by 10 C.F.R. S 50.33(f);

C. Appendix E: the antitrust information required by 10 C.F.R. S 50.33a, 10 C.F.R., Part 50, Appendix L, and Commission Regulatory Guide 9.2 (Revi-sion 1).

Each of the appendices referred to in this paragraph are by this reference incorporated herein.

18. The following information pertaining to the City of Anaheim is found attached hereto in the appendices referred to:

A. Appendix F: the general information re-quired by 10 C.F.R. S 50.33; B. Appendix G: the financial qualification information required by 10 C.F.R. S 50.33(f);

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C. Appendix H: the antitrust information re-quired by 10 C.F.R., Part 50, Appendix L, and Commission Regulatory Guide 9.2 (Revision 1).

Each of the appendices referred to in this paragraph are by this reference incorporated herein.

19. Each of the Cities has formally resolved to acquire an ownership interest in Units 2 and 3 and have, by resolution, verified that the information herein submitted and referred to in Paragraphs 16 or 17 above is true and correct. Said Resolution of the City Council of Riverside is attached as Appendix I hereto. Said Resolution of the City Council of Anaheim is attached as Appendix J hereto.

Each of the appendices referred to in this paragraph is by this reference incorporated herein.

20. No unreviewed environmental impact requiring an environmental impact statement pursuant to 10 C.F.R.,

Part 51 is presented by the centemplated transfer of a par-tial ownership intereat in Units 2 and 3 by Edison to each of the Cities because such transfer does not involve any de-sign or other physical changes to Units 2 and 3, any changes in the transmission or other facilities associated with Units 2 and 3, any increase in effluents created by Units 2 and 3, or any increase in the authorized power levels for Units 2 and 3.

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21. The contemplated transfer of partial ownership to the Cities does not involve any change whatsoever in the

( exclusive responsibility and control to be exercised by Edison over the physical construction, operation, and main-tenance of Units 2 and 3. This being the case the proposed amendment to the Unit 2 and 3 construction permits is deemed not to involve a "significant hazards consideration" as that phrase is used in 10 C.F.R. SS 2.105 and 50.91, and Section 189a of the Atomic Energy Act (42 U.S.C. 2239).

22. In the event this application is approved by the Commission, the Cities and each of them, as evinced uy the resolutions attached hereto as Appendices I and J, agree pursuant to 10 C.F.R. S 50.37 that they will not perm.'_t any individual to have access to " Restricted Data", as that term is defined in 10 C.F.R. S 50.2(o), until the Civil Service Commission shall have made an investigation and report to the Commission on the character, associations, and loyalty of such individual, and the Commission shall have determined that permitting such person to have access to Restricted Data will not endanger the common defense and security.

WHEREFORE, Applicants and the Cities request the following relief:

1. That Southern California Edison Company be granted permission to transfer to the City of Anaheim an 2111 046 12.

undivided 1.66 percent co-tenancy ownership interest in San Onofre Nuclear Generating Station, Units 2 and 3 including the easement appurtenant thereto and an undivided 1.39 per-cent co-tenancy ownership interest in San Onofre Nuclear Generating Station Common Facilities including the easement appurtenant thereto.

2. That Southern California Edison Company be granted permission to transfer to the City of Riverside an undivided 1.79 percent co-tenancy ownership interest in San Onofre Nuclear Generating Station, Units 2 and 3, including the easement appurtenant thereto and an undivided 1.49 percent co-tenancy ownership interest in the San Onofre Nuclear Generating Station Common Facilities including the easement appurtenant thereto.

3. That upon transfer of said ownership interest in San Onofre Nuclear Generating Station to the City of Anaheim and/or the City of Riverside and upon written noti-fication to the Director of the Office of Nuclear Reactor Regulation by Southern California Edison Ccmpar.y that such a transfer of ownership interests to the City of Anaheim and/or the City of Riverside has been consummated, Para-graph 1.B of Construction Permit No. CPPR-97 and Paragraph 1.B of Construction Permit No. CPPR-98 shall be amended to provide that the City of Anaheim and/or the City of River-side be named as " Applicants" therein, in addition to Southern California Edison Company and San Diego Gas &

Electric Company.

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Subscribed on this /7 day of hdb / 7? '/ .

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Respectfully submitted, SOUTl!ERN CALIFORNIA EDISON COMPANY By '

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Charles R. Kocher James A. Booletto Attorneys for Southern California Edison Company By b 'N

'ames If. 'Beole tt Subscribed and swopn to before me this

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e AGNES CRABTREE I  !

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PmNCIPAL OfTICE IN l

1. II U My Commisson Esp. Aug.27.1981l

(/7t.'c/ r /7(f!^ 'L//s Notary /Public in and for the County of Los A%geles, State of California 2l11 048

o APPROVED A TO FORM SAN DEGO GAS & EEC{RIC COMPANY DAT8- ?1 4 . 9}_9 l7 f PAu jak f ~ By fi* ' ' ~

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A* orney David R. Pigott Frank S. Bayley, III Samuel B. Casey Chickering & Gregory Attorneys for San Diego Gas & Electric Company

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CITY OF RIVERSIDE

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Subscribed and sworn to before me this 7 , day of de //f , 1979 lAY Nota Public in and for the County of ange, State of California e /) .4 /4l, 4 W-F M r1 5-My Commission Expires: /e/ f / 9 fd ALAN R. WATTS 3rd OFFICIAL SEAL ROURKE & WOODRUFF J'J: U ' "/. BRUNS llsse}Th NOTARY PULUC - CAUFORNIA By (6W (L[Lp Attorneys for 'the Cities of Riverside and Anaheim, California 2111 050 S

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APPENDIX A SETTLEMENT AGREDfENT AMONG SOUTHERN CALIFORNIA EDISON COMPANY, AND THE CITIES OF ANAHEIM, BAhTING, AF)

RIVERSIDE.

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SETTLEMENT AGREEMENT THIS SETTLEMENT AGREEMENT is made and entered into by and between SOUTHERN CALIFORNIA EDISON COMPANY (Edison), and the cities of ANAHEIM, BANNING AND RIVERSIDE (Cities), and relates to those matters which have been the subjeet of negotiations for a considerable time and includes claims relating to the matters involving the parties presently pending before regulatory commissions, before the U. S. Court of Appeals for the District of Columbia and before the . Department of Justice.

As a result of those s'ettlement discussions, but subject to conditions set forth in this Settlement Agreement, and with the agreement that each condition of the Settlement Agreement is in consideration and support of every other condition, the parties have agreed as.follows:

ARTICLE 1 - DISPOSITION OF PENDING PROCEEDINGS 1.1 Cities will withdraw their objections and cooperate with Edison to attain the prompt and early disposition of Federal Power Commission Docket No. E-7618 so as to permit the rates filed therein as modified hereunder to become final.

1.2 Cities will withdraw with prejudice their intervention in Federal Power Commission Projects 67 and 120 having to do with relicensing of certain hydroelectric projects of Edison.

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() s. 3 Cities will withdraw with prej'udice their interven-tion in California Public Utilities Commission Certificate ApplicationNo.5I076havingtodowiththeproposedThird .

Midway-Vincent High Voltage Transmission line. '

l.4 Cities will amend their petition to intervene to with-(

draw their objectionc in the Atomic Energy Commission Licensing Proceedings Docket Nos. 50-361 and 50-362 relating to the licensin s of San Oncfre Units 2 and 3. Upon Edison's request, Cities will advise the Atomic Energy Commission and the Department of Justice that the Cities have settled their claims relative to San Onofre on the basis of the proposal in this Settlement Agreement. Such advice may be used by Edison to the end that the Departmen: of Juscice will recommend to the Atomic Energy Commission that the granting of a license to Edison and San Diego Gas & Electric Company for San Onofre Units 2 and 3 will not create or maintain a situation incon-sistent with the antitrust laws. Nothing contained in this paragraph shall ibnit the Cities from otherwise participat-ing in the licensing proceedings.

1.5 Cities will dismiss their appeal in cities of Anaheim, Riverside and Banning, California vs. Federal 2cwer Commis-sion, pending before the U. S. Court of Appeals for the District of Columbia, as No. 71-1652. -

Cities have, in the pending appeal, taken the position that Edison was not lawfully entitled to file unilaterally

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1

O with the Federal Power Commission the increased rates .

, and to modify the discounts applicable to Cities'which were the subject of Edison's filing on or about March 23,1971 (which became effective subject to refund -

on November 14, 1971); Edison's position is that its said filing was lawful in all respects, that it was not con-tractually prohibited from making such filing and that the additioncl revenues now being collected under such rate increases and modifications are neithe$ unjust nor unreasonable. It is Edison's further position t! at, if the Cities were to prevail in such litigation and Edison were required to await expiration of the terms of the present contracts with the Cities and were thereafter required to make a new filing with 'the Federal Power Commission and were not permitted to place such rates into effect before the regular processing, including a new five months' suspension, it has been estimated by Edison (utilizing the Cith.es' load-growth projections) that Edison would be exposed to loss of revenues from Cities in excess of $5 million, in addition to poten-tial costs arising out of' litigation of other claims by Cities. In consideration of Cities dismissing such appeal, releasing other claims, and agreeing that, except as otherwise provided in Paragraph 2.4 of this Agreement, Edison will not be prohibited by contract or otherwise from making future unilateral rate filings.under 2111.055

O Section 205 of the Federal Power Act, and Cities under-taking, as aforesaid, to cooperate in permitting the said

. rates which were. filed on March 23, 1971, as modified in this Agreement, to become final, Edison agrees to pay the Cities $3.,100,000 as cf September 1,1972. Edison further '

agrecs to pay to the Cities, as of September 1,1972, the sum of $25,000, which Edison believes is significantly less t.han it would necessarily incur in eny defense of Cities' antitrust claims. .

1.6 The $3,125,000 sum included in Paragraph 1.5, shall be paid promptly upon approval or acceptance.by the Federal Power Commission of this Settlement Agreement and upon the tenders for filing specified in Paragraph 5.6, and shall be distributed as follows:

Anaheim $1,715,000 '

Riverside $1,402,000 Banning $ B,000 Said sums wil? be adjusted for prepayment or post _-

payment at an interest rate of 1/27. per month compounded monthly. '

1.7 Cities shall make no claim based upon allegations of past anti-comp:.titive activities against Edison arising out of Edison's participation in, or non-participation in, or receipt of power from the Navajo Projcat or the Navajo-Four Corners Project, but Cities reserve their rights to ,

otherwise seek participation in or otherwise obtain power ' .

from the Navajo Project.

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RTICLE 2 - RATE MATTERS

,2.1 Edison agrees to provide service at 220 kV and the

~ Cities of Anaheim and Riverside hereby commit to take service at such higher voltage as soon as necessary facilities and rights of way can be procured and the necessary construction completed. The necessary details involved in determining the arrangements for each of the 220 to 66 kV substations to be constructed, and the timing and responsibility for providing such facilities are as set forth in Exhibit G.

2.2 Edison agrees to modify and request the Federal Power Comm'ission to accept for filing and make effective as provided herein concurrently upon th.e acceptance or approval of this Settlement Agreement, a modification of Rate Schedule v

R-2 applicable to Cities as filed in Federal Power Co= mission Docket No. E-7618 relative to the Cities to increase the voltage discount effective November 14, .1971, to 10 cents per kilowatt for service taken at 33 kV, 20 cents per kilowatt for service taken at 66 kV and 35 cente per kilowatt for service taken at 220 kV. Edison further agrees that in the event the City of Banning receives service prior to November 14, 1977, at 115 kV in accordance with Exhibit G, the rate schedule on file at that time under which Banning is served will be further modified effective when such service commences to provide for a voltage discount of 30 cents per kilowatt for service taken at 115 kV. The rate schedules as modified.

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"I 2111 057

( are set forth in Exhibit H and shall be tendered for filing in accordance with this Settlement Agreement.

2.3 The parties agree that the voltage discounts shall be as set forth in Paragraph 2.2. abava until November 14, 1977, and that during that period, none of the parties will contest the voltage discounts.

2.4 Edison will make no new rate filings before the Federal Power Commission concerning full requirements service which will effect prior to , June 1,1973, an increase in the level of rates applicable to resale customers taking such full requirements service. Edison may file new or increased rates pursuant to Section 205 of the Federal Power Act, which rates Edison may request to be made effective, subject to refund, allowing for full statutory suspension, as early as June 1, 1973, and Cities may oppose or seek the modification of any such rates except as Ibnited by this Settlement Agreement.

'2.5 New services under terms and conditions as set forth in Article 4 of this Agreement shall be made available to the Cities by Edison, subject to regulatory authorization.

2.5 With the exception of the R-2 Rate Schedules currently in effect as modified herein, nothing herein shall be con-strued as a waiver by any of the Cities of their right to oppose future rate filings of Edison, except that each 058 2111

City agrees not to oppose any such rate filing on the basis

, of matters covered by Paragraphs 'l.5 or 2.3 above or by the release in Article 3 below.

ARTICLE 3 - RELEASE 3.1 The Cities hereby release Edison, its directors, officers, employees, agents and attorneys from any and all claims and demands, in connection with the subject matters involved in the allegations of Cities in the legal or administiative proceedings enumerated in 3.2 below, of whatever-nature, anticipated or unanticipated, known or unknown, arising out of, or by virtue of, any conduct of Edison, occurring prior to the date of this Settlement Agreement, which conduct allegedly brea'ched any contractual relationship or allegedly violated any of the laws or regulations of the United States Government, or any agency thereof, or the laws or regulations of the State of California, or any of the several-states or political subdivisions thereof, or any agency thereof.

3.2 The aforesaid claims and demands relate to the matters involving the allegations of Cities in those legal or ,

administrative proceedings known as:

3.2.1 Federal Power Commission Docket No. E-7618, a rate filing of Edison.

3.2.2 Federal Power Commission Projects No. 67 and 120, having to do with relicensing of hydroelectric projects of Edison.

2111 059

3.2.3 California Public Utilities Commission

, Certificate Application No. 52976, having '

to do with a~ proposed high voltage transmission line.

3.2.4 Atomic Energy Commission Licensing Pro-ceeding Docket Nos. 50-361 and 50-362, relating to the San Onofre Nuclear Generating Station.

3.2.5 City of Anaheim, et al, vs. Federal Power Commission, U. S. Court of Appeals, D. C. Circuit Case No. 71-1652. .

3.3 Edison hereby releases Cities, their officials, officers, employees, agents and attorneys from any and all claims and demands of whatever nature, ant'icipated or unantici-pated, known or unknown, arising out of or by virtue of any conduct of Cities occurring prior to the date of this Settlement Agreement in connection with the subject matters of, or documents provided in, or activities related to, the legal and administrative proceedings listed here in Paragraphs 3.2.1 through 3.2.5.

3.4 Each of the undersigned expressly waive the provisions of Section 1542 of the Civil Code of the State of California, reading as follows:

2111 060

() "1542 certain claims not affected by general release.

A general release does not extend to claims

,. , which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor." .

ARTICLE 4 - FURTHER AGREEMEh"r 4.1 Edison agrees, subject to regulatory authorization, to make available to Cities the following services and will take the steps reasonably necessary to seek to obtain such authorization:

4.1.1 Combined dispatch of-power resources, sharing of reserves, transmission service, purchase and sale of capacity or energy and other necessary supplemental services, as part of integrated operation of City-owned resources with those of Edison in accordance with Exhibit A attached. A definitive agreement reflecting Exhibit A attached, with which the parties agree to abide, will be entered into between Edison and each City at an appropriate time in the future.

4.1.2 Partial Requirements Service, under terms and conditions to be determined as set forth in Paragraph 5.8, to supplement and back up other 2111 061 g

(:5 power resources obtained by t.be Cities and ,

. integrated with Edison's resources as set forth in Exhibit A.

4.1.3 Transmission service on Edison's 220 kV network in conjunction with integrated operations under the terms and condition's set forth in Exhibits C and D attached. Such transmission service is based on using Edison's existing and planned transmission network and is therefore limited to power flows to the City. If a City requests specific transmission service both to and from a Cit'y and if such service is technically feasible, Edison will provide such service and.will develop and tender for filing appropriate rates and charges.

4.1.4 Transmission service outside the 220 kV network but within Edison's certificated area on a point-to-point basis in conjunction with integrated operation under terms and conditions set forth in Exhibits C and E attached. Such transmission service is based on using Edison's existing transmiss' ion system and -

is therefore lLmited to power flows to the City.

If a City requests specific transmission service both to and from a City and if such service is technically feasible, Edison will provide such service and will develop and tender for filing appropriate rates and charges.

2111 062

() 4.1.5 Transmission service in conjunction with

. s integrated operation for City-owned power from power sources outside Edison's certificated area, on the basis that Edison will use its best efforts to make mutually satisfactory arrangements to transmit the City-owned power over facilities existing at the time such transmissipn service is requested and where such facilities are owned solely by Edison

, to Edison's 220 kV network when.a City requests specific service. Any such service will be provided under Edison's transmission rate schedules or under rates, term 3, and conditions to be agreed upon, and, in the event of disagreement, Edison shall develop and tender for filing with the Federal Power Commission, an appropriate rate schedule and service agreement for such service, and Cities may oppose or seek the modification thereof. '

If City desires' transmission of power over facilities outside Edison's certificated service area, where such facilities are interconnected with, but'not solely owned by, Edison, then City shall be responsible for negotiations with the appropriate owner or owners of such facilities for such trans-mission. Edison shall cooperate with City in its efforts to obtain such transmission of power.

2111 .063

O 4.1.6 Should Cities obtain an entitlement to layoff power from the Navajo Project, Edison will make the necess'ary arrangements to bring Cities' power to Edison's network provided the combined entitle-ment of Edfson and Cities will not exceed Edison's present entitlement (presently estimated to be 327 megawatts) and provided further that Edison remains entitled to an amount at least equal to the combined entitlement of Cities.

~

4.1.7 Participation on a mutually agreeable basis in new generating units initiated by Edison in which Edison is a joint participant with other utilities or generating agencies. Such resources shall be integrated in accordance with those principles set forth in Exhibit A concerning integrated operation. Participation is also offered in the ownership of San Onofre Units 2 and 3 on the basis set forth in Exhibit F, provided that Cities commit themselves co such participation not later than November 1, 1977. Participation is neither offered to nor waived by the Cities in -

existing plants or contractual arrangements or in future power sources that will be owned solely by Edison or in contractual arrangements related to such power sources.

4.2 Edison agrees that no agreement between it and any other electrical system or systems will be construed by 2111 064

-~

(I Edison in such manner as to prevent or frustrate (1) the carrying out of the terms of this . Settlement Agr.eement and the service arrangements contemplated herein, or (2) the entering into arrangements between the Cities and Edison or any other system to achieve the Cities' objective hereunder to have opportunities of contracting for, utilizing, and developing, independent power sources.

Edison will cooperate with Cities in achieving the Cities' .

objective, but nothing in this Paragraph 4.2 shall inhibit Edison from exercising its rights, and performing all the terms and conditions of all lawful agreements to which it is now a party.

4.3 Cities will, promptly upon approval or acceptance by the Federal Power Commkssion of this Settlement Agreement, and upon the tenders for filing specified in Paragraph 5.6, return to Edison all documents, and'all copies of such documents, including summaries thereof where possible, in the possession of Cities, their attorneys or agents, (except copies of documents attached to Cities' filings or pleadings in proceedings listed in 3.2), which Cities, their attorneys or agents have obtained from Edison or h. ave made in the course of discovery proceedings in Federal Power Commission Docket No. E-7618, and will refrain from making or retaining other copies thereof. Such documents, summaries thereof, or information contained in such documents shall not be used against Edison by Cities, their attorneys or agents in any way, including use in any other legal proceedings.

2111 065

( Edison agrees it will return on request documents that the parties agree in advance pertain to cost of, service, rate design, related engineering information and the like, for use in future rate proceedings.

ARTICLE 5 - GENERAL CONDITIONS l 5.1 The making of this Settlement Agreement or the acceptance of it by any regulatory commission shall not be deemed in any respect to constitute a finding by such commission or an admission by any of the Cities or by Edison that any allegation or contention urged by the other parties in the various proceedings now pending or c to any of the matters covered by this Settlement Agreement is true or valid.

5.2 This Settlement Agreement is conditioned expressly upon the approval or acceptance by the Federal Power Commission of all of its terms and conditions, including i

the permitting to-become effective, consistent with Article 2, of the rate schedules as specified in Section 5.5. " Approval or acceptance" as used in this Settlement Agreement refers to a final order of the Federal Power Commission which is no longer subject to review.

5.3 contracts setting forth rates for the services con-templated herein shall be tendered for filing with the Federal Power Commission and such contracts and rates shall be subject to change, except as expressly limited ,

2111 066

. a

herein or in such contracts, upon filing by Edison pursuant to Section 205 of the Federal Power Act.

5.4 All resale service rendered by Edison shall be subject to the Rules of Edison on file with the Federal Power Commission, as such Rules may be modified from time to tLme upon filing by Edison pursuant to Section 205 of the Federal Power Act.

5.5 Concurrently with the submission of this Settlement Agreement to the Federal Power Commission and consistent with Article 2, Edison will tender Exhibits G and H for filing as rate schedules with the request that they be accepted for filing and allowed to go into effect concurrently upon approval or acceptance of the Settlement Agreement.

5.6 Immediately upon approval or acceptance by the Federal Power Commission of this' Settlement Agreement, but not prior to closing of Docket E-7618, Edison will tender to the Federal Power Commission for filing as rate schedules Exhibit C, D, and E hereto. Cities will not oppose such filings made consistent with this Settlement Agreement.

5.7 ~

Edison will tender to the Federal Power Commission for filing as a rate schedule each of the definitive Integrated Operation Agreements negotiated pursuant to Exhibit A when such agreements are executed, but not prior to the conclusion of the current resale rate .

5-2111 067

Q proceedings, Docket No. E-7618. If the parties are

~

unable to agree on the form of contract, Edison shall tender for filing to the Federal Power Comnission its proposed form of Integrated Operation Agreement, to which Exhibit A shall be attached, and Cities reserve the right to intervene, oppose and seek modification of the proposed form of contract and the parties agree that the matter may be consolidated for hearing and decision upon timely motion in any Edison rate case involving resale rates subsequent to this Settlement Agreement.

Neither party will take a position which does not conform to the agreed upon principlas in Exhibit A.

5.8 The parties have agreed that partial requirements service should be available to Cities frem Edison but have not resolved their differences as to the appropriate rates, terms and conditions for.such service. A copy of the contract rate schedule as proposed by Edison without concurrence by the Cities (Exhibit B, Partial Requirements Service) is attached hereto. It is the Cities' position that the disparity between the all requirements and partial requirements rat'es as presently proposed, will prevent the Cities from developing their own resource program; and further that the applicability of Edison's all requirements rate schedules should be extended to partial requirements service, or these rates should be otherwise established, so as to enable the Cities to 16 -

2111 068 o

• - .- _90eM  % w ape r_ _ w

c. e% y,egyey,

[]) develop their own resource program on a competitive basis.

Edison disputes Cities' position but the parties agree

, that these matters may be raised before the Federal Power Commission in connection with Edison's rate cases involving resale rates subsequent to this Settlement Agreement and have the all requirements and partial requirements rate matters consolidated for hearing and decision. Parties agree that any filing by Edison of a rate for partial requirements service, such as Exhibit B, may be consolidated for hearing and decision (with such rate cases). Absent a prior agreement, the parties agree to relegate to litigation and decision in such subsequent proceedings the determination of proper rates, terms and conditions for partial requirements service.

5.9 Nothing herein shall be construed as a waiver by any of the Cities of their rights to file complaints under the Federal Power Act as to any matter herein except as set forth in Paragraphs 1.5 and 2.3 and Article 3.

5.10 Commitments made and services offered herein shall be subject to interruption or curtailment in case of force majeure.

5.11 If filing with any public agency is necessary to implement the load shedding or load curtailment program referred to in Exhibit A of this Agreement, Edison shall file in accordance with statutory requirements.

17 _ 2111 069

. e

( 5.12 Any undertaking by one party to another party under this Agreement shall not constitute the dedication of the electrical system or any portion thereof of any party to the public or to the other party, nor affect the status of any party as an independent electric system.

5.13 This Agreement is made upon the explicit understand-ing that it constitutes a negotiated settlement and that all offers of settlement and discussions relating thereto are and shall be privileged and shall be without prejudice to the position of any party. It is further agreed that the parties shall not be considered as necessarily agree-ing with any method of cost-of-service determination, or design of rate schedule, or the application of any rule

~

of law. This Settlement Agreement and such cdditional agreements as may be required to implement t' is Agreement are submitted on the same explicit understanding and on

-the further condition that in the event any appropriate commission does not by order accept this Settlement Agreement, it shall be deemed withdrawn and shall not constitute part of the record in any proceeding or be used for any other purpose. ,

5.14 Upon any breach of this Agreement, any party may seek whatever remedy it deems appropriate including, but not limited to, rescission or damages. Breach by a City, however, shall not entitle Edison to discontinue any of the services offered hereunder which Cities are taking, as of the date of the breach.

18 - 2111 070

O 5.15 This Agreement shall be governed by the laws of the State of California, or of United States Federal law, as applicable.

5.16 The signatories hereto represent that they .save been appropriately authorized to enter into this Agreement on behalf of the party for whom they sign.

Executed this fourth day of August 1972.

SOUTHERN CALIFORNIA EDISON COMPANY By  !/ M U b h >- L-7 VicePresidet& cr Assist

.mmm /nt to the President 3.mm..,

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CITY OF ANAHEIM By M .M - , (( . .

Q: 4L_ >x.W.

CITY OF BANNING By AtkL /k WC ms.

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EXHIBIT A PRINCIP~,ES FOR AGREEMENT ON INTEGRATED OPERATION 2111 073

(;>

EXHIBIT A PRINCIPLES FOR AGREEMENT ON -

INTEGRATED OPERATION

1. General Agreement i 1.1 The parties to the Integrated Operation Agreement shall be Southern California Edison Company (Edison) and the City of (City).

The principles set forth herein shall form the basis for a definitive Integrated Operation Agreement.

1.2 In order to better meet the power requirements of the respective parties and obtain operational economies on their respective systems, Edison and City agree to integrate their power sources. To accomplish this, Edison agrees to provide dispatching services for sources owned by, or under the control of,'the City and to schedule operation and maintenance of such sources in the same manner as if they were owned or controlled by Edison.

1.3 Edison and the City will participate in joint .

planning in order that each party will have available to it sufficient information as to the future load, transmission and power supply plans of the other and in order /to make joint power flow studies as related to future plans. The City and Edison shall each appoint a representative to freely exchange information' s.

and deterdine procedures regarding planning, engineering A-1 2111 074

,,m,,.. m. -. m, =. w me e am e- ' ~ ~

O and operations in connection with Integrated Operation.

1.4 The City shall coordinate its other power supplies with the Edison system under an Integrated Operation Agreement. Such coordination will consist of providing any personnel, actions , facilities , information and cooperation reasonably required for planning, operating, dispatching, maintenance and billing activities. The City will provide Edison with information needed to schedule deliveries from City's sources and to provide Edison with complete data concerning generation by City-operated units.

1.5 . The Integrated Operation Agreement shall become effective when signed by both parties and shall.

remain in effect until canceled by one party giving

• the other not less than 10 years' advance written notice of such cancellation, except that such agree-ment may be mutually terminated at any time. City may cancel the Integrated Operation Agreement and Exhibit A on 30 days' written notice, if no City sources of generation have been integrated into the combined resource plan. In the event Edison files (under Section 205 of the Feceral Power Act) a change

.in rates which affects Integrated Operation and which creates a substantial detriment to City, City may cancel the Integrated Operation Agreement upon five

-years' written notice given not later than 90 days after such change is final. ,

2111 0,/a A-2 m ==ge- . . . . . -

O 2 . Planning and Participation .

2.1 City may, frem tbne to time, desire to' construct or acquire a source or scurces of power to meet all or a part of the electrical requirements of its system.

To integrate such source or sources into Edison's system, City shall, at the earliest practicable tLne, inform Edison in writing of such desire. City shall show by the use of historical growth trends, future forecasts and other available supporting data that such sources will meet all or a part of its requirements in the reasonably foreseeable future. Sources from which City may obtain generation include, but are not 1Laited to the following:

2.1.1 By construction of' generating facilities either solely or in participation with parties other than Edison.

2.1.2 By purchase of power from third parties.

2.1.3 ~By participation with Edison in new generating units initiated by Edison in which Edison is a joint participant with other *

, utilities or generating agencies; provided that Edison's and City's shares shall be in

, proportion to the relative size of Edisen's and City's historical loads as determined from an average of the last six annual peak demands for eac.h system, the latest of which .

2111 076 A-3

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-we * * = * " * * " * " " * * *

• is for the year preceding the year during which the City commits to such participation.

, Said shares, expressed as percentages, shall be determined to the nearest 0.01 percent.

Edison shall, as soon as practicable, inform City of Edison's plans for its participation in such projects.

2.2 Edison agrees to use its best efforts to integrate power sources planned by the City into the resource plan developed for the combined systems, provided:

2.2.1 Jufficient notice of the estimated date of firm operation is given to Edison in order that adequate and reliable power supplies for the combined systems may 'be provided in a timely manner; 2.2.2 Sufficient notice is given to Edison of the date when City must make a definite commit-ment to proceed with the construction or acquisition of such power source; 2.2.3 Such sources are of appropriate size, type, reliability and design, and have appropriate operating characteristics, for integration; 2.2.4 Such sources do not exceed the City's system requirements for the reasonably fore-seeable future,unless City and Edison mutuai.ly

• 2111 077 A-4

(Ji agree that City's proposed power source is desirable; .

2.2.5 Such sources would not defer a power source proposed by Edison in the current resource planning for the combined systems -

and for which Edison has made substantial financial or other commitments toward its construction, unless City and Edison mutually agree that City's proposed power source is desirable; 2.2.6 Such sources are compatible with (a) resources planned for the combined systems, (b) the resource plans. submitted annually by Edison to the California Public Utilities -

Commission under its General order 131, and (c) other resource. plans periodically submitted to regional agencies and organizations, which plans shall include the future power sources of the City previously agreed to be integrated into the combined systems; and ,

2.2.7 Agreement between the parties is reached regarding transmission facilities required to integrate the City's proposed source into the combined systems. ,

2.3 Within 60 days of the later of (a) recei'pt by .

Edison of the information on a proposed City power A-5 2111 078

__ _ _ _ _ am e

-LveN N M -- "*N"

O source as set forth in Section 2.2, or (b) the agree-ment on transmission facilities as required by Section 2.2.7, Edison shall inform City whether or not the source of power proposed by City meets the criteria set forth in Section 2.2. In the event that Edison informs the City that such proposed source of power does not meet said criteria, Edison shall, upon request by the City, make available for examination by the City the plans and specifications of Edison's comparable existing and planned sources of power.

2.4 As soon as practicable after Edison has informed City pursuant to Section 2.3 that the source of power proposed by the City can be integrated into the resource plan for the combined systems, City shall '

enter into appropriate transmission service arrange-ments with Edison for such source. After City has made a definite commitment to Edison to proceed with the construction or acquisition of such source of power, City shall take all steps necessary to make available the proposed source of power by the estima>ed date of firm operation.

2.5 In the event Edison is unable or unwilling to construct such new transmission facilities as may be required to integrate the City's source of power into the combined systems, City shall have the right to construct transmission facilities to provide such '

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^-6

.2111 079

. _ m,- . . . . . . . . - ~ = . - - - - - < -

O integration. Such facilicies may be constructed

. jointly with other utilities; provided that such utilities have entered into either an agreement for interconnected operations or an Integrated Operations Agreement with Edison. Edison will agree to enter into arrangements with such other utilities substan-tially in accord with its existing interconnection agreements or principles set forth herein for Integrated Operations.

2.6 City shall take all steps necessary to make the proposed source of power available in accordance with Section 2.4 above within the time necessary to proceed with the project involved. If, under any circumstances, the City decides to abandon its involvement in the proposed power source, Edison shall have the right to assume ownership of the souren and the responsibility for its completion upon reimbursing the City for all costs incurred by City in connection with such power source.

2.7 The parties will support each o.ther in obtaining ,

any necessary authorizations and regulatory approvals for new sites, rights-of-way and facilities associated with transmission services and new sources of power included by agreement in the combined resource plan.

3. City-owned and operated Generation .

3.1 City shall design and construct 'its sources of

^-7 2111 080

O generation in such manner that such sources are capable of performing in a manner comparable to Edison's sources of generation.

3.2 City and Edison shall confer from time to time on desirable unit characteristics and design criteria bearing on unit reliability and usability so that the parties have a reasonable period of time to exchange views on such characteristics and criteria. Such exchange shall not create any responsibility on the part of the requesting party or anyone else as to the adequacy or capability of such source and is only intended to enable the requesting party to evaluate the reliability of sources which are to be integrated with its own sources of generation.

3.3 The Rated Capability of a source of generation, including a purchase from a specific generating unit owned by a third party, shall be the City's share of the unit's mcximum level of net generation that can be continuously maintained (with only ordinary maintenance and adjustment) under physical, regulatory, legal, warranty, or other restrictions at any given time. The Rated Capability shall be determined by operating tests of the type normally used by Edison to establish the ;apability of its generating units.

The Rated Capability of a source of purchased power will be deemed to be its maximum firm rate of delivery' under the purchase contract.

1 081 g

3.4 A City's source of generation shall be considered

, to be a source of Rated Capability on the da' e when City has demonstrated that all essential features and equipment are capable of operating simultaneously in such condition that such source is capable of continuous delivery into the integrated systems at its Rated Capability. Such demonstration shall include satisfactory completion of all necessary start-up and performance tests which would be performed normally on similar Edison sources. Such date shall, for the purposes herein, be considered to be the date of firm operation.

3.5 City shall, at Edison's request, install and maintain at City's expense automatic generation control equipment compatible with Edison's automatic generation control system on those sources of City's generation which have been designated by Edison.

Edison will not request such equipment to be installed on City sources unless Edison would install such equipment on the source if Edison owned it.

4. Integrated operation and Maintenance 4.1 After City acquires a source or sources of power, City and Edison shall at all times each contribute a proportionate sl.are cf the reserve requirements for

.the combined systems. City's contribution shall be deemed to be a percentage of the then effective Rated -

~

2111 082 A-9

O Capability, said percentage for any year being equal to the ' average of the five annual reserve margins planned by Edison for the combined systems during five consecutive years, the first of which be-ing the year in which such percentage is to apply.

Said average shall be determined to the nearest 0.01 percent. '

4.2, City shall be responsible for the operation and maintenance of the sources of generation owned and operated *;y it.

4.3 City shall make its sources of power available for scheduling by Edison to meet the combined require-ments of Edison and City. City's sources will not be scheduled by Edison for. op'eration in excess of their Rated Capability except under emergency condi-tions. Edison shall inform City in advance when such operation is anticipated and the duration thereof. In the event that an emergency arises where such advance notification is not possible, Edison shall inform the City as soon as possible after such operation has occurred. Edison shall schedule City sources in accordance with good electric utility practice.

4.4 City shall coordinate with Edison the schedules for maintenance and refueling work on City's sources of power. City shall parform all such work on sources solely owned by it in accordance with such schedules, and shall not, except in emergencies, take any such source out of service without prior approval cf the Edison '

dispatcher.

A-10

(:)

4.5 City shall keep Edison currently informed

, cf any operating or scheduling limitations on any of City's sources of power. City shall use due diligence to restore the availability of its sources of power in the event of outages which cause all or a part of such sources to become temporarily unavailable.

4.6 As long as the City is purchasing a portion of i

its load requirements from Edison, in the event that the lack of availability of generating sources or transmission capacity results in insufficient capacity to provide adequate service .to the eembine;i loads of s

Edison's and City's systems, and load enrtailment er limitations on new loads becomes necessary on the combined system, the City and Edison cgree to engage jointly in load curtailment on a pro rata basis and/or in limitations on new loads. No curtailment or limita-tion will be initiated until all reasonable efforts have been made by each party to make full use of all California and adjacent regional resources.

4.7 Each party shall operate its system, in accordance with good electric utility practice, to minimize the reactive power demand placed on the other party's system.

4.8 In the event that Edison, at its sole option, schedules energy from City's Rated Capability caring

.any hour, which energy exceeds the City's requirements during that hour, Edison shall pay City for such excess energy at a rate per~ kilowatt-hour equal to City's incremental cost plus 15 percent of such cost.

^-11 2111 084

4.9 Edison shall purchase all energy generated by a City's source of generation prior to that source's date of firm operation if the operation of such source is agreed to by Edison. Edison shall pay for such energy at a rate equal'to Edison's incremental cost.

No capacity or energy credit will be allowed under any applicable partial requirements rate until a source of power is fim. Edison wi,11 cooperate, when condi-tions on its system permit, by providing a load for ,

warranty testing of all new City units.

4.10 Edison shall provide scheduling and dispatching services for City's sources of pc wer. City shall reimburse Edison monthly for such services at a mutually agreeable rate based on Edison's costs, including overheads, of providing such services.

4.11 In the event City acquires a non-firm source of energy, City will be credited for such energy to the extent that such energy is used to meet that portion of its requirements which is not being met by City's other sources of power. Edison shall purchase from City all such energy which is excess to City's require-ments at City's cost which cost shall include charges-made by Edison and others to City for transmission service, plus 15 percent of such cost provided, that such energy is economically usable by Edison. Edison shall provide and City shall be obligated to pay for spinning reserves to back up such non-firm source at a charge equal to the incremental cost incurred by Edison in providing such reserves.

A-12

In the event City acquires a non-firm source of energy, Edison shall use its best efforts to provide transmission service over existing facilities solely owned by Edison for any such non-firm source of energy. If City desires transmission of such non-firm power over facilities outside Edison's certificated service area where such facilities are interconnected with but not solely owned by Edison, City shall be responsible for negotiations with the appropriate owner or owners of such facilities for such transmission.

Edison shall cooperate with City in its efforts to obtain such transmission of power. It is contemplated that the period of time involved may be more or less than 12 months and that the charges for transmission '

service will be calculated on a basis proportional to charges applicable to Network or Point-to-Point Transmission Service. If the period involved is not a multiple of 12 months, a special agreement will be required which may embody changes in the terms and conditions of Network or Point-to-Point Transmission Servicetoreflectconditionsoccas5.onedbythe different period of time involved.

4.12 Either party may, from time to time, require a demonstration of the ability of a City's generating source to produce the Rated Capability of that source.

Such demonstration shall be similar to that set forth in Section 3.3 hereof. Such demonstration shall be performed at the requesting party's sole expense.

, A-13 2111 086

( .

5. Interconnection Facilities .

5.1 The design and construction of City-owned facili-ties at any point of interconnection between the systems of Edison and City shall be subject to the written approval of Edison. So long as City has made such design and performed such construction in accordance with Edison's standards, Edison shall not withhold such approval.

5.2 City shall have the right to construct trans-mission facilities, or arrange with others for trans-mission service, and such facilities or the facilities providing such service, may be connected to Edison's system when (a) adequate electrical system protection is provided; (b) the City reimburses Edison for costs

. incurred by it as a result of such connection; and (c) the City arranges for transmission service to be provided by Edison in accordance with the terms and conditions of Edisons rates for such service. Such facilities or arrangements may be constructed or pro-vided jointly with other utilities, provided that such utilities have entered into either an. agreement for interconnected operations or an Integrated Operations Agreement with Edison. Edison will agree to enter into arrangements with such other utilities substantially in accord with its existing interconnection agreements or principles set forth herein for Integrated operations.

A-14 2111 087

(I .

6. Supplemental service and Losses -

6.1 Edison shall provide the balance of City's electric system requirements including replacement power and energy for unavailable Rated Capability under rates, terms, conditions, and form of contract to be agreed upon by the parties or determined by final order of the Federal Power Commission.

6.2 Prior to determining the City's capacity and energy credits,the Rated Capabili.ty of each of the City's sources of generation and its associated energy shall be reduced to reflect appropriate average transmission losses from that source to the point of interconnection between Edison's and City's Systems.

'I 6.3 Capacity credit under any applicable partial requirements rate for a City's source of generation shall be given when such source is integrated into the combined systems as provided in Section 2.0 hereof, but not prior to the date of firm operation. .

6.4 In the event of a forced outage of a City resource, Edison shall use its best efforts to provide transmission service over existing facilities solely owned by Edison for any appropriate resource City may obtain to replace the resource forced out.

If City desires transmission of power from such '

^~15 2111 088

O resource over facilities outside Edison's certificated service area where such facilities are incerconnected with but not solely owned by Edison, City shall be responsible for negotiations with the appropriate owner or owners of such facilities for such transmission.

Edison shall cooperate with City in its efforts to obtain such transmission of power. It.is contemplated that the period of time involved may be more or less than 12 months and that the ' charges for transmission service will be calculated on a basis proportional to charges applicable to Network or Point-to-Point Transmission Service. If the period involved is not a multiple of 12 months a special agreement will be required which may embody changes in the terms and conditions of Network or Point-to-Point Transmission Service to reflect conditions occasioned by the different period of time involved.

7. Sale of Surolus 'ower 7.1 In the event City constructs or acquires a source of power which Edison and City have. agreed will be ,

integrated with the power sources available to the combined systems, and a portion of such source will exceed the immediately foreseeable requirements of the City, Edison will purchase such portion subject to the following:

7.1.1 City shall first use such source of power -

to meet its own estimated requirements.

A-16 2111 ()89

()I 7.1.2 City shall have given Edison at least five years' advance notice.of the amount.of such portion City desires Edison to purchase, unless shorter notice is otherwise agreed upon.

7.1.3 City and Edison have agreed that City will have a need for such portion for its own requirements in the reasonably foreseeable future; 7.1.4 The capacity associated with such portion is available for a minimum of 12. consecutive months; 7.1.5 Energy associated with such capacity bears the same ratio to the . total energy availability as the ratio of capacity to be purchased bears to the total capacity of the source; and 7.l'.6 The price for capacity and energy to be purchased by Edison shall fully compensate City for investment and all other associated Costs.

7.1.7 For purposes of determining Rated Capability, it shall be deemed that the Rated Capability of such source is equal to its total capability minus the amount of capacity being sold to Edison.

7.2 In the event City desires to sell outside the ,

combined systems all or a part of the output of any -

A-17 2ii1 090

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of its sources of power, City shall first offer to sell such output to Edison at a price which shall fully compensate City for investment and all other associated' costs. In the event Edison does not choose

.to purchase such output, City may sell it outside the combined systems during periods when it is anticipated such output will not be required to serve the combined

, loads of Edison and the City. Where applicable, Edison agrees to provide transmission service for the period of the sale in accordance with the terms and conditions of the Integrated 0perations Agreement.

7.3 In the event Edison refuses to integrate the City's proposed source of power into the combined systems as City proposes, City may proceed with its construction or acquisition.

In such event, City shall not receive a capacity credit under any applicable partial requirements rate until such integration is agreed upon between the parties. The City shall be free to sell all or part of the output outside the combined systems and where applicable Edison agrees to provide transmission service for the period of the sale in accordance with the terms and conditions of the Integrated Operations Agreement. '

8. Transmission Line Desien Ratines 8.1 Charges for Network Transmission Service and Point-to-Point Transmission Service are based on the A-18 2111 091

(

design ratings of transmission lines. For the purpose

. of determining such charges, such design ratings shall be deemed to be as follows:

8.1.1 For all 220 kV transmission lines utilized for Network Transmission Service, and where such lines are listed in Schedule 18A of the Federal Power Commission Annual Power System Statement Form 12, 57 percent of those capacity ratings set forth in said Schedule; 8.1.2 For a transmission line operating at 220 kV or less, where such line is not utilized for Network Tra'nsmission Service but where such line is listed in Schedule 18A of the Federal -

Power Commission Annual Power System Statement Form 12, 57 percent of its capacity rating as set forth in said Schedule.

8.1.3 For a transmission line operating at 220 kV or less and where such line is not listed in Schedule 18A of the Federal Power Commission ,

Annual Power System Statement Form 12, 57 per-cent of Edison's estimate of the capacity rating that would be set forth in said Schedule if such line were listed.

8.1.4 Capacity rctings of transmission lines operating at 220 kV or less, as such ratings A-19 2Ill'092

()

are set forth in said Schedule 18A, shall not be less than the current carrying capacity of that'line's overhead conductor which, at 60 Hertz continuous alternating current, will raise the conductor temperature from an ambient t

air temperature of 400 centigrade to a conductor temperature of 900 ce'ntigrade with a cross wind of two feet per second; 8.1.5 Except for Edison's 500 kV line constructed between Eldorado Substation and the Colorado River (which presently has a design rating of 768 megawatts), a transmission line operating at 500 kV shall be deemed to have a design rating of 1,000 MW, unless a different design rating is established from stability studies, which studies give weight to generator and transmission line impedances, transients,

. series compensation, and parallel circuits, as well as conductor material and size. In the event the design rating of a 500 kV line is changed as a result of changes in series -

compensation or other factors, charges for transmirision service will be modified accordingly.

8.1.6 For the 800 kV DC transmission line between Celilo anc Sylmar Converter Stations, the design rating, with all equipment in service, shall be A-20

2111 093

()

, deemed to be not more'than 1,400 megawatts at the O'regon-Nevada border, of which Edis n's enticlement is 21.5 percent of such rating.

8.2 Either party may request a review of the 57 per-cent figure, or the basis of. determining capacity ratings set forth above, not more than once in any

, five-year period. If such a review indicates that such figure should be increased or decreased by more than one percentage point, er if such basis should be changed, an increase or decrease in charges, as appropriate, shall be made and reflected in the next scheduled rate filing. City may, on request, review studies cade by Edison which=are used to determine the design rating for the 500 kV transmission line in question.

9. Notices 9.1 Any written notice, if to be given to the City, shall be addressed to and if to Edison, to Secretary, Southern California Edison Company, P. O. Box 800, Rosemead, California 91770.

2111 094 A-21

()

10. Arbitration

, 10.1 The Integrated Operation A;;reement will provide that, in the event of any disagreement between the parties with respect to (1) any question of fact or opinion involved in the application of the provisions of that agreement, or (ii)'the interpretation of any provision of that agreement, the disagreement will be submitted to arbitration, unless such matter is within a regulatory agency's jurisdiction.

11. No Dedication of Facilities 11.1 Any undertaking by one party to another party under the Integrated Operation Agreement shall not constitute the dedication of the electrical r / stem or any portion thereof of any party to the public or to the other party, and it is agreed that any such undertaking shall cease upon the termination of that agreement.

12. Regulatory Authority 12.1 The Integrated Operation Agreement shall be.

subject to filing with, and to such changes or modifications as may from time to time be directed by appropriate regulatory authority, if any, in the exercise of its jurisdiction.

2111 095 A-22

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13. Uncontrollable Forces

• 13.1 No party shall be considered to be in default in the performance of any of its obligations under the Integrated Operation Agreement or any related Transmission Service Agreement (other than obligations of said party to pay costs and expenses) when a

, failure of performance shall be due to uncontrollable forces. The term " uncontrollable forces" shall be any cause beyond the control of the party affected, including but not restricted to failure of or threat of failure of facilities, flood, earthquake, storm, fire , lightning, epidemic , war, riot, civil disturbance or disobedience, labor dispute, labor or material ,

shortage, sabotage, restraint by court order or public authority, and action or non-action by or failure to obtain the necessary authorizations or approvals from any governmental agency or authority, which by exercise of due diligence it shall be unable to overcome. Nothing contained herein shall be construed so as to require a party to settle any-strike or labor dispute in which it may be involved.

Any parcy rendered unable to fulfill any of its obligations under the Integrated Operation Agreement by reason of uncontrollable forces shall exercise due diligence to remove such inability with all reasonable dispatch.

2Ill 096 A-23

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14. Liabi,lity 14.1 Except for any loss, damage, claim, cost, charge or expense resulting from Willful Action, no party (First Party), its directors, or other governing body, officers, or employees , sha'll be liable to the other party (Second Party) for any loss, damage, claim, cost

' charge or expense of any kind or nature (including direct, indirect or consequential loss, damage, claim, cost, charge or expense) incurred by Second Party, resulting (whether or not from the negligence of any party, its directors or other governing body, officers, employees or any other person or entity whose negli-gence would be imputed to such party) from (i) engineering, repair, supervision, inspection, testing, protection, operation, maintenance, replacement, reconstruction, use or ownership of the First Party's electric system, or (ii) the performance or nonperformance of the obligations of any party under the Integrated Operation Agreement or any related Transmission Service Agreement.

Except for any loss, damage, claim, cost, charge or '

expense resulting from Willful Action, the Second Party releases the First Party, its directors, or other governing body, officers, and employees, from any such liability.

2lil 097 -

A-24

d 14.2 Except for liability resulting from Willful

, Action, any party whose electric customer shall make a claim or bring an action for any death, injury, loss or damage arising out of elect ic service to such customer shall indemnify and hold harmless the other party, its directors, or other governing body, officers and employees from and against any liability for such death, injury, loss or da:nage. The term " electric customer" shall mean any electric customer, except an electric utility system to whom power is delivered for resale. .

14.3 Willful Action as referred to huelli is defined as follows: , .

14.3.1 Action taken or not taken by a party at the direction of its directors or other Jov.erning body, officers , or employees having nanagement or administrative responsibility affecting its performanca under the Integrated Operation Agree-ment or any related Transmission Service Agreement, which action is knowingly or intentionally taken, or failed to be taken with conscious indifference to the consequences thereof or with intent that injury or damage would result therefrca. Willful Action does not include any act or failure to act which is merely involuntary, accidental or negligent. ,

^-25 2111 098

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14.3.2 Action taken or not taken by a party at the direction of its directors, other governing body, officers, or employees having management or administrative responsibility affecting its i

performance under the Integrated Operation Agreement or any related Transmission Service Agreement, which action has been determined by final arbitratien award or judgment or judicial decree to be a material default under the Inte-grated Operation Agreement or any related Transmission Service Agreement and which action occurs or continues beyond the time specified in such arbitration award or judgment or judicial decree for curing such default or, if no time'to cure is specified therein, occurs or continues thereafter beyond a reason-able time to cure such default.

4 14.3.3 Action taken or not taken by a party at the direction of its directors, other governing body, officers or employees having management or administrative responsibility affecting its performance under the Integrated Operation Agreement or any related Transmission Service Agreement, which action is knowingly or inten-tionally taken cr failed to be taken with the A-26 2111 099

(b) .

. knowledge that such action taken or failed to be taken is a material default under the Integrated Operation Agreement or any related Transmission Service Agreement.

14.3.4 The phrase " employees having management or administrative responsibility," as used in this Section 14.3, means the employees of a party who are responsible for one or more of the executive functions of planning, organizing, coordinating, directing, controlling, operating and supervising such party's performance under the Integrated Operation Agreement or any related Transmission ~ Service Agreement with .

responsibility for results.

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' EXHIBIT B PARTIAL REQUIREMENTS SERVICE CONTRACT RATE RI 2111 102

7/21/72

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EXHIBIT B PARTIAL REQUIREMENTS SERVICE CONTRACT RATE RI APPLICABILITY Applicable to electric power delive' red to the City of (City) at by Southern California Edison Company (Utility) where a part or all of the electrical requirements cf the City can be supplied from a source or sources other than Utility and where all such sources are integrated with Utility's system in accordance with

~

an Integrated Operation Agreement between City and Utility.

RATES Per Meter Per Month DEMAND CHARGE:

First 5,000 kW or less of billing demand. . . . $14,750.00 Next 15,000 kW or billing demand, per kW. . . . 2.65 Next 30,000 kW of billing demand, per kW.... 2.55 All excess kW of billing demand, per kW.... 2.50 ENERGY CHARGE (to be added to the Demand Charge):

All kWh, per kWh at Utility's system incremental cost, plus 15%

SPECIAL CONDITIONS

1. Voltage: Service will be supplied by the Utility at the available nominal standard voltage at one point of delivery.

2111 103

. B-1

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2. Billing Demand: The Billing Demand in any month shall be the maximum kilowatts of City System Demand less the appropriate Capacity credit; provided, how-ever, the Billing Demand shall not be lower than 50%

of the highest Billing Demand on Utility in the last 11 months. The Billing Demand will be determined to the nearest kilowatt. .

3. Rated Capability: City's Rated Capability frem sources other than Utility will consist of the sum of the rated capabilities (as Rated Capability is defined in the Integrated Operation Agreement) of each firm power resource obtained by the City provided each such resource has been integrated in accordance with the current Integrated Operations Agreement between Utility and City.

4. Capacity credit: City's capacity Credit shall be equal to the total kilowatts of the Citys Rated Capability from sources other than Utility less a number of kilowatts for reserves equal to the average annual reserve margin (expressed as a decimal' ratio) planned -

for Utility's area system during the five-year period starting with the current calendar year multiplied by such Rated Capability. The capacity Credit will not be decreased to reflect Rated Capability which is unavailable, unless such unavailability is for a period 3_2 2111 104

O of more than 60 consecutive days excluding outages for regularly scheduled maintenance or unless such Rated Capability has been unavailable for 90 day s of the last 180 days excluding outages for regulaO; scheduled maintenance. City's Capacity Credit will be applied in all months that such Rated Capability is available, except as provided herein, and except that, if any Rated Capability has been unavailable for 180 consecutive days, no Capacity Credit will be allowed for that Rated Capability until the beginning of the eleventh billing period following,and including, the billing period in which such Rated Capability has been available for 50 percent or more of the time in such billing period.

When, after periods of unavailabi1* ty, Rated Capability again becomes available during a billing period, such Capacity Credit shall be re-established so long as such Rated Capability is available for 50 percent or more of the time in that billing period.

Otherwise, such Capacity Credit will be re-established at the beginning of the billing period. next following .

the period in which such Rated Capability becomes available.

5. Energy Billing: The kilowatt-hours to be billed under this schedule shall be equal to the monthly total of the City's hourly energy requirements reduced by the kilowatt-hours, adjusted for losses,' scheduled by Utility from City's power resources but not less than zero. Utility will provide all kilowatt-hours other

- "-3 2111 .105

O than those scheduled from the City's power re.:ources.

The energy rate for any hour shall be equal to 115% of Utility's prevailing system incremental cost as computed and recorded hourly on Utility's system load sheets; provided , that , if such cost cannot be calculated by the computer because of system ' conditions or is deter-mined to be invalid as a result of computer operating conditions or has been calculated errcneously, the best estimate of Utility's System Operation Division shall be used for that hour.

6. City System Demand: The City System Demand in any month shall be the highest coincident measured maximum average kilowatt input to City's system from all sources during any 30-miaute metered interval in the month.

7. Power Factor Adjus tment: The charges will be adjusted each month for reactive exchange. The charges will be increased by $0.20 for each kilovar of maximum reactive exchange imposed on Utility in excess of 20% of the number of kilowatts of Billing Demand. The maximum

~ reactive exchange shall be the measured maximum average kilovar exchange, indicated or recorde'd by meters to be '

supplied by the Utility, during any 30-minute metered interval in the month. The kilovars shall be determined to the nearest unit. A device will be installed on each kilovar meter to prevent reverse operation of the meter.

B-4 2111 106

() .

8. Voltage Discount: The charges will be reduced by $0.10 per kilowatt of Billing Demand for service metered and delivered from 30,000 volts to 50,000 volts, by $0.20 per kilowatt of Billing Demand for service delivered and metered from 50,000 volts to 100,000 volts, by $0.30 per kilowatt of Billing Demand for service delivered and metered from 100,000 volts to 200,000 volts, and by $0.35 per kilowatt of Billing demand for service delivered and metered above 200,000 volts.

9. Metering: Service will be metered at the del.ivery voltage or meters will be compensated to reflect delivery at such voltage. The Utility will supply, own, and maintain all necessary meters and associated equipment utilized for billing.

The City shall provide, at no expense to.the Utility, a suitable location for all meters and associated equipment utilized for billing.

In addition, the City shall install, at City's expense, all metering equipment furnished by the Utility for City-owned generation. '

10. Notice of Termination: Service under this schedule, or any superseding schedule, may not be terminated by the City except on written notice to the Utility of not less than 36 months.

11. Rules of Service. This rate is subject to the Rules of Utility on file with the Federal Power Commission, as they may be modified ,from time to time.

2111 107

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EXIIIBIT C TRANSMISSION SERVICE AGREDIEITI 2111 109

[]) JULY 12,1972 EXHIBIT C ,

TRANSMISSION SERVICE AGREEMENT BETWEEN SOUTHERN CALIFORNIA EDISON COMPANY AND THE CITY OF THIS ACREEMENT is made and entered into by and between SOUTHERN CALIFORNIA EDISON COMPANY, a California ccrporation (hereinafter referred to as " Edison") and THE CITY OF

, a municipal corporation of the State of California (hereinaf ter referred to as " City")

W I T N E S S E T H:

WHEREAS, City plans to obtain power from (hereinafter referred to as

") for a period starting to be delivered for the account of the City at the kV interconnection between and Edison electric systems at the Substation; and WHEREAS, Edison and City'have entered into a contract for the integrated operation of their combined electric systems; and WHEREAS, City desires to have the power obtained from transmitted from said kV interconnection for the City's use at the substa. tion designated above by the City; and ,

2111 110 .

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WHEREAS, Edison is willing to transmit said power over its elcctric system for City under its Network Transmission Contract Rate and Point-to-Point Transmission Contract Rate as applicable; NOW THEREFORE, City and Edison for and in consideration of the mutual convenants to be kept and performed by them agree as follows:

1. TERM This Agreement shall become effective on the date of either (1) its execution by of the City of and by Edison, er (2) authorization by regulatory commission (s) having jurisdiction, whichever shall be the latest. Edison shall proceed with diligence to obtain such authorization.

This agreement shall be for a period ending ,

and will continue beyond such date until cancelled by either party giving no less than twelve months' notice to the other party;

2. TRANSMISSION SERVICE 2.1 Transmission service under this contract shall commence on and shall be provided by

• Edison in accordance with the terms, conditions and charges set forth in the Network Transmission Centract Rate TN and the Point-to-Point Transmission Contract Rate TP attached or any superseding rate schedules.

2.2 Edison shall accept deliveries of power up to a C-2 2111 111

O maximum rate of delivery of kW (herein designated as Contract Capacity for applicati,n to

, } the transmission service rates) and shall deliver an equivalent amount of power, less transmission losses, to the City.

2.3 Edison shall accept deliveries of power from scheduled for the account of the City at the Substation kV bus at a maximum rate of delivery up to the Contract Capacity and shall make simultaneous deliveries of power for the City's use at the point of' interconnection between City's and Edison's systems at the kV bus of _ Substation, as designated by City. .

2.4 Charges and transmission losses for Network Transmission Service shall be made in accordance with the terms, conditions, and percentages expressed in the Network Transmission Service Contract Rate TN or any supersed'ing rate schedule and shall be subject to modification by Edison pursuant to Section 205 of the Federal Power Act, and by City pursuant to '

Section 206 of the Federal Power Act. For calculation of such charges and losses, circuit mileage is hereby agreed to be miles. Charges for requested connecting services provided under Special Condition 4, shall be . Charges for new facilities provided under Special Condition 5, shall be . .

C-3 2111 112

2.5 Charges and transmission losses for Point-to-Point

[])

Transmission Service shall be made in accordance with-the terms and conditions expressed in the Point-to-Point Transmission Service Contract Rate TP or any superseding rate schedule. The initial charge for service shall be $ per kilowatt of Contract Capacity per year, and the initial transmission losses shall be 7. of Contract Capacity and  % of scheduled energy deliveries to Edison, and charges and losses shall be subject to modification by Edison pursuant to Section 205 of the Federal Power Act, and by City pursuant to Section 206 of the Federal

. Power Ac t. Charges for new facilities provided under Special Condition 3, shall be .

2.6 Connecting services to be provided by Edison under this Agreement shall consist of 2.7 New facilities to be provided by Edison under this Agreement shall consist of 2.8 Edison reserves the right to tem ~porarily interrupt' or curtail service hereunder (1) upon reasonable advance notice to City to make repairs, replacements or modifications or to perform maintenance work, all for the purpose of maintaining continuity of service, C-4 2111 113

O (2) without notice to City if such interruption or curtailment is because of an Uncontrollable Force.

Such curtailment may be related to implementation of mutual load shedding arrangements agreed to between City and Edison.

3. OTHER ACREEMENTS

• 3.1 Schedules of power deliveries and dispatching of power sources shall be accomplished consistent with the terms and conditions of the Integrated Operation Agreement entered into between Edison and City.

3.2 Conditions of service not otherwise provided for in this Agreement, the Integrated Operation Agreement, the Partial Requirements Rate RI, the Network Transmission Service Contract Rate TN and the Point-to-Point Transmission Service Contract Rate TP shall be in accordence with the Rules of Edison on file with the Federal Power Commission as modified from time to time pursuant to Section 205 or 206 of the Federal Power Act. .

2111 114 C-5

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O EXHIBIT D NETWORK TRANSMISSION SERVICE CONTRACT RATE TN 2111 116

JULY 12, 1972 EXHIBIT D NETWORK TRANSMISSION SERVICE CONTRACT RATE TN Applicability t Applicable to transmission service to be provided by Southern California Edison Company (Utility) for the use by the City of (City),for transmitting City-owned power, over Utility's 220,000 volt transmission facilities from any 220,000 volt substation bus to any other 220,000 volt substation bus designated by the City, both busses to be owned by Utility and to be located within the area delineated on the attached map, and when such City-owned power is integrated with Utility's system in accordance with an Integrated Operaticn Agreement between City and Utility.

Rates Per Year For terminal facilities, per kW of Contract Capacity 25.40c For transmission facilities, per kW of Contract Capacity per circuit mile 4.37c For switching facilities, per kW of Contract Capacity per circuit mile 1.52c Special Conditions

1. Contract Capacity: The Contract Capacity under this rate will be the capacity requested by the City at the D-1 2111 117

(:t beginning of each Contract Period for which service is requested. Contract Capacity shall not be decreased during any Contract Period. Each separate power resource obtained by the City shall be treated as an individual block of Contract Capacity for a specified Contract Period.

2. Contract Period: A Contract Period shall be any multiple of twelve months following commencement of service for each block of power to be transmitted. Service shall continue beyond the Contract Period until canceled by City giving notice of not less than 12 months or by Utility giving notice of not less than 12 months.

3. Circuit Mileage: Circuit Mileage will be the circuit mileage along the shortest route within the delineated area, from the substation from which power is to be delivered. Mileage will be measured to the nearest 0.1 mile.

4. Connection Services:

a. The City will be responsible for the following:

(1) Arrangements necessary to transmit its power to Utility's 220,000 volt bus from .which Network ,

Transmission Service begins.

(2) Arrangements within the delineated area to trans-form such power, if necessary, to or from 220,000 volts.

D-2 2111 118

O (3) Arrangements within the delineated area to transmit its power from the Utility's 220,000 volt bus to the City's system.

. b. The arrangements required under Sub-paragraphs 4.a (1), (2) and (3) above shall be provided by Utility under Schedule TP, if applicable, and, if Schedule TP is not applicable, may, by agreement of the parties, be provided by Utility at charges adequate to fully compensate Utility for use of its facilities, if, in Utility's judgment, adequate capacity is available in existing facilities.

5. New Facilities: Construction of new 220,000 volt terminal, transmission and switching facilities within the. delineated area which are required to be built by Utility to provide service under this rate in advance of Utility's other needs as a result of a request for trans-mission service, will be the subject of special charges adequate to fully compensate Utility for- the investment and costs associated with such facilities during the period they are not required for Utility's other needs.

6. Losses: Losses shall be calculated at the following rates which are based on average system losses:

a. For capacity. per kW of Contract ,

Capacity per circuit mile 0.0237,

b. For energy, per kWh per circuit mile 0.022%

Such losses will be deducted by Utilicy from the quantities '

delivered to'it for transmission to City.

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O.7 Contracts: Utility 'shall, within 30 days from the date when City applies in writing for service under this schedule, state if new facilities are required under the provisions of Special Condition 5. If no new facilities are required, service will commence upon date requested by City, but not less than 60 days after the date of said application. Where new facilities are required, service will commence on the later of either the date requested by City or a date determined by t'he Utility'c construction schedule of the new facilities to be installed by Utility.

8. Payment of Charges: The annual charges for service in each year of the Contract Period shall be due at the beginning of each such year and payable monthly at 1/12 of the annual charges.

9. Rules for Service: This rate is subject to the Rules of Utility on file with the Federal Power Commission, as they may be modified from time to time.

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EXHIBIT E POINT-TO-POINT TRANSMISSION SERVICE CONTRACT RATE TP 2111 123

() JULY 12, 1972 EXHIBIT E POINT-TO-POINT TRANSMISSION SERVICE CONTRACT RATE TP Applicability Applicable to transmission service to be provided by Southern California Edison Company (Utility) for the use by the City of (City) for transmitting City-owned power, where Network Transmission Service is not applicable, from any substation bus to any other substation bus designated by the City, and when such City-owned power is integrated with Utility's system in accordance with an Integrated Operation Agreement between City and Utility.

Rates -

The charges for this service shall be the City's propor-tionate share of the average of Utility's costs (including return requirements) for two transmission paths, one of which is the shortest circuit mile path, and the other which is the shortest circuit mile path that is located on a separate right-of-way, where practicable. .

The charges shall reflect Utility's current revenue re-quirements associated with the original cost of the land and facilities associated with each transmission path.

Charges shall be ba ' on the design ratings of the trans-mission lines included in the transmission paths used, and such design ratings shall be used to allocate the original cost 2111 124 E-1

O .

of power transformer and other ccmmon substation facilities to the transmission paths on which the charges will be based.

Such design ratings shall be calculated as defined in the Integrated Operations Agreement.

i Special Conditions

1. Contract Capacity: The Contract Capacity under this rate will be the capacity requested by the City at the beginning of each Contract Period for which service is requested. Contract Capacity shall not be decreased during any Contract Period. Each separate power resource obtained by the City shall be treated as an individual block of Contract Capacity for a specified Contract Period.

2. Contract Period: A Contract Period shall be any multiple of twelve months following commencement of service for each block of power to be transmitted. Service shall continue beyond the. Contract Period until canceled by City giving notice of not less than 12 months or by Utility giving notice of not less than 12 months.

3. New Facilities: Reconstruction of exisring terminal, transmission and switching facilities which is required to provide service under this rate in advance of Utility's other needs as a result of a request for transmission service, will be the subject of special charges adequate to fully compensate Utility for the investment and costs associated with such reconstruction during the period it is not required for Utility's other needs. Utility shall 2111 125

, E-2

O have no obligation to provide any facilities outside of its certificated service area or to acquire new rights-of-way or construct new lines or other new facilities within its certificated service area.

4. _

Losses: City shall bear its share of the average transmission losses estimated to occur over each of the transmission paths deemed to be used for such transmission service. Such losses will be deducted from the quantities delivered to Utility for transmission to City.

5. Contract: Utility shall, within 30 days from cae date when City applies in writing for service under this rate, state if new facilities are required under the provisions of Special Condition 3. If no new facilities are required, service will commence not less than 60 days after the date of said application. Where new facilities are required,

. service will commence on the later of the date requested by City or a date determined by the Utility's construction schedule of the new facilities to be installed by the Utility.

6. Payment of Charges: The annual charges for service in

~

each year of the Contract Period shall be due at the begin-ning of each such year and payable monthly at 1/12 of the annual charges.

7. Rules of Service: This rate is subject to the Rules of Utility on file with the Federal Power Commission, as .

they may be modified from time to time.

E-3

2111 127 EXHIBIT F SAN ONOFRE PARTICIPATICN PRINCIPLES 2111 128

7/lu/72 (I

EXHIBIT F SAN ONOFRE PARTICIPATION PRINCIPLES Edison is prepared to offer to the Cities of f.naheim, Riverside and Banning participation in the ownership and output of the proposed Units 2 and 3 of the San Onofre Nuclear Generating Station, which station is now owned as tenants in common by Edison and San Diego Gas & Electric Company. 'It must be recognized, how-ever, that the concurrence and agreement of San Diego shall be necessary in establishing equitable arrangements for the sharing of risks, costs and responsibilities among the participants.

If a City participates, its percentage participation share must be the same.in both Units 2 and 3. In addition, a City must acquire a proportionate ownership share in facilities constructed

.in connection with San Onofre Unit 1 that are to be utilized in connection with the construction or operation of Units 2 and 3, as well as in the operation of Unit 1.

Edison shall offer each of the Cities of Anaheim, Riverside and Banning undivided interests in San Onofre Units 2 and 3, as tenants in common with Edison and San Diego. The participation ,

share of San Diego therein shall be 20 percent. The remaining 80 percent participation share shall be apportioned on a percentage basis among Anaheim, Riverside, Banning and Edison based on their historical relative sizes. Such participation shares are as follows:

4 0

2111 129 F-1

O Edison 76.45%

Anaheim 1.66%

Banning 0.107.

' Riverside 1.797.

Based upon the current assumed net effective rating of 1140 megawatts per unit, these participation shares for both units shall be: -

Edison 1,,743.1 megawatts Anaheim 37.8 megawatts Banning 2.3 megawatts Riverside 40.8 megawatts An outline of the underlying bases of the offer to the Cities is as follows:

1. Any. offered participation share not accepted or retained by the offeree shall be retained by Edison as a part'of its participation share of the project.

Participation by a City shall be pursuant to a formal participation agreement to be negotiated simultaneously among Edison, San Diego and the participating City or Cities. Edison believes that this agreement can be negotiated in final form and

• executed approximately six months af ter all partici-pating Cities formally advise Edison.in writing of their desire and intention to participate in the project pursuant to the general terms and conditions set forth in this proposal. .

2)\\

\50 *

.F-2

a Before being obligated to make payments to Edison, a participating City shall obtain all necessary approvals, including voter approval if required, for the City's project contractual undertakings and for its means of financing its participation in the construction and operacion of Units 2 and 3.

A participating City must furnish Edison and San Diego with satisfactory evidence, including an appropriate legal opinion of its counsel, that the City has legal authority to enter into and be bound by all of its project contractual undertakings.

A City's right to participation in the project shali terminate if such City has not satisfied the terms and conditions of this paragraph by November 1, 1977.

Edison, San Diego and Cities shall use their best efforts to obtain all necessary approvals from regulatory and other authorities as are required of each of them in connection with their participation in the project. A City may withdraw from the project in the event that after using its best efforts it is unable to obtain any required regulatory or other -

approval. In the event of a withdrawal by a City pursuant to this paragraph, the accumulated construc-tion costs and all other costs incurred by the with-drawing City in connection with the project up to the date of such termination shall be borne by such F-3 2111 131

O .

withdrawing City if the entire project shall be

. terminated. If the project shall not be terminated following such withdrawal, Edison shall recover such City's participation share and shall reimburse the withdrawing City for its incurred construction costs

.,(including interest during construction but excluding

, a City's own administrative and general expenses).

2. Negotiations for an appropriacc assignment or amendment to the plant site easements covering the .

approximate 83-acre San Onofre plant site, access road and spur track shall be undertaken by the partici-pants with the United States at the Cities' expense so that the Cities 'may acquire undivided interests as tenants in common in the portions of such ease-ments as are necessary to cover the Cities' interests in Units 2 and 3 and the facilities common to Units 1, i

2 and 3. i .

After obtaining any necessary consent or approval from the United States, Edison shall assign to a participating City appropriate undivided interests in the rights of way and easements acquired from the United States for San Onofre Units 2 and 3 plant site and appurtenant facilities (excluding the Edison and San Diego switchyards). A participating City shall also acquire interests in other land rights for San Onofre necessary for its participation in the project, subject to the obtaining of any necessary consents or approvals . ,

211.1 132 F-4

- A participating City shall assume its proporti onate share of the easement payments to the United States under the San Onofre easements, and shall reimburse Edison for a proportionate share of acquisition and developmental expenses incurred by Edison a n ngin obt i i such easements.

t i ,

A participating City shall also reimburse Edison for a proportionate share s- of acqui i tion, rental and developmental expenses i ncurred in connection with San Onofre land rights other than ose th acquired from the United States.

3.

The participation agreement shall set forth inetail d the proposed bases for the parties ' parti i c pation in the ownership, construction, operation and maintenance of Units 2 and 3 and the common facilities .

This participation agreement shall eventually be supersed e d

by more definitive ownership, construction and agreements, operating Negotiations for amendments to existing specialized agreements, or for new specialized ree- ag ments, such as agreements relating to the purcha se and financing of the turbine generators or the nucl ear fuel cycle, shall also be undertaken among the spartie and with third parti.es. .

An underlying. condition precedent for the Cities' participation shall be that no significant departures shall be made from the arrangement s between Edison and San Diego for ownership, constructi on, opera-tion and maintenance under which and Edison San Diego have participated in the San Onofre Unit 1 project, or 8

g 2111 133

. from the arrangements already made, or which may be

,' made prior to the date of commitment by a participat-ing City, for the Units 2 and 3 project.

Arrangements for construction shall be based upon contractual commitments already made by Edison and

San Diego, and upon the draft construction agreement

. which has been negotiated in close to final form be-tween Edison and San Diego. -

4. Upon satisfying the terms and conditions of the third paragraph of the preceding Section 1, the City shall reimburse Edison for the City's proportionate share of project costs incurred to that date by Edison, together with an appropriate amount for the components of interest during construction and Edison's administra-tive and general expenses charged to the project. If the project is subsequently abandoned by the participants.,

all participants shall be responsible for their shares of all costs associated with the project.

The total cost of the project is now estimated to be

$840,000,000, but these estimates are constantly changing.

Charges to the project as of the end of 1971 are esti-mated to be over $20,000,000.

5. A participating City shall purchase its ownership interest in the common facilities from Edison on or before the date of initial generation of Unit 2. The purchase price shall be based upon the reproduction cost new less depreciation of the common facilities.

21ii I34 F-6

O

6. A participating City shall acquire no ownership

, interest in the Edison and San Diego switchyard facilities at San Onofre.

7. Edison shall be the project manager for construc-tion and operating agent for operation of the project.

. .,It shall receive no profit for acting in such capacities.

As a part of the project construction, operation and maintenance costs, Edison shall receive an appropriate allowance for its administrative and general expenses.

8. Each participant shall be responsible for the payment of its participation share of all project capital costs, includine, interest during construction or allowances for funds used .during construction, a nd property taxes.

9. The participants shall pay all fixed charges and operating and maintenance expenses on the basis of participation shares. Fuel costs shall be shared by the participants on the basis of their participation shares. Any cost impact caused by the Cities' partici-pation shall be taken into account. These cost impacts can go in aither direction. As near as possible, the Cities shall be,given the advantages of cost decreases' resulting from their participation and shall be charged for any added burdens placed on Edison-San Diego because of the Cities' participation.

10. It is anticipated that the units will be initially operated as base load units. Whenever Unit 2 or 3.is '

operated, each participant shall be entitled to receive F-7 2lll l3b

ci its participation share of the output on the unit.

If any participant requests the operation of San Onofre Unit 2 or 3, when available, it shall be operated or the participant requesting operation shall be furnished an equivalent amount of capacity and energy at an equivalent cost'by the other

, participants.

11. The Cities shall release Edison and San Diego from any liability to the Cities resulting from damage to Unit 2 or 3 which is caused by the operatiza of Unit 1.

Edison-San Diego shall release the Cities from any liability to Edison and San Dlego resulting from damage to Unit 1 or to the Edison and San Diego switch-yards which is caused by the construction and operation of Unit 2 and 3. Liability arrangements among the Units 2 and 3 participants governing the operation of Units 2 and 3 shall be substantially identical to those arrange-ments now in effect between Edison and San Diego which govern the operation of Unit 1.

12. As project manager and operating agent, Edison shall be responsible for all aspects of fuel management for ,

the Unit 2 and .3 reactor cores. As an example Edison and San Diego have contracted to purchase yellowcake from Utah International Inc. for San Onofre Units 1, 2, and 3. The Cities shall assume a proportionate share of the financial responsibility for such fuel management.

2111 136 F-8

O In the event one or more of the Cities of Anaheim, Riverside, and, Banning participate in San Onofre Units 2 and 3 as' outlined

• above, they will be expected to enter into an Integrated Operations Agreement as outlined in Exhibit A, which includes the terms and conditions for providing reserves, Transmission Service, and partial requirements.

I 2111 137 e

4 9

F-9

A 2111 138 s

EXHIBIT G 220KV AND 115KV TO CITIES OF ANAHEIM, RIVERSIDE, AND BANNING 2111 139

JULY 20, 1972

()

EXHIBIT G 220 KV AND 115 KV TO CITIES OF ANAHEIM, RIVERSIDE AND BANNING General Each City will provide a suitable site for the substation facilities required by Edison. If a City's dead-end tower on its site is further than one transmission span from Edison's existing or planned right-of-way, City shall pay Edison a facilities charge for the additional feet of transmission line required beyond such span at the rate specified in Edison's Rules on file with the Federal Power Commission.

Each City.will provide', at no charge to Edison, property, foundations , subsurface ccnduits , grounding, permanent relay house ,

and fence protection for all Edison-owned substation facilities located on City's site. City will also provide sufficient space within its station and on its system for the installation, by either Edison or City as appropriate, of a reactive supply and

, associated terminal equipment sufficient to compensate to a power factor consistent with standard Edison practice on the ,

220 kV or 115 kV bus. -

City of Anaheim Edison will own, provide, operate and maintain above-ground 220 kV switching, buswork and metering facilities associated with Edison's 220 kV lines for a station having an ultimate demand of one million kVa or less. Ed.ison also will'own, oper-ate and maintain any 220 kV circuits originating at other Edison facilities and cerminating at the 220 kV station.

211 1 140 G-1

O .

Edison and City af Anaheim shall use their best, efforts to provide initial 220 kV service to City by July 1, 1974.

Expanded 220 kV service by Edison shall be provided on or before the date when it is estimated th. c City's load will exceed 400 megawatts.

_ City of. Riverside

. Edison will own, provide, operate and caintain above-ground 220 kV switching, buswork and metering facilities associated with Edison's 220 kV lines for a station having an ultimate demand of one million kVe or less. Edison also will own, operate and maintain any 220 kV circuits originating at other Edison facilities and terminating at the 220 kV station.

Edison and City of Riverside shall use their best efforts to provide initial 220 kV service to City by June 1,1976.

Expanded 220 kV service by Edison shall be provided on or before the date when it is estimated that City's load will exceed 400 .egawatts. i City of Banning Edison will, upon two years' advance written notice from the City of Banning, provide an extension of Edison's 115 kV -

bus to Edison's 115 kV dead-end tower for.which space and foundations will be provided by City, located on City's proposed substation site located on the south side of Lincoln Street.

G-2 2111 14I O

• 9. , d 2111 142 a

4 m

_ _ _ _ _ _ _ _ . . A

(

EXHIBIT H SCHEDULE R RESALE SERVICE TO THE CITIES OF ANAHEIM, RIVERSIDE, AND BANNING

(

2111 143

(

,0UTHERN CAtlFORNIA EDISON COMPANY O O

(

2244 Walnut Grove Avenuo e 3 c; : i. .' ,@n,,

Rosemead, Cohfornio 91770 ,

Scheduto R 2

( .

RESALE SERVICE-LARGE ,

APPLICABillTY Apphcalde to alertric t nricy for resair deliserrd to the City of Anaheim at the City of Anaheim Lewis Substation at a nominal sohau of M,.000 vohs.

RATES Per Meier t

Demand Charge:

Tirst 5,000 kw or less of billing demand.. . . . . . . . . . . . . . . . $5,000.00 Next 5,000 kw of billing demand, per kw.. . . . . . . . . . . . . . . . . 0.75

. Next 40,000 kw of billing demand, per kw.. . . . . . . 0.65 All excess kw of billing demand, per kw.. . . . . . . . . . . . 0.55 Energy Charge P- e added to Demand Charge):

First 150 k - per lev of billing demand, per kwhr.. . . . . . . 1.10p Next 150 kw per kw of billing demand, per kwhr.. .. 0.78 p All e xce ss kwbr, per kwhr.. .. . . . . . . . . . . . . 0.53p Minimum CharDe:

The monthly minimum charge shall be the monthly Demand Chorge.

SPECIAL CONDITIONS

1. Voltage: Service will be supplied at one standard voltage.

2. BillinD Demand: The hilling demand shall he the kilowatts of maximum demand but not less than 50% of the highest maxinmm drmamt r,tabhshed in the preceding 11 months, however, in no case shall the billing demand be less than 5.000 Lw. Ili1hng demamt shall he drictmined to the nearcst kw.

3. Maximum Demand: The maximum acinand in any monih shall be the measured maximum average kilowatt input, indicated or reemded by instruments in he supplied by the utihty, duiing any 30-minute metered interval in the month.

4. Voltage Discount: Tur demand th;us:r will br reduced by 50.20 per Lilowatt of billing demand for service delivered and miserrd at a nominal voltage ni us.oon volt..

5. Power Factor Adjustment: The charges will be adjusted each month for the power factor as follows:

The charges will be decreased by 20 cents per Lilowatt of measured maximum demand ar.i will be increased by 20 cents per Lilovar of reactive demand. However, in im case shall the kilovars used for the adjust.

n ent he less than one hith of the number of kilowatts.

The Litovars of scactive demand shalt he calculated by multiplying the kilowatts of measured maximum demamt by the ratio of the Lilovar hours to the kilowatt. hours. Demands in Lilowatts and kilovars shall be determined to the nearest unit. A ratchet device will be installed on the kilovar. hour meter to prevent its reverse operation on trading power factors. .

6. Adjustment for Off. Peak Demand: lipon application by the customer, any kilowatts of maximum demand in esec35 of the on pcal demand will not he runsiilried in ratablishing the hilling detuand for computing the energy ch.nge. hnt will be consi.f ard in r>tabbshing the 1.illing demand for computing the demand charge, by adding one-half cf the amouns that the inasitumn demamt rscords the on peak demand. to the on peak demand. The on-peak demand will be she masinnnn demand unwring briuren the hmn

• of 6:30 a.m. and 10:30 p.m., Pacific Stand.ird Time, of any da.s tscrpt .%mula3 3 amt the tollowmg hohdap: Nrw Yrais. Washington's liirthday, h!cmorial Day, Independence Day,

l. abor llay. 'I hank >giving llay. aml Christmas.

THIS SCHEDULE IS ALSO SUBJECT TO THE RULES FOLLOWING.

,.e.

n-1 2111 144

l SOUTHERN CALIFORNIA EDISON COMPANY 0 '

2244 Wolnut Grove Avenue Rosemead, Cobfornia 91770 k -

, Schedule R.2 RESALE SERVICE-LARGE APPLICABILITY Applicable to a fectric rmny for resale driivered to the City of Anaheim at the City of Anaheim 1.ewis Substation at a nonnual suhage of 220,000 volts.

RATES ' Per Ma'**

Demond Charge:

First 5,000 kw or less of billing demand.. . ... ...... ... ... .. .... $ 5,0 0 0.0 0 Next 5,000 kw of billing demand, per kw. . . . . . . . . . . . . . . . . . . . . . 0.75 Next 40,000 kw of billing demand, per kw... .. . . . . . . . . . . . 0.65 All ex ce s s kw of billing demand, per kw... . . . . . . . . . 0.55 Energy Cl orDe (to be added to Demond Chargo):

First 150 kwhr per kw of billing demand, per kwbr.. . . .. . ... 1.10f Next 150 kwhr per kw of billing demand, per kwbr.. . . 0.78p All excess kwhr, per kwhr . . . . . . . . . . 0.53/

Minimum Chorge:

The monthly minimum charge shol be the monthly Demand Charge.

SPECIAL CONDITIONS

1. Voltogo: Service will be supplied at one standard voltage.

2. BillinD Demand: The hilUne demand shlt be the kilowatts of maxirnum demand but not less than 507, of the highest maumum demand ratablished in the preceding 11 munths. however, in no case shall the billing demand be

.( less than 5,000 ku. Dilling demand shall be determined to the nearest kw.

3. Maximum Demand: The maximum dernand in any month shall he the measured maximum average kilowatt input indicated or recorded by instruments to be supplied by the utihty, during any 30 minute metered interval in the month.

i

4. Voltage Discount: The demami charge will he reduced by $0.35 per kilowatt of billing demand for service delivered and metered at a nominal voltage of 220.000 vohx.

5. Power Factor Adjustment: The charges will lee adjusted cach month for the power factor as follows:

The charges will be decreased by 20 cents per kilowatt of me.'sured maximum demand and will be increased by 20 cents per kilovar of reactive demand. However. in no case shall the kilovars used for the adjust.

ment be less than onc.fifth of the number of kilowatts.

The kilovars of reactive demand shall be calculated by mult; plying the kilowatts of measured maximum demand by the ratio of the kilovar.huurs in the kilowatt hours. Demands in kilowatts and kilovars shall be determined to the ncarest unit. A ratchet device will be installed on the kilovar hour meter to prevent its reverse operation on leading powcr factors.

~

6. Adjustment for Off. Peak Demand: ttuon application by the customer, any kilowatts of maximum demand in csrens of the on peak denund will not he runwideerd m vs.tablishing the hilling demand for computing the energy ch.nge, hnt will I,e consideird in r>tabbshmg the bilhng dennand for computing the demand chan ge. I.y adding one. half of the : inn.nni that the masinmm demand vscerds ihr on.pcak demand, to the on.pcak demand. The on peak demand will lie the maximum demand octmring brewren the honri of 6:30 a m. and 10:30 p m., l'aci6c Standard Time, of any day escept Sundan and the (..llowing holiitays: New Years. Washington *n Birthday, Memorial Day, Independence Day,

l. abor Day, Thanksgiving Day, and Christinas.

THIS SCHEDULE IS ALSO SUBJECT TO THE RULES FOLLOWING.

2111 1 h-H-2

SOUTHERN CALIFORNIA EDISON COMPANY D

gJ i D~fUl:N,{ Ju_! .o 2244 Walnut Grove Avenue Rosemead, Cohfornia 91770 ( - Schedule R.2 RESALE SERVICE- LARGE APPLICABILITY Appheable to ettetric energy for ruale dclivered to the City of Banning at Banning Substation at a nominal voltage of 33.000 volts. RATE 5 - P= ' M * Demand Charge:

,                               First 5.000 kw or less of billing demand..             ..           . . . . . . . . . . . . . . . . . .       $5,000.00 Next 5,000 kw of billing demand, per kw.                                                . . . . . . . . . . .        0.75 Next 40,000 kw of billing demand, per kw..                                        . . . .                            0.65 All excess kw of billing demand, per kw..                                                                   .        0.55 Energy Charge (to be added to Demand Charge):

First 150 kwbr per kw of billing demand, per kwhr.. . . . .. ....... 1.10( Next 150 kwhr per kw of billing demand, per kwhr...... 0.78p All e xce s s kwhr, per kwbr..... . . . . . . . . . . . 0.53p Minimum Charget The monthly minimum charge shall be the monthly Demand Charge SPECIAL CONDITIONS

1. Voltage: Service will be supplied at one standard voltage.

2. Billing Demand: The hilling demand shall he the Lilowatts nf maximum demand but not less than 50c/, of

( the highest maximum demand estabbshed in the preceding Il months, however, in no case shall the billing demand be s less than 5.000 kw. Billing demand shall be deterruined to the nearest kw.

    .                3. Maximum Demand: The maximum demand in any month sha!! he the measured maximum average kilowatt input, indicated or recorded by instruments to be supphed by the utility, during any 30-minute metered interval in the month.                                                  ,

4. Voltage Discount: The dem.oul charer will he reduced by 50.10 per kilowatt of billing de:nand for service deliscrrd and metered at a muninal voltage of 3.1.000 voh.,

S. Power Factor Adjustment: The charges will he adjusted each month for the power factor as follows: The charges will he decreased by 20 cents per kilowatt of measured maximum demand and will be increased by 20 cents per Litovar of reactive demand. llowever, in no case shall the kilovars used for the adjust-ment be less than one-fifth of the number of kilowatts. The kilovars of reactive demand shall be calculaird by multiplying the kiinwatts of measured maximum demand by the ratio of the kilovar. hours to the Lilowatt. hours. Demands in kilowatts and kilovars shall be determined to the nearest unit. A ratchet device will be installed on the kilovar. hour meter to prevent its reverse operation on leadmg power factors.

6. Adjustment for Ofi. Peak Demand: tipnn application by the customer, any kilowatts of maximum demand in excess of the on.pcak demand will not he ennsidered in establishing the billing demand for computing the energy ch.uge. but will he considcerd in estabha.hing the hilling demand for computing the demand charge. by adding one. half of the am..unt that the masunnm dem.md execeds tiie on. peak demand to the r n.pcak demand. The on. peak demaad will he the maximum demand ocentring brewren the hours of 6:30 a m. and 10:30 p.m., Paci6c Standard Time of any day encept Sund.u s and the sollowing holidays: New Years. Washington's Birthday, Memorial Day, Independence Day,

l. abor D.iy, Thanksgiving Day, and Christmas.

s.(s THIS SCHEDULE IS ALSO SUDJECT TO THE RULES FOLLOWING. 2111 146 H-3

SOUTHERN CAllf 0RNIA EDISON COMPANY D A, D D  % ' a 2244 Wot-ut Grove Avenuo Rosemood, California 91770 e e,j ]1>bpLb .

                                                                                                                                           '  h k

• Schedule R 2 RESALE SERVICE-LARGE APPLICA Bi!!TY Appbrahir to ciertr,r energy for renale elelivered to the City of B.mning at Danning Substation at a nominal voltage of 115.000 volta.

RATES Per Meer Demand Charge: First 5,000 kw or less of billing demand.. . ...... $ 5,000.00 Next 5,000 kw of billing demand, per kw.. . . . . . . . . . . . . . . . . . . . . . 0.75 Next 40,000 kw of billing demand, per kw.. . . . . . . . . . . . . . . 0.65 All excess kw of billing demand, per kw. . . . . . . . 0.55 Energy Charge (to be added to Demand Charge): First 150 kwhr per kw of billing demand, per kwhr.. ..... . . . 1.10p Next 150 kwbr per kw of billing demand, per kwbr... . . . . . . . . 0.78( All excess kwhr, per kwhr .. . 0.53p Minimum Charge: The monthly minimum charge shall be the monthly Demand Charge. SPECIAL CONDITIONS

1. Voltage: Service will be supplied at one standard voltage.

..- 2. Billing Demon'd: The hilling demand shall he the kilowatts of maximum demand but not less than 50% of the highest maximum demand established in the preceding !! months, however, in no case shall the bir.ing demand be less than 5,000 kw. Billing demand shall be determined to the nearest kw. ( e

3. Maximum Demand: The maximum demand in any month shall he the measured maximum average kilowatt input, indicated or recorded by instruments to be supplied by the utibty, during any 33-minute metered interval in the month.

i

4. VoltoDe Discount: The demamt charer will be reduced by $0.30 per kilowatt of billing demand for service delisered and metered at a n.nninal sullage of 115.000 volin.

5. Power Factor Adjustment: The charges will be adjusted each month for the power factor as follows:

The charges will be decreased by 20 cents per kilowatt of measured maximum demand and will Le increased by 20 cents per kilovar of reactive demand. However. in no case shall the kilovars used for the adjust. ment be less than one.fifth of the number of kilowatts. The kilovars of reactive demand shall 'be calculated by multiplying the kilowatts of measured maximum dennand by the ratio of the kilovar-hours to the kilowatt hours. Demands in kilowatts and kilovars shall be determined to the ucarest unit. A ratchet device will be install:d on the kilovar. hour meter to prevent its reverse operation on leadmg power factors.

6. Adjustment for Off.Pook Domand: tipon application by the customer. any kilowatts of maximum demand in excess of the on.pc.tk demand wdl not be considered in establishing the bilhng derr.and for computing the energy charge, but will be runsidered in es'ibbshing the Inthng demand for computing the demand charge, by adding one. half of the mm nne that the manimum demand escreds the on peak demand, to the on. peak demand. The on peak demand will be the maniumm demand ocenrrme hetwren the hours of 6:30 a.m. and 10:30 p.m., Pacific Standard Time, of any dar esrept Smula3 s aml the folk. wing hiihdays: New Ycars. Washington's Birthday,11cmorial Day, independence Day, l.nh .r Day, Thanksgiving Day, and Christmas.

~

THIS SCHEDULE IS ALSO SUBJECT TO THE RULES TO1 LOWING. ( 7.G B H-4 2111 147

SOUTHERN CAllFORNIA EDISON COMPANY h 2244 Wolnut Grove Avenuo [ . Rosemood, Californio 91770 s , ( , Schedule R 2 RESALE SERVICE-LARGE APPLICABillTY Appbcahir to electric energy for resale deliverrd to the City of Riverside at the Riverside City limits at a nominal vohage of u 000 vults. RATES Per M* Per Month Demand ChorDe: First 5,000 kw or less of billing demand.. .. . . . .... $5,000.00

   .                                 Next 5,000 kw of billing demand, per kw                       . . . . .                           0.75 Next 40,000 kw of billing demand, per kw..            .. .. .                                     0.65 All exeess kw of billing demand, per kw..                          .           .....      .       0.55 Energy Charge (to be added to Demand Charge):

First 150 kwhr per kw of billing demand, per kwhr.... 1.10( Next 150 kwhr per kw of billing demand, per kwbr.... . . 0.78( All e x c e s s kwhr, per kw hr.... .. 0.53 p Minimum Charge: The monthly minimum charge shall be the monthly Demand Chorge. SPECIAL CONDITIONS -

1. Voltage: :lervice will he supplied at ,one standard voltage.

2. Billing Demand: The hilling demand shall he the kilnwatts of maximum demand but not less than 5097, of the highest maximum domand estabhshed in the preceding 11 months hr. wever, in no ease shall the billing demand be less than 5.000 kw. Bilhng demand shall be determined to the nearest kw.

3. Maximum Demand: The maximum demand in any month shall be the measured maximum average kilowatt input, indicated or recorded by instruments to be supplied by the utihty, during any 30-minute metered interval in the month.

4. Voltage Discount: The demand charge will be reduced by 50.20 per kilowatt of billing demand for service dehvered and metered at a nominal voltage of 60.000 volta.

5. Power Factor Adjustment: The cha:ges will be adjusted each month for the power factor as follows:

The :harges will he decreased by 20 cents per kilowatt of measured maximum demand and will be inercased by 20 cents per kilovar ni reactive demand. }{owever. in no ease shall the kilovars used for the adjust-ment he less than one.fifth of the number of kilnwatts. The kih.vars of reactive demand shall be calculated by multiplying the kilowatts of measured maximi.m demand by the ratio of the kilovar. hours to the kilowatt-hours. Demands in kilowatts and kilovars shall be determir-d to the nearest unit. A ratchet device will be installed on the kilovar-hour meter to prevent its reverse operatinn on leading power factors.

6. Adjustment for Off.Pook Demand: L:pon application by the customer, any kilowatts of maximum demand in eseest of the on.prak dem.md will not he considcied in establishing the billing demand for computing the energy eturge. but will be considerrd in establishing the hilling demand for computin;: the demand charge, by adding one-half of the amount slut the maximum alemand excerds the im-peak demand, to the on-peak demand. The on-peak demand will be the maxitmmi demand occursing brewren the hours of 6:30 a.m. and 10:30 p m., Paci6e Standard Time, of any day escept Snmlays ami the h.Ilowing holidays: New \* cars, Washington's Birthday, lllemorial Day, Independence Day, l.af or Day. Thanksgiving Day, and Christmas.

THIS SCHEDULE IS ALSO SU!UECT TO THE RULES FOLLOWING. . f.ca

                                                                     $5                                                           2111         148

• • WW - q .

'_.n.-- c,oufHrRN CAlllORNIA LDISON COMPANY 72f Walnut Grovo Avenuo D @@b) fi[lf5)[l3%8) h - Rwemead, Cohfornia 91770 , Schedulo R-2 RESALE SERVICE-LARGE APPitCADillTY Appheable so dretric energy for renale delivered to the City of Riverside at Jurupa Substation at a nominal voltage of 210.000 volo.. RATES Per M*'*' l Demand Charge: First 5,000 kw or less of billing demand.. ..... .... .. $5,000.00 Next 5.000 kw of billing demand, per kw_ . . . . . . . . 0.75 Next 40,000 kw of billing demand, per kw.. . . . . . .. 0.65 f, All excess kw of billing demand, per kw. ... ... 0.55 Energy Chargo (to be added to Demand Charge): First 150 kwhr per kw of billing demand, per kwhr... ._ 1.10p Next 150 kwbr per kw of billing demand, per kwhr............. 0.78( All excess kwbr, per kwhr .. . . . . . 0.53 p Minimum Charpe: The monthly minimum charge shall be the monthly Demand Charge. SPECIAL CONDITIONS

1. Voltage: Service will be supplied at one standard voltage.

2. Bi!!ing Demand: The hilling demand shall he the kilowatts of maximum demand but not less than 507, of the highest rnaximum demand established in the preceding Il months, however, in no case sha!! the billing demand be less than 5,000 kw. Dithng demand shall be determined to the nearest kw.

-(                   3. Maximum Demand: The maximum demand in any month shall be the measured maximum average kilowatt A             input. indicated or recorded by instruments to be supplied by the utility, during any 30. minute metered interval in the mont h.

4. Voltoge Discount: The demand charge will he reduced by 50.35 per kilowatt of billing demand for service delivered and mctcred at a nominal voltage of 220.000 volts. .

5. Power Factor Adjustment: The charges will be adjusted each month for the power factor as follows:

The charg'.s will he decreased by 20 cents per kilowatt of measured maximum demand and will be increased by 20 crats per kilovar of reactive demand. However, in no case shall the kilovars used for the adjust-ment I c less than one fdth of the number of kilowatts. The kil. vars of reactive demand shall be calculated by multiplying the kilowatts of measured maximum demand ay the ratin af the kilovar. hours to the kilowatt. hours. Demands in kilowatts and kilovars shall be determined to the nearest unit. A ratchet device will be installed on the kilovar-hour meter to prevent its reverse operation on leading power. factors.

6. Adjustment for Off. Peak Demand: Upon application by the customer, any kilowatts of maximum tiemand in escess of the on.pcak demand will nbt he considered in estahtishing the billing demand for computing the energy charge, but will be considered in estalitishing the hilling demand for computing the demand charge, by adding one. half of the amount that the maximum demand exceeds the on. peak demand. to the on. peak demand. The on. peak demand will be the maximum demand occurring between the hours of 6:30 a.m. and 10:30 p.m., Pacific Standard Time, of any day escept Sunda3 s and the following holidays: New Years. Washington's Birthday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas.

                                       ~

THIS SC!{EDULE IS ALSO SUMECT TO THE RULES FOLLOWING. l w. (~ . H-6

                                                                                                                                                  ~

2.11i 149 a +

2111 150 ( APPENDIX B LETTER AGREEMENT AMONG SOUTHERN CALIFORNIA EDISON COMPANY, SAN DIEGO GAS & ELECTRIC COMPANY, CITY OF RIVERSIDE, AND CITY OF ANAHEIM. 2111 151

'/ - NOVEMBER 1, 1977 LETTER AGREEMENT AMONG SOUTHERN CALIFORNIA EDESON COMPANY, SAN DIEGO GAS & ELECTRIC COMPANY, CITY OF RIVERSIDE AND CITY OF ANAHEIM 2111 152 Y

w NOVEMBER 1, 1977 LETTER AGREEMENT AMONG SOUTHERN CALIFORNIA EDISON Cot 4PANY, SAN.DIEGO GAS & ELECTRIC COMPANY, CITY OF RIVERSIDE, AND CITY'0F AHAHEIM s The Cities of Anaheim and Riverside (Cities) propose to enter into a Participation Agreement dated as of November 1,

  \"

1977, with Southern California Edison Company (Edison) and S:In Diego Gas & Electric Company (San Diego) to provide for the Cities' participation in the ownership, construction and operation of San Onofre Nuclear Generating Station Units 2 and 3. Sections 8.1 through 8.7'of said Participation AP,reement require the Cities to make certain payments to Ediaon and San Diego af ter November 1,1977, the effectiv L date of the Participation Agreement. While Anaheim, Edison, Riverside and San Diego (Parties) were negotiating the Participation Agreement, a position taken by a " responsible technician" in the Washington office of the Internal Revenue Service in connection with San Diego's Heber Project raised a question as to whether acquisition by publicly owned 2111 153

g  % utilities and investor. owned utilities of unaivided co-tenancy interests in utility facilitics would disqualify the interest owned by the investor owned utilities in such facilities as Section 38 property fcr the purposes of the investment tax credit, pursuant to the Internal Revenue Code and thus cause the investor owned utilities to lose substantial tax benefits. In order to resolve the question, Edison is under-taking to obtain a Ruling of the Internal Revenue Service that the acquisition by the Cities of an undivided co-tenancy interest in San Onofre Nuclear Generating Station Units 2 and 3 will not disqualify tue ownership interest in San Onofre Nuclear Gene-ratinc Statien Units 2 and 3 retained by Edison and San Diego an Section 38 property for the purposes of the investment tax credit. The Parties recognize that such a ruling cannot be obtained by November 1,1977, the effective date of the Partici-pation Agreement. The Cities represent that they cannot prudently issue revenue bonds to finance their acquisition of an interest in San Onofre Nuclear Generating Station Units 2 and 3 until the Participation Agreement has been executed. Edinon and San Diego represent that they cannot prudently execute the Participation Agreement until the question con-cerning the investment tax credit has been resclved. The Parties therefore agree:

1. Edison will endeaver to obtain a revenue rulinc 2111 154

,' %s from the Internal Revenue Service that the acquisition of an undivided co-tenancy interest by the ;ities in San Onofre Nuclear Generating Station Unit.1 2 and 3 will not disqualify the Edison and. San Diego ownership interests in San Onofre Nuclear Generating Station Units 2 and 3 as Section 38 prop-erty for the purposes of an investmant tax credit. Edison reserves the right to withdraw its revenue ruling request if at any time it appears that such a ruling would be adverse to Edison or San Diego. The Parties will also explore courses of action other than endeavoring to obtain such ruling.

2. Anaheim and Riverside shall each reimburse Edicon for 50% of the costs incurred by Edison for outside legal counsel and related travel expenses for Edison personnel in its endeavor to obtain such revenue ruling. Neither the seeking of such ruling nor the reimbursement of costs as provided herein nor any provision of this Letter Agreement shall be deemed to modify any Party's rights or obligations under the Settlement Agreement dated August 4, 1972, between Edison and the Cities of Anaheim, Banning and Riverside.

3. Tne Cities will not be required to make any pay-ments pursuant to Section 8 of the Participation Agreement until the question concerning the investment tax credit is resolved.

4 The following agreements, attached hereto as Exhibits A, B, C, D and E respectively, have been fully necotiated among the Parties thereto, and the Parties to said w 2111 155

s. agreements agree that they are in final form as attached: A. San Onofre Units 2 and 3 Participation Agreement. B. Supplemental Agreement for the Integration of Anaheim's Entitlements in San Onofre Unit 2 and Unit 3. C. Supplemental Agreement for the Integration of Riverside's Entitlements in San Onofre Unit 2 and Unit 3. D. Edison-Anaheim San Onofre Transmission Service Agreement. E. Edison-Riverside San Onofre Transmission Service Agreement. The Parties further agree that said agreements shall be executed and become effective in accordance with the terms thereof when each Party is, in its sole discretion, satisfied that the execution of said agreements will not adversely affect the investment tax credit for those portions of San Onofre fluclear Generating Station Units 2 and 3 owned by Edison and San Die 60-

5. If the agreements attached as Exhibits A, B,C,D and E are executed, Anaheim and Riverside shall pay to Edison and San Diego those amounts due under Section 8 of the Partici-pation Agreement in accordance with the terms thereof plus 9.0%

of those amounts due under Section 8 of the Participation Agreement per annum from the date such payment would have been w due under the Participation Agreement to the date of payment. 2111 156

                                           \"

6. The Parties shall cooperate with each other and coordinate their efforts to resolve the subject question.

7. Until the agreements attached as Exhibits A, B, C, D and E are executed, the Parties shall meet at least every four months commencing on December 1, 1977, and at other times as agreed by the Parties for the purpose of reviewing the progress of the Parties in their efforts to resolve the sub-ject question.

8. Edison, Riverside and Anaheim agree that execution of this Letter Agreement, together with delivery of (1) each City's City Council Resolution authorizing the execution of this Letter Agreement and (ii) a legal opinion of Cities' respective legal counsel that b each City has legal authority to enter into and be bound by this Letter Agreement and the agreements attached as Exhibits A,'B, C, D and E, constitutes compliance with the third paragraph of Section 1 of Exhibit F to the Settlement Agreement dated August 4, 1972, between Edison and the Cities of Anaheim, Banning and Riverside. This Letter Agreement shall not otherwise affect any of the other terms and conditions of aaid Settlement Agreement.

9. If the agreements attached as Exhibits A, B, C, D and E have not been executed by April 1, 1979, this Letter Agreement shall have no further force or effect, provided, however, that Edison, Riverside and Anaheim agree that the v

provisions in Section 8 of this Letter Agreement shall 21i1 157

w continue in full force and effect and provided further that Edison, Riverside or Anaheim may seek to resolve the subject question by whatever means any of them deems appropriate, judicial or otherwise. The Parties have caused this Letter Agreement to be executed on their behalf and the signatories hereto represent that they have been duly authorized to enter into this Letter l Ph 0 g ir Agreement on behalf of the Party for whom they sign. ' T O'( $ V Executed as of the 1st day of " ember, 1977.

                                                                                                          '   "j#

i.

                                                                                                               .F
                                                                                                    .k      b ATTEST:                                SOUTHEFi            LIFORNIa        DI ON COMP     \MfBI {g.t          f
                   .'. //

L , s .- > . . . . . By / .sr1 f k . t,l}}(L Assistant Secretary 'Vice President / ATTEST: SAN DIEGO:. GAS & ELECTRIC COMPANY

                                                          /:        - 7, /
                 'J c'L N. 6's       By       //

M .~ SECRETARY SEi;;03 V!CE PRESIDENT ATTEST: CL, "2 P RIVER IDE) ( ' AL 6 '(/L sh Jn , LAtsh City Clerk Mayor d ' ATTEST: CIT OF NAHEIM

                                                  ^/

TQ. >d). City' Clerk h>D By OsM 9 '

                                           / Utilities Director AFFRCV'Di AS TO FORM N
                              )

2111 158

( APPENDIX B LETTER AGREEMENT AMONG SOUTFERN CALIFORNIA EDISON COMPANY, SAN DIEGO GAS & ELECTRIC COMPANY, CITY OF RIVERSIDE, AND CITY OF ANAHEIM. 2111 159

't . NOVEMBER 1, 1977 LETTER AGREEMENT AMONG SOUTHERN CALIFORNIA EDISON COMPANY, SAN DIEGO GAS & ELECTRIC COMPANY, CITY OF RIVERSIDE AND CITY OF ANAHEIM 2111 160 Y

     .._ .      - _                                                     _.    - . ~ . .

v NOVEMBER 1, 1977 LETTER AGREEMENT AMONG SOUTHERN CALIFOR!!IA EDISON COMPANY, SAN.DIEGO GAS & ELECTRIC COMPANY, CITY OF RIVERSIDE, AND CITY'OF A!!AHEIM The Cities of Anaheim and Riverside (Cities) propose to enter into a Participation Agreement dated as of November 1,

  \"

1977, with Southern California Edison Company (Edison) and San Diego Gas & Electric Company (San Diego) to provide for the Cities' participation in the ownership, construction and operation of San Onofre Euclear Generating Station Units 2 and 3. Sections 8.1 through 8.7'of said Participation Av.reement require the Cities to make certain payments to Edicon and San Diego after November 1, 1977, the effective date of the Participation Agreement. While Anaheim, Edison, Riverside and San Diego (Parties) were negotiating the Participation Agreement, a position taken by a " responsible technician" in the Washington office of the Internal Revenue Service in connection with Gan Diego's Heber Project raised a question as to whether acquisition by publicly owned 2111 161

                                                                    - - . _  .a...a .   .

g  % utilities and investor. owned utilities of undivided co-tenancy interests in utility facilities would disqualify the interest owned by the investor owned utilitiss in such facilities as Section 38 property for the purposes of the investment tax credit, pursuant to the Internal Revenue Code and thus cause the investor owned utilities to lose substantial tax benefits. In order to resolve the question, Edison is under-taking to obtain a Ruling of the Internal Revenue Service that the acquisition by the Cities of an undivided co-tenancy interest in San Onofre Nuclear Generating Station Units 2 and 3 will not disqualify the ownership interest in San Onofre Nuclear Gene-rating Station Units 2 and 3 retained by Edison and San Diego as Section 38 property for the purposes of the investment tax credit. The Parties recognize that such a ruling cannot be obtained by November 1, 1977, the effective date of the Partici-pation Agreement. The Cities represent that they cannot prudently issue revenuc bonds to finance their acquisition of an interest in San Onofre Nuclear Generating Station Units 2 and 3 until the Participation Agreement has been executed. Edison and San Diego represent that they cannot prudently execute the Participation Agreement until the question con-cerning the investment tax credit has been resolved. The Parties therefore agree:

1. Ediscn will endeaver to obtain a revenue rulinc 2111 162

.'- v from the Internal Revenue Service that the acquisition of an undivided co-tenancy interest by the Cities in San Onofre Nuclear Generating Station Units 2 and 3 will not disqualify the Edison and.Sa,n Diego ownership interests in San Onofre Nuclear Generating Station Units 2 and 3 as Section 38 prop-erty for the purposes of an investment tax credit. Edison reserves the right to withdraw its revenue ruling request if at any time it appears that such a ruling would be adverse to Edison or San Diego. The Parties will also explore course of action other than endeavoring to obtain such ruling.

2. Anaheim and Riverside shall each reimburse Edison for 50% of the costs incurred by Edison for outside legal counsel w and related travel expenses for Edison personnel in its endeavor to obtain such revenue ruling. "either the seeking of such ruling nor the reimbursement of costs as provided herein nor any provision of this Letter Agreement shall be deemed to modify any Party's rights or obligations under the Settlement Agreement dated August 4,1972, between Edison and the Cities of Anaheim, Banning and Riverside.

3. The Cities will not be required to make any pay-ments pursuant to Section 8 of the Participation Agreement until the question concerning the investment tax credit is resolved.

4 The following agreements, attached hereto as Exhibits A, B,C, D and E respectively, have been fully necotiated among the Parties thereto, and the Partfes to said 2111 163

                                            -4 agreements agree that they are in final form as attached:

A. San Onofre Units 2 and 3 Participation Agreement. B. Supplemental Agreement for the Integration of Anaheim's Entitlements in San Onofre Unit 2 and Unit 3. C. Supplemental Agreement for the Integration of Riverside's Entitlements in San Onofre Unit 2 and Unit 3 D. Edison-Anaheim San Onofre Transmission Service Agreement. E. Edison-Riverside San Onofre Transmission Service Agreement. The Parties further agree that said agreements shall be executed and become effective in accordance with the terms thereof when each Party is, in its sole discretion, satisfied that the execution of said agreements will not adversely affect the invectment tax credit for those portions of San Onofre Nuclear Generating Station Units 2 and 3 owned by Edison and San Diego.

5. If the agreements attached as Exhibits A, B,C, D and E are executed, Anaheim and Riverside shall pay to Edison and San Diego those amounts due under Section 8 of the Partici-pation Agreement in accordance with the terms thereof plus 9.0%

of those amounts due under Section 8 of the Participation Agreement per annum from the date such payment would have been w due under the Participation Agreement to the date of payment. 2111 164

2111 165 EXHIBIT A PARTICIPATION AGREEMENT AMONG SOUTHERN CALIFORNIA EDISON COMPANY, SAN DIEGO GAS & ELECTRIC COMPANY, CITY OF RIVERSIDE, AND THE CITY OF ANAHEIM. 2111 166

1 2 3 SAN ONOFRE UNITS 2 5 AND.3 PARTICIPATION AGREEMENT 6 7 8 AMONG 9 10 11 SOUTHERN CALIFORNIA EDISON COMPANY 12 SAN DIEGO GAS & ELECTRIC COMPANY CITY OF RIVERSIDE 13 CITY OF ANAHEIM 14

 'w 15 lo 17              2ll} }b[

18 - 19 20 21 22 23 24 25 26 w

1 2 SAN ONOFRE UNITS 2 3 AND 3 PARTICIPATION AGREEMENT 4 TABLE OF CONTENTS 5 . SECTION PAGE 1 PARTIES 1 2 RECITALS 1 3 AGREEMENT 2 4 DEFINITIONS 2 11 5 OWNERSHIP 11 12 6 TRANSFER OF RIGHTS AND OBLIGATIONS 13 13 7 COST RESPONSIBILITIES 19 14 ,j 8 BILLING AND PAYMENT 25 15 9 ADMINISTRATION 26 16 10 LIABILITY AND INSURANCE 27 17 11 NUCLEAR FUEL 29 18 12 TAXES 39 19 13 RELATIONSHIP OF PARTIES 40 20 14 TERMINATION 41 21 15 ADDITIONAL GENERATING UNITS 42 22 16 UNCONTROLLABLE FORCES 43 23 17 NOTICES 44 24 18 ARBITRATION 44 25 19 MISCELLANEOUS PROVISIONS 45 28 2111 168

1 APPENDICES V 2 A MAvS 3 8 DESCRIPTlGN OF COMMON FACILITIES AREA 4 C DESCRIPTION OF SWITCHYARD AREA 5 D DESCRIPTION OF UNIT 1 AREA 6 E DESCRIPTION OF UNITS 2 AND 3 AREA 7 F CONSTRUCTION AGREEMENT 8 G OWNERSHIP AGREEMENT 9 H SAM ONOFRE UNITS 2 ANIf 3 LETTER AGREEMENT 10 I UNIT 1 OPERATING AGREEMENT 11 J PERMITS, LICENSES, AND MATERIAL EQUIPMENT AND SERVICE SUPPLIER'S AGREEMENTS LISTING 13 14 v 15 1, 2111 169 17 18 19 23 21 22 25 24 25 28 v

1 SAN ONOFRE " NITS 2 AND 3 PARTICIPATION AGREEMENT g 3 1. PARTIES: The Parties to this Participation Agreement 4 are: SOUTHERN CALIFORNIA EDISON COMPANY, a California 5 corporation (" Edison") ; SAN DIEGO GAS & ELECTRIC 6 COMPANY, a California corporation (" San Diego") ; CITY 7 OF RIVERSIDE, a municipal corporation of the State of 8 California (" Riverside"); and CITY OF ANAHEIM, a 9 municipal corporation of the State of California 10 (" Anaheim") ; individually " Party," collectively 11 " Parties." 12 2. RECITALS: This Participation Agreement is made with 13 reference to the following facts, among others: 14 2.1 Edison and San Diego presently own, as w 15 tenants-in-common, a nuclear generating station 18 located on a site of approximately 90 acres in the 17 northwest corner of the Marine Corps Base, Camp 18 Pendleton, California, and known as the San Onofre 19 Nuclear Generation Station (" San Onofre") . 20 2.2 Edison, Riverside, Anaheim, and the City of 21 Banning entered into the Settlement Agreement, dated 22 August 4, 1972, under which Edison offered to Riverside, 23 Anaheim, and the City of Banning participation in the 24 ownership and output of Units 2 and 3 at San Onofre. 25 2.3 Riverside and Anaheim by letters to Edison 20 dated April 8, 1977 and April 5, Sie* , respectively, s-2111 170

I have indicated their intent to participate in Units 2 2 and 3 at San Onofre in accordance with the terms and 3 conditions of the Settlement Agreement. 4 2.4 The Parties desire to provide in this 5 Participation Agreement the terms and conditions under 6 which Riverside and Anaheim participate in the 7 ownership and output of Units 2 and 3 at San Onofre. 8 3. AGREEMENT: The Parties agree as follows: 9 4. DEFINITIONS: When used herein, the following terms 10 shall have the following meanings: 11 4.1 Additional Generating Unit: Any facility 12 for the generation of electrical energy (including all 13 auxiliary and associated equipment) constructed or 14 installed at San Onofre other than Unit 1, Unit 2, or v 15 Unit 3 or generating facilities necessary for the le operation of Unit 1, Unit 2, or Unit 3. 17 4.2 Common Facilities: Those facilities which 18 will serve in connection with the operation and 19 maintenance of all of Units 1, 2, and 3 and which consist 20 of the administrative, warehouse and shop building, 21 including any associated facilities installed therein 22 for the use of all of Units 1, 2, and 3; the security 23 system; the sewage treatment plant; the microwave 24 facility; the common fencing and landscaping; the 25 environmental monitoring equipment; a portion of the 28 railroad spur track; the plant access roads; the N-2111 171

I probable maximum flood protection facilities; and such 2 other facilities as the Parties may agree upon from time 3 to time. 4 4.3 Common Facilities Area: The entire land 5 area covered by the Project Easements except for the 6 Unit 1 Area, the Units 2 and 3 Area, and the Switch-7 yard Area, as more fully described in Exhibit B and 8 shown in Exhibit A, both attached hereto. 9 4.4 Construction Agreement: The San onofre lo Units 2 and 3 Construction Agreement between Edison 11 and San Diego, dated May 24, 1973, as amended by 12 Amendment No.1 dated March 8,1977, attached hereto 13 as Exhibit F. 14 4.5 Construction Costs: Those costs described 15 by Sections 4.2 and 6.1 of the Construction Agreement. le 4.6 Coordinating Representatives: The repre-17 sentatives established pursuant to Section 7.1.1 of 18 the Construction Agreement. 19 4.7 Current Operating Capacity: The maximum 20 Units 2 and 3 output in kilowatts available to the 21 Edison Switchyard and San Diego Switchyard less the 22 simultaneous power required for operation of all 23 process and auxiliary equipment and systems used or 24 useful in connection with the operation and 25 maintenance of Units 2 and 3. 8 4.8 Edison Switchyard: The 220-kV switchrack 2111 172

I and related facilities at San Onofre connected to and

• " located north of the Interconnection Facilities 2

3 except for the power circuit breakers, transformer 4 side disconnect switches, conductors, structures, founda-5 tions, and dead-end assemblies associated with the main - 6 transformer leads and reserve auxiliary transformer leads, 7 or any environmental radiation monitoring equipment 8 installed therein. In addition, the controls associated 9 with the Edison Switchyard located in the Units 2 and 3 10 control-administration building are considered to be 11 part of the Edison Switchyard. 12 4.9 Generation Entitlement Share: The per-13 centage entitlement of each Party to the Net Energy 14 Generation and to the Current Operating Capacity. Each w 15 Party's such percentage entitlement to Units 2 and 3 16 shall be as follows: 17 4.9.1 Edison - 76.55 percent 18 4.9.2 San Diego - 20.00 percent 19 4.9.3 Riverside - 1.79 percent 20 4.9.4 Anaheim - 1.66 percent 21 4.10 Interconnection Facilities: The power 22 circuit breakers, conductors, bus support structures, 23 disconnect switches, current transformers, potential 24 transformers, relaying, metering, relaying and meter-25 ing interface cabinets and taps to the 220-kV buses 26 located in or associated with the bus sectionalizing 2111 173

1 position through which the Edison Switchyard and the 2 San Diego Switchyard are connected and the common air 3 conditioning unit and associated controls for the 4 relay houses. 5 4.11 Net Energy Generation: The energy 6 (kilowatthours) generated by Units 2 and 3 over any 7 period of time less the energy required for operation 8 of all process and auxiliary equipment and systems used 9 in connection with the operation and maintenance of 10 Units 2 and 3. 11 4.12 Nucl33r Fuel: Any special nuclear or 12 byproduct material as defined in the Atomic Energy Act 13 of 1954, as amended and as may be amended from time to 14 time, including irradiated fuel and radioactive waste w 15 and other products resulting directly or as a result is of reprocessing, possessed or utilized in connection 17 with Unit 2 or Unit 3, or produced or remaining as a 18 result of the operation of Unit 2 or Unit 3. Where 19 the term " supply of Nuclear Fuel" is used, it shall 20 mean and include arrangements with respect to all 21 aspects of the nuclear fuel cycle, including the mining, 22 milling, design and licensing, conversion, enrichment, 23 fabrica tion, transportation, reprocessing, storage and 24 disposal of Nuclear Fuel. 25 4.13 Nuclear Fuel Agreement: Any agreement 26 entered into by the Project Director (or Operating w

                                   -s-                    2111   174

1 Agent) for the supply of Nuclear Fuel, including, 2 without lLaitation, agreements for the purchase, sale, 3 lease, transfer, disposition, management, storage, 4 transportation, mining, milling, conversion, enrichment, 5 processing, design and licensing, fabrication, repro-6 cessing, and disposal of Nuclear Fuel. 7 4.14 Operating Agent: Edison, who, pursuant to 8 the San Onofre Units *2 and 3 Letter Agreement, is 9 designated the Company having responsibility for the 10 operation and maintenance of Unit 2 and Unit 3. 11 4.15 Ownership Agreement: The San Onofre 12 Ownership Agreement between Edison and San Diego, 13 dated October 5, 1967, and attached hereto as 14 Exhibit G. %s 15 4.16 Plant Site: An area of land used for the le major portion of San Onofre described in an easement 17 granted for such purpose by the United States to 18 Edison and San Diego on May 12, 1964 and recorded in 19 the Official Records, Office of the County Recorder of 20 San Diego County, in Series 5, Book 1964, Page No. 85887 21 as amended by the Amendment to Grant of Easement recorded 22 on July 6, 1977 in the Official Records, Office of the 23 County Recorder of San Diego County, in Book 1977, 24 Page No. 77-268984'. 25 4.17 Project Director: Edison, who, as agent for 28 San Diego, Riverside, and Anaheim, and as principal on its s-2111 175

1 own behalf, is designated the Party having the 2 responsibility for the performance and completion of 3 the " Project Work" under the Construction Agreement. 4 4.18 Project Easements: The interests acquired 5 under (1) three easements in favor of Edison and San 6 Diego granted by the United States of America, covering 7 respectively, the Plant Site, including the associated 8 exclusion area, the Access Road Area, and the Spur 9 Track Area, all recorded in the Official Records of 10 San Diego County and hereinafter sometime', referred to 11 respectively as the Plant Site Easement, the Access 12 Road Easement and the Spur Track Easement; (2) the 13 easement-lease covering the Off-Shore Land; (3) a 14 license granted to Edison and San Diego by the 15 Atchison, Topeka and Santa Fe Railway perfecting the 10 rights of Edison and San Diego for those portions of 17 the Access Road Area lying within the railroad right 18 of way; and (4) any Subsequent Acquisition; all initial 19 capitalized terms in this section shall have the 20 meanings defined in this Participation Agreement or, 21 if not defined herein, in the Ownership Agreement. 22 4.19 San Diego Switchyard: The 220-kV switchrack 23 and related faciL ties at San Onofre connected to and 24 located south of the Interconnection Facilities 25 except for the power circuit breakers, transformer 26 side disconnect switches, conductors, structures, w 2111 176

1 foundations, and dead-end assemblies associated 2 with the main transformer leads and reserve auxiliary 3 transformer leads, or any environmental radiation 4 monitoring equipment installed therein. 5 4.20 San Onofre Nuclear Generating Station 3 (" San Onofre"): The entire nuclear generating facility 7 located on a site of approximately 90 acres in the 8 northwest corner of the Marine Corps Base, Camp 9 Pendleton, California, cor..sisting of the Plant Site, 10 the Access Road Area, the Spur Track Area, and Off-11 Shore Land, any Subsequent Acquisitions, Unit 1, Unit 2, 12 Unit 3, the Common Facili ies, the Edison 13 Switchyard, the San Diego Switchyard, the Interconnection 14 w Facilities, and any Additional Generating Units subse-15 quently constructed or installed, as such terms are 10 defined in this Participation Agreement or, if not 17 defined herein, in the Ownership Agreement. 18 4.21 San Onofre Units 2 and 3 Letter Agreement: 19 The letter agreement between Edison and San Diego, 20 dated January 22, 1970 and ag' reed to by San Diego on 21 January 23, 1970, relating to the ownership, construc-22 tion, operation, maintenance, and use of Units 2 and 3, 23 and which is attached hereto as Exhibit H. 24 4.22 Switchyard Area: The land area covered by 25 the Project Easements and generally used for the Edison 26 Switchyard, the San Diego Switchyard, and the Inter-v _,_ 2111 177

I connection Facilities as more fully described in 2 Exhibit C and shown in Exhibit A, both attached hereto. 3 4.23 Unit 1: The first nuclear generating unit 4 at San Onofre currently rated at approximately 436 5 megawatts (net) of electric power and consisting of a 6 nuclear steam supply system, a turbine generator, and 7 all related equipment and facilities which are necessary 8 for the safe and efficient generation of electrical 9 energy including the power circuit breakers, transformer lu side disconnect switches, conductors, structures, 11 foundations, and dead-end assemblies installed in the 12 Switchyard Area and associated with the Unit 1 main 13 transformer ' leads and reserve auxiliary transformer 14 leads, but excluding the Common Facilities. v 15 4.24 Unit 1 Area: The. land area covered by 16 the Project Easements and generally used for Unit 1, 17 as more fully described in Exhibit D and shown in 18 Exhibit A, both attached hereto. 19 4.25 Unit 1 Off-Shore Land: That portion of the 20 Unit 1 Area designated as Parcel 2 in Exhibit A and 21 Exhibit D, both attached hereto. 22 4.26 Unit 1 Operating Agreement: The Amended 23 San Onofre Operating Agreement between Edison and 24 San Diego, dated July 30, 1970, as amended by Amendment 25 No. 1 to Amended San Onofre Operating Agreement dated 26 August 30, 1971, and tached hereto as Exhibit I.

 ~-

2111 178

1 4.27 Unit 2: The second nuclear generating 2 unit at San Onofre designed to generate approximately 3 1,100 megawatts (nat) of electric power and consisting 4 of a nuclear steam supply system, a turbine-generator 5 and all related equipment and facilities which are 6 necessary for ~ the safe and efricient generation of 7 electrical energy, including the power circuit breakers, 8 transformer side disconnect switches, conductors, 9 structures, foundations, and dead-end cssemblies installed 10 in the Switchyard Area and associated with the Unit 2 11 main transformer leads and reserve auxiliary transformer 12 leads, and that equipment necessary to connect Unit 2 13 with those facilities existing as part of Unit 1 and 14 s- those facilities that will be part of Unit 3, installed 15 on the Plant Site, but excluding the Common Facilities. 16 4.28 Unit 3: The third nuclear generating unit 17 at San Onofre designad to generate approximately 1,100 18 megawatts (net) of electric power and consisting of a 19 nuclear steam supply system, a turbine generator and all 20 related equipment and facilities which are necessary 21 for the safe and efficient generation of electrical 22 energy, including the power circuit breakers, transformer 23 side disconnect switches, conductors, structures, 24 foundations, and dead-end assemblies installed in the 25 Switchyard Area and associated with the Unit 3 main

. 28 transformer leads and reserve auxiliary transformer w

2111 179

I leads, and that equipment necessary to connect Unit 3 we 2 with those facilities that will be part of Unit 2, 3 installed on the Plant Site, but excluding the Common 4 Facilities. - 5 4.29 Units 2 and 3 Area: The land area 6 covered by the Project Easements and generally 7 used for Units 2 and 3, as more fully described in 8 Exhibit E and shown in Exhibit A, both attached hereto. 9 4.30 Units 2 and 3 off-shore Land: That portion of 10 the Units 2 and 3 Area designated as Parcel 2 in Exhibit A 11 and Exhibit E, both attached hereto. 12 4.31 Uranium Requirements: The most current 13 projection by calendar yehr of the quantity of natural 14 sa uranium U308 concentrates necessary for the refueling 1S of Unit 2 and Unit 3 for the remaining operating life 16 of the unit as developed by the Project Director (or 17 Operating Agent) and updated on an annual basis. 18 5. OWNERSHIP: Upon execution of this Participation Agreement: 19 5.1 Edison, San Diego, Riveraide, and Anaheim 20 shall own Units 2 and 3 as tenants-in-common in pro-21 portion to their respective Generation Entitlement 22 Shares. 23 5.2 Edison, San Diego, Riverside, and Anaheim 24 shall own the Common Facilities as tenants-in-cormon 25 as follows: 26 5.2.1 Edison shall own an undivided 77.12 w 2111 180

i 1 percent interest therein; 2 5.2.2 San Diego shall own an undivided 20.00 3 percent interest therein; 4 5.2.3 Riverside shall own an undivided 1.49 . 5 percent interest therein; and 6 5.2.4 Anah'eim shall own an undivided 1.39 7 percent interest therein. 8 5.3 Edison, San Diftre, Riverside, and Anaheim 9 chall have the following interests in the Project 10 Easements: 11 5.3.1 Edison shall have the following 12 undivided co-tenancy interests therein: 13 5.3.1.1 Unit 1 Area - 80.00% 14 v 5.3.1.2 Units 2 and 3 Area - 76.55% 15 5.3.1.3 Common Facilities Area - 77.124 le 5.3.1.4 Switchyard Area - 80.00% 17 5.3.2 San Diego shall have the following 18 undivided co-tenancy interests therein: 19 5.3.2.1 Unit 1 Area - 20.004 20 5.3.2.2 Units 2 and 3 Area - 20.004 21 5.3.2.3 Common Facilities Area - 20.00% 22 5.3.2.4 Switchyard Area - 20.004 23 5.3.3 Riverside shall have the following 24 undivided co-tenancy interests therein: 25 5.3.3.1 Unit 1 Area - 0.004 26 5.3.3.2 Units 2 and 3 Area - 1.79%

   ~-
                                         -12_             2111    18i

1 5.3.3.3 Common Facilities Area - 1.49% 2 5.3.3.4 Switchyard Area - 0.00% 3 5.3.4 Anaheim shall have the following 4 undivided co-tenancy interests therein: 5 5.3.4.I Unit 1 Area - 0.00% 6 5.3.4.2 Units 2 and 3 Area - 1.66% 7 5.3.4.3 Common Facilities Area - 1.39% 8 5.3.4.4 Switchyard Area - 0.00% 9 Where necessary, facilities associated with and 10 incidental to a specific portion of San Onofre may be 11 installed on or over any portion of the Plant Site. 12 6. TRANSFER OF RIGHTS AND OBLIGATIONS: 13 6.1 Edison hereby sells and Riverside and Anaheim 14 v each hereby purchase the respective ownership interest 15 of Riverside and Anaheim in that portion of Units 2 16 and 3 for which Edison has paid as of the date of 17 execution of this Participatlon Agreement. 18 6.2 Edison hereby sells and Riverside and Anaheim 19 each hereby purchase the respective ownership interest 20 of Riverside and Anaheim in that portion of the Common 21 Facilities for which Edison has paid as of the date of 22 execution of this Participation Agreement. 23 6.3 Upo'n receipt of payment pursuant to 24 Section 8.5, Edison shall assign to Riverside and 25 Anaheim their respective interests in the Project 26 Easements. Edison shall make initial contacts 2 l} }d2

I with the necessary persons and agencies concerning

'"    2  assignment of the Project Easements, after which Edison 3  and San Diego shall assist and cooperate with Riverside 4   and Anaheim in effecting such assignments; however, 5   Riverside and Anaheim shall have primary responsibility 6   for drafting and for taking other appropriate actions 7   to effect said assignments.      Assignment of the Project 8  Easements shall in no way affect Edison's and San Diego's 9  rights to install Additional Generating Units or other 10   facilities in the Switchyard Areas, the Unit 1 Area, 11   the Common Facilities Area, and any areas available 12   for future use, in which Riverside and Anaheim shall be 13 neither granted nor denied an ownership interest by 14 reason of any provision of this Participation Agreement.

v 15 6.4 Edison hereby assigns to Riverside an IC undivided 1.79 percent interest and to Anaheim an 17 undivided 1.66 percent interest in the Construction 18 Agreement as it pertains to Units 2 and 3. Edison 19 hereby assigns to Riverside an undivided 1.49 percent 20 interest and to Anaheim an undivided 1.39 percent 21 interest in the Construction Agreement cs it pertains 22 to Common Facilities. Riverside and Anaheim hereby 23 acquire all rights and assume all duties and obliga-24 tions of a " Company" under the Construction Agreement 25 applicable to their undivided interests therein. The 28 Construction Agreement shall be amended to provide for w O

                                     -t4-2111     182

1 Riverside's and Anaheim's acquisition of a portion of 2 Edison's rights and obligations under the construction 3 Agreement. Except as mutually agreed or except as 4 provided by this Participation Agreement, no 5 significant departures shall be made from the arrange-6 ments previously agreed to by Edison and San Diego and 7 set forth in the Construction Agreement; however, 8 Section 6.1.8 of the Construction Agreement shall be 9 amended to provide for payment by Riverside and 10 Anaheim of their proportionate shares of the adminis-11 trative and general expenses actually recorded by 12 Edison. Edison shall remain the Project Director. 13 Edison and San Diego shall cooperate with Riverside 14 %s and Anaheim in amending the Const'uction r Agreement; 15 however, Riverside and Anaheim shall have primary 16 responsibility for drafting contract language and 17 for performing other work necessary to amend the 18 Construction Agreement. 19 6.5 Edison, San Diego, Riverside, and Anaheim 20 shall own Units 2 and 3 and the Common Facilities under 21 obligations, terms and conditions no less favorable than 22 those set forth in the Ownership Agreement, as supple-23 mented by the San Onofre Units 2 and 3 Letter 24 Agreement, and those set forth herein. The ownership 25 Agreement shall be amended, and executed by the Parties, 26 to provide for Riverside 's and Anaheim's ownership i ~- 2111 184

1 interests as set forth in this Participation Agreement. 2 Except as mutually agreed or except as provided by 3 this Participation Agreement, no significant departures 4 shall be made from the arrangements previously agreed 5 to by Edison and San Diego and set forth in the 6 Ownership Agreement as supplemented by the San Onofre 7 Units 2 and 3 Letter Agreement. Edison and San Diego 8 shall cooperate with Riverside and Anaheim in amending 9 the ownership Agreement; however, Riverside and 10 Anaheim shall have primary responsibility for drafting 11 contract language and'for performing other work 12 necessary to amend the ownership Agreement. The 13 following facts shall be recognized by and 14 v incorporated in the amendment to the Ownership 15 Agreement: 16 6.5.1 Significant changes have occurred 17 in the description and location of certain facilities; 10 6.5.2 Unless agreed otherwise, Riverside 19 and Anaheim shall have no ownership interest, cost 20 responsibility, rights or obligations in Unit 1, the 21 San Diego Switchyard, the Edison Switchyard, nor the 22 Interconnection Facilities under this Participation 2 Agreement; 24 6.5.3 The definitions of the San Diego Switchyard, Edison Switchyard, Interconnection Facilities, Unit 1, Unit 2, Unit 3, Additional 2111 185 1 Generating Unit, Plant Site, and San Onofre Nuclear 2 Generating Station shall be amended to coincide with 3 the definitions contained in this Participation 4 Agreement; and 5 6.5.4 The Parties each reserve any rights which 6 they may have either by contract or by law, to participate 7 in any Additional Generating Unit; provided, however, that 8 Riverside and Anaheim shall be neither granted nor denied 9 participation rights by reason of any provision of this 10 Participation Agreement. 11 6.6 Edison, San Diego, Riverside, and Anaheim 12 shall negotiate in' good faith and execute an operating i 13 agreement covering the operation and maintenance of 14 Units 2 and 3. Except as mutually agreed or except as ss 15 provided by this Participation Agreement, said operat-16 ing agreement shall provide for the operation and 17 maintenance of Units 2 and 3 in substantially the same 18 manner and under substantially the same terms and 19 conditions as the Unit 1 Operating Agreement provides 20 for Unit 1 as supplemented by the San Onofre Units 2 21 N and 3 Letter Agreement. Edison shall be the Operating 22 Agent for Units 2 and 3. The Parties hereby appoint the 23 Operating Agent as their agent, and the Operating Agent 24 shall undertake as their agent and as principal on 25 its own behalf, to carry out the duties and responsi-26 bilities provided hereunder to be performed by it. 2111 186

1 6.7 Edison has or will install communication 2 facilities at locations other than San Onofre which 3 are required in the performance of its duties as 4 Operating Agent. Edison, San Diego, Riverside, and 5 Anaheim shall negotiate in good faith and execute an e off-site communication facilities agreement providing 7 for the allocation of costs associated with the 8 off-site communication facilities owned by the 9 operating Agent and required in the performance of 10 San onofre operation and maintenance fur.ctions. 11 6.8 Edison, San Diego, Riverside, and Anaheim 12 shall cooperate in identifying and in amending or i 13 assigning where necessary the permits, licenses and 14 material, equipment and service suppliers' agreements ss 15 held in connection with Units 2 and 3; however, Riverside le and Anaheim shall have primary responsibility for 17 drafting and for taking other appropriate actions to 18 effect such amendments and assignments of permits and 19 licenses. Edison shall have primary responsibility for 20 drafting and for taking other appropriate actions to 21 effect such amendments and assignments of material, 22 equipment and service suppliers' agreements. A listing 23 of said permits, licenses, and material, equipment and 24 service suppliers' agreements identified to date is 25 attached hereto as Exhibit J. 26 6.9 Except as provided otherwise herein, Edison

                                    -t8-2111   187

1 and San Diego agree, upon request of Riverside or Anaheim, '" to make, execute or deliver, as may be reascnably 2 3 required, any and all documents needed to implement or 4 effectuate the transfer of rights and obligations 5 provided for in this Participation Agreement. 6 6.10 Anaheim and Riverside each shall be entitled 7 to their proportionate share of the benefits of, and 8 shall each be boucd by and pay their proportionate share 9 of all costs and liabilities incurred by Edison in the 10 performance of its duties under, all material, equipment 11 and service suppliers' agreements entered into by 12 Edison or Edison and San Diego for the construction, 13 operation and maintenance of Units 2 and 3 and the 14 Common Facilities. Said benefits, costs and liabilities w 15 shall enure to or become the responsibility of 10 Anaheim and Riverside in their respective proportionate 17 shares regardless of whether Anaheim and Riverside or 18 either of them have become parties to such agreements. 19 7. COST RESPONSIBILITIES: 20 7.1 Riverside and Anaheim shall reimburse Edison 21 for all recorded costs and expenses (including ad valorem 22 taxes incurred by Edison and prorated as of November 1, 23 1977, Construction Costs including costs of the Units 2 24 and 3 Off-Shore Land, Edison's allowance for funds used 25 during construction, and administrative and general 28 expenses) expended on or prior to the date hereof by w 2111 188

1 Edison on its own behalf in connection with Units 2 2 and 3 as follows: s 7.1.1 Riverside shall reimburse Edison for 4 2.2375 percent of such costs and expenses; and 5 7.1.2 Anaheim shall reimburse Edison for 6 2.0750 percent of such costs and expenses. 7 7.2 Riverside and Anaheim shall reimburse Edison 8 for the reproduction costs new (including applicable 9 overheads, allowance for funds used during construction, 10 and administrative and general expenses) less depre-11 ciation of Common Facilities paid for by Edison and San 12 Diego on or prior to the date hereof as follows: 13 7.2.1 The total amount of the reproduction 14 cost new less depreciation of such Common Facilities v 15 as of the date hereof shall be deemed to be 16 $8,600,000.00; 17 7. 2. 2. Riverside shall reimburse Edison for 18 1.49 percent of such total amount; and 19 7.2.3 Anaheim shall reimburse Edison for 20 1.39 percent of such total amount. 21 7.3 Construction Costs associated with Units 2 22 and 3 incurred subsequent to the date hereof shall be 23 borne by the Parties as follows: 24 7.3.1 Edison shall bear 76.55 percent of 25 such costs; 28 7.3.2 San Diego shall bear 20.00 percent w

                                     ~ *~

2\\\ \89

1 of such costs; '" Riverside shall bear 1.79 percent of 2 7.3.3 3 such costs; and 4 7.3.4 Anaheim shall bear 1.66 percent of 5 such costs. e 7.4 Construction Costs associated with Common 7 Facilities incurred subsequent to the date hereof 8 shall be borne by the Parties as follows: 9 7.4.1 Edison shall bear 77.12 percent of 10 such costs; 11 7.4.2 San Diego shall bear 20.00 percent 12 of such costs; 13 7.4.3 Riverside shall bear 1.49 percent 14 of such costs; and 15 7.4.4 Anaheim shall bear 1.39 percent of 16 such costs.' 17 7.5 Costs of all Project Easements, except for the 18 Plant Site easement, the Unit 1 off-shore Land easement-19 lease, and the Units 2 and 3 Off-Shore Land easement-20 lease, incurred subsequent to the date hereof shall be 21 borne by the Parties as follows: 22 7.5.1 Edison shall bear 77.12 percent of 23 such costs; 24 7.5.2 San Diego shall bear 20.00 percent of 25 such costs; 28 7.5.3 Riverside shall bear 1.49 percent of s. 2111 190

1 such costs; and 7.5.4 Anaheim shall bear 1.39 percent of 2 3 such costs. 4 7.6 Costs of the Plant Site easement incurred 5 subsequent to the date hereof shall be borne by the , 6 Parties as follows: 7 7.6.1 Edison shall bear 77.8915 percent of 8 such costs; 9 7.6.2 San Diego shall bear 20.0000 percent of 10 such costs; 11 7.6.3 Riverside shall bear 1.0921 percent 12 of such costs; and 13 7.6.4 Anaheim shall bear 1.0164 percent of 14 such costs. v 15 7.7 Costs of the Units 2 and 3 off-Shore Land 16 easement-lease incurred subsequent to the date hereof 17 shall be borne by the Parties as follows: 18 7.7.1 Edison s, hall bear 76.55 percent of 19 such costs; 20 7.7.2 San Diego shall bear 20.00 percent of 21 such costs; 22 7.7.3 Riverside shall bear 1.79 percent of 23 such costs; and 24 7.7.4 Anaheim shall bear 1.66 percent of 25 such costs. 26 7.8 Costs of the Unit 1 Off-Shore Land easement-lease w 2111 191

1 Lecurred subsequent to the date hereof shall be borne 2 by the Parties as follows: , 3 7.8.1 Edison shall bear 80.00 percent of 4 such costs: 5 7.8.2 San Diego shall bear 20.00 percent of 6 such costs; 7 7.8.3 Riverside shall bear 0.00 percent of 8 such costs; and 9 7.9.4 Anaheim shall bear 0.00 percent of 10 such costs. 11 7.9 If, pursuant to Section 5.3, facilities 12 associated with and incidental to a specific portion 13 of San Onofre are installed on or over any portion of 14 the Plant Site not designated for such use and if ,a 15 the Coordinating Committee established under the 16 Construction Agreement or the Board of Review to be 17 established under the operating agreement for Units 2 & 3 18 determines'that such installation significantly alters the 19 benefits derived from the Project Easements by each of the 20 Parties, the Parties shall amend Sections 7.5, 7.6, 7.7 21 and 7.8, hereof, or the definitive agreement which 22 supersedes such Sections. 23 7.10 Riverside and Anaheim shall reimburse 24 Edison for the acquisition, rental, and developmental 25 expenses incurred by Edison on its own and San Diego's 20 behalf in connection with San Onofre land rights w 21i1 92

1 (other than the Units 2 and 3 off-Shore Land rights, \" the cost of which shall be considered a Construction 2 3 Cost under Section 7.1, hereof) as follows: 4 7.10.1 The amount of such expenses is 5 deemed to be $1,366,300.00; 6 7.10.2 Riverside shall reimburse Edison 7 for 1.1651 percent of such amount; and 8 7.10.3 Anaheim shall reimburse Edison for 9 1.0836 percent of such amount. 10 7.11 Except for costs incurred in necotiating 11 and preparing this Participation Agreement and the 12 definitive Project Agreements among Edison, San Diego, 13 Riverside, and Anaheim, Riverside and Anaheim shall 14 reimburse Edison and San Diego for all costs incurred w 15 by each of them to effect Riverside's and Anaheim's le participation in Units 2 and 3 as follows: 17 7.11.1 Riverside shall reimburse Edison and 18 San Diego for 50 percent of such costs; and 19 7.11.2 Anaheim shall reimburse Edison and 20 San Diego for 50 percent of such costs. 21 7.12 Except as mutually agreed or except as 22 provided by Section 11 hereof, operation and maintenance 23 costs and expenses shall be borne by the Parties in 24 proportion to their respective ownership interests in 25 the facility for which such costs and expenses are 20 incurred. v 2111 193

1 8. BILLING AND PAYMENT: 2 8.1 Edison shall submit to each of Riverside 3 and Anaheim, upon or subsequent to execution of this 4 Participation Agreement, an invoice for the amount of 5 those costs and expenses covered by Section 7.1. O Rivarside and Anaheim shall pay the invoice amount to 7 Edison within fiftaen (15) days after receipt of 8 such invoice. 9 8.2 Edison shall bill, and Riverside and Anaheim - 10 shall pay, those costs covered by Sections 7.3 and 7.4 11 in the manner presently used between Edison and San 12 Diego and set forth in Sections 6.7 and 6.9 cf the 13 Construction Agreement. 14 8.3 Until such time as the Project Easaments are w 15 assigned pursuant to Section 6.3 and arrangements are 10 made to provide for direct payment by Riverside and 17 Anaheim to the agencies issuing easements and until-18 such time as all assessments and taxes for which 19 Riverside and Anaheim are responsible pursuant to 20 Section 12.1 are assessed and levied directly against 21 Riverside and Anaheim, Edison shall bill Riverside and 22 Anaheim for their proportionate share of costs covered. 23 by Sections 7.5, 7.6, 7.7, and 12.1. Such billing shall 24 be made on or before 20 days prior to the date said cost, 25 assessment or tax becomes due to the issuing agency 28 or taxing authority. Riverside and Anaheim shall 2111 194

1 pay to Edison the amouct specified by such billing 2 prior to the date said coct becomes due to the 3 issuing agency or taxing authority. 4 8.4 Riverside and Anaheim shall pay to Edison 5 the amounts set forth in Section 7.2 and Section 7.10 6 within ten days after execution of this Participation 7 Agreement. 8 8.5 Edison and San Diego shall submit to River-9 side and Anaheim, no more frequently than monthly, 10 invoices for the amount of costs covered by Section 7.11. 11 Riverside and Anaheim shall pay the invoiced amount to 12 Edison and San Diego within fifteen (15) days after 13 receipt of such invoice. 14 8.6 Edison shall bill, and Riverside and Anaheim 15 shall pay, all operation and maintenance costs in the 16 manner to be set forth in the operating agreement 17 executed pursuant to Section 6.6, hereof. 18 8.7 Payments not made to Edison and/or San Diego 19 by Riverside and Anaheim on or before the due date 20 shall be payable with interest accrued at the rate of 21 ten percent (10%) per annum or the maximum legal rate 22 of interest, whichever is less, computed from the due 23 date to the date payment is received by Edison and/or 24 San Diego. 25 9. ADMINISTRATION: 28 9.1 As a means of securing effective cooperation v 2111 195

1 and interchange of information, Riverside and Anaheim 2 shall, within ten days after the execution of this 3 Participation Agreement, designate representatives in 4 accordance with Section 7 of the Construction 5 Agreement. 6 9.2 The representatives of Riverside and Anaheim 7 appointed pursuant to Section 9.1 shall have the rights 8 and obligations set forth in Section 7 of the 9 Construction Agreement; provided, however, that the 10 representation of Riverside and Anaheim shall not be 11 effective until such time as Riverside and Anaheim 12 begin paying funds pursuant to Section 8. 13 10. LIABILITY AND INSURANCE: 14 10.1 This Participation Agreement shall be 15 deemed to be a " Project Agreement" under the le Construction Agreement and the provisions of Section 8, 17 Project Insurance, and Section 9_, Liability, of the 18 Construction Agreement shall apply except as follows: 19 10.1.1 The term " Company" or " Companies," 20 when used in Sections 4.33, 8 and 9 of the Construction 21 Agreement, shall include Edison, San Diego, Riverside, 22 and Anaheim. 23 10.1.2 The percentages to be paid or shared 24 as set forth in Sections 9.5 and 9.7 of the Construction Agreement shall be changed to the following: 10.1.2.1 Edison - 76.55%: v 2111 196

I 10.1.2.2 San Diego - 20.001: %" 2 1.79%; and 10.1.2.3 Riverside - 3 10.1.2.4 Anaheim - 1.66%. 4 10.2 Riverside and Anaheim shall be added as 5 named insureds on those policies of insurance presently 6 in effeet pursuant to Sections 8.1.1 and 8.3.1 of the 7 onstruction Agreement. 8 10.3 Riverside and Anaheim shall each make 9 application to Nuclear Mutual, Ltd., to become member 10 insureds under the policies of insurance presently in 11 effect for San Onofre Units 2 and 3 for (i) all risk-12 builders' risk insurance covering loss or damage to 13 project work under course of construction and (ii) 14 nuclear property damage insurance. sa 15 10.3.1 If such application is accepted, 16 Riverside and Anaheim shall, through the Project 17 Director (or Operating Agent) , obtain and maintain said 18 insurance coverage in effect during their participation 19 in the ownership of San Onofre Units 2 and 3. 20 10.3.2 If such application is not accepted, 21 Riverside and Anaheim shall each for itself secure and 22 maintain in effect said insurance coverage from the 23 Nuclear Energy Liability-Property Insurance Association 24 and the Mutual Atomic Energy Reinsurance Pool or their

  ^5 equivalent.

20 10.4 Riverside and Anaheim hereby release w 2111 197

1 Edison and San Diego from any and all liability to Riverside 2 and Anaheim or either of them resulting from damage to or 3 loss or use of Units 2 and 3 which is caused by or is a 4 result of the construction, operation or maintenance of 5 Uni'.1, the Ed3 3cn Switchyard, the San Diego Switchyard, the 6 Interconnection Facilities, or any Additional Generating 7 Units. Edison and San Diego hereby release Riverside and 8 Anaheim from any and all liability to Edison and San Diego 9 or either of them resulting from damage to or loss of use of 10 Unit 1, which is caused by or is the result of the construc-11 tion, operation or maintenance of Units 2 or 3, or any 12 Additional Generating Units. Except as otherwise provided 13 in Section 9.3 of the Construction Agreement, the terms of 14 this Section 10.4 are not applicable where a Party has com-w- 15 mitted Willful Action as defined in Section 4.33 of the 16 Construction Agreement. 17 11. NUCLEAR FUEL: 18 11.1 Supply of Nuclear Fuel: Except as providc1 in 19 Section 11.3, the Project Director (or Operating Agent) 20 shall make all arrangements for the supply of Nuclear Fuel 21 consistent with the Nuclear Fuel Budget most recently 22 adopted by the Coordinating Representatives. In doing so, 23 the Project Director (or Operating Agent), acting as princi-24 pal on its own behalf and as agent for the other Parties 25 shall negotiate, execute, administer, perform and enforce 28 Nuclear Fuel Agreements as it deems necessary or appropriatc , w _2,_ 2111 198

1 All proposed Nuclear Fuel Agreements shall be submitted to 2 the Coordinating Representatives (or other representatives 3 established by the operating agreement for Unit 2 and Unit 4 3) for approval, or'for the purpose of informing the Coordi-5 nating Representatives if their approval is not required, 6 prior to execution; provided, that any Nuclear Fuel Agree-7 ment may be executed by the Project Director (or Operating 8 Agent) without its being submitted to the Coordinating 9 Representatives so long as obligations of the Parties pur-10 suant to such Nuclear Fuel Agreement are within and consis-11 tent with the nuclear fuel budget most recently adopted by 12 the Coordinating Representatives (or other representatives 1.5 established by the operating agreement for Unit 2 and Unit 14 ,, 3). The Project Director (or Operating Agent) shall prompt-15 ly furnish each Party with copies of all Nuclear Fuel Agree-le ments executed as agent for such Party. If the Coordinating 17

      .:apresentatives (or other representatives established by the 18 operating agreement for Unit 2 and Unit 3) are unable or 19 fail to reach unanimous approval of a Nuclear Fuel Agreement       ,

20 any Party may call for submission of the matter to arbitra-21 tion in accordance with Section 12.1 of the Construction 22 Agreement (or such other section as may be provided in the 23 operating agreement for Unit 2 and Unit 3). Pending the

  '4
  ~

final decision of the arbitrator, the Project Director (o r 25 Operating Agent) is authorized and obligated to take such 26 action with respect to the supply of Nuclear Fuel as in its v 2111 199 1 discretion is necessary.

• " 11.2 Costs and Financing of Nuclear Fuel: 'Except as 2

3 Provided in Section 11.3 and 11.4, all costs incurred by the 4 Project Director (or Operating Agent) in connection with the 5 Nuclear Fuel shall be shared by each Party in propor-e tion to its Generation Entitlement Share. The costs of 7 Nuclear Fuel shall include: (i) all costs incurred and pay-8 ments made by the Project Director (or Operating Agent) pur-9 suant to any Nuclear Fuel Agreement; and (ii) all other costs 10 and expenses not a part of a Nuclear Fuel Agreement incurred 11 by the Project Director (' o r Operating Agent) in connection 12 with: (a) the receiving, storing, and handling of fuel as-13 semblies at the Plant Site; (b) the shipment of fuel assem-14 blies from the Plant Site; and (c) the acquisition, engineer - w 15 ing, and fuel mancgement of Nuclear Fuel. Each Party shall le own an undivided interest in all Nuclear Fuel equal to its 17 Generation Entitlement Share, and may determine its own 18 method of financing its share of costs and expenses associ-19 ated with such interest, provided that no Party shall enter 20 into any arrangement which imposes any obligation upon any 21 other Party or restricts or limits the rights of the other 22 Parties to finance the costs associated with their respec-23 tive undivided interests. A Party may sell or assign all or 24 part of its interest in Nuclear Fuel to any person or entity 25

     .(" Fuel Lessor") for leaseback to such Party subject to the 26 conditions that: (i) the Fuel Lessor shall waive irrevocably w

2111 200 I all right to partition of such Nuclear Fuel; (ii) such Party 2 shall indemnify all other Parties against any costs or ex-3 penses incurred by them because of such Party's sale and 4 leaseback of its interest in Nuclear Fuel. 5 11.3 Special Provisions Regarding tho Supply and 6 Cost of Uranium Concentrates: 7 11.3.1 Any Party may elect to provide 8 directly all or a portion of its share of natural 9 uranium U300 concentrates not covered by an existing 10 Nuclear Fuel Agreement entered into in accordance with 11 Section 11.1; provided, however, that the maximum quantity 12 so supplied by a Party shall be no greater than the 13 product of its Generation Entitlement Share and the 14 w Uranium Requirements and that the minimum quantity so 15 supplied by a Party in any single delivery shall be not 18 less than the minimum quantity specified in Nuclear Fuel 17 Agreement (s) for conversion services (currently 20,000 lbs. 18 0308 Net). 19 11.3.2 An election by any Party to provide 20 natural uranium U308 concentrates shall, in each 21 instance, be communicated to the Project Director (or 22 Operating Agent) sufficiently in advance so as not to 23 interfere in any way with the Project Director's (or 24 Operating Agent's) performance of its responsibilities 5 under Section 11.1, and such an election shall not be 6 allowed when submitted after the Project Director (or w _32_ 21ii 201

1 Operating Agent) has begun, pursuant to an authorized 2 nuclear fuel budget, to arrange for the supply of such 3 natural uranium U308 concentrates. 4 11.3.3 Once the Project Director (or 5 Operating Agent) has acknowledged a Party's election to e provido natural uranium U308 concentrates, such Party 7 shall be responsible for providing and delivering such 8 natural uranium U308 concentrates, and shall extend its 9 best efforts to fulfill such responsibility. 10 11.3.4 If, subsequent to any Party's 11 election to supply natural uranium U308 concentrates 12 pursuant to Sections 11.3.1 and 11.3.2, the Uranium 13 Requirements for Unit 2 or Unit 3 change due to fuel 14

  ,,        management decisions by the Project Director (or 15 Operating Agent), operating circumstances, decisions, 10 or consequences, government enrichment policies, or the 17 availability of recycle uranium and/or plutonium, then 18 such Party shall be responsible for supplying a pro-19 portionate amount of any increased Uranium Requirements, 20 or inventorying a proportionate amount of any decreased ol Uranium Requirements.

22 11.3.5 Where a Party chooses to provide its 23 own natural uranium U308 concentrates, it shall bear "4 the costs of such, and such costs shall not be included os

      ~

in the costs te be shared pursuant to Section 11.2. With respect to the Parties not choosing to provide their own w 2111 202

1 natural uranium U308 concentrates, the Project Director 2 (or Operating Agent) shall provide such uranium concentrates 3 as part of the supply of Nuclear Fuel, and the cost of 4 providing such shall be shared by such Parties in 5 proportion to their Generation Entitlement Shares. e 11.4 Evidence of Supply of Uranium Concentrates: 7 It is recognized that failure of any Party to fulfill 8 the responsibilities provided in Sections 11.1 or 11.3 could 9 delay the availability of fuel and thus impair operation 10 of Unit 2 or Unit 3. Accordingly, the following pro-11 visions are adopted to assure the timely and dependable 12 availability of all natural uranium U308 concentrates 13 required for Unit 2 and Unit 3: 14 s., 11.4.1 One year prior to each date on which 15 natural uranium U308 concentrates are scheduled by the 16 Project Director (or Operating Agent) to be delivered 17 for conversion, the Project Director (or Operating 18 Agent) shall notify all Parties of the quantity and speci-19 fications of natural uranium U308 concentrates required, 20 the date on which delivery is required, and the place at 21 which delivery is required to'be made and the quantity 22 which each Party has a responsibility to deliver. Within 23 one month of such notification, each Party shall provide 24 the Project Director (or Operating Agent) and the Coordinat-25 ing Representatives with evidence that the Party has firm 26 commitments for providing the required quantity and quality w 2111 203 1 of natural uranium U308 concentrates on or before the ~ 2 specified delivery dates. 3 11.4.2 If the Project Director (or Operating 4 Agent) reasonably concludes that any such Party 5 (" deficient Party") has not provided satisfactory e evidence as required by Section 11.4.1, the Project 7 Director (or Operating Agent) shall proceed to acquire 8 and arrange for the delivery of the quantity of such 9 uranium concentrates required to be provided by the 10 deficient Party; the actual costs of acquiring such 11 natural uranium U308 concentrates shall be billed to 12 the deficient Party as incurred (or invoiced) and paid 13 within five days after receipt of each such bill (o r , 14 where an invoice instead of a bill is provided to the 15 deficient Party, within the time provided by the invoice). 16 The Project Director (or Operating Agent) shall make a 17 reasonable effort to acquire such natural uranium U308 18 concentrates on terms which are reasonable in the 19 commercial context which exists at the time of the 20 acquisition; however, neither the Project Director (o r 21 Operating Agent) nor any Party shall have any obligation 22 to supply such material f rom its own inventories of or 23 rights to natural uranium U308 concentrates or to af ford 24 the deficient Party access to the benefits of any 25 favorable buriness opportunities available to the Project Director (or Operating Agent) or any other Party; w 2111 204

I and, provided further that no Party shall incur any 2 liability to any other Party as a result of carrying out 3 the provisions of this Section 11.4 except as provided 4 herein. 5 11.4.3 If at any time after the provisions 6 of Section 11.4.1 have been complied with, the Project 7 Director (or Operating Agent) reasonably concludes that 8 a Party's ability to provide natural uranium U308 9 concentrates specified in a notice pursuant to section 10 11.4.1 is in doubt, the Project Director (or Operating 11 Agent) shall so notafy the deficient Party. If within 12 15 days af ter receipt of such notice the deficient Party 13 has not provided reasonable assurance of its ability to 14 w provide such natural uranium U308 concentrates, the 15 Project Director (or Operating Agent) may implement the 16 provisions of Section 11.4.2. If a Party actually fails 17 to make a delivery required by a notice pursuant to 18 19 Section 11.4.1, the Project Director (or Operating Agent) may, upon 24 hours notice to such Party, and at 20 21 the deficient Party's sole cost, acquire and arrange for delivery of such natural uranium U300 concentrates on 22 any terms which may be immediately available. 23 11.4.4

  '4 If the Project Director (or Operating Agent) 25               is unable to acquire and arrange for delivery of 26     natural uranium U308 concentrates to cover a deficient Party's commitment, and as a result the available cycle

. { _,,_ 2111 205

1 energy in the succeeding cycle is less than it would have been had b there been a full supply of natural uraniu:n U308 concentrates, then the 2 3 deficient Party shall be subjected to an appropriate reduction in its 4 entitlement to the Net Energy Generation durig such cycle. 5 11.4.5 Wi2 respect to Sections 11.4.2,11.4.3, ard 11.4.4; e if the Coordinatig Pepresentatives reasonably conclude that the 7 ability of the Project Director (or Operating Agent) actim as princi-8 pal on its own behalf to provide natural uranium concentrates which it 9 is obligated to provide is in doubt, then the determinations and 10 actions assigned to the Project Director (or Operating Agent) by 11 those sections shall be assumed by the Coordinating Representatives. 12 In this case the representative of the Project Director 13 (or Operating Agent) shall not be entitled to vote on 14 the determinations, approvals or actions under w 15 consideration. 16 11.5 Advancement of Funds for Nuclear Fuel: 17 Except as provided in Section 11.3 and 11.4, each Party 18 shall pay to the Project Director (or Operating Agent) 19 its proportionate share of the total amount due for the 20 purchase of Nuclear Fuel for Unit 2 and Unit 3 in advance 21 of the dates on which payments therefor by the Project 22 Director (or Operating Agent) become due under any Nuclear 23 Fuel Agreement. The operating agreement for Unit 2 and 24 Unit 3 shall include detailed p scedures for the payment i 25 of Nuclear Fuel related costs, including procedures for the 28 allocation of costs of Nuclear Fuel where electric energy Y 2111 206 17 -

1 delivered to the account of one or ::cre Parties differs frcm the

~

2 respective Generation Entitlement Shares. 3 11.6 Procedures for Control of the Supply of Nuclear Fuel: By 4 January 1,1978 and on each October 31 thereaf ter until wrk related to 5 the supply of Nuclear Fuel has been c cleted (or mtil temination " 6 of the ownership Agreement, whichever :ecurs sooner), the Project 7 01 rector (or Operating Agent) shall submit to the Coordinating Repre-8 centatives (or other representatives established by the operating agem- l 9l ment for Unit 2 aM Unit 3) for review and approval, modification, or 10 other action a revised nuclear fuel badget effective as of the succeading 11 January 1 in fom and content approved by *te Coordinating Representa-12 tives, divided by calendar quarter for the sucmeding two years and by 13 calendar year for at least the third, fourth, aM fifth succeeding 14 v years (and for such additional succeeding years as the Project Director 15 (or Operating Agent) may, in its discretion, provide) . 16 11.7 Information: The Project Director (or Operating Agent) shall 17 keep the parties full and prmptly informed as to significant matters 18 involvirg the supply of Nuclear Fuel. 19 11.8 Additional Matters: The parties recognize 20 that additional matters with respect to the supply of 21 Nuclear Fuel, not provided for in the preceding sections 22 of this Section 11, may require additional agreement 23 between the Parties and agree to negotiate with respect 24 to such additional matters as part of the San Onofre 25 Units 2 and 3 Operating Agreement or as a separate 26 agreement. - i w 2111 207

1 12. TAXES: 2 12.1 All taxes or assessments levied against each 3 ' Party's ownership or beneficial interest in San Onofre, 4 excepting those taxes or assessments levied against an 5 individual Party in behalf of any or all of the other 6 Parties, shall be the sole responsibility of the Party upon 7 whose such ownership said taxes or assessments are 8 levied. 9 12.2 The Parties shall use their best efforts to 10 have any taxing authority imposing any assessments, 11 property taxes or other taxes, excluding any 12 sales or use taxes, assess and levy such taxes and 13 assessments directly against the Party responsible 14 for such tax or assessment. 15 12.3 Except as provided in Section 12.4, Riverside 16 shall reimburse Edison or San Diego for any and all taxes 17 which are levied on Edison or San Diego as a result of the 18 transfer to Riverside of a portion of Edison's ownership 19 interests in Unit 2, Unit 3, or the Common Facilities. 20 Except as provided in Section 12.4, Anaheim shall reimburse 21 Edison or San Diego for any and all taxes which are levied 22 on Edison or San Diego as a result of the transfer to 23 Anaheim of a portion of Edison's ownership interests in 24 Unit 2, Unit 3, or the Common Facilities. 25 12.4 Taxes described in Section 12.3 shall not 26 include any tax on capital gains which may result from 2111 208 I the transfer to Anaheim and Riverside. 2 13. RELATIONSHIP OF PARTIES: 3 13.1 The covenants, obligations and liabilities 4 of the Parties under this Participation Agreement are 5 intended to be several and not joint or collective, . 6 and nothing herein contained shall ever be construed 7 to create an association, joint venture, trust or 8 partnership, or to impose a trust or partnership 9 covenant, obligation or liability on or with regard to 10 any of the Parties. Each Party shall be individually 11 responsible for its own covenants, obligations and 12 liabilities as herein provided. No Party shall be under 13 the control of or shall be deemed to control another 14 Party. No Party shall have a right or power to bind v 15 another Party without its express written consent, 16 except as expressly provided in 'his Participation 17 Agreement. 18 13.2 The Parties hereby elect to be excluded from 19 the application of Subchapter "K" of Chapter 1 of 20 Subtitle "A" of the Internal Revenue Code of 1954 or 21 such portion or portions thereof as may be pe:..nitted or 22 authorized by the Secretary of the Treasury or his 23 delegate insofar as such subchapter, or any portion 24 or portions thereof, may be applicable to the Parties 25 under this Participation Agreement. 26

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1 14. TERMINATION:

*'                 14.1   Riverside or Anaheim may withdraw from 2

3 iarticipation in San Onofre and terminate this Partici-4 pation Agreement if, after using its best efforts, it 5 is unable to obtain any required approval from regula-e tory and other authorities. In the event of termination 7 by a Party pursuant to this Section 14.1 and if 8 construction of Units 2 and 3 is not continued by the 9 other Parties, the accumulated Construction Costs and 10 all other costs incurred by the terminating Party in 11 connection with San Onofre prior to the date of 12 termination shall be borne by such terminating Party. 13 If construction of Units 2 and 3 is continued by 14 the other Parties, Edison shall acquire the terminating v 15 Party's interest in San Onofre and shall reimburse such 16 terminating Party for its incurred Construction Costs 17 (including its allowance for funds used during 18 construction but excluding those costs covered by 19 Section 7.11 and the terminating Party's own administra-20 tive and general expenses). 21 14.2 Prior to such time as the Construction 22 Agreement is amended pursuant to Section 6.4, 23 and prior to the initial operation of Unit 2, this 24 Participation Agreement may be terminated in the manner 25 and for the reasons set forth in Section 17 of the Con-20 struction Agreement. v

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1 14.3 When Edison believes the obligations of

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2 this Participation Agreement have been met, Edison shall 3 serve notice of that fact upon the other Parties. If 4 none of the Parties objects and notifies the other Parties 5 of such objection within 60 days af ter receipt of such 6 notice, this Participation Agreement shall then 7 terminate. 8 15. ADDITIONAL GENERATING UNITS: 9 15.1 The Parties each reserve any rights which 10 they may have, either by contract or by law, to 11 participate in any Additional Generating Unit; provided, 12 however, that Riverside and Anaheim shall be neither 13 granted nor denied participation rights by reason of 14 any provision of this Participation Agreement. v 15 15.2 If Additional Generating Units are construc-10 ted, interests in the Project Easements shall be 17 reallocated among the participants such that each 18 participant's interest in the land area used for a 19 specific unit or facility is the same as that partici-20 pant's interest in the unit or facility occupying such 21 land area; cost responsibilities for each Project Ease-22 ment, including cost responsibilities for past 23 acquisition, rental, and developmental expenses of such 24 easement, shall be reallocated on the basis of each 25 participant's interest in each of the units or 26 facilities occupying such easement and the proportionate w 2k 2

V 1 land areas occupied by each unit or facility on such 2 easement. Interests in and cost responsibilities for 3 the Common Facilities shall be reallocated among the 4 participants of all the units at San Onofre on the basis 5 of the rated operating capacity of each unit and the 6 reproduction cost new, less depreciation for said 7 Common racilities. 8 16. UNCONTROLLABLE FORCES: No Party shall be considered 9 to be in breach of any of the obligations hereunder, 10 other than the obligation to pay money, to 11 the extent failure of performance shall be due to an 12 uncontrollable force. The term " uncontrollable force" 13 shall mean any cause beyond the control of a Party 14 unable to perform such obligation, including, but not w 15 limited to, failure of facilities, flood, earthquake, 10 storm, fire, lightning, and other natural catastrophies, 17 epidemics, war, riot, civil disturbance, labor dispute, 18 sabotage, government priorities, restraint by court 19 order or public authority, and action or non-action by 20 or inability to obtain the necessary authorizations or 21 approvals from any government agency or authority, 22 which by exercise of reasonable diligence and foresight 23 such Party could not reasonably have been expected to 24 avoid and which by exercise of reasonable diligence it 25 has been unable to overcome. Any Party rendered unable 26 to fulfill any obligation by reason of an uncontrollable v 2111 212

I force shall exercise due diligence to remove such 5' 2 inability with all reasonable dispatch. Nothing 3 contained herein shall be construed so as to require a 4 Party to settle any strike or labor dispute in which it 5 may be involved. 6 17. NOTICES: All notices under this Participation , 7 Agreement shall be in writing and shall be delivered 8 in person or sent by registered or certified mail to 9 the applicable of the following addressees: 10 Southern California Edison company c/o Secretary 11 P. O. Box 800 Rosemead, California 91770 12 San Diego Gas & Electric Company 13 c/o Vice President, Project Management P. O. Box 1831 14 San Diego, California 92112 ss 15 City of Riverside c/o Public Utilities Director le 3900 Main Street

• Riverside, California 92522 17 City of Anaheim 18 c/o Utilities Director P. O. Box 3222 19 Anaheim, California 92803 20 By notice sen'. to the other Parties, any Party may 21 designate different persons or different addresses for 22 the giving of notices hereunder.

23 18. ARBITRATION: If the Parties, acting through their 24 respective Coordinating Representatives, are unable 25 to reach agreement with respect to a matter herein 28 specified to be approved, established, determined, or 2}ll 2l}

1 resolved by agreement of the Psrties, any Party may 2 call for submission of such matter or dispute to 3 arbitration in the manner set forth in Section 12 of 4 the Construction Agreement, which call shall be 5 binding upon the other Party or Parties to the dispute. 6 The Project Director shall continue to do all things 7 and make all expenditures necessary pending the final 8 decision of the arbitrator. 9 19. MISCELLANEOUS PROVISIONS: 10 19.1 Edison shall, within twelve (12) months 11 after receipt of payment pursuant to Section 8.1, 12 procure a release of the interests transferred pur-13 suant to Section 6.1 from the lien of Edison's trust 14 ~ indenture and deliver to Riverside and to Anaheim a 15 bill of sale covering Riverside's and Anaheim's le respective ownership interests in such portion of Units 17 2 and 3. 18 19.2 Edison shall, within twelve (12) months 19 af ter receipt of payment pursuant to Section 8.5, 20 procure a release of the interests transferred pursuant 21 22 to Section 6.2 from the lien of Edison's trust indenture 23 and deliver to Riverside and to Anaheim a bill of sale 24 covering Riverside's and Anaheim's respective ownership interests in such portion of the Common Facilities. 25 19.3 26 The Parties agree to negotiate in good faith and to proceed with diligence to complete all necessary 1 definitive agreements pertaining to Units 2 and 3.

               19.4   Unless mutually agreed or unless provided 2

3 otherwise herein, no significant departures shall be 4 made from the arrangements between Edison and San Diego 5 for ownership, construction, operation and maintenance 6 of Units 2 and 3 or, where no such arrangements exist 7 for Units 2 and 3, the arrangements under which Edison 8 and San Diego have participated in Unit 1. 9 19.5 Each Party shall be responsible for making 10 arrangements necessary to transmit its entitlement of 11 San Onofre power from San Onofre to its electric system. 12 19.6 Except as provided in Section 6.8, 13 Riverside and Anaheim each shall be responsible for 14 obtaining, at its own expense, its required v 15 authorizations and approvals, if any, relating to its le participation in the construction or recenstruction 17 and operation of San Onofre and to its performance 18 of the provisions of this Participation Agreeoent, 19 from federal, state, or local regulatory authorities 20 having jurisdiction to issue such authorizations and 21 approvals, and shall keep the Project Director and 22 Operating Agent informed of its applications therefor. 23 19.7 The Parties do not intend to dedicate and 24 nothing in this Participation Agreement shall be con-25 strued as constituting a dedication by any Party of lh 28 its properties or facilities, or any part thereof, to 2 ul 216

I any other Party or to the customers of any Party. 2 19.8 For itself and its successors and assigns, 3 Edison, San Diego, Riverside and Anaheim, each, until 4 expiration or termination of the Ownership Agreement 5 as it may be amended from time to time, waives the 6 right to seek partition of San Onofre and the Project Easements (whether by partitionment in kind or by sale 8 and division of the proceeds thereof) . Edison, San Diego, 9 Riverside and Anaheim, each further agrees that it will 1

  *0 not resort to any action at law or in equity to partition 11 the same (in either such manner) and to that extent waives the benefits of all laws that may now or hereafter 13 authorize such partition.

%, 19.9 If a Party desires to assign to another 15 Party any or all of its interest in Unit 2 or Unit 3, le the provisions of Section 8 of the 17 Ownership Agreement shall not apply. If a Party desires 18 19 to assign to an entity other than another Party any or 20 all of its interest in Unit 2 or Unit 3, the other 21 Parties each shall have the right of first refusal, as provided by the Ownership Agreement, to purchaec such 22 23 interest in proportion to the respective Generation 24 Entitlement Shares of the Parties seeking to exercise the right of first refusal. 25 28 19.10 Riverside and Anaheim each represent and 2lII j!I 3

I warrant that it has obtained all necessary approvals, - 2 including voter approval if required, for its project 3 contractual undertakings including this Participation 4 Agreement and for its means of financing its 5 participation in the construction, operation and 6 maintenance of Unita 2 and 3 and that it has legal 7 authority to enter into and be bound by all of its 8 project contractual undertakings including this 9 Participation Agreement. 10 19.11 Riverside and Anaheim shall have the right 11 to audit the books and records of Edison directly 12 partaining to Units 2 and 3, the Common Facilities, and 13 the Plant Site. Should any audit reveal errors, 14 v omissions or items not properly chargeable to Units 2 15 and 3, the Common Facilitiec and the Plant Site or to le Riverside and Anaheim in the amounts billed, appropriate 17 adjustment shall ce made. 18 19.12 Effectiveness of this Participation Agree-19 ment shall be subjet:t to its being accepted for filing by the regulatory agency having jurisdiction. El IN WITNESS WHEREOF, the Parties have caused this 2 Participation Agreement to be executed on their behalf 23 and the signatories hereto represent that they have 24 been duly authorized to enter into this Participation Agreement on behalf of the Party for whom they sign. 26 j

                                            .m v

_o_ 2111 217

1 Executed as of the 1st day of November,1977. 2 3 ATTEST: SOUTHERN CALIFORNIA EDISON COMPANY 4 5 By 6 7 ATTEST: SAN DIEGO GAS & ELECTRIC COMPANY 8 9 By 10 11 ATTEST: CITY OF RIVERSIDE 12 13 By 14 ~ 15 ATTEST: CITY OF ANAHEIM 16 17 By 18 .

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JOCU V E \~~ 3 AGE 3J__EJ A \ O.m w ozs6 NO. OF PAGES REASON: O PAGE ILLEGIBLE: HARD COPY FILED AT: PDR CF OTHER C BETTER COPY REQUESTED ON / / hAGE TOO LARGE TO FILM: eARDCOevFitEDA1: eDR OTHER g FILMED ON APERTURE CARD NO. O

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g**)Dju 'O S. h o w _m COMMON FACILITIES AREA %=' That certain real procorty in the County of San Diego, State of California, described as follows: PARCEL 1: That portion of the Pancho Santa Margarita y Las Flores, as described in the Patent f rom the United State s of Amer ica , dated March 28, 1979 and recorded in Book 7, cace 18 et sea., of Patents in the of fice of the County Pecorde r o f sa id County, being also portions of Section 24 in Townshio 9 South, Pance 7 West, and Section 30 in Townshio 9 South, Range 6 ile st , as shown on Record of Survey Map No. 6242 filed June 13, 1963 in the office of said County recorder , described as follows: Beginning at a 6 inch bv 6 inch concrete hinhway mono ent, set in the Southwesterly line of U. S. H ighway 101, sa id monu-ment being North 56* 12' 04" rest 2123.77 feet, measured along said Southwesterly line, from a 6 inch hv 5 inch concrete highusy monumen t, sa id fir st ?bove . mentioned concrete hich:::v monument bears South 02* 52' 15" East 3207.25 feet fron a 1-1/2 inch iron pice, with brasm can, set for the "ortheast corv r of Sect ion 24 in Townchip 9 . couth, Ranac 7 iMot, an shown an "si? Record of Survey Map, said fit st above mentioned conct ?te highway monument be ing alco a t the bec inn inc o f a tan.7en t curva, concave Southwesterly and havinq a radius of 4940 fect: thence %s Northwesterly along said curv", through an angle of 12' 01' 00", a distance of 1034.63 feet; thence continuino alona said coutb-westerly line 'and tangent to said last mentioned curve, r;or th 68* 12' 04" West, 503.81 feet to the beqinning of a tanqent curve, concav? to the Northeant and havina a radius of 2060 feet; thence Northwesterly, along sa id laFt mentioned cutve, through an angle of 04* 54' 28" a distance o f 176.47 fee t to a point, a r ad ial line o f said last mentioned curve e33rinq through said last mentioned coint bear s Seuth 26' 42' 23" Kest; thence South 33' 00' 00"' West, 785.32 feet to the '5 ,n High Tide Line of the Pacific Ocean; thence Southeasteriv, along said Mean High Tide Line o f the Pa c i f i c Oc e an t o ,1 Line that is parallel with and 4500 fee t Southeasterly, measur21 at r ight angles, f rom the cour ce hereinabove described as havino a bearing of South 33' 00' 00 West and a lenoth of 7 0 5. 3? feet; thence North 33* 00' 00" East, alona sa id carallel l in e , 663.39 feet to a noint in said Southwesterly line of U. 9. Highway 101, sa id last mentioled coint beino in a curva in sa id Southwesterly line , ca id curve be ing concave Sout'v:*t er ly and having a r ad ius o f 11,440 feet and beinn al:o tent c.* *n tt? cour ce here inabove dercr io' ed is havina ,1 "eatinq o f ",

• h Ec' 12' 04" West and a length o f ?l23.77 feet, a r ad ial l ine 6, ca id curve nas:3 ing through sa id last mentioned noint F' 1r c

           " orth 37* 12' 19" Ea s t - t hence Nn c t hue.7 te r ly, a lona c    ' cu ve, ss                                      EXH1 BIT "B" 2111   223

j  ! TU , through an angle o f G3' 2 4' 23", a d istance o f 680.14 feet to '" the second above mentioned 6 inch by 6 inch concrete highway monument; thence North 56* 12' 04" West, 2123.77 feet to the Poin t of Beginning . EXCEPTING THEREFROM that portion thereof described as follows: That portion of the Rancho Santa Marcarita y Las Flores, described in Patent f rom the United Sta te s of Amer ica , da ted March 28, 1879, and recorded in Book 7, oaae 18 et seo., o f Patents in the of fice of the County P.ecorder of the County of San Diego, and being also a portion of Section 24, Townshio o South, Range 7 West, as shown on Record of Survey Mao Fo. 4242, filed June 13, 1963, in said o f fice o f the County Recorder , described is follows: Beginning at a point in the !?orthwesterly boundary line of the land described in that certain Grant of Easement from the United Sta tes o f Amer ica, Secretary o f the Navy, to Southern California Edison Cocoany and San Diego Gd3 and Electric Company, on May 12, 1964, recorded in Series 5, Book 1964, Page No. 85987, o f Of ficial Record s in said of fice o f the County Pecor.ler , said land beina also shown on said Record of Survey Map th. 624' said colat beina South 33* 00' 00" West, 14 3. 21 fee t, measured .long said

• 1. Nor thwesterly boundary line, f rom the Northvasterly corner thereof; thence the following :ourses and d istaaces: South 57' OC ' 00" East, 102.80 feet; South 63
• Sc ' 50" East, 434.90 feet; South 07' 00' 56" East, 167.65 feet: South 57' 00 ' 00" Ea s t , 208.00 feet; North 33 03' 00" East, 22.50 feet; Forth 73* 57' 20" East, 35.09 feet; South 57* 0 0 ' 00" East , 121.00 fee t ; South 12' 00 ' 00" Ea s t , n0.61 feet; South 57* 00' 00" East, 145.00 feet; South 12' On' 00" Ea s t , 79.20 feet; 90 ti t h 57' 00' 00" East, 75.73 feet; South 04* 55' 29" West, 60.07 feet; South 57' 00' 00" East, 134.00 feet and South 13' 00' 0 0 " We s t , 3 75.00 fee t to a coin t in the Southwesterly boundary line of said land, said point being North 52' 00' 51" vest, 03.62 feet, measured along said Southwesterly boundar y line, f rom the Southeasterly terminun of that cer tain course e.hown as having a bearing of " South 32' 00' 51" East" and a dis-tance of "299.95 feet" as shown on Eccord o f Survey Map No.

6242; thence along said Southwesterly boundary line the follow-ing courses and distances: No r tn 52' 0 0 ' 51" West, 296.33 fee t ; North 58' 35' 25" West, 289.39 fee t ; " orth 65* 56' 29" West, 300.23 feet; Nor th ris a 1G' 51" rest, 301.02 fee t and North 61* 30' 2 5 " n'e s t , 30R.74 fee t to r,id Northwesterly boundary line of the land showa on Focord of Survey Mao No. 6242; thence along caid Nor thw"Sterly bound ar y line Mor th 33* 00' 00" Ea s t , 642.11 feet to the Po int o f Beg inn ino. EXHIBIT "n" 2111 224

O UN O ALSO EXCdPTING THEREFROM that portion thereof de.9eribed as follows: That portion of the Rancho Santa Margarita y Las Flores, describe.d in Patent from the United States of America, dated March 28,1879 and recorded in Book 7, nage 18 et sea. o f Patents in the of fice of the County Recorder of the County of San Diego, and being also portions of Section 24, Township 9 South, Range 7 West and Section 30, Townshio 9 South, Pange 6 - West, as shown on Record of Survey Mao No. 6242, filed June 13, 1963, in said office of the County Recorder, described as follows: Beginning at a 6 inch by 6 inch concrete highway monument set in the Northeasterly boundary line of the land described in that certain Grant of Easement from the United States of Amer ica , Secra tar y o f the Navy, to Southern California Edison Company and San Diego Cas and Electric Comoany, on May 12, 1964, recorded in Series 5, Book 1964, Paqe No. 85837 of Official Records, in said of fice o f the County Recorder , sa id land being also shown on said record of Survey Mao :'o. 6242, said concrete highway monument beinq also the Northwesterly term.inus of that cer tain cour s7 shoun as havinq a hearinq of "ilo t t h 5 6

• 12 ' 0 4 " We c t" and a d istance o f "2123.77 fe? t" on ca id Record of Survey Mao No. 6242; thence Northwesterly, tanqcnt to said last mentioned course alona a curve concave Southwesterly, havinn a radius of 4940.00 feet, throuch a central angle of 00* 25' 46", a distance of 37.02 feet to tS2 intersection o f a non-tangent curve concave Southeasteriv, having a r adius o f 13 5.00 feet, a r adial line o f said last mentioned curve cassing through said point bears " orth 46' 45' 03" West; thence Southwesterly alona said curve through a cer. tral angle of 09' 25' 25", a distance of 22.20 feet to a point in a r ever se curve concave t'or thwerterly, havina a radius o f 135.00 feet; thence Southwesterly along said last mentioned curve through a central anale o f 54' 17' 57", a d is-tance o f 127.94 fee t to a point , a radial line of said curve passing through said coint bears South Ol' 52' 3 0" Ea st ;

thence the following courses aad distances: South 33' 00' 00" Uest, 45.00 feet; South 57* 00' 00" Cast, A5.00 feet; South 33' 00' 00" vest, 123.00 feet; South 57' 00' 00" Fact, 1095.00 feet; " orth 33* 00' 00" Fast, 12.00 feet; South 57' 00' 00" East, 185.51 feet; North 06' 06' 31" East, 80.73 feet; and North 13* 18' 05" East, 211.24 feet to a coint in the Northeasterly boundary lin > of the land shown on raid Record of Survey Map No. 6242; thence along T a id No r th? )ste r lv boundar y line , Nor th 56' 12' 01" West, 1121.00 fee t to the po in t o f beainning. ALSO EXCEPTING THEREF90M t ha t por tion t he reo f derc r ibe.i ac Collows: %s EXHIaIT "4" 2111 225

D* @ '3'

                                             .A.hW D                $

ww! S\D , That portion of the Pancho Santa Margarita y Las Flores, described in Patent f rom the United States of America, dated %- March 28, 1879 and recorded in Book 7, oage 18 at sea. of Patents in the office of the County Recorder of the County of San Diego, and being also portions of Section 24, Townshio 9 South, Range 7 West and Section 30, Townshio 9 South, Rance 6 West, as shown on Record of Survey Map No. 6242, filed June 13, 1963, ira said office of the County Recorder, described as follows:

                           ~

Beginning at a inch by 6 inch concrete highway monument set in the Northeasterly boundary line of the land described in that certain Grant of Easement f rom the United States o f America, Secretary of the Navy, to Southern California Edison Co.tpany and San Diego Gas and Elec~ r ic Company, on May 12, 1964, recorded in Series 5, Book 1964, Page No. 85887 of Of ficial Records, in said of fice of the County Recorder , sa id land being also shown on said Pecord of Survey Map No. 6242, said concrete highway monument being also the Northwesterly terminus of that certain course snown as havino a bearino of

  " North 56* 12' 04" West" and a d istance o f "212 3.77 f ee t" on said Record of Survey Map No. 6242; thence Northwesterly, tangent to said last mentioned course alonn a curve concave Southwesterly, having a radius of 4940.00 feet, through a central angle of 00* 25' 46", a distance of 37.02 feet to the intersection of a non-tangent curve concave Southeasterly, having a radius of 135.00 feet, a radial line of said last
                                         ~

%s mentioned curve passing througn said point bears North 46' 45' 03" West; thence Southwesterly along said curve throuch a central angle of 09* 25' 25", a distance of 22.20 feet to a point in a reverse curve concave Northwesterly, having a radius of 135.00 feet; thence Southwesterly along said last mentioned curve through a central angle of 54* 17 ' 5 7", a d is-tance o f 127.94 feet to a point, a radial line of said curve passing through said point bears South Ol' 52' 30" East; thence South 33* 00' 00" West, 45.00 feet; thence South 57' 00' 00" East, 45.00 feet; thence South 33* 00' 00" West, 123.00 fee t to the TRUE P3 INT OF BEGINNING o f this des-cription; thence the following courses and distances: 9outh 57* 00' 00" East, 1095.00 feet; North 33* 00' 00" East, 12.00 feet; South 57' 00' 0 0 " Ea s t , 185.51 feet; South 06* 0 6' 31" West, 76.25 feet; South 35' 36' 25" East, 208.36 fee t ; South 33' 00' 00" West, 102.00 feet: North 64* 48' 28" West, 301.80 fee t and South 33* 00' 00" West, 24 5.30 fee t to a point in the Southstesterly boundary line o f the land shown on sa id Record of Survey Map No. 6242; thence along sa id South-westerly boundary line the following cour ses and distances: North 68* 35' 07" ;;est, 172.49 feet; North 73* 50' 00" Uest, 301.73 feet; 'forth 65* 24' 5 3 " ','e s t , 169.60 feet; Mor th 57' 24' 41" West, 146.24 fee t ; Morth 49' 34' 15" West, 300.24 f?ct; North 50* 06' 17 " 'r'e s t , 300.11 feet Ond Vorth 52' 00' ws EXHIBIT "3" 2111 226

D' [) D f3'lf LS 6

                                       ~    LX X     =

51" West, 03.62 feet to a point in said Southwesterly boundary line which is South 52' 00' 51" East, 296.33 feet, from the %s Northwesterly terminus of that certain course shown as havina a bearing of " South 52' 00' 51" East" and a distance of "299.95 feet"; thence leaving said Southwesterly boundary line North 33 4 00' 00" East, 426.00 feet; thence South 57' 00' 00" East, 161.00 feet; thence North 33' 00' 00" East, 167.00 feet to the true point o f beg inning . PARCEL 2: That portion of the Rancho Santa Margarita y Las Flores, described in Patent from the United States of America, dated March 28, 1879, and recorded in Book 7, oage 18 et sec., o f Patents in the of fice o f the County Pecorder af the County of San Diego, and being olso a portion of Section 24, Townshio 9 South, Range 7 West, as shown on Record of Survey Mao No. 6742, filed June 13, 1963, in said of fice of the County Recorder , described as follows: Beginning at a point in that cer tain course having a bear ing o f " South 52' 00' 51" East" and a distance o f "299.95 feet" in the Southwesterly boundary line of the land shown on Record of Survey. Map Mo. 6242, filed June 13, 1961 in the otfice ef the County Recorder of San Diego County, said point beinq North 52' 00' 51" West, 03.62 feet from the Southeasterly termi-nus of said certain course; thence Nor th 33' 0 0 ' 0 0" Ea st , %- 105.00 feet; thence North 57' 00' 00" West, 10.00 fee t to the TRUE POINT OF BEGIJNING of this description; thence continuing North 57' 00' 00" West, 40.00 feet; thence North 33' 00' 00" East, 110.00 feet; thence South 57' 00' 00" East, 40.00 feet and thence Scuth 33* 00' 00" West, 110.00 feet to the true point of beginning. PARCEL 3A (Access Road): A str ip o f land, Forty (40) feet wide, the centerline o r which is hereinaf ter described , lying within the Rancho Santa Margarita y Las Flores, as described in the Patent from the United States o f Amer ica , dated March 28, 1979 and recorded in Book 7, page 19 et seo. , o f pa tents in tha o f fice o f the Coun ty Recorder of said County, and beinq also a cor tion of Section 24, Township 9 South, Range 7 West, as cor Pecord of Survov Map No. 6242 filed June 13, 1963 in the of fice o f sa id County Recorder. The centerline o said ctr ip o f land is described as follows: s, EXHIBIT "B"

                                                 } }}       }}f

Beginning at a 6 inch by 6 inch concrete highway monunent, se t in the Southwesterly line of U. S. Highway 101, said monu- %s ment being Nor th 56* 12' 04" West, 2123.77 feet, measured alona said Southwesterly line, from a 6 inch by 6 inch concrete highway monument, said first above mentioned concrete highway monument bears South 02* 52' 15" East, 4207.25 feet f rom a 1-1/2 inch iron pipe, with brass cao, set for the Northeast <:orner o f Section 24 in Township 9 South, Range 7 West, as shown on said Record of Survey Map, said fir st above mentioned concrete hiqh-way monument being also at the beginning of a tangent curve concave Southwesterly and having a radius of 4940 feet; thence Northwesterly, along said curve, through an angle o f 12* 00' 00", a distance of 1034.63 feet; thence continuing alona sa id Southwesterly line and tangent to said last mentioned curve, North 68* 12' 04" West, 503.81 feet to the beginnino of a tangent curve concave to the Northeast and having a radius of 2060 feet; thence Northwesterly, along said last mentioned curve, through an angle of 04

• 54 ' 28" a distance o f 176.47 feet to a point, a r adial line o f said last mentioned curve passing through said last mentioned coint bears South 26
• 42' 24" West; thence South 33' 00' 00" West, 118.21 fee" to the TRUE FOINT OF BEGINNING of this description; thence North 57' 0 0 ' 0 0" We st , 473.57 feet to the beginnina of a tancent curve concave Northeasterly and having a radius of 1912.67 feet; thence Northwesterly, along said last mentioned curve, through an angle of 29' 47' 14" a distance of 994.37 feet; thence tangent to said last mentioned curve, North 27* 12' 46" West,

%, 65.16 feet to the beginning of a tancent curve concave to the Southeast and having a r adius o f 129.64 feet; thence North-westerly, Northerly and Easterly, along said last mentioned curve through an angle of 151' 00'.42" a distance of 341.68 feet; thence tangent to said last mentioned curve, South 56* 12' 04" Ea s t , 152.16 feet, to the beginning of a tangent curve concave to the Southwest and having a radius of 100.00 feet; thence Southeasterly along said last mentioned curve, throu1h an angle o f 14 ' 38 ' 12", a distance of 25.55 feet; thence tangent to said last mentioned curve, South 41' 3 3' 5 2 " Ca s t , 161.32 fee t to the beginning o f a tangent curve cor. cave to the Northeast and haviria a radius of 100.00 feet; thence Southeasterly, along said last mentioned curve throuah an angle o f 14

• 38' 12", a d istance o f 25. 5 5 f ee t; thence tangent to said last mentioned curve, South 56* 12 04" East, 1651.27 feet to the beginning o f a tangent curve concave to the Mot th-east and having a radius of 100.00 feet; thence Southeastacly along said last mentioned curve throuch an angle of 09' 48' 07" a distance o f 17.11 feet; thence tangen t to said last mentioned curve, South 66* 00' 11" Ea s t , 153.29 feet to the beginnino of a tangent curve concave Southw7sterly and having a radius of 60.00 feet; thence Southeasterly and Southerly alona said last mentioned curve, through an angle of 90* 00' 00", a dist ance o f 94.25 foot to a point hereinaf ter referred to as Point "A";

EXHIBIT "B" 2111 228

thence tangent to said last mentioned curve, South 23* 59' 49"

                              ~

West, 33 feet to a point in the Northeasterly line of U. S. %=' Highway 101, said last mentioned point being in a curve in said Northeasterly line, said curve being concave Southwesterly and having a radius of 5060 feet, a radial line to said last mentioned curve passing through said last mentioned coint bears North 23' 59' 49" East, said last mentioned point beina Easterly 194.13 feet measured along said Northeasterly line from a 6 inch by 6 inch concrete highway monument, said hiahway monument bears South 10* 20 ' 14" West, 3668.46 feet from a 1-1/2 inch iron pipe with brass cap, set for the Nortbeast corner of said Section 24. The side lines of said strip of land, hereinacove described and designated as Parcel 3A, shall be prolonged or shortened so as to terminate in the Northeasterly line of said U. S. Highway 101. PAPCEL 3B (Access Road): That portion of the Rancho Santa Margarita y Las Flores, as desc~ribed in the patent from the United States of America, dated March 28, 1879 and recorded in Book 7, eage 18 et sea., . of Patents in the office of the County Pecorder of said County and being also a portion of Section 24 in Township 9 South, Range 7 West, as shown on the Record of Survey Mao No. 6242, filed June 13, 1963 in the office of said County Recorder, 4< described as follows: Beginning at Point " A" hereinabove r efer red to in the centerline description of the strio of land hereinabove de-scribed and designated as Parcel 3A; thence South 66* 00' 11" East, 20 feet to the beginning of a non-tangent curve concave to the East and having a radius of 40.00 feet; thence Southerly along said curve through an angle of 55' 32' 58" a distance of 38.78 feet to a point in the Northeasterly line of U. S. Highway 101, said last mentioned point being in a curve concave to the South and having a radius of 5060 feet, a radial line of said last mentioned curve cessing throuch said last mentioned point bear s North 24* 2 5' 12" East; thence Westerly along said last mentioned curve through an anale of 00* 50' 4 6" a d istance o f 74.72 feet to a point, a r adial line of said last mentioned curve passina through said last mentioned point bear s Nor th 23' 3 4 ' 26" East, said last mentioned point being also at the beginning of a non-tanoent curve concave to the West and having a radius o f 40.00 feet: thence Northerly along said la st mentioned curve through an angle o f 55' 3 2 ' 58" a d istance o f 38.78 fee t to a noint, a radial line to said last mentioned curva casnina throuch ci a last mentioned point bears South 66* 00' 11" Cast; thence South 66' 00' 11" East, 20 fee t to the coin t o f beg inninc . g, CXHIBIT "B" 2111 229

EXCEPTING f rom the land hereinabove described and desio-nated as Parcel 3B that portion thereof lying within the strip %s of land hereinabove described and designated as Parcel 3A. PARCEL 4 (Spur Track Area): A strip of land, One Hundred (100) feet wide, lyino For ty-seven and one-hal f ( 4 7. 5 ) feet Northeasterly and Fif tv-two and one-half ( 5 2. 5) feet Southwesterly of the hereinaf ter described reference line, said strio of land lying within the Rancho Santa Margarita y Las Flores, as described in the Patent from the United States of America, dated March 28, 1879 and recorded in Book 7, page 18 et sec., of Pa tents in the office of the County Recorder of said County, and beino also a portion of Section 24 in Township 9 South, Range 7 West, as shown on the Record of Survey Mao No. 6242, filed June 13, 1963 in the of fice of said County Recorder. The reference line referred to above is described as follows: Beginning at a 6 inch by 6 inch concrete highway monument, set in the Southwesterly line of U. S . H ich wa y 101, sa id monumen t being North 56* 12 ' 04" West, 2123.77 feet, measured along said Southwesterly line, from a 6 inch by 6 inch concrete highway monument, said first above mentioned concrete hiqhway monument bears South 02* 52' 15" East, 4207.25 feet from a gs 1-1/2 inch iron pipe, with brass cao, set for the Northeast corner of Section 24 in Township 9 South, Range 7 West , as shown on said Record of Survey Map, said fir st above mentioned concrete highway monument being also at the beginning of a tangent curve concave Southwesterly and having a radius of 4940 feet; thence Northwesterly, along said curve, through an angle of 12' 00' 00", a distance of 1034.63 feet; thence continuing along said Southwesterly line and tanoent to said last mentioned curve, North 68* 12' 04" West, 503.81 feet to to the beginning of a tangent curve concave to the Northeast and having a radius of 2060 feet; thence Northwesterlv, alona said last mentioned curve, through an angle of 04

• 54 ' 28" a distance of 176.47 feet to a point, a radial line o f said last mentioned curve passing throuch said last mentioned coint bears South 26' 42' 24" West; thence South 33* 00' 00* West, 115.71 feet to the TRUE POINT OF BEGINNING o f this description; thence North 57* 00' 00" West, 473.57 feet to the becinnino of

  .a tangent curve concave Northe asterly and havino a radius of 1910.17 feet; thence Nor thwesterly alona sa id last mentioned curve, through an angle of 29' 47' 14" a distance of 993.07 feet; thence tangent to said last mentioned curve North 27' 12' 46" West, 456.60 feet to the beginning of a tancent curve concave Southwesterly and having a r adius o f 573.69 feet; thence Northwesterly along said last mentioned curve throuch an angle of 20' 00' 00" a d istance o f 200.26 feet to the EXRIBIT "B" 2111 230

beginning of a compound curve concave Southwesterly and havina a radius of 736.76 feet; thence Northwesterly along said last %s mentioned curve through an angle of 8' 5 9 ' 18" 115. 59 fee t to a point in the centerline of the 100 foot right of way of The Atchison, Topeka and Santa Fe Railway Comoany, said coint being North 56* 12' 04" West, 700 feet, measured along said last mentioned centerline from its intersection with the centerline of U. S. Highway 101 (140 feet wide) .

  . PARCEL 5 (Exclusion Area):

That portion of the Rancho Santa Maraatita y Las Flores, as described in the Patent from the United States of Amer ica, dated March 28, 1879, and recorded in Book 7, oage 18 e t sec., of Patents, in the of fice of the County Recorder of said County and being also portions of Sections 19 and 30 in Townstio 9 South, Range 6 West, and of Section 24 in Township 9 South, Range 7 West, as shown on a Record of Survey Mao No. 6242 filed June 13, 1963 in the office of said County Pecorder described as follows: Beginning at the Southwest corner of the 83.63 Acre carcel o f land , shown on said Map fil?d on June 13, 1963 as f%n No. 6242 of Records of Survey in the office o f said County t?cnt der: thence North 33* 00' 00" East, along the Porthwesterly boundary line of said 83.63 Acre parcel, a distance of 516.11 feet to the beginning of a tangent curve concave Southerly and having %- a radius of 1967.50 feet; thence Northerly and Easterly alona said curve , through an angle o f 90* , a distance of 3090.54 feet; thence South 57' 00' 00" East, 565.00 feet to the benin-ning of a tangent curve concave Westerly and havino a radius of 1967.50 feet; thence Easterly and Southerly alona said last mentioned curve, througt 77 angle of 90*, a distance of 3090.54 feet to a point in the sutheasterly boundary line o f said 83.63 Acre parcel; thence along said Southeasterly boundat v line and tangent to said last mentioned curve South 33* 00' 00" West, 235.17 feet to the Southeast corner of said 83.63 Acre parcel; thence Northwesterly along the various courses and distances in the Southwesterly boundary line of said 83.63 Acre parcel to the point of beginning. EXCEPTING THEREFROM that oor tion thereo f lyina South-westerly of the Southwesterly line of U. S. Highway 101. %, EXHIBIT "B" SWITCHYARD AREA V That certain real property in the County of San Diego, State of California, described as follows: That portion of the Rancho Santa Margarita y Las Flores, described in Patent from the United States of America, dated March 28, 1879 and recorded in Book 7, page 18 et seg. of Patents in the of fice of the County Recorder of the County o f San Diego, and being also por tions of Section 24, Townshio 9 South, Range 7 West and Section 30, Township 9 South, Pance 6 West, as shown on Record of Survey Map No. 6242, filed June 13, 1963, in s~ aid office of the County Recorder, described as follows: Beginning at a 6 inch by 6 inch concrete highway Tonument set in the Northeasterly boundary line of the land described in that cer tain Grant of Easement from the United States o f America, Secretary of the Navy, to Southern California Edison Company and San Diego Gas and Electric Coccany, on May 12, 1964, recorded in Series 5, Book 1964, Page No. 85887 of Of ficial Records, in said of fice o f the County Recorder , said land being also shown on said Record of Survey Map No. 5242, said concrete highway monument being also the Northwesterly terminus of that certain course shown as having a bearina of

          " North 56' 12' 04" West" and a distance of "2123.77 feet" on

%s said Record of Survey Map No. 6242; thence Northwesterly, tangent to said last mentioned course along a curve concavo Southwesterly, having a radius of 4940.00 feet, through a central angle o f 00* 25' 46", a distance of 37.02 feet to the intersection of a non-tangent curve concave Southeasterly, having a radius of 135.00 feet, a radial line of said last mentioned curve passing through said point bears North 46' 4 5 ' 0 3 " We st ; thence Southwesterly alona said curve throu75 a central angle of 09' 25' 25", a distance of 22.20 feet to a p( int in a reverse curve concave Northwesterly, havino a radius of 135.00 feet; thence Southwesterly along said last mentioned curve through a central angle o f 54

• 17' 5 7", a d is-tance o f 127.94 feet to a point, a radial line of said curve passing through said point bears South Ol' 52' 3 0" East ;

thence the following courses and distances: South 33* 00' 00" West, 45.00 feet; South 57' 00' 0 0 " Ea s t , 4 5.00 feet; South 33* 00' 00" West, 123.00 feet; South 57' 00' 00" East, 1095.00 feet; North 33' 00' 00* East, 12.00 feet; South 57' 00' 00" Cast, 135.51 feet; North 06* 06' 31" East, 80.73 feet; and North 13* 19' 05" Ea s t , 211.24 feet to a coint in tne Nor theasterly coundary line o f the land shown on sa id Record of Survey Map No. 6242; thence along sa id Northeasterly boundar y line , t:or th 56

• 12 ' 04" Ucst, 1121.00 feet to the point o f beginning.

%,                                EXHIBIT "C"

g ,, UNIT 1 AREA PARCEL 1: That certain real property in the County of San Diego, State of California, described as follows: That portion of the Rancho Santa Margarita y Las Flores, described in Patent from the United States of America, dated Maren 28, 1879, and recorded in Book 7, page 18 et seq., of Patents in the office of the County Recorder of the County of San Diego, and being also a portion of Section 24, Townsnip 9 South, Range 7 West, as shown on Record of Survey Map No. 6242, filed June 13, 1963, in said of fice of the County Recorder, described as follows:

         . Beginning at a point in the Northwesterly boundary line of the land described in that certain Grant of Easement from the United States of America, Secretary of the Navy, to Southern California Edison Company and San Diego Gas and Electric Company, on May 12, 1964, rec 7rded in Series 5, Book 1964, Page No. 85187, of Of ficial Records in. said of fice o f tne County Recorder , said lanc ceing also shown on said Record of Survey Map No. 6242, said point ceing South 33' 00' 00" West, 143.21 feet, .4easured along said Nor thwesterly boundary line, f rom the Northwesterly corner

'"' thereof; thence the following courses and distances: South 57' 00' 00" East, 102.80 feet; South 68* 59' 50" East, 434.90 feet; South 07' 00' 56" East, 167.65 feet; South 57* 00' 00" East, 208.00 feet; North 33' 00' 00" East, 22.50 feet; North 73* 57' 20" East, 35.09 feet; South 57* 00' 00" East, 121.00 feet; South 12' 00' 00" East, 80.61 feet; South 57* 00' 00" East, 145.00 feet; South 12* 00' 00" East, 79.20 feet; South 57' 00' 00" East, 75.73 feet; South 04' 55' 29" West, 60.07 feet; South 57' 00' 00" East, 134.00 feet and South 33* 00' 00" West, 375.00 feet to a point in the Soutnwesterly boundary line of said land , said point Deing North 52' 00' 51" hest, 03.62 feet, measur ed along said Southwesterly boundary line, f rom the Southeasterly terminus of that cer tain cour se shown as having a bearing of " South 52' 00 ' 51" East" and a dis-tance of "299.95 feet" ar :. town on Record of Survey Map No. 6242; thence along said Southwesterly boundary line the follow-ing courses and distances: North 52' 00' 51" West, 296.33 feet; North 58' 35' 26" West, 289.39 feet; North 65* 56' 29" West, 300.23 feet; North 68* 16' 51" Wast, 301.02 feet and North 61* 30' 25" West, 308.74 fee t to said Northwesterly boundary line of the land shown on Record of Survey Map No. 6242; thence along said Nor thvesterly boundar y line Nor th 33* 00' 00" East, 642.11 f ee t to tne Poin t o f Geg.nn ing . EXHIBIT "D" ~'~ 2111 233

EXCEPTING THEREFROM that certain rectangular oarcel of land, described as follows: ws Beginning at a point in that certain course having a bearing o f " South 52' 00' 51" East" and a distance of "299.95 feet" in the Southwesterly boundary line of the land shown on Record of Survey Map No. 6242, filed June 13, 1963 in the office of the County Recorder of San Diego County, said coint .being North 52' 00' 51" West, 03.62 feet from the Southeasterly termi-nus of said certain course; thence North 3 3

• 0 0 ' 0 0 " Ea s t ,

105.00 feet; thence North 57' 00' 00" West, 10.00 feet to the TRUE POINT OF BEGINNING of thir descriotion; thence continuing Nor th 57' 00 ' 00" West, 40.00 feet; thence North 33* 00' 00" East, 110.00 feet; thence South 57' 00' 00" East, 40.00 feet and thence South 33' 00' 00" West, 110.00 feet to the true point of beginning.

• PAFCEL 2 (Off-Shore Land):

A strip of tide and submerged land, one-hundred (100) feet wide, in the County of San Diego, State of California, the center line of which is described as follows: Beginning at a point in that certain course in the Southwesterly boundary of the 83.63 Acre parcel of land shown on Record of Survey Mao filed on June 13, 1963, s.- as Map No. 6242 of Records of Survey in the office of County Recorder of said County, said certain course is shown on said map as having a bearing of "S 52* 00' 51" E" and a length o f "299.95 feet", said point being South 52

• 00 ' 51" East 18.71 feet f rom the Northwesterly terminus of said certain course; thence South 33* 00' 00" West, 3,310.11 feet, containing 7.599 acres more or less.

The side lines of said strio of land shall be shortened at the Northeasterly terminus thereof so as to terminate in the Southwesterly boundary line of said 83.63 Acre parcel of land, shown on said Record of Survey Map. 2111 234 %, EXMIBIT "D"

UNITS 2 & 3 AREA %s PARCEL 1: That certain real property in the County of San Dieco, State of California, described as follows: That portion of the Rancho Santa Margarita y Las Flores, described in Patent from the United States of America, dated March 28, 1879 and recorded in Book 7, eage 18 et sec. of Patents in the of fice of the County Recorder of the County of San Diego, and being also portions o f Section 24, Townshio 9 South, Range 7 West and Section 30, Townshio 9 South, Range 6 West, as shown on Record of Survey Map No. 6242, filed June 13, 1963, in said of fice of the County Recorder, described as follows: Beginning at a 6 inch by 6 inch concrete highway monument set in the Northeasterly boundary line of the land described in that certain Grant of Easement from the United States of America, Secretary of the Navy, to Southern California Edison Company and San Diego Gas and Electr ic Comoany, on May 12, 1964, recorded in Series 5, Book 1964, Pace No. 85887 of Of ficial Records, in said office of the County Recorder, said land being also shown on said Record of Survey Map No. 6242, said concrete highway monument being also the Northwesterly 3.e terminus of that certain course shown as havino a bearing of

   " North 56* 12' 04" West" and a d istance o f " 2123.77 f ee t" on said Record of Survey Map No. 6242; thence Northwesterly, tangent to said last mentioned course along a curve concave Southwesterly, having a radius of 4940.00 feet, through a central angle of 00* 25' 46", a distance of 37.02 feet to the intersection of a non-tangent curve concave Southeasterly, having a radius of 135.00 feet, a radial line of said last mentioned curve passing throuch said point bears North 46' 45' 03" West; thence Southwesterly along said curve through a central e.ngle of 04* 25 ' 25", a distance of 22.20 feet to a point in a reverse curve concave Northwesterly, havino a radius of 135.00 feet; thence Southwesterly along said last mentioned curve through a central ang!3 o f 54* 17 ' 5 7" , a d is-tance o f 127.94 fee t to a po in t , a rao111 line of said curve passing through said point bear s Sout a Ol* 52' 30" East; thence South 33* 00' 00" West, 45.00 feet; thence South 57' 00' 00" East, 45.00 feet; thence South 33' 00' 00" West, 123.00 fee t to the TRUE POINT OF BEGINNING o f this de s-cription; thence the following cour ses and distances:         South 57' 00' 00" East, 1095.00 feet; North 33* 00' 00" East, 12.00 feet; South 57' 00' 00" East, 185.51 feet; South 06* 06' 31" West, 76.25 feet; South 35* 36' 25" Ea st , 208.36 feet; South 33* 00' 00" West, 102.00 feet; North 64* 48' 28" West,
                            EXHIBIT 'E" 2111        235

301.80 feet and South 3 3 ' 0 0 ' 0 0 " We s t , 245.30 feet to a point in the Southwesterly boundary line of the land shown on

%.e   said Record of Survey Map No. 6242; thence along said South-westerly boundary line the following        courses and distances:

North 68* 35' 07" West,172.49 feet; North 73* 50' 00" West, 301.73 feet; North 65* 24' 53" West, 169.60 feet; North 57* 24' 41" West, 146.24 feet; North 49" 34' 15" West, 300.24 fee t ; Nor th 50

• 06 ' 17" West, 300.13 feet and North 52' 00 '

51" West, 03.62 feet to a point in said Southwesterly boundary line which is South 5 2' 0 0 ' 51" Ea st , 296.33 feet, from the Northwesterly terminus of that certain course shown as havine a bearing of " South 5 2 ' 0 0 ' 51" Ea s t " and a distance of "299.15 feet"; thence leaving said Southwesterly boundary line North 33' 00' 00" East, 426.00 feet; thence South 57' 00' 00" East, 161.00 feet; thence North 33' 00' 00" East, 167.00 feet to the true point of beginning. - PARCEL 2 (Off-Shore Land): Those certain tide and submerged lands in the County of San Diego, State of California, described as follows: Beginning at the Easterly terminus of that certain course in the Southwesterly boundary line of the 83.63 Acre carcel of land shown on Record of Survey Mao filed on June 13, 1963 as Map No. 6242 of Record of Surveys, in the office of the County Recorder o f said County, said certain course is shown on said s./ map as having a bearing of " South 49' 34' 15" East and a length 300.24 feet"; thence South 57* 2 4 ' 41" East, 8.64 feet to the TRUE POINT OF BEGINNING of this description; thence the following courses and distances: South 3 3* 0 0 ' 0 0" We st , 56.81 fee t ; South 39' 44' 55" West, 2347.44 fee t ; North 57' 00' 00" West, 58.14 feet; South 3 3 ' 0 0 ' 0 0 " We s t , 140.00 feet; South 57* 00' 00" Ea s t , 50.00 feet; South 33' 00' 00" West, 681. 39 feet; Nor th 57' 00' 00" West, 20.00 feet; South 33* 00' 00" West, 140.00 feet; South 57' 00' 00" East, 20.00 feet; South 33' 00' 00" West, 5029.50 feet; South 57* 00' 00" East, 40.00 feet; North 33' 00' 00" East, 5029.50 feet; South 57* 00' 00" East, 80.00 feet; Nor th 33* 00' 00" Ea s t , 140.00 feet: North 57' 00' 00" West, 50.00 feet; North 33' 00' 00" East, 681.39 feet; South 57' 00' 00" Ea st , 20.00 feet; North 33' 00' 00" East, 14 0.00 feet; Nor th 5 7 ' 0 0 ' 0 0 " We s t , 11.37 feet: North 39' 44' 55" East, 543.88 feet; South 50

• 15 ' 0 5" Ea st, 70.00 feet; North 39' 44' 55" East, 140.00 feet; North 50*

15 ' 0 5 " We st , 45.00 feet: North 39' 44' 53" Fast, 1660.88 fee t ; South 61* 03' 16" East, 21.05 feet; South 26* 17' 55" West, 2343.08 feet; No r th 5 7 ' 0 0 ' 0 0 " We s t , 11.43 feet; South 33* 00' 00" West, 140.00 feet; South 57* 00' 00" East, 20.00 feet; South 33' 00' 00" West, 681.38 feet; North 57* 00' 00" We s t , 50.00 feet; South 33* 00' 00" West, 14 0. 00 feet ; South 57* 00' 00" East, 80.00 feet; South 33* 30' 00* West, 2699.50 s, EXHIBIT "E" 2111 236

West, 58.09 feet: North 26* 17' 55" East, 2347.21 feet and North 33* 00' 00" East, 64.97 feet to a' ooin t in the South- %- westerly boundary line of the 33.63 Acre carcel of land shown on said Record of Survey Map No. 6242; thence along said Southwesterly line, the following two courses: North 65* 2 4 ' 53 " We s t , 48.94 fee t and Nor th 57

• 24 ' 41" West, 137.60 feet to the true point of beginning.

2111 237 s-e* ,, . g - n. e. g-e

                                     -1

h e a e - 6 & EXHIBIT F SAN ONOFRE UNITS 2 AND 3 CONSTRUCTION AGREEMENT AND AMENDMENT NO. 1 SAN ONOFRE UNITS 2'AND 3 CONSTRUCTION AGREEMENT 2111 238 n

1 v 2 D

t .I l,D 4

5 6 SAN ONOFRE U:ITS 2 A':D 3 - 7 0 CONSTRUCTIO!! 7.GREF.!4E::T 9 10 11

• BET *. EE!!

12 13 14 w 15 . 10 SAN DII'.GO CAS & EI.ECTRIC CC"?A:;Y 17 18 AND 19 20 SOUTill'R I CALIFOR:-:IA 1:DISO?i CO.**PA sY 21 d 23 71 23

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          .. _ . . . . . . . . _ _ _ _ .       ..     .. _ . - . . . . _              .J 2111     239

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 'v  2              SAN ONOPRE UNITF 2 ANC 3 3                CONSTRUCTION AGREE:1ENT 4

5 INDEX 6 SECTION PAGE 7 1 PARTIES 1 8 , 2 RECITALS 1 9 10 3 AGREEME:iT 2 11 4 DEFINITIO:S 2 12 4.1 COMPOSITE EUDGET 2 13 4.2 CONSTRUCTIO:: COSTS 3 v 14 4.3 COORDINATII:G REPRISENTATIVES 3 15 4.4 oATE Or tIpx OpER;,TIcN 3 10 4.5 DATE OF INITIAL PULL POh'ER 3 OPERATION 4.6 DATE OF INITII.L OPERATION 3 g 4.7 EDISON SWITCHYARD 3 79 4.8 ENGI!!EER-CONST?UCTOR 4 20 4.9 ENGINEERING REPRESE::TATIVES 4 21 4.10 FINAL CO'PLETION REPORT 4 22 23 4.11 FISCAL REI'lli:SENTATIVES 4 4.12 FPC ACCOU::TS 4 24 4.13 I NSUltAN('i: Iti;l'!WSl'.:4TAYIVi.S 5 gg 4.14 NUCLI:Ait INPO;'F.ATION C1:::TI:n 5 20 V 2111 240

D

                                      ]D           *D ~P~B         f wI              aB J A[           =

I 1 PAGE SECTION 2 4.15 OPERATI!:0 AGENT 5 3 4 4.16 PARTICIPATION SHARE 5 4.17 PLANT SITE 5 5 6 4.18 PROJECT AGREEME :TS 5 7 4.19 PROJECT DIRECTOR 6 8 4.20 PROJECT INSURA::CE 6 9 4.21 PROJECT WORK 6 4.22 QUALITY CONTROL 6 10 11 4.23 QUALITY CO:: TROL REPCESE"TATIVES 7 12 4.24 REQU!:ST FOR FUNDS 7 13 4.25 SAN DIEGO SWITCl! YARD 7 s 14 4.26 SAN OSOFRE NUCLEAR G7,NERATING 7 STATION 16 4.27 SAN OliOFRE OW::ERSHIP AGREDiENT 8 lc 4.28 SITE A 8 4.29 START-UP PERIOD 8 4.30 UNIT 1 8 9 g 4.31 UNIT 2 8 4.32 UNIT 3 9 4.33 WILLFUL ACTIO:! 9

    ,2 5           PROJECT Woi'K                                                        11 g

6 CON 3Titt*CTION COSTS 16 p 7 Arm 1.:I::TI'I.TIO:; 26

    .5
      ,,            8           P E r r' l-     r :S t:r:/.C C                                     31 w
           **=*        * * * -               ..--- -         .   -     . . . . , _ . - _ _ _ _ _ .         .

2111 241

SECTION PAGE 9 LIABILITY - 36 3 10 AUT!IORI :ATIONS AND APPROVALS 40 4  ? 11 RELATIONSill? OF PARTIES 4J 5 12 ARBITRATION 44 0 13 PAYMENT OF TAXES , 47 7 14 START-UP 48 8 15 NOTICES - 48 9 16 UNCO::TROLLADLE FORCES 49 10 17 TERMI!!ATION 49 11 18 ADDITIONAL AGREEME:TS AND CO::SE!!TS 50 13 19 CTHER AGREEME::TS 51 13 ( , 20 COMPLETION OF PROJECT WORK 51 V 21 TERA 52 15 16 17 18 19 2111 242 20 21 22 . 2:S 24 25 to

                                                              ~         '

TD T u x xlf f D D}]a~ - I 1 SAN ONOFRE UNITS 2 AND 3

  %s   2                           CONSTRUCTION AGP.EE TNT                         ,

3 4 5 1. PARTIES: This Agreement is entered into as of the G . ? .'/ day of 39' e < f , 1973, by and between

                                                       /

7 SAN DIEGO GAS & ELECTRIC dOMPANY, a California corporation 8 (" San Diego") and SOUTHERM CALIFORNIA EDISON COMPANY, 9 a California corporation (" Edison"), individually called 10 " Company" and collectively called "Companics". 11 2. RECITALS: This Agrec=ent is made with reference 12 to the following facts, among others: 13 2.1 The Companics entered into the San Onofre (), 14 Ownership Agreement, dated October 5, 1967, in connection 15 with the San Onofre Nuclear Generating Station (hereinaf ter 10 called " San Onofrc"), and Unit 1 in particular. 17 2.2 The Companies entered into a letter ag.ecment, 18 dated January 22, 1970, pertaining to the intent of the 19 Companics with reg 6rd to the ownership, construction, opera-20 tion, maintenance and une of Uni ts 2 and 3 at San Onofrc. As 21 provided in said letter agreement, the Companies also entered 2"' into supplemental agreements concerning liability and 23 insurance, dated August 21, 1970, and project costs prior to ai cxecution of this \greement, dated September 9, 1970, both in 25 connection with Uni - 2 cnd 3. Y 2.3 :ne Jenpar. ten enterra into a lotter ae;re<nent.,

                       =       - . - . . . - - - . . .     ._     _ _ . __

2111 243

I dated Occcmber 22, 1970, that provides for the retirement f the existing switchyard facilities and the construction 2

      . of new s'sitchyard facilitics at Site A.

O 4 2.4 The Companics entered into an agreement, dated 5 June 30, 1970, amended September 30, 1970 and October 2, 1972, O with the English Electric Company, Limited, for purchase of two 7 turbine generators for Units 2 and 3. g 2.5 The Companics intend to enter into an 9 agreement with Combustion Engincering, Inc., for purchase of 10 the nucicar steam supply systems, including fuel fabrication 11 for the first fuel loading, for Units 2 and 3. 32 2.6 The Companics intend to enter into agreements 13 with others for the fuel supply and the fuel reprocessing s 14 for all units at the San Onofrc Nuclear Ge.ierating Station. v 15 2.7 The Companics intend to enter into an 10 agreement with others for engineer-constructor services for 17 Units 2 and 3. 18 2.8 Edison and San Diego desire to provide in this 19 Agreement for their respective rights and obligations with 20 respect to the construction of Units 2 and 3. 21 3. AGREEMENT: The Companics agree as follows: 22 4. DEFIMITIONS: When used herein, the following 23 terms shall have the following meanings: 24 4.1 Composite Pudar1: The budget c'.cscribed in 25 Section 6.5 hereof that the Co: panies jointly prepare to OS project the Co: ::truction Costs. 2111 244

                                       - p_

• L, J .

1 4.2 construction Costs,: Those costs described in 2 Section 6.1 hereof incurred by the Companies in the perfor-3 mance of Project Work. 4 4.3 Coordinating Representativos: The representa-5 tives established pursuant to S'cetion 7.1.1 hereof. 6 4.4 Date of Firm Operation: The date, in each case

       -7     for Unit 2 and Unit 3, on which that unit is formally .eleased 8   by the Project Director to the system dispatchers for opera-9 tion as a reliable source of generation and can be reasonably 10     expected to operate continuously at its rated capacity.

11 4.5 Date of Initial Full Power operation: .c 12 date, in cach case for Unit 2 e.nd Unit 3, on which that unit 13 shall have first achieved two hundred (200) cbntinuoushours '. 14 of operation at full power. 15 4.6 Date of Initial operation: The date, in each 16 case for Unit 2 and Unit 3, on which that unit's generator is 17 first synchronized to each company's electric system and 18 generates power. 4.7 Edicon Switchyard: The 220-kV switchrack and 20 related facilities at San Onofre constructed for Edison's 21 exclusive use, incl. ding the 220-kV bus sections to which 22 Edison's transmission lines are connected, but not including 23

       ~-

the power circuit breakers, transforncr side disconnect 64

       "~

switches, conductors, and dead-end assemblics associated with 25 the main transformer leids and reserve cu.siliary transforrer leads or any environmental radiation tr.onitoring equip m nt .-

  ,w 3

2111 245

                                                            ~       '
                                                                        ~

D Ju[n}}m D

                                           ~1

(,, 1 installed therein. In addition, the following items located

   %,  2     in the Unit 1 control-administration building are considered 3     to be part of the Edison Switchyard:

4 . 4.7.1 Controls, indicating lights and 5 instruments associated with Edison's 6 220-kV switchrack facilities. 7 4.7.2 Meters and devices for interconnection d 8 metering and Edison's associated 9 - telemetering equipment. ..J 10 4.8 Engineer-Constructor: A corporation which 11 shall perform major engineering and construction portions 12 of the Project Work under a separate contract with the 13 Companics. 14 4.9 Encineering Representatives: The represen-ss 15 tatives established pursuant to Section 7.1.2 hereof. 10 4.10 Final Completion Pecort: A co=plete 17 summary of tho' Construction Costs incurred in the performance 18 of the Project Work and each Company's portion of said 19 Construction Costs. 20 4.11 Fiscal nepresentatives: The representatives 21 cstablished pursuant to Section 7.1. 3 hereof. 22 4.12 FPC Accounts: The Federal Powcr Commission's 23 Uniform System of Accounts prescribed for Public Utilities 24 and Licenscos (Class A and Class B), in effect on 25 January 1, 1970, as amended. Reference in this Agreccent to

      'C i         any cpecific FPC account number chall mean the FPC account
                                                  -4   -

2111 246

D ul 1 number in effect as of the ef fective date of this Agreement, 2 or any successor TPC account number. 3 4.13 Insurance Reprocontativos: The reproson-4 tatives established pursuant to Section 7.1.4 hereof. 5 4.14 Nuclear Information Center: The structuras j 0 and associated facilitics that will be constructed or re-

    ,    7   located at the Plant Site, for the purposc of educating 8   visitors about nuclear power generation and its effect on 9   the environnent.                     '

10 4.15 Operating Acont: Edison, who, pursuant to 11 the January 22, 1970 lutter agreement between the Companies 12 referred to in Section 2.2 hereof, is designated the Comy ny 13 having responsibility for the operation and maintenance V 14 of Unit 2 and Unit 3. v 15 4.16 Participation Share: The respective undivided 16 percentage ownership interest of each Company in Units 2 and 17 3 which is eighty percent (801) for Edison and twenty percent 18 (20%) for San Diego. 19 4.17 Plant Site: An arca of land used for tne 20 major portion of San Onofre described in an easement grtnted 21 for such purpose by the United States to the Comapnics on 22 P.sy 12, 1964 and recorded in the Official Records, Office 25 of the County Recorder of San Diego County, in Series 5, 24 11 ooh 1964, Page No. SSS87. 25 4.18 Project Acrccments: Those agreements which 2G

 )           r. ave been executed, or will be executed during the to. , of

_ __s 2111 247

     -                            ..                                   ~     ~~ "

DMD ddJ vJ W@lWN J _a I this Agreement, by San Diego and Edison, between themselvas, 2 or jointly with third parties, which relate to the construction 3 of Units 2 and 3. 4 4.19 Project Director: Edison, who, as agent for 5 San Diego and principal on its own behalf, is designated the O Company having the responsibility for the* performance and l 7 completion of the Project Work. 8 4.20 Project Insurance: Policies of insurance 9 relating to the Project Work to be secured and maintained as 10 provided in Section 8 hereof. 11 4.21 Project Work: All engineering, dosisc., 12 construction, contract preparation, purchasing, supervision, 13 expediting, inspection, accounting, testing, start-up, and w- 14 regulatory licensing of and for Units 2 and 3 and other w . . - fc}a ud {ac{_l4, ties (but not the switchyard facilities at 16 Site A, the Edison Switchyard and the San Diego Switchyard) 17 as such work is more particularly described in Section 5 18 hereof. 19 4.22 Ouality control: All those planned and 20 systematic actions necessary or appropriate to provide, 21 in accordance with 10 C'.F.R. Par,t 50, Appendix B, as it may 22 be acended from time to tice, adequato assurance to the 23 Conpanics that the construction and operation of Units 2 and 3 24 will not pose an unduc risk to the health and safety of the 25 public, and that Units 2 and 3 will provido continuous a:1d 20

  .      teliable :J.neration of electric pc..cr.

w 2111 248 l 1 4.23 Quality Control Representatives: The repre-2 sentatives established pursuant to Section 7.1.5 hereof. 3 4.24 Recuest for Funds: The request of the Prcject 4 Director pursuant to Section 6.7 hereof for funds required 5 from San Diego for its portion of Construction Costs. G 4.25 San Diego Switchyard: The 220-kV switchrack 7 and related facilitics constructed at San Onofre for San 8 Diego's exclusive use, including the 220-kV bus sections to 9 which San Diego's transmission lines arc connected, but not 10 including the power circuit breakers, transformer side dis-11 connect switches, conductors, and dead-end assemblies 12 associated with the main transformer leads and reserve 13 auxiliary transformer leads or any environmental radiatien 14 monitoring equipment installed therein. '

                                                                        ~

ws 1G 4.26 San Onofre ::uelear Cencrating Station (" San 1G Onofro"): The entire nuclear generating facility located 17 on a site of approximately 90 acres in the northwest corner of 18 the Marine Corps Base, Camp Pendleton, California, consisting 19 of the Plant Site, the Access Poad Area, the Spur Track 20 Area, the Off-Shore Land, any Subsequent Acquisitions, Unit 21 1, Unit 2, Unit 3, the Nuc] car Information Conter, the Edison 22 Switchyard, the San Diego Switchyard, and any Additional 23 Goncrating Units subsequently constructed or installed, as 20 such terms are defir.cd in the San Onofra Cwnership Agreement 25 or this Agreement. PG

                                      //

w - -- _,_ 2111 249

v:J\ ~

a. ~,, a 1 4.27 San onofre ownership Agrecrent: The s,

k,, 2 agreement the Cc= panics entered into cn October 5, 1967, 3 which provides for the ownership of the San Onofre Nuclcar 4 Generating Station.' 5 4.28 Site A: The area of land at San Onofrc 6 on which Edison and San Diego have constructed new 7 switchyard facilities for use during a portion of the 8 construction period of Units 2 and 3. 9 4.29 Start-Up Period: The period, for each 10 unit, commencing on the date when the auxiliary bus of 11 each unit is first energized for testing, and terminating 12 on the Date of Firm Operation of such unit, during which 13 any necessary alterations and adjustments shall be 14 made to provide for said unit's safe and dependable operation. v 15 4.30 Unit 1: The first nuclear generating le unit at San Onofre, consisting of a nuclear steam supply 17 system, a turbine-generator designed to generate approxit?.tely 10 430 megawatts (nct) of electric power, and all related 19 cquipecnt and facilitics which are necessary for the safe 20 and ef ficient generation of electrical energy. 21 4.31 Unit 2: The second nuclear generating 22 unit at San Onofre, consisting of a nucicar steam 23 cupply system, a turbine-generator designed to generate 64 approximately 1,140 megawatts (nct) of electric power,

     ,,5
     ~

and all related cgr.ipment and facil.'. tics which are necessary 20 ' f or t.hc sa fe a nd o f f i c ' e n t c.r ' . ec on of eicetrical energy ,

 .s             -                     -

_ 2111 250

D -- -- 9 1 including that equipter.t necessary to connect Unit 2 2 with those facilities existing as part of Unit 1 and those 3 facilities that will be part of Unit 3, installed on 4 thc Plant Site, but excluding those ecmmon facilities 5 installed alcng with Unit 1 or Unit 3. 6 4.32 Unit 3: The third nuclear generating 7 unit at San onofre, consisting of a nuclear stcam supply 8 system, a turbine-generator designed to generate approximately 9 1,140 megawatts (net) of clectric power, and all related 10 equipment and facilitics which are necessary for the safe 11 and efficient generation of electrical energy, including 12 that equipment necessary to connect Unit 3 with those facilitics 13 cxisting as part of Unit 1 and those facilitics that will 14 be part of Unit 2, installed on the Plant Site, but v 15 excluding those corr.on facilitics installed along with le Unit 1 or Unit 2. 17 4.33 Willful Action: Action taken or not taken by 18 a Company at the direction of its directors, officers or 19 employees having management or administrative responsibility 20 af fecting its performance under any of the Project Agrcoments, 21 which action: 22 4.33.1 is knowingly or intentionally taken or 23 failed t.o be taken with conscious 24 indifforence to the consequences there-l 25 of, or with intent that injury or

 ,. 0 damago would result. or uculd prc,1>ai ly v
                                      ,;                  2111       251

                                                     .t         [..b i m,$

1 result therefro=; 2 4.33.2 has been determined by final arbitra-3 tion award or final judgment or judic-4 ial decree to be a material default 5 under any of the Project Agr32monts and 6 whichoccursorcontinoesbehondthe 7 time specified in such arbitration 8 award or judgment or judicial decroc 9 for curing such default, or, if no tipo 10 to cure is specified thereir, occurs er 11 continues thercaf ter beyonc. a reat.o:.- 12 able tine to cure such default: 13 4.33.3 is knowingly or intentionally tahcn or 14 failed to be taken with the knowledge v 1G that such action taken or failed to be 1G taken is a natorial default under any 17 of the Project Agrecments. 18 Willful Action does not include any act or 19 failure to act which is merely involuntary, accihntal 20 or negligent. As used in this Section 4.33, the phrasc 21 "ceployces having managenent or administrative responsibility" 22 refers to employces of a Company who are respons'.ble for 23 onc or more of the executive or adr.inistrative f anctica.s of 24 planning, organi::ing, coordinating, directing, :3ntrolli.g 25 and supervising such Company's performance under any of U t.he Projcet UJreenents.

                                                  -.                       =     - -.. -
                                              -30                            2111 252

D D @ M Qgqqq u y. . %>h,ul]\jQf 1 5. PROJECT WORK: The Projcct Work shall be performcd 2 and completed as follows: 3 5.1 Edison shall be the Project Director. 4 5.2 San Diego hereby appoints Edison as its agent, 5 and Edison hereby undertakes as San Diego's agent and as 6 principal on its own behalf, the responsibility to perform 7 and complete the Project Work in accordance with the terms 8 and conditions set forth herein. - 9 5.3 As part of such responsibility and subject to 10 the terms and conditions set forth herein, the Project Director 11 shall, in regard to the Project Work: 12 5.3.1 Contract for, furnish ay(d_obta,in 13 services and studies. 14 5.3.2 Purchase and procure equip: rent, %s 15 apparatus, machinery, materials, tools, le and supplies. 17 5.3.3 Secure and maintain Project Insurance. 18 5.3.4 Investigate, adjust and settle claims 19 against the Companies for which pay-20 ment is not made by Project Insurance, 21 and claims of the Companics against 22 any insurcr or third party for losses 23 and damages. The Project Director shalF 24 obtain the prior consent of the 25 Coordinating Reprcuenta tives ho fore "O agreeing to a settlement of any claim v 2111 253 1 r combination of claims exceeding 2 $100,000 arising out of the s?me trans-3 action or event and not covered by 4 Project Insurance. 5 5.3.5 Assist any insurer in the investiga-6 tion, adjust =cnt and setticment of any 7 loss or claim covered by Project 8 Insurance. - 9 5.3.6 Determine what contractors, if any, 10 shall be required to furnish insurance 11 as provided in Section 8.1 hereof, and 12 faithful performance and paycent bonds. 13 5.3.7 Execute, administer and enforce con-14 tracts in the name of Edison, acting as v 15 principal on its own behalf and as 16 agent for San Diego, for the Project 17 Work; provided, that agreements with 18 third parties concerning the nuclear 19 steam supply systems, fuel supply, 20 fuel reprocessing, turbine-generators 21 and the Engineer-Constructor vill be 22 executcd and enforced by both Edison 23 and San Diego. 24 5.3.8 Comply with laws and regulations 25 appliccble to the Project Ucrk, includ-20 ing the provisions of any work: ten's v

               -u_                  2111    254

y compensation acts. g, 2 5.3.9 Keep and maintain records of monics rc-3 ceived and expcnded, obligations in- . curred, credits accrued, estimates of 4 Construction Costs (excluding ad valorem 5 6 taxes and the allowance for funds used 7 during construction), and contracts 8 entered into in the performance of 9 Project Work. 10 5.3.10 Expend funds advanced by San Diego to 11 the Project Director only for Construc-12 tion Costs and in accordance with the 13 terms and conditions of this Agrec=ent. 14 5.3.11 Keep Units 2 and 3 free from liens ex-15 cept for liens for taxes or assecsments 10 not yet due or liens incidental to 17 construction; provided, that the Project 18 Director may in good faith contest the 19 lawfulness or validity of any lien if 20 such lien cannot be fore-closed during 21 the pendency of the contest. 22 5.3.12 Keep San Diego, through its Engineering 23 Reprecontntivo, fully and pronptly 24 informcd as to significant matters 25 involving the Project Work.

   . 20     5.3.13   Obtain or cause to be obtained, in V                                                              _

2111 255 _13_

accordance with Section 10 hercof, 1

 %#             ccnstruction permits, temporary 2

access rights and other licenses 3 and approvals required to perform 4 5 and complete Project Work. - 0 5.3.14 construct or cause to be constructed Units 2 and 3 with the objective: 7 5.3.14.1 for Unit 2, of having a 8 9 Date of Firm Operation 10 by October 1, 1979; 11 and 12 5.3.14.2 for Unit 3, of having a 13 . Date of Firm Operaticn by 14 October 1, 1980. 15 The Project Director shall use its 10 best ef forts in the performance of 17 its responsibilities hereunder to 18 complete the Project Work as 19 scheduled above and shall promptly 20 inform the Coordinating Representatives 21 of any factors affecting such 22 schedules. 23 5.3.15 Subsequent to the Date of Initial 24 Full Pcwcr Operation of cach Unit, 25 make final equipment modifications 20 necessary to meet the cpecified

 %a 1                          requirc..ents thereof, and conduct
 ,  2                          tests to verify tnat specified 3                          efficiencies of major equipment 4                          items have bcon achieved.

5 5.3.16 Construct or causo *o be constructed 6 a Nuclear Information Center on 7 the Plant Site with convenient access 8 by the public, parking facilitics 9 and landscaping. 10 5.4 Each Company shall provide the other with 11 any available information pertaining to the Project Work 12 that will assist the other Company in responding to a 13 request for such information by any regulatory agency. 14 The Companies shall keep each other inforred on such v 15 responses to regulatory agencies. 18 5.5 The Project Direc, tor shall prepare and 17 provide San Diego with a summary of Construction Costs, 18 in a form which will allow San Diego to classify its 19 portion of such Construction Costs to appropriate FPC 20 Accounts, as soon as practicable after the Date of Firm 21 Operation of Unit 2 and Unit 3. 22 5.6 The Project Director s.211 preparc and provide 23 San Diego with a Final Completion P.cpert within one year after 24 the completion of Project t.'ork. 25 5.7 The Project Director shall use the FPC Accountsi 23 in preparing the summary of Construction Costs and the Final v ._ 2111 257 l 1 Completion Report and any supplements thereto. 3 6. CONSTRUCTION COSTS: 3 6.1 Construction costs shall consist of payments 4 mado and obligations incurred (other than obligations for the 5 allowance for funds used during construction and ad valorem 0 taxos) for the account of Project Work. Construction Costs 7 shall include, but shall not be limited to, all payments made 8 and obligations' incurred in connection with the following: 9 6.1.1 All cost of labor, services and studies 10 authorized by the Project Director. 11 6.1.2 Payroll of the Companics' employces who 12 perform Project Work, including 13 customary labor loading charges applic-14 able thereto such as Social Security v 15 Tax, unemployment taxes and time-off le allowances. 17 6.1.3 All components of the costs of con-18 struction including overhead costs 19 . associated with construction, temporary 20 facilitics, land and land rights, 21 structurcs and improvements, and 22 equipment for Units 2 and 3, as set 23 forth in the FPC Accounts. 24 6.1.4 All costs, including those of consul-25 tants and attorneys retained for the 20 purpose of the n'roject Nork and San V _.. __ _ _ ._ . . _ _ _ . . . . .__. 2111 258 1 San Diego's gencral counsel (but excluding those direct costs of 2 Edison's attorneys whose costs and 3 4

                    . expenses are included in administrative 5                   and general expenses provided for in i           Section 6.1.8 horcof, and those costs 6

7 of San Diego's general' counsel involved j 8 in Pre-licensing anti-trust review activities), incurred by the Companics 9 10 in regard to: 11 6.1.4.1 Land rights (excluding 12 transmission land rights) . 13 6.1.4.2 Procurement of the nuclear 14 steam supply systems (in-v 15 cluding the initial fuel 10 loadings), turbine-genera-17 - tors and services of the 18 . Engineer-Constructor, 19 6.1.4.3 Preparation of applications 20 or reports required to 21 obtain necessary regulatory 22 approvals for Units 2 and 3, 23 6.1.4.4 Preparation of the agrce-24 monts relating to Projcet 25 Work (excluding this Agree-2G ment, the letter and su;+1e-l w . 2111 259 1 mental agreements referred 2 to in Sections 2.2 and 2.3 w s hereof, agreements relating 4 to the ownership, operation 5 and maintenance and any 6 other agreement or amendment 7 to an agreement relating 8 to Units 2 and 3 that the 9 Companies have or may enter 10 into between themselves 11 cxclusively). 12 6.1.5 All costs, including any rental 13 charges, of materials, supplies, tools, 16 machinery, equipment, apparatus and 'v 15 construction power. le 6.1.6 All costs of injuries and damages 17 referred to in Section 9.5 hereof, ld workmen's compensation incurred 19 referred to in Section 5.3.8 hereof 20 and Project Insurance, execpt that 21 insuranco described in Section 8.2 22 hereof. 23 6.1.7 All federal, state or local taxes of 24 any character imposed upon Project 25 Work. 20 6.1.8  ;.n a110wance for administrative a'nd v - - - - 2111 260

                            ..p.

general expenses to cover the costs of 2 servic s rendered by each Company in 3 the performance of Project Work. Said 4 allowance for each Company shall be thc 5 su of (1) twenty-eig h and one-hah 6 per ent (28.b) of the labor portion of 7 each respective Company's direct pay-8 roll, including overheads, of employces 9 who pcrtarm Project Work, (2) three-10 fourths of one percent (3/4%) of one-11 half of the Construction Costs, such 12 Construction Costs first being reduced 13 by the aforementioned labor portion, 14 and (3) one-half of one percent (1/ 2 's ) b, 15 . of the remaining one-half of the le , Construction Costs, s'.ch Construction 17 - Costs first beino ceduced by the afore-18 mentioned lab sr portion. 19 As used in this Section 6.1.8, the 20 Construction Costs base for the appli-21 cation of the percentages referred to 22 above shall not include: 23 6.1.8.1 Any allowance for adminis-24 trative and general expenscs, 25 6.1.8.2 Costs and expenses referred 20 to in Section '.5 hereof. - w -

                                                            ~

21T 261 l 1 6.1.8.3 Legal fees incurred by San Diego. 2 3 6.1.9 Expenses of the operating Agent 4 incurred during the engineering 5 design period, the construction O period and the Start-Up PdEod of each

        !   7                           unit.

8 6.1.10 Any training expenses charged to 9 Construction Costs in accordance with 10 an agreement providing for the opera-11 tion of Un.'ts 2 and 3. 12 6.2 Except as otherwise. agreed by the Companies, 13 any costs incurred in connection with the retirement of the

x. , - 14 switchyard facilities at Site A, the construction of the

    %s 15   Edison Switchyard and the construction of the San Diego Switch-10   yard shall be borne solely by ti.e Company owning such facility.

17 6.3 Neither Company shall be entitled to a fee, 18 price, percentage or any other compensation over and above 19 the costs of services rendered by it in the performance of 20 Project Work. 21 6.4 Edison shall pay cighty percent (801) and 22 San Diego shall pay twenty percent (20%) of all Construction 23 Costs. 24 6.5 Budgots for tre expected expenditures of 25 Construction Costs will be estc.blished by the Companics in 20 the following manner: 2111 262

                                               .- ) -

1 6.3.1 Within thirty working days after exe-2 cution of this Agreement, each Company w 3 shall prepare and submit to the Fiscal 4 Representatives expenditure curves of 5 its expected expenditures for Construc-6 tion Costs for the term of this Agrec-I 7 ment, and a detailed. budget of its 8 expected monthly expenditures for 9 Construction Costs for the 1973 and 10 1974 calendar years, 11 6.5.2 Within fifteen working days after re- i 12 ceipt of each Companics' curves and 13 budget, the Companics, through their 14 - Piscal Representativcs, shall jointly: w 15 - 6.5.2.1 Develop a Composite Budget, 10 which will consist of a 17 composite expenditure curve 18 for the term of this Agrec-19 ment and a composite de-20 tailed budget by months for 21 the 1973 and 1974 calendar 22 years. 23 6.5.2.2 Submit such Composite Budget 24 to the Coordinating Repre-25

          .                       oentstives for the..: revicw 20

• cnd approval, v

2111 263 1 6.5.3 The Coordinating Representatives shall y review such Composite Budget and impic-w 3 ment any necessary actions so that such 4

                 . Composite Budget will receive their 6             approval within twenty working days 6             after receipt of the Composite Budget.

7 6.5.4 Such Composite Dudget shall form the 8 basis for projecting the Construction 9 Costs; provided, that the Companics' 10 failure to develop such Composite 11 ,. Budget chall not in any way prevent 12 the Project Director frcm performing 13 in a timely fashion the Project Work. / 14 6.5.5 By september 1 of each succeeding year 15 thercafter and until the termination of 16 this Agreement, each 'ompany shall 17 preparc and submit to the Fiscal 18 Representatives a detailed budget of 19 its expected monthly expenditures fer 20 Construction Costs for the two next 21 following years. 22 6.5.6 Within fiftcon working days after re-25 ccipt of each Company's detailed 24 budget for the two next following 25 years, the Companies, through their 20 Fiscal hepresentatives, shall jointly w 2111 264

y revise the Composite Budget acccrdi..g-2 . ly and submit such revised Composite 3 Budget to the Coordinating Represen-4 tatives for their review and approval. 5 6.5.7 The Coordinating Representatives shall 0 review such revised Composite Budget i 7 and implement any necessary actions so 8 that such revised Composite Budget will 9 receive their approval by October 1 of 10 each succeeding year. 11 6.5.8 The Co. - 2nics shall promptly advisc 12 each other if and when it boccres 13 apparent that actual costs will diffcr ( , 14 materially from projected costs sub-w IS mitted by such Company. If from time le to time it becomes evident that the 17 Composite Budget is in need of materiah 18 revision, the Companies, acting throug'n. 19 their Fiscal Representatives, shall 20 promptly revise such Composite Budget 21 and submit it to the Coordinating 22 Representatives for their approval. 25 6.6 San Diego shall submit to the Project Director, 24 no e. ore f requently than weekly, an invoice for actual 25 Construction Costs incurred by San Diego fcr the period

     '/ 's ,

covet:cd by such invoice, w 2111 265

y 6.7 San Diego shall advance funds weekly to the

s. .

Pr ject Director, so that the Project Director may rcimburse

    ,  2 3

itself and pay others for Construction Costs to be incurred, as follows: 4 5 6.7.1 On Thursday of each week, the Project 0 Director shall submit to San Diego a 7 Request for Funds (in the form des-8 cribed in F.xhibit A attached hereto), 9 to cover San Diego's portion of 10 expected expenditures for Construction 11 Costs for the calendar week following 12 such request. San Dir.go shall mahc 13 such advance payment to the Project s 14 Director within three working days v 15 after receipt by San Diego of such 10 request. 17 6.7.2 In making any Request for Funds, the 18 Project Director shall take into 19 account any unexpended balance in or 20 deficiency of funds previously ad-21 vanced by San Diego and statements 22 of Construer. ion Cocts previously 23 submitted by San Diego. 24 6.7.3 Funds not advanecd to the Project 25 Director by San Diego in responce to 3 20 a itequo:s t for Fundo on or before O.c 2111 266

1 due dato shall be payable with 2 interest accrued at the rate of ten w 3 percent (10%) per annum or the 4 maximum legal rate of interest, which-5 ever is icsser, computed from the due 6 date to the date cf payment. 7 6.8 The Project Director shall make its r? cords 8 relating to Construction Costs available to the Fisca?. 9 :<epresentatives at reasonabic times and places. 10 6.9 A cash adjustment shall be made between 11 Edison and San Diego so that each item of the Construction 12 Costs shall be shared between the Ccmpanies in proportion 13 to their Participation Shares as follows: 14 6.9.1 When the total and final Construction v 15 Costs shall have been incurred and 16 calculated, San Diego chall pay to 17 Edison for any deficit between total 18 advances made by it and its Participa-19 tion Share of the total and final 20 Construction Costs, or shall be 21 reimbursed by Edison for any credit 22 between said total advances made by . 23 it and its Participation Sharc of the 24 -otal and final Construction Coets. 25 6.9.2 Such deficit or credit shall be payabic 20 with interest at an annual interest 4 _2s_ 2111 267

1 rate charged to price unsecured 2 borrowers by the Bank of America, 3 N.T. and S.A., San Francisco, then 4 in offect, accrued from the date of 5 the last cash transaction between the O Companics resulting from a Request for 7 runds and until the date of payment of 0 such deficit or c'_' edit. 9 7. ADMINISTRATION: 10 7.1 As a means of securing effective cooperation 11 and interchange of information and of providing consultetica 12 on a prompt and orderly basis between the Companies in . 13 connection with various administrative and technical problen.c 14 which may arise from time to time in connection with the w 15 performance of the Proiect Agreements, cach Company shall 10 designato qualified representatives, as listed below, who 17 shall contact cach other directly regarding Project 1:ork 18 matters and shall be responsible for developing procedures 19 as required to provido for effcetive liaison between the 20 Companies. 21 7.1.1 A Coordinating Representative to be 22 appointed by each Ccepany: 23 7.1.1.1 To provide liaison 24 between the CerJanics it tP 25 Management level. 2C 7.1.1.2 To revicu and discu:.. , w _ .. -

                                      -2c-                     2111  268

1 issues and problems relating 2 to Units 2 and 3 and to seek 3 to resolve issues referred to 4 it by the Engineering, Fiscal, 5 Insurance, or Quality Control 6 Representatives. 7 7.1.2 An Engineering Representative to be 8 appointed by each Company: 9 7.1.2.1 To provide liaison between 10 the Companics at the 11 Project engineering 1cvel 12 and.to provide a point of 13 contact for all Project 14 '

                               Work except matters specif-15              '

ically assigned to other 10 representatives provided for 17 in this Scction 7. 18 7.1.2.2 To review and discuss issues 19 and probler..s and to take 20 such actions as are necessary 21 to implement the provisions 22 of this Agreement. 23 7.1.2.3 To perform such other 24 25 functicns and dutics as ray 20 be c.1:;igned to them by the Cc.c C.'na inn ? c p r e s e n t . : : v c r. . I w . _ _ _ _ . . . . ____ _l

                      <7-21ii           269

1 1 7.1.3 A Fiscal Representative to be appointed s. s, 2 by each Company: s 7.1.3.1 To provide liaison between 4 the Companics and to provide 5 a point of contact for all 6 matters concerning plant 7 accounting, audits, billings, 8 constructicn expense account-9 ing and other related fiscal 10 matters. 11 7.1.3.2 To review and discuss issucs 12 and problens and to take 13 such actions as are necessary 14 to imple..cnt the provisions 15 of this Agreement. 10 7.1.3.3 To develop procedures for 17 providing proper accounting 18 betwcon the Co panics 19 . incidental to the Construc-20 tion Corts. 21 7.1.3.4 To perfora such other 22 functions and duties as nay 23 be assic.nud to them by the 24 Coo rd i n _ '. . . ; ~-ap re s e n t a *. ve t . 25 7.1.4 An Irr.urance tcprt ..: .tive to be appo!i.ttd 1, each - V _ ___ _.. ... ._ . . . _ . . ._ . _ _ _ ___ _4 2111 270

. 1 7.1.4.1 To provide liaison between

    --        2                                   the Companics and to provido 3                                   a point of contact for all 4                                   matters concerning Project 5                                   Incurance.

0 7.1.4.2 To revic'.t and discuss 1scues 7 and probicms and take such 8 actions as are necessary to 9 implement the provisions of 10 thic Agrec.. tent. 11 7.1.4.3 To perfcnn cuc' othcc 12 functionn and duties an r.ay 13 be assig!.ed to thc= by the 14 Coordinating Representatives. w 15 7.1.5 A Quality Control Ecpresentative to be le appointed by caeh Company: 17 7.1.5.1 To providt liaison between 18 the Cc,,per. cs and to pro-19 vide a point of contact for "O all catters concerning 21 Quality Control. 22 7.1.5.2 To revice and di cucs issues 23 and problens, and take such 20 actions a:.d inntituto such

       <.- . r; pc-Cu               . a: a t c n e c er '.,0.. .y 06 s'                                                      .

t o 21 p 1 <. . .. : a t. the p1o'/ 23 i. :.a w 2111 271

                                                                 , ,          a           $

of Ll.i Ag r F T".c n t . 7.1.5.3 To perform such other 2 3 functions and dutics as mav-4 be assigned to them by the g Coordinating Representativec. 0 7.2 within tea days af ter exc cution of this Agrec-7 .cnt, each Company by notice to the other Corv.ny shall 8 decignato its Coordins.tir.g, Engineering, Ficcal, Incurance and 9 Quality Control ncprecer.tatives. 10 7.3 Ecch Cor-iny shall notirf the other Cc pany 11 pro:..pt.ly o f a ny cht.nge in its r.:grect:.' r ti cen. 12 7.4 The Carpenics, c : ting :.hro':ch their Coor lin - 13 nLing P.cpresentativec, c!.a l l h c v.: the r i r;h t. to estah]ich 14 ad hoc cercaittcos when, in the o,. inion of the Coordint. ting w 35 i:e pre cen ta tive s , -:uch c.. mit toca e t c re ;ui::cd . The authc.ity 10 of any such corr'.ittee shTil be set forth in the written 17 c:grec: vent between the Ccordinati ig !!cprone.ntctiven establi hing 10 .:uch cor mittee and chal: be subject to the provisions of 19 the Projcct Agrc rcnt s. t "O 7.5 i<cprec. .n..tivcc estc.M  ?..d purnuant to this 21 ,.greenent chall have no authority to :1. edify any of the 22 ' rov.i sions of the Project Agreer .ntr;; p. ovid.d, that thic 23 !.gretrent r ay be tradi fied in <eri ting ni chen c'uly . :ccuted 24 '., y e n o f f ice:r o f cach ' cr.,pany . 25 7.C ' .y e c

• i c . , .' 'T r..

                                       .i                                  ae .t        .r deter:.in.: tion :           .: t-I 5 . r-          :

g 1 - ( . . :.. . t. .,

                                                                                        . 12 i.e : . .. . n cd    (

l. ,

w . . . . . .. . . . . . _ . _ . . . _ .._. ..... . . . _ . . . .

                                                                   ,.                               2111         272

D**D *D R3 4fA~ - owJ - ([ -. ( _, 1 wri tir.g and chall beco.: 2 cf fe t:L.vc when ci gt..: ! by the 2 Coordinating P.cprecentative of each Co=pany. w

8. PROJECT T::SLTJ.T_E_:

4 8.1 During the performance of Project Work ' s hereunder, the Project Director chall securc and maintain in 6 offect the following non-nuclea- incurance co'terages , to 7 the cxtent available, covering the Project Work. Such 8 coverages may be provided by either the Companics or 9 contreeters. 10 8.1.1 Cor.prehensive bodily injury and 11 property d. .qc licb!1 icy insurance, 12 cxcluding cutcrobile liability. 13 8.1.2 All ris. :-1.ui1J.cz 's risl. i n:urr.n:c 14 coverin-j loss or dt.; '.go to Project w 15 Work ur. icr cource of ecnutructi::., 10 including r.atcrials and cupplien 17 while in transit and while stored at 18 the Plc..t Site.. 19 8.2 During the perforrn nce o f T.-c.jcet Ucr}. here-20 under cach Ccr..pany r. hall recure and tr.aintni:. in of fect the 21 follu. ring insurance coveragen fnr itself: 22 Automolilo liability protection 8.2.1 63 covering liubilitir:. arising cut of 24 the ute by unch Co p...y of owr.cd, 25 non-own.d, c hired autcrobiles

2. .

uced it. the per for:  :.c. o f T n.. c t . I w -- _ _ _ _ . _ . . . _ _ _ . . _ _ . _ _ . . . _ _...-__ . 2111 273 _ n ..

U k ' 1l Work. 2 8.2.2 Wor/ *. men's compensation benefits 3 covering such Conr:ny's own 4 cmployecs in compliance with 5 statutory requirements of the 6 relevant jurisdiction. 7 8.3 The cc= panics shall, prior to the delivery of 8 nuclear fucl for Unit 2 and Unit 3 to the Plant site, 9 secure and maintai1 in effect the following nuclear 10 insurance and othar coverages with respect to said 11 units: 12 8.3.1 Nuclear liability insurance agr. inst 13 liability crising cut of or resultir.g from a " nuclear incident" as defined 15 in Section lig of the Atomic Encrgy 16 Act of 1954, as amended. Such 17 inr.urance shall include (a) la linbility insurence from the ?:uclear 19 Energy Liabi~lity Insurance Asscciation 20 and the "utur.1 Atenic Energy 21 Liability Underuriters, or 22 equivalent insurance in such amour.t 23 and in such forn a; shall rect the 24 fir.ancial prc tc e tion rc quireronts o f i OS l the At,mic Energy corr.incion purru:..t 2 *. li to .. .d. . n- t . c n 170: M the 1.tr -i c

  .           L..           ... _ . . . _     _ _._ _                                . _ ___
                                                         . . , .                   2111 274

hhh 1 Energy Act of 1954, as atended, 2 and (b) a Government Indomnity 5 Agreencnt with the Atomic Energy 4 Commission pursuant to Subsection 5 170c of the Atomic Energy Act of 1954, 6 as amended. 7 8.3.2 Nuclear property damage insurcnce 8 from tl.c Nuclear Energy Property 9 Innurance Association and the 10 Mutual Atomic Energy Reinsurance 11 Pool, c r Nuclear Mutual, Ltd. , or 12 equivalent inuurance, and cny 13 additicnal nuclear preperty dcrage 14 s, insurance coverage in such amount 15 and such form as are agreed upon 16 by the Companics. 17 8.4 The inrurable values, limits, deductibles, 18 retentions, and other special terms, covenants and 19 conditions of the Project Insurance shall be agreed upon 20 by the Companics prior to the placc...ent of such insurance. 21 8.5 Both Companics shall be named insureds, 22 individually and jointly, c.n the insurance described in 23 Sections B.1 and 3.3 hereof, ard the compichensive bodily 24 inju:.y and property damage liability in:.urunce referred TS to in Section 8.1.1 hereof shall carry cros liability c: .% . o.a.

 'd 2111 275

y e [f)] r-b (a g g r;NNjbb9h y 8.6 Project Incur.nce policics shall be prirary o

    ~

insurance for all purposes and shall be so endorsed; provided, ma 3 that the liability insurance referred to in Section 3.1.1 may 4 be execcs of insurance being provided by a contractor. Any 5 .ather insurance carried by a Corp:ny individually shall not o .'articipate with the Project Insurance as respects any loss 7 c.r claim for which valid and collectible Project Insurance 8 chall apply. Such other incurance shall apply solely as 9 respects the individual interests of the Company carrying 10 such cther insurance. 11 8.7 Each of the policier. cf Project Incurance .shcll 12 be endorsed so as to provide that all additional named insuref el 13 chall be given the same advance notieu of cancellation or 14 natorial change as that rcquired to be given to the Projcct w 15 g Director. 10 8.8 The Project Director shall furnish cach 17 Company with either a certified copy of each of the policies l'3 of Project Insurance or a certified copy of cach of the policy 10 forms of Prcject Insurance, together with a line chect therefor io (and any subr.equent emendmentn) naniing the insurcrs and 31 underwriters and the extent of their participation. When 72 the policies or policy forms of Project Incurance ha.c been 23 approved in writir.g by both Companics, c. aid relicy forn:

  'M       shall not he r:odified or chant;cd by any Cun; any withoat the 23       prior writt. n co- ent of the o.her Conpany, except for 23       nino. an       -     
                                             '- 21 c!..ing. r. or - ad i f i ca t ion , cs to w      { _. _     _. _ _ . . _ . . _ _            _.

2iii 276 it.

qpF3 Pa Up r' ~ ' ' 7 ff li 1% op 4, .c y which notification shall be given by the Project Director to the Companics. 2 8.9 The Project Director may at its option be in 3 4 whole or in part a self-insurer for workmor.'s compansation to 5 the extent the benefits thereunder may be extended to coployecc 6 f the Projcct Director at Units 2 and 3.

• 7, 8.10 If either Company's insurance program affords 8 equal or better coverage on a more favorable cost basis than 9 that available to the Project Director, the Companies may 10 agree that such insurance progran may be utilized to af fcrd all.

11 or part of the incurance required by Sections 8.1 and 3.3 12 hereof. 13 8.11 Nothing herein shall prohibit the Project \) 14 Director or any Company from furnishing a policy of Projcet w 15 Insurance which combines the coverage required by this 10 Agreement with cov: rage outside the scope of that required 17 by this Agreement. If the Project Director or either Company 18 furnishes such a r.31 icy of Prc. ject Insurance, the Comps:acs 19 shall agree on the portion of the total premium cost which 20 is a]locabic to Project.Insurcnce. If the Cenpanies are unable to agree or. st'ch allc ct. tion, the P.'c]cc: Director :.1y 21 22 cake an estimated allocation and bill the Companics on the 23 basis thereof, wit h ad jus tr.mnt to be made .t.cn the dispute 24 is resolved. 23 8.12 E> cept as provided in Section 8.13 horcof, 2C t if either Cc:.!p n, u sircs c! ir jes in :ny Prc;.c- Insure:.;c

--         -                =

I _3s_ 2111 277

1 policy, such Company shall notify the Projcet Director 2 and the other Company in writing of the desired changes not 3 1 cs than ninety days prior to the rencwal or anniversary 4 date of such Project Insurance policy. 5 8.13 Each Company shall have the right by written 6 notice to the Project Director to name any mortgagec, trustec 7 or secured party on all or any of the Project Insurance 8 policies as loss pcyces or additional insureds as their 9 interest may appear. 10 8.14 If the Cc= panics are unable to agree upon 11 any matters relating to the Prcject Insurance, the Projc:t 12 Director, pending rer.olution of such disagroc ent, shall 13 procure such policier of insurance as in its best judgment / 14 arc necessary and required to protect the Co= panics against w 15 the insurable ris}:s for which Projcet Insurance is required. 16 During any period of negotiations with an insurcr, or other 17 ncgotiations which are pending at the expiration of the 18 period of coverage of a Project Insurance policy, or if a 19 Project Insurance policy is cancelled, the Project Director 20 shall renew or bind policies as an cmcrgency r.casure or may 21 procure policien of insurance which are identical to those 22 which were cancelled, or may to the extent possible secure 23 rep]necable policies which will provide subutcntially the 24 nar.ic coverage as the policy expiring or can clied. 25 9. LIAB'.._t.TT.*:: 20 9.' '

<'d in this Secti r. ?, tne f e l .' : : ". 7 . ' . -

V -_- . . . . . _ -, A

                                               .' o -

y have the following meaning: exclusively: 2 9.1.1 " Damage" muans any loss, da. mage, 3 cost, charge or expense resulting 4 fr m the performance or nonperformance 5 by a Company or the Companics of 6 Project h*ork, or the performance 7 or nonperfo{mance by a Company or the 8 Com. panics of any of the Project , _ 9 Agreements. 10 9.1.2 " Nuclear Incident" means a nucic r 11 incident as defined in Section lig or le . the Atomic Energy Act of 195', as 13 amended. 14 9.1.3 " Uninsured Damage" means Dam. age not v 15 paid for by Project Insurance. 10 9.2 Except as provided in Section 9.3 hereof, 17 neither Company will be liable to the other Company for 18 Uninsured Damage resulting fro:a a Nuclear Incident. 19 9.3 Neither Company, its directors, cfficers or 20 c.mployces shall be obliga ted to discharge any liability to 21 the other Company in excess of $2,000,000 for any single 22 occurrence for any direct, indircet or consequential 23 Uninsured Damage of any kind or nature suffered by the other 24 Company, resulting frcm Willful Action ar.d resulting from or 25 arising out of a ::uclcar Incident. 1:ach Cc. .!:a r.y expressly 2 ') relcares the ot.l.er Company , i t , d i r e c t.o r . . , citicert ani 2111 279 1 empicyces from any such liability in excess of 52,000,000 per

    %,   3 occurrence and from any judgmcat in excess of S2,000,000 per 3 occurrence obtained against a Company, its directors, 4  officers or employecs, for any such liability.                 Neither 5  Company shall execute, levy or otherwise enforce such a 6  judgment, or record or effcet a judgment lien, against the i

7 other Company, its directors, officers or employees for any 8 part of such judgment in excess of $2,000,000 per occurrence. 9 9.4 Subject to Sections 9.2 and 9.3 hereof and 10 except for Uninsured Damage resulting from Willful Action 11 (and not resulting from or ari.-ing out of a Nuclear Incident), 12 neither Company, its directors, officers or cmployccs shall 13 be obligated to discharge any liability to the other company, N 14 for any direct, indirect or consequential Cninsured Damage v 15 of any kind or nature suffered by the other Company, whether is or not resulting from the negligence of a Company, its 17 directors, officers, employees or any other person or ent.ity 18 whenc negligence would be imputed to a Ccapany. Subject to 19 the execptions centained in this Section 9.4, cach Company 20 expressly relcaces the other Company, its directors, officers 21 and employces for any such liability.  ::either Company shall 22 execute, levy or otherwisc enforce a jud9 .ent for such 33 liability, including recording or effecting a judgment lien, 24 against the other Corp.:ny, its directers, c.f ficers, or 25 empicy cs. 20 9.5 r b e:t *o Rctionr 9.2 arf 9.3 herect 4. 3 V 2111 280

1 cxcept for liability for Uninsured Damage resulting frem 2 Willful Action (and not resulting from or arising out of w 3 a Nuclear Incident), and except as provf.ded in Sections 9.6 4 and 9.7 hereof, Edison shall pay cighty percent (80%) and

                                                                            /,

5 San Diego shall pay twenty percent (20%) of: ' 6 9.5.1 The costs and expenses of discharging 7 liability of one or both of the 8 Companies for any direct, indirect 9 or consequential Uninsured Damage 10 of any kind or nature suffered by 11 any party other than a company, whether 12 or not resulting from the negligence 13 of a Company, its directors, of ficers , 14 and employces or any other person 15 or entity whose negligence would bc 10 imputed to a Company; and 17 9.5.2 The costs and e::penses incurred in la settlement of injuries and damage 19 claims, including attorneys' fees and 20 the cost of labor and related supplies 21 and expenses incurred in injuries and 22 damages activitics (all as referred 23 to in FI'C Account 925) resulting 24 from or arising out of such liability. 25 9.6 Execpt for liability for Uninsured Damage 00 re ulting from Willful Action, cither Company whose ulti.. ate 'W _,,_ 2111 281

1 consumer shall make a claim or demand or bring an action %, 2 for any damage (including death or injury) arising out of 3 cicctric service to such ultimate consumer shall indcenify and 4 hold harmicss the other Company, its directors, officers, and 5 cmploycos from 1 d against any claim, demand or liability 0 for such damage. The term " ultimate consumcr" means any 7 clectric customer, except an electric utility system to which 8 electric power is delivered for resalc. 9 9.7 Except for liability for Uninsurcd Damage 10 (including dea th or injury) resulting from Uillful Action, 11 cach Company shall bear the total costs of discharging all 12 legni liability imposed upon it or the other Ccepany, 13 including attorneys' fees and other associated costs, arising ,, out of workmen's compensation claims, or employers' liability 15 claims, brougat by its employcos; provided, that the 10 cost of discharging such liability, including attorneys' fees 17 and other associated costs, arising out of such workmen's 18 compensation claims brought by a compcny's personnel whose 19 - labor expenses are charged or allocated to the Project Work 20 shall be sharci cighty perecnt (801) by. Edison and twenty 21 percent (201) by San Diego. 22

10. AUTHORIZATIONS AND APPROVAT.S : The Project Director, 23 assisted as nccessary by San Diego, will be responsible for 24 cbtaining the cquired authorizations Ond approvals for the 25 Projcct Work. Such authori:aticas ar.d approvals ray incluce, 20 l but a.c not ncceunarily limited to, the fol :, wing (thenc iv . ;

• .- =. _ .]

2111 282 y marked with an asterisk (*) ir.dicate the arcas in which the 2 Companies will make joint application): w , 3 10.1 Atomic Energy Commission 4 10'.l.1 Construction permit.* 5 10.1.2 Operating license

• O 10.1.3 Special nuclear material licensc*

7 10.2 Public Utilities Commission 8 10.2.1 Certificates of convenience and 9 necessity

• 10 10.2.2 Authorization for "inancial agree:ent 11 relative to the fin 5ncing of the 12 English Electric turbine-generaters' 13 10.3 State Resources Agenef 14 10.3.1 Siting agreement
• 15 10.4 State Lands Commission 10 10.4.1 Sand disposal and temporary working 17 arca permit
• 18 10.4.2 Offshore conduit easement and 19 construction permit
• 20 10.5 San Diego Regi_onal !?ater Ou?.lity Control 9sard ,

21 10.5.1 Sand disposcl permit

• 22 10.5.2 Industrial waste discharge resolution
• 23 10.6 State Water Recources control Board 24 10.6.1 Certif ica tien o f cc.c.pliance wi th wa ter 23 quality standard:;*

26 10.7 Army Cc rpg o f I' .n i ni c rn w a _,1_ 2111 283

1 10.7.1 offshore conduit construction permit

• 2 10.7.2 Sand disposal permit
• 3 10.7.3 Discharge permit
• 4 10.8 U.S. Coast Guard 5 10.8.1 Aid to navigation agreement 6 10.9 State Department of Public Health 7 10.9.1 Radiological monitoring program O approval * ,

9 10.9.2 Radioactive materials license 10 10.10 U.S. Marine corps 11 10.10.1 Soil dicposal agreement 12 10.10.2 Temporary casement for 220-kV trans-13 mission lines 14 10.10.3 Sand disposal permit v 15 10.10.4 Telephone line relocation approval le 10.11 Santa Fe Railway 17 10.11.1 Te.?porary right-of-way encroachment 18 permit 19 10.11.2 Spur track approval 20 10.12 State Department of Hi_chways 21 10.12.1 U.S. Highway 101 relocation 22 10.13 State Department of Hichway.3/U.S. Marine corps 23 10.13.1 Encroachment permit for permanent 24 access road E5 10.13.2 Temporary encroac!. ment permits for: O^ 10.13.2.1 Access road to sito A w 2111 284

.       1                               10.13.2.2    220-kV and 138-kV temporary 2                                            lines on shoulders of old 3                                            U.S. 101 4                                10.13.2.3    Duct bank and fireline 5                                             installation 6                10.14 Pacific Telcohone and Telegranh Company       ,

7 10.14.1 Approval to relocato U.S. Marine Corps 8 communication cable within PT&T 9 Company's easement 10 10.14.2 Duct bank and firclino crossing 11 10.15 California coactal Zone Cc mission 12 10.15.1 Any permits required under the 13 California Coastal Zone Conservation > 14 Act of 1972.

• w .

15 10.16 Switchyard and Transmission Line Aporovals 10 10.16.1 Each Conpany shall be responsible for 17 obtaining at its own expense, its 18 required authorizaticns and approvals, 19 if any, relating to its switchyard at 20 Site A, the Edison Switchyard, the 21 San Dicgo Switchyard, and trancmission 22 lines into and out of said switchyards. 23

11. . RELATIOUS!!IP or PAF.T7]is,:

24 11.1 The covenants, obligations and liabilitice of the Companies under the Projcet Agreements are intended to be ccvoral and not joint or collective, and nothing v _ - - _u_ 2111 285

1 herein contained shall cver be construed to create an s, 2 association, joint venture, trust or partnership, or to 3 impose a trust or partnership covenant, obligation or 4 liability on or with regard to either of the companies. 5 Each Company shall be individually responsible for its own 6 covenants, obligations and liabilities as herein.provided. 7 Neither Company shall be under tho control of or shall bc 8 deemed to control the,,,other Company. No Company shall have 9 a right or power to bind the other Company without its 10 express written consent, except as expressly provided in 11 the Project Agreements. 12 11.12 The Co= panics hereby elect to he excluded 13 from the application of Subchapter "K" of Chapter 1 of

     ~4
.,,      Subtitle "A"   of the Internal Revenue Code of 1969, or such 10 portion or portions thereof as may be permitted or authorized 16 by the Secretary of the Treasury or his delegate insofar as 17 such subchapter, or any portion or portions thereof, may 18 be applicable to the Companics under the Project Agreements.

19

12. ARBITRATION:

20 12.1 If the Companies, acting through their 21 respective Coordinating Representatives, are unable to reach 22 agreement with respect to a matter herein specified to be 25 approved, established, determined, or resolved by agracment 2i of the C0mpanies, or by their representatives appointed 2" putcut.nt to thir Agreement, either Ccepany may cr.ll for 26 -v nurmission of such matter or disputo to arbitratica in the 2111 286 1 manner heroin set forth, which call shall be binding upon -sj 2 the other Company to. the disputc. The Project Director shall 3 continue to do all things and make all expenditures necessary 4 for the Project Work pending the final decision of the 5 arbitrators. 6 12.2 The company calling for arbitration shall i 7 give notice to the other Company, setting forth in such 8 notice in adequate detail the issues to be arbitrated, and 9 within ten days from reccipt of such notice the other 10 Company may by notice to the first Company set forth in 11 adequate detail additional related issues to be arbitrated. 12 12.3 Within twenty days from its notice calling 13 for the arbitration, the first Company shall appoint a 14 person to serve as one arbitrator, and shall give notice w 10 to the other Company of such appointment, and within le fiftcen days 'f ter receipt of notice of appointment of the 17 first arbitrator, the other company shall appoint a person 18 to serve as a ce:ond arbitrator, and shall give notice to 19 the first Company of such appointment. The two persons so 20 appointed shall then agree upon and secure a third arbitrator. 21 If the second arbitrator should not be appointed within 22 fif tcen days fr::n the cppointment of the first or if the 23 third arbitrator should not be secured within fifteen days 24 from the ppointment of the second, either Company may with C5 notice to the cther Co?pany ca'.1 upen the American Arbitration 00 Association (or upon a nimila.- c ._, a r .atic.. if the American 2111 287

1 Aribtration Association should not at that time exist) for 2 appointment "of an arbitrator or arbitrators skilled with 3 respect to the matter to be arbitrated, and whose appointment 4 shall be binding on both Companies. No person shall be G eligible for appointment by the American Arbitration 6 Association who is an officer, employee, shareholder of, or 7 otherwisc interested in either of the Companies or in the l 8 mattir to be arbitrated. 9 12.4 The arbitrators so appointed shall hear 10 , evidence submitted by both Companies and may call for 11 additional information, which additional information the 12 Companies or Company called upon shall furnish to the 13 extent feasibic. 7. decision or determination signed by a , 14 majority of the arbitrators shall be evnclusive with respect 10 to the issues submitted and shall be binding upon both le Companies. 17 12.5 Except as otherwise provided in Sections 12.1, 18 12.2, 12-3, and 12.4 hereof, the arbitration shall be governed 19 by the rules of practice and procedure of the American 20 Arbitration Association from time to time in force, except 21 that, if such rules and practice as herein modified shall 22 conflict with the California Code of Civil Procedure or any 23 other provision of California law then in force, such M California rules and provisions shall govern. This submission 25 and agreement to arbitrate shall be specifically enforceable. 28 The award of the arbitrators or a majority of them upon any v 2111 288 _y_

1 question submitted to them hereunder shall be final and 2 binding upon the Companies to the extent and in the manner 3 provided by the California Code of Civil Precedure. 4 12.6 Each Company shall bear the fee and personal 5 expenses of the arbitrator appointed by it, together with 6 the fees and expenses of its own counsel and of its own 7 witnesses, and all other costs and expenses of the arbitration 8 shall be borne equally by the Companies, unless a decision of 9 the arbitrators shall specify a different apportionment of 10 any or all of such costs and expenses. 11 13. PAYMENT OF TAXES 12 13.1 The Companies shall use their best efforts 13 to have any taxing authority in. posing any property ta;.es 14 or other taxes, excluding any sales or use taxes, and \" 15 assessments on Units 2 and 3 assess and levy such taxes and le assessments directly against each Company in proportion to its 17 Participation Share. 18 13.2 All taxes or assessments levied against each 19 Company shall be the sole responsibility of the Company upon 20 whom such taxes and assessments were levied directly against 21 one Company in behalf of both Companics. 22 13.3 If any property taxes and other taxes and assessments on Units 2 and 3 are levied and ascessed in a 24 man r other than specified in Section 13.1 hereof, such 25 taxes or assesscents will be paid by the Conpany against 20 w'.o= cuch tr.:: or a t:Ler.. ncnt la _ovi. 1. 7 ., art.o nt o f cuch m _- .... _ ..____ I 2111 289

I taxes or assessments will be charged to the proper account 2 for cost sharing in proportf.m to the Participation Shares. 3 14. START-UP: 4 14.1 Edison, as Operating Agent, shall establish 5 a separate account for accumulation of all costs relating to 6 the StartdUp Period of Units 2 and 3. Charges in such account 7 shall include (a) the cost (normally capitalized in accordance 8 with kPC Accounts) of all expenses (excluding the cost of the 9 Engineer-Constructor start-up crews) and (b) an allowance 10 for the payroll loading and administrative and general expense 11 determined in accordance with Section 6 hereof. 12 14.2 Edison, as Project Director, shall charge all 13 such costs accumulated in such account to Construction Costs. 14 14.3 During the Start-Up Period for Unit 2 and 15 Unit 3, the Companies shall be obligated to take delivery 16 of power and energy generated by and available from each 17 such unit in proportion to their Participation Shares. 18 15. NOTICES: All notices under this Agreement shall 18 be in writing and shall be delivered in person or sent by 0 registered or certified mail to the applicable of the 21 . follow ng addressecs: 22 Southern California Edison Company g C/o Secretary Post Office Box 800 24 Rosemead, California 91770 "5

• San Diego Gao r, nicctric Conpany c/o Vice President - Electric 20 Post Offico Box 1831

 ,                      San Diego, California     92112 v

_43_ 2111 290

        ~

m 1 , By notice sent to the othcr Company, 2 either Company may designate different persons or different 3 addresses for the giving of notices h'ereunder. 4 16. UNCONTROLLABLE FORCES: Neither Company shall be 6 considered to be in breach of any of tuc obligations hereunder 6 to the extent failure of performance shall be $ue to 7 uncontrollabic forces. The term " uncontrollable forces" shall 8 mean any cause beyond the control of a Company unable to 9 perform such obligation, including, but not limited to, 10 failure of facilitics, flood, earthquake, storm, fire, 11 lightning, and other natural catastrophies, epidemics, war, 12 riot, civil disturbance, labor dispute, sabotage, Government 13 prioritics, restraint by Court order or public authority,

    ,,    14    and action or non-action by or failure to obtain the necessary 15    authorizations or approvals from any Government agency or 16    authority, which by exercise of reasonable diligence and 17    foresight such Company could not reasonably have been expected 18     to avoid and which by exercise of reasonabic diligence it 19    has been unable to overcome.              Any Company rendered unable to 20     fulfill any obligation by reason of uncontrollable forces 21    shall exercise due diligence to remove such inability with 22    all reasonable dispatch.           Nothing contained herein shall be 23    construed'so es to require a Company to settle any strike or 24     labor dicpute in which it may to involved.

25- 17. TEW11 HAT 10N: 20 17,7 g;,,.her Company may terminate its obligaticra _e,_ 2111 291

1 ,under this Agreement by notice to the other Company if, after y a using its best efforts, it is unable to obtain any required 3 authori:ation or approval referred to in Section 10 hereof 4 or any other author'ization or approval as required by law or 5 if cny such authorization or approval, when issued, made or e effected shall include an unforeseen condition that would 7 have a substartial adverso economic effect on such Company. 8 17.2 In the event of a termination by either 9 Company pursuant to Section 17.1 hereof, all costs and 10 expenses (in>:luding interest during construction) incurred by 11 the terminating Company in connection with Units 2 and 3 and 12 the terminating Company's Participation Share of accumulated 13 Construction Costs incurred up to the date of such termination s 14 shall be borne by the terminating Company. 15 17.3 The interests of such terminating Company in 16 Units 2 and 3 may be acquired by the other Company for an 17 amount equal to the terminating Company's then contribution 18 to Construction Costs and all other costs and expenses (includ-19 ing the all nance for funds used during construction) incurred 20 by such ter r i.nating Company in connection with Units 2 and 3. 21 17.4 If the company not terminating does not wish 22 to. acquire the interests of the terminating Company, all costs and c:.penses incurred to impicment such total termination of Units 2 nd 3 shall be shared in proportion to the o5

      ~

Participation Share of each Company. 28

 /          18.         !)DITIONAL AGREE.MI:::TS A m Cor: sri:TS: Each Company

I agrees to negotiate in good faith and to proceed with

     ,,  2 diligence to obtain all agreements and consents required 5 by it to be obtained, necessary to implement this Agreement, 4 between such Company and the other Company or other parties.

5 19. OTHER AGREEMENTS: This Agreement supersedes the 6 lettcr agrcoment between the Companies concerning liability 7 and insurance dated August 21, 1970, and shall operate to 8 terminate the letter agreement between the companies concerning g project costs prior to a definitive Construction Agreement 10 dated September 9, 1970, both in connection with Units 2 and 3. 11 20. COMPLETIO!! OF PROJECT WORK : The Project Work shall 12 be deemed to have been completed as follows: 13 20.1 When the Project Director deems the Project

   '    14 Work to be completed in accordance with this Agreement, the
    %s 15 Project Director shall serve notice of that fact upon San 10 Dicgo. If San Diego does not object within one hundrea and 17 twenty days after its receipt thereof, by notice to Edison, 18 acting as Project Director ~, which notice shall specify the 19 items of Project Work claimed not to be completed, the 20 Project Work shall be deemed to have been completed one 21 hundred and twenty days after roccipt of such notice by 22 San Diego from the Project Director.

23 .20.2 If objection is made by San Diego under 24 Section 20.1 hereof, the Project Work shall be deemed to 25 have been completed when both Companies agree, or when a 20

     .. binding determination through arbitration or othorwico hac '

sa _,1_ 2T1T 2 W

I been made to that effect. 2 21. TERM: Except as provided in Section 19 hereof, 3 this Agreement shall become effective as of January 22, 1970, 4 when it has been duly executed by Edison and San Diego, and 5 shall continue in force until the obligations of the 6 Companics have been performed or othenrise discharged. 7 IN WITNESS WHEREOF, the Companies have caused this 8 Agreement to be executed in duplicate on their behalf as of 9 the data first written above, 10 11 ATTEST: SAN DIEGO GAS & ELECTRIC CO'PANY

                    ~

12 - 17 - - 11 [ Tbj.#AA By k1/k t O, - y _ ,g " secm.n n:::n sCynsbar b$ yp^ 3 I e' ,7 ATTEST: SOUTHERN CALIFORNIA EDISON COMPANY a1'

   ,  4     8

[i  ?, 9 0 ** h4-& -06 k., 2:2_ By

• c. .

                                                                                       *-1 '  i 21                                  n='m "unar                  Y. ICE-PkESIDEIM 22 23                         .

24 2S 26 v L_ . . . _ _

                                                         -s2-                         2111 294

REQUEST FOR FUNDS - SAN ONOFRE UNITS 2 & 3 SAN ctEco 5OUTHERN

• GASAMD CALIFO RN8 A T TA*

EL E CT RIC ED150N 20 % 80% 9 De% west for V.'eeti Ending Enger., er - C< nstructor Acque rcments

                                 - Ccn traction Enginect - Cc.v.tructor Reasercracnts
                                 - Eri;:eecring Turdene Generator Nuctcar Stum Swcaly System Proicet Director's tsbor Consultants other Proge:t Director's Costs
                                                                                                                                   =

TOTAL *

            %s' Pro!ect UC4 Wests to Date                                                 .

Engircer - Ccostru:ter Requirements . l

                                  - Constructici                                                                                                                !

Er.ginter - Ccnstructor Requirements  !

                                  - Engi..eenng                                               -
                                                                                                                                                                )

i Turbire Ger.crator . . Nuclear Stearn $4 ply System Protect Director s Labor - Consuit ints - . Other Prog:t Director's Costs TOTJL _ __

            %,r 9^^
            i 6 C h s e. t u d      I'r.irct vana;er To Transfer runds To                                                                 4Yb
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           ' i i as t a t,y                                                                                        sit L LsT W . DAIL
                                   ,i..r....,.               , , , . , , ,, ,.   ,,. .                ,[;*"'Oi

      =                                     -

1 2 , %i 3 4 5 6 7 AMENDMENT NO. 1 8 9 SAN ONOFRE UNITS 2 AND 3 10 CONSTRUCTION AGREEMENT 11 12 BETWEEN 13 SAN DIEGO GAS 6 ELECTRIC COMPANY AND SOUTilERN CALIFORNIA EDTSON COMPANY 17 18 19 20 21 22 23 24 25 20

                                                   ~

1 AMEND.'!ENT NO. 1 SAN ONOFRE UNITS 2 AND 3 2 CONSTRUCTION AGREEMI:NT 3 1. PARTII.S : The Parties to this Amendment No. I to the San 4 Onofre Units 2 and 3 Construction Agreement (" Construction 5 Agreerent") are: SAN DIEGO GAS 6 ELECTRIC COMPANY 6 (" SAN DIEG0"), a California corporation, and SOUTI!ERN 7 CALIF )RNIA EDISON COMPANY (" EDISON"), a California 8 corporation. 9 2. RECITALS: This Amendment No. I to the Construction 10 Agrce: ment is made with reference to the following facts, 11 amoi, others: 12 2.1 The Parties entered into the San Onofre Units 13 2 and 3 Construction Agreement, dated May 24, 1973, to 1 4 pro /ide for their respective rights and obligations with

  \" 15 res?cct to the construction of Units 2 and 3 at San Onofrc.

16 2.2 The Parties desire to amend certain provisions 17 of the Construction Agreement to more clearly provide 18 f- their respective rights and obligations with respect 19 ti the construction of switchyard facilitics at San 20 Crofre, to provide for a singic arbitrator to resolve 21 d.sputes and to revise the responsibility for preparation 22 af the Composite Budget. 23

3. /GREEMENT: The Parties agree as follows:

24 3.1 Add Section 4.34 to the Construction Agreenent 23 is follows: 26 "4.34 Interconnection Facilities: The power ci rcui t

         - - - -                              -.                                   I 2111 297

1 breakers, conductors, bus support structurcs, disconnect 2 - switches , current transformers , potential trans formers , 3 relaying, metering, relaying and metering interface 4 cabinets and taps to the 220 ky buses located in or 5 associated with the bus sectionalizing position through 6 which the Edison Switchyard and the San Diego Switchyard 7 are connected and the common air conditioning unit 8 and associated controls for the relay houses." 9 3.2 Amend Section 4.7 of the Construction Agreement 10 to read as follows: 11 "4.7 Edison Switchyard: The 220 kV switchrack 12 and relat,cd facilities at San 0.,ofre connected to and 13 located to the north of the Interconnection Facilitics 14 except for the power circuit breakers , transformer

%s 15            side disconnect switches, conductors, and dead-end 16            assemblics associated with the main trans former leads 1

and reserve auxiliary transformer 1 cads, or any environ-10 mental radiation monitoring equipment installed therein. 19 In addition, the controls associated with the Edison 20 Switchyard located in the Units 2 and 3 control-administra-21 tion building are considered to be part of the Edison 22 bwitchyard." 23 3.3 Amend Section 4.21 of the Construction Agreer.cnt 24 to read as follows: 25 "4.21 Proiect h'ork: All engineering, desirn 20 con:.t ,x' ion , con t rac t p repa ra tion , pu rchasi r.g , s ur. r-v _ _ . . . 2 2OI 298

__ m 1 vision, expediting, inspection, accounting, terting,

             '-   start-up, and regulatory licensing of and for Units 2 and 3     3, the Interconnection Facilities, and other related 4     fr.cilitics (but not the switchyard facilities at Site A, 5     the Edison Switchyard and the San Diego Switchyard) as such 6     work is more particularly described in Section 5 hereof."

7 3.4 Amend Section 4.25 of the Construction Agreement 8 to read as follows: 9 "4.25 San Dicco Switchyard: The 220 kV switchrack 10 and related facilities at San Onofre connected to and 11 located to the south of the Interconnection Facilities 12 creept for the power circuit breakers, transformer side 13 , disconnect switches, conductors, and dead-end 14 assemblics associated with the main transformer . leads

  %s 15      and reserve auxiliary transformer leads, or any environ-le     mental radiation monitorin? squipment installed therein."

17 3.5 Amend Section 6.1.3 of the Construction Agree-18 ment to read as follows: 19 "6.1.3 All components of the costs of construction 20 including overhead costs associated with construction, 21 temporary facilitics, land and land rights, structures 22 and improvements, and equipment for Units 2 and 3, and 23 the Interconnection Facilitics, as set forth in the 24 FPC Accounts." 23 3.6 Amend Section 6.4 of the Construction Agreenent 20 to read as follo.s: w ._. ___ 2111 299

1 "6.4 Edison shall pay cighty percent (80%) and s, 2 San Diego shall pay twenty' percent (20t) of all Construc-3 tion Costs except for those Construction Costs incurred 4 in connection with the Interconnection Facilities. Edison 5 shall pay fifty percent (500) and San Diego shall pay 6 fifty percent (50%) of all Construction Costs incurred 7 in connection with the Interconnection Facilities; pro-8 vided, however, that the costs of engineering and design . 9 for the Interconnection Facilities shall'be shared as 10 provided by the San Onofrc Switchyard Letter Agreement 11 between Edison and San Diego, dated May 6,1974." 12 3.7 Amend Section 6. 5.5 o f the Cons truction Ag rec-13 ment to read as follows:

                                  "6.5.5             Annually or more often, cach Company shall 15 preparc and submit to the Engineering Representatives 16  .

a detailed budget of its expected monthly expenditures 17 for Construction Costs for the two next following yea rs." 18 3.8 Amend Section 6.5.6 of the Construction Agree-19 ment to read as follows: 20 "6.5.6 The Companics, through their Engineering 21 Representatives, shall jointly revise the Composite 22 Budget accordingly and submit such revised Composite 23 Budr,e t to the Coordinating Representatives for their 24 revi ew and a;'p. cval . " 25 20 3.9 Anend Section 6. . 8 of the Cons truction Ap ree-nent to re:i.! is foilm

   -           . . . . . .   . . . . . . . . . . .    ..    .           .. - . _ . . _ _ _ . . . . _ _ . _ _ _ . . .. I 2\\\               500

1 "G.S.8 The Companics chall promptly advise each 2 other if and when it becomes apparent that actual 3 costs will differ materially from projected costs sub-4 mitted by such Company. If from time to time it becomes 5 evident that the Composite Budget is in need of material 0 revision, the Companies, acting through their Enginecr-7 ing Representatives, shall promptly revisc such Composite 8 Budget and submit it to the Coordinating Representatives 9 for their approval." 10 3.10 Amend Section 12.1, Page 45, Line 5, of the 11 Construction Agreement by deleting the word " arbitrators" 12 and inserting the word " arbitrator". 13 3.11 Amend Section 12.0 of the construction Agree-14 ment to read as follows:

 \./  15                         "12.3      Within twenty (20) days after the date of 16 receipt of the initial notice of arbitration, the Parties, 17 acting through their Coordinating Representatives, shall 18 meet ~for the purpose of selecting one (1) arbitrator. In 19 the event the Coordinating Representatives shall fail 20 to select such arbitrator as herein provided, then such representativcc shall rcqucst the American Arbitration 22 Association (or a similar organization if the American 23 Arbitration Association should not at that time exist) 24 to provide a list of arbitrators, the number of which 25 shall be one (1) more than there are sides to the dicpute.

20

                                                       -S-2111     301

1 The arbitrator sclected above, if any, and all arbitrators

   ,,    2              on such list shall be availabic to serve and shall be 3,             skilled and experienced in the field which gives risc 4              to the dispute, and no person shall be eligible for t,             appointment as an arbitrator who is an of ficer, employec 5             or shareholder of any of the parties to the dispute or T              is otherwisc intorested in the matter to be arbitrated.

I Within thirty (30) days af ter the date of receipt of

          >             such list, the Coordinating Representatives shall take 30              turns striking names from said list. The last name l              remaining on said list shall be the solceted arbitrator.

L2 Within ten (10 ) days after such selection, the Parties 13 shall submit to such arbitrator ^the written notices pre-14 pared pursuant to Section 12.2 hereof." w 15 3.12 Amend Section 12.4 of the Construction Agree-le ment to read as follows: 17 "12.4 The arbitrator shall consider evidence sub-18 mitted by the Parties and may call for additional in f orna - 19 tion. The Parties shall use their best efforts to 20 furnish such additional information. The decision of 21 the arbitrator shall be binding upon all the Parties." 22 3.13 Amend Section 12.5, Page 46, Line 26, of the 23 Construction Agreement by deleting the words " arbitrators 24 or a majority < 1 them" and inserting the word " arbitrator". 25 3.14

• mend Section 12.6 of '.hc Construction Agree-20 ment to read ac follosen:

w _ _ _ _ . ._ 2111 302 1 -

                                 "12.6              The fees and . xpenses of the arbitrator 2             shall be shared by the Partics equally, unicss the decision 3             of the arbitrator shall specify some other apportionment 4             of such fees and expenses.                                   All other expenses and costs 5

of the arbitration shall be borne by the Party incurring 6 the same." 7 3.15 Except as provided herein , the Construction 8 Agreement shall remain in full force and effec't in accord-9 ance with its terms. 10 . IN h'ITNESS h'llEREOF, the Parties hereto have caused 11 this Amendment No. 1 to the Construction Agreement to be 12 executed in duplicate as of the g r y. day of March , 1977.

                                   ~

13 14 ATTEST: , SAN DIEGO GAS 4 ELECTRIC CO.'IPANY

 "     15           bL          S A ! v u s -t SLT:.: u.?:L A0
                                           .- f-, -1                       By:        k

• Y , -tv 17 f.ri,e- a a m M' ' ' / amyv Cols ten , v1cc e rc s :.ec n t -

Project tranagement 18 I- "2 ' 19 VA'NJ..? o'-'. r. i. c.rm. ;r .

                                       .'..../-

e o w.:. 20 ATTEST: SOUTilliRN CALIFORNIA EDISON CO.' IPA.NY n1 c lf,- ./ 7% b*><~------- p.c h - By: _ A.tkZ A. Arena}l,licePresident 23 0; 25 9C

                                      ' i           ._.     . . . . _ _ _ _ _ _                ______                = ._ _)
   - t
                                     .i                                                 .
                              -          i                                 +                                2111  303

v EXHIBIT G-SAN ONOFRE OWNERSHIP AGREEMENT 2111 304 V

             ~
      '.                                                 CO!!FORXED COP't          8 t.

v ' s . SAN ONOTRE OWNERSHIP AGREEMENT BETUEEN SAli DIEGO GAS & ELECTRIC COMPANY

         '                                AND v                   SOUTiiCRN CALIFORNLi EDISCN COMPA..Y 2111        305        -
  /                                                                      -

w

1 SAN C:: OPS CtRTET. SHIP AGREE!D:::T b  ;

                                                                                                        ~~          -

3  ; TABLE OF CONTENTS 4 PAGE 5 SECTIC:: 6 1 DEFINITIONS 2 7 1.1 Access Road Arca 2 8 1.2 Additional Generating Unit 9 1.3 Amended San Onofre Operating - 2 Agrcc=cnt 10 Capital Addition 3 1.4 , 3 1.5 capital Betterir.cnt ccpital Improvc=ent 3 1.6 ccpital Repiccc=ent 3 1.7 son Switchycrd 4

• 15 Edicon Switchyard Area 5 1.9 1G 1.10 FPC Accounts S' .

y7 1.11 1;ucicar Infor: ration Center 5 yg 5 1.12 Off-shore Land

 ~

g

• 20 " "U #U U 7 '

20 6 1.14 Plant Site 21 1.15 Prescribcd Accounting Practice 7 22 1.16 Proj ect Easc=cnts 7 2a 1.17 San Dic;o Switchyard 7 g,. " 1.18 San Dicso Switchyard Arca 8 g 1.19 San Dacfre Interconnection Agrec=cnt 8 p ,,

 )         i
             - - . . -                -..      . . . . - . - - .  ...     = - . . -                              ..
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2111 306

PAGE 1 SECTION . 2 1.20 San onofre Nuc1 car Cencrating Station 8

 'y 3                                                                                                    '

1.21 Spur Track Area 9 4

                            , 1,22          Subsequent Acquisition                                 9, 1.23        Unic 1                                                 9 6                                                                          '

2 OWNERSilIP 10 7 3 ADDITIONAL GENERATING UNITS 13 8 4 NUCLEAR INFOPRATION CENTER 18 9 5 SUITCHYARDS 18 g 6 DESTRUCTION, D.UMGE OR CO!!DD! NATION 11 op 9317 1 19 12 7 MORTGAGE AND CREATION OF SECURI'1T 13 8 RIGHT OF FIRST REFUSAL 21 14 9 WAIVER OF RIGHT TO PARTITION 28 vl5

                                           ^               

1G 11 REU.TIONSilIP OF PARTIES 31 77 12 MISCELU.NEOUS PROVISIONS 32 yg

 ~

13 NO DEDICATIOtt OF FACILITIES 32 yg

                              -                          -                                            3 20 33 21         15 ,             NbTICES 16               PRIOR AGREDfENTS                                                   34 22 23                                          ,

24 * .

      ?G
 *       ..                     -    . . . . . . . - _ =              ---          - - -           ~    ~~

N

                                                                    - u.     -

2111 307

1 . 2 SAN ON0FRE O*.CERSHIP Ar. REP'E:iT v -

 .       3 4                      THIS AGRED!ENT, mad *e as of this        5th     day of 5              October           ,

1967, between SAN DIECO CAS & ELECTRIC 6 CO:! pal?l, hereinaf ter called " San Diego", and SOUTHERN ' 7 CALIPORMIA EDISON CO: PAirt, hereinafter called " Edison", 8 corporations org.nized and existing under and by virtue of 9 the laws of the State of California, hereinafter referred to lo individually as " Company" and collectively as "Companics". 11 E I T p' E S_ S_ E T H: 12 MIEREAS, San Dicgo and Edison have entered into 13 an agreement entit. led " Edison-San Dicego A5_ rec cnt" of

    . 14        March 8,1963, to prcvide for their joint participati6n in vl5           the procurement, construction and operation of the San Onofrc 1G      Nuclear Generating Station.

17 MIEREAS, Edison and San Dicco propose to enter 18 into the Amended San Onot.c Operating Agreccent and the San 19 Onofrc Interconacetion Agrec=cnt.. , 20 i.llERi2;S, Edison and San Diego desire to 21 supplement the aforesaid Edison-San Diego Agrecatent in regard 22 to incidents of ownership as te:. ants in cort.T.on, valver of 23 partition, trans fer of ovaership and other c.atters with 24 respect to the San Onofre ::uciccr Ccuerating Station. , 25 1;o.1 Ti!EREPCRE, in cc asiderat. ion of the terms 2c and conditions hercin set forth to be performed by each of

   }          -                        -.                  -

y 2111 308

1 the Companics, respectively, the Conpanics agrec as follows: -** 2 1. DEFINITIO!:S

   *3                 Whencver used herein, the following terms shall                      ,
        -4         have the following meanings, exclusively:

Access Road Arca: 5 1,1 e An area of land described in an casement 7 granting rights for access and other purposes a relating to the Sr.n Onofre Nuclear Cencrating 9 ' Station by the United States to Edison and San 10 Diego on liay 12, 1964, recorded in the Official 11 Records, Office of the County Recorder of San 12 Diego County, in Series 5, Book 1964, Page No. 13 85889. Such Jr.nd arca consisting of approxi-

       '4                     mately 3.6S acres in the northwest corner of the J
       '5
        .                     11arinc Corps Base, Camp Pendleton, California, lo                      is chown in E::hibit A and further described in 17                      Exhibit A-1, both attached hereto.

10 1.2 Additionni Cencratinn Unit:

  ' 19                         Any faci.lity for the generation of electrical 20                  -

energy (incl'uding all auxiliary and associated 21 equipment) constructed or inctallcd at the San 22 Onofre Nucicar Generating Station other than 23 Unit 1 or generating facilitics necessary for tl.c 24 opct ation of Unit 1. 25 1.3 Amended San 0 ofre Orcrat f r- A" rec:mnt: 20 The agreer. cut the Companics prc}o c to enter ly - -- . -. -.. - - - - . - . - . - =. .

   -                                                   2.

2111 309

1 into which will provide for the operation and 2 maintenance of Unit 1 and other portions of the

     %s San Onofre Nuclear Cencrating Station to the 3

4 cxtent provided therein. 5 1.4

• Capital Addition:

6 Any iten of property which is added to Unit 1 7 and which does not replace any pre-existing unit 8 of property constituting a part of Unit 1 or any 9 added land or land right, which does not replace 10 any existing land or land right, necessary for 11 the operation of Unit 1 and uhich, in accordance 12 with Prescribed Accounting Practice, would bc 13 capitalined.

  *- 14                        1.5          cauttal Petterrent:

v The enlarge = cat or improvcuent of any unit of 15 lo property constituting a part of Unit 1 or the 17 replacement thereof, where such replacement 18 constitutes an enlargement or improvement of the 19 , unit of propcrty replaced and which, in 20 accordance with Prescribed Accounting Practice, 21 would be capitalized. 22 1.6 gp_i ta! In::7overent,: 23 A Capital neplacement, Capital Ectterment or 24 Capital Addition. , 25 1.7 Canical K alace.m nt: The : epi. s ment of any uni.t of 1ropt.

• I .

 .i                                   .
                                                                   -   3-                  2l11 310

• 1 constituting a part of Unic I where such 2 replacement does not constitute an enlargement w

3 or improvement of the unit 'of property replaced . 4 and which, in accordance with Prescribed 6

• Accounting Practica, would be capitalized.

6 1.8 Edison Switchyard: 7 The 220-kv switchrack and related facilitics 8 located within the Edison Switchyard Area and 9 any, facilitics subsequently installed or con-10 structed therein by Edison, but not including 11 the conductors and dead-end assemblics for the 12 220-kv Unit l' main transformer leads or any 13 cnvircnn.cntal radiation tonitoring equip =cnc se 14 installed thcroin. For purposes of this i

     %"15                               Agreement, the fcilowing items located in t he 10                            Unit 1 control-administratita building are also 17                             considered to be part of the Edison Switchyard:

18 .l.8.1 Controls, indicacing lights and 10 instruments associated with Edison's ,

                                                                  ~

20 220-hv suitchrack facilitics, 21 1.8.2 Tap changing controls and associa ted 22 indic~ating meters for San Diego's 23 220/138-kv autocransformers. 24 1.8.3 Meters and devices for interconnection 25 metering ar.d Edican's associated tele-20 metering e.iirru.nt. w 2111 3 .l il

^

1 1.9 Edison S.if tch.ard Arc 2: ~~ 2 . An area of land used as the site of the Edison v 3 I Switchyard and, at present, as the site of the , 4 Nuclear Inforestion Center. Such land area 5 consisting of cppro:<imately 3.66 acres within o the Plant Site is shown in Exhibit A and further 7 deceribcd in Exhibit A-2 both attached hereto. 8 1.10 FPC Accounts: 9

• The Fedcral Power Commission's " Uniform System 10 of Accounts Prescribed for Public Uti.litics and 11 Li.censecs (C1sss A and Class B), in Ef fect on 12 March 1,1965, subject to the Provision: of the 13 Federal yo=r Act".

j, 14 1.11 Nucl car Inforia. tion Center : v 16 ' The structures and associated facilities 10 designated in Exhibit A (attached hereto) as 17 the Nuc1 car Infortr. tion Center located uithin clie 18 unfenced portion of the Edicon Suitchyard Arca 19 and any subsequent improvements of or addi.tions 20 to caid structures and facilitics. 21 1.12 off-5.-ore I.and: 22 A st. rip of tido and submcrged land used for 23 circulating unter conduits for t.hc San Onofre 24 Nucler.r Cencrating Static.n descri.bcd i.n an case-25 ment-lease for such purpose from the State of 20 Cc.li fornia to Edice.n and San Di.cgo be:;i.nnin; on

  \          .   .     . . .  . . _ . _ _ . . . . _ . _ _ _ . _ _ _  _-

2111 312 _ = _______ _.

e , 1 September 24, 1964 end recorded in the official P 2 Records, Office of the County Recorder of San

 *" 3      l Diego County, in Series 5, Book 1964, Page No.        .

4 235236. Such land area consisting of approxi-mately 7.599 acres is shown in Exhibit A and

                                 ~

5 0 further described in Exhibit A-3, both attached 7 hereto. 8 1.13 Operating Emerncncv: 0 'Any unanticipated event or circumstance which, lo at the time of such event or circumstance, either 11 reduces or will have the reasonably anticipated 12 effect of reducing the generation of electrical 13 energy by Unit 1 or either impairs or uill have 4 the reasonably anticipated effcce of impairing

  %<G                     the operation of the switchyard facilitics.

16 1.14 Plant Site: 17 An area of land used for the major portioh of la the San Onofrc Nuclear Generating Station 19 described in an casement granted for such pur-20 po3c by the United States to Edison and San 21 Diego on May 12, 1964 and recorded in the 22 Official Records, Office of the County Recorder 23 of San Diego County, in Series 5, Book 1954, 24 Page No. 85S87. Such land area concisting of 25 . approximately 83.63 acres in the north est 20 corner of the Marine Corps b'ase, Camp Pendleton ,

 )       .

2111 3I3

1 California, is shown in Exhibit A and further 2 described in Exhibit A-4, both attached hereto.

• 3 1.15 Prescribed Accountine: Prceticc: ,

4 Cencrally accepted accounting principles, in 5 accordance with FPC Accounts, applicable to o electric utility operations.

     'I     1.16      Project Easements:

8 The interests acquired under (1) three casements 9 in favor of Edison and San Diego granted by the 10 United States of /s.orica, covering respectively, 11 the Plant Site, including the associated 12 exclusion arec, the Access Rocd Area, and the 33 Spur Trcck Arca, c11 recorded in the Official 14 Records of San Diego County cnd hereinafter scac-15 timos referred to respectively as the Plant Site 10 Easement, the Access Road Ensament and the Spur 17 Trach Easement; (2) the casement-lease covering . 10 the Off-Shore Land; (3)' a license granted to the 19 Companics by the Atchison, Topeka and Santa Fe 20 Railuay perfectin;; the rights of the Ccapanics 21 .. for those portions of the Access Rocd Area 22 lying within the railroad right cf way; cnd (4) 23 ony Subsequent Acquisition. 24 San nice.o ruftchyard: 1.17 .

     "                  The 220-hv and 138 kv suitchrecks, 220/133-hv 0               autotransforr.crs ; and related facilities located gjjj     3j4

s 1 within the San Diego Switchyard Arca and any 2 fac 11 tics subsequently installed or constructed L 3 therein by San Diego, but not including the con- , 4 ductors and dead-end assemblics for the 130-kv 5 auxiliary "C" transformer leads. 6 1.18 San Dic;o S.ciechvard Arce.: 7 -- An arca of innd used as the site of the San Diego 8 Switchyard. Such land crea consisting of appro::f-9 mately 2.72 acres within the Plant Site is shown 10 in Exhibit A and further described in Exhibit A-5 11 both attached hereto. . 12 1.19 San Onofra Interconnection Agreement: 13 The agreer.:nt the Companics propose to enter 14 into uhich uill provide for the operation and v 15 maintenance of the Edison and San Diego suitch-10 , yards through which their respective systems arc 17 interconnected. 18 1.20 San Onnfrc Mucicar Cencratine Station,: 19 The entire nuclear generating facility located

                                 *                 ~

20 on a site of approv.imat:cly 90 acres in the 21 northucst corncr of the !!arine Corps 13ase, Camp . 22 Pendleton, California, consisting of the Finnt. 23 Site (including i.he Edison Switchyard Arca and 24 San Diego Suitchycrd Arcs.), the Access Road Arca, 25 the Spur Track Acca, the Off-Shore Land, any 20 Subsequent Acqul.sitione , Unit 1, the !!uclear

                                                                                                             ~

9;.. - (. I lI

                                                                                       )

1 Information Center, the Edison Switchyard, the 2 San Diego Switchycrd, and any Additional V3 i . Cencratins Units subscquently constructed or . I 4 installed., 5 1.21 . Sour Track Arca: 6 An arca of land used for a railroad spur track, 7 pipelines, and coc=unication lines for the San 8 Onofrc Nuclear Generating Station described in 9 .an casement granted for such purpose by the 10 United States to Edison and San Diego on May 12, 11 1964 and recorded in the Official Records, 12 Office of the County Recorder of San Diego 13 County, in Scrics 5, Book 1964, Page No. 858SS. 14 Such land arca consisting of appro::inntcly 5.14 15 acres in the northucst corner of the Marine Corps 3G Base, Camp Pendl.cton, California, is shotra in 17 Exhibit A and furt'.... described in Exhibit A-6, la both cttached hereto. , 19 1.22 Subsequent Accuisit. ion: 20 Any future acquisition by either Edison or San 21 Diego of land or icnd rights necessary for the 22 operat: ion of Unit 1. 23 1.23 Unit 1: . 24 The first nuciccr generating unit, consistin; 25 of a nuclear secam supply systcm, a turbine-20 generator designed to generate appro:cicately

 )
                                             ~ ' ~'

2111 316

e

    .,    I                                    450 megawatts (gross) of c1cceric power, and 2                                    all related equipment and facilitics which arc
     *' s                                     necessary for the safe and efficient generation                  ,

4 of cicetricity, installed on the Plant Site, the 5 . Access Road Arec, the Spur Track Arca, and the e Off-Shore Land, but excluding the Edison Switch-7 yard, San Diego Suitchyard, and the Nucicar 8 Information Center. 9 2. OUNERSHIP . 10 2.1 ,1]n i t 1: Edison and Scn Diego shall roccive 11 title to Unit 1 and thereafter cs. Unit 1 as 12 tenants in common as fr ilous :

• 13' 2.1.1 Edison chnll e in an undivided cishty (50).

14 percent intcrc:t therein;

  %, 15                                       2.1.2       San Diego shall oun an undivided twenty lo                                                  (20) percent interest therein.

17 2.2 'Suitchyards : Edison and San Diego shall roccive 18 title to and thercafter oun the Suitchyards con-19 structed at the San Onofre Nuclear Cencrating 20 Station as follow!,: 21 2.2.1 Edison she.11 be the sole ouner of the 22 Edison Suitchyard; - 23 2.2.2 San Dicco shall be the sole ouncr of 24 the S n Diego Suitchyr.rd; 25 provided, houcver, that this Section 2.2 shall 2G in no way af fect the interests of the Com;cnics 2Ii1 317

1 in the Plant Site Easement. 2.3 Nucicar Inforr, tion Center: Notwithstanding any 2 _ sa u 3  ; agreement betueen the Companics concerning the ,

          ~

4 sharing of costs of operating the Nuclear Infor-

                          ~

mation Center, Edison and San Diego shall roccive 5 o titic to and thercafter own as tenants in common 7 the Nucicar Information Center as follows : 2.3.1 Edison shall own an undivided eighty a 9 (80) percent interest therein; 10 2.3.2 San Diego shall oun an undivided cuency 11 (20) percent interest therein. 2.4 Additionci Cencrcting Unite,: In the event that 12 Additional Cencrating Units arc installed or 13 constructed at the San Cnofre Nuclear Gencrating

 .        14 in Station, Edison and San Diego shall receive lo                     titic to and thereafter een as tenants in common all the facilitics comprising cach such 17 18 Additional Generating Unit in accordance with 19 Section 3 hereof c.nd the agreements executed by 20                     the Compenies in connection with the installatio7:

21 or construction of such unit. 2', 2.5 Proh:et U re entr : Edison and San Diego chall 23 receive titic to the Project Ecsements and 24 thercafter own the Project Easements as tenant.s in cox. on as follo,rs : 25 pa 2.5.1 Edison shall o.ra an undivided eighty (T' ',,

   .e                                                                                            .

2111 318

1 percent intercct thercin; 2 2.5.2 San Diego shall own an undivided twenty (20) v 3 percent interect therdin. . 4 2.6 Subcequent Acquicit. ions : In the event that 5

• either Company makes a Subsequent Acquisition, G it shall be deemed to have done so jointly with 7 the other Company. Edison and San Diego shall -.

8 roccive citic to and thercafter own as tenants 9 in co.Tmon any intercct acquired in a Subsequent 10 Acquisition, as follows : 11 2.6.1 Edison shall ovn an undivided eighty (30) 12 perecut interect ther2in; 13 2.6.2 San Diego shcl1 oun an undivided twenty 14 (20) percent interect therein. w l0 Immediately following any Subsequent

                                                                                                ~

1G Acquisition the Companics will execute and 17 [.ccordappropriateinstrumentsestablichingtheir 18 respective ownership interests as set forth in 19 this Section 2.6. - -

                                         ~

20 2.7 Capital Iccrovement;n : Edison and San Diego 21 shall receive titic to and thercafter own any 22 Capital Improvements as tenants in coamoa as 23 follows 24 2.7.1 Edison shall o a an undivided cichty (80) 25 perccat intere.ct therein; 2c 2.7.2 San Diego shall own an undivided tuency (20) J - - - - - - - _ w

                                                               -   12 -

2111 319

1 percent interest thercin. q 2 3. ADDITIO3.L GO'2MTT"G UNI,T_S, 5 3.1 In order to utilize cffcetively the site of the . 4 San Onofre Nuclear Cencrating Station and to S coordinate its development with the generatin O resources requirements of cach Company, Edison 7 and San Diego uill conducc joint studies for the 8 construction and operation of Additional Gencr..- 9 ting Units at the San Onofre Nuclear Cencrating 10 Station. The Compcnics uill prepare a pir.n for 11 sito develop =cnt, (hereinaf ter eclied the " Plan") 12 includin; any Additional Gencrcting Units, no 13 Inter than Janucry 1, 1968. Said Plan will

 '       14 thercafter be mcintained and amended by the s, 15                             Companics to show cny chnn cs ende thereto par-10                         sucnt to Sections 3.2 cnd 3.3 hereof.                  At all 17                         timas the Plcn vill set forth the expected size,
   . 18                         proposed date of cc=r.utment , dccc of com.ncreial 19                     . operation, technical description, cnd estimated 20                          costs of any proposed Additional Generating 21                         Units.       The Plcn vill also specify the partici-22                         pation, if any, desired by San Diego, which 23                         participation will not be less than een (10) 24                         percent nor more than fifty (50) percent. Said 25                         Plan shall not operr.tc to obligate cr bind 20                         cither Carpany in any r.:nner execpt as prcvided j
             . ...                    .    ..    ..                . . . . . - - _ = -      _ _ _ _ _ . _ .

2111 7,20

                                                                                       ~
                                                                                     ~

. 1 in Section 3.4 hereof. 2 3.2 Proposed amendments to the Plan will be sub-s. 3 mitted in writing by the proposing Company to 4 the other Company. If both Ccapanics agree to 5 such amendment, it shall be signed by the e appropriate representatives of each Company, and 7 such amendment vill thercafter become a part of 8 the Plan. 9 3.3 In the event the Compcnics disar;rce uith respect 10 to a proposed amendment or any part thereof, an 11 amendment t;ill be prepcred in writing, embodying 12 all matters upon which the Companics agrec and 13' the Edison proposnis in metters where the 14

   ,                            Companics do not agree; provided, houcver, thct 15 any discgreement uith respect to San Diego's 10                       proporcioncte participation sball be resolved in 17 accordance uith Scn Diego's proposal. Said 18
                             , amend.nent will be signed by cpproprince represen-19 tatives of both Companics and will thereafter 20                       becoma a part of the Plan. Execpt cc.provided 21 in Section 3.4 hereof, any amendment prepared in 22 accordance with this Section 3.3 which has not 23 been signcd within thirty (30) days of its sub-24 mission to the Cor.pcnics shall, ce the 25 cxpiration of said thirty (30) days, be dec=cd 20 an e ffective c:End.nont to the Plcn.

J . . . . 2111 321

1 3.4 On the date of com;.titment specified in the Plan, 2 . an appropriate officer of cach Company shall s attend a Final Amendment Meeting (hereinafter 4 referred to as the " Meeting"). At the Mcoting, 5 . the Plan will be revicued and confirmed or final 6 amendments 'to the Plan, if any, shall be' prc-7 pared. No amendments received after the Meeting a has adjourn'ed shall become effective unicss 9 permitted under Sections 3.4.1 or 3.4.2 hereof. lo 3.4.1 If an amendment pursuant to section 3.3 11 is prepared at the Meeting and said amendment 12 substantially changen the Plan, San Diego may at 13 any time within the next thirty (30) days accud 14 the Plan to change its percentage participction s ,15 uithin the range of ten (10) to fifty (50) per-10 cent, or San Dicgo acy decline to participate in 17 'the propoced Additional Generating Unit; pro-18 vided, honover, that San Diego must declare at 19 the Meeting whether it considers said amend =cnt 20 to be substantial. Upon such declaration by San 21 Diego, the officers shall cpecify the dates on 22 which the thirty (30) day periods provided in 23 this section and in Section 3.4.2 shall expire. 24 3.4.2 If San Dicco amends the Plan or declines to 25 participate, pursunnt to Section 3.4.1 above, 20 i Edison ue.y. within thirty (30) dcys of its receip I

                                                                           ~25-2111    322

1 of notice of such action, cicct not to proceed ~~ with the Plan. If such election is mado, the 2 3  ;

                         . date of co=mitment shall be deemed to be extended    .

4 for six (6) months. In the event Scn Diego 5

                           -   declines to participate pursuant to Section 3.4.1 6                      above, Edison cay proceed to construct en 7

Additional Generating Unit without pr.rticipation a by San Diego. Any such Additional Generating 9 Unit will be constructed in substantial lo accordance with the Plan. 11 3.4.3 At such time during the sixty (60) days 12 follouing the dcte of commitment cs both 13 Compcnics are foreclosed from further amendments to the Plan or elections to uithdraw pursuant to

j. 14

  '- 15 Sections 3.4.1 or 3.4.2 hercof, the Plan shall 16                       be dec=ed final cnd the Companic: shall be bound, 17                       c,ch to the other, to construct, oun and opercte 18                    ,the Additional Generating Unit in accord nce 19                      with the final Plan.

20 3 . 4 '. 4 The Compcnics re2y, at any time, by uritten 21 agreccent waive any of the foregoing provisions 22 of this Section 3.4. 23 3.5 If pursuant to section 3.4 hereof the companics 24 become bound t,o jountly construct cnd oun an 25 Additional Cencrating Unit they will promptly 2G negotiate all necessary agreements for the ounce-l - 2111 323

1 ship, construction and operation of the proposed . 2 Additional Generating Unit on ceres. and conditione

 %, s                 not 1 css favorable proportionaccly to each 4             Company than those provided for in this San 5

Onofre Otmership A3rcement and other agreements o directly related thereto. If the Companics arc 7 unabic to cgree on any such neccesary agreements, , 8 tb.e ouncrship, operation and construction of the 9 Additional Generating Unit vill, subject to 10 Section 3.6 hercof, be governed by this Agrecmont 11 and all others directly related thereto, in all 12 matters other than the proportionate c' haring of 13' costs and output of such Additional Generating 14 Unit. . + 15 3.6 In the event that an Additional Generating Unit w 1G is con tructed and is to bc ounod or operated in 17 different proportionate participation than in 18 Unit 1, the Companics will amend this San Onofre

  ~

19 ' Ownerchip Agreement and directly related agrec-20 . ments to apportion the o;:nership, use and cost 21 of the Project Easements and any facilitics , 22 unich are common to Unit 1 and such Additional 23 Generating Unit so as to reflect such changes in 24 proportionate, participation. The Companics vill 25 also exercice their best efforts to provide cach i 's other with suitable relcases from the licas of f

 %-                                       - 17 2111 324

1 their respective trust indentures or the Company 2 not securing such a release shall provide the

  ,,    s               other uith an opinion by its general counsel that 4               no such release is required.

5 3.7 - If San Diego does not participate in the e construction, ownership or operation of an 7 Additional Generating Unit, its right to r reici-8 Pate in subsequent Additional Cencrating Units, 9 as set forth hereinabove, will be in no way 10 diminished or prejudiced. 11 4. NUCLEAR II.TO2".\ TION CENTER 12 The Euclear Information Center shcil be removed or 13 demolished uhen construction or installation of an 14 Additional Generating Unit ecuses Edison to require 's- 15 additional suitchyard facilitics which it deems cannot w 1G be adequately installed in the Edison Switchyard Arca 17 without such removal or demolition. The costs and 18 salvage value incurred in connectior. uith such removal

   . 19    or demolition shall be shared on the basis of the 20    Compan.ies ' participation in such Additional Generating 21    Unit. In the event of such rc= oval or demolition the 22    Companies cay agree to relocate or rebuild the Nuclear 23    Information Center.

24 5. St.'T TCUyAnOS , , 25 Each Cor.yany shall exercise exclusive control over its 2G Switchyard and Switchyard Arca; provided, houcver, that

 )                                                  -
  ,,                                                                                                         2111       325

s 1 in the event of an Operating Emergency, personnel of

 %,      2           either Company may enter any Switchyard Area for the                    .

3 purpose of undertaking any immediately necessary action, 4 in accordance with procedures to be established and 5 approved by the Companics. 6 6. DESTRUCTIO:T, DTU.GE OR CONDE?CMTIO! OF UIIIT 1 7 6.1 If all, or substantially all, of Unit 1 should 8 be destroyed, damaged or condemned, then the 9 Companics by agrccment may clect to repair, rc-10 store or reconstruct the damaged, destroyed or 11 condemned facilities in such a manner as to 12 , restore the facilities to substantially the sa.c 13 . general character or use as the original, or to 14 such other character or use as the Companics 15 may then mutually agree. In the event of such is election, the costs of such repair, restoration 17 or reconstruction shall be shared eighty (80) 18 percent by Edison and tuenty (20) percent by 19 - San Dicgo, 'a nd, upon completion thereof, the 20 . Companics' rights, titics and interests thcrcin 21 shall remain as provided in this Agreement. 22 6.2 Failure,to reach such agreement within a 23 reasonabic period of time shall be deemed to be 24 an election not to repair, rcstore or reconstruct 25 the damaged, destroyed or condemned facilitics, 25 in which event the proceeds from any insurance

  -        I    --                      .                   __       _         . _ _ _ .   .

19 - 2111 326

1 - or from any award shall be distributed eighty

,         2                 (80) percent to Edison and tuanty (20) percent Y5                       to San Diego, and remainin'g Unit 1 facilitics 4
                        , shall be dispaced of by the companies in a 5           -     manner to be mutually agreed upon and the pro-6                 cceds resulting therefrem or the costs incurred
                 ~

7 thereby shall be shared eighty (80) percent by 8 Edison and twenty (20) percent by San Diego. 9 6.3 In the cvont that less than substantially all of 10 Unit 1 shall be destroyed, damaged or condemned, 11 it chall bc the oblication of the Companics to 12 repair, restore or reconstruct the dam:ged, 13' destroyed or condemned facilitics in such a 14 manner as to restore such facilitics to sub- ^ 15 stantially the same general character or use as b . 10 the original. The cocts of such repair, 17 'rectoration or reconstruction shall be shared 18 cighty (80) percent by Edison and twenty (20) 19 ' percent by San Diego. - 20 7. MORTCAGE Atm CREATIO:I of SECCITY ItifERESTS 21 7.1 Edison and San Diego shall have the right at any 22 time, and fron time to tima, to mortgage, or 23 otherwise encumber their respective rights, 24 titics and intercats in the San Onofra Nuclear 25 Generating Station and the Project Easements by 26 conycyance to a.trustco or trustccs undcr dccds 2111 327

1 of trust, cortgages or indenturcs, or by 2 . execution of security agreements or other w I 3 1 obligations or securities, and to any successors 4 or assigns thereof, without need for the prior 5 written consent of the other Company. 0 7.2 Any mortgage, trustee or secured party under 7 present or futurc~ deeds of trust, mortgages, 8 indentures or security agreements of either 9 ' Company and any successors or assigns thercof, lo and any rocciver, reforce or trustcc in bank-11 ruptcy or reorganization of cither Co=pany, and 12 any successor by action of law or otherwise, 13 and any purchascr, transferce or assignce of 14 any of the aforementioned secured parties, may v 15 succeed to and acquire all the rights, citics is and interests of such Company in the San Onofre 17 Nuclear Generating Station and the Projeci: Ease-18 ,ments, and may tahc possession of or forecl.ose 19 upon said property, rights, titles and interests

                                          .                                                                              ~

20 of such Company, without need for the prior 21 written consent of the other Company. 22 7.3 Any transfer, assignment, merger or consolidation 23 made pursuant to the provisions of this Section 7 24 shall not be subject to the terms and conditions 25 set forth and contcined !.n Section 8 hereof. 20 8- RIGliT OF FTPPT REW '.L 2111 328

i w i . y , N N . l N, < T/L R/W *c

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                                                                                           .                                                                            i l

A I SCALE IN FEET a

                                                                       - Q-.1-a-                                                  .L 6

1 _m i 0,. 400

• 600 1200 1

e

   .s.                                                                                                                                     .

P o% EXF'S T X 2*

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SAN ONOFRE NUCLEAR GEtGRATING STATIC.'1 l MAP SrD' mig LOC M ; GN 3 OF Tr:E PLAN I Si ; t, FJVCLEAR INFORMATION CENTER. EDISCtd SWITC H f A R D

                         ,                                     ARE A. S Ati D: EGO SWI TCHYARD ARC A.

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1 8.1 Except as is otheruice provided in Section 7 ~ 2 and Section 8.15 hereof, chould either Compcny b3 desire to assign, transfer, convoy or otherwisc , 4 dispose of (hereinafter collectively referred to 5 as " Assign") its rights, titles and interests in e the San Onofre liucicar Concrating Station, the 7 Project Easements or its entiticment to cicctric 8 capacity and associated energy in Unit 1 or any 9 part thereof or intercot therein (hereinafter lo referred to as " Transfer Interest"), to any 11 person, company, corporation, governmental agency 12 or any other party (herein.fter referred to as 13 '.%ird Party"), the remaining Company chall have 14 the right of first refusal, as hereinafter 15 described, to purchace for itself cuch Transfer 16 Interest. 17 8.2 After its receipt of a bona fide written offer la from a Third Party to purchase a Transfer 19 Interest and at 1 cast three (3) years prior to 20 its intended date to Ascign, the Company desiring 21 - to Assign its Trancfer Interest shall serve 22 written notico of its intention to do so upon the 23 other Company. Such notice shall contain the 24 proposed date to Ascign, the terms and conditions 25 of said bona fide written offer roccived by such 2G Company, and a propo:al to Assign its Transfer

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~ t Intercat to the remaining Company. The terms 2 and conditions contained in such proposal shall be at least as favorable to the remaining

  *3        l 4                    Company as the terms and conditions of said bona 5

fide written offer, or may be the same terms and o conditions set forth in said offer. 7 8.3 'Ihe remaining Company shall signify its desire _ 8 to purchase the Transfer Interest, or its desire 9

• not to purchase the Transfer Interest by servin6 10 written notice of such intention upon the Company 11 desiring to Assign pursuant to Section 15 hereof 12 within one hundred eighty (180) days after such 13 service pursuant to Section 8.2 of the wri,tten 14 notico of intention to Assign. Failure by a Company to serve notice as provided hereunder 15 is within the tima period specified shall be con-17 clusively dec=cd to be notice of its intention 18 not to purchase the Transfer Interest.

19 8.4 such right of first refusal shall c:cist as of 20 the effective date of this Owncrship Agreement 21 and shall continue for the ters of thi.s 22 Owncrship Agreement. 23 8.5 When intention to purchase the Transfer Interest 24 has bcon indicated by a notice to purchase duly 25 - given pursuant to Section 8.3 herc0f, the 20 Companics shall thereby incur the folloui..r. J _ _ . . _ _

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2 1 obligations:

        "         8.5.1          The Company desiring to Assign and the 5               Company desiring to purchase the Transfer                      .

4 Interest shall be obligated to proceed in good 5 faith and with diligence to obtain all required 6 authori=ations and approvals to Assign; 7 8.5.2 The Compcny desirin6 to Assign shall bc , 8 obligated to obtain the release of any liens 9 imposed by or through it upon any 'part of the 10 Transfer Interest, and to Assign the Transfer . 11 Interest at the earliest practicable date therc-12 after; and 13 8.5.3 ' The company desiring to purchcse the

 ,sr 14         .    .

Transfer Interest shall be obligated to perform ws5 all terms and conditions required of it to lo complete the purchase of the Transfer Interest. 17 8.6 Purchase of a Transfer Interest pursuant t'o 18 .Section 8.5 hereof sh:11 be fu13 y consums.ated 19 within thirty (30) months following the date 20 upon which the notice to purchase required to bc

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21 given under this Section 8.3 has been duly served , 22 unicss the Conpanics are then diligently pursuing 23 applications to appropriate regulatory bodies 24 (if any) for required authorizations to effect 25 such Assign =cnt or cre then diligently 26 prosecutI:.;, or defendin; appeals from orders _ _=._..

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2l}l b33

I entered or authorizations issued in connection 2 with such applications. In the event such

       *" s               applications or appeals are in progress at the      .

4 end of said thirty (30) months, the purchase of 5 the Transfer Interest shall be fully consum=sted 6 upon completion of said applications or appeals. 7 If the Company desiring to purchase the Transfer '- 8 Interest is barred from doing so by any regula-9 tory body or court from whose decision no appeal 10 may be taken, the company desiring to Assign may 11 proceed to dispose of the Transfer Interest as 12 if the other Company had declined to purchase 13 the Transfer Intercat. 14 8.7 If the intention not to purchase the Tranc 'cr s: (,15 Interest has been indicated by a notice duly

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10 given hereunder or by failure to give such 17 notice as provided in Section 8.3, the Cotr.pany 18 desiring to Assign Jhall be free to Assign all 19 but not 1 css than all of its Transfer' Interest 20 to the Third Party that made the bona fide 21 . written offer upon the terms and conditions sct 22 forth in said bona fide written offer. If such 23 Assignment of the entire Transfer Interest to 24 the Third Party is not completed within eighteen 25 (18) conths after the proposed date to Assign 2G specified in the notice given pursuant to Section 9 ss

• 2111 '34

J 1 , 8.3 hereof, the Company desiring to Assign its b 2 Transfer Interest must, onless it is then V 3 diligently pursuing its ap'plications to appro- , 4 priate regulatory bodies (if any) for required 5 authorizations to effect such Assignment, or is 6 then diligently prosecuting or defending ~ appeals 7 from orders entered or authorizations issued in 8 connection with such applications, give another 9 complete nou right of first refuscl to the other 10 Company pursucnt to the provisions of this 11 Section 8, before such Company shall be free to 12 Assign a Transfer Interest to said Third Party. 13' 8.8 Any Third Pcrty 1:ho purchases the Trcnsfer 3 14 Interest shall receive title to and shall cun 15 the Transfcr Interest as a tenant in comr_on, sub-10 jcct to the same rights and obligatic.ts as are 17 applied to the Transfer Interest lii the hands of 18 the Assigning Company. - 19 g,9 Except as is otheruise provided in Section 8.10 20 and Section" 8.11 hereof, no Assignment of a 21 Transfer Interest chall relieve the Assigning 23 Company from continuing full licbility and 23 financici responsibility for perforusnce of all 24 obligations imposed by this Agrecaent, the 25 Amended Sen Onofre Operating Agreement and the 26 San Onofre Intercenacetion Acreament. . y .. ..... . 2111 335

1 8.10 To the extent that Edison delegatest to San 2 Diego the functions of operating Unic 1, pursuant

    's            ik to Section 8.14 hereof, Edison shcIl be relieved        ,

4 of such dutics. 6 8.11 An Assigning Company shall be relieved of its e dutics and obligations under this Agreement, the 7 Amended San Onofro Operating Agreement and the 8 San .Onofre Interconnection Agrectant if cnd when: 9 8.11.1 Its Assignce agrees in writing with the 10 remaining Company to assume such obligations 11 and dutics; and 12 8.11.2 The remaining Company agrees in writing to 13 the Assignor's relcace from such oblications. 14 8.12 Any Third Party who may succeed to the Transfer w15 Interest pursuant to this Section 8 shall 16 specificclly agree in writing uith the ren,ainin.c 17 Company at the time of such Assignment that it 18 will not Assign all or any portion of the 19 Transfer Interest so ccquired without conplying 20 with the terms and conditions of this Saction 8. 21 8.13 Any purported Acsignment of a Transfer Interest 22 (other th:n one providcd for in Section 7 hereof) 23 failing to comply with the requirements of this 24 Section 8 chall be void. 20 8.14 In t.hc event Edison deciros to Acsign all er 20 substanticlly all of its interest in the San w - 2l}I \3b

s 1 Onofre Nuclear Generating Station, other than 2 pursuant to Section 7 or Section 8.15 hereof, w . 3 San Diego shall have the option to accuma all , 4 duties of operating Unit 1 and the Companics 5 shall complete all,necessary ccatractual arrange-6 ments and modifications to enke San Diego 7 operating ager of Unit 1, as of the time such 8 assignment becomes effcetive. ,- , 9 8.15 Edison and San Diego each shall have the right 10 to Assign its respective rights, citics and 11 interests in the San Onofrc Nucicar Generating 12 Station and the Project Eacements without the 13 need for prior uritten consent of the other Company, and without complying uith Seccions S.1 g ,, 14 , v l5 through 8.7, inclusive, and Section 8.14 hereof lo at any time to the follouing: 17 8.15.1 Any corporation or other entity acquiring 18 . all or substantially all of the property of such 19 Company; or 20 8.15.2 Any corporation or entity into which or 21

• with which such Co:.peny mcy be merged or 22 consolidated.

23 9. WAIVER OF RIGHT.TO PARTITIO:7 24 For itscif and its succcccors and assigns, Edi::en and , 25 San Diego, each, until c::piration or termination of this 26 Agreement, naives the right to seek partition of the San 2111 337

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  ,      1            Onofro Mucicar Gancrating Station and the Project Esse-2            ments (whether by partionment in kind or by cale and
    's                division of the proceeds thereof).' Edison and San Diego,     ,

4 each, further agrecs that it will not resort to any 5 action' at latt or in quity to partition the same (in either o such m:nner) and to that extent waives the benefit:s of 7 all laws that may now or hereafter authorize such 8 partition.

        .9   10.      Cot.T.!APTS RUi :m:G UIrrt THE IJ.1:D 10             10.1      Execpt as otitertiisc provided in Section 10.3 11                       hereof, all of the recpective covenants and 12                       obligations of Edison and San Diego set forth 13'                      and contained in this Agreement, the Amended San 14                       Onofrc Operating Agreement and the San Onofre b.,15                         Interconncction Agrcoment shall bind and shall le                       be and beco.uc the respective obligations od:

17 10.1.1 Edison and San Diego; 18 10.1.2 All mortgcgces, trustees and secured 19 partics under all present cnd future 20 mortgades, in'denturce and deeds of trust, 21 and security cgrcomente uhich cre or r.ny 22 become a lien upon any of the properties 23 of Edison or Scn Diego; 24 10.1.3 All receivers, assignces for the benefit 25 of creditors, bankruptcy trustees and 2G referces of' Edison and San Diego;

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2111 338

1 10.1.4 All other persons, firms, partnerships or 3 2 corporations claiming through or under any Nd I s- I of the foregoins; and ,

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4 10.1.5 Any successors or assigns of any of those 6 mentioned in this Seccion 10.1; e and shall be obligations running uith the Companies' 7 rights, titics and interests in the San Onofre Nucicar Generating Station and the Project Easements. It is 8 9 the' specific intention of this provision that all of lo such covenants and obligations shc11 be binding upon 11 . any pcrty tihich acquires any of the rights, titics 12 or interests of cither Edison or San Diego in the 13 San Onofra Nucicar Generating Station or the Project

,y.      14          Easements and that such party shcil be obligated to
  \" 15              use such rights, titles and interests for the purpose

, lo of discharging such covencnts and obligations. 17 10.2 The rights, citics and interests of Edison and ' 18 San,Diego in the San Onofre Nuclear Generating Station 19 and the Project Easements shall inure to the benefit

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20 of their successors and assigns. 21 10.3 Any mortgagce, trustee or secured pcrty, or cny 22 receiver or trustec appointed pursuant to the pro-23 visions of any present or future cortgcge, deed of 24 trust, indenture or security egrec=cnt creating a 25 lien upon or encumbering the rights, titics or 26 interests of cither 'Co peny in the San Onofrc Nucicar 2 2111 339

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1 Generating Station or the Project Easema.nts, and any a - successors thereof by cetion of law or otherwise, and 2

  %s 5           any purchaser, transferce, or assignee of'any thereof,         .

4 shall not be obligated to pay any menics accruin; on 5 account of any of the obligations or dutics of such e Company under this Agrocment or the Amended San Onofre 7 Operating Agreement incurred prior to the taking of 8 possession or the initiation Of foreclosure or other 9 remedial procccdings by such mortgagee, trustcc or 10 secured party. 11 10.4 Edison and San Diego shall use their best efforts 12 to obtain from the trustec(s) of their rc.spective 13 trust, indentures valid co.mitte. a cats obligating said jf.14 trustees to honor all the covenants set forth in

  %-15               Section 10.1 herein in the event they enter into 16           possession of the San Onofrc liuclear Generating 17            Station. Such co=mitments may be in the form of 18 releases, consents or any other form ultimately agreed 19            upon with said trustec(s). To the extent that either 20            Company has secured such a commitment prior to the 21            effectiva date of this Agrec=cnt such Company shall 22            not incur any duty or obligation under this 23            Section 10.4.,

24 11. RELA.TT0"S'!IP 07 PARTIES, . 25 The dutics, obligations and liabilitics of Edison and 20 San Diego hercundcr are ' intended to be sc,:ral and not 2111 340

1 joint or collective, and nothing herein contained shall 2 ever be construed to create an association,-trust or

    *3            partnership or impose a trust or phrenorship duty,             ,

4 obligation or liability on or with regard to Edison or 5 San Dfcgo. Edison and San Diego shall be individually 6 responsible for their own obligations as hercin provided. 7 Neither Edison nor San Diego shall have the right or a power to bind the other except as expressly provided in 9 this Agreemant, the Amended San Onofra Operating /. gree-10 ment or the San Onofre Interconnection Agreement. 11 12 MISCELUIEOUS Pn0VISICMS 12 12.1 Edison and San Diego.agrec, upon request, to 13' ' make, execute and deliver any and all c'oce:.wnts 14 reasonably required to impiccant the terms of v 15 this Omership Agreement. 1G 12.2 The captions and headings appearing in this 17 Agreement are inserted merely to facilitate 18 reference and shall have no hearing upon the 19 interpretation of the previsions hereof. 20 12,3 This Agreemi:nt is made under and shall bc 21 governed by the laws of the State of California. 22 12.4 The recitals on page 1 of this Agreement are 23 intended to serve as informational provisions 24 only and are not to be construed as binding upon 25 cither Company in any t.ay. W 13. NO DEDIC/g1C:! OF F.' CILITTr.S ./ L

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    . 1             Any undertaking by one Company to the other under any 2             provision of this A5rcement shall not constitute the v

3 dedication of the system or any portion thereof of any . 4 Company to the public or to the other Co=pany, and it

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5 is understood and agreed that any such undertaking shall O cease upon the termination of this Agreement. 7 14. TERI! 8 This Agrecmsnt shall becomo effective when it has been 9 duly cr.ccuted by both Edison and San Diego, and chall 10 continue in effect until termination of the casement 11 recorded in the Official Records, Office of the County 12 Recorder, Sen Diego County, in Scrics 5, Book 1964, at 13 page go,.85087, granted to the Companies by the United j 14 States of America for the San Onofre Nuclear Genercting w15 Station, or such esrlier date as the Companics may agree 10 to coacc operation of Unit 1. 17 Upon ternication of this Agrecracnt, the Companics* 18 shall agree upon further operation of Unit 1 or _upon 19 its disposition. In the event the Cowp:nies agree to 20 dispoce of Unit 1, the proceed: reculting therefrom 21 or t'hc costs incurred thereby shall be shared cighty 22 (80) percent by Edison and twenty (20) percent by 23 San Diego. - 24 15. NOTIgg - 25 All notices under this Agrecment chr.11 be in scriting "G

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cnd chall be delivered in person or cent by regictcred

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2111 142

1 or certified m:11 to the applicabic of the follouing 2 addresses:

    '" s                                   Southern California Edison Company                 .

c/o Secretary 4 Post Office Eox 351 Los Angeles, California 90053 5 San Diego G:s & Elcetric Company - 6 c/o President Post Office Box 1831 7 San Diego, California 92112 8 By notice sent co the other Company, either Edison or 9 San Diego may designate different persons or different 10 addresses for the giving of notices hereunder. 11 16. PRIOR AGREF:T.UTS, 12 It is the intention of the Companics to superscd2 1s hereby the Edison-San Diego Agreement of March 8, 1963 14 to the extent that it provides for matters covered g,15 herein. The Companics intend to remain bound and 16 obligated by those provisions of that agrecment which 17 relate to construction costs, the AEC Assistance 18 Contract, Edison's appointm:nt as San Diego's agent, as well as all other matters not covered her*cin. In 19 20 the event that the Idison-San Diego Agreement of 21 March 8, 1963, is inconsistent with this Agreement,

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22 the provisions of this Agreement shall be controlling. 23 24 . 25 2G

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2111  ;,4 3

~ l IN WITNESS WiIE*tEOF, the Companics have caused this

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2 Agreement to be executed in duplicato on their behalf. v 3' Attest: - SAN DIEGO CAS & ELECTRIC CCMPANY . 4 (SEAL) 5 Assistant /s'/ D.R. Green By /s/ J. F. Sin.lott Secret.ary Presinant 7 Attect: SOUTHERN CALIFORNIA EDISON COMPANY 8 (SEAL) - 9 /s/ C. D. Lenter By /s/ 'dillian R. Goul.d Secretc.ry vice ~Fidsidanc 10 11 STATE OF CALIFORMIA COUErY OF San Diero ) The foregoing instrum2nt was acknowledged before p ,g ,

e. Ms w, day d o_qn , N , by J. F.,._Sinn gt , President of SAM DIEGO GAS &

ELECTRIC C0'.1PA"Y, a corporation organized and existing under and by virtue of the laws of the State of California, on 8 , 7g behalf of said corporation. , 20 - 21 gp / Florence La Monte Notary WT Lic 22 My Corr. mission Cxpires: 23 . 24 Mr.rch 13, 19'/0 Florence LaMonto

                                                .        Notary Public 25                                           Principal Office, San Dicco Co., Calif.

26

• 21i' $44

1 STATE OF CALIFOP.!!IA D[ 2 COUI. T l 07 Los Angeles ) L 3' The foregoing inctrumant was acknowicdged before 4 m,e this 4th day of October _, 1967, by 5 William R. Could, Vice.-President of SOUTHEm! CALIFor:NIA 6 EDISON CC;!PANY, a corporation organized and existing under and 7 by virtue of the laus of the State of California, on behalf 8 of said corporation. 9 10 Dona Marv Wilee-d f./ hotcry Td611e 11 . 12 13, My Cox. mission D:pires: Dona Mary Wilec.b June 27, 1969 Notary Public - California 14 Principn1 Offico in s. LOS Angeles Ocunty 15 V - to 17

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JOCU V E \~~ 3 AGE DU _ E J _ AN O. msisow NO. OF PAGES REASON: O PAGE ILLEGIBLE: C HARD COPY FILED AT: PDR CF OTHER O BETTER COPY REQUESTED ON

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1 ETRIBIT A-1 v

         .2                                DESCRIPTIO!! OF ACCESS ROAD AREA                                    .

V . . 3 .y 4 That cortnin real property in the County of San Diego, State of .Cclifornia, described cc follo::: . 5 PARCEL 1: 0 A strip of land, Forty (40) fcc ::ide, the center line 7 of uhich is hereinnf ter described, lying ::ithin the Rcacho Santa Margarita y Las Flores, as dcccribcd in the Patent frc t 8 the United S;:ates of Accrica, dated March 28, 1879 cnd recorded in Book 7, pcge 18 ct seq. , of Patents in the office 9 of the County Recorder of said County, and being cico a portion of S.:ction 24, Towachip 9 South, Range 7 Uest ,0asin 10 per Record of Survey Mcp Mo. 794 filed January 17,19.y the office of scid County Recorder. 11 The center line of caid strip of 1 cad is deceribed as 12 fallo::s : 13 - Beginning at a 6 inch by 6 inch concrete high:.ny monum2nt, set in the South::cstcrl .4# 14 ccid r..onucc. cat being March 56* 12'y 04" line Uc:tof2123.77 U. S. liighuey fcct, 101, v r.encured along said South::cstcrly line, fron a 6 inch by 6 15 inch concrete hip,h::cy nonuscut, said fir.:t above centicncd cc,ncrete highuny conuu:n bears South 02* 52' 15" East, 16 4207. 25 feet from a 1-1/ 2 inch iron pipe, with brass ccp, set for the Northenst cornce of Scctica 26 in Tounchip 9 17 South, nr.n,c 7 Ucst, cs shora on scid Record of Survey Map, said first above mentioned concrete high..*cy mone:. tent being 18 also at the b: ginning of a tangent curve concave South-vesterly and hr.ving a radius of 40!.0 fcc .; thence Ucrth-

          ,9 ucsterly, nica3 sr.id curve, through cn engle of 12* 00' 00",

a distcnce of 1034.63 fact; thence contine.in; clong scid 20 Southuestcrl.y line nnd tr.ngent to said Ir.:t tantioned curva, N rth 60* 12' 04" Uest, 503.51 feet to the beginains of a 21 taurent curve conenvc to the Northeast cnd hcving a rndius 22 f 2000 fcet; thence Morthue: tcrly, clcng said inst tantioned cur, c, throur.h an cn31c of 04* 54' 28" a dis tance o f 176.6'i 23 feet to a point, a radial line.of scid ir.se ccationed curve passin7, through scid last n:.nticacd point becr.: Fouth 25*

o. 42' 24 Ucs t ; thence South 33' 00' 00" Ucst, 116.2L feet to the 'C.UF. POT;;T OF In'.GIS:'ING of thic descr:*.otica ; th.nce Mort h 57 00' C0" Ucst, 473.57 fcc to the.'bc.n nnin; cf a tengrat curva conccvc l'orthe.9eterly rnd hr vin; a redies o f I o ., 1912.67 feet; thc.:cc Ucrthues terly, nion; raid le.s t r. a tir::e d curs 0, t h: ough .a en;1c of 29' 47 ' 14" a distcuce of 995.31

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                                                              *                                             .e
                 * * == .e e e e- .   ..        sum.e - __-

ho

OI MNO ~ 1 fect- thence tangent to said Icst mentioned curve, North 27* 12' d6" Ucst , 65.16 fcct to the beginning of a ecngent curve J 2 conecvc to the Southecst and having a radius of 129.64 fect;

           -       thcace llorthe :nterly,1:ortherly cnd Ecstcrly, along scid last 5       mentioned curve through an angle of 151* 00' 42" a dictcnce of 341.68 feet; thence tangent to said last mentioned curve, 4       South 56* 12' 04" East, 15 2.16 feet , to the beginning of a tangent curve conenvc to the Southue:t and havieg a radius of 5       100.00 fect; thence Southeasterly alon through an engic of 14" 38' 12"g           , said    last mentioned a distance        of 25.55 6       curve, feet; t  hence    tcngent  to  said last  mentioned           curve,      South     41, 33' 52" East, 161.32 feet to the beginning of a tangent curve 7      conecyc to the !!orthcact and having a radius of 100.00 fect; thence Southconterly, along said last mentioned curve through 8      an angic of 14       38' 12", a distence of 25.55 fect; thence tangent to Fid last mentioned curve, South 56

• 12' 04" Eas t ,

9 1651. 27 feet to the beginning of a tangent curve concave to the 1:orthec t and ncving a rtdius of 100.00 fect; thence 10 Southeasterly niong said last uentioned curve through cn engic of 09* 4S' 07" a distance of 17.11 fect; thence tcugent 11 to said last centioned curve, South 66* 00' 11" East, 153.29 feet to the bot,ir.ning of a tangent curve concave Sc.uch:.ccterl .,

' and hnvi,3 a radien of 60.00 fect; thcnce Southca.sterly and Sou th: rly clen said Inst mentioned curve, thrcugh an ingle 13 of 90* 00' 03"3, a distance of 94. 25 feet to a point hcrc.1n-after referre! to cs Point "A"; thence tangent to said laat J, 14 . mentioned curve, South 23

• 59 ' 49" Ucs t , 33 feet to a point in the I;ortheadterly linc of U. S. Hig:.uny 101, said ic.it w 15 mentioned point being in a curvc in cnid l'ortheccterly lic.c, said curve being concave Southuestcrly and hcving a rc:'ius lc of 50G0 feet, a traial line to caid Icst c.cnticacd curve passing through scid last mentioned point bears : orth 23 17 5 9 ' 49 cas t , said last contioncd point being Encterly 194.13 f.ec meccured along scid !!orthccsterly line from a 6 inch by 18 c:onuntant bear:

6 inch10 South concrete hir;h 20' 14" Ucstay3668.4G monum nt, feetsaid froahighuay/2 a 1-1 inch iron 19 pipe uith brass cap, set for the I;orthcast corncr of said Section 24, 20 The side linen of said strip of land, hereinabove 21 descrlhed and designated as Pnrcel 1, shall be prolon ,cd or shortened co as to terminc.tc in the.1:orthecaterly line of 22 said U. S. liighusy 101. 23 ' PARCEL 2:

           '> s' That portion of the Rancho Scuta P.argarita y Lcs Florec ,
           ,,        as described in the Pctent from the United Stat.,3 o ;. A- c r ic a ,

dated March 26, IS79 cud recorded in Look 7, per,c 18 et ccc., 2G of Patents in the Office of the County Recorde.r of raid County and being alt.,o c portion of Sccti n 25 n Tt,raship 9

 )

4

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D 0 " h. t n 9{ l a @D Aff'~ N . K _ 1 South, Rvnge 7 Ucst, as sho m on the accord of Survey 1:ap No. 794, fi] cd January 17, 1940 in the office of said CounCy , , , 2 Recorder, described as fellous: . Y 3 Beginning at Point "A" hereinabove referred to in the center line description of the strio of land hereincbove 4 described anc'. desigunted as Pareci 1; thence South 66" C0' 11" East 20 fcet to the beginning of a non-tcusent curve 5 concave to the East and h ving a radius of 40.00 feetj thence Southerly alour, said curve through cn angle of 55* 32 58" e a distance of 33.78 foot to a point in the fiortheasterly line of U. S. liighuay 101, said last mentioned point being in a 7 curve concave to the South end having a radius of 50$0 feet, a radial line of said last mentioned c vvc passing through a said last mantioned point becrs h'crt!. .4* 25 ' 12" Eas t ; thence Ucsterly alon 9 angic of 00* SO' 46"gasaid distance last mentioned of 74.7 2 feetcurvetothrough a point, an a radial line of said last mentioned curve passing through 10 said last ccationed point bacrs North 23* 34' 26" Eas t, said last mentioned point being also at the beginning of a non-11 tangent curve concave to the Uast and having a rndius of 40.00 fact; thence Northerly along said last menticacd curve IP, through cn c.n31c of 55 32' 58" a din er.nce of 3S.78 feet m a point, a rcdial line to said last mentioned cueve nessim: 13 through sr.id last centic.ncd point ber.ra South 66 00 5 11" East; t.hence South 66 00' 11" East 20 fcc to the point of 14 beginning. 15 EXCEPTKO from the land hereinchove described and designated as Pareci 2 that portica thereof lying uithin 1G the strip of land hereinchove described and deci;;ncted as Parcel 1. 17 - 18 .

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19 . . . . 2 fl 1 @S . 21 - 22, . , 23 24 . 2b 2G J

                                                                #            4         4 8   4

IfilID D }An) @ud (iiTf)u)[ d /5!L . 1 EX111 BIT A-2 ~ 2 DESCRIPTION 0" EDISON SUITC!1 YARD AREA _ wg . 4 That portion of the acncho Santa Mcrgarita y L:s Flores, ac described in the Pctent from the United States of 5 America, dated 1: arch 20,1879 and recorded in Book 7, pist 18 ct sco. , of Patents in the office of the County Recorder of e said Couni y, being also portions of Section 24 in Totrach.p 9 South, Range 7 Uest and Section 30 in To:inchip 9 South, nnn:;c " 7 6 Ucet, ns sho::a on Record of Survcy l'cpc I?o. 794 fi]cd January.17, 1940 in the office of crid County nccorder, a dcccribed as follot:c : - - 9 Beginning at a 6 inch *cy 6 4.nch concrete hight ay U,.". . ilight:: y 101, lo cuid nonut.:.-at b ,' r.s Southucstcrl monem:nt, set in L1 South 02' 52 15" 'y line of 4207.25 fccc frca East a 1-1/2 inch irca pipe, uf.th bracc cap, not for the 1:ortheast , 11 corner of Section 24 in To:euchip 9 Sotth, Ringe 7 Ucut l shot:n on said Record of Survey thp; thenen South 56* li'as04" 12 Enct alon;; sr.id Scuchuccccrly linc of U.S. ni;!n:c.y 101, a distcuca of 50 fcc.t; th -nce South 33* 00' 00" Uect, 12 fcot to 13 the 'dU2 FOIFI' 0'./ UEGIEdING of thi.s dcccrintion: thence Sout.i. 55* 12' 04" East parailcl uith said Shuthuar.tcrly line 14 of U.S . :ti~.huay 101, a dis tance o f .".;6 feet ; ther.ce South g, 33* 00' 00 1 ' Ucce 269 feet to a point in a line t:hich p .rres 15 threv.:h a point that bears South 33' 00 ' 00" Uast 286 feet froa the horcinbefore referred to 6 x 6 concrete conument in is the Southt:.'aterly line of caid U.S. Hight:ay 101; thence Nortin:ccterly cleng said Inst mantiencd line 594 foot- th enc.c 17 North 33* 00 00" East, 154 feet; thence South 55* 12 I 04" East, 38 fect; thence 1 orth 33* 00' 00" Enct 120 fccc to the 18 TRUE POINT OF BEGIlh1IUG of this description. 19 . 20 - 21 . 22 3 2111 351 24 . 25 20 30 - w r

                                        -                    .I       fr        , bh 1                                              EX111 BIT A-3 g                                                                                     .

DESCRIPTION OF OFF Silo!F. LARD w 5 - 4 A STRIP OF TIDE At:0 SUDMF.RCED IAUD HIDS, IN Tile GULF OF SAUTA CATALIM1,0:7.-IIUUDRED SA1; DIEGO COUNTY, T1'F. (100) 6 CENTCR LIME OF HilICil IS DESCRIICD AS FOLLOUS: 0 BEGI!C ING AT A POIliT Ill Ill'.T CERTAIN COURSE IN THE SOUTl!-

              -         UESTERLY P.O'.1;iDART cv TilF. 83.63-ACP.S PARCEL OF I.M!D Si!O*.:M ON 7     TiiE LICt:'.sSF.D StTNEYOR'S M'.P FILED ON JUSC 13, 1963, AS !!AP NO. 6 24 2 0F RECORDS OF SuaW'Y 11: Ti:5 0FFICC OF COUGTY                                                       ,

8 RECORDER OF SAID COUUTY, SAID CERTAIN COURSF. IS S!!O..Si ON SAID li.iP AS HAVIEG A BEARING OF "S 5 2 G3' 51" E" AUD A 9 LE :GTl! 0F "299.95 FEET", SAID POI 5T LEI:; SOUTit 57* 00' 51" EAST 18.71 fit.T FRO:t Tile RORTIF.T.STERLY TER'17t!US OF SAID 10 CERTAIt! CO*J11Sh: Ti!ENCE SOUTil 33' 00' 00" UZST, 3,310.11 FEET, C057/.I!n.0 7.599 ACRES l0RE OR LESS. Ti!E S1DC L7Nr.S OF SAID STRIP OF LAND SilALL JE SMonTi'.::F.D AT 12 qi!E NonTnt:ASIERLY Tgic;II.US Tii.'RCOF SO AS TO TER'iIt!.'.TF.11! Tile SOUTi!. ESTERLY EOUNDARY LL E OF SAID P3.63 ACRE PARCEL OF l'3 LA::D, SIIO'.:M ON SAID LICE! SED SUfNEYOR 'S 1'.AP. 14

     .r-15 10                                      .

17 10 2111 352 . . 1S 20 . 21 22 - - 23 24 25 2G

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M

DTD ' D p& (n _, df eJ - 1 EX11IDlT A-4 . 2 DESCRIPTIO'i 0F PLAMT SITE .

       %s' 3                                                                  -

4 That certain real property in the County of San Diego, State of California, described as follous: 5 - That portion of the Rancho Santa Margarita y Las Flores, o as described in the Patent from the United States of America, dated Mcrch 28, 1879 and recorded in Book 7, page 18 et ccq., 7 of Patents. in the office of the County Recorder of said 8 County, Range 7 being alsoSection Ucst and portions30of in Section Totmship249'inSouth, Tot.aship 9 South). Range 6 Ucst as shoua on Record of Survey Map No, 794 filed January 17, 9 1940 in the affice of said County Recorder, described as follows: - 10 Beginning at a 6 inch by 6 inch concrete highway monument, 11 set in he Southwesterly line of U. S. Highuay 101, said monvacnt being Morth 50 12' 04" Uest 2123. 77 feet , measured 12 along said Southwestcrly line, from a 6 inch by 6 inch conc::cte s highuay monum at, said first above aceticaod concrete highr.yl 15 mon went beats South 02" 5 2' 15" East 4 207. 25 feet f< oa a 1 1/1 inch iron pisc, with brass. cap, set for the Northeas corna.r

  .           14        of Sectica 24 in To.:aship 9 Sou:.h, Range 7 Ucst, as shrun on
     /-                 said Recora of Survey Map, said first nbeve mentioned cor. crc:e 15        high .'sy mnura:nt being also at the bcginning of a tangent cunlc, 1G concave Southwesterly and having a radius of 4940 fcet; th c.nc e No):thucaterly along said curve, through an engle of 12 00',

y7 a distance of 1034.63 feet; thence continuing along said Southeuenterly line and tangent to said last mentioned curve, yg North 6S 12' 04" Ucst, 503.81 feet to the beginning of a tangent curve, concave to the Northeast end having a radius yg of 2060 fect; thence Northuesterl> along said last centieneJ. curve, through an angle of 04* 54 l,23" a distance of 176./:7 20 f t t a p6 int, a radial line of said last mentioned curve passing through said last ecationed point bacra South 2G* 4 2' oy 24" Ues t; thence South 33* 00' 00" Ucst, 785.32 feet to the Mcan l!igh Tide Line of the Pacific Ocean; thence Southeastc'.:ly, 22 al ng said Mer.n High Tide Line of the Pacific Ocean to a line " that is parallel uith and 4500 feet Southeasterly, censured 23 at right angles, froa the course hereinabove describ:d as having a bearing of South 33* 00' 00" Ucst and a lear.th of 21 785.32 feet; thence North 33* 00' 00" Eact, along sr.id parallcl line, 663.39 feet to a point in said South. csterly 23 line of U. S. Hig!n:cy 101, said last nc.ationed point bcin:. in a curve in said Scutbucsterly line, scid cerve baln; conce.e,.: 20 South::esterly and having a radius of 11640 feet and I M an also tsagent to the course hereinal ove dcscribed ac h . vin;. a p . . . . . . . - - . . .

      %e 2111     353

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       .                                      _        n m}'$ ~a}f i-1  bearing of North 56* 12' 04" West and a icngth of 2123.77 feet,f                                                             '

a radial line to said curve p,cssing through said last menticacd! point ber.rs North 37* 12' 19 2 East v said curve, through an engic of 03; thence 24 ' 23", Northwesterly, a di.ntence ofalong 5 6 inch . 680.14 concretofeet to themonument; hight:ny second above thence mentioned North 56* 6 inch 12' 04 by' Wect,

        ,4  2123.77 feet to the point,of beginning.

o . 6 - 7 - 9 - 10 11 2))\ 554 . 12 - 13 - j- 14

• 15 16 . .

17 18 . 19 -

                                                                                                                                               )

20 . 21 22 , 23 24

5 20

l 1 EXHIBIT A-5 . 2 - DESCRIPT703 0F SAN DIEG7 SUITCHYARD AREA - w5 . . .

   ,        4                 That portion of the Rancho Scate !!crgarita y Lac Florca, ac described in the Patent from the United States of Ancrica, 5     dated March 28, 1879 and recorded in Book 7, pcnc 18 et seq.,

of Patents in the office of the County Recorder of ccid 0 County, being alco portionc of Sectic.: 24 in Tounship 9 South, Range 7 Ucat cnd Section 30 in Tonnchio 9 South, Range 6 Uect, 7 as shot n on Record of Survey Ifcp. No. 794 filed Jcnuary 17, 1940 in the office of said County Recorder, deceribed as 8 follo::c : . 9 Beginning at a 6 inch concrete hight.;ny monm. tent, c'et in the South::ccccrl 10 benrc South 02*5y2'line 15"ofEact U. S.4207.liinb::ay 101,from 25 feet caidamonun_nt 1-1/2 inch iron pipe uith bresc cap, cet for the !!crthence coracr of 11 Section 2d in To::uchip 9 South, nnnge 7 Ue.9t, na c ho'.'a on ccid Record of Survey Map; thcace South 56

• 12' 04" Eas t 12 alon ; said South: ector)y line of U. S. Ilf gh;:ny 101, a dictcnce of 50 feet; thence South 33* 00' 00" Ucst 12 fect; thcace 13 South 56* 12' 04" Enct, parcilcl uit h cnid South- ec terl, 111.c

(}14 of U. S. High::cy 101, a distance of 556 fcet; thence Scuth 33* 00' 00" Ucce 18 feet to the TnU2 POIUT 01' B::GINd7.1:C of thic description; thence South 56* 12' 06" Ecct pqrcilcl 1:ith 16 caid Southitesterly line of U. S. High::ay 101, a di::tence of 105 feet to c point; thence Eae.tcrly in a direct line to n 1G point that ic 1: orth 33* 00' 00" Ecct 15 feat cnd Scuch 55* 12' 17 06" 56* Ecst 12' 06"18East feet from 347 feet;the 1thence cat centioned South 33" pointI 00 thence South 00" Ucct, 240 fect; thence 1:ortleresterly 470 feet to a point that be.rc la South 33* 00' 00" Ucce 262 feet fro:n the TRUE POIUT OF yg DECII;::II;C of thic d::ccription; thence !! orth 33* 00' 00" Ence 262 feet to the TI:Ud POI::T OF BEGII::;11:0 of this_ deceript.f.on. 20 21 - -

                                                         ~

22 23 , 2lll b 24 - 25 g 2G v

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. 1 . EXilIBIT A-6 ,

2 DESCRIPTION OF SPUR TRACK AREA .

     %s 5                      .

4 That certcin real property in the County of Scn Diego, State of California, described as follous: 5 " A strip of innd One Hundred (100) feet vide, lying o Forty-ceven and one-h$1f (47.5) fact Northec:terly cnd Fif ty-two cnd one-half (5 2.5) feet Southuasterly of the berein- . 7 cfter described reference line, ccid strip of 1cnd lying within th2 Rancho Santa Ifargarita y Las Flores, cs deceribed 8 in the Patent from the United Sectes of /.mcrica, dated March 28, 1879 and recorded in Book 7, page 18 ct seq. , of 9 Patents in the office of t'.c Ccunty Recorder of said County, and being also a portion of Section 24 in Touaship 9 South, 10 Range 7 Ucst, cs shoun on the Record of Survey Map Mo. 794, filed January 17, 1940 in the office cf said County Recorder. 11 - The reference linc. referred to above is deceribed as 12 follou0: 13' .Beginning at a 6 inch by 6 '.nch concretc highucy menu-ment, set in the Southuenterly line of U. S. High'eny 3 01, 4 said monument being 1: orth 56 12' 04" West 2123.77 feet , 14

    .             meccured clong snid Southuccterly line, from c 6 inch by 6 inch concrete highucy monument, said first above mentioned

• 15 concrete highway monument bears South 02 5 2 ' 15" Eas t ,

1G 4207. 25 feet froa a 1-1/2 inch iron pipe, with brcsc ccp, set for the Northenct corner of Sectica 24 in Tounship 9 17 South, Range 7 Ucst, as shot:n on caid Record of Survey ::ap, said first above mantioned concrete highuay monum:nt being 18 also at the beginning of a tangent curve conecyc South-

   .              ucsterly cnd-having a rcdius of 4940 fect; thence North-19    ucaterly, along said curve, through an angle of 12 00' 00",

a distance of 1034.63 feet; thence continuing nion; said 20 Southuesterly line cnd tangent to caid last mentioned curve, North 68* 12 04" West, 503.81 feet to the beginning of a 21 tan: cut curve concave to the Mortheast and hcving a radius of 2060 fect; thence Northucaterly, along caid 1cce mentioned 22 curve, through an angic of 04* 54 28" a distance of 176.47 feet to a point, a rcdini lina of scid last mentic.ned curve 23 b,ansing' 2' 24 Ucs t;through raid last thance South mentioned 33* 00' 00" point West,becrs 115.71South feet25* to 24 the TT,UE POIST OP UEGE:1HG. of this de:criptica; thence - North 57' 00' 00" Ucst 473.57 feet to the beginning of a 25 tencent curve conccvc Northeasterly and having a radiu: of 1910.17 fect; thence Northuc:terly clong said last mentioned gp 20 v 2111 356

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          'l       curve, throuCh an angle of 29' 47' 14" a distance of 993.07
    -N             feet; thence tangcut to said last centioned curv Morth 27*

2 12' 46" Ucst 456.60 feet to the beginning of a tangent curve concave Southuestcely and having a radius of.573.69 fect; - vs thence Morthucctarly along said last mentioned curve through an angic of 20' 00' 00" a distance of 200.26 feet to the . 4 beginning of a compound curve concave Southuesterly and

• thence Northuesterly alon 5

having a radius of 736.76 feet;said last mentioned curva through an angic of 8* 5 115.59 fccc to a point in the center line of the 100 foot e right of uny of the t.tchison, Topcha and Santa Fe Railuny - Ccapany, said point being North 56* 12 ' 04" West 700 feet, 7 measured along said last mentioned center line fro.n its intersection uith the center line of U.7 S. Highuay 101 (140 - 8 feet uide). , 9 , 10 ,. 11 .  ; e 12

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19 . 20 . 21 . 22 . 23 . I 25

g h 4 e EXHIBIT !! SAN ONOFRE UNITS 2 AND 3 LETTER AGREEMENT

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Southern California Edison Company h

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   = ~ ~ . ~ ~                                                        m. u.,

San Diego Gas & Electric Company P. O. Box 1831 San Diego, California 92112 Gentlemen: , This letter sets forth the agreement of San Diego Gas & Electric Company (San Diego) and Southern California Edison Company (Edison) pursuant to the San Onofre Ownership Agreement, dated October 5, 1967, to proceed with the con-struction of two additional generating units (Units 2 and 3) at the San Onofre Nuclear Generating Station. The Companies agree, as provided in this letter, to share in the ownership, construction, operation, maintenance and use of Units 2 and 3 and to proceed with the award of major contracts for such units. The Companies agree that, with respect to Units 2 and 3, this letter shall substitute for the procedures des-cribed in Section 3 of the San Onofre Ownership Agreement. %s The commitments in this letter shall be superseded by definitive agreements described in Section 4 hereof. The Companies agree as follows:

1. UNITS 2 AND 3 -

1.1 Units 2 and 3 shall be substantially identical generating units utill:ing a pressurized water reactor nuclear steam supply system, together with initial core fuel assemblies and the necessary appurt en an ces . The nuclear steam supply system and the initial core fuel assemblies will be furnished by Combustion Engineering, Inc. Each unit shall be designed to produce approxi-mately 1,140 megawatts net electrical output.

2. SCHEDULES 2.1 The Companies intend to make an award to Combustion Engineering, Inc. for the v

2311'359)

o __2__ nuclear steam supply systems and initial core fuel assemblies for Units 2 and 3 on or before January 23, 1970. The award will be made in the names of both Companies. 2.2 In accordance with Section 3 4 of the San Onofre Ownership Agreement, the Companies confirm that the scheduled dates for initial full power operation of Units 2 and 3 will be June 1,1975, and June 1, 1976, respectively. In order to permit a shake-down period and adequate time to estaolish said units as reliable generatin6 resources, the commercial operating date for each unit will be scheduled for one year after the scheduled date of initial full power opera-tion of such unit. 3 PARTICIPATION 31 In light of the exercise by San Diego of its participation option pursuant to the San > gs Onofre Ownership Agreement, the Companies shall acquire and own Units 2 and 3, as tenants in common, as follows: 3 1.1 San Diego shall own an undivided twenty per cent (20%) interest therein; and 312 Edison shall own an undivided eighty per cent (30%) interest therein. 32 The capacity entitlement of each Company in each of Units 2 and 3 shall be the product of its percentage participation share and the net effective generating capacity of such unit. 33 Each Company shall be responsible for transmitting its capacity entitlement and energy associated therewith from San Onofre Nuclear Generatin6 Station to its system. w 2111 560

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4. DEFINITIVE AGREEMENTS 4.1 The Companies agree to negotiate in good faith and to proceed with diligence to obtain all necessary project agreements, including those pertaining to the follow-ing:

4.1.1 Agreements ,<*h the suppliers of the nuclear steam supply systems and turbine-generators, to be executad by both Companies with such suppliers. 4.1.2 Construction. 4.1 3 Fuel supoly, to be executed by e both Companies with the supplier, 4.1.4 Agreement with the Engineer-Constructor, to be executed by both Companies with the Engineer-Constructor. %s 4.1 5 Ownership. 4.1.6 Operation and maintenance. 4.1.7 Fuel reprocessing, to be executed by both Companies with the Reprocessor. 5 REGULATORY APPROVALS 51 The Compenies agree to proceed with dilir,ence tt obtain all necessary regulatory approvals for the construction and operation of Units 2 and 3

6. PROJECT COSTS 6.1 Costs incurred by the Companies which are properly chargeable to the construction of Units 2 and 3 snall be set forth in budget:

to be approved in advance by the Companics. w 21i2 101

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5* %s 6.2 San Diego shall be entitled to proportionate reimbursement by Edison for costs incurred by San Diego, which costs contribute to the advancement and are properly chargeable to the construction of Units 2 and 3 6.3 Edison shall be entitled to proportionate reimbursement by San Diego for costs incurred by Edison, which costs contribute to the

  -          advancement and are properly chargeable to the construction of Units 2 and 3 6.4   The details of the payment of those costs incurred by Edison prior to the effective date of the Cor.struction Agreement shall be set forth in a supplement to this letter.

It is anticipated that such payments shall be made on a monthly basis.

7. LIABILITY AND INSURANCE 7.1 The Companies agree to negotiate and complete, within sixty (60) days after the date of

%s execution of this letter, a supplement to this letter containing (a) liability provisions governing the construction of Units 2 and 3, and (b) any necessary insurance arrangements for said units.

8. INTERCONNECTION 8.1 For system security reasons, the Companies intend to arrange in connection with the construction of Units 2 and 3 the interconnec-tion facilities located at the San Onofre Nuclear Generating Station in such a manner that a certain amount of capacity compatible to both systems from said station will be available to both Companies during times wnen the two systems are not operating in parallel.

The arrangement and operation of such inter-connection and the amount of capacity to be isolated on the respective systems will be subjects of joint studies to be performed by the Companies assuming various contingencies of planned and forced outages. 2112 00

Co 9 --5-- w 9 PROJECT MANAGER AND OPERATING AGENT 91 The Companies hereby appoint Edison as Project ManLder and Operating Agent. Edison shall perform, or cause to be per formed, as agent for San Die 6o and as principal on its own behalf the project work for Units 2 and 3 -

10. LIAISON 10.1 The Companies shall promptly inform each other concerning significant matters involving the project work.

10.2 Each Company sh?.ll promptly notify the other in advance of important meetings

  .                  with equipment vencors, regulatory f                    a6encies and otners so that representa-tives of both Companies may participate in such meetings.

10 3 The Companies snall meet periodically at the management level to review 'and discuss policy aatters affecting the project work, and at the engineering staff level to review and discuss the project work. 10.4 San Diego shall designate a project representative to provide direct contact between Edison and San Die 6o in matters pertaining to the project work. 2ii2 003 W

CE.~.5 w If the foregoing properly expresses our mutual agreement, please confirm by signing in the space provided below and returning one copy to me. Sincerely, SOUT JN CALIFORNIA EDISON COMPANY

                                                 'k\y
                                                   ~

Senior Vice President Accepted and agreed to this '23 day of 3,ziu<_4 w , 1970. l

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              ' , SMi DIEGO G AS & ELECTRIC COMPANY By                  c ce. V w-      -
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         .l        D'   . '* N i                                                  ,  ,,

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                                   $           .f Docket Nos. 50 361 and 50 362
                                                                          's.            .

SAN ONOFRE' NUCLEAR , GENERATING STATION i UNITS 2 AND 3 1 m Application for Permission to ' ransfer An Ownefship interest to the. Cities of Anaheim and Riverside, California and for Amendments to Construction Permits Nos, CPPR-97 and CPPR-98 I Volume 2 'J1.[ ~ MSOUTHERN CALIFORNIA EDISON COMPANY

   .;AN Di[ GO GAS & ELECTRIC COMPANY
                                                                     = . . . = : : = -
                   = = - -
                                                    .- - -                                   .{

2112 005 I i

CONTENTS Volume 1 APPLICATION Application for Permission to Transfer an Ownership Interest to the Cities of Anaheim and Riverside, California, and for Amendment to Construction Permits Nos. CPPR-97 and CPPR-98. APPENDIX A Settlement Agreement Among Southern California Edison Company, and the Cities of Anaheim, Banning, and Riverside. EXHIBIT A Principles for Agreement on Integrated Operation EXHIBIT B Partial Requirements Service Contract Rate RI EXHIBIT C Transmission Service Agreemrat EXHIBIT D Network Transmission Service Contract Rate TN EXHIBIT E Point-to-Point Transmission Service Contract Rate TP EXHIBIT F San Onofre Participation Principles EXHIBIT,G 220KV and ll5KV to Cities of Anaheim, Riverside, and Banning EXHIBIT H Schedule R Resale Service to the Cities of Anaheim, Riverside, and Banning APPENDIX B Letter Agreement Among Southern California Edison Company, San Diego Gas & Electric Company, City of Riverside, and City of Anaheim. 2112 006,

EXHIBIT A Participation Agreement A=ong Southern California Edison Co=pany, San Diego Cas & Electric Company, City of Riverside, and the City of Anaheim. Volume 2 EXHIBIT B Supplemental Agreement for the Integration of Anaheim's Entitlements in San Onofre Units 2 and 3. EXHIBIT C Supplemental Agreement for the Integration of Riverside's Entitle =ents in San Onofre Units 2 and 3. EXHIBIT D Edison - Anaheim San Onofre Transmission Service Agreement. EXHIBIT E Edison - Riverside San Onofre Transmission Service Agreement. APPENDIX C General Information Required Pursuant to 10CFR Section 50.33(a)-(e) - City of Riverside, California. APPENDIX D Information Submitted by the City of Riverside Pursuant to 10CFR Section 50.33 (f) and 10CFR Part 50, Appendix C, Relating to Financial Qualifications. APPENDIX E e Information Requested by the Attorney General for Antitrust Review - City of Riverside. APPENDIX F General Information Required Pursuant to 10CFR Se'ction 30.33(a)-(e) - City of Anaheim. APPENDIX G Information Submitted by the City of Anaheim Pursuant to 10CFR Section 50.33 (f) and 10CFR Part 50, Appendix C, Relating to Financial Qualifications. 2!12 007

Volu=e 3 APPENDIX H Information Requested by the Attorney General for Antitrust Review - City of Anaheim. APPENDIX 1 A Resolution of the City Council of the City of Riverside Authorizing and Directing that an Application be Filed with the Nuclear Regulatory Commission Seeking to Obtain Permission for Southern California Edison Company to Transfer a Partial Ownership Interest in San Onofre Nuclear Generating Station Units 2 and 3 to the City of Riverside. APPENDIX J A Resolution of the City Council of the City of Anaheim Authorizing and Directing that an Application be Filed with the Nuclear Regulatory Co==ission Seeking to Obtain Permission for Southern California Edison Company to Transfer a Partial Ownership Interest in San Onofre Nuclear Ger.erating Station Units 2 and 3 to the City of Anaheim. 2112 008 s

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v EXHIBIT I AMENDED SAN ONOFRE OPERATING AGREEMENT AND AMENDMENT NO. 1 '."O AMENDED SAN ONOFRE OPERATING AGREEMENT 2112 010 M

e. .

  ..     . t AMENDED SAM ONSTRE OPERATING AGREO!ENT BE NEEN SAN DIEGO GAS & ELECTRIC COMPANY v

E SOUTHERN CALIFordiIA EDISON CCMPANY 2112 011

r 1 2 AMENDED SAN ONOFRE OPEMTI:'G AG"EEMENT s G tab . 'F CONTENTS 5 SECTION PAGE 6 1 DEFINITIONS 4 7 1.1 Access Rcad 4 8 1.2 Additional Generating Unit 4 9 1.3 Board of Review 5 lo 1.4 Capital Improvement 5 11 1.5 Edison Switchyard 5 12 1.6 Edison Switchyard Area 6 13 1.7 Edison Transmission Lines 6

   ,, 14               1.8    FPC Accounts                               6 15            1.9    Fuel Service Contract                      6 le            1.10   Nuclear Information Center                 7 17           1.11 Off-Shore Land                               7 18           1.12   Plant Site                                 7 19            1.13   Prescrihel Accountir.; Practica            8 20            1.14   San Diego Switchyard                       8 21            1.15   San Diego Switchyard Area                  8 22            1.16   San Diego Transmission Lines               8 23            1.17   San Onofre Agreements                      8 24           1.18   San Onofre Interconnectica Agrec=ent       9 25             1.19  San Onofre Nuclear Generatinu, Station     9 2e .           1.20  5. a Ono frc C..r.u rs' ip Agreement      10 i

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                                                -t-                2ii2 012

1 SECTte:! PAGE 2 1.21 Spur Track Area 10 3 1.22 Station Site 10 4 1.23 Subsequent Acquisition 11 5 1.24 Unit 1 11 s 1.25 Unit 1 220-kv Output 11 7 1.26 Unit 1 Auxiliary "C" Transformer 11 8 1.27 Unit 1 Auxiliary "C" Transformer Demand 11 9 1.28 Unit 1 Current Operating Capacity 11 lo 1.29 Unit 1 Effective Operating Capacity 12 11 1.30 Unit 1 Insurance 12 12 1.31 Unit 1 Minimum Output 12 13 1.32 Unit i Net Output 12 14 1.33 Unit 1 Operating Impairment 12 15 1.34 Willful Action 13 le 2 PARTICIPATION IN THE OPERATION AND MAINTE- 15 NANCE OF THE SAN ONOFRE NUCLEAR GENERATING STATION 18 3 BOARD OF REVIEW AND LIAISON 17 19 4 OPERATION AND MAINTENANCE 23 20 5 ALLOCATION OF CAPACITY AND SCREDULING OF 28 ENERGY 21 22 6 CAPITAL IMPROVEMENTS .. 30 23 7 OPERATION AND MAINTENANCE EXPENSES 34 24 8 NUCLEAR FUEL COSTS 41 25 9 ENVIRON'ENIAL RADIATION MONITORING 44 26 10 INSURANCE 45 11 2112 013

1 SECTION PAGE 2 11 AD VALOREM TAXES 50 3 12 PAYMENTS 51 4 13 UNIT 1 OPERATING DIPAIRSENT 57 5 14 ATOMIC ENERGY COMMISSION REGULATORY MATTERS 58 6 15 METER TESTS 60 7 16 LIABILITY 61 8 17 ARBIIRATION 65 9 18 FORCE MAJEURE - 68 10 19 REIATIONSHIP OF PARTIES 69 11 20 NOTICES 70 12 21 TERM 70 13 w 14 15 16 17 2112 014 18 19 20 21 22 23 24 25 28

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1 %, 2 3 AMENDED SAN ONOFRE OPERATING AGREEMENT 4 5 THIS AGREEME:IT, executed on the cfdM day of 6 Jy, , /f74 , between SAN DIEGv CAS & 7 ELECTMC COMi%:N, hereinaf ter called " San Diego", and SOUTIERN 8 CALIF 03.'*IA EDISON COMPA'N, hereinafter called " Edison", 9 corporations organized, created, and existing under and by 10 virtue of the laws of the State of, California, hereinafter 11 referred to individually as " Company" and collectively as 12 "Corpcnies". 13 W I,T.,N E S,S_ E T H : 14 WHEREAS, San Diego and Edison have entered into an 15 agreement entitled " Edison-San Diege Agreement" of March 8, is 1963, to provide for their joint participation in the procure-17 ment, construction, and operation of the San Onofre Nuclear 18 Generating Station. 19 WHEREAS, Edi. ion and Westinghouse Electric Corporation 20 entered into a contract entitled San Onofre Nuclear Generating 21 Station Unit No. 1 Contract for Fuel Service", dated June 12, 22 1963, to provide long-term fuel service for Unit 1. 25 WHEREAS, Edison assigned to San Diego an undivided 24 20 per cent interest in said Contract for Fuel Service by a 25 docu=ent entitled " Assign = cat of Interest in Contract for 2c Fucl Service", dated June 21, 1963. 2112 015

1 WHEREAS, Edison and San Diego have entered into an

 *"   2 agreement and Modification No. 'l thereto with the United States 3 of America, represented by the Atomic Energy Commission, dated 4  March 31,-1964, hereinafter referred to as the " Assistance 5  Contract".

6 WHEREAS, the Edison-San Diego Agreement provides 7 ..at Edison and San Diego shall enter 3.nto an operating agree-8 ment which shall contain the terms and conditions undee which 9 the San Onofre Nuclear Gent ating Station shall be operated lo and maintained and the method of sharing the costs thereof 11 and the output therefrom. - 12 WHEREAS, pursuant to the Edison-San Diego Agreccent. 13 (i) Edison assigned a 20 per cent undivided interest to San 14 Diego in the contract entitled " Agreement for Coast Nuclear 15 Station, Unit No. 1", hereinafter called the "NPPC", entered la into by Edison on January 11, 1963, with Bechtel Corporation 17 and Westinghouse Electric Corporation, and (ii) San Diego 18 irrevocably appointed Edison as its agent, and Edison agreed 19 to undertake as San Diego's agent, as well as in Edison's own 20 behalf, the performance of all specified Edison obligations 21 under the NPPC, the handling of all transactions and relations 22 with Bechtel and Westinghouse under the NPPC, the performance 23 of all Edison's obligations therein specified and the handling 24 of all transactions and relations with Westinghouse under the 25 Fuel Service Contract, the performance of the terms and condi-20 tions of the Assistance Contract with the Atomic Energy

                                        -2                 21  2  016

1 Commission, the making en behalf of Edison and San Diego cf

• - 2 reports to the AEC and the California Public Utilities Co=-

3 mission, the issuance of publicity and conducting public 4 relations except those involving San Diego's service territory, 5 and liaison with the California Coordinator of Atomic Energy 6 Development and Radiation Protection. 7 '4HEREAS , the Companie s desire that Unit 1 shall be 8 so perated and m.aintained that its value and useftiness as 9 power generating resource will provide benefi,ts to Edison lo and San Diego in proportion to their ownership therenf. 11 WHEREAS, the Companies desire to obtain and share 12 maxt=um experience and training benefits from the operation 13 and maintenance of Unit 1. 14 K1IEREAS, Edison and San Diego entered into an agree-w 15 cent entitled " San Onofre Ownership Agrec=ent", dated 16 October 5,1967, and recorded .n October 6,1967, in Series 8, 17 Book 1967, Page 154649 of Official Records in the office of 18 the County Recorder of the County of San Diego, to supplement 19 the Edison-San Diego Agreement in regard to certain incidents 20 of ownership of the San Onofrc Nuc1 car Generating Station. 21 WEEREAS, Ei:ison and San Diego entered'into an 22 agreemen t entitled " San Onofre Operating Agreement", dated 23 June 1, 1966, which provides certain terms and conditions 24 under which Edison shall operate and maintain Unit 1. 25 WHEREAS, Edison and San Diego desire to amend and 20 restate the San Onofre Operating Agreement to provide for the v 2112 017 1,i making of Capital Improvements, the sharing of expenses, the

 %-      l 2   providing of insurance, and other matters in connection with 3   the operation and maintenance of Unit 1.

4 NOW THEREFORE, in consideration of the terms and 5 conditions herein set forth to be performed by each of the 6 Companies, respectively, the parties hereto agree as follows: 7 1. DEFINITIONS 8 Whenever used herein, the following ter=s shall have 9 the following meanings, exclusively: ' 10 1.1 Access Road Area: An area of land described in an 11 easement granting rights for access and other pur-12 poses relating to the San Onofre Nuclear Generating 13 Station by the United States to Edison and San Diego

s. 14 on May 12, 1964, recorded in Series 5, Book 1964, 15 Page 85889 of Official Records in the office of the is County Recorder of the County of San Diego. Such 17 land area consisting of approximately 3.68 acres in 18 the northwest corner of the Marine Corps Base, 19 Camp Pendleton, California, is shown in Exhibit A 20 attached hereto.

21 1.2 Additional Generating Unit: Any facility for the 22 generation of electrical-energy (including all 23 auxiliary and associated equipment) constructed or 24 installed at the San Onofre Nuclear Generating Sta-25 tion other than Unit 1 or auxiliary generating 26 facilities necessary for the operation of Unit 1. w _3 2112 018

1 1.3 Board cf Acview: The board established pursuant to

 \"    2 Section 3.1 hereof.

s 1.4 Canical Imorovement: .The addition of any unit of 4 property, land or land right to Unit 1 or the Station 5 Site or the replacement, enlargement or improvement 6 of any unit of property, land or land right con-7 stitutin.; a part of Unit 1 or the Station Site, 8 which, in accordance with Prescribed Accounting 9 Practice, would be capitalized. , lo 1.5 Edison Switchvard: The 220-kv switchrack and related 11 facilities located within the Edison Switchyard Area 12 and any facilities suosequently installed or con-13 structed therein by Edison, but not including tis 14 conductors and dead-end assemblies for the 220-kv 15 Unit 1 main transforner leads or any environmental le radiation monitoring equipment installed therein. 17 For purposes of this agreement,. the following items 18 located in the Unit 1 control-administration build-19 ing are also considered to be part of the Edison 20 Switchyard: 21 1.5.1 Controls, indicating lights, and instru=ents 22 associated with Edison's 220-kv switchrack 23 facilities. 24 1.5.2 Tap .aanging controls and associated indi-25 cating meters for San Diego's 220/138-kv 28 auto crans formers , w

                                       -3                 2112 019

r-- 1 1.5.3 Meters and devices for interconnection meter- %, 2 ing and Edisons associated telemetering 3 equipment. 4 1.6 Edison Switchvard Area: An area of land used as the 5 site of Edison Switchyard and, at present, as the 6 site of the Nuclear Information Center. Such land 7 area consisting of approximately 3.66 acres within 8 the Plant Site is shown in Exhibit A. 9 1.7 Edison Transmission Lines: The 220-kv transmission lo lines connecting the Edison Switchyard with the 11 remainier of the Edison system. 12 1.8 FPC Accounts: The Federal Power Co= mission's 13 " Uniform System of Accounts Prescribed for Public 14 Utilities and Licensees (Class A and Class B), in w 15 Effect on March 1, 1965, Subject to the Provisions is of the Federal Power Act", as emended on or before 17 the execution date of this agreement. 18 1.9 Fuel Service Contract: A contract entitled 19 " San Onofre Nuclear Generating Station Unit 1 20 Contract for Fuel Service" entered into as of 21 June 12, 1963, by Edison and Westinghouse Electric 22 Corporation, in which contract Edison assigned to 23 San Diego an undivided 20 per cent interest on 24 June 21, 1963; as amended by Amendment No, l thereto 25 on March 27, 1964, and Amendment No. 2 thereto on 28 March 27, 1967, and as it may thereafter_be.a=cnd_ed. _6_ 2112 020

1 1.10 Nuclecr Inicr-2cion Center: The structures and %, 2 associated facilities' designated in Exhibit A as 3 the Nuclear Infor=ation Center, located within the 4 presently unfenced portion of the Edison Switchyard 5 Area and any subsequent improvements of or additions e to said structures and_ facilities. 7 1.11 Off-Shore Land: A strip of tide and submerged land 8 used for circulating water ccnduits for the San 9 Onofrc Nuclear Cencrating Station des,cribed in an lo easement-lease for such purpose from the State of 11 California to Edison and San Diego beginning on 12 September 24, 1964, and recorded in Series 5, 13 Book 1964,'Page 235236 of Official Records in the 14 office of the County Recorder of the County of v 15 San Diego, as such easement-lease was amended on is December 5, 1968, and may hereafter be amended. 17 Such land area consisting of approximately 7.599 la acres is shown in Exhibit A. 19 1.12 Plant Site: An area of land used for the major 20 portion of the San Onofre Nuclear Generating Station 21 described in an easement granted for such purpose by 22 the United States to Edison and San Diego on May 12, 23 1964, and recorded in Series 5, Book 1964, 24 Page 85887 of Official Records in the office of the 25 . County Recorder of the County of San Diego. Such 2c land area consisting of approximately 83.63 acres 2l12 021

1 in the northwest corner of the Marine Corps Base, -- 2 Camp Pendleton, California, is shown in Exhibit A. 3 1.13 Prescribed 3 t unting Practice: Generally accepted 4 accounting principles, in accordance with FPC 5 Accounts, applicable to electric utility operations. 6 1.14 San Diece Switchvard: The 220-kv and 138-kv switch-7 racks, 220/138-kv autocransfor=ers, and related 8 facilitic.i located within the San Diego S.titchyard 9 Area and any facilities subsequently installed or lo constructed therein by San Diego, but not including 11 the conductors and dead-end assemblies for the 12 Unit 1 Auxiliary "C" Transformer leads. 13 1.15 San Dieco Switchvard Area: An area of land used as

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14 the site of the San Diego Switchyard. Such land v 15 area consisting of approximately 2.72 acres within la the Plant Site is shown in Exhibit A. 17 1.16 San Die?o Transmission Lines: The 138-kv trans-18 mission lines connecting the San Diego Switchyard 19 with the remainder of the San Diego system. 20 1.17 San onofre Agreements: The Edison-San Diego Agree-21 ment referred to on page 1 hereof, the San Onofre 22 Ownership Agree =ent, this Amended San Onofre 23 Operating Agreement, the Puel Service Contract, 24 the Assistance Contract, the Special Nuclear 25 Material Lease Agrec= cat No. 264 dated July 1, 1968, 26 between the United S tates and the Companies , the v - _8 2112 022

1 fuel reprocessing agreement to be entered into by %- 2 the fuel reprocessor and the Companies covering the s reprocessing of spent fuel, the three ee:ements 4 granting rights by the United States to Edison and 5 San Diego for the Access Road, the Plant Site, and 6 the Spur Track Area, and the easement-lease granting 7 rights by the State of California to Edison and 8 San Diego for the Off-Shore Land. 9 1.18 San Onofre Interconnection Aereement: The agreement 10 the companies propose to execute to provide, among 11 other matters, for the operation and maintenance of 12 the Edison arid San Diego Switchyards and for the la interconnection of their systems through such Switch-14 yards, as such agreement may thereafter be amended. ~ 15 1.19 San Onofre Nuclear Generatine Station: The entire le nuclear generating facility located on a site of 17 approximately 90 acres in the northwest corncr of 18 the Marine Corps Base, Camp Pendleton, Califo rnia , 19 consisting of the Plant Site (including the Edison 20 Switchyard Area and San Diego Switchyard Area), the 21 Access Road Area, the Spur Track Area, the O ff-22 Shore Land, any Subscquent Acquisitions, Unit 1, 2s the Nuclear Information Center, the Edison Switch-24 yard, the San Diego Switchyard, and any Additional 25 Generating Units subsequently constructed or 28 installed. 2 12 U43 1 1.20 San Onofre Ownershio Agreement: The agreement the %- 2 Companies have execut'ed as of October 5,1967, whi'ch 3 was recorded on October 6, 1967, in Series 8, 4 Bcok 1967, Page 154649 of Official Records in the 5 office of the County Recorder of the County of e San Diego, supplementing the Edison-San Diego Agree-7 ment of March 8,1963, in regard to incidents of 8 ownership as tenants in common, waiver of partition, 9 transfer of ownership, and other matt,ers with 10 respect to the San Onofre Nuclear Generating Station, 11 as such agreement may thereafter be amended. 12 1.21 Sour Track Area: An area of land used for railroad 13 spur track, pipelines, and cm==unication lines for 14 the San Onofre Nuclear Generating Station described w 15 in an casement granted for such purpose by the 16 United States to Edison and San Diego on May 12, 17 1964, and recorded in Series 5, Book 1964, la Page 85888 of Official Records in the office of the 19 County Recorder of the County of San Diego. Such 20 land area consisting of approximately 5.14 acres 21 in the northwest corner of the Marine Corps Base, 22 Camp Pendleten, California, is shown in Exhibit A. 23 1.22 Station Site: The Access Road Area, the Spur Track 24 Area, the Off-Shore Land, Subsequent Acquisitions , 25 anri that portion of the Plant Site not included with-2a , in e Ltiter the Edison or San Diego Switchyard Area. I

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I 1.23 Subsecuent Accuisition: Any future acquisition by

 %"   2        either Edison or San Diego of land or land rights 3        necessary for the operation and maintenance of 4        Unit 1.

5 1.24 Unit 1: The first nuclear generating unit, consist-e ing of a nuclect steam supply system, a turbine-7 generator designed to generate approximately a 450 megawatts (gross) of electric power, and all 9 related equipment and facilities which are neccssary lo for the safe and efficient generation of electricity 11 therefrom installed on the Plant Site, the Access 12 Road Area, the Spur Track Area, and the Off-Shore 13 Land, but excluding the Edison Switchyard, San Diego i 14 Switchyard, and Nuclear Information Center. 15 1.25 Unit 1 220-kv outuut: The output in kilowatts of 16 Unit I delivered to and measured at the Edisca 17 220-kv Switchyard. 18 1.26 Unit 1 Auxiliary "C" Trans former: The 138/4-kv, 19 three-phase transformer connected to the San Diego 20 Switchyard to supply a portion of the Unit 1 21 auxiliary power requirement. 22 1.27 _ Unit 1 Auxiliary "C" Trans former Demand: The 23 demand in kilowatts of the Unit 1 Auxiliary "C" 24 Transformer delivered from and measured at the 25 San Diego Switchyard. 20 1.28 Unit 1 Current operating Capacity: The maxt=um v _11 2112 025

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1 Unit 1 Net Output available to the Edison and

 %-    2       San Diego Transmission Lines at any given time.

s 1.29 Unit 1 Effective Operatin: Cacacity: The full load 4 net eleemrical capability of Unit 1 as established 5 from time to time pursuant to performance tests. 6 within the operating limits authorized by the 7 Atomic Energy Commission, which is reported to 8 regulatory agencies and others as the effective 9 operating capacity of Unic 1. , lo 1.30 Unit 1 Insurance: Insurance coverages (including 11 the Government Indemnity Agreement referred to in 12 Section 10.2.1 hereof) for Unit 1, the Station Site, 13 and Edison personnal regularly assigned to Unit 1, 14 to be provided by Edison or Edison and San Diego s. 15 pursuant to Sections 10.1 and 10.2 hereof. le 1.31 Unit 1 Minimum Outout: The minimum Unit 1 Net 17 Output at which Unit 1 can be satisfactorily 18 operated. 19 1.32 Unit 1 Net Outcut: Unit 1 220-kv Output less the 20 simultaneous Unit 1 Auxiliary "C" Transformer 21 Demand. 22 1.33 Unit 1 Operating Innairment: Any unanticipated 23 event or circums tance, including any action, order, 24 or directive of any ragulatory aucharity having 25 competent jurisdiction, which at the ti=e of such 2C e /ent c.r circumstance either reduces ur Fas the ,

w. - . _ .

2!l2 12b

1 reasonably 2nticipated effect of reducing the genera-

 %#     2           tion of electric energy by Unit 1, or the operating s           reliability of Unit 1.

4 1.34 Willful Actien: 5 1.34.1 Action taken or failed to be taken by a e Company at the direction of its directors, 7 corporate officers or employees having a managem2nt respcasibility affecting its 9 performance under any of the San Onofre lo Agreements, which action: 11 1.34.1.1 is knowingly or intentionally 12 taken or failed to be taken with 13 conscious indifference to the 14 consequences thereof or with v 15 intent that injury or damage is . - . would result or probably would 17 result therefrom; 18 1.34.1.2 has been determined by final 19 arbitration award or final 20 judgment or judicial decree' to be 21 a material default under any of 22 the San Onofre Agreements and 23 which action occurs or continues 24 beyond the time specified in such 25 - arbitration award or judgec7t or 20 judicial decree for curing such ,

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2Il2 027

                                      -l3-

y default, or lf no 2 , time to cure is 3 specified therein, 4 occurs or continues 5 thereafter beyond a e reasonable time to 7 cure such default; 8 1.34.1.3 is knowingly or 9 . intentionally taken lo or failed to be taken 11 with the knowledge that 12 such action taken or 13 failed to be taken is ,, 14 a material default 15 under any of the San is Onofre Agreements. 17 1.34.2 Willful' Action does not include 18 any act or failure to act which 19 is merely involuntary, acci-20 dental or negligent. 21 1.34.3 The phrase " employees having 22 management responsibility" 23 as used in this Section 1.34 24 means the employees of a 25 Company who are responsthie 20 for one or more of the %d t L. .- . ... 2112 028

1 executive functions of plan-2 ning, organizing, coordinating, s directing, controlling, and 4 supervi' sing such Company' c 5 performance under any of the 6 San Onofre Agreements, with 7 responsibility for results. 8 Included cnong such employees 9 for Ediscn are the Generating 10 Station Superintendent, 11 - referred to in Section 3.2.1 12 hereof and, during his 13 absence from the station, the , q,, 14 _ Edison employee who has been 15 - designatel to act and is act-10 ing for the Generating Sta-17 tion Superintendent, and la such employee's non-field 19 supervisors who are respon-20 sible for one or more of said 21 executive functions. 22 2 PARTICIPATION IN THE OPERATION AND 23 MAINTENANCE OF THE SAN ONOFFF 24 NUCLEAR CENERATING STATION 25 2.1 Edison shall, for the term of this agreement, per-20  !' form all operation and maintenance of Unit 1 and the s- I 2112 019

I 1 Station Sito upon the terms , covenants, and condi- \" 2 tions set forth herein. The operation and mainte-s nance of Additional Generating Units shall be 4 provided for in subsequent agreements. 5 2.2 Edison shall perform the operation and maintenance 6 of UniP. I and the Station Site in accordance with 7 standards comparable to those followed at Edison's a other ther=al generating plants and in accordance 9 with generally accepted electric utility industry lo standards and practices, subject to any requirements 11 imposed by the Atomic Energy Co= mission or any other 12 regulatory agency having jurisdiction over such 13 operation and maintenance. 14 2.3 San Diego and Edison through the Board of Review 15 will jointly make policy determinations concerning 10 the operation and maintenance and use of Unit 1 and 17 the Station Site; provided, however, that all matters 18 relating to Additional Generating Units shall be 19 subject to Section 3 of the San Onofre Ownership 20 Agreement. In addition, San Diego will be entitled 21 to participate in and review the operation and 22 maintenance of Unit 1 and the Station Site, as 2s herein provided, through its designated representa-24 tives, in order that San Diego may realize value 25 frvm Unit 1 both as a power generating resource and 2a as a scurce of nuclear power plant o pera t in,3 2112 05U

                               -lo-

1 experience; provided, however, such participation

 %-   2        and review by San Die'og  shall be conducted in a s        manner and at times that will not materially hamper 4        or materially increase the costs of the operation 5        and maintenance of Unit 1 and the Station Site.

6 2.4 Edison shall operate and maintain the Edison Switch-7 yard and San Diego shall operate and maintain the 8 San Diego Switchyard in accordance with the San 9 Onofre Interconnection Agreement. Ne,ither Ediscn lo nor San Diego shall separate its system from Unit 1 11 or from the system of the other Company at the San 12 Onofre Nuclear Generating Station in such a manner 13 as to interfere with the operation and maintenance 14 of Unit 1 or restrict the use by the other Co=pany w 15 of its entitlement in the capacity and energy of 16 Unit 1 except as provided in the San Onofre Inter-17 connection Agreement. 18 3. BOARD OF REVIEW AND LIAISON - 19 3.1 A Board of Review is hereby established to consist 20 of one member, and an alternate authorized to act 21 in the absence of such member, appointed by each 22 Company within ten days af ter the date of execution 23 of this agreement. The Board of Review shall hold 24 meetings at such times and places as may be neces-25 sary to carry out its duties hereunder. Any action, 20 agreement or determination made by the Board of v 2112 031

I 1 Review shall be reduced to writing and shall become -- 2 effective when signed by the member from each Company 3 , or an authorized alternate. Meetings may be called 4 by either member by giving written notice of the 5 time, place, and agenda at least seven days in 6 advance; cxcept that the members may waive such 7 notice. It shall be the duty of the Board of Review a to review and approve the follcwing uith respect to 9 Unit 1 and the Station Site: , lo 3.1.1 The annual capital expenditures budget; 11 3.1.2 The annual manpower budget; 12 3.1.3 The annual operation and maintenance 13 expense budget; 14 3.1.4 The annual fuel expense budget; 15 3.1.5 The establishment of the Unit 1 F.ffective le Operating Capacity; 17 3.1.6 The schedule of planned outages for over-18 hauls, inspections, and refueling operations; 19 3.1.7 Procedures for providing nuclear trainin; 20 for Edison and San Diego employees and for 21 personnel other than employees of the 22 Companies; and 23 3.1.8 Other matters as are set forth in this 24 agreement and the San Onofre Interconnectier 25 Agreement. - 20 In addition, the Board of Review shall resolve an

• 2112 032 18-

1 questions arising in the inplementation of this %s 2 agreement which canno't be resolved by the respective 3 Company representatives appointed pursuant to 4 Section 3.2 hereof and perform such other duties as 5 may be agreind to by the Companies fram time to time. 6 '3. 2 Each Company will designate qualified representa-7 tives, and alternates authorized to act in the 8 absence of such representatives, as listed below, 9 who shall contact each other directly regarding 10 operating and maintenance matters and shall be 11 responsible for developing procedures as required to 12 provide for effective liaison between the Companies. 13 3.2.1 A Generating Station Superintendent to 14 be appointed by Edison to directly supervise 15 the operation and maintenance of Unic 1 and 16 the Station Site and to be the primary 17 Edison contact on all Unit 1 matters not 18 delegated to other Edisen representatives. 19 3.2.2 A San Diego Plant Representative to be 20 appointed by San Diego and to oe the primary

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21 San Diego contact on all Unit 1 matters not 22 delegated to other San Diego representatives. 23 Such representative shall, subject to AEC 24 regulations: 25 . 3.2.2.1 Be subject to all plant rules and 20 regulations to the same extent as %W 2112Oji5~ 1 the Generating Station Super-intendent.

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2 3 3.2.2.2 Have access to the plant at any 4 time to the same extent as the 5 Generating Station Superintendent. 6 3.2.2.3 Have the right to confer with the 7 Generating Station Superintendent 8 at all reasonable times. 9 3.2.2.4 Have access to au plant files lo except for confidential personnel 11 records. 12 3.2.2.5 Receive copies of plant corre-13 spondence to the same extent as 14 w the Generating Station Superin-15 tendent except for correspondence 18 dealing with confidential per-17 sonnel records. 18 3.2.2.6 Have at the plant suitable desk 19 space, file space, furnishings , 20 parking space, and locker facili-21 ties. 22 3.2.2.7 Have access to and use of such 23 duplicating facilities as may be 24 provided at the plant. 25 3.2.2.8 Be advised as far in advance as 2c possible of special operating and 20 2112 034

1 maintenance plans, tests, and

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• 2 othcr important or out-of-the-3 ordinary plant activities.

4 3.2.2.9 Be promptly notified of meetings 5 between the Generating Station G Superintendent and equipment 7 vendors, personnel from regulatory 8 agencies, etc. 9 3.2.3 The Edison Dispatcher and the San Diego Load 10 Supervisor shall be the primary contacts 11 with regard to the loading of Unit 1 and the 12 delivery of San Diego's share of Unit 1 out-13 put. 14 3.2.4 A Public Relations Representative to be w 15 appointed by each Company to serve as a con-le tact on all matters concerning plant visits 17 and tours, other than visits by persons, 18 includi.sg Edison and San Diego employees, 19 having business to transact at the plant. 20 3.2.5 A Fiscal Representa.tive to be appointed by 21 each Company to serve as a contact on all 22 matters concerning plant accounting, audits, 23 billing, operation and maintenance expense

     '44          accounting, and other fiscal matters.

2'y 3.2.6 An Insurance Representative to be appointed 28 by each Company to serve as a contact on

                              -21                 2112 035

1 all matters concerning insurance.

  %-     2     3.2.7   A Public Information Representative to be 3             appointed by each Company to serve as a 4             contact on r31 matters concerning publicity 5             and news releases relating to the San Onofre 6             Nuclear Generating Station.

7 3.2.8 An Engineering Representative to be appointed 8 to serve as a point of contact on Unit 1 9 engineering activities, including those lo related to regulatory and nuclear fuel 11 matters. Such Representatives, when 12 authorized by their respective companies, 13 may represent them in formal meetings, 14 formal proceedings and negotiations con-15 cerning regulatory and nuclear fuel matters. la 3.3 The representatives appointed pursuant to Section 17 3.2 hereof shall have responsibilities for contact 18 and coordination between Edison and San Diego on 19 all Unit 1 and Station Site matters pertaining to 20 their areas of responsibility. It is not intended, 21 however, that this will preclude additional full 22 and free exchange of infor=ation at all Company 23 levels. 24 3.4 The representatives appointed pursuant to Section 25 3.1 or Section 3.2 hereof shall serve at the 2e pleasure of the Company by which they are appointei.I

 %-               -                                   n. 4 n n7L tiic   vsv 1         Each Company shall promptly' notify the other Company
%-   2         of the tepresentatives so appointed, or 'of any 3         changes of said representatives.

4 4. OPERATION A'.'D MAINTENANCE 5 4.1 Edison shall provide all manpower required for the 6 operation and maintenance of Unit 1 and the Station 7 Site. On or before the first of September of each 8 year, Edison shall prepare and submit to the Board 9 of Review, for its review and approval, a manpower lo budget for Unit 1 and the Station Site for the 11 ensuing calendar year. On or before the fifteenth 12 of October of each year, the Bo'rd of Review shall 13 appr ove a mac . wer budget for Unit 1 and the Station 14 Sita for the ensuing. calendar year. Said manpower w 15 budget may be revfsed at any time during the year le with the approval of the Board of Review. Edison 17 shall furnish San Diego with job descriptions for 18 each position as required. If personnel in addition 19 to regular Edison employees are required for special 20 testing, operations, maintenance, or other special 21 work, such personnel shall be obtained from regular 22 San Diego employees to the extent that qualified 23 personnel are available, and the use of such per-24 sonnel by Edison will be economical and practical. 25 San Diego employees so assigned shall work under 28 the direction and supervision of Edison personnel v 2 2 037

1 in charge of such special -ork. %, 2 4.2 Edisen -'v use Unit 1 facilitics and personnel as 3 may be n.:essary to ...in c=ployees to can nit 1. 4 In addition to training personnel for plant manning, 5 the Unit i facilitics and personnel may be used at 6 the request of eithcr Company to provide nuclear 7 training for its employees in accordance with 8 principics and proceduces appro.*ed by the Board of 9 Review. Training of perscnnel, other than employces 10 of the Companies, shall be conducted in accordance 11 with principles and procedurcs approved by the Board 12 of Review. 13 4.3 Edison shall prepare and issue all station orders 14 and instructions necessary for the operation and w 15 maintenance of Unit 1 and the Station Site. Copics 16 of all such instructicns and orders will be furnished 17 to the San Diego Plant Representative. To the extent 18 practicabic, Edison will consult with the San Diego - 19 Plant Representative and will submit such instruc-20 tions and orders to him for his review and comment 21 prior to issuance. 22 4.4 Edison will procure all materials, equipment, and 23 supplies (execpt nuclear fuel) necessary for the 24 operation and maintenance of Unit I and the Station 25 Site. Edison shall own an undivided eighty (50) 20 percent nterest, and San Diego shall own an ,

      '                                                    n. .-    n,m_

4II4 UJU

                                                                =

1 undivided twenty (20) percent interest in such w- 2 materints, equipment, and supplies. 3 4.5 On or before the first of Septe=ber of each year, 4 Edison will prepare and submit to the Board of 5 Review, for its review and approval, an operating 6 and maintenance expense budget and a fuel expense 7 budget for Unit 1 and the Station Site for the 8 ensuing calendar year. On or before the fifteenth 9 of October of each year, the Board of Review shall 10 approve an operating and maintenance expense budget 11 and a fuel e xpense budget for Unit 1 and the Station 12 Site for the ensuing calendar yccr. Said operating 13 and maintenance expense and fuel expense budgets may 14 be revised at dny time with the approva'. of the w 15 Board of Review. 16 4.6 Edison and San Diego shall enter into agreements 17 between themselves or jointly with third parties 18 with respect to the procurement, ownership, canage-19 ment, and reprocessing of nuclear fuel required for 20 the operation of Unit 1. 21 4.7 Edison, in consultation with San Diego, shall pre-22 pare and submit annually to the Board of Revicw, 23 for its review and approval prior to the fiftcenth 24 of October of each year, a schedule of planned 25 outages for overhauls, inspections, and refueling 2a operations for Unit i for the ensuing five-year I _,3_ 2112 039

1 periad. Other scheduled outages for Unit 1 shall bc -, 2 Pl anncd by Edison in consultation with San Diego. 3 Edison, as plant operator, shall have the authority 4 for taking an unscheduled outage of Unit 1 or liric-5 ing the Unit 1 Current Operating Capacity if, in e Edison's judgment, such action is necessary for the 7 safety of personnel, to prevent damaga to equipment, 8 or to perform c crgency repairs or m.aintenance. To 9 the extent practicabic, the Edison Dispatcher shall 10 consult with the San Diego Load Supervisor in order 11 to take such unscheduled outages or limit the 12 Unit 1 Current Operating Capacity at times mutually 13 agreed upen. 14 4.8 The Edison Dispatcher and the San Diego Load Super-15 visor shall contact each other regarding day-to-day 10 Unit 1 operating matters, and the San Diego Load 17 Separvisor shall notify the Edison Dispatcher of la San Diego's desired output of Unit 1. With respe t 19 to such r.atters, the *:dison Dispatcher shall isc 20 all orders to the U..1: 1 contrcl cperator, exce;. 21 as otherwise provided in energency opercting prc 22 cedures approved by the f. card of Review. 23 4.9 San D!.cgo shall provide a direct communication Link 24 between the San Diego Load Supersi.sor and the Unit 1 25 control room so that San Diego 1y be advised of and I

   ?6      may obtain first-hand infCcratiCn ahCut plant           ,

2112 010

                               -2L-

To the extent practicable, the Unit 1

~

1 conditions.

  -s    2      control operator will simultaneously advise the 3      Edison Dispatcher and the San Diego Load Supervisor 4      of plant operating conditions.

5 4.10 Edison snall prepare and maintain records and e reports required in connection with the operation 7 and mainte:.ance of Unit 1 and the Station Site. 8 Sa.. Diego shall be supplied with a tabulation of all 9 records and reports routincly prepared and main-10 tained and chall be supplied with copies of such 11 records and reports as it requires. A copy of any 12 special report required in connection with the 13 operatien and maintenance of Unit 1 and the Station 14 Site shall be supplied to San Diego. Through w 15 appropriate representatives , San Diego will advisc 16 Edison of information needed for regulatory reports 17 to be submitted by San Diego, and Edison will make 18 such information available to San Diego in a timely 19 manner. San Diego also will be furnished a list of 20 all plant drawings , equipment , specifications, 21 manufac turers ' operating manuals , etc. , and will be 22 supplied with at least one copy of such of these 23 items as it requests. 24 4.11 The Edison and San Diego Public Relations Repre-25 sentatives, in consultation with the Generating 2s Station Superintendent, will prepare and subr.it [ w 2112 04i

I to the Board of Review, for its review and approval,

   %-  2           rules and procedures covering plant visits and tours.

3 4.12 In the event the operating and maintenance expense 4 budget, the fuel expense budget, the manpower budget, 5 or any revision of any of such budgets has been 6 submitted but has not been approved by the Board of 7 , Review as provided in Sections 4.1 and 4.5 hereof, 8 Edisen shall continue to tal:e all actions necessary 9 for the operation and maintenance of. Unit 1 and the 10 3tation Site until the budget or revision in ques-11 tion is approved. 12 5. ALLOCATION OF CA?ACITY A:D SC'!EDULT':G OF E:.~ERGY 13 5.1 Edison and San Diego shall each have a capacity 14 entitlement in Unit 1 equal to eighty (80) percent 15 and twenty (20) percent, respectively, of the Unit I la Effective Operating Capacity and such capacity 17 cntitlements shall be used for reporting and la resources planning; provided, however, the amount 19 of Unit 1 capacity available to each of Edison and 20 San Diego shall, at any given time, be equal to 21 eighty (80) percent cnd twenty (20) percent, 22 respectively, of the Unit 1 Current Operating 23 Capacity. The Edison Dispatcher will keep the San 24 Diego Load Supervisor advised of the Unit 1 Current 25 Operating Capacity. 20 5.2 Edison and San Diego shall each 3 cncitled to N" 23 2112 042

I schedule generation on Unit 1 (including associated  !

  %'   2     reactive power), for its account at any time, up to 3     the a=ount of Unit 1 Cur: ent Operating Capacity 4     available to it.

5 5.3 Unit 1 shall be operated whenever Edison or San 6 Diego requests its operation, provided that the 7 Company requesting such operation schedules genera-8 tion, for its account, in an amount at least equal 9 to eighty (80) percent, for Edison, or twenty (20) 10 percent, for San Diego, of the Unic 1 Minimum Output.

                                      ~

11 A Company not requesting _ operation shall, neverthe-12 less, be required to schedule additional generatien 13 to the extent necessary to increase load to the 14 Unit 1 Minimum Output. w 15 5.4 Metering devices have been installed in the Edison 18 and San Diego Switchyards to provide input to the 17 Edison and San Diego load frequency control equip-18 ment such that an amount of power equal to the sum 19 of twenty (20) percent of the Unit 1 220-kv Output 20 plus eighty (80) percent of the Unit 1 Auxiliary "C" 21 Transformer Demand will automatically flow across 22 the interconnection from the Edison Switchyard to 23 the San Diego Switchyard, in addition to any 24 scheduled interchange from Edison to San Diego. 25 Edison and San Diego will thereby automatically 2n receive into their Transmission Lines eighty (30)

 ,.                                                                j 2112 043

1 percent and twenty (20) percent, respectively, of the Unit 1 Net Output'. During periods when Unit

--   2                                                                   1 3            is not generating, kdison and San Diego will thereby 4            automatically supply from their systems eighty (80) 5           percent and twenty (20) percent, respectively, of 6            the Unit 1 auxiliary load.

7 5.5 In the event either Ccmpany wishes to receive less 8 than its full entitlement to Unit 1 Net Cutput, the 9 Edison Dispatcher and the San Diego Load Supervisor lo will arrange for each Company to receive its desired 11 share of Unit 1 Net Output in accordance with pro-12 cedures to be approved by the Board of Review. 13 6. CAPITAL I' TROVE'?NTS 14 6.1 On or before the first of September of each year, w 15 Edison shall prepare and submit to the Beard of le Review, for its review and approval, a Capital 17 t Improvements budget for the ensuing calendar year. 18 On or before the fif teenth of October of each year, 19 the Board of Review shall approve a Capital I.Tprove-20 ments budget for the ensuing calendar year, which 21 said budget may at any time during the year be 22 revised with the approval of the Board of Review. 23 6.2 Edison shall make all Capital Improvements approved 24 by the Board of Review. 25 6.3 The costs of all Capital Improvement; made by Edison M' purr .mc to 5 ections 6.2, O ans. 1: n eo r cha.t. Se  ! _ ?117

                                                               ec nA ,

v7 I shared eighty (80) percent by Edison and twenty (20)

\=#    2         percent by San Diego.'

3 6.4 The costs of any Ca'pital Improvement shall include 4 all costs incurred by Edison which confor= to the 5 provisions of Elsetric Plant Instruction 3 of the 6 FPC Accounts entitled " Components of Construction 7 Cost"; provided, however, for the purpose of billing 8 San Diego 2or its share of such costs, Edison shall 9 abide by the following qualifications to said 10 Electric Plant Instruction 3: 11 6.4.1 Charges pursuant to Item (8) " Injuries and 12 Damages" and Item (14) " Insurance" shall not 13 include any costs shared by San Diego pur-14 suant to Section 10 hereof which provides 15 for insurance coverage with respect to is Unit 1. However, such charges shall include 17 costs of any injuries or damages arising out 18 of and occurring during the course of con-19 struction of a Capital Improvement and the 20 cost of any additional insurance which the 21 Insurance Representatives deem necessary to 22 protect the interests of the Companies in 23 such a Capital I=provement prior to the time 24 the coverage provided in Section 10 hereof 25 becomes applicable thereto. 28 6.4.2 Charges pursuane to Item (12) " General

                                                                      = _ -
                                     -3t-2112 045

1 administration capitalized" shall be as

 %"   2 follows:

s 6.4.2.1 If any Capital Improve =ent is made 4 by Edison forces, the amount of 5 general administration expense 6 (includes pensions and benefits and 7 other administrative and general 8 expenses) allocable to such Capital 9 Improvement shall be deternined by 10 multiplying the amount of Edison 11 direct labor costs chargenble 12 thereto by the Capital A&C Ratio. 13 The Capit2l A&G Ratio shall be 14 determined in accordance with the v 15 method shown in Exhibit G. Esti-le mated ratios shall be used and 17 year-end adjus tments shall be made 18 in a manner similar to that 19 described in Sections 7.4.1 and 20 7.4.2 hereof. 21 6.4.2.2 If any Capital Improvement is made 22 by a contractor, the amount of 23 general administration expense 24 allocabic to such Capital Improvo-25 ment shall be deternined by culti- - 20 plying the total : < cr.b r co - i 2Ti2U4d 1 thercof by 0.01; provided, however, w 2 such allocable amount shall not be 3 less than the lesser of $50.00 or 4 five (5) percent of the total work 5 order cost. As used in this e Section 6.4.2.2, " total work order 7 cost" does not include the Edison 8 overhead costs of (1) interest 9 during cbnstruction, (2) taxes lo during construction, (3) injuries 11 and damages, and (4) general 12 administration expense. 13 6.4.2.3 The procedures and ratios involved

 ,,   14             in determining the amount of 15            general administration expense to le            be cllocated to any Capital 17             Improvement, as described in this 18             Section 6.4.2, shall be reviewed 19             from time to ti=e by the Fiscal 20             Representatives and, if necessary, 21             be revised so that the application 22             thereof shall continue to be 23             equitable to Edison and San Diego.

24 Any such revision shall be agreed 25 to in writing by the Fiscal Sc Representatives and approved by

                      -33 .                2112 047

I the Board of Review, w 2 6.4.3 Charges pursuant to Item (16) " Taxes" shall 3 not include any taxes shared by San Diego 4 pursuant to Section 11 hereof. 5 6.4.4 There shall be no charges made pursuant to 6 Item (17) " Interest during construction". 7 6.5 Edison, at its own expenso, shall take all improve-8' ments to the Edison Svitchyard, and San Diego, at its 9 own expense, shall make all improvements to the 10 San Diego Switchyard, as is more fully provided in 11 the San Onofre Interconnection Agreemenc.

  " 12     7. OPERATION AND MAINTENANCE EX?ENSES 13 7.1 The expenses incurred by Edison on behalf of itself

-- 14 and San Diego for the operation and maintenance of 15 Unit 1 and the Station Site which are chargeable to le FPC Accounts 517, 519 through 525, inclusive, 528 17 through 532, inclusive, 560, 562, 566, 568, 569, 18 570, and 573 shall be shared eighty (80) percent by 19 Edison and twenty (20) percent by San Diego. 20 Charges to such accounts include the following: 21 7.1.1 Overhead expenses incurred by Edison which 22 , are allocable to the operation and mainte-23 nance of Unit i and the Station Site. Such 24 overhead expenses shall be deter =ined in 25 accordance with the allocation procedurcs 20 shown in Exhibit B. l 2l12 048 1 7.1.2 Nuclear training expenses for the initial w 2 manning of Unit 1 and for Unit 1 personnel s replacements required by normal attrition, 4 such as promotions, resignations or neces-5 sary transfers. Other nuclear training 6 expenses for the training of personnel to 7 provide manning of other generating facili-8 ties shall not be charged to the operation 9 and maintenance of Unit 1. Any disagreement 10 with respect to charging any nuclear training 11 expenses to the operation and maintenance of 12 Unit 1 shall be resolved by the Board of 13 Review. 14 7.1. 3 Payments made by Edison to San Diego, pur-15 suant to Section 12.6 hereof, for the use of 16 San Diego personnel in the operation and 17 - maintenance of Unit 1 and the Station Site. 18 7.2 Payroll tax expenses incurred by Edison on behalf of 19 itself and San Diego which are allocable to the 20 operation and maintenance of Unit 1 and the Station 21 Site shall be shared cignty (80) percent by Edison 22 and twenty (20) percent by San Diego. The amount of 23 such allocable expenses shall be determined oy 24 multiplying the Edison labor cost portion of the 25 expenses determined in accordance with Section 7.1 2s hereof by a decimal fraction, hereinaf ter referred - w

                                     -3.>-           2112 049

I to as the Payroll Tax Ratio. The Payroll Tax Ratio sa

• 2 shall be determined and applied as follows:

3 7.2.1 *During each calendar year, an estimated Pay-4 roll Tax Ratio shall be used to determine 5 the amount of payroll tax expenses to be 6 paid monthly by San Diego. Such estimated 7_ Payroll Tax Ratio shall be determined in 8 accordance with the method shown in Exhibit C 9 hereof based on Edison's expenses for the 10 preceding year; provided, however, by agree-11 ment of the Fiscal Representatives, such 12 ratio may be changed to more nearly reficct 13 the expected expenses of the current year. 3, 14 7.2.2 As soon as practicable after the end of each 15 calendar year, the actual Payroll Tax Ratio le for such year shall be deternined in accord-17 ance with the method shown in Exhibit C 18 hereof. Using said actual Payroll Tax Ratio, 19 the payroll tax expenses for which San Diego i l 20 is obligated hereunder shall be determined 21 for such year. To the extent that such 22 expenses are more or less than those already 23 paid by San Diego during said year, Edison 24 shall receive frem or pay to San Diego, as 25 the case may be, the amount of such Ed difference. 1 7.3 Pansions and benefits expcases (ir.cluding payroll w 2 tax expenses and Work =cn's Cc pens tion expences s applicable thereto) incurred by Edison on behalf of 4 itself and San Diego which are allocable to the 5 operation and maintenance of Unit I and the S tation 6 Site shall be chared cichty (80) percent by Edison 7 and twenty (20) percent by San Diego. The a: cunt of 8 such allocable expen.ics shall be determined by :ulti-9 plying the Edison labor cost portion,of the expenses lo determined in accordance with Section 7.1 hereof by 11 a decimal fraction, hereinaf ter re ferred to as the 12 Benefits Ratio. The Benefits Ratio shall be deter-13 mined and applied as follows:

,,   14                   7.3.1          During each calendar year, an esticated 15                                  Benefits Ratio shall be used to deterr.ine 18                                  the amount of pensions and benefits expenses 17                            -

to be paid mcnthly by San Diego. Such 18 estima':cd Benefits Ratio shall be determined 19 in accordance with the method shcwn in 20 Exhibit E hereof based on Ediscn's expenses 21 for the preceding year; provided, however, 22 by agreement of the Fiscal Representatives, 23 such ratio may be changed to T. ore nearly 24 reflect the (xpected expenses of the current 25 year. 2s 7.3.2 As soon as practicable af ter the end of cach

          ~ - - - - - - - - - . - _ . . . . . .            - - - - - . . .            __

2112 USI

1 calendar year, the actual Benefits Ratio for w 2 such year shall be d'e termined in accordance 3 with the method shewn in Exhibit E hereof. 4 Using said actual Benefits Ratio, the pen-5 sions and benefits expenses for which San 6 Diego is obligated hereunder shall ;c deter-7 mined for such year. To the extent that 8 such expenses are more or less than rhose 9 already paid by San Diego during said year, lo Edison shall receive from or pay to San 11 Diego, as the case may be, the amount of 12 such difference. 13 7.4 Administrative and general expensos (including p2y-

,, 14         roll tax expenses, Workmen's Conpensation expenses, 15         and pensions and benefits expenses applicable there-le          to) incurred by Edison on behalf of itself and San 17         Diego which are allocable to the operation and 18 maintenance of Unit I and the Station Site shall be 19 shared eightf (CO) percent by Edison and twency (20) 20         percent by San Diego. The amount of such allocable 21         expenses shall be determined by multiplying the 22         Edison labor cost portion of the expenses deter-23         mined in accordance with Section 7.1 hereof by a 21         decimal fraction, hereinafter referred to as the 25         A & G Ratio. The A & G Ratio shall be determiacd 26         and applied as follows:

w

                                                               ....x 2112 052

1 7.4.1 During es:h calendar year, an estimated

2. A & G Ratio shall be used to determine the s amount of administrative and general expenses 4 to be paid monthly by San Diego. Such esti-5 mated A & G Ratio shall be determined in 6 accordance with the method shown in 7 Exhibit F hereof based on Edison's expenses a for the preccding year; provided, hot.ever, 9 by. agree =ent of the Fiscal Representatives ,

lo such ratio may be changed to more nearly 11 reflect the expected e.<penses of the current 12 year. 13 7.4.2 As soon as practicable after the end of each ,, 14 calendar year, the actual A & G Ratio for 15 such year shall be determined in accordance le with the method shown in Exhibit F hereof. 17 Using said actual A & G Ratio, the adminis-18 trative and general expenses for which San 19 Diego is obligated hereunder shall be deter-20 mined for such year. To the extent that such 21 expenses are more or less than those aircady 22 paid by San Diego during said year, Edisen 23 shall receive from er pay to San Dic;,o, as 24 the case may be, the amoun t o f such 23 difference. 28 7.5 The procedures referred to in Secticn 7.1.1 h r. ,f

        -   - - - - - , . . - - - =-                   .   . _ .         . . . . . . . . .

2112 053

I and the motheds for daterninin; 2nd applying the 2 Payroll Tax Ratio, Benefits Ratio, and A & G Ratio 3 referred to in Sections 7.2, 7.3, and 7.4 hereof 4 shall be reviewed from time to time by the Fiscal 5 Representatives and, if necessary, be revised so 6 that the applacution thcreof shall continue to be 7 equitable to Edisen and , San Diego. Any such revi-8 sion shall be agreed to in writing by the Fiscal 9 Representatives and approved by the Board of Review. 10 7.6 Nuclear training expenses incurred prior to 11 January 1,1967, for the initial manning of Unit 1 12 which have been charged to FPC Account 926 shall be 13 shared eighty (80) percent by Edison and twenty (20)

,, 14          percent by San Diego. Any training expenses for 15          Unit 1 personnel incurred on or after January 1, le          1967, which are charged to F?C Account 926 shall be 17          shared through application of the Benefits Ratio 18          pursuant to Section 7.3 hereof.

19 7.7 Each Ccmpany shall pay all expenses of its repre-20 sentatives referred to in Section 3 hereof except 21 for such expenses properly chargeable to Unit 1. 22 7.8 Edison shall pay all operation and maintenance 23 expenses of the Edison Switchyard and San Diego 24 shall pay all operation and maintenance expenses of 25 the San Diego Switchyard. Such expenses shall not 23 be shared by the Companics in connection with tha , v

                                   -4t-2112 054

1 operation and =aintenance of Unit 1 except for the 2 costs of meter tests as specified in Section 13. . 3 7.9 Edison shall pay directly to the United States its 4 eighty (80) percent share and San liego shall pay 5 directly to the United States its twenty (20) per-6 cent share of the annual use charges due under the 7 terms and conditions of the grants of casements for 8 the Plant Site, Spur Track Area, and Access Road 9 Area. , 10 8. NUCLEAR FUEL COSTS 11 8.1 During the term of the Fuel Service Contract, Edison 12 shall make all pay =ents to and receive all moneys is and credits from Westinghouse, the Atomic Energy ,, 14 Commission, and others, which arise under the Fuel 15 Service Contract and directly related contracts. 7.0 San Diego shall pay to Edison its share of such 17 pay =ents and shall receive from Edison its share 18 of moneys and credits, as hereinafter specified, in 19 the manner provided in Section 12 hereof. 20 8.2 Pay =ents for fuel under Article VI-C of the Fuel 21 Service Contract shall be shared as follows: 22 8.2.1 The fixed monthly payment shall be shared 23 eighty (80) parcent by Edison and twenty (20) 24 percent by San Diego. 25 8.2.2 The portion of all energy pay =ents equal to 20 the zero net load fuel costs for Unit 1 _ui. 2112 055

I shall be shared eighty (80) percent by Edisen v 2 and twenty (21) percent by San Diego. Such 3 zero net load fuel costs shall be determined 4 each billing period in accordance with pro-5 cedures to be approved by the Board of 6 Review. 7 8.2.3 The rc=aining portion cF all energy paynants 8 shall be shared by Edison and San Diego in 9 direct proportion to the amount of energy lo delivered for the account of each Company 11 from Unit 1 during the period covered by 12 such pay =ents. 13 8.3 Any additional payment (including any non-California

 ,, 14     taxes associated with reprocessing charges) or credit 15     which may arise under Article VII of the Tuol Scrvice 16     Contract, except for those arising under Subdivision 17     D, shall be shared by Edison and San Diego in direct 18     proportion to the sens of ;he energy payments 19     charged to each Co=pany under Sections 8.2.2 and 20     8.2.3 hereof, during the period in which the fuel, 21     to whic.h such additional paycent or credit applies, 22     was used; provided, however, if any such additional 23     payment or credit ap; lies to fuel which will be used O'     in the future, it shall be shared laitially      - ;,h t .,      :

25 (80) percent by Edison and twenty (20) perco .c Sy 20 San Diego and appropriate adjustments shal -

                              .c,-            2112 056

1 made periodically, as such fuel shall be used, to w 2 provide sharing of such additional payment or credit

                                  ~

3 as first specified above in this Section 8.3. 4 - 8.4 Any additional payment with respect to California 5 State and local sales and use taxes which may arise 6 under Article VIII of the Fuel Service Contract shall 1 7 be shared by Edison and San Diego in the same propor-8 tion as they share (or shared) the pay =ents to which 9 said taxes apply. Any other pay =ents which may arise 10 under Article VIII of the Fuel Service Contract shall 11 be shared eighty (80) percent by Edison and twenty 12 (20) percent by San Diego. 13 8.5 For the purpose of establishing a scheduled refuel-14 ing date with Westinghouse pursuant to Article III 15 of the Fuel Service Contract, Edison and San Diego lo each shall estimate the rate at which it expects to 17 schedule energy from Unit 1 during the remaining 18 period of operation before refueling and each shall 19 advise the other thereof. Any additional pay =ent 20 which =ay be required under Article III-B or 21 Article III-D of the Fuel Service Contract, as a 22 result of scheduling energy from Unit 1 at a lesser 23 rate than that estimated, shall be shared by Edison 24 and San Diego in direct proportion to the a cunts by 25 which the a=ounts of energy esticated to be scheduled 26 fren Unit I cr.cced ~ the c. cunts o f energy actua11 2112 057

1 taken from Unit 1 by each Company. Neither Company v 2 shall schedule energy at a rate greater than that estimated during the remaining period of operation 3 4 before refueling, without the consent of the other 5 Company. 6 8.6 Any additional paynents which may arise under 7 Article III-C of the Fuel Service Contract, as a 8 result of operating Unit 1 at less than ninety (90) 9 percent capacity factor, shall be shared by Edison 10 and San Diego in direct proportion to the amounts, 11 if any, by which the amounts of energy corresponding 12 to ninety (90) percent capacity factor operation 13 exceed the amounts of energy actually taken from

     %, 14         Unit 1 by each Company.

15 8.7 All other pay =ents, costs, charges, or credits which le may arise under or in connection with the Fuel 17 Service Contract or directly related contracts, or 18 any other agreed upon costs incurred by Edison on 19 behalf of itself and San Diego for the operation of 20 Unit I which are chargeable to FPC Accounts 157, 21 158,'159 or 518 shall be shared eighty (80) percent 22 by Edison and twenty (20) percent ~oy San Diego 23 unless otherwise determined by the Board of P.eview. 24 9. ENVIRON'E?iAL FADIATIO!! YO'!ITORI"C 25 Edison shall perform or cause to be perforeca all 26 cnvironmental radiation 7.onitoring activitics whi * - i w

                                      - L ', .

1 necessary in connection with the operation of Unit 1, N-2 including those which must be performed outside of or 3 away from the San Onofre Nuclear Generating Station. 4 Such activities include, but are not limited to, (i) the 5 procurement, installation, operation, and maintenance of 6 monitoring equipment and supplies, (ii) the collection 7 and analysis of data, and (iii) the reporting of such 8 activities and analyses to goverre. ental agencies and 9 others. All costs incurred by Edison in c,onnection with 10 or allocable to such environmental radiation monitoring 11 activities shall be shared eighty (80) percent by Edison 12 and twenty (20) percent by San Diego. 13 10. INSURANCE s, 14 10.1 For the protection of Edison and San Diego with 15 respect to liabilities and risks arising out of the le ownership, operation, or maintenance of Unit 1 and 17 the Station Site, Edison shall secure and maintain 18 in force policies of insurance of the following 19 types, in form, and with companies satisfactory to 20 the Insurance Representatives, and with premiums to 21 be shared by Edison and San Diego as set forth in 22 Section 10.3 hereof. Such insurance coverage shall 23 be subject to periodic review and revisien to assure 24 the maintenance of ins'urance protection as dec=ed 25 to be required by mutual agreement of the Insurance 26 Representatives. In the event of any disagreement l 2

I concerning the securing of or the subsequent revi-ws 2 sion of such insurance coverage, the matter shall be 3 submitted to the Board of Review. 4 10.1.1 Comorehensive General Liability Insurance - 5 Non-nucicar (Includina Motor Vehicles) 6 Edison shall extend its comprehensive , 7 general liability insurance to provide e coverage for Unit 1 and the Station Site 9 with San Diego added as an a,dditional na=e1 10 insured respecting such coverage. 11 10.1.2 Workren's comoensation and Emolovers' 12 Liability Insurance 13 Edison shall extend its Workmen's Cc t -

%,   14            pensation and Employers' Liability Insur..: :e 15             to the extent of permissible self-insurai e le           and insured excess to include operating 4.nd 17           maintenance personnel of Edison regular cf 18           assigned to Unit 1.

19 10.1.3 Physical Da=12e Insurance - Non-nuclea; 20 To the extent possible, Edison sia.L 21 extend coverage under its Physical Da ge 22 Insurance policies to provide non-nucl:ar 23 physical da=1ge coverage for Unit i d the 24 Station Site for risks not covered './ the 25 nuclear preparty damage insurance re . erre i , 26 to in Section 10. 2. 2 hereo f, with S i t 1 - . %, i

                               - 'i -

2112 060

1 I added as an additional na=ed insured respccc-l 2 ing such coverage. This insurance is 3- applicable to all real and personal property 4 of every description, subject to policy 5 exclusions. In the event Edison is unable 6 to obtain such coverage for Unit 1 and the 7 Station Site under its present program, 8 such coverage shall be provided in the 9 manner and to the extent agr,eed upon by the lo Insurance Representatives. 11 10.2 Nuclear Insurance 12- Edison and San Diego shall secure and maintain in 13 force the following insurance and other coverages s, 14 with respect to Unit 1 and the Station Site: 15 10.2.1 Protection against liability arising out

                  ~

le of, or resulting from, a " nuclear incident" 17 as defined in the Atomic Energy Act of 18 1954, as amended, to include (a) liability 19 insurance from the Nuclear Energy 20 Liability Insurance Association and/or 21 the Mutual Atomic Energy Liability Under-22 writers, or equivalent insurance in such 23 amount and in such form as shall meet 24 the financial protection requirecents of 25 the Atomic Energy Commission pursuant to 28 Subsection 170(b) of the Atomic Energy w 2112 061

1 Act of 1954, as amended; and (b) a 2 Government Indemnity Agreement with the 3 Atomic Energy Commission pursuant to the 4 Subsection 170(c) of the Atomic Energy 5 Act of 1954, as amended; and 6 10.2.2 Nuclear property damage insurance from the 7 Nuclear Energy Property Insurance Associa-8 tion and/or the Mutual Atcmic Energy 9 Reinsurance Pool, or equival,cnt insurance, lo and any additional nuclear property da= age 11 insurance coverage, in such amount and such 12 form as are. agreed upon by the Insurance 13 Representatives. g, 14 10.3 The premium costs allocable to the 2dditicnal non-15 nuclear insurance coverage with respect to Unit 1 le and the Station Site described in Section 10.1 17 hereof and for the nuclear insurance described in 18 Section 10.2 hereof shall be shared eighty (80) 19 percent by Edison and twenty (20) percent by San 20 Diego. All dividends, return prc=iums, and credits 21 received respecting Unit 1 insurance policies 22 shall be shared in the same proportions. 23 10.4 San Diego shall provide, at its sole expense, 24 Work =en's Compensation and E=ployers' Liability 25 Insurance to cover the San Diego Plant Repretenta-l 20 tive, San Diego personnel used for special :rk on ~ pjj2 Q62

1 Unit 1 pursuant to Section 4.1 hereof, San Diego

s.

• 2 personnel receiving training at the San Onofre 3 Nuclear Generating Station pursuant to Section 4.2 4 hereof, and any other San Diego personnel while at 5 the San Onofre Nuclear Generating Station.

6 10.5 Edison shall investigate, adjust and settle claims 7 asserted by any party other than a Company against 8 the Companies or either of them, which are claims 9 of the type referred to in Section 16.3 hereof; 10 however, San Diego shall investigate, adjust and 11 settle claims asserted by any of its ultimate 12 consumers, which are claims of the type referred to 13 La Section 16.4 hereof. At the request of Edison,

  ,,  14       San Diego shall assist in the investigation, adjust-15       ment and settlement of any such claims.

le 10.6 Edison shall present and prosecute claims for 17 losses and damages against any insurer or third 18 party. Costs incurred by Edison in presenting and 19 prosecuting such claims and any other costs 20 incurred by Edison arising out of the operation 21 and maintenance of Unit 1 and the Station Site 22 which are chargeable to FPC Account 924, will be 23 shared eighty (80) percent by Edison and twenty 24 (20) percent by San Diego. 25 10.7 Through the appointed Insurance Representatives, 23 Edison shall consult with San Diego on matters v 2112 063

I 1' of insurance with respect to Unit 1 and the Station v 2 Site and shall provide San Diego copies of ,the 3 following: 4 10.7.1 Policies of nuclear insurance and certifi-5 cates of insurance applicable to non-nuclear e coverages in effect. 7 10.7.2 Invoices applicable to insurance costs. 8 10.7.3 Notices of losses in excess of $1,000 9 applicable to physical damage, third party lo liability, and Work =en's Compensation. 11 10.7.4 Notices of Workmen's Compensation claims 12 filed with the Workmen's Compensation 13 Appeals Board. g, 14 10.7.5 Annual su=maries of Workmen's Compensation 15 claims. le 10.7.6 Status reports of all claims involving a 17 potential loss in excess of $1,000. 18 10.8 San Diego shall pay to Edison its share of premium 19 costs and other insurance costs in the manner 20 provided in Section 12 hereof. 21 11. AD VALOREM TA.ES 22 11.1 Edison and San Diego shall use their best efforts to 23 have any taxing authority i=posind ad valore: taxes 24 or assessments on the San Onofre Nuclear Generating 25 Station assess and levy such taxes and assessnents 20 directly against each Company on the basis cf irm i w 2112 064 1 Percenta;c ownership in the property taxed. 2 11.2 All ad valorem taxes or assessments so levied 3 against each Company shall be the sole rctpensi-4 bility of the Company upon whom said tax is or 5 assessments are levied. 6 11.3 If any ad valorem taxes or assessments . e assessed 7 and levied in a mannar other than that i'ccified in 8 Sectica 11.1 hereof, it shall be the re sponsibility 9 of the Board of Review to establish pron.edures for 10 the equitable apportionment of such tax s or assess-11 ments and the payment thereof. 12 12 PAYME:;TS 13 12.1 As soon as practicable after the date )f execution 14 of this agreement, Edison shall submit to San Diego 1S an accounting report showing: 18 12.1.1 All expenditures in conneccia l with the 17 operation and maintenance of Unit 1 and 18 the Station Site (except fo: such expendi-19 tures which have been or wi . . be capitali ed 20 and shared under the Edison-ian Diego 21 Agreement) which have been .rade by Edison 22 on behalf of itself and San Diego on or 23 before the last day of the ilendar month 24 in which this agrc< rent is .e cu t e ; ! , 25 12.1.2 San Diego's share of such e penditures 2e determined in accordance ..h the w

          .                            -31          2112 065

1 provisions of Sections 6, 7, 8, 9, 10, .'.4, w 2 15 and 16 hereof; 3 12.1.3 The month and year in which such expendi-4 tures were made; and 5 12.1.4 The amount of interest then due on San 6 Diego's share of such expenditures computed 7 from the fifteenth day of the month in 8 which such expenditures were made at the 9 rate of six (6) percent per annum. 10 12.2 San Diego shall pay to Edison its share of the 11 expenditures and accumulated interest shown in said 12 accounting report within ten days after receipt by 13 San Diego of said accounting report. s, 14 12.3 With respect to Unit 1 and Station Site expenditures 15 made af ter the last day of the calendar month in 16 which this agreement is executed, Edison shall 17 notify San Diego of San Diego's share of such Unit 1 18 and Station Site expenditures made pursuant to 19 Sections 6, 7, 9, 14, 15 and 16 hereof and San Diego 20 shall pay its share of such expenditures to Edison, 21 in the manner specified below: 22 12.3.1 On or before the first day of each calendar 23 month, Edison shall submit in writing to 24 San Diego (a) an estirate of all such l' 25 expenditures which Edisca expects to .ake 28 on behalf of itself and 3.ia Diego during s .-. - . . . . . _ . _ . . _ . . . . _ . _ . . . . _ . . . . . . 2112 066

I that calendar month, (b) an estimate of 2 San Diego's share of such expenditures 3 determined in accordance with the provisions 4 of this agree =ent, and (c) the amount of 5 money to be paid by San Diego in payment of 6 its share of expenditures. In determining 7 such amount, Edison shall take account of 8 any unexpended balance of funds previously 9 advanced by San Diego pursuant hereto or lo any deficiency 1n funds previously so 11 advanced by San Diego. 12 12.3.2 San Diego shall pay to Edison the amount of 13 money so specified on or before the s, 14 fifteenth day of the calendar month for 15 which expenditures have been es timated. 16 12.3.3 As soon as practicable after the close of 17 each calendar month, Edison shall furnish to 18 San Diego an accounting report covering all 19 Unit 1 and Station Site costs incurred by 20 Edison on behalf of itself and San Diego 21 during that month. 21 12.3.4 Upon termination of this agreement and after 23 all Unit 1 and Statien Site costs incurred 24 under this agreement have been deter =ined, 25 Edison shall pay to San Diego any unexpended 20 balance of funds previously advanced by

                            -52                2112 067

1 San Diego or San Diego shall pay to Edison 2 any deficiency in funds previously advanced 5 by San Diego. 4 12.4 With respect to expenditures to be made pursuant to 5 Section 8 hereof af ter the last day of the calendar 6 month in which this agrec=ent is executed, Edison 7 shall notify San Diego and San Diego shall pay its 8 share of such expenditures in the manner specified 9 below: lo 12.4.1 Not less than five business days prior to 11 the date Edisen must n.ake such expenditures, 12 Edison shall provide San Diego with a 13 written state =ent of San Diego's share of 14

• such expenditures.

15 12.4.2 San Diego shall pay its share of such le expenditures to Edison no later than the 17 date Edison must make such expenditures, la 12.4.3 In the event Edison is unable to make an 19 accurate detcr=ination of San Diego's share 20 in sufficient time to give San Diego the 21 notice provided for in Section 12.4.1 22 hereof, Edison shall estimate San Diego's 23 share and San Diego shall pay such esti-24 mated amount. The following billing wlll 25 be adjusted by the amount such estEnated 26 share dif fers fren San Diego's actual + 2112 068 I share subsequently deter =ined. 2 12.4.4 Upon written agreement of the Fiscal, 3 Representatives, San Diego may pay its share 4 of all or any of the expenditures described 5 in Section 8 hereof, other than payments to 6 Wes tinghous e , the Atomic Energy Commission, 7 or the fuel reprocessor, in the manner 8 described in Section 12.3 hereof. 9 12.5 With respect to expenditures to be made by Edison lo pursuant to Section 10 hereof after the last day of 11 the calendar month in which this agreement is 12 executed, Edison shall provide San Diego a written 13 statement of San Diego's share of such expenditures s, 14 not less than eight business days in advance of the 15 date Edison must make such expenditures. San Diego 16 shall pay its share of such expenditures to Edison 17 no later than the date that Edison must make such 18 expenditures. 19 12.6 If and to the extent that San Diego personnel are 20 used'for special work on Unit 1 and the Station 21 Site, as provided in Section 4.1 hereof, San Diego 22 shall pay all wages, salaries, and other expenses 23 associated with such use of San Diego perscnnel. 24 San Diego shall advise Edison in advance of the 25 basis of the charges to be made by San Diego for 26 the use of its personnel and Edison shall nake p112 069

1 payment to San Diego thereof on cc:pletion or dur-2 , ing the course of such work, as the Companies =ay 3 agree.

• Edison shall charge any such payment to 4 Unit 1 and the Station Site.

5 12.7 The accounting reports submitted by Edison covering 6 Unic 1 and Station Site costs sha i'. be in a form 7 satisfactory to San Diego with suf ficient detail to 8 enable San Diego to allecate coser to the proper 9 FPC-Accounts and to ascertain the accuracy and 10 correctness of such costs. 11 12.8 San Diego shall have the right to post-audit the 12 books and records of Edison perta'.ning to I ait I and 13 the Station Site. Should any post-audit reveal ,, 14 errors, omissions or items not properly chargeable 15 to Unit 1 and the Station Site e r to San Diego in le the amounts billed, appropriate t ljust=ents shall 17 be made. 18 12,9 Annually or at such other inter .ils agreed upon by 19 the Fiscal Representatives, Edison shall prepare 20 and distribute complete compilations of Unit i and 21 Station Site costs which are rcquired for fiscal 22 purposes by the Companies. San Diego will assisc 23 in such preparations as necess a y. 24 12.10 Any disagreement as to whethet ian Diego's share 25 of Unit'l and Station Site corts has been properly 20 determined in accordance with the provisions of v 2112 070

I this agreement, which is not resolved within sixty 2 days of the date written notice of such disagcaement 3 is given, shall be referred to the Board of Review. 4 If after thirty days the Board of Review has not 5 resolved the dispute, the matter may be submitted 6 to arbitration as provided in Section 17 hereof. 7 12.1L Any payment by either Company to the other under 8 this agreement which is not cade when due shall 9 thereafter be payable with interest computed at the lo rate of ten (10) percent per annum from the date 11 payment is due until the date payment is received. 12 12.12 In the event either Co=pany disputes any portion 13 of any payment which it is required to make to the ,, 14 other Company under this agreccent, the disputing 15 Company shall give written notice thereof and shall le pay the full amount of such pay =ent on or before 17 the date when such payment is due. In the event 18 it is determined subsequently that the disputing 19 Company is entitled to a refund of all or any por-20 tion of such payment, then the other Cocpany shall 21 thereupon pay to the disputing Company the amount 22 of such refund with interest computed at the rate 23 of ten (10) percent per annum from the date of 24 payment to the date o f reimburse =ent. 25 13. UNIT 1 OPE"tTING I"'AIRME'iT 26 In the event of a Unit 1 Operati:q Impairrent, w 2112 07i

1 Edison shall take all actions reasonably necessary and 2 required to restore or maintain the operating capability 5 and reliability of Unit 1 in a timely manner; provided, 4 however, if all or substr.ntially all (as determined by 5 the Board of Review) of Unit 1 is destroyed, damaged, or e conde=ned, no such restoracicn shall be undertaken unless 7 the Companics agree thereto. As soon as practicable 8 after the commencement of any Unit 1 Operating Impairment, 9 Edison shall cdvise San Diego of the occurrence and lo nature of such Unit 1 Operating Impairment and the actions 11 being taken and contemplated to be taken to restore or 12 maintain the operating capability and reliability of

     's      Unit 1.

v 14 14. ATOMIC EFERGY CO304ISSION REGUIATORY "ATTE?S 15 14.1 Edison, in consultation with San Diego, shall be le rasponsible for the preparation and filing with the 17 Atomic Energy Co==ission of any application for a 18 construction permit and a license to acquire, 19 possess, and use Unit 1, including any amendments 20 theraof, to extend the term of the provisional 21 operating license or to acquire a permanent 22 operating license, and for handling all other 23 matters with the Atomic' Energy Cc==ission in 24 connection therewith, except for any such matters - 25 which the Atomic Energy Commission may require 20 San Diego to handle independently. Edi on shall s, _58 2112 072

1 submit such applications to San Diego for appreval 2 and execution prior to filing. 3 14.2 The Companies, through and as agreed upon by their 4 appropriate representatives, shall meet or com= uni-5 cate regularly to advise, inform, and consult with 6 each other on all significant matters and upcoming 7 meetings connected with the regulation of the 8 San Onofre Nuclear Cencrating Station by the Atomic 9 Energy Comnission or other regulatory agencies. 10 San Diego's representatives shall have the right to 11 attend and participate in all such ceetings, 12 whether in-aouse, with the AEC, or others. 13 14.3 Except as the companies may otherwise mutually

   ,, 14         agree, Edison and San Diego shall take all actions, 15        including the making of Capital Improvements, which 18        are reasonably necessary to obtain regulatory 17        approval for the operation of Unit 1, including all 18        such actions which are reasonably necessary to 19        obtain without unreasonable delay a permanent 20        operating license for Unit 1.

21 14.4 Engineering costs incurred by Edison which are 22 required in connection with its activities pursuant 23 to Section 14.1 hereof shall be included among the 24 expenses to be shared by the Ccmpanies pursuant to 25 Section 7.1 herecf, except for any such costs 26 which shall be chargeable to Capital Improvce:nts _3,_ 2112 073

I required in connection therewith and shared pursuant

   %e 2           to Section 6 hereof. If it should be determined s           subsequently thac such costs are not chargeable to 4           any of the FPC Accounts referred to in Secticn 7.1 5            hereof, such costs shall nevertheless be treated, 6            for purposes of this agreement, as if they were so 7            chargeable.

8 15. METER TE3TS 9 15.1 In accordance with test procedures approved by the 10 Board of Review, Edison shall make routine tests of 11 the meters in the Edison Switchyard which =casure 12 (a) energy deliveries between Unit 1 and the Edison is Switchyard, (b) energy deliveries from the San

   ,, 14            Diego Switchyard to the Unit 1 Auxiliary "C" Trans-15            former, and (c) energy deliveries over the inter-16            connection between the Edison and San Diego 17            Switchyards. Edison shall make such tests during 18            the month of June of each year or at such other 19            times as may be agreed upon. Edison shall adjust 20            or replace any meter which is found to be inac-21            curate. Edison shall, at the request of San Diego, 22            or may, on its own initiative, make special tests 23            of said =eters. Edison shall give San Diego rea-24            sonable notice of the time when eeter tests will be 25            made and San Diego shall have the right to have a 28            representative witness the tests. The costs of w
                                        -6 ~

2112 074

1 meter tests shall be shared eighty (80) percent by sw 2 Edison and twenty (20) percent by San Diego, except 3 that the requesting or initiating Company shall pay 4 the entire cost of any special tests it requests or 5 initiates wherein the percentage error is found to 6 be less than one (1) percent slow or fast. 7 15.2 If any test shows any meter to be inaccurate by 8 more than one (1) percent er if any meter fails to 9 register, corrections, equcl to the amount of error 10 as found, shall be made to :he records of the 11 measurements made by such noter during the period 12 of such erroneous meter re:;istration or, if such 13 period cannot be determined or reasonably esti-i

 %,  14            mated, for half the period from the date of the 15            last preceding test.      BillLig adjustments or energy 16            exchanges corresponding to such corrections shall 17            be made in accordance with procedures approved by 18            the Board of Review.

19 16. LIABILITY 20 16.1 Each Company shall be respcnsible for the conse-21 quences of its Willful Action, t nd shall indc=nify 22 the other Company from the consequences thereof. 23 16.2 Except ' for any loss , damar.c , cos t, charge, or 24 expense (hereinaf ter colle ( :ively referred to as 25 " Damage") resulting from bfilful Action, and 28 except to the extent of ar: Damage covered by valid w 2112 075

1 and collectible Unit 1 Insurance, no Company (First v 2 Company), its directors, officers or employees shall 3 be obligated to discharge any' liability to the other 4 Company (Second Company) for any direct, indirect or 5 consequential Da= age of. any kind or nature incurred 6 by the other Company (Second Company) resulting 7 [whethcr or not from the negligen'ce of a Company 8 (First Company), its directors, officers, employces 9 or any other person or entity whose negligence would 10 be imputed to such Company (First Company {} from 11 (i) the ownership, operation, maintenance or use of 12 the San Onofre Nuclear Generating Station, or (ii) 13 the perfor=ance or non-performance of the obliga-

  %, 14    'tions of a Company under any of the San Onofre 15    Agreements.      Subject to the exceptions in this 16    Section 16.2, each Company (Second Company) 17     expressly releases the other Company (First Company),

18 its directors , officers , and employees frem any 19 such liability, or from any judg=ent obtained 20 against such other Company (First Company), its 21 directors, officers or employees, for any such 22 liability, and such Company (Second Company) shall 23 not execute, levy or otherwise enforce such a judg-24 cent (including recording or effecting a judgmunc 25 lien) against the other Co=pany (First Company), 28 its directors , officers or employces. 2112 076

1 16.3 Except for any liability resulting from Willful 2 Action, except as provided in Sections 16.4 and s 16.5 hereof, and except for any liability paid for 4 by Unit 1 Insurance, Edison shall pay eighty (80) 5 percent and San Diego shall pay twenty (20) percent 6 of (i) the costs and expensos of discharging lia-7 bility of one or both of the Co=panies for any 8 Damage of any kind or nature (including direct, 9 indirect or consequential Damage) suffered or 10 incurred by any party other than a Company (whether 11 or not resulting from the negligence of any Company, 22 its directors, officers, c=ployees, or any other 13 person or entity whose negligence would be imputed s, 14 to such Company) resulting from (a) the ownership, 15 operation, maintenance or use of Unit 1 or the 16 Station Site, or (b) the performance or non-17 performance of the obligations of a Company under 18 eny of the San Onofre Agreements, and (ii) the 19 costs and expenses incurred in settle =ent of 20 injuries and da= ages claims, including attorneys' 21 fees and the cost of labor and related supplies and 22 expenses incurred in injuries and damages activitics 23 (all as referred to in FPC Acc .une 925), :sulting 24 from or arising out of such liability. P5 16.4 Except for any liability resulting frem Willful 28 Action and except for any liability paid for by 2112 077

     ,   1           insurance or the Government Indemnity Agrec=ent 2           referred to in Section 10.2.1 hereof, either Company s           whose ultimate consumer shall make a claim or demand, 4           or bring an action for any death, injury or Damage 5           arising out of electric service to such ultimate con-6           sumer and resulting from (i) the ownership, operation, 7   .       maintenance or use of Unit 1 or the Staticn Site, or 8            (ii) ti.c performance or non-performance of the obliga-9            tions of a Company under any of the San Onofre Agrec-10           ments shall indemnify and hold harmless the other 11           Company, its directors, officers and employces from 12           and against any claim, demand or liability for such x       13           death, injury or Damage. The term " ultimate censumer" 14           means an electric consumer to whom no electric po'wcr 15           or energy is dalisered for resale.

18 16.5 Except for any liability resulting from Willful Action, 17 each Company shall bear the total cost of discharging 18 all legal liability imposed upon it or the other 19 Company, including actorneys' fees and other associ-20 ated costs, arising cut of Workmen's Ccmpensation 21 claims (or employer's liability claims) brought by its 22 employees, provided, however, the total cost of dis-23 charging such liability, including attorneys' 24 feesandl other associated costs, arising out of such Workmen's i i 25 Compensation claims brought by Edison personnel whose 26 labor expenses are charged or allocated to the opera- _,.,_ 2112 078

                                  ~

I 1 tion and maintenance of Unit 1 and the Station Site .w 2 pursuant to Section 7.1 hereof, shall be shared eighty 3 (80) percent. by Edison and twenty (20) percent by 4 San Diego. 5 17. ARBITRATION 6 17.1 In the event that San Diego and Edison, acting through 7 their respective acabers on the Board of Revicu, should 8 be unable to reach agreement with respect to a matter 9 herein specified to be approved, established, deter-10 mined, or resolved by agreement of the Companics , or by 11 their representatives appointed pursuant to this agree-12 cent, either Company may call for submission of such 13 matter or dispute to arbitration in the mannce herein -- 14 set forth, which call shall be binding upon the other 15 Company to the dispute. Edison shall continue to do 1G all things and make all expenditurcs necessary for the 17 operation and maintenance of Unit 1 and the Station 18 Site pending the final decision of the arbitrators. 19 17.2 The Caicpany i alling for arbitration shall give notice to 20 the other Company, setting forth in such notice in ade-21 quate detail the issues to be arbitrated, and within ten 22 days from receipt of such notice the other Company may 23 by notice to the first Company set forth in adequate 24 detail additional related issues to be arbitrated. 25 17.3 Within twenty days from its notice calling for the 20 - arbitraticn, the first Company shall npoint a %, I I

                                                                   'O q q 4 ^

1 person to serve as one arbitrator, and shall give sa 2 - notice to the' other Compaay of such appoint =ent, and 3 within fifteen days af ter receipt of notice of 4 appointment of the first arbitrator, the other 5 Company shall appoint a person to serve as a second 6 arbitrator, and shall git a notice to the first 7 Company of such appointmr.nt. The two persons so 8 appointed shall then agree upon and secure a third 9 arbitrator. If the secci d arbitrator should not be lo appointed within fifteen days af ter receipt of 11 notice of appointment of the first, or if the third 12 arbitrator should not b a secured within fif teen 13 days from the appoint = cat of the second, either ' %" 14 Company may with notice to the other Company call 15 upon the American Arbit;ation Association (or upon le a similar organization if the American Arbitration 17 Association should not at that time exist) for 18 appointment of an arbit rator skilled with respect to 19 the matter to be arbitrated, and whose appointrent 20 shall be binding on bc :h Companies. So person 21 shall be eligible for cppointment by the American 22 Arbitration Associaticn who is an officer, 23 employee, shareholder if, or otherwise interested 24 in either of the Campt.Les hereto cr in the matter 25 to be arbitrated. 28 17.4 Th9 arbitrators so ap;ainted shall hear evidence 2112 080

                                           ~.

I submitted by both Companies and may call for addi-2 tional information, which additional information 3 the Companics or Company called upon shall furnish 4 to the extent feasibic. A decision or determina-5 tion signed by a majority of the arbitrators shall 8 be conclusive with respect to the issues submitted 7 and shall be binding upcn acch Companies. 8 17.5 Execp as otherwise provided in Sections 17.1, 9 17.2, 17.3, and 17.4 hereof, the arbitration shall 10 be governed by the rules of practice and procedure 11 of the American Arbitration Association from time 12 to time in force, except that, if such rules and ,

 ..        13              practice as herein modified shall con.llet with the
  ' %"     14              California Code of Civil Procedure or any other 15              provision of California law then in force, such is              California rules and provisions shall govern. This 17              submission and agreement to arbitrate shall be 18              specifically enforceable.       The award of the 19              arbitrators or a majority cf them upon any question 20              submitted to them hereunder shall be final and 21              binding upon the Companies to the extent and in the 22              manner provided by ~he California Code of Civil 23              Procedure.

24 17.6 Each_ Company shall bear the fee and personal 25 expenses of the arbitrator appointed by it, , l 26 together with the fees and exi nses of its ce'n 2112 081

1' counsel and of its own witnesses, and all other 2 costs and expenses of the arbitration shall be borne 3 one-half by the Company calling for arbitration and 4 one-half by the other Company involved, unless a 5 decision of the arbitrators shall specify a dif-6 forent apportionment of any or all of such costs 7 and expenses. 8 18. FO2CE :'VI'Z5 9 Neither Company shall be* considered to be in breach lo of any of the obligations bereunder to the extent failure 11 of performance shall be due to uncontrollable forces. 12 The term "uncontrc11ahic forces" shall ccan any cause 13 beyond the coatrol of a Conpany unable to perform such

   *- 14               obligation, including, but not limited to, failure of 15              facilitics, flood, earthquake, storm, fire, lightning, 10               ard other natural catastrophes, epidemic, war, riot, 17              civil disturbance, labor dispute, sabotage, Governcent 18              priorities, restraint by Court order or public authority, 1G   i and a tion cr non-action by or failure to obtain the i

20 ' necessary authorizations or approvals from any Covernment 21 agency or authority, which by exercisc of reasonabic 22 diligence and foresight such Company could not reasonably 23 have been expected to avoi1 and which by cxcrcise of 24 , reasonuble dLJig:oce it haa been unabla to overecta. 25 I Nothing contained herein chall be construed so as to l l 2G j requLra a Ce.pany :c nettle any strike or labor dispute

                                                                                i i
                                                                          'r

• R **R

l 1l in which it may be involved. Any Company rendered unable v 2 to fulfill any obligation by reason of uncontrollable 3 forces shall exercice due diligence to remove such 4 inability with all reasonable dispatch. 5 19. RELATION 51tIP OF P!.RTIFS c 19.1 The covenants, obligations, and liabilities of the 7 Compcnics are latended to be sev2ral and not joint 8 ~ or collective, and nothing harcin contained shall 9 ever be construed to create an association, joint 10 venture, trust or partnership, or to impose a trust 11 or partnership covenant, obligation or liability on 12 or with regard to either of the Companics. Each 13 Company hereto shall be individually responsible -- 14 for its own covenants, obligations, and liabilitics 15 as herein provided. Neither Ccapany shall be under le the control of or shall be deemed to control the 17 other Company. No Company shall have a right or 18 power to bind the other Cenpany without its express 19 written consent, except as expressly provided in 20 the San Onofre Agreements. 21 19.2 The Coppanies hereby elect to be excluded from the 22 application of Subchapter "K" of Chapter 1 of Sub-23 title "A" of the Internal Revenue Code of 1954, or 24 such portion or portions thereof as may be permitted ; I 20 i or authorized by tbc Secretary of the Treasury or 20 his dcle .. ...- inso far as ;uch subc~naptcr, or any w

                                          -<9-               2112 083

1 portion or portions thereof, may be applicable to 2 the Companies under the San Onofre Agreements. 3 20. NOTICES 4 All noticos under this agreement shall be in writing 5 and shall be delivered in person or sent by registered or o certified mail to the applicable of the following 7 addresses: 8 Southern California Edison Company c/o Secretary 9 Post Office Box 351 10 L s Angeles, California 90053 11 San Diego Gas & Electric Company c/o President 12 Pact Office Box 1831 13 San Dicgo, California 92112 s- 14 By notice sent to the other Company, either Edison 15 or San Diego may designate different persons or different 10 addresses for the giving of notices hereunder. 17 21. TEmi 18 This agreement shall be effective as of October 5, 19 1967, and shall continue in effect until termination of 20 the easc=ent for the Plant Site, or such earlier date 21 as the Companies may agree to cease operation of Unit 1. 22 The San Onofre Operating Agreement is hereby superseded 23 as of October 5, 1967. 24 IN WITNESS Wi:EREOF, the Co=panies have caused 25 this agreement to be executed in duplicate on their 20 behalf. 1 SAN DIZCO CAS & ELECTRIC CO.vfANY 2

• 3 4 ATTEST: By eb Vm 4

5 e ./...:9% 4..w 7 8 SOUTF.ER:t CALIFCR:;1A EDISC:! CO:'?A: Y 9

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11 ATTEST: By 1d p,h . ,2 12 DElllOR V10E PPC5t:ENT 13 - 86W

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EXHIBIT B w ALLOCATION OF OVE? HEAD EXPENSES Overhead expenses ir. curred by Edison which are allocable to the San Onofre Nt. clear Generating Station are comprised of the following:

1. All of the following expe nses incurred at the San Onofre Nuclear Gener ting Station:

a) The salaries and expenses of the Station Chief and nis super.isory, ac=inistrative, engineering, and clerical and acccunting staff assigned to t':e 5 a Onofre Nuclear Generating Station; b) Stationery a6d offt:e supplies expenses; c) The payroll and otner costs incurred in processing grievances; d) The payroll and other ccsts incurred in attending job training, meetings by employees assigned to the San Onofre Nuclear Generating Staticn; e) Miscellaneous overhead expenses not assignatic to othc.- functions of the San Onofre Nuclear Generating Station.

2. A portion of the following expenses incurred in Edison's Steam Generation Division:

a) The salaries and e<penses of the Superin-tendent of Steam G1neration and his supervisory, ac=inistrative, engineering, and clerical and accounting staff; b) Stationery and office supplies expenses; c) A portion (which is applicable to the Steam Generation Divisi:n) of the payroll and other costs incurred in the operation of Edison's cperators' training schcol and the salaries and experses of Steam Generation Division personnel wnile attending such school' , w 2112 090

2 ms

• d) Miscellaneous overhead expenses not assign-able to other functions of the Steam Genera-tion Division.

Such portien shall be determined by multiplying the total of such salaries and expenses by a ratio, the numerator of which is the total payroll for the San Onofre Nuclear Generat".ng Station and the denominatcr of which is the total payrcll supervised by the Superintendent of Ste n Generation anc his staff. 3 A portion of the fellowing expenses incurred in Edisen's Power Supply Department: a) The salaries and expenses of the Manager of Power Supply and the Supe ~rintendent of System Operation and their supervisory, administrative, engineering, and clerical and accounting staffs, but excluding system dispatchers; b) Stationery and office supplies expenses; c) Expenses (but not payroll costs) incurred in attending certain conventions and cen-mittee meetings by Power Supply Department personnel; d) Miscellaneous overhead costs not assignable to other functions of the Power Supply Department. Such pcrtion shall be determined by multiplying the total of such salaries and expenses by a ratio, tne numerator of which is the total payroll for the San Onofre Nuclear Generating Station and the denominator of which is the total payroll super-vised by the Manager of Power Supply and his staff. 4 The overhead expenses of Edison's Steam Maintenance Divisien will oe charged to the San Onofre Nuclear Generating Station only to the extent that Steam Maintenance Divisien personnel are employed at the San Gnofre Nuclear Generating Station. The tota. cC ruch allocatie cverhea; e x : e r.n c s

       . ';i be alle at:.. nr.d :har:;e 1 to tne acprce ri .te .'PC 0 . :* i ? ci3nt      in. c:,cra:icn and maintenance expenue G:'c' ants for Unit 1 a::d the Edison Zwitenvard en ene
       .1' :: tae ti:e:         halucn later ch trges to cuen ::ccun'.:.

2112 091

                                     ~
                                   ~

EXHIBIT C PAYROLL TAX RATIO The Payroll Tax Ratio shall be determined in the following manner using, where indicated, expenses reported in the Annual Report of Edison to the Federal Power Ccm-mission ("FPC 7orn 1"): Payrcil Taxes for 1967 Payroll taxes applicable to labor charged to operation and maintenance, construction, and other accounts, per FPC Form 1, Page 352: F.I.C.A. $2,711,186 H.I.T. 347,596 F.U.T.A. 134,311 S.U.I. 755,494 Total $3,948,5_87_ __ w Labor Base for 1967 Total labor charged to operation and maintenance, construction, arid other accounts, per FPC Form 1, Pat;e 356: $107,586,271 Payroll Tax Ratio for 1967 = $ 3,948,587 , o ,0 3 r,7

                                      $107,500,271 2112 092

EXHIBIT D WORKMEN'S COMPENSATION RATIO The Workmen's Compensation Ratio, to be applied au shown in Exhibits E, F, and G, shall be determined in the followir.; mar.ncr using, where indicated, expenses reported in the Annual Report of Edison to the Federal Power Com-mission ("FPC For.1"): Workmen': Cc.censation Excenses for 1967 (Not Cacitalized) Employee ir. juries expenses, per FPC Form 1, Page 226: Disability Allowance and Compensation - Employees .. $270,298 Medical Expenses .............. 91,662 First Aid Kits ................ 63,531

                                                                                 $    425.491 Portion of liability insurance premium allocable to Workmen's Compensation coverage:                                       8,507
 %,   Total Workmen's Co=pensation expenses:                                     $    433,998 Less the amount of such expenses which have been sharec oy the Conpanies pursuant to Sections 10 and 16 nereof:                                                 $              0 Net expenses to be allocated:                                              $    433,998 Labor Base for lo67 Total labor charged to operation and maintenance, per FPC Form 1, Page 356:                                     $72,770,976 Total labor charged to other accounts, per FPC Form 1, Page 356:                                                       979.429 Total libor base:                                                          $73,750,405 Less the amount of labor characd to the operation ans maintenance of Unit 1 and the Station Site pursuant to Section 7.1 hereof:                                                                    _

166,524 Net labcr .:ac . $73,5931 1g( w

       'd o r k r ? n '  O .~.T r a n 3 ? t i e n P.,1 t t o e $     4,}} OG3   ,  n , g e. q 173,5<.3,:: 1       - <-

2112 093

w EXHIBIT E BENEFITS RATIO The Benefits Ratio shall be determined in the follow-ing canner using, where incicated, expenses reported in the Annual Report o." Edison to the Federal Power Commission ("FPC Form 1"): . Pensicr.s and Eenefits Expenses for 1967 Labor

• Total Employee pensions and benefits $1,051,144 $ 10,522,097 charged to Account 926, per FPC Form 1, Page 419:

Plus employee pensions and benefits capitalized: - 3,516,c21 Sub-total $1,051,144 $ 14,038,613

 ,,      Payroll taxes             8 3.67% or labor                     38,577 Workmen's Compensation d 0.595 of labor                         6,202 Total pensions and benefits expenses:                       $ 14,083,3,c7 Labor Base for 1967 Total labor enarged to operation and                        $107,586,271 maintenance, construction, and other accounts, per FPC Form 1, Page 356:

Less labor charged to FPC Account 926: 1,051,144 Net labor base: $1061 5?S,127 Benefits Ratio for 1967 = s 14,083,397 - 0*132

                                       $100,535,127

• Includes direct and indirect labor

 ~

2112 094

EXHIS:T F A & G ?ATIO

 %s The A & G Ratio : hall t e deter =ined in the following manner using, where indicateu, expenses reported in the Annual ?.eport of Edison to the Federal Pcwer Commission ("FFC Form 1"):

Administrative and General Expen:es Allocable to Operation and Maintenance for 1907 ( pe r FPC Fo.-m 1, Page 419)

            -                                                        Labc: *_

Total A/C 920 Administrative and general salaries: $10,565,273 310,5ff,2 3 921 Office supplies and expenses: 216,355 3,1: 2. ~- Total Accounts 920 ana 921: $10,731 1 '23 310.2 0 ~ ~ 0.6303 (See Exhibit H) of Acco 2nts 920 and 921 applicable to operation and maintenance: $ 6,801,051 5 8,995,679 A/C 923 C tcide services (see Note 1): - 407,--3 932 General maintenance 1,033,843 1,78L,:31 Sub-total $ 7,834,894 311,1SE,ll3 Payroll taxes 0 3 67% of labor $ 287,521 Workmen's Compensation 9 0.59% of labor 46,226

 -             Pensions and benefita a           13 22% of labor                           1,035,'~3 Total A & G expense allocable to operation and maintenance: $12,557.f:1 Operation and Maintenance Labor Base for 1967 Total labor charged to operatton and mainte-nance accounts, per FPC Form 1, Page 356:                                          $72,770,976 Less the ame- .t of such labor charged to administrative and general expense accounts:

Direct labor, per FPC Form 1, Page 355: $12,891,459 Indirect labor included in the acount reported in FPC Form 1, Page 356, Column C, Line 92: 392,065 Total 13,283,: 1-Net cperation and maintenancc labcr base: $59,487, ~2

                                                                                                   -a A & G Ratio for 1967           =     $12,557,653       ,   ,
                                                                          ~~~ ,13
                                                    $59,457,452                                          ,

2112 093

  'I;o t e ':  Tr.e arount :-cwn rcr A/C ?23 sna11 to the anc;nt chtr e3 tnereto ex:.-: trau it sna;l nct exceed tr.c .reater                       'f

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EXHIBIT G CAPITAL A & G RATIO The Capital A & G Ratio shall be determined in the followir.g manner using, where indicated, expenses reported in the Annual Report of Edison to the Federal Power Commission ("FPC Form 1"): Administrative and General Expenses Allocable to Construction for 1967 (per FPc Form 1, Page 419) Labor

• Total A/C 920 A:ministrative and general salaries: $10,565,273 310.565,273 921 Office supplies anc expenses: 216,355 3,695,a't Total Accounts 920 and 921 $10,781,623 glg73 0 35S8 (See Exhibit H) of Accounts 920 and 921 applicable to construction: $ 3,868,448 $ 5,116,756 Payroll taxes 8 3.67% of labor Workmen's Compensation 0 141,972 0.59% or labor 22,82t Pensions and benefits 8 13.22% or labor 511,409 6

   ,, Total A & G expense allocable to construction                                                   $ 5,792,961 Total pen sions and benefits expense allocable to total lab )r charged to construction accounts:

0.1322 x $33,835,866 =

                                                                                                      $ 4,473,101 Total A & G plus : nsions and benefits expenses allocable to construction:                                                                   $10,266,c62 Less amount of A & G plus pensions and benefits expenses allocable to contract construction:

0.01 x $169,200,000 =

                                                                                                      $ 1,692,cc0 Remainder of A & G plus pensions and benefits expences allocable to Edison construction:                                                    $ 8,574,052 Construction Direct Labor Base for 1967 Total direct           labor charged to construction accounts, per FTC Form 1, Page 356:
                                                                                                      $20,42],S24 Capital A & G Ratio for 1967                 =
                                                                           $ 8,574 0_61 x     -        0'41c-
                                                                           $20,42d,Uic            -
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_ . 2112 096

v EXHIBIT H DETERMI!;ATION OF CPERATION & MAINTENANCE AND CONSTRUCTIO!? LA 03 RATIOS TO EF. USED IN EXHIBITS ? 5G Labor Char.;e.s for 1967 Total labor charretj to croration and mainte-nance acc:un:r., .5er FPC Form 1, Page 356: $72,770,976 Less t'.2 2..cun; cf such lctor charged to ad=1ni;;ra:110 anu general expense accounts: Direct labor, per FPC Form 1, Page 355: $12,891,459 Indirect labor included in the amount reportec in FPC Form 1, Page 356, Column C, Line 92: - 392,065 Total 13,283,524 Net labor charged to cperation and maintenance accounts: . $59,487,452

 '" Total labor ch:rged to other accounts, per FPC Form 1, Page 356:                                                                    979,429 Total labor charged to construction accounts, per FPC Forn 1, Page 356:                                                          33,835,866 Total labor base for this computation:                                           $ 9 4 , 3 0_2 , 7 3 *,

Ratic cr r.e: cperation and maintenance = $59,487,3c2 labor to total labor: $94,302,7.7

                                                                                   =     0.6308 Ratio of construction labor to total           =       $33,835,366             =     0*3CA' labor:                                                 $94,302,7,7                          'La 1

2112 097 m

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• AMENDME:7 ::0. 1

     *"       2                              -

TO 3 AME!!DED SAN ONOFRE OPERATING AGREEME::T . 4 5 THIS A:! ENC::E IT NO.1 to the AMENDED SA!I O!!OFRE OPERATI: 3 AGREEME:? is entered into as of the s{f7 "S day of 6 7 N. .,/- , 1971, by and between SAtt DIEGO GAS & 8 ELECT IC CO:"PA::Y, a California corporation (" San Dicco") and 9 SOUTHER:: CALIF 0P.:i!A EDISC:! CO:*PA:lY, a California corporatica 10 (" Edison"), hereinafter sometimes individually called 11 " Company" and collectively called " Companies." 12 RECITALS 13 This Amendcont is made with reference to the following \'N- 14 facts: 15 San Diego and Edison entered into the Amended San le Onofre Operating Agreement as of July 30, 1970. On the same 17 date San Diego and Edison entered into a letter agreement 18 that nodii' icd in part the provisiens of Section 16 19 (Liability l of the Amended San Onofre Operating Acrec=ent. 20 San Dic o and Edison now wish to amend Sectica 16 and 21 Section 10 of the Acended San Onofre Operating Acreccent and 23 to supersede the aforementioned letter agrec ent as herein-23 after set forth. - 24 Ac t- . 't"'T 25 The Cc runics ac: ce as follows: 2112 098 h 2G / 1 AME :D:C::7 To F2CTIO:: 16

     %,        2            Section 16 of.the Amended San Cnofre Operating Acreemene s      is hereby amended to read as follows:

4 15+ LIABILITY ' 5 16.1 As used'in thin Section 16, the following terms shall have the following meanings: 6 7 16.1.1 "DamaCe" means any loss, damage', cost, 8 chnrce or expense resulting from the 9 ownership, operation, maintenance or use lo , of Unit 1 or the Station Site, or the per-11 formance or non-performance by a Cocpany 12 . or the Companics of any of the San Onofre 13 Agrectents. * %- 14

• 16.1.2 s, "Huclear Incident" n. cans a nucleat- 1r.ci '

15 dent as defined in Section lig of the le . Atomic Energy Act of 1954, as anended. 17 16.1.3 " Uninsured Damace" = cans Damage not paid J 18 . for by Unit 1 Insurance. 19 16.2 Except as permitted under Section 16.3 hereof, 20 neither Company cha'll be liable to the other Cc=- 21 pany for Uninsured Damage resulting from a !!uclear 22 Incident. ' 23 16.3 Neither Ccmpany, its directors, officers or en-24 ployees shall be obligated to discharge any liabil-- 25 ity to the other Company in excess of $2,000,000 20

,,                                  for any single occurrence for iny direct, 1:: direct 2112 099

1 or consequential Uninsured Damage of any kind or s, 2 sa nature suffered by the other Company, resultir.g 3 from 'dillful Action and resulting from or arising 4 out of a Nuclear Incident. Each Company expressly 5 releases the other Company, its directors, 6 officers and employees from any such liability in 7 execes of $2,000,000 per occurrence and from any 8 judgment in excess of $2,000,000 per occurrence 9 . obtained against a Company, its directors, 10 officers or employces,. for any such liability. 11 Neither Ccmpany shall execute, levy or otheritise 12 enferec such a ju.d t ment, or record or effect a 13 judgment lien, against the other Company, its , 14 v directors, officers or employees for any part of , 15 su:h judgment in excess of $2,000,000 per 10 occurrence.

           . 17       16.4       Subject to Sections 16.2 and 16.3 hereof and 18 axcept for Uninsured Damage resulting from '.'illful 19 A: tion (and not resulting from or arising out of 20 a Nuclear Incident), neither Company, its 21 directors, officers or employees shall be oblicated 22 to discharge any liability to the other Ccepany, 23 far any direct, indirect or consequential Uninsures 24 D1 mace of any kind or nature suffered by the other       '

25 Company, whether or not resulting from the nccli-20 .)w Conce of a Company, its directors, officers , _3_ 2112 100

      ?.             employces or any other person or entity who:e

1. Subject 2 negliCence would be imputed to a Company.

3 to the exceptions contained in this Section 16.4, 4 each Ccmpany expressly releases the other Company, 5 its directors, officers and employees from any 6 such liability. Neither Company shall executo, 7 levy or otherwise enforce a judgment for such 8 liability, including recording or effecting a 9 judgment lien, against the other Company, its 10 directors, officers or employees. s 11 16.5 subject to Sections 16.2 and 16.3 hercor and 12 except for liability for Uninsured Damage resultir. 13 fron Willful Action (and not resulting frca or., j 14 arising out of a Nuclear Incident) and except as . 15 provided in Sections 16.6 and 16.7 hereof, Edi:on 10 shall pay eighty percent (305) and San Dicco shall 17 pay twenty percent (20%) of: , 18 16.5.1 The costs and expen:cs of discharCing 10 liability of one or both of the Companics 20 for any direct, indirect or consequential 21 Uninsured Danage of any kind or nature 22 suffered by any party other than a 23 Company, whether or not resulting frca the 24 negligence of a Compa.5y, its directors, L - officers and employces or any other per:cn 2G or entity whose ncclicence would to

• w

                                      -n-                   2112 101

        *        ~ .

1 imputed t'o a Company; and b  %, 2 16.5 2 The costs and expenses incurred in 3 5 settlement of injuries and danaces 4 claims, including attorneys' fees and the 5 cost of labor and related supplies and 6 expenses incurred in injuries and danaces

                                                                           ~

7 activities (all as referred to 1n FPC 8 Account 925) resulting from or arising 9 out of such liability.

          . 10     16.6    Except for liability for Uninsured Datace result-11            ing from Willful Action, either Company whose 12            ultimate consumer shall make a claim or demand, or 13            bring an action for any damacc (including death f '\
\ / ,, 14                   or injury) arising ous of cicetric service to sue:.

15 ultinate consumer shall indemnify and hold harn-16 less the other Company, its directors, officers 17 and enployees from and against any claim, demand 18 or liability for such danace. The term "ultin. ate 19 consumor" means an electric consu=cr to .hom no 20 electric po cr or enorcy is delivered for resale. 21 16.7 Except fo liability for Uninsured Camace (includ-22 ing death or injury) resulting from Willful Actlen, 23 each Company shall bear the total cost of dis-24 charginc all legal liability imposed upon it or the 25 . other Company, includinC attorneys' fees and c.he.- {} s, 2G associated costs , arising out of '..*ork=cn's

                                                    -s-              2112 102

( l Compensation claims, or employers' liability

    %e                                               .

2 claims,. brought by its employces ; provided that 3 the~ cost or discharging such liability, includinc 4 attorneys' recs and other associated costs, 5 arising out of such Workmen's Compensation claims 6 brought by Edison personnel whose labor expenses 7 are charged or allocated to the operation and 8 maintenance of Unit 1 and the Station Site 9 pursuant to Section 7.1 hereof. shall be shared 10 l eighty percent (80%) by Edison and twenty percent 11 (20%) by San Diego. 12 A *F::D"F':7 TO SECTIO:: 10 13 Section 10.5 of the Amended San Onofre Operating Agree-w 14 cent is hereby amended to read as follous: 15 10,5 Edison shall investigate, adjust and settle claims 10 asserted by any party other than a Company ag2 inst

          ' 17                    the Companics or either of them, which are claims 18                    of the type referred to in Section 16.5 hereof.

19 Edison shall obtain the prior consent of the 20 Board of Revicu members before aCrcoing to a 21 setticment of any claim or combination of claims 22 exceeding $100,000 arising out of the same trans-23 action or event and not covered by Unit 1 24 Insurance. At the request of Edison, San Dicco 25 . shall assist in the investication, adjust..cnt and l {p- 20 settlement of any such claims. Each Cercany shall _6_ 2112.103

1 investicate, adjus't and settle claims asserted by

 )
       %,       2                           any of itr ultimate consumers, which are claims of 3                           the type referred to in Section 16.6 horcor.

4 SUPERSE22 LETTF1 AGREE **E:!? 5 This Amendment supersedes the letter agreement of July 30, 6 1970 betwcon the Companics that modified in part the provisions 7 of Sectic.n 16 of the Amended San Onofre Operating Ac eenent. 8 TEP'I 9 The tchm of this Amend =ent shall be coincident .ith the 10 term of the Amended San Onofrc Operating Agreement. 11 IN tlIT !ESS 'dHEREOF, the Companies have caused this Amend-12 cent to be executed in duplicate on their behalf. e 13 SAN DIEGO OAS & ELECTRIC CO::?A :Y , . M ,,,,, 14 ATTEST: 15 By Ok h  : 0k, 10

                       '    .   .4, .    . . e, ,/                           D 17                                              SOUTHERM CALIFOR::IA EDISON CO'PA::Y 18     ;c- 33 19                                             By    .                !      0-: 8 1O.<a 73.g.,m
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20 21 22  !- re . '. , l. '.. 23 f .I ~ [3. . . ' ' 21  ! :'.+ .2 0

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2112 104

PERMITS, LICENSES, AND MATERIAL, EQUIPMENT AND SERVICE SUPPLIER'S AGREEMENTS WHICH MAY REQUIRE AMENDMENT OR ASSIGNMENT

  %e

1. American Society for Mechanical Engineering A. Owner's Certificute of Authorization

2. Army Corps of Engineers A. Of fshore Conduit Construction Permit B. Sand Disposal Permit C. Permit Assigned Not Applicable D. Marine Monitoring Buoys (12)

E. Del Mar Boat Dock and Grounding Pad

3. Nuclear Regulatory Commission (Formerly A .E.C. )

A. Construction Permit B. Operating License

%,        C. Special Nuclear Material License D. Uranium Enrichment Agreement E. Contaminated Equipment License

4. Coastal Zone Commission A. Coastal Zone Commission Construction Permit No. 183-73 B. Guarantee Agreement C. Trust Fund Agreement and Marine Review Committee D. Site Drainage (Berm)

5. U.S. Coast Guard A. Aid to Navigation Agreement B. Buoys - Sand Disposal 2112 105

%, EXHIBIT " J

6. Environmental Protection Agency A. Concrete Batch Plant Approval to Construct B. Operating Permit - Batch Plant C. Auxiliary Boiler Construction / Operating Permit D. Other Ancillary Equipment That'Could Emit Air Contaminants E. NPDES 8003395 (Plant Operating)

F. NPDES #CA0107328 (Construction Dewatering)

7. U.S. Marine Corps A. Construction Parking B. Grant Easement C. Plant and Mesa Site License NF(R)22928 (1) Access Road (2) Parcels: A,B,C,D, E, F, G, Conduit Haul Road, and Evap. Pond

,, -(3) Heavy Haul Road and Boat Dock D. Jap Mesa (1) Temporary PKS Waterline - NF (R) 23306 (2) Extension of Permit E. Sand Disposal F. Jobsite Security Plan G. Telephone Line Relocation H. Temporary Easement for 220 kV Lines . I. T/S Construction Laydown Area J. Mutual Aid Agreement K. Onshore Tracer Study Agreement EXHIBIT

• J w

2112 106

8. Pacific Telephone and Telegraph Company A. Fill Over Easement B. Relocation of U.S.M.C. Cable into PT&T Easement C. Construction Parking D. Duct Beam and Fireline Crossing

9. Public Utilities Commission A. Authorization for Financial Agreement B. Certificate of Convenience and Necessity C. Certificate of Convenience and Necessity for Transmission Lines

10. City of San Clemente A. Temporary Service Agreement

11. San Diego Coun'ty - A.P.C.D.

A. Auxiliary Boiler Construction / Operating Permit B. Batch Plant Construction C. Batch Plant Operating

12. San Diego Water Quality Control Board A. Dewatering Discharge 74-4 (NPDES CA0107328)

B. Sand Disposal (1) 70-R42 (2) Addendum #1 (3) Monitoring and Reporting Program #71-6 C. Operation Order 476-21 (NPDES CA000339-)

13. Santa Fe Railway A. Haul Road Overcrossing License B. Overhead Wire Crossing Agreement

,, EXHIBIT " J " 2lI2 107

14. Southern California Gas A. Highway 101 Relocation Permit ss B. Off-Highway Haul Route Permit C. Temporary Information Center

15. State Department of Parks and Recreation A. Access Road Agreement B. Construction Parking C. Temporary Waterline D.I Highway 101 Realignment E. Main Plant Access F. Signalization of Highway 101 - Main Plant Access Lighting G. Circ. Conduit Haul Road H. Signal at Highway 101 and Jap Mesa Haul Road I. AMERON E_tch Plant Evaporation Pond J. Heavy Haul Road

16. State Department of Public Health A. Radiological Monitoring Program Approval B. Source Material License (RA 226)

C. Contaminated Equipment License

17. State Department of Transportation A. Construction Parking and Hopper (ll74-E-762, 668)

3. Relocate Power Pole (1173-U-743-943)

Install Guard Rail (ll71-E-761-930) String 220 kV Across IS (1170-0-782-727) Temporary 138 kV and 220 kV Across IS (1170-U-782-701) C. Jap Mesa Road Access (ll73-E-762-565) EXHIBIT " J w

                                     ~*~

2II2 108

D. P.&in Plant (1) Access (2) Rider to Move Road (ll73-E-762-565)

12. Off-Highway Hac1 Route (1173-E-762-565)

          '. Offsite Drainage Structure Permit (ll74-E-762-633)

G. U.S. 101 Realignment (ll74-E-762-633) H. Temporary I5 Crossing I. Duct Beam and Fireline Installation J. Floor Protection Beam

18. State Lands commission A. Buoys - Sand Disposal (Marine Monitoring - 3 Buoys)

B. Offshore Easement (1) Construction Permit (2) Conduit Site %, C. Sand Disposal (1) Work Area (2) Extension of Permits

19. State Resources Agency A. Siting (1) Agreement and Amendment (2) Amendment to Resources Agreement

20. State Water Resources Conttol Board A. Sand Disposal Certificate of Conformance 470-12 B. Plant Operation Certificate of Conformance 472-28 EXHIBIT " J s- 2112 109

21. Temporary Construction Power Permits A. All Required Permits for Temporary Construction Power

22. Department of Motor Vehicles A. Licensing

23. Federal Aviation Administration A. Air Navigation Approval B. Transportation Facilities Air Naval Approval

24. Federal Communications Commission A. License to Construct and Operate Electronic Transmission Equipment (1) Mobile System (2) Telemetering System

      ,       (3)  Microwave System

25. Tri-Cities Municipal Water District

26. Material, Equipment and Service Suppliers' Agreements A. Engineering and Construction Contract - San Onofre Nuclear Generating Station Units 2 and 3 among Edison, San Diego, and Bechtel Power Corporation B. Nuclear Steam Supply System Contract among Edison, San Diego, and Combustion Engineering C. Nuclear Steam Supply System Spare Parts Master Agreement between Edison and Combustion Engineering D. Preservice Examination Agreement between Edison and Combustion Engineering E. General Engineering Services Master Agreement between Edison and Combustion Engineering F. Turbine Generator Contract among Edison, San Diego and GEC-English Electric Corporation G. Turbine Generator Spare Parts Master Agreement between Edison and GEC-English Electric Corporation

 ,,                          EXHIBIT " J 2112 110

H. Heavy Haul Contract between Edison and Rigging International

  % I. Off-Shore Circulating Water System Contract between Edison and Guy F. Atkinson Company 2ll2     lll w

r-y a EXHIBIT "

e 2112 112

EXHIBIT B SUPPLEMEhTAL AGREEMENT FOR THE INTEGRATION OF ANAHEIM'S ENTITLEMENTS IN SAN ONOFRE UNITS 2 AND 3 2112 113

1 SUPPLEMENTAL AGREEMENT %- FOR THE INTEGRATION OP 2 ANAHEIM'S ENTITLEMENTS IN SAN ONOFRE UNIT 2 AND UNIT 3 3 4 1. PARTIES: The Parties to this agreement are the City 5 of Anaheim, a municipal corporation of the State of 6 California and the Southern California Edison Company, 7 a California corporation. 8 2. RECITALS: This agreement is made with reference to the 9 following facts, among others: 10 2.1 On , the Parties entered into 11 the Integrated Operations Agreement providing for 12 integrated operation of their resources. 13 2.2 On , Edison, Anaheim, the 14 City'of Riverside, and San D,iego Gas & Electric Company 15 entered into the Participation Agreement under which le Anaheim has acquired a 1.66 percent ownership interest 17 in Unit 2 and Unit 3 and a corresponding entitlement in 18 the capacity and energy from such units. 19 2.3 On , the Parties entered into 20 the Edison-Anaheim San Onofre Transmission Service 21 Agreement under which Edison has agreed to provide 22 transmission service for Anaheim's entitlement over 23 Edison's electrical transmission f acilitles between 24 Unit 2 and Unit 3 and Anaheim. 25 2.4 Anaheim desires and Edison is willing that 26 Anaheim's entitlement in Unit 2 and Unit 3 be in teg ra ted sw 2112 114

I as a City Capacity Resource pursuant to the Integrated E Operations Agreement. L 3. AGREEMENT: The Parties agree as follows: 4 4. D,EFINITIONS : The following terms, when used- herein 5 with initial capitalization (whether in singular or 3 plur al) , shall have the meaning specified: 7 4.1 Anaheim: City of Anaheim. 8 4.2 Authorized Representative: Authorized 9 Representstive as defined in the Integrated Operations 10 Agreement. 11 4.3 Batch Energy Rate: The total amount of 12 prereactor payments plus interect made for the purchase 13 of a nuclear reactor fuel batch for Unit 2 or Unit 3, plus 14 the total estimated pore.eactor payments and credits 15 for such batch, less a" amount amortized in a previous 16 fuel cycle, divided by the estimated net electrical 17 generation to be produced during the remaining period 18 when such nuclear batch is in Unit 2 or Unit 3. Adjust-19 ments will be made on the basis of the actual net 20 electrical generation produced during said remaining 21 period. 22 4.4 Capacity Credit: Capacity Credit as defined 23 in the Integrated Operations Agreement. 24 4.5 City Capacity Resource: City Capacity 25 Resource as defined in the Integrated Operations 26 Agreement. is 2112 115

              .                     .   .            . . _ . ~ . . . . . .

1 4.6 City Incremental Cost: City Incremental v 2 Cost as defined in the Integrated Operations Agreement. 3 4.7 Commission: Federal Energy Regulatory 4 Commission or successor. 5 4.8 Contract Energy Cost: Contract Energy Cost 6 as defined in the Integrated Operations Agreement. 7 4.9 Date of Pirm Operation: Date of Firm 8 Operation as defined in the Integrated Operations 9 Agreement. 10 4.10 Edison: Southern California Edison Company. 11 4.11 Effective Operating Capacity: The full 12 load net electrical capability as established. from 13 time to tbne pursuant to performance tests within the 14 operating limits authorized by the Nuclear Regulatory w 15 Commission, which is reported to regulatory agencies le and others as the effective operating capacity. 17 4.12 Integrated Operations Agreement: The 18 Integrated Operations Agreement between Anaheim and 19 Edison, dated . 20 4.13 Load: Load as defined in the Integrated 21 Operations Agreement. 22 4.14 Participation Agreement: The San Onofre 23 Units 2 and 3 Participation Agreement among Edison, 24 San Diego Gas & Electric Company, City of Riverside, 25 and Anaheim, dated . 20 4.15 Party: Edison or Anaheim.

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2112 116 o 1 4.16 Rated Capability: Rated Capability as v 2 defined in the Integrated Operations Agreement. 3 4.17 Settlement Agreement: Settlement Agreement as 4 defined in the Integrated Operations Agreement. 5 4.18 Transmission Service Agreement: The Edison-6 Anaheim San Onofre Transmission Service Agreement between

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7 Anaheim and Edison, dated . 8 4.19 Unit 2: Unit 2 as defined in the 9 Participation Agreement. 10 4.20 Unit 3: Unit 3 as defined in the 11 Participation Agreement. 12 5. INTEGRATION: 13 5.1 Anaheim's entitlements in Unit 2 and Unit 3 14 shall be integrated and Anaheim shall receive capacity w 15 Credit in accordance with the Integrated Operations 16 Agreement. Unless otherwise agreed, Anaheim's 17 Unit 2 entitlement shall become a source of Rated 18 Capability on October 1, 1980 or the Date of Firm 19 operation for Unit 2, whichever is later, and Anaheim's 20 Unit 3 entitlement shall become a source of Rated 21 Capability on January 1,1982 or the Date of Firm 22 Operation for Unit 3, whichever is later. 23 5.2 This agreement is supplemental to the 24 Integrated Operations Agreement and shall not amend or 25 supersede said Integrated Operations Agreement, except 20 that the provisions of this agreement which are w 2112 117 1 inconsistent with those of the Integrated Operations %s 2 Agreement shall control during the term of this 3 agreement. 4 6. DETERMINATION OF ANAHEIM'S RATED CAPABILITY: 5 6.1 Rated Capability of Anaheim's entitlements 6 in Unit 2 and Unit 3 shall be equal to 1.66 percent of 7 the firm power rating of Unit 2 and Unit 3, respectively. 8 Unless otherwise agreed, such firm power ratings shall 9 be as follows: 10 6.1.1 During the period between the Date 11 of Firm Operation for Unit 2 and October 1, 1981, the 12 firm power rating of Unit 2 shall be equal to 220 13 megawatts. Thereafter, such rating shall be equal to 14 the Ef fective operating Capacity of Unit 2. Accordingly, w 15 such rating is now scheduled to be 220 megawatts between le October 1, 1980 and October 1, 1981, and 1100 megawatts 17 thereafter. 18 6.1.2 During the period between the Date of 19 Firm Operation for Unit 3 and January 1,1983, the 20 firm power rating of Unit 3 shall be equal tc 220 21 megawatts. Thereafter, such rating shall be equal to 22 the Ef fective operating Capacity of Unit 3. According ly , 23 such rating is now scheduled to be 220 megawatts between 24 January 1, 1982 and January 1, 1983, and 1100 megawatts 25 thereafter. 28 6.2 Unless otherwise agreed by the Authorized w 2112 l18 1 Representatives, the ~ Parties shall use the dates and 2 ratings set forth in Section 6.1.1 and 6.1.2 for 3 planning and reporting purposes. 4 7 DETERMINATION OF CITY INCREMENTAL COST: 5 7.1 Pursuant to Section S.9 of the Integrated 6 Operations Agreement, unless otherwise agreed by the 7 Authorized Representatives, City Incremental Cost 8 for Unit 2 or Unit 3 shall each be determined by the 9 following formula: 10 CIC = (FC + OC)(100) (100-L) 11 12 CIC = City Incremental Cost, expressed in terms of 13 mills per kilowatthour. Such cost, as determined 14 for the end of any month, shall be applicable in 15 the next succeeding month. 16 FC = Nuclear fuel cost, expressed in terms of mills 17 per kilowatthour for Unit 2 or Unit 3. Such 18 cost, as determined at the beginning of a fuel . 19 cycle, shall equal the sum of the Batch Energy 20 Rates for Anaheim for the fuel batches in Unit 2 21 or Unit 3 during a fuel cycle. Such cost as 22 determined at the beginning of a fuel cycle shall 23 be applicable for the duration of said fuel cycle. 24 OC = Cther costs associated with the production of 25 such energy, expressed in terms of mills per 20 kilowatthour for Unit 2 or Unit 3. Such other 2112 119 I costs shall be equal to (i) the sum of money 2 billed to Anaheim by Edison, for the period 3 covered by the latest Form 1 Report, for FPC 4 Accounts 517, 519-525, 528-532 and for fuel 5 management costs, divided by (ii) Anaheim's share 6 of the net generation from Unit 2 or Unit 3 during 7 such period. Such other costs shall be applicable 8 during the 12-month period commencing May 1 of 9 that year. 10 L = Transmission losses, expressed in percent, as 11 determined in accordance with Section 7.3 of the ld Transmission Service Agreement. Such losses 13 shall be applicable to sales made by Edison to 14 An ahe im , in any hour, pursuant to Section v . 15 16.2.1.1 of the Integrated Operations Agreement. 16 Such losses shall not be applicable for sales 17 made by Anaheim to Ediso, pursuant to Section 18 19.2 of the Integrated Operations Agreement. 19 8.,, ANAHEIM'S ELECTION TO PAY FOR ENERGY WHEN UNITS ARE AVAILABLE BUT NOT DISPATCHED: 20 21 8.1 Pursuant to Section 16.2.1.1 of the 22 Integrated Operations Agreement, Anaheim elects to pay 23 for energy associated with its entitlement in Unit 2 24 and Unit 3 at City Incremental Cost. 25 8.2 Anaheim may change its election to pay a t 20 '. Contract Energy Cost or City Incremental Cost upon ( i)

 %s 2112 120

1 three years' notice to Edison or (ii) when a change in 2 the Contract Energy Con * rmula has become ef fective. 3 9. EFFECTIVE DATE, TERM, AND TERMINATION: 4 9.1 This agreement shall become effective on the 5 date following execution by both Parties when accepted 6 for filing by the Commission, but if upon such filing 7 the Commission enters upon a hearing to determine 8 whether this agreement is just and reasonable, it shall 9 not become effective until the date when an order no 10 longer subject to judicial review has been issued by 11 the Commission determining this agreement to be just 12 and reasonable without new conditions unacceptable to 13 either Party. 14 9.2 This agreement shall remain in effect for %s 15 50 years, except that it shall terminate sooner upon 16 the occurrence of any of the following : 17 9.2.1 Written agreement of the Parties to 18 terminate this agreement, or 19 9.2.2 Termination of the In teg ra ted 20 Operations Agreement, or 21 9.2.3 Termination of the Unit 2 and Unit 3 22 ownership or operating agreements. 23 9.3 If notice of termination of the Integrated 24 Cperations Agreement is given by either Party, the 25 Parties shall take actions similar to those described 26 in Section 4.3 of the Integrated Operations Agreement %s 2112 121 I to develop a new arrangement for furnishing the v 2 services referred to in the Settlement Agreement which 3 are provided for in this agreement. 4 10. SIGNATURE CLAUSE: The signatories hereto represent 5 that they have been authorized to enter into this 6 agreement on behalf of the Party for whom they sign. 7 Executed as of , 19_ . 8 9 SOUTIIERN CALIFORNIA EDISON COMPANY 10 11 By Vice President 12 13 CITY OF ANAHEIM 14 v 15 By Utilities Director 16 17 18 / 19 20 / 21 22 / 23 24 / 25 26 / w 2112 122 2112 123 EXHIBIT C SUPPLEMENTAL AGREEMENT FOR THE INTEGRATION OF RIVERSIDE'S ENTITLEMENTS IN SAN ONOFRE UNITS 2 AND 3. . 2112 124

1 SUPPLEMENTAL AGREEMENT FOR THE INTEGRATION OF 2 RIVERSIDE'S ENTITLEMENTS IN SAN ONOFRE UNIT 2 AND UNIT _3 3 4 1. PARTIES: The Parties to this agreement are the City 5 of Riverside, a municipal corporation of the State of 6 California and the Southern California Edison Company, 7 a California corporation. 8 2. RECITALS: This agreement is made with reference to the 9 following facts, among others: lb 2.1 On , the Parties entered into 11 the Integrated Operations Agreement providing for 12 integrated operation of their resources. 13 2.2 On , Ed iso n , Riverside, the 14 City of Anaheim, and San Diego Gas & Electric Company %s 15 e n te red into the Participation Agreement under which is Riverside has acquired a 1.79 percent ownership interest 17 in Unit 2 and Unit 3 and a corresponding entitlement in 18 the capacity and energy from such units. 19 2.3 On , the Parties entered into 20 the Edison-Riverside San Onofre Transmission Service 21 Agreement under which Edison has agreed to provide 22 transmission service for Riverside's entitlement over 23 Edison's electrical transmission facilities between 24 Unit 2 and Unit 3 and Riverside. 25 2.4 Riverside desires and Edison is willing that 26 Riverside's entitlement in Unit 2 and Unit 3 be in teg ra ted 'v 2112 12;

1 as a City Capacity Resource pursuant to the Integrated 2 Operations. Agreement. 3 3. AGREEMENT: The Parties agree as follows: w 4 4. DEFINITIONS: The following terms, when used herein wi th 5 initial capitalization (whether in singular or plural), 6 shall have the meaning specified: 7 4.1 Authorized Representative: Authorized 8 Representative as defined in the Integrated Operations 9 Agreement. 10 4.2 Batch Energy Rate: The total amount of 11 prereactor payments plus interest made for the purchase 12 of a nuclear fuel batch for Unit 2 or Unit 3, plus the 13 estimated postreactor payments and credits for such 14 batch, and less any amount amortized in a previous fuel 15 cycle, divided by the estimated net electrical s, 18 generation to be produced during the remaining period 17 when such nuclear batch is in Unit 2 or Unit 3. 18 Adjustments will be made on the basis of the actual net 19 electrical generation produced during said remaining 20 period. 21 4.3 Capacity Credit Capacity Credit as defined 22 in the Integrated Operations Agreement. 23 4.4 City Capacity Resource: City Capacity Resource 24 as defined in the Integrated Operations Agreement. 25 4.5 City Incremental Cost: City Incremental Cost 26 as defined in the Integrated Operations Agreement. ss 2112 126

1 4.6 Commission:- Federal Energy Regulatory 2 Ccmmission or successor. 4.7 Contract Energy Cost: Contract Energy Cost 3 4 as defined in the Integrated Operations Agreement. 5 4.8, Date of Pirm Operation: Date of Firm 6 Operation as defined in the Integrated Operations 7 Agreement. 8 4.9 Edison: Southern California Edison Company. 9 4.10 Ef fective Operating Capacity: The full 10 load net electrical capability as established from time 11 to time pursuant to performance tests within the 12 operating limits authorized by the Nuclear Regulatory 13 Commission, which is reported to regulatory agencies 14 and others as the effective operating capacity. v 15 4.11 Integrated Operations Agreement: The 16 Integrated Operations Agreement between Riverside and 17 Edison, dated . 18 4.12 Load: Load as defined in the Integrated 19 Operations Agreement. 20 4.13 Participation Agreement: The San Onofre 21 Units 2 and 3 Participation Agreement among Edison, 22 San Diego Gas & Electric Company, City of Anaheim, and 23 Riverside, dated . 24 4.14 Party: Edison or Riverside. 25 4.15 Rated Capability: Ra ted Capability as 26 defined in the Integrated Operations Agreement. w 2112 127 1 4.16 Riverside: City of Riverside. 2 4.17 settlement Agreement: Settlement Agreement 3 as defined in the Integrated Operations Agreement. 4 4.18 Transmission Service Agreement: The Edison-5 Riverside San Onofre Transmission Service Agreement 6 between Riverside and Edison, dated . 7 4.19 Unit 2: Unit 2 as defined in the 8 Participation Agreement. 9 4.20 Unit 3: Unit 3 as defined in the 10 Participation Agreement. 11 5. INTEGRATION: 12 5.1 Riverside's entitlements in Unit 2 and Unit 3 13 shall be integrated and Riverside shall receive Capacity 14 Credit in accordance with the Integrated Operations 15 Agreement. Unless otherwise agreed, Riverside's 16 Unit 2 entitlement shall become a source of Rated 17 Capability on October 1,1980 or the Date of Firm 18 Operation for Unit 2, whichever is later, and River-19 side's Unit 3 entitlement shall become a source of 20 Rated Capability on January 1,1982 or the Date of Firm 21 Operation for Unit 3, whichever is later. 22 5.2 This agreement is supplemental to the 23 Integrated Operations Agreement and shall not amend or 24 supersede said Integrated Operations Agreement, except 25 that the provisions of this agreement which are 26 inconsistent with those of the Integrated Operations v _

                                        ,_              2112 128

1 Agreement shall control during the term of this 2 ag reement. 3 6. DETERMINATION OP RIVERSIDE'S RATED CAPABILITY: 4 6.1 Rated Capability of Riverside's entitler.snts 5 in Unit 2 and Unit 3 shall be equal to 1.79 percent of 6 the firm power rating of Unit 2 and Unit 3, respectively. 7 Unless otherwise agreed, such firm power ratings shall 8 be as follows: 9 6.1.1 During the period between the Date 10 of Firm Operation for Unit 2 and October 1, 1981, the 11 firm power rating of Unit 2 shall be equal to 220 12 megawatts. Thereaf ter, such rating shall be equal to 13 the Ef fective Operating Capacity of Unit 2. According ly, 14 such rating is now scheduled to be 220 megawatts between v 15 October 1, 1980 and October 1, 1981, and 1100 megawa tts 16 thereafter. 17 6.1.2 During the period between the Date of 18 Firm Operation for Unit 3 end January 1, 1983, the 19 firm power rating of Unit 3 shall be equal to 220 20 megawatts. Thereaf ter, such rating shall be equal to 21 the Ef fective Operating Capacity of Unit 3. Accord ingly, 22 such rating is now scheduled to be 220 megawatts between 23 January 1, 1982 and January 1, 1983, and 1100 megawa tts 24 thereafter. 25 6.2 Unless otherwise agreed by the Authorized 28 Re pr ese n ta tiv es , the Parties shall use the dates and v _,_ 2112 129

k 1 ratings set forth in Section 6.1.1 and 6.1.2 for 2 planning and reporting purposes. 3 7. DETERMINATION OF CITY INCREMENTAL COST: 4 7.1 Pursuant to Section 5.9 of the Integrated 5 Operations Agreement, unless otherwise agreed by the 6 Authorized Representatives, City Incremental Cost for 7 Unit 2 or Unit 3 shall each be determined by the 8 following formula: 9 CIC = (FC + OC)(100) (100-L) 10 11 CIC = City Incremental Cost, expressed in terms of 12 mills per kilowatthour. Such cost, as determined 13 for the end of any month, shall be applicable in 14 the next succeeding month.

  %s 15     FC  = Nuclear fuel cost, expressed in terms of mills 16           per kilowatthour for Unit 2 or Unit 3.          Such cost, 17           as determined at the beginning of a fuel cycle, 18           shall equal the sum of the Batch Energy Rates 19           for Riverside for the fuel batches in Unit 2 or 20           Unit 3 during a fuel cycle. Such cost as 21           determinud at the beginning of a fuel cycle 22           shall be applicable for the duration of said 23           fuel cycle.

24 OC = Other costs associated with the production of 25 such energy, expressed in terms of mills per 28 kilowatthour for Unit 2 or Unit 3. Such other _,_ 2112 130

I costs shall be equal to (i) the sum of money \" 2 billed to Riverside by Edison, for the period 3 covered by the latest Form 1 Report, for FPC 4 Accounts 517, 519-525, 528-532 and for fuel 5 management costs, divided by (ii) Riverside's 6 share of the net generation from Unit 2 or 7 Unit 3 during such period. Such other costs 8 shall be applicable during the 12-month period 9 commencing May 1 of that year. 10 L = Transmission losses, expressed in percent, as 11 determined in accordance with Section 7.3 of the 12 Transmission Service Agreement. Such losses 13 shall be applicable to sales made by Edison to 14 Riversid e, in any hour, pursuant to Section %s 15 16.2.1.1 of the Integrated Operations Agreement. le Such losses shall not be applicable for sales 17 made by Riverside to Edison pursuant to Section 18 19.2 of the Integrated Operations Agreement. 19 8. RIVERSIDE'S ELECTION TO PAY FOR ENERGY WHEN UNITS ARE AVAILABLE BUT NOT DISPATCHED: 20 21 8.1 Pursuant to Section 16.2.1.1 of the 22 Integrated Operations Agreement, Riverside elects to 23 pay for energy associated with its entitlements in 24 Unit 2 and Unit 3 at City Incremental Cost. 25 8.2 Riverside may change its election to pay at 28 Contract Energy Cost or City Incremental Cost upon (i) %s 2112 131 1 three years' notice to Edison or (ii) when a change in 2 the Contract Energy Cost formula has become ef fective. 3 9. EFFECTIVE DATE, TERM, AND TERMINATION: 4 9.1 This agreement shall become ef fective on the 5 date following execution by both Parties when accepted 6 for filing by the Commission, but if upon such filing 7 the Commission enters upon a hearing to determine 8 whether this agreement is just and reasonable, it 9 shall not become effective until the date when an 10 order no longer subject to judicial review has been 11 issued by the Commission determining this agreement to 12 be just and reasonable without new conditions 13 unacceptable to either Party. 14 9.2 This agreement shall remain in ef fect for w 15 50 years, except that it shall terminate sooner upon le the occurrence of any of the following: 17 9.2.1 Written agreement of the Parties to 18 terminate this agreement, or 19 9.2.2 Termination of the Integrated 20 Operations Agreement, or 21 9.2.3 Termination of the Unit 2 and Unit 3 22 ownership or operating agreements. 23 9.3 If notice of termination of the Integrated 24 Operations Agreement is given by either Party, the Parties shall take actions similar to those described 8 in Section 4.3 of the Integrated operations Agreement

%s 2112 132 1     to develr.p a new arrangement for furnishing the

• 2 servir.es referred to in the Settlement Agreement which 3 are provided for in this agreement.

4 10. SIGNATURE CLAUSE: The signatories hereto represent 5 that they have been authorized to enter into this e agreement on behalf of the Party for whom they sign. 7 Executed as of , 19 . 8 9 SOUTHERN CALIFORNIA EDISON COMPANY 10 By 11 Vice President 12 CITY OF RIVERSIDE 13 14 By v Public Utilities Director le / 17 18 / 19 20 / 21 22 / 23 24 / 25 26 / w 2112 133

2112 134 EXHIBIT D EDISON - ANAHEIM SAN ONOFRE TRANSMISSION SERVICE AGREEMENT 2112 135

1 EDISON-ANAHEIM SAN ONOFRE

  %s TRANSMISSION SERVICE AGREEMENT y

3 1. PARTIES: The Parties to this agreement are the City 4 of Anaheim, a municipal corporation of the State of 5 California, and the Southern California Edison Company, 6 a California corporation. 7 2. RECITALS: This agreement is made with reference to 8 the following facts, among others: 9 2.1 On , the Parties entered 10 into the Integrated operations Agreement providing 11 for integrated operation of their resources. 12 2.2 On , Edison, Anaheim, the 13 City of Riverside, and San Diego Cas & Electric 14 Company entered into the Participation Agreement under 15 which Anaheim has acquired a 1.66 percent ownership 16 interest in Unit 2 and Unit 3 and a corresponding entitle-17 ment in the capacity and energy from such units. 18 2.3 On , the Parties entered 19 into the Supplemental Agreement for the Integration 20 of Anaheim's Entitlements in San Onofre Unit 2 and 21 Unit 3, under which Edison has agreed to integrate 22 Anaheim's Entitlement in Unit 2 and Unit 3 in 23 accordance with the Integrated Operations Agreement. 24 2.4 Anaheim desires to have its energy from Unit 25 2 and Unit 3 transmitted to the Point of Delivery, and 26 Edison is willing to transmit such energy for Anaheim 2112 136

g as provided hereunder. 2 3. AGREEMENT: The Parties agree as follows: 3 4. DEFINITIONS : The following terms, when used herein with 4 initial capitalization (whether in the singular or plural) , 5 shall have the meaning specified: , 6 4.1 Anaheim: City of Anaheim. 7 4.2 Authorized Representative: Authorized 8 Representative as defined in the Integrated Operations 9 Agreement. 10 4.3 Circuit Mileage: Circuit Mileage as used in 11 Contract Rate TN. 12 4.4 Commission: Federal Energy Regulatory 13 Commission or successor. 14 4.5 Contract Capacity: Contract Capacity as %e 15 used in Contract Rate TN. 16 4.6 Contract Rate TN: A rate schedule

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17 designated Network Transmission Service, Contract Rate 18 TN, filed with the Commission as part of a submittal 19 by. Edison in Docket E-8160 designat< t Southern California 20 Edison Company, FPC Electric Tariff, Original Volume 21 No. 1, or any superseding rate schedule. 22 4.7 Date of Firm Operation: Date of Firm 23 Operation as defined in the Integrated Operations 24 Agreement. 25 4.8 Edison: Southern California Edison Company. 26 4.9 Edison's 220-kV Buses: The 220-kV buses in v 2112 137

1 the Edison Switchyard. %s 2 4.10 Edison Switchyard: Edison Switchyard as 3 defined in the Participation Agreement. 4 4.11 Integrated Operations Agreement: The 5 Integrated Operations Agreement between Anaheim and 6 Edison, dated . 7 4.12 Interconnection Facilities: Interconnection 8 Facilities as defined in the Participation Agreement. 9 4.13 Participation Agreement: The San Onofre 10 Units 2 and 3 Participation Agreement among Edison, 11 San Diego Gas & Electric Company, City of Riverside, 12 and Anaheim dated . 13 4.14 Party: Edison or Anaheim. 14 4.15 Point of Delivery _: The point where the '" 15 electrical conductors of Edison connect with the le electrical conductors of Anaheim at Anaheim's Lewis 17 Substation. 18 4.16 Rated Capability: Rated Capability as 19 defined in the Integrated Operations Agreement. 20 4.17 San Diego Switchyard: San Diego Switchyard 21 as defined in the Participation Agreement. 22 4.18 Settlement Agreement: Settlement Agreement 23 as defined in the Integrated Operations Agreement. 24 4.19 Uncontrollable Force: Uncontrollable Force 25 as defined in the Integrated Operations Agreement. 26 4.20 Un,it 2: Unit 2 as defined in the Participa-w 2112 138

1 tion Agreement. %s 2 4.21 Unit 3: Unit 3 as defined in the Participa-3 tion Agreement. 4 4.22 Unit 2 Points of

Attachment:

The four points 5 where the jointly-owned 220 kV switchrack facilities 6 which are part of Unit 2 are connected to the Edison-7 owned 220 kV disconnect switches in the Edison Switch-8 yard, as indicated on Exhibit 1, attached hereto. 9 4.23 Unit 3 Points of

Attachment:

The four points 10 where the jointly-owned 220 kV switchrack facilities 11 which are part of Unit 3 are connected to the San Diego-12 owned 220 kV disconnect switches in the San Diego 13 Switchyard, as indicated on Exhibit 1, attached hereto. 14 5. EFFECTIVE DATE, TERM, AND TERMINATION: '" 15 5.1 This agreement shall become effective on the 16 date following execution by both Parties when accepted 17 for filing by the commission, but if upon such filing 18 the Commission enters upon a hearing to determine 19 whether this agreement is just and reasonable, it shall 20 not become effective until the date when an order no 21 longer subject to judicial review has been issued by 22 the Commission determining this agreement to be just 23 and reasonable without new conditions unacceptable to 24 either Party. 25 5.2 This agreement shall remain in effect for 28 50 years, except that it shall terminate sooner upon w _4_ 2112 139

1 the occurrence of any of the following v 2 5.2.1 Written agreement of the Parties to 3 terminate this agreement, 4 5.2.2 Termination of the Integrated Operations 5 Agreement, or 6 5.2.3 Termination of Unit 2 and Unit 3 7 ownership or operating agreements. 8 5.3 If notice of termination of the Integrated 9 Operations Agreement is given by either Party, the 10 Parties shall take actions cimilar to those described 11 in Section 4.3 of the Integrated Operations Agreement to 12 develop a new arrangement for furnishing the services 13 referred to in the Settlement Agreement which are 14 provided for in this agreemGnt. V 15 6. TRANSMISSION SERVICE: 16 6.1 Except as modified herein, transmission 17 servica hereunder shall be provided in accordance with 18 Contract Rate TN. Edison anticipates that, prior to 19 commencement of service hereunder, Edison will have 20 filed for changes in Contract Rate TN to, among other 21 things, spdate charges therein. Anaheim expressly 22 reserves the right to oppose such filings. 23 6.2 Service hereunder shall commence on the Date 24 of Firm Operation for Unit 2. Contract Capacity shall 25 then be 18.26 megawatts, the expected maximum Rated 26 On the Date of Firm Operation Capability for Unit 2. w 2112 140

1 for Unit 3, Contract Capacity shall be inaueased by %- 3 18.26 megawatts, the expected maximum l ated Capability 3 for Unit 3. 4 6.3 Edison shall accept deliveries of Anaheim's 5 Unit 2 and Unit 3 energy at Edison's 220-kV Buses at 6 , rates of delivery not exceeding Contract Ccpacity, and 7 shall simultaneously deliver a like amount of energy, 8 less transmission losses, to Anaheim at the Point of 9 Delivery. 10 6.4 During times when Anaheim may be required to 11 provide its share of the auxiliary power requirement 12 at San Onofre, Edison shall accept deliveries of energy 13 from Anaheim at the Point of Delivery, and simultaneously 14 deliver a like amount of energy, less transmission losses, 15 to E'ilson's 220-k" Buses, to enable Anaheim to meet 16 suoi requirements. 17 6.5 Edison shall provide connection services as 18 required by Contract Rate TN to Anahaim by transmitting 19 (1) Anaheim's share of Unit 2 output and auxiliary power 20 requirements between the Unit 2 Points of Attachment 21 and Edison's 220-kV Buses, and (2) Anaheim's share of 22 Unit 3 output and auxiliary power requirements between 23 the Unit 3 Points of Attachment and Edison's 220-kV Buses. 24 6.6 No new facilities as covered by Special 25 Condition No. 5 of Contract Rate TN shall be necessary 26 to provide service hereunder. %, I 2112 141

1 6.7 Edison reserves the right to temporarily

• - 2 intarrupt or curtail service hereunder (1) upon s reasonable advance notice to Anaheim to make repairs, 4 replacaments, or modifications or to perform 5 maintenance work, all for the purpose of maintaining e continuity of service, (2) without notice to Anaheim 7 if such interruptior, or curtailment is because of an 8 Uncontrollable Force. Such curtailment may be related 9 to implementation of mutual load shedding arrangements 10 agreed to between Anaheim and Edison.

11 7. CHARGES AND TRANSMISSION LOSSES: 12 7.1 For the service provided under Section 6.3, 13 charges shall be made in accordance with the rates set 14 forth in Contract Rate TN. Circuit Mileage is hereby \" 15 agreed ta be 47.4 miles initially and subject to change 16 in accordance with Contract Rate TN by written agreement 17 of the Authorized Representa,tives. No additional 18 charge shall be made for the service provided under 19 Section 6.4. 20 7.2 For the connection services provided under 21 Section 6.5 the annual charge for Unit 2 shall be $690 22 and the annual charge for Unit 3 shall be $2760, 23 7.3 Transmission losses referred to in Sections 6.3 24 and 6.4 shall be determined in accordance with the rates 25 set forth in Contract Rate TN and using the Circuit 26 Mileage agreed to in Section 7.1. ws I 2112 142

1 7.4 Not withstanding any other provision of this '- 2 agreement Edison shall have the right in furnishing trans-3 mission service hereunder to file with the commission for 4 changes in rates, charges, classification, or service, or 5 any rule, regulation or contract relating thereto, as set 6 forth in Section 21 of the Integrated Operations Agreement. 7 8. BILLING AND PAYMENT: 8 8.1 Prior to the fifteenth day of December, Edison 9 shall render a bill to Anaheim for services to be 10 provided hereunder during the following calendar year. 11 One-twelfth of such annual charges shall be due and 12 payable by Anaheim on the fif teenth day of each month. 13 The bill for a partial year's advance service shall be 14 rendered at least fif teen days prior to the commence-15 ment of service, and equal monthly payments shall be 16 made during such partial year. 17 8.2 Payments which are not made in full by 18 Anaheim by said due date, by placing payment in the 19 mail properly addressed with postage prepaid, shall 20 thereafter accrue interest at 10 percent per annum of 21 the unpaid balance prorated by days until payment is 22 made, provided, that in no event shall such interest 23 rate exceed the maximum rate permitted by law 24 applicable to this agreement. 25 9. INTEGRATION AGREEMENT PROVISIONS: This agreement is 26 an Integration Agreement as defined in the II.tegrated w 2112 143

1 Operations Agreement. Therefore, the provisions of %- 2 that agreement covering liability, arbitration, 3 regulatory authority, uncontrollable forces, governing 4 law, notices, and other matters, apply also to this 5 agreement. 6 10. SIGNATURE CLAUSE: The signatories hereto represent 7 that they havo een authorized to enter into this 8 agreement on be.alf of the Party for whom they sign. 9 Executed as of , 19__. 10 11 SOUTHERN CALIFORNIA EDISON COMPANY 12 By - 13 Vice President 14 ,, CITY OF ANAHEIM 18 gy 7 Utilities Director 18 19 20 21 22 23 24 25 26 %e 2112 144

2112 145

           , EXHIBIT E EDISON - RIVERSIDE SAN ONOFRE TRANSMISSION SERVICE AGREEMENT.

2112 146 e

1 EDISON-RIVERSIDE SAN ONOFRE b 2 TRANSMISSION SERVICE AGREEMENT 3 1. PARTIES: The Parties to this agreement are the City 4 of Riverside, a municipal corporation of the State of 5 California, and the Southern California Edison Company, 6 a California corporation. 7 2. RECITALS: This agreement is made with reference to 8 the following facts, among others: 9 2.1 On , the Parties entered 10 into the Integrated Operations Agreement providing 11 for integrated operation of their resources. 12 2.2 On , Edison, Riverside, the 13 City of Anaheim, and San Diego Gas & Electric 14 Company entered into the Participation Agreement under 15 which Riverside has acquired a 1.79 percent ownership le interest in Unit 2 and Unit 3 and a corresponding 17 entitlement in the capacity and energy from such units. 8 2.3 On , the Parties entered into the Supplemental Agreement for the Integration of Riverside's Entitlements in San Onofre Unit 2 and Unit 3, under which Edison has agreed to integrate 22 Riverside's Entitlement in Unit 2 and Unit 3 in 23 accordance with the Integrated Operations Agreement. 24 2.4 Riverside desires to have its energy from Unit 26 2 and Unit 3 transmitted to the Point of Delivery, and Edison is willing to transmit such energy for 2112 147

y Riverside as provided hereunder. 2

3. AGREEMENT: The Parties agree as follows:

3

4. DEFINITIONS: The following terms, when used herein 4 with initial capitalization (whether in the singular or 5 plural), shall have the meaning specified:

6 4.1 Authorized Representative: Authorized 7 Representative as defined in the Integrated Operations 8 Agreement. 9 4.2 Circuit Mileage: Circuit Mileage as used in 10 contract Rate TN. 11 4.3 Commission: Federal Energy Regulatory 12 Commission or successor. 13 4.4 contract Capacity: Contract capacity as used 14 in Contract Rate TN, Contract Rate TP, and Vista- %- 15 Riverside Contract, Rate TP. 16 4.5 Contract Rate TN: A rate schedule designated 17 Network Transmission Service, Contract Rate TN, filed 18 with the Commission as part of a submittal by Edison 19 in Docket E-8160 designated Southern California Edison 20 Company, FPC Electric Tariff, Original Volume No. 1, 21 or any superseding rate schedule. 22 4.6 Contract Rate TP: A rate schedule designated 23 Point-to-Point Transmission Service, Contract Rate TP, 24 filed with the Commission as part of a sabn;ittal by 25 Edison in Docket E-8160 designated Southern California 26 Edison Company, FPC Electric Tarif f, Original Volume 2112 148

1 No. 1, or any superseding rate schedule.

 %-     2        4.7  Date of Firm Operation:     Date of Firm Operation 3   as defined in the Integrated Operations Agreement.

4 4.8 Edison: Southern California Edison Company. 5 4.9 Edison's 220 kV Buses: The 220 kV buses in e the Edison Switchyard. 7 4.10 Edison Switchyard: Edison Switchyard as 8 defined in the Participation Agreement. 9 4.11 Integrated Operations Agreement: The 10 Integrated Operations Agreement between Riverside and 11 Edison, dated . 12 4.12 Interconnection Facilities: Interconnection 13 Facilities as defined in the Participation Agreement. 14 4.13 Participation Agreement: The San Onofre 15 Units 2 and 3 Participation Agreement among Edison, 10 San Diego Gas & Electric Company, City of Anaheim, and 17 Riverside dated . 18 4.14 Party: Edison or Riverside. 19 4.15 Point of Delivery: The point where the 20 electrical conductors of Edison connect with the 21 electrical conductors of Riverside at the city limits 22 of Riverside. 23 4.16 Rated Capability: Rated Capability as 24 defined in the Integrated Operations Agreement. 25 4 17 Riverside: City of Riverside. 20 4 18 San Diego Switchyard: San Diego Switchyard v 2112 149

I as defined in the Participation Agreement.

   %"            4.19  Settlement Agreement:

2 Settlement Agreement 3 as defined in the Lntegrated operations Agreement. 4 4.20 Uncontr311able Force: Uncontrollable Force 5 as defined in the Integrated operations Agreement. a 4.21 Unit 2 Unit 2 as defined in the Participation 7 Agreement. 8 4.22 Unit 3: Unit 3 as defined in the Participation 9 Agreement. 10 4.23 Unit 2 Points of

Attachment:

The four points 11 where the jointly-owned 220 kV switchrack facilities 12 which are part of Unit 2 are connected to the Edison-13 owned 220 kV disconnect switches in the Edison Switchyard, 14 as indicated on Exhibit 1, attached hereto.

  %w 15        4.24  Unit 3 Points of 

Attachment:

The four points le where the jointly-owned 220 kV switchrack facilities 17 which are part of Unit 3 are connected to the San Diego-18 owned 220 kV disconnect switches in the San Diego 19 Switchyard, as indicated on Exhibit 1, attached hereto. 20 4.25 Vista-Riverside Contract Rate TP: A rate 21 schedule to be filed by Edison with the Commission 22 providing for point-to-point transmission service 23 between Edison's 220 kV buses at Vista Substation and 24 the Point of Delivery. The terms and conditions of 25 said rate schedule shall be consistent with the terms 28 and conditions of Contract Rate TP.

 %d                                                      e 2112 150

1 5. EFFECTIVE DATE, TERM, AND TERMINATION:

 \s     2               5.1    This agreement shall become effective on the 3        date following execution by both Parties when accepted 4        for filing by the Commission, but if upon such filing 5        the Commission enters upon a hearing to determine 6        whether this agreement is just and reasonable, it shall 7         not become effective until the date when an order no 8         longer subject to judicial review has been issued by 9         the Commission determining this agreement to be just 10        and reasonable without new conditions unacceptable to 11        either Party.

12 5.2 This agreement shall remain in effect for 13 50 years, except that it shall terminate sooner upon 14 the occurrence of any of the following:

\"   15                       5.2.1   Written agreement of the Parties to 16         terminate this agreement, 17                       5.2.2   Termination of the Integrated operations 18        Agreement, or 19                        5.2.3   Termination of Unit 2 and Unit 3 20         ownership or operating agreements.

21 5.3 If notice of termination of the Integrated 22 Operations Agreement is given by either Party, the 23 Parties shall take actions similar to those described 24 in Section 4.3 of the Integrated Operations Agreement to 25 develop a new arrangement for furnishing the services 26 referred to in the Settlement Agreement which are w 2112 151

1 provided for in this agreement. v 2 6. TRANSMISSION SERVICE: 3 6.1 Except as modified herein, transmission 4 service hereunder shall be provided in accordance with 5 Contract Rate TN, Contract Rate TP, and Vista-Riverside 6 Contract Rate TP. Edison anticipates that, prior to 7 commencement of service hereunder, Edison will have 8 filed for changes in Contract Rate TN, Contract Rate TP, 9 and Vista-Riverside Contract Rate TP to, among other 10 things, update charges therein. Riverside expressly 11 reserves the right to oppose such fi.'ings. 12 6.2 Service hereunder shall commence on the Date 13 of Firm Operation for Unit 2. Contract Capacity shall 14 then be 19.69 megawatts, the expected maximum Rated %- 15 Capability for Unit 2. On the Date of Firm Operation 18 for Unit 3, Contract Capacity shall be increased by 17 19.69 megawatts, the expected maximum Rated Capability 18 for Unit 3. 19 6.3 Edison shall accept deliveries of Riverside's 20 Unit 2 and Unit 3 energy at Edison's 220-kV Buses at 21 rates of delivery not exceeding Contract Capacity, and 22 shall simultaneously deliver a like amount of energy, 23 less transmission losses, to Riverside at the Point of 24 Delivery. 25 6.4 During times when Riverside may be required to 28 provide its share of the auxiliary power requirement 2112 152

1 at San onofre, Edison scall accept deliveries of energy

 %"     2  from Riverside at the Point of Delivery, and simultaneously 3  deliver a like amount of energy, less transmission losses, 4  to Edison's 220-kv Buses, to enable Riverside to m4et 5  such requirements, 6         6.5  Edison s' hall provide connection services as 7   required by contract Rate TN to Riverside by transmitting 8    (1) Riverside's share of Unit 2 output and auxiliary power 9   requirements between the Unit 2 Points of Attachment 10    and Edison's 220-kV Buses, and (2) Riverside's share of 11   Unit 3 output and auxiliary power requirements between 12 the Unit 3 Points of Attachment and Edison's 220-kV Buses.

13 6.6 No new facilities as covered by Special 14 Condition No. 5 of Contract Rate TN or Special Condition 15 No. 3 of Contract Rate TP shall be necessary to provide 16 service hereunder. 17 6.7 Edison reserves the right to temporarily 18 interrupt or curtail service hereunder (1) upon 19 reasonable advance notice to Riverside to make repairs, 20 replacements, or modifications or to perform 21 maintenance work, all for the purpose of maintaining 22 continuity of service, (2) without notice to Riverside 23 if such interruption or curtailment is because of an 24 Uncontrollable Force. Such curtailment may be related 25 to implementation of mutual load shedding arrangements 6 agreed to between Riverside and Edison.

                                                                                             }jj} }}}

1 7. CHARGES AND TRANSMISSION LOSSES:

%-     2           7.1  For the services provided under Section 6.3, 3     charges will be made in accordance with Sections 7.1.1 4     and 7.1.2. No additional charge shall be made for the 5     service provided under rection 6.4.

6 7.1.1 For service between Edison's 220 kV 7 Buses and Edison's Vista Substation 220 kV buses, 8 charges shall be made in accordance with the rates set 9 forth in Contract Rate TN. Circu?.t Mileage is hereby 10 agreed to be 69.6 miles initially and subject to change 11 in accordance with Contract Rate TN by written agreement 12 of the Authori.ed Representatives. 13 7.1.2 For service between Edison's Vista 14 Substation 220 kV buses and the Point of Delivery, \" 15 charges shall be as set forth in Vista-Riverside Contract 16 Rate TP. 17 7.2 For the connection services provided under 18 Section 6.5, the annual charge for Unit 2 shall be 19

             $740 and the annual charge for Unit 3 shall be S2970.

20 7.3 Transmission losses referred to in Sections

                               ~

21

6. 3 and 6. 4 shall be the sum of (1) the losses 22 determined in accordance with the rates set forth in 23 Contract Rate TN and using the Circuit Mileage agreed 24 to in Section 7.1, and (2) losses set forth in Vista-25 Riverside Contract Rate TP, 26 7.4 Not withstanding any other provision of this w

2112 154

1 agreement Edison shall have the right in furnishing

 %-    2     transmission service hereunder to file with the 3     Commission for changes in rates, charges, classifi-4     cation, or service, or any rule, regulation or 5      contract relating thereto, as set forth in Section 21 0      of the Integrated Operations Agreement.

7 8. BILLING AND PAYMENT: 8 8.1 Prior to the fifteenth day of December, Edison 9 shall render a bill to Riverside for services to be 10 provided hereunder during the following calendar year. 11 One-twelfth of such annual charges shall be due and 12 payable by Riverside on the fifteenth day of each month. 13 The bill for a partial year's service shall be rendered 14 at least fifteen days prior to the commencement of

• " 15 service, and equal monthly payments shall be made during le such partial year.

17 8.2 Payments which are not made in full by 18 Riverside by said due dates, by placing payment in the 19 mail properly addressed with postage prepaid, shall 20 thereaf ter accrue interest at 10 percent per annum of 21 the unpaid balance prorated by days until payment is 22 made, provided, that in no event shall such interest 23 rate exceed the maximum rate permitted by law 24 applicable to this agreement. 25 9. INTEGRATION AGREEMENT PROVISIONS: This agreement is an Integration Agreement as defined in the Integrated 2112 155

Operations Agreement. Therefore, the provisions of 1 2 that agreement covering liability, arbitration, 3 regu.latory authority, uncontrollable forces, governing 4 law, notices, and other matters, apply also to this 5 agreement. 6 10. SIGNATURE CLAUSE: The signatories hereto represent 7 that they have been authorized to enter into this 8 agreement on behalf of the Party for whom they sign. 9 Executed as of , 19__. la 11 SOUTHERN CALIFORNIA EDISON COMPANY 12 13 Vice President 14 15 CITY OF RIVERSIDE 16 By 17 Public Utilities Director 18 19 20 21 22 23 24 25 26 9* l 1 2112 156

2112 157 t APPENDIX C GENERAL INFORMATION REQUIRED PLTSUANT TO 10CFR SECTION 50.33(A)-(E) - CITY OF RIVERSIDE, CALIFORNIA 2112 158

GENERAL INFORMATION REQUIRED PURSUANT TO 10 C.F.R. SECTION 30.33(a) - (e) The following Information is supplied by the City of Riverside pursuant to the requirements of 10 C.F.R. Section 50.33. Each application shall state: (a) Name of Applicant City of Riverside (b) Address of Applicant: 3900 Main Street, Riverside, California 92522 (c) Description of Business or Occupation of Applicant The City of Riverside is a Municipal Corporation rendering general municipal services, including, among others, the furnishing of electricity to customers of the City of Riverside. (d)(1) If Applicant Is An Individual, State Citizenship Applicant is a municipal corporation incorporated pursuant to the Constitution and laws of the State of California. (d)(2)If Applicant is a Partnership, State Name, Citizenship and Address of Each Partner and the Principle Location Where the Partnership Doea Business See answer to (d)(1). (d)(3) If Applicant is a corporation or an unincorporated association, state: (i) The state where it is incorporated or organized and the principal location where it does business. See answers to (c) and (d)(1). GI) The Names, Addresses and Citizenship of Its Directors And Of Its Principal Officers. Ab Brown, Mayor Ernest Pintor, Councilman Ed Sheppard, Councilman Arden Anderson, Councilman Robert E. Bowers, Councilman Don Lorenzi, Councilman Sam Digati, Councilman Jim Manning, Councilman William Cornett, City Manager Everett Ross, Public Utilities Director The address of all the above-mentioned officers of the City of Riverside 1 71 1' Iqq

1s 3900 Main Street, Riverside, California 92501. The citizenship of the above-named officers is United States. (111) Whether It Is Owned, Controlled. Or Dominated By An Allen, A Foreign Corporation, or Foreign Government, And If So, Give Details. The City of Riverside is not owned, controlled or dominated by an allen, fcreign corporation or foreign government. . (dX4)If The Applicant Is Acting As An Agent Or Representative Of Another Person In Filing The Application, Identify The Principal And Furnish Infor-matin Required Under This Paragraph With Respect To Such Principal. The City of Riverside is filing this Information In its onn behalf in order to acquire an ownership interest in Units 2 and 3. 2112 160 2

2112 161 APPENDIX D INFORMATION SUBMITTED BY THE CITY OF RIVERSIDE PURSUANT TO 10CFR SECTION 50.33 (F) AND 10CFR PART 50, APPENDIX C. RELATING TO FINANCIAL QUALIFICATIONS. 2112 162

INFORMATION SUBMITTED BY THE CITY OF RIVERSIDE PURSUANT L TO 10 C.F.R. SECTION 50.33(f) AND 10 C.F.R. I t PART 50, APPENDIX C, RELATING TO FINANCIAL QUALIFICATIONS

1. Applicant's Estimate of Total Construction Costs of The Proposed Facil-Itles Is As Follows:

(a) Total nuclear production plant costs S 2,600,000,000.00 (b) Transmission, distribution and general S 23,915,000.00 l plant costs (c) Nuclear fuel inventory costs for S 162,636,000.00 lirst core Total Estimated Cost: S 2,786,551,000.00

2. Riverside intends to finance its share of the construction funds by issuing Electric Revenue Bonds payable from the electric revenues of the River-side Electric System. Attached hereto is a copy of an Official Statement which the City intended to utilize in connection with an issue bf electric revenue bonds in 1978 to finance its share of the construction funds to acquire its share of the San Onofre Nuclear Generating Station, Units 2 and

3. This Official Statement was not used because an issue concerning investment tax credit with Edison was not resolved and therefere the sale of Electric Revenue Bonds was cancelled.

3. Attached hereto is a copy of Riverside's interim financial state-ment which is unaudited for eight months ending February 28, 1979.

Also, attached to Appendix E is a copy of Riverside's most recent audited financial report.

4. At page 14 of the Official Statement attached hereto with respect to question 2, there is an estimate of power supply costs for the period 1981 through 1990, showing that Riverside will be able to save money after paying the costs of owning its portion of San Onofre Nuclear Gene.;ating Station Units 2 and 3, rather than buying an equivalent amount of power from Edison at Edison's wholesale rates. If Riverside establishes rates to its customers sufficient to derive revenues with which to pay Edison for whole-sale power, such revenues will be more than the revenues neces-sary to pay the cost of oper2 tion of San Onofre Nuclear Generating Station Units 2 and 3 during the first five years of operation.

5. In view of the fact there has never been a permanent shut-down of a commercial reactor, it is unknown at this time what the estimated cost of permanent shut-down and maintenance of the facility in safe condition will be.

2112 163 1

CITY OF RIVERSIDE ELECTRIC FUND INTERIM STATEMENTS OF REVEriUE AND EXPENSE FOR EIGHT MONTHS - ENDED FEBRUARY 28, 1979 AND 1978 (UNAUDITED) . 1979 , 1978 OPERATIriG REVENUES . t Electric Sales - Domestic Sales ......................................... $13,049,154 $11,673,419 Commercial and Industrial Sales ........................ 17,833,309 15,964,066 Municipal Sales ........................................ 1,053,978 1,001,960 Total El ectri c Sal es . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . 31.,936,441 28,639,435 Other Operating Revenues ................................. 176,063 178,934 Total Operating Revenues ........................... 32,112,504 28,818,379 LESS: OPERATING REVENUE DEDUCTIONS BEFORE DEPRECIATION O pera ti ng Ex p e ns es . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,287,000, 24,422,388, NET OPERATING INCOME BEFORE DEPRECIATION ................. 4,825,504 4.395,991 LESS: DEPRECIATION ........ .............................. 1,118,069 1,110,801 NET OPERATING INCOME ..................................... 3,707,435 3,285,190

  ^"': NON-0PERATING INCOME iterest Revenue .......................................                                                211,558                         123,383
      -aundry Revenue .........................................                                                  95,732                         111.328 Total Non-Operating Income .........................                                                307,292                         236,7_11_

TOTAL INCOME .............................................- 4.014,725 3,521,901 LESS: NON-OPERATIllG EXPENSES Interest Expense - Revenue Bonds ....................... 391,293 _, 415,434

                                                                                                                                     ~

T OTAL N ET I N C OME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,623,432 $ 3,106,467 i SOURCE: Unaudited Monthly Reports of the Electric Fund. Contribution to General Fund not included. 1978 1979

                           $2,336,818
                           $2.606,240 2ll/-                lg4
                                                                                                             /

2112 165 APPENDIX E INFORMATION REQUESTED BY THE ATTORNEY GENERAL FOR ANTITRUST REVIEW - CITY OF RIVERS!DE. 2112 166

SAN ONOFRE NUCLEAR GENERATING STATION UNITS 2 AND 3 10 C.F.R. PART 50, APPENDIX L , Information Requested By The Attorney General 1 For Antitrust 8eview . Answers of The City of Riverside QUESTION NO.1: State separately for hydroelectric and thermal generating resources app!!- cant's most recent peak load and dependable capacity for the same time period. State applicant's dependable capacity at time of system peak for

• each of the next 10 years for which information is available. Identify each new unit or resource. For hydroelectric generating capacity, indicate the number of kilowatt hours of use associated with each kilowatt of capacity during the " adverse water year" upon which dependable capacity is based.

Indicate average annual kilowatt hour loads per kilowatt, associated with each system peak shown (exclusive of interchange arrangements). FESPCNSE NO.1: Riverside's nest recent peak load occurred cn Septert:er 26, 1978.

       'Ihe peak load was 278 megawatts. Riverside has, for a nuder of years, and does presently purchase, its <mpaH ty and most of its energy requirements at wholesale frm Southern Califomia Edison (SCE). Riverside dces not currently cun any generatiq resources.

Riverside purchases ncn-firm energy frm Nevada Power Ccupany (NPC) pursuant to an Econmy Energy Agreenent between Riverside and NPC, executed on June 1,1976 and amended an Septenber 15, 1976 and June 2, 1978. 'dus Agrement with NPC is schadnlad to terminate an June 30, 1980. Riverside has executed an Integrated Operations 4cwcut (ICA) with SCE dated Moverber 11, 1977. 'Ihe ICA has been filed with and appreved by the Federal Energy Regulatory Cc2mtission (FERC). 'Ihe ICA provides that SCE will supply capacity and energy for Riverside's load, which is in excess of Riverside's own resources. Attached hereto and made a part hereto as Exhibit "A" is Riverside's current resource plan for the next ten years. Riverside has no hydro-electric gerarating capacity at present, howew.r, Riverside has filed a joint application with the City of Anaheim before EEE for a pre-liminary pemit to study the feasibility of the preposed Balsam Meadcw Hydrcelectric Power Project (Project No. 2868). Also shown en Exhibit "A" is the projected demand and energy requir ments for the City of Riverside frcm 1978 through 1990. Exhibit "A" reflects the extimated average annual Elowatt hour loads per kilowatt, associated with the annual peak demand. QUESTION NO. 2 State app!! cant's estimated annual load growth for each of the next 20 years or for the period app!! cant utilizes in system planning. Indicate growth both in kilowatt requirements and kilowatt hour requirements. RESPONSE NO. 2: 2112 167 1

See Exhibit "A" referred to in Response No.1. QUESTION NO. 3: State estimated annual load growth in kilowatts and kilowatt hours of companies or pools upon which the economic justification of the subject unit is based for each of the next 20 years or for the period ap*plicant

• utilized in system planning. Identify each company or pool member.

RESPONSE NO. 3: San Onofre Nuclear Generating Station, Units 2 and 3 (SONGS 2 & 3) are required to serve the future load requirements of SCE and San Diego Gas & Electric (SDG&E), as well as Anaheim and Riverside. Exhibit A referred to in the Response to Question No.1 provides the annual load ,rowth for Riverside. The future load growth for SCE and SDG&E have heretofore been filed with the Nuclear Regulatory Commission (NRC) in conm w.i with the Construction License and Operating Permits for Sorgi a Md J. Neither Anaheim or Riverside are members of a pool. QUESTION NO. 4:

• For the year the subject unit would first reine on !!ne, state estimated annual load growth in kilowatts and k!'awatt hours of any coordinating group or pool of which the applicant is a member (other than the coordinating group or pool referred to in the applicant's response to ! tem 3) which has generating and/or transmission planning functions. Identify each company or pool member whose loads are indicated in the response thereto.

RESPONSE NO. 4: As indicated in Response No.1, Riverside has an IOA with SCE which pro-vides that Riverside and SCE shall engage in joint planning with respect to loads, resources and transmission facilities, Riverside is not a member of any other pool or coordinating group. SCE's estimated peak demand is shown in the following table for the years 1981,1982 and 1983. SCE PEAK OEMAND AND ENERGY (MW AND MWH) 1981 1982 1983 Peak Demand 13,180 13,716 14,091 Megawatt Hours 61,260 63,490 66,270 QUESTION NO. 5: State applicant's minimum ir stalled reserve criterion (as a percentage of load) for the period when the subject unit will first come on line. If the applicant shares reserves with other systems, identify the other systems and provide minimum installed reserve criterion (as a percentage of load) by contracting parties or pool for the period when the proposed unit will first come on line. 2 2112 168

RESP WSE NO. S: 2e ICA provides that SC and Riverside shall each contribute its r@ricnste share of the installed reservas required to provide reliable electric service to the mnhinad f.:.zm loads of the parties. Riverside's ccntribution tu msemes is desned to be a percentage of the sum of the generating c = h414ty of all Riverside's resources. Such percentage is detaminad and shall be equal in any year to the arithmetic average of the five annual reserve margins, as shown in the Resource Scbadula used to meet the forecast firm 1mda of SG and Riverside. Se current SG Besourm Sead"la for the years 1981 t!uctz;h 1985 shows reserves as follows: RESERVES (SHOWN AS A PERCENT OF LOAO) 1981 17.5 % Q82 18.7 % 1983 19.9 % 1984 16.9 % 1985 17.3 % The average reserve requirement for Riverside, calculated pursuant to the SCE Resource Schedule and the IOA, would be 18.06% for the period 1981 through 1985. It should be noted that Riverside's reserve margin would be a percent of the rated capability of its generating resources rather than a percent of its load pursuant to the IOA. QUESTICQ NO. 6: Describe methods used as a basis to establish, or as s guide in establishing the criteria for applicant's and/or applicant's pool's minimum amount of installed reserves (e.g., (a) single largest unit down, (b) probability methods such as loss of Icad one day in 20 years, lo a of capacity once in 5 years, (c) other methods and/or (d) judgment. List contingencies other than risk of forced outage that enter into the determination). RESPONSE NO. 6: Edison has stated that their system operating experience indicates that an installed capacity margin of at least 18%, plus or minus 2% of annual peak demand, is required to maintain a minimum level of reliability and to fMDI customer expectations based upon past performance, includint- Gnpgr provision for scheduled maintenance and unscheduled outap.s. Suc9 experience also indicates that the installed capacity ma*R cm de. ducting scheduled maintenance, should be sufficient to alle:c ! ;  ;'the larger of: a) Tin two largest risks (generating unit or transmission line), or b) Seven percent (7%) of system demand plus the largest risk. 3 2112 169

     'Ihe method used to establ.vn F.Jison's minimn prnb blietic relia-bility index, which is arWmtely equiv-'ent to a loss of load index of cne hour in twenty years, is described in Exhibit B which is attached hereto and made a part hereof, entitled:
            " EDISON PROBABILITY CRITERION FOR DETERMINATION OF INSTALLED GENERATION RESERVE REGUIREMENTS" The resulting index is consistent with the historical reliability of the Edison system.

QUESTION NO. 7: Indicate whether applicant's system interconnections are credited exp!!. citly or imolicitly in establishing applicant's installed reserves. FESPCNSE tLd: SCE implicitly credits systen interconnecticns in es"blichirn its installed reserves but Riverside is followmg the fornula set forth in Respcnse Nos. S and 6 and 9,oes not take inter:::ennections into censideration. CUESTION NC. 8: List rignts to receive emergency power and obligations to deliver emer-gency power, rights or obligations to receive or deliver deficiency power or unit power, or other coordinating arrangements, by reference to app!Icant's Federal. Power Commission (FPC) rate schedules (i.e., ABC Power & Light Co., FPC Rate Schedule No.15, including Supplementa 1 - 5), and also by reference to applicant's State Commission filings. Where documents are not on file with the FPC, supply copies, or where not reduced to writing, describe arrangements. Identify for each such arrangement the partic-Ipating parties other than applicant. Provide one line electrical and geographic diagrams of coordinating groups or power pools (with generation or transmission planning functions) of which applicant's generation and transmission facilities constitute a part. RESPONSE NO. 8:

1. Settlement Agreeme.it. Rate Schedule FPC (FERC) No.15, as supple-mented. Participating party is Southern California Edison.

2. Integrated Operations Agreement. Rate Schedule FERC No. 94.

Participating party is Southern Califomia Edison. 3. Economy Energy Agreement between Nevada Power Company and City of Riverside, Califomia, Rate Schedule FPC (FERC) No.19. Participating party is Nevada Power Company. 4. Agreement for Integration and Transmission of Non-Firm Energy Pur-chased Pursuant to An Economy Energy Agreement by Riverside from Nevada Power Company. Rate Schedule FPC (FERC) M M. Partici-pating party is Southern California Edison. 2112 170 4

5. Riverside-Los Angeles Interruptible Transmission Service Agreement.

A copy of this Agreement is attached. Participating party is the Depart-ment of Water & Power of the City of Los Angeles.

6. Edison-Riverside Interruptible Transmission Service (from Victorville-Lugo Ir.terconnection) Agreement. Rate schedule FERC No. 98. Partici-pating Party is Southem Califomia Edison. .

7. Riverside" - BPA Power Sales Contract. On June 8,1978 Riverside entered into an Agreement with the United States acting through the Bonneville Power Administration. The Agreement provides for the sale to Riverside of surplus energy and provisional energy. If Riverside purchases provisional energy, an equi' valent amount of energy is subject to retum by Riverside to BPA, at the option of BPA. A copy of the Agreement is attached. There have been no transactions pursuant to this Agreement because Riverside has not yet been able to secure transmission service from the California-Oregon Border (COB) to Riverside. Riverside entered into a transmission service agreement with the Califomia Department of Water Resources (DWR) to transmit energy from the COB to the Midway Substation of Pacific Gas & Electric Company (PG&E). However, SCE, PG&E and SDG & E notified O'#R and Riverside that the transmission service agreement was a dullity and therefore the three companies would not permit any transactions to take place pursuant to the transmission service agreement. The term of the transmission service agreement has since expired. Piverside is negotiating with SCE a non-firm transmission service agreement from the COB to Riverside, but no agreement has been executed at this time.

QUESTION NO. 9: List and provide the mailing address of non-affiliated electric utility systems with peak loads smaller than applicant's which serve either at wholesale or at retail adjacent to areas served by the applicant. RESPONSE NO. 9: . City of Colton,650 North La Cadena Drive, Colton, California 92324. GUESTION NO.10: List separately those systems in Item 9 which purchase from applicant (a) all bulk power supply and (b) systems which purchase partial bulk power supply requirements. Where information is available to applicant, ider.tify those item 9 systems purchasing part or all of their bulk power supply requirements from suppliers other than applicant. RESPONSE NO.10: a) None b) Ncne c) Cotton purchases all bulk power from SCE. 2112 171 5

CUESTION NO.11: State as to all power generated and sold by app!! cant the most recent average cost of bulk power supply experienced by applicant (a) at site of generating facilities, (b) at the delivery points from the primary trans-mission (backbone) system, (c) at delivery points from the secondary transmission system, and (d) at delivery points from the distribution system, in terms of dollars per kilowatt per year, in mills per kilowatt hour, and in both the kilowatt costs and kilowatt hour costs divided by the kilowatt hours. If wholesale sales are made at varying voltages, indicate average costs at each voltage. RESPCNSE NO.11: Riverside does not have any generating resources of its own at the current time. Riverside purdases all of its mpeity and most of its energy require-ments frcm Edia,on. Riverside does purdase ecx:narrf energy fran Nevada Power Ccmpany. Edison delivers power and energy to Riverside at the Riverside City limits. The current cost of power and energy delivered to Riverside by SCE is $28,000.00 for the first 5,000 kilowatts, $5.30 per kilowatt for the second 5,000 kilowatts, and $4.80 per kilowatt for the amounts in excess of 10,000 kilowatts per mcnth for capacity, and 21.7 mills per kilowatt hour for energy, plus the adjustment for the cost of fuel not included in the base rate. Riverside does not sell energy at wholesale rates. QUESTION NO.12: State (a) for generating facilities and (b) for transmission sub-divided by voltage classes, the most recent estimated cost of applicant's bulk power supply expansion program of which the subject unit is a part, in terms of dollars per kilowatt per year, in mills per kilowatt hour and in both the kilowatt costs and kilowatt hour costs divided by the kilowatt hours. Also state separately the most recently estimated cost of the subject unit (s). RESPONSE NO.12: Table 1 shows the estimated cost for capacity and energy from the resources in Riverside's resource program. TABLE 1 KIINATT AND ICIN;CT HOUR COSTS mR RIVERSIDE'S CURpar 6 RESCXJECE PROGIW1 PLANT CAPACITY ENERGY DATE IN CAPACITY COST ($ PER NAME. SERVICE COST (MILLS (MW) KW YEAR) PER KWH) San Onofre 2 & 3 1981 & 1983 39.4 131.22 6.72 Intermountain 1986 through 20.4 116.24 18.43 Power Project 1990 1, 2, 3, & 4 Palo Verde 4 & 5 1988 & 1990 25.4 149.49 10.22 6 2112 172

l l f QUESTION NO.13: l List and describe all requests fct, or indications of interest in, Inter- ! connection and/or coordination and purchases or sales of coordinating

power and energy from adjacent utilities !!sted in item 9 since 1960 and state applicant's response thereto. List and describe all requests for, or Indications of interest in, supply of full or partial requirements of bulk power for the same period and state applicar.t's response thereto.

RESPONSE NO.13: Riverside has not had any requests for interconnection or coordination from Colton. Responses made hereinabove explain coordination between Riverside and SCE. QUESTION NO.14: List (a) agreements to which app!! cant is a party (reproducing relevant paragraphs) and (b) State laws (supply citations only) which restrict or preclude coordination by, with, between, or among any electric utilities or systems identified in applicant's response to Items 8 and 9. List (a) agreements to which the applicant is a party (reproducing relevant paragraphs) and (b) State laws (supply citations only) which restrict or preclude substitu d .m of service or establishment of service of full or partial bulk power supply requirements by an electric utility other than app!! cant to systems identified in Items 8 and 9. Where the contract provision appears in contracts or rate schedules on file with a Federal agency, identify each in the same form as in previous responses. Where the contract has not been filed with a Federal agency, a copy should be supplied unless it has been supplied pursuant to another item hereto. - Where it is not in writing it should be described. RESPONSE NO.14: Riverside is not a party to any agreement which restricts or precludes coordination by or among electric utilities, whether located adjacent to Riverside or elsewhere. Riverside does not supply full or partial bulk power supply to any electric utility. Riverside is not aware of any state laws which restrict or preclude Riverside from coordinating with, between or among other electric utilities or systems. Article 11, Section 9 of the California Constitution grants to all municipal corporations in California the power to furnish light, water, power, heat, transportation, or means of communication. These services may also be rendered outside trvs bound-aries of such municipal corporations, provided that another municipal corporation which furnishes the same service does consent to provide the service within its boundaries. QUESTION NO. l_:5 State, at point of delivery, average future costs of power purchased from applicant to adjacent systems identified in applicant's Response to Item 9 in terms of dollars / month /kw for capacity, mills /kw for energy and mills /kwh for both power and energy at purchaser's present load factor (a) at present load, (b) at 50 pe cent increase over present load, (c) at 100 percent increase over present load, and (d) at 200 percent increase over present load. (All costs should be determined under present rate sche-dules.) Where sales are made under contracts or rate schedules on file with a f ederal agency and not included in the response to item 9, identify each 2112 173

in the same form as in previous responses. Where the contract has not been filed with a Fede., . agency, a copy should be supplied. RESPONSE NO.15: Riverside does not sell power to adjacent systems. QUESTION NO.16: State whether applicant has prepared, caused to be prepared, or received engineering studies for generation and transmission expansion programs which include loads of each system in Item 9. RESPONSE NO.16: Riverside has not prepared engineering studies for generation and trans-mission expansion programs for Colton. However, pursuant to Section 6 and Section 7 of the Integrated Operations Agreement (ICA) with SCE, Riverside has received information from SCE with respect to SCE's generation and transmission expansion programs. Riverside has also supplied information to SCE with respect to Riversides generation and transmission expansion programs. QUESTION NO.17: List adjacent systems to which applicant has offered to sponsor or to conduct system surveys in contemplation of an offer by applicant to purchase, merge or consolidate with said adjacent system, subsequent to January 1,1960. RESPONSE NO.17: Riverside has not offered to purchase, merge or consolidate with any adjacent system, either prior to or subsequent to, January 1,1960 and consequently has not offered to sponsor or conduct any system sur.veys. QUESTION NO.18: List applicant's offers or proposais to purchase, merge or consolidate with electric utilities, subsequent to January 1,1960. RESPONSE NO.18: See Response No.17. GUESTION NO.19: List all acquisitions of or mergers or consolidations with electric utilities by applicant, subsequent to January 1,1960, including: (a) The name and principal piace of business of the system prior to the acquisition, merger or consolidation; (b) The date the acquisition merger or consolidation was consummated; 2112 174 8

(c) Gross annual revenue and most recent peak load, dependable capacity and the largest thermal generating unit of the system, prior to the dates of consummation. RESPONSE NO.19: Riverside has had no acquisitions, mergers or consolidations with other electric utilities, either prior to or subsequent to, January 1,1960. QUESTION NO. 20: State applicant's six (or fewer if there are not six) lowest industrial or large commercial rates for firm electric power supply in terms of cost for power and energy in mills per kilowatt hour (and separately, the demand and energy components) and indicate the portion of the charge attributed 5 to bulk power supply. State the rates or rate blocks applicant utilizes for. - its six (or fewer if there are not six) promotional services such as electric ' space heating, electric hat water heating, and the like, in terms of mills per kilowatt hour for power and energy and indicate the portion of the rate or rate blocks attributed to bulk power supply. - RESPONSE NO. 20: Riverside has no promotional rates. There are varying lifeline quantities for normal appliances, electric space heaters, electric water heaters and both electric 2 pace and water heating. The lifeline quantitles adopted by Riverside are the same as those imposed on SCE by the California Public Utilities Commission. 2112 l/5 9

SAN ONOFRE NUCLEAR GENERATING STATION UNITS 2 AND 3 CITY OF RIVERSIDE Part A of The Information Requested In Regulatory Guide 9.2 The City of Riverside herewith submits the information requested in Questions la., Ib. and Ic. of Regulatory Guide 9.2. Attached hereto is a copy of (1) the most recent Official Statement of the City of Riverside involving the issuance of Electric Revenue Bonds;(2) a copy of the City of Riverside's Financial Report for Fiscal 1977-78; and, (3) a copy of City of Riverside's most recent Form 1-M, which was filed with the Federal Energy Regulatory Commission (FERC).

1. Settlement Agreement. Rate Scht dule FPC (FERC) No.15, as supple-mented. Participating party is Southern California Edison. ,

2. Integrated Operations Agreement. Rate Schedule FERC No. 94.

Participating party is Southern Califomia Edison.

3. Economy Energy Agreement between Nevada Power Company and City of Riverside, Califomia, Rate Schedule FPC (FERC) No.19. Participating party is Nevada Power Company.

4. Agreement for Integration and Transmission of Non-Firm Energy Purchased Pursuant to An Economy Energy Agreement by Riverside from Nevada Power Company. Rate Schedule FPC (FERC) No. 84. Participating party is Southern Califomia Edison.

5. Riverside-Los Angeles Interruptible Transmission Service Agreement. A copy of this Agreement is attached. Participating party is the Department of Water &

Power of the City of Los Angeles.

6. Edison-Riverside Interruptible Trar.c nission Service (from Victorville-Lugo Interconnection) Agreement. Rate schedule FERC No. 98. Participating Party is Southern California Edison.

2112 1/6 1

7. Riverside - BPA Power Sales Contract. Jn June 8,1978 Riverside entered into an Agreement with the United States acting through the Bonneville Power Administration. The Agreement provides for the sale to Riverside of surplus energy and provisional energy. If Riverside purchases provisional energy, an equivalent amount of energy is subject to return by Riverside to BPA, at the option of BPA. A copy of the Agreement is attached. There have been rio transactions pursuant to this Agreement because Riverside has not yet been able to secure transmission service from the Califomia-Oregon Border (COB) to Riverside. Riversus entered into a transmission service agreement with the California Department of Water Resources (OWR) to transmit energy from the COB to the Midway Substation of Pacific Gas &

Electric Company (PG&E). However, SCE, PG&E and SOG & E notified OWR and Riverside that the transmicsion service agreement was a nullity and therefore the three companies would not permit any transactions to t: ke place pursuant to the transmission service agreement. The term of the transmission service agreemern has since expired. Riverside is negotiating with SCE a non-firm transmission service agreement from the COB to Riverside, but no agreement has been executed at this time. 2112 1/7

Ol?I?ICI AI, STATIO1ENT pygf{!6gMr CITY OF . NIVERSID I CALIFORNIA 2 L '7f s u,ooo,ooo Electric Revenue Bonds Issue of 1978 Sale Date - August 22.1978

                                                         & t '/3 t 4 WAINWitI(;IIT Ai, It A.TIKICY INC.
                         'r'~oserffiroofe r io . //rrooicryorr/.fisorrorre Los Angeles    N       prk      San Francisco              Miami

g CITY OF RIVERSIDE, CALIFORNIA CITY COUNCIL Albert C.13rown, Mayor Arden Anderson Don Lorenzi Robert E. Bowers Jim Manning Sam Digati Ernest Pintor Edwin Shepard IlOARD OF PUllLIC UTILITIES Edward J. Campbell, Chairman Lester G. Heustis William C. Evans Tony M. Esquibel Charles M. Ross CITY OFFICIALS William F. Cornett, Jr., City Manager Alice fIare, City Clerk E .crett C. Ross, Public Utilities Director iIarold E. Brewer, Finance Directe # and City Treasurer 3ohn Woodhead, City Attorney IlOND COUNSEL O'Melveny & Myers FINANCIAL CONSULTANT Wainwright & Ramsey Inc. c SPECIAL COUNSEL Alan R. Watts CONSULTING ENGINEERS R. W. Ilcek and Associates The date of this Ollicial Statement is July 18,1978

e (This Page Intentionally left Illank) 2112 18) 1 0

TABLE OF CONTENTS g Description of the Bonds. 1 City of Riverside Public Utilitics Department. 20 Payment 1 IIistory of the Department. 20 Registration 2 Jurisdiction of the Department. 20 Redemption . 2 Administration of the Department. 21 Tax Exemption, Legal Opinion and Other The Board of Public Utilities. 21 Closing Papers 2 Niembers of the Board of Public Utilities. 21 011icial Statement , 3 Public Utilities Director. 22 Legality for Jnvestment by Savings and New N1anagerrent Programs. 22 Commercial Banks in California. 3 Additional Sales 3 'Ihe Electric System. 22 Inception of the System. 22 Authorization of the Bonds. 3 Service Area , 23 Source of Power. 23 Pm pose of the Bonds and Disposition of the Proceeds 4 Existing Facilities , 23 Security of the 11onds. 4 . Ilistorical Operating Data of the Electric System. 24 Sales and Revenue. 24 Rate Covenant 4 Capital Plannir.g , 26 1.imits on Additional Debt. 5 llistorica. Capital Improvements. 26 6 Pr jecter Capital Improvement Program. 27 Other Covenants . 6 Electric Ra.es . 28 investment of Funds. Area Rate Comparisons. 28 6 City of Riverside Rate Schedules. 28 Flow of Funds. Electric Resenue Fund. 6 Billing and Collecting Procedm L 29 Ilond Sersice Account. 6 Financial flistory of the Electric System and ti.c Resene Account 6 Electric Fund 29 N1aintenance and Operation Account. D Surplus 7 7 Electric Revenue Bonds. 34 Outstanding and Proposed Debt. 34 The Project , 7 Debt Service Requirements and Coverage by Report of Consulting Engineers. 9 Income 34 The Project , 9 City of Riverside: Financial. 36 Nuclear Fuel . 10 Auditors 36 st ae na ing Requirements for

                                                                   # "        "    'P    "                    

in n t en 38 City' Po er pply Costs. lI Assessed Valuations and Tax Collections. 39 Estimated Annual Cost of Power from Recent Constitutional Amendment. 41 the Project 12 Direct and Oserlapping Debt. 42 Comparison of Unit Power Costs. 15 Pensi n Obligations. 42 Conclusions 15 City of Riverside: Economic Background. 45 Other Projects . . 16 General , 45 Intermountain Power Project ("lPP") . 16 Accessibility 45 Palo Verde Nuclear Generating Station Population . 46 Units 4 and 5. 16 Ilousing 46 Income and Commerce. 47 Litigation 17 Employ ment and Industry. 49 City 17 Agriculture 51 Rate Cases Before Federal Energy Regulatory N!unicipal Government and Services. 51 Commission ( FERC) 17 Non-N1unicipal Services and Facilities. 51 Other Litigation 18 N!iscellaneous . 51 Regulatory Ntatters . 19 General Statement and Certificate Concerning Public Utilities Commission. 19 Orlicial Statement . 52 Federal Energy Regulatory Commission. 19 Nuclear Regulatory Commission. . 19 Summaries of Various Agreements Applicable California Energy Commission. 20 to the Project. 53 2112 1 %

TABLES Table 1. Sub-Transmission and Distribution I.ines. 24 Table 2. Electric System Growth Statistics 25 Table 3. Top Ten Customers,1977. 26 Table 4. Financing of Electric System Capital Improvements. 27 Table 5. Electric Rate Comparisons by hionthly llill. 28 Table 6. Comparative Statements of Actual Revenues and Expenses, Operating Ratios, and Debt Service Coverage 30 Table 7. Comparative Statements of Revenue and Expense. 31 Table 8. Comparative Analyses of Changes in Retained Earnings. 31 Table 9. Interim Statements of Resenue and Expense for Nine Afonths Ended h1 arch 31,1978 and 1977. 32 Table 10. Comparatise llalance Sheets. 33 Table i1. Pro Forma Revenues Available for Debt Service. 34 Table 12. Estimated Debt Service Requirements. 35 Table 13. Gener d City Resenues by Source-General Governmental Expenditures by Function. 37 Table 14. General Fund-Comparative Statements of Revenues, Expenditures and Changes in Fund Halances. 38 Table 15. General Fund-Comparative llalance Sheets. 39 Table 16. Assessed Valuations, Tax Collections, and Tax Rates. 40 Table 17. Af ajor Property Taxpayers. 1977-78. 41 Table 18. Statement of Direct and Overlapping Debt. 43 Table 19. Debt Senice Requirements on Outstanding General obligation and Waterworks. Parking District No. I, and Sewer Resenue Bonds. 44 Tabs 20. Economic Indicators 45 Table 21. Comparative Population . 46 Table 22. Dwelling Unit lluilding Permits. 47

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Table 23. Resident Total Personal Income. 48 Table 24. Taxable Sales All Outlets. 49 Table 25. Employment, Unemployment and l_ abor Force. 49 Table 26. Wage and Salary Employment by Industry. 50 j Table 27. Largest Industrial Employers.1977. 50 APPENDICES Appendix A. Summary of the Integrated Operations Agreement Appendix 11. Summary of the Supplemental Agreement for the Integration of Riverside's Entitlements in San Onotre Units 2 and 3 Appendix C. Summary of the San Onofre Units 2 and 3 Participation Agreement Appendix D. Summary of the Edison Riverside San Onofre Transmission Service Agreement Appendix E. Ilond Resolution Appendix F. Report of Certified Public Accountants 2112 182 4

Official Statement of the CITY OF RIVERSIDE, CALIFORNIA Relating to its

                                                    $43,000,000 Electric Revenue Bonds, Issue of 1978 This Official Statement, including the Appendices hereto, is provided to furnish information in connection with the public sale by the City of Riverside, California (the " City") of $43,000,000 Electric Revenue Bonds, Issue of 1978 (the " Bonds") on Tuesday, August 22,1978 at 10:00 o' clock A.M. (P.D.T.). The Bonds were authorized by a resolution of the City Council (the " Resolution") adopted on July 5,1978 in accordance with the provisions of the City Charter. A copy of the Resolution is included as Appendix E hereto.

The Bonds are to be issued for the purpose of acquiring a 1.79% ownership interest in the San Onc.fre Nuclear Generating Station, Units No. 2 and No. 3, (the " Project") from the Southern California Edison Company (" Edison"). DESCRIPTION OF TIIE BONDS h Dated August 1,1978. To mature cach August I as shown below. Principal Principal Year Amount Year Amount 1983 .$ 500,000 1998 . $ 1,275,000 1984 . 525,000 1999 . 1,375,000 1985 . .. 575,000 2000 . 1,450,000 1986 600,000 2001 . 1,550,000 1987 650,000 2002 . 1,650,000 1988 . 675,000 2003 1,750,000 1989 . 725,000 2004 1,875,000 1990 . 775,000 2005 . 2,000,000 1991 . . 825,000 2006 2,125,000 1992 875,000 2007 2.250,000 1993 925,000 2008 2,400,000 1994 . .. . 1,000,000 2009 2,550,000 1995 . 1,050,000 2010 2,725,000 1996 1,125,000 2011 2,900,000 1997 1,200,000 2012 . . 3,100,000 Payment The Bonds and the interest thereon (February 1 and August 1) will be payable in lawful money of the United States of America at the oflice of the City Treasurer of the City of Riverside, in the City, or, at the option 0 2112 183

of the holder, at any fiscal agency of the City in Los Angeles or San Francisco, California, or in Chicago, Illinois, or in New York, New York. l Registration The Bonds will be coupon bonds registrable as to principal only or as to both principal and interest, and the form of registration may be changed, or the bonds discharged from registration, all in accordance with the provisions in the Resolution. Redemp tion The Bonds maturing on or prior to August I,1988, shall not be subject to call and redemption prior to maturity. The Bonds maturing on or after August 1,1989, or any of them, may be called before maturity and redeemeil, at the option of the City, on August 1,1986, or on any interest payment date thereafter prior to maturity at a redemption price for each redeemable Bond equal to 100% % of the principal amount thereof, plus % % of the principal amount for each wholc 12 months' period and for any remaining fraction of a 12 months' yeriod from the date fixed for redemption to the maturity date of the Bond, but the redemption price, including premium payable at any time upon redemption, shall not exceed 103% % of the principal amount. All or ary of the Bonds subject to call may be called for redemption at any one time. If less than all of the Bonds at: redeemed at any one time, the Donds shall be redeemed only by complete maturity or maturities as selecte:1 by the City Council at its discretion. Tax Exemption, Legal Opinion and Other Closing Papers The City will furnish to the purchaser, without charge, concurrently with payment for and delivery of the Bonds,11 e following closing papers, each dated the date of delivery. (a) Legal opinion-The opinion of O'Melveny & Myers of Los Angeles, California, Bond Counsel, approving the validity of the Bonds and stating that interest on the Bonds is exempt from income taxes of the United States of America under present federal income tax laws, and that such interest is also exeinpt from personal income taxes of the State of California under present state income tax laws. A copy of sild opinion of O'Melveny & Myers, certified by an oflicer of the City by facsimile signature, will be prir ted on the back of each Bond. (b) A certificate of the City certifying that on the basis of the facts, estimates and circumstances in cxistence on the date of issue,it is not expected that the proceeds of the Bonds will be used in a manner tha'. would cause the Bonds to be arbitrage bonds; (c) A certificate of the City signed by officers and representatives of the City certifying to the follow-ing: (1) that said officers and representatives have signed the Bonds, whether by facsimile or manual signature, and that they were respectively duly authorized to execute the same; and (2) that there is no litigation threatened or pending atiecting the validity of the Bonds; (d) The receipt of the City showing that the purchase price of the Bonds, including interest accrued to the date of delivery thereof, has been received by the City; (c) A certificate of the City signed by an officer of the City, acting in his official capacity, to the effect that at the time of the sale of the Bonds and at all times subsequent thereto up to and including the time of the delivery of the Bonds, the Oflicial Statement relating to the Bonds did not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein,in the light of the circumstances under which they were made, not misleading, and having attached thereto a copy of the Official Statement. The statements of law and legal conclusions set forth herein entitled " Authorization of the Bonds, " Purpose of the Bonds and Disposition of the Proceeds", " Security of the Bonds"," Rate Covenant"," Limits on Additional Debt", "Other Covenants", " Investment of Funds", and " Flow of Funds" have been reviewed by Bond Counsel. 2 4 2112 184

Bond Counsel's employment is limited to the review of legal proceedings required for the authorization of the Bonds and to rendering an opinion as to the validity of the llonds and the exemption of interest on the Honds from income taxation. The opinion of Ilond Counsel will not consider or extend to any documents, agreements, representations, offering circulars or other material of any kind concerning the Bonds not mentioned in this paragraph. Official Statement The City will furnish to the successful bidder, without charge,500 copies of the Ollicial Statement approved by the City Council for this issue. Wainwright & Ramsey Inc. has acted as financial consultant to the City of Rivt Ude and will receive compensation from the City contingent upon sale and delivery of the llonds. Requests for other information concerning the llonds and the City or for copics of the Official Statement should be addressed to one of the following: Wainwright & Ramsey Inc. Wainwright & Ramsey Inc. 7325 Woodrow Wilson Drive Suite 4110,70 Pine Street Los Angeles, California 90046 New York, New York 10005 Wainwright & Ramsey Inc. Everett C. Ross 58 Sutter Street Public Utilities Director San Francisco, Cahtornia 94104 3900 Main Street Riverside, California 92522 Legality for Investment by Sasings and Commercial llanks in California It is believed that the Bonds fulfill the requirements of Section 1362 of the Financial Code of the State of h California. The llonds are payable out of revenues from a revenue producing property ( Electric System) owned, controlled, and operated by the City of Riverside, and are secured by such revenues; net income from such prop-erty available for the payment of electric revenue bonds for the five fiscal years ending with the fiscal y car 1977-78 averaged at least one and one-tenth times all debt service requirements of such bonds, and for each of said five fiscal years equaled at least all such debt service requirements, and for the last fiscal year exceeded the maximum annual debt service requirement for any fiscal year thereafter on all such bonds which were outstanding during such last fiscal year and which will be outstanding after the issue of the lionds; and said Electric System had a gross income of at least $1,000,000 in said last fiscal year. An application will be made by the City for a certiti-cate from the Superintendent of llanks of the State of California certifying that the specific Ilond issue presently offered will, when issued, constitute legal investments for savings and commercial banks. Additional Sales No additional electric revenue bonds, ranking on a parity with the issue of 1966, Issue of 1969, Issue of 197!, Issue of 1973, Issue of 1977 Honds (Subordinated), and the currently offered Honds, will be ofTered for sale for at least 180 days following the sale. AUTilORIZATION Ol' Tile IlONDS The $43,000,000 Electric Revenue llonds, Issue of 1978 (the "Honds") will be issued in accordance with the provisions of a recommendation by the Board of Public Utilities of the City, and a resolution adopted by the City Council of the City of Riverside on July 5,1978 ("the Resolution), in accordance with the provisions of the City Charter. B ' 2112 185

PURPOSE OF TIIE BONDS AND DISPOSITION OF TIIE PROCEEDS The Bonds herein offered are to be issued for the purpose of acquiring a 1.7904 ownership interest in the Project from Edison. Additional bonds will be issued by the City in order to complete the financing of such ownership interest. A portion of the proceeds of the sale of the Bonds will be used to fund the total amount of interest payable on the Bonds from their date to August 1,1982, plus one-half of the amount of interest payable on the Bonds from August 1,1982 to August 1,1983, and to make a $2,000,000 deposit into the Reserve Fund. The balance will be used by the City to finance a portion of its share of the Project. Proceeds from the sale of the Bonds will be applied approximately as follows: Payment to Edison for Construction and Other Costs. . 524,778,000D Bond Interest During Construction (Net of Estimated Reinvestment i EarningsT) 10,334,000 Deposit to Reserve Fund. 2,000,000 Financing Costs 150,000 Future Construction Payments. 5,738,000 Total Bond Issue. .543,000,000 3 Including $3,461,000 combined City's share of estimated interest costs paid by Edison :hrough October 1977 and City's interest costs at 9% per year on funds expended by Edison from No-vember 1,1977 to September I,19 78, plus $1,243.000 of nuclear fuel cost. O Hased on 6G annualinterest rate from temporary investment of all available funds. SECURITY OF TIIE HONDS The Bonds are being issued on a parity with the outstanding Electric Revenue Bonds, Issue of 1966, Issue of 1969, Issue of 1971, and Issue of 1973. The Bonds are payable both as to principal and interest and as to any premiums upon the redemption of any thereof prior to maturity only out of the Electric Revenue Fund and not out of any other fund or moneys of the City. The Electric Revenue Fund is established under and pursuant to said City Charter, and, under the provisions of the Resolution, the revenues of the electric public utility system of the City (the " Electric System") are required to be deposited in the City Treasury in the Electric Revenue Fund and used only for the purposes authorized by said Section 1306 of the City Charter and the Resolution, including the payment of principal and interest on the Bonds. The Bonds shall not constitute or evidence indebtedness of the City, but shall constitute and evidence only indebtedness of the Electric System thereof payable in the manner provided in said Section 1306 and the Resolu-tion. RATE COVENANT The City shall prescribe, revise and collect such charges for the services, facilities and electricity of the Electric System which, after making allowances for contingencies and errors in the estimates, shall be at least sufficient to pay the following amounts in the order set forth: (a) The interest on and principal of the outstanding debt evidenced by revenue bonds, revenue notes, or other evidences of indebtedness payable only out of the revenues pertaining to the Electric System (" Revenue Bonds of the City Payable Out of the Electric Revenue Fund") (whether serial or term bonds) as they become due and payable: 4 4 2112 186

(b) All payments required for compliance with this Resolution including payments required to be made into the Reserve Account; (c) The Operating and Maintenance Expenses; (d) All payments required to be made into the Surplus Revenue Fund, and into the Debt Service Account in such Fund, on behalf of the Electric Revenue Bonds (Subordina'ed) of 1977, in compliance with the terms of, and which were authorized by, Resolution No.13012 on February 15, 1977; (c) All payments required to meet any other obligations of the City which are charges, liens, encum-brances upon or payable from revenues of the Electric System; and the charges shall be so fixed that the Net Operating Revenues (defined as Gross Operating Revenues less Operating and Maintenance Expenses) shall be at least 1.25 times the amounts payable under said (a) and (b) above and I times the amounts payable under (d) above. See, however, " Limits on Additional Debt" below. LIMITS ON ADDITIONAL DEllT Except for bonds issued to refund these Bonds, no additional indebtedness evidenced by revenue bonds, revenue notes or other similar evidences of indebtedness, contracts or other obligations of any kind payable tot of the revenues of the Electric System and ranking on a parity with these Bonds shall be created or incurred unless: First: The City is not in default under the terms of the Resolution. Second: The Net Operating Revenues, calculated on sound accounting principles, as shown by the books of the City for the latest fiscal year or the last completed twelve (12) month period ended prior to D the incurring of such additional indebtedness as shown by an audit certificate or opinion of an independent certified public accountant or firm of certified public accountants employed by the City, plus, at the option of the City, either or ail of the items hereinafter in this covenant designated (a) and (b), shall have amounted to at least 1.25 times the maximum amount of annual debt service in any fiscal year thereafter on all indebtedness to be outstanding immediately subsequent to the incurring on such additional indebted-ness. liowever, a 1.50 coverage factor was required in the covenant limiting additional debt made on behalf of the previously issued Electric Revenue Honds, Issue of 1966 of the City and will remain 1.50 as long as the same are outstanding. The items either or all of which may be added to such Net Operating Revenues for the purpose of applying the limitation on additional debt are the following: (a) An allowance 'or net revenues from any revenue producing additions to anu extensions and improvements of the Electric System to be made with the proceeds of such additional indebtedness or with the proceeds of lunds previously issueu, and also for net revenues from any such additions, extensions or improvemnts which have been made from moneys from any source but which, during all or any part of such fiscal year or last completed twelve (12) mon'.h period, were not in service, all in an amount equal to 90ff of the estimated additional average annual net revenues to be derived from such additions, exten-sions or improvements for the first thirty-six (36) month period in which each addition, extension or improvement is respectively to be in operation, all as shown by the certificate or opinion of a qualified independent engineer employed by the City. (b) An allowance for earnings arising from any increase in the charges made for the use of the Electric System which has become effective prior to the incurring of such additional indebtedness but which, during all or any part of such fiscal year or last completed twelve (12) month period, was not in etIcct,in an amount equal to 90?F of the amount by which the nct revenues would have been increased if

                                   '.                         5 2112 187

such increase in charges had been in effect during the whole of such fiscal year or last completed twelve (12) month period, as shown by the certificate or opinion of a qualified independent engineer employed by the City. OTIIER COVENANTS Other covenants of the City relating to punctual payment of debt service: discharge of claims; commence-ment of the Project; eflicient operation and maintenance of the Electric System; sales and encumbrances of the Electric System and its revenues; insurance; records and accounts; collection of service charges; and arbitrage are set forth in full in the Resolution, a copy of which is appended hereto. INVESTMENT OF FUNDS Under the Resolution, moneys in the Construction Fund, the Bond Service Account, the Reserve Account and the Electric Surplus Revenue Fund may be temporarily invested in any obligations in which the City may lawfully invest its funds. Investments of the Reserve Account shall mature not later than five years from the date of investment; and all other investments shall mature not later than the date or dates when moneys in such funds or accounts will be required for the purposes provided in the Resolution. All profit earned on any such investments will become part of the funds or accounts on which earned and, except for the Reserve Account, the interest accruing thereunder shall be credited to such funds or accounts. G FLOW OF FUNDS Electric Resenue Fund The Gross Operating Revenues shall be deposited in the Electric Revenue Fund, and payments from said Fund shall be made only as provided by law and the Resolution, or any other resolution relating to Revenue Bonds of the City Payable Out of the Electric Revenue Fund. I!ond Sersice Account On the first day of each calendar month, there shall be set aside and transferred within the Electric Revenue Fund to the Bond Service Account at least one-sixth (1/6th) of the interest which will become due and payable on outstanding Revenue Bonds of the City Payable Out of the Electric Revenue Fund (whether serial or term bonds) within the next ensuing six (6) months and also at least one-twelfth (1/12th) of the principal amount of such Revenue Bonds of the City Payable Out of the Electric Revenue Fund which will mature and be payable within the next ensuing twelve (12) months, so that at least the full amount required to pay, as it becomes due, the interest on such Revenue Bonds of the City Payable Out of the Electric Revenue Fund and any maturity or installment of principal of such serial Revenue Bonds of the City Payable Out of the Electric Revenue Fund shall be set aside in the Bond Service Account at least one month prior to the date the interest and/or principal becomes due. Reserse Account From the proceeds of the Bonds, the sum of $2,000.000 shall be deposited in the Reserve Account. Such sum shall be credited on a monthly basis,in an amount equal to one-sixtieth (l /60th) of maximum annual debt

                                                          '                                                         8 2112 188

service until such time as it shall oc exhausted. Thereafter, from the Electric Revenue Fund there shall be trans-ferred a sum equal to no less than one-sixtieth (l/60th) of the maximam annual debt service until an amount h equal to the maximum annual debt service has been paid into the Reserse Account and thereafter there shall be rnaintained in said Reserve Accoant a sum equal to the maximum annual debt service. Maintenance and Operation Ac:our.t Monthly sums sufficient for the payment of the operating and maintenance expenses of the Electric System shall be set aside and transferred within the Electric Revenue Fund to the Maintenance and Operation Account after the transfers required to be made to the Bond Service Account and the Reserve Account. Surplus After the monthly transfers described above have been made, any remaining balance of the Gross Operating Revenues shall be used for (a) the payments required to be made into the Surplus Revenue Fund in accordance with provisions of Resolution No.13012 of the City Council adopted February 15,1977 authorizing the issuance of $2,500,000 aggregate principal amount Electric Revenue Bonds, Issue of 1977 (Subordinated), so long as any of such bonds are outstancing, and thereafter for (b) the restoration, if necessary, of the requiced amount in the Reserve Account, and thereafter, for (c) the purposes and in the order set forth in subsections (e) and (f) of Section 1304 of the City Charter as presently existing or as hereafter amended. After the above transfers and uses have been made and all other covenants of the City contained herein have been duly performed, any money remaining in the Electric Revenue Fund (herein sometimes referred to as

    " Surplus") shall be transferred within the Electric Revenue Fund to the Surplus Account and may be: (i) invested in any authorized investments, or (ii) used for the redemption of any outstanding Revenue Bonds of the City Payable Out of the Electric Revenue Fund which are subject to call and redemption prior to maturity or for the purchase from time to time on the open market of any of the outstanding Revenue Bonds of the City Payable Out of the Electric Revenue Fund whether or not subject to call (irrespective of the maturity or number of such Bonds) at such prices and in such manner, either at public or private sale, or otherwise as the City in its discretion may determine, but the purchase price (including brokerage or other charges, but excluding accrued interest) shall not exceed 104% of the principal amount thereof, or, if the Revenue Bonds of the City Payable Out of the Electric Revenue Fund are subject to call and redemption prior to maturity, shall not exceed the redemption price on the next interest payment date of such Bonds so purchased, or (iii) used in any lawful manner.

TIIE PROJECT The City proposes to issue the Bonds for the purpose of paying a portion of the cost of acquiring an owner-ship interest in the Project. The Project is being constructed by Edison. The City currently purchases all of its firm electrical power requirements at Edison's wholesale rates. The City purchases certain amounts of economy energy from Nevada Power Company. Such economy energy pur-chases will terminate in 1980. The Cities of Anaheim, Riverside and Banning entered into a " Settlement Agree-ment" dated August 4,1972 with Edison, which resolved certain rate litigation and regulatory proceedings which the Cities were involved in with Edison. The Settlement Agreement also contained the principles of integrated operation, which allow for the planning, constructing, maintaining and operating of the City and Edison Power Supply systems. The Settlement Agreement further provided that the parties would negotiate and execute an Integrated Operations Agreement ("IOA") between each City and Edison. 7 2112 189

The City has signed an Integrated Operations Agreement with Edison, which provides for the integrated operation of the City's bulk power supply system with that of Edison, all as further described in the Summary of the Integrated Operations Agreement ( Appendix A). The Settlement Agreement also provided that the City may acquire a 1.79% ownership interest in the Project. The City and Edison negotiated a Participation Agreement which also included San Diego Gas & Electric Company and the City of Anaheim. A summary of the Participation Agreement is included as Appendix C hereto. The Participation Agreement nrovides for the ownership of the Project among the parties as tenants-in-common in proportion to their respective generation entitlement shares. Edison . .76.55 % San Diego , .20.00 Riverside 1.79 Anaheim 1.66 The Participation Agreement assigns to the City an undivided 1.79% interest in the Construction Agreement as it pertains to the Project. The Participation Agreement provides for the parties to execute an Operating Agree-ment covering the operation and maintenance of the Project. The City and Edison, pursuant to the IOA, have entered into a Supplemental Agreement to integrate the City's entitlement in the Project. A summary of this Agreement is included as Appendix 11 hereto. The Supple-mental Agreement for integration provides that the City shall receive credit for its share of Project capacity in accordance with the IOA. The City and Edison have entered into a Transmission Service Agreement which provides for the trans-mission of the City's share of the energy from the switchyard at the Project to the Point of Delivery at the City. A summary of this Agreement is included as Appendix D hereto. The Transmission Service Agreement provides for the number of miles for which transmission service is provided and the contract rate at which such transmis-sion service is provided. Under the IOA, Edison will continue to supply the City's power and energy requirements over and above the capability of the City's own generating resources. Edison will credit the City on its monthly billing statements for the power and energy generated by the City's integrated generating resources. For detailed information concerning the Project and the City's participation therein, reference is made to the report of June 26,1978 prepared by R. W. lleck and Associates, which follows, as well as to Appendices A II, C and D of this Official Statement. At the present time, Edison and San Diego Gas & Electric Company are members of Nuclear Mutual, Ltd., a llermuda Corporation, a membership corporation composed of other utilities which own, either in whole or in part, nuclear energy facilities. Pursuant to Section 10 of the Participation Agreement, it is contemplated that the City shall become a member of Nuclear Mutual, Ltd. and become an insured under policies of insurance presently in effect for the Project for (i) All Risk lluilder's Risk Insurance covering loss or damage to Project work under course of construction and (ii) nuclear property damage insurance. The Price-Anderson Act, recently upheld by the U.S. Supreme Court, requires that all owners of nuclear plants be insured for liability insurance through the Nuclear Energy Liability-Property Insurance Association. The City intends to apply for such insurance. 2112 190 8 I

REPORT OF CONSULTING ENGINEERS $ R. W. BECK AND ASSOCIATES ENGINEERS AND CONSULTANTS ANNING SEATTLE, WASHINGTON ESIGN DENVER, COLORADO ATES PHOENIX, ARIZON A JW Tou t R BUILDINC. ORLANDO. F LORIDA ALUATIONS $[ ATill, W AsHINGTON %I01 COLUMBUS, NEBRASKA ANACIMENT Tit l PHONE 2% 6224m WELLESLEY, MASSACHUSETTS INDI ANAPOLIS. INDI ANA MINNE APollS. MINNIsOT A N ASHvillE, TE NN E sst E L F NO. City of Riverside June 26,1978 City Hall 3900 Main Street Riverside, California 92522 Gentlemen: Presented herewith is a summary of our analyses, investigations and studies with respect to the proposal by the City of Riverside, California (the " City") to issue $43,000,000 of revenue bonds for the purpose of paying a portion of the cost of acquiring an ownership interest in the San Onofre Nuclear Generating Sta-g tion, Units 2 and 3 (together referred to herein as the " Project"). The Project is being constructed by the Southern California Edison Company (" Edison"). The City's present financing program provides that additional bonds will be issued at later dates and in amounts necessary to pay the remaining cost of acquiring an ownership interest in the Project. After this issue, the estimated amount of such additional bonds is expected to be

     $ 16,000,000 for a total financing requirement for the Project of $59,000,000.

The City currently purchases all of its firm electrical power requirements from Edison at Edison's wholesale rates and purchases certain amounts of economy energy from the Nevada Power Company. Such economy energy purchases will terminate in 1980. The " Settlement Agreement" dated August 4,1972 with Edison provided, among other things, that the City may acquire a 1.79% ownership interest in the Project and that Edison will provide the necessary transmission services to the City to deliver the output of the Project to the City's system. The City has signed an Integrated Operations Agreement (" LOA") and a Supplemental Agreement (" Supplemental IOA") with Edison which provides, among other things, for the operation of the Project by Edison, for the benefit of the City, by integrating the scheduling of the Project with the scheduling of Edison's other generating resources. Under the IOA, Edison will continue to supply the City's power and energy require-ments over and above the capability of its own generating resources. Edison will credit the City on its monthly billing statements for the power and energy generated by the City's own generating resources that are integrated with the operation of the Edison resources. The City and Edison have agreed in the Supplemental IOA that the Project will be included as an integrated resource pursuant to the IOA. The Project The San Onofre Nuclear Generation Station consists of two 1,100-MWe nuclear generating units currently under construction and an existing nuclear generating unit No. I rated at 450 MWe. The station is located on an 84-acre site approximately three miles south of San Clemente, California and within the U.S. Marine Corps Base at Camp Pendleton. The two units under construction are essentially identical in design and will share certain common facilities with each other such as the control room and the seawater intake and discharge facilities. 9 2112 191

The nuclear steam supply systems for the Project, supplied by Combustion Engineering, Inc., are closed-cycle pressurized water reactor systems rated at 3,410 MWt each with two reactor coolant loops. The turbine generators are tandem compound units supplied by GEC Turbine Generators, Ltd. (formerly English Electric). The main condensers are being supplied by Ingersoll Rand and will be cooled by circulating seawater obtained through large intake lines extending into the ocean. The main generators are rated at 1,312,950 kVA. The main transformers will consist of banks of three single-phase transformers designed to step up the voltage of each generator output to 230 kV for interconnection into the transmission facilities of Edison's transmission network. It is currently planned that the Project will be owned as tenants-in-common by the following investor-owned and public utilities: Ownership Interest Southern California Edison Company. . 76.5 5 G San Diego Gas & Electric Company. .20.00 City of Riverside. 1.79 City of Anaheim. 1.66 Nuclear Fuci The nuclear fuel cycle consists of four basic elements prior to insertion of the fuel assemblies in a nuclear reactor. These elements include acquisition of uranium concentrates, conversion of the uranium concentrates to uranium hexafluoride, enrichment of the uranium hexalluoride and fabrication of the enriched uranium into fuel assemblies. After the fuel has been used in the reactor, it is removed for reprocessing or disposal. The following table shows the amount of coverage Edison has acquired for the materials and services for nuclear fuel for the Project: Unit No. 2 Unit No. 3 Full Cm erage TL Coverage Full Coverage  % Coverage Through Through 1990 Through Through 1990 Uranium .1981 62% 1981 62 % Conversion '980 16 1980 17 Enrichment .2008 100 2009 100 Fabrication .1983 41 1984 44 Storage . .1992 100 1992 100 At the present time, there are no operating facilities in this country for reprocessing spent nuclear fuel. In April 1977, the President of the United States announced an indefinite deferral of the reprocessing of spent fuel and the use of plutonium. In October 1977, the Department of Energy announced its intent to accept and take title to spent fuel from utilities upon payment of a one-time storage fee. The details of this proposal are currently being formulated and are scheduled to be published in late 1978. Edison is currently con sidering increasing its spent fuel storage capability for the Project as a result of these actions. Status and Schedule Construction of Unit 2 negan in March 1974 after rcecipt of a construction permit from the Nuclear Regulatory Commission in October 1973. 't he major construction of Unit 3 was begun in June 1975. Startup operations are scheduled for February 1980 for Unit 2 with initial full power operation in September 1980. Fuel loading for Unit 3 is scheduled for May 1981 with initial full power operation scheduled for December 1981. Full commercial operation of Units 2 and 3 is scheduled for October 1981 and January 1983, respec-tively. As of June 1,1978, construction of Unit 2 was approximately 58% complete and Unit 3 was approxi-mately 45% complete. 10 2112 to * /L <

Estimated Financing Requirements for the Project The following table shows the estimated cost of constructing and financing the Project: D Total Proj. ctD City's Share Land and Land Rights. .$ 2,773,000 $ 50,000 Structures and Improvements. 568,383,000 10,174,000 Reactor Plant Equipment. 678,028,000 12,137,000 Turbogenerator 385,517,000 6,901,000 Accessory Electrical Equipment. 163,821,000 2,932,000 Miscellaneous Power Plant Equipment. 50,478,000 903,000 Subtotal Direct Construction Costs. .51,849,000,000 $33,097,000 Ad Valorem Taxes. 46,086,000 506,0003 Nuclear Fuel 244.836,000 4.383,000 Total Construction Costs. . $2,139,922,000 537,986,000 Bond Reserve FundB. . 4,518,000 Amounts Funded During Construction?. 19,939,000 Financing Costs 3 . 100,000 Gross Requirements . $62,743,000 Less: Interest income @. 3,743,000 Net Financing Requirements. . . $59,000,000 G Estimated by Edison. G Estimated share of tax to be paid by City. G Provided from Bond proceeds.

                @ Based on 6.5% annualinterest rate on bonds sold to pay cost of construction. Interest capital-ized until August 1,1982 on 100% principal amount of bonds and until August I,1983 on 50% of the bonds issued for construction of the Project. Includes City's share of estimated interest costs paid by Edison through October 1977 and City's interest costs at 9% per year on funds expended by Edison from Nosember I,1977 to Septernber 1,1978.

G Includes estimated amounts for financing costs on each of two bond issues.

                @ Based on 6.0% annualinterest rate from temporary investment of funds.

The above estimated financing requirements for the City's ownership share of the Project does not include allowances for working capital which, if included, would increase the amount of bonds to be sold. City's Power Supply Costs The following table shows the annual peak and energy requirements as estimated by the City and the estimated amounts of peak and energy expected to be supplied from the Project and from Edison purchases. Peak SIW Energy (%1illions of LWh) Purchased Capacity Purchased Generated Require- from from the Hequire- from by the Year ments3 Edison ProjectV mentsT Edison ProjectB 1981 .296 296.0 01 1,101 1,078 23 1982 . .310 294.6 15.4 1,157 1,067 90 1983 .325 294.1 30.9 1,215 1,008 207 1984 .340 309.1 30.9 1,276 1,033 243 1985 .355 324.1 30.9 1,341 1,088 253 1986 .370 339.1 30.9 1,416 1,161 255 1987 .386 355.1 30.9 1,495 1,240 255 1988 ,. .403 372.1 30.9 1,579 1,324 255 1989 .. 420 389.1 30.9 1,668 1,413 255 1990 .439 408.1 30.9 1,761 1,506 255

                @ Estimated by the City.

T Includes reductions in total capability of projects due to reserves and losses.

                @ Based on the expected generation by the Project reduced by transmission losses.
                @ Does not include capacity available during first three months of operation.

11 2112 193

Under the principles of the IOA, the City will receive credit for the amount of capacity of its integrated resources less transmission losses and less the City's share of the Edison system reserves. For purposes of our analyses, we have assumed the transmissian losses would be 1,61 % and that the Edison system capacity reserves would be 20% for each year of the study. We have also estimated the costs of transmission from the Project based on the Edison-Riverside San Onofre Transmission Service Agreement. Estimated Annual Cost of Poner from the Project The table following shows the estimated annual costs of power from the Project as it is delivered to the City's system for the years 1981 through 1990 based on Edison's expected energy generation by the Project. CITY OF RIVERSIDE Fstimated Annual Cmts of Project ($000) 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 Interest and AmortizationR .$- $ 1,083 $3,405 $4,518 $4,5 I 8 $4,518 $4,518 $4.518 $4.518 $4,5 I 8 I.and EawmentE .$- $ 2 $ 2 $ 2 $ 2 $ 2 $ 2 5 2 $ 2 $ 2 Operation and AfaintenanceT. 47 190 342 362 385 415 434 454 475 497 Administrative and General?. 21 86 102 109 115 124 132 141 150 160 Nuclear insuranec3 . 37 64 64 64 64 64 64 64 64 64 Nuclear Fuell 130 535 1,252 1,628 1,876 2,044 2,173 2,303 2.458 2,743 Renewals and Replacementa 11 45 95 100 106 113 120 127 134 142 Taxest . 29 115 115 115 115 115 115 115 115 115 Transmission? , J 86 174 174 174 174 174 174 174 174 Subtotal .$296 $ 1,123 $2,146 $2,554 $2,837 $3,051 $3,214 $3,380 $ 3,572 $3,897 1.ess: Interest Earnings?. _--. (68) (271) (271) (271) (271) (271) (271) (271) (271) Total , .5296 52,138 $5,280 $6,801 $7,084 $7,298 $7,461 $7,627 $7,819 $8,144 Energy Delivered ( Alillions of LWh)R 23 90 207 243 253 255 255 255 255 255 Cost (Niills/LWh) .12.9 23.8 25.5 28.o 28.0 28.6 29.3 2D 30.7 31.9 @ llased on 100?E of interest capitalized until August 1.1982 and 50% of the interest capitalized until August 1.1983. Remaining interest to be paid from resenues. Level debt service is based on an interest rate of 6.509 and maturity over 30 years with princi-pal pa)ments beginning August I,1983. @ Supplied by Edison through 1986, thereafter Operation and Niaintenance escalated at 4.69 per Scar and Administratise and General at 6.6% per year. @ Itased on Edison nuclear fuel costs estimated through 1990 @ EstimatcJ at $1,800 per megawatt of capacity in 1978 dollars and escalated at 6% per year. G Ilased on the City's share of ad valorem taxes at the time of acquiring its ownership share. @ Ilased on the Edison-Riverside San Onofre Transmission Service Agreement. O Earnings at 64 annual interest rate on llond Fund Reserve once Fund is fully funded at the maximum annual debt service on the Ilonds. @ Computed at City's share of estimated total generation at source, supplied by IMison, less energy transmission losses estimated at 1.619. We have projected the costs of power to the City for the period 1981 through 1990 on the basis that the City would purchase from Edison all power requirements not supplied from the Project. Under the IOA, the City would be required to purchase Contract Energy at the Contract Energy Cost and the balance of its purchases from Edison at Edison wholesale rates for power. Contract Energy is defined in the IOA as:

      "(i) the amount of energy capability associated for that hour *vith the Capacity Credit for that hour less (ii) the amount of energy received as determined from Schedules during that hour (adjusted from trans-mission losses to the Point of Delivery) from the City's Integrated Resources, but not less than zero" 12 2112 194

During the study period Contract Energy is estimated to average less than 5% of all energy purchased from Edison by the City. The Contract Energy Cost is determined by multiplying Edison's cost of fuel for conventional oil-fired h combustion turbine and combined-cycle generating resources measured in ullars per Btu by the weighted heat rate of these generating resources measured in Btu's per kilowatt-hour. This rae plus a charge for certain other costs associated with fuel is then adjusted for transmission losses to the City's poat of delivery. We have projected the Edison wholesale power rates for the period 1981 through 1990. The projections are based on information contained in tue Edison October 1977 projected results of operations before the Public Utilities Commission of the State of California entitled "Results of Operations 1974-1978, Recorded, Adjusted, Estimated" and "Results of Operations,1979 Test Year" and in Edison's " System Forecasts 1977-1996" Energy Demand Year ((/kWh) ($/kW Mo.) 1981 . . .2.55 5.98 1982 .2.58 6.52 1983 .2.63 7.47 1984 .2.77 7.70 1985 .3.07 7.94 1986 .3 20 8.85 I987 .3.35 9.66 1988 . 3.61 11.64 1989 .3.71 11.85 1990 .3.92 13.68 The table on page 14 shows the estimated power supply costs for the City for the period 1981 through 1990, with and without Project ownership based upon the foregoing assumptions. The savings to the City resulting from Project ownership as shown on that table will differ from actual savings to the extent that actual conditions differ from those assumed. Should extended outages occur at a City Integrated Resource, the City will be required to purchase from Edison Replacement Capacity which is defined in the IOA as:

        " Capacity acquired by the City pursuant to Section 16.1 from a source outside Edison's control area or from Edison's system to replace kilowatts of Rated Capacity unavailable from City Capacity Reserves."

The amount of Replacement Capacity that the City must purchase is the greater of (i) the maximum kilowatt ditTerence (rated generating capability of the City's Integrated Resource for a given day less the capacity available from the resource that day) which has existed for 70 or more censecutive days immediately preceding that day, or (ii) the maximum kilowatt difference which exists for that day and has existed for 100 or more non-consecutive days during the 180 consecutive-day period immediately preceding that day. The cost of Replacement Capacity, measured in dollars per kilowatt-day, is based on the costs of electric generating facilities installed during the pre-vious five years just prior to the current year. The City will not be required to purchase Replacement Capacity until a generating unit has been out or par-tially out of operation f~ more than 70 consecutive days or more than 100 days out of 180 consecutive days and the City has exhausted its maintenance reserve for each unit for that year. The maintenance reserve is an amount of megawatt-days established for each City's Integrated Resource each year from which the City may withdraw megawatt-days to be credited against City's Replacement Capacity obligation for each unit. The City expec'.s to be required to pay the cost of Replacement Capacity only under unusual circumstances arising from extended outages of its Integrated Resources. Therefore, we have not considered the effects of Re-placement Capacity costs on the City's power supply costs. 13 112 195

ESTI51ATED POWER SUPPLY COSTS ($000) 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 ANNUAL POWER COSTS WITil THE PROJECT San Onofre Project Costs. . .$ 296 $ 2,138 $ 5,280 $ 6,F91 $ 7,084 $ 7,298 $ 7,461 $ 7,627 5 7,819 $ 8,144 Purchased Power Costs 3 42,847 44,987 46,795 50,307 56,640 64,191 72,424 86,576 93,796 108,976 Total Annual Power Costs. .543,143 $47,125 $52,075 $57,108 $63,724 $71,489 $79,885 $94.203 $ 101,615 $ l 17.120 Total Energy Requirements (millions of kilowatt-hours). 1,101 1,157 1,215 1,276 1,341 I,416 1,495 1,579  ?,668 1,761 g Unit Power Costs (mills per kilowatt-hour) 39.2 40.7 42.9 44.8 47.5 50.5 53.4 59.7 60.9 66.5 ANNUAL POWER COSTS WITHOUT THE PROJ ECT Purchased Power Costs. .543,433 $47,389 $53,015 $58,059 $65,624 $73,722 $82,434 $97,701 $105,064 $121,136 Unit Powcr Costs (mills per kilowatt-hour) 39.4 41.0 43.6 45.5 48.9 52.1 55.1 61.9 63.0 68.8 Savings to City 2 .$ 290 $ 264 $ 943 $ 951 $ 1,900 $ 2,233 $ 2,549 $ 3,498 $ 3,449 $ 4,016 N O Hased on projected Edison energy and capacity rates and projected Edison contract energy costs.

~    @ Estimated savings to City are calculated from estimates of Project costs and Edison wholesale power rates which are based on the assumptions set out in this report rhe

_ savings to the City resulting from Project ownership shown above will differ from actual savings to the extent that actual conditions differ from those ass,med. N C% a e e

Comparison of Unit Power Costs The power delivered to the City from the City's share of.the Project under the IOA will displace a similar D amount of power which would otherwise be purchased fiom Edison at Edison's wholesale power rates. The fol-lowing table shows a comparison of the :osts for such an amount of power purchased from Edison at the projected wholesale power rates with the costs to the City Mr its share of Project costs under the IOA. COMPARISON OF UNIT POWER COSTS ($000) Edison Purchase Costs Displaced by Project Project Power Costs City's Share of Contract

                                                                 %Illis/        Project    Energy                 %Illis/

Year Capacity raergy Total kWh Costs Costs Total kWh 1981.. . .$ 200 $ 1,020 $ 1,220 30.5 $ 296 $ f02 $ 898 22.5 1982. 873 4,102 4,975 31.3 2,138 2,574 4,'12 29.6 1983. 2,001 7,916 9,917 32.9 5,280 3,694 8,974 29.8 1984. . 2,062 8,642 10,704 34.3 6,801 2,953 9,754 31.3 1985. . 2,127 9,671 11,798 37.5 7,084 2,815 9,899 31.4 1986. 2,370 10,080 12,450 39.5 7,298 2,922 10,220 32.4 1987. 2,587 10,553 13,140 41.7 7,461 3.132 10,593 33.6 1988. 3,118 11,372 14,490 46.0 7,627 3,360 19,987 34.9 1989. 3,174 11,686 14,860 47.2 7,819 3,594 11,413 36.2 1990. 3,664 12,348 16,012 50.8 8,144 3,852 11,996 38.1 Conclusions Based upon our studies, investigation and analyses, the assumptions set forth in this letter and the informa-tion supplied by the City and Edison with respect to the proposal by the City to acquire an ownersip interest in ti:: Project, we are of the opinion that:

1. The cost of constructing the Project as estimated by Edison is comparable with the cost expected for similar projects being developed within the same time frame.

2. T;.3 cost of power from the Project is reasonable and comparable to other generating resources that may be available for acquisition by the City during the early 1980's.

3. The acquisition of an ownership interest in the Project by the City and the operation of the Project under the principles of the Integrated Operation /.gr~: ment should provide the City with an economicallong-range source of power that will res8 :.n lower power supply costs than would resn't from the continued pur-chase of all its power requirements from Edison.

Respectfully submitted, R. W. HECK AND ASSOCIATES 2112 197 D 15 i t

OTIIElt PI(OJECTS

     'lhe City is currently involved in studies of the feasibility of participating in the Intermountain Power Proj-ect and Palo Verde Nuclear Generating Station Units 4 and 5.

Intermountain Pour Project ("IPP"i in 1974 the City entered into a Membership and Study Agreement with the California cities of Anaheim, Ilurbank, Glendale, Pasadena and the Department of Water & Power of the City of Los Angeles and with tie Intermountain Consumers Power Aw>ciation, composed of a group of Utah municipalities and rural electric cooperatives. The purpose of the Membership and Study Agreement was to investigate the feasibility of con-structing and operating the project. 'Ihc piopmed project is a 3,000 megawatt coal fired c'ectric generating plant consisting of four 750 megawatt generators, t :'c located in South-Central Utah. A feasibility study is being con-ducted by the Department of Water & Power of the City of 1.os Angeles pursuant to an agreement between the Intermountein Power Project and the Department of Water & Power. In May 1977, several Utah municipalities (which are members of Intermountain Consumers Power Asso-ciation) agreed to organize the Intermountain Power Agency (IPA), a political sulxlivision of the State of Utah created pursuant to the provisions of the Interlocal Cooperation Act of the State of Utah, for the express purpose of undertaking and financing the project. It is contemplated that IPA would iwuc its bonds to finance construction of she project and the bonds would be secured by long-term take-or-pay contracts with each of the Participants in the project. 'l he City currently has a 10% share in the Membership and Study Agreement. It seems likely, how-ever, that due to various circumstances, the share of the City in executing a long-term take-or-pay contract to purchase power from IPA would be somewhat less than its current share. I he feasibility study is now complete and has concluded that the Salt Wash site is feasible, from an engineer-ing standpoint, for construction of the project. 'Ihe Salt Wash site is kicated casterly of Capital Itcef National Park. Notwithstanding the conclusions of the feasibility study, the Secretary of the Interior of the United States, with respect to air quality in the asca surrounding the Salt Wash site, has urged IPP to invcstigate the availability of alternate sites for the project. Currently, IPP has made a preliminary assessment of a site lotated near I.ynndyl, hicated in Millard County, Utah. The I ynndyl site is being consi& red as an alternate to the Salt Wash site for purposes of the environmental statement, which will be filed with the United States llureau of 1.and Management. In the case of both sites neither a water supply nor a crol supply for the project have been con-tracted for by IPP. IPP now estimates thc date of commercial operation for the first unit to be in July 1987. It is also estimated that for additional units commercial operation would occur in approximately yearly intervals thereafter. 'Ihc current escalated cost of the project is estimated to be in excess of $4 billion dollars. It is currently planned that the Participants will make a decision in late 1979 as to whether to proceed with the project. Palo Verde Nuclear Generating Station Units 4 and 5 On February 1,1978, the City entered into a iteplication Agreement with lidison, Arizona Public Service Company, El Paso lifectric Company, San Diego Gas & I!!cctric Company, Nevada Power Company, the Depart-ment of Water & Power of the City of I.os Angeles, and the Cities of Anaheim, Hurbank, Pasadena and Glendale. The purpose of the Iteplication Agreement is to provide a basis for the parties to said Agreement to do all work requisite to the Nuclear Regulatory Commission requirements pertaining to the filing and processing of a con-struction permit for Units 4 and 5, to be constructed in a manner identical to Units I,2 and 3 at the Palo Verde Nucicar Generating Station. 'ihe Citics' current share of the Replication Agreement is 19. 'I kis would amount to 12.20 megawatt. from each unit, for a total of 24.40 megawatts. It is currently contemplated that all work pursuant to the Iteplication Agreement will be completed by July 1979 and the parties will determine whether or not to execute a Participation Agreement to proceed with the proj. cet at that time. The City currently estimates that the cost of par ticipation in Units 4 and 5 wouid be approximately $40 million dollars. The current schedule provides for Unit 4 to be in commercial operation in 1988 and for Unit 5 to be in commercial operation in 1990. 2112 198 I

LITIGATION h City There is no litigation pending or, to the knowledge of the City, threatened, questioning the corporate exis-tence of the City, or the title of the oflicers of the City to their respective offices, or the validity of the 1978 Bonds or the power and authority of the City to issue the 1978 Bonds, or the validity of the Integrated Operations Agreement, Participation Agreement, Supplemental Integrated Operations Agreement, and Transmission Service Agreement, exc pt as noted below. There is no litigation pending, or to the knowledge of the City, threatened, questioning the authority of the City to fix, charge and collect rates for the sale of power and energy by the City as provided in the Resolution. Rate Cases Hefore Federal Eacrgy Regulatory Commission (FERC) DocAct No. E-8570. Edison filed for a 21% rate increasc a.. :el adjustment clause on January 2,1974. The California cities of Anaheim, Riverside, Hanning, Colton and Azusa (" Cities"), each of which purchases electric power at wholesale from Edison, filed a Petition to Intervene on January 25,1974. FERC suspended the rate increase for five months, until August 4,1974. licarings were held from December 9,1974 through December 17,1974. The Administrative Law Judge issued an Initial Decision on September 13,1976, granting Edison the full increase requested. The Cities' brief on exceptions was filed on November 15,1976, and Edison filed its brief opposing exceptions on December 23,1976. On April 22,1978 FERC issued an order affirming, in part, and modifying, in part, the Initial Decision of the Administrative Law Judge. The Commission affirmed the Initial Decision as to a disallowance of certain financing charges which had been included in the Fuel Adjustment Clause. The Commissiu modified the ini-tial decision with respect to the proper accounting for Edison's oil pipeline system. The Commission has ordered Edison to make refunds with 9% interest within sixty (60) days. On April 21,1975 the Cities, by motion, requested FERC to reopen the record in this Docket to review D the Edison fuel adjustment clause to determine whether Edison was recovering improper charges through t fuel adjustment clause. The Administrative Law Judge issued an initial Decision on July 20,1976 finding that Edison had improperly included portions of cost in its fuel adjustment clause. DocAct No. 74-1488. In Docket E-8570 the Cities raised the issue of " price squeeze" wherein the Cities alleged that Edison's wholesale rete was higher than its retail rate for large industrial customers, and that such rates maintained a situation inconsisNt with the Antitrust Laws of the United States. FERC determined that the price squeeze issue should not ' e considered in Docket E-8570. The Court of Appeals for the District of Columbia Circuit issued its decision on April 4,1975 reversing FERC and holding that FERC had both the authority and the responsibility to weigh discriminaton between two classes of service, only one of which (whole-sale) is subject to FERC jurisdiction, and that FERC, in reviewing a rs.te filing, should consider whether the utility filing had, as a purpose, the intent to forestall its wholesale customers from competing with it at retail. On June 7,1976, in separate case, the Supreme Court affirmed the holding of the Court of Appeals on the price squeeze issue. The Court of Appeals remanded this case to FERC to reopen the record for consideration of the price squeeze issue. On July 5,1978 FERC issued an order reopening the proceedings in Docket E-8570 for consideration of the price squeeze issue. This matter has been scheduled for a pre-hearing conference on September 20,1978. Docket No. ER76-205. Edison filed on October 31,1975 for a rate increase of 14.1% to its R-2 whole-sale customers. A Petition to Intervene was filed on behalf of Anaheim, Riverside, Hanning, Colton and Azusa on November 24, 1975. FERC's initial order suspended the proposed rate increase until February 1,1976. licatings were held from August 2,1977 through August 31,1977 on cost of service and price squeeze issues. All briefs were filed by the Cities and Edison on or before December 7,1977. An initial Decision by the Admin-istrative Law Judge was issued on June 1,1978. The Administrative Law Judge found that the rates on file had not been shown to be just and reasonable, or otherwise lawful, under the provisions of the Federal Power Act, 17 2112 199

with respect to certain matters noted in the Decision. The Administrative Law Judge further found that the Cities had not been subjected to a price squecie due to the fact that the price differential between the wholesale rate and the large Industrial retail rate was cost justified. The Administrative Law Judge further found that there was competition and that such competition had been adverse to Cities but that no remedy was available in this proceeding. Other Litigation DocAct No. E-7777 (Phme II) and DocAet No. E-7796. Certain Northern California Cities raised ques-tions concerning the anti-competitive effect of the California Power Pool. The California Power Pool was created pursuant to an Agreement between Pacific Gas & Electric, San Diego Gas & Electric, and Edison. Docket No. E-7796 concerns the anti-competitive eficcts of the Seven Party Agreement between Pacific Gas & Electric, San Diego Gas & Electric, Edison and the Northwest Companies of Portland General Electric, Pacific Power and Light, Puget Sound Power and Light, and Washington Water Power. Discovery has been commenced, and is proceeding, in both of these matters. Anaheim, Riverside, Arusa and Colton have intervened in both proceedings. lie.uing dates for E-7796 are now set for August 22,1978. licaring dates have not yet been set for E-7777. City of Anaheim, Et Al. vs Morton, Et AI. The Cities of Anaheim, Riverside and llanning filed a complaint in the U.S. District Court for the District of Columbia which was transferred by order of the Court, dated July 31,1974, to the U.S. District Court for Arizona (Case No. 74-542). The complaint in the matter seeks both injunctive relief and declaratory relief against the Secretary of the Interior enjoining the Secretary from selling or disposing of layoff power from the Navajo Power Project to non-preference customers, until the needs of preference customers have been satisfied. The complaint further alleges that Anaheim, Riverside ard llanning, plaintilis in the matter, are preference customers entitled to such layoff power as preference customers. The plaintitis filed a Motion for Preliminary injunction requesting that the Secretary of Interior be directed to sell Anaheim, Riverside and llanning prefer-ence power from the Navajo Power Project, which is now being sold to Edison. A hearing was held on this mat-ter on December 21 and 22,1976. The Judge in the District Court issued an order on March 8,1977 denying the Cities' Motion for Preliminary injunction. This order was appealed to the U.S. Court of Appeals for the Ninth Circuit. An initial llrief was filed on behalf of the Cities on August 10,1977. A hearing on the appeal has been scheduled for August 14,1978. Stanislaus Nuclear Project Pacific Gas & Electric has proposed construction of a new nuclear generating plant in Northern California called the Stanislaus Nuclear Project. Anaheim and Riverside filed a Petition to Intervene before the Nuclear Regulatory Commission on October 15,1976 seeking participation in the Project and transmission of power to the Cities. fly an order issued April 15,1977 the Petitions to Intervene of Anaheim and Riverside were granted. The parties involved in this litigation are now involved in discovery in connection with the proposed hearing on the matter. City of Anaheim, Et Al. vs 50. California Edison Company On March 2,1978 the Cities of Anaheim, Riverside, llanning, Colton and A7 usa filed an action in the Federal District Court for the Central District of California alleging that Edison was involved in a combina-tion to restrain and monopolize trade and price discrimination, all in violation of the Sherman Antitrust Act and the Robinson-Patman Price Discrimination Act. On or about May 5,1978 Edison filed motions for a more definite statement, to dismiss the complaint for failure to state a claim, or in the alternative, to stay the action. The Cities have filed opposition to these motions and the motions were heard by the court on June 26, 1978, but a decision has not been rendered. City of Lafayette, Louisiana Et AI. vs Louisiana Power & Light Company (U.S. Supreme Court) On March 29,1978, the United States Supreme Court rendered its decision in the above-entitled case. The City of Lafayette, Louisiana and others filed a treble damage antitrust action against Louisiana Power & Light 18 21l2 200

(LP&L) alleging that LP&L committed various offenses which injured the Petitioners in the operation of their electric systems. LP&L filed a counter-claim alleging violation of the antitrust laws by Lafayette and othert. LP&L, by means of its counter-claim, sought treble damages because of (1) asserted " sham" litigation to delay or prevent the construction of a nuclear generating unit by LP&L' (2) covenants in municipal bond indentures claimed to present competition in electric service within municipal boundaries; (3) claimed exclusion of com-petition by long-term supply arrangements; (4) asserted " tie-ins" or " tying arrangements" requiring that pros-pective gas or water service customers also take electric service from the City. This matter was considered on the basis of the pleadings without trial. The Court focused principally on the allegations concerning tying arrangements, allegations which it assumed to be correct and provable. The Court held that cities are not exempt, as a part of the state action doctrine, from the antitrust laws unless the state "as sovereign" and probably by the State Legislature, directed the specific sorts of action at-issue. The Court held that the defense of state action is available only when it is found from the authority given a governmental entity te operate in a particular area, that the Legislature contemplated the kind of action complained of. Thus, when the state itself has not directed or authorized an anti-competitive practice, the state's subdivisions, in exercising their delegated power, must obey the antitrust laws. The District Court had granted a motion of Lafayette to dismiss the counterclaim.The Court of Appeals had resersed and remanded that action and the Supreme Court affirmed the decision of the Court of Appeals. It may reasonably be anticipated that, pursuant to the decision in the Lafayette case, treble damage anti-trust actions will be filed against municipalities for the purpose of subjecting the municipalities to treble damage liability. REGUi.ATORY MATFERS h Public Utilities Commission On November 25.1977 Edison filed an application with the Public Utilities Commission for the State of Cahfornia sceling an order authorizing Edison to sell an undivided co-tenancy interest in its San Onofre Nuclear Generating Station Units 2 and 3 and certain common facilities to the Cities of Anaheim and Riverside. On April 18,1978, in Decision No. 88708. the Public Utilities Commission issued its order authori7ing Edison to trans-fer a portion of its ownership interest in San Onofre Nuclear Generating Station Units 2 and 3 and certain com-mon facilities related thereto to the Cities. Federal Energy Regulatory Commission Section 203(a) of the Federal Power Act provides, in general, that no public utility shall dispose of the whole of its facilities subj cr Jo the jurisdiction of the Commission, or any part thereof, of a value in excess of

  $50,000.00 without first hasing secured an order of the Commission authorizing it to do so. Ilowever, Section 201(b) of the Federal Power Act provides that the generation of electricity, its local distribution, or its trans-mission in intra-state commerce are not within the jurisdiciion of the Federal Energy Regulatory Commission and thus it is unnecessary to secure an order from the Commission approving the sale of the facilities to the City.

Nuclear Regulatory Commission The Atomic Energy Act (42 USC 2131; Ti:!e 10 CFR 50.10(a)) provides that it is unlawful for any person within the United States to transfer or receive in interstate commerce, manufacture, produce, transfer, acquire, possess, use any utilization or production facility equipment except under and in accordance with a license issued by the Commission. A Construction Permit was issued on October 18,1973 to Edison and San Diego Gas & Electric. Therefore, while the City will not operate the facility, it has been concluded that it will be necessary for the Construction Permit to be amended by adding the City as an owner thereto. An Operating 19 2112 201

Permit has not yet been granted for this facility. It will be necessary for the City to apply for, and be granted, an Operating Permit for 'he facility. In general, the City will have to comply with the linancial and other require-ments of the Atomic linergy Act in connection with such Permits. It is not anticipated that the City will have I any different problems with obtaining an amended Construction Permit or an Operating Permit than will the current owners of the project (Edison and San Diego Gas & !!!cetrie). I!dison and San Diego base applied for an Operating Permit. Petitions to intervene hoe been granted to several Intervenors. Discovery has commenced and is presently proceeding. 't hereafter the I.icensing floard will set dates for hearings on this matter. The 1.icensing Ikiard has indicated that when the Cities acquire their ownership interest in the Project that they will be consolidated with applicants for the Operating Permit proceedings. California Energy Commlulon

     'Ibe Public Resources Cmle of the State of California provides that no nuclear fission thermal power plant requiring the reprocessing of fuel rods, except those having vested rights, shall be permitted land use in the State of Cah'ornia until the California linergy Commission finds that the (Jnited States, through an authorized agency, has identified and approved a technology for the construction and operation of nuclear fuel rmi reproe-essing plants, and the Commission has reported such findings to the California I.cgislature, who may disa!!irm such findings by the Commission within one hundred (!(X)) 1.cgislative days after such findings are reported to the Legislature. (Public Resources Code, Section 25524 I) This section specifically provides, however, that a vested right to construct a nuclear thermal i mwer plant exists for San Onofre Nuclear Generating Station IJnits 2 and 3 and therefore such findings are unnecessary with respect to those generating units.

The Public Resources Code provides that no nuclear liwion thermal power plant, except those which are exempted, shall be a permitted land use in the State of California until the California linergy Commission finds that the (Jnited States, through an authorized agency, has developed and approved, and there exists, a demon-strated technology for the disposal of high level nuclear waste and the Commission has regmrted such hndings to the California 1.egislature,who may disaflirm such lindings within one hundred (l(X)) 1.cgislative days after the Commiwinn has reported such findings to the i egislature. (Public Resources Umle, Section 25524.2) This see-tion, however, specifically exempts San Onofre Nuclear Generating Station tJnits 2 and 3 from its provisions.

      't he Public Resources Code provides that no nuc! car liwion thermal power plant, except those having vested rights, shall be permitted land use in the State of California until the California Energy Commiwion under-takes and completes a study of the necewity for, and effectise uses, and economic feasibility of underground-ing and berm containment for nuclear reactors and has submitted such study to the California I.cgislature.

(Public Resources Cmle, Section 25524.3) This section specifically exempts San Onofre Nuclear Generating Station (Jnits 2 and 3 from its provisions. CITY OF RIVEllSIDE PUllI,IC IJTILITIES DEPARTMENT IIistory of the Department The Public (Jtilities Department was created in 1928 to exercise jurisdiction over the municipal electric ant! water systems of the City of Riverside. Prior to this, each had been operated as a separate department of the City since the inception of the electric system in 1895 and of the water system in 1913. 'I he funds of each system have always been segregated from each other and from the City's other moneys.

     't he Public IJtilities Department, as presently constituted, was created by Article XIII of the City Charter which was adopted in April 1953 and modified by Charter c!cction in June 1968 and by Charter election in June 1974 and by Charter c!cction in Nosember 19'7.

Jurisdielion of the Department

     'ihe Department exercises jurisdiction over the electric and water utilities owned, controlled, and operated by the City. The City's sanitary sewer system is operated by the Public Works Department of the City.

20 2112 202

Administration of the Departmerit The Department is under the management and control of the City h1anager, subject to the powers and duties D vested in the Board of Public Utilities, described below. The Department is supervised by the Director of Public Utilities, a professional engineer. The Department is organized in9 three divisions:

1. Water Division

2. Electric Division

3. Commercial Division He Board of Public Utilities The Board of Public Utilitics, created by Article XIII, Section 1301 of the City Charter, consists of five members appointed by the City Council. As set forth in Section 1302 of Article XIII, the Board of Public Utilitics, among other things, has the power and obligation to:

(1) Consider the annual budget for the Department of Public Utilities during the process of its prep-aration and make recommendations with respect thereto to the City Council and the City hianager. (2) Within the limits of the budget of the Department of Public Utilities, authorize and purchase of equipment, materials or supplies exceeding the sum of $2,000, and authorize the acquisition, construction, improvement, extension, enlarcement, diminution, or curtailment of all or any part of any public utility system. No such purchase, acquisition, construction, improvement, extension, enlargement, diminution or curtailment shall be made without such authorization. (3) Within the limits of the budget of the Department of Public Utilities, make appropriations from the contingency reserve fund for capital expenditures directly related to the appropriate utility function. (4) Require of the City hianager monthly reports of receipts and expenditures of the Dcpartment of D Public Utilities, segregated as to each separate utility, and monthly statements of the general condition of the Department and its facilities. (5) Establish rates for water and c!cctric revenue producing utilities owned, controlled, or operated by the City, but subject to the approval of the City Council. (6) Approve or disapprove the appointment of the Director of Public Utilitics, who shall be the de-partment head. (7) Designate its own secretary. (8) hiake such reports and recomn endations to the City Council regarding the Department of Public Utilities as it shall deem advisable. (9) Exercise such other powers and perform auch other duties as may be prescribed by ordinance not inconsistent with any of the provisions of the City Charter. Alembers of the Board of Public Utilities EDWARD J. CAslPUELL-Chairman of the Board of Public Utilities, appointed as a Board member in h! arch 1972. Businessman. Owner of Preston and Simons hfortuary. LFSTER G. Hrusris- Appointed as a Board member in 1968. Registered hiechanical Engineer in the State of California. Retired Chief Engineer, Alcan Westun Products, Division of Alcan Aluminum Corporation, in Riverside. WituAst C. EVANS- A Board member for 33 years; January 1937-December 1940, and continuously since January 1949. A civic leader and a former hlayor of Riverside. Former U.S. Army Base Engineer. Active in property management and investments. > d f. R U

CilARt.rs hf. Ross-Appointed as a lloard member in July 1967. Certified Public Accountant. Retired principal partner and founder of the firm of Ross, Landis and Pauw, Certified Public Accountants. TONY hl. Escumi.t.- Appointed as a lloard member in July 1972. Owner and Chairman of Iloard of Ilonita Enterprises, Inc., builder. Past commissioner, Riserside County Flood Control & Water Conservation District, Zone 1. Public Utilities Director Evrni:rT C. Ross- Appointed Director of Public Utilities Department of Riverside in 1958 following two years' service as Assistant hianager of the Department. Received a llachelor of Science in electrical engineering in 1947 from Stanford University. Registered c!cctrical engineer in the State of California. Senior member of the Institute of Electrical and Electronic Engineers. hiember of the American Water Works Association. Past Chairman of California Regional Water Quality Control lloard, Santa Ana Region, hiember of Iloard of Governors and Past President, California h!unicipal Utilities Association. New Management Programs The Public Utilities Department in September 1969 instituted one of the nation's first municipal utility scientific work management programs based on engineered work standards developed from hiethods-Time-hicasurement. This program has been applied to the construction and maintenance work performed by its field crews. Ily pre-planning and scheduling of jobs, a substantial increase in productivity of the water and electric crews has been experienced, with annual net benefits of over $330,000. Continued improvements in coverage, work standards, mi job methods are being made, which are expected to produce greater increases in operating ciliciency. New, improved techniques in customer service work in the water and electric utility commercial office have been instituted. In April 1972, new cathode ray tubes were installed in the utility's customer service oHice, tied directly to a new 11-3500 llurroughs computer, to permit instantaneous input and recall of customer information. This is one of the first on-line computer installations with viewing tubes for utility customer service in the United States. Faster and more etlicient senice to customers has resulted. TIIE ELECTRIC SYSTEM Inception of the S3stem The City of Riverside was a pioneer in the long-distance transmission and distribution of electric power. The municipal electric system which was constructed in 1895, was among the first eight such municipally owned systems in the State of California prior to the turn of the century. It has been fundamentally a sub-transmission and distribution system, though the City did generate part of its own power from 1900 to 1924. Power has been purchased exclusively from Edison from 1950 to May of 1976. At that time, Riverside began receiving non-lirm energy purchased from the Nevada Power Company and delivered to the City by Edison. The municipal electric system was created in response to public demand for more light at lower rates; the initial construction was financed by a $40,000 bond issue voted in June 1895 and another of like amount in 1900. (Prior to this a small private company had furnished power for lights in a few stores and homes and for a few street lights.) As the initial source of power for the municipal system was h>cated 20 miles from Riverside, the City contracted for construction of the first 10.000-volt transmission line of that length in the United States The original, specially designed transformers which stepped the power up to 10,000 volts at the power plant and then down to 2,200 volts in Riverside for distribution, thereby making possible Riverside's long distance line, are still preserved and were exhibited at the P 'nama Pacific International Exposition in San Francisco in 1915 as "the pioneer high voltage transformers of the world." 22 2112 204

Service Area The Electric Division of the Public Utilities Department, through its clectric distribution system, provides D service throughout the City to domestic, commercial, industrial, agricultural, municipal and other customers. The City commenced service on April 13,1966 to the Arlanza area annexed November 17,1961 and to the La Sierra area annexed May 7,1963; prior to this, both areas had been served by Edison. Part of the proceeds of the electric revenue b(mds sold March 1966, was to finance the consolidation of these areas into the existing municipal system. Prior to mid-1950, the Electric Division sold power

• s approximately 328 customers outside the City limits.

TP : City sold these distribution facilities to Edison and the California Electric Power Company for $74,876 on June 30,1950, in order to comply with the provisions of a wholesafe-resale basis service agreement for the pur-chase of electric energy solely from Edison; the City agreed not to sell any electric energy outside the City in the Company's service area now or in the future. Source of Power 1896-1900-During the first five years of the municipal electric system's existence, all power was purchvJ from a small (250 kw) hydroelectric plant built in 1892 in Mill Creek Canyon primarily to serve the City of Redlands by the old Redlands Power Company, a predecessor of Edison; the plant was the first of its kind in the United States. 1900-1913-The growth in demand for lighting and local street cars prompted the City to supp' ment its source of purchased power with its own steam-generating plant. This 450 kW plant was financed by a $40,000 bond issue voted in 1900. 1913-1924-Power was generated by the City and also purchased from Edison and the Southern Sierras Power Company, which later became the California Electric Pcwcr Company (Cal.-Electric). Operation of the City's steam plant was discontinued in 1924 due to its obsolescence relative to the service rendered by the modern interconnected power systems. 1924-1950- All power was purchased from the same two companies selling power to the City from 1913 to 1950. The City ceased to purchase power from Cal.-Electrie on February 1,1950 and since that date has purchased exclusively from Edison. Itrictly, this change came about following a request for a rate increase by Cal.-Electric to the State Public Utilities Commission; both companies had been charging the same rate prior to this. In essence the Commission determined that the best interests of the City of Riverside would be served by its purchasing power solely from Edison. (In exchange for ceasing ser ice to Riverside, Cal.-Electric acquired some of Edison's customers elsewhere.) 1950-1976- All the power requirements of the municipal electric system have been purchased wholesale from Edison, in May of 1976, the City of Riverside began receiving nca-firm energy purchased from the Nevada Power Company and delisered (wheeled) to the City by Edison. The Transmission Agreement between the City and Edison allows for a deduction, by Edison, of 3.3% of the energy transmitted to account for average transmission losses. Charges for transmission, dispatching and scheduling services are billed to Riverside by Edison under separate billing. Existing Facilities The municipal electric system is fundamentally a sub-transmission and distribution system providing service to virtually all electric customers within the City limits. Power is purchased wholesale from Edison at 66,000 volts and is supplied to the City limits through five separate 66,000-volt transmission lines owned and operated by Edison. These lines are uwd for the sole purpose of del:vering electric energy from Edison's Vista Substation to the northerly limits of the City of Riverside, at which points connections are made to the City-owned and operated 66.000-volt transmission system. D 2' 2112 205

Including street lights, the City has 1,197 circuit miles of sub-transmission and distribution lines. The 574 circuit miles of underground lines are primarily in commercial and new residential areas. Newly constructed substations and recent additions to existing stations provide ample distribution capacity for most any type of industrial or commercial load. There are now 18 substations, with a combined capacity of 434 MVA (million vrit-amperes). IllSTORICAL OPERATING DATA OF Tile ELECTRIC SYSTEM Sales and Ilesenue Rapid growth in power usage, revenues and number of customers has characterized the past 15 years. The municipal electric system now serves 59,054 customers (84CF greater than ir. 1961-1962), who used 880.2 million kWh in the 1976-1977 fiscal year (22006 above 1961-1962), generating revenues of $36,034,860 this past fiscal year (5800F higher than in 1961-1962). Domestic, commercial and industrial customers account for 93.006 of operating revenues, 95.4?'c of kilowatt hour usage, and for 99.6CF of the number of customers for the fiscal year ended June 30,1977. Other types of customers include municipal and agricultural. The source of revenues and usage of power are concen-trated neither in a singic or small group of customers nor in a certain type of customer-a healthy diversification exists, as exhibited in the following tables: Summarized in Tables 1 and 2 are selected items of statistical information concerning the facilities and historical operations of the City's Electric System and its customers for recent years. Table 3 enumerates the ten largest customers of the Electric System. TAllI.E I CITY OF RIVERSIDE EI.ECI RIC SYSTE.41 Sul>-Transmission and Distribution I.ines tincluding Street I.ights)

                  ?,'",'                                                       Circuit 31iles Ended                                       Oserhead         l'nderground             Total June 30                                         I.ines             I.ines              I.ines 1960.                                      .458.19              152.48              610.67 1961.                                      .472.63              153.22              625.85 1962.                                      .505.41              153.83              659.24 1963.                                      .512.71              154.74              667.45 1964.                                      .530.85              156.30              687.15 1965.                                      .549.51              160.50              710.01 1966.                                      .584.63              164.36              748.99 I967.                                      .614.00              i67.99              781.99 1968.                                      .609.99              178.71              788.70 1969.                                        627.49             188.40              815.89 1970.                                      .629.85              209.79              839.64 1971.                                      .625.11              230.08              855.19 1972.                                      .623.22              327.03              950.25 1973.                                      .624.44              353.70              978.14 1974.                                      .622.66              388.53            1,011.19 1975.                                        625.81             406.73            1,032.54 1976.                                       .625.13             41'      '

1,041.06 1977. .601.59 4 o .> . 1,086.90 1978. .623.41 573.91 1,197.32 SOURCE: City of Riverside Public Utilities Department. 24

                                                                                                   &n
                                                                                          ? I 1a")

TAIII E 2 CITY OF RIVERSIDE ELECTRIC SYSTEM Grow th Statistics Number of Customers by T3pe As of Ely Per Cent of Total June 30 Domestic Commercial Industrial Other Total Domestic Commer-ial Industrial 1968. .40,955 3,327 572 686 45,540 89.9 % 7.3%  ! .3 % 1969. .41,445 3,366 580 603 45,994 90.1 7.3 1.3 1970. .42,166 3,429 583 599 46,777 90.1 7.3 1.2 1971% .43,023 4,181 18] 206 47,591 90.4 8.8 0.4 1972. , .43,883 4,355 149 156 48,543 90.4 9.0 0.3 1973. .47,923 4,351 153 199 52,626 91.1 8.3 0.3 1974. .50,070 4,312 156 198 54,736 91.5 7.9 0.3 1975. .51,285 4,253 144 211 55.893 91.F 7.6 0.3 1976. .52,239 4,304 143 216 56,902 91.8 7.6 0.3 1977. .54,307 4,392 147 208 59,054 92.0 7.4 0.2 Electric Operating Resenues by T3 pe of Customer (000's omitted) l'iscal

g. ded Ily Per Cent of Total June 30 Domestic Commercial Industrial Other Total Domestic Commercial Industrial 1968 . $ 4,187 $2,976 $ 2,413 $ 557 $ 10,133 41.3% 29.4 % 23.8 %

1969, 4,179 3,047 2,381 516 10,123 41.3 30.1 23.5 1970, 4,533 3,083 2,649 576 10,841 41.8 28.4 24.4 1971 4,758 2,955 3,349 609 11,671 40.8 25.3 28.7 1972 5,294 3,362 3,814 821 13,291 39.8 25.3 28.7 1973 5,851 3.810 4,323 775 14,759 39.6 25.8 29.3 1974h 7,331 4,696 5,327 906 18,260 40.1 25.7 29.2 D 1975 1976, 12,026 12,876 7,473 8,911 8,477 10,110 1,143 1,338 29,119 33,235 41.3 38.7 25.7 26.8 29.1 30.4 1977. 13,707 8.882 10,971 2,475 36,035 38.0 24.6 30.4 Kilowatt ilour Usage by Ty pe of Customer (000% omitted) l'iscal I de i Ity Per Cent of Total

 . lune 30            Domestic      Commercial         Industrial        Other      Total     Domestic Commercial Industrial 1968.             .212,137         158,380           226,983         34,158     631,658       3 3.67c       25.1%         35.9 %

1969. .220,229 179,630 240,688 35,325 675.872 32.6 26.6 35.6 1970. .245,220 178,142 261,035 39,497 723,894 33.9 24.6 36.1 1971. .265,086 152,281 353,082 28,511 798,960 33.2 19.1 44.2 1972. .286,160 164,381 381,152 30,784 862,477 33.2 19.0 44.2 1973. .330.000 168,810 362,213 39.84I 900.864 36.6 I 8.7 40.2 1974. .298,173 172,892 371,460 39,372 881,897' 33.8 19.6 42.1 1975. .309,089 170,408 354,256 41,567 875,320 35.3 19.5 40.5 1976. .318,376 179,575 357,978 39,213 895,142 35.6 20.1 40.0 1977. .319,230 175,302 344,882 40,793 880.207 36.3 19.9 39.2 9 Beginning in August 1971, certain power users presionsly clawined as " Industrial" and "Other" were reclawined to "Commer-cial"

 @ Heginning in N!ay 1974. reflected in electric resenue is resenue derived from a fuel cost surcharge, which is basically a flow-through of increased fuel exper.sc to I:dison related to electric generation.

t 'Ihe decrease in usage between 1974 and 1973 was attributable to voluntary cut-backs encouraged by the foreign oil embargo and resulting energy crisis. The decrease in 1977 from the previous year stemmed from better load management by industrial and commercial customers and reduction of service to a major aluminum plant. SOURCE: City of Riverside Public Utilities Department. 25 2112 207

TABI.E 3 CITY OF RIVEllSIDE EI.ECTRIC SYSTEM Top Ten Customers,1977 Annual Total kWh Annual Customer T>pe of Business Purchased Bill University of California, Riverside. . State University . 46, t 44.000 $ 1,500,450 Alumax Mill Products, Inc., . Aluminum Mill Products, Sheet and Plate. 24.062,000 694,430 Rohr Industries, Inc. , . . Acrospace and Aircraft Components. 15,838,000 496,680 flourns, Inc. . . . . Precision Electro-Mechanical Instruments. I1,134.000 331,8(X) Loma I.inda University. . Private College . 7,911,000 268,970 County of Riverside. . .Ilati of Records. 7,725,000 263,230 Riverside County llospital. . . llospital 7,200,000 229,680 City of Riverside. . . Sewage Treatment Plant. 6,687,000 213,310 Riverside Community llospital. . llospital 6,462,000 206,140 City of Riverside. . City llall , 6,040,000 183,570 Total . . . I 39,203,(XX) $4,388,260 Percentage of System Total. . 15.8 % 12.2 % SOURCE: City of Riverside Public Utilities Department. l CAPITAI. Pl.ANNING Ifistorical Capital Improsements The development of Itiverside's municipal electric system over the past 15 years has been characterized by rapid growth,largely due to two factors: (I) the number of customers has increased by 77% since 1961-1962 as a result of population expansion due to both internal growth and annexation; the effect of the latter occurred primarily in 1966 when the Illectric Division began serving the Arlanza and I_a Sierra areas which had been annexed in 1961 and 1963, respectively; and (2) the greatly expanded electricity usage per customer. Kilowatt hours used has increased 225% since 1961-1962, due to a combination of greater use of appliances, particularly air conditioners, and commercial and industrial expansion. As the municipal electric system is fundamentally a sub-transmission and distribution system, the capital improvements constructed in the decade of the sixties were of that nature. Financial conservation has characterized the municipal electric system for more than half a century. The

$4,700,000 Issue of 1966 was the first bonding since 1900. Over the past 15 years 64.1% of the $36,459,319 of capital improvements was financed from current revenues; such contributions average almost $1.6 million annually.

Table 4 sets forth historical expenditures for capital improvements to the filectric System and indicates the source of funds for the fiscal years ended June 30,1962 through June 30,1977. 26 2112 208

TAIII.E 4 CITY OF RIVERSIDE l Financing of Electric System CapitalImprovements Current Fbral Revenues Year as a Ended Current Revenue l'er Cent June 30 Revenues Bonds'D Total of Total 1962.. . . $2,137,474 $ - $2,137,474 100.0 % 1963. 1,339,299 - 1,339,299 100.0 1964. 1,440,499 - 1,440,499 100.0 1965. . . 1,681,284 - 1,681,284 100.0 1966,. . 1,336,169 3,491,473 4,827,642 27.7 1967. . 1,479,773 909,158 2,388,931 61.9 1968. 1,797,034 198,399 1,995,433 90.1 1969. 1,593,142 - 1,593,142 100.0 1970. 1,846,517 343,607 2,190,124 84.3 1971. 1,659,862 1,647,052 3,306,914 50.2 1972. . 1,596,792 1,875,150 3,471,942 46.0 1973. , 1,869,207 1.399,496 3,268,703 57.2 1974. 1,468,785 1,191.524 2,660,309 55.2 1975. 1,046,172 1,516,894 2,563,066 40.8 1976. 1,077,567 516,990 1,594,557 67.6 1977. . 2,178,284 217,041 2,395,325 90.9 O Indicates rates of expenditure of proceeds of $4,700.000 Issue of 1966 Honds, $2,100,000 issue of 1969 Honds, $3.000,000 issue of 1971 Honds and $3.700.000 issue of 1973 Honds, and not the fiscal year in which the bonds were sold. Projected Capital Improsement Program g The projects scheduled for the six-year period covered by the Capital Improvement Program through June 30,1983 are necessary to provide a high level of service for the growing electric power requirements of industry, commerce and homes. The following is a summary of projects for the current and next five fiscal years:

1. Generation . $58,967,000

2. Underground Facil; ties 10,422,000

3. Overhead Facilities . 3 65,000

4. Substation Facilities , 2,730,000

5. Streetlighting Facilitics , 381,000

6. Other I acilities , 1,236,000 Total .576,701,000 The approximate timing of capitalimprovements has been planned as follows:

Fiscal Year Ending June 30 1978 .$ 2,528,000 1979 41,928,000 1980 11,299,000 198I 8,271,000 1982 6,109,000 1983 6,566,000 Total . $76,701,000 Note: Except for generating facilities, the policy is to generally fund 50G or more of capital improvements from revenues. 27 2112 209

ELECTRIC RATES , Area Rate Compariwns The electric rates in c!Icct on June 15,1978,in the City of Riverside were generally lower for the average and large domestic user than comparable rates charged by other utilities serving in cities su'rrounding Riverside. At the same tir . the commercial rates charged by Riverside were slightly above the rates charged by the utilities serving the sr . anding area. Although not shown in Table 5, the rates to industrial users were equal to the rates charged by Edison for comparable service in nearby cities. When economy energy is available from Nevada Power Company, the saving in purchased power expense is flowed through to all customers. This results in a slight advantage for Riverside industrial customers as compared to the surrounding area. TAIll.E 5 NINE SOUI'IIERN CAI.IFORNIA CITIES Electric Rate Compariwns by Monthly 11111 June 15,1978 Domestic Commercial 5,000 kWh 150 kWh 500 kWh 1,500 kWh 500 kWh 2.000 kWh (small hmall) (aierage) Carge) (small) (average) powern Anaheim 3 . 58.63 $22.96 $63.50 $35.97 $114.80 $255.05 Corona . 8.93 23.57 65.15 38.19 122.21 260.83 I.os Angelco , , 6.92 23.07 69.20 26.75 97.96 240.40 Ontario 8.93 23.57 65.15 38.19 122.21 260.83 Palm Springs, 8.93 23.57 65.15 38.19 122.21 260.83 Pomona 8.63 23.16 64.74 37.09 121.11 259.73 Riverside'0 . 8.92 22.86 59.87 40.68 133.24 279.22 San liernardino 8.63 23.16 64.74 37.09 121.11 259.73 Santa Ana 8.63 23.16 64.74 37.09 121.11 259.73

                % NIunicipal system.

SOURCli: City of Riverside Public Utilitics Department. City of Riserside Rate Schedules The f'ublic Utilities Department of the City of Riverside a, present has in c!Icct nine electric power rate schedules Schedule D -Domestic Service-described in detail on the following page. Schedule A -General Service-applicable to service for all type of users, including lighting. power and heating, alone or combined. Schedule TC -Trallie Control Service-for service to all trallic signals. Schedule C -Industrial Service- Applicable to service for industrial and processing establishments, where one or more products are manufactured or processed. Schedule PA -Power- Agricultural and Pumping-applicable to power service for general agriculture or for gneral water or sewage pumping; energy charge per kWh is based on the horse-power of the connected load. 28 2112 210

Schedule PW-1 -Wind Machines for Frost Protection-applicable only for service to wind machines for frost protection; energy charge per kWh is based on the horsepower of the connected load. Schedule LS-1 -Street Lighting Service-Department Financed-energy charged by flat rates per Lamp per year. Schedule LS-2 -Street Lighting Setvice-Customer Financed-energy charged by flat rates per Lamp per year. Schedule OL -Outdoor Lighting-Other than Street Lights-Department owned and maintained-energy charged by flat rates per lamp per month. The following is a summary of selected portions of the Schedule D for Domestic Service now in effect: Monthly Rate: Customer Charge . $ 1.20 Per kWh linergy Charge Per kWh (to be Added to Customer Chargel: I irst 60 kWh. 5.67( Next 240 kWh. 3.67t Additional kWh* 3.02 v

• The rate of 2.75c per kWh is billed for (a) customers with Department-approsed c!cctrie water heaters for monthly usage between 300 kWh and 750 kWh; (b) customers with electric space beating engineered to heat the entire family accommolation for all monthly usage over 300 kWh during the months November through April; and. (c) customers with all-electrie homes for all monthly usage over 300 kWh. These rates are subject to a fuel cost surcharge.

k Ililling and Collecting Procedure Residential, commercial and industrial customers are billed monthly. Ilills are due and payable on presenta-tion and become delinquent fifteen days after mailing. After a bill is delinquent, the Department may discontinue electric service and turn off the electricity after giving appropriate written notice. Charges for connection or reconnection of service, payments for deposits or to reinstate deposits, and the entire delinquent bill shall all be paid in full or other satisfactory arrangements made before ser ice shal; be connected or reconnected. FINANCIAL IIISTORY OF TIIE ELEC'lIIIC SYSTEM AND TIIE ELECTRIC FUND There is summarized in Table 6 the actual revenues, expenses, operating ratios, debt service coverage and other financial data of the Electric System for the fiscal years ended June 30,1968 through June 30,1977. Table 7 sets forth the revenue, cxpense, and total net income of the Electric Utility Fund for the fiscal years ended June 30,1973 through June 30,1977. Table 8 analyzes the changes in retained earnings of the Electric Fund for that same period. Table 9 shows interim statements of revenue and expense of the Electric Fund for the nine months ended March 31,1978, and March 31,1977, derived from unaudited financia! reports of the City. Table 10 summarizes the llalance Sheets of the Electric Fund as of June 30 of each year from 1973 through 1977. 29 2117- L s: g

TABl.E 6 CITY OF RIVERSIDE ELECI'RIC SYSTE31 Comparatis e Statements of Actual Reienues and Espenws, Operating Ratios, and Debt Seriice Coverage Debt Total Senice Per Cent of Coverage meal Income Trander ranna Rmoue by Net Year Net Other Available to Ended Operating Operating Operating Income For Debt Debt General Operating Debt Operating June 30 Revenues Espenws Retenues (Net) Senice Senice Balance Fund Balance Expenws Senice Revenues y 1968 . $ 10,132,508 $ 6.883,778 7,343,703

                                                    $3,24R,730 2,779,236
                                                                $ 79,255 80,483
                                                                           $3,327,985 2,859.719 5 332,407 324,658
                                                                                                     $2,995,578 2,535,061
                                                                                                                  $1,011,163 1.165,238
                                                                                                                             $1,984,415 1,369,823 67,9 fc 72.5 3.3 rc 3.2 9.8 x 8.6 1969 D      10,122,939 1970        10,841,019         8,084,527      2,756,492  286,034    3,042,526       390.286   2.652.240    1,164,138  1,488,102   74.6      3.6      7.1 1971        11,744,099         8,723,722      3,020,377  142,189    3,162,566       523.112   2.639,454    1,246,717  1,392,737   74.3      4.5      5.8 1972        13 290,601       10,206,116       3,084,485  256.163    3,340,648       782,512   2,558,136    1,350,571  1,207,565   76.8      5.9      3.9 1973        14,758,609       10.815,967       3,942,642  213,010    4,155,652       762,550   3,393,102    1,528,419  1,864.683   73.3      5.2      5.2 1974        18,259,934       13,809,172       4,450,762  507,217    4,957,979     1,072,985   3,884,994    1,697,240  2,187,754   75.6      5.9      4.1 1975        29,119,048       23,458,719       5,660,329  539,677    6,200,006     1,046,986   5,153,020    2,085,407  3,067,613   80.6      3.6      5.4 1976        33,235,382       28,249,146       4.986.236  465,673    5,451,909       963,717   4,488,192    2,679,665  1,808,527   85.0      2.9      5.2 1977        36,034.860       31,479,140       4,555,720  480,018    5.035,738       994,985   4,040,753    3,077,479    963,274   87.4      2.8      4.6 y
      @ Rate reduction of S rc effective July 1,1968.

SOURCE: City of Riverside Public Utilities Department, N O h

TABLE 7 CITY OF RIVERSIDE El ECIRIC FUND Comparatise Statements of Resenue and Expense Year Ended June 30 1977 1976 1975 1974 1973 OPERATING REVENUES Electric Sales Domestic Sales , . . . $ 13,706,804 $ 12,875,919 $ 12.025,640 $ 7,331,226 $ 5,851,137 Commercial and industrial Sales. , 20,793,573 19,021,370 15,950.757 10,022,514 8,132,821 N!unicipal Sales 1,336.056 1,198.133 1,095,406 868,738 745,332 Total Electric Sales. . 35,836,433 33,095,422 29,071,803 18,222,478 14,729,290 Other Operating Revenues. 198,427 139,960 47,245 37,456 29,319 Total Operr. ting Revenues, , 36,034,860 33,235,382 29,119,048 18,259,934 14,758,609 LESS: OPERATING REVENUE DEDUC-TIONS IIEFORE DEPRECIATION Total Operating Expenses. . 31,479,140 28,4n4,346 23.458,719 13,809,172 10,815,967 NET OPERATING INCOh!E IlEFORE DEPRECI ATION . 4,555,720 4,831,036 5,660,329 4,450,762 3,942,642 1.ESS: DEPRECIATION 1,584,682 1,548,756 1,486,275 1,441,578 1,325,321 NET OPER ATING INCONIE. , 2,971,038 3,282,280 4,174,054 3,009,184 2,617,321 ADD: NON-OPERATING INCON1E Interest Revenue 195,024 313,315 399,482 388,687 107,940 Sundry Revenue 284,994 152,358 ~ 140,195 118,530 105,070 Total Non operating income. 480,018 465,673 539,677 507,217 213,010 1OTAL INCOA!E 3,451,056 3,747,953 4,713,731 3.516,401 2,830,331 LESS: NON-OPERATING EXPENSES. Interest Expense-Revenue !!onds, 544,985 570,985 596,985 622,985 437,550 Ilond Sale Expense. , 3.068 - - - 26,262 Total Non-operating Expenses. 548,053 570,985 596,985 622,985 463,812 TOTAL N ET INCONIE .$ 2.903,003 $ 3,176,968 5 4,116,746 $ 2,893,416 $ 2,366,519 SOURCE: Audited Annual Financial Reports of the City. TABLEN CITY OF HIVERSIDE El EUIRIC FUND Comparatise Analyses of Changes In Retained Earnings Year Ended June 30 1977 1976 1975 1974 1973 IlEGINNING IIAI.ANCE, July I . . $ 26,352,655 $25,885,002 $24,091,773 $ 23,028,734 $20,546,609 ADDITIONS Net Income . 2,903,003 3,176,968 4,116,746 2,893,416 2,366.519 Settlement from Southern California Edison. - - - 61,128 1,784,185 Accrued Interest on 1973 Ilond Issue, - - - - 17,520 TotalInlance and Additions. 29.255,658 29,061.970 28,208,519 25.983.278 24,714,833 DEDUCTIONS Payment to General Fund. 3,077,479 2,679,665 2,085,407 1,697,240 1,528,419 I.oss on Retirement of Utility Plant. 35.933 9,857 59,675 95,026 37,707 Adjustments to Retained Earnings. 4,842 19,793 23,235 9,239 16,643 Transfer to Special Capital Improvement Fund. - - 155,200 90,000 90,000 Transfer to Central Garage Fund. - - - - 13,330 Total Deductions 3.118,254 2,709,315 2,323,517 1,891,505 1,686,099 ENDING llAI.ANCE, June 30. , $26,137,404 $26,352.655 $ 25.88 5,002 $24.091.773 $23,028,734 SOURCE: Audited AnnualIinancial Reports of the City,

TAIll.E 9 CITY OF KlVERSIDE EI.ECIRIC FUND Interim Statements of Resenue and Expenw for Nine Stunths Ended Starch 31,1978 and 1977 (Unaudited) 1978 1977 OPERATING REVENUES Electric Sales Domestic Sales . , $ 12,997,257 $ 10,450,178 Commercial and Industrial Sales. 17,950,068 15,434,909 Niunicipal Sales ,, 1,133,919 995,581 Total Electric Sales. 32,081,244 26,880,668 Other Operating Rever.ucs. 200,744 183,284 Total Operating Revenues. 32,281,988 27,063,952 1.ESS: OPERATING REVENUE DEDUCllONS IIEFORE DLIPR ECI ATION Operating Expenses . 27,254,732 23,358,046 NET OPERATING INCONIE IIEFORE DEPRECIATION 5,027,256 3,705,906 LESS: DEPRECI ATION I,206,128 1,160,426 NET OPERATING lNCONIE. 3,821,128 2,545,480 ADD: NON-OPER ATING INCON1E Interest Revenue 126,628 96,339 Sundry Revenue 115,352 246,158 Total Non-Operating Income. 241,980 342,497

 'lOTAl. INCONIE                                               4,063,108      2.887,977 I.ESS: NON-OPERA'llNG EXPENSES Interest Expense-Revenue licnds.                          467,363        408,738
 'IOFAL NEI INCON1E                                        .$ 3,595.745     $ 2,479,239 SOURCE: Unaudited Quarterly Reports of the lilectric I und.

I 2112 214 32

TAllLE 10 CITY OF HIVERSIDE ELEClHIC IcOND l Comparatis e llalance Sheets June 30 1977 1976 1975 1974 1973 Assets CURRENT ASSETS Cash , , , $ 5,360,806 5 2,653,865 $ 1,750,274 $ 489,555 $ 145,8 m Interest Receivable , ,. - - - - 28,700 Accounts Rece4vable-Net , 43,539 29,987 40,382 21,993 15,853 Utilities Accounts Receivable-Net. 2,668,599 3,409,350 2,921,957 2,023,646 1,269,182 Due from Riserside County. , 1,018 977 1,822 875 3,225 Prepaid Expenses , 2,500,(xx) - - 6,031 10,036 Total Current Assets. . 10,573,962 6.094,179 4,714,435 2.542,100 1,472,846 REVIRICTED ASSETS - Cash With Fiscal Agent. 52,090 43,405 100,673 68,621 29,528 Cash-Edison Settlement . 926,147 1,399,817 1,400,348 1,559,180 1,584,000 Cash - Revenue llond Service. 329,227 214,298 218,710 223,Il3 227,507 Cash-Revenue llond Reserve. . 931,114 888,932 805,270 687,321 539.828 Cash-Re,'enue Hond Construction. - 217,NI 767,520 2,085,879 3,292,291 Total Restricted Assets. 2,238,578 2.763,493 3,292,521 4,624,114 5,673,154 OlllER ASSE~IS . 541,867 505.063 505,063 _ 505,063 505,063 UTILIIY PI ANT IN SERVICE-Utility Plant 47,120,218 45,301,568 42,923,927 41,057,941 37,488,395 1 css: Allowance for Depreciation, 14,562,084 13,075,211 11,784,289 10,534,543 9,320,273 Net Utility Plant in Sersice, 32,558,134 32,226,357 31,139,638 30,523,398 28,168.122 Total Construction Work in Progress. 2,532,164 1,50P,417 2,130,303 1,385.261 1,898,220 Total Utility Plant in Service and Construction Work in Progress. 35,090,298 33,734,774 33,269,941 31,908,659 30,066.342 Total Assets, .548,444,705 $43,097.509 $41,781,960 $30,579,936 $ 37,717,405 Liabilities Resers es, Contrihutions and Retained Earnings CURRENT LI ABILITIES (Payable from Current Assets) Acccunts Payable , , $ 5,263,069 $ 2,615,524 $ 1,781,677 $ 1,336,512 $ 888.526 Accrued Payroll 56,224 40,743 20,951 10,113 o,766 I ong Term Debt Due Within One Year, 850,000 450,000 450,000 450,0(x) 450,000 Lease Purchase Obligations, 67,600 - - - - Total Current Liabilities (Payable from Current Assets) 6.236,893 3.106.267 2,252,628 1,796,625 1,348,292 CURRENT LIAHILITIES (Payable from Restricted Assets) Construction Accounts Payable. 24,031 , 5,734 39,941 188 39,896 Matured Hond Interest Payable. 52,090 43,405 95,673 68,621 29,528 Matured Ilond Principal Payable, - - 5,000 - - Iotal Current Liabilities ( Pavable from Restricted Assets), 76,121 49,139 140,614 68,809 69,424 LONG TERM DEllT (l.ess Portion Due Within One Year) . I1,960,000 10,310,000 10,760,(x x) 11,210.000 11,660,000 RESERVE FOR INSUR ANCE. - - - II,0 W 11,000 CON TRillUTIONS IN AID OF CONS I RUCTION 4,034,287 3,279,448 2.743,716 2,401.729 1,599.955 RETAINED EARNINGS 26,137,404 26.352.655 25,885,002 24,091,773 23,028,734 Total I. labilities, Resers es, Contributions and Retained Earnings. , $48,444,705 $43,097,509 $41,781,960 $39,579,936 $37,717,405 SOURCE: Audited Annual Iinancial Reports of the City. 33 2112 215

ELECTRIC REVENUE HONDS Outstanding and Proposed Debt The City sold $4,700,000 Electric Revenue Bonds. Issue of 1966, on March 29,1966; $2,100,000 Electric Revenue Bonds, Issue of 1969, on January 6,1970; $3,000,000 Electric Revenue Bonds, Issue of 1971, on June 8,1971; $3,700,000 Electric Resenue Bonds, Issue of 1973, on March 20,1973; and $2,500,000 Electric Revenue Bonds, Issue (Subordinated) of 1977, on April 12,1977, of which $11,960,000 remain outstanding. On delivery of the Bonds, $54,960,000 electric revenue bonds will be outstanding and payable from rev-enues of the Electric System. Debt Service Requirements and Coserage by Income The maximum future annual debt service requirement on the outstanding bonds and the proposed Bonds will amount to $4,078,348 (6% % interest rate assumed) during the 1983-1984 fiscal year, as shown in Table

12. This requirement would have been covered 1.70 times by the $6,937,438 Pro Forma income available for debt service during the fiscal year ended June 30,1977, as shown in Table 11.

TABl.E I1 CITY OF RIVERSIDE EI.ECTRIC FUND Pro Forma Resenues Asailable for Debt SersiceL Year Ended June 30,1977 Pro Forma Gross Revenues. . $39.801,678 Operating Expenses Excluding Depreciation. 32.864.240 Pro Forma Revenues Available for Debt Service. . $ 6,937,43 8

              @ Gross revenues adjusted to include 909 of retail electric rate increase as of October 1,1977, 100% of rate decrease as of June 1,1978, and 909 of net additions to the Electric System through June 30,1978.

2112 21o 34

TABI.E12 CITY Ol' RIVERSIDE EI.ECIRIC I/UND Estimated Debt Senice Requirements Propowd Electric Resenues lionds Fiscal I""'Of1978 Year Prewntly Oustanding Electric Resenue Estimated Electric Resenue Bonds Bonds-Iwucs of 1966,1969,1971 and 1973 Total Ending Interest Iwue tsubordinated) of 1977 Estimated June 30 Principal Interest Total Principal at 6829 Total Principal Interest Total Debt Sersice 1979 $ 450,000 $ 494.840 $ 944,840 $ -

                                                                           $        - W $            -    $ 800.000 $ 74,100 $ 874,100           $ 1,818,940 1980            450.000        469,995        919.995         -              -    P           -       850,000          42,438     892,438    1,812.433 1981            450,000        444.955        894,955         -              - *              --

450,000 9,000 459,000 1,353,955 1982 450,000 419.880 S69.880 - - T - - - - 869,880 1983 450.000 396,270 846,270 - 698.750 0 698,750 - - - 1,545,020 1984 455,000 374,415 829.415 500.000 2.080.000) 2,580.000 - - - 3 409,415 1985 455,000 352,910 807,910 525,000 2,745,438 3,270,438 -- - - 4,078,348 1986 455,000 331,370 786,370 575,000 2,709.687 3.284,687 - - - 4,071,057 1987 455,000 309.670 764,670 600,000 2.671,300 3,271,500 - - - 4,036,170 1988 455.000 287.845 742,845 650,(MM) 2.630.875 3.280.875 - - - 4.023,720 1989 460,000 266,020 726,020 675,000 2,587.813 3.262,813 - - - 3,"88.833 1990 460.0(X) 243,873 703.873 725,000 2,542,312 3,267,312 - - - 3,971,185 1991 460.000 221.627 681.627 775.000 2,493.563 3,268.563 - - - 3,950,190 1992 460.000 199,365 659,365 825,000 2,441.562 3,266,562 - - - 3.925,927 w 1993 460.000 177.014 637,014 875,000 2.386,313 3,261,313 - - - 3.898,327 1994 460,000 154,471 614.471 925,000 2,327,812 3,252,812 - - - 3,867,283 1995 460,00() 131,929 591,929 1 hK).000 2.265,250 3.265,250 - - - 3,857,179 1996 460,000 109,386 569,386 1,050,000 2,198.625 3.248.625 - - - 3,818.011 1997 295.000 86,844 381,844 1,125,000 2,127,938 3,252.938 - - - 3,634,782 1998 295,000 70,281 365,281 1,200,000 2,052,375 3,252,375 - - - 3.617,656 1999 295.000 53,719 348,719 1,275.000 1,971,937 3.246,937 - - - 3,595,656 2000 295,000 37,156 332,156 1.375.000 1.885,813 3,260,813 - - - 3,592,969 2001 225,000 23.000 248,000 1,450.000 1,794.000 3,244.000 - - - 3.492.000 2002 125.000 11.250 136,250 1,550.000 1,696,500 3,246,500 - - - 3,382,750 2003 125.000 5.625 130,625 1,650,000 1 <592.500 3,242,500 - - - 3.373.125 2004 - - - 1,750,000 1,482,000 3.232,000 - - - 3,232,000 N 2005 - - - 1,875,000 1,364,187 3.239,187 - - - 3.239,187

 -     2006                -             -              -      2,000.000      1,238,250        3.238,250         -              -           -       3.238,250
 ~     2007                -             -              -      2,125,000      1.l N.188        3.229,188         -               -          -       3,229,188 y      2008                -             -              -      2,250,000        962.000        3.212,000         -              -           -       3,212,000 2009                -             -              -      2.400,000        810.875        3,210,875         -              -           -

3.. . ' " 2010 -- - - 2,550,000 650,000 3.200.000 - - - 3,200.000

    ~

2011 - - - 2,725,000 478,562 3.203.562 - - - 3.203,562 ~ 2012 - - - 2,900,000 295,750 3.I95,750 - - - 3 I95,750 2013 - - - 3,100.000 100,750 3.200.750 - - - 3.200,750

                   $9.860,000 $5,673,710 $15.533,710         S43.000,000 $54.387.125        $97.387,125   52,100.000 $125,538 $2,225,538         $115,146,373 0 Excludes interest funded from Bond proceeds.

CITY OF IIIVF.ItSIDE: FINANCIAI, The lionds will not be sceured by any pledge of ad valorem taxes or General Itund revenues but will be pay-abic solely from the gross sevenues of the City's !!!cetric System. 'lhe financial and economic position of the City of Itiverside set forth below and on the following pages is included in the Ollicial Statement for information pur-poses only,in the interest of giving a more complete description of the City. Auditors The City's financial auditor since 1961 has been Thomas, Ilyrne & Smith, certified Public Accountants, Itiverside, California. Included in this Ollicial Statement as Appendis it are selected schedules from the City of Itiverside audited Annual Itinancial iteport for fiscal year 1976-77.

'esenues and F.spenditures A ten-year hi, tory of general City revenues by source and expenditures by function, as reported in the City's audited Annual l'inancial Iteport, 1976-77 (latest available), comprises Table 13.

2112 218 8

TABI.E13 CITY OF RIVERSIDE General City Resenues by Source Taxes Fiscal Total (Other Res enue Charges Year Property than From for Utility I.icenses Interest Ended Tat Property Other Current Funds Fines and and and June 30 CoIIcctions Taxes) AgenciesI Sersices Contributions Forfeitures Permits Rents 31iscellaneous? Total 1968. . $ 2,929.107 $ 3.156,534 5 3.002.174 $2.337,270 $1.286.137 $558,759 $ 445.033 $390,919 (167,459 $14,273,392 1969. 3,034,217 3.387,657 3,097,471 2.981.145 1,482.447 741,036 491.477 417.422 197,197 15,830.069 1970. 2,955.321 3,175,562 4.112,746 3.300,559 1,474.905 815,520 516,138 502,561 129,071 16,982,383 1971. 3,!05,231 4,467,556 4,989.054 3,718.821 1.593.686 767,014 678.236 414,178 450,242 20,184,018 1972. 3.381.375 5.399,837 4.810.909 4.472,785 1.727.061 788.031 901.053 373.878 160,448 22,015.377 1973. 3.571.252 6,106.530 7.791,766 4,513,70N 1,952,776 812,524 942.327 295,228 441,527 26,427.638 1974. 3,381.226 6.866,934 8.515.837 4,19 N.3 5 2 2.125 460 680,328 1,202,167 550.561 276.125 27,796.990 1975, 3.601.056 7,830,169 9,105.250 4.194.194 2,573.130 684.006 1,402,388 643,510 205,943 30,219.646 1976, 3.943,790 8,778.902 12.355.684 4,498.495 3.246,193 681,166 1.887,338 454,657 263,568 36,109.793 1977. 4,451,460 10,135.409 13,224.846 5.840.892 3.829,735 819.142 3.343.558 495.518 103,299 42,243.859 General Gosernmental Espenditures by Function u Public h rLs l'i cal and Senice Cisic Center Year (including %Iuseum Ended Sew age Public Parks and General DMt June 30 Disposall Safety Recreation l ibraries Gos ernment IIcalth ? Retireme nt Other Senice Total 1968. .5 6,772,085 $ 4.547.188 $ 1.648,669 51,103,744 5 807.162 $ 16.416 $ - S - S 775,5 0 515,670.554 1969. 5.798.871 5,055,347 2.062,683 1,239,968 859,543 16,606 - - 759.840 15.792,858 1970 6,203.020 5.772,856 1.959.148 1,361.634 987.883 17.243 - - 851,960 17,153,744 1971. 8.020,349 7,221.463 2.183.272 1,433,876 1.046,909 17,000 - - 871,810 20.794.679 1972. 6.924.613 7,607.995 2,919.621 1,604.443 1.274.562 17,810 - - 924.783 21.273.827 1973. 8.803,170 8.460.121 2,h38.544 1.693.745 I.574,117 20.508 - - 911.476 24,101.681 1974. 8.325.256 9,700,741 3.361.623 1,943.630 I,679.739 62.004 - - 881,059 25.954.052 10,533,995 10,589,169 4,627,649 2,193,857 2,023,538 56,140 30.874,109 N 1975. 10,798.432 11,670,440 5.152.543 2.817.985 2.007,313 24.084 849.761 33,999,149 _ 1976. - 690.424 9 837.928 1977. 11,848.599 13,072.812 6.061.776 2.556,691 2,435.291 - - 439.0041 1,146.152 37,560,325 N T Includes State-collected locally shared taxes.

    @ Excludes bond sales proceeds.
    $ Under State law, the County is required to proside basic health services in the City of Riverside. Thew expenditures reprevnted only the cost of additional health

~ services contracted by the City. 9 T Housing and Community Development Grant funds expended for redeselorment and rehabilitation. SOURCE. City of Riverside Annual Financial Report, 1976-77,

Financial Statements For informative purposes. Table 14 presents comparative City General Fund Statements of Revenues, Expenditures, and Changes in Fund Italances for the five liscal years ended with 1976-77 (latest audited state-ments availal,le). Table 15 shows comparative General Fund llalance Sheets as of June 30,1973 through 1977. TAllLE 14 CITY OF HlVERSIDE General Fund Comparatise Statements of Resenues, Es;nnditures and Changes in Fund Halances Year Ended ,Iune 30 1977 1976 1975 1974 1973 REVENUES Property Taso . $ 3,301,675 $ 2,838,876 $ 2,574,339 $ 2.443,479 $ 2,583,630 Sales and U<e Tases. 6,421.355 5.413,319 4,832,203 4,470,470 4,062,867 Other Tasci . 3,714,054 3,219.027 2.868,581 2,278,745 2,064,357 1.icenses and Permits. 1,528,763 1,115.092 863,761 1,131,795 926,425 Fines, Forfeitures and Penalties. 130,326 117,082 126,495 102.669 106,826 Interest and Rents, 299,842 223,707 277,426 28n,738 227,802 Revenue from Other Agencies. 4,181,667 2,744,298 2.647,280 2,704,397 1,872,497 Charges for Current Sersices. 1,065,083 726,922 496,689 397,983 441,174 Municipal Electric Fuad Contributions. 3,077,479 2.679,665 2,085,407 1,697,240 1,528,724 Municipal Water Fund Contributions, 752,256 566,528 487,723 428,220 424,052 Other Sundry Resenues 41,525 131.775 32,166 78,365 59,294 Total Revenues . 24,514.025 19,776,291 17,292,070 16,020,101 14,297,648 EXPENDITURES General Gosernment , 3,886,091 2,010,592 1,976.290 1,654,947 1,552,500 Public Safety 12,900.177 I I,6 33,006 10,446,296 9,005,267 8,394,464 Public Works and Services. 3,844,028 3,836,951 3,753,016 3,090,064 2,839,124 Parks, Recreation and Cultural. 3,369.354 3,289,353 3,366,571 2,929,888 2.461,552 Public Ilealth , - - - - 20,508 Total Espenditures 23,999.650 20,769,902 19.542,173 16,680,166 15,268,148 Deduct AmountsCharged toSpecial Revenue Funds 2,380,816 2,252,047 2,513.011 - - Net Expenditures 21,618,834 18,517,855 17,029,162 16,680.166 15,268.148 Escess(Deficit)of Resenues over Net ISpenditures 2,895,191 1,258,436 262,908 (660,065) (970,500) FUND llAI.ANCE AT flEGINNING OF YEAR 1,727,253 504 ~43 223,926 662,725 1,228,327 ADDITIONS Contributions from Other Funds. 450,000 269,342 - 743,658 800,853 Reservations of Fund Halance at lleginning of Year , 550,053 434,850 693,084 549,114 473,903 Accrued Resenue at lleginning of Year. 386,216 - - - - Prior Year Adjustments. - - - - 1,603 Total , 6,008,713 2,467,171 1,179,918 1,295,432 1,534,186 DEDUCTIONS 594,139 26,155 139,582 349,832 256,176 Contributions to Other Funds. Reservations of Fund llalance at End of Year. 1,043,883 550,053 434,850 693,084 607,050 135,791 163,710 100,943 28,590 8,235 Other Adjustments to Fund llalance, Total 1,773.813 739,918 675,375 1,071,506 871,461 FUND llAl.ANCE AT END OF YEAR. . $ 4,234,900 $ 1,727,253 $ 5N,543 $ 223,926 $ 662,725 SOURCE: Audited AnnualIinancial Repotts of the City. 3s 2112 220 I

TAllLE 15 CITY OF RIVERSIDE h General Fund Comparative Balance Sheets June 30 1977 1976 1975 1974 1973 ASSETS Cash . . . .55,370,679 $2,304,195 $ 1.1., .35 5 879,974 $ 1,364,515 Accounts Receivable-Net . I19,598 71,026 113,418 58,439 57,218 Due from Other Funds-Net. . 493,191 607,534 170,918 136,876 97,006 Due from Other Governmental Agencies. 711,070 198.443 205,441 252,815 198,760 Prepaid Expenses . . 135,635 140,345 116,728 130,450 134,030 Amount to be Prosided for Contract and 1. case Purchase Obligalons . . 398,849 489,408 624,779 510,245 701,593 Restricted Asseis-l'ul,lic Employment Program-Net - - - 9,999 183,269 Total . . . $7,229,022 $3,810.951 $2,375,539 $ 1,978,798 $2,736,391 1.I Allll.lTIES, RESERVES AND FUND IIALANCE Accounts Payable , , , . $ 1,374,166 $ 1,029,826 5 805,085 $ 515,996 $ 491,658 Due to Other Funds. , 156,306 - - - - Deferred Revenues 20,918 14,411 6,282 25,548 90,096 Contract and I case Purchase Obligations. 398,849 489,408 624,779 510,245 701,593 Accounts Payable from Restricted Assets. - - - 9,999 183,269 Total Liabilities 1,950,239 1,533,645 1,436,146 1,061,788 1,466,616 Reserves 1,n43,883 550,053 434,850 693,084 607,050 Fund llalance . 4.234,900 1,727,253 504,543 223,926 662,725 Total . .. . . $7,229,022 $3,810,951 $2,375,539 $ 1,978,798 $2,736,391 SOURCli: Audited Annual Iinancial Reports of the City. Assessed Valuations and Tax Collections Taxes are levied for each fiscal year on taxable real and personal property which is situated in the City as of the preceding March 1. For assessment and col!cetion purposes, property is classified either as " secured" or

 " unsecured" and is listed accordingly on separate parts of the assessment roll. The " secured roll" is that part of the assessment roll containing State-assessed public utilities property and property the taxes on which are a lien on real property suflicient, in the opinion of the County Assessor, to secure payment of the taxes. Other property is assessed on the " unsecured roll."

Property taxes on the secured roll are due in two installments, on November I and February I of the fisca! year. If unpaid, such taxes become delinquent on December 10 and Api.i 10, respectively, and a 6% penalty attaches to any delinquent payment. In addition, property on the secured roll with respect to which taxes are delinquent is sold to the State on or about June 30 of the fiscal year. Such property may thereafter be redeemed by payment of the delinquent taxes and the delinquent penalty, plus a redemption penalty of 1% per month to the time of redemption. If taxes are unpaid for a period of five years or more, the property is deeded to the State and then is subject to sale by the County Tax Collector. Property taxes on the unsecured roll are due as of the March I lien date and become delinquent, if unpaid, on August 31 of the fiscal year, A 6% penalty attaches to delinquent taxes on property on the unsecured roll, and an additional penalty of 1% per month begins to accrue beginning November 1 of the fiscal year. The taxing authority has four ways of collecting unsecured personal property taxes: (1) a civil action against the taxpayer; (2) filing a certificate in the c!! ice of the County Clerk specifying certain facts in order to obtain a judgment lien 39 2 1 1 <^ m^ "s-

on certain property of the taxpayer; (3) Eling a certincate of delinquency for record in the County itecorder's office,in order to obtain a lien on certain property of the taxpayer; and (4) scirure and sale of personal property, improvements or possessory interest belonging or assessed to the assessee. Total assessed valuation of all taxable property in the City of Itiverside increased from $258,300,630 to $542,360,646 at an average annual rate of approximately 7.7% from 1967-68 to 1977-78 Such assessed valu-ations include secured and unsecured properties assessed by the Iliverside County Assessor, and secured utility properties assessed by the State lloard of liqualization. 'Ihey are before deduction of State-reimbursed home-owner's and business inventory exemptions beginning in 1969-70 but exclude veterans, religious, charitable, and other such nonrecoverable exemptions lixcluded also are the incremental assessed valuations within redevelop-ment project areas, the revenues from which were allocated to the Itiverside Itedesclopment Agency in the years beginning with 1975-76. T he State lloard of I!quali/ation determined that the 1977-78 Itiverside County valuations averaged 24.19 of full market value, and that same lloard's ratio of assessed to full market value of utility properties was 25%. Itased thereon, the 1977-78 estimated full market value of all taxable property in the City of Itiverside was

$ 2,282,108,256.

In addition to an Il-> car record of assessed valuations, Table 16 shows the City tax lesies, collections, and collection percentages for the iust ten completed Oscal years. Collections of current levies in each year averaged 95.8%, and total ec' lections averaged 99.7%, Also shown in Table 16 is an i1-year history of property tax rates lesied on the securcJ roll in a typical tax code area in itiverside by the City and overlapping taxing agencies. TAHl.E16 CIIY OF HIVEHNIDE Awcwed Valuations, Tu , Collections, and Tas Rates Per Cent of Current Year's Tases Natio riscal Aucued Heeelted of Total Year Valuation Total Total During Collec tions ceured Hou .fas Mate Ended All Tasuble Tus Tus Current to Total Cry of Userlapping June 30 Propertfo I.ety Collection # Year Tas I.ety Hit erside Agenrics Total 1968 . $ 258,300,630 $2,918,797 $2,929,107 96.8 % 100.4 % $ 1.1300 $ 7.8639 $ 8.9939 1969 , 266,N 16.310 3,015.024 3,034,217 97.3 100.6 1.13(H) H.3294 9.4594 1970 279,265,432 2,95 H,343 2,955,321 95.9 99.9 1.1300 8.9250 10.0550 1971 296,740,661 3.113,037 3,105,231 96.7 99.H 1.13)0 9.30(H) 10.4300 1972 322,768.0M4 3,409,436 3,381,375 95.4 99.2 1.1300 9.5780 10.7080 1973 336,H 23,772 3,563,196 3,571,253 95.6 100.2 1.1300 9.6150 10.7450 1974 355,837,058 3,403.294 3,371,122 95.4 99.1 1.1300 9.3010 10.4310 1975 385,907,138 3,687,559 3,5 H 4,477 93.6 97.2 1.1300 8.9400 10.0700 1976 416,491,63 l " 3,974.909 3,926.906 94.2 98.8 1.1300 9.N760 Il.0060 1977 451,298,331:" 4,363,320 4,432,360 97.3 101.6 1.1300 10.1290 11.2590 1978 542,360,646'" 4,855,572 n.a. n.a. n.a. i.0100 9.070 t o 4470 m Grow awcwed valuation Icw all esemptions, plus the homeow ners' and businew inventory esemptions beginning in 1969-7u, the taxes on which are paid by the State of California.

@ Includes prior years.

• Escludes incremental aucwed saluation in the redevelopment project area, the tases on which aic payable to the Redevelop-ment Agency.

SOURCE: City of Rise side Annual l'inancial Reports t 2112 222

Major taxpayers in Riverside and the secured taxes paid by each in 1977-78 are shown in Table 17. TAlli.F 17 ClI Y (!F HIVERSIDE Major Property Taspayers, 1977-78 Tases Paid, Taspa3 er 1977-78 n Pacific 'lelephone Company , . $3,014,506 Southern California Gas Company. . 2,467,421 Amcord (American Cement Co.) . . 690,221 Southern Pacific Transportation . . 557,298 Kohr Industries , . . . 526,958 Ow ens-Illinois, Inc. 404,528 Pacific 1.ighting Service Co. 390,858 llourns, Inc. 381,898 J. C. Penney Properties. . 377,180 Alumax Aluminum Products Co.. 335,724 7' Total pa>ments to County of secured roll lesies liy all tasing agencies. SOURCl!: Rivenide County Tas Collector. Recent Constitutiona! Amendment Under State law, all properties pencrally were assessed by the County Assessor at 25% of full cash value. California voters, on June 6,1978, approved Proposition 13, commonly known as the Jarvis-Gann initiative. h This Constitutional amendment, which adds Article Xill A to the California Constitution, defines full cash value to mean "the County Assessor's valuation of real property as shown on the 1975-76 tax bill under ' full cash value,' or thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership has occutred after the 1975 assessment period."'ihis full cash value may be increased at a rate not to exceed 2G per year to account for inflation. 'Ibe Initiative further limits the amount of any ad valorem tax on real property to 1% of the full cash value, or 4% of the assessed value. The initiative is currently the subje; of various lawsuits to challenge its constitutionality under both the State and Federal Constitutions, as well as to resolve differing interpretations and applications of its language and to harmonize it with other parts of the California Constitution. Accordingly, the exact elTect of the Initiative on the City of Riverside cannot be determined at this time. The City believes that the full cash value of property subject to ad valorem taxation in the City in fiscal year 1978-79 will be approximately $2.2 billion, or approx-imately the same as the full cash value for fiscal year 1977-78. In the past, properties in Riverside County have been subject to taxation at varying rates by 26 municipalities and numerous special purpose districts providing such services as schools, water, flood control and sanitation. Each entity has set its budgeted expenses and then determined, subject to certain legal limitations, the property tax rate which would need to be levied in order to raise sollicient funds. In fiscal year 1977-78, a typical tax rate in the City was $10.4470 per $100 of assessed valuation. As a result of the Jarvis-Gann Initiative, the maximum tax rate is $4 per $100 of assessed valuation, plus such additional amounts as is necessary to cover certain out-standing indebtedness. The California legislature has adopted legislation apportioning the property tax among the County atal the various municipalities and special districts contained therein. The City's share of property taxes on the secured roll is expecte<l to decrease from $4.1 million in fiscal > car 1977-78 to approximately $1.9 million in fiscal year 1978-79 41 y ;, _

                                                                                                            =

Direct und Oscrlapping Debt Although the Honds will be payable solely from grms revenues of the City's !!!cctric System, the direct and j overlapping Imnded deb;s ef the City as ol August 22,1978, are shown in Table iM. Ihe debt ratios calculated on the 1975-76 assewed valuation are intended to acknowledge the revised assessment practices beginning with 1978-79 impor:d by the recently-apprmed Jarvis-Gann Initiatise (see the foregoing sectim titled "Itecent Con-stitutional Amendment"). Ilowever, it should be noted that the 1978-79 asv ssed valuation is expeced to be materially greater than the previously established 1975-76 awewed valuation by the amount of the adjustments permitted by the Amendment. ~lherefore, the debt ratios based on the 1975-76 awewed valuation should be materially overstated. lixcluding $9,000,000 of 1977 r. funding bonds of the itiverside Civic Center Authority, the iwuc of which will have no effect on rentals until 2003-04, that Authority, the Parking Authority of the City of Riverside, and the itiverside Airport 1. case Company have issued a total af $30,080,000 of bonds which are sceured by pledges of rental revenues under leases of four projects to the Cit y of Itiserside. As of the August 22 scheduled sale date of the Ilonds currently offered, $28,792,000 of those bonds will be outstanding. 'Ihe annual base rentals due under all the leases total $2,255,800 through 1991-92; $2,219,300 from 1992-93 through 2002-03; and

$285,700 in 2003-2004. ( l he sale of the aforementioned refunding bonds reduced the 2003-04 total base rental by $925,000. ) Upon payment and expiration of the respectise leases, ownership t. all leased facilities will revert to the City.

In addition to the lease obligations described above, as of the sale date of the llonds currently off red, the City of Iliverside will have $4,720,000 outstanding general obligation Imnds, of which $2,320,000 art currently supported by revenues from sewer service charges. 'Ihe remaining bonds were iwued for the department capital projects and other city n.provemems. General obligation bond debt service requirements are shown in Table 19, along with those requirements in connection with 1000F self-supporting revenue bonds other than electric revenue bonds, the latter require-ments having been presented elsewhere in this Ollicial ytatement. l Pemion Obligatiom Retirement benefits for all City employees are pi ,ded by combined membership in the Public limployees' Retirement System of the State of California (l!!!.R.S.) and, except for police and fire safety employees, the Federal Social Security System. As of June 30,1976, I!!!.R.S. had separate contracts with the State of California and 944 local public agencies, including coverage for 1,109 school and community college districts. Membership includes safety, State indmtrial, and miscellaneou + groups. I!ach groyp has a somewhat differing program and amount of actuarial liability. For the Public lin ployees' Retirement Fund as a whole, net awets available for benefits on June 30, 1976, according to the annual audit prepared t,y Coopers and 1.> brand, Certified Public Accountants, were $7,85 8,768,931, while the unfunded obligation was $6,753,964,123. 'Ibe latter is the amount by which the excess of the present value of total projected benel;ts over the som of the present values of future employer normal emts and future member contributions exceeds the amount of available net awets at carrying value, Contributions to Pli.R.S. of 7CF of the miscellaneous employees' carnings, less $133.33 for OASDI par-ticipation, and 90F of the public safety employees' carnings, are accomplished through autan'atic paycheck deductions. The City's contribution rate is determined by periodic actuarial valuations based on the benefit for-mula and the number of employees and their respective salary schedules. At July 1,1977, an actuarial valuation by the State indicated the City had an unfunded liability for miscel-laneous members of $1H,544,016 and for public safety members of $18,871,932. Contribution rates of 5.8990; for miscellaneous members and i1.175CF for public safety members were established by the State to amorti/c those liabdities by July 1,2000. Actuarial requirements at July 1,1978, have not been determined. 42 l 91 j- -n 4 L Ii[ [ (( 4

For 1977-78, the City's contribution rate .vas 11.2209c for miscellaneous employees and 25.8069E for public safety employees. The rates for 1978-79 are.12.9079F and 25.7609c for miscellaneous and public safety employees respectively. City contributions budgeted for 1978-79 total $4,366,000, compared with a' . al expen-ditures of $3,648,948 in 197 -78. TABLE 18 CITY OF RIVERSIDE Statement of Direct and Overlapping Debt As of August 22,1978 1977-78 Assessed Valuation: .$542,360,6'5 (after deducting $8,344,563 redevelopment tax increment) 1975-76 Assessed Valuation: .5416,491,631 (af ter deducting $1,968,321 redevelopment tax increment) Cc Applicable Debt 8/22/78 beet and Oserlapping Bonded Debt: Riserside County 22.569 % $ 162,497 Riverside County Building Authorities. 22.569 4.720,306 hietropolitan Water District. 1.082 5,681,366 Riverside County Flood Control Zone No.1. 78.720 17,416,800 Riverside Community College District. 68.770 1,306,630 Riverside Unified School District. 92.753 16.208,576 Riverside School District. 93.984 887,209 Alvord Unified School District. .93.213-95.322 4,169,176 Jurupa UniGed School District. 0.006 155 hforeno Va!:ey tinitied School District. l.773 28,970 Highgr.ve School District. 64.175 25,670 City of Riverside. 100. 4,720.000t I City of Riverside Building Authorities. 100. 28,792,000 City of Riverside Parking District No.1. 100. 725,000 La Sierra Community Services District. 100. 275,000 Other Districts . Various 163.053 Total Gross Direct and Overlapping Bonded Debt. $85,282,408 1.ess: City Parking District No.1 (100"E self-supporting) . 725,000 Total Net Direct and Oserlapping Bonded Debt. $84.557,408 August 22,1978

=

1975-76 1977-78 Ratios to Assessed Valuation: Direct I)ebt ($33,512,000) . 8.05 fc 6.189c Total Gross Debt. . 20.48 G 15.72 % Total Net Debt. . 20.30Fc 15.59 Fc Sh e of Authorised and Unsold Bonds: h!ctropolitan Water District. . $3,949,300 Home Gardens Sanitation District. .$ 271 Riverside Unified School District. 556,518 La Sierra Community Senices District. 100,000 Alvord Unified School District. 657,722 Western Afetropolitan Water District,ID No. 3. 289,357 State School Building Aid Repayable as of 6/30/77. $7,514,527

         @ Excludes revenue bonds.

SOURCE: California Municipal Statisties,Inc. <n q 43 Il it5

TABI.S 19 CITY OF RI\ PRSIDE Debt Senice Requirements on Outstanding General Obligation and Waterworks, Parking District No.1, and Sewer Revenue Bonds @ As of June 30,1978 Fiscal ding General Obligation Bonds Resen se BondsB June 30 Principal Interest Totalt Principal Interest Total 1979. .$ 570,000 $ 196,869 $ 766,869 $ 1,010,000 $ 2,018,166 $ 3,028,166 1980. 575,000 165,143 740,143 1,085,000 1,960,839 3,045,839 1981. 630,000 144,143 774,143 1,095,000 1,898,767 2,993,767 1982. 615,000 121,218 736,218 1,170,000 1,835,275 3,005,275 1983. 415,000 98,810 513,810 1,210,000 1,767,610 2,977,610 1984. 265,000 56,080 351,080 1,290,000 1,696,854 2,986,854 1985. 280,000 75,843 355,843 1,330,000 1,622,129 2,952.129 1986. 180,000 66,493 246,493 1,345,000 1,550,197 2,895,197 1987. 185,000 58,508 243,508 1,150.000 1,479,441 2,629,441 1988. , 190,000 50,090 240,090 1,110,000 1,417,601 2,527,601 1989. 200,000 41,456 241,456 1,130,000 1,357,640 2,487,640 1990. 205,000 32,265 237,265 1,195,000 1,295,305 2,490,305 1991. 215,000 22,640 237,640 1,130.000 1,229,134 2,359,134 1992. 165,000 12,555 177,555 1,185,000 1,166,168 2 351,168 1993. 80,000 5,180 85,180 1,200.000 1,100,155 2,300,155 1994. 40,000 2,100 42,100 1,250,000 1,032,198 2,282,198 1995. 1,290,000 961,089 2,251,089 1996. 1,370,000 886,020 2,256,62G - 1997. 1,355,000 807,285 2,162,285 I998. 1,390,000 727,888 2,117,888 l 1999. 1,465,000 645,707 2,110,707 2000. 1,485,000 559,721 2,044,721 2001. 1,540,000 473,189 2,013,189 2002. 1,600,000 381,894 1,981,894 2003. 1.215,000 294,742 1,509,742 2004. 1,280,000 218,274 1,498,274 2005. 950,000 150,705 1,100,705 2006. 710,000 101,654 811,654 2007. 625,000 59,918 684,918 2008. 410,000 23,780 433,780

                  $4,810.000         $ 1,179,393        $5,989,393           $35,570,000          $30,719.345            $66,289,345

'i> Delt service on outstanding and the proposed City electric revenue bonds is tabulated elsew here in this Official Statement. @ Includes $2.869,840 of total debt service applicable to sewer improvement bonds and the .78879c' sewer portion of the 1957 Nf unicipal Improvement Hond issue, such debt service currently being paid from the enterprise Sewer Service Fund. t Waterworks and sewer revenue bonds are payable solely from revenues generated by the enterprise Water Fund and Sewer Sec-sice Fund. Revenue bonds of Parking District No. I are payable solely from funds held in trust by Security Pacific National HanL. SOURCE: City of Riverside Annual Financial Report. 1976-77, and City Public Utilities Department. no' 2117i 1 (- ddO i 44

CITV OF RIVERSIDE: ECONOMIC HACKGROUND h General The City of Riverside is the County seat of Riverside County and is located in the western portion of that County about 57 miles east of downtown Los Angeles and about 87 miles north of San Diego. Within ten miles of Riverside are the seven cities of San Bernardino, Corona, Norco, Fontana, Rialto, Colton, and Redlands. Those eight cides are located in the Counties of Riverside and San Bernardino, which together are referred to as the Riverside-San Bernardino-Ontario Standard Nietropolitan Statistical Area (SN1SA). The eight cities, including Riverside, represent an important economic area of the State and of Southern California. They lie to the west and south respectively of the strategic San Gorgonio and Cajon Passes, from which transcontinental railroads and interstate highways converge to connect the Los Angeles area with other areas of the Nation. The City of Riverside arca is situated in close proximity to the metropolitan economic centers of Los Angeles and Orange Counties. Riverside and San Bernardino Counties cover 27,400 square miles, a land area larger than the State of Virginia. Riverside County alone is larger than the State of New Jersey. The City of Riverside area, though small geographically in relation to the bi-County area, contains most of the population.

                      ~

Rainfallin the Riverside area amounts to about 12 inches during the average year, and average temperatures range from 51 in January to 75.5 in July. Afore extreme weather prevails in the arid interior of the Counties. TABLE 20 CITY OF RIVERSIDE Economic Indicators Building Permits Telephone Electric Water Year Number Valuation Connections Customers Customers

                                .3,565            5 59,875,118 D  1973 1974                         .3,245                35,745,482 123,923 130,830 52,626 54,736 35,744 43,783 1975                         .3,425               48.330,591               135,552           55,893          44,115 1976                           4,754              96,731,398               142,094           56,902          44,966 1977                         .8,468              243,684,408               151,348           59,054          46,304 SOURCES: City of Rherside Planning and Public Utilities Departments; Pacific Telephone Company.

Accessibility Rail. N1ajor railroads in the area are the Santa Fe, the Union Pacific, and the Southern Pacific-with recip-rocal switching agreements. Riverside is provided with nine local freight trains daily. Highway Niajor freeways serving Riverside include: 1-15E northward to I-10, the major east-west link from Los Angeles to the central and southern United States, San Bernardino,1-15, U.S. 395, and points north, and southward to U.S. 395, I-15, and San Diego; State Route 91 (Riverside Freeway) westward to the Anaheim-Santa Ana-Garden Grove and beach cities (Orange County) area; and State Route 60 (Pomona Freeway) west-ward to downtown Los Angeles. Truck. There are about 73 common carriers serving the City of Riverside in interstate and intrastate com-merce. Overnight deliverics a the major California metropolitan areas and Phoenix, Arizona, are available. Bus. Greyhound and Continental Trailways provide r(gional and nat onal i service. Service to Los Angeles and intermediate points is provided by the Southern California Rapid Transit District. Air. Ontario International Airport to the west about 18 miles from Riverside serves the general region. The airport is operated by the City of Los Angeles Department of Airports and is currently served by seve'i major carriers: American, Eastern, Continental, United, Western, PSA, and Hughes Air West. 45 2112 227

The Riverside Municipal Airport provides regularly scheduled commuter flights to the Los Angeles Inter-national Airport, as well as facilities for executive and private aircraft. G Population The City of Riverside is the most populous in the Riverside-San Bernardino-Ontario SMSA with about i1.5% of the people. Relative to the four Southern California counties of Riverside, San Bernardino, Los Angeles, and Orange, the City represented about 0.1% of the population in 1950 and about 1.5% in 1978. Riverside has experienced a continuous growth since 1950 averaging over 3,900 persons per year. The 1950 Census estimated the population at 46,764, t..e 1960 Census at 84,332, and the 1970 Census at 140,089. The California Department of Finance estimated the population of the City to be about 155,800 in January, 1978. While the average annual rate of population growth from 1970 to 1978 (l.38% ) is less than that of the period since 1950 (4.43 % ), over the long-term period the City has grown at a rate faster than the State, the four Southern California counties, and the Counties of Riverside and San Bernardino. The City area has expanded from about 39.2 square miles in 1950 to about 71.6 square miles,99.8% of such expansion having occurred by 1970. TABLE 21 CITY OF RIVERSIDF, EIGIIT CITIES, RIVERSIDE-SAN BERNARDINO-ONTARIO S3ISA, FOUR SOUTIIERN CALIFORNIA COUNTIES, AND CALIFORNIA Comparatise Population April 1950,1960,1970, and Estimated January,1978 Average Annual Hate of Growth April April April January Long-Term 1950 1360 1970 1978 1950-78 1970-78 Colton 14,465 18,666 19,974 19,300 1.04 % -0.44 % Corona 10,223 13,336 27,519 37,000 4.74 3.89 Fontana Uninc. 14,659 20,673 25,300 n.a. 2.64 Norco . Unine. Uninc. 14,511 19,200 n.a. 3.68 Redlands 18,429 26,829 36,355 36,450 2.49 0.03 Rialto 3,156 18,567 28,370 32,100 8.72 1.61 RIVERSIDE 46,764 84,332 140,089 155,800 4.43 1.38 San Bernardino. 63,058 91,922 104,251 105,400 1.87 0.14 Eight Cities . 156,095 268,311 391,742 430,550 3.72 1.23 Riserside County 170,046 306,191 459,074 590,200 4.59 3.30 San llernardino County. 281,642 503,591 684,072 756,800 3.63 1.31 Riverside-San Bernardino-Ontario SNISA 451,688 809,782 1,143,146 1,347,000 4.02 2.14 Four Southern California CountiesT . 4,819,599 7,552,478 9,595,607 10,234,400 2.75 0.84 California . .10,586,223 15,717,204 19.953,134 22,077,000 2.68 1.31 3 Riverside, San llernardino. I os Angeles and Orange Counties. SOURCE: Bureau of the Census, U.S. Department of Commerce: CENSUS OF POPULATION (1950,1960,1970, and through the publication of document PC (VIF6); January,1978, estimates are those of the Population Research Unit, California Depart-mer. Finance in Report 78E-1, dated h!ay 8,1978. Ilousing The City of Riverside has realized substantial and continuous growth of its housing stock since 1960, mainly from new construction and, to a limited extent, from annexation. 46

The total housing stock of the City at the time of the 1960 Census was about 28,600 units. By the time of the 1970 Census, the stock was estimated at about 45,312 units, an increase of 16,712 units (5806 ). During I those 10 years,9,414 new units were authorized for construction, as indicated by building permits. (The differ-ence between the stock increase and the building permit figures was due to annexations, conversions, replace-ments, and construction-in-progress.) In the eight years 1970 through 1977, about 16,806 dwelling units were authorized by building permits, which would indicate expansion to about 62,118 units, a 3796 increase, noting that the land area has remained the same over the period. The Riverside County Planning Department estimated the housing stock of the City in .lanuary, 1975,1976,1977, and 1978, at 54,031,54,609,56,258, and 58,740, respectively. Over the eighteen years 1960 through 1977, about 3896 of the total dwelling units authorized by building permits in the eight cities in the City of Riverside area were authorized in Riverside. The annual average number of such authorized units in Riverside was over 1096 of the annual average authorized in the bi-County SNISA. TABLE 22 CITV OF RIVERSIDE, EIGIIT CITIES, RIVERSIDE-SAN BERNARDINO-ONTARIO SMSA, FOUR SOUTIIERN CALIFORNIA COUN'IIES, AND CAI.IFORNIA D selling Unit Building Permits 1960 through 1977 Eighteen Average Five-Year Periods Years Per 1960-64 1965-69 1970-74 1975-77 1960-77 Year Colton 803 343 463 398 2,007 112 Corona 2,97! 950 1,870 1,483 7,274 404 Fontana 1,036 591 1,036 711 3,374 187 Norco n.a.@ 420 881 993 2,294T 176T Redlands 2,968 374 1,221 1,566 6,129 341 Rialto . 1,795 747 1,115 520 4,177 232 RIVERSIDE 5,993 3,421 7,794 9,012 26,220 1,457 l San Bernardino . 12,139 1,539 3,145 1,409 18,232 1,013 Eight Cities 27,705 8,385 17,525 16,092 69,707 3.873 Other Areas, Cities. 63,132 25,995 50,797 48,886 188,810 10,489 Riverside-San Bernardino-Ontario SMSA , 90,837 34,380 68,322 64,978 258,517 14,362 Four Southern California Counties @. 640,605 304,372 412,079 224,387 1,581,443 87,858 California .1,212,316 730,899 1,079,?37 622,353 3.644,805 202,489

 @ Norco did not report during the 1960-64 period, since it was unincorporatet, the 18-year total and the average per year are based on a 13-year period.
 @ Riverside, San Hemardino, I.os Angeles, and Orange Counties.

SOURCE: Derived from data published by Hureau of the Census, U.S. Department of Commerce: CONSTRUCTION REPORTS (Series C40, annual, Washington, D. C.). Income and Commerce Total resident personal income in the Riverside-San Bernardino-Ontario SNISA increased about 57.79E from 1970 through 1975 (the latest year published by the U.S. Department of Commerce), due both to increases in population as well as to increased per capita income. Per capita personal income in the SNISA increased about 48C6 from $3,650 in 1970 to $5,401 in 1975. The latter amount trailed the $6,660 in the four Southern California counties and the 56,596 in California. The total personal income of residents of the SMSA in 1975 represented about 10CF of the four Southen California counties'such income and about 4.7CF of the State's. As for just the City of Riverside, the latest Survey of Buying Power, published by Sales and Afarketing Afanagement magazine, indicates a median household effective buying income in 1976 of $13,724 in the City,

 $11,644 in Riverside County, and $12,552 in the bi-County SMSA. Nican family income of SI1,914 in the City reported in the 1970 Census was higher than in the SNISA ($10,478) and the aserage in the four Southern 47 7 g. _

California counties ($11,850), but lower than in California ($12,227). Families classified as at poverty level or below comprised 8.3% of total families in the City, 8.4G in the State, 8G in the four Southern California counties, and 10.3% in the SN1SA. Due both to location and to a large resident market, the City of Riverside is a major commercial center in the SN1SA. The City's commercial activities, as indicated by total taxable retail sales in 1977, made up about 14.1 % of those in the SN1SA, about 1.6% of those in the four Southern California counties, and about 0.73G of those in the State. Ily comparison, the City's population represented about 11.7G of the SN1SA, about 1.5G of the four Southern California counties, and about 0.7G of the State populations, indicating a concentration of comniercial activities. Following is the breakdown of 1977 sales tax permits in the City of Riverside by type of outlet and the per cent of total taxable transactions contributed by each type: Per Cent Tasable T 3pe of Outlet Permits Transactions Apparel Stores . 99 3.7% General Merchandise Stores. 34 16.3 Drug Stores 26 1.2 Food Stores . I17 7.0 Packaged 1.iquor Stores. 30 1.4 Eating and Drinking Places. 244 7.2 Ilome Furnishings and Appliances. 95 2.9 Iloilding Materials and Farm implements. 43 9.2 Auto Dealers and Auto Supplies. 97 18.5 Service Stations 121 6.3 Other Retail Stores. 317 8.4 All Other Outlets. .1,938 17.8 The daily Riverside l'ress omd Enterprise, in its 1977-78 AfarActing Digest special edition, lists more than 100 merchandising chains with at least one outlet in Riverside County, TABLE 23 RIVERSIDE-SAN IlERNARDINO-ONTARIO SNISA, FOUR SOUTIIERN CALIFORNIA COUNTIES, cal.IFORNIA Resident Total Personal Income 1970 through 1975 ($ thousands) 1970 1971 1972 1973 1974 1975 Net I abor and Proprietor's incomen S 2,743,335 $ 2.876,728 $ 3.119.245 $ 3,411,867 $ 3,707,370 $ 3,968.661 Residence AdjustmentT 245,521 239,911 262.024 287,529 346,602 409.449 Dividends, Interest, Rent . 604.698 634,265 665.003 715,655 836,583 928,961 Transfer Pa> ments 608.622 701,633 767.440 866.665 1,051,267 1,300,553 Total Resident Personal Income .5 4.202.176 $ 4.452,537 $ 4.813,712 $ 5,281.716 $ 5,941.822 5 6,607,624 (Per Capita) ( $3,650) ( $3.827 ) ( $4,091 ) ( $4,454) ( $4.928 ) ( $5,401 ) Four Southern California CountiesT .543,997,225 $46.045,574 5 49,791.660 $ 54,313,984 $ 60,207,896 $ 65,795.481 (Per Capita) ( $4.576) ( $4,748 ) ( $5,144 ) ( $ 5,581 ) (56,149) ( $6,660) California .589,892,445 $95,3 35,940 $ 102,949,604 $ 113,514,529 $ 126,955,682 $ 139,388,100 i Per Capita) ( $4,493 ) ( $4,711 ) ( $5,044 ) ( $5,497) ( $6,090) ( $6,596)

@ Net I. abor and Proprietor's Income includes wage and salary and proprietor's income by place of employment, less personal contributions for social insurance. The residence adjustment w hen added to Net I. abor and Proprietor's Income provides the Net Labor and Proprietor s Income by place of residence.
@ Riverside, San Bernardino. I.os Angeles, and Orange Counties.

SOURCE: Regional Economics Information System. Ilureau of Economic Analysis, U.S. Department of Commerce, Table 5.00. 48 7' ; ; p=

TABLE 24 CITY OF RIVERSIDE, EIGIIT CITIES, FOUR SOUTIIERN CALIFORNIA COUNTIES D Taxable Sales All Outlets 1973 through 1977 ($ thousands) 1977 1976 1975 1974 1973 Colton .$ 98,299 $ 81,676 $ 68,704 $ 65,765 $ 57,414 Corona 148,712 119,623 94,736 87,223 77,662 Fontana , 92,027 77,646 67,688 62,431 57,956 Norco 21,342 17.243 14,132 11,316 9,889 Redlands 127,998 99,655 84,060 79,235 77,559 Rialto . 83,789 68,581 57,040 60,327 51,796 RIVERSIDE . 722,846 588,267 506,560 462,346 436,677 San Bernardino . 751,670 624,285 546,717 504,399 498,886 Total Eight Cities. .$ 2,046,683 $ 1,676,976 $ 1,439,637 $ 1,333,042 $ 1,267,839 Los Angeles County. . $31,851,689 $27,415,161 $24,662,095 $23,285,926 $21,220,440 Orange County 8,658,128 6,965,894 5,571,433 5,210,5 W 4,701,633 Riverside County . 2,242,074 1,775,716 1,502,1I3 1,369,029 1.274,508 San Hernardino County. 2,894.297 2,343,336 1,977,173 1,823,841 1,686,423 Total Four Counties. . $45,646,188 $38,500,107 $33,712,814 $31,689,315 $28,883,004 INDICATORS: Riverside (Per Cent 8 Cities). 35.3 % 35.1 % 35.2 % 34.7 % 34.4 % Riverside (Per Cent 4 Counties) 1.6% 1.5 % 1.5 % 1.5 % 1.5 % 8 Cities (Per Cent 4 Counties). 4.5% 4.4 % 4.2% 4.2 % 4.4 % SOURCE: Hoard of Equalization, State of Califomia: TRADE OUTLETS AND TAXABLE SALES (annual 1;immaries). Employment and Industry D While no annual information is regularly compiled on employment just in the City of RF.erside, informa-tion for the Riverside-San Bernardino-Ontario SMSA, the sixth largest of 17 in Calif .nia, indicates that resident employment increased about 23G from 379,000 in 1970 to about 467,700 in 1977. The rate of resident unemployment ranged from 7.6% to 10.1% in 1974 through 1977, having been between 0.1% and 0.3% higher than the State rate in each of those four recent years. The average unemployment rate in the bi-County SMSA in 1977 was 8.4%. The most important wage and salary employment sectors are trade, services, and government, which com-bined made up almost two thirds of all such employment in 1977. Government constituted about 24%. Being TABLE 25 RIVERSIDE-SAN IIERN \RDINO-ONTARIO SMSA Employ ment, Unemploy ment and Labor Force'D Averages: 1974-77 (thousands) 1977 1976 1975 1974 Employment .467.7 436', 415.5 425.8 Unemployment 42.9 44.9 46.7 34.9 Civilian Labor Force. .510.6 480.9 462.2 460.7 Unemployment Rate , . 8.4 % 9.3 % 10.1 % 7.69, State Unemployment Rate. .8.2 % 9.2% 9.9 % 73 % O By place of residence, including workers involved in labor disputes. SOURCE: State Employment D-velopment Department. 49 2112 231

the county seats, Riverside's and San Bernardino's county government establishments, as well as two major U.S. Air Force bases,51 arch Air Force Base south of Riverside and Norton Air Force Base near San Bernardino, explain the importance of that sector. Wholesale and retail trade, and services, constituted about 239c' and 19%, respectively, of the 1977 wage and salary employment. The City of Riverside is an important industrial center for the manufacture of, among others, instruments, computer equipment, aluminum, recreational vehicles, mobilehomes, and aerospace and aircraft components. The City has over 2,900 acres zoned for industrial use, and there are 96 manufacturing plants. While the area has been undergoing major urbanization for many years, vast tracts of citrus groves remain in and adjacent to the City, providing also for an important agricultural industry (see " Agriculture"). TABLE 26 RIVERSIDE-SAN BERNARDINO-ONTARIO S.\1SA Wage and Salary Emplo3 ment by Industr3'D Aserages: 1973-77 (thousands) Sector 1977 1976 1975 1974 1973 Agriculture 19.9 19.2 17.4 17.4 18.1 h1ining 2.3 2.2 2.3 2.5 2.2 Construction . 17.7 14.5 12.8 14.9 17.8 Durable Af anufacturing . 41.3 39.1 37.1 42.8 43.5 Non-Durable h!anufacturing . 15.8 15.2 14.0 14.6 14.5 Transportation, Communications, Utilities 20.1 19.0 19.0 19.4 18.5 Wholesale Trade , 14.3 13.6 13.1 13.0 13.1 Retail Trade 74.5 69.1 64.8 64.7 63.0 Finance, Insurance, Real Estate. 14.5 13.5 12.6 12.4 12.4 Services . 74.8 71.2 68.1 66.0 63.8 Government 92.9 90.0 89.2 84.2 80.9 Total .388.1 366.6 350.4 351.9 347.8

                'O Hy place of work, excluding the self-employed, farmers, unpaid family workers, domestic work-ers in households, and workers ins olved in labor disputes.

SOURCE: State Employment Development Depaitment. TABLE 27 CITY OF RIVERSIDE Largest Industrial Emplo3ers,1977 Approsimate Number Firm of Employees Products Hourns, Inc. 1,460. . Instruments. Life Systems Equipment, Computer liardware Fleetwood Enterprises, Inc.. 1,200. h1obilchomes Rohr Industries, Inc., 1,130. . Acrospace and Aircraft Components Riverside Press Enterprise. 680. . Newspapers and Printing Owens-Illinois, Inc., Lily Division . 500. . Plastic and Paper Cups, Lids, Containers E. L. Yeager. 450. . Asphalt Alixes, licavy Construction Contractor The Toro Company, Irrigation Division. 450. Irrigation Systems Alumax h1ill Products Inc., 385. . Aluminum 51ill Products. 5heet and Plate Alfred 51. Lewis Inc., 370. Food Distribution LVW Hrown Estate. 350. Citrus Grower / Packer Travel Queen, Inc. , 350. hiotor Homes Illue Hanner Company, Inc., 325. . Citrus Packer / Shipper Riverside Cement Co., 319. Cement Butcher Boy Food Products. 300. . Frozen Foods Winnebago Industries. Inc. (opened in 1978). .250--300. h1otor Homes Amoco Reinforced Plastics. 250. Afortar Pipe Royal Citrus Company. 230. Citrus Packer / Shipper Flexsteel Industries (opened in 1978). .200-250. .htobilehome and RV Furniture Atco Structures International. 240. .Relosatable flousing Structures llunter Engineering Co. Inc.. 230. .Non-ferrous hietal Processing h!achinery SOURCE: Riverside Chamber of Commerce. 50 2112 232

Agriculture g Crops grown in Riverside County in 1977 were valued at about $268,345,800, and livestock production F value was estimated at $226,575,900. Total agricultural production value therefore was $494,921,700. Accord-ing to the 1977 Rirerside Cotmty Agricultural Crop Report compiled by the County Agricultural Commissioner, multiplying that amount by three gives $1,484,765,100 of revenue generated to the total economy, "again confirming agriculture as the leading industry in the county." Thirty-one crops exceeded $1 million in value, including table and wine grapes, several citrus fruits, cotton, dates, melons, potatoes, cereal grains, onions, avocados, and a wide variety of vegetables. Municipal Gosernment and Senices Riverside was incorporated October 11,1883, and has been a Home Rule Charter City under the Council-Manager form of government since 1953. The City Council is composed of seven members elected for four-year overlapping terms from the seven wards of the City. The Mayor is elected at large for a four-year term and is presiding oflicer for the Council but does not have a vote unless there is a tie. The Council appoints a City Manager, City Attorney, City Clerk, and members of various advisory boards and commissions. The City provides a wide range of services including water, sewer, electric power, recreation and parks, and refuse disposal services. There were about 1,404 positions budgeted in 1978 for City departments. Non-Municipal Senices and Facilities Utilities Natural gas service to the City is provided by the Southern California Gas Company. Telephone service to the City is provided by the Pacific Telephone Company. Education Public Primary and Secondary Schools: The City of Riverside is included in and is served primarily by the Riverside Unified School District. The District has 22 elementary schools with 12,266 pupils in kindergarten through sixth grade, five middle schools (grades 7 and 8) with 4,058 pupils, and four senior high schools (grades 9-12) with 8.217 pupils, those enrollments having been in the fall of 1977. Part of Riverside is within the Alvord Unified School District which also serves the County area southwest of the City. That District has eight elementary schools with 4.531 pupils, two intermediate schools with 1,872 pupils, and two senior high schools with 2,988 pupils. Private Primary and Secondary Schools: There are 17 parochial and private schools serving the City of Riverside and its environs. Riverside is also the home of the California State School for the Deaf (clementary through high school) and the Sherman Indian High School, a Federal school for Indian children (elementary through high school) which emphasizes occupatioral training. Higher Education: Within the City of Riverside are five institutions of higher education with a combined 1977-78 enrollment of 22,300. They are: the University of California at Riverside, Riverside City College (2-year community college). Loma Linda University, Pepperdine University, and California 1,tist College. Mi3cellaneous Medical: Riverside has four general hospitals with a bed capacity of 1,000,210 physicians and surgeons, and 104 dentists. Recreational The Riverside International Raceway draws crowds of over 80,000 to major car races. Within one hour's drive is Lake Arrowhead, Ilig Ilear Lake mountain resorts, Idyllwild mountain resorts, Palm Springs and the Coachella Valley, Disneyland, Los Angeles and the beach cities. Si ff}} }}}

Cultural: There are numerous cultural organizations in the City, prominent among which are the Riverside Opera Association (the only opera company in Southern California outside the Los Angeles area), the semi-professional Riverside Symphony Orchestra, the Riverside Concer: Band, the Riverside Chorale, the Riverside l Community Players (an amateur theatrical group claiming to have the longest continuous existence-since 1925 -in the U.S.), and the Riverside Art Association. There are also 106 churches, five newspapers, three radio stations, seven commercial television channels plus a a"-ber of public television channels received direct and a cable system,11 theatres, and five libraries. GENERAL STATEMENT AND CERTIFICATE CONCERNING OFFICIAL STATEMENT This OficialStatement was prepared for and under the supervision of the City Council of the City of River-side by Wainwright & Ramsey Inc. in its capacity as financial consultant to the City. All contents have been based on information believed to be reliable, but no representation is made that any estimate or assumption is correct or will be realized. As far as any contents involve matters of opinion, whether or not expressly so stated, they are set forth as such and not as representations of fact. The agreements of the City with the holders of the Bonds are set forth in the Resolution, a true copy of which is appended hereto. Reference is hereby made to that docu-ment for a complete statement of the rights and obligations of the City and holders of the Bonds. Neither this OficialStatement nor any other communication to date, oral or written, is to be construed as a contract with the holdersof theBonds. At the time of delivery of the Bonds, the City will furnish to the successful bidder a certificate to the efect that at the time of sale of the Bonds and at all time subsequent thereto up to and including the time of said delivery the Oficial Statement did not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, na misleading. 500 co, 'r Oficial Statement will be supplied to the purchaser of the Bonds free of charge, and such reasonable number of additional copies as the purchaser may request, for this purpose. Dated June 18,1978. CITY OF RIVERSIDE, CALIFORNIA Afayor City Manager Utilities Director n n, 52 7b

I SUMMARIES OF VARIOUS AGREEMENTS APPLICABLE TO TIIE PROJECT Appendices A, B, C and D hereto are summaries of Agreements between the City and Edison which relate to the Project and the relationship of the City's Electric System with that of Edison's Electric System. Copies of these Agreements can be obtained from (1) Everett C. Ross, Public Utilities Director, 3900 Main Street, Riverside, California 92522, or (2) Wainwright & Ramsey Inc., 58 Sutter Street, San Francisco, California 94104. The City will supply copies of these Agreements, if requested, to the successful purchaser of the Bonds. 2112 735 53

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Appendix A SUMMAR/ OF TIIE INTEGRATED OPERATIONS AGREEMENT I The City of Riverside (the " City") has executed an Integrated Operations Agreement lh Southern California Edison Company (" Edison"). A summary of certain provisions of the Integrated Operations Agree-ment follows: Purpme la order to better meet the power requir nents and obtain operational economies on their respective sys-tems, the City and Edison agreed to integrate their present and future Resources. The Agreement is intended to provie for Edison to furnish the capacity and energy necessary to meet City's load, to the extent not provided by City integated resources. Term The Integrated Operations Agreement shall become effective on the date following execution by both parties when the Federal Energy Regulatory Commission accepts the Agreement for filing. The Agreement shall remain in effect for fifty (50) years, unless terminated (i) by written agreement of the parties, (ii) by ten (10) years advanced written notice from one party to the other, or (iii) upon five (5) years advance written notice from City to Edison if Edison tenders for filing a change in rates which effects Integrated Operations, and which creates a substantial detriment to City. If Notice of Termination is given by either party the parties shall commence negotiations to negotiate in good faith a new arrangement to become effective upon termination of the Integrated Operations Agreement. Integration of Resources City may construct or acquire and integrate a Resource as a City Capacity Resource to meet cll or part of its Firm Load, and Edison shall use its best efforts to integrate such proposed City Capacity Resource in accord-ance with the qualifications contained in the Integrated Operations Agreement. Scheduling and Dispatching Edison, acting as City's agent, shall provide scheduling and dispatching services for City Resources and City Transmission Facilities. . Reserve Obligations City's contribution to Reserves is deemed to be a percentage of the sum of the kilowatt capability of City Capacity Resources. The percentage for any year shall be equal to the arithmetic average of the five annual reserve margins planned by Edison for its resources for the next five consecutive years. Partial Requirements Service Edison shall make available and deliver capacity and energy to City under the Partial Requirements Rate then in elTect with the Federal Energy Regulatory Commission. City is billed under the Partial Requirements Rate for its maximum peak demand during the billing period, less the Capacity Credit in etTect at the time such maximum peak demand occurs. The Capacity Credit is equal to the rated capabilities of the City Capacity Resources minus the City contribution to installed reserves. The amount of the partial requirements energy to be purchased in any billing period shall equal the total energy requirement of the City's load, minus the greater of the amount of energy scheduled and dispatched from City Resources, or the amount of energy associated with the effective Capacity Credit.

                                                           ^-i 2112 237

Replacement Capacity and Contract Energy if a City Capacity Resource is unavailable for 70 or more consecutive days, or for 100 or more non-con-secutive days during a 180 consecutive day period, the City must provide replacement t tpacity by first with-drawing a number of kilowatt-days from the Sueduled Maintenance Account for that City Capacity Resource. After the scheduled maintenance account for a City Capacity Resource is exhausted, the City may obtain re-placement capacity by purchase from one or more third parties outside the Edison Control Area, or Edison, or both. When a City Capacity Resource is not available, the City shall purchase from Edison, Contract Energy, which is the amount of energy capability associated with the capacity credit, less the amount of energy received from City Integrated Resources. The cost of Contract Energy is derived by utilizing Edison's fuel cost for con-ventional oil-fired, combustion turbine and combined-cycle generation plus the operating and maintenance costs associated with the production of such energy. Surplus Capacity and Excess Energy from City Capacity Resources Edison shall purchase from the City surplus capacity and associated energy from any City Capacity Re-source when the City, upon twelve (12) months advance written notice to Edison, shall declare such capacity and energy to be surplus to the City's estimated load during the period of sale. Edison shall pay the City for such capacity and associated energy at a price which shall fully compensate City for its costs associated with such City Capacity Resources. When energy is dispatched from one or more City Capacity Resources which exceeds the requirements of City's load in any hour, such excess energy shall be purchased by Edison. The charge for such energy shall be City's incremental costs of that City Capacity Resource, plus 15% of such costs. To the extent a City Capacity Resource is available, but not dispatched by Edison, City may sell energy associated with such City Capacity Resource to third parties outside the Edison Control Area. Transmission Service Edison shall provide, upon City's request, firm transmission service for capacity or energy, or both, associ-ated with City Capacity Resources. Transmission Service shall be provided either on Edison's 220 kV network or on a point-to-point basis where transmission service is to be provided outside the 220 kV network but within Edison's Certificated Service Area. Edison shall use its best efIorts to provide transmission service where a City requests transmission service outside of Edison's Certificated Service Area. Transmission service shall be provided in accordance with rates on file and approved by the Federal Energy Regulatory Commission. Change of Rates In general, with respect to the rates charged by Edison for Partial Requirements Service, Replacement Ca-pacity and Contract Energy, and Transmission Service, Edison reserves the right to file with the Federal Energy Regulatory Commission for a change in rates, charges and conditions of service provided that no change shall be made which is inconsistent with the Integrated Operations Agreement or any Integration Agreement. Edison's right to file for a change in rates with respect to Partial Requirements Service is subject to certain limitations when the Partial Requirements Rate becomes difIerent than the All Requirements Rate. Thereafter, changes in the rate design of the Partial Requirements Rate are also subject to certain limitations. Edison has the right to change the rates, charges and conditions relating to Replacement Capacity and Contract Energy, provided that no change shall be inconsistent with the Integrated Operations Agreement or any Integration Agreement. Edison may also change the wording contained in the Integrated Operations Agreement which describes how Replace-ment Capacity and Contract Energy charges are calculated, but such changes may not become effective for three years after the filing or a Final Order of the Commission, whichever occurs first. Edison reserves the right to change the rates, charges and conditions of service with respect to the furnish-ing of Transmbsion service, provided that no change shall be inconsistent with the Integrated Operations Agree-ment or an- ntegration Agreement. Moreover, any change as to wording in any Transmission Service Agree-ment may not become etTective for two years after the filing or a Final Order of the Commission, whichever occurs first. A-2 2112 238

Appendix B

SUMMARY

OF TIIE SUPPLEMENTAL AGREEMENT FOR TIIE INTEGRATION OF RIVERSIDE'S ENTITLEMENTS k IN SAN ONOFRE UNITS 2 AND 3 This Agreement between Riverside and Edison is supplemental to the Integrated Operations Agreement and does not supersede it except to the extent that terms therein are inconsistent. This Agreement provides that Riverside's entitlements in Units 2 and 3 will be irugrated. Integration Riverside's entitlements in Units 2 and 3 shall be integrated and Riverside shall receive capacity credit in accordance with the Integrated Operations Agreement. Riverside's Unit 2 entitlement shall become a source of Rated Capability on October 1,1980, or the Date Of Firm Operation for Unit 2, whichever is later and, Unit 3 entitlement shall become a source of Rated Capability on January 1,1982, or the Date of Firm Operation for Unit 3, whichever is later. Determination of Riverside's Rated Capability Rated Capability of Riverside's entitlements shall be equal to 1.79% of the firm power rating of Units 2 and 3 respectively. For Unit 2, during the period between the Date Of Firm Operation and January 1,1981, and for Unit 3, during the period between the Date Of Firm Operation and January 1,1983, the firm power rating shall be equal to 220 megawatts. After said dates, respectively, such ratings shall be equal to the effective operating capacity of each unit, planned for 1,100 megawatts cach. Riverside's Election to Pay for Energy When Units are Available but Not Dispatched D Riverside elects to pay for energy associated with its entitlement in Units 2 and 3 at City increniental Cost.

  ' Riverside may change its election to pay at Contract Energy Cost or City Incremental Cost upon either three years notice to Edison or whe 1 a change in a contract energy cost formula has become effective. The Incremental Cost of City is deriveu by adding the cost of fuel to other production costs and subtracting transmission losses.

Effective Date, Term and Termination This Agreement is effective on the date following the execution by both parties when accepted for filing by the Commission, or at such time when the Commission determines that this Agreement is just and reasonable without new conditions unacceptable to either party. The Agreement is to remain effective for fifty (50) years, except upon, (1) written agreement of the parties to terminate the Agreement, or (2) termination of the Integrated Operations Agreement, or (3) termination of the Units 2 and 3 ownership or operating agreements. If Notice of Termination of the Integrated Operations Agreement is given by either party, the party shall take actions to develop a new arrangement for furnishing the services referred to in the Settlement Agreement. 2112 239 B-1

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Appendix C

SUMMARY

OF TIIE SAN ONOFRE UNITS 2 AND 3 PARTICIPATION AGREEMENT

)    Purpose Edison and the Cities of Riverside, Anaheim and Banning entered into a Settlement Agreement, dated August 4,1972, under which Edison offered to said Cities participation in the ownership and output of Units 2 and 3 at San Onofre. Anaheim and Riverside have indicated their intent to participate in Units 2 and 3. The purpose of this Agreement is to provide for the terms and conditions under which the Parties will participate in the ownership and output of Units 2 and 3.

Parties The parties to this Participation Agreement are Edison, San Diego Gas & El%tric Company (" San Diego"), Riverside and Anaheim. Ownership Upon execution of the Participation Agreement Edison, San Diego, Riverside and Anaheim shall own facilities as tenants-in-common in proportion to their respective generation entitlement shares as follows: Edison San Diego Riverside Anaheim Common Facilities .77.12 % 20.00 % 1.49 % 1.39 % Project Easements Unit 1 .80.00 20.00 0 0 Units 2 and 3. .76.55 20.00 1,79 1.66 Switchyard Area .80.00 20.00 0 0 Construction Agreement h Edison assigns to F.iverside and Anaheim, respectively, an undivided 1.79% and 1.66% interest in the Construction Agreement as it pertains to Units 2 and 3. Riverside and Anaheim acquire all rights and assume all duties and obligations of a " company" under the Construction Agreement, which shall be amended to provide for payment by Riverside and Anaheim of their proportionate shares of expenses. Operating Agreement The parties shall execute an Operating Agreement, covering the operation and maintenance of Units 2 and 3, which shall be accomplished in substantially the same manner and terms and conditions as thq Unit i Operating Agreement provides for Unit 1. Edison will be operating agent for Units 2 and 3 and shall act as both the Agent and Principal on behalf of the other parties. Each of the parties shall be entitled to their proportioned share of the benefits and bear their proportioned share of the burdens incurred by Edison and San Diego in the performance of their duties under the agreements entered into by them for the construction, operation and maintenance of Units 2 and 3 and the common facilities. Billing and Payment Riverside and Anaheim will reimburse Edison within fifteen (15 ) days after receipt of invoice for construc-tion costs incurred prior to execution of this Agreement. Construction costs incurred after date of execution sha;l be paid in the manner prescribed in the Construction Agreement. Until such time as direct payment arrange-ments are made, Edison will bill Riverside and Anaheim for their proportionate share of costs of all project casements, plant site casements and the costs of Units 2 and 3 Off-Shore Land Easement lease. Riverside and Anaheim will reimburse Edison for production costs of the common facilities paid by Edison and for the acquisition, rental and developmental expenses incurred by Edison within ten (10) days after execution of this Agreement. C-1 ljj} }f;

Riverside and Anaheim will reimburse Edison for costs incurred to effect their participation in Units 2 and 3 each month within fifteen (15) days after receipt of invoice. Payments not made on or before the due date will be payable, with interest accrued at a rate of 10% per annum or the maximum rate of interest, whichever l is less. Administration Anaheim and Riverside shall designate representatives in accordance with Section 7 of the Construction Agreement within ten (10) days after execution of this Agreement. Rights and obligations set forth in Section 7 will become effective when Riverside and Anaheim begin paying funds pursuant to the billing and payment procedures set out above. Liability and Insurance The provisions of Section 8 and 9 of the Construction Agreement shall apply to this Agreement except as follows: The term " company" shall include Edison, San Diego, Riverside, and Anaheim. The percentages to be paid as set forth in Section 9.5 and 9.7 of the Construction Agreement shall be changed to Edison-76.55%, San Diego-20.00%, Riverside-l.79%, and Anaheim-1.66%. Riverside and Anaheim will be added as named insureds on those policies of insurance presently in etTect. Each will make application to Nuclear Mutual Limited, to become member insureds under the policies of in-surance presently in effect for San Onofre Units 2 and 3 for (a) all risk builders' risk insurance covering loss or damage to project work under course of construction, and (b) nuclear property damage insurance. if application for such insurance is accepted, Riverside and Anaheim shall maintain the policies through the term of this Agreement. If the application is not accepted, Riverside and Anaheim will cach secure and maintain insurance coverage from the Nuclear Energy Liability-Property Insurance Association and the Mutual Atomic Energy Reinsurance Pool, or their equivalent. Riverside and Anaheim agree to release Edison and San Diego from any and all liability resulting from I damage to, or loss of use of, Units 2 and 3, which is a result of the construction, operation or maintenance of Unit 1, the Edison Switchyard, the San Diego Switchyard, the Interconnection Facilities, or any additional generating units. Edison and San Diego release Riverside and Anaheim from any and all liability resulting from damage to or loss of use of Umt 1, which is the result of the construction, operation or maintenance of Units 2 or 3, or any additional generating units. Nuclear Fuel The Project Director, Edison, will make arrangements for the supply of nuclear fuel. In doing so, it will negotiate, execute, administer, perform and enforce nuclear fuel agreements as its deems necessary or appro-priate.The proposed Nuclear Fuel Agreements will be submitted to the coordinating representatives for informa-tion and approval prior to execution. However, any Nuclear Fuel Agreement may be executed by the Project Director without its being submitted to the coordinating representatives as long as obligations of the parties are consistent with the Nuclear Fuel Budget. Costs incurred by the Project Director shall be shared by each party in proportion to its generation entitle-ment share. Each party will own an undivided interest in all nuclear fuel equal to its generation entitlement share and may determine its own method of financing. With certain limitations, any party may elect to provide directly all or a portion of its share of natural uranium 308 concentrates if the election is communicated to the Project Director sufficiently in advance. One year prior to each date in which natural uranium 308 concentrates are scheduled to be delivered, the Project Director will notify all parties of the quantity and specifications of uranium concentrates required. Within one month of such notification each party will provide the Project Director with evidence that the party has a firm commitment for providing the required uranium. If such evidence is not satisfactory the Project Director C-2 2}I9 > <. 7 ,9 n/

may proceed to arrange for delivery of the deficient party's uranium cancentrates and the cost shall be billed to the deficient party as incurred. If the Project Director is unable to arrange for the uranium to cover a deficient l party's commitment, then party shall be subjected to an appropriate reduction in its entitlement to the Net Energy Generation during the cycle. Each party shall pay its proportionate share of the total amount due in advance of the date of which payments therefore by the Project Director become due. Taxes All taxes or assessment > levied against each party's ownership or beneficial interest in San Onofre shall be that party's sole responsibility. Riverside and Anaheim shall reimburse Edison or San Diego for all taxes which are levied against Edison or San Diego as a result of their transfer to Riverside and Anaheim of a portion of Edison's ownership interest in Units 2,3 or the common facilities. These taxes shall not include any tax on capital gains which may result from such transfer. Termination Riverside and/or Anaheim may terminate this Agreement if unable to attain any required approval from regulatory or other authorities. If construction of Units 2 and 3 is not continued by the remaining parties, the accumulated construction costs incurred by the terminating party shall be borne by such terminating party. If construction is continued the other parties shall acquire the terminating parties interest in San Onofre and shall reimburse such terminating party for its incurred construction costs. Additional Generating Units The parties reserve any right to participate in any additional generating unit, provided, that Riverside and Anaheim shall neither be granted nor denied participation rights by reason of any provision of this Participa-tion Agreement. If additional generating units are constructed, interests in the project easements shall be g reallocated among the participants. Uncontrollable Fuces No party will be considered in breach of any obligation herein other than the obligation to pay money, to the extent failure of performance is due to an uncontrollable force. Any party unable to fulfill obligations by reason of an uncontrollable force shall exercise diligence to remove the inability with all reasonable dispatch. Miscellaneous Provisions Edison shall, within twelve (12) months after receipt of payments, procure releases of the interest trans-ferred from the lien of Edison's trust indenture and deliver to Riverside and Anaheim a bill of sale covering their respective ownership interests. Each party will be responsible for making arrangements necessary to transmit its entitlement of San Onofre power from San Onofre to its electric system. Except as provided elsewhere herein, Riverside and Anaheim will each be responsible for obtaining from all regulatory authoridcs such authorizations and approvals as are necessary for its participation and construction and operation of San Onofre. Each party waives the right to seek partition of San Onofre and the Project Easements. Each further agrees that it will not resort to any action at law or inequity to partition the same. Before any party may assign to any entity, other than another party, any or all its interests in Units 2 or 3, the other parties each shall have the right of first refusal. Riverside and Anaheim have the right to audit the books and records of Edison directly pertaining to Units 2 and 3 in the common facilities and the plant site. If any errors are revealed by such inspection, appropriate adjustments will be made. C-3 2}l2 2/} 4

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Appendix D

SUMMARY

OF TIIE EDISON RIVERSIDE SAN ONOFRE TRANSMISSION SERVICE AGREEMENT Purpose The purpose of this Agreement is to provide transmission of the City's share of the energy from the Edison Switchyard at San Onofre Nuclear Generating Station to Riverside at the point of delivery, as more specifically provided herein. Term The Agreement shall become effective on the date following execution by the parties when accepted for filing by the Federal Energy Regulatory Commission. or at such time when the Commission determines that the Agreement is just and reasonable, and without new conditions, unacceptable to either party. The Agreement will remain efTective for 50 years unless, by written agreement, the parties terminate the Agreement, the Inte-grated Operations Agreements Units 2 and 3 are terminated. If notice of termination of the Integrated Operations Agreement is given by either party the parties shall take action to develop a new arrangement for furnishing the services referred to in the Settlement Agreement. Transmission Senice Except as modified herein, transmission service shall be provided in accordance with the Contract Rate TN and Contract Rate TP. Service shall commence on the Date Of Firm Operation for Unit 2, and on the Date Of Firm Operation for Unit 3 and Contract Capa ity shall, for each, be 19.69 megawatts. Edison will accept delivery of Riverside's Units 2 and 3 energy at Edison's 220-kV buses at rates of delivery not exceeding Contract Capacity, and will simultaneously deliver a like amount of energy to Riverside at the Point Of Delivery. The Point Of Delivery is the City Limits of Riverside. During times when Riverside may be required to provide its share of auxiliary power requirement at San Onofre, Edimn will accept deliveries fr. m Riverside at the Point Of Delivery and simultaneous.y deliver the like ans nnt to Edison's 220-kV busses o D enable Riverside to meet its requirements. Edison reserves the right to temporarily interrupt or curtail services upon reasonante advance notice to Riverside to make repairs or modifications or to perform maintenance work. Charges and Transmission Losses Charges will be made in accordance with the rates set forth in Contract Rate TN and Contract Rate TP. Circuit mileage is agreed to be 69.9 miles subject to change. No additione charge shall be made for auxiliary power requirements. Transmission losses will be determined in accordance with the rates set forth in Contract Rate TN, Contract Rate TP and using the circuit mileage agreed to above. Edison reserves the right,in furnishing transmission service as set forth in the Integrated Operations Agree-ment, to file with the Commission for changes in rates, charges, classification, or services, or any rule, re,gulation or contract. Ililling and Payment Prior to the 15th day of December of each year, Edison will render a bill to Riverside for services to be provided during the following year. One-twelfth of such annual charge shall be due by Riverside on the 15th day of each month. Payments which are not made in full by the due date shal' accrue interest at 107c per annum on the unpaid balance. Integration Agreement Prosisions Provisions of the Integrated Operations Agreement covering liability, arbitration, regulatory authority, uncontrollable forces, governing law, notices, and other matters, apply also to this Agreement. D-1 2112 245

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Appendix E CITY OF RIVERSIDE RESOLUTION NO.13472 (as amended) RESOLUTION OF Tile CITY COUNCIL OF Tile CITY OF RIVERSIDE, CALIFORNIA. AUTHORIZING THE ISSUANCE OF $43,000,000 ELECTRIC REVENUE BONDS OF SAID CITY AND PROVIDING TIIE TERNIS AND CONDITIONS FOR THE ISSUANCE OF SAID llONDS. Page Recitals.. . . I Section 1. Definitions.. 1 Section 2. Amount, Issuance, Purpose and Nature of Bonds.. 2 Section 3. Description of Bonds.. .. 3 Section 4. Interest.. 4 Section 5. E.:ccution of Bonds.. 4 Section 6. Registration.. 4 Section 7. Redemp'. ion of Bonds.. 4 (a) Notice of Redemption.. . 4 (b) Redemption Account.. 5 (c) Effect of Notice and Availability of Redemption Aloney.. 5 Section 8. Funds and Accounts.. 6 l Section 9. Disposition of Bond Proceeds.. 6 Section 10. Electric Revenue Fund.. 6 Section 11. Bond Sersce Account.. 6 Section 12. Reserve Account.. 7 Sectien 13. N1aintenance and Operation Account.. . 8 Section 14. Surplus . 8 Section 15. Warranty.. . 8 Section 16. Covenants.. 8 Covenant 1. Punctual Payment.. 9 Covenant 2. Discharge Claims.. 9 Covenant 3. Commence Acquisition and Construction.. 9 Covenant 4. Operate Electric System in EfTicient and Economical Nianner.. 9 Covenant 5. Against Sale, Eminent Domain.. 9 Covenant 6. Insurance.. 10 Covenant 7. Records and Accounts.. 10 Covenant 8. No Free Service.. . 10 Covenant 9. Rates and Charges.. I1 Covenant 10. No Priority for Additional Bonds.. I1 2112 247

Page Covenant 11. Limit- on Additional Debt.. .. I1 Covenant 12. Arbitrage.. . . 12 Section 17. Investments.. . . . . 12 Section 18. Lost, Stolen; Destroyed or h!utilated Bonds.. 12 Section 19. Cancellation of Bonds.. . 12 Section 20. Consent of Bondholders.. . . 13 (a) Calling Bondholders' Meeting.. 13 (b) Notice of Afecting.. 13 (c) Voting Qualifications.. . . . . 13 (d) Issuer-owned Bonds.. 14 (c) Ouorum and Procedure 14 (f) Vote Required.. . . 14 Section 21. Bond and Coupon Forms.. 14 Section 22. Specific Findings.. . . . 18 Section 23. Proceedings Constitute Contract.. 19 Section 24. Future Contracts.. 19 Section 25. Severability.. 19 Section 26. ElIective Date.. . 19 Execution.. . . . 19 4 2112 248 E-2

CITY OF RIVERSIDE RESOLUTION NO.13472 RESOLUTION OF TIIE CITY COUNCIL OF T11E CITY OF RIVERSIDE, CALIFORNIA, AUTIIORIZING TIIE ISSUANCE OF $43,000.000 ELECTRIC REVENUE BONDS OF SAID CITY AND PROVIDING THE TERMS AND CONDITIONS FOR Tile ISSUANCE OF SAID BONDS. W11EREAS, pursuant to Section 1306 of the City Charter, the Board of Public Utilities has recom-mended to the City Council the authorization of the issuance of electric revenue bonds for the purpose of acquiring, constructing, reconstructing, replacing, extending and improving works for supplying the City and its inhabitants with electric energy; and WHEREAS, said Recommendation specified the matters required by said Section 1306; and certified copics thereof have been transmitted to the offices of the Mayor, the City Manager, and the City Clerk, and the City Clerk has forthwith presented the said Recommendation to the City Council; NOW, THEREFORE, the City Council of the City of Riverside, California, DOES HEREBY RESOLVE, DETERMINE AND ORDER as follows: Section 1. Definitions. Unless the context otherwise requires, the following terms used in this Resolution shall have the following meanings: (a) " Authorized investments" means any investments in which the City may legally invest funds subject to its control. (b) " Board" means the Board of Public Utilities of the City. g (c) " Bonds" means the Bonds authorized by this Resolution. (d) " City" means the City of Riverside, California. (e) " City Charter" means the Charter of the City. (f) " City Council" or " Council" means the City Council of the City. (g) " Electric Revenue Fund" means the revenue fund pertaining to the municipal utility (i.e., the Electric System) on account of which the indebtedness evidenced by the Bonds is created. (h) " Electric System" means the electric public utility system of the City and shall include all works owned, controlled or operated by the City for supplying the City and its' inhabitants with electric energy. (i) " Fiscal year" means the year period beginning on July 1st and ending on the next follow-ing June 30th. (j) " Gross Operating Revenues" means all the revenues of the Electric System which are required by the City Charter to be kept separate and apart from all other moneys of the City by deposit in the appropriate revenue fund, to wit: the " Electric Revenue Fund." (k) " Maximum amount of annual debt service" shall mean an amount equal to the maximum amount required to be paid in any liscal year on account of interest and principal coming due on the Revenue Bonds of the City Payable Out of the Electric Rcvenue Fund. (1) " Net Operating Revenues" means the Gross Operating Resenues, less " Operating and Maintenance Expenses." E-3 2112 249

(m) "Operatmg and Maintenance Expenses" means those expenses of operation and mainte-nance of the Electric System and include any necessary contribution to retirement of Electric System employees. (n) " Parity bonds" means revenue bonds, revenue notes or other similar evidences of indebtedness heretofore on hereafter issued for the acquisition, construction and financing of extensions of, additions to, repairs and replacements to, renewals of, and improvements of the enterprise, payable out of the surplus revenues and whi:h rank on a parity with the Bonds. (o) " Recommendation" means the Recommendation of the Board to the City Council referred to in the recitals hereof. (p) " Revenue Bonds of the City Payable Out of the Electric Revenue Fund" means the

    " Revenue Bonded Debt of the Electric System," to wit: the debt evidenced by revenue bonds, revenue notes or other evidences of indchtedness payable only out of the revenues pertaining to the Electric System (i.e., the Electric Revenue Fund), whether the same are issued under the provis;ons of the City Charter or under the provisions of any general law of the State of California.

(q) "Section 1306" means Section 1306 of the City Charter, and any other references to sections shall, unless etherwise indicated, refer to sections of the City Charter. (r) "Scrial bonds" means bonds, falling due by their terms in specified years, which are not term bonds. (s) " Subsequent resolution" means any resolution authorizing the issuance of parity bonds subsequent to the issuance of the Bonds. (t) " Term bonds" means bonds which are scheduled to be called and redeemed prior to maturity through the use of a sinking fund established for that purpose. Whenever it is necessary to calculate, as to any issue of bonds, the maximum amount required to be paid in any fiscal year thereafter on account of interest and principal coming due on such bonds, said maximum amount shall be deemed to be the maximum sum obtained for any fiscal year thereafter by totaling the following for each fiscal year thereafter; (a) The principal amount of all outstanding serial bonds payable in such fiscal year; and (b) The amount of minimum sinking fund payments for term bonds required to be made in such fiscal year together with premium thereon, if any be payable; and (c) The interest which would be duc during such fiscal year on the aggregate amount of bonds which would be outstanuing in such fiscal year if the bonds are retired as scheduled, but deducting and excluding from such aggregate amount the amount of bonds already retired. Section 2. Amount, Issuance, Purpose and Nature of Bonds. Pursuant to Section 1306, the City Council hereby approves the Recommendation and hereby authorizes and orders the issuance of Electric Revenue Bonds in accordance with the Recommendation for the purpose stated in such Recommendation and heretofore stated in the recitals hercef. Said Electric Revenue Bonds shall not constitute or evidence indebtedness of the City but shall constitute and evidence only indebtedness of the Electric Systen payable in the manner prosided in Section 1306 and in this Resolution, and not otherwise. Said Electric Revenue Bonds are payable both as to principal and interest and as to any premiums upon the redemption of any thereof prior to maturity only out of the Electric Revenue Fund and not out of any other fund or moneys E-4 2)l2 2{,

of the City; provided, however, that this shall not preclude payment of principal, interest or premiums through appropriate reserve funds or special trust accounts, or out of sums received as premiums or I accrued interest on the sale, or the payment of principal or premiums out of the proceeds of the sale of refunding bonds issued for that purpose, or the payment out of the proceeds of any Bonds of the whole or a part of the interest accruing on said Bonds during the period of the performance of work to be paid for out of the proceeds, and for the first six months thereafter, or the payment by the purchasers of any such Bonds, or by an entity, public or private, other than the City, in any case where any such purchaser or entity may hase guaranteed such payment, Any Bond for the payment and discharge of which, upon maturity or upon redemption prior to maturity, provision has been made through the irrevocable setting apart in a bond service fund, redemp-tion fund, or other trust fund or trust account to insure the payment thereof of moneys sutlicient for that purpose, or through the irrevocable segregation for the purpose, in some bond service fund, redemption fund or other trust fund or trust account of moneys sufficient therefor, shall be deemed to be no longer outstanding ,tithin the meaning of any provision of Section 1306 and this Resolution. Nothing in this Resolution shall preclude the issuance, subject to the limitations in the covenants in Section 16 hereof, of Resenue llonds of the City Payable Out of the Electric Revenue Fund and ranking on a parity with these llonds. Section 3. Description of Ilonds. Said Bonds shall be in the principal sum of $43,000,000, shall be 8600 in number, numbered I to 8600 inclusive, and shall be of the denomination of $5,000 each. Said Bonds shall be designated ELECTRIC REVENUE BONDS, ISSUE OF 1978, shall be dated August I,1978, and shall be payable in consecutive numerical order on August 1 in each year of maturity in the amounts for e::ch of the several years as follows: Principal Principal Year Amount Year Amount 1983.. $ 500,000 1998.. 51,275,000 1984.. 525,000 1999.. 1,375,000 1985.. 575,000 2000.. 1,450,000 1986.. 600,000 2001. 1,550,000 1987.. 650,000 2002.. 1,650,000 1988.. 675,000 2003.. 1,750,M O 1989.. 725,000 2004.. 1,875,000 1990.. 775,000 2005.. 2,000,000 1991. 825,000 2006.. 2,125,000 1992.. 875,000 2007.. 2,250,000 1993.. 925,000 2008.. 2,400,000 1994.. 1,000,000 2009.. 2,550,000 1995.. 1,050,000 2010.. 2,725,000 1996. I,125,000 2011. 2,900,000 1997.. 1,200,000 2012.. 3,100,000 n-

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Section 4. Interest. Said Bonds shall bear interest at a rate or rates to be hereafter fixed by resolution or resolutions, but not to exceed seven and one-half percent (7% G ) per annum payable semiannually on the 1st days of February and August of each year. Each Bond shall bear interest until the principal sum thereof has been paid; prosided. however, that if at the maturity date of any Bond, or if the same is redeemable prior to maturity and has been duly called for redemption, fum are available for the payment or redemption thereof in full accordance with the terms of this Resolution, said Bond shall then cease to bear interest. Said 13onds and the interest thereon shall be payable in lawful money of the United States of America at the oflice of the City Treasurer of the City, or at the option of the holder, at any fiscal agency of the City in Los Angeles, California, or in San Francisco, California, or in Chicago, Illinois, or in New York, New York. Section 5. Faceution of Bonds. The Mayor of the City and the Treasurer of the City are hereby authorized and directed to sign all of said Bonds by their printed, lithographed or engraved facsimile signatures, and the City Clerk of the City is hereby authorized and directed to countersign said Bonds and to allix thereto the printed, lithographed or engraved facsimile corporate seal of the City, and the Treasurer of the City is hereby authorized and directed to sign the interest coupons of said Bonds by his printed, lithographed or engraved facsimile signature. Section 6. Registration. Said Bonds may be registered either as to principal only or as to both principal and interest, and the form of registration of any registered Bond may be changed, or any registered Bond may be discharged from registration in the manner and with the etTect set forth in the provisions for registration containcd in the form of Bond set forth in Section 21 hereof. Section 7. Redemption of Bonds. The Bonds maturing on or prior to August 1,1988, shall not be subject to call or redemption prior to maturity. The Bonds maturing on or after August I,1989, or any of them, may be called before maturity and redeemed, at the option of the City, on August 1,1986, or on any interest payment date thereafter prior to maturity, at a redemption price for each redeemable Bond equal to 100% CF of the principal amount thereof plus % 9 of such principal amount for each whole twelve months' period and for any remaining fraction of a twelve months' period from the redemption date to the maturity date of such Bond, but the redemption price, including premium payable at any time upon redemption, shall not exceed 103H 9 of such principal amount. All or any of the Bonds subject to call may be called for redemption at any one time. If less than all of the Bonds are redeemed at any one time, such Bonds shall be redeemed only by complete maturity or maturities as selected by the City Council at its discretion. The interest payment date on which Bonds are to be presented for redemption is herein sometimes called the " redemption date." (a) Notice of Redemption. Notice of the intended redemption shall be published by one insertion in a newspaper of general circulation in the City, and in a financial newspaper or journal of national circulation published in The City of New York, New York, said publications to be at least 30 days but not more than 60 days prior to the redemption date. The notice of redemption shall (a) state the redemption date; (b) state the redemption price; (c) state the numbers and dates of maturity of the Bonds to be redeemed; provided, however, that whenever any call includes all of the outstanding Bonds of a maturity the numbers of the Bonds need not be stated; (d) require that such Bonds be surrendered with all interest coupons maturing subsequent to the redemption date (except that no coupons need be surrendered on Bonds registered as to both principal and interest) at the oflice of the Treasurer of the City, or at any fiscal agency of the City in Los Angeles. California, or in San Francisco, California, or in Chicago, Illinois, or in New York, New York; and (e) give notice that further interest on such Bonds will not accrue after the redemption date. The Treasurer shall, on or before the date of publication of said notice of redemption, mail a similar notice, postage prepaid, to any person, firm or corporation that originally perchased the Bonds from the City. E-6 2112 252

If any of the Honds designated for redemption shall be registered so as to be payable otherwise than to bearer, the Treasurer shall, on or before the date of publication of sdd notice of redemption, h mail a similar notice, postage prepaid, to the respcetive registered owners thereof at the address uppearing on the llond registry books. The actual receipt by the holder of any Hond (hereinafter referred to as " bondholder") of notice of such redemption shall not be a condition precedent to redemption, and failure to receive such notice shall not alfect the validity of the proceedings for the redemption of such Ilonds or the ce'sation of interest on the redemption date. The notice or notices required by this section shall be given by the Treasurer. A certificate by the Treasurer that notice of call and redemption has been given to original purchasers and to holders of registered Honds as herein prosided shall be conclusive as against all parties, and no ')ondholder whose Hond or registered Hond is called for redemption may object thereto or object to the cessation of interest on the redemption date fixed by any claim or showing that be failed to actually receive such notice of call and redemption. (b) Rede mption .lccount. Prior to the redemption date there shall be established in the City Treasury in the Electric Revenue Fund a redemption account to be described or known as El.ECTRIC REVENUE IlONDS, ISSUE OF 1978, REDEMPIION ACCOUNT (hereinafter sometimes referred to as " Redemption Account"), and prior to the redemption date there must be set aside in said Redemption Account moneys available for the purpose and sullicient to redeem, at the premiums payable as provided in this Reschition, the Hords designated in such notice for redemption. Said moneys must be set aside in said accounts solely for that purpose and shall t3e applied on or after the redemption date to payment (principal and premium) of the Honds to be redeemed upon presentatien and surrendei of such llonds and (except as to Honds registered as to both principal and interest) all interest coupons maturing after the redemption date, and shall be used only for that purpose. Any interest coupons due on or prior to the redemption date shall be paid from the llond Service Account provided in Section 11 hereof upon presentation and surrender thereof. Any interest due on or prior to the redemption date upon Honds registered as to both

) principal and interest shall be paid from said Hond Service Account. Each Hond presented (if unregistered or registered as to principal only) must have attached thereto or presented therewith allinterest coupons maturing after the redemption date. If after all of the Honds have been redeemed and cancelled or paid and cancelled there are money remaining in said Redemption Account, said moneys shall be transferred to the Electric Revenue Fund; provided, howeser, that if said moneys are part of the proceeds of refunding bonds said moneys shall be transferred to the fund or account created for the payment of principal of and interest on such refunding bonds.

(c) Efect of Notice and ilrailability of Redemption Money. When notice of redemption has been gisen, substantially as hereinbefore provided, and when the amount necessary for the redemp-tion of the Honds called for redemption (principal and premium) is set aside for that purpose in the Redemption Account, as hercinbefore provided, the Bonds designated for redemption shall become due and payable on the redemption date, and upon presentation and surrender of said Honds and (except as to Honds registered as to both prin-ipal and interest) all interest coupons maturing after the redemption date, at the place specified in the notice of redemption, such Honds shall be redeemed and paid at said redemption price out of the Redemption Account, and no interest will accrue on such Honds called for redemption on on any interest coupon thereof after the redemp-tion date specified in such notice, and the holders of said Honds so called for redemption after such reden.ption date shall look for the payment of such Honds and the premium thereon only to said Redemption Account. All llonds redeemed and all interest coupons thereof shall be cancelled forthwith by the Treasurer and shall not be reissued. All interest coupons pertaining to any redeemed Hond3, which coupons have matured on or prior to the redemption date, shall continue to be payable to the respective holders thereof but without interest thereon. All unpaid interest payable at or prior to the redemption Jate upon Honds registered in such manner that the interest is payable only to the rtgistered owners shall E-7

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continue to be payabic to the respective registered owners of such Bonds, or their order, but without interest thereon. Section 8. Funds and Accounts. There are hereby created or continued and redesignated, as the case may be, in the City Treasury the following funds and accounts:

1. Electric Revenue Bonds, Acquisition and Construction Fund (herein sometimes called

    " Construction Fund");

2. Electric Revenue Fund, in which there are hereby continued the following accounts:

a. Electric Revenue Bonds, Bond Service Account (herein sometimes called " Bond Service Account");

b. Electric Revenue Bonds, Reserve Account (herein sometimes called " Reserve Account");

c. Electric Maintenance and Operation Account (herein sometimes called "M & O Account");

d. Electric Revenue Bonds, Surplus Account (herein sometimes called " Surplus Account");

3. Electric Surplus Revenue Fund (" Surplus Revenue Fund") in which there is hereby con-tinued the Debt Service Account.

Section 9. Disposition of Bond Proceeds. For the purpose of insuring the application of the proceeds received from the sale of the Bonds to the objects and purposes set forth in the recitals hereof, for which said Bonds are to be issued, the proceeds of the sale of the Bonds, except for any premium and any accrued interest paid by the purchasers of the Bonds and except for the amoimt to be placed in the Reserve Account pursuant to Section 12 hereof, shall be pheed in the Construction Fund and shall be applied exclusively to such objects and purposes set forth in the recitals hereof. The City may deposit money receised from any other source in the Construction Fund. The money set aside and placed in the Construction Fund shall remain therein until from time to time expended for such objects and purposes for which the Bonds were issued; provided, however, that: (a) the Electric Revenue Fund may be reimbursed frorr. ;uch proceeds for expenditures for purposes for which the Bonds were issued made from such Fund after the issuance of the Bonds had been recommended by the Board; (b) said proceeds may be used for the payment of intrest on said Bonds during the period of acquisition and construction and for the first n months thereafter; and (c) when the objects and purposes for which the Bonds are issued have been accom-plished any remaining unexpended funds derived from the sale of said Bonds shall be used for the payment of principal and interest of said Bonds or for the redemption of any callable Bonds thereof, and, for such purpose, shall be transferrcJ to the appropriate fund or account. Money in the Construction Fund may be temporarily invested in any authorized investments. Section 10. Electric Resenue Fund. The Gross Operating Revenues shall be deposited in the Electric Revenue Fund, and payments from said fund shall be made as provided by Section 1304 and this Resolution, or any other resolution relating to Revenue Bonds of the City Payable Out of the Electric Revenue Fund. xetion 11. Bond Sersice Account. Upon delivery of the Bonds to the purchasers thereof, any premium and any accrued interest paid by said purchasers shall be placed in the Bond Service Account. On the date of the Bonds and thereafter, so long as any of the Bonds are outstanding, on the first day of each calendar month these shall be set aside and transferred within the Electric Revenue Fund to the E-S n ~ c.

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flond Service Account at least one-sixth (1/6th) of the interest which will become due and payable on outstanding Revenue Bonds of the City Payable Out of the Electric Revenue Fund (whether serial I or term bonds) within the next ensuing six (6) months and also at least one-twelfth (1/l?th) of the principal amount of such Revenue llonds of the City Payable Out of the Electric Revenue Fund (serial htmds only) which will mature and be payable within the next ensuing twelve (12) months, so that at

      ! cast the full amount required to pay, as it becomes due, the interest on such Resenue Ilords of the City Payable Out of the Electric Revenue Fund and any maturity or installment of principal of such serial Revenue Ilonds of the City Payable Out of the Electric Revenue Fund shall be set aside in the Ilond Service Account at least one month prior to the date the installment of interest and/or principal becomes due, No such transfer need be made prior to the actual delivery of the Ilonds to the purchaser thereof, pro-vided, however, that if the Ilonds are issued and delivered subsequent to their date there shall be set aside, transferred to and placed in the llond Service Account on the 1st day of the calendar month subsequent to the date of delivery, sums at least sullicient, together with other transfers of the same amount raade on the 1st day of each calendar month thereafter, to provide in said llond Senice Account one month prior to the payment date of the first installment of interest and/or principal on such llonds the full amount of such installment of interest and/or principal. Any amount required to be set aside, transferred to and placed in the Ilond Service Account may be prepaid in whole or in part by being earlier set aside, transferred to and placed in the Ilond Service Account and in that event the monthly transfer which has been so prepaid need not be made at the time appointed therefor. In any event, at least one month prior to the due date of any maturity or installment of principal of such Revenue Ilonds of the City Payable Out of the Electric Revenue Fund (serial bonds only) and/or interest on such Revenue Ilonds of the City Payable Out of the Electric Revenue Fund (whether serial or term bonds), all sums required for the payment thereof must be in such Ilond Service Account in cash. Such sums shall be so trans-ferred within the Electric Revenue Fund, except for transfers to said Account from the Reserve Account as hereinafter prosided in this Resolution. It is hereby directed that such sums be so set aside through transfers made in such amounts as may be necessary to comply with the foregoing provisions of this section. Aloney set aside and placed in said llond Service Account shall remain therein until from time l to time expended for the payment of such principal and interest, and shall not be used for any other purpose whatever, except that any such money so set aside and placed in said Ilond Service Account which at any time may be in excess of the amount which at that time is required by the terms ef this section to be in the llond Service Account in cash may be temporarily invested in any authorized invest-ments, but such investment shall not affect the obligation of the City to cause the full amount required by the terms of this section to be available in said llond Service Account in cash at the time required by the terms of this section. Any money remaining in said Ilond Service Account after payment in full (including interest) of the llonds may be transferred to the Electric Revenue Fund. The llonds and interest coupons shall recite that they are payable from the Electric Revenue Fund, but said llonds and coupons, notwithstanding such recital, shall be paid from the llond Service Account, which is derived from the Electric Revenue Fund and is a subdivision thereof. If at the time any llond or interest coupon is presented for payment the moneys in the llond Service Account are insufficient to make such payment, money sullicient for such Payment shall be transferred from the Reserve Account to said iland Service Account.

Section 12. Resene Account. Upon delivery of the Ilonds to the purchasers thereof, the som of

   $ 2,000,000 from the proceeds of the sale thereof shall be placed in the Reserve Account. On the first day of each calendar month after the lionds have been dehvered to the purchasers thereof there hall be transferred from the Electric Revenue Fund (after the transfer prosided for in Section 11 reof to the Ilond Service Account) and placed in the Reserve Account a sam no less than one sntieth (l 60) of the maximum amount of annual debt service until an amount equal to the maximum amount of annual debt service has been paid into said Reserve Account, and thereaf ter there shall be maintained in said Reserve Account a sum equal to said maximum amount of annual debt service.

Aloneys deposited in the Reserve Account from the proceeds of sale of the llonds shall be deemed to satisfy such motuhly transfer requiicment to the extent of such deposit. Aloneys in the Reserve Account E-9 91 1 n-I $I ~ fl)

shall be used solely for the purpose of paying the interest on any Revenue Bonds of the City Payable Out of the Electric Revenue Fund (whether serial or term bonds), for paying the principal on any serial Revenue Bonds of the City Payable Out of the Electric Revenue Fund or for the cali and redemption of any term Revenue Bonds of the City Payable Out of the Electric Revenue Fund in the event that moneys in the Bond Service Account or sinking account (s) are insuflicient therefor and for that purpose may be withdrawn and transferred to the Bond Service Account, sinking account (s) or redemption account (s) as the case may be; provided, howeser, that said moneys may be invested in any authorized investments. Any interest earned from investment of moneys in the Reserve Account shall be deemed to be part of the Gross Operating Revenues and shall be placed in the Electric Revenue Fund. No payment need be made into the Reserve Account su long as there shall be in said Account a sum at least equal to the maximum amount of annual debt service. Whenever moneys are withdrawn from the Reserve Account for any of the aforesaid purposes, the amount in the Reserve Account shall be restored to the amount required by this section by monthly transfers "om the Electric Revenue Fund made on the first day of each calendar month thereafter, each such transfer (except the last) to be equal to at least one-sixtieth (1/60) of the maximum amount of annual debt service. Any amount in the Reserse Fuad in excess of the maximum amount of annual debt service shall be transferred to the Electric Revenue Fund. Money in the Reserve Account may be used to pay the principal and/or interest on the last outstanding maturity of Revenue Bonds of the City Payable Out of the Electric Revenue Fund. Section 13. Maintenance and Operation Account. Monthly sums su0icient for the payment of the Operating and Maintenance Expenses shall be set aside and transferred within the Electric Revenue Fund to the M & O Account after the trensfers required by Sections 11 and 12 have been made. Section 14. Surplus. After the monthly transfers required or permitted by Sections 11,12 and 13 hereof nave been made, any remaining balance of the Gross Operating Revenues shall be used for (a) the payments required to be made into the Surplus Revenue Fund in accordance with provisions of Resolution No.13012 of the City Council adopted February 15, 1977 authorizing the issuance of

$2,500,000 aggregate principal amount Electric Revenue Bonds, Issue of 1977 (Subordinated), so long as any of such bonds are outstanding, and thereafter for (b) the restoration, if necessary, of the Reserve Account as required in Section 12 her f, and thereafter, for (c) the purposes and in the order set forth in subsections (c) and (f) of Section 1304, as presently existing or as hereafter amended.

After the above transfers and uses have been made and all other covenants of the City contained herein have been duly performed, any money remaining in the Electric Revenue Fund (herein some-times referred to as " Surplus") shall be transferred within the Electric Revenue Fund to the Surplus Account and may be: (i) invested in any authorized investments, or (ii) used for the redemp-tion of .ny outstanding Revenue Bonds of the City Payable Out of the Electric Revenue Fund which are subject to call and redemption prior to maturity or for,the purchase from time to time on the open market of any of the outstanding Revenue Bonds of the City Payable Out of the Electric Revenue Fund whether or not subject to call (irrespective of the maturity or number of such Bonds) at such prices and in such manner, either at public or private sale, or otherwise as the City in its discretion may determine, but the purchase price (including brokerage or other charges, but excluding accrued interest) shall not exceed 104% of the principal amount thereof, or, if the Revenue Bonds of the City Payable Out of the Electric Revenue Fund are subject to call and redemption prior to maturity, shall not exceed the redemption price on the next interest payment date of such Bonds so purchased, or (iii) used in any lawful manner. Section 15. Warranty. The City shall preserve and protect the security of the Bonds and the rights of the bondholders and warrant and defend their rights against all claims and demands of all persons. Section 16. Cosenants. The City makes the followit; covenants with the bondholders (to be performed by the City or its proper ollicers, agents or employees) which covenants are necessary and desirable for the protection and security of the bondholders; provided hov/cVer, that said covenants do E-10 97I7

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not require the City to use any of its funds other than the Electric Revenue Fund. Said covenant: shall be in effect, subject to the provisions of Section 20 hereof, so long as any of the Bonds issued hereunder l are outstanding and unpaid, or so long as prmision for the full payment and discharge thereof at maturity or upon redemption thereof prior to maturity through the setting apart in the Hond Service Account or in the Redemption Account or in a special trust fund to insure the payment or redemption thereof (as the case may be) of money sullicient for that purpose has not been made. Covenant 1. Punctual Pa3 ment. The City shall duly and punctually pay or cause to be paid the principal of and interest on every Hond issued hereunder, together with the premium thereon, if any be payable, on the date, at the place and in the manner mentioned in the Honds and coupons and in accordance with this Resolution, and that the payments into the Hond Sersice Account and Reserve Account will be made, all in strict conformity with the terms of said Honds and of this Resolution, and that it will faithfully observe and perform all of the conditions, cmenants and requirements of this Resolution and all sesolutions supplemental thereto and of the Honds issued hereunder, and that time of such payment and performance is of the essence of the Citis contract with the bondholders. Covenant 2. Discharge Claims. In order to fully preserse and protect the priority and security of the Honds the City shall pay from the E!cetric Revenue Fund and discharge all lawful claims for labor, materials and suppl:es furnished for or in connection with the Electric System which, if unpaid, may become a lien or charge upon the revenues prior or superior to the lien of the Honds and impair the security of the Honds. The City shall also pay from the Electric Revenue Fund all taxes and assessments or other gmernmental charges lawfully lesied or assessed upon or in respect of the Electric System or upon any part thereof or upon any of the revenues therefrom. Covenant 3. Commence Acquisition and Construction. As soon as funds are asailable therefor, the City will commence the accomplishment of the purposes for which the Bonds are issued and will continue the same to completion with all practical dispatch and in an economical manner. l Coven:mt 4. Operate Electric System in Ellicient and Economical .\lanner. 'I he City shall operate the Electric System in an etlicient and economical manner and shall operate, maintain and preserse the filectric System in good repair and working order. Cm enant 5. Agaimt Sale, Eminent Domain, The Electric System shall not be mortgaged or otherwise eneumbered, sold, leased, pledged, any charge placed thereon, or disposed of as a whole or substantially as a whole unless such sale or other disposition be so arranged as to prmide for a con-tinuance of payments into the Electric Revenue Fund sufficient in amount to permit payment therefrom of the principal of and interest on and premiums, if any, due upon the call and redemption thereof, of the Resenue Honds of the City Payable Out of the Electric Revenue Fund, and also to prmide for such payments into the Reserve Account as are required under the terms of this Resolution. The resenue c,f the Electric System or any other funds pledged or otherwise made available to secure payment of the principal of and interest on the Honds shall not be mortgaged, encumbered, sold. leased, pledged, any charge placed thereon, or disposed of er used except as authorized by the terms of this Resolution. The City further covenants that it will not enter into any agreement which impairs the operation of the Electric System or any part of it necessary to secure adequate revenue to pay the principal and interest of the Honds or which otherwise would impair the rights of the bondholders with respect to the revenue or the operation of the Electric System. If any part of the Electric System is sold the payment therefor shall eithu be used for the acquisition, construction and financing of additions to and extensions and improve-ments of the Electric System or shall be placed in the llond Service Account or the Redemption Account and shall be used to pay or call and redeem outstanding Honds in the manner provided in this Resolution. Any amounts received as awards as a result of the taking of all or any part of IN Electric Sptem by the lawful exercise of eminent domain, if anJ to the extent that such right can be excreised agaii.st such property of the City, shall either be used for the acquisition and/or construction of improve-E-Il nr, 2- 2 23/

ments and extensions of the Electric System or shall be placed ia the llond Service Account or the Redemption Account and shall be used to pay or call and redeem outstanding 11onds in the manner provided in this Resolution. Covenant 6. Insurance. The City shall at all times maintain with responsible insurers all such insurance on the Electric System as is customarily maintained with respect to works and properties of like character against accident to, loss of or damage to such works or properties. If any useful part of the Electric System shall be damaged or destroyed, such part shall be restored to use. The money collected from insurance against accident to or destruction of the Electric System shall be used for repairing or rebuilding the damaged or destroyed Electric System, and to the extent not so applied, shall be applied to the retirement of any outstanding Revenue llonds of the City Payable Out of the Electric Revenue Fund. The City shall also maintain with responsible insurers workmen's compensation insurance and insurance against public liability and property damage to the extent reasonably necessary to protect the City and the bondholders. Covenant 7. Records and Accounts. The City shall keep proper books of records and accounts of the Electric System, separate from all other records and accounts, in which complete and correct entries shall be made of all transactions relating to the Electric System. Said books shall at all times be subject to the inspection of the holder of not less than 109 of the outstanding Revenue Ilonds of the City Payable Out of the Electric Revenue Fund or their representatives authorized in writing. The City shall cause the books and accounts of the Electric System to be audited annually by an independ nt certified public accountant or firm of certified public accountants, and will make available for inspection by the bondholder at the oflice of the City Clerk of said City, and at the oflice of the Treasurer thereof and at the oflice of each fiscal agency of the City, a copy of the report of such accountant or accountants. The City shall cause to be published annually, not more than 120 days after the close of each fiscal year a summary statement showing the Gross Operating Revenues and the amount of all other funds collected which are required to be pledged or otherwise made available as security for payment of principal of and interest on the Revenue llonds of the City Payable Out of the Electric Revenue Fund, the disbursements from such Revenues and other funds in reasonable detail, and a general statement of the financial and physical condition of the Electric System. The City shall furnish a copy of the statement to any bondholder upon request. Cov.aant 8. No Free Ser ice. Except to the extent that the City is required under agreements and/or contracts existing on the etTective date of this Resolution, no electricity or other service from the Electric Sptem may be furnished or rendered to any public agency (such term to include the United States of America, the State of California, the City, and any other municipal or public corporation, distnet er public agency) or any private corporation or person free. Except to tne extent that the City is required under agreements and/or contracts existing on the effective date of this Resolution, no such electricity or other service shall be rendered to any such public agency or any priate corporation or person at rates lower than those charged other persons for similar sersiec, except that charges to the City for electricity used for facilities of the City may be made at rates lower than those charged private persons. No building or other real property of the Electric Sptem shall be furnished free to any such public agency or any private person or corporation, but each of the foregoing shall pay the reasonable rental value of any property so used. Reasonable and proper charges for service rendered or quarters furnished to the Electric System shall be paid to the City from the Electric Revenue Fund. 'Ihe City shall maintain and enforce valid regulations for the payment of bills for electric service. Such regulations shall at all times during such period provide that the City shall discontinue electric service to any user whose electric bill has not been paid within the time fixed by said regulations. E-12 2112 258

Covenant 9. Hates and Charges. The City shall prescribe, revise and collect such charges for the sersices, facilities and electricity of the Electric System which, after making allowances for contingencies ) and error in the estimates, shall be at least sufficient to pay the following amounts in the order set forth: (a) The interest on and principal of the outstanding Revenue Bonds of the City Payable Out of the Electric Resenue Fund (whether serial or term bonds) as they become due and payable; (b) All payments required for compliance with this Resolution including payments required to be made into the Reserve Account; (c) 'Ihe Operating and Maintenance Expenses; (d) All payments required for compliance with Resolution No.13012 referred to in Section 14 heicof; and (e) All payments required to meet any other obligations of the City which are charges, tiens, encumbrances upon or payable from revenues of the Electric System; and the charges shall be so fixed that the Net Operating Revenues shall be at least 1.25 times the amounts payable under said (a) and (b) above and 1 times the amounts payable under (d) above. Covena nt 10 No Priorit3 for Additional llonds. No additional Resenue llonas of the City Pay-able Out e 5e Electric Revenue Fund shall be issued pursuant to Section 1306 or any other section of the City ' 'er or any other law of the State of California having any priority in payment of principal or interest out of the Electric Revenue Fund or out of any revenues payable into such Fund over the llonds theretofore issued and payable out of such Fund. Covenan t i 1. I.imits on Additional Debt. Except for bonds isseed to refund these llonds, no additional indebtedness esidenced by revenue bonds, revenue notes or other similar esidences of indebt-k cdness, and rankingcontracts or other on a parity withobligations these llondsofshall anybekind payable created out of the or incurred revenues of the Electric System unless: First: 'ihe City is not in default under the terms of this Resolution. Second: 'I he Net Operating Revenues, calculated on sound accounting principles, as shown by the books of the City for the latest tiscal year or the last completed twelve (12) month period ended prior to the incurring of such additional indebtedness as shown by an audit certificate or opinion of an independent certified public accountant or firm of certified public accountar' employed by the City, plus, at the option of the City, either or all of the items hereinafter i ihis covenant designated (a) and (b), shall have amounted to at least 1.25 times the maximu amount of annual debt sersice in any fiscal year thereafter on all indebtedness to be outstandin;, anmediately subsequent to the incurring of such additional indebtedness. I he items cilher or all of uhieh may be added to such Net Operating Revenues for the purpose of applying the restriction contained in this covenant are the following: (a) An allowanee for net sesenues from any resenue producing additions to and extensions and improvements of the Electric System to be made with the proceeds of such additional indebted-ness or with the proceeds of bonds presiously issued, and also for net revenues from any such additions, extensions or improsements which have been made from moneys from any source but which. during all or any part of such fiscal year or last completed twelve (12) month period, were not in sersice, all in an amount equal to 909 of the estimated additional average annual net res en um :o be derived from such additions, extensions and improvements for the first thirty-six (36) anth period in which each addition, extension or improsement is respectisely to be in oper .on, all as shown by the certificate or opinion of a qualified independent engineer employed by the City. E-13 9 n~ ( f l c) a9

(b) An allowance for earnings arising from any increase in the charges made for the use of the Electric System which has become efTective prior to the incurring of such additional indebted-ness but which, during all or any part of such fiscal year or last completed twelve (12) month period, was not in efTect, in an amount equal to 90% of the amount by which the net resenues would have been increased if such increase in charges had been in etiect during the whole of such fiscal year or last completed twelve (12) month period, as shown by the certificate or opinion of a qualified independent engineer employed by the City. The issuance of parity bonds shall also be subject to the provisions of Resolution No.13012, referred to in Section 14 hereof. Covenant 12. Arbitrage. Sums credited to the various funds and accounts pertaining to the Bonds or the Project shall not be invested in such a manner as to result in the loss of exemption from federal income taxation of interest on the Bonds. Such sums constituting in the aggregate a major poition or more of the proceeds of all the Bonds shall not be invested directly or indirectly in taxable obligations so as to produce an adjusted yield (including permissible adjustments for a y premiums, discounts and costs) which results in the Bonds constituting taxable " arbitrage bonds" wi ain the meaning of Section 103(d), Internal Revenue Code of 1954, as amended by Section 601(a), Tax Reform Act of 1969 (83 Stat. 656), any subsequent amendments, and the Income Tax Regulations issued thereunder; but such sums may be otherwise invested if and when such act and regulations permit the investment to be made in the manner made without causing the Bonds to become taxable " arbitrage bonds" Section 17. Insessments. Obliptions purchased as an invest.*nt of money in any funds or accounts which are herein authorized to be invested shall be deemed m all times to be a part of such funds or accounts and any profit realized from the investment shal: be credited to such funds or accounts and any loss resulting from such investment shall be charged to such funds or accounts and, except for the Reserve Account, the interest accruing thereunder shall be credited to such funds or accounts. Investments of the Reserve Account shall mature not later than five (5) years from the date of investment; and all other investments shall mature not later than the date or dates when moneys in such funds or accounts will be required for the purposes provided in this Resolution. The City shall sell at the best price obtainable or present for redemption any obiigations so purchased wheneser it shall be necessary to do so in order to provide moneys to meet any payment or transfer for such account or from such funds or acccunts. For the purpose of determining at any given time the balance in any such fund or account any such investment constituting a part of such fund or account shall be valued at the then estimated or appraised market value of such investment. Section 18. I.ost, Stolen, Destroyed or Mutilated Bonds. In the event that any Bonds or any interest coupon pertaining thereto is lost, destroyed or mutilated, the City will cause to be issued a new Bond or coupon similar to the original to replace the same in such manner and upon such reason-abic terms and conditions, including the payment of costs and the posting of a surety bond, if the City deems such surety bond necessary, as may from time to time be determined and prescribed by resolution. The City may authorize such new ilond or coupon or coupons to be signed and authenticated in such manner as it determines in said resolution. Section 19. Cancellation of Ilonds. All Bonds and coupons surrendered to any tiscal agent of the City for payment upon maturity or for redemption prior to maturity shall upon payment therefor be cancelled immediately and forthwith transmitted to the Treasurer. All of the Bonds and i".erest coupons surrendered to the Treasurer for payment or redemption shall upon payment therefor be cancelled imme-diately. Any llonds purchased by the City as authorized herein together with all unpaid coupons pertaining thereto shall be cancelled fonhwith and shall not be reissued. All of the cancelled Bonds and interest coupons shall remain in the custody of the Treasurer until destroyed pursuant to due authorization. lfn

Section 20. Coment of Ilondholders. The City may, f: n time to time, and at any time, without the consent of bondholders as hereinafter provided, in ordt c are any ambiguity, defect or omission in this Resolution or in any resolution or order in the procceengs for the issuance of the 13onds, adopt such additional resolutions or orders supplemental hereto as shall not be inconsistent with the terms and provisions hereof, and such supplemental resolutions or orders shall thereafter become a part of the proceedings for the issuance of the 13onds as referred to in Section M. The consent of bondholders provided for in this section shall relate solely to the amendment, waiver or modification of the covenants 3pecified in Section 16 hereof and shall not be effective to waive or modify any other provisions to this Resolution or of any of the proceedings for the issuance of said Ilonds. Any act relating to the amend-ment, waiver or modification of any of the said covenants consented to by bondholders holding sixty percent (60G ) in aggregate principal amount of the outstanding Ilonds, exclusive of Ilonds, if any, owned by the City, shall be binding upon the holders of all of the llonds and interest coupons, whether such coupons be attached to lionds or detached therefrom, and shall not be deemed an infringement of any of the provisions of this Resolution or of said Charter, whatever the character of such act may be, and may be done and performed as fully and freely as if expressly permitted by the terms of this Resolution, and after such consent relating to such specified matters has been given, no bondholder or holder of any interest coupon, whether attached to a llo,d or detached therefrom, shall have any right or interest to object to such action or in any manner to question the propriety thereof or to enjoin or restrain the City or any ollicer thereof from taking any action pursuant thereto. (a) Calling Ihmd/m/dcri Afecting. If the City shall desire to obtain any such consent, it shall call a meeting of bondholders, by resolution, for the purpose of considering the action, the consent to which is desired. (b) Notice of Afecting. Notice specifying the purpose, place, date and hour of such meeting shall be published once in a financial newspaper or journal of national circulation pub-lished in The City of New York, New York, not less than sixty (60) days and not more than ninety (90) days prior to the date fixed for the meeting. Such notice shall set forth the nature g of the proposed action, consent to which is desired. If any of the llonds shall be so registered as to be payable otherwise than to bearer, the City Clerk shall, on or before the first publication of such notice, mail a similar notice, postage prepaid, to the respective registered owners thereof at their addresses appearing on the llond Registry llooks. The place, date and hour of holding such meeting and the date or dates of publishing and mailing such notice shall be determined by the City, in its discretion. The. .. receipt by any bondholder of notice of any such meeting shall not be a condition precedent to the holding of such meeting, and failure to receive such notice shall not afTect the validity of the proceedings thereat. A certificate by the City Clerk, approved by resolution of the City Council of said City, that the meeting has been called and that notiec thereof has been given as herein prmided shall be conclusive as against all pmtic- and it shall not be open to any bond-holder to show that he failed to receive notice of such meeting. (c) I'oting Gualifications. Any bondholder may, prior to any such meeting, deliver his llond or 11onds to any agency designated by the City for the purpose, and shall thereupon be entitled to receive an appropriate receipt for the Ilond or Ilonds so deposited, calling for the redelivery of such Ilond or 11onds at any time after the meeting. The Treasurer shall prepare and deliver to the chairman of the meeting a lia of the names and addresses of the registered owners of Ilonds, with a statement of the maturities and serial numbers of the llonds held and deposited by each of such bondholders, and no bondholder shall be entitled to vote at such meeting unlew his name appears upon such list or unless he shall present his llond or llonds at the meeting or a certificate of deposit thereof, satisfactory to the City, executed by a bank or trust company. No bondholder shall be permitted to vote with respect to a larger aggregate principal amount of Ilonds than is set against his name on such list, unless he shall produce the lionds upon uhich he desires to vote, or a certificate of deposit thereof as abovo prosided. E-15 2112 2nl

(d) Issner-owned Honds. The City covenants that it will present at the meeting a certificate, signed and verified by one member of the City Council and by the Treasurer, stating the maturities and serial numbers of all Bonds owned by, or held for account of, the City, directly or inJirectly. l N. person shall be permitted at the meeting to vote or consent with respect to any Bond appearing upon such certificate, or any Bond which it Gall be established at or prior to the meeting is owned by the City, directly or indirectly, and no such Bond (in this Resolution referred to as " issuer-owned Bond") shall be counted in determining whether a quorum is present at the meeting. (c) Guorum and Procedure. A representation of at least sixty percent (60?L) in aggregate principal amount of the Bonds then outstanding (exclusive of Bonds, if any, owned by the City) shall be necessar" to constitute a quorum at any meeting of bondholders, but less than a quorum may adjourn the meeting from time to time, and the meeting may be held as so adjourned without further noGee, whether such adjournment shall have been had by r. quorum or by less than a quorum. The City shall, by an instrument in writing, appoint a temporary chairman of the meeting, and the meeting shall be organized by the election of a permanent chairman and a secretary. At any meeting each bondholder shall be entitled to one vote for every $5,000 principr.1 amount of Bonds with respect to which he shall be entitled to vote as aforesaid, and such vote may be given in person or by proxy duly appointed by an instrument in writing presented at the meeting. The City, by its duly authorized representative, may attend any meeting of the bondholders, but shall not be required to do so. (f) Vote Fequired. At any such meeting held as aforesaid there shall be submitted for the consideration and action of the bondholders a stracment of proposed action, consent to wh' a is desired, and if such action shall be consented to and approved by bondholders holding at .;ast sixty percent (609 ) in aggregate amount of the Bonds then outstanding (exclusive of issuer-owned Bonds) the chairman and secretary of the mceting shall so certify in writing to the City, and such certificate shall constitute complete evidence of consent of bondholders under the provisions of this Resolution. A certificate signed and verified by the chairman and secretary of any such meeting, shall be conclusive esidence and the only competent evidence of matters stated { in such certificate relating to proceedings taken at such meeting. Section 21. Bond and Coupon Forms. Said Bonds shall be payable to bearer, shall be issred in negotiable form, and shall be negotiable, and the form of said Bonds and interest a mpons thecof shall be substantially as follows: UNITED STATES OF AMERICA STATE OF CALIFORNIA COUNTY OF RIVERSIDE CITY OF RIVERSIDE ELECTRIC REVENUE BOND ISSUE OF 1978 No.. $5,000 Tile CITY OF RIVERSIDE, a municipal corporation situated in the County of Riverside, State of California, FOR VALUE RECEIVED, hereby promises to pay, solely from the Electric Revenue Fund, as hereinafter provided, to the bearer, on August I,19.. , upon presentation and surrender of this Bond, the sum of FIVE THOUSAND DOLLARS, with interest thereon at the rate of. Th per annum, payable semiannually on the first days of February and August of each and every year from the date hereof until this Bond is pa!d, upon presentation and surrender of the respective interest coupons hereto attached; provided, however, that if at the maturity date of this Bond or, if the same is redeemable prior to maturity and shall be duly called for redemption, then at the date fixed for redemption, funds are available for the payment or redemption thereof, as prosided in the Resolution hereinafter mentioned, this Bond shall then cease to bear interest. E-16 2112 2'2

Both principal and interest are payable in lawful money of the United States of America at the office of the City Treasurer of the City of Riverside, in said City, or, at the option of the holder I hereof, at any fiscal agency of the City of Riverside in 1.os Angeles, California, or in San Francisco, California, or in Chicago, Illinois, or in New York, New York. This Hend shall not constitute or esidence indebtedness of the City of Riserside, but shall constitute and esidence only indebtedness of the Electric System payable in the manner provided in Section 1304 of the City Charter of the City of Riverside and the Resolution hereinafter referred to adopted under said Section 1306 authorizing the issuance of this Bond and not otherwise. This Hond is payable both as to principal and interest and as to any premium upon the redemption hereof prior to maturity only out of the E!ectric Revenue Fund and not out of any other fund or moneys of the City; prmided, however, that this shall not preclude payment of principal, interest or premiums through appropriate reserve funds or special trust accounts, or out of sums received as premiums or accrued interest on the sale of the issue of Honds of which this is one, or the payment of principal or premiums out of the proceeds of the sale of refunding bonds issued for that purpose, or the payment out of the proceeds of the sale of the issue of Honds of which this is one of the whole or a part of the interest accruing on said Honds during the period of the performance of work to be paid for out of the proceeds, and for the first six months thereafter, or the payment by the purchasers of any such Bonds, or by an entity, public or private, other than the City, in any case where any such purchaser or entity may have guaranteed such payment. The Electric Revenue Fund is established under and pursuant to said City Charter, and, under the provisions of said Resolution, the revenues of the Electric System of the City ar ccquired to be deposited in the City Treasury in the Electric Revenue Fund and used cnly fo oc purposes authorized by said Section 1304 and said Resolution, including the payment ca principal and interest of the issue of Honds of which this is one. This is one of a duly authorized issue of Honds of the City designated

• Electric Revenue Honds, Issue of 1978," hereinafter called "the Honds," all of which have been issued pursuant

) to said Section 1306 of the City Charter for the purpose of acquiring, constructing, reconstructing, replacing, extending and improsing the Electric System and the creation of said issue and the terms and conditions of the Honds are prmided for by the Resolution of the City Council of said City authorizing the Honds adopted July 5,1978, designated Resolution No. 13472, and this reference incorporates said Resolution herein, and by acceptance hereof the holder of this Bond and the coupons hereto attached assents to said terms and conditions. Said Resolutien is adopted under said Sectico 1306, and this Bond and the interest coupons hereto attached are issued under and are to be construed in accordance with the laws of the State of California. By covenant expressed in said Resolution, the City is obligated to prescril'e, revise and collect charges for the services, facilities and electricity of the Electric System of the City such as to proside revenues sufficient to pay the interest on and principal of the outstanding Bonds of this issue as they become due and payable in addition to all other payments required for compliance with said Resolution and the operating and maintenance expenses of the Electric System, are prohibited from issuing Honds basing any priority with respect to payment from the Electric Revenue Fund, and are subject to conditions with respect to any sale of said Electric System. In the manner pro-sided in the Resolution, any or all of the obligations referred to in this paragraph and certain other obligations mentioned in said Resolution may be waived with the consent of the holders of 60fo in aggregate principal amount of the outstanding Honds, exclusive of issuer-owned Bonds. Unless this Hond matures on or prior to August I,1988 it is callable and redeemable prior to maturity in accordance with the Provisions For Redemption Prior To Maturity endorsed hereon. This Bond and the coupons hereto attached are negotiable instruments and shall be negotiable by delivery. This Hood mny be registered as to principal only or as to both principal and interest, in accordance with the prosisions for registration endorsed hereon. E-17 2112 2r3

It is hereby certifkl cnd recited that any and all acts, conditions and things icquiicd to exist, to happen and to be performed precedent to and in the incurring of the indebtedness evidenced by this Bond and in the issuance of this Bond exist, have happened, and have been performed in due time, form and manner as required by Section 1306 of the Charter of the City, the Constitution and laws of the State of California and that this Bond, together with all other indebtedness of the City pertaining to the aforesaid Electric System, is within every debt and other limit prescribed by the Constitution and laws of the State of California and the Charter of said City. IN WITNESS WilEREOF, said City of Riverside has caused this Bond to be signed by the Mayor and the Treasurer of said City by their facsimile signatures, countersigned by the City Clerk of said City, and scaled with the facsimile corporre seal of said City, and the interest coupons hereto attached to be signed by the Treasurer by his facsimile signature, and has caused this Bond to be dated the first day of August,1978. Mayor of the City of Riverside, California Treasurer of the City of Riverside, California COUNTERSIGNED: 4 City Clerk of the City of Riverside, California (SEAL) (COUPON FORM) TIIE CITY OF RIVERSIDE, CALIFORNIA, will pay to the bearer, at the office of the Treasurer of said City in said City, or at the option of the holder hereof, at any fiscal agerm,, of the City of Riverside Coupon No.. In Los Angeles, California, or in San Francisco, California, or in Chicago, Illinois, or in New York, New York, out of the Electric Revenue Fund of said City and not out of any other fund or moneys of the City, the sum of $-. in lawful money of the United States of America, being the interest then due on ELECTRIC REVENUE BOND, ISSUE OF 1978 No. dated August I,1978, subject to the provisions on the reverse hereof.

                                                    ~                            - ~          ~
                                                               ~~ Treasurir of the City of ' ~~ ~

Riverside, California E-IS , - n ..

On the reverse side of the coupon there shall be printed substantially the following: (REVERSE OF COUPON' If the Bond to which this coupon is itached is redet nable prior to maturity and is duly called for redemption on a date prior to the mc.irity date of u.;s coupon, this coupon will be void. Substantially the following provisions for redemption and for registration shall be printed on the reverse side of the Bond: PROVISIONS FOR REDEMPTION PRIOR TO MATURITY Unless this Bond matures on or prior to August 1,1988, it is redeemabic prior to maturity in the manner and subject to the terms and provisions, and with the effect, set forth in the Resolution referred to on the face of this Bond, at the option of the City, on August 1,1986, or on any interest payment date thereafter prior to maturity, upon at least 30 days' prior notice published in a newspaper circulated in the City of Riserside, California, and in a financial newspaper or journal of national circulation published in The City of New York, New York, at a redemption price for each redeemable Bond equal to 100h G of the principal amount thereof plus % % of such principal amount for each whole twelve months' period and for any remaining fraction of a twelve months' period from the redemption date to the maturity date of such Bond, but the redemption price, including premium payable at any time upon redemption, shall not exceed 103% G of such principal amount. PROVISIONS FOR REGISTRATION This Bond, if unregistered, may be registered in the name of any person (designated by the bearer) as the registered owner hereof, either as to principal only or as to both principal and interest. This Bond, if registered in either of said forms may be changed to registration in the other

    )             of said forms or discharged from registration.

Each registration, transfer after registration, change of form of registration, or discharge from registration of this llond shall be entered by the Treasurer in books kept for that purpose at his office in Riverside, California, and noted by him in the registration blank on this Bond. Registration as to principal only shall not affect the negotiability by delivery of the coupons pertaining to this Bond. Upon any registration of this Bond as to both principal and interest, all unmatured coupons pertaining hereto shall be surrendered to the Treasurer and may be preserved or cancelled in his discretion. So long as this llond is registered no transfer hereof shall be valid for any purpose unless made by the registered owner and entered nnd noted as herein provided, and the principal hereof and any premium upon the redemption hereof shall be payable only to the registered owner, or to his order. Interest on this Bond, if registered as to l'oth principal and interest, shall be payable to the person whose name appears upon the registry books as the registered owner hereof at the close of business on the tet.th day preceding the interest payment date or to his order. If this Bond is registeret' s to both principal and interest and its registratiot is changed to registration as to principal only, or if it is discharged from registration, there shall re attached hereto coupons representing interest hereon to become due thereafter to the date of maturity, hereof. In lieu thereof, and upon surrender and cancellation hereof, the Treasurer in his discretion may issue in exchange therefor a new Bond, alth such coupons attached, identical with this Bond, except for the presious notations on the registration blank her.on, and except that the signatures on the new Bond shall be those of the persons holding the oflices at the time of aflixing such signatures. l E-19 2112 2A5

The issuance of any such new Bond or of new coupons shall be at the expense of the registered Owner. Each discharge hereof from registration shall be effected by an entry on the registry books, and a notation in the blank below, that this Bond is payable to bearer, whereupon this Bond shall become an unregistered bearer instrument, negotiable by delivery as if it had never been registered. Each registration of this Bond, if unregistered, will be made only upon request of the bearer hereof. Each transfer, change of form of registration, or discharge from registration of this Bond, or issuance of a new Bond in lieu hereof, will be made only upon request of the registered owner. Each request or transfer must be in form satisfactory to the Treasurer and must be made in writing, signed by .he registered owner, or by his agent duly authorized in writinr, or by the bearer, as required. Date of In Whose Name Alanner of Signature of Registration Registered Renistra4n Treasurer Section 22. Specific Findings. It is hereby found and determined that:

1. The Recommendation approved in this Resolution complied with Section 1306 and was duly and regularly transmitted and presented as set forth in the recitals hereof.

2. That this Resolution is adopted under said Section 1306 within the period specified in said Recommendation.

I

3. That the issuance of the Bonds, hereunder, will not violate any of the provisions of:

Resolution Number Prosiding for the Issuance of 10481 Electric Revenue Bonds, Issue of 1966 11361 Electric Revenue Bonds, Issue of 1969 11667 Electric Revenue Bonds, Issue of 1971 12044 Electric Revenue Bonds, Issue of 1973 13012 Electric Revenue Bonds, Issue of 1977 (Subordinated)

4. That with the exception of the Electric Revenue Bonds Issue of 1977 (Subordinated),

the Bonds issued hereunder rank on a parity with those previously issued Bonds referred to in 3, above.

5. That following the issuance of the Bonds hereunder, the amount of the equity (including surplus arising from contributions in aid of construction) of the Electric System, as of the end of the last fiscal year, which ended not less than four (4) months prior to the adoption of this Resolution, derived from the operation of the Electric System, to which pertains the Electric Revenue Fund out of which the Bonds are to be payable, equals at least 662iG of the aggregate of the amount of Revenue Bonds of the City Payable Out of the Electric Rennue Fund.

E-20 , m l l /. f. c

6. All provisions of this Resolution comply with said Section 1306 and are salid under the Constitution of the State of California and the United States of America.

I Section 23. Proceedings Constitute Contract. This Resolution, adopted pursuant to Section 1306, providing for the issuance of revenue bonds under said Section and the resolutions providing for the sale of the Bonds, awa ding the Bonds, fixing the interest rate or rates thereon and all other resolutions or orders in the proceedings for the issuance or said Bonds shall constitute a contract between the City and the bondholders and may be enforced by any bondholder by mandamus, injunction or any applicable legal action, suit, proceeding or other remedy. Said contract is made under and is to be construed in accordance with the laws of the State of California. Section 24. Future Contracts. Nothing herein contained shall be deemed to restrict or prohibit the City of Riverside from making contracts or creating bonded or other indebtedness payabic from the general fund of the City, or from taxes or from any source other than the Electric Reunue Fund. Section 25. Sescrability. If any covenant, agreement or provision, or any portion thereof, contained in this Resolution, or the application thereof to any person or circumstance, is held to be unconstitutional, invalid, or unenforceable, the remainder of this Resolution and the application of any such covenant, agreement or provision, or portion thereof, to other persons or circumstances, shall be deemed severable and shall not be affected thereby, and this Resolution and the Bonds issued pursuant hereto shall remain valid and the bondholders shall retain all valid rights and benefits accorded to them under this Resolution, Section 1306, the Charter of the City and the Constitution and laws of the State of California. Section 26 Effecti>e Date. This Resolution shall take effect upon the expiration of 30 days following the publication thereof subject to the right of referendum, all as provided in Section 1306 of the Charter. ADOPTED, SIGNED AND APPROVED this 5th day of July,1978. AB BROWN Mayor of the City of Riverside, California ATTEST-(SEAL) ALICE A. liARE City Clerk of the City of Riverside, California

1. Alice liare, City Clerk of the City of Riserside, California, hereby certify that the foregoing resolution was duly and regularly introduced and adopted by the City Council of said City, at its regular meeting held on the 5th day of July,1978, by the following vote:

AYES: Councilmen Pintor Shepard, Anderson, Bowers, Lorenzi, Digati and Manning. NOES: None. ABSENT: None. IN WII~ NESS WilEREOF I hase hereunto set my hand and allixed the otlicial seal of the City of Riserside, California, this 5th day of July,1978 ALICE A. IIARE City Clerk of the City of Riverside E-21 2112 267

G (This Page Intentionally Left Blank) 2112 268 4

Appendix F THOMAS, BYRNE & SMITH D CE RTIFIE D PUBLIC ACCOUNTANTS January 20, 1978 Onn..n, t i hornas. C P A 4362 Oeange Soeet O H.c haert u vene. C P A Rvets cte. CaMornia 92501 V C Snu th. Jr . C P A 682 4851 The City Council City of Riverside 3900 Main Street Riverside, California 92522 Ladies and Gentlemen: We have examined the financial statements of the various funds and account groups of the City of Riverside for the year ended June 30, 1977 as reflected in the accompanying pages '2" through "83". Our examination was made in accordance with generally accepted auditing standards, and accordingly included such tests of the accounting records and such other auditi g procedures as we considered necessary in the circumstances except that we d;d not verify historical cost < of all property and equipment. In our opinion, except for the values shown for property and equipment, the accompanying financial statements present fairly the financial position, of the

)              various funds and account groups of the City of Riverside at June 30, 1977, and with the exception of depreciation in the Electric, Water and Working Capital Operating Funds which was computed on property and equipment whose historical cost was not verified by us, the accompanying statements reflect fairly the results of operations of such funds and changes in financial position of the Electric and Water Operating Funds for the year then ended, in conformity with generally accepted accounting principles applied on a basis consc+ent with that of the preceding year, except as noted in the notes to the finai,-ial statements.

The accompanying supplemental information presented on pages "85" to "95" are not necessary for a fair presentation of the financial statements, but are presented as additional analytical data. This information has not been sub-jected to the tests and other auditing procedures applied in the examination of the aforementioned financial statements, and accordingly we do not express an opinion on them. Respectfully submitted, THOMAS, BYRNE & SMI

                                                              .     / [E         a4 W Certified Public Accountant 2112 2o9 F-1

ELECTRIC FUND , COMPARATIVE BALANCE SHEET June 30, 1976 and 1977 e Exhibit Y ASSETS 1976 1977 CURRENT ASSETS Cash $ 2,653,565 $ 5,360,506 Petty Cash 300 300 Accounts Receivable 49,119 51,499 Less: Estimated Uncollectible Accounts _19,132 7,960, Net Accounts Receivable 29,987 43,539i f Due from Other. Funds: i Utill ties Accounts Receivable 3,444,484 2,683,858; Less: Estimated Uncollectible Accounts 35,134 15,259, Net Utilities Accounts Receivable 3,409,350 2,668,599i l Due from Other Governmental Agencies: a Riverside County 977 1,018 Prepaid Expenses M Total Current Assets 6,094,179 10.573,962!

                                                                                                           /

RESTRICTED ASSETS ( Cash with Fiscal Agent 43,405 52,09% Cash - Edison Settlement 1,399,817 926,147: Cash - Revenue Bond Service 214,298 329,227-Cash - Revenue Bond Reserve 888,932 931,114 Cash - Revenue Bond Construction 217,041 i i Total Restricted Assets 2,763,493 2,238,578; OTHER ASSETS Advance to Central Stores Fund 505,063 505,063i Unamortized Bond Sale Expenses Sj Total Other Assets 505,063 541,86% i UTILITY PLANT IN SERVICE i Utility Plant (Schedule G-5) 45,301.568 47 Less: Allowance for Depreciation 13,075,211 M,120,218 _ Total Utility Plant in Service 32,226,357 32,558,13r Construction Work in Process:  ? Electric Revenue Ft.nc 660,342 1,076,32c Bond Construction Fun! 848,075 X5,83! Total Construction 4 ork in Process 1,508,417 1 53_2,_1 % TOTAL ASSETS $ '43. 097. 509 h 04 The accompanying notes are an integral part of this statement. ,,, II i :'. fI0 F-2

CITY OF RIVERSIDE ANNUAL FINANCIAL REPORT ELECTRIC FUND COMPARATIVE BALANCE SHEET June 30, 1976 and 1977 Exhibit G IABILITIES, CONTRIBUTIONS AND RETAINED EARNINGS 1976 1977 CURRENT LI ABILITIES (Payable from Current Assets) Accounts Payable $ 2,614.547 $ 5,262,051 Condemnation Deposits 977 1,018 Accrued Payroi1 40,743 56,224 Long Term Debt Due Within One Year 450,000 850,000 Lease Purchase Obligations 67,600 Total Current Liabilities (Payable from Current Assets) 3,106,267 6,236,893 CURRENT LIABILITIES (Payable from Restricted Assets) Construction Accounts Payable 5,734 24,031 Matured tbnd interest Payable 43,405 52,090 Total ,urrent Liabili ties (Payable from Restricted Assets) 49,139 76,121 Total Current Liabilities 3.155,406 6,313,014 ONG TERM DEBT Revenue nonds 10,760,000 12,810,000 Less: Loig Term Debt Due Within One Year 450,000 _ 850,000 Total !.ong Term Debt 10,310,000 11,960,000 TOTAL LIABILITIES 13,465,406 18,273,014 ONTRIBUTIONS Contributions in Aid of Construction 3,279,448 4,034,287 ETAINED EARNINGS (Schedule G-1) 26,352,655 26,137,404 TOTAL LIA3ILITIES, CONTRIBUTIONS AND RETAINED EARN!NGS 143.097.509 $48.444.703 2112 271 e accompanying notes are an integral part of this statement. F-3

CITY OF RIVERSIDE ANNUAL FINANCIAL REPORT ELECTRIC FUND COMPARATIVE ANALYSIS OF CHANGES IN RETAINED EARNINGS Years Ended June 30, 1976 and 1977 Schedv M t-

                                                                                                                               ~

1976 1977 BEGINNING BALANCE, July 1 $25,885,002 $26,352,655 Additions Net income (Schedule G-4) 3,176,968 2,903,003 Total Balance and Additions 29,061,970 29,255,658 Deductions Payments to General Fund (1) 2,679,665 3,077,479 Loss on Retirement of Utility Plant 9,857 35,933 Adjustments to Retained Earnings 19,793_ J Total Deductions 2,709,315 _3d18,25_4. BALANCE , June 30 126.352.655. $26d3_Lh04 _ (1)Section 1304 of City Charter - 11.5% of prior year 8s gross revenues excluding surcharge revenues for the years 1975 and 1976 are shown on Statement of Revenue and Expense. STATEMENT OF CHANGES IN ASSETS RESTRICTED FOR DE3T SERVICE Year Ended June 30, 1977 Schedule G-2 Cash With Fiscal Debt Agent Servic(. Reserves Total CASH BALANCE, July 1, 1976 $ 43,405 $ 214,298 $ 888,932 $ 1,146,635 CASH RECEIPTS Transfer from Operating Fund 1,100,673 42,182 1,142,855 Accrued Bond Interest 9,241 9,24i Transfer from Revenue Bond Service 994,985 ___994,18E Total Cash Available 1,038,390 1,324,212 931,114 3,293,71f CASH DISBURSEMENTS Principal Payments 450,000 450,00t Interest Payments 536,300 536,30t Trans fer to Fiscal Agent 994,985 M' Total Disbursements 986,300 994,985 __L.98,L 21 CASH BALANCE, June 30, 1977 S- 52.090 1_ 329.221 1__931.114 $ 1.312.43 The accompanying notes are on integral part of this statement. y 7 1 1 7. 2 7 7.

ITY OF RIVERSIDE ANNUAL FINANCIAL REPORT ELECTRIC FUND COMPARATIVE SOURCE AND APPLICATION OF FUNDS Years Ended June 30, 1976 and 1977 Schedule G-3 1976 1977 OURCE OF FUNDS Net income (Schedule G-4) $ 3,176,968 $ 2,903,003 Changes in income not involving Working Capital: Provisions for Ocpreciation 1,548,756 1,584,682 Bond Sale Proceeds 2,500,000 Lease Purchase Obligation 67,600 Contributions in Aid of Construction increase 535,732 754,839 Total Source of Funds 5,261,456 7,810,124 PPLICATION OF FUNDS Net increase in Utility Plant 2,013.589 2,940,206 Loss on Retirement of Utility Plant 9,857 35,933 Reduction in Long Term Debt 450,000 850,000 Payments to General Fund 2,679,665 3,077,479 Adjustments to Retained Earnings 19,793 4,842 Total Application of Funds 5,172,904 6,908,460 INCREASE (DECREASE) IN WORKING CAPITAL S 88.552 $ 901.63 1 I , CREASE (DECREASE) IN COMPONENTS OF WORKING CsPITAL Cash on Hand $ 903,891 $ 2,706,941 Petty Cash (300) Current Receivables 476.153 (727,158) Prepaid Expenses 2,500,000 Unamortized Bond Sale Expense 36,804 Restricted Assets (529,028) (524,915) Net increase in Current Assets 850,716 3,991,672 et (Increase) Decrease in Current Liabili ties (762,164) (3,090,008) INCREASE (DECREASE) IN WORKING CAPITAL S 88,512 L_901.464 9 ^ cllt 273 1e accompanying notes are an integral part of this statement. F-5

CITY OF RIVERSIDE ANNUAL FINANCIAL REPORT ELECTRIC FUND COMPARATIVE STATEMENT OF REVENUE AND EXPENSE Years Ended June 30, 1976 and 1977 Schedule G-1976 1977 OPERATING REVENUES Electric Sales: Domestic Sales $12,875,919 $13,706,804 Commercial and Industr8al Sales 19,021.370 20,793.573 Municipal Sales 1,198,133 _ 1,336,056 Total Electric Sales 33,095,422 35,836,433 Other Operating Revenues 139,960 198,427 Total Operating Revenues 33,235,382 36,034,860 LESS: OPERATING REVENUE DEDUCTIONS BEFORE DEPRECI ATION Operating Expenses: Purchase Power 24,299,050 27,646,644 Transmission Expenses 70,965 79,008 0istribution Expenses 1,396,967 1,342,664 Customer Account Expenses 964,514 830,868 Power Service Expenses 34,302 35,460 Administration and General Expenses 1,617,461 1,578,407 Clearing and Miscellaneous Account Expenses 21,087 (33,911 Total Operating Expenses 28,404,346 31,479,140 NET OPERATING INCOME BEFORE DEPRECIATION 4,831,036 4,555.72 LESS DEPRECIATION (Schedule G-5) 1,548,756 1,584,682 NET OPERATING INCOME 3,282,280 2,971,03 ADD: NON-0PERATING INCOME Interest Revenue 313,315 195,02 Sundry Revenue 152,358 284,99 Total Non-Operating income 465,673 480,01 TOTAL INCOME 3,747.953 3,451,05 LESS: NON-0PERATING EXPENSES Interest Expense - Revenue Bonds 570,985 544,98 Bond Sale Expense 3,06 Total Non-Operating Expenses 570,985 548 A5. TOTAL NET INCOME (1) jli_3.176,9686 1]_,9903.00 ADJUSTMENT SURCHARGE (included in Operating Revenue) } 6.474.722 .$_5 541.02 (1) The 11.5% of prior year's gross revenue, excluding surcharge revenues, payment upeared after Total Net income and before Net income to Retainod Earnings of this scheduse, in the 1975-76 statement. This payment now appears on the Comparative Analysis of Changes in Retained Earnings schedule. This payment for the 1975-76 fiscal year was $2,679,665 and for 1976-77 fiscal year was $3,077,479. The accompanying notes are an integral part of this statement. F-6 2)}} }[f

CITY OF RIVERSIDE ANNUAL FINANCIAL REPORT ELECTRIC FUND SCHEDULE OF FIXED ASSETS AND DEPRECIATION Year Ended June 30, 1977 Schedule G-5 l Balance Removals & Balance 7-1-76 Additions Adj us tmen ts 6-30-77 UTILITY PLANT Transmission Plant $ 5,539,524 $ 21.526 S 2,129 $ 5,558,921 Distribution Plant 38,475,730 1,835,793 115,083 40,196,440 General Plant 1,286,314 96,836 18,293 1,364,857 TOTAL UTILITY PLANT gg01568 1195h155 1 13L505 341 120,23 ALLOWANCE FOR DEPRECIATION Transmission Plant $ 1,256,427 $ 160,401 $ 1,385 $ 1,415,443 Dist ribution P1 ant 10,815,065 1,360,820 81,354 12,094,531 General Plant 1,003,719 63,462 15,071 1,052,110 TOTAL Al LOWANCE FOR DEPRECIATION 11J,0]l,211 1 1 584,683_ 1 97,810 1142 56_2,084

   ;ET UTILITY PLANT Transmission Plant                                               $ 4,283,097    $   (138,875) $          744  S 4,143,478 Di s t ri bu t i on Piant                                         27,660,665         474,973         33,729    28,101,909

- General Plant 282,595 33,37_4 3,2'l 312,747 NET UTILITY PLANT 112,226.351 S 36L 422 1 J 12 695 5122 558dh I 2112 275 I he accompanying notes are an integral part of this statement. F-7

CITY OF RIVERSIDE ANNUAL FINANCIAL REPORT NOTES TO FINANCIAL STATEMENTS June 30, 1977 NOTE A - SIGNIFICANT ACCOUNTING POLICIES The accounting policies of the City of Riverside conform to generally accepted accounting principles as applicable to governmental units. In Janua ry, 1974, the City received a Certificate of Award for meritorius financial reporting for its 1972-73 financial report f rom the California Society of Municipal Finance Of ficers. This report reflects further refinements of that report. The more significant accounting policies reflected in the financial statements in this Annual Financial Report are summarized as follows: Basis of Accounting. The modified accrual basis of accounting is used for all funds except the Parking Meter, Sewer Service, Refuse Collection and Dis;osal, Electric, Water and intragovernmental Service funds, which utilize the acc';al basis of account-ing. Under the modified accrual basir, revenues are recorded when collected (cash basis) or wl en actual amounts due are ascertained (accrual basis). Liabilities are recorded when incurred (accrual basis). Budgetary Control is exercised by encumbering appropriations as purchase orders are issued. Purchase orders which exceed appropriations are not released until additional funds are made avcilable. Investments are stated at cost. Cash accounts of all funds are pooled for investment purposes in order to maximize interest earnings. All such interest earnings become revenue to the General Fund unless prohibited by bond covenants, or legal req u i re-ments relating to special funds or grant provisions. Inventories in the Central Stores Fund are priced at cost using the average cost 4 method. General Fixed Assets in the general fixed asset account group and Airport Fund are recorded as expenditures in the appropriate fund at time of purchase. Such assets except for street rela ted improvements are capi talized at cost in the general fixed asset account group and the Airport Fund. No depreciation has been provided on gene ra l fixed assets. Utility Plant in Service and Fixed Assets of intragovernmental Service Funds are stated at cost. Depreciation has been computed over the estimated lives of depre-ciable assets using the straight line method. Uncollectible Accounts. Uncollectible account expense, relative to utility accounts receivable (electric, water, sewer and refuse service charges, street light excise taxes and utility users tax), is determined by the percentage of sales method. Uncollectible account expense, relative to miscellaneous accounts receivable, is determined by the direct write-of f method on those accounts considered uncollectible and by reserving those accounts which are doubtful. NOTE B - CHANGES IN FINANCIAL REPORT PRESENTATION The accompanying financial statements include the following revisions over those of previous years: The method of recording revenues received for Sales and Use Taxes, State Gasoline Taxes and Property Taxes has been modified in fiscal year 1976-77 from the cash basis

                                                                         ^

n lld L/o F-8

CITY OF RIVERSIDE ANNUAL FINANCIAL REPORT to the accrued method. Revenues which should have been accrued in fiscal year 1975-76 are recorded as prior year adjustments to fund balances, and the results of this action are shown on the following tabulation: Prior Year Current Year Fund Balance Accrued Balance at 6/30/76 at 6/30/77 increased Property Taxes General Fund $ 92,467 $127,958 Library Fund 21,838 25,918 Debt Service Fund 7,643 9,627 Capital Outlay Fund 1,985 2,468 District Improvement incidentals Fund 201 134 TOTAL 1124,134 $166,105 Sales and Use Taxes General Fund $293,750 $338,750 Special Gas Tax Fund State Gasoline Tax 2107 $ 29,839 $ 12,340 State Gasoline Tax 2106 52,868 55,051 TOTAL $ 82,707 $ 67,391

       )  NOTE C - UNFUNDED LIABILITIES The accompanying financial statements do not take into account any liability for the following items. The current annual requirements for these items are recorded as realized and appropriated accordingly in the annual budget.

Pension Plans. Reti rement benefits for all employees are provided by combined mem-be rsh ip in the Public Employees' Retirement System of the State of California and except for police and fi re safety employees, the Federal Social Security System. At July 1, 1976, an actuarial valuation by the state indicated the city had an unfunded liabili ty for safety members of $17,834,447, and for miscellaneous members

 =        of $15,286,250. Contribution rates of 10.787% for safety members and 5.130% for miscellaneous members were established by the state to amortize this liability by July 1, 2000      Actuarial requirements at July 1, 1977: have not been determined.

Vacation. City employees receive from ten to twenty days vacation each year depending upon length of service. Vacation can be accumulated as of January 1st to a maximum of not to exceed two years continuous service. No accruals a' re made by the city fcr vacation earned but not paid. Sick Leave. City employees receive one working day of sick leave for each full month of employment or major portion thereof with unlimited accumulation for unused sick leave. Upon retirement, disability or death unused sick leave is payable at the rate of 25% af ter five years of employment and 50% af ter ten years employment. No accruals

       } are made for unused sick leave.

l' 1I 1 ^id  ?/ F-9

CITY OF RIVERSIDE ANNUAL FINANCIAL REPORT Riverside Municipal Ai rport. The gross operating revenues of the Ai rport increased 27.0 percent over 1975-76. Comparative data for the past three fiscal years are presented in the following tabulation: 1976-77 1975-76 1974-75 Gross Operating Revenues $ 94,533 $ 74,463 $ 71,709 Operating Expenses Excluding Terminal Building Lease-Purchase Payment (1) 162,710 161,839 123,040 Gross Operating income or (Deficit) (68,177) (87,376) (51,331) Contribution f rom General Fund 133,838 19,338 67,120 Fede ral (FAA) Grant in Aid Funds 215,715 (For Construction purposes only) (1) The Airport Terminal Building was financed by revenue bonds of $530,000 issued by the Riverside Ai rport lease Company, a non profit corporation. The bonds are secured and serviced by a lease-back agreement with the City which provides for an annual lease payment of $36,500 over a 25 year period ending December, 1992, at which time the City will take title to the terminal building. On June 30, 1977, the combined deficit fund balance in the Airport Funds less reserves amounted to a net deficit of $97,342. Such deficit represents funds expended in previous years for Iand acquisition for a parallei runway of which $121,168 is esti-mated to be reimbursable from a grant pending with the Federal Aviation Administration. Electric Utility System. The City's Electric System experienced an 8.3 percent increase in gross income during the year, reflectirm ;.he full impact of the 18.4 percent increase ef fective January 15, 1976, and the increase of 2,545 new accounts, but l of fset by a 1.6% overall reduction in consumption. Comparative data for the past three fiscal years are presented in the following tabulation: 1976-77 1975-76 1974-75 Gross Income $36,514,878 $33,701,055 $29,658,725 Net income 2,903,003 3,332,168 4,116,746 Income Available for Debt Service 5,035,738 3,451,909 6,200,006 Average Annual Debt Service 1,493,611 720,164 744,147 Cove rage (income available for debt service divided by average annual debt service) 3.4 7.6 8. 3 During the year short term Subordinated Revenue Bonds for $2,500,000 were issued. This was to purchase prepaid power from the Nevada Power Company over a three year period with an estimated savings of $800,000 to the City's Electric System over this pe riod . During the year $450,000 of regularly maturing revenue bor.ds were retired in the Electric Fund. Debt Service account balances of $1,260,341 fully meet the requi red reserves. Capital additions to the electric system totaling $1,945,155 were financed from current revenues and bond funds. Wate r Ut il i ty System. The City's Water System experienced a 4.3% increase in gross income during the year. Due to a 7 percent decrease in consumption, the two 8 percent rate increases effective November 1, 1976 and April I, 1977, and 847 accounts increase didn't generate as much revenue as anticipated. Comparative data of the past three fiscal years are presented in the following tabulation: 9 q nr Ll5IL fl0 F-10

CITY OF RIVERSIDE ANNUAL FlNANCIAL REPORT Water Acquisition Contracts Payable Since 1961, the city has acquired the majority of the water companies servicing the agricultural lands in the city in order to h insure an adequate water supply for f,uture needs. As a condition of the acquisition of these water companies, the city has made contractual agreements with the majority of the shareholders of each such company to purchase their water right shares for a stipulated sum at such time as their lands are diverted to non-agricultural use. The water acquisition contract liability of $2,113,536, shown in the Water Fund Balance Sheet represents the maximum contingent liability of the city of June 30, 1977, if all contractual shareholders diverted their lands to non-agricultural use on that date. The annual rate at which this occurs varies from two to four percent. During the year, contracts paid off for land so diverted totalled $139,267 as shown in the following tabulation: Deduct Con t ra c ts Contracts Contractual Contracts Outstanding & Shares Obligations outstanding Company 7/1/76 Pu rchased Expired 6/30/77 Gage Canal $1,697,325 $ 88,025 $ $1,609,300 East Riverside Water 301,612 17,592 284,020 Riverside Watern 104,212 2,650 3,722 97,840 Temescal Water 124,000 31,000 93,000 Twin Buttes Water

• 31,334 1,958 29,376

                                  $2.258,483        $139,267          $ 5,680        $2,113,536 SThese contracts, unless paid before maturity, diminish in value eacl year until such g time as no further liability exists to the city other than to provide normal water service.

NOTE D - FUNDS AND ACCOUNT GROUPS EXPLAINED Each fund group presented in this report serves the following specific fiscal purpose: General Fund (Exhibit B). The General Fund is used to finance the ordinary operations of the City. It may be used for any legally authorized purpose and receives all revenues that are not by law or accepted governmental accounting practice set apart in special funds. Special Revenue Funds (Exhibit C). These funds are created by statutory or legista-tive action to finance particular activities from the receipt of special tax levies or other specific revenues. Debt Service Funds (Exhibit D). These funds are established to account for revenues collected for payment of interest and principal on general obligation bonds of the City. Capital Projects Funds (Exhibit E). These funds are established to account for special revenues or bond sale proceeds issued for financing specific capital outlay acquisi-tion and improvement projects. Enterprise Funds (Lxhibits F, G and H). These funds are used to account for the financing of the following self-supporting enterprises conducted by the city: Municipal Airport, Electric and Water Utility Systems. 3" f f c) c/9 F-!!

CITY OF RIVERSIDE ANNUAL FINANCIAL REPORT Trust and Agency Funds (Exhibit 1). These funds are used to account for resources received and held in trust by the city te be expended in accordance with the con-ditions of the trust or agency involved. Int ragove rnmental Service Funds (Exhibi t J) . These funds are established as revol vi ng funds to finar.cc the city's Central Gr. age, Central Printing and Central Stores ope ra t ions . General Fixed Assets (Exhibit K) . This self-balancing group of accounts represents the general fixed assets of the City of Rive. side recorded on the basis of cost or estimated value at the time of acquisition i f cost could not be obtained. General Long-term Debt (Exhibit L). This group of accounts reflects the detail of the city's bon;cd indebtedness as of June 30, 1977, and includes general obligation bonds, special revenue bonds and long-term lease obligations. NOTE E - FINANCIAL HIGHLIGHTS A summary of the revenues and expenditures of the city's various funds compared with the preceding fiscal year are shown as follows: Revenues for general governmental funds exclusive of band sale proceeds totalled $42,314,019 in the 1976-77 fiscal year, an increase of 17.2 percent over 1975-76. General property taxes produced 10.5 percent of general revenues, down 0.4 percent from last year. The Riverside Public Library exercises a unique role in that it not only provides city library services through its Main Library, four branch libraries and a bookmobile, but also provides library services to six other small cities and fi f teen unincorporated communities located throughout the county by contract with the County of Riverside. This extended service for " Contract Branches" is financed by a ll special library district property tax levied in those cities and communities par-ticipating in the county contract. Thus included in Revenues from Other Agencies is

$1,487,794 received from the County for this purpose. The amount of revenue f rom various sources and the increase over last year are shown in the following tabu-lation:

I nc rease Per Cent Amount Per Cent Over 1975-76 Increase Revenue Source (Thousands) of Total (Thousands) Over 1975-76 Property Taxes $ 4,451 10.5% $ 507 12.9% Other Taxes 10,135 24.0 1,356 15.4 Licenses and Permits 3,344 7.9 1,457 77.2 Fines and Penalties 819 1.9 138 20.3 Interest and Rents 496 1.2 41 9.0 Revenue from Other Agencies 13,225 31.3 869 7.0 Charges for Current Services 5,841 13.8 1,343 29 9 Utility Funds Contributions 3,830 9.0 584 18.0 Other Revenues 173 .4 - 91 -34.5 Total Revenues $42,314 100.0% $6,204 17.2% 2II9

                                                                               ' iu cu 90' F-12

CITY OF RIVERSIDE ANNUAL FINANCIAL REPORT Assessed Valuations of $453.4 million represented an increase of 8.9 percent over the preceding year. The assessed value at July 1, 1977, relating to the 1977-78 fiscal h year is $550.7 million, an increase of 21.5 percent over the assessed value at July 1, 1976. Current Tax Apportionments received from the Riverside County Tax Collector were 97.3 percent of the tax levy, up 3.1 percent from last year. The ratio of total apportion-ments received (current and delinquent) to the current tax levy was 101.6 percent, an increase of 2.8 percent over last year. The c i ty's tax ra te has remained at $1.13 per $100 assessed valuation since 1962-63. A breakdown of the tax rate by funds for the past three years is shown in the following tabulation: 1976-77 1975-76 1974-75 Purpose General Fund (including Re ti rement) $ .840 $ .813 $ .805 Library Fund (including Retirement) .190 .220 .220 Debt Service Fund .080 .077 Capital Outlay (Streets) Fund .085

                                                       .020          .020         .020
                                                     $1.130      $1.130        $1.130 The City's Tax Rate Limits established by City Charter compared with actual tax rates required for 1976-77 are shown in the following tabulation:

Tax Ra te Unused Limits Per 1976-77 Tax Rate Purpose City Charter Tax Rates Limits Gene ra l Fund: ) General Purposes $1.000 Re t i renen t

                                                               $    .243(1)     $ ./57
                                                 .617(2)            .617 1.617               .860            .757 Library Fund:

Library Purposes .200 .170 .030 Retirement .020(2) .020

                                                .220               .190            .030 Debt Service Fund:

General Obligations Bonds .080(3) .080

                                              $1.917          $ 1.130           $ .787 (1) I,cludes $.02 allocated to the Capital Outlay Fund for street construction purposes.

(2) Limited by City Charter to a " tax sufficient to meet all obligations of the city to the State Employees ' Retirement System for the reti rement of ci ty employees." (3) The City Charter limits general obligation bonded indebtedness to 15 percent of the city's assessed valuation and provides that in order for the city to incur such indebtedness approval must be obtained from two-thirds of the electors voting on such proposition. Expenditures for general government purposes exclusive of the Civic Center Projects totaled $37,194,163, an increcse of 10.8 percent over 1975-76, increases or decreases in levels of expenditures for major functions of the city over the preceding year are shown in the following tabulation: 2112 28i F-13

ANNUAL FINANCIAL REPORT CITY OF RIVERSIDE Increase Per Cent Amount Per Cent Over 1975-76 increase Functions (Thousands) of Total (Thousands) Over 1975-76 General Government $ 2,435 6.5% $ 428 21.3% Public Safety 13,073 34.7 1,403 12.0 Public Health -24 -100.0 Public Works and Services: Admin & Engineering 576 15 -60 -9.4 5,436 14.4 403 8.0 Streets Storm Drains 45 .1 -239 -84.2 Sewage Disposal 2,089 55 712 51.7 Refuse Disposal 2,607 69 -9 .3 Buildings and Parking 1,096 2.9 244 28.6 Libraries (1) 2,557 6.8 -262 -9.3 Parks and Recreation 3,962 10 5 -179 -4.3 Museum 282 7 -19 -6.3 Civic Center 1,817 4.8 1,106 155.5 Bonded Debt Retirement 590 1.6 20 35 Redevelopment and Rehabilitation 439 1.2 -252 -36.5 Bond Interest 556 1.5 288 107.5 Contributions to Other Funds 134 .4 115 605.3 Total $37,694 100.0% $3,675 10.8% Category: Current operations $32,836 87 1% $3,382 11.5% Capi tal Projects (2) 4,858 12.9 293 6.4 Total $37,694 100.0% $3,675 10.8% (1) As previously explained under " Revenues," the Riverside Public Library also provides library services to six small cities and fifteen unincorporated com-munities in Riverside County, thus included in expenditures for " Libraries" is

       $1,509,244 expended directly for these c'ntract branches. These contract bran-ches are also allocated a portion of the city'; expenditures incurred by the Main Library for administrative, technical and reader services.

(2) The detail of expenditures for capital projects (laid acquisition, buildings an improvements) financed from current revenues and bond funds compared with the two preceding years, is shown in the following taoulation: Amount (Thousands) Function 1976-77 1975-76 1974-75 Public Safety:

                                                      $ 140          $        $       4 Police Fire                                                   32              35           139 Public Works:

1,976 1,619 1,906 Streets Traffic Signals 395 231 77 Sewerage Systems 760 149 113 Storm Drains 45 284 153 All Other 324 701 433 2112 282 F-14

                   . . . . _ _                                                ~ ""

CITY OF RIVERSIDE ANNUAL FINANCIAL REPORT Amount (Thousands) Function _ 1976-77 1975-76 1974-75 _ Libraries 36 441 70 Parks and Recreation 1,016 1,086 1,223 Airport Contribution 134 19 17 Total $4,858 S4,565 $4,135 Unappropriated Fund Balances in the governmental operating funds at fiscal year end were $7,762,507, an increase of 94.9 percent over last year's balances. Changes in the balances of the major fund groupings over the preceding year are shown in the following tabulation: (Amounts shown are in thousands) I, crease or Fund (Decrease) 1976-77 1975-76 Over 1975-76 General $ 4,235 $ 1,727 $ 2,508 Special Revenue 2,275 998 1,277 Revenue Sharing Trust 43 54 (11) Debt Service Fund 114 95 18 Capital Projects (Excluding Bond Funds) 1,095 1,108 (13) Total $ 7,762 $ 3,983 $ 3,773 General Ob_ ligation Bonded Debt The ratio of net general obligation bonded debt to assessed valuation and the amount of bonded debt per capita for the City of Riverside at the end of the 1976-77 fiscal year, were as follows: i Ratio of Debt Ratio of Debt Debt to Assessed Value to Estimated Per (25% of Market Value) Market Value Capita Net Direct Bonded Debt $ 4,905,000 9% .2% $ 32 overlapping Debt 42,364,430 7.8% 2.0% 274 Net Direct & Overlapping Debt $47,269,430 8.7% 2.2% $306 Outstanding General Obligation bonds at June 30, 1977, totaled $4,905,000, of which

      $2,700,000 issued for sewer purposes is considered self-supporting from sewer service charges. The remaining $2,205,000 is direct tax supported. Pages 59 to 71 inclusive of this report present more detailed information about the debt position of the City.

General obligation bonds authorized for fire protection purposes and unissued at , June 30, 1977, amounted to $450,000. During the past year, $530,000 of general obligation bonds were retired. inves tmen t of Temporarily Idle Cash funds earned $1,027,755 during the 1976-77 fiscal year. Such investments consisted of time deposits, savings accounts, banker accept-ances, treasury notes and federal agency securities, ranging f rom 5 to 365 days to maturity. A comparison of temporarily idle cash funds invested during the past four years is shown in the following tabulation: l OO' [ f f I-) (0J F-15

CITY OF RIVERSIDE ANNUAL FINANCIAL REPORT 1976-77 1975-76 1974-75 1973-74 Cash on deposit (1) $18,927,580 $16,822,478 $17,337,558 $17,458,915 Cash invested (1) 19,540,660 17,429,528 17,852,248 17,837,729 Percentage invested 103.2% 103.6% 103.0% 102.2% interest income $ 1,027,755 $ 1,022,776 $ 1,461,500 $ 1,587,950 Average Net Return 5.26% 5.87% 8.19% 8.90% Equivalent Tax Rate (2) $ .25 $ .27 $ 38 $ .45 (1) Average daily balance (2) Per $100 assessed valuation The Special Gas Tax Fund reserves and fund balances totaling $1,413,062 consist of the following allocations: Chapter 2106 funds $1,174,116 Chapter 2107 funds 238,946

                                                                             $1,413,062 The Loca! Transportation Fund reserves and fund balances totaling $1,166,226 consist of the following allocations:

UMTA $ 625,874 Article 4, Transportat:on System 26,863 Article 8, Acquisition and Construction Streets 513,489

                                                                             $1,166,226 Sewerage System The gross operating revenues of the City's Sewerage Eystem increased 39.7 percent over 1975-76. Such increase was due to a 32% increase in rates for sewer service charges and a 27% increase in sewer connection fees effective June 1, 1976 The balance of increase was due to increase in construction. Comparative data for the past three fiscal years is presented in the following tabulation:

1976-77 1975-76 1974-75 Gross income $2,471,012 $1,768,768 $1 ,795,619 Less Operation Expenditures 1,328,408 1,227,713 1,088,934 income Available for Debt Service $1,142,604 $ 541,055 $ 706,685 Average Annual Debt Service Sewer Reve nue Bonds $ 148,460 $ 147,123 $ 146,249 Cove rage (income available for debt service divided by average annual debt service) 7.7 3.7 4.8 During the year $60,000 of regularly maturi.g revenue bonds were retired in the Sewer Service Fund. The debt service account balances of $238,453 fully meet the required reserves. Parking District No. 1 is no longer operative as its parking facilities were sold to the Riverside Parking Authority on September 3, 1974, for $860,299.04. That amount was deposited with Security Pacific National bank as trustees for the district and invested in long-term U.S. Treasury Bills and Notes. Such investments provide suf-ficient funds to guarantee payment of the remaining Parking District No. 1 bonds and interest coupons as they mature, ojj(q ll l ,, ng* bU0 F- 16

CITY OF RIVERSIDE ANNUAL FINANCIAL REPORT 1976-77 1975-76 1974-75 Gross income $7,621,286 $7,302,466 $5,782,652 Net income 1,314,055 1,276,332 528,632 h income Available for Debt Service Average Annual Debt Service 4,110,072 3,976,607 2,826,739 2,146,833 1,806,510 1,670,876 Coverage (income availabic for debt service divided by average annual debt service) 1.9 2.2 17 Water revenue bonds of $3,000,000 were sold January 18, 1977 at a net interest cost of 5.78872. During the year $650,000 of regularly maturing revenue bonds were retired in the Water Fund, debt service account balances of $2,108,440 fully meet required reserves. The water system capital addition of $2,066,136 completed during the year were financed f rom current revenues and bond funds. NOTE F - 0FFICIAL BONDS AND INSURANCE Section 611 of the City Charter requires that the City Council shall by ordinance or resolution fix the amounts and terms of the official bonds of all officials or employ-ces who are required by ordinance to give sucil bonds. The officials required to be bonded and the amount of each such official's bond as specified by Ordinance No. 4401 are as follows: Mayor and Members of Ci ty Council, ecch $ 3,000 Controller / Treasurer 200,000 The City also carries a blanket Dishonesty, Disappearance and Destruction policy on all city employees in the amount of $50,000. Other insurance coverage in effect on June 30, 1977 is as follows: Amount of Self-insured Expiration Kind of Insurance Type of Coverage Cove rage Deductible Date Property: All Property Fi re 'ECE & VMM $50,243,650 1,000 Special Coverages:

                                                                           $                7-01-78 Airport-Terminal              EQDA                        553,410      5%/ Loss      7-12-76 Rental income                 73,000                   7-12-78
              -Neon Sign            All Risk                    10,000            100      7-01-78 Automotive Vehicles           Fire / Theft & Com-prehensive              1,500,000         25,000      9-30-77 Citv Hall                     EQDA                     7,205,000      5%/ Loss       7-28-78 Rental income            2,020,000           1,000     7-28-78 Exhibit Hal1                  EQDA                     6,300,000      5%/ Loss       6-10-78 Contents                   400,000      5%/ Loss       6-10-78 Rental Income            1,850,000      5%/ Loss       6-10-78 Helicopters                   All Risk             50,000-44,t00ea 250-5,000          1-07-79 Heritage House                EQDA                         142,500     5%/ Loss       7-12-78 Museum Stock                  All Risk                    410,000             100     7-01-78 Valuable Papers               All Risk                  1,000,000             500     7-01-78 Parking Terrace #3            EQDA                      1,186,000      5%/ Loss       1-05-79 Rental Income               285,700          1,04       7-01-78 Pellisier Ranch               Fire /ECE & VMM               20,000       100-250      7-01-78(1) 2112 285 F-17

CITY OF RIVERSIDE ANNUAL FINANCIAL REPORT Amount of Self-Insured Expiration Kind of Insurance Type of Coverage Cove ra ge Deductible Date Liability: Gen. Lieb. 10,000,000 7-01-77 Airport Helicopters Gen. Liab. 5,000,000 1-07-79 General City Gen. Liab. 25,000,000 500,000(2) 1-08-78 Boiler & Machinery Gen. Liab. 100,000 4-12-78 E Employee Benefit: Air Travel AD&D 100,000 5-07-78 Group Health: Kaiser Hospital / Medical Full Continuous Aetna Hospital / Medical 50,000MM Continuous Life: All Employees Life, AD&D 1,000 Continuous Management Employees Life, AD&D 10-25,000 Continuous Workers' Compensation Work. Comp. 5,000,000 250,000(3) 4-01-78 Damages by Law 1,000,000 (1) An 80% coinsurance clause exists on this policy. (2) Claim adjustment services for the self-insured fartion of this City's general liability and property damage insurance is provided by contract with Crawford and Company, insurance adjusters. The estimated reserve requirements as of June 30, 1977, for claims incurred but not paid amounted to $239,652. (3) Claims adjustment services for the self-insured portion of the City's workers' compensation insurance is provided by contract with R. L. Kautz and Company. The estimated reserve requirements as of June 30, 1977 for claims incurred but not paid amounted to $619,945 NOTE G - CITY OF RIVERSIDE DE'-iRRED COMPENSATION PLAN During the fiscal year 1976-77 the City of Riverside established an Employees' Defer-red Compensation Plan. Glendale Federal Savings and Loan Association was appointed to accept funds for investment and will account for such funds on a regular basis. The city shall have the same rights and obligations in connection with any of such invested funds as any other investor having the same types of savings accounts with Glendale Federal. The plan was approved by the Internal Revenue Service on December 9, 1976. Savings are insured up to $100,000 by the Federal Savings and Loan Insurance Corporation. At June 30, 1977, Glendale Federal had on deposit in the name of the City of Riverside, assigned to participants the sum of $125,901. 2112 286 - F-18

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• I CITY OF FINANCE DEPARTMENT < J'am uam wie H.ede. r a A *
• a WW I ncr e.sne I Revenue Sources Property taxes A mou nt (T hremds)

S 4,826 Percent of Tot al 10.91 over 1977 ( T housands )

                                                                                                                                                                     $     251 12,052          27.3              1,622 Other taxes                                                          1,502 I     nses anti Permits            4,329           9.8 904           2.0                   85
   "' " " ' * * " Deceminir 7, 1978 Fines and Forfeitures                                                  457 Use of Money                         914           2.1 B,lM            M.3               2,2 H u v .--                                                                                          IntegowmentM Rmnue I 'U".77.5
   "~

Mr. W m. F. Cor nett, City Manager 7 City of Riverside Riverside, CA 92522 Charges for Services Utility Contributions Miscellaneous Revenues 1,268 4,245 467

                                                                                                                                    $44,i65 2.9 9.6 1.1 100.0a            g Os7 176 415 348 I               

Dear M r. Cor ne 't t :

T he Annual Financial Report of the City of Riverside, California for the year ended June 30, 1978 is submitted herewith. Assessed valuations of $471.5 milhon represents an increase of 22.3% over the proceeding year. T he assessal valih 3 at July 1, 1978 relating tn the 1978-79 fmcal year is $537. 5 million, an increase of 14% over the assessel value at July 1,1977. I ACCOUNTING HEPORT This report has been prepared in conformity with generally accepted accounting principles and is presented in the latest Current tax cruxtione rmeived from the Riverside Cou nt y Tax CoDector were 99.fr percent of the tax levy, up 1.3 peicent from The ratio of total apportions received (cu r r ent and last year. suggested format by the Municipal Finance Officers Association of I the U nited States and Canada. T his com prehensive annual financial re port covers all funds and account groups of the City; it includes appropriata combined and combining stat ements with amompanying notes, sched ules and statistical tabk>s deemed delinquent) to the current tax levy was 100.1 perwnt, a decrease cf 6 percent over last year. The City tax rate was $1.01 per

                                                                                                      $100 assessed valuation. A lireakdown of the tax rate by funds for the past three years is shown in the folbwing tahluat u >n nmessary to give an accurate financial status of this City while                    Pu rpose                                   1977-78     1976-77         1975-76   .

complying with all legal provisions and determining fairly with full S . 7W f. 8W T~ BIT I durlosu re the financial position and results of operations of the General Fund (Including Retirement! bibrary Fund (Including Retirement) .206 .190 .220 City for the year ending June 30, 1978. Accounting systens used Debt Service Fund .066 000 .077 by the City are described in the notes in the financini statement Capital Outlay (Stumts! Fund .020 020 020 section of the reg ort. $1.010 $ 1.1 10

                                                                                                                                                            ~-
                                                                                                                                                                             $1.130 Many of the tuvisions in the accompanying financial statement were                  1977-78 Maximum Tax Rate Permissalile was $1.H60.

the rcsults of Municipal Finance Officers Association special review com nit tm's recom me ndations on the presentation of the City's As a result of recent legisbtion, 1978-79 property taxes w tll Annual Financial Rep >tt. a mount tn approximately 40e c. the prur year levy with the exceptinn of prof erty taxes lev ed for delet service assued prior to

           -                          GENER AL GOVERNMENT Ah FUNCTIONS                                the new legislation. The City will receive approximately $1 milhon N                                                                                             from the State for 1:roperty t/ < rebef dunng 1978-79.

I N CD R ev..n ue for ger.eral gover n mental functions (excluding S pecial A ssessme nt Fundl totaled $44,165,383 in 1978, an increase of 20.8e over 1977. General property taxes produced - 10.96 of general revenue compared to 12. 31 last year. The amount of revenue from Expenitatures for general g< /eronental fundtons (excludtng Special A ssessroent Fund) totaled 40,052,478, an increase of 19.1 tercent over 1976-77 Increases er decreases in levels of expenditure s 'Lr vanous sources and the increaue over last ycur are shown in the s I Q folbwing tatsulat2on nay>r funct2ons of the r .ty over the preeding year are sho.dn in the folbwing talluation I I

The City's current Wwdy rating for G neral Obhqaf ion Honds is Aa. Capit.d incre w e Current Proyes Total Permnt over 1977 The City does not have any uninsued qercial obbgat ion bonds as (in (in (in of tin rf June 30, 1978. g T hou s . ) T hous. ) T hous. ) Tot al T hous. ) F u n< t ton

,eneral Gover nment      S 4,479 S 284 $ 4,763 11.94 $1,010                           Cash tenp>rarily id b dudng the year was invrst o t in time 14,39)        624    15,017 37.5         1,823              depuits ranging from I to 365 days to nat urity, federal a.iency             N Public Safety 2,512      7,678 19.2           437             secu r itjes ranging f r om 181 days to 7\. years tn nat o rity , and linghways and Streets       5,t66 1,281              ba n kers awept a nces ranging from 76 to 178 days to nat u rit y.

Cult ut e and Picreation 7,613 778 8,391 20.9 3,4 76 3,476 8.7 1, 7 39 During the year, t he City's cash r emoro's were divided between N Lere Payments demand deponits and invest ments as fi dlows: in denand delmits Debt Services 728 728 1.8 -3 SEM S4,198 $ 40,053 10u. 04 S6,2H7 29.71 in bank tine deposits 40.21; in federal agencies 6.61: and " in ba nke rs amept ances 23.51. The average yield on nat o rit y investments during t he year was 6.91, and the amount of intercut N The undesig nated fund balano s in may3r operating funds were received was $2,101,30 3. The latter amount was $1,073,548 nore naintained at adojuate levels. The undesignated fund babnce in than interest earned for the prier year. A com pa r ison of the General Fund of $2,196,441 was down $203,849 from last year, tenpararily idb cash funds investol during the past four years is Special Gas Tax u ndesig nated fund balance of $401,139 was un shown in the folbwing tabluation:

$272,413 from last year, and the Special Capital Improvement u ndesig nat ed fund balance of S174,546 was down S231,573 from                                                 1977-78      1976-77      1975-76       1974-75 proeling year.                                                                         Cash on deposit (1) S29,7324,058 $18,927,S80 $16,822,4 78 $17,337,558 Cash invested (1)      30,400,001 19,540,660 17,429,528 17,852,248 DEBT ADMIT 3ISTR ATIOt3                                       Percentage invested         102.6%       103.2%        103.6%       103.0%

2,101,303 1,027,755 1,022,776 1,461,500 The June 30, 1978 ratio of net bonded debt to assessed valuation Interest income Average net return 6.91% 5.26% 5.871 8.19% and bonded debt per capita are useful indicators of the City's debt Egtuv. tax rate (2) S .42 $ .25 $ .27 S .38 position to runicipal management investors and is reflect ed as fotbws: (1) Average daily balance Ratio of (2) Per $100 assessed valuati>n Debt to Ratio cf C APIT AL PROJECTS Ftit4DS Assessed Debt to Value 25% Present Debt Present Market Per Capital Outlay, Storm D rain , and local Transportatjon Funds are Market Value Ca ita used to acmu nt for street and highway capital propet S 4,810,000 " .UUUT .F $ 0. expen titures. It is not the policy rf the City to capitalize street Net direct lund debt 41,375,616 .066 .017 264.70 related proy cts. A report of street expendttures is rnjuired to Overlapping debt $295.4 7 be filed with the State ContrcAler's Office annually.

 "et direct & overlapping debt $46,185,616          074%     .019%

Sycal Capital Improvenent fu nds are used fer park capital Outstandtng general obligation bonds at June 30, 1978 totaled improvenents. The City rmords the prior year's gurk capital

 $4,810,000, of wtuch $2,410,000 was issued for inprovements to the                     profyct expenditures as general fixed assets.

sewage systen and is current 3y teir.9 paid fron the Sower Fund, a scif-suplotted fund. The renaining $2,400,000 is considered a net The Fire Bond construction rund is used selely for the acquisition dir ed tax supierted debt. Tables 7 through 22 of this report of ' Ire protation capital improvements. T hese expen<*dtures are presents note detMied information about the city's debt p@lon, also recorded as general fixed assets. Du ring the past . J $545,000 of general obligation bonds were The folbwing tahluation shows current year expenditures for each en Decem oer 1, 1977, S450,000 of general obligation retired, bonds were sold at interest rates varying fron 4.34 to 61 for fire capital proy'ct fund. department capital proy> cts. rund A nou nt Capttal Outlay S 853,912 Sycal Capital inprovenent 420,955 Suarn Drain 793,324 fire Bend 299,924 106,650 local Transmitataan $2,474,N5 Tot;d is

I I GEtO:R AL FIXED ASST:TS Grms ineone 1977-78

                                                                                                                            $9,267,674 1976-77
                                                                                                                                                 $7,601,28t, 1,297,967              493,075 I    The general fixed assets (I the City are thme fixed assets used in the j o r formance of general fundions and exclude fixed assets <f the enterpaise funds.         It also excludes the capitalization of all tJet income Incone Availabb for Debt Service Debt Service Roluir ements Coverage (income avaibbb for debt 5,045,289 2,306,482 4,041,348 2,02),083 stseet and highway related capital improvements. As of June 30,               service divided by annual debt                                         2.0 1978, the generst ftxed assets of the Cit y tot ded $50,694,049.                                                                2.2 wa vice)                                      715,000             650,000 This amou nt repr esents the original cost of the assets and is              Matured Donds Rdjred mnsiderably kss than their present value.                 Depreciat2on of general fixed aswts is not recog nized in the City's accounting              Water revenue bonds of $6,600,000 were mld April 1, 1978 at a net syst em .                                                                    interest cmL of 5.60581. Debt      service reser ves of $2,5 39,310 fully nects Im>nd rix]uirements. The       City's cur rent Mouly rating for UNTERPRISE FilNDS                               water revenue bonds is Al. The water systen capital revenuead.ht. ion of and S3,496,350 during the year was finanm! from current Eke ric Fund.        The Cit y's Eketric System ext eriencax! a 20.3%         lond funds.

I increase n grms income dunng the year. This increaue in gross incomo resulted from an increase in fuel surcharges of $3.6 million, paid to Edison, which was s w: ed on to the consu mer, a rate increase of 51 effective October 1, 1977, and an increase of 3,000 Airport Fund. The gross income of the Airlott increased 21.9E over the previous year. Comparative data for the last two years is presented in the folbwing talluations: new acmunts. The City rea ized a savings b2 fuel purchase on a I prepaid arrangenent with Ne"ada Power Company of approximately S190,000. Comg arative data for the last two fhical years l' resented in the following tab'uataan:

b. Gross Income Net Income or Deficit Cent ribution from General Fund 1977-78

                                                                                                                                   $115,212
                                                                                                                                   -121,820 253,445 1976-71 M'r3 3
                                                                                                                                                  -115,935 133,838 I      Grms Income tJet Inmme 1977-78
                                           $4T MQ78 2,590,898 1976-77
                                                           $ 3OTT'il78
                                                              -215,251 4,994,963 Federal (FA A) and State (C A AP) Crants (for. construction purposes only)               651,312 T he stivity at the Riverside M u nicipal Airport. haa increased substantially in the past three months and, with the butiding (I a Income Available for Debt Service 8,333,492 Debt Service Roj uirenent s            1,446,940        986,300              regional general aviation district office, the ativity will increase coverage (incone available for                                               even more, which should increase the revenue at the airport.

I debt service divided by annual debt service) 5.8 5.1 This is the first year that depreciation is included in o[erating 850,000 450,000 expenses. thtuant Bonds Retired I Debt. service reserves of $1,592,590 fully meets la>nd roluirerents. Capital ad.htaans to the Flectric Systen totalinq $1,811,838 were Refuse Fund. The g ross inct me of the City's Ref use Cr&dann and Disposal Systen increased 11.2% over the previous fiscal year. Comparative data for the last two fiscal years is presental in the m financut fron revenues and bond funds. following tabluation: I"N The City will be selling $6 3,000,000 of revenue tonds for 1976-77 N pa r t icipation in the San O nofre N uclear Generating Propt plus -1977-78 ot her generatang propt.s in the near future. The City's current Grms Income $ 3 I'@0 $2,828,057 97,945 169,856 n = =ly rating for Elect ne Revenue Bonds as Aa. INy NO fe* Income This is the first year that the Refuse Fund has la en refbeted as Fater Fund. The City's Water Systen experienced a 22a increase

 ~      2n gross incone donng the year, reflecting the full impa t of the            an enterpnse fu nd . D urin g the 1978-79 fiscal yer the City rate increases of 8s effective Ncvember 1,1977 and April 1, 1978,            assoned the bilhng of private contradnrs wna had been o&cting I        arnt the increase of 2,500 new accounts.        Comparative data cf the 1.nt two fiscal years is presented in the following tabluations residential acmunts in the annexed areas .I the enty . The City will receive a fee for this ocavice.

I m g

I I AC K NOWLEDGEM EN TS Sewer Fund. The gross ino>ne of the City's Sewerage System m Increased 11.6% over 1976-77. The increase is due to $176,000 The pre 3mration af this report could not be acu>mplished wit hout incriuso in sewer o>nne< tion fees and an increase in new accounts the efficient and dedicated services of the entiru staff of the over the prior year. Comparative data for the last two years is Finance Department. I would like to express my appredation tn all presentof in ihe folk > wing tabloationt members of the de3uttnent who assisted and nintributol to its prepar ation . I would also like in thank your of f km and the 1977-78 1976-77 members of the City Council for their interent and s u p p>rt in 32,759,272 $2,47 3,860 planning and conducting the financial operations of the city in a Grms income respansible and progressive manner. tiet Ina>me 1,012,614 908,968 Incomo Avadable for Debt Service 1,263,312 1,165,88.1 Debt Service Requirenents 125,620 129,070 Respectfully submitted, Coverage (income available for debt service divided by annual debt 10.1 9.0 M, AMs, [ g+w~ @ service) llarold E. nrewer C\1 Hature Donds Retired 41,000 60,000 Finance Director Dett service reserves of $240,872 fully meets fond retirements. g ILy The City's current Moixty rating is Al for sewer revenue londs. T he city issued $2,000,000 of revenue londs in the fiscal year N 1978-79 for the city's share of the new Tertiary Treatment Plant 3 funded largely by Federal and Statse g rants. This is the first g

 ) ear that fixed assets and depreciation were included in the sewer                                                                       B fund financial statements.

Transteirtation Fund is being presented in this year's finandal reloat separately as an enter prise fund in accordance wit h Souther n Califurnia Asca>ciations of Governments requirements. OTilER Ftrl ANCIAI. INFORM ATIO!1 The Parking Fund will be me rged with the General Fund in July 1, 1978. INDEPCNDENT AUDIT The City Chuter requires an annual audit to be made of the Irjeks W of a&nunt, financial records, and transactions of all administrative departnerts rf the City by a Certified Public Accountant selected by the City Coundl. This rajuirenent has been complied with and the auditor's epinion has Lmn included in this report. I m I

I MAYOR I I CliY COUNCIL I LilYCLERK CIT Y M AN AGE R CITY AT TORNEY ASST. CITY M ANAGER [ RAINCRO55 5QUARE M ANPOWE R OF yng g

                                                                    ~

OF FIC E I COMMurelTY RELATIONS OF FICE DAT A PROCESSING PROPE R f Y SE RVICES OF F gCE MUSL UM POLICE FIRE I PE RSONNE L PL ANNING DEPARTMENT FINArdC E DE P A RinaE NT DEPARTMENT DEPARIMENT DEPARTMErdi DE P AR T M E ra T

• SUPPORT SERVICES
• OPE R ATIONS
• tauDGE T & PROGR AM
• AF FIRM ATIVE ACTION
• CURRENT PL AreNLNG
• PREVENTION
• MERIT SYSlEM
• ADV ANCE PLANNING
• FIELD OPER ATIONS ANALYSIS
• SUPPRESSION
• RECRulIMENT
• BUILDING & ZOretNG
• DISASTER PREPARLONE55 I
• ACCOur4 TING
• RE VENUE
• SAFETY
• PURCH ASING & STORES 4

I PUBLIC WORKS DEPARTMENT

• CITY ENGINEERING PUBLIC EERVICE DE PA. T *AE NT
• BU!LDING t' AIN IENANCE PUBLIC UTitiTIES DEPARTMENT
• COMMt RCI AL LIBR AR Y DEPARTMENT
• RE ADE R SE RVICES PARK & RECRE ATION DE PA R T M E r4 T
• OPER ATIONS
• RECRE ATIOr4 AIRPOR T DEPARTMENT
• ELECihlC
• TECHNIC AL 5E RVICES I
• T R AFFIC ENGINE E RING
• COMMUNIC ATIONS
• PARKS
• SOL ID W ASTE DISPOSAL
• WATE R
• SEWE R AGE SYSTErAS
• ST REET SE RVICES I Ab Brown . . .

LEGISLATIVE OF F ICI AL5

                                                          . .         .  .        . . .     . . .          Mayor               Willian F. Cornett. Jr.                       . . . .

DEPARinENT HEADS

                                                                                                                                                                                              ....            .       . . . . .         Ci ty Manager *
                                                                                                                                                                                                                   . .                  . City ClerU I~                                                                                                                              Alice A. Hare               . . ..            . . . . .....                                   .
                                                                            . . . .      Councilman - Ward 1                                                                                  ......                  . .       . . City Attorneyo Ernest  Pintor                   . .                .      . .

Councilman - Ward 7 John H. Woo.1 head ......

 ~ Ed Shepard                                      . . .              .  . . . .

Harold E. Brewer .. Finance Director / City Controller. City Treasurer Councilman - ward ) . . . . . Personnel Director N Arden R. Anderson . .

                                                                                     . Councilman - vard 4                     James B. Judge          .          . .            . . . .. . .

Planning Director Robert E. Sower $ . . . Councilman - Ward 5 Merle c. cardner . .. . . . . . ..... . .

                                                                                                                                                                                                                                    . Chief of Police INW Don torenzi San Digati jim Manning Councilman - Vard 6 Councilman      '.ard 7 victor E. Jones Richard J. BoSted Warrent Schweitzer Robert C. Wales
                                                                                                                                                                                                                              .             Fire Chief Acting Museum Director Pub!iC Work 5 Director and City Engineer Q                                                                                                                                                             .       .      . .

Public Service Director and Superirtendent of Streets I George N. etut,b a r d Public Utilities Director Everett C. RoSS. .. . . . . .

                                                                                                                                                                                                                               . . Litrary Director Catterine E. Luca5              . . .             . .       ......                  . .

Park and Pecreation Director Eddic Brown . . . . . ............ Actir.g Airport Director A. M. Rice . . . . . .

                                                                                                                                ' Appointed by City Council

IllOM AS, B 'E & SMI Til s.t H [a& It O re Jt e I A8'd 15 December 4,1978

                                                                                                           .i n. o. ... . . . ,

n.,..s... e ., ...., e r & n . . ,.. o s. o. .. . ..r.o i o ...... . u..o. cea .

                                                                                                                      .ue.

v c s., ., ,. ce4 The City Council City of Riverside I 3900 Main Street Riverside, California 92522 Gentlemen: I tie have examined the financial statements of the various funds and account groups of the City of Riverside for the year ended June 30, 1978 as retlected in the accompanying pages "2" through "22". Our examination was made in accordance I, with generally accepted auditing standards, and accordingly included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances except that we did not verify historical costs of all property and equipment, in our opinion, except for the values shown for property and equipment, the accompanying financial statements present fairly the financial position, of the various funds and account groups of the City of Riverside at June 30, 1978, and I with the exception of depreciation in the Proprietary Funds which was competed on property and equipment whose historical cost was not verified by us, the accompanying statements reflect fairly the results of operations of such funds I and changes in financial position of the Proprietary Funds for the year then ended in conf >rmity with generally accepted accounting principles applied on a basis consist it with that of the preceding year, except as noted in the notes to the fir, cial statements. N The accomp aying supplemental information presented on pages "23" to "40" and

    '                 the column on the accompanying combined balance sheets captioned " Total-
  ~                  Memo,randum Only" are not necessary for a fair presentation of the financial I  N N

statements, but are presented as additional analytical data. The supplemental information has not been subjected to the tests and other auditing procedures applied in the examination of the aforementioned financial statements, and C accordingly we do not express an opinion on them. I -P.- Respectfully submitted, Til0 MAS, BYRNE r, SM TH gMy Certified Public Accountant I ,

I Ci ty of Riverside I C0tmillED FillAtlCI AL STATEMEllTS Descriptions of the funds and account groups shown on the following financial statements are as follows: Governmental Funds 1 Genera) Fund - to account for all unrestricted resources except those required to be accounted for in another fund. I 2. Special Revenue Funds - to account for the proceeds of speci fic revenue sources that are restricted by law or administrative action to expenditures for speci fied purposes. Capital Projects Funds - to account for financial resources segregated for the acquisi tion of major I 3. capital facilities.

4. Debt Service Fund - to account for the accumulation of resources for the payment of interest and principal on general long term debt.

5. Special A=,essment Fund - to account for the financing of public improvements or services deemed to benefit the properties against which special assessments are levied.

Proprietary Funds

6. Enterprise Funds - to account for operations that are financed and operated in a manner similar to private business enterprises - where the stated intent is that the costs (expenses, including or deprecia-tion) of providing goods or services to the general public on a continuing basis be finant '.d I recovered primarily through user charges - or where periodic determination of revenues earned, expenses incurred, and/or net income is deemed appropriate for a capital maintenance, public policy, management control, accountabili ty, or other purposes.

I - NJ

    -        7. Internal Service Funds - to account for the financing of goods or services provided by one department to other departments on a cost reimbursement basis.

M Fiduciary Funds - to account for assets held by the Ci ty of Riverside as a trustee or agent for individuals, Th'is includes nonexpendable trust funds. I N private organization, and/or other governmental uni ts.

   ~D LD I      Account Groups - are used to establish accounting control and accountability for the city's general fixed assets, the unmatured princip0 of the general obligation long term debt, and long term lease obligations.

I I

tahihit I

                                                    %                                                                  (ity ol R6ve (OMillNE D 9ALAh(               lT At t 1 UND I1f $ AND ACUnHeI GR0tiP5 June 30, 19to tot 40 f i duc c ar y            L e t Grongs                              Mecane aname Do l g_

Govern ne ntal f und t ypes Fr opr iet ar y fund fyp"es fund ~Jpe,s Gence al feneral onternaI trust and Fized t ong t e rm June 30 lune 30 5pecial Debt Capital 5pecial Debt 19/8 1977 A55Ef5 Ceneral Aevenue Service Qojecy Assewments interprise 5ervices j ency Assets 612,975 $ 921,2 % $ - $ - $ 36,006. # 07 5 28,313,150 Cash 13,256,432 52,323,766 $ 115,067 $4,109,232 $28,208 5 24,639,18) 37,148 8,675 - - 756,81) 329,302

                                                               -                   -         47,782                     -             -              66),208                                                                                             105,000              755,000 Cash with fiscal agent                                                                                                                                      -                  -             105,000                  -                    -

lavest= cats w6th fis ul agent - - -

                                                                                                                                                                                                   -                 -                    -              122,031              166.105 Proper t y t ames receivat,le                             95,362             18,144            6,$81                 1,824            120                    -                 -
                                                                                                                                                                                                                     -                    -           6,023,015           4,48t,870 5,601,9r.3            8,74                       -

Account s re(ei vable 342,342 }9,965 29,973 (4,314) 46 (7),434) (l.f,4 ) - - - (116.999) (58,938) Q Alloweveces f or estimeted uncollectible {}8,807) - - -

                                                                                                                                                                                                                                          -                28,010               12,630 28.439                5,627                  -                    -                 -

spec 6al assessment s receivable 9% - - - 426,933 t7,053 86,325 - - 182.578 358,417 Inteeest r ecei vable 187.827 St,184 - 1 3.21,9 50,529 155,t6) 44,tS3 -

                                                                                                                                                                                                                     -                     -          1,275,981           1.338.330      N Interland loans receivable                               426,136                     -              -                                   -
                                                                                                                                                                                                                                          -          18.592,653           6,68),221 88),135          3,664.675                           2, % 9,909                -         11.201,160           393,774                      -

1,758,520 Due t r.m. other gover,=nent s 1,903,910 - - - 1,90),980 Central stoees inventory of supplies - 3,833

                                                                                                                                       -          f,594,04l 265,908                      .                  -                    -          2,024,506            3,019.059     N Prepaid e.penses                                          160.731                                   -                     -

10,640,405 - 19,891,889 19,337,383 9.251,%4 - - '"~* t end 26,335,929 - 33,739,910 32,958,092

                                                                                    -              -                     -             -          7,383,989                    -                    -

(3,397,107) (3,2 fe9,67 3) - Buildings and improvements -

                                                                                                                                       -         (3,397,707)                   -                    -                 -                     -

Accumulated depreciation - - - - 112,527,696 t05,722,743 lepeovements other than buildings - - - - - 108.155,179 - - 4.172.587 (28,143,450) (25,815,203) N

                                                                                                                         -             -       (28,743.450)                    -                    -                 -

53,188,385 Accumulated depreciation - - -

                                                                                                                                        -         4.241,5t?           398,703                        -        9,345,198                     -        t3,985,416 Machiner y and equipment                                          -                   -             -                      -
                                                                                                                                                                                                                                            -        (3,538,681)         (3,224.269)
                                                                 -                   -             -                      -             -        (3,303,779) (234,902)                              -                  -

0,085,734 6.328,}69 Acciniutated depreciation - -

                                                                                                    -                     -             -         8,085.734                    -                     -

133,473 114,162 Cons t r uc t ion la progress - -

                                                                                                                          -             -                    -                 -                     -                 -            13),473 Aeount available in debt servic.e fund                            -                  -

Amount to be provided for retire = eat of: - - - - 4,676,527 4,676,527 4,790.838 General long term debt - - -

                                                                                                                                                              -                 -                    -                 -        27,120,000           27.120,000          29,055,000 Long term lease obligatioris                                   -                   -             -                     -
                                                                                                                                                                                -                    -                 -                    -             125,0J               398,849 fquipment lease purchase contracts                   125.079                      -

TOTAL A55ti$

                                                     $5.439.181 56 101.567 $ 169,430 $6.650.402. }$,jg 11%.487.151.11.447.nI5 11.721.2 % M 0J4 111.910.000 }U@@l HJMNR LI A9 6t ITIE S ANO FUNO (QHl1Y L i abil l t les :                                                                                                42,594 $35,781 $ ).368,696 $ 203,010 $                                             - $               - $                  - $ 4,916.436 $ 8,787,048 Accounts payable                                 $ t ,161,1,2 3 $         64,035 $ 35,957 $                                                                                                                                              -         2.f tle,617          3,062,120 80,926                                    -                     -              -        2,03),693                     -                    -                 -

t,338,380 Contrac.ts pava hte - 755,16) - - - 3.275.981 Inter fund loans payable 94,682 426,t)6 - - - -

                                                                                                                                                               -                 -                    -                 -                     -             12,685               20,268 Oue to other governmeats                              32,685                      -             -                     -

19,707 - 1,688,780 t,175,552 45,227 - - 183,223 921.2 % - Acc rued li abili ties $19,379 - 800,000 - 47,530,000 42,625,000

                                                                                                                           -              -      46,730,000                      -

4,905,000 Revenue bonds payable - - -

                                                                                                                                                               -                 -                     -                 -        4,810,000            4.810,000 Gener al obligatirm bords payable                              -                   -             -                     -             -
                                                                                                                                                                                                                         -     _2J,120,000            2 7,5 t 7J00        29,055,000
                                                                                        -             -                     -              -          397,000                     -                    -

t ong term lease obligations - 52.712,610 977,880 1,72 t 2% - 11,9}0,000 09,883,559 90,368.}68 3 1,899,095 JJ5,)?8 35.957 42d14, 35,791 TOT AL Ll APlt l11($ f und E qui t r - - - - 50,694,049 - 50,698.,049 t8,956,401 t e' ve s t wat s 6 e general fired assets - - - -

                                                                                                                                                                                                                         -                     -      37,338,551          21,931,437
                                                                                        -              -                     -             -      37,338,551                      -                     -

Contributed capi tas and gr ant s -

                                                                                                                                                                                                                                                -       4.372,772            3,607,234 me ta,ned earnings                                                                                                     -             -        4,372,772                     -                     -                 -

seser ved f or rever e dond retire-ert - - -

                                                                                                                                            -     52,063,418 2,49,135                                    -                -                     -

54.532.553 47,881.567 un e e se r ve d f und bat eace - - -

                                                                                                                                                                                                                           -                    -          164,564              138,543 seser,ed for prepa,4 e,pc ,ses                    160,731               3,81)                  -                    -              -
                                                                                                                                                                                   -                     -                -                     -          65),381              724.590 496,648             t56,73)                   -                     -             -

Reserved for encunore-ces t.hr e se r ved tigegnates for speci f ic cap. al - - - 10,166.521 6,4C8,785 5f6.266 4,'77,452 - 5,128,771 14.032 - -

                                                                                                                                                                                                         -                 -                     -          133,473              s14,1(2 projects acd progr ams                                                     -   133,le73                        -              -                   -                  -

tesiyates for de s t ser dce - Desig-sted f or fines asset - - - - - - 47,682 -

                                                                     -          3,7,682                  -                    -
                                                                                                                                                                                                         -                  -                    -         2 4,5C 5              138,e4 eepl ace er ts                                                                                       1 4 ,505                 -                    -                 -

esir ate 4 for fotste cr: 9e i..es ,22150.000 t,)32,532 -

                                                                                                                                                                                     -                    -                 -                    -        ,603,1,42     Jgg 96,Mt             '90 a A9                   -                                                    , , _

r r esirate s R W.-1 - liMX.21 ljM21dh ry, (q it. ) , m .16 r J M ,169 ,_l))g,J f .W,8C 9 _L 32 H , ' , N1 2 ,4, I H - m .ms mf c . r

                                             .e       gg.u t u, M : :,,.O.,hr. 22ny,2 111J11 c'4.-e'.m ;1.,,-Lu Dawi.., LLibl,t Maw, :.%%JL .,iM1.L
                                             ....t ..,o.t             . -... .
     .. . . p.            e l __ . S .r.   .

E

hibit 2 City of rside COMulNED SI ATENENT Of itEblNUES, iXPEND4 TUAES AND CHANGES IN TUND BAL ANCE S All LOVERNMENT AL f Uno TYPES I for the fiscal icar Ended June 30, 1978 Total (Memorandum OnIy) Governmental Fund Types Year Inded I Special Debt Service Capital Projects Special Assessment June 30 1978 June 30, 1977 General Bevenue I Sources of Financial Resources: Revenues: Property tases

                                                                              $ 3,le52,066 12.051,898
                                                                                               $ 963,297
                                                                                                                   $   316,561
                                                                                                                                    $     94,205 5      5.88/
                                                                                                                                                                         $ 8+,832,016 12,051,898 5 4,589,555 10,429,159 35,704 other taxes                                                                                                           -                  -           19,429               19.829 I

Special assessments levied 2,26fe,612 - 8+ ,329,2 2 3 2,826,828 1,921,562 143,0'e9 - Licenses and permits - 903,9 % 819,142 159,741 7% ,203 - - 456,636 Fines ard forfelts 701,072 163,194 2,473 s,7,s+38 - 914,171 use of money 48,930 1,036,527 - 15,16c,584 12,928,385 8.,970,200 9,104.927 Interguvernmental revenues 32,197 - - 1,267,538 I,098.105 Charges for services 1,235,34 -

                                                                                                                                                -                 -         8*,245,053          3,21,6,193 4,245,053                   -                -

I utility cuntributions Niscell cous revenues 108,738 50,096 - 308,003 - 466,837 702,699 367,964 3,750,785 25,316  % ,190,699 37,125,t.06 28,8',5,671 11,200,963 I Total Revenues Other sources: - - i+50,000 - f.50,000 - Proceeds of general obligation bonds - 311,200 - 52,000 - 363,200 862.959 Transfer from governmental funds -

                                                                                           -                  -        379,229                    -                -            379,229             373,619 Transfer from enterprise funds 11,512,163           787,193        fe 252,785             25,316        45,383.128          38,368,984 28,845,671 Total Sources of Financial Resources uses of Financial Resources:

I Empenditures: Current: General government 3,903,196 12.419,218 576,522 1,973,408 1.,879,718 14.392,626 2,760,825 12,692,188 4,882.523 Public safety 3,260,659 1,925,009 - - - 5,385,668 I Highways and streets Culture and recreation Lease payments Capital outlay 4,02),109 3,190,100 856,7f.I 3,569,748 285.700 866,421

                                                                                                                                 -     2,47fe,765 12,903 24,710 7,605,760 3,475,800 4,222,637 6,096,446 1,736,500
                                                                                                                                                                                                 '4,897,1,43 Debt Service:                                                                                                                                                          545,000             530,000 IN
                                                                                             -                  -       5'+5,000                    -                 -

Principal retirement - 182,882 - - 182,882 201,382 Interest 9,196,808 727,882 2,478.,765 37,613 40,090,091 33,797,307 fotal Expenditures 27,653,023 IN) Other Uses: Transfers to other governmental funds Transfer to enterprise funds 363,200 2.558,145 363.200 2,558,145 905,301 138,838 N 2,474,765 37,613 43,0ll t.36 34 ,8 .I ,42,6 30,571,368 9,196,808 727,882 C IN 4 Total Uses of Financial Resources 19,311 1,778,020 (12.297) 2,371,692 3,520,538 Net increase (Decrease) in Fund Balances ouring the Year (1,728,697) 2,315,355 114,162 4,829,788 13,499,8,o 9,979,338 5,278,783 3,2 50,8 t te 26.3M I Fund Galarce - Ju l y I i_3,559,Q86 L5,566 J n 1_133,4 H LL60L808 i l 4,031, llL811 &8, 10,'d3M Fund 3alacce - June 30 D e accompanying notes are an integral part of this statement. I 3

t

                                                                                                                                                                                        -hibit 3 City of River M

STATEMENT OF REVINVES, EXPf NDITURES AND CHANGES IN FUND BAIANCE - BUDGE T AND ACIUAL GENERAL AND SPECI AL REVENUE FutJD TYPES For the F iscal Year Ended June 30, 1978 Total Special Revenue Funds (Hemnrandum Only) General Fund over Over @ Over (Under) (Under) CN (Under) Eudget Actual Hudget N Budget Budget Actual Dudget Budget Actual Sources of Financial Resources: Revenues: 19,997 5 4,320,100 5 4.415.363 5 95,263 N

                                                          $ 3,452,066             75,266         943,300          963,297    5 Property taxes                         S 3,376,800                     $                 5                S
                                                                                                                                          -      10,384,000         12,051,898         1,667,8'38 ~

10,384,000 12.051,898 1,667,898 - - 2,064,611 709.111 - Other taxes 699,262 133,200 143,049 '9,849 I,355,500 Licenses and permits 1,222,300 1,921,562 8f.7,000 903,914 56,944 N 12,741 700,000 744,203 44,203 147,000 159,141 864,266 511,966 Fines and forfeits 439,672 90,900 163,194 72,294 352,300 Use of money 261,400 701.072 199,697 13,536,994 14,075,127 538,133 4,6 3f ,764 4.970,200 338,436 8.905.230 9,104,927 286,980 Intergovernmental revenues 32,197 4,897 980,558 1,267,538 953,258 1,235,341 282,083 27.300 4,245,053 (20,997) (harges for services (20,997) - - 4,266,050 utility contribution 4,266,050 4,2'.5,053 - (322,704) 388,800 158,834 (229,966) 16,000 108,738 92,738 372,800 50,096 Miscellaneous revenues 28,233 36,431,302 40,0',6,634 3,615,332 28,845,671 3,587,099 11,172,730 11.200,963 intal Revenues 25,258,572 Other Sources: Transfer from other general - 311,200 311,200 - 311,200 311.200 governmental funds Total Sources of Financial 11,512,163 28,233 36,742,502 40,357,834 3,615,332 25,258,572 28,845,671 3,587,099 11,483,930 Resources Uses of Financial pesources: Expenditures: Current: 806,883 576,522 (230,361) 5,306,081 f. (826,363) General government 4,499,198 3,903,196 (596,002) 15,109,177 18. 392,626 479,718 (116,551) 12,419,218 U t 6,551 ) 1,973,408 1,973,408 - Public safety 13,135,769 (3,947) 5,670,758 5.185,668 (185,090) 3,741,802 3.260,659 (488,143) 1.928,956 1,925,009 Highways and streets 3,569,748 (168,122) 8,112,902 7,592,857 (520,045) 4,375,032 4.023,109 (351,923) 3,737,870 3,475,800 culture and recreation 285,700 285,700 - 3,475,800 - Eease payments 3,190,100 3,190,f00 - 5,820,991_ (4,097,829) 856,741 (474,091) 4,490,159 866.421 (3,623,738) 1. 72 L 161 Capital outlay 1,330,832 9,196,808 (4,026,168) 43,495,709 36,819,831 (6,645,878) 30,272,733 27,653,023 (2,619,710) 13,222,976 Total Expenditures Other uses: Transfer to other general 363,200 - - - 363,200 363.200 - go ve rnnen t al funds 363,200 -

                                                                                                                           -                 -       2 ,558,1 f,5      2,558,145                    -

Transfer to enterprise funds 2,558,145 2,558,145 - - 9,196,808 ff. 026,168) 46,t17,054 39,77I,176 f6,645,878) 33,f94,078 30,574,368 (2,619,710) 13,222,976 Total Uses of Financial Resources Net increase (Decrease) in Fund 4,054,401 (9,674,552) 586.658 10,261,210

                                              '7,935.506)    (1,728,697)       6,206,809       (1,739,046)       2,315,355 eata,ce Ouring tt e wear 3,250,814        3,250,811                   -      8,529,597         8,529,597                     -

f und Balance - July 1 5,278,783 5,278,783 - 1Q & }}1) LM[ Mil ggo,o B F und eat ence - June 30 iL2.656,723) 53.550A8j $__6.2062 q s 1.511.763 Lh13 S 4.054.401 Tse accxpa ying notes are en ictegral part of tFis statenent. 4

Exhi 4 W City of Riverside STATEMENI 0F CilANGES IN Gfh(RAI F lXED ASSE TS I F or the F iscal Year Ended June 30, 19/8 Balance Balance July I, 1977 Addltions Re t i r esien t June 30, 19/8 Cost: I General government Public safety 511.,055,028 5,633,765

                                                                                                  $        17.553 601.019 268,738
                                                                                                                                         -      $14.072,581 5,966,046 8 , 33.6 , 71,8               ]97,38h                     4,773        8,$39,359 Highwafs and streets 20,920,860                  I,227,864                     32,661       22,116,063 Culture and recreation
                                                                       $$g                         i 2,043.870            $ _306,J]2            gg4,0.l.3 TOTAL COST I                                                         City of Riverside Exhibit 5 STATEHENT OF CHANGES IN GENERAL LONG TERM DE8T For the Fiscal Year Ended June 30, 1978 General                 Debt                  lessor's I

General Obligation Onligation service Revenues Bonds Funds Principal Balance Balance Bonds June 30, 1978 July 1, 1977 issued _ Retired Operations Re.tuction I Amount available in debt service funds Amount to be provided for retirement:

                                           $     114,162    5          -         5              -

S 19,311 5 -

                                                                                                                                                  $     133,473 4.676,527 4,790,838          450,000              545,000                 (19,311)                      -

I Long term debt Long term lease obligation TOT AL AVAIL ABLE AND TO 29,055,000

                                           $33,960,000      }_ _QO ,03 5

5 '+5 ,000_ 5 I,935,000 3 9 L 090 27.120,000 131,910,n00 BE PROVIDED I N General obligatian debt payable: Ge.eral bonds s 4,905,000 5 450,000 5 585,000 5 - 1,935,000

                                                                                                                                              -    5 8.,810,000 27 120,000 N       Lorg term lease obligations          29.055,000                 -                        -

I NO NO TOTAL GENERAL OBLIGATION OE ST PAVA 9tt j33,960,000_ i 450,000 $__ 345,002 5 ___ - 1 1,935,000 m ,93L of0 I The accgs, pan,ing notes are an integral part Of this statenent. I 5

E.hibis 1 City iverside COMalNE D ST ATE MENT OF CHA',GE S IN F INANCI AL Po$lil0N A*.L PHOPRl(I AHf FUND TYPE S AND NONf MPE NDAlflE THU5T FUNDS I For the Fiscal year Ended June 30, 1978 Fiduciasy Total (Hemos andum Only) Year i nded I Fund Types Proprietary Fund Types _ NonespondJhIe Julic 30, AJne 30, Internal Enterprise Funds 1978 89/1 Airport Fie f use sewer Iransportatinn Total Services Trust Electric water Sources of F inanc ial pesnurces : I Operations: Het increase (decrease in retained earnings or fund

                                                                                                                                                                                            - 5 1,502,015 5 t,319,390 balance during the year -

165,775 5 97,945 5 1,833,385 5 51,206 5 6,037,176 5 i,464,839 5 5 2.590,898 5 1,297,967 5 I (E st.ibi t 6) Espenses not requiring current outlay of financial resources: Depreciation 1,666,202 1,407,784 34,150 159,796 185,078 34,133 3,487,143 26,631 - _,,.3,583,774 ,_LM8 dM I Total Financial Resources tran oper at hins 4,257,100 2,705,758 199,925 257,741 2,018,463 85,339 9,524,319 1,491,470 - II,015,789 15,407,114 4,b/7,780 2, 61,185 633,934 9,912,13P I,729 15,407,814 - - 6,600,000 J p00,000 I cont rit,uted capi tal and grants 863,803 3.995,510 -

                                                                                                                        -                  -      6,600,000               -                   -

Bond sale oro<.eeds - 6,600,000 - - Total Su rces of 87,068 31,538,433 1,491,470 - 33,022,903 13,13o, 9 13,301,263 833,859 257,748 13,930,608 Financial murces 5,t20,903 I uses of F inancial Resources: Acqusition of ti,ed assets ketirement of revenue tionds 3,478,040 850,000 4,904,134 785,000 28,137 154,499 f,22,643 60,000 35,863 9,02),916 1,625,000 37,758

                                                                                                                                                                           -           65,000
                                                                                                                                                                                               -         9,061,674 1,690,000 6,502,853 1,230,000 payable I                Total uses of Financial besources        4,328,040       5,619,834           28,737           154,499          482,643              35,863      10,648,916          37,758            65,000          10,751,678,        7,812,853 Net Increase (Decrease)                                                         10L 742 511,4!!1,938 5 __31,705                  570,88L511 i ! A5L111 i_ _(65,000) 52 L ?11,773 13 JZLlit in Working C.pital      i __ 132,861 i_14H2.1H 5              805.172 5 Compunent Element 5 of Net increase (Decrease) in Working Capital:                                                                                                                         8,9,177 5 6,706,043 $ 1,137,913 5                           - 5 1,843,936 5 5,374,798 (33,823) 5 I,907.713 5 I                                         5(2,433,010) 5 1,079,502 5           136,470 5                                                               404,868                            (2,300)             402,568          324,766 Casti                                                                                                            12                 -

Cash with fiscal agent 425,084 (20,228) - - investments .i t h fiscal - - - - (50,0001 (50,000) (50,0'0) 11,904.672 65,406 - 11,970,0/8 6,208 agent I,426,818 251.,440 652,616 76,484 9,494,314 - I ~- *"} Account, receivable (net)

     , Centras stores inventory of supplies

• Prepaid e,penses 7 ~Jinterest receivable (1,2l0,486) 99,216 74,382 160,973 (6,720) 18,250 (20,086) 65,463 77

                                                                                                          -         10,651 39,245 2,747 62 45 273,587 2,560,871 (1,117,715) 145,B0 131,078 (21.383)
                                                                                                                                                                              -        (12,700) 145,390 (986,637) 260,887 2,539,488 51,804 2,550,267 (18,400)

(3,029,702) 148,807 Accounts payable 2,482,924 -- - 18,9,261 - - 149,261 128,028 - 11,000 IL 21,233 18,000 Contracts payable 18,000

                                                                                                                                               -        18,000                 -                   -

I tease obligation paywnts - - (17,050) (4,692) (25,742) (49,423) ti,750 (#28) (4,953) (3,977) (826) ___ C_) Accrued liabilities (18.916) C Net increase (Cecrease) 5 __g5,ogg) 12 b2]I,2_2p 1,5 J2(In 803,241 i! f.d4L258 1__- _5LUj, 170,88L11], 5 1,'*53,712 I en Working Capital L_.]27,.8Q 1]fh1)), 5 805,f11 5 the acctmpanying notes are an integral part of this statement I >

C3ty of R rside COMBINitlG STATEHErlTS SPECIAL REVEllVE FullDS Description of the special revenue funds combined on the following financial statements are as follows: Library Fund accounts for the financial transactions of the City's Library and the County Free Library System which is operated by the City by a contract with the County of Riverside. Parking Fund accounts for the financial transactions in operating the parking lots and garages of the City. Traf fic Safety Fund accounts for the financial transactions as prescribed by State of Cali fornia statute on California Vehicle Code Fines. Special Gas Tax Fund accounts for the financial transactions as prescribed by State of California statute on California Streets and Highways. I' Revenue Sharing Fund accounts for the financial transactions as prescribed by United States Treasury Codes on revenue sharing funds. Communi ty Development Fund accounts for the financial transactions as prescribed by the Federal Housing and Urban Development Block Grants. Comprehensive Employment Training Act Fund accounts for the financial transactions as prescribed by the Federal Department of Labor. I I

   ~

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  .N DJ
  ~
  ~

I I I

I^bihit 8 City of Riv le COMBINtNG BALANCE SHEEI All SPECI AL REVENUE FUf405 June 30, 1978 Housing t, Comprehensive Total June 30, .fune 30, Special sevenue Consnun i t y Education f, Parking Traffic Sharing Development Training Act 1978 1977 N Safety Gas Tax A55fiS Library Heter O 12,898 $ (3,515) $ (154,232) $ 2,32 3,766 $ 1,358,415 392,605 $ 156,701 $ (62,041) $ s ,921,350 $ - - 1 8 ,18.4 25,918 Cash 18,#44 - - -

                                                                                                                                         -           29,264             39,965            19,865 Property taxes receivable                              7,095       3,606               -
                                                                                                                                                          -             51,184             15,264 (NJ Accounts receivable                                                                    -              51,184           -

3,664,675 2,3/2,658 471,614 2,882,512 124,968 , Interest receivable 62,041 123,042 3,833 2,908

                                                             -          898                                                              -

Due frnm other goveinments 185 3,648_ - Prepaid expenses Lh!0_1Js], g]%Sg N TOTAL As5ETS l l ABillTIES AND FUNJ BAL ANCE L I18.022 5 4 164.453 $ 5 2.095.576 s 544.512 ildl819]. s I

                                                                                                                                                            - $          6fe,031 $        168,598 Liabilities:                                                                             - $                 - 5         - $        9,618 $                                             341,253 54,413 $           - $                                                                              -          fe26,136 Accounts payable                           $
                                                                                                               -    426,136                -
                                                                                                                                                            -            45,231             3fe ,363 Inter f und loans payable                         42,512_       2,719                 -

Accrued liabilities 9,618 $35,398 St.t ,214

                                                                                                                -   426,136                                  -

96,925 2,719 - Tutal Liabilities

                                                                                                                                            -                -             3,833             2,908 fund Balance:                                             185      3,648                  -                  -           -

26,624 - 156,733 259,000 Reserved for prepaid expenses - 80,738 - 49,378 -

                                                                                                                                                                                                        ,d Reserved for encumbrances                                                                                                                                     8+,477,452        2,557,329 2,788,927 h

Designated for specific capital projects 49,825 25,000 - 1,613,700 -

                                                                                                                                             -                -           47,682                   -

and programs 47,682 - 880,l,69 431,577 Designated for fixed asset replacements

                                                                                             -          401,138      118,376         53,828                   -

228,723 85.40f4 Un.tesignated 5,566,169 3,250,884 2,095,576_ 118,376 2.869,379 - 325,104 161,734 - Total Fund Balance - s 6.101 A Q, s 1.795 m 8 E

                                                                                                   $ 2.095J16. s     544.512 5 2.878.931. s 101 % 6,1Lifl[5 AND FUND BALANCE     $    418.029 s   164.453_ $

The accompanying notes are an integral part of this statement. I O I I I I 8 I

(whibit 9 City o erside COfiblNING STAl[Mf NI Of f(EVENU(5, [XPENDI TURl5 AND CHANGE 5 IN f UND BAL ANCL 5 At t $PECI AL P[ VENUE F UNDS I fur Fiscal Veer Ended June 30, 1978 Total year Endeu Housing 6 Comprehensive I [ibrary Parking Heter traffic Salety Special Cas Tax Revenue Sharing Cumuni t y Education 0 Development Training Act June 30, 1978 June 30, 1977 Sources of Financial Resources: I Revenue: Property taxes Licenses and permits fines and forfeits 5 963,297 $ 143,08,9

                                                                                         -         144,203
                                                                                                                                                                     - S 963,297 $

If*3,049 7'+4,2 0 3 163,19fe

                                                                                                                                                                                                /80,744 153,318 688,816 77,325 1,620             48,690                             112,884            -             -

I use of money 1,81.8,478 2,027,000 1,742,555 9,104,927 7,250,748 I,866,502 - - 1,620,392 26,022 Intergovernmental revenues - - - - 32,197 Charges for services 32,197 - - 50,096 12,404 25 4' 185 - 1,886 - - - Miscellaneous revenue I,848,178 2,027,000 1,742,555 II,200,963 8,989,377 2,863,641 239,924 744,203 1,735,162 Total Revenues Other Sources: - - - 311,200 96,367 Transfer from general fund - 311,200 - - 1,735,162 1,81.8,478 2,027,000 1,742,555 11.512,163 9,085,7f.4 2,863,681 551,12's 784.203 otal Sources of Financial Resources Uses of Financial Resources: Current: - 282,190 294,332 576,522 359,8 5f+ I ceneral government

                                                                                                            -                 -  1,803,000               -      170,8.08    1,9 7 3,f.08     1,813,fe95 Public safety                                                 -

744,203 595,000 - - 481,298 1,925,009 1.741.177

                                                                         -        184,508                                                                                   3, 69,7t.8       2,8:?,297 Highways and streets                                                                                               -      5,771               -      836,587 Cultuse and recreation                          2,727,460                      -                -
                                                                                                                                           -             -              -      285,700           285,700
                                                                         -        285,700                   -                 -

866,428 1,490,177 Lease payments 371,806 I 30,167 5,800 - 457,648 1,000 - Capital Outlay 1,052,6f+8 1,809,771 653,996 I,742,555 9,196,808 8,503,3po 2,757,627 436,008 74f,203 i Total uses of Financial Resources 582,l.'*4 I Net increase (Decrease) in Fund 682,514 38,707 1.373,004 2,315,355 ealance During year 106,014 185,116 1,413,062 79,669 1,8+96,375 3,250,814 2,668,370 Fund Balance - Ju l y 1 215,090 46,618 1. _ _ _ _ r02 5.5,566.169 )_3,259,614

                                                                            $__ 16],] p $ __ ___-p- $_2,095_,516 1__.116,314 1._g,?_69,319 I N
 ~

Fur.d Balance - June 30 $ .. _ J2 ] ,] Oft wihe acconpanying notes are an integral part of this statement. IN 95 I CD L4 I I e

City of Rivers' A C014BINING STATEl4EllTS CAPITAL. PROJECT FUNDS follows: Descriptions of the Capital Project Funds combined on the following financial statements are os i mp rovu.nen t s . Capi tal Outlay Fund accounts for the financial transactions for street and highway capital 7 Special Capi tal improvement Fund accounts for the financial transaction for park and street tree capital improvements. N Storm Drain Fund accounts for the financial transactions for storm drain capi tal improvements. N Fire Bond Fund accounts for the financial transactions f rom the proceeds of sale of general obligation fire bond use for capi tal improvements to the Ci ty's fi re protection sys tem. Local Transportation Fund accounts for the financial transactions per Article 8 of the Transportation (Designated Development Act of 1971 (SD 325) State of California for street ari highway capital Improvements. by ba. City for capital outlay purposes.) I I I I I I I I

I t ahi t. i t 10 City eversid,: COM8INING hALANCE SHEEI I CAPITAL l ROJt Cl FUNDS June 30 1973 1968 Local Total Special June 30, .hme 30 Capital Storm Fire Bond f e as. spar t a-Capital 1977 improvement Drain Constru(. tion tion 1978 Ou t l a s ASSEIS

                                                                                  $ (106,909) s1,679,196 $1,404,821 5 530,151 5 601,973 58. 109,232                               $2,3 7 7. 391 I      Cash Propert, tames receivable Accounts receivable Allowance for estimated uncollectibles 1,824 27,239 (1,580) 2,734 (2,13te) 6,983          6,266 1,824 29,973 (4,334) 13,249
                                                                                                                                                                                           , 2,a,68 3/0,857 184 ,552
                                                                                                                                                            -           50,529            156,306 Inteiest receivable                                                               50,529                    -          -              -
                                                                                                                                                            -       2,449,909        2,247,473 Interlund loans receivable                                                    2 ,18+ 7,317          302,592            -              -

Due f rom other gova:remients ICIAL ASSEIS U* * L I ABit lilE S AND FUND BAL ANCE 42,594 5 226,314

*         'I*'III*I*';                                                            $      2o,896 $            6,99R $     6,700 $             - $             - $
                                                                                                                                                                                ,         g g y ,gg,5 Accounts payable                                                                                                                ,                ,

C2ntracts payable 42, # m,2% 28,896 6,998 6,700 - - Total Liabilities F und Balance: I Unreserved: Designated for specific capital projects and programs Designated for future contingencies 1.892,375 113,826 83,323 1,767,565 32,679 178.,546 719,067 679,oss. 320,692 216,842 429,072 5,128,771 179,162 1 3_3_2,532 146,505 3,403.323 116,908 1,309,5_57 undesignated I Total Fund Balance 10TAL LI ABillilES AND FUND BAL ANCE 1 089,524 I,971.,790 1,398,123 537,134 608,239

                                                                                   $2,118,820 31,981,788 ${,401.Jgj $ 53hyjtt $_ 608,732 $6450 A01 $5,1M.041 6

6,607,808 le,829,788 I The accompanying notes are an integral part of tisis staten.cnt. / I ~

    ~

I 0 LN I CD LN in

[xhibit ll City of Rive:es;de COnblNING ST ATEMENI Of REVENUES , E XPENolillRES sm.U CHAriCE S I N F tlND DALA'eCE S CAPITAL PROJf LI FUNDS For the Ilscal year Ended June 30, 1978 Total 1968 Local Year Ended Special Capital Capital Fire Bond Transporta- June 30 June 30, sg Storm Drain Construction tiun 1978 1977 Outlay improvement

                                                                                                                                                                                         ?. ,

sources of Financial Resources: Revenue: -

                                                                                                                                               $     94,205   5       78,450           (N.
                                                            $      94,205     $

1,14fe ,747 Property tases 1,276,871 987,741 - - 2,264,612 , Licenses and permi ts -

                                                                                          -                  -         28,042         19,396         47,438           19,r.69          ~

use of money 182,004 1,036,527 1.441,475 Intergovernmental revenues 754,322 100,201 - 271,442 816 300,003 65,228 N 16,615 19,830 - Miscellaneous revenues 1.259,183 28,858 201,400 3,750,185 2,809,369 Total Revenues 865,142 1,396,202 other Sources: 52,000 - - - 52,0 9 316,592 g g Transfer f rom general fund - - 850,000 - 450,000 - Proceeds from general obligation bonds - 1,2S9,183 478,858 201,8,00 4,252,785 3,125,961 917,142 1,396,202 Total Sources of Financial Resources Uses of Financial Resources: EFpen7 tures: 793,324 299,924 106,650 2,474.765 2,777,120 Capital Outlay 853,912 420.955 Other Uses: - - - - - 450,000 Transfer to general fund - 793,324 299,924 106,650 2,474,765 3,227,120 853,912 420,955 Total Uses of Financial Resources Net increase (Decrease) in Fund 465,859 178,934 94,750 1,778,020 (101,159) 63,230 975,247 Balance During the Year 932,262 358,200 513,489 4,829,788 4,930,947 2,026,294 999,543 Fund Balance - Alv 1

                                                                                                   $ 1.398.121        537.13fe   $    608. Q $ 6.607.808        $ 4.829.788
                                                              $ 2.089.524       5 1.974.790                        $

Fund Balance - June 30 I I I

• e acc orpar . i r ; notes are ac .-tegral part of t5is statenert.

12 I

I City of Riverside C0liBINING STATEHENTS PROPRIETARY Fut1D TYPES AllD tt0flEXPEllDABLE TRUST FullDS Description of the proprietary fund types and nonexpendable trust funds conbined on the following financial statements are as follows: Electric Fund accounts for the financial transactions of the City's electric distribution system. I Water Fund accounts for the financial transactions of the City's water distribution system. Ai rport Fund accounts for the financial transactions of the Ci ty's ai rport operations. Refuse Fund accounts for the financial transactions of the City's refuse collection and sanitary landfill operations. Sewer Fund accounts for the financial transactions of the Cl ty's sewerage system. Transportation Fund accounts for the financial transactions of the City s Senior Citizens transportation I 8 system in accordance with the Article 4 of the Transportation Development Act of 1971 (58 325) of the State of Cali fornia. Urban Mass Transportation funds are also accounted for in this fund, internal Service Funds account for the financial transactions of the operations of departments providing service for other departments. Fiduciary Fund (flonexpendable Trust Fund) accounts for the Parking District tio.1 Revenue Bond investments at fiscal agent for the reti rement of debt service on such revenue bonds. I ~ I M N u I C N I I

t aihi' I7 City of River-CCMHINlNG [lAl Atl(,( ,1it i 1 l'90PRII TAPy Flitet s At40 t:Out xt[ts[dett IRO%T f uf405 i tune 30, 1978 F I duo i as y Intal fund _fg es O Peoprletary (und T ypes Inteenal NonenpenA,ble June 30, no nc 31 interprise funds Irost 1978 19/r Pq Peluse 5 ewer Iransportation Total seevices Electric Water Airport AS$17 5 160,583 524,639,183 $ 612,975 5 - 525,252,158 517,408,933

                                          $ 5,065,950 $16,343,547 5                  20,632 5          127,711 $ 2,920,760 5                                                              37,188                    8,675                 709,03I         305.752   C\!

rash 275 - 663,208 155,000 471,l74 185,759 - -

                                                                                                                                                                                               -                105,000                   705,000                   %

cash with liscal agent - - 3,770,127 5,60s,943 8.7% - 5,610,089 Investnent with fiscal agent 338,205 205,568 - 4,184,849 862,490 10,831 Aununts receivable (73,434) t444) - (13.878) (35,639) N Allowance for estimated (22,390) (2,531) (972) (1,648) - 5,627 11,622 uncollectibles (f.5,89 3 ) 5,627 - - 5,627 - - - - 86,325 530,381 267,546 5pecial assessments receivable - 18,282 8 ,5f. 7 826,9;) 17,053 252,554 - 199,386 840,821 Interest e ece i va*> l e 147,550 -

                                                                                                                                                          -             755,863           44,153                          -

505,053 250,l00 - - - 393,774 18.594,938 1,352,020 Interlund luans receivable 666,866 9,933,838 537,661 II.201,160 - twee from nther gover.*ents 1,437 55,358 - 1,903,910 1,758,520 Cent ral stores inventory of - - 8,903.970 - 265,908 - 1,859. 42 2 B80,516 supplies - -

                                                                                                                                     -                    62         1,594,048                                                         9,251p.44       9,073.,286 1,319,899           255,753            18,250                     77 9.2 51,4'.8+                -                        -

rrepaid e penses 6,716,743 1,395,665 17,%) 235,327 - 7,383,989 6,866,768 825,7 % 7,383,989 - - tand 798',059 5'+4,943 - 4.558,479 - (3,397,107) (3,249,673) Pulldings and improvements 1,482,508 (2,708,996) (3,397,80/P - - (482,364) (155,539) (120,208) - 108.855,179

                                                                                                                                                                                                                           -         108,155,119 101,979,420 Accuenulated deprecl etion                                                 1,008,288              109,960          8,738,034                         -

(28,1t),450) (25,815,203) leprovements other than buildings %,135,540 52,s70,357 (28,743,450) - - (14,133,265) (12,543,336) (241,417) (67,415) (1,153,017) - 4.24I,517 398,701 - 4,640,218 4,329,728 Auumulated depreciation 18,547 1,349,306 233,182 177,81' (3,538,681) (3,224,269) Math!nery and equipment 1,270,520 1,192,849 (189,118) (3,303,779) (234,902) - (829,076) (16,603) (1,132,576) (199,901) 8,085 g J }28,j g Aumulated depreci ation (1,006,452) 724,190 - 8,085,734 - - 3,344,903 3,982,)68 29,216 5.057 Construction in progress 764.7 M 1L8 Q ,8 M M $ 1.447 015 3 800.03:0,,1110ll! Q Q2M 0h2d 58,8.564.165 $d)Mg $ 1.132.479 5 807.386 g])97.373 $ TOTAL A55115 t f A99tiflES AND IUM0 Equity 543 $ 3,368,696 $ 203,0t0 $ - $ 3,571,706 $ 6,07 3,162 E 22,337 5 67,289 $  % ,564 5 2,033,698 2,249,842 Accounts payable $ 2.855,21.8 $ 376,115 $ - 2,033,691 - 755,163 4 ,367 1,987,324 - - - 755,163 - 755,163 Contracts payable - - - - 202,930 152,330 Interfund loans payable - - - 16,96fe 2 , 36 8 183,223 19,707 - 16,858 56,179 1,931 21,623 - 397,000 415,000 Accrued liabi t it les 397,000 - ti7,530,0 0 0 3 625,000

                                                            -                -        397,000                      -

46,730,000 800,000 ton) term lease obligations 33,660,000 - - 1.110,000 - Revenue t.onds payable 11,960,000 2,911 52,7t2,610 977,880 800,000 Sr. ,490,490 JJLOA t'g 36,080,218 428,268 96,912 1,173,528 Total tiabilities 14,937,77)

                                                                                                                                                                                                                                -       37,338,551     21,931,43i           5 Fund (qui t y                                                                                                        12,005,567                 57,942           37,338,553                      -

4,898,090 17,534,174 2.842,778 - Cont r ibuted c api t al and 9 rants , se tained earnings-4,372,772 - - 4,372,772 3,607.234 3 Reserve for revenue bond 2,539,380 - - 240,872 - 2,%9,135 54,532,553 _42dLOL6 1,592,590 7 t o,t.04 10,077,406 703,982 52,06),418 retireaent 27,135,782 13,367,521 68,833 unreser ed 58,905,325 51,403,310 10,318,279 703,942 56,436,190 2,% ),135 - 15,906,831 68,433 710,404 Total petai-ed Earnings 28,728,102 - - - .0- - - Fu'd Salarte 710,f,04 22,323,845 761,681, 33,774,7'*1 J %9.135 9(,243.876 _7p 3i,M 33,626,392 33,44i,0i;5 2.911,211 fatal Fe d ro it, fotAt t taeltlTits 44D 807.116 R3,8 97,371 5 M_4_.M i.I'.6.%M $ 3.w.01s Lh3 3 7 %. 366 n,2,L6M3 F U'. ( C' I T , Bj M $ $ $ M M Q )))2,4 43 $

        . . _ . ,i _ .. . . . ._ . , . l . .r _ s . t . t ._

I 13 I

City o erside Exhibit 13 MEMORANDUM SI AltttiNI of INCOME AND EXPEN5f 5 BY iUNCil0N ELECTRIC AND WATER I Total Year Ended June 30, 1978 Total Year Ended Memorandum Only I Memorandum Only Year Ended water June 30, 1918 Electric June 30, 1978

 .                                                                                                    Operating Revenues:

Operating Revenues: water Sales: $ 1,530,158 9 Electric Sales;

                                                                      $17,074,243                            Dunestic and comercial sales                                 1 ,79 3 h

m Domestic sales Co rcial and industrial sales 24.335,511 1,541,364 r l'rigation sales Hydrant rental 101,242

  '            m nicipal sales                                                                                                                                        158,105 tunicipal sales                                            56,050 42.951,818                            Miscellaneous sales Total Electric Sales 7,859,341 217,964                              Total Water Sales Other Operating Revenues 191,646 43,169,082                         Other Operating Revenues Total Operating Revenues 8,056,9P 7 Total Operating Revenues Less: Operating Espense Deductions Before Depreciation:

Ili Operating Espenses: Purchase power 31,068,783 Less: Operating Expense Deductions Before Depreciation: Operating Expenses: 78,197 323,14o I Source af supply expenses fransmission e, pense Olstributior expense 1,374,091 978,083 891,203 Pumpine expenses Cus tuner account expenses Water treataent expenses 25.062 29,243 I,052,983 Power service empenses 1,585,802 Transmission and distribution expense A4ninistration and general expenses Custuner account expense 452,893 (34,33t) 1,254.492 Clearing and miscellaneous account expense Administration and general empenses Il ' Total Operating Empenses (1) 35,592.986 Clearing and miscellaneous account expense t'5,11 Total Operating Expenses (1) 4,172J81 Het Operating Incune Before Depreciation 7,576,096 I Less Depreciation Net Operating incume 6,666,202 5.909.894 Net Operating income Before Depreciation Less Depreciation 3,884,602

                                                                                                                                                                    ,,407,784 Add: Non-Operating income:

350,309 I Interest income Mi scellaneous non-operating incone Total Non-Operating income 407,087 75?g Ne t Ope r a t i ng i ncone Add: Non-Operating income: Interest income _2,476,8Q 828,404 Miscellaneous non operating income 382,28) I Total income N Less: Non-Operating Espenses: interest empense revenue bond 6,66/,290 596/p0 Total Non-Operating income 8,210,687 3,687.505 18,402 Total income

      . _-*. Bond   sales expenses IN                Total Non. Operating Espenses                              615 M                       Less: N m -Operating Espenses Interest expense revenue bond Bond sale e, pense 1,596,130 9,405 VJ Total Net income                                              5 6.05 L94_8 IO     g Adjustment surcharge (incluJed in operating revenue) 5 9,119,891_                            Total Non-Operating Espenses Total Het income I,605,535 Llj]MD 1_34pg I           (1) Does not include general fund contributeue.

and $784,003 for water. w.' O.Mt .MO for electric The accompanying notes are an integral part of this statement. Adjustment surcharge (included in operating revenue) I 14

I I Ci ty of Riverside a

n C0ftBlfilNG STATEHENTS INTERNAL SERVICE FUtlDS N

                                                                                                     ~

Descriptions of the internal service funds combined on the following financial statements are as follows: { Workers Compensation insurance Fund accounts for the financial transactions of the Ci ty's sel f- l W insured workers compensation program. Public Liabili ty Insurance Fund accounts for the financial transactions of the Ci ty's sel f-insured public liability program. C_entral Stores Fund accounts for the financial transactions for the centralizing of the City's inventory of supplies and the City's printing. Central Garage Fund accounts for the financial transactions in the repai r and mainten.ence of all city owned equipment except for plice and fi re vehicles. I I I I

bibit 14 ( it Riversile

              '                                                                             ContiluthG bat ANCE Suf t1 PPOPHi[l Aky IlmD IYPES = jfat(RNAL $[PVICES I                                                                                                   June 30, 197d Pravrietary F ur d Types - Interral services                                           lotal I

sell insured June 30, kone 30, WurLess PubIic Central Cea t s al 1971 Stores G. rage 1978 (w pensation Liability A55Eis 20,459 $ 612,975 5 (524,227) 420,874 $ 1,280,402 5(1,108,760) $ I Cash 5 - 37,148 36,4 37 (.sh with fiscal agent 37,148 - 2,435 8,746 7,202 5,915 - 396 Attounts seteiva,le - (444) (444) (159) Allow ae f ur es tinated uncollec tit,le -

                                                                                                                                        -             17,053                 10,875 snterest receiva,le                                    6,117                10,936                          -

44,153 85,658 I Interfund loans receiv.ble 44,153 -

                                                                                                                                        -           393,774                295,000 oue Irum other govere.ments                         393,774                      -

3,903,910 1,758,520 1,903,950 - 134,823 Central stores ir antory of supplies - 216,761 10,711 929 265,901 Prepaid e, pen,es 37,500 123,283 398,701 366,160

                                                                                           -                   275,488                                                    ( 21_),488 )

Nechinery and equipn.ent -

                                                                                           -                  (146,519)         (88,383)           (234,902)

AtumulatcJ Jepreciation I 101AL A55Eis 5 9 M .481 $ J ,5to d M j 935,225 1 ---38,221 Udt'tL0lh Llag6J[ l l ABilli tts AND f uteD IQilliY l s etaili t ies : 74,071 $ 203,010 $ 181,627 f,120 12,605 5 114,614 5 155,863 Accounts payable $ $ 155,163 I

                                                                                           -                    755,363                   -

Interfund loans payable -

                                                                                            -                     5,735           13,972               19,J07,                15.015 Acc. rued liabili t ies t

88,043 977,880 951,805 1,720 12,605 875,512 Total Li.bifities fond Equity: 59,718* (29,8 3 f.) 2,469,135 1,004,23 94),761 1,495,494 Retained earnings 1 1 442,015 . I,9M,[0L

                                                                                $ 1.508,091               $ 935,226        s      58.209 TOTAL LI ABILITIES AN) FUND EQUliY       $ __94S d81_

I The accompanying notes are an integral part of this statement. I N I6 N Iu -meme o I o 15 -

(, hit : n 15 City of Riversi COMBINING STATEMENT OF REVENUES, EXPENSES AND Cl?ANGES f f4 Pf iA {NED TARNINGS PROPRIETARY TUNO IVPES INTEPNAL '.f RVICES T or F iscal Year Er.ded June 30, 1978 Total Proprietary Fund Types - Internal Services year Ended SelI insured Central June 30 June 30, Workers Public Central 1977 Stores Garage 1978 Elability Carpensation N

                                                                                                                                                                       ~

Pevenues: $ 1,564,322 5 3,313,318 5 2,590,178 5 837,656 5 427,255 O Charges for services 5 484,085 12,275 126,528 672% 91,143 - 23.110 54,367 47,922 SunJry 27,965 - interest 26,402 N 8.576,597 3,494,213 2,705,346 - 865,621 450,365 Total Revenues 60f 630 856,8'.9 780,879 N Expenses: 267,323 589,526 1,402,836 986,797 Personal services - 118,852 983,984 18,610 Maintenance and operations . 6,357 5,600 11,957 General office ewpense 22,710 78,037 83,846

                                                                          -                   55,327                                                 890,886 Materials and supplies                           -

1,159 2,630 1,057,764 529,314 524,661 26,638 19,857 Insurance 6,857 Depreciatio.i - 19274 1,61?,307 3,134,074 2,773,875 529,314 524,63 468,792 Total Expenses (34,710) 360,139 (68,529) Encess (Defici t) of Sevenues 340,960 (18,427) over E,penses 72,316 Other Changes in Fund Equity: - 1,104,700 - 104.700 1,000,000 - Transfers tecn general f und (34,710) 1,%4,839 (6e,259) Net increase (Decrease) in Fund I,340,960 (18,427) Equi ty During Y-ar 177,016 s 004.296 1,072,825 766,745 154,534 78,141 4 .8 76 Petained earnings - July I 59.714 5 (29.834) $ 2.%9.135 s f.004.291 91,3.761 $ 1.495.494 $ Retained earnings - June 30 I The accompanying cotes are an integral part of this statement. I I I I 16 I

te ibit 16 Citt . verside CON 81 ps t rag ST AititE ta r Of CnAracts it4 I ItaAraCI AL Pos t i t uta f'HOPRIETAHy fut40 1YtL5 - It.i t RtaAL SE RV ICE S I for f iscal year EnJed Jui.e 30,1918 Proprietary Fund Types - Internal Services M al h .a s f aAd Self insured I June 30, Jurt 30, workers Public Central Central Stores Carage 19/8 IW7 Compensation tiability Sources of f inancial pesources: I' Operations: Net increase (decrease) in retained earnings balance during t rie yees ([=hibit 15) $ I/7,096- 5 1.340,960 5 (18,427) $ 134,110) 5 1,s.64,839 5 It 8,529) I Espenses not requiring c.urrent outlay of financial resources: Depreciation - . 19,774 6,857 26,631 19 p / I Total F inanc ial Resour ces froen Operations tises of F inan(lal Resources: 171,016 1,340,960 Ig 29,638 (21,853) 8,120 1,8,91,1,70 3M58 (48 g ) 2/ g Acquisition of timed assets I Total uses of F inancial Resources tac t increase (Decrease) in

                                                               -                           -                       29,638                        8,120
                                                                                                                                         $__ O5,9/3) 37,]58 1,[,41L / ] 2             L QMy) 2/ g Working Capital                                                 L 1,340,960                i_. .L'8,23 [ )

I' 5 ))LO]ft Coe+onent Elenents of tee t increase (Decrease) in Wor king Cepi tal: 5 1,131,913 5 (3/4.03/) 9/,635 5 1,211,329 5 (190,008) 5 12.957 C st. 5 1,991 65,406 210,336 I Accounts receiv ble (net) Central stores inventory of supplies Prepaid cepenses Accounts parable 55,277 5,824 18,280 8,393 119,929 (4,691) (255) 145,390 4.3% 13.187 929 (48,159) (3,691) 145,390 131.078 (21.3331 6 /,128 319, % 4) 115,293) i t.g)

                                                                                             -                      (I,001)                                     (h692)

Aurued liabilities Net increase ( Dec r e ase ) in 1__ J28,291 ) 1 _l35,913) 1J,453,111 1_ . UihU working Capit.1 1 ___111 a]6 $ J ,340,969 IN M 8 The acc wpanying notes are an irtegral part of this statesuent, Is mb I 17

City of Riverside NOTES TO FINANCI AL SfATEMENTS Fiscal Year Ended June 30, 1978 A. Summary of significant accounting policies. Changes in Financial Report Presentation. The City's 1977-78 Financial Report is presented in the latest suggested = format of the Municipal Finance Of ficers Association of the Uni ted States and Canada draf ted wi th the aid of the American Institute of Certi fied Public Accountants. The following major changes were made to the Ci ty's 1977 -io report over prior reports to comply with the latest format:

1. Major fund classi fication changes:

Sewer, Refuse, and Transportation Funds (Article 4) reclassi fled as Enterprise Funds formerly Special g a, Revenue Funds. . N

b. Sewer Capi tal Project Fund combined wi th Sewer Fund.

c. Storm Drain Fund presented as Capi tal Project Fund, formerly Special Revenue Fund.

d. Local Transportation Fund (Article 8) formerly part of Transportation Fund presented as Capi tal Project Fund.

e. Comprehensive Employment Training Act Fund added to Special Revenue Funds.

f. All clearing type account funds removed f rom financial report.

2. Transfer of fixed assets f rom General Fixed Assets to Sewer, Refuse and Transportation Funds.

3. Depreciation of assets for Sewer, Refuse, Transportation and Ai rport Funds applied to fixed assets.

Compliance with American Insti tute of Certi fied Public Accountants Statement of Posi tion 77-2, September 1, 1977. the statements of revenue, expense and The Ci ty has reflected the utili ty contributions to the General Fund on The contributions were formerly re-changes to retained earnings in accordance with the Statement of Position. flected in a separate comparative analysis of changes in retained earnings statement. Accounting Records of the City of Riverside are organized on the basis of the eight generic fund types and the two account groups generally used by governmental uni ts. Descriptions are on divider pages in the statement section of this report. I 18 I

emorandom Totals. This report uses memorandum to; , on combined s tatemen ts. The total columns on su<  ; tate-ments are not comparable to a consolidation; it does not fairly present financial position in conformity .s th generally accepted accounting principles, even if interfund elimination were made, it is not customary to make such eliminations in the combined statements of governmental units. Hemorandum totals are used for overview pur-poses only. Basis of Accounting. The General, Special Revenue and Debt Service Funds are maintained on the modified accrual I basis of accounting, wherein:

1. Revenues are recorded as received in cash except;

a. Revenues which are both measurable and available as a resource to finance operations of the current year are accrued;

b. Revenues of a material amount not received at the normal time of receipt are accrued or deferred as appropriate.

2. Expenditures are recorded on an accrual basis except:

a. Disbursements for inventory type items are considered expenditures at the time of purchase;

b. Interest on long-term debt is recorded as an expenditure on its due date.

All other funds are maintained on the accrual basis of accounting. Investments are stated at cost. Cash accounts of all funds are pooled for investment purposes in order to maxi-mize interest earnings. All such interest earnings become revenue to the General Fund unless prohibited by bond covenants, or legal requirements relating to speci fic funds or grant provisions, inventories are priced at cost using the average cost method. Property, Plant and Equipment is carried at cost in the enterprise funds and internal service fund. Depreciation

     .3 of these assets is computed by use of straight-line method over the estimated useful lives of the assets.

General fixed assets are recorded as expenditures ir; tem uci.cral, Special Revenue, and Capi tal Project Funds at

'N      time of purchase. These assets, excluding streets and storm drain related facilities which are not capitalized, are capitalized at cost in the general fixed assets account group.         Gi f ts are recorded in general fixed assets
      . at fair market value at the time received. No depreciation is provided on general fixed assets.

O Fixed assets disposed of are removed from the accounts on the basis of their historical or estimated acquisition costs, as appropriate. 19

Unct :ctible Accounts relative to utility accounts recc7 ile (electric, water, sewer and refuse service charges, street light excise taxes and utility users tax),-as determined by the percentage of sales method. Uncoliectible account expense, relative to misceIIaneous accounts receivable, Is determined by the direct wri te-of f method on those accounts considered uncollectible and by reserving those accounts which are doubt ful. Encumbrances. The Ci ty records obligations n the form of purchase orders, contracts on other commi tments. 8 They cease to be encumbrances when the actual liability is incurred and the related expendi ture is recorded. Budgetary Process. The annual budget, which includes estimated revenue and appropriations, is adopted by the C City Council and presented in the financial statements as follows: . - . -

1. Estimated revenue is the original estimate with modi fications for new programs which are anticipated to be received during the fiscal year. ,

2. Original appropriations are modified by supplemental appropriations and transfers among budget categories. [

C\.'

3. The City Council approves all significant changes.

B. Oxnposi tJon of Cash. Treasurers Cash and investments at June 30, 1978: Demand deposits and checking accounts $ 634,802 Time certi ficate of deposi t and other investments 24,121,380 Banker's acceptance 11,216,709 Cash on hand, June 30, 1978 33,216 Total Treasurers cash and investments $36.006.107 included in the above is $13,240.567 in the Enterprise Funds of restricted cash reserved for bond construction l E and debt service requirements. C. Redevelopment Agency Loan. Not included as a loan receivable in the accompanying financial statements is a $395,000 loan to the Redevelopment Agency. The 1977-78 Budget reflects a General Fund appropriation of $395,000 for Airport Industrial Development which was expended September, 1977. The City rectived a note from the Redevelopment Agency of the City of l

                                                                                                                               =

Riverside, a separate public enti ty, for $395,000 plus interest, payable semi-annually at . rate based upon interest earned by the City. Current chinges in Cali fornia Property Tax Laws makes the aticipated repayment of the loan doubtful, inasmuch as it wr.s based on tax increments available to the Redevelopment Agency on this project. When payments are received they will be recorded as current revenues. I I 20

D. :tirement Plan. Substantially all city employees are mem!crs of the Public Employees' Retirement System, administered by the I State of California, to which con tributions are made by both the City and employee. At July 1, 1977, the plan administrator indicated the City had an unfunded liability of $18,264,016 for the miscellaneous members and

              $18,871,932 for the safety members. The excess of the actuarially computed value of vested benefits over the amounts available in the pension fund was not determined at June 30, 1978 Contribution rates have been I              established to amortize the unfunded Iiabili ties by the year 2000. Itost ci ty employees (except Police and Fire) are also covered under 0ASDI, administrated by the Public Employees' Retirement System of the State of Cali fornia fully funjed equally by the City and the employee.      The total pension expense recognized by the City for the I              fiscal year ended June 30, 1978, was approximately $3,673,000 for PERS and $815,000 for 0ASDI.

Vacation and Sick Pay. E. The accompanying financial statements da not include any accrual for vacatian and sick pay benefi ts due employees at June 30, 1978 These amounts are recorded as realized and appropriated accordingly in the annual budget, i Vacation. Ci ty employt;es receive f rom ten to twenty days vacation each year depending upon the length of service. Vacation can be accumulated as of January I to a maximum not to exceed accumulation of two years continuous service. Unused vacation pay may be redeemed in cash upon termination of employment. Sick Leave. City employees receive one working day of sick leave for each month of employment or major portion thereof with unlimited accumulation for unused sick leave. Upon reti rement, disability or death, unused sick leave can be redeemed in cash at the rate of 25% af ter five years employment and 50% after ten years employment. F. Ci ty of Riverside Deferred Compensation Plan. During the fiscal year 1976-77 the Ci ty of Riverside established an employees deferred compensation plan. Glendale Federal Savings and Loan Assuciation was appointed to accept funds for investnent and accounts for such funds on a regular basis. The City has the same rights and obligations in connection with any such invested funds as any other investor having the same type of savings account with Glendale Federal. The y plan was approved by the internal Revenue Service on December 9, 1976. Each participant's account is insured

    ._,        up to $40,000 and the Ci ty up to $100,000 by the Federal Savings and Loan insurance Corporation. At June 30,
   -           1978, Glendale Federal had on deposit in the name of the City of Riverside, assigned to participants the sum
   ,N J        of $277,298     The aforementioned amount is not included in the accompanying financial statements.
     ^     G. Capitalized Leases.
        '      The City has entered into lease agreements with the Riverside Airport lease Company, Riverside Civic Center Authori ty and Parking Authori ty of th Ci ty of Riverside, separate public entities, which have issued revenue lease bonds to construct f acili ties foc the Ci ty.

I g -

The >onds are collateralized by leases of the f acili ti. to the City with the facilitics becoming the City' l property upon the reti remen t of the bonds. The lease pasnts approximately equal the total debt service re- E qui rements of the bonds. Because of the nature of the leases and related bond transactions, these transactions are being accounted for as though the Ci ty owned and financed the f acili ties di rectly. Accordingly the lease g obligation have been recorded in the Ci ty's long-term debt account and on the Ai rport financial statement. The g total of the related bond debt; and the amount expended to date for construction of the facilities have been reflected in the general fixed assets group of accounts and on the Ai rport Fund s tatements. The following tabulation reflects pertinent information reflecting the sale of bonds and annual lease payments. Riverside Parking Authority g Airport Riverside Civic of the City of CO E Lease Center Authority Riverside - Company Community Parking Airport Center Garage 3 l Facility Facility 5 (Amounts in thousands) Terminal Ci ty llall Date of Issue 12-1-66 12-1-72

                                                                        $15,000 7-15-74
                                                                                          $11.000 8-15-74
                                                                                                             $3,450

{ g g Amount Issued $530 4 1/2% 4.25% to 6.25% 7% 7% Interest Rate 1967-92 1975-02 1975-04 1977-03 Years of Redemption liedemption Range $12 to $36 $220 to $1.065 $155 to $795 $40 to $270 E 2002 2003 2003 E Lease Expires 1992 Annual Lease Payment $36.5 $1,008.6 $925 $285.7 Current Long Term Ob11gation $397 $13,330 $10.597.5 $3.192.5 On August 16, 1977, a Refunding Lease Revenue Bond was issued for $9,000,000 by Riverside Civic Center Authority to refund Coninuni ty Center Facili ty Bonds. The bonds bear interest at rates which vary from 5.1% to 6.6% and mature serially in progressive annual amounts f rom $360,000 in 1988 to $845,000 in 2003 with fina! year payment l B of $405,000 in 2004. The 1977 Refunding Lease Revenue Bonds were sold to redeem callable bonds of the 1974 issue totaling $8,665,000 and pay a call premium of $225.900 on July 15, 1987. H. Contingencies. As of June 30, 1978, the Ci ty was involved in a number of damage sui ts, in which claims range f rom minor to substantial amounts, are oeing asserted against the City, in the opinion of the City administration, these l E actions should not have a significant effect on the financial position of tne funds of the City.

l. Special Assessment District improvement Bonds.

The City has special assessment bonds issued under the 1911 and 1913 Special Ir,provement Act and the 1943that Vehicle Parking Improvement Act. The City has no liability to the bond holders until assessments represented by particular bond has been collected. I

City c - 'iverside SIATISTICAL TABLES The statistical tables presented in this section of the report reflects the social and economic data, financial trends and the fiscal capaci ty of the Ci ty. I I I Ii , I . O b' I

T att l e City of Riverside GENERAL GOVERNMlNI AL EXPENDlIUR[5 BY IUNCil0N l AST IEN F l5 CAL YEARS Culture L Deb t lease General Public Streets & Payments Fiscal Safety Highways Recreation Services Gove rswnen t Year 876,149 $ 5,055,347 $ 1,156,254 5 3,302,651 $ 6 % ,040 $

                                                               $                                                                               770,861                  -

1969 1,005,126 5,772,856 3,Ot.816 3,320,782 1970 4,506,/yt 3,617,148 154,112 - I,06),909 7,228,% ) 737,363 I 1971 1,292,372 7,607,995 5,311,2/8 4,524,064 1972 5,826,933 4,332,289 721,481 - 1,598,,625 8,% c.121 1973 9,700,748 5,092,450 5,305,253 725,575 - 1,741,743 719,153 1974 2,079,678 10,589,169 7,120,9 % 6,821,506 - 1975 7,%I,928 702,282 508,600 2,721,821 11,670,% 0 6,805,749 1976 7.110,085 731.382 1,736.500 3,753,366 13,194,307 7,240,617 3,475.800 1977 7,677,883 8,391,274 727,882 4.763,123 15,036,516 1978 I 1 2. Excludes Electric and Water share of annual lease 30,w nts. Excludes special assessment expenditures. I Table 2 City of Riverside GENERAL COVERNMENTAL REVENUES BY SOURCES LAST TEN Fl5 CAL YEARS Charges Licenses Miscellaneous I Use of I nt ergove r rvnen t al for Utility and Fines and Contributions Revenues Fiscal Forfeitures Money Revenue Services Year Taxes Permits

                                                                                                                      $ 2,810,848          384,392      5 1,482,% 7        $ 939,564
                                           $ 5,917,'880        491,1,77        $    741,036          $ 417,422                         $

109,770 1969 $ 492,823 4,040,156 541,377 1.474,905 516,138 815,520 I 1970 6,130,882 4,989,054 665,076 1,593,686 403,636 678,236 767,014 393,906 7,572,787 4,806,718 791,522 1,727,06 110,987 1971 8.939,226 901.053 788,031 355,360 426,083 1972 284,329 7,791,766 737,898 1,952,776 9,807,979 942,327 812,524 187,039 1973 612,731 8,197,932 397,983 2,125,% 0 10,248,160 1,361,368 680.328 2,573,830 194,812 BQ 1974 8,982,066 496,689 I 1,249,918 684,006 617,928 1975 I I ,431,225 12.319,184 762,602 3.2 % ,193 259,922 12,722,692 1,618,049 681,166 433,605 119,156 1976 8,56,636 12,928,385 1,091,105 3,829,735 15,004,753 2,826,828 819,142 4,245,053 M6,837 1977 903,9 % 914,177 15,160,584 1,267,5'i8

     '                                      16,878,027       4.329,223 1978 l   >

Ay Special assessment and expendable trust funds revenue not included. O E I I 23

Table 3 City of Riverside TAX REVENUES BY SOURCE LAST TEN FISCAL YEARS General Transient Utility Street Light Occupancy Fiscal Total Property Sales and Property Taxes Use Tan Transfer Tax Users Tax Excise Tax Franchises Tax Year Taxes

                                                                                                                                                                               ~

92,565 " 94,430 $ 1969 $ 5,917,880 $ 3,039,723 $ 2,643,711 $ 47,451 $ - 99,038 100,123 N 6,130,882 2.955,320 2,931,255 45,146 - - b 1970 1,065,185 104,402 108,359 7,572,787 3,105,231 3,829,313 60,297 - 1978 1972 8,939,226 3,381,375 3,556,407 74,769 1,535,147 t,608,114 158,014 254,027 124,721 130,197 108,793 109,502 cs; l g 9,801,979 3,571,253 4,062,867 72,019 1973 63,948 1,807,128 276,459 131,280 117,719 1974 10,428,160 3,381.226 4,470,470 _ 4,832.203 69,637 2,352,089 304,225 142,630 129,385 1975 11.431,225 3,601,056 1 % ,555

                                                                                                                                                                              ~

5,483,319 80.216 2,657,010 307,663 174,139 1976 12,722,692 3,943,190 169,858 CN' 6,715,157 2,853,864 329,343 185,860 1977 15,004,753 4,575,544 175.127 229,278 196,832 16,878,027 4,826,129 8,052,714 216,807 3,027,895 328,372 1978 Table 4 City of Riverside PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN FISCAL YEAPS g Total Total Percent Prior Years Collections Collections of Levies Levies Total Tax as Percent of Fiscal Secured Unsecured Total Tax Secured Unsecured Levies Roll Roll Current Levies Collected Collected Collections Current Levies Year Roll Roll

                                                              $ 2,659,205          275,177        $ 2,934,382         97.y%      $      99,835    $ 3,034,217       800.67.

1969 $ 2,764,185 $ 250,839 $ 3,085,024 $ 2,955,321 99.9 269,293 2,958,343 2,569,739 267,807 2,837,5 % 95.9 117.775 2,689,050 1970 1978 2,854,547 258,490 3,113,037 2,739,46 270,814 3,010,280 96.7 94,951 129,613 3,105,231 3,381,375 99.8 99.2 l g 3,095,280 314,156 3,409,436 2,933,856 317,906 3,251,762 95.4 1972 3,405,827 165,426 3,571,253 800.2 3,254,068 309,128 3,563,196 3,094,140 311,687 95.6 1973 3,247,203 123,919 3,371,122 99.1 3.120,492 282,802 3,403,294 2,959,627 287,576 95.4 1974 3,452,385 93.6 132,092 3,584,417 97.2 3,407,228 280,331 3,687,559 3,179,284 273,101 1975 3,%1,% 7 282,723 3,744,190 94.2 182,716 3,926,906 98.8 1976 3,668,298 306,681 3,974,909 4,432,360 101.6 3,916,530 327,449 4.243,979 97.3 188,381 1977 4.039,196 324,124 4,363,320 75,336 4,805,534 100.1 4,447, % 7 358,994 4,199,M1 4,335,416 394,782 4,730,198 98.6 1978

                                                                                                                                  ~

Current tax collections shown for each fiscal year f rom 1969 through 6, ;v ,~i .~iuoe final June 30 sett1ement received from the County after 1 close of fiscal year.

2. Current tax collections shown for fiscal year 1978 includes final June 30 settlement received f rom the County af ter close of fiscal y-ar.

3. Unsecured roll is tax at prior year tax rate.

I 286

l ar, City of sess3Je I ASSESSED VALUE of IARA8tE PROPtRIV LA5I IEN FISCAL y[ARS Esemptions 3 Suaeo,mie r s Net lotal f aceptions total Veteran, Ian Rate and Business Assessed SecureJ Unsecured I fiscal Total Church etc. Purposes Inventory V.'uation Year Roll Roll

                                                                                                                       $266,816,310                    -       $266,816,380 s969               $200,565,240              $22,198,140       $282,763,380             5-15,941,070                          $

268,800,297 270,055,729 25,654,930 295,710,659 -33,980,362 261.8c2,297 - 1970

                                                                                                       -38,132,717       275,490,064                   -        275,490,064 1978               286,904,584               26,988,197         313,822,781                                                                       301,720.0%
                                                                                                                                            -21,048,038 I                                 309,32),928               32,491,595         341,815,523              -19.047,439       322,768,084 1972 357,735,282              -20,911,510       336,823,772        -21,4 % ,668        3I5,327,504 1973                325,845,927               31,889,355                                                                       -54,660,593         301.176,MS 32,200,537         377,241,168              -21,404,110       155,837,058 1974                345,040,631                                                                                                 59,574,503         326,332,635 33,993,310         404,409,796              -18,502,658       385,907,138 1975               170,416,486                                                                                                -64.729,738         351,761,893 402,030,621               36,878,287         438,908,838              -22,417,207       416,498,631 1976                                                                                     -22,4 3,430       453,417,402        -67,282,90)         386,134,499 1977               436,496,161               19,384,671         475,880,832                                                                       471,493.479 576.926,613              -34,536,404       542,390.209        -70.897,030 534,595,383               42,331,230 Il. i 1978 The State of California requires that all property be assessed at 25% of market value. The County of Riversida assesses all property within the City of Riverside and only a portion of that property in any one year.

I Table 6 City of Riverside PROPERTV IAX RAIES AND IA11(Vlf 5 - ALL OVERLAPPING COVERNM[NIS LASI ifN FISCAL VEARS County of I fiscal School Districts Riverside Other Total Year City Tam Raty 5.338 2.3714 6840 9.4594 fol3o I 1969 10.0550 1.130 5.640 2.5450 .7400 1970 6640 30.4300 1.130 5.671 2.9590 1978 8730 10.7080 1972 1.130 5.780 2.9250 5.930 2.8250 8600 10.1450 8973 1.130 5.758 2.6730 8700 10.4380 1974 1.130 I 5.445 2.6350 8600 10.0700 1975 1.130 6.387 2.6330 8560 18.0060 1976 1.130 6.384 2.9230 8220 11.2590 1977 1.130 f.010 6.077 2.5440 8160 10.44/0 1978 laa levies

                                                                               $14,161,064              $ 6,330,214       $ 1,623,578        $25,135,880 1969                    $ 3,015.024                                                                        26,182,073 2,958,343           14,693,563                6,622,874        1,907,295 1970                                                                                     1,84 ,638         28,647,824
          *N                       1978                      3,813,037           15,638,103                8,057,0 %

2.575,910 32,230,891 3,409,436 17,410,783 8,834,762 I

         ~                         1972 18,657,863                8,935.347        2.715,369         33,878,775 1973                      3,563,196                                                                        31,494,294
         ~

3,403,294 17,384,783 8,083,485 2,617,732

        -                          1974                                                                    8,608,294        2,808,942         32,951,259 8V                         1975                      3,687,559           17.8% ,M4 22,211.427                9,262,438         3,012.167        38,MO,934 1976                      1,914,909                                                                        43,402,270 4,36),320           24,651,642               18,203.530         3,183,778 1977                                                                                                       49,509,823 I
        ,^.                                                  4,199,MI            28,748,266               12.112,643         3,849,253 1978 4M N                          l. Represents ane of % tas dist ricts ,,ithin the City of Riverside.

2. Unsecured pe oper t y is tamed at prior year rates.

Secured pauperty tames are due in tw installments Novee ber I arJ february 1. They bec me delinquent ceuwbe r 10 I 3 4 5. 6. ar.d Apr il to, sespectively. UnsecureJ prope r t y taxes are due July ll, and becone delinquent Awayas t 31. Delicquent penalty is 6o If t ames tecim e Jelinquent they are deedcJ to the state anJ sady te sold by the counts tan collector f or tames due pli.s 14 per mo.th redenptior fee.

7. All property taaes ..e collected by the County of RiversiJe with no collection fee charged to the City.

9 25

Tatste 7 City of River i RATIO OF NET GENERAL BONDED DEBT TO ASSESSED VALUE AND NET BONDED DEBT PER CAPITA LAST TEN F 15 CAL YEARS CN Ratio of Net less Bondad Debt Net Bonded Cross Debt Service Net to Assessed Debt Per , Fiscal Assessed Value Capita Population Value Bonded Debt Fund Bonded Debt - Year

                                                $266,816,310             $ 8,375,000            $      68,730           $ 8,306,270                 031             $61.36 1%9                          135,360                                                                                                                                 56.83     cN; 261,800,297              7,895,000                   80.161             7,814,839                 030 1970 Federal Census          139,217                                                                                                                                 50.73 275,490,064              7.485,000                   94.583             7,320,487                 027 1978                         144.300                                                                                      6,837,894                 021              46.87 145,900              322,768,084              6,935,000                   97,106 1972 6,455,000                                      6,353,303                 019              42.16 150,700             336,823,772                                         101.697 1973                                                                                                                      5,857,896                 016              37.92 154,500             355,837,058              5,955,000                   97.104 1974 385,907.138              5,445,000                   93,109             5.351,891                 0:4              35.35 1975                          151,400                                                                                                                                34.55 154,500             416,491,631              5,435,000                   97,358             5,337,642                 013 1976                                                                                                                      4.790.838                 011              31.01 154,500             453,417,402              4,905,000                  114.162 8977                                                                                                 133,473             4,676,527                 009              30.77 1978                         156,309             542,390,209               4,810,000 Population figures supplied by the State of California, Finance Department except 1970.

Table 8 Table 9 City of Riverside City of Riverside l COMPUTATION OF LEGAL DEST MARGIN COMPUTATION OF DIRECT AND OVERtAPPING DE8T As of June 30, 1978 As of June 30, 1978 Percentage 5628.3 % .681 Applicable to City of Riverside Assessed valuation, June 30, 1978 City of Riverside Share of Debt 5 94,259,203 Debt Limit: 157. of Assessed Valuation Direct Debt: City of Riverside 100.0Y, $ 4,810,000 Amount of debt applicable to debt limit: Overi pping Debt: Total bonded debt $52,340,000 County of Riverside 21.84 157,248 School Districts: Less assets in debt service 16,972,393 'unds $' 13),473 Riverside Unified 92.26 - 93.68 Riverside Comunity College 67.40 1,280,600 Otr er deductions allowed 91.40 - 94.05 3,855,9 9 by law: . Alvord Unlfled 25,512 Electric Pevenue Bonds 11,960,000 Highgrove School 63.78 33,660,000 Moreno Valley Unified 1.93 31,329 Water Revenue Bonds Parking District No. I Revenue Bonds 800,000 . Other Special Districts: Sewer Revenue sonds 1,110,000 47,663.473  : Flood lone No. I 77.71 12,530,738 La Sierra Comunity Services 100.00 257,000 6,137,339 Total debt applicable to debt Ilmit 4,676,527 Metropoliten Water District 1.17 Western Municipal Water Total Debt Margin, June 30. 1978 5 89.582.676_

                                           .015 - 38.5                   118,587 District 1.52 - 2.92                      8,901_

All other districts I t m h d u Daner at M M assessed valuation for general Total Overlapping Debt $41, 75,616 obligation bonds. Sh6.185,616 TOTAL DIRECT AND OVERLAPPING DEST 3 Determined by ratio of assessed valuation of property subject to taxa-j g g g lg p g g g p to valuation of property subject to tana-I 26

ble 50

'                                                                                         Cite el aiweeside I

RAll0 of ANNUAL D(98 $&RW1(E (IPtN0lluRE5 S OR GEN (RAL SUNt4 D 0181 10 I0IAL 61Nt RAL EXPLNot ruRf 5 LASI IIN F15LAL VfAR$ letal Total Ratio of Detet Services Debt General to General tape.dltures fincal Empenditures (Per Cent) Yeas Principal Interest Service I 0 1%9 1970 1978 1972

                                                                $    430,000 480,000 480,000 480,000
                                                                                      $    266,040 290.861 274,Il2 257, % 2
                                                                                                              $ 6 % ,040 770,861 754,l82 737. % 2 128,481
                                                                                                                                     $13 ot4,%I 14, % 3.%I 17,863,398 19,473,072 20,935.499 5.31 5.4 4.4 3.8 3.4 480.000               248,488 I
        ~

8973 125,575 22. % 5,762 1.2 IS14 500,000 225.575 209,853 789,153 27.330,450 2.6 1975 580,000 2.4 192,283 702,283 29,870,820 1976 580.000 738,382 33,558.745 2,2 1977 530,000 208,322 182,882 727,882 39,949,083 8.8 1978 545,000 I lable il City of Riverstdo Straf 00LE Of REV{MUE WoNO COWERAGE I LA52 SEN fl5 CAL VfAR$ Iset Sevenue Debt service Requirements fiscal Cross Avallebte for Total Coveress Debt Service Principal laterest year Sevenue E mper.ses I 1969 1970 1975 5972

                                    $30,203.422 18,827.053 II,886,288 83,5 % ,764
                                                          $ 7.343.703 8,084,527 8.723.722 80,206,136
                                                                               $ 2.859,789 3,042.526 3,862, % 6 3,340,648 Electric
                                                                                                        $    155,000 855,000 225,000 325,000
                                                                                                                               $     169,655 287,049 306,773 4 % ,628}}