ML20098C944

Forwards Addl Financial Info,In Response to NRC 750430 Request.Formal Application Will Be Updated by 750630

ML20098C944
Person / Time
Site:	05000000, Washington Public Power Supply System
Issue date:	05/29/1975
From:	Stein J WASHINGTON PUBLIC POWER SUPPLY SYSTEM
To:	Giambusso A Office of Nuclear Reactor Regulation
Shared Package
ML20093C821	List: GO2-76-563, Application for Ol.Environ Rept - OL Stage Also Encl. W/O Environ Rept ML20093C818 ML20096H672 ML20096H687 ML20096H696 ML20096H709 ML20098C636 ML20098C644 ML20098C647 ML20098C657 ML20098C670 ML20098C683 ML20098C691 ML20098C698 ML20098C708 ML20098C712 ML20098C722 ML20098C747 ML20098C749 ML20098C757 ML20098C759 ML20098C766 ML20098C771 ML20098C776 ML20098C807 ML20098C837 ML20098C852 ML20098C863 ML20098C876 ML20098C883 ML20098C885 ML20098C910 ML20098C933 ML20098C936 ML20098C944 ML20098C957 ML20098C966 ML20098C976 ML20098C981 ML20098C987 ML20098C998 ML20098D000 ML20098D009 ML20098D014 ML20098D028 ML20098D036 ML20098D047 ML20098D057 ML20098D068 ML20098D070 ... further results
References
CON-WPPSS-124, FOIA-84-603 GO1-75-90, NUDOCS 8409270293
Download: ML20098C944 (98)

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[~ Washington Public Power Supply System I A JOINT OPERATING AGENCY ,

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P, O. Don 900 3000 GIo WASHINGTON Way RCM L AND, W ASHiNGTO'4 19333 PF%t(50). 3469tt May 29, 1975

- G01-75-90 Docket Nos. 50-460 50-513-Mr. Angelo Giambusso, Director Division of Reactor Licensing Office of Nuclear Reactor Regulation U. S. Nuclear Regulatory Commission Wa'shington, D. C. 20555

Subject:

WPPSS NUCLEAR PROJECTS NO.1 & 4 SUBMITTAL OF FINANCIAL DATA

Reference:

Letter, A. Schwencer, NRC, to JJ Stein, WPPSS, dated April 30, 1975.

Dear fir. Giambusso:

The reference requested that the Supply System provide additional financial information in response to 11 staff questions. Twenty-five copies of the responses to these questions are attached.

Unless we hear to the contrary from the NRC, we will update the formai application (i.e. ,10 CFR 50.33 and 50.37 information) by June 30, 1975, to incorporate some of the attached information, as appropriate. This would be done by replacement pages to the application. The najor revisions would be updating the capital cost estimates, rethod of financing, and previous bond financing included in Exhibit A, and the submittal of 1974 financial statements for the project participants included in Schedule III of Exhibit A.

Very truly yours, 8409270293 840824 PDR FOIA COHEN 84-603 PDR J. J. STEIN Managing Director JJS:AGH:km Attachments (25) cc: DJ Anderson - BPA JB Knotts - Conner, Hadlock & Knotts RW Beck Company  !

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,- - . WPPSS fluclear Projects fio.1 L'4 Submittal'of Financial Data

. Dated liay 29, 1975 Letter No. G01-75-901 STATE OF WASHIflGT0ff -)

_) ss:

COUflTY 0F BEllT0f1 )

J.' J. STElft,' Being first duly sworn, deposes and says: That he is the fianaging Director. of the WASHIf1GT0ft PUBLIC P0'n'ER SUPPLY SYSTEli, the ap;1ican:

-hert:in; that he is authorized to s'ubmit the foregoing on behalf of saic applicant; that he has read the foregoing and knows the contents therecf; anc believes the same to be true to the best of his knowledge.

DATED M/e2rJ2[ , 1975 V'

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J.J.\S,TElip 4 j On this day personally appeared before me J. J. Stein to me known to be the individual who executed the foregoing instrument and acknowledged that te sign'ed the same as his free act and deed for the uses and purposes therein mentioned.

GIVErl under my hand and seal this o7/d d day of ba . 197 .

hJ k Yb'EM:v Notary Public in an for the Sta e of Washington sy g, . d- f <~ I Residing at et h i d o A 4 ta[

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O WPPSS NUCLEAR PROJECTS NOS. 1 AND 4 SUBMITTAL OF FINANCIAL DATA MAY, 1975

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..  : QUESTION.

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_ ' 1. Amendment No.l(dated July 22,1974) to the license application indicates

- that the total capital cost of WNP-Unit.1 will-be financed by' the-issuance of WPPSS revenue bonds, with interim financing provided by the issuance lof WPPSS . revenue notes. It is further indicated that the issuance of the revenue bonds will be based lupon the contractual commitments of 104 consumer-owned utilities:(the " Participants") and five investor-owned utilities

-(the " Companies"), to purchase the entire electrical output capability of WNP-Unit 1. Provide us with representative samples of these contracts as well as samples of both the " Net Billing Agreements" to be used with the Companies. By way of updating Amendment No.:1, Exhibit A, " Financial

-Qualifications", provide the.following additional information:

ANSWER The " Net Billing Agreements" are those with the public agency participants.

. The agreements with investor owned utilities are called " Exchange Agreements."

Attachments ~as follows:

1-1 WNP No.1 Sample Project Exchange Agreement 1-2 WNP No. 1 Sample Amendatory Agreement No. I to Project Exchange Agreement 1-3 WNP No.1 Project Agreement with BPA 1-4 WNP No. 1 Net Billing Agreement 1-5 WNP No. 4-Option and Services Agreement and Participants Agreement QUESTION

1. (a) Describe in detail the contractual security provided by the Participants and the Companies as a basis for issuing WPPSS revenue obligations to finance the subject facilities.

ANSWER There are different forms of security for WNP-1 and WNP-4:

WNP The annual project budget, including retirement of debt and associated interest, is paid by the Participants and by the five private power Companies.

The exchange agreements provide that each of the five companies will purchase a 6.494 percent share of the project capability beginning July 1,1980, and ending June 30, 1996. Such share is assigned to Bonneville in exchange fo'.-

which Bonneville agrees to make available during such period to each company 80,000 kilowatts of capacity and 68,000 average kilowatts of energy (595,680,000 kilowatt hours annually).

The exchange agreements provide that each company will pay the Supply System for its share of project capability during the period of July 1,1980, through July 30, 1990, an amount determined by applying Bonneville's wholesale rates then in effect to the cap 3 city and energy made available to each company.

For the final six years, i.e., July 1,1990, through June 30, 1996, each com-pany will pay its share based on the Supply System's estimated costs associated

with the project. Monies paid by the Companies are used to reduce the annual project budget after which the balance is paid to WPPSS by the Participants.

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Th3 Participants assign their rights to Project output to BPA, for which BPA

- allows the monies pa'd to WPPSS by the Participants to apply against Participants' i BPA power bills. Thus. the security for WPPSS bonds is the promise to pay by the Comoanies and ultimately by the Particioants. ine vu uacivu vi une parucipants and of the Companies to make payments to the Supply System is not dependent on completion or operation of the project as discussed further below and confirmed '

in the answer to 1(e). In case of default of Company (ies), the non-defaulting Companies are obligated to satisfy the total Company requirement. In the event of a default of a Participant, other Participants agree to automatic set-ups in their billing (by as much as 25 percent) to satisfy the total participant obli-gations to WPPSS.

It will be seen that the first level of security for reoivment of bonds (which  !

will have retired outstanding notes) is the revenues to 39 derivan trom oper- i ation of the project. Since the Participants and the Comp =nies are obligated l to make payments whether or not the project is completed, werable or operating and notwithstanding interruption or curtailment of output, the source of funds for the payment of project costs is not de)endent on actual nrniert revanons. ps**#

but is " insured" on a broad base through tie obligation of .the 104 public and y,ma*

cooperative entities ana, to tne extent of their interest, the five utility companies. This is the second level of securitv Moreover, it will be seen ,

that there is a tniru ieves or security for the financing of the project in

_the oDaigation or tne reueros government, actina throuan tne connevisie Power Aamin m ru iun, ou pr uviue power ana credits to the public participants and to provide capacity ano energy at no acoitionai con to tne companies (than they pay the Supply System) irrespective of the operation of the project.

These arrangements tend to ensure the availability of funds on the part of the Participants and the Companies and make payments to the Supply System.

Fnr additicna' detail on thn encuritu tn ho nrnvidad fnr bonds see Attachment 3? T 2+ nanos ' 0-11. Although the discussion in Attachment 4-2 applies to WNP-2, similar security will be provided for WNP-1.

In summary, the security for the WPPSS oblicationc is well diversified and ultimately bac (ed by the U. 5. Government- The promise to pay is not dependent upon successful operation of the Project. In the case of the Participants, they

-Sare obligated to raise rates to whatever level necessary to meet these obligations, and there. is no legal restriction or mandatory review by other agencies to prevent this from occurring. The power received through exchange or net billing by the Companies or the Participants, respectively, is in almost all cases the most economic source available to them. Thus default of this contract does not appear likely.

_1WNP WNP-4 will be financed as a portion of a system comprised of the Supply System interest in WNP-4, WNP-5 and Skagit as discussed further below. The primary security to meet debt service of financing sold for this project is backed by Option and Services Agreement for the preliminary financing and by the Participants Agreement, which will replace the Option and Services Agreement about the time of the construction permit for the permanent financing. In either case, the form of the agreement is the same--a promise to pay a specific share of the Project budget, whether or not the Project is completed and not dependent upon any Project output. ,IheJro.jec.t budget includes debt service. In WNP-4, the Participants are all public utilities, either Public Utilitf Districts, Municipalities or Cooperatives. They all promise to raise rates to whatever i level is necessary to meet their obligations to WPPSS; and they agree to step-

! ups of their obligations by as much as 25 percent in the event of 'a default of a utility of their own class (the cooperatives are considered in one class and all.others in another class). There_is_no restriction to limit their rate l . increase. In almost all cases, even at escalated levels, the power available to the utilities from WNP-4 is the most economic alternative available to meet

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.' . . ' load growth; thus, a default is considered highly unlikely. In the event'of

a. default, the non-defaulting utilities have the right to sue for recovery.

(For additional information please see Attachment 4-1.)

QUESTION (b) -Describe--in detail t'he financing plan for WNP-Unit 4, which was not

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firmly established at-the time Amendment No. I was submitted to the Connission.

ANSWER

-The financing plan is discussed in part in (a) above. The b'asic plan is one

. of selling each public Participant the rights to a specific share of the out-put of the Project. .In return, the Participant promises to pay the same

. specific share of. the annual Project budget, which will include debt service

~ and all fixed and variable Project costs for the year to. support operation at a level requested by the Participants. To the extent surplus power is available from the Project, WPPSS will use its best efforts'to secure separate contracts for its sale; however, the Participant's obligations are not.affected by the success of WPPSS in accomplishing these surplus sales. The basic power sale document is the Participant's Agreement, which will be-executed about the time the construction permit is' granted. Prior to that, initial financing is sup-ported to a maximum level of $100 M by the Option Agreement. The Option Agreement gives the signer an option to obtain a share of the Projects output under the Participant's Agreement at least equal to his Final Option Share.

Under the Option Agreement a utility has the same absolute obligations to repay the $100 M authorized as he would in the Participant's Agreement; however, he is not obliged to take a position in the Participant's Agreement. _ As of May 28, 1975, sufficient participants have signed or have indicated they

.are in the process of signing to insure subscription of 100% of the project

. output. The Participant's Agreement replaces the Option Agreement and takes over all financial obligations. (For additional information see Attachment 4-1).

QUESTION 1.- (c) Identify the source (s) of short and long-term debt service payments during the period of construction of each unit.

ANSWER From the proceeds of each short-term debt issue, an amount equal to the total interest to be paid is deposited in a trustee administered interest fund.

Short-term principal redemption is provided from the proceeds of long-term debt issues. .

From the proceeds of each long-tera debt issue, an amount equal to the total interest to be paid from the date of the bonds to the anticipated date of commercial operations is deposited in a trustee administered interest fund.

QUESTION

1. (d) ' Describe the contractual arrangements between WPPSS and the Participants and Companies, that will provide not only for purchase of the entire electrical output capability of the units but that will also provide i adequate funds for debt service and retirement of the WPPSS revenue obligations used to finance WNP-Units 1 and 4.

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' i' ~ What assurances 'does WPPSS have that the Participants and the Companies-will-have the capability to pay their respective shares-of_the total

- capital, interest and. operating costs of _the_ facilities in the event-these costs escalate above current estimated levels?

- ANSWER-

.This is covered in 1 (a)-above.

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1. (e) Are the Participants and Companies required to pay. their respective portions of the facilities' total costs (including debt service)

'regardless of the level of power availability from the units?

If not, describe the source (s) of funds to make up 'any difference.

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.Yes QUESTION

, 1. (f) -What is the nature and amount of reserves, if any, required to be maintained by WPPSS to provide for debt service charges on revenue i bonds? What is the source of funds for the reserves?

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' ANSWER The nature and amount of reserves are described in the enclosed draft bond resolutions; attachments 2-1 and 2-2 for WNP No. I and 4, respectively.

QUESTION

1. (g) Previously submitted information indicates that WNP-Unit 1 (and presumably i WNP-Unit 4) will be financed on a project basis as a separate generating system, as have all construction projects undertaken by WPPSS. If there is to be any deviation from this financing method in the case of WNP-Units 1 and 4, provide details of the financing plan and a detailed statement of sources of funds with underlying assumptions for each-year through completion of construction of both units.

ANSWER

<& WNP-1 will be financed on a project basis as a separate generating system.

. WNP-4, however, will be part of a system, which can include at least 70 per-cent of WNP-5 at Satsop, Washington, and up to 15 percent of each of the units 1 and 2 of the Sakgit Nuclear Project sponsored and partly owned by

.Puget Sound Power and Light. The WPPSS_ obligation in the projects will be financed -as a separate system in the mann'er descr_ibedjo_r WNP QEove, ihe 16urce of funds is by notes and bondf sold Uhder the Option and Participaht's

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Agreement. The flow of funds will be in one of two increments of $50 M under the Option Agreement and in increments of $150 to 200 M in advance of project needs under the Participant's Agreement.

- $' QUESTION

1. (h) Provide any further information that is needed to completely update Exhibit A, " Financial Qualifications", of Amendment No.1.

' ANSWER See Attachment 1.(h)-1 QUESTION

'2. Provide copies of the indenture and/or other documents governing the issuance of long-term debt by WPPSS.

ANSWER Attachments as follows:

2-1 WNP No.1 draft revenue bond resolution 2-2 WNP No. -4 draft revenue bond resolution - - - . - -

It should be noted that while these documents are called drafts, they are in the expected final form.

QUESTION

3. Provide a detailed explanation of all restrictions and constraints on the sale of long and short-term debt. Short-term debt should include notes, bank lines of credit and commercial paper, if any. If interest coverage requirements apply to any class or classes of debt, explain the requirements

- and provide a calculation of the coverage for the most recent twelve months' period.

ANSWER All debt issues, both short and long term, are governed by bond or note resolutions.

Each resolution contains certain covenants to secure the debt issue. See the following referenced attachments for specific covenants:

1. Attachment 2-1, Article X (WNP No. 1)

2. Attachment 2-2, Article IX (WNP No. 4)

3. Attachment 3-1, Section 12 WNP No. 1 $77,000,000 Note Resolution '

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We have no bank lines of credit or coninercial paper.

With respect to interest coverage requirements, see answer to question 1 (a) and 1(c)above.

-QUESTION _

4.' Provide copies of Official Statements prepared in connection with the most recent WPPSS bond and note issuances, including issuances specifically related to the financing of WNP-Units 1 and 4. If there are prospective debt issues related to the subject units, provide copies of the preliminary official statements.

Answer

1. $77,000,000 WNP No.1 Revenue Notes Series 1974 Official Statement is included in the formal application, i.e., the 10CFR 50.33 and 50.37 information.

2. Attachment 4 Preliminary Official Statement - WNP-4, WNP-5 and Skagit.

3. Attachment 4 Official Statement for $125,000,000 Revenue Bonds - Ser es 1975A WNP-2.

QUESTION

5. Provide for each unit the most recent cost estimates grouped as follow.:

(a) total nuclear production Cant costs; (b) transmission, distribution, and general plant costs; and (c) nuclear fuel inventory cost for the first core. Also, complete the attached schedule titled, " Plant Capital Investment Suninary", for each unit using the most recent cost estimates.

A R WNP No.1 WNP No.4 (a) Total nuclear production plant costs $438,422,000 $435,824,200 (b) Transmission, distribution and general plant costs $ 13,464,000 $ 10,043,400 L~

(c) Nuclear _ fuel inventory cost for the first core $ 44,005,000 $ 63,060,000 The amounts shown for (a) and (b) above represent direct construction costs.

The amounts shown for (c) excludes interest expense.

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e Attachment 5-1 WNP No.1 " Plant Capital Investment Sunnary" Attachment 5-2 WNP No. 4 " Plant Capital Investment Sunnary" QUESTION

6. If nuclear fuel for the facility is to be acquired by lease or other arrangement than purchase, submit copies of the lease or documents relating to the "other arrangement".

ANSWER Nuclear fuel will be acquired by purchase.

QUESTION

7. Indicate the earliest and latest estimated dates for completion of construction of each unit, if changed from those presently shown.

ANSWER There are no changes in those dates provided in Amendment No.1 of the application.

QUESTION

8. Provide copies of WPPSS' financial statements for the most recent twelve months' period. Include the " Statement of Funds" for the subject nuclear units. Also, copies of similar statements for the corresponding twelve months' period ended in the previous year should be submitted. Subsequent to the current submission, continue to submit copies of the WPPSS annual financial statements as required by 10 CFR 50.71(b).

ANSWER We maintain separate books of' account for each project once the project has its own funding. Attachment 8-1, WNP No.1 balance sheet and statement of funds is the first and most recent financial statement for the Project (fiscal year-end is June 30). WNP No. 4 is presently being accounted for in the WPPSS Ger,eral Fund set of books. Attachment 8-2, WPPSS General Fund Balance Sheet, includes WNP No. 4 costs through April 30, 1975.

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QUESTION , ,,

9. Provide for each of the five investor-owned Comoanies the following information.

'(a) Copies of the 197a Annual Report to Stockholders.

l ANSWER j Attachment 9(a)-1 QUESTION

9. (b) Copies of interim financial statements including income and retained earnings statements and balance sheet for the most recent twelve months' period. Copies of similar statements for the corresponding twelve months' period ended in the previous year should also be submitted.

ANSWER The most recently issued financial statements are the 1974 Annual Reports to Stockholders of the five investor owned companies.as supplied in 9(a) above.

Statements for the previous twelve months have already.been supplied-in the 1973 Annual Reports to Stockholders in Amendment number one to the formal application.

QUESTION

9. (c) Copies of the prospectus for the most recent security issue.

ANSWER _

Attachment 9(c)-1 QUESTION

10. Provide a 1974 update of the financial and operating summaries of the 104 conusmer-owned Participants as presented in Schedule III, Exhibit A, of Amendment No. l.

ANSWER Attachment 10-1 QUESTION

11. Indicate the amount of WPPSS' most recent rate relief action and provide copies of the relative rate order (s) estab.lishing the increases. Provide details of the amounts and timing of any prcspective WPPSS rate increases.

Describe the statutory authority, if any, allowing WPPSS to charge rates to its member utility districts that are sufficient to cover all costs of operation plus a reasonable return on investment.

ANSWER As set forth in Page 5 of our final application in response to 50.33(i), the Supply System does not have rates but is reimbursed for its costs. Our Project net billing and/or power sales contracts with Participants allow for complete recovery of project costs including debt service. WPPSS is a municipal corpor-ation and joint operating agency of the State of Washington, None of the pro-jects nor the General Fund have any equity. During the conrtruction phase, project costs, including net interest expense and administration and general and overhead, are capitalized.

With respect to operating plants, revenues and expenses are equal since we are only concerned with cost recovery.

$25,000,000

[ WASHINGTON PUBLIC POWER SUPPLY SYSTEM A Municipal Corporation and a Joint Operating Agency of the

(- State of Washington j

4M % Washington Public Power Supply Systen Nuclear Project No.1 Revenue Notes, Series 1973 Dated: February 15,1973 Dee: December 15,1975 Principal and semi-annual interest (June 15 and December 15, first coupon due June 25,1973) payable ,

at Morgan Guaranty Trust Company, New York, New York, or Seattle-First National Bank, '

Seattle, Washington. The Notes will be in coupon form in the single denomination of $25,000, or any multiple thereof, interest exempt, in the opinion of Bond Counsel, from federal income taxation under existing laws and regulations and a specific ruling to be received from the internal Revenue Service with respect to the Notes. (See statement under the caption " Tax Exemption" herein.)

The Notes are being issued to finance a portion of the cost of acquisition and construction of the Washington Public Power Supply System Nuclear Project No.1. This Project will be constructed and operated by the Supply System pursuant to an agreement between the Supply System and the Bonneville Power Administration. The Project's entire capability will be sold by the Supply System to certain statutory preference customers arid private utility customers of Bonneville and assigned by such customers to Bonneville under Net Billing Agreements and Exchange Agreements, respectively. The Exchange Agreements provide that beginning July 1,1980, each such private utility will purchase a portion of

( Project capability and exchange it with Bonneville which will supply a certain amount of power to such utility with payment to be made by the utility to the Supply System. Pursuant to the Net Billing Agree-ments, the balance of Project capability will be sold to the preference customers who will pay to the Supply System an amount equal to the Project's annual costs, less any amounts received from the private utility customers pursuant to the Exchange Agreements. Each preference customer will assign its share of Project capability to Bonneville which will credit the payments made to the Supply System by such preference customer against billings made by Bonneville to such preference customer for power and certain services. The Net Billing Agreements provide that each web customer is obligated to pay the Supply System whether or not the Project is completed, operable, or operating cad notwithstanding the suspension, interruption, interference, reduction or curtailment of the Project output.

The Notes, togeth-r with interest thereon, will be payable from any moneys of the Supply System that may Eie lawfully applied thereto including revenues of the Project and the proceeds of revenue bonds or refunding notes

- of the Supply System. Interest on the Notes wiii be capitalized to maturity.

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De Notes are to be issued subject to the approval of legality by Wood Dawson Love & Sabatine New York, New York, Bond Counsel to the Supply System, ar.d Houghton, Cluck, Coughlin & Riley, Seattle, Washington, Special or about Counsel February to the Supply System. It is expected that the Notes in definitive form will be ready for delivery on 27,1973.

February 8,1973

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TABLE OF CONTENTS PAGE Purpose of the Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 The Supply System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 5

The Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Security for the Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 6

Estimated Application of Note Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . .

7 Bonneville Power Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8 The Participants and the Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

l The Hydro-Thermal Power Program and Power Supply in the Pi. ific Northwest .............................................. 9 The Net Billing Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  !!

15 The Project Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

17

'Ihc Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Registration of the Notes by State Auditor . . . . . . . . . . . . . . . . . . . . . . . . . 20 Trustee............,....................................... 20 Negotiable Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Approval of Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 21 Tax Exemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Miscellaneous ...............................................

21 Exhibit I - List of Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Exhibit II- Letter of R. W. Beck and Associates . . . . . . . . . . . . . . . . . . . 29 Exhibit III- Form of Net Billing Agreement . . . . . . . . . . . . . . . . . . . . . . 39 Exhibit IV - The Project Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 Exhibit V - Opinions of Wood Dawson Love & Sabatine . . . . . . . . . . . . . 80 Exhibit VI- Opinions of Houghton, Cluck, Coughlin & Riley. . . . . . . . . . 83 Map . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Centerfold i

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( OFFICIAL STATEMENT WASHINGTON PUBLIC POWER SUPPLY SYSTEM (A Munleipal Corporation and a Joint Operating Agency of the State of Washington) 825,000,000 4M% Washington Public Power Supply System Nuclear Project No.1 Revenue Notes, Series 1973 February 8,1973 He purpose of this Official Statement, which includes the cover page hereof, is to set forth informa-tion concerning Washington Public Power Supply System (the " Supply System"),its Washington Public Power Supply System Nuclear Project No.1 (the " Project") and its $25,000,000 Washington Public Power Supply System Nuclear Project No.1 Revenue Notes, Series 1973 (the " Notes"), in connection with the sale by the Supply System of the Notes and for the information of all who may become holders of such Notes. The Notes are to be issued pursuant to the Revised Code of Washington, Chapter 43.52, as amended (the "Act") and Resolution No. 606 (the " Resolution") adopted February 5,1973 by the Supply System.

PURPOSE OF THE NOTES The purpose of the Notes is to pay a portion of certain preliminary costs of the Project, including paying at maturity a portion of certain notes previously issued by the Supply System for such purpose and repaying temporary loans from other funds of the Supply System also used for such purpose. The estimated application of the proceeds from the sale of the Notes to pay such costs is set forth herein under " Estimated Application of Note Proceeds".

THE SUPPLY SYSTEM

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The Supply System, a municipal corporation and a joint operating agency of the State of Washing-ton, wrs organized in January,1957, pursuant to the Act. Its membership is made up of 18 of the operating public utility districts in the State and the Cities of Richland, Seattle and Tacoma, Washington.

The Supply System has the authority, among other things, to acquire, construct and operate plants, works and facilities for the generation and transmission of electric power and energy. The Supply System has the power of eminent domain, but it is speci5cally precluded from the condemnation of any plants, works or facilities owned and operated by any city, public utility district or privately-owned electric utility.

The Supply System presently owns and operates the electric generating and associated facilities on the United States Atomic Energy Commission's Hanford Reservation (the "Hanford Project") with a name plate rating of 860,000 kilowatts which has produced more than 18 billion kilowatt-hours of electric power since startup in April,1966, and is currently the second largest producer of nuclear generated electricity in the United States; and the Packwood Lake Hydroelectric Project with a name plate rating of 27,500 kva. In 1963, the Supply System issued $122,000,000 Hanford Project Electric Revenue Bonds, 570,805,000 of which are presently outstanding. In 1962 and 1965, the Supply System sold

$10,500,000 and $3,200,000 Packwood Lake Hydroelectric Project Revenue Bonds, of which

$13,181,000 are still outstanding. Both Hanford and Packwood bonds are payable solely from the revenues of the respective systems which they financed.

In addition, the Supply System has begun preliminary construction on a 1,100,000 kilowatt nuclear

)

plant on the Hanford Reservation to be known as Washington Public Power Supply System Nuclear 1 Project No. 2 and has issued $55,000,000 of notes to finance such work. The Supply System is also planning a 1,200,000 kilowatt nuclear plant at a site yet to be selected to be known as Washington Public Power Supply System Nuclear Project No. 3 and has financed certain preliminary investigations in connection with such plant from a portion of the proceeds of a $1,500,000 note issue.

The Supply System has its principal office in Richland, Washington. He management and control i of the Supply System is vested in a Board of Directors composed of representatives of the 18 member, I public utility districts and the Cities of Richland, Seattle and Tacoma. Regular meetings of the Board I are held quarterly. I 3

w An Executive' Committee of the Board admini<ters the business of the Supply System between l regular meetings of the Board. Members of the Executive Committee are:

Ed Fischer, Cornmianinner, Public Utility District No.1 of Clark County, Chairman W. G. Hulbert, Jr., Manager, Public Utility District No.1 of Snohomish County Glenn C. Walkley, Commianianer, Public Utility District No.1 of Franklin County, Vice Chairman E. Victor Rhodes, Commissioner, Public Utility District No. 2 of Pacific County, Secretary Gordon Vickery, Superintendent, Seattle City Light, City of Seattle A. J. La@i. Director of Utilities, City of Tacoma D. E.. Hughes, Manager of Engineering and Planning, Public Utility District No.1 of Cowlitz County The Executive Committee holds regular meetings each month and special meetings as often as the business of the Supply System may require.

Members of the Supply System and their respective representatives on the Board of Directors are as follows:

Public Utility District No.1 of Benton County . . . . . . . . . . . . . . John Goldsbury j'

Public Utility District No.1 of Chelan County. . . . . . . . . . . . . . . Kirby Billingsley Public Utility District No.1 of Clallam County. . . . . . . . . . . . . . Alvin E. Fletcher Public Utihty District No.1 of Clark County. . . . . . . . . . . . . . . .Ed Fischer Public Utility District No.1 of Cowlitz County. . . . . . . . . . . . . .D. E. Hughes

Public Utility District No.1 of Douglas County. . . . . . . . . . . . . .Howard Prey Public Utility District No.1 of Ferry County. . . . . . . . . . . . . . . . Thomas F. Kroupa Public Utility District No.1 of Franklin County. . . . . . . . . . . . . . Glenn C. Walkley Public Utility District No. 2 of Grant County. . . . . . . . . . . . . . . . John L. Toevs Public Utility District No.1 of Grays Harbor County. . . . . . . . . .J. Tannahill Public Utility District No.1 of Kittitas County. . . . . . . . . . . . . . . Harold W. Jenkins Public Utility District No.1 of Klickitat County. . . . . . . . . . . . . . Gerald C. Fenton Public Utility District No.1 of Lewis County. . . . . . . . . . . . . . . . Arnold J. James Public Utility District No. 3 of Mason County. . . . . . . . . . . . . . . Edwin W. Taylor Public Utility District No. 2 of Pacific County. . . . . . . . . . . . . . .E. Victor Rhodes City of Richland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Joseph Shipman City of Seattle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Gordon Vickery Public Utility District No.1 of Skamania County. . . . . . . . . . . . . Rolf E. Jemtegaard

~

Public Utility District No.1 of Snohomish County. . . . . . . . . . . . W. G. Hulbert, Jr.

City of Ta:oma . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A. J. Benedet+1 Public Utility District No.1 of Wahkinkum County. . . . . . . . . . . Francis I.engo i

l The officers of the Supply System elected by the Board are Howard Prey, President; Alvin E.

Fletcher, Vice President; and E. Victor Rhodes, Secretary.

The chief administrative officer of the Supply System is J. J. Stein, Managmg Director. The principal adminatrative positions of the Supply Syst:m are:

Managing Director . . . . . . . . . . . . . . . . . . . .J. J. Stein Deputy Managing Director . . . . . . . . . . . . .L. L. Humphreys Manager Engineering and Construction ...J.R. Church Treasurer . . . . . . . . . . . . . . . . . . . . . . . . . . Elmer A. Landin, Jr.

Legal Counsel . . . . . . . . . . . . . . . . . . . . . . . Richard Q. Quigley Controller . . . . . . . . . . . . . . . . . . . . . . . . . . J. T. Bobo Auditor . . . . . . . . . . . . . . . . . . . . . . . . . . . . C. W. Godfrey In connection with this Project, the Supply System has engaged R. W. Beck and Associates as

! consulting engineer (" Consulting Engineer"), United Engineers & Constructors, Inc. as architect-engineer

(" Construction Engineer"), The S. M. Stoller Corporation as nuclear fuel, consultant, and'Blyth Eastman j Dillon & Co. Incorporated as financial consultant ("Fm~ ancial Consultant").

l 4

s 88 m

i m PRosacr  :

( The Project will be constructed and operated by the Supply System pursuant to an agreement (the

" Project Agreement") between the Supply System and the Bonneville Power Administration ("Bonne-ville") as part of a Hydro-Thermal Power Program designed to meet the anticipated needs for power in the Paciac Northwest. The following is a general description of the Project; for a more complete description, reference is made to the report of the Consulting Engmeer attached as Exhibit II to this OfBcial Statement.

The Atomic Energy Commission (the "AEC") has notified Bonneville and the Supply System that the dual-purpose nuclear reactor owned and operated by the AEC which supplies by-product steam to the two existing generators included in the Hanford Project is now scheduled for shut-down on July 1, 1975. Bonneville has deternuned that it is not economical for the Supply System to undertake the licensing and operatio2 of the AEC reactor in order to maintain the Hanford Project in operation and has notified .

the Supply System that it would not approve expenditures for such licensing. Accordingly the Hanford

Project as such will cease production of power when the AEC reactor ceases operation. The Supply System has negotiated with all parties to the various agreements concerning the use of the output of the Hanford Project and has received approval to incorporate the existing turbine generators and other useful parts of the Hanford Project as part of the Project.

The Project will be located on the Hanford Reservation (at the site of the Hanford Project) 30 miles northwest of the City of Richland, and will consist of a pressurized water nuclear-electric generating plant having a nominal capacity of 1,220,000 kilowatts, together with associated facilities to deliver the output to Bonneville's high voltage transmission system in the vicinity of the Project.

The Project will utilize a Babcock and Wilcox pressurized water reactor steam supply system, a new General Electric topping turbine generator and the two existing turbine generator units (as they will be modi 8ed) of the Hanford Project.

k The Supply System has entered into contracts for certain long delivery items for the plant including the nuclear steam supply system, the torping turbine generator and nuclear fuel. Under its current schedule, the Supply System anticipates (i) receipt of the AEC construction permit in the fall of 1974; (ii) fuel loading in the spring of 1980;'and (iii) commercial operation in September,1980. The Supply System has considered environmental factors relevant to the Project together with the technical and economic matters referred to herein; it has taken the steps required to date to conform with the Washington State Environmental Policy Act of 1971, including the preparation of an environmental impact statement, and will continue to meet the requirements of that Act.

The Supply System expects to adopt a Bond Resolution to provide for the permanent financing of the Project in early 1975. The Construction Engineer and the Supply System have estimated that the cost of construction, exclusive of the initial nuclear core, sales tax, owner's costs, financing costs and interest during construction, will be $415,300,000. The Consulting Engineer and the Financial Consultant (assuming four bond issues) have estimated the aggregate principal amount of the issues to be

, 5607,000,000, at an assumed interest rate of 6%.

j SECURHY FOR THE NOTES

! The Notes, together with interest thereon, shall be payable from any moneys of the Supply System L

that may be lawfully applied to the payment thereof, including (i) revenues of the Project, including all i

payments to be made to the Supply System pursuant to certain agreements (the " Net Billing Agreements")

i described below; and (ii) the proceeds of revenue bonds or refunding notes of the Supply System. Interest i on the Notes will be capitalized to maturity. '

' The Project's entire capability will be sold by the Supply System to 104 statutory preference customers (the " Participants") and 5 private utility customers (the " Companies") of Bonneville, and l assigned by such customers to Bonneville pursuant to the Net Billing Agreements and certain agree-

{.

' ments (the " Exchange Agreements"), respectively. The Exchange Agreements provide that each Com-pany will purchase 6.494% of the Project capability during the period begmnag July 1,1980 and 5

I ending June 30,1996 and exchange its share of Project capability with Bonneville which will supply a certain amount of power to the Company with payment to be made by the Company to the Supply System. Pursuant to the Net Billing Agreements the balance of Project capability will be sold to the Participants who will pay to the Supply System an amount equal to the Project's annual costs,less any amounts payable by the Companies pursuant to the Exchange Agreements. Each Participant will assign its share of Project capability to Bonneville which will credit the payments made to the Supply System by such Participant against billings made by Bonneville to such Participant for power and certain services. The Net Billing Agreements provide that the Participants are obligated to pay the Supply System whether or not the Project is completed, operable, or operating and notwithstanding the suspension, interruption, interference, reduction or curtailment of the Project output.

If for any reason the Supply System is unable to issue and sell revenue bonds or refunding notes to obtain funds to pay the principal of the Notes, together with any interest thereon, when due, or is unable to proceed with the financing of the Project, the Supply System covenants in the Resolution that it will terminate the Project as provided in Section 15 of the Project Agreement and willinvoke the provisions of Section 10 of each of the Net Billing Agreements.

The Supply System may terminate the Project pursuant to Section 11(a) or Section 15 of the Project Agreement if it is determined that the Supply System is unable to construct, operate or proceed as owner of the Project due to licensing, financing, or operating conditions or other causes which are beyond its control.

Pursuant to the Resolution and Section 10 of the Net Billing Agreements, upon giving the notice of termination of the Project the Supply System shall make monthly billing statements to the Participants in amounts sufficient to pay the Notes; provided, however, that the maximum monthly amount which can be billed to any Participant, under these circumstances, cannot exceed the ability of Bonneville to allow net billing credits in such month to said Participant in the manner provided in the Net Billing Agreements, taking into account all assignments which can be made pursuant to the Net Billing Agreements.

ESTIMA'ITD APPLICATION OF NOTE PROCEEDS The proceeds from the sale of the Notes will be applied to the payment of the estimated preliminary costs set forth below. The Supply System estimates that these funds will be sufficient to pay all expenses necessary to obtain a construction permit for the Project from the AEC, to receive site certification from the State of Washington and to pay certain initial construction costs of the Project. The Supply System presently plans to sell a portion of the permanent bonds as soon as practicable after receiving the construc-tion permit and fund the Notes at such time. The Supply System anticipates the issuance of such permit in the fall of 1974.

Esthmated Disposition of Proceeds

$25,000,000 Notes i Initial Construction Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,000,000 Engineering and Construction Management (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,183,000 Escalation and Contingencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,500,000 SalesTax..............................................................

50,000 Supply System's Direct Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,253,000 Note Discount and Financing Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 386,000 3,010,417 Capitahzed Interest ( 2 ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

G ross Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 326,382,417 Less : Investment Earmngs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,382,417 l

Principal Amount of Note Issue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $25,000,000 (1) Includes both payment of that portion of the principal of and interest on a $1,500.000 note issue which was i

used for this purpose and repayment of any temporary loans from other funds of the Supply System used for this purpose.

(2) Assuming an interest rate of 4.25%. l 6 i 1

l l

( BONNEVILLE POWER ADMINISTRATION j The Bonneville Power Administration, an agency of the U. S. Department of the Interior, was i established by the Bonneville Project Act of August 20,1937, to build transmission facilities and to '

market power from federal hydroelectric projects in the Pacific Northwest. Such projects now number 26 with an installed capacity of 10,124,900 kilowatts. These projects and authorized new projects and additions at existing projects will have, when completed, an installed capacity of approximately 21,335,900 kilowatts. Bonneville's transmission facilities include nearly 12,000 miles of 115 kv to 500 kv ac and 800 kv de transmission lines. These transmission facilities together with the hydroelectric projects mentioned above comprise the Federal Columbia River Power System.

Bonneville's revenues from the Federal Columbia River Power System for the past five fiscal years by major clas:ifications of customers were as follows:

Bommerille's Revenees by Major Ci iac=*ta= of Customers (1)

anneso nan preterene. z? Eyrie *'*llr"U*"

cost =ers otmise. ananstriai ano other votai 1968. . . . . . . . . . . . $49,134,719 $12,515,810 $39,498,338 $16,739,045 $117,887,912 1969... ........ 55,752,314 16,967,117 46,204,161 18,353,608 137,277,200 1970............ 58,419,581 20,319,033 50,063,203 18,878,209 147,680,026 1971............ 64,078,043 25,120,610 45,418,745 21,060,576 155,677,974 1972...... ..... 69,391,748 37,847,546 45,733,067 23,013,074 175,985,435 (1) From Bonneville Summary Financial Data.

In addition to the federal hydroelectric projects, Bonneville has entered into arrangements for the

(- acquisition of additional power supply and storage. Under a treaty between the United States and Canada and agreements associated with this treaty relating to the development of the Columbia River, Bonneville, acting jointly with the U. S. Army Corps of Engineers as the U. S. entity, has obtained certain rights to 15,500,000 acre-feet of hydro storage on the Columbia River in Canada. The City of Eugene, Oregon, a preference customer of Bonneville, has a 30% ownership share in the capability of the Trojan Nuclear Project (see section herein entitled "The Hydro-Thermal Power Program and Power Supply in the Pacific Northwest"). Bonneville has contracted to obtain through net billing Eugene's share of Trojan's capability and anticipates receiving power and energy therefrom in 1975. Bonneville has also contracted to obtain through net billing 100% of the capability of the Supply System's Nuclear Project No. 2 and anticipate:, receiving power and energy therefrom in 1977.

Bonneville also transmits over its transmission facilities the major portion of the power from 11 nonfederal projects to various private and public utilities in the Pacific Northwest.

The Federal Columbia River Power System has interconnections with other regious in the United States and Canada. Three high voltage transmission lin- interconnections (two 500 kv ac, one 800 kv de) of tl e Pacific Northwest-Pacific Southwest Intertie have been completed and are now in operation.

Two 500 kv ac lines will interconnect the Federal ColunAi River Power System with British Columbia, Canada, and several 230 kv ac lines interconnect the eastern portion of the system with utilities in the Mountain States and adje;ent Canadian provinces. The:e interconnections provide, in addition to mutual support in the event of a breakdown or emergency, the means to carry capacity and energy which is surplus to the P.icific Northwest needs to these areas, and conversely to carry surplus capacity and energy from these areas into the Pacific Northwest.

Bommeville Contracts Bonneville and each of the Participants have entered into one or more contracts requiring payments to

( Bonneville for the purchase or exchange of power, the operation and maintenance of facilities or the transmission of power over the Federal Columbia River Power System.

7

a 4 4 Os s .A k ,J + m a:- m 4 4 1

1 s

Bonneville markets power to 158 customers,' including 104 preference customers (public bodies and j u cooperatives which have preference and priority upon power from the Federal Columbia River Power System pursuant to the Bonneville Project Act, u amended) under the terms of various power sales and exchange contracts. Each of the Participants is a preference customer and is a party to at least one zsuch contract. The power sales contracts generally provide for the sale and delivery of Arm power to a Participant in the amount of its requirements for power over and above the generating resources, if any, that the Participant has available to serve its own loads. Bonneville's obligation is effective for the term of the contract unless Bonneville gives the Participant at least Sve years' prior notice of insufficiency of supply. Bonneville as a policy matter has agreed to give the Participants eight years' notice and an eight (year notice provision has been included in all such power sales contracts executed since March 2,1971.

At the end of such notice period Bonneville may restrict its deliveries to an amount which is not less than the amount which Bonnevdle will be obligated to deliver in Escal year 1976 or 25,000 average kw, wh'chever is more.

These power sales contracts are usually for a term of twenty yesrs and contain provisions for a rate .

review once each Ave years, the next rate review date being December 20,1974. In the past Bonneville has replaced its power sales contracts on or prior to their expiration with new power sales contracts.

THE PARTICIPANTS AND THE COMPANIES J

The Project has 104 Participants, of which 29 are municipalities,28 are districts and 47 are co-operatives. The Participants will contract to purchase 67.53% of the Project's capability during the period 1980 to 1996 and 100% of the Project's capabilit'y thereafter. The Companies will contract to purchase 32.47% of the Project's capability during the period 1980 to 1996. Exhibit I attached hereto lists each Participant and Company and indicates its snare of the Project capability purchased.

Pursuant to the Exchange Agreements, each of the 5 Companies will purchase 6.494% of the Project's capability from the Supply System during the period 1980 to 1996 and exchange such capability with Bonneville for 80 megawatts of capacity and 68 megawatts average annual energy. Payments to the Supply System for the period 1980 to 1990 will be computed under the applicable Bonneville wholesale rate schedule for such capacity and average annual energy. For the period 1990 to 1996, each Company

+

, will pay 6.494% of the Fixed Cost and Operation, Maintenance and Other Costs (as defined in the Exchange Agreements), plus payrients with respect to fuel costs, certain reserves and transmission costs.

The Participants, all of which are statutory preference customers of Bonneville, currently obtain all or part of their power supply and other services from Bonneville, and, under their power sales and other L

contracts, will have an estimated net billing capacity which in the aggregate is estimated to be in excess of j their share of the Project's estimated annual costs paid to the Supply System. Each Participant's share 4 of such annual costs will be " net billed" (credited) against the bulings made by Bonneville to the Par-ticipant on a monthly basis under its power sales and other contract (s).

! Prior to the sale of the Notes each of the Participants wid have executed a Net Billing Agreement,

. as more fully. described below, with the Supply System, and Bonneville.

-Under the Net Billing Agreements and the Exchange Agreements, each Participant and each Com-pany assigns its share of the Project's capability to Bonneville, and the entire output of the Project is to be added to and pooled with the other power sources available to Bonneville.

; Since the Participants' pa>unts to the Supply System will be net billed, the cost of their share of the power produced by the Project will be borne by Bonneville customers. Bonneville has assured Congress that "any costs or losses to Bonneville under these agreements will be borne by all Bonneville rate payers . i through rate adjustments,if necessary."

8

(

1

(- 'IME HYDRO-THERMAL POWER PROGRAM AND POWER SUPPLY IN THE PACIFIC NORTHWEST The Joint Power Planning Council, consisting of 108 public and private utilities in the Pacific North-west and Bonneville, wu formed to plan th,: coordination of existing and future thermal and hydro-electric resources in the Northwest. The major part of the power supply for the PaciSc Northwest has historically been from hydroelectric generating resources. However, the remaining hydro projects to be developed in the Northwest will be essentia!!y peaking projects. The area has turned to thermal genera-tion for its base load resources for the future. The combination of hydro peaking and large scale thermal generating plants was found by the Joint Power Planning Council to be the most economic means of provid-ing additional power to meet the area's power requirements. He most economic thermal units are too large for any one of the preference customers to install for its own needs. As a result, the Joint Power Planning Council developed the " Hydro-nermal Power Program". This program has been endorsed by the current and previous Administrations and by the Congress.

De utility members of the Joint Power Planning Council have concluded that the Hydro-Thermal Power Program will:

1. Best preserve the environment and natural beauties of the PaciSc Northwest.

2. Make edicient and economic use of the Federal Columbia River Transmission System.

3. Obtain the economics of scale from large thermal generating plants.

4. Meld the output of large thermal generating plants with that of existing hydro-generating units and the peaking generation units which will be installed at existing dams, to achieve the most ecunomic and reliable power supply to meet the power requirements of the Pacific Northwest.

The first large scale steam electric generating plant built under the Hydro-Thermal Power Program is the Centralia Steam Plant which is jointly owned by Pacific Power & Light Company, The Washington m Water Power Company, Portland General Electric Company, Puget Sound Power & Light Company, the Cities of Seattle and Tacoma and the Public Utility Districts of Grays Harbor and Snohomish Counties.

The initialinstallation consists of two 700,000 kilowatt steam electric generating units using coal strip-mined from a nearby coal field for fuel. The first unit was placed in operation in late 1971, and the second unit in late 1972.

The first single-purpose nuclear fueled electric generating plant in the Pacine Northwest, and the second plant in the Hydro-Thermal Power Program, is under construction by the Portland General Electric Company at the Trojan site on the Columbia River downstream from Portland, Oregon. The plant is jointly owned by the Portland General Electric Company, the City of Eugene, Oregon and Paci6c Power & Light Company. This plant with a capacity of approximately 1,130,000 kilowatts is scheduled for completion in 1975. The third power installation in the Program is Pacific Power & Light Company's coal-fired units to be installed at the Jim Bridger Plant located near Rock Springs, Wyoming.

The first 500,000-kilowatt generating unit at Jim Bridger is not included in the Hydro-Thermal Power Program as its output is to be used outside the Pacific Northwest coordinated system. The second and third units, for use in the coordinated system, are scheduled for operation in late 1975 and late 1976, respectively.

The fourth installation is to be the Supply System's Nuclear Project No. 2, a 1,100,000 kilowatt plant on the Hanford Reservation, which is scheduled for commercial operation in September 1977. Portland -

General Electric Company is planning a nuclear installation near Boardman, Oregon, to be included as the fifth project under the Hydro-Thermal Power Program for operation in 1980. The sixth plant under this program is to be the Project, which is scheduled for operation m 1980. The Supply System's Nuclear Project No. 3, a 1,200,000 kilowatt plant to be located at a site yet to be selected, is scheduled for initial operation in 1981 as the seventh plant under this program. Preliminary investigations on the Supply System's Nuclear Project No. 3 and the Project have been financed from the proceeds of a $1,500,000 t

f note issue of the Supply System. It is expected that additional notes will be issued in the future for ad-ditional costs on Nuclear Project No. 3.

9

The present Hydro-Thermal Power Program of thermal generating plants for installation through 1981 is tabula,ted below:

Dermal Plant Sch=M= of Hydre-Hermal Power Preyam ,, -

~

OEr Es.Y smou.s 7.m o 1 PaciSc Power & Light Company Centralia, Coal-Bred 700 (1).

The Washington Water Power Washagton Coal-Sud 700 (1)

Company (Centralia Steam

.. Plant ) . . . . . . . . . . . . . . . . . .

2 - Portland General Electric Com-pany (Trojan - Nuclear Pro-1,130 July 1975 ject)..................... Near St. Helens, Oregon Nuclear 3 Paci6c Power & Light Company (Jim Bridger Plant) . . . . . . . Rock Spnngs, Wyoming Coal-Ared 500 Sept.1975 500 Sept.1976 4 Washington Public Power Sup-ply System (Nuclear Project t No. 2 ) - . . . . . . . . . . . . . . . . . Hanford, Washington Nuclear 1,100 Sept.1977 5' Portland General Electric Com-pany (Boardman Plant) . . . . . Near Boardman, Oregon Nuclear 1,700 Sept.1980 6 Washington Public Power Sup-

- ply System -(Nuclear Project No.1) ................. Hanford, Washington Nuclear 1,220 Sept.1980 7 Washington Public Power Sup-ply System (Nuclear Project 1,200 Sept.1981 i No. 3 ) . . . . . . . . . . . . . . . . . . Site under consideration Nuclear (1) Currently in operation at reduced capacity.

The _ Joint Power Planning Council is now considering further installations to meet the power requirements of the Paciac Northwest during the 1980s.

In addition to the foregoing major projects in the Paci6c Northwest. The Montana Power Company and Puget Sound Power & Light Company are constructing a coal-Bred steam electric generating plant at Colstrip, Montana. A portion of the output of this project will be used outside of the Paci8c Northwest coordinated system and the balance of the output will be used by Puget Sound Power & Light

Company to assist in meeting its needs within the PaciSc Northwest. Present plans provide for 350,000 kilowatts to be available to Puget Sound Power & Light Company by 1976. Planning is proceeding on additional 525,000 kilowatt blocks presently scheduled for initial operation in September 1978 and September 1979.

Power R: ,' ~ ' and Resources Each year the Pacific Northwest Utilities Conference Committee (PNUCC), the committee of Paci6c Northwest utilities which has the responsibility for estimating loads and resources, prepares a long-Range Projection of Power Loads and Resources for Hermal Planning (Long-Range Projection),

which presents an analysis of both peak and energy loads and resources available to meet them. The most recent Long-Range Projection is dated March 24, 1972. The estimated resources available to meet projected loads in terms of dependable capacity and Arm energy as contained in that analysis are summarized in the following tables. However, recent studies by Bonneville and other PNUCC members j - indicate that projected area peak and s.urgy loads in the years 1974-75,1975-76 and 1977-78 will be in l_ excess of the projected peak and energy resources which will be available in the area in such years. He l Iong-Range Projection dated March 24, 1972 which is summarized in the following tables does not indicate a de6 cit in such years, or indicates a de6 cit which is less than the de6cits shown in such studies.

De resources assumed to be available in the Long-Range Projection are restricted to those plants (1) in operation, or (2) under construction, or (3) those for which substantial funds have been made avail-able for 6nal planning. Accordingly, the projection did not include as assured resources the Boardman Plant of Portland General Electric Company, the Supply System's proposed Nuclear Project No. 3, the Project or the additional units at the Colstrip, Montana plant.

10

e

( FirusImade and Resources Northwest Power Pool, West Group Ares

• Peak Capability-Kilowatts Year Additional f J."m'. aA"in'.la. 11"'1 4 a.J a m m m re!.m a"4%%L 1973....... 20,269,000 21.088,000 (819,000) - (819,000) 1974....... 21,698,000 22,195,000 (497,000) -

(497,000) 1975....... 23,530,000 23,679,000 (149,000) - (149,000) 1976....... 24,376,000 26,219,000 (1,843,000) - (1,843,000) 1977....... 25,496,000 26,989,000 (1,493,000) - (1,493,000) 1978....... 26,818,000 29,035,000 (2,217,000) - (2,217,000) 1979....... 28,122,000 30,982,000 (2,860,000 - (2,860,000) 1980....... 29,698,000 31,070,000 (1,372,000) - (1,372,000) 1981....... 31,404,000 31,053,000 351,000 1,037,000 (686,000) 1982....... 32,570,000 31,416,000 1,154,000 1,037,000 117,000 1983....... 34,514,000 31,500,000 3,014,000 1,037,000 1,977,000

. Energy Capability-Average Eliowatts 1973.. .... 12,938,000 12,962,000 (24,000) - (24,000) 1974....... 13,757,000 13,966,000 (209,000) - (209,000) 1975....... 14,640,000 14,187,000 453,000 - 453,000(4) 1976....... 14,975,000 15,091,000 (116,000) - (116,000) 1977....... 15,632,000 15,865,000 (233,000) - (233,000)

.- 1978....... 16,443,000 16,550,000 (107,000) - (107,000)

( 1979....... 17,229,000 16,759,000 470,000 - 470,000 1980....... 18,066,000 16,889,000 1,177,000 .- 1,177,000 1981....... 19,005,000 16,848,000 2,157,000 672,000 1,485,000 1982....... 19,731,000 16,912,000 2,819,000 907,000 1,912,000 1983....... 20,638,000 16,922,000 3,710,000 1,031,000 2,685,000 (1) Parenthesis denotes surplus.

(2) After deducting 15% peaking reserves. Computed using West Group Forecast principies.

(3) Refer to text above.

(4) Does not include Hanford Project operation which will add up to 420,000 avg. kw to West Group resources in the year erding June 30. 1975.

• Area served by the utility members of the Joint Power Planning Council other than The Montana Power Company.

THE NET BILLING AGREEMENTS Prior to the sale of the Notes, the Supply System, Bonneville and each Participant will enter into a Net Billing Agreement. These Agreements will provide for the assignment to Bonneville by the Fartici-pants of the capability of the Project,less the portion sold pursuant to the Exchange Agreemems. The Participants will pay the Supply System all costs associated with the Project including all obligations incurred with respect to the Hanford Project after July 1,1980, including the Supply System's obligations under Resolution 178 (the bond resolution authorizing the bonds for the Hanford Project),less amounts l payable from other sources, including amounts payable under the Exchange Agreements. In consideration i of such assignment Bonneville will offset or credit the amounts paid by the Participants to the Supply System against amounts owed Bonneville by the Participants for power purchased and certain services under Bonneville Contracts. 'Ihis system of olisets or credits is termed " net billing". An abbreviated summary of certain provisions of the Net Billing Agreements follows; however, reference should be made to full text of the form of Agreements attached hereto as Exhibit 11I.

The capitalization of any word or words which is not conventionally capitalized '(e.g. Project,

(

Participants) indicates that such words are defined in the Net Billing Agreements (Exhibit 111). (The same practice is followed in the summaries of the Project Agreement and Resolution which follow.)

11

D Term eito Assesment Each Agreement becomes effective upon execution and delivery and will terminate on the date that the Project Agreement terminates except as provided in Section 10(c) and as to accrued obligations and liabilities. Net billing will begin on January 1,1980, or the date of commercial operation, whichever is earlier, or at some earlier date if the Project is terminated pursuant to Section 15 of the Project Agree-ment, as hereinafter described.

Although the Net Billing Agreements may be terminated prior to the maturity of any notes or bonds, the obligation of each of the Participants thereunder to pay its proportionate share of debt service on any notes or bonds shall continue until the notes or bonds have been retired, and Bonneville will continue l to be obligated to offset or credit these payments against the Participant's Benneville Contracts.

! Ownership and Operallen The Supply System will use its best efforts to arrange for the financing, design, construction, operation and maintenance of the Project.

l Sale, Purchase and Assignment The Supply System will sell and each Participant will purchase its share of the Project Capability

and in turn will assign its share of such capability to Bonneville.

1 l

Method of Sale and Purchase The Supply System sells and each Participant purchases its Participant's Share of the Project Capa-bility. The Participant's Share after June 30, 1996 is the Participant's Percentage shown in the last l column of Exhibit A to the Net Billing Agreement. In each Contract Year prior to July 1,1996, it is the 3 percentage specified for such year in said exhibit multiplied by 0.6753. The purchase price to be paid l by each Participant in each Contract Year will be the amount specified in the Billing Statement rendered j to the Participant by the Supply System. The amount of the Billing Statement is determined by multiply-ing the Annual Budget or any amended Annual Budget, less any other funds, including payments under

the Exchange Agreements, specified in the' Annual Budget as being payable from sources other than l payments under the Net Billing Agreements, by the Participant's Percentage. The Annual Budget shall provide for all of the Supply System's costs with respect to the Project in the Contract Year, including debt service and all obligations with respect to the Hanford Project, including obligations under Resolution 178. The Participant is obligated to pay the Supply System whether or not the Project is completed, operable, or operating and notwithstanding the stspension, interruption, interference, reduction or curtailment of the Project output, and such payments shall not be subject to reduction and shall not be conditioned upon the performance or nonperformance by the Supply System or Bonneville or any other Participant under the Net Billing Agreements or any other agreement or instrument.

Assignment The Participant assigns and Bonneville accepts the assignment of the Participant's Share. In con-sideration of such assignment, Bonneville will offset or credit the amounts paid by the Participant to the Supply System under the Net Billing Agreement against amounts owed Bonneville for power ourchased and certain services under its Bonneville Contracts.

Bonneville is obligated to make the offsets and credits specified in the Net Billing Agreements whether or not the Project is completed, operable, or operating and notwithstanding the suspension.

interruption, interference, reduction or curtailment of the Project output. Such offsets and credits shall not be subject to reduction and shall not be conditioned upon the performance or nonperformance by the Supply System or Bonneville or any other Participant under the Net Billing Agreements or any other agreement or instrument.

12

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c Each Participant is obligated to pay the Supply System on a monthly basis its proportionate share of the Supply System's annual expenses incurred in connection with the operation of the Project as speci6ed in sits Billing Statement. Each month's payments will be based on the amount of net billing credit received

- from Bonneville by the Participant during the preceding month on its B'onneville billings. If the credits received from BonneviDe are less than the Participant's share of expenses for a Contract Year, the Par-ticipant is nevertheless obligated to pay its proportionste share of such expenses.

L Bonneville may enter into net billing agreements with any or all of the Participants in connection

' with the construction and operation of other thermal generating plants,- and has entered into such agreements with most of the Participants in connection with either the Washington Public Power Supply System Nuclear Project No. 2 or the Trojan Project. Pursuant to the Net Bdhng Agreements, Bonneville will o8 set the amounts it owes under the Net Billing Agreement and all other net billing agreements which

. It may have in e8ect with each Participant against the sum of the amounts that such Participant may owe Bonneville for power and certain services in the proportion that the amount a:N in the current Billing Statement bears to the sum of the amounts to be paid by Bonneville under all such agreements for that Contract Year. Each Net Billing' Agreement provides that Bonneville and the Participant shall not enter into any agreements providing for payments to the Participant which Bonneville estimates will cause the aggregate of its billings to the Participant to be less than 115 percent of the Bonneville net billing obhgations to the Participant under all agreements providing for net billing.

If Bonneville is unable to net bill the amounts to be paid to the Supply System because the dollar obligations due Bonneville from a Participant are, or are expected to be, insudicient to ofset Bonneville's dollar obligations to such Participant, Bonneville will endeavor to arrange for a voluntary assignment of f such amounts which cannot be net billed and the Participant shall make any such assignment so arranged.

A The other Participants will have the Arst right to accept such assignment, pro rata among those exercising such right, before such an assignment is made to a customer who is not one of the Participants. If Bonne-viUe is unable to' arrange for such an assignment, the Participant will make such assignment to the other Participants, who are obligated to accept it, pro rata, provided that the sum of such assignments to a Participant shall not, without its consent, exceed either 25% of the Participant's Share of Project

!. Capability or its net billing capability, Nevertheless,if all or a portion of the Participant's Share is assigned as described above, the Partici-l pant will 2emain liable to pay the purchase price for its Share in accordance with its Agreement as if 4

such assigenent had not been made. Such liability of the Participant will be discharged only to the extent i

that the assignee of all or a portion of the Participant's Share shall pay to the Supply System the purchase i price forthe Share so assigned.

j If assignments cannot be made in amounts sufficient to bring into balance the respective dollar obliga-tion of Bonneville and the Participant and an accumulated balance in favor of the Participant from a previous year is expected by Bonneville to be carried for an additional year, such balance and any subsc-i

- quent monthly net balances that cannot be net billed will be paid in cash to the Participant by BonneviDe, subject to the kvailability of appropriations for such purpose.

If Bonneville is unaNe to satisfy'its obligation to an afected Participant by net billing, assignment or cash payment and determines that this will continue for a significant period, the afected Participant may '

direct that all or a portion of the power and energy associated with its share be delivered by the Supply L

System for the Participant's account at a speci6ed point of delivery either for the expected period of such

inability or the remainder of the term of the Net Billing Agreement, whichever is speci6ed by the i

Participant when it elects to have such power and energy delivered to it. The amount of power and

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energy delivered will be limited to the amount of the Participant's Share for which payment by Bonneville cannot be made.

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, e ,- r . ...,e.-- --mo e, ,e- r-,.,-mw.,,m, -w-. -,,em,--w,--+-,,--,-.,ee.. --.---.~wws--eme.--r-.-e.--+,-e,+w,-~% rem.,

4 T. ,a-a If the Project is ended pursuant to Section 15 of the Project Agreement, as described below, Supply System wiu give notice of termination of each Net Billing Agreement effective upon the date of termina-

tion of the Project Agreement. Supply System shall then terminate all activities relating to construction and operation of the Project and shall undertake the salvage and disposition or sale of the Project as provided in the Project Agreement. After such terrmaation, the Supply System win make monthly

!, accounting statements to Bonnevine and each Participant of au costs associated with such termination.

The monthly accounting statements wiu credit against such costs all amounts received by the Supply l l System from the disposition of Project assets, including amounts payable under the Exchange Agreements.

If the monthly accounting statements show that such costs exceed such credits, the Participant will pay its portion of such excess costs to the Supply System. The payments will be made at times and in amounts sufficient to discharge on a current basis the Participant's Percentage of the amount which~ the Supply

!? l System is required to pay into the vanous funds provided in the Bond Resolution for debt service and ,

allother purposes.

SeemovlBe's Approval and Project Consultant If any proposal or item subject to approval by Bonneville is disapproved by Bonneville and an alteraative proposal or item is suggested by Bonneville, Supply System shall adopt such suggestion or within seven days after receipt of such disapproval, shall appoint a Project Consultant acceptable to

- Bonneville to review the proposal or item. Proposals or items found by the Project Consultant to be consistent with Prudent Utility Practice shall become immediately effective. Proposals or items found i by the Project Consultant to be inconsistent with Prudent Utility Practice shall be modified to conform

! to the recommendation of the Project Consultant or as the parties otherwise agree and shall become effective as and when modi 6ed. If any proposal or item referred to the Project Consultant has not been i

4 resolved and will affect the continuous operation of the Project, Supply System shall continue to operate the Project and may proceed with the item as proposed by Supply System, or as proposed by Bonneville, i or as modi 6ed by mutual agreement of Supply System and Bonneville. If the Supply System proceeds with ,

l the item as proposed by it, and the item is determined by the Project Consultant to be inconsistent with Prudent Utility Practice, Supply System shall bear any net increase in the cost of construction or operation of the Project resulting from such item without charge to the Project to the extent such item is found l

i by the Project Consultant to be inconsistent with Prudent Utility Practice.

i l- Event of Deesmit j The Participant's Share of the Project Capability purchased by the Participant from the Supply System

! and assigned to Bonneville under the Agreement will be automatically increased for the remaining term of the Agreement pro rata with that of other nondefaulting Participants if, and to the extent that, one or more of the Participants is unable, fans, or refuses for any reasca to perform its obligations under its Net Billing Agreement; provided however, that the sum of such increases for each Participant, widiout its consent, may not exceed an accumulated maximum of 25% of its Participant's Share nor shall any such increase cause the estimate of the payments to be made by the Participant to the Supply System to exceed the estimate of Bonneville's billings to the Participant for power and certain services during the period of such increase.

Pastielpameis Rate Cevesamt No Participant will be required to make payments to the Supply System under its Net Billing Agreement except from revenues derived from the ownership and operation of its electric utility properties

! and from payments by Bonneville under such Agreement. The Participant covenants that it will establish, maintain and collect rates or charges for power and energy and other services, facilities and commodities

- sold, furnished or supplied by it through any of its electric utility properties which shall be adequate to provide revenues sufBcient to enable the Participant to make the payments to Supply System pursuant to

)

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( its Net Billing Agreement and to pay all other charges and obligations payable from or constituting a charge andlien upon such revenues.

Eshhks

'Ibe Exhibits described below are an integral part of the Net Billing Agreements and are attached to the form of Net Billing Agreement appended to this Official Statement as Exhibit IIL Exhibit A- A list of the Participants and their respective Participant's Percentages.

Exhibit B - Description of the Project.

Exhibit C-Contractual provision required by Statute or Executive Order. Under the pro-visions of Executive Order 11246 of September 24,1965 and the Rules and Regulations and relevant Orders of the Secretary of Labor thereunder, the Supply System has been granted by the Director, Office of Federal Contract Compliance, U. S. Department of Labor, a limited exemption from the cancellation, termination, and suspension provisions contained in Section 3(f) of Exhibit C to the Net Billing Agreements in the event of non compliance with the Equal Opportunity clause contained in said Agreements.

THE PROJECT AGREEMENT Prior to the sale of the Notes the Supply System and Bonneville will enter into the Project Agree-ment. That Agreement, among other things, provides standards for the design, licensing, financing, con-struction, fueling, operation and maintenance of the Project, and for the making of any replacements, repairs or capital additions thereto. An abbreviated summary of some of the provisions of the Project

{, Agreement follows; however, reference should be made to the full text of the Agreement attached hereto as Exhibit IV.

Terms The Agreement becomes effective upon its execution and delivery and will terminate when the Project is terminated as provided in Section 15 of the Agreement.

Section 15 provides that the Project shall terminate and the Supply System shall cause the Project to be salvaged, discontinued, decommissioned and disposed of or sold in whole or in part to the highest bidder or bidders, or disposed of in such other manner as the parties may agree when:

(a) Supply System determines it is unable to construct, operate, or proceed as owner of the Project due to licensing, financing, or operating conditions or other causes which are beyond its

, control.

(b) The parties determine the Project is not capable of producing energy consistent with Prudent Utility Practice or, if the parties disagree, the Project Consultant so determi.,es, or (c) Bonneville directs the end of Project pursuant to the provisions of Section 11(a), which provides that if the estimated cost of a replacement or repair or capital addition required by a gov-crnmental agency after the Date of Commercial Operation exceeds 20 percent of the then dep'reciated value of the Project, Bonneville may direct that the Supply System end the Project in accordance with Section 15.

Design, Licensing and Construction of the Project The Supply System agrees among other things (i) to perform its duties and exercise its rights in i accordance with Prudent Utility Practice; (ii) to use its best efforts to obtain all licenses, permits and other rights and regulatory approvals necessary for the ownership, construction, and operation of the Project; 15

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(iii) to construct the Project in accordance with Prudent Utility Practice; and (iv) to use its best efforts to schedule the Date of Commercial Operation as near as possible to September 1,1980.

_ -In the Agreement " Prudent Utility Practace" at a particular time means any of the practices,

-- methods and acts,~ including those engaged in or approved by a signi6 cant proportion of the electrical

utility industry prior to such time, or any of the practices, methods, and acts which, in the_ exercise of reasonable judgment in light of the facts known at the time the decision was made, could have been

. expected to accomplish the desired result at the lowest reasonable cost consistent with reliability, safety and expedition.-In evaluating whether any act or proposal conforms to Prudent Utility Practice, Bonne-ville and the Supply System and any Project Consultant shall take into account the fact that the Supply System is a municipal corporation with statutory duties and responsibilities, and the objective to integrate the entire Project Capability with the generating resources of the Federal Columbia River Power System in order to achieve optimum utilization of the resources of that system taken as a whole and to achieve ofBcient and -sal operation of that system.

Flmancing The Supply System shall use its best efforts to issue and sell Bonds to finance the cost of the Project and the completion thereof, as such costs are de6ned in the Bond Resolution, and to finance the cost of any capital additions, renewals, repairs, replacements or modi 6 cations to the Project; provided, however, i that such Bonds may then be legally issued and sold.

Prior to i*.s adoption, the Bond Resolution shall be subject to the approval of Bcaneville.

Bedset Both the Construction Budgets and the Annual Budgets and any revision thereof are to be submitted to Bonneville and are subject to its approval. In the absence of any objection by Bonneville a budget will become effective within 30 days after submittal, in the case of the Construction and Annual Budgets, 4 and within 7 days,in the case of any revision thereat.

All accounts shall be kept so as to permit conversion to the applicable system of accounts prescribed for electric utilities by the Federal Power Comnussion.

Operation and Maintenance

'Ibe Supply System shall operate and maintain the Project in accordance with Prudent Utility Prac-tice and in accordance with the requirements of the Atomic Energy Cm-ienion and other government agencies having jurisdiction.

I

! Exhbies

'Ibe Exhibits described below are an integral part of the Project Agreement and are attached to the copy of the Project Agreement appended to this Official Statement as Exhibit IV.

Exhibit A-Description of the Project.

Exhibit B-Contractual provisions required by Statute or Executive Order. Under the pro-visions of Executive Order 11246 of September 24,1965 and the Rules and Regulations and relevant

,- Orders of the Secretary of Labor thereunder, the Supply System has been granted by the Director, Office of Federal Contract Compliance, U. S. Department of Labor, a limited exemption from the cancellation, termination, and suspension provisions contained in Section 3(f) of Exhibit B to the Project Agreement in the event of non-compliance with the Equal Opportunity clause contained )i in said Agreement.

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( mE RESOLtmON The following is a summary of certain provisions of the Resolution authorizing the issuance of the Notes and does not purport to be complete. Reference should be made to the Resolution for full and complete information about the Notes. Copies of the Resolution are available on request either at the office of the Supply System in Richland, Washington, or Blyth Eastman Dillon & Co. Incorporated, Seattle, Washington, or New York, New York.

Use of the Proceeds The Resolution authorizes the issuance of Twenty-five Million Dollars (325,000,000) principal amount of revenue notes of the System designated " Washington Public Power Supply System Nuclear Project No.1 Revenue Notes, Series 1973" for the purpose of paying a part of the cost of acquiring and constructing the Project and placing it into operation, including the cost of acquiring land and rights in land, acquiring nuclear fuel, preliminary work and expenses incurred in connection with the Project, engineering and other professional services, making site and other studies and surveys for the Project, obtaining necessary permits, licenses and approvals, preparing detailed plans and speci6 cations for the construction of the Project, paying the portion of the principal of an outstandmg $1,500,000 note issue which was expended for the Project and the interest thereon, the expenses of issuing and selling the Notes and the fees and charges of the paying agents, trustee and depositaries appointed pursuant to the Resolu-tion, and paying interest on the Notes from their date to the date of maturity thereof.

Description of the Notes The Notes are to be issued in the form of coupon notes in a single denomination of $25,000 or any multiple thereof, (as may be requested by the purchaser or purchasers), numbered from 1 upwards, and

(.

dated February 15,1973. They will bear interest at such rate as is determined by the Board at the time of sale thereof, will be payable as to interest on June 15,1973 and semi-annually on each December 15 and June 15 thereafter, and shall mature on December 15, 1975.

Sources from Which Notes Payable The Notes, together with the interest thereon, will be payable from any monies of the Supply System that may be lawfully applied to the payment thereof, including revenues of the Project and the proceeds of the Supply System's revenue bonds or refunding notes.

Creation of Phsde and Accomats The Resolution authorizes the creation of two special funds of the Supply System: one, known as the " Nuclear Project No.1,1973 Preliminary Construction Fund" (the "1973 Preliminary Construction Fund"), will be held in trust and administered by the Supply System, and the other, known as the

" Nuclear Project No.1,1973 Note Interest Fund" (the "1973 Note Interest Fund"), will be held in trust and admmistered by the Nuclear Project No.1,1973 Note Interest Fund Trustee (the "1973 Note Interest Fund Trustee"). The Supply System will appoint one of the Paying Agents for the Notes as 1973 Note Interest Fund Trustee.

l Disposition of the Proceeds of the Notes From the proceeds of the sale of the Notes there shall be deposited:

1. With the paying agent for $1,500,000 principal amount of notes heretofore issued by the I

Supply System, the sum of $1,000,000 to be used to pay principal of and interest on said notes, being I the amount thereof allocable to the Project.

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2. With the 1973 Note Interest Fund Trustee for credit to the 1973 Note Interest Fund an amount equal to the interest to accrue on the Notes from the date thereof to December 15, 1975, which shall be used to pay interest on the Notes during such period.

3. ' With the Supply System for credit to the 1973 Preliminary Construction Fund the balance '

' of such Note proceeds, which will be apphed for the purposes noted above under the title "Use of the Proceeds".

Monies in the 1973 Note Interest Fund will be used solely for the purpose of paying interest on the

- Notes. On or before the fourteenth (14th) day of the month in which an installment of interest falls due on the Notes, the 1973 Note Interest Fund Trustee will transfer fror.s the 1973 Note Interest Fund to the Paying Agents an amount which, together with any monies there9; fore neceived or held by the Paying Agents for the purpose, will be suflicient to pay the insiallment of interest then falling due on the Notes. If at any time monies in the 1973 Note Interest Fund and other available monics are inadequate for payment of interest, the Supply System will transfer from the 1973 Preliminary Construction Fund to the 1973 Note Interest Fund any additional amounts of money required.

All monies held or set aside by the Supply System in the 1973 Preliminary Construction Fund will, until invested or applied as provided in the Resolution, be deposited by the Supply System for the account of the 1973 Preliminary Construction Fund in such depositary or depositaries (hereinafter referred to as the " Construction Fund Depositary" or " Construction Fund Depositaries") as the Supply System may appoint. Each Construction Fund Depositary will be a state bank or trust company or national banking i association located in the State of Washington and quali6ed under the laws of said State to receive deposits of public monies, having a capital stock and surplus in excess of seven million five hundred thousand dollars ($7,500,000). All monies so deposited shall be continuously secured for the benefit i of the Supply System and the holders of the Notes to the extent permitted by applicable state or federal laws for the securing of deposits of public monies.

i Investmentof Moeies HeidiaFunds

{ Monies held for the credit of the 1973 Preliminary Construction Fund are to be invested by the

! Construction Fund Depositaries at the direction of the Supply SystemLin the following:

(i) direct obligations of, or obligations the principal of and inten d on which are unconditionally l~

guaranteed by, the United States of America; i

(ii) obligations of the Federal National Mortgage Association and obligations issued or guar-

anteed by the Government National Mortgage Association; (iii) obligations issued by the Banks for Cooperativ

s, Federal Intermediate Credit Banks,

' Federal Home Loan Banks, the Esport-Import Bank of the United States, and Federal Land Banks; (iv) Public Housing Bonds or Project Notes issued by public housing authorities and fully secured as to the payment of both pnncipal and interest by a pledge of annual contributions to be paid by the United States of America, or any agency thereof.

Monies held for the credit of the 1973 Note Interest Fund are to be invested by the 1973 Note Interest Fund Trustee in direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America.

Monies in the 1973 Preliminary Construction Fund may be invested by the Construction Fund Deposi-taries, at the direction of the Supply System, in bank time deposits evidenced by certificates of deposit ,

issued by any bank, trust company, or national bankmg association located in the State of Washington f

! 18

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(' which is a member of the Federal Reserve System and which has capital stock and surplus of at least 57,500,000. Such time deposits will mature not later than the time when the funds invested are required for the purpose intended and will be secured at all times in the manner provided by the laws of the State of Washington, provided, that the funds invested in bank time deposits issued by any one bank, trust company, or national banking association will not exceed at any one time 50% of the total of the l capital stock and surplus of such bank, trust company or national banking =aciation.

All interest earned by reason of investment of monies in either fund shall accrue to the 1973 Pre.

liminary Construction Fund. In the event monies that are invested are needed in the 1973 Preliminary Construction Fund or 1973 Note Interest Fund to meet obligations for which funds are not ctherwise available, then the Supply System shall sell or present for redemption any part of the investments to the extent required to provide the necessary funds.

Particular Covenemes of the Systems According to other provisions of the Resolution the Supply System covenants and agrees with the purchasers and holders of the Notes as follows:

A. The Supply System will pay the principal of and interest on each and every Note issued by the Supply System pursuant to the Resolution on the dates and at the places provided for in the Notes from any monies of the Supply System that may be lawfully applied to the payment thereof, including revenues of the Project and the proceeds of revenue bonds or refunding notes of the Supply System.

B. So long as any of the Notes issued pursuant to the provisions of the Resolution are cut-standing and unpaid, the Supply System will not, (i) voluntarily consent to or permit any rescission k' of, nor will it consent to any amendment to, nor otherwise take any action under or in connection with any of the Net Billing Agreements or Exchange Agreements which will reduce the payments provided for therein or which will release any party thereto from its obligations therein, or which willin any manner impair or adversely aficct the rights of the Supply System or of the Noteholders, and the Supply System will perform all of its obligations under the Net Billings Agreements and

, Exchange Agreements and take such action and proceedings as shall be necessary to protect and safeFuard the security for the payment of the Notes afforded by the provisions of the Net Billing Agreements and Exchange Agreements; or (ii) voluntarily consent to or permit any rescission of, nor will it consent to any amendment to or modi 6 cation of, nor otherwise take any action unbr or in connection with the Project Agreement which will in any manner impair or adversely affect the rights of the Supply System or of the holders from time to time of the Notes. The Supply System will perform all of its obligations under the Project Agreement and will take such actions and proceedings as shall be necessary to protect and safeguard the security fcr the payment of the Notes afforded by the provisions of the Project Agreement.

' C. The Supply System will proceed as promptly as is reasonably possible and practicable to obtain all necessary permits, licenses and approvals, to prepare detailed plans and speci6 cations for the construction of the Project and to do other necessary preliminary work so that the construction of the Project can be commenced and financing of such construction provided for through the sale of revenue bonds of the Supply System.

D. As soon as it is reasonably practicable the Supply System will issue and sell its revenue bonds or refunding notes for the purpose of providing funds to pay the cost of construction of the Project, which cost shall include, among other things, the payment of the principal and interest not paid from the principal of the Notes authorized pursuant to the Resolution. If for any reason the

( Supply System is unable to issue and sell bonds or refunding notes to obtain funds to ' pay the princi-pal of the Notes when due, or is unable to proceed with the financing of the Project for any reason, 19

1 the Supply System will terminate the Project as provided in sub-paragraph (a) of Section 15 of the Project Agreement and willinvoke the provisions of Section 10 of each of the Net Billing Agreements.

. Thereafter the System shall in each month make monthly accounting statements under the Net Billing Agreements which shal' show as the amounts due from the Participants in such month the maximum amount which can be stated therein for payment by the Participants in such month without causing the amount due from any Participant to exceed the ability of the Administrator to allow net billing credits to said Participant in such month in the manner provided in the Net Billing Agreements, taking into account all assignments which can be made pursuant to said Section, and shall deposit the amount so collected into a special fund which is created to provide for the payment of the principal of and interest on the Notes and any additional notes hereafter issued to pay costs of

-acquiring and constructing the Project.

E. The System reserves the right to issue additional notes to pay a part of the cost of acquiring and constructing the Project payable on a parity with the Notes from the proceeds of revenue bonds or notes or any other monies available therefor, including revenues of the Project.

SeverabRity If any one or more provisions of the Resolution shall be declared by any court of competent jurisdic-tion to be contrary to law, then the affected provisions shall be deemed separable from, and shall in no way affect the validity of, any of the other provisions of the Resolution or the Notes issued thereunder.

REGISTRATION OF THE NOTES BY STATE AUDITOR The Notes will be registered by the State Auditor of the State of Washington, and a certificate of such registration signed by the State Auditor or a Deputy State Auditor will be endorsed upon each Note in accordance with the provisions of Section 54.24.070 of the Revised Code of Washington, made applicable to the Supply System by the Revised Code of Washington, Section 43.52.3411. Such section provides, in part, that any revenue obligations after having been so registered and bearing such certificate, shall be held in every r.ction, suit, or proceeding in which their validity is or may be brought into question prima facie valid and binding obligations in accordance with their terms.

TRUSTEE The Supply System has appointed Seattle.First National Bank, Seattle, Washington to serve as the 1973 Note Interest Fund Trustee.

NEGOTIABLE INSTRUMENTS The Notes and interest coupons attached thereto are negotiable instruments in accordance with the provisions of Section 54.24.120 of the Revised Code of Washington.

LITIGATION There is no litigation pending, nor to the knowledge of the Supply System, any threatened, question-ing the corporate existence of the Supply System, or the title of the officers of the Supply System to their l respective ofBees, or the validity of the Notes, or the power and authority of the Supply System to issue i

the Notes, or the validity of the Net Billing Agreements, the Exchange Agreements, the Project Agreement, or any other proceeding taken or contract entered into by the Supply System, which is in any way related to the Project, or the power and authority of the Supply System to fix, charge and collect rates for the sale of power, energy and capability from the Project as provided in the Resolution.

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( APPROVAL OF LEGAL PROCEEDENGS All legal matters incident to the Net Billing Agreements, the Exchange Agreements, the Project Agreement and the authorization and issuance of the Notes are subject to the approval of Messrs. Wood Dawson Love & Sabatine, Bond Counsel to the Supply System, and Messrs. Houghton, Cluck,- Coughlin

& Riley, Special Counsel to the Supply System. Copies of the opinions they propose to render are appended hereto as Exhibits V and VI.

TAX EXEMPTION in the opinion of the above named Counsel, the interest on the Notes will be exempt from Federal income taxes under existing laws and regulations and a speci6c ruling issued by the Internal Revenue Service, which ruling has been applied for and must be received prior to delivery of the Notes.

MISCELLANEOUS The references, excerpts, and summaries contained herein of the Net Billing Agreements, the Project Agreement, the Exchange Agreements, and the Resolution, do not purport to be complete statements of the provisions of such documents and reference should be made to such documents for a full and complete statement of all matters relating to the Notes, the basic agreements securing the Notes and the rights and obligations of the holders thereof. Copies of the form of the Exchange Agreements are available upon request at the office of the Supply System in Richland, Washington.

'Ibe authorizations, agreements and covenants of the Supply System are set forth in the Resolution, and neither this Omcial Statement nor any advertisement of the Notes are to be construed as a contract

( with the _ holders of the Notes. Any statements made in this Omcial Statement involving matters of opinion or of estimates, whether or not expressly so identi6ed, are intended merely as such and not as representations of fact.

All of the information relative to the Paci6c Northwest, Bonneville, Joint Power Planning Council and Paciac Northwest Utilities Conference Committee, have been taken from sources deemed to be reliable but are not guaranteed as to completeness or accuracy.

The delivery of this Omcial Statement has been duly authorized by the Supply System.

WASHINGTON Pusuc Powan SurrLY SysTsu By /s/ E. Vicion RHODES Secretary Dated February 8,1973 l

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{ EXIRBrF I

• ne Participeats and Conspanies, their esseoasers and grees revesnes esehm onneville billings for power and certain services and Participant's and Coaspesy's S WASHINGTON PUBLIC POWER SUPPLY SYSTEM NeclearProject No.1 of each Participant and Company for Ascal 1971. Columns ues (1) and (2 by each Participant and Company and assigned toased Bonneville.

amounts previously committed under other each Participant will be obligated to pay in the year c ng anycet billing estimates 1981-1982.

nent financing, Column (7) shows the annual Pro n e perma-offset or credited against the billings to the Participantaeshown Company. ant to be in Column (

to each

=,

I I

23 ,

I l

4 (al m 9

Fleent 1971 Semelseles Persisigene Casemeness Reveemes 3'

. City of Albion, Idaho . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129 $. 23,974

, City of Bandon, Oregon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,528 359,638 Pubh'c Utility District No. I of Benton County, Washington . . . . . . . 14,660 4,298,840

. Benton Rural Electric Association, Inc. . . . . . . . . . . . . . . . . . . . . . . 4,704 1,129,546 Big Bend Electric Cooperative, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . 4,162 1,700,664 Blachly-Lane County Cooperative Electric Association . . . . . . . . . 1,697 696,345-City of Blaine, Washingon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,110 213,618-City of Bonners Ferry, Idaho . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,565 312,511 City of Burley, Idaho . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,142 725,506 -

City of Canby, Oregon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,751 365,589

. City of Cascade Locks, Oregon . . . . . . . . . . . . . . . . . . . . . . . . . . . . 553 154,102

= Central Electric Cooperative, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . 4,085 1,046,776 i City of Centralia, Washington . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,125 1,050,609 Central Lincoln Peoples' Utility District . . . . . . . . . . . . . . . . . . . . . . 16,578 5,893,171 Public Utility District No.1 of Chelan County, Washington . . . . . . 18,429 5,285,371 2

City of Cheney, Washington . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,382 591,242 Public Utility District No.1 of Clallam County, Washington. . . . . . 8,708 2,367,150 ,

Public Utility District No.1 of Clark County, Washington. . . . . . . . 50,083 12,900,355 Clatskanie Peoples Utility District . . . . . . . . . . . . . . . . . . . . . . . . . 2,364 1,961,856 Clearwater Power Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,217 1,302,874 i

Columbia Basin Electric Cooperative, Inc. . . . . . . . . . . . . . . . . . . . 2,918 975,702

- Columbia Power Cooperative Association, Inc. . . . . . . . . . . . . . . . . 1,213 423,654 Columbia Rural Eleceic Association, Inc. . . . . . . . . . . . . . . . . . . . 1,816 732,015 r Consolidated Irrigation District No.19 . . . . . . . . . . . . . . . . . . . . . . 1 4,409 Consumers Power, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,329 2,483 4 Coos-Curry Electric Cooperative, Inc. . . . . . . . . . . . . . . . . . . . . . . . 7,489 2,089, City of Coulee Dam, Washington . . . . . . . . . . . . . . . . . . . . . . . . . . . 524 162,389

'g' Public Utility District No.1 of Cowlitz County, Washington. . . . . . 27,708 8,850,406

City of Declo, Idaho . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 18,229 Public Utility District No.1 of Douglas County, Washington . . . . . 6,999 1,944,441 Douglas Electric Cooperative, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . 4,702 1,069,193 City of Drain. Oregon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 550 176,106 The East End Mutual Electric Co., Ltd. . . . . . . . . . . . . . . . . . . . . . . 297 50,120

City of Ellensburg Washington . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,001 1,049,037 City of Eugene, Oregon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44,595 13,290,553 l

J Fall River Rural Electric Coo 3,898 855,604 I Farmers Electric Co., Ltd...............................

. . perative, Inc. . . . . . . . . . . . . . . . . . .183. 18,079 Public Utility Distric' No.1 of Ferry County, Washington. . . . . . . . 1,455 437,514 Flathead Electric Cooperative, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . 262 715,334 4..

City of Forest Grove, Oregon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,917 899,465 Public Utilit District No.1 of Franklin County, Washington. . . . . 9,643 2,745,511

! Public Utilit District No. 2 of Grant County, Washicaton . . . . . . . . 19,177 6,183,230 Public Utilit District No.1 of Grays Harbor County, Washington. 27,481 5,989,605 Harney Electric Cooperative, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . 1,459 800,133

' City of Heyburn, Idaho . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 632 360,198 Hood River Electric Cooperative of Hood River County, Oregon. . . 2,050 594.436 '

r Idaho County Light & Power Cooperative Association, Icc.. . . . . . . 1,483 333,372 City of Idaho Falls, Idaho . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,939 3,033.982 Inland Power & Light Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,897 2,553.719

. Public Utility District No.1 of Kittitas County, Washington. . . . . . 1,104 276,517 Public Utility District No.1 of Klickitat County, Washington. . . . . . 5,634 1,513,044 i Kootenai Electric Cooperative, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . 4,018 803,721 f Lane Electric Cooperative, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,995 1,771,532 Public Utility District No.1 of Lewis County, Washington . . . . . . . . 14,571 3,206,393 j i

( A) Shares very slightly each year between 1982 and 1986.

(3) Estimated total Bonneville billines less estimated credits by Bonneville applicable to purchases of Particioants' shares J f '

of capability from the Supply System's Nuclear Project No. 2 and from the City of Eugene. Oregon's 30% share of '

4 the Troies Nuclear Project. Sillings are based upon current Bonneville estimates of power requirements and i

• ~

earrest tonsevine raise increased by 40%.

24

r1 1 1

1

( <s) (4) (s) (e) m m ere et Share of Prefect CapabiMey(A) seen.nos2 _ 19e61996 n wearese muuments) caewc) 0.003 0.003 0.004 $ 8,400 $ 2,700 0.071 0.112 0.166 193,700 56,800 2.724 3.353 4.965 4,626,500 2,183,700 0.271 0.208 0.308 560,400 217,100 0.026 0.121 0.179 470,100 21,100 0.140 0.158 0.234 388,600 112,600 0.070 0.074 0.109 131,800 56,300 0.064 0.078 0.115 123,500 50,900 0.061 0.121 0.179 258,300 49,300 0.105 0.200 0.296 235,500 84,400

. 0.032 0.050 0.074 73,900 25,400 0.450 0.312 0.462 825,200 361,100 0.112 0.201 0.298 329,800 89,900 2.089 2.815 4.169 4,223,600 1,674,300 0.565 0.338 0.501 614,000 452,600 0.326 0.345 0.511 526,600 261,500 0.559 0.781 1.157 1,128,800 447,700 10.907 9.883 14.635 14,248,900 8,743,600 0.372 0.414 0.613 1,491,500 298,300 0.219 0.185 0.274 516,100 175,400 0.078 0.109 0.161 308,200 62,800 0.028 0.028 0.042 90,700 22,200 0.481 0.419 0.621 882,300 386,000 0.006 0.003 0.005 7,800 4,900

/* 0.634 0.721 1.068 1,510,200 508,300

( 0.174 0.024 0.252 0.032 0.373 0.048 715,900 65,600 139,700 19,500

,. 5.631 4.983 7.379 6,652,300 4,514,200 0.010 0.018 0.026 17,200 8,100 0.034 0.030 0.044 64,400 27,600 0.231 0.223 0.331 583,100 185,100 0.039 0.065 0.096 119,200 30,900 0.010 0.007 0.011 23,600 8,100 0.441 0.527 0.780 793,000 353,500 0.046 0.041 0.061 6,246,300 36,800 0.036 0.127 0.188 160,600 28,700 0.005 0.003 0.005 18,600 3,800 0.076 0.071 0.105 135,100 60,600 0.118 0.083 0.123 266,300 94,700 0.012 0.317 0.470 404,100 9,700 0.679 0.898 1.330 1,431,500 544,000 0.548 0.328 0.486 596,500 439,600 2.337 1.862 2.758 4,994,400 1,873,000 0.020 0.071 0.105 221,100 15,700 0.068 0.113 0.167 215,800 54,700 0.123 0.151 0.224 368,400 98,500 0.024 0.032 0.047 84,100 19,500 0.274 0.613 0.908 959,400 219,800 0.752 0.581 0.860 1,386,400 603,000 0.136 0.161 0.238 219.000 109,300 0.334 0.349 0.517 662,800 268,000 0.182 0.143 0.212 360,900 145,600 0.301 0.363 0.537 952,600 241,400 0.713 0.862 1.276 1,446,100 571,600

Bawd o estimated average annual costs assuming level debt service and a 6% interest rate on permanent financing Costs could be dillerent if debt service is not on a level basis. Costs are based upon 1972 costs of labor

" and materials escalated to 1981.

25

(1) ts) l 1

Fiscal 1971 Stads6cs Cassemees me,eese.

Parasipass ,

Lincoln Electric Cooperative, Inc. (Montana) . . . . . . . . . . . . . . . . . 1,708 $ 50'.

Lincoln Electric Cooperative (Washmston) . . . . . . . . . . . . . . . . . . 1,459 574,s56 rative, Inc. . . . . . . . . . . . . . . . . . . . . . . . . 1,245 274,739 Lost River Electric Lower Valley Power & - t,Inc........................... 5,759 1,470,957 Public Utility District No.1 of Mason County, Washington. . . . . . . 2,216 378,683 Public Utilit District No. 3 of Mason County, Washington. . . . . . . 11,075 2,584,581

, Washington . . . . . . . . . . . . . . . . . . . . . . . . . . . . 607 201,860 Town of City of McMinn , Oregon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,274 1,538,975 Midstate Electric Cooperative, Inc. . . . . . . . . . . . . . . . . . . . . . . . . 3,183 863,281 3,200 618,027 City of Mdton-Freewater, Oregon . . . . . . . . . . . . . . . . . . . . . . . . . .

50 8,979 City of Minadoka, Idaho . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 687,819 Missoula Electric Cooperative, Inc. . .' . . . . . . . . . . . . . . . . . . . . . . . 3,185 1,873 707,634 City of Monmouth, Oregon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

969 257,563 Nespelem Valley Electric Cooperative, Inc. . . . . . . . . . . . . . . . . . . .

5,304 1,074,018

- Northern Lights, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Northern Wasco County People's Utility District . . . . . . . . . . . . . . . 2,367 495,466 872 168,436 Okanogan County Electric Cooperative, Inc. . . . . . . . . . . . . . . . . . .

Public Utility District No.1 of Okanogan County, Washington. . . . 10,418 2,672,146 Orcas Power and Light Company . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,954 823,074 Public Utility District No. 2 of Paci$c County, Washington. . . . . . . 10,434 1,792,213 2,651 788,308 Public Utility District No.1 of Pend Oreille County, Washington . .

6,573 1,788,238 City of Port Angeles, Washington . . . . . . . . . . . . . . . . . . . . . . . . . . . 68,043 Prairie Power Cooperative, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 305 Raft River Rural Electric Cooperative, Inc. . . . . . . . . . . . . . . . . . . . 1,658 913,261 1,831 491,281 Ravalli County Electric Cooperative, Inc. . . . . . . . . . . . . . . . . . . . .

8,797 2,394,804 City of Richland, Washington . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Riverside Electric Company, Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . 185 33,709 1,924 477,681 City of Rupert, Idaho . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 379,254 Rural Electric Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,861 Salem Electric . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,344 1,231 ' l Salmon River Electric Cooperative, Inc. . . . . . . . . . . . . . . . . . . . . . . 1,122 28'.

255,176 56,383, o 6 City of Seattle, Washington . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Public Utili District No.1 of Skamania County, Washington. . . . . 2,454 665,957 Public Utili District No.1 of Snohomish County, Washington. . . . 100,858 22,776,210 ctric Lines, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 336 94,796 South Side 5,315 1,321,075 City of Spring 6 eld, Oregon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69,547 Town of Sumas, Washington . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 316 2,577 705,164 Surprise Valley Electri6 cation Corporation . . . . . . . . . . . . . . . . . . .

81,386 28,475,191

' City of Tacoma, Washington . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144,649 Tanne r Electric . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 627 j Tillamook Peoples' Utility District . . . . . . . . . . . . . . . . . . . . . . . . . . 11,517 2,566,536 Umatilla Electric Cooperative Association . . . . . . . . . . . . . . . . . . . . 3,793 1,023,967 873 211,828 Unity Light and Power Company . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,015 553,617 Vera Irrigation District No.15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 666,850

' Vigilante Electric Cooperative, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . 2,755 1,940 370,573

' Public Utility District No.1 of Wahklakum County, Washington. . . 624,664 Wasco Electric Cooperative, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,019 1,309 661,463 Wells Rural Electric Company . . . . . . . . . . . . . . . . . . . . . . . . . . . .

West Oregon Electric Cooperative, Inc. . . . . . . . . . . . . . . . . . . . . . . 2,408 599.202 1 253,022 Public Utility District No. I of Whatcom County, Washington . . . . .

975,090 $253,507,983 Total Participants (104) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1 compesy

. TSe Montana Power Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179,204 57,713,257 Paci8c Power & Light Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . 480,383 171,679,000 358.279 104,918,573 Portland General I.lectric Company . . . . . . . . . . . . . . . . . . . . . . . . .

l 367,741 94,101,000 L Puget Sound Power & Light Company . . . . . . . . . . . . . . . . . . . . . . . 52,577,948 The Washington Water Power Company . . . . . . . . . . . . . . . . . . . . . 172.294 f

1,557,901 5480,989,649 Total Companies (5 ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total Penid ;eets and Companies . . . . . . . . . . . . . . . 2,532.991_ $734,497.Aq i

(A) Shares vary slightly each year between 1982 and 1986. ')

(B) Estimated total BonnevGle bGliess less estimated credits by BonnevDie applicable to purchase of Participant's share.

of c abGity from the Supply System's Nuclear Project No. 2 and from the City of Eugene, Oregon's 30% share of the Nuclear Project. Billings are based upon current Bonneville estimates of power requirements and current rates increased by 40%.

26

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r

-s-m (4) (s) (8) (7) h ere of Share of Project CapaWHer(M m

, 1961 1982 1986 1996 Thereafter BunngWB) CeseWC)

! 0.070 0.059 0.087 $ 166,400 $ 55,800 0.052 0.038 0.056 131,000 41,700 0.025 0.038 0.056 89,500 20,000 0.196 0.180 0.266 496,500 157,000 0.109 0.126 0.186 190,200 87,700 1.003 0.987 1.462 1,562,800 803,900 0.028 0.047 0.069 95,400 22,200 0.313 0.608 0.900 868,800 251,200 0.190 0.227 0.336 508,400 152,100 0.113 0.161 0.238 416,800 90,900 0.001 0.001 0.001 2,400 500 0.149 0.113 0.168 288,500 119,100 0.221 0.458 0.679 477,900 177,000 0.047 0.040 0.059 106,100 37,400 0.186 0.158 0.234 383,500 148,900 0.111 0.166 0.246 280,500 89,300 0.012 0.026 0.038 67,900 9,200 0.192 0.174 0.257 439,500 153,700 0.219 0.237 0.351 502,900 175,400 0.564 0.679 1.006 1,064,200 452,000 0.059 0.037 0.055 64,800 47,100 0.277 0.449 0.665 973,000 221,900 0.010 0.005 0.007 19,900 8,100 0.124 0.151 0.224 402,900 99,100 0.165 0.132 0.195 313,000 132,100 0.761 1.230 1.821 1,632,400 610,100 0.010 0.005 0.007 19,500 8,100 0.047 0.083 0.123 148,900 37,900 0.160 0.140 0.208 295,900 128,300 0.358 0.447 0.662 959,100 286,900

( 0.023 0.031 0.046 78,100 18,400 8.942 5.811 8.605 11,989,700 7,168,300 0.156 0.217 0.321 '

330,200 125,000 13.465 13.225 19.584 23,155,300 10,793,600 0.029 0.022 0.032 61,300 23,300 0.030 0.186 0.275 306,700 24,400 0.008 0.014 0.021 22,500 6,500 0.035 0.033 0.049 136,200 28,100 3.144 4.032 5.971 6,461,800 2,519,900 0.030 0.034 0.050 75,800 24,400 0.351 0.650 0.963 1,086,600 281,000 0.621 0.673 0.997 1,484,600 497,500 0.099 0.076 0.122 195,000 79,600 0.196 0.313 0.464 418,100 157,000 0.024 0.028 0.042 113,000 18,900 0.118 0.155 0.229 226,700 94,700 0.081 0.078 0.116 250,800 65,000 0.127 0.069 0.102 179,200 101,800 0.083 0.082 0.121 230,100 66,600 0.425 0.261 0.387 498,700 341,000 67.530 67.530 100.000 $124,207,700 $$4,133,000 6.494 6.494 0.000 NA 1,922,000 6.494 6.494 0.000 NA 1,922,000 6.494 6.494 0.000 NA 1,922,000 6.494 6.494 0.000 NA 1,922,000 6.494 6.494 0.000 NA 1,922,000 32.470 32.470 0.000 $ NA $ 9.610,000 100.000 100.000 100.000 5 NA $63,743,000 Based upon estimated average annual costs assuming level debt service and a 6% interest rate on perrnanent Anancing. Costs could be different if debt sersice is not on a level basis. Costs are based upon 1972 costs of labor and snatorials escalated to 1981.

Nota: NA means not applicable.

27

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4 (THIS PAGE INTENTIONALLY LEIT BIJLNK) 4 k

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c

-( xx m mrr n R. W. BECK AND ASSOCIATES ncAul.co T o fsAMMING ttATTLt.% ASHfMCToN DestGN CENVt R. COLORADO Rafts PHotNII. AAIZoNA ANALYlgs M Towls BUILDMC caLANDO, FLORIDA fvALUAfloNS NATTLt.WAlNINCTON W991 COwMOUS. NESRASEA u m rsu f ygggppgong m 80570N. MASSACHU$tTTs FILE NO. SS-1118-NF1-TA January 31,1973 Board of Directors WAsmMGToN PunLic PowF.m SUFFLY SYSTEM Richland,Wuhington Gentlemen:

Subject:

Summary Engineerirg Report Washington Public Power Supply System Nuclear Project No.1 Presented herewith is a summary of our analyses, investigations and studies with respect to the proposal by the Washington Public Power Supply System (the " Supply System") to issue $25,000,000 C of its Washington Public Power Supply System Nuclear Project No.1 Revenue Notes, Series 1973 (the

" Notes") for the purpose of paying certain initial costs of acquiring and constructing a nuclear-fueled electric generating phnt of approximately 1,220,000 kilowatts and related facilities to be known as Washington Public Power Supply System Nuclear Project No.1 (the " Project") and placing it into operation. The Notes will mature on December 15,1975.

The present program provides that the Notes will be retired from the proceeds of bonds issued to provide permanent financing of the Project. The costs to be financed from the proceeds of the Notes include the cost of preliminary work and expenses incurred in connection with the Project such as (a) engineering and other professienal services, (b) obtaining permits, licenses and approvals, (c) pre-paring detailed plans and specifications for the Project, (d) payment of certain preliminary costs for equipment, (e) other costs associated therewith and (f) payment of the portion of the principal of and interest on a $1,500,000 note issue which is allocable to the Project (generally referred to collectively herein as " Initial Work").

The Initial Work to be financed by the proceeds from the Notes will be that which is necessary to obtain a certification of the site for the Project by the Washington State Thermal Power Plant Site Evaluation Council, to obtain a construction permit from the United States Atomic Energy Commission (the "AEC") and, in general, to accomplish any other work to be undertaken prior to the issuance of long-term bonds to finance the actual construction of the Project.

The Supply System is a municipal corporation and a joint operating agency organized under the laws of the State of Washington and has 21 members consisting of 18 public utility districts and 3 municipalities, all located within the State of Washington. The Supply System owns and operates the Packwood Lake Hydroelectric Project of 27,500 kva of nameplate capacity located in Lewis County, Washington, and the steam-electric generating plant with a capacity of approximately 860,000 kilowatts located in Benton County, Washington, known as the Hanford Proj:ct. Steam is provided to this latter

{ project from a nuclear reactor owned and operated by the AEC on its Hanford Reservation near Rich-land, Washington. The Supply System issued $13,700,000 of Packwood Lake Hydroelectric Project 29

Revenue Bonds, Series of 1962 and 1965, to Annace construction of the Packwood Lake Hydroelectric Project and $ 622,000,000 of Hanford Project Electnc Revenue Bonds, Series of 1963, to inance construc-tion of the Hanford Project. Each of these projects is a separate utility system and the revenues of each i7  ; are respectively pledged to the separate systems. [

^

The Supply System has preliminary construction underway on a 1,100,000 kilowatt nuclear power plant on the Hanford Reservation of the AEC, approximately 12 miles north of the City of Richland, i

Washington to be known as Washington Public Power Supply System Nuclear Project No. 2. It has issued $55,000,000 of revenue notes for the purpose of Anancing initial work on this project.

Present plans call for the Washington Public Power Supply System Nuclear Project No. 2 to be .

l operated as a separate utility system with revenues of such project pledged to such separate system.

2 Handsed Puoiset j The AEC has noti 6ed the Supply System that the nuclear production reactor (the "NPR") owned and operated by the AEC on its Hanford Reservation which provides steam to the Supply System's Han-ford Project will cease operation on July 1,1975. The Bonneville Power Adrainistration ("Bonneville")

has determined that it is not economical for the Supply System to undertake the licensing and opera-4

- tion of the NPR in order to maintain the Hanford ?roject in operation and has not Aed the Supply System that it would not approve expenditures for such licensing. Accordingly the Hanford Project, as such, will i

cease production of power when the NPR ceases operation.

The Supply System will enter into an agreement with the AEC which discharges the Supply 'jstem's ,

obligations to AEC relative to the operation of the NPR for Hanford Project purposes after June 30,1975.

The Net Billing Agreements (hereinafter described) which will be executed by the 71 public 4 agency and cooperative participants in the Hanford Project contain a provision which approves the use by the Supply System of the turbine-generators and other useful parts of the Hanford Project as a part 1

of the Project. The Exchange Agreements (hereinafter described) which will be executed by the 5 investor-owned utilities which are participants in the Hanford Project contain similar provisions.

The annual cost of the Project includes, as one of its elements, all of the annual costs of the Hanford Project, beginning on July 1,1980, including the debt service on the Hanford Project bonds. De ,

existing Hanford Project exchange agreements will remain in effect. So long as all annual costs of the Hanford Project are paid by the Project, however, no billings are contemplated under those exchange j agreements.

! Supply System's Resolution No.178, which provided for the issuance of Hanford Project Electric l Revenue Bonds, Series of 1963, will remain in effect.

- Pseposal l The Supply System is proposing to construct the Project at the site of its Hanford Project. He l Project, to be known as Washington Public Power Supply System Nuclear Project No.1, will consist of l a modern commercial power reactor to provide steam, a new turtJne generating unit and the two existing i

! turbine generating units included in the Hanford Project. The Supply System has entered into contracts i for certain long-delivery items for the Project and is proceeding with engineering and investigations

! necessary to obtain a construction permit. The Project is scheduled for commercial operation in l September 1980.

t l The Supply System proposes to Snance the Initial Work through issuance of $25,000,000 of Notes i

to mature on December 15, 1975. These Notes will be retired from proceeds of the long-term i bonds expected to be issued to Anance construction of the Project, or from any other funds available to the Supply System. The Supply System expects to issue the long term bonds in several series,

• begening '

shortly after the receipt of a Construction Permit for the Project from the AEC.

30 t

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4.

( Present plans call for the Project to be operated as a separate system with revenues of the Project pledged to such separate system.

Descripelos of the Project The Project will be located about 140 miles cast-southeast of Seattle, Washington, on the Hanford Reservation of the AEC, approximately 30 miles northwest of Richland, Washington and 47 miles cast of Yakima, Washington.

The Project will consist of a Babcock and Wilcox pressurized water nuclear steam supply system rated at 3,600 megawatts thermal, including control system and primari coolant tubes with steam generators, radwaste system, service systems, containment building and other auxi'iary structures. Steam will be fed from this source to a new topping turbine and generator housed in an extension to the existing turbine generator building. Interconnecting piping will tie in to the existing low-pressure turbine complex which will be modified by the addition of extra stages of blades. After driving the turbine, steam will be exhausted into a condenser. Methods of cooling the condenser are still under study. The Project will have a net electrical output of approximately 1,220,000 kilowatts. Power will be delivered from the Project into the BPA transmission grid in the vicinity of the Project.

Permits and Licenses Prior to construction of the Project, the Supply System must obtain site certification by the Wash-ington State Thermal Power Plant Site Evaluation Council and a construction permit by the AEC.

Construction Program The Supply System has employed the 6rm of United Engineers & Constructors, Inc. ("UE&C")

[.

as Architect-Engineer to design and supervise construction of the Project.

The construction schedule as prepared for the Project by UE&C calls for continuation of design of the Project by UE&C and for the design of n;ajor components of the Project by equipment suppliers until receipt of the AEC Construction Permit, expected by the fall of 1974. Work will be accelerated following receipt of the Construction Permit.

Erection of the containment vessel for the reactor system is scheduled to start in July 1975. The reactor vessel is scheduled for delivery in July 1977 and the new topping turbine and generator for delivery m October 1977. Certain of the project components are expected to be available for pre-operational testing in 1978 and 1979. Fuelloading is scheduled for the spring of 1980. Initial criticality is scheduled for the summer of 1980, with commercial operation scheduled for September 1980.

Contractual commitments totaling approximately $82,603,662 have been entered into by the Supply System. The following table shows the progress in awarding major contracts for the Project.

Washington Public Power Supply System Nuclear Project No.1 Contracts Awarded as of Jammary 1,1973 Coeiract Comerect Contractor heas A=and Date Annouet General Electric Topping Turbine Generator and Modifications 11-22-72 $21,990,124 Babcock & Wilcox Nuclear Steam Supply System 11 22-72 50,504,065(1)

Kerr McGee Corp. Initial Core Uranium Supply 12- 6-72 10,109,473 i $82,603,662 (1)InclMes $7,604,065 for fabrication of the fuel for the initial core.

31

1 l

I Imidal Flaeacing Prograan The proceeds of the Notes are designed to provide funds necessary to meet the foregoing construction schedule to the winter of 1974-1975. The Architect-Engineer estimates that the AEC Construction Permit will be issued by that time. Interest on the Notes will be capitalized to maturity.

Tl.: estimated disposition of the proceeds of the $25,000,000 of Notes based on an assumed interest rate of 4.25% is given in the following table.

Estlanased rip"'r of Proceeds

$25,000,000 Notes Initial Construction Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,000,000 Engineering and Construction Management (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,183,000 Escalation and Contingencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,500,000 SalesTax............................................................. 50,000 Supply System's Direct Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,253,000 Note Discount and Other Financing Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 386,000 Capitalized Inte rest ( 2 ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,010,417 G ross Cos ts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $26,382,417 Less: Inv e stme n t Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.382.417 Principal Amount of Note Issue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $25,000,000 (1) Includes both payment of that portion of the principal of and interest on a $1.500,000 note issue which was used for this purpose and repayment of any temporary loans from other funds of the Supply System ued for this purpose.

(2) Assuming an interest rate of 4.25%.

The Project Agreement between the Supply System and Bonneville provides that the Project shall terminate when the Supply System determines it is unable to construct, operate or proceed as owner of the Project due to licensing, financing or operating conditions or other causes which are beyond its control. In the event that the Supply System terminates the Project, the Net Billing Agreements will provide the mechanism by which the Supply System's obligations will be discharged. We estimate that under current Bonneville rates there would be in excess of 555,000,000 of net billing capability available to the Participants during the calendar year 1975.

Permanent Finamelag Progress The current Supply System program anticipates that permanent financing will be initiated in the winter of 1974-1975 through the issuance of long-term bonds to be retired from revenues of the Project.

These bonds are proposed to be issued to provide funds to retire the Notes and to pay the balance of the costs associated with the construction of the Project and placing it into operation. The Supply System

, proposes to issue the bonds in several series.

t Construction costs have been estimated by UE&C to total $415,300,000 including engineering and i construction management and escalation and contingencies to a 1980 operating date but exclusive of nuclear fuel, sales tax, owner's costs, finandng costs and interest during construction.

l The Supply System has entered into a contract with the AEC which provides for payment of l $5,400,000 for the AEC's costs of deactivating the NPR. The Supply System proposes to make the j payment from funds available from the issuance of revenue bonds or from other funds if available.

I The current program provides that funds necessary to provide one-half year's interest in a reserve account in the bond fund, working capital, an initial reserve and contingency fund and a contingency 32

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( fuel fund will be funded under the Net Billing Agreements in advance of the expected date of com-

. mercial operation.

Based on the foregoing and further assuming permanent financing through the sale of four issues of bonds of approximately equal size, the first of which is assumed to be sold about January 1,1975, the estimated total amount of bonds to be issued to fir.ance the Project, assuming a 6% interest rate for the bonds, is shown in the following tabulation:

Estimeded Permanent Finameing Required (1)

WASHINGTON PUBLIC POWER SUPPLY SYSTEM Noelear Project No.1 Structures and Improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 79,500,000 Reactor Plant Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115,200,000 Turbo Generating Plant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49,500,000 Accessory Electric Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,800,000 Miscellaneous Power Plant Equipment . . . . . . . . . . . . . . . . . . . . . 4,900,000 Station Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000,000 Other ............................................... 4,000.000 Subtotal (2) .................................. 5277,900,000 Escalation and Contingencies (2) . . . . . . . . . . . . . . . . . . . . . . . . . 113,350,000 Nucle ar Fuel ( 3 ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,168,000 Sales Tax ( 2 ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,221,000 Engineering and Construction Manat . rent (2) . . . . . . . . . . . . . . . 24,050,000 Owner's Direct Cost (3) . . . . . . . . ...................... 21,932,000

(' Payment to AEC(4) . . . . . . . . ........................ 5,400,000 Special Consultants (2) ........ ........................ 2,000,000 Bond Discount and Other Financ'mg Expenses (5) . . . . . . . . . . . . . 15,559,000 Capitalized Interest During Construction (6) . . . . . . . . . . . . . . . . 122,997,000 Gross Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . 5637,577,000 Less: Estimated Income from Temporary Investments (7) . . . . . . 30.577.000 Net Require m e nt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $607,000.000 (1) Based on 6% interest rate on the Bonds.

(2) Based on estimates by United Engineers & Constructors, Inc.

(3) As estimated by the System excludes sales tax on nuclear fuel.

(4) A portion of this payment may be obtained from other funds.

(5) Includes costs of issuance of the Notes.

. (6) Includes interest oc the Notes at 4.23%.

(7) Includes investment income from temporary investment of the proceeds of the Notes.

In addition to the foregoing amounts to be obtained through issuance of bonds, present planning con-templates that amounts to be paid by the Participants during the period beginning January 1,1980 and extending to September 1,1980 under the Net Billing Agreements will be as follows:

Reserve Account in Bond Fund . . . . . . . . . . . . . . . . . . . . . . . . . $18,210,000 Working Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000,000 l Reserve and Contingency Fund . . . . . . . . . . . . . . . . . . . . . . . . 3,000,000 l Contingency Fuel Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,000.000(1)

Total.......................................... $31,210.000

!. (1) ing of annual fuel costs in the event of a critical period of power supply. Estimated amount 33

Project Output The Project is estimated by UE&C to have a nominal net peaking capability of 1,220,000 kilowatts.

. Operating at an 85% annual plant factor,it would be capable of producing about 9,000,000,000 kilowatt-hours annually. During a critical period of power supply in the Pacific Northwest caused by water shortage,it is expected that the Project would be called upon to produce the full amount of energy that it is capable of producing. During other periods, however, there will be times when surplus water will be available to generate power at existing hydroelectric projects thereby permitting a reduction in the total amount of energy produced at the thermal electric projects to be constructed under the Hydro.

Thermal Power Program, including the Project.

Studies prepared by Bonneville indicate that the average output required from the Project will be in the order of 750,000 to 850,000 average kilowatts. Annual generation would therefore average between 6,500,000,000 and 7,500,000,000 kilowatt. hours.

Annual Cost De proposed bond resolution for the Project provides that the Supply System will make payments to the Hanford Project revenue fund in amounts sufficient to enable the Supply System to pay from the Hanford Project revenue fund all of the obligations of the Supply System payable from moneys in such fund beginning July 1,1980, or a later date if the AEC has not discontinued dual purpose operation of the NPR by that date.

Present plans call for the AEC to discontinue such dual purpose operation on June 30.1975, substantially before the 1980 date.

The amounts to be paid by the Supply System to the Hanford Project revenue fund are estimated to average approximately $4,056.000 per year for the period July 1,1980 through June 30,1990 and approximately $1,101,000 per year for the period July 1,1990 through June 30. 1996. No payments are expected after that date.

Preliminary estimates of the remainder of the annual costs have been prepared based on an assumed interest rate of 6% on the bonds proposed to be issued to finance the Project, and further based on 1972 costs of labor and materials escalated to 1981 1982 cost levels, adjusted to eliminate special costs due to start.up.

Assuming generation of 6,500,000,000 kilowatt-hours annually, the estimated average remainder of annual costs of the Project are as follows:

Fixed Costs:

Interest and Amortization (l) . ........ ........... $41,867,000 Payments to Reserve and Contingency Fund . . . . . . . . . . . . . . 4,187,000 Insurance ......................................... 2,000,000 Operation and Maintenance (Fixed) . . . . . . . . ........... 4,369,000 Administrative and General Expenses . . . . . . . . . . . . . . . . . . . 1,377,000 Subtotal .................................. $53,800,000 Less: Surplus of Prior Year's Payment to Reserve and Contin-gency Fund ( 2 ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.987,000 Total Fixed Costs . . . . . . . . . . . . . . . . . . . . . . $50,813,000 Variable Costs:

Fu e l Cos t . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,476,000 Operation and Maintenance (Variable) . . . . . . . . . . . . . . . . . 650,000 Taxes ............................ ............... 1,300,000 Total Variable Costs . . . . . . . . . . . . . . . . . . . . $ 10,426,000 Total Remainder of Annual Costs . . . . . . . . . . . . . . . . . . . . . . . . . . $61,239,000 Less: Interest Earnings on Reserve Funds (3) . . . . . . . .... 1,552,000 Net Remainder of Annual Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . $59,687,000 (1) Based on level debt service and a 35 year amortization.

, (2) Computed as fol;ows:

Payment to Reserve and Continsency Fund . . . . . . . . . . . . . . . . . . . . . . . . . . $4.187.000 l Less

Amount Required for Renewals. Replacements and Additions ...... 1,200,000 Net Surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . _ _ $2.987.000 (3) Computed on the basis of 5.5% interest earnings.

34

g Sale of Power The output of the Project will be purchased by 104 statutory preference customers of Bonneville (the " Participants") and by 5 investor-owwd utilities (the " Companies"). Prior to the sale of the Notes each of the 104 Participants, the Supply System and Bonneville will execute Net Billing Agreements which will provide for the purchase of specified shares of the output of the Project by each Participant. Con-currently the 5 Companies, the Supply System and Bonneville will execute Exchange Agreements pro-viding for the purchase of the remaining shares of the output of the Project. The percentage shares of the output of the Project purchased by each class of Participant (Utility Districts, Municipalities and Cooperatives) and by the Companies for the period 1980 to 2015 are shown in the following table:

Feeeeedage shares itse to 1996 1996so 2015(I)

Utility Districts . . . . . . . . . . . . . . . . . . . . . . . . . . 44.030* 64.869 Municipalities . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.080* 24.145 Cooperatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.420* 10.986 Subtotal ................... 67.530 100.000 Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32.470 -

Total . . . . . . . . . . . . . . . . . . . . . . 100.000 100.000

• Averages for period.

(!) Estimated final matmity of long-term bonds.

Net Binlag Agreements The Net Billing Agreements provide that the Participants pay the Supply System the total annual cost of the Project less the amounts received from the Companies under their Exchange Agreements. In-( cluded in the annual costs are the payments to the Hanford Project. The Participants, in turn, assign their interest in the output of the Project to Bonneville. Bonneville pays the Participants, in the form of credits on their power bills from Bonneville, amounts equal to the Participants' payments to the Supply System. Assuming generation of 6,500,000,000 kilowatt-hours annually, the estimated average annual payments by the Participants to the Supply System for the periods 1980-1990,1990-1996 and 1996 2015 based on 1972 cost of labor and materials escalated to 1981-1982 cost !cvels are shown on the following table:

Estimated Average AmasalCost(1)

, WASHINGTON PUBLIC POWER SUPPLY SYSTEM Nuclear Project No.1 Period 1986 1990 1990 1996 1996 2015 Payments to Hanford Project . . . . . . . 5 4,056,000 $ 1,101,000 $ -

Remainder of Net Annual Costs ... . 59.687,000 59,687,000 59,687,000

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Total Net Annual Costs . . . . . . . $63,743,000 $60,788,000 $59,687,000 Net AnnualCosts per Kwh (6,500,000,000 Kwh)(2) . . . . . . . . 9.81 mills 9.35 mills 9.18 mills Payments from Companies . . . . . . . . . . $ 9,610,000 $22,945,000 $ -

Balance from Participants . . . . . . . . . . $54,133,000 $37,843,000 $59,687,000 (1) Based on level debt service and a 35. year amortization.

(2) Net annual cost per kwh assuming annual generation of 9,000,000,000 kwh is estimated to average as follows:

1980 1990. . . . . . . . . . . . . . 7.53 mills l- 1990 1996. . . . . . . . . . . . . . 7.20 mills 1996 2015. . . . . . . . . . . . . . 7.08 mills 35

0 Eschunge Ayeoments The E;.ehange Agreements provide that the Companies will each purchase a 6.494% share of Project

. Capability beginning July 1,1980 and ending June 30, 1996.' Such share is assigned to Bonneville in exchange for which Bonneville agrees to make available to each Company 80,000 kilowatts of capacity and 68,000 average kilowatts of energy (595,680,000 kilowatt-hours annually).

The Agreements provide that each Company will pay the Supply System for its share of Project Capability during the period July 1,1980 through June 30, 1990 an amount determined by applying Bonneville's wholesale rates then in effect to the capacity and energy made asailable to each Company. i We estimate that payments to be made by each Company annually during the period July 1,1980 i

through June 30,1990 will be $1,922,000 or a total of $9,610,000 for all 5 Companies, using a projected 40% increase in Bonneville rates prior to 1980. The Bonneville Administrator has stated that the an-ticipated increase based on current estimates will be approximately 50% by 1980.

i For the period beginning July 1,1990 agad extending through June 30, 1996 each Company will pay for its share based on the Supply System costs associated with the Project. We estimate that annual ,

payments during this period will average $4,589,000 for each Company or a total of $22,945,000 based on estimated 1982 levels of labor and material costs.

Project Agresument Prior to the sale of the Notes, the Supply Gstem and Bonneville will enter into a Project Agreement which, among other things, will provide standards for the design, construction and operation of the Project.

An abbreviated summary of some of the provisions of the Project Agreement is included in the Official  ;

Statement to which this letter will be attached. Reference should be made to the full text of the i

Agreement for allofits provisions.

) Concissions Based on our studies and analyses of the Supply System ptoposal to construct a nuclear-fueled steam-electric generating project of approximately 1,220,000 kw in the vicinity of Richland, Washington, we are of the opinion that:

1. The output of the Project is required to meet the load growth of the utility systems of the Pacific Northwest under the Hydro-Thermal Power Program and can readily be absorbed by the Participants and the Companies when the Project is scheduled for initial operation.

! 2. The Supply System's program for financing the Initial Work is sound 'and provides a sound basis for proceeding with the Project prior to permanent financing.

3. The Net Billing Agreements to be executed by the Supply System, each Participant and Bonneville and the Exchange Agreements to be executed by the Supply System, each Company'and ,

Bonneville together with the Project Agreement to be executed by the Supply System . Td Bonneville provide a sound foundation for proceedmg with the Project.

l 4. The estimated cost of the output of the Proje;t is reasonable and comparable to costs

. expected from similiar projects to be developed within the same time frame.

Respectfully submitted, R. W. BacK AND ASSOCIATES l

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(' TnWe 1 WASHINGTON PUBLIC POWER SUPPLY SYSTEM

[ NUCLEAR PROJECT NO.1 PARTICIPANTS AND COMPANIES Seassaary of Flaandal Statistical Data for 1971 Distrtets(t) Municipattttee Cooperettves Companies Total STAnsDCS

, Customers:

r Re side ntial . . . . . . . . . . . . . . . . . . . . . . . . . . 331,663 406,813 111,950 1,366.009 2.216,4.35 Total............................... 383,541 457,034 134J15 1,557,901 2.532,991

( Kilowatt-hout Sales (000) . . . . . . . . . . . . . . . . 13.218,496 14.171.585 2,955,515 42,234,306 72,579,902 Kilowatt-hour Purchases (000):

Bonneville (Hanford Project Exchange) . . I,648,534 1,145,272 431,559 2,109,709 ' 335.074 Bonneville .. ....... ...... ... ...  !!.577,342 4,412.550 2.924.321 9,690.575 28.504,788 Othe: ............................... 759,403 497,147 23.718 18,047,104 19,327.372 Total Kilowatt-hour Purchases 6 (000) .................... 13,985,279 6,054.969 3,379,598 29,847.388 53.267,234 j Kilowatt. hours Generated (000) . . . . . . . . . . . . 3,761 9,312.154 4.484 18,291,674 27,612,073 Total Kilowatt-hour Requirement (000) .................... 13.989.040 15,367,123 3,384,082 48,139,062 80.879,307 E

Peak Demands-Kilowatts . . . . . . . . . . . . . . . . . 2,823,302 2,959,174 1,238,416 6,926.100 13,946,992 INCOME AND DPERAUNo STATEMENT i Income:

Total Operating Revenues ......... .. $ 99,755,125 $116,772,495 $ 36,980.363 $ 480.989,649 $ 734,497,632 Other Income (Non-operating) .... ... 2.823.717 2,828.175 580,590 16.291,232 22.523,814 Total Income . . . . . . . . . . . . . . . 3102,578,842 $119,600,670 $ 37,561,053 $ 497,280,881 $ 737,021,446

. Operating Exrenses:

. Purchased Power:

Bonneville (Hanford Project Exchange) $ 5.375,159 $ 2,941,376 $ 1,384,892 3 4,364,718 $ 14.066.145 Bonneville . . . . . . . . . . . . . . . . . . . . . .. 34,277,608 12.730,475 9,106,547 20,606,721 76.72!.351 h 'j Other ............ ..... ...... .. 2,334,858 2,693,688 211.099 54,035,003 59.274,648 E

Total Purchased Power Expense $ 41,987,625 $ 18.365,539 5 10,702,538 $ 79.006.442 5 150.062,144 Generating Expense . . . . . . . . . . . . . . . . . . 94,278 6.956,023 20,127 16,176,449 23.246,887 Total Power 'upply Expense ... $ 42,081,903 $ 25,321,562 $ 10,722.675 $ 95.182,891 5 173,309,031 Other Expense (it ' din 2 Depreciation

, and Taxes . . . . . . . ....... . 37,108,491 69,153,202 19,765,211 262.961,657 388.988,561 p Total Operating Expense . . . . . . S 79,190,394 3 94,474,764 5 30,487,886 $ 358,144,548 $ 562,297,592 CONDENSED bas.ANCE SxEET Assets:

'.I 4 Net Utility Plant . . . . . . . . . . . . . . . . . . . . . 3302,394,916 $703,709,314 $163,603.331 $2,444.991,984 $3,614,699.545 Other Property and InvestmeE!s . . . . . . . . 30.911,428 22,980,761 8.598,201 55,236,378 117,726,768

=

Curreat Assets . . . . . . . . . . . . . . . . . ... 43,021.819 62,471,873 15,694,760 112,413,093 233.601,545 De ferred De bits . . . . . . . . . . . . . . . . . . . . . 8,154,497 11.997,672 1,014,410 26,728,216 47,894,795 Total Assets . . . . . . . . . . . . . . . 3384,482,660 $801.159,620 $183,910,702 $2,639,369,671 $4,013,922,653

_ Imag-term Debt .................... 1125,992,238 $423.148,884 $140,146,798 $1,405.940.065 $2,095.227,985

, Current Liabilities . . . . . . . . . . . . . . . . . . . 21,081,885 27,426,476 4,144.995 169,656 584 222,309.940 Deferred Credits . . . . . . . . . . . . . . . . . . 3,629,726 894,619 604,636 12,763,507 17.892,488 Reserve s . . . . . . . . . . . . . . . . . . . . . . . . . . 1,149,329 6.792,614 76,798 58,102,147 66,120,887 Contributions in Aid of Construction . . .. 6,883,792 10,646,620 5.170,339 27,284,591 49.985.342 Retained Earnings (Capital Stock). . . . . . . 225,745,691 332.250,407 38,767.136 965,622,777 1.562.386.011 Total Liabilities . . . . . . . . . . . . . $384,482,660 $801,159,620 $188,910,702 $2,639,369,671 $4,013,922.653 i (1) Public Utility Districts, Peoples Utility Districts, and 2 Irrigation Districts.

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38

( EXEBir M Foau 0F NET BELING AGREEMENT Contract No. l

)

1 i

WASHINGTON PUBLIC POWER SUPPLY SYSTEM NUCLEAR PROJECT NO.1 I AGREEMEhT executed by the UNTTED STATES OF AMERICA

t. DEPARTMENT OF THE INTERIOR I

acting by and through the BONNEVILLE POWER ADMINISTRATOR and WASHINGTON PUBLIC POWER SUPPLY SYSTEM and (11IE PARTICIPANT)

(Nd Eming Agreenes0 .

39

1 INDEX TO SECI10NS PAon StenoN

1. Definition and Explanation of Terms . . . . . . . . . . . . . . . . . . . . . . . 42

2. Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

3. Term of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

4. Financing, Design, Construction, Operation and Maintenance of the Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

5. Sale, Purchase, and Assignment of Participant's Share . . . . . . . . . . 45

6. Payment by the Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

7. Payment by the Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

8. Scheduling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

9. Participant's right to Use Project Capability . . . . . . . . . . . . . . . . . . 48

10. Termination Settlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

11. Provisions Relating to Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

12. Obligations in the Event of Default . . . . . . . . . . . . . . . . . . . . . . . . 50

13. Sources of Participant's Payments . . . . . . . . . . . . . . . . . . . . . . . . . 50

14. Modification and Uniformity of Agreement . . . . . . . . . . . . . . . . . . 50

15. Hanford Exchange Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

16. Assignment of Agreement .............................. 51

17. Approval by Rural Electrification Administrator . . . . . . . . . . . . . 51

18. Participants' Review Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

19. Applicability of Other Instruments . . . . . . . . . . . . . . . . . . . . . . . . 53 Exhibit A (Table of Participants and Participant's Percentage) . . . . . 55 Exhibit B (Project Characteristics) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 Exhibit C (Provisions Required by Statute or Executive Order) . . . . . . 62 l

40

,o f[ . This AGREEMENT, executed ,1973, by the UNITED STATES OF AMERICA (here-inafter called "the Gcvernment"), Department of the Interior, acting by and through the BoNNEVILLE power ADMINISTRATOR (hereinafter called "the Admmistrator"), and WASHINGTON PusLIc power SUFFLY SYSTEM (hereinafter called " Supply System"), a municipal corporation of the State of Washing-too, and (Participant's Name) a corporation of the State of (Participant),

WITNESSETH:

WHEREAs Supply System has constructed the Hanford Project which includes Generating Facilities with an electrical capability of 860 megawatts that are operated in conjunction with byproduct steam from the New Production Reactor (NPR) of the Atomic Energy Committion (AEC) on the Hanford Reservation; and WHEREAS the AEC has notified Supply System of its intention to discontinue dual purpose operation of the NPR and Supply System, the Administrator and the Participants, being all the parties to the Hanford Exchange Agreements, have agreed that Supply System shall construct a nuclear steam supply facility and additional generating facilities which can be used in conjunction with the Generating Facilities; and WHEREAs Supply System, the Administrator and 76 utility participants have executed Hanford

) Exchange Agreements which provide for the purchase of Project Output from the Hanford Project by the Participants and the exchange of such Project Output with the Admfnntrator for firm electric power and energy;and

/ WHEREAS Supply System proposes to design, finance, Construct, operate and maintain the Project; and-WHEREAS the Participant proposes ta purchase the Participant's Share from Supply System for assignment to the Administrator hereunder, and the Administrator proposes to acquire such Participant's Share; and WHEREAs Supply System and the Participant have each determined that the sale by Supply System -

to the Participant of the Participant's Share and assignment thereof to the Admini<trator as herein pro-vided will be beneficial to it by reducing the cost of and increasing the amounts of firm power and energy which will be available to serve its members or customers in the future; and WHEREAs the Adtninnetrator has determined that the acquisition of the Participant's Share as herein provided will assist in attainmg the objectives of the Bonneville Project Act and other statutes which pertain to the disposition of electric power and energy from Government projects in the Pacific North-west by enabling th: Government to make optimum use of the Federal Columbia River Power System, and that the integration of the capability of the Project with the generating resources of the Federal Columbia River Power System as provided herein will enable the Admi=*rator to make available addi-tional firm power and energy to meet the needs of his customers; and WHEREAs the construction of the Project is a part of the Hydro Thermal Power Program for the Pacific Northwest and this agreement is one of a series of agreements implementing such program; and WHERIAs the Administrator will pool electric power and eaergy acquired hereunder with other electric power available to the Administrator from the Federal Columbia River Power System so that any costs or losses associated with acquiring such electric power and energy will be borne by the Administra-tor's ratepayers through rate adjustments if necessary; and 41 i . ...-_- , , - . - . - - - - - - - - - - - -- - - - - ' -~ "-- - "-~-' ~ ' ~ - - ' " ~ ~ '

f l .WHEREAs the Administrator and the Participant are parties to agreements which require payments by the Participant to the Administrator which may be used to offset payments by the Administrator to l the Participant hereunder under a net billing procedure; and i

WHEREAs Supply System and the Administrator propose to enter into the Project Agreement sirnul-taneously with this agreement which will provide among other things for relationships between Supply System and the Administrator with respect to Project construction, operation, maintenance and budgets; and I

WHEREAs the Administrator and Supply System propose to enter into agreements with the other i I

Participants containing terms and conditions substantially identical to those specified herein; and i

WHEREAS the Administrator, Supply System, The Montana Power Company, Pacific Power & Light Company, Ponland General Electric Company, Puget Sound Power & Light Company, and The Wash- j iagton Water Power Company expect to enter into Project Exchange Agreements simultaneously with this agreement, which among other things provide for the purchase of Project Capability from the Project and the exchange of such Project Capability for firm power from the Admmi*trator; and WHEREAS Supply System is organized under the laws of the State of Washington (Rev. Code of Washington, Ch. 43.52) and is authorized by law to construct, acquire and operate works, plants, and facilities for the generation and/or transmission of electric power and energy and to enter into contracts with the Administrator and public and private organizations for the disposition and distribution of electric power and energy produced thereby; and I

WHEREAs the Administrator is authorized pursuant to law to dispose of electric power and energy generated at various federal hydroelectric projects in the Pacific Northwest and to enter into related agreements; Now THEnzroms, the parties hereto mutually agree as follows:

1. Definition and Explanation of Terms.

! (a) " Annual Budget" means the budget adopted by Supply System not less than 45 days prior to the beginning of each Contract Year which itemizes the projected costs of the Project applicable to such Contract Year, or, in the case of an amended Annual Bt:dget, applicable to the remainder of such Contract Year. The Annual Budget, as amended from time to time, shall make provision for all such Supply System's costs, including (1) all obligations of Supply System incurred with respect to the Hanford Project, including its obligations under Supply System Resolution No.

178 and the Bond Resolution, and (2) accruals and amortizations, resulting from the ownerst.ip, operation (including cost of fuel), and maintenance of the Project and repairs, renewals, replace-ments, and additions to the Project, including, but not limited to, the amounts which Supply System is required under the Bond Resolution to pay in each Contract Year into the various funds

! provided for in the Bond Resolution for debt service and all other purposes and shall include the

- source of funds proposed to be used; provided, however, that the Annual Budget for any portion of a Contract Year prior to the Date of Commercial Operation or September 1,1980, whichever occurs first, shall include only such amounts as may be agreed upon by Supply System and the Administrator.

i All taxes imposed and required by law to be paid, and which are due and payable in a Contract Year, shall be included in the Annual Budget for that Contract Year as a Project Cost. To the  ;

extent Supply System is permitted by law to negotiate for payments in lieu of taxes or other negoti-(

ated payments to state or local taxing entities, the Annual Budget shall also include the amounts I

of such negotiated payments; provided, however, that Supply System shall not agree to such a negotiated payment if in any Contract Year the sum of such negotiated payments to such taxing

42 l

l' . , . - . _ . - , , - - - - _ . - - - . - , - - . - - - - - - - . . . - - - - _ - - - . - _ . . . . - . - _ - -

( entities and taxes imposed by law by such taxing entities would exceed the total amount of ad valorem taxes that Supply System would have paid in that year to such taxing entities if the Project or portion thereof, within the boundaries of each such taxing entity, were subject to ad valorem taxes and its valuation for tax purposes were added to the valuation of the property subject to ad valorem taxes by such taxing entity, but with its millage rate reduced so that the amount of ad valorem taxes raised would be unchanged.

(b) " Billing Statement" means the written statement prepared by Supply System that shows the amount to be paid to Supply System by the Participant for the Participant's Share for a Con.

tract Year or, in the case of an amended Billing Statement, for the remainder of such Contract Year. Such amount shall be determined as to the Participant by multiplying the amount of the Annual Budget or the amended Annual Budget, as the case may be, less any other funds (including but not limited to amounts payable under the Project Exchange Agreements) which shall be specified in the Annual Budget as being payable from sources other than the payments to be made under the Net Billing Agreements, by the Participant's Percentage. At the end of each Contract Year any amount over or under billed during such year will be reflected in the Billing Statement for the following Contract Year.

(c) " Bonds" means any bond, bonds or other evidences of indebtedness issued in connection with the Project pursuant to the Bond Resolution (1) to finance or refinance Supply System's costs associated with planning, designing, financing, acquiring and constructing the Project pursuant to the Bond Resolution, and (2) for any other purpose related to the Project authorized thereby.

(d) " Bond Resolution" means the resolution or resolutions adopted or supplemented by Supply System, as the same may 1,e amended or supplemented, to authorize the Bonds.

(- (e) " Contract Year" (1) means the period commencing on the Date of Commercial Opera-tion, or on January 1,1980, whichever occurs first, and ending at 12 p.m. on the following June 30, and (2) thereafter means the 12-month period commencing each year at 12 p.m. on June 30, except that the last Contract Year shkil end on the date of termination of this Agreement.

(f) "Date of Commercial Operation" means the date fixed pursuant to section 1(f) of the Project Agreement.

(g) " Generating Facilities" means the Hanford Project pow:rhouse with two turbine generator units with a combined nameplate rating of 860 megawatts, related auxiliary equipment, trans-formation and transmission facilities.

(h) "Hanford Exchange Agreements" means the Exchange Agreements (Contracts No.

14-03-35345 through 14-03-35363 and 14-03-35569 through 14-03-35625, inclusively) executed by 76 utility participants, Supply System and the Administrator providing for the purchase of Project Output from the Hanford Project by the Participants and the exchange of such Project Output with tne Administrator for firm power and energy.

(i) "Hanford Project" means the works, plant and facilities constructed by Supply System for the generation and transmission of electric power and energy in conjunction with the Atomic Energy Commission's New Production Reactor pursuant to Supply System's Resolution No.178.

(j) " Net Billing Agreements" means this agreement and all other agreements for the Project similar to this agreement entered into by Supply System, the Administrator and each of the Partici-pants (Contracts No. 14-03-39217 through 14-03-39320, inclui e).

(k) " Participants" means those entities which are speci6ed in Exhibit A or which become assignees of all or part of a Participant's Share pursuant to sections 7(b) or 16.

43

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. (1) "Pzrticipant's Percentage" means the decimil fracti:n for the Participant speciSed in _

Exhibit A adjusted pro rata for increases or decreases in the Participant's Share under the proviso in subsection (m) below. .

(m) ." Participant's Share" means the decimal fraction share of Project Capability purchased by the Participant hereunder determined as follows:

(1) During the period beginning on the date of execution of this agreement and ending at 12 p.m. on June 30,1996, such fraction shall be the Participant's Percentage specified in Exhibit A multiplied by 0.67530.

(2) During the period beginning at 12 p.m. on June 30, 1996, and continuing for the remainder of the term hereof, the Participant's Share shall be the Participant's Percentage speci6ed in Exhibit A;-

provided, however, that the decimal fractions determined in (1) or (2) above shall (1) during any period in which a decimal fraction share is assigned to the Participant pursuant to sections 7(b),7(f),

.or 12 hereof or pursuant to section 7(b) in the other Net Billing Agreements, be increased by the decimal fraction share or shares so assigned, and (2) be decreased by any reductions under section 12 hereof or under an assignment by the Participant under section 7(b) hereof during any period in which such reductions or assignments are in effect.

(n) " Project" means the nuclear generating plant and related property as described in Exhibit B. Exhibit B shall be revised from time to time by mutual agreement of Supply System and the Administrator, after consultation with the Participant, but in any event shall conform to the descrip-j tion of the Project in the Bond Resolution which authorizes the issuance of Bonds in an amount ,

[ sufficient to pay the costs of acquiring and constructing the Project.

~

(o) " Project Agreement" means the agreement for financing construction, ownership and operation of the Project, as the same may be amended, executed by Supply System and the Admmk-trator (Contract No. 14-03-39211).

f (p) " Project Capability" means the actual electrical generating capability, if any, of the Project at any particular time (iricluding times when the Project is not operable or operating or the operation thereof is suspended, interrupted, interfered with, reduced or curtailed, in each case in whole or in part), less Project station use and losses.

(q) " Project Consultant" means an individual or firm, of national reputation having demon-i strated expertise in the field of the matter or item referred to it, appointed among other things, for the resolution of a differecce regarding a matter or item referred by Supply System. A different i Project Consultant may be appointed for each matter or item referred.

(r) " Project Exchange Agreements" means the agreements entered into by Supply System, the Administrator and each of The Montana Power Company, Pacific Power & Light Company, Portland General Electric Company, Puget Sound Power & Light Company, and The Washington Water Power Company (Contracts No. 14-03-39212 through No. 14-03-39216, inclusive).

(s) " Prudent Utility Practice" at a particular time means any of the practices, methods, and I

acts which, in the exercise of reasonable judgment in light of the facts (including but not limited to the practices, methods and acts engaged in or approved by a significant portion of the electrical utility industry prior thereto) known at the time the decision was made, would have been expected to accomplish the desired result at the lowest reasonable cost consistent with reliability, safety and expedition. - Prudent Utility Practice shall apply not only to functional parts of the Project but also to appropriate structures, landscaping, painting, signs, lighting, other facilities and public relations programs reasonably designed to promote public enjoyment, understanding and acceptance of the .}

44

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act, to the exclusion of all others, e but rather to be a s to the optimum practice, method or In evaluating whether any matter conforms to Pr d pectrum of possiNe practices, methods or ac Consultant shall take intou ent account (1) the the Utility Practice, factparties th c and any bilities thereof and (2)atthe _

Supply objective System is ato integrate municipal ngton with the statutory duties and responsi-tho corporatio resources resources of the of that Federal system taken as Columbiaea entirewhole Project andRiver Power with to Capability S the gener that system. Any practice, method orachieve ,

act efficient and economi1 1 to be Prudent Utility Practice shall be de which pursuant to the Project Agreement is de emed to be Prudent Utility Practice hereunder .

m ned this agreement. Supply System and the Parti i2. Exhibits.

la Exhibit C.

cpant shall each be the "s used Contractor i

as provided in section 10(c) and except as to accrue date the Project Agreement terminates, e ective upon execution and delivery and e obligations and liabilities, shall terminate on

4. Financing, Design, Construction, Operation 4

best efforts to arrange for ,

andfinancing, Maintenance of reement and Prudent Utility Practice, design the Project. congood em, in Supply Syst shall u fait se its

5. Sale, Purchase and sAssignment are.

of Participant' o ect. Shstruc (a) Sale of Participant's Share. Supply Syste chases, the Participant Participant's to Supply Systems for Share. the The purchase Participant' Sh -

pricm here 1

ing Statement. The Participant shall e to be paid for each Contract Year by the are shall be tions 5,6 and 10, whether er not the Project imake the payments to -

Ing the suspension, interruption, interference red under sec-s completed, performanceoperable n- or operat conditioned upon the or nonperformans i

any other Participant under this or ceanybyother agreemSystem Supply or the Adm ent or instrument.

and the Adadaistrator hereby accepts the assignm(b) e of such assignment, the Administrator of shall provid credits specified in section 7 andent the 10 inParticipant's Share. In section th Project is completed, operable ore operating to the Participant and the payments, offsets and forence, reduction or curtailment e manner of the Project provided therein, whether or no,t the notwithstanding the suspension, interruption int as specl8cally provided output. oin Such section payments,7, and ,

offsets, shall -

nottobm or credits be formance by Supply System, the Participant or orinstrument. e conditioned upon the performanc any Participant under this or any other agreeme

6. Payment by the Participant.

(a) Not less than 45 days prior to each C

• such Contract Administrator tract Year. a Billing Year is amended, Statement showing the Supply System shallot tract Y amount to be paid by the Participant f -

45

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

1 e

Whenever during a Contract Year the Participant's Percentage changes from that und in  !

preparing the Billing Statement for that Contract Year an amended Billing State. ment shall be prepared for the remainder of that Contract Year reflecting such change and shall be submitted to the Participant and the Administrator.

(b) De Participant shall pay to Supply System each Contract Year the amount specified in the Billing Statement submitted under subsection (a) above. Such payments shall be made as Wad hgjoW.

De Participant shall pay to Supply System each month in a Contract Year the amount by

' which the net billing credits and cash payments theretofore received from the Admimerator by the Participant for that Contract Year under section 7 exceed the sum of the Participant's previous payments to Supply System for that Contract Year until the amount of the Billing Statement has been paid; provided, however, that in any event the Participant shall pay by the end of the last month in that Contract Year the amount by which the amount in the Billing Statement exceeds the total of the monthly amounts previously paid to Supply System by the Participant in such Contract Year.

Each such payment shall be made on or before the thirtieth day after (1) the date on each of the Administrator's bills to the Participar2t which reflects a credit to the Particpant for such Contract Year pursuant to section 7(a) or (2) the date that payment is received from the Admin-istrator pursuant to section 7(c). Amouna due and not paid by the Participant on or before the close of business of such thirtieth day shall bear an additional charge of two percent of the unpaid j amount. Thereafter, a further charge of one-half percent of the initial amount remaining unpaid shall be added on the last day of each succeeding 30-day period until the amount due is paid in full.

Remittances received by mail will be accepted without a'ssessment of the delayed payment charges referred to above provided the postmark indicates the payment was mailed on or before the thirtieth 3 l day af:er the date of the bill. If the thirtieth day after the date of the bill is a Sunday or other non- /

business day of the Participant, the next following business day shall be the last day on which payment i may be mailed without addition of the delayed payment charge.

(c) In the event that Supply System bears any cost under section 10(e) of the Project Agree-l ment the Participant will pay to Supply System an amount equal to the amount of such cost

! multiplied by the Participant's Percentage, in addition to the payments specified in section 6(b) hereof.

Payments under this section 6(c) shall be made within 30 days from the date of mailing of the statement stating the amount of the payments.

7. Payment by the Administrator.

(a) For each Contract Year, the Administrator shall pay to the Participant an amount equal to that set forth in the Billing Statement for that Contract Year. The Administrator's payments shall be effected by means of credits against the Administrator's monthly bilhngs to the Partmpant under the Participant's Bonneville Contracts, as follows:

l (1) For Contract Years in which this is the only agreement requirin: "e Adminisaator to make payments to the Participant: In the month precedmg each such Contract Year the Administrator shall allow a billing credit in the form of an offset to the Participant in the full amount of the Administrator's billings in that month under the Participant's Bonneville Con-tracts. A billing credit computed in the same manner shall be allowed in each of the s"~Wg months (except the last) in that Contract Year until the full amount owed by the Admmidrator for that Contract Year has been offset against the Admmistrator's billings to the Participant.

(2) For Contract Years in which there are two or more agreements requiring the Admin-istrator to make payments to the Panicipant: In the month preceding eacn such Contract  ;

Year and in each of the succeedag months (except the last) in that Contract Year the Partici-46

e pant's billing credits under this agreement shall be offset in the manner specified in (1) above against the payments due from the Administrator under all agreements of the Participant requiring the Administrator to make payments to the Participant, in the proportion that the amount specified in the Billing Statement bears to the sum of the amounts to be paid by the Administrator under all such agreements for that Contract Year.

The total offsets allowed to the Participant hereunder for a Contract Year shall not exceed the sum of (1) the amount specified in the Billing Statement for that year and, (2) any amount paid by the Participant for a prior Contract Year which remains unpaid by the Administrator to the Participant under this agreement.

" Participant's Bonneville Contracts" as used in this section means all contracts or agreements between the Participant and the Administrator which require payments by the Participant to the Administrator for sale and exchange of electric power and energy, operation and maintenance of facilities, use of transmission facilities, and emergency and standby power.

(b) If for any Contract Year, the Administrator determines that the dollar obligations due the Administrator from the Participant, referred to in subsection (a) above, are or are expected to be insufHelent to offset the Administrator's dollar obligations to such Participant under sub-section (a) above, and, in the opinion of the Administrator and the Participant, are expected to remah insufBeient for a signi5 cant period, the Administrator shall use his best efforts to arrange for assignment of all or a portion of the Participant's Share and the associated benefits and obliga-tions (subject to the prior assignment of the Participant's Share to the Administrator bereunder) to another customer or customers of the Administrator for all or a portion of the remaining term of this agreement to the extent required to eliminate the insufBc'ency, and the Participant shall make the assigntcent so arranged. The other Participants shall have first right to accept such assignment, pro rata among those exercising such right, before an assignment is made to a customer who is not one of the Participants. If the Administrator is unable to arrange for such assignment, the Partici-pant shall make such assignment to, other Participants pro rata pursuant to the counterparts of subsection (f) of this section in the other Net Billing Agreements.

(c) If (1) assignments under subsculon (b) above cannot be made in amounts sufficient to bring into balance the respective dolla- obligations of th: Administrator and (2) an accumulated balance in favor of the Participant from a previous Contract Year is expected by the Administrator to be carried for an additional Contract Year, such balance and any subsequent monthly net balances that cannot be net billed shall be paid in cash to the Participant by the Administrator, subject to the availability of appropriations for such purposes.

(d) The Administrator and the Participant shall not enter into any agreements providing for payments to the Participant which the Administrator estimates will cause the aggregate of his billings to the Participant to be less than 115 percent of the Administrator's net billing obligations to the Participant under all agreements providing for net billing.

(e) If all or a portion of the Participant's Share is assigned under this section 7, the Participant shall nevertheless remain liable to Supply System to pay the purchase price for the Participant's Share in accordance with section 5(a) as if such assignment had not been made, and such liability of the Participant'shall be discharged only to the extent that the assignee of the portion of the Participant's Share so assigned shall pay to Supply System the purchase price for the portion of the Participant's Share so assigned in accordance with the provisions of this agreement. Supply System may commence such suits, actions or proceedings, at law or in equity, including suits for speciSc performance, as may be necessary or appropriate to enforce the obligations of the Participant with respect to such liability.

(f) If assignments pursuant to section 7(b) of the other Net Billing Agreements cannot be made in amounts sufficient to balance dollar obligations of the Admmhtrator and any other Partici-47

pant, the Participant shall accept on a pro rata basis with other Participants assignment of a portion E of such other Participant's Share, to the extent required to eliminate such insuf5ciency; provided, however, that the sum of such assignments to the Participant under this subsection shall not without the consent of the Participant exceed an accumulated maximum of 25 percent of the Participant's Share speci6cd in Section 1(m)(2), nor shall any such assignment under this subsection cause the estimate of the payments to be made by the Participant to Supply System under this agreement to exceed the estimate of the Administrator's billings to the Participant for each Contract Year during the period of such assignment, both such estimates to be made by the Administrator.

. (g) The estimates by the Administrator under this agreement of billing credits and of pay-ments to be made by the Participant and the Administrator giving rise to such billing credits shall be conclusive.

8. Scheduling. Prior to 4 p.m. on each work day beginning on the day preceding the Date of Com-mercial Operation (work day meaning a day which the Adnunistrator and Supply System observe as a regular work day) the Administrator shall notify Supply System of the amounts of energy from the Participant's Share he will require for each hour of the following day or days; provided, however, that the Administrr. tor may during any hour request delivery of other amounts of such energy. Supply System's dispatcher, within the capability of the Participant's Share and in accordance with Prudent Utility Practice, shall schedule for delivery to the Administrator at the point of delivery speci6ed in section 11 for each hour in the term hereof the amounts of energy so requested by the Administrator.

9. Participant's Right to Use Project Capability.

(a) If the Administrator is unable to satisfy his obligation to the Participant by net billing, assignment or cash payment under section 7, and determines, in consultation with the Participant, that this inability will continue for a significant period, the Participant may direct that all or a portion of the energy associated with the Participant's Share be delivered by Supply System for the Partici-

}-

pant's account at the point of delivery speci6ed in section 11, for either the expected period of such inability or the remainder of the term hereof, whichever is speci6ed by the Participant when it elects to have such energy delivered ta it. The amount of such delivery shan be limited to the amount of the Participant's Share for which payment cannot be made, at the time the Participant elects to have such delivery made to it, by net billing with the Participant or assignees or by direct payment by the Administrator hereunder. The Participant's obligations to assign its Participant's Share to the Administrator and the Administrator's obligations to acquire such share and make payments to the Participant under this agreement shall then be appropriately modified. The Administrator's prior obligations to the Participant not previously liquidated pursuant to the terms of section 7 shall be preserved until satis 6ed.

(b) If the Participant elects to withdraw all or a portion of its Participant's Share as provided in this section, the Administrator will transmit such share to any point (s) of delivery on the Federal Columbia River Power System designated by the Participant where the Administrator determines such share can be made available, will supply station service and losses related to such share during shutdown of the Project, and will provide forced-outage reserves for such share, under the same terms and conditions as provided in contracts for similar service then being offered to other utilities in the Pacidic Northwest owning interests in large thermal projects.

(c) Upon withdrawal of any portion of the Participant's Share under this section, the Partici-pant shall schedule such portion in the same manner as provided for the Administrator in section 8, and the Administrator's rights under section 8 shall be correspondingly reduced.

Whenever the Participant schedules any portion of its Participant's Share, the Participant and the Administrator shall (1) schedule at least their respective proportionate shares of the minimum capability of the Project as determined by Supply System unless all Participants with similar -g obligations to schedule and the Administrator agree to a shutdown of the Project; provided, how-ever, that the Administrator may, at his election, require shutdown of the Project if he supplies 48

i l

c through' exchange arrangements the power and energy the Participant 'otherwise would schedule from the Project during such period of shutdown, and (2) supply to the Supply System all necessary forecasts of their generation requirements from the Project for ensuing periods as necessary to enable Supply System to prepare the fuel management plan pursuant to section 8 of the Project Agreement.

i

10. Termination Settlements.

-(a) If the Project is ended pursuant to section 15 of the Project Agreement, Supply System l shall give notice of termination of this agreement effective upon the date of termination of the Project Agreement. Supply System shall terminate all activities related to construction and opera-tion of the Project. and shall undertake the salvage, discontinuance, decomminaioning, and dispo-sition or sale of the Project, as provided in the Project Agreement. After such termination, Supply System shall provide monthly accounting statements to the Administrator and the Participant of all costs associated therewith. Such monthly accounting statements shall continue until all Bonds have been paid or funds set aside for the payment or retirement thereof in accordance with the Bond Resolution or the final disposition of the Project, whichever is later, at which time a final accounting statement shall be prepared by Supply System at the earliest reasonable time. Such costs of salvage, discontinuance, decommissioning, and disposition or sale shall include, but shall not be limited to, all of Supply System's accrued costs and liabilities resulting from Supply System's ownership, construction, operation (including cost of fuel) and maintenance of and renewals and replacements to the Project, all other Supply System costs resulting from its ownership of the Project and the salvage, discontinuance, decommissioning, and disposition or sale thereof, and all amounts which Supply System is required under the Bond Resolution to pay in each year into the various funds provided in the Bond Resolution for debt service and all other purposes until the date that all of the Bonds have been paid or funds set aside for the payment or retirement thereof in

{ accordance with the Bond Resolution.

The monthly accounting statements shall credit against such costs all amounts received by j

Supply System from the disposition of Project assets, including but not lirr.ited to amounts payable under the Project Exchange Agreements. 'Ihe final accounting statement shall credit the fair market value of any assets related to the Project then retained by Supply System. If the monthly or final accounting statements show that such costs exceed such credits, the Participant shall pay Supply System at times reasonably agreed upon the sum determined by multiplying the amounts shown to be due in the monthly and final accounting statements by the decimal fraction then used in expressing the Participant's Percentage. In any case sud payments shall be made at times and in amounts sufficient to cover on a current basis the Participant's Percentage of the amount which Supply System is required under the Bond Resolution to pay in each year into the various funds provided in the Bono Resolution for debt service and all other purposes. If the final account-ing statement shows that such credits exceed such costs, Supply System shall pay at times reasonably agreed upon a : amount determined by multiplying such excess by the Participant's Percentage, such amounts to be divided between the Administrator and the Participant as their interests may appear.

Such excess credits shall bear interest from the date of such final accounting statement to the date of payment, at the average of the annual interest rates for each month during such time for three-to-five year issues, United States Government securities (taxable), Money Market Rates, as published by the Board of Governors of the Federal Reserve System in the " Federal Reserve Bulletin" or  !

equivalent publication or the maximum rate lawfully payable by Supply System, whichever is less.

(b) To the extent of the Participant's Share then assigned to the Administrator, the Adminis- I trator shall pay the Participant the amounts, if any, paid by the Participant to the Supply System pursuant to this section. Such amounts shall be paid is the manner specified in section 7 and at such times as the parties agree upon. .

(c) The provisions of this section 10 and the provisions of sections 5(a) and 5(b) describing the circumstances under which payments are to be made in this section 10 and the provisions of secton 13 shall remain in effect notwithstanding termination of this agreement pursuant to section 3.

49

b.

11. Provisions Relating to Delivery.' Deliveries of electric power and energy to the Administrator }

shall be made at the point of delivery and at the approximate voltage described below. Such electric

[- power and energy shall be in the form of three-phase current, alternating at a frequency of approximately 60 Hertz. Amounts so delivered at such point during each month shall be determined from measure-ments made by the Government's meters, adjusted for losses as agreed upon by the parties hereto, installed to record such deliveries at the place and in the circuits hereinafter specified:

PaoJECT POINT OF DEuYERYt l

Location: the point in the Vantage substation where the 500 kv facilities of the Government and the Project are connected;

, Voltage: 500 kv; Metering: in the 500 kv circuits at the Project over which such electric power and energy will flow; Adjustment: for losses between the point of metering and point of delivery.

12. Obligations in the Event of Default. The Participant's Share purchased by the Participant from l

Supply System and assigned by the Participant to the Administrator under this agreement shall be auto-matically increased for the remaining term of this agreement pro rata with that of other nondefaulting Participants if, and to the extent that, one or more of the Participants is unable, or fails or refuses for any reason, to perform its obligations under its Net Billing Agreement, and the Participant's Share of the defaulting Participant shall be reduced correspondingly; provided, however, that the sum of such increases for the Participant pursuant to this subsection shall not, without consent of the Participant, exceed an accumulated maximum of 25 percent of the Participant's Share specified in section 1(m)(2),

nor shall any such increase under this subsection cause the estimate of the payments to be made by the Participant to Supply System under this agreement to exceed the estimate of the Administrator's billings )

to the Participant during the period of such increase, which estimates shall be made by the Adamistrator and shall be conclusive.

If the Participant shall fail or refuse to pay any amounts due to Supply System hereunder, the fact that the other Participants have assumed the obligation to make such payments shall not relieve the Participant of its liability for such payments, and the Participants assuming such obligation, either in-dividually or as a member of a group, shall have a right of recovery from the Participant. Supply System or any Participant as their interests may appear, jointly or severally, may commence such suits, actions or proceedings, at law or in equity, including suits for specific performance, as may be necessary or appropriate to enforce the obligations of this agreement against the Participant under this subsection.

13. Sources of Participant's Payments. The Participant shall not be required to make the payments to Supply System under this agreement except from the revenues derived by the Participant from the l

ownership and operation of its electric utility properties and from payments by the Administrator under l this agreement.

l l

The Participant covenants and agrees that it will establish, maintain and collect rates or charges for power and energy and other services, facilities and commodities sold, furnished or supplied by it through any of its electric utility properties which shall be adequate to provide revenues sufBcient to enable the Participant to make the payments to be made by it to Supply System under this agreement and to pay all other charges and obligations payable from or constituting a charge and lien upon such revenues.

14. Modification and Uniformity of Agreement.

(a) This agreement shall not be binding upon any of the parties hereto if it is not binding upon all of the parties hereto, but this agreement shall not be subject to termination by any party under any circumstances, whether based upon the default of any other party under this agreement, )

or any other instrument, or otherwise, except as specifically provided in this agreement.

50

_ __ ____ ~,_ _ __ _ , ._. _

(b) This agreement shall not be amended, modified, or otherwise changed by agreement of the parties in any manner that will impair or adversely affect the security afforded by the provisions of this agreement for the payment of the principal, interest, and premium, if any, on the Bonds as they respectively become payable so long as any of the Bonds are outstanding and unpaid or funds are not set aside for the payment or retirement thereof in accordance with the Bond Resolution.

(c) If any Net Billing Agreement is amended or replaced so that it contains terms and conditions different from those contained in this agreement, the Admmistrator shall notify the Participant and upon timely request by the Participant shall amend this agreement to include similar terms and conditions.

15. HanfordExchange Agreement.

(a) If the Participant is a party to a Hanford Exchange Agreement, the parties hereto agree (i) to the use and employment of the Generating Facilities by Supply System for the purposes and in the manner prescribed in the Bond Resolution, (ii) that the electric power and energy to be produced by the Project, including the electric power and energy to be produced by the Generat-ing Facilities, shall be disposed of to the parties, in the quantities, for the periods and under the terms and conditions prescribed in the Net Billing Agreements and the Project Exchange Agree-ments, and (iii) that the execution and delivery of this agreement does not affect, limit, modify, alter, release, or discharge their respective rights and obligations under such Hanford Exchange Agreements, or reduce the Panicipant's obligations to make payments thereunder in the event that sufficient moneys to make such payments are not otherwise available in accordance with the Net Billing Agre-ments and the Project Exchange Agreements.

• (b) Supply System shall transfer to the appropriate funds and accounts under Supply System Resolution No.178 from the revenues received from the sale of Project Capability amounts sufficient so that no payments by the Participants under the Hanford Exchange Agreements are due under section 5(e) of such Agreements.

16. Assignment of Agreement. This agreement shall inure to the benefit of and shall be binding upon the respective successors and assigns of the parties to this agreement; provided, however, that except as provided in sections 7,9 and 12 hereof, neither this agreement nor any interest therein shall be transferred or assigned by any one of the parties hereto except with the mutual consent in writing of the other two parties hereto, to any other entity except the United States or an agency thereof. Such consent will not be unreasonably withheld. No assignment or transfer of this agreement shall relieve the parties of any obligation hereunder.

17. Approval by Rural Electrification Administrator. If the Participant is a party to an agreement or other instrument pursuant to which approval of this agreement by the Administrator of the Rural Electrification Administration is required as listed in Exhibit A, this agreement shall not be binding upon any of the parties until it shall have been approved by him or his delegate.

18. Participants' Review Board.

(a) Composition; election. Not more than 30 days after the execution of this agreement, and thereafter not less than 60 days prior to the commencement of each Contract Year and at such other times prior to June 30,1980 as the Participants' Review Board may determine, the Participants shall elect a Participants' Review Board consisting of nine members. Supply System shall give each Participant not less than 15 days' written notice stating the time .nd place at which a meeting of representatives of the Participants shall be held for the purpose of holding such. election. Each Participant shall designate the person and an alternate (to serve in the absence or disability of such 51

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

1 person), to cast its vote (s) for Board members by written notice filed with Supply System. The

'~

vote cast in behalf of each Participant shall be proportional to its Participant's Share. Any vacancy on the Board shall be filled by vote of the remaining Board members pending the next Board election.

i E(b) Board meetings; voting; and rules.' Meetings of the Participants' Review Board shall be held at least quarterly during the construction of the Project and at least semi-annually thereafter.

Timely written notice of the time and place of such meeting shall be given to the parties Each member of the Board shall be entitled to one vote, to be cast in person and not by proxy. A majority of the Board shall constitute a quorum, and the majority of those present shall be necessary and sufficient for the adoption of any motion or resolution except as otherwise provided in subsection (e) below. All meetings of the Board shall be open to attendance by any person authonzed by any of

.the Participants. Except as herein provided, the calling and holding of meetings of'the Board, .

and all of its other proceedings, shall be governed by rules adopted from time to time by two-thirds of the entire membership of the Board which rules may provide that the Board shall have the right to appoint persor of technical, legal, auditing or other special quahfications to committees to carry out reviews t .d investigations.

'(c) Except in the event of an emergency requiring immediate action, copies of all proposed Construction and Annual Budgets and fuel management plans, including amendments thereto, and plans for refinancing the Project shall be submitted by Supply System to the Participants' Review

. Board within a reasonable time, prior to the time such proposed budgets and plans are to be adopted l by Supply System. Such copies shall be submitted to the Participant upon its request.

(d) Except in the event of an emergency requiring immediate action, all bids, bid evaluations and proposed contract awards for amounts in excess of $500,000 shall be submitted to the Partici-

~

pants' Review Board at least seven days prior to award.

(e) Supply System will consider the recommendations of the Participants' Review Board, giving due regard to utilizing the Project consistent with Prudent Utility Practice and the Supply System's statutory duties. Written recommendation may be made to Supply System whenever such recommendation is approved by the majority of the members of the Participants' Review Board.

Such written recommendations shall be forwarded to Supply System within a reasonable time along with supporting data, which time shall not exceed the comparable time, if any, prescribed in the Project Agreement. Supply System shall take action on such recommendations within a reasonable l

time for adoption, modi 6 cation or rejection. Supply System, upon taking action, shall notify the

! Participants' Review Board promptly of such action, and, if it modafles or rejects a recommendation, shall give the reason therefor.

(f) If Supply System modifies or rejects a written recommendation of the Participants' Review Board concerning a matter submitted for review under subsections (c) or (d) above, the Partici-pants' Review Board may refer the matter to the Project Consultant in the manner described in section 10 of the Project Agreement for his written decision and his decision shall be bindag upon the parties. Pending any decision by the Project Consultant under this suh'ma Supply System shall proceed in accordance with the Project Agreement. Nothing in this subsecten shall affect the procedure for the settlement of any dispute between the Administrator and the Supply System under this agreement or the Project Agreement.

(g) Except as specifically provided in section 10(e) of the Project Agreement, Supply System shall not proceed with any item as proposed by it and not concurred in by the Admmistrator without approval of the Participants' Review Board.

! (h) Supply System shall not, without the consent of the Administrator and the Participants' Review Board, cause the insurance on the Project to be extended to say additional units or generating

}

projects or to lapse to permit the extension of such coverage.

52

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l

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19. Applicability of Other Instruments. It is recognized by the parties hereto that Supply System in the ownership, construction and operation of the Project must comply with the requirements of the Bood Resolution and all licenses, permits, and regulatory approvals necessary for such ownership, conaruction and operation, and it is, therefore, agreed that this agreement is made, and referrals to the Projut Consultant hereunder shall be, subject to the terms and provisions of the Bond Resolution and all such licenses, permits, and regulatory approvals.

IN WITNESS WHEREOF, the parties hereto have executed this agreement in several counterparts.

UNITED STATES OF AMERICA Departmentof theinterior (SEAL)

By ...............................

Bonneville Power Administrator WASHINGTON PunLIC POWER SUPPLY SYSTEM (SEAL)

By ................... ......... .

Title ..............................

ATTEST:

By................................

Title .............................. -

(THE PARTICIPANT'S NAME)

(SE.U.)

By.................................

Title ..............................

By................................

Title ..............................

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.y - . 1 9

e (THIS PAGE INTENTIONALLY LEFT BLANK)

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I EXHIBIT A (WPPSS No.1)

TABLE OF PARTICIPANTS AND PARTICIPANT'S PERCENTAGE _

Participant Reference City of Albion, Idaho . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Albion City of Bandon, Oregon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Bandon -

Public Utility District No.1 of Ben'on Count

. y, Washington . . . . . . . . . . Benton PUD

• Benton Rural Electric Association . . . . .......................

Benton REA

• Big Bend Electric Cooperative, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . _ Big Bend

• Blachly-Lane County Cooperative Electric Association . . . . . . . . . . . . B!achly-Lane The City of Blaine, Washington . . . . . . . . . . . . . . . . . . . . . . . . . . . . Blaine The City of Bonners Feny, Washington . . . . . . . . . . . . . . . . . . . . . . . . Bonners Ferry City of Burley, Idaho . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Burley The City of Canby, Oregon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Canby City of Cascade Locks, Oregon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cascade Locks

' Central Electric Cooperative, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . Central Elec.

The City of Centraha, Washington . . . . . . . . . . . . . . . . . . . . . . . . . . . . Centralia The Central Lincoln Peoples' Utility District . . . . . . . . . . . . . . . . . . . . . Central Line.

Public Utility District No.1 of Chelan County, Washington . . . . . . . . Chelan The City of Cheney, Washington . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cheney '

Public Utili District No. I of Callam County, Washington . . . . . . . . Gallam Public Utili District No.1 of Clark County, Washington . . . . . . . . . . Clark Clatskanic coples' Utility District ........................... Clatskanie

'CIcarwater Power Company . . . . . . . . . . . . . . ................ Clerrwater

' Columbia Basin Electric Cooperative, Inc. . . . . . . . . . . . . . . . . . . . . . . Columbia Basin

• Columbia Power Cooperative Association, Inc. . . . . . . . . . . . . . . . . . . Columbia Power

• Columbia Rural Electric Association, Inc. . . . . . . . . . . . . . . . . . . . . . . Columbia Rural Consolidate <' 1rrigation District No. 19 . . . . . . . . . . . . . . . . . . . . . . . . Cons. Irrig.

' Consumers Power, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consumers

• Coos-Curry Electric Cooperative, Inc. . . . . . . . . . . . . . . . . . . . . . . . . Coos. Curry City of Coulee Dam, Washington . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Coulee Dam Pub 1'c Utility District No.1 of Cowlitz Count

. .y, Washington . . . . . . . . Cowlitz The City of Declo, Idaho . . . . . . . . . . . . . ..................... Decio Public Utility District No.1 of Douglas County, Washington . . . . . . . . Douglas PUD

• Douglas Electric Cooperative, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . Douglas Elec.

The City of Drain. Oregon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Drain East End Mutual Electric Co., Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . East End The Oty of Ellensburg, Washin Ellensburg The City of Eugene, Oregon................................

. .gton . . . . . . . . . . . . . . . . . . . . . . . . . . . . Eugene

• Fall River Rural Electric Cooperative, Inc. . . . . . . . . . . . . . . . . . . . . . . Fall River Farmers Electric Co., Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Farmers

• Public Utility District No.1 of Ferry County, Washington . . . . . . . . . . Ferry

• Flathead Ecctric Cooperative, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . Flathead The City of Forest Grove, Oregon . . . . . . . . . . . . . . . . . . . . . . . . . . . . Forest Grove Public Utili District No.1 of Franklin County, Washington . . . . . . . . Franklin

' Public Utilit District No. 2 of Grant County, Washington . . . . . . . . . . Grant Public Utili District No.1 of Grays Harbor Count Grays Harbor

• Harney Electric Cooperative, Inc . . . . . . . . . ................. . . . y, Washington . . . .Harney City of Heyburn, Idaho . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Heyburn

• Approval of Agreement by Rural Electri6 cation Administration required.

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i Fernessens mer me. }

Hood Riv'er' Electric Cooperative of Hood River County, Oregon . . . . Hood River

• Idaho County Light & Power Cooperative Association, Inc. . . . . . . . . Idaho Co.

Idaho Falls City of Idaho Falls, Idaho . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inland

• Inland Power & Light Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• Public Utility District No.1 of Kittitas County, Washington . . . . . . . . Kittitas

• Public Utility District No.1 of Klickitat County, Washington . . . . . . . . Klickitat

• Kootenai Electric Cooperative, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . Kootenai Lane

• Lane County Electric Cooperative, Inc. . . . . . . . . . . . . . . . . . . . . . . . . Lewis

. Public Utility District No.1 of Lewis County, Washington . . . . . . . . . .

• Lincoln Electric Cooperative, Inc. (Montana) . . . . . . . . . . . . . . . . . . Lincoln (M)

• Lincoln Electric Cooperative, Inc. (Wuhington) . . . . . . . . . . . . . . . . . Lincoln (W)

• Lost River Electric Cooperative, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . Lost River Lower Valley

• Lower Valley Power & Light, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• Public Utility District No.1 of Mason County, Washington . . . . . . . . . . Mason 1 Public Utility District No. 3 of Mason County, Washington . . . . . . . . Mason 3 Town of McCleary, Washington . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . McCleary City of McMinnville, Oregon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

McMinnville

• Midstate Electric Cooperative, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . Midstate City of Milton.Freewater, Oregon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Milton.F.

Minidoka City of Minidoka, Idaho . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

'Missoula Electric Cooperative, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . Missoula Monmouth City of Monmouth, Oregon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Nespelem

• Nespelem Valley Electric Cooperative, Inc. . . . . . . . . . . . . . . . . . . . . . .

• Northern Lights, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Northern Lts.

Northern Wasco County People's Utility District . . . . . . . . . . . . . . . . . . Northern Wasco Okanogan Elec.

• Okanogan County Electric Cooperative, Inc. . . . . . . . . . . . . . . . . . . . . . Okanogan PUD Public Utility District No.1 of Okanogan County, Washington . . . . . .

• Orcas Power and Light Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . Orcas Public Utility District No. 2 of Pacific County, Washington . . . . . . . . . . Pacific Public Utility District No.1 of Pend Oreille County, Wnhington . . . . Pend Oreille Port Angeles City of Port Angeles, Washington . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• Prairie Power Cooperative, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Prairie

• Raft River Rural Electric Cooperative, Inc. . . . . . . . . . . . . . . . . . . . . . . Raft River

'Ravalli County Electric Cooperative, Inc. . . . . . . . . . . . . . . . . . . . . . . . Ravalli Richland City of Richland, Washington . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1 Riverside Electric Company, Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Riverside Rupert City of Rupert, Idaho . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Rural Rural Electric Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Salem Salem Electric . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Salmon

• Salmon River Electric Cooperative, Inc. . . . . . . . . . . . . . . . . . . . . . . . .

Seattle l City of Seattle, Washington . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Skamania Public Utili District No.1 of Skamania County, Washington . . . . . .

Public Utili District No.1 of Snohomish County, Washington . . . . . . Snohomish South Side South Side ectric Lines, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Springfield The City of Springfield, Oregon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

' Approval of Agreement by Rural Electnfication Administration required.

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paresessant meteren.

- The Town of Sumas, Washington . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sumas

• Surprise Valley Electri6 cation Corporation . . . . . . . . . . . . . . . . . . . . . . Surprise V.

. City of Tacoma, Washington . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tacoma

• Tanne r Electric . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tanner

• Tillamook Peoples' Utility District . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tillamook

?Umatilla Electric Cooperative Association . . . . . . . . . . . . . . . . . . . . . . Umatilla Unity Light and Power Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unity Vera Irrigation District No.15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vera

• Vigilante Electnc Cooperative, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vigilante Public Utility District No.1 of Wahkiakum County, Washington . . . . . Wahkiakum

• Wasco Electric Cooperative, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Wasco

• Wells Rural Electric Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Wells

• West Oregon Electric Cooperative, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . West Oregon Public Utdity District No.1 of Whatcom County, Washington . . . . . . . Whatcom

' Approval of Agreement by Rural Electri6 cation Administration required.

, Upon prior written notice to Supply System, the Administrator and all of the other Participants, this Exhibit A may be amended from time to time upon mutual agreement of two or more Participants so as to provide revised Participants' Percentages for such Participants so long as the aggregate of the increases j in Participants' Percentages is equal to the aggregate of the decreases in Participants' Percentages; pro-vided, however, that the sum of any such decreases for any Participant pursuant to this paragraph shall not exceed an accumulated maximum of 25 percent of the Panicipant's P:rcentage specified in this Exhibit on the date of execution of this agreement nor shall any such increase under this paragraph cause the estimate of the payments to be made by a Participant to Supply System under this agreement 4

to exceed 86.95 p:rcat of the estimate of the Administrator's billings to such Participart during the period of such increase, which estimates shall be made by the Administrator and shall be conclusive; l

provided, further, that any such increase or decrease shall not affect or impair the tax exempt status of the Bonds. The Administrator shall then prepare a revised Exhibit A which shall be substituted for this Exhibit A and become a part of this agreement.

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,,- , - - - - - - - , - < - n-n-,, .- ,- - --,,v , . , - - - , , . . , - , - - _ , . - ~ ~ , - - - - , . - . , - - , , , - - , - , - , - - ~ , . , _ . . _ , - - - - - - - - . -

PARTICIPANT *S PERCENTAGE

• 1 sed-SI asSI-SS 19 W SS 19iBS-84 1984-85 3905-88 1988-81 PARTICIPANT 1919-88 0.00004 0.00005 0.00007 0.00006 0.00006 0.00005 0.00004 j Albion . . . . . . . . . . . . . . . . 0.00004 0.00152 0.00162 0.00165 0.00170 0.00166' Bandon ............... 0.00089 0.00089 0.00105 0.04806 0.04 % 5 Benton PUD . . . . . . . . . . 0.03529 0.03529 0.04034 0.04808 0.04979 0.04816 0.00427 0.00401 0.00374- 0.00354 0.00336 0.00322 0.00308 Benton REA . . . . . . . . . . . 0.00427 0.00006 0.00039 0.00252 0.00242 0.00232 0 00225 0.00179 l Big Bend . . . . . . . . . . . . . 0.00006 0.00197 0.00197 0.00208 0.00198 0.00208 0.00217 C.00225 0.00234 i Blachly-Lane ..........

' 0.00087 0.00104 0.00134 0.00124 0.00119' 0.00118 0.00109 Blaine . . . . . . . . . . . . . . . . 0.00087 0.00080 0.00094 0.00125 0.00126 0.00121 0.00120 0.00115 i Bonners Ferry . . . . . . . . . . 0.00080 0.00069 0.00091 0.00228 0.00228 0.00217 0.00212 0.00179 Bu rley . . . . . . . . . . . . . . . . 0.00069 0.00189 0.00223 0.00244 0.00267 0.00296 j Canby ................ 0.00111 0.00111 0.00156 e00074 0.00039 0.00047 0.00057 0.00063 0.00067 0.00071 Cascade I.mcks . . . . . . . . . 0.00039 0.00697 0 00667 0.00566 0.00553 0.00519 0.00483 0.00462 Central Elec. . . . . . . . . . . 0.00697 0.00125 0.00166 0.00318 0.00328 0.00320 0.00321 0.00298 I Centralia . . . . . . . . . . . . . . 0.00125 0.02654 0.03093 0.03740 0.03967 0.04010 0.04125 0.04169 -

Central Linc. . . . . . . . . . . 0.02654 0.00826 0.00826 0.00836 0.00701 0.00650 0.00573 0.00521 0.00501 Chelan ...............

0.00554 0.00556 0.00530 0.00522 - 0.00511

< Cheney ............... 0.00426 0.00426 0.00483 0.00676 0.00827 0.01163 0.01202 0.01177 0.01185 0.01157 i Clallam . . . . . . . . . . . . . . . 0.00676 0.14704 0.14704 0.16152 0.15907 0.15855 0.14940 0.14583 0.14635 l E Clark ................

0.00845 0.00773 0.00726 0.00613 Clatskanie . . . . . . . . . . . . . 0.00383 0.00383 0.00551 0.00882

' 0.00339 0.00324 0.00336 0.00319 0.00303- 0.00291 0.00274 Clearwater . . . . . . . . . . . . 0.00339 0.00106 0.00116 0.00153 0.00180 0.00177 0.00175 0.00161 Columbia Basin . . . . . . . . 0.00106 0.00041 0.00041 0.00048 0.00047 0.00046 0.00045 0.00042 Columbia Power . . . . . . . . 0.00041 0.00717 0.00713 0.00633 0.00622 0 00612 0.00607 0 00621 Columbia Rural . . . . . . . . 0.00717 0.00009 0.00009 0.00008 0.00007 0.00006 0.00006 0.00005

Cons. Irrig. . . . . . . . . . . . . 0.00009 0.00918 0.00918 0.00939 0.00791 0.00858 0.00925 0.00980 0.01068

Consumers ............

i Coos-Curry . . . . . . . . . . . . 0.00238 0.00238 0.00258 0.00420 0.00415 0.00410 0.00406 0.00373 0.00029 0.00036 0.00061 0.00060 0.00056 0.00054 0.00048 Coulee Dam . . . . . . . . . . . 0.00029 0.08027 0.08339 0.08218 0.08196 0.07692 0.07507 0.07379

! Cowlitz . . . . . . . . . . . . . . . 0.08027 0.00011 0.00015 0.00020 0.00022 0.00023 0.00024 0.00026 l Decio . . . . . . . . . . . . . . . . 0.00011 0.00057 0.00051 0.00051 0.00051 0.00051 0.00044 0.00044 l

Douglas PUD . . . . . . . . . . 0 5)057 Douglas Elec. . . . . . . . . . . 0.00358 0.00358 0.00342 0.00295 0.00303 0.00314 0.00322 0.00331 .,

j 0.00046 0.00057 0.00099 0.00103 0.00102 0.00103 0.00096 lE Drai n . . . . . . . . . . . . . . . . . 0.00046 0.00017 0.00015 0.00015 0.00014 0.00013 0.00012 0.00011 't I East End . . . . . . . . . . . . . 0.00017  ? 4 Ellensburg . . . . . . . . . . . . . 0.00557 0.00557 0.00653 0.00823 0.00836 0.00806 0.00801 0.00780 Eugene ............... 0.00054 0.00054 0.00068 0.00073 0.00075 0.00071 0.00060 0.00061 C>

! (1) Participant's Percentages will remain the same as 1986-87 for remaining Contract Years in the term hereof. 3

~

l. >

i l

rangscsraw ramencarans reneswaos

,n_svo.as asse-en asen-as foss-as ases-se ,nsee-as asus-as, asse-si Fall River . . . . . . . . . . . . . 0.00012 0.00012 0.00053 0.00119 0.00137 0.00154 0.00171 0.00188 Farmers . . . . . . . . . . . . . . . 0.00008 0.00008 0.00007 0.00010 0.00009 0.00008 0.00007 0.00005 l Ferry ................. 0.00103 0.00103 0.00112 0.00134 0.00!30 0.00120 0.00114 0.00105

! Flathead . . . . . . . . . . . . . . 0 00172 0.00172 0.00175 0.00170 0.00156 0.00144 0.00135 0.00123 Forest Grove . . . . . . . . . . 0.00019 0.00019 0.00018 0.00082 0.00211 0.00360 0.00416 0.00470 Franklin .............. 0.00846 0.00846 0.01005 0.01446 0.01468 0.01413 0.01401 0.01330 l Grant ................ 0.00802 0.00802 0.00812 0.00681 0.00630 0.00556 0.00506 0.00486-l Grays Harbor . . . . . . . . . . 0.04776 0.04776 0.03460 0.02358 0.02553 0.02597 0.026 % 0.02758 l Harney . . . . . . . . . . . . . . . 0.00007 0.00007 0.00029 0.00125 0.00124 0.00123 0.00122 0.00105 Heyburn . . . . . . . . . . . . . . 0.00081 0.00081 0.00101 0.00200 0.00201 0.00192 0.00189 0.00167 Hood River . . . . . . . . . . . . 0.00175 0.00175 0.00182 0.00208 0.00214 0.00219 0.00224 0.00224

, Idaho Co. . . . . . . . . . . . . . 0.00032 0.00032 0.00036 0.00053 0.00052 0.00051 0.00050 0.00047 Idaho Falls . . . . . . . . . . . . 0.00258 0.00258 0.00406 0.00922 0.00967 0.00958 0.00974 0.00908 i

Inland . . . . . . . . . . . . . . . . 0.01181 0.01181 0.01114 0.00970 0.00931 0.00893 .0.00866 0.00860 Kittitas ............... 0.00173 0.00173 0.00202' O.00237 0.00243 0.00236 0.00237 0.00238 Klickitat .............. 0.00442 0.00442 0.00495 0.00653 0.00617 0.00580 0.00562 0.00517

Kootenai . . . . . . . . . . . . . . 0.00285 0.00285 0.00269 0.00246 0.00235 0.00225 0.00217 0.00212 -

$ Lane ................. 0.00433 0.00433 0.00446 0.00533 0.00538 0.00545 0.00550 0.00537 I.zwis . . . . . . . . . . . . . . . . . 0.00913 0.00913 0.0I056 0.01443 0.01449 0.01381 0.01356 - 0.01276 Lincoln (M) . . . . . . . . . . . 0.00107 0.00107 0.00103 0.00107 0.00102 0.00097 0.00093 0.00087 l' Lincoln (W) . . . . . . . . . . 0.00077 0.00077 0.00077 0.00056 0.00055 0.00054- 0.00053 0.00056 Lost River . . . . . . . . . . . . . 0.00030 0.00030 0.00037 0.00057 0.00058 0.00058 0.00058 0.00056

! Lower Valicy . . . . . . . . . . 0.00297 0.00297 0.00290 0.00321 0.00307 0.00294 0.00284 0.00266 i

Mason 1 . . . . . . . . . . . . . . 0.00140 0.00140 0.00162 0.00198 0.00200 0.00192 0.00190 0.00186 i Mason 3 . . . . . . . . . . . . . . 0.01337 0.01337 0.01485 0.01641 0.01630 0.01541 0.01501 0.01462 l McCleary . . . . . . . . . . . . . 0.00033 0.00033 0.00041 0.00086 0.00086 0.00081 0.00080 0.00069

) McMinnville . . . . . . . . . . . 0.00148 0.00148 0.00464 0.00742 0.00816 'O.00845 0.00887 0.00900 Midstate .............. 0.00272 0.00272 0.00281 0.00282 0.00296 0.00311 0.00324. 0.00336 Milton-F. . . . . . . . . . . . . . . 0.00031 0.00031 0.00168 0.00183 0.00221 0.00263 0.00190 0.00238

{ Minidoka . . . . . . . . . . . . . . 0.00002 0.00002 0.00001 0.00002 0.00001 0.00001 0.00001 0.00001

, Missoula . . . . . . . . . . . . . . 0.00229 0.00229 0.00220 0.00197 0.00187 0.00179 0.00172 0.00168 3 i

Monmouth . . . . . . . . . . . . . 0.00230 0.00230 0.00327 0.00407 0.00489 0.00546 0.00607 0.00679 IE Nespelem ........ .... 0.00071 0.00071 0.00069 0.00070 0.00067 0.00064 0.00062 0.00059 4

! Northern Lts. . . . . . . . . . . 0.00282 0.00282 0.00275 0.00262 0.00253 0.00245 0.00238 0.00234  ? 4 f Northern Wasco . . . . . . . . 0.00145 0.00145 0.00165 0.00164 0.00190 0.00210 0.00228 0.00246 D>

f (1) Participant's Percentages will remain the same as 1986-87 for remaining Contract Years in the term hereof. 3 .

l

PARTICIPANT'M PERCENTAGE 1984 1885-88 3888-87_

19R4-81 1981-82 1982-83 1943-24 PARTICIPANT 1979-89 0.00041 0.00041 0.00041 0.00038 0.000II 0.00017 0.00044 Okanogan Elec. . . . . . . . . 0.00011 0.00360 0.00327 0.00257 -

0.002E0 0.00284 0.00440 0.00408 Okanogan PUD . . . . . . . . 0.00280 0.00347 0.00349 0.00351 0.00309 0.00309 0.00324 0.00348 0.00348 Orcas ................ 0.01101 0.01057 0.01046 0.01006 0.00713 0.00835 0.0I088 Pacinc . . . . . . . . . . . . . . . . 0.00713 0.00069 0.00062 0.00057 0.00055 j 0.00087 0.00087 0.00074 Pend Oreille . . . . . . . . . . . 0.00087 0.00862 0.00810 0.00784 'O.00665 0.00339 0.00410 0.00872 Port Angeles . . . . . . . . . . 0.00339 0.00009 0.00008 0.00007 0.00016 0.00015 0.00012 0.00011 Prairie . . . . . . . . . . . . . . . . 0.00016 0.00255 0.00249 0.00244 0.00240 0.00224 0.00169 0.00183 Raft River . . . . . . . . . . . . . 0.00169 0.00209 0.00202 0.00197 0.00195 0.00252 0.00252 0.00244 0.00217 Ravalli ............... 0.01801 0.01796 0.01837 0.01821 0.00874 0.01127 0.01710

! Richland . . . . . . . . . . . . . . 0.00874 0.00010 0.00009 0.00008 0.00007 0.00016 0.00015 0.000)2

! Riverside . . . . . . . . . . . . . . 0.00016 0.00142 0.00137 0.00136 0.00123 0.00054 0.00070 0.00140 R upert . . . . . . . . . . . . . . . . 0.00054 0.00208 0.00205 0.00704 0.00208 0.00241 0.00237 0.00212 Rural . . . . . . . . . . . . . . . . 0.00241 0.00535 0.00577 0.00612. 0.00662 0.00483 0.00530 0.00490 -

Salem . . . . . . . . . . . . . . . . . 0.00483 0.00049 0.00049 0.00049 0.00046 3

0.00030 0.00030 0.00034 0.00050 Salmon ............... 0.09887 0.09232 0.08835 0.08605 i 0.13782 0.13242 0.11291 Seattle . . . . . . . . . . . . . . . . 0.13782 0.00345 0.00335 0.00335 0.00321 0.00191 0.00231 0.00337 g Skamania . . . . . . . . . . . . . 0.00191 0.18591 0.19445 0.19711 0.19584

! 0.20845 0.19939 0.18996

Snohomish . . . . . . . . . . . . 0.20845 0.00038 0.00036 'O.00034 0.00032 0.00047 0.00043 0.00041 South Side . . . . . . . . . . . . . 0.00047 0.00168 0.00208 0.00233. 0.00258 0.00275 Spring 6cid . . . . . . . . . . . . . 0.00013 0.00013 0.00045 0.00021' O.00022 0.00022- 0.00022 0.00021 0.00009 0.00012 Sum as . . . . . . . . . . . . . . . . 0.00009 0.00071 0.00065 0.00060 0.00049 0.00056 0.00052 0.00078 j Surprise V. . . . . . . . . . . . . 0.00056 0.02684 0.04477 0.05078 0.05971 0.07356 0.04655 0.01912 Tacoma . . . . . . . . . . . . . . . 0.07356 0.00052 0.00051 0.00051 0.00050 0.00050 0.00043 0.00045 i Tanner ............... 0.00043 0.00519 0.00862 0.00929 0.00954 0.00990 0.00963 Tillamook . . . . . . . . . . . . . 0.00414 0.00414 I 0.00711 0.00789 0.00863 0.00913 0.00997 0.00918 0.00919 i Umatilla . . . . . . . . . . . . . . 0.00918 0.00126 0.00120 0.00115 0.00112 0.00157 0.00147 0.00133

! Unity . . . . . . . . . . . . . . . . . 0.09157 0.00458 0.00468 0.00464 0.00226 0.00290 0.00438 0.00460 l Ve ra . . . . . . . . . . . . . . . . . 0.00226 0.00037 0.00035 0.00065 0.00060 0.00055 0.00051 0.00042 g Vigilante . . . . . . . . . . . . . . 0.00037 0.00234 0.00235- 0.00229 0 0.00145 0.00175 0.00234 0.00241

Wahkiakum . . . . . . . . . . . . 0.00145 0.00125 0.00123 0.00116 Wasco . . . . . . . . . . . . . . . . 0.00125 0.00125 0.00120 0.00129 0.00126 l i

0.00129 0.00118 0.00109 0.00102 0.00102 0.00214 0.00188 l Wells . . . . . . . . . . . . . . . . . 0.00214 0.00123 0.00114 0.00115 0.00118 0.00119 0.00121 E

,q West Oregos . . . . . . . . . . . 0.00127 0.00127 0.00531 0.00494 0.00438 0.00401 0.00387 3>

0.00619 0.00630 Whatcom . . . . . . . . . . . . . . 0.00619 3

l (1) Participant's Percentages will remain the same as 1986-87 for remaining Contract Years in the term hereof.

1 i

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EXHIBIT B WASHINGTON PUBLIC POWER SUPPLY SYSTEM NUCLEAR PROJECT NO.1 Description of Project The Washington Public Power Supply System's Nuclear Project No.1 is expected to have a net electrical plant capability of approximately 1230 MW.

A new pressurized water reactor nuclear steam supply system similar to other reactors now under construction will replace the NPR as a steam source. It will include, but not be limited to, a nuclear reactor, fuel, control systems, primary coolant loops with steam generators, engineered safeguard systems, radwaste system, service systems, containment building and other auxiliary facilities.

Steam will be fed from this new reactor to a new topping turbine and generator with a nameplate rating of approximately 400 MW housed in an extension of the existing turbine-generator building of the Generating Facilities. New piping will transmit low pressure exhaust steam from the new topping turbine to the existing low pressure turbine complex which is a part of the Generating Facilities. The existing turbines may be modified, including the addition of extra stages of blades; and such modifications, additions and alterations to the condensers, cooling system, feedwater besters, feedwater pumps, instru-mentation, control systems, auxiliary startup power facilities and other components of the Generating Facilities will be made as shall be required to operate the topping turbine and to utilize exhaust steam from the topping turbine.

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EXHIBIT C .

PROVISIONS REQUIRED BY STATUTE OR EXECUTIVE ORDER

1. Contract Work Hours and Safety Standards.'

This contract, to the extent that it is of a character rpecided in the Contract Work Hours and Safety Standards Act (Public Law 87-581, 76 Stat. 357-360, as acended) and is not covered by the Walsh-Healey Public Contracts Act (41 U. S. C. 35-45), is subject to the following provisione and to all other provisions and exceptions of said Contract Work Hours and Safety Standards Act.

(a) No Contractor or subcontractor contracting for any pr.it of the contract work which may require or involve the employment.of laborers or mechanics shall require or permit any laborer or mechanic in any workweek in which he is employed on such work, to work in excess of eight hours in any calendar day or in excess of forty hours in any workweek unless such laborer or mechanic receives compensation at a rate not less than one and one-half times his basic rate of pay for all hours worked in excess of eight hours in any calendar day or in excess of forty hours in such workweek, whichever is the greater number of overtime hours.

(b) In the event of any violation of the provisions of subsculon (a), the Contractor and any subcontractor responsible for such violatien shall be liable to any affected employee for bis unpaid, wages. In addition, such Contractor or subcontractor shall be liable to the United States for liquidated .

damages. Such liquidated damages shall be computed, with respect to each individual !aborer or mechanic employed in violation of the provisions of subsection (a), in the sum of $10 for each calendar day on which such employee was required or permitted to work in excess of eight hours or in excess of forty hours in a workweek without payment of the required overtime wages.

(c) The Administrator may withhold, or cause to be withheld, from any moneys peyable on I account of work performed by the Contractor or subcontractor, the full amount of wages required by this contract and such sums as may administratively be determined to be cecessary to satisfy any liabilities of such Contractor or subcontractor for liquidated d.anages as provided in sub-section (b).

(d) No contractor or sube' Ttractor contracting for any part of the contract work shall require any laborer or mechanic employed in the performance of the contract to work in surroundings or under working conditions which are unsanitary, hazardous, ot dangerous to his health or safety, as determined under construction safety and health standards promulgated by the Secretary of l

l Labor by regulation based on proceedings pursuant to section 553 of title 5, United States Code, provided that such proceedings include a hearing of the nature authorized by said section.

(e) The Contractor shall require the foregoing subsections (a), (b), (c), (d) and this sub-section (e) to be inserted in all subcontracts.

(f) The Contractor shall keep and maintain for a period cf three (3) years from the com-i pletion of this contract the information required by 29 CFR I 516.2(a). Such material shall be made available for inspection by authorized representatives of the Government, upon their request, at reasonable times during the normal work dsy.

2. Convict Labor.

'Itc Contractor shall not employ any person undergoing sentence of imprisonment at hard labor.

3. Equal Opportunity.

Unless exempted pursuant to the provisions of Executive Order 11246 of September 24,1965 and the rules, regulations and relevant orders of the Secretary of Labor thereunder, during the performance of this contract, the Contractor agrees u follows:

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(a) The Contractor will not discriminate against any employee or applicant for employment because of race, color, religion, sex, or national origin. The Contractor will take affirmative action to ensure that applicants are employed, and that employees are treated during employment, without regard to their race, color, religion, sex, or national origin. Such action shall include, but not be limited to, the following: employment, upgrading, demotion or transfer; recruitment or recruitment advertising; layoff or termination; rates of pay or other forms of compensation and selection for training, including apprenticeship. The Contractor agrees to post in conspicuous places, available to employees and applicants for employment, notices to be provided by the Admmittrator setting forth the provisions of this equal opportunity clause.

(b) The Contractor will, in all solicitations or advertisements for employees placed by or on behalf of the Contractor, state that all quejified applicants will receive consideration for employment without regard to race, color, religion, sex, or national origin.

(c) The Contractor will send to each labor union or representative of workers with which he has a collective bargaining agreement or other contract or understanding, a notice, to be pro-vided by the Administrator, advising the labor union or worker's representative of the Contractor's commitments under this equal opportunity clause and shall post copics of the notice in conspicuous places available to employees and appticants for employment.

(d) The Contractor will comply with all provisions of Executive Order No.11246 of Sep-tember 24, 1965, and of the rules, regulations, and relevant orders of the Secretary of Labor.

(e) The Contractor will furnish allinformation and reports required by Executive Order No.

11246 of September 24,1965, and by the rules, regulations, and orders of the Secretary of Labor, or pursuan: thereto, and will permit access to his books, records, and accounts by the Admin-istrator and the Secretary of Labor for purposes of investigations to ascertain compliance with such rules, regulations and orders.

(f) In the eveai of the Contractor's noncompliance with the equal opportunity clause of this contract or with any of such rules, regulations, or orders, this contract may be cancelled, terminated, or suspended in whole or in part and the Contractor may be declared ineligible for further Govern-ment contracts in accordance with yocedures authorized in Executive Order No.11246 of Septem-ber 24,1965, and such other sanctions may be imposed and remedies invoked as provided in Executive Order No.11246 of September 24,1965, or by rule, regulation, or order of the Secretary of Labor, or as otherwise provided by law.

(g) The Contractor will include the provisions of paragraphs (a) through (g) in every sub-contract or purchase order unless exempted by rules, regulations, or orders of the Secretary of Labor issued pursuant to Section 204 of Exertive Order No.11246 of September 24,1965, so that such provisions will be binding upon each suucontractor or vendor. The Contractor will take such action with respect to any subcontract or purchase order as the Administrator may direct as a means of enforcing such provisions including sanctions for noncompliance; provided, however, that in the event the Contractor becomes involved in, or is threatened with, litigation with a subcontractor or vendor as a result of such direction by the Administrator, the Contractor may request the United States to enter into such litigation to protect the interests of the United States. ,

4. Interest of Member of Congress.

No Member of or Delegate to Congress, or Resident Commissioner shall be admitted to any share or part of this contract or to any benefit that may arise therefrom. Ncthing, however, herein contained shall be construed to extend to such contract if made with a corporation for its general benent.

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( EXHIBIT IV Contract No. 14 03-39211 WASHINGTON PUBLIC POWER SUPPLY SYSTEM NUCLEAR PROJECT NO.1 AGREEMENT executed by the UNITED STATES OF AMERICA DEPARTMENT OF THE INTERIOR acting by and through the .

BONNEVILLE POWER ADMINISTRATOR and

(

WASHINGTON PUBLIC POWER SUPPLY SYSTEM project Agmenm0 65

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INDEX TO SECTIONS PAGE SacTioN Definition and Explanation of Terms . . . . . . . . . . . . . . . . . . . . . . 68 1.

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2. Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Term of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 3.

Design, Licensing and Construction of the Project . . . . . . . . . . . . . 69 4.

Financing of the Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 5.

Budget and Accounting Procedures . . . . . . . . . . . . . . . . . . . . . . . . 71 6.

Operation and Maintenance of the Project . . . . . . . . . . . . . . . . . . . 72 7.

8. Fuel ................................................

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9. Pe rmits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73

10. Administrator's Approval and Project Copsultant . . . . . . . . . . . . . 73

11. Replacements, Repairs and Capital Additions . . . . . . . . . . . . . . . . 74

12. Insurance ............................................ 75

13. Inspection of Project Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 i

14. Trainin g . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75

15. End of the Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75

16. Assignment of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76

17. Applicability of Other Instruments . . . . . . . . . . . . . . . . . . . . . . . . . 76 Exhibit A (Project Characteristics) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 Exhibit B (Provisiens Required by Statute or Executive Order) . . . . . . . 78 1

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~a This AGREEMENT, executed ,1973, by the UNITED STATES OF AMERICA (Gov-ernment), Department of the Interior, acting by and through the BONNEVILLE POWER ADMINISTRATOR (Administrator), and WAsMNGTON Puntic POWER SUPPLY SYSTEM (Supply System), a municipal corporation of the State of Washington, WITNESSETH:

WHEREAs Supply -System has . constructed the Hanford Project which includes the Generating Facilities having a generating capability of 860 megawatts which are operated in conjunction with by-product steam from the New Production Reactor (NPR) of the Atomic Energy Commission (AEC) on the Hanford Reservation; and WHEREAs the AEC has noti 6ed Supply System of its intention to discontinue dual purpose opera-tion of the NPR and Supply System, the Administrator and the Participants, being all the parties to the Hanford Exchange Agreements, have agreed that Supply System shall construct a nuclear steam supply facility and additional generating facilities which can be used in conjunction with the Generating Facili-ties; and WHEREAS Supply System proposes to design. finance, construct, operate, and maintain the Project; and WHEREAs, the Administrator has determined that acquisition of the Project Capability as herein provided will assist in attaining the objectives of the Bonneville Project Act, and other statutes pertaining to the disposition of electric power and energy from Government projects in the Pacific Northwest by enabling the Government to make optimum use of the Federal Columbia River Power System, and that the integration of the capability of the Project with the generating resources of the Federal Columbia River Power System as provided herein will enable the Administrator to make available additional firm power and energy to meet the needs of his customers; and WHEREAS the construction of the Project is a part of the Hydro Thermal Power Program for the Pacific Northwest and this agreement is one of a seri:s of agreements implementing such program; and WHEREAS Supply System expects to enter into certain contracts for the financing, planning, enginect-ing, construction and operation of the Project; and WHEREAS Supply System, the Administrator, and the Participants are parties to Net Billing Agree-ments under which Supply System sells a portion of Project Capability to the Participants and under which the Admmistrator will acquire Project Capability from the Participants; and WHEREAs Supply System, the Admmistrator, and each of The Montana Power Company, Pacific Power & Light Company, Portland General Electric Company, Puget Sound Power & Light Company, and The Washington Water Power Company are parties to Project Exchange Agreements under which Supply System sells a portion of Project Capability to such companies and the companies exchange such Project Capability with the Admmistrator for electric power and energy from the Federal Columbia River Power System; and j

! WHEREAS Supply System is organized under the laws of the State of Washington (Rev. Code of l Washington Ch. 43.52) and is authorized by law to construct, acquire and operate works, plants, and

facilities for the generation and/or transmission of electric power and energy and to enter into contracts I

with the Administrator and public and private organizations for the disposition and distribution of electric energy prcduced thereby; and WHEREAs the Administrator is authorized pursuant to law to dispose of electric power and energy generated at various federal hydroelectric projects in the Pacific Northwest and to enter into related agreements i

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Now, THEREFORE, the parties do hereby mutually agree as follows:

1. Definition and Explanation ol Terms.

(a) " Annual Budget" means the budget adopted by Supply System not less than 45 days prior to the beginning of each Contract Year which itemizes the projected costs of the Project applicable '

to such Contract Year, or, in the case of an amended Annual Budget, applicable to the remainder of such Contract Year. The Annual Budget, as amended from time to time, shall make provision for all such Supply System's costs, including (1) all obligations of Supply System incurred with respect to the Hanford Project, including its obligations under Supply System's Resolution No.178 and the Bond Resolution and (2) accruals and amortizations, resulting from the ownership, operation (including cost of fuel), and maintenance of the Project and repairs, renewals, replace-ments, and additions to the Project, including, but not limited to, the amounts which Supply System is required under the Bond Resolution to pay in each Contract Year into the various funds provided for in the Bond Resolution for debt service and all other purposes and shall include the source of funds proposed to be used; provided, however, that the Annual Budget for any portion of a Contract Year prior to the Date of Commercial Operation or September 1,1980, whichever occurs first, shall include only such amounts as may be agreed upon by Supply Systern and the Administrator.

(b) " Bonds" means any bond, bonds, or other evidences of indebtedness issued in connection with the Project pursuant to the Bond Resolution (1) to finance or refinance Supply System's costs associated with planning, designing, financing, acquiring and constructing the Project pursuant to the Bond Resolution and (2) for any other purpose related to the Project authorized thereby.

(c) " Bond Resolution" means the resolution or resolutions adopted or supplemented by Supply System, as the same may be amended or supplemented, to authorize the Bonds.

~

(d) " Construction Budget" means the budget adopted by Supply System which sets forth an i

estimated schedule of construction expenditures and itemizes all costs related to ownership, design, planning, construction and financing of the Project, as well as any revision or updating thereof during the course of construction.

(e) " Contract Year" (1) means 'he period commencing on the Date of Commercial Opera-tion, or on January 1,1980, whichever occurs first, and ending at 12 p.m. on the following June 30, and (2) thereafter means the 12-month period commencing each year at 12 p.m. on June 30, except that the last Contract Year shall end on the date of termination of this agreement.

(f) "Date of Commercial Operation" means the date fixed by the parties as the point in time when the project is ready to be operated on a commercial basis pursuant to schedules agreed to by the Administrator and Supply System.

(g) " Generating Facilities" means the Hanford Project power house with two tmbme gen-erator units with a combined nameplate rating of 860 megawatt , related auxiliary equipment, transformation and transmission facilities.

(h) "Hanford Exchange Agreements" means the Exchange Agreements (Contracts No.

14-03-35345 through 14-03-35363 and 14-03-35569 through 14-03-35625, inclusively) executed by 76 utility participants, Supply System and the Administrator providing for the purchase of Project Output from the Hanford Project by the Participants and the exchange of such Project Output with

- the Administrator for firm power and energy (i) "Hanford Project" means the works. plants and facilities constructed by the Supply System for the generation and transmission of electric power and energy in conjunction with the Atomic Energy Commission's New Production Reactor pursuant to Supply System's Resolution No.178.

(j) " Net Billing Agreements" means the agreements for the Project entered into by Supply 2 ' System, the Administrator and each of the Parucipants (designated as Contracts No. 14-03-39217 l through 14-03-39320, inclusive).

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s (k) " Participants" means those entities which are specified in Exhibit A of the Net Billing Agreements, or which become assignees of all or part of any Participant's Share pursuant to the Net Billing Agreements.

(1) " Project" means the nuclear generating plant and related properties as described in Exhibit A. Exhibit A may be revised from time to time by mutual agreement of the parties, but in any event shall conform to the description of the Project in the Bond Resolution which authorizes the issuance of Bonds in an amount sufficient to pay the costs of acquiring and constructing the Project.

(m) " Project Capability" means the actual electrical generating capabJity, if any, of the Project at any particular time (including times when the Project is not operath or operating or the operation thereof is suspended, interrupted, interfered with, reduced or curtailed, in each case in whole or in part), less Project stason use and losses.

(n) " Project Consultant" means r.n individual or firm, of national reputation having demon-strated expcrtise in the field of the me.ter or item referred to it, appointed among other things, for the resolution of a difference regarding a matter or item referred by Supply Syrtem. A different Project Consultant may be appointed for each matter or item referred.

(o) " Project Exchange Agreements" means the agreements entered into by Supply System, the Administrator and each of The Montana Power Company, PaciSc Power & Light Company, Portland General Electric Company, Puget Sound Power & Light Company, and The Washington Water Power Company (Contracts No. 14-03-39212 through 14-03-39216, inclusive).

(p) " Prudent Utility Practice" at a particular time means any of the practices, methods, and acts, which, in the exercise of reasonable judgment in light of the facts (including but not limited to the practices, methods and acts engaged in or approved by a significant portion of the electrical ttility industry prior thereto) known at the time the decision was made, would have been expected to accomplish the desired result at the lowest reasonable cost consistent with reliability, saftey and expedition. Prudent Utility Practice shall apply not only to functional parts of the Project but also to appropriate structures, landscaping, painting, signs, lighting, other facilities and public relations programs reasonably designed to promote public enjoyment, understanding and acceptance of the Project. Prudent Utility Practice is not intended to be limited to the optimum practice, method or act, to the exclusion of all others, but rather to be a spectrum of possible practices, methods or acts.

In evaluating whether any matter conforms to Prudent Utility Practice, the parties and any Project Consultant shall take into account (1) the fact that Supply System is a municipal corporation and operating agency under the laws of the State of Washington with the statutory duties and responsi-bilities thereof and (2) the objective to integrate the entire Project Capability with the generating resources of the Federal Columbia River Power System to achieve optimum utilization of the re-sources of that system taken as a whole, and to achieve efficient and economical operation of that system.

2. Exhibits. Exhibits A and B are by this reference incorporated herein and made a part of this agreement. Supply System shall be the Contractor as that term is used in Exhibit B.

3. Term of Agreement. This agreement shall be effective upon execution and delivery and shall terminate when the Project terminates as provided in section 15.

4. Design, Licensing and Construction of the Project.

(a) Supply System shall perform its duties and exercise its rights under this agreement in accordance with Prudent Utility Practice.

(b) Supply System shall seek and use its best efforts to obtain all licenses, permits and other rights and regulatory approvals necessary for the ownership, construction, and operation of the Project.

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(c) Supply System shall complete all appropriate planning and engineering studies and con- i struct the Project in accordance with Prudent Utility Practice. Supply System shall use its best efforts to schedule the Date of Commercial Operation to be, as near as may be, September 1,1980.

(d) Supply System shall keep the Administrator informed of all matters Supply System deems significant with respect to planning, engineering studies and construction of the Project, where practicable in time for the Admmistrator to comment thereon before decisions are made. Upon request by the Administrator, Supply System shall furnish or make available to the Administrator with reasonable promptness, and at reasonable times, copies of proposed plans, specifications, invi-tations for bids and contracts and all certificates delivered to Supply System by any engineer or architect in connection with such construction, and all bids, papers, records and accounts relating to construction or operation of the Project.

(e) Supply System shall award separate contracts for readily separable parts of the work to the extent consistent with construction of the Project at the least overall cost and the high quality required. Construction contracts may be lump sum or unit price, and may also contain incentive and liquidated damages clauses. Supply System shall advertise for bids among qualified contractors and award the contract after appropriate evaluation and review to the lowest responsible bidder, or reject all bids. All bids, bid evaluations, and proposed contract awards for amounts in excess of

$500,000 shall be submitted to the Administrator prior to contract award. If the Administrator disapproves the proposed award, the matter will be referred to the Project Consultant as provided in section 10.

(f) The Administrator may, at his option and at Government expense, maintain a representa-tive at the Project site during the construction of the Project. Such representative shall have no authority regarding administration or inspection of the Project construction.

(g) Notwithstanding any other provisions of this agreement, the selection of the (1) type )

and speciScations for the nuclear stcam supply system, (2) method of cooling, (3) specifications for the additional turbine-generator, and (4) architect-engineer shall be made only after approval by the Administrator.

(h) The Administrator shall have the right to purchase upon reasonable terms and conditions energy produced during any test operation of the generating unit of the Project, upon reasonable notice to Supply System of his intention to do so, given prior to the commencement of such test operation. If the Admmistrator does not exercise such right, he shall accept delivery into the Federal Columbia Rive' Power Syst n and, upon reasonable terms and conditions, shall deliver any such energy not purchased by him to Supply System or its assignee at mutually agreed points.

5. Financing of the Project.

(a) Supply System shall, in good faith and with duc diligence, use its best efforts to issue and sell Bonds to finance the costs of the Project and the completion thereof, as such costs are defined in the Bond Resolution and, subject to the provisions of section 11(c), to finance the costs of any capital additions, renewals, repaire, replacements, or modifications to the Project; provided, however, that in each such case such Bonds may then be legally issued and sold.

Supply System may, after submitting its financing proposal to the Administrator, or shall, whenever requested by the Administrator, adopt proceedings to authorize the issuance and sale of additional Bonds to refund outstanding Bonds prior to maturity in accordance with the Bond Resolution; provided, however, that if in the judgment of Supply System or the Adnunistrator no substantial benefits or economics will be achieved by such refunding the matter shall be referred to the Project Consultant as provided in section 10.

(b) Notwithstanding any other provisions of this agreement, the Bond Resolution shall bc )

subject to the approval of the Administrator.

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6. Budget and Accounting Procedurer. l (a) Construction Budget. The Administrator has heretofore reviewed Supply System's Con-struction Budget in connection with the Project. By October 1 of each year until completion of construction of the Project Supply System shall prepare and submit to the Administrator an updated Construction Budget describing the items of construction and the estimated amounts to be expended therefor in each quarter from the ===^=g January 1_ to estimated date of Project completion.

Supply System shall submit revised Construction Budgets to the Administrator from time to time to resect substantial changes in construction schedules, plans, speci8 cations, or costs. Updated C=.m.cbs Budgets for the EE=="=g calendar year ac: revned Construction Budgets for the current calendar year shall become effective unless disapproved by the Administrator within 30 days, and seven days, respectively, a'ter submittal.- Any item disapproved shall be referred to the Project Consultant as provided in section 10.-

A monthly Construction Budget report shall be prepared by Supply System and Sled with the Administrator showing by major plant accounts or contracts, the cumulative amounts committed and the cumulative expenditures to date of each such report.

4 (b) Annual Budget. At least 90 days prior to the expected Date of Commercial Operation,

Supply System shall submit to the Administrator a proposed Annual Budget for the period from the expected Datc of Commercial Operation to the next suceceding July 1, and if the Date of Com-mercial Operation occurs subsequent to April 1 in a calendar year, a similar Annual Budget for i the next succeeding Contract Year. Thereafter, on or before April 1 of each year Supply System shall submit to the Administrator a similar Annual Budget for the next succeeding Contract Year, which budget shall take into account the cumulative difference between total moneys received and expenditures for the prior Contract Year and provide for adjustment, es necessary, of the appropriate

, working cash fund.

All taxes imposed and required by law to be paid, and which are due and payable in a Contract Year, shall be included in the Annual Budget for that Contract Year as a Project Cost. To the extent Supply System is permitted by' law to negotiate for payments in lieu of taxes or other negotiated payments to state or local taxing entities, the Annual Budget shall also include the amounts of such negotiated payments; provided, however, that Supply System shall not agree to such negotiated payment if in any Contract Year the sum of such negotiated payments to such taxing entities and taxes imposed by law by such taxing entities would exceed the total amount of ad valorem taxes that Supply System would have paid in that year to such taxing entities if the Project or portion thereof, within the boundaries of each such taxing entity, were subject to ad

valorem taxes and its valuation for tax purposes were addul to the valuation of the property subject to ad valorem taxes by such taxing entity, but with its millage rate reduced so that the amount of ad valorem taxes raised would be unchanged.  ;

t Notwithstanding any other provision of this agreement, costs incurred by Supply System in  !

an emergency or to protect the safety of the Project or the public shall be added to the Annual Budget as incurred. Promptly after any such occurrence, and prior to expenditures of any other

. funds not contemplated in the effective Annual Budget, Supply System shall submit a revised Annual Budget to the Administrator.

. The Annual Budget and revised Annual Budget shall become effective unless S. approved by

the Administrator within 30 days and seven days, respectively, after submittal. Any item dis-approved shall be referred to the Project Consultant as provided in section 10.

l (c) Accounting. Supply System shall keep up-to-date books and records showing all financial )

l transactions and other arrangements made in carrying out the terms of this agreement. Such books

! and records shall contain information supporting the allocation of Supply System's indirect costs

associated with the Project, and the method of allocating or prorating costs or expenses as between l

the Project and other activities in which Supply System may have an interest shall be based upon 71 I

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Prudent Utility Practice. Such books and records shall be retained by Supply System for three  ;

c years and shall be made available for inspection and audit by the Administrator at any reasonable

time, m

• All accounts shall be kept so as to permit conversion to the applicable system of accounts prescribed for electric utilities by the Federal Power Commission.

Any contract with any consultant or contractor of Supply System providing for reimbursement of costs or expenses of any kind shall require the keeping and maintenance of books, records, e documents, and other evidence pertaining to the costs and expenses incurred or claimed under such

contract to the extent and in such detail as will properly reflect all costs related to this agreement g

and shall require such books, records, documents and evidence to be made available to the Admina-trator at all reasonable times for review and audit for a period of three years after final settlement i of the applicable contracts.

(d) All moneys received on account of the Proicct which are surplus to a current year's oper-

_ . ating and capital expenses and Bond Resolution requirements shall be invested by Supply System L in accordance with the Bond Resolution until such surplus moneys can be appropriately applied

. In a future Contract Year.

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7. OperationandMaintenanceof theProlect.

(a) Supply System shall operate and niaintain the Project in accordance with Prudent Utility ir Practice, so as to meet the requirements of the Atomic Energy Commission, and other government F

agencies having jurisdiction and the applicable requirements of bond resolutions.

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= (b) During any hour in which the Project does not generate power for station use and losses Ri to the high voltage terminals of the Project substation, the Administrator shall furnish such power, K except for amounts others are obligated to supply under the Project Exchange Agreements and Net j L Billing Agreements to the Supply System at the point of delivery specified in section 11 of the Net Billing Agreements; provided, however, that deliveries of such power may be interrupted or reduced in the case of system emergencies, or in order to make repairs, replacements or necessary additions

to or perform maintenance on that portion of the Federal Columbia River Power System necessary b

E to provide such power.

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8. Fuel.

F 'a) At least 60 days prior to the anticipated date of award of the initial fuel contracts, Supply y Syste;i shall submit the proposed provisions of such contracts to the Admmhtrator. Within 180 T- days after the date of award of such contracts, and annually thereafter until the Date of Commercial Operation, Supply System shall prepare and submit a fuel management plan (Plan) to the Admin-i istrator. Each year after the Date of Commercial Operation, the Plan shall be submitted at the

{ same time the Annual Budget is submitted pursuant to section 6(b). Supply System shall amend the Plan as reasonably required to reflect changes in conditions unforeseen at the time the Plan L .

was prepared.

[ Supply System shall consult with the Adrninistrator in the preparation of the initial and each

, subsequent Plan. The Administrator shall furnish Supply System all necessary forecasts of the generation requirements of the Project. Such forecasts shall indicate the manner in which the g Project is to be operated to integrate and coordinate the Project with hydroelectric and other thermal r resources available to the Admmatrator. Supply System shall rely upon such forecasts in preparing I the Plan.

De Plan shall cover a period of at least the next succeeding ten years. It shall include a cash C flow analysis of forecasted expenditures and credits for each major component of the fuel cycle, by E years, for the entire period, and cash flow by months, for the first five years of the period. He Plan shall also include, but shall not be limited to, forecasts of the dates and details of fueling out-E-

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y ages, contracts for each component of the fuel cycle,' shipments and any licenses or permits required therefor and any other pertinent actions.

Each Plan,' (including the provisions of the initial fuel contracts,) any changes therein, and costs relating thereto shall become effective unless disapproved by the Administrator within 30 days after submitts); provided, however, that whenever in his judgment it is practical to do so the Administrator shall notify Supply. System in writing within ten days after each such submittal of his approval or disapproval. Any matter or item disapproved shall be referred to the Project Consultant as pro.ided in section 10.

(b) At the time of each fueling, Supply System shall prepare in consultation with the Adminis-trator and furnish to the Administrator its best estimate of the kilowatt-hours of net energy available from the Project to the next scheduled fueling date and the estimated fixed and variable unit cost per net kilowatt-hour and furnish to the Administrator such other data as may be requested by the Administrator. Supply System shall review the data with the Admimstrator at least monthly and revise such data as necessary.

9. Permits. Subject to any regulations of the Atomic Energy Commission pertainicg to the Project, if by the terms of this agr eement any equipment er facility of either party is, or is to be, located on the property of the other, a permit to install, test, maintain, inspect, replace, and repair during the term of

. this agreement and to remove at the expiration of said term such equipment and facility, together with 1

the right of ingress to and egress from the location thereof at all reasonable times in such term, is hereby granted by the other party.

10. Administrator's Approval and Project Consultant.

' {-

(a) All proposals of Supply System, including but not limited to, budgets, plans, actions, activities, or matters submitted to the Administrator under any provisions of this agreement shall include itemized cost estimates and other detail sufficient to support a comprehensive review, includ-ing but not limited to, a copy of all supporting reports, analyses, recommendations, or other docu-ments pertaining thereto. If the Administrator does not disapprove the proposal within the time speci6ed, or if no time is specified, within seven days after receipt, the proposal shall be deemed approved. Any proposal disapproved shall be segregated so that exact items of difference are identi-Sed and shall become effective immediately as to items not disapproved.

(b) Except as provided in sections 4(g), 5(b),11(b), and the third paragraph of section 6(b), disapproval by the Administrator shall be given in writing and shall be based solely on a

whether the proposal or item is consistent with Prudent Utility Practice. Such disapproval shall 4

describe in what particular the proposal or item is not consistent with Prudent Utility Practice and

, shall at the same time recommend what would meet that standard.

i

' When any proposal or item is so disapproved by the Administrator, Supply System shall adopt the suggestion of the Administrator or within seven days after receipt of such disapproval, shall appoint a Project Consultant acceptable to the Administrator to review the proposal or item in the manner described in this section. If the parties shall not agree upon the selection of the Project l Consultant, Supply System shall promptly request the Cinef Judge of the United States District

! Court for the Western District of Washington to appoint the Project Consultant.

(c) The Project Consultant shall consider all written arguments and factual materials which

! ' have been submitted to it by either party within the ten days following its appointment, and as promptly as possible after the expiration of such period, make a written determination as to whether l the proposal or item disapproved by the Administrator referred to it by Supply System would or

! would not have been consi< tent with Prudent Utility Practice. If the Project Consultant determines i

that the proposal or item referred to it was not consistent with Prudent Utility Practice it shall, at l

the same time, recommend what would, under the same circumstances, have met such test.

l

[ 73 l

i

.-.__.._.....-..,.,.._-_m.~_e._, _ . - - - . _ , ... _ _ _ . . _ . . . , _ . . . .- . . __.,m,_-_r,

Proposals or items found by the Project Consultant to be consistent with Prudent Utihty Practice l shall become immediately efective. Proposals or items found by the Project Consultant to be incon-

< sistent with Prudent Utility Practice shall be moddied to conform to the recommendation of the  ;

Project Consultant or as the parties otherwise agree and shall become cEcctive as and when moddled. j (d) All costs incurred by Supply System for or by reason of employing a Project Consultant under this agreement and the Net Bdhng Ay -- - - t= shall be a cost of the Project. ,

(e) If any proposal or item referred to the Project Consultant has not been resolved and will afect the continuous operation of the Project, Supply System shall continue to operate the Project. -

Supply System may proceed with the item, (1) as proposed by it, or (2) as proposed by the r- Administentor, or (3) as moddled by mutual agreement by Supply System and the Administrator prior to the time such item afects operation of the Project; provided, however, that if Supply System

' proceeds with the item as proposed by it and that item is determined by the Project Consultant to be lamaai=**at with Prudent Utility Pracace, Supply System shall bear any net increase in the cost of construction or operation of the Project resulting from such item without charge to the Project to the extent such item was inmanistent with what the Project Consultant determined would under

, - such circumstances have met such test. Notwithstanding other provisions of this section.10(e),

whenever a proposal has been referred to the Project Consultant, Supply System shall operate in accordance with Supply System's proposals until such proposal has been resolved by the Project Consultant, whenever Supply System determines that the Administrator's proposals would create

- an immediate danger to the safe operation of the Project.

(f) The Administrator's approval or failure to disapprove any plan, proposal or item pursuant to the terms of this agreement shall not render the G'overnment, its officers, agents, cr employees, liable or responsiole for any injury, loss, damage, or accident resulting from ownership, design, l

construction, operation, or maintenance of the Project. g (g) The word " item" as used in this section means the item described including the cost speci8ed therefor.

11. Replacements, Repairs and Capital Additionr.

l (a) After the Date of Commercial Operation Supply System shall submit its plar, including j

but not limited to a financing plan, and budget of expenditures to the Administrator for each replace-

! ment, repair, or betterment relating thereto, or capital addition required by govemmental agencies, each as related to the Project and having a cost, as estimated by Supply System, in excess of

$3,000,000; provided, however, that if the estimated cost of any such replacement, repair, or better-ment relating thereto, or capital addition required by governmental agencies, exceeds 20 percent of the l then depreciated value of the Project, the Administrator may direct that Supply System end the Project in accordance with section 15. If the parties cannot agree upon such estimated costs, such i- estimated costs shall be referred to and determined by the Project Consultant. If the Administrator does no*. so direct within 90 days from the date such estimated cost has been so agreed upon or determined, Supply System shall proceed with its plan and budget of expenditures for such replace-ment, repair, or betterment relating thereto, or capital addition required by such governmental agency. Each such plan and budget or updated or revised budget relating thereto shall be submhted to the Administrator and shall become effective at the time and in the manner provided in sec-tion 6(a).

(b) Notwithstanding any other provisions of this agreement, Supply System shall not expend or obligate, without prior approval of the Administrator, moneys exceeding $50,000 in any Con-tract Year for capital additions to the Project unless such capital additions are required by j governmental agencies.

(c) If in any Contract Year the amounts in the Annual Budget for renewals, re' pairs, replace- 'l

! ments, and betterments and for capital additions necessary to achieve design capability or required i I 74 l

l l

L

( by governmental agencies (Amounts for Extraordinary Costs), whether or not such amounts are costs of operation or costs of construction, exceed the amount of reesrves, if any, maintained for such purpose pursuant to the Bond Resolution plus the proceeds of insurance, if any, available by reason of loss or damage to the Project, by the lessor of:

(1) an amount of $3,000,000 or (2) an amount by which the amount of the Administrator's estimate of the total of the Administrator's net billing credits available in such Contract Year to the Participants pursuant to section 7(a) of the Net Billing Agreements and the amounts of such reserves and insurance proceeds, if any, exceeds the Annual Budget for such Contract Year exclusive of Amounts for Extraordmary Costs, Supply System shall, in good faith. use its best efforts to issue and sell Bonds to pay such excess in accordance with section 5(a).

12. Inrurance.

(a) Supply System shall maintain in force, for the benefit of the Project, the Administrator, Supply System, and the Participants as their respective interests shall appear, as a Project expense, such insurance as will satisfy the requirements of the Bond Resolution, the Atomic Energy Act of 1954 as amended, other insurance required by applicable statutes, and such other insurance as the parties agree. Subject to sectioti 11 any proceeds of such insurance received by the Supply System for loss or damage to the Project shall be used to repair the Project. Supply System shall not, without the consent of the Admmistrator and the Participants' Review Board as established pursu-ant to section 17 of the Net Billing Agreements, cause the insurance on the Project to be extended

[ to any additional units or generating projects or to lapse to permit the extension of such coverage.

(b) The Administrator may request additional insurance to the extent available, and Supply System shall purchase sach requested insurance at the Admmistrator's expense. The proceeds from such requested insurance shall be disbursed as directed by the Administrator.

13. Inrpection of Profect Facilities. The Administrator may, but shall not be obligated to, inspect the Project at any reasonable time, but such inspection, or failure to inspect, shall not render the Govern-ment, its officers, agents, or employees, liable or responsible for any injury, loss, damage, or accident resulting from defect in the Project.

14. Training. Supply System shall carry out a familiarization and training program to maintain adequate staff for the Project and the expenses thereof shall be part of the direct or indirect costs of '

construction or costs of operation as appropriate.

15. End of the Profect. The Project shall terminate and Supply System shall cause the Project to be salvaged, discontinued, decommissioned, and disposed of or sold in whole or in part to the highest bidder (s) or disposed of in such other manner as the parties may agree when (a) Supply System determines it is unable to construct, operate, or proceed as owner of the Project due to licensing, financing, or operating conditions or other causes which are beyond its control.

(b) the parties determine the Project is not capable of producing energy consistent with Prudent Utility Practice or, if the parties disagree, the Project Consultant so determines, or (c) the Administrator directs end of Project as provided in section 11(a).

The date of termination shall be the earliest of the date of the determination under subsections (a) or (b) above or the date of direction under subsection (c) above.

75

, w _--

'16. Assignment of Agreement. This agreement shall inure to the benent of, and shall be binding upon, the respective succe> sors and assigns of the parties to this agreement; provided, however, that neither this agreement, nor any interest therein shall be transfened or assigned by (a) Supply System to any entity other than the United States or an agency thereof, without written consent of the Administra-tor, or (b) the Administrator to any party other than the United States, or an agency thereof, without written consent of Supply System.

17. Applicability of Other lastrwnents. It is recognized by the parties hereto that Supply System in the ownership, construction and operation of the Project must comply with the requirements of the Bond Resolution and all licenses, permits and regulatory approvals necessary for such ownership, construction and operation, and it is, therefore, agreed that this agreement is made, and referrals to the Project Consultant hereunder shall be, subject to the terms and provisions of the Bond Resolution and all such licenses, permits, and regulatory approvals.

IN WITNESS WHEaEOF, the parties hereto have executed this agreement in several counterparts.

UNITED STATES OF AMERICA Department of the interior

• By ..................................

(SEAL)

Bonneville Power Administrator WASHINGTON PunLic POWER SurrLY SysTEu -

1 By ..................................

(SEAL)

Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

ATTEST:

By...........................

Title . . . . . . . . . . . . . . . . . . . . . . . . . . .

1 76

I EXHIBIT A PROJECT CHARACTERISTICS WASHINGTON PUBLIC POWER SUPPLY SYSTEM NUCLEAR PROJECT NO.1 The Washington Public Power Supply System's Nuclear Project No.1 is expected to have a net electrical plant capability of approximately 1230 MW.

A new pressurized water reactor nuclear steam supply system similar to other reactors now under construction will replace the NPR as a steam source. It will include, but not be limited to, a nuclear reactor, fuel, control systems, primary coolant loops with steam generators, engineered safeguard systems, radraste system, service systems, containment building and other auxiliary facilities.

Steam will be fed from this new reactor to a new topping turbine and generator with a nameplate rating of approximately 400 MW housed in an extension of the existing turbine-generator building of the Generating Facilities. New piping will transmit low pressure exhau:t steam from the new topping turbine to the existing low pressure turbine complex which is a part of the Generating Facilities. The existing turbines may be modi 6ed, including the addition of extra stages of blades; and such modifications, addi-tions and alteration to the condensers, cooling system, feedwater heaters, feedwater pumps, instrumenta-tion, control systems, auxiliary startup power facilities and other components of the Generating Facilities will be made as shall be required to operate the tcpping turbire and to utilize exhaust steam from the topping turbine.

77

EXHIBIT B *>

FROVISIONS REQUIRED BY STATUTE OR EXECUTIVE ORDER

1. Contract Work Hours and Safety Standards.

This contract, to the extent that it is of a character specified in the Contract Work Hours and Safety Standards Act (Public Law 87-581, 76 Stat. 357-360, as amended) and is not covered by the Walsh.

Healey Public Contracts Act (41 U.S.C. 35-45), is subject to the following provisions and to all other provisions and exceptions of said Contract Work Hours and Safety Standards Act.

(a) No Contractor or subcontractor contracting for any part of the contract work which may require or involve the employment of laborers or mechanics shall require or permit any laborer or mechanic in any workweek in which he is employed on such work, to work in excess of eight hours in any calendar day or in excess of forty hours in any workweek unless such laborer or mechanic receives compensation at a rate not less than one and one-half times his basic rate of pay for all hours worked in excess of eight hours in any calendar day or in excess of torty hours in such workweek, whichever is the greater number of overtime hours.

(b) In the event of any violation of the provisions of subsection (a), the Contractor and any subcontractor responsible for such violation shall be liable to any affected employee for his unpaid wages. In addition, such Contractor or subcontractor shall be liable to the United States for liqui-dated damages. Such liquidated damages shall be computed, with respect to each individual laborer or mechanic employed in violation of the provisions of subsection (a), in the sum of $10 for each calendar day on which such employee was required or permitted to work in excess of eight hcurs or in excess of forty hours in a workweek without payment of the required overtime wages.

(c) The Administrator may withhold, or cause to be withheld, from any moneys payable on account of work performed by the Contractor or subcontractor, the full amount of wages required by this contract and such sums as may administratively be determined to be necessary to satisfy any liabilities of such Contractor or subcontractor for liquidated damages as provided in subsection (b).

(d) No contractor or subcontractor contracting for any part of the contract work shall require any laborer or mechanic employed in the performance of the contract to work in surroundings or under working conditions which are unsanitary, hazardous, or dangerous to his health or safety, as determined under construction safety and health standards promulgated by the Secretary of Labor by regulation based on proceedings pursuant to section 553 of title 5, United States Code, provided that such proceedings include a hearing of the nature authorized by said section.

(e) The Contractor shall require the foregoing subsections (a), (b), (c), (d) and this sul>-

section (e) to be inserted in all subcontracts.

(f) The Contractor shall keep and maintain for a period of three (3) years from the comple-tion of this contract the information required by 29 CFR 5516.2(a). Such material shall be made available for inspection by authorized representatives of the Government, upon their request, at reasonable times during the normal work day.

2. Convict Labor. The Contractor shall not employ any person undergoing sentence of imprison-ment at hard labor.

3. Equal Opportunity. Unless exempted pursuant to the provisions of Executive Order 11246 of September 24,1965 and the rules, regulations and relevant orders of the Secretary of labor thereunder, during the performance of this contract, the Contractor agrees as follows:

(a) 'Ibe Contractor will not discriminate against any employee or applicant for employment )

because of race, color, religion, sex, or national origin. The Contractor will take affirmative action 78

p E

m

= f to ensure that applicants are employed, and that employees are treated during employment, without

=- regard to their race, color, religion, sex, or national origin. Such action shall include, but not be

[ limited to, the following: employment, upgrading, demotion or transfer; recruitment or recruitment r advertising; layoff or termination; rates of pay or other forms of compensation and selection for training, including apprenticeship. The Contractor agrees to post in conspicuous places, available b to employees and applicants for employment, notices to be provided by the Administrator setting

forth the provisions of this equal oppottunity clause.

E (b) The Contractor will, in all solicitations or advertisements for employees placed by or on T behalf of the Contractor, state that all qualified applicants will receive consideration for employment E without regard to race, color, religion, sex, or national origin.

r (c) The Contractor will send to each labor union or representative of workers with which he has a collective bargaining agreement or other contract or understanding, a notice, to be provided

by the Administrator, advising the labor union or worker's representative of the Contractor's com-mitments under this equal opportunity clause and shall post copies of the notice in conspicuous places available to employees and applicants for employment.

y (d) The Contractor will comply with all provisions of Executive Order No.11246 of Septem-ber 24,1965, and of the rules, regulations, and relevant orders of the Secretary of Labor.

(e) The Contractor will furnish all information and reports required by Executive Order No.11246 of Septmber 24, 1965, and by the rules, regulations, and orders of the Secretary of E Labor, or pursuant thereto, and will permit access to his books, records, and accounts by the Ariministrator and the Secretary of Labor for purposes of investigations to ascertain compliance g with such rules, regulations and orders.

7 (f) In the event of the Contractor's noncompliance with the equal opportunity clause of this contract or with any of such rules, regulations, or orders, this contract may be cancelled, terminated, T or suspended in whole or in part and the Contractor may be declared ineligible for further Govern-f ment contracts in accordance with procedures authorized in Executive Order No.11246 of Septem-p ber 24,1965, and such other sanctions may be imposed and remedies invoked as provided in Executive Order No.11246 of September 24,1965, or by rule, regulation, or order of the Secretary of Labor, or as otherwise provided by law.

{ -

(g) The Contractor will include the provisions of paragraphs (a) through (g) in every E subcontract or purchase order unless exempted by rules, regulations, or orders of the Secretary of p Labor issued pursuant to Section 204 of Executive Order No.11246 of ';eptember 24,1965, so that such provisions will be binding upon each subcontractor or vendor. The Contractor will take Ec such action with respect to any subcontract or purchase order as the Administrator may direct as a

means of enforcing such provisions including sanctions for noncompliance; provided, however, that l- in the event the Contractor becomes involved in, or is threatened with, litigation with a subcontractor E or vendor as a result of such direction by the Administrator, the Contractor may request the United k States to enter into such litigation to protect the interests of the United States.

R 4. Interest of Member of Congress. No Member of or Delegate to Congress, or Resident Commis-sioner shall be admitted to any share or part of this contract or to any benefit that may arise therefrom.

Nothing, however, herein contained shall be construed to extend to such contract if made with a corpora-E

=

tion for its general benefit.

E E

m b

79

D i

EXHIBIT V ve6:n-o.s e.e .ae.o..o WOOD DAWSON t.OVE & SABATIN E ' " "

ATTORNEYS AND coWNaCLLQRS AT LAW

..m. .............

so ........-

t.;."s,*=:o.

.= o'..':::,

. i s a.. 4e WALL sin c er

.. . a s . . c o. c. NEW YORK,N Y. 10005 s...... s.....c.

Board of Directors WASHINGTON PUBuc POWER SUPPLY SYSTEM 395 Fifth Avenue Richland, Washington DEAR $1Rs:

WASHINGTON PUBLIC POWER SUPPLY SYSTEM NUCLEAR PROJECT NO.1 REVENUE NOTES, SERIES 1973,

$25,000,000 At your request we have examined into the validity of an issue of S25,000,000 Washington Public Power Supply System Nuclear Project No.1 Revenue Notes, Series 1973, of Washington Public Power Supply System (the " System"), a municipal corporation of the State of Washington. Said note.s are issuable in coupon form, are dated February 15, 1973, mature without optioa of prior redemption on  ;

December 15,1975, are of the denomination of S cach, numbered I to , inclusive, and bear interest at the rate of per centum per annum, payable semi-annually June 15 and December 15. Said notes recite that they are issued under and pursuant to Resolution No. ,

adopted by the Board of Directors of the System on the th day of February,1973 (the " Note Resolution"), and under the authority of and in full compliance with the Constitution and statutes of the State of Washington, including Titles 43 and 54 of the Revised Code of Washington, and proceedings of the Board of Directors of the System daly adopted, for the purpose of paying a part of the cost of acquiring and constructing the Project (as such Project is defined in the Note Resolution).

We have examined the Constitution and statutes of the State of Washington, and certi6ed copies of proceedings of the Board of Direktors of the System authorizing the issuance of said notes, including the Note Resolution, and other proofs relating to the issuance of said notes, also an executed note of said issue.

In our opinion the Note Resolution has been duly adopted, the provisions thereof are valid and binding upon the System and said notes have been duly authorized and issued in accordance with the Constitution and statutes of the State of Washington, and constitute valid and legally binding obligations of the System, payable from any moneys of the System that may be lawfully applied to the payment 1

thereof, including revenues of the Project, as the Project is defined in the Note Resolution, and the proceeds of revenue bonds or refunding notes of the System.

It is also our opinion that the interest on said notes is exempt from taxation by the United States of America under existing laws and regulations and a specific ruling issued by the Internal Revenue Service with respect to the notes.

Very truly yours, Woon DAWSON LOVE & SABATINE l 80

( wCOD DAWSON LOVE & SABATINE ATTORNEYS AND COUNSELLORS AT LAW tr6re o c asa .

• • • ^""***"*"

.o.so X.'.'

• 2 *,*:.*o "," * " " *'

.t G. .'Z.. .MU....., . .

48 WALL STREET

.mus ntLtm n N EW Y O R K, N. Y. 10005 Board of Directors WASHINGTON Pusuc Powna SurrLY SYSTEM 395 Fifth Avenue Richland, Washington DEAR SMS:

WASHINGTON PUBLIC POWER SUPPLY SYSTEM NUCLEAR PROJECT NO.1 REVENUE NOTES, SERIES 1973,

$25,000,000 Under date of ,1973, we rendered an opinion approving the validity of the above notes (the " Notes") issued pursuant to a resolution adopted by the Board of Directors of the Washington

, Public Power Supply System (the " System") on ,1973 (the " Note Resolution").

k, We have examined into the validity of the Project Agreement (Contract No. 14-03-39211), dated

,1973, between the United States of America, Department of the Interior, acting by and through 11 .nneville Power Administrator, and Washington Public Power Supply System, referred to on page of the OfBeial Statement of the System, dated ,1973, relating to the Notes. With respect to the authorization, execution and delivery of said agreement, we have examined certified copies of proceedings of the Board of Directors of the System authorizing the execution and delivery of said agreement, and such other documents, proceedings and matters relating to the authorization, execution and delivery of said agreement by each of the parties thereto as we deemed relevant. In our opinion, said 1

agreement has been duly authorized, executed and delivered by each of the parties thereto and constitutes a valid and binding agreement enforceable in accordance with its terms.

We have also examined into the validity of of the Net Billing Agreements, referred to on page of said Official Statement, among the United States of America, Department of the Interior, acting by and through the Bonneville Power Administrator, the System, and certain of the Participants referred to in Exhibit I of said Official Statement, which agreements provide for the purchase and assignment of an aggregate of not less than  % of the capability of the Project, as such Project is defined in the Note Resolution, in any Contract Year (as defined in the Net Billing Agreements) durint the period ending June 30,1986,  % of said capability in the period beginning

, July 1,1986 to and including June 30,1996,and  % of said capability in each twelve month period thereafter. With respect to the authorization, execution and delivery of said Net Billing Agreements, we have examined certified copies of proceedings of the System and of the Participants which are parties thereto, authorizing the execution and delivery of said Net Billing Agreements, and such other documents, proceedings and matters relating to the authorization, execution and delivery of said Net Billing Agreements by each of the parties thereto as we deemed relevant.

In our opinion, each of said Net Billing Agreements has been duly authorized, executed

and delivered by each of the parties thereto and constitutes a valid and binding agreement, enforceabic in accordance with its terms.

81

We have also examined into the validity of the five Exchange Agreements referred to on page of said OfBeial Statement, among the United States of America, Department of the Interior, acting by and through the Bonneville Power Administrator, the System and each of The Montana Power Company, Pacific Power & Light Company, Portland General Electric Company, Puget Sound Power & Light Company and The Washmston Water Power Company, which five agreements provide for the purchase by said Companies and exchange of an aggregate of 32.470% of the capability of the Project during the period beginning July 1,1980, and ending on June 30, 1996. With respect to the authorization, execution and delivery of said Exchange Agreements, we have exammed certified copies of proceedings of the System and of the Companies which are parties thereto, authorizing the execution and delivery of said Ex4=:e Agreements, and such other documents, proceedings and matters relating to the authorization, execution and delivery of said Exchange Agreements by each of the parties thereto as we deemed relevant. In our opmion, each of said Exchange Agreements has been duly authorized, executed and delivered by each of the parties thereto and constitutes a valid and binding agreement, enforceable in accordance with its terms.

In rendering this opinion, we have relied upon the opinion of counsel for each of the Participants and aforesaid Companies that the Net Billing Agreement or Exchange Agreement to which such Participant or Company is a party has been duly executed and delivered by said Participant or Company and is not in conflict with, or in violatio. of, and will not be a breach of, or constitute a default under, the terms and conditions of any other agreement or commitment by which such Participant or Company is bound.

Very truly yours, Woop DAWSON LOVE & SAEATINE

)

4 42

e s

4

/ ,

EXHIBIT VI )

law orrices or i U.*e*t%"' " "'* HOUGHTON, CLUCK, COUGHUN & RILEY

• • vac

, ",e sao crur=AL suitolNO YgLg pHohg; 8 $$ '

g,8cMv3AToEn ""^******'"****'#

BERTRAM L. MET 2GER.JR.

JOE L M A40 AR D WILLI AM N. M ATMI AS. E Board of Directors WASHINGTON Pusuc POWER SUPPLY SYSTEM 395 Fifth Avenue Richland, Washington DEAR Stas:

WASHINGTON PUBLIC POWER SUPPLY SYSTEM NUCLEAR PROJECT NO.1 REVENUE NOTES, SERIES 1973, S25,000,000 At your request we have examined into the validity of an issue of $25,000,000 Washington Public Power Supply System Nuclear Project No.1 Revenue Notes, Series 1973, of Washington Public Power Supply System (the " System"), a municipal corporation of the State of Washington. Said notes are issuable in coupon form, are dated February 15, 1973, mature without option of prior redemption December 15,1975, are of the denomination of $ each, numbered 1 to , inclusive, and bear interest at the rate of per centum per annum, payable semi-annually June 15 and December

15. Said notes recite that they are issued under and pursuamt to Resolution No. , adopted by the Board of Directors of the System on the day of February,1973 (the " Note Resolution"), and under the authority of and in full compliance with the Constitution and statutes of the State of Washington, including Titles 43 and 54 of the Revised Code of Washington, and proceedings of the Board of Directors of the System duly adopted, for the purpose of paying a part of the cost of acquiring and constructing the Project (as such Project is defined in the Note Resolution).

We have examined the Constitution and statutes of the State of Washington, and certified copies of proceeding:, of the Board of Directors of the System authorizing the issuance of said notes, including the Note Resolution, and other proofs relating to the issuance of said notes, also an executed note of said issue.

In our opinion the Note Resolution has been duly adopted, the provisions thereof are valid and binding upon the System and said notes have been duly authorized and issued in accordance with the Constitution and statutes of the State of Washington, and constitute valid and legally binding obligations of the System, payable from any moneys of the System that may be lawfully applied to the payment thereof, including revenues of the Project, as the Project is defined in the Note Resolution, and the proceeds of revenue bonds or refunding notes of the System.

It is also our opinion that the interest on said notes is exempt from taxation by the United States of America under existing laws and regulations and a specific ruling issued by the Internal Revenue Service i with respect to the notes.

Very truly yours, HouGHToN, CLUCK, COUGHLtN &"Rtt.EY 83 l

1

, l s

pw orricca or

" 7 7 2 "' " * *'

, HOUGHTON, CLUCK,COUGHLIN & RlLEY gut cCuOay,N

_ ano ecNinAL auito No vetepMosc gy,seau=At stATTLt.wAsmNoTON 98304 sas m i DERTR AM L. MET 20ER,JR.

JOEL MA40ARD wtLLI AM N. M ATMI A S, II Board of Directors WASHINGTON Pusuc POWER SUPPLY SYSTEM 395 Fifth Avenue Richland, Washington DEAR SIRS:

WASHINGTON PUBLIC POWER SUPPLY SYSTEM NUCLEAR PROJECT NO.1 REVENUE NOTES, SERIES 1973,

$25,000,000 Under date of ,1973, we rendered an opinion approving the validity of the above notes (the " Notes") issued pursuant to a resolution adopted by the Board of Directors of the Washington Public Power Supply System (the " System") on ,1973 (the " Note Resolution").

We have examined into the validity of the Project Agreement (Contract No. 14-03-39211), dated

,1973, between the United States of America, Department of the Interior, acting by and through the Bonnevilie Power Administrator, and Washington Public Power Supply System, referred to on page of the Official Statement of the System, dated ,1973, relating to the Notes. With respect to the authorization, execution and delivery of said agreement, we have examined certified copies of proceedings of the Board of Directors of the System authorizing the execution and delivery of said agreement, and such other documents, proceedings and matters relating to the authorization, executi)n and delivery of said agreement by each of the parties thereto as we deemed relevant. In our opinior. Said agreement has been duly authorized, executed and delivered by each of the parties thereto and constitutes a valid and binding agreement enforceable in accordance with its terms.

We have also examined into the validity of of the Net Billing Agreements, referred to on page of said Official Statement, among the United States of America, Department of the Interior, acting by and through the Bonneville Power Administrator, the System, and cenain of the Participants referred to in Exhibit I of said Official Statement, which agreements provide far the purchase and assignment of an aggregate of not less than  % of the capability of the Project, as such Project is defined in the Note Resolution, in any Contract Year (as defined in the Net Billing Agreements) during the period ending June 30,1986  % of said capability in the period beginning July 1,1986 to and including June 30,1996 and  % of said capability in each twelve month period thereafter. With respect to the authorization, execution and delivery of said Net Billing Agree-ments, we have examined certified copies of proceedings of the System and of the Participants which are parties thereto, authorizing the execution and delivery of said Net Billing Agreements, and such other documents, proceedings and matters relating to the authorization, execution and delivery of said Net Billing Agreements by each of the parties thereto as we deemed relevant. In

our opinion, each of said Net Billing Agreements has been duly authorized, executed and delivered by each of the parties thereto and constitutes a valid and binding agreement, l enforceable in accordance with its terms.

! We have also examined into the validity of the five Exchange Agreements referred to on page of said Official Statement, amor.g the United States of America, Department of the Interior, acting by and through the Bonneville Power Admmistrator, the System and each of The Montana Power Company, 84

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Pacine Power & Light Company, Portland General Electric Company, Puget Sound Power & Light Com-pony and The Washington Water Power Company, which five agreements provide for the purchase by said companies and exchange of an aggregate of 32.470% of the capability of the Project during the period beginning July 1,1980, and ending on June 30,1996. With respect to the authorization, execution and delivery of said Exchange Agreements, we have examined certified copies of proceedings of the System and of the companies which are parties thereto, authorizing the execution and delivery of said Exchange Agreements, and such other documents, proceedings and matters relating to the authorization, execution and delivery of said Exchange Agreements by each of the parties thereto as we deemed relevant.

In our opinion, each of said Exchange Agreements has been duly authorized, executed and delivered by each of the parties thereto and constitutes a valid and binding agreement, enforceable in accordance with its terms.

In rendering this opinion, we have relied upon the opinion of counsel for each of the Participants and aforesaid companies, that the Net Billing Agreement or Exchange Agreement to which such Partici-pant or Company is a party has been duly executed and delivered by said Participant or company and is not in con 8ict with, or in violadon of, and will not be a breach of, or constitute a default under, the terms and conditions of any other agreement or commitment by which such Participant or company is bound.

Very truly yours, HOUGHTON, CLUCK, COUGHLIN & RILEY l

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