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ED-5 Facilities Contract & Supplement #1 FACILITIES CONTRACT

By and Between
ARIZONA POWER AUTHORITY

and
ELECTRICAL DISTRICT NO. FIVE, PINAL COUNTY

Article
Title
Page

1 Preamble ...................................... 1

2-14
Explanatory....................................1-3

15
Contract Subject to Other Contracts .............4

16-18
Description of Facilities.......................4-5

19-20
Annual Costs Defined ...........................5-6

21-22
Division of Annual Costs ........ . . . . . . 6

23
Capital Additions and Retirements ...............6-7

24-25
Operation of Substation. .......................7

Maintenance of Substation. 7
Estimated Annual Costs .......................8
28-30
Billing and Payments .........................8

31-33
Option to Purchase Substation ..................9

34-36
Non-Payment of Bills . . . . . . . . . . . . . . 9-10

Continuity of Electric Service ................. 11
37 Uncontrollable
Forces.......................... 11-12
39-40
Metering ..................................... 12-13

41 Power
Factor .................................. 13
42
Cooperation of Contracting Parties ........... . 14
43
Transfer of Interest in Contract by District . . 1 4
44
License to the District........................ 15
45
License to the Authority ...................... 15-16
46
Balancing Loads ............................... 16

47
District's Lines and Equipment ................ 17
48
Responsibility for Property .................... 17
49
Right of Access ............................... 18
50 Liability ..................................... 18
51 Waivers............... ....................... 19
52 Notices. ........................................19
53
Authorized Representatives of Parties. ........ 19
54
Term of Contract . .......................... . 20
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EXIT ARIZONA POWER AUTHORITY

1810 West Adams
Phoenix, Arizona
85007

C O N T R A C T

1. THIS CONTRACT made and entered into this 21st day of
December , 1976, by and between the ARIZONA POWER AUTHORITY,

a body corporate and politic, hereinafter called "Authority" and
ELECTRICAL DISTRICT NO. FIVE, PINAL COUNTY, Arizona, hereinafter
referred to as "District".

2. to acquire or construct and operate electrical trans
mission systems and related facilities necessary for it to deliver
electric power under its jurisdiction to qualified entities; and
3. WHEREAS, pursuant to such statutory provisions, the Authority
developed a program to bring power generated on the Colorado River
to Arizona and, as a part of such program, adopted the Bureau of
Reclamation's transmission system designating it as the Authority's
basic system and established uniform rates for both transmission
voltage and low voltage delivery; and
4. WHEREAS, a substation to be located within Electrical District
No. Five was included and such basic plan and the cost of such sub-
station facilities was included in the rates studies which preceded
the WHEREAS, Section 30-121 (b) A.R.S., 1956 authorizes the
Authority adoption of the uniform power rates established and
promulgated
by the Authority; and
-1-

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EXIT 5. WHEREAS, the District was forced by circumstances to build
its own substation which in 1962 was damaged by fire to the extent
that reconstruction of the substation facilities was necessitated;
and
6. WHEREAS, immediate replacement became necessary to avoid
serious financial losses resulting from crop failures due to inter-
ruption of pumping power as a result of which the District petitioned
the Authority (Petition No. 62-17) to provide a substation and related
facilities to serve the District; and
7. WHEREAS, a public hearing on the District's petition was held
in the office of the Authority on July 30, 1962 and thereafter the
Authority Commission acted favorably on the District's petition
relating to such facilities; and
8. WHEREAS, the Authority and the District, through mutual
negotiations, arrived at an understanding concerning the terms and
conditions under which said substation would be provided for the
District and the Authority thereafter caused such substation to be
constructed as requested by the District's petition, and
9. WHEREAS, after the substation was completed and placed in
service, both parties have been operating under the terms and
conditions of their mutual understanding with respect to such
facilities; and
10. WHEREAS, the parties have previously agreed to reduce the terms
and conditions of their mutual understanding with regard to such
facilities to a formal written contract for their mutual protection;
and

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EXIT 11. WHEREAS, the Authority had previously made available such
distribution facilities for a majority of its other customers and,
based upon the mutual benefits flowing from such decision, the parties
determined to construct a single facility serving all purposes of the
Authority and the District; and
12. WHEREAS, the Authority required transformer capacity of
approximately 20,000 kw in order to make deliveries under its existing
contracts, the cost of such facilities having been included in the
rates established by the Authority for power and energy delivered at
distribution voltage; and
13. WHEREAS, prior to the Authority's determination that it would
construct the substation, consideration was given to the Districts'
need for additional 115 kv transformer capacity and distribution
facilities which were essential for delivery of power by the District
and it being the mutual understanding of the parties that such distri-
bution facilities could be provided as a part of the construction
contract for the substation at a substantially lower cost than would
be possible if the distribution facilities were provided separately by
the District under its own contract; and
14. WHEREAS, the parties had arrived at a basic understanding
regarding the division of costs whereby the cost of the 115 kv
facilities would be divided between the Authority and the District
equally (50-50 basis) and the cost of the 12.5 kv distribution
facilities would be repaid entirely by the District.

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EXIT NOW, THEREFORE, in consideration of the premises, conditions, and
mutual covenants herein contained, and in further consideration of the
prior performance by both parties of the terms and conditions of their
mutual understanding with respect to such substation facilities, the
parties agree as follows:

Contract Subject to Other Contracts

15. This contract is made upon the express condition and covenant
that all rights hereunder shall be consistent with and controlled by
any applicable terms and conditions of: the Boulder Canyon Project
Contract for the Sale of Electrical Energy, dated November 23, 1945
(No. Ilr-1455); the Parker Davis Project Contract for Wheeling Electric
Energy, dated January 1, 1965, (14-06-300-1444) and supplements and
amendments thereto; and, the provisions of the Arizona Power Authority
Act, Title 30 ARS.

Description of Facilities

16. The substation is located in the southeast corner of Section 30,
T. 9 S., R. 8 E., (G&SRM) Pinal County, Arizona on State land previously
occupied by the District substation.

_
4
_

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EXIT 17. The substation includes two 20 MVA power transformers and
related 115 kv equipment. A 12.5 kv distribution structure, providing
four outgoing distribution lines and all related equipment, is also
included. These facilities are described in detail in Exhibit C,
attached hereto.
18. The Authority substation facilities were installed at an initial
original cost for the entire substation of $355,811.35.
Annual Costs Defined
19. The Annual Costs of the facilities shall include:

(1) Operation and Maintenance Expenses
(2) Insurance
Expense
(3) Depreciation
Expense
It is agreed that these expenses are to be as defined in the system of
accounts prescribed by the Federal Power Commission for electric utilities,
and as reflected on such books of account maintained by the Authority.

20. In order to apportion costs which cannot be directly assigned to
the appropriate 115 kv and 12.5 kv facilities expense accounts, the
parties agree that certain costs will be divided as follows:

(1) Insurance expense will be prorated on the
basis of the original cost of the respective
facilities.
(2) The personnel expense of station operation
will be divided equally (50-50 basis) between
12.5 and 115 kv facilities.
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EXIT (3) The contract maintenance expenses (Article 26)
will be divided equally 50-50 basis) between
the 12.5 kv and 115 kv facilities.

Division of Annual Costs

21. The Annual Costs of the substation facilities, as defined in
Article 19 shall be divided between the Authority and the District as
follows:

(1) The Annual Costs of the 115 kv facilities
shall be di