ORDINANCE _________________

AN ORDINANCE relating to the City Light Department's participation in a variable payment program for the purchase of electricity from the Bonneville Power Administration; authorizing the Department to enter into agreements and execute documents required by the program; and pledging the net revenues of the Light System to the payment of certain obligations in connection with the program.

WHEREAS, the City Light Department purchases wholesale electricity from the Bonneville Power Administration ("BPA") under the Block and Slice Power Sales Agreement; and

WHEREAS, BPA has offered its Block power product customers, including the City, a new payment program for purchased power (the "Flexible PF Rate Program"); and

WHEREAS, the Flexible PF Rate Program ("Program") will change the Block power rate from fixed to variable over the course of each year depending on BPA's cash requirements, reduce the amount of cash reserves that BPA is required to maintain, and result in lower annual Block power rates to its customers, including the City; and

WHEREAS, as required by the Program, the City has negotiated an irrevocable letter of credit with Bank of America, N.A. (the "Letter of Credit"), designating BPA as beneficiary, to support the City's power payment obligations under the Program; and

WHEREAS, the City and BPA have negotiated Amendment No. 8 to the Block and Slice Power Sales Agreement ("Amendment No. 8") to enable the City to participate in the Program; NOW, THEREFORE,

BE IT ORDAINED BY THE CITY OF SEATTLE AS FOLLOWS:

Section 1. The Superintendent of the City Light Department, or his designee, is hereby authorized to execute and perform Amendment No. 8, substantially in the form attached to this ordinance as Exhibit A, with such changes that are consistent with this ordinance and are acceptable to the Superintendent, to provide for the City's participation in Bonneville Power Administration's Flexible PF Rate Program.

Section 2. In connection with the issuance of a Letter of Credit in the maximum amount of $16,500,000 and substantially in the form attached to this ordinance as Exhibit B with such changes as are consistent with this ordinance and acceptable to the Superintendent, the Superintendent, or his designee, is authorized to execute, on behalf of the City, a Reimbursement Agreement, substantially in the form attached to this ordinance as Exhibit C, with such changes as are consistent with this ordinance and acceptable to the Superintendent. The Superintendent, or his designee, is further authorized to negotiate and execute any amendments or replacements of the Letter of Credit, Reimbursement Agreement and related documents as the Superintendent deems necessary, appropriate or desirable provided that the total principal amount of any reimbursement obligation under the Reimbursement Agreement and any amendments or replacements shall not exceed $16,500,000, and the term of such documents shall not extend beyond September 30, 2009.

Section 3. The City pledges, to the repayment of the obligations to the Bank under the Reimbursement Agreement, the net revenue of the Light System in the manner, to the extent and subject to the terms and conditions set forth in the Reimbursement Agreement.

Section 4. The Superintendent, or his designee, is further authorized to negotiate and execute documents related to those described in sections 1 and 2 that are deemed reasonably necessary or appropriate to satisfy the City's performance of its obligations under Amendment No. 8.

Section 5. Any acts in furtherance of this ordinance that are taken after its passage but prior to its effective date are hereby ratified and confirmed.

Section 6. This ordinance shall take effect and be in force thirty (30) days from and after its approval by the Mayor, but if not approved and returned by the Mayor within ten (10) days after presentation, it shall take effect as provided by Municipal Code Section 1.04.020.

Passed by the City Council the ____ day of _________, 2006, and signed by me in open session in authentication of its passage this _____ day of __________, 2006.

_________________________________

President __________of the City Council

Approved by me this ____ day of _________, 2006.

_________________________________

Gregory J. Nickels, Mayor

Filed by me this ____ day of _________, 2006.

____________________________________

City Clerk

(Seal)

Exhibit A: Amendment No. 8

Exhibit B: Letter of Credit

Exhibit C: Reimbursement Agreement

Cindy Wright/CW/cab

SCL Power Sales Agreement Amendment ORD

July 28, 2006

Version 7

3