AN ORDINANCE relating to the City Light Department; authorizing an amendment to the Power Purchase and Sale Contract for the Lucky Peak Power Plant Project, which simplifies the calculation of the Royalty Payment made by City Light.

WHEREAS, in 1984, the City of Seattle, through its City Light Department ("City Light") entered into a fifty (50) year power purchase and sale contract with the Boise-Kuna Irrigation District, Nampa & Meridian Irrigation District, Wilder Irrigation District and Big Bend Irrigation District (collectively the "Districts") for the purchase of power from the Lucky Peak Power Plant Project ("Lucky Peak"); and

WHEREAS, the Lucky Peak Power Purchase and Sale Contract includes provisions for a Royalty Payment to be paid to the Districts by City Light; and

WHEREAS City Light and the Districts wish to amend the Royalty Payment formula for the period commencing October 1, 2008 and ending September 30, 2038; NOW THEREFORE,

BE IT ORDAINED BY THE CITY OF SEATTLE AS FOLLOWS:

Section 1. The Superintendent of City Light, or his designee, is hereby authorized to execute for and on behalf of the City of Seattle an amendment to the Lucky Peak Power Purchase and Sale Contract, substantially in the form attached hereto as Attachment 1. This amendment to the Lucky Peak Power Purchase and Sale Contract, between City Light and the Districts sets forth the terms for calculating the monthly Royalty Payment from October 1, 2008 through September 30, 2038.

Section 2. Any act consistent with the authority of this ordinance that is taken after its passage but prior to its effective date is hereby ratified and confirmed.

Section 3. 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 ________________________, 2008, and signed by me in open session in authentication of its passage this

_____ day of ___________________, 2008.

_________________________________

President __________of the City Council

Approved by me this ____ day of _____________________, 2008.

_________________________________

Gregory J. Nickels, Mayor

Filed by me this ____ day of __________________________, 2008.

____________________________________

City Clerk

(Seal)

Attachment 1: Amendment to the Power Purchase and Sale Contract

Robin H. Cross/RHC

SCL Lucky Peak Royalty Payment Amendment ORD

July 8, 2008

Version #1

Form Last Revised on December 31, 2007 1

Attachment 1

AMENDMENT TO THE

POWER PURCHASE AND SALE CONTRACT

Executed by

The City of Seattle

Boise-Kuna Irrigation District

Nampa & Meridian Irrigation District

Wilder Irrigation District

and

Big Bend Irrigation District

for

The Lucky Peak Power Plant Project

Dated April 23, 1984, as amended

Effective Date: xxxx

This Amendment to the Power Purchase and Sale Contract for The Lucky Peak Power Plant Project, dated April 23, 1984 ("Amendment") is entered into this _____ of ______, 2008, between The City of Seattle, a municipal corporation of the State of Washington, acting by and through its City Light Department ("City Light") and the Boise-Kuna Irrigation District, Nampa & Meridian Irrigation District, and the Wilder Irrigation District, all organized and existing under the laws of the State of Idaho, and Big Bend Irrigation District, an irrigation district organized and existing under the laws of the State of Oregon (collectively the "Districts").

WHEREAS, in 1984, City Light entered into a fifty (50) year power purchase and sale contract for the purchase of power from the Lucky Peak hydroelectric project (the "Contract") ; and

WHEREAS, the Contract provides for City Light to pay the Districts a "Royalty Payment" as described in Section 4(c) of the Contract; and

WHEREAS, the formula for calculating the Royalty Payment changes twenty years after the date of Commercial Operation of Lucky Peak hydroelectric projecton October 1, 2008; and

WHEREAS, certain variables in the replacement formula have changed in the past twenty years and now create uncertainty and the potential for conflict; and

WHEREAS, both City Light and the Districts desire to change the replacement formula with a formula that provides greater certainty and less potential for conflict; and

WHEREAS, the Districts are authorized and are willing to amend the Royalty Payment provision of the Contract and City Light desires to amend the same provision.

NOW, THEREFORE, the Districts and City Light, for and in consideration of the mutual covenants and agreements herein contained, the sufficiency of which is hereby acknowledged, agree to amend the Contract as follows:

1. The previous Section 4 (c) (2) shall be deleted and replaced in its entirety as follows:

(2) beginning on October 1, 2008 through December 31, 2009, the initial Royalty Payment to be made in each Month shall be an amount calculated using the following formula:

Initial Royalty Payment = Net Output x $8.60/MWh.

For the period January 1, 2010 through December 31, 2010 an escalation rate equal to 3% shall be applied using the following formula to determine the initial escalated Royalty Payment:

Initial escalated Royalty Payment = (Net Output x ($8.60/MWh x (1+ 3 percent

The escalation rate of 3% shall be compounded annually thereafter to determine the "Multiplying Factor" to be applied annually commencing January 1, 2011 and each year thereafter. Each year's Multiplying Factor as shown in the table 1 below shall be effective upon the date shown in the table below and shall be used in the following formula to determine the Royalty Payment:

Royalty Payment = Net Output x $8.60/MWh x Multiplying Factor

Table 1

Effective Date Multiplyi ng Factor

January 1, 2011 1.06

January 1, 2012 1.09

January 1, 2013 1.12

January 1, 2014 1.15

January 1, 2015 1.18

January 1, 2016 1.22

January 1, 2017 1.26

January 1, 2018 1.30

January 1, 2019 1.34

January 1, 2020 1.38

January 1, 2021 1.42

January 1, 2022 1.46

January 1, 2023 1.50

January 1, 2024 1.55

January 1, 2025 1.60

January 1, 2026 1.65

January 1, 2027 1.70

January 1, 2028 1.75

January 1, 2029 1.80

January 1, 2030 1.85

January 1, 2031 1.91

January 1, 2032 1.97

January 1, 2033 2.03

January 1, 2034 2.09

January 1, 2035 2.15

January 1, 2036 2.21

January 1, 2037 2.28

January 1, 2038 2.35

2. All other provisions of the Contract, including any other previously executed amendments, shall remain in full force and effect.

3. This Amendment may be executed in any number of counterparts, and each such counterpart hereof shall be deemed to be an original instrument, but all such counterparts together shall constitute but one agreement.

4. The parties have executed this Amendment on the date following their respective signatures.

THE CITY OF SEATTLE,, BOISE-KUNA IRRIGATION DISTRICT,

A WASHINGTON MUNICIPAL CORPORATION,

BY AND THROUGH ITS CITY LIGHT DEPARTMENT

____________________________________ ____________________________________

By: By:

Title: Title:

Date: Date:

NAMPA & MERIDIAN IRRIGATION DISTRICT, WILDER IRRIGATION DISTRICT,

____________________________________ ____________________________________

By: By:

Title: Title:

Date: Date:

BIG BEND IRRIGATION DISTRICT

____________________________________

By:

Title:

Date:

AMENDMENT TO THE POWER PURCHASE AND SALE CONTRACT Executed by The City of Seattle, Boise-Kuna Irrigation District, Nampa & Meridian Irrigation District, Wilder Irrigation District And Big Bend Irrigation District for The Lucky Peak Power Plant Project Dated April 23, 1984

3 of 4

Attachment 1 to SCL Lucky Peak Royalty Payment Amendment ORD