AN ORDINANCE relating to the City Light Department; authorizing the Superintendent to enter into two Replacement Interruptibility Contracts with Nucor Steel Seattle, Inc. ("Nucor"), for the provision of interruptible power to Nucor's 26KV Plant Service and to its Arc Furnace Service.

WHEREAS, Birmingham Steel Corporation Seattle Division and Seattle City Light entered into two Interruptibility Contracts effective January 13, 2002, pursuant to Ordinance 120667; and

WHEREAS, Birmingham Steel was the only High Demand customer to avail itself of the interruptible option provided by Ordinance 120667; and

WHEREAS, Nucor assumed both Interruptibility Contracts in purchasing the Seattle assets of Birmingham Steel through a bankruptcy proceeding; and WHEREAS, Seattle City Light and Nucor have agreed that Nucor shall have the option of prepaying certain payments related to the extraordinary power cost adjustments listed in the Interruptibility Contracts by paying to Seattle City Light $9 million, and in the event Nucor elects such option Nucor and Seattle City Light shall enter into two revised Interruptibility Contracts that will, among other things, provide and expanded interruptible flexibility to Seattle City Light in return for an extension of an interruptible rate modified to reflect such prepayment; and

WHEREAS, the agreements authorized by this ordinance are specific to current circumstances and the unique relationship between City Light and Nucor Steel, and do not represent a general shift in the City's long-term rate-setting objectives and electric rate policies; and

WHEREAS, Nucor Steel has provided Council with a written commitment to invest more than $2 million in its Seattle facility, once the attached contracts are approved; and

WHEREAS, Council requests that as part of the upcoming rate-setting process City Light and the City Light Rates Advisory Committee assess how City Light's industrial rates might be re-structured in order to help sustain City Light's long-standing industrial customer base; and

WHEREAS, Council requests that the aforementioned assessment include a study of the benefits provided by interruptible service options, and the development and recommendation of these and other comparable service options, which can provide benefits to both City Light and its industrial customers (including Nucor) without affecting the rates faced by other customer classes; and

WHEREAS, Council requests that the aforementioned assessment also include an evaluation of how changes in industrial rates that are not linked to new service options would influence City Light's other rates, and that any associated recommendations concerning changes not linked to new service options include (1) include a consideration of the potential economic impacts on other ratepayers, and (2) balance existing rate setting objectives regarding equitable cost allocation and economic development, as identified in Resolution 28004;

NOW, THEREFORE,

BE IT ORDAINED BY THE CITY OF SEATTLE AS FOLLOWS:

Section 1. Should Nucor elect to exercise the option described in the recitals above, the Superintendent of the City Light Department is hereby authorized to execute two agreements with Nucor, substantially in the form of the agreements attached to this ordinance entitled, "REPLACEMENT INTERRUPTIBILITY CONTRACT BETWEEN NUCOR STEEL SEATTLE, INC., 26 KV PLANT SERVICE, AND SEATTLE CITY LIGHT" and "REPLACEMENT INTERRUPTIBILITY CONTRACT BETWEEN NUCOR STEEL SEATTLE, INC., ARC FURNACE SERVICE, AND SEATTLE CITY LIGHT."

Each of these contracts reflect Nucor's exercise of the prepayment option to Seattle City Light of lump sum amounts in advance of the time that such amounts might otherwise be owing pursuant to the prior contracts. In addition, Seattle City Light will be provided expanded interruptible options. In return Nucor will be granted an extension of a modified interruptible rate through December 31, 2004. As further consideration for extending this modified interruptible rate, Nucor also agrees to pay an additional "extraordinary power cost adjustment" Calculated as specified in the two Replacement Interruptibility Contracts. Nucor Corporation, Inc., further agrees to pay Seattle City Light that extraordinary power cost adjustment, even if Nucor Steel Seattle, Inc., ceases to purchase power from Seattle City Light.

Section 2. Should Nucor elect to exercise the option described in the recitals above ,the rates and other payment provisions applicable to Nucor pursuant to the two Replacement Interruptibility Contracts authorized by this ordinance shall supercede any rates that would otherwise apply pursuant to the HDI schedule within SMC 21.49.058, as adopted by Ordinance 120667.

Section 3. During the term of the attached contracts, City Light shall provide to Council, on a monthly basis, a written status report including the following information:

1. A summary of the total number of hours market prices exceeded the $51 per Mega-Watt hour trigger price;

2. The number of opportunities City Light had to interrupt service to Nucor Steel (to either the arc furnace or the plant), given the terms of the contracts;

3. The number of times service to Nucor Steel was interrupted or that Nucor Steel chose to pay the 'buy-through' price established in the attached contracts;

4. An explanation for any difference between items 2 and 3; and

5. An accounting of any additional revenues that resulted from interruption or 'buy-through' during the month in question.

This report will be provided during the second week of each following month.

Section 4. Any acts taken in furtherance of this ordinance, prior to its effective date, including execution of the two referenced contracts, are hereby ratified and confirmed. Section 5. 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 _________, 20__, and signed by me in open session in authentication of its passage this _____ day of __________, 20__. _________________________________ President __________of the City Council

Approved by me this ____ day of _________, 20__. _________________________________ Gregory J. Nickels, Mayor

Filed by me this ____ day of _________, 20__. ____________________________________ City Clerk

Attachment A: REPLACEMENT INTERRUPTIBILITY CONTRACT BETWEEN NUCOR STEEL SEATTLE, INC., 26 KV PLANT SERVICE, AND SEATTLE CITY LIGHT

Attachment B: REPLACEMENT INTERRUPTIBILITY CONTRACT BETWEEN NUCOR STEEL SEATTLE, INC., ARC FURNACE SERVICE, AND SEATTLE CITY LIGHT

March 11, 2004 (Ver. 3) t ATTACHMENT A

REPLACEMENT INTERRUPTIBILITY CONTRACT BETWEEN NUCOR STEEL SEATTLE, INC. 26 KV PLANT SERVICE AND SEATTLE CITY LIGHT

WHEREAS, Seattle Ordinance 120667 provided for High Demand General Service Customers to enter into an interruptibility contract with Seattle City Light and, in return, be billed under the HDI rate schedule; and

WHEREAS, Birmingham Steel Corporation Seattle Division and Seattle City Light entered into an 26 kV Plant Service Interruptibility Contract effective January 13, 2002, pursuant to Ordinance 120667; and

WHEREAS, Nucor Steel Seattle, Inc. ("Nucor") assumed the 26 kV Plant Service Interruptibility Contract in purchasing the Seattle assets of Birmingham Steel through a bankruptcy proceeding; and

WHEREAS, Seattle City Light and Nucor have agreed that Nucor shall have the option of prepaying certain payments related to the extraordinary power cost adjustments listed in the 26 kV Plant Service Interruptibility Contract by paying to Seattle City Light $2.52 million, and in the event Nucor elects such option, Nucor and Seattle City Light shall enter into a revised 26 kV Plant Service Interuptiblity Contract that will, among other things, provide expanded interruptible flexibility to Seattle City Light in return for an extension of an interruptible rate modified to reflect such prepayment; and

WHEREAS, by executing this agreement and making payment hereunder Nucor has exercised such option;

NOW, THEREFORE, NUCOR and SEATTLE CITY LIGHT (City Light) hereby enter into this REPLACEMENT INTERRUPTIBILITY CONTRACT for electricity consumed by Nucor's 26 kV Plant Service at 2424 S.W. Andover Street, Seattle, Washington this _____ day of March, 2004.

I. Term

This Contract shall be in effect from April 22, 2004 until that date when Nucor has paid City Light a lump sum extraordinary power cost adjustment pursuant to section III.B.2., below.

Upon the expiration of this contract, City Light will continue to provide electric service to Nucor through the then applicable HD tariff, or other applicable tariff, as provided for by City Ordinance.

II. Prepayment of Power Cost Adjustment

This Contract is conditioned upon, and shall not go into effect unless, Nucor has exercised its option and delivered to City Light a lump sum payment of Two Million, Five Hundred Twenty Thousand Dollars ($2,520,000.00) on or before March 31, 2004. This lump sum payment of $2.52 million represents the prepayment of the extraordinary power cost adjustment payments for the first 520,575,000 kWh consumed after the effective date of this agreement to which Nucor may otherwise have been obligated to pay under the previous Interruptibility Contract, assuming that Nucor continued to purchase power from City Light.

III. Modified, Extended HDI Rate

A. April 22, 2004 through December 31, 2004

Pursuant to this Replacement Interruptibility Contract, Nucor shall be charged the following rates for electric service for the 26 kV Plant Service from April 22, 2004 through December 31, 2004:

Energy Charges: Peak: Energy used between six (6:00) a.m. and ten (10:00) p.m., Monday through Saturday, excluding major holidays,* at 3.62 cents per kWh Off-peak: Energy used at all times other than the peak period at 2.86 cents per kWh

Demand Charges: Peak: All kW of maximum demand between six (6:00) a.m. and ten (10:00) p.m., Monday through Saturday, excluding major holidays,* at $0.40 per kW Off-peak: All kW of maximum demand in excess of peak maximum demand, at all times other than the peak period, at $0.17 per kW

Minimum Charge: $122.00 per meter per day

Major holidays excluded from the peak period are New Year's Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.

Discounts: Transformer losses in kWh 1756 + .53285 x kW + .00002 x kW2+ .00527 x kWh

Transformer investment $0.17 per kW of monthly maximum demand

B. January 1, 2005 until a new applicable HD tariff, or other applicable tariff is established by ordinance

Pursuant to this Replacement Interruptibility Contract, Nucor shall be charged the following rates for electric service for the 26 kV Plant Service from January 1, 2005 until the effective date of a new applicable HD tariff, or other applicable tariff established by ordinance:

Energy Charges: Peak: Energy used between six (6:00) a.m. and ten (10:00) p.m., Monday through Saturday, excluding major holidays,* at 4.31 cents per kWh Off-peak: Energy used at all times other than the peak period at 3.87 cents per kWh

Demand Charges: Peak: All kW of maximum demand between six (6:00) a.m. and ten (10:00) p.m., Monday through Saturday, excluding major holidays,* at $0.40 per kW Off-peak: All kW of maximum demand in excess of peak maximum demand, at all times other than the peak period, at $0.17 per kW

Minimum Charge: $122.00 per meter per day

Major holidays excluded from the peak period are New Year's Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.

Discounts: Transformer losses in kWh 1756 + .53285 x kW + .00002 x kW2+ .00527 x kWh

Transformer investment $0.17 per kW of monthly maximum demand

C. When a new applicable HD tariff, or other applicable tariff is established by ordinance

1. The rates established by III A and B above shall be in effect until a new rate ordinance establishes a new applicable HD tariff, or other applicable tariff, for the 26 kV Plant load. Further the rates established by III A and B above shall not be altered by any rate adjustments resulting from a BPA pass-through or any other adjustment. When a new applicable HD tariff, or other applicable tariff, for the 26 kV Plant load is established by ordinance, Nucor shall be obligated to pay the following Extraordinary Power Cost Adjustment:

2. Extraordinary Power Cost Adjustment.

An extraordinary power cost adjustment shall be calculated according to the following method: (Step 1) A total amount shall be calculated applying all charges in effect for the Nucor 26 kV Plant Service when a new applicable HD tariff, or other applicable tariff is established by ordinance against the electric service provided to the 26 kV Plant Service for the period from January 1, 2004 until the effective date of a new applicable HD tariff, or other applicable tariff established by ordinance excluding any power purchased during a buy through period as specified in Section V.D. (Step 2) This amount shall be compared to the total amount Nucor actually paid for electrical service for the period from January 1, 2004 until the effective date of a new applicable HD tariff, or other applicable tariff established by ordinance excluding any power purchased during a buy through period as specified in Section V.D. Any excess amount above the total amount actually paid during the period constitutes the extraordinary power cost adjustment. However, such extraordinary power cost adjustment shall not exceed a sum calculated by multiplying 0.9 cents/kWh times the actual total energy consumption for the period from January 1, 2004 until the effective date of a new applicable HD tariff, or other applicable tariff established by ordinance, excluding any power purchased during a buy through period as specified in Section V.D. Further, if the total amount calculated under Step 1 is less than the total amount paid for electrical service for the period from January 1, 2004 until the effective date of a new applicable HD tariff, or other applicable tariff established by ordinance, excluding any power purchased during a buy through period as specified in Section V.D, there shall be no extraordinary power cost adjustment owing by Nucor, nor shall Nucor be entitled to any credit.

3. Method of Payment for Extraordinary Power Cost Adjustment

Nucor shall pay the total extraordinary power cost adjustment within 90 days of receiving from City Light the calculated amount specified in Section III.C.2.

4. Continuing Obligation for Payment for Extraordinary Power Cost Adjustment and Additional Power Cost Adjustment Associated with Termination of Service

Notwithstanding any decision by Nucor, for whatever reason, including moving its facility or selling its assets, to cease purchasing electricity for 26 kV Plant Service from City Light before a new applicable HD tariff, or other applicable tariff is established by ordinance, Nucor remains obligated to pay City Light the extraordinary power cost adjustment. Such payment of the entire amount pursuant to section III.B.2 and this additional power cost adjustment, or for whatever number of kWh obligation pursuant to section III.B.2 and this additional power cost adjustment, shall be paid to City Light by Nucor within 60 days of Nucor's cessation of purchasing electricity for 26 kV Plant Service. In the event that Nucor Steel Seattle, Inc. declares bankruptcy or ceases operations in Seattle, Washington, or refuses to pay for any reason, the Nucor Corporation shall pay the extraordinary power adjustment.

IV. Interruptions Not Covered by this Contract

Nucor remains subject to interruption pursuant to Seattle Municipal Code Sections 21.49.110(U) and (V). In summary, section 21.49.110(U) states that City Light shall not be liable for any loss, injury, or damage resulting from the interruption of electric service from any cause beyond the control of City Light. Similarly, section 21.49.110(V) states that during emergencies declared by appropriate civil authority, City Light shall have the authority to curtail electric service to any customer.

V. Interruptibility

As a condition of entering into this Replacement Interruptibility Contract, Nucor agrees to be interrupted for electric service for the 26 kV Plant Service throughout the term of this Contract under the following conditions:

A. Trigger Price

City Light may interrupt Nucor's 26 kV Plant Service to the plant when the wholesale price of electricity to City Light exceeds $51 per megawatt hour. The wholesale price in dollars per megawatt hour shall be a forecast specific dollar value per megawatt hour projected by City Light to be in effect during the proposed period of interruption. City Light shall provide Nucor documentation of its projections upon request.

B. Notice of Interruption

In advance of the interruption City Light shall provide Nucor with at least twelve hours telephonic and email notice of any planned interruption of 26 kV Plant Service pursuant to this Contract. City Light shall disclose to Nucor the beginning date and hour of the proposed interruption, the proposed length of interruption, and the forecast price per megawatt hour value of wholesale power and the "buy through" price at which City Light may offer Nucor the opportunity to avoid the requested interruption pursuant to Section V. D, below.

C. Limitation of Interruption

City Light shall interrupt Nucor's 26 kV Plant Service for no fewer than twelve hours per interruption and no more than 184 total hours of interruption in any given calendar month.

D. Option to Avoid Interruption

Unless City Light is experiencing a technical difficulty, such as transmission interruption or other system failures, Nucor will be offered a "buy through" option to avoid interruption whenever an interruption pursuant to this Contract is requested, provided Nucor agrees to compensate City Light according to the following terms:

1. There are no technical difficulties or system failures that have occurred that preclude City Light from offering Nucor a buy through option.

2. City Light in its sole discretion shall establish the buy through price in $/MWh based on market price plus a 17% adder for taxes, losses, and administrative expenses. This total buy through price shall be communicated to Nucor at the time interruption is requested.

3. Nucor must provide City Light with telephonic and email notice that it has chosen to avoid interruption within one hour of receiving the 12-hour notice pursuant to Section V.B., above.

4. Nucor will then pay City Light an amount equal to the total buy through price in $/MWh multiplied by 11.85 MW and then multiplied times the number of hours interrupted.

E. Non-Waiver of Demand Charges

Nucor Steel agrees not to be credited for their demand charges when City Light exercises its option to interrupt under the Trigger Price clause.

VI. Miscellaneous

A. Indemnification

Nucor shall defend and indemnify City Light against any claim or loss resulting from City Light exercising its option to interrupt Nucor under this Contract.

B. Successors and Assigns

This contract shall be binding upon any and all successors and assigns of Nucor, and any other entity that is provided 26 kV Plant Service at Nucor's location.

C. Dispute Resolution

Nucor and City Light shall make every attempt to resolve disputes through discussion and, if necessary, non-binding mediation prior to litigation.

Should mediation become necessary, Nucor and City Light shall each submit the names of five mediators and each party shall then cross off any from the other party's list that are unacceptable until one mediator is chosen. Should the parties fail to select a mediator through this process, a mediator shall be chosen for the parties by the Presiding Judge of the Superior Court of the State of Washington for King County, at Seattle. In the event of mediation, each party shall share the costs of the mediator equally, but in mediation and in any subsequent litigation, each party shall bear all of its own attorney and witness costs.

Any disputes arising under this Contract that are not settled through discussion or mediation shall be brought in the Superior Court of the State of Washington for King County, at Seattle.

VII. Contacts

The point of contact for each party under this Agreement shall be as follows:

Nucor: ____________________ (or alternate designated by Nucor) Nucor Steel Seattle, Inc. 2424 S. W. Andover St. Seattle, Washington 98106 1100 Telephone: 206 933 2201 Email:

City Light: Ann Emigh, Account Executive (or alternate designated by City Light) Seattle City Light 700 5th Ave., Suite 3300 Room Number KT 3260 Seattle, WA 98104 Telephone: 206 684 3671 Email: ann.emigh@ci.seattle.wa.us

VIII. Signatures Nucor Steel Seattle, Inc. ___________ Seattle City Light_____________ (name) Jim Ritch, (title) Acting Superintendent

Nucor Corporation, Inc. _________________________________ (name) (title)

t ATTACHMENT B

REPLACEMENT INTERRUPTIBILITY CONTRACT BETWEEN NUCOR STEEL SEATTLE, INC. ARC FURNACE SERVICE AND SEATTLE CITY LIGHT

WHEREAS, Seattle Ordinance 120667 provided for High Demand General Service Customers to enter into an interruptibility contract with Seattle City Light and, in return, be billed under the HDI rate schedule; and

WHEREAS, Birmingham Steel Corporation Seattle Division and Seattle City Light entered into an Arc Furnace Interruptibility Contract effective January 13, 2002, pursuant to Ordinance 120667; and

WHEREAS, Nucor Steel Seattle, Inc. ("Nucor") assumed the Arc Furnace Interruptibility Contract in purchasing the Seattle assets of Birmingham Steel through a bankruptcy proceeding; and

WHEREAS, Seattle City Light and Nucor have agreed that Nucor shall have the option of prepaying certain payments related to the extraordinary power cost adjustments listed in the Arc Furnace Interruptibility Contract by paying to Seattle City Light $6.48 million, and in the event Nucor elects such option, Nucor and Seattle City Light shall enter into a revised Arc Furnace Interuptiblity Contract that will, among other things, provide expanded interruptible flexibility to Seattle City Light in return for an extension of an interruptible rate modified to reflect such prepayment; and

WHEREAS, by executing this agreement and making payment hereunder Nucor has exercised such option;

NOW, THEREFORE, NUCOR and SEATTLE CITY LIGHT (City Light) hereby enter into this REPLACEMENT INTERRUPTIBILITY CONTRACT for electricity consumed by Nucor's 34kV Arc Furnace Service at 2424 S.W. Andover Street, Seattle, Washington this _____ day of March, 2004.

I. Term

This Contract shall be in effect from April 22, 2004 until that date when Nucor has paid City Light a lump sum extraordinary power cost adjustment pursuant to section III.B.2., below.

Upon the expiration of this contract, City Light will continue to provide electric service to Nucor through the then applicable HD tariff, or other applicable tariff, as provided for by City Ordinance.

II. Prepayment of Power Cost Adjustment

This Contract is conditioned upon, and shall not go into effect unless, Nucor has exercised its option and delivered to City Light a lump sum payment of Six Million, Four Hundred Eighty Thousand Dollars ($6,480,000.00) on or before March 31, 2004. This lump sum payment of $6.48 million represents the prepayment of the extraordinary power cost adjustment payments for the first 1,323,155,085 kWh consumed after the effective date of this agreement to which Nucor may otherwise have been obligated to pay under the previous Interruptibility Contract, assuming that Nucor continued to purchase power from City Light.

III. Modified, Extended HDI Rate

A. April 22, 2004 through December 31, 2004

Pursuant to this Replacement Interruptibility Contract, Nucor shall be charged the following rates for electric service for the Arc Furnace Service from April 22, 2004 through December 31, 2004:

Energy Charges:

Peak: Energy used between six (6:00) a.m. and ten (10:00) p.m., Monday through Saturday, excluding major holidays,* at 3.62 cents per kWh

Off-peak: Energy used at all times other than the peak period at 2.86 cents per kWh

Demand Charges: Peak: All kW of maximum demand between six (6:00) a.m. and ten (10:00) p.m., Monday through Saturday, excluding major holidays,* at $0.40 per kW Off-peak: All kW of maximum demand in excess of peak maximum demand, at all times other than the peak period, at $0.17 per kW

Minimum Charge: $122.00 per meter per day

Major holidays excluded from the peak period are New Year's Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.

Discounts: Transformer losses in kWh 1756 + .53285 x kW + .00002 x kW2+ .00527 x kWh

Transformer investment $0.17 per kW of monthly maximum demand

B. January 1, 2005 until a new applicable HD tariff, or other applicable tariff is established by ordinance

Pursuant to this Replacement Interruptibility Contract, Nucor shall be charged the following rates for electric service for the Arc Furnace Service from January 1, 2005 until the effective date of a new applicable HD tariff, or other applicable tariff established by ordinance:

Energy Charges: Peak: Energy used between six (6:00) a.m. and ten (10:00) p.m., Monday through Saturday, excluding major holidays,* at 4.31 cents per kWh Off-peak: Energy used at all times other than the peak period at 3.87 cents per kWh

Demand Charges: Peak: All kW of maximum demand between six (6:00) a.m. and ten (10:00) p.m., Monday through Saturday, excluding major holidays,* at $0.40 per kW Off-peak: All kW of maximum demand in excess of peak maximum demand, at all times other than the peak period, at $0.17 per kW

Minimum Charge: $122.00 per meter per day

Major holidays excluded from the peak period are New Year's Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.

Discounts: Transformer losses in kWh 1756 + .53285 x kW + .00002 x kW2+ .00527 x kWh

Transformer investment $0.17 per kW of monthly maximum demand

C. When a new applicable HD tariff, or other applicable tariff is established by ordinance

1. The rates established by III A and B above shall be in effect until a new rate ordinance establishes a new applicable HD tariff, or other applicable tariff, for the Arc Furnace load. Further the rates established by III A and B above shall not be altered by any rate adjustments resulting from a BPA pass-through or any other adjustment. When a new applicable HD tariff, or other applicable tariff, for the Arc Furnace load is established by ordinance, Nucor shall be obligated to pay the following Extraordinary Power Cost Adjustment:

2. Extraordinary Power Cost Adjustment.

An extraordinary power cost adjustment shall be calculated according to the following method: (Step 1) A total amount shall be calculated applying all charges in effect for the Nucor Arc Furnace Service when a new applicable HD tariff, or other applicable tariff is established by ordinance against the electric service provided to the Arc Furnace Service for the period from January 1, 2004 until the effective date of a new applicable HD tariff, or other applicable tariff established by ordinance excluding any power purchased during a buy through period as specified in Section V.D. (Step 2) This amount shall be compared to the total amount Nucor actually paid for electrical service for the period from January 1, 2004 until the effective date of a new applicable HD tariff, or other applicable tariff established by ordinance excluding any power purchased during a buy through period as specified in Section V.D. Any excess amount above the total amount actually paid during the period constitutes the extraordinary power cost adjustment. However, such extraordinary power cost adjustment shall not exceed a sum calculated by multiplying 0.9 cents/kWh times the actual total energy consumption for the period from January 1, 2004 until the effective date of a new applicable HD tariff, or other applicable tariff established by ordinance, excluding any power purchased during a buy through period as specified in Section V.D. Further, if the total amount calculated under Step 1 is less than the total amount paid for electrical service for the period from January 1, 2004 until the effective date of a new applicable HD tariff, or other applicable tariff established by ordinance, excluding any power purchased during a buy through period as specified in Section V.D, there shall be no extraordinary power cost adjustment owing by Nucor, nor shall Nucor be entitled to any credit.

3. Method of Payment for Extraordinary Power Cost Adjustment

Nucor shall pay the total extraordinary power cost adjustment within 90 days of receiving from City Light the calculated amount specified in Section III.C.2.

4. Continuing Obligation for Payment for Extraordinary Power Cost Adjustment and Additional Power Cost Adjustment Associated with Termination of Service

Notwithstanding any decision by Nucor, for whatever reason, including moving its facility or selling its assets, to cease purchasing electricity for Arc Furnace Service from City Light before a new applicable HD tariff, or other applicable tariff is established by ordinance, Nucor remains obligated to pay City Light the extraordinary power cost adjustment. Such payment of the entire amount pursuant to section III.B.2 and this additional power cost adjustment, or for whatever number of kWh obligation pursuant to section III.B.2 and this additional power cost adjustment, shall be paid to City Light by Nucor within 60 days of Nucor's cessation of purchasing electricity for Arc Furnace Service. In the event that Nucor Steel Seattle, Inc. declares bankruptcy or ceases operations in Seattle, Washington, or refuses to pay for any reason, the Nucor Corporation shall pay the extraordinary power adjustment.

IV. Interruptions Not Covered by this Contract

Nucor remains subject to interruption pursuant to Seattle Municipal Code Sections 21.49.110(U) and (V). In summary, section 21.49.110(U) states that City Light shall not be liable for any loss, injury, or damage resulting from the interruption of electric service from any cause beyond the control of City Light. Similarly, section 21.49.110(V) states that during emergencies declared by appropriate civil authority, City Light shall have the authority to curtail electric service to any customer.

V. Interruptibility

As a condition of entering into this Replacement Interruptibility Contract, Nucor agrees to be interrupted for electric service for the Arc Furnace Service throughout the term of this Contract under the following conditions:

A. Trigger Price

City Light may interrupt Nucor's Arc Furnace Service to the plant when the wholesale price of electricity to City Light exceeds $51 per megawatt hour. The wholesale price in dollars per megawatt hour shall be a forecast specific dollar value per megawatt hour projected by City Light to be in effect during the proposed period of interruption. City Light shall provide Nucor documentation of its projections upon request.

B. Notice of Interruption

In advance of the interruption City Light shall provide Nucor with at least two hours telephonic and email notice of any planned interruption of Arc Furnace Service pursuant to this Contract. City Light shall disclose to Nucor the beginning date and hour of the proposed interruption, the proposed length of interruption, and the forecast price per megawatt hour value of wholesale power and the "buy through" price at which City Light may offer Nucor the opportunity to avoid the requested interruption pursuant to Section V. D, below.

C. Limitation of Interruption

City Light shall interrupt Nucor's Arc Furnace Service for no fewer than three hours per interruption and no more than 184 total hours of interruption in any given calendar month.

D. Option to Avoid Interruption

Unless City Light is experiencing a technical difficulty, such as transmission interruption or other system failures, Nucor will be offered a "buy through" option to avoid interruption whenever an interruption pursuant to this Contract is requested, provided Nucor agrees to compensate City Light according to the following terms:

1. There are no technical difficulties or system failures that have occurred that preclude City Light from offering Nucor a buy through option.

2. City Light in its sole discretion shall establish the buy through price in $/MWh based on market price plus a 17% adder for taxes, losses, and administrative expenses. This total buy through price shall be communicated to Nucor at the time interruption is requested.

3. Nucor must provide City Light with telephonic and email notice that it has chosen to avoid interruption within one hour of receiving the 2-hour notice pursuant to Section V.B., above.

4. Nucor will then pay City Light an amount equal to the total buy through price in $/MWh multiplied by 30.13 MW and then multiplied times the number of hours interrupted.

E. Non-Waiver of Demand Charges

Nucor Steel agrees not to be credited for their demand charges when City Light exercises its option to interrupt under the Trigger Price clause.

VI. Miscellaneous

A. Indemnification

Nucor shall defend and indemnify City Light against any claim or loss resulting from City Light exercising its option to interrupt Nucor under this Contract.

B. Successors and Assigns

This contract shall be binding upon any and all successors and assigns of Nucor, and any other entity that is provided Arc Furnace Service at Nucor's location.

C. Dispute Resolution

Nucor and City Light shall make every attempt to resolve disputes through discussion and, if necessary, non-binding mediation prior to litigation.

Should mediation become necessary, Nucor and City Light shall each submit the names of five mediators and each party shall then cross off any from the other party's list that are unacceptable until one mediator is chosen. Should the parties fail to select a mediator through this process, a mediator shall be chosen for the parties by the Presiding Judge of the Superior Court of the State of Washington for King County, at Seattle. In the event of mediation, each party shall share the costs of the mediator equally, but in mediation and in any subsequent litigation, each party shall bear all of its own attorney and witness costs.

Any disputes arising under this Contract that are not settled through discussion or mediation shall be brought in the Superior Court of the State of Washington for King County, at Seattle.

VII. Contacts

The point of contact for each party under this Agreement shall be as follows:

Nucor: ____________________ (or alternate designated by Nucor) Nucor Steel Seattle, Inc. 2424 S. W. Andover St. Seattle, Washington 98106 1100 Telephone: 206 933 2201 Email:

City Light: Ann Emigh, Account Executive (or alternate designated by City Light) Seattle City Light 700 5th Ave., Suite 3300 Room Number KT 3260 Seattle, WA 98104 Telephone: 206 684 3671 Email: ann.emigh@ci.seattle.wa.us

VIII. Signatures

Nucor Steel Seattle, Inc. _________________ Seattle City Light _______________ (name) Jim Ritch, (title) Acting Superintendent

Nucor Corporation, Inc. _________________________________ (name) (title)

t