AN ORDINANCE relating to the City Light Department; authorizing execution of the Tailwater Encroachment Losses Compensation Delivery Agreement, the 2005 Memorandum of Agreement, and the Boundary Transformer Agreement, which together will provide for cost-effective transmission service for the City of Seattle in the Boundary Project area and enhanced electric grid reliability.

WHEREAS, Article 48 of the Federal Energy Regulatory Commission ("FERC") license for the Boundary Project requires that the City Light Department ("City") compensate Public Utility District No. 1 of Pend Oreille County, Washington ("District") for the encroachment of the Boundary Project's reservoir into the Box Canyon Project's tailwater; and

WHEREAS, the City and the District have negotiated the Tailwater Encroachment Losses Compensation Delivery Agreement to provide for computation and delivery of encroachment compensation to the District; and

WHEREAS, Article 49 of the City's FERC license provides that the City assign up to 48 megawatts (MW) from the Boundary Project to the District ("Article 49 Power") and the District wants to clarify the interpretation of Article 49 with respect to the District's sale of surplus energy after July 31, 2005, and until FERC issues a new Boundary Project license; and

WHEREAS, on February 14, 1999, the City and the District entered into the Energy Delivery and Exchange Agreement, and this agreement, requiring the District to schedule a minimum of 60 percent of its maximum Article 49 Power entitlement in all hours, expires on July 31, 2005; and

WHEREAS, the City wants the District to continue scheduling a minimum of 60 percent of its maximum Article 49 Power entitlement in all hours, effective August 1, 2005, to enable the City to reduce Boundary Project demand on the regional transmission grid; and

WHEREAS, the City and the District have negotiated the 2005 Memorandum of Agreement to provide, among other considerations, clarification of the interpretation of Article 49 and extension of the District's minimum scheduling requirement for Article 49 Power; and

WHEREAS, the Bonneville Power Administration ("Bonneville"), the City, and the District have negotiated the Boundary Transformer Agreement, providing for installation and operation of a transformer and breaker in the Boundary Substation to allow for the costeffective delivery of Article 49 Power and tailwater encroachment

compensation from the Boundary Project to the District via shared use of a future Boundary transformer and interconnected facilities, including the City's 115-kV Boundary Tap Line; NOW, THEREFORE,

BE IT ORDAINED BY THE CITY OF SEATTLE AS FOLLOWS:

Section 1. The Superintendent of the City Light Department ("City"), or his designee, is hereby authorized to enter into three agreements, entitled: (1) Tailwater Encroachment Losses Compensation Delivery Agreement, (2) 2005 Memorandum of Agreement, and (3) Boundary Transformer Agreement, all substantially in the form of the agreements attached to this ordinance as Exhibits A, B, and C, respectively. The Tailwater Encroachment Losses Compensation Delivery Agreement (Exhibit A) provides for computation and delivery of the encroachment compensation owed to the Public Utility District No. 1 of Pend Oreille County, Washington ("District") by the City pursuant to Article 48 of the Federal Energy Regulatory Commission ("FERC") license for the Boundary Project. The 2005 Memorandum of Agreement (Exhibit B) provides for an interpretive clarification of Article 49 of the Boundary FERC license as requested by the District; renewal of the District's obligation to schedule a minimum of 60 percent of its Article 49 Power during all hours of the day; and several other provisions related to the cost-sharing and cooperative operation of the future Boundary transformer. The Boundary Transformer Agreement (Exhibit C) provides for cooperative planning, acquisition, installation, and operation of a transformer and breaker at Boundary Substation and shared use of the interconnected transmission path, which will provide for cost-effective transmission of Article 49 Power and encroachment compensation, as well as enhanced electric grid reliability for the Bonneville Power Administration ("Bonneville"), the City, and the District in the Boundary area.

Section 2. Council approval shall be required for any agreement to revise the data collection or computation procedures, pursuant to Section 12 of the Tailwater Encroachment Losses Compensation delivery Agreement, which would likely result in more than a ten percent revision to thee amount of compensation to be paid to the District.

Section 3. Any acts taken in furtherance of this ordinance, but prior to its effective date, are hereby ratified and confirmed.

Section 4. 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 _________, 2005, and signed by me in open session in authentication of its passage this _____ day of __________, 2005. _________________________________ President __________of the City Council

Approved by me this ____ day of _________, 2005. _________________________________ Gregory J. Nickels, Mayor

Filed by me this ____ day of _________, 2005. ____________________________________ City Clerk

Exhibit A: Tailwater Encroachment Losses Compensation Delivery Agreement

Exhibit B: 2005 Memorandum of Agreement

Exhibit C: Boundary Transformer Agreement August 19, 2005 version 2 amended t

TAILWATER ENCROACHMENT

LOSSES COMPENSATION DELIVERY AGREEMENT

This Tailwater Encroachment Losses Compensation Delivery Agreement ("Encroachment Delivery Agreement") is made as of this ____day of _____________, 2005, by and between the City of Seattle, a municipal corporation under the laws of the State of Washington, acting by and through its City Light Department ("City"), and the Public Utility District No. 1 of Pend Oreille County, Washington ("District"), a municipal corporation under the laws of the State of Washington. The City and the District are each sometimes referred to individually in this Encroachment Delivery Agreement as "Party"; the City and the District are sometimes referred to together in this Encroachment Delivery Agreement as "Parties."

WITNESSETH,

WHEREAS, the District owns and operates a hydroelectric project, known as the Box Canyon Project, located on the Pend Oreille River in Pend Oreille County, Washington; and

WHEREAS, the City owns and operates a hydroelectric project, known as the Boundary Project, located on the Pend Oreille River downstream of the Box Canyon Project in Pend Oreille County, Washington; and

WHEREAS, operation of the Boundary Project can result in losses to Box Canyon Project capacity, power, and energy production, when the Boundary Project reservoir encroaches into the Box Canyon Project tailwater; and

WHEREAS, Article 48 of the Federal Energy Regulatory Commission ("FERC") license for the Boundary Project requires that the City compensate the District for the encroachment of the Boundary Project's reservoir into the Box Canyon Project tailwater; and

WHEREAS, on December 20, 1965, the City and the District entered into an agreement (the "1965 Agreement") relating to encroachment compensation and providing for the formation of a Board of Engineers to develop an appropriate encroachment losses calculation methodology; and

WHEREAS, the 1970 Report of the Board of Engineers entitled, "Boundary Project F.P.C. License Article 48 Backwater Encroachment on Box Canyon Power Plant," established the methodology the Parties have been using to determine on an hourly basis the loss of capacity, power, and energy production resulting from the Boundary Project reservoir's encroachment into the Box Canyon Project tailwater; and

WHEREAS, the Parties now believe that with advances in data collection and computational procedures they can mutually benefit from a simplification of the encroachment calculation methodology; and

WHEREAS, the City owns a 115-kV transmission line approximately 8.9 miles long that extends from the Boundary Substation of Bonneville Power Administration ("BPA") to the BPA's Metaline Falls Tap near the town of Metaline Falls in Pend Oreille County ("Boundary Tap Line"); and

WHEREAS, on February 16, 1996, the Parties entered into the Boundary Transmission Tap Line Agreement that provides, among other things, for the Parties to share equally the capacity of the reinforced Boundary Tap Line; and

WHEREAS, in 1996 the City and the District amended the 1965 Agreement to require that the City deliver tailwater encroachment losses compensation to the District at the 230-kV terminals of a Washington Water Power transformer at which the Boundary Tap Line terminated in the Boundary Substation; and

WHEREAS, Washington Water Power's transformer has been removed from Boundary Substation, and BPA, the City, and the District have negotiated the Boundary Transformer Agreement providing for, among other things, the installation and operation of a replacement transformer ("Boundary Transformer") at the Boundary Substation; and

WHEREAS, the City's obligation to deliver encroachment compensation to the District is currently netted after-the-fact against the City's energy purchases from the District pursuant to the Power Purchase

Contract executed between the Parties in 1956; and

WHEREAS, the Power Purchase Contract with the District expires after July 31, 2005, and thereafter the City intends to deliver encroachment compensation directly to the District; and

WHEREAS, the Parties do not expect the Boundary Transformer to be installed prior to 2009 and have agreed that the City's obligation to deliver encroachment compensation until the earlier of such time as the Boundary Transformer is operating or October 31, 2009 should be satisfied by the City's payment of money to the District;

NOW THEREFORE, in consideration of the mutual covenants and agreements herein contained, the Parties agree as follows:

Section 1 Definitions

1.1 "BPA" shall mean the Bonneville Power Administration or its successor agency.

1.2 "Boundary Transformer" shall mean the future 230/115 kV, 100/133/167 MVA (OA/FA/FA) non-LTC transformer with a 13.8 kV, 2-4 MVA tertiary winding to be located in the Boundary Substation, which will be interconnected to the north terminus of the Boundary Tap Line, pursuant to the Boundary Transformer Agreement.

1.3 "Heavy Load Hours" shall mean the time period starting at 0600 prevailing local time and ending at 2200 prevailing local time each day, Monday through Sunday.

1.4 "Light Load Hours" shall mean all hours of the day that are not Heavy Load Hours.

1.5 "Operating Information" shall mean the reservoir elevation, generation output, station service consumption, and other data necessary to calculate TEL.

1.6 "Tailwater Encroachment Losses" or "TEL" shall mean the difference between the theoretical output of the Box Canyon Project in the absence of the Boundary Project and the actual output of the Box Canyon Project during operation of the Boundary Project as calculated according to the methodology established in Exhibit 1. Secondary effects of tailwater encroachment, including but not limited to changes in storage capability of the Box Canyon reservoir, shall be excluded from TEL.

1.7 "USGS" shall mean the United States Geological Survey, or its successor agency, responsible for federal stream gauging on the Pend Oreille River.

Section 2 Term

This Encroachment Delivery Agreement shall be in effect upon its execution by both Parties until the earlier of: (a) the date on which the operating license for Boundary Project issued to the City by the FERC expires (including annual licenses under the Federal

Power Act), without renewal or extension; or (b) the license to operate Boundary Project is issued, transferred or assigned to an entity other than the City.

Section 3 Service to be Provided

The City shall compensate the District for TEL, as defined in Section 1.6, by providing the District with energy or other compensation as provided below in Sections 7 or 9. The Parties agree that by compensating the District in accordance with this Encroachment Delivery Agreement, the City satisfies its obligations under Article 48 of the FERC license for the Boundary Project or under a comparable article of a successor FERC license held by the City for the Boundary Project.

Section 4 Operating Information and Maintenance of Data

4.1 Unless the USGS makes Operating Information directly available to the City, the District shall provide the City with the Operating Information for the Box Canyon Project necessary to compute the TEL. Data provided by the District shall include, but not be limited to, the tailwater and forebay elevations, generation output and energy consumed by station service. Data provided by the City shall include, but not be limited to, the USGS river elevation, stream flow, and computed TEL data.

4.2 The City shall develop, collect, and maintain the data necessary to compute TEL. The City shall maintain for no less than six (6) years from each date of recording such data or the date of receiving such data, whichever is later, a record of:

(a) the generation output, station service, and reservoir elevation readings provided by the District;

(b) the reservoir elevations and stream flow measurements provided by the USGS;

(c) the computed TEL;

(d) the amount of hourly transmission loss compensation BPA charged the City, if any, resulting from TEL compensation deliveries the City makes to the District via the Boundary Transformer; and

(e) the hourly schedules of TEL less transmission losses that are delivered to the District by the City.

4.3 During periods when the data necessary to calculate TEL are unavailable or unreliable, the City may estimate such information; provided that the City shall first request such missing data from the District, and the District shall provide such data, if available, within 10 days of a request by the City. The City shall clearly mark estimated data as such.

4.4 Either Party shall, upon reasonable notice, make available to the other Party its recorded Operating Information for review and auditing purposes. Unless otherwise mutually agreed, each Party shall make available and deliver Operating Information to the other Party in electronic format, computer-readable format. Additional information reasonably requested by either Party shall be provided as mutually agreed.

Section 5 Computing Tailwater Encroachment Losses

5.1 The Parties shall calculate TEL, as defined in Section 1.6 of this agreement, by simulating the theoretical output of the Box Canyon Project in the absence of encroachment from the Boundary Project and comparing that theoretical output to the actual output of Box Canyon Project during operation and encroachment from the Boundary Project. As much as possible, the simulation process shall use measured physical parameters.

5.2 Effective August 1, 2005, the Parties shall no longer use the methodology and procedures established by the December 1970 Report of the Board of Engineers and shall instead use and apply the methodology described in the Principles and Procedures for Calculating TEL, attached hereto as Attachment 1 and incorporated into this Encroachment Delivery Agreement by this reference, for calculating compensation due the District under the City's Boundary Project FERC license for all loss of capacity, power, and energy production resulting from the Boundary Project reservoir's encroachment into the Box Canyon Project tailwater.

Section 6 Errors and Changes

6.1 A Party that discovers an error in the calculation of the TEL shall promptly notify the other Party so that corrections can be made in an expeditious manner. The City shall correct errors and make any necessary recalculations, as follows:

(a) where the date of the beginning of the error is known, the City shall recalculate TEL back to the date of the error or back 12 months, whichever period is shorter;

(b) where the date of the beginning of the error is unknown, the City shall recalculate TEL back for a period of 12 months; or

(c) as the Parties may otherwise agree.

6.2 The Parties shall schedule delivery of compensation for corrected TEL as provided in Section 7, below, or as the Parties may otherwise agree.

Section 7 Scheduling

7.1 Upon the energization date of the Boundary Transformer or October 1, 2009, whichever is earlier, the City shall deliver compensation to the District for TEL in the manner and in accordance with the scheduling criteria established by this section.

7.2 By or before 09:00 hours prevailing local time on the day following each day the District has experienced TEL, the City will provide the District with the calculation of TEL compensation for that day and a corresponding hourly schedule for the delivery of TEL compensation to be delivered on the seventh day following the day the District has experienced TEL.

7.3 Unless otherwise agreed and subject to any adjustments made under this section, the City shall schedule delivery of TEL compensation to the District on a daily basis and shall make delivery of TEL compensation on the seventh day following each day the District has experienced TEL. The City will schedule delivery of TEL compensation in whole megawatt-hours (MWh) on the appropriate prescheduling day as established by customary business practices.

7.4 The City shall deliver TEL compensation to the District at the points of delivery, described below, as follows:

(a) when Boundary Project is generating sufficient capacity, at the high side of the Boundary Transformer;

(b) when Boundary Project is not generating (i.e., it is off-line), at other points of interconnection between BPA and the District to which the City can redirect transmission capacity in an economical manner under its transmission service agreement(s) with BPA;

(c) when Boundary Project is not generating sufficient capacity to satisfy the TEL schedule, including adjustments, at the high side of the Boundary Transformer and/or at other points of interconnection between BPA and the District to which the City can redirect transmission capacity in an economical manner under its transmission service agreement(s) with BPA, as reasonably proposed by the City; or

(d) at any other delivery point as the Parties may otherwise agree.

7.5 To accommodate Daylight Savings Time changes, the Parties will adjust scheduling of delivery of TEL compensation as follows:

Each April, on the 23-hour day that Daylight Savings Time begins, the City will withhold from delivering that portion of TEL compensation otherwise scheduled for delivery during the hour ending 0200, as reflected in the TEL calculation and schedule for the 24-hour day seven days earlier, and will, instead, schedule delivery of TEL compensation for the missing hour seven days later when compensation for the hour ending 0200 is missing from the TEL calculation and schedule for the 23-hour day.

Each October, on the 25-hour day when Daylight Savings Time ends, the Parties shall schedule over a 25-hour day by filling the extra hour ending 0200 with zero (0) megawatts because no energy was scheduled for that extra hour in the daily TEL schedule that was produced seven days earlier. Then, the energy of the extra hour ending 0200 that appears on the daily TEL schedule as a result of the extra hour ending 0200 on the day that Daylight Savings Time ends shall be added to the energy schedule seven days later and scheduled over the 24hour day.

7.6 The Parties may adjust delivery schedules for:

(a) transmission losses compensation as provided in Section 8;

(b) correction of errors as provided in Section 6;

(c) adjustments for Daylight Savings Time as described above; or

(d) other factors, as the Parties may otherwise agree.

7.7 The Parties agree to revise the provisions of this section as needed to be consistent with customary business practices of the time, such revision to be documented in writing signed or otherwise acknowledged by both Parties.

Section 8 Transmission Losses Compensation

The District shall compensate the City for any transmission losses compensation the City may owe BPA, if any, resulting from TEL compensation deliveries the City makes to the District via the Boundary Transformer. Unless the Parties otherwise agree, the City shall deduct from the TEL compensation calculations and delivery schedules any hourly transmission loss compensation it may owe BPA, pursuant to the City's transmission service agreement with BPA, resulting from TEL compensation deliveries the City makes to the District via the Boundary Transformer.

Section 9 Financial Settlement Option

9.1 The Parties agree that during the period beginning August 1, 2005, and until the earlier of the date upon which the Boundary Transformer is energized and fully operational or October 31, 2009, the City's obligation to compensate the District for TEL shall be satisfied by the City's payment of monthly financial settlements. The calculation of monthly financial settlements shall be based on the hourly TEL compensation as it would have been delivered pursuant to Section 7 and the Dow Jones Firm Mid-C Daily Price Index for Light Load Hours and/or Heavy Load Hours, as the case may be. During this period, the settlement process and payment terms shall be as follows:

9.1.1 On or before the 10th of September 2005, and on or before the 10th calendar day of each succeeding month thereafter, the City shall calculate the TEL in accordance with this Encroachment Delivery Agreement and submit for the District's approval a monthly summary of the hourly TEL as these would have otherwise been scheduled pursuant to Section 7 multiplied by the appropriate hourly index price.

9.1.2 Upon approval of the summary provided in Section 9.1.1, the District shall invoice the City for the total computed value of TEL for the month via facsimile notice sent to the billing contact listed below in Section 10.

9.1.3 The City shall pay each monthly invoice within 10 days of receipt, except that when the due date falls on a Saturday, Sunday, or City holiday, the due date shall be the next business day. Invoices not paid in full on or before the close of business on the due date shall be subject to an interest charge, applied each day to the unpaid balance, calculated on the basis of the Prime Rate for Large Banks as reported in the Wall Street Journal, plus three (3) percent. The applicable interest rate shall be the rate reported on the first day of the month in which payment is received.

9.2 After the Boundary Transformer commences full-time operation or October 31, 2009, whichever is earlier, the City may, subject to the mutual agreement of the District, satisfy its obligation to compensate the District for TEL, or any portion thereof, by the City's payment of financial settlements. The Parties shall confirm in writing signed by both Parties the agreed price and payment terms for financial settlements reached under this subsection.

Section 10 Notices

Any notice required under this Encroachment Delivery Agreement shall be made as indicated below. Either Party may change its contact information set forth below by giving the other Party written notice of such changes in accordance with the provisions of this section.

10.1 Notices of an operating nature shall be made orally or in writing to the other Party's primary and secondary points of contact as follows:

Primary Operations Contact: Secondary Operations Contact:

PUD No. 1 of Pend Oreille County PUD No. 1 of Pend Oreille County 130 N. Washington Ave. 130 N. Washington Ave. P.O. Box 190 P.O. Box 190 Newport, WA 99156 Newport, WA 99156 Attention: Box Canyon Operator Attention: Dispatch Center Phone: (509) 442-3232 Phone: (509) 447-3045 Fax: (509) 447-6790 Fax: (509) 447-9330

Seattle City Light Seattle City Light 700 Fifth Ave. Suite 3300 Boundary Powerhouse P.O. Box 34023 P.O. Box 219 Seattle, WA 98124-4023 10382 Boundary Road Metaline Falls, WA 99153

Attention: Real-time Power Attention: Hydro Operator Marketing Phone: (509) 446-3073 or 3083 Phone: (206) 615-0966 (unlisted) Fax: (206) 615-0969 Fax: (509) 446-2928

10.2 Any general notice or other communication, other than notices of an operating nature, shall be given in writing and shall be deemed to have been received if delivered in person, by fax, or sent by acknowledged delivery as follows:

PUD No. 1 of Pend Oreille County Seattle City Light 130 N. Washington Ave. 700 Fifth Ave. Suite 3300 P.O. Box 190 P.O. Box 34023 Newport, WA 99156 Seattle, WA 98124-4023

Attention: Director, Hydro Attention: Power Supply Officer Operations Phone: (206) 386-0049 and Power Supply Fax: (206) 684-3158 Phone: (509) 447-3137 Fax: (509) 447-5824

10.3 Any billing or payment notice, shall be given in writing and shall be deemed to have been received if delivered in person, by fax, or sent by acknowledged delivery as follows:

PUD No. 1 of Pend Oreille County Seattle City Light 130 N. Washington Ave. 700 Fifth Ave. Suite 3300 P.O. Box 190 P.O. Box 34023 Newport, WA 99156 Seattle, WA 98124-4023

Attention: Treasurer/Chief Attention: Manager, Wholesale Accountant Contracts Phone: (509) 447-9326 Phone: (206) 386-4533 Fax: (509) 447-6370 Fax: (206) 386-4555

Section 11 Relation to the 1965 Agreement

Except as specifically agreed with respect to the computation methodology that is described in Section 5, in the event that there is any conflict between the terms of this Encroachment Delivery Agreement and the terms of the 1965 Agreement, the 1965 Agreement shall govern.

Section 12 Revisions and Amendment

The Parties may mutually agree to revise the data collection or computation procedures described herein, including Attachment 1, which agreement shall be documented through a writing signed by both Parties.

Section 13 Incorporation of Attachment

The Attachment 1 is incorporated into this Encroachment Delivery Agreement.

IN WITNESS WHEREOF, the parties hereto have executed this Encroachment Delivery Agreement.

THE CITY OF SEATTLE, PUBLIC UTILITY DISTRICT NO. 1

CITY LIGHT DEPARTMENT OF PEND OREILLE COUNTY,

WASHINGTON

_________________________ _________________________

Jorge Carrasco Robert Geddes

Superintendent General Manager

Attachment 1: Principles and Procedures for Calculating Tailwater Encroachment Losses (TEL)

Page 10 of 10

Page 1 of 10 Exhibit A to Ordinance

PRINCIPLES AND PROCEDURES FOR

CALCULATING TAILWATER ENCROACHMENT LOSSES (TEL)

The Parties agree that tailwater encroachment losses (TEL) for Box Canyon Project shall be calculated based on the principle that encroachment losses are equivalent to the theoretical generation output without encroachment minus actual generation output after encroachment. Thus, TEL shall be calculated from the following equation:

TEL = Gn Gm

Gn = Gn1 + Gn2 + Gn3 + Gn4

SS0 = SS / (Gm1 + Gm2 + Gm3 + Gm4)

Gm = Gm1 + SS0 * Gm1 + Gm2 + SS0 * Gm2 + Gm3 + SS0 * Gm3 + Gm4 + SS0 * Gm4

GHn = FBm TWn

GHm = FBm TWm

Where TEL = tailwater encroachment losses

Gn = sum of generation from all units without encroachment

Gm = sum of generation from all units with encroachment

Gni (where i = 1, 2, 3 or 4) = individual unit generation without encroachment

Gmi (where i = 1, 2, 3 or 4) = individual unit generation with encroachment (measured)

SS = total energy used for station service (measured)

SS0 = normalized energy used for station service

GHn = plant gross head without encroachment

GHm = plant gross head with encroachment

FBm = forebay elevation (measured)

TWn = tailwater elevation without encroachment

TWm = tailwater elevation with encroachment (measured)

Following are step-by-step instructions for calculating hourly TEL:

1. For each hour of the day, determine each of the four Box Canyon units power output (Gm1, Gm2, Gm3, and Gm4) from watt-hour readings exactly on the hour of interest.

2. For each hour of the day, determine the total energy used for station service (SS) on the hour of interest.

3. Determine the average Box Canyon intake forebay elevation (FBm) for each hour, by averaging the four 15-minute interval readings from the District's forebay gauge: exactly on the hour of interest, 15 minutes after the hour, 30 minutes after the hour, and 45 minutes after the hour.

4. Determine the average Box Canyon tailwater elevation (TWm) immediately downstream of the powerhouse for each hour, by averaging the four 15-minute interval readings from the USGS gauge no. 12396500 Pend Oreille River Below Box Canyon near Ione, Washington (use 02_00065 gauge height readings).

5. Determine the average hourly discharge in CFS from Box Canyon Project for each hour, by averaging the four 15-minute interval readings from the USGS gauge no. 12396500 Pend Oreille River Below Box Canyon near Ione, Washington (use 01_00060 discharge readings). The USGS discharge data may be adjusted and/or averaged to smooth transient variability through an algorithm provided by USGS, or as otherwise mutually agreed by the Parties.

6. Compute the unencroached tailwater elevation (TWn ) corresponding to the hourly discharge as obtained from step (5) using USGS Rating Table for Pend Oreille River below Box Canyon Dam Near Ione, Washington (use USGS Rating Table No. 8, October 1, 1966).

7. Compute plant gross heads with (GHm) and without (GHn) encroachment.

8. Based on Box Canyon turbine-generator's power-discharge-head relationship as established by the December 1970 Report of the Board of Engineers, determine individual unit turbine discharge (Q1, Q2, Q3, and Q4) from individual unit power output (Gm1, Gm2, Gm3, and Gm4) that has been adjusted for station service energy and plant gross head with encroachment (GHm).

9. Using the same power-discharge-head relationship, determine individual unit power output without encroachment (Gn1, Gn2, Gn3, and Gn4) from unit turbine discharge (Q1, Q2, Q3, and Q4) as derived from step (8) and plant gross head without encroachment (GHn).

10. TEL is calculated to the nearest kWh. Since TEL is scheduled in whole MWh, the amount of TEL to be scheduled for each hour shall be determined by rounding down to the nearest integer. Fractions of a MWh of TEL that are not scheduled due to such rounding shall be carried over to subsequent hours and accumulated until the sum of the total accumulated unscheduled TEL is at least one MWh, at which time the integer amount so carried over shall be added to the scheduled TEL of the hour and any fraction then remaining shall be carried over to subsequent hours to be accumulated with later MWh fractions, as before.

Page 2 of 2

Page 1 of 2 Attachment 1 to Exhibit A to Ordinance

2005 MEMORANDUM OF AGREEMENT

BETWEEN

THE CITY OF SEATTLE, CITY LIGHT DEPARTMENT

AND

PUBLIC UTILITY DISTRICT NO. 1 OF PEND OREILLE COUNTY

THIS 2005 MEMORANDUM OF AGREEMENT ("2005 MOA") constitutes an agreement by and between the City of Seattle, Washington, a municipal corporation under the laws of the State of Washington, acting by and through its City Light Department ("City"), and Public Utility District No. 1 of Pend Oreille County, Washington, a municipal corporation under the laws of the State of Washington ("District"). The City and the District are each sometimes referred to individually in this Agreement as "Party"; the City and the District are sometimes referred to together in this Agreement as "Parties."

WITNESSETH,

WHEREAS, Article 49 of the City's Federal Energy Regulatory Commission ("FERC") license for the Boundary Project provides for the City to assign up to 48 megawatts (MW) from the Boundary Project to the District ("Article 49 Power"); and

WHEREAS, on April 29, 1992, the Parties entered into the Settlement Agreement ("Settlement Agreement") establishing the terms and conditions for the assignment of firm power by the City to the District pursuant to Article 49 of the Boundary Project license; and

WHEREAS, on July 5, 2000, the Parties entered into the Memorandum of Agreement under which the Parties agreed, among other things, that the City would seek a continuation of Article 49 in the new Boundary Project license, including the removal of the constraint on the sale of Article 49 Power outside Pend Oreille County, and the District would support and assist the City's relicensing of the Boundary Project; and

WHEREAS, on March 26, 2004, the District provided notice to the City, pursuant to the September 5, 1969 Agreement between the Parties, that the District intends to recapture, effective August 1, 2005, the remaining 12 MW of Box Canyon Project power and to simultaneously take its full 48 MW of Article 49 Power; and

WHEREAS, the District wants to clarify the interpretation of Article 49 with respect to the District's sale of surplus energy after August 1, 2005, and until FERC issues a new Boundary Project license; and

WHEREAS, the City owns a 115-kv transmission line approximately 8.9 miles long that extends from the Boundary Substation of Bonneville Power Administration ("BPA") to the BPA's Metaline Falls Tap near the town of Metaline Falls in Pend Oreille County ("Boundary Tap Line"); and

WHEREAS, on February 16, 1996, the Parties entered into the Boundary Transmission Tap Line Agreement that provides, among other things, for the Parties to share equally the capacity of the reinforced Boundary Tap Line; and

WHEREAS, the Parties want to make the most economical and beneficial use of their respective and shared electric generating and transmission resources in Pend Oreille County; and

WHEREAS, BPA, the City, and the District have negotiated the Boundary Transformer Agreement, providing for installation and operation of a transformer and breaker in the Boundary Substation to allow the costeffective delivery of Article 49 Power and tailwater encroachment compensation from the Boundary Project to the District via the Boundary Tap Line; and

WHEREAS, the Boundary Transformer Agreement requires that the City and the District provide a transformer and breaker for the Boundary Substation, and the City and the District agree that the District should pay the acquisition costs for this equipment in recognition of the greater benefits that the District will receive from transmission savings; and

WHEREAS, on February 14, 1999, the Parties entered into the Energy Delivery and Exchange Agreement, and this agreement, requiring the District to schedule a minimum of 60 percent of its maximum Article 49 Power entitlement in all hours, expires on July 31, 2005; and

WHEREAS, the City wants the District to continue scheduling a minimum of 60 percent of its maximum Article 49 Power entitlement, effective August 1, 2005, to enable the City to reduce Boundary Project demand on the regional transmission grid;

NOW THEREFORE, in consideration of the foregoing facts, the Parties agree as follows:

1. Beginning August 1, 2005, and until FERC issues the new Boundary Project license, the District may purchase, subject to the terms of the Settlement Agreement, up to 48 MW of Article 49 Power to meet the District's load requirements within its service territory. Should the District have Box Canyon and/or other power surplus to its load, the District may sell such surplus outside the District's service territory without affecting the District's Article 49 Power entitlement.

2. The District shall pay all acquisition costs of the transformer and breaker to be installed at Boundary Substation pursuant to the Boundary Transformer Agreement. The District shall also assume sole responsibility for the future maintenance and capital replacements of the transformer and breaker, insofar as BPA does not assume this responsibility, except that the City shall be responsible for any protective equipment required to operate the tertiary winding of the Boundary transformer in order to supply station service.

3. The District shall keep the City informed of its plans for maintenance of the Boundary transformer and breaker, and it shall promptly inform the City of any event of an operating nature that affects operation of the "Transmission Path" described in the Boundary Transformer Agreement by contacting the following City personnel:

Seattle City Light Seattle City Light 700 Fifth Ave. Suite 3300 Boundary Powerhouse P.O. Box 34023 P.O. Box 219 Seattle, WA 98124-4023 10382 Boundary Road Metaline Falls, WA 99153

Attention: Real-time Power Attention: Hydro Operator Marketing Phone: (509) 446-3073 or 3083 Phone: (206) 615-0966 (unlisted) Fax: (206) 615-0969 Fax: (509) 446-2928

Fax: (509) 446-2928 4. In consideration of the City's payment of $135,000 to the District upon execution of this 2005 MOA, the District shall grant the City and the City shall hold a one-third (1/3) capacity interest in the use of the transformer and breaker, effective on the day that the transformer is energized and so long as the Boundary Tap Line is interconnected to the transformer.

5. Effective August 1, 2005, the District shall schedule, subject to the terms of the Assignment Agreement, a minimum of sixty (60) percent of its maximum Article 49 Power entitlement in all hours.

6. During hours when the Boundary Project is not on-line or when the Boundary transformer and/or breaker are not in operation, the City may schedule Article 49 Power and Tailwater Encroachment Loss deliveries to the District in the most economical manner possible, including via non-firm transmission.

7. If the District wishes to sell the Boundary transformer and/or breaker, it will first provide the City an opportunity to purchase the equipment by providing written notification to the City's representative designated in Section 10 of the Boundary Transformer Agreement. If the City elects to purchase the Boundary transformer and/or breaker from the District, it shall so notify the District within 90 days of receiving written notice from the District.

8. This 2005 MOA may be amended only with the express written consent of both Parties.

9. This 2005 MOA shall become effective and binding upon the City and the District on the date of the last signature for and on behalf of the Parties and shall be in effect so long as any of the facilities installed under the Boundary Transformer Agreement are in existence and operable, unless this 2005 MOA is terminated by written agreement of both Parties. All liabilities incurred under this 2005 MOA shall be preserved until satisfied.

IN WITNESS WHEREOF the Parties hereto have executed this 2005 MOA.

THE CITY OF SEATTLE, PUBLIC UTILITY DISTRICT NO. 1

CITY LIGHT DEPARTMENT OF PEND OREILLE COUNTY

By: ______________________ By: ______________________

Jorge Carrasco Bob Geddes

Superintendent General Manager

Date: ____________________ Date: ____________________

Page 4 of 4

Page 1 of 4 Exhibit B to Ordinance

Contract No. 05TX-12006

BOUNDARY TRANSFORMER AGREEMENT

executed by the

UNITED STATES OF AMERICA

DEPARTMENT OF ENERGY

acting by and through the

BONNEVILLE POWER ADMINISTRATION

and

Public Utility District No. 1 of Pend Oreille County

and

The City of Seattle, City Light Department

Index to Sections

Section Page

1. Term of Agreement 2

2. Definitions..........................................................

3. Design, Engineering and Installation............................................. .... 3

4. Supply, Procurement and Ownership.................................................. 3

5. Operation and Maintenance ..... 4

6. Replacement and Upgrade of Boundary Equipment........................... 5

7. Transmission Path Capacity Allocation ........... 6

8. Liability............................................................

9. Dispute Resolution...........................................................

10. Representation.......................................................

11. Choice of Law 8

12. Assignment...........................................................

13. Applicability........................................................

14. Severability.........................................................

15. Notices..............................................................

16. Signatures...........................................................

This AGREEMENT (Agreement), executed __________________, 2005, by the UNITED STATES OF AMERICA (Government), Department of Energy, acting by and through the BONNEVILLE POWER ADMINISTRATION (Bonneville); and the Public Utility District No. 1 of Pend Oreille County (Pend Oreille) and the City of Seattle, City Light Department (Seattle); (referred to collectively as "Parties" and Pend Oreille and Seattle may be jointly referred to as "the Customers").

RECITALS

WHEREAS Bonneville, Pend Oreille and Seattle have agreed to participate in a joint project to reinforce the interconnected transmission system for increased reliability and system robustness;

WHEREAS the Parties agree that the arrangement provided in this agreement benefits the interconnected systems of the Parties;

WHEREAS the Parties agree to the various responsibilities and obligations set forth below;

WHEREAS this project will result in a new transmission path with capacity allocated among the Parties according to the terms of this Agreement;

NOW, THEREFORE, in consideration of the promises and mutual covenants and agreements herein contained, the Parties agree as follows:

1. TERM OF AGREEMENT

This Agreement shall be effective at 0000 hours on August 1, 2005 (Effective Date), and shall terminate at the time the Boundary Equipment is permanently removed from Bonneville's Boundary Substation; provided however, in no case shall this Agreement terminate prior to the date the Point-to-Point Service Agreement No. 02TX-10875 (PTP Agreement) between Bonneville and Pend Oreille terminates at 0000 on January 1, 2012. Neither the PTP Agreement nor the Boundary Project Transmission Agreement (Contract No. DE-MS7990BP92488) shall terminate early, unless Bonneville and Pend Oreille agree to a financial settlement of the transmission charges for the remaining term under such agreements. In the event that the Agreement is terminated, all liabilities incurred hereunder are hereby preserved until satisfied.

2. DEFINITIONS

"Boundary Transformer" means the Pend Oreille-owned 230/115 kV, 100/133/167 MVA (OA/FA/FA) non-LTC, SCADA alarm equipped transformer with a 13.8 kV, 2-4 MVA tertiary winding installed at Bonneville's Boundary Substation in accordance with this Agreement.

"Boundary Equipment" means the Boundary Transformer, 115 kV circuit breaker and all associated equipment including, but not limited to, wiring, relaying and oil containment, installed in Bonneville's Boundary Substation in accordance with this Agreement.

"Transmission Path" means the path created from Bonneville's Boundary 230 kV bus through the Boundary Transformer, across Seattle's Boundary-Metaline Falls Tap 115 kV line and Bonneville's 115 kV line between Metaline Falls Tap and Box Canyon Tap, ending at Box Canyon Tap.

3. DESIGN, ENGINEERING AND INSTALLATION

a. Bonneville shall, at its expense, provide for all labor and overhead charges associated with the planning, design, engineering, permitting, project management and installation of the Boundary Equipment.

b. Bonneville shall coordinate review of the project requirements diagram with the Customers prior to finalizing the plan of service. The project requirements diagram shall be provided to the Customers no later than March 31, 2006. The Customers shall provide comments, if any, in writing to Bonneville no later than June 30, 2006. Bonneville shall finalize the project requirements diagram no later than July 31, 2006.

c. No metering point for Pend Oreille will be established as a result of the installation of the Boundary Equipment in accordance with this Agreement.

d. Bonneville shall develop specifications for the Boundary Transformer and the associated 115 kV power circuit breaker and coordinate review with the Customers. The specifications shall be provided to the Customers for review no later than September 30, 2006. The Customers shall provide comments, if any, in writing to Bonneville no later than December 30, 2006. Bonneville shall finalize the specifications no later than January 31, 2007.

e. Bonneville and the Customers shall coordinate the schedule for the procurement, construction and installation of the Boundary Equipment. Such coordination is to be completed no later than October 31, 2007.

f. The energization date of the Boundary Equipment shall be no later than October 31, 2009.

4. SUPPLY, PROCUREMENT AND OWNERSHIP

a. The Customers, at their cost, shall arrange to provide to Bonneville the Boundary Transformer, a 115 kV SF-6 gas power circuit breaker, and all associated equipment, including, but not limited to, wiring, relaying and oil containment in accordance with the specifications determined in 3(d).

b. At Customers' request Bonneville shall, to the extent allowed by law, procure any or all of the Boundary Equipment on their behalf and at their cost. Such request shall be in writing and delivered to Bonneville no later than June 30, 2007.

c. Pend Oreille will own the Boundary Equipment. The change of ownership between Bonneville and Pend Oreille shall be between the 230 kV bushing of Pend Oreille's Boundary Transformer and the Boundary 230 kV bus in Bonneville's Boundary substation.

5. OPERATION AND MAINTENANCE

a. Routine Maintenance. Bonneville shall operate and maintain the Boundary Equipment in the same manner in which Bonneville operates and maintains similar facilities of the Government. Operation and labor and materials for normal maintenance on the Boundary Equipment, such as gaskets, seals, etc., shall be provided by Bonneville at Bonneville's expense.

b. Outage Coordination. Bonneville shall consult with Pend Oreille prior to any planned outage for maintenance of the Boundary Equipment to determine:

(1) a mutually acceptable period of time required by Pend Oreille to prepare for the outage; and

(2) a mutually acceptable period in which to accomplish the required maintenance; and

(3) such agreement shall not be unreasonably withheld.

c. Maintenance Records. Bonneville shall provide Pend Oreille with copies of maintenance records for work performed on the Boundary Equipment within thirty (30) days after such maintenance is performed. Transformer gas-in-oil test results will be provided to Pend Oreille within thirty (30) days of receipt of the test results

by Bonneville.

d. Box Canyon Phase Shifter. Upon energization of the Boundary Equipment, Pend Oreille's Box Canyon Phase Shifter will be operated with total actual power flows between plus or minus 10 MW to the Box Canyon Tap, unless Pend Oreille is notified by the Bonneville dispatchers to change the tap position to alleviate temporary transmission system loading problems. Under no circumstances will the Phase Shifter be temporarily loaded above the OA/FA/FA rating of 100/133/167 MVA.

e. Box Canyon Switches. Bonneville and Pend Oreille shall enter into a separate signed operating agreement to allow Pend Oreille's dispatch control center to remotely control the Bonneville-owned Box Canyon Tap switches, B1011 and B1012.

f.

Load Limits. Bonneville will operate the Boundary Transformer and the Boundary-Metaline Falls Tap 115 kV line consistent with the applicable Bonneville standards:

(1) Boundary Transformer Loading: Bonneville will operate the Boundary Transformer in accordance with Bonneville's Operating Bulletin 15, Operation of Transformers and Shunt Reactors, August 25, 2003, version or its successor.

(2) Boundary-Metaline Falls Tap 115 kV Line Loading: Bonneville will monitor loading on the Boundary-Metaline Falls Tap 115 kV line in accordance with the then current National Electric Safety Code (NESC) standards, using the Bonneville Loading Guide and the ambient temperature at Boundary Substation to determine the line rating. The Boundary-Metaline Falls Tap 115 kV line was constructed with 795 ACSR (Drake) conductor sagged for up to 75?C conductor operating temperature with two (2) foot per second wind speed.

(3) Line Upgrade: If the Boundary-Metaline Falls Tap 115 kV line is upgraded, new operating limits for the Boundary Transformer will be coordinated among the Parties.

g. Path Operation. Bonneville shall be the Transmission Path operator. The Transmission Path will be operated normally closed except for planned and unplanned outages unless otherwise agreed to by the Parties.

h. Other. The connection where Pend Oreille's facilities interconnect with Bonneville's facilities at Box Canyon Tap shall be operated normally closed except for planned and unplanned outages for the duration of this Agreement.

6. REPLACEMENT AND UPGRADE OF BOUNDARY EQUIPMENT

a. Routine or Planned Replacement. For routine or planned replacement of any part of the Boundary Equipment that Bonneville determines is necessary for operation and maintenance of such equipment in the same manner in which Bonneville operates and maintains similar facilities of Bonneville, Pend Oreille shall reimburse Bonneville for the cost of non-labor capital expenditures under separate written agreement. Prior to committing to any capital expenditures for such replacement, Bonneville shall coordinate with Pend Oreille. Such capital expenditures to be reimbursed to Bonneville for replacement of any of the Boundary Equipment, including transformer and breaker accessories such as bushings, pumps, compressors, gauges, fans, cabinet heaters, etc., shall be approved in advance by Pend Oreille and such approval shall not be unreasonably withheld.

b.

Non-Routine Upgrade or Modification. In the event that changes to the substation or transmission facilities owned by the Parties in the area of the Boundary Equipment require modifying, upgrading or replacing any of the Boundary Equipment, the Parties shall agree among themselves in writing that such changes to the Boundary Equipment are necessary. Pend Oreille will be responsible for nonlabor capital expenditures of such modification, upgrade or replacement. Bonneville will be responsible for labor expenditures of such modification, upgrade or replacement.

c. Catastrophic Failure. In the event of a catastrophic failure of the Boundary Equipment, Bonneville shall provide an initial emergency response. Bonneville will use best efforts to be in an initial emergency response mode, with crews being notified and mobilized, within two (2) hours. After such initial emergency response, Bonneville shall coordinate with Pend Oreille regarding: (i) Bonneville's responsibility to provide labor for repair and/or replacement of the failed equipment at Bonneville's expense; and, (ii) Pend Oreille's responsibility to provide equipment or repair of equipment at Pend Oreille's expense.

Following such catastrophic failure Pend Oreille shall take immediate action to replace or repair the damaged Boundary Equipment at its expense.

In the event that a spare transformer is needed in the interim, Bonneville shall provide such spare transformer to the extent one is available. All of the cost associated with transportation of the spare transformer to and from Bonneville's Boundary Substation, including labor to prepare the transformer for shipment and for resiting such transformer upon return to storage, shall be paid by Pend Oreille. The labor costs associated with installation and maintenance of the spare transformer at Boundary Substation will be borne by Bonneville. There shall be no lease charge for the use of the spare transformer in the Boundary substation.

d. Removal. If requested by Pend Oreille, Bonneville shall, upon two (2) years' written notice, and at Pend Oreille's expense, remove and return to Pend Oreille at the Boundary Substation, where such Boundary Equipment is located, the salvageable Boundary Equipment facilities that are owned by Pend Oreille. After such removal, Bonneville may, at Pend Oreille's expense, return the Boundary Substation facilities to the configuration: (i) existing before such Boundary Equipment was installed; or, (ii) as mutually agreed between Pend Oreille and Bonneville.

7. TRANSMISSION PATH CAPACITY ALLOCATION

As consideration for the actions undertaken in accordance with this Agreement, and the benefits that the addition of the Boundary Equipment provides to the interconnected transmission system, each Party shall have rights to one-third of the operating transfer capability of the Transmission Path.

8. LIABILITY

a. While Bonneville, Pend Oreille and Seattle are each parties to the Agreement Limiting Liability Among Western Interconnected Systems, such agreement shall continue in full force and effect as between the Parties and shall be controlling with respect to liability matters notwithstanding any other provision of this section.

b. To the extent allowed by the Federal Tort Claims Act, Bonneville agrees to defend, indemnify and hold harmless each of Seattle and Pend Oreille, their affiliated companies, boards of directors, officers, employees, agents and representatives, against and from any and all loss, claims, actions or suits, for or on account of injury, bodily or otherwise to, or death of persons, or for damage to or destruction of property belonging to Seattle or Pend Oreille or others, resulting from Bonneville's negligent acts or omissions or intentional misconduct in connection with the performance of this Agreement, excepting that any liability attaching to Bonneville shall be reduced by any proportion that such injury or harm is caused by negligence or intentional misconduct of either Seattle or Pend Oreille, their affiliated companies, board of directors, officers, employees, agents or representatives.

c. Each of Seattle and Pend Oreille agree to defend, indemnify and hold harmless Bonneville and the other Party, their employees, agents and representatives, against and from any and all loss, claims, actions or suits, for or on account of injury, bodily or otherwise to, or death of persons, or for damage to, or destruction of property belonging to Bonneville, or others, resulting from either Seattle's or Pend Oreille's negligent acts or omissions or intentional misconduct in connection with the performance of this Agreement, excepting that any liability attaching to Seattle or Pend Oreille

shall be reduced by any proportion that such injury or harm is caused by negligence or intentional misconduct of Bonneville or the other Party, their employees, agents or representatives.

d.

No Party shall be liable to any other Party for any injury or death to any person, or for any loss or damage to any property, caused by or arising out of an electric disturbance on the First Party's electric system, whether or not such electric disturbance resulted from the First Party's negligent, grossly negligent or wrongful act or omission. For the purposes of this section 8(d):

(1) the term "electric disturbance" means any sudden, unexpected, changed or abnormal electric condition occurring in or on an electric system;

(2) the term "Party" means, in addition to such Party itself, its affiliated companies, its board of directors, officers and employees;

(3) the term "damage" means all damage, including consequential damage;

(4) the term "person" means any person, including those not connected with any Party to this Agreement.

e. The Parties acknowledge and agree that no Party is the agent or principal for any other Party, nor are they partners or joint venturers; and the Parties each agree that they will not represent to any other Party that they act in the capacity of agent or principal for any other Party.

f. In no event shall any Party be liable to any other Party for any special, punitive, exemplary, consequential, incidental or indirect losses or damages for any failure of performance howsoever caused, whether or not arising from such Party's sole, joint or concurrent negligence.

9. DISPUTE RESOLUTION

(a) Pending resolution of a disputed matter, the Parties shall continue performance of their respective obligations pursuant to this Agreement.

(b) In the event of a dispute arising out of this Agreement, all Parties shall negotiate in good faith to reach an acceptable and timely resolution of the dispute. Should the Parties be unable to resolve the dispute to their mutual satisfaction within twenty (20) working days after such negotiation begins, or at the conclusion of any other mutually acceptable time period, the Parties shall attempt in good faith to resolve the dispute through non-binding mediation.

(c) No Party shall be obligated to engage in mediation for longer than five (5) business days. Each Party shall be responsible for its own expenses and an equal share of the expenses of the mediator.

10. REPRESENTATION

Each Party represents to each other Party that the individual signing on its behalf is authorized to execute this Agreement for and on behalf of such Party. Each Party represents to the other Parties that this Agreement is legal and binding on such Party in accordance with its terms.

11. CHOICE OF LAW

This Agreement shall be interpreted, construed and implemented under Federal law.

12. ASSIGNMENT

All rights, benefits and obligations under this Agreement shall be binding upon the respective successors and assigns of the Parties to this Agreement. This Agreement shall not be transferred or assigned by any Party to any other person or entity without the written consent of the other Parties. The assigning Party shall notify the non-assigning Parties of such assignment. Any consent required of the other Parties shall not be unreasonably withheld or delayed.

13. APPLICABILITY

This Agreement constitutes the entire understanding among the Parties with respect to the subject matter hereof, supersedes any and all previous understandings among the Parties with respect to the subject matter hereof, and binds and inures to the benefit of the Parties and their successors and assigns.

14. SEVERABILITY

If one or more provisions of this Agreement shall be found by a court of competent jurisdiction to be invalid, illegal or unenforceable in any respect, it shall be given effect to the extent permitted by applicable law, and such invalidity, illegality or unenforceability shall not affect the validity of the other provisions of this Agreement.

15. NOTICES

Any notice required under this Agreement shall be made as indicated below. Any party to this Agreement may change its contact information set forth below by giving the other Parties written notice of such changes in accordance with the provisions of this section.

(a) Operating Notice: Any notice of an operating nature between Pend Oreille and Bonneville shall be made orally or in writing to the primary and/or secondary points of contact as follows:

Primary Point of Contact: Secondary Point of Contact:

Bonneville Power Administration Bonneville Power Administration Attn: Chief Substation Operator Attn: Spokane Regional Manager III 2410 East Hawthorne Rd. 2400 East Hawthorne Rd. Mead, WA 99021 Mead, WA 99021 Phone: (509) 358-7375 Phone: (509) 465-1039 Fax: (509) 358-7460 Fax: (509) 465-1070

PUD No. 1 of Pend Oreille County PUD No. 1 of Pend Oreille County N. 130 Washington Ave. N. 130 Washington Ave. PO Box 190 PO Box 190 Newport WA 99156 Newport, WA 99156 Attention: Dispatch Center Attention: Box Canyon Operator Phone: (509) 447-3045 Phone: (509) 442-3232 Fax: (509) 447-9330 Fax: (509) 447-6790

(b) Administrative Notice: Any notice or other communication related to this Agreement, other than notices of an operating nature, shall be given in writing and shall be deemed to have been received if delivered in person, by fax, or sent by acknowledged delivery.

If to the Customers: If to Bonneville:

PUD No. 1 of Pend Oreille County Bonneville Power Administration N. 130 Washington Ave. Mail Stop TM/OPP-2 P.O. Box 190 8100 NE Parkway Drive Suite 50 Newport, WA 99156 Vancouver, WA 98662. Attn: Director, Hydro Operations and Attn: Transmission Account Power Supply; and Director of Executive Construction and Engineering for Pend Oreille Phone: (509) 447-3137 TM/OPP-2 Fax: (509) 447-5824 Phone: (360) 619-6015 Fax: (360) 619-6940 And

The City of Seattle, City Light Department 700 Fifth Ave Suite 3300 P.O. Box 34023 Seattle, WA 98124-4023 Attn: Power Supply Officer Phone: (206) 386-0049 Fax: (206) 684-3158

16. SIGNATURES

The signatories represent that they are authorized to enter into this Agreement on behalf of the Party for whom they sign. This Agreement may be executed in counterparts.

PUBLIC UTILITY DISTRICT UNITED STATES OF AMERICA

NO. 1 OF PEND OREILLE COUNTY Department of Energy

Bonneville Power Administration

By: By:

Name: Name:

(Print/Type) (Print/Type)

Title: Title: Transmission Account Executive

Date: Date:

THE CITY OF SEATTLE, CITY LIGHT DEPARTMENT

By:

Name:

(Print/Type)

Title:

Date:

05TX-12006, PUD of Pend Oreille County & The City of Seattle Page 2 of 11

Page 1 of 11 Exhibit C to Ordinance