AMENDMENT NO. 14 TO THE
ARIZONA NUCLEAR POWER PROJECT
PARTICIPATION AGREEMENT
1. PARTIES:
The Parties to this Amendment No. 14 to the Arizona Nuclear Power Project
Participation Agreement, hereinafter referred to as "Amendment No. 14,"
are: ARIZONA PUBLIC SERVICE COMPANY, a corporation organized and existing
under and by virtue of the laws of the State of Arizona, hereinafter
referred to as "Arizona"; SALT RIVER PROJECT AGRICULTURAL IMPROVEMENT AND
POWER DISTRICT, an agricultural improvement district organized and existing
under and by virtue of the laws of the State of Arizona, hereinafter
referred to as "Salt River Project"; SOUTHERN CALIFORNIA EDISON COMPANY, a
corporation organized and existing under and by virtue of the laws of the
State of California, hereinafter referred to as "Edison"; PUBLIC SERVICE
COMPANY OF NEW MEXICO, a corporation organized and existing under and by
virtue of the laws of the State of New Mexico, hereinafter referred to as
"PNM"; EL PASO ELECTRIC COMPANY, a corporation organized and existing under
and by virtue of the laws of the State of Texas, hereinafter referred to as
"El Paso"; SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY, a joint powers
agency organized and existing under and by virtue of the laws of the State
of California, doing business in the State of Arizona as SOUTHERN
CALIFORNIA PUBLIC POWER AUTHORITY ASSOCIATION, hereinafter referred to as
"SCPPA"; and DEPARTMENT OF WATER AND POWER OF THE CITY OF LOS ANGELES, a
municipal corporation organized and existing under and by virtue of the
laws of the State of California, hereinafter referred to as "LADWP,"
hereinafter individually referred to as "Party" and collectively as
"Parties."
2. RECITALS:
2.1 Arizona, Salt River Project, Edison, PNM, El Paso, SCPPA and LADWP are
parties to a certain agreement entitled Arizona Nuclear Power Project
Participation Agreement, dated as of August 23, 1973, as amended by
Amendment No. 1, dated as of January 1, 1974, Amendment No. 2, dated
as of August 28, 1975, Amendment No. 3, dated as of July 22, 1976,
Amendment No. 4, dated as of December 15, 1977, Amendment No. 5, dated
as of December 5, 1979, Amendment No. 6, effective as of October 16,
1981, Amendment No. 7, effective as of April 1, 1982, Amendment No. 8,
executed as of September 12, 1983, Amendment No. 9, executed as of
June 12, 1984, Amendment No. 10, executed as of November 21, 1985,
Amendment No. 11, effective January 10, 1987, Amendment No. 12,
effective August 5, 1988, and Amendment No. 13, effective June 15,
1991, hereinafter, as so amended, referred to as the "Participation
Agreement."
2.2 The Parties wish to establish procedures through this Amendment No. 14
for allocating the costs associated with Postretirement Benefits other
than Pensions in accordance with the Statement of Financial Accounting
Standards (SFAS) 106 adopted by the Financial Accounting Standards
Board.
Revised: 01/21/00 2
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3. AGREEMENT:
For and in consideration of the premises and the mutual obligations of and
undertakings by the Parties as hereinafter provided in this Amendment No.
14 to the Participation Agreement, the Parties agree as follows:
4. EFFECTIVE DATE:
This Amendment No. 14 shall become effective after it has been executed by
all Parties. The procedures for allocating costs that are associated with
this Amendment shall be applied retroactively to January 1, 1993.
5. DEFINED TERMS:
5.1 The italicized words and phrases used in this Amendment No. 14 shall
have meanings ascribed to them in Section 3 of the Participation
Agreement as amended by this Amendment No. 14.
5.2 All references to a "Section" or "Sections" in this Amendment No. 14
shall mean a Section or Sections of the Participation Agreement unless
the text expressly states otherwise.
6. AMENDMENTS TO THE PARTICIPATION AGREEMENT MADE BY THIS AMENDMENT NO. 14:
6.1 SECTION 3 - DEFINITIONS is amended by:
6.1.1 The addition of new Section 3.44A, which reads in its entirety
as follows:
3.44A POSTRETIREMENT BENEFITS: As defined in SFAS 106, all
forms of benefits, other than retirement income,
provided by the OPERATING AGENT to its retirees.
6.1.2 The addition of a new Section 3.51B, which reads in its
entirety as follows:
3.51B RETURN ON ASSETS: The earnings on the investments of
the plan assets intended for the post retirement health
and welfare benefits trusts.
6.1.3 The renumbering of Section 3.52A to 3.52B and the addition of
a new Section 3.52A which reads in its entirety as follows:
3.52A SFAS: Statement of Financial Accounting Standards of the
Financial Accounting Standards Board.
6.1.4 The renumbering of Sections 3.54K and L to 3.54L and 3.54M,
respectively, and the addition of a new Section 3.54K, which
reads in its entirety as follows:
Revised: 01/21/00 3
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3.54K TRANSITION OBLIGATION: The unrecognized amount of the
(i) accumulated POSTRETIREMENT BENEFITS obligation in
excess of (ii) the fair value of plan assets plus any
recognized accrued post-retirement benefit cost or less
any recognized prepaid post-retirement benefit cost as
of the date of adoption of SFAS 106.
6.2 APPENDIX E - COST OF OPERATING WORK AND CAPITAL IMPROVEMENTS, is
amended by the deletion of Sections E.1.6, E.5.1 and E.5.2 and the
substitution in lieu thereof of new Sections E.1.6, E.5.1, and E.5.2,
which reads in their entirety as follows:
E.1.6 The portion of the OPERATING AGENT'S employee pensions and
benefits expenses as defined under FPC Account 926 (including the
TRANSITION OBLIGATION and related interest and the RETURN ON
ASSETS), which is the sum of the amounts determined by (1)
applying the Benefits Ratio computed in accordance with Sections
E.5.1 and E.5.2 hereof to the total labor charges of ANPP
operating and maintenance expenses, including without limitation
the labor portion of expenses chargeable to ANPP pursuant to
Sections E.1.1, E.1.2, E.1.3 and E.1.4 hereof, (2) the TRANSITION
OBLIGATION and related interest pursuant to Sections E.7A.1,
E.7A.2 and E.7A.3 and (3) the RETURN ON ASSETS pursuant to
Sections E.7B.1 and E.7B.2.
E.5.1 The Benefits Ratio set forth below shall be applied to the labor
expense portion of the ANPP operations and maintenance expenses,
to the OPERATING AGENT'S direct labor charges incurred in
effecting CAPITAL IMPROVEMENTS, and to the labor expenses
included in the OPERATING AGENT'S supervisory and administrative
and general expense accounts. Estimated and actual Benefits
Ratios shall be determined, adjusted and used in the manner set
forth in Section E.10 hereof.
Benefits Ratio = B
-
L
Where:
B = The OPERATING AGENT'S total system employee pensions
and benefits (as defined in FPC Account 926, excluding
the TRANSITION OBLIGATION and related interest and the
RETURN ON ASSETS) including PAYROLL TAXES and worker's
compensation expense on labor charged to employee
pensions and benefits. The TRANSITION OBLIGATION and
related interest will be billed separately and the
expected RETURN ON ASSETS will be credited separately to
the PARTICIPANTS.
L = The OPERATING AGENT'S total labor distributed,
including accruals less labor charged to pensions and
benefits, less labor charged to injuries and damages.
E.5.2 The following example sets forth the method to be employed by
the OPERATING AGENT to determine the Benefits Ratio:
Revised: 01/21/00 4
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EXAMPLE COMPUTATION
OF BENEFITS RATIO
(Based on OPERATING AGENT'S 1997 Expenses)
PENSIONS AND BENEFITS LABOR TOTAL
----- -----
Employee Pensions and Benefits $2,542,461 $ 60,804,375
Payroll Taxes on Labor at
Total Labor Rate 7.067% 179,676
Compensation Insurance at
Total Labor Rate 0.502% 12,775
Less the TRANSITION OBLIGATION related to
POSTRETIREMENT BENEFITS and Interest on the
TRANSITION OBLIGATION, billed outside of the
Benefits Ratio 17,141,515
Less expected RETURN ON ASSETS (8,706,403)
------------
Total Employee Pensions and Benefits net of
the TRANSITION OBLIGATION and Related Interest
and Expected RETURN ON ASSETS $ 52,561,714
===========
LABOR BASE
Labor charged to operation and maintenance,
construction and miscellaneous general ledger
accounts $323,082,848
Less total labor charged to Pensions and Benefits 1,799,288
Less total labor charged to Injuries and Damages 399,809
------------
Total applicable labor $320,883,751
============
Benefits Ratio: $52,561,714/$320,883,751 16.38%
6.3 APPENDIX E - COST OF OPERATING WORK AND CAPITAL IMPROVEMENTS, is
amended by adding the new Sections E.7A, E.7B and E.7C which read in
their entirety as follows:
E.7A TRANSITION OBLIGATION
E.7A.1 The OPERATING AGENT'S TRANSITION OBLIGATION at
January 1, 1993 is $182,918,448, of which $43,000,000
is allocable to Palo Verde. Future changes in
corporate-wide benefit plan levels covered under SFAS
106
Revised: 01/21/00 5
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that may affect the level of the OPERATING AGENT'S
TRANSITION OBLIGATION, shall be applied to Palo Verde
at the rate of 23.508%. Any such changes to the
TRANSITION OBLIGATION will be reflected in the year
that the actuarial valuation reports such changes.
E.7A.2 Interest on the unamortized TRANSITION OBLIGATION
balance at January 1 of each year will be calculated
using the current year's discount rate per the
current year's actuarial valuation. Since the
actuarial valuation is usually not available until
mid-year, an estimated rate, based on the prior
year's actuarial valuation will be used until the
current year's actuarial valuation is available. At
that time, the interest related to the TRANSITION
OBLIGATION will be trued-up to reflect the current
year's valuation. In the event of removal of one or
more GENERATING UNITS from service prior to 2013, an
actuarial study will be completed to recalculate the
remaining TRANSITION OBLIGATION pertaining to Palo
Verde on a stand-alone basis.
E.7A.3 The TRANSITION OBLIGATION will be amortized over 20
years on a straight line basis, starting January 1,
1993. The OPERATING AGENT shall bill the TRANSITION
OBLIGATION and related interest for the year on a
monthly basis as set forth below:
TRANSITION OBLIGATION AND RELATED INTEREST
BILLED OUTSIDE OF THE BENEFITS LOAD
TOTAL BILLED TO
COMPANY PALO VERDE
------- ----------
Total TRANSITION OBLIGATION
Fixed At 1-1-93 To Be
Amortized Over 20 Years $182,918,448 $43,000,000
One Year's Amortization Of the
TRANSITION OBLIGATION ("T.O.") 9,145,922 2,150,000
Interest On The Unamortized
Balance Of The T.O. At 1-1-93 15,090,772 3,547,500
------------ -----------
Total 1993 TRANSITION OBLIGATION
& Interest 24,236,694 5,697,500
============ ===========
Interest On The Unamortized
Balance Of the T.O. At 1-1-93
Unamortized Balance At 1-1-93 182,918,448 43,000,000
1993 Discount Rate 8.25% 8.25%
------------ -----------
Interest On TRANSITION OBLIGATION 15,090,772 3,547,500
============ ===========
E.7B RETURN ON ASSETS
E.7B.1 The current year expected RETURN ON ASSETS will be
estimated annually by the actuary. Any RETURN ON
ASSETS related to any trusts established for the
purpose of obtaining preferential tax treatment
(i.e., union versus
Revised: 01/21/00 6
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non-union), shall be allocated by the actuary to Palo
Verde based on the ability of Palo Verde to
participate in such trust.
E.7B.2 As soon as practical after the end of each calendar
year, the actual RETURN ON ASSETS will be determined
by the actuary and allocated to Palo Verde. The
actuary shall then calculate the allocation of total
trust(s) assets at the end of each calendar year to
Palo Verde based on current year trust(s)
contributions, earnings and distributions. The
allocation of trust assets to Palo Verde will be the
basis for the allocation of expected RETURN ON ASSETS
annually by the actuary.
E.7C Funding of Postretirement Benefit Costs
E.7C.1 All POSTRETIREMENT BENEFIT costs, other than the
expected RETURN ON ASSETS and the TRANSITION
OBLIGATION and related interest, as defined in SFAS
106, are to be billed through the Benefits Ratio.
E.7C.2 POSTRETIREMENT BENEFITS that have been collected
either through the Benefits Load, or as TRANSITION
OBLIGATION and related interest, as adjusted for the
RETURN ON ASSETS, shall be funded by the OPERATING
AGENT in irrevocable external trusts intended for
postretirement health and welfare benefits. Funding
will occur within an administratively reasonable time
period on approximately a quarterly basis.
7. EXECUTION BY COUNTERPARTS:
This Amendment No. 14 may be executed in any number of counterparts, and
upon execution by all PARTICIPANTS, each executed counterpart shall have
the same force and effect as an original instrument and as if all
PARTICIPANTS had signed the same instrument. Any signature page of this
Amendment No. 14 may be detached from any counterpart of this Amendment No.
14 without impairing the legal effect of any signature thereon, and may be
attached to another counterpart of this Amendment No. 14 identical in form
hereto but having attached to it one or more signature pages.
Revised: 01/25/00 7
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8. SIGNATURE CLAUSE:
The signatories hereto represent that they have been appropriately
authorized to enter into this Amendment No. 14 on behalf of the Party for
whom they sign.
ARIZONA PUBLIC SERVICE COMPANY
By: James M. Levine
------------------------------------
Its: Executive V.P., Generation
-----------------------------------
Date: 3-31-00
----------------------------------
SALT RIVER PROJECT AGRICULTURAL
IMPROVEMENT AND POWER DISTRICT
By: William P. Schrader
------------------------------------
Its: President
-----------------------------------
Date: 2-28-00
----------------------------------
ATTEST AND COUNTERSIGN:
By: Terrill A. Lonon
-------------------------------------
Its: Corporate Secretary
------------------------------------
Date: 2-28-00
-----------------------------------
SOUTHERN CALIFORNIA EDISON COMPANY
By: Harold B. Ray
------------------------------------
Its: Executive Vice President
-----------------------------------
Date: 3-20-00
----------------------------------
ATTEST AND COUNTERSIGN
By: Beverly P. Ryder
-------------------------------------
Its: Corporate Secretary
------------------------------------
Date: 3-21-00
-----------------------------------
Revised: 01/25/00 8
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PUBLIC SERVICE COMPANY OF NEW MEXICO
By: Patrick J. Goodman
------------------------------------
Its: Vice President - Power Production
-----------------------------------
Date: 4-19-00
----------------------------------
EL PASO ELECTRIC COMPANY
By: John C. Horne
------------------------------------
Its: Vice President
-----------------------------------
Date: 5-11-00
----------------------------------
SOUTHERN CALIFORNIA PUBLIC POWER
AUTHORITY, DOING BUSINESS IN THE STATE
OF ARIZONA AS SOUTHERN CALIFORNIA PUBLIC
POWER AUTHORITY ASSOCIATION
By: Joseph F. Hsu
------------------------------------
Its: President
-----------------------------------
Date: April 24, 2000
----------------------------------
ATTEST AND COUNTERSIGN:
By:
-------------------------------------
Its:
------------------------------------
Date:
-----------------------------------
Revised: 01/25/00 9
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DEPARTMENT OF WATER AND POWER OF
THE CITY OF LOS ANGELES
By: Enrique Martinez
------------------------------------
Its: Assistant General Manager -
Power Services
-----------------------------------
Date: June 20, 2000
----------------------------------
STATE OF ARIZONA )
) ss.
County of Maricopa )
On this 31 day of March, 1999, before me, the undersigned Notary Public,
personally appeared James M. Levine who acknowledged himself to be the Executive
Vice President of ARIZONA PUBLIC SERVICE COMPANY, an Arizona corporation, and
that he as such officer, being authorized to do, executed the foregoing
instrument for the purposes therein contained by signing the name of the company
by himself as such Executive Vice President.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
Twyla Hannah
--------------------------------
Notary Public
My Commission Expires:
Nov. 12, 2002
--------------------
Revised: 01/25/00 10
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STATE OF ARIZONA )
) ss.
County of Maricopa )
On this 28th day of February, 2000, before me, the undersigned Notary
Public, personally appeared William P. Schrader who acknowledged himself to be
the President of SALT RIVER PROJECT AGRICULTURAL IMPROVEMENT AND POWER DISTRICT,
an Arizona corporation, and that he as such officer, being authorized to do,
executed the foregoing instrument for the purposes therein contained by signing
the name of the company by himself as such Salt River Project Agricultural
Improvement and Power District.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
Karen C. Umber
--------------------------------
Notary Public
My Commission Expires:
July 30, 2002
--------------------
STATE OF CALIFORNIA )
) ss.
County of Los Angeles )
On this 20 day of March, 2000, before me, the undersigned Notary Public,
personally appeared Harold B. Ray who acknowledged himself to be the Exec. Vice
President of SOUTHERN CALIFORNIA EDISON COMPANY, a California corporation, and
that he as such officer, being authorized to do, executed the foregoing
instrument for the purposes therein contained by signing the name of the company
by himself as such Exec. Vice President.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
Marcelda G. Puentes
--------------------------------
Notary Public
My Commission Expires:
4-13-2001
--------------------
Revised: 01/25/00 11
<PAGE>
STATE OF NEW MEXICO )
) ss.
County of Bernalillo )
On this 19th day of April, 2000, before me, the undersigned Notary Public,
personally appeared Patrick J. Goodman who acknowledged himself to be the Vice
President, Power Prod. of PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico
corporation, and that he as such officer, being authorized to do, executed the
foregoing instrument for the purposes therein contained by signing the name of
the company by himself as such Public Service Company of New Mexico.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
Barbara Baker
--------------------------------
Notary Public
My Commission Expires:
6-23-02
--------------------
STATE OF TEXAS )
) ss.
County of El Paso )
On this 11th day of May, 2000, before me, the undersigned Notary Public,
personally appeared John C. Horne who acknowledged himself to be the Vice
President of EL PASO ELECTRIC COMPANY, a Texas corporation, and that he as such
officer, being authorized to do, executed the foregoing instrument for the
purposes therein contained by signing the name of the company by himself as such
Vice President.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
Rhonda M. Pyle
--------------------------------
Notary Public
My Commission Expires:
6-10-2003
--------------------
Revised: 01/25/00 12
<PAGE>
STATE OF CALIFORNIA )
) ss.
County of Los Angeles )
On this 24th day of April, 2000, before me, the undersigned Notary Public,
personally appeared Joseph F. Hsu who acknowledged himself to be the President
of SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY (doing business in the State of
Arizona as SOUTHERN CALIFORNIA POWER AUTHORITY ASSOCIATION), a California joint
powers agency, and that he as such officer, being authorized to do, executed the
foregoing instrument for the purposes therein contained by signing the name of
the company by himself as such President.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
Candace Toscano
--------------------------------
Notary Public
My Commission Expires:
May 12, 2003
--------------------
STATE OF CALIFORNIA )
) ss.
County of Los Angeles )
On this 20th day of June, 2000, before me, the undersigned Notary Public,
personally appeared Enrique Martinez who acknowledged himself to be the
Assistant General Manager - Power Services of DEPARTMENT OF WATER AND POWER OF
THE CITY OF LOS ANGELES, a department organized and existing under the Charter
of the City of Los Angeles, a California municipal corporation, and that he as
such officer, being authorized to do, executed the foregoing instrument for the
purposes therein contained by signing the name of the company by himself as such
Assistant General Manager - Power Services.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
Daisy Cheung
--------------------------------
Notary Public
My Commission Expires:
November 17, 2002
--------------------
Revised: 01/25/00 13
