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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the period ended March 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-6986
PUBLIC SERVICE COMPANY OF NEW MEXICO
(Exact name of registrant as specified in its charter)
New Mexico 85-0019030
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Alvarado Square, Albuquerque, New Mexico 87158
(Address of principal executive offices)
(Zip Code)
(505) 848-2700
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Common Stock--$5.00 par value 41,774,083 shares
Class Outstanding at May 1, 1994
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PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
INDEX
Page No.
PART I. FINANCIAL INFORMATION:
Report of Independent Public Accountants 3
ITEM 1. FINANCIAL STATEMENTS
Consolidated Statements of Earnings--
Three Months Ended March 31, 1994 and 1993 4
Consolidated Balance Sheets--
March 31, 1994 and December 31, 1993 5
Consolidated Statements of Cash Flows--
Three Months Ended March 31, 1994 and 1993 6
Notes to Consolidated Financial Statements 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 8
PART II. OTHER INFORMATION:
ITEM 1. LEGAL PROCEEDINGS 13
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 15
ITEM 5. OTHER INFORMATION 15
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 17
Signature 18
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders
of Public Service Company of New Mexico:
We have reviewed the accompanying condensed consolidated balance sheet of
Public Service Company of New Mexico (a New Mexico corporation) and
subsidiaries as of March 31, 1994, and the related condensed consolidated
statements of earnings and cash flows for the three-month periods ended March
31, 1994 and 1993. These financial statements are the responsibility of the
Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the financial statements referred to above for them to be
in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Public Service Company of New
Mexico and subsidiaries as of December 31, 1993 (not presented herein). Our
report on that statement described the Company's adoption, effective January
1, 1993, of Statement of Financial Accounting Standards No. 106, Employers'
Accounting for Postretirement Benefits Other Than Pensions, and No. 109,
Accounting for Income Taxes. In our opinion, the information set forth in
the accompanying condensed consolidated balance sheet as of December 31,
1993, is fairly stated, in all material respects, in relation to the
consolidated balance sheet from which it has been derived.
ARTHUR ANDERSEN & CO.
Albuquerque, New Mexico
May 6, 1994
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<TABLE>
ITEM 1. FINANCIAL STATEMENTS
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS
(Unaudited)
<CAPTION>
Three Months Ended
March 31
------------------
1994 1993
---- ----
(In thousands except
per share amounts)
<S>
Operating revenues: <C> <C>
Electric $148,668 $146,158
Gas 109,419 99,989
Water 2,720 2,411
-------- --------
Total operating revenues 260,807 248,558
-------- --------
Operating expenses:
Fuel and purchased power 32,158 35,806
Gas purchased for resale 63,293 53,721
Other operation and maintenance 79,656 101,250
Depreciation and amortization 18,737 19,656
Taxes, other than income taxes 10,193 9,596
Income taxes 14,099 2,178
-------- --------
Total operating expenses 218,136 222,207
-------- --------
Operating income 42,671 26,351
-------- --------
Other income and deductions, net of taxes:
Allowance for equity funds used
during construction - 12
Other (47) 5,652
-------- --------
Net other income and deductions (47) 5,664
-------- --------
Income before interest charges 42,624 32,015
-------- --------
Interest charges:
Interest on long-term debt 17,182 18,010
Other interest charges 1,405 2,252
Allowance for borrowed funds used
during construction (66) (207)
-------- --------
Net interest charges 18,521 20,055
-------- --------
Net earnings 24,103 11,960
Preferred stock dividend requirements 1,681 1,716
-------- --------
Net earnings applicable to common stock $ 22,422 $ 10,244
======== ========
Average shares of common stock outstanding 41,774 41,774
======== ========
Net earnings per share of common stock $ 0.54 $ 0.25
======== ========
Dividends paid per share of common stock $ - $ -
======== ========
The accompanying notes are an integral part of these financial statements.
/TABLE
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<TABLE>
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
March 31, December 31,
1994 1993
-------- -----------
(Unaudited)
<S> (In thousands)
ASSETS <C> <C>
Utility plant $2,572,527 $2,550,166
Accumulated provision for depreciation and amortization (864,400) (846,234)
---------- ----------
Net utility plant 1,708,127 1,703,932
---------- ----------
Other property and investments 34,187 33,966
---------- ----------
Current assets:
Cash 24,577 20,510
Temporary investments, at cost 47,850 47,850
Receivables 143,419 147,223
Income taxes receivable - 10,400
Fuel, materials and supplies 51,852 48,086
Gas in underground storage 7,940 8,599
Other current assets 12,007 11,347
---------- ----------
Total current assets 287,645 294,015
---------- ----------
Deferred charges 166,780 180,276
---------- ----------
$2,196,739 $2,212,189
========== ==========
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock equity:
Common stock $ 208,870 $ 208,870
Additional paid-in capital 470,149 470,149
Excess pension liability, net of tax (2,795) (2,795)
Retained earnings (deficit) since January 1, 1989
(appropriated $6.7 million as of March 31, 1994) (98,426) (120,848)
---------- ----------
Total common stock equity 577,798 555,376
Cumulative preferred stock:
Without mandatory redemption requirements 59,000 59,000
With mandatory redemption requirements 23,100 24,386
Long-term debt, less current maturities 902,496 957,622
---------- ----------
Total capitalization 1,562,394 1,596,384
---------- ----------
Current liabilities:
Short-term debt - -
Accounts payable 77,168 116,905
Current maturities of long-term debt 63,480 18,903
Accrued interest and taxes 37,545 29,992
Other current liabilities 56,370 51,364
---------- ----------
Total current liabilities 234,563 217,164
---------- ----------
Deferred credits 399,782 398,641
---------- ----------
$2,196,739 $2,212,189
========== ==========
The accompanying notes are an integral part of these financial statements.
</TABLE>
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<TABLE>
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Three Months Ended
March 31
------------------
1994 1993
---- ----
<S> (In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES: <C> <C>
Net earnings $24,103 $11,960
Adjustments to reconcile net earnings to net cash
flows from operating activities:
Depreciation and amortization 22,931 25,220
Allowance for equity funds used during construction - (12)
Accumulated deferred investment tax credit (1,295) (1,404)
Accumulated deferred income tax 3,476 9,593
Changes in certain assets and liabilities:
Receivables 14,204 (23,476)
Fuel, materials and supplies (3,766) 4,517
Deferred charges 13,204 13,768
Accounts payable (39,744) (16,079)
Accrued interest and taxes 7,553 11,875
Deferred credits (2,628) (6,718)
Other 5,167 362
Other, net 1,711 1,069
------- -------
Net cash flows from operating activities 44,916 30,675
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Utility plant additions (26,884) (25,727)
Other property additions (274) (1,829)
Temporary investments, net - (5,665)
------- -------
Net cash flows from investing activities (27,158) (33,221)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Redemptions and repurchases of preferred stock (1,419) (600)
Repayments of other long-term debt (10,568) (1,684)
Net increase in short-term debt - 1,650
Dividends paid (1,704) (1,717)
------- -------
Net cash flows from financing activities (13,691) (2,351)
------- -------
Increase (decrease) in cash 4,067 (4,897)
Cash at beginning of period 20,510 21,080
------- -------
Cash at end of period $24,577 $16,183
======= =======
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Interest paid $19,368 $14,526
======= =======
Income taxes paid, net $ - $ 1
======= =======
The accompanying notes are an integral part of these financial statements.
</TABLE>
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PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) General Accounting Policy
In the opinion of management, the accompanying unaudited consolidated
financial statements contain all adjustments necessary for a fair
presentation of the consolidated financial statements. The accounting
policies followed by Public Service Company of New Mexico (the "Company") are
set forth in note (1) of notes to the Company's consolidated financial
statements in the Company's Annual Report on Form 10-K for the year ended
December 31, 1993 (the "1993 Form 10-K") filed with the Securities and
Exchange Commission.
(2) First Mortgage Bond Redemption
On April 20, 1994, the Company redeemed its $45 million 10 1/8% series first
mortgage bonds prior to scheduled maturity. The premium paid for the early
redemption and the unamortized issuance expense were approximately $1.9
million and $.2 million, respectively. Approximately $.5 million of these
amounts will be written off with the remainder being deferred for future
recovery.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The Company's 1993 Form 10-K PART II, ITEM 7.--"MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" discusses
management's assessment of the Company's financial condition, results of
operations and other issues facing the Company. The following discussion
supplements the 1993 Form 10-K discussion and should be read in conjunction
with the consolidated financial statements presented herein and in the 1993
Form 10-K.
The January 12, 1994 Stipulation
As previously reported, on January 12, 1994, the Company and the New Mexico
Public Utility Commission ("NMPUC") staff and primary intervenor groups
entered into a stipulation ("stipulation") which addresses retail electric
prices, generation assets and certain financial concerns of the Company. The
Company filed the stipulation with the NMPUC, recommending that electric
retail rates be reduced by $30 million. The stipulation is subject to NMPUC
approval. (See PART II, ITEM 7.--" MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS-- January 12, 1994 Stipulation"
in the 1993 Form 10-K.)
On January 3, 1994, the NMPUC issued an order establishing an investigation
of rates for both the Company and Southwestern Public Service Company. The
order requires the Company to file a general rate case no later than July 1,
1994. However, in an order issued March 7, 1994 regarding the stipulation,
the NMPUC preliminarily stayed the requirements of its investigative order as
they pertain to the Company, pending the filing of testimony on the
stipulation and until further order of the NMPUC.
On March 23, 1994, the Company requested an extension for filing its
testimony in support of the stipulation from April 18, 1994 to May 16, 1994.
On March 24, 1994, the NMPUC granted the extension. On May 10, 1994, the
Company requested a second extension for filing its testimony from May 16,
1994 to June 1, 1994. The NMPUC granted the extension on May 13, 1994. No
hearing date has been scheduled.
LIQUIDITY AND CAPITAL RESOURCES
The Company currently estimates a total of $205 million for its capital
requirements for 1994. The Company expects that such cash requirements are
to be met primarily through internally-generated cash. However, to cover
differences in the amounts and timing of cash generation and cash
requirements, the Company intends to utilize short-term borrowings under its
liquidity arrangements, which consist of a $100 million secured revolving
credit facility ("Facility"), an additional $40 million credit facility
collateralized by the Company's electric customer accounts receivable and $11
million in local lines of credit. The Company had no borrowings under such
liquidity arrangements as of March 31, 1994.
The Facility has an expiration date of June 13, 1995 and contains a provision
that could prevent additional borrowings in the event of a material adverse
change in the condition (financial or otherwise), results of operations,
assets, business or prospects of the Company. In respect to the total debt
to total capitalization test under the Facility and the letter of credit
issued to support certain pollution control bonds, the Company is allowed to
exclude from the calculation of total capitalization up to $200 million in
pre-tax write-offs resulting from the Company's restructuring efforts. The
Company was allowed to exclude, from the calculation, approximately $180
million in pre-tax write-offs resulting from the stipulation signed in
January 1994. The maximum allowed ratio of the Company's total debt to total
capitalization under the Facility and the letter of credit is 72%. As of
March 31, 1994, such ratio was 67.49%.
On April 20, 1994, the Company redeemed its $45 million 10 1/8% series first
mortgage bonds. The bonds, originally due October 1, 2004, were called at
104.22% of the principal amount. Annual savings, exclusive of the call
premium, will be approximately $4.6 million or $.07 per share.
RESULTS OF OPERATIONS
Resources excluded from NMPUC jurisdictional rates continue to negatively
impact the Company's results of operations; however, as a result of the Palo
Verde Nuclear Generating Station ("PVNGS") Unit 3 write-down and the
provision for loss associated with the M-S-R Public Power Agency, a
California public power agency ("M-S-R"), power purchase contract recorded in
1992, the Company has experienced positive operating income from the excluded
resources. Selected financial information for the excluded resources is
shown below:
Three Months Ended
March 31
--------
1994 1993
---- ----
(In thousands)
Operating revenues $ 9,854 $ 13,873
Operating income $ 619 $ 2,522
Net loss $ (2,456) $ (1,678)
Net utility plant at end of period $158,350* $198,968
* Decrease is a result of the sale of 50 MW of San Juan Generating Station
("SJGS") Unit 4 to the City of Anaheim, California.
Electric gross margin (electric operating revenues less fuel and purchased
power expense) increased $6.2 million in the current quarter primarily due to
a difference of $6.7 million (or $.10 per share) between the estimated
unbilled revenues reported in the fourth quarter of 1993 and actual unbilled
revenues. In addition, there was an increase in jurisdictional energy sales
of 22.1 million KWh, or $1.8 million. These increases were partially offset
by a decrease in the gross margin of the excluded resources and firm-
requirements wholesale customers of $2.5 million as a result of a decrease in
available capacity due to the 1993 sale of a 50 MW undivided interest in SJGS
Unit 4 to the City of Anaheim, California, and a mid-cycle outage and less
than full power operations (86%) of the PVNGS units.
Gas operating revenues and gas purchased for resale increased $9.4 million
and $9.6 million, respectively, in the current quarter, mainly due to higher
purchased gas costs.
Other operation and maintenance expenses decreased $21.6 million from last
year's quarter due mainly to an accrual of $23.3 million related to the
Company's severance program in 1993. Such decrease was partially offset by
an increase in PVNGS maintenance expense of $2.8 million resulting primarily
from the PVNGS Unit 2 mid-cycle outage and an increase in pension and
retirees health care costs accruals of $1.2 million due to lowering the
discount rates from 8 percent to 7 percent for measuring benefit obligations.
Operating income taxes for the current quarter increased $11.9 million from
a year ago due primarily to increased pre-tax earnings for the current
quarter.
Other income and deductions (net) decreased $5.7 million from the same
quarter last year due primarily to an after-tax gain of $7.7 million
recognized from the sale of the Company's investment in ACE Limited stock in
1993, which was partially offset by additional provisions for legal expenses
in 1993.
OTHER ISSUES FACING THE COMPANY
Palo Verde Nuclear Generating Station
Steam Generator Tubes
As previously reported, tube cracking in the PVNGS steam generators
adversely affected operations in 1993, and will continue to do so in 1994
and probably into 1995, because of the cost of replacement power, reduced
off-system sale incentives, maintenance expense associated with unit
outages and corrective actions required to deal with the issue. (See PART
II, ITEM 7.-- "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS -- OTHER ISSUES FACING THE COMPANY -- Palo Verde
Nuclear Generating Station - Steam Generator Tubes" in the Company's 1993
Form 10-K.)
PVNGS Unit 2
The operation of Unit 2 has been particularly affected by this issue.
Arizona Public Service Company ("APS"), as the operating agent, has
encountered axial tube cracking in the upper regions of the two steam
generators in Unit 2. This form of tube degradation is uncommon in the
industry and, in March 1993, led to a tube rupture and an outage of the
unit that extended to September 1993, during which the unit was refueled.
In March 1994, a mid-cycle inspection outage was completed which revealed
further tube degradation in Unit 2. The outage included, among other
things, inspecting and chemically cleaning each of Unit 2's steam
generators, and subsequently starting the unit up using boric acid in the
secondary water system. Unit 2 is scheduled for another mid-cycle
inspection outage in the fall of 1994. The Unit 2 refueling and
maintenance outage which was originally planned for the fall of 1994 is
now scheduled to be completed in early 1995.
PVNGS Unit 3
Unit 3 is currently in a refueling outage, during which APS is inspecting
and has chemically cleaned each of Unit 3's two steam generators and the
unit will be started up with boric acid in the secondary water system.
APS's inspection of these generators has revealed axial cracking in a
small number of tubes in the upper regions of each of the generators. As
a result, APS has expanded the scope of its inspections of these steam
generators to obtain additional information about the extent and severity
of the axial cracking. The expanded inspection in one of the steam
generators has been completed. APS expects that the expanded inspection
in the other steam generator will be completed within the next week. APS
currently expects that Unit 3 will be restarted in June. However, in
light of the axial cracking that APS has found to date, APS anticipates
that Unit 3 would be removed from service in late 1994 for a mid-cycle
inspection of its steam generators.
PVNGS Unit 1
Unit 1 is scheduled for a refueling outage beginning in March 1995. In
late 1993, APS concluded that Unit 1 could be safely operated until the
1995 outage and submitted its supporting analysis to the Nuclear
Regulatory Commission (the "NRC"). However, in light of the axial
cracking found in the Unit 3 steam generators, APS is currently evaluating
the potential need for a mid-cycle steam generator tube inspection outage
in Unit 1 late in 1994.
General
Although its analysis is not yet completed, APS believes that the axial
cracking in the Unit 2 and Unit 3 steam generator tubes is due to the
susceptibility of tube materials to a combination of deposits on the tubes
and the relatively high temperatures at which all three units are
currently designed to operate. APS also believes that it can retard
further tube degradation to acceptable levels by remedial actions, which
include chemically cleaning the generators and performing analyses and
adjustments that will allow the units to be operated at lower temperatures
without appreciably reducing their power output. Chemical cleaning has
been completed in Unit 2 and was completed in Unit 3 during its current
refueling outage. The temperature analyses should be concluded within the
next several months. In the meantime, the lower temperatures will be
achieved by operating the units at less than full power (86%).
APS previously reported that all three units should be returned to full
power by mid-1995, and one or more of the units could be returned to full
power during 1994. However, due to the axial cracking found in Unit 3,
APS cannot currently predict when one or more of the units will be
returned to full power.
So long as the three units are involved in mid-cycle outages and are
operated at less than full power (86%), the Company will incur additional
replacement power costs and reduced off-system sale incentives of
approximately $8.8 million during 1994. Approximately 70% (61% related
to retail customers and 9% related to firm-requirements wholesale
customers) of these additional costs will be recovered through the fuel
and purchased power cost adjustment clauses ("FPPCAC"). (See PART I, ITEM
1.--"BUSINESS--RATES AND REGULATION--FPPCAC" in the Company's 1993 Form
10-K.) The future recovery of these costs from retail customers will be
dependent upon receiving an order from the NMPUC regarding the elimination
of the FPPCAC.
The Company estimates that additional operations and maintenance expenses
totaling approximately $2.0 million (before income taxes) will be incurred
if mid-cycle inspection outages are performed at Units 1 and 3 in late
1994.
When tube cracks are detected during any outage, the affected tubes are
taken out of service by plugging. That has occurred in a number of tubes
in all three units, particularly in Unit 2, which is by far the most
affected by cracking and plugging. APS expects that because of the
foregoing remedial actions, the rate of plugging will slow considerably
and that, while it may ultimately reach some limit on plugging, it can
operate the present steam generators over a number of years.
PVNGS Decommissioning Funding
As previously reported, the Company has a program for funding its share of
nuclear plant decommissioning costs for PVNGS. (See PART II, ITEM 7 --
"MANAGEMENTS'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS -- OTHER ISSUES FACING THE COMPANY -- PVNGS Decommissioning
Funding" in the 1993 Form 10-K.)
The Company's share of the PVNGS decommissioning costs was estimated at the
end of 1993 at approximately $143.2 million in present value, or $755.1
million in future value. These estimates are based on the estimated
remaining useful lives of 32 years, 32.75 years and 36 years for PVNGS
Units 1, 2 and 3, respectively and an assumed escalation rate of 5% per
year. The amount of the annual provision for 1994 using these assumptions
is $4.8 million. This amount is charged to operating expense in the income
statement and accrued as a provision for decommissioning in the liability
section of the Company's balance sheet. The total provision for nuclear
plant decommissioning reflected in the Company's balance sheet as of March
31, 1994 is approximately $18.7 million.
The Company has established a decommissioning trust fund to which it makes
annual deposits. The annual deposit approved by the NMPUC in 1987 is
$396,000 per unit. The NMPUC jurisdictional share of this amount related
to PVNGS Units 1 and 2 is included in retail rates. The market value of
trust assets at the end of 1993 was approximately $11.0 million. Operating
expenses (decommissioning expense) are adjusted at year end to reflect the
market value of the trust assets.
As previously reported, a supplemental investment program will be needed as
a result of both cost increases and the under performance of the existing
investment program. However, a supplemental funding program will not be
established until clarification and/or possible revisions to a FERC order
issued in October 1993 regarding restricted investment vehicles for nuclear
decommissioning trusts are obtained. Although a supplemental program will
not be established pending resolution from the FERC, the Company has
requested recovery of the increased decommissioning costs in the
stipulation.
A Transmission Right-of-Way
As previously reported, the Company has an easement for right-of-way with the
Navajo Nation for portions of two transmission lines that emanate from SJGS
and connect with Four Corners Power Plant and with a switching station in the
Albuquerque area. This easement expired January 17, 1993 and the Company has
been attempting to renew the grant. (See PART II, ITEM 7.--"MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS --
OTHER ISSUES FACING THE COMPANY-- A Transmission Right-of-Way" in the 1993
Form 10-K.)
On April 1, 1994, the Company submitted a proposal to the Navajo Nation for
a long-term renewal of the easement and the Company is currently awaiting a
response to that proposal. The Company continues to assess its options but
is not pursuing other alternatives unless it receives indications that
agreement cannot be reached in a satisfactory manner. The Company is
currently unable to predict the outcome of the negotiations or the costs
resulting therefrom.
Sale of SJGS Unit 4
As previously reported, the Company executed a purchase and participation
agreement with Utah Associated Municipal Power Systems (UAMPS) to sell 35 MW
of SJGS Unit 4 for approximately $40 million, which was subject to, among
other things, regulatory approvals. (See PART II, ITEM 7.--MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS--
OTHER ISSUES FACING THE COMPANY--Excess Capacity Sales/Wholesale Power
Market" in the Company's 1993 Form 10-K.)
The Company has received required regulatory approvals for the sale, and the
transaction is currently scheduled to close on June 2,1994. The Company
expects to receive cash proceeds of approximately $40 million and anticipates
recognizing approximately $5.7 million ($.14 per share) for the gain and tax
benefits associated with sharing the gain with the New Mexico jurisdictional
customers.
<PAGE>
PART II--OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
OTHER PROCEEDINGS
As previously reported, on March 31, 1993, certain individuals ("the New
Mexico Plaintiffs"), formerly affiliated with Bellamah Community Development
("BCD") whose general partners include Meadows Resources Inc., a subsidiary
of the Company ("Meadows"), filed suit ("the New Mexico suit") in the United
States District Court for the District of New Mexico against numerous
parties, including the Company, current and former employees of the Company
or Meadows, and MCB Financial Group, Inc., a Delaware corporation ("MCB"),
50% of which stock is owned by Meadows. (See PART I, ITEM 3.--"LEGAL
PROCEEDINGS--OTHER PROCEEDINGS" in the Company's 1993 Form 10-K.) The New
Mexico Plaintiffs have not requested any monetary relief against the Company
or certain current and former employees of the Company and Meadows but have
joined those parties in connection with insurance coverage and bad faith
insurance practices alleged against the insurance company which had issued a
directors and officers liability policy to various entities, including MCB
and BCD. The insurance allegations are made in connection with claims which
were then threatened by the Resolution Trust Corporation ("RTC"), as receiver
for Western Savings & Loan Association ("Western"), against the Company and
others. The New Mexico Plaintiffs also sued the RTC for a declaration that
they are not liable for any claims asserted by the RTC involving Western and
BCD. The Company and the current and former employees of the Company or
Meadows counterclaimed against the New Mexico Plaintiffs and cross-claimed
against the insurance company and the RTC in connection with insurance
coverage and bad faith insurance practices. In addition, the Company and the
current and former employees of the Company or Meadows cross-claimed against
the RTC, seeking a declaration of non-liability.
The RTC moved to transfer the New Mexico suit to the United States District
Court for the District of Arizona. On February 7, 1994, an order was entered
transferring the case in its entirety. Prior to the transfer, however, the
Federal magistrate judge in New Mexico issued a proposed order which, if
accepted by the district judge, would require the parties to enter into
mediation of all the claims. The parties are negotiating a form of order
dismissing without prejudice the claims asserted in the New Mexico suit
against MCB, the RTC, and the insurance company, ordering the mediation of
the claims asserted in the Arizona proceeding (described below) by the RTC
against all of the other parties in the New Mexico suit except the insurance
company and MCB, and preserving a motion for sanctions filed against the RTC
by the Company, its current or former employees named in the New Mexico suit,
and the New Mexico Plaintiffs.
On April 16, 1993, the Company and certain current and former employees of
the Company or Meadows were named as defendants in an action filed in the
United States District Court for the District of Arizona by the RTC, as
receiver for Western. Three of the individuals sued by the RTC have
indemnity agreements with the Company. The claims related to alleged actions
of the Company's employees in 1987 in connection with a loan procured by BCD
from Western and the purchase by that partnership of property owned by
Western. The RTC apparently claims that the Company's liability stems from
the actions of a former employee who allegedly acted on behalf of the Company
for the Company's benefit. The RTC is claiming in excess of $40 million in
actual damages from the BCD/Western transactions and alternatively is
claiming damages substantially exceeding that amount on Arizona racketeering,
civil conspiracy and aiding and abetting theories. These allegations involve
claims against the Company for damages to Western caused by other defendants
and from other transactions to which BCD was not a party. The RTC claims
that damages under the Arizona racketeering statute would be trebled under
applicable Arizona law. The RTC may also seek attorneys fees and costs. In
February 1994, the RTC advised that the RTC would be seeking to amend the
complaint to allege against the Company civil conspiracy, common law fraud
and aiding and abetting breach of fiduciary duties, aiding and abetting
common law fraud and aiding and abetting violation of Federal and Arizona
racketeering laws (all of which claims are already asserted against the
Company's current and former employees named in the suit) and is considering
claims against Meadows and against the Company as "successor to and alter
ego" of Meadows. As of May 11, 1994, the RTC has not sought to amend its
complaint.
On March 3 and 4, 1994, the parties participated in a mediation session aimed
at settling the litigation. The session ended without a settlement. The
mediator has continued settlement discussions with the parties.
In July 1993, the Company and certain current or former employees of the
Company or its subsidiaries were also named in an action filed in Federal
District Court in Arizona on behalf of a class of common stockholders of
Western. The allegations were similar to those filed in the RTC actions
described above. On January 24, 1994, motions to dismiss filed by the
Company and certain current or former employees of the Company or its
subsidiaries were granted by the Arizona court for lack of standing to bring
the actions. Although the plaintiffs may appeal the order of the court, the
Company believes the claims are without merit.
The Company continues to investigate all of the claims made by the RTC in
this litigation and is vigorously defending those claims. The Company cannot
predict the ultimate outcome of the case but believes that the RTC's
contentions are without merit and currently believes that the outcome will
not result in a material adverse impact on the Company's results of
operations or financial condition.
<PAGE>
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the annual meeting of shareholders held on April 27, 1994, the
shareholders elected the following three nominees to serve as directors until
the annual meeting of shareholders in 1997, or until their successors are
duly elected and qualified, as follows:
Votes
Against Broker
Director Votes For or Withheld Abstentions Non-Votes
-------- --------- ----------- ----------- ---------
Robert G. Armstrong 35,796,772 426,625 * *
Reynaldo U. Ortiz 35,725,332 498,065 * *
Paul F. Roth 35,776,580 446,817 * *
The approval of the selection by the Company's Board of Directors ("Board")
of Arthur Andersen & Co. as independent auditors for the fiscal year ending
December 31, 1994, was voted on, as follows:
Votes
Against Broker
Votes for or Withheld Abstentions Non-Votes
--------- ----------- ----------- ---------
35,824,851 194,430 204,116 *
* Not applicable or not readily available.
ITEM 5. OTHER INFORMATION
Palo Verde Nuclear Generating Station
Notice of Violation
By letter dated April 1, 1994, the NRC sent a Notice of Violation and
Proposed Imposition of Civil Penalty notifying APS, as the operating agent,
that the NRC proposes to impose a civil penalty in the amount of $100,000
for two violations aggregated into one "Severity Level III" problem. The
notice relates to two APS-identified violations of NRC regulatory
requirements and PVNGS security procedures involving failure to ensure that
a contractor of APS (1) conducted adequate background investigations before
APS granted certain individuals unescorted site access to PVNGS and (2)
required annual audits of private investigative agencies that assisted the
contractor in conducting background investigations. On April 29, 1994, APS
responded to the notice and paid the $100,000 penalty.
Discrimination Allegations
As previously reported, on December 15, 1993, APS and a former contract
employee at PVNGS, who had filed discrimination claims with the Department
of Labor against APS, entered into a settlement agreement, a part of which
was subject to approval by the Secretary of Labor. The claims related to
allegations that APS had discriminated against the contract employee
because he engaged in "protected activities" (as defined under Federal
regulations). (See PART I, ITEM 2.--"PROPERTIES--ELECTRIC--Nuclear Plant--
Discrimination Allegations" in the Company's 1993 Form 10-K.) On March 21,
1994, the Secretary of Labor issued a final order approving the settlement.
New Director Appointed
On April 5, 1994, Mr. Manuel Lujan, Jr., the former Secretary of the Interior
and United States Congressman, was appointed by the Board as a new Board
member. This appointment fills the position vacated by former Board member
Vickie Fisher, who resigned her position as a director for the Company in
December 1993 when she accepted a position with the City of Albuquerque.
(See ITEM 5. "OTHER EVENTS--Director Resignation" in the Company's Form 8-K
dated January 13, 1994.)
For the past year, Mr. Lujan has been acting as a consultant for various
firms. From 1989 to 1993, Mr. Lujan served as Secretary of the Interior
under President George Bush. Mr. Lujan was elected in 1968 to the U.S. House
of Representatives from New Mexico District 1 and served through 1988 in the
91st through 100th Congresses. His Congressional committee memberships
included Interior and Insular Affairs, Water and Power Resources Committee,
Energy and Environment Subcommittee, Science and Technology Committee,
Science Research and Technology Committee and the Fossil and Nuclear Energy
Research and Development Subcommittee.
<PAGE>
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits:
3.2 Bylaws of Public Service Company of New Mexico With All
Amendments to and Including April 27, 1994
10.5.5 Modification No. 8 to San Juan Project Co-Tenancy Agreement
between Public Service Company of New Mexico and Tucson Electric
Power Company dated September 15, 1993
10.5.6 Modification No. 9 to San Juan Project Co-Tenancy Agreement
between Public Service Company of New Mexico and Tucson Electric
Power Company dated January 12, 1994
10.6.3 Modification No. 8 to San Juan Project Construction Agreement
between Public Service Company of New Mexico and Tucson Electric
Power Company dated January 12, 1994
10.7.3 Modification No. 8 to San Juan Project Operating Agreement
between Public Service Company of New Mexico and Tucson Electric
Power Company dated September 15, 1993
10.7.4 Modification No. 9 to San Juan Project Operating Agreement
between Public Service Company of New Mexico and Tucson Electric
Power Company dated January 12, 1994
10.11 San Juan Unit 4 Early Purchase and Participation Agreement dated
as of September 26, 1983, between the Company and M-S-R Public
Power Agency, and Modification No. 2 to the San Juan Project
Agreements dated December 31, 1983 (refiled)
10.40.2* Second Amendment to the Public Service Company of New Mexico
Director Restricted Stock Retainer Plan dated April 27, 1994
10.54.1* Health Care and Retirement Benefit Agreement By and Between the
Public Service Company of New Mexico and John T. Ackerman dated
February 1, 1994
15.0 Letter Re Unaudited Interim Financial Information
*Designates each management contract, compensatory plan or arrangement
required to be filed as an exhibit to this report.
b. Reports on Form 8-K:
None, other than the previously filed Form 8-Ks described in the 1993
Form 10-K.
<PAGE>
<PAGE>
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PUBLIC SERVICE COMPANY OF NEW MEXICO
(Registrant)
Date: May 13, 1994 /s/ Donna M. Burnett
-----------------------------------
Donna M. Burnett
Corporate Controller and
Chief Accounting Officer
<PAGE>
<PAGE>
EXHIBIT INDEX
Paper (P) or
Exhibit Electronic (E)
- - ------- --------------
3.2 Bylaws of Public Service Company of New Mexico With All
Amendments to and Including April 27, 1994 E
10.5.5 Modification No. 8 to San Juan Project Co-Tenancy
Agreement between Public Service Company of New
Mexico and Tucson Electric Power Company dated
September 15, 1993 E
10.5.6 Modification No. 9 to San Juan Project Co-Tenancy
Agreement between Public Service Company of New Mexico
and Tucson Electric Power Company dated January 12, 1994 E
10.6.3 Modification No. 8 to San Juan Project Construction
Agreement between Public Service Company of New Mexico
and Tucson Electric Power Company dated January 12, 1994 E
10.7.3 Modification No. 8 to San Juan Project Operating Agreement
between Public Service Company of New Mexico and Tucson
Electric Power Company dated September 15, 1993 E
10.7.4 Modification No. 9 to San Juan Project Operating Agreement
between Public Service Company of New Mexico and Tucson
Electric Power Company dated January 12, 1994 E
10.11 San Juan Unit 4 Early Purchase and Participation
Agreement dated as of September 26, 1983, between
the Company and M-S-R Public Power Agency, and
Modification No. 2 to the San Juan Project Agreements
dated December 31, 1983 (refiled) E
10.40.2 Second Amendment to the Public Service Company of
New Mexico Director Restricted Stock Retainer Plan
dated April 27, 1994 E
10.54.1 Health Care and Retirement Benefit Agreement By and
Between the Public Service Company of New Mexico and
John T. Ackerman dated February 1, 1994 E
15.0 Letter Re Unaudited Interim Financial Information E
<PAGE>
<PAGE>
BYLAWS
OF
PUBLIC SERVICE COMPANY OF NEW MEXICO
With All Amendments to and Including April 27, 1994
<PAGE>
<PAGE>
BYLAWS
OF
PUBLIC SERVICE COMPANY OF NEW MEXICO
ARTICLE I.
Meetings of Stockholders
Section 1. Meetings. The Annual Meeting of Stockholders shall be held
on the fourth Wednesday of April in each year, if not a legal holiday
and if a legal holiday, then on the next succeeding business day, at a
time of the day to be determined by resolution of the Board of Direc-
tors, for the election of directors and the transaction of such other
business as may properly come before the meeting. Special meetings may
be called by a majority of the Board of Directors, the Executive
Committee, the Chairman of the Board or the President.
Section 2. Place of Meetings. The annual or any special meeting of
stockholders shall be held at the principal office of the Company in the
City of Albuquerque, Bernalillo County, State of New Mexico, or at such
other places within or without the State of New Mexico as shall be
specified in the notice of such meeting.
Section 3. Notice. Written notice of any meeting stating the time and
place, and if a special meeting, the purpose or purposes of such
meeting, shall be mailed to each stockholder of record entitled to vote
at such meeting at the address of such stockholders as the same appears
on the stock transfer books of the Company, except as otherwise provided
by law. In the event of the transfer of a stockholder's stock after
mailing of such notice and prior to the holding of the meeting, it shall
not be necessary to mail notice of the meeting to any transferee. All
notices of any special stockholder meeting shall be mailed not less than
forty (40) days before the date of the meeting; however, notice of any
such special meeting called by a majority of the Board of Directors, the
Executive Committee, the Chairman of the Board or the President, and
notice of any annual meeting, shall be mailed not less than ten (10)
days before such meeting of stockholders.
Section 4. Quorum. At any meeting of the stockholders, except as
otherwise provided by law, it shall be necessary that the holders of a
majority of the issued and outstanding shares of the capital stock
entitled to vote at such meeting shall be represented in person or by
proxy to constitute a quorum for the transaction of business.
Section 5. Adjournment. Whenever at any meeting of the stockholders,
notice of which shall have been duly given, a quorum shall not be
present, or whenever for any reason it may be deemed desirable, a
majority in interest of the stockholders present in person or by proxy
may adjourn the meeting from time to time to any future day, without
notice other than by announcement at the meeting or adjournment thereof.
At any such adjourned meeting at which quorum shall be present, any
business may be transacted which might have been transacted at the
meeting on the date originally fixed.
Section 6. Organization. The Chairman, or in the absence of the Chair-
man, the President, or in the absence of both, a Vice President shall
call meetings of the stockholders to order and shall act as Chairman of
such meetings. The stockholders may appoint any stockholder or the proxy
of any stockholder to act as Chairman of any meeting of the stockholders
in the absence of the Chairman, President and Vice Presidents. The
Secretary, or in the absence of the Secretary, an Assistant Secretary,
shall act as Secretary at all meetings of the stockholders, but in the
absence of the Secretary and Assistant Secretaries at any meeting of the
stockholders the presiding officer may appoint any person to act as
Secretary of such meeting.
Section 7. Inspectors. At each meeting of the stockholders at which a
vote by ballot is taken, the polls shall be opened and closed, the
proxies and ballots shall be received and be taken in charge, and the
validity of proxies and the acceptance or rejection of votes shall be
decided by two inspectors. No person who is a candidate for the office
of director shall act as Inspector of any election for directors. Such
inspectors shall be appointed by the Board of Directors before the
meeting, or, if no such appointment shall have been made, then by the
presiding officer of the meeting. If for any reason any of the inspec-
tors previously appointed shall fail to attend or refuse or be unable to
serve, inspectors in place of any so failing to attend or refusing or
unable to serve shall be appointed in like manner.
Section 8. Voting. At each meeting of stockholders every stockholder,
whether resident or nonresident, shall be entitled to one vote for each
share of stock standing in the name of the stockholder on the books of
the Company on the date on which stockholders entitled to vote are
determined. Such stockholder may be represented and vote by a proxy or
proxies appointed by an instrument in writing; in the event that such
instrument in writing shall designate two or more persons to act as
proxies, a majority of such persons present at the meeting, or if only
one shall be present, then that one shall have and may exercise all of
the powers conferred by such written instrument upon all of the persons
so designated, unless the instrument shall otherwise provide. No proxy
shall be voted at any meeting or adjournment thereof other than that for
which the proxy is given.
In all elections for directors, voting shall be by written ballot.
The Board of Directors may fix a date in advance not exceeding fifty
(50) days preceding the date of any meeting of stockholders as a record
date for the determination of stockholders entitled to notice of and to
vote at any such meeting, and in such case only stockholders of record
on the date so fixed shall be entitled to notice of and to vote at such
meeting.
ARTICLE II.
Directors
Section 1. Number, Election and Terms. The business and property of
the corporation shall be managed and controlled by a Board of Directors
who, if and while so required by law, shall be stockholders in the
Company, and none of whom need be a resident of the State of New Mexico.
The directors shall be nine in number and shall be elected in classes in
the manner provided in Article Fifth of the Articles of Incorporation as
amended.
Section 2. Chairman of the Board of Directors. The Chairman shall be
elected annually by the Board of Directors at the annual meeting thereof
and shall hold that office until the next annual meeting or until a
successor shall be elected and shall qualify. In the event of the
incapacity of the Chairman of the Board, the Board of Directors shall,
by a majority vote of the Board of Directors, designate an Acting
Chairman who shall, during the incapacity of the Chairman, assume and
perform all functions and duties which the Chairman is authorized or
required by law to do. The Chairman of the Board shall have the power
to call special meetings of the stockholders and of the Directors for
any purpose or purposes. The Chairman shall preside at all meetings of
the stockholders and of the Board of Directors unless the Chairman shall
be absent or incapacitated. The Chairman of the Board, subject to the
authority of the Board, shall generally do and perform all acts incident
to the office of the Chairman of the Board and which are authorized or
required by law.
Section 3. Vacancies. Any vacancies occurring on the Board of Direc-
tors by death, resignation, or otherwise shall be filled by a majority
of Directors then remaining in office.
Section 4. Meetings. The meetings of the Board of Directors shall be
held at the times and places designated by the Board of Directors.
There shall be no fewer than four regular meetings of the Board during
any calendar year.
The Annual Meeting of the Board of Directors for the election of
officers and of the Executive Committee, and such other business as may
properly come before the meeting, shall be held immediately following
the annual meeting of stockholders.
Special meetings of the Board of Directors shall be held whenever
called at the direction of the Chairman of the Board of Directors, the
President, any two directors, or the Executive Committee.
Section 5. Notice. No notice shall be required of any annual or
regular meeting of the Board of Directors unless the place thereof shall
be other than that last designated by the Board. Notice of any annual or
regular meeting, when required, or of any special meeting of the Board
of Directors shall be given to each director by mailing or delivering
the same at least forty-eight hours, or by telephoning the same at least
twenty-four hours before the time fixed for the meeting. Such notice may
be waived by any director. Unless otherwise indicated in the notice
thereof any and all business may be transacted at a special meeting. At
any meeting at which every director shall be present, even without
notice, any business may be transacted.
Section 6. Quorum. A majority of the Board of Directors shall consti-
tute a quorum for the transaction of business, and any action receiving
the affirmative vote of a majority of the directors present at any
meeting shall be effective.
Section 7. Adjournments. Any annual, regular or special meeting of the
Board of Directors may be adjourned from time to time by the members
present whether or not a quorum shall be present, and no notice shall be
required of any adjourned meeting beyond the announcement of such
adjournment at the meeting.
Section 8. Indemnification. Each person who shall have served as a
director or an officer of the Company, or, at the request of the
Company, as a director or an officer of any other corporation, partner-
ship or joint venture, whether profit or nonprofit, in which the Company
(a) owns shares of capital stock, (b) has an ownership interest, (c) is
a member, or (d) is a creditor, and regardless of whether or not such
person is then in office, and the heirs, executors, administrators and
personal representatives of any such person shall be indemnified by the
Company to the full extent of the authority of the Company to so
indemnify as authorized by the law of New Mexico.
Section 9. Committees. The Board of Directors, by resolution adopted
by a majority of the full Board of Directors, may designate from among
its members one or more committees, in addition to the Executive
Committee provided for in Article III hereof, each of which, to the
extent provided in the resolution establishing such committee and
designating the member or members thereof, shall have and may exercise
all the authority of the Board of Directors, except as may be limited by
law.
ARTICLE III.
Executive Committee
Section 1. The Board of Directors may from time to time appoint by
resolution adopted by a majority of the full Board of Directors from
among its members an Executive Committee which may exercise the powers
of the Board of Directors in the management of the business, affairs and
property of the Company during intervals between the meetings of the
Board of Directors unless and until the Board of Directors shall
otherwise direct. Membership will be the Chairman of the Board and the
Chairperson of each of the standing committees of the Board.
Section 2. A majority of the Executive Committee shall constitute a
quorum for the transaction of business and any action receiving the
affirmative vote of a majority of the members of the Executive Committee
present at any meeting shall be effective; provided, however, that the
affirmative vote of not less than three members of the Executive
Committee shall be required for any such action.
Section 3. Meetings of the Executive Committee shall be held whenever
called by the direction of the Chairman of the Board of Directors, the
president or any two members of the Executive Committee. Notice of any
meeting of the Executive Committee shall be given each member of the
Executive Committee in writing or by telephone at least 24 hours before
the time fixed for the meeting. Such notice may be waived by any member
of the Executive Committee.
ARTICLE IV.
Officers
Section 1. Number, Election and Term. The officers of the Company
shall be a President, one or more Vice Presidents, a Secretary, a
Treasurer, and a Controller who shall be elected annually by the Board
of Directors at the annual meeting thereof and who shall hold their
respective offices until the next annual meeting or until their succes-
sor shall be elected and shall qualify. The Board of Directors may
designate one or more Vice Presidents as "Executive" Vice Presidents and
one or more Vice Presidents as "Senior" Vice Presidents. The title of
any Vice President may include words indicative of the area of responsi-
bility of such Vice President. The Board of Directors shall designate
one of the Vice Presidents as the chief financial officer of the
Company. The Board of Directors may from time to time appoint such
additional officers as the interest of the Company may require and fix
their terms and duties of office. A vacancy occurring in any office may
be filled by the Board of Directors. All officers shall hold office
subject to the Board of Directors and shall be subject to removal at any
time by the affirmative vote of a majority of the whole Board of
Directors. Election of any person as an officer of the Company shall not
of itself create contract rights.
Section 2. President. The President shall be the Chief Executive
Officer of the Company and shall provide active executive management
over all operations of the Company; subject, however, to control of the
Board of Directors. The President shall have the power to appoint and
discharge, subject to the general approval or review by the Board of
Directors, employees and agents of the Company and to fix their compen-
sation to make and sign contracts and agreements in the name of and on
behalf of the Company and direct the general management and control of
the business and affairs of the Company. The President may delegate from
among the powers enumerated in the preceding sentence to officers of the
Company, such responsibilities and authority as the President may
determine. The President shall have the power to segregate the opera-
tions of the Company into areas of responsibility. The President shall
see that the books, reports, statements and certificates required by the
statute under which the Company is organized or any other laws applica-
ble thereto are properly kept, made, and filed according to law; and the
President shall generally do and perform all acts which are authorized
or required by law. The President shall designate a Vice President who
shall, during the absence or incapacity of the President, assume and
perform all functions and duties which the President might lawfully do
if present in person and not under any incapacity.
Section 3. Vice Presidents.
Section 3(a). Executive and Senior Vice Presidents. Each Vice Presi-
dent designated as "Executive" or "Senior Vice President" shall be
responsible for such areas and activities as assigned by the President,
shall be subject to the authority of the President and shall assist in
the general control and management of the business and affairs of the
Company.
Section 3(b). Other Vice Presidents. The Vice Presidents shall be
responsible for such areas and activities as are assigned by the
President and shall perform such duties as may be required.
Section 3(c). Assumption of Duties by a Vice President. A Vice Presi-
dent, consistent with the title or duty of such Vice President, shall
assume and perform all functions and duties assigned to a superior
executive during the absence or incapacity of such superior.
Section 4. Secretary. The Secretary shall be sworn to the faithful
discharge of the duties of the Secretary. The Secretary shall keep a
record in the proper books provided for that purpose of meetings and
proceedings of the Board of Directors, Executive Committee and other
Committees as may be designated by the Board and stockholders, and shall
record all votes of the directors and stockholders in a book to be kept
for that purpose. The Secretary shall notify the directors and stock-
holders of the respective meetings as required by law or by the bylaws
of the Company and shall perform such other duties as may be required by
law or the bylaws of the Company, or which may be assigned from time to
time by the Board of Directors or Executive Committee. The Secretary is
authorized to appoint one or more assistants from time to time as the
Secretary deems advisable, the assistant or assistants to serve at the
pleasure of the Secretary, and to perform the duties that are delegated
by the Secretary. The assistant or assistants so appointed shall not be
officers of the Company.
Section 5. Treasurer. The Treasurer shall have the custody of all the
funds and securities of the Company, and shall have the power on behalf
of the Company to sign checks, notes, drafts and other evidences of
indebtedness, to borrow money for the current needs of the business of
the Company and to make short-term investments of surplus funds of the
Company. The Treasurer shall render to the President or directors,
whenever required by them, an account of all transactions performed as
Treasurer and of the financial conditions of the Company. The Treasurer
shall perform such other duties as may be assigned from time to time by
the Board of Directors, by the Executive Committee or by the President.
The Treasurer is authorized to appoint one or more assistants from time
to time as the Treasurer deems advisable, the assistant or assistants to
serve at the pleasure of the Treasurer, and to perform the duties that
are delegated by the Treasurer. The assistant or assistants so appoint-
ed shall not be officers of the Company.
Section 6. Controller. The Controller shall be the chief accounting
officer of the Company and have full responsibility and control of the
accounting department, which department shall include all accounting
functions carried on throughout the Company and its subsidiaries. As
such, the Controller shall, subject to the approval of the Board of
Directors, the Executive Committee or the President, establish account-
ing policies. The Controller shall standardize and coordinate account-
ing practices, supervise all accounting records and the presentation of
all financial statements and tax returns. The Controller shall also
direct the internal auditing of the Corporation. The Controller shall
have such other powers and duties as, from time to time, may be con-
ferred by the Board of Directors, by the Executive Committee or by the
President. The Controller is authorized to appoint one or more assis-
tants from time to time as the Controller deems advisable, the assistant
or assistants to serve at the pleasure of the Controller, and to perform
the duties that are delegated by the Controller. The assistant or
assistants so appointed shall not be officers of the Company.
Section 7. Form of Appointment. In making any appointments of assis-
tants the Secretary, Treasurer, and Controller shall use the following
form:
<PAGE>
I, (Name), the duly elected (Title) of
Public Service Company of New Mexico, do hereby appoint
(Name) to serve as Assistant (Title)
for the period of (date) to (date), unless
this appointment is terminated earlier in writing, to assume
or perform all functions and duties which I might require
and, in my absence or incapacity, which I might lawfully do
if present and not under any incapacity.
Any appointments of assistants by the Secretary, Treasurer or Controller
and any terminations of appointments shall be maintained in the records
of the Secretary's office.
ARTICLE V.
Contracts
Section 1. Unless the Board of Directors shall otherwise specifically
direct, all contracts, instruments, documents or agreements of the
Company shall be executed in the name of the Company by the President,
or any Vice President, or any other employee, if approved by the
President by either administrative policy letter or specific written
designation. It shall not be necessary that the corporate seal be
affixed to any contract.
Section 2. No contract or other transaction between the Company and
any other corporation owning or holding stock in this Company shall be
affected by the fact that the directors or officers of this Company are
interested in, or are directors or officers of, such other corporation.
No contract or transaction of this Company with any person or persons or
firm or association or corporation (other than one owning or holding
stock in this Company) shall be affected by the fact that any director
or officer of this Company is a party thereto or interested therein, or
in any way connected with such person or persons, firm or association,
or corporation, provided that at the meeting of the Board of Directors
of this Company, making, authorizing or confirming such contract or
transaction, there shall be present a quorum of directors not so
interested, and that such contract or transaction shall be approved or
be ratified by the affirmative vote of at least three directors not so
interested.
The Board of Directors in its discretion may submit any contract, or
act, for approval or ratification at any annual meeting of the stock-
holders, or at any meeting of the stockholders called for the purpose of
considering any such act or contract; and any contract or act that shall
be approved or be ratified by the vote of the holders of a majority of
the capital stock of the Company which is represented in person or by
proxy at such meeting (provided that lawful quorum of stockholders be
there represented in person or by proxy) shall be as valid and as
binding upon the Company and upon all the stockholders as though it had
been approved or ratified by every stockholder of the Company.
ARTICLE VI.
Negotiable Instruments
Except as otherwise provided by the Board of Directors, all checks,
drafts, bills of exchange, promissory notes and other negotiable instru-
ments shall be signed by the Chairman of the Board, the President, any
Vice President, Secretary or Treasurer.
ARTICLE VII.
Capital Stock
Section 1. Certificates of Stock. All certificates of stock shall be
in such form as the Board of Directors may approve and shall be signed
by the President or a Vice President and by the Secretary and may be
sealed with the seal of the Company or a facsimile thereof. The
signatures of the President or Vice President and the Secretary of the
Company upon a certificate may be facsimiles. In case any officer of
the Company whose signature, whether facsimile or otherwise, shall have
been placed upon any certificate shall cease to be such officer before
any certificate so signed shall have been actually issued and delivered,
such certificate may nevertheless be issued and delivered by the Company
as though the person who had signed such certificate had not ceased to
be an officer. All certificates shall be numbered for identification.
The name of the person owning the shares represented thereby with the
number of shares and the date of issue shall be entered on the Company's
books. All certificates surrendered to the Company shall be cancelled,
and no new certificates shall be issued until a certificate or certifi-
cates aggregating the same number of shares of the same class shall have
been surrendered or
cancelled; but the Board of Directors or Executive Committee may make
proper provision, from time to time, for the issue of new certificates
in place of lost or destroyed certificates.
Section 2. Transfer Agents and Registrars. The Company shall, if and
whenever the Board of Directors shall so determine maintain one or more
transfer offices or agencies, each in charge of a transfer agent
designated by the Board of Directors, where the shares of the capital
stock of the Company shall be directly transferable, and also one or
more registry offices, each in charge of a registrar designated by the
Board of Directors, where such shares of stock shall be registered and
no certificates for shares of the capital stock of the Company, in
respect of which one or more transfer agents and registrars shall have
been designated, shall be valid unless countersigned by one of such
transfer agents and registered by one of such registrars. The Board of
Directors may also make such additional rules and regulations as it may
deem expedient concerning the issue, transfer and registration of
certificates for shares of the capital stock of the Company.
Section 3. Transfer of Stock. Transfers of stock shall be made only
upon the books of the Company by the holder in person or by the holder's
attorney upon surrender of certificates for a like number of shares.
Section 4. Closing of Transfer Books. The Board of Directors shall
have power to close the transfer books of the Company for a period not
exceeding fifty (50) days preceding the date of any meeting of stock-
holders or the date for the payment of any dividend or the date for the
allotment of rights or the date when any change or conversion or
exchange of capital stock shall go into effect; provided, however, that
in lieu of closing the transfer books as aforesaid, the Board of
Directors may fix in advance a date, not exceeding fifty (50) days
preceding the date of any meeting of stockholders or the date for the
payment of any dividend or the date for the allotment of rights or the
date when any change or conversion or exchange of capital stock shall go
into effect, as a record date for the determination of stockholders
entitled to notice of and to vote at any such meeting, or entitled to
receive payment of any such dividend or to any such allotment of rights,
or to exercise the rights in respect of any such change, conversion or
exchange of capital stock, and in such cases only such stockholders as
shall be stockholders of record on the date so fixed shall be entitled
to such notice of, and to vote at such meeting, or to receive the
payment of such dividend, or to receive such allotment of rights, or to
exercise such rights, as the case may be, notwithstanding any transfer
of any stock on the books of the Company after any such record date
fixed as aforesaid.
ARTICLE VIII.
Dividends
Dividends upon the stock of the Company may be declared from time to
time by the Board of Directors in its discretion and paid to stockhold-
ers from the surplus or net profits arising from the business of the
Company.
ARTICLE IX.
Books
The books of the Company, except as otherwise provided by law, may be
kept outside of the State of New Mexico, at such place or places as may
be from to time designated by the Board of Directors.
The Directors shall, from time to time determine whether and to what
extent, and at what time and places, and under what conditions and
regulations the accounts and the books of the Company, or any of them,
shall be open to the inspection of stockholders; and no stockholder
shall have any right to inspect any book or account or document of the
Company except as conferred by the statutes of New Mexico, or authorized
by the Directors.
ARTICLE X.
Corporate Seal
The common corporate seal is, and until otherwise ordered by the Board
of Directors shall be, an impression circular in form upon paper or wax
bearing the words "Public Service Company of New Mexico, Incorporated,
1917."
The seal shall be in the charge of the Secretary. If and when so
directed by the Board of Directors or by the Executive Committee a
duplicate of the seal may be kept and used by the Treasurer or by an
Assistant Secretary or Assistant Treasurer.
ARTICLE XI.
Amendments
The power to alter, amend or repeal the Bylaws of the Company or adopt
new Bylaws for this Company shall be vested in the Board of Directors.
<PAGE>
<PAGE>
MODIFICATION 8
TO
SAN JUAN PROJECT CO-TENANCY AGREEMENT
BETWEEN
PUBLIC SERVICE COMPANY OF NEW MEXICO
AND
TUCSON ELECTRIC POWER COMPANY
THIS MODIFICATION No. 8 to the San Juan Project Co-Tenancy
Agreement between PUBLIC SERVICE COMPANY OF NEW MEXICO ("New
Mexico") and TUCSON ELECTRIC POWER COMPANY ("Tucson"), hereinafter
referred collectively as the "Parties", is hereby entered into and
executed as of this ____ day of _________________, 1993.
WITNESSETH:
WHEREAS, the Parties entered into an agreement described as
the San Juan Project Co-Tenancy Agreement ("Co-Tenancy Agreement")
effective July 1, 1969, as modified by Modification No. 1 on May
16, 1979, Modification No. 2 on December 31, 1983, Modification
No. 3 on July 17, 1984, Modification No. 4 on October 25, 1984,
Modification No. 5 on July 1, 1985, Modification No. 6 on April 1,
1993, and Modification No. 7 on April 1, 1993, which establishes
certain terms and conditions relating to their participation and
responsibilities in the San Juan Project; and
WHEREAS, on August 18, 1980, the Parties entered into a Coal
Sales Agreement with the San Juan Coal Company ("SJCC"), as
amended; and
WHEREAS, the Parties, in order to more efficiently use the San
Juan Project, desire to amend the terms and conditions under which
fuel expenses are allocated among the Participants; and
WHEREAS, the Parties desire to acknowledge certain obligations
of the Participants regarding the Coal Sales Agreement; and
WHEREAS, the Parties desire to amend the Co-Tenancy Agreement
in other particulars as described herein.
NOW THEREFORE, the Parties agree that the Co-Tenancy Agreement
is hereby amended as follows:
DEFINITIONS: The following terms when used herein shall have the
meaning specified:
1.0 Effective Date: This Modification No. 8 shall become
effective January 1, 1993.
2.0 Section 5.13 shall be amended to read in its entirety as
follows:
Emergency Coal Storage Pile(s): The coal storage pile,
sometimes referred to as the Minimum Coal Storage Pile, for
the unit(s) which is to be drawn upon when fuel deliveries are
interrupted.
3.0 Section 6.4 shall be amended to read in its entirety as
follows:
Emergency Coal Storage Pile shall be owned by the
Participants and Unit Participants, in proportion to their
respective investment in the Emergency Coal Storage Pile.
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have caused this
Modification No. 8 to the Co-Tenancy Agreement to be executed as of
this _____ day of _____________, 1993.
PUBLIC SERVICE COMPANY OF NEW MEXICO
By: ______________________________
Its: ______________________________
TUCSON ELECTRIC POWER COMPANY
By: ______________________________
Its: ______________________________
<PAGE>
<PAGE>
MODIFICATION NO. 9
TO
CO-TENANCY AGREEMENT
BETWEEN
PUBLIC SERVICE COMPANY OF NEW MEXICO
AND
TUCSON ELECTRIC POWER COMPANY
This Modification No. 9 to the Co-Tenancy Agreement
Between PUBLIC SERVICE COMPANY OF NEW MEXICO ("New Mexico") and
TUCSON ELECTRIC POWER COMPANY ("Tucson"), hereinafter sometimes
referred to collectively as the "Parties" or "Participants," is
hereby entered into and executed as of the 12 day of January, 1994
WITNESSETH
WHEREAS, the Parties entered into an agreement
described as the Co-Tenancy Agreement Between New Mexico and Tucson
effective July 1, 1969, as modified by Modification No. 1 on May
16, 1979, Modification No. 2 on December 31, 1983, Modification No.
3 on July 17, 1984, Modification No. 4 on October 25, 1984,
Modification No. 5 on July 1, 1985, Modification No. 6 on April 1,
1993, Modification No. 7 on April 1, 1993 and Modification No. 8 on
September 15, 1993 ("Co-Tenancy Agreement"), which establishes
certain terms and conditions relating to their ownership and
operation of the San Juan Project and Project Agreements; and
WHEREAS, as of May 27, 1993, New Mexico and Utah
Associated Municipal Power Systems, a political subdivision of the
State of Utah ("UAMPS"), entered into the Restated and Amended San
Juan Unit 4 Purchase and Participation Agreement ("UAMPS PPA"),
whereby UAMPS agreed to purchase from New Mexico a 7.028 percent
undivided ownership interest in Unit 4; and
WHEREAS, the UAMPS PPA provides, among other things,
that UAMPS, upon closing of the transaction provided for in the
UAMPS PPA, will have the voting rights and obligations of a Unit
Participant on San Juan Project Committees as said rights and
obligations are set forth in the Project Agreements; and
WHEREAS, New Mexico and Tucson desire to clarify the
rights and responsibilities of Participants and Unit Participants
in the San Juan Project as a result of UAMPS' purchase of a 7.028
percent undivided interest in Unit 4 pursuant to the UAMPS PPA.
NOW, THEREFORE, the Parties agree that the Co-Tenancy
Agreement is hereby amended as follows:
1.0 Effective Date. This Modification No. 9 shall
become effective immediately upon the closing of UAMPS' purchase of
the 7.028 percent undivided ownership interest in Unit 4 pursuant
to the UAMPS PPA.
2.0 Compliance With Section 6.7. Section 6.7 of the
Co-Tenancy Agreement requires that in the event either Participant
transfers any of its rights, title or interest in the San Juan
Project, the Participants shall jointly execute a Supplement to the
Co-Tenancy Agreement, in recordable form, which describes the
rights, titles, and interests of each Participant following such
transfer or assignment. On November 17, 1981, New Mexico sold and
transferred an 8.475 percent undivided ownership interest in Unit
4 to the City of Farmington, New Mexico ("City of Farmington"). On
December 31, 1981, Tucson and the M-S-R Public Power Agency
("M-S-R") entered into the Tucson/M-S-R Agreement-Option to Acquire
Ownership Interest in San Juan Unit 4, wherein Tucson agreed to
Jell to M-S-R and M-S-R agreed to purchase from Tucson, pursuant to
the terms and conditions of such agreement, on or before November
30, 1982, the Tucson Option (also referred to as the "Option to
Repurchase" in the May 16, 1979, San Juan Unit 4 Purchase Agreement
between New Mexico and Tucson). On November 29, 1982, New Mexico
and M-S-R executed the San Juan Unit 4 Purchase and Participation
Agreement and on September 26, 1983, New Mexico and M-S-R executed
the San Juan Unit 4 Early Purchase and Participation Agreement
under which New Mexico sold and transferred a 28.8 percent
undivided ownership interest in Unit 4 to M-S-R effective December
31, 1983. On October 31, 1984, Tucson transferred its 50 percent
undivided ownership interest in Unit 3 to the Alamito Company
("Alamito"). Alamito has since that date changed its name to
Century Power Corporation ("Century"). On December 28, 1984, New
Mexico and the Incorporated County of Los Alamos, New Mexico ("Los
Alamos County") entered into the Amended and Restated San Juan Unit
4 Purchase and Participation Agreement ("County PPA") which
provided that New Mexico would sell and transfer to Los Alamos
County a 7.2 percent undivided ownership interest in Unit 4 which
transfer occurred as of July 1, 1985. On April 26, 1991, New Mexico
and the City of Anaheim, California ("City of Anaheim") entered
into the San Juan Unit 4 Purchase and Participation Agreement (the
"Anaheim PPA") which provided that New Mexico would sell and
transfer to the City of Anaheim a 10.04 percent undivided ownership
interest in Unit 4, which transfer occurred on August 12, 1993. On
March 25, 1993, Century and Southern California Public Power
Authority ("SCPPA") entered into the San Juan Unit 3 Purchase
Agreement (the "SCPPA PA") which provided that Century would sell
and transfer to SCPPA a 41.8 percent undivided ownership interest
in Unit 3, which transfer occurred on July 1, 1993. As of May 27,
1993, New Mexico and UAMPS entered into the UAMPS PPA which
provides that New Mexico will sell and transfer to UAMPS a 7.028
percent undivided ownership interest in Unit 4, which transfer is
expected to occur in 1994. In accordance with the requirements of
Section 6.7, the following sections of the Co-Tenancy Agreement are
hereby amended to read as follows:
<PAGE>
Amended Section 6.3.1:
6.3.1 For Units 1 and 2 and for all equipment and
facilities directly related to Units 1 and 2, in accordance with
the following percentages:
A. Participants
1. New Mexico - 50 percent
2. Tucson - 50 percent
B. Unit Participants
1. M-S-R - 0 percent
2. City of Farmington - 0 percent
3. Century - 0 percent
4. Los Alamos County - 0 percent
5. SCPPA - 0 percent
6. City of Anaheim - 0 percent
7. UAMPS - 0 percent
6.3.1.1 For Unit 3 and for all equipment and
facilities directly related to Unit 3 only, in accordance with
the following percentages:
A. Participants
1. New Mexico - 50 percent
2. Tucson - 0 percent
B. Unit Participants
1. M-S-R - 0 percent
2. City of Farmington - 0 percent
3. Century - 8.2 percent
4. Los Alamos County - 0 percent
5. SCPPA - 41.8 percent
6. City of Anaheim - 0 percent
7. UAMPS - 0 percent
Amended Section 6.3.2:
6.3.2 For Unit 4 and for all equipment and facilities
directly related to Unit 4 only, in accordance with the following
percentages:
A. Participants
1. New Mexico - 38.457 percent
2. Tucson - 0 percent
B. Unit Participants
1. M-S-R - 28.8 percent
2. City of Farmington - 8.475 percent
3. Century - 0 percent
4. Los Alamos County - 7.20 percent
5. SCPPA - 0 percent
6. City of Anaheim - 10.04 percent
7. UAMPS - 7.028 percent
Amended Section 6.3.3:
6.3.3 For equipment and facilities common only to
Units 1 and 2, in accordance with the following percentages:
A. Participants
1. New Mexico - 50 percent
2. Tucson - 50 percent
B. Unit Participants
1. M-S-R - 0 percent
2. City of Farmington - 0 percent
3. Century - 0 percent
4. Los Alamos County - 0 percent
5. SCPPA - 0 percent
6. City of Anaheim - 0 percent
7. UAMPS - 0 percent
Amended Section 6.3.4:
6.3.4 For equipment and facilities common only to
Units 3 and 4, in accordance with the following percentages:
A. Participants
1. New Mexico - 44.119 percent
2. Tucson - 0 percent
B. Unit Participants
1. M-S-R - 14.4 percent
2. City of Farmington - 4.249 percent (ownership
interest is with respect to common facilities
not in service on November 17, 1981; the City
of Farmington was granted an Easement and
License for use of common facilities which
were in service on November 17, 1981).
3. Century - 4.1 percent
4. Los Alamos County - 3.612 percent
5. SCPPA - 20.9 percent
6. City of Anaheim - 5.07 percent
7. UAMPS - 3.55 percent
Amended Section 6.3.5:
6.3.5 For equipment and facilities common to all of the
units in accordance with the following percentages:
A. Participants
1. New Mexico - 46.297 percent
2. Tucson - 19.8 percent
<PAGE>
B. Unit Participants
1. M-S-R - 8.7 percent
2. City of Farmington - 2.559 percent (ownership
interest is with respect to common facilities
not in service on November 17, 1981; the City
of Farmington was granted an Easement and
License for use of common facilities which
were in service on November 17, 1981).
3. Century - 2.49 percent
4. Los Alamos County - 2.175 percent
5. SCPPA- 12.71 percent
6. City of Anaheim - 3.10 percent
7. UAMPS - 2.169 percent
Amended Section 6.3.6:
6.3.6 For the Switchyard Facilities except as otherwise
provided in Section 15 hereof, in accordance with the following
percentages:
A. Participants
1. New Mexico - 50 percent
2. Tucson - 50 percent
B. Unit Participants
1. M-S-R - 0 percent
2. City of Farmington - 0 percent
3. Century - 0 percent
4. Los Alamos County - 0 percent
5. SCPPA - 0 percent
6. City of Anaheim - 0 percent
7. UAMPS - 0 percent
3.0 Amended Section 8.1. Section 8.1 shall be amended
to read in its entirety as follows:
8.1 Subject to the provisions of paragraphs
10.1 and 10.2 hereof, the Participants shall be entitled to share
the Net Effective Generating Capacity of Units 1 and 2 in equal,
undivided one-half (1/2) interests. New Mexico, Century and Unit
Participants to which Century conveys or has conveyed ownership
interests and generation entitlements in Unit 3 shall have a 100
percent (100%) interest in the Net Effective Generating Capacity of
Unit 3. New Mexico and Unit Participants to which New Mexico
conveys or has conveyed ownership interests and generation
entitlements in Unit 4 shall have a 100 percent (100%) interest in
the Net Effective Generating Capacity of Unit 4.
4.0 Amended Section 9.5.3. Section 9.5.3 shall be
amended to read in its entirety as follows:
9.5.3 With respect to matters involving and not
solely related to Unit 4, New Mexico will in good faith solicit the
views of the City of Farmington, Los Alamos County, the City of
Anaheim and UAMPS on matters involving the San Juan Project which
affect Unit 4.
5.0 Amended Exhibit V. Exhibit V (a-h) shall be amended
to read in its entirety as shown on the attached Exhibit A.
6.0 Amended Section 25.8. Section 25.8 shall be
amended to read in its entirety as follows:
25.8 Except as modified by the provisions set
forth in Modification No. 9, all of the terms and conditions of the
Co-Tenancy Agreement, effective as of July 1, 1969, as modified by
Modification No. 1 on May 16, 1979, Modification No. 2 on December
31, 1983, Modification No. 3 on July 17, 1984, Modification No. 4
on October 25, 1984, Modification No. 5 on July 1, 1985,
Modification No. 6 on April 1, 1993, Modification No. 7 on April 1,
1993 and Modification No. 8 on September 15, 1993, shall remain in
full force and effect.
7.0 Amended Section 26. Section 26 shall be amended to
read as follows:
26.0 RECOGNITION OF M-S-R, THE CITY OF FARMINGTON,
CENTURY POWER CORPORATION, LOS ALAMOS COUNTY, SCPPA, THE CITY OF
ANAHEIM AND UAMPS ACKNOWLEDGEMENT.
26.1 The Parties recognize that M-S-R, the City
of Farmington, Century Power Corporation, Los Alamos County, SCPPA,
the City of Anaheim and UAMPS each has acknowledged that it is
familiar with the Project Agreements as amended between New Mexico
and Tucson and such agreements govern the activities of the San
Juan Project. Where a specific provision of the EPPA, the
Farmington PAPA, the County PPA, the Anaheim PPA, or the UAMPS PPA
is in conflict with the provision in one or more of the Project
Agreements, then (a) as between New Mexico and M-S-R, the
provisions of the EPPA shall govern, all as provided in Section 5.2
of such EPPA, and (b) as between New Mexico and the City of
Farmington, the provisions of the Farmington PAPA shall govern, all
as provided in Section 8.2 of the Farmington PPA, and (c) as
between New Mexico and Los Alamos County, the provisions of the
County PPA shall govern, all as provided in Section 5.2 of the
County PPA, and (d) as between New Mexico and the City of Anaheim,
the provisions of the Anaheim PPA shall govern, all as provided in
Section 7.2 of the Anaheim PPA and (e) as between New Mexico and
UAMPS, the provisions of the UAMPS PPA shall govern, all as
provided in Section 7.2 of the UAMPS PPA. "EPPA" shall mean the San
Juan Unit 4 Early Purchase and Participation Agreement entered into
by New Mexico and M-S-R on September 26, 1983. "Farmington PAPA"
shall mean the San Juan Unit 4 Purchase Agreement and Participation
Agreement entered into by New Mexico and the City of Farmington on
November 17, 1981. "County PPA" shall mean the Amended and Restated
San Juan Unit 4 Purchase and Participation Agreement entered into
by New Mexico and Los Alamos County on December 28, 1984. "Anaheim
PPA" shall mean the San Juan Unit 4 Purchase and Participation
Agreement entered into by New Mexico and the City of Anaheim on
April 26, 1991. "UAMPS PPA" shall mean the Restated and Amended San
Juan Unit 4 Purchase and Participation Agreement entered into by
New Mexico and UAMPS as of May 27, 1993.
IN WITNESS WHEREOF, the Parties hereto have caused this
Modification No. 9 to the Co-Tenancy Agreement to be executed as of
the 12 day of January, 1994.
PUBLIC SERVICE COMPANY OF NEW MEXICO
By: /s/ M. Phyllis Bourque
Its: Senior Vice President
TUCSON ELECTRIC POWER COMPANY
By: /s/ N. B. Johnsen
Its: Vice President
<PAGE>
<PAGE>
Exhibit A
AMENDED EXHIBIT V
<PAGE>
<PAGE>
Exhibit V(a)
FACILITIES AND EQUIPMENT
SPECIFIC TO SAN JUAN UNIT NO. 1
Ownership
New Mexico - 50% Tucson - 50%
M-S-R - 0% City of Farmington - 0%
Century Power Corporation - 0% Los Alamos County - 0%
SCPPA - 0% City of Anaheim - 0%
UAMPS - 0%
1. Turbine Generator
2. Condenser
3. Condensate and Feedwater System
a. Condensate Pumps
b. Feedwater Heaters
c. Boiler Feed Pumps
d. Storage Tanks
4. Boiler including: Air Heaters, Pulverizers, Bunkers, and
Feeders
5. Forced Draft Fans and Primary Air Fans
6. Precipitator
7. Stack and Stack Monitoring System
8. Cooling Tower
9. Circulating Water Pumps
10. Main, Start-Up, Unit Auxiliary, and SO2 Scrubber
Transformers
11. Bottom Ash System (Up to but not including Dewatering Tank
or Ash Water Pump building and equipment)
12. Fly Ash System
13. Building HVAC System
<PAGE>
<PAGE>
Exhibit V(a) (continued)
14. SO2 Absorbers, Scrubbers, Transfer Pumps, Booster Fans, and
Flue Gas Reheat System including the 650-Pound Reheat Steam
Line and Desuperheater from the Plant Main Steam Line but
not including the 165-Pound Control Valve and Branch Line to
the Chemical Plant.
15. Emergency Diesel Generator
16. Electrical and Control Systems
17. SSR Protection System
18. Unit Specific Piping for all Air Systems, Chemical Feed
Systems, and Hydrogen
<PAGE>
<PAGE>
Exhibit V(b)
FACILITIES AND EQUIPMENT
SPECIFIC TO SAN JUAN UNIT NO. 2
Ownership
New Mexico - 50% Tucson - 50%
M-S-R - 0% City of Farmington - 0%
Century Power Corporation - 0% Los Alamos County - 0%
SCPPA - 0% City of Anaheim - 0%
UAMPS - 0%
1. Turbine Generator
2. Condenser
3. Condensate and Feedwater System
a. Condensate Pumps
b. Feedwater Heaters
c. Boiler Feed Pumps
d. Storage Tanks
4. Boiler including: Air Heaters, Pulverizers, Bunkers, and
Feeders
5. Forced Draft Fans and Primary Air Fans
6. Precipitator
7. Stack and Stack Monitoring System
8. Cooling Tower
9. Circulating Water Pumps
10. Main, Start-Up, Unit Auxiliary, and SO2 Scrubber
Transformers
11. Bottom Ash System (Up to but not including Dewatering Tank
or Ash Water Pump building and equipment)
12. Fly Ash System
13. Building HVAC System
14. SO2 Absorbers, Scrubbers, Transfer Pumps, Booster Fans, and
Flue Gas Reheat System including the 650-Pound Reheat Steam
Line and Desuperheater from the Plant Main Steam Line but
not including the 165-Pound Control Valve and Branch Line to
the Chemical Plant
<PAGE>
<PAGE>
Exhibit V(b) (continued)
15. Emergency Diesel Generator
16. Electrical and Control Systems
17. Unit Specific Piping for all Air Systems, Chemical Feed
Systems, and Hydrogen
<PAGE>
<PAGE>
Exhibit V(c)
FACILITIES AND EQUIPMENT
SPECIFIC TO SAN JUAN UNIT NO. 3
Ownership
New Mexico - 50% Tucson - 0%
M S-R - 0% City of Farmington - 0%
Century Power Corporation - 8.2% Los Alamos County - 0%
SCPPA - 41.8% City of Anaheim - 0%
UAMPS - 0%
1. Turbine Generator
2. Condenser
3. Condensate and Feedwater System
a. Condensate Pumps
b. Feedwater Heaters
c. Boiler Feed Pumps
d. Storage Tanks
4. Boiler including: Air Heaters, Pulverizers, Bunkers, and
Feeders
5. Forced Draft Fans and Primary Air Fans
6. Precipitator
7. Stack and Stack Monitoring System
8. Cooling Tower
9. Circulating Water Pumps
10. Main, Unit Auxiliary 3A and 3B Transformers*
11. Bottom Ash System including: Hopper, Dewatering Tank,
Settling Tank, Surge Tank, Storage Tank and Pump House
12. Fly Ash System
13. Building HVAC System
14. SO2, Absorbers, Scrubbers, Transfer Pumps, Booster Fans, and
Flue Gas Reheat System
*New Mexico and Tucson each owns a 50% interest in the main unit
transformer.
<PAGE>
<PAGE>
Exhibit V(c) (continued)
15. Emergency Diesel Generator
16. Electrical and Control Systems
17. Fuel Oil Ignitor Heaters and Unit Specific Piping
18. Unit Specific Piping for all Air Systems, Chemical Feed
Systems, and Hydrogen
19. Coal Reclaim Hoppers, Feeders, Feeder Belts, Belt Scales,
Fire Protection System, and 3C Conveyor to the Secondary
Crusher Building
20. SSR Protection System
21. Auxiliary Steam Header Piping System:
a. Including the Unit Specific Branch Line to the Reheat
System
b. Not included is the Branch Line to the Chemical Plant
<PAGE>
<PAGE>
Exhibit V(d)
FACILITIES AND EQUIPMENT
SPECIFIC TO SAN JUAN UNIT NO. 4
Ownership
New Mexico - 38.457% Tucson - 0%
M-S-R - 28.8% City of Farmington - 8.475%
Century Power Corporation - 0% Los Alamos County - 7.2%
SCPPA - 0% City of Anaheim - 10.04%
UAMPS - 7.028%
1. Turbine Generator
2. Condenser
3. Condensate and Feedwater System
a. Condensate Pumps
b. Feedwater Heaters
c. Boiler Feed Pumps
d. Storage Tanks
4. Boiler including: Air Heaters, Pulverizers, Bunkers, and
Feeders
5. Forced Draft Fans and Primary Air Fans
6. Precipitator
7. Stack and Stack Monitoring System
8. Cooling Tower
9. Circulating Water Pumps
10. Main, Unit Auxiliary 4A and 4B Transformers
11. Bottom Ash System including: Hopper, Dewatering Tank,
Settling Tank, Surge Tank, Storage Tank and Pump House
12. Fly Ash System
13. Building HVAC System
<PAGE>
<PAGE>
Exhibit V(d) (continued)
14. SO2 Absorbers, Scrubbers, Transfer Pumps, Booster Fans, and
Flue Gas Reheat System
15. Emergency Diesel Generator
16. Electrical and Control Systems
17. Fuel Oil Ignitor Heaters and Unit Specific Piping
18. Unit Specific Piping for all Air Systems, Chemical Feed
Systems, and Hydrogen
19. Coal Reclaim Hoppers, Feeders, Feeder Belts, Belt Scales,
Fire Protection System, and 3D Conveyor to the Secondary
Crusher Building
20. Auxiliary Steam Header Piping System:
a. Including the Unit Specific Branch Line to the Reheat
System
b. Not included is the Branch Line to the Chemical Plant
<PAGE>
<PAGE>
Exhibit V(e)
FACILITIES AND EQUIPMENT
COMMON TO SAN JUAN UNITS 1 AND 2
Ownership
New Mexico - 50% Tucson - 50%
M-S-R - 0% City of Farmington - 0%
Century Power Corporation - 0% Los Alamos County - 0%
SCPPA - 0% City of Anaheim - 0%
UAMPS - 0%
1. Bearing Cooling Water System
2. Bottom Ash Dewatering Facility including: Dewatering Tank,
Settling Tank, Surge Tank, Storage Tank, and Pump House
3. Demineralizer System including: Clarifier, Storage Tanks,
and Sump Pump
4. Fuel Oil System (Fuel Oil for Ignition and Flame
Stabilization)
5. Premix Tank Facility (This was the wastewater neutralizer
facility and is now operated as part of the Water Management
System.)
6. Instrument Air System, except Unit Piping
7. Chemical Feed System except Unit Piping
a. Condensate and Feedwater System
b. Boiler
c. Bearing Cooling Water System
d. Cooling Tower Systems
e. Chlorination System
8. Plant Air System except Unit Piping
9. Sootblowing Air System except Unit Piping
10. Hydrogen Storage System except Unit Piping
11. Coal Handling Reclaim Systems A and B including: Hoppers,
Feeders, Reclaim Conveyors, Belt Scales, and Sprinkler
System
12. Coal Tripper System south of column, Line 12 including Dust
Collection System
13. Turbine Lube Oil Storage and Transfer System
<PAGE>
<PAGE>
Exhibit V(e) (continued)
14. Control Room, Equipment Rooms, and Associated HVAC System
15. Turbine Crane south of column, Line 12
16. Fuel Oil, Ash, and Water Pipe Racks
17. Boiler Fill System for Units 1 and 2
18. All spare parts common to either unit
19. SO2 Backup Scrubber-Absorber Transformer
20. SAR Multiplexer Control System
<PAGE>
<PAGE>
Exhibit V(f)
FACILITIES AND EQUIPMENT
COMMON TO SAN JUAN UNITS 3 AND 4
Ownership
New Mexico - 44.119% Tucson - 0%
M-S-R- 14.4% City of Farmington - 4.249%
Century Power Corporation - 4.1% Los Alamos County- 3.612%
SCPPA- 20.9% City of Anaheim - 5.07%
UAMPS - 3.55%
1. Bearing Cooling Water System
2. Demineralizer System: including Sump Pumps, Filter Beds, and
Storage Tanks
3. Fuel Oil System (Fuel Oil for Ignition and Flame
Stabilization except Ignitor Heaters and Unit Specific
Piping)
4. Wastewater Neutralizer Facility (This facility is operated
as part of Water Management System.)
5. Instrument Air System except Unit Piping
6. Chemical Feed System except Unit Piping
a. Condensate and Feedwater System
b. Boiler
c. Bearing Cooling Water System
d. Cooling Tower Systems
e. Chlorination System
7. Plant Air System except Unit Piping
8. Sootblowing Air System except Unit Piping
9. Start-up Transformers and Nonseg Bus to Units 3 and 4
Switchgear
10. Hydrogen Storage System except Unit Piping
City of Farmington's ownership interest is with respect to Common
Facilities not in service on November 17, 1981; the City of
Farmington was granted an Easement and License for use of Common
Facilities which were in service on November 1 7, 1981.
<PAGE>
<PAGE>
Exhibit V(f) (continued)
11. Coal Tripper System Serving Units 3 and 4 including Dust
Collection Systems
12. Turbine Lube Oil Storage and Transfer System
13. Control Room, Equipment Rooms, and Associated HVAC System
14. Boiler Fill System for Units 3 and 4
15. Auxiliary Cooling Systems including Auxiliary Cooling Tower
No. 1 and Pumps, but excepting No. 4 Tower Pumps and Piping
which is Unit Specific
16. C02 Storage System
17. Start-Up Boiler Feed Pump
18. Turbine Bay Crane north of column, Line 12
19. Fuel Oil, Ash, and Water Pipe Racks
20. Fire Water Booster and Jockey Pumps
21. Halon Fire Protection System
22. Cooling Tower Multiplex Control System
23. All spare parts common to either unit.
<PAGE>
<PAGE>
Exhibit V(g)
FACILITIES AND EQUIPMENT
COMMON TO ALL FOUR SAN JUAN UNITS
Ownership
New Mexico - 46.297% Tucson - 19.8%
M-S-R - 8.7% City of Farmington - 2.559%
Century Power Corporation - 2.49% Los Alamos County - 2.175%
SCPPA - 12.71% City of Anaheim - 3.10%
UAMPS - 2.169%
1. River and Raw Water System including:
a. Diversion and intake structures, including all
equipment and pump building.
b. Raw water line to reservoir.
c. Reservoir and pump buildings and all equipment.
d. Raw water lines to plant yard.
e. All above ground and underground fire protection system
to each vendor supplied or unit specific fire
distribution system.
2. Auxiliary Boiler
3. SO2 System Chemical Plant except Absorbers
a. Double effect evaporator train systems.
b. Fly ash filter system.
c. Absorber product and feed tanks.
d. Condensate collection, storage, and transfer systems.
e. Soda ash storage, mixing, and distribution systems.
f. Sulfate purge system including: crystallizers,
centrifuges, evaporators, and salt cake system.
g. Sulfuric acid plant system including storage tanks and
load out system.
h. Auxiliary No. 2 cooling tower, pumps, and systems.
4. Spare-Main Transformer 345/24 kV for all units
5. Maintenance, Office, and Warehousing Facilities
City of Farmington's ownership interest is with respect to Common
Facilities not in service on November 17, 1981; the City of
Farmington was granted an Easement and License for use of Common
Facilities which were in service on November 17, 1981.
<PAGE>
<PAGE>
Exhibit V(g) (continued)
6. Chemical Laboratory
7. Coal and Ash Handling Control Facilities
8. Roads and grounds such as fencing, yard lighting, guard
facilities, drainage, and dikes.
9. Potable Water System
10. Environmental Monitoring systems including Air, Water, and
Ground.
Excludes Stack Monitoring Systems which are unit specific.
11. Transportation such as trucks, cars, and dozers
12. Water Management System
a. Wastewater Recovery System - Northside
1) Reverse osmosis system including lime/soda softening
clarifier system.
2) Brine concentrator Nos. 4 and 5.
3) Process Pond No. 3 and pumping system.
4) North evaporation Ponds 1, 2 and 3.
b. SO2 Waste Treatment System - Southside
1) Process ponds 1A, 1B, 2 and pumping system.
2) Clarifier system.
3) Oxidation towers.
4) Brine concentrator Nos. 2 and 3.
5) South evaporation pond Nos. 1, 2, 3, 4 and 5.
c. Data Acquisition System
d. Solid Waste Disposal Pit
e. Coal Pile Runoff Ponds
13. Coal Transfer Facilities from the Reclaim Conveyors to the
Head-End of Plant Belts 4A and 4B and Dust Suppression
Systems
14. Maintenance Bay Facilities including: Bay Bridge Crane, all
Offices, and Support Facilities
<PAGE>
<PAGE>
Exhibit V(g) (continued)
15. Sewage Treatment Facilities
16. On each of Units 1 and 2, the Chemical Plant 165-pound
Control Valve, and Branch Line from the Unit Specific
650-pound Reheat Steam Line
17. On each of Units 3 and 4, the Chemical Plant Branch Steam
Line from the Unit Specific Auxiliary Steam Header System
<PAGE>
<PAGE>
Exhibit V(h)
SAN JUAN PROJECT
SWITCHYARD FACILITIES
Cost Allocation (%)
Replacements/Improvements
Installed Cost Betterments
New New
Mexico Tucson Mexico Tucson
345 kV Bus 1 & 3 (East Bus) 50 50 50 50
Bus 2 (West Bus) 50 50 50 50
Circuit Breakers
06582 (345/230) 50 50 50 50
05482 50 50 50 50
04382 (OJO) 50 50 50 50
12982 (McKinley) 50 50 50 50
11882 50 50 50 50
10782 (Unit 4) 50 50 50 50
09882 (McKinley) 58.33 41.67 62.5 37.5
08782 54.16 45.84 56.25 43.75
07682 (Unit 3) 50 50 50 50
15282 (Four Corners) 50 50 50 50
14182 50 50 50 50
13082 (Unit 2) 50 50 50 50
18582 (West Mesa) 50 50 50 50
17482 50 50 50 50
16382 (Unit 1) 50 50 50 50
20782 50 50 50 50
<PAGE>
<PAGE>
Exhibit V(h)
(continued)
Replacements/Improvements
Installed Cost Betterments
New New
Mexico Tucson Mexico Tucson
Shunt Reactors
Ojo 100 0 100 0
McKinley 1 5.36 94.64 5.36 94.64
McKinley 2 16.67 83.33 25 75
WW (BA) 100 0 100 0
Transformers
Station Aux. No. 2 100 0 100 0
400 MVA, 345/230-12.5
Station Aux. No. 1 50 50 50 50
345/4.16-12.5
Station Aux. No. 3 50 50 50 50
90 MVA, 345/69-12.5
Future Facilities
345/69/12 kV 66.67 33.33 66.67 33.33
2-345 Kv Bkrs (Durango) 50 50 50 50
Lower Voltage
230 Kv Control Hse 83.33 16.67 83.33 16.67
230/69 kV Trf 66.67 33.33 66.67 33.33
Shiprock 230 Kv line 100 0 100 0
<PAGE>
MODIFICATION NO. 8
TO
SAN JUAN PROJECT CONSTRUCTION AGREEMENT
BETWEEN
PUBLIC SERVICE COMPANY OF NEW MEXICO
AND
TUCSON ELECTRIC POWER COMPANY
This Modification No. 8 to the San Juan Project
Construction Agreement between PUBLIC SERVICE COMPANY OF NEW MEXICO
("New Mexico") and TUCSON ELECTRIC POWER COMPANY ("Tucson"),
hereinafter referred to collectively as the "Parties" or
"Participants", is hereby entered into and executed as of the 12
day of January, 1994
WITNESSETH:
WHEREAS, the Parties entered into an agreement
described as the San Juan Project Construction Agreement effective
July 1, 1969, as modified by Modification No. 1 on May 16, 1979,
Modification No. 2 on December 31, 1983, Modification No. 3 on July
17, 1984, Modification No. 4 on October 25, 1984, Modification No.
5 on July 1, 1985, Modification No. 6 on April 1, 1993 and
Modification No. 7 on April 1, 1993 ("Construction Agreement"),
which establishes certain terms and conditions relating to their
participation and responsibility in the construction of the San
Juan Project; and
WHEREAS, as of May 27, 1993, New Mexico and Utah
Associated Municipal Power Systems, a political subdivision of the
State of Utah ("UAMPS"), entered into the Restated and Amended San
Juan Unit 4 Purchase and Participation Agreement ("UAMPS PPA"),
whereby UAMPS agreed to purchase from New Mexico a 7.028 percent
undivided ownership interest in San Juan Unit 4; and
WHEREAS, the UAMPS PPA provides, among other things,
that UAMPS, upon closing of the transaction provided for in the
UAMPS PPA, will have the voting rights and obligations of a Unit
Participant on San Juan Project Committees as said rights and
obligations are set forth in the Project Agreements; and
WHEREAS, New Mexico and Tucson desire to clarify the
rights and responsibilities of Participants and Unit Participants
in the San Juan Project as a result of UAMPS' purchase of a 7.028
percent undivided interest in Unit 4 pursuant to the UAMPS PPA.
NOW, THEREFORE, the Parties agree that the Construction
Agreement is hereby amended as follows:
<PAGE>
1.0 Effective Date. This Modification No. 8 shall
become effective immediately upon the closing of UAMPS' purchase of
the 7.028 percent undivided interest in Unit 4 pursuant to the
UAMPS PPA.
2.0 Amended Section 21.14.3. Section 21.14.3 shall be
amended to read in its entirety as follows:
21.14.3 With respect to matters involving and not
solely related to Unit 4, New Mexico will in good faith solicit the
views of the City of Farmington, Los Alamos County, the City of
Anaheim and UAMPS on matters involving the San Juan Project which
affect Unit 4.
3.0 Amended Section 22. Section 22 shall be amended to
read in its entirety as follows:
22.0 RECOGNITION OF M-S-R, THE CITY OF FARMINGTON,
CENTURY POWER CORPORATION, LOS ALAMOS COUNTY, SCPPA, THE CITY OF
ANAHEIM AND UAMPS ACKNOWLEDGEMENT.
22.1 The Parties recognize that M-S-R, the City of
Farmington, Century Power Corporation, Los Alamos County, SCPPA,
the City of Anaheim, and UAMPS each has acknowledged that it is
familiar with the Project Agreements as amended between New Mexico
and Tucson and such agreements govern the activities of the San
Juan Project. Where a specific provision of the EPPA, the
Farmington PAPA, the County PPA, the Anaheim PPA, or the UAMPS PPA
is in conflict with the provision in one or more of the San Juan
Project Agreements, then (a) as between New Mexico and M-S-R, the
provisions of the EPPA shall govern, all as provided in Section 5.2
of such EPPA, and (b) as between New Mexico and the City of
Farmington, the provisions of the Farmington PAPA shall govern, all
as provided in Section 8.2 of the Farmington PPA, and (c) as
between New Mexico and Los Alamos County, the provisions of the
County PPA shall govern, all as provided in Section 5.2 of the
County PPA, and (d) as between New Mexico and the City of Anaheim,
the provisions of the Anaheim PPA shall govern, all as provided in
Section 7.2 of the Anaheim PPA, and (e) as between New Mexico and
UAMPS, the provisions of the UAMPS PPA shall govern, all as
provided in Section 7.2 of the UAMPS PPA. "EPPA" shall mean the San
Juan Unit 4 Early Purchase and Participation Agreement entered into
by New Mexico and M-S-R on September 26, 1983. "Farmington PAPA"
shall mean the San Juan Unit 4 Purchase Agreement and Participation
Agreement entered into by New Mexico and the City of Farmington on
November 17, 1981. "County PPA" shall mean the Amended and Restated
San Juan Unit 4 Purchase and Participation Agreement entered into
by New Mexico and Los Alamos County on December 28, 1984. "Anaheim
PPA" shall mean the San Juan Unit 4 Purchase and Participation
Agreement entered into by New Mexico and the City of Anaheim on
April 26, 1991. "UAMPS PPA" shall mean the Restated and Amended San
Juan Unit 4 Purchase and Participation Agreement entered into by
New Mexico and UAMPS as of May 27, 1993.
<PAGE>
4.0 Amended Section 18.10. Section 18.10 shall be
amended to read in its entirety as follows:
18.10 Except as modified by the provisions set forth in
Modification No. 8, all of the terms and conditions of the
Construction Agreement, effective as of July 1, 1969, as modified
by Modification No. 1 on May 16, 1979, Modification No. 2 on
December 31, 1983, Modification No. 3 on July 17, 1984,
Modification No. 4 on October 25, 1984, Modification No. 5 on July
1, 1985, Modification No. 6 on April 1, 1993 and Modification No.
7 on April 1, 1993, shall remain in full force and effect.
IN WITNESS WHEREOF, the Parties hereto have caused this
Modification No. 8 to the Construction Agreement to be executed as
of the 12 day of january, 1994.
PUBLIC SERVICE COMPANY OF NEW MEXICO
By: /s/ M. Phyllis Bourque
Its: Senior Vice President
TUCSON ELECTRIC POWER COMPANY
By: /s/ N. B. Johnson
Its: Vice President
<PAGE>
May 9, 1994
MODIFICATION NO. 8
TO
SAN JUAN PROJECT OPERATING AGREEMENT
BETWEEN
PUBLIC SERVICE COMPANY OF NEW MEXICO
AND
TUCSON ELECTRIC POWER COMPANY
THIS MODIFICATION No. 8 to the San Juan Project Operating
Agreement between PUBLIC SERVICE COMPANY OF NEW MEXICO ("New
Mexico") and TUCSON ELECTRIC POWER COMPANY ("Tucson"), hereinafter
referred to collectively as the "Parties", is hereby entered into
and executed as of this ____ day of _________________, 1993.
WITNESSETH:
WHEREAS, the Parties entered into an agreement described as
the San Juan Project Operating Agreement effective January 1, 1973,
as modified by Modification No. 1 on May 16, 1979, Modification
No. 2 on December 31, 1983, Modification No. 3 on July 17, 1984,
Modification No. 4 on October 25, 1984, Modification No. 5 on
July 1, 1985, Modification No. 6 on April 1, 1993, and Modification
No. 7 on April 1, 1993 (as so modified, the "Operating Agreement"),
which establishes certain terms and conditions relating to their
participation in and responsibility for the operation of the San
Juan Project; and
WHEREAS, on August 18, 1980, the Parties entered into a Coal
Sales Agreement with San Juan Coal Company ("SJCC") for the supply
of coal for the San Juan Project (as from time to time amended,
supplemented or modified, the "Coal Sales Agreement"); and
<PAGE>
WHEREAS, in order to operate the San Juan Project more
efficiently, the Parties desire to amend the terms and conditions
under which fuel expenses are allocated among the Participants and
Unit Participants; and
WHEREAS, the Parties desire to amend the Operating Agreement
in other particulars as described herein,
NOW, THEREFORE, the Parties agree that the Operating Agreement
is hereby amended as follows:
1.0 Effective Date: This Modification No. 8 shall, subject
to the receipt of any required regulatory action, be deemed
effective as of January 1, 1993.
2.0 DEFINITIONS: Section 5 is amended by adding the
following defined terms:
5.17.1 ANNUAL MINIMUM COAL DELIVERY: The quantities of
coal set forth on Exhibit H to the Coal Sales Agreement, which
amounts are shown on Attachment A to this Modification No. 8.
5.17.2 FIXED FUEL EXPENSE: Those expenses itemized on
Attachment B, Summary of Fixed Fuel Expense, to this
Modification No. 8. To the extent further modifications to
the Coal Sales Agreement result in changes to such expenses,
the Operating Agent shall promptly modify Attachment B to
reflect those changes.
5.17.3 MINIMUM FIXED FUEL EXPENSE: Fixed Fuel Expense
associated with the Annual Minimum Coal Delivery.
5.17.4 PARTICIPANT MINIMUM FIXED FUEL EXPENSE: For each
Participant or Unit Participant, the Minimum Fixed Fuel
Expense multiplied by that Participant's or Unit Participant's
Participation Share as provided in Section 6.3.5 of the
Co-Tenancy Agreement.
5.17.5 EXCESS FIXED FUEL EXPENSE: Annual Fixed Fuel
Expenses in excess of Minimum Fixed Fuel Expense.
5.17.6 CARRY-OVER TONS: Coal deliveries made annually
to the San Juan Project by SJCC in excess of the Annual
Minimum Coal Delivery, as more fully described in Section
9.2(b)(3) of the Coal Sales Agreement.
5.17.7 VARIABLE FUEL EXPENSES: All fuel expenses not
specifically identified as Fixed Fuel Expense.
5.17.8 CARRY-OVER TONS ACCOUNT: A record system
established and maintained by the Operating Agent to allocate
to the Participant or Unit Participant Carry-over Tons earned
by the San Juan Project.
3.0 Section 5.21, Fixed Fuel, shall be deleted in its
entirety.
4.0 Sections 18.1 through 18.5 are amended in their entirety
to read as follows:
18.1 The quantity of coal delivered to the San Juan
Project shall be determined by the belt scales, in accordance
with the Coal Sales Agreement.
18.2 The Participants shall maintain a coal inventory
including an Emergency Coal Storage Pile for Units 1, 2, 3 and
4, wherein the Participants and Unit Participants shall have
Participation Shares as provided in Section 6.3.5 of the
Co-Tenancy Agreement. The Engineering and Operating Committee
shall establish an optimum coal inventory tonnage for Units 1,
2, 3 and 4 in total. Coal inventory shall be accounted for in
FERC Account 151.
18.3 Costs of the coal inventory and fuel expense shall
be apportioned among and paid for by the Participants and Unit
Participants on the following basis:
18.3.1 Costs that are classified as Fixed Fuel
Expenses shall be charged to FERC Account 151. Such
Fixed Fuel Expenses shall then be charged monthly to FERC
Account 501 and shall be apportioned among and paid for
by the Participants and Unit Participants on the basis of
the percentage that each Participant's or Unit
Participant's monthly Net Energy Generation and auxiliary
generation bears to the total monthly Net Energy
Generation and auxiliary generation. The Fixed Fuel
Expense balance in FERC Account 151 shall be reduced to
zero monthly by charging Fixed Fuel Expense to FERC
Account 501. Such Fixed Fuel Expense shall be reconciled
annually among the Participants and Unit Participants
based on the Participation Shares as provided in Section
6.3.5 of the Co-Tenancy Agreement.
18.3.2 Costs that are classified as Variable Fuel
Expenses shall be charged to the fuel inventory or
credited (as withdrawn) to FERC Account 151 and such
costs shall be apportioned among and paid for by the
Participants and Unit Participants on the basis of the
Participation Shares as provided in Section 6.3.5 of the
Co-Tenancy Agreement. Variable Fuel Expenses related to
coal requirements shall be charged to FERC Account 501 as
determined by dividing the total number of tons of coal
at the beginning of the month, plus the coal delivered
during the month, into the total recorded variable cost
and multiplying the cost per ton so derived by the number
of tons withdrawn. The Variable Fuel Expenses shall be
apportioned among and paid for by the Participants and
Unit Participants on the basis of the percentage that
each Participant's or Unit Participant's monthly Net
Energy Generation bears to the total monthly Net Energy
Generation of the Unit(s).
18.3.3 All other Variable Fuel Expenses (including,
but not limited to fuel oil, fuel handling, ash disposal)
incurred which are chargeable to FERC Account 501 shall
be apportioned among the Participants in accordance with
Section 18.3.2.
18.3.4 The Participants acknowledge and recognize
that the Unit Participants have acknowledged the terms
and conditions of the Coal Sales Agreement, wherein,
among other terms and conditions, an annual Fixed Fuel
Expense must be paid by the San Juan Project each year to
SJCC. Each Participant and Unit Participant shall pay
its Participant's Minimum Fixed Fuel Expense plus a
proportional share of Excess Fixed Fuel Expense. Such
Excess Fixed Fuel Expense shall be allocated to the
Participants and Unit Participants based on each
Participant's and Unit Participant's percentage share of
Carry-over Tons created during that calendar year.
18.3.5 The Participants acknowledge and recognize
that the Unit Participants have acknowledged the monthly
allocation of Fixed Fuel Expenses based on the monthly
Net Energy Generation, as described in Section 18.3.1,
may result in an individual Participant or Unit
Participant having been allocated Minimum Fixed Fuel
Expense and Excess Fixed Fuel Expense equal to, less
than, or greater than its proportional share of such
expenses. Any overpayment or underpayment of a
Participant's or Unit Participant's Minimum Fixed Fuel
Expenses and Excess Fixed Fuel Expense shall be included
as an adjustment to the final Participant and Unit
Participant fuel invoices in a given year. Payments
received from Participants or Unit Participants which
have underpaid during the year shall be used by the
Operating Agent to pay SJCC for any Minimum Fixed Fuel
Expense not paid and to compensate other Participants or
Unit Participants which have overpaid.
18.3.6 The Participants acknowledge and recognize
that the Unit Participants have acknowledged the
provisions of the Coal Sales Agreement that create Carry-
over Tons. To the extent that Carry-over Tons are
created and paid for by individual Participants or Unit
Participants, the Carry-over Tons will be allocated to
each Participant's or Unit Participant's Carry-over Tons
Account in proportion to each Participant's or Unit
Participant's allocation of Excess Fixed Fuel Expense for
the calendar year. At the direction of a Participant or
Unit Participant, the Operating Agent shall transfer
Carry-over Tons from an individual Participant's or Unit
Participant's Carry-over Tons Account to another
Participant's or Unit Participant's Carry-over Tons
Account. Carry-over Tons shall be accounted for on the
basis of tonnage only, with no financial value attached
thereto. Participants and Unit Participants shall apply
any existing Carry-over Tons from their account to the
payment of a minimum tonnage deficiency invoice. When
Carry-over Tons are used by the San Juan Project,
Participants and Unit Participants whose Carry-over Tons
Accounts are reduced shall be compensated by Participants
and Unit Participants whose Carry-over Tons Accounts have
no balance or an inadequate balance to meet their
obligation for the Annual Minimum Coal Delivery. The
value of this compensation shall be based on the actual
cost billed by SJCC.
18.3.7 The Participants acknowledge and recognize that
the Unit Participants have acknowledged the provisions of
Attachment C to this Modification No. 8 as representative of
the allocation and billing methodology agreed to as a result
of this Modification No. 8. Attachment C reflects the
allocation of expenses among the Participants and Unit
Participants based on Modification No. 8 and actual expenses
incurred for fuel expense for the month of January 1993.
18.4 The Operating Agent shall provide the Participants
and Unit Participants a monthly written report on the
following items related to coal deliveries at the San Juan
Project:
18.4.1 Annual Minimum Coal Delivery for the year.
18.4.2 Annual Minimum Coal Delivery allocated among
the Participants and Unit Participants.
18.4.3 Total actual coal deliveries by SJCC to the
San Juan Project for each month and for the year to date.
18.4.4 Total actual coal deliveries to the San Juan
Project for each month and for the year to date,
allocated to the Participants and Unit Participants.
18.4.5 Total cost and tonnage of inventory
allocated to the Participants and Unit Participants.
18.4.6 Fixed Fuel Expense and Variable Fuel Expense
allocated to the Participants and Unit Participants for
each month and for the year to date.
18.4.7 Status of Carry-over Tons for the San Juan
Project, allocated to the Participants and Unit
Participants.
18.5 The Operating Agent shall replace the tons of coal
withdrawn from inventory on a ton for ton basis according to
the coal withdrawn from inventory for the month, such
replacement to reflect anticipated generation usage in the
following month. The cost of this replacement shall be
apportioned among the Participants in accordance with Sections
18.2 and 18.3.
5.0 Section 15.2 shall be amended in its entirety to read as
follows:
The Engineering and Operating Committee may authorize Capital
Additions, Capital Betterments and Capital Replacements not
included in the annual capital expenditures budget; provided,
that such Capital Additions, Capital Betterments, and Capital
Replacements shall not exceed in any one year the sum of two
hundred and fifty thousand dollars ($250,000) for each such
addition, betterment or replacement, unless also authorized by
the Coordination Committee.
6.0 Section 15.4 shall be amended in its entirety to read as
follows:
The Operating Agent shall submit to the Participants a
forecast of cash requirements by months for Capital Additions,
Capital Betterments and Capital Replacements. Said forecast
will be submitted on a yearly basis after final budget
approvals have been made. A revised forecast shall be
submitted when the capital expenditures budget is revised, or
when significant changes in monthly expenditures from those
previously forecast are anticipated. The Operating Agent
shall be authorized to make expenditures related to Capital
Additions, Capital Betterments and Capital Replacements not
included in the annual capital expenditures budget; provided,
however, that such expenditures for Capital Additions, Capital
Betterments and Capital Replacements shall not exceed in any
one year the greater of the sum of fifty thousand dollars
($50,000) or a twenty percent (20%) increase in the total
amount originally authorized for each such Capital Addition,
Capital Betterment or Capital Replacement, unless also
authorized by the Engineering and Operating Committee.
IN WITNESS WHEREOF, the Parties hereto have caused this
Modification No. 8 to the Operating Agreement to be executed as of
the _____ day of _____________, 1993.
PUBLIC SERVICE COMPANY OF NEW MEXICO
By: ________________________________
Its: ________________________________
TUCSON ELECTRIC POWER COMPANY
By: ________________________________
Its: ________________________________
<PAGE>
STATE OF NEW MEXICO )
) ss.
COUNTY OF BERNALILLO )
This instrument was acknowledged before me on_______________,
1993, by ______________________________, as Senior Vice President
of Public Service Company of New Mexico, a New Mexico corporation,
on behalf of the corporation.
_______________________________
Notary Public
My Commission Expires:
_________________________
STATE OF ARIZONA )
) ss.
COUNTY OF PIMA )
This instrument was acknowledged before me
on_________________, 1993, by ________________________________, as
Vice President of Tucson Electric Power Company, an Arizona
corporation, on behalf of the corporation.
________________________________
Notary Public
My Commission Expires:
________________________
<PAGE>
<PAGE>
MODIFICATION NO. 9
TO
SAN JUAN PROJECT OPERATING AGREEMENT
BETWEEN
PUBLIC SERVICE COMPANY OF NEW MEXICO
AND
TUCSON ELECTRIC POWER COMPANY
This Modification No. 9 to the San Juan Project
Operating Agreement between PUBLIC SERVICE COMPANY OF NEW MEXICO
("New Mexico") and TUCSON ELECTRIC POWER COMPANY ("Tucson"),
hereinafter referred to collectively as the "Parties" or
"Participants", is hereby entered into and executed as of the 12
day of January , 1994
WITNESSETH:
WHEREAS, the Parties entered into an agreement
described as the San Juan Project Operating Agreement effective
January 1, 1973, as modified by Modification No. 1 on May 16, 1979,
Modification No. 2 on December 31, 1983, Modification No. 3 on July
17, 1984, Modification No. 4 on October 25, 1984, Modification No.
5 on July 1, 1985, Modification No. 6 on April 1, 1993,
Modification No. 7 on April 1, 1993 and Modification No. 8 on
September 15, 1993 ("Operating Agreement"), which establishes
certain terms and conditions relating to their participation and
responsibility in the operation of the San Juan Project; and
WHEREAS, as of May 27, 1993, New Mexico and Utah
Associated Municipal Power Systems, a political subdivision of the
State of Utah ("UAMPS"), entered into the Restated and Amended San
Juan Unit 4 Purchase and Participation Agreement ("UAMPS PPA"),
whereby UAMPS agreed to purchase from New Mexico a 7.028 percent
undivided ownership interest in San Juan Unit 4; and
WHEREAS, the UAMPS PPA provides, among other things,
that UAMPS, upon closing of the transaction provided for in the
UAMPS PPA, will have the voting rights and obligations of a Unit
Participant on San Juan Project Committees as said rights and
obligations are set forth in the Project Agreements; and
WHEREAS, New Mexico and Tucson desire to clarify the
rights and responsibilities of Participants and Unit Participants
in the San Juan Project as a result of the UAMPS purchase of a
7.028 percent undivided interest in Unit 4 pursuant to the UAMPS
PPA.
NOW, THEREFORE, the Parties agree that the Operating
Agreement is hereby amended as follows:
1.0 Effective Date. This Modification No. 9 shall become
effective immediately upon the closing of UAMPS' purchase of the
7.028 percent undivided interest in Unit 4 pursuant to the UAMPS
PPA.
2.0 Amended Section 7.3.3. Section 7.3.3 shall be
amended to read in its entirety as follows:
7.3.3 With respect to matters involving and not
solely related to Unit 4, New Mexico will in good faith solicit the
views of the City of Farmington, Los Alamos County, the City of
Anaheim, and UAMPS on matters involving the San Juan Project which
affect Unit 4.
3.0 Amended Section 17.1. Section 17.1 shall be
amended to read in its entirety as follows:
17.1 The expenses for the operation and
maintenance of the San Juan Project which are chargeable to FERC
Accounts 426, 500, 502, 505, 506, 507, and 510 through 514; 556,
557A; and 924 (when appropriate) shall be apportioned among the
Participants and Unit Participants, as follows:
17.1.1 Prior to the Transfer Date in
accordance with the following percentages:
A. Participants
1. New Mexico - 50 percent
2. Tucson - 50 percent
17.1.2 On and after UAMPS' purchase of the
7.028 percent undivided interest in Unit 4 pursuant to the UAMPS
PPA, in accordance with the following percentages:
17.1.2.1 For Units 1 and 2 and for all equipment and
facilities directly related to Units 1 and 2 in accordance with the
following percentages:
A. Participants
1. New Mexico - 50 percent
2. Tucson - 50 Percent
B. Unit Participants
1. M-S-R - 0 percent
2. City of Farmington - 0 percent
3. Century Power Corporation - 0 percent
4. Los Alamos County - 0 percent
5. SCPPA - 0 percent
6. City of Anaheim - 0 percent
7. UAMPS - 0 percent
17.1.2.2 For Unit 3 and all equipment and facilities
directly related only to Unit 3 in accordance with the following
percentages:
A. Participants
1. New Mexico - 50 percent
2. Tucson - 0 percent
B. Unit Participants
1. M-S-R - 0 percent
2. City of Farmington - 0 percent
3. Century Power Corporation - 8.2 percent
4. Los Alamos County - 0 percent
5. SCPPA - 41.8 percent
6. City of Anaheim - 0 percent
7. UAMPS - 0 percent
17.1.2.3 For Unit 4 and for all equipment and
facilities directly related only to Unit 4 in accordance with the
following percentages:
A. Participants
1. New Mexico - 38.457 percent
2. Tucson - 0 percent
B. Unit Participants
1. M-S-R - 28.8 percent
2. City of Farmington - 8.475 percent
3. Century Power Corporation - 0 percent
4. Los Alamos County- 7.20 percent
5. SCPPA - 0 percent
6. City of Anaheim - 10.04 percent
7. UAMPS - 7.028 percent
17.1.2.4 For equipment and facilities common only
to Units 1 and 2, in accordance with the following percentages:
A. Participants
1. New Mexico - 50 percent
2. Tucson - 50 percent
B. Unit Participants
1. M-S-R - 0 percent
2. City of Farmington - 0 percent
3. Century Power Corporation - 0 percent
4. Los Alamos County - 0 percent
5. SCPPA - 0 percent
6. City of Anaheim - 0 percent
7. UAMPS - 0 percent
17.1.2.5 For equipment and facilities common only to
Units 3 and 4, in accordance with the following percentages:
A. Participants
1. New Mexico - 44.119 percent
2. Tucson - 0 percent
B. Unit Participants
1. M-S-R - 14.4 percent
2. City of Farmington - 4.249 percent
3. Century Power Corporation - 4.1 percent
4. Los Alamos County- 3.612 percent
5. SCPPA - 20.9 percent
6. City of Anaheim - 5.07 percent
7. UAMPS - 3.55 percent
17.1.2.6 For the Switchyard Facilities except as
otherwise provided in Section 15 of the Co-Tenancy Agreement, in
accordance with the following percentages:
A. Participants
1. New Mexico - 65 percent
2. Tucson - 35 percent
B. Unit Participants
1. M-S-R - O percent
2. City of Farmington - O percent
3. Century Power Corporation - O percent
4. Los Alamos County - O percent
5. SCPPA - O percent
6. City of Anaheim - O percent
7. UAMPS - O percent
17.1.2.7 For the SO2 chemical plant system, except
absorbers, and for the chemical laboratory, including
neutralizers, in accordance with the following percentages:
A. Participants
1. New Mexico - 46.297 percent
2. Tucson - l 9.8 percent
B. Unit Participants
l. M-S-R - 8.7 percent
2. City of Farmington - 2.559 percent
3. Century Power Corporation - 2.49 percent
4. Los Alamos County- 2.175 percent
5. SCPPA- 12.71 percent
6. City of Anaheim - 3.10 percent
7. UAMPS - 2.1 69 percent
17.1.2.8 Except as provided in Exhibit III(g), for
equipment and facilities common to all of the units, and all
Project expenses not identifiable by unit and not otherwise
listed above, in accordance with the following percentages:
A. Participants
1. New Mexico - 46.297 percent
2. Tucson - 19.8 percent
B. Unit Participants
1. M-S-R - 8.7 percent
2. City of Farmington - 2.559 percent
3. Century Power Corporation - 2.49 percent
4. Los Alamos County - 2.175 percent
5. SCPPA- 12.71 percent
6. City of Anaheim - 3.10 percent
7. UAMPS - 2.169 percent
17.1.3 In the event of a shutdown of Units 1 and/or 2,
the expenses incurred in connection with the shutdown (including but
not limited to removal, salvage, cleanup, and protection service)
shall be equally apportioned between the Participants.
In the event of a shutdown of Unit 3, said expenses shall be
allocated as set forth in Paragraph 17.1.2.2. In the event of a
shutdown of Unit 4, said expenses shall be allocated as set forth
in Paragraph 17.1.2.3. Expenses which are attributable to
equipment and facilities common to more than one unit shall be
apportioned in accordance with Paragraph 17.1.2.
4.0 Amended Exhibit III. Exhibit III (a-i) shall be
amended to read in its entirety as shown on the attached Exhibit A.
5.0 Amended Section 31.10. Section 31.10 shall be
amended to read in its entirety as follows:
31.10 Except as modified by the provisions set forth in
Modification No. 9, all of the terms and conditions of the
Operating Agreement, effective as of January 1, 1973, as modified
by Modification No. 1 on May 16, 1979, Modification No. 2 on
December 31, 1983, Modification No. 3 on July 17, 1984,
Modification No. 4 on October 25, 1984, Modification No. 5 on July
1, 1985, Modification No. 6 on April 1, 1993, Modification No. 7 on
April 1, 1993 and Modification No. 8 on September 15, 1993, shall
remain in full force and effect.
6.0 Amended Section 32. Section 32 shall be amended to
read in its entirety as follows:
32.0 RECOGNITION OF M-S-R, THE CITY OF FARMINGTON,
CENTURY POWER CORPORATION, LOS ALAMOS COUNTY, SCPPA, THE CITY OF
ANAHEIM AND UAMPS ACKNOWLEDGEMENT.
32.1 The Parties recognize that M-S-R, the City of
Farmington, Century Power Corporation, Los Alamos County, SCPPA,
the City of Anaheim and UAMPS, each has acknowledged that it is
familiar with the Project Agreements as amended between New Mexico
and Tucson and such agreements govern the activities of the San
Juan Project. Where a specific provision of the EPPA, the
Farmington PAPA, the County PPA, the Anaheim PPA or the UAMPS PPA
is in conflict with the provision in one or
more of the Project Agreements, then (a) as between New Mexico and
M-S-R, the provisions of the EPPA shall govern, all as provided in
Section 5.2 of such EPPA, and (b) as between New Mexico and the
City of Farmington, the provisions of the Farmington PAPA shall
govern, all as provided in Section 8.2 of the Farmington PAPA, and
(c) as between New Mexico and Los Alamos County, the provisions of
the County PPA shall govern, all as provided in Section 5.2 of the
County PPA, and (d) as between New Mexico and the City of Anaheim,
the provisions of the Anaheim PPA shall govern, all as provided in
Section 7.2 of the Anaheim PPA, and (e) as between New Mexico and
UAMPS, the provisions of the UAMPS PPA shall govern, all as
provided in Section 7.2 of the UAMPS PPA. "EPPA" shall mean the San
Juan Unit 4 Early Purchase and Participation Agreement entered into
by New Mexico and M-S-R on September 26, 1983. "Farmington PAPA"
shall mean the San Juan Unit 4 Purchase Agreement and Participation
Agreement entered into by New Mexico and the City of Farmington on
November 17, 1981. "County PPA" shall mean the Amended and Restated
San Juan Unit 4 Purchase and Participation Agreement entered into
by New Mexico and Los Alamos County on December 28, 1984. "Anaheim
PPA" shall mean the San Juan Unit 4 Purchase and Participation
Agreement entered into by New Mexico and the City of Anaheim on
April 26, 1991. "UAMPS PPA" shall mean the Restated and Amended San
Juan Unit 4 Purchase and Participation Agreement entered into by
New Mexico and UAMPS as of May 27, 1993.
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have caused this
Modification No. 9 to the Operating Agreement to be executed as of
the 12 day of January 1994.
PUBLIC SERVICE COMPANY OF NEW MEXICO
By: /s/ M. Phyllis Bourque
Its: Senior Vice President
TUCSON ELECTRIC POWER COMPANY
By: /s/ N. B. Johnsen
Its: Vice President
<PAGE>
<PAGE>
Exhibit A
AMENDED EXHIBIT III
<PAGE>
<PAGE>
Exhibit III(a)
FACILITIES AND EQUIPMENT
SPECIFIC TO SAN JUAN UNIT NO. 1
Operation and Maintenance Costs
New Mexico - 50% Tucson - 50%
M-S-R - 0% City of Farmington - 0%
Century Power Corporation - 0% Los Alamos County - 0%
SCPPA - 0% City of Anaheim - 0%
UAMPS - 0%
1. Turbine Generator
2. Condenser
3. Condensate and Feedwater System
a. Condensate Pumps
b. Feedwater Heaters
c. Boiler Feed Pumps
d. Storage Tanks
4. Boiler including: Air Heaters, Pulverizers, Bunkers, and
Feeders
5. Forced Draft Fans and Primary Air Fans
6. Precipitator
7. Stack and Stack Monitoring System
8. Cooling Tower
9. Circulating Water Pumps
10. Main, Start-Up, Unit Auxiliary, and SO2 Scrubber Transformers
11. Bottom Ash System (Up to but not including Dewatering Tank or
Ash Water Pump building and equipment)
12. Fly Ash System
13. Building HVAC Systems
14. SO2 Absorbers, Scrubbers, Transfer Pumps, Booster Fans, and
Flue Gas Reheat System including the 650 Pound Reheat Steam
Line and Desuperheater from the Plant Main Steam Line but not
including the 165 pound Control Valve and Branch Line to the
Chemcial Plant.
<PAGE>
<PAGE>
Exhibit III(a) (continued)
15. Emergency Diesel Generator
16. Electrical and Control systems
17. SSR Protection System
18. Unit Specific Piping for all Air Systems, Chemical Feed
systems, and Hydrogen
<PAGE>
<PAGE>
Exhibit III(b)
FACILITIES AND EQUIPMENT
SPECIFIC TO SAN JUAN UNIT NO. 2
Operation and Maintenance Costs
New Mexico - 50% Tucson - 50%
M-S-R - 0% City of Farmington - 0%
Century Power Corporation - 0% Los Alamos County - 0%
SCPPA - 0% City of Anaheim - 0%
UAMPS - 0%
1. Turbine Generator
2. Condenser
3. Condensate and Feedwater System
a. Condensate Pumps
b. Feedwater Heaters
c. Boiler Feed Pumps
d. Storage Tanks
4. Boiler including: Air Heaters, Pulverizers, Bunkers, and Feeders
5. Forced Draft Fans and Primary Air Fans
6. Precipitator
7. Stack and Stack Monitoring System
8. Cooling Tower
9. Circulating Water Pumps
10. Main, Start-Up, Unit Auxiliary, and SO2 Scrubber Transformers
11. Bottom Ash System (Up to but not including Dewatering Tank or Ash
Water Pump building and equipment)
12. Fly Ash System
13. Building HVAC Systems
14. SO2 Absorbers, Scrubbers, Transfer Pumps, Booster Fans, and
Flue Gas Reheat System including the 650 Pound Reheat Steam
Line and Desuperheater from the Plant Main Steam Line but not
including the 165 pound Control Valve and Branch Line to the
Chemical Plant.
<PAGE>
<PAGE>
Exhibit III(b) (continued)
15. Emergency Diesel Generator
16. Electrical and Control systems
17. SSR Protection System
18. Unit Specific Piping for all Air Systems, Chemical Feed
systems, and Hydrogen
<PAGE>
<PAGE>
Exhibit III(c)
FACILITIES AND EQUIPMENT
SPECIFIC TO SAN JUAN UNIT NO. 3
Operation and Maintenance Costs
New Mexico - 50% Tucson - 0%
M-S-R - 0% City of Farmington - 0%
Century Power Corporation - 8.2% Los Alamos County - 0%
SCPPA - 41.8% City of Anaheim - 0%
UAMPS - 0%
1. Turbine Generator
2. Condenser
3. Condensate and Feedwater System
a. Condensate Pumps
b. Feedwater Heaters
c. Boiler Feed Pumps
d. Storage Tanks
4. Boiler including: Air Heaters, Pulverizers, Bunkers, and Feeders
5. Forced Draft Fans and Primary Air Fans
6. Precipitator
7. Stack and Stack Monitoring System
8. Cooling Tower
9. Circulating Water Pumps
10. Main, Unit Auxiliary 3A and 3B Transformers
11. Bottom Ash System including: Hopper, Dewatering Tank, Settling
Tank, Surge Tank, and Pump House
12. Fly Ash System
13. Building HVAC Systems
<PAGE>
<PAGE>
Exhibit III(c) (continued)
14. SO2 Absorbers, Scrubbers, Transfer Pumps, Booster Fans, and
Flue Gas Reheat System including the Reheat Steam Line from
the Auxiliary Steam Header
15. Emergency Diesel Generator
16. Electrical and Control Systems
17. Fuel Oil Ignitor Heaters and Unit Specific Piping
18. Unit Specific Piping for all Air Systems, Chemical Feed
Systems, and Hydrogen
19. SSR Protection System
20. Auxiliary Steam Header Piping System
a. Including the Unit Specific Branch Line to the Reheat System
b. Not including the Branch Line to the Chemical Plant
<PAGE>
<PAGE>
Exhibit III(d)
FACILITIES AND EQUIPMENT
SPECIFIC TO SAN JUAN UNIT NO. 4
Operation and Maintenance Costs
New Mexico - 38.457% Tucson - 0%
M-S-R - 28.8% City of Farmington - 8.475%
Century Power Corporation - 0% Los Alamos County - 7.2%
SCPPA - 0% City of Anaheim - 10.04%
UAMPS - 7.028%
1. Turbine Generator
2. Condenser
3. Condensate and Feedwater System
a. Condensate Pumps
b. Feedwater Heaters
c. Boiler Feed Pumps
d. Storage Tanks
4. Boiler including: Air Heaters, Pulverizers, Bunkers, and
Feeders
5. Forced Draft Fans and Primary Air Fans
6. Precipitator
7. Stack and Stack Monitoring System
8. Cooling Tower
9. Circulating Water Pumps
10. Main, Unit Auxiliary 4A and 4B Transformers
11. Bottom Ash System including: Hopper, Dewatering Tank,
Settling Tank, Surge Tank, and Pump House
12. Fly Ash System
13. Building HVAC Systems
<PAGE>
<PAGE>
Exhibit III(d) (continued)
14. SO2 Absorbers, Scrubbers, Transfer Pumps, Booster Fans, and
Flue Gas Reheat System including the Reheat Steam Line from
the Auxiliary Steam Header
15. Emergency Diesel Generator
16. Electrical and Control Systems
17. Fuel Oil Ignitor Heaters and Unit Specific Piping
18. Unit Specific Piping for all Air Systems, Chemical Feed
Systems, and Hydrogen
19. Auxiliary Steam Header Piping System:
a. Including the Unit Specific Branch Line to the Reheat
System
b. Not including the Branch Line to the Chemical Plant
<PAGE>
<PAGE>
Exhibit III(e)
FACILITIES AND EQUIPMENT
COMMON TO SAN JUAN UNITS 1 AND 2
Operation and Maintenance Costs
New Mexico - 50% Tucson - 50%
M-S-R - 0% City of Farmington - 0%
Century Power Corporation - 0% Los Alamos County - 0%
SCPPA - 0% City of Anaheim - 0%
UAMPS - 0%
1. Bearing Cooling Water System except Unit Piping
2. Bottom Ash Dewatering Facility including: Dewatering Tank,
Settling Tank, surge Tank, Storage Tank, and Pump House
3. Fuel Oil System (Fuel Oil for Ignition and Flame
Stabilization)
4. Instrument Air System except Unit Piping
5. Chemical Feed System except Unit Piping
a. Condensate and Feedwater System
b. Boiler
c. Bearing Cooling Water System
d. Cooling Tower Systems
e. Chlorination System
6. Plant Air System except Unit Piping
7. Sootblowing Air System except Unit Piping
8. Hydrogen Storage System except Unit Piping
9. Coal Tripper System including Dust Collection System
10. Turbine Lube Oil Storage and Transfer System
11. Control Room, Equipment Rooms, and Associated HVAC System
12. SO2 Back-up Scrubber - Absorber Transformer
13. Turbine Crane south of column, Line 12
14. Fuel Oil, Ash, and Water Pipe Racks
15. Boiler Fill System
<PAGE>
<PAGE>
Exhibit III(e) (continued)
16. SAR Multiplexer Control System
<PAGE>
<PAGE>
Exhibit III(f)
FACILITIES AND EQUIPMENT
COMMON TO SAN JUAN UNITS 3 AND 4
Operation and Maintenance Costs
New Mexico - 44.119% Tucson - 0%
M-S-R - 14.4% City of Farmington - 4.249%
Century Power Corporation - 4.1% Los Alamos County - 3.612%
SCPPA - 20.9% City of Anaheim - 5.07%
UAMPS - 3.55%
1. Bearing Cooling Water System except Unit Piping
2. Fuel Oil System (Fuel Oil for Ignition and Flame
Stabilization except Ignitor Heaters and Unit Specific
Piping)
3. Instrument System except Unit Piping
4. Chemical Feed system Except Unit Piping
a. Condensate and Feedwater System
b. Boiler
c. Bearing Cooling Water System
d. Cooling Tower Systems
e. Chlorination System
5. Plant Air System except Unit Piping
6. Sootblowing Air System except Unit Piping
7. Start-up Transformers and Nonseg Bus to Units 3 and 4
Switchgear
8. Hydrogen Storage System except Unit Piping
9. Coal Tripper System including Dust Collection Systems
10. Turbine Lube Oil Storage and Transfer System
11. Control Room, Equipment Rooms, and Associated HVAC System
12. Boiler Fill System
13. Auxiliary Cooling Systems including Auxiliary Cooling Tower
No. 1 and Pumps, but excepting No. 4 Tower Pumps and Piping
which is Unit Specific
<PAGE>
<PAGE>
Exhibit III(f) (continued)
14. CO2 Storage System except Unit Piping
15. Start-Up Boiler Feed Pump except Unit Piping
16. Turbine Bay Crane north of column, Line 12
17. Fuel Oil, Ash, and Water Pipe Racks
18. Fire Water Booster and Jockey Pumps
19. Halon Fire Protection System
20. Cooling Tower Multiplex Control System
<PAGE>
<PAGE>
Exhibit III(g)
FACILITIES AND EQUIPMENT
COMMON TO ALL FOUR SAN JUAN UNITS
Operation and Maintenance Costs
New Mexico - 46.297%Tucson - 19.8%
M-S-R - 8.7%City of Farmington - 2.559%
Century Power Corporation - 2.49%Los Alamos County - 2.1 75%
SCPPA - 12.71%City of Anaheim - 3.10%
UAMPS - 2.169%
1. River and Raw Water System including:
a. Diversion and intake structures, including all equipment
and pump building.
b. Raw water line to reservoir.
c. Reservoir, pump buildings, and all equipment.
d. Raw water lines to plant yard.
e. All above and underground fire protection system to each
vendor supplied or unit specific fire protection system.
2. Auxiliary Boiler
3. SO2 System Chemical Plant except Absorbers
a. Double effect evaporator train systems.
b. Fly ash filter system.
c. Absorber product and feed tanks.
d. Condensate collection, storage, and transfer systems.
e. Soda ash storage, mixing, and distribution systems.
f. Sulfate purge system including: crystallizers,
centrifuges, evaporators, and salt cake system.
g. Sulfuric acid plant system including storage tanks and
load out system.
h. Auxiliary No. 2 cooling tower, pumps, and systems.
4. Spare-Main Transformer 345/24 kV for all units
5. Maintenance, Office, and Warehousing Facilities
6. Chemical Laboratory
<PAGE>
<PAGE>
Exhibit III(g) (continued)
7. Coal and Ash Handling Control Facilities*
8. Roads and grounds such as fencing, yard lighting, guard
facilities, drainage, and dikes.
9. Potable Water System
10. Environmental Monitoring systems including Air, Water, and
Ground. Excludes Stack Monitoring Systems which are unit
specific.
11. Transportation such as trucks, cars, and dozers (not
otherwise charged).
12. Water Management System
a. Wastewater Recovery System - Northside
1) Neutralization system including premix tank,
neutralization tank, clarifier/thickener, and pumps.
2) Reverse osmosis system including lime/soda softening
clarifier system.
3) Brine concentrator Nos. 4 and 5.
4) Process Pond No. 3 and pump system.
5) North evaporation Ponds 1, 2 and 3.
b. SO2 Waste Treatment System - Southside
1) Process ponds lA, lB, 2 and pumping system.
2) Premix tank and clarifier system.
3) Oxidation towers.
4) Brine concentrator Nos. 2 and 3.
5) South evaporation pond Nos. 1, 2, 3, 4 and 5.
c. Data Acquisition System
d. Solid Waste Disposal Pit
e. Coal Pile Runoff Ponds.
13. Coal Handling Equipment - all equipment from all reclaim
hoppers ending at the chutes to the tripper conveyors. This
includes: hoppers, feeders, feeder belts,
*Maintenance Only
<PAGE>
<PAGE>
Exhibit III(g) (continued)
reclaim conveyors, plant conveyors, belt scales, fire protection
systems, dust suppression systems, magnetic separators, all
electrical and controls, and heating and ventilation systems.*
14. Maintenance Bay Facilities including: Bay Bridge Crane, all
Offices, and Support Facilities.
15. Sewage Treatment Facilities
16. All Demineralizer Systems including: Clarifier, Storage
Tanks, Sump Pumps, Filter Beds, and Control Systems
17. The Chemical Plant 165-pound Control Valve and Branch Line
from each of Units 1 and 2 Unit Specific 650-pound Reheat
Steam Line
18. The Chemical Plant Branch Steam Line from (but not including)
the Unit Specific Auxiliary Steam Header System on each of
Units 3 and 4.
*Maintenance Only
<PAGE>
<PAGE>
Exhibit III(h)
FACILITIES AND EQUIPMENT
COMMON TO ALL FOUR SAN JUAN UNITS
Operation Costs Only
Variable split based on generation by unit
New Mexico
M-S-R
Tucson
City of Farmington
Century Power Corporation
Los Alamos County
SCPPA
City of Anaheim UAMPS
1. Coal and Ash Handling Control Facilities
2. Coal Handling Equipment
All equipment from all reclaim hoppers ending at the chutes to
the tripper conveyors. This includes: hoppers, feeders, feeder
belts, reclaim conveyors, plant conveyors, belt scales, fire
protection systems, dust suppression systems, magnetic
separators, all electrical and control, and heating and
ventilation systems.
<PAGE>
<PAGE>
Exhibit III(i)
SWITCHYARD FACILITIES AND EQUIPMENT
Operation & Maintenance Costs
New Mexico - 65% Tucson - 35 %
<PAGE>
<PAGE>
SAN JUAN UNIT 4
EARLY PURCHASE PARTICIPATION AGREEMENT
Dated as of September 26, 1983
Between
PUBLIC SERVICE COMPANY OF NEW MEXICO
and
M-S-R PUBLIC POWER AGENCY
<PAGE>
<PAGE>
SAN JUAN UNIT 4
EARLY PURCHASE AND PARTICIPATION AGREEMENT
TABLE OF CONTENTS
Section and Subject Pages
Recitals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1. Effective Date and Termination Date. . . . . . . . . . . . . . . . . . . 5
2. Transfer of Ownership. . . . . . . . . . . . . . . . . . . . . . . . . . 6
3. Purchase Price and Prepaid Items . . . . . . . . . . . . . . . . . . . . 6
4. Power Sales Arrangement. . . . . . . . . . . . . . . . . . . . . . . . .10
5. San Juan Project Agreements. . . . . . . . . . . . . . . . . . . . . . .19
6. Amendments to San Juan Project Agreements. . . . . . . . . . . . . . . .20
7. Warranties and Representations . . . . . . . . . . . . . . . . . . . . .20
8. Purchase Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
9. Purchase Closing Conditions. . . . . . . . . . . . . . . . . . . . . . .24
10. Representations and Warranties Regarding Condition
of Facility. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
11. Reliance and Planning by Parties and Obligations
Prior to Purchase Closing. . . . . . . . . . . . . . . . . . . . . . .32
12. PNM as Operating Agent; Applicability of Certain
Provisions of Operating Agreement . . . . . . . . . . . . . . . . . .36
13. Applicability of Certain Provisions of
Co-Tenancy Agreement. . . . . . . . . . . . . . . . . . . . . . . . .39
14. Entitlement to and Scheduling of San Juan
Unit 4 Power and Energy . . . . . . . . . . . . . . . . . . . . . . .41
15. Start-Up and Auxiliary Power and Energy Requirements . . . . . . . . . .43
16. Expenditures for San Juan Project Capital Betterments,
Capital Additions, Capital Replacements and Costs of
Operating Work . . . . . . . . . . . . . . . . . . . . . . . . . . . .44
17. M-S-R-TEP Hazard Sharing . . . . . . . . . . . . . . . . . . . . . . . .45
18. Coal Supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46
19. Water Supply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47
20. Right of M-S-R to Inspect and Audit. . . . . . . . . . . . . . . . . . .48
21. Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .48
22. Disputes; Arbitration. . . . . . . . . . . . . . . . . . . . . . . . . .52
23. Rights to San Juan Switchyard. . . . . . . . . . . . . . . . . . . . . .55
24. Right to Bring in an Additional Transmission Line. . . . . . . . . . . .56
25. Risk of Loss Prior to Purchase Closing . . . . . . . . . . . . . . . . .57
26. Destruction, Damage or Condemnation of San Juan Unit 4
After Purchase Closing . . . . . . . . . . . . . . . . . . . . . . . .58
27. Consistency of Terms . . . . . . . . . . . . . . . . . . . . . . . . . .60
28. Relationship of Parties. . . . . . . . . . . . . . . . . . . . . . . . .61
29. Section Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . .62
30. Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .62
31. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .63
32. Survival of Warranties and Representations . . . . . . . . . . . . . . .63
33. Assignment, Transfer, Conveyance or Other Disposition. . . . . . . . . .63
34. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .70
35. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .70
<PAGE>
TABLE OF CONTENTS
(Continued)
Section and Subject Pages
36. Further Assurance. . . . . . . . . . . . . . . . . . . . . . . . . . . .71
37. Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .71
38. Force Majeure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .71
39. Independent Covenants. . . . . . . . . . . . . . . . . . . . . . . . . .72
40. Equal Opportunity. . . . . . . . . . . . . . . . . . . . . . . . . . . .73
41. Filing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .73
42. Nondedication of Facilities. . . . . . . . . . . . . . . . . . . . . . .74
43. No Third Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . .74
44. Execution of Interconnection Agreement . . . . . . . . . . . . . . . . .74
Signatures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .75
Exhibit A--Definitions of Capitalized Terms
Exhibit A-1--Definitional Cross-References
Exhibit B--Instrument of Sale add Conveyance
Annex. A--Real Property
Annex B--Pollution Control
Exhibit C--Easement and License
Exhibit D--Opinions of Counsel
Exhibit E--Purchase Price
Exhibit F--Prepaid Items
Exhibit G--Letter of Representation
Exhibit H--Certificate of President
Exhibit I--Letter of Certified Public Accountant
Exhibit J--Opinion of Counsel
<PAGE>
<PAGE>
SAN JUAN UNIT 4 EARLY PURCHASE AND PARTICIPATION AGREEMENT
THIS SAN JUAN UNIT 4 EARLY PURCHASE AND PARTICIPATION AGREEMENT
("Agreement"), dated as of the 26th day of September, 1983, is between PUBLIC
SERVICE COMPANY NEW MEXICO, a Mew Mexico corporation (hereinafter called
"PNM"), and M-S-R PUBLIC POWER AGENCY, a joint exercise of powers agency
organized under the laws of the State of California ("M-S-R"), hereinafter
sometimes referred to individually as a "Party" or collectively as the
"Parties."
The capitalized terms used in this Agreement, unless otherwise
specifically defined herein or in Exhibit "A" attached hereto, shall have the
meanings defined in the San Juan Project Agreements (as that term is defined
in Section 5.1 herein).
RECITALS
This Agreement is made with reference to the following facts, among
others:
0.l PNM and Tucson Electric Power Company, an Arizona corporation
("TEP"), are the Participants in and owners of the San Juan Project
coal-fueled electric generating units ("San Juan consisting of four
Project") San Juan Units 1, 2, and 3 are jointly owned by PNM and TEP, and
San Juan Unit 4 is owned by PNM and the City of Farmington, New Mexico
("Farmington"). The lends upon which San Juan Units 1, 2, 3, and 4 are
situated are jointly owned by PNM and TEP.
O.2 PNM and TEP have entered into the San Juan Project Agreements which
establish the terms and conditions of the ownership, construction, and
operation of the San Juan Project and their respective rights and obligations
relating thereto.
O.3 The New Mexico Public Service Commission ("NMPSC") has issued
certificates of public convenience and necessity and location permits to PNM
in NMPSC Numbers 1111 add 965 with respect to Units 1 and 2, and Case number
1121 with respect to San Juan Units 3 and 4, authorizing PNM to participate
with TEP in the San Juan Project. Up until 1979, PNM and TEP each owned an
undivided fifty percent (50%) interest in the San Juan Project.
0.4 San Juan Units 1, 2, 3, and 4 are in commercial operation.
O.5 In NMPSC Case Number 1452, the NMPSC issued to PNM a certificate of
public convenience and necessity authorizing PNM to purchase TEP's fifty
percent (50%) undivided interest in San Juan Unit 4.
0.6 By Purchase Agreement, dated as of May 16, 1979, Pnm and TEP agreed
upon and consummated the purchase and sale of TEP's fifty percent (50%)
undivided interest in San Juan Unit 4, with TEP retaining an option ("TEP
Option") to acquire up to a twenty-eight and eight-tenths percent (28.8%)
ownership interest in San Juan Unit 4 ("Ownership Interest") at a later date,
on at least eight years' notice.
0.7 On December 31, 1981, TEP and M-S-R entered into the TEP/M-S-R
Agreement--Option to Acquire Ownership Interest in San Juan Unit 4
("TEP/M-S-R Agreement"), wherein TEP agreed to sell to M-S-R and M-S-R agreed
to purchase from TEP, pursuant to the terms and conditions of such agreement,
on or before November 30, 1982, the TEP Option (also referred to as the
"Option to Repurchase" in the May 16, 1979, San Juan Unit 4 Purchase
Agreement between PNM and TEP). On December 31, 1981, TEP and M-S-R also
entered into the TEP/M-S-R Agreement on Power Sales. TEP subsequently
advised PNM of those agreements. On January 5, 1982, TEP extended to PNM
the right of first refusal to acquire the TEP Option upon the same terms and
conditions agreed to by M-S-R. On March 5, 1982, PNM confirmed that it would
not exercise its right of first refusal and that M-S-R had the right to
Purchase from TEP the TEP Option. All rights of first refusal which PNM may
have had to purchase the TEP Option or to exercise the right to purchase the
TEP Option pursuant to the San Juan Co-Tenancy Agreement, as amended by
Modification No. 1 dated May 16, 1979, or by the agreement between PNM and
TEP dated December 1, l980, have expired. The NMPSC, by Order of Hearing
and Investigation, dated April 23, 1982, and docketed in NMPSC Case Number
1452, initiated an investigation into the PNM refusal to exercise its right
of first refusal. At the conclusion of the investigation, the NMPSC issued
an order authorizing PNM to sell the Ownership Interest in San Juan Unit 4 on
or after May 1, 1995. On November 29, 1982, PNM and M-S-R executed the San
Juan Unit 4 Purchase and Participation Agreement ("Purchase and Participation
Agreement") which detailed the sale by PNM to M-S-R of the Ownership
Interest and the participation between M-S-R and PNM in the operation
an ownership of San Juan Unit 4. The Purchase and Participation
Agreement was submitted to the NMPSC on December 20, 1982.
0.8 On November 30, 1982, M-S-R gave to PNM, and PNM received from
M-S-R, Notice of Exercise of Option ("Notice of Exercise of Option"), by
which M-S-R exercised the TEP Option to acquire the Ownership Interest.
0.9 In the Purchase and Participation Agreement the Parties recognized
that by the May 16, l979 Purchase Agreement between PNM and TEP, upon eight
years' notice, acquisition of the Ownership Interest could take place on or
after May 1, 1995.
0.10 The Parties have each determined that it would be individually and
mutually beneficial to consummate the purchase, sale, and transfer of the
Ownership Interest in 1983 rather than in 1995. PNM and M-S-R entered
into a First Amendment ("First Amendment") to the Purchase and Participation
Agreement on May 31, 1983, which amendment provided for the Purchase Closing,
as defined in Exhibit A hereto, to occur on or before December 31, 1983, and
for the execution of this Agreement and an Interconnection Agreement (as
referenced in Section 44 of this Agreement), governing the terms and
conditions of such sale and other related matters.
NOW THEREFORE, based upon the foregoing recitals, and in consideration of
the mutual promises, terms, covenants, and conditions of this Agreement, PNM
and M-S-R the Parties, hereby agree as follows:
<PAGE>
<PAGE>
AGREEMENT
SECTION 1
EFFECTIVE DATE AND TERMINATION DATE
1.1 Effective Date. This Agreement shall become effective on the date
and at the time it is executed by both PNM and M-S-R, and shall remain in
effect until such date as is set forth in Section 1.2 herein; provided,
however, that it shall be earlier terminated without further action. (i) in
the event the Purchase Closing has not occurred on or before December 31,
l983 (or such other date as may be agreed upon in writing by the Parties
pursuant to Section 8.1 hereof), or (ii) pursuant to the provisions of
Section 25.1 hereof. The Purchase and Participation Agreement, as amended by
the First Amendment, is hereby merged into and modified in this Agreement and
the provisions hereof, as merged and modified constitute the sole and only
rights and obligations of the Parties relating to the matters set forth
therein and herein; provided however, that the provisions of the Purchase and
Participation Agreement, with the exception of the First Amendment, shall be
revived and remain effective and binding in the event of the aforesaid early
termination of this Agreement by reason of the Purchase Closing not occurring
on or before December 31, 1983 or other agreed-upon date.
1.2 Termination Date. This Agreement shall continue in full force and
effect from its Effective Date until July 1, 2019, unless sooner
terminated in accordance with Sections 1.1 or 25.1 hereof or by the mutual
written agreement of the Parties. In the event the term of the Co-Tenancy
Agreement referred to in Section 5.1 hereof is extended, the term of this
Agreement shall be extended so that the terms of such agreements shall be
coterminous.
SECTION 2
TRANSFER OF OWNERSHIP INTEREST
2.1 Conveyance of Title. PNM shall convey to M-S-R at the time of
Purchase Closing the Ownership Interest by the Instrument of Sale and
Conveyance ("Instrument of Sale and Conveyance") and the Easement and
License ("Easement and License") in substantially the form of Exhibits B and
C, respectively, attached hereto. The Ownership Interest being conveyed by
PNM shall be with special warranty covenants free and clear of all taxes
and assessments, all liens, trusts, mortgages, security agreements,
financial statements, and encumbrances, except Permitted Encumbrances.
SECTION 3
PURCHASE PRICE AND UNPAID ITEMS
3.1 Purchase Price. The Purchase Price to be paid by M-S-R. to PNM for
the Ownership Interest, exclusive of the prepaid items referred to in Section
3.3 hereof, shall be the sum of (i) PNM's book cost for said Ownership
Interest determined as of the date of the Purchase Closing, which shall
include AFUDC actually reflected on PNM's books for the Ownership Interest,
net of PNM's depreciation as of the date of the Purchase Closing all as
determined in accordance with the methodology shown on Exhibit E hereto, and
(ii) ten million dollars ($10,000,000). Such depreciated book cost
represents the estimated cost of the Ownership Interest through the date of
the Purchase Closing. PNM has and shall be entitled to segregate the
Ownership Interest of San Juan Unit 4 and associated pollution, control
systems and facilities and to charge AFUDC thereon without charging AFUDC on
the remainder interest, and it is presumed that the Ownership Interest is
the share on which the AFUDC was and is charged. Book Cost shall reflect
any credit for insurance or condemnation proceeds received by reason of any
damage, destruction, condemnation or similar occurrence involving San Juan
Unit 4 if such insurance or condemnation proceeds were paid to reimburse
utility plant account property. Additional costs to complete the San Juan
Project after the Purchase Closing are anticipated. It is PNM's present
estimate that the total of such costs allocable to M-S-R's Ownership Interest
will be approximately one million five hundred thousand dollars ($1,500,000).
3.2 At the Purchase Closing, M-S-R shall pay PNM one hundred
seventy million ninety one thousand one hundred eighty-one dollars
($170,091,181), which amount represents PNM's estimate of the total
Purchase Price, being the sum of (i) and (ii) of Section 3.1 hereof. As soon
as practicable after the Purchase Closing, but no later than 9O days
thereafter, PNM shall determine its actual depreciated book cost as of the
date of the Purchase Closing, in accordance with the methodology set forth in
Section 3.1 of this Agreement. In the event the actual depreciated book
cost plus $10,000,000 exceeds the total Purchase Price paid at the Purchase
Closing, M-S-R shall pay PNM such difference. In the event the actual
depreciated book cost plus $10,000,000 is less than the total Purchase Price
paid at the Purchase Closing, PNM shall pay M-S-R such difference. Such
payment, together with interest at the rate quoted by Irving Trust
Company, New York City, New York ("Irving Trust Company"), as the prime rate
of interest as of the date of the Purchase Closing, from the date of the
Purchase Closing to the date of payment, shall be made within ten (lO) days
of the date that PNM delivers its price determination to M-S-R, unless M-S-R
disputes such determination.
3.2.1 In the event M-S-R disputes the amount of the Purchase Price
calculated by PNM, M-S-R shall have the right to audit the PNM books and
records relating to the Ownership Interest, in which event the audit shall be
commenced within fifteen (15) days from the date PNM delivers its price
determination and completed within thirty (30) days thereafter. In the event
M-S-R and PNM are able to reach agreement within thirty (30) days after
completion of the audit as to the actual depreciated book cost of the
Ownership Interest, then the first audited purchase price differential due
PNM or the refund due M-S-R shall be paid within ten (1O) days with interest
at the rate quoted by Irving Trust Company, as the prime rate of interest as
of the date of the Purchase Closing, from the date of the Purchase Closing to
the date of payment. In the event MS-R and PNM are unable to reach
agreement within thirty (30) days of completion of the audit as to the actual
depreciated book cost of the Ownership Interest, then either Party may call
for lndependent arbitration in accordance with the last sentence of Section
22.1 hereof, and the final arbitrated purchase price differential due PNM or
the refund due M-S-R shall bear interest at the rate quoted by Irving Trust
Company, as the prime rate of interest as of the date of the Purchase
Closing, from the date of the Purchase Closing to the date of payment, which
payment shall be made within 30 days of the arbitration award.
3.3 Prepaid Items. In addition to the Purchase Price to be paid by
M-S-R to PNM at the Purchase Closing, M-S-R shall pay PNM an amount equal to
PNM's cost of prepaid items properly allocable to the Ownership Interest as
reflected on PNM's books as of the date of the Purchase Closing. The
representative items for reimbursement are shown on Exhibit F. The Parties
agree that an estimate of five million one hundred thousand dollars
($5,100,000) shall be used as the cost of such prepaid items to be paid at
the Purchase Closing. As soon after the Purchase Closing as practicable, but
no later than 9O days thereafter, the actual cost of such prepaid items as of
the date of the Purchase Closing shall be determined and, if the actual cost
of the prepaid items is higher than $5,100,000, M-S-R shall reimburse PNM
for the difference, plus interest at the rate quoted by Irving Trust
Company, as the prime rate of interest as of the date of the Purchase Closing
from the date of the Purchase Closing to the date of payment, which shall
be within 30 days after the determination of the actual cost of prepaid
items. If the actual cost of the prepaid items is less than $5,100,000, PNM
shall reimburse M-S-R for the difference, plus interest at the rate quoted by
Irving Trust Company, as the prime rate of interest as of the date of the
Purchase Closing from the date of the Purchase Closing to the date of payment
which shall be within 30 days after the determination of the actual cost of
the prepaid items. M-S-R shall be entitled to all rights, titles and
interest associated with such prepaid items and shall be entitled to audit
PNM's books regarding the cost of the prepaid items.
3.3.1 In the event M-S-R disputes the costs of prepaid items as
determined by PNM, the audit, arbitration, refund, and payment provisions of
Section 3.2.1 hereof shall apply.
SECTION 4
POWER SALES ARRANGEMENT
4.1 From and after the Purchase Closing through April 30, 1995, M-S-R
shall sell to PNM, and PNM shall purchase from M-S-R, seventy-three and
fifty-three/one hundredths percent (73.53%) of the capacity available from
the Ownership Interest and the energy associated therewith, for delivery to
PNM at the San Juan Unit 4 step-up transformer.
4.2 For the capacity and energy referred to in Section. 4.1 hereof, PNM
shall pay M-S-R monthly a sum comprised of a reservation fee ("Reservation
Fee"), a demand charge ("Demand Charge"), and an energy charge ("Energy
Charge"). The Demand and Energy Charges shall be equal to all of the
operation, and maintenance and total costs associated with the seventy-three
and fifty-three/one hundredths percent (73.53%) of the Ownership
Interest, including but not limited to: (i) all costs of fuel, water,
materials, supplies and equipment, and (ii) any other charges of whatever
kind, type, nature, or number which relate in any way to M-S-R's Ownership
Interest pursuant to the San Juan Project Agreements, including all costs to
M-S-R required to be borne by M-S-R under Section 21 of the Operating
Agreement. The Demand Charge shall also include a monthly amount equal to
one-twelfth (1/12) of the annual levelized debt service cost of all Capital
Betterments, Capital Additions and Capital Replacements ("Capital
Improvements") incurred after the Purchase Closing and chargeable to M-S-R's
Ownership Interest provided that any cost included in the Reservation Fee
shall not be duplicated in the Demand Charge. Such fee and charges are
further described as follows:
4.2.1 Reservation Fee. PNM shall pay M-S-R a monthly Reservation Fee
(in addition to the other charges set forth in this Section 4) of one
million nine hundred thousand eight hundred seventy-three dollars
($1,900,873) per month. Except as provided elsewhere herein, no adjustments
shall be made to the Reservation Fee.
4.2.1.1 The Reservation Fee set forth in Section 4.2.1 hereof shall be
adjusted within twenty (20) days after the actual Purchase Price and cost
of the prepaid items have beer determined as provided in Section 3 hereof.
The Reservation. Fee shall be adjusted as follows: (i) The Reservation Fee
shall be first adjusted ("First Adjustment"), either upward or downward, to
account for the difference between the estimated and actual Purchase Price
and cost of the prepaid items as of the date of Purchase Closing. The First
Adjustment shall be made by multiplying $1,900,873 by a fraction, the
numerator of which is the sum of the actual Purchase Price and cost of
prepaid items, multiplied by 1.03 and the denominator of which is one hundred
eighty million four hundred forty six thousand nine hundred sixteen dollars
($180,446,916). (ii) In addition to the First Adjustment calculated above,
a one-time lump sum payment shall be made by PNM or M-S-R, as the case may
be, within thirty (30) days of the determination of the First
Adjustment; said lump sum payment shall equal the difference between the
Reservation Fee as adjusted in Section 4.2.1.1(i) and $1,900,873, multiplied
by the number of monthly Reservation Fee payments previously made by PNM plus
interest at the rate quoted by Irving Trust Company as the prime rate of
interest as of the date of the Purchase Closing from the date of each
Reservation Fee payment to the date of payment pursuant to Section 4.2.1.1
(ii). (iii) The First Adjustment Reservation Fee as calculated in
4.2.1.1(i) shall be subsequently adjusted upward to reflect any additional
costs to complete the San Juan Project allocable to the Ownership Interest,
as provided in section 3.1 hereof, paid by M-S-R after the Purchase Closing.
Said adjustment shall be made by multiplying $1,900,873 by a fraction, the
numerator of which shall be 1.03 multiplied by the sum of (a) the actual
Purchase Price, (b) the actual cost of prepaid items, (c) any additional
costs to complete the San Juan Project allocable to the Ownership Interest
and (d) interest accrued during construction on any such additional
costs, at an annual rate of 9.75 percent, and the denominator of which is
$180,446,916. Such subsequent adjustment to the Reservation Fee shall be
made as soon as practicable after the construction work has been completed.
(iv) The Reservation Fee shall be adjusted pursuant to the partial
termination provisions of Section 4.3 hereof.
4.2.1.2 The Reservation Fee set forth herein shall be in effect through
April 30, 1995, but shall be subject to readjustment downward prior to
that date to reflect the net effect of any refunding by M-S-R of the
San Juan Project Revenue Bonds, Series "A" issued in June 1983 and any
bonds, notes or other evidences of indebtedness ("Bonds") issued to replace
the refunded bonds. Such downward adjustment shall be calculated by
multiplying the Reservation Fee (as adjusted by Section 4.2.1.1 hereof but
without any adjustment under this subsection) by a fraction, the
numerator of which is the effective composite interest rate of any refunding
Bonds and the outstanding San Juan Project Revenue Bonds, Series "A" (or
any outstanding prior series of any earlier refunding Bonds) and the
denominator of which is the effective composite interest rate of the San Juan
Project Revenue Bonds, Series "A." The effective composite interest rate
for the San Juan Project Revenue Bonds, Series "A" is 9.754275 percent.
4.2.2 Demand Charge. PNM shall pay M-S-R a monthly Demand Charge
consisting of an amount of sum equal to the sum of (i) seventy-three and
fifty-three one/hundredths percent (73.53%) of M-S-R's total monthly
expenses for operation, maintenance (excluding fuel) and taxes directly
associated with the Ownership Interest, (ii) a monthly administrative and
general expense of four thousand dollars ($4,000), (iii) one-twelfth (1/12)
of the annual levelized debt service cost of all Capital Improvements
incurred after the Purchase Closing and allocable to the Ownership Interest,
calculated using PNM's book basis life of such Capital Improvements, and
directly associated with the Ownership Interest, and (iv) one twelfth (1/12)
of the total annual insurance expenses incurred by M-S-R and associated with
the Ownership Interest. Provided, however, that in the event such total
insurance expenses in any one year exceed the greater of six hundred thousand
dollars ($600,000) or the Adjusted Premium Amount, as defined in Section
4.2.2.3 hereof, the Demand Charge shall include only such portion of said
excess amount as is determined by multiplying said excess amount by a
fraction, the numerator of which shall be the capacity available from the
Ownership Interest which is purchased by PNM for said year and the
denominator of which shall be the total capacity available from the Ownership
Interest.
4.2.2.1 Taxes as used herein shall include payments made by M-S-R "in
lieu of ad valorem taxes" pursuant to Section 3-24-9 NMSA 1978, as
presently in effect or hereafter amended from time to time, gross receipts,
privilege, franchise, excise or any other taxes or assessments (whether or
not evidenced by a lien), license fees or permit fees imposed on or in
relation to the Ownership Interest by the State of New Mexico or any
political subdivision thereof.
4.2.2.2 The annual levelized debt service cost of all Capital
Improvements shall be determined on the assumption that M-S-R borrows money
to pay such costs and repayment is made on a level debt service basis,
without contingency or reserve requirements, over the remaining useful life
of the Capital Improvements (or life of the plant, whichever is less) with
levelized monthly principal and interest payments. The assumed interest rate
shall be that which M-S-R would have paid had tax exempt revenue bonds been
issued, as such rate is determined by a municipal bond underwriter
satisfactory to M-S-R and PNM, the decision of which shall be final.
4.2.2.3 The "Adjusted Premium Amount," as used herein, shall reflect
increases and decreases in the cost of living, based on the Consumer Price
Index "All Items Category," as published by the United States
Department of Labor (the "Index"). The Adjusted Premium Amount shall be
the product obtained by multiplying $600,000 by a fraction, the numerator of
which shall be the Current Index, as hereinafter defined, and the
denominator of which shall be the Base Index, as hereinafter defined.
The Current Index shall be the Index figure prevailing on December 31st
of the year immediately preceding the calendar year for which the
determination is
being made. The Base Index shall be the Index figure prevailing on December
31, 1983.
4.2.3 Energy Charge. PNM shall pay M-S-R a monthly Energy Charge
consisting of an amount of money equal to the total fuel expenses, any
variable operation and maintenance expenses, and any export or similar taxes
lawfully due, all as associated with PNM's scheduling of energy from the
seventy-three and fifty-three/one hundredths percent (73.53%) of the
Ownership Interest, as billed to M-S-R by the Operating Agent. All operation
and maintenance charges associated with the seventy-three and
fifty-three/one hundredths percent (73.53%) of the Ownership Interest not
included in the Demand Charge shall be included in the Energy Charge.
4. 2.1 Any operation, maintenance or other cost associated with the
73.53%, of the Ownership Interest of whatever kind, type, nature or number
which has not heretofore been expressly allocated to the Demand Charge or
Energy Charge, shall be allocated to the Demand Charge if it is fixed by
nature, or shall be allocated to the Energy Charge if it is variable by
nature.
4.3 M-S-R's obligation to sell such power and energy to PNM shall
terminate on April 30, 1995; however, at any time and upon at least three (3)
years' advance written notice to PNM, M-S-R may partially terminate its
obligation to make power sales to PNM, in any amount up to 32 megawatts, such
termination to be effective as of May 1 of the year specified by M-S-R in
said notice. Effective with any such partial termination, the amount of
the Reservation Fee, as adjusted pursuant to Sections 4.2.1.1 and
b.2.l.2 hereof, shall be reduced by twenty percent (20%). Additionally,
such Reservation Fee, after being reduced by twenty percent (20%), shall
be reduced by multiplying the Reservation Fee by a fraction, the numerator
of which shall be the capacity available from the 0wnership Interest then
being purchased by PNM and the denominator of which shall be the total
capacity available from the Ownership Interest. Effective with any such
partial termination, the obligation of PNM to pay the Demand Charge pursuant
to Section 4.2.2 hereof shall be proportionately reduced, the amount of
such revised payments to be proportionate to the percentage of the
capacity available to PNM from the Ownership Interest. Effective with any
such partial termination, the obligation of PNM to pay the Energy Charge
pursuant to Section 4.2.3 hereof shall continue to be proportionate to the
percentage of energy scheduled to PNM from the Ownership Interest.
4.4 PNM shall be obligated to make the payments set forth in
Section 4.2 hereof whether or not San Juan Unit 4 is completed, operable
operating not withstanding the suspension, interruption, interference,
reduction, curtailment or unavailability of the output of San Juan Unit 4 for
any reason whatsoever in whole or in part, including Uncontrollable Forces as
described in Section 38 hereof, unless such San Juan Unit 4 has been
inoperable or unavailable for operations ("out of service") for a period
greater than two thousand four hundred (2,400) consecutive hours, in which
case, PNM's obligations to make any payment under Section 4.2.1 and 4.2.2
hereof on the two thousand four hundred and first (2,401st) consecutive hour
shall be suspended for such period as San Juan Unit 4 remains out of service.
All payments due by PNM to M-S-R for the month in which the two thousand four
hundred and first (2,401st) consecutive hour in which San Juan Unit 4 is out
of service shall be prorated, and M-S-R shall be paid in full for the
prorated period preceding the two thousand four hundred and first
(2,40lst) consecutive hour. PNM's obligations to make payments shall resume
when required testing procedures, based upon the customary standards of the
electric utility industry, have been completed and San Juan Unit 4 is again
operable or available for operation. In the event San Juan Unit 4 is out of
service, PNM as Operating Agent shall act with due diligence to carry out
repairs and tests necessary to render San Juan Unit 4 again operable or
available for operation as expeditiously as possible. Such payment shall be
prorated by hour for the first month of service based upon the period in
which the unit is again operable or available for operation.
4.5 PNM shall pay the Reservation Fee to M-S-R on or before the 25th day
of each month, commencing in the month following the Purchase Closing. The
first payment shall include an additional payment based on a proration of the
Reservation Fee from the Purchase Closing through the end of the month in
which the Purchase Closing takes place. All other payments due M-S-R, under
this Section 4 shall be netted monthly against all costs and expenses due PNM
as Operating Agent by M-S-R for such month, with the exception of (i) such
expenses as are attributable to the marketing of Brokerage Energy under
Service Schedule B of the Interconnection Agreement, which PNM shall
advance funds for and charge against the balancing account as provided
therein, (ii) costs incurred in connection with advances during construction
for costs of Project Work as referred to in Section 9 of the Construction
Agreement and (iii) costs incurred in connection with expenditures for
Capital Additions, Capital Betterments and Capital Replacements, as referred
to in Section 15 of the Operating Agreement, said agreements being referred
to in Section 5.1 hereof. The accounting period shall be a calendar month.
For record keeping and billing purposes, the Parties shall develop mutually
agreeable provisions for issuing and paying net billed amounts on a monthly
basis.
4.6 The power sales arrangement described in Section 4 hereof is a sale
by M-S-R to PNM of electric power and energy. M-S-R does not intend, and
nothing in this Agreement shall be construed to mean, that M-S-R is
distributing, selling, or furnishing electric power and energy to or for the
public in New Mexico.
<PAGE>
SECTION 5
SAN JUAN PROJECT AGREEMENTS
5.1 Existing PNM-TEP Agreements. The Parties recognize that the San
Juan Project, as between PNM and TEP, is contractually governed by the
following agreements as amended: Co-Tenancy Agreement between PNM and TEP
dated February 15, 1972, as amended on May 16, 1979 ("Co-Tenancy Agreement");
and San Juan Project Operating Agreement between PNM and TEP dated December
21, 1973, as amended on May 16, 1979 ("Operating Agreement"); and (iii)
San Juan Project Construction Agreement between PNM and TEP dated July 1,
1969, as amended on May 16, 1979 ("Construction Agreement"). The above
referenced agreements are sometimes collectively referred to as the "San Juan
Project Agreements."
5.2 PNM/M-S-R Relationship. The relationship between PNM and M-S-R
with respect to San Juan Unit 4 shall be governed by this Agreement and the
Interconnection Agreement. M-S-R acknowledges that it is familiar with the
San Juan Project Agreements between PNM and TEP and that such Agreements
govern the activities of the San Juan Project. As between PNM and M-S-R,
where a specific provision of this Agreement is in conflict with a provision
with a provision in one or more of the San Juan Project Agreements, then the
provision of this Agreement shall govern.
<PAGE>
SECTION 6
AMENDMENTS TO SAN JUAN PROJECT AGREEMENTS
6.1 Prior to the Purchase Closing the Parties shall cause to be
prepared draft amendments to the San Juan Project Agreements to reflect M-S-
R's acquisition of the Ownership Interest.
SECTION 7
WARRANTIES AND REPRESENTATIONS
7.1 M-S-R hereby covenants, warrants, and represents to PNM as
follows: (i) M-S-R is a joint powers agency existing under the laws of the
State of California and has the requisite power and authority to purchase a
28.8 percent undivided ownership interest in San Juan Unit 4; (ii) the
execution, delivery and performance of this Agreement and the Interconnection
Agreement by M-S-R have been duly and effectively authorized by all requisite
action by M-S-R; (iii) M-S-R has full power and authority to execute this
Agreement and the Interconnection Agreement, and this Agreement and the
Interconnection Agreement have been duly executed and delivered by M-S-R and
constitute the valid and binding obligations of M-S-R enforceable in
accordance with their terms; (iv) no regulatory approval is required to be
obtained by M-S-R in connection with M-S-R's purchase of the Ownership
Interest (or if any regulatory approval is required, it will be duly
obtained prior to the Purchase Closing) but M-S-R takes no representation
or warranty regarding the NMPSC; (v) the execution and delivery of this
Agreement and the Interconnection Agreement and compliance with the
provisions hereof and thereof will not conflict with or constitute on the
part of M-S-R a breach of or a default under existing law, court or
administrative regulation, decree or order to which M-S-R is subject, or an
agreement, ordinance, indenture, mortgage, lease or other instrument by which
M-S-R is or may be bound; and (vi) there is no action, suit, proceeding,
inquiry; or investigation at law or in equity or before or by any public
board or body pending or, to M-S-R's knowledge, any basis therefor,
wherein an unfavorable decision, ruling or finding would have a material
adverse effect on the transactions contemplated by this Agreement or the
Interconnection Agreement.
7.2 PNM hereby covenants, warrants and represents to M-S-R as
follows: (i) PNM is a corporation duly organized, validly existing and in
good standing as a public utility under the laws of the State of New Mexico
and has corporate power and authority to own its undivided ownership interest
in San Juan Unit 4 and to carry on its business as it is presently being
conducted; (ii) the execution, delivery and performance of this Agreement
and of the Interconnection Agreement by PNM have been
duly and effectively authorized by all requisite corporate action;
(iii) PNM has full power and authority to execute this Agreement and the
Interconnection Agreement, and this Agreement and the Interconnection
Agreement have been duly executed and delivered by PNM and constitute the
valid and binding obligations of PNM enforceable in accordance with their
terms; (iv) PNM will have duly and validly obtained by the Purchase
Closing from the NMPSC and the Federal Energy Regulatory Commission
("FERC") all consents and approvals necessary to the execution, delivery, and
performance of this Agreement and the Interconnection Agreement, and all
releases, release of liens, mortgages, trusts, security agreements, financing
statements, waivers, consents, approvals, and other government or regulatory
orders or approvals, including the release (which may be delivered
simultaneously with the payment of the Purchase Price for the Ownership
Interest at the Purchase Closing) by Irving Trust Company under the PNM
Indenture of the Ownership Interest from the lien of such indenture,
necessary to the execution, delivery and performance of this
Agreement and of the Interconnection Agreement by PNM (v) the execution and
delivery of this Agreement and the Interconnection Agreement and compliance
with the provisions hereof and thereof will not conflict or constitute on the
part of PNM a breach of or a default under existing law, court or
administrative regulation, decree or order to which PNM is subject, or any
agreement, ordinance, indenture, mortgage, lease or other instrument by which
PNM is or may be bound; (vi) immediately prior to the Purchase Closing, PNM
will be the owner of the Ownership Interest and entitled to sell such
Ownership Interest to M-S-R; (vii) the title and conveyance of the Ownership
Interest from PNM to M-S-R will be at the Purchase Closing free and clear of
all taxes and assessments, liens, trusts, mortgages and encumbrances except
Permitted Encumbrances; and (viii) there is no action, suit, proceeding,
inquiry or investigation at law or in equity or before or by any public board
or body pending or, to PNM's knowledge, threatened against or affecting PNM,
or to PNM's knowledge, any basis therefor, wherein any unfavorable decision,
ruling or finding would have a material adverse effect on the transactions
contemplated by this Agreement or the Interconnection Agreement.
7.3 M-S-R and PNM each covenant, warrant and represent to each other
that they respectively will not take any action, or omit to take any action,
which would impair their ability to respectively covenant, warrant and
represent herein, and again as of the date of the Purchase Closing, that the
matters set forth in Sections 7.1 and 7.2 hereof are true in all material
respects as of such dates. M-S-R and PNM further covenant, warrant and
represent to each other that they respectively will use their best efforts to
prevent or correct any actions taken, or any omissions to act, by third
parties which would impair the Parties from respectively covenanting,
warranting and representing to each other herein, and again as of the
date of the Purchase Closing, that the matters set forth in Sections 7.1 and
7.2 hereof are true in all material respects as of such dates.
7.4 Subject to the provisions of Sections 7.3 hereof and any
changes contemplated thereunder, and subject to Section 38 hereof, M-S-R and
PNM shall again covenant, warrant, and represent, as of the date of the
Purchase Closing, that the matters set forth in Sections 7.1 and 7.2 hereof
respectively are true in all material respects.
SECTION 8
PURCHASE CLOSING
8.1 The Purchase Closing shall be held (i) on December 31, 1983, unless
said date is changed by the mutual written agreement of M-S-R and PNM, and
(Ii) at a location agreed to by M-S-R and PNM. At the Purchase Closing M-S-R
shall pay PNM, in the equivalent of immediately available funds, the
estimated Purchase Price as provided in Section 3.2 hereof and the estimated
cost of prepaid items as provided in Section 3.3 hereof; PNM shall execute
and deliver to M-S-R the Instrument of Sale and Conveyance and the Easement
and License; and PNM and M-S-R shall execute and deliver such other
agreements, documents and certificates as may be appropriate, including such
satisfaction and approval from TEP as the Parties shall agree may be
necessary; and counsel for PNM and M-S-R shall deliver the opinions of
counsel described in Exhibit D hereof.
SECTION 9
PURCHASE CLOSING CONDITIONS
9.1 Conditions to PNM Obligations Hereunder. All obligations of PNM
under this Agreement are subject to the fulfillment, prior to or at the
Purchase Closing, of each of the following conditions (or the waiver in
writing of such conditions by PNM):
9.1.1 PNM shall not have discovered any material error, misstatement or
omission in the representations and warranties as made by M-S-R in this
Agreement.
9.1.2 M-S-R's representations and warranties contained in this
Agreement shall be made again at and as of the time of the Purchase Closing,
and shall then be true in all material respects.
9.1.3 M-S-R shall have performed and complied with 211 agreements,
covenants and conditions required by this Agreement to be performed or
complied with by it prior to or at the Purchase Closing.
9.1.4 PNM shall have been furnished with 2 certificate of the President
or General Manager of M-S-R or such representative as may be designated by
the Commission of M-S-R, dated the date of Purchase Closing, certifying in
such detail as PNM may reasonable request to the fulfillment of the foregoing
conditions.
9.1.5 PNM shall have received all governmental and regulatory orders and
approvals, and all releases, release of liens, mortgages and encumbrances,
except Permitted Encumbrances, consents, and approvals, including the
release by Irving Trust Company under the PNM Indenture of the Ownership
Interest from the lien of such indenture, necessary to the execution,
delivery, and performance of this Agreement and the Interconnection
Agreement by PNM. The condition of this Section 9.1.5 shall not be
subject to waiver by PNM pursuant to Section 9.1 hereof, unless approved in
writing by M-S-R.
9.1.6 PNM shall have been provided with an opinion of counsel to M-
S-R that all requisite governmental and regulatory approvals necessary under
the laws of the State of California to the execution, delivery, and
performance of this Agreement and the Interconnection Agreement by M-S-R have
been obtained.
9.l.7 The total insurance expenses to be incurred by M-S-R and
associated with the Ownership Interest shall be acceptable to PNM.
9.2 Conditions to M-S-R's Obligations Hereunder. All obligations of
M-S-R under this Agreement are subject to the fulfillment, prior to or at the
Purchase Closing, of each of the following conditions (or the waiver in
writing of such conditions by M-S-R):
9.2.1 M-S-R shall not have discovered any material error, misstatement
or omission in the representations and warranties as made by PNM in this
Agreement.
9.2.2 PNM's representations and warranties contained in this Agreement
shall be made again at and as of the time of the Purchase Closing and shall
then be true in all material respects. The inability of PNM to make any
representation or warranty due to an Uncontrollable Force as defined in
Section 38 hereof, shall excuse M-S-R from its obligations at the Purchase
Closing.
9.2.3 PNM shall have performed and complied with all agreements,
covenants and conditions required by this Agreement to be
performed or complied with by it prior to or at the Purchase Closing.
9.2.4 M-S-R shall have been furnished with a certificate of duly
authorized Vice the Chairman of the Board or the President or President of
PNM dated the date of the Purchase Closing, (i) certifying in such
detail as M-S-R may reasonably request to the fulfillment of the foregoing
conditions, and (ii) stating that the descriptions of all real and personal
property referenced in the Instrument of Sale and Conveyance and the Easement
and License are true and correct, and that such documents in fact correctly
describe all of the Ownership Interest and related property and rights to
which M-S-R is entitled, for and in connection with the Ownership Interest,
and (iii) that the fixtures and personal property as to which an undivided
interest therein is transferred and conveyed to M-S-R as part of the
Ownership Interest are affixed to, or situated upon land owed or leased by
PNM and TEP as described in the Easement and License and the Instrument of
Sale and Conveyance and (iv) specifically describing each Permitted
Encumbrance then in existence, based upon such documents and inquiries as
are described in the certificate, and certifying that none of such
Permitted Encumbrances singly or in the aggregate materially adversely affect
the use of the Ownership Interest during the term of this Agreement. Such
certificate shall state that subparagraph (iv) of the certificate is given
and delivered solely for the information of M-S-R and that such subparagraph
(iv) shall not be quoted or relied upon by any third party for any purpose
whatsoever and that M-S-R accepts the certification expressed in subparagraph
(iv) with the express agreement that PNM makes no warranty to M-S-R
thereby.
9.2.5 M-S-R shall have received all governmental and regulatory
orders and approvals necessary to the execution, delivery, and performance of
this Agreement and the Interconnection Agreement by
M-S-R.
9.2.6 M-S-R shall have been provided with an opinion of counsel to
PNM that all governmental and regulatory orders and approvals, including
but not limited to the NMPSC and the FERC, and all releases, release of
liens, trusts, mortgages, and encumbrances, except permitted Encumbrances,
consents, and approvals, including the release by Irving Trust Company
under the PNM Indenture of the Ownership Interest from the lien of such
indenture, necessary to the execution, delivery, and performance of this
Agreement and the Interconnection Agreement have been obtained, and that as
to such governmental and regulatory orders and approvals no appeal has been
taken and the statutory periods for appeal have expired.
9.2.7 M-S-R shall have obtained extended outage insurance coverage, at
reasonable cost, as shall in the reasonable exercise of M-S-R's discretion be
adequate to cover any period of suspension of payment by PNM.
9.2.8 Amendments to the San Juan Project Agreements reflecting M-S-R's
acquisition of the Ownership Interest, which shall be reasonably
satisfactory to M-S-R, shall have been executed and delivered at or
before the Purchase Closing.
9.2.9 Endorsements shall have been obtained evidencing that M-S-R shall
have been added as an additional named insured on all of the policies of
insurance covering the San Juan Project and maintained by the Operating Agent
and the Project Manager, effective as of the Purchase Closing.
9.3 Obtaining Releases, Approvals, etc. Each Party covenants and
agrees to diligently pursue and to take all steps necessary to obtain all
required releases, release of liens, waivers or approvals from third
parties and all requisite governmental and regulatory approvals for the
consummation of the transactions contemplated by this Agreement and the
Interconnection Agreement.
9.4 PNM M-S-R Voting. It shall be a further condition to each Party's
performance of its obligations under this Agreement and the
Interconnection Agreement that, prior to or at the Purchase Closing,
mutually satisfactory modifications be made to the San Juan Project
Agreements and other agreements pertaining to the San Juan Project, as
necessary, providing that (i) M-S-R shall succeed as of the date of the
Purchase Closing to all of TEP's voting rights and rights of committee
participation as to matters relating solely to San Juan Unit 4; (ii) M-S-R
shall not be entitled to vote directly on matters which relate to other units
or common facilities of the San Juan Project, provided that TEP shall retain
voting rights for M-S-R with respect to matters involving, and not solely
related to San Juan Unit 4, with the obligation to consult with M-S-R on all
matters involving the San Juan Project which affect San Juan Unit 4; (iii)
is the event of disagreement among PNM, TEP, and M-S-R as to whether a matter
relates solely to San Juan Unit 4 or to other units or common facilities,
such determination shall be made by PNM and TEP under the Operating
Agreement; and (iv) as to matters relating solely to San Juan Unit 4, in the
event any committee established under any of the San Juan Project Agreements
fails to agree with respect to any matter relating solely to San Juan Unit
4 which such committee is authorized to determine, approve, or otherwise
act upon after a reasonable opportunity to do so, then the Project Manage or
the Operating Agent, as the case may be, shall be authorized and obligated to
take such action as in its discretion it deems to be necessary to the
successful and proper construction, operation, and maintenance of San Juan
Unit 4, pending the resolution of any such inability or failure to agree, by
arbitration or otherwise.
SECTION 1O
REPRESENTATIONS AND WARRANTIES REGARDING
CONDITION OF FACILITY
10.1 "AS IS" Sale. THE SAN JUAN UNIT 4 OWNERSHIP INTEREST IS TO BE SOLD "AS
IS" AND WHERE IS." PNM MAKES NO REPRESENTATION OR WARRANTY WHATSOEVER IN
THIS AGREEMENT, EXPRESS, IMPLIED OR STATUTORY, INCLUDING WITHOUT LIMITATION,
ANY REPRESENTATION OR WARRANTY AS TO THE VALUE, QUANTITY, CONDITION,
SALABILITY, OBSOLESCENCE, MERCHANTABILITY, FITNESS OR SUITABILITY FOR USE OR
WORKING ORDER OF ANY OF SAN JUAN UNIT 4, NOR DOES PNM REPRESENT OR WARRANT
THAT THE USE OR OPERATION OF SAN JUAN UNIT 4 WILL NOT VIOLATE PATENT,
TRADEMARK OR SERVICE MARK RIGHTS OF ANY THIRD PARTIES. M-S-R IS WILLING TO
PURCHASE THE SAN JUAN UNIT 4 OWNERSHIP INTEREST "AS IS" AND "WHERE IS" AND IN
ACCORDANCE WITH THE TERMS AND CONDITIONS OF THIS AGREEMENT. Notwithstanding
the foregoing, m-S-R shall have the benefit, in proportion to its interest in
San Juan Unit 4, of all manufacturers' and vendors' warranties (to the extent
such warranties are transferable or enforceable by PNM for M-S-R's benefit)
running to PNM in connection with the San Juan Unit 4 Ownership Interest.
10.2 Further Understanding Regarding AS IS Sale. NOTWITHSTANDING THE
FOREGOING IT IS EXPRESSLY UNDERSTOOD AND AGREED THAT: (i) PNM expressly
covenants and warrants that title to the San Juan Unit 4 Ownership
Interest will be at the date of Purchase Closing free from all former grants,
sales, taxes, assessments, liens, trusts, mortgages and encumbrances, except
for Permitted Encumbrances, and that PNM has not otherwise encumbered or
alienated such interest; and (ii) nothing contained herein shall be
construed to relieve PNM from its duties and obligations under the
Operating, Co-Tenancy and Construction. Agreements and hereunder.
SECTION 11
RELIANCE AND PLANNING BY PARTIES AND OBLIGATIONS
PRIOR TO PURCHASE CLOSING
11.1 M-S-R's Obligations. M-S-R recognizes that PNM will have to plan
its financial requirements and generating capacity requirements upon M-S-R's
acquisition of the Ownership Interest. In order to comply with its
obligations contained in this Agreement, M-S-R covenants and agrees that its
financial projections and planning will ensure that M-S-R will be, on the
date of the Purchase Closing, in a financial position to pay PNM for the
Ownership Interest.
11.2 M-S-R's Conduct of Business. M-S-R further covenants and agrees
that it will conduct its business in a manner consistent with the provisions
contained in Section 11.1 above so that the conveyance of the Ownership
Interest to M-S-R will occur, and to the extent permitted by law, will take
all action necessary to facilitate the conveyance of the Ownership Interest.
11.3 PNM's Obligations. PNM recognizes that M-S-R will make its
financial projections to be in a financial position to pay PNM for the
Ownership Interest. In order to comply with its obligations contained in
this Agreement, PNM hereby covenants and agrees that it will plan its
generating capacity to insure that on the date of the Purchase Closing, PNM
will have sufficient generating and reserve capacity (excluding any portion
of capacity of San Juan Unit 4 attributable to the Ownership Interest) to
satisfy its obligations to serve its customers.
11.4 PNM's Conduct of Business. PNM further covenants and agrees that
it will conduct its business in a manner consistent with the provisions
contained in Section 11.3 hereof, so that the conveyance of the Ownership
Interest to M-S-R will occur, and to the extent permitted by law, will take
all action necessary to cause the conveyance of the Ownership Interest to
M-S-R to occur.
11.5 PNM's Cooperation. In the event M-S-R issues additional Bonds in
connection with its acquisition or ownership or the Ownership
Interest, PNM agrees to cooperate with M-S-R in connection with the
offering and sale of such Bonds. Such cooperation shall be limited to the
following:
11.5.1 Preparing a report with respect to the facilities, operations,
status and agreements pertaining to the San Juan. Project (including San Juan
Unit 4) and with respect to PNM, for inclusion as an appendix in official
statements ("Official Statement"), which report shall include financial
statements, other financial and statistical data, a general description
of PNM's generation and transmission system and such additional information
with respect to PNM and its interest in the San Juan Project as may be
reasonably requested by M-S-R for purposes of the Official Statement.
11.5.2 Delivering to M-S-R on the date of execution ("Execution Date")
by M-S-R of each purchase contract for the sale of the Bonds to underwriters
or other purchasers of the Bonds (Purchasers") a Letter of Representation
addressed to M-S-R and such Purchasers, substantially in the form of Exhibit
"G" hereto.
11.5.3 Delivering to M-S-R on each closing date ("Closing Date")
for the sale of the Bonds a Certificate of the President or Vice President
or PNM substantially in the form of Exhibit "H" hereto.
11.5.4 Causing to be delivered to M-S-R on each Execution Date and each
Closing Date a letter, addressed to the Purchasers, of PNM's independent
public accountants, substantially in the form of Exhibit "I" hereto, so long
as the delivery of such a letter is permitted under the then existing
professional standards and guidelines of the accounting industry.
11.5.5 Causing to be delivered to M-S-R on each Closing Date an opinion
of counsel for PNM, addressed to the Purchasers, substantially in the form
of Exhibit "J" hereto.
11.5.6 Making available to M-S-R, its consultants and its counsel,
and the Purchasers and their counsel:
11.5.6.1 Such records and documents relating to the San Juan Project
and PNM as any of them may reasonably request in connection with due
diligence reviews of the information relating to the San Juan Project
and PNM contained in the Official Statement.
11.5.6.2 Senior technical and accounting personnel for the purpose of
explaining and discussing the information,
report, records and documents referred to in Section 11.5 hereof.
11.5.7 Upon written request of M-S-R, furnishing to M-S-R five (5)
copies of all reports filed during the 12-month period preceding the date
of the M-S-R request by PNM with the Securities and Exchange Commission on
forms 10-K, 1O-Q, and 8-K (or any forms hereafter adopted by said Commission
in replacement thereof) pursuant to Section 13 of the Securities Exchange
Act of 1934, as amended, plus five (5) copies of the PNM annual and
quarterly reports as sent generally to all PNM common shareholders.
11.6 Each Letter of Representation, opinion and Certificate, the form
of which is attached hereto, shall be modified to reflect conditions in
existence at the date of the Certificate, and PNM, if unable to deliver
any such document, after using reasonable efforts to do so, shall have no
liability to M-S-R for failure to so deliver any such document.
11.7 M-S-R agrees to pay all reasonable expenses of PNM and to
reimburse PNM for all fees and disbursements and reasonable out-of-pocket
expenses (including the reasonable fees of counsel to PNM) incurred by PNM in
connection with or related to compliance with the provisions of Section 11.5
hereof.
<PAGE>
SECTION 12
PNM AS OPERATING AGENT;
APPLICABILITY OF CERTAIN PROVISIONS
OF OPERATION AGREEMENT
12.l M-S-R recognizes that PNM is the Operating Agent, as that term is
defined in Section 5.31 of the Operating Agreement, for the San Juan Project,
including San Juan Unit 4.
12.2 PNM's responsibilities as Operating Agent to M-S-R as a
Participant are governed by Section 6.3 of the Operating Agreement, as such
Section may from time to time be amended.
12.3 M-S-R hereby appoints PNM as its agent, and PNM agrees to
undertake, as M-S-R's agent and as principal on its own behalf, upon the
terms and subject to the conditions as set forth in this Agreement, the
responsibility for the performance of Operating Work, as that term is defined
in Section 5.36 of the Operating Agreement, relating to San Juan Unit 4.
12.4 PNM's liability as agent for M-S-R under this Agreement and as
agent for M-S-R under any San Juan Project Agreement is expressly limited and
governed by Section 21 of the Operating Agreement as such section may be
amended from time to time.
12.5 After the Purchase Closing, the following provisions of the
Operating Agreement, as amended and as it may be amended from time to time,
except where a specific provision of this Agreement applies, shall govern San
Juan Unit 4 participation as between PNM and M-S-R, with the term
"Participant" as used in such provisions being deemed to include M-S-R as a
Participant in proportion to its ownership interest with PNM in San Juan Unit
4 for the purposes of this Section 12.5:
12.5.1 Section 7, "Coordination Committee," except that M-S-R will have
voting rights solely with respect to San Juan Unit 4 and will not have voting
rights related to other San Juan units and common facilities except through
TEP or its successors.
12.5.2 Section 8, "Engineering and Operating Committee," except
that M-S-R will have voting rights solely with respect to San Juan Unit 4 and
will not have voting rights related to other San Juan units and common
facilities except through TEP or its successors.
12.5.3 Section 9, "Auditing Committee," except that M-S-R will have
voting rights solely with respect to San Juan Unit 4 and will not have voting
rights related to other San Juan units and common facilities except through
TEP or its successors.
12.5.4 Section 10, "Payment of Expenses by Participants."
12.5.5 Section 12, "Materials and Supplies."
12.5.6 Section 13, "Emergency Spare Parts."
12.5.7 Section 14, "Annual Budgets."
12.5.8 Section 15, "Capital Additions, Capital Bettermentsand Capital
Replacements."
12.5.9 Section 16, "Operating Emergency."
12.5.10 Section 17, "Operation and Maintenance Expenses," except
wherein specific reference is to Switchyard Facilities, such as Section 17.3.
12.5.11 Section 18. "Fuel Costs."
12.5.12 Section 19, "Payment of Taxes."
12.5.13 Section 20, "Operating Insurance."
12.5.14 Section 21, "Liability."
12.5.15 Section 30, "Surplus or Retired Property."
12.5.16 Section 5, "Definitions," for definitions used ln other
sections of the Operating Agreement referenced herein, unless otherwise
defined herein.
12.6 After the Purchase Closing, all costs of Operating Work shall be
shared by the Parties pursuant to Section 16 hereof and shall be advanced by
them to the Operating Agent and disbursed and accounted for by it in
accordance with Section 12.5.4 hereof.
12.7 After the Purchase Closing, in the event PNM in the performance of
its duties pursuant to this Section 12 incurs any liability to any third
party, any amount paid by PNM on account of such liability shall be
considered a cost of Operating Work and apportioned between the Parties
pursuant to Section 12.6 hereof; provided, that M-S-R shall receive a
credit for its proportionate share of any insurance proceeds.
12.8 As to matters relating solely to San Juan Unit 4, in the event any
committee established under any of the San Juan Project Agreements fails to
agree with respect to any matter relating solely to San Juan Unit 4 which
such committee is authorized to determine, approve, or otherwise act
upon after a reasonable opportunity to do so, then the Project Manager or the
Operating Agent, as the case may be, is authorized and obligated to take such
action as in its discretion it deems to be necessary to the successful
and proper construction, operation, and maintenance of the San Juan
Project, pending the resolution of any such inability or failure to agree, by
arbitration or otherwise.
SECTION 13
APPLICABILITY OF CERTAIN PROVISIONS OF
CO-TENANCY AGREEMENT
13.1 After the Purchase Closing, the following provision of the Co-Tenancy
Agreement, as amended and as it may be amended from time to time, except
where a specific provision of this Agreement applies, shall govern San Juan
Unit 4 participation as between PNM and M-S-R, with the term "Participant" as
used in such provisions being deemed to include M-S-R as a participant, in
proportion to its ownership interest with PNM in San Juan Unit 4, for the
purposes of this Section 13:
13.1.1 Section 9, "Coordination Committee," except that M-S-R will have
voting rights solely with respect to San Juan Unit 4 and will not have voting
rights related to other San Juan units and common facilities except through
TEP or its successors.
13.1.2 Section 10, "Use of Facilities During Curtailments," as modified
by Section 17 hereof governing hazard sharing between TEP and M-S-R.
13.1.3 Section 11, "Waiver of Right to Partition."
13.1.4 Section 12, "Mortgage and Transfer of Participants' Interests.
13.1.5 Section 14. "Severance of Improvements From Leasehold."
13.1.6 Section 15, "Capital Additions, Capital Betterments, Capital
Replacements and Retirement of San Juan Project and Participants' solely
Owned Facilities."
13.1.7 Section 17, "Rights of Participants Upon Termination."
13.1.8 Section 24, "Covenants Running With The Land."
13.1.9 Section 5, "Definitions," for definitions used in other sections
of the Co-Tenancy Agreement referenced herein, unless otherwise defined
herein.
SECTION 14
ENTITLEMENT TO AND SCHEDULING OF
SAN JUAN UNIT 4 POWER AND ENERGY
14.1 The provisions of this Section 14 shall apply after the
Purchase Closing.
14.2 Except as set forth in Section 14.3 hereof, the following
provisions shall apply:
14.2.1 Each Party shall be entitled to Power and Energy, as said terms
are defined in Sections 5.39 and 5.17 respectively of the Operating
Agreement, from San Juan Unit 4 in proportion to its ownership interest in
San Juan Unit 4.
14.2.2 The Operating Agent shall keep M-S-R's system dispatcher
advised of the Available Operating Capacity, as that term is defined in
Section 5.3 of the Operating Agreement.
14.2.3 When a Participant's request for its share of Available Operating
Capacity necessitates the operation of a unit, each Participant in that
unit shall schedule for its account not less than its share of minimum Net
Generation, as that term is defined in Section 5.27 of the Operating
Agreement. If, however, a Participant has scheduled an amount of Power in
excess of its share of the Minimum Net Generation, the other Participants in
that unit shall be allowed to reduce their scheduled Power to an amount
that will maintain the unit at the Minimum Net Generation level.
14.2.4 The delivery of Power and Energy from San Juan Unit 4 shall be
scheduled in advance by each Participant in San Juan Unit 4 and accounted for
on the basis of integrated hourly actual generation, all in accordance with
operating procedures established in writing by the Engineering and Operating
Committee, as that term is defined in Section 5.18 of the Operating
Agreement. Such operating procedures shall provide for modifying such
schedules to meet the needs of day-to-day and hour-by-hour operation,
including emergencies on a Participant's system.
14.2.5 The Operating Agent shall, to the extent possible, generate
Power and Energy at the San Juan Project in accordance with schedules
submitted by each Participant in San Juan Unit 4, as such schedules may be
revised from time to time, as long as such schedules do not jeopardize the
operation of the San Juan Project. To the extent practicable, San Juan
Unit 4 shall be scheduled to operate as a base load generating unit.
14.3 During the period that PNM is purchasing Power and Energy from
M-S-R pursuant to the provisions of Section 4 hereof, PNM shall assume
M-S-R's scheduling responsibilities under this Section 14 with respect to
such Power and Energy as PNM purchases thereunder. Similarly, PNM shall
assume M-S-R's scheduling responsibilities under this Section 14 with
respect to any remaining portion of the Power and Energy available from the
Ownership Interest not purchased by PNM, for so long as such Power and
Energy is marketed by PNM on M-S-R's behalf in accordance with Service
Schedule B of the Interconnection Agreement.<PAGE>
SECTION 15
START-UP AND AUXILIARY POWER AND
ENERGY REQUIREMENTS
15.1 The provisions of this Section 15 shall apply
after the Purchase Closing.
15.2 Except as set forth in Section 15.3 hereof, each Party shall be
obligated to provide its share of start-up and auxiliary power and energy;
in proportion to its ownership interest in San Juan Unit 4. Advance
arrangements for start-up and auxiliary power and energy shall be made in
accordance with operating procedures established by the Engineering and
Operating Committee. Any supplementary arrangements which may be required to
facilitate M-S-R's supply of start-up and auxiliary power and energy shall be
made in accordance with procedures established by the Interconnection
Committee as that term is defined in Section 7 of the Interconnection
Agreement.
15.3 During the period that PNM is purchasing Power and Energy from
M-S-R pursuant to the provisions of Section 4 hereof, PNM; shall assume
M-S-R's start-up and auxiliary power and energy requirement responsibilities
under this Section 15 with respect to any such Power and Energy purchased by
PNM and to any remaining portion of the Power and Energy available from the
Ownership Interest not purchased by PNM for so long as such Power and Energy
is marketed by PNM on M-S-R's behalf in accordance with Service Schedule B of
the Interconnection Agreement.
SECTION 16
EXPENDITURES FOR SAN JUAN PROJECT CAPITAL BETTERMENTS,
CAPITAL ADDITIONS, CAPITAL REPLACEMENTS AND
COSTS OF OPERATING WORK
16.1 The provisions of Section 16 shall apply after the Purchase
Closing.
16.2 With respect to Capital Betterments, as defined in Section 5.6 of
the Operating Agreement, Capital Additions, as defined in Section 5.5 of the
Operating Agreement, Capital Replacements, as defined in Section 5.7 of the
Operating Agreement, and costs of Operating Work, the Parties agree that the
costs incurred by reason of this Agreement and the San Juan Project
Agreements shall be distributed as follows, with the exception of costs
associated solely with Switchyard Facilities for which M-S-R will bear no
cost responsibility:
16.2.1 Costs which are directly tied to San Juan Unit 4 shall be
charged in accordance with the percentage ownership of that unit.
16.2.2 Costs which are tied to groups of units common with San Juan Unit
4 shall be charged in proportion to the ownership interest in that group of
units.
16.3 The costs referred to in Section 16.2 hereof shall be
allocated in accordance with the Uniform System of Accounts established by
the Federal Energy Regulatory Commission.
SECTION 17
M-S-R-TEP HAZARD SHARING
17.1 The parties acknowledge that M-S-R and TEP have entered into an
agreement for the sole purpose of assisting them in reducing reserve
requirements. Such agreement provides that, commencing May 1, 1995, M-S-R
will assign to TEP for reserve purposes one-half of its generation
entitlement in San Juan Unit 4 and that TEP, in turn, will assign to M-S-R
for reserve purposes an equal amount of TEP's generation entitlement in San
Juan Unit 3. The acknowledgement in this Section shall not obligate PNM to
bear any substantial costs by reason of such M-S-R agreement with TEP.
SECTION 18
COAL SUPPLY
18.1 Coal Supply. PNM agrees that, after the Purchase Closing, the
supply of coal for M-S-R's ownership share of San Juan Unit 4 is to be
acquired by PNM as Operating Agent for M-S-R and will be provided under the
following terms:
18.1.1 The price M-S-R will pay PNM for coal will always be the price
paid by both PNM and TEP for coal required for their ownership shares of the
San Juan Project. Such pricing will be pursuant to the San Juan Project
Fuel Agreement in effect on the date of the Purchase Closing and as it may be
amended; provided, however, that no amendment shall thereafter be made that
is inconsistent with any of the principles noted in this Section 18.
18.1.2 The quality of the coal available to San Juan Unit 4 shall be the
same as that made available to San Juan Units 1, 2, and 3. Coal will be
priced uniformly with respect to all four units of the San Juan Project and
the availability of coal will be shared by all four units in proportion to
their generating capabilities.
18.1.3 Coal force majeure piles for the units shall be owned in
proportion to ownership in the units with the cost of coal in each pile
determined at the time the pile is established. M-S-R will carry its
proportionate share of any costs associated with any coal force majeure pile
or allocation thereof established for San Juan Unit 4.
SECTION 19
WATER SUPPLY
19.1 PNM agrees that, after the Purchase Closing, the supply of water
for the San Juan Project (including water for M-S-R's ownership share of San
Juan Unit 4 and water for any other Participant's ownership share in the San
Juan Units) is to be acquired by PNM as Operating Agent and will be provided
under the following terms:
19.1.1 The price M-S-R will pay PNM for water will always be the price
paid by both PNM and TEP for water required for their ownership shares of the
San Juan Project.
19.1.2 The quality of the water available to San Juan Unit 4 shall be
the same as that made available to San Juan Units 1, 2, and 3. Water will be
priced uniformly with respect to all four Units of the San Juan Project and
the availability of water will be shared by all four units in order that any
curtailment of generating capacity due to water shortage will be borne pro
rata by each unit.
SECTION 20
RIGHT OF M-S-R TO INSPECT AND AUDIT
20.1 It is expressly understood and agreed, notwithstanding any
provision contained herein or any provision in the San Juan Project
Agreements to the contrary, that M-S-R shall have the right, at reasonable
times and places, to inspect the premises of, and to audit any books or
records which in any way pertain to San Juan Unit 4 or the Ownership
Interest, including inspection and audit of any facilities or common
facilities which in any way affect the Ownership Interest. M-S-R shall have
such right, exercisable from time to time, upon fifteen (15) days notice to
PNM.
<PAGE>
SECTION 21
DEFAULTS
21.1 Each Party hereby agrees that it shall pay all moneys and carry
out all other duties and obligations agreed to be paid and/or performed by it
pursuant to all of the terms and conditions set forth and contained in this
Agreement.
21.2 In the event of a default by any Party in any of the terms and
conditions of this agreement, then, within ten (1O) days after written notice
has been given by the nondefaulting Party to the other Party of the existence
and nature of the default, the defaulting Party shall remedy such default
either by advancing the necessary funds and/or commencing to render the
necessary performance.
21.3 In the event or a default by a Party in any of the
terms and conditions of this Agreement, and the giving of notice
as provided in Section 21.2 hereof, the defaulting Party shall
take all steps necessary to cure such default as promptly and
completely as possible and shall pay promptly upon demand to
the nondefaulting Party the total amount of money, and/or the
reasonable equivalent in money of nonmonetary performance, if
any, paid and/or made by such nondefaulting Party in order to
cure any default by the defaulting Party, together with interest
thereon, to be calculated monthly, at the lesser of (i) the
prime lending rate established and last published or quoted by
Irving Trust Company or (ii) the maximum rate of interest
legally chargeable, from the date of payment by the
nondefaulting Party or from the date of completion of
performance of a disputed obligation to the date of payment by
the defaulting Party or from the date of completion of
performance of a disputed obligation to the date of
reimbursement by the defaulting Party.
21.4 In the event that a Party shall dispute the existence
or nature of a default asserted in a notice given pursuant to
Section 21.2 hereof, then such Party shall pay the disputed
payment or perform the disputed obligation, but may do so under
protest. The protest shall be in writing, shall accompany the
disputed payment or precede the performance of the disputed
obligation, and shall specify the reasons upon which the protest
is based. Copies of such protest shall be mailed by such Party
to the other Party. Payments not made under protest shall be
deemed to be correct, except to the extent that periodic or
annual audits may reveal over or underpayments by a Party,
necessitating adjustments. In the event it is determined by
arbitration, pursuant to the Provisions of this Agreement or
otherwise, that a protesting Party is entitled to a refund of
all or any portion of a disputed payment or payments or is
entitled to the reasonable equivalent in money of nonmonetary
performance of a disputed obligation theretofore made, then,
upon such determination, the nonprotesting Party shall pay such
amount to the protesting Party, together with interest thereon,
to be calculated monthly, at the lesser of (i) the prime lending
rate established and last published or quoted by Irving Trust
Company, or (ii) the maximum rate of interest legally
chargeable, from the date of payment by the protesting Party or
from the date of completion of performance of a disputed
obligation to the date of reimbursement by the nonprotesting
Party.
21.5 Unless otherwise determined by a board of arbitrators,
in the event a default by any Party in the payment or
performance of any obligation under this Agreement shall
continue for a period of six (6) months or more without having
been cured by the defaulting Party or without such Party having
commenced or continued action in good faith to cure such
default, or in the event the question of whether an act of
default exists becomes the subject of arbitration pursuant to
Section 22 hereof, and such act of default continues for a
period of six (6) months following a final determination by a
board of arbitrators or otherwise that an act of default exists
and the defaulting Party has failed to cure such default or to
commence such action during said six (6) month period, then, at
any time thereafter and while said default is continuing, the
nondefaulting Party, by written notice to the defaulting Party,
may suspend the right of the defaulting Party (i) to be
represented on and participate in the actions of any committee,
and (ii) to receive all or any part of its proportionate share
of Power and Energy, in which event:
21.5.1 During the period that such suspension is in effect,
the nondefaulting Party (i) shall bear all of the operation
and maintenance costs, insurance costs, and other expenses
otherwise payable by the defaulting Party under this Agreement,
and (ii) shall be entitled to schedule and receive for its
account the generation entitlement of the defaulting Party.
21.5.2 A defaulting Party shall be liable to the
nondefaulting Party for all costs and expenses, less associated
fuel costs, incurred by such nondefaulting Party pursuant to
Section 21.5.1 hereof.
21.5.3 The suspension of a defaulting Party shall be ter-
minated and its full rights hereunder restored when all of its
defaults have been cured and all costs, less associated fuel
costs, incurred by the nondefaulting Party pursuant to
Section 21.5.1 hereof have been paid by the defaulting Party or
other arrangements suitable to the nondefaulting Party have been
made.
21.6 In addition to the remedies provided for in Section
21.5 hereof, the nondefaulting Party may, in submitting a
dispute to arbitration in accordance with the provision of
Section 22 hereof, request that the board of arbitrators
determine what additional remedies may be reasonably necessary
or required under the circumstances which give rise to the
dispute. The board of arbitrators may determine what remedies
are necessary or required in the premises, including but not
limited to the conditions under which San Juan Unit 4 may be
operated economically and efficiently during the period when
the defaulting Party's right to receive its proportionate share
of Power and Energy is suspended.
SECTION 22
DISPUTES; ARBITRATION
22.1 In the event that a dispute between the Parties should
arise under this Agreement, except for a dispute regarding the
Purchase Price or the cost of prepaid items, which shall be
subject to the provisions of Sections 3.2 and 3.3 hereof, such
dispute shall first be submitted to the PNM and M-S-R members on
the Engineering and Operating Committee for resolution. In the
event these two members are unable to resolve such dispute
within, ninety (90) days after submission, the dispute shall be
referred ln writing for resolution to the President or a Vice
President designated by PNM and the General Manager of M-S-R, or
his designee. If such dispute has not been resolved within
thirty (30 days after the referral made by either Party, either
Party may thereafter call for submission of such dispute to
arbitration in the manner hereinafter set forth, which call
shall be binding upon the Parties.
22.2. The Party calling for arbitration shall give written
notice to the other Party, setting forth in such notice in
adequate detail the nature of the dispute, the amount or
amounts, if any, involved in such dispute, and the remedy
sought by such arbitration proceedings, and, within twenty (20)
days from receipt of such notice, the other Party may, by
written notice to the first Party, prepare its own statement of
the matter at issue and set forth in adequate detail
additional related matters or issues to be arbitrated.
Thereafter, the Party first submitting its statement of the
matter at issue shall have ten (10) days in which to submit a
rebuttal statement.
22.3 Within ten (10) days following the submission of the
rebuttal statement, if any, or if none is submitted, then not
later than forty (40) days after the initial notice, the Parties
shall meet for the purpose of selecting arbitrators. Each
Party shall designate an arbitrator. The arbitrators so
selected shall meet within twenty (20) days following their
selection and shall select one additional arbitrator. If the
arbitrators selected by the Parties, as herein provided, shall
fail to select such additional arbitrator within said twenty
(20) day period, then the arbitrators shall request a list of
arbitrators from the American Arbitration Association (or
similar organization if the American Arbitration Association
should not at that time exist) who are qualified and eligible to
serve as hereinafter provided. The arbitrators selected by the
Parties shall take turns striking names from the list of
arbitrators furnished by the American Arbitration Association
and the last name remaining on said list shall be the additional
arbitrator. In the event that the dispute between the Parties
concerns the Purchase Price, each Party shall designate an
arbitrator from among the accounting firms known as the Big
Eight. The arbitrators so selected shall meet within (20) days
following their selection and shall select one additional
arbitrator from among the Big Eight accounting firms. If the
arbitrators selected by the parties shall fail to select such
additional arbitrator within said twenty (20) day period, then
the arbitrators selected by the Parties shall select such
additional arbitrator by taking turns striking names from the
list of Big Eight accounting firms and the last firm remaining
shall be the additional arbitrator. The arbitrators shall be
persons skilled and experienced in the field which gives rise to
the dispute and no person shall be eligible for appointment as
an arbitrator who is an officer, employee or otherwise
interested in any of the Parties to the dispute or in the matter
to be arbitrated.
22.4 The arbitrators shall hear evidence submitted by the
respective parties and may call for additional information,
which additional information shall be furnished by the Parties
having such information. The decision of a majority of the
arbitrators shall be binding upon both the Parties.
22.5 This agreement to arbitrate shall be specifically
enforceable and the award of the arbitrators shall be final and
binding upon the Parties to the extent provided by the laws of
the State of New Mexico. Any award may be filed with the clerk
of any court having jurisdiction over the Parties or either of
them against whom the award is rendered, and, upon such filing,
such award, to the extent permitted by the laws of the
jurisdiction in which the award is filed, shall be
specifically enforceable or shall form the basis of a
declaratory judgment or other similar relief.
22.6 The fees and expenses of the arbitrators shall
be shared equally by the Parties unless the decision of the
arbitrators shall specify some other apportionment of such fees
and expenses. All other expenses and costs of the arbitration
shall be borne by the Party incurring the same.
22.7 In the event that either Party shall attempt to
institute or to carry out the provisions herein set forth in
regard to arbitration, and such Party shall not be able to
obtain a valid and enforceable arbitration decree, such Party
shall be entitled to seek legal remedies in a court having
jurisdiction in the premises, and the provisions in this
Agreement referring to decisions of a board of arbitrators shall
be then deemed applicable to final decisions of such court.
SECTION 23
RIGHTS TO SAN JUAN SWITCHYARD
23.1 PNM acknowledges that the Sale of Option Agreement
between TEP and M-S-R dated November 29, 1982, entitles M-S-R to
use TEP's rights in the Switchyard Facilities at the San Juan
Switchyard in order to use or make available to third parties
at the San Juan Switchyard up to 144 megawatts of
capacity.
SECTION 24
RIGHT TO BRING IN AN ADDITIONAL TRANSMISSION LINE
24.1 M-S-R represents to PNM that TEP has agreed to provide
for the termination of an M-S-R transmission line within the San
Juan Switchyard. PNM consents to such a transmission line
connecting to the San Juan Switchyard, subject to the following:
24.1.1 All work performed within the San Juan Switchyard
will be done by PNM, as the Project Manager as that term is
defined in Section 5.41 of the Operating Agreement, or a
contractor approved by PNM.
24.1.2 All plans and specifications for work within the San
Juan Switchyard will be submitted to the Engineering and
Operating Committee by TEP.
24.1.3 All costs and expense of the interconnection
and related work will be paid for by M-S-R.
24.1.4 The interconnection will be made in accordance with
the conditions of Section 15.5 of the Co-Tenancy Agreement;
except, however, that PNM agrees that it will not, through its
Engineering and Operating Committee representative or
otherwise, impose the availability of space within the
switchyard or interference with expansion plans at the San Juan
Site as a limiting condition(s) to its approval of the
termination of the M-S-R transmission line.
24.2 The Parties recognize that the interconnection of
the M-S-R transmission line with the San Juan Switchyard may
require additional agreements concerning the shares of operation
and maintenance costs in the switchyard, use of the Switchyard
Facilities, and the allocation of applicable costs of
construction for Switchyard Facilities as may be required to
assure safety and stability of the switchyard. PNM agrees to
grant to M-S-R by separate instrument an easement, in, on, over,
under, along and across the San Juan Switchyard and San Juan
Project lands (to the extent PNM has a lawful right to make such
a grant), without cost or charge, for the construction,
operation and maintenance of an M-S-R transmission line, for
the term of this Agreement, in such convenient location, and of
such reasonable length and width, to carry out the purpose of
this Section 24. Such easement shall be executed in recordable
form and timely delivered by PNM to M-S-R so as not to delay the
commencement of construction after approval of the design by the
Engineering and Operating Committee.
SECTION 25
RISK OF LOSS PRIOR TO PURCHASE CLOSING
25.1 In the event San Juan Unit 4 should be destroyed,
damaged or condemned prior to the Purchase Closing, the
Parties hereto and Farmington shall jointly determine whether
to repair, restore, or reconstruct the damaged, destroyed or
condemned facility. Should M-S-R elect not to participate ln
the repair, restoration, or reconstruction of the damaged,
destroyed, or condemned facility, then this Agreement shall
thereupon terminate; the Purchase and Participation
Agreement, as amended, shall be terminated (and shall not
thereafter become effective notwithstanding the provisions of
Section 1.1 hereof); and PNM or Farmington, or both, shall be
entitled to proceed in such manner as it or they may determine.
Should the Parties elect to repair, restore, or reconstruct the
damaged, destroyed or condemned facility, and should
construction be underway on the date set for the Purchase
Closing, the Purchase Closing shall occur without postponement.
25.2 Before the Purchase Closing, M-S-R shall purchase and
maintain such insurance as it determines necessary to insure
against the risk of loss to its interests by damage to, or
destruction of, San Juan Unit 4. Any such insurance shall
contain a waiver of subrogation in favor of PNM, and its
insurers, with provisions reasonably acceptable to PNM. By
requiring such waiver of subrogation it is not the intent of the
Parties to modify the provisions of Section 12.4 of this
Agreement. Upon the Purchase Closing, PNM shall cause M-S-R to
be added as an additional named insured on each of the Insurance
policies provided under the San Juan Project Agreements.
SECTION 26
DESTRUCTION, DAMAGE OR CONDEMNATION OF SAN JUAN UNIT 4
AFTER PURCHASE CLOSING
26.1 Notwithstanding any provision to the contrary in the
San Juan Project Agreements and subject to the provisions of
Section 25 hereof, the provisions of this Section 26 shall
govern San Juan Unit 4 after the Purchase Closing. For the
purpose of this Section 26, "Parties" shall include Farmington.
26.2 If all, or substantially all, of San Juan Unit 4
should be destroyed, damaged or condemned, then the Parties may
elect to repair, restore, or reconstruct the damaged, destroyed,
or condemned facilities in such a manner as to restore the
facilities to substantially the same general character or use as
the original, or to such other character or use as the Parties
may then mutually agree. In the event of such election, it
shall be the obligation of the Parties to pay for the costs of
such repair, restoration, or reconstruction, to the extent not
covered by insurance or condemnation proceeds, in accordance
with the percentage ownership interests of the respective
Parties in such facilities, and, upon completion thereof, the
Parties' rights, titles, and interests therein shall be as
provided in this Agreement.
26.3 In the event of an election by the Parties not to
repair, restore, or reconstruct the damaged, destroyed, or
condemned facilities, the proceeds from any insurance or from
any award shall be distributed to the Parties in accordance
with the respective percentage ownership interests in and to
such facilities. The facilities not destroyed, damaged, or
condemned shall be disposed of by the Parties in a manner to be
mutually agreed upon, and the proceeds from such disposition
shall be distributed in accordance with the percentage ownership
interests of the respective Parties in such facilities.
26.4 In the event the Parties cannot agree to repair,
restore, or reconstruct the damaged, destroyed, or condemned
facilities, then the Party or Parties electing to restore,
reconstruct, or repair may do so at its or their own expense
providing that payment at salvage value is first made to the
withdrawing Party or Parties. In such event the withdrawing
Party or Parties shall have no further obligation or benefit
under this Agreement, except for obligations incurred prior to
such withdrawal.
26.5 In the event that less than substantially all of San
Juan Unit 4 is destroyed, damaged, or condemned, then it shall
be the obligation of the Parties to repair, restore, or
reconstruct the damaged, destroyed, or condemned equipment and
facilities in such a manner as to restore such equipment and
facilities to substantially the same general character or use as
existed prior to the destruction, damage, or condemnation. Each
Party shall be obligated to pay its proportionate share of the
costs of such repair, restoration, or reconstruction to the
extent not covered by insurance or condemnation proceeds.
<PAGE>
SECTION 27
CONSISTENCY OF TERMS
27.1 The terms and provisions of this Agreement, together
with documents attached hereto as Exhibits, and any amendments
hereto, shall be read in pari materia and are to be construed as
a whole. If any term or provision is found to be illegal or
inconsistent or incompatible with the provisions as a whole,
said provision is hereby eliminated and the remaining provisions
are to remain in full force and effect; provided, however, that
if the absence of the eliminated provision substantially renders
this agreement destructive of the original intentions of the
Parties, the Parties agree to negotiate in good faith to amend
this Agreement in order to restore to the maximum extent
practicable the original intentions of the Parties.
SECTION 28
RELATIONSHIP OF PARTIES
28.1. The covenants, obligations, and liabilities of the
Parties are intended to be several and not joint or collective,
and nothing herein contained shall ever be construed to create
an association, joint venture, trust, or partnership, or to
impose a trust or partnership covenant, obligation, or liability
on or with regard to one or both of the Parties. Each Party
shall be individually responsible for its own covenants,
obligations, and liabilities as herein provided. No Party
shall be under the control of or shall be deemed to control any
other Party or the Parties as a group. No Party shall be the
agent of or have a right or power to bind any other Party
without its express written consent, except as expressly
provided in this Agreement or the Interconnection Agreement.
28.2. After the Purchase Closing, the Operating Agent shall
be the agent of the Parties and shall exercise in good faith
such authority as is conferred upon the Operating Agent by this
Agreement.
28.3. The Parties hereby elect to be excluded from the
application of Subchapter K of Chapter 1 of Subtitle A of the
Internal Revenue Code of 1954, or such portion or portions
thereof as may be permitted or authorized by the Secretary of
the Treasury or his delegate insofar as such Subchapter, or any
portion or portions thereof, may be applicable to the Parties
under this Agreement.
28.4. PNM, as agent for M-S-R and Operating Agent, will use
prudent utility practice in operation and maintenance of the San
Juan Project, specifically including San Juan Unit 4, and shall
keep M-S-R fully informed as to the operation and
maintenance of the San Juan Project insofar as the same affects
San Juan Unit 4.
SECTION 29
SECTION HEADINGS
29.1 The headings to each section of this Agreement are for
reference only and are not to be read as a part of this
Agreement.
SECTION 30
AMENDMENTS
30.1 This Agreement shall not be amended except by written
instrument executed by both Parties.
SECTION 31
GOVERNING LAW
31.1 This Agreement is made in and shall be governed by and
under the laws of the State of New Mexico.
SECTION 32
SURVIVAL OF WARRANTIES AND REPRESENTATIONS
32.1 All warranties and representations made herein shall
be as of the date specified herein and such warranties and
representations shall survive the Purchase Closing.
<PAGE>
SECTION 33
ASSIGNMENT, TRANSFER, CONVEYANCE OR OTHER DISPOSITION
3.1 In any assignment, transfer, conveyance or other
disposition of their respective interests under this
Agreement, or in San Juan Unit 4, PNM and M-S-R shall have
the following rights and obligations:
33.1.1 Except as provided in Section 12 of the Co-Tenancy
Agreement and subject to the provisions of Sections 33.1.7
and 33.1.8 below, should either Party desire to assign,
transfer, convey or otherwise dispose of ("Assign") any
portion of or all of its rights, titles and interests in San
Juan Unit 4, or any portion or all of its rights, titles and
interests in, to and under this Agreement, or any portion or all
of its rights, titles and interests in the fuel or water rights,
lands or the improvements thereon or any part thereof or
interests therein ("Transfer Interest"), to any person, company,
corporation or government agency ("Outside Party"), the
remaining Party shall have the right of first refusal, as
hereinafter described, to purchase such Transfer Interest for
the following amount:
The amount of a bona fide written offer (such offer may
include a provision that the Outside Party obtain necessary
approvals to the purchase which provisions shall have no effect
on the time period set forth in Section 33.1.3 hereof) from an
Outside Party ready, willing, and able to purchase the Transfer
Interest after the expiration of the periods for giving notices
specified in Section 33.1.2 and 33.1.3 hereof.
33.1.2 At least three (3) months prior to its intended date
to Assign, and after its receipt of a bona fide written offer
from an Outside Party of the type described in Section 33.1.1
above, the Party desiring to assign its Transfer Interest shall
serve written notice of the Party's intention to do so upon the
remaining Party in accordance with Section 34 of this Agreement.
Such notice shall contain the approximate proposed date to
Assign, the terms and conditions of said bona fide written offer
received by such Party, and the terms and conditions of the
proposed assignment offered to be made to the remaining Party.
The terms and conditions contained in such notice shall be at
least as favorable to the remaining Party as the terms and
conditions of said bona fide written offer, or may be the same
terms and conditions as set forth in said offer.
33.1.3 The remaining Party shall signify its desire to pur-
chase the entire Transfer Interest, or any percentage
interest therein, or not purchase all or any percentage interest
therein, by serving written notice of its intention upon the
Party desiring to Assign pursuant to Section 34 hereof within
sixty (60) days after such service pursuant to Section 33.1.2 of
the written notice of intention to Assign. Failure by the
remaining Party to serve notice as provided hereunder within the
time period specified shall be conclusively deemed to be notice
of its intention not to purchase any portion of the Transfer
Interest, which intention is referred to herein as a "Refusal to
Purchase."
33.1.4 When intention to purchase the entire Transfer
Interest has been indicated by notices duly given hereunder by
the remaining Party, the Parties shall thereby incur the
following obligations:
33.1.4.1 They shall be obligated to proceed in good faith
and with diligence to obtain all required authorizations and
approvals to Assign;
33.1.4.2 The Party desiring to Assign shall be obligated to
obtain the release of any liens imposed by or through it upon
any part of the Transfer Interest and to Assign the
Transfer Interest at the earliest practicable date thereafter;
and
33.1.4.3 The Party desiring to purchase the Transfer
Interest shall be obligated to perform all terms and conditions
required of it to complete the purchase of the Transfer
Interest.
33.1.4.4 The purchase of the Transfer Interest shall be
fully consummated within six (6) months following the date upon
which all notices required to be given under this Section 33
have been duly served, unless the Party is then diligently
pursuing applications to appropriate regulatory bodies (if any)
for required authorizations to effect such assignment or is then
diligently prosecuting or defending appeals from orders entered
or authorizations issued in connection with such applications.
33.1.5 If the intention to purchase the entire
Transfer Interest has not been indicated by notices given within
the time periods specified in this Section 33 by the Party
desiring to purchase the Transfer Interest, the Party desiring
to Assign shall be free to Assign all, but not less than all, of
its Transfer Interest to the Outside Party that made the bona
fide written offer of the type described in Section 33.1.1
hereof upon the terms and conditions set forth in said bona
fide written offer. If such assignment of the entire Transfer
Interest to the Outside Party is not completed within eighteen
(18) months after the approximate proposed date to Assign
specified in the notice given pursuant to Section 33.1.2 hereof,
the Party desiring to Assign its Transfer Interest must, unless
it is then diligently pursuing its applications to appropriate
regulatory bodies (if any) for required authorizations to
effect such assignment, or is then diligently prosecuting or
defending appeals from orders entered or authorizations issued
in connection with such applications, give another complete new
right of first refusal to the remaining Party pursuant to the
provisions of this Section 33, before such Party shall be free
to Assign a Transfer Interest to said Outside Party.
33.1.6 No assignment of a Transfer Interest, whether to the
other Party or to an Outside Party, shall relieve the assigning
Party from full liability and financial responsibility for
performance after any such assignment: (i) Of all obligations
and duties incurred by such Party prior to such assignment under
the terms and conditions of this Agreement and the San Juan
Project Agreements; and/or (ii) of all obligations and duties
provided and imposed after such assignment upon such
assigning Party under the terms and conditions of this
Agreement and the San Juan Project Agreements; unless and
until the assignee shall agree in writing with the remaining
Party to assume such obligations and duties; provided, however,
that such assignor shall not be relieved of any of its
obligations and duties by an assignment under this
Section 33, without the express prior written consent of the
remaining Party; and provided further that the provisions of
this Section 33.1.6 shall not be applicable to any assignment of
a Transfer Interest by one Party to the other Party if payment
in full for such Transfer Interest has been made by the Party
who is the assignee thereof.
33.1.7 M-S-R's right of first refusal under this
Section 33 relating to an ownership interest in San Juan
Unit 4 shall be further subject to the following conditions:
33.1.7.1 For the purposes of this Section 33.1.7, the
"M-S-R Right of First Refusal Determinant" shall mean an
undivided 28.8 percent ownership interest in San Juan Unit 4
(exclusive of the Ownership Interest) as reduced from time to
time by the percentage of ownership interest in San Juan Unit 4
(i) previously offered to and purchased by M-S-R, or (ii) pre-
viously transferred, if any, by PNM to an Outside Party in a
fully consummated transaction or transactions following a
Refusal (or Refusals) to Purchase of M-S-R.
33.1.7.2 When the M-S-R Right of First Refusal Determinant
is reduced to zero percent (or a negative percent amount) by
(1) a fully consummated transaction or transactions with
M-S-R, or (ii) a fully consummated transaction or transactions
following a Refusal (or Refusals) to Purchase of M-S-R, or
(iii) both, then M-S-R's right of first refusal to purchase an
undivided interest or interests in San Juan Unit 4 shall
terminate.
33.1.8 Notwithstanding PNM's obligation to M-S-R as provided
in this Section 33, and as limited by Section 33.1.7 hereof,
should PNM be the Party deciding to assign, then PNM shall have
the further and unqualified right in an offer made pursuant to
this Section 33, to reduce the amount of ownership in San Juan
Unit 4 to be offered to M-S-R in order to make an offer to
Farmington proportionate to Farmington's ownership interest in
San Juan Unit 4, subject to the following:
33.1.8.1 If the percentage interest offered by PNM is
37.275 percent or more of San Juan Unit 4, then M-S-R shall be
entitled to receive an offer for up to a 28.8 percent ownership
interest in San Juan Unit 4, less any reduction calculated
pursuant to Section 33.1.7 hereof.
33.1.8.2 If the percentage interest offered by PNM is less
than 37.275 percent of San Juan Unit 4, then the offer that
M-S-R is otherwise entitled to receive pursuant to this Section
33, as limited by Section 33.1.7 hereof, may be reduced by PNM;
by the share that PNM offers Farmington, provided, however,
that (i) given that Farmington has a limited 8.475 percent
right of first refusal and M-S-R has a limited 28.8 percent
right of first refusal, and such reduction of the offer to M-S-R
shall be made on a proportionate basis to both M-S-R's and
Farmington's rights of first refusal, and (ii) until M-S-R's
right of first refusal has been reduced to zero percent (0%) in
accordance with Section 33.1.7.2 hereof, offers to Farmington
shall not entitle Farmington to purchase more than an additional
8.475 percent interest in San Juan Unit 4.
SECTION 34
NOTICES
34.1 Any notice, demand or request provided for in
this Agreement shall be deemed properly served, given or made if
delivered in person or sent by registered or certified mail,
postage prepaid, to the persons specified below:
34.1.1 Public Service Company of New Mexico
c/o Corporate Secretary
Alvarado Square Albuquerque, 87158
34.1.2 M-S-R Public Power Agency
c/o General Manager
Post Office Pox 4060
Modesto, CA 95352
34.2 Any Party may, at any time, by written notice to the
other Party, designate different persons or different addresses for
the giving of notices hereunder.
SECTION 35
COUNTERPARTS
35.1 This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original
but all of which together shall constitute one and the same
instrument.
SECTION 36
36.1 From time to time hereafter PNM and M-S-R will
execute such instruments of conveyance and other documents, upon
the request of the other, as may be necessary or appropriate to
carry out the intent of this Agreement.
SECTION 37
WAIVER
37.1 No waiver by a Party of its rights with respect to a
default under this Agreement, or with respect to any other
matter arising in connection with this Agreement, shall be
effective unless the nondefaulting Party waives its respective
rights in writing with respect thereto and any such waiver shall
not be deemed to be a waiver with respect to or matter. No
delay, short of the statutory period of limitations, in
asserting or enforcing any right hereunder shall be deemed a
waiver of such right.
SECTION 38
FORCE MAJEURE
38.1 Neither Party shall be considered to be in default in
the performance of any of the obligations hereunder (other than
obligations of the Parties to pay costs and expenses) if failure
of performance shall be due to uncontrollable forces
("Uncontrollable Forces"). The term uncontrollable Forces
shall mean any cause beyond the control of the Party affected,
including but not limited to failure of facilities, flood,
earthquake, storm, fire, lightning, epidemic, war, riot, civil
disturbance, labor dispute, sabotage, and restraint by court
order or public authority or failure to obtain approval from a
necessary governmental authority, which by exercise of due
diligence and foresight, such Party could not reasonably have
been expected to avoid and which by exercise of due diligence,
it shall be unable to overcome. Nothing contained herein shall
be construed so as to require a Party to settle any strike or
labor dispute in which it may be involved. Either Party
rendered unable to fulfill any obligations by reason of
Uncontrollable Forces shall exercise due diligence to remove
such inability with all reasonable dispatch.
SECTION 39
INDEPENDENT COVENANTS
39.1 The covenants and obligations set forth and contained
in this Agreement are to be deemed to be independent covenants,
not dependent covenants, and the obligations and covenants to be
kept and performed are not conditioned on the performance by the
other Party of all of the covenants and obligations to be kept
and performed by a Party.
SECTION 40
EQUAL OPPORTUNITY
40.1 During the term of this Agreement, PNM and M-S-R
agree to abide by all applicable equal employment opportunity
laws, rules, and regulations. PNM and M-S-R agree that they
will not discriminate against any employee or applicant for
employment because of race, color, religion, sex, or national
origin and will take affirmative action to ensure that
applicants are employed, and that employees are treated
during employment without regard to their race, color,
religion, sex, or national origin. The Parties will comply
with all applicable provisions of Executive Order 11246 of
September 24, 1965, as amended, and of the rules, regulations,
and relevant orders of the Secretary of Labor.
SECTION 41
FILING
41.1 This Agreement shall be subject to filing with
competent regulatory authority, in the exercise of its lawful
jurisdiction.
SECTION 42
NONDEDICATION OF FACILITIES
42.1 The Parties do not intend to dedicate and nothing in
this Agreement shall be construed as constituting a dedication
by any Party of its properties or facilities, or any part
thereof, to any other Party or to the customers of any Party.
SECTION 43
NO THIRD PARTY BENEFICIARIES
43.1 Except as otherwise specifically provided in this
Agreement, the Parties do not intent to create rights in or to
grant remedies to any third party as a beneficiary of this
Agreement or of any duty, covenant, obligation, or undertaking
established herein.
43.2 Nothing contained in this Agreement shall be
construed to constitute an assumption or guarantee by PNM of any
bonds, notes, or other forms of indebtedness or securities
issued, or to be issued, by M-S-R, within the meaning of the New
Mexico Public Utility Act.
SECTION 44
EXECUTION OF INTERCONNECTION AGREEMENT
44.1 Contemporaneously with the execution of this
Agreement, the Parties shall execute an interconnection
agreement ("Interconnection Agreement" relating to economy
energy sales, economy energy brokerage, and power exchanges.
The Interconnection Agreement is hereby incorporated by
reference into this Agreement.
IN WITNESS WHEREOF, the Parties have executed this Agreement as
of the day and year first above written.
PUBLIC SERVICE COMPANY OF NEW MEXICO
By: /s/ C. D. Bedford
-------------------------
Its: Sector Vice President
M-S-R PUBLIC POWER AGENCY
By:
-------------------------
Its: General Manager
<PAGE>
<PAGE>
EXHIBIT A
DEFINITIONS OF CAPITALIZED TERMS
For capitalized terms not defined herein or defined within the body of the
Agreement, refer to Definitional Cross-Reference Exhibit A-1.
1.0 AFUDC. Allowance for Funds Used During Construction.
2.0 INSTRUMENT OF SALE AND CONVEYANCE. The instrument of conveyance
by PNM to M-S-R of the San Juan Unit 4 Ownership Interest in the form of
Exhibit B.
3.0 OWNERSHIP INTEREST. The ownership interest to be received by M-S-
R from PNM at the Purchase Closing pursuant to the San Juan Unit 4 Purchase
Agreement between PNM and TEP dated May 16, 1979, ("PNM-TEP Purchase
Agreement") and this Agreement. This is an undivided 28.8% interest in San
Juan Unit 4 as provided in Section 3 of the PNM-TEP Purchase Agreement
(including, but not limited to, generator, turbine, coal-handling facilities,
pollution control facilities, cooling towers, start-up and step-up
transformers, material and supply inventories, fuel supply, tools, and
equipment (to the extent the cost of such tools and equipment is included in
the Purchase Price or the cost of prepaid items), and an allocated share of
common facilities, placed in service prior to Purchase Closing), together
with the other interests described in the Instrument of Sale and
Conveyance, and in the Easement and License, attached as Exhibits B and C,
respectively, to this Agreement.
4.0 PARTICIPANT. An entity which holds an undivided interest as a co-
tenant in, and entitlement to generation from any unit at the San Juan
Project.
5.0 PERMITTED ENCUMBRANCES.
5.1 Liens for taxes, assessments, or governmental charges for the then
current year; and liens for taxes, assessments or governmental charges,
workers' compensation awards, and similar obligations not then due and
delinquent or which can be paid without penalty;
5.2 Liens for taxes, assessments, or governmental charges already due
(or liens incidental to construction for indebtedness already due) but the
validity of which is being contested at the time by PNM in good faith;
5.3 Easements, licenses, restrictions, exceptions, reservations, or
other outstanding interests in or against any property and/or rights-of-way
of PNM created or existing by way of, or for the purpose of, public highways,
private roads, railroads, railroad sidetracks, pipelines, gas transportation
lines, transmission lines, transportation lines, distribution lines,
telegraph or telephone lines, mains, ditches, and other like purposes; water
power rights of the state or others; and building and use restrictions;
5.4 Any obligations or duties affecting the property of PNM to any
municipality or public authority with respect to any franchise, grant,
license, or permit;
5.5 Defects in titles to overflow and flood lands and rights, and in
titles to rights-of-way for transmission lines, distribution lines, mains,
ditches, telephone lines, telegraph lines, or for other purposes of PNM,
over public or private property, none of which, in the opinion of counsel for
PNM, materially impair the use of the property affected thereby in the
operation of the business of PNM;
5.6 Rights reserved to or vested in any municipality or public
authority by the terms of any right, power, franchise, grant, license, or
permit, or by any provisions of law, to terminate such right, power,
franchise, grant, license, or permit or to purchase or recapture or to
designate a purchaser of any of the property of PNM or otherwise to control
or regulate any property of PNM;
5.7 Rights granted or created or burdens assumed by PNM under
agreements for the joint use of poles and equipment, and similar agreements;
and burdens created under any law or governmental regulation or permit
requiring PNM to maintain certain facilities or perform certain acts as a
condition of PNM's occupancy of or interference with any public lands or any
river or stream or navigable waters or bridge or highway;
5.8 Any right of use, ingress, egress, partition, easement, license,
or reservation, contractual or otherwise, of any joint owner in any
property, plant, system, or facility owned by PNM jointly with other persons
and any lien securing indebtedness of any such joint owner, neither payable
by, nor assumed nor guaranteed by, PNM existing as to any undivided interest
of such other joint owner in such jointly owned property;
5.9 Unfiled, inchoate mechanics' and materialmen's liens for
construction work in progress and any other undetermined liens and charges
incidental to current construction;
5.10 Worker's repairmen's, warehousemen's and carrier's liens and
other similar liens, if any, arising in the ordinary course of business;
5.11 All the following, if they do not individually or in the
aggregate materially impair the use of the Ownership Interest or materially
detract from the value thereof to M-S-R, viz.: any easements, restrictions,
mineral, oil, gas, and mining rights and reservations, zoning laws and
defects in title or other encumbrances to which the Ownership Interest may be
subject;
5.12 The rights of Farmington under existing installment sale
agreements relating to pollution control revenue bond financings; and
5.13 Patent reservations of either the United States of America or the
State of New Mexico.
6.0 PNM INDENTURE. The Indenture of Mortgage and Deed of Trust
between PNM and Irving Trust Company, as Trustee, dated as of June 1, 1947,
as amended and supplemented.
7.0 PURCHASE CLOSING. The meeting by the Parties hereto which results
in the conclusion of all transactions relating to the sale by PNM of the
Ownership Interest to M-S-R, including but not limited to the payment by M-
S-R to PNM of the Purchase Price, the execution and delivery of all
agreements, documents, and certificates contemplated hereby and delivery of
opinions of counsel referred to herein.
8.0 PURCHASE PRICE. The Purchase Price of the Ownership Interest to
be paid by M-S-R to PNM at Purchase Closing, calculated in accordance with
Section 3 of this Agreement.
9.0 SAN JUAN PROJECT. Four-unit coal-fired electric generating plant
constructed or under construction at the San Juan Site. The San Juan Project
includes all facilities, structures, transmission, and distribution lines
incident to the four-unit electric generating plant; provided, however, that
the San Juan Project shall not include distribution and transmission lines
owned exclusively by a Party or TEP (such as 12.47 kV distribution system),
equipment in the Switchyard Facilities owned exclusively by a Party or TEP,
and coal processing facilities owned by a third party.
10.0 SAN JUAN PROJECT AGREEMENTS. Those agreements specified in
Section 5 of this agreement, as such Agreements have been amended and as the
same may be amended from time to time.
11.0 SAN JUAN PROJECT FUEL AGREEMENT. That certain Coal Sales
Agreement between San Juan Coal Company and PNM and TEP, dated August 18,
1980, and effective as of December 1, 1980, as in effect on the date hereof
and as may from time to time be amended.
12.0 SAN JUAN STATION. Same as "San Juan Project."
16.0 SAN JUAN UNIT 4. Unit 4 of the San Juan Project, presently
having a net output of approximately 472 MW, including, but not limited to
cooling tower and the pollution control systems and facilities relating
thereto (situated on but excluding that certain real property more
particularly described in Annex A to Exhibit B hereto), which began
commercial operation on April 27, 1982, and the interest in which is
presently 91.525 percent owned by PNM and 8.475 percent owned by Farmington.
<PAGE>
<PAGE>
EXHIBIT A-1
DEFINITIONAL CROSS-REFERENCES
Agreement/
Term Section No.
Available Operating Capacity O.A. 5.3
Capacity O.A. 5.4
Construction Agreement Co-T. 5.7
Construction Costs C.A. 5.5
Co-Tenancy Agreement Co-T. 5.8
Energy O.A 5.17
Engineering and Operating Committee O.A. 5.18
Minimum Net Generating O.A. 5.27
Operating Agent O.A. 5.31
Operating Agreement Co-T. 5.16
Operating Emergency O.A. 5.33
Operating Insurance O.A. 5.35
Operating Work O.A. 5.36
Power O.A. 5.39
Project Insurance C.A. 5.26
Project Manager C.A. 5.27
Project Work C.A. 5.28
San Juan Site Co-T. 5.22
Switchyard Facilities Co-T. 5.23
________________________
*Note: C.A. = Construction Agreement
Co-T. = Co-Tenancy Agreement
O.A. = Operating Agreement
<PAGE>
<PAGE>
EXHIBIT 1
INSTRUMENT OF SALE AND CONVEYANCE
PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico Corporation ("PNM"),
for consideration paid and the mutual covenants and agreements of the Parties
contained in that certain Early Purchase and Participation Agreement dated as
of __________, 1983 (the "Agreement"), which Agreement is incorporated herein
by this reference, hereby grants, transfers, bargains, sells and conveys to
M-S-R Public Power Agency, a joint exercise of powers agency, existing under
the laws of the State of California ("M-S-R"), the Ownership Interest, as
defined in the Agreement, including all of the following.
1. An undivided 28.8% interest in and to all of that certain
commercially operating, coal-fired, steam electric generating unit,
currently with a net rated capacity of 472 megawatts, described as the
San Juan Unit 4, San Juan Generating Station (also called the "San Juan
Project"), New Mexico ("San Juan Unit 4") situated upon that certain
real property located in San Juan County, New Mexico, which real
property is described in Annex A attached hereto and incorporated
herein by reference, together with an undivided 28.8% interest in all
fixtures associated with San Juan Unit 4 including, but not limited to,
the startup and step-up transformers, boiler, 616,700 kVA General
Electric turbine generator, ash storage and unloading systems, cooling
towers, control equipment, auxiliary equipment, and all other
components of every kind and description affixed to San Juan Unit 4 and
situate upon such real property.
2. An undivided 28.8% interest in all auxiliary equipment,
instruments, material and supply inventories, fuel supply, tools, and
equipment (to the extent the cost of such tools and equipment is
included in the Purchase Price or prepaid items), and construction work
in progress, and all other components of every kind and description
purchased or to be purchased for or in connection with San Juan Unit 4,
including those Pollution Control Systems and Facilities associated
with San Juan Unit 4 which are not common to other units at the San
Juan Station, a portion of which systems and facilities are described
in Annex B attached hereto and incorporated herein by reference.
3. An undivided 8.7% interest in the "San Juan Project
Agreements", as defined in the Agreement, and an undivided 28.8%
interest in the "Unit No. 4 Contracts," which are all agreements that
may exist solely for materials, equipment, facilities, and construction
necessary for the completion of San Juan Unit 4.
4. An undivided 14.4% interest in all of the facilities
(personal and fixtures) which are common only to San Juan Units 3 and
4 in service on the date hereof, as referenced in San Juan Project
Agreements, including the coal handling facilities, fuel oil system,
and the Pollution Control Systems and Facilities associated with San
Juan Units 3 and 4, a portion of which systems facilities are
described in Annex B including, but not limited to, the SO2 system,
chemical plant, crystallizors, condensate stripper, evaporators,
centrifuges, dryers, storage silos, mixing tanks, load out facilities,
control room and controls, pumps, blowers, and piping.
5. An undivided 8.7% interest in all of the facilities
(personal and fixtures) which are common to San Juan Units 1, 2, 3,
and 4 in service on the date hereof, as referenced in the San Juan Pro-
ject Agreements, including those Pollution Control Systems and Faci-
lities associated with San Juan Units 1, 2, 3, and 4, a portion of which
systems and facilities are described in Annex B and including, but not
limited to, the raw water system, the water management system, and the
support services complex, improvements and structures.
6. This Instrument of Sale and Conveyance is intended to pass
title as to the fixtures situate upon the real property described in
Annex A, attached hereto, but is not intended to pass title to the
underlying real property described in Annex A.
This Instrument of Sale and Conveyance is made with special warranty
covenants subject to the following disclaimer:
NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY, THE
BUILDINGS, OTHER STRUCTURES AND IMPROVEMENTS, FIXTURES AND PERSONAL PROPERTY
HEREIN CONVEYED ARE HEREBY CONVEYED BY PNM TO M-S-R UPON AN "AS IS" AND
"WHERE IS" BASIS. NEITHER PNM NOR ANY PERSON OR ENTITY OF ANY KIND OR NATURE
WHATSOEVER ACTING FOR OR ON BEHALF OF PNM EITHER HAS MADE OR HEREBY MAKES ANY
REPRESENTATION OR WARRANTY WHATSOEVER WITH RESPECT THERETO, WHETHER EXPRESS,
IMPLIED OR STATUTORY, INCLUDING, WITHOUT LIMITATION, ANY REPRESENTATION OR
WARRANTY AS TO THE VALUE, QUANTITY, CONDITION, SALEABILITY, OBSOLESCENCE,
MERCHANTABILITY, FITNESS OR SUITABILITY FOR USE OR WORKING ORDER THEREOF OR
THAT THE USE OR OPERATION THEREOF WILL NOT VIOLATE PATENT, TRADEMARK OR
SERVICE MARK RIGHTS OF ANY THIRD PARTIES. Notwithstanding the foregoing, M-
S-R shall have the benefit, in proportion to its interest in San Juan Unit 4,
of all manufacturers' and vendors' warranties (to the extent such warranties
are transferable or enforceable by PNM for M-S-R's benefit) running to PNM in
connection with the property herein conveyed.
NOTWITHSTANDING THE FOREGOING IT IS EXPRESSLY UNDERSTOOD AND AGREED
THAT: (1) PNM expressly covenants and warrants that title to the Ownership
Interest is free from all former grants, sales, taxes, assessments, liens and
encumbrances, except for "Permitted Encumbrances" as that term is defined in
the Agreement and that PNM has not otherwise encumbered or alienated such
interest; and (2) nothing contained herein shall be construed to relieve PNM
from its duties and obligations under the Operating, Co-Tenancy and
Construction Agreements relating to the San Juan Project, and under the
Agreement.
PNM, by execution and delivery of this instrument, and M-S-R, by its
acceptance of the within instrument, hereby expressly waive and renounce for
the term of the Agreement, for themselves, their successors, transferees and
assigns, any and all rights of any kind or nature whatsoever, legal or
equitable, as a tenant in common in the property herein conveyed to partition
and equitable accounting.
This Instrument of Sale and Conveyance and the terms and conditions
contained herein shall bind and inure to the benefit of the respective
successors, assigns, trustees and representatives of PNM and M-S-R.
This Instrument of Sale and Conveyance shall be governed by and
construed in accordance with the laws of the State of New Mexico.
IN WITNESS WHEREOF, PNM has caused this Instrument of Sale and
Conveyance to be executed on the ___ day of December 1983.
PUBLIC SERVICE COMPANY OF NEW MEXICO
a New Mexico corporation
By:
_______________________________
STATE OF NEW MEXICO )
) ss.
County of Bernalillo )
The foregoing instrument was acknowledged before me this ___ day of
December 1983, by ____________________________, a Vice President of Public
Service Company of New Mexico, a New Mexico corporation, on behalf of said
corporation.
______________________________________
Notary Public
My Commission Expires:
______________________
<PAGE>
<PAGE>
ANNEX A
DESCRIPTION OF SAN JUAN UNIT 4 (REAL PROPERTY)
Three particular parcels of land situate in the Southeastern
part of Section 17 and the central part of Section 20, Township 30
North, Range 15 West, NMPM, San Juan County, New Mexico, and being
more particularly described as follows:
TRACT A--POWER PLANT
Beginning at a brass cap at the corner common to Sections 17,
16, 20, and 21; thence S 57 degrees 53'57"W, 2087.24' to the Northeast
corner of said tract and the true point of beginning; thence South,
265.00' to the Southeast corner; thence West, 993.00' to the
Southwest corner; thence North, 265.00' to the Northwest corner; thence
East, 993.00' to the Northeast corner and the true point of beginning.
The above described tract contains 6.041 acres.
TRACT B--ASH HANDLING
Beginning at a brass cap at the corner common to Sections 17,
16, 20, and 21; thence S 46 degrees, 56'04"W, 1653.67' to the
Northeast corner of said tract and the true point of beginning; thence
South, 245.00' to the Southeast corner; thence West, 245.00' to the
Southwest corner; thence North 245.00' to the Northwest corner; thence
East 245.00' to the Northeast corner and the true point of beginning.
The above described tract contains 1.378 acres.
TRACT C--COOLING TOWER
Beginning at a brass cap at the corner common to Sections 17,
16, 20, and 21; thence N 89 degrees 39'10"W, 695.00' along the line common to
Sections 17 and 20 to the Southeast corner of said tract and the true
point of beginning; thence North, 275.00' to the Northeast corner; thence
West, 1087.00' to the Northwest corner; thence South, 281.58' to the
Southwest corner, a point on the line common to Sections 17 and 20;
thence S 89 degrees, 39'10"E, 1087.02' along the aforementioned
Section Line to the Southeast corner and the true point of beginning.
The above described tract contains 6.945 acres.
Note: Bearings are based on the New Mexico State Plane Coordinate
System, West Zone. Distances are true ground dimensions.
<PAGE>
<PAGE>
ANNEX B
DESCRIPTION OF A PORTION OF THE POLLUTION
CONTROL SYSTEMS AND FACILITIES
The Pollution Control Systems and Facilities consist, in part, of
various systems to abate or control atmospheric pollution resulting from the
generation of electricity by San Juan Unit 4 of the San Juan Generating
Station (also called the San Juan Project).
Nitrogen Oxides Reduction System. Low heat input burners with two
storage combustion firing and over-fire air ports in addition to duct
work, dampers, fans and motors for gas recirculation, all to reduce NOX
emissions by reducing flame temperatures and diluting combustion air.
Dust Suppression System. Pipes, pumps, pipe nozzles, tanks and
associated equipment to spray water over coal transfer points in order to
control the escape of coal dust to the atmosphere.
Sulfur Oxide Removal System. The sulfur oxide removal system is a
regenerative system and is designed to reduce emissions of sulfur
oxides to permissible levels. The regenerative system utilizes a
sodium solution or other chemical reagent as the absorbing agent and
produces elemental sulfur or other marketable or environmentally
acceptable end product. The system includes material-handling and
by-product or waste disposal facilities.
Electrostatic Precipitator. A high efficiency electrostatic
precipitator for San Juan Unit 4 along with associated structural
supports and duct work, to remove fly ash from flue gas exiting the steam
boiler.
Ash Handling System. A pneumatic system including blower, valves,
pipes, storage silos, unloading facilities, associated structural
supports and controls to transfer and store fly ash collected from the
steam generator economizer and precipitator hoppers. The system also
includes dewatering tanks and storage bins utilized for the
preparation and storage of bottom ash immediately prior to final disposal.
Water Management System. Facilities to segregate drainage and waste
water from San Juan Units 1, 2, 3 and 4 into two separate systems; one to
dispose of waste water from the sulfur oxide removal systems for San Juan
Units 1 and 2 and for San Juan Units 3 and 4, and the other to dispose of
waste water and drainage from the cooling system. The Water Management
System includes evaporation ponds, brine concentrators, oxidation towers,
drainage and runoff capture facilities and instrumentation to
regulate and assist in the operation of such facilities.
<PAGE>
<PAGE>
EXHIBIT C
EASEMENT AND LICENSE
PUBLIC SERVICE COMPANY OF NEW MEXICO ("PNM"), a New Mexico corporation,
and TUCSON ELECTRIC POWER COMPANY ("TEP"), an Arizona corporation authorized
to transact business in New Mexico ("Grantors"), for consideration paid,
grant to M-S-R Public Power Agency, a joint exercise of powers agency
existing under the laws of the State of California ("M-S-R") ("Grantee"), an
easement in and to all of the real estate, premises and leasehold interests
described in that certain Co-Tenancy Agreement between PNM and TEP (formerly
"Tucson Gas and Electric Company"), dated February 15, 1972, and filed in the
records of San Juan County, New Mexico, February 23, 1972, in Book 694 at
Page 171, et seq., as modified by Modification No. 1 dated May 16, 1979, only
to the extent necessary and for the purpose of allowing Grantee, M-S-R, to
own, enter upon and inspect, and the Operating Agent, as agent for Grantee,
to operate Grantee's undivided 28.8% interest in San Juan Unit 4 of the San
Juan Generating Station (also called the San Juan Project) pursuant to that
certain Early Purchase and Participation Agreement dated as of ______,
1983 (the "Agreement"), between PNM and M-S-R and filed in the records of San
Juan County, New Mexico, ____________, 1983, in Book _____ at Page
______, together with an irrevocable license to bring upon such real estate,
premises and leasehold interests, store and process coal, fuel and water,
upon payment of the charges appropriate therefor pursuant to the terms of the
Agreement, required to operate the Grantee's 28.8% undivided interest in San
Juan Unit 4.
This easement and license shall continue for the entire term of the
Agreement and for any renewal or extension thereof and shall be binding alike
upon the Grantors, their successors and assigns.
IN WITNESS WHEREOF, the parties have hereunto set their hands and seals
this ______ day of December, 1983.
PUBLIC SERVICE COMPANY OF NEW MEXICO,
a New Mexico corporation
By:
TUCSON ELECTRIC POWER COMPANY, an
Arizona corporation
By:
STATE OF NEW MEXICO )
) ss.
County of Bernalillo )
The above and foregoing document was acknowledged before me this
_____ day of December, 1983 by ________________, a Vice President of
Public Service Company of New Mexico, a New Mexico corporation, on behalf of
said corporation.
Notary Public
My commission expires:
STATE OF ARIZONA )
) ss.
County of Pima )
The above and foregoing document was acknowledger before me this _____
day of December, 1983 by ____________, __________________________ of Tucson
Electric Power company, an Arizona corporation, on behalf of said
corporation.
Notary Public
My commission expires:
<PAGE>
<PAGE>
EXHIBIT D-l
OPINION OF COUNSEL
[letterhead of McDonough, Holland & Allen]
[The following is a draft of the form of opinion that we anticipate could be
rendered at closing. The text of the letter would, of course, depend upon
the results of such inquiry as will be appropriate.]
December , 1983
Public Service Company of New Mexico
Alvarado Square
Albuquerque, NM 87158
Subject: San Juan Unit 4 Early Purchase and
Participation Agreement and Interconnection
Agreement, dated as of , 1983,
between Public Service Company of New Mexico
and M-S-R Public Power Agency
Gentlemen:
We represent M-S-R Public Power Agency, a joint exercise of powers
agency organized under the laws of the State of California ("M-S-R") as
special counsel in connection with (i) the San Juan Unit 4 Purchase and
Participation Agreement, dated as of November 29, 1982, between Public
Service Company of New Mexico, a New Mexico corporation ("PNM"), and M-S-R,
as modified by the Supplement to the Agreement dated as of November 29, 1982,
and by the First Amendment dated as of May 31, 1983 to such agreement (the
"Original M-S-R/PNM Agreement"); (ii)he San Juan Unit 4 Early Purchase and
Participation Agreement, dated as of , 1983, between PNM and M-S-R
("EPPA"); and (iii) the Interconnection Agreement, dated , 1983
(the "Interconnection Agreement"). We have been requested by our client
M-S-R to provide you with this opinion. Unless otherwise defined herein or
the context hereof requires, each item herein with its initial letter
capitalized has the meaning given to such term in the EPPA or the
Interconnection Agreement.
In this connection, we have examined such certificates of public
officials, such certificates of officers of M-S-R, and the originals or
copies certified to our satisfaction of all such corporate documents and
records of M-S-R, and such other documents, records and papers, as we have
deemed relevant and necessary as a basis for our opinion hereinafter set
forth. In our examinations, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals,
the conformity to the originals or all documents submitted to us as
certified, photocopied or conformed copies, and the authenticity of the
originals of all such latter documents. We have relied upon such
certificates of public officials and such certificates and statements of
officers of M-S-R with respect to the accuracy of material factual matters
contained therein, which were not independently established by McDonough,
Holland & Allen, including the representations and warranties of M-S-R
contained in the Original M-S-R/PNM Agreement, the EPPA and the
Interconnection Agreement.
Based upon the foregoing, it is our opinion that as of the date hereof:
1. M-S-R is a joint powers agency existing under the laws of the
State of California (section 6500 et seq., Calif. Gov. Code) and has the
requisite power and authority to purchase the Ownership Interest.
2. The execution, delivery and performance of the EPPA and the
Interconnection Agreement by M-S-R have been duly and effectively authorized
by all requisite action of M-S-R.
3. M-S-R has full power and authority to execute the EPPA and the
Interconnection Agreement and the EPPA and the Interconnection Agreement have
been duly executed and delivered by M-S-R and are the valid and binding
obligations of M-S-R, enforceable against M-S-R in accordance with their
terms.
4. You and we are receiving today an opinion from special counsel
to M-S-R in the State of New Mexico, Sutin, Thayer & Browne, A Professional
Corporation, regarding the authority and capacity of M-S-R to sue and be
sued, and hold title to property in the State of New Mexico. In our opinion
California law does not preclude M-S-R from suing or being sued in state and
federal courts located in New Mexico in an action or proceeding arising
out of the EPPA or the Interconnection Agreement. In giving this opinion,
M-S-R does not waive its right to remove a state suit to federal court.
5. No regulatory or other governmental approval under the laws of
the State of California is required to be obtained by M-S-R for the execution
and delivery by M-S-R of the EPPA and the Interconnection Agreement or
compliance by M-S-R with the provisions thereof. We give no opinion
regarding the New Mexico Public Service Commission or the laws of the State
of New Mexico.
6. To the best of our knowledge, the execution and delivery of the
EPPA and the Interconnection Agreement and compliance with the provisions
thereof will not conflict with or constitute on the part of M-S-R a breach of
or a default under any existing law, court or administrative regulation,
decree or order to which M-S-R is subject or any agreement, ordinance,
indenture, mortgage, lease or other instrument by which M-S-R is or may be
bound, but we give no opinion regarding the New Mexico Public Service
Commission or the laws of the State of New Mexico.
7. To the best of our knowledge, there is no action, suit,
proceeding, inquiry or investigation at law or in equity or before or by any
public board or body pending or, to our knowledge, threatened against or
affecting M-S-R, or to our knowledge, any basis therefor, wherein an
unfavorable decision, ruling or finding would have a material adverse effect
on the transactions contemplated by the EPPA and the Interconnection
Agreement.
The opinions expressed herein relating to the enforceability of the
rights and remedies provided in the EPPA and the Interconnection Agreement
are qualified to the extent that such rights and remedies (i) may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar laws
heretofore or hereafter enacted affecting creditors' rights, to the extent
constitutionally applicable, (ii) may be subject to the exercise of judicial
discretion in accordance with general principles of equity, (iii) may be
subject to the valid exercise of the sovereign police powers of the State of
California or the State of New Mexico, or (iv) may be subject to the
constitutional powers of the United States of America.
With respect to our opinions in paragraph 1, in regard to the laws of
the State of New Mexico we have relied upon the opinion of Sutin, Thayer &
Browne, of even date herewith.
The opinions expressed herein are for the sole use of PNM and may be
relied upon only by PNM and its counsel.
Our opinion is not to be circulated, quoted or otherwise relied upon by any
other party except with our prior written consent.
Very truly yours,
McDONOUGH, HOLLAND & ALLEN
A Professional Corporation
By
Dennis W. De Cuir
<PAGE>
<PAGE>
EXHIBIT D-2
OPINION OF COUNSEL
[letterhead of Keleher & McLeod, P.A.]
[The following is a draft of the form of opinion that we anticipate
could be rendered at closing. The text of the letter would, of course,
depend upon the results of such inquiry as will be appropriate.]
December _ , 1983
M-S-R Public Power Agency,
a joint exercise of powers agency
organized under the laws of the
State of California
Post Office Box 4060
Modesto, California 95352
Gentlemen:
We have acted as counsel for Public Service Company of New Mexico, a
New Mexico corporation ("PNM"), in connection with legal matters pertaining
to (i) the San Juan Unit 4 Purchase and Participation Agreement, dated as of
November 29, 1982, between PNM and M-S-R Public Power Agency, a joint
exercise of powers agency organized under the laws of the State of California
("M-S-R"), as modified by the Supplement to the Agreement dated as of
November 29, 1982, and by the First Amendment dated as of May 31, 1983 to
such agreement (the "Original M-S-R/PNM Agreement"); (ii) the San Juan Unit
4 Early Purchase and Participation Agreement, dated as of ,
1983, between PNM and M-S-R ("EPPA"); and (iii) the Interconnection Agreement
between PNM and M-S-R dated , 1983 (the "Interconnection
Agreement"). We have been requested by our client, PNM, to provide you with
this opinion. Unless otherwise defined herein or the context hereof
requires, each term used herein with its initial letter capitalized has the
meaning given to such term in the EPPA or the Interconnection Agreement.
In this connection, we have examined such certificates of public
officials, such certificates of officers of PNM, and the originals or copies
certified to our satisfaction of all such corporate documents and records
of PNM, and such other documents, records and papers, including copies of
Orders issued by the New Mexico Public Service Commission ("NMPSC") in Case
1452 and in Case 1829 and by the Federal Energy Regulatory Commission
("FERC") in Case as we have deemed relevant and necessary as a basis for our
opinion hereinafter set forth. In our examinations, we have assumed the
genuineness of all signatures, the authenticity of all documents submitted to
us as originals, the conformity to the originals of all documents submitted
to us as certified, photocopied or conformed copies, and the authenticity of
the originals of all such latter documents. We have relied upon such
certificates of public officials and such certificates and statements of
officers of PNM with respect to the accuracy of material factual matters
contained therein, which were not independently established by Keleher &
McLeod, P.A., including the representations and warranties of PNM contained
in the Original M-S-R/PNM Agreement, the EPPA and the Interconnection
Agreement.
Based upon the foregoing, we are of the opinion that as of the date
hereof, under New Mexico law:
1. PNM is a corporation duly organized, validly existing and in
good standing as a public utility under the laws of the State of New Mexico and
has corporate power and authority to carry on its business as it is presently
being conducted, to own its undivided ownership interest in San Juan Unit 4,
and to sell to M-S-R the Ownership Interest.
2. The execution, delivery and performance of the EPPA and the
Interconnection Agreement by PNM have been duly and effectively authorized by
all requisite corporate action.
3. PNM has full power and authority to execute the EPPA and the
Interconnection Agreement and the EPPA and the Interconnection Agreement have
been duly executed and delivered by PNM and are the valid and binding
obligations of PNM, enforceable against PNM in accordance with their terms.
4. PNM has obtained from the NMPSC and the FERC all consents and
approvals necessary for the execution, delivery and performance of the EPPA
and the Interconnection Agreement. In our opinion, such consents and
approvals of the NMPSC and the FERC constitute all regulatory or other
governmental approvals required of PNM to fully performed its obligations
under the EPPA and the Interconnection Agreement. To the best of our
knowledge, no appeal of either the NMPSC or FERC approval has been taken and
in our opinion the statutory period for appeal has expired.
5. To the best of our knowledge, the execution and delivery of the
EPPA and the Interconnection Agreement by PNM and compliance with the
provisions thereof will not conflict with our constitute on the part of PNM
a breach of or a default under existing law, court or administrative
regulation, decree or order to which PNM is presently subject or any existing
agreement, ordinance, indenture, mortgage, lease or other instrument by which
PNM is presently bound.
6. To the best of our knowledge, all releases, release of liens,
trusts, mortgages and encumbrances, except Permitted Encumbrances, consents,
and approvals, including the release by IRVING TRUST COMPANY of the lien
created under the PNM Indenture, necessary to the execution, delivery and
performance of the EPPA and the Interconnection Agreement by PNM have been
obtained.
7. To the best of our knowledge, there is no action, suit,
proceeding, inquiry or investigation at law or in equity or before or by any
public board or body pending or, to our knowledge, threatened against or
affecting PNM, or to our knowledge, any basis therefor, wherein any
unfavorable decision, ruling or finding would have a material adverse effect
on the transactions contemplated by the EPPA and the Interconnection
Agreement.
The opinions expressed herein relating to the enforceability of the
rights and remedies provided in the EPPA and the Interconnection Agreement
are qualified to the extent that such rights and remedies (i) may be limited
to bankruptcy, insolvency, reorganization, moratorium or other similar laws
heretofore or hereafter enacted affecting creditors' rights, (ii) may be
subject to the exercise of judicial discretion in accordance with general
principles of equity, (iii) may be subject to the valid exercise of the
sovereign police powers of the State of New Mexico, and (iv) may be subject
to the constitutional powers of the United States of America or the State of
New Mexico.
The opinions expressed herein are for the sole use of M-S-R and may be
relied upon only by M-S-R and its counsel. Our opinion is not to be
circulated, quoted or otherwise relied upon by any other party except with
our prior written consent.
Yours very truly,
KELEHER & McLEOD, P.A.
By:
William B. Keleher
<PAGE>
<PAGE>
<TABLE>
EXHIBIT E
MSR's Estimated Net Book Investment
Actuals Through 4/30/83--Budgeted Through Completion
<CAPTION>
MSR's
MSR's Share of MSR's
Share of Estimated Estimated
MSR's MSR's MSR's Retent. & Expend. Net Book
MSR's Net Estimated Estimated Est. Net Payables 1/84 Value
Book Value Expend. Depreciation Book Value 4/30/83 Through Through
IA Description 4/30/83 5/83-12/83 5/83-12/83 12/31/83 Balance Complet. Completion
- - -- ----------- ---------- ---------- ------------ ---------- ---------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
6050 WCC Coal Water Supp.
Handling Facility $ 6,737.14 $ 0.00 $ (114.88) $ 6,622.26 $ 0.00 $ 0.00 $ 6,622.26
6051 602A Air Monitoring 251,099.40 34,466.17 0.00 285,565.57 359.43 0.00 285,925.00
6052 Reservoir Raising 666,236.21 0.00 (11,384.80) 654,851.41 151.68 0.00 655,003.09
6079 Automatic
Gen. Control 4,092.97 0.00 (68.96) 4,024.01 0.00 0.00 4,024.01
6091 San Juan Paving 50,888.74 361,200.00 (845.76) 411,242.98 0.75 0.00 411,243.73
6094 1980 Construction
Budget Items 103,710.86 9,910.00 (2,471.60) 111,149.26 0.00 0.00 111,149.26
6184 San Juan Auxiliary
Power Improvements 452,579.88 29,026.98 0.00 481,606.86 4,262.12 0.00 485,868.98
6185 San Juan Acid Plant 884,910.49 0.00 (39,309.44) 845,601.05 0.00 0.00 845,601.05
6185 Acid Plant Compl.
Costs 16,034.81 0.00 0.00 16,034.81 5,455.43 0.00 21,490.24
6194 1981 Construction
Budget Items 74,010.99 0.00 (821.36) 73,189.63 0.00 0.00 73,189.63
6282 Power Plant Maint.
Information System 32,511.90 10,897.00 0.00 43,408.90 322.84 0.00 43,731.74
6294 1982 Construction
Budget Items 104,965.56 38,371.00 (602.08) 142,734.48 120.95 0.00 142,855.43
6295 1982 Construction
Budget Items 150,754.74 77,949.00 (331.74) 228,372.00 2,535.92 0.00 230,907.92
6361 Raw Water & Fire
Protection Supply
Project 0.00 39,041.00 0.00 39,041.00 0.00 0.00 39,041.00
6390 1983 Construction
Budget Items 0.00 29,615.00 0.00 29,615.00 0.00 0.00 29,615.00
6394 1983 Construction
Budget Items 116,553.14 175,507.93 0.00 292,061.07 752.46 0.00 292,813.53
6395 1983 Construction
Budget Items 1,335.19 216,204.37 0.00 217,539.56 0.00 0.00 217,539.56
6398 Materials Mgmt.
System 29,587.73 0.00 (141.52) 29,446.21 0.00 0.00 29,446.21
6441 Unit 4 Common in
Unit 3 Utility 6,025,130.56 0.00 (108,898.56) 5,916,232.00 4,550.65 0.00 5,920,782.65
6442 Unit 4 Utility 85,286,875.35 3,377,369.03 (1,484,651.82) 87,179,592.56 94,372.98 0.00 87,273,965.54
6561 Unit 4 Common in
Unit 3 Environ. 69,489.89 0.00 (1,218.40) 68,271.49 1,075.61 0.00 69,347.10
6562 Unit 4 Environ. 31,072,765.06 0.00 (524,418.40) 30,548,346.66 2,613.60 0.00 30,550,960.26
6760 Unit 4 Common in
Unit 3 SO2 133,330.63 0.00 (7,969.96) 125,360.67 0.00 0.00 125,360.67
6761 Units 3 and 4
Wastewater 3,779,890.80 0.00 (210,163.31) 3,569,727.49 32,794.81 0.00 3,602,522.30
6894 1978 Const.
Budget Items 2,600.99 0.00 (102.24) 2,498.75 0.00 0.00 2,498.75
6898 1978 Const.
Budget Items 3,456.16 0.00 (109.04) 3,347.12 0.00 0.00 3,347.12
6962 Water Mgmt.
Study 5,401,596.72 2,391,599.03 0.00 7,793,195.75 337,563.58 792,016.72 8,922,776.05
6963 Unit 4 SO2 19,681,591.29 569,927.05 (890,186.96) 19,361,331.38 54,109.39 0.00 19,415,440.77
6963 Unit 4 SO2 Compl.
Costs 363,600.67 0.00 (16,534.64) 347,066.03 0.00 0.00 347,066.03
6985 1979 CBIs and
Construction
Support Facility 963,514.96 120,266.62 (17,186.64) 1,066,594.94 75,767.22 0.00 1,142,362.16
6994 1979 Construction
Budget Items 41,482.36 0.00 (1,537.60) 39,944.76 0.00 0.00 39,944.76
6998 1979 Construction
Budget Items 5,535.61 0.00 (142.24) 5,393.37 0.00 0.00 5,393.37
7094 1980 Retirement
Budget Items (8.35) 0.00 0.00 (8.35) 0.00 0.00 (8.35
7098 Removal of Old
Support Facility 3,855.56 4,350.50 0.00 8,206.06 0.00 0.00 8,206.06
7294 1982 Retirement
Budget Items (89.19) 0.00 0.00 (89.19) 0.00 0.00 (89.19
7394 1983 Retirement
Budget Items (6.53) 0.00 0.00 (6.53) 0.00 0.00 (6.53
5064 Training Costs 144,070.00 0.00 0.00 144,070.00 0.00 0.00 144,070.00
--------------- ------------- -------------- --------------- ----------- ----------- ---------------
$155,924,692.29 $7,485,700.68 ($3,319,211.95) $160,091,181.02 $616,809.42 $792,016.72 $161,500,007.16
=============== ============= =============== =============== =========== =========== ===============
</TABLE>
<PAGE>
<PAGE>
EXHIBIT F
PREPAID ITEMS
FERC Account Number Item
128 Insurance Deposits
151 Coal Inventory
151 Oil Inventory
151 Start-up Oil
154 Stores Inventory
154 Soda Ash Inventory
154 Minor Materials
163 Stores Closing
165 Prepaid Insurance
165 Water Rights
The foregoing listed FERC Account Numbers and Items are included as being
representative of those prepaid items accounted for as such by the San Juan
Project as of November 1982. The listing is complete as of the date of the
execution of the Early Purchase and Participation Agreement (the "Agreement")
by and between Public Service Company of New Mexico and M-S-R Public Power
Agency, but is not to be construed as all inclusive on the date of the
Purchase Closing, as defined in the Agreement. It is the intent of PNM and
M-S-R that all items properly accounted for and allocated to San Juan Unit
4 as prepaid items be paid for by M-S-R in accordance with it Ownership
Interest.
<PAGE>
<PAGE>
EXHIBIT G
PUBLIC SERVICE COMPANY OF NEW MEXICO
Alvarado Square
Albuquerque, New Mexico 87158
, 1983
TO: M-S-R Public Power Agency
Post Office Box 4060
Modesto, California 95352
The Underwriters of M-S-R Bonds
Dear Sirs:
This Letter of Representation is delivered by Public Service Company
of New Mexico ("PNM") pursuant to Section 11.5 of the Early Purchase and
Participation Agreement dated as of , 1983, between PNM and M-
S-R Public Power Agency ("M-S-R") and in connection with the purchases by the
Underwriters of "the Bonds" as described in the Preliminary Official
Statement dated , 19 (which, together with all appendices and
reports attached thereto is hereinafter referred to as the ("Official
Statement").
1. PNM certifies and represents as of the date hereof as follows:
(a) The representations and warranties of PNM contained in
Section 7.2 of the Early Purchase and Participation Agreement, dated
as of , 1983, by and between PNM and M-S-R, are true and correct
as of the date hereof as if made on the date hereof;
(b) PNM has prepared a report with respect to the facilities,
operations, status and agreements pertaining to the San Juan Project
dated , 19 , which is annexed to the Official Statement as
Appendix . That as of the date hereof the information contained in
Appendix is true and the statements in Appendix which purport
to be statements of fact are true and correct and Appendix does
not omit to state any material fact necessary to make the statements
made in Appendix not misleading in light of the circumstances under
which they are made.
(c) PNM has prepared in connection with the issuance of the
Bonds the information describing PNM which is annexed to the Official
Statement as Appendix . That as of the date hereof, the
information contained or incorporated by reference in Appendix is
true and the statements contained or incorporated by reference in
Appendix which purport to be statements of fact are true and
correct and Appendix does not omit to state any material fact
necessary to make the statements made in Appendix not
misleading in light of the circumstances under which they are made.
2. This Letter of Representation is made solely for the benefit of
M-S-R and the Underwriter, persons controlling any Underwriter within the
meaning of the Securities Act of 1933, and their respective successors and
assigns and no other person, partnership, association or corporation shall
acquire or have any right under or by virtue hereof. The terms "successors"
and "assigns" shall not include any purchaser of Bonds from any Underwriter
merely by reason of such purchase.
3. This Letter of Representation shall become effective upon the
execution hereof and shall terminate upon termination of the purchase
contract between M-S-R and the Underwriters dated , 19 , (the
"Purchase Contract"), provided, however, that the certification and
representations provisions contained herein shall remain operative and in
full force and effect.
4. Notices. All communications given hereunder shall be in writing
and shall be delivered: if to PNM, to Corporate Secretary, Public Service
Company of New Mexico, Alvarado Square, Albuquerque, New Mexico 87158,
Attention: Secretary; if to M-S-R, to M-S-R Public Power Agency, Post Office
Box 4060, Modesto, California 95352, Attention: General Manager; and if to
the Underwriters, to the address specified in the Purchase Contract.
If you agree with the foregoing, please sign and return to us the
enclosed counterpart of this letter, whereupon it shall become a binding
agreement among each of you and PNM.
Very truly yours,
Public Service Company of New Mexico
By:
Accepted and Agreed to this day of , 19 .
<PAGE>
<PAGE>
EXHIBIT H
PUBLIC SERVICE COMPANY OF NEW MEXICO
CERTIFICATE
I, , President of Vice President of Public Service
Company of New Mexico ("PNM"), hereby certify that:
1. This certificate has been executed in connection with the
issuance and sale by M-S-R Public Power Agency ("M-S-R") of $ aggregate
principal amount of Bonds, Series (the "Bonds"), as more fully described
in the Official Statement of M-S-R, date , 19 , prepared in connection
with the sale of the Bonds (the "Official Statement").
2. I have read Appendices and to the Official Statement and
conferred with appropriate officers and employees of PNM with respect to the
contents thereof and to the best of my knowledge, Appendices and to the
Official Statement as of its date and at all times subsequent thereto up to
and including the date hereof, did not and do not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements therein, in the light of the circumstances under which
they were made, not misleading.
3. The representations of PNM contained in the Letter of
Representation, dated , 19 , addressed to M-S-R and the Under-
writers of the Bonds pursuant to the purchase contract, dated , 19
, entered into by M-S-R and the Underwriters (the "Purchase Contract"), are
true and correct on and as of the date hereof as if made on the date hereof.
4. There has not been any material adverse change in the facili-
ties, operations, status or agreements pertaining to the San Juan Project or in
the business, property or financial condition of PNM since the respective dates
of information relating to the San Juan Project and PNM contained in
Appendices and to the Official Statement except as set forth in or
contemplated by such Appendices.
5. Except as set forth in or contemplated by Appendices and to the
Official Statement, there is no action, suit, or proceeding pending or, to
the best of my knowledge, threatened against the San Juan Project or PNM
which could adversely affect the San Juan Project or PNM in any material
respect, or in any way contesting or affecting the validity or enforceability
of the Letter of Representation, the Early Purchase and Participation
Agreement, or the Interconnection Agreement, or contesting in any way the
completeness or accuracy of Appendices and to the Preliminary Official
Statement or Appendices and to the Official Statement or any supplement or
amendment to any such Appendix.
6. All capitalized terms employed herein which are not otherwise
defined shall have the same meanings as in the Purchase Contract.
Dated: , 19 .
President or Vice President
Public Service Company of New Mexico
<PAGE>
<PAGE>
EXHIBIT I
This draft is furnished solely for the purpose of indicating the form
of letter PNM believes its independent Certified Public Accountants would be
able to furnish the underwriters in response to their request, the matters
expected to be covered in the letter and the nature of the procedures that
we anticipate the accountants would expect to carry out with respect to such
matters. We anticipate that the underwriters and the accountants would have
discussions as to the procedures that the accountants were to follow and that
no additional procedures will be required. The text of the letter itself
will depend upon the results of the procedures and it is anticipated that the
completion of such procedures would not be accomplished until shortly before
the letter is given and in no event before the cut-off date indicated in the
letter. It is further anticipated that any letter given at a time of
financing by M-S-R will be dependent at that time upon the then existing
professional standards and guidelines of the accounting industry.
(Letterhead of Certified Public Accountants to PNM)
To: Public Service Company of New Mexico
Albuquerque, New Mexico
The Underwriters of M-S-R Bonds
Gentlemen:
We have examined the consolidated balance sheets of Public Service Company
of New Mexico (the Company) and subsidiaries as of December 31, 19
, and and the related consolidated statements of earnings,
capitalization and changes in financial position for each of the years in the
three-year period ended December 31, , included in Appendix (the
"Appendix") to the Official Statement dated , 19 (the "Official
Statement") prepared in connection with the issuance by M-S-R Public Power
Agency Bonds, Series ; our report with respect thereto is also included
in such appendix. In connection with the Official Statements:
1. We are independent certified public accountants with respect to
the Company as contemplated by Rule 2-01 of Regulation S-X of
the Securities and Exchange Commission.
2. In our opinion, the financial statements examined by us and
included in the Appendix and covered by our report included in
the Appendix and covered by our report included therein comply
as to form in all material respects with the applicable
accounting requirements of the Securities Exchange Act of 1934
and the published rules and regulations of the Securities and
Exchange Commission thereunder with respect to annual reports
on Form 10-K.
3. We have not examined any financial statements of the Company as
of any date or for any period subsequent to December 31, 19.
Therefore, we are able to and do not express any opinion on the
financial position, results of operations, or changes in
financial position as of any date or for any period subsequent
to December 31, 19 .
4. For purposes of this letter, we have read the 19 minutes of
meetings of the stockholders, the Board of Directors and the
Executive Committee of the Board of Directors of the Company
and its subsidiaries as set forth in the minute books at ,
19 , Company officials having advised us that the minutes of
all such meetings through that date were set forth therein and
have carried out other procedures to , 19 (our
work did not extend to the period from , 19 to ,
19 , inclusive), as follows:
With respect to the period from January 1, 19 , to , 19
, we have:
(a) Read the incomplete unaudited consolidated financial
statements (incomplete in that relevant footnotes and a
statement of changes in financial position were not
available) of the Company and subsidiaries for
, , of both 19 and 19 furnished us by the
Company, officials of the Company having advised us
that no such financial statements as of any date or for
any period subsequent to , 19 were available; and
(b) Made inquires of certain Company officials who have
responsibility for financial and accounting matters
regarding whether the incomplete unaudited consolidated
financial statements referred to under (a) are stated
on a basis substantially consistent with that of the
audited consolidated financial statements incorporated
by reference in the Registration Statement and Prospec-
tus.
The foregoing procedures do not constitute an examination made in
accordance with generally accepted auditing standards. Also, they would not
necessarily reveal matters of significance with respect to the comments
in the following paragraph. Accordingly, we make no representations about
the sufficiency of the foregoing procedures for your purposes.
5. Nothing came to our attention as a result of the foregoing
procedures, however, that caused us to believe that:
(a) At 19 _ , there were any changes in the capital
stock or long-term debt of the Company and subsidiaries
consolidated (except for capitalized leases and long-
term debt incurred in the aggregate not in excess of
$2,000,000 principal amount) or any decrease in con-
solidated net assets as compared with amounts of such
items shown in the December 31, 19 _ audited consoli-
dated balance sheet, included in the Official State-
ment, except as occasioned by the
declaration or payment of dividends,
required payments on long-term debt, the issuance of
Common Stock of the Company under the Company's Tax
Reduction Act Stock Ownership Plan, Employee Stock
Purchase Plan, Shareholder's Dividend Reinvestment
Plan and Consumer Stock Plan or the utilization of
funds held by the pollution control bond trustees; or
(b) For the period from January 1, 19 _ to , 19_,
there were any decreases, as compared with the
corresponding period in the preceding year, in
consolidated operating revenues, operating income, net
earnings or net earnings applicable to common stock,
except in all instances for changes or decreases which
the Official Statement discloses have occurred or may
occur.
6. As mentioned under 4(a), Company officials have advised us that
no consolidated statements as of any date or for any period
subsequent to , 19 _ are available; accordingly, the
procedures carried out by us with respect to changes in
financial-statement items after , 19 _ , have, of
necessity, been even more limited than those with respect to
the periods referred to in 4. We have made inquiries of cer-\
tain Company officials who have responsibility for financial
and accounting matters regarding whether (i) there was any
change at , 19 in the capital stock or long-term debt of the
Company and subsidiaries consolidated (except for capitalized
leases and long-term debt incurred in the aggregate not in
excess of $2,000,000 principal amount) or any decrease in
consolidated net assets as compared with amounts of such items
shown in the December 31, 19 audited consolidated balance
sheet included in the Official Statement except as
occasioned by the declaration or payment of dividends,
required payments on long-term debt, the issuance of Common
Stock of the Company under the Company's Tax Reduction Act
Stock Ownership Plan, Employee Stock Purchase Plan, Share-
holder's Dividend Reinvestment Plan and Consumer Stock Plan or
the utilization of funds held by the pollution control bond
trustees; or (ii) for the period from , 19 _ , to
, 19_ , there were any decreases, as compared with the
corresponding period in the preceding year, in consolidated
operating revenues, operating income, net earnings or net
earnings applicable to common stock. On the basis of these
inquiries and our reading of the minutes as described in 4,
nothing came to our attention that caused us to believe that
there was any such change or decrease, except in all instances
for changes or decreases which the Official Statement
discloses have occurred or may occur.
7. This letter is solely for the information of, and assistance to, the
underwriters in conducting and documenting their investigation of the
affairs of the Company in connection with the offering of the bonds
covered by the Official Statement, and is not to be used, circulated,
quoted or otherwise referred to within or without the underwriting
group for any other purpose, including, but not limited to, the
purchase or sale of securities, nor is it to be referred to in whole
or in part in the Official Statement or any other document, except
that reference may be made to it in the bond purchase agreement or in
any list of closing documents pertaining to the offering of the bonds
covered by the Official Statement.
Very truly yours,
<PAGE>
EXHIBIT J
OPINION OF KELEHER & MCLEOD, P.A.
COUNSEL FOR PUBLIC SERVICE COMPANY OF NEW MEXICO
, 19
To: The Purchasers of M-S-R Bonds
Gentlemen:
We are Counsel to Public Service Company of New Mexico ("PNM") and in
such capacity we have represented PNM in connection with (i) the Purchase and
Participation Agreement dated as of November 19, 1982, and the supplement
thereto, between PNM and M-S-R Public Power Agency ("M-S-R") (the "Purchase
and Participation Agreement"), (ii) the First Amendment thereto dated May 31,
1983 (the "First Amendment"), (iii) the Early Purchase and Participation
Agreement dated , 19 , and (iv) the Interconnection Agreement
date , 19 .
We hereby restate as of the date hereof the opinions contained in our
letters dated November 29, 1982, and delivered to M-S-R in connection with
the Purchase and Participation Agreement as fully as if such opinions were
set forth at length herein.
Further, based upon our review of the material included in the Official
Statement as Appendix and our knowledge of PNM and without having
undertaken to determine independently the accuracy, completeness or fairness
of the statements contained in Appendix included in the Official
Statement, we have no reason to believe that Appendix (except for
financial and statistical information included or incorporated by reference
therein, as to which we express no view) in the Official Statement as of its
date and the date hereof contained or contains any untrue statement of a
material fact or omitted or omits to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
Very truly yours,
Keleher & McLeod, P.A.
<PAGE>
<PAGE>
MODIFICATION NO. 2 TO
CO-TENANCY AGREEMENT
BETWEEN
PUBLIC SERVICE COMPANY OF NEW MEXICO
AND
TUCSON ELECTRIC POWER COMPANY
THIS MODIFICATION NO. 2, to the Co-Tenancy Agreement Between PUBLIC
SERVICE COMPANY OF NEW MEXICO ("New Mexico") and TUCSON ELECTRIC POWER
COMPANY ("Tucson"), hereinafter sometimes referred to collectively as the
"Parties" or "Participants", is hereby entered into and executed this 31st
day of December, 1983.
WITNESSETH:
WHEREAS, New Mexico and Tucson entered into an agreement described as
the Co-Tenancy Agreement Between New Mexico and Tucson effective July 1,
1969, as modified by Modification No. 1 on May 16, 1979, ("Co-Tenancy
Agreement") which establishes certain terms and conditions relating to their
ownership and operation of the San Juan Project and Project Agreements: and
WHEREAS, by Purchase Agreement, dated as of May 16, 1979, New Mexico
and Tucson agreed to the sale by Tucson and purchase by New Mexico of
Tucson's 50% undivided interest in San Juan Unit 4, which sale was
consummated on May 16, 1979, with Tucson retaining an option ("Tucson
Option") to acquire up to a 28.8% ownership interest in San Juan Unit 4
("Ownership Interest") at a later date; and
WHEREAS, on November 17, 1981, New Mexico and the City of Farmington,
New Mexico ("Farmington") executed the San Juan Unit 4 Purchase Agreement
and Participation Agreement between New Mexico and Farmington ("Farmington
PAPA") pursuant to which New Mexico transferred to Farmington an 8.4751%
undivided ownership interest in San Juan Unit 4 ("San Juan Unit 4") of the
San Juan Project; and
WHEREAS, on November 29, 1982, Tucson sold, assigned and conveyed the
Tucson Option to purchase the Ownership Interest to M-S-R Public Power Agency
("M-S-R"), pursuant to the Tucson/San Juan Project Sale of Option Agreement,
and on November 29, 1982, New Mexico and M-S-R entered into the San Juan Unit
4 Purchase and Participation Agreement ("Purchase and Participation
Agreement"), and supplement thereto, which set forth the terms and conditions
of a sale by New Mexico to M-S-R of the Ownership Interest and the
participation between M-S-R and New Mexico in the operation and ownership of
San Juan Unit 4; and
WHEREAS, on November 30, 1982 M-S-R gave to New Mexico, and New Mexico
received from M-S-R Notice of Exercise of Option, by which M-S-R exercised
the Tucson Option to acquire the Ownership Interest; and
WHEREAS, on May 31, 1983, New Mexico and M-S-R entered into a First
Amendment to the Purchase and Participation Agreement, which provided for the
negotiation and execution by New Mexico and M-S-R of a definitive agreement
to provide for the purchase, sale and transfer of the Ownership Interest to
occur on or before December 31, 1983; and
WHEREAS, on September 26, 1983, New Mexico and M-S-R entered into the
San Juan Unit 4 Early Purchase and Participation Agreement ("EPPA"), into
which the Purchase and Participation Agreement, as amended, was merged and
modified, which provides, among other things, for such 1983 sale by New
Mexico and purchase by M-S-R of the Ownership Interest; and
WHEREAS, the EPPA provides, among other things, that amendments to the
San Juan Project Agreements to reflect M-S-R's acquisition of the Ownership
Interest shall have been executed and delivered at or before the Purchase
Closing (as said term is defined in the EPPA); and
WHEREAS, the Parties intend by this Modification No. 2 to amend the
Co-Tenancy Agreement to (1) acknowledge M-S-R's acquisition of its Ownership
Interest in San Juan Unit 4, in compliance with the conditions of the EPPA;
(2) to provide a mechanism whereby persons or entities acquiring an ownership
interest in and a generation entitlement from a San Juan generating unit may
also acquire voting rights and rights of committee participation, subject to
the conditions and limitations set forth herein; (3) to add one parcel of
real property to the San Juan Project; (4) to amend the description of one
parcel of San Juan Project lands; and (5) to extend the term of the
Co-Tenancy Agreement.
NOW, THEREFORE, New Mexico and Tucson agree that the Co-Tenancy
Agreement is hereby amended as follows:
1.0 Effective Date. This Modification No. 2 shall become effective
immediately upon the Purchase Closing contemplated in the EPPA, currently
anticipated to be December 31, 1983. In the event such Purchase Closing does
not occur prior to June 30, 1984, this Modification No. 2 shall be null and
void.
2.0 New Sections 2.10 and 2.11. New Sections 2.10 and 2.11 shall
be added to Section 2 to read in their entirety as follows:
2.10 The conveyances required to be made (a) by New
Mexico to Tucson and (b) by James Cooney, Trustee to New Mexico and
Tucson, as described in Section 2.3, have been executed, delivered,
and duly recorded in the records of San Juan County,
New Mexico. New Mexico and
Tucson have acquired additional lands by Patent from the United States
of America, such lands being described as:
Township 30 North, Range 15 West, N.M.P.M.,
Section 17, SE1/4SU1/4, S1/2SE1/4 San Juan
County, New Mexico,
and such lands are part of the San Juan Project.
2.11 The description of the River Water Diversion and Pump-
ing Station site as set forth in Exhibit I, Attachment C is hereby
amended to read as follows:
That part of Lot Six (6) in Section Four (4) and of Lot Five (5) in
Section Three (3), in Township Twenty-Nine (29) North, Range Fifteen
(15) West, N.M.P.M., San Juan County, New Mexico, described as follows:
Beginning at a point which is 772.69 feet, South 88 degrees 12'03"
East from the Northwest Corner of Lot 6:
Thence S.55 deg. 50'29"E., 205.55 feet;
Thence N.78 deg. 21'34"E., 457.06 feet;
Thence N.88 deg. 29'07"E., 746.61 feet;
Thence S.25 deg. 38'00"W., 1,177.50 feet;
Thence N.54 deg. 32'00"W., 1,291.70 feet;
Thence N.32 deg. 01'00"E., 372.20 feet to the point of beginning.
Containing 21.039 acres more or less.
3.0 New Section 5.30. A new Section 5.30 shall be added to
Section 5 to read in its entirety as follows:
5.30 Unit Participant: M-S-R and any other person or entity,
other than a Participant, which has both (a) an ownership interest of
five percent (5%) or greater in a San Juan generating unit, and (b) a
generation entitlement from such San Juan generating unit, provided the
following conditions have been fulfilled (except with respect to M-S-R,
which shall become a Unit Participant upon the effective date hereof
without any further action):
5.30.1 The Participant or Unit Participant which transferred
such ownership interest and generation entitlement to such person or
entity shall have executed a consent that such person or entity shall
have the voting rights of a Unit Participant set forth herein; and
5.30.2 Such person or entity shall have executed an
acceptance of such voting rights, subject to the terms and conditions
hereof.
4.0 Amended Section 9. Section 9 shall be amended to read in its
entirety as follows:
9.O COORDINATION COMMITTEE:
9.1 As a means of securing effective cooperation and
interchange of information and of providing consultation on a prompt
and orderly basis among the Participants and Unit Participants in
connection with various administrative and technical problems which may
arise from time to time under this Co-Tenancy Agreement, the parties
hereto hereby establish a Coordination Committee.
9.2 The Coordination Committee shall consist of one
representative from each Participant and Unit Participant who shall be
an officer of a Participant or duly authorized representative of a Unit
Participant. It shall be the function and responsibility of the
Coordination Committee to consider such matters as are herein
specifically provided and as may be provided from time to time by
amendment of or supplement to this Co-Tenancy Agreement.
9.3 The Coordination Committee shall have no authority to
modify any of the provisions of this Co-Tenancy Agreement.
9.4 Each Participant and Unit Participant shall notify the
other Participants and Unit Participants promptly of the designation
of its representative on the Coordination Committee and of any
subsequent change in such designation. Any of the Participants and
Unit Participants may, by written notice to the other Participants and
Unit Participants, designate an alternate or substitute to act as its
representative on the Coordination Committee in the absence of the
regular member of the Coordination Committee or to act on specified
occasions or with respect to specified matters.
9.5 No action may be taken by the Coordination Committee
unless such action is agreed to by all of the Participants and Unit
Participants entitled to vote thereon acting through their
representatives on the Coordination Committee. A Participant's
Coordination Committee member shall be entitled to vote on all matters
except those matters which relate solely to a generating unit in which
such Participant does not have an ownership interest. A Unit
Participant's Coordination Committee member shall have a right to vote
only on matters which relate solely to a specific generating unit in
which such Unit Participant has both an ownership interest and
generation entitlement. It is agreed that maintenance
scheduling, and operation during periods of curtailment of the total
San Juan Project pursuant to Section 10, Paragraph 10.2 of this
Co-Tenancy Agreement are not matters which relate solely to a
specific generating unit, but are matters affecting all units of the
San Juan Project. On matters which relate to generating units in
which a Unit participant has no ownership interest, or common
facilities of the San Juan Project, a Unit Participant shall have no
vote; provided however that:
9.5.1 With respect to matters involving and not solely
related to San Juan Unit 4, Tucson, as a Participant holding
voting rights on the Coordination Committee, shall retain such
voting rights for M-S-R, with the obligation to consult with
M-S-R on all matters involving the San Juan Project which
affect San Juan Unit 4 as set forth in the San Juan Unit No. 4
Sale of Option Agreement, dated November 29, 1982, between
Tucson and M-S-R, and the EPPA.
9.6In the event of disagreement among Coordination Committee
members as to whether a matter relates solely to a specific San Juan
generating unit or to other generating units or common facilities of
the San Juan Project, then such determination shall be made by the
agreement of the New Mexico and Tucson Coordination Committee
members,
9.7 In the event the Coordination Committee fails to reach
agreement on a matter that has earlier been determined to relate solely
to San Juan Unit 4, which such committee is authorized to determine,
approve, or otherwise act upon after a reasonable opportunity to do so,
then the Project Manager or Operating Agent (as said terms are
respectively defined in the San Juan ProJect Construction Agreement and
San Juan Project Operating Agreement) shall be authorized and obligated
to take such action as in its discretion it deems to be necessary to
the successful and proper construction, operation and maintenance of
San Juan Unit 4, pending the resolution, by arbitration or otherwise,
of any such inability or failure to agree.
5.0 Amended Section 21.1: Section 21.1 shall be amended to read in
its entirety as follows:
21.1 This Co-Tenancy Agreement shall continue in force and
effect for a period of fifty-three (53) years from July 1, 1969.
6.0 Amended Section 25.8. Section 25.8 shall be amended to
read in its entirety as follows:
25.8 Except as modified by the provisions set forth in
this Modification No. 2, all of the terms and conditions of
this Co-Tenancy Agreement, effective as of July 1, 1969, as
modified by Modification No. 1 as of May 16, 1979, shall
remain in full force and effect.
7.0 New Section 25.9 A new Section 25.9 shall be added to
Section 25 to read in its entirety as follows:
25.9 The distinction between a Unit Participant and a
Participant, as used in Section 5.30 and Section 9 is made in
order to provide Unit Participants certain voting rights
and rights of committee participation. Except as
specifically set forth herein, such provisions are not intended
to, and do not modify, reduce, or expand the liabilities,
duties, rights or obligations between the Participants and Unit
Participants, as may exist by reason of the applicability of
other provisions of this Co-Tenancy Agreement by virtue of any
other agreement between a Participant and a Unit Participant.
Except with respect to voting rights and committee
participation, the rights, obligations, or the liability of a
Unit Participant and a Participant shall be identical.
8.0 New Section 26. A new Section 26 shall be added to
read in its entirety as follows:
26.0 RECOGNITION OF M-S-R AND FARMINGTON
ACKNOWLEDGEMENT
26.1 The Parties recognize that M-S-R and Farmington
each have acknowledged that it is familiar with the San Juan
Project Agreements between New Mexico and Tucson and such
agreements govern the activities of the San Juan
Project and that where a
specific provision of the EPPA or of the Farmington PAPA is in
conflict with a provision in one or more of the San Juan Pro-
ject Agreements, then (a) as between New Mexico and M-S-R the
provisions of the EPPA shall govern, all as provided in Section
5.2 of such EPPA, and (b) as between New Mexico and Farming-
ton the provisions of the Farmington PAPA shall govern, all as
provided in Section 8.2 of the Farmington PAPA.
9.0 New Section 27. A new Section 27 shall be added to read in its
entirety as follows:
27.0 RESTRICTIONS ON FURTHER AMENDMENTS
27.1 New Mexico and Tucson shall not, by further amendment,
modification, or early termination of this Co-Tenancy Agreement,
abrogate, dilute or deny the voting rights or rights of committee
participation accorded a Unit Participant herein, without the
advance written consent of such Unit Participant.
IN WITNESS WHEREOF, New Mexico and Tucson have caused this Modification
No. 2 to be executed as of this 31st day of December, 1983.
PUBLIC SERVICE COMPANY OF NEW MEXICO
By
Vice President
Its
TUCSON ELECTRIC POWER COMPANY
By
Its
STATE OF NEW MEXICO
ss.
COUNTY OF BERNALILLO
The foregoing instrument was acknowledged before me this 28th day of
December, 1983, by C.D. Bedford, a Senior Vice President of Public Service
Company of New Mexico, a New Mexico corporation, on behalf of said
corporation.
NOTARY PUBLIC
My Commission Expires
STATE OF ARIZONA
ss.
COUNTY OF PIMA
The foregoing instrument was acknowledged before me this 28th day of
December, 1983, by Einar Greve, Executive Vice President of Tucson Electric
Power Company, an Arizona corporation on behalf of said corporation.
NOTARY PUBLIC
My Commission Expires
<PAGE>
<PAGE>
MODIFICATION NO. 2 TO
SAN JUAN PROJECT CONSTRUCTION AGREEMENT
BETWEEN
PUBLIC SERVICE COMPANY OF NEW MEXICO
AND
TUCSON ELECTRIC POWER COMPANY
THIS MODIFICATION NO. 2, To the San Juan Project Construction Agreement
between PUBLIC SERVICE COMPANY OF NEW MEXICO ("New Mexico") and TUCSON
ELECTRIC POWER COMPANY ("Tucson"), hereinafter sometimes referred to
collectively as the "Parties" or "Participants", is hereby entered into and
executed this 31st day of December, 1983.
WITNESSETH:
WHEREAS, New Mexico and Tucson entered into an agreement described as
the San Juan Project Construction Agreement Between New Mexico and Tucson
effective July 1, 1969, as modified by Modification No. 1 on May 16, 1979,
("Construction Agreement") which establishes certain terms and conditions
relating to their participation and responsibility in the construction of the
San Juan Project; and
WHEREAS, by Purchase Agreement, dated as of May 16, 1979, New Mexico
and Tucson agreed to the sale by Tucson and purchase by New Mexico of
Tucson's 50% undivided interest in San Juan Unit 4, which sale was
consummated on May 16, 1979, with Tucson retaining an option ("Tucson
Option") to acquire up to a 28.8% ownership interest in San Juan Unit 4
("Ownership Interest") at a later date; and
WHEREAS, on November 17, 1981, New Mexico and the City of Farmington,
New Mexico ("Farmington") executed the San Juan Unit 4 Purchase Agreement and
Participation Agreement between New Mexico and Farmington ("Farmington PAPA")
pursuant to which New Mexico transferred to Farmington an 8.475% undivided
ownership interest in San Juan Unit 4 ("San Juan Unit 4") of the San Juan
Project; and
WHEREAS, on November 29, 1982, Tucson sold, assigned and conveyed the
Tucson Option to purchase the Ownership Interest to M-S-R Public Power Agency
("M-S-R"), pursuant to the Tucson/San Juan Project Sale of Option Agreement,
and on November 29, 1982, New Mexico and M-S-R entered into the San Juan Unit
4 Purchase and Participation Agreement ("Purchase and Participation
Agreement"), and supplement thereto, which set forth the terms and
conditions of a sale by New Mexico to M-S-R of the Ownership Interest and the
participation between M-S-R and New Mexico in the operation and ownership of
San Juan Unit 4; and
WHEREAS, on November 30, 1982 M-S-R gave to New Mexico, and New Mexico
received from M-S-R Notice of Exercise of Option, by which M-S-R exercised
the Tucson Option to acquire the Ownership Interest; and
WHEREAS, on May 31, 1983, New Mexico and M-S-R entered into a First
Amendment to the Purchase and Participation Agreement, which provided for the
negotiation and execution by New Mexico and M-S-R of a definitive agreement
to provide for the purchase, sale and transfer of the Ownership Interest to
occur on or before December 31, 1983; and
WHEREAS, on September 26, 1983, New Mexico and M-S-R entered into the
San Juan Unit 4 Early Purchase and Participation Agreement ("EPPA"), into
which the Purchase and Participation Agreement, as amended, was merged and
modified which provides, among other things, for such 1983 sale by New
Mexico and purchase by M-S-R of the Ownership Interest; and
WHEREAS, the EPPA provides, among other things, that amendments to the
San Juan Project Agreements to reflect M-S-R's acquisition of the Ownership
Interest shall have been executed and delivered at or before the Purchase
Closing (as said term is defined in the EPPa); and
WHEREAS, the Parties intend by this Modification No. 2 to amend the
Construction Agreement (1) to acknowledge M-S-R's acquisition of its
Ownership Interest in San Juan Unit 4, in compliance with the conditions of
the EPPA; and (2) to provide a mechanism whereby persons or entitles
acquiring an ownership interest in and a generation entitlement from a San
Juan generating unit may also acquire voting rights and rights of committee
participation, subject to the conditions and limitations set forth herein.
NOW, THEREFORE, New Mexico and Tucson agree that the Construction
Agreement is hereby amended as follows:
1.0 Effective Date. This Modification No. 2 shall be effective
immediately upon the Purchase Closing contemplated in the EPPA, currently
anticipated to be December 31, 1983. In the event such Purchase Closing does
not occur prior to June 30, 1984, this Modification No. 2 shall be null and
void.
2.0 New Section 5.39.1. A new Section 5.39.1 shall be added to
Section 5 between Sections 5.39 and 5.40 to read in its entirety as follows:
5.39.1 Unit Participant: M-S-R and any other person or entity
other than a Participant, which has both (a) an ownership interest of
five percent (5%) or greater in a San Juan generating unit, and (b) a
generation entitlement from such San Juan generating unit, provided the
following conditions have been fulfilled (except with respect to M-S-R,
which shall become a Unit Participant upon the effective date hereof
without any further action):
5.39.1.1 The Participant or Unit Participant which
transferred such ownership interest and generation entitlement
to such person or entity shall have executed a consent that
such person or entity shall have the voting rights of a Unit
Participant set forth herein; and
5.39.1.2 Such person or entity have executed an
acceptance of such voting rights, subject to the terms and
conditions hereof.
3.0 Amended Section 21. Section 21 shall be amended to read in its
entirety as follows:
21.0 ADMINISTRATION:
21.1 The Project Manager shall keep the Coordination Committee fully
and promptly advised on major matters relating to the performance of Project
Work.
21.2 The Engineering and Operating Committee consists of not more
than two representatives designated by each of the Participants and Unit
Participants, and each such representative is authorized by the Participant
or Unit Participant by whom he is designated, to act on its behalf with
respect to those matters herein provided to be the responsibilities of the
Engineering and Operating Committee. The functions and responsibilities of
the Engineering and Operating Committee under this Construction Agreement
shall be the following:
21.2.1 To act as the liaison among the Participants, Unit Participants
and the Project Manager.
21.2.2 To perform such other functions and responsibilities as may be
assigned to it by the Coordination Committee.
21.3 Each Participant and Unit Participant shall notify the other
Participants and Unit Participants promptly of any change in the designation
of its representatives on the Engineering and Operating Committee. Any of
the Participants and Unit Participants may, by written notice to the other
Participants and Unit Participants, designate an alternate or substitute to
act as its representative on the Engineering and Operating committee in the
absence of the regular members of the Engineering and Operating Committee or
to act on specified occasions with respect to specified matters.
21.4 No action may be taken by the Engineering and Operating Committee
unless such action is agreed to by all of the Participants and Unit
Participants entitled to vote thereon acting through their representatives
on the Engineering and Operating Committee. This provisions is subject to
the limits established for the Engineering and Operating Committee in Section
8.3 of the Operating Agreement.
21.5 The Engineering and Operating Committee shall keep written
minutes and records of all meetings and any action or determination by the
Engineering and Operating Committee shall be reduced to writing, to become
effective when signed by duly authorized representatives of the Participants
and Unit Participants entitled to vote thereon.
21.6 If the Engineering and Operating Committee shall be unable to
agree on any matter within the scope of its responsibility under the terms
and conditions of this Construction Agreement, such matter shall be referred
in writing to the Coordination Committee.
21.7 The Auditing Committee consists of not more than two
representatives designated by each of the Participants and Unit Participants,
and each such representative is authorized by the Participant or Unit
Participant by whom he is designated, to act on its behalf with respect to
those matters herein provided to be the responsibilities of the Auditing
Committee. The functions and responsibilities of the Auditing Committee
under this Construction Agreement shall be the following:
21.7.1 To make audits of the expenditures made and obligations
incurred by the Project Manager in the performance of the terms and
conditions of this Construction Agreement. The audits will be made
when deemed necessary by the Participants or at the request of either
of them.
21.7.2 To certify to the Participants and Unit Participants
whether the Project Manager's accounting methods and records are in
accordance with the terms and conditions of this Construction
Agreement.
21.7.3 To review and make written recommendations to the
Participants and Unit Participants on all matters referred to the
Auditing Committee.
21.8 Each Participant and Unit Participant shall notify the other
Participants and Unit Participants promptly of any change in the designation
of its representatives on the Auditing Committee. Any Participant and Unit
Participant may, by written notice to the other Participants and Unit
Participants, designate an alternate or substitute to act as its
representative on the Auditing Committee in the absence of the regular
members of the Auditing Committee or to act on specified occasions with
respect to specified matters.
21.9 No action may be taken by the Auditing Committee unless such
action is agreed to by all of the Participants and Unit Participants entitled
to vote thereon acting through their representatives on the Auditing
Committee.
21.10 The Auditing Committee shall keep written minutes and records
of all meetings and any action or determination by the Auditing Committee shall
be reduced to writing, to become effective when signed by duly authorized
representatives of the Participants and Unit Participants entitled to vote
thereon.
21.11 If the Auditing Committee is unable to agree on any matter
within the scope of its responsibility under the terms and conditions of this
Construction Agreement, such matter shall be referred in writing to the
Coordination Committee.
21.12 The Coordination, Engineering and Operating, and Auditing
Committees or any other committees established under any of the Project
Agreements shall have no authority to modify any of the provisions of this
Construction Agreement.
21.13 The Project Manager shall consult with the Operating Agent on
engineering design considerations which have an effect on the operation or
maintenance of the San Juan Project, in accordance with the Project Manager's
existing practice with its own Power Production Department.
21.14 A Participant's committee members shall be entitled to vote on
all matters except those matters which relate solely to a generating unit in
which such Participant does not have an ownership interest. A Unit
Participant has both an ownership interest and generation entitlement. On
matters which relate to generating units in which a Unit Participant has no
ownership interest, or common facilities of the San Juan Project, a Unit
Participant shall have no vote; provided however that:
21.14.1 With respect to matters involving and not solely re-
lated to San Juan Unit 4, Tucson, as a Participant
holding voting rights on
the Coordination, Engineering and Operating, and Auditing Committees,
shall retain such voting rights for M-S-R, with the obligation to
consult with M-S-R on all matters involving the San Juan Project which
affect San Juan 4 as set forth in the San Juan Unit No. 4 Sale of
Option Agreement, dated November 29, 1982, between Tucson and M-S-R,
and the EPPA.
21.15 In the event of disagreement among members of a particular
San Juan Project committee as to whether a matter brought properly before such
committee relates solely to a specific San Juan generating unit or to other
generating units or common facilities of the San Juan Project, then such
determination shall be made by the agreement of the New Mexico and Tucson
members of such committee. If the New Mexico and Tucson members of the
Auditing Committee or Engineering and Operating Committee are unable to agree
on such a matter, then the matter shall be referred to the New Mexico and
Tucson members of the Coordination Committee.
21.16 In the event the Coordination Committee, or Engineering and
Operating Committee, or Auditing Committee fails to reach agreement on a
matter that has earlier been determined to relate solely to San Juan Unit
4, which such committee is authorized to determine, approve, or otherwise act
upon after a reasonable opportunity to do so, then the Project Manager (as
said term is defined in this Construction Agreement) shall be authorized and
obligated to take such action as in its discretion it deems to be necessary
to the successful and proper construction, operation, and maintenance of San
Juan Unit 4 pending the resolution, by arbitration or otherwise, of any such
inability or failure to agree.
4.0 Amended Section 18.10. Section 18.10 shall be amended to read
in its entirety as follows:
18.10 Except as modified by the provisions set forth in this
Modification No. 2, all of the terms and conditions of this
Construction Agreement shall remain in full force and effect.
5.0 New Section 18.11. A new Section 18.11 shall be added to Section
18 to read in its entirety as follows:
18.11 The distinction between a Unit Participant and a
Participant, as used in Section 5.39.1 and Section 21 is made in order
to provide Unit Participants certain voting rights and rights of
committee participation. Except as specifically set forth herein, such
provisions are not intended to, and do not, modify, reduce, or expand
the liabilities, duties, rights, or obligations between the
Participants and Unit Participants, as may exist by reason of the
applicability of other provisions of this Construction Agreement by
virtue of any other agreement between a Participant and Unit
Participant. Except with respect to voting rights and committee
participation, the rights, obligations, or the liability of a Unit
Participant and a Participant shall be identical.
6.0 New Section 22. A new Section 22 shall be added to read in its
entirety as follows.
22.0 RECOGNITION OF M-S-R AND FARMINGTON ACKNOWLEDGEMENT.
22.1 The Parties recognize that M-S-R and Farmington each have
acknowledged that it is familiar with the San Juan Project Agreements
between New Mexico and Tucson and such agreements govern the activities
of the San Juan Project and that where a specific provision of the EPPA
or of the Farmington PAPA is in conflict with a provision in one or
more of the San Juan Project Agreements, then (a) as between New Mexico
and M-S-R the provisions of the EPPA shall govern, all as provided in
Section 5.2 of such EPPA, and (b) as between New Mexico and Farmington
the provisions of the Farmington PAPA shall govern, all as provided in
Section 8.2 of the Farmington PAPA.
7.0 New Section 23. A new Section 23 shall be added to read in its
entirety as follows:
23.0 RESTRICTIONS ON FURTHER AMENDMENTS.
23.1 New Mexico and Tucson shall not, by further amendment or
modification of this Construction Agreement, abrogate, dilute or deny
the voting rights or rights of committee participation accorded a Unit
Participant herein, without the advance written consent of such Unit
Participant.
<PAGE>
IN WITNESS WHEREOF, New Mexico and Tucson have caused this Modification
No. 2 to be executed as of this 31st day of December, 1983.
PUBLIC SERVICE COMPANY OF NEW MEXICO
By
Its Vice President
TUCSON ELECTRIC POWER COMPANY
By
Its Executive Vice President<PAGE>
STATE OF NEW MEXICO
ss.
COUNTY OF BERNALILLO
The foregoing instrument was acknowledged before me this 28th day of
December, 1983, by C.D. Bedford , a Senior Vice President of Public
Service Company of New Mexico, a New Mexico corporation, on behalf of said
corporation.
NOTARY PUBLIC
My Commission Expires:
STATE OF ARIZONA
ss.
COUNTY OF PIMA
The foregoing instrument was acknowledged before me this 28th day of
December, 1983, by Einar Greve, Executive Vice President of Tucson Electric
Power Company, a Arizona corporation, on behalf of said corporation.
NOTARY PUBLIC
My Commission Expires:
<PAGE>
<PAGE>
MODIFICATION NO. 2 TO
SAN JUAN PROJECT OPERATING AGREEMENT
BETWEEN
PUBLIC SERVICE COMPANY OF NEW MEXICO
AND
TUCSON ELECTRIC POWER COMPANY
THIS MODIFICATION NO. 2 to the San Juan Project Operating Agreement
between PUBLIC SERVICE COMPANY OF NEW MEXICO ("New Mexico") and TUCSON
ELECTRIC POWER COMPANY ("Tucson"), hereinafter sometimes referred to
collectively as the "Parties" or "Participants", is hereby entered into and
executed this 31st day of December, 1983.
WITNESSETH:
WHEREAS, New Mexico and Tucson entered into an agreement described as
the San Juan Project Operating Agreement between New Mexico and Tucson
effective January 1, 1973, as modified by Modification No. 1 on May 16, 1979,
("Operating Agreement") which establishes certain terms and conditions
relating to their participation and responsibility in the operation of the
San Juan Project; and
WHEREAS, by Purchase Agreement, dated as of May 16, 1979, New Mexico
and Tucson agreed to the sale by Tucson and purchase by New Mexico of
Tucson's 50% undivided interest in San Juan Unit 4, which sale was
consummated on May 16, 1979, with Tucson retaining an option ("Tucson
Option") to acquire up to a 28.8% ownership interest in San Juan Unit 4
("Ownership Interest") at a later date; and
WHEREAS, on November 17, 1981, New Mexico and the City of Farmington,
New Mexico ("Farmington") executed the San Juan Unit 4 Purchase Agreement and
Participation Agreement between New Mexico and Farmington ("Farmington PAPA")
pursuant to which New Mexico transferred to Farmington an 8.475% undivided
ownership interest in San Juan Unit 4 ("San Juan Unit 4") of the San Juan
Project; and
WHEREAS, on November 29, 1982, Tucson sold, assigned and conveyed the
Tucson Option to purchase the Ownership Interest to M-S-R Public Power Agency
("M-S-R"), pursuant to the Tucson/San Juan Project Sale of Option Agreement,
and on November 29, 1982, New Mexico and M-S-R entered into the San Juan Unit
4 Purchase and Participation Agreement ("Purchase and Participation
Agreement"), and supplement thereto, which set forth the terms and conditions
of a sale by New Mexico to M-S-R of the Ownership Interest and the
participation between M-S-R and New Mexico in the operation and ownership of
San Juan Unit 4; and
WHEREAS, on November 30, 1982 M-S-R gave to New Mexico, and New Mexico
received from M-S-R Notice of Exercise of Option, by which M-S-R exercised
the Tucson Option to acquire the Ownership Interest; and
WHEREAS, on May 31, 1983, New Mexico and M-S-R entered into a First
Amendment to the Purchase and Participation Agreement, which provided for the
negotiation and execution by New Mexico and M-S-R of a definitive agreement
to provide for the purchase, sale and transfer of the Ownership Interest to
occur on or before December 31, 1983; and
WHEREAS, on September 26, 1983, New Mexico and M-S-R entered into the
San Juan Unit 4 Early Purchase and Participation Agreement ("EPPA"), into
which the Purchase and Participation Agreement, as amended, was merged and
modified which provides, among other things, for such 1983 sale by New
Mexico and purchase by M-S-R of the Ownership Interest; and
WHEREAS, the EPPA provides, among other things, that amendments to the
San Juan Project Agreements to reflect M-S-R's acquisition of the Ownership
Interest shall have been executed and delivered at or before the Purchase
Closing (as said term is defined in the EPPa); and
WHEREAS, the Parties intend by this Modification No. 2 to amend the
Operating Agreement (1) to acknowledge M-S-R's acquisition of its Ownership
Interest in San Juan Unit 4, in compliance with the conditions of the EPPA;
and (2) to provide a mechanism whereby persons or entitles acquiring an
ownership interest in and a generation entitlement from a San Juan
generating unit may also acquire voting rights and rights of committee
participation, subject to the conditions and limitations set forth herein.
NOW, THEREFORE, New Mexico and Tucson agree that the Operating
Agreement is hereby amended as follows:
1.0 Effective Date. This Modification No. 2 shall be effective
immediately upon the Purchase Closing contemplated in the EPPA, currently
anticipated to be December 31, 1983. In the event such Purchase Closing does
not occur prior to June 30, 1984, this Modification No. 2 shall be null and
void.
2.0 New Section 5.53.1. A new Section 5.53.1 shall be added to
Section 5 between Sections 5.53 and 5.54 to read in its entirety as follows:
5.53.1 Unit Participant: M-S-R and any other person or entity,
other than a Participant, which has both (a) an ownership interest of
five percent (5%) or greater in a San Juan generating unit, and (b) a
generation entitlement from such San Juan generating unit, provided the
following conditions have been fulfilled (except with respect to M-S-R,
which shall become a Unit Participant upon the effective date hereof
without any further action):
5.53.1.1 The Participant or Unit Participant which
transferred such ownership interest and generation entitlement
to such person or entity shall have executed a consent that
such person or entity shall have the voting rights of a Unit
Participant set forth herein; and
5.53.1.2 Such person or entity have executed an
acceptance of such voting rights, subject to the terms and
conditions hereof.
3.0 Amended Section 7. Section 7 shall be amended to read in its
entirety as follows:
7.0 COORDINATION COMMITTEE:
7.1 The Coordination Committee shall remain in existence during the
term of this Operating Agreement.
7.2 In addition to the functions and responsibilities of the
Coordination Committee described in the other Project Agreements, the
Coordination committee shall have the following functions and
responsibilities under this Operating Agreement.
7.2.1 To provide liaison among the Participants, Unit Participants.
7.2.2 Exercise general supervision over the Engineering and Operating
Committee and the Auditing Committee.
7.2.3 Consider and act upon all matters referred to the Coordination
Committee by the Engineering and Operating Committee and the Auditing
Committee.
7.3 The Coordination Committee shall have no authority to modify
any provisions of the Project Agreements. No action may be taken by the
Coordination Committee unless such action is agreed to by all of the
Participants and Unit Participants entitled to vote thereon acting through
their representatives on the Coordination Committee, and action by the
Coordination Committee shall constitute action by the Participants and Unit
Participants. A Participant's Coordination committee member shall be
entitled to vote on all matters except those matters which relate solely to
a generating unit in which each Participant does not have an ownership
interest. A Unit Participant's Coordination Committee member shall have a
right to vote only on matters which relate solely to a specific generating
unit in which Unit Participant has both an ownership interest and generation
entitlement. It is agreed that maintenance scheduling and operation during
periods of curtailment of the total San Juan Project pursuant to Section 10,
Paragraph 10.2 of the Co-Tenancy Agreement are not matters which relate
solely to a specific generating unit, but are matters affecting all units of
the San Juan Project. On matters which relate to generating units in which
a Unit Participant has no ownership interest, or common facilities of the San
Juan Project, a Unit Participant shall have no vote; provided however that:
7.3.1 With respect to matters involving and not solely related
to San Juan Unit 4, Tucson, as a Participant holding voting rights on
the Coordination Committee, shall retain such voting rights for M-S-R,
with the obligation to consult with M-S-R on all matters involving the
San Juan Project which affect San Juan Unit 4 as set forth in the San
Juan Unit No. 4 Sale of Option Agreement, dated November 29, 1982,
between TEP and M-S-R and the EPPA.
7.4 Any action, agreement or determination made by the Coordination
Committee shall be reduced to writing and shall become effective when signed
by such representatives of each Participant and Unit Participant or
authorized alternates entitled to vote thereon; provided, in the event of an
Operating Emergency, action or determination may be made on the basis of oral
agreements among duly authorized representatives of the respective
Participants and Unit Participants entitled to vote thereon, and such action
or determination subsequently shall be reduced to writing.
7.5 Each Participant and Unit Participant shall notify the other
Participants and Unit Participants promptly of any change in the designation
of its representative on the Coordination committee. Each Participant and
Unit Participant may, by written notice to the other Participants and Unit
Participants, designate an alternate or substitute to act as its
representative in the absence of its regular member or to act on specified
occasions with respect to specified matters.
7.6 In the event of disagreement among Coordination Committee members
as to whether a matter relates solely to a specific San Juan generating unit
or to other generating units or common facilities of the San Juan Project,
then such determination shall be made by the agreement of the New Mexico and
Tucson Coordination Committee members.
7.7 In the event the Coordination Committee fails to reach agreement
on a matter that has earlier been determined to relate solely to San Juan
Unit 4, which such committee is authorized to determine, approve, or
otherwise act upon after a reasonable opportunity to do so, then the
Operating Agent (as said term is defined in this Operating Agreement) shall
be authorized and obligated to take such action as in its discretion it deems
to be necessary to the successful and proper construction, operation, and
maintenance of San Juan Unit 4, pending the resolution, by arbitration of
otherwise, of any such inability or failure to agree.
4.0 Amended Section 8. Section 8 shall be amended to read in its entirety
as follows:
8.0 ENGINEERING AND OPERATING COMMITTEE:
8.1 The Engineering and Operating Committee shall remain in existence
during the term of this Operating Agreement.
8.2 In addition to the functions and responsibilities of the
Engineering and Operating Committee described in the other Project
Agreements, the Engineering and Operating Committee shall have the following
functions and responsibilities under this Operating Agreement.
8.2.1 Review and approve the following items related to the
performance of Operating work.
8.2.1.1 The Annual capital expenditures budget.
8.2.1.2 The annual manning table.
8.2.1.3 The annual operation and maintenance budget.
8.2.1.4 The written statements of operating procedures.
8.2.1.5 The planned maintenance schedule and a list of
contractors for contract maintenance included in the annual
maintenance budget.
8.2.1.6 The policies for establishing the Emergency
Spare Parts inventory.
8.2.1.7 The policies for establishing the inventory
for Material and Supplies.
8.2.1.8 The statistical and administrative reports,
budgets and information and other similar records, and the form
thereof, to be kept and furnished by the Operating Agent, in
accordance with Section 6.3.15 hereof (excluding accounting
records used internally by the Operating Agent for the purpose
of accumulating financial and statistical data, such as books
of original entry, ledgers, work papers, and source documents).
8.2.1.9 The operating procedures and criteria for
determining Net Effective Generating Capacity, Minimum Net
Generation, Zero Net Load, and Net Energy Generation of the San
Juan Project.
8.2.1.10 The principles and procedures for establishing
communication channels among Participants and Unit Participants.
8.2.1.11 The operating procedures for performance and
efficiency testing.
8.2.1.12 The operating procedures for maintaining
complete and accurate Power and Energy accounting.
8.2.1.13 The Operating Agent's estimate and analysis of
the total expenditures resulting from an Operating Emergency, as
provided in Section 16.7 herein.
8.2.1.14 The results and expenditures of programs and
contracts on environmental control and data collection for which
the Operating Agent has contracted.
8.2.2 Establish the amount of coal to be maintained in the
Emergency Coal Storage Pile.
8.2.3 Establish operating procedures for delivery of coal to the
Emergency Coal Storage Pile.
8.2.4 Establish procedures for the operation of the San Juan
Project during any period of curtailed operations which reduces or may
reduce the Net Effective Generating Capacity.
8.2.5 Establish criteria for determination of Date of Firm
Operation.
8.2.6 Except for Project Work which is defined in Section 5.28
of the Construction Agreement, and except for an Operating Emergency
as provided in Section 16 hereof, designate a construction agent
responsible for the design, construction and acquisition of Capital
Additions, Capital Betterments and Capital Replacements.
8.2.7 Establish operating procedures under which the Operating
Agent shall determine the fuel requirements for the San Juan Project.
8.2.8 Approve the list of transportation and motorized equipment
to be purchased or leased by the Operating Agent for use in the
performance of Operating Work.
8.2.9 Perform such other functions and responsibilities as may
be assigned to it from time to time by the Coordination Committee.
8.2.10 Establish a list of approved contractors with which the
Operating Agent may contract with in the performance of Operating Work.
8.3 The Engineering and Operating committee shall have no
authority to modify any of the provisions of this Operating Agreement.
No action may be taken by the Engineering and Operating Committee
unless such action is agreed to by all of the Participants and Unit
Participants entitled to vote thereon acting through their
representatives on the Engineering and Operating Committee. A
Participant's Engineering and Operating Committee members shall be
entitled to vote on all matters except those matters which relate
solely to a generating unit in which such Participant does not have an
ownership interest. A Unit Participant's Engineering and Operating
Committee members shall have a right to vote only on matters which
relate solely to a specific generating unit in which such Unit
Participant has both an ownership interest and generation entitlement.
It is agreed that maintenance scheduling and operation during periods
of curtailment of the total San Juan Project pursuant to Section 10,
Paragraph 10.2 of the Co-Tenancy Agreement are not matters which relate
solely to a specific generating unit, but are matters affecting all
units of the San Juan Project. On matters which relate to generating
units in which a Unit Participant has no ownership interest, or common
facilities of the San Juan Project, a Unit Participant shall have no
vote; provided however that:
8.3.1 With respect to matters involving and not solely
related to San Juan Unit 4, Tucson, as a Participant holding
voting rights on the Engineering and Operating Committee, shall
retain such voting rights for M-S-R, with the obligation to
consult with M-S-R on all matters involving the San Juan Project
which affect San Juan Unit 4 as set forth in the San Juan Unit
No. 4 Sale of Option Agreement, dated November 29, 1982, between
TEP and M-S-R, and the EPPA.
8.4 The Engineering and Operating committee shall keep written minutes
and records of all meetings, and any action or determination made by the
Engineering and Operating committee shall be reduced to writing and shall
become effective when signed by a representative of each Participant and Unit
Participant on the Engineering and Operating Committee or authorized
alternates entitled to vote thereon, except that in the event of an Operating
Emergency, action may be taken or a determination may be made on the basis
of oral agreements among duly authorized representatives of the respective
Participants and Unit Participants entitled to vote thereon and such action
or determination subsequently shall be reduced to writing.
8.5 Each Participant and Unit Participant shall notify the other
Participants and Unit Participants promptly of any change in the designation
of its representatives on the Engineering and Operating Committee. Each
Participant and Unit Participant may, by written notice to the other
Participants and Unit Participants, designate an alternate or substitute to
act as such representative in the absence of any of its regular members or
to act on specified occasions with respect to specified matters.
8.6 In the event of disagreement among Engineering and Operating
Committee members as to whether a matter relates solely to a specific San
Juan generating unit or to other generating units or common facilities of the
San Juan Project, then such determination shall be made by the agreement of
the New Mexico and Tucson Engineering and Operating Committee members. If
the New Mexico and Tucson Engineering and Operating Committee members cannot
agree on such matter, the matter shall be referred to the New Mexico and
Tucson members of the Coordination Committee.
8.7 In the event the Engineering and Operating committee fails to
reach agreement on a matter that has earlier been determined to relate solely
to San Juan Unit 4, which such committee is authorized to determine, approve,
or otherwise act upon after a reasonable opportunity to do so, then the
Operating Agent shall be authorized and obligated to take such action as in
its discretion it deems to be necessary to the successful and proper
construction, operation, and maintenance of San Juan Unit 4 pending the
resolution, by arbitration or otherwise, of any such inability or failure to
agree.
5.0 Amended Section 9. Section 9 shall be amended to read in its entirety
as follows:
9.0 AUDITING COMMITTEE:
9.1 The Auditing Committee shall remain in existence during the term
of this Operating Agreement.
9.2 In addition to the functions and responsibilities of the Auditing
Committee described in the other Project Agreements, the Auditing Committee
shall have the following functions and responsibilities under this Operating
Agreement:
9.2.1 Review internal control and make periodic audits of the
records maintained by the Operating Agent in its performance of
Operating Work and any other company records maintained by the
Operating Agent in support of its billings to the Participants and Unit
Participants.
9.2.2 Review and approve the format and content of the Operating
Agent's accounting records and reports for Operating Work.
9.2.3 Certify to the Participants and Unit Participants that
the Operating Agent's results of operations and accounting methods and
records, including any allocations for Operating Work, are in
accordance with the Project Agreements and Accounting Practice.
9.2.4 Review and approve the Participant's administrative and
general expense allowance and other normal loadings when such
Participant acts as construction agent for Capital Additions, Capital
Betterments, and Capital Replacements.
9.2.5 Review and approve the Operating Agent's cost and expense
allocations between (1) electric generation and related functions and
(2) un related functions.
9.2.6 Perform such functions and responsibilities as may be
assigned to it from time to time by the Coordination Committee.
9.3 The Auditing Committee shall no authority to modify any of
the provisions of this Operating Agreement. No action may be taken by
the Auditing Committee unless such action is agreed to by all of the
Participants and Unit Participants entitled to vote thereon acting
through their representatives on the Auditing Committee. A
Participant's Auditing Committee members shall be entitled to vote on
all matters except those which relate solely to a generating unit in
which such Participant does not have an ownership interest. A Unit
Participant's Auditing Committee members shall have a right to vote
only on matters which relate solely to a specific generating unit in
which such Unit Participant has both an ownership interest and
generation entitlement. On matters which relate to generating units
in which a Unit Participant has no ownership interest, or common
facilities of the San Juan Project, a Unit Participant shall have no
vote; provided however that:
9.3.1 With respect to matters involving and not solely
related to San Juan Unit 4, Tucson, as a Participant holding
voting rights on the Auditing Committee, shall retain such
voting rights for M-S-R, with the obligation to consult with M-
S-R on all matters involving the San Juan Project which affect
San Juan Unit 4 as set forth in the San Juan No. 4 Sale of
Option Agreement, dated November 29, 1982, between Tucson
and M-S-R, and the EPPA.
9.4 The Auditing Committee shall keep written minutes and
records of all meetings, and nay action or determination by the
Auditing Committee shall be reduced to writing and shall become
effective when signed by duly authorized representatives of each
Participant and Unit Participant entitled to vote thereon.
9.5 Each Participant and Unit Participant shall notify the
other Participants and Unit Participants promptly of any change in the
designation of such representatives. Any of the Participants and Unit
Participants may, by written notice to the other Participants and Unit
Participants, designate an alternate or substitute to act as such
representative in the absence of any of its regular members, or to act
on specified occasions with respect to specified matters.
9.6 In the event of disagreement among Auditing Committee
members as to whether a matter relates solely to a specific San Juan
generating unit or to other generating units or common facilities of
the San Juan Project, then such determination shall be made by the
agreement of the New Mexico and Tucson Auditing Committee members. If
the New Mexico and Tucson Auditing Committee members cannot agree on
such matter, the matter shall be referred to the New Mexico and Tucson
members of the Coordination Committee.
9.7 In the event the Auditing Committee fails to reach agreement on a
matter that has earlier been determined to relate solely to San Juan Unit
4, which such committee is authorized to determine, approve, or otherwise act
upon after a reasonable opportunity to do so, then the Operating Agent shall
be authorized and obligated to take such action as in its discretion it deems
to be necessary to the successful and proper construction, operation, and
maintenance of San Juan Unit 4 pending the resolution, by arbitration or
otherwise, of any such inability or failure to agree.
5.0 Amended Section 31.10. Section 31.10 shall be amended to read
in its entirety as follows:
31.10 Except as modified by the provisions set forth in this
Modification No. 2, all of the terms and conditions of this Operating
Agreement shall remain in full force and effect.
6.0 New Section 31.11. A new Section 31.11 shall be added to
Section 31 to read in its entirety as follows:
31.11 The distinction between a Unit Participant and a
Participant, as used in Section 5.53.1 and Section 7, Section 8 and
Section 9 is made in order to provide Unit Participants certain voting
rights and rights of committee participation. Except as specifically
set forth herein, such provisions are not intended to, and do not,
modify, reduce, or expand the liabilities, duties, rights, or
obligations between the Participants and Unit Participants, as may
exist by reason of the applicability of other provisions of this
Operating Agreement by virtue of any other agreement between a
Participant and Unit Participant. Except with respect to voting rights
and committee participation, the rights, obligations, or the liability
of a Unit Participant and a Participant shall be identical.
7.0 New Section 32. A new Section 32 shall be added to read in its
entirety as follows.
32.0 RECOGNITION OF M-S-R AND FARMINGTON ACKNOWLEDGEMENT.
32.1 The Parties recognize that M-S-R and Farmington each have
acknowledged that it is familiar with the San Juan Project Agreements
between New Mexico and Tucson and such agreements govern the activities
of the San Juan Project and that where a specific provision of the EPPA
or of the Farmington PAPA is in conflict with a provision in one or
more of the San Juan Project Agreements, then (a) as between New Mexico
and M-S-R the provisions of the EPPA shall govern, all as provided in
Section 5.2 of such EPPA, and (b) as between New Mexico and Farmington
the provisions of the Farmington PAPA shall govern, all as provided in
Section 8.2 of the Farmington PAPA.
8.0 New Section 33. A new Section 33 shall be added to read in its
entirety as follows:
33.0 RESTRICTIONS ON FURTHER AMENDMENTS.
33.1 New Mexico and Tucson shall not, by further amendment or
modification of this Operating Agreement, abrogate, dilute or deny the
voting rights or rights of committee participation accorded a Unit
Participant herein, without the advance written consent of such Unit
Participant.
IN WITNESS WHEREOF, New Mexico and Tucson have caused this Modification No.
2 to be executed as of this 31st day of December, 1983.
PUBLIC SERVICE COMPANY OF NEW MEXICO
By
Its Vice President
TUCSON ELECTRIC POWER COMPANY
By
Its Executive Vice President
STATE OF NEW MEXICO
ss.
COUNTY OF BERNALILLO
The foregoing instrument was acknowledged before me this 28th day of
December, 1983, by C.D. Bedford , a Senior Vice President of Public
Service Company of New Mexico, a New Mexico corporation, on behalf of said
corporation.
NOTARY PUBLIC
My Commission Expires:
STATE OF ARIZONA
ss.
COUNTY OF PIMA
The foregoing instrument was acknowledged before me this 28th day of
December, 1983, by Einar Greve, Executive Vice President of Tucson Electric
Power Company, a Arizona corporation, on behalf of said corporation.
NOTARY PUBLIC
My Commission Expires:
<PAGE>
SECOND AMENDMENT TO THE
PUBLIC SERVICE COMPANY OF NEW MEXICO
DIRECTOR RESTRICTED STOCK RETAINER PLAN
THIS SECOND AMENDMENT to the Public Service Company of New
Mexico Director Restricted Stock Retainer Plan (the "Second Amendment")
is made this 27th day of April, 1994, by the Public Service Company of
New Mexico (the "Company"). If not defined in this Second Amendment,
capitalized terms contained herein have the meaning as set forth in the
Public Service Company of New Mexico Director Restricted Stock Retainer
Plan (the "Plan").
WHEREAS, the Plan was adopted by the Company, effective as of
the 1992 annual meeting of the stockholders of the Company, held on May
25, 1992;
WHEREAS, pursuant to Section 8.1 of the Plan the Board of
Directors of the Company (the "Board") reserved the right to amend the
Plan; and
WHEREAS, consistent with its authority, the Board approved
the First Amendment to the Plan, effective as of April 16, 1993 (the
"First Amendment").
NOW, THEREFORE, consistent with its authority, the Board
hereby causes the Company to adopt the following further amendments to
the Plan:
1. Article II. is hereby amended as follows:
A. New Sections 2.2A and 2.2B.
are hereby inserted following Section 2.2 and before
Section 2.3., to read as follows:
2.2A. "Cash Election" shall mean
an irrevocable election filed with the Company on or
before the Cash Election Date to receive all (but not
less than all) of the Retainer in cash, in lieu of
Restricted Stock, pursuant to Section 6.1(b).
2.2B. "Cash Election Date" shall
mean the date as described below, on or before which a
Director must make his or her Cash Election:
A. For the Cash Election with respect
to the Grant Date occurring on June 1, 1994, the Cash
Election Date shall be May 26, 1994.
B. For the first year in which a
Director is eligible to receive a Restricted Stock
Grant after the June 1, 1994 Grant Date, the Cash
Election Date shall be the first Annual Meeting Date
coincident with or immediately following the Director's
election or appointment to the Board.
C. For all other Cash Elections, the
Cash Election Date shall be the last day of a
Director's tax year, immediately preceding the tax year
including a Grant Date of a Restricted Stock Grant.
B. Section 2.12 is hereby
amended in its entirety to read as follows:
2.12 "Grant Date" shall mean the
date a Restricted Stock Grant is granted, with the
Grant Date for 1994 being June 1, 1994, and with all
subsequent Grant Dates being on each Annual Meeting
Date thereafter, so long as Restricted Stock Grants
continue to be granted pursuant to Section 6.1 and 6.2.
hereof.
C. Section 2.17 "Retainer" is
hereby amended by adding the following sentence to the
end thereof:
Notwithstanding the foregoing
provisions of this Section 2.17, for the period from
the 1994 Annual Meeting Date to the 1995 Annual Meeting
Date, none of the Retainer shall be earned before the
June 1, 1994 Grant Date.
D. New Sections 2.21 and 2.22
are added as follows:
2.21 "Trust" shall mean the
trust established by the Company of even date herewith
for the purpose of purchasing and holding the
Restricted Stock granted pursuant to Section 6.1(a),
and subsequently distributing such shares to the (i)
Director upon the lapse of restrictions pursuant to
Section 7.4 or (ii) Company upon the forfeiture of such
shares pursuant to Section 7.5.
2.22 "Trustee" shall mean the
Trustee, or its successor, serving as the Trustee of
the Trust.
2. Section 3.3 is hereby amended in its entirety to read as
follows:
3.3 Consistency of Grants and
Conditions. Notwithstanding any of the above, all
Restricted Stock Grants as of a Grant Date shall be at
the same average per share Fair Market Value, and
subject to the same conditions, with respect to each
and every Director receiving such Restricted Stock
Grants.
3. The title of ARTICLE VI. is hereby amended in its
entirety to read as follows:
CASH ELECTION AND GRANT OF RESTRICTED STOCK
4. Section 6.1 is amended in its entirety to read as
follows:
6.1 Cash Election and Restricted
Stock Grants.
(a) Grant of Restricted Stock. Except as
provided for in Section 6.1(b), as of each Grant Date,
each Director shall be given a Restricted Stock Grant
granting such Director shares of Stock, with the
conditions and restrictions as set forth in Section
7.1. hereof. The Retainer amount (if it is not paid in
cash pursuant to Section 6.1(b) or funded with
authorized but unissued shares) shall be paid by the
Company to the Trustee (to be held in trust) within an
administratively reasonable period of time following
the Grant Date. The Trustee shall purchase, on behalf
of the Director, the number of shares of Stock equal to
the result obtained by dividing the Retainer in effect
on the Grant Date (and not paid in cash, pursuant to
Section 6.1(b)) by the Fair Market Value of the Stock
on the date of the purchase. If the calculation of the
shares granted would result in a fractional share
interest, the number of shares shall be rounded up to
the highest number of full shares, and the Company
shall contribute such additional cash to the Trust,
necessary to acquire full shares. Such Stock shall be
purchased by the Trustee within an administratively
reasonable period of time following the Grant Date.
Each Restricted Stock Grant granted under the Plan
shall be evidenced by a written notice pursuant to
Section 6.3.
(b) Cash Election. On or
before the Cash Election Date, each Director is hereby
given the right to file an irrevocable Cash Election
with the Company electing to receive all (but not less
than all) of the Retainer in cash in lieu of Restricted
Stock. Any cash to be paid to a Director pursuant to a
Cash Election shall be paid to the Director by the
Company within an administratively reasonable period of
time following the Grant Date. If a Director fails to
file a Cash Election on or before the Cash Election
Date with respect to a Grant Date, the Director shall
receive a grant of Restricted Stock on such Grant Date
pursuant to Section 6.1(a).
5. Section 6.4 is hereby amended by adding the following
paragraph to end thereof:
The Plan is intended to be construed so that
participation in the Plan will be exempt from Section
16(b) of the Exchange Act, pursuant to Rule 16b-3 as
promulgated thereunder, as may be further amended or
interpreted by the Securities and Exchange Commission.
In the event that any provision of the Plan shall be
deemed not to be in compliance with such rules, in
order to enjoy the exemption from the Exchange Act,
such provision shall be deemed of no force or effect
and the remaining provisions of the Plan shall remain
in effect.
6. Section 7.2(a) is hereby amended in its entirety to read
as follows:
(a) The certificates of shares
of Restricted Stock granted pursuant to this Plan shall be
issued in the sole name of the Recipient, but until such
restrictions shall have lapsed in accordance herewith, such
certificates shall either be held by:
(i) the Company;
(ii) a custodian designated by
the Company; or
(iii) the Trustee.
The Company shall issue, or the custodian or Trustee, as may
be applicable, shall issue, a receipt evidencing any
Restricted Stock held by it issued in the name of the
Recipient.
7. Section 7.4(b) is hereby amended by deleting the term
"Annual Meeting Date" where it appears in the first sentence
and replacing the same with "Grant Date".
8. Except as amended by the First Amendment and this
Second Amendment, the Plan is otherwise unchanged.
IN WITNESS WHEREOF, the Company has caused this Second
Amendment to the Public Service Company of New Mexico Director
Restricted Stock Retainer Plan to be executed and effective, as of the
date and year first above written.
PUBLIC SERVICE COMPANY
OF NEW MEXICO
By
BENJAMIN F. MONTOYA, President
<PAGE>
<PAGE>
HEALTH CARE AND RETIREMENT BENEFIT AGREEMENT
THIS HEALTH CARE AND RETIREMENT BENEFIT AGREEMENT (the "Agreement") is
made this __ day of _____, 1994 by and between the PUBLIC SERVICE COMPANY OF
NEW MEXICO (the "Company") and JOHN T. ACKERMAN ("Ackerman").
WITNESSETH
WHEREAS, Ackerman was employed by the Company from June 1971 through
1993, serving in various positions with the Company, including as
President, Chief Executive Officer and Chairman of the Board of Directors
of the Company (the "Board");
WHEREAS, Ackerman retired from the Company at the end of 1993;
WHEREAS, the salaries of the officers of the Company, including
Ackerman, were frozen in 1993;
WHEREAS, most of the other officers whose salaries were frozen
received the Initial Award of stock options pursuant to the Public Service
Company of New Mexico Performance Stock Plan (the "PSP") in lieu of a
salary increase;
WHEREAS, those PSP participants also received an increase in their
retirement benefits equal to the value of the Initial Awards, payable under
either the Public Service Company of New Mexico Employees' Retirement Plan
(the "Retirement Plan") (provided in the First Amendment to the Retirement
Plan which was adopted in December 1993) or under other related
nonqualified deferred compensation arrangements;
WHEREAS, Ackerman did not participate in the PSP and therefore the
First Amendment to the Retirement Plan likewise does not apply to Ackerman;
WHEREAS, the Board now desires to adopt a nonqualified deferred
compensation plan providing Ackerman with the same increase in retirement
benefits provided to PSP participants, specifically, the retirement benefit
to which he would have been entitled if he had received a salary increase
equal to 7.5% of his Salary Range Control Point (as that term is defined in
the PSP); and
WHEREAS, the Board has agreed, in lieu of severance benefits to which
Ackerman was entitled, to provide health benefits to Ackerman and his
spouse, following his retirement from the Company, pursuant to the
following terms and conditions.
NOW, THEREFORE, in consideration of the foregoing, and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged by the parties hereto, it is hereby agreed as follows:
1. Health Care Benefits.
A. Level of Benefits. Following Ackerman's retirement from
the Company, the Company shall provide Ackerman and his spouse, or upon his
death, his surviving spouse, with Health Care Benefits. Such "Health Care
Benefits" as used herein, shall mean the medical and dental benefits
provided to Ackerman as of December 31, 1993 under existing policies and
plans maintained by the Company including the PNM Executive Medical Plan,
and the PNM Benefit Trust and Master Plan. Any limitation, subrogation or
coordination of benefit provisions as shall apply to the Health Care
Benefits shall apply to any benefits provided hereunder. Notwithstanding
the foregoing, if the Health Care Benefits provided by the Company to the
Chief Executive Officer are modified, these same modifications shall apply
to the Health Care Benefits provided to Ackerman. The Company shall pay
any premiums necessary under existing policies and plans to provide the
Health Care Benefits hereunder.
B. Term. Except as set forth in paragraph 1.C. hereof, the Health
Care Benefits provided hereunder shall be provided from the date of
Ackerman's retirement until the date Ackerman (or his surviving spouse if
he is not then living), becomes eligible for Medicare benefits.
C. Health Care Legislation. The Company reserves the right to
amend or modify this Agreement in response to federal health care
legislation, provided that, following such amendment or modification,
Ackerman shall continue to receive, either through this Agreement or
through other government or Company provided benefits, substantially
equivalent health care benefits as were being provided pursuant to this
Agreement prior to the enactment of such federal health care legislation.
D. Benefit Reduction. Benefits otherwise receivable by Ackerman
hereunder shall be reduced, to the extent comparable benefits are actually
received by Ackerman from another employer following his retirement date,
and any such benefits actually received by Ackerman, shall be reported by
Ackerman to the Company.
2. Retirement Benefits. Following Ackerman's retirement from the
Company, the Company shall provide Ackerman with an agreed upon annual
benefit equal to $5,100 (based upon a single life annuity) ("Retirement
Benefits"). The Retirement Benefits shall be adjusted and paid (i) using
the form of benefit (e.g. joint and survivor annuity); (ii) over the same
time period; and (iii) using the same beneficiary designation as is elected
by Ackerman for the form of benefit pursuant to the Public Service Company
of New Mexico Accelerated Management Performance Plan.
3. No Assignment. This Agreement shall inure only to the benefit
of Ackerman and his spouse, surviving spouse or designated beneficiary and
may not be assigned, transferred, pledged, or hypothecated in any way by
Ackerman, Ackerman's personal representative, heir, distributee or other
person claiming under Ackerman, and shall not be subject to execution,
attachment or similar process.
4. Administrator. This Agreement shall be administered by the
Management Development and Compensation Committee of the Board (the
"Committee"). The Committee shall be the "named fiduciary" for purposes of
ERISA, and shall have the authority to control and manage the operation of
the Agreement and the authority to interpret and construe the Agreement and
any such interpretation and construction of any such provisions of this
Agreement shall be final. The Committee shall, in addition to the
foregoing, exercise such other powers and perform such other duties as it
may deem advisable in the administration of this Agreement. The Committee
may engage agents, to assist in and may engage legal counsel, who may be
counsel for the Company.
5. Claims Procedure. The Committee (as defined in
paragraph 4. above) shall make all determinations as to Ackerman's right to a
benefit pursuant to this Agreement. The Committee, within ninety (90) days
after receipt of written notice of an objection to benefits payable or claim for
benefits, shall render a written decision on the objection to the benefits
payable or the claim for benefits. If the objection to benefits payable or
the claim for benefits is denied, either in whole or in part, the decision
shall include:
(i) The specific reason or reasons for the denial;
(ii) An indication of the specific provisions on which the
denial is based;
(iii) A description of any additional material or information
necessary for the claimant to perfect the claim and any explanation of why
such material or information is necessary; and
(iv) An explanation of the appeal procedure hereunder,
indicating that the appeal of the adverse determination must be in writing
addressed to the Committee, and received within sixty (60) days after the
receipt by the claimant of the Committee's written denial of benefits.
Failure to perfect an appeal within the 60-day period shall make the
decision conclusive.
If the Ackerman should appeal to the Committee, he or his duly
authorized representative, must do so in writing and may submit, in
writing, whatever issues and comments he or his duly authorized
representative, feels are pertinent. Ackerman or his duly authorized
representatives, may review pertinent documents. The Committee shall
render a written decision on the question of the benefits payable or the
claim for benefit, setting forth the specific reasons for its decision
including a reference to the provisions of the Agreement within sixty (60)
days after receipt of the request for review, unless special circumstances
(such as a hearing) would make the rendering of a decision within the sixty
(60) day limit infeasible, but in no event shall the Committee render a
decision respecting a denial for a claim for benefits later than one
hundred twenty (120) days after its receipt of a request for a review.
Any denial by the Committee of Ackerman's claim for benefits under
the Agreement shall be stated in writing and such notice shall be written
in a manner that may be understood without legal or actuarial counsel.
6. Arbitration. Any dispute, controversy or claim arising out of
or relating to the execution of this Agreement, including but not limited
to the rights, duties and obligations under this Agreement, not resolved
under the above claims procedure shall be determined by binding arbitration
pursuant to the Uniform Arbitration Act Section 44-7-1, et seq. NMSA (1978)
with each party to bear its own costs and attorney's fees. The presiding
judge of the Second Judicial District Court, or his or her designee, shall
provide a list of three (3) attorneys for selection as arbitrator. Within
seven (7) days after the issuance of this list, each party may strike from
the list one (1) name. The attorney remaining on the list shall then be
appointed as arbitrator. All expenses of the arbitrator shall be shared
equally by the parties.
7. Source of Payments. This Agreement is a nonqualified, unfunded
and unsecured deferred compensation arrangement. The Retirement Benefits
payable under this Agreement shall be paid out of the general corporate
funds of the Company which are subject to the claims of creditors, or out
of any trust the Company shall establish or authorize; provided that all
assets paid into any such trust shall at all times prior to actual payment
to Ackerman or his beneficiaries remain subject to the claims of the
general creditors of the Company. Neither Ackerman, his designated
beneficiaries, his estate nor heirs, (i) shall have any right, title or
interest whatsoever in or to, or claim, preferred or otherwise, in or to
any particular assets of the Company or any trust that the Company may
establish or designate to aid in providing the payments described in this
Agreement; or (ii) shall acquire any interest greater than that of an
unsecured creditor in any assets of the Company.
8. Amendment. Except as set forth in paragraph 1.A. and C. above,
the Agreement may be amended only by written consent of both parties.
9. Controlling Law. This Agreement shall be interpreted under the
laws of the State of New Mexico, except to the extent the same are
preempted by the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), in which case the provisions of ERISA will control.
10. Binding Effect. This Agreement shall be binding upon and inure
to the benefit of any successor of the Company and any such successor shall
be deemed substituted for the Company under the terms of this Agreement.
As used in this Agreement, the term "successor" shall include any persons,
firm, corporation, or other business entity, which at any time, whether by
merger, purchase or otherwise, acquires all or substantially all of the
assets or the business of the Company.
IN WITNESS WHEREOF, the parties hereto, personally or by their
authorized representatives, have subscribed to this Agreement, as of the
day and year first above written.
PUBLIC SERVICE COMPANY
OF NEW MEXICO
By:
BENJAMIN F. MONTOYA
Its: President
ACKERMAN
JOHN T. ACKERMAN
<PAGE>
ARTHUR
ANDERSEN
ARTHUR ANDERSEN & CO. SC
May 6, 1994 Arthur Andersen & Co.
Suite 400
6501 Americas Parkway NE
Albuquerque, NM 87110-5372
505 889-4700
Public Service Company of New Mexico:
We are aware that Public Service Company of New Mexico has incorporated by
reference in its Registration Statement No. 33-65441 its Form 10-Q for the
quarter ended March 31, 1994, which includes our report dated May 6, 1994
covering the unaudited interim financial information contain therein.
Pursuant to Regulation C of the Securities Act of 1933, that report is not
considered a part of the registration statement prepared or certified by our
firm or a report prepared or certified by our firm within the meaning of
Sections 7 and 11 of the Act.
Very truly yours,
Arthur Andersen & Co.
Arthur Andersen & Co.
