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The term “secondary energy" wherever used herein shall mean all electrical energy generated in one year (June 1 to May 31, inclusive) in excess of the amount of firm energy as hereinabove defined, available

in such year.

VIII The contractors shall pay monthly for all energy in accordance with the rates established or provided for herein. When energy taken in any month is not in excess of one-twelfth (K2) of the minimum annual obligation, bill for such month shall be computed at the rate for firm energy in effect when such energy was taken on the basis of the actual amount of energy used during such month. All energy used during any month in excess of one-twelfth (112) of the minimum annual obligation shall be paid for at the rate for secondary energy in effect when such energy was taken; provided, however, that the secondary rate shall not apply to any energy taken during any month unless and until an amount of energy equivalent to one-twelfth (K2) of the minimum annual obligation has been taken for all months beginning with the month of June immediately preceding; provided, however, that the bill for the month of May shall not be less than the difference between the minimum annual payment and the sum of the amounts charged for firm energy during the preceding eleven (11) months. The United States will submit bills to all contractors by the fifth of each month immediately following the month during which the energy is generated, and payments shall be due on the first day of the month immediately succeeding. If such charges (less, in bills to lessees, credit allowances due lessees for generation for other allottees) are not paid when due, a penalty of one per centum (1%) of the amount unpaid shall be added thereto, and thereafter an additional penalty of one per centum (1%) of the amount unpaid shall be added on the first day of each calendar month thereafter during such delinquency.

IX The total payments made by each contractor for firm energy available in any year (June 1 to May 31, inclusive), whether any energy is generated or not, exclusive of its payments for use of machinery, shall be not less than the number of kilowatt-hours of firm energy available to said contractor and which said contractor is obligated to take and/or pay for during said year, multiplied by one and sixty-three hundredths mills ($0.00163), or multiplied by the adjusted rate of payment for firm energy in case the said rate is adjusted as provided in Article VI hereof, less credits on account of charges to other allottees, as provided for and referred to in Article IV hereof. For a fractional year at the beginning or end of the contract period, the minimum annual payment for firm energy shall be proportionately adjusted in the ratio that the number of days water is available for generation of energy in such fractional year bears to three hundred sixty-five (365). Provided, however, that in order to afford a reasonable time for the respective lessees to absorb the energy contracted for, the minimum annual payments by each for the first three (3) years after energy is ready for delivery to such lessees, respectively, as announced by the Secretary, shall be as

Per cent

55 70 85 100

follows, in percentages of the ultimate annual obligation, to take and/or pay for firm energy:

First year
Second year..
Third year-

Fourth year and all subsequent years.During said absorption period, if the quantity of energy taken in any one year (June 1 to May 31, inclusive) is in excess of the above percentages of the ultimate obligation during such year to take and/or pay for firm energy, such excess shall be paid for at the rate for secondary energy. Provided further, that the minimum annual payment shall be reduced in case of interruptions or curtailment of delivery of water as provided in Paragraph X hereof.

X The United States will deliver water continuously to each lessee in the quantity, in the manner, and at the times necessary for the generation of the energy which each of said lessees has the right and/or obligation to generate under its contract in accordance with the load requirements of each of said lessees and of allottees for which the respective lessees are generating agencies, excepting only that such delivery shall be regulated so as not to interfere with the necessary use of said Boulder Canyon Dam and Reservoir for river regulation, improvement of navigation, flood control, irrigation, or domestic uses, and the satisfaction of present perfected rights in or to the waters of the Colorado River or its tributaries, in pursuance of Article VIII of the Colorado River compact. The United States reserves the right temporarily to discontinue or reduce the delivery of water for the generation of energy at any time for the purposes of maintenance, repairs and/or replacements, or installation of equipment, and for investigations and inspections necessary thereto; provided, however, that the United States shall, except in case of emergency, give to the lessees reasonable notice in advance of such temporary discontinuance or reduction, and that the United States shall make such inspections and perform such maintenance and repair work after consultation with the lessees at such times and in such manner as will cause the least inconvenience to the lessees and the allottees, and shall prosecute such work with diligence, and, without unnecessary delay, will resume delivery of water so discontinued or reduced. Should the delivery of water be discontinued or reduced below the amount required, severally, for the normal generation of firm energy for the payment of which the contractor obligates itself, the total number of hours of such discontinuance or reduction in any year shall be determined by taking the sum of the number of hours during which the delivery of water is totally discontinued, and the product of the number of hours during which the delivery of water is partially reduced, and the percentage of said partial reduction below the actual quantity of water required for the normal generation of firm energy. Total or partial reductions in delivery of water which do not reduce the power output below the amount required at the time for the normal generation of firm energy will not be considered in determining the total hours of discontinuance in any year. The minimum annual payment shall be reduced by the ratio that the total number of hours of such discontinuance bears

to eight thousand seven hundred sixty (8,760). In no event shall any liability accrue against the United States, its officers, agents, and/or employees, for any damage, direct or indirect, arising on account of drought, hostile diversion, act of God, or of the public enemy, or other similar cause.

Each lessee shall make full and complete written monthly reports as directed by the Secretary, on forms to be supplied by the United States, of all electrical energy generated by it and the disposition thereof to allottees. Such reports shall be made and delivered to the director on the third day of the month immediately succeeding the month in which the electrical energy is generated, and the records and data from which such reports are made shall be accessible to the United States on demand of the Secretary.

XI Any agency receiving a contract for electrical energy equivalent to one hundred thousand (100,000) firm horsepower, or more, may when deemed feasible by the Secretary, from engineering and economic considerations and under general regulations prescribed by him, be required to permit any other agency having contracts for less than the equivalent of twenty-five thousand (25,000) firm horsepower, upon application to the Secretary made within sixty (60) days from the execution of the contract of the agency the use of whose transmission line is applied for, to participate in the benefits and use of any main transmission line constructed or to be constructed by the former for carrying such energy (not exceeding, however, one-fourth (%) the capacity of such line), upon payment by such other agencies of a reasonable share of the cost of construction, operation, and maintenance thereof.

XU The use is authorized of such public and reserved lands of the United States as may be necessary or convenient for the construction, operation, and maintenance of main transmission lines, to transmit electrical energy generated at Hoover Dam, together with the use of such public and reserved lands of the United Stated as may be designated by the Secretary, from time to time, for camp sites, residences for employees, warehouses, and other uses incident to the operation and maintenance of the power plant and incidental works.

XIII The Secretary, or his representatives, shall at all times have the right of ingress to and egress from all works of the contractors for power or power privileges, for the purpose of inspection, repairs, and maintenance of works of the United States, and for all other proper purposes. The Secretary or his representatives shall also have free access at all reasonable times to the books and records of contractors for power or power privileges, relating to the generation, transmission, and disposition of electrical energy with the right at any time during office hours to make copies of or from the same.

XIV All patents, grants, contracts, concessions, leases, permits, licenses, rights of way, or other privileges from the United States or under its authority, necessary or convenient for the use of waters of the Colorado River or its tributaries, or for the generation or transmission of electrical energy generated by means of the waters of said river or its tributaries, whether under the Boulder Dam project act, the Federal water power act, or otherwise, shall be upon the express condition and with the express covenant that the rights of the recipients or holders thereof to waters of the river or its tributaries, for the use of which the same are necessary, convenient, or incidental, and the use of the same shall likewise be subject to and controlled by said Colorado River compact.

XV All contracts for purchase of energy available at Hoover Dam shall be made directly with the United States.

XVI No contract for electrical energy or for generation of electrical energy shall be of longer duration than fifty (50) years from the date at which such energy is ready for delivery as announced by the Secretary

XVII The holder of any contract for electrical energy not in default thereunder shall be entitled to a renewal thereof upon such terms and conditions as may be authorized or required under the then existing laws and regulation, unless the property of such holder dependent for its usefulness on a continuation of the contract be purchased or acquired and such holder be compensated for damages to its property, used and useful in the transmission and distribution of such electrical energy and not taken, resulting from the termination of the supply.

XVIII All contracts shall be subject to these, and such other rules and regulations conforming to the Boulder Canyon project act as the Secretary may from time to time promulgate; provided, however, that no right under any contract then existing shall be impaired or obligation thereunder be extended thereby; and provided, further, that opportunity for hearing shall be afforded such contractors by the Secretary prior to modification or repeal thereof or promulgation of additional regulations.

RAY LYMAN WILBUR,

Secretary of the Interior. WASHINGTON, D. C.

April 25, 1930. Note.--Amended, as noted in the text, March 10, 1931, July 1, 1931, and Nov. 16, 1931.

(APPENDIX 2]

BOULDER CANYON PROJECT

CONTRACT FOR LEASE OF POWER PRIVILEGE

UNITED STATES

AND
THE CITY OF LOS ANGELES

AND
SOUTHERN CALIFORNIA EDISON CO. (LTD.)

April 26, 1930
Amended May 28, 1930, and September 23, 1931

(NOTE.—The contract as it appears here is a consolidation of the original and various supplementary contracts, which are referred to in footnotes.]

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