CONTRACT FOR ELECTRICAL ENERGY

(1) This contract, made this 5th day of November, nineteen hundred thirty-one, pursuant to the act of Congress approved June 17, 1902 (32 Stat. 388), and acts amendatory thereof or supplementary thereto, all of which acts are commonly known and referred to as the reclamation law, and particularly pursuant to the act of Congress approved December 21, 1928 (45 Stat. 1057), designated the Boulder Canyon project act, between the United States of America, hereinafter referred to as the United States, acting for this purpose by Ray Lyman Wilbur, Secretary of the Interior, hereinafter styled the Secretary, and the Southern Sierras Power Co., a corporation organized and existing under and by virtue of the laws of the State of Wyoming, hereinafter styled the allottee.

Witnesseth:

EXPLANATORY RECITALS

(2) Whereas, for the purpose of controlling the floods, improving navigation, and regulating the flow of the Colorado River, providing for storage and for the delivery of the stored waters for reclamation of public lands and other beneficial uses exclusively within the United States, and for the generation of electrical energy, the Secretary, subject to the terms of the Colorado River compact, is authorized to construct, operate, and maintain a dam and incidental works in the main stream of the Colorado River at Black Canyon or Boulder Canyon, adequate to create a storage reservoir of a capacity of not less than twenty million acre-feet of water; also to construct, equip, operate, and maintain at or near said dam, or cause to be constructed, a complete plant and incidental structures suitable for the fullest economic development of electrical energy from the water discharged from said reservoir; and

(3) Whereas, after full consideration of the advantages of both the Black Canyon and Boulder Canyon dam sites, the Secretary has determined upon Black Canyon as the site of the aforesaid dam, hereinafter styled the Hoover Dam, and has determined that the revenues provided for by this contract, together with other contracts in accordance with the provisions of the Boulder Canyon project act, are adequate in his judgment to insure payment of all expenses of operation and maintenance of the Hoover Dam and appurtenant works incurred by the United States, and the repayment within fifty (50) years from the date of completion of said works of all amounts advanced to the Colorado River Dam fund under subdivision (b) of section 2 of the Boulder Canyon project act, together with interest thereon made reimbursable under said act; and

(4) Whereas the United States has entered into an agreement of date April 26, 1930, with the City of Los Angeles (hereinafter styled the city), and Southern California Edison Co. (Ltd.) (hereinafter styled the company), severally (both hereinafter referred to as the lessees) for the lease and the operation and maintenance of a Government-built power plant to be constructed at Hoover Dam, together with the right to generate electrical energy (a copy of which said lease

as amended by supplemental agreements of date May 28, 1930, and September 23, 1931, is attached hereto, marked Exhibit A, and by this reference made a part hereof); and whereas in said lease the Secretary has reserved the authority to, and in consideration of the execution thereof is authorized by each of the aforesaid lessees, severally, to contract with the other allottees named in the allocation set forth therein for the furnishing of energy to such allottees at transmission voltage in accordance with the allocation to each allottee, and the Secretary is therein granted by each lessee, severally, the power in accordance with the provisions thereof to enforce as against each lessee the rights to be acquired by such other allottees by contracts to be entered into with the United States; and whereas in said lease the company has agreed to generate energy allocated to the allottee;

and

(5) Whereas the company, the allottee, Los Angeles Gas & Electric Corporation, and San Diego Consolidated Gas & Electric Co. have mutually agreed upon a division of all energy for which the company is obligated and/or entitled to take under said agreement marked Exhibit A, on the basis of seventy-five per centum (75%) thereof to the company, ten per centum (10%) thereof to the allottee, ten per per centum (10%) thereof to Los Angeles Gas & Electric Corporation, and five per centum (5%) thereof to San Diego Consolidated Gas & Electric Co., and the allottee is desirous of entering into a contract with the United States for the purchase of electrical energy to be generated at the power plant to be leased, as aforesaid, to the company;

(6) Now, therefore, in consideration of the mutual covenants herein contained, the parties hereto agree as follows, to wit:

ALLOCATION OF ELECTRICAL ENERGY

(7) The United States will cause electrical energy to be delivered to the allottee under and in pursuance of and subject to the provisions of the aforesaid lease, attached hereto as Exhibit A, throughout the period during which the company is obligated or entitled to take energy under said lease, in accordance with the following allocation, to wit:

Of firm energy, as defined in article eight (8) hereof:

A. To the State of Nevada, for use in Nevada, not exceeding eighteen per centum (18%) of said total firm energy.

B. To the State of Arizona, for use in Arizona, not exceeding eighteen per centum (18%) of said total firm energy. Should either of the States not take its full eighteen per centum (18%) allocation within a period of twenty (20) years hereof, the other may then contract for the energy not so taken up to four per centum (4%) of the total firm energy; provided, that the combined amount used by the two States shall not, at any time, exceed thirty-six per centum (36%) of such total firm energy.

C. To the Metropolitan Water District of Southern California for pumping Colorado River water into and in its aqueduct for the use of such district within the following limits:

(1) Thirty-six per centum (36%) of said total firm energy, plus (2) All secondary energy developed at the Hoover Dam power plant as provided in article thirteen (13) hereof, plus

(3) So much of the firm energy allocated to the States, the city, the company, and the allottee, as may not be used by them. Energy allocated to the States, but not in use by them, shall be released to the district by the two lessees as hereinafter in this subdivision three (3) provided. Unless otherwise agreed upon by said lessees such release shall be made on the basis of one-half by the city, and one-half by the company and the allottee collectively; provided, however, that in any such case the allottee shall release ten per centum (10%) of all energy required to be released by the company and the allottee collectively.

(a) If the district makes a firm contract with the Secretary for the balance of the lease period for part or all of such unused State energy (subject to the first right of the States thereto) such contract shall be made effective upon two years' written notice to the Secretary, and compensation to the lessees, respectively, for main transmission line property rendered idle;

(b) If the district does not so make a firm contract for such energy, then energy allocated to the States but not in use by them, shall be released to the district upon not less than fifteen months' written notice to the Secretary and at such compensation as the district and such lessees, respectively, may agree upon, to cover cost and overhead of replacing energy which otherwise would have been received at the Pacific coast end of the main transmission lines by the lessees, respectively. Such cost shall include interest on and depreciation and operation and maintenance of the plant capacity while required for the generation of such substitute energy; and also appropriate allowance for interest on and maintenance and depreciation of plant capacity rendered idle because of cessation of generation of such substitute energy until such time as such plant capacity would otherwise have been installed by the lessees, respectively, for their own requirements. If the district and the respective lessees fail to agree on such compensation, such energy shall nevertheless be released to the district, and the disagreement shall be determined in accordance with article twenty-one (21) (a) hereof. Such determination shall include allowance for items of cost and overhead as specified in this paragraph. Pending such determination, energy so released shall be paid for by the district at the rate for firm energy but the determination of compensation under article twenty-one (21) (a) hereof shall not be controlled by such rate.

During any year beginning June 1, the district shall not use any secondary energy or any unused State energy, until it has first used subsequent to June 1, next preceding, an amount of firm energy equivalent to one-twelfth of the amount of firm energy it is obligated to take and/or pay for annually multiplied by the number of months elapsed since June 1 next preceding.

(4) If, due to temporary deficiency in secondary energy regularly used by the district, substitute energy is requested by the district in

excess of the energy made available under the foregoing subparagraph (3) (b) the city and/or the company and/or the allottee may release so much energy as may be practicable on the same terms as provided in subsection (3) (b) preceding.

D. To the municipalities of Anaheim, Beverly Hills, Burbank, Colton, Fullerton, Glendale, Newport Beach, Pasadena, Riverside, San Bernardino, and Santa Ana (referred to herein as "the municipalities"), six per centum (6%) in all, to be allocated between them as they may agree; but if no agreement is submitted to the Secretary on or before November 16, 1931, the Secretary shall determine the allocation of each.

E. To the City of Los Angeles, thirteen per centum (13%).

F. To Southern California Edison Co. (Ltd.), the Southern Sierras Power Co., the San Diego Consolidated Gas & Electric Co., and the Los Angeles Gas & Electric Corporation, referred to herein as "the companies," nine per centum (9%) in all, whereof ten per centum (10%) of said nine per centum (9%), being nine-tenths of one per centum (0.9 of 1%) of all firm energy, shall be taken and/or paid for by the allottee.

It is further agreed that

(1) So much of the energy allocated to the States (thirty-six per centum (36%) of the firm energy) and not in use by them, or failing their use, by the district for the above purposes, shall be taken and/or paid for one-half by the city and one-half by the company and the allottee collectively, of which said latter one-half, ten per centum (10%) shall be taken and/or paid for by the allottee. In addition all firm energy allocated to the city (thirteen per centum (13%)) shall be taken and paid for by the city.

(11) All of the energy allocated to the municipalities may be contracted for in compliance with regulations of the Secretary, by any one or more of them, as they may agree, on or before November 16, 1931. So much of the energy allocated to the municipalities as is not so contracted for, or if contracted for, not used by them directly or under contract for municipal purposes and/or distribution to their inhabitants, shall be taken and paid for by the city.

(III) So much of the energy allocated to the Southern Sierras Power Co., the San Diego Consolidated Gas & Electric Co., and the Los Angeles Gas & Electric Corporation as is not firmly contracted for by them, severally, in compliance with regulations of the Secretary on or before November 16, 1931, shall be taken and paid for by the company.

(IV) If any allottee is permitted by the United States to divert water from the reservoir at a time when the reservoir is not spilling, in consequence of which the amount of energy which would have been utilized is diminished, such diminution shall be debited to the allocation of firm energy herein made to such allottee; and charge for the energy equivalent of such diversion shall be made, and the amount of energy which the allottee shall otherwise be obligated to take and/or pay for hereunder shall be correspondingly reduced.

The reservoir shall be considered as spilling whenever water is being discharged in excess of the amount used for the generation of power, whether such waste occurs over the spillway or otherwise.

(v) Each of the States of Arizona and Nevada may, from time to time within the period of the aforesaid lease, contract for energy