(2) To pay the United States for credit to the city on account of use of the leased equipment as herein elsewhere provided; and

(3) To pay the United States for credit to the city on account of maintenance of said equipment in first-class operating condition, including repairs to and replacements of machinery; provided, however, that if the expenditures for replacements shall exceed at any time the sum accumulated by the city as a depreciation reserve in accordance with rules and regulations prescribed by the Secretary pursuant to the Boulder Canyon project act, less all amounts previously withdrawn for replacements, then the rates aforesaid shall be readjusted as hereinafter provided so as to reimburse the city for such excess expenditures within the term of this contract.

At the end of fifteen (15) years from the date of execution of said Exhibit A (April 26, 1930), and every ten (10) years thereafter, the above rates of payment for energy shall be readjusted upon demand of either party hereto, either upward or downward as to price, as the Secretary may find to be justified by competitive conditions at distributing points or competitive centers.

The rate for falling water for generation of firm energy which shall be uniform for both lessees and the municipality provided for by any such readjustment shall be arrived at by deducting from the price of electrical energy justified by competitive conditions at distributing points or competitive centers-(1) all fixed and operating costs of transmission to such points; (2) all fixed and operating costs of such portion of the power-plant machinery as is to be operated and maintained by the several lessees, including the cost of repairs and replacements together with such readjustment as to replacements as is provided for in paragraph 3 in this article; it being understood that such readjusted rates shall under no circumstances exceed the value of said energy based upon competitive conditions at distributing points or competitive centers.

The charges agreed to be paid by the municipality to the United States for credit to the city as generating agency in this article shall be such proportion of the cost incurred by such generating agency as it and the city may agree, or failing such agreement as the Secretary may determine.

The term "cost," as used with reference to generating energy, shall include a proper proportionate allowance for amortization for the cost of machinery and equipment as provided in paragraph a of article 9 of Exhibit Å hereof, and interest on the prepayments thereof made by the city, a proper proportionate part of any annuity set-up in accordance with regulations of the Secretary provided for in subdivision 3 of article sixteen (16) of Exhibit A hereof, and any additional expenditures made by the city with the approval of the Secretary, for the purpose of meeting the obligation of the city to make replacements; and a proper proportionate part of the actual outlay of the city for operating such machinery and equipment and keeping the same in repair including reasonable overhead charges. The extent of the allowance for the several items in the event of disagreement between the city and municipality, and the system of accounting therefor, shall be prescribed by the Secretary under uniform regulations as required by section 6 of the Boulder Canyon project act.

MONTHLY PAYMENTS AND PENALTIES

(13) The municipality shall pay monthly for energy in accordance with the rates established or provided for herein, and for the generation thereof as provided in article twelve (12).

When energy taken in any month is not in excess of one-twelfth (2) 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; provided, however, that the bill for the month of May shall not be less than the difference between the minimum annual payment, as provided in article fourteen (14) hereof, and the sum of the amounts charged for firm energy during the preceding eleven months. The United States will submit bills to the municipality 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 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.

The monthly charge for generation of such energy to be credited to the generating agency shall be in such amount as may be determined in accordance with article twelve (12) hereof.

MINIMUM ANNUAL PAYMENT

(14) The minimum quantity of firm energy which the municipality shall take and/or pay for each year (June 1 to May 31, inclusive), under the terms of this contract, and after the same is ready for delivery to the municipality, as provided in subdivision (a) of article eleven (11) hereof, shall be 1.8867% of all firm energy as defined in article nine (9) hereof, available in said year. The total payments made by the municipality for firm energy available in any year (June 1 to May 31, inclusive), whether any energy is taken by it, or not, exclusive of its payments for credit to the generating agency, shall be not less than the number of kilowatt-hours of firm energy which the municipality 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 twelve (12) 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, that the minimum annual payment shall be reduced in case of interruptions or curtailment of delivery of water as provided in article seventeen (17) hereof.

The minimum annual payments made by the municipality for generation of such energy, to be credited to the generating agency, shall be determined in accordance with article twelve (12) hereof.

NO ENERGY TO BE DELIVERED WITHOUT PAYMENT

(15) Unless the written consent of the Secretary be first obtained, no electrical energy shall be generated for, or delivered to, the munici

pality if it shall be in arrears for more than twelve (12) months in the payment of any charge and/or penalty due or to become due the United States hereunder, whether for its own use or for credit to the generating agency.

CONTRACT MAY BE TERMINATED IN CASE OF BREACH

(16) If the municipality shall be in arrears for more than twelve (12) months in the payment of any charge and/or penalty due or to become due to the United States hereunder, and shall not have obtained an extension of time for payment thereof, or, if such extension be obtained, has not made such payment within the time as extended, then the Secretary reserves the right forthwith upon written notice to the municipality to terminate this contract and dispose of the energy herein allocated as he may see fit; provided, he shall first give opportunity to the city to contract on terms and conditions to be prescribed by the Secretary, for such energy, and provided further, that such disposition shall be subject to the condition that the municipality shall have the right at any time within ten (10) years from date of the first of the defaults or breaches for which the contract is terminated, to become reinstated hereunder by payment to the United States of all arrearages and penalties, if any, together with any and all loss incurred by the United States by reason of such termination, and compensation to the contractor or contractors for equipment rendered idle by such reinstatement. In case of disagreement or dispute as to any of the items so to be paid the same shall be determined as provided in article 22 hereof. Nothing contained in this contract shall relieve the municipality from the obligation to make the United States whole, for the period of this contract, for all loss and/or damage occasioned by the failure of the municipality to take and/or pay for energy as provided in this contract. The waiver of a breach of any of the provisions of this contract shall not be deemed to be a waiver of any other provisions hereof, or of a subsequent breach of such provision.

INTERRUPTIONS IN DELIVERY OF WATER

(17) The United States will deliver water continuously to each essee 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 this 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 Hoover Dam and Boulder Canyon 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, and this contract is made upon the express condition, and with the express covenant, that the rights of the municipality to the waters of the Colorado River, or its tributaries, are subject to, and controlled by, 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 purpose 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 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 for the normal generation of firm energy for the payment of which said municipality has hereby obligated 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 by the lessees, severally, 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 by such lessee 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 specified in article fourteen (14) hereof 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; nevertheless interruptions in delivery of water occasioned by such causes shall be governed as hereinabove provided in this article.

MEASUREMENT OF ENERGY

(18) All energy shall be measured at generator voltage and suitable metering equipment shall be provided and installed by the United States for this purpose. Suitable correction shall be made in the amounts of energy as measured at generator voltage to cover step-up transformer losses and energy required for operation of station auxiliaries, in determining the amounts of energy delivered at transmission voltage as provided in this contract. The said meter equipment shall be maintained by and at the expense of the respective lessees. Meters shall be tested at any reasonable time upon the request of either the United States or a lessee, and in any event they shall be tested at least once each year. If the test discloses that the error of any meter exceeds one per centum (1%), such meter shall be adjusted so that the error does not exceed one-half of one per centum (2%). Meter equipment shall be tested by means of suitable testing equipment which will be provided by the United States, and which shall be calibrated by the United States Bureau of Standards as often as requested by any party hereto. Meters shall be kept sealed, and the seals shall be broken only in the presence of representatives of both the United States and the lessees respectively and likewise all test of meter equipment shall be conducted only when representatives of both the United States and the respective lessees are present. In the event that energy

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furnished to the municipality at Boulder Canyon is transmitted over lines of another contractor, the meters at Boulder Canyon will record only the total amounts of energy delivered to the operators of main transmission lines and it will not be possible to determine from these meters the division of the energy between the various municipalities and the operator. The municipality or the operator of said lines shall provide suitable meter equipment, satisfactory to the Secretary, at the point where the energy is delivered by the operator of said lines to the municipality, for determining the amounts of energy delivered to the municipality at said point and to these amounts there shall be added proper corrections to cover transformer and line losses in determining the amounts of energy furnished to the municipality at Boulder Canyon. The Secretary's determination of said amounts shall be conclusive.

INSPECTION BY THE UNITED STATES

(19) The Secretary or his representatives shall have free access at all reasonable times to the books and records of the municipality relating to the disposal of electrical energy, with the right at any time during office hours to make copies of or from the same.

TRANSMISSION

(20) The city having, in article twenty-five (25) of Exhibit A hereof, undertaken that it shall construct, operate, and maintain at cost, including allowance for necessary overhead expense, the main transmission lines required for transmitting all Boulder Canyon energy allocated to the municipality to the receiving station at the Pacific coast end of the city's main transmission lines, the municipality agrees to pay its pro rata of the cost of construction, operation, and maintenance of said lines as it and the city may agree, and the Secretary will, when notified by the city that arrangements to that effect have been concluded by the city and municipality, cause delivery of energy at transmission voltage to be made accordingly. In the event that an operator of main transmission lines other than the city transmits the energy allocated to the municipality pursuant to Exhibit A, article 25 (b), the obligation of the municipality under this paragraph shall apply for the benefit of such other operator as though it has been named herein instead of the city. In any event, disputes and disagreements between the municipality and the operator of main transmission lines shall be determined in accordance with article 22 (a) hereof. Nothing herein contained, however, shall relieve the municipality of the obligation to pay the United States for energy contracted for by it, whether transmitted or not.

DURATION OF CONTRACT

(21) This contract shall not become effective for any purpose unless on or before November 16, 1931, two-thirds of the qualified electors of the municipality, voting at an election to be held for that purpose, have assented that the municipality shall incur the indebtedness and liability of this contract, and make provision for the collection of an annual tax sufficient to pay to the United States each year the minimum annual obligation of the municipality under this contract, or any portion thereof not paid from other sources. After having become effective this contract shall remain in effect until