1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2001
COMMISSION REGISTRANT AND STATE OF INCORPORATION IRS EMPLOYER
FILE NO. ADDRESS AND TELEPHONE NUMBER IDENTIFICATION NO.
- ------------------ ------------------------------------- ------------------
333-47647 American States Water Company 95-4676679
(A California Corporation)
630 East Foothill Boulevard
San Dimas, California 91773-9016
909-394-3600
000-01121 Southern California Water Company 95-1243678
(A California Corporation)
630 East Foothill Boulevard
San Dimas, California 91773-9016
909-394-3600
Indicate by check mark whether 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 Registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
American States Water Company Yes [X] No [ ]
Southern California Water Company Yes [X] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
As of August 14, 2001, the number of Common Shares outstanding, No Par Value
with Stated Value of $2.50, of American States Water Company was 10,079,629 all
of which are listed on the New York Stock Exchange.
As of August 14, 2001, all of the 110 outstanding Common Shares of Southern
California Water Company are owned by American States Water Company.
2
AMERICAN STATES WATER COMPANY
AND
SOUTHERN CALIFORNIA WATER COMPANY
FORM 10-Q
INDEX
PAGE NO.
--------
PART I FINANCIAL INFORMATION
Item 1: Financial Statements 1
Consolidated Balance Sheets of American States Water Company as of
June 30, 2001 and December 31, 2000 2 - 3
Consolidated Statements of Income of American States Water Company
for the Three Months Ended June 30, 2001 and June 30, 2000 4
Consolidated Statements of Income of American States Water Company
for the Six Months Ended June 30, 2001 and June 30, 2000 5
Consolidated Statements of Income of American States Water Company
for the Twelve Months Ended June 30, 2001 and June 30, 2000 6
Consolidated Statements of Cash Flow of American States Water Company
for The Six Months Ended June 30, 2001 and June 30, 2000 7
Consolidated Balance Sheets of Southern California Water Company as
of June 30, 2001 and December 31, 2000 8 - 9
Consolidated Statements of Income of Southern California Water
Company for the Three Months Ended June 30, 2001 and June 30, 2000 10
Consolidated Statements of Income of Southern California Water
Company for the Six Months Ended June 30, 2001 and June 30, 2000 11
Consolidated Statements of Income of Southern California Water
Company for the Twelve Months Ended June 30, 2001 and June 30, 2000 12
Consolidated Statements of Cash Flow of Southern California Water
Company for the Six Months Ended June 30, 2001 and June 30, 2000 13
Notes to Financial Statements 14 - 17
Item 2: Management's Discussion and Analysis of Financial Condition and
Results of Operation 18 - 35
Item 3: Quantitative and Qualitative Disclosures About Market Risks 36
PART II OTHER INFORMATION
Item 1: Legal Proceedings 36 - 39
Item 2: Changes in Securities 39
Item 3: Defaults Upon Senior Securities 39
Item 4: Submission of Matters to a Vote of Security Holders 39
Item 5: Other Information 39 - 40
Item 6: Exhibits and Reports on Form 8-K 40
i
3
PART I
ITEM 1. FINANCIAL STATEMENTS
General
The basic financial statements included herein have been prepared by
Registrant, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission.
Certain information and footnote disclosures normally included in
financial statements, prepared in accordance with generally accepted accounting
principles, have been condensed or omitted pursuant to such rules and
regulations, although Registrant believes that the disclosures are adequate to
make the information presented not misleading. In the opinion of management, all
adjustments necessary for a fair statement of results for the interim period
have been made.
It is suggested that these financial statements be read in conjunction
with the financial statements and notes thereto in the latest Annual Report on
Form 10-K of American States Water Company.
Filing Format
This quarterly report on Form 10-Q is a combined report being filed by
two separate Registrants: American States Water Company (hereinafter "AWR") and
Southern California Water Company (hereinafter "SCW"). For more information,
please see Note 1 to the Notes to Financial Statements and the heading entitled
General in Item 2 - Management's Discussion and Analysis of Financial Condition
and Results of Operation. References in this report to "Registrant" are to AWR
and SCW, collectively unless otherwise specified. SCW makes no representations
as to the information contained in this report relating to AWR and its
subsidiaries, other than SCW.
1
4
AMERICAN STATES WATER COMPANY
CONSOLIDATED BALANCE SHEETS
ASSETS
(UNAUDITED)
JUNE 30, DECEMBER 31,
2001 2000
----------- -----------
UTILITY PLANT, at cost (in thousands)
Water ......................................................... $ 618,858 $ 608,032
Electric ...................................................... 37,857 37,630
----------- -----------
656,715 645,662
Less - Accumulated depreciation ............................... (182,314) (173,367)
----------- -----------
474,401 472,295
Construction work in progress ................................. 48,291 36,801
----------- -----------
522,692 509,096
----------- -----------
OTHER PROPERTY AND INVESTMENTS .................................. 24,792 25,222
----------- -----------
CURRENT ASSETS
Cash and cash equivalents ..................................... 7,101 5,808
Accounts receivable -
Customers, less reserves of $681 in 2001 and $510 in 2000 ... 11,508 10,481
Other ....................................................... 4,989 5,233
Unbilled revenue .............................................. 13,130 11,363
Materials and supplies, at average cost ....................... 1,240 1,116
Supply cost balancing accounts ................................ 19,705 11,145
Prepayments and other ......................................... 3,472 4,085
Accumulated deferred income taxes - net ....................... - 3,249
----------- -----------
61,145 52,480
----------- -----------
DEFERRED CHARGES
Regulatory tax-related assets ................................. 16,788 17,705
Other deferred charges ........................................ 13,563 12,143
----------- -----------
30,351 29,848
----------- -----------
TOTAL ASSETS ........................................ $ 638,980 $ 616,646
=========== ===========
The accompanying notes are an integral part of these financial statements.
2
5
AMERICAN STATES WATER COMPANY
CONSOLIDATED BALANCE SHEETS
CAPITALIZATION AND LIABILITIES
(UNAUDITED)
JUNE 30, DECEMBER 31,
2001 2000
---------- ----------
(in thousands)
CAPITALIZATION
Common shareholders' equity .................... $ 194,301 $ 192,723
Preferred shares ............................... 1,600 1,600
Preferred shares subject to mandatory
redemption requirements ...................... 320 320
Long-term debt ................................. 196,164 176,452
---------- ----------
392,385 371,095
---------- ----------
CURRENT LIABILITIES
Notes payable to banks ......................... 42,000 45,000
Long-term debt and preferred shares
due within one year .......................... 735 735
Accounts payable ............................... 14,750 11,857
Taxes payable .................................. 3,834 5,585
Accrued interest ............................... 1,744 1,783
Other accrued liabilities ...................... 15,805 15,257
---------- ----------
78,868 80,217
---------- ----------
OTHER CREDITS
Advances for construction ...................... 68,121 69,230
Contributions in aid of construction ........... 40,695 39,670
Accumulated deferred income taxes - net ........ 52,120 51,131
Unamortized investment tax credits ............. 3,105 3,156
Regulatory tax-related liability ............... 1,795 1,817
Other .......................................... 1,891 330
---------- ----------
167,727 165,334
---------- ----------
TOTAL CAPITALIZATION AND LIABILITIES ... $ 638,980 $ 616,646
========== ==========
The accompanying notes are an integral part of these financial statements.
3
6
AMERICAN STATES WATER COMPANY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS
ENDED JUNE 30, 2001 AND 2000
(UNAUDITED)
THREE MONTHS ENDED
JUNE 30,
---------------------------
2001 2000
---------- ----------
(in thousands, except
per share amounts)
OPERATING REVENUES
Water ........................................ $ 46,495 $ 42,089
Electric ..................................... 3,176 3,156
Other ........................................ 199 183
---------- ----------
49,870 45,428
---------- ----------
OPERATING EXPENSES
Water purchased .............................. 10,658 11,323
Power purchased for pumping .................. 1,896 1,589
Power purchased for resale ................... 2,615 1,604
Groundwater production assessment ............ 1,954 2,020
Supply cost balancing accounts ............... (2,293) (366)
Other operating expenses ..................... 4,508 4,344
Administrative and general expenses .......... 8,938 5,999
Depreciation ................................. 4,493 3,807
Maintenance .................................. 2,086 2,589
Taxes on income .............................. 4,125 3,301
Other taxes .................................. 1,877 1,693
---------- ----------
40,857 37,903
---------- ----------
Operating income ............................. 9,013 7,525
OTHER INCOME/(LOSS) .............................. 16 (54)
---------- ----------
Income before interest charges ............... 9,029 7,471
INTEREST CHARGES ................................. 3,976 3,552
---------- ----------
NET INCOME ....................................... 5,053 3,919
DIVIDENDS ON PREFERRED SHARES .................... (21) (22)
---------- ----------
EARNINGS AVAILABLE FOR COMMON SHAREHOLDERS ....... $ 5,032 $ 3,897
========== ==========
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING .... 10,080 8,958
Basic Earnings Per Common Share .................. $ 0.50 $ 0.44
WEIGHTED AVERAGE NUMBER OF DILUTED SHARES ........ 10,171 8,986
Fully Diluted Earnings Per Share ................. $ 0.49 $ 0.43
Dividends Declared Per Common Share .............. $ 0.325 $ 0.32
The accompanying notes are an integral part of these financial statements.
4
7
AMERICAN STATES WATER COMPANY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE SIX MONTHS
ENDED JUNE 30, 2001 AND 2000
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30,
---------------------------
2001 2000
---------- ----------
(in thousands, except
per share amounts)
OPERATING REVENUES
Water ........................................ $ 82,640 $ 76,676
Electric ..................................... 7,133 7,167
Other ........................................ 388 334
---------- ----------
90,161 84,177
---------- ----------
OPERATING EXPENSES
Water purchased .............................. 17,150 18,878
Power purchased for pumping .................. 3,426 3,050
Power purchased for resale ................... 10,348 3,579
Groundwater production assessment ............ 3,427 4,273
Supply cost balancing accounts ............... (8,560) (1,433)
Other operating expenses ..................... 8,636 8,231
Administrative and general expenses .......... 15,518 11,912
Depreciation ................................. 8,977 7,609
Maintenance .................................. 4,299 5,146
Taxes on income .............................. 6,838 5,713
Other taxes .................................. 3,866 3,492
---------- ----------
73,925 70,450
---------- ----------
Operating income ............................. 16,236 13,727
OTHER INCOME/(LOSS) .............................. (170) (41)
---------- ----------
Income before interest charges ............... 16,066 13,686
INTEREST CHARGES ................................. 7,896 6,872
---------- ----------
NET INCOME ....................................... 8,170 6,814
DIVIDENDS ON PREFERRED SHARES .................... (42) (43)
---------- ----------
EARNINGS AVAILABLE FOR COMMON SHAREHOLDERS ....... $ 8,128 $ 6,771
========== ==========
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING .... 10,080 8,958
Basic Earnings Per Common Share .................. $ 0.81 $ 0.76
WEIGHTED AVERAGE NUMBER OF DILUTED SHARES ........ 10,171 8,972
Fully Diluted Earnings Per Share ................. $ 0.80 $ 0.75
Dividends Declared Per Common Share .............. $ 0.65 $ 0.64
The accompanying notes are an integral part of these financial statements.
5
8
AMERICAN STATES WATER COMPANY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE TWELVE MONTHS
ENDED JUNE 30, 2001 AND 2000
(UNAUDITED)
TWELVE MONTHS ENDED
JUNE 30,
---------------------------
2001 2000
---------- ----------
(in thousands, except
per share amounts)
OPERATING REVENUES
Water ........................................ $ 174,760 $ 164,945
Electric ..................................... 14,331 13,814
Other ........................................ 853 591
---------- ----------
189,944 179,350
---------- ----------
OPERATING EXPENSES
Water purchased .............................. 39,863 40,704
Power purchased for pumping .................. 7,885 7,431
Power purchased for resale ................... 17,433 7,177
Groundwater production assessment ............ 6,644 7,754
Supply cost balancing accounts ............... (13,498) (1,785)
Other operating expenses ..................... 17,151 16,437
Administrative and general expenses .......... 29,743 26,761
Depreciation ................................. 16,708 14,369
Maintenance .................................. 9,433 11,135
Taxes on income .............................. 16,251 13,368
Other taxes .................................. 7,515 6,864
---------- ----------
155,128 150,215
---------- ----------
Operating income ............................. 34,816 29,135
OTHER INCOME/(LOSS) .............................. (228) 232
---------- ----------
Income before interest charges ............... 34,588 29,367
INTEREST CHARGES ................................. 15,146 13,835
---------- ----------
NET INCOME ....................................... 19,442 15,532
DIVIDENDS ON PREFERRED SHARES .................... (85) (87)
---------- ----------
EARNINGS AVAILABLE FOR COMMON SHAREHOLDERS ....... $ 19,357 $ 15,445
========== ==========
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING .... 9,938 8,958
Basic Earnings Per Common Share .................. $ 1.95 $ 1.72
WEIGHTED AVERAGE NUMBER OF DILUTED SHARES ........ 10,006 8,965
Fully Diluted Earnings Per Share ................. $ 1.93 $ 1.72
Dividends Declared Per Common Share .............. $ 1.295 $ 1.280
The accompanying notes are an integral part of these financial statements.
6
9
AMERICAN STATES WATER COMPANY
CONSOLIDATED CASH FLOW STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2001 AND 2000
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30,
---------------------------
2001 2000
---------- ----------
(in thousands)
CASH FLOWS FROM Operating Activities:
Net income ............................................ $ 8,171 $ 6,814
Adjustments for non-cash items:
Depreciation and amortization ........................ 8,977 7,609
Deferred income taxes and investment tax credits ..... 5,082 556
Other - net .......................................... (1,198) (3,097)
Changes in assets and liabilities:
Accounts receivable .................................. (783) 1,026
Prepayments .......................................... 613 296
Supply cost balancing accounts ....................... (8,560) (1,433)
Accounts payable ..................................... 2,893 (1,874)
Taxes payable ........................................ (1,751) 2,049
Unbilled revenue ..................................... (1,579) (1,042)
Other ................................................ 1,940 (1,356)
---------- ----------
Net Cash Provided .................................. 13,805 9,548
---------- ----------
Investing Activities:
Construction expenditures ............................... (22,407) (21,430)
---------- ----------
Net Cash Used ..................................... (22,407) (21,430)
---------- ----------
Financing Activities:
Issuance of securities ................................. 20,000 7
Receipt of advances and contributions .................. 2,014 3,558
Repayments of long-term debt, net of
redemption of preferred shares ....................... (287) (252)
Refunds on advances for construction .................. (2,238) (2,239)
Changes in notes payable to banks ...................... (3,000) 16,000
Common and preferred dividends paid .................... (6,594) (5,776)
---------- ----------
Net Cash Provided ................................. 9,895 11,298
---------- ----------
Net Increase (Decrease) in Cash and Cash Equivalents ..... 1,293 (584)
Cash and Cash Equivalents, Beginning of period ........... 5,808 2,189
---------- ----------
Cash and Cash Equivalents, End of period ................. $ 7,101 $ 1,605
========== ==========
The accompanying notes are an integral part of these financial statements.
7
10
SOUTHERN CALIFORNIA WATER COMPANY
CONSOLIDATED BALANCE SHEETS
ASSETS
(UNAUDITED)
JUNE 30, DECEMBER 31,
2001 2000
---------- ----------
(in thousands)
UTILITY PLANT, at cost
Water ........................................................... $ 581,661 $ 570,836
Electric ........................................................ 37,857 37,630
---------- ----------
619,518 608,466
Less - Accumulated depreciation ................................. (173,488) (165,002)
---------- ----------
446,030 443,464
Construction work in progress ................................... 47,878 36,605
---------- ----------
493,908 480,069
---------- ----------
OTHER PROPERTY AND INVESTMENTS .................................... 9,579 9,711
---------- ----------
CURRENT ASSETS
Cash and cash equivalents ....................................... 3,065 1,545
Accounts receivable -
Customers, less reserves of $653 in 2001, and $498 in 2000 .... 10,785 10,071
Other ......................................................... 4,883 5,097
Intercompany receivable ......................................... 246 376
Unbilled revenue ................................................ 12,833 11,363
Materials and supplies, at average cost ......................... 1,155 1,039
Supply cost balancing accounts .................................. 19,705 11,145
Prepayments and other ........................................... 3,293 3,756
Accumulated deferred income taxes - net ......................... - 3,256
---------- ----------
55,965 47,648
---------- ----------
DEFERRED CHARGES
Regulatory tax-related assets ................................... 16,788 17,705
Other deferred charges .......................................... 12,760 11,396
---------- ----------
29,548 29,101
---------- ----------
TOTAL ASSETS ............................................ $ 589,000 $ 566,529
========== ==========
The accompanying notes are an integral part of these financial statements.
8
11
SOUTHERN CALIFORNIA WATER COMPANY
CONSOLIDATED BALANCE SHEETS
CAPITALIZATION AND LIABILITIES
(UNAUDITED)
JUNE 30, DECEMBER 31,
2001 2000
---------- ----------
(in thousands)
CAPITALIZATION
Common shareholders' equity ................................ $ 190,950 $ 164,808
Long-term debt ............................................. 186,897 167,062
---------- ----------
377,847 331,870
---------- ----------
CURRENT LIABILITIES
Notes payable to banks ..................................... 22,000 45,000
Long-term debt and preferred shares due within one year .... 275 275
Accounts payable ........................................... 14,473 11,203
Intercompany payable ....................................... - 4,746
Taxes payable .............................................. 3,986 5,675
Accrued interest ........................................... 1,697 1,722
Other accrued liabilities .................................. 15,596 13,512
---------- ----------
58,027 82,133
---------- ----------
OTHER CREDITS
Advances for construction .................................. 56,925 58,195
Contributions in aid of construction ....................... 40,483 39,642
Accumulated deferred income taxes - net .................... 50,574 49,569
Unamortized investment tax credits ......................... 2,928 2,973
Regulatory tax-related liability ........................... 1,795 1,817
Other ...................................................... 421 330
---------- ----------
153,126 152,526
---------- ----------
TOTAL CAPITALIZATION AND LIABILITIES ............... $ 589,000 $ 566,529
========== ==========
The accompanying notes are an integral part of these financial statements.
9
12
SOUTHERN CALIFORNIA WATER COMPANY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS
ENDED JUNE 30, 2001 AND 2000
(UNAUDITED)
THREE MONTHS ENDED
JUNE 30,
---------------------------
2001 2000
---------- ----------
($ in thousands, except
per share amounts)
OPERATING REVENUES
Water ........................................ $ 44,834 $ 42,089
Electric ..................................... 3,176 3,156
---------- ----------
48,010 45,245
---------- ----------
OPERATING EXPENSES
Water purchased .............................. 10,648 11,323
Power purchased for pumping .................. 1,814 1,589
Power purchased for resale ................... 2,615 1,604
Groundwater production assessment ............ 1,954 2,020
Supply cost balancing accounts ............... (2,293) (366)
Other operating expenses ..................... 4,223 4,260
Administrative and general expenses .......... 8,649 5,810
Depreciation ................................. 4,183 3,807
Maintenance .................................. 2,033 2,579
Taxes on income .............................. 3,987 3,342
Other taxes .................................. 1,792 1,691
---------- ----------
39,605 37,659
---------- ----------
Operating income ............................. 8,405 7,586
OTHER INCOME/(LOSS) .............................. (13) (54)
---------- ----------
Income before interest charges ............... 8,392 7,532
INTEREST CHARGES ................................. 3,579 3,552
---------- ----------
NET INCOME ....................................... 4,813 3,980
DIVIDENDS ON PREFERRED SHARES .................... - -
---------- ----------
EARNINGS AVAILABLE FOR COMMON SHAREHOLDERS ....... $ 4,813 $ 3,980
========== ==========
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING .... 110 100
Basic Earnings Per Common Share .................. $ 43,755 $ 39,800
Dividends Declared Per Common Share .............. $ 30,000 $ 31,000
The accompanying notes are an integral part of these financial statements.
10
13
SOUTHERN CALIFORNIA WATER COMPANY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE SIX MONTHS
ENDED JUNE 30, 2001 AND 2000
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30,
---------------------------
2001 2000
---------- ----------
($ in thousands, except
per share amounts)
OPERATING REVENUES
Water ........................................ $ 79,639 $ 76,676
Electric ..................................... 7,133 7,167
---------- ----------
86,772 83,843
---------- ----------
OPERATING EXPENSES
Water purchased .............................. 16,996 18,878
Power purchased for pumping .................. 3,287 3,050
Power purchased for resale ................... 10,348 3,579
Groundwater production assessment ............ 3,427 4,273
Supply cost balancing accounts ............... (8,560) (1,433)
Other operating expenses ..................... 8,121 8,090
Administrative and general expenses .......... 14,963 11,591
Depreciation ................................. 8,356 7,609
Maintenance .................................. 4,180 5,132
Taxes on income .............................. 6,579 5,772
Other taxes .................................. 3,689 3,489
---------- ----------
71,386 70,030
---------- ----------
Operating income ............................. 15,386 13,813
OTHER INCOME/(LOSS) .............................. (222) (41)
---------- ----------
Income before interest charges ............... 15,164 13,772
INTEREST CHARGES ................................. 7,423 6,872
---------- ----------
NET INCOME ....................................... 7,741 6,900
DIVIDENDS ON PREFERRED SHARES .................... - -
---------- ----------
EARNINGS AVAILABLE FOR COMMON SHAREHOLDERS ....... $ 7,741 $ 6,900
========== ==========
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING .... 105 100
Basic Earnings Per Common Share .................. $ 73,724 $ 69,000
Dividends Declared Per Common Share .............. $ 62,857 $ 63,000
The accompanying notes are an integral part of these financial statements.
11
14
SOUTHERN CALIFORNIA WATER COMPANY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE TWELVE MONTHS
ENDED JUNE 30, 2001 AND 2000
(UNAUDITED)
TWELVE MONTHS ENDED
JUNE 30,
---------------------------
2001 2000
---------- ----------
($ in thousands, except
per share amounts)
OPERATING REVENUES
Water ........................................ $ 170,493 $ 164,945
Electric ..................................... 14,331 13,814
---------- ----------
184,824 178,759
---------- ----------
OPERATING EXPENSES
Water purchased .............................. 39,567 40,704
Power purchased for pumping .................. 7,679 7,431
Power purchased for resale ................... 17,433 7,177
Groundwater production assessment ............ 6,644 7,754
Supply cost balancing accounts ............... (13,498) (1,785)
Other operating expenses ..................... 16,335 16,201
Administrative and general expenses .......... 28,919 26,072
Depreciation ................................. 15,834 14,369
Maintenance .................................. 9,239 11,119
Taxes on income .............................. 15,687 13,502
Other taxes .................................. 7,237 6,859
---------- ----------
151,076 149,403
---------- ----------
Operating income ............................. 33,748 29,356
OTHER INCOME ..................................... (321) 232
---------- ----------
Income before interest charges ............... 33,427 29,588
INTEREST CHARGES ................................. 14,901 13,835
---------- ----------
NET INCOME ....................................... 18,526 15,753
DIVIDENDS ON PREFERRED SHARES .................... - -
---------- ----------
EARNINGS AVAILABLE FOR COMMON SHAREHOLDERS ....... $ 18,526 $ 15,753
========== ==========
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING .... 103 100
Basic Earnings Per Common Share .................. $ 179,864 $ 157,530
Dividends Declared Per Common Share .............. $ 128,155 $ 122,000
The accompanying notes are an integral part of these financial statements.
12
15
SOUTHERN CALIFORNIA WATER COMPANY
CONSOLIDATED CASH FLOW STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2001 AND 2000
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30,
---------------------------
2001 2000
---------- ----------
(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income .......................................... $ 7,741 $ 6,900
Adjustments for non-cash items:
Depreciation and amortization ....................... 8,356 7,609
Deferred income taxes an investment tax credits ..... 5,111 551
Other - net ......................................... (1,346) (1,872)
Changes in assets and liabilities:
Accounts receivable ................................. (500) (1,042)
Prepayments ......................................... 463 296
Supply cost balancing accounts ...................... (8,560) (1,433)
Accounts payable .................................... 3,270 (1,763)
Intercompany Payable ................................ (4,746) -
Taxes payable ....................................... (1,689) 2,068
Unbilled revenue .................................... (1,470) (1,042)
Other ............................................... 2,073 (392)
---------- ----------
Net Cash Provided ................................. 8,703 9,880
---------- ----------
Investing Activities:
Construction expenditures .............................. (22,195) (21,429)
---------- ----------
Net Cash Used .................................... (22,195) (21,429)
---------- ----------
Financing Activities:
Issuance of securities ................................ 45,000 -
Receipt of advances and contributions ................. 2,014 3,558
Repayments of long-term debt, net of
redemption of preferred shares ...................... (164) (251)
Refunds on advances for construction ................. (2,238) (2,239)
Changes in notes payable to banks ..................... (23,000) 16,000
Common and preferred dividends paid ................... (6,600) (6,300)
---------- ----------
Net Cash Provided (Used) ......................... 15,012 10,768
---------- ----------
Net Increase (Decrease) in Cash and Cash Equivalents .... 1,520 (781)
Cash and Cash Equivalents, Beginning of period .......... 1,545 2,020
---------- ----------
Cash and Cash Equivalents, End of period ................ $ 3,065 $ 1,239
========== ==========
The accompanying notes are an integral part of these financial statements.
13
16
AMERICAN STATES WATER COMPANY
AND
SOUTHERN CALIFORNIA WATER COMPANY
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
American States Water Company (AWR), incorporated in 1998, is the parent
company of Southern California Water Company (SCW), American States Utility
Services, Inc. (ASUS) and Chaparral City Water Company (CCWC). More than 90% of
AWR's assets consist of the common stock of Southern California Water Company.
SCW is a public utility company engaged principally in the purchase, production,
distribution and sale of water, and the distribution and sale of electric energy
in several mountain communities. Unless otherwise stated in this report, the
term Registrant applies to both AWR and SCW, collectively.
1. For a summary of significant accounting policies and other information
relating to these interim financial statements, reference is made to
pages 37 through 46 of the Form 10-K, incorporated in the 2000 Annual
Report to Shareholders of AWR, under the caption "Notes to Financial
Statements."
2. Basic earnings per common share are calculated pursuant to SFAS No. 128
- Earnings per Share and are based on the weighted average number of
common shares outstanding during each period and net income after
deducting preferred dividend requirements. Under the American States
Water Company 2000 Stock Incentive Plan, stock options representing
45,657 common shares were granted to certain eligible employees on May
1, 2000, and stock options representing additional 45,657 common shares
were granted on January 2, 2001. A fully diluted earnings per share is
shown as a result.
3. On April 22, 1999, the California Public Utilities Commission (CPUC)
issued an order denying SCW's application seeking approval of its
recovery through rates of costs associated with its participation in the
Coastal Aqueduct Extension of the State Water Project (SWP). SCW's
participation in the SWP commits it to a 40-year entitlement with a
value of approximately $9.5 million. SCW's investment in SWP is
currently included in Other Property and Investments. The remaining
balance of the related liability of approximately $7 million is recorded
as other long-term debt. SCW intends to recover its investment in SWP
through contributions from developers on a per-lot or other basis, and,
failing that, sale of its 500 acre-foot entitlement in SWP. SCW believes
that its full investment and on-going costs associated with its
ownership will be fully recovered.
4. New water rates with an annual increase of approximately $2.5 million
for seven ratemaking districts in SCW's Region I were implemented in
January 2001. SCW's application to combine the seven ratemaking customer
service areas (CSAs) into one regional rate was, however, denied by the
CPUC. Step increases of approximately $1.7 million for CSAs in SCW's
Region III were also effective in January 2001. An attrition increase of
approximately $2.8 million for Region II was in effect from February
2001. There are no active regulatory proceedings affecting CCWC or its
operations.
5. As permitted by the CPUC, SCW maintains water and electric supply cost
balancing accounts to account for under-collections and over-collections
of revenues designed to recover such costs. Recovery or refund of such
over/under collections are recorded in income when received from
customers and charged to balancing accounts when such costs are
incurred. The balancing accounts are reversed when such costs are
recovered through rate adjustments.
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As previously disclosed in Registrant's Form 10-K for the year ended
December 31, 2000, SCW, like other California utilities, has experienced
rapid increases in the price of electric energy. As of June 30, 2001,
SCW had an aggregate under-collection of $19.7 million in its water and
electric balancing accounts. Of this total amount, approximately $16.8
million is related to purchased power costs at SCW's Bear Valley
Electric customer service area (BVE). This is a result of the
differences between wholesale purchased power costs, which have averaged
approximately $0.16 per kilowatt-hour during the first six months of
this year, and the $0.024 per kilowatt-hour (KWh) currently authorized
in rates for collection of purchased power costs from customers. On May
24, 2001, the CPUC approved SCW's Advice Letter filed in May 2000 for
recovery over a five-year period of approximately $2.4 million in
under-collected power costs, which resulted in an overall rate increase
of 12.5% for customers of BVE, and imposed a condition of conducting a
subsequent audit on the electric balancing account. SCW filed a second
Advice Letter on April 9, 2001 for recovery over a five-year period of
an additional under-collection of $8.7 million. A draft Resolution
issued by the CPUC on July 24, 2001 approves, with modifications, the
Advice Letter, which will result in an additional rate increase of 14.8%
to BVE's customers. The draft Resolution is scheduled to be on the
agenda at the Commission meeting on August 23, 2001. On May 11, 2001,
SCW filed a third Advice Letter with the CPUC to seek recovery of $0.095
per KWh for electric energy purchased pursuant to a five-year, fixed
cost contract with Mirant Americas Energy Marketing, LP. (Mirant). SCW
subsequently withdrew the Advice Letter and anticipates filing an
application in the third quarter of 2001 with the CPUC, along with a
motion requesting immediate recovery of these costs, subject to refund,
after completion of the review process. The application, if approved,
will result in an additional rate increase of approximately 50%.
Registrant believes that the recovery of these amounts is probable but
is unable to predict when, or if, the CPUC will authorize recovery of
all or any of these expenses. SCW will continue to file additional
Advice Letters to recover the differences between actual wholesale power
costs and the amounts currently recovered through rates. Registrant also
believes that timely actions by the CPUC to authorize SCW to recover
past and future power costs are necessary to avoid any material adverse
effect on SCW's financial condition.
In March 2001, the CPUC approved SCW's first filing for recovery of
increased costs of electric power incurred to pump water for its water
customers. In April 2001, SCW filed a second Advice Letter to increase
water rates by approximately $2.3 million company-wide to cover
additional electric base rate increases, authorized recently by the CPUC
for the Southern California Edison Company and the Pacific Gas and
Electric Company.
See the sections entitled "Liquidity and Capital Resources," "Electric
Energy Situation in California," and "Regulatory Matters" for
information on actions being taken by SCW to recover these costs. CCWC,
subject to regulation by the Arizona Corporation Commission (ACC), does
not maintain balancing accounts and increases in costs are recovered
through general rate case applications.
6. On October 2000, AWR completed the acquisition of the common stock of
CCWC for an aggregate value of $31.2 million, including assumption of
approximately $12 million in debt. As of June 30, 2001, Registrant has
$12,906,000 in goodwill included in Other Property and Investments. The
amount represents the difference between the purchase price of the
common equity of CCWC and CCWC's book equity at the time of closing and
is being amortized over a period of 40 years.
7. In July 2001, the Financial Accounting Standards Board issued SFAS No.
141, Business Combinations, and SFAS No. 142, Goodwill and Other
Intangible Assets. SFAS No. 141 eliminates the pooling-of-interests
method of accounting, effective June 30, 2001. After that, all
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business combinations will be recorded under the purchased method of
accounting (record goodwill for excess of costs over the net assets
acquired). SFAS No. 142 requires that companies cease amortizing
goodwill, effective January 1, 2002. Goodwill initially recognized after
June 30, 2001, will not be amortized. Goodwill on the balance sheet at
June 30, 2001 will be amortized until January 1, 2002. Under SFAS No.
142, goodwill will be tested for impairment using a fair-value approach
when events or circumstances occur indicating that impairment might
exist. A benchmark assessment for goodwill is also required within six
months of the date of adoption of SFAS No. 142. Registrant is assessing
the impact on future financial reporting related to both past and future
transactions, but believes that adoption of this statement will not have
a significant impact on its financial position or results of operation.
8. AWR has three principal business units: water and electric distribution
units, through its SCW subsidiary, a water service utility operation
conducted through its Chaparral City Water Company (CCWC) unit, and a
non-regulated activity unit through the American States Utilities
Services, Inc. (ASUS) subsidiary. All activities of SCW currently are
geographically located within California. All activities of CCWC are
located in the state of Arizona. Both SCW and CCWC are regulated
utilities. On a stand-alone basis, AWR has no material assets other than
its investments in its subsidiaries. The tables below set forth
information relating to SCW's water and electric operating segments,
CCWC, and non-regulated businesses, consisting of ASUS and AWR corporate
expenses. Included in the amounts set forth, certain assets, revenues
and expenses have been allocated. The identifiable assets are net of
respective accumulated provisions for depreciation.
(dollars in thousands) For The Three Months Ended June 30, 2001
- ------------------------------------------------------------------------------------------------------------
SCW
------------------------ CCWC Non- Consolidated
Water Electric Water Regulated AWR
--------- --------- --------- --------- ---------
Operating revenues $ 44,834 $ 3,176 $ 1,661 $ 199 $ 49,870
Operating income before income 13,345 (1,533) 696 50 12,558
taxes
Identifiable assets 467,143 26,766 28,783 - 522,692
Depreciation expense 3,821 361 311 - 4,493
Capital additions $ 11,128 $ 497 $ 86 - $ 11,711
(dollars in thousands) For The Three Months Ended June 30, 2000
- ------------------------------------------------------------------------------------------------------------
SCW
------------------------ CCWC Non- Consolidated
Water Electric Water Regulated AWR
--------- --------- --------- --------- ---------
Operating revenues $ 42,089 $ 3,156 N.A. $ 183 $ 45,428
Operating income before income 10,215 713 N.A. (102) 10,826
taxes
Identifiable assets 437,555 25,860 N.A. - 463,415
Depreciation expense 3,457 350 N.A. - 3,807
Capital additions $ 10,093 $ 335 N.A. - $ 10,428
(dollars in thousands) For The Six Months Ended June 30, 2001
- ------------------------------------------------------------------------------------------------------------
SCW
------------------------ CCWC Non- Consolidated
Water Electric Water Regulated AWR
--------- --------- --------- --------- ---------
Operating revenues $ 79,639 $ 7,133 $ 3,001 $ 388 $ 90,161
Operating income before income 21,651 (266) 1,014 95 22,494
taxes
Identifiable assets 467,143 26,766 28,783 - 522,692
Depreciation expense 7,634 722 621 - 8,977
Capital additions $ 22,187 $ 1,062 $ 216 - $ 23,465
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(dollars in thousands) For The Six Months Ended June 30, 2000
- ------------------------------------------------------------------------------------------------------------
SCW
------------------------ CCWC Non- Consolidated
Water Electric Water Regulated AWR
--------- --------- --------- --------- ---------
Operating revenues $ 76,676 $ 7,167 N.A. $ 334 $ 84,177
Operating income before income 17,455 2,130 N.A. (145) 19,440
taxes
Identifiable assets 437,555 25,860 N.A. - 463,415
Depreciation expense 6,909 700 N.A. - 7,609
Capital additions $ 19,983 $ 912 N.A. - $ 20,895
(dollars in thousands) For The Twelve Months Ended June 30, 2001
- ------------------------------------------------------------------------------------------------------------
SCW
------------------------ CCWC Non- Consolidated
Water Electric Water Regulated AWR
--------- --------- --------- --------- ---------
Operating revenues $ 170,493 $ 14,331 $ 4,267 $ 853 $ 189,944
Operating income before income 46,730 2,125 1,312 320 50,487
taxes
Identifiable assets 467,143 26,766 28,783 - 522,692
Depreciation expense 14,412 1,422 874 - 16,708
Capital additions $ 45,686 $ 2,453 $ 413 - $ 48,552
(dollars in thousands) For The Twelve Months Ended June 30, 2000
- ------------------------------------------------------------------------------------------------------------
SCW
------------------------ CCWC Non- Consolidated
Water Electric Water Regulated AWR
--------- --------- --------- --------- ---------
Operating revenues $ 164,945 $ 13,814 N.A. $ 591 $ 179,350
Operating income before income 39,206 3,652 N.A. (355) 42,503
taxes
Identifiable assets 437,555 25,860 N.A. - 463,415
Depreciation expense 12,997 1,372 N.A. - 14,369
Capital additions $ 46,773 $ 2,127 N.A. - $ 48,900
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION
FORWARD-LOOKING INFORMATION
Certain matters discussed in this report (including the documents
incorporated herein by reference) are forward-looking statements intended to
qualify for the "safe harbor" from liability established by the Private
Securities Litigation Reform Act of 1995. These forward-looking statements can
generally be identified as such because the context of the statement will
include words such as Registrant "believes," "anticipates," "expects" or words
of similar import. Similarly, statements that describe Registrant's future
plans, objectives, estimates or goals are also forward-looking statements. Such
statements address future events and conditions concerning capital expenditures,
earnings, litigation, rates, water quality and other regulatory matters,
adequacy of water supplies, the California energy crisis, liquidity and capital
resources, opportunities related to operations and maintenance of water systems
owned by governmental entities and other utilities and providing related
services, and accounting matters. Actual results in each case could differ
materially from those currently anticipated in such statements, by reason of
factors such as utility restructuring, including ongoing local, state and
federal activities; future economic conditions, including changes in customer
demand and changes in water and energy supply cost; future climatic conditions;
litigation developments; and legislative, regulatory and other circumstances
affecting anticipated revenues and costs. See the section entitled "Risk
Factors" for more information.
GENERAL
American States Water Company (AWR), incorporated in 1998, is engaged in
the business of holding, for investment, the stock primarily of utility
companies. AWR's primary investment is the stock of Southern California Water
Company (SCW). SCW is a California public utility company engaged principally in
the purchase, production, distribution and sale of water (SIC No. 4941). SCW
also distributes electricity in one customer service area (SIC No. 4911). SCW is
regulated by the California Public Utilities Commission (CPUC) and was
incorporated on December 31, 1929 under the laws of the State of California.
SCW is organized into three regions and one electric customer service
area (CSA) operating within 75 communities in 10 counties in the State of
California and provides water service in 21 CSAs. Region I incorporates 7 CSAs
in northern and central California; Region II has 4 CSAs located in Los Angeles;
Region III incorporates 10 water CSA's. SCW also provides electric service to
the City of Big Bear Lake and surrounding areas in San Bernardino County. See
the section entitled "Electric Energy Situation in California" for more
information.
SCW served 245,738 water customers and 21,566 electric customers at June
30, 2001, or a total of 267,304 customers, compared with 265,842 total customers
at June 30, 2000.
SCW's utility operations exhibit seasonal trends. Although SCW's water
utility operations have a diversified customer base, revenues derived from
commercial and residential water customers accounted for approximately 85.1%,
90.4% and 91.2% of total water revenues for the three, six and twelve months
ended June 30, 2001, respectively, as compared to 86.1%, 90.7% and 90.6% for the
three, six and twelve months ended June 30, 2000, respectively.
AWR also owns two other subsidiaries. American States Utility Services,
Inc. (ASUS) contracts to lease, operate and maintain water and wastewater
systems owned by others and to provide related services, such as billing and
meter reading, to approximately 90,000 accounts. Chaparral City Water Company
(CCWC) is an Arizona public utility company serving 11,342 customers as of June
30, 2001 in the town of Fountain Hills, Arizona and a portion of the City of
Scottsdale, Arizona. The Arizona Corporation Commission (ACC) regulates CCWC.
AWR completed the acquisition of the common stock of CCWC on
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October 10, 2000 for an aggregate value of $31.2 million, including assumption
of approximately $12 million in debt. Neither AWR nor ASUS is regulated by
either the CPUC or the ACC.
ACQUISITION OF PEERLESS WATER CO.
In December 1999, Registrant agreed to acquire Peerless Water Co., a
privately owned water company in Bellflower, California, subject to satisfaction
of certain conditions, including CPUC approval. The number of Common Shares to
be issued will be determined at the closing, but will in no event be greater
than 131,036 shares nor less than 107,538 shares. The transaction, if approved
by the CPUC, is not anticipated to close before the end of the fourth quarter of
2001.
RESULTS OF OPERATION
Basic earnings per common share for the three months ended June 30, 2001
increased by 13.6% to $0.50 per share as compared to $0.44 per share for the
comparable period last year. Basic earnings for the six months ended June 30,
2001 increased by 6.6% to $0.81 per share from $0.76 per share for the same
period of last year. As compared to the twelve months ended June 30, 2000, basic
earnings increased by 13.4% to $1.95 per share from $1.72 per share. The
increases in the recorded results primarily reflect the impact of various rate
increases authorized by the CPUC at SCW, additional revenues generated by CCWC
since the acquisition and various reasons as discussed below. Fully diluted
earnings per share for the three, six and twelve months ended June 30, 2001 are
$0.49, $0.80 and $1.93 per share, respectively, as compared to $0.43, $0.75 and
$1.72 per share for the comparable periods of 2000.
As compared to the same periods ended June 30, 2000, water operating
revenues increased by 10.5%, 7.8% and 6.0% for the three, six and twelve months
ended June 30, 2001, respectively, due to (i) the increases in rates authorized
by the CPUC, and additional revenues generated by CCWC. New rates in the
customer service areas that comprise SCW's Region I were effective January 2,
2001. Attrition increases for SCW's Metropolitan customer service area and step
increases for SCW's Region III were also in effect in the first quarter of 2001.
The additional revenues generated by rate increases were partially offset by a
reduction of 4.2%, 4.7% and 1.8% in water sales, respectively, for the three,
six and twelve months ended June 30, 2001 to customers of SCW. See the section
entitled "Regulatory Matters" for more information.
Electric revenues increased slightly by 0.6% for the three months ended
June 30, 2001 as compared to the same period ended June 30, 2000 reflecting a
rate increase of 12.5% effective May 24, 2001 authorized by the CPUC to recover
previous under-collected energy costs, offset by a decrease of 3.5% in usage.
Kilowatt-hour sales of electricity decreased by 2.1% for the six months ended
June 30, 2001 as compared to the same period ended June 30, 2000 resulting in a
0.5% decrease in electric operating revenues. The decrease in sales was due
principally to more winter snows experienced in Registrant's service area during
the first quarter of this year, which decreased the use of snow making machines
at ski resorts in the area. As compared to the twelve months ended June 30,
2000, kilowatt-hour sales increased by 3.3% due to increase in commercial and
residential usage. As a result, electric operating revenues for the twelve
months ended June 30, 2001 increased by 3.7%. See the section entitled
"Regulatory Matters" and "Electric Energy Situation in California" for more
information.
Other revenues increased by 8.2%, 15.8% and 44.3% for the three, six and
twelve months ended June 30, 2001, respectively, due to new ASUS service
contracts and increased activities with existing contracts.
Purchased water costs decreased by 5.9%, 9.2% and 2.1%, respectively,
for the three, six and twelve months ended June 30, 2001 as compared to the same
periods ending in 2000 reflecting a decrease in purchased water volume resulting
from lower sales and less purchased water in Registrant's supply mix.
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Cost of power purchased for pumping increased by 19.3%, 12.3% and 6.1%
for the three, six and twelve months ended June 30, 2001, respectively, due to
the rate increases implemented by SCW's energy suppliers pursuant to CPUC
decisions. On March 27, 2001, the CPUC approved SCW's Advice Letters to increase
revenues by approximately $762,000 annually to recover the costs of purchased
power for its water ratemaking districts. Another Advice Letter to increase
water rates by approximately $2.3 million annually to recover additional
electric power increases was filed in April 2001, and is pending CPUC approval.
See the section entitled "Regulatory Matters" and "Electric Energy Situation in
California" for more information.
As compared to the three, six and twelve months ended June 30, 2000,
costs of power purchased for resale to customers in SCW's Bear Valley Electric
customer service area increased by 63.0%, 189.1% and 142.9%, respectively, due
primarily to significant increases in wholesale market prices for energy in the
State of California. The increases were partially offset by a one-time sale of
energy on the spot market that resulted in a $580,000 gain in April 2001. The
sale of excess energy on the spot market resulted from a one-month overlap of
energy purchase agreements. Most of this increase has been included in the
electric supply cost balancing account that, as described below, partially
insulates earnings from the effects of the significantly increased power costs,
unless recovery of these costs is disallowed. The CPUC approved an overall rate
increase on May 24, 2001 to recover approximately $2.4 million in
under-collected power costs incurred prior to March 31, 2000 over a five-year
period. Two Advice Letters to increase electric rates by approximately $10.7
million in the aggregate annually were filed with the CPUC during the second
quarter of 2001 to recover additional electric power costs incurred during the
electric power crisis in California. SCW subsequently withdrew one of the Advice
Letter filings and now anticipates filing an application with a motion
requesting immediate recovery of these costs, subject to refund, after
completion of the review process. SCW intends to continue to file additional
Advice Letters to recover the differences between actual wholesale power costs
and the costs recovered through previously approved rates. Due to the nature of
the regulatory process, there is a risk of disallowance of full recovery of
costs or additional delays in the recovery of costs during any period in which
there has been a substantial escalation in costs. See the sections entitled
"Liquidity and Capital Resources", "Regulatory Matters" and "Electric Energy
Situation in California" for more information.
Groundwater production assessments for the three, six and twelve months
ended June 30, 2001 decreased by 3.3%, 19.8% and 14.3%, respectively, as
compared to the same periods in 2000. The decrease incurred principally in SCW's
San Gabriel and San Dimas customer service areas due to (i) lower administrative
assessments levied against production for the water year ended June 30, 2001,
(ii) over-accrued costs during the periods ended June 30, 2000 for excess
pumping, which were corrected in the third quarter of 2000, and (iii) less
pumped water volume.
A positive entry for the provision for supply cost balancing accounts
reflects recovery of previously under-collected supply costs. Conversely, a
negative entry for the provision for supply cost balancing accounts reflects an
under-collection of previously incurred supply costs. At June 30, 2001,
Registrant had a net under-collected position of $19.7 million in both its water
and electric balancing accounts primarily due to the increases in energy costs.
See the sections entitled "Liquidity and Capital Resources", "Regulatory
Matters" and "Electric Energy Situation in California" for more information.
Other operating expenses increased by 3.8%, 4.9% and 4.3% for the three,
six and twelve months ended June 30, 2001, respectively, as compared to the same
periods of last year. The increases were primarily due to additional costs
related to the inclusion of CCWC and increases in labor and billing costs due to
additional billing and customer service contracts obtained by ASUS.
Administrative and general expenses increased by 49.0%, 30.3% and 11.1%,
respectively, for the three, six and twelve months ended June 30, 2001 as
compared to the same periods ended June 30, 2000 reflecting additional costs and
reserves associated with SCW's Bear Valley Electric customer service area in
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response to the energy situation in California, including possible disallowances
of past costs included in the balancing account as well as an adverse settlement
with SCW's energy provided, increased reserves for self-insured worker's
compensation liabilities, and additional costs from CCWC.
Depreciation expense increased by 18.0%, 18.0% and 16.3%, respectively,
for the three, six and twelve months ended June 30, 2001 reflecting, among other
things, the effects of recording approximately $40.1 million in net plant
additions at SCW during 2000, depreciation on which began in January 2001, and
additional depreciation associated with CCWC's plant. In addition, amortization
of goodwill, which represents the difference between the purchase price of the
common equity of CCWC and CCWC's book equity at the time of closing, began
October 2000.
As compared to the three, six and twelve months ended June 30, 2000,
maintenance expense decreased by 19.4%, 16.5% and 15.3%, respectively, due
primarily to the implementation of Registrant's Cash Preservation Plan (CPP) in
April 2001. See the sections entitled "Liquidity and Capital Resources",
"Electric Energy Situation in California" and "Regulatory Matters" for more
information.
Taxes on income increased by 25.0%, 19.7% and 21.6%, respectively, as
compared to the three, six and twelve months ended June 30, 2000, due to an
increase in pre-tax operating income of 26%, 20.8% and 25.3%, respectively, for
the comparable periods ended June 30, 2001. The twelve-month comparison was also
affected by a lower effective tax rate for the same period ended June 30, 2001.
Other taxes increased by 10.9%, 10.7% and 9.5%, respectively, for the
three, six and twelve months ended June 30, 2001, respectively, as compared to
the same periods last year reflecting principally increased property taxes due
to higher property valuation assessments, and additional property and payroll
taxes at CCWC.
The loss recorded in other income for the six and twelve months ended
June 30, 2001 was due principally to the effects of recording amortization and
interest expenses, starting January 2000, on SCW's entitlement in the State
Water Project, and higher expenses associated with increased non-regulated
activities.
Interest expense increased by 11.9%, 14.9% and 9.5%, respectively, for
the three, six and twelve months ended June 30, 2001 as compared to the three,
six and twelve months ended June 30, 2000 due to (i) short-term borrowing,
incurred by AWR to fund the acquisition of CCWC, (ii) the issuance of $20
million in long-term debt by SCW in January 2001 and (iii) the inclusion of
long-term debt at Registrant's CCWC unit.
LIQUIDITY AND CAPITAL RESOURCES
AWR funds its operating expenses and pays dividends on its outstanding
Common and Preferred Shares principally through dividends from its subsidiaries,
principally SCW. AWR has a Registration Statement on file with the Securities
and Exchange Commission (SEC) for issuance, from time to time, of up to $60
million in Common Shares, Preferred Shares and/or debt securities. On August 16,
2000, AWR issued 1,107,000 Common Shares at $26.125 per share under this
Registration Statement. Net proceeds from the offering have been used to fund a
portion of the purchase price of CCWC and to invest in additional shares of SCW.
As of June 30, 2001, approximately $31,074,000 remained for issuance under this
Registration Statement. AWR completed the acquisition of the common stock of
CCWC on October 10, 2000 for an aggregate value of $31.2 million, including
assumption of approximately $12 million in debt.
AWR maintains a credit facility with a $25 million aggregate borrowing
capacity. At June 30, 2001, $20 million was outstanding under this facility.
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SCW funds the majority of its operating expenses, payments on its debt,
and dividends on its outstanding Common Shares through internal sources.
Internal sources of cash flow are provided primarily by retention of a portion
of earnings, amortization of deferred charges, and depreciation expense.
Internal cash generation is influenced by factors such as weather patterns,
environmental regulation, litigation, changes in supply costs, and timing of
rate relief. See the sections entitled "Risk Factors" and "Electric Energy
Situation in California" for more information.
Because of the seasonal nature of its water and electric operations, SCW
utilizes its short-term borrowing capacity to finance current operating
expenses, including expenses for purchased power distributed through its Bear
Valley Electric customer service area. SCW has experienced increased costs for
electric energy, particularly during the fourth quarter of 2000, and first and
second quarters of 2001. At December 31, 2000, SCW had under-collected its
electric power costs by approximately $8.6 million. During the first two
quarters of 2001, SCW incurred $8.2 million more in purchased power costs than
it was authorized to recover in current rates. SCW also has an additional $2.9
million of under-collected supply costs in its water business.
CPUC approval has been obtained to increase electric rates to recover
$2.4 million in under-collected electric power costs over a five-year period.
CPUC approval has also been obtained to recover approximately $762,000 annually
of costs for purchased power for its water ratemaking districts. Applications
are pending before the CPUC for additional rate increases to recover
under-collected power costs from SCW's electric and water customers. See the
sections entitled "Electric Energy Situation in California" and "Regulatory
Matters". SCW's under-collected position for purchased power relative to its
Bear Valley Electric Service division could reach approximately $23 million by
the end of 2001 if the CPUC does not timely authorize recovery of both past
electric power costs as well as costs associated with the new power purchase
agreement. Registrant believes that timely regulatory approval of these
applications by the CPUC is necessary to avoid any material adverse impact on
SCW's liquidity and financial condition.
Registrant implemented a Cash Preservation Plan (CPP) in April 2001 to
control costs and temporarily to limit capital and maintenance expenditures
principally to those projects that are believed necessary to meet public safety
and health requirements or otherwise provide for continued service pending CPUC
approval of rate increases that will permit SCW to begin recovery of power costs
incurred during California's energy crisis. The CPP impacts both the electric
and water businesses of SCW. Management anticipates that the CPP, through
deferral of capital expenditures alone, could reduce cash expenditures in 2001
by as much as $20 million. See the sections entitled "Electric Energy Situation
in California" and "Regulatory Matters" for more information.
The aggregate short-term borrowing capacity available to SCW under its
three bank lines of credit was $60 million as of June 30, 2001, of which a total
of $22 million was then outstanding. SCW routinely employs short-term bank
borrowing as an interim-financing source.
SCW also relies on external sources, including equity investments from
AWR, long-term debt, contributions-in-aid-of-construction, advances for
construction and install-and-convey advances, to fund the majority of its
construction expenditures. In January 2001, SCW issued the remaining $20 million
of long-term debt under a Registration Statement filed in 1998 with the proceeds
used to reduce then outstanding bank borrowing. During 2001, SCW anticipates
filing a Registration Statement with the SEC for issuance, from time to time, of
additional debt securities. On March 30, 2001, AWR purchased an additional $25
million equity investment in SCW.
CCWC funds the majority of its operating expenses, payments on its debt
and dividends, if any, through internal sources. CCWC also relies on external
sources, including long-term debt, contributions-
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in-aid-of-construction, advances for construction and install-and-convey
advances, to fund the majority of its construction expenditures.
ASUS funds its operating expenses primarily through contractual
management fees.
ELECTRIC ENERGY SITUATION IN CALIFORNIA
The electric energy environment in California has changed as a result of
the December 1995 CPUC decision on restructuring of California's electric
utility industry and state legislation passed in 1996. On September 23, 1996,
the State of California enacted legislation, California Assembly Bill 1890 as
amended by California Senate Bill 477, to provide a transition to a competitive
market structure, which was expected to provide competition and customer choice,
beginning January 1, 1998, with all consumers ultimately participating by 2002.
SCW's Bear Valley electric customer service area was exempted by the CPUC from
compliance with most of the provisions of the CPUC order and the state
legislation.
On January 17, 2001, the Governor of the State of California proclaimed
a state of emergency in California due to shortages of electricity available to
certain of California's utilities (resulting in blackouts), the unanticipated
and dramatic increases in electricity prices and the insufficiency of
electricity available from certain of California's utilities to prevent
disruption of electric service in California. The reasons for the high cost of
energy are under investigation but are reported to include, among other things,
limited supply caused by a lack of investment in new power plants to meet growth
in demand, planned and unplanned outages of power plants, lower than usual
availability of hydroelectric power from the Pacific Northwest due to lower than
usual precipitation and higher demand for electricity in the region,
transmission line constraints, increased prices for natural gas, the fuel used
in many of the power plants serving the region, and an uncertain power market.
Recently, legislation has been enacted and executive orders issued
designed to encourage and accelerate the construction of additional power plants
and the re-powering and updating of existing power plants to increase the supply
of electricity in the State. A number of investigations have also been
instituted as to the causes of the California energy situation and numerous
pieces of legislation have been introduced at the California Legislature to deal
with different aspects of the situation. The long-term impact of these
legislative initiatives on SCW's Bear Valley Electric (BVE) customer service
area is difficult to predict. For the short-term, however, management expects
energy costs to remain high and to continue to be volatile.
On July 25, 2001, the Federal Energy Regulatory Commission (FERC)
established the scope and methodology for calculating refunds related to
transactions in the spot markets operated by the California Independent System
Operator Corporation (Cal-ISO) and the California Power Exchange Corporation
(Cal-PX) during the period October 2, 2000 through June 20, 2001, and ordered
evidentiary hearings for the purpose of determining the amount of such refunds.
SCW is a party to these proceedings, but has not been a direct participant in
either the Cal-ISO or Cal-PX markets. SCW does not believe that these
proceedings or any other proceedings currently pending before FERC will result
in any reduction in SCW's under-collected power costs in the near term, if at
all.
All electric energy sold by SCW to customers in its BVE customer service
area is purchased from others. Historically, SCW purchased electric energy from
the Southern California Edison (SCE) unit of Edison International. However, in
order to keep electric power costs as low as possible, SCW entered into an
energy brokerage contract with Sempra Energy Corporation (Sempra). SCW purchased
electric energy for its BVE customer service area from Sempra during the period
beginning March 26, 1996 through April 30, 1999. SCW changed energy brokers to
Illinova Energy Partners (Illinova) beginning May 1, 1999
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through April 30, 2000, and with Dynegy Power Marketing, Inc. (Dynegy) since May
1, 2000. Illinova has been acquired by Dynegy.
In May 2000, SCW entered into a one-year, block forward purchase
contract with Dynegy for 12 megawatts (MW's) of electric energy for its BVE
customer service area at a price of $35.50 per MW hour (MWh). This contract
expired April 30, 2001.
SCW entered into a five-year, block forward purchase contract with
Mirant Americas Energy Marketing, LP (Mirant) to supply its BVE customer service
area with 15 MW's of electric energy at a price of $95 per MWh beginning April
1, 2001 through December 31, 2006. SCW also finalized an agreement with Pinnacle
West Capital Corporation on June 14, 2001 for additional 8 MW's of electric
energy to meet BVE's peak winter demands. The contract provides for pricing of
$75 per MWh from November 1, 2001 to March 31, 2002, $48 per MWh from November
1, 2002 to March 31, 2003, and $36 per MWh from November 1, 2003 to March 31,
2004. The average minimum load at SCW's Bear Valley Electric customer service
area has been approximately 12 MW's. The average winter load has been 18 MW's
with a winter peak of 38 MW's when the snowmaking machines at the ski resorts
are operating. Under the terms of a contract with Dynegy that expires on April
30, 2002, Dynegy has agreed to procure electric energy for SCW in excess of the
amounts it has purchased under the forward block purchase contracts previously
described, to sell excess energy purchased by SCW under the terms of these
contracts and to act as scheduling coordinator for SCW. SCW has withheld payment
on $3.4 million invoiced by Dynegy for the period December 20, 2000 through
February 20, 2001, pending resolution of certain disputes. Although most of this
amount is included in the electric supply cost balancing account, SCW has
reserved against the portion not currently included in the balancing account.
Demand for energy in SCW's Bear Valley Electric customer service area
generally has been increasing. However, the ability of SCW to deliver purchased
power to these customers is limited by the ability of the transmission
facilities owned by Southern California Edison Company ("Edison") to transmit
this power. See section entitled "Legal Proceedings" for a discussion of
litigation between Edison and SCW regarding Edison's obligations to upgrade
these transmission facilities. In order to meet these increasing energy demands,
SCW is considering, in addition to the renegotiated block forward purchase of
electric energy, a number of options including (i) the purchase of electric
energy from on-site generation facilities installed by a third party, (ii) the
use of portable generation, and (iii) the installation of generation owned by
Registrant. Each of these options is expected to result in further increases in
electric energy prices for customers of SCW's BVE customer service area.
WATER SUPPLY
For the three months ended June 30, 2001, SCW supplied a total of
22,834,000 ccf of water as compared to 23,954,000 ccf for the three months ended
June 30, 2000. Of the total 22,833,818 ccf of water supplied during the second
quarter of 2001, approximately 59% came from pumped sources and 38.5% was
purchased from others, principally the Metropolitan Water District of Southern
California (MWD) and its member agencies. The remaining 2.5% of total supply
came from the United States Bureau of Reclamation (the Bureau). For the three
months ended June 30, 2000, 55.5%, 41.9% and 2.5% was supplied from pumped
sources, purchased from MWD and the Bureau, respectively.
For the six months ended June 30, 2001, SCW supplied a total of
38,422,000 ccf of water, 61.1% of which came from pumped sources, 37.4% was
purchased and the remaining amount was supplied by the Bureau. During the six
months ended June 30, 2000, SCW produced 40,468,000 ccf of water. Of this amount
57.7% came from pumped sources, 40.7% was purchased and the remainder was
provided by the Bureau.
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During the twelve months ended June 30, 2001, SCW supplied 85,393,638
ccf of water as compared to 88,346,000 ccf supplied during the twelve months
ended June 30, 2000. During the twelve months ended June 30, 2001, pumped
sources provided 57.1% of total supply, 40.9% was purchased from MWD and its
member agencies. The remaining 2.0% of total supply came from the United States
Bureau of Reclamation (the Bureau) under a no-cost contract. For the twelve
months ended June 30, 2000, 56.6%, 41.3% and 2.1%, respectively, was supplied
from pumped sources, purchased from MWD and the Bureau.
The MWD is a water district organized under the laws of the State of
California for the purpose of delivering imported water to areas within its
jurisdiction. Registrant has 57 connections to the water distribution facilities
of MWD and other municipal water agencies. MWD imports water from two principal
sources: the Colorado River and the State Water Project (SWP). Available water
supplies from the Colorado River and the SWP have historically been sufficient
to meet most of MWD's requirements and MWD's supplies from these sources are
anticipated to remain adequate through 2001. MWD's import of water from the
Colorado River is expected to decrease in future years due to the requirements
of the Central Arizona Project (CAP). In response, MWD has taken a number of
steps to secure additional storage capacity and to increase available water
supplies, by effecting transfers of water rights from other sources.
Registrant's water supply and revenues are significantly affected, both
in the short-run and the long run, by changes in meteorological conditions.
Statewide precipitation from October 2000 to May 2001 remains at 75% of average.
Reservoir storage, at May 31, 2001, is about average, which helps to ensure
sufficient water supplies for most local agency users. Based on the May 1, 2001
snow survey and water in storage, the Department of Water Resources (DWR) has
increased the 2001 allocation of entitlement water for long-term State Water
Project contractors including MWD from 1.38 million acre-feet to 1.44 million
acre-feet. Although overall groundwater conditions remain at adequate levels in
most of SCW's operating areas, certain of SCW's groundwater supplies have been
affected to varying degrees by various forms of contamination which, in some
cases, have caused increased reliance on purchased water in its supply mix.
Likewise the Colorado River water outlook remains favorable. The
April-July inflow to Lake Powell is forecast to be 5.6 million acre-feet, which
is 72% of average. The May 2001 snow pack in the Upper Colorado River basin was
78% of average.
CCWC obtains its water supply from three operating wells and from
Colorado River water delivered by the CAP. The majority of CCWC's water supply
is obtained from its CAP allocation and well water is used for peaking capacity
in excess of treatment plant capability, during treatment plant shutdown, and to
keep the well system in optimal operating condition. CCWC has an Assured Water
Supply designation, by decision and order of the Arizona Department of Water
Resources, providing in part that, subject to its requirements, CCWC currently
has a sufficient supply of ground water and CAP water which is physically,
continuously and legally available to satisfy current and committed demands of
its customers, plus at least two years of predicted demands, for 100 years.
Notwithstanding such a designation, CCWC's water supply may be subject
to interruption or reduction, in particular owing to interruption or reduction
of CAP water. In the event of interruption or reduction of CAP water, CCWC can
currently rely on its well water supplies for short-term periods. However, in
any event, the quantity of water CCWC supplies to some or all of its customers
may be interrupted or curtailed, pursuant to the provisions of its tariffs.
REGULATORY MATTERS
SCW is subject to regulation by the CPUC, which has broad powers with
respect to service and facilities, rates, classifications of accounts, valuation
of properties, the purchase, disposition and
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mortgaging of properties necessary or useful in rendering public utility
service, the issuance of securities, the granting of certificates of convenience
and necessity as to the extension of services and facilities and various other
matters. CCWC is subject to similar regulation by the ACC.
AWR and ASUS are not regulated by the CPUC. The CPUC does, however,
regulate certain transactions between SCW and its non-regulated affiliates.
The 22 customer service areas (CSAs) of SCW are grouped into 16 water
districts and 1 electric district for ratemaking purposes. Water rates vary
among the 16 ratemaking districts due to differences in operating conditions and
costs. SCW monitors operations on a regional basis in each of these districts so
that applications for rate changes may be filed, when warranted. Under the
CPUC's practices, rates may be increased by three methods: general rate case
increases (GRC's), offsets for certain expense increases and advice letter
filings related to certain plant additions. GRC's are typically for three-year
periods, which include step increases for the second and third year. Rates are
based on a forecast of expenses and capital costs. GRC's have a typical
regulatory lag of one year. Offset rate increases typically have a two to four
month regulatory lag.
New water rates with an annual increase of approximately $2.5 million
for seven ratemaking districts in SCW's Region I were implemented in January
2001. SCW's application to combine the seven ratemaking CSAs into one regional
rate was, however, denied by the CPUC. Step increases of approximately $1.7
million for CSAs in SCW's Region III were also effective in January 2001. An
attrition increase of approximately $2.8 million for Region II was in effect
from February 2001.
As of June 30, 2001, SCW had accrued approximately $16.8 million in
under-collected purchased power costs included in the electric balancing
account. In May 2000, SCW filed an Advice Letter with the CPUC for recovery over
a five-year period of approximately $2.4 million in under-collected power costs
and removal of a negative amortization authorized by the CPUC in 1997. The CPUC
issued a final order on May 24,2001 authorizing an overall rate increase of
12.5%, with a condition of conducting a subsequent audit on the expenses
included in the electric balancing account.
SCW filed a second Advice Letter on April 9, 2001 seeking recovery, over
five years, of an additional under-collection of $8.7 million for energy costs.
A draft resolution issued by the CPUC on July 24, 2001 approves, with
modifications, the Advice Letter filed by SCW. The draft resolution is scheduled
to be on the agenda at the CPUC meeting on August 23, 2001. If approved by the
Commission, as drafted, rates in SCW's BVE service territory will increase by an
additional 14.8%.
On May 11, 2001, SCW filed with the CPUC for an additional increase in
electric rates to recover energy costs under the purchase agreement with Mirant.
SCW subsequently withdrew the Advice Letter and anticipates filing an
application in the third quarter of 2001 with the CPUC, along with a motion
requesting immediate recovery of these costs, subject to refund after completion
of the review process. The application, if approved, will result in an
additional electric rate increase of approximately 50%. SCW expects to continue
to file additional Advice Letters to recover differences between actual electric
power costs and amounts recovered through electric rates. SCW believes that
timely regulatory actions to authorize SCW to recover its past and future power
costs are necessary to avoid any material adverse effect on SCW's liquidity and
financial condition. See the sections entitled "Liquidity and Capital Resources"
and "Electric Energy Situation in California" for more information.
In March 2001, the CPUC approved SCW's filing for recovery of increased
costs of electric power incurred to pump water for its water customers. In April
2001, SCW filed a second Advice Letter to increase water rates by approximately
$2.3 million company-wide to recover additional electric base rate increases,
authorized recently by the CPUC for the Southern California Edison Company and
the Pacific
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Gas and Electric Company. See the section entitled "Electric Energy Situation in
California" for more information.
Hearings before the CPUC have concluded on SCW's application to include
an additional $1.6 million in rate base for a water treatment facility in SCW's
Clearlake service area. In 1993, the CPUC disallowed the entire $1.6 million and
Registrant wrote off the entire amount. A draft decision issued on March 30,
2001 by the CPUC allows SCW to include $500,000 of the $1.6 million in the
regulated rate base. An alternate draft decision issued by one of the CPUC
Commissioners proposes to deny the application. A final order is anticipated in
the third quarter of 2001.
On April 22, 1999, the CPUC issued an order denying SCW's application
seeking approval of its recovery through rates of costs associated with its
participation in the Coastal Aqueduct Extension of the State Water Project
(SWP). SCW's participation in the SWP commits it to a 40-year entitlement. SCW's
investment of approximately $9.5 million in SWP is currently included in Other
Property and Investments. The remaining balance of the related liability of
approximately $7 million is recorded as other long-term debt. SCW intends to
recover its investment in SWP either through contributions from developers on a
per-lot or other basis, or from the sale of its 500 acre-foot entitlement in
SWP.
On December 26, 2000, SCW filed an Advice Letter with the CPUC, in
accordance with a prior CPUC resolution authorizing such a filing, seeking
recovery of approximately $1,800,000 in expenses associated with its lawsuits
against Aerojet General Corporation and the Department of Water Resources of the
State of California. An order, issued April 28, 2001, authorized SCW to recover
these costs from customers in SCW's Arden-Cordova customer service area over a
six-year period.
On January 26, 2001, the CPUC Staff, SCW and Peerless Water Co., a
privately owned water company in Bellflower, California, signed a Settlement
Agreement, which recommends approval of the proposed acquisition by SCW of
Peerless. A final decision from the CPUC is not anticipated prior to the fourth
quarter of 2001.
There are no active regulatory proceedings affecting CCWC or its
operations.
ENVIRONMENTAL MATTERS
1996 Amendments to Federal Safe Drinking Water Act
On August 6, 1996, amendments (the 1996 SDWA amendments) to the Safe
Drinking Water Act (the SDWA) were signed into law. The 1996 SDWA revised the
1986 amendments to the SDWA with a new process for selecting and regulating
contaminants. The U. S. Environmental Protection Agency (EPA) can only regulate
contaminants that may have adverse health effects, are known or likely to occur
at levels of public health concern, and the regulation of which will provide "a
meaningful opportunity for health risk reduction." The EPA has published a list
of contaminants for possible regulation and must update that list every five
years. In addition, every five years, the EPA must select at least five
contaminants on that list and determine whether to regulate them. The new law
allows the EPA to bypass the selection process and adopt interim regulations for
contaminants in order to address urgent health threats. Current regulations,
however, remain in place and are not subject to the new standard-setting
provisions. The DOHS, acting on behalf of the EPA, administers the EPA's program
in California.
The 1996 SDWA amendments allow the EPA for the first time to base
primary drinking water regulations on risk assessment and cost/benefit
considerations and on minimizing overall risk. The EPA must base regulations on
best available, peer-reviewed science and data from best available methods. For
proposed regulations that involve the setting of maximum contaminant levels
(MCL's), the EPA must use,
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and seek public comment on, an analysis of quantifiable and non-quantifiable
risk-reduction benefits and cost for each such MCL.
SCW and CCWC currently test their wells and water systems according to
requirements listed in the SDWA. Water from wells found to contain levels of
contaminants above the established MCL's is treated to reduce contaminants to
acceptable levels before it is delivered to customers.
Since the SDWA became effective, SCW has experienced increased operating
costs for testing to determine the levels, if any, of the constituents in SCW's
sources of supply and additional expense to lower the level of any contaminants
in order to meet the MCL standards. Such costs and the costs of controlling any
other contaminants may cause SCW to experience additional capital costs as well
as increased operating costs.
AWR is currently unable to predict the ultimate impact that the 1996
SDWA amendments might have on the financial position or results of operation of
its regulated utility subsidiaries. The CPUC and ACC ratemaking processes
provide SCW and CCWC with the opportunity to recover prudently incurred capital
and operating costs associated with water quality. Management believes that such
incurred costs will be authorized for recovery by the CPUC and ACC, as
appropriate.
Proposed Enhanced Surface Water Treatment Rule
On July 29, 1994, the EPA proposed an Enhanced Surface Water Treatment
Rule (ESWTR), which would require increased surface-water treatment to decrease
the risk of microbial contamination. The EPA has proposed several versions of
the ESWTR for promulgation. The version selected for promulgation will be
determined based on data collected by certain water suppliers and forwarded to
the EPA pursuant to EPA's Information Collection Rule, which requires such water
suppliers to monitor microbial and other contaminants in their water supplies
and to conduct certain tests in respect of such contaminants. The EPA has
adopted an Interim ESWTR applicable only to systems serving greater than 10,000
persons. On April 10, 2000, EPA published the proposed Long Term 1 Enhanced
Surface Water Treatment Rule and Filter Backwash Rule (LT1FBR) in the Federal
Register. This proposed rule will apply to each of SCW's five surface water
treatment plants and the CCWC's surface water treatment plant. It basically
extends the requirements of the ESWTR to systems serving less than 10,000
persons and will require some systems to institute changes to the return of
recycle filter backwash flows within the treatment process to reduce the effects
of recycle on compromising microbial control. Registrant is presently unable to
predict the ultimate impact of the LT1FBR, but it is anticipated that all five
SCW's plants and the CCWC's plant will achieve compliance within the three year
to five-year time frames identified by EPA.
Regulation of Disinfection/Disinfection By-Products
SCW and CCWC are also subject to the new regulations concerning
disinfection/disinfection by-products (DBP's), Stage I of which regulations were
effective in November 1998 with full compliance required by 2001. Stage I
requires reduction of trihalomethane contaminants from 100 micrograms per liter
to 80 micrograms per liter. Two of SCW's systems are immediately impacted by
this rule. SCW implemented modifications to the treatment process in its Bay
Point and Cordova systems. It is anticipated that both systems will be in full
compliance by 2001. A third SCW plant will require treatment modifications in
order to comply with this rule. SCW is preparing to conduct studies in
Calipatria to determine the best treatment methods to comply with this rule.
It is anticipated that the EPA will adopt Stage II rules pertaining to
DBP's by year-end 2001. The EPA is not allowed to use the new cost/benefit
analysis provided for in the 1996 SDWA amendments for establishing the Stage II
rules applicable to DBP's but may utilize the regulatory negotiating process
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provided for in the 1996 SDWA amendments to develop the Stage II rule. The final
rule is expected by 2002.
Ground Water Rule
On May 10, 2000, the EPA published the proposed Ground Water Rule (GWR),
which establishes multiple barriers to protect against bacteria and viruses in
drinking water systems that use ground water. The proposed rule will apply to
all U.S. public water systems that use ground water as a source. The proposed
GWR includes system sanitary surveys conducted by the state to identify
significant deficiencies; hydrogeologic sensitivity assessments for
undisinfected systems, source water microbial monitoring by systems that do not
disinfect and draw from hydrogeologically sensitive aquifer or have detected
fecal indicators within the system's distribution system; corrective action; and
compliance monitoring for systems which disinfect to ensure that they reliably
achieve 4-log (99.99%) inactivation or removal of viruses. The GWR is scheduled
to be issued as a final regulation in 2001. While no assurance can be given as
to the nature and cost of any additional compliance measures, if any, SCW and
CCWC do not believe that such regulations will impose significant compliance
costs, since they already currently engage in disinfection of their groundwater
systems.
Regulation of Radon and Arsenic
The final regulation on arsenic was published in January 2001 with a new
federal standard of 10 parts per billion (ppb). Compliance with an MCL of 10 ppb
will require implementation of wellhead treatment remedies for eight affected
wells in SCW's system and three wells in CCWC's system. However, the EPA
recently withdrew the pending arsenic standard for a sixty-day review to seek
independent reviews of both the science behind the standard and of the cost
estimates to communities of implementing the rule. Registrant is unable to
predict if or when the rule will be officially released.
The EPA has proposed new radon regulations following a National Academy
of Sciences risk assessment and study of risk-reduction benefits associated with
various mitigation measures. The National Academy of Sciences study is in
agreement with much of EPA's original findings but has slightly reduced the
ingestion risk initially assumed by EPA. EPA established an MCL of 300 Pico
Curies per liter based on the findings and has also established an alternative
MCL of 4000 Pico Curies per liter, based upon potential mitigation measures for
overall radon reduction. It is our understanding that the United States Office
of Management and Budget has sent the radon rule back to EPA for
reconsideration. The final rule was expected to be effective in August 2000, but
has been delayed by the new administration. SCW and CCWC currently monitor their
wells for radon in order to determine the best treatment appropriate for
affected wells.
Voluntary Efforts to Exceed Minimum Surface Water Treatment Requirements
SCW is a voluntary member of the EPA's "Partnership for Safe Water", a
national program designed to further protect the public from diseases caused by
cryptosporidium and other microscopic organisms. As a volunteer in the program,
SCW commits to exceed minimum operating requirements governing surface water
treatment, optimize surface water treatment plant operations and ensure that its
surface water treatment facilities are performing as efficiently as possible.
Fluoridation of Water Supplies
SCW is subject to State of California Assembly Bill 733, which requires
fluoridation of water supplies for public water systems serving more than 10,000
service connections. Although the bill requires affected systems to install
treatment facilities only when public funds have been made available to cover
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capital and operating costs, the bill requires the CPUC to authorize cost
recovery through rates should public funds for operation of the facilities, once
installed, become unavailable in future years.
Matters Relating to SCW's Arden-Cordova System
In January 1997, SCW was notified that ammonium perchlorate in amounts
above the state-determined action level had been detected in three of its wells
serving its Rancho-Cordova system. Aerojet-General Corp. has, in the past, used
ammonium perchlorate in their processing as an oxidizer of rocket fuels. SCW
took the three wells detected with ammonium perchlorate out of service at that
time. Although neither the EPA nor the DOHS has established a drinking water
standard for ammonium perchlorate, DOHS has established an action level of 18
parts per billion (ppb) which required SCW to notify customers in its
Rancho-Cordova customer service area of detection of ammonium perchlorate in
amounts in excess of this action level. In April 1997, SCW found ammonium
perchlorate in three additional wells and, at that time, removed those wells
from service until it was determined that the levels were below the
state-determined action level. Those wells were returned to service. SCW
periodically monitors these wells to determine that levels of perchlorate are
below the action level currently in effect.
In February 1998, SCW was informed that nitrosodimethylamine (NDMA) had
been detected in amounts in excess of the EPA reference dosage for health risks
in four of its wells in its Rancho-Cordova system. The wells have been removed
from service. Another well was also removed from service in September 1999 due
to the contamination. NDMA is an additional by-product from the production of
rocket fuel and it is believed that such contamination is related to the
activities of Aerojet-General Corp. Aerojet-General Corp. has reimbursed SCW for
constructing a pipeline to interconnect with the City of Folsom water system to
provide an alternative source(s) of water supply in SCW's Rancho-Cordova
customer service area and has reimbursed SCW for costs associated with the
drilling and equipping of two new wells. As of June 30, 2001, Aerojet-General
Corp. has previously reimbursed SCW $4.5 million. The remainder of the costs is
subject to further reimbursement, including interest. The reimbursement from
Aerojet-General Corp. reduces SCW's utility plant and costs of purchased water.
On October 25, 1999, SCW filed a lawsuit against the California Regional
Water Quality Control Board (CRWQCB) alleging that the CRWQCB has willfully
allowed portions of the Sacramento County Groundwater Basin to be injected with
chemical pollution that is contaminating the underground water supply in SCW's
Rancho Cordova customer service area. In a separate case, also filed on October
25, 1999, SCW sued Aerojet General Corp. for causing the contamination. On March
22, 2000 Aerojet General Corp. filed a cross complaint against SCW for
negligence and constituting a public nuisance. SCW is unable to determine at
this time what, if any, potential liability it may have with respect to the
cross complaint, but intends to vigorously defend itself against these
allegations. Management cannot predict the outcome of these proceedings. See the
section entitled "Legal Proceedings" for more information.
Matters Relating to SCW's Culver City System
The compound, methyl tertiary butyl ether (MTBE), an oxygenate used in
reformulated fuels, has been detected in the Charnock Basin, located in the city
of Santa Monica and within SCW's Culver City customer service area. At the
request of the Regional Water Quality Control Board, the City of Santa Monica
and the California Environmental Protection Agency, SCW removed two of its wells
in the Culver City system from service in October 1996 to help in efforts to
avoid further spread of the MTBE contamination plume. Neither of these wells has
been found to be contaminated with MTBE. SCW is purchasing water from the
Metropolitan Water District of Southern California (MWD) at an increased cost to
replace the water supply formerly pumped from the two wells removed from
service.
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Pursuant to an agreement with SCW in December 1998, two of the
potentially responsible parties (the Participants) have reimbursed SCW's legal
and consulting costs related to this matter and for increased costs incurred by
SCW in purchasing replacement water. However, a notice of termination from the
Participants to the settlement agreement was received in October 1999 claiming
overpayments for replacement water in excess of SCW's water rights. No
assurances can be given that future negotiations will result in complete
restoration of SCW's water rights or that continued reimbursement of SCW's costs
will be forthcoming.
On September 22, 1999, the U.S. EPA and the Los Angeles Regional Water
Quality Control Board ordered Shell Oil Company, Shell Oil Products Company and
Equilon Enterprises LLC to provide replacement drinking water to both SCW and
the City of Santa Monica due to MTBE contamination of the Charnock Sub-Basin
drinking water. The EPA has ordered Shell Oil to reimburse SCW for water
replacement costs. The agencies are continuing to investigate the causes of MTBE
pollution and intend to ensure that all responsible parties contribute to its
clean up although SCW is unable to predict the outcome of the EPA's enforcement
efforts.
On April 25, 2001, Registrant filed a lawsuit against all the
potentially responsible parties for polluting and contaminating water existing
in areas of the Sub-Basin from which SCW has pumped water through its Charnock
Well Field. Management cannot predict the likely outcome of this proceeding.
Matters Relating to SCW's Yorba Linda System
The compound, MTBE, has been detected in three wells serving SCW's Yorba
Linda system. Two of the wells are standby wells and the third well has not
shown MTBE above the DOHS secondary standard of 5.0 ppb at this time. SCW has
constructed an interconnection with the MWD to provide for additional supply in
the event the third well experienced levels of detection in excess of the DOHS
standard.
SCW has met with the Regional Water Quality Control Board, the Orange
County Water District, the City of Anaheim, the DOHS and three potentially
responsible parties (PRP's) to define the extent of the MTBE contamination plume
and assess the contribution from the PRP's. The PRP's have voluntarily initiated
a work plan for regional investigation. While there have not been significant
disruptions to the water supply in Yorba Linda at this point in time, no
assurances can be given that MTBE contamination will not increase in the future.
RISK FACTORS
You should carefully read the risks described below and other
information in this Form 10-Q in order to understand certain of the risks of our
business.
OUR LIQUIDITY, AND IN CERTAIN CIRCUMSTANCES, EARNINGS, COULD BE
ADVERSELY AFFECTED BY THE INCREASE IN ELECTRICITY PRICES IN CALIFORNIA.
Under California law, we are permitted to file for a rate increase to
recover electric power costs not being recovered in current rates. Increases in
electric power costs generally have no direct impact on profit margins, but do
affect cash flows and can therefore impact the amount of our capital resources.
Electric power costs have increased substantially in California since April
2000. As of June 30, 2001, SCW had accrued $19.7 million in unrecovered power
costs in its water and electric balancing accounts
We have been funding these power costs from our short-term borrowing
facilities. In addition, in April 2001, the Company implemented a Cash
Preservation Plan to control costs and temporarily to limit capital and
maintenance expenditures. SCW has filed Advice Letters to recover the
under-collection of power costs in its water and electric balancing accounts and
intends to continue to do so until such time
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as its actual power costs are being fully recovered in rates. However, due to
the nature of the regulatory process, there is a risk of disallowance of full
recovery of supply costs during any period in which there has been a substantial
run-up in these costs. Any material disallowance of purchased power costs could
have a material adverse impact on cash flow and earnings. In addition, we
believe that timely action by the CPUC to authorize the recovery of these costs
is necessary to avoid a material adverse effect on SCW's financial condition.
Delays in obtaining regulatory approval or disallowance of recovery of costs
could also affect SCW's ability to pay dividends to AWR. AWR's ability to pay
dividends on its Common Shares is dependent upon the payment of dividends by
SCW.
The Company has established reserves for its Bear Valley Electric
division for possible disallowance of the recovery of past power costs included
in the supply cost balancing account arising out of the California electric
crisis as well as amounts currently in dispute with our energy supplier.
THE BALANCING ACCOUNT MECHANISM, ALTHOUGH APPLICABLE TO WATER SUPPLY
COSTS, DOES NOT INSULATE THE COMPANY'S EARNINGS FROM CHANGES IN WATER SUPPLY
MIX.
We recover certain water supply costs through a balancing account
mechanism. Water supply costs include the cost of purchased water and power and
groundwater production assessments. The balancing account is not, however,
designed to insulate SCW's earnings against changes in supply mix. As a result,
SCW may not recover increased costs due to increased use of purchased water,
which is generally more expensive than groundwater, through the balancing
account mechanism.
SIGNIFICANT CLAIMS HAVE BEEN ASSERTED AGAINST US IN WATER QUALITY
LITIGATION.
SCW has been sued in eighteen water quality related lawsuits alleging
personal injury and property damage as a result of the delivery of water that
was allegedly contaminated involving multiple plaintiffs and defendants. Fifteen
of the lawsuits involve plaintiffs who receive water from the San Gabriel Basin
in Los Angeles County. The other lawsuits involve plaintiffs in Sacramento
County. On September 1, 1999, the First District Court of Appeal in San
Francisco held that the CPUC had preemptive jurisdiction over regulated
utilities and ordered dismissal of a series of these lawsuits, including seven
of the lawsuits against SCW. On October 1, 1999, one group of plaintiffs
appealed this decision to the California Supreme Court, which has accepted the
petition. We anticipate that the California Supreme Court will hear oral
arguments during 2001. The lawsuits not involved in the appeal are currently
inactive pending the decision of the California Supreme Court.
In March 1998, the CPUC issued an Order Instituting Investigation as a
result of water quality lawsuits being filed against water utilities in
California. On November 2, 2000, the CPUC issued a final order concluding that
the CPUC has jurisdiction to regulate the service of water utilities with
respect to the health and safety of that service; that DOHS requirements
governing drinking water quality adequately protect the public health and
safety; and that regulated water utilities, including SCW, have satisfactorily
complied with past and present drinking water quality requirements.
If the California Supreme Court upholds the dismissal of the lawsuits,
it is not known whether the plaintiffs will seek recourse through new
legislation, or through the CPUC, and what effect, if any, this may have on us.
If the California Supreme Court permits these lawsuits to proceed, the lawsuits
will be tried on the merits.
The CPUC has authorized a memorandum account for legal expenses incurred
by water utilities, including SCW, in the water quality lawsuits. Under the
memorandum account procedure, SCW may recover litigation costs from ratepayers
to the extent authorized by the CPUC. The CPUC has not yet authorized SCW
recover any of its litigation costs. As of June 30, 2001, SCW had incurred
$888,600 in this memorandum account.
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OUR OPERATING COSTS HAVE INCREASED AND ARE EXPECTED TO CONTINUE TO
INCREASE AS A RESULT OF GROUNDWATER CONTAMINATION.
SCW's operations have been impacted by groundwater contamination in
certain of its service territories. We have taken a number of steps to address
this contamination, including the removal of wells from service, the
construction of water treatment facilities and securing alternatives sources of
supply from other areas not affected by the contamination.
In some cases, we have been reimbursed for our costs by potentially
responsible parties. In other cases, we have taken legal action against parties
that we believe to be potentially responsible for the contamination.
Certain government officials have suggested that water producers, such
as SCW and CCWC, may have liability under certain environmental statutes if
their pumping operations affect the movement of the contamination. SCW has been
required to remove certain wells from service because its pumping activities
might affect the movement of contamination in other service areas. Currently,
neither the Environmental Protection Agency nor any other governmental agency
has identified the Company or, to our knowledge, any other water producer, as a
potentially responsible party. We cannot assure you, however, that SCW or CCWC
will not be identified as a potentially responsible party in the future. Our
future results of operations could be adversely affected if either SCW or CCWC
is required to pay clean-up costs and is not allowed to recover such costs in
rates.
ENVIRONMENTAL REGULATION HAS INCREASED, AND IS EXPECTED TO CONTINUE TO
INCREASE, OUR OPERATING COSTS.
SCW and CCWC are subject to increasingly stringent environmental
regulations that will result in increasing capital and operating costs. These
regulations include:
- The 1996 amendments to the Safe Drinking Water Act that require
increased testing and treatment of water to reduce specified
contaminants to minimum containment levels
- Approved regulations requiring increased surface-water treatment to
decrease the risk of microbial contamination; these regulations will
affect SCW's five surface water treatment plants and one CCWC plant
- Additional regulation of disinfection/disinfection byproducts
expected to be adopted before the end of 2002; these regulations
will potentially affect two of SCW's systems
- Additional regulations expected to be adopted in 2001 requiring
disinfection of certain groundwater systems
- Potential regulation of arsenic and radon
- California customer requirements to fluoridate public water systems
serving over 10,000 customers
SCW and CCWC may be able to recover costs incurred to comply with these
regulations through the ratemaking process for their regulated systems. We may
also be able to recover certain of these costs under our contractual
arrangements with municipalities. In certain circumstances, we may be able to
recover costs from parties responsible or potentially responsible for
contamination.
THE ADEQUACY OF OUR WATER SUPPLIES DEPENDS UPON A VARIETY OF FACTORS
BEYOND OUR CONTROL.
The adequacy of our water supplies varies from year to year depending
upon a variety of factors, including:
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- Rainfall
- The amount of water stored in reservoirs
- The amount of water used by our customers and others
- Water quality, and
- Legal limitations on use
Population growth and increases in the amount of water used have
increased limitations on use to prevent over-drafting of groundwater basins. The
import of water from the Colorado River, one of SCW's important sources of
supply, is expected to decrease in future years due to the requirements of the
Central Arizona Project ("CAP"). We have also taken wells out of service due to
groundwater contamination.
CCWC obtains its water supply from operating wells and from the Colorado
River through the CAP. CCWC's water supply may be subject to interruption or
reduction if there is an interruption or reduction in CAP water.
Water shortages may affect us in a variety of ways:
~ They adversely affect supply mix by causing us to rely on more
expensive purchased water
~ They adversely affect operating costs
~ They may result in an increase in capital expenditures for building
pipelines to connect to alternative sources of supplies and
reservoirs and other facilities to conserve or reclaim water
We may be able to recover increased operating and construction costs for
our regulated systems through the ratemaking process. We may also be able to
recover certain of these costs under the terms of our contractual agreements
with municipalities. In certain circumstances, we may recover these costs from
third parties that may be responsible, or potentially responsible, for
groundwater contamination.
OUR EARNINGS ARE GREATLY AFFECTED BY WEATHER DURING DIFFERENT SEASONS.
The demand for water varies by season. Therefore, the results of
operations for one period may not indicate results to be expected in another
period. For instance, most water consumption occurs during the third quarter of
each year when weather tends to be hot and dry. On warm days, use of water by
residential and commercial customers may be significantly greater than on cold
days because of the increased use of water for outdoor landscaping. Likewise the
demand for electricity in our Big Bear service area is greatly affected by
winter snows. An increase in winter snows reduces the use of snow making
machines at ski resorts in the Big Bear area and, as a result reduces electric
revenues.
Variability of weather from normal temperatures or changes in snow or
rainfall can materially impact results of operations. As a result, weather has
been and will continue to be one of the dominant factors in our financial
performance.
OUR BUSINESS IS HEAVILY REGULATED AND, AS A RESULT DECISIONS BY
REGULATORY AGENCIES AND CHANGES IN LAWS AND REGULATIONS CAN SIGNIFICANTLY AFFECT
OUR BUSINESS.
Our revenues depend substantially on the rates that we are permitted to
charge our customers and our ability to recover our costs in these rates,
including the ability to recover the costs of purchased water, groundwater
assessments and electric power costs in rates. In April 1999, the CPUC denied
our request to recover through rates the costs associated with our participation
in the Coastal Aqueduct Extension of the State Water Project. We also have an
application pending before the CPUC to include
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an additional $1.6 million in rate base for a water treatment plant in SCW's
Clearlake service area that was previously disallowed by the CPUC in 1993. In
addition, we have applications pending to acquire the Peerless Water Co. and to
recover additional amounts in our water and electric balancing accounts.
We have been adversely affected by electric restructuring in California
and the escalation of energy costs attributable thereto. The California
Department of Water Resources has attempted to alleviate the crisis by
purchasing electricity for Pacific Gas and Electric Company, Southern California
Edison Company and San Diego Gas and Electric Company, but does not purchase any
electricity for our Bear Valley electric division. FERC has taken certain
actions intended to stabilize the energy market in the West and has ordered
evidentiary proceedings for the purpose of determining the amount of refunds
that may be due to direct participants in the Cal-ISO and Cal-PX markets. We are
not direct participants in these markets. We therefore do not believe that this
or any of the other proceedings currently pending before FERC will result,
either directly or indirectly, in any reduction in SCW's under collected power
costs in the near term, if at all.
OUR BUSINESS REQUIRES SIGNIFICANT CAPITAL EXPENDITURES.
The utility business is capital intensive. On an annual basis, we spend
significant sums for additions to or replacement of property, plant and
equipment. During calendar years 2000, 1999 and 1998, we spent $45,786,000,
$51,578,000 and $45,269,000, respectively, for these purposes. Our budgeted
capital expenditures for calendar year 2001 for these purposes are approximately
$50,400,000. Actual expenditures will be lower because of the cash preservation
plan adopted by the Company to conserve cash temporarily during the electric
energy crisis.
We obtain funds for these capital projects from operations,
contributions by developers and others and advances from developers (which must
be repaid). We also periodically borrow money for these purposes. We maintain
bank lines of credit that we can use for these purposes. We cannot assure you
that these sources will continue to be adequate or that the costs of funds will
remain at levels permitting us to remain profitable.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Registrant has no derivative financial instruments, financial
instruments with significant off-balance sheet risks or financial instruments
with concentrations of credit risk. The disclosure required is, therefore, not
applicable.
PART II
ITEM 1. LEGAL PROCEEDINGS
SCW is a defendant in eighteen lawsuits involving claims pertaining to
water quality. Fifteen of the lawsuits involve customer service areas located in
Los Angeles County in the southern portion of the State of California; three of
the lawsuits involve a customer service area located in Sacramento County in
northern California.
On September 1, 1999, the First District Court of Appeal in San
Francisco, in a published opinion entitled Hartwell Corporation v. The Superior
Court of Ventura County (Hartwell), held that the CPUC had preemptive
jurisdiction over regulated public utilities and ordered dismissal of a series
of lawsuits pertaining to water quality filed against water utilities, including
SCW. Seven lawsuits against SCW have been ordered for dismissal by the state
Court of Appeals -- the Adler (Case No. 1), Santamaria (Case No. 2), Anderson
(Case No. 3), Dominguez (Case No. 4), Celi (Case No. 5), Boswell (Case No. 6),
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and Demciuc (Case No. 7) Matters. On October 11, 1999, one group of plaintiffs
appealed to the California Supreme Court, which has accepted the case.
Management is unable to predict the outcome of this proceeding but, in any
event, does not anticipate a decision prior to the fourth quarter of 2001.
On December 3, 1998, SCW was named as a defendant in a complaint in
multiple counts, styled Abarca, et al. v. City of Pomona, et al. (Case No. 8),
filed in Los Angeles Superior Court which seeks recovery for negligence,
wrongful death, strict liability, permanent trespass, continuing trespass,
continuing nuisance, permanent nuisance, negligence per se, absolute liability
for ultrahazardous activity, fraudulent concealment, conspiracy/fraudulent
concealment, battery and unfair business practices on behalf of 383 plaintiffs
(the Abarca Matter). Plaintiffs seek damages, including general and special
damages according to proof, punitive and exemplary damages, as well as
attorney's fees, costs of suit and other unspecified relief.
SCW was named as a defendant, along with the City of Pomona, California
and Xerox Corporation in the matter styled Adejare, et al. v. Southern
California Water Company, et al. (Case No. 9), filed on July 22, 1999 in Los
Angeles Superior Court which seeks recovery for wrongful death, battery and
fraudulent concealment (the Adejare Matter). Plaintiffs seek damages, including
general and special damages according to proof, punitive and exemplary damages,
as well as attorney's fees, costs of suit and other unspecified relief.
In December 1997 SCW was named a defendant in the matter of Nathaniel
Allen, Jr., et al. v. Aerojet-General Corporation, et al. (Case No. 10), which
was filed in Sacramento Superior Court. The complaint makes claims based on
wrongful death, personal injury, property damage as a result of nuisance and
trespass, medical monitoring, and diminution of property values (the Allen
Matter). Plaintiffs allege that SCW and other defendants have delivered water to
plaintiffs which allegedly is, or has been in the past, contaminated with a
number of chemicals, including TCE, PCE, carbon tetrachloride, perchlorate,
Freon-113, hexavalent chromium and other, unnamed, chemicals. SCW filed
Demurrers and Motion to Strike in this matter on June 5, 1998. A stay of all
proceeding in the Allen matter is in effect pending the outcome of the
California Supreme Court's proceeding in the Hartwell case.
In March 1998, SCW was named a defendant in the matter of Daphne Adams,
et al. v. Aerojet General, et al. (Case No. 11) that was filed in Sacramento
Superior Court (the Adams Matter). The complaint makes claims based on
negligence, strict liability, trespass, public nuisance, private nuisance,
negligence per se, absolute liability for ultrahazardous activity, fraudulent
concealment, violation of California Business and Professions Code section 17200
et seq., intentional infliction of emotional distress, intentional spoilage of
evidence, negligent destruction of evidence needed for prospective civil
litigation, wrongful death and medical monitoring. Plaintiffs seek damages,
including general, punitive and exemplary damages, as well as attorney's fees,
costs of suit, injunctive and restitutionary relief, disgorged profits and civil
penalties, medical monitoring according to proof and other unspecified relief.
SCW filed its Demurrers and Motion to Strike in this matter on June 5, 1998. A
stay of all proceedings in the Adams Matter is in effect pending the outcome of
the California Supreme Court's proceeding in the Hartwell case.
In May 2000, SCW was named a defendant in the matter of Wallace Andrew
Pennington, et al. v. Aerojet General, et al. (Case No. 12) that was filed in
Sacramento Superior Court (the Pennington Matter). The complaint makes claims
based on negligence, intentional infliction of emotional distress, strict
liability, public liability for ultra hazardous activity and fraudulent
concealment. Plaintiffs allege that SCW and other defendants knowingly operated
and maintained wells, which provided contaminated drinking water to the
surrounding communities. Plaintiffs seek damages, including general, punitive
and exemplary damages, as well as attorney's fees, costs of suit, special
damages, according to proof of medical bills and lost wages and lost income as
occasioned by personal injury and plaintiff's inability to pursue employment,
and other unspecified relief. All counsels in the Pennington matter have agreed
to a stay in this matter, pending the outcome of the Hartwell case.
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In April 2000, SCW was named a defendant in the matter of Almelia
Brooks, et al. v. Suburban Water Sys., et al. (Case No. 13) that was filed in
Los Angeles Superior Court which seeks recovery for negligence, wrongful death,
strict liability, permanent trespass, continuing trespass, continuing nuisance,
permanent nuisance, negligence per se, absolute liability for ultrahazardous
activity, fraudulent concealment, conspiracy/fraudulent concealment, battery and
unfair business practices on behalf of plaintiffs (the Brooks Matter).
Plaintiffs seek damages, including general and special damages according to
proof, punitive and exemplary damages, as well as attorney's fees, costs of suit
and other unspecified relief. SCW was served in October 2000. Management is
unable to predict the outcome of this proceeding.
In August 1999, SCW was named a defendant in the matter of Lori
Alexander, et al. v. Suburban Water Sys., et al. (Case No. 14) that was filed in
Los Angeles Superior Court which seeks recovery for negligence, wrongful death,
strict liability, permanent trespass, continuing trespass, continuing nuisance,
permanent nuisance, negligence per se, absolute liability for ultrahazardous
activity, fraudulent concealment, conspiracy/fraudulent concealment, battery and
unfair business practices on behalf of plaintiffs (the L. Alexander Matter).
Plaintiffs seek damages, including general and special damages according to
proof, punitive and exemplary damages, as well as attorney's fees, costs of suit
and other unspecified relief. SCW was served in October 2000. Management is
unable to predict the outcome of this proceeding.
In December 2000, SCW was named a defendant in the matter of David
Arnold, et al. v. City of Pomona, et al. (Case No. 15) that was filed in Los
Angeles Superior Court which seeks recovery for negligence, wrongful death,
strict products liability, continuing trespass, permanent trespass, continuing
nuisance, permanent nuisance, negligence per se, absolute liability for
ultrahazardous activity, fraudulent concealment, conspiracy/fraudulent
concealment, battery and unfair business practices on behalf of plaintiffs (the
Arnold Matter). Plaintiffs seek damages, including general and special damages
according to proof, punitive and exemplary damages, as well as attorney's fees,
costs of suit and other unspecified relief. SCW was served in May 2001.
Management is unable to predict the outcome of this proceeding.
In December 2000, SCW was named a defendant in the matter of Gilda
Ambrose-Dubre, et al. v. City of Pomona, et al. (Case No. 16) that was filed in
Los Angeles Superior Court which seeks recovery for negligence, strict products
liability, continuing trespass, permanent trespass, continuing nuisance,
permanent nuisance, negligence per se, absolute liability for ultrahazardous
activity, fraudulent concealment, civil conspiracy/fraudulent concealment,
battery and unfair business practices on behalf of plaintiffs (the Ambrose-Dubre
Matter). Plaintiffs seek damages, including general and special damages
according to proof, punitive and exemplary damages, as well as attorney's fees,
costs of suit and other unspecified relief. SCW was served in May 2001.
Management is unable to predict the outcome of this proceeding.
In January 2001, SCW was named a defendant in the matter of Melissa
Garrity Alvarado, et al. v. Suburban Water Systems, et al. (Case No. 17) that
was filed in Los Angeles Superior Court which seeks recovery for negligence,
survival of personal injuries, wrongful death, strict liability, negligence per
se, absolute liability for ultrahazardous activity, fraudulent concealment,
conspiracy/fraudulent concealment, battery and unfair business practices on
behalf of plaintiffs (the Alvarado Matter). Plaintiffs seek damages, including
general and special damages according to proof, punitive and exemplary damages,
as well as attorney's fees, costs of suit and other unspecified relief. SCW was
served in May 2001. Management is unable to predict the outcome of this
proceeding.
In March 2001, SCW was named a defendant in the matter of Charles
Alexander, et al. v. City of Pomona, et al. (Case No. 18) that was filed in Los
Angeles Superior Court which seeks recovery for negligence, wrongful death,
strict products liability, continuing trespass, permanent trespass, continuing
nuisance, permanent nuisance, negligence per se, absolute liability for
ultrahazardous activity, fraudulent concealment, civil conspiracy/fraudulent
concealment, battery and unfair business practices on behalf of plaintiffs (the
C. Alexander Matter). Plaintiffs seek damages, including general and special
damages
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according to proof, punitive and exemplary damages, as well as attorney's fees,
costs of suit and other unspecified relief. SCW was served in May 2001.
Management is unable to predict the outcome of this proceeding.
In light of the breadth of plaintiffs' claims in these matters, the lack
of factual information regarding plaintiffs' claims and injuries, if any, and
the fact that no discovery has yet been completed, SCW is unable at this time to
determine what, if any, potential liability it may have with respect to these
claims. Registrant believes there are no merits to these claims and intends to
vigorously defend against them.
SCW is subject to self-insured retention provisions in its applicable
insurance policies and has either expensed the self-insured amounts or has
reserved against payment of these amounts as appropriate. SCW's various
insurance carriers have, to date, provided reimbursement for costs incurred for
defense against these lawsuits.
ORDER INSTITUTING INVESTIGATION (OII)
In March 1998, the CPUC issued an OII to regulated water utilities in
the state of California, including SCW. The purpose of the OII was to determine
whether existing standards and policies regarding drinking water quality
adequately protect the public health and whether those standards and policies
were being uniformly complied with by those water utilities. On November 2,
2000, a final decision from the CPUC concluded that the Commission has the
jurisdiction to regulate the service of water utilities with respect to the
health and safety of that service; that DOHS requirements governing drinking
water quality adequately protect the public health and safety; and that
regulated water utilities, including SCW, have satisfactorily complied with past
and present drinking water quality requirements.
On December 26, 2000, SCW filed an Advice Letter with the CPUC seeking
recovery of $879,000 in deferred expense incurred during the OII. The CPUC had
previously authorized establishment of memorandum accounts to capture such
expenses. Management believes that these expenses will be fully recovered but is
unable to predict when, or if, the CPUC will authorize recovery of all or any of
the costs.
OTHER LITIGATION
On October 25, 1999, SCW filed a lawsuit against the California Central
Valley Regional Water Quality Control Board (CRWQCB) alleging that the CRWQCB
has willfully allowed portions of the Sacramento County Groundwater Basin to be
injected with chemical pollution that is destroying the underground water supply
in SCW's Rancho Cordova customer service area. Management cannot predict the
likely outcome of this proceeding.
In a separate case, also filed on October 25, 1999, SCW sued Aerojet
General Corp. for causing the contamination of the Sacramento County Groundwater
Basin. On March 22, 2000 Aerojet General Corp. filed a cross complaint against
SCW for negligence and constituting a public nuisance. Registrant is unable to
determine at this time what, if any, potential liability it may have with
respect to the cross complaint, but intends to vigorously defend itself against
these allegations. Management cannot predict the likely outcome of this
proceeding.
The CPUC has authorized memorandum accounts to allow for recovery of
costs incurred by SCW in prosecuting these cases from customers, less any
recovery from the defendants or others. As of June 30, 2001, approximately
$4,103,000 has been recorded in the memorandum accounts. The CPUC has authorized
SCW to increase rates, effective April 28, 2001, for recovery over a six-year
period of approximately $1,800,000, in expenses that were incurred on or before
August 31, 2000. SCW will continue to file additional Advice Letters to recover
the remaining costs. Management believes these
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costs are recoverable but cannot give assurance that the CPUC will ultimately
allow recovery of all or any of the remaining costs through rates.
On April 25, 2001, Registrant filed a lawsuit against all the
potentially responsible parties, who stored, transported and dispensed gasoline
containing methyl tertiary butyl ether (MTBE) in underground storage tanks,
pipelines or other related infrastructure. Said MTBE polluted and contaminated
water existed in areas of the Sub-Basin from which SCW has pumped water through
its Charnock Wall Field. As a result thereof, SCW ceased operation of its
Charnock Well Field in October 1996. Management cannot predict the likely
outcome of this proceeding.
SCW has been, in conjunction with the Southern California Edison
(Edison) unit of Edison International, planning to upgrade transmission
facilities to 115kv (the 115kv Project) in order to meet increased energy and
demand requirements for SCW's Bear Valley Electric Service area. On December 27,
2000, SCW filed a lawsuit against Edison for declaratory relief and seeking
damages for breach of contract as a result of delays in the 115kv Project.
Subsequently Edison filed a cross-complaint against SCW for breach of contract,
anticipatory breach, quantum meruit and common counts. Management cannot predict
the likely outcome of this proceeding.
Registrant is also subject to ordinary routine litigation incidental to
its business. Other than as disclosed above, no legal proceedings are pending,
except such incidental litigation, to which Registrant is a party or of which
any of its properties is the subject, which are believed to be material.
ITEM 2. CHANGES IN SECURITIES
As of June 30, 2001, earned surplus amounted to $68,863,000. As of June
30, 2001, there were no retained earnings restricted, under any of SCW's debt
instruments, as to the payment of cash dividends on Common Shares. Delays in
obtaining approval of the CPUC for recovery of energy costs in rates or
disallowance of the recovery of such costs could affect SCW's ability to pay
dividends to AWR. AWR's ability to pay dividends on its Common Shares is
dependent upon the payment of dividends from SCW. CCWC is subject to contractual
restrictions on its ability to pay dividends.
There are 493,039 and 63,411 Common Shares authorized but un-issued
under the DRP and the 401(k) Plan, respectively, at June 30, 2001. Shares
reserved for the 401(k) Plan are in relation to company matching contributions
and for investment purposes by participants.
There are 250,000 Common Shares reserved for issuance under Registrant's
2000 Stock Incentive Plan. Under the Plan, stock options representing a total of
91,647 Common Shares upon exercise were granted to certain eligible employees on
May 1, 2000 and January 2, 2001.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No items were submitted during the second quarter of the fiscal year
covered by this report to a vote of security holders through the solicitation of
proxies or otherwise.
ITEM 5. OTHER INFORMATION
On July 27, 2001, the Board of Directors of Registrant declared a
regular quarterly dividend of $0.325 per common share. The dividend will be paid
September 1, 2001 to shareholders of record as of the
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close of business on August 7, 2001. In other actions, the Board of Directors
declared regular quarterly dividends of $0.25 per share, $0.265625 per share and
$0.3125 per share on its 4%, 4-1/4% and 5% Cumulative Preferred Shares,
respectively.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
3.2.1 Amended and Restated By-laws of Southern California Water Company
10.17 American States Water company Annual Incentive Plan as amended April 23,
2001.
10.23 Power Purchase Agreement between Southern California Water Company and
Pinnacle West Capital Corporation.
10.24 Western Systems Power Pool Agreement
No Reports of Form 8-K were filed during the period covered by this report.
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SIGNATURES
Pursuant to the requirements of Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned duly authorized officer and chief financial officer.
AMERICAN STATES WATER COMPANY
and its subsidiary
SOUTHERN CALIFORNIA WATER COMPANY
By:s/ McClellan Harris III
----------------------------------
McClellan Harris III
Vice President-Finance,
Chief Financial Officer,
Treasurer and Secretary
By:s/ Linda J. Matlick
----------------------------------
Linda J. Matlick
Controller
Southern California Water Company
Dated: August 14, 2001
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1
EXHIBIT 3.2.1
BYLAWS
FOR THE REGULATION, EXCEPT
AS OTHERWISE PROVIDED BY STATUTE OR
ITS RESTATED ARTICLES OF INCORPORATION,
OF
SOUTHERN CALIFORNIA WATER COMPANY
(A CALIFORNIA CORPORATION)
ARTICLE I. OFFICES.
SECTION 1. PRINCIPAL EXECUTIVE OFFICE. The principal executive
office of the corporation shall be fixed and located at such place as the Board
of Directors (herein called the "Board") shall determine. The Board is hereby
granted full power and authority to change said principal executive office from
one location to another.
SECTION 2. OTHER OFFICES. Branch or subordinate offices may at any
time be established by the Board at any place or places.
ARTICLE II. MEETINGS OF SHAREHOLDERS.
SECTION 1. PLACE OF MEETINGS. Meetings of shareholders shall be
held either at the principal executive office of the corporation or at any other
place within or without the State of California which may be designated either
by the Board or by the written consent of all persons entitled to vote thereat,
given either before or after the meeting and filed with the Secretary.
SECTION 2. ANNUAL MEETINGS. The annual meetings of shareholders
shall be held on such date and at such time as may be fixed by the Board.
SECTION 3. SPECIAL MEETINGS. Special meetings of the shareholders,
for any purpose or purposes whatsoever, may be called at any time by the Board,
the Chairman of the Board, the President, or by the holders of shares entitled
to cast not less than ten percent of the votes at such meeting.
ARTICLE III. DIRECTORS.
SECTION 1. POWERS. Subject to limitations of the Articles, these
Bylaws and of the California General Corporation Law as to action required to be
approved by the shareholders or by the outstanding shares, the business and
affairs of the corporation
2
shall be managed and all corporate powers shall be exercised by or under the
direction of the Board.
SECTION 2. NUMBER OF DIRECTORS. The authorized number of directors
shall be eight (8).
ARTICLE IV. OFFICERS.
SECTION 1. OFFICERS. The officers of the corporation shall be a
President, a Secretary, and a Chief Financial Officer. The corporation may also
have, at the discretion of the Board, such other officers as the business of the
corporation may require, each of whom shall hold office for such period, have
such authority and perform such duties as the Board may from time to time
determine.
SECTION 2. PRESIDENT. The President shall be the general manager
and chief executive officer of the corporation and has, subject to the control
of the Board, general supervision, direction and control of the business and
officers of the corporation. The President shall preside at all meetings of the
shareholders and at all meetings of the Board. The President has the general
powers and duties of management usually vested in the office of president and
general manager of a corporation and has such other powers and duties as may be
prescribed by the Board.
SECTION 3. SECRETARY. The Secretary shall keep or cause to be
kept, at the principal executive office or such other place as the Board may
order, a book of minutes of all meetings of the shareholders, the Board and its
committees, and a share register or a duplicate share register.
The Secretary shall give, or cause to be given, notice of all the
meetings of the shareholders and of the Board and any committees thereof
required by the Bylaws or by law to be given, shall keep the seal of the
corporation in safe custody, and shall have such other powers and perform such
other duties as may be prescribed by the Board.
SECTION 4. CHIEF FINANCIAL OFFICER. The Chief Financial Officer is
the chief financial officer of the corporation and shall keep and maintain, or
cause to be kept and maintained, adequate and correct accounts of the properties
and business transactions of the corporation, and shall send or cause to be sent
to the shareholders of the corporation such financial statements and reports as
are by law or these Bylaws required to be sent to them. The books of account
shall at all times be open to inspection by any director.
The Chief Financial Officer shall deposit all moneys and other
valuables in the name and to the credit of the corporation with such
depositaries as may be designated by the Board. The Chief Financial Officer
shall disburse the funds of the corporation as may be ordered by the Board,
shall render to the President and the directors, whenever they request it, an
account of all transactions as Treasurer and of the financial condition of
3
the corporation, and shall have such other powers and perform such other duties
as may be prescribed by the Board.
ARTICLE V. OTHER PROVISIONS.
SECTION 1. ANNUAL REPORT TO SHAREHOLDERS. The annual report to
shareholders referred to in Section 1501 of the California General Corporation
Law is expressly waived, but nothing herein shall be interpreted as prohibiting
the Board from issuing annual or other periodic reports to shareholders.
SECTION 2. CONSTRUCTION AND DEFINITIONS. Unless the context
otherwise requires, the general provisions, rules of construction and
definitions contained in the General Provisions of the California Corporations
Code and in the California General Corporation Law shall govern the construction
of these Bylaws.
ARTICLE VI. AMENDMENTS.
These Bylaws may be amended or repealed either by approval of the
outstanding shares (as defined in Section 152 of the California General
Corporation Law) or by the approval of the Board; provided, however, that after
the issuance of shares, a bylaw specifying or changing a fixed number of
directors or the maximum or minimum number or changing from a fixed to a
variable number of directors or vice versa may be adopted only by approval of
the outstanding shares, and a bylaw reducing the fixed number or the minimum
number of directors to a number less than five shall be subject to the
provisions of Section 212(a) of the California General Corporation Law.
ARTICLE VII. INDEMNIFICATION.
SECTION 1. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
(a) Each person who was or is a party or is threatened to be made
a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (hereinafter a "proceeding"),
by reason of the fact that he or she is or was a director or officer of the
corporation, or of any predecessor corporation, or is or was a director or
officer who is or was serving at the request of the corporation as a director,
officer, employee or other agent of another corporation, a partnership, joint
venture, trust or other enterprise (including service with respect to
corporation-sponsored employee benefit plans), whether the basis of such
proceeding is alleged action or inaction in an official capacity as a director
or officer or in any other capacity while serving as a director or officer,
shall, subject to the terms of any agreement between the corporation and such
person, be indemnified and held harmless by the corporation to the fullest
extent permissible under California law and the corporation's Articles, against
all expense, liability and loss (including attorneys' fees, judgments, fines,
ERISA excise taxes or penalties and amounts paid in settlement) actually and
reasonably incurred or suffered by such person in connection therewith;
provided, however, that amounts paid in settlement of a proceeding shall be
payable only if the settlement is approved in writing by the corporation. Such
indemnification shall continue as to a person who has ceased to be a director or
officer for acts performed while a director or officer and shall inure to the
benefit of his or her heirs, executors and administrators. Notwithstanding the
foregoing, the corporation shall indemnify any such person in connection with a
proceeding (or part
4
thereof) initiated by such person only if such proceeding (or part thereof) was
authorized by the Board of the corporation. The right to indemnification
conferred in this Article shall include the right to be paid by the corporation
the expenses incurred in defending any proceeding in advance of final
disposition to the fullest extent permitted by law; provided, however, that the
payment under this Article of such expenses in advance of the final disposition
of a proceedings shall be conditioned upon the delivery to the corporation of a
written request for such advance and of an undertaking by or on behalf of the
director or officer to repay all amounts so advanced if it shall be ultimately
determined that such director or officer is not entitled to be indemnified.
(b) Notwithstanding the foregoing or any other provisions under
this Article, the corporation shall not be liable under this Article to
indemnify a director or officer against expenses, liabilities or losses incurred
or suffered in connection with, or make any advances with respect to, any
proceeding against a director or officer: (i) as to which the corporation is
prohibited by applicable law from paying as an indemnity; (ii) with respect to
expenses of defense or investigation, if such expenses were or are incurred
without the corporation's consent (which consent may not be unreasonably
withheld); (iii) for which payment is actually made to the director or officer
under a valid and collectible insurance policy maintained by the corporation,
except in respect of any excess beyond the amount of payment under such
insurance; (iv) for which payment is actually made to the director or officer
under an indemnity by the corporation otherwise than pursuant to this Bylaw
Article, except in respect of any excess beyond the amount of payment under such
indemnity; (v) based upon or attributable to the director or officer gaining in
fact any personal profit or advantage to which he or she was not legally
entitled; (vi) for an accounting of profits made from the purchase or sale by
the director or officer of securities of the corporation pursuant to the
provisions of Section 16(b) of the Securities Exchange Act of 1934 and
amendments thereto or similar provisions of any federal, state or local
statutory law; or (vii) based upon acts or omissions involving intentional
misconduct or a knowing and culpable violation of law.
SECTION 2. INDEMNIFICATION OF EMPLOYEES AND AGENTS. A person who
was or is a party or is threatened to be made a party to or is involved in any
proceeding by reason of the fact that he or she is or was an employee or agent
of the corporation or is or was an employee or agent of the corporation who is
or was serving at the request of the corporation as an employee or agent of
another enterprise, including service with respect to corporation-sponsored
employee benefits plans, whether the basis of such action is alleged action or
inaction in an official capacity or in any other capacity while serving as an
employee or agent, may, upon appropriate action by the corporation and subject
to the terms of any agreement between the corporation and such person, be
indemnified and held harmless by the corporation up to the fullest extent
permitted by California law and the corporation's Articles, against all expense,
liability and loss (including attorneys' fees, judgments, fines, ERISA excise
taxes or penalties and amounts paid or to be paid in settlement) actually and
reasonably incurred or suffered by such person in connection therewith.
SECTION 3. RIGHT OF DIRECTORS AND OFFICERS TO BRING SUIT. If a
claim under Section 1 of this Article is not paid by the corporation or on its
behalf within 90 days after a written claim has been received by the
corporation, the claimant may at any time thereafter bring suit against the
corporation to recover the unpaid amount of the claim, and, if successful in
whole or in part, the claimant also shall be entitled to be paid the expense of
prosecuting such claim.
5
SECTION 4. SUCCESSFUL DEFENSE. Notwithstanding any other provision
of this Article, to the extent that a director or officer has been successful on
the merits or otherwise (including the dismissal of a proceeding without
prejudice or the settlement with the written consent of the corporation of a
proceeding without admission of liability) in defense of any proceeding referred
to in Section 1 or in defense of any claim, issue or matter therein, such
director or officer shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred in connection therewith.
SECTION 5. INDEMNITY AGREEMENTS. The corporation may enter into
agreements with any director, officer, employee or agent of the corporation
providing for indemnification to the fullest extent permissible under applicable
law and the corporation's Articles.
SECTION 6. SUBROGATION. In the event of payment by the corporation
of a claim under Section 1 of this Article, the corporation shall be subrogated
to the extent of such payment to all of the rights of recovery of the
indemnified person, who shall execute all papers required and shall do
everything that may be necessary or appropriate to secure such rights, including
the execution of such documents necessary or appropriate to enable the
corporation effectively to bring suit to enforce such rights.
SECTION 7. NON-EXCLUSIVITY RIGHTS. The right to indemnification
provided by this Article shall not be exclusive of any other right which any
person may have or hereafter acquire under any statute, bylaw, agreement, vote
of shareholders or disinterested directors or otherwise.
SECTION 8. INSURANCE. The corporation may maintain insurance, at
its expense, to protect itself and any director, officer, employee or agent of
the corporation or another corporation, a partnership, joint venture, trust or
other enterprise against any expense, liability or loss, whether or not the
corporation would have the power to indemnify such person against such expense,
liability or loss under California law.
SECTION 9. EXPENSES AS A WITNESS. To the extent that any director,
officer or employee of the corporation is by reason of such position a witness
in any action, suit or proceeding, he or she will be indemnified against all
costs and expenses actually and reasonably incurred by him or her or on his or
her behalf in connection therewith.
SECTION 10. NONAPPLICABILITY TO FIDUCIARIES OF EMPLOYEE BENEFIT
PLANS. This Article does not apply to any proceeding against any trustee,
investment manager or other fiduciary of an employee benefit plan in such
person's capacity as such, even though such person may also be an agent of the
corporation. The corporation shall have power to indemnify such trustee,
investment manager or other fiduciary to the extent permitted by subdivision (f)
of Section 207 of the California General Corporation Law.
SECTION 11. SEPARABILITY. Each and every paragraph, sentence, term
and provision of this Article is separate and distinct so that if any paragraph,
sentence, term or provision shall be held to be invalid or unenforceable for any
reason, such invalidity or unenforceability shall not affect the validity or
enforceability of any other paragraph, sentence, term or provision hereof. To
the extent required, any paragraph, sentence, term or provision of this Article
may be modified by a court of competent jurisdiction to preserve its validity
and to provide the claimant with, subject to the
6
limitations set forth in this Article and any agreement between the corporation
and the claimant, the broadest possible indemnification permitted under
applicable law.
SECTION 12. EFFECT OF REPEAL OR MODIFICATION. Any repeal or
modification of this Article shall not adversely affect any right of
indemnification of a director, officer, employee or agent of the corporation
existing at the time of such repeal or modification with respect to any action
or omission occurring prior to such repeal or modification.
1
EXHIBIT 10.17
American States Water Company
Annual Incentive Plan
As Amended April 23, 2001
2
AMERICAN STATES WATER COMPANY
ANNUAL INCENTIVE PLAN
TABLE OF CONTENTS
ARTICLE I THE PLAN............................................................... I-1
1.1 Purpose................................................................ I-1
1.2 Definitions............................................................ I-1
1.3 Administration and Authorization; Power and Procedure.................. I-3
1.4 Payment/Grant of Awards................................................ I-4
1.5 Non-Transferability.................................................... I-4
1.6 Beneficiary Designation................................................ I-4
ARTICLE II AWARDS................................................................. II-1
2.1 Award Determination.................................................... II-1
2.2 Vesting................................................................ II-2
2.3 Award Payment.......................................................... II-2
2.4 Acceleration of Awards upon Change in Control.......................... II-2
ARTICLE III OTHER PROVISIONS....................................................... III-1
3.1 Rights of Eligible Employees, Participants and Beneficiaries........... III-1
3.2 Compliance with Laws................................................... III-1
3.3 Withholding; Payroll Taxes............................................. III-1
3.4 Plan Amendment, Termination and Suspension............................. III-1
3.5 Effective Date of the Plan............................................. III-1
3.6 Governing Law.......................................................... III-1
3.7 Captions............................................................... III-2
3.8 Terms.................................................................. III-2
3.9 Non-Exclusivity of Plan................................................ III-2
3
AMERICAN STATES WATER COMPANY
ANNUAL INCENTIVE PLAN
I. THE PLAN
1.1 Purpose: The purpose of this Plan is to promote the success of the
Company by contributing to a team culture, focusing attention on
increasing shareholder value, and creating an incentive program
that will support future growth.
1.2 Definitions: For purposes of this Plan, the following terms shall
have the meanings indicated below:
(a) "Actual Return on Rate Base" shall mean the Company's
actual annual rate of return on net assets included in the
Company's rate filings, determined on a consolidated basis.
(b) "Authorized Return on Rate Base" shall mean the composite
annual rate of return on equity authorized for the Company
during the Plan Year by the California Public Utilities
Commission. The Authorized Rate of Return shall be
calculated by the Company in accordance with the rules
and/or examples approved by the Committee, and will be
reviewed by the Company's external auditors.
(c) "Award" shall mean an award of a specified amount of cash
or restricted stock to a Participant under the Plan.
(d) "Base Compensation" shall mean the salary and hourly wages,
exclusive of overtime and bonuses, paid to an Eligible
Employee during the calendar year proceeding the
Determination Date.
(e) "Board" shall mean the Board of Directors of the Company.
(f) "Change in Control Event": Shall have the meaning given
such term in the Company's 2000 Stock Incentive Plan.
(g) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
(h) "Committee" shall mean the Compensation Committee of the
Board of Directors.
I-1
4
(i) "Company" shall mean American States Water Company.
(j) "Consolidated Total Operating Revenues" shall be as set
forth in the Company's audited consolidated financial
statements.
(k) "Determination Date" shall mean the last day of each Plan
Year.
(l) "Eligible Employee" shall mean an employee of the Company,
or a Subsidiary, designated by the Committee at the
beginning of a Plan Year as eligible to receive an Award
under this Plan.
(m) "Employer" shall mean the Company, or a Subsidiary of the
Company which directly employs an Eligible Employee.
(n) "Financial Performance" shall mean the Company's Actual
Return on Rate Base as a percentage of its Authorized
Return on Rate Base, determined on a consolidated basis.
(o) "Individual Adjustment" shall be the adjustment determined
in accordance with section 2.1(a)(iv) of this document.
(p) "Increase in Total Operating Revenues from Acquisition"
shall mean the projected increase in Consolidated Total
Operating Revenues from the Company's acquisition of
another firm during the Plan Year.
(q) "Maintenance Adjustment" shall be calculated in accordance
with section 2.1(a)(ii) of this document.
(r) "Participant" shall mean an Eligible Employee whose last
performance appraisal was satisfactory.
(s) "Personal Representative" shall mean the person or persons
who, upon the Total Disability or incompetence of a
Participant, shall have acquired on behalf of the
Participant, by legal proceeding or otherwise, the power to
exercise the rights or receive benefits under this Plan and
who shall have become the legal representative of the
Participant.
(t) "Plan" shall mean this Annual Incentive Plan.
(u) "Plan Year" shall mean the calendar year.
(v) "Restricted Stock" shall mean shares of the common stock of
the Company that are non-transferable and subject to
forfeiture upon termination of employment within a
specified period of time following the date of grant.
I-2
5
(w) "Strategic Adjustment" shall be a factor based on Company
performance. At the beginning of each plan year the
Committee will establish performance criteria reflecting
progress towards the Company's strategic goals. The
Committee will, at that time, also establish the amount of
the adjustment (no more than 50% in total) to be made to
Awards otherwise payable under the Plan based on the
achievement of these criteria.
(x) "Subsidiary" shall mean any corporation or other entity a
majority of whose outstanding voting stock or voting power
is beneficially owned directly or indirectly by the
Company.
(y) "Target Award" shall mean the amount equal to a
Participant's Base Compensation multiplied by a percentage
determined at the beginning of each Plan Year by the
Committee. For 2001, the target award for the Chief
Executive Officer is 30%; the target award for Vice
Presidents is 25%; and the target award for managers is
12.5% equally weighted between the Company's financial
performance and the manager's individual performance.
1.3 Administration and Authorization; Power and Procedure:
(a) Committee: This Plan shall be administered by, and all
granting of Awards to Eligible Employees shall be
authorized by, the Committee. Action with respect to the
administration of this Plan shall be the sole and absolute
discretion and responsibility of the Committee.
(b) Plan Awards; Interpretation; Powers of Committee: Subject
to the express provisions of this Plan, the Committee shall
have the sole and absolute authority:
(i) to determine which employees are eligible to
participate in the Plan for a Plan Year;
(ii) to determine the amount of the Award payable to each
Participant for a Plan Year;
(iii) to construe and interpret this Plan and any
agreements defining the rights and obligations of
the Company and Participants under this Plan,
further define the terms used in this Plan, and
prescribe, amend and rescind rules and regulations
relating to the administration of this Plan;
(iv) to make all other determinations and take such other
action as contemplated by this Plan or as may be
necessary or advisable for the administration of
this Plan and the effectuation of its purposes.
(c) Binding Determinations: The Committee shall have full
discretion to construe and interpret the terms and
provisions of the Plan, which interpretation or
construction shall be final and binding on all parties,
including but not limited to the Company, any Subsidiary
and any Participants or Beneficiaries. Any action taken
by, or inaction of, the
I-3
6
Company, or the Committee relating or pursuant to this Plan
shall be within the absolute discretion of that entity or
body and shall be conclusive and binding upon all persons.
No member of the Committee, or officer of the Company,
shall be liable for any such action or inaction of the
entity or body, of another person or, except in
circumstances involving bad faith, of himself or herself.
(d) Reliance on Experts: In making any determination or in
taking or not taking any action under this Plan, the
Committee may obtain and may rely upon the advice of
experts, including professional advisors to the Company.
(e) Delegation: The Committee may delegate ministerial,
non-discretionary functions to individuals who are officers
or employees of the Company or a Subsidiary.
(f) Absence of Liability; Indemnity: No member of the
Committee, director, officer or agent of the Company shall
be liable for any action or determination taken, made or
omitted in good faith. To the extent permitted under
applicable state law, the Company shall indemnify and hold
harmless the members of the Committee and any delegate
against any and all claims, loss, damage, expense or
liability arising from any action or failure to act with
respect to this Plan, except in the case of gross
negligence or willful misconduct.
1.4 Payment/Grant of Awards: Subject to the express provisions of this
Plan, the Committee shall determine the amount of each Award.
1.5 Non-Transferability: Neither a Participant nor any other person
shall have the right to commute, sell, assign, transfer, pledge,
anticipate, mortgage or otherwise encumber, transfer, hypothecate
or convey in advance of actual receipt of the amounts, if any,
payable hereunder, or any part thereof, part thereof, which are,
and all rights to which are, expressly declared to be unassignable
and non-transferable. No part of the amounts payable shall, prior
to actual payment, be subject to seizure or sequestration for the
payment of any debts, judgments, alimony or separate maintenance
owed by a Participant or any other person, nor be transferable by
operation of law in the event of a Participant's or any other
person's bankruptcy or insolvency.
1.6 Beneficiary Designation:
(a) "Beneficiary" or "Beneficiaries" shall mean the person or
persons, including a trustee, Personal Representative or
other fiduciary, last designated in writing by a
Participant in accordance with procedures established by
the Committee to receive the benefits, if any, specified
hereunder in the event of the Participant's death. No
beneficiary designation shall become effective
I-4
7
until it is filed with the Committee, and no Beneficiary
designation of someone other than the Participant's spouse
shall be effective unless such designation is consented to
by the Participant's spouse on a form provided by and in
accordance with procedures established by the Committee. If
there is no valid Beneficiary designation in effect, or if
there is no surviving designated Beneficiary, then the
Participant's surviving spouse shall be the Beneficiary. If
there is no surviving spouse to receive any benefits
payable in accordance with the preceding sentence, the duly
appointed and currently acting personal representative of
the Participant's estate (which shall include either the
Participant's probate estate or living trust) shall be the
Beneficiary. In any case where there is no such personal
representative of the Participant's estate duly appointed
and acting in that capacity within 90 days after the
Participant's death (or such extended period as the
Committee determines is reasonably necessary to allow such
personal representative to be appointed but not to exceed
180 days after the Participant's death), then Beneficiary
shall mean the person or persons who can verify by
affidavit or court order to the satisfaction of the
Committee that they are legally entitled to receive the
benefits specified hereunder. In the event any amount is
payable under the Plan to a minor, payment shall not be
made to the minor, but instead be paid (a) to that person's
living parent(s) to act as custodian, (b) if that person's
parents are then divorced, and one parent is the sole
custodial parent, to such custodial parent, or (c) if no
parent of that person is then living, to a custodian
selected by the Committee to hold the funds for the minor
under the Uniform Transfers of Gifts to Minors Act in
effect in the jurisdiction in which the minor resides. If
no parent is living and the Committee decides not to select
another custodian to hold the funds for the minor, then
payment shall be made to the duly appointed and currently
acting guardian of the estate for the minor or, if no
guardian of the estate for the minor is duly appointed and
currently acting within 60 days after the date the amount
becomes payable, payment shall be deposited with the court
having jurisdiction over the estate of the minor.
(b) Effect of Payment: The payment to the Beneficiary or deemed
Beneficiary, in accordance with the provisions of this
Plan, shall completely discharge all obligations under this
Plan of the Committee, the Company and any Subsidiary.
I-5
8
II. AWARDS
2.1 Award Determination:
(a) Performance Evaluation:
(i) Financial Performance: Performance shall first be
evaluated based on the Company's Actual Return on
Rate Base, determined on a consolidated basis, as a
percentage of its Authorized Return on Rate Base as
determined by the California Public Utilities
Commission. In 2001, the following schedule shall
apply:
Actual/Authorized Return Financial Performance Percentage
------------------------ --------------------------------
Greater than 120% At Committee's Discretion
120% 120%
115% 115%
110% 110%
105% 105%
Equal to 100% 100%
Note: Percentages will be interpolated for
performance between levels.
(ii) Maintenance Adjustment: If the Company's maintenance
costs are significantly less than estimated for rate
base purposes (more than .5% of the Authorized
Return on Rate Base), the Actual Return on Rate Base
will be adjusted downwards by the amount of the
shortfall.
(iii) Strategic Adjustment: For Executives (Vice
Presidents and above), the Company's Financial
Performance shall be adjusted (up or down) based on
factors including the achievement of strategic goals
such as acquisitions of other firms. The maximum
adjustment for strategic performance in one year
shall be capped at 50%. In 2001, the following
schedule shall apply:
Increase in Total Operating Revenues
from Acquisition Strategic Adjustment
------------------------------------- --------------------
Less than 10% 0%
10% 10%
13% 12%
16% 14%
19% 16%
22% 18%
25% 20%
28% 22%
31% 24%
Greater than 33% 25%
II-1
9
(iv) Individual Adjustment: For Managers, the individual
award consists of two equal parts - a Financial
Performance component and an Individual Performance
component. The Individual Performance component
shall be based on the accomplishment of goals that
are established by the Employer at the beginning of
each Plan Year. The degree to which goals are
accomplished could impact one-half of the Award for
managers from 0% to 100%.
(b) Determination of Individual Awards: For Executives, the
Award to be paid to any Participant will be equal to (i)
the Participant's base salary times (i) the applicable
Target Award times (ii) the Financial Performance
adjustment factor times (iii) the Strategic Adjustment
factor. For Managers, the Award to be paid to any
Participant is determined in two parts. One-half of the
Award will be equal to (i) the Participant's bases salary
times (ii) the Financial Performance Adjustment factor
times (iii) 50% of the applicable Target Award; and
one-half of the Award will be equal to (i) the
Participant's base salary times (ii) the Individual
Adjustment factor times (iii) 50% of the applicable Target
Award.
(c) Participant's Award: A Participant's Award shall be
pro-rated in the event he/she participates in the Plan for
less than the full year, moves into a position covered
under a different schedule of awards, and/or moves into or
from a position not currently included under this Plan. The
pro-rated amount will be calculated by multiplying the
Award otherwise payable to the Participant for the entire
year by a fraction, the numerator of which is the number
months completed by the Participant during the Plan Year ,
and the denominator of which is 12.
2.2 Vesting: There is no vested right to receive an Award and no Award
is earned until paid. A Participant who terminates employment for
any reason before the payment of the Awards shall forfeit any
unpaid Awards, except in the cases of death or disability.
2.3 Award Payment: Awards will be paid by the Employer following the
completion of the audit of the financials, normally within 75 days
of the end of the fiscal year. Payment shall be provided in cash
and/or Restricted Stock. All payments less than 20% of Base
Compensation shall be paid cash. Payments above 20% of Base
Compensation may be paid, at the discretion of the Committee, in
Restricted Stock issued in accordance with the provisions of the
American States Water Company Long-Term Incentive Plan (the
"Long-Term Incentive Plan"). The number of shares of Restricted
Stock (if any) to be issued shall equal the difference between the
amount of the Award and the amount paid in cash divided by the
Fair Market Value (as defined in the Long-Term Incentive Plan) of
a share of the Company common stock determined as of the
Determination Date. Unless the Committee otherwise provides, the
rights of a Participant with respect to Restricted Stock issued
hereunder shall vest, and the applicable restrictions shall
II-2
10
lapse, in a series of three successive equal annual installments
commencing on the first anniversary of the Determination Date.
2.4 Acceleration of Awards upon Change in Control: Notwithstanding the
foregoing, unless prior to a Change in Control Event the Committee
determines that, upon its occurrence, benefits under any or all
Awards shall not be accelerated or determines that only certain or
limited benefits under any or all Awards shall be accelerated and
the extent to which they shall be accelerated, then upon the
occurrence of a Change in Control Event, the Awards shall be
vested and the Participant shall be entitled to the payment
thereof within 75 days after the Change in Control Event. The
Award to be paid to any Participant will be equal to (i) the
Financial Performance for the 12 month period preceding the Change
in Control Event times (ii) one hundred percent (100%) plus the
Strategic Adjustment or Individual Adjustment, whichever is
applicable, for the 12 month period preceding the Change in
Control Event, times the Target Award times (iii) a fraction, the
numerator of which is the number of months completed by the
Participant during the Plan Year, and the denominator of which is
12. Any discretion with respect to these events shall be limited
to the extent required by applicable accounting requirements in
the case of a transaction intended to be accounted for as a
pooling of interests transaction. The Committee may override the
limitations on acceleration and may accord any Participant the
right to refuse any acceleration in such circumstances as the
Committee may approve.
II-3
11
III. OTHER PROVISIONS
3.1 Rights of Eligible Employees, Participants and Beneficiaries:
(a) Employment Status: Status as an Eligible Employee shall not
be construed as a commitment that any Award will be made
under this Plan to an Eligible Employee or to Eligible
Employees generally.
(b) No Employment Contract: Nothing contained in this Plan (or
in any other documents related to this Plan or to any
Award) shall confer upon any Eligible Employee or
Participant any right to continue in the employ or other
service of the Company, or any Subsidiary, or constitute
any contract or agreement of employment or other service,
nor shall interfere in any way with the right of the
Company, or any Subsidiary, to change such person's
compensation or other benefits or to terminate the
employment of such person, with or without cause, but
nothing contained in this Plan or any document related
hereto shall adversely affect any independent contractual
right of such person without his or her consent thereto.
3.2 Compliance with Laws: This Plan, the granting and vesting of
Awards under this Plan and the payment of money under this Plan or
under Awards granted hereunder are subject to compliance with all,
applicable federal and state laws, rules and regulations and to
such approvals by any listing, regulatory or governmental
authority as may, in the opinion of counsel for the Company, be
necessary or advisable in connection therewith.
3.3 Withholding; Payroll Taxes: The Employer shall withhold from
payments made hereunder any taxes required to be withheld from
such payments under federal, state or local law.
3.4 Plan Amendment, Termination and Suspension:
(a) Board Authorization: The Board may, at any time, terminate
or, from time to time, amend, modify or suspend this Plan,
in whole or in part. Any Restricted Stock outstanding at
that time will be governed by the terms of the American
States Water Company Long-Term Incentive Plan.
3.5 Effective Date of the Plan: This Plan shall be effective as of
January 1, 1999.
3.6 Governing Law: Severability
(a) Choice of Law: This Plan shall be governed by, and
construed in accordance with the laws of the State of
California applicable to contracts made and performed
within such State, except as such laws may be preempted by
the
III-1
12
laws of the United States of America, which laws shall then
govern its effect and its construction to the extent they
preempt California law.
(b) Severability: If any provision shall be held by a court of
competent jurisdiction to be invalid and unenforceable, the
remaining provisions of this Plan shall continue in effect.
3.7 Captions: Captions and headings are given to the sections and
subsections of this Plan solely as a convenience to facilitate
reference. Such headings shall not be deemed in any way material
or relevant to the construction or interpretation of the Plan or
any provision thereof.
3.8 Terms: Whenever any words are used herein in the masculine, they
shall be construed as though they were used in the feminine in all
cases where they would so apply; and wherever any words are used
herein in the singular or plural, they shall be construed as
though they were used in the plural or the singular, as the case
may be, in all cases where they would so apply.
3.9 Non-Exclusivity of Plan: Nothing in this Plan shall limit or be
deemed to limit the authority of the Board or the Committee to
grant awards or authorize any other compensation.
EXECUTED this 1st day of April 23, 2001.
AMERICAN STATES WATER COMPANY
By:
-------------------------------------
Title:
-------------------------------------
III-2
1
EXHIBIT 10.23
[PINNACLE WEST LETTERHEAD]
CONFIDENTIAL
June 14, 2001
To: Southern California Water Company
The following terms and conditions shall govern this agreement on June 14,
2001, between Southern California Water Company ("SCWC"), and Pinnacle West
Capital Corporation ("PWMT"), whereby SCWC agreed to purchase and receive and
PWMT agreed to sell and deliver energy as follows:
SELLER: Pinnacle West Capital Corporation BUYER: Southern California Water Company
400 N. 5th Street, M/S 9842 630 E. Foothills Blvd.
Phoenix, Arizona 85004 San Dimas, CA 91773-9016
CONFIRM CONFIRM
ADMINISTRATOR: Margie Logan ADMINISTRATOR: Raymond P. Juels
(602) 250-2809 (phone) (909) 394-3600 X 679 (phone)
(602) 371-5256 (fax) (909) 394-3768 (fax)
PRESCHEDULE: (602) 250-4371 PRESCHEDULE: (909) 280-9411
REAL TIME: (602) 250-4470 REAL TIME: (909) 280-9411
QUANTITY (MW/HR.): 8 Megawatts QUANTITY (MWH): 87,168 MWh's
PRICE ($/MWH): Simple average price of TYPE OF ENERGY: CAISO Firm with Liquidated
$53.00/MWh for the Winter Damages.
periods listed below.
Payment for each year will be
based on each Winter period
price as follows:
Winter Period 1 - $75.00/MWH
Winter Period 2 - $48.00/MWH
Winter Period 3 - $36.00/MWH
START DATE: WINTER PERIODS END DATE: WINTER PERIODS
Period 1 - November 1, 2001 March 31, 2002
Period 2 - November 1, 2002 March 31, 2003
Period 3 - November 1, 2003 March 31, 2004
DAY(S) OF WEEK: Monday through Sunday, HOURS: H.E. 0100-2400 Pacific
including NERC holidays Prevailing Time ("PPT").
DELIVERY POINT: SP15 (Inter SC Trade) - Dynegy is current SC. SCWC to notify PWMT if
SC changes.
TRANSMISSION CONTINGENCIES: None GENERATION CONTINGENCIES: None
ENABLING AGREEMENT: PWMT and SCWC enter into this transaction pursuant to and in accordance with
the WSPP Agreement and Service Schedule C (SSC) of the WSPP Agreement, to which PWMT and
SCWC are parties. Terms used but not defined herein shall have the meanings ascribed to them in the
WSPP Agreement.
ADDITIONAL TERMS: Per attached.
2
ADDITIONAL TERMS
SCHEDULING: Preschedules shall be exchanged for all deliveries of energy,
including identifications of receiving and generating control areas under this
Agreement by 11:00 a.m. Pacific Prevailing Time on the last work day observed
by both Parties prior to the scheduled date of delivery. Interchange scheduling
shall be conducted in accordance with Western Systems Power Pool (WSPP)
Operating Procedure No. 1.
SPECIAL PROVISIONS: Deliveries will be made except during interruptions or
reductions which are due to uncontrollable forces as defined in Section 10 of
the Western Systems Power Pool Agreement, dated February 1, 2001, ("WSPP
Agreement"), in which case the obligations of both Parties will be reduced for
the duration of the interruption or reduction.
NERC HOLIDAYS: The following shall be deemed holidays for purposes of this
Agreement: New Year's Day, Memorial Day, Independence Day, Labor Day,
Thanksgiving, and Christmas Day.
ADDITIONAL TERMS AND CONDITIONS: Neither Party shall transfer or assign all or
any part of this Agreement or its rights or obligations hereunder or otherwise
dispose of any right, title or interest herein without the prior written consent
of the other Party, which consent shall not be unreasonably withheld or delayed.
Notwithstanding the foregoing, either Party may, without the need for consent
from the other Party, (a) transfer, pledge, or assign this Agreement as security
for any financing; (b) transfer, assign or delegate this Agreement or its rights
or obligations hereunder to an Affiliate of such party; or (c) transfer, assign
or delegate this Agreement to any person or entity succeeding to all or
substantially all of the assets of such party; PROVIDED, HOWEVER, THAT ANY SUCH
ASSIGNEE SHALL AGREE TO BE BOUND BY THE TERMS AND CONDITIONS HEREOF AND,
PROVIDED, FURTHER, THAT ANY TRANSFER, ASSIGNMENT OR DELEGATION THAT DOES NOT
REQUIRE CONSENT HEREUNDER SHALL NOT, IN ANY WAY, RELEASE THE ASSIGNOR FROM
LIABILITY FOR THE FULL PERFORMANCE OF ANY OBLIGATIONS (AND ONLY THOSE
OBLIGATIONS) ARISING UNDER THIS AGREEMENT PRIOR TO THE EFFECTIVE DATE OF THE
TRANSFER, ASSIGNMENT OR DELEGATION. To the extent a transfer does not require
consent, the transferring Party shall provide prompt notice to the other party
of the transfer and the effective date thereof. Any transfer in violation of
this section shall be deemed null and void.
The definition of Affiliate: "AFFILIATE" means, with respect to any person,
any entity controlled, directly or indirectly, by such person, any entity that
controls, directly or indirectly, such person, or any entity directly or
indirectly under common control with such person. For this purpose, "control" of
any entity or person means ownership of an majority of the voting power of the
entity or person.
"CAISO ENERGY" means with respect to a Transaction, a Product under which
the Seller shall sell and the Buyer shall purchase a quantity of energy equal to
the hourly quantity without Ancillary Services (as defined in the Tariff) that
is or will be scheduled as a schedule coordinator to schedule coordinator
transaction pursuant to the applicable tariff and protocol provisions of the
California Independent Operator ("CAISO")(as amended from time to time, the
"Tariff") for which the only excuse for failure to deliver or receive is an
"Uncontrollable Force."
A CAISO "Schedule Adjustment", (defined as a schedule change implemented by the
CAISO that is neither caused by, or within the control of, either Party) shall
not constitute an Uncontrollable Force.
3
BILLING AND PAYMENT: Monthly billings and payment shall be in accordance
with Section 9 of the WSPP Agreement. Billings and payment shall be sent to:
Pinnacle West Capital Corporation Southern California Water Company
Attention: Cash Management, Station 9996 Attention: Raymond P. Juels
P. O. Box 53920 630 E. Foothills Blvd.
Phoenix, AZ 85072-3920 San Dimas, CA 91773-9015
PWMT Contract No. 62803 shall be included on all correspondence or invoices in
reference to this agreement.
If the above accurately reflects the terms and conditions of the agreement
between PWMT and SCWC on June 14, 2001, please sign a copy of this Agreement and
return it via fax to the PWMT Confirm Administrator listed above.
PINNACLE WEST CAPITAL CORPORATION SOUTHERN CALIFORNIA WATER COMPANY
Signature: /s/ DAVID A. HANSEN Signature: /s/ JOEL A. DICKSON
---------------------------- ----------------------------
Print Name: David A. Hansen Print Name: Joel A. Dickson
--------------------------- ---------------------------
Title: Director, Marketing & Trading Title: Vice President
-------------------------------- --------------------------------
Date: 6-15-01 Date: 6/14/01
--------------------------------- ---------------------------------
4
CERTIFICATE
OF
CORPORATE SECRETARY
The undersigned, McClellan Harris III, hereby certifies:
(1) That he is the duly elected, qualified and acting Corporate Secretary
of Southern California Water Company, a California corporation; and
(2) That Joel A. Dickson, in his capacity as an executive officer of
Southern California Water Company, is authorized by the Bylaws of
Southern California Water Company, to execute that agreement styled
as PWMT Contract No. 62803 dated June 14, 2001, relating to the
purchase and receipt by Southern California Water Company of electric
energy delivered and sold by Pinnacle West Capital Corporation; and
(3) That the authority granted by the Bylaws of Southern California Water
Company is currently in full force and effect.
WITNESS, the hand of the undersigned and the seal of said Corporation this
14th day of June 2001.
[SIGNATURE ILLEGIBLE]
--------------------------------------
Corporate Secretary
(SEAL)
1
Western Systems Power Pool Exhibit 10.24
Rate Schedule FERC No. 6
WESTERN SYSTEMS POWER POOL
AGREEMENT
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: May 2, 2001
2
Western Systems Power Pool Original Sheet No. 1
Rate Schedule FERC No. 6
TABLE OF CONTENTS
1. PARTIES..................................................................4
2. RECITALS.................................................................4
3. AGREEMENT................................................................5
4. DEFINITIONS..............................................................5
5. TERM AND TERMINATION....................................................11
6. SERVICE SCHEDULES AND WSPP DEFAULT TRANSMISSION TARIFF..................12
7. HUB AND OPERATING AGENT.................................................13
8. ORGANIZATION AND ADMINISTRATION.........................................16
9. PAYMENTS................................................................20
10. UNCONTROLLABLE FORCES...................................................22
11. WAIVERS.................................................................24
12. NOTICES.................................................................24
13. APPROVALS...............................................................25
14. TRANSFER OF INTEREST IN AGREEMENT.......................................27
15. SEVERABILITY............................................................28
16. MEMBERSHIP..............................................................28
17. RELATIONSHIP OF PARTIES.................................................29
18. NO DEDICATION OF FACILITIES.............................................30
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
3
Western Systems Power Pool Original Sheet No. 2
Rate Schedule FERC No. 6
19. NO RETAIL SERVICES......................................................30
20. THIRD PARTY BENEFICIARIES...............................................30
21. LIABILITY AND DAMAGES...................................................30
22. DEFAULT OF TRANSACTIONS UNDER THIS AGREEMENT AND
CONFIRMATION AGREEMENTS.................................................34
23. OTHER AGREEMENTS........................................................43
24. GOVERNING LAW...........................................................43
25. JUDGMENTS AND DETERMINATIONS............................................43
26. COMPLETE AGREEMENT......................................................44
27. CREDITWORTHINESS........................................................44
28. NETTING AND SET-OFF.....................................................46
29. TAXES...................................................................47
30. CONFIDENTIALITY.........................................................48
31. TRANSMISSION TARIFF.....................................................49
32. TRANSACTION SPECIFIC TERMS AND ORAL AGREEMENTS..........................49
33. PERFORMANCE, TITLE, AND WARRANTIES FOR TRANSACTIONS
UNDER SERVICE SCHEDULES.................................................52
34. DISPUTE RESOLUTION......................................................53
35. FORWARD CONTRACTS.......................................................56
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
4
Western Systems Power Pool First Revised Sheet No. 3
Rate Schedule FERC No. 6 Superseding Original Sheet No. 3
36. TRADE OPTION EXCEPTION..................................................56
37. ADDITIONAL REPRESENTATIONS AND WARRANTIES...............................57
38. AMENDMENT...............................................................58
39. EXECUTION BY COUNTERPARTS...............................................58
40. WITNESS.................................................................59
EXHIBIT A: NETTING
EXHIBIT B: FORM OF COUNTERPARTY GUARANTEE AGREEMENT
EXHIBIT C: SAMPLE FORM FOR CONFIRMATION
EXHIBIT D: WSPP MEDIATION AND ARBITRATION PROCEDURES
SERVICE SCHEDULES
A. ECONOMY ENERGY SERVICE
B. UNIT COMMITMENT SERVICE
C. FIRM CAPACITY/ENERGY SALE OR EXCHANGE SERVICE
LIST OF MEMBERS
Issued by: Michael E. Small, General Counsel to Effective: February 1, 2001
Western Systems Power Pool
Issued on: December 1, 2001
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued November 2, 2000.
5
Western Systems Power Pool Original Sheet No. 4
Rate Schedule FERC No. 6
1. PARTIES:
The Parties to this Western Systems Power Pool Agreement
(hereinafter referred to as "Agreement") are those entities that
have executed this Agreement, hereinafter sometimes referred to
individually as "Party" and collectively as "Parties," but
excluding any such entity that withdraws its participation in the
Agreement.
2. RECITALS:
2.1 The WSPP experiment has been successfully concluded. Its main
purpose was to determine the feasibility of a marketing
arrangement which would increase the efficiency of interconnected
power system operations above that already being accomplished
with existing agreements through increased market knowledge and
market pricing of commodities.
2.2 The Parties now desire to proceed with a similar marketing
arrangement on a long term basis for prescheduled and real-time
coordinated power transactions, such as economy energy
transactions, unit commitment service, firm system
capacity/energy sales or exchanges. Accordingly, this Agreement,
together with any applicable Confirmation Agreement, sets forth
the terms and conditions to implement these services within any
applicable rate ceilings set forth in the Service Schedules in
conformance with FERC orders where applicable.
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
6
Western Systems Power Pool Original Sheet No. 5
Rate Schedule FERC No. 6
2.3 Each Party meets the membership requirements set out in Section
16.
2.4 The Parties are willing to utilize their respective electric
generation and transmission systems or contractual rights thereto
to the extent of their respective obligations which are set forth
in this Agreement.
3. AGREEMENT:
In consideration of the mutual covenants and promises herein set
forth, the Parties agree as follows:
4. DEFINITIONS:
The following terms, when used herein with initial
capitalization, whether in the singular or in the plural, shall
have the meanings specified:
4.1 Agreement: This Western Systems Power Pool Agreement, including
the Service Schedules and Exhibits attached hereto, as amended;
provided, however, that Confirmation Agreements are not included
within this definition.
4.1a Business Day(s): Any day other than a Saturday or Sunday or a
national (United States or Canadian, whichever is applicable)
holiday. United States holidays shall be holidays observed by
Federal Reserve member banks in New York City. Where both the
Seller and the Purchaser have their principal place of business
in the United States, Canadian holidays shall not apply.
Similarly, where both the Seller and the Purchaser have their
principal place of business in Canada, United States holidays
shall not apply. In situations where one Party has its principal
place of business within the United States and the other Party's
principal place of
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
7
Western Systems Power Pool First Revised Sheet No. 6
Rate Schedule FERC No. 6 Superseding Original Sheet No. 6
business is within Canada, both United States and Canadian
holidays shall be observed.
4.1b Confirmation Agreement(s): Any oral agreement or written
documentation for transactions under the Service Schedules which
sets forth terms and conditions for transactions that are in
addition to, substitute, or modify those set forth in the
Agreement. A sample written confirmation document is included as
Exhibit C. Section 32 of this Agreement provides for such
Confirmation Agreements. The Parties may agree to modify terms of
this Agreement for more than one transaction pursuant to a
separate written agreement. The changes to the Agreement agreed
to through such written agreements shall be considered part of
the Confirmation Agreement and shall apply to all transactions
entered into between the two Parties under the Agreement unless
the Parties specifically agree to override such changes for a
particular transaction consistent with Section 32 of this
Agreement.
4.1c Contract Price: The price agreed to between the Seller and the
Purchaser for a transaction under the Agreement and any
Confirmation Agreement.
4.1d Contract Quantity: The amount of electric energy and/or capacity
to be supplied for a transaction under a Service Schedule as
agreed to through any Confirmation Agreement.
4.2 Control Area: Shall mean an electric system capable of regulating
its generation in order to maintain its interchange schedule with
other electric systems and to
Issued by: Michael E. Small, General Counsel to Effective: February 1, 2001
Western Systems Power Pool
Issued on: December 1, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
8
Western Systems Power Pool Original Sheet No. 6A
Rate Schedule FERC No. 6
contribute its frequency bias obligation to the interconnection
as specified in the North American Electric Reliability Council
(NERC) Operating Guidelines.
4.3 Economy Energy Service: Non-firm energy transaction whereby the
Seller has agreed to sell or exchange and the Purchaser has
agreed to buy or exchange energy that is subject to immediate
interruption upon notification, in accordance with the Agreement,
including Service Schedule A, and any applicable Confirmation
Agreement.
Issued by: Michael E. Small, General Counsel to Effective: February 1, 2001
Western Systems Power Pool
Issued on: December 1, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
9
Western Systems Power Pool First Revised Sheet No. 7
Rate Schedule FERC No. 6 Superseding Original Sheet No. 7
4.4 Electric Utility: An entity or lawful association which (i) is a
public utility, Independent Power Producer, or Power Marketer
regulated under applicable state law or the Federal Power Act, or
(ii) is exempted from such regulation under the Federal Power Act
because it is the United States, a State or any political
subdivision thereof or an agency of any of the foregoing, or a
Rural Utilities Service cooperative, or (iii) is a public
utility, Independent Power Producer, or Power Marketer located in
Canada or Mexico that is similarly regulated.
4.5 Executive Committee: That committee established pursuant to
Section 8 of this Agreement.
4.6 FERC: The Federal Energy Regulatory Commission or its regulatory
successor.
4.7 Firm Capacity/Energy Sale or Exchange Service: Firm capacity
and/or energy transaction whereby the Seller has agreed to sell
or exchange and the Purchaser has agreed to buy or exchange for a
specified period available capacity with or without associated
energy which may include a Physically-Settled Option and a
capacity transaction in accordance with the Agreement, including
Service Schedule C, and any applicable Confirmation Agreement.
4.7a Guarantee Agreement: An agreement providing a guarantee issued by
a parent company or another entity guaranteeing responsibility
for specific obligations for transactions under this Agreement
and Confirmation Agreements. A sample form of guarantee is
provided in Exhibit B.
4.7b Guarantor: The entity providing a guarantee pursuant to a
Guarantee Agreement.
Issued by: Michael E. Small, General Counsel to Effective: February 1, 2001
Western Systems Power Pool
Issued on: December 1, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
10
Western Systems Power Pool First Revised Sheet No. 8
Rate Schedule FERC No. 6 Superseding Original Sheet No. 8
4.8 Hub: An electronic communication center that functions as a
central point to electronically receive and assemble data for
offers to buy or sell power or transmission service from each
Party and make that data electronically available concurrently to
all Parties.
4.9 Incremental Cost: The forecasted expense incurred by the Seller
in providing an additional increment of energy or capacity during
a given hour.
4.10 Independent Power Producer: An entity which is a non-traditional
public utility that produces and sells electricity but which does
not have a retail service franchise.
4.11 Interconnected Transmission System: The total of all transmission
facilities owned or operated by the Parties, including
transmission facilities over which Parties have scheduling
rights.
4.11a Letter of Credit: An irrevocable, transferable, standby letter of
credit, issued by an issuer acceptable to the Party requiring the
Letter of Credit.
4.11b NERC. North American Electric Reliability Council or any
successor organization.
4.12 Operating Agent: Arizona Public Service Company, or its successor
as may be designated by the Executive Committee.
4.13 Operating Committee: That committee established pursuant to
Section 8 of this Agreement.
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2001
Western Systems Power Pool
Issued on: May 2, 2001
11
Western Systems Power Pool Original Sheet No. 9
Rate Schedule FERC No. 6
4.14 Power Marketer: An entity which buys, sells, and takes title to
electric energy, transmission and/or other services from
traditional utilities and other suppliers.
4.14a Physically-Settled Option: Includes (i) a call option which is
the right, but not the obligation, to buy an underlying power
product as defined under Service Schedules B or C according to
the price and exercise terms set forth in the Confirmation
Agreement; and (ii) a put option which is the right, but not the
obligation, to sell an underlying power product as defined under
Service Schedules B or C according to the price and exercise
terms set forth in the Confirmation Agreement.
4.14b Premium: The amount paid by the Purchaser of a Physically-Settled
Option to the Seller of such Option by the date agreed to by the
Parties in the Confirmation Agreement.
4.15 Purchaser: Any Party which agrees to buy or receive from one or
more of the other Parties any service pursuant to the Agreement
under any Service Schedule and any applicable Confirmation
Agreement.
4.16 Qualifying Facility: A facility which is a qualifying small power
production facility or a qualifying cogeneration facility as
these terms are defined in Federal Power Act Sections 3(17)(A),
3(17)(C), 3(18)(A), and 3(18)(B); which meets the requirements
set forth in 18 C.F.R. Sections 292.203-292.209; or a facility in
Canada or Mexico that complies with similar requirements.
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
12
Western Systems Power Pool First Revised Sheet No. 10
Rate Schedule FERC No. 6 Superseding Original Sheet No. 10
4.16a Replacement Price: The price at which the Purchaser, acting in a
commercially reasonable manner, effects a purchase of substitute
electric energy in place of the electric energy not delivered by
the Seller or, absent such a purchase, the market price for such
quantity of electric energy, as determined by the Purchaser in a
commercially reasonable manner, at the delivery point (agreed
upon by the Seller and the Purchaser for the transaction).
4.16b Retail Entity: A retail aggregator or supplier or retail
customer; provided, however, only those Retail Entities eligible
for transmission service under the FERC's pro forma open access
transmission tariff are eligible to become members of the WSPP.
4.16c Sales Price: The price at which the Seller, acting in a
commercially reasonable manner, effects a resale of the electric
energy not received by the Purchaser or, absent such a resale,
the market price for such quantity of electric energy at the
delivery point (agreed upon by the Seller and the Purchaser), as
determined by the Seller in a commercially reasonable manner.
4.17 Seller: Any Party which agrees to sell or provide to one or more
of the other Parties any service pursuant to the Agreement under
any Service Schedule and any applicable Confirmation Agreement.
4.18 Service Schedule: A schedule of services established pursuant to
Section 6 of this Agreement.
4.19 Uncontrollable Forces: As defined in Section 10 of this Agreement
or in a Confirmation Agreement.
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2001
Western Systems Power Pool
Issued on: May 2, 2001
13
Western Systems Power Pool Original Sheet No. 10A
Rate Schedule FERC No. 6
4.20 Unit Commitment Service: A capacity and associated scheduled
energy transaction or a Physically-Settled Option which the
Seller has agreed to sell and the Purchaser has agreed to buy
from a specified unit(s) for a specified period, in
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2001
Western Systems Power Pool
Issued on: May 2, 2001
14
Western Systems Power Pool Original Sheet No. 11
Rate Schedule FERC No. 6
accordance with the Agreement, including Service Schedule B, and
any applicable Confirmation Agreement.
4.20a WSPP: The Western Systems Power Pool.
4.20b WSPP Default Transmission Tariff: The transmission tariff filed
on behalf of WSPP Members with FERC as it may be amended from
time to time.
5. TERM AND TERMINATION:
5.1 This Agreement shall become effective as of July 27, 1991 when
acceptance or approvals required under Section 13.2 of this
Agreement with respect to those Parties that are subject to FERC
jurisdiction have been obtained; provided, however, that this
Agreement shall not become effective as to any Party in the event
the pre-grant of termination requested under Section 13.3 is not
allowed by FERC, absent that Party's consent; and provided,
further, that this Agreement shall not become effective as to any
Party if any terms, conditions or requirements imposed by FERC
are found unacceptable by that Party. This Agreement shall
continue in effect for a period of ten (10) years from said
effective date and thereafter on a year to year basis until
terminated by the Parties; provided, however, that any Party may
withdraw its participation at any time after the effective date
of this Agreement on thirty (30) days prior written notice to all
other Parties.
5.2 As of the effective date of any withdrawal, the withdrawing Party
shall have no further rights or obligations under this Agreement
except the right to collect
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
15
Western Systems Power Pool Original Sheet No. 12
Rate Schedule FERC No. 6
money or receive service owed to it for transactions under any
Service Schedule and the obligation to pay such amounts due to
another Party and to complete any transactions agreed to under
any Service Schedule as of said date. No Party shall oppose,
before any court or regulatory agencies having jurisdiction, any
other Party's withdrawal as provided in this Section.
5.3 Except as provided for in Section 5.2, after termination, or
withdrawal with respect to the withdrawing Party, all rights to
services provided under this Agreement or any tariff or rate
schedule which results from or incorporates this Agreement shall
cease, and no Party shall claim or assert any continuing right to
such services under this Agreement. Except as provided for in
Section 5.2, no Party shall be required to provide services based
in whole or in part on the existence of this Agreement or on the
provision of services under this Agreement beyond the termination
date, or date of withdrawal with respect to the withdrawing
Party.
6. SERVICE SCHEDULES AND WSPP DEFAULT TRANSMISSION TARIFF:
6.1 The Parties contemplate that they may, from time to time, add or
remove Service Schedules under this Agreement. The attached
Service Schedules A through C for Economy Energy Service, Unit
Commitment Service, and Firm System Capacity/Energy Sale or
Exchange Service are hereby approved and made a part of this
Agreement. Nothing contained herein shall be construed as
affecting in any way the right of the Parties to jointly make
application to FERC for a change
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
16
Western Systems Power Pool Original Sheet No. 13
Rate Schedule FERC No. 6
in the rates and charges, classification, service, terms, or
conditions affecting WSPP transactions under Section 205 of the
Federal Power Act and pursuant to FERC rules and regulations
promulgated thereunder. Subject to the provisions of Section 13,
future Service Schedules, if any, shall be adopted only by
amendment of this Agreement and shall be attached hereto and
become a part of this Agreement.
6.2 [RESERVED]
6.3 When the WSPP Default Transmission Tariff applies as specified in
the preamble to such Default Transmission Tariff, Transmission
Service under it shall be available both to Parties and
nonParties under this Agreement; provided, however, each Party or
nonParty must be an eligible customer under the WSPP Default
Transmission Tariff in order to receive service.
7. HUB AND OPERATING AGENT:
7.1 The Operating Agent shall act for itself and as agent for the
Parties to carry out its designated responsibilities under this
Agreement.
7.2 The Operating Agent shall, as directed by the Operating Committee
pursuant to Section 8.2.4, and on behalf of the Parties, either
(i) purchase or lease, and install or have installed, operate and
maintain the necessary equipment to operate the Hub or (ii)
contract for Hub services.
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
17
Western Systems Power Pool Original Sheet No. 14
Rate Schedule FERC No. 6
7.3 The Operating Agent's estimated total costs to be incurred under
Section 7.2 shall be subject to review by the Operating Committee
and approval by the Executive Committee.
7.4 At least sixty (60) days prior to each calendar year that this
Agreement is in effect, the Operating Agent shall prepare a
budget for said year of operation under this Agreement and shall
submit same to the Operating Committee for review, and to the
Executive Committee for approval. Subsequent budget revisions
shall be submitted to the Operating Committee for review and to
the Executive Committee for approval.
7.5 The Operating Agent shall perform other administrative tasks
necessary to implement this Agreement as directed by the
Executive Committee.
7.6 Except as provided in Section 7.7, all Parties shall share
equally in all costs of the Operating Agent incurred under this
Agreement, including but not limited to initial FERC filing fees
and any reasonable legal fees.
7.7 Each Party, in coordination with the Operating Agent, shall at
its own expense acquire, install, operate, and maintain all
necessary software and hardware on its system and the necessary
communications link to the Hub to conduct transactions under this
Agreement.
7.8 The Operating Agent shall bill the Parties for costs incurred
under this Agreement on an estimated basis reasonably in advance
of when due, and such billings shall be paid by the Parties when
due. Such billings shall be adjusted in the following
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
18
Western Systems Power Pool Original Sheet No. 15
Rate Schedule FERC No. 6
month(s) to reflect recorded costs. Billing and payment of the
Operating Agent's costs shall otherwise be implemented in
accordance with the provisions of Section 9.
7.9 The Operating Agent, at reasonable times and places, shall make
available its records and documentation supporting costs for
bills rendered under this Agreement for the inspection of any
Party for a period of time not to exceed two (2) years from the
time such bills were rendered.
7.9.1 A Party requesting review of the Operating Agent's records
shall give the Operating Agent sufficient notice of its
intent, but in no event less than thirty (30) days.
7.9.2 The requesting Party may perform this review using
personnel from its own staff or designate a certified
public accounting firm for the purpose of this review.
7.9.3 All costs incurred to perform this review shall be at the
requesting Party's own expense.
7.9.4 The Party performing the review shall not voluntarily
release the Operating Agent's records or disclose any
information contained therein to any third party unless
the written consent of the Operating Agent and the
Executive Committee has been obtained.
7.10 Upon the termination of this Agreement, unless otherwise directed
by the Executive Committee, the Operating Agent shall either
dispose of any Hub
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
19
Western Systems Power Pool Original Sheet No. 16
Rate Schedule FERC No. 6
equipment which it has purchased, or have the right of first
refusal to purchase such equipment at original cost less
depreciation, and shall apply any net proceeds from the sale of
the Hub equipment against its costs incurred under this
Agreement. The Operating Agent shall refund any excess proceeds
equally to the Parties.
8. ORGANIZATION AND ADMINISTRATION:
As a means of securing effective and timely cooperation within
the activities hereunder and as a means of dealing on a prompt and
orderly basis with various problems which may arise in connection with
system coordination and operation under changing conditions, the Parties
hereby establish an Executive Committee and an Operating Committee.
8.1 Executive Committee:
The Executive Committee shall consist of one
representative and an alternate from each Party designated
pursuant to Section 8.5 herein. The responsibilities of the
Executive Committee are as follows:
8.1.1 To establish sub-committees as it may from time to time
deem necessary.
8.1.2 To review at least annually the service activities
hereunder to ensure that such activities are consistent
with the spirit and intent of this Agreement.
8.1.3 To review any unresolved issues which may arise hereunder
and endeavor to resolve the issues.
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
20
Western Systems Power Pool Original Sheet No. 17
Rate Schedule FERC No. 6
8.1.4 To review and approve the Operating Agent's annual budget
under this Agreement, and any revision thereto, within
thirty (30) days of recommendation by the Operating
Committee.
8.1.5 To establish and approve any additional budgets under this
Agreement as may be deemed necessary.
8.1.6 To review and recommend to the Parties for approval any
additions or amendments to this Agreement, including
Service Schedules.
8.1.7 To review and act on the application of an entity to
become a Party to this Agreement.
8.1.8 To designate a successor to the Operating Agent, if
necessary.
8.1.9 To do such other things and carry out such duties as
specifically required or authorized by this Agreement;
provided, however, that the Executive Committee shall have
no authority to amend this Agreement.
8.1.10 To notify any Party of the rescission of its interest in
this Agreement due to its failure to continue to meet the
requirements of Section 16.1.
8.1.11 To arrange for legal representation for filing this
Agreement (and any subsequent amendments) with FERC and
supporting the Agreement (or amendments) in any FERC
proceeding, and for other purposes as required.
8.2 Operating Committee:
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
21
Western Systems Power Pool Original Sheet No. 18
Rate Schedule FERC No. 6
The Operating Committee shall consist of one
representative and an alternate from each Party designated
pursuant to Section 8.5. The responsibilities of the Operating
Committee are as follows:
8.2.1 To establish, review, approve, or modify procedures and
standard practices, consistent with the provisions hereof,
for the guidance of load dispatchers and other operating
employees in the Parties' electric systems as to matters
affecting transactions under this Agreement.
8.2.2 To submit to the Executive Committee any proposed new or
revised Service Schedules.
8.2.3 To establish, review, approve, or modify any scheduling or
operating procedures required in connection with
transactions under this Agreement.
8.2.4 To direct the Operating Agent in matters governed by this
Agreement.
8.2.5 To review and make recommendations to the Executive
Committee for approval of the Operating Agent's annual
budget under this Agreement, including any proposed
revisions thereto, within thirty (30) days of receipt from
the Operating Agent.
8.2.6 To review and recommend as necessary the types and
arrangement of equipment for intersystem communication
facilities to enhance transactions and benefits under this
Agreement.
8.2.7 To review the Operating Agent's estimated total costs of
providing, having provided or contracting for a Hub.
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
22
Western Systems Power Pool Original Sheet No. 19
Rate Schedule FERC No. 6
8.2.8 To review new member applications for membership to this
Agreement and make recommendations on said applications to
the Executive Committee.
8.2.9 To do such other things and carry out such duties as
specifically required or authorized by this Agreement or
as directed by the Executive Committee; provided, however,
that the Operating Committee shall have no authority to
amend this Agreement.
8.3 All matters which require Operating Committee or Executive
Committee approval as provided in this Agreement shall be by no
less than ninety percent (90%) affirmative agreement of the
committee members present.
8.4 Unless otherwise agreed by all committee members, the chairperson
of each committee shall provide the other Parties at least ten
(10) Business Days advance notification of all committee
meetings, including an agenda of matters to be discussed and
voted on at the meeting. All material issues to be submitted to a
vote of the committee shall appear on the agenda. Prior to the
selection of a chairperson the Operating Agent shall provide such
advance notice for the initial meeting of each committee.
8.5 Each Party shall give written notice to the other Parties of the
name of its designated representative and alternate
representative (to act in the absence of the designated
representative) on each committee within thirty (30) days after
the execution of this Agreement. Notice of any change of
representative or alternate
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
23
Western Systems Power Pool First Revised Sheet No. 20
Rate Schedule FERC No. 6 Superseding Original Sheet No. 20
representative shall be given by written notice to the other
Parties. Each Party's designated representative shall be
authorized to act on its behalf with respect to those committee
responsibilities provided herein.
8.6 Each committee shall meet as necessary or at the request of any
Party.
8.7 Each committee shall elect a chairperson and other officers at
its first meeting.
9. PAYMENTS:
9.1 The accounting and billing period for transactions under Service
Schedules to this Agreement shall be one (1) calendar month,
unless otherwise specified in a Service Schedule agreed to
through a Confirmation Agreement. Bills sent to any Party shall
be sent to the appropriate billing address as set forth on the
WSPP homepage or as otherwise specified by such Party.
9.2 Payments for amounts billed under Service Schedules hereto shall
be paid so that such payments are received by the Party to be
paid on the 20th day of the invoicing month or the tenth (10) day
after receipt of the bill, whichever is later. Notwithstanding
the foregoing, Premiums shall be paid within three (3) Business
Days of receipt of the invoice therefor. Payment shall be made at
the location designated by the Party to which payment is due.
Payment shall be considered received when payment is received by
the Party to which Payment is due at the location designated by
that Party. If the due date falls on a non-Business Day of either
Party, then the payment shall be due on the next following
Business Day.
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2001
Western Systems Power Pool
Issued on: May 2, 2001
24
Western Systems Power Pool Original Sheet No. 20A
Rate Schedule FERC No. 6
9.3 Amounts not paid on or before the due date shall be payable with
interest accrued at the rate of one percent (1%) per month, or
the maximum interest rate permitted
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2001
Western Systems Power Pool
Issued on: May 2, 2001
25
Western Systems Power Pool First Revised Sheet No. 21
Rate Schedule FERC No. 6 Superseding Original Sheet No. 21
by law, if any, whichever is less, prorated by days from the due
date to the date of payment unless and until the Executive
Committee shall determine another rate.
9.4 In case any portion of any bill is in dispute, the entire bill
shall be paid when due. Any excess amount of bills which, through
inadvertent errors or as a result of a dispute, may have been
overpaid shall be returned by the owing Party upon determination
of the correct amount, with interest accrued at the rate of one
percent (1%) per month, or the maximum interest rate permitted by
law, if any, whichever is less, prorated by days from the date of
overpayment to the date of refund unless and until the Executive
Committee shall determine another rate. The Parties shall have no
rights to dispute the accuracy of any bill or payment after a
period of two (2) years from the date on which the first bill was
delivered for a specific transaction.
9.5 If a Party's records reveal that a bill was not delivered for a
specific transaction, then the Party may deliver to the
appropriate Party a bill within two (2) years from the date on
which the bill would have been delivered under Section 9.1 of
this Agreement. The right to payment is waived with respect to
transactions, or portions thereof, not billed within such two (2)
year period.
9.6 Each Party, or any third party representative of a Party, shall
keep complete and accurate records, and shall maintain such data
as may be necessary for the purpose of ascertaining the accuracy
of all relevant data, estimates, or statements
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2001
Western Systems Power Pool
Issued on: May 2, 2001
26
Western Systems Power Pool Original Sheet No. 21A
Rate Schedule FERC No. 6
of charges submitted hereunder for a period of two (2) years from
the date the first bill was delivered for a specific transaction
completed under this Agreement.
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2001
Western Systems Power Pool
Issued on: May 2, 2001
27
Western Systems Power Pool First Revised Sheet No. 22
Rate Schedule FERC No. 6 Superseding Original Sheet No. 22
Within a two (2) year period from the date the first bill was
delivered under this Agreement, any Party to that transaction may
request in writing copies of the records of the other Party for
that transaction to the extent reasonably necessary to verify the
accuracy of any statement or charge. The Party from which
documents or data has been requested shall cooperate in providing
the documents and data within a reasonable time period.
10. UNCONTROLLABLE FORCES:
No Party shall be considered to be in breach of this Agreement or
any applicable Confirmation Agreement to the extent that a failure to
perform its obligations under this Agreement or any such Confirmation
Agreement shall be due to an Uncontrollable Force. The term
"Uncontrollable Force" means an event or circumstance which prevents one
Party from performing its obligations under one or more transactions,
which event or circumstance is not within the reasonable control of, or
the result of the negligence of the claiming Party, and which by the
exercise of due diligence, the claiming Party is unable to avoid, cause
to be avoided, or overcome. "Uncontrollable Forces" may include and are
not restricted to flood, drought, earthquake, storm, fire, lightning,
epidemic, war, riot, civil disturbance or disobedience, labor dispute,
labor or material shortage, sabotage, restraint by court order or public
authority, and action or nonaction by, or failure to obtain the
necessary authorizations or approvals from, any governmental agency or
authority
Issued by: Michael E. Small, General Counsel to Effective: February 1, 2001
Western Systems Power Pool
Issued on: December 1, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
28
Western Systems Power Pool Original Sheet No. 22A
Rate Schedule FERC No. 6
The following shall not be considered "Uncontrollable Forces": (i) the
price of electricity faced by Seller; or (ii) Purchaser's inability due
to price to use or resell the power purchased hereunder. No Party shall,
however, be relieved of liability for failure of performance to the
extent that such failure is due to causes arising out of its own
negligence or due to removable or remediable causes which it fails to
remove or remedy within a reasonable time period. Nothing contained
herein shall be construed to require a
Issued by: Michael E. Small, General Counsel to Effective: February 1, 2001
Western Systems Power Pool
Issued on: December 1, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
29
Western Systems Power Pool First Revised Sheet No. 23
Rate Schedule FERC No. 6 Superseding Original Sheet No. 23
Party to settle any strike or labor dispute in which it may be involved.
Any Party rendered unable to fulfill any of its obligations by reason of
an Uncontrollable Force shall give prompt notice of such fact and shall
exercise due diligence, as provided above, to remove such inability
within a reasonable time period. If oral notice is provided, it shall be
promptly followed by written notice.
Notwithstanding the "due diligence" obligations or obligations to
remove or remedy the causes set forth in the foregoing paragraph (which
do not apply to this paragraph except as specified below), where the
entity providing transmission services for transactions under any
Service Schedule interrupts such transmission service, the interruption
in transmission service shall be considered an Uncontrollable Force
under this Section 10 only in the following two sets of circumstances:
(1) An interruption in transmission service shall be considered an
Uncontrollable Force if (a) the Parties agreed on a transmission
path for that transaction at the time the transaction under this
Agreement was entered into by the Parties' thereto, (b) firm
transmission involving that transmission path was obtained
pursuant to a transmission tariff or contract to effectuate the
transaction under the applicable Service Schedule, and (c) the
entity providing transmission service curtailed or interrupted
such firm transmission pursuant to the applicable transmission
tariff or contract;
(2) if the Parties did not agree on the transmission path for a
transaction at the time the transaction was entered into, an
interruption in transmission service shall be
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
30
Western Systems Power Pool Original Sheet No. 24
Rate Schedule FERC No. 6
considered an Uncontrollable Force only if (a) the Party
contracting for transmission services shall have made
arrangements with the entity providing transmission service for
firm transmission to effectuate the transaction under the
applicable Service Schedule, (b) the entity providing
transmission service curtailed or interrupted such transmission
service due to an event of Uncontrollable Forces or provision of
like effect, and (c) the Party which contracted for such firm
transmission services could not obtain alternate energy at the
delivery point, alternate transmission services, or alternate
means of delivering energy after exercising due diligence.
No Party shall be relieved by operation of this Section 10 of any
liability to pay for power delivered to the Purchaser or to make
payments then due or which the Party is obligated to make with respect
to performance which occurred prior to the Uncontrollable Force.
11. WAIVERS:
Any waiver at any time by any Party of its rights with respect to
a default under this Agreement or any Confirmation Agreements, or any
other matter under this Agreement, shall not be deemed a waiver with
respect to any subsequent default of the same or any other matter.
12. NOTICES:
12.1 Except for the oral notice provided for in Section 10 of this
Agreement, any formal notice, demand or request provided for in
this Agreement shall be in
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
31
Western Systems Power Pool Original Sheet No. 25
Rate Schedule FERC No. 6
writing and shall be deemed properly served, given or made if
delivered in person, or sent by either registered or certified
mail, postage prepaid, or prepaid telegram or fax or other means
agreed to by the Parties.
12.2 RESERVED
12.3 Notices and requests of a routine nature applicable to delivery
or receipt of power or energy or operation of facilities shall be
given in such manner as the committees from time to time or the
Parties to a transaction shall prescribe.
13. APPROVALS:
13.1 This Agreement is subject to valid laws, orders, rules and
regulations of duly constituted authorities having jurisdiction.
Nothing contained in this Agreement shall give FERC jurisdiction
over those Parties not otherwise subject to such jurisdiction or
be construed as a grant of jurisdiction over any Party by any
state or federal agency not otherwise having jurisdiction by law.
13.2 This Agreement, including any Service Schedule hereto, shall
become effective as to any Party when it is accepted for filing
by FERC, without changes or conditions unacceptable to such
Party, for application to the Parties subject to FERC
jurisdiction under the Federal Power Act; provided, however, that
nothing in this Agreement is intended to restrict the authority
of the Bonneville Power Administration (BPA) pursuant to
applicable statutory authority to use its existing wholesale
power and transmission rates or to adopt new rates, rate
schedules, or general rate schedule provisions for application
under this Agreement and obtain
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
32
Western Systems Power Pool Original Sheet No. 26
Rate Schedule FERC No. 6
interim or final approval of those rates from FERC pursuant to
Section 7 of the Pacific Northwest Electric Power Planning and
Conservation Act, 16 U.S.C. Sec. 839e, provided such rates do not
exceed the maximum rates in the applicable Service Schedule and
are consistent with the terms and conditions of said Service
Schedule. If, upon filing of this Agreement by Parties subject to
FERC jurisdiction under the Federal Power Act, FERC orders a
hearing to determine whether this Agreement or a Service Schedule
under this Agreement is just and reasonable under the Federal
Power Act, the Agreement or Service Schedule shall not become
effective until the date when an order issued by FERC,
determining this Agreement or the Service Schedule to be just and
reasonable without changes or new conditions unacceptable to the
Parties, is no longer subject to judicial review. Any changes or
conditions imposed by any agency or court, including FERC
ordering a hearing, shall be cause for immediate withdrawal by
any nonconsenting Party.
13.3 The Parties subject to FERC jurisdiction under the Federal Power
Act shall have the right to terminate their participation in this
Agreement, and any rate schedule or services included herein,
pursuant to the terms of Section 5 of this Agreement and without
the necessity of further filing with or approval by FERC.
13.4 Any amendment or change in maximum rates specified in the Service
Schedules shall not become effective with regard to any Party
that is subject to FERC jurisdiction under the Federal Power Act
until it is accepted for filing or
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
33
Western Systems Power Pool Original Sheet No. 27
Rate Schedule FERC No. 6
confirmed and approved by FERC as specified in and subject to the
conditions of Section 13.2.
13.5 Nothing contained in this Agreement shall be construed to
establish any precedent for any other agreement or to grant any
rights to or impose any obligations on any Party beyond the scope
and term of this Agreement.
14. TRANSFER OF INTEREST IN AGREEMENT:
No Party shall voluntarily transfer its membership under this
Agreement without the written consent and approval of all other Parties
except to a successor in operation of the applicable properties of such
Party. With regard to the transfer of the rights and obligations of any
Party associated with transactions under the Service Schedules, neither
Party may assign such rights or obligations unless (a) the other Party
provides its prior written consent which shall not be unreasonably
withheld; or (b) the assignment is to a successor in operation whose
creditworthiness is comparable to or higher than that of the assigning
Party. Any successor or assignee of the rights of any Party, whether by
voluntary transfer, judicial or foreclosure sale or otherwise, shall be
subject to all the provisions and conditions of this Agreement and
Confirmation Agreements (where applicable) to the same extent as though
such successor or assignee were the original Party under this Agreement
or the Confirmation Agreements, and no assignment or transfer of any
rights under this Agreement or any Confirmation Agreement shall be
effective unless and until the assignee or transferee agrees in writing
to assume all of the obligations of the assignor or transferor and to be
bound by all of the provisions and
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
34
Western Systems Power Pool First Revised Sheet No. 28
Rate Schedule FERC No. 6 Superseding Original Sheet No. 28
conditions of this Agreement and any Confirmation Agreement (where
applicable). The execution of a mortgage or trust deed or a judicial or
foreclosure sale made thereunder shall not be deemed a voluntary
transfer within the meaning of this Section 14.
15. SEVERABILITY:
In the event that any of the terms, covenants or conditions of
this Agreement or any Confirmation Agreement, or the application of any
such term, covenant or condition, shall be held invalid as to any person
or circumstance by any court, regulatory agency, or other regulatory
body having jurisdiction, all other terms, covenants or conditions of
this Agreement and the Confirmation Agreement and their application
shall not be affected thereby, but shall remain in force and effect
unless a court, regulatory agency, or other regulatory body holds that
the provisions are not separable from all other provisions of this
Agreement or such Confirmation Agreement.
16. MEMBERSHIP:
16.1 Any Electric Utility, Retail Entity or Qualifying Facility may
become a Party to this Agreement. The Executive Committee shall
notify such Electric Utility, Retail Entity or Qualifying
Facility of its decision within sixty (60) days of a request to
become a Party to this Agreement, and any acceptable entity shall
become a Party hereto by the execution of this Agreement or a
counterpart hereof, payment of costs pursuant to Section 16.4,
and concluding any necessary acceptance or approval referred to
in Section 13. Any such Party, if it is subject to the ratemaking
jurisdiction of FERC,
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2001
Western Systems Power Pool
Issued on: May 2, 2001
35
Western Systems Power Pool Original Sheet No. 29
Rate Schedule FERC No. 6
shall be responsible for any FERC filing necessary for it to
implement its performance under this Agreement.
16.2 Each Party shall continue to meet the requirements of Section
16.1 in order to remain a Party to this Agreement
16.3 Being a Party to this Agreement shall not serve as a substitute
for contractual arrangements that may be needed between any Party
which operates a Control Area and any other Party which operates
within that Control Area.
16.4 Any entity that becomes a Party to this Agreement which was not a
party to the experimental Western Systems Power Pool Agreement
shall pay a one time fee of $25,000 under this Agreement in
recognition of prior efforts and costs incurred by the parties to
the experimental Western Systems Power Pool Agreement, which
efforts greatly facilitated development of this Agreement. Such
fee shall be credited to future costs of the Operating Agent
incurred hereunder.
17. RELATIONSHIP OF PARTIES:
17.1 Nothing contained herein or in any Confirmation Agreement shall
be construed to create an association, joint venture, trust, or
partnership, or impose a trust or partnership covenant,
obligation, or liability on or with regard to any one or more of
the Parties. Each Party shall be individually responsible for its
own covenants, obligations, and liabilities under this Agreement
and under any applicable Confirmation Agreement.
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
36
Western Systems Power Pool First Revised Sheet No. 30
Rate Schedule FERC No. 6 Superseding Original Sheet No. 30
17.2 All rights of the Parties are several, not joint. No Party shall
be under the control of or shall be deemed to control another
Party. Except as expressly provided in this Agreement, no Party
shall have a right or power to bind another Party without its
express written consent.
18. NO DEDICATION OF FACILITIES:
Any undertaking by one Party to another Party under any provision
of this Agreement shall not constitute the dedication of the electric
system or any portion thereof of the undertaking Party to the public or
to the other Party, and it is understood and agreed that any such
undertaking under any provision of this Agreement by a Party shall cease
upon the termination of such Party's obligations under this Agreement.
19. NO RETAIL SERVICES:
Nothing contained in this Agreement shall grant any rights to or
obligate any Party to provide any services hereunder directly to or for
retail customers of any Party.
20. THIRD PARTY BENEFICIARIES:
This Agreement shall not be construed to create rights, in, or to
grant remedies to, any third party as a beneficiary of this Agreement or
of any duty, obligation or undertaking established herein except as
provided for in Section 14.
21. LIABILITY AND DAMAGES:
21.1 This Agreement contains express remedies or measures of damages
in Sections 21.3 and 22 for non-performance or default. THE
LIABILITY OF THE NON-PERFORMING OR DEFAULTING PARTY SHALL BE
LIMITED AS SET
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2001
Western Systems Power Pool
Issued on: May 2, 2001
37
Western Systems Power Pool Original Sheet No. 30A
Rate Schedule FERC No. 6
FORTH IN SUCH PROVISIONS, AND ALL OTHER DAMAGES OR REMEDIES ARE
HEREBY WAIVED. Therefore, except as provided in Sections 21.3 and
22, no Party or its directors, members of its governing bodies,
officers or employees shall be liable to any other Party or
Parties for any loss or damage to property, loss of earnings
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2001
Western Systems Power Pool
Issued on: May 2, 2001
38
Western Systems Power Pool Original Sheet No. 31
Rate Schedule FERC No. 6
or revenues, personal injury, or any other direct, indirect, or
consequential damages or injury, or punitive damages, which may
occur or result from the performance or non-performance of this
Agreement (including any applicable Confirmation Agreement),
including any negligence arising hereunder. Any liability or
damages faced by an officer or employee of a Federal agency or by
that agency that would result from the operation of this
provision shall not be inconsistent with Federal law.
21.2 [RESERVED]
21.3 The following damages provision shall apply to transactions under
Service Schedules B and C. For transactions under Service
Schedule A, this damages provision or some other damages
provision will apply only if such a damages provision is agreed
to through a Confirmation Agreement. The damages under this
Section 21.3 apply to a Party's failure to deliver or receive
electric power or energy in violation of the terms of the
Agreement and any Confirmation Agreement. The Contract Quantity
and Contract Price referred to in this Section 21.3 are part of
the agreement between the Parties for which damages are being
calculated under this Section.
(a) If either Party fails to deliver or receive, as the case
may be, the quantities of electric power or energy due
under the Agreement and any Confirmation Agreement
(thereby becoming a "Non-Performing Party" for the
purposes of this Section 21.3), the other party (the
"Performing
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
39
Western Systems Power Pool Original Sheet No. 32
Rate Schedule FERC No. 6
Party") shall be entitled to receive from the
Non-Performing Party an amount calculated as follows
(unless performance is excused by Uncontrollable Forces as
provided in Section 10, the applicable Service Schedule,
or by the Performing Party):
(1) If the amount the Purchaser scheduled or received
in any hour is less than the applicable hourly
Contract Quantity, then the Purchaser shall be
liable for (a) the product of the amount (whether
positive or negative), if any, by which the
Contract Price differed from the Sales Price
(Contract Price - Sales Price) and the amount by
which the quantity received by the Purchaser was
less than the hourly Contract Quantity; plus (b)
the amount of transmission charge(s), if any, for
firm transmission service upstream of the delivery
point, which the Seller incurred to achieve the
Sales Price, less the reduction, if any, in
transmission charge(s) achieved as a result of the
reduction in the Purchaser's schedule or receipt of
electric energy (based on Seller's reasonable
commercial efforts to achieve such reduction). If
the total amounts for all hours calculated under
this paragraph (1) are negative, then neither the
Purchaser nor the Seller shall pay any amount under
this Section 21.3(a)(1).
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
40
Western Systems Power Pool Original Sheet No. 33
Rate Schedule FERC No. 6
(2) If the amount the Seller scheduled or delivered in
any hour is less than the applicable hourly
Contract Quantity, then the Seller shall be liable
for (a) the product of the amount (whether positive
or negative), if any, by which the Replacement
Price differed from the Contract Price (Replacement
Price - Contract Price) and the amount by which the
quantity delivered by the Seller was less than the
hourly Contract Quantity; plus (b) the amount of
transmission charge(s), if any, for firm
transmission service downstream of the delivery
point, which the Purchaser incurred to achieve the
Replacement Price, less the reduction, if any, in
transmission charge(s) achieved as a result of the
reduction in the Seller's schedule or delivery
(based on Purchaser's reasonable commercial effort
to achieve such reduction). If the total amounts
for all hours calculated under this paragraph (2)
are negative, then neither the Purchaser nor the
Seller shall pay any amount under this Section
21.3(a)(2).
(3) The Non-Performing Party shall pay any amount due
from it under this section within the billing
period as specified in Section 9 of this Agreement
or agreed to in the applicable Confirmation
Agreement if the Parties agreed to revise the
billing period in Section 9.
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
41
Western Systems Power Pool Original Sheet No. 34
Rate Schedule FERC No. 6
(b) The Parties agree that the amounts recoverable under this
Section 21.3 are a reasonable estimate of loss and not a
penalty, and represent the sole and exclusive remedy for
the Performing Party. Such amounts are payable for the
loss of bargain and the loss of protection against future
risks.
(c) Each Party agrees that it has a duty to mitigate damages
in a commercially reasonable manner to minimize any
damages it may incur as a result of the other Party's
performance or non-performance of this Agreement.
(d) In the event the Non-Performing Party disputes the
calculation of the damages under this Section 21.3, the
Non-Performing Party shall pay the full amount of the
damages as required by Section 9 of this Agreement to the
Performing Party. After informal dispute resolution as
required by Section 34.1, any remaining dispute involving
the calculation of the damages shall be referred to
binding dispute resolution as provided by Section 34.2 of
this Agreement. If resolution or agreement results in
refunds or the need for refunds to the Non-Performing
Party, such refunds shall be calculated in accordance with
Section 9.4 of this Agreement.
22. DEFAULT OF TRANSACTIONS UNDER THIS AGREEMENT AND CONFIRMATION
AGREEMENTS:
22.1 EVENTS OF DEFAULT
An "Event of Default" shall mean with respect to a Party
("Defaulting Party"):
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
42
Western Systems Power Pool First Revised Sheet No. 35
Rate Schedule FERC No. 6 Superseding Original Sheet No. 35
(a) the failure by the Defaulting Party to make, when due, any
payment required pursuant to this Agreement or
Confirmation Agreement if such failure is not remedied
within two (2) Business Days after written notice of such
failure is given to the Defaulting Party by the other
Party ("the Non-Defaulting Party"). The Non-Defaulting
Party shall provide the notice by facsimile to the
designated contact person for the Defaulting Party and
also shall send the notice by overnight delivery to such
contact person; or
(b) the failure by the Defaulting Party to provide clear and
good title as required by Section 33.3, or to have made
accurate representations and warranties as required by
Section 37 and such failure is not cured within five (5)
Business Days after written notice thereof to the
Defaulting Party; or
(c) The institution, with respect to the Defaulting Party, by
the Defaulting Party or by another person or entity of a
bankruptcy, reorganization, moratorium, liquidation or
similar insolvency proceeding or other relief under any
bankruptcy or insolvency law affecting creditor's rights
or a petition is presented or instituted for its
winding-up or liquidation; or
(d) The failure by the Defaulting Party to provide adequate
assurances of its ability to perform all of its
outstanding material obligations to the Non-Defaulting
Party under the Agreement or Confirmation Agreement
Issued by: Michael E. Small, General Counsel to Effective: February 1, 2001
Western Systems Power Pool
Issued on: December 1, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
43
Western Systems Power Pool First Revised Sheet No. 36
Rate Schedule FERC No. 6 Superseding Original Sheet No. 36
pursuant to Section 27 of this Agreement or any substitute
or modified provision in the Confirmation Agreement.
(e) With respect to its Guarantor, if any:
(i) if a material representation or warranty made by a
Guarantor in connection with this Agreement, or any
transaction entered into hereunder, is false or
misleading in any material respect when made or
when deemed made or repeated; or
(ii) the failure of a Guarantor to make any payment
required or to perform any other material covenant
or obligation in any guarantee made in connection
with this Agreement, including any transaction
entered into hereunder, and such failure shall not
be remedied within three (3) Business Days after
written notice; or
(iii) a Guarantor becomes Bankrupt;
(iv) the failure, without written consent of the other
Party, of a Guarantor's guarantee to be in full
force and effect for purposes of this Agreement
(other than in accordance with its terms) prior to
the satisfaction of all obligations of such Party
under each transaction to which such guarantee
shall relate; or
(v) a Guarantor shall repudiate, disaffirm, disclaim,
or reject, in whole or in part, or challenge the
validity of, any guarantee.
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2001
Western Systems Power Pool
Issued on: May 2, 2001
44
Western Systems Power Pool Original Sheet No. 36A
Rate Schedule FERC No. 6
22.2 REMEDIES FOR EVENTS OF DEFAULT
If an Event of Default occurs, the Non-Defaulting Party
shall possess the right to terminate all transactions between the
Parties under this Agreement upon written notice (by facsimile or
other reasonable means) to the Defaulting Party, such notice of
termination to be effective immediately upon receipt. If the
Non-Defaulting Party fails to exercise this right of termination
within thirty (30) days following the time when the Event of
Default becomes known (or more than thirty days if the
Non-Defaulting and Defaulting Parties agree to an extension),
then such right of termination shall no longer be available to
the Non-Defaulting Party as a remedy for the Event(s) of Default.
The Non-Defaulting Party terminating transaction(s) under this
Section 22.2 may do so without making a filing at FERC.
Upon termination, the Non-Defaulting Party shall liquidate
all transactions as soon as practicable, provided that in no
event will the Non-Defaulting Party be allowed to liquidate
Service Schedule A transactions. The payment associated with
termination ("Termination Payment") shall be calculated in
accordance with this Section 22.2 and Section 22.3. The
Termination Payment shall be the sole and exclusive remedy for
the Non-Defaulting Party for each terminated transaction
("Terminated Transaction") for the time period beginning at the
time notice of termination under this Section 22 is received.
Prior to receipt
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2001
Western Systems Power Pool
Issued on: May 2, 2001
45
Western Systems Power Pool Original Sheet No. 37
Rate Schedule FERC No. 6
of such notice of termination by the Defaulting Party, the
Non-Defaulting Party may exercise any remedies available to it
under Section 21.3 of this Agreement or Confirmation
Agreement(s), and any other remedies available to it at law or
otherwise.
Upon termination, the Non-Defaulting Party may withhold
any payments it owes the Defaulting Party for any obligations
incurred prior to termination under this Agreement or
Confirmation Agreement(s) until the Defaulting Party pays the
Termination Payment to the Non-Defaulting Party. The
Non-Defaulting Party shall possess the right to set-off the
amount due it under this Section 22 by any such payments due the
Defaulting Party as provided in Section 22.3(d).
22.3 LIQUIDATION CALCULATION OPTIONS
The Non-Defaulting Party shall calculate the Termination
Payment as follows:
(a) The Gains and Losses shall be determined by comparing the
value of the remaining term, transaction quantities, and
transaction prices under each Terminated Transaction had
it not been terminated to the equivalent quantities and
relevant market prices for the remaining term either
quoted by a bona fide third-party offer or which are
reasonably expected to be available in the market under a
replacement contract for each Terminated Transaction. To
ascertain the market prices of a replacement contract, the
Non-Defaulting Party may consider, among other valuations,
quotations
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
46
Western Systems Power Pool Original Sheet No. 38
Rate Schedule FERC No. 6
from leading dealers in energy contracts, any or all of
the settlement prices of the NYMEX power futures contracts
(or NYMEX power options contracts in the case of
Physically-Settled Options) and other bona fide third
party offers, all adjusted for the length of the remaining
term and differences in transmission. It is expressly
agreed that the Non-Defaulting Party shall not be required
to enter into replacement transactions in order to
determine the Termination Payment.
(b) The Gains and Losses calculated under paragraph (a) shall
be discounted to present value using the Present Value
Rate as of the time of termination (to take account to the
period between the time notice of termination was
effective and when such amount would have otherwise been
due pursuant to the relevant transaction). The "Present
Value Rate" shall mean the sum of 0.50% plus the yield
reported on page "USD" of the Bloomberg Financial Markets
Services Screen (or, if not available, any other
nationally recognized trading screen reporting on-line
intraday trading in United States government securities)
at 11:00 a.m. (New York City, New York time) for the
United States government securities having a maturity that
matches the average remaining term of the Terminated
Transactions; and
(c) The Non-Defaulting Party shall set off or aggregate, as
appropriate, the Gains and Losses (as calculated in
Section 22.3(a)) and Costs and notify
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
47
Western Systems Power Pool Original Sheet No. 39
Rate Schedule FERC No. 6
the Defaulting Party. If the Non-Defaulting Party's
aggregate Losses and Costs exceed its aggregate Gains, the
Defaulting Party shall, within three (3) Business Days of
receipt of such notice, pay the Termination Payment to the
Non-Defaulting Party, which amount shall bear interest at
the Present Value rate from the time notice of termination
was received until paid. If the Non-Defaulting Party's
aggregate Gains exceed its aggregate Losses and Costs, the
Non-Defaulting Party, after any set-off as provided in
paragraph (d), shall pay the remaining amount to the
Defaulting Party within three (3) Business Days of the
date notice of termination was received including interest
at the Present Value from the time notice of termination
was received until the Defaulting Party receives payment.
(d) The Non-Defaulting Party shall aggregate or set off, as
appropriate, at its election, any or all other amounts
owing between the Parties (discounted at the Present Value
Rate) under this Agreement and any Confirmation Agreements
against the Termination Payment so that all such amounts
are aggregated and/or netted to a single liquidated
amount. The net amount due from any such liquidation shall
be paid within three (3) Business Days following the date
notice of termination is received.
If the Defaulting Party disagrees with the calculation of
the Termination Payment and the Parties cannot otherwise resolve
their differences, the calculation issue shall be submitted to
informal dispute resolution as provided in Section 34.1
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
48
Western Systems Power Pool Original Sheet No. 40
Rate Schedule FERC No. 6
of this Agreement and thereafter binding dispute resolution
pursuant to Section 34.2 if the informal dispute resolution does
not succeed in resolving the dispute. Pending resolution of the
dispute, the Defaulting Party shall pay the full amount of the
Termination Payment calculated by the Non-Defaulting Party within
three (3) Business Days of receipt of notice as set forth in
Section 33.2(c) subject to the Non-Defaulting Party refunding,
with interest, pursuant to Section 9.4, any amounts determined to
have been overpaid.
For purposes of this Section 22.3:
(i) "Gains" means the economic benefit (exclusive of Costs),
if any, resulting from the termination of the Terminated
Transactions, determined in a commercially reasonable
manner as calculated in accordance with this Section 22.3;
(ii) "Losses" means the economic loss (exclusive of Costs), if
any, resulting from the termination of the Terminated
Transactions, determined in a commercially reasonable
manner as calculated in accordance with this Section 22.3;
(iii) "Costs" means brokerage fees, commissions and other
similar transaction costs and expenses reasonably incurred
in terminating any specifically related arrangements which
replace a Terminated Transaction, transmission and
ancillary service costs associated with Terminated
Transactions, and reasonable attorneys' fees, if any,
incurred in connection
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
49
Western Systems Power Pool Original Sheet No. 41
Rate Schedule FERC No. 6
with the Non-Defaulting Party enforcing its rights with
regard to the Terminated Transactions. The Non-Defaulting
Party shall use reasonable efforts to mitigate or
eliminate these Costs.
(iv) In no event, however, shall a Party's Gains, Losses or
Costs include any penalties or similar charges imposed by
the Non-Defaulting Party.
22A. DEFAULT IN PAYMENT OF WSPP OPERATING COSTS:
22A.1 A Party shall be deemed to be in default in payment of its
share of WSPP operating costs pursuant to Section 7 of
this Agreement, if any, when payment is not received
within ten (10) days after receipt of written notice. A
default by any Party in such payment obligations shall be
cured by payment of all overdue amounts together with
interest accrued at the rate of one percent (1%) per
month, or the maximum interest rate permitted by law, if
any, whichever is less, prorated by days from the due date
to the date the payment curing the default is made unless
and until the Executive Committee shall determine another
rate.
22A.2 A defaulting Party, which is in default under Section
22.A1, shall be liable for all costs, including costs of
collection and reasonable attorney fees, plus interest as
provided in Section 22.A1 hereof.
22A.3 The rights under this Agreement of a Party which is in
default of its obligation to pay operating costs under
this Agreement for a period of three (3) months or more
may be revoked by a vote of the non-defaulting
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
50
Western Systems Power Pool Original Sheet No. 42
Rate Schedule FERC No. 6
Parties' representatives on the Executive Committee
consistent with Section 8.3. The defaulting Party's rights
shall not be revoked, however, unless said Party has
received at least thirty (30) days written notice of the
non-defaulting Parties' intent to revoke such rights. Said
notice shall state the date on which the revocation of
rights shall become effective if the default is not cured
and shall state all actions which must be taken or amounts
which must be paid to cure the default. This provision
allowing the non-defaulting Parties to revoke such rights
is in addition to any other remedies provided in this
Agreement or at law and shall in no way limit the
non-defaulting Parties' ability to seek judicial
enforcement of the defaulting Party's obligations to pay
its share of the operating costs under this Agreement.
Upon the effective date of such revocation of rights, the
defaulting party shall not be allowed to enter into any
new transactions under this Agreement. The defaulting
party under the Agreement or any Confirmation Agreements
shall be required to carry out all obligations that
existed prior to the effective date of such revocation. If
a defaulting Party's rights under this Agreement have been
revoked, the Executive Committee may restore that Party's
rights upon the defaulting Party paying all amounts due
and owing under this Agreement.
22A.4 Upon revocation of the rights of a defaulting Party under
this Agreement, Operating Agent costs hereunder shall be
equally shared among the
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
51
Western Systems Power Pool Original Sheet No. 43
Rate Schedule FERC No. 6
remaining Parties. Cost allocation adjustments shall be
retroactive to the date of the default.
23. OTHER AGREEMENTS:
No provision of this Agreement shall preclude any Party from
entering into other agreements or conducting transactions under existing
agreements with other Parties or third parties. This Agreement shall not
be deemed to modify or change any rights or obligations under any prior
contracts or agreements between or among any of the Parties.
24. GOVERNING LAW:
This Agreement and any Confirmation Agreement shall be governed
by and construed in accordance with the laws of the State of Utah,
without regard to the conflicts of laws rules thereof. The foregoing
notwithstanding, (1) if both the Seller and Purchaser are organized
under the laws of Canada, then the laws of the province of the Seller
shall govern, or (2) if the Seller is an agency of or part of the United
States Government, then the laws of the United States of America shall
govern.
25. JUDGMENTS AND DETERMINATIONS:
Whenever it is provided in this Agreement that a Party shall be
the sole judge of whether, to what extent, or under what conditions it
will provide a given service, its exercise of its judgment shall be
final and not subject to challenge. Whenever it is provided that (i) a
service under a given transaction may be curtailed under certain
conditions or circumstances, the existence of which are determined by or
in the judgment of a Party, or (ii) the existence of qualifications for
membership shall be determined by
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
52
Western Systems Power Pool Original Sheet No. 44
Rate Schedule FERC No. 6
the Executive Committee pursuant to Section 16, that Party's or the
Executive Committee's determination or exercise of judgment shall be
final and not subject to challenge if it is made in good faith and not
made arbitrarily or capriciously.
26. COMPLETE AGREEMENT:
This Agreement and any subsequent amendments, including the
Service Schedules and Exhibits incorporated herein, and any Confirmation
Agreement, shall constitute the full and complete agreement of the
Parties with respect to the subject matter hereof, and all prior or
contemporaneous representations, statements, negotiations,
understandings and inducements are fully merged and incorporated in this
Agreement.
27. CREDITWORTHINESS:
Should a Party's creditworthiness, financial responsibility, or
performance viability become unsatisfactory to the other Party in such
other Party's reasonably exercised discretion with regard to any
transaction pursuant to this Agreement and any Confirmation Agreement
(after the transaction is agreed to or begins), the dissatisfied Party
(the "First Party") may require the other Party (the "Second Party") to
provide, at the Second Party's option (but subject to the First Party's
acceptance based upon reasonably exercised discretion), either (1) the
posting of a Letter of Credit, (2) a cash prepayment, (3) the posting of
other acceptable collateral or security by the Second Party, (4) a
Guarantee Agreement executed by a creditworthy entity; or (5) some other
mutually agreeable method of satisfying the First Party. The Second
Party's obligations under this Section 27 shall be limited to a
reasonable estimate of the damages to the First Party
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
53
Western Systems Power Pool Original Sheet No. 45
Rate Schedule FERC No. 6
(consistent with Section 21.3 of this Agreement) if the Second Party
were to fail to perform its obligations. Events which may trigger the
First Party questioning the Second Party's creditworthiness, financial
responsibility, or performance viability include, but are not limited
to, the following:
(1) The First Party has knowledge that the Second Party (or its
Guarantor if applicable) are failing to perform or defaulting
under other contracts.
(2) The Second Party has exceeded any credit or trading limit set out
in the Confirmation Agreement or other agreement between the
Parties.
(3) The Second Party or its Guarantor has debt which is rated as
investment grade and that debt falls below the investment grade
rating by at least one rating agency or is below investment grade
and the rating of that debt is downgraded further by at least one
rating agency.
(4) Other material adverse changes in the Second Party's financial
condition occur.
(5) Substantial changes in market prices which materially and
adversely impact the Second Party's ability to perform under this
Agreement or any Confirmation Agreement occur.
If the Second Party fails to provide such reasonably satisfactory
assurances of its ability to perform a transaction hereunder within
three (3) Business Days of demand therefore, that will be considered an
Event of Default under Section 22 of this Agreement and the First Party
shall have the right to exercise any of the remedies provided for under
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
54
Western Systems Power Pool Original Sheet No. 46
Rate Schedule FERC No. 6
that Section 22. Nothing contained in this Section 27 shall affect any
credit agreement or arrangement, if any, between the Parties.
28. NETTING AND SET-OFF:
28.1 If the Purchaser and the Seller are each required to pay an
amount to each other in the same calendar month for transactions
under this Agreement, then such amounts with respect to each
Party may be aggregated and the Parties may discharge their
obligations to pay through netting of the respective amounts due,
in which case the Party, if any, owing the greater aggregate
amount may pay to the other Party the difference between the
amounts owed. Each Party reserves to itself all rights, set-offs,
counterclaims, and other remedies and defenses (to the extent not
expressly herein waived or denied) which such Party has or may be
entitled to arising from or out of this Agreement and any
applicable Confirmation Agreements. All outstanding transactions
and the obligations to make payments under this Agreement, any
Confirmation Agreement, or any other agreement between the
Parties may be offset against each other, set off, or recouped
therefrom.
28.2 Parties shall net payments (associated with transactions under
this Agreement and Confirmation Agreement) in accordance with
Exhibit A, if such Parties have executed the form attached as
Exhibit A. The Parties obligation to net shall include the
netting of all payments received by the Parties in the same
calendar month. Parties that have executed Exhibit A shall
provide a signed copy of
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
55
Western Systems Power Pool Original Sheet No. 47
Rate Schedule FERC No. 6
Exhibit A to the Parties under this Agreement and indicate on the
WSPP Homepage that they have so executed Exhibit A (once the WSPP
Homepage possesses the necessary capability). If a Party executed
Exhibit A, that Party may withdraw its agreement to net by
providing thirty (30) days notice to all Parties that it is
withdrawing its agreement to net. If a Party indicated its
election to net payments on the WSPP Homepage and that Party
desires to withdraw its agreement to net, that Party shall
provide 30 days notice on the WSPP Homepage of the change in its
election to net and such action shall be sufficient to satisfy
the notice requirement of the preceding sentence. Any such
changes in netting status shall apply beginning 30 days after
notice is provided and only shall apply to transactions agreed to
beginning on or after the date the change in netting status
becomes effective.
28.3 The Parties may by separate agreement either through a
Confirmation Agreement or some other agreement set out specific
terms relating to the implementation of the netting and/or
set-off in addition to or in lieu of Exhibit A.
29. TAXES:
The Contract Price for all transactions under the Service
Schedules shall include full reimbursement for, and the Seller is liable
for and shall pay, or cause to be paid, or reimburse the Purchaser for
if the Purchaser has paid, all taxes applicable to a transaction that
arise prior to the delivery point. If the Purchaser is required to remit
such tax, the amount shall be deducted from any sums due to the Seller.
The Seller shall indemnify,
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
56
Western Systems Power Pool Original Sheet No. 48
Rate Schedule FERC No. 6
defend, and hold harmless the Purchaser from any claims for such taxes.
The Contract Price does not include reimbursement for, and the Purchaser
is liable for and shall pay, cause to be paid, or reimburse the Seller
for if the Seller has paid, all taxes applicable to a transaction
arising at and from the delivery point, including any taxes imposed or
collected by a taxing authority with jurisdiction over the Purchaser.
The Purchaser shall indemnify, defend, and hold harmless the Seller from
any claims for such taxes. Either Party, upon written request of the
other Party, shall provide a certificate of exemption or other
reasonably satisfactory evidence of exemption if either Party is exempt
from taxes, and shall use reasonable efforts to obtain and cooperate
with the other Party in obtaining any exemption from or reduction of any
tax. Taxes are any amounts imposed by a taxing authority associated with
the transaction.
30. CONFIDENTIALITY:
The terms of any transaction under the Service Schedules or any
other information exchanged by the Purchaser and Seller relating to the
transaction shall not be disclosed to any person not employed or
retained by the Purchaser or the Seller or their affiliates, except to
the extent disclosure is (1) required by law, (2) reasonably deemed by
the disclosing Party to be required to be disclosed in connection with a
dispute between or among the Parties, or the defense of any litigation
or dispute, (3) otherwise permitted by consent of the other Party, which
consent shall not be unreasonably withheld, (4) required to be made in
connection with regulatory proceedings (including proceedings relating
to FERC, the United States Securities and Exchange Commission or any
other
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
57
Western Systems Power Pool Original Sheet No. 49
Rate Schedule FERC No. 6
federal, state or provincial regulatory agency); (5) required to comply
with North American Electric Reliability Organization, regional
reliability council, or successor organization requirements; or (6)
necessary to obtain transmission service. In the event disclosure is
made pursuant to this provision, the Parties shall use reasonable
efforts to minimize the scope of any disclosure and have the recipients
maintain the confidentiality of any documents or confidential
information covered by this provision, including, if appropriate,
seeking a protective order or similar mechanism in connection with any
disclosure. This provision shall not apply to any information that was
or is hereafter in the public domain (except as a result of a breach of
this provision).
31. TRANSMISSION TARIFF:
Pursuant to FERC Order No. 888, issued on April 24, 1996, and
FERC orders where applicable, the WSPP Default Transmission Tariff has
been filed and has become effective. The Parties agree to be bound by
the terms of that Tariff for so long as they are Western Systems Power
Pool members.
32. TRANSACTION SPECIFIC TERMS AND ORAL AGREEMENTS:
32.1 The Parties' agreement to transaction specific terms which
constitute the Confirmation Agreement shall be made by one of the
following methods: (1) provision of pertinent information through
written Confirmation Agreements (see Exhibit C for a sample); or
(2) oral conversation, provided that such oral conversation is
recorded electronically. By mutual agreement and consistent with
and pursuant to the provisions of this Section 32, the Parties to
a transaction under
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
58
Western Systems Power Pool First Revised Sheet No. 50
Rate Schedule FERC No. 6 Superseding Original Sheet No. 50
this Agreement may agree to modify any term of this Agreement
which applies to such transaction (but now to provisions
regarding the operation of the WSPP as an organization including
Sections 7 and 8), such agreement to be reflected in a
Confirmation Agreement. Written confirmation shall be required
for all transactions of one week or more. Upon request of the
Purchaser or at the election of the Seller, the Seller shall
provide written confirmation which must be received by the
Purchaser within five Business Days of the date of the agreement
or request. The Purchaser shall have five Business Days from date
of receipt to respond to the confirmation. If the Purchaser does
not respond within that time period, the Seller's written
confirmation shall be considered as accepted and final. If the
Seller fails to provide any required written confirmation within
five Business Days, as described above, then the Purchaser may
submit a written confirmation to the Seller. The Purchaser shall
submit such written confirmation within five Business Days after
the deadline for submitting a written confirmation applicable to
the Seller as set forth above has expired. If the Seller fails to
respond to Purchaser's confirmation within five Business Days,
then the Purchaser's written confirmation shall be considered as
accepted and final. Notwithstanding the foregoing, any failure of
the Seller or the Purchaser to provide written confirmation of
the transaction shall not invalidate any oral agreement of the
Parties. Nor shall any oral agreement of the Parties be
considered invalidated before and during the time period the
confirmation process
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2001
Western Systems Power Pool
Issued on: May 2, 2001
59
Western Systems Power Pool Original Sheet No. 50A
Rate Schedule FERC No. 6
is ongoing and no final Confirmation Agreement under these
procedures or through mutual agreement has been reached.
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2001
Western Systems Power Pool
Issued on: May 2, 2001
60
Western Systems Power Pool Original Sheet No. 51
Rate Schedule FERC No. 6
32.2 The Parties agree not to contest, or assert any defense with
respect to, the validity or enforceability of any agreement to
the terms concerning a specific transaction(s), on the basis that
documentation of such terms fails to comply with the requirements
of any statute that agreements be written or signed. Each Party
consents to the recording by the other Party, without any further
notice, of telephone conversations between representatives of the
Parties, which contain agreements to or discussion concerning the
terms of a specific transaction(s). All such recordings may be
introduced and admitted into evidence for the purpose of proving
agreements to terms, and any objection to such introduction or
admission for such purpose is hereby expressly waived. The terms
documented hereunder, whether stated in a written document or a
recording, are intended by the Parties as a final expression of
their agreement with respect to such terms as are included
therein and may not be contradicted by evidence of any prior
agreement, but may be supplemented by course of dealing,
performance, usage of trade and evidence of consistent additional
mutually agreed-upon terms.
32.3 For individual transactions under the Service Schedules, the
Agreement as it may be modified or supplemented by a Confirmation
Agreement shall bind the Parties and govern the transactions;
provided, however, if the Parties to a transaction do not reach
agreement on such modification or change to a term of the
Agreement, or the Confirmation Agreement is not considered
accepted and final pursuant to Section 32.1, then the term or
terms of the Agreement, which the Parties could not
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
61
Western Systems Power Pool Original Sheet No. 52
Rate Schedule FERC No. 6
reach agreement to modify or change or which are not considered
modified pursuant to Section 32.1, shall apply to that
transaction. In the event of a conflict between a binding and
effective Confirmation Agreement and this Agreement, the
Confirmation Agreement shall govern.
32.4 The Seller shall not be required to file written confirmations
with FERC except as provided in the Service Schedules.
33. PERFORMANCE, TITLE, AND WARRANTIES FOR TRANSACTIONS UNDER SERVICE
SCHEDULES:
33.1 Performance
33.1.1 The Seller shall deliver to the delivery point(s) as
agreed to in the applicable Confirmation Agreement and
sell to the Purchaser in accordance with the terms of the
Agreement and such Confirmation Agreement.
33.1.2 The Purchaser shall receive and purchase the Contract
Quantity, as agreed to by the Parties in the applicable
Confirmation Agreement, at the delivery point(s) and
purchase from the Seller in accordance with the terms of
the Agreement and such Confirmation Agreement.
33.2 Title and Risk of Loss
Title to and risk of loss of the electric energy shall
pass from the Seller to the Purchaser at the delivery point
agreed to in the Confirmation Agreement; provided, however, with
regard to federal agencies or parts of the United States
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
62
Western Systems Power Pool Original Sheet No. 53
Rate Schedule FERC No. 6
Government, title to and risk of loss shall pass to Purchaser to
the extent permitted by and consistent with applicable law.
33.3 Warranties
The Seller warrants that it will transfer to the Purchaser
good title to the electric energy sold under the Agreement and
any Confirmation Agreement, free and clear of all liens, claims,
and encumbrances arising or attaching prior to the delivery point
and that Seller's sale is in compliance with all applicable laws
and regulations. THE SELLER HEREBY DISCLAIMS ALL OTHER
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
34. DISPUTE RESOLUTION:
34.1 INFORMAL DISPUTE RESOLUTION
Before binding dispute resolution or any other form of
litigation may proceed, any dispute between the Parties to a
transaction under this Agreement first shall be referred to
nonbinding mediation. The Parties shall attempt to agree upon a
mediator from a list of ten (10) candidates provided by the
Chairman of the WSPP Operating Committee or his or her designee.
If the Parties are unable to agree, then the Chairman or the
designee shall appoint a mediator for the dispute. Neither the
mediator nor the person involved on behalf of the WSPP in
developing a list of mediators for the Parties to choose from or
in selecting the
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
63
Western Systems Power Pool Original Sheet No. 54
Rate Schedule FERC No. 6
mediator (if the Parties are unable to do so) shall possess a
direct or indirect interest in either Party or the subject matter
of the mediation. The WSPP shall establish procedures for the
appointment of mediators and the conduct of mediation and those
procedures shall apply to the mediation.
34.2 BINDING DISPUTE RESOLUTION
The Parties to a dispute may elect binding dispute
resolution using the following process unless binding arbitration
of certain disputes is required under this Agreement in which
event the Parties shall use the process set forth in this Section
34.2 to resolve such disputes, unless the Parties otherwise
agree:
(a) WSPP Dispute Resolution: A Party to a dispute (if binding
dispute resolution is required) or all Parties to a
dispute (if agreement of the Parties is required for
binding dispute resolution) may initiate binding dispute
resolution under WSPP procedures by notifying the Chairman
of the WSPP Operating Committee or his or her designee.
The Chairman or his or her designee shall provide the
Parties with a list of ten (10) eligible arbitrators.
Within ten (10) days of receiving the list, the Parties
shall agree on a single arbitrator from the list to
conduct the arbitration, or notify the Chairman of the
Operating Committee or the designee of their inability to
reach agreement. If notified of the Parties inability to
reach agreement, then the Chairman or the designee shall
choose the arbitrator from the list within five (5) days.
Neither the arbitrator nor the person
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
64
Western Systems Power Pool Original Sheet No. 55
Rate Schedule FERC No. 6
involved on behalf of the WSPP in developing a list of
arbitrators for the Parties to choose from or in selecting
the arbitrator (if the Parties are unable to do so) shall
possess a direct or indirect interest in either Party or
the subject matter of the arbitration. The Procedures to
be used for this arbitration shall follow the arbitration
procedures which shall be developed and maintained by the
WSPP and the procedures will be generally consistent with
the commercial arbitration rules of the American
Arbitration Association though not involving the
Association.
If the Parties agree to binding dispute resolution under
this Section 34.2, each Party understands that it will not be
able to bring a lawsuit concerning any dispute that may arise
which is covered by this arbitration provision. Notwithstanding
the foregoing, nothing herein is intended to waive any provision
of the Federal Arbitration Act, 9 U.S.C. Section 1, et. seq., or
any right under state statute or common law to challenge an
arbitration award or to prevent any action to enforce any
arbitration award.
A Party's liability and damages under any arbitration
award resulting from the process set forth in this Section 34.2
shall be limited as provided in this Agreement or in any
Confirmation Agreement.
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
65
Western Systems Power Pool Original Sheet No. 56
Rate Schedule FERC No. 6
34.3 COSTS
Each Party shall be responsible for its own costs and
those of its counsel and representatives. The Parties shall
equally divide the costs of the arbitrator or mediator and the
hearing.
34.4 CONFIDENTIALITY
Any arbitration or mediation under this Section 34 shall
be conducted on a confidential basis and not disclosed, including
any documents or results which shall be considered confidential,
unless the Parties otherwise agree or such disclosure is required
by law.
35. FORWARD CONTRACTS:
The Parties acknowledge and agree that all transactions under the
Agreement and Confirmation Agreement(s) are forward contracts and that
the Parties are forward contract merchants, as those terms are used in
the United States Bankruptcy Code. The Parties acknowledge and agree
that all of their transactions, together with this Agreement and the
related Confirmation Agreement(s) form a single, integrated agreement,
and agreements and transactions are entered into in reliance on the fact
that the agreements and each transaction form a single agreement between
the Parties.
36. TRADE OPTION EXCEPTION
The Parties intend that any Physically Settled Option under this
Agreement shall qualify under the trade option exception, 17 C.F.R.
Section 32.4. Accordingly, each Party buying or selling a Physically
Settled Option agrees and warrants that any such option
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
66
Western Systems Power Pool Original Sheet No. 57
Rate Schedule FERC No. 6
shall be offered only to a provider, user, or merchant and that the
entities entering into the options are doing so solely for purposes
related to their business.
37. ADDITIONAL REPRESENTATIONS AND WARRANTIES:
Each Party warrants and represents to the other(s) that it
possesses the necessary corporate, governmental and legal authority,
right and power to enter into and agree to the applicable Confirmation
Agreement for a transaction or transactions and to perform each and
every duty imposed, and that the Parties' agreement to buy and sell
power under this Agreement and the Confirmation Agreement represents a
contract. Each Party also warrants and represents to the other(s) that
each of its representatives executing or agreeing through a Confirmation
Agreement to a transaction under this Agreement is authorized to act on
its behalf.
Each Party further warrants and represents that entering into and
performing this Agreement and any applicable Confirmation Agreement does
not violate or conflict with its Charter, By-laws or comparable
constituent document, any law applicable to it, any order or judgment of
any court or other agency of government applicable to it or any
agreement to which it is a party and that this Agreement and applicable
Confirmation Agreement(s), constitute a legal, valid and binding
obligation enforceable against such Party in accordance with the terms
of such agreements.
Each Party also represents that it is solvent and that on each
delivery this representation shall be deemed renewed unless notice to
the contrary is given in writing by the Purchaser to the Seller before
delivery.
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
67
Western Systems Power Pool Original Sheet No. 58
Rate Schedule FERC No. 6
38. AMENDMENT:
38.1 This Agreement may be amended upon the submission to FERC and
acceptance by FERC of that amendment. The Parties through the
Executive Committee shall direct the filing of any amendments.
The Parties to this Agreement agree to bound by this Agreement as
it may be amended, provided that the Parties possess the right to
challenge any amendments at FERC and to exercise any applicable
withdrawal rights under this Agreement.
38.2 Unless otherwise stated in the amendment, all amendments shall
apply only to new transactions entered into or agreed to on or
after the effective date of the amendment. Preexisting agreements
and transactions shall operate under the version of the WSPP
Agreement effective at the time of the agreement for the
transaction unless the Parties to a transaction or transactions
mutually agree otherwise.
38.3 An agreement modifying this Agreement or a Confirmation Agreement
for a transaction needs no consideration to be binding.
39. EXECUTION BY COUNTERPARTS:
This Agreement may be executed in any number of counterparts, and
upon execution by all Parties, each executed counterpart shall have the
same force and effect as an original instrument and as if all Parties
had signed the same instrument. Any signature page of this Agreement may
be detached from any counterpart of this Agreement without impairing the
legal effect of any signatures thereon, and may be attached to another
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
68
Western Systems Power Pool Original Sheet No. 59
Rate Schedule FERC No. 6
counterpart of this Agreement identical in form hereto but having
attached to it one or more signature pages.
40. WITNESS:
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed by their duly authorized representative as of the 27th day of
July, 1991 (or as of the date of execution of this Agreement by each
Party's duly authorized representation, in the case of any Party that
becomes a signatory to this Agreement subsequent to July 27, 1991).
By:________________________________
Name:
Title:
69
Western Systems Power Pool Original Sheet No. 60
Rate Schedule FERC No. 6
EXHIBIT A
NETTING
Each Party that executes this Exhibit A to the Agreement agrees to net
payments for transactions under WSPP Service Schedule A, B, and C with any other
Party or Parties which also have agreed to net payments by executing a copy of
this Exhibit A. The Party executing this Exhibit A shall indicate below when it
desires that its agreement to net becomes effective. A Party agreeing to net
under this Exhibit A shall comply with the provisions of Section 28.2 of the
Agreement. Defined terms used herein are as defined in the WSPP Agreement.
Netting shall be done in accordance with the following provision:
If the Purchaser and Seller are each required to pay an amount on
the payment due date in the same month for transactions under the
Agreement or Confirmation Agreement, then such amounts with
respect to each Party will be aggregated and the Parties will
discharge their obligations to pay through netting, in which case
the Party owing the greater aggregate amount will pay to the
other party the difference between the amounts owed consistent
with the payment times in Section 9.2 of the Agreement, unless
the Parties have otherwise agreed to a different payment time as
allowed by the Agreement. Each Party reserves to itself all
rights, set-offs, counterclaims and other remedies and/or
defenses to which it is or may be entitled, arising from or out
of the Agreement. All outstanding payments between the Parties
which are to be netted pursuant to this Exhibit A for
transactions under WSPP Service Schedule A, B, and C shall be
offset against each other or set off or recouped therefrom.
- ---------------------------------- --------------------------
Name of Authorized Representative Effective Date for Netting
- ----------------------------------
Name of WSPP Member
- ---------------------------------- --------------------------
Signature of Authorized Date of Execution
Representative
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
70
Western Systems Power Pool Original Sheet No. 61
Rate Schedule FERC No. 6
[WSPP SAMPLE FORM -- PARTIES ARE FREE TO USE THIS OR DISREGARD IT.]
EXHIBIT B
FORM OF COUNTERPARTY GUARANTEE AGREEMENT
This Guarantee Agreement (this "Guarantee"), dated, as of [__________],
199[__], is made and entered into by [_____________], a [__________] corporation
("Guarantor").
WITNESSETH:
WHEREAS, [___________________] (the "Company") may enter into
transactions involving power sales under the Western Systems Power Pool ("WSPP
Agreement") and related confirmation agreements1 (collectively "Agreements")
with [Company Name] ("Guaranteed Party"); and
WHEREAS, Guarantor will directly or indirectly benefit from the
Agreements.
NOW THEREFORE, in consideration of the Guaranteed Party agreeing to
conduct business with Company, Guarantor hereby covenants and agrees as follows:
1. GUARANTY. Subject to the provisions hereof, Guarantor hereby
irrevocably and unconditionally guarantees the timely payment when due of the
obligations of Company (the "Obligations") to the Guaranteed Party in accordance
with the Agreements. If Company fails to pay any Obligations, Guarantor shall
promptly pay to the Guaranteed Party no later than the next Business Day (as
defined in the WSPP Agreement), after notification, the amount due in the same
currency and manner provided for in the Agreements. This Guarantee shall
constitute a guarantee of payment and not of collection. Guarantor shall have no
right of subrogation with respect to any payments it makes under this Guarantee
until all of the Obligations of Company to the Guaranteed Party are paid in
full. The liability of Guarantor under the Guarantee shall be subject to the
following:
(a) Guarantor's liability hereunder shall be and is specifically
limited to payments expressly required to be made in accordance with the
Agreements (even if such payments are deemed to be damages) and, except to the
extent specifically provided in the Agreements, in no event shall Guarantor be
subject hereunder to consequential, exemplary, equitable, loss of profits,
punitive, tort, or any other even if such fees together with the payments
- ----------
1
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
71
Western Systems Power Pool Original Sheet No. 62
Rate Schedule FERC No. 6
exceed the cap in Section 1(b), damages, costs, except that Guarantor shall be
required to pay reasonable attorney fees.
(b) The aggregate liability of the Guarantor shall not exceed
[_____] Million U.S. Dollars [___________].
2. DEMANDS AND NOTICE. If Company fails or refuses to pay any
Obligations, the Guaranteed Party may make a demand upon Guarantor (hereinafter
referred to as a "Payment Demand"). A Payment Demand shall be in writing and
shall reasonably and briefly specify in what manner and what amount Company has
failed to pay and an explanation of why such payment is due, with a specific
statement that the Guaranteed Party is calling upon Guarantor to pay under this
Guarantee. A Payment Demand satisfying the foregoing requirements shall be
deemed sufficient notice to Guarantor that it must pay the Obligations. A single
written Payment Demand shall be effective as to any specific default during the
continuance of such default, until Company or Guarantor has cured such default,
and additional Payment Demands concerning such default shall not be required
until such default is cured.
3. REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants
that:
(a) it is a corporation duly organized and validly existing under
the laws of the State of [_____________] and has the corporate power and
authority to execute, deliver and carry out the terms and provisions of this
Guarantee;
(b) no authorization, approval, consent or order of, or registration
or filing with, any court or other governmental body having jurisdiction over
Guarantor is required on the part of Guarantor for the execution and delivery of
this Guarantee; and
(c) this Guarantee constitutes a valid and legally binding agreement
of Guarantor enforceable against Guarantor in accordance with its terms, except
as the enforceability of this Guarantee may be limited by the effect of any
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally and by general principles of equity.
4. EFFECT OF BANKRUPTCY BY COMPANY. The Guarantor's obligation to pay
under this Guarantee shall not be affected in any way by the institution with
respect to the Company of a bankruptcy, reorganization, moratorium or similar
insolvency proceeding or other relief under any bankruptcy or insolvency law
affecting creditor's rights or a petition for the Company's winding-up or
liquidation.
5. AMENDMENT. No term or provision of this Guarantee shall be amended,
modified, altered, waived, or supplemented except in a writing signed by the
Guarantor and Guaranteed Party hereto.
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
72
Western Systems Power Pool Original Sheet No. 63
Rate Schedule FERC No. 6
6. WAIVERS. Guarantor hereby waives (a) notice of acceptance of this
Guarantee; (b) presentment and demand concerning the liabilities of Guarantor,
except as expressly hereinabove set forth; and (c) any right to require that any
action or proceeding be brought against Company or any other person, or except
as expressly hereinabove set forth, to require that the Guaranteed Party seek
enforcement of any performance against Company or any other person, prior to any
action against Guarantor under the terms hereof.
Except as to applicable statutes of limitation, no delay of the
Guaranteed Party in the exercise of, or failure to exercise, any rights
hereunder shall operate as a waiver of such rights, a waiver of any other rights
or a release of Guarantor from any obligations hereunder.
Guarantor consents to the renewal, compromise, extension, acceleration
or other changes in the time of payment of or other changes in the terms of the
Obligations, or any part thereof or any changes or modifications to the terms of
the Agreements.
Guarantor may terminate this Guarantee by providing written notice of
such termination to the Guaranteed Party and upon the effectiveness of such
termination, Guarantor shall have no further liability hereunder, except as
provided in the last sentence of this paragraph. No such termination shall be
effective until fifteen (15) Business Days after receipt by the Guaranteed Party
of such termination notice. No such termination shall affect Guarantor's
liability with respect to any obligations arising under any transaction entered
into prior to the time the termination is effective, which transaction shall
remain guaranteed pursuant to the terms of this Guarantee.
7. ASSIGNMENT. The Guarantor shall not assign this Guarantee without the
express written consent of the Guaranteed Party. The Guaranteed Party shall be
entitled to assign its rights under this Agreement in its sole discretion.
8. NOTICE. Any Payment Demand, to the Guaranteed Party or the Guarantor
notice, request, instruction, correspondence or other document to be given
hereunder by any party to another (herein collectively called "Notice") shall be
in writing and delivered personally or mailed by certified mail, postage prepaid
and return receipt requested, or by telegram or telecopier, as follows:
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
73
Western Systems Power Pool Original Sheet No. 64
Rate Schedule FERC No. 6
To [Name of Guaranteed Party] ____________________________
_______________________________
_______________________________
Attn: ________________________
Fax No.: (___) ________________
To Guarantor: _______________________________
_______________________________
_______________________________
Attn: ________________________
Fax No.: (___) ________________
Notice given by personal delivery or mail shall be effective upon actual
receipt. Notice given by telegram or telecopier shall be effective upon actual
receipt if received during the recipient's normal business hours, or at the
beginning of the recipient's next business day after receipt if not received
during the recipient's normal business hours. All Notices by telegram or
telecopier shall be confirmed promptly after transmission in writing by
certified mail or personal delivery. Any party may change any address to which
Notice is to be given to it by giving notice as provided above of such change of
address.
8. MISCELLANEOUS. THIS GUARANTEE SHALL IN ALL RESPECTS BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF [State], WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. This Guarantee shall be binding upon
Guarantor, its successors and assigns and inure to the benefit of and be
enforceable by the Guaranteed Party, its successors and assigns. The Guarantee
embodies the entire agreement and understanding between Guarantor and the
Guaranteed Party and supersedes all prior agreements and understandings relating
to the subject matter hereof. The headings in this Guarantee are for purposes of
reference only, and shall not affect the meaning hereof. This Guarantee may be
executed in any number of counterparts, each of which shall be an original, but
all of which together shall constitute one instrument.
EXECUTED as of the day and year first above written.
[_____________________________]
By: __________________________
Name: ________________________
Title: _______________________
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
74
Western Systems Power Pool First Revised Sheet No. 65
Rate Schedule FERC No. 6 Superseding Original Sheet No. 65
EXHIBIT C
SAMPLE FORM FOR CONFIRMATION
1. TRANSACTION SPECIFIC AGREEMENTS
The undersigned Parties agree to sell and purchase electric
energy, or a Physically-Settled Option, pursuant to the WSPP Agreement
as it is supplemented and modified below:
(a) Seller:__________________________________
(b) Purchaser: __________________________________
(c) Period of Delivery: From __\__\__ To __\__\__
(d) Schedule (Days and Hours): __________________
(e) Delivery Rate:________________________________
(f) Delivery Point(s): __________________________
(g) Type of Service (Check as Applicable)
Service Schedule A _________
Service Schedule B _________
Service Schedule C _________
Physically-Settled Option Service Schedule B ______
Physically-Settled Option Service Schedule C ______
(h) Contract Quantity: ________ Total MWhrs.
(i) Contract or Strike Price: _____________________
(j) Transmission Path for the Transaction (If Applicable):
(k) Date of Agreement if different: _____________
(l) Additional Information for Physically-Settled Options
(i) Option Type: Put __________ Call______________
(ii) Option Style: __________
(iii) Exercise Date or Period: __________
(iv) Premium: __________
(v) Premium Payment Date: _________
(vi) Method for providing notice of exercise _________________
(m) Special Terms and Exceptions:
See Attachment A
[Special Terms and Exceptions shall be shown on an Attachment to this
Confirmation.]
- ------------------------------ ---------------------------
Name of Trader for Purchaser Name of Trader for Seller
Issued by: Michael E. Small, General Counsel to Effective: February 1, 2001
Western Systems Power Pool
Issued on: December 1, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
75
Western Systems Power Pool Original Sheet No. 66
Rate Schedule FERC No. 6
- --------------------------- ---------------------------
Authorized Signature Authorized Signature
for Purchaser for Seller
- --------------------------- ---------------------------
Date Date
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
76
Western Systems Power Pool Original Sheet No. 67
Rate Schedule FERC No. 6
EXHIBIT D
WSPP MEDIATION AND ARBITRATION PROCEDURES
I. MEDIATION
A. INFORMAL MEDIATION. WSPP members with a dispute or a potential
dispute involving transactions under the WSPP Agreement may
request non-binding, informal mediation by contacting the WSPP's
General Counsel and by providing a brief explanation in writing
of the dispute and the remedy being sought. All parties to the
dispute must request this Informal Mediation for it to become
effective. After this contact, a telephonic conference call will
be arranged among the affected WSPP members and the WSPP's
General Counsel, the Chairman of the Operating Committee, and/or
some other independent and knowledgeable person requested by the
Chairman of the Operating Committee to participate. The purpose
of the conference call will be to discuss the issues and to have
an independent person or persons state their views. Best efforts
will be made to set up this conference call within five Business
Days after the WSPP's General Counsel is contacted subject to
accommodating the schedules of all involved. This Informal
Mediation shall be considered as satisfying the Mediation
requirements of Section 34.1 of the WSPP Agreement.
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
77
Western Systems Power Pool Original Sheet No. 68
Rate Schedule FERC No. 6
B. INITIATING FORMAL MEDIATION. A WSPP member which believes that it
possesses a claim against another WSPP member relating to a WSPP
transaction, which is unable to resolve the dispute through
agreement with the other member to the transaction, and which
desires to pursue that claim shall initiate non-binding formal
mediation pursuant to Section 34.1 of the WSPP Agreement. The
member initiating such mediation shall do so by Serving written
notice to the Chairman of the WSPP Operating Committee, the
WSPP's General Counsel, and the other members against which the
claim is directed. Such notice shall state the nature of the
dispute, the remedy sought, and support the claim.
C. RESPONSE TO DOCUMENT INITIATING FORMAL MEDIATION. Within eight
days, the member or members against which the claim is directed
may provide a response to the notice which shall be Served on the
member which initiated the Mediation, the Chairman of the WSPP's
Operating Committee, and the WSPP's General Counsel.
D. CHOOSING THE MEDIATOR. The Mediator shall be chosen in accordance
with the procedures set forth in Section 34.1 of the WSPP
Agreement. Each Party may suggest persons to be included on the
list of Mediators to be presented to the Parties provided that
these suggested persons shall be provided to the WSPP
Representative together with relevant personal histories within
two Business Days
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
78
Western Systems Power Pool Original Sheet No. 69
Rate Schedule FERC No. 6
of the date by which time the list of Mediators is to be sent
out. The WSPP Representative shall allow at least one person
suggested by each Party to be added to the list of Mediators. A
brief personal history of each person on the list of potential
mediators shall be provided to the Parties, with that history
showing the person's employment over the last five years and any
other relevant facts. The WSPP Representative shall provide the
Parties with the list of Mediators within five days of receipt of
notice of the dispute. The Parties then shall have five days in
which to reach agreement on a Mediator or inform the WSPP
Representative that they were unable to reach agreement in which
event the WSPP Representative shall appoint the Mediator
consistent with Section 34.1 of the WSPP Agreement. Upon request
of the Parties for expedition, the WSPP Representative shall use
best efforts to expedite this process.
E. LOCATION FOR THE FORMAL MEDIATION. The Parties shall agree on a
location for the Mediation. If the Parties fail to reach
agreement, then the WSPP Representative shall set the location
which shall be convenient for the Parties and the Mediator.
F. TIME FOR THE FORMAL MEDIATION. The Parties shall agree on the
time for the Mediation after consultation with the Mediator if
one has been appointed. If the Parties fail to reach agreement,
then the WSPP Representative shall set the time
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
79
Western Systems Power Pool Original Sheet No. 70
Rate Schedule FERC No. 6
which shall not be more than twenty-one days after the notice
initiating the Mediation is received after consultation with the
Parties and any Mediator.
G. CONDUCT OF THE FORMAL MEDIATION. The Mediator shall have the
ability to conduct the Mediation in any manner which the Mediator
believes is appropriate to facilitate resolution of the dispute.
Each Party shall have at least one representative with the
authority to settle the dispute present at the Mediation. The
Mediation shall be private and confidential and the Mediator
shall have the authority to exclude any person not directly
involved unless the Parties agree otherwise in writing. At the
Mediation, each Party shall have the right to make a brief
presentation of its case and to question the other Party. Each
Party also may be represented by counsel.
H. REPLACEMENT OF THE MEDIATOR. If the Mediator resigns, withdraws
or is no longer able to serve, then the Parties shall have two
Business Days in which to agree on a new Mediator. If the Parties
are unable to agree within such time, the WSPP Representative
shall appoint a replacement Mediator from the list used to select
the first Mediator within two Business Days after being notified
that the Parties are unable to agree. The dates and deadlines in
this section may require modification if the mediator is
replaced. Any extensions shall be as limited as possible.
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
80
Western Systems Power Pool Original Sheet No. 71
Rate Schedule FERC No. 6
II. ARBITRATION
A. INITIATING ARBITRATION. A WSPP member which initiates Arbitration
pursuant to Section 34.2 of the WSPP Agreement shall do so by
Serving the Chairman of the WSPP Operating Committee, the WSPP
General Counsel and the members against which the claim is
directed with written notice of its demand for arbitration. Such
notice shall state the nature of the dispute, the remedy sought,
and support the claim.
B. RESPONSE. Within ten days of receipt of the notice, any member or
members against which the claim is directed may provide a
response to the notice. Such response must include any
counterclaims which the member believes are appropriate. If a
counterclaim is submitted, then the member which submitted the
notice may respond to the counterclaim within ten days of
receipt. All such responses shall be Served on the Parties, the
Chairman of the WSPP Operating Committee, and the WSPP General
Counsel.
C. CHOOSING THE ARBITRATOR. The Arbitrator shall be chosen in
accordance with the procedures set forth in Section 34.2 of the
WSPP Agreement. Each Party may suggest persons to be included on
the list of Arbitrators to be presented to the Parties provided
that these suggested persons are provided to the WSPP
Representative together with relevant personal histories within
two business days
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
81
Western Systems Power Pool Original Sheet No. 72
Rate Schedule FERC No. 6
of the date by which time the list of Arbitrators is to be sent
out. The WSPP Representative shall allow at least one person
suggested by each Party to be added to the list of potential
Arbitrators. A brief personal history of each person on the list
of potential Arbitrators shall be provided to the Parties, with
that history showing the person's employment over the last five
years and any other relevant facts. The WSPP Representative shall
provide the Parties with the list of Arbitrators within seven
days of receipt of notice of the request for Arbitration. The
Parties then shall have ten days in which to reach agreement on
the Arbitrator or to inform the WSPP Representative that they
were unable to reach agreement in which event the WSPP
Representative shall appoint the Arbitrator consistent with
Section 34.2 of the Agreement. Upon request of the Parties for
expedition, the WSPP Representative shall use best efforts to
cause this process to be expedited.
D. LOCATION FOR THE ARBITRATION. The Parties shall agree on a
location for the Arbitration. If the Parties fail to reach
agreement, then the WSPP Representative shall set the location
which shall be convenient for the Parties and the Arbitrator.
E. TIME FOR THE ARBITRATION. The Parties shall agree on the time for
the Arbitration and coordinate that time with the Arbitrator if
one has been agreed to or appointed. If the Parties fail to reach
agreement, then the WSPP Representative
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
82
Western Systems Power Pool Original Sheet No. 73
Rate Schedule FERC No. 6
shall set the time which shall not be more than 60 days after the
notice is received. The WSPP Representative shall set a time
after consultation with the Parties and the Arbitrator to check
their schedules.
F. DISCOVERY. After appointment of the Arbitrator, each Party shall
be entitled to obtain relevant documents from the other Parties
and to take depositions. Each Party shall respond to such a
document request within seven days of receipt of the request and
make its employees or consultants available for depositions to
the extent that the employee or consultant possesses knowledge
and information relevant to the dispute. Each Party shall
disclose documents that are confidential or commercially
sensitive subject to a reasonable protective order. Any disputes
concerning discovery shall be promptly referred to the Arbitrator
who shall have authority to resolve such disputes, including the
authority to require attendance of witnesses at depositions. The
Federal Rules of Civil Procedure shall apply to discovery under
these procedures.
G. CONDUCT OF ARBITRATION IF THE PARTIES AGREE TO WAIVE AN ORAL
HEARING. If the Parties agree to waive an oral hearing, then the
Parties shall Serve Initial Briefs no later than 35 days after
the notice is received or notify the Arbitrator that they do not
wish to submit any additional documents. Parties shall Serve any
Reply Briefs no later than ten days after the date for Service of
Initial Briefs.
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
83
Western Systems Power Pool Original Sheet No. 74
Rate Schedule FERC No. 6
H. CONDUCT OF THE ARBITRATION HEARING. No later than fifteen days
before any hearing, any Party may Serve an Initial Brief or
notify the Arbitrator that they do not wish to submit any
additional documents. A Party shall Serve any Reply Brief no
later than five Business Days before any hearing. The Arbitrator
shall preside over any hearing and rule on all objections
including objections as to the admissibility of evidence or
whether the questioning is proper. All testimony shall be
submitted under oath. The Arbitrator is not bound to follow any
particular rules governing the conduct of the proceeding. The
Arbitrator may rely on legal advice provided through the WSPP.
The Arbitrator may require any person employed by a Party to
attend and testify at the hearing. Each Party shall possess the
right to present evidence, including witnesses, and to
cross-examine other Parties' witnesses. The Arbitration shall be
private and the Arbitrator shall have the authority to exclude
any person not directly involved unless the Parties otherwise
agree. Each Party may be represented by counsel. A stenographic
record of the Arbitration shall be kept.
I. DECISION. Within ten Business Days after the end of the
Arbitration hearing, the Arbitrator shall issue his award in
writing. If the Parties waived the right to an oral hearing, then
the Arbitrator shall issue the award within ten Business Days of
the last date Briefs were to be submitted. The Arbitrator is not
limited in the
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
84
Western Systems Power Pool Original Sheet No. 75
Rate Schedule FERC No. 6
remedies he may order so long as any arbitration award is
consistent with the provisions and limitations of the WSPP
Agreement and any applicable Confirmation Agreement with respect
to the liability and damages of any Party; provided, however,
upon agreement of the Parties to the dispute, the Arbitrator's
choice of remedies may be limited.
J. REPLACEMENT OF THE ARBITRATOR. If the Arbitrator resigns,
withdraws, or is no longer able to serve then the Parties shall
have two Business Days in which to agree on a new Arbitrator. If
the Parties are unable to agree within such time, the WSPP
Representative shall appoint a replacement Arbitrator from the
list used to select the first Arbitrator within two Business Days
after being notified that the Parties are unable to agree. The
dates and deadlines in this section may require modification if
the mediator is replaced. Any extensions shall be as limited as
possible.
III. MISCELLANEOUS
A. CONFIDENTIALITY. Any Arbitration or Mediation shall be
confidential as provided in Section 34.4 of the WSPP Agreement.
B. COSTS. Costs shall be borne by Parties as provided in Section
34.3 of the WSPP Agreement.
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
85
Western Systems Power Pool Original Sheet No. 76
Rate Schedule FERC No. 6
C. RESTRICTIONS ON LAWSUITS. Each Party shall be subject to the
restrictions provided in Section 34.2 of the WSPP Agreement.
D. ATTORNEY-CLIENT/ATTORNEY WORKPRODUCT. The Arbitrator or Mediator
shall not take any action which would result in disclosure of
information in violation of the attorney-client privilege or
attorney workproduct doctrine.
IV. DEFINITIONS
A. ARBITRATOR OR ARBITRATION. The Arbitrator appointed pursuant to
these procedures and Section 34.2 of the WSPP Agreement and the
Arbitration pursuant to these procedures and the WSPP Agreement.
B. INITIAL OR REPLY BRIEFS. Written documents submitted by the
Parties to support their positions and respond to each others
positions. Such documents shall be limited to 25 pages.
C. BUSINESS DAYS. Defined as in the WSPP Agreement.
D. MEDIATOR OR MEDIATION. The Mediator appointed pursuant to these
procedures and Section 34.1 of the WSPP Agreement and the
Mediation pursuant to these procedures and the WSPP Agreement.
E. PARTIES. The WSPP members involved in the Mediation or
Arbitration which have a direct interest in the dispute.
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
86
Western Systems Power Pool Original Sheet No. 77
Rate Schedule FERC No. 6
F. SERVICE, SERVING, OR SERVED. The method of service shall be by
fax, unless impracticable because of the size of the document. In
all events, the document should be delivered to the Party by
overnight mail. Parties also should attempt to send the document
out by email if possible. Service will be accomplished to a Party
if sent to the Party's contact person for the disputed
transaction. If there are multiple contact persons for one Party,
service to one such person shall suffice. Service shall be to
those individuals or entities specified in this procedures, but
must include service to the Parties, the Mediator or Arbitrator
(if either has been appointed), and to the WSPP General Counsel.
G. WSPP REPRESENTATIVE. The Chairman of the WSPP Operating Committee
or his or her designee for the purposes of the Arbitration or
Mediation.
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
87
Western Systems Power Pool Original Sheet No. 78
Rate Schedule FERC No. 6
SERVICE SCHEDULE A
ECONOMY ENERGY SERVICE
A-1 PARTIES:
This Service Schedule is agreed upon as a part of this Agreement by the
Parties.
A-2 PURPOSE:
The purpose of this Service Schedule is to define additional specific
procedures, terms and conditions for requesting and providing Economy
Energy Service.
A-3 TERMS:
A-3.1 A Party may schedule Economy Energy Service from another Party by
mutual agreement; provided, however, that each Party shall be the
sole judge as to the extent to and the conditions under which it
is willing to provide or receive such service hereunder
consistent with statutory requirements and contractual
commitments including the Agreement and any applicable
Confirmation Agreement.
A-3.2 Scheduling of Economy Energy Service hereunder shall be a
responsibility of the Parties involved.
A-3.3 Each Seller/Purchaser may prepare a daily estimate of the amount
of Economy Energy Service that it is willing and able to sell/buy
each hour and the associated hourly sale/purchase price for the
next Business Day, plus the weekend and
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
88
Western Systems Power Pool Original Sheet No. 79
Rate Schedule FERC No. 6
holidays, and communicate this information to all other Parties
via the Hub.
A-3.4 Purchasers shall arrange purchases directly with Sellers, and
shall be responsible for transmission arrangements.
A-3.5 Unless otherwise mutually agreed between the Purchaser and the
Seller, all Economy Energy Service transactions shall be
pre-scheduled, and billings shall be based on amounts and prices
agreed to in advance by schedulers, subject to Paragraphs A-3.6
and 3.7 and subject to change by mutual agreement between
dispatchers or schedulers due to system changes.
A-3.6 The price for Economy Energy Service shall be mutually agreed to
in advance between Seller and Purchaser and shall not be subject
to the rate caps specified in Section A-3.7 in either of the
following two circumstances:
(1) where the Seller is a FERC regulated public utility and
that Seller has been authorized to sell power like that
provided for under this Service Schedule at market-based
rates; or
(2) where the Seller is not a FERC regulated public utility. A
Party is a FERC regulated public utility if it is a
"public utility" as defined in Section 201(e) of the
Federal Power Act, 16 U.S.C. Section 824(e).
A-3.7 Except as provided for in Section A-3.6, the price shall not
exceed the Seller's forecasted Incremental Cost plus up to:
$7.32/kW/ month; $1.68/kW/week;
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
89
Western Systems Power Pool Original Sheet No. 80
Rate Schedule FERC No. 6
33.78cents/kW/day; 14.07 mills/kWh; or 21.11 mills/kWh for
service of sixteen (16) hours or less per day. The hourly rate is
capped at the Seller's forecasted Incremental Cost plus
33.78cents/kW/ day. The total demand charge revenues in any
consecutive seven-day period shall not exceed the product of the
weekly rate and the highest demand experienced on any day in the
seven-day period. In lieu of payment, such Parties may mutually
agree to exchange economy energy at a ratio not to exceed that
ratio provided for in Section C-3.7 of Service Schedule C. The
Seller's forecasted Incremental Cost discussed above also may
include any transmission and/or ancillary service costs
associated with the sale, including the cost of any transmission
and/or ancillary services that the Seller must take on its own
system. Any such transmission and/or ancillary services charges
shall be separately identified by the Seller to the Purchaser for
transactions under this Schedule including the exchange of
economy energy. The transmission and ancillary service rate
ceilings shall be available through the WSPP's Hub or homepage.
Any such transmission services (and ancillary service provided in
conjunction with such transmission service) by Seller shall be
provided pursuant to any applicable transmission tariff or
agreement, and the rates therefore shall be consistent with such
tariff or agreement.
A-3.8 Unless otherwise agreed, the Purchaser shall be responsible for
maintaining
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
90
Western Systems Power Pool Original Sheet No. 81
Rate Schedule FERC No. 6
operating reserve requirements as back-up for Economy Energy
Service purchased and the Seller shall not be required to
maintain such operating reserve.
A-3.9 Each Party that is a FERC regulated public utility as defined in
A-3.6 shall file the Confirmation Agreement with FERC for each
transaction under this Service Schedule with a term in excess of
one year no later than 30 days after service begins if that Party
would have been required to file such Confirmation Agreements or
similar agreements with FERC under an applicable FERC accepted
market based rate schedule.
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
91
Western Systems Power Pool Original Sheet No. 82
Rate Schedule FERC No. 6
SERVICE SCHEDULE B
UNIT COMMITMENT SERVICE
B-1 PARTIES:
This Service Schedule is agreed upon as part of this Agreement by the
Parties.
B-2 PURPOSE:
The purpose of this Service Schedule is to define additional specific
procedures, terms, and conditions for requesting and providing Unit
Commitment Service.
B-3 TERMS:
B-3.1 A Party may schedule Unit Commitment Service from another Party
by mutual agreement; provided, however, that each Party shall be
the sole judge as to the extent to and the conditions under which
it is willing to provide or receive such service hereunder
consistent with statutory requirements and contractual
commitments including the Agreement and any applicable
Confirmation Agreement. Once an agreement is reached, then the
obligation for Unit Commitment Service becomes a firm commitment,
for both Parties, for the agreed capacity and terms.
B-3.2 Unless otherwise mutually agreed by the Parties involved in a
Unit Commitment Service transaction, the terms set forth in this
Service Schedule B shall govern such transaction.
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
92
Western Systems Power Pool Original Sheet No. 83
Rate Schedule FERC No. 6
B-3.3 Unless otherwise agreed between the Purchaser and the Seller, all
transactions shall be prescheduled, subject to any conditions
agreed to by schedulers, for a specified unit for a specified
period of time.
B-3.4 Purchasers shall arrange purchases directly with Sellers.
B-3.5 The price for Unit Commitment Service shall be mutually agreed to
in advance between Seller and Purchaser and shall not be subject
to the rate caps specified in Section B-3.6 in either of the
following two circumstances:
(1) where the Seller is a FERC regulated public utility and
that Seller has been authorized to sell power like that
provided for under this Service Schedule at market-based
rates; or
(2) where the Seller is not a FERC regulated public utility.
A Party is a FERC regulated public utility if it is a
"public utility" as defined in Section 201(e) of the Federal
Power Act, 16 U.S.C. Section 824(e). B-3.6 Except as provided for
in Section B-3.5, the price shall not exceed the Seller's
forecasted Incremental Cost plus up to: $7.32/kW/month;
$1.68/kW/week; 33.78cents/kW/day; 14.07 mills/kWh; or 21.11
mills/kWh for service of sixteen (16) hours or less per day. The
hourly rate is capped at the Seller's forecasted Incremental Cost
plus 33.78cents/kW/day. The total demand charge revenues in any
consecutive seven-day period shall not exceed the product of the
weekly rate and the
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
93
Western Systems Power Pool Original Sheet No. 84
Rate Schedule FERC No. 6
highest demand experienced on any day in the seven-day period.
The Seller's forecasted Incremental Cost discussed above also may
include any transmission and/or ancillary service costs
associated with the sale, including the cost of any transmission
and/or ancillary services that the Seller must take on its own
system. Any such transmission and/or ancillary service charges
shall be separately identified by the Seller to the Purchaser.
The transmission and ancillary service rate ceilings shall be
available through the WSPP's Hub or homepage.
B-3.7 Start-up costs and no-load costs if included by the Seller shall
be stated separately in the price.
B-3.8 Energy schedules for the Purchaser's share of a unit may be
modified by the Purchaser with not less than a thirty (30) minute
notice before the hour in which the change is to take place,
unless otherwise mutually agreed or unforeseen system operating
conditions occur.
B-3.9 Unit Commitment Service is intended to have assured availability;
however, scheduled energy deliveries may be interrupted or
curtailed as follows:
(a) By the Seller by giving proper recall notice to the
Purchaser if the Seller and the Purchaser have mutually
agreed to recall provisions,
(b) By the Seller when all or a portion of the output of the
unit is unavailable, by an amount in proportion to the
amount of the reduction in the output of the
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
94
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Rate Schedule FERC No. 6
unit, unless otherwise agreed by the schedulers,
(c) By the Seller to prevent system separation during an
emergency, provided the Seller has exercised all prudent
operating alternatives prior to the interruption or
curtailment,
(d) Where applicable, by the Seller to meet its public utility
or statutory obligations to its customers, or
(e) By either the Seller or the Purchaser due to the
unavailability of transmission capacity necessary for the
delivery of scheduled energy.
B-3.10 Each Party that is a FERC regulated public utility as defined
above in B-3.5 shall file the Confirmation Agreement with FERC
for each transaction under this Service Schedule with a term in
excess of one year no later than 30 days after service begins if
that Party would have been required to file such Confirmation
Agreements or similar agreements with FERC under an applicable
FERC accepted market based rate schedule.
B-4 BILLING AND PAYMENT PROVISIONS:
B-4.1 Except as provided in Sections B-4.2 and B-5, billing for Unit
Commitment Service shall be computed based upon the agreed upon
prices.
B-4.2 In the event the Seller requests recall of Unit Commitment
Service in a shorter time frame than was mutually agreed pursuant
to Section B-3.9(a) and the
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
95
Western Systems Power Pool Original Sheet No. 86
Rate Schedule FERC No. 6
Purchaser agrees to allow such recall, the Purchaser shall be
relieved of any obligation to pay start-up costs.
B-5 TERMINATION PROVISION:
In the event Unit Commitment Service is curtailed or interrupted except
as provided in Section B-3.9(a), the Purchaser shall have the option to
cancel the Unit Commitment Service at any time by paying the Seller for
(i) all energy deliveries scheduled up to the notice of termination and
(ii) all separately stated start-up and no-load costs.
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: September 29, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
96
Western Systems Power Pool First Revised Sheet No. 87
Rate Schedule FERC No. 6 Superseding Original Sheet No. 87
SERVICE SCHEDULE C
FIRM CAPACITY/ENERGY SALE OR EXCHANGE SERVICE
C-1 PARTIES:
This Service Schedule is agreed upon as a part of this Agreement by the
Parties. C-2 PURPOSE:
The purpose of this Service Schedule is to define additional specific
procedures, terms, and conditions for requesting and providing Firm
Capacity/Energy Sale or Exchange Service.
C-3 TERMS:
C-3.1 A Party may schedule Firm Capacity/Energy Sale or Exchange
Service from another Party by mutual agreement; provided,
however, that each Party shall be the sole judge as to the extent
to and the conditions under which it is willing to provide or
receive such service hereunder consistent with statutory
requirements and contractual commitments including the Agreement
and any applicable Confirmation Agreement. Once an agreement is
reached, then the obligation for Firm Capacity/Energy Sale or
Exchange Service becomes a firm commitment, for both Parties, for
the agreed service and terms.
C-3.2 Unless otherwise agreed between the Purchaser and the Seller, all
transactions shall be prescheduled, subject to any conditions
agreed to by schedulers.
C-3.3 Firm capacity transactions shall include buying, selling, or
exchanging capacity between Parties with or without associated
energy. Firm capacity is deemed a capacity sale from the Seller's
resources and backed by the Seller's
Issued by: Michael E. Small, General Counsel to Effective: February 1, 2001
Western Systems Power Pool
Issued on: December 1, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
97
Western Systems Power Pool First Revised Sheet No. 88
Rate Schedule FERC No. 6 Superseding Original Sheet No. 88
capacity reserves.
C-3.4 Firm energy transactions shall include buying, selling, or
exchanging firm energy between Parties. Subject to mutual
agreement, firm energy is deemed a quantity of energy the Seller
has agreed to sell and deliver and the Purchaser has agreed to
buy within a specified time period.
C-3.5 Purchaser shall arrange purchases directly with Sellers.
C-3.6 The price for Firm Capacity/Energy Sale or Exchange Service shall
be mutually agreed to in advance between Seller and Purchaser and
shall not be subject to the rate caps specified in Section C-3.7
in either of the following two circumstances:
(1) where the Seller is a FERC regulated public utility and
that Seller has been authorized to sell power like that
provided for under this Service Schedule at market-based
rates; or
(2) where the Seller is not a FERC regulated public utility. A
Party is a FERC regulated public utility if it is a
"public utility" as defined in Section 201(e) of the
Federal Power Act, 16 U.S.C. Section 824(e).
C-3.7 Except as provided for in Section C-3.6, the price shall not
exceed the Seller's forecasted Incremental Cost plus up to:
$7.32/kW/month; $1.68/kW/week; 33.78cents/kW/day; 14.07
mills/kWh; or 21.11 mills/kWh for service of sixteen (16) hours
or less per day. The hourly rate is capped at the Seller's
forecasted Incremental Cost plus 33.78cents/kW/day. The total
demand charge revenues in any consecutive seven-day period shall
not exceed the product of the weekly rate and the
Issued by: Michael E. Small, General Counsel to Effective: February 1, 2001
Western Systems Power Pool
Issued on: December 1, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
98
Western Systems Power Pool First Revised Sheet No. 89
Rate Schedule FERC No. 6 Superseding Original Sheet No. 89
highest demand experienced on any day in the seven-day period.
Exchange ratios among such Parties shall be as mutually agreed
between the Purchaser and the Seller, but shall not exceed the
ratio of 1.5 to 1.0. The Seller's forecasted Incremental Cost
discussed above also may include any transmission and/or
ancillary service costs associated with the sale, including the
cost of any transmission and/or ancillary services that the
Seller must take on its own system. Any such transmission and/or
ancillary service charges shall be separately identified by the
Seller to the Purchaser for transactions under this Schedule
including exchanges. The transmission and ancillary service rate
ceiling shall be available through the WSPP's Hub or homepage.
Any such transmission service (and ancillary services provided in
conjunction with such transmission service) by Seller shall be
provided pursuant to any applicable transmission tariff or
agreement, and the rates therefore shall be consistent with such
tariff or agreement.
C-3.8 Firm Capacity/Energy Sale or Exchange Service shall be
interruptible only if the interruption is: (a) within the recall
time or allowed by other applicable provisions governing
interruptions of service under this Service Schedule mutually
agreed to by the Seller and the Purchaser, (b) due to an
Uncontrollable Force as provided in Section 10 of this Agreement;
or (c) where applicable, to meet Seller's public utility or
statutory obligations to its customers. If service under this
Service Schedule is interrupted under Section C-3.8(a) or (b),
neither Seller nor Purchaser shall be obligated to pay any
damages under this Agreement or Confirmation Agreement. If
service under this Service Schedule is interrupted for any reason
Issued by: Michael E. Small, General Counsel to Effective: February 1, 2001
Western Systems Power Pool
Issued on: December 1, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
99
Western Systems Power Pool Original Sheet No. 89A
Rate Schedule FERC No. 6
other than pursuant to Section C-3.8(a) or (b), the
Non-Performing Party shall be responsible for payment of damages
as provided in Section 21.3 of this Agreement or in any
Confirmation.
Issued by: Michael E. Small, General Counsel to Effective: February 1, 2001
Western Systems Power Pool
Issued on: December 1, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
100
Western Systems Power Pool First Revised Sheet No. 90
Rate Schedule FERC No. 6 Superseding Original Sheet No. 90
C-3.9 Each Party that is a FERC regulated public utility as defined in
Section C-3.6 shall file the Confirmation Agreement with FERC for
each transaction under this Service Schedule with a term in
excess of one year no later than 30 days after service begins if
that Party would have been required to file such Confirmation
Agreements or similar agreements with FERC under an applicable
FERC accepted market based rate schedule.
C-3.10 Seller shall be responsible for ensuring that Service Schedule C
transactions are scheduled as firm power consistent with the most
recent rules adopted by the applicable NERC regional reliability
council.
Issued by: Michael E. Small, General Counsel to Effective: February 1, 2001
Western Systems Power Pool
Issued on: December 1, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued September 15, 2000.
101
Western Systems Power Pool Original Sheet No. 91
Rate Schedule FERC No. 6
LIST OF MEMBERS
ACN Power, Inc. CMS Marketing, Services and Trading Co.
Amerada Hess Corporation CNG Power Services Corp.
Ameren Energy Marketing Company Coastal Merchant Energy, L.P.
American Electric Power Service Corporation Colorado Springs Utilities
as agent for Ohio Power Company, Public Service
Company of Oklahoma and Southwestern Electric
Power Company
APS Energy Services Company, Inc. Colton, City of
Aquila Energy Marketing Corporation Columbia Energy Power Marketing
Arizona Electric Power Co. Columbia Power Corporation
Arizona Public Service Co. ConAgra Energy Services, Inc.
Arkansas Electric Coop. Corp. Conectiv Energy Supply, Inc.
Associated Electric Cooperative, Inc. Conoco Gas & Power Marketing
Astra Oil Company, Inc. Constellation Power Source
Avista Corporation Cook Inlet Energy Supply
Avista Energy, Inc. Coral Power, L.L.C.
Basin Electric Power Cooperative Deseret G&T
Benton Public Utility District No. 1 of Benton DTE Energy Trading, Inc.
County
Blackhills Power & Light Company Duke Energy Trading & Marketing, LLC
Bonneville Power Adm. Duke/Louis Dreyfuss, LLC
BP Energy Company Dynegy Power Marketing, Inc.
Burbank, City of Dynegy Power Services, Inc.
Calif. Dept. of Water Resources E prime
California Polar Power Brokers, LLC Edison Mission Marketing & Trading, Inc.
Calpine Energy Services, L.P. Edison Source
Candela Energy Corporation Edmonton Power Authority, Alberta
Cargill-Alliant, LLC El Paso Electric
Carolina Power & Light Company El Paso Merchant Energy, L.P.
Cinergy Capital & Trading, Inc. Empire District Electric Co.
Cinergy Operating Companies Energy Transfer Group, LLC
City of Anaheim, Public Utilities Dept. EnerZ Corporation
City of Glendale Water & Power Dept. Engelhard Power Marketing, Inc.
City of Independence ENMAX Energy Corporation
City of Riverside, California Enron Power Marketing, Inc.
City of Santa Clara Electric Department Enserco Energy Inc.
City of Sikeston, Board of Municipal Utilities Entergy Electric System
City Utilities of Springfield, Missouri Entergy Power Marketing Corp.
City Water & Light (Jonesboro, AR) Entergy Power, Inc.
Cleco Marketing & Trading LLC Equitable Power Services Co.
Cleco Utility Group Inc. Eugene Water & Electric Board
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: November 17, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued November 2, 2000.
102
Western Systems Power Pool Original Sheet No. 92
Rate Schedule FERC No. 6
Farmington, City of Missouri Joint Municipal Electric Utility
Comm.
Federal Energy Sales, Inc. Mock Energy Services, L.P.
FPL Energy Power Marketing Inc. Modesto Irrigation District
Golden Spread Electric Cooperative Morgan Stanley Capital Group, Inc.
Grand River Dam Authority M-S-R Public Power Agency
Hafslund Energy Trading, LLC Municipal Energy Agency of Mississippi
Hetch-Hetchy Water & Power Municipal Energy Agency of Nebraska
Howard Energy Co., Inc. National Gas & Electric L.P.
Idaho Power Company Nebraska Public Power District
IGI Resources, Inc. Nevada Power Co.
Illinova Energy Partners, Inc. New West Energy
Imperial Irrigation District NewEnergy, Inc.
Industrial Energy Applications, Inc. NorAm Energy Services, Inc.
InterCoast Power Marketing Northern California Power Agency
J. Aron & Company Northern States Power Company
KAMO Electric Cooperative, Inc. NP Energy Inc.
Kansas City Board of Public Utilities NRG Power Marketing Inc.
Kansas City Power & Light OGE Energy Resources, Inc.
KN Energy Marketing Oklahoma Gas & Electric
Kock Energy Trading, Inc. Oklahoma Municipal Power Authority
Lafayette Utilities System Omaha Public Power District
LG&E Energy Marketing Inc. ONEOK Power Marketing Company
Lincoln Electric System Pacific Gas & Electric Co.
Los Alamos County Pacific Northwest Generating Cooperative
Los Angeles Dept. of Water & Power PacifiCorp
Louisiana Generating LLC PacifiCorp Power Marketing
Louisville Gas & Electric Company PanCanadian Energy Services
Mason County PUD No. 3 Pasadena, City of
McMinnville Water & Light PECO Energy
Merchant Energy Group of the Americas, Inc. PG&E Energy Services
Merrill Lynch Capital Services, Inc. PG&E Energy Trading - Power, L.P.
Metropolitan Water District PG&E Power Services Company
MidAmerican Energy Company Phibro Inc.
MidCon Power Services Corp. Pinnacle West Capital Corporation
MIECO, Inc. Plains Elec. Gen. & Trans. Coop. Inc.
Minnesota Power & Light Company Platte River Power Authority
Minnesota Power, Inc. Portland General Electric Co.
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: November 17, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued November 2, 2000.
103
Western Systems Power Pool Original Sheet No. 93
Rate Schedule FERC No. 6
Power Exchange Corporation Strategic Energy LLC
Powerex Sunflower Electric Power Corp.
PPL Electric Utilities Corporation Tacoma Power
PPL EnergyPlus, LLC Tenaska Power Services Co.
PPL Montana, LLC Tennessee Valley Authority
Public Service Co. of NM Texaco Energy Services
Public Service Co. of Colorado Texas-New Mexico Power Company
Public Utility District No. 1 of Franklin Cty. The Energy Authority
PUD No. 1 of Chelan County The Montana Power Company
PUD No. 1 of Grays Harbor County The Power Company of America, LP
PUD No. 1 of Snohomish County Tractebel Energy Marketing, Inc.
PUD No. 2 of Grant County TransAlta Energy Marketing (US) Inc.
Puget Sound Energy TransCanada Power
QST Energy Trading Inc. Tri-State Generation and Transmission Assoc.
Questar Energy Trading Tucson Electric Power
Rainbow Energy Marketing Corporation Turlock Irrigation District
Redding, City of TXU Energy Trading Company
Reliant Energy Services, Inc. Union Electric Company
Rocky Mountain Generation Coop., Inc. Utah Associated Municipal Power Systems
Sacramento Municipal Utility District UtiliCorp United
Salt River Project Vastar Power Marketing, Inc.
San Diego Gas & Electric Co. Vernon, City of
SCANA Energy Marketing, Inc. Virginia Electric and Power Company
Seattle City Light Vitol Gas & Electric LLC
Sempra Energy Solutions West Kootenay Power Ltd.
Sempra Energy Trading Corp. Western Adm. Lower Colorado
Sierra Pacific Power Co. Western Adm. Sacramento
Sonat Power Marketing LP Western Adm. Upper Colorado
Southern California Edison Co. Western Adm. Upper Great Plains
Southern California Water Company Western Farmers Electric Co-op
Southern Company Energy Marketing L.P. Western Power Services, Inc.
Southern Company Services, Inc. Western Resources, Inc.
Southern Illinois Power Cooperative Williams Energy Marketing & Trading Co.
Southwest Power Administration WPS Energy Services, Inc.
Southwestern Public Service
Split Rock Energy LLC
St. Joseph Light & Power Co.
Statoil Energy Trading, Inc.
Issued by: Michael E. Small, General Counsel to Effective: July 1, 2000
Western Systems Power Pool
Issued on: November 17, 2000
Filed to comply with order of the Federal Energy Regulatory Commission,
Docket Nos. ER00-3338, et al., issued November 2, 2000.
