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HomeMy WebLinkAbout02- Montana League of Cities and Towns; Northwest Energy Marketing - Power Sales Contract 505.003n3622.2 POWER SALES AGREEMENT This Power Sales Agreement ("Agreement") is made and entered into effective this 19th day of June, 2002 (the "Effective Date"), by and between MONTANA LEAGUE OF CITIES AND TOWNS, INC., a Montana non profit corporation ("Buyer") and NORTHWESTERN ENERGY MARKETING, LLC, a Delaware limited liability company, ("Seller"). Buyer and Seller sometimes referred to individually as "Party" and collectively as "Parties". "VHEREAS, on February 1, 2002, Buyer issued a formal Request for Competitive Proposal ("RFP") to the public, requesting bids to supply firm, full requirements electric power supply service to aggregated municipal loads, commencing on July I, 2002 for periods of three and five years; WHEREAS, on February 19, 2002, Seller submitted a formal response to the RFP (the "Response"), proposing certain options with respect to supply of the electric power supply service outlined in the RFP; WHEREAS, on February 20, 2002, Buyer contacted Seller and informed Seller that the Response was selected as the winning RFP proposal, subject to final negotiation of contract terms; WHEREAS, Buyer and Seller have negotiated the final prices and terms of the contract; and WHEREAS, Buyer and Seller desire to memorialize the terms of the Response in a formal supply contract. NOW, THEREFORE, in consideration of the mutual agreements, covenants and conditions set forth herein, the Parties hereto, intending to be legally bound, hereby agree as follows: I . ARTICLE 1. PURPOSE AND PROCEDURES 1.1 Scope of Agreement. The Parties agree that during the Term of this Agreement they may from time to time enter into transactions whereby Seller wi)) sell and deliver, and Buyer wi)) purchase and receive Energy ("Transactions"). The Parties agree that during the Term, should they enter into any Transaction other than the Primary Transaction, the specific terms for such Transaction shall include (i) the Period of Delivery, (ii) the Contract Price, (iii) the Delivery Point(s), (iv) the Pirm Electric Service and Contract Amounts and (v) whether the Transaction is Firm or Non-Firm. J .2 Authorized Representatives. The initial authorized representative for each Party shall be as designated on Exhibit "A" attached hereto. The Parties may change their designated 505.003f73622.2 authorized representatives by providing the other Party with written notice of the change. The authorized representatives shall have no power to modify the terms of this Agreement. 1.3 Primary Transaction. The Parties have agreed to enter into a transaction with a Period of Service beginning 0000 hours on July 1, 2002 and ending 2400 hours on June 30, 2007 (the "Primary Transaction"). The Primary Transaction is intended to provide Energy to (i) Buyer's Municipal Customers currently being served by Energy West Resources, Inc. and (ii) to those municipal customers that will become Buyer's Municipal Customers upon termination of their respective Energy supply arrangement with Montana Power, LLC ("MP"). For Buyer's Municipal Customers currently being served by Energy West Resources, Inc., Seller will provide Energy as of 0000 hours on July 1,2002. Seller will work with Energy West Resources, Inc. to coordinate a seamless transition of service to these customers that will include, among other things, an appropriate allocation of the Energy delivered during the billing period that includes June 30, 2002 that differentiates the pricing between the Energy delivered by Energy West Resources, Inc. and Seller. For those municipal customers that will become Buyer's Municipal Customers upon termination of service with MP, Seller will commence providing Energy to these customers immediately following the day and time in July 2002 in which MP records its final meter reading. Seller acknowledges that these municipal customers will become Buyer's Municipal Customers at varying days throughout the month of July 2002, depending upon MP's schedule for making the final meter readings. The Primary Transaction shall be made pursuant to those terms, conditions and obligations contained in that certain Purchase and Sale Confirmation Agreement between the Parties attached hcreto and incorporated herein by this reference, as Exhibit "c" (the "Confirmation"). In the event any terms of this Agreement conflict with or are inconsistent with the terms of the Confirmation as set forth in Exhibit "C", the terms of the Confirmation shall prevail and control the terms of the Primary Transaction. 1.4 No Obligation to Enter into Additional Transactions. Nothing contained in this Agreement shall be construed as requiring either Party to enter into and perform additional Transactions other than the Primary Transaction. 1.5 Value-Added Services. Seller shall make available to Buyer's Municipal Customers the value-added services described in Exhibits "E","F" and "G". To the extent Buyer's Municipal Customers participate in the load shaping, "hedging plus" and "floating fuel" programs, Seller shall share the benefits derived from these programs in accordance with the terms set forth in Exhibits "E" ,"F" and "G". Participation in the load shaping, "hedging plus" and "floating fuel" programs is at the discretion of Buyer's Municipal Customers. ARTICLE 2. DEFINITIONS In addition to terms defined elsewhere in this Agreement, the following definitions shall have the following meanings: 2.1 "Affiliate" means, with respect to any person, any other person (other than an individual) that, directly or indirectly, through one or more intermediaries, controls, or is controlled by, or is 505.003n3622.2 under common control with, such person. For purposes of the foregoing definition, "control" means the direct or indirect ownership of more than fifty percent (50%) of the outstanding capital stock or other equity interests having ordinary voting power. 2.2 "Business Day" means any day on which Federal Reserve member banks in New York City are open for business; and a Business Day shall open at 8:00 a.m. and close at 5:00 p.m. local time for cach Party's principal place of business. 2.3 "Buyer's Municipal Customers" means those individual cities and towns who are listed on Exhibit B to this Agreement, which includes those cities and towns cUlTently receiving Energy from Energy West Resources, Inc. and those cities and towns that will become Buyer's customers upon termination of their CUlTent Energy supply arrangement with MP, which is scheduled to occur during the month of July 2002. 2.4 "Claims" means all claims or actions, threatened or filed and whether groundless, false or fraudulent, that directly or indirectly relate to the subject matter of an indemnity, and the resulting losses, damages, expenses, attorneys fees and court costs, whether inculTed by settlement or otherwise, and whether such claims or actions are threatened or filed prior to or after the termination of this Agreement. 2.5 "Confirmation" shall have the meaning set forth in Section 1.3 of this Agreement. 2.6 "Contract Price" means the price set forth in the Confirmation attached hereto as Exhibit "e" . 2.7 "Contract Amounts and Finn Electric Service" means that quantity of Energy that Seller agrees to sell and deliver, or cause to be delivered to Buyer, and that Buyer agrees to purchase and receive, or cause to be received, from Seller, as set forth in the Confirmation attached hereto as Exhibit "C". 2.8 "Delivery Point" means the agreed point of delivery and receipt of Energy set forth in the Confirmation attached hereto as Exhibit "C". 2.9 " Energy" means electric energy of the character commonly known as three phase, sixty- hertz electric energy that is delivered at the nominal voltage of the Delivery Point. 2.10 "Finn" means, with respect to a Transaction, that the only excuse for the failure to deliver Energy by Seller or the failure to receive Energy by Buyer pursuant to a Transaction is Force Majeure or the other Party's nonperformance. 2.11 "Force Majeure" means an event not anticipated as of the Effective Date, which is not within the reasonable control of the Party affected by such event (the "Affected Party"), and which by the exercise of reasonable due diligence the Affected Party is unable to overcome or obtain or cause to be obtained a commercially reasonable substi.tute therefor. Force Majeure 505.003n3622.2 may include, but is not restricted to: acts of God; fire; civil disturbance; sabotage; action or restraint by court order or public or governmental authority (so long as the Affected Party has not applied for or assisted in the application for, and has opposed where and to the extent reasonable, such government action); provided, that the loss of Buyer's markets nor Buyer's inability economically to use Energy purchased hereunder nor Seller's inability economically to provide and deliver Energy pursuant to a Transaction shall not constitute an event of Force Majeure. Interruption by a Transmission Provider shall not be deemed to be Force Majeure unless (i) the Party contracting with such Transmission Provider shall have made arrangement with such Transmission Provider for the firm transmission, as defined under the Transmission Provider's tariff, of the Energy to be delivered or received hereunder and (ii) such interruption is due to a Force Majeure as defined under the Transmission Provider's tariff. 2.12 "Non-Firm" means, with respect to a Transaction, that delivery or receipt of Energy may be interrupted for any reason or for no reason, without liability on the part of either Party. 2.13 "Period of Delivery" means the period of time measured from the date physical delivery of Energy is to commence to the date physical delivery is to terminate under a Transaction. 2.14 "Period of Service" shall have the meaning set forth in the Confirmation, attached hereto as Exhibit "C". 2.15 "Primary Transaction" shall have the meaning set forth in Section 1.3 of this Agreement. 2.16 "Regulatory Approval" means all current and future valid and applicable local, state and federal regulatory authorizations, consents, or approvals required for a Transaction to occur. 2.17 "Schedule" or "Scheduling" shall have the meaning set forth in the Confirmation, attached hereto as Exhibit "C". 2.18 "Taxes" means any or all ad valorem, property, occupation, severance, generation, first use, conservation, Btu or energy, transmission, utility, gross receipts, privilege, sales, use, excise and other taxes, governmental charges, licenses, fees, permits and assessments, other than taxes based on net income or net worth. "New Taxes" means (i) any Taxes enacted and effective after the Effective Date, including without limitation, that portion of any Taxes or New Taxes that constitutes an increase, or (ii) any law, rule, order or regulation, or interpretation thereof, enacted and effective after the Effective Date resulting in the application of any Taxes to a new or different class of Parties. 2.19 "Transaction" shall have the meaning set forth in Section 1.1 of this Agreement. 2.20 "Transmission Providers" means the entity or entities transmitting Energy on behalf of Seller or Buyer to or from the Delivery Point in a particular Transaction. ARTICLE 3. TERM 505.003n3622.2 3.1 Term of A?reement. This Agreement shall become effective on the Effective Date and shall remain in effect through 2400 hours on June 30, 2007 ("Termination Date"); provided, however, that this Agreement shall remain in effect with respect to any Transaction other than the Primary Transaction entered into prior to the Tennination Date until both Parties have fulfilled all their obligations with respect to such Transaction. Seller shall commence Energy deliveries to Buyer's Municipal Customers who are currently being served by Energy West Resources, Inc. as of 0000 hours on July 1, 2002. Seller shall commence Energy deliveries to Buyer's Municipal Customers who are currently being served by MP at varying days throughout the month of July 2002, depending upon the date upon which MP performs its final meter reading. ARTICLE 4. OBLIGATIONS AND DELIVERIES 4.1 Seller's and Buyer's Obligations. With respect to each Transaction and subject to the terms of this Agreement, Seller shall sell and deliver, or cause to be delivered, and Buyer shall purchase and receive, or cause to be received, at the Delivery Point the Firm Electric Service and Contract Amounts, and Buyer shall pay Seller the Contract Price as such terms are set forth in the Confinnation. 4.2 Transmission and Scheduling. Seller shall arrange and be responsible for transmission service to the Delivery Point and shall Schedule or arrange for Scheduling services with its Transmission Providers to deliver the Firm Electric Service and Contract Amounts to the Delivery Point as provided in the Confirmation. Seller will act on behalf of Buyer to arrange for Network Transmission Service (as defined in the MP tariff), at the sole cost of Buyer, as set forth in the Confirmation. In this regard, Seller shall work for the benefit of Buyer to manage and mitigate the cost of Network Transmission Service. To the extent Seller can mitigate the cost of Buyer's Network Transmission Service through incremental sales when such service is either not needed or only partially needed by Buyer, Seller will provide a credit in the form of an offset to Buyer's Municipal Customer's cost of Network Transmission Service on each customer's monthly invoice. Seller shall Schedule or arrange for Scheduling services to deliver the Firm Electric Service and Contract Amounts from the Delivery Point to the ultimate metering point of Buyer's Municipal Customers. 4.3 Title. As between the Parties, Seller shall be deemed to be in exclusive control (and responsible for any damages or injury caused thereby) of the Energy up to the Delivery Point and Buyer shall be deemed to be in exclusive control (and responsible for any damages or injury caused thereby) of the Energy at and after the Delivery Point. 4.4 Force Majeure. If either Party is rendered unable by Force Majeure to carry out, in whole or part, its obligations under a Firm Transaction and such Party gives notice and full details of the event to the other Party as soon as practicable after the occurrence of the event, then during the pendency of such Force Majeure but for no longer period, the obligations of the Party affected by the event (other than the obligation to make payments then due or becoming due with 505.003n3622.2 respect to perfonnance prior to the event) shall be excused to the extent required. The Party affected by the Force Majeure shall remedy the Force Majeure with all reasonable dispatch; provided, however, that this provision shall not require Seller to deliver Energy at points other than the Delivery Point. ARTICLE 5. PRICE 5.1 Price. The Contract Price for Energy and other services sold and delivered by Seller pursuant to the Primary Transaction shall be as set forth in the Confilmation. The Contract Price shall remain in effect for the Term of this Agreement and, absent mutual agreement, shall not be subject to change through application to any regulatory or governmental agency. ARTICLE 6. TAXES 6.1 Taxes. Seller is liable for and shall pay, or cause to be paid all Taxes applicable to the Primary Transaction arising prior to the Delivery Point ("Seller's Taxes"). Seller shall indemnify, defend and hold harmless Buyer from any Claims for Seller's Taxes. Buyer is liable for and shall pay, or cause to be paid all Taxes applicable to the Primary Transaction arising after the Delivery Point ("Buyer's Taxes"). Buyer shall indemnify, defend and hold harmless Seller from any Claims for Buyer's Taxes. ARTICLE 7. BILLING; PAYMENT 7.1 Billing and Payment. The Parties shall account for all Transactions hereunder on the basis of delivered quantities, pursuant to the availability of such data from MP, who is responsible for delivered data, as provided in the Confirmation. In accordance with Section 10.2, Buyer will coordinate with MP the release of all relevant meter data to Seller to facilitate the services to be provided by Energy West Resources, Inc. The Parties shall maintain records of deliveries for accounting and operating purposes. The accounting period for the Primary Transaction shall be one (I) calendar month. Seller or Seller's agent shall deliver to each of Buyer's Municipal Customers on or before the tenth (loth) day of the current month one consolidated statement for the preceding month specifying for each account of that Buyer's Municipal Customer: the Delivery Point, metering point and metering number for each account, the total quantity of Energy delivered by Seller to each account of that Buyer's Municipal Customer, and the amount due for each account of that Buyer's Municipal Customer together with a grand total due for that billing cycle from that Buyer's Municipal Customer ("Consolidated Invoice"). If an actual quantity that is necessary to complete the Consolidated Invoice is not available by the contractual billing date, Seller or Seller's agent shall prepare the statement based on Seller's best estimate of that quantity. The estimated quantity, if any, will then be corrected to the actual quantity on the following month's Consolidated Invoice or as soon thereafter as the necessary information is available. 505.003f73622.2 On or before the fifteenth (15th) day following the billing date of Seller's Consolidated Invoice, Buyer's Municipal Customers will pay to Seller the undisputed amount of Seller's Consolidated Invoice. If the due date is not a Business Day, then Buyer's payment will be due the next Business Day. If any of Buyer's Municipal Customers dispute, in good faith, any portion of Seller's Consolidated Invoice, Buyer's Municipal Customers shall remit to Seller the non-disputed portion of the Consolidated Invoice and notify Scller and Buyer in writing of the reasons for the disputed portion of the Consolidated Invoice. The Parties, including Buyer's Municipal Customer initiating the dispute, shall negotiate to resolve such dispute. In the event that the executives of the Parties and Buyer's Municipal Customer do not resolve the dispute within ten (10) Business Days, the dispute may be submitted to binding arbitration pursuant to the Montana Uniform Arbitration Act ("MAA"). The arbitration, which will take place in Helena, Montana, must be heard and resolved within forty-five (45) days after notice of the billing dispute. The Parties shall select a retired federal or Montana state court judge to serve as the arbitrator and hear the dispute; provided, however, that the arbitrator selected cannot have any prior or current business, professional or investment relationship with either Party. Any decision rendered by the arbitrator shall be final and enforceable by any court with jurisdiction over either Party. If, after resolution by the arbitrator, it is determined that any disputed amount is owing to Seller, then Buyer's Municipal Customers shall pay such amount, plus interest at the rates specified in Section 7.4 from the date the payment was originally due, together with any MAA fees and arbitrator cost. If, however, the arbitrator determines that any disputed amount should be refunded to Buyer, then Seller shall pay such amount plus interest at the rates specified in section 7.4 from the date such payment was received by Seller, together with any MAA fees and arbitrator cost. In any arbitration hereunder, the Parties shall bear their respective legal costs. 7.2 Method of Payment: All payments may be made via cash or check payment, automatic withdrawal, wire transfer or ACH as each of Buyer's Municipal Customers, in its sole and absolute discretion, shall designate. The relevant account information is set forth in Exhibit "D" attached hereto. 7.3 Failure to Make Payment: In the event one of Buyer's Municipal Customers fails to make a payment when due under this Agreement, which amount is not a disputed amount under Section 7.1 of this Agreement, Seller shall have the continuing right to suspend performance to that Buyer's Municipal Customer upon notice to Buyer and the relevant Buyer's Municipal Customer. Seller shall have the right to suspend provision of Energy hereunder to that Buyer's Municipal Customer if (I) any bill remains unpaid for fifteen (15) days after the billing date of Seller's Consolidated Invoice and then only upon an additional fourteen (14) days written notice of intent to terminate for non-payment or (2) that Buyer's Municipal Customer breaches any other term or condition of this Agreement and fails to remedy or correct the same within thirty (30) days after written notice of such default from Seller. Suspension of provision of Energy under this Section shall be in addition to any and all other remedies available in this Agreement. 505.003f73622.2 7.4 Interest. If one of Buyer's Municipal Customers fails to pay any amount of any statement when that amount becomes due, then Buyer's Municipal Customer shall pay Seller interest on the unpaid balance that shall accrue on each calendar day from the due date at a rate equal to the then-effective monthly prime commercial lending rate per annum announced by the Chase Manhattan Bank from time to time plus one percent (1 %), provided that for any period that such interest exceeds any applicable maximum rate permitted by law, the interest shall equal said applicable maximum rate. The interest provided for by this Section shall be compounded monthly. If either principal or interest is due, any payments thereafter received shall first be applied to the interest due, then the previously outstanding principal due and lastly, to the most cunent principal due. 7.5 Audit. In the event either Party desires an audit with respect to any services provided by Seller, an accounting firm that is mutually agreeable to the Parties will conduct such audit. The Party seeking the audit will pay the cost of the audit. If any overcharge or undercharge in any form whatsoever shall be found by the audit and the statement therefor has been paid, the Party that has been paid the overcharge shan refund the amount of the overcharge paid and the Party that has been undercharged shall pay the amount of the undercharge, within thirty (30) days after the completion of the audit and notification of such overcharge or undercharge thereof; provided, however, no retroactive adjustment shall be made for any overcharge or undercharge beyond a period of twelve (12) months from the date of the statement on which such overcharge or undercharge was first included. Nothing in this Section 7.5 shall entitle Buyer or Buyer's Municipal Customers the right to audit any Seller records relating to sources of Energy supply. ARTICLE 8. REPRESENT A TIONS AND WARRANTIES 8.1 Necessary Authorizations. Each Party represents that it has all necessary corporate, legal and other authority, including Regulatory Approval, to enter into this Agreement, the Primary Transaction and any subsequent Transaction made in accordance with the terms of this Agreement, and to perform each and every duty and obligation imposed therein, and that this Agreement, the Primary Transaction and any subsequent Transaction made in accordance with the teIms of this Agreement, when executed by the duly authorized representatives of each Party, rcpresents a valid, binding and enforceable legal obligation of each Party. Neither Party to this Agreement shall be required to investigate the authority of the person executing this Agreement, the Primary Transaction or any Transaction entered into hereunder as a condition to enforcing the terms of this Agreement, the Primary Transaction or any subsequent Transaction. 8.2 Montana Retail Electricity License. Buyer represents that, as of the Effective Date, it possesses a valid Montana Retail Electricity License and that all sales made to Buyer's Municipal Customers hereunder are retail electricity sales. Buyer also represents that it will continue to hold a valid Montana Retail Electricity License throughout the Term of this Agreement. In the event Buyer elects not to continue to hold a Montana Retail Electricity License, Buyer shall notify Seller immediately and agrees to cooperate with Seller to structure the sales anangement hereunder to ensure compliance with relevant federal and Montana laws governing retail electricity sales. 505.003f13622.2 8.3 Relationship with Municipal Customers. Buyer represents that, as of the Effective Date, all of Buyer's Municipal Customers set forth on Exhibit "B" attached hereto have executed that certain Agency Agreement and that certain Agreement for Purchase of Electric Power Supply (collectively referred to as the "Agency Agreement") with Buyer, obligating Buyer's Municipal Customers to purchase all of their respective Energy supply from Buyer. Buyer also represents, to the best of Buyer's knowlcdge, that each of Buyer's Municipal Customers has the financial means to satisfy its obligations under their respective Agency Agreement and that none of Buyer's Municipal Customers have had their Energy supply suspended by Energy West Rcsources, Inc. during the term of the Power Sales Agreement that expires on June 30, 2002. ARTICLE 9. ASSIGNMENTS 9.1 Assignment. This Agreement shall be binding upon and shall inure to the benefit of, and may be performed by, the successors and assigns of the Parties, except that, no assignment, pledge, or other transfer of this Agreement by either Party shall operate to release the assignor, pledge, or transferor from any of its obligations under this Agreement unless: (a) the other Party consents in writing to such assignment, pledge, or transfer and releases, in writing, the assignor, pledge or, or transferor from any of its obligations hereunder; (b) the assignment, pledge, or other transfer is to an Affiliate of the assignor, pledgor, or transferor and the assignee, pledgee, or transferee assumes, in writing, all of the obligations of the assignor, pledgor, or transferor under this Agreement, provided that such assignee, pledgee, or transferee demonstrates financial capacity at least equal to that of the assignor, pledgor, or transferor; or (c) such transfer is incidcnt to a merger or consolidation with, or transfer of all, or substantially all, of the assets of the transferor to another person, business, joint venture, trust, corporation, company, governmental body or entity which shall as a part of such succession, assume all of the obligations of the assignor, pledgor, or transferor under this Agreement. 9.2 Assignment of Rights to Payment. Either Party may assign its rights to receive payment under this Agreement including, without limitation, an assignment by Seller to any financial institution or trustee involved with the financing of the business operations of Seller and its Affiliates, without having to first obtain the consent of the other Party. Otherwise, except as provided in Section 9.1, neither Party may assign, pledge or otherwise transfer its rights under this Agreement to any other entity without the consent of the other Party, which consent shall not be unreasonably withheld. ARTICLE 10. ACCOUNTS AND RECORDS; ADMINISTRATIVE SERVICES 10.1 Records. The Parties shall keep complete and accurate records, meter readings and memoranda of their operations under this Agreement and shall maintain such data for a period of at least two (2) years after the completion of the Primary Transaction. Either Party shall have the right to examine and inspect all such records, meter readings and memoranda insofar as may be necessary for the purpose of ascertaining the reasonableness and accuracy of all relevant data, estimates, statements or charges submitted to it hereunder. SOS.003n3622.2 10.2 Administrative Services. Buyer acknowledges that Seller desires to maintain a high level of customer service to Buyer with respect to billing and settlement services. In this regard, Seller intends to engage the services of Energy West Resources, Inc. pursuant to a separate services contract to perform metering computation, itemized individual statements and consolidated billing and other administrative services as are currently being provided by Energy West Resources, Inc. for the Buyer under the Power Sales Agreement scheduled to expire on June 30, 2002. ARTICLE 11. NOTICES 11.1 Notices. Any notice, demand, request, payment, statement, or correspondence provided for in this Agreemcnt, or any notice which a Party may desire to give to the other, shall be in writing (unless otherwise provided) and shall be considered duly delivered when received by mail, facsimile, wire or ovemight courier, at the addresses listed below: (i) To Buyer: Montana League of Cities and Towns, Inc., 208 North Montana Avenue, Helena, MT 59601 Schneider Consulting Services, Inc. 513 First Street, Helena, MT 59601 Reason for Notice: Attention: Facsimile Number: StatementslPa ments , Contractual Operations om Schneider (406) 442-9231/(406) 442-6464 (406) 442-9231/(406) 442-6464 (call first) (406) 442-6464 (call first) Alec Hansen/Tom Schneider Alec Hansen/Tom Schneider (ii) To Scller: N0l1hWestern Energy Marketing, LLC, 125 S. Dakota Avenue, Sioux Falls, SD 57104 Reason for Notice: Attention: Facsimile Number: StatementslPayments Scott Magie/Michael Young (605) 359-0200/(605) 978- 2840 Contractual Scott Magie/Michael Young (605) 359-0200/(605) 978- 2840 Operations/Scheduling Scott Magie/Michael Young (605) 359-0200/(605) 978- 505.003n3622.2 12840 Each Party shall provide the other with all names, telephone and facsimile numbers necessary for its pcrformance under this Agreement, the Primary Transaction and any subsequent Transactions; and cither Party may change the information shown in Section 11.1 by giving written notice to the other Party. ART] CLE 12. MISCELLANEOUS 12.1 Governing Law. The interpretation and performance of this Agreement, the Primary Transaction and all subsequent Transactions shall be governed by and construed in accordance with the laws of the State of Montana without regard to principles of conflict of laws and venue shall be in Lewis & Clark County and no other county. 12.2 Entire Agreement. This Agreement, together with all Exhibits and Schedules attached hereto, constitute the entire agreement between the Parties relating to the subject matter hereof and supersedes any other agreements, written or oral, between the Parties concerning such subject matter. The following Exhibits and Schedules are attached hercto and made a part of this Agreement: Exhibit A Exhibit B Exhibit C Exhibit D Exhibit E Exhibit F Exhibit G Designated Authorized Representatives of the Parties Buyer's Municipal Customers Confirmation Payment Remittance Alternatives Load Shaping and Efficiency Programs "Hedging Plus" Program "Floating Fuel" Program 12.3 No Waiver. No waiver by either Party of any default of the other Party under this Agreement shall opcrate as a waiver of a future default whether of a like or different character. 12.4 Amcndments. No amendment of the terms and provisions of this Agreement or the Confirmation shall be or become effective except by written amendment executed by the Parties. 12.5 Severability. Should any provision of this Agreement or the Confirmation for any reason be declared invalid or unenforceable by final and applicable order of any court or regulatory body having jurisdiction, such decision shall not affect the validity of the remaining portions, and the remaining portions shall remain in effect as if this Agreement or the Confirmation had been executed without the invalid portion. In the event any provision of this Agreement or the Confirmation is declared invalid, the Parties shall promptly renegotiate to restore this Agreement or the Confirmation as near as possible to its original intent and effect. 505.003n3622.2 12.6 Survival. The provisions of this Agreement and the Confirmation concerning payment, confidentiality, and indemnification shall survive the termination or expiration of this Agreement. 12.7 Counterparts. This Agreement may be executed in several counterparts, and all such counterparts shall constitute one Agreement binding on both Parties hereto and shall have the same force and effect as an original instrument, notwithstanding that both Parties may not be signatories to the same original or the same counterpart. 12.8 Construction. The language used in this Agreement is the product of both Parties efforts and each Party hercby irrevocably waives the benefit of any rule of contract construction that disfavors the drafter of a contract or the drafter of specific language in a contract. 12.9 Compliance with FERC and MPSC. The Parties agree that in performance of this Agreemcnt or the Initial Confirmation, they shall comply with all Federal Energy Regulatory Commission ("FERC") and Montana Public Service Commission ("MPSC") rules and regulations, and should any provision of this Agreement or the Initial Confirmation conflict with any FERC or MPSC rules and regulations, the Parties shall comply with the FERC or MPSC rules and regulations. IN WITNESS WHEREOF, the Parties have executed this Agreement effective as of the date first written above. NORTHWESTERN ENERGY MARKETING, LLC By:~-f.b Name: Mi ~\ :r: ~~ Title: Vi~ ~~ k- rt-{- MONTANA LEAGUE OF CITIES AND TOWNS, INC. By: _\ L_.... ~ \....-....-._ Name: nl ~r l-lo..0'5CV1 Title: € '{LCcrr~L'.(J ('1 L~D1<... EXHIBIT "A" DES I GNA TED A UTHORIZED REPRESENT A TIVES OF PARTIES Designated Authorized Representatives Pursuant to Section 1.2 of the Agreement: For Seller: Scott M. Magie NorthWestern Energy Marketing, LLC 125 S. Dakota Avenue Sioux Falls, SD 57104 Phone: (605) 359-0200 Fax: (605) 978-2840 For Buyer: Thomas J. Schneider Schneider Consulting Services, Inc. 513 First Street Helena, MT 59601 Phone: (406) 442-6464 Fax: (406) 442-6464 (call first) Alec Hansen Executi ve Director Montana League of Cities and Towns 208 North Montana A venue Helena, MT 59601 Phone: (406) 442-8768 Fax: (406) 442-9231 505.003m622.2 505.003m622.2 EXHIBIT "B" BUYER'S MUNICIPAL CUSTOMERS A list of Buyer's Municipal Customers is attached hereto as of the date of execution of this Agreement. In addition, an additional exhibit setting forth the lighting accounts for each of Buyer's Municipal Customers, will be attached as soon as possible after the execution of this Agreement, once those lighting accounts are properly and fully identified and tabulated. Montana League of Cities and Towns - July 2000 through July 2001 I City of Great Falls Upper River Rd Water Plant 100542-0 MLCT-1066 OG82692360 City of Great Falls 111 12th St N 100517-2 MLCT-1067 OW68880896 City of Great Falls 4th 5t 8. 1st Ave N 1 00401-9 MLCT-1068 0037665138 Great Falls I TOTAL City of Havre 19512 Ave W 100387-0 MLCT-1069 OG90055197 City of Havre Highland Park 100432-4 MLCT-1070 0584922328 City of Havre 9th SULegion Field Pump 100433-2 MLCT-1071 0555258036 City of Havre 520 4th Street 100437-3 MLCT-1072 0031785195 City of Havre North Havre Treating Plant 1 00440-7 MLCT-1073 OS80073735 City of Havre North Havre Treating Plant 100440-7 MLCT.1073 0056126410 City of Havre City Water Plant Pump 5 100429-0 MLCT-1075 OG9oo18m City of Havre 402 3rd St 100416-7 MLCT-1076 0584829832 City of Havre Sewer Lift Pump 5 of NMC 100442-3 MLCT-lOn 0579892814 Havre I TOTAL City of Helena Reeder's Village Pump House 1 00487-8 MLCT-1078 0039735798 City of Helena Hale Reservoir 1 00491-0 MLCT-1079 0038792869 City of Helena 1995 N Benton Ave 100536-2 MLCT-1080 0038049393 City of Helena 1995 N Benton Ave 100536-2 MLCT.1080 E029132240 City of Helena 1115 Rimini Dr 100510-7 MLCT-1081 OG83129339 City of Helena Downtown Mall 100513-1 MLCT-1082 0582138827 rt-lu.vJU~ ;c 4"~~ Cily sf l'eleRB 291 I> Last C"'af1ae Clolle.... 1991886 MLG"F 19Ba DCeee97S-4-7 City of Helena 3001 E Lyndale Ave 100424-1 MLCT-1084 0593543574 City of Helena 125 N Last Chance Gulch 100511-5 MLCT-1085 0572860414 City of Helena Parking Ramp on 6th Ave 100512-3 MLCT-1086 OS80097551 City of Helena Oalhausen Pump Station 100397-9 MLCT-1087 OW6n83877 City of Helena Eureka Pump Station 5 Main 100509-9 MLCT-1088 0038652248 City of Helena Forrest Estates Water Pumps 100514-9 MLCT-1089 0547122523 City of Helena 650 N Hannaford St 100427-4 MLCT-1090 0548456700 City of Helena 340 Neill Ave 100417-5 MLCT-1091 0033001233 City of Helena 3000 E Lyndale Ave 100420-9 MLCT-1092 0576494819 City of Helena 3000 E Lyndale Ave 100384-7 MLCT-1092 EA95009567 City of Helena 1708 E Custer Ave 100420-9 MLCT-1093 0033212323 City of Helena Cooney Lift Station 100504-0 MLCT.1094 0039873546 City of Helena 2201 N Benton Ave 100418-3 MLCT-1095 0548705984 Helena I TOTAL City of Missoula 625 E Pine St 100403-5 MLCT.1096 0039858462 City of Missoula 3011 Latimer St 100447-2 MLCT-1097 0038491315 City of Missoula 128 W Main St 100457-1 MLCT-1098 0542490318 City of Missoula 1100 Clark Fork Dr 100406-8 MLCT-1099 oG9OO51512 City of Missoula Higgins Ave Bridge 100435-7 MLCT-1100 oG93761 004 City of Missoula 1501 39th St 100389-6 MLCT.1101 oS87384274 City of Missoula 300 5 4 5t E-John Toole Park 100453-0 MLCT.1102 oG90018670 City of Missoula 800 W Broadway St 100451-4 MLCT.1103 0027213187 City of Missoula 201 W Spruce 5t 100404-3 MLCT-1104 0033468896 City of Missoula Caras Park W Tent Plaza 100407-6 MLCT-1105 0039729721 City of Missoula 100 Hickory St 100409-2 MLCT-1106 OG15OO7048 City of Missoula 5 Reserve St-Lift Station 100426-6 MLCT-1107 0037665144 Missoula I TOTAL City of Glasgow Backwash Station 100530-5 MLCT-1119 0584878112 City of Glasgow Treatment Plant 100533-9 MLCT-1120 oG86190548 City of Glasgow Fort Peck Hwy Sewage 100531-3 MLCT-1121 OW68194922 City of Glasgow City Sewer Plant 100532-1 MLCT-1122 0035029552 Glasgow I TOTAL City of Deer Lodge 198 N Frontage Rd 100441-5 MLCT-1123 0568134659 City of Deer Lodge 618 2nd 51. 100405-0 MLCT-1124 OG9OO38784 Deer Lodge I TOTAL City of Belgrade 91 E Central Ave 100434-0 MLCT-1125 oG97260290 Belgrade I TOTAL Town of Cascade Water Treat./Knapp Creek 1 00525-5 MLCT-1126 oG79083667 Cascade I TOTAL City of Conrad 2 mi E 3 mi SofValier 1 00445-6 MLCT-1127 0039874402 City of Conrad 4.5 mi NE of Conrad 100388-8 MLCT-1128 oG76688958 City of Conrad 99 Dry Forks 100386-2 MLCT-1129 OG93799549 Conrad I TOTAL Town of Darby 502 Water St S 100502-4 MLCT-1130 0039591336 Town of Darby Water Pump Tanner St 100501-6 MLCT-1131 oG971 05687 Town of Darby Pump Cole Ave 100500-8 MLCT-1132 0542465151 Darby I TOTAL MLCT Summary 0901 TomRevised2.xlsjf Prepared by Energy West Resources 2/28/2002 MLCT Swnmary 0901 T omRevisedl.xlsjf ?I?R/?Om Montana League of Cities and Towns ~ July 2000 through July 2001 I City of Harlem Lagoon Site 100419-1 MLCT-1133 0039766506 City of Harlem Water Plant 1 00425-8 MLCT-1134 OS76386888 City of Harlem Main Lift Station 100421-7 MLCT-1135 0037113823 City of Harlem City Hall 100423-3 MLCT-1136 OG89630432 Harlem I TOTAL City of Malta N Malta Hwy #242 100452-2 MLCT-1137 0884061764 City of Malta 7th Ave E - Sewer Pump 100444-9 MLCT-1138 0558583055 City of Malta 6175 5th Ave 100443-1 MLCT-1139 OS82093320 City of Malta City Well # 5 Legg Add 100450-6 MLCT-1140 OG83043439 City of Malta City 5hop 100446-4 MLCT-1141 OG86174034 City of Malta 8331st Ave E 100461-3 MLCT-1142 0879892157 City of Malta Booster Pump Top of Hill 100458-9 MLCT-1143 0585662740 City of Malta Trafton Lift Station 100456-3 MLCT-1144 0884436290 City of Malta City Hall 1 00439-9 MLCT-1146 OG15077386 City of Malta 40 8 2nd 5t E 100464-7 MLCT-1147 OG95165747 City of Malta 103 S 7th St W Pump 2 716188-8 0039766471 Malta I TOTAL Town of Manhattan Wellhouse--500 Blk 5 RR Ave I 100414-2 MLCT-1147 0039368110 Town of Manhattan 100 Blk of 50uth 7th 8t 100415-9 MLCT-1148 OS68019728 Town of Manhattan 100 Blk of South 7th St 1 00408-4 MLCT-1148 ES49476669 Town of Manhattan 1132nd8t 100415-9 MLCT-1149 0584899843 Manhattan I TOTAL Town of Plains 4th 5t City Water Well 100495-1 MLCT-115O 0028829188 Town of Plains 6055 Central Ave 100494-4 MLCT-1151 0039895226 Town of Plains 603 5th Ave 100497-7 MLCT-1152 0542659564 Town of Plains 296 Helterline Rd 100496-9 MLCT-1153 0542435353 Plains I TOTAL Town of Sheridan 320 Water St 110413--4 MLCT-1154 OG86190535 Sheridan I TOTAL Town of 5uperior Mullan Rd W - Sewage Plant 100503--2 MLCT-1155 Superior I TOTAL City of Three Forks SE Cmer Talc Rd & 4 Ave E 100523-0 MLCT-1156 0884184929 City of Three Forks End of E Oak on N side of Rd 100438-1 MLCT-1157 OG90018739 City of Three Forks 30 HP Pump.5 Mi E Talc Pint 100520-6 MLCT-1158 0039142898 City of Three Forks 311 Hwy 10 W - Water Well 100522-2 MLCT-1159 0555129328 City of Three Forks Main Street 100521-4 MLCT-1160 OG55096214 Three Forks I TOTAL City of Laurel 113W1stSt 722343-1 MLCT -2002 0563260138 City of Laurel 215W 1st St 723423--0 MLCT-2003 0542689674 City of Laurel 125 7th Ave 5hop 724479-1 MLCT-2004 0595601974 City of Laurel 1501 5ewer Plant Rd 5 Pint 725439-4 MLCT -2005 OS01083583 City of Laurel 1405 Sewer Plant Rd W Pint 725201-8 MLCT-2006 OS82045123 City of Laurel 502 E 13th St Park 725327-1 MLCT -2007 OG78869170 Laurel I TOTAL City of Livingston 405 Bennett St 709794-2 MLCT-2008 OG93740649 City of Livingston 1325BSt 709876-7 MLCT-2009 OG90086966 City of Livingston 229 River Dr 709881-7 MLCT-2010 OG62074757 City of Livingston 56 Water Tower Ave 709894-0 MLCT -2011 0039043049 City of Livingston 414 E Callender St 709935-1 MLCT-2012 OG93741475 City of Livingston 601 Robin Ln 719271-9 MLCT-2013 OG90055816 City of Livingston 4 Billman Ln 719272-7 MLCT-2014 0584209525 City of Livingston 315 Bennett St 720048-8 MLCT-2015 OG93700194 Uvin~.n I TOTAL PreDared bv Enerl[V West Resources '2MMC"1 co ... 0 q,t"CU; iii.. 0 ._ C(O~ e. t >- ~:!::ZZZ ...0000 C/I 1-1-1- ~~~ a: a: a: C(C(c( J:J:J: .~ 5 ~-5 C/I:5!~ C( ~ ;:J, li; a:zo !zg:~ ~~;:: 11).......... 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N~MN~NN~~NNNSNN~~ g..g~~~~~~~ ~~~S~~@8 t~~~~~~~~~ ~~~~~~~~ II( r.. ~8wwwwww~wwwwwwwwww :~~wmm~~~~~~~~~8~~ i~~~~~~~;~~~S~~~~~ !~~~M~~~~~~MM~~~~~ ~ .~~m~~~o~mm~~~~~~~ c~~~~~~m~~~~~~~~oo "~~~81~~~8~~~~~~~~~ 8-~~~~--~~mffi~mm~~~ ~ Additional Lie:htine Loads All 1853 municipal lighting loads for Buyer's Municipal Customers, which list is known to NorthWestern Energy and which list was identified by NorthWestern Energy in PSC Docket No. D2001.1 0.14 in response to MLCT Data Request 1-003. EXHIBIT "C" INITIAL CONFIRMATION Attached. 505.003n3622.2 EXHIBIT "C" NORTHWESTERN ENERGY DEVELOPMENT, LLC AND MONT ANA LEAGUE OF CITIES AND TOWNS, INC. INITlAL PURCHASE AND SALE CONFIRMATlON DATE: June 19,2002 TO: Alec Hansen - Executive Director Entity: MONTANA LEAGUE OF CITIES & TOWNS Tom Schneider - SCHNElDER CONSULTING Telephone: (406) 442-8768 Fax: (406) 442-9231 Telephone: (406) 442-6464 Fax: (406) 442-6464 (call first) CONFlRMATION AGREEMENT Power Sales Agreement Power Sales Agreement Dated June 19,2002 Contact Information NorthWestern Energv Marketing, LLC Seller NORTHWESTERN ENERGY MARKETING, LLC Scott M. Magie Phone: (605) 359.0200 Fax: (605) 978-2840 Buyer MONT ANA LEAGUE OF CITIES AND TOWNS, INC. Alec Hansen Tom Schneider Municipal Customers of Individual cities and towns, listed on Exhibit B attached to Buyer the Power Sales Agreement, who have contracted with the Alec Hansen Buyer to provide energy service to certain of their accounts Tom Schneider as listed on Exhibit B attached to the Power Sales Agreement. Service Firm Electrical Energy Period of Service 60 Months 00 Days Start Date From 0000 hours on July 1,2002 through End Date 2400 hours on June 30, 2007. Those Buyer's Municipal Customers who are currently receiving their Energy from Energy West Resources, Inc. will commence receiving Energy from Seller at 0000 hours on July 1,2002. Seller will work with Energy West Resources, Inc. to coordinate a seamless transition of service to these customers that will include, among other things, an appropriate allocation of the Energy delivered during the billing period that includes June 30, 2002 that differentiates the pricing between the Energy delivered by Energy West Resources, Inc. and Seller. Those Buyer's Municipal Customers who are currently receiving their Energy from MP will commence receiving Energy from Seller immediately following the day and time on which MP conducts the respective customer's final July 2002 meter reading, which readings will occur throughout the month of July 2002. Contract Amounts Firm shaped energy, including all energy losses, shall be delivered to the meters of each of the accounts of Buyer's Transmission and Distribution Delivery Point; Metering Point Contract Price Municipal Customers, per class profile supplied by MP. Sel1er wil1 be responsible for al1 transmission costs to the Montana system. Sel1er will hold the MP network operating agreement in Montana on behalf of the Buyer and Buyer's Municipal Customers. Buyer and Buyer's Municipal Customcrs will pay for the actual Network transmission service, as set forth in the MP tariff (and updated by MP from time to time). This transmission service shall include Transmission, Scheduling, Regulation, Reactive Power and Voltage Support. Seller shall provide all other ancillary services and energy, including energy imbalance, losses, and all operating reserves, required at this time under the MP tariff. To the extent MP files tariff changes that require more services in addition to those set forth in the current MP tariff, and such changes result in an increase in cost, such costs shaII be the responsibility of Buyer. If, however, MP files tariff changes that result in a decrease in Network transmission costs, then such cost reduction shall be credited for the benefit of Buyer and Buyer's Municipal Customers. Moreover, SelIeI' shaII work for the benefit of Buyer to manage and mitigate the cost of Buyer's Network transmission service. To the extent Sel1er can mitigate such cost through incremental sales when such service is either not needed or only partially needed by Buyer, SelIeI' will provide a credit in the form of an offset to Buyer's Municipal Customer's al10cated portion of the cost of Network transmission service on each customer's monthly invoice. For purposes of title transfer, title shaII pass to Buyer upon SelIer's delivery of Firm Energy into MP's transmission system. Notwithstanding title transfer. Seller shall act as Buyer's Scheduling agent to deliver Energy to the meters of each of Buyer's Municipal Customers listed on Exhibit B attached to the Power Sales Agreement in accordance with the terms and conditions of delivery on MP's distribution system. The contract price for al1 Firm Energy for all OS 1 Secondary demand loads delivered under this Confirmation shall be the default supply price per megawatt hour as approved by the Public Service Commission minus U.S. $1.50 per megawatt hour delivered to the meter of each of the accounts of Buyer's Municipal Customers ("Demand Load Contract Price"); provided, however, the Demand Load Contract Price shall at no time exceed $33.11 per megawatt hour ("Maximum Demand Load Contract Price"). The contract price for aII Firm Energy for all (i) OS I Secondary non-demand loads, and (ii) irrigation demand loads delivered under this Confirmation shaH be the default supply price per megawatt hour as approved by the Public Service Commission minus U.S. $0.69 per megawatt hour delivered to the meter of each of the accounts of Buyer's Municipal Customers ("Non~Demand Load Contract Price"); provided, however, the Non-Demand Load Contract Price shall at no time exceed $33.11 per megawatt hour Use by Buyer and Buyer's Municipal Customer Scheduling Control Area Services Fixed Terms Other Considerations ("Maximum Non-Demand Load Contract Price"). The contract price for all Firm Energy for all lighting loads delivered under this Confirmation shall be the default supply price per megawatt hoUT as approved by the Public Service Commission minus U.S. $0.69 per megawatt hour delivered to the meter of each of the accounts of Buyer's Municipal Customers ("Lighting Load Contract Price"); provided, however, the Lighting Load Contract Price shall at no time exceed $33.11 per megawatt hour ("Maximum Lighting Load Contract Price") and at no time shall the Lighting Load Contract Price fall below $31.40 per megawatt hour ("Minimum Lighting Load Contract Price"). The Parties further agree that in the event the Public Service Commission orders the approved default supply price per megawatt hour for any respective rate class to be phased in or otherwise credited over time to the default supply customers, the Contract Price applicable to that rate class under this Confirmation shall be calculated using the approved rate, not the phased in rate during the referenced period; provided however, the total savings over the term of this Confirmation shall aggregate to a savings of at least $1.50 per megawatt hour or $0.69 per megawatt hOUT as applicable, for all Firm Energy delivered. Buyer's Municipal Customers will be directly responsible for all tariffed MP distribution costs, Uniform Systems Benefit Charges (USBS), customer transition charges or credits (CTCs) and any other MP tariffed charges. Seller and Buyer agree that Firm Energy provided under this Confirmation shall constitute a wholesale sale of electricity to Buyer for subsequent retail sale to Buyer's Municipal Customers. Seller, or its assigned agent, shall have the responsibility to schedule all Firm Energy to the Delivery Point(s). Seller, or its assigned agent, shall have the obligation for normal control area services necessary to deliver Firm Energy to MP's system. The terms, conditions and prices specified in this Confirmation shall remain in effect through the Term of the Confirmation and neither Party shall petition any regulatory agency asserting jurisdiction over this Confirmation or the Parties, to amend such terms, conditions and prices, nor shall either Party support such a petition filed by any third Party; provided, nothing in this paragraph be interpreted to prohibit any Party from contesting any petition filed by any third party. The charges related to Buyer's applicable transmission and ancillary services, as described in the "Transmission and Distribution" and "Contract Price" sections of this Credit Terms and Billing Confirmation, shall be determined, allocated and charged to Buyer's Municipal Customers under a rate structure consistent with the transmission component of MP's MPSC approved default rates/tariffs (i.e., $/kwh or $/kw). Because of the delay in receiving transmission and ancillary services invoices from MP, Seller shall charge Buyer's Municipal Customers at an initial rate of $0,0062005/kwh. On a semiannual basis, the actual transmission and ancillary services charges applicable to Buyer's Municipal Customers will be reconciled to charges billed to Buyer's Municipal Customers for the same period, and the net reconciliation amount will be included on Buyer's Municipal Customers' next monthly invoice as either a separate transmission charge or credit. Seller shall provide Buyer documentation of the reconciliation calculations. After each semiannual reconciliation process, the prospective rate will be adjusted to reflect actual results for the prior six (6) month period. Nothing herein shall be interpreted to preclude Seller from being entitled to reimbursement of 100% of the Buyer's applicable transmission cost incurred on Buyer's aggregate load. In the event the MPSC establishes a demand charge structure ($/kw) for the transmission component, the applicable transmission rate for the small non-demand metered customers should be calculated as total applicable charges divided by total kwh during the period. Prospective semiannual rates and any reconciliation charges or credits should be calculated and applied in the same manner for these small non-demand metered customers. Seller shall provide Consolidated Invoices and utilize the billing and payment practices set forth in Section 7 of the Power Sales Agreement. This Confirmation is being provided to Buyer in accordance with the Power Sales Agreement dated June 19,2002, (the "Power Sales Agreement") between Buyer and Seller, and constitutes part of and is subject to all of the terms and provisions of such Power Sales Agreement; provided however, in the event any terms of the Power Sales Agreement conflict with or are inconsistent with the terms of this Confirmation, the terms of this Confirmation shall prevail and control the terms of this Primary Transaction. Terms used but not defined herein shall have the meanings ascribed to them in the Power Sales Agreement. MONT ANA LEAGUE OF CITIES AND TOWNS, INC. NORTHWESTERN ENERGY MARKETING, LLC Please execute this Confirmation and return an executed copy to Seller by facsimile transmission at (605) 978-2840 within two (2) Business Days of receipt. In the event you fail to execute and deliver this Confirmation or otherwise fail to provide any written objections to this Confirmation within the specified time, you will be deemed to have accepted the terms and conditions set forth herein. BY: _ l L. # ~ NAME: lA.. 1 f: C" t-la ,^.~IL.. V1. TITLE: .sc "e-c-:-O"\ \ ().... d i n.cc.~a.... TITLE: EXHIBIT "D" PAYMENT REMITTANCE AL TERNA TIVES 505.1Xl3n3622.2 EXHIBIT "E" LOAD SHAPING AND E}"'FICIENCY PROGRAMS Seller will coordinate value-added services with Buyer and participating Buyer's Municipal Customers, which will include identifying conservation and/or load shifting opportunities. Seller will develop a set of four pricing periods within each day to define basic market conditions. Seller will estimate the effect of conservation and/or load shaping in each of the four pricing periods, based upon current market conditions. Participating Buyer's Municipal Customers will coordinate planned load shifting with Seller each month, or such time period as mutually agreed. The coordination is critical in order to quantify the maximum potential "credit" effect. Seller will re-market the combined energy surplus that is a direct result of planned conservation or load shifting and provide the net proceeds of such transactions as a "credit" to the participating Buycr's Municipal Customers. The energy surplus will be calculated as the historical load less the quantified planned conservation or load shifting. Permanent efficiency programs will also be quantified and credited as mutually agreed. 505.003n3622.2 Participating Buyer's Municipal Customers will be provided with a monthly "credit" for adapting energy consumption. To the extent possible, Seller will apply any applicable "credit" directly to the account responsible for the conservation. Participation in these programs is at the sole and absolute discretion of Buyer's Municipal Customers. Buyer's Municipal Customers may join and withdraw from these programs at any time during the Term of the Agreement. Due to administrative burdens, however, any Buyer's Municipal Customer that withdraws during a calendar year cannot elect to re-enroJJ in the program until the start of the next calendar year. Pricing Periods (may be changed from time to time, based upon market conditions) are as follows: Peri od Summer Winter I HE 1300-1800 HE 0700-1000 2 HE 0700-1200 HE 1600-2000 3 HE 1900-2200 HE 11 00-1500 4 HE 0 I 00-0600 HE 0100-0600 The following illustrates how the above program will work to pass the savings through to the participating Buyer's Municipal Customers: er Month Load Shaving Quantity (10%) 1,170 Original Energy Cost Efficiency "Savings" Effective Energy Cost Percentage Savings Initial Hed e Price $32.41 Market Price $48.62 Effective Discount Analysis $379,197.00 $ 56,879.55 $322,317.45 5.6% Total Ener Cost $379,197.00 Total "Savings" Energy Sales $56,879.55 505.003173621.2 EXHIBIT "F" "HEDGING PLUS" PROGRAM The commodity market is influenced by constantly changing fundamental and psychological factors. In light of this fact, Seller agrces to offer a service to Buyer's Municipal Customers referred to as "Hedging Plus". Hedging Plus is a service which constantly monitors the appropriateness of hedges. Since Seller cannot determine each Buyer's Municipal Customer's risk profile for thcm, the service effectively creates a price guarantee. Essentially, the initial hedge price reflects the effective maximum price each participating Buyer's Municipal Customer shall pay for its Energy. However, Seller does monitor the market in order arbitrage day-ahead versus real-time market prices as well as longer-tenn commodity price movements. Each participating Buyer's Municipal Customer will share in a percentage of the profits, but not be required to participate in any risk or losses arising from adverse market conditions. Restated, participating Buyer's Municipal Customers can only benefit from the hedging plus services, and in no circumstances shall participants' price be higher than the original hedge price. Seller shall calculate the profits of such market activity and provide a credit to participating Buyer's Municipal Customers each calendar quarter. Since the risk is born completely by Seller, the profit sharing reflects an unequal allocation of the savings (30% to Buyer). Furthermore, Seller is not required to coordinate market transactions it deems to present significant risk. For example, assume Seller discovers through market information that, due to fish concerns, BP A must maintain high flows throughout the weekend. Seller will therefore sell the energy held as a hedge for participating Buyer's Municipal Customers in the day-ahead or week-ahead market and purchase back at a lower price in the hourly market over the weekend. A second example of Seller's ability to manage risk is demonstrated by the gas-fired combined cycle facility owned and operated by an affiliate of Seller, which provides the ability to coordinate market opportunities. Additionally, the merchant generation activity requires Seller to constantly focus on the wholesale market. Specifically, Seller can either re-scll fuel or inject the fuel into storage, for later use. The plant can then be shut down at night in order to purchase from less flexible base-load facilities or cheap hydro resources. The following illustrates how the above program would benefit participating Buyer's Municipal Customers: er Month Initial Hed e Price $32.41 Total Ener Cost $379,197.00 Hed e Exit Price $29.00 "New" Hed e Price $27.50 505.003n3622.2 Shared Savings Percentage Allocated to Buyer: Initial Hedge Price "New" Effective Hedge Price] Percentage Savings Net Optimization Value $32.41 $31.96 1.4% 30% I Amount is determined as follows: lnitial Hedge Price - [(Hedge Exit Price - "New" Hedge Price) x 30%]. 505.003n3622.2 ~ EXHIBIT "G" CONTINUED "}4'LOA TING FUEL" PROGRAM "Floating Fuel" Structure Seller will quantify the benefit of constructing a portion of the portfolio to react to floating fuel (natural gas) prices. The peaking portion of the portfolio will be attributed to a corresponding fuel price. Seller will present to participating Buyer's Municipal Customers numerous structures, which provide value for the participants, and will completely identify any associated risk. To the extent, fuel prices decrease and strategic hedges are implemented, participating Buyer's Municipal Customers will benefit by a predetermined multiple. Each Buyer's Municipal Customer may participate in this program in its sole discretion. If a Buyer's Municipal Customer does not elect this service, then the customer will maintain the agreed upon fixed price hedge. Seller, utilizing forward hedges and storage, will optimize any agreed upon floating fuel structure. Such a strategy may result in a significantly lower effective price, but does present some risk. To compliment this strategy with some maximum price certainty, participating Buyer's Municipal Customers may desire to utilize a cap or a costless collar in order benefit from lower fuel prices while limiting risk. This floating fuel strategy for a portion of the portfolio will typically be accompanied with predetermined "target prices" at which hedges would be placed. The following illustrates this floating fuel structure: Assumed Gas Price 5 Year Price Base Case - Full Requirements with Li htin $3.00 $32.41 Fuel Decrease - Full Requirements with Li htin $2.40 $31.61 Fuel Increase - Full Requirements with Li htin $3.30 $32.81 505.003f73622.2 MONTANA LEAGUE OF CITIES AND TOWNS P. o. BOX 1704 HELENA, MT 59624 (406) 442-8768 Fax (406) 442-9231 FEDERAL ID #81-0302984 Thursday, January 23, 2003 City Manager Clark Johnson City of Bozeman P. O. Box 1230 Bozeman, MT 59771 Rob"U..1 , .::L ~ ~NE...t> AS I {z11 o~ -1 1 .~.~---~------------~~-- d~~\oe.J INtt 2..1..3 Dear Clark: Enclosed please find the 2002-2007 Agreement for Purchase of Electric Power Supply between the Montana League of Cities and Towns and your municipality. Attached as Exhibit 1 to each Agreement is a copy of the 2002-2007 Power Sales Agreement and Initial Confirmation between the League and NorthWestern Energy Marketing, LLC. Attached as Exhibit 2 to each agreement is a copy of the specific municipal loads to be served by this Agreement. Enclosed is one full original of the Agreement, with a duplicate Notice page and signature page. You should fill out the name, title and address of the municipal representative entitled to receive notice under the Terms of the Agreement. These two pages are marked with flags. Please execute both signature pages, preferrably in blue ink. These signature pages are also marked with flags. When completed, return one original signature page and one Notice page in the enclosed prepaid mailing envelope to the League office. Keep the fully executed document for your files. We have a duplicate document (minus the signature and Notice pages) in our office. Please note that pursuant to the MLCT's prior agreement with each municipality, the very first paragraph of the Agreement shows that the effective date of this Agreement is the same effective date as the Power Sales Agreement that MLCT entered into with NorthWestern Energy Marketing, LLC: June 19, 2002. If you have any questions, please do not hesitate to contact me. Sincerely, _\\ Alec Hansen Executive Director AGREEMENT fOR PURCHASE OF ELECTRIC POWER SUPPLY - Page 1 505.007/1 12700 AGREEMENT FOR PURCHASE OF ELECTRIC POWER SUPPLY This agreement for purchase of electric power supply ("Agreement") is made effective the 19th day of June, 2002 ("Effective Date"), by and between Montana League of Cities and Towns, Inc., a Montana non profit corporation (the "League") and the City of Bozeman, a Montana municipality ("Buyer"). The League and Buyer are sometimes referred to individually as "Party" and collectively as "Parties". Recitals A. Buyer and the League entered into that certain Agency Agreement ("2002 Agency Agreement"), whereby Buyer (1) designated the League as Buyer's exclusive agcnt for purposes of acquiring electric power supply to serve selected accounts and loads of Buyer and (2) authorized the League to seek power supply proposals and entcr power supply contracts with commodity suppliers upon a demonstration of power supply cost savings to Buyer. B. Pursuant to the 2002 Agency Agreement, the League solicited, negotiated and entered into a Power Sales Agrcement ("2002-2007 Power Sales Agreement") and Initial Confirmation ("2002-2007 Initial Confirmation") with NorthWestern Energy Marketing, LLC ("NEM") for the supply to Buyer of electric power by NEM to serve selected accounts and loads of Buyer, copies of which agreements are attached hereto as Exhibit 1 and as Exhibit C to Exhibit 1. C. Pursuant to the terms and conditions of the Agency Agreement and this Agreement, Buyer now desires to purchase energy from NEM and comply with all terms and conditions of the 2002-2007 Power Sales Agreement. NOW THEREFORE, in consideration of the mutual covenants and promises contained herein, thc Parties agree as follows: Agreement 1. Definitions. All defined terms not defined in this Agreement shall have the definitions as contained in the 2002-2007 Power Sales Agreement. 2. Energv Purchase. Pursuant to the terms ofthe Agency Agreement, and on behalf of and for the account of Buyer, the League entered into a transaction to purchase energy from NEM by entering into the 2002-2007 Power Sales Agreement and 2002-2007 Initial Confirmation attached to the Power Sales Agreement as Exhibit C thereto. The period of service for the 2002- 2007 Energy Purchase shall commence 0000 hours on July I, 2002 and shall expire 2400 hours on June 30, 2007 ("Period of Service"). Buyer hereby ratifies the actions of the League in soliciting, negotiating, and entering into the 2002-2007 Power Sales Agreement and 2002-2007 Initial Confirmation on behalf of Buyer. Buyer further agrees to purchase energy from NEM to service the selected loads and accounts of Buyer as listed in Exhibit 2 attached hereto. Buyer AGREEMENT FOR PURCHASE OF ELECTRIC POWER SUPPLY - Page 2 505.00711 12700 further agrees to comply with all of the terms and conditions ofthe 2002-2007 Power Sales Agreement and 2002-2007 Initial Confirmation. 3. Delivery of Energy Pursuant to Energy Purchase. Pursuant to the terms of the 2002- 2007 Power Sales Agreement and the 2002-2007 Initial Confirmation, Buyer shall purchase and receive, or cause to be received, at the Delivery Point the System Firm Energy Service and Contract Amounts sold and delivered by NEM. Buyer shall pay NEM the Contract Price for all delivered System Firm Energy Service and Contract Amounts. 4. Buver's Further Obligations. Buyer shall have each and every other obligation described in the 2002-2007 Power Sales Agreement and the 2002-2007 Initial Confirmation, including but not limited to acceptance of Energy at the Delivery Point, payment of the Contract Price, transmission charges, payment of Taxes, if any, compliance with the payment and billing procedures, and maintenance of records. 5. Indemnification of the League. Buyer hereby agrees to indemnify and hold harmless the League for any and all liability, Claims, damages, costs (including attorneys' fees), fines, penalties, liabilities, actions or proceedings in tort, contract or otherwise, arising from the League's negotiations with or the purchase of electricity from NEM on behalf of and for the account of Buyer. 6. Necessary Authorizations. Each Party represents that it has all necessary corporate, legal and other authority, including Regulatory Approval, to enter into the Agency Agreement and this Agreement, and to perform each and every duty and obligation imposed in this Agreement, the 2002-2007 Power Sales Agreement and the 2002-2007 Initial Confirmation, and that this Agreement, when executed by the duly authorized representatives of each Party, represents a valid, binding and enforceable legal obligation of each Party. Neither Party to this Agreement shall be required to investigate the authority of the person executing this Agreement as a condition to enforcing the terms of this Agreement. 7. Assignment. This Agreement shall be binding upon and shall inure to the benefit of, and may be performed by, the successors and assigns of the Parties, except that, no assignment, pledge, or other transfer of this Agreement by either Party shall operate to release the assignor, pledge, or transferor from any of its obligations under this Agreement unless: (a) the other Party consents in writing to such assignment, pledge, or transfer and releases, in writing, the assignor, pledge or, or transferor from any of its obligations hereunder; (b) the assignment, pledge, or other transfer is to an Affiliate of the assignor, pledgor, or transferor and the assignee, pledgee, or transferee assumes, in writing, all ofthe obligations of the assignor, pledgor, or transferor under this Agreement, provided that such assignee, pledgee, or transferee demonstrates financial capacity at least equal to that ofthe assignor, pledgor, or transferor; or (c) such transfer is incident to a merger or consolidation with, or transfer of all, or substantially all, of the assets of the transferor to another person, business, joint venture, trust, corporation, company, governmental body or entity which shall as a part of such succession, assume all of the obligations of the assignor, pledgor, or transferor under this Agreement. AGREEMENT FOR PURCHASE OF ELECTRIC POWER SUPPLY - Page 3 505.007/] 12700 Either Party may assign its rights to receive payment under this Agreement without having to first obtain the consent of the other Party. Neither Party may assign, pledge or otherwise transfer its rights under this Agreement to any other entity without the consent of the other Party, which consent shall not be unreasonably withheld. 8. Notices. Any notice, demand, request, payment, statement, or correspondence provided for in this Agreement, or any notice which a Party may desire to give to the other, shall be in writing (unless otherwise provided) and shall be considered duly delivered when receivcd by mail, facsimile, wire or overnight courier, at the addresses listed below: (i) To thc League: Alec Hansen Montana League of Cities and Towns, Inc. 208 North Montana Avenue Helena, Montana, 59601 Fax: (406) 442-9231 (ii) To Buyer: ~ 'K V. ~o \h",So'N.. L 1J..,/ C:,F ~'2.c;,N\.At4. N\QM~f"U~ '90 ~o);. I Z.o!) fly..74!;AAAt-.l 1\I'Io",<<"p.N.~ "5'1771 - IZ03 F~l.. "fOfp S'ez.- Z3'Oz. (iii) To NEM: Scott Magie and Michael Young NorthWestern Energy Marketing, LLC 125 S. Dakota Avenue Sioux Falls, SD 57104 Fax: (605) 359-0200 and (605) 978-2840 9. Miscellaneous. 9.1 Governing Law. The interpretation and performance ofthis Agreement shall be governed by and construed in accordance with the laws ofthe State of Montana without regard to principles of conflict oflaws, and venue shall be in Lewis and Clark County, Montana. III [THIS SPACE INTENTIONALLY LEFT BLANK] III AGREEMENT FOR PURCHASE OF ELECTRIC POWER SUPPLY - Page 4 505.007/112700 9.2 Entire Agreement. This Agreement, together with all Exhibits and Schedules attached hereto, constitutes the entire agreement between the Parties relating to the subject matter hereof and supersedes any other agreements, written or oral, between the Parties concerning such subject matter. The following Exhibits and Schedules are attached hereto and made a part of this Agreement: Exhibit 1 Exhibit 2 2002-2007 Power Sales Agreement (with 2002-2007 Initial Confirmation) Selected Loads and Accounts of Buyer 9.3 No Waiver. No waiver by either Party of any default of the other Party under this Agreement shall operate as a waiver of a future default whether of a like or different character. 9.4 Amendments. No amendment ofthe terms and provisions of this Agreement shall be or become effective except by written amendment executed by the Parties. 9.5 Severability. Should any provision of this Agreement for any reason be declared invalid or unenforceable by final and applicable order of any court or regulatory body having jurisdiction, such decision shall not affect the validity of the remaining portions, and the remaining portions shall remain in effect as if this Agreement had been executed without the invalid portion. In the event any provision of this Agreement is declared invalid, the Parties shall promptly renegotiate to restore this Agreement as near as possible to its original intent and effect. 9.6 Survival. The provisions of this Agreement concerning payment and indemnification shall survive the termination or expiration of this Agreement. 9.7 Counterparts. This Agreement may be executed in several counterparts, and all such counterparts shall constitute one Agreement binding on both Parties hereto and shall have the same force and effect as an original instrument, notwithstanding that both Parties may not be signatories to the same original or the same counterpart. 9.8 Construction. The Agreement shall not be construed against anyone party for having drafted it. 9.9 Compliance with FERC and PSC. The Parties agree that in performance of this Agreement, the 2002-2007 Power Sales Agreement or the 2002-2007 Initial Confirmation, they shall comply with all FERC and PCS rules and regulations, and should any provision of this Agreement, the 2002-2007 Power Sales Agreement or the 2002-2007 Initial Confirmation conflict with any FERC or PSC rules and regulations, the Parties shall comply with the FERC or PSC rules and regulations. III [THIS SP ACE INTENTIONALLY LEFT BLANK] III AGREEMENT FOR PURCHASE OF ELECTRIC POWER SUPPLY - Pllge 5 505.007/112700 IN WITNESS WHEREOF, the Parties have executed this Agreement effective as of the date first written above. MONTANA LEAGUE OF CITIES AND TOWNS, INC. By: _\L - \- ~- Alec Hansen, Executive Director THE CITY OF BOZEMAN BY:~ Name: Ll...Af'C t::.. y. ..Jol-l ~~ Title: L,..t.., MANll.bt~e:. AGREEMENT FOR PURCHASE Of ELECTRIC POWER SUPPLY. Page 6 505.007/112700 EXHIBIT 1 2002-2007 POWER SALES AGREEMENT (WITH 2002-2007 INITIAL CONFIRMATION) Attached. AGREEMENT FOR PURCHASE OF ELECTRIC POWER SlJPPL Y - Page 1 SOS'(107/112700 EXHIBIT 2 SELECTED LOADS AND ACCOUNTS OF BUYER Attached. I City of Bozeman City of Bozeman City of Bozeman City of Bozeman City of Bozeman City of Bozeman City of Bozeman City of Bozeman City of Bozeman City of Bozeman City of Bozeman Bozeman MLCT Summary 0901 TomRevised2.xllijf '"l/'"lQ/'"lnn'"l Montana League of Cities and Towns - July 2000 through July 2001 7022 Sourdough Rd Bogart Park Bandstand 1211 W Main St 814 N Rouse Ave 814 N Bozeman Ave Intersect - Pear & L St N End 410 S 19th Ave Wastewater Plant Admin 807 N Tracy Ave 411 E Main St 220 E Lamme St Pt',-"'n~t'(),-l h.v Pnf31"IT11 W&JIQt RpQ(-'i'.l"'rl"~~ 100462-1 100460-5 100529-7 100393--8 100395-3 100410-0 100526-3 100527-1 100400-1 10052a..9 100399-5 MLCT-1018 MLCT-1019 MLCT-1020 MLCT-1021 MLCT-1022 MLCT-1023 MLCT-1024 MLCT-1025 MLCT-1026 MLCT-1027 MLCT-1028 DG64492171 OG93769578 DA02757032 OG55859916 0038302498 0039729025 DG50572082 OG97134208 OG93n5718 OS50950270 I TOTAL