6.1. SR 03-07-2011REQUEST FOR ACTION
TO
ITEM NUMBER
City Council and Utilities Commission
6.1.
AGENDA SECTION
MEETING DATE
PREPARED BY
joint Meeting
March 7, 2011
Troy Adams, P.E. — ERMU Director
of Operations
ITEM DESCRIPTION
REVIEWED By
Elk River Municipal Utilities' CAPX2020 Brooking -Twin Cities
Lori Johnson, City Administrator
Transmission Project Investment Options
REVIEWED BY
ACTION REQUESTED
Review of option for Elk River Municipal Utilities (ERMU) to increase investment allocation into
CAPX2020 Brookings -Twin Cities Transmission Project with Midwest Municipal Transmission Group
(MMTG) through Central Minnesota Municipal Power Agency ( CMMPA). Decision to increase
allocation requires Utilities Commission approval and City Council approval per CMMPA bonding
requirements. Decision to increase allocation to be made at the March 14`'' joint City Council and
Utilities Commission meeting. Representatives from CMMPA will be at the March 7"' and March 14'h
joint City Council and Utilities Commission meetings.
BACKGROUND /DISCUSSION
In May 2006, the Utilities Commission authorized joining MMTG to explore the potential to obtain
ownership in the transmission system. In February 2007, ERMU entered into an agreement to participate
through CMMPA in the CAPX2020 Brooking -Twin Cities Transmission Project. This represents
ERMU's direction to own instead of rent.
In mid February, CMMPA received notice that the Federal Energy Regulatory Commission (FERC)
awarded all the incentives that were pending. Representatives from CMMPA will be able to elaborate on
the impact of this ruling on this project.
FINANCIAL IMPACT
One of the questions that had been raised by staff was the impact of the project bonding on the City and
Utilities. The bond counsel for CMMPA on this project, Virginia Rutledge of Public Financial
Management, provided a teleconference discussion on the impact of the debt issuance of municipal
general obligation bonds and municipal utility bonds issued with electric revenue as the source for debt
service. According to CMMPA bond counsel, the CMMPA bonding related to this project will not
impact a City's bond rating or ability to issue municipal general obligation bonds. This bonding will not
affect the ability for the municipal utility to issue revenue bonds. Also, the bonding associated with this
project will not require the municipal utility (through bond covenants) to have reserves dedicated to this
bonding.
The original $1,993,134 investment in direct costs that ERMU is currently under agreement for results in
$2,246,896 in total debt supported. The return on this investment through the CMMPA bonding is
designed to provide approximately $45,770 annually over the 40 year project life.
The option for increasing the investment allocation would have a maximum direct cost of $6,489,038 and
result in $7,509,173 in maximum total debt supported. The return on this increased allocation investment
through CMMPA bonding is designed to provide approximately $124,102 annually over the 40 year
project life.
Representatives from CMMPA will provide a detailed financial overview for the City Council and Utilities
Commission at the time of the meeting.
ATTACHMENTS
• CAPX2020 Brookings -Twin Cities Transmission Project — Project Overview
• CAPX2020 Brookings -Twin Cities Transmission Project — CMMPA Downstream Agreement
• CAPX2020 Brookings -Twin Cities Transmission Project — Commission Resolution
• CAPX2020 Brookings -Twin Cities Transmission Project — Council Resolution
Action Motion by Second by Vote
Follow Up
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Topics
■ Transmission Investment Opportunity
■ Why invest strategically
■ The Economics of the investment
■ Status and Issues to be resolved
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The Present:
• Highly constrained transmission grid
• Very little transmission has been built in the last 30 years
• Current transmission assets are close to being fully depreciated
• Current transmission rate base is small
F The Past:
NSP transmission rates increased by 60% in 2006 when NSP grandfathered
agreements (GFAs) expired
The future:
• Large scale expansion in transmission infrastructure is needed
• As a result, transmission rates are projected to increase by over 100% in the next
10 years
There are opportunities for municipals to invest in transmission ownership
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MISO Network
Tariff Paid
Debt
Service
MISO Tariff
Recovery Proportional tIf Transmission owned
i! contributed to MISO rate base
7
MISO Network
Tariff Paid
Debt
Service
M ISO Tariff
Recovery
Tariff
the Debt y on
Investment the
Why Invest?
• To offset anticipated future transmission tariff increases
• Investing in transmission is a way to hedge future
increases in transmission costs
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• Formed in Spring of 2004
• Regional coalition of electric
utilities
• 11 utilities
— 3 investor -owned utilities
— 3 electric cooperatives
— 4 municipal agencies
— 1 municipal
• Formed to meet projected
transmission needs in 2020
• - . r-
Nearly 720 miles
In- service dates from 2012 to 2015
Fargo -St. Cloud- Monticello 2013
250 mi, 345 -kV
Brookings County- Hampton
250 mi, 345 -kV
2015
Hampton- Rochester -La Crosse
150 mi, 345 -kV
2015
Bemidji -Grand Rapids 2012
70 mi, 230 -kV
• Alleviates emerging community service reliability
concerns
• Critical foundation for future transmission
and generation, including renewable resources
• 345 kV Lines "Double Circuit Ready"
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Brookings Line Project
Projected cost $827M (2010$)
250 mile 345 kV line
113 Double circuit ready
[3 9 substations
0 Subscriptions illustrated below
(subject to change)
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Xcel 72.1%
GRE (CM) 16.5%
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Brookings Line.High-Level Schedule
Mid 2011 2015
Sign Upstream Agreement, In Service Date
Financial Close & Start Construction
(Downstream Agreements 15
need to be signed by March 1)
PA,
Current Brookings Line Participatiorl
Levels for CMMPA/MMTG
CMMPA entered into a
Project Development
Agreement in 2007 on
behalf of the CMMPA and
MMTG participants for a
total investment of $13.2 M
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.3 16 cities subscribed to
CAPX2020 Brookings
proj ect
m 10 CMMPA members
N 6 non-CMMPA members
Brookings-Twin Cities Project Brookings-Twin Cities Project
Agency Participants
Participant Election Share
Participant Election Share
Blue Earth Light & Water
19,70%
$
2,591,732
Delano Municipal Utilities
5,29%
$
695.9,52
Fairfax City of
1,35%
$
177,6,06
Granite Falls City of
3.16%
5
415,730
Janesville Utilities
1,40%
$
184,1114
Kenyon Municipal Utility
2.52%
S
331.631
Mountain Lake Municipal Utilities
2-17%
$
285,485
Slcapy Eyo Public Utilitic--
7.56%
S
997.226
Springfield Public Utilities Commission
2,80%
$
368,368
Windom City of
6,68%
$
878,821
Subtotal Agency Participants
52.650/6
$
6,926,634
Open Participants
River
L
1615
$
1,93, lam'.
Independence Light & Power
1.89%
5
248,648
Indianola Municipal Utilities
3,79%
498,6,12
Montezuma Municipal Light & Power
0,76%
99,986
Waverly Light & Power
0.76%
$
99,986
Willmar Municipal Utilities
25,00%
3,289,000
Subtotal of Open Participants
47.35%
6,229,366
Total Participants
100.00% $
13,156,000
CMMPXs current subscription levels reflect recommendations based 16
sn a prior neutral Investment calculation performed back in 2007
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Limit Reflecting �NITEP 200
Load Ratio Share Commitment: $6,265,278
Current Commitment: $1,993,134
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N—ecessary Gross Up Adjustments
No
The load ratio share investment level which CMMPA contracts for in the
upstream agreement needs to be grossed up for the following adjustments
71 Externally driven
• Inflation from 2010 $ to the 2011, 2012, 2013 and 2014 construction years
• To accommodate an increase for the upstream CM Max
• To finance bond underwriting costs
Internally driven
0 To allow for CMMPA indirect cost associated with financing
• Interest during Construction
• Setting up Debt Reserve Fund
To accommodate financing for the first two years 0 & M
E3 The recovery of 0 & M will always lag by two years due to the Attachment 0 tariff filing process
o We conservatively an 0 & M cost of 5%/year of the original investment
This could be substantially lower than this
In any case may probably want to set up some sort of reserves fund for Renewals and Replacement
As a the investment level indicated in your formal resolution need to gross up the
$6,265,278 investment level (i.e. its Pro Rata of its Load. Ratio Share) by 14% to a
investment level of $7,140,953.
m In the event that a co-participant chooses less than their pro-rata load ratio share, if YOU want to leave the
option open to investment higher than its pro-rata load ratio share, then you may want to consider
designating a number based on greater than its pro-rata load ratio share
0 All participants will be have first rights to their pro-rata load ratio share and any remaining investment I-ights
will. be available pro-rata to participants interested in investing over their pro-rata load ratio share
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Preliminary Economic Assumptions
Assuming
Brookings will be MISO Board approved as an MVP
100% of our investment qualifies for tariff recovery
® 100% tax - exempt financing
FERC approval of CMMPA incentive rate filing
QI
Brook--ings Line Project Cash Flow
Before Reserve Impact at Recommended Investment Level
When total revenue falls
below the sum of the debt
service and O&M, there is
a negative cash flow
Reserve
Requirement
—Total Revenue
3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 13 15 37 39 41 43
Brookings Line Project as Flow
After Reserve Impact at Recommended Investment 1---,evel
Reserve Req
Covered with
Additiona I Debt
t
Investment Level
Reserve impact eliminates
I the negative cash flow
,;R_ -
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II
Requirement
g::�;;j: Q &M incurred
M Debt Service,
3 5 7 9 11 1.3 15 17 14 21 23; 25 27 29 31 31 35 37 39 41 43 Total Revenue
26
Cumulative 6
of Return the Assets
Excludes O&M and Depreciation (Per $100,000
$300,000
$250,000
$200,000
$150,000
$100,000
$50,000
$0
-2 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42
Term (Years)
With FERC Incentives
■ 11 Year Simple Payback
■ 28 % Return on Investment
Without FERC Incentives
■ 14 Year Simple Payback
■ 14% Return on Investment
PA�-,
A cti on jlnaction example Regarding
Brookings Line
ESTIMATED TRANSMISSION TARIFF PAID
CAL TRANSMISSION RECOVERY
Do Nothing
Original Investment
F A
LRS Investment
$3,262,262 1 $10.42 1 $3,262,262 1 $10.42 1 $3,262,262 1 $10.42
($58,437) ( ($0.19) 1 ($58,437) 1 ($0.19) 1 ($58,437) 1 ($0.19)
BROOKINGS TRANSMISSION RECOVERY -GROSS
$0
$0.00
($360,887)
($1.15)
($940,398)
($3.00)
BROOKINGS DEBT SERVICE
$0
$0.00
$162,089
$0.52
$509,515
$1.63
BROOKINGS NET RECOVERY
$0
$0.00
($198,798)
($0.63)
($430,883)
($1.38)
Participant Load (MWh)
313,1531 1 313,15
313,153
M•
Project disks
Obligation to maintain and replace, no matter how costly
We would carry insurance to cover insurable losses
Non - insured cost would most likely all qualify for tariff recovery
Because of the very attractive projected returns on our investment, this risk is really more about
not having total control over our balance sheet and becoming more leveraged than desired
Obligation to make necessary improvements to accommodate future interconnection generators
• The tariff requires the interconnecting generator to reimburse the transmission provider
• In general it is very hard to conceive of a situation where any cost required by regulatory
requirements would not be recoverable in the tariff
Possible future NERC Compliance responsibilities and obligations
Regulatory Risk
FERC Incentive and MISO MVP Cost Allocation will be resolve by the before we decide to
proceed, but we have no assurances about other possible regulatory changes
• It is highly unlikely that MISO or FERC would retroactively make changes to the tariff that
adversely affect the project economics
• If regulatory changes were to occur in the future, they would most likely apply to future
transmission and we would most likely get grandfathered
3 The elimination of MISO in the future
• If this were to occur we would have to recover our coast through other tariff methods where the rules on
recovery may be different
• Biggest risk here is that the hypothetical capital structure may not be recognized
• However the projected economics still yield a 14% return even with out the hypothetical capital structure
Sr'l umming Up
CMMPA is optimistic that:
• It will be granted Incentive Rates from FERC
• FERC will approve the MISO MVP tariff
With these FERC transmission incentives, there is significant economic benefit
to invest in CAPX2020 Brookings using tax - exempt debt (or taxable debt)
This economic benefit is greatest when the investment is financed by tax - exempt
debt
'9il1
SPA
The following issues are currently being resolved:
Get final sign -off from bond counsel of tax - exempt financing limits for
transmission investments OK
FERC approval of MISO tariff filing establishing the MVP tariff Approved.
Inclusion of Construction Work In Progress (CWIP) in rate base
o Using a Hypothetical Capital Structure (55% equity /45% debt)
Recognize an equity return of 12.38%
o Recovery of Abandoned sunk costs should the project be canceled
32
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Brookings Project Tentative Schedule
November 2010 - Participant Downstream Agreement review
• Discussion draft of the Brookings Downstream Agreement is expected to be ready for participants'
attorney review November 2010
• We need to begin al review of downseam contracts with Participants' attorneys this fall prior to
gin 1q- tr
the final resolution of all issues
November 2010 — Determine Participant investment levels
m We need to begin legal review of contracts and identify Participant investment-, levels this fall prior to
the final resolution of all issues
r
o March 2011 — Execution of downstream Brookings transmission contracts
1! June 2011 — Anticipated signing of Brookings Upstream Agreements
July 2011 — Financial Close and Construction Start of the Brookings Project
Brookings in-service date is 2015
34
BROOKINGS - TWIN CITIES TRANSMISSION PROJECT AGREEMENT
CENTRAL MINNESOTA MUNICIPAL POWER AGENCY
Brookings - Twin Cities Transmission Project Agreement
With
MINNESOTA
February 14, 2011
BROOKINGS - TWIN CITIES TRANSMISSION PROJECT AGREEMENT
TABLE OF CONTENTS
ARTICLE1 .......................................................................................... ..............................3
Section 101. Term and Termination ............................................ ..............................3
Section 102. Definitions .............................................................. ..............................3
ARTICLE2 ......................................................................................... .............................11
Section 201. Sale of Participant Capacity Rights Share ............. .............................11
Section 202. Participant Payment Obligations ........................... .............................11
Section 203. True Up of Costs Incurred Under Development Project
Agreement.......................................................................... .............................11
Section 204. No Guarantee of Transfer Capability .................... .............................12
ARTICLE3 ......................................................................................... .............................12
Section 301. Title to Transmission Project; No Rights of Partition ........................12
Section 302. CMMPA Further Actions to Secure Benefits ....... .............................13
ARTICLE, 4 ......................................................................................... .............................13
Section 401. Relationship to Other Instruments ......................... .............................13
Section 402. Estimated Construction Costs, Maximum CM Costs,
CMMPA Bonds ..................................................... .............................17
Elective Increases to CMMPA Percentage Interest, and
Section 502.
Discretionary Upgrades ..................................................... .............................13
Section 403. Actions Not Subject to Requirements of Section 402 ........................14
Issuance of Taxable, Tax Subsidy, and Tax - Exempt Bonds ..............17
Section 404. Transmission Project Decisions; Transmission Project
Section 504.
Coordinating Committee ................................................... .............................14
Section 405. MISO Participation ............................................... .............................15
Participant Opinion ............................................... .............................19
Section 406. MISO Participation Discontinued ......................... .............................15
Section 506.
Section 407. Regulatory Change ................................................ .............................16
Section 408. Discretionary Amendments to Certain Upstream Project
Source of Payments ............................................... .............................19
Agreements........................................................................ .............................17
Section 508.
ARTICLE5 ......................................................................................... .............................17
Section 501.
CMMPA Bonds ..................................................... .............................17
Section 502.
Bonds for Refunding ............................................. .............................17
Section 503.
Issuance of Taxable, Tax Subsidy, and Tax - Exempt Bonds ..............17
Section 504.
Tax Covenants ....................................................... .............................18
Section 505.
Participant Opinion ............................................... .............................19
Section 506.
Participant Bonds .................................................. .............................19
Section 507.
Source of Payments ............................................... .............................19
Section 508.
Participant Rate and System Maintenance Covenant .........................20
i
BROOKINGS - TWIN CITIES TRANSMISSION PROJECT AGREEMENT
Section 509. Unconditional Payment Obligation ....................... .............................20
Section510. Insurance ............................................................... .............................20
ARTICLE6 ......................................................................................... .............................20
Section 601.
Estimated Transmission Project Costs .................. .............................20
Section 602.
Annual Budget ....................................................... .............................21
Section 603.
Participant Portion of Monthly Transmission Project Costs ..............21
Section 604.
Billing Statement ................................................... .............................22
Section 605.
Billing Adjustments ............................................... .............................23
Section 606.
Billing Disputes ..................................................... .............................23
ARTICLE7 ......................................................................................... .............................24
Section701.
Reports .................................................................. .............................24
Section 702.
Records and Accounts ........................................... .............................24
Section 703.
Participant Information ......................................... .............................24
ARTICLE8 ......................................................................................... .............................25
Section 801.
Failure of the Participant to Pay ............................ .............................25
Section 802.
Payment Default by Another Participant ............... .............................26
Section 803.
Participant Default Other Than Failure to Pay ...... .............................26
ARTICLE9 ......................................................................................... .............................27
Section 901.
Ending of Transmission Project ............................ .............................27
ARTICLE10 ....................................................................................... .............................27
Section 1001.
Termination, Amendment, and Waiver ............. .............................27
Section1002.
Notices ................................................................. .............................28
Section 1003.
Arbitration ........................................................... .............................29
Section 1004.
Governing Law and Venue ................................. .............................29
Section 1005.
Obligations of Good Faith and Fair Dealing; Prudent Utility
Practice.............................................................................. .............................29
Section 1006.
Severability .......................................................... .............................29
Section 1007.
Assignment of Agreement by Participant ........... .............................30
Section 1008.
Pledge of Agreement by CMMPA ...................................................30
Section 1009.
CMMPA Transfer of Transmission Project ........ .............................31
Section 1010.
No Unreasonable Adverse Distinction; Ability to Join
CMMPA
on Comparable Terms ........................................ .............................31
Section 1011.
Duly Authorized Signatories; Binding Effect of Execution .............31
Section 1012.
Confidentiality of Information ............................ .............................32
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BROOKINGS - TWIN CITIES TRANSMISSION PROJECT AGREEMENT
ATTACHMENT 1 DESCRIPTION OF BROOKINGS PROJECT
ATTACHMENT 2 CMMPA PERCENTAGE INTEREST, ESTIMATED COSTS
OF ACQUISITION AND CONSTRUCTION, AND CMMPA
SHARE OF MAXIMUM CM COSTS
ATTACHMENT 3 PARTICIPANTS AND SHARES
ATTACHMENT 4 MONTHLY TRANSMISSION PROJECT COSTS
ATTACHMENT 5 EXAMPLE CALCULATION OF PARTICIPANT PORTION
OF MONTHLY TRANSMISSION PROJECT COSTS
ATTACHMENT 6 AGENCY AGREEMENT, LIST OF PARTIES TO
TRANMISSION PROJECT AGREEMENTS, AND LIST OF
PROJECT AGREEMENTS
ATTACHMENT 7 PARTICIPANT OPINION
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BROOKINGS - TWIN CITIES TRANSMISSION PROJECT AGREEMENT
THIS AGREEMENT is executed by and between CMMPA and the undersigned
Participant. Capitalized terms used in this preamble and in the recitals that follow have
the meanings given in Section 102 of this Agreement.
WHEREAS, CMMPA has duly executed an Agency Agreement originally executed on
the 1St day of July, 1987, as restated on January 15, 1997, August 11, 2004, May 24,
2006, and January 13, 2010, as the same may be further amended and restated from time
to time; and
WHEREAS, CMMPA shall have all of the powers enumerated in the Act, including
those in Section 453.54 thereof, and in the exercise thereof shall be deemed to be
performing an essential governmental function and exercising a part of the sovereign
powers of the State of Minnesota; and
WHEREAS, the CapX 2020 participants, including CMMPA, executed the CapX 2020
Development Agreement dated March 7, 2007 to pursue Development Work for the
Brookings Project; and
WHEREAS, the Participant and CMMPA executed the Development Project Agreement
dated February 28, 2007 to facilitate CMMPA's pursuit of Development Work for the
Transmission Project; and
WHEREAS, CMMPA proposes to participate in the Brookings Project; and
WHEREAS, certain CapX 2020 participants, including CMMPA, intend to execute in the
near term the Brookings Project Participation Agreement, which sets forth the terms and
conditions for their participation in the Brookings Project; and
WHEREAS, pursuant to the terms and conditions of the Brookings Project Participation
Agreement, the CapX 2020 Development Agreement will terminate upon the effective
date of the Brookings Project Participation Agreement; and
WHEREAS, the Development Project Agreement will terminate upon the effective date
of this Agreement; and
WHEREAS, effective August 16, 2007, CMMPA became a MISO transmission owner
to, among other things, facilitate payment to CMMPA on behalf of the Participants for
their costs related to the Transmission Project under this Agreement, including returns on
their investments, and to benefit CMMPA and the Participants, and therefore, in
conjunction with executing this Agreement, the Participant must have executed (or
concurrently execute) a Transmission Asset Assignment Agreement to address the
Transmission Project as it relates to MISO; and
WHEREAS, the Participant has determined that, to meet the needs of its current and
future customers, it is desirable to enter into this Agreement to participate in the
Transmission Project; and
BROOKINGS - TWIN CITIES TRANSMISSION PROJECT AGREEMENT
WHEREAS, the Participant is entering into this Agreement with CMMPA, in
conjunction with other Participants' execution of separate Transmission Project
Agreements, (i) to enable the Participants collectively to (a) facilitate CMMPA's
acquisition of the Transmission Project for the benefit of all Participants, (b) enhance
CMMPA's ability to cost - effectively finance acquisition of the Transmission Project, and
(c) enable CMMPA to fulfill its obligations under the Upstream Agreements, the Bond
Resolution, and any additional Other Instruments relevant to the Transmission Project,
and (ii)to enable the Participant to receive benefits from the Transmission Project, either
through its ability to use the Participant Capacity Rights Share, or through receipt of
revenues pursuant to the Transmission Asset Assignment Agreement that can be used to
reduce the Participant's overall costs of transmission service; and
WHEREAS, CMMPA proposes to sell to the Participant and the Participant proposes to
purchase from CMMPA the Participant Capacity Rights Share to effectuate the purposes
described above, all as hereinafter provided.
Now, THEREFORE, the parties hereto agree as follows:
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BROOKINGS - TWIN CITIES TRANSMISSION PROJECT AGREEMENT
ARTICLE 1
TERM AND TERMINATION OF AGREEMENT; DEFINITIONS
Section 101. Term and Termination.
This Agreement shall be effective upon: (i) execution and delivery of the Transmission
Project Agreements by CMMPA, and each of the Participants listed and having the
Participant Shares specified in Attachment 3 hereto; and (ii) the effective date of the
Brookings Project Participation Agreement. This Agreement shall terminate or may be
terminated only in accordance with Articles 9 and 10 of this Agreement.
Section 102. Definitions.
As used in this Agreement (including its preamble, recitals, and attachments):
(a) "Act" means the Minnesota Statutes, Chapter 453, Sections 453.51 to 453.62, as
the same has been heretofore or may be hereinafter amended.
(b) "Agreement" and "Transmission Project Agreement" mean this Brookings -
Twin Cities Transmission Project Agreement between CMMPA and the
Participant and all substantially similar agreements entered into by CMMPA and
the other Participants with respect to the Brookings Project, in each case as the
same may be amended from time to time, including all Attachments to this
Agreement, as any such Attachment may be revised and updated from time to in
accordance with Section 1001(c), and any substantially similar agreement entered
into between CMMPA and any party that is not a Participant in connection with
any transfer of any Participant Share pursuant to Section 801(c) of this
Agreement.
(c) "Annual Budget" means the budget effective for any Contract Year pursuant to
Section 602 of this Agreement, which itemizes the estimated Monthly
Transmission Project Costs during a Contract Year, or, in the case of an amended
Annual Budget, during the remainder of a Contract Year.
(d) "Applicable Law" means (i) any and all laws (including all statutory enactments
and common law), ordinances, constitutions, regulations, treaties, rules, codes,
standards, permits, requirements and orders that: (a) have been adopted, enacted,
implemented, promulgated, ordered, issued, entered or deemed applicable by or
under the authority of any governmental or regulatory agency or body having
jurisdiction over a specified Person (or the properties or assets of such Person)
and (b) are applicable to the Brookings Project, or the performance of the
obligations of the Owners and other parties to the Project Agreements; and (ii) the
rules, orders, regulations, practices, procedures and protocols established in
compliance with Applicable Law (as defined in clause (i) of this definition) by
duly authorized transmission providers (such as MISO), electric reliability
organizations (such as the North American Electric Reliability Corporation and
the Midwest Reliability Organization) and comparable Persons that are applicable
BROOKINGS - TWIN CITIES TRANSMISSION PROJECT AGREEMENT
to the transactions, operations, and activities contemplated by the Project
Agreements, or the performance of the obligations of the Owners and other
parties to the Project Agreements; provided, however, that "Applicable Law"
shall not include any laws, ordinances, constitutions, regulations, treaties, rules,
codes, standards, permits, requirements and orders adopted, enacted,
implemented, promulgated, ordered, issued, or entered by CMMPA or the
Participant.
(e) "Billing Statement" means the written statement, which may include a statement
transmitted by facsimile, email, or other electronic means, prepared monthly by
CMMPA and delivered to the Participant, which shows the amounts to be paid as
Participant Portion of Monthly Transmission Project Costs.
(f) "Bond Resolution" means any one or more resolutions, indentures, loan
agreements, or other similar instruments providing for the issuance of Bonds
issued or to be issued by CMMPA to fund all or any portion of Costs of
Acquisition and Construction of the Transmission Project or to refund Bonds.
(g) "Bonds" means any bonds, notes or other evidences of indebtedness issued from
time to time by CMMPA to pay Costs of Acquisition and Construction or to
refund previously issued Bonds.
(h) "Brookings Project" means the Brookings - Southeast Twin Cities transmission
project described in Attachment 1 to this Agreement.
(i) "Brookings Project Construction Management Agreement" means the
Brookings, Southeast Twin Cities Construction Management Agreement executed
by CMMPA in connection with the Brookings Project.
(j) "Brookings Project Participation Agreement" has the meaning given such term
in the recitals to this Agreement.
(k) "CapX 2020 Development Agreement" means the agreement entered into by the
CapX 2020 participants to carry out Development Work pursuant to the terms and
conditions of that agreement.
(1) "CapX 2020 Projects" mean the Brookings Project and one or more additional
transmission projects for which CapX 2020 participants anticipate entering into
other project agreements.
(m) "Change in Law" means any change in, or enactment of, any Applicable Law or
official published policy regarding the interpretation or enforcement of any
Applicable Law by a governmental or regulatory agency or body, in either case
taking place after the effective date of the Project Agreements and affecting or
relating to the Brookings Project, the performance of the obligations of the
Owners and other parties to the Project Agreements; provided, however, such a
change affecting only a tax payable or any other cost of performance under the
Project Agreements will not constitute a Change in Law; provided, however, that
a "Change in Law" shall not include any change in, enactment of, or policy
regarding the interpretation or enforcement of, any laws, ordinances,
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BROOKINGS - TWIN CITIES TRANSMISSION PROJECT AGREEMENT
constitutions, regulations, treaties, rules, codes, standards, permits, requirements
and orders adopted, enacted, implemented, promulgated, ordered, issued, or
entered by CMMPA or the Participant.
(n) "CMMPA" means the Central Minnesota Municipal Power Agency, which has
heretofore been duly created and incorporated as a municipal corporation and a
political subdivision of the State of Minnesota under provisions of the Act.
(o) "CMMPA MISO Transmission Owner Agreement" means the agreement
between MISO and CMMPA dated August 16, 2007 providing for, among other
things, MISO's operational control of certain transmission facilities, including the
CMMPA Project Capacity Rights, and disbursement of revenues by MISO to
CMMPA, together with any ancillary agreements, and any successor or
replacements thereto.
(p) "CMMPA Project Capacity Rights" means CMMPA's rights to use its
Percentage Interest of the Facility Capacity and associated Transfer Capability of
the Brookings Project.
(q) "Contract Year" means the 12 -month period commencing on January 1 and
ending December 31 of each year during the term of this Agreement, except that
the first Contract Year shall commence on the earliest of (i) the date to which
interest is capitalized on all of the Bonds issued to finance the Costs of
Acquisition and Construction of the Transmission Project but not later than one
year prior to the first principal installment date for such Bonds, or (ii) the date on
which CMMPA determines, in accordance with CMMPA's financing plan for the
Transmission Project, that it requires the Participant to make its first payment of
the Participant Portion of Monthly Transmission Project Costs to enable CMMPA
to meet Monthly Transmission Project Costs as they become due; and the last
Contract Year shall end at the date of termination of this Agreement as provided
in Article 9 of this Agreement.
(r) "Costs of Acquisition and Construction" means, to the extent not included in
Other Transmission Project Costs, all costs of planning, determining feasibility,
engineering, designing, financing, installing, constructing, acquiring, and placing
in operation or retirement or disposal of the Transmission Project, all as
contemplated by the term "Costs of Acquisition and Construction" as defined in
the Bond Resolution, including, but not limited to, funds for:
(i) the deposit or deposits from the proceeds of Bonds in any funds or accounts
established pursuant to the Bond Resolution as reserves for renewals,
replacements and contingencies, and for decommissioning, retirement from
service, termination, salvage, discontinuance, sale or disposal of any
facilities included in the Transmission Project, including restoration of lands
with respect thereto, as a general or other reserve, or for working capital;
(ii) the deposit or deposits from the proceeds of Bonds in any fund or account
established pursuant to the Bond Resolution to meet reserve requirements
for Debt Service on Bonds;
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BROOKINGS - TWIN CITIES TRANSMISSION PROJECT AGREEMENT
(iii) interest accruing in whole or in part on Bonds prior to and during acquisition
and construction and for such additional period as CMMPA may reasonably
determine to be necessary in accordance with the Bond Resolution;
(iv) the payment of the principal of and premium, if any, and interest on notes or
other evidences of indebtedness, including obligations issued in anticipation
of the issuance of Bonds, for the payment of costs required to determine the
feasibility of the Transmission Project, and to acquire, construct, finance,
carry out, and place in operation the Transmission Project;
(v) all costs of issuance of Bonds, including underwriting fees, bank
commitment and letter of credit fees, legal fees, accounting fees, financial
advisory fees, engineering fees, bond insurance and indemnity fees, any
swap premium or swap termination payment, and any other costs of
issuance;
(vi) all federal, state and local taxes and payments in lieu of taxes legally paid in
connection with the Transmission Project;
(vii) all costs relating to injury and damage claims arising out of the
Transmission Project, including, without limitation, claims and judgments
related to construction of the Transmission Project;
(viii) all costs relating to study and development of the Transmission Project,
including any costs paid by CMMPA under the Development Project
Agreement, preliminary survey, investigation and development costs,
engineering, contractors' fees, permits, licenses and approvals, labor,
materials, equipment, lands, rights of way, franchises, easements and other
interests in land, utility services and supplies, payments to other public
agencies, training and testing costs, insurance premiums, fees and expenses
of trustees and paying agents, legal, accounting, and financing costs,
administrative and general costs, and all other costs incurred by or on behalf
of CMMPA and properly allocable to the acquisition and construction of the
Transmission Project and carrying out and placing the same in operation,
including repayment of any interim borrowing costs to provide for the
foregoing; and
(ix) all other costs incurred by or on behalf of CMMPA and properly allocable to
the development, acquisition, financing, and construction of the
Transmission Project.
(s) "Debt Service" means, with respect to any period, the aggregate of the amounts
required by the Bond Resolution to be paid or deposited during said period into
any fund or account created by the Bond Resolution for the sole purpose of
paying the principal (including sinking fund installments) of, premium, if any, and
interest on all Bonds from time to time outstanding as the same become due.
(t) "Debt Service - Related Costs" means the amounts listed in Part 1 of
Attachment 4 to this Agreement.
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BROOKINGS - TWIN CITIES TRANSMISSION PROJECT AGREEMENT
(u) "Development Project Agreement" means the Brookings -Twin Cities
Development Project Agreement entered into between the Participant and
CMMPA dated February , 2007 setting forth the Participant's entitlement and
other rights and obligations related to the development of the Transmission
Project.
(v) "Development True -Up Amount" has the meaning given such term in
Section 203(a) of this Agreement.
(w) "Development Work" has the meaning given such term in the Development
Project Agreement.
(x) "Discretionary Upgrade" means any Upgrade (i) with respect to which CMMPA
has the right to elect whether or not to provide funding, and (ii) the costs of which
CMMPA proposes to treat as Costs of Acquisition and Construction, payable
either from proceeds from Bonds or as Other Transmission Project Costs, under
this Agreement.
(y) "Elective Increase to CMMPA Percentage Interest" means CMMPA's
exercise of rights conferred by the Upstream Project Agreements to voluntarily
increase its Percentage Interest in the Brookings Project, such as by purchasing a
portion of another Owner's interest pursuant to a right of first offer or call option,
or subscribing to a greater Percentage Interest resulting from an increase to the
Maximum CM Costs in which another Owner has declined to participate. The
term "Elective Increase to CMMPA Percentage Interest" does not include (i) any
increase in CMMPA Percentage Interests that results from events outside of
CMMPA's control, including, without limitation, an obligation to step up
following another Owner's default under an Upstream Project Agreement, or
(ii) any reduction in CMMPA Percentage Interest, whether resulting from
CMMPA's voluntary action or otherwise.
(z) "Facility Capacity" means the then - current maximum power that can be
transmitted over the Project Facilities, as built, without consideration of
constraints imposed by the balance of the transmission grid with which the Project
Facilities are interconnected.
(aa) "Federal Tax Exemption" means the exclusion from gross income of interest on
CMMPA's Bonds for federal income tax purposes.
(bb) "FERC" means the Federal Energy Regulatory Commission or its successor.
(cc) "Management Committee" means the committee of the Owners' representatives
established pursuant to the Brookings Project Participation Agreement.
(dd) "Mandatory Upgrade" means any Upgrade for which CMMPA is obligated by
Applicable Law or pursuant to the Upstream Project Agreements to provide
funding.
(ee) "Maximum CM Costs" means the maximum cost amount, as specified in
Section 5.1.3 of the Brookings Project Construction Management Agreement, that
may be incurred for purpose of constructing the Brookings Project, unless action
BROOKINGS - TWIN CITIES TRANSMISSION PROJECT AGREEMENT
to increase permitted maximum costs is taken in accordance with the Brookings
Project Construction Management Agreement. As of the execution date of this
Agreement, the Maximum CM Costs for the Brookings Project, as well as the
portion of the Maximum CM Cost CMMPA is obligated to pay in accordance
with its Percentage Interest, are as set forth in Attachment 2 to this Agreement.
(ff) "Midwest Independent Transmission System Operator" (MISO) means the
Midwest Independent Transmission System Operator, Inc. or any successor
organization that serves as the transmission provider under the MISO TEMT or
any equivalent or successor tariff.
(gg) "MISO TEMT" means the MISO Open Access Transmission and Energy
Markets Tariff or any successor, including all schedules or attachments thereto
and all business practices manuals related thereto that are in effect from time to
time.
(hh) "Monthly Transmission Project Costs" means the monthly amounts, as more
particularly set forth in Attachment 4 to this Agreement, necessary to cover all
Debt Service- Related Costs and Other Transmission Project Costs during the term
of this Agreement.
(ii) "Other Instruments" has the meaning given such term in Section 401 of this
Agreement.
(jj) "Other Transmission Project Costs" means all Monthly Transmission Project
Costs other than Debt Service- Related Costs, as provided in Part 2 of Attachment
4 to this Agreement.
(kk) "Owner" means each Person (including CMMPA) identified as an "Owner" in
the Brookings Project Participation Agreement.
(11) "Participant" means, as the context requires, the Person executing this
Agreement, or another Person executing a separate Transmission Project
Agreement, which Person, in each case, is a "city," as defined in Subdivision (3)
of Section 453.52 of the Act, located in the State of Minnesota, the State of Iowa
or other state of the United States of America as permitted by the Act. In general,
references to "the Participant" are to the Person executing this Agreement;
references to "other Participant" (whether singular or plural) mean one or more
Persons that have executed separate Transmission Project Agreements; and
references to "the Participants" mean the Person executing this Agreement
together with all other Persons executing separate Transmission Project
Agreements, all of which are listed in Attachment 3 to this Agreement.
(mm) "Participant Capacity Rights Share" means that portion of the CMMPA Project
Capacity Rights sold to the Participant under this Agreement, which constitutes a
percentage of the CMMPA Project Capacity Rights equal to its Participant Share
as listed in Attachment 3 to this Agreement (subject to change as provided in
Article 8 of this Agreement).
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BROOKINGS - TWIN CITIES TRANSMISSION PROJECT AGREEMENT
(nn) "Participant Election Share" and "Election Share" mean, with respect to the
Participant, that percentage set forth for such Participant in the Development
Project Agreement representing the Participant's percentage share of rights and
obligations related to the development of the Transmission Project.
(oo) "Participant Portion of Monthly Transmission Project Costs" means the net
amounts due from the Participant under this Agreement, on a monthly basis, to
pay Monthly Transmission Project Costs, as determined in accordance
Section 603.
(pp) "Participant Share" and "Share" mean, with respect to a Participant, that
percentage set forth for that Participant in Attachment 3 hereto representing such
Participant's percentage share of the CMMPA Project Capacity Share to which
such Participant is entitled as established pursuant to this Agreement (subject to
change as provided in Article 8 of this Agreement).
(qq) "Percentage Interest" means the individual undivided several interest of an
Owner in the Brookings Project as determined in accordance with the Brookings
Project Participation Agreement.
(rr) "Person" means any individual; corporation; partnership; limited liability
company; association; cooperative association; joint stock company; trust;
unincorporated organization; joint venture; federal, state, municipal, or local
governmental or regulatory body (including, without limitation, any agency,
authority, branch, board, commission, court, department, instrumentality, office,
subdivision, or other unit); or other entity with legal constitution under Applicable
Law.
(ss) "Project Agreements" mean any and all of the agreements that CMMPA has
entered into with other parties, including CapX 2020 participants, relating to the
Brookings Project, which agreements are listed in Attachment 6, as the same may
be amended or.replaced from time to time.
(tt) "Project Facilities" means those facilities and related equipment and materials,
installations and facilities, including associated site improvements, appurtenances
and structures procured, installed or constructed for the Brookings Project, that
are identified as "Facilities" or "Discretely Owned Substation Assets" in or
pursuant to the Brookings Project Participation Agreement.
(uu) "Prudent Utility Practice" at a particular time means any practices, methods and
acts (including but not limited to the practices, methods and acts engaged in or
approved by a significant portion of the electrical utility industry prior thereto)
which, in the exercise of reasonable judgment in the light of the facts known at
the time the decision was made, could have been expected to accomplish the
desired result at the lowest reasonable cost consistent with good business
practices, reliability, safety and expedition. Prudent Utility Practice shall apply
not only to functional parts of the Transmission Project but also to appropriate
structures, landscaping, painting, signs, lighting, or facilities and public relations
programs reasonably designed to promote public enjoyment, understanding and
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BROOKINGS - TWIN CITIES TRANSMISSION PROJECT AGREEMENT
acceptance of the Transmission Project. Prudent Utility Practice is not intended
to be limited to the optimum practice, method or act, to the exclusion of all others,
but rather to be a spectrum of possible practices, methods or acts. In evaluating
whether any matter conforms to Prudent Utility Practice, the parties shall take into
account (i) the fact that CMMPA is a body politic and corporate and a political
subdivision under the laws of the State of Minnesota, with the statutory duties and
responsibilities thereof, and (ii) in the case of any joint facility, the applicable
ownership or participation agreement between the owners or participants of the
facility.
(w) "Tax Subsidy Bonds" means any Bonds as to which CMMPA is entitled to
receive any subsidy, reimbursement, or other payment from the federal
government of the United States of America under the American Recovery and
Reinvestment Act of 2009 (or any similar legislation or regulation of the federal
government or any other governmental entity) or any extension of such
legislation.
(ww) "Taxable Bonds" means Bonds, other than Tax Subsidy Bonds, the interest on
which is not excluded from gross income for federal income tax purposes.
(xx) "Tax- Exempt Bonds" means Bonds the interest on which is excluded from gross
income for federal income tax purposes.
(yy) "Total Development Project Costs" means the cumulative amount of all
Monthly Development Project Costs (as that term is defined in the Development
Project Agreements) paid by CMMPA on behalf of the Participants as of the
effective date of this Agreement.
(zz) "Transfer Capability" means the transfer capability of the transmission grid
after incorporating the Project Facilities, as such transfer capability may change
from time to time.
(aaa) "Transmission Asset Assignment Agreement" has the meaning given such term
in Section 405 of this Agreement, and also includes any successor agreement
contemplated by Section 406 of this Agreement.
(bbb) "Transmission Project" means that portion of the Brookings Project (including
all replacements, restoration, rebuilding, capital additions or modifications to
maintain Facility Capacity or reliability, and Upgrades) in or with respect to
which CMMPA holds or is subject to rights, interests, and obligations by virtue of
its Percentage Interest. The term "Transmission Project" includes working capital
and any other facilities, contracts, property and arrangements determined by
CMMPA to be part of the Transmission Project. CMMPA's anticipated
Percentage Interest in the Brookings Project, as well as its share of estimated
initial construction costs and Maximum CM Costs, as of the execution date of this
Agreement, are set forth in Attachment 2 to this Agreement.
(ccc) "Transmission Project Coordinating Committee" means the committee
established pursuant to Section 404(b) of this Agreement.
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(ddd) "Upgrade" means a capital addition or modification to the Project Facilities,
undertaken after the effective date of the Upstream Project Agreements, that
increases Facility Capacity or Transfer Capability, or is otherwise required
because of an interconnection request made by a Person other than an Owner, and
includes capital additions or modifications required by Applicable Law and those
made part of the Brookings Project by the Owners pursuant to the Brookings
Project Participation Agreement. The term "Upgrade" includes Discretionary
Upgrades and Mandatory Upgrades.
(eee) "Upstream Project Agreements" means (i) those Project Agreements entered
into by CMMPA and one or more other Owners in connection with the Brookings
Project, and (ii) the CMMPA MISO Transmission Owner Agreement. The term
"Upstream Project Agreements" does not include any Project Agreement to which
one or more Participants are parties.
ARTICLE 2
CMMPA SALE OF PARTICIPANT CAPACITY RIGHTS SHARE AND
PARTICIPANT PAYMENT OBLIGATIONS
Section 201. Sale of Participant Capacity Rights Share.
CMMPA hereby sells to the Participant and the Participant hereby purchases the
Participant Capacity Rights Share, subject to the terms, conditions, limitations,
obligations, and covenants set forth in this Agreement.
Section 202. Participant Payment Obligations.
In consideration for the Participant Capacity Rights Share, the Participant shall pay to
CMMPA the Participant Portion of Monthly Transmission Project Costs, in accordance
with Article 6.
Section 203. True Up of Costs Incurred Under Development Project Agreement.
(a) To the extent the Participant's "Election Share" under the Development Project
Agreement is less (stated as a percentage) than the Participant Share as of the
effective date of this Agreement, the Participant shall be responsible for promptly
remitting to CMMPA the difference in Total Development Project Costs actually
paid by the Participant as of the effective date of this Agreement and the amount
of Total Development Project Costs the Participant would have paid had its
Election Share (stated as a percentage) been equal to its Participant Share (the
foregoing amount, the "Development True -Up Amount "). CMMPA may, at its
option and consistent with CMMPA's financing plan for the Transmission Project,
treat the Development True -Up Amount as a Cost of Acquisition and
Construction.
(b) To the extent the Participant Share is less (stated as a percentage) than its Election
Share as of the effective date of this Agreement, CMMPA shall credit to the
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BROOKINGS - TWIN CITIES TRANSMISSION PROJECT AGREEMENT
Participant Portion of Monthly Transmission Project Costs amounts to refund to
the Participant the Development True -Up Amount. CMMPA may, at its option
and consistent with CMMPA's financing plan for the Transmission Project, treat
the Development True -Up Amount as an offset against Costs of Acquisition and
Construction instead of refunding it through credits against the Participant Portion
of Monthly Transmission Project Costs.
Section 204. No Guarantee of Transfer Capability.
The Participant acknowledges and agrees that the Transfer Capability associated with the
CMMPA Project Capacity Rights, and therefore the Transfer Capability associated with
the Participant Capacity Rights Share, is not subject to CMMPA's control and will vary
throughout the term of this Agreement. The Participant acknowledges and agrees that the
sale to the Participant of the Participant Capacity Rights Share carries with it no
guarantee or other assurance with respect to the Transfer Capability associated with the
Participant Capacity Rights Share.
ARTICLE 3
CMMPA RETENTION OF TITLE TO TRANSMISSION PROJECT; CMMPA
FURTHER ACTIONS TO SECURE BENEFITS
Section 301. Title to Transmission Project; No Rights of Partition.
(a) CMMPA shall at all times retain title to the Transmission Project. The sale to the
Participant of the Participant Capacity Rights Share under this Agreement shall
not (i) constitute a transfer of ownership of any part of the Project Facilities, or
(ii) make the Participant a party to, or enable the Participant to exercise rights
under, any Upstream Project Agreement. The rights conferred on the Participant
by sale to it of its Participant Capacity Rights Share shall be the sole rights in the
Transmission Project transferred by CMMPA to the Participant pursuant to this
Agreement. CMMPA shall retain all rights held by it with respect to the
Brookings Project, including its rights as an Owner under the Upstream Project
Agreements, other than the Participant Capacity Rights Share specifically
transferred to the Participant by this Agreement.
(b) The Participant acknowledges that CMMPA has, under the Upstream Project
Agreements, waived any rights of partition CMMPA may have with respect to the
Brookings Project. The Participant further acknowledges and agrees that
CMMPA has not granted to the Participant any property rights with respect to the
Transmission Project, but should any court or other authority with jurisdiction
ever determine otherwise, the Participant irrevocably waives any rights of
partition and the benefit of all Applicable Law (including statutory and common
law) that may now or hereafter authorize such partition of the Transmission
Project or any part thereof. Solely for purposes of this Section 301(b), the term
"Applicable Law" shall include any laws, ordinances, constitutions, regulations,
treaties, rules, codes, standards, permits, requirements and orders adopted,
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BROOKINGS - TWIN CITIES TRANSMISSION PROJECT AGREEMENT
enacted, implemented, promulgated, ordered, issued, or entered by CMMPA or
the Participant.
Section 302. CMMPA Further Actions to Secure Benefits.
In addition to its obligations specifically set forth in this Agreement and the Transmission
Asset Assignment Agreement, CMMPA shall take such further actions it determines, in
good faith, to be appropriate or necessary to seek to secure for the Participants the
benefits of the Transmission Project contemplated by this Agreement and the
Transmission Asset Assignment Agreement.
ARTICLE 4
GOVERNING OBLIGATIONS AND DECISION -MAKING
Section 401. Relationship to Other Instruments.
The Participant and CMMPA acknowledge and agree that CMMPA, in the development,
ownership or participation, construction, acquisition and operation of the Transmission
Project, is bound by and must comply with the requirements of Applicable Law, all
Upstream Project Agreements, the Transmission Asset Assignment Agreement, the Bond
Resolution, and all licenses, permits and regulatory oversight and approvals necessary for
such development, ownership or participation, construction, acquisition, and operation
( "Other Instruments "). The Participant and CMMPA therefore agree that this Agreement
is subject to the terms and provisions of such Other Instruments, as they may be amended
or supplemented from time to time. Consistent with this Agreement, the Upstream
Project Agreements, and the Bond Resolution, CMMPA shall take such actions as it
determines in good faith are necessary or appropriate to seek to enforce its rights under
the Upstream Project Agreements.
Section 402. Estimated Construction Costs, Maximum CM Costs, Elective Increases
to CMMPA Percentage Interest, and Discretionary Upgrades.
(a) Attachment 2 sets forth, as of the execution date of this Agreement, the parties'
calculations supporting the amount designated as the Costs of Acquisition and
Construction for completion of the Transmission Project. The estimated Costs of
Acquisition and Construction reflect the aggregate amount of funding
(considering both "net" proceeds to be paid out under the Brookings Construction
Management Agreement and associated indirect costs) needed to acquire
CMMPA Percentage Interest in the Brookings Project as set forth in
Attachment 2.
(b) Unless CMMPA has first obtained the concurrence of the Transmission Project
Coordinating Committee as provided in Section 404(d), CMMPA shall not:
(i) approve an increase in the Maximum CM Costs,
(ii) commit to an Elective Increase to CMMPA Percentage Interest, or
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(iii) enter into any agreement or other arrangement obligating it to provide
funding for a Discretionary Upgrade.
Section 403. Actions Not Subject to Requirements of Section 402.
The Participant acknowledges and agrees that CMMPA's obligations under
Section 402(b) are applicable only to the actions enumerated in Section 402(b), and that
no cost limit or need for prior approval of the Participant or the Transmission Project
Coordinating Committee applies to other matters related to the Transmission Project,
including, without limitation, (i) costs incurred in connection with Mandatory Upgrades,
(ii) Monthly Transmission Project Costs, (iii) changes to CMMPA Percentage Interest
that do not constitute Elective Increases to CMMPA Percentage Interest, (iv) CMMPA's
obligations to the other Owners under the Upstream Project Agreements related to
liability for third -party claims and indemnification of the other Owners, or (v) any other
obligations imposed on CMMPA by Other Instruments.
Section 404. Transmission Project Decisions; Transmission Project Coordinating
Committee.
(a) Except as expressly provided otherwise in this Agreement, the CMMPA Board of
Directors shall have the authority and responsibility to make decisions on behalf
of the Participants with respect to all Transmission Project- related matters.
Within the decision - making process, CMMPA shall consider the individual needs
and desires of the Participants, as well as the needs and desires of the Participants
collectively, with respect to the Transmission Project, consistent with CMMPA's
requirements, obligations or covenants pursuant to the Other Instruments or legal
requirements and documents related to other projects of CMMPA.
(b) Promptly following the effective date of this Agreement, a Transmission Project
Coordinating Committee shall be established, consisting of representatives
appointed by the Participants (one for each), as well as one non - voting staff
person of CMMPA appointed by the CMMPA Board of Directors. The
Transmission Project Coordinating Committee shall meet as necessary to discuss
the administration of the Transmission Project and shall make recommendations
to the CMMPA Board of Directors regarding decisions to be made about the
Transmission Project. The Transmission Project Coordinating Committee shall
elect a chairperson, who shall serve as liaison to the CMMPA Board of Directors.
A meeting of the Transmission Project Coordinating Committee may be called by
the chairperson or at the request of at least two Participants.
(c) Except as provided in Section 404(d), (i) each Participant representative on the
Transmission Project Coordinating Committee shall have one vote, (ii) the
affirmative votes of over 50% of the Participant representatives on the
Transmission Project Coordinating Committee shall be required for the
Transmission Project Coordinating Committee to take action, and (iii) no vote,
recommendation, or other action of the Transmission Project Coordinating
Committee shall be binding on CMMPA or the CMMPA Board of Directors.
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(d) If at any time during the term of this Agreement CMMPA proposes to (i) approve
an increase to the Maximum CM Costs, (ii) commit to an Elective Increase to
CMMPA Percentage Interest, or (iii) enter into an agreement or other arrangement
obligating it to provide funding for a Discretionary Upgrade, CMMPA may do so
only if it has first submitted the matter to the Transmission Project Coordinating
Committee and there has been an affirmative vote of [over 50 %] of the Participant
representatives on the Transmission Project Coordinating Committee (measured
as a ratio of the number of Participant representatives voting in favor as compared
to the total number of Participant representatives on the Transmission Project
Coordinating Committee) holding at least 75% of the Participant Shares
(measured as an aggregate percentage of Participant Shares held by the
Participants whose representatives voted in favor). For the avoidance of doubt, an
affirmative vote of the Transmission Project Coordinating Committee shall be
necessary for CMMPA to take the actions described in the preceding sentence,
but shall in no event compel CMMPA to do so.
Section 405. MISO Participation.
The parties expressly contemplate that the CMMPA Project Capacity Rights will be
subject to the CMMPA MISO Transmission Owner Agreement. CMMPA and the
Participant have therefore entered into (or shall concurrently with the execution of this
Agreement enter into), a CMMPA Transmission Owners Services and Asset Assignment
Agreement that includes within its scope the Participant Capacity Rights Share (the
"Transmission Asset Assignment Agreement "). The terms of the Transmission Asset
Assignment Agreement are indispensable to the implementation of this Agreement,
except as provided otherwise in Section 406. For so long as CMMPA remains bound by
the CMMPA MISO Transmission Owner Agreement and the CMMPA Project Capacity
Rights are included within the scope of the CMMPA MISO Transmission Owner
Agreement, (a) the Participant must use CMMPA (and no other party) as the
"Transmission Owner" for the Transmission Project for all purposes related to inclusion
of the Transmission Project in MISO, and (b) CMMPA shall take such actions as it
determines in good faith are necessary to seek to enforce its rights under the CMMPA
MISO Transmission Owner Agreement.
Section 406. MISO Participation Discontinued.
(a) If for any reason during the term of this Agreement the CMMPA Project Capacity
Rights are no longer subject to the CMMPA MISO Transmission Owner
Agreement and MISO TEMT, then (i) if CMMPA is required by Applicable Law
or otherwise determines it is in the best interests of CMMPA to offer open- access
transmission services using the CMMPA Project Capacity Rights, the parties will
replace the Transmission Asset Assignment Agreement with a successor
agreement specifying the terms under which the CMMPA Project Capacity Rights
will be administered under a successor tariff, and (ii) if clause (i) of this
Section 406 does not apply, the parties will replace the Transmission Asset
Assignment Agreement with a successor agreement specifying the terms under
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which the Participant will have the right to make direct use of its Participant
Capacity Rights Share for scheduling electrical power or energy deliveries
without the payment of any rate, fee, or charges to Owners other than CMMPA.
(b) Any terms established in accordance with subsection (a)(ii) of this Section 406
shall, among other things: (i) not require either CMMPA or the Participant to
provide transmission, distribution, interconnection or other related services to
another Participant or a third party under this Agreement; (ii) permit CMMPA or
its agent to temporarily interrupt, increase or reduce deliveries of electric power
and energy using the Participant Capacity Rights Share if CMMPA or its agent
determines that such interruption, increase or reduction is necessary in case of
emergencies; (iii) permit CMMPA or its agent to interrupt or reduce deliveries of
electric power and energy using the Participant Capacity Rights Share in order to
install equipment in or make repairs to or replacements, investigations, and
inspections of or to perform other maintenance work on the generation or
transmission facilities and apparatuses (or to enable a third party to accomplish
any of the foregoing); and (iv) specify that CMMPA shall not be required to
provide, or be liable for failure to provide, service using the Participant Capacity
Rights Share when such failure or the cessation or curtailment or interference with
the service is caused by events or forces beyond CMMPA's control.
Section 407. Regulatory Change.
(a) The Participant acknowledges and agrees that (i) certain of the Project
Agreements may need to be modified to conform to any final order issued by
FERC that directly addresses provision(s) in those agreements, (ii) any of the
Project Agreements could be amended, or may be proposed to be amended, as a
result of a Change in Law, and (iii) FERC, the North American Electric
Reliability Corporation, the Midwest Reliability Organization (or their
successors), or any other governmental or regulatory agency or body may make a
determination that results in a modification to one or more of the Project
Agreements.
(b) If the occurrence of any of the events described in Section 407(a) necessitates a
material change to this Agreement, CMMPA shall, within 30 days of becoming
aware of such event, provide written notification thereof to the Participant.
Subsequent to such notification and in accordance with Section 404(c) of this
Agreement, the Transmission Project Coordinating Committee shall make
appropriate recommendations to the CMMPA Board of Directors regarding
changes, if any, to this Agreement to address the modifications, proposed
modifications, or amendments to the Project Agreements. The Participant shall
work in good faith with CMMPA to implement any changes to this Agreement
that CMMPA, giving due consideration to any recommendations of the
Transmission Project Coordinating Committee, may determine to be necessary.
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Section 408. Discretionary Amendments to Certain Upstream Project Agreements.
If, at any time during the term of this Agreement, CMMPA proposes to request, or
receives a request from another Owner, to amend one or more of the Upstream Project
Agreements as defined in Section 102(eee)(i) of this Agreement, CMMPA shall not enter
into any such amendment without first consulting with, and providing an opportunity for
input and recommendations from, the Transmission Project Coordinating Committee.
ARTICLE 5
RIGHTS AND OBLIGATIONS RELATED TO CMMPA FINANCING OF COSTS
OF ACQUISITION AND CONSTRUCTION
Section 501. CMMPA Bonds.
CMMPA may issue Bonds in series from time to time, including Bonds issued in
accordance with a Bond Resolution and consistent with CMMPA's financing plan for the
Transmission Project, to pay Costs of Acquisition and Construction of the Transmission
Project. In developing or revising its financing plan for the Transmission Project,
CMMPA shall consult with, and provide an opportunity for input and recommendations
from, the Transmission Project Coordinating Committee.
Section 502. Bonds for Refunding.
In addition to the issuance of Bonds to pay the Cost of Acquisition and Construction
related to the Transmission Project as provided in Section 501 of this Agreement,
CMMPA may also issue Bonds to refund any Bonds to reduce Monthly Transmission
Project Costs or if, in the opinion of CMMPA, it may otherwise be advantageous.
Section 503. Issuance of Taxable, Tax Subsidy, and Tax- Exempt Bonds.
CMMPA may issue Bonds and additional bonds or refunding bonds as Taxable Bonds,
Tax Subsidy Bonds, or Tax - Exempt Bonds. CMMPA shall have sole discretion to
determine, based on such considerations as it deems warranted, including but not limited
to evaluation of how each of the Participants, viewed separately, may affect any Federal
Tax Exemption applicable to current or anticipated funding or the issuance of any Tax
Subsidy Bonds, when it is necessary or appropriate to issue Taxable Bonds related to the
Transmission Project. Any Taxable Bonds and any portion of the Transmission Project
financed or refinanced by Taxable Bonds shall, to the extent permitted by the Bond
Resolution, not be subject to the tax covenants set forth in Section 504 of this Agreement.
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Section 504. Tax Covenants.
(a) In order to maintain the Federal Tax Exemption of interest on CMMPA's Bonds
or CMMPA's right to receive any subsidy or other payment relating to Tax
Subsidy Bonds, and for no other purpose, the Participant covenants to comply
with each applicable requirement of the Internal Revenue Code of 1986 or any
successor code (the "Code ") necessary to qualify CMMPA's Bonds as obligations
described in section 103(a) of the Code or to receive subsidies or other payments
on Tax Subsidy Bonds, as applicable. In furtherance of these covenants, the
Participant also agrees to provide any information required by CMMPA to
maintain the Federal Tax Exemption of its Bonds or the right to receive subsidies
or other payments on Tax Subsidy Bonds, as applicable.
(b) The Participant covenants and agrees it shall not take any action or omit to take
any action, which action or omission, if reasonably expected on the applicable
delivery date, would cause interest on any of CMMPA's Bonds to be included in
gross income for federal income tax purposes or cause CMMPA to lose the right
to receive subsidies or other payments on Tax Subsidy Bonds.
(c) The Participant recognizes that provisions of law related to the Federal Tax
Exemption or subsidies or other payments on Tax Subsidy Bonds may limit the
arrangements permitted with respect to sale, assignment or other disposition of the
Participant Capacity Rights Share. The Participant shall comply with the policies
adopted by CMMPA with respect to allocation of the private use permitted under
such provisions.
(d) In the event that the action (or inaction) of the Participant results in the loss of
Federal Tax Exemption or the right to receive subsidies or other payments on Tax
Subsidy Bonds with respect to any of CMMPA's Bonds or requires any action or
payments by CMMPA or any other Participant to prevent such loss of Federal
Tax Exemption or the right to receive subsidies or other payments on Tax Subsidy
Bonds, the Participant shall be responsible for all costs related to such loss or
prevention of loss of Federal Tax Exemption or the right to receive subsidies or
other payments on Tax Subsidy Bonds (including, without limitation, payments to
bondholders, payments to the IRS, costs incident thereto, and attorney fees of
CMMPA or any other Participant related thereto).
(e) Notwithstanding any other provisions of the Bond Resolution to the contrary, so
long as necessary in order to maintain the Federal Tax Exemption of CMMPA's
Bonds or the right to receive subsidies or other payments on Tax Subsidy Bonds,
the covenants contained in this Section shall survive the payment of such Bonds
and the termination of this Agreement. The covenants contained in this
Section 504 do not apply to any Bonds of CMMPA to which the Federal Tax
Exemption was not intended to apply or which were not issued as Tax Subsidy
Bonds.
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Section 505. Participant Opinion.
Upon the execution and delivery of this Agreement and at such other times as CMMPA
shall reasonably request, the Participant shall furnish CMMPA with an opinion by an
attorney or firm of attorneys, addressed to CMMPA and such other parties as CMMPA
requests, to the effect of the matters set forth on Attachment 7 hereto.
Section 506. Participant Bonds.
The Participant may issue bonds, notes or other evidences of indebtedness payable from
and secured by a lien on the revenues derived from the ownership or operation of its
electric system provided that the payment of operating expenses (including Monthly
Transmission Project Costs hereunder) from such revenues are ahead of debt service on
such bonds, notes or other evidences of indebtedness. If a Participant chooses to issue
bonds, notes or other evidences of indebtedness that are not consistent with the
requirements of the preceding sentence, then the Participant shall be required to comply
with the following provisions:
(a) an independent consultant with special skill, knowledge and experience in
analyzing the operations of electric utility systems provides an opinion that the
financing and operation of the facilities for which such bonds, notes or other
evidences of indebtedness are being issued are not (or were not when the
Participant undertook such issuance) reasonably expected to materially adversely
affect the ability of the Participant to pay operating expenses (including Monthly
Transmission Project Costs) for which it is or will be liable; and
(b) the Participant obtains the written approval of CMMPA, which shall not be
unreasonably withheld.
The Participant shall be responsible for all costs incurred in complying with the
requirements of (a) and (b) above in this Section 506, including all reasonable CMMPA
related costs. This Section 506 shall not apply to: (i) the Participant's obligations with
respect to bonds, notes or other evidences of indebtedness issued under joint ownership
or participation agreements to which the Participant is a party as of the date hereof, or
(ii) refunding bonds, notes or other evidences of indebtedness heretofore issued, or
hereafter issued by the Participant in compliance herewith, payable from and secured by a
lien on revenues in priority to operating expenses.
Section 507. Source of Payments.
The Participant shall not be required to make any payments to CMMPA under this
Agreement except from the revenues and other moneys derived by the Participant from
its electric system. The Participant hereby agrees that amounts payable by the Participant
under this Agreement shall be operating expenses of the Participant's electric system.
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Section 508. Participant Rate and System Maintenance Covenant.
The Participant shall establish, maintain and collect rates and charges for the electric
service of its electric system so as to provide revenues sufficient, together with available
electric system reserves, to enable the Participant to pay to CMMPA all amounts payable
under this Agreement, all other amounts payable from and all lawful charges against or
liens on the revenue of its electric system and to operate and maintain its electric system
in a sound, businesslike manner in accordance with Prudent Utility Practice.
Section 509. Unconditional Payment Obligation.
The Participant shall pay the Participant Portion of Monthly Transmission Project Costs,
whether or not the Transmission Project is completed or is operating or operable, and
whether or not its capacity is suspended, interrupted, interfered with, reduced, or curtailed
or terminated in whole or in part; and such payments shall not be subject to reduction,
whether by offset or otherwise, and shall not be conditioned upon the performance or
nonperformance by any party of any agreement for any cause whatsoever.
Section 510. Insurance.
CMMPA shall procure and maintain in force for the benefit of the Transmission Project
and the Participants, as their respective interests shall appear, as a Monthly Transmission
Project Cost, such insurance as will satisfy the requirements of the Bond Resolution and
applicable statutes and regulations thereunder, and such other insurance as may be
required by the Project Agreements or that CMMPA may reasonably deem desirable
(having provided the Transmission Project Coordinating Committee an opportunity to
provide input and offer any recommendations in accordance with Section 602(b)).
Subject to Article 9 of this Agreement, provisions of the Bond Resolution, and provisions
of the Project Agreements, any proceeds of such insurance received by CMMPA relating
to the Transmission Project shall be used to offset costs of the Transmission Project.
Subject to the Bond Resolution, Project Agreements, and Applicable Law, CMMPA may
elect to self - insure any or all risks related to the Transmission Project, and to establish a
self - insurance reserve fund, the costs of which shall be included in Monthly Transmission
Project Costs. Nothing hereunder shall preclude Participant from obtaining at its own
expense such additional insurance as it may deem appropriate.
ARTICLE 6
BUDGET, BILLING, AND PAYMENT OBLIGATIONS
Section 601. Estimated Transmission Project Costs.
The Participant hereby approves the estimate of the Cost of Acquisition and Construction
as of the execution date of this Agreement, which estimate has been provided to the
Participant. Participant acknowledges that such estimate may change from time to time.
Such changed estimates are hereby approved by the Participant subject to the provisions
of Section 404(d). Attachment 2 sets forth the current estimate of the Costs of
Acquisition and Construction prepared as of the date indicated. When substantial
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changes in estimated costs are anticipated, CMMPA shall deliver revised estimates of the
Costs of Acquisition and Construction to the Participant.
Section 602. Annual Budget.
(a) At least 90 days before the start of each Contract Year, CMMPA shall deliver to
the Participant a preliminary Annual Budget setting forth the proposed operating,
capital and financing plan for the Transmission Project for the upcoming Contract
Year, together with all components of Monthly Transmission Project Costs, which
are set forth in Attachments 4. The preliminary Annual Budget shall be based on,
among other things, annual budgeting information provided by the Management
Committee in accordance with the Upstream Project Agreements and CMMPA
estimates of other Transmission Project - related costs.
(b) Not more than 30 days following CMMPA's delivery of the preliminary Annual
Budget for a given Contract Year, CMMPA shall convene a meeting of the
Transmission Project Coordinating Committee at which CMMPA will make
individuals familiar with the budgeting process available to answer questions and
receive feedback from Participants concerning the preliminary Annual Budget.
The Transmission Project Coordinating Committee may, if it chooses, provide
recommendations to CMMPA concerning the preliminary Annual Budget, which
shall not be binding on CMMPA but which CMMPA shall consider, as it deems
appropriate, in preparing a final Annual Budget for the applicable Contract Year.
(c) As promptly as practicable following the Transmission Project Coordinating
Committee meeting convened in accordance with Section 602(b), CMMPA shall
deliver to the Participant a final Annual Budget for the upcoming Contract Year,
consistent with the terms set forth in Section 602(a), which shall reflect such
changes, if any, to the preliminary Annual Budget as CMMPA determines in good
faith are warranted by comments or recommendations received from the
Transmission Project Coordinating Committee or other circumstances relevant to
the Transmission Project.
Section 603. Participant Portion of Monthly Transmission Project Costs.
(a) The amounts (charges and credits) included in the Participant Portion of Monthly
Transmission Project Costs shall be allocated to the Participant according to its
Participant Share, except for amounts CMMPA determines have been incurred or
received for the Participant on a basis other than its Participant Share, in which
case such amounts shall, to the maximum extent feasible, be allocated to the
Participant consistent with the basis on which they were incurred or received.
This may result in bases for allocating Debt Service- Related Costs, Other
Transmission Project Costs, amounts credited, or their various components, that
differ from one another and may change from time to time.
(b) The Participant Portion of Monthly Transmission Project Costs shall consist of
(i) charges for Monthly Transmission Project Costs (including, without limitation,
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any amounts to be deposited in any rate stabilization or other payment reserve
fund); and (ii) credits for such available receipts, revenues and other moneys, if
any, as have been received by CMMPA and deposited into the appropriate fund or
account established under the Bond Resolution, and determined by CMMPA to be
applied against Monthly Transmission Project Costs (A) pursuant to the
Transmission Asset Assignment Agreement; (B) as Development True -Up
Amounts; (C) from insurance proceeds; (D) from the sale of surplus Transmission
Project equipment, materials and supplies; (E) as a withdrawal from working
capital or any rate stabilization or other payment reserve fund; and (E) from any
other moneys to be credited under the Bond Resolution or Project Agreements.
(c) If, during the construction of the Transmission Project, CMMPA receives
payments for Transmission Project Construction Work in Progress (CWIP), such
payments shall be applied (i) consistent with the Bond Resolution, to offset Costs
of Acquisition and Construction that would otherwise be included in amounts for
which CMMPA issues Bonds, or (ii) against amounts that would otherwise be
included in Monthly Transmission Project Costs; provided, however, that
CMMPA shall have discretion to determine, in conjunction with developing or
revising its financing plan for the Transmission Project, how to apportion any
such CWIP Payments between the foregoing purposes.
Section 604. Billing Statement.
(a) On or before the 1St day of each month of each Contract Year or other time period
as determined by CMMPA (with reasonable prior notice to the Participant),
CMMPA shall prepare and deliver to the Participant, including by facsimile,
email, or other electronic transmission, a Billing Statement showing the
Participant Portion of Monthly Transmission Project Costs determined in
accordance with Section 603. Attachment 5 sets forth an illustration of the
calculation of the Participant Portion of Monthly Transmission Project Costs.
(b) CMMPA shall have the right to true up the monthly Billing Statement to the
extent that estimated amounts included therein vary from actual costs and credits
incurred or received by CMMPA. CMMPA shall be permitted to issue and
collect, in a single Billing Statement, the Participant Portion of Monthly
Transmission Project Costs for multiple months, including the current month.
The amounts shown in the Billing Statement to be paid to CMMPA by the
Participant shall be due and payable on the 25th day of the month, and any
amounts due and not paid by the Participant on or before the close of business on
the 25th day of the month shall be subject to a service charge of one and one -half
percent (1 %2 %) per month. Remittances received by mail will be accepted without
assessment of said charges, provided that the postmark indicates that the payment
was mailed on or before such day. If the 25th day of the month is a Sunday or
other non - business day of the Participant, the next following business day shall be
the last day on which payment may be mailed without addition of said charges.
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Section 605. Billing Adjustments.
On or before 120 days after the end of each Contract Year, CMMPA shall submit to the
Participant a statement of the actual aggregate Monthly Transmission Project Costs for
such Contract Year. If the actual aggregate Monthly Transmission Project Costs, and any
other amounts payable for such Contract Year exceed the amounts on the basis of which
the Participant has been billed, the deficiency shall be added to the next succeeding
Billing Statement or, at CMMPA's discretion, spread over the remainder of the then -
current Contract Year. If the actual aggregate Monthly Transmission Project Costs, or
other amounts payable for such Contract Year are less than the amounts on the basis of
which the Participant has been billed, CMMPA shall credit such balance on the next
succeeding Billing Statement, or by agreement of the Participant and CMMPA on the
Billing Statements delivered to the Participant for the remainder of the then - current
Contract Year.
Section 606. Billing Disputes.
(a) Except as set forth below in subsection (b) of this Section 606, the Participant
shall not have the right to challenge any Billing Statement or other bill, invoice or
statement rendered by CMMPA for any known claim or claim that it could have
reasonably known, invoke arbitration of the same or bring any court or
administrative action of any kind questioning the propriety of the same after a
period of twenty -four months from the date of rendering. In the case of a Billing
Statement or other bill, invoice or statement containing estimates for any known
claim or claim that it could have reasonably known, the Participant shall not have
the right to challenge its accuracy after a period of twenty -four months from the
date of its adjustment to reflect the actual amounts due. The Participant's right to
challenge any Billing Statement or other bill, invoice or statement rendered by
CMMPA with respect to claims not subject to the twenty -four month limitation
periods set forth above shall be limited to the twenty -four month period from the
date on which the Participant knew, or reasonably should have known, of the facts
and circumstances giving rise to the claim.
(b) In the event of any dispute as to any portion of any Billing Statement (including
its reasonableness or appropriateness), the Participant shall nevertheless pay the
full amount of the disputed charges when due and shall give written notice of the
dispute (other than any dispute based upon information not reasonably available
to the Participant at the time required to give notice under this paragraph (b)) to
CMMPA not later than the date such payment is due. Such notice shall identify
the amount in dispute and set forth a full statement of grounds on which such
dispute is based. No adjustment shall be considered or made for disputed charges
unless notice is given, as aforesaid. CMMPA shall give consideration to such
dispute and shall advise the Participant with regard to its position relative thereto
within one hundred and twenty (120) days following receipt of such written
notice. Upon final determination (whether by agreement, arbitration, adjudication
or otherwise) of the correct amount, any difference between such correct amount
and such full amount shall be properly reflected in the Billing Statement next
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submitted to the Participant after such determination. The difference shall include
a service charge of one and one -half percent (11/2 %) per month.
ARTICLE 7
REPORTS; RECORDS AND ACCOUNTS; PARTICIPANT INFORMATION
Section 701. Reports.
(a) CMMPA shall prepare, or cause to be prepared, and issue to the Participant the
following reports for each Contract Year:
(i) financial and operating statement relating to the Transmission Project;
(ii) status of Annual Budget;
(iii) status of the construction budget of the Brookings Project during
construction or budgets pertaining to Upgrades; and
(iv) other Brookings Project budgets, such as operating and capital
improvements budgets.
(b) CMMPA shall cause to be prepared and issued to the Participants the following
reports no later than 180 days, or no later than such time as may be set forth in the
Bond Resolution, after the conclusion of each Contract Year:
(i) an annual audit as provided for in Section 702 of this Agreement; and
(ii) certain reports that may be required by the Bond Resolution.
Section 702. Records and Accounts.
CMMPA shall keep accurate records and accounts for the Transmission Project in a
manner similar to the FERC Uniform System of Accounts and Generally Accepted
Accounting Principles or such other system as may be reasonably approved by CMMPA.
Such records and accounts shall be separate and distinct from CMMPA's other records
and shall contain information supporting the allocation of CMMPA's indirect costs
associated with the Transmission Project. A firm of certified public accountants,
experienced in electric utility accounting for a similar organization, to be employed by
CMMPA, shall audit such records and accounts annually. Such records and accounts
shall be made available for inspection by the Participant at any reasonable time. Such
annual certified audit, including all written comments and recommendations of such
accountants, will be provided to the Participants in accordance with Section 701 of this
Agreement.
Section 703. Participant Information.
The Participant agrees to supply CMMPA, upon request, with such information and
documentation, including any opinions by an attorney or firm of attorneys, as CMMPA
shall reasonably determine to be requisite to and necessary or desirable with respect to
the Transmission Project and the financing thereof, and other matters pertaining to the
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Transmission Project, including financial statements and other information reasonably
available to allow CMMPA to respond to requests for such information from any federal,
state or local regulatory body or as may be required in connection with the issuance of
Bonds.
ARTICLE 8
OBLIGATIONS IN THE EVENT OF DEFAULT
Section 801. Failure of the Participant to Pay.
(a) Upon failure of the Participant to make any payment in full when due under this
Agreement or to perform any obligation herein, CMMPA shall make demand
upon the Participant, and if said failure is not cured within 20 days from the date
of such demand it shall constitute a default at the expiration of such period.
CMPPA shall also provide notice of such demand to the other Participants.
(b) If the Participant in good faith disputes the legal validity of said demand, it shall
make such payment or perform such obligation within said 20 -day period under
protest directed to CMMPA. Such protest shall specify the reasons upon which
the protest is based.
(c) Upon the failure of any Participant to make any payment which failure constitutes
a default under this Agreement or another Transmission Project Agreement,
CMMPA shall use its commercially reasonable efforts to sell and transfer all or a
portion of the Participant Share of the defaulting Participant for all or a portion of
the remainder of the term of this Agreement. The Participants not in default shall
each have the first right to accept such disposal pro rata based on Participant
Shares among those exercising such right before a transfer is made to a party that
is not a Participant. If all or any portion of the Participant Share of a defaulting
Participant is transferred pursuant to this paragraph, the Participant Share of the
defaulting Participant shall not be reduced, and the defaulting Participant shall
remain liable to CMMPA (and to the non - defaulting Participants) to pay the full
amount of its Participant Portion of Monthly Transmission Project Costs as if
such sale had not been made, except that such liability shall be discharged to the
extent that CMMPA shall receive payment from the purchaser or purchasers
thereof. If a transfer to a party that is not a Participant is required, preference
shall be given to municipal utilities and cooperatives, subject to CMMPA's rights
and duties under the Upstream Project Agreements and the Bond Resolution.
(d) If the Participant fails or refuses to pay any amounts due to CMMPA hereunder,
the fact that the other Participants have assumed the obligation to make such
payments shall not relieve the Participant of its liability for such payments.
CMMPA may commence such suits, actions or proceedings, at law or in equity,
including suits for specific performance, as may be necessary or appropriate to
enforce against the Participant its obligations under this Agreement.
(e) CMMPA shall be entitled to recover from the Participant any and all legal fees
and other costs incurred by CMMPA as a result of the Participant's default.
25
BROOKINGS - TWIN CITIES TRANSMISSION PROJECT AGREEMENT
Section 802. Payment Default by Another Participant.
(a) Upon failure of any other Participant(s) to make any payment which failure
constitutes a default under that Participant's Transmission Project Agreement, and
except as transfers are made pursuant to paragraph (c) of Section 801, the
Participant Share for the Participant shall be automatically increased for the
remaining term of this Agreement pro rata with that of the other non - defaulting
Participant(s) and the Participant Share for the defaulting Participant(s) shall be
reduced correspondingly; provided that (i) no Participant Share shall be increased
by more than 35% (cumulatively for all payment defaults under the Transmission
Project Agreements), and (ii) no such reduction shall reduce the defaulting
Participant's(s') obligations under paragraph (b) of this Section 802.
(b) If another Participant fails or refuses to pay any amounts due to CMMPA under
its Transmission Project Agreement, the fact that the Participant and other
Participants have assumed the obligation to make such payments shall not relieve
the defaulting Participant of its liability for such payments. CMMPA may
commence such suits, actions or proceedings, at law or in equity, including suits
for specific performance, as may be necessary or appropriate to enforce against
the defaulting Participant its obligations under its Transmission Project
Agreement.
(c) CMMPA shall be entitled to recover from the defaulting Participant any and all
legal fees and other costs incurred by CMMPA as a result of that Participant's
default.
(d) If, through legal action against a defaulting Participant, CMMPA recovers any
damages from such Participant for defaulting under its Transmission Project
Agreement, CMMPA shall apply the proceeds of such recovery (net of
CMMPA's direct and indirect costs incurred in connection with the legal action)
to the benefit of the Transmission Project.
(e) If another Participant fails or refuses to pay any amounts due to CMMPA under
its Transmission Project Agreement and after a reasonable time CMMPA fails to
enforce the Transmission Project Agreement under subparagraph 9(b), Participant
may enforce the Agreement, but the proceeds of such recovery (net of
Participant's direct and indirect costs incurred in connection with the legal action)
shall be paid to CMMPA and applied to the benefit of the Transmission Project.
Section 803. Participant Default Other Than Failure to Pay.
In the event of any default by the Participant under any covenant, agreement or obligation
of this Agreement, other than a failure to make a payment required to be made under this
Agreement, CMMPA may bring any suit, action, or proceeding in law or in equity,
including mandamus, injunction, specific performance, declaratory judgment, or any
combination thereof, as may be necessary or appropriate to enforce against the
BROOKINGS - TWIN CITIES TRANSMISSION PROJECT AGREEMENT
Participant any covenant, agreement or obligation of this Agreement. Such remedies
shall be in addition to all other remedies provided for herein.
ARTICLE 9
END OF TRANSMISSION PROJECT
Section 901. Ending of Transmission Project.
(a) CMMPA shall determine when the Transmission Project shall be terminated;
provided, however, if there is a proposal, pursuant to the Upstream Project
Agreements, to terminate the Transmission Project and CMMPA has the right to
vote on such proposal, CMMPA shall make good faith efforts, before casting its
vote, to convene a meeting of the Transmission Project Coordinating Committee
to allow Participants to provide input concerning the termination proposal. Any
CMMPA decision to terminate (or authorize termination of) the Transmission
Project shall be made in accordance with Prudent Utility Practice, provided that:
(i) termination of the Transmission Project shall comply with CMMPA's rights
and duties under the Upstream Project Agreements, (ii) termination of the
Transmission Project and this Agreement shall not occur so long as any Bonds or
any other obligations due under the Bond Resolution are outstanding or until
adequate provision for the payment thereof has been made in accordance with
provisions of the applicable Bond Resolution, and (iii) termination of the
Transmission Project and this Agreement will not occur until all costs, obligations
and liabilities of CMMPA for the Brookings Project have been provided for.
(b) To the extent that there are outstanding liabilities and costs that CMMPA is
obligated to pay as of termination of the Transmission Project, the Participant
shall be responsible for payment for its Share of the amount of such outstanding
liabilities and costs. If, following termination of the Transmission Project and
adequate provision for all obligations due under the Bond Resolution and all other
costs, obligations and liabilities of CMMPA for the Brookings Project, there are
funds or credits available to CMMPA that are properly allocable to the
Transmission Project, CMMPA shall remit or otherwise credit to the Participant
its Participant Share of such funds or credits.
ARTICLE 10
MISCELLANEOUS PROVISIONS
Section 1001. Termination, Amendment, and Waiver.
(a) This Agreement shall not be subject to termination by either party under any
circumstances, whether based upon the default of the other party under this
Agreement or default of another Participant under another Transmission Project
Agreement, or any party's default under any other instrument, or otherwise,
except as specifically provided in this Agreement.
27
BROOKINGS - TWIN CITIES TRANSMISSION PROJECT AGREEMENT
(b) So long as any of the Bonds are outstanding or until adequate provision for
payment thereof has been made in accordance with the Bond Resolution, this
Agreement shall not be terminated, amended, modified, or otherwise changed in
any manner that will (i) extend the time for or reduce payments pledged as
security for the Bonds, (ii) materially adversely affect the security for the Bonds
afforded by the provisions of this Agreement upon which owners from time to
time of the Bonds may reasonably have relied as an inducement to purchase or
hold the Bonds, or (iii) in any other manner materially impair or adversely affect
the rights of the owners from time to time of the Bonds.
(c) Subject to the limitations set forth in subsection (b) of this Section 1001, this
Agreement may be amended only by a written instrument specifically referring to
this Agreement, executed and delivered by CMMPA and the Participant, except
that CMMPA may, with the approval of the CMMPA Board of Directors, revise
any of Attachments 1, 2, 3, 5, 6 and 7 to this Agreement as necessary or
appropriate to reflect updated or changed information, Changes in Law, or
requirements related to the Bonds. CMMPA may not modify Attachment 4
except with the approval of the CMMPA Board of Directors and the Transmission
Project Coordinating Committee.
(d) No term, condition, warranty, representation, or covenant contained in this
Agreement may be waived except by a written instrument executed by the party
waiving compliance. Any such waiver shall be effective only in the specific
instance and for the specific purpose for which it was given and shall not be
deemed a waiver of any other provision or of the same breach or default upon any
recurrence. No failure on the part of either party to exercise, and no delay in
exercising, any right conferred by this Agreement shall operate as a waiver
thereof nor shall any single or partial exercise of any right preclude any other or
further exercise thereof or the exercise of any other right.
Section 1002. Notices.
Any notice, demand, approval, proposal, protest, direction or request provided for in this
Agreement to be delivered, given or made to the Participant shall be deemed delivered,
given or made if delivered in writing in person or mailed by registered or certified mail,
postage prepaid, return receipt requested, addressed to the Person and at the address
designated in writing filed with CMMPA by the Participant. The Participant may change
such designation, at any time and from time to time, by giving notice to CMMPA as
below provided. Any such notice, demand or request to be delivered, given or made to
CMMPA must specifically reference this Agreement and shall be deemed delivered,
given or made if delivered in writing, in person, or sent by mail as above provided to the
following address:
Chief Executive Officer
Central Minnesota Municipal Power Agency
459 South Grove Street
Blue Earth, Minnesota 56013
28
BROOKINGS - TWIN CITIES TRANSMISSION PROJECT AGREEMENT
or such other address designated by CMMPA, as provided above.
Section 1003. Arbitration.
In the event that a dispute arises between the parties as to the interpretation or
performance of this Agreement, then upon written request of either party, representatives
with settlement authority for each party shall meet in person and confer in good faith to
resolve the dispute. Any dispute under this Agreement may be submitted to arbitration
at the request of either CMMPA or the Participant provided that the other party agrees.
Copies of any such request shall be given to the other Participants and shall specify the
issue or issues in dispute. Within ten days after receipt of such a request CMMPA and
the Participant shall confer and attempt to agree upon appointment of a single arbitrator.
If such agreement is not accomplished, CMMPA or the Participant may request the
American Arbitration Association to appoint an arbitrator. The arbitrator shall conduct a
hearing within thirty days thereafter, unless such time is extended by agreement of
CMMPA and the Participant, shall notify the parties of his or her decision, stating his or
her reasons for such decision, in writing, and separately listing his or her findings of fact
and conclusions of law. The arbitrator shall not have power to amend, add to, or remove
provisions from this Agreement. Subject to such limitation, the decision of the arbitrator
shall be final and binding on CMMPA and the Participant except that either party may
exercise available statutory rights under Minnesota law to petition a court of competent
jurisdiction for review of the arbitrator's decision. The pendency of arbitration shall
affect neither the obligation of the Participant to make any payment in full when due
under this Agreement nor the obligations of this Agreement upon the failure of the
Participant to make any payment in full when due under this Agreement. The prevailing
party of a disputed matter shall be entitled to recover from the other party its reasonable
legal fees and other costs of arbitration and court proceedings.
Section 1004. Governing Law and Venue.
This Agreement is made under and shall be governed by the law of the State of
Minnesota, exclusive of principles related to choice of law. Venue for any proceeding
concerning this Agreement shall be in any state or federal court of competent jurisdiction
located in the State of Minnesota.
Section 1005. Obligations of Good Faith and Fair Dealing; Prudent Utility Practice.
Each of CMMPA and the Participant acknowledges and agrees that (a) in performing this
Agreement, it has an obligation of good faith and fair dealing, and (b) its actions and
determinations pursuant to this Agreement shall be consistent with Prudent Utility
Practice.
Section 1006. Severability.
If any section, paragraph, clause or provision of this Agreement shall be finally
adjudicated by a court of competent jurisdiction to be invalid, the remainder of this
Agreement shall be unaffected by such adjudication and all of the remaining provisions
29
BROOKINGS - TWIN CITIES TRANSMISSION PROJECT AGREEMENT
of this Agreement shall remain in full force and effect as though such section, paragraph,
clause or provision or any part thereof so adjudicated to be invalid had not been included
herein. However, the parties shall attempt to negotiate provisions that reasonably
substitute for the invalid provision in order to place the parties in the position that they
would have been had the stricken clause or provision not been found invalid.
Section 1007. Assignment of Agreement by Participant.
This Agreement shall inure to the benefit of, and shall be binding upon, the respective
successors and assigns of the parties to this Agreement; provided, that neither this
Agreement, nor any interest or rights conferred herein, may be assigned or transferred or
sold by the Participant, including in connection with any sale, transfer or other
disposition of Participant's electric system, except as provided herein, unless
(a) CMMPA has given its prior written consent, which shall not be unreasonably
withheld; and
(b) such assignment or transfer or sale is to another Participant or the successor or
assignee has agreed to execute a separate agreement with CMMPA to address the
parties' obligations and responsibilities pertaining to CMMPA becoming a MISO
transmission owner on behalf of the successor or assignee; and
(c) in the opinion of counsel to CMMPA such assignment or transfer or sale (i) will
not adversely affect the Federal Tax Exemption on the Bonds or CMMPA's rights
to receive subsidies or other payments relating to Tax Subsidy Bonds, and (ii) is
consistent with CMMPA's rights and obligations under the Upstream Project
Agreements.
If the Participant proposes to assign, transfer, sell or otherwise dispose of its electric
system, the Participant shall provide timely notification to CMMPA, and CMMPA and
the Participant will establish an agreeable schedule for CMMPA and its counsel to
respectively address the requirements of parts (a) through (c) of the preceding sentence.
No such assignment, transfer, sale or other disposition shall relieve the Participant of any
obligation hereunder. The parties shall seek to reasonably facilitate transfers among
Participants, to entities related to the Participant, to other municipal entities and
municipal power agencies and like entities.
Section 1008. Pledge of Agreement by CMMPA.
Participant acknowledges and agrees that CMMPA may assign and pledge to the trustee
designated in the Bond Resolution, all its right, title, and interest in, to and under this
Agreement and all payments to be made to CMMPA under the provisions of this
Agreement as security for the payment of the principal (including sinking fund
installments) of, premium, if any, and interest on Bonds and may deliver possession of
this Agreement to such trustee in connection therewith, and, upon such assignment and
pledge, CMMPA may grant to such trustee any rights and remedies herein provided to
CMMPA, and thereupon any reference herein to CMMPA shall be deemed, with the
30
BROOKINGS - TWIN CITIES TRANSMISSION PROJECT AGREEMENT
necessary changes in detail, to include such trustee which shall be a third -party
beneficiary of the covenants and agreements of the Participant herein contained.
Section 1009. CMMPA Transfer of Transmission Project.
CMMPA shall not, without the prior written consent of the Participant, which shall not be
unreasonably withheld, or as otherwise required by Applicable Law, transfer the
Transmission Project to any third party (including, without limitation, by sale, merger, or
other acquisition) unless the transfer:
(a) is consistent with the terms of the Upstream Agreements,
(b) complies with any applicable requirements set forth in the Bond Resolution, and
(c) will not materially diminish the Participant Capacity Rights Share or the
Participant's other rights under this Agreement.
Section 1010. No Unreasonable Adverse Distinction; Ability to Join CMMPA on
Comparable Terms.
(a) The terms, conditions and provisions of this Agreement and the other
Transmission Project Agreements shall apply comparably to all Participants and
CMMPA shall not make any unreasonable adverse distinction among the
Participants.
(b) Throughout the term of this Agreement, the membership application of any
Participant that is not then a member of CMMPA and desires membership in
CMMPA shall be subject to the same terms and conditions then applying to other
applicants for membership as prescribed in the CMMPA Agency Agreement (or
successor document(s)) effective at the time consistent with Minnesota law, with
the intent to allow membership application on terms no less favorable than for
then - existing CMMPA members.
Section 1011. Duly Authorized Signatories; Binding Effect of Execution.
Each of CMMPA, as to its signatory, and the Participant, as to its signatory, hereby
represents and warrants that the individual executing this Agreement on its behalf is duly
authorized to do so, and that, by such execution set forth on the signature page to this
Agreement, such party is hereby duly and lawfully bound by this Agreement.
31
BROOKINGS - TWIN CITIES TRANSMISSION PROJECT AGREEMENT
Section 1012. Confidentiality of Information.
To the extent that CMMPA provides confidential or proprietary information to the
Participant in connection with the Transmission Project, the use and treatment of such
confidential or proprietary information shall be as provided for in the Upstream Project
Agreements or other limiting agreements. If the Participant is granted access to any
'`critical energy infrastructure information" (as defined in 18 C.F.R. § 388.113(c)(1) or
any successor provision) of CMMPA or any other Owner, the Participant shall comply
with all applicable requirements of 18 C.F.R. Part 388 pertaining to the critical energy
infrastructure information.
Section 1013. Entire Agreement.
This Agreement, together with the Transmission Asset Assignment Agreement and
subject to the other Project Agreements, Other Instruments, and other documents
specifically referenced by this Agreement, constitutes the entire agreement of the parties
with respect to its subject matter, and supersedes all prior oral or written agreements,
understandings, representations and warranties, and courses of conduct and dealings
between the parties with respect to its the subject matter.
32
BROOKINGS - TWIN CITIES TRANSMISSION PROJECT AGREEMENT
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day of , 2011.
CENTRAL MINNESOTA MUNICIPAL POWER AGENCY
By
Bob Elston
Title: President
By
Mary Grunig
Title: Secretary
CITY OF , MINNESOTA
By
Title:
By
Title:
UTILITIES COMMISSION
By
Title:
By
Title:
33
BROOKINGS - TWIN CITIES TRANSMISSION PROJECT AGREEMENT
ATTACHMENT 1
DESCRIPTION OF BROOKINGS PROJECT
Description - Brookings, S.D. - Southeast Twin Cities 345 -kV Line
CMMPA and four other parties have entered into the Brookings, Southeast Twin Cities
Project Participation Agreement ( "Brookings Project Participation Agreement ") dated
, which, together with other concurrently executed agreements (collectively, the
"Upstream Project Agreements ") provides for the development, construction, acquisition,
completion, and operation and maintenance of the Brookings Project, including Upgrades
and other improvements and capital additions. The four parties that entered into the
Upstream Project Agreements with CMMPA are Northern States Power, Great River
Energy ( "GRE "), Otter Tail Power Company and Western Minnesota Municipal Power
Agency.
The Brookings, South Dakota, to southeast Twin Cities proposal is a 210 -mile 345 -kV
transmission line between the Brookings County Substation near Brookings, South
Dakota, and a new substation, Hampton Corner, in the southeastern quadrant of the Twin
Cities area, plus a 30 -mile 345 -kV transmission line between Marshall and the Granite
Falls area. Alternatively, a portion of the proposal could follow an existing 230 -kV line
corridor between Granite Falls and near New Prague, Minnesota. Parts of the new
transmission infrastructure may be located in the following Minnesota counties: Brown,
Carver, Chippewa, Dakota, LeSueur, Lincoln, Lyon, McLeod, Redwood, Renville, Rice,
Scott, Sibley and Yellow Medicine. The proposal also includes the following
connections to the existing transmission system:
• Brookings County Substation near Brookings, South Dakota
• Lyon County Substation near Marshall, Minnesota.
• A new substation (Hazel Run) near Granite Falls, Minnesota.
• A 230 -kV line from Hazel Run to Minnesota Valley Substation on the east
side of Granite Falls.
• Franklin Substation or a new substation in the Franklin area.
• A new substation (Union Hill), west of New Prague, to connect with the
existing Twin Cities to Mankato 345 -kV line.
• Lake Marion Substation or a new substation further south in the Interstate
35 corridor to connect to an existing 115 -kV line.
• A new substation (Hampton Corner) to connect the line to an existing
345 -kV line northeast of Hampton, Minnesota.
The first step in the regulatory process for the Brookings Project is the Certificate of
Need, which has been granted. The route permits have been requested and are in process,
with final approval of all lines segments expected to be granted in late 2010. This is
presently being done by GRE, the Brookings Project Construction Manager.
34
BROOKINGS - TWIN CITIES TRANSMISSION PROJECT AGREEMENT
As of the date of this Agreement, the (i) current estimate of construction costs, excluding
Development Costs, for completion of the Brookings Project is $725 million, and
(ii) CMPPA estimates that the Maximum CM Cost will be in the range of $857 million
(both in 2010 dollars).
The current targeted Brookings Project in- service date is 2015.
35
BROOKINGS -TWIN CITIES TRANSMISSION PROJECT AGREEMENT
ATTACHMENT
ESTIMATED COSTS OF ACQUISITION AND CONSTRUCTION
MAXIMUM CM COSTS
Projected Financing Costs of Acquisition and Construction - Based on Brookings Estimates of Actual Costs
15.15%
5.00% Elk River
Project CMMPA Participant
Direct Project Construction Cost Estimates: Total of Project Total % of CMMPA 5%
Estimated Initial Construction Costs'
Contingency for Mabmum CM Costs2
Contingency for higher than expected inflation 3_
Estimated Maximum External Obliaation
Proiect Develooment Costs (totaV
Total Project Capital Investment
Less Prepaid Project Development Costs under Dev
Project Construction Costs Financed
CMMPA Costs Requiring Funding:
Working Capital Re uirement -O /M Expense Recover
Working Capital Requirement-Debt Service Durin C
Bond Reserve Requirement
Costs of Issuance
Gross Financing Requirement
Less Tariff Recovery on Construction Work In Pro re:
Net Bond Financing Requirement
$ 725,000,
$ 108,750,
$ 22,888,
$ 856,638,E
Footnotes:
' Estimated Initial Construction Costs include 2.75% annual inflation over constr
Z Per Article 1, Section 102, definition ee
3 Additional inflation provided for at 3% annually over construction period
4 Includes estimated Project Development True -up Amount ($968,066)
5 Prepaid costs already incurred plus pending development costs through perrr
l
od
877
3,890
1,000
6,489,038
601,162
7,090,200
141,804
133,012
589,419
151,500
7,651,435
14( 2,262
7,509,173
BROOKINGS - TWIN CITIES TRANSMISSION PROJECT AGREEMENT
ATTACHMENT 3
PARTICIPANTS AND PARTICIPANT SHARES
There are sixteen Participants that have entered into Brookings -Twin Cities Transmission
Project Agreements with CMMPA for the Brookings Project. The Participants and their
Shares are listed below:
Transmission Project Participants*
Share ( %) **
1. Blue Earth, City of- Blue Earth Light & Water
19.70%
2. Delano, City of- Delano Municipal Utilities
5.29
3. Elk River, City of
15.15
4. Fairfax, City of
1.35
5. Granite Falls, City of
3.16
6. Independence, Iowa, City of - Independence Light
& Power
1.89
7. Indianola, Iowa, City of- Indianola Municipal
Utilities
3.79
8. Janesville, City of- Janesville Utilities
1.40
9. Kenyon, City of - Kenyon Municipal Utility
2.52
10. Montezuma, Iowa, City of- Montezuma
Municipal Light & Power
0.76
11. Mountain Lake, City of - Mountain Lake
Municipal Utilities
2.17
12. Sleepy Eye, City of- Sleepy Eye Public Utilities
7.58
13. Springfield, City of - Springfield Public Utilities
Commission
2.80
14. Waverly, Iowa, City of- Waverly Light & Power
0.76
15. Willmar, City of- Willmar Municipal Utilities
25.00
16. Windom, City of
6.68
Total
100%
* All Participants are located in the State of Minnesota except where otherwise noted.
** Stated Participant Shares are based on each party's "Election Share" under the
Development Project Agreement, and may be subject to change.
37
BROOKINGS - TWIN CITIES TRANSMISSION PROJECT AGREEMENT
ATTACHMENT 4
MONTHLY TRANSMISSION PROJECT COSTS
For each calendar month of a Contract Year (or shorter time period as determined at the
reasonable discretion of CMMPA), Monthly Transmission Project Costs shall include the
items of cost paid or incurred by CMMPA for such month in connection with the
Transmission Project (categorized as either Debt Service- Related Costs or Other
Transmission Project costs as provided in Parts 1 and 2 of this Attachment 4). The
Participant Portion of Monthly Transmission Costs shall be as provided in Section 603 of
the Agreement.
Part 1. Debt Service- Related Costs
Debt Service- Related Costs include:
(a) Debt Service amounts CMMPA is required to pay on Bonds issued to finance
or refinance all or a part of the Transmission Project, and any regularly
scheduled payments required to be made on any swaps or other similar
arrangements relating to the Bonds;
(b) certain amounts that may be required for coverage on Debt Service amounts in
item (a) above, reserves on Bonds issued to finance or refinance all or a part
of the Transmission Project, cost for credit and liquidity support, and any
other financing- related costs;
(c) certain amounts CMMPA is required under the Bond Resolution to pay or
deposit into any fund or account established by the Bond Resolution,
including any reserve requirements for Debt Service on Bonds; and
(d) any other amounts CMMPA determines are required to meet its Debt Service
obligations.
Part 2. Other Transmission Project Costs
Other Transmission Project Costs are all costs related to the Transmission Project other
than Debt Service - Related Costs, to the extent not included in the Costs of Acquisition
and Construction and funded from the proceeds of Bonds, and include:
(a) amounts paid by CMMPA pursuant to the Upstream Project Agreements and
determined by CMMPA to be Other Transmission Project Costs;
(b) amounts CMMPA determines are allocable to the Transmission Project
pursuant to the Transmission Asset Assignment Agreement;
(c) such other costs as may be determined by CMMPA to be properly allocable to
the Transmission Project, including but not limited to (i) ordinary operation
and maintenance costs, including the provision of control center services, and
provisions for reserves related thereto; (ii) administrative and general costs,
insurance and overhead costs and any charges payable by CMMPA in
connection with the Transmission Project; (iii) working capital reasonably
38
BROOKINGS - TWIN CITIES TRANSMISSION PROJECT AGREEMENT
required for the Transmission Project; (iv) costs relating to the study and
development of the Transmission Project; and (v) a share, reasonably
determined by CMMPA to be allocable to the Transmission Project, of all
operation and maintenance costs related to the operation and conducting of the
business of CMMPA, including salaries, fees for legal, engineering, and other
services and all other expenses properly related to the conduct of the affairs of
CMMPA;
(d) amounts CMMPA is required to pay for federal, state and local taxes and
payments in lieu of taxes legally paid in connection with the Transmission
Project;
(e) amounts required for renewals and replacements, or payment or deposit of the
foregoing amounts into any reserve fund or account;
(f) amounts for payment or deposit into any fund or account outside the pledge of
the Bond Resolution attributable to costs or reserves of the Transmission
Project;
(g) amounts required to be deposited in any fund or account under the Bond
Resolution other than for Debt Service or Debt Service reserves, including,
without limitation, any rate stabilization or other payment reserve fund or
account established by CMMPA for the payment of Monthly Transmission
Project Costs in future months;
(h) amounts set aside by CMMPA for the retirement from service, disposal,
decommissioning, or termination of the Transmission Project or any facility
thereof;
(i) amounts relating to injury and damage claims arising from the development,
acquisition, participation, construction, operation, maintenance, the provision
of control services, repairs, renewals, replacements, termination, or
administration of the Transmission Project;
(j) amounts relating to payments for insurance required pursuant to Section 510
of this Agreement, including contributions to a self insurance reserve fund;
(k) amounts required to pay the cost of or to provide reserves for extraordinary
operating and maintenance costs, including the prevention or correction of any
unusual loss or damage to keep the Transmission Project or any facility
thereof in good operating condition or to prevent a loss of revenues therefrom;
and
(1) amounts to be paid for any scheduled or termination payments under swap or
other similar arrangements that CMMPA may enter into relating to the
Transmission Project.
39
BROOKINGS - TWIN CITIES TRANSMISSION PROJECT AGREEMENT
ATTACHMENT 5
EXAMPLE CALCULATION OF PARTICIPANT PORTION
OF MONTHLY TRANSMISSION PROJECT RESULTS
The following is an illustrative format of a Billing Statement that sets forth the
Participant Portion of Monthly Transmission Project Revenue and Costs.
Participant Billing — ILLUSTRATION of a month in year 5 of $1,000,000
Commitment to Estimated Initial Construction Costs
MISO SCHEDULE 9 TARIFF REVENUE'
MISO SCHEDULE 7 TARIFF REVENUE
MISO SCHEDULE 8 TARIFF REVENUE'
DEPOSIT TO REVENUE TO MAINTAIN CASH FLOW4
LESS: O/M EXPENSES'
DEBT SERVICE'
DEPOSIT TO OTHER RESERVES
NET TRANSMISSION RETURN
$12,825.08
$ (171.84)
$ (1,075.86)
$ (7,453.17)
$ 4,124.20
Footnotes:
1 MISO Schedule 9 Tariff Revenue is return based on computed Annual Transmission Revenue Rights via
MISO Attachment O filing
2 MISO Schedule 7 Tariff Revenue is return computed on Intra Pricing Zone or "Point -to- Point"
Transmission Service
3 MISO Schedule 8 Tariff Revenue is return computed on Inter Pricing Zone or "Drive -Thru" Transmission
Service
4 Cash Flow reserves are required to prevent cash calls throughout the life of the project
5 Operating and Maintenance Expenses include both external (Project Operating Manager) and applicable
CMMPA expenses
6 Debt Service includes both principal and interest
Deposits to reserves for major repairs and replacements could be necessary if the reserve provided by the
operating management teams is deemed insufficient
40
BROOKINGS - TWIN CITIES TRANSMISSION PROJECT AGREEMENT
ATTACHMENT 6
AGENCY AGREEMENT, LIST OF PARTIES TO
TRANMISSION PROJECT AGREEMENTS, AND
LIST OF PROJECT AGREEMENTS
CMMPA has adopted an Agency Agreement and has entered into, or will enter into, a
number of agreements that pertain to the Brookings Project and arrangements for further
development, acquisition, construction, operation and maintenance, the provision of
control services, additions and betterments (including Upgrades) of the Brookings
Project. These agreements, which are subject to change from time to time during the
term of this Agreement, are:
Agreement
Date Executed
Fourth Restated Agency Agreement, Central Minnesota Municipal
Fourth
Power Agency, Originally Adopted July 1, 1987, restated as of
Restatement as
January 15, 1997, August 11, 2004, May 24, 2006, and
of 1/13/2010
January 13, 2010, as the same may be further amended and restated
from time to time
Brookings -Twin Cities Transmission Project Agreement between
To be executed
Central Minnesota Municipal Power Agency and the following
Participants:
1. Blue Earth, Minnesota, City of — Blue Earth Light & Water
2. Delano, Minnesota, City of— Delano Municipal Utilities
3. Elk River, Minnesota, City of
4. Fairfax, Minnesota, City of
5. Granite Falls, Minnesota, City of
6. Independence, Iowa, City of— Independence Light & Power
7. Indianola, Iowa, City of— Indianola Municipal Utilities
8. Janesville, Minnesota, City of— Janesville Utilities
9. Kenyon, Minnesota, City of — Kenyon Municipal Utility
10. Montezuma, Iowa, City of— Montezuma Municipal Light & Power
11. Mountain Lake, Minnesota, City of — Mountain Lake Municipal
Utilities
12. Sleepy Eye, Minnesota, City of — Sleepy Eye Public Utilities
13. Springfield, Minnesota, City of — Springfield Public Utilities
Commission
14. Waverly, Iowa, City of— Waverly Light & Power
15. Willmar, Minnesota, City of— Willmar Municipal Utilities
16. Windom, Minnesota, City of
41
BROOKINGS - TWIN CITIES TRANSMISSION PROJECT AGREEMENT
AjzYeement
Date
Executed
Brookings -Twin Cities Development Project Agreement between Central
2/07
Minnesota Municipal Power Agency and the Participants (see list above)
CMMPA Transmission Owner Services and Asset Assignment Agreement
To be
(the "Transmission Asset Assignment Agreement ")?
executed
Brookings - SE -TC Brookings Project Participation Agreement between
To be
Central Minnesota Municipal Power Agency and the other Owners (the
executed
"Brookings Project Participation Agreement ")
Brookings - SE -TC Brookings Project Construction Management
To be
Agreement between Central Minnesota Municipal Power Agency and the
executed
other Owners (the "Brookings Project Construction Management
Agreement ")
Brookings - SE -TC Brookings Project Operation and Maintenance
To be
Agreement between Central Minnesota Municipal Power Agency and the
executed
other Owners
Brookings - SE -TC Brookings Project Transmission Capacity Exchange
To be
Agreement between Central Minnesota Municipal Power Agency and the
executed
other Owners
Such other documents, including (but not limited to) the Transmission
To be
Easement Agreement, as are executed by Central Minnesota Municipal
executed
Power Agency and one or more other Owners and defined in the Brookings
Project Participation Agreement as "Project Agreements"
Cap X Participation Agreement between MMTG and Other CapX 2020
January 1,
participants
2007
CMMPA MISO Transmission Owner Agreement
August 16,
2007
42
BROOKINGS - TWIN CITIES TRANSMISSION PROJECT AGREEMENT
ATTACHMENT 7
PARTICIPANT OPINION
In accordance with Section 505 of this Agreement, the Participant shall furnish CMMPA
with an opinion by an attorney or firm of attorneys to the effect that:
(a) Valid Existence. The Participant is a municipal corporation or other eligible
person or entity duly created and validly existing pursuant to the Constitution and
Statutes of the State of Minnesota or other State of the United States, or is
otherwise organized and authorized as a Participant.
(b) Performance. The Participant has full legal right and authority to enter into this
Agreement and to carry out its obligations hereunder.
(c) Rates and Charges. The Participant has full legal right and authority to fix,
impose and collect rates and charges, and such rates and charges are not subject to
the regulatory jurisdiction of any State government, local government (other than
that of the Participant), or regulatory authority.
(d) Ownership of Electric UtilitySystem. The Participant has legal title to and the
beneficial interest in and is beneficially possessed of the electric utility system or
integrated utility system such Participant owns, maintains, and operates.
(e) Authorization, Execution. At meetings duly called and held at which quorums
were present and acting throughout, the governing body of the Participant duly
approved this Agreement and its execution and delivery on behalf of the
Participant, this Agreement has been duly authorized, executed and delivered by
the appropriate officers of the Participant, and assuming that CMMPA has all the
requisite power and authority to execute and deliver, and has duly authorized,
executed and delivered, this Agreement, this Agreement constitutes the legal,
valid and binding obligation of the Participant enforceable in accordance with its
terms subject, however, to the effect of, and to restrictions and limitations
imposed by or resulting from, bankruptcy, insolvency, moratorium, reorganization
or other similar laws affecting creditors' rights generally. No opinion need be
rendered as to the availability of any particular remedy.
(f) No Violation, Etc. The execution and delivery of this Agreement by the
Participant, the performance by the Participant of its obligations hereunder and
the consummation of the transactions contemplated herein do not and will not
contravene any provision of the Charter or Certificate of Incorporation or any
other organizational document of the Participant and any amendment thereto
under which the Participant is organized and presently operating or any existing
law or any existing order, injunction, judgment, decree, rule or regulation of any
court or administrative agency having jurisdiction over the Participant or its
property or result in a breach or violation of any of the terms and provisions of, or
constitute a default under, any existing bond resolution, indenture, mortgage, deed
of trust or other agreement to which the Participant is a party or by which it or its
property is bound.
43
BROOKINGS - TWIN CITIES TRANSMISSION PROJECT AGREEMENT
(g) Approvals. All approvals, consents or authorizations of, or registrations or filings
with, any governmental or public agency, authority or person required on the part
of the Participant in connection with the execution, delivery and performance of
this Agreement have been obtained or made.
(h) Litigation. _ To the knowledge of such attorney or firm of attorneys after due
inquiry, there is no litigation or other proceedings pending or threatened in any
court or other tribunal of competent jurisdiction (either State or Federal)
questioning the creation, organization or existence of the Participant or the
validity, legality or enforceability of this Agreement.
44
_PUBLIC UTILITIES COMMISSION
RESOLUTION
BE IT RESOLVED by the
"Commission ", as the governing body of the
municipal utility, of the City of
Public Utilities Commission„ hereinafter
Public Utilities, a Minnesota
Minnesota as follows:
Section 1. It was previously determined that it was in the best interest of the
Commission to utilize the resources and services of the Central Minnesota Municipal Power
Agency "CMMPA" to participate in the development and investment in the acquisition,
construction, ownership and operation of high voltage electrical transmission including
negotiation of contracts, planning, transmission needs studies, transmission arrangements,
engineering and technical assistance.
Section 2: The Commission now wishes to properly update and supplement its
relationship with CMMPA and also authorize the Commission's participation in the following
project:
Brookings - Twin Cities Transmission Project
Section 3: The Commission does hereby approve Participation in the Brookings -Twin
Cities Transmission Project and the financing thereof, if any, with the Central Minnesota
Municipal Power Agency with its participation amount not to exceed $ ,
without the further action of the Commission.
Section 4: The CMMPA Brookings -Twin Cities Transmission Project Agreement is
hereby approved. The President (Chairman) and the Secretary are hereby authorized and
directed to execute the Brookings -Twin Cities Transmission Project Agreement for and on behalf
of the Commission, such execution to be final and conclusive evidence of the Commissions'
authorization thereof.
Adopted this day of , 2011.
Its
Attest:
It
I,
CERTIFICATE
the of the
Public Utilities Commission, do hereby certify that attached
hereto is a true and correct copy of a resolution (other than the exhibits thereto) duly adopted by
the Commission at a meeting duly held on the
day of , 2011
notice of such meeting having been given in accordance with law and at which meeting a
quorum was present and acting throughout.
I also do hereby certify that such resolution has not been amended in any way from the
date of such adoption to the date hereof.
IN WITNESS WHEREOF I have hereunto set my hand this day
of , 2011.
CITY COUNCIL RESOLUTION
NO.
BE IT RESOLVED by the City Council of the City of ,
(hereinafter referred to as "City "), as follows:
Section 1. Through the City's prior approval and execution of the Brookings-
Twin Cities Development Project Agreement between the Central Minnesota Municipal
Power Agency ( "CMMPA ") and the City (the "Development Project Agreement "), it
was previously determined that it is in the best interests of the City to utilize the resources
and services of CMMPA to participate in the development and investment in the
acquisition, construction, ownership and operation of high voltage transmission of
electrical energy and capacity, negotiation of contracts, planning, including transmission
needs studies, transmission arrangements, engineering and technical assistance.
Section 2: As contemplated by the terms of the Development Project Agreement,
the City now wishes to properly update and supplement its relationship with CMMPA
and also authorize the City's participation in the following project:
Brookings - Twin Cities Transmission Project.
Section 3: The City has received and reviewed a signature ready draft of the
Brookings -Twin Cities Transmission Project Agreement dated February 14, 2011 and
finds such draft to be acceptable.
Section 4: The City Council hereby authorizes participation in the Brookings-
Twin Cities Transmission Project and the financing thereof, if any, with CMMPA, with
its participation amount related to construction of the Brookings - Twin Cities
Transmission Project not to exceed $ , without the further action of
the City.
Section 5: The Mayor and
are hereby
authorized and directed to execute the Brookings - Twin Cities Transmission Project
Agreement for and on behalf of the City, such execution to be final and conclusive
evidence of the City's authorization thereof.
Adopted this day of , 2011.
ATTEST:
By_
Its
Mayor
N
CERTIFICATE
I, , the of
the City of , do hereby certify that attached hereto is
a true and correct copy of a resolution (other than the exhibits thereto) duly adopted by
the City Council at a meeting duly held on the day of ,
2011 notice of such meeting having been given in accordance with law and at which
meeting a quorum was present and acting throughout.
I also do hereby certify that such resolution has not been amended in any way
from the date of such adoption to the date hereof.
IN WITNESS WHEREOF I have hereunto set my hand this
day of , 2011.
3