CONTACT: Brian Young Ron Lunt (623) (623)

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CONTACT: Brian Young Ron Lunt (623) 869-2424 (623) 869-2362 byoung@cap-az.com rlunt@cap-az.com MEETING DATE: September 7, 2017 Agenda Number 6.

1 CONTACT: Brian Young Ron Lunt (623) (623) MEETING DATE: September 7, 2017 Agenda Number 6.f AGENDA ITEM: Consideration of Action to Approve Amendment No. 1 to the Agreement for the Administration of the U.S. Entitlement in the Navajo Project among the Bureau of Reclamation, Western Area Power Administration and CAWCD RECOMMENDATION: Staff recommends that the Board of Directors approve Amendment No.1 to the Agreement for the Administration of the U.S. Entitlement in the Navajo Project among the Bureau of Reclamation (Reclamation), Western Area Power Administration (WAPA) and CAWCD (Navajo 3-Party Agreement) to extend the term through December 31, FINANCIAL IMPLICATIONS: None Additional budget spending authority requested: $0 LINKAGE TO STRATEGIC PLAN, POLICY, STATUTE OR GUIDING PRINCIPLE: 2016 CAWCD Strategic Plan o Project Reliability: Effectively Operate and Maintain CAP Assets PREVIOUS BOARD ACTION/ACTIVITY: September 15, 2011 Board approved the Agreement for the Administration of the U.S. Entitlement in the Navajo Project among the Bureau of Reclamation, Western Area Power Administration and CAWCD, and authorized the General Manager, or his Designee, to execute the Agreement. ISSUE SUMMARY/DESCRIPTION: The Navajo 3-Party Agreement was entered into in 2011 to define the roles and responsibilities of the Parties as the Amended Navajo Marketing Plan period commenced on October 1, These roles and responsibilities included scheduling of and payment for Navajo energy, marketing of Navajo surplus power, and other operational and administrative changes stemming from the coinciding move from Salt River Project balancing area to the WAPA balancing area.

2 The Navajo 3-Party Agreement is set to expire on December 31, Navajo Generation Station will continue to operate until December 23, 2019 under a lease extension which will require an extension of the Navajo 3-Party Agreement. Staff from all Parties have reviewed the agreement and recommend extension of the term through December 31, 2019 without any other modifications. The Parties have revised all of the Operating Procedures under the Navajo 3-Party Agreement over a period of about 2 years. Any modifications that staff would otherwise have recommended have been made through these revisions to the Operating Procedures. SUGGESTED MOTION: I move that the Board of Directors approve Amendment No. 1 to the Agreement for the Administration of the U.S. Entitlement in the Navajo Project among the Bureau of Reclamation, Western Area Power Administration, and Central Arizona Water Conservation District, and authorize the General Manager, or his Designee, to execute the agreement in substantially the form in which it was presented today. Attachment.

3 Agenda Number 6.f. Attachment. United States Department of Energy WESTERN AREA POWER ADMINISTRATION Desert Southwest Regional Office CONTRACT AMENDMENT NO. 1 TO WESTERN CONTRACT NO. 11-DSR RECLAMATION CONTRACT NO. 1-CU-30-P1212 AMONG DEPARTMENT OF ENERGY WESTERN AREA POWER ADMINISTRATION Desert Southwest Region DEPARTMENT OF THE INTERIOR BUREAU OF RECLAMATION CENTRAL ARIZONA WATER CONSERVATION DISTRICT FOR ADMINISTRATION OF THE U.S. ENTITLEMENT IN THE NAVAJO PROJECT

4 AMENDMENT NO. 1 TO WESTERN CONTRACT NO. 11-DSR RECLAMATION CONTRACT NO. 1-CU-30-P1212 AMONG DEPARTMENT OF ENERGY WESTERN AREA POWER ADMINISTRATION Desert Southwest Region DEPARTMENT OF THE INTERIOR BUREAU OF RECLAMATION CENTRAL ARIZONA WATER CONSERVATION DISTRICT FOR ADMINISTRATION OF THE U.S. ENTITLEMENT IN THE NAVAJO PROJECT TABLE OF CONTENTS Section Title Page No. 1 Preamble Explanatory Recitals Agreement Definitions Modification of Section 5 of the Original Contract (Term) Term of Contract Amendment Original Contract to Remain in Effect Execution By Counterparts Authority to Execute... 4 Signature Clause... 5 i

5 AMENDMENT NO. 1 TO WESTERN CONTRACT NO. 11-DSR RECLAMATION CONTRACT NO. 1-CU-30-P1212 AMONG DEPARTMENT OF ENERGY WESTERN AREA POWER ADMINISTRATION Desert Southwest Region DEPARTMENT OF THE INTERIOR BUREAU OF RECLAMATION CENTRAL ARIZONA WATER CONSERVATION DISTRICT FOR ADMINISTRATION OF THE U.S. ENTITLEMENT IN THE NAVAJO PROJECT 1. PREAMBLE: This Contract Amendment (Amendment) is made this day of, 2017, pursuant to the Acts of Congress approved June 17, 1902 (32 Stat. 388); August 4, 1939 (53 Stat. 1187); September 30, 1968 (82 Stat. 885); August 4, 1977 (91 Stat. 565); August 17, 1984 (98 Stat. 1333); December 10, 2004 (118 Stat. 3478); and Acts amendatory or supplementary to the foregoing Acts, between the OF AMERICA, (i) acting by and through the Administrator, Western Area Power Administration, Department of Energy, hereinafter called Western, represented by the officer executing this Amendment or a duly appointed successor, and (ii) acting by and through the Commissioner, Bureau of Reclamation, Department of the 1

6 Interior, hereinafter called Reclamation, represented by the Regional Director, Lower Colorado Region, represented by the officer executing this Amendment or a duly appointed successor, and the Central Arizona Water Conservation District, hereinafter called CAWCD, acting through the officer executing this Amendment or a duly appointed successor; as part of Western Contract No. 11-DSR (Reclamation Contract No. 1-CU-30-P1212) (Original Contract), dated September 30, 2011, pursuant to the same authorities as the Original Contract, and subject to all the provisions of the Original Contract except as herein amended. Western, Reclamation, and CAWCD are each sometimes individually called Party and sometimes collectively called Parties. 2. EXPLANATORY RECITALS: 2.1 The Central Arizona Project (CAP) is a federal Reclamation project authorized under the Colorado River Basin Project Act of 1968, 82 Stat Reclamation holds a 24.3% beneficial ownership interest in the Navajo Generating Station (NGS) and the power generated by it for the benefit of the CAP. Reclamation is responsible under the Amended Plan, in consultation with CAWCD, for determining the Navajo Surplus available for sale and exchange by Western. 2.3 On October 1, 2011, Reclamation, Western, and CAWCD entered into the Original Contract relating to: 1) the reservation of Navajo Reserved Energy to CAWCD; 2) CAWCD s use of Navajo Reserved Energy; and 3) the determination of Navajo Surplus to be marketed or exchanged by Western in accordance with the Amended Plan. 2.4 The Parties now desire to amend the Original Contract by extending the 2

7 expiration date in Section 5 of the Original Contract (Term) as herein agreed. 3. AGREEMENT: The Parties agree to the terms and conditions set forth herein. 4. DEFINITIONS: The following terms, whether in the singular or the plural, when used in this Amendment, shall have the meanings specified: 4.1 Amended Navajo Power Marketing Plan (Amended Plan) The plan for the marketing and exchanging of Navajo Surplus adopted September 18, 2007, in accordance with the Hoover Power Plant Act of 1984 (98 Stat. 1333). 4.2 Navajo Entitlement The entitlement of the United States to 24.3% of the power generation from NGS. 4.3 Navajo Reserved Energy The energy associated with the Navajo Entitlement that is reserved annually by CAWCD, in accordance with the Original Contract, for the energy required to serve the CAP pumping plants, water control structures, substations, transmission lines, and other physical properties listed in Exhibit A of the Original Contract. 4.4 Navajo Surplus The capacity and energy associated with the Navajo Entitlement that is in excess of the pumping requirements of the CAP and any needs for desalting and protective pumping facilities under Section 101(b)(2)(B) of the Colorado Basin Salinity Control Act of 1974, Pub. L , as amended. 5. MODIFICATION OF SECTION 5 OF THE ORIGINAL CONTRACT (TERM): Section 5 of the Original Contract is hereby deleted in its entirety and the following substituted therefore: 5. This Contract became effective on October 1, 2011, and shall remain in effect until December 31, 2019, unless Reclamation, Western, or CAWCD provides notice of 3

8 termination by giving the other Parties no less than one (1) year s prior written notice of such termination. 6. TERM OF CONTRACT AMENDMENT: This Amendment shall become effective upon execution and shall remain in effect and terminate concurrently with the Original Contract as amended herein. 7. ORIGINAL CONTRACT TO REMAIN IN EFFECT: Except as expressly modified by this Amendment, the Original Contract shall remain in force and effect, and this Amendment shall be subject to all terms of the Original Contract. 8. EXECUTION BY COUNTERPARTS: This Amendment may be executed in any number of counterparts and, upon execution and delivery by each Party, the executed and delivered counterparts together shall have the same force and effect as an original instrument as if all Parties had signed the same instrument. Any signature page of this Amendment may be detached by any counterpart of this Amendment without impairing the legal effect of any signatures thereon, and may be attached to another counterpart of this Amendment identical in form hereto, by having attached to it one or more signature pages. 9. AUTHORITY TO EXECUTE: Each individual signing this Amendment certifies that the Party represented has duly authorized such individual to execute this Amendment that binds and obligates the Party. 4

9 The Parties have caused this Amendment No. 1 to Western Contract No. 11-DSR (Reclamation Contract No. 1-CU-30-P1212) to be effective in accordance with Section 5, herein. DEPARTMENT OF ENERGY WESTERN AREA POWER ADMINISTRATION By Title Address Ronald E. Moulton Senior Vice President and Desert Southwest Regional Manager Desert Southwest Region P.O. Box 6457 Phoenix, AZ DEPARTMENT OF THE INTERIOR BUREAU OF RECLAMATION By Title Address Terrance J. Fulp, Ph.D. Regional Director Bureau of Reclamation Lower Colorado Region P.O. Box Boulder City, NV (SEAL) CENTRAL ARIZONA WATER CONSERVATION DISTRICT Attest: By Theodore C. Cooke By Title General Manager Title Address P.O. Box Phoenix, AZ

Southern California Edison Company Tariff Title: Rate Schedules Tariff Record Title: Rate Schedule FERC No. 304 FERC FPA Electric Tariff United States

Southern California Edison Company Tariff Title: Rate Schedules Tariff Record Title: Rate Schedule FERC No. 304 FERC FPA Electric Tariff United States Department of Energy WESTERN AREA POWER ADMINISTRATION