Amendment to Wholesale Power Agreement between Lower Colorado River Authority and McCulloch Electric Cooperative, Inc.

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Summary

This amendment updates the Wholesale Power Agreement between Lower Colorado River Authority (LCRA) and McCulloch Electric Cooperative, Inc., extending its term to June 25, 2016. It establishes customer advisory task forces for resource planning and rate design, outlines procedures for acquiring additional power capacity, and sets conditions for purchasing power from other sources. The amendment also addresses financial integrity, termination rights for material breach, and requires McCulloch to purchase all power from LCRA after ending purchases from West Texas Utilities Company by June 11, 1992.

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EX-10.42 33 a2036361zex-10_42.txt EXHIBIT 10.42 AMENDMENT TO WHOLESALE POWER AGREEMENT This Amendment to the Wholesale Power Agreement between Lower Colorado River Authority ("LCRA") and McCulloch Electric Cooperative, Inc. ("Customer"), dated June 25, 1977, is entered into as of the 28th day of September, 1987. In consideration of the mutual promises set forth, LCRA and Customer agree as follows: 1. PERIOD OF EXTENSION. The term of the Agreement shall be extended to June 25, 2016 and the notice date shall be June 25, 2011. 2. RESOURCE PLANNING TASK FORCE. LCRA shall establish and coordinate a Resource Planning Task Force, at its option or at the request of a simple majority of its customers, to assist LCRA with LCRA's preparation of its 10-year forecast of load and resources under PURA *16. The purpose of the Task Force is to maximize customer involvement with LCRA's system planning to efficiently and economically satisfy its customers' needs for reliable electric service. Customer involvement shall continue notwithstanding changes in applicable law. 2.1 Each customer may designate a representative to nerve on the Task Force. 2.2 The Task Force shall act as an advisory committee to LCRA in LCRA's preparation of its ten-year forecast. LCRA shale meet with the Task Force as necessary to obtain the Task Force's views before completing its draft forecast. LCRA shall submit its draft forecast to the Task Force for consideration. Any Task Force member that believes LCRA's draft forecast does not adequately reflect its views may furnish comments that LCRA shall submit to the Board along with its draft forecast. 2.3 LCRA will make available to the Task Force the information and other resources necessary for the Task Force to discharge its function. 3. BASELOAD AND PEAKING GENERATION CAPACITY. The Board-approved Resource Plan, as reflected in LCRA's 10-year forecast and the statewide electrical energy plan of the Public Utility Commission of Texas, may show that LCRA has a need for additional base load or peaking generation capacity. 3.1 In the event LCRA decides to seek certification of a baseload generation unit, a decision Customer opposes, Customer may elect to fix its electrical requirements from LCRA at a "Contract Load." 3.1.1 Customer may establish a "Contract Load" by giving LCRA written notice of Customer's opposition within 90 days after Customer receives written notice of,LCRA's decision to seek certification. 3.1.2 "Contract Load" is the total rated generation capacity of LCRA at the time of the notice, multiplied by the ratio of energy purchased during the preceding 12-month period and the total energy supply during such period. Once established, a "Contract Load" may be modified when LCRA decides to seek certification of succeeding baseload generation units, provided such modification is determined to have a system-wide benefit. 3.1.3 Customer may purchase power in excess of the "Contract Load" from sources other than LCRA, and LCRA will have no duty to furnish Customer with such power. 3.2 In the event LCRA decides not to seek certification of a peaking generation unit, a decision Customer opposes, Customer may elect to install or otherwise acquire "Customer Peaking Capacity". 3.2.1 Customer may acquire "Customer Peaking Capacity" by giving LCRA written notice at least 24 months prior to the acquisition date. 3.2.2 "Customer Peaking Capacity" shall not exceed ten percent (10%) of Customer's annual coincident peak demand during the preceding 12-month period. 3.3 Except for purchases of power in excess of a "Contract Load" and "Customer Peaking Capacity", Customer shall not obtain electrical requirements covered by this Agreement from sources other than LCRA without first receiving LCRA's written consent, and such consent shall not be unreasonably withheld. 4. RATE DESIGN TASK FORCE. LCRA shall establish and coordinate a Rate Design Task Force, at its option or at the request of a simple majority of its customers, to assist LCRA with LCRA's preparation of its major rate requests under PURA *43. The purpose of the Task Force is to maximize customer involvement with LCRA's activities on matters of cost of service, cost allocation and functionalization, and rate design to. create just and reasonable rates for its customers. Customer involvement shall continue notwithstanding changes in applicable law. 4.1 Each customer may designate a representative to serve on the Task Force. 4.2 The Task Force shall act as an advisory committee to LCRA in LCRA's preparation of its major rate requests. LCRA shall meet with the Task Force as necessary to obtain the Task Forces views before completing its draft rate filing. LCRA shall submit its draft rate filing to the Task Force for consideration. Any Task Force member that believes LCRA's draft rate filing does not adequately reflect its views may furnish comments that LCRA shall submit to the Board along with its draft rate filing. 4.3 LCRA will make available to the Task Force the information and other resources necessary for the Task Force to discharge its function. 4.4 The Board-approved Rate Design Plan shall be reflected in LCRA's major rate requests. LCRA shall support rates that acknowledge cost of service as a principal concern, recognizing appropriate functionalization of investments and allocation of costs, and promote the efficient use of the system. Rates shall not be unreasonably preferential, prejudicial or discriminatory, but shall be sufficient, equitable and consistent in application to each customer class. 5. FINANCIAL INTEGRITY. LCRA shall request rates projected to recover all operating expenses, debt service and debt service coverage sufficiently in excess of the minimum coverage requirements under LCRA's priority bonds to maintain LCRA's financial integrity. LCRA's capital structure shall include a reasonable amount of short-term debt to take advantage of changes in the yield curve. 6. RIGHT OF TERMINATION. If either party shall materially breach any provision of the Agreement, the non-breaching party shall give written notice to the breaching party describing the material breach with specificity. The breaching party shall have thirty days to cure the alleged breach. If the alleged breach is not cured, the nonbreaching part shall be entitled to terminate the Agreement effective upon thirty days written notice. This right of termination shall be cumulative, and-shall not affect any other remedy that the parties may have in law or equity. 7. DURATION OF AGREEMENT. Except as expressly provided herein or subsequently agreed to by the parties in a written amendment, all terms and conditions of the Agreement shall remain in full force. Additionally, in consideration of the mutual promises set forth, LCRA and Customer further agree as follows: 1. Customer now purchases power and energy from West Texas Utilities Company ("WTU") to serve certain portions of its load. Customer has notified WTU that it will discontinue purchasing power and energy from WTU no later than June Il, 1992. Upon the termination of purchases from WTU, Customer hereby agrees to purchase and LCRA agrees to sell and deliver all power and energy required by Customer at those points of delivery formerly served by WTU. 2. LCRA agrees that the points of delivery for power and energy sold to Customer pursuant to this Amendment shall be the same as the points of delivery for Customer's former purchases from WTU. LOWER COLORADO RIVER AUTHORITY By:___________________________ ATTEST: - ---------------------------- McCULLOCH ELECTRIC COOPERATIVE, INC. By____________________________ ATTEST: - ---------------------------- Effective: June 1, 1999 Revised Sheet No. 1 of 4 EXHIBIT A OF WHOLESALE POWER AGREEMENT DATE JUNE 25, 1974 Revisions of Sheet 1 and Total Maximum Demand Stated in Paragraph 1 of Sheet 2 POINTS OF DELIVERY MCCULLOCH ELECTRIC COOPERATIVE Distributor
Contract Load (KW, NCP) Year Estimated Contract Load Ending (KW, NCP) Years Ending June 25 No. Location Phase Season 6/25/00 2001 2002 2003 2004 1 Brownwood Tap 3 Summer 2250 2413 2531 2657 2789 Winter 2800 3000 3145 3297 3457 2 Camp San Saba 3 Summer 4950 5100 5280 5450 5600 Winter 4500 5500 5600 5650 5700 3 Dutton 3 Summer 4179 ###-###-#### 4744 Winter 4800 5000 5185 5378 5578 4 Eden 3 Summer 1660 1730 180) 1870 1940 Winter 1700 1760 1810 1860 1910 5 Hext 3 Summer 638 657 677 699 722 Winter 571 598 626 656 688 6 Melvin Tap 3 Summer 1060 1080 1110 1140 1170 Winter 782 804 825 850 870 7 Richland Springs 3 Summer 3320 3453 3567 3685 3806 Winter 2580 2660 2740 2830 2910 8 Terry 3 Summer 810 840 866 897 927 Winter 803 834 865 885 908 Summer Totals: 18857 19601 20295 21000 21698 Winter Totals: 18536 20156 20796 21406 22021
Paragraph 1, Page 2 of Exhibit A LOWER COLORADO RIVER AUTHORITY MCCULLOCH ELECTRIC COOPERATIVE ATTEST: BY:_________________ ATTEST: BY:___________________________ General Manager ________ DATE: ______ _________ DATE: _________