ORDINANCE _________________

AN ORDINANCE relating to the City Light Department; authorizing the Superintendent of Seattle City Light to execute an agreement with Bonneville Power Administration and Puget Sound Energy Corporation for the Preferred Puget Sound Area Plan of Service Projects and Cost Allocation; and ratifying and confirming certain prior acts.

WHEREAS, Bonneville Power Administration (BPA) owns and is responsible for the reliable operation of the Federal Columbia River Transmission System (FCRTS); and

WHEREAS, Seattle City Light and Puget Sound Energy each own and operate electric systems that are interconnected with the FCRTS in the Puget Sound Area and electric power is delivered within those electric systems, and to or from them by BPA over the FCRTS; and

WHEREAS, the Puget Sound Area experiences periods of transmission congestion that may require mitigation to maintain reliable operation of the Puget Sound Area Interconnection, including in some cases, curtailments of firm transmission service; and

WHEREAS, as of February 2011, the Parties entered into Contract No. 11TX-15290, "Temporary Operational Support Program Agreement," that provides for voluntary changes in planned generation, including an increase in Puget Sound Area generation, as temporary and short-term measures for relieving forecasted transmission congestion conditions that are expected to adversely affect the reliable operation of the Puget Sound Area Interconnection; and

WHEREAS, representatives from each of the Parties and other entities participated in regional studies to develop a long term plan, and implement a range of physical improvements to preserve the reliable operation of the Puget Sound Area Interconnection, and reduce the need to curtail firm transmission service; and

WHEREAS, the Parties have identified the projects described herein that, when taken as a whole, are expected to preserve the reliable operation of the Puget Sound Area Interconnection, and reduce the need to curtail firm transmission service; and it is in their individual and collective interests to continue to support the efforts needed to carry out these projects; and

WHEREAS, the transmission congestion affecting the Puget Sound Area Interconnection is a shared problem, and the projects and cost-sharing arrangements provided herein are appropriate; NOW, THEREFORE,

BE IT ORDAINED BY THE CITY OF SEATTLE AS FOLLOWS:

Section 1. As requested, the Superintendent of Seattle City Light is authorized to execute, for and on behalf of The City of Seattle, a Memorandum of Agreement with Bonneville Power Administration and Puget Sound Energy Corporation substantially in the form attached hereto as Attachment 1, relating to the Preferred Puget Sound Area Plan of Service Projects and Cost Allocation. The Superintendent of City Light is also authorized to execute, for and on behalf of The City of Seattle, any other related agreement or document that is necessary or convenient, relating to the Preferred Puget Sound Area Plan of Service Projects and Cost Allocation.

Section 2. Any act consistent with the authority of this ordinance that is taken after its passage, but prior to its effective date, is hereby ratified and confirmed.

Section 3. This Ordinance shall take effect and be in force 30 days from and after approval by the Mayor, but if not approved and returned by the Mayor within ten days after presentation, it shall take effect as provided by Seattle Municipal Code Section 1.04.020.

Passed by the City Council the ____ day of ________________________, 2011, and signed by me in open session in authentication of its passage this

_____ day of ___________________, 2011.

_________________________________

President __________of the City Council

Approved by me this ____ day of _____________________, 2011.

_________________________________

Michael McGinn, Mayor

Filed by me this ____ day of __________________________, 2011.

____________________________________

Monica Martinez Simmons, City Clerk

(Seal)

Attachment:

Attachment 1 -Memorandum of Agreement Relating to the Preferred Puget Sound Area Plan of Service Projects and Cost Allocation

Jackie Smith SCL Puget Sound Area Plan Agreement ORD October 25, 2011 Version #2

Contract No. 11TX-15450

MEMORANUDUM OF AGREEMENT

executed by the

UNITED STATES OF AMERICA

DEPARTMENT OF ENERGY

acting by and through the

BONNEVILLE POWER ADMINISTRATION

and

THE city of seattle

acting by and through its

CITY LIGHT DEPARTMENT

and

Puget sound energy, inc.

(Relating to the Preferred Puget Sound Area Plan of Service Projects

and Cost Allocation)

This MEMORANDUM OF AGREEMENT (MOA) is executed by the United States of America, Department of Energy, acting by and through the Bonneville Power Administration (BPA), THE City of Seattle, acting by and through its City Light Department (Seattle City Light), and Puget Sound Energy Inc. (Puget) (Customers). BPA and Customers are sometimes referred to individually as "Party" and collectively as "Parties".

WHEREAS, BPA owns and is responsible for the reliable operation of the Federal Columbia River Transmission System (FCRTS),

WHEREAS, Seattle City Light and Puget each own and operate electric systems that are interconnected with the FCRTS in the Puget Sound Area and electric power is delivered within those electric systems, and to or from them by BPA over the FCRTS,

WHEREAS, the Puget Sound Area experiences periods of transmission congestion that may require mitigation to maintain reliable operation of the Puget Sound Area Interconnection, including in some cases, curtailments of firm transmission service,

WHEREAS, as of February 2011, the Parties entered into Contract No. 11TX-15290, "Temporary Operational Support Program Agreement," that provides for voluntary changes in planned generation, including an increase in Puget Sound Area generation, as temporary and short-term measures for relieving forecasted transmission congestion conditions that are expected to adversely affect the reliable operation of the Puget Sound Area Interconnection,

WHEREAS, representatives from each of the Parties and other entities participated in regional studies to develop a long term plan, and implement a range of physical improvements to preserve the reliable operation of the Puget Sound Area interconnection, and reduce the need to curtail firm transmission service,

WHEREAS, the Parties have identified the projects described herein that, when taken as a whole, are expected to preserve the reliable operation of the Puget Sound Area Interconnection, and reduce the need to curtail firm transmission service; and it is in their individual and collective interests to continue to support the efforts needed to carry out these projects, and

WHEREAS, the transmission congestion affecting the Puget Sound Area interconnection is a shared problem, and the projects and cost sharing arrangements provided herein are appropriate.

NOW THEREFORE, in consideration of the mutual obligations and undertakings herein, the sufficiency of which is acknowledged, the Parties agree as follows:

1. DEFINITIONS

(a) "Bothell to SnoKing Reconductor Project" means the project identified in the Preferred Plan of Service in which Seattle City Light will reconductor the existing Bothell to SnoKing No. 1 and No. 2 230 kV lines with high-temperature conductor.

(b) "BPA Preferred Plan Projects" means, collectively, the Covington 500 kV Transformer Addition Project and the Northern Intertie Remedial Action Scheme ("RAS") Improvement Project.

(c) "

Broad Street

Inductor Project" means the project identified in the Preferred Plan of Service in which Seattle City Light will add 6 ohm series inductors to the

Massachusetts-Broad Street

and East Pine-Broad Street 115 kV lines.

(d) "ColumbiaGrid" means the Washington non-profit membership corporation formed to improve the operational efficiency, reliability, and planned expansion of the Pacific Northwest transmission grid, the eight members of which, as of the Effective Date, are Avista Corporation; BPA; Public Utility District No. 1 of Chelan County, Washington; Public Utility District No. 2 of Grant County, Washington; Puget; Seattle City Light; Public Utility District No. 1 of Snohomish County, Washington; and Tacoma Power.

(e) "Covington 500 kV Transformer Addition Project" means the project identified in the Preferred Plan of Service in which BPA will install a third 500-230 kV transformer at the BPA Covington Substation.

(f) "Delridge to Duwamish Reconductor Project" means the project identified in the Preferred Plan of Service in which Seattle City Light will reconductor the existing Delridge to Duwamish 230 kV line with high-temperature conductor.

(g) "Lakeside 230 kV Transformer Addition Project" means the project identified in the Preferred Plan of Service in which Puget will install a 230-115 kV transformer at the Puget Lakeside Substation.

(h) "MapleValley to SnoKing Reconductor Project" means the project identified in the Preferred Plan of Service in which Seattle City Light will reconductor the existing MapleValley to SnoKing 230 kV line with high-temperature conductor.

(i) "North Downtown Inductor Project" means the project identified in the Preferred Plan of Service in which Seattle City Light will add 6 ohm series inductors to the proposed North Downtown-Canal line as part of Seattle City Light's North Downtown Substation Project.

(j) "Northern Intertie RAS Improvement Project" means the project identified in the Preferred Plan of Service in which BPA will install new software for and re-wire electrical protection devices on the Northern Intertie RAS.

(k) "Northern Intertie RAS" means the existing BPA preprogrammed set of automatic operating steps that are designed to protect the regional high voltage electric grid in the event of a loss of one of the two Custer-Monroe 500 kV lines.

(l) "Preferred Plan of Service" means the "Updated Transmission Expansion Plan for the Puget Sound Area to Support Winter South-to-North Transfers Puget Sound Area Study Team" approved by ColumbiaGrid on April 25, 2011, a copy of which is attached as Exhibit A to this MOA.

(m) "Preferred Plan Projects" means, collectively, the BPA Preferred Plan Projects, the Puget Preferred Plan Projects, and the Seattle City Light Preferred Plan Projects.

(n) "Puget Preferred Plan Projects" means the Sammamish to Lakeside to Talbot Rebuild Project and the Lakeside 230 kV Transformer Addition Project.

(o) "Sammamish to Lakeside to Talbot Rebuild Project" means the project identified in the Preferred Plan of Service in which Puget will upgrade Puget's existing Sammamish to Lakeside to Talbot 115 kV lines to 230 kV operation using Puget's existing Sammamish to Lakeside to Talbot utility corridor.

(p) "Seattle City Light Preferred Plan Projects" means the Bothell to SnoKing Reconductor Project, the Broad Street Inductor Project, the North Downtown Inductor Project, and the Delridge to Duwamish Reconductor Project.

2. TERM

The term of this MOA shall be effective on the date of execution by all Parties (Effective Date) and shall continue until the earliest to occur of the following: (i) the date of completion of the last of the Preferred Plan Projects; (ii) a Party terminates this MOA pursuant to section 5(c) of this MOA; or (iii) December 31, 2020.

3. PREFERRED PLAN OF SERVICE PROJECTED PROJECT COMPLETION SCHEDULE AND COST

(a) BPA Preferred Plan Projects. Each Party acknowledges that, as of the Effective Date, the projected project completions schedule and capital costs of the BPA Preferred Plan Projects are as follows:

BPA Preferred Plan Project	Projected Completion	Projected Capital Cost
1. Covington 500 kV Transformer Addition Project	2018	$56.2 million
2. Northern Intertie RAS Improvement Project	2014	$4.0 million

(b) Puget Preferred Plan Projects. Each Party acknowledges that, as of the Effective Date, the projected project completions schedule and capital costs of the Puget Preferred Plan Projects are as follows:

Puget Preferred Plan Project	Projected Completion	Projected Capital Cost
1. Sammamish to Lakeside to Talbot Rebuild Project	2017	$45.0 million (single circuit) or $41.3 million (double circuit)
2. Lakeside 230 kV Transformer Addition Project	2017	$22.0 million

(c) Seattle City Light Preferred Plan Projects. Each Party acknowledges that, as of the Effective Date, the projected project completions schedule and capital costs of the Seattle City Light Preferred Plan Projects are as follows:

Seattle City Light Preferred Plan Project	Projected Completion	Projected Capital Cost
1. Bothell to SnoKing Reconductor Project	2017	$2.5 million
2. Broad Street Inductor Project	2017	$7.3 million[*]
3. North Downtown Inductor Project	2017	$4.4 million*
4. Delridge to Duwamish Reconductor Project	2016	$1.9 million

(d) Preferred Plan Project Not Planned for Construction Based On the Construction of the Puget Preferred Plan Projects. Each Party acknowledges that, the construction of the Puget Preferred Plan Projects negates the need for the construction of the MapleValley to SnoKing Reconductor Project. Each Party acknowledges that, as of the Effective Date, the projected project completions schedule and capital costs of the MapleValley to SnoKing Reconductor Project are as follows:

Preferred Plan Project	Projected Completion	Projected Capital Cost
Maple Valley to SnoKing Reconductor Project	N/A	$16.1 million

4. PRELIMINARY CAPITAL COST ALLOCATION

As of the Effective Date of this MOA, the Parties agree to share in the capital costs of Preferred Plan Projects as follows:

(a) BPA Preferred Plan Projects. BPA shall pay the entire actual capital cost of each of (i) the Covington 500 kV Transformer Addition Project and (ii) the Northern Intertie RAS Improvement Project

(b) Seattle City Light Preferred Plan Projects. BPA, Puget, and Seattle City Light shall each pay one-third of the total actual capital cost of each of (i) the Bothell to SnoKing Reconductor Project; (ii) the Delridge to Duwamish Reconductor Project; (iii) the Broad Street Inductor Project; and (iv) the North Downtown Inductor Project.

(c) Puget Preferred Plan Projects. BPA and Seattle City Light shall each pay to Puget an amount equal to one-third of the adjusted projected capital cost of the Maple Valley to SnoKing Reconductor Project, which adjusted projected capital cost shall be determined as provided in the following table:

Projected Capital Cost of the MapleValley to SnoKing Reconductor Project	=	$16.1 million * Cost Differences in Reconductor Projects
where:
Cost Differences in Reconductor Projects	=	the quotient of (i) the sum of the actual capital costs of the Delridge to Duwamish Reconductor Project and Bothell to SnoKing Reconductor Project and (ii) the sum of the projected capital costs of the Delridge to Duwamish Reconductor Project and Bothell to SnoKing Reconductor Project identified in section 3(c) above (i.e., $4.4 million)

5. FINAL CAPITAL COST ALLOCATION AND OPTION OF ELECTION TO CANCEL

(a) The allocations identified in section 4 are based on preliminary planning capital cost projections. The final capital cost allocation for the Seattle City Light Preferred Plan Projects shall be based on actual design and construction capital costs for each of the Seattle City Light Preferred Plan Projects, and the final capital cost allocation for the Puget Preferred Plan Projects shall be in accordance with the formula proscribed in section 4(a) above. The Parties shall review such actual design and construction capital costs and schedules and shall agree in writing to the final capital cost allocation.

(b) Each Party reserves the right to cancel any Preferred Plan Project for which such Party is the sponsor if such Party determines that

(i) the actual capital cost of such Preferred Plan Project is likely to exceed the projected capital cost of such Preferred Plan Project by a factor that is equal to or in excess of thirty percent (30%), or

(ii) the projected in-service date of the Preferred Plan Project will be more than twenty-four (24) months later than the projected completion date identified in section 3 above for such Preferred Plan Project.

If a Party elects to cancel a Preferred Plan Project for which such Party is a sponsor under this section 5(b), such Party shall provide written notice to such other Parties within five (5) days of such election. Within a reasonable period of time after receipt of such written notice, representatives of the Parties shall convene and identify alternative projects that the Parties expect will preserve the reliable operation of the Puget Sound Area Interconnection and reduce the need to curtail firm transmission service in a manner similar to the project cancelled pursuant to section 5(b). If the Parties cannot agree in good faith upon an alternative project to replace a project cancelled pursuant to section 5(b) within a reasonable period following receipt of written notice of such termination, then any Party may terminate this MOA upon 90 days' written notice to the other Parties.

6. RESPONSIBILITY FOR ALL OTHER COSTS

(a) Each Party shall be solely responsible for the Preferred Plan Project for which such Party is the sponsor, less the contributions from the other Parties as provided in section 4. This MOA only affects the cost sharing for the Preferred Plan Projects.

(b) Each Party shall own the assets for the Preferred Plan Project for which such Party is the sponsor and shall be solely responsible for the operation and maintenance costs of such assets. Each Party shall be entitled to any capacity increases to its transmission system that results from any assets installed pursuant to this MOA.

(c) If any Party enhances a Preferred Plan Project after completion of such Preferred Plan Project to meet such Party's needs, the cost of such future enhancements shall be borne solely by such Party. Each Party shall attempt in good faith to coordinate with the other Parties with respect to any future enhancements to a Preferred Plan Project to minimize or eliminate any impact to the interconnected electric systems of such other Parties.

7. PAYMENT SCHEDULE

Payments will be made at the completion of individual projects. The Parties shall agree in writing to the method and schedule for the cost share contributions to be made under this MOA.

8. NATIONAL ENVIRONMENTAL POLICY ACT ASSESSMENT

To the extent that BPA's financial contributions under this MOA are determined to trigger the need for analysis of projects under the National Environmental Policy Act, the Parties shall coordinate such assessment.

9. JOINT COMMUNICATIONS

The Parties shall coordinate joint communications regarding presentations of the preferred plan of service to the public.

10. GENERAL PROVISIONS

(a) This MOA, including documents expressly incorporated by reference, constitutes the entire agreement between the Parties. It supersedes all previous communications, representations, or contracts, either written or oral, which purport to describe or embody the subject matter of this MOA.

(b) No amendment of this MOA shall be of any force or effect unless set forth in a written instrument signed by authorized representatives of each Party.

(c) This MOA is made and entered into for the sole benefit of the Parties, and the Parties intend that no other person or entity shall be a direct or indirect beneficiary of this MOA.

(d) This MOA shall be interpreted consistent with and governed by federal law.

(e) In the event that any provision of this MOA is determined to be invalid or unenforceable for any reason, in whole or part, the remaining provisions of this MOA shall be unaffected thereby and shall remain in full force and effect to the fullest extent permitted by law, and such invalid or unenforceable provision shall be replaced by the Parties with a provision that is valid and enforceable and that comes closest to expressing the Parties' intention with respect to such invalid or unenforceable provision.

(f) Each Party shall be solely responsible for and shall pay its own costs and expenses incurred by it in connection with the negotiation of this MOA.

(g) Whenever this MOA requires or provides that (i) a notice be given by a Party to any other Party or (ii) a Party's action requires the approval or consent of any other Party, such notice, consent or approval shall be given in writing and shall be given in accordance with the provisions of Exhibit B to this MOA.

(h) This MOA is binding on any successors and assigns of the Parties. No Party may otherwise transfer or assign this MOA, in whole or in part, without the other Parties' written consent. Such consent shall not be unreasonably withheld.

(i) Nothing contained in this MOA shall be construed as creating a corporation, company, partnership, association, joint venture or other entity, nor shall anything contained in this MOA be construed as creating or requiring any fiduciary relationship between the Parties. No Party shall be responsible hereunder for the acts or omissions of any other Party. Nothing herein shall preclude (i) a Party from taking any action (or having its affiliates take any action) with respect to any other transmission project, including any such project that may compete with the projects provided herein, or (ii) the Parties jointly from entering into MOAs with third parties for the joint development, construction, ownership or operation of any project or for the provision of transmission capacity from such project.

(j) Other than the obligation to pay amounts due under Section 4, in no event shall any Party be liable to any other Party under any provision of this MOA for any losses, damages, costs or expenses for any direct, special, indirect, incidental, consequential, or punitive damages, including but not limited to loss of profit or revenue, whether based in whole or in part in contract or in tort, including negligence, strict liability, or any other theory of liability; provided, however, that damages for which a Party may be liable to any other Party under another agreement will not be considered to be special, indirect, incidental, or consequential damages hereunder.

(k) The Parties shall not be in breach of their respective obligations to the extent the failure to fulfill any obligation is due to an Uncontrollable Force. "Uncontrollable Force" means an event beyond the reasonable control of, and without the fault or negligence of, the Party claiming the Uncontrollable Force, that prevents that Party from performing its contractual obligations under this MOA and which, by exercise of that party's reasonable care, diligence and foresight, such Party was unable to avoid. Uncontrollable Forces include, but are not limited to:

(1) strikes or work stoppage;

(2) floods, earthquakes, or other natural disasters; terrorist acts; and

(3) final orders or injunctions issued by a court or regulatory body having competent subject matter jurisdiction which the Party claiming the Uncontrollable Force, after diligent efforts, was unable to have stayed, suspended, or set aside pending review by a court of competent subject matter jurisdiction.

Neither the unavailability of funds or financing, nor conditions of national or local economies or markets shall be considered an Uncontrollable Force. The economic hardship of a Party shall not constitute an Uncontrollable Force. Nothing contained in this provision shall be construed to require any Party to settle any strike or labor dispute in which it may be involved.

If an Uncontrollable Force prevents a Party from performing any of its obligations under this MOA, such party shall: (1) immediately notify the other Parties of such Uncontrollable Force by any means practicable and confirm such notice in writing as soon as reasonably practicable; (2) use its best efforts to mitigate the effects of such Uncontrollable Force, remedy its inability to perform, and resume full performance of its obligation hereunder as soon as reasonably practicable; (3) keep the other Parties apprised of such efforts on an ongoing basis; and (4) provide written notice of the resumption of performance. Written notices sent under this section 10(k) must comply with Exhibit B, Notices and Contact Information.

11. WAIVER

No waiver of any provision or breach of this MOA shall be effective unless such waiver is in writing and signed by the waiving Party, and any such waiver shall not be deemed a waiver of any other provision of this MOA or any other breach of this MOA.

12. SIGNATURE

The Parties have caused this MOA to be executed as of the latest date all Parties have signed this MOA.

CITY OF SEATTLE UNITED STATES OF AMERICA

CITY LIGHT DEPARTMENT Department of Energy

Bonneville Power Administration

By:			By:
Name:			Name:
(Print/ Type)			(Print/ Type)
Title:			Title:
Date:			Date:

PUGET SOUND ENERGY, INC.

By:
Name:
(Print/ Type)
Title:
Date:

Insert file path

EXHIBIT A

PREFERRED PLAN OF SERVICE

EXHIBIT B

NOTICES

Any notice required under this MOA shall be in writing and shall be delivered in person; or with proof of receipt by a nationally recognized delivery service or by United States Certified Mail. Notices are effective when received. Either Party may change the name or address for receipt of notice by providing notice of such change. The Parties shall deliver notices to the following person and address:

If to Seattle City Light: Attention: Phone: Fax: Email: If by First Class Mail: City of Seattle, City Light Department (Customer Address) (Customer City, State, Zip) If by Overnight Delivery Service : City of Seattle, City Light Department (Customer Address) (Customer City, State, Zip)	If to BPA: Attention: Phone: Fax: Email: If by First Class Mail: Bonneville Power Administration P.O. Box 61409 Vancouver, WA 98666-1409 If by Overnight Delivery Service : Bonneville Power Administration TSE/TPP-2 7500 NE 41st Street Suite 130 Vancouver, WA 98662
If to the Puget: Attention: Phone: Fax: Email: If by First Class Mail: Puget Sound Energy, Inc. P.O. Box 97034 Bellevue, WA 98009-9734 If by Overnight Delivery Service : Puget Sound Energy, Inc. 10885 N.E. 4th Street, Suite 1100 Bellevue, WA 98004-5591

[*] The projected capital costs of the Broad Street Inductor Project and the North Downtown Inductor Project do not reflect any projected costs for land acquisition. As of the Effective Date, the Parties acknowledge that Seattle City Light may have to acquire land to accomplish the Broad Street Inductor Project, and the actual capital costs of the Broad Street Inductor Project will, if necessary, reflect the actual costs of land acquisition for such project. As of the Effective Date, the Parties do not anticipate that the North Downtown Inductor Project will require Seattle City Light to acquire any land.