MEMORANDUM OF UNDERSTANDING
This Memorandum of Understanding (this MOU) is entered into as of March 5, 2010 (the Effective Date), by and between PacifiCorp, an Oregon corporation (PacifiCorp), and Idaho Power Company, an Idaho corporation (Idaho Power). PacifiCorp and Idaho Power are sometimes referred to in this MOU individually as a Party and, collectively, as the Parties.
A. PacifiCorp owns and operates facilities for the transmission of electric power and energy in interstate commerce (PacifiCorp Transmission System).
B. Idaho Power owns and operates facilities for the transmission of electric power and energy in interstate commerce (Idaho Power Transmission System; each of the PacifiCorp Transmission System and the Idaho Power Transmission System, a Transmission System and, collectively, the Transmission Systems).
C. Each of PacifiCorp and Idaho Power have an independent obligation pursuant to their respective Open Access Transmission Tariff to plan for and expand their respective Transmission System based upon the needs of their native load customers, network customers, and eligible customers that agree to expand the Transmission System.
D. Idaho Power has developed an integrated resource plan for service to its native load customers, and received network load and resource forecasts from its network customers that collectively demonstrate the need to evaluate expansion of Idaho Powers Transmission System.
E. PacifiCorp has developed an integrated resource plan for service to its native load customers, and received network load and resource forecasts from its network customers that collectively demonstrate the need to evaluate expansion of PacifiCorps Transmission System.
F. The Parties are committed to the development of transmission facilities to fulfill their service obligations and to operate reliable Transmission Systems.
G. The Parties are also committed to engaging potential stakeholders in this development process through the Northern Tier Transmission Groups planning workgroup and other appropriate forums.
H. The Parties have been involved in the joint development and expansion of certain major electric transmission facilities (the Gateway West Project) pursuant to (i) the Memorandum of Understanding Between Idaho Power Company and PacifiCorp Concerning Electric Transmission Development, dated May 7, 2007 and (ii) the First Amended and Restated Agreement to Share Permitting Costs for Gateway West in
Support of the National Environmental Policy Act (NEPA) Process, dated September 5, 2008.
I. The Parties are considering whether to modify the Gateway West Project through Idaho and terminating in Oregon to recognize significant capital savings through participation in a combined set of projects over the next six (6) years (as further defined in Exhibit A, the Projects) which is expected to meet, in part, both Parties long term integrated resource planning needs.
J. The Parties are also considering whether to construct new projects into Oregon, specifically the Hemingway to Boardman project, which, if pursued, could be included in the Projects.
K. Idaho Power and PacifiCorp are parties to certain Legacy Agreements (as defined in Exhibit A) which grant to one another certain transmission capacity rights over portions of the other Partys existing Transmission System.
L. The Parties desire to consider whether to terminate the Legacy Agreements and replace the transmission arrangements contemplated therein with joint ownership transmission arrangements and other alternative transmission arrangements pursuant to definitive agreements mutually satisfactory to the Parties (as further defined in Exhibit A, the Definitive Agreements).
M. The Parties are entering into this MOU to set forth a process by which the Parties will negotiate in good faith to attempt to reach mutually satisfactory agreement on the terms and conditions of the Projects and the Definitive Agreements.
NOW THEREFORE, in consideration of the mutual covenants contained herein, and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
1. Effective Date; Term.
(a) This MOU shall become effective on the Effective Date.
(b) The term of this MOU shall commence on the Effective Date and shall terminate upon the earlier date to occur of the following (the Termination Date):
(i) The date that each of the Parties executes and delivers each of the Definitive Agreements;
(ii) The date that either Party provides notice to the other Party that it has decided, in its sole and absolute discretion, not to proceed with the Projects and the Definitive Agreements; or
(iii) The Parties fail to execute and deliver the Definitive Agreements
on or before September 1, 2010, as such date may be extended by mutual written agreement of the Parties (the Target Date).
(c) This MOU shall automatically terminate on the Termination Date and
shall have no further force or effect, provided that the rights and obligations set forth in Sections 4, 5, and 6 shall survive the termination of this MOU and remain in full force and effect.
2. Negotiate Terms of Definitive Agreements.
(a) During the term of this MOU, both Parties shall proceed diligently and in good faith to negotiate mutually satisfactory terms of the Definitive Agreements and all such other agreements and documents necessary to fully document the transactions contemplated by the Projects and the Definitive Agreements by no later than the Target Date.
(b) Each Party shall select a senior-level representative (each, a Representative) to be responsible for coordinating activities under this MOU. Each Party commits to provide its Representative with the support and resources necessary to further the purposes of this MOU. In no event shall the Representatives be permitted to amend the terms of this Agreement, other than in accordance with Section 6(b).
(c) Based on the information currently known to the Parties, it is proposed that the Definitive Agreements would include the terms and conditions set forth in the Term Sheet attached hereto as Exhibit A (the Term Sheet). The Term Sheet sets forth the Parties current general understanding with respect to certain provisions of the Definitive Agreements, but is not intended to represent a binding agreement or final contractual language, or to address every provision which the Parties may wish to incorporate into the Definitive Agreements.
3. Nature of MOU. Neither this MOU nor the Term Sheet is intended to include all
of the essential terms of the transactions contemplated by this MOU (which will only be contained in the Definitive Agreements) and, accordingly, neither this MOU nor the Term Sheet is intended to be a complete and binding agreement as to the terms of the Definitive Agreements and the transactions contemplated thereby. No binding agreement will exist between the Parties with respect to the transactions to be included in the Definitive Agreements unless and until the Parties execute and deliver the Definitive Agreements.
4. Confidentiality. All information exchanged in connection with this MOU (but not
this MOU) shall constitute Confidential Information subject to the terms and conditions of that certain Mutual Nondisclosure and Confidentiality Agreement, dated as of October 21, 2009, between the Parties (the Confidentiality Agreement), the provisions of which are incorporated herein by reference. The Parties anticipate posting this MOU on their respective OASIS sites for public disclosure.
5. Limitation of Liability; Indemnity.
(a) Each of the Parties acknowledges and agrees that: (i) the other Partys decision to proceed with the Definitive Agreements, including the decision to proceed with the Projects, and any other decision with respect to the Definitive Agreements or the Projects, is within the other Partys sole and absolute discretion and that the other Party may terminate this MOU at any time for any reason whatsoever or for no reason; and (ii) the other Party shall not be liable to it for any claim, loss, cost, liability, damage or expense, including any direct damage or any special, indirect, exemplary, punitive, incidental or consequential loss or damage (including any loss of revenue, income, profits or investment opportunities or claims of third party customers), arising out of or directly or indirectly related to the other Partys decision to terminate this MOU, the other Partys performance under this MOU, or any other decision with respect to proceeding or not proceeding with the Definitive Agreements or the Projects.
(b) The rights and obligations under this Section 5 shall survive the expiration and termination of this MOU.
6. General Provisions.
(a) This MOU represents the entire agreement between the Parties and supersedes any prior written or oral agreements or understandings between the Parties relating to the subject matter of this MOU, provided that nothing in this MOU shall limit, repeal, or in any manner modify the existing legal rights, privileges, and duties of each of the Parties as provided by agreement (including the Confidentiality Agreement and the Legacy Agreements), statute or any other law or applicable court or regulatory decision.
(b) This MOU may not be amended except in writing signed by both of the Parties.
(c) Any waiver on the part of a Party to this MOU of any provision or condition of this MOU must be in writing signed by each Party to be bound by such waiver, shall be effective only to the extent specifically set forth in such writing and shall not limit or affect any rights with respect to any other or future circumstance.
(d) This MOU is for the sole and exclusive benefit of the Parties and shall not create a contractual relationship with, or cause of action in favor of, any third party.
(e) Neither Party shall have the right to assign its interest in this MOU, including its rights, duties, and obligations hereunder, without the prior written consent of the other Party, which consent may be withheld by the other Party in its sole and absolute discretion. Notwithstanding the foregoing, either Party shall have the right, without the prior consent of the other Party, to assign all of its interest in this MOU in connection with any sale, merger or other transfer of all or a substantial part of such Partys electric transmission facilities as an operating entity: provided, however, that the effectiveness of such assignment shall be conditioned upon assignee (i) agreeing in writing to assume all of the rights and obligations of the assignor
hereunder as of the assignment date and (ii) having all necessary corporate and regulatory authority and approvals to perform its obligations under this MOU. Any assignment made in violation of the terms of this Section 6(e) shall be null and void and shall have no force and effect.
(f) In the event that any provision of this MOU is determined to be invalid or unenforceable for any reason, in whole or part, the remaining provisions of this MOU 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.
(g) 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 MOU, the Definitive Agreements and all other agreements, documents and instruments related hereto and thereto, including all legal fees and expenses and expenses associated with such Partys own due diligence activities.
(h) Whenever this MOU requires or provides that (i) a notice be given by a Party to the other Party or (ii) a Partys action requires the approval or consent of the other Party, such notice, consent or approval shall be given in writing and shall be given by personal delivery, by recognized overnight courier service, or by certified mail (return receipt requested), postage prepaid, to the recipient thereof at the address given for such Party as set forth below, or to such other address as may be designated by notice given by any Party to the other Party in accordance with the provisions of this Section 6(h):
If to PacifiCorp:
825 NE Multnomah Street, Suite 1600
Attention: Director Transmission Services
If to Idaho Power:
Idaho Power Company
1221 West Idaho Street
Boise, ID 83702
Attention: Manager Transmission Policy & Development
Each notice, consent or approval shall be conclusively deemed to have been given (A) on the day of the actual delivery thereof, if given by personal delivery or overnight delivery, and (B) date of delivery shown on the receipt, if given by certified mail (return receipt requested).
(i) This MOU may be executed in one or more counterparts (including by facsimile or a scanned image), each of which when so executed shall be deemed to be an original, and all of which shall together constitute one and the same instrument.
(j) Nothing contained in this MOU shall be construed as creating a corporation, company, partnership, association, joint venture or other entity, nor shall anything contained in this MOU be construed as creating or requiring any fiduciary relationship between the Parties. No Party shall be responsible hereunder for the acts or omissions of the other Party. Nothing herein shall preclude a Party from taking any action (or have its affiliates take any action) with respect to any other transmission project, including any such project that may compete with the Projects.
(k) Unless otherwise expressly provided, for purposes of this MOU, the following rules of interpretation shall apply: (A) any reference in this MOU to gender includes all genders, and the meaning of defined terms applies to both the singular and the plural of those terms; (B) the insertion of headings are for convenience of reference only and do not affect, and will not be utilized in construing or interpreting, this MOU; (C) all references in this MOU to any Section are to the corresponding Section of this MOU unless otherwise specified; (D) words such as herein, hereinafter, hereof, and hereunder refer to this MOU (including the Exhibits to this MOU) as a whole and not merely to a subdivision in which such words appear unless the context otherwise requires; (E) the word including or any variation thereof means including, without limitation and does not limit any general statement that it follows to the specific or similar items or matters immediately following it; and (F) the Parties have participated jointly in the negotiation and drafting of this MOU and, in the event an ambiguity or question of intent or interpretation arises, this MOU shall be construed as jointly drafted by the Parties and no presumption or burden of proof favoring or disfavoring any Party will exist or arise by virtue of the authorship of any provision of this MOU.
7. Governing Law; Venue. This MOU shall be governed by, and construed and
interpreted in accordance with, the laws of the State of Idaho without regard to its principles of conflicts of laws. Venue for any action hereunder shall be proper in either Multnomah County, Oregon or Ada County, Idaho. Each Party waives to the fullest extent permitted by law, any right it may have to contest venue and a right to trial by jury in respect of any suit, action, claim or proceeding relating to this MOU.
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IN WITNESS WHEREOF, each of the Parties has caused its duly authorized officer to execute this Memorandum of Understanding as of the date first above written.
By: /s/ Pat Reiten
Name: Pat Reiten
Title: President, Pacific Power
IDAHO POWER COMPANY
By: /s/ Daniel B. Minor
Name: Daniel B. Minor
Title: Executive Vice President, Operations