HomeMy WebLinkAbout1990-090 Allocation Agrmt - PP&LALLOCATION AGREEMENT
THIS AGREEMENT ("Agreement"), made this 9th day of
January, 1990, is by and between the city of Ashland, a
municipal corporation of the State of Oregon, hereinafter
referred to as "Ashland," and Pacific Power & Light Company,
hereinafter referred to as "Pacific," an assumed business name
for a portion of the electric utility operations of PacifiCorp,
an Oregon corporation:
RECITALS:
WHEREAS, Pacific is in the business of furnishing
electrical power and energy to various areas, including the
area of Southern Oregon; and
WHEREAS, Ashland furnishes electrical energy to the
residents and businesses within its corporate limits, and
WHEREAS, Ashland largely funds the cost of its
municipal government and services through its sale of
electrical power and energy; and
WHEREAS, in the past Pacific has been furnishing
electrical power and energy to areas outside the city limits of
Ashland and, as Ashland has annexed territory to its corporate
limits, Ashland has become the provider of electrical power and
energy to new customers in those newly annexed areas; and
WHEREAS, at present there is litigation pending
between the parties with respect to Ashland's becoming the
provider of electric energy to customers served by Pacific at
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the time of annexation, and in so doing Ashland has commenced
litigation for the condemnation of Pacific's facilities in the
said annexed areas; and
WHEREAS, the parties have reached an agreement as to
the sale of Pacific's facilities in said annexed areas to
Ashland and as to the price to be paid for such facilities; and
WHEREAS, for Pacific to provide electrical power and
energy in the Southern Oregon area it needs certainty as to the
area in which it will serve in the future so as to be able to
estimate and plan for the growth of the Southern Oregon area
and accordingly the growth and the need for electrical power
and energy in that area; and
WHEREAS, the parties wish to define a boundary of
service of electrical power and energy to prevent duplication
of service and facilities; and
WHEREAS, the parties have experienced uncertainty and
substantial expense in the Past with respect to areas annexed
by Ashland and with resulting disputes as to the cost of
Ashland's acquiring facilities in the areas annexed; and
WHEREAS, the parties wish to establish a formula by
which Pacific's facilities will be sold to Ashland in areas
annexed by Ashland, so as to minimize uncertainty and to avoid
the substantial expenses that have been incurred by both
parties in the past; and
WHEREAS, the parties acknowledge that the formulae
set forth herein are reasonable in light of anticipated loss to
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Pacific under the circumstances set forth herein, that such
formulae constitute a genuine pre-estimate of loss, and that
proof of actual loss would be difficult; and
WHEREAS, so long as this Agreement shall remain in
effect the parties also acknowledge that Ashland does have the
legal right to become the sole provider of electrical power and
energy in areas annexed to its corporate limits and that,
accordingly, Pacific does agree to sell its facilities to
Ashland in areas annexed to Ashland in the future; and
WHEREAS, in the case of PacifiCorp v. City of
Ashland, Case No. 86-0553-J-1, PacifiCorp has cross-complained
against Ashland for inverse condemnation and it is intended
that this dispute be settled by this Agreement; and
WHEREAS, the parties hereto wish to settle the
various claims between them and in regard thereto, it is
understood and agreed that this settlement, with respect to the
litigation mentioned below, is the compromise of doubtful and
disputed claims, and that this Agreement is not to be construed
as admissions of liability on the part of either pa~ty and this
settlement is intended to avoid further litigation and to
purchase peace in the premises. The parties further
acknowledge that this Agreement is entered into under threat of
condemnation, and that none of the terms or conditions hereof
can reasonably provide the basis for determining "just
compensation" under any applicable law; and
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WHEREAS, the parties do hereby conclude and settle
all pending litigation between them.
NOW, THEREFORE, based upon the foregoing recitals,
the truth of which is hereby admitted and premises and
agreements contained herein, the parties do agree as follows:
1. Pacific shall forthwith move to dismiss with
prejudice its claims against Ashland in PacifiCorp v. City of
ashi~nd, Case No. 86-0553-J-1.
2. Ashland shall forthwith move to dismiss with
prejudice its case against Pacific being Ashland v. Pacif~Corp,
Case No. 89-1096-L-2, wherein Ashland is seeking condemnaticn
of Pacific's facilities within the present city limits.
3. Pacific does hereby sell to Ashland all electric
distribution lines, facilities and equipment of 12.5 kilovolts
and below (hereinafter referred to as "Distribution
Facilities") located in the areas covered by the above lawsuits
as more particularly specified in Exhibit #A", appended hereto
and incorporated herein by this reference (hereinafter referred
to as "Subject Property"). Pacific warrants that it has a good
and absolute right to sell and convey the Subject Property and
all property contemplated to be sold to Ashland in the future
by the terms of this Agreement and that all such property is or
will be free and clear of all liens, claims, or encumbrances of
every kind whatsoever. Further, Pacific agrees to indemnify
and hold Ashland harmless from and against, and to reimburse
Ashland with respect to any and all lawsuits, damages,
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liabilities, costs, expenses, and deficiencies including
interest, penalties, and reasonable attorney's fees, reasonably
incurred by Ashland by reason of, or arising out of, or in
connection with a breach of any representation or warranty made
by Pacific regarding Pacific's interest in the Subject
Property.
4. The parties shall share equally in the cost of
testing all transformers for PCB's. Pacific shall remove and
dispose of any transformer that contains 50 parts per million
or greater of PCB's at Pacific's sole expense prior to the sale
of Subject Property to Ashland. Ashland shall provide at its
sole expense replacement transformers for all transformers
removed by Pacific on account of PCB's.
5. Concurrent with Oregon Public Utility Commission.
("PUC") approval of this Agreement, Ashland shall pay to
Pacific, in addition to any sums paid to Pacific under any
other provision of this Agreement, the sum of $200,000 as
consideration for the Subject Property. Such amount shall
include up to $5000 in physical separation costs that will be
incurred by Pacific in order to carry out the provisions of .
this Agreement.
6. After the effective date of this Agreement, in
circumstances involving new customers for electrical service in
areas that Ashland intends to annex that are both (a) within
Ashland's service boundary as defined by Exhibit "B" but not
yet annexed, and (b) within which Ashland intends to provide
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retail electric service, Ashland may serwe such customers with
its own facilities. In the event that Ashland is unable to
serve such new customers from its facilities, the parties shall
use their best efforts to arrive at mutually acceptable terms
and conditions governing which party shall provide service to
such customer most efficiently pending annexation. These terms
and conditions may include, but are not limited to, service by
Ashland pursuant to the letter-form energy exchange agreement
between the parties dated April 1, 1982, as modified on
August 2, 1985, and as such agreement may be modified in the
future.
7. The parties jointly agree that in the future as
Ashland annexes areas within its service boundary as defined in
Exhibit "B," Ashland shall purchase from Pacific and Pacific
shall sell to Ashland all of Pacific's Distribution Facilities
located in the area being annexed with the formula for the
price of such facilities to be two (2) times Pacific's gross
revenue from the sale of electrical power and energy to
customers within the annexed area during the immediately
preceding twelve months, which amount shall be annualized in
the event service was provided for fewer than twelve months.
In addition, in all future sales (that is, other than the one
for $200,000 mentioned above), there may be payable to Pacific
its reasonable physical separation costs. Ashland shall have
the choice of paying the reasonable physical separation costs
or allowing the remaining customer(s) to be served by Pacific
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as energy exchange customer(s) with Ashland billing Pacific for
the energy the latter furnishes to the retail customer. The
rate charged for the exchange of energy shall be as set forth
in the letter-form agreement between the parties dated April 1,
1982 as modified on August 2, 1985, and as such agreement may
be modified in the future.
8. In the event Ashland's urban growth boundary is
modified and Ashland expands its area of electrical services
through annexation and beyond the service boundary specified in
Exhibit "B," Ashland shall be entitled to provide electrical
service to the Distribution Facilities in that extended area
upon paying Pacific -- (a) six (6) times Pacific's gross annual
revenue from customers in the area in question, during the
immediately preceding 12 months, which amount shall be
annualized in the event service was provided for fewer than
twelve months, plus (b) reasonable physical separation costs,
if any. This valuation method for Distribution Facilities
shall be exclusive, regardless of whether Ashland expands its
electrical service area beyond its service boundary in reliance
on this Agreement through eminent domain or otherwise.
9. This Agreement is subject to the approval of the
PUC pursuant to ORS 758.415. PUC approval is a condition
precedent to this Agreement becoming effective. Accordingly,
the parties agree to jointly use reasonable efforts to acquire
such approval and while such efforts are being undertaken, they
further agree to jointly request the court to postpone and
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continue all the litigation between the parties that is
presently pending.
10. This Agreement shall be effective upon its
execution by the parties and approval by the PUC and shall
continue in effect until terminated by mutual agreement. This
Agreement shall be binding upon the successors and assigns of
the parties. This Agreement is entered into by Ashland in its
proprietary capacity.
11. Each party releases any and all claims it may
have against the other arising from the same and distribution
of electrical power and energy in the areas covered by the
above litigation and all matters relating thereto.
12. Nothing contained in this Agreement shall be
construed as limiting Pacific's right to construct, operate,
and maintain electric facilities within the City of Ashland
used to provide electrical power and energy to any of Pacific's
existing or future customers that the City does not ~ntend to
serve.
13. The parties agree to discuss terms and
conditions under which Pacific would supply Ashland with
wholesale electrical power and energy.
14. In any legal proceeding arising out of,
interpreting or enforcing this Agreement, the prevailing party
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at trial or on appeal shall be entitled to an award of
reasonable attorneys' fees and costs.
IN WITNESS WHEREOF, the parties hereto have set their
hands and seals.
ATTEST:
City Recorder
CITY OF ASHLAND, a Municipal
Corporation
Mayor
PACIFICORP, dba PACIFIC POWER &
LIGHT COMPANY
Vice ~r~sid nt-
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